Monday, 20 July 2009

FDM’s Mounties still mounting

(By Anthony Miller – Monday 20th July 2009 9:30am). A trading update from AIM-listed ITSA-cum-IT services group FDM Group (see here) echoes the sentiments of the rest of the sector: “buying decisions are taking longer than we would normally expect; and once buying decisions have been made, contract durations ... have shortened”. At least the number of FDM’s “Mounties” (basically employed contractors) are up since the end of the year, albeit by only 9 to 302. Freelance contractor numbers are down 6 to 326. The significance is that Mounties are about three times more profitable for FDM than contractors, so FDM can afford to lose a few freelancers so long as the Mounties keep, well, mounting, I suppose. Indeed, CEO Rod Flavell indicated H1 profits are ‘in line’ though visibility is down.

Meanwhile, MBO discussions continue (see Management bids for FDM). I say MBO, but there is no firm offer on the table as best as I understand it. The mooted 120p ‘bid’ appeared to excite management more than investors, with one tipster advising investors to complain to the company that “management is taking the p*ss”. Of course, we couldn’t possibly comment on what the ‘right’ price should be. I note that FDM’s shares dropped 6% to 105p as I write, having peaked at 128p mid-June. This will be interesting to watch.

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