Field Systems Designs Holdings plc Final Results

 
TIDMFSD 
 
FIELD SYSTEMS DESIGNS HOLDINGS 
PLC 
 
CHAIRMAN'S STATEMENT 
 
The Board presents the results of Field Systems Designs Holdings plc (FSD) for 
the year ended 31 May 2018. 
 
It is pleasing to see the improvement in turnover and operating profits 
reflected by the current year's results. Turnover from the water industry 
during the mid-point cycle of expenditure under Asset Management Programme 6 
(AMP6) has been matched by the sales contribution from the Energy from Waste 
sector (EfW). 
 
FSD is now fully on board to assist water companies and their Tier 1 framework 
contractors chosen under AMP6 to manage their expenditure. FSD has successfully 
earned its position on their supply-chain arrangements through complex 
pre-qualification tests and has invested in talented engineering and 
installation personnel to be able to fully participate at the earliest stages 
of project development in decisions that direct efficiencies and cost-saving 
measures. FSD is now looking ahead to 2020 to restart the process as plans by 
water utilities begin to emerge for AMP7. 
 
The group's move to diversify into the Energy from Waste sector (EfW) has 
proven successful. The group is currently completing two major EfW contracts 
for one client and seeking to secure new orders as it builds on the confidence 
it has built in delivering these complex projects. 
 
The board is positive about the outlook for group performance over the next 
financial year and is well-positioned with a strong cash balance and good 
opening order book to maximise the benefits from future opportunities. 
 
D K Bird 
 
Chairman 
 
31 October 2018 
 
PUBLICATION OF NON-STATUTORY ACCOUNTS 
 
The financial information set out in this preliminary announcement does not 
constitute statutory accounts as defined in the Companies Act 2006. 
 
The group statement of financial position as at 31 May 2018 and the unaudited 
group income statement for the year then ended have been extracted from the 
Group's 2018 statutory financial statements upon which the auditors opinion has 
not yet been issued. 
 
These financial statements have not yet been delivered to the registrar of 
companies. 
 
The directors of Field Systems Designs Holdings plc accept responsibility for 
this announcement and confirm compliance with the NEX Exchange Growth Market 
rules. 
 
FIELD SYSTEMS DESIGNS HOLDINGS 
PLC 
 
STRATEGIC REPORT 
 
The directors present the Strategic Report for Field Systems Designs Holdings 
Plc ('the company') and its subsidiary undertakings (together referred to as 
'the group') for the year ended 31 May 2018. 
 
OPERATIONAL PERFORMANCE 
 
The group achieved a turnover of GBP25.9 million for the year to 31 May 2018, an 
increase of 50% on last year, reflecting the pick-up in work from the Water 
Industry as project awards from AMP6 grow, and a continuation of work from the 
EfW sector with two major projects both with extended programme durations. 
 
Turnover was generated as follows:                      2018          2017 
 
                                                           GBP             GBP 
 
 
Water and Sewerage                                12,509,786    10,931,388 
 
Power generation and Energy from Waste            12,752,185     5,597,291 
 
Transport and Tunnels                                631,390       551,503 
 
Building services, Maintenance, 
 
Security, Instrumentation, Controls and                3,105       134,303 
Automation 
 
                                                  25,896,466    17,214,485 
 
                                                   =========     ========= 
 
Gross profit margins dipped in the year ended 31 May 2018 to 6.6% from 7.6% 
last year. Gross margins were under downward pressure due to projects suffering 
from the tough contractual stance adopted by its customer in the Energy from 
Waste sector. 
 
The contribution from its improved turnover left the group with operating 
profits for the year of GBP551,389 (2017: GBP462,388). 
 
The directors are pleased to report a solid group profit after tax of GBP494,863 
for the year ended 31 May 2018 (2017: GBP672,123) 
 
BUSINESS REVIEW 
 
The Field Systems Designs group (FSD) focuses on delivering specialist 
mechanical and electrical design and installation works. 
 
Water and Sewerage 
 
FSD continued to take on Mechanical and Electrical (M&E) installation contracts 
during the year across the sector as the group strives to maintain its 
reputation as a respected industry specialist. 
 
Sales volumes improved significantly in the Water Industry in 2018 where 48% of 
turnover was derived (2017: 64%). The Group undertook a diversity of projects 
for a number of different Water Utilities in many regions of the United 
Kingdom, working for multiple Tier One contractors under AMP6 frameworks and 
supply-chain arrangements. 
 
Power generation and Energy from Waste 
 
In 2018 49% of the improved turnover was derived from the Power and EfW sector 
(2017: 33%). FSD worked primarily on Energy from Waste projects, undertaking 
major electrical installation works at Levenseat and Hull on projects which use 
advanced thermal treatment gasification technology. There was also work 
undertaken during the year on generators and outage works. 
 
Transport and Tunnels 
 
Electrical installation works were completed during the year on a London-based 
deep cable tunnel, which maintained Group turnover in this sector. FSD 
continues to support tunnelling works as they arise, dealing competently with 
the complexities these projects involve. 
 
Building services, Maintenance, Instrumentation, Controls and Automation 
 
FSD continues to offer smaller electrical installation service contracts across 
various sectors, building on its reputation by offering its existing customer 
base quality, timeliness and value for money. A small electrical workshop 
facility with tooling and equipment enables the group to produce in-house small 
isolator builds, lighting panel builds and remote monitoring enclosure 
pre-assemblies. 
 
Mechanical design, fabrication and installation 
 
This year the group continued to take on the mechanical elements of M&E 
installation contracts through its mechanical subsidiary which continues to 
build up its client base and its reputation for quality in-house fabrication 
and site installation services. 
 
PRINCIPAL RISKS AND UNCERTAINTIES 
 
The board regularly undertakes a review of business risks and uncertainties 
confronting the group and evaluates the significant project risks affecting its 
business. The following issues are the principal risks and uncertainties faced 
by the group. 
 
Economic 
 
The group's business may be affected by market forces beyond its control. 
During a downturn all competing companies operating in the same industry 
sectors will be impacted by economic and political change that will alter the 
volume and value of available work. 
 
Brexit 
 
On 23 June 2016, the people of the UK voted to leave the EU (Brexit); there 
continues to be volatility in financial markets, in currency markets and 
uncertainty over future actions by governments and businesses. The directors 
have been considering the long-term impact of Brexit as the implications become 
known, however the short-term effects are inflationary, primarily on material 
pricing as a consequence of weaker sterling. The board continues to monitor 
market information on price increases and react as required on any 
consequential effects on wage and price inflation. 
 
Cyclical trading 
 
The group is heavily reliant on the Water industry and its business is affected 
by the cyclical nature of the UK market caused by the 5-year Asset Management 
Programmes governed by OFWAT. At the beginning and the end of each AMP the 
water industry suffers a downturn as all competing companies operating in this 
industry are chasing a reduced volume of available work. The group mitigates 
these uncertainties by continually monitoring changes in its market sector, by 
focusing its sales efforts on non-water industry work flows and reviewing 
regularly forecasted sales opportunities to ensure that adequate sales volumes 
can be secured. 
 
Skilled personnel 
 
The group is dependent on the quality, attention and diligence of its personnel 
across the full spectrum of its skill disciplines. The group's ability to 
attract, retain, train and motivate its skilled management and personnel will 
be reflected by business growth, profitability and a reputation for quality 
work. The group offers 'added-value' to its customers by offering a superior 
quality of project management, engineering and supervisory resource to 
complement its installation services. It is this wealth of knowledge and 
experience that sets FSD aside from its competition. 
 
The board reviews personnel issues on a monthly basis and the Safety, Health, 
Environment and Quality manager (SHEQ) ensures there is investment in training 
programmes for site and management to broaden the competence, knowledge and 
experience of its employees. The group continues to promote the further 
training and improvement of staff; benefitting where applicable from the 
introduction of the government Apprenticeship Levy. 
 
Health and safety 
 
The group demands effective and successful management of health and safety 
risks by its supply-chain and similar demands are rightly made by its own 
customer base. Constant vigilance is paramount and any accident can have 
serious consequences. The commitment to enforcing safe working and adherence to 
regulation is strong at board level and flows through the organisation through 
qualified specialists, continual instruction and training. The group is 
extremely aware of the potential for an 'incident' to damage the group and 
gives constant attention to ensuring that this risk is kept to a minimum. The 
board, supported by a highly qualified health and safety specialist, endorses 
the importance of vigilant health and safety practices. 
 
Long term contracts - bidding 
 
The majority of group turnover is from fixed price and target price contracts. 

The failure to adequately assess from client's specifications the full scope of 
works, the correct pricing of that work and the time required to complete the 
work may have serious ramifications on profitability. There are specific risk 
management procedures in place to ensure that prices estimated for fixed price 
contracts are accurate and to ensure the correct costing of successful bids as 
the work progresses. The Tender Approval Procedure (TAP) is a key risk 
management tool used to minimise these risks. The TAP completion process 
identifies tender project risks, assesses the probability of their occurrence, 
their impact if they do occur and actions necessary to manage them down to an 
acceptable level. This procedure is used to ensure that commercial and 
contractual risks are monitored and managed by the board. 
 
Long term contracts - costing 
 
Fixed price and target price contracts may also be subject to cost and time 
overruns, and the costs of additional work undertaken on variations may not be 
properly measured or fully recovered from the customer. The Project Summary 
Report (PSR) is a key risk management tool used to minimise these risks. The 
PSR completion process quantifies the value of project work undertaken after 
successful contract award, reviews the potential commercial risks and 
highlights any safety, technical, operational and environmental risks. This 
tool is used to ensure that commercial and contractual risks are monitored and 
managed by the board. 
 
Competitiveness 
 
The group has a leading market position in sectors such as the water industry, 
and has also penetrated other sectors such as tunnelling, the power industry 
and energy from waste market to ensure a constant pipeline of enquiries. 
Nevertheless in an increasingly competitive environment and with cyclical 
volumes, accurate and competitive pricing is key to a successful contract 
award. The board constantly monitors the competitiveness of its cost base to 
ensure that its pricing remains competitive. Regular benchmarking and framework 
submissions also assist this process of review. 
 
Financial instruments 
 
The group uses financial instruments when required to provide a financing base 
for the group's operations and derivatives are used to hedge against known 
commodity price and exchange rate exposures in contractual arrangements secured 
by the group. There may not always be instruments that provide accurate hedging 
or readily available markets for such hedges. 
 
Cash flow 
 
The group has a strong balance sheet and access to additional debt funding, and 
trades comfortably within its current working capital. Customers may require 
additional project work to be undertaken and the group may be required to fund 
this work for a period of time until the additional costs can be formally 
approved and funds received. The group may also experience an increase in the 
level of credit given to customers as a consequence of a change in their 
financial status or payment systems. In such circumstances there are short-term 
cash-flow consequences which are managed carefully by the finance department 
and any consequences mitigated. 
 
KEY PERFORMANCE INDICATORS (KPI's) 
 
The board uses both financial and non-financial (operational) performance 
indicators in the analysis and management of the business. The indicators 
relate both to financial and contractual performance and to other non-financial 
areas, including but not limited to, employees, health and safety, quality 
assurance, customer satisfaction and the environment. KPI's are used by the 
management to run and monitor the business and many of the trends and results 
provide information which is commercially sensitive or is confidential in 
nature. 
 
Financial 
 
The main financial KPI used by the board is the measure of gross profit margin 
(being the gross project profit contribution as a percentage of turnover), as 
overheads can largely be controlled in line with budget, however margins on 
contractual activity are key to annual profitability.  An overall target margin 
is set annually in advance after review of overhead structure and subsequently 
represents the average bid margin used in pricing projects. It is designed to 
cover group overheads plus an element of profit. The gross profit margin used 
in the annual budgeting process is used to benchmark monthly performance and 
provides for a degree of margin erosion due to difficulties in fully recovering 
the value of additional works requested by customers. This varies according to 
market conditions. 
 
The actual margin experience is reflected in the reported results and a 
detailed review is contained within the operational performance reported 
earlier in the Strategic Report. 
 
Non-financial 
 
The board measures customer satisfaction using an independent on-line survey 
assessment. A rolling 12-month record is kept of customer feedback on project 
completion with charitable donations used to encourage participation. Customers 
are asked to complete answers to a number of questions regarding group 
performance on a scale of 1 (poor) to 5 (excellent) including such areas as the 
focus on Safety and the Environment, completion of site work to programme, 
contract financial management and standard of workmanship. The responses are 
used by the board as an independent confirmation of group performance levels 
and negative feedback is vigorously followed up and improvement measures 
implemented. The group targets an average score of 4.5 and the overall 
responses have been very close to this target with an average of 4.2 (2017: 
4.3) during the year. 
 
The ongoing independent assessments of the Group's Safety, Quality and 
Environmental Standards are key to it maintaining the efficiency of its 
operational performance and adherence to high levels of site safety and 
environmental awareness. The Group is approved to the Quality Management 
Standard ISO 9001:2008, has an environmental management system approved to ISO 
14001:2004, and a safety management system based on OHSAS 18001:2007. Achilles 
UVDB, the Utilities Sector Vendor Database performance assessor, regularly 
review the Group's processes for managing and installing electrical services, 
as well as its fault resolution procedures. The results of the 2018 Achilles 
audit were again excellent, reflecting 100% scores in all 4 areas of the 
management systems and 100% in all 4 areas of the site evaluation; these 
assessments look at areas of health & safety& safety, environment, quality & 
social corporate responsibilities. 
 
The Group board has both corporate and personal responsibility to ensure that 
its operations are managed in a safe and environmentally controlled manner. In 
common with its industry the Group measures its record on Health & Safety using 
an annual Accident Frequency Rate (AFR) chart showing lost time accidents per 
100,000 man-hours worked. 
 
The group AFR is currently zero. 
 
QUALITY ASSURANCE 
 
FSD is approved to the Quality Management Standard BS EN ISO 9001:2008. The 
British Standards Institute (BSI) and Achilles, the Utilities Sector 
procurement performance assessor, regularly review the Group's processes for 
managing and installing electrical services, as well as its fault resolution 
procedures. Recent assessments have again been successfully completed with 
excellent results from the UVDB Verify audits. The Group is committed to a 
strategy that provides its clients with a high-quality service that conforms to 
the client's requirements. This strategy includes a strong management 
commitment to quality, the recruitment and retention of high calibre, 
experienced and well-trained staff, properly documented procedures, processes 
and controls, and compliance with all regulatory and legal requirements. 
Quality Audits continue to be carried out across Group sites on a regular basis 
to ensure compliance and to improve the Group's activities. The annual 
management review meeting assesses the group's performance against targets and 
sets new targets. FSD have now successfully transitioned to BS EN ISO 9001: 
2015; the new Quality Management Standard. 
 
ENVIRONMENT 
 
FSD has an environmental management system approved to the international 
environment standard, ISO 14001:2004. The BSI and Achilles regularly review the 
Group's processes for managing its impact on the environment. The Group 
achieved its CEMARS (Certified Emissions Measurement and Reduction Scheme) 
accreditation in 2010 and now works to the principles of ISO 14064-1:2006 as it 
strives to minimise harm to the environment, prevent pollution and use best 
practice environment solutions wherever possible to minimise its carbon 
foot-print. A risk assessment approach is used to manage environmental matters, 
and to identify and assess key environmental hazards arising from business 
activities and manage them appropriately. FSD have now successfully 
transitioned to ISO 14001:2015; the new International Environment Standard. 
 
HEALTH AND SAFETY 
 
A commitment to Health and Safety is the Group's number one priority. Every 
Board meeting starts by focusing on preserving high safety standards and 
promoting a positive safety culture within the Group, to ensure that our 
employees, customers, suppliers and the public are kept safe. FSD has a safety 
management system implemented across all sites that has successfully been 
approved to the Health and Safety Management System BS OHSAS 18001:2007 and are 
currently going through a transition period to update to BS ISO 45001:2018, 
Occupational health and safety management systems, by early 2019 (the 
internationally recognised standard for management of occupational health and 
safety risks). The Group achieved a ROSPA (Royal Society for the Prevention of 
Accidents) Gold Medal award again this year. There is a strong commitment at 
Board level, supported by a highly qualified health and safety specialist, 
which endorses the importance of vigilant health and safety practices and the 
investment in training for site and management to broaden the competence, 

knowledge and experience of its employees. This is supported by expert guidance 
provided by the EEF, ECA and CITB. 
 
EMPLOYEES 
 
Group employee numbers have increased from an average of 133 in 2017 to 199 in 
2018 reflecting the improved turnover and a varied mix of work scope during the 
year. 
 
We are pleased to place on record the appreciation of the efforts and support 
given to the group by its employees, who continue to make a significant 
contribution to the group. 
 
PENSIONS 
 
The Scheme's funding position has improved from a surplus of GBP83,000 at the 
start of the year to a surplus of GBP274,000 at the end of the year. The Group is 
not recognising the surplus and so the Group's defined benefit pension scheme 
funding position as at 31 May 2018 has been maintained at GBPNil, a target 
reached in 2017. This is derived from the group's most recent actuarial review 
and reflects market conditions as at 31 May 2018. There was a GBP67,000 (2017: GBP 
376,000) settlement gain released to the profit and loss account during the 
year following the payment of a cash equivalent transfer value to a deferred 
member withdrawing from the defined benefit scheme, 
 
CORPORATE RESPONSIBILITY 
 
The group recognises its responsibilities to the people it employs, its 
customers and suppliers, its shareholders, the wider community and to the 
environment. We are a well-managed, responsible and ethical group and are 
determined to be widely recognised for our quality of installation, the skills 
of our people and the seriousness with which we take our corporate 
responsibilities. 
 
OUTLOOK 
 
The group entered the new financial year with an opening order book of GBP12.0 
million (2017: GBP13.0 million). 
 
The group's principal source of revenue historically has been from the Water 
Industry and key to its success during AMP6 (Sixth Asset Management Programme) 
is its continued participation as part of the various frameworks being 
formulated by the Water Utilities selecting their preferred supply chain. 
 
AMP6 runs for five years to April 2020. The Water Utilities have now mostly 
concluded their MEICA frameworks with different approaches to their mechanism 
and methodologies of spend. Sales volumes in the Water Industry have been 
strong this year in line with prior years and the spend is set to continue 
until AMP7. The early indications from OFWAT are that AMP7 will have a larger 
investment programme than AMP6. 
 
FSD will continue to be fully involved in the prequalification processes with 
the regional Utilities and will strive to secure its position on frameworks and 
strategic alliances with water process companies. 
 
In the Energy from Waste (EfW) sector FSD have had a busy year and will 
continue to work on major EfW projects into 2019 as it completes its current 
order book. 
 
The decision by prominent Engineering, Procurement and Construction (EPC) 
contractors to not pursue further opportunity from the EfW sector has created 
some uncertainty in the market over future volume expectations. However whilst 
continuing to pursue suitable new EfW opportunities, FSD have already executed 
some projects derived from EfW legacy works and expect to receive further 
enquiries from previous projects completed in the sector. 
 
The group continues to confidently target other MEICA turn-key solutions with 
its in-house M&E capabilities, using joint venture alliances and other working 
arrangements to deliver the extended scope of works. 
 
The Group have recently invested in the development of a team of specialists 
who will complement existing business services by enabling FSD to offer 
telemetry and process automation services in the water and power industries. 
 
The board continues to react to customer demands and invest in training to keep 
standards high, whilst creating operational efficiencies to best position the 
business for the opportunities ahead. 
 
On behalf of the board 
 
Nigel Billings 
 
Managing Director 
 
31 October 2018 
 
FIELD SYSTEMS DESIGNS HOLDINGS PLC 
 
 
GROUP INCOME STATEMENT 
 
for the year ended 31 May 2018 
 
                                                               2018        2017 
 
                                                                  GBP           GBP 
 
 
 
TURNOVER                                                   25,896,466    17,214,485 
 
Cost of sales                                            (24,176,037)  (15,909,564) 
 
                                                              _______       _______ 
 
GROSS PROFIT                                                1,720,429     1,304,921 
 
Operating expenses                                        (1,169,040)     (842,533) 
 
                                                              _______       _______ 
 
GROUP OPERATING PROFIT                                        551,389       462,388 
 
 
Defined benefit scheme settlement gain                         67,000       376,000 
 
Interest receivable and similar income                          9,696         8,182 
 
Interest payable and similar charges                          (3,552)       (8,017) 
 
                                                              _______       _______ 
 
PROFIT ON ORDINARY 
 
ACTIVITIES BEFORE                                             624,533       838,553 
TAXATION 
 
Taxation                                                    (129,670)     (166,430) 
 
                                                              _______       _______ 
 
PROFIT ON ORDINARY 
 
ACTIVITIES AFTER TAXATION                                     494,863       672,123 
 
                                                               ======        ====== 
 
EARNINGS PER 
SHARE 
 
Basic                                                           9.2p          12.5p 
 
                                                              ======         ====== 
 
Diluted                                                         9.1p          12.4p 
 
                                                              ======         ====== 
 
 
All operations are continuing. 
 
FIELD SYSTEMS DESIGNS HOLDINGS PLC 
 
GROUP STATEMENT OF FINANCIAL POSITION 
 
As at 31 May 2018 
 
                                                     2018              2017 
 
                                                        GBP                 GBP 
 
FIXED ASSETS 
 
Tangible assets                                   504,133           463,394 
 
CURRENT ASSETS 
 
Stock - raw materials                             151,379           501,117 
 
Debtors                                         7,598,742         5,663,174 
 
Cash at bank and in hand                        3,972,722         2,705,945 
 
                                                 ________          ________ 
 
                                               11,722,843         8,870,236 
 
                                                 ________          ________ 
 
CREDITORS 
 
Amounts falling due within one year             8,631,719         6,095,391 
 
                                                 ________          ________ 
 
NET CURRENT ASSETS                              3,091,124         2,774,845 
 
                                                 ________          ________ 
 
TOTAL ASSETS LESS CURRENT 
 
LIABILITIES                                     3,595,257         3,238,239 
 
CREDITORS 
 
Amounts falling due after more than                 4,742            33,587 
one year 
 
PROVISIONS FOR LIABILITIES 
 
Deferred taxation                                  39,000            31,000 
 
Post-employment employee benefits                       -                 - 
 
                                                 ________          ________ 
 
NET ASSETS                                      3,551,515         3,173,652 
 
                                                  =======           ======= 
 
CAPITAL AND RESERVES 
 
Called up share capital                           569,250           569,250 
 
Share premium account                             158,750           158,750 
 
Other reserves                                    370,033           370,033 
 
Profit and loss account                         2,453,482         2,075,619 
 
                                                 ________          ________ 
 
TOTAL SHAREHOLDERS' EQUITY                      3,551,515         3,173,652 
 
                                                  =======           ======= 
 
Approved by the board and signed on behalf of the board and authorised for 
issue on 
 
31 October 2018 by:- 
 
Bruce Smith.........................................Director 
 
Nigel Billings.......................................Director 
 
 
 
END 
 

(END) Dow Jones Newswires

October 31, 2018 13:43 ET (17:43 GMT)