Field Systems Designs Holdings plc Half-year Report

 
TIDMFSD 
 
FIELD SYSTEMS DESIGNS HOLDINGS 
PLC 
 
INTERIM RESULTS 
 
The Board of Field Systems Designs Holdings plc (FSD), a specialist 
installation and engineering Group providing mechanical and electrical design 
and installation services in the water, power, and waste industries, announces 
its interim results for the six months to 30 November 2021. 
 
OVERVIEW 
 
The results for the first six months of this financial year show significantly 
reduced turnover and profitability compared to the prior period. 
 
The consolidated results for the six months to 30 November 2021 show group 
turnover of GBP2.6million; (2020 GBP5.7million) with a group loss after tax of 
GBP(1,270,000); (2020 GBP(209,000). 
 
COVID-19 has had a serious impact on the release of work in the UK Water 
Industry. The unexpected fall in order intake and turnover due to the pandemic 
created an excess in labour resources which placed a cost burden on the group 
with no productive output in return. Key personnel were retained in 
anticipation of workflows from the Water companies which never materialised. 
 
Two major projects suddenly terminated in October 2021 when its customer NMCN 
went into administration. There were considerable costs and disruption to 
operations in the demobilisation from sites and the financial impact from 
unpaid debts. 
 
These two exceptional events, together with ongoing projects working under the 
disruptive and costly stringent COVID safety rules, caused gross profit margins 
to fall, and with overheads no longer relative to the volume of business, this 
resulted in losses. 
 
The group maintains a healthy balance sheet and the level of cash remains 
robust. 
 
COVID-19 
 
The global pandemic has had a major impact on the release of work in the 
primary market of the Group being the UK Water Process industry. 
 
The UK water utilities have asset management programmes (AMPs) governed by 
OFWAT which run in 5-year cycles where supplier frameworks are created to 
deliver their infrastructure and maintenance investment. FSD has established 
itself as a key supplier in the industry with membership of multiple frameworks 
and preferred supplier agreements. 
 
Unfortunately the timing of the pandemic could not have been worse, as the last 
5-year investment programme (AMP6) ended in April 2020, just as the virus hit 
the economy. Normally at this stage of the five-year cycle FSD would have 
experienced a marked step-up in investment and engineering activity as capital 
projects are approved and construction begins. The global Coronavirus crisis 
coincided with the start of AMP7 when, under the guidance of OFWAT, water 
companies agree their budget determinations with the Competition and Markets 
Authority (CMA) which sets out the water- rates companies can charge their 
customers over the investment period. 
 
A number of water companies challenged their determination by OFWAT for the 
AMP7 investment period, which runs from 2020 to 2025. These challenges together 
with concerns over COVID-19 caused UK Water Utilities to cease their new 
investment plans to preserve their cash resources, to protect their staff, 
thereby ceasing engineering design work, and to delay the start of impending 
projects until the outlook for the economy was clearer. 
 
Consequently, the impact on FSD was that the next investment cycle (AMP7) was 
effectively delayed two years from April 2020 to March 2022. Our customers held 
back placement of new orders so eliminating any quantum of new work to start as 
old projects were completed. 
 
CUSTOMER FAILURE 
 
The Group was in contract on two major projects with NMCN, formerly known as 
North Midland Construction, and which ceased trading on 4 October 2021 after 75 
years in business. One project for Severn Trent Water was at its conclusion 
whilst the other for the States of Jersey was in its infancy. FSD was under 
intense programme pressure from NMCN on both contracts at that time, with 
assurances of their solvency by their relevant project teams. Their sudden 
cessation caused considerable disruption to our operations due to the 
demobilisation of staff, the redistribution of resources and the loss of 
forecast turnover and margin. The unpaid debts amounted to in excess of £ 
300,000. 
 
OUTLOOK 
 
The expectation is for an improved second half for the May 2022 Financial Year, 
as order intake gains momentum in early 2022, followed by a further increase in 
turnover for the May 2023 Year-end, and thereafter, as normality returns. 
 
The AMP7 budgetary expenditure targets still need to be spent by the Water 
Utilities, albeit now over a shorter time-period, in order to meet their 
regulatory obligations and respond to the significant environmental challenges 
they face with increased demand for water and the negative impacts of sewage 
spills and leakage. 
 
The delayed period of expenditure has created difficulties for FSD, struggling 
to sustain its labour resources during a period of low turnover; however there 
now approaches an influx of projects as work levels ramp up rapidly while the 
water companies strive to catch up on the delay to starting AMP7. 
 
The flipside to this period of stagnation, with a scarcity of project 
opportunities, is that fortunately the projects FSD have tendered over this 
extended period have not been lost, merely delayed, and so FSD is confident 
that it is in prime position as normality resumes to prosper from the growing 
workload emerging from the Water sector. 
 
There are clear signs of new AMP7 projects finally being prepared for release, 
the order book has been filling since the New Year to pre-COVID levels and with 
secured orders of over £7 million the outlook is now positive. The trading 
conditions ahead look promising for FSD and having been nominated on frameworks 
and allocated a number of key projects the Group now prepares itself for a busy 
period of activity as it faces a steep incline in project awards. 
 
The positive public announcements from the main water utilities confirm that 
the proposed 2020-2025 budgets remain to be spent. In fact the regulatory 
bodies will insist that this is the case as infrastructure investment is so 
desperately needed to keep our UK population watered and the environment clean. 
 
FSD has strengthened its management team by a new Board director appointment 
and retained the majority of its experienced workforce so as to react swiftly 
as the Utility Companies restart projects and expect as we emerge from the 
shadow of COVID that business volume will return and that a improved trading 
period lies ahead as the water industry catches up the ground lost to COVID-19. 
 
N Billings 
 
Managing Director 
 
28 February 2022 
 
FIELD SYSTEMS DESIGNS HOLDINGS PLC 
 
 
UNAUDITED COMPREHENSIVE INCOME STATEMENT 
 
for the six months ended 30 November 2021 
 
                                            2021           2020 
 
                                             £'000          £'000 
 
TURNOVER                                    2,639          5,748 
 
Cost of sales                               (3,672)        (5,492) 
 
                                            _______        _______ 
 
GROSS PROFIT                                (1,033)        256 
 
Net operating expenses                      (491)          (537) 
 
                                            _______        _______ 
 
OPERATING LOSS                              (1,524)        (281) 
 
Interest receivable and similar income      7              16 
 
Interest payable and similar charges        (1)            (2) 
 
                                            _______        _______ 
 
LOSS ON ORDINARY 
 
ACTIVITIES BEFORE TAXATION                  (1,518)        (267) 
 
Taxation                                    248            58 
 
                                            _______        _______ 
 
LOSS ON ORDINARY 
 
ACTIVITIES AFTER TAXATION                   (1,270)        (209) 
 
                                            ======         ====== 
 
Other comprehensive loss                    -              (19) 
 
                                            _______        _______ 
 
TOTAL COMPREHENSIVE DEFICIT 
 
FOR THE PERIOD                              (1,270)        (228) 
 
                                            ======         ====== 
 
EARNINGS PER SHARE 
 
Basic                                       (23.5)p        (3.9)p 
 
                                            ======         ====== 
 
NOTES: 
 
1.         The directors of Field Systems Designs Holdings plc accept 
responsibility for this announcement. 
 
2.         This interim statement has neither been audited, nor reviewed by our 
auditors, Shipleys LLP. 
 
FIELD SYSTEMS DESIGNS HOLDINGS PLC 
 
UNAUDITED GROUP STATEMENT OF FINANCIAL POSITION 
 
As at 30 November 2021 
 
                                                        2021           2020 
 
                                                       £'000          £'000 
 
FIXED ASSETS 
 
Tangible assets                                          389            502 
 
CURRENT ASSETS 
 
Stock                                                    123             83 
 
Debtors                                                2,276          3,835 
 
Cash at bank and in hand                               3,709          5,599 
 
                                                    ________       ________ 
 
                                                       6,108          9,517 
 
                                                    ________       ________ 
 
CREDITORS 
 
Amounts falling due within one year                    4,083          6,012 
 
                                                    ________       ________ 
 
NET CURRENT ASSETS                                     2,025          3,505 
 
                                                    ________       ________ 
 
TOTAL ASSETS LESS CURRENT 
 
LIABILITIES                                            2,414          4,007 
 
CREDITORS 
 
Amounts falling due after more than one                    2             21 

year 
 
PROVISION FOR LIABILITIES 
 
Deferred tax                                              33             59 
 
Post-Employment Employee Benefits                          -              - 
 
                                                    ________       ________ 
 
NET ASSETS                                             2,379          3,927 
 
                                                     =======        ======= 
 
CAPITAL AND RESERVES 
 
Called up share capital                                  569            569 
 
Share premium account                                    159            159 
 
Reserves                                               1,651          3,199 
 
                                                    ________       ________ 
 
TOTAL SHAREHOLDERS' EQUITY                             2,379          3,927 
 
                                                     =======        ======= 
 
 
 
END 
 
 

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March 01, 2022 02:00 ET (07:00 GMT)