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Field Systems Designs Holdings plc · FSD

31/10/2016 17:01

FIELD SYSTEMS DESIGNS HOLDINGS PLC - Annual Financial Report PR Newswire

FIELD SYSTEMS DESIGNS HOLDINGS PLC                                                


I am pleased to announce the results of Field Systems Designs Holdings plc (FSD) for the year ended 31 May 2016.

Finally Asset Management Programme (AMP6) in the Water industry has arrived and the group’s investment in the Energy from Waste sector (EfW) has generated real growth. Working in these industries is still tough; with both contractual and operational complexities; however this year’s results reflect a solid performance.

The Water Industry’s sixth 5-year build and refurbishment Asset Management Programme (AMP6) running to April 2020 has now commenced. There was a delayed start to AMP6 with slow release of work, however residue works from the tail-off from AMP5 helped to maintain volumes in the water sector in the current year.

The group’s move to diversify into the Energy from Waste sector (EfW) has proven successful. These major projects from different clients have rewarded the long-term relationship -building in the sector and reflect the confidence that FSD has now built in delivering these complex projects.

The group continues to promote its recognised position in the Water Industry by pursuing new framework agreements under AMP6. FSD has established a strong reputation in delivering complex solutions on target and hopes to build on its considerable prior experience by participating fully with the Water Utilities during their next investment phase.

FSD now offers the favoured full Mechanical and Electrical (M&E) solution with the benefit of its in-house mechanical fabrication and erection capability which gives the group control over its programme commitments.

The group is positive about the outlook for performance in 2017/2018, as it is well-positioned with a good opening order book to maximise the benefits from future opportunities.

D K Bird


31 October 2016


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 2016 and the group income statement for the year then ended have been extracted from the Group's unaudited 2016 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 ICAP Securities & Derivatives Exchange guidance note relating to the number of directorships held.

FIELD SYSTEMS DESIGNS HOLDINGS PLC                                               


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 2016.


The group achieved a turnover of £14.5million for the year to 31 May 2016, an increase of 1% on last year, reflecting the slow-down of work in the Water Industry as the end of AMP5 approached, but a significant increase in work from the EfW sector.

Turnover was generated as follows:                    2016       2015

                                                       £          £

Water and Sewerage                                  8,986,968  9,257,988

Power generation and Energy from Waste              5,328,437  4,394,156

Rail, Transport and Tunnels                            14,370     54,721

Building services, Maintenance,

Security, Instrumentation, Controls and Automation    153,949    696,250

                                                   14,483,724 14,403,115

                                                    =========  =========

Gross profit margins improved slightly in the year ended 31 May 2016 to 7.8% from 7.2% last year. However gross margins remain less than budget as downward pressure on gross profits remains as projects suffer from tough contractual stances from the Energy from Waste sector and operating difficulties have arisen with the Water Industry Tier One contractors as new project teams are being formed as AMP6 starts to grow.

The group achieved a fair operating profit for the year of £335,028 (2015: £238,038). In view of the economic climate the directors are pleased to report a solid group profit after tax of £307,523 for the year ended 31 May 2016 (2015: £204,112)


The Field Systems Designs group (FSD) focuses on delivering specialist mechanical and electrical design and installation works.

Water and Sewerage

Sales volumes were again dominated by the Water Industry where 62% of turnover in 2016 was derived (2015: 64%).

AMP5 in theory ceased in April 2015, however some residual projects were still completed during the year. Crossness Sewage Treatment Works (STW) was finished and work faces on long-term delayed projects such as Lee Valley were finally released for construction.

Early projects were released under AMP6 and the experience, patience and expertise of its operatives were put to the test in working under a new regime of working practices by its new Tier One customers.

Power generation and Energy from Waste

The group increased its presence in the Power sector where it derived 37% of turnover in 2016 (2015: 31%).

FSD won further Energy from Waste contracts from new customers where the group continues to build on its previous success in the sector. Additional projects were secured in the sector, using Incineration, Gasification and Biomass technologies.

The Tyseley and Welland projects use advanced thermal treatment gasification technology. The Greatmoor project uses mass-burn incineration chain grate technology. Levenseat and Hull projects use advanced thermal treatment gasification technology.

There were also works on generators and Combined Heat & Power (CHP) units providing instrumentation, electrical engineering and installation services; and outage works at Hartlepool Nuclear Power Station.

Rail, Transport and Tunnels

FSD continues to deliver minor electrical installation services in the transportation industries supporting mainly the underground sector.

Building services, Maintenance, Security, Instrumentation, Controls and Automation

FSD continues to deliver electrical installation services in the commercial, security, water and rail sectors, building its reputation by offering its existing customer base quality, timeliness and value for money. The range of services includes lighting, power distribution, fire-alarm and security systems has grown turnover.

Mechanical fabrication and installation

This year the group continued to take on M&E installation contracts through its mechanical subsidiary which continues to build up its client base and its reputation for quality fabrication and installation services.

There were some major pipework fabrication and installation contracts undertaken during the year for projects in the Water industry. The AMP6 spend in England released works to the FSD group such as water treatment works, pumping stations and CHP units.

Profitability at the division was poor primarily as a result of difficulties with early projects released under AMP6 and extra costs in dealing with a new regime of working practices by its new Tier One customers could not be recovered.


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.


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.


On 23 June 2016, the people of the UK voted to leave the EU (Brexit); there has consequently been volatility in financial markets, in currency markets and uncertainty over future actions by governments and businesses. The directors are 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 is acting on information that price increases are already being made by suppliers of materials and on the anticipated consequential effects that this will have on wage and price inflation generally.

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.

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 contracts. By definition 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 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.


The group has a leading market position in sectors such as the Water Industry, and has also penetrated other sectors such as the rail industry, 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.


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.


The main financial KPI used by the board is the measure of gross profit margin (being the gross project 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.


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 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 overall responses have been very good 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 accredited to OHSAS 18001:2007. Achilles UVDB, the Utilities 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 2016 Achilles audit were again excellent, reflecting 100% scores for both management systems and site evaluation, in the assessed areas of health & safety, environment, quality & social corporate responsibilities.

The Group has once again received a ROSPA Gold Award in health & Safety.

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.

The group targets a year on year decline in the AFR, shown below, which charts the number of lost time accidents per 100,000 man hours worked. 

The group AFR is currently zero.


FSD group 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 company'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 company sites on a regular basis to ensure compliance and to improve the company’s activities. The annual management review meeting assesses the group’s performance against targets and sets new targets.


FSD group 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 has achieved its CEMARS (Certified Emissions Measurement and Reduction Scheme) accreditation and is now approved to 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.


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 group 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, (the internationally recognised standard for management of occupational health and safety risks). The company achieved a ROSPA (Royal Society for the Prevention of Accidents) Gold Medal award this year.

There is a strong commitment at board level, supported by a highly qualified health and safety specialist, endorsing the importance of vigilant health and safety practices and 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 (Engineering Employers' Federation), ECA (Electrical Contractors Association) and CITB (Construction Industry Training Board). The group continues to establish safety initiatives and these are currently on target with a good safety record.


Group employee numbers have increased slightly from an average of 96 in 2015 to 101 in 2016 reflecting a varied mix of work 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.


The group's pension deficit as at 31 May 2016 was £22,400 net of deferred tax, a reduction of 92% from £268,000 as at 31 May 2015. This is derived from the group's most recent actuarial review and reflects market conditions as at 31 May 2016.


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 company 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.


The group entered the new financial year with an opening order book of £13.0 million (2015: £5.7 million).

The group’s principal source of revenue is from the Water Industry and key to its success during AMP6 (Sixth Asset Management Programme) will be its continued participation as part of the various frameworks being formulated by the Water Utilities to select its preferred supply chain.

AMP6 runs for five years to April 2020. Some Water Utilities have concluded their MEICA frameworks whereas others are still formulating their approach. Consequently sales volumes in the Water Industry have been slow to start which is consistent with prior years. However the signs are now clear that the spend is about to come through and the mid period of AMP6 should prove a busy one.

FSD has established a strong reputation in delivering complex solutions on target and hopes to build on its considerable prior experience by participating fully with the Water Utilities during their next investment phase. FSD has been fully involved in the prequalification processes to secure its position on frameworks and has been pursuing strategic alliances with water process companies.

Despite the commitment to gain successful placement on water frameworks, a degree of FSD’s sales effort has been committed to industries outside of water and towards new technology sectors such as Energy from Waste.

We have built on our mass burn incineration success in the Energy from Waste sector by developing new relationships with EPC contractors in the advanced thermal treatment gasification sector which is attracting large investment. We are partnering on large EC&I projects (Electrical, Control and Instrumentation) and have secured Hull and Levenseat on this basis.

Some customers have formed Joint Ventures in this sector which is attracting a great deal of energy from waste pipeline for both current and future opportunity. While there has been some project uncertainty created by the government funding incentive of CFD (Contracts for Difference), projects are still progressing and are bankable on gate-fee alone. We now have an established pipeline of Energy from Waste opportunity which evidences our investment in this sector for organic growth and when CFD has been re-invented, the pipeline will be broadened.

We are also developing our combined heat and power (CHP) business and attracting new customers for large gas and diesel engine installation projects which offer other market opportunity entries outside of our core sectors of water and EfW.

With 11.5GW of generating capacity shut down over the past few years as a result of the 2015 large combustion plant directive, we are now also seeing enquiries landing for biomass conversion and both open and combined cycle gas turbine opportunity.

The ability of the group to confidently target MEICA turn-key solutions with its in-house M&E capabilities, using joint venture alliances and other working arrangements to deliver, has secured new projects for both Incineration and Gasification technologies in the EfW sector boosting sales volumes over the next few years and deepening the order book. Future potential works being pursued include a large biomass project, an open cycle gas turbine, a biogas direct grid injection and larger scale anaerobic digestion.

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

P J Haines

Managing Director

31 October 2016

FIELD SYSTEMS DESIGNS HOLDINGS PLC                                              


for the year ended 31 May 2016

                                          Notes     2016         2015

                                                     £            £

TURNOVER                                        14,483,724   14,403,115

Cost of sales                                   (13,358,007) (13,362,690)

                                                _______      _______

GROSS PROFIT                                    1,125,717    1,040,425

Operating expenses                              (790,689)    (802,387)

                                                _______      _______

GROUP OPERATING PROFIT                          335,028      238,038

Gains arising on fair value of investment
property                                        54,000       54,000

Interest receivable and similar income          375          362

Interest payable and similar charges            (17,746)     (15,238)

                                                _______      _______


ACTIVITIES BEFORE TAXATION                      371,657      277,162

Taxation                                        (64,134)     (73,050)

                                                _______      _______


ACTIVITIES AFTER TAXATION                       307,523      204,112

                                                ======       ======


Basic                                           5.70p        3.78p

                                                ======       ======

Diluted                                         5.69p        3.77p

                                                ======       ======

All operations are continuing.

FIELD SYSTEMS DESIGNS HOLDINGS PLC                                             


As at 31 May 2016

                                                2016      2015

                                                  £         £


Tangible assets                                 993,231 1,045,893

Investment property                             756,000   702,000


Stock – raw materials                            19,117    39,117

Debtors                                       4,068,750 4,893,738

Cash at bank and in hand                      1,512,874 1,321,116

                                               ________  ________

                                              5,600,741 6,253,971

                                               ________  ________


Amounts falling due within one year           4,416,980 5,308,365

                                               ________  ________

NET CURRENT ASSETS                            1,183,761   945,606

                                               ________  ________


LIABILITIES                                   2,932,992 2,693,499


Amounts falling due after more than one year     50,713    62,143


Deferred taxation                                 7,400  (67,000)

Post-employment employee benefits                28,000   335,000

                                               ________  ________

NET ASSETS                                    2,846,879 2,363,356

                                                =======   =======


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                       1,748,846 1,265,323

                                               ________  ________

TOTAL SHAREHOLDERS’ EQUITY                    2,846,879 2,363,356

                                                =======   =======

Approved by the board and signed on behalf of the board and authorised for issue on

31 October 2016 by:-

Bruce Smith......................................Director

Philip Haines....................................Director

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