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Field Systems Designs Holdings plc · FSD

30/10/2015 13:21

FIELD SYSTEMS DESIGNS HOLDINGS PLC - Annual Financial Report PR Newswire



I am pleased to announce the results of Field Systems Designs Holdings plc (FSD) for the year ended 31 May 2015.

Our industries remain tough, consequently it has been some achievement to remain profitable this year and so these results reflect a solid performance in this difficult operating climate.

The Water Industry’s fifth 5-year build and refurbishment Asset Management Programme (AMP5) concluded in April 2015 and so AMP6 running to April 2020 has just commenced. Both the tail-off from AMP5 and a delayed start to AMP6 has seen volumes in the water sector in the current year decline.

In anticipation of this typical intra-AMP decline in business the group’s move to diversify into new industries has proved challenging, but there has been some success this year with two recent awards in the Energy from Waste sector (EfW). These major projects from two different clients reward 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 2015/2016, as it is well-positioned with a good opening order book to maximise the benefits from future opportunities.

D K Bird
28 October 2015


The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in the Companies Act 2006.

The consolidated balance sheet at 31 May 2015 and the audited consolidated profit and loss account for the year then ended have been extracted from the Group's 2015 statutory financial statements upon which the auditors opinion is unqualified.

These financial statements have 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.



The group achieved a turnover of £14.4million for the year to 31 May 2015, an increase of 20% 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:                       2015       2014

                                                          GBP        GBP

Water and Sewerage                                  9,257,988 10,089,156

Power generation and Energy from Waste              4,394,156    949,060

Rail, Transport and Tunnels,                           54,721    306,157

Building services, Maintenance,

Security, Instrumentation, Controls and Automation    696,250    631,642

                                                    _________  _________

                                                   14,403,115 11,976,015

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

Gross profit margins fell in the year ended 31 May 2015 to 7.2% from 8.6% last year. Gross margins are considerably less than budget as downward pressure on gross profits remains as projects from the Water Industry continue with their associated difficulties in recovering value from additional works, particularly as the Water Industry Tier One contractors continue to focus on minimising cost as AMP5 comes to an end.

The group achieved a fair operating profit for the year of £222,287 (2014: £187,188).

In view of the economic climate the directors are pleased to report a solid group profit after tax of £130,361 for the year ended 31 May 2015 (2014: £135,278).

The directors do not recommend the payment of a dividend.


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


Sales volumes were again dominated by the Water Industry where 64% of turnover in 2015 was derived (2014: 84%).

The AMP5 spend in England declined gradually during the year and water-related works became scarce and more difficult to secure. Turnover was derived from on-going major works coming to a conclusion such as Crossness Sewage Treatment Works (STW) or longer-term projects such as Lee Valley. A major M&E scheme was completed in Jersey and other works were more specialised turn-key projects where FSD formed multi-disciplined teams to complete Mechanical, Electrical, Instrumentation, Control and Automation schemes (MEICA).


The group increased its presence in the Power sector where it derived 31% of turnover in 2015 (2014: 8%).

FSD won further Energy from Waste contracts where the company continues to build on its success at the Riverside facility in London. Two major projects were secured in the sector, using both Incineration and Gasification technologies. 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.

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

FSD delivers electrical installation services in the commercial, security, water and rail sectors, building its reputation by offering its growing customer base quality, timeliness and value for money.

The expansion of the range of services to include lighting, power distribution, fire-alarm and security systems has grown turnover. However the addition of property fit-out projects to its range of activities was not successful and has now been ceased.

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 AMP5 spend in England released works to the FSD group such as water treatment works, pumping stations and Ultra-Violet water analysis.

Profitability at the division was poor primarily as a result of one particularly badly performing contract undertaken during the year in Jersey. Changes have since been made to deal with the causal factors.


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.

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 2015 Achilles audit were again excellent, reflecting high scores for both management systems and site evaluation, in the assessed areas of health & safety, environment and quality.

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, which charts the number of lost time accidents per 100,000 man hours worked. The group AFR (Accident Frequency Rate) 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 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 94 in 2014 to 96 in 2015 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 2015 was £268,000 net of deferred tax, an increase of 1% from £265,600 as at 31 May 2014. This is derived from the group's most recent FRS17 actuarial review and reflects market conditions as at 31 May 2015.


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 £5.7 million (2014: £4.1 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 are well under way with their MEICA frameworks whereas others are still formulating their approach. Consequently sales volumes in the Water Industry are slow to start which is no surprise as industry investment has traditionally declined in the last and first years of the five year regulatory period.

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 started 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.

The first major success in the EfW Incineration sector for FSD was the 65MW Riverside resource recovery facility which was delivered for Hitachi Zosen Inova on behalf of Cory Environmental. The invaluable reputation gained on this project led to FSD assisting in in the completion of the Newhaven EfW plant and the recent award of the Greatmoor EfW project where we are currently delivering the turbine and some balance-of-plant projects.

The reference site that Riverside gave FSD to endorse its credentials led to the award of the complete electrical infrastructure on the ITI Bentinck modular Gasification project. We are now working for MWH as the main electrical contractor on the Tyseley EfW project in Birmingham which uses Nexterra modular gasification technology.

There are a number of major future works being tendered and negotiated for both Incineration and Gasification technologies in the EfW sector which if secured will boost sales volumes over the next few years.

FSD also has a considerable degree of experience and success with Anaerobic Digestion, Biogas and CHP (Combined Heat & Power) where we have delivered many schemes as a Thames Water framework contractor.

The ability of the group to more confidently target MEICA turn-key solutions with its in-house M&E capabilities, and using joint venture alliances and other working arrangements to deliver, has enhanced its position in the sector.

The group continues to enhance its personnel’s capabilities through appropriate training to ensure the continued quality of service and maintain the depth of its experience. Accordingly FSD can offer an added-value service to the rail, underground, power, water, waste and tunnelling sectors and differentiate itself from its competition.

The group has improved its specialised engineering techniques by further investment this year, particularly in Building Information Modelling (BIM), which will enable FSD to assist our clients by improving the quality of their overall project deliverables. Additionally this will enable FSD to work on government approved projects, as BIM- compliancy is a key criteria for approval. It is also anticipated that the impact of BIM on resource planning will create operational efficiencies with the beneficial side-effect for the group of offering an enhanced design resource to supplement its installation capabilities.

The board continues to react to customer demands and keep standards high, whilst creating operational efficiencies to best position the business for the opportunities ahead.

P J Haines
Managing Director
28 October 2015


FIELD SYSTEMS DESIGNS HOLDINGS PLC                                              


for the year ended 31 May 2015

                                    2015         2014

                                     GBP          GBP

TURNOVER                      14,403,115   11,976,015

Cost of sales               (13,362,690) (10,949,190)

                                 _______      _______

GROSS PROFIT                   1,040,425    1,026,825

Net operating expenses         (818,138)    (839,637)

                                 _______      _______

OPERATING PROFIT                 222,287      187,188

Interest receivable                  362          594

Interest payable                (15,238)     (30,498)

PROFIT ON ORDINARY               _______      _______

ACTIVITIES BEFORE TAXATION       207,411      157,284

Taxation                        (77,050)     (22,006)

PROFIT ON ORDINARY               _______      _______

ACTIVITIES AFTER TAXATION        130,361      135,278

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


Basic                               2.4p         2.5p

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

Diluted                             2.4p         2.5p

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

All operations are continuing.

FIELD SYSTEMS DESIGNS HOLDINGS PLC                                            


As at 31 May 2015

                                                   2015      2014

                                                    GBP       GBP


Tangible assets                               1,740,780 1,706,957


Stock – raw materials                            39,117    31,054

Debtors                                       4,893,738 2,755,840

Cash at bank and in hand                      1,321,116   916,723

                                               ________  ________

                                              6,253,971 3,703,617

                                               ________  ________


Amounts falling due within one year           5,308,365 2,842,353

                                               ________  ________

NET CURRENT ASSETS                              945,606   861,264

                                               ________  ________


LIABILITIES                                   2,686,386 2,568,221


Amounts falling due after more than one year     62,143    24,939


Deferred taxation                                17,000         -

Pension obligations                             268,000   265,600

                                               ________  ________

NET ASSETS                                    2,339,243 2,277,682

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


Share capital                                   569,250   569,250

Share premium account                           158,750   158,750

Other reserves                                  370,033   370,033

Profit and loss account                       1,241,210 1,179,649

                                               ________  ________

SHAREHOLDERS’ FUNDS                           2,339,243 2,277,682

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

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

28 October 2015 by:

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

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

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