FIELD SYSTEMS DESIGNS HOLDINGS PLC - Half-year Report

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 2022.

OVERVIEW

The results for the first six months of this financial year show significantly improved turnover and profitability compared to the prior period.

The consolidated results for the six months to 30 November 2022 show group turnover of GBP6.7million; (2021 GBP2.6million) with a group profit after tax of GBP57,000; (2021 Loss GBP(1,270,000).

COVID-19 had a serious impact on the release of work in the UK Water Industry over the two-year period to 31 May 2022. 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.

The Group sustained poor annual trading results to 31 May 2022, however this marked the turning point for the Group, and the tide began to turn during the first half of the new financial year with turnover more than doubling, and with a return to profit.

The group still maintains a healthy balance sheet and the level of cash remains robust.

COVID-19

The global pandemic 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 generally 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.

The last 5-year investment programme (AMP6) ended in April 2020, just as the virus hit the world’s economies. Normally at this stage of the five-year cycle FSD would have experienced a marked step-up in investment, however concerns over COVID-19 caused UK Water Utilities to cease their new investment plans to preserve their cash resources and to protect the health of their staff, thereby ceasing engineering design work, and delaying the start of impending projects.

The impact on FSD was that the next investment cycle (AMP7) was effectively delayed by two years. FSD suffered financially from the decision to retain its skilled resources, as despite receiving assurances regarding the success of our tender proposals, and having been given expectations for a heightened level of activity, our order intake and turnover fell.

OUTLOOK

There has been much recent negative media publicity regarding the performance of the Water Industry and their failure to maintain their infrastructure.

The global Coronavirus crisis is now easing, and the pressure from government agencies to solve residual environmental problems is increasing, consequently water companies are starting to accelerate their expenditure under AMP7 for the remainder of the cycle until 2025.

The positive public announcements from the main water utilities confirm that the proposed 2020-2025 budgets remain to be spent. The regulatory bodies will insist on this given that the infrastructure investment is desperately needed to keep our UK population watered and the environment clean.

FSD expects to be a benefactor of this rapid growth and the Board look forward to better performance and trading results ahead. The expectation is for an improvement in the second half of the 2023 Financial Year, as order intake gains momentum, followed by a further increase in turnover for the May 2024 Year-end, and thereafter, as normality returns.

There are clear signs of new AMP7 projects finally being released; the order book has been filling since the New Year to pre-COVID levels and with secured orders of over £9 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.

FSD has strengthened its management team by making new Board director appointments and has retained the majority of its experienced workforce so as to react swiftly as business volumes return.

We acknowledge the current inflationary pressures in the UK economy and will continue to focus on maintaining margins from our operations, and mitigating increases in associated commodity and energy costs, as well as other challenges in our supply chain.    

N Billings

Managing Director

23 February 2023

FIELD SYSTEMS DESIGNS HOLDINGS PLC                                              

UNAUDITED COMPREHENSIVE INCOME STATEMENT

for the six months ended 30 November 2022

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 2022