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DJ Field Systems Designs Holdings plc Final Results

 
TIDMFSD 
 
FIELD SYSTEMS DESIGNS HOLDINGS PLC 
 
CHAIRMAN'S STATEMENT 
 
I am pleased to announce the results of Field Systems Designs Holdings plc for 
the year ended 31 May 2014. Our industries remain tough; it has been some 
achievement to remain profitable and so these results reflect solid performance 
in this difficult operating climate. 
 
The Water Industry's fifth 5-year build and refurbishment Asset Management 
Programme (AMP5) running to April 2015 has driven volume in the water sector in 
the current year but is now starting to see a decline. 
 
The group's move to diversify into new industries has proved challenging, 
particularly with International customers given their demanding contractual 
requirements, and even in those industries where there is proven experience 
such as the water industry, we have met with more than the usual number of 
pressures on pricing and valuation. 
 
Nevertheless the group continues to promote its recognised position in the 
Water Industry, where it has established a strong reputation in delivering 
complex solutions on target, and also to place more focus on the renewables 
markets as it builds on its considerable prior experience and with a specialist 
team geared up to deliver in this arena. 
 
The pursuance of joint Mechanical and Electrical (M&E) contracts continues with 
the benefit of an in-house mechanical fabrication and erection capability which 
gives the group control over its programme commitments. 
 
The group remains very cautious about the outlook for performance in 2014/2015, 
given the current economic climate, but it is still well-positioned with a good 
opening order book and robust cash position to maximise the benefits from 
future opportunities. 
 
D K Bird 
Chairman 
 
23 October 2014 
 
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 consolidated balance sheet at 31 May 2014 and the audited consolidated 
profit and loss account for the year then ended have been extracted from the 
Group's 2014 statutory financial statements upon which the auditors opinion is 
unqualified. 
 
Those 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 
 
STRATEGIC REPORT 
 
OPERATIONAL PERFORMANCE 
 
The group achieved a turnover of GBP12million for the year to 31 May 2014, a drop 
from last year, reflecting the slow-down of work in the Water Industry as the 
end of AMP5 approaches. 
 
Turnover was generated as follows:                          2014           2013 
                                                             GBP              GBP 
 
Water and Sewerage                                    10,089,156     11,502,745 
Power generation and Energy from Waste                   949,060        955,280 
Rail, Transport and Tunnels                              306,157         31,502 
Building services, Maintenance, 
Security, Instrumentation, Controls and Automation       631,642      1,101,616 
                                                      __________     __________ 
                                                      11,976,015     13,591,143 
                                                      ==========     ========== 
 
Gross profit margins improved very marginally in the year ended 31 May 2014 to 
8.6% up from 8.5% last year. Nevertheless 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 as the Water Utilities and their Tier One contractors 
continue to focus on cost following their OFWAT determination. 
 
The group achieved a fair operating profit for the year of GBP187,188 (2013: GBP 
178,198). 
 
In view of the economic climate the directors are pleased to report a solid 
Group profit after tax of GBP135,278 for the year ended 31 May 2014 (2013: GBP 
124,498) 
 
BUSINESS REVIEW 
 
The Field Systems Designs Group (FSD) focuses on delivering specialist 
mechanical and electrical design and installation works. 
 
Water 
 
Sales volumes were again dominated by the Water Industry where 84% of turnover 
in 2014 was derived (2013: 85%). The AMP5 spend in England continued strongly 
during the year, but is now declining; water-related works emanated from 
large-scale treatment works, multi-centre projects, from specialist works on 
pumping stations and on continued Ultra-Violet water analysis. 
 
The company completed the high profile electrical installation for the new 
Peacehaven sewage works for Southern Water and its delivery partner 4D - a 
consortium of Costain, MWH and Veolia Water. 
 
Power 
 
In the Power sector 8% of turnover in 2014 was derived (2013: 7%). FSD won new 
work in the Energy from Waste (EfW) sector where the company continues to build 
on its success at the Riverside facility in London. There were also numerous 
works on generators and CHP (combined heat power) units providing 
instrumentation, electrical engineering and installation services. 
 
Other projects included outage works at Hartlepool Nuclear Power Station and 
collaborative works as part of its CAF Consortium on Ferrybridge Energy from 
Waste Plant. 
 
Building services, Maintenance, Security, Instrumentation, Controls and 
Automation 
 
FSD Electrical Services (FSDe) continues to focus on delivering commercial 
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 helped to improve turnover during the year. The 
improvement in financial management of projects also led to better project 
recoveries. Nevertheless turnover has not yet reached a level at which the 
company is profitable. 
 
FSDe has therefore added a property fit-out specialist to its team and it is 
expected that this will boost turnover over the next 12 months to a level where 
the company can return to profit. 
 
Mechanical fabrication and installation 
 
This year the Group continued to take on Mechanical and Electrical (M&E) 
installation contracts with its mechanical subsidiary FSD Mech. The company 
continued to build up its client base and its reputation for quality 
fabrication and installation services. 
 
There were some major pipework fabrication 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. 
 
FSD Mech supported its fellow electrical subsidiaries with mechanical works for 
mutual customers and enhanced the growing reputation of the Group for delivery 
of joint Mechanical & Electrical works providing quality, timeliness and value 
for money. 
 
There was also a small but growing exposure to projects outside of water making 
good use of the fabrication facility to provide mechanical products and 
pipework. 
 
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, as in 
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 (AMPs) 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 successful 
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 SHEQ manager 
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. In mitigation 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 

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DJ Field Systems Designs Holdings plc Final Results -2-

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. 
 
Competitiveness 
 
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. 
 
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 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 came 
under pressure during 2014 as although gross profit margins improved very 
marginally in the year to 8.6%, up from 8.5% last year, these margins were less 
than budget as downward pressure on gross profits remains as projects from the 
Water Industry continue to experience difficulties in recovering value from 
additional works. The move to a greater number of projects in the Water 
Industry led to falling margins as typically recovering costs for extra works 
is extremely difficult. 
 
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 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 based on OHSAS 18001:2007. Achilles UVDB, 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. The results of the 2014 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 is currently zero. 
 
QUALITY ASSURANCE 
 
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. 
 
ENVIRONMENT 
 
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. 
 
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 Group has a safety management system implemented across all sites that has 
successfully been reapproved 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, 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. The Group 
continues to establish safety initiatives and objectives and these are 

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DJ Field Systems Designs Holdings plc Final Results -3-

currently on target with a good safety record. 
 
EMPLOYEES 
 
Group employee numbers have fallen slightly from an average of 96 in 2013 to 94 
in 2014 reflecting a different 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. 
 
PENSIONS 
 
The Group's pension deficit as at 31 May 2014 was GBP265,600 net of deferred tax, 
an increase of 8% from GBP246,400 as at 31 May 2013. This is derived from the 
Group's most recent FRS17 actuarial review and reflects market conditions as at 
31 May 2014. 
 
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 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. 
 
OUTLOOK 
 
The Group entered the new financial year with an opening order book of GBP4.1 
million (2013: GBP5.5 million). 
 
The Group is in the main reliant on the fortunes of the Water Industry and it 
is from this industry that the majority of turnover is derived. 
 
The current AMP5 (Asset Management Programme), runs for five years to April 
2015; it was slow to start, has progressed strongly over the last three years 
and is now in decline. Industry investment has traditionally declined in the 
last and first years of the five year regulatory period, which is why FSD's 
sales effort remains committed to industries outside of water and towards new 
technology sectors such as Energy from Waste and Gasification. 
 
OFWAT (the water industry regulator) has published details of the methodology 
it intends to use to assess water companies' business plans for AMP6, which 
starts in 2015. The methodology relates to water supply and sewerage in England 
and Wales and makes it clear that the water industry's emphasis is shifting 
from the previous need to meet European Union water quality legislation to 
focusing on value for money for customers. 
 
OFWAT requires that water companies should focus on long term outcomes, to 
encourage innovative ways of working that will deliver services for less money, 
and with less impact on the environment. 
 
This shift in emphasis is leading to water companies looking for different 
skill sets from their supply chains with expertise that will help them make 
more of existing assets. Many have already started their Framework processes by 
appointing delivery teams in preparation for a rapid start when OFWAT signs off 
their funding. 
 
FSD is prepared for this change in approach and longer-term thinking. FSD has 
the quality and environmental credentials plus the engineering team to ensure 
that it can offer early involvement in decision making processes and innovative 
design to consider asset-life-cost implications and more efficient solutions. 
 
FSD has started the prequalification processes to secure its position on 
frameworks and strategic alliances with the water process companies. 
 
The Group now offers a turn-key solution with Mechanical and Electrical (M&E) 
capabilities using joint venture alliances and other working arrangements with 
like-minded quality partners to offer a full delivery package and enhance 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 and the efficiencies this gives have helped the Group to 
offer 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 
tougher trading conditions ahead. 
 
P J Haines 
Managing Director 
 
23 October 2014 
 
 
 
 
FIELD SYSTEMS DESIGNS HOLDINGS PLC 
 
CONSOLIDATED PROFIT AND LOSS ACCOUNT 
for the year ended 31 May 2014 
 
                                                2014            2013 
 
                                                GBP               GBP 
 
TURNOVER                                        11,976,015      13,591,143 
 
Cost of sales                                  (10,949,190)    (12,435,990) 
 
                                               ___________     ___________ 
 
GROSS PROFIT                                     1,026,825       1,155,153 
 
Net operating expenses                            (839,637)       (976,955) 
 
                                                  _________       _________ 
 
OPERATING PROFIT                                   187,188         178,198 
 
Interest receivable                                    594           3,424 
 
Interest payable                                   (30,498)        (43,651) 
 
                                                    _______         _______ 
 
PROFIT ON ORDINARY 
ACTIVITIES BEFORE TAXATION                          157,284         137,971 
 
Taxation                                            (22,006)        (13,473) 
 
                                                    _______         _______ 
 
PROFIT ON ORDINARY 
ACTIVITIES AFTER TAXATION                           135,278         124,498 
 
Minority interest                                     -               8,660 
 
                                                    _______         _______ 
 
PROFIT FOR THE YEAR                                 135,278         133,158 
 
                                                     ======          ====== 
 
EARNINGS PER SHARE 
 
Basic                                                 2.5p             2.5p 
                                                    ======           ====== 
 
Diluted                                               2.5p             2.5p 
                                                    ======           ====== 
 
All operations are continuing. 
 
 
 
 
FIELD SYSTEMS DESIGNS HOLDINGS PLC 
 
CONSOLIDATED BALANCE SHEET 
As at 31 May 2014 
 
                                                            2014           2013 
                                                                GBP             GBP 
 
FIXED ASSETS 
 
Intangible assets                                              -         13,328 
Tangible assets                                        1,706,957      1,818,864 
 
                                                        ________       ________ 
 
                                                       1,706,957      1,832,192 
 
CURRENT ASSETS 
 
Stock - raw materials                                     31,054         30,174 
Debtors                                                2,755,840      3,941,367 
Cash at bank and in hand                                 916,723        923,279 
                                                        ________       ________ 
 
                                                       3,703,617      4,894,820 
                                                        ________       ________ 
 
CREDITORS 
Amounts falling due within one year                    2,842,353      4,228,968 
                                                        ________       ________ 
 
NET CURRENT ASSETS                                       861,264        665,852 
                                                        ________       ________ 
 
TOTAL ASSETS LESS CURRENT 
LIABILITIES                                            2,568,221      2,498,044 
 
CREDITORS 
Amounts falling due after more than one                   24,939         36,440 
year 
 
PROVISIONS FOR LIABILITIES 
 
Pension obligations                                      265,600        246,400 
Deferred tax                                                   -              - 
                                                        ________       ________ 
 
NET ASSETS                                             2,277,682      2,215,204 
                                                       =========      ========= 
 
CAPITAL AND RESERVES 
 
Share capital                                            569,250        569,250 
Share premium account                                    158,750        158,750 
Other reserves                                           370,033        370,033 
Profit and loss account                                1,179,649      1,117,171 
                                                        ________       ________ 
 
SHAREHOLDERS' FUNDS                                    2,277,682      2,215,204 
 
Minority interests                                             -              - 
                                                        ________       ________ 
 
                                                       2,277,682      2,215,204 
 
                                                       =========      ========= 
 
Approved and authorised for issue on 23 October 2014 by:- 
 
P J Haines.......................................Director 
 
D F Lower........................................Director 
 
 
 
END 
 

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October 31, 2014 09:06 ET (13:06 GMT)