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DJ Field Systems Designs Holdings plc Annual Financial Report

 
TIDMFSD 
 
FIELD SYSTEMS DESIGNS HOLDINGS PLC 
 
CHAIRMAN'S STATEMENT 
 
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 
Chairman 
28 October 2015 
 
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 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. 
 
 
STRATEGIC REPORT 
 
OPERATIONAL PERFORMANCE 
 
The group achieved a turnover of GBP14.4million 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              696,250       631,642 
Automation 
 
                                                   _________     _________ 
 
                                                  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 GBP222,287 (2014: GBP 
187,188). 
 
In view of the economic climate the directors are pleased to report a solid 
group profit after tax of GBP130,361 for the year ended 31 May 2015 (2014: GBP 
135,278). 
 
The directors do not recommend the payment of a dividend. 
 
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 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). 
 
Power 
 
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. 
 
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. 
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 

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DJ Field Systems Designs Holdings plc Annual -3-

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 2015 was GBP268,000 net of deferred tax, 
an increase of 1% from GBP265,600 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. 
 
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 GBP5.7 
million (2014: GBP4.1 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 
 
 
CONSOLIDATED PROFIT AND LOSS ACCOUNT 
 
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 
 
                                                    ======         ====== 
 
EARNINGS PER SHARE 
 
Basic                                                 2.4p           2.5p 
 
                                                    ======         ====== 
 
Diluted                                               2.4p           2.5p 
 
                                                    ======         ====== 
 
All operations are continuing. 
 
 
FIELD SYSTEMS DESIGNS HOLDINGS PLC 
 
CONSOLIDATED BALANCE SHEET 
 
As at 31 May 2015 
 
                                                       2015          2014 
 
                                                        GBP           GBP 
 
FIXED ASSETS 
 
Tangible assets                                   1,740,780     1,706,957 
 
CURRENT ASSETS 
 
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 
 
                                                   ________      ________ 
 
CREDITORS 
 
Amounts falling due within one year               5,308,365     2,842,353 
 
                                                   ________      ________ 
 
NET CURRENT ASSETS                                  945,606       861,264 
 
                                                   ________      ________ 
 
TOTAL ASSETS LESS CURRENT 
 
LIABILITIES                                       2,686,386     2,568,221 
 
CREDITORS 
 
Amounts falling due after more than                  62,143        24,939 
one year 
 
PROVISIONS FOR LIABILITIES 
 
Deferred taxation                                    17,000             - 
 
Pension obligations                                 268,000       265,600 
 
                                                   ________      ________ 
 
NET ASSETS                                        2,339,243     2,277,682 
 
                                                    =======       ======= 
 
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                           1,241,210     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 
 
 
 
END 
 

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October 30, 2015 09:21 ET (13:21 GMT)