TIDMFCRM

RNS Number : 8228D

Fulcrum Utility Services Ltd

02 November 2020

2 November 2020

FULCRUM UTILITY SERVICES LIMITED

("Fulcrum" or "the Group")

Domestic Asset Sale Update

Fulcrum is pleased to provide an update on the sale of its domestic customer gas connection assets and associated meters to E.S. Pipelines Limited (ESP) , as previously announced on 23 December 2019.

Timing of future asset transfers and associated payments

The asset sale agreement with ESP originally provided that future asset transfers would occur when the value of the completed assets exceeds GBP6.5 million or at twelve monthly intervals, whichever is the earlier. Given the delays to house building caused by the COVID-19 lockdown, it has now been agreed that future asset transfers will instead occur on fixed dates, namely the 30 November and 31 May of each year. The first subsequent transfer (being the second tranche of assets transferred) will therefore occur on 30 November 2020, with a total estimated consideration GBP4.7 million, of which GBP4.4 million will be received in cash on that date, with the retention balance expected to be received on 31 May 2022. The revised arrangements give the Group greater certainty of cash inflows and will thus support the Group's cash planning. In the current economic environment, these amounts will be retained in the business in the short to medium term to provide liquidity to support the Group's operations and growth strategy.

Enhanced payments milestone achieved

The arrangements with ESP under the asset sale agreement also provides for the Group to receive additional payments from ESP if certain milestones are achieved for new domestic connections won in the period to 31 March 2025. The Group is pleased to confirm that the first milestone has been successfully achieved. This will result in an additional payment in respect of the first tranche of assets transferred, which completed on 31 March 2020, of GBP0.4 million which will be received on or around 30 November 2020. The amounts stated above in respect of the second tranche of assets to be transferred, are inclusive of the additional milestone payment.

Reflecting the achievement of this milestone, the total gross consideration receivable by Fulcrum is now expected to increase by c.GBP1 million to c.GBP49 million. GBP17.4 million has been received to-date and, as noted above, GBP4.4 million will be received on 30 November 2020, leaving approximately GBP27 million to be received over the next five years. The arrangement with ESP includes further milestone targets which, if achieved, would trigger additional enhanced payments of up to GBP4 million over the remaining term of the contract.

Daren Harris, CEO, said:

"I am very pleased to today confirm the achievement of the first enhanced payment milestone, resulting from a strong series of new housing contract wins, and the amended arrangements with ESP which will provide certainty of the timing of cash inflows and thus enhance our cash planning.

The asset sale has significantly strengthened the Group's balance sheet and aids our strategic growth ambitions, and the enhancement to payments will further support this. Our relationship with ESP also continues to progress strongly and is delivering improvements in the Group's capabilities across all segments of the market."

Enquiries:

 
                                                        +44 (0)114 280 
                                                         4102 
Fulcrum Utility Services Limited 
 Daren Harris, Chief Executive Officer 
                                                         +44 (0)20 7397 
 Cenkos Securities plc (Nominated adviser and broker)    8900 
 Max Hartley (Nomad) / Michael Johnson (Sales) 
 
 N+1 Singer (Joint Corporate Broker)                     +44 (0)20 7496 
 Sandy Fraser / Rachel Hayes / Carlo Spingardi           3000 
 
 Camarco (Financial PR advisers) 
 Ginny Pulbrook / Tom Huddart                            +44(0)203 757 4992

Notes to Editors:

Fulcrum is a multi-utility infrastructure and services provider. The Group operates nationally with its head office in Sheffield, UK and its main business is the design, build, ownership and maintenance of energy connections and their related utility infrastructure. The Group's offering also extends to smart meter ownership and exchange programmes, and the selective ownership and maintenance of utility networks and infrastructure. https://investors.fulcrum.co.uk/

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END

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