TIDMFCRM
RNS Number : 3515H
Fulcrum Utility Services Ltd
03 December 2020
MAR: The information contained within the announcement is deemed
by the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the
publication of this announcement via Regulatory Information Service
("RIS"), this inside information is now considered to be in the
public domain.
3 December 2020
FULCRUM UTILITY SERVICES LIMITED
("Fulcrum" or "the Group")
Unaudited interim results for the six months ended 30 September
2020
Fulcrum Utility Services Limited, a leading independent
multi-utility infrastructure and services provider focused on
delivering infrastructure for the UK's net-zero future, announces
its interim results for the six-month period ended 30 September
2020.
Financial highlights
The Group responded quickly to the COVID-19 pandemic and has
recovered strongly from its initial impact, with activity levels
returning to pre-COVID levels in Q2:
-- Revenue of GBP19.5 million (2019: GBP19.5 million)
-- Adjusted EBITDA(1) loss of GBP1.0 million (2019: GBP1.4
million profit), reflecting the impact of COVID-19 combined with
investment for strategic growth
-- Year on year order book growth of 9.4%, to GBP68.5 million,
as at 30 September 2020 (2019: GBP62.6 million)
-- Adjusted loss before tax(1) of GBP2.4 million (2019: GBP0.1 million profit)
-- Net cash inflow from operations before tax of GBP0.7 million (2019: GBP0.0 million)
-- Basic loss per share of 1.4p (2019: 0.4p)
-- Net cash at the period end of GBP1.8 million (31 March 2020:
net cash GBP6.0 million) reflecting capital investment of GBP4.2
million in acquiring utility assets
Financial strength:
During the period, the Group has maintained its focus on
retaining a strong balance sheet and healthy cash flow, balanced
with investing for strategic growth. The Group has continued to
build its financial strength following the period end:
-- The second asset transfer to E.S. Pipelines Limited ("ESP")
completed on 30 November 2020, generating cash of GBP4.7 million.
In addition, the Group received a further GBP0.4 million in cash
relating to the first tranche of the asset transfer, following the
achievement of the first enhanced payment milestone
-- There is approximately GBP27 million still to be received
from ESP, the majority of which will be received over the next two
to three years. Future biannual transfer dates have now been agreed
(November and May each year) giving the Group enhanced visibility
over the timing of future cashflow receipts
-- On 1 December 2020, the Group entered into a new two year
GBP10.0 million Revolving Credit Facility ("RCF") to fund the
acquisition of utility assets. The majority of which, once
completed, will ultimately be sold to ESP and the funds used to
repay the RCF
Operational highlights
The Group continued to operate effectively, choosing to maintain
its core operational capability and winning key contracts in
housing, industrial and commercial and smart metering, whilst also
selectively investing to further position itself to capitalise on
the opportunities presented by a green economy as it moves into a
growth phase:
-- Effective and rapid response to COVID-19 led to a strong
recovery, with activity levels returning to pre-COVID levels in
Q2
-- Expanded Electric Vehicle team to capitalise on the
Government's commitment to invest GBP1.3bn in the roll out of
charging infrastructure
-- Built relationships with hydrogen stakeholders, leveraging
our existing gas capabilities to offer infrastructure solutions for
hydrogen networks. The growth of low carbon hydrogen is a key part
of the development of a greener economy and the Group's existing
gas capabilities place it very strongly to support the delivery of
future hydrogen networks
-- Continued to make good progress in executing our strategy,
with selective investment in bolstering operational
capabilities
-- Renewed focus on our high-performance behaviour framework,
with a sustained emphasis on supporting and developing our people
and bringing in refreshed talent
-- Improved our ability to win larger contracts, securing a
variety of new and significant contracts that supported sustained
order book growth.
Significant contract wins
Housing:
-- A GBP1.6 million multi-utility contract to power and heat 550
homes as part of a major redevelopment scheme*
-- A GBP1.1 million contract to deliver a full multi-utility
solution to a major development of 500 new homes
-- A GBP0.8 million contract to deliver a full multi-utility
service to a new development of 276 new homes*
Industrial and Commercial:
-- A GBP4.2 million contract to provide 13.5km of new high
voltage electrical infrastructure for a major redevelopment
project*
-- A GBP1.5 million contract to install 3.8km of gas
infrastructure to feed Combined Heat & Power units that will
serve a large automotive manufacturing operation*
-- A GBP0.7 million project to design and install electricity
infrastructure as part of a substantial extension to a UK shopping
centre
-- A GBP0.7 million contract to deliver a full multi-utility
solution to a large new commercial development
-- A GBP0.6 million contract to deliver over 2km of gas
infrastructure for major new renewable energy project for a food
waste recycling specialist
EV:
-- Contracts with a major Charge Point Operator to design and
install electric vehicle charging infrastructure for two national
UK retailers
-- A contract to install fleet charging facilities for a logistics organisation
-- A contract to install charging infrastructure for major EV charging hub development
Smart Metering:
-- The Group secured six new agreements with energy suppliers.
*Contract secured post period end and therefore not included in
the order book at 30 September 2020.
Outlook
Strong market drivers support the Group's future aspirations and
present significant long-term growth opportunities. These drivers
are further reinforced by the Government's Ten Point Plan for a
Green Industrial Revolution and National Infrastructure Strategy,
both announced in November 2020, which set out measures and funding
to support the development of a greener economy and to accelerate
the UK's journey to net zero.
The Group has entered the second half of the financial year in a
strong position and expects full year revenue to be stable year on
year, despite the COVID affected first quarter, and to be
profitable on an adjusted
EBITDA(1) basis for the full year.
Fulcrum is ideally placed to support the electrical revolution
that is needed to facilitate the global move away from fossil
fuels. It is a fundamentally robust business with strength in its
orderbook , its balance sheet and its operational capabilities and
it will be further strengthened by cash from the transfer of assets
to ESP. This will enable the Group to achieve its strategic growth
objectives and the Board remains confident that the business is
well placed to capitalise on the significant, long-term, growth
opportunities that a net-zero future presents:
-- The electrical revolution in the UK is underway. More
electrical infrastructure is needed to deliver low carbon and
emissions free green energy, and Ofgem has proposed a five-year
investment programme of GBP25 billion, with potential for an
additional GBP10 billion or more, to transform Britain's energy
networks
-- The ban on the sale of new petrol and diesel cars and vans
from 2030 creates additional impetus for new utility infrastructure
to power the nation's electric vehicles, with the Government
committing to invest an additional GBP1.3 billion to accelerate the
roll out of charging infrastructure
-- The growth of low carbon hydrogen is a key part of the
development of a greener economy and the Group's existing gas
capabilities place it very strongly to support the delivery of
future hydrogen networks
-- The UK Government has committed to build an average of
300,000 new homes each year by the mid-2020s, with each home
requiring new utility infrastructure
-- The smart energy revolution is a critical component of a
net-zero future, with energy suppliers required to exchange
approximately 30 million meters by mid-2025
Daren Harris, CEO, said:
We responded quickly to the initial impact of the COVID-19
pandemic, allowing a strong recovery in Q2, with activity levels
returning to pre-COVID levels. The Group and its people have
performed incredibly well, with agility and resilience and I am
proud of the recovery we have achieved, together.
At the same time, we made strong progress against our strategic
objectives, winning key new contracts in our core markets and
selectively investing in the business to support our future growth.
We also continued to secure a variety of significant new contracts,
achieving a year-on-year order book growth of 9.4%.
Whilst COVID-19 continues to create economic uncertainty in the
UK, the Group remains in a strong position. First, we have
financial strength, supported by a robust balance sheet, current
and future cash from the sale of our domestic gas assets and
associated meters to ESP. Second, we have a healthy and growing
order book and an improved ability to compete on and secure larger
schemes, and third we are supported by strong strategic tailwinds
driven by the need to decarbonise the UK's economy.
The Board is very pleased with the progress made in the period.
We are encouraged by the various and significant opportunities that
a net-zero future presents for long-term growth and are confident
the Group is well positioned to capitalise on this.
Footnote:
(1) Fulcrum discloses both statutory and alternative performance
measures. A full description and reconciliation of the alternative
performance measures is set out in note 3 to the condensed
consolidated interim financial information.
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
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/
Operational performance
We made strong progress in the execution of our strategy and in
each of our sectors in the period. Including:
-- Bolstering and improving capabilities, operations, processes,
management information and control systems to support future
strategic growth
-- Providing sustained and significant support and development
for our people, whilst bringing in new talent to strengthen our
operations
Sector highlights:
Sector Market assessment Business highlights
Housing
* The housing market is operating effectively during * Enquiry levels were strong as homebuilders seek to
the COVID-19 pandemic and the UK's home builders meet demand stimulated by the temporary relaxation of
remain optimistic about their ability to operate stamp duty
successfully moving forward
* Bolstered our business development function and
* Market drivers remain strong, with the Government's delivered targeted expansion into new geographies
commitment to build 300,000 homes each year by the
mid-2020s and 220,600 new build housing completions
in 2019/20 * Improved capabilities, resulting from our
relationship with ESP, has seen the group being able
to successfully compete on larger schemes
* Secured the Group's first 1,000+ connection
multi-utility housing project
* Achieved an enhanced milestone payment in the ESP
asset sale via securing a strong series of new
housing contract wins
----------------------------------------------------------------- ------------------------------------------------------------------
Industrial
and * There is a clear and significant requirement for more * Enquiry levels have remained strong and, during the
Commercial electrical and renewable energy generating period, the Group continued to secure a variety of
infrastructure to deliver low carbon and emissions substantial contracts
free green energy
* Established a Major Projects business development
* Additional opportunities presented by the UK's exit team to target and secure the most significant
from the EU as sectors, including domestic food schemes
growth and storage, grow
* Significantly bolstered our EV Business Development
* The recently announced ban on the sale of new petrol Team and operational delivery function
and diesel cars and vans from 2030 creates additional
impetus for new utility infrastructure to power the
nation's electric vehicles * Secured a variety of projects to design and install
electric vehicle charging infrastructure, including
contracts for two national UK retailers, fleet
* The Government has recently committed to invest charging facilities for a logistics organisation and
GBP1.3 billion to accelerate the roll out of EV infrastructure for a major EV charging hub
charging infrastructure development
----------------------------------------------------------------- ------------------------------------------------------------------
Smart
Metering * Binding obligations on energy suppliers to exchange * Our flexible and responsive service approach has
approximately 30 million meters to Smart by mid-2025, supported significant interest from gas and
remain electricity suppliers looking to fulfil their
regulatory obligations
* Bolstered our business development function
* Secured new agreements with a variety of energy
suppliers and are in advanced discussions with
additional energy suppliers
----------------------------------------------------------------- ------------------------------------------------------------------
Maintenance
and * The need for an electrical revolution and significant * Provided enhanced, responsive services to suppor
Ownership: requirement for more electrical and renewable t
generating infrastructure, to deliver low carbon and essential services and industries helping combat
emissions free green energy to achieve net zero, will COVID-19
require specialist maintenance
----------------------------------------------------------------- ------------------------------------------------------------------
Financial performance
In the first six months of the year, the Group reported an
adjusted EBITDA(1) loss of GBP1.0 million (2019: GBP1.4 million
profit). COVID-19 inevitably had a significant impact on the result
for the first quarter as revenue was delayed and fixed operational
costs continued, offset in part by the Coronavirus Job Retention
Scheme. However, the Group reacted responsibly, swiftly and
effectively to the global pandemic and as such activity levels in
the second quarter returned to pre-COVID levels. Investment in our
people, operations and processes has continued through the second
quarter as the Group lays the foundations for future growth.
Notwithstanding the disruption from the COVID-19 pandemic, Group
revenue remained constant at GBP19.5 million, compared to the first
half of last year (2019: GBP19.5 million). Asset ownership revenue
also remained in line with the prior period at GBP1.8 million
(2019: GBP1.9 million), despite the transfer of the first tranche
of assets in the sale of the domestic gas asset portfolio on 31
March 2020 to ESP.
The order book increased by 9.4% since 30 September 2019 to
GBP68.5 million (2019: GBP62.6 million). This reflects the ongoing
and successful delivery of our sales growth strategy.
The adjusted loss before tax(1) was GBP2.4 million (2019: profit
of GBP0.1 million). This reduction was driven by the lower
EBITDA(1) performance.
At 30 September 2020, the Group had net cash of GBP1.8 million,
a decrease from 31 March 2020 of GBP4.2m (2019: net debt of
GBP(2.2) million). This decrease since year end is primarily due to
the investment in utility assets which will ultimately be
transferred to ESP.
The Group has a strong balance sheet with a net asset value
position of GBP43.4 million at 30 September 2020 (FY 2020:
GBP46.3m). It remains well capitalised and has benefited from the
transfer of the second tranche of assets to ESP on 30 November 2020
for a consideration of GBP4.8 million (GBP4.7 million of which has
been received in cash, with the remainder being a retention amount
which will be received on 31 May 2022). There is approximately
GBP27 million still to be received from ESP, the majority of which
will be received over the next two to three years. Future biannual
transfer dates have now been agreed with ESP (November and May each
year) giving the Group enhanced visibility over the timing of
future cashflow receipts . In addition, on 1 December 2020, the
Group entered into a new two year GBP10.0 million RCF to fund the
acquisition of utility assets, the majority of which, once
completed will ultimately be transferred to ESP.
The Board will not be recommending the payment of an interim
dividend, considering the loss for the period and continuing
near-term economic uncertainty.
Delivering contracts safely, efficiently and profitably
Maintaining the highest standards of health and safety remains
our highest priority, especially during the COVID-19 pandemic. A
safety-first strategy is in place to ensure zero harm and, although
this is well embedded into our culture and operations, we are never
complacent and are committed to continuous improvement in health
and safety performance.
In the period, we also introduced a COVID Safety Team and COVID
Safety Officer to ensure that the Group always complies fully with
Government guidelines on managing the risk of COVID-19. Throughout
the pandemic, our commitment to the safety and wellbeing of our
people, customers and the public has never faltered, and we
continue to ensure that there will be no disruption to the high
levels of service we offer.
Outlook
Strong market drivers support the Group's future aspirations and
present significant long-term growth opportunities. These drivers
are further reinforced by the Government's Ten Point Plan for a
Green Industrial Revolution and National Infrastructure Strategy,
both announced in November 2020, which set out measures and funding
to support the development of the greener economy and to accelerate
the UK's journey to net zero.
The Group has entered the second half of the financial year in a
strong position and expects full year revenue to be stable year on
year, despite the COVID affected first quarter, and to be
profitable on an adjusted EBITDA(1) basis for the full year.
Fulcrum is ideally placed to support the electrical revolution
that is needed to facilitate the global move away from fossil
fuels. It is a fundamentally robust business with strength in its
orderbook , its balance sheet and its operational capabilities and
it will be further strengthened by cash from the transfer of assets
to ESP. This will enable the Group to achieve its strategic growth
objectives and the Board remains confident that the business is
well placed to capitalise on the significant, long-term, growth
opportunities that a net-zero future presents.
Footnote:
(1 () Fulcrum discloses both statutory and alternative
performance measures. A full description and reconciliation of the
alternative performance measures is set out in note 3 to the
condensed consolidated interim financial information.
Consolidated Interim Statement of Comprehensive Income
For the six months ended 30 September 2020 (unaudited)
Unaudited Unaudited Audited
Six months ended 30 Six months ended 30 Year ended
September 2020 September 2019 31 March
2020
Note GBP'000 GBP'000 GBP'000
------------------------------ ----- ----------------------------- ----------------------------- -------------
Revenue 2 19,516 19,518 46,101
------------------------------ ----- ----------------------------- ----------------------------- -------------
Cost of sales - underlying (14,845) (13,421) (31,955)
Cost of sales - exceptional
items 4 (190) - (1,766)
------------------------------ ----- ----------------------------- ----------------------------- -------------
Total cost of sales (15,035) (13,421) (33,721)
------------------------------ ----- ----------------------------- ----------------------------- -------------
Gross profit 4,481 6,097 12,380
Administrative expenses -
underlying (7,598) (6,521) (13,611)
Administrative expenses -
exceptional items 4 (456) (391) (870)
------------------------------ ----- ----------------------------- ----------------------------- -------------
Total administrative expenses (8,054) (6,912) (14,481)
------------------------------ ----- ----------------------------- ----------------------------- -------------
Operating loss (3,573) (815) (2,101)
Profit on sale of subsidiary
- exceptional items 4 - - 3,886
Net finance expense (105) (126) (472)
(Loss)/profit before tax (3,678) (941) 1,313
Taxation 6 611 (1) 243
------------------------------ ----- ----------------------------- ----------------------------- -------------
(Loss)/profit for the
financial period/year (3,067) (942) 1,556
------------------------------ ----- ----------------------------- ----------------------------- -------------
Other comprehensive income
Items that will never be
reclassified to
(loss)/profit:
Revaluation of utility assets - - 3,036
Surplus arising on utility
assets internally adopted in
the period/year 145 649 951
Reversal of prior increase of
utility assets - (153) (1,086)
Deferred tax (28) - (321)
------------------------------ ----- ----------------------------- ----------------------------- -------------
Total comprehensive
(expense)/income for the
period/year (2,950) (446) 4,136
------------------------------ ----- ----------------------------- ----------------------------- -------------
(Loss)/profit per share attributable to the owners of the business
Basic 5 (1.4)p (0.4)p 0.7p
Diluted 5 (1.4)p (0.4)p 0.7p
------------------------------ ----- ----------------------------- ----------------------------- -------------
Adjusted EBITDA
Adjusted EBITDA from continuing operations is the basis that the
Board uses to measures and monitor the Group's financial
performance as it is a more accurate reflection of the commercial
reality of the Group's business. Further details of the Alternative
Performance Measures are included in note 3.
Unaudited Unaudited Audited
Six months Six months Year ended
ended 30 ended 30 September 31 March
September 2019 2020
2020
GBP'000 GBP'000 GBP'000
------------------------------------ ------------ -------------------- ------------
Operating loss (3,573) (815) (2,101)
Equity-settled share-based payment
charge 23 31 (6)
Exceptional items within operating
loss 646 391 2,636
Depreciation and amortisation 1,937 1,834 4,019
------------------------------------- ------------ -------------------- ------------
Adjusted EBITDA from continuing
operations (967) 1,441 4,548
Surplus arising on sale of domestic
utility assets - - 3,886
------------------------------------- ------------ -------------------- ------------
Adjusted EBITDA including sale
of domestic utility assets (967) 1,441 8,434
Consolidated Interim Statement of Changes in Equity
For the six months ended 30 September 2020 (unaudited)
Share capital Share premium Revaluation Merger reserve Retained Total equity
reserve earnings
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- -------------- -------------- ---------------- --------------- ---------------- -------------
Balance at 1
April 2020
(audited) 222 389 11,939 11,347 22,410 46,307
Loss for the
period - - - - (3,067) (3,067)
Surplus arising
on utility
assets
internally
adopted in the
year - - 145 - - 145
Depreciation on
previously
revalued
assets - - (116) - 116 -
Deferred tax
liability - - (28) - - (28)
Transactions
with equity
shareholders:
Equity settled
share-based
payments - - - - 23 23
Balance at 30
September 2020
(unaudited) 222 389 11,940 11,347 19,482 43,380
For the six months ended 30 September 2019
Restated
balance at 1
April 2019
(audited) 221 210 12,737 11,347 20,714 45,229
Loss for the
period - - - - (942) (942)
Surplus arising
on utility
assets
internally
adopted in the
year - - 649 - - 649
Disposal of
previously
revalued
assets - - (153) - 153 -
Deferred tax
liability - - (85) - - (85)
Transactions
with equity
shareholders:
Issues of new
shares 1 106 - - - 107
Equity settled
share-based
payments - - - - 31 31
---------------- -------------- -------------- ---------------- --------------- ---------------- -------------
Balance at 30
September 2019
(unaudited) 222 316 13,148 11,347 19,956 44,989
---------------- -------------- -------------- ---------------- --------------- ---------------- -------------
Consolidated Interim Balance Sheet
At 30 September 2020
Unaudited Unaudited Audited
30 September 2020 30 September 2019 31 March 2020
Note GBP'000 GBP'000 GBP'000
-------------------------------- --------- ------------------- ------------------- ---------------
Non-current assets
Property, plant and equipment 42,626 44,348 38,820
Intangible assets 8 24,711 26,479 25,522
Right-of-use assets 2,334 2,152 2,720
Deferred tax assets 2,441 1,955 1,784
-------------------------------- --------- ------------------- ------------------- ---------------
72,112 74,934 68,846
-------------------------------- --------- ------------------- ------------------- ---------------
Current assets
Contract Assets 14,586 9,108 12,279
Inventories 422 629 446
Trade and other receivables 9 6,727 6,090 6,826
Cash and cash equivalents 11 1,753 3,782 15,973
-------------------------------- --------- ------------------- ------------------- ---------------
23,488 19,609 35,524
-------------------------------- --------- ------------------- ------------------- ---------------
Total assets 95,600 94,543 104,370
-------------------------------- --------- ------------------- ------------------- ---------------
Current liabilities
Trade and other payables 10 (13,629) (9,075) (11,909)
Contract liabilities (30,648) (26,460) (27,905)
Borrowings 11 - (6,000) (10,000)
Lease liabilities (816) (574) (772)
Provisions (58) (96) (58)
-------------------------------- --------- ------------------- ------------------- ---------------
(45,151) (42,205) (50,644)
-------------------------------- --------- ------------------- ------------------- ---------------
Non-current liabilities
Lease liabilities (1,796) (1,828) (2,226)
Deferred tax liabilities (5,273) (5,521) (5,193)
-------------------------------- --------- ------------------- ------------------- ---------------
(7,069) (7,349) (7,419)
-------------------------------- --------- ------------------- ------------------- ---------------
Total liabilities (52,220) (49,554) (58,063)
-------------------------------- --------- ------------------- ------------------- ---------------
Net assets 43,380 44,989 46,307
-------------------------------- --------- ------------------- ------------------- ---------------
Equity
Share capital 222 222 222
Share premium 389 316 389
Revaluation reserve 11,940 13,148 11,939
Merger reserve 11,347 11,347 11,347
Retained earnings 19,482 19,956 22,410
-------------------------------- -------------------------- ------------------- ---------------
Total equity 43,380 44,989 46,307
-------------------------------- -------------------------- ------------------- ---------------
Consolidated Interim Cash Flow Statement
For the six months ended 30
September 2020 Unaudited Unaudited Audited
Six months ended 30 Six months ended 30 Year ended 31 March 2020
September 2020 September 2019
GBP'000 GBP'000 GBP'000
----------------------------- --------------------------- --------------------------- ---------------------------
Cash flows from operating
activities
(Loss)/profit for the
period/year after tax (3,067) (942) 1,556
Tax (credit)/charge (611) 1 (243)
----------------------------- --------------------------- --------------------------- ---------------------------
(Loss)/profit before tax for
the period/year (3,678) (941) 1,313
Adjustments for:
Depreciation 994 1,002 2,228
Amortisation of intangible
assets 943 832 1,791
Exceptional items - fixed
asset impairment - - 1,766
Net finance expense 105 147 472
Equity settled share-based
payment charges 23 31 (6)
Profit on disposal of
utility assets - - (3,886)
Loss on disposal of assets -
other - - 3
(Increase)/decrease in c
ontract assets (2,307) 23 (3,147)
Decrease in trade and other
receivables 99 154 916
Decrease/(increase) in
inventories 24 (22) 162
Increase/(decrease) in trade
and other payables 1,765 (1,374) (1,072)
Increase in contract
liabilities 2,743 118 1,562
Decrease in provisions - - (38)
Cash inflow/(outflow) from
operating activities 711 (30) 2,064
Tax paid (39) (345) (410)
Net cash inflow/(outflow)
from operating activities 672 (375) 1,654
----------------------------- --------------------------- --------------------------- ---------------------------
Cash (outflow)/inflow from
investing activities
Acquisition of external
utility assets (1,919) (2,346) (5,030)
Utility assets internally
adopted (gross construction
cost less impairment) (2,304) (2,707) (6,475)
Acquisition of property,
plant and equipment (46) (23) (98)
Acquisition of intangible
assets (132) (243) (326)
Proceeds on disposal of
utility assets - - 16,756
Proceeds on disposal of
assets - other - - 5
Finance income received - - 3
Net cash (outflow)/inflow
from investing activities (4,401) (5,319) 4,835
----------------------------- --------------------------- --------------------------- ---------------------------
Cash flows from financing
activities
Dividends paid - - (3,331)
Borrowings (10,000) 3,000 7,000
Interest paid and banking
charges (non-IFRS 16) (58) (105) (273)
IFRS 16 - principal payments (386) (306) (797)
IFRS 16 - interest payments (47) (43) (119)
Proceeds from issue of share
capital - 106 180
Net cash (outflow)/inflow
from financing activities (10,491) 2,652 2,660
----------------------------- --------------------------- --------------------------- ---------------------------
Net (decrease)/increase in
cash and cash equivalents (14,220) (3,042) 9,149
Cash and cash equivalents at
beginning of period/year 15,973 6,824 6,824
----------------------------- --------------------------- --------------------------- ---------------------------
Cash and cash equivalents at
end of period/year 1,753 3,782 15,973
----------------------------- --------------------------- --------------------------- ---------------------------
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL
INFORMATION
1. Basis of preparation of the condensed consolidated interim financial information
General information
Fulcrum Utility Services Limited (the "Company") is a limited
company incorporated in the Cayman Islands and domiciled in the UK.
The ordinary shares are traded on AIM on the London Stock Exchange.
The address of its registered office is PO Box 309, Ugland House,
Grand Cayman, KY1-1104, Cayman Islands.
The condensed consolidated interim financial information for the
six months ended 30 September 2020 comprise the Company and its
subsidiaries (together referred to as the "Group").
The condensed consolidated interim financial information,
including the financial information for the year ended 31 March
2020 set out in this interim financial information, does not
comprise statutory accounts within the meaning of section 434 of
the Companies Act 2006. The information for the year ended 31 March
2020 is derived from the non-statutory accounts for that financial
year. The non-statutory accounts for the year ended 31 March 2020
were approved on 6 August 2020. The Auditor's report on those
accounts was unqualified. Attention was drawn to the accounting
policy in note 1 of the Annual Report and Accounts 2020, which
refers to the global Coronavirus pandemic however the audit opinion
was not modified in respect of this matter.
These condensed consolidated interim financial statements have
not been audited or reviewed. They were approved by the Board on 2
December 2020.
Basis of preparation
The condensed consolidated interim financial information for the
six month period ended 30 September 2020 has been prepared in
accordance with IAS 34, 'Interim Financial Reporting' as adopted by
the European Union. The condensed consolidated interim financial
information should be read in conjunction with the Annual Report
and Accounts for the year ended 31 March 2020, which have been
prepared in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union.
Going-concern basis
The condensed consolidated interim financial information is
prepared on the basis that the Group is a going concern. In
assessing going concern and determining whether there are material
uncertainties, the Directors consider the Group`s business
activities, together with factors that are likely to affect its
future development and position.
A review of the Group`s cashflows, solvency, liquidity position
and borrowing facilities has taken place. At 30 September 2020 the
Group had net assets of GBP43.4 million (31 March 2020: GBP46.3
million) including cash of GBP1.8 million (31 March 2020: GBP6.0
million) and had no borrowings. The RCF of GBP10.0 million was
fully repaid on 1 April 2020. In the six months to 30 September
2020 the Group generated a net cash inflow from operations before
tax of GBP0.7 million (2019: GBP0.0 million).
The Group`s forecasts and projections, after taking account of
sensitivity analysis of changes in trading performance and
corresponding mitigating actions show that the Group has adequate
cash resources for the foreseeable future.
On 30 November 2020 the second tranche of assets were
transferred to ESP for a total consideration of GBP4.8 million of
which GBP4.7 million was received in cash on that day and GBP0.1
million is withheld as retention and is due on 31 May 2022. In
addition, on 1 December 2020, the Group entered into a new 2 year
GBP10.0 million RCF to fund the acquisition of utility assets, of
which the vast majority will ultimately be sold to ESP.
Accounting policies
The same accounting policies are followed in this condensed
consolidated interim financial information as were applied in the
Group`s latest audited financial statements to 30 March 2020.
2. Segmental analysis
The Board has been identified as the Chief Operating Decision
Maker (CODM) as defined under IFRS 8: Operating Segments. The
Directors consider there to be two operating segments,
Infrastructure: Design and Build and Utility assets: Own and
Operate. Fulcrum's Infrastructure: Design and Build segment
provides utility infrastructure and connections services. Utility
assets: Own and Operate comprises both the ownership of gas,
electrical and meter assets and the safe and efficient conveyance
of gas and electricity through its transportation networks. Gas
transportation services are provided under the iGT licence granted
from Ofgem in June 2007 and electricity services are provided under
the iDNO licence granted from Ofgem in November 2017.
The information provided to the Board includes management
accounts comprising operating profit before exceptional items for
each segment and other financial and non-financial information used
to manage the business on a consolidated basis.
Six months to 30 September 2020 Six months to 30 September 2019
(unaudited) (unaudited)
Infrastructure:
Design and Utility assets: Infrastructure: Utility assets:
Build Own and Operate Total Group Design and Build Own and Operate Total Group
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- ---------------- ---------------- ----------- ----------------- ---------------- -----------
Reportable
segment revenue 17,748 1,768 19,516 17,624 1,894 19,518
Adjusted EBITDA
from continuing
operations * (1,383) 416 (967) 660 781 1,441
Share based
payments (23) - (23) (31) - (31)
Depreciation and
amortisation (1,462) (475) (1,937) (1,300) (534) (1,834)
----------------- ---------------- ---------------- ----------- ----------------- ---------------- -----------
Reportable
segment
operating
(loss)/profit
before
exceptional
items (2,868) (59) (2,927) (671) 247 (424)
Cost of sales
-exceptional
items - (190) (190) - - -
Administrative
expenses
-exceptional
items (437) (19) (456) (391) - (391)
----------------- ---------------- ---------------- ----------- ----------------- ---------------- -----------
Reporting segment
operating
(loss)/profit (3,305) (268) (3,573) (1,062) 247 (815)
Net finance
expense (102) (3) (105) (40) (86) (126)
----------------- ---------------- ---------------- ----------- ----------------- ---------------- -----------
(Loss)/profit
before tax (3,407) (271) (3,678) (1,102) 161 (941)
----------------- ---------------- ---------------- ----------- ----------------- ---------------- -----------
Year ended 31 March 2020 (audited)
Utility assets: Total Group
Infrastructure: Own and Operate GBP'000
Design and Build GBP'000
GBP'000
------------------------------------------------------------------- ------------------ ---------------- -----------
Reportable segment revenue 41,848 4,253 46,101
Adjusted EBITDA from continuing operations* 2,341 2,207 4,548
Share based payment 6 - 6
Depreciation and amortisation (2,887) (1,132) (4,019)
------------------------------------------------------------------- ------------------ ---------------- -----------
Reportable segment operating (loss)/profit before exceptional items (540) 1,075 535
------------------------------------------------------------------- ------------------ ---------------- -----------
Cost of sales -exceptional items - (1,766) (1,766)
Administrative expenses - exceptional items (832) (38) (870)
------------------------------------------------------------------- ------------------ ---------------- -----------
Reporting segment operating loss (1,372) (729) (2,101)
Profit on sale of subsidiary - exceptional items - 3,886 3,886
Net finance expense (219) (253) (472)
------------------------------------------------------------------- ------------------ ---------------- -----------
(Loss)/profit before tax (1,591) 2,904 1,313
------------------------------------------------------------------- ------------------ ---------------- -----------
*Adjusted EBITDA from continuing operations is operating
(loss)/profit excluding the impact of exceptional items,
depreciation, amortisation and equity-settled share based payment
charges. A full reconciliation of Alternative Performance Measures
is provided in note 3.
The Group derives all of its revenue from the UK and all of the
Group's customers are based in the UK. The Group`s revenue is
derived from contracts with customers.
3. Alternative Performance Measures ("APMs")
The Group uses APMs, as listed below, to present users of the
accounts with a clear view of what the Group considers to be the
results of its underlying, sustainable business operations, thereby
enabling consistent period-on-period comparisons and making it
easier for users of the accounts to identify trends. APMs are not
defined by IFRS and therefore may not be directly comparable with
other companies` APMs. APMs should be considered in addition to,
and are not intended to be a substitute for, or superior to, IFRS
measurements.
Alternative Performance
Measure Definition
------------------------------- ---------------------------------------------
Adjusted EBITDA from continuing Operating (loss)/profit excluding exceptional
operations items, amortisation, depreciation and
equity-settled share-based payments
Adjusted (loss)/profit (Loss)/profit before taxation excluding
before taxation amortisation of acquired intangibles
and exceptional items included within
cost of sales and administrative expenses
Net assets per share Net assets divided by the number of shares
in issue at the financial reporting date
------------------------------- ---------------------------------------------
A reconciliation of APMs to statutory measures is disclosed in
the tables below:
(a) Reconciliation of operating loss to "adjusted EBITDA from
continuing operations"
Unaudited Unaudited Audited
Six months Six months Year ended
ended 30 September ended 30 31 March
2020 September 2020
2019
GBP'000 GBP'000 GBP'000
--------------------------------------------- ------------ ------------
Operating loss (3,573) (815) (2,101)
Adjusted for:
Exceptional items within operating
loss (note 4) 646 391 2,636
Amortisation and depreciation 1,937 1,834 4,019
Equity-settled share-based payments 23 31 (6)
------------------------------------- ------- ------------ ------------
Adjusted EBITDA from continuing
operations (967) 1,441 4,548
------------------------------------- ------- ------------ ------------
(b) Reconciliation of (loss)/profit before tax to "adjusted
(loss)/profit before tax"
Unaudited Unaudited Audited
Six months ended Six months Year ended
30 September ended 30 31 March
2020 September 2020
2019
GBP'000 GBP'000 GBP'000
------------------------------------- ------------------ ------------ ------------
(Loss)/profit before tax (3,678) (941) 1,313
Adjusted for:
Exceptional items included
in cost of sales 190 - 1,766
Exceptional items included
in administrative expenses 456 391 870
Amortisation of acquired intangibles 678 678 1,356
------------------------------------- ------------------ ------------ ------------
Adjusted (loss)/profit before
tax (2,354) 128 5,305
------------------------------------- ------------------ ------------ ------------
(c) Net assets per share
Unaudited Unaudited Audited
30 September 30 September 31 March
2020 2019 2020
------------------------------------ -------------- -------------- ----------
Net assets at end of period/year
(GBP`000) 43,380 44,989 46,307
Issued shares at end of period/year
(000`s) 222,118 221,106 222,118
Net assets per share (p) 19.5p 20.3p 20.8p
------------------------------------ -------------- -------------- ----------
4. Exceptional items
Unaudited Unaudited Audited
Six months ended 30 September Six months ended 30 September Year ended
2020 2019 31 March
2020
GBP'000 GBP'000 GBP'000
------------------------------------- ------------------------------- ------------------------------- -------------
Exceptional items included in cost
of sales 190 - 1,766
Exceptional items included in
administrative expenses 456 391 870
Profit on sale of subsidiary - - (3,886)
------------------------------------- ------------------------------- ------------------------------- -------------
646 391 (1,250)
------------------------------------- ------------------------------- ------------------------------- -------------
(a) Exceptional items included in cost of sales
Unaudited Unaudited Audited
Six months ended 30 September Six months ended 30 September Year ended
2020 2019 31 March
2020
GBP'000 GBP'000 GBP'000
------------------------------------- ------------------------------- ------------------------------- -------------
Fixed asset impairment - - 1,766
Exceptional remedial works to 190 - -
utility assets
------------------------------------- ------------------------------- ------------------------------- -------------
190 - 1,766
------------------------------------- ------------------------------- ------------------------------- -------------
Fixed asset impairment relates to the impairment of utility
assets not previously revalued upwards.
(b) Exceptional items included in administrative expenses
Unaudited Unaudited Audited
Six months ended 30 September Six months ended 30 September Year ended
2020 2019 31 March
2020
GBP'000 GBP'000 GBP'000
--------------------------------- -------------------------------- -------------------------------- -------------
Restructuring costs 33 276 641
One-off legal and advisor costs 323 40 229
Other one-off costs 100 75 -
--------------------------------- -------------------------------- -------------------------------- -------------
456 391 870
--------------------------------- -------------------------------- -------------------------------- -------------
Restructuring costs relate to employee exit and severance costs.
One off legal and advisor costs include costs incurred in the
Group`s response to the Proposed Tender Offer from Harwood Capital
LLP. Other one off costs include non-recurring Group
re-organisational costs.
(c) Profit on sale of subsidiary
Unaudited Unaudited Audited
Six months ended 30 September Six months ended 30 September Year ended
2020 2019 31 March
2020
GBP'000 GBP'000 GBP'000
------------------------------ --------------------------------- --------------------------------- -------------
Profit on sale of subsidiary - - (3,886)
------------------------------ --------------------------------- --------------------------------- -------------
- - (3,886)
--------------------------------- ---------------------------------------------------------------- -------------
On 27 January 2020, utility assets belonging to one of the
Group's subsidiaries, Fulcrum Pipelines Limited, were transferred
to a fellow Group subsidiary, Gas Newco 1 Limited. On 31 March
2020, the Group disposed of its 100% equity interest in Gas Newco 1
Limited. The transaction gave rise to the following profit on
disposal:
Year ended
31 March 2020
GBP'000
----------------------------------------- ---------------
Consideration - proceeds received (16,756)
Consideration - retention (receivable
in September 2021) (500)
Consideration - deferred (received
30 June 2020) (670)
----------------------------------------- ---------------
Total consideration (17,926)
Net book value of assets acquired 9,724
Revaluation in prior periods 3,071
Legal costs relating to the transaction 1,245
----------------------------------------- ---------------
(3,886)
----------------------------------------- ---------------
Some of the disposed utility assets had previously been revalued
in accordance with the Group policy. Upon disposal, this gave rise
to a transfer between the revaluation reserve and retained earnings
of GBP3,071,000.
5. Earnings per share (EPS)
The calculation of the adjusted basic and diluted earnings per
share is based upon the following (loss)/profit attributable to
ordinary shareholders and the weighted average number of ordinary
shares outstanding:
Unaudited Unaudited Audited
Six months ended 30 September Six months ended 30 September Year ended
2020 2019 31 March
2020
GBP'000 GBP'000 GBP'000
----------------------------------- -------------------------------- -------------------------------- -------------
(Loss)/profit for the period/year
used for the calculation of basic
EPS (3,067) (942) 1,556
Exceptional items included in cost
of sales 190 - 1,766
Exceptional items included in
administrative expenses 456 391 870
Remove tax relief on exceptional
items (123) (74) (501)
Add amortisation of intangibles* 678 832 1,356
----------------------------------- -------------------------------- -------------------------------- -------------
( Loss)/profit for the period/year
used for the calculation of
adjusted EPS (1,866) 207 5,047
----------------------------------- -------------------------------- -------------------------------- -------------
*Excludes amortisation of software and developments costs
Number of shares ('000):
30 September 30 September 31 March 2020
2020 Number 2019 Number Number of
of Shares of Shares Shares
-------------------------------- ------------- ------------- --------------
Weighted average number
of ordinary shares for the
purpose of basic EPS 222,118 221,651 221,907
Effect of potentially dilutive
ordinary shares 4,901 9,490 4,901
-------------------------------- ------------- ------------- --------------
Weighted average number
of ordinary shares for the
purpose of diluted EPS 227,019 231,141 226,808
-------------------------------- ------------- ------------- --------------
Unaudited Unaudited Audited
Six months Six months Year ended
ended 30 ended 30 31 March
EPS September September 2020
2020 2019
-------------------------------- ------------- ------------- ----------------
Basic (1.4)p (0.4)p 0.7p
Diluted basic (1.4)p (0.4)p 0.7p
Adjusted basic (0.8)p 0.1p 2.3p
Adjusted diluted (0.8)p 0.1p 2.2p
-------------------------------- ------------- ------------- ----------------
6. Taxation
Unaudited Unaudited Audited
Six months ended 30 September Six months ended 30 September Year ended
2020 2019 31 March
2020
GBP'000 GBP'000 GBP'000
--------------------------- ------------------------------- ------------------------------- ------------
Current tax (7) - 128
Deferred tax (604) 1 (371)
--------------------------- ------------------------------- ------------------------------- ------------
Total tax (credit)/charge (611) 1 (243)
--------------------------- ------------------------------- ------------------------------- ------------
A change to the main UK corporation tax rate, announced in the
Budget on 11 March 2020, was substantively enacted on 17 March
2020. The rate applicable from 1 April 2020 now remains at 19.0%.
Deferred tax balances have been adjusted accordingly and are
calculated on the basis that they will unwind at 19.0%.
The Group has GBP12.8 million (31 March 2020: GBP9.3 million) of
tax losses for which deferred tax assets of GBP2.4 million (31
March 2020: GBP1.8 million) have been recognised. The deferred tax
asset increased by GBP0.6 million as a result of the newly
recognised losses in the period (31 March 2020: GBP0.1 million
utilised). The deferred tax asset is expected to be recovered over
12 years (31 March 2020: 12 years). The Group also has unrecognised
tax losses of GBP1.8 million (31 March 2020: GBP1.8 million), for
which no deferred tax asset is recognised as there is insufficient
certainty over whether the losses will reverse.
7. Capital commitments
At the 30 September 2020 the Group had entered into contracts to
purchase property, plant and equipment in the form of utility
assets for the amount of GBP12.1 million. The capital commitment at
31 March 2020 was GBP14.0 million and at 30 September 2019 was
GBP16.4 million .
8. Intangible assets
Goodwill Brand & customer relationships Software Total
GBP`000 GBP'000 GBP'000 GBP'000
--------------------------------- --------- ------------------------------ --------- ---------
At 1 April 2019 (audited) 14,251 11,045 1,773 27,069
Additions - - 242 242
Amortisation for the period - (678) (154) (832)
--------------------------------- --------- ------------------------------ --------- ---------
At 30 September 2019 (unaudited) 14,251 10,367 1,861 26,479
--------------------------------- --------- ------------------------------ --------- ---------
Additions - - 84 84
Disposals - - (91) (91)
Amortisation for the period - (678) (272) (950)
--------------------------------- --------- ------------------------------ --------- ---------
At 31 March 2020 (audited) 14,251 9,689 1,582 25,522
--------------------------------- --------- ------------------------------ --------- ---------
Additions - - 132 132
Amortisation for the period - (678) (265) (943)
--------------------------------- --------- ------------------------------ --------- ---------
At 30 September 2020 (unaudited) 14,251 9,011 1,449 24,711
--------------------------------- --------- ------------------------------ --------- ---------
9. Trade and other receivables
Unaudited Unaudited Audited
30 September 2020 30 September 2019 31 March 2020
GBP'000 GBP'000 GBP'000
----------------------------------- ------------------- ------------------- ---------------
Trade receivables 4,051 3,448 3,744
Other receivables and prepayments 2 ,676 2,642 3,082
----------------------------------- ------------------- ------------------- ---------------
6,727 6,090 6,826
----------------------------------- ------------------- ------------------- ---------------
10. Trade and other payables
Unaudited Unaudited Audited
30 September 2020 30 September 2019 31 March 2020
GBP'000 GBP'000 GBP'000
---------------- ------------------- ------------------- ---------------
Trade payables 6,532 3,961 5,593
Other payables 7,097 5,114 6,316
---------------- ------------------- ------------------- ---------------
13,629 9,075 11,909
---------------- ------------------- ------------------- ---------------
11. Reconciliation to net funds/(debt)
Unaudited Unaudited Audited
30 September 2020 30 September 2019 31 March 2020
GBP'000 GBP'000 GBP'000
-------------------------- ------------------ ------------------ --------------
Cash and cash equivalents 1,753 3,782 15,973
Borrowings - (6,000) (10,000)
-------------------------- ------------------ ------------------ --------------
Net funds/(debt) 1,753 (2,218) 5,973
-------------------------- ------------------ ------------------ --------------
12. Related parties
The Group has a related party relationship with its subsidiaries
and with its key management personnel. Details of the remuneration,
share options and pension entitlement of the Directors are included
in the Remuneration Report on page 44 of the Annual Report and
Accounts 2020, which are available on Fulcrum Utility Services
Limited's website at https://investors.fulcrum.co.uk/
13. Principal risks
The Board has assessed the Principal Risks, as disclosed on
pages 24 to 28 of the Annual Report and Accounts 2020, which are
available on Fulcrum Utility Services Limited's website at
https://investors.fulcrum.co.uk/ , and have determined that there
has been no change in risks faced or the risk rating to most of the
risks detailed.
It has been determined that two risks have been reduced as set
out below:
Description Mitigating actions Change
in risk
----------------------------------------------------------------- -----------------------------------------------------------------
COVID-19
------------------------------------------------------------------------------------------------------------------------------------ -------
There is a risk that: Reduced
* The recent outbreak and global spread of COVID-19 has * The Group has proven that it can continue to operate
a significant and prolonged impact on the UK economy effectively in a UK lockdown due to the essential
and may disrupt our supply chain and our customers' nature of the services it provides and the markets it
projects and adversely impact our operations. serves
* The temporary emergency public safety measures which
the UK Government introduced, continue for an
extended period of time, increasing pressure on our
operations due to an economic downturn.
----------------------------------------------------------------- -----------------------------------------------------------------
Working capital management and funding
------------------------------------------------------------------------------------------------------------------------------------ -------
There is a risk that: Reduced
* The Group does not have the working capital * The Group has maintained its focus on retaining a
management and funding required to deliver on its strong balance sheet and healthy cash flow as
strategy and future growth plans described within the Financial Strength overview.
----------------------------------------------------------------- ----------------------------------------------------------------- -------
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