Information  X 
Enter a valid email address

Fulcrum Utility Srvc (FCRM)

  Print   

Thursday 03 December, 2020

Fulcrum Utility Srvc

Interim Results

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 £19.5 million (2019: £19.5 million)

·     Adjusted EBITDA(1) loss of £1.0 million (2019: £1.4 million profit), reflecting the impact of COVID-19 combined with investment for strategic growth  

· Year on year order book growth of 9.4%, to £68.5 million, as at 30 September 2020 (2019: £62.6 million)

· Adjusted loss before tax(1) of £2.4 million (2019: £0.1 million profit)

· Net cash inflow from operations before tax of £0.7 million (2019: £0.0 million)

· Basic loss per share of 1.4p (2019: 0.4p)

· Net cash at the period end of £1.8 million (31 March 2020: net cash £6.0 million) reflecting capital investment of £4.2 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 £4.7 million. In addition, the Group received a further £0.4 million in cash relating to the first tranche of the asset transfer, following the achievement of the first enhanced payment milestone

· There is approximately £27 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 £10.0 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 £1.3bn 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 £1.6 million multi-utility contract to power and heat 550 homes as part of a major redevelopment scheme*

· A £1.1 million contract to deliver a full multi-utility solution to a major development of 500 new homes

· A £0.8 million contract to deliver a full multi-utility service to a new development of 276 new homes*

 

Industrial and Commercial:

·   A £4.2 million contract to provide 13.5km of new high voltage electrical infrastructure for a major redevelopment project*

· A £1.5 million contract to install 3.8km of gas infrastructure to feed Combined Heat & Power units that will serve a large automotive manufacturing operation*

· A £0.7 million project to design and install electricity infrastructure as part of a substantial extension to a UK shopping centre

· A £0.7 million contract to deliver a full multi-utility solution to a large new commercial development 

· A £0.6 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 £25 billion, with potential for an additional £10 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 £1.3 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:

Fulcrum Utility Services Limited

Daren Harris, Chief Executive Officer

 

Cenkos Securities plc (Nominated adviser and broker)

Max Hartley (Nomad) / Michael Johnson (Sales)

 

N+1 Singer (Joint Corporate Broker)

Sandy Fraser / Rachel Hayes / Carlo Spingardi

 

+44 (0)114 280 4102

 

 

+44 (0)20 7397 8900

 

 

+44 (0)20 7496 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 the COVID-19 pandemic and the UK's home builders remain optimistic about their ability to operate successfully moving forward

· Market drivers remain strong, with the Government's commitment to build 300,000 homes each year by the mid-2020s and 220,600 new build housing completions in 2019/20

· Enquiry levels were strong as homebuilders seek to meet demand stimulated by the temporary relaxation of stamp duty

· Bolstered our business development function and delivered targeted expansion into new geographies

· 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 Commercial

· There is a clear and significant requirement for more electrical and renewable energy generating infrastructure to deliver low carbon and emissions free green energy

· Additional opportunities presented by the UK's exit from the EU as sectors, including domestic food growth and storage, grow

· The recently announced 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

· The Government has recently committed to invest £1.3 billion to accelerate the roll out of EV charging infrastructure

· Enquiry levels have remained strong and, during the period, the Group continued to secure a variety of substantial contracts

· Established a Major Projects business development team to target and secure the most significant schemes

· Significantly bolstered our EV Business Development Team and operational delivery function

· Secured a variety of projects to design and install electric vehicle charging infrastructure, including contracts for two national UK retailers, fleet charging facilities for a logistics organisation and infrastructure for a major EV charging hub development

Smart Metering

· Binding obligations on energy suppliers to exchange approximately 30 million meters to Smart by mid-2025, remain

· Our flexible and responsive service approach has supported significant interest from gas and 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 Ownership:

· The need for an electrical revolution and significant requirement for more electrical and renewable generating infrastructure, to deliver low carbon and emissions free green energy to achieve net zero, will require specialist maintenance

· Provided enhanced, responsive services to support essential services and industries helping combat COVID-19

 

Financial performance

In the first six months of the year, the Group reported an adjusted EBITDA(1) loss of £1.0 million (2019: £1.4 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 £19.5 million, compared to the first half of last year (2019: £19.5 million). Asset ownership revenue also remained in line with the prior period at £1.8 million (2019: £1.9 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 £68.5 million (2019: £62.6 million).  This reflects the ongoing and successful delivery of our sales growth strategy.

The adjusted loss before tax(1) was £2.4 million (2019: profit of £0.1 million). This reduction was driven by the lower EBITDA(1) performance.

At 30 September 2020, the Group had net cash of £1.8 million, a decrease from 31 March 2020 of £4.2m (2019: net debt of £(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 £43.4 million at 30 September 2020 (FY 2020: £46.3m). 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 £4.8 million (£4.7 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 £27 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 £10.0 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

Six months ended 30   September 2020

 

Unaudited

Six months ended 30   September 2019

 

  Audited

Year ended

31 March

2020

 

Note

£'000

£'000

£'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

Six months ended 30 September 2020

 

Unaudited

Six months ended 30 September

2019

 

 Audited

Year ended

31 March

2020

 

 

£'000

£'000

£'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 reserve

Merger reserve

Retained earnings

Total equity

 

£'000

£'000

£'000

£'000

£'000

£'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

30 September 2020

Unaudited

30 September 2019

Audited

31 March2020

 

Note

£'000

£'000

£'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

Six months ended 30 September 2020

 

Unaudited

Six months ended 30 September 2019

 

Audited

Year ended 31 March 2020

 

£'000

£'000

£'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 contract 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 £43.4 million (31 March 2020: £46.3 million) including cash of £1.8 million (31 March 2020: £6.0 million) and had no borrowings. The RCF of £10.0 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 £0.7 million (2019: £0.0 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 £4.8 million of which £4.7 million was received in cash on that day and £0.1 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 £10.0 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

(unaudited)

Six months to 30 September 2019

(unaudited)

 

 

Infrastructure:

Design and Build

£'000

Utility assets:

Own and Operate

£'000

Total Group

£'000

 

Infrastructure:

Design and Build

£'000

Utility assets:

Own and Operate

£'000

Total Group

£'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)

 

 

Infrastructure:

Design and Build

£'000

Utility assets:

Own and Operate

£'000

Total Group

£'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 operations

Operating (loss)/profit excluding exceptional items, amortisation, depreciation and equity-settled share-based payments

 

Adjusted (loss)/profit before taxation

(Loss)/profit before taxation excluding 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

Six months ended 30 September

2020

 

Unaudited

Six months ended 30 September

2019

 

  Audited

Year ended

31 March

2020

 

£'000

£'000

£'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

Six months ended 30 September

2020

 

Unaudited

Six months ended 30 September

2019

 

  Audited

Year ended

31 March

2020

 

£'000

£'000

£'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

30 September

2020

 

Unaudited

30 

2019

 

  Audited

31 March

2020

Net assets at end of period/year (£`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

Six months ended 30 September

2020

Unaudited

Six months ended 30 September

2019

  Audited

Year ended

31 March

2020

 

£'000

£'000

£'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

Six months ended 30 September

2020

Unaudited

Six months ended 30 September

2019

  Audited

Year ended

31 March

2020

 

£'000

£'000

£'000

Fixed asset impairment

-

-

1,766

Exceptional remedial works to utility assets

190

-

-

 

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

Six months ended 30 September

2020

 

Unaudited

Six months ended 30 September

2019

 

  Audited

Year ended

31 March

2020

 

£'000

£'000

£'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

Six months ended 30 September

2020

 

Unaudited

Six months ended 30 September

2019

 

  Audited

Year ended

31 March

2020

 

£'000

£'000

£'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

£'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 £3,071,000.

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

Six months ended 30 September

2020

 

Unaudited

Six months ended 30 September

2019

 

  Audited

Year ended

31 March

2020

 

£'000

£'000

£'000

(Loss)/profit for the period/year used for the calculation of basic EPS

(3,067)

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 2020 Number of Shares

30 September 2019 Number of Shares

31 March 2020 Number of 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

 

 

 

 

 

EPS

 

Unaudited

Six months ended 30 September

2020

 

Unaudited

Six months ended 30 September

2019

 

  Audited

Year ended

31 March

2020

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

Six months ended 30 September

2020

 

Unaudited

Six months ended 30 September

2019

 

  Audited

Year ended

31 March

2020

 

£'000

£'000

£'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 £12.8 million (31 March 2020: £9.3 million) of tax losses for which deferred tax assets of £2.4 million (31 March 2020: £1.8 million) have been recognised. The deferred tax asset increased by £0.6 million as a result of the newly recognised losses in the period (31 March 2020: £0.1 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 £1.8 million (31 March 2020: £1.8 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 £12.1 million. The capital commitment at 31 March 2020 was £14.0 million and at 30 September 2019 was £16.4 million.

 

 

8.  Intangible assets

 

Goodwill

Brand & customer relationships

Software

Total

 

 

£`000

 

£'000

 

£'000

 

£'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

30 September 2020

Unaudited

30 September 2019

Audited

31 March 2020

 

£'000

£'000

£'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

30 September 2020

Unaudited

30 September 2019

Audited

31 March 2020

 

£'000

£'000

£'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

30 September 2020

Unaudited

30  2019

Audited

31  2020

 

£'000

£'000

£'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:

· The recent outbreak and global spread of COVID-19 has a significant and prolonged impact on the UK economy and may disrupt our supply chain and our customers' projects and adversely impact our operations.

· 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.

· The Group has proven that it can continue to operate effectively in a UK lockdown due to the essential nature of the services it provides and the markets it serves

Reduced

Working capital management and funding

 

There is a risk that:

· The Group does not have the working capital management and funding required to deliver on its strategy and future growth plans

· The Group has maintained its focus on retaining a strong balance sheet and healthy cash flow as described within the Financial Strength overview.

Reduced

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
 
END
 
 
IR KLLFBBLLBFBK

a d v e r t i s e m e n t