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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Fulcrum Utility Services Ld | LSE:FCRM | London | Ordinary Share | KYG368851047 | ORD 0.1P (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.15 | 0.10 | 0.20 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMFCRM
RNS Number : 3050J
Fulcrum Utility Services Ltd
04 December 2018
4 December 2018
FULCRUM UTILITY SERVICES LIMITED
("Fulcrum", the "Company" or the "Group")
Unaudited interim results for the six months ended 30 September 2018
Fulcrum, the UK's market leading independent multi-utility infrastructure and services provider, today announces its interim results for the six-month period ended 30 September 2018.
Financial highlights - continued delivery on all financial metrics
-- Revenue up 49.0% to GBP29.2 million (2017: GBP19.6 million) -- Adjusted EBITDA* up 35.7% to GBP5.4 million (2017: GBP4.0 million) -- On a like-for-like** basis, revenue increased by 12.9% and adjusted EBITDA* up 20.9%
-- Profit before tax (before exceptional items) up 13.5% to GBP4.2 million (2017: GBP3.7 million)
-- Net cash inflows from operations of GBP3.0 million (2017: GBP2.1 million) -- Basic earnings per share of 1.7p (2017: 1.8p) -- Cash of GBP10.4 million at 30 September 2018 (2017: GBP14.5 million)
Strong cash flow continues to support a progressive dividend policy
-- The Board is recommending an interim dividend of 0.75p per share for FY2019, an increase of 7.1% against the prior year (2017: 0.7p per share)
-- The dividend reflects the Board's ongoing confidence in the Group's ability to generate cash and its future prospects
Operational highlights - progressive growth and delivery against strategy
-- Sustained growth in the infrastructure order book, up 8.8% since March 2018 to GBP45.8 million
-- Significant growth in utility asset ownership with committed spend of GBP15.4 million at the end of September
(2017: GBP7.5 million)
-- GBP20.0 million undrawn debt facility to support increased adoption of utility assets
-- Integration of The Dunamis Group Limited ("Dunamis") and CDS Pipe Services Limited ("CDS") progressing well and in line with expectations
-- Dunamis successfully delivered a number of projects in the period, including the first tranche in a series of electrical vehicle charging infrastructure projects
-- Increased operational capacity across the Group, strengthening electrical and multi-utility capabilities
-- Smart metering services being established: Meter Operator (MOP) accreditation achieved in September, underpinning future plans for the installation and adoption of smart meters
-- Ian Foster, Chief Operating Officer - Gas, has notified the Board that he will be retiring on 31 March 2019. A successor has been identified and will be announced in the New Year.
*Adjusted EBITDA is operating profit excluding the impact of exceptional items, depreciation, amortisation and equity settled share based payment charges
** Like-for-like is after adjusting for the acquisition of The Dunamis Group Limited ("Dunamis") and CDS Pipe Services Limited ("CDS")
Martin Harrison, CEO of Fulcrum, said:
"These results reflect the continued successful delivery of the Group's long-term strategy and our commitment to meeting customer demand across each of our routes to market. The Group continues to invest in the business to drive sales growth, improve operational capacity and efficiency and push for ever higher levels of customer satisfaction.
I would like to thank Ian Foster for his 15 years of service. Ian has played an instrumental role in Fulcrum's evolution and I wish him all the best in his retirement.
The Group is well positioned to deliver further high quality, sustainable growth."
Enquiries:
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+44 (0)114 280
4102
Fulcrum Utility Services Limited +44 (0)114 280
Hazel Griffiths, Chief Financial Officer 4150
Craig Baugh, Director of Sales and Marketing
Cenkos Securities plc (Nominated adviser and broker) +44 (0)20 7397
Max Hartley (Nomad) / Nick Searle (Sales) 8900
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Ginny Pulbrook / Tom Huddart +44(0)203 757 4992
Notes to Editors:
Fulcrum is a multi-utility infrastructure and services provider based in Sheffield, UK. The Company's primary business is the provision of utility infrastructure services to the residential, commercial and industrial markets throughout the mainland UK. These range from the design, installation or alteration of utility services for single site properties to large complex multi-site projects. Through its subsidiaries, Fulcrum Pipelines Limited and Fulcrum Electricity Assets Limited, Fulcrum is also licensed as an Independent Gas Transporter and Independent Distribution Network Operator, owning and operating gas and electrical assets that connect properties to the main UK gas and electricity networks. Fulcrum is also a meter asset manager and meter operator, owning and operating meter assets across mainland UK.
In 2018 Fulcrum acquired the Dunamis Group, an electrical infrastructure services company, creating one of the UK's leading gas and electrical infrastructure services groups.
http://www.fulcrum.co.uk/
Overview
The results for the six months ended 30 September 2018 ("H1") reflect a period of continued growth and consolidation in our business. The Group achieved another robust performance through organic growth within our core infrastructure and asset businesses, complemented by solid acquisitive growth delivered by Dunamis and CDS, which were acquired earlier this year. A record adjusted EBITDA* of GBP5.4 million, profit before tax of GBP4.0 million and continued cash generation all support the Company's ability to maintain its progressive dividend policy. These results reflect the continued successful delivery of the Group's strategy and our commitment to meeting customer demand across each of our routes to market throughout mainland UK.
Robust financial performance
Fulcrum has delivered a robust set of results in the first six months, achieving a record adjusted EBITDA* of GBP5.4 million from both organic growth in our core infrastructure and asset businesses and a solid performance delivered by our recently acquired companies. Period-on-period revenue increased by GBP9.6 million, or 49.0%, to GBP29.2 million (2017: GBP19.6 million) benefiting from a full six months' contribution from Dunamis, acquired at the beginning of February 2018. On a like-for-like basis, after adjusting for the acquisitions, revenues from infrastructure services amounted to GBP20.8 million (2017: GBP18.7 million) and increase of GBP2.5 million or 12.9%. Asset ownership revenues increased by 44.4% to GBP1.3 million (2017: GBP0.9 million. With its low cost to serve, this annuity income stream represents a secure and profitable component of the Group's future financial stability.
Gross profit increased by GBP2.8 million to GBP10.4 million (2017: GBP7.6 million), with gross profit margins down slightly to 35.7%
(2017: 38.9%, FY2018: 36.7%). This change in margin is predominately due to the inclusion of Dunamis for the full six-month period. On large electrical infrastructure projects delivered by Dunamis, there is typically a higher proportion of expensive plant and equipment which carries a lower margin and results in an overall dilutive effect on the project margin. On a like-for like basis, after adjusting for the acquisitions, gross profit increased by GBP0.9 million or 12.3%.
Adjusted EBITDA* for the period increased to GBP5.4 million (2017: GBP4.0 million) and profit before tax increased to GBP4.0 million
(2017: GBP3.7 million).
Strong returns and increased dividend
Basic earnings per share was 1.7p (2017: 1.8p) with the growth in revenue offset by the increase in issued share capital and the increased amortisation charge resulting from the acquisitions. During H1, 8,990,314 ordinary shares were issued with a nominal value of GBP8,990 to employees exercising vested share options. These exercises relate to the EMI 2015 and 2016 option plans, ESS 2015 option plan and GSS 2016 option plans which are now fully exercised. The associated cash consideration for the exercise prices for the EMI schemes was GBP302,268. As at 30 September, the issued share capital of the company was 220,328,797 ordinary shares (30 September 2017: 174,656,734) with a nominal value of GBP220,328. The year-on-year increase in the issued share capital share relates to the acquisitions of Dunamis and CDS, along with employee share option conversions.
Working capital management continues to be a key area of focus and the Group achieved a positive operating cash flow from trading activities of GBP3.0 million (2017: GBP2.1 million) during H1. At 30 September 2018, the Group had net cash of GBP10.4 million (2017: GBP14.5 million); a GBP4.1 million decrease against the prior period. This decrease reflects the acquisitions of Dunamis and CDS, which utilised existing cash resources to part satisfy the consideration. It also reflects increased investment in utility asset ownership, as well as increased dividend payments. Excluding the GBP4.8 million paid in respect of the acquisitions, net cash increased by GBP0.7 million.
The Group continues to maintain a progressive dividend policy. Our aim is to operate a policy within the context of broadly two times dividend cover. As a result of the continued strong performance and cash generation in the period, the Board will pay an interim dividend of 0.75p per share for FY2019 (FY18: 0.7p). The period-on-period dividend increase of 7.1% demonstrates the Board's confidence in the future of the Group and cash generation from both infrastructure services and utility assets. The dividend will be paid on 25 January 2019 to members on the register on 28 December 2018. Shares will be marked ex-dividend on
27 December 2018.
Delivering contracts safely, efficiently and profitably
Safety is paramount in our organisation. In the period, we received the Royal Society for the Prevention of Accidents (RoSPA) Order of Distinction, which recognises 15 years of health and safety excellence and demonstrates our commitment to the health and safety of our customers, each other, suppliers, the public and the environment.
We appointed a Group Head of Compliance to oversee the enlarged Group's compliance requirements and to create a uniform platform across the Group. Following the launch of our SAFE initiative earlier in the year, we have introduced behavioural safety awareness and training in addition to competence based training. We also recognise and reward the people and teams who go above and beyond to demonstrate safe behaviours with our quarterly "Safety Champion" and annual "Safety Champion of Champions" awards.
The Group continues to invest in the business to improve operational capacity and drive efficiencies to optimise profits. In the period, we have increased our direct delivery offering, focusing on strengthening our electrical and multi-utility capabilities to support the growth in electrical and housing sales orders. We also look at ways to continually improve and simplify the way we work, reducing the level of manual interactions by maximising automation wherever possible and encouraging our people to develop efficient and innovative ways of working.
Winning contracts in our chosen markets
The sustained growth in the infrastructure order book is encouraging and demonstrates the successful delivery of our sales growth strategy. As at 30 September 2018, the Group's order book had increased by 8.8% to GBP45.8 million, up from GBP42.1 million as at 31 March 2018). During the period, we completed two major contracts: a large gas pipeline to a food manufacturing plant and a large high voltage electricity infrastructure project for a battery storage site. As these contracts transitioned from the order book, they have been replaced by several other large contract wins. The Company has also continued to secure a core portfolio of projects up to GBP50,000 in revenue.
The integration of Dunamis is progressing well and in line with plans, with increasing numbers of collaborative gas and electricity opportunities being generated. Dunamis' electrical capabilities enhance the Group's position in the electricity and dual fuel markets and also support its expansion into the electric vehicle charging market. Dunamis' business is made up of larger, lower margin infrastructure projects which are by nature subject to external factors. During the period some of these infrastructure projects have been influenced by external pressures which has resulted in certain projects commencing later than expected.
In addition to delivering large electrical infrastructure projects, Dunamis now offers the end-to-end design and delivery of all industrial, commercial and electric vehicle charging infrastructure projects within the Group. Dunamis successfully delivered a number of projects in the period, including a large high voltage electricity infrastructure project for a battery storage site, a series of electrical vehicle charging infrastructure projects and recurring maintenance work delivered by Maintech Power.
The Group's ability to adopt and own the electrical infrastructure delivered by Dunamis will further increase the valuable portfolio of stable, secure, low risk and long term income-generating utility assets.
The Group continues to grow its utility asset estate and the associated annuity revenue streams by adopting the assets it constructs, alongside assets purchased from external utility contractors. During the period, our ownership of utility assets increased by GBP4.9 million to a total net book value of GBP19.2 million at 30 September 2018 (2017: GBP13.4 million). There has been sustained growth in the assets secured from external utility contractors, with the committed capital spend increasing from GBP7.5 million as at 30 September 2017 to GBP15.4 million as at 30 September 2018, including GBP1.0 million of electrical assets. The cash will be spent in the months and years ahead as these schemes are developed, increasing future transportation income. The growth strategy in utility asset ownership is supported by our debt facility for up to GBP20.0 million, this was undrawn at the end of September.
The Group secured its Meter Operator (MOP) accreditation in September 2018, resulting in the Group now having all of the accreditations required to underpin the future plans to install, adopt, own and operate smart meters. We are embedding our smart metering services, including establishing IT systems and relationships with energy suppliers.
Management Changes
Following 15 years with Fulcrum, Ian Foster, the Chief Operating Officer - Gas, will be retiring on 31 March 2019. Throughout his career at Fulcrum, Ian has been instrumental in building the business to where it is today. A successor has been identified and will be announced in the New Year.
Outlook
The Group's performance in the first six months has been strong. The financial strength of the Group, resulting from the successful execution of its strategy over recent years, places the business in a good position to adapt to changes in market conditions and to take advantage of opportunities. We remain vigilant with respect to the potential risks that the Group may face and are focused on the strategic advantages afforded by our business model and customer offering. We will:
- continue to always put safety first; - continue to focus on sales growth and enhancing our customer service; - create long-term secure income by increasing our ownership of gas and electricity assets; - maintain and improve operational disciplines;
- maximise returns on new initiatives such as EV charging and smart metering opportunities; and
- sustainably increase dividends.
We therefore remain confident in our ability to deliver incremental value to all of our stakeholders.
Consolidated Interim Statement of Comprehensive Income
For the six months ended 30 September 2018 (unaudited)
Unaudited Restated unaudited Restated unaudited
Six months ended 30 Six months ended 30 Year ended 31 March 2018
September 2018 September 2017
Note GBP'000 GBP'000 GBP'000
-------------------------- ----- ------------------------- -------------------------- --------------------------
Revenue 2 29,218 19,585 44,597
Cost of sales (18,790) (11,976) (28,370)
-------------------------- ----- ------------------------- -------------------------- --------------------------
Gross profit 10,428 7,609 16,227
Administrative expenses (6,444) (3,942) (9,570)
-------------------------- ----- ------------------------- -------------------------- --------------------------
Operating profit 3,984 3,667 6,657
-------------------------- ----- ------------------------- -------------------------- --------------------------
Analysed as:
EBITDA before share based
payments and exceptional
items 5,424 4,007 8,406
Equity settled share
based payment charges (52) (17) (35)
Exceptional items (221) - (823)
Depreciation and
amortisation (1,167) (323) (890)
------------------------- -------------------------- --------------------------
3,984 3,667 6,657
-------------------------- ----- ------------------------- -------------------------- --------------------------
Net finance (expense)
/income (11) 33 59
Profit before tax 3,973 3,700 6,716
Taxation 3 (315) (638) 250
-------------------------- ----- ------------------------- -------------------------- --------------------------
Profit for the financial
period 3,658 3,062 6,966
-------------------------- ----- ------------------------- -------------------------- --------------------------
Other comprehensive
income
Items that will never be
reclassified to profit
Revaluation of property,
plant and equipment - - 334
Deferred tax on items
that will never be
reclassified to profit
or loss - - (62)
-------------------------- ----- ------------------------- -------------------------- --------------------------
Total comprehensive
income for the period 3,658 3,062 7,238
-------------------------- ----- ------------------------- -------------------------- -------------------------- Profit per share attributable to the owners of the business Basic 4 1.7p 1.8p 4.0p Diluted 4 1.7p 1.6p 3.7p -------------------------- ----- ------------------------- -------------------------- --------------------------
Consolidated Interim Statement of Changes in Equity
For the six months ended 30 September 2018 (unaudited)
Share Share Revaluation Merger Retained Total
capital premium reserve reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ---- ----------- ------------ ------------ ----------- ----------- ------------
Six months ended 30 September
2018:
Balance at 1 April 2018 211 21,042 3,607 11,347 94 36,301
IFRS 15 adjustment - - - - (250) (250)
Restated balance as at 1 April 2018 211 21,042 3,607 11,347 (156) 36,051
Profit for the period - - - - 3,658 3,658
Transactions with equity
shareholders:
Issues of new shares 9 302 - 407 - 718
Equity settled share-based payments - - - - 52 52
Balance at 30 September 2018 220 21,344 3,607 11,754 3,554 40,479
Six months ended 30 September
2017:
Balance at 1 April 2017 167 14,101 3,343 - (7,165) 10,446
Profit for the period - - - - 3,062 3,062
Transactions with equity
shareholders:
Issues of new shares 7 485 - - - 492
Equity settled share-based payments - - - - 17 17
Balance at 30 September 2017 174 14,586 3,343 - (4,086) 14,017
------------------------------------- ----------- ------------ ------------ ----------- ----------- ------------
Year ended 31 March 2018:
Balance at 1 April 2017 167 14,101 3,343 - (7,165) 10,446
Profit for the year - - - - 6,966 6,966
Revaluation surplus - - 334 - - 334
Revaluation reserve transfer - - (8) - 8 -
Deferred tax liability - - (62) - - (62)
Transactions with equity
shareholders:
Equity-settled share based payments - - - - 35 35
Dividends - (3,494) - - - (3,494)
Issue of new shares 44 10,435 - 11,347 - 21,826
Balance at 31 March 2018 211 21,042 3,607 11,347 (156) 36,051
------------------------------------- ----------- ------------ ------------ ----------- ----------- ------------
Consolidated Interim Balance Sheet
At 30 September 2018 (unaudited)
Unaudited Restated unaudited Restated audited
30 September 2018 30 September 2017 31 March 2018
Note GBP'000 GBP'000 GBP'000
------------------------------- ----- ------------------- ------------------- -----------------
Non-current assets
Property, plant and equipment 19,627 13,429 16,025
Intangible assets 27,504 2,958 27,797
Deferred tax assets 3 2,045 1,283 2,194
------------------------------- ----- ------------------- ------------------- -----------------
49,176 17,670 46,016
------------------------------- ----- ------------------- ------------------- -----------------
Current assets
Contract Assets 4,480 2,673 4,114
Trade and other receivables 15,777 7,173 15,289
Cash and cash equivalents 9 10,417 14,532 9,431
30,674 24,378 28,834
------------------------------- ----- ------------------- ------------------- -----------------
Total assets 79,850 42,048 74,850
------------------------------- ----- ------------------- ------------------- -----------------
Current liabilities
Trade and other payables 6 (36,426) (27,346) (35,525)
Provisions (98) - (98)
------------------------------- ----- ------------------- ------------------- -----------------
(36,524) (27,346) (35,623)
------------------------------- ----- ------------------- ------------------- -----------------
Non-current liabilities
Deferred tax liabilities (2,847) (685) (2,926)
------------------------------- ----- ------------------- ------------------- -----------------
Total liabilities (39,371) (28,031) (38,549)
------------------------------- ----- ------------------- ------------------- -----------------
Net assets 40,479 14,017 36,301
------------------------------- ----- ------------------- ------------------- -----------------
Equity
Share capital 220 174 211
Share premium 21,344 14,586 21,042
Revaluation reserve 3,607 3,343 3,607
Merger reserve 11,754 - 11,347
Retained earnings 3,554 (4,086) 94
------------------------------- ----- ------------------- ------------------- -----------------
Total equity 40,479 14,017 36,301
------------------------------- ----- ------------------- ------------------- -----------------
Consolidated Interim Cash flow Statement
For the six months ended 30 September 2018 (unaudited)
Unaudited Unaudited
Six months ended 30 Six months ended 30 Audited
September 2018 September 2017 Year ended 31 March 2018
Note GBP'000 GBP'000 GBP'000
-------------------------------- --------------------------- --------------------------- --------------------------
Cash flows from operating
activities
Profit before tax for the
period 3,973 3,700 6,716
Depreciation 442 250 532
Amortisation of intangible
assets
725 75 358
Capitalisation of pipeline
assets (2,695) (1,184) (2,611)
Net finance expense /
(income) 11 (33) (59)
Equity settled share based
payment charges 52 17 35
Decrease / (increase) in
trade and other
receivables 339 (44) (5,924)
(Increase)/decrease in
inventories (366) (1,026) (1,396)
Increase in trade and other
payables 6 530 355 4,830
Decrease in provisions - - (23)
---------------------------- --------------------------- --------------------------- -------------------------- Cash generated from operations 3,011 2,110 2,458 Net interest (paid) / received (11) 33 59 Net cash from operating activities 3,000 2,143 2,517 ---------------------------- --------------------------- --------------------------- -------------------------- Cash flows from investing activities Acquisition of external utility assets (1,758) - (920) Acquisition of property, plant and equipment (205) (186) (170) Acquisition of intangible assets (353) (478) (955) Acquisition of subsidiaries, net of cash acquired - - (10,587) Net cash used in investing activities (2,316) (664) (12,632) ---------------------------- --------------------------- --------------------------- -------------------------- Cash flows from financing activities Dividends paid - - (3,494) Proceeds from issue of share capital 302 492 10,479 Net cash from financing activities 302 492 6,985 ---------------------------- --------------------------- --------------------------- -------------------------- Net increase in cash and cash equivalents 986 1,971 (3,130) Cash and cash equivalents at 1 April 2018 9,431 12,561 12,561 ---------------------------- --------------------------- --------------------------- -------------------------- Cash and cash equivalents at 30 September 2018 10,417 14,532 9,431 ---------------------------- --------------------------- --------------------------- --------------------------
NOTES TO THE INTERIM FINANCIAL INFORMATION
1. General information
Fulcrum Utility Services Limited is a limited company incorporated in the Cayman Islands and domiciled in the UK. The address of its registered office is PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. The Company is listed on the AIM market of the London Stock Exchange.
The condensed consolidated interim financial information, including the financial information for the year ended 31 March 2018 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 period ended 31 March 2018 is derived from the non-statutory accounts for that financial period. The non-statutory accounts for the year ended 31 March 2018 were approved on 5 June 2018. The Auditor's report on those accounts was unqualified and did not draw attention to any matters by way of emphasis of matter.
These interim financial statements have been reviewed, not audited, by the Company's auditors and their Report is set out on page 15.
1.1. Basis of preparation
The condensed consolidated interim financial information for the period ended 30 September 2018 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 2018, which have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 31 March 2018, as described in those financial statements.
1.2. Accounting policies
The financial statements have been prepared using consistent accounting policies except for the first time adoption of IFRS 15 (Revenue from Contracts with Customers) and IFRS 9 (Financial Instruments). The following adopted IFRSs have been issued but have not been applied by the Group in the condensed consolidated interim financial information:
-- IFRS 16 Leases (effective date 1 January 2019)
The Group has not early adopted the new IFRS 16 Lease standard. The adoption of this new standard may have an impact on the financial statements when introduced, however, a detailed analysis of the effect is not yet possible.
Following the implementation of IFRS 15, Revenue from Contracts with Customers, our accounting policy for revenue has been amended as follows:
Adoption of utility assets:
Revenue relating to following the adoption of utility assets (included in Infrastructure revenue) is recognised at the point the assets is "adopted", which is when the performance obligation is satisfied. The value at which the revenue is recognised is the fair value of the asset held with the corresponding entry to tangible assets.
Contract costs:
Costs to obtain a contract are expensed unless they are incremental, i.e. they would not incurred if the contract had been obtained, and the contract is expected to be sufficiently profitable for them to be recovered
There is no impact of IFRS15 adoption on all other revenue streams.
As a result of the change, revenue for the year ended 31 March 2018 has decreased by GBP0.2 million (six month period to 30 September 2017 has increased by GBP0.1 million). For the current period, revenue is GBP1.3 million lower than it would have been prior to the implementation of IFRS 15 and reported profit from operations is GBP1.3 million lower than it would have been prior to the implementation. There is no impact on the Group's cash flows.
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 three operating segments, infrastructure services, gas transportation and Dunamis which was acquired in the year. Fulcrum's infrastructure services provides utility infrastructure and connections services and gas transportation business comprises both the ownership of gas infrastructure assets and the safe and efficient conveyance of gas through its gas 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 2018 Six months to 30 September 2017
-------------------
Dunamis
Infrastructure Gas Dunamis Total Infrastructure Gas GBP'000 Total
Services Transportation GBP'000 Group Services Transportation Group
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------- -------------- -------------- --------- --------- -------------- -------------- --------- --------
Revenue 20,933 1,325 6,960 29,218 18,711 874 - 19,585
Adjusted
EBITDA 3,951 753 720 5,424 3,333 674 - 4,007
Share based
payment
charge (52) - - (52) (17) - - (17)
Depreciation
&
amortisation (139) (310) (718) (1,167) (142) (181) - (323)
------------- -------------- -------------- --------- --------- -------------- -------------- --------- --------
Operating
profit
before
exceptional
items 3,760 443 2 4,205 3,174 493 - 3,667
Exceptional
items (221) - - (221) - - - -
------------- -------------- -------------- --------- --------- -------------- -------------- --------- --------
Operating
profit 3,539 443 2 3,984 3,174 493 - 3,667
Finance
income - - 1 1 13 20 - 33
Finance
expense (12) - - (12) - - - -
Profit before
Tax 3,527 443 3 3,973 3,187 513 - 3,700
------------- -------------- -------------- --------- --------- -------------- -------------- --------- --------
Year ended 31 March 2018
-----------
Infrastructure
Services Gas Transportation Dunamis Total Group
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------ ---------------- ------------------ --------- -----------
Revenue 40,469 1,951 2,427 44,847
Adjusted EBITDA 6,813 1,583 260 8,656
Share based payment charge (35) - - (35)
Depreciation & amortisation (228) (411) (252) (891)
------------------------------------------ ---------------- ------------------ --------- -----------
Operating profit before exceptional items 6,550 1,172 8 7,730
Exceptional items (823) - - (823)
------------------------------------------ ---------------- ------------------ --------- -----------
Operating profit 5,727 1,172 8 6,907
Finance income 27 32 2 61
Finance expense (2) - - (2)
Profit before Tax 5,752 1,204 10 6,966
------------------------------------------ ---------------- ------------------ --------- -----------
The Group derives all of its revenue from the UK and all of the Group's customers are based in the UK.
3. Revenue
The Group's operations and main revenue streams are those described in the last annual financial statements. The Group's revenue is derived from contracts with customers. The nature and effect of initially adopting IFRS 15 on the Group's interim financial statements are disclosed in Note 1.
A. Disaggregation of revenue
In the following table, revenue is disaggregated by primary geographic market, service lines and timing of revenue recognition. The table also includes a reconciliation of the disaggregated revenue with the Group reportable segments (See note 2):
Infrastructure Services Gas Transportation Dunamis
---------------------------------------- ------------------------- -------------------- -----------
GBP'000 2018 2017 2018 2017 2018 2017
---------------------------------------- ------------ ----------- ------------ ------ ----- ----
Primary geographic markets
United Kingdom 20,791 18,711 1,325 874 6,960 -
---------------------------------------- ------------ ----------- ------------ ------ ----- ----
20,791 18,711 1,325 874 6,960 -
---------------------------------------- ------------ ----------- ------------ ------ ----- ----
Service line
Service revenue on long term contracts 8,295 9,401 - - 5,052 -
Service revenue on short term contracts 7,914 7,251 - - 4 -
Maintenance contracts - - - - 1,716 -
Gas transportation - - 1,325 874 - -
Adoption of utility assets 4,582 2,059 - - - -
---------------------------------------- ------------ ----------- ------------ ------ ----- ----
20,791 18,711 1,325 874 6,960 -
---------------------------------------- ------------ ----------- ------------ ------ ----- ----
Timing of revenue recognition
Services transferred at a point in time 4,582 2,059 1,325 874 - -
Services transferred over time 16,209 16,652 - - 6,960 -
---------------------------------------- ------------ ----------- ------------ ------ ----- ----
20,791 18,711 1,325 874 6,960 -
---------------------------------------- ------------ ----------- ------------ ------ ----- ----
B. Contracting balances
The following table provides information about receivables, contract assets and contract liabilities from contracts with customers:
Six months to 30 September 2018 Six months to 30 September 2017 Year ended
31 March 2018
GBP'000 GBP'000 GBP'000
------------------------------------ ------------------------------- ------------------------------- --------------
Receivables, which are included in
"Trade and other receivables" 14,336 14,500 6,012
Contract Assets 4,480 2,673 4,114
Contract liabilities, which are
included in "Trade and other
payables" 27,772 21,637 25,756
------------------------------------ ------------------------------- ------------------------------- --------------
4. Dividend
During the year, the Group declared a dividend of 1.4p per share bringing the total dividend for financial year ended 31 March 2018 to 2.1p per share (financial year ended 31 March 2017: 1.9p per share). This was paid on 26 October 2018. The Board have proposed an interim dividend for financial year 2019 of 0.75p per share (2018: 0.7p) which will be payable on 25 January 2019.
5. Exceptional items
Six months to 30 September Six months to 30 September Year ended 31 March 2018
2018 2017
GBP'000 GBP'000 GBP'000
Restructuring costs 221 - 29
Acquisition costs in respect
of The Dunamis Group
Limited - - 686
Acquisition costs in respect
of CDS PSL Holdings Limited - - 108
----------------------------- ----------------------------- ----------------------------- -------------------------
221 - 823
----------------------------- ----------------------------- ----------------------------- -------------------------
Restructuring costs relate to employee and other costs associated with changing the operating model.
6. Earnings per share
Basic earnings per share have been calculated by dividing the profit attributable to shareholders by the weighted average number of ordinary shares in issue during the period, which were 217,439,403 (September 2017: 171,634,953, March 2018: 178,652,474). Diluted earnings per share is calculated by dividing the profit attributable to ordinary shareholders by the weighted average number of ordinary share in issue adjusted to assume conversion of all potentially dilutive ordinary shares from the start of the year, producing a figure of 235,146,684 (September 2017: 187,135,080; March 2018: 192,539,653).
The earnings per share from continued operations were as follows:
Six months to 30 September Six months to 30 September 2017 Year ended 31 March 2018
Profit per share 2018
------------------------ ------------------------------- -------------------------------- -------------------------
Basic 1.7p 1.8p 4.0p
------------------------ ------------------------------- -------------------------------- -------------------------
Adjusted basic 1.7p 2.2p 4.2p
------------------------ ------------------------------- -------------------------------- -------------------------
Diluted basic 1.6p 1.6p 3.7p
------------------------ ------------------------------- -------------------------------- -------------------------
Diluted adjusted basic 1.6p 1.9p 3.9p
------------------------ ------------------------------- -------------------------------- -------------------------
The calculation of the basic and diluted earnings per share is based upon the following data:
Six months to 30 September Six months to 30 September Year ended 31 March 2018
2018 2017
Profit for the period GBP'000 GBP'000 GBP'000
Profit for the period
attributable to
shareholders 3,658 3,062 7,216
Add exceptional items 221 - 823
Less deferred tax asset
recognised (149) 637 (515)
----------------------------- ----------------------------- ----------------------------- -------------------------
Adjusted profit for the
period attributable to
shareholders 3,730 3,699 7,524
----------------------------- ----------------------------- ----------------------------- -------------------------
7. Taxation
Six months to 30 September 2018 Six months to 30 September 2017 Year ended
31 March 2018
GBP'000 GBP'000 GBP'000
----------------- ------------------------------- ------------------------------- --------------
Current tax 467 - 23
Deferred tax (149) (638) (273)
----------------- ------------------------------- ------------------------------- --------------
Total tax charge 318 (638) (250)
----------------- ------------------------------- ------------------------------- --------------
Deferred tax has been recognised in respect of tax losses carried forward that are expected to be utilised against future taxable profits.
Further reductions to 19% (effective from 1 April 2017) and to 18% (effective 1 April 2020) were substantively enacted on 26 October 2015. An additional reduction to 17% (effective from 1 April 2020) was announced in the Budget on 16 March 2016.
The deferred tax assets at balance sheet date have been calculated based on these rates.
The Group has a further GBP11.5 million (2017: GBP12.1 million) of tax losses of which a deferred tax asset of GBP2.0 million has been recognised. During the period GBP0.2 million of the deferred tax asset was utilised against taxable profits.
8. Capital commitments
During the period ended 30 September 2019 the Group entered into contracts to purchase property, plant and equipment in the form of gas pipelines and electrical cables. The commitment at 30 September 2018 was GBP15.4 million (2017: GBP7.5 million).
9. Intangibles
Goodwill Brand & customer relationships Software Total
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- -------- ------------------------------ -------- -------
Balance at 1 April 2018 14,251 12,399 1,147 27,797
Additions - - 432 432
Amortisation for the period - (678) (47) (725)
----------------------------- -------- ------------------------------ -------- -------
Balance at 30 September 2018 14,251 11,721 1,532 27,504
----------------------------- -------- ------------------------------ -------- -------
10. Trade and other payables
Six months to 30 September 2018 Six months to 30 September 2017 Year ended 31 March 2018
GBP'000 GBP'000 GBP'000
---------------------- -------------------------------- -------------------------------- -------------------------
Trade payables 5,680 2,979 5,992
Contract liabilities 27,772 21,637 25,756
Other payables 3,072 2,730 3,777
---------------------- -------------------------------- -------------------------------- -------------------------
36,524 27,346 35,525
---------------------- -------------------------------- -------------------------------- -------------------------
Of the GBP27.8 million contract liabilities, GBP23.7m (2017: GBP15.6m) relates to deferred income. Deferred income represents contracted sales for which services to customers will be provided in future periods.
11. Cash and cash equivalents
Six months to 30 September 2018 Six months to 30 September 2017 Year ended
31 March 2018
GBP'000 GBP'000 GBP'000
-------------------------- ------------------------------- ------------------------------- --------------
Cash and cash equivalents 10,417 14,532 9,431
-------------------------- ------------------------------- ------------------------------- --------------
Net funds 10,417 14,532 9,431
-------------------------- ------------------------------- ------------------------------- --------------
12. Principal risks
The Board have assessed the Principal Ricks as disclosed in the 2018 Annual Report and accounts and have determined that there has been no change in risk faced or risk rating at 31 March 2018. The principal risks which may affect the business and the future performance of the Group are set out below:
Description Mitigating actions Change in risk -------------------------------------------------- -------------------------------------------------- Growth and strategy execution ------------------------------------------------------------------------------------------------------ -------------- The Board has adopted its strategy, as it believes The Group's strategy is agreed by the Board at an No change it is the one most likely to add the greatest annual strategy meeting and thereafter regularly sustainable value for shareholders and reviewed at Board meetings and by the Executive stakeholders. It is possible that, with time, Directors. The Board engages with management factors and employees to ensure the strategy is become known that indicate that the strategy communicated and currently being pursued is not the most effective understood and that all employees have a clear or efficient and that alternative strategies may understanding of the potential benefits and be more appropriate risks of the strategy. -------------------------------------------------- -------------------------------------------------- Acquisitions ------------------------------------------------------------------------------------------------------ -------------- Early 2018 the Group acquired two businesses, The enlarged Group is overseen by an experienced No change Dunamis Executive Management Team to ensure harmonisation and CDS. The challenges surrounding integrating of strategy and objectives across the Group. The different cultures, working practices and clear communication of the Group's vision, locations could impact team retention and strategy and benefits of acquisitions to both performance. The inability to successfully partners and consumers aligns the teams. The integrate Group is also forming functional teams where our acquisitions may adversely affect consumer possible. and/or partner experience with a resulting impact on strategic cross-sell opportunities and the Group's future revenues. In addition, there is the possibility that the financial and operational control environments of acquired entities are not as established as those of the Group or those required when operating in a listed environment. -------------------------------------------------- -------------------------------------------------- Retention and recruitment ------------------------------------------------------------------------------------------------------ -------------- Success depends on the continued retention and The Group has put in place suitable reward and No change performance of the Group's valued employees. recognition packages to all staff, comprising Skilled development, technical, operating, sales a blend of short and long-term incentives for and marketing personnel are essential for senior managers and Executives. Appropriate the business to meet its strategic goals and the staff development programmes are in place to Group operates in markets with a high demand assess, manage and develop the leadership skills
for high calibre personnel. of staff throughout the organisation. In addition,
we invest in succession planning and improving
learning and development, giving opportunities for
employees to upgrade skills.
-------------------------------------------------- -------------------------------------------------- --------------
Macroeconomic conditions
------------------------------------------------------------------------------------------------------ --------------
The Group derives all its revenues from mainland There has been no material change to the severity No change
UK and is therefore predominately dependent of this risk for the Group throughout the
on the macroeconomic conditions in the UK. As the year. We continue to closely monitor the impact of
UK negotiates the terms of its the increased uncertainty on the UK economy
exit from the European Union, there remains a and how this could impact the sectors in which we
degree of uncertainty on the outlook for the operate. The Group's multi-channel, multi-brand
UK economy. strategy and the increasingly diversified market
position resulting from the Group's most
recent acquisitions, creates a diverse revenue
base which means it is well placed to minimise
any negative impacts. We will continue to employ
robust tendering processes to maintain strong
cost control over Group sourcing.
-------------------------------------------------- -------------------------------------------------- --------------
Competitive environment and reliance on key customers
----------------------------------------------------------------------------------------------------------- ---------
The business strategy relies fundamentally on the Our increasingly diversified position, including the No change
ability to increase revenues and ensuring addition of Dunamis and CDS, has reduced
that the cost base remains under control. However, our exposure to volatility in individual competitive
the markets in which the Group operates markets. These risks are managed through
are competitive. The actions of the Group's the corporate planning and review processes.
competitors, and/or our own inaction, can have
a significant and adverse impact on the Group
including those from organisations that may
be larger and/or have greater capital resources.
---------------------------------------------------- -----------------------------------------------------
Gas and electricity connections market and regulatory environment
----------------------------------------------------------------------------------------------------------- ---------
Operating in the gas industry carries with it The Group seeks to reduce the risk of losses arising No change
inherent risks, such as reliance on ageing from these circumstances through careful
infrastructure, planning, robust operational guidelines and the
potential injury to, or loss of, human life or sharing of risk with client and supplier
equipment, as well as the risk of downtime organisations
or low productivity caused by weather interruptions and by putting in place suitable insurance
or equipment failures. Losses could result arrangements.
from litigation or interruption of the Group's
business should these risks materialise. There
are also associated regulatory risks relating to the
Group's reliance on a number of different
licences, which it requires in order to carry out
the design and project management of connections
to gas pipelines. Fulcrum Pipelines Limited is
specifically licensed by Ofgem, as an Independent
Gas Transporter (IGT) and Fulcrum Electricity Assets
Limited obtained an Independent Network
Distribution Operator (iDNO) Licence during the
year. This brings with it the risk that the
regulatory environment could change, which may have
a direct and significant impact on the
Group's regulated activities.
---------------------------------------------------- ----------------------------------------------------- ---------
Health and safety
----------------------------------------------------------------------------------------------------------- ---------
The health and safety of our employees, We ensure that the Board's health and safety strategy No change
subcontractors, suppliers and customers is of is implemented by our comprehensive
paramount management systems and controls, overseen by our
importance to us. Accidents on our sites could lead Group health and safety department to minimise
to reputational damage and financial penalties. the likelihood and impact of accidents.
---------------------------------------------------- -----------------------------------------------------
Working capital management and funding
----------------------------------------------------------------------------------------------------------- ---------
A changing mix of new contract sales, moving away In granting commercial credit terms, careful No change
from payments in advance toward credit terms, attention is paid to the timing of cash receipts
may place a strain on working capital as the volume and payments over the period of contract delivery.
of credit sales increases. The Group needs Where necessary, a deposit is requested
to ensure that it has the funding required to from customers prior to commencing work and invoicing
deliver on its strategy and future growth plans milestones with customers are matched
and that it manages its debt and cash balances where possible to the invoicing patterns with
effectively. contractors. To support the forecast growth
in utility asset ownership of gas and electricity
assets, the Group agreed a new debt facility
of up to GBP20.0 million with our existing bank,
Lloyds Banking Group plc, on 30 May 2018.
---------------------------------------------------- ----------------------------------------------------- ---------
IT systems and cyber security
-------------------------------------------------- ------------------------------------------------------------------
Fulcrum uses a range of computer systems across the The Group's IT strategies are reviewed regularly to No change
Group. Outages and interruptions could ensure they remain appropriate, with business
affect the ability to conduct day-to-day operations, continuity and disaster recovery testing performed.
which could result in loss of sales and We have a dedicated internal IT support
delays to cash flow. Key systems could be breached team who work closely with our with external
causing financial loss, data loss, disruption support providers to ensure that regular updates
or damage. In addition, any theft or misuse of data to technology, infrastructure, communications and
held within the Group's systems could application systems occur. The Group has
have both reputational and financial implications advanced centralised hardware and software security
for the in place to ensure protection of commercial
Group. and sensitive data. For new IT projects, external
consultants are utilised in conjunction
with internal project management. Restricting
access to data, systems and code and ensuring
all systems are secure and up to date.
---------------------------------------------------- --------------------------------------------------- ---------
13. 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 pages 20 and 21 of the Annual Report and Accounts, which are available on the Fulcrum Utility Services Limited's website at www.fulcrumutilityserviceslimited.co.uk.
Ian Foster's connected party is a director of TQM Ltd. In the six months ended 30 September 2018, TQM provided consulting services to the value of GBP13k.
INDEPENT REVIEW REPORT TO FULCRUM UTILITY SERVICES LIMITED
Conclusion
We have been engaged by the company to review the condensed set of financial statements in the half-yearly report for the six months ended 30 September 2018 which comprises the Consolidated Interim Statement of Comprehensive Income, the Consolidated Interim Statement of Changes in Equity, Consolidated Interim Balance Sheet, Consolidated Interim Cash flow Statement and the related explanatory notes.
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly report for the six months ended 30 September 2018 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and the AIM Rules.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the half-yearly report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Directors' responsibilities
The half-yearly report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly report in accordance with the AIM Rules.
As disclosed in note 1.1, the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards as adopted by the EU. The directors are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with IAS 34 as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly report based on our review
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the company in accordance with the terms of our engagement. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.
Matthew Wilcox
for and on behalf of KPMG LLP
Chartered Accountants
1 Sovereign Square
Sovereign Street
Leeds
LS1 4DA
4 December 2018
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 rns@lseg.com or visit www.rns.com.
END
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