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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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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 |
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0 | 0 | N/A | 0 |
TIDMFCRM
RNS Number : 3515H
Fulcrum Utility Services Ltd
03 December 2020
MAR: The information contained within the announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the publication of this announcement via Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.
3 December 2020
FULCRUM UTILITY SERVICES LIMITED
("Fulcrum" or "the Group")
Unaudited interim results for the six months ended 30 September 2020
Fulcrum Utility Services Limited, a leading independent multi-utility infrastructure and services provider focused on delivering infrastructure for the UK's net-zero future, announces its interim results for the six-month period ended 30 September 2020.
Financial highlights
The Group responded quickly to the COVID-19 pandemic and has recovered strongly from its initial impact, with activity levels returning to pre-COVID levels in Q2:
-- Revenue of GBP19.5 million (2019: GBP19.5 million)
-- Adjusted EBITDA(1) loss of GBP1.0 million (2019: GBP1.4 million profit), reflecting the impact of COVID-19 combined with investment for strategic growth
-- Year on year order book growth of 9.4%, to GBP68.5 million, as at 30 September 2020 (2019: GBP62.6 million)
-- Adjusted loss before tax(1) of GBP2.4 million (2019: GBP0.1 million profit) -- Net cash inflow from operations before tax of GBP0.7 million (2019: GBP0.0 million) -- Basic loss per share of 1.4p (2019: 0.4p)
-- Net cash at the period end of GBP1.8 million (31 March 2020: net cash GBP6.0 million) reflecting capital investment of GBP4.2 million in acquiring utility assets
Financial strength:
During the period, the Group has maintained its focus on retaining a strong balance sheet and healthy cash flow, balanced with investing for strategic growth. The Group has continued to build its financial strength following the period end:
-- The second asset transfer to E.S. Pipelines Limited ("ESP") completed on 30 November 2020, generating cash of GBP4.7 million. In addition, the Group received a further GBP0.4 million in cash relating to the first tranche of the asset transfer, following the achievement of the first enhanced payment milestone
-- There is approximately GBP27 million still to be received from ESP, the majority of which will be received over the next two to three years. Future biannual transfer dates have now been agreed (November and May each year) giving the Group enhanced visibility over the timing of future cashflow receipts
-- On 1 December 2020, the Group entered into a new two year GBP10.0 million Revolving Credit Facility ("RCF") to fund the acquisition of utility assets. The majority of which, once completed, will ultimately be sold to ESP and the funds used to repay the RCF
Operational highlights
The Group continued to operate effectively, choosing to maintain its core operational capability and winning key contracts in housing, industrial and commercial and smart metering, whilst also selectively investing to further position itself to capitalise on the opportunities presented by a green economy as it moves into a growth phase:
-- Effective and rapid response to COVID-19 led to a strong recovery, with activity levels returning to pre-COVID levels in Q2
-- Expanded Electric Vehicle team to capitalise on the Government's commitment to invest GBP1.3bn in the roll out of charging infrastructure
-- Built relationships with hydrogen stakeholders, leveraging our existing gas capabilities to offer infrastructure solutions for hydrogen networks. The growth of low carbon hydrogen is a key part of the development of a greener economy and the Group's existing gas capabilities place it very strongly to support the delivery of future hydrogen networks
-- Continued to make good progress in executing our strategy, with selective investment in bolstering operational capabilities
-- Renewed focus on our high-performance behaviour framework, with a sustained emphasis on supporting and developing our people and bringing in refreshed talent
-- Improved our ability to win larger contracts, securing a variety of new and significant contracts that supported sustained order book growth.
Significant contract wins
Housing:
-- A GBP1.6 million multi-utility contract to power and heat 550 homes as part of a major redevelopment scheme*
-- A GBP1.1 million contract to deliver a full multi-utility solution to a major development of 500 new homes
-- A GBP0.8 million contract to deliver a full multi-utility service to a new development of 276 new homes*
Industrial and Commercial:
-- A GBP4.2 million contract to provide 13.5km of new high voltage electrical infrastructure for a major redevelopment project*
-- A GBP1.5 million contract to install 3.8km of gas infrastructure to feed Combined Heat & Power units that will serve a large automotive manufacturing operation*
-- A GBP0.7 million project to design and install electricity infrastructure as part of a substantial extension to a UK shopping centre
-- A GBP0.7 million contract to deliver a full multi-utility solution to a large new commercial development
-- A GBP0.6 million contract to deliver over 2km of gas infrastructure for major new renewable energy project for a food waste recycling specialist
EV:
-- Contracts with a major Charge Point Operator to design and install electric vehicle charging infrastructure for two national UK retailers
-- A contract to install fleet charging facilities for a logistics organisation -- A contract to install charging infrastructure for major EV charging hub development
Smart Metering:
-- The Group secured six new agreements with energy suppliers.
*Contract secured post period end and therefore not included in the order book at 30 September 2020.
Outlook
Strong market drivers support the Group's future aspirations and present significant long-term growth opportunities. These drivers are further reinforced by the Government's Ten Point Plan for a Green Industrial Revolution and National Infrastructure Strategy, both announced in November 2020, which set out measures and funding to support the development of a greener economy and to accelerate the UK's journey to net zero.
The Group has entered the second half of the financial year in a strong position and expects full year revenue to be stable year on year, despite the COVID affected first quarter, and to be profitable on an adjusted
EBITDA(1) basis for the full year.
Fulcrum is ideally placed to support the electrical revolution that is needed to facilitate the global move away from fossil fuels. It is a fundamentally robust business with strength in its orderbook , its balance sheet and its operational capabilities and it will be further strengthened by cash from the transfer of assets to ESP. This will enable the Group to achieve its strategic growth objectives and the Board remains confident that the business is well placed to capitalise on the significant, long-term, growth opportunities that a net-zero future presents:
-- The electrical revolution in the UK is underway. More electrical infrastructure is needed to deliver low carbon and emissions free green energy, and Ofgem has proposed a five-year investment programme of GBP25 billion, with potential for an additional GBP10 billion or more, to transform Britain's energy networks
-- The ban on the sale of new petrol and diesel cars and vans from 2030 creates additional impetus for new utility infrastructure to power the nation's electric vehicles, with the Government committing to invest an additional GBP1.3 billion to accelerate the roll out of charging infrastructure
-- The growth of low carbon hydrogen is a key part of the development of a greener economy and the Group's existing gas capabilities place it very strongly to support the delivery of future hydrogen networks
-- The UK Government has committed to build an average of 300,000 new homes each year by the mid-2020s, with each home requiring new utility infrastructure
-- The smart energy revolution is a critical component of a net-zero future, with energy suppliers required to exchange approximately 30 million meters by mid-2025
Daren Harris, CEO, said:
We responded quickly to the initial impact of the COVID-19 pandemic, allowing a strong recovery in Q2, with activity levels returning to pre-COVID levels. The Group and its people have performed incredibly well, with agility and resilience and I am proud of the recovery we have achieved, together.
At the same time, we made strong progress against our strategic objectives, winning key new contracts in our core markets and selectively investing in the business to support our future growth. We also continued to secure a variety of significant new contracts, achieving a year-on-year order book growth of 9.4%.
Whilst COVID-19 continues to create economic uncertainty in the UK, the Group remains in a strong position. First, we have financial strength, supported by a robust balance sheet, current and future cash from the sale of our domestic gas assets and associated meters to ESP. Second, we have a healthy and growing order book and an improved ability to compete on and secure larger schemes, and third we are supported by strong strategic tailwinds driven by the need to decarbonise the UK's economy.
The Board is very pleased with the progress made in the period. We are encouraged by the various and significant opportunities that a net-zero future presents for long-term growth and are confident the Group is well positioned to capitalise on this.
Footnote:
(1) Fulcrum discloses both statutory and alternative performance measures. A full description and reconciliation of the alternative performance measures is set out in note 3 to the condensed consolidated interim financial information.
Enquiries:
+44 (0)114 280 4102 Fulcrum Utility Services Limited Daren Harris, Chief Executive Officer +44 (0)20 7397 Cenkos Securities plc (Nominated adviser and broker) 8900 Max Hartley (Nomad) / Michael Johnson (Sales) N+1 Singer (Joint Corporate Broker) +44 (0)20 7496 Sandy Fraser / Rachel Hayes / Carlo Spingardi 3000
Notes to Editors:
Fulcrum is a multi-utility infrastructure and services provider. The Group operates nationally with its head office in Sheffield, UK and its main business is the design, build, ownership and maintenance of energy connections and their related utility infrastructure. The Group's offering also extends to smart meter ownership and exchange programmes, and the selective ownership and maintenance of utility networks and infrastructure. https://investors.fulcrum.co.uk/
Operational performance
We made strong progress in the execution of our strategy and in each of our sectors in the period. Including:
-- Bolstering and improving capabilities, operations, processes, management information and control systems to support future strategic growth
-- Providing sustained and significant support and development for our people, whilst bringing in new talent to strengthen our operations
Sector highlights:
Sector Market assessment Business highlights Housing * The housing market is operating effectively during * Enquiry levels were strong as homebuilders seek to the COVID-19 pandemic and the UK's home builders meet demand stimulated by the temporary relaxation of remain optimistic about their ability to operate stamp duty successfully moving forward * Bolstered our business development function and * Market drivers remain strong, with the Government's delivered targeted expansion into new geographies commitment to build 300,000 homes each year by the mid-2020s and 220,600 new build housing completions in 2019/20 * Improved capabilities, resulting from our relationship with ESP, has seen the group being able to successfully compete on larger schemes * Secured the Group's first 1,000+ connection multi-utility housing project * Achieved an enhanced milestone payment in the ESP asset sale via securing a strong series of new housing contract wins ----------------------------------------------------------------- ------------------------------------------------------------------ Industrial and * There is a clear and significant requirement for more * Enquiry levels have remained strong and, during the Commercial electrical and renewable energy generating period, the Group continued to secure a variety of infrastructure to deliver low carbon and emissions substantial contracts free green energy * Established a Major Projects business development * Additional opportunities presented by the UK's exit team to target and secure the most significant from the EU as sectors, including domestic food schemes growth and storage, grow * Significantly bolstered our EV Business Development * The recently announced ban on the sale of new petrol Team and operational delivery function and diesel cars and vans from 2030 creates additional impetus for new utility infrastructure to power the nation's electric vehicles * Secured a variety of projects to design and install electric vehicle charging infrastructure, including contracts for two national UK retailers, fleet * The Government has recently committed to invest charging facilities for a logistics organisation and GBP1.3 billion to accelerate the roll out of EV infrastructure for a major EV charging hub charging infrastructure development ----------------------------------------------------------------- ------------------------------------------------------------------ Smart Metering * Binding obligations on energy suppliers to exchange * Our flexible and responsive service approach has approximately 30 million meters to Smart by mid-2025, supported significant interest from gas and remain electricity suppliers looking to fulfil their regulatory obligations * Bolstered our business development function * Secured new agreements with a variety of energy suppliers and are in advanced discussions with additional energy suppliers ----------------------------------------------------------------- ------------------------------------------------------------------ Maintenance and * The need for an electrical revolution and significant * Provided enhanced, responsive services to suppor Ownership: requirement for more electrical and renewable t generating infrastructure, to deliver low carbon and essential services and industries helping combat emissions free green energy to achieve net zero, will COVID-19 require specialist maintenance ----------------------------------------------------------------- ------------------------------------------------------------------
Financial performance
In the first six months of the year, the Group reported an adjusted EBITDA(1) loss of GBP1.0 million (2019: GBP1.4 million profit). COVID-19 inevitably had a significant impact on the result for the first quarter as revenue was delayed and fixed operational costs continued, offset in part by the Coronavirus Job Retention Scheme. However, the Group reacted responsibly, swiftly and effectively to the global pandemic and as such activity levels in the second quarter returned to pre-COVID levels. Investment in our people, operations and processes has continued through the second quarter as the Group lays the foundations for future growth.
Notwithstanding the disruption from the COVID-19 pandemic, Group revenue remained constant at GBP19.5 million, compared to the first half of last year (2019: GBP19.5 million). Asset ownership revenue also remained in line with the prior period at GBP1.8 million (2019: GBP1.9 million), despite the transfer of the first tranche of assets in the sale of the domestic gas asset portfolio on 31 March 2020 to ESP.
The order book increased by 9.4% since 30 September 2019 to GBP68.5 million (2019: GBP62.6 million). This reflects the ongoing and successful delivery of our sales growth strategy.
The adjusted loss before tax(1) was GBP2.4 million (2019: profit of GBP0.1 million). This reduction was driven by the lower EBITDA(1) performance.
At 30 September 2020, the Group had net cash of GBP1.8 million, a decrease from 31 March 2020 of GBP4.2m (2019: net debt of GBP(2.2) million). This decrease since year end is primarily due to the investment in utility assets which will ultimately be transferred to ESP.
The Group has a strong balance sheet with a net asset value position of GBP43.4 million at 30 September 2020 (FY 2020: GBP46.3m). It remains well capitalised and has benefited from the transfer of the second tranche of assets to ESP on 30 November 2020 for a consideration of GBP4.8 million (GBP4.7 million of which has been received in cash, with the remainder being a retention amount which will be received on 31 May 2022). There is approximately GBP27 million still to be received from ESP, the majority of which will be received over the next two to three years. Future biannual transfer dates have now been agreed with ESP (November and May each year) giving the Group enhanced visibility over the timing of future cashflow receipts . In addition, on 1 December 2020, the Group entered into a new two year GBP10.0 million RCF to fund the acquisition of utility assets, the majority of which, once completed will ultimately be transferred to ESP.
The Board will not be recommending the payment of an interim dividend, considering the loss for the period and continuing near-term economic uncertainty.
Delivering contracts safely, efficiently and profitably
Maintaining the highest standards of health and safety remains our highest priority, especially during the COVID-19 pandemic. A safety-first strategy is in place to ensure zero harm and, although this is well embedded into our culture and operations, we are never complacent and are committed to continuous improvement in health and safety performance.
In the period, we also introduced a COVID Safety Team and COVID Safety Officer to ensure that the Group always complies fully with Government guidelines on managing the risk of COVID-19. Throughout the pandemic, our commitment to the safety and wellbeing of our people, customers and the public has never faltered, and we continue to ensure that there will be no disruption to the high levels of service we offer.
Outlook
Strong market drivers support the Group's future aspirations and present significant long-term growth opportunities. These drivers are further reinforced by the Government's Ten Point Plan for a Green Industrial Revolution and National Infrastructure Strategy, both announced in November 2020, which set out measures and funding to support the development of the greener economy and to accelerate the UK's journey to net zero.
The Group has entered the second half of the financial year in a strong position and expects full year revenue to be stable year on year, despite the COVID affected first quarter, and to be profitable on an adjusted EBITDA(1) basis for the full year.
Fulcrum is ideally placed to support the electrical revolution that is needed to facilitate the global move away from fossil fuels. It is a fundamentally robust business with strength in its orderbook , its balance sheet and its operational capabilities and it will be further strengthened by cash from the transfer of assets to ESP. This will enable the Group to achieve its strategic growth objectives and the Board remains confident that the business is well placed to capitalise on the significant, long-term, growth opportunities that a net-zero future presents.
Footnote:
(1 () Fulcrum discloses both statutory and alternative performance measures. A full description and reconciliation of the alternative performance measures is set out in note 3 to the condensed consolidated interim financial information.
Consolidated Interim Statement of Comprehensive Income
For the six months ended 30 September 2020 (unaudited)
Unaudited Unaudited Audited Six months ended 30 Six months ended 30 Year ended September 2020 September 2019 31 March 2020 Note GBP'000 GBP'000 GBP'000 ------------------------------ ----- ----------------------------- ----------------------------- ------------- Revenue 2 19,516 19,518 46,101 ------------------------------ ----- ----------------------------- ----------------------------- ------------- Cost of sales - underlying (14,845) (13,421) (31,955) Cost of sales - exceptional items 4 (190) - (1,766) ------------------------------ ----- ----------------------------- ----------------------------- ------------- Total cost of sales (15,035) (13,421) (33,721) ------------------------------ ----- ----------------------------- ----------------------------- ------------- Gross profit 4,481 6,097 12,380 Administrative expenses - underlying (7,598) (6,521) (13,611) Administrative expenses - exceptional items 4 (456) (391) (870) ------------------------------ ----- ----------------------------- ----------------------------- ------------- Total administrative expenses (8,054) (6,912) (14,481) ------------------------------ ----- ----------------------------- ----------------------------- ------------- Operating loss (3,573) (815) (2,101) Profit on sale of subsidiary - exceptional items 4 - - 3,886 Net finance expense (105) (126) (472) (Loss)/profit before tax (3,678) (941) 1,313 Taxation 6 611 (1) 243 ------------------------------ ----- ----------------------------- ----------------------------- ------------- (Loss)/profit for the financial period/year (3,067) (942) 1,556 ------------------------------ ----- ----------------------------- ----------------------------- ------------- Other comprehensive income Items that will never be reclassified to (loss)/profit: Revaluation of utility assets - - 3,036 Surplus arising on utility assets internally adopted in the period/year 145 649 951 Reversal of prior increase of utility assets - (153) (1,086) Deferred tax (28) - (321) ------------------------------ ----- ----------------------------- ----------------------------- ------------- Total comprehensive (expense)/income for the period/year (2,950) (446) 4,136 ------------------------------ ----- ----------------------------- ----------------------------- ------------- (Loss)/profit per share attributable to the owners of the business Basic 5 (1.4)p (0.4)p 0.7p Diluted 5 (1.4)p (0.4)p 0.7p ------------------------------ ----- ----------------------------- ----------------------------- -------------
Adjusted EBITDA
Adjusted EBITDA from continuing operations is the basis that the Board uses to measures and monitor the Group's financial performance as it is a more accurate reflection of the commercial reality of the Group's business. Further details of the Alternative Performance Measures are included in note 3.
Unaudited Unaudited Audited Six months Six months Year ended ended 30 ended 30 September 31 March September 2019 2020 2020 GBP'000 GBP'000 GBP'000 ------------------------------------ ------------ -------------------- ------------ Operating loss (3,573) (815) (2,101) Equity-settled share-based payment charge 23 31 (6) Exceptional items within operating loss 646 391 2,636 Depreciation and amortisation 1,937 1,834 4,019 ------------------------------------- ------------ -------------------- ------------ Adjusted EBITDA from continuing operations (967) 1,441 4,548 Surplus arising on sale of domestic utility assets - - 3,886 ------------------------------------- ------------ -------------------- ------------ Adjusted EBITDA including sale
of domestic utility assets (967) 1,441 8,434
Consolidated Interim Statement of Changes in Equity
For the six months ended 30 September 2020 (unaudited)
Share capital Share premium Revaluation Merger reserve Retained Total equity reserve earnings GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 ---------------- -------------- -------------- ---------------- --------------- ---------------- ------------- Balance at 1 April 2020 (audited) 222 389 11,939 11,347 22,410 46,307 Loss for the period - - - - (3,067) (3,067) Surplus arising on utility assets internally adopted in the year - - 145 - - 145 Depreciation on previously revalued assets - - (116) - 116 - Deferred tax liability - - (28) - - (28) Transactions with equity shareholders: Equity settled share-based payments - - - - 23 23 Balance at 30 September 2020 (unaudited) 222 389 11,940 11,347 19,482 43,380 For the six months ended 30 September 2019 Restated balance at 1 April 2019 (audited) 221 210 12,737 11,347 20,714 45,229 Loss for the period - - - - (942) (942) Surplus arising on utility assets internally adopted in the year - - 649 - - 649 Disposal of previously revalued assets - - (153) - 153 - Deferred tax liability - - (85) - - (85) Transactions with equity shareholders: Issues of new shares 1 106 - - - 107 Equity settled share-based payments - - - - 31 31 ---------------- -------------- -------------- ---------------- --------------- ---------------- ------------- Balance at 30 September 2019 (unaudited) 222 316 13,148 11,347 19,956 44,989 ---------------- -------------- -------------- ---------------- --------------- ---------------- -------------
Consolidated Interim Balance Sheet
At 30 September 2020
Unaudited Unaudited Audited 30 September 2020 30 September 2019 31 March 2020 Note GBP'000 GBP'000 GBP'000 -------------------------------- --------- ------------------- ------------------- --------------- Non-current assets Property, plant and equipment 42,626 44,348 38,820 Intangible assets 8 24,711 26,479 25,522 Right-of-use assets 2,334 2,152 2,720 Deferred tax assets 2,441 1,955 1,784 -------------------------------- --------- ------------------- ------------------- --------------- 72,112 74,934 68,846 -------------------------------- --------- ------------------- ------------------- --------------- Current assets Contract Assets 14,586 9,108 12,279 Inventories 422 629 446 Trade and other receivables 9 6,727 6,090 6,826 Cash and cash equivalents 11 1,753 3,782 15,973 -------------------------------- --------- ------------------- ------------------- --------------- 23,488 19,609 35,524 -------------------------------- --------- ------------------- ------------------- --------------- Total assets 95,600 94,543 104,370 -------------------------------- --------- ------------------- ------------------- --------------- Current liabilities Trade and other payables 10 (13,629) (9,075) (11,909) Contract liabilities (30,648) (26,460) (27,905) Borrowings 11 - (6,000) (10,000) Lease liabilities (816) (574) (772) Provisions (58) (96) (58) -------------------------------- --------- ------------------- ------------------- --------------- (45,151) (42,205) (50,644) -------------------------------- --------- ------------------- ------------------- --------------- Non-current liabilities Lease liabilities (1,796) (1,828) (2,226) Deferred tax liabilities (5,273) (5,521) (5,193) -------------------------------- --------- ------------------- ------------------- --------------- (7,069) (7,349) (7,419) -------------------------------- --------- ------------------- ------------------- --------------- Total liabilities (52,220) (49,554) (58,063) -------------------------------- --------- ------------------- ------------------- --------------- Net assets 43,380 44,989 46,307 -------------------------------- --------- ------------------- ------------------- --------------- Equity Share capital 222 222 222 Share premium 389 316 389 Revaluation reserve 11,940 13,148 11,939 Merger reserve 11,347 11,347 11,347 Retained earnings 19,482 19,956 22,410 -------------------------------- -------------------------- ------------------- --------------- Total equity 43,380 44,989 46,307 -------------------------------- -------------------------- ------------------- ---------------
Consolidated Interim Cash Flow Statement
For the six months ended 30 September 2020 Unaudited Unaudited Audited Six months ended 30 Six months ended 30 Year ended 31 March 2020 September 2020 September 2019 GBP'000 GBP'000 GBP'000 ----------------------------- --------------------------- --------------------------- --------------------------- Cash flows from operating activities (Loss)/profit for the period/year after tax (3,067) (942) 1,556 Tax (credit)/charge (611) 1 (243) ----------------------------- --------------------------- --------------------------- --------------------------- (Loss)/profit before tax for the period/year (3,678) (941) 1,313 Adjustments for: Depreciation 994 1,002 2,228 Amortisation of intangible assets 943 832 1,791 Exceptional items - fixed asset impairment - - 1,766 Net finance expense 105 147 472 Equity settled share-based payment charges 23 31 (6) Profit on disposal of
utility assets - - (3,886) Loss on disposal of assets - other - - 3 (Increase)/decrease in c ontract assets (2,307) 23 (3,147) Decrease in trade and other receivables 99 154 916 Decrease/(increase) in inventories 24 (22) 162 Increase/(decrease) in trade and other payables 1,765 (1,374) (1,072) Increase in contract liabilities 2,743 118 1,562 Decrease in provisions - - (38) Cash inflow/(outflow) from operating activities 711 (30) 2,064 Tax paid (39) (345) (410) Net cash inflow/(outflow) from operating activities 672 (375) 1,654 ----------------------------- --------------------------- --------------------------- --------------------------- Cash (outflow)/inflow from investing activities Acquisition of external utility assets (1,919) (2,346) (5,030) Utility assets internally adopted (gross construction cost less impairment) (2,304) (2,707) (6,475) Acquisition of property, plant and equipment (46) (23) (98) Acquisition of intangible assets (132) (243) (326) Proceeds on disposal of utility assets - - 16,756 Proceeds on disposal of assets - other - - 5 Finance income received - - 3 Net cash (outflow)/inflow from investing activities (4,401) (5,319) 4,835 ----------------------------- --------------------------- --------------------------- --------------------------- Cash flows from financing activities Dividends paid - - (3,331) Borrowings (10,000) 3,000 7,000 Interest paid and banking charges (non-IFRS 16) (58) (105) (273) IFRS 16 - principal payments (386) (306) (797) IFRS 16 - interest payments (47) (43) (119) Proceeds from issue of share capital - 106 180 Net cash (outflow)/inflow from financing activities (10,491) 2,652 2,660 ----------------------------- --------------------------- --------------------------- --------------------------- Net (decrease)/increase in cash and cash equivalents (14,220) (3,042) 9,149 Cash and cash equivalents at beginning of period/year 15,973 6,824 6,824 ----------------------------- --------------------------- --------------------------- --------------------------- Cash and cash equivalents at end of period/year 1,753 3,782 15,973 ----------------------------- --------------------------- --------------------------- ---------------------------
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
1. Basis of preparation of the condensed consolidated interim financial information
General information
Fulcrum Utility Services Limited (the "Company") is a limited company incorporated in the Cayman Islands and domiciled in the UK. The ordinary shares are traded on AIM on the London Stock Exchange. The address of its registered office is PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.
The condensed consolidated interim financial information for the six months ended 30 September 2020 comprise the Company and its subsidiaries (together referred to as the "Group").
The condensed consolidated interim financial information, including the financial information for the year ended 31 March 2020 set out in this interim financial information, does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. The information for the year ended 31 March 2020 is derived from the non-statutory accounts for that financial year. The non-statutory accounts for the year ended 31 March 2020 were approved on 6 August 2020. The Auditor's report on those accounts was unqualified. Attention was drawn to the accounting policy in note 1 of the Annual Report and Accounts 2020, which refers to the global Coronavirus pandemic however the audit opinion was not modified in respect of this matter.
These condensed consolidated interim financial statements have not been audited or reviewed. They were approved by the Board on 2 December 2020.
Basis of preparation
The condensed consolidated interim financial information for the six month period ended 30 September 2020 has been prepared in accordance with IAS 34, 'Interim Financial Reporting' as adopted by the European Union. The condensed consolidated interim financial information should be read in conjunction with the Annual Report and Accounts for the year ended 31 March 2020, which have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.
Going-concern basis
The condensed consolidated interim financial information is prepared on the basis that the Group is a going concern. In assessing going concern and determining whether there are material uncertainties, the Directors consider the Group`s business activities, together with factors that are likely to affect its future development and position.
A review of the Group`s cashflows, solvency, liquidity position and borrowing facilities has taken place. At 30 September 2020 the Group had net assets of GBP43.4 million (31 March 2020: GBP46.3 million) including cash of GBP1.8 million (31 March 2020: GBP6.0 million) and had no borrowings. The RCF of GBP10.0 million was fully repaid on 1 April 2020. In the six months to 30 September 2020 the Group generated a net cash inflow from operations before tax of GBP0.7 million (2019: GBP0.0 million).
The Group`s forecasts and projections, after taking account of sensitivity analysis of changes in trading performance and corresponding mitigating actions show that the Group has adequate cash resources for the foreseeable future.
On 30 November 2020 the second tranche of assets were transferred to ESP for a total consideration of GBP4.8 million of which GBP4.7 million was received in cash on that day and GBP0.1 million is withheld as retention and is due on 31 May 2022. In addition, on 1 December 2020, the Group entered into a new 2 year GBP10.0 million RCF to fund the acquisition of utility assets, of which the vast majority will ultimately be sold to ESP.
Accounting policies
The same accounting policies are followed in this condensed consolidated interim financial information as were applied in the Group`s latest audited financial statements to 30 March 2020.
2. Segmental analysis
The Board has been identified as the Chief Operating Decision Maker (CODM) as defined under IFRS 8: Operating Segments. The Directors consider there to be two operating segments, Infrastructure: Design and Build and Utility assets: Own and Operate. Fulcrum's Infrastructure: Design and Build segment provides utility infrastructure and connections services. Utility assets: Own and Operate comprises both the ownership of gas, electrical and meter assets and the safe and efficient conveyance of gas and electricity through its transportation networks. Gas transportation services are provided under the iGT licence granted from Ofgem in June 2007 and electricity services are provided under the iDNO licence granted from Ofgem in November 2017.
The information provided to the Board includes management accounts comprising operating profit before exceptional items for each segment and other financial and non-financial information used to manage the business on a consolidated basis.
Six months to 30 September 2020 Six months to 30 September 2019 (unaudited) (unaudited) Infrastructure: Design and Utility assets: Infrastructure: Utility assets: Build Own and Operate Total Group Design and Build Own and Operate Total Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 ----------------- ---------------- ---------------- ----------- ----------------- ---------------- ----------- Reportable segment revenue 17,748 1,768 19,516 17,624 1,894 19,518 Adjusted EBITDA from continuing operations * (1,383) 416 (967) 660 781 1,441 Share based payments (23) - (23) (31) - (31) Depreciation and amortisation (1,462) (475) (1,937) (1,300) (534) (1,834) ----------------- ---------------- ---------------- ----------- ----------------- ---------------- ----------- Reportable segment operating (loss)/profit before exceptional items (2,868) (59) (2,927) (671) 247 (424) Cost of sales -exceptional items - (190) (190) - - - Administrative expenses -exceptional items (437) (19) (456) (391) - (391) ----------------- ---------------- ---------------- ----------- ----------------- ---------------- ----------- Reporting segment operating (loss)/profit (3,305) (268) (3,573) (1,062) 247 (815) Net finance expense (102) (3) (105) (40) (86) (126) ----------------- ---------------- ---------------- ----------- ----------------- ---------------- ----------- (Loss)/profit before tax (3,407) (271) (3,678) (1,102) 161 (941) ----------------- ---------------- ---------------- ----------- ----------------- ---------------- -----------
Year ended 31 March 2020 (audited)
Utility assets: Total Group Infrastructure: Own and Operate GBP'000 Design and Build GBP'000 GBP'000 ------------------------------------------------------------------- ------------------ ---------------- ----------- Reportable segment revenue 41,848 4,253 46,101 Adjusted EBITDA from continuing operations* 2,341 2,207 4,548 Share based payment 6 - 6 Depreciation and amortisation (2,887) (1,132) (4,019) ------------------------------------------------------------------- ------------------ ---------------- ----------- Reportable segment operating (loss)/profit before exceptional items (540) 1,075 535 ------------------------------------------------------------------- ------------------ ---------------- ----------- Cost of sales -exceptional items - (1,766) (1,766) Administrative expenses - exceptional items (832) (38) (870) ------------------------------------------------------------------- ------------------ ---------------- ----------- Reporting segment operating loss (1,372) (729) (2,101) Profit on sale of subsidiary - exceptional items - 3,886 3,886 Net finance expense (219) (253) (472) ------------------------------------------------------------------- ------------------ ---------------- ----------- (Loss)/profit before tax (1,591) 2,904 1,313 ------------------------------------------------------------------- ------------------ ---------------- -----------
*Adjusted EBITDA from continuing operations is operating (loss)/profit excluding the impact of exceptional items, depreciation, amortisation and equity-settled share based payment charges. A full reconciliation of Alternative Performance Measures is provided in note 3.
The Group derives all of its revenue from the UK and all of the Group's customers are based in the UK. The Group`s revenue is derived from contracts with customers.
3. Alternative Performance Measures ("APMs")
The Group uses APMs, as listed below, to present users of the accounts with a clear view of what the Group considers to be the results of its underlying, sustainable business operations, thereby enabling consistent period-on-period comparisons and making it easier for users of the accounts to identify trends. APMs are not defined by IFRS and therefore may not be directly comparable with other companies` APMs. APMs should be considered in addition to, and are not intended to be a substitute for, or superior to, IFRS measurements.
Alternative Performance Measure Definition ------------------------------- --------------------------------------------- Adjusted EBITDA from continuing Operating (loss)/profit excluding exceptional operations items, amortisation, depreciation and equity-settled share-based payments Adjusted (loss)/profit (Loss)/profit before taxation excluding before taxation amortisation of acquired intangibles and exceptional items included within cost of sales and administrative expenses Net assets per share Net assets divided by the number of shares in issue at the financial reporting date ------------------------------- ---------------------------------------------
A reconciliation of APMs to statutory measures is disclosed in the tables below:
(a) Reconciliation of operating loss to "adjusted EBITDA from continuing operations"
Unaudited Unaudited Audited Six months Six months Year ended ended 30 September ended 30 31 March 2020 September 2020 2019 GBP'000 GBP'000 GBP'000 --------------------------------------------- ------------ ------------ Operating loss (3,573) (815) (2,101) Adjusted for: Exceptional items within operating loss (note 4) 646 391 2,636 Amortisation and depreciation 1,937 1,834 4,019 Equity-settled share-based payments 23 31 (6) ------------------------------------- ------- ------------ ------------ Adjusted EBITDA from continuing operations (967) 1,441 4,548 ------------------------------------- ------- ------------ ------------
(b) Reconciliation of (loss)/profit before tax to "adjusted (loss)/profit before tax"
Unaudited Unaudited Audited Six months ended Six months Year ended 30 September ended 30 31 March 2020 September 2020 2019 GBP'000 GBP'000 GBP'000 ------------------------------------- ------------------ ------------ ------------ (Loss)/profit before tax (3,678) (941) 1,313 Adjusted for: Exceptional items included in cost of sales 190 - 1,766 Exceptional items included in administrative expenses 456 391 870 Amortisation of acquired intangibles 678 678 1,356 ------------------------------------- ------------------ ------------ ------------ Adjusted (loss)/profit before tax (2,354) 128 5,305 ------------------------------------- ------------------ ------------ ------------
(c) Net assets per share
Unaudited Unaudited Audited 30 September 30 September 31 March 2020 2019 2020 ------------------------------------ -------------- -------------- ---------- Net assets at end of period/year (GBP`000) 43,380 44,989 46,307 Issued shares at end of period/year (000`s) 222,118 221,106 222,118 Net assets per share (p) 19.5p 20.3p 20.8p ------------------------------------ -------------- -------------- ---------- 4. Exceptional items Unaudited Unaudited Audited Six months ended 30 September Six months ended 30 September Year ended 2020 2019 31 March 2020 GBP'000 GBP'000 GBP'000 ------------------------------------- ------------------------------- ------------------------------- ------------- Exceptional items included in cost of sales 190 - 1,766 Exceptional items included in administrative expenses 456 391 870 Profit on sale of subsidiary - - (3,886) ------------------------------------- ------------------------------- ------------------------------- ------------- 646 391 (1,250) ------------------------------------- ------------------------------- ------------------------------- ------------- (a) Exceptional items included in cost of sales Unaudited Unaudited Audited Six months ended 30 September Six months ended 30 September Year ended 2020 2019 31 March 2020 GBP'000 GBP'000 GBP'000 ------------------------------------- ------------------------------- ------------------------------- ------------- Fixed asset impairment - - 1,766 Exceptional remedial works to 190 - - utility assets ------------------------------------- ------------------------------- ------------------------------- ------------- 190 - 1,766 ------------------------------------- ------------------------------- ------------------------------- -------------
Fixed asset impairment relates to the impairment of utility assets not previously revalued upwards.
(b) Exceptional items included in administrative expenses Unaudited Unaudited Audited Six months ended 30 September Six months ended 30 September Year ended 2020 2019 31 March 2020 GBP'000 GBP'000 GBP'000 --------------------------------- -------------------------------- -------------------------------- ------------- Restructuring costs 33 276 641 One-off legal and advisor costs 323 40 229 Other one-off costs 100 75 - --------------------------------- -------------------------------- -------------------------------- ------------- 456 391 870 --------------------------------- -------------------------------- -------------------------------- -------------
Restructuring costs relate to employee exit and severance costs. One off legal and advisor costs include costs incurred in the Group`s response to the Proposed Tender Offer from Harwood Capital LLP. Other one off costs include non-recurring Group re-organisational costs.
(c) Profit on sale of subsidiary Unaudited Unaudited Audited Six months ended 30 September Six months ended 30 September Year ended 2020 2019 31 March 2020 GBP'000 GBP'000 GBP'000 ------------------------------ --------------------------------- --------------------------------- ------------- Profit on sale of subsidiary - - (3,886) ------------------------------ --------------------------------- --------------------------------- ------------- - - (3,886) --------------------------------- ---------------------------------------------------------------- -------------
On 27 January 2020, utility assets belonging to one of the Group's subsidiaries, Fulcrum Pipelines Limited, were transferred to a fellow Group subsidiary, Gas Newco 1 Limited. On 31 March 2020, the Group disposed of its 100% equity interest in Gas Newco 1 Limited. The transaction gave rise to the following profit on disposal:
Year ended 31 March 2020 GBP'000 ----------------------------------------- --------------- Consideration - proceeds received (16,756) Consideration - retention (receivable in September 2021) (500) Consideration - deferred (received 30 June 2020) (670) ----------------------------------------- --------------- Total consideration (17,926) Net book value of assets acquired 9,724 Revaluation in prior periods 3,071 Legal costs relating to the transaction 1,245 ----------------------------------------- --------------- (3,886) ----------------------------------------- ---------------
Some of the disposed utility assets had previously been revalued in accordance with the Group policy. Upon disposal, this gave rise to a transfer between the revaluation reserve and retained earnings of GBP3,071,000.
5. Earnings per share (EPS)
The calculation of the adjusted basic and diluted earnings per share is based upon the following (loss)/profit attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding:
Unaudited Unaudited Audited Six months ended 30 September Six months ended 30 September Year ended 2020 2019 31 March 2020 GBP'000 GBP'000 GBP'000 ----------------------------------- -------------------------------- -------------------------------- ------------- (Loss)/profit for the period/year used for the calculation of basic EPS (3,067) (942) 1,556 Exceptional items included in cost of sales 190 - 1,766 Exceptional items included in administrative expenses 456 391 870 Remove tax relief on exceptional items (123) (74) (501) Add amortisation of intangibles* 678 832 1,356 ----------------------------------- -------------------------------- -------------------------------- -------------
( Loss)/profit for the period/year used for the calculation of adjusted EPS (1,866) 207 5,047 ----------------------------------- -------------------------------- -------------------------------- -------------
*Excludes amortisation of software and developments costs
Number of shares ('000):
30 September 30 September 31 March 2020 2020 Number 2019 Number Number of of Shares of Shares Shares -------------------------------- ------------- ------------- -------------- Weighted average number of ordinary shares for the purpose of basic EPS 222,118 221,651 221,907 Effect of potentially dilutive ordinary shares 4,901 9,490 4,901 -------------------------------- ------------- ------------- -------------- Weighted average number of ordinary shares for the purpose of diluted EPS 227,019 231,141 226,808 -------------------------------- ------------- ------------- -------------- Unaudited Unaudited Audited Six months Six months Year ended ended 30 ended 30 31 March EPS September September 2020 2020 2019 -------------------------------- ------------- ------------- ---------------- Basic (1.4)p (0.4)p 0.7p Diluted basic (1.4)p (0.4)p 0.7p Adjusted basic (0.8)p 0.1p 2.3p Adjusted diluted (0.8)p 0.1p 2.2p -------------------------------- ------------- ------------- ---------------- 6. Taxation Unaudited Unaudited Audited Six months ended 30 September Six months ended 30 September Year ended 2020 2019 31 March 2020 GBP'000 GBP'000 GBP'000 --------------------------- ------------------------------- ------------------------------- ------------ Current tax (7) - 128 Deferred tax (604) 1 (371) --------------------------- ------------------------------- ------------------------------- ------------ Total tax (credit)/charge (611) 1 (243) --------------------------- ------------------------------- ------------------------------- ------------
A change to the main UK corporation tax rate, announced in the Budget on 11 March 2020, was substantively enacted on 17 March 2020. The rate applicable from 1 April 2020 now remains at 19.0%. Deferred tax balances have been adjusted accordingly and are calculated on the basis that they will unwind at 19.0%.
The Group has GBP12.8 million (31 March 2020: GBP9.3 million) of tax losses for which deferred tax assets of GBP2.4 million (31 March 2020: GBP1.8 million) have been recognised. The deferred tax asset increased by GBP0.6 million as a result of the newly recognised losses in the period (31 March 2020: GBP0.1 million utilised). The deferred tax asset is expected to be recovered over 12 years (31 March 2020: 12 years). The Group also has unrecognised tax losses of GBP1.8 million (31 March 2020: GBP1.8 million), for which no deferred tax asset is recognised as there is insufficient certainty over whether the losses will reverse.
7. Capital commitments
At the 30 September 2020 the Group had entered into contracts to purchase property, plant and equipment in the form of utility assets for the amount of GBP12.1 million. The capital commitment at 31 March 2020 was GBP14.0 million and at 30 September 2019 was GBP16.4 million .
8. Intangible assets Goodwill Brand & customer relationships Software Total GBP`000 GBP'000 GBP'000 GBP'000 --------------------------------- --------- ------------------------------ --------- --------- At 1 April 2019 (audited) 14,251 11,045 1,773 27,069 Additions - - 242 242 Amortisation for the period - (678) (154) (832) --------------------------------- --------- ------------------------------ --------- --------- At 30 September 2019 (unaudited) 14,251 10,367 1,861 26,479 --------------------------------- --------- ------------------------------ --------- --------- Additions - - 84 84 Disposals - - (91) (91) Amortisation for the period - (678) (272) (950) --------------------------------- --------- ------------------------------ --------- --------- At 31 March 2020 (audited) 14,251 9,689 1,582 25,522 --------------------------------- --------- ------------------------------ --------- --------- Additions - - 132 132 Amortisation for the period - (678) (265) (943) --------------------------------- --------- ------------------------------ --------- --------- At 30 September 2020 (unaudited) 14,251 9,011 1,449 24,711 --------------------------------- --------- ------------------------------ --------- --------- 9. Trade and other receivables Unaudited Unaudited Audited 30 September 2020 30 September 2019 31 March 2020 GBP'000 GBP'000 GBP'000 ----------------------------------- ------------------- ------------------- --------------- Trade receivables 4,051 3,448 3,744 Other receivables and prepayments 2 ,676 2,642 3,082 ----------------------------------- ------------------- ------------------- --------------- 6,727 6,090 6,826 ----------------------------------- ------------------- ------------------- --------------- 10. Trade and other payables Unaudited Unaudited Audited 30 September 2020 30 September 2019 31 March 2020 GBP'000 GBP'000 GBP'000 ---------------- ------------------- ------------------- --------------- Trade payables 6,532 3,961 5,593 Other payables 7,097 5,114 6,316 ---------------- ------------------- ------------------- --------------- 13,629 9,075 11,909 ---------------- ------------------- ------------------- --------------- 11. Reconciliation to net funds/(debt) Unaudited Unaudited Audited 30 September 2020 30 September 2019 31 March 2020 GBP'000 GBP'000 GBP'000 -------------------------- ------------------ ------------------ -------------- Cash and cash equivalents 1,753 3,782 15,973 Borrowings - (6,000) (10,000) -------------------------- ------------------ ------------------ -------------- Net funds/(debt) 1,753 (2,218) 5,973 -------------------------- ------------------ ------------------ --------------
12. Related parties
The Group has a related party relationship with its subsidiaries and with its key management personnel. Details of the remuneration, share options and pension entitlement of the Directors are included in the Remuneration Report on page 44 of the Annual Report and Accounts 2020, which are available on Fulcrum Utility Services Limited's website at https://investors.fulcrum.co.uk/
13. Principal risks
The Board has assessed the Principal Risks, as disclosed on pages 24 to 28 of the Annual Report and Accounts 2020, which are available on Fulcrum Utility Services Limited's website at https://investors.fulcrum.co.uk/ , and have determined that there has been no change in risks faced or the risk rating to most of the risks detailed.
It has been determined that two risks have been reduced as set out below:
Description Mitigating actions Change in risk ----------------------------------------------------------------- ----------------------------------------------------------------- COVID-19 ------------------------------------------------------------------------------------------------------------------------------------ ------- There is a risk that: Reduced * The recent outbreak and global spread of COVID-19 has * The Group has proven that it can continue to operate a significant and prolonged impact on the UK economy effectively in a UK lockdown due to the essential and may disrupt our supply chain and our customers' nature of the services it provides and the markets it projects and adversely impact our operations. serves * The temporary emergency public safety measures which the UK Government introduced, continue for an extended period of time, increasing pressure on our operations due to an economic downturn. ----------------------------------------------------------------- ----------------------------------------------------------------- Working capital management and funding ------------------------------------------------------------------------------------------------------------------------------------ ------- There is a risk that: Reduced * The Group does not have the working capital * The Group has maintained its focus on retaining a management and funding required to deliver on its strong balance sheet and healthy cash flow as strategy and future growth plans described within the Financial Strength overview. ----------------------------------------------------------------- ----------------------------------------------------------------- -------
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