Fulcrum Utility Services - COVID-19 Update & Completion of Sale of Assets
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FULCRUM UTILITY SERVICES LIMITED
("Fulcrum" or the "Company")
COVID-19 Update and Completion of Sale of Domestic Assets
Fulcrum Utility Services Limited, the UK's market leading independent multi-utility infrastructure and services provider, today provides an update on the steps being taken to mitigate the impact of COVID-19 and the completion of the sale of its domestic gas assets.
In response to the COVID-19 pandemic, we have committed, as a responsible business, to follow all Government advice. We will continue to put the safety and wellbeing of our people, our customers and the communities we work in first and foremost. We have done, and will continue to do, everything in our power to ensure that this is the case.
Our people and customers
In this unprecedented time, and in line with the measures introduced by the UK Government on 23rd March, we took our responsibility to safeguard the wellbeing of our field-based people and the communities they work in seriously, by postponing the delivery of all non-essential utility connection and infrastructure works, whilst ensuring we are prepared to remobilise safely and quickly at the appropriate time. In the interim, the Group is delivering its emergency utility service provision and a new fast-tracked service to sites providing critical services to combat COVID-19, such as hospitals, food manufacturing plants, electricity generation sites and medical research facilities and also continues to earn recurring income from its retained, regulated asset base.
We thank our people and our customers for their continued support and commitment.
Trading and immediate priorities
The Group's trading performance for the Financial Year ended 31st March 2020 was broadly in line with expectations. However, following the increasingly stringent measures introduced by the UK Government during March, there has been a more pronounced reduction in demand for our services; many customer sites have closed, with some suppliers also suspending operations. The situation continues to evolve, and we fully expect that there will be further temporary closures and operational disruption, which will continue until restrictions are relaxed.
The Group is pleased to confirm the completion of the sale of the initial tranche of its domestic customer gas connection assets and order book and associated meters, to E.S. Pipelines Limited ("ESP") on 31st March 2020, with cash consideration of £16.8 million (before related expenses) received on Completion, significantly strengthening the Group's balance sheet. As announced on 23rd December 2019, the total estimated net consideration, inclusive of the £16.8m announced today, is expected to be £33 million with the balance to be received in future tranches.
The Group has used the proceeds from the sale to repay its existing debt of £11.0 million in full, leaving the business debt free, other than operating lease obligations and with net cash balances of £5.6 million at close of business on 31st March 2020.
The Group has also welcomed and is accessing available government support measures, including the UK Government's Coronavirus Job Retention Scheme for a significant proportion of its workforce. This should ensure that employees placed on the scheme continue to receive a proportion of their pay during a period of furlough. We have also implemented measures to defer 20% of the pay of employees who have not been furloughed, including the Board and executive management team, as a temporary cash conservation measure. Further, the Group has minimised discretionary expenditure and continues to apply robust discipline to its management of working capital. The cumulative effect of the above measures, once fully implemented, will be to materially reduce the Group's regular monthly overhead base.
We continue to have strong relationships with our bank and are in active discussions regarding the provision of new facilities, backed by our retained, regulated asset base and their recurring income, to support the Group's longer-term needs. We will also continue to consider and access any future government support measures as and when they become available.
The Board will continue to monitor the situation closely and explore further actions as necessary to support the Group's liquidity.
As set out in our interim results on 23rd December 2019, the Group was beginning to generate improved performance and was encouraged by new legislative and regulatory announcements, such as the decarbonisation of energy, that should benefit the Group longer-term. However, given the current economic uncertainty and the unquantifiable impact of COVID-19 on the Group's trading environment, the Board does not believe it is possible to provide guidance for FY2021 at this stage.
However, looking further ahead, we have a fundamentally robust business with a strong orderbook, supported by current and future cash received from the sale of domestic assets to ESP. These factors give the Board confidence that the Group is well positioned to prosper in the long term.
In the meantime, the Group is prioritising maintaining the strength of its balance sheet and its cash reserves . As a result, the Group will not pay a dividend in respect of the financial year ended 31st March 2020 and has decided not to continue with previous plans to implement a share buy-back.
The Group will provide a date for the release of its preliminary results in due course and will provide further updates as and when appropriate.