FULCRUM UTILITY SERVICES LIMITED
(“Fulcrum” or “the Group”)
Unaudited interim results for the six months ended 30 September 2020
Fulcrum Utility Services Limited, a leading independent multi-utility infrastructure and services provider focused on delivering infrastructure for the UK's net-zero future, announces its interim results for the six-month period ended 30 September 2020.
Financial highlights
The Group responded quickly to the COVID-19 pandemic and has recovered strongly from its initial impact, with activity levels returning to pre-COVID levels in Q2:
· Revenue of £19.5 million (2019: £19.5 million)
· Adjusted EBITDA(1) loss of £1.0 million (2019: £1.4 million profit), reflecting the impact of COVID-19 combined with investment for strategic growth
· Year on year order book growth of 9.4%, to £68.5 million, as at 30 September 2020 (2019: £62.6 million)
· Adjusted loss before tax(1) of £2.4 million (2019: £0.1 million profit)
· Net cash inflow from operations before tax of £0.7 million (2019: £0.0 million)
· Basic loss per share of 1.4p (2019: 0.4p)
· Net cash at the period end of £1.8 million (31 March 2020: net cash £6.0 million) reflecting capital investment of £4.2 million in acquiring utility assets
Financial strength:
During the period, the Group has maintained its focus on retaining a strong balance sheet and healthy cash flow, balanced with investing for strategic growth. The Group has continued to build its financial strength following the period end:
· The second asset transfer to E.S. Pipelines Limited (“ESP”) completed on 30 November 2020, generating cash of £4.7 million. In addition, the Group received a further £0.4 million in cash relating to the first tranche of the asset transfer, following the achievement of the first enhanced payment milestone
· There is approximately £27 million still to be received from ESP, the majority of which will be received over the next two to three years. Future biannual transfer dates have now been agreed (November and May each year) giving the Group enhanced visibility over the timing of future cashflow receipts
· On 1 December 2020, the Group entered into a new two year £10.0 million Revolving Credit Facility (“RCF”) to fund the acquisition of utility assets. The majority of which, once completed, will ultimately be sold to ESP and the funds used to repay the RCF
Operational highlights
The Group continued to operate effectively, choosing to maintain its core operational capability and winning key contracts in housing, industrial and commercial and smart metering, whilst also selectively investing to further position itself to capitalise on the opportunities presented by a green economy as it moves into a growth phase:
· Effective and rapid response to COVID-19 led to a strong recovery, with activity levels returning to pre-COVID levels in Q2
· Expanded Electric Vehicle team to capitalise on the Government's commitment to invest £1.3bn in the roll out of charging infrastructure
· Built relationships with hydrogen stakeholders, leveraging our existing gas capabilities to offer infrastructure solutions for hydrogen networks. The growth of low carbon hydrogen is a key part of the development of a greener economy and the Group's existing gas capabilities place it very strongly to support the delivery of future hydrogen networks
· Continued to make good progress in executing our strategy, with selective investment in bolstering operational capabilities
· Renewed focus on our high-performance behaviour framework, with a sustained emphasis on supporting and developing our people and bringing in refreshed talent
· Improved our ability to win larger contracts, securing a variety of new and significant contracts that supported sustained order book growth.
Significant contract wins
Housing:
· A £1.6 million multi-utility contract to power and heat 550 homes as part of a major redevelopment scheme*
· A £1.1 million contract to deliver a full multi-utility solution to a major development of 500 new homes
· A £0.8 million contract to deliver a full multi-utility service to a new development of 276 new homes*
Industrial and Commercial:
· A £4.2 million contract to provide 13.5km of new high voltage electrical infrastructure for a major redevelopment project*
· A £1.5 million contract to install 3.8km of gas infrastructure to feed Combined Heat & Power units that will serve a large automotive manufacturing operation*
· A £0.7 million project to design and install electricity infrastructure as part of a substantial extension to a UK shopping centre
· A £0.7 million contract to deliver a full multi-utility solution to a large new commercial development
· A £0.6 million contract to deliver over 2km of gas infrastructure for major new renewable energy project for a food waste recycling specialist
EV:
· Contracts with a major Charge Point Operator to design and install electric vehicle charging infrastructure for two national UK retailers
· A contract to install fleet charging facilities for a logistics organisation
· A contract to install charging infrastructure for major EV charging hub development
Smart Metering:
· The Group secured six new agreements with energy suppliers.
*Contract secured post period end and therefore not included in the order book at 30 September 2020.
Outlook
Strong market drivers support the Group's future aspirations and present significant long-term growth opportunities. These drivers are further reinforced by the Government's Ten Point Plan for a Green Industrial Revolution and National Infrastructure Strategy, both announced in November 2020, which set out measures and funding to support the development of a greener economy and to accelerate the UK's journey to net zero.
The Group has entered the second half of the financial year in a strong position and expects full year revenue to be stable year on year, despite the COVID affected first quarter, and to be profitable on an adjusted EBITDA(1) basis for the full year.
Fulcrum is ideally placed to support the electrical revolution that is needed to facilitate the global move away from fossil fuels. It is a fundamentally robust business with strength in its orderbook , its balance sheet and its operational capabilities and it will be further strengthened by cash from the transfer of assets to ESP. This will enable the Group to achieve its strategic growth objectives and the Board remains confident that the business is well placed to capitalise on the significant, long-term, growth opportunities that a net-zero future presents:
· The electrical revolution in the UK is underway. More electrical infrastructure is needed to deliver low carbon and emissions free green energy, and Ofgem has proposed a five-year investment programme of £25 billion, with potential for an additional £10 billion or more, to transform Britain's energy networks
· The ban on the sale of new petrol and diesel cars and vans from 2030 creates additional impetus for new utility infrastructure to power the nation's electric vehicles, with the Government committing to invest an additional £1.3 billion to accelerate the roll out of charging infrastructure
· The growth of low carbon hydrogen is a key part of the development of a greener economy and the Group's existing gas capabilities place it very strongly to support the delivery of future hydrogen networks
· The UK Government has committed to build an average of 300,000 new homes each year by the mid-2020s, with each home requiring new utility infrastructure
· The smart energy revolution is a critical component of a net-zero future, with energy suppliers required to exchange approximately 30 million meters by mid-2025
Daren Harris, CEO, said:
We responded quickly to the initial impact of the COVID-19 pandemic, allowing a strong recovery in Q2, with activity levels returning to pre-COVID levels. The Group and its people have performed incredibly well, with agility and resilience and I am proud of the recovery we have achieved, together.
At the same time, we made strong progress against our strategic objectives, winning key new contracts in our core markets and selectively investing in the business to support our future growth. We also continued to secure a variety of significant new contracts, achieving a year-on-year order book growth of 9.4%.
Whilst COVID-19 continues to create economic uncertainty in the UK, the Group remains in a strong position. First, we have financial strength, supported by a robust balance sheet, current and future cash from the sale of our domestic gas assets and associated meters to ESP. Second, we have a healthy and growing order book and an improved ability to compete on and secure larger schemes, and third we are supported by strong strategic tailwinds driven by the need to decarbonise the UK's economy.
The Board is very pleased with the progress made in the period. We are encouraged by the various and significant opportunities that a net-zero future presents for long-term growth and are confident the Group is well positioned to capitalise on this.