Fulcrum Utility Services Ltd - Preliminary Results 2019

FULCRUM UTILITY SERVICES LIMITED

("Fulcrum", the "Company" or the "Group")

Preliminary results for the year ended 31 March 2019

 

Fulcrum, the UK's market leading independent multi-utility infrastructure and services provider, today announces its preliminary results for the year ended 31 March 2019.

 

Financial performance

  • Revenue up 20.4% to £48.9 million (2018 restated: £40.6 million)
  • Adjusted EBITDA* up 16.8% to £10.0 million (2018 restated: £8.6 million)
  • Profit before tax of £6.0 million (2018 restated: £6.9 million) and adjusted profit before tax* of £8.6 million (2018 restated: £7.9 million)
  • Net cash inflows from operations of £3.5 million (2018: £3.1 million)
  • Adjusted earnings per share of 3.5p (2018 restated: 4.3p) and basic earnings per share of 2.3p (2018 restated: 3.7p)
  • Net cash of £3.8 million as at 31 March 2019 (2018: £9.4 million)
  • Net assets per share up 17.8% to 20.5p
  • The financial statements for FY2019 reflect the adoption of IFRS15 Revenue from Contracts with Customers and the results for FY2018 have been restated (see next page for impact statement)

 

Dividend

  • The Board is recommending a final dividend of 1.5p per share (2018: 1.4p per share) resulting in a full-year dividend of 2.25p per share (2018: 2.1p), an increase of 7.1% against the prior year
  • The dividend reflects the Board's ongoing confidence in the Group's ability to generate cash and its future prospects.

 

Operational highlights

  • Sustained growth in the order book, up 41% since March 2018 to £60.5 million (2018: £42.8 million)
  • In FY2019, our housing team secured £18.7 million in new multi?utility housing project orders, up 74% on the prior year
  • Utility asset estate transportation revenues up by 53% to £3.0 million, with external capital commitments up by 84% to £18.7 million (2018: £10.4 million) providing forward visibility of asset earnings
  • Enhanced our in-house talent with the addition of new skillsets to underpin our expansion into smart metering and electric vehicle charging infrastructure, alongside developing our expertise in the multi-utility and asset ownership sectors
  • Smart meter accreditations gained and first installation contract secured for 90,000 smart meters, forecast to generate revenues of £12.0 million over a three year period
  • Electric vehicle charging infrastructure projects secured at £1.0 million with our integrated design, build and connect service.

*Adjusted EBITDA is operating profit excluding the impact of exceptional items, depreciation, amortisation and equity settled share based payment charges. Adjusted profit before tax is profit before tax excluding the impact of exceptional items and the amortisation of acquired intangibles. Full reconciliation of APM provided in note 3.

 

Martin Harrison, CEO of Fulcrum, said:

"FY2019 has been a year of progress for the Fulcrum Group. The nature of the UK's ongoing requirement for investment in its new utility infrastructure networks provides us with long-term prospects for continued growth. The Group has established a positive reputation across its markets through a track record of reliable and responsive delivery, evidenced through our relationships with customers.

Whilst we remain vigilant of the short-term impacts of economic and political uncertainty, and expect a softening of the Infrastructure Services market in the current financial year, our strategy to broaden our range of services, especially electric vehicle charging infrastructure and smart metering installations, will continue to provide long-term, sustainable growth opportunities. We look forward to progressing on our strategic priorities over the next 12 months. With the combined expertise, drive and dedication of our employees across the Group, we have a real opportunity to develop our position within the utility services market. We are confident in our ability to deliver incremental value to our stakeholders."

 

Explanation of delay to announcement of preliminary results

The delay to the announcement of the results was due to the Group and its auditor needing to agree the accounting treatment for the adoption of IFRS15: Revenue from Contracts with Customers.  Detailed consideration of accounting guidance led the Group to conclude in late May 2019 that a revised interpretation would be more appropriate. Given the significance of the proposed change it was the subject of extended technical consideration and the Board informed the market of the delay on 3 June 2019 and did not form a final view on the appropriate accounting policies until 5 July 2019.  The change meant that profit on projects would be different depending on whether the infrastructure assets being constructed were to be retained and adopted by the Group's licensed infrastructure companies, or were adopted by a third party licensed infrastructure company. In the case of Group adoption of assets, as more fully described in the paragraph below, an element of profit may be classed as an asset revaluation and is not included in EBITDA. The Group's EBITDA under the new accounting policy was announced to the market on 16 July 2019, with the reduction from the previously announced EBITDA for the year ending 31 March 2019 going directly to Other Comprehensive Income. Since then, EBITDA has not changed but the Group has had to complete an unprecedented amount of analysis to restate balance sheets at 31 March 2017, 2018 and 2019 for c41,000 live supply points as well as integrating the five-yearly external asset revaluation into this work in order to ensure that utility assets and utility assets under construction were properly restated in the Annual Report and Accounts.