13 May 2022
FULCRUM UTILITY SERVICES LIMITED
(“Fulcrum” or “the Group”)
Trading Update
Fulcrum Utility Services Limited, a leading independent provider of essential utility services including multi-utility connections, electric vehicle charging infrastructure, renewable energy infrastructure and smart metering solutions, provides a trading update today for its financial year ended 31 March 2022.
Since the Group's fundraise in December 2021, the UK energy market has continued to experience considerable turbulence and whilst the Group's core multi-utility contracting business has remained relatively unaffected by this, the Group's meter exchange operations have not been immune to the fallout from the energy market crisis. In particular, the performance and profitability of the Group's smart meter exchange and management contract with energy supplier, E (Gas and Electricity) Limited (“E”) (“the Contract”), was acutely impacted in the final quarter of the year, primarily as a result of the insolvency of several of the Group's other energy supplier customers and one of the Group's labour-only subcontractors. These events resulted in Fulcrum being unable to service the Contract in a manner to maintain the Contract's profitability for the Group and, as a result, the Board has mutually agreed with E to terminate the Contract.
At the same time, wider market issues of supply chain pressure and cost inflation in materials and labour are weighing on the profitability of the Group's core multi-utility contracting business. These pressures are particularly prevalent in the Group's major multi-utility and complex electrical infrastructure projects, which are inherently specialist and longer term in nature. As such, whilst the Group expects to report adjusted Revenue1 for the year ended 31 March 2022 of £57.4 million, representing year on year growth of 21.8%, adjusted EBITDA2 is now expected to be approximately £0.5 million. Furthermore, the Board expects that whilst the crisis in the energy market, and the difficult market conditions prevail, the Group's order book will soften and this is reflected in the order book value of approximately £48 million3 as at 31 March 2022.
Whilst the Board is mindful of the ongoing volatility in the UK energy market, its priority is to refocus the Group's operations on executing its core utility infrastructure and asset ownership growth strategies whilst protecting and improving margins. Antony Collins was appointed as interim CEO in January this year. Antony has a strong background in business turnaround and brings extensive experience of leading underperforming businesses and, since joining Fulcrum, has worked to put in place a strong and experienced executive team to lead the Group. Jonathan Jager joined the Group as CFO in February and is a highly experienced CFO with over 20 years' experience of developing high performing finance functions within the energy sector. Stuart Crossman joined the Group in January as COO and is a Chartered Engineer with over 40 years in utilities and experience in asset management and delivering excellence in operational performance and health and safety.
The Group's network of utility assets, valued in excess of £36 million as at 31 March 2022, continue to generate recurring income and provide attractive and predictable long-term returns. The Board continues to believe that additional asset ownership presents a significant growth opportunity for the Group. The Board is cognisant that, whilst presenting risks, the current instability in the energy market also produces opportunities for the Group to acquire asset portfolios at attractive valuations. As such, the Board continues to identify and review asset acquisition opportunities and is at varying stages of discussion and due diligence with several opportunities.
Antony Collins, CEO, said:
Despite the challenges presented by both the UK's energy crisis and wider difficult trading conditions, I believe that Fulcrum has the essential capabilities needed to be successful in what are exciting and growing markets. The new executive team is actively reviewing the Group's activities to ensure optimal performance and to identify opportunities to improve profitability and to deliver long term, sustainable growth for the benefit of all shareholders.
The Board is confident that the Group remains well positioned to support the expansion of the UK's energy infrastructure, by providing services that are essential to the UK as it transitions to a net-zero future.