Fulcrum Utility Services Limited, a leading independent provider of essential utility services including multi-utility connections and renewable energy infrastructure, provides its interim results for the six-month period ended 30 September 2022.
FULCRUM UTILITY SERVICES LIMITED
(“Fulcrum” or “the Group”)
Unaudited interim results for the six months ended 30 September 2022
Fulcrum Utility Services Limited, a leading independent provider of essential utility services including multi-utility connections and renewable energy infrastructure, provides its interim results for the six-month period ended 30 September 2022.
The first half of FY23 has been challenging for the Group, as it has continued to experience the impact of the significant, ongoing demands presented by a turbulent energy market and wider difficult economic conditions.
The Group’s legacy operational issues have also been deeper and more longstanding than anticipated. This, together with challenges with historical projects and the unprecedented cost increases impacting much of the Group’s supply chain, has continued to erode sales margins and weighed heavily on the Group’s performance.
The Group’s progress in the period was also further hampered by a cyber security incident, which impaired managerial and system information, and the ability to fully invoice customers, for up to three weeks.
Financial headlines:
- Revenues for the six months to 30 September 2022 decreased by 16% on the previous year to £23.9 million (H122: £28.6 million)
- Adjusted EBITDA(1) of £(3.3) million (H122: Adjusted EBITDA(1) of £1 million)
- Net cash(2) position as at 30 September 2022 of £4.8 million (30 September 2021: net debt(2) of £3.3 millio n)
1 Adjusted EBITDA is operating (loss) / profit excluding the impact of exceptional items, other net gains, depreciation, amortisation and equity-settled share-based payment charges.
2 Net cash / debt is defined as cash and cash equivalents less loans and borrowings, excluding lease liabilities.
Strategic and operational headlines:
- New Executive team implemented critical improvement actions to protect and improve margins and to refocus the Group on its core utility infrastructure and asset ownership growth strategy
- Despite challenging market conditions, the Group is pleased to have won a series of major utility contract awards in the period including:
- a £4.1m contract to design and deliver the high voltage electrical infrastructure that will power a new 158-acre solar farm and battery storage facility;
- a £2m multi-utility infrastructure project to power a leisure resort in the south of England for a leading brand of family resorts;
- a £2m contract to deliver High Voltage electrical infrastructure that will power a new Battery Energy Storage System in the north of England; and
- a £1.2 million project to support the energisation High Voltage infrastructure for a new 50MW solar farm.
- Importantly, these contracts have been tendered on in line with the Group’s improved margin strategy and have been secured under enhanced contractual terms which better protect the Group and its margins in the current economic conditions
- Inclusive of the contract wins, the order book at 30 September 2022 was £50.2 million, an increase of 3% (31 March 2022: £48.7 million)
Domestic Asset Sale update
- In the period, the Group successfully completed tranche five of the domestic gas assets transfer to ESP for a total consideration of 2.2 million on 31 May 2022. 2.1 million of this was received in cash on 1 June 22 with a further 0.1 million in cash received in respect of the previous tranches of assets transferred.
Post Period end
- The Group is pleased to confirm that it has continued to win a strong succession of new contract wins and continues to build a healthy pipeline of new opportunities;
- Tranche six of the domestic gas assets transfer to ESP was also successfully completed for a total consideration of £1.6 million. £1.5 million of this was received in cash on 1 December 2022;
- The Company entered into an arrangement with Bayford & Co Ltd (“Bayford”) and funds managed by the Harwood Capital Management Limited Group (“Harwood”) in respect of the provision of funding of up to £6 million (the “Facility”) by way of a convertible loan; and
- Review initiated to consider all the various strategic options available to the Group in order to maximise value for all shareholders
- The Group confirms that Antony Collins, Interim CEO, will leave the business on 31 December 2022 following the completion of his 12-month assignment. The Board would like to thank Antony for his contribution to Fulcrum during his tenure
- Lindsay Austin, Managing Director of The Bayford Group, will take over day-to-day responsibility from Antony Collins as Interim CEO. A handover process is currently underway.
Current trading and Outlook
The Executive team’s continuing priority is to protect and improve margins in the current turbulent market conditions. New critical measures, including controls and procedures to ensure optimal performance and to improve and protect the Group’s margins, have been implemented and, whilst the benefits of these actions are yet to be fully realised and will take longer than expected to positively impact the Group’s results, the Board is pleased that the series of multi-utility contracts won in the period have been under these revised contractual terms.
In conjunction with these management improvements, and supported by the new Facility, the Group has initiated a review of the various strategic options available to it to maximise value for all shareholders and to ensure it continues to have adequate working capital.
Medium to long-term market fundamentals remain strong and the Group’s experience and capabilities mean it remains well positioned to benefit from the UK’s transition to a low carbon economy and a net-zero future.
Jennifer Babington, Chair, said:
“The Board and I are disappointed in these results but remain confident that the business is taking the necessary actions to turn the Group’s performance around. This is a challenging task, taking longer than anticipated, as improvements are being implemented alongside turbulent and difficult economic conditions. Despite these challenges, the medium to long-term growth opportunities for the Group remain clear and are underpinned by strong market drivers and government stimulus. We are also very pleased to be supported by our major shareholders as we move the business forward. The recent Facility will support the Group’s strategy review, which will underpin its turnaround. I also believe the new Facility is another positive demonstration of the future potential that our major shareholders see in Fulcrum.”