REG - Fulcrum Utility Srvc - Interim Results
02/12/2021 07:00
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RNS Number : 2859U Fulcrum Utility Services Ltd 02 December 2021
2 December 2021
FULCRUM UTILITY SERVICES LIMITED
("Fulcrum" or "the Group")
Unaudited interim results for the six months ended 30 September 2021
Positive H1 performance, with full year anticipated to be in line with
expectations
Fulcrum Utility Services Limited, a leading independent provider of essential
utility services including multi-utility connections, electric vehicle
charging infrastructure, renewable energy infrastructure services and smart
metering solutions, announces its interim results for the six-month period
ended 30 September 2021.
The Group is pleased to announce it has made good progress in the first half
of the year, as it recovers from the impact of Covid-19 and demonstrates
resilience against the current volatility in the UK energy market.
Financial highlights
* H1 trading in line with management expectations;
* Trading for the full financial year is anticipated to be in line with market
expectations;
* Revenues for the six months to 30 September 2021 increased by 46% on the
previous year to £28.6 million (H1 2021: £19.5 million), demonstrating a
strong recovery following Covid-19's impact;
* Adjusted EBITDA((1)) of £1.0 million (H1 2021: loss of £1.0 million) in line
with management expectations;
* Loss before tax of £1.3 million (H1 2021: loss of £3.7 million) reflecting
increased adjusted EBITDA((1)) and a reduction in exceptional items;
* Net debt((2)) of £3.3 million (31 March 2021: £1.5 million) with headroom of
£5.6 million on the Group's Revolving Credit Facility at 30 September 2021.
Strategic highlights
* Achieved significant order book growth of 44%, up £24.8 million to £80.9
million at 30 September 2021 (31 March 2021: £56.1 million), driven by
securing a variety of significant new contract wins;
* Successful completion of tranche three of the domestic gas assets transfer to
ESP for a total consideration of £3.8 million, with £3.7 million of this
received in cash on 1 June 2021;
* The Group's refocused attention on cost discipline has delivered a 14%
reduction in underlying overhead costs((3)) compared to H2 FY21. The Group
expects further benefits from its actions to be realised in H2 FY22;
* The Group's broad and diverse business operations continue to demonstrate
resilience within a currently volatile energy market.
Domestic Asset Sale update
The Group is pleased to confirm the successful completion of tranche four of
the domestic gas assets transfer to ESP for a total consideration of £2.8
million on 30 November 2021. £2.7 million of this was received in cash on 30
November 2021 with a further £0.1 million in cash received in respect of the
previous tranches of assets transferred. This additional payment was a result
of the Group achieving the first enhanced payment milestone under the asset
sale agreement.
In FY22 to date, the Group has successfully completed the transfers of both
the third and fourth tranches of its domestic customer gas connection assets
to ESP for a total consideration of £6.6 million.
The Group continues to evaluate opportunities, particularly in the smart
energy infrastructure market, where strong Government stimulus and an
increasing regulatory framework present significant and strategic growth
opportunities to monetise all aspects of meter life.
Current trading and Outlook
The Board is satisfied with the Group's trading and performance in the first
half of the year and confirms a positive outlook for the full financial year,
which is anticipated to be in line with market expectations.
Fulcrum has demonstrated resilience during both the Covid-19 pandemic and the
currently volatile energy market. The Board believes that this performance
reflects the fundamental strength of the Group's business model with its broad
and diverse operations and revenue streams.
The Group has a substantially enlarged orderbook and healthy sales pipeline,
which continues to grow. Market fundamentals also remain very strong and there
is a significant growth opportunity for the Group across all the diverse
sectors it operates in, supported by Government stimulus that underpins the
UK's transition to a low carbon economy.
The Board is excited by Fulcrum's future growth potential and remains
confident that the Group's growing and healthy order book, robust business
model and diverse and specialist energy infrastructure capabilities, essential
to supporting the UK's energy transition, position it well to capitalise on
these significant opportunities.
Terry Dugdale, CEO, said:
"We have made good progress across all areas of the business in the first half
of the year. Our order book is healthy and continues to grow.
The resilience demonstrated by the Group to date in the face of ongoing
turbulence in the energy market is, I believe, a testament to the robustness
of the Group's business model, diverse operations and order book strength.
Our continued focus on stabilising the business and strengthening its
foundations has enabled us to grow in our core markets and provides a robust
platform from which to grow the business further. The backdrop of the UK's
smart energy revolution and vision for a net-zero future presents Fulcrum with
significant and strategic growth opportunities and I am excited by the future
prospects for the Group."
Enquiries:
Fulcrum Utility Services Limited +44 (0)114 280 4150
Terry Dugdale, Chief Executive Officer
Cenkos Securities plc (Nominated adviser and broker) +44 (0)20 7397 8900
Camilla Hume / Callum Davidson (Nomad) / Michael Johnson (Sales)
Notes to Editors:
Fulcrum is a multi-utility infrastructure and services provider. The Group
operates nationally with its head office in Sheffield, UK. It designs, builds,
owns and maintains utility infrastructure and offers smart meter exchange
programmes. https://investors.fulcrum.co.uk
Strategic and operational performance, by sector:
Fulcrum uses its specialist and broad capabilities to provide multi-utility
infrastructure services and solutions to four key sectors, nationally. In the
period, the Group made positive progress in all sectors, delivering a
significantly enlarged order book.
The Board believes that substantial growth opportunities exist for the Group
in each sector that the Group operates in, all of which are underpinned by
strong regulatory and Government stimulus.
Sector Growth drivers and Strategic progress Noteworthy contract wins in H1 FY22
stimulus
in H1 FY22
Smart · c.29 million meters to exchange in the UK by end of 2025, with a · The Group's smart metering exchange and management services saw a · A five-year agreement, anticipated to be worth £20 million, with
metering significant ramp up in activity expected to achieve the deadline positive recovery post Covid-19 energy supplier E to manage its 320,000 UK meter points and exchange an
expected 80,000 meters
The Group is an active, and quickly growing, participant in the UK's Smart · Significant and strategic growth opportunities exist for the · Commenced mobilisation of five-year agreement with E
Metering market, delivering smart meter exchange programmes and gas and Group as a participant in the smart energy infrastructure market across all
electricity meter installation, management and maintenance services aspects of the meter life
Housing · The UK Housing market continued to be buoyant in the period · Established in the market with various UK housebuilders and well · Two contracts, with a combined value of £5.9 million, to deliver
positioned to expand on its currently low market share multi-utility infrastructure at a major new development, Fairham. The Group
The Group provides a total design and build multi-utility infrastructure and · The UK's undersupply of housing, supported by strong government
also has the opportunity to deliver multi-utility connections for the
connections service for new housing developments of all sizes across the UK incentives · Selectively tendered on new opportunities in line with margin development's 3,000 new homes in the future
strategy
· Recent estimates indicate 340,000 new homes are needed each year
· A £1.1 million contract to deliver multi-utility connections to
until 2031 to bridge a structural undersupply · Secured a strong flow of new contract wins, which were supported 715 new homes on behalf of a national home builder
by the Group's improved competitiveness in this sector
· A £1.0 million project to install multi-utility infrastructure
to connect 412 new homes on behalf of a national developer
· A £0.6 million contract to deliver utility infrastructure to
power and heat 285 new homes on behalf of a regional homebuilder
Industrial & Commercial ("I&C") (including EV Connections) · Electricity is a key enabler in decarbonising the economy and · The Group's strong, specialist capabilities and broad offering · A £5.5 million contract to design and install 21.1km of
electricity demand could double by 2050 position it well to benefit from the UK's I&C and EV utility multi-utility infrastructure that will heat and power a large-scale greenhouse
The Group provides multi-utility infrastructure for all sizes and complexities
infrastructure needs
of I&C and EV projects, including niche high voltage and specialist gas · Increased need for more electrical infrastructure to power and
· A £4.9 million contract to design and install high voltage
connections support the renewable energy generating and battery storage infrastructure · Selectively tendered on new opportunities in line with margin electricity, water, and gas infrastructure for a major new innovative
that is essential to transition to net zero strategy employment park
· 2030 ban on the sale of new petrol and diesel cars and proposal · The Group used its capabilities to secure a variety of major · A £1.6 million project to deliver a 7km gas pipeline to help
to ban all new diesel and petrol heavy goods vehicles from 2040 multi-utility infrastructure projects in the period delivering significant power a significant new cereal processing plant
order book growth
· A £0.7 million project to design and build a 1.8km pipeline
that will connect a major new biomethane plant to the gas network
· A £0.4 million contract to deliver high voltage EV charging
infrastructure that will power a commercial fleet of electric vehicles
Maintenance and Ownership · Increased need and demand for more solar, wind and battery · The Group's portfolio of I&C utility assets continues to · Secured a new five-year high voltage electrical maintenance
storage developments, which require specialist maintenance to keep these sites deliver attractive and predictable long-term returns with potential for contract for two new 50MW battery storage facilities located in Kent and
The Group has specialist high voltage electrical maintenance capabilities, operational and at optimum performance further investment and growth Oxford which will provide power to sites including a new EV charging Superhub
including services and support for renewable energy generating and battery
storage infrastructure. It is licensed to provide gas and electricity asset · The Group successfully completed the planned transfer of the
ownership and adoption services third tranche of its domestic customer gas connection assets to ESP
Financial performance
The first half financial performance of the Group was in line with
management's expectations and significantly ahead of the first half of last
year, which was impacted by Covid-19.
Group revenue for the first six months of the financial year was £28.6
million, £9.1 million, 46% ahead of the first half of last year (H1 2021:
£19.5 million). Both operating segments contributed to this growth in
revenue, however the majority of the increase came from the Infrastructure:
Design and Build segment (£8.9 million), reflecting increased activity on
larger projects.
Gross margin, excluding the impact of exceptional items, was 21.9% in the
first half of the financial year, a reduction of 2.0% compared to the first
half of FY21. This reflects the Group's success in securing a variety of
larger value, and typically lower margin, contracts across its core markets,
which began to be delivered in the period.
An increased focus on cost discipline has resulted in a 14% reduction in
underlying overhead expenses((3)) during the first half of the year compared
to the second half of the financial year to 31 March 2021.
Adjusted EBITDA((1)) was £1.0 million, a £2.0 million increase compared to
the first half of last year (H1 2021: £1.0 million loss) reflecting a robust
recovery from the challenges Covid-19 presented to the Group last year. The
loss before tax was £1.3 million (H1 2021: loss of £3.7 million). This
improvement reflects the higher adjusted EBITDA((1) )performance and a
reduction in exceptional items.
The order book has increased significantly since 31 March 2021, reflecting the
larger contract wins secured following the year end. At 30 September 2021 the
order book was £80.9 million, an increase of 44% from £56.1 million, at 31
March 2021.
Over the six months to 30 September 2021, net asset value reduced to £34.1
million (FY 2021: £35.4 million) primarily as a result of the £1.1 million
loss after tax (H1 2021: loss of £3.1 million) and reduces net assets per
share to 15.4p per share from 15.9p per share at 31 March 2021.
At 30 September 2021, the Group had net debt((2)) of £3.3 million, an
increase of £1.8 million from 31 March 2021 (FY 2021: net debt of £1.5
million). This increase since year end is primarily due to the investment in
utility assets of £2.3 million, essential IT infrastructure upgrades of £0.3
million, leases of £0.5 million and an outflow of £2.8 million from
operating activities, reflecting the increase in revenue and the mobilisation
on a number of large contracts that have recently started, offset by proceeds
related to asset sales to ESP.
Delivering contracts safely, efficiently, and profitably
Maintaining the highest standards of health and safety remains our highest
priority and the Group continues to operate with robust Covid-19 secure
measures in place to protect all its stakeholders. A safety-first strategy is
in place to ensure zero harm and, although this is well embedded into our
culture and operations, we are never complacent and are committed to
continuous improvement in health and safety performance.
The Group has achieved substantial order book growth in the period whilst
maintaining its robust and selective tendering processes. This ensures that
contracts won can be delivered in line with the Group's requirements and
margin strategy.
(1) Adjusted EBITDA from continuing operations is operating loss
excluding the impact of exceptional items, other (losses) / gains,
depreciation, amortisation and equity-settled share-based payment charges
(2) Net debt is defined as cash and cash equivalents less loans and
borrowings, excluding lease liabilities
(3) Underlying overheads is administrative expenses excluding the impact
of exceptional items, depreciation, amortisation and equity-settled
share-based payment charge
Consolidated Interim Statement of Comprehensive Income
For the six months ended 30 September 2021 (unaudited)
Unaudited Unaudited Audited
Six months ended 30 September 2021 Six months ended 30 September 2020 Year ended
31 March
2021
Note £'000 £'000 £'000
Revenue 2 28,552 19,516 47,054
Cost of sales - underlying (22,306) (14,845) (35,211)
Cost of sales - exceptional items 4 - (190) (2,050)
Total cost of sales (22,306) (15,035) (37,261)
Gross profit 6,246 4,481 9,793
Administrative expenses - underlying (7,063) (7,598) (15,912)
Administrative expenses - exceptional items 4 (184) (456) (6,400)
Total administrative expenses (7,247) (8,054) (22,312)
Other (losses)/gains 5 (34) - 1,353
Operating loss (1,035) (3,573) (11,166)
Net finance expense (256) (105) (293)
Loss before tax (1,291) (3,678) (11,459)
Taxation 7 187 611 1,178
Loss for the financial period/year (1,104) (3,067) (10,281)
Other comprehensive income
Items that will never be reclassified to profit or loss:
Revaluation of utility assets - - 1,569
Surplus arising on utility assets internally adopted in the period/year 119 145 338
Reversal of prior increase of utility assets (83) - (3,548)
Additional costs allocated to previously revalued assets (37) - -
Deferred tax (380) (28) 560
Total comprehensive expense for the period/year (1,485) (2,950) (11,362)
Loss per share attributable to the owners of the business
Basic 6 (0.5)p (1.4)p (4.6)p
Diluted 6 (0.5)p (1.4)p (4.5)p
Adjusted EBITDA
Adjusted EBITDA from continuing operations is the basis that the Board uses to
measure and monitor the Group's financial performance as it is a more accurate
reflection of the commercial reality of the Group's business. Further details
of the Alternative Performance Measures are included in note 3.
Unaudited Unaudited Audited
Six months ended 30 September 2021 Six months ended 30 September Year ended
£'000
2020 31 March
£'000
2021
£'000
Operating loss (1,035) (3,573) (11,166)
Equity-settled share-based payment charge 216 23 436
Other losses/(gains) 34 - (1,353)
Exceptional items within operating loss 184 646 8,450
Depreciation and amortisation 1,598 1,937 3,739
Adjusted EBITDA from continuing operations 997 (967) 106
(Loss)/surplus arising on sale of domestic utility assets and enhanced (34) - 1,353
payments
Adjusted EBITDA including sale of domestic utility assets 963 (967) 1,459
Consolidated Interim Statement of Changes in Equity
For the six months ended 30 September 2021 (unaudited)
Share capital Share premium Revaluation reserve Merger reserve Retained earnings Total equity
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 April 2021 (audited) 222 389 9,552 11,347 13,871 35,381
Loss for the period - - - - (1,104) (1,104)
Surplus arising on utility assets internally adopted in the period - - 119 - - 119
Disposal of previously revalued assets - - (1,179) - 1,179 -
Depreciation on previously revalued assets - - (129) - 129 -
Reversal of prior increase of utility assets - - (83) - - (83)
Additional costs allocated to previously revalued assets - - (37) - - (37)
Deferred tax - - (380) - - (380)
Transactions with equity shareholders:
Equity settled share-based payments - - - - 216 216
Balance at 30 September 2021 (unaudited) 222 389 7,863 11,347 14,291 34,112
For the six months ended 30 September 2020
Restated balance at 1 April 2020 (audited) 222 389 11,549 11,347 22,800 46,307
Loss for the period - - - - (3,067) (3,067)
Surplus arising on utility assets internally adopted in the period - - 145 - - 145
Depreciation on previously revalued assets - - (116) - 116 -
Deferred tax - - (28) - - (28)
Transactions with equity shareholders:
Equity settled share-based payments - - - - 23 23
Balance at 30 September 2020 (unaudited) 222 389 11,550 11,347 19,872 43,380
Consolidated Interim Balance Sheet
At 30 September 2021
Unaudited Unaudited Audited
30 September 2021 30 September 2020 31 March 2021
Note £'000 £'000 £'000
Non-current assets
Property, plant and equipment 9 35,071 42,626 37,314
Intangible assets 10 18,240 24,711 18,907
Right-of-use assets 2,732 2,334 3,081
Deferred tax assets 3,645 2,441 2,710
59,688 72,112 62,012
Current assets
Contract assets 21,241 14,586 15,640
Inventories 462 422 438
Trade and other receivables 11 7,927 6,727 6,550
Cash and cash equivalents 14 1,035 1,753 3,934
30,665 23,488 26,562
Total assets 90,353 95,600 88,574
Current liabilities
Trade and other payables 12 (12,570) (13,629) (12,669)
Contract liabilities (30,636) (30,648) (27,098)
Current lease liability (913) (816) (996)
Provisions (34) (58) (54)
(44,153) (45,151) (40,817)
Non-current liabilities
Non-current lease liability (2,152) (1,796) (2,382)
Borrowings 13 (4,296) - (5,483)
Deferred tax liabilities (5,640) (5,273) (4,511)
(12,088) (7,069) (12,376)
Total liabilities (56,241) (52,220) (53,193)
Net assets 34,112 43,380 35,381
Equity
Share capital 222 222 222
Share premium 389 389 389
Revaluation reserve 7,863 11,550 9,552
Merger reserve 11,347 11,347 11,347
Retained earnings 14,291 19,872 13,871
Total equity 34,112 43,380 35,381
Consolidated Interim Cash Flow Statement
For the six months ended 30 September 2021
Unaudited Unaudited Audited
Six months ended 30 September 2021 Six months ended 30 September 2020 Year ended 31 March 2021
£'000 £'000 £'000
Cash flows from operating activities
Loss for the period/year after tax (1,104) (3,067) (10,281)
Tax credit (187) (611) (1,178)
Loss before tax for the period/year (1,291) (3,678) (11,459)
Adjustments for:
Depreciation 874 994 1,919
Amortisation of intangible assets 724 943 1,820
Exceptional items - fixed asset impairment - - 1,857
Exceptional items - intangible asset impairment - - 4,935
Net finance expense 256 105 293
Equity settled share-based payment charges 216 23 436
Loss/(profit) on disposal of utility assets 119 - (873)
Increase in contract assets (5,197) (2,307) (3,361)
(Increase)/decrease in trade and other receivables (1,903) 99 (201)
(Increase)/decrease in inventories (24) 24 8
(Decrease)/increase in trade and other payables (94) 1,765 2,995
Increase/(decrease) in contract liabilities 3,538 2,743 (807)
Decrease in provisions (20) - (4)
Cash (outflow)/inflow from operating activities (2,802) 711 (2,442)
Tax paid - (39) (108)
Net cash (outflow)/inflow from operating activities (2,802) 672 (2,550)
Cash flows from investing activities
Acquisition of external utility assets (1,166) (1,919) (3,958)
Utility assets internally adopted (1,097) (2,304) (3,503)
Acquisition of property, plant and equipment (216) (46) (87)
Acquisition of intangible assets (57) (132) (140)
Proceeds on disposal of utility assets 3,725 - 4,578
Receipt of deferred consideration on disposal of utility assets 642 - 670
Costs paid in relation to disposal of subsidiary - - (1,245)
Costs paid in relation to disposal of utility assets (28) - (102)
Proceeds on disposal of assets - other - - 9
Net cash inflow/(outflow)from investing activities 1,803 (4,401) (3,778)
Cash flows from financing activities
Borrowings received 2,000 - 5,700
Borrowings repaid (3,250) (10,000) (10,000)
Prepaid arrangement fees (3) - (247)
Interest paid and banking charges (non-IFRS 16) (137) (58) (153)
IFRS 16 - principal payments (453) (386) (861)
IFRS 16 - deposit payments - - (11)
IFRS 16 - interest payments (57) (47) (139)
Net cash outflow from financing activities (1,900) (10,491) (5,711)
Net decrease in cash and cash equivalents (2,899) (14,220) (12,039)
Cash and cash equivalents at beginning of period/year 3,934 15,973 15,973
Cash and cash equivalents at end of period/year 1,035 1,753 3,934
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
1. Basis of preparation of the condensed consolidated interim
financial information
General information
Fulcrum Utility Services Limited (the "Company") is a limited company
incorporated in the Cayman Islands and domiciled in the UK. The ordinary
shares are traded on AIM on the London Stock Exchange. The address of its
registered office is PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman
Islands.
The condensed consolidated interim financial information for the six months
ended 30 September 2021 comprise the Company and its subsidiaries (together
referred to as the "Group").
The condensed consolidated interim financial information, including the
financial information for the year ended 31 March 2021 set out in this
interim financial information, does not comprise statutory accounts within the
meaning of section 434 of the Companies Act 2006. The information for the year
ended 31 March 2021 is derived from the non-statutory accounts for that
financial year. The non-statutory accounts for the year ended 31 March 2021
were approved on 30 July 2021. The Auditor's report on those accounts was
unqualified.
These condensed consolidated interim financial statements have not been
audited or reviewed. They were approved by the Board on 1 December 2021.
Basis of preparation
The condensed consolidated interim financial information for the six month
period ended 30 September 2021 has been prepared in accordance with IAS 34,
'Interim Financial Reporting' as adopted by the United Kingdom. The condensed
consolidated interim financial information should be read in conjunction with
the Annual Report and Accounts for the year ended 31 March 2021, which have
been prepared in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the United Kingdom.
Going-concern basis
The condensed consolidated interim financial information is prepared on the
basis that the Group is a going concern. In assessing going concern and
determining whether there are material uncertainties, the Directors consider
the Group`s business activities, together with factors that are likely to
affect its future development and position.
A review of the Group`s cash flows, solvency, liquidity position and borrowing
facilities has taken place. At 30 September 2021 the Group had net assets of
£34.1 million (31 March 2021: £35.4 million) including net debt of £3.3
million (31 March 2021: net debt of £1.5 million). In the six months to 30
September 2021 the Group's net cash outflow from operations before tax was
£2.8 million (FY 2021: £2.4 million).
The Group`s forecasts and projections, after taking account of sensitivity
analysis of changes in trading performance and corresponding mitigating
actions show that the Group has adequate cash resources for the foreseeable
future.
Accounting policies
The same accounting policies are followed in this condensed consolidated
interim financial information as were applied in the Group`s latest audited
financial statements to 31 March 2021.
2. Segmental analysis
The Board has been identified as the Chief Operating Decision Maker (CODM) as
defined under IFRS 8: Operating Segments. The directors consider there to be
two operating segments, Infrastructure: Design and Build, and Utility assets:
Own and Operate. Fulcrum's Infrastructure: Design and Build segment provides
utility infrastructure and connections services. Utility assets: Own and
Operate comprises both the ownership of gas, electrical and meter assets and
the safe and efficient conveyance of gas and electricity through its
transportation networks. Gas transportation services are provided under the
iGT licence granted from Ofgem in June 2007 and electricity services are
provided under the iDNO licence granted from Ofgem in November 2017.
The information provided to the Board includes management accounts comprising
operating result before exceptional items for each segment and other financial
and non-financial information used to manage the business on a consolidated
basis.
Six months to 30 September 2021 Six months to 30 September 2020
(unaudited) (unaudited)
Utility assets: Total Utility assets: Total
Group
Group
Infrastructure: Own and Operate
Infrastructure: Own and Operate
£'000
£'000
Design and Build £'000 Design and Build £'000
£'000 £'000
Reportable segment revenue 26,665 1,887 28,552 17,748 1,768 19,516
Adjusted EBITDA from continuing operations* 213 784 997 (1,383) 416 (967)
Other gains/(losses) 85 (119) (34) - - -
Share based payments (216) - (216) (23) - (23)
Depreciation and amortisation (1,326) (272) (1,598) (1,462) (475) (1,937)
Reportable segment operating (loss)/profit before exceptional items (1,244) 393 (851) (2,868) (59) (2,927)
Cost of sales - exceptional items - - - - (190) (190)
Administrative expenses -exceptional items (184) - (184) (437) (19) (456)
Reporting segment operating (loss)/profit (1,428) 393 (1,035) (3,305) (268) (3,573)
Net finance expense (45) (211) (256) (102) (3) (105)
(Loss)/profit before tax (1,473) 182 (1,291) (3,407) (271) (3,678)
Year ended 31 March 2021 (audited)
Infrastructure: Utility assets:
Design and Build Own and Operate Total Group
£'000 £'000 £'000
Reportable segment revenue 43,400 3,654 47,054
Adjusted EBITDA from continuing operations* (969) 1,075 106
Other gains 480 873 1,353
Share based payment (436) - (436)
Depreciation and amortisation (2,979) (760) (3,739)
Reportable segment operating (loss)/profit before exceptional items (3,904) 1,188 (2,716)
Cost of sales - exceptional items - (2,050) (2,050)
Administrative expenses - exceptional items (6,400) - (6,400)
Reporting segment operating loss (10,304) (862) (11,166)
Net finance expense (171) (122) (293)
Loss before tax (10,475) (984) (11,459)
*Adjusted EBITDA from continuing operations is operating loss excluding the
impact of exceptional items, other losses/gains, depreciation, amortisation
and equity-settled share based payment charges. A full reconciliation of
Alternative Performance Measures are provided in note 3.
The Group derives all of its revenue from the UK and all of the Group's
customers are based in the UK. The Group`s revenue is derived from contracts
with customers.
3. Alternative Performance Measures ("APMs")
The Group uses APMs, as listed below, to present users of the accounts with a
clear view of what the Group considers to be the results of its underlying,
sustainable business operations, thereby enabling consistent period-on-period
comparisons and making it easier for users of the accounts to identify trends.
APMs are not defined by IFRS and therefore may not be directly comparable with
other companies` APMs. APMs should be considered in addition to, and are not
intended to be a substitute for, or superior to, IFRS measurements.
Alternative Performance Measure Definition
Adjusted EBITDA from continuing operations Operating loss excluding exceptional items, other losses/gains, amortisation
and depreciation and equity-settled share-based payments
Adjusted loss before taxation Loss before taxation excluding amortisation of acquired intangibles and
exceptional items included within cost of sales and administrative expenses
Net assets per share Net assets divided by the number of shares in issue at the financial reporting
date
A reconciliation of APMs to statutory measures is disclosed in the tables
below:
(a) Reconciliation of operating loss to "adjusted EBITDA from continuing
operations"
Unaudited Unaudited Audited
Six months ended 30 September Six months ended 30 September Year ended
2021 2020 31 March
2021
£'000 £'000 £'000
Operating loss (1,035) (3,573) (11,166)
Adjusted for:
Exceptional items within operating loss (note 4) 184 646 8,450
Other losses/(gains) (note 5) 34 - (1,353)
Amortisation and depreciation 1,598 1,937 3,739
Equity-settled share-based payments 216 23 436
Adjusted EBITDA from continuing operations 997 (967) 106
(b) Reconciliation of loss before tax to "adjusted loss before taxation"
Unaudited Unaudited Audited
Six months ended 30 September Six months ended 30 September Year ended
2021 2020 31 March
2021
£'000 £'000 £'000
Loss before tax (1,291) (3,678) (11,459)
Adjusted for:
Exceptional items included in cost of sales - 190 2,050
Exceptional items included in administrative expenses 184 456 6,400
Amortisation of acquired intangibles 624 678 1,356
Adjusted loss before taxation (483) (2,354) (1,653)
(c) Net assets per share
Unaudited Unaudited Audited
30 September 30 September 31 March
2021 2020 2021
Net assets at end of period/year (£`000) 34,112 43,380 35,381
Issued shares at end of period/year (000`s) 222,118 222,118 222,118
Net assets per share (p) 15.4p 19.5p 15.9p
4. Exceptional items
Unaudited Unaudited Audited
Six months ended 30 September Six months ended 30 September Year ended
2021 2020 31 March
2021
£'000 £'000 £'000
Exceptional items included in cost of sales - 190 2,050
Exceptional items included in administrative expenses 184 456 6,400
184 646 8,450
(a) Exceptional items included in cost of sales
Unaudited Unaudited Audited
Six months ended 30 September Six months ended 30 September Year ended
2021 2020 31 March
2021
£'000 £'000 £'000
Fixed asset impairment - - 1,857
Exceptional remedial works to utility assets - 190 193
- 190 2,050
(b) Exceptional items included in administrative expenses
Unaudited Unaudited Audited
Six months ended 30 September Six months ended 30 September Year ended
2021 2020 31 March
2021
£'000 £'000 £'000
Restructuring costs 74 33 569
One-off legal and advisor costs 110 423 896
Intangible asset impairment - - 4,935
184 456 6,400
5. Other (losses)/gains
Included within other (losses)/gains are the following amounts:
Unaudited Unaudited Audited
Six months ended 30 September Six months ended 30 September Year ended
2021 2020 31 March
2021
£'000 £'000 £'000
(Loss)/profit on disposal of assets (119) - 873
Enhanced payments received 85 - 480
(34) - 1,353
Enhanced payments are amounts receivable by the Group when the number of
domestic connections introduced by the Group to a third-party reaches certain
pre-agreed thresholds.
The (loss)/profit on disposal of assets represents the (loss)/gain arising on
sale of certain of the Group's utility assets to a third-party. The Group has
entered into an agreement with the third party to sell part of its utility
assets portfolio in structured tranches. The (loss)/profit outlined below is
the result of assets transferred in the current and previous financial
period/year.
Unaudited Audited
Six months ended 30 September Year ended
2021 31 March
2021
£'000 £'000
Consideration - proceeds received 3,725 4,578
Consideration - retention receivable 115 142
Total consideration 3,840 4,720
Net book value of assets sold (including the effect of previous revaluations) (3,931) (3,712)
Legal costs relating to the transactions (28) (102)
Discounting of retention consideration due in more than one year - (33)
(Loss)/profit on disposal of assets (119) 873
Some of the disposed utility assets had previously been revalued in accordance
with the Group policy. Upon disposal, this gave rise to a transfer between the
revaluation reserve and retained earnings of £1,179,000 (year ended 31 March
2021: £574,000).
£642,000 was received in September 2021 in relation to retention amounts
receivable. £500,000 related to Tranche 1 of the asset sale, and £142,000
related to Tranche 2 of the asset sale.
6. Earnings per share (EPS)
The calculation of the adjusted basic and diluted earnings per share is based
upon the following loss attributable to ordinary shareholders and the weighted
average number of ordinary shares outstanding:
Unaudited Unaudited Audited
Six months ended 30 September Six months ended 30 September Year ended
2021 2020 31 March
2021
£'000 £'000 £'000
Loss for the period/year used for the calculation of basic EPS (1,104) (3,067) (10,281)
Exceptional items included in cost of sales - 190 2,050
Exceptional items included in administrative expenses 184 456 6,400
Remove tax relief on exceptional items (35) (123) (1,606)
Amortisation of brands and customer relationships 624 678 1,356
Loss for the period/year used for the calculation of adjusted EPS (331) (1,866) (2,081)
Number of shares ('000):
30 September 30 September 31 March
2021
2020
2021
Weighted average number of ordinary shares for the purpose of basic EPS 222,118 222,118 222,118
Effect of potentially dilutive ordinary shares 4,219 4,901 7,434
Weighted average number of ordinary shares for the purpose of diluted EPS 226,337 227,019 229,552
Unaudited Unaudited Audited
Six months ended 30 September Six months ended 30 September Year ended
2021 2020 31 March
2021
EPS
Basic (0.5)p (1.4)p (4.6)p
Diluted basic (0.5)p (1.4)p (4.5)p
Adjusted basic (0.1)p (0.8)p (0.9)p
Adjusted diluted (0.1)p (0.8)p (0.9)p
7. Taxation
Unaudited Unaudited Audited
Six months ended 30 September Six months ended 30 September Year ended
2021 2020 31 March
2021
£'000 £'000 £'000
Current tax - (7) (130)
Deferred tax (187) (604) (1,048)
Total tax credit (187) (611) (1,178)
At Budget 2020, the Government announced that the Corporation Tax main rate
(for all profits except ring fenced profits) for the years starting 1 April
2021 and 1 April 2022 would be 19%. At Budget 2021, the Government announced
that the Corporation Tax main rate would rise to 25% for the tax year starting
1 April 2023. The increase in the tax rate to 25% is considered to be
substantively enacted, and accordingly the deferred tax balances that are
expected to unwind after 1 April 2023 have been calculated at 25%.
The Group has £12.6 million (31 March 2021: £12.1 million) of tax losses for
which deferred tax assets of £3.1 million (31 March 2021: £2.7 million) have
been recognised. The deferred tax asset is expected to be recovered over 5
years. The Group also has unrecognised tax losses of £3.0 million (31 March
2021: £3.0 million) for which no deferred tax asset has been recognised as
there is insufficient certainty over whether those losses will reverse.
8. Capital commitments
At 30 September 2021 the Group had entered into contracts to purchase
property, plant and equipment in the form of utility assets for the amount of
£8.9 million. The capital commitments at 31 March 2021 were £9.6 million and
at 30 September 2020 were £12.1 million.
9. Property, plant and equipment
Utility Fixtures Computer equipment Total
assets
and fittings
£'000
£'000 £'000
£'000
Cost
At 1 April 2020 (audited) 66,588 1,065 1,276 68,929
Externally acquired assets 1,919 - 60 1,979
Internally adopted assets 2,296 - - 2,296
Surplus arising on internally adopted assets 145 - - 145
Disposals - (15) - (15)
At 30 September 2020 (unaudited) 70,948 1,050 1,336 73,334
Externally acquired assets 1,566 19 8 1,593
Internally adopted assets 874 - - 874
Surplus arising on internally adopted assets 193 - - 193
Revaluation 1,659 - - 1,659
Disposals (3,860) - - (3,860)
At 31 March 2021 (audited) 71,380 1,069 1,344 73,793
Externally acquired assets 1,161 - 216 1,377
Internally adopted assets 578 - - 578
Surplus arising on internally adopted assets 119 - - 119
Disposals (3,951) - - (3,951)
At 30 September 2021 (unaudited) 69,287 1,069 1,560 71,916
Accumulated depreciation
At 1 April 2020 (audited) (28,271) (717) (1,121) (30,109)
Depreciation charge for the period (466) (55) (82) (603)
Disposals - 4 - 4
At 30 September 2020 (unaudited) (28,737) (768) (1,203) (30,708)
Depreciation charge for the period (269) (88) (67) (424)
Impairment from external revaluation (5,495) - - (5,495)
Disposals 148 - - 148
At 31 March 2021 (audited) (34,353) (856) (1,270) (36,479)
Depreciation charge for the period (254) (30) (102) (386)
Disposals 20 - - 20
At 30 September 2021 (unaudited) (34,587) (886) (1,372) (36,845)
Net book value
At 30 September 2021 (unaudited) 34,700 183 188 35,071
At 31 March 2021 (audited) 37,027 213 74 37,314
At 30 September 2020 (unaudited) 42,211 282 133 42,626
At 31 March 2020 (audited) 38,317 348 155 38,820
Additions of internally adopted assets within utility assets in the six months
ended 30 September 2021 are stated at the full cost of construction of £0.8
million (year ended 31 March 2021: £8.8 million) less the deficit arising on
internally adopted assets of £0.2 million (year ended 31 March 2021: £5.6
million).
10. Intangible assets
Goodwill Brand & customer relationships Software Total
£`000 £'000 £'000 £'000
At 1 April 2020 (audited) 14,251 9,689 1,582 25,522
Additions - - 132 132
Amortisation for the period - (678) (265) (943)
At 30 September 2020 (unaudited) 14,251 9,011 1,449 24,711
Additions - - 8 8
Amortisation for the period - (678) (199) (877)
Impairment for the period (4,494) (218) (223) (4,935)
At 31 March 2021 (audited) 9,757 8,115 1,035 18,907
Additions - - 57 57
Amortisation for the period - (624) (100) (724)
At 30 September 2021 (unaudited) 9,757 7,491 992 18,240
11. Trade and other receivables
Unaudited Unaudited Audited
30 September 2021 30 September 2020 31 March 2021
£'000 £'000 £'000
Trade receivables 4,392 4,051 3,938
Other receivables and prepayments 3,535 2,676 2,612
7,927 6,727 6,550
12. Trade and other payables
Unaudited Unaudited Audited
30 September 2021 30 September 2020 31 March 2021
£'000 £'000 £'000
Trade payables 6,830 6,532 6,524
Other payables 5,740 7,097 6,145
12,570 13,629 12,669
13. Interest-bearing loans and borrowings
Changes in liabilities arising from financing activities are shown below:
Unaudited Unaudited Audited
30 September 2021 30 September 2020 31 March 2021
£'000 £'000 £'000
At the beginning of the period / year (5,483) (10,000) (10,000)
Repaid 3,250 10,000 10,000
New borrowings (2,000) - (5,700)
Capitalised borrowing fees 3 - 260
Amortisation of capitalised borrowing fees (66) - (43)
At the end of the period / year (4,296) - (5,483)
14. Reconciliation to net (debt)/funds
Unaudited Unaudited Audited
30 September 2021 30 September 2020 31 March 2021
£'000 £'000 £'000
Cash and cash equivalents 1,035 1,753 3,934
Borrowings (4,296) - (5,483)
Net (debt)/funds (3,261) 1,753 (1,549)
Net (debt)/funds is defined as cash and cash equivalents less loans and
borrowings, excluding lease liabilities.
15. Related parties
The Group has related party relationships with its subsidiaries, Directors and
key management personnel. Details of the remuneration, share options and
pension entitlement of the Directors are included in the Remuneration Report
on page 44 of the Annual Report and Accounts 2021, which are available on the
Fulcrum Utility Services Limited website at https://investors.fulcrum.co.uk
(https://investors.fulcrum.co.uk/) .
Principal risks
The Board have assessed the Principal Risks as disclosed in the 2021 Annual
Report and Accounts and have determined that there has been no change in the
risks faced or the risk rating of the risks detailed.
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