REG - Fulcrum Utility Srvc - Trading Update

Fulcrum Utility ServicesAnnouncement

13/05/2022 07:00

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RNS Number : 3627L  Fulcrum Utility Services Ltd  13 May 2022

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
Revenue(1) for the year ended 31 March 2022 of £57.4 million, representing
year on year growth of 21.8%, adjusted EBITDA(2) 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 million(3) 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.

(1) Adjusted Revenue from continuing operations excluding Smart Metering's
onerous contracts

(2) Adjusted EBITDA from continuing operations is operating profit excluding
the impact of exceptional items (inclusive of Smart Metering's onerous
contracts) other gains, depreciation, amortisation, and equity-settled
share-based payment charges

(3) Orderbook value excluding Smart Metering's onerous contracts

This announcement contains inside information.

Enquiries:

 Fulcrum Utility Services Limited                                   +44 (0)114 280 4150

 Antony Collins, 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/

 

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