REG - Fulcrum Utility Srvc - Trading Update

Fulcrum Utility ServicesAnnouncement

24/10/2022 07:00

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RNS Number : 7933D  Fulcrum Utility Services Ltd  24 October 2022

24 October 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 and renewable energy
infrastructure, provides a trading update for the six months ending 30
September 2022.

The Group is pleased to have won a series of major utility contract awards in
the first half of the financial year ending 31 March 2023 ("FY23"), notably:

·      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.

During the first half of FY23, the Group has continued to experience the
impact of significant challenges of ongoing adverse energy and wider market
conditions.  In addition, the critical measures put in place by the new
executive team in order to turn around the business's operating performance,
and the impact of the recently notified cyber security incident, are being
felt by the Group.

The Group expects to report revenue of approximately £24.0 million for the
first half of FY23 (H1 22: £28.6 million). Ongoing challenges with the legacy
and closure of historic projects, and the unprecedented cost increases
impacting much of the Group's supply chain, have continued to erode sales
margins.  The Group now expects to report an interim half year adjusted(1)
EBITDA loss of approximately £3.0 million (H1 22: £1.0 million profit) with
a corresponding impact on the Group's full year results.  As a result the
Group now expects revenue for full year FY 2023 will be approximately £49.0
million (FY22: £61.8 million) and that the Group adjusted EBITDA loss will be
approximately £6.0m (FY22: £0.5 million profit) subject to audit review.

Whilst the new executive team's continuing priority is to protect and improve
margins and refocus the Group on its core utility infrastructure and asset
ownership growth strategy, the Group's challenges are historic in origin, have
been longstanding and are widespread.  As such, the benefits of the business
improvements introduced to date and currently underway are taking longer than
anticipated to realise.

The executive team has put in place a number of new controls and procedures
improving the project costing and tracking processes and enforcement of
contract variations to protect the Group's margins. The full implementation of
these new controls and procedures has been hampered by the cyber security
incident and so their benefits will take longer than expected to impact the
Group's results.

Although the Group's field operations were unaffected by the cyber security
incident, it did impair managerial and system information, and the ability to
fully invoice customers for up to three weeks.  Hence the Group's net cash
position as at 30 September 2022 was £4.8 million.  Whilst the Group
continues to actively manage its working capital, it is in discussions with
its substantial shareholders to ensure that the Group remains adequately
funded.

 (1) Adjusted EBITDA. (subject to audit review) is operating loss excluding the impact of exceptional items, other net gains, depreciation, amortisation and equity-settled share-based payment charges.

Antony Collins, CEO, said:

"Clearly the Board and I are disappointed in these results but I am confident
that the steps needed to turn Fulcrum around are well underway.  I always
knew the task of turning Fulcrum around would be a hard one and the challenges
that the Group has faced are much deeper and wider spread than anyone
previously anticipated.  However, I believe the major issues have now been
identified and measures and ameliorations put in place to improve
performance.

The Group's medium to long-term growth continues to be underpinned by strong
market drivers and government stimulus. With the executive team identifying
improvement opportunities and ensuring optimal performance I believe, that
Fulcrum will be well positioned to benefit from the UK's transition to a low
carbon economy and a net-zero future"

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. https://investors.fulcrum.co.uk/

 1  (#_ftnref1) Adjusted EBITDA. (subject to audit review) is operating loss
excluding the impact of exceptional items, other net gains, depreciation,
amortisation and equity-settled share-based payment charges.

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