Interim Results

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 Terry Dugdale, Chief Executive Officer Cenkos Securities plc (Nominated adviser and broker) Camilla Hume / Callum Davidson (Nomad) / Michael Johnson (Sales)	[phone] [phone]

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 stimulus	Strategic progress in H1 FY22	Noteworthy contract wins in H1 FY22
Smart metering The Group is an active, and quickly growing, participant in the UK's Smart Metering market, delivering smart meter exchange programmes and gas and electricity meter installation, management and maintenance services	· c.29 million meters to exchange in the UK by end of 2025, with a significant ramp up in activity expected to achieve the deadline · Significant and strategic growth opportunities exist for the Group as a participant in the smart energy infrastructure market across all aspects of the meter life	· The Group's smart metering exchange and management services saw a positive recovery post Covid-19 · Commenced mobilisation of five-year agreement with E	· A five-year agreement, anticipated to be worth £20 million, with energy supplier E to manage its 320,000 UK meter points and exchange an expected 80,000 meters
Housing The Group provides a total design and build multi-utility infrastructure and connections service for new housing developments of all sizes across the UK	· The UK Housing market continued to be buoyant in the period · The UK's undersupply of housing, supported by strong government incentives · Recent estimates indicate 340,000 new homes are needed each year until 2031 to bridge a structural undersupply	· Established in the market with various UK housebuilders and well positioned to expand on its currently low market share · Selectively tendered on new opportunities in line with margin strategy · Secured a strong flow of new contract wins, which were supported by the Group's improved competitiveness in this sector	· Two contracts, with a combined value of £5.9 million, to deliver multi-utility infrastructure at a major new development, Fairham.  The Group also has the opportunity to deliver multi-utility connections for the development's 3,000 new homes in the future · A £1.1 million contract to deliver multi-utility connections to 715 new homes on behalf of a national home builder · 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) The Group provides multi-utility infrastructure for all sizes and complexities of I&C and EV projects, including niche high voltage and specialist gas connections	· Electricity is a key enabler in decarbonising the economy and electricity demand could double by 2050 · Increased need for more electrical infrastructure to power and support the renewable energy generating and battery storage infrastructure that is essential to transition to net zero · 2030 ban on the sale of new petrol and diesel cars and proposal to ban all new diesel and petrol heavy goods vehicles from 2040	· The Group's strong, specialist capabilities and broad offering position it well to benefit from the UK's I&C and EV utility infrastructure needs · Selectively tendered on new opportunities in line with margin strategy · The Group used its capabilities to secure a variety of major multi-utility infrastructure projects in the period delivering significant order book growth	· A £5.5 million contract to design and install 21.1km of multi-utility infrastructure that will heat and power a large-scale greenhouse · A £4.9 million contract to design and install high voltage electricity, water, and gas infrastructure for a major new innovative employment park · A £1.6 million project to deliver a 7km gas pipeline to help power a significant new cereal processing plant · 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 The Group has specialist high voltage electrical maintenance capabilities, including services and support for renewable energy generating and battery storage infrastructure. It is licensed to provide gas and electricity asset ownership and adoption services	· Increased need and demand for more solar, wind and battery storage developments, which require specialist maintenance to keep these sites operational and at optimum performance	· The Group's portfolio of I&C utility assets continues to deliver attractive and predictable long-term returns with potential for further investment and growth · The Group successfully completed the planned transfer of the third tranche of its domestic customer gas connection assets to ESP	· Secured a new five-year high voltage electrical maintenance contract for two new 50MW battery storage facilities located in Kent and Oxford which will provide power to sites including a new EV charging Superhub

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 Six months ended 30   September 2021	Unaudited Six months ended 30   September 2020	Audited 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 Six months ended 30   September 2021 £'000	Unaudited Six months ended 30   September 2020 £'000	Audited Year ended 31 March 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 payments		(34)	-	1,353
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 30   September   2021	Unaudited 30   September   2020	Audited 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 Six months ended 30   September   2021			Unaudited Six months ended 30   September   2020	Audited 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 c ontract 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 (unaudited)				Six months to 30 September 2020 (unaudited)
	Infrastructure: Design and Build £'000	Utility assets: Own and Operate £'000	Total Group £'000	Infrastructure: Design and Build £'000	Utility assets: Own and Operate £'000	Total Group £'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: Design and Build £'000	Utility assets: Own and Operate £'000	Total Group £'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 Six months ended 30 September 2021		Unaudited Six months ended 30 September 2020	Audited Year ended 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 Six months ended 30 September 2021	Unaudited Six months ended 30 September 2020	Audited Year ended 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 30 September 2021	Unaudited 30 September 2020	Audited 31 March 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 Six months ended 30 September 2021	Unaudited Six months ended 30 September 2020	Audited Year ended 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 Six months ended 30 September 2021	Unaudited Six months ended 30 September 2020	Audited Year ended 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 Six months ended 30 September 2021	Unaudited Six months ended 30 September 2020	Audited Year ended 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 Six months ended 30 September 2021	Unaudited Six months ended 30 September 2020	Audited Year ended 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 Six months ended 30 September 2021	Audited Year ended 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 Six months ended 30 September 2021	Unaudited Six months ended 30 September 2020	Audited Year ended 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 2021	30 September 2020	31 March 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

EPS	Unaudited Six months ended 30 September 2021	Unaudited Six months ended 30 September 2020	Audited Year ended 31 March 2021
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 Six months ended 30 September 2021	Unaudited Six months ended 30 September 2020	Audited Year ended 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 assets £'000	Fixtures and fittings ​£'000	Computer equipment ​£'000	Total ​£'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 30 September 2021	Unaudited 30 September 2020	Audited 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 30 September 2021	Unaudited 30 September 2020	Audited 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 30 September 2021	Unaudited 30 September 2020	Audited 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 30 September 2021	Unaudited 30 September 2020	Audited 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.

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.

 

END

 

 

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