Fulcrum Utility Services : Annual Report and Accounts 2022

Financial performance

• Revenue up 31.2% to £61.8 million (2021: £47.1 million)
• Adjusted EBITDA1 of £0.5 million (2021: £0.1 million)
• Loss before tax of £14.2 million2 (2021: £11.5 million)
• Cash outflow from operating activities of £7.6 million (2021: £2.4 million)
• Adjusted earnings per share of (1.4)p (2021: (0.9)p) and
  basic earnings per share of (5.2)p (2021: (4.6)p)

• Net cash of £11.2 million as at 31 March 2022 (2021: £1.5 million net debt)
• Debt facility headroom of £10 million as at 31 March 2022 (2021: £4.3 million)
• Net assets of £45.9 million (2021: £35.4 million)

FULCRUM AT A GLANCE

VALUES

Our values live in

everything we do and are our commitment to be the very best for all our stakeholders.

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SUSTAINABILITY

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Read more on page 11

GOVERNANCE

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CHAIR'S STATEMENT

The Group has refocused its attention on its core multi-utility contracting and asset ownership growth strategy and the Board has put in place a new Executive Team to execute it.

Jennifer Babington

Non-executive Chair

As has been widely reported, FY22 was a challenging year for the UK's energy infrastructure sector and Fulcrum has not been immune to this. Whilst the Group initially experienced a strong recovery from the impact of Covid-19 and positive progress was made in the first half of the year, the impact of difficult market conditions is reflected in the Group's overall performance for the full year.

Results

It was pleasing that Fulcrum's first half financial performance was in line with management's expectations, and significantly ahead of the first half of the prior year. The Group also secured a strong succession of its largest ever contract wins.

Notwithstanding this positive start to the year, with the Group's diverse business operations initially helping to insulate it from the energy crisis, the sustained turbulence in the energy market, coupled with wider market issues of supply chain pressure and cost inflation in materials and labour, along with exceptional costs, significantly affected the Group's profitability in the final quarter of the year.

Revenue for the year ended 31 March 2022 was slightly ahead of market expectations at £61.8 million, representing year-on-year growth of 31.2%, with adjusted EBITDA for the same period at £0.5 million. Adjusted EBITDA is operating loss of £13.7 million, excluding the impact of exceptional items of £10.6 million (including £5.6 million for onerous contracts), other net gains of £0.3 million, depreciation and amortisation of £3.3 million and an equity-settledshare-based payment charge of £0.6 million.

I would like to express my personal thanks to all of our people for their hard work, efforts and resilience in what has been another year of difficult market conditions.

Impact of the UK's energy crisis and challenging trading conditions

Since the Group's successful fundraise in December 2021, the UK energy market has continued to experience considerable turbulence. Predominantly, this affected the performance and profitability of the Group's meter exchange operations.

Wider market issues of supply chain pressure and cost inflation in materials and labour also weighed on the profitability of the Group's multi-utility contracting operations, especially in its major electrical and multi-utility projects, which are inherently complex and longer term in nature.

The Board expects that whilst the challenges in the energy market and the difficult market conditions continue, the Group's order book will also soften, and this is reflected in the order book value of £48 million1 as at 31 March 2022. We have put appropriate actions and controls in place to mitigate risk and protect the business whilst the UK's energy crisis and challenging market conditions prevail.

A refocus on our core strategy

The Group has refocused its attention on its core multi-utility contracting and asset ownership growth strategy and the Board has put in place a new Executive Team to execute it.

The Board believes that there is a significant opportunity for the Group to grow its multi-utility contracting operations across the housing and industrial and commercial, including electric vehicle connections, sectors. The Board further believes that the Group's essential and niche capabilities position it well for future growth and that this belief is underpinned by the long-term strategic tailwinds of the UK's utility and energy infrastructure needs now, and for its net-zero future.