TIDMFCRM
RNS Number : 3564Y
Fulcrum Utility Services Ltd
05 December 2017
FULCRUM UTILITY SERVICES LIMITED
("Fulcrum" or the "Company")
Unaudited interim results for the six months ended 30 September
2017
Fulcrum, the UK's market leading independent multi-utility
infrastructure and services provider, today announces its interim
results for the six months ended 30 September 2017.
CONTINUED DELIVERY ON ALL FINANCIAL METRICS
Financial highlights
-- Revenue up 8.3% to GBP19.6m (2016 restated: GBP18.1m)
-- Underlying* EBITDA up 14.2% to GBP4.0m (2016: GBP3.5m)
-- Profit before tax up 19.4% to GBP3.7m (2016: GBP3.1m)
-- Net cash inflows from operations of GBP2.1m, after the
addition of GBP1.3m in gas pipeline and meter assets
-- Basic earnings per share of 1.8p (2016: 1.6p)
-- Cash of GBP14.5m at September 2017 (2016: GBP12.5m)
-- Board is recommending an interim dividend of 0.7p per share
for FY2018, up by 17% (2017: 0.6p per share)
Operational highlights
-- Sustained growth in the order book, up 11% since March 2017 to GBP33.7m
-- Strengthened in-house capabilities through investment in
additional multi-skilled direct delivery teams and technical
designers
-- Increased the annualised external gas asset purchase run-rate to GBP10m
-- Independent Distribution Network Operator (iDNO) licence
granted by Ofgem in November, enabling electricity asset adoption
from early 2018
-- Online assets value portal launched in November, providing
instant gas and electricity asset quotations and orders
-- Given the growth potential in the acquisition of external
utility assets, the Company is reviewing potential options to
increase its debt facility to support this part of its strategy
-- Expanding service offering to provide an end-to-end electric
vehicle (EV) charging infrastructure solution
Martin Harrison, CEO of Fulcrum, said:
"The successful execution of the Company's strategy continues to
place Fulcrum in a strong financial and operational position. We
remain committed to safety and excellent customer service,
enhancing our in-house multi-utility capabilities and growing
infrastructure services and the asset base. The granting of the
iDNO licence will further enhance our growth in utility assets and
associated future income streams. We are reviewing potential
funding options to enhance these purchases and deliver increased
shareholder returns. Fulcrum's strategy provides a solid foundation
to build upon the performance achieved in the first half of the
year and the outlook remains positive for the full year 2018."
Enquiries
Fulcrum Utility Services Limited +44 (0)114
Craig Baugh, Head of Marketing and 280 4150
Customer Engagement
Cenkos Securities plc (Nominated adviser +44 (0)20 7397
and broker) 8900
Max Hartley (Nomad) / Nick Searle (Sales)
Camarco (Financial PR advisers) +44(0)203 757
Ginny Pulbrook / Tom Huddart 4992
Notes to Editors:
Fulcrum is a multi-utility infrastructure and services provider
based in Sheffield, UK. The Company's primary business is the
provision of utility infrastructure services to the residential,
commercial and industrial markets throughout the main land UK.
These range from the design, installation or alteration of utility
services for single site properties to large complex multi-site
projects. Through its subsidiary, Fulcrum Pipelines Limited,
Fulcrum is also licensed as an Independent Gas Transporter, owning
and operating gas pipelines that connect properties to the main UK
gas networks, and a meter asset manager.
http://www.fulcrum.co.uk/
BUSINESS AND OPERATING REVIEW
We are pleased to announce our interim results for the six
months ended 30 September 2017 ("H1"). During the period, we have
again improved profitability, achieving a record underlying EBITDA
of GBP4.0m and profit before tax of GBP3.7m, increased cash
generation with cash at bank of GBP14.5m, supporting the Company's
ability to maintain its progressive dividend policy.
Trading update
The Company performed strongly in H1. In accordance with the
stated growth strategy, Fulcrum's continued emphasis on safety and
customer service excellence, when combined with increased
investment in our sales teams, have ensured that we have strong
levels of repeat and new business. This approach has delivered
sustained growth in the order book, up GBP3.4m (+11%) since March
2017, to GBP33.7m.
Our sales approach is maturing, with dedicated teams servicing
our routes to market: key accounts (including British Gas), major
projects, housing and technical sales. Notable contract wins since
31 March 2017 include:
-- A GBP2.4m project to deliver new gas infrastructure to three
Short Term Operating Reserve (STOR) sites across the UK. These
sites will convert gas to electricity at times of peak demand;
-- A GBP0.8m project to provide multi-utility services to a
commercial development in Nottinghamshire;
-- A GBP0.4m project to convert a Scottish distillery from its
existing fuel source to natural gas, with the installation of a
1.8km gas pipeline;
-- A GBP0.2m multi-utility contract to deliver gas, water and
electricity infrastructure to a new housing development in the West
Midlands.
In addition to these contract wins, the Company continues to
secure a core portfolio of smaller projects.
After successfully providing electricity connections for a
number of Electric Vehicle (EV) charging projects, the Company is
now expanding its service offering to provide an end-to-end EV
charging infrastructure solution. This holistic service includes
the supply and installation of EV charging stations in addition to
designing, constructing and owning the electricity infrastructure
required to power them. The Company sees this as an evolution of
its existing electricity infrastructure provision in an exciting
and growing market, which will be further bolstered by the 2017
budget announcement of a GBP400m fund for a national charging
network and subsidies for vehicle purchases.
We have expanded our direct delivery capability, recruiting more
multi-utility construction teams and investing in upskilling
existing teams to deliver electrical work across mainland UK. We
have strengthened our in-house technical design capabilities, to
support the increase in multi-utility projects being tendered and
won.
Our end--to--end, fully branded operating model creates an agile
and responsive platform to deliver continued growth through a
multi--skilled workforce and customer focused operation. This model
is a key differentiator and further enhances our customer service
led, broad offering, with full end-to-end customer experience.
In order to maintain competitive advantage, we will continually
review and improve working practices to ensure that the business
model is efficient. Our cost of delivery across all functions
(direct, indirect and support) will continue to be tested to drive
improved levels of sales orders won and sustainable
profitability.
Utility assets
A key component of our growth strategy is to create long-term
secure income by increasing our ownership of gas and electricity
assets.
As part of this strategy, the Company is continuing to grow its
gas asset estate and the associated annuity revenue streams by
adopting the assets that it constructs, alongside assets from other
external Utility Infrastructure Providers (UIPs) who do not have an
independent gas transporter licence that enables them to own gas
pipelines.
During the period we increased our owned portfolio of domestic,
industrial and commercial assets across the UK by GBP1.3m to a
total net book value of GBP13.1m at 30 September 2017. Notably in
H1, there was encouraging growth in the utility assets secured from
external UIPs, with the annualised run-rate increasing to GBP10m.
The total committed external spend has increased from GBP2.8m as at
31 March 2017 to GBP7.5m as at 30 September 2017. The cash will be
spent as these schemes are built out, increasing future
transportation income. The transportation income during the period
grew to GBP0.9m (2016: GBP0.7m) and on an annualised basis,
GBP1.8m. With low costs to serve, this annuity income stream
represents a secure and profitable component of the Company's
future financial stability.
Post period end, in November, Fulcrum Electricity Assets
Limited, an operating subsidiary of the Group, announced that it
had been granted an independent Distribution Network Operator
(iDNO) licence by Ofgem. The industry qualification processes,
which will formally enable the Company to adopt and own electrical
assets, are progressing well with completion expected in early
2018. The granting of the iDNO licence is an important strategic
step for the Company, allowing it to broaden and increase its
long--term income stream through the adoption of the electricity
assets in addition to gas assets.
In addition, a new online gas and electricity asset quotation
portal has been released to further promote our competitive asset
values and our straightforward customer centric approach. Developed
in partnership with our customers, the aim of the portal is to
streamline the asset quotation process by providing instant
quotations and the ability to accept online.
Given the current and anticipated growth in the acquisition of
gas and electricity assets, the Company is reviewing potential
funding options with the aim to have an increased facility in place
by the end of the year.
Outlook
Fulcrum continues to make excellent progress and is well
positioned to sustain growth and profitably in the utility services
market, with a balanced approach across infrastructure services,
asset ownership and a commitment to efficient operations and
customer service.
We are confident that the outlook remains positive and that the
Company continues to be well positioned to make sustained progress
in 2018.
FINANCIAL REVIEW
Trading results
The financial results for the six-month period to 30 September
2017 reflect continued progress for the business, with growth
achieved in revenue, profit and underlying EBITDA. Cash generated
from operating activities was GBP2.1m (2016: GBP3.8m) and since
March 2017, net funds have increased by GBP2.0m to GBP14.5m. The
Company's working capital continues to be carefully managed.
Revenue
During H1, revenue increased by 8.3% to GBP19.6m (2016 restated:
GBP18.1m). Revenues from infrastructure services amounted to
GBP18.7m (2016 restated: GBP17.4m) and GBP0.9m (2016: GBP0.7m) from
pipeline transportation income and meter asset rental income.
Profit and performance
Gross profit increased by GBP0.2m to GBP7.6m (2016: GBP7.4m),
with gross profit margins down slightly at 39% (2016: 41%) as a
result of project mix and further investment in people.
Underlying EBITDA for the period increased to GBP4.0m (2016:
GBP3.5m) and profit before tax increased to GBP3.7m (2016:
GBP3.1m).
Earnings per share
Basic earnings per share from continuing operations was 1.8p
(2016: 1.6p). On a statutory basis, the diluted profit per ordinary
share from continuing operations was 1.6p (2016: 1.4p).
Dividend
As a result of the continued strong performance, the Board is
recommending an interim dividend of 0.7p per share for FY2018
(2017: 0.6p). This reflects the Board's ongoing confidence in the
Company's ability to generate cash and its future prospects. The
dividend will be paid on 26 January 2018 to members on the register
on 29 December 2017. Shares will be marked ex-dividend on 28
December 2017. The cash generative business model, from both
infrastructure services and utility assets, provides visibility and
confidence in the sustainability and growth of future
dividends.
Taxation
Deferred tax assets totalling GBP1.3m have been recognised at 30
September 2017 (2016: GBP2.6m). In the six months ending 30
September 2017, GBP0.6m was utilised against the Company's taxable
profits of GBP3.7m. The total accumulated losses carried forward
amount to GBP8.8m.
Deferred tax liabilities totalling GBP0.7m have been recognised
at 30 September 2017 (2016: GBP0.7m) in respect of the revaluation
of the industrial and commercial pipeline assets. There is
currently no intention to sell these assets and the Company expects
to recover their valuation through use. Therefore no tax is
currently expected to be payable in respect of the revaluation.
Cash generation
Working capital continues to be a key area of focus, with
careful management throughout the period resulting in positive
operating cash flow from trading activities of GBP2.1m (2016:
GBP3.8m). At 30 September 2017, the Company had net funds of
GBP14.5m
(2016: GBP12.5m); a GBP2.0m increase against the prior period,
after increased investment in our pipeline estate (GBP1.3m) and
upfront funding of the GBP4.2m fuel oil conversion project
(GBP0.9m).
Bank facilities
The Company holds an undrawn revolving credit facility for up to
GBP4.0m with the Company's bankers, Lloyds Banking Group. The
revolving credit facility remained undrawn throughout the period
and the Company has complied with all the financial covenants
relating to these facilities.
Given the growth potential in the acquisition of external
utility assets, the Company is reviewing potential options to
increase its debt facility to support this part of its
strategy.
Share capital
The Company has one class of shares in issue, being ordinary
shares with a nominal value of 0.1p each. During the period,
7,414,835 ordinary shares were issued with a nominal value of GBP7k
to employees exercising vested shares options. The associated cash
consideration of the exercise price was GBP492k. As at 30 September
2017, the issued share capital of the Company was 174,656,734
ordinary shares with a nominal value of GBP174k.
Principal risks and uncertainties
The risks and uncertainties faced by the Company, as disclosed
in the Annual Report and Accounts to 31 March 2017, remain valid,
with the main financial risks faced by the Company being credit
risk and liquidity risk. The Directors regularly review and agree
policies for managing these risks.
Credit risk arises from cash and cash equivalents and credit
exposure to the Company's customers. Over half of the Company's
customers pay in advance of works commencing, with the remaining
profile consisting of established large businesses. It is
considered that the failure of any single counterparty would not
materially impact the financial wellbeing of the Company, other
than one customer, for which the risk of failure is considered
minimal based on current market conditions and performance.
Liquidity risk is the risk that the Company will not be able to
meet its financial obligations as they fall due. The Board is
responsible for ensuring that the Company has sufficient liquidity
to meet its financial liabilities as they fall due without
incurring unacceptable losses or risking damage to the Company and
does so by monitoring cash flow forecasts and budgets. The Company
holds a combination of short and medium term deposits and an
undrawn GBP4.0m revolving credit facility committed to November
2018. These cash deposits and committed facilities are deemed
sufficient to meet projected liquidity requirements.
Consolidated Interim Statement of Comprehensive Income
For the six months ended 30 September 2017 (unaudited)
Restated*
Unaudited Unaudited Audited
Six months ended 30 Six months ended 30 Year ended 31 March 2017
September 2017 September 2016
Note GBP'000 GBP'000 GBP'000
--------------------------- ----- -------------------------- -------------------------- --------------------------
Revenue 2 19,585 18,098 37,736
Cost of sales (11,976) (10,684) (22,358)
--------------------------- ----- -------------------------- -------------------------- --------------------------
Gross profit 7,609 7,414 15,378
Administrative expenses (3,942) (4,354) (8,906)
--------------------------- ----- -------------------------- --------------------------
Operating profit 3,667 3,060 6,472
--------------------------- ----- -------------------------- -------------------------- --------------------------
Analysed as:
EBITDA before share based
payments and exceptional
items 4,007 3,456 7,321
Equity settled share based
payment charges (17) (106) (213)
Depreciation and
amortisation (323) (290) (636)
-------------------------- -------------------------- --------------------------
3,667 3,060 6,472
--------------------------- ----- -------------------------- -------------------------- --------------------------
Net finance income 33 34 63
Profit before tax 3,700 3,094 6,535
Taxation 3 (638) (588) (1,289)
--------------------------- ----- -------------------------- -------------------------- --------------------------
Profit for the financial
period 3,062 2,506 5,246
--------------------------- ----- -------------------------- -------------------------- --------------------------
Other comprehensive income
Items that will never be
reclassified to profit
Revaluation of property,
plant and equipment - - 280
Deferred tax on items that
will never be
reclassified to profit or
loss - - (9)
--------------------------- ----- -------------------------- -------------------------- --------------------------
Total comprehensive income
for the period 3,062 2,506 5,517
--------------------------- ----- -------------------------- -------------------------- --------------------------
Profit per share attributable to the owners of the business
Basic 4 1.8p 1.6p 3.3p
Diluted 4 1.6p 1.4p 2.8p
--------------------------- ----- -------------------------- -------------------------- --------------------------
*See note 1.
Consolidated Interim Statement of Changes in Equity
For the six months ended 30 September 2017 (unaudited)
Share Share Revaluation Retained Total equity
capital premium reserve earnings
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- ---- ------------- ------------- ------------- ------------- -------------
Six months ended 30 September 2017:
Balance at 1 April 2017 167 14,101 3,343 (7,165) 10,446
Profit for the period - - - 3,062 3,062
Transactions with equity
shareholders:
Issues of new shares 7 485 - - 492
Equity settled share-based payments - - - 17 17
Balance at 30 September 2017 174 14,586 3,343 (4,086) 14,017
Six months ended 30 September 2016:
Balance at 1 April 2016 156 15,233 3,079 (12,631) 5,837
Profit for the period - - - 2,506 2,506
Transactions with equity shareholders:
Issues of new shares 4 429 - - 433
Equity settled share-based payments - - - 106 106
Balance at 30 September 2016 160 15,662 3,079 (10,019) 8,882
------------------------------------------- ------------- ------------- ------------- ------------- -------------
Year ended 31 March 2017:
Balance at 1 April 2016 156 15,233 3,079 (12,631) 5,837
Profit for the year - - - 5,246 5,246
Revaluation surplus - - 280 - 280
Revaluation reserve transfer - - (7) 7 -
Deferred tax liability - - (9) - (9)
Transactions with equity
shareholders:
Equity-settled share based payments - - - 213 213
Dividends - (1,964) - - (1,964)
Issue of new shares 11 832 - - 843
------------------------------------------- ------------- ------------- ------------- ------------- -------------
Balance at 31 March 2017 167 14,101 3,343 (7,165) 10,446
------------------------------------------- ------------- ------------- ------------- ------------- -------------
Consolidated Interim Balance Sheet
At 30 September 2017 (unaudited)
Unaudited Unaudited Audited
30 September 2017 30 September 2016 31 March 2017
Note GBP'000 GBP'000 GBP'000
------------------------------- ----- ------------------- ------------------- ---------------
Non-current assets
Property, plant and equipment 13,429 10,460 12,297
Intangible assets 2,958 2,492 2,567
Deferred tax assets 3 1,283 2,622 1,921
------------------------------- ----- ------------------- ------------------- ---------------
17,670 15,574 16,785
------------------------------- ----- ------------------- ------------------- ---------------
Current assets
Inventories 2,673 1,192 1,647
Trade and other receivables 7,173 6,283 7,129
Cash and cash equivalents 14,532 12,486 12,561
24,378 19,961 21,337
------------------------------- ----- ------------------- ------------------- ---------------
Total assets 42,048 35,535 38,122
------------------------------- ----- ------------------- ------------------- ---------------
Current liabilities
Trade and other payables 6 (27,346) (25,908) (26,991)
Provisions - (69) -
------------------------------- ----- ------------------- ------------------- ---------------
(27,346) (25,977) (26,991)
------------------------------- ----- ------------------- ------------------- ---------------
Non-current liabilities
Deferred tax liabilities (685) (676) (685)
------------------------------- ----- ------------------- ------------------- ---------------
Total liabilities (28,031) (26,653) (27,676)
------------------------------- ----- ------------------- ------------------- ---------------
Net assets 14,017 8,882 10,446
------------------------------- ----- ------------------- ------------------- ---------------
Equity
Share capital 174 160 167
Share premium 14,586 15,662 14,101
Revaluation reserve 3,343 3,079 3,343
Retained earnings (4,086) (10,019) (7,165)
------------------------------- ----- ------------------- ------------------- ---------------
Total equity 14,017 8,882 10,446
------------------------------- ----- ------------------- ------------------- ---------------
Consolidated Interim Cash flow Statement
For the six months ended 30 September 2017 (unaudited)
Unaudited Unaudited
Six months ended 30 Six months ended 30 Audited
September 2017 September 2016 Year ended 31 March 2017
Note GBP'000 GBP'000 GBP'000
-------------------------------- --------------------------- --------------------------- --------------------------
Cash flows from operating
activities
Profit before tax for the
period 3,700 3,094 6,535
Depreciation 250 157 362
Amortisation of intangible
assets
75 133 278
Capitalisation of pipeline
assets (1,184) (1,083) (2,518)
Net finance income (33) (34) (63)
Equity settled share based
payment charges 17 106 213
(Increase)/decrease in
trade and other
receivables (44) 380 (466)
(Increase)/decrease in
inventories (1,026) 211 (244)
Increase in trade and other
payables 6 355 843 1,936
Decrease in provisions - (29) (98)
---------------------------- --------------------------- --------------------------- --------------------------
Cash generated from
operations 2,110 3,778 5,935
Net interest received 33 34 63
Net cash from operating
activities 2,143 3,812 5,998
---------------------------- --------------------------- --------------------------- --------------------------
Cash flows from investing
activities
Purchase of property, plant
and equipment (186) (55) (381)
Purchase of intangible
assets (478) (27) (248)
Net cash used in investing
activities (664) (82) (629)
---------------------------- --------------------------- --------------------------- --------------------------
Cash flows from financing
activities
Dividends paid - - (1,963)
Proceeds from issue of
share capital 492 433 832
Repayment of finance lease - - -
liabilities
---------------------------- --------------------------- --------------------------- --------------------------
Net cash from/(used in)
financing activities 492 433 (1,131)
---------------------------- --------------------------- --------------------------- --------------------------
Net increase in cash and
cash equivalents 1,971 4,163 4,238
Cash and cash equivalents
at 1 April 2017 12,561 8,323 8,323
---------------------------- --------------------------- --------------------------- --------------------------
Cash and cash equivalents
at 30 September 2017 14,532 12,486 12,561
---------------------------- --------------------------- --------------------------- --------------------------
NOTES TO THE INTERIM FINANCIAL INFORMATION
1. General information
Fulcrum Utility Services Limited is a limited company
incorporated in the Cayman Islands and domiciled in the UK. The
address of its registered office is PO Box 309, Ugland House, Grand
Cayman, KY1-1104, Cayman Islands. The Company is listed on the AIM
market of the London Stock Exchange.
The condensed consolidated interim financial information,
including the financial information for the year ended 31 March
2017 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 period ended 31
March 2017 is derived from the non-statutory accounts for that
financial period. The non-statutory accounts for the year ended 31
March 2017 were approved on 6 June 2017. The Auditor's report on
those accounts was unqualified and did not draw attention to any
matters by way of emphasis of matter.
These interim financial statements have been reviewed, not
audited, by the Company's auditors and their Report is set out on
page 15.
1.1. Basis of preparation
The condensed consolidated interim financial information for the
period ended 30 September 2017 has been prepared in accordance with
IAS 34, 'Interim financial reporting' as adopted by the European
Union. The condensed consolidated interim financial information
should be read in conjunction with the Annual Report and Accounts
for the year ended 31 March 2017, which have been prepared in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union. The accounting policies adopted
in the condensed consolidated interim financial information are
consistent with those of the annual financial statements for the
year ended 31 March 2017.
1.2. Change in accounting policy
In the prior year, the Board considered the accounting for the
recognition of assets that are adopted by the Group, where those
assets are acquired at their "fair value" on adoption, in
accordance with IFRIC 18: Transfers of assets from customers (first
applied 31 March 2011). IFRIC 18 requires that assets be treated as
additions to Property Plant and Equipment at their "fair value",
with a consequent adjustment to revenue. The Group has previously
treated these asset additions in accordance with IFRIC 18, with an
adjustment to cost of sales, rather than revenue. The Board has
concluded on consideration of the accounting that it is more
appropriate in achieving a relevant presentation to include the
adjustment within revenue. This will ensure that the impact of the
application of IFRIC 18 is clearer in the financial statements. The
impact of the change is to increase revenue by GBP1.2m (2016:
GBP0.9m), with an offsetting adjustment within cost of sales. The
restatement has no impact on the reported gross profit, profit for
the period and net assets as at 30 September 2017.
1.3. Going concern
As at 30 September 2017 the Group had net assets of GBP14.0m
(2016: GBP8.9m), including cash of GBP14.5m (2016: GBP12.5m) as set
out in the consolidated balance sheet and an unused revolving
credit facility of GBP4.0m (2016: GBP4.0m) and so would be in a
position to pay its obligations as they arise. In the six months to
30 September 2017, the Group generated a profit before tax of
GBP3.7m and had net cash inflows of GBP2.0m.
Consequently, the Directors have a reasonable expectation that
the Group has adequate resources to fund its operations for the
foreseeable future. Accordingly, they continue to adopt the going
concern basis in preparing the condensed consolidated interim
financial statements.
1.4. Accounting policies
The financial statements have been prepared using consistent
accounting policies. The following adopted IFRSs have been issued
but have not been applied by the Group in the condensed
consolidated interim financial information.
-- IFRS 9 Financial Instruments (effective date 1 January 2018)
-- IFRS 15 Revenue from Contract with Customers (effective date 1 January 2018)
-- IFRS 16 Leases (effective date 1 January 2019)
The adoption of IFRS 15 and IFRS 16 may have an impact on the
financial statements when introduced, detailed analysis of the
effects is currently being undertaken with further reporting on the
impact to be included in the year-end financial statements. The
adoption of other standards is not expected to have a material
effect on the financial statements.
In preparing the condensed consolidated interim financial
information, the significant judgments made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the
consolidated financial statements for the period ended 31 March
2017.
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 services and gas transportation. Fulcrum's
Infrastructure Services provides utility infrastructure and
connections services and the pipeline business comprises both the
ownership of gas infrastructure assets and the safe and efficient
conveyance of gas through its gas transportation networks. Gas
transportation services are provided under the IGT licence granted
from Ofgem in June 2007.
The information provided to the Board includes management
accounts comprising operating profit before exceptional items for
each segment and other financial and non-financial information used
to manage the business on a consolidated basis.
Restated
Six months to 30 September Six months to Year ended
2017 30 September 2016 31 March 2017
------------------------------ ------- ----------------------------------------- ---------------------------------------
Infrastructure Gas Total Infrastructure Gas Total Infrastructure Gas Total
Services Transportation Group Services Transportation Group Services Transportation Group
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- -------------- --------- -------------- -------------- -------
Reportable
segment
revenue 18,711 874 19,585 17,383 715 18,098 36,237 1,499 37,736
Underlying
EBITDA 3,333 674 4,007 3,087 369 3,456 6,340 981 7,321
Share based
payment
charge (17) - (17) (106) - (106) (213) - (213)
Depreciation
and
amortisation (142) (181) (323) (154) (136) (290) (350) (286) (636)
------------- -------------- -------------- ------- -------------- -------------- --------- -------------- -------------- -------
Reportable
segment
operating
profit
before
exceptional
items 3,174 493 3,667 2,827 233 3,060 5,777 695 6,472
Exceptional - - - -
items - - - - -
------------- -------------- -------------- ------- -------------- -------------- --------- -------------- -------------- -------
Reporting
segment
operating
profit 3,174 493 3,667 2,827 233 3,060 5,777 695 6,472
Finance
income 13 20 33 39 7 46 48 27 75
Finance
expense - - - (12) - (12) (12) - (12)
------------- -------------- -------------- ------- -------------- -------------- --------- -------------- -------------- -------
Profit before
tax 3,187 513 3,700 2,854 240 3,094 5,813 722 6,535
------------- -------------- -------------- ------- -------------- -------------- --------- -------------- -------------- -------
The Group derives all of its revenue from the UK and all of the
Group's customers are based in the UK.
3. Taxation
Six months to 30 September 2017 Six months to 30 September 2016 Year ended
31March 2017
GBP'000 GBP'000 GBP'000
----------------- ------------------------------- ------------------------------- -------------
Current tax - - -
Deferred tax (638) (588) (1,289)
----------------- ------------------------------- ------------------------------- -------------
Total tax charge (638) (588) (1,289)
----------------- ------------------------------- ------------------------------- -------------
Deferred tax has been recognised in respect of tax losses
carried forward that are expected to be utilised against future
taxable profits. Reductions in the UK corporation tax rate to 19%
(effective from 1 April 2017) and to 18% (effective 1 April 2020)
were substantively enacted on 26 October 2015. An additional
reduction to 17% (effective from 1 April 2020) was announced in the
Budget on 16 March 2016.
The deferred tax assets at balance sheet date have been
calculated based on these rates.
The Group has a further GBP8.8m (2016: GBP17.9m) of tax losses
of which a deferred tax asset of GBP1.3m has been recognised.
During the period, GBP0.6m of the deferred tax asset was utilised
against taxable profits.
4. Earnings per share
Basic earnings per share have been calculated by dividing the
profit attributable to shareholders by the weighted average number
of ordinary shares in issue during the period, which were
171,634,953 (September 2016: 155,953,125, March 2017: 161,021,297).
Diluted earnings per share is calculated by dividing the profit
attributable to ordinary shareholders by the weighted average
number of ordinary share in issue adjusted to assume conversion of
all potentially dilutive ordinary shares from the start of the
year, producing a figure of 187,135,080 (September 2016:
184,803,122, March 2017: 186,666,736).
The earnings per share from continued operations were as
follows:
Six months to 30 September Six months to 30 September 2016 Year ended 31 March 2017
Profit per share 2017
------------------------ ------------------------------- -------------------------------- -------------------------
Basic 1.8p 1.6p 3.3p
------------------------ ------------------------------- -------------------------------- -------------------------
Adjusted basic 2.2p 1.6p 4.1p
------------------------ ------------------------------- -------------------------------- -------------------------
Diluted basic 1.6p 1.4p 2.8p
------------------------ ------------------------------- -------------------------------- -------------------------
Diluted adjusted basic 1.9p 1.4p 3.5p
------------------------ ------------------------------- -------------------------------- -------------------------
The calculation of the basic and diluted earnings per share is
based upon the following data:
Six months to 30 September Six months to 30 September Year ended 31 March 2017
2017 2016
Profit for the period GBP'000 GBP'000 GBP'000
Profit for the period
attributable to
shareholders 3,062 2,506 5,246
Less deferred tax asset
recognised - - 1,289
----------------------------- ----------------------------- ----------------------------- -------------------------
Adjusted profit for the
period attributable to
shareholders 3,062 2,506 6,535
----------------------------- ----------------------------- ----------------------------- -------------------------
5. Dividend
During the year, the Group declared a dividend of 1.3p per share
bringing the total dividend for the full financial year 2016/2017
to 1.9p per share (FY 2015/2016: 0.9p per share). This was paid on
27 October 2017. The Board have proposed an interim dividend for
financial year 2018 of 0.7p per share (2017: 0.6p) which will be
payable in January 2018.
6. Trade and other payables
Six months to 30 September Six months to 30 September Year ended 31 March 2017
2017 2016
GBP'000 GBP'000 GBP'000
Trade payables 2,979 1,717 2,779
Accruals and deferred income 22,197 21,810 22,430
Other payables 2,170 2,381 1,782
------------------------------ ---------------------------- ----------------------------- -------------------------
27,346 25,908 26,991
------------------------------ ---------------------------- ----------------------------- -------------------------
Of the GBP22.2m accruals and deferred income, GBP15.6m (2016:
GBP13.9m) relates to deferred income. Deferred income represents
contracted sales for which services to customers will be provided
in future periods.
7. Capital commitments
During the year ended 31 March 2017, the Group entered into a
contract to purchase property, plant and equipment in the form of
pipelines. The commitment at 30 September was GBP7.5m (2016:
nil).
8. Financial risk management
The Group's principal financial instruments are cash, trade
receivables and payables. The Group does not have any financial
instruments that are measured at fair value on a recurring basis.
The fair values of all financial instruments are equal to their
book values and there is no difference between the carrying amount
and contracted cash flows. All contracted cash flows are due within
one year.
Credit risk
Credit risk arises from cash and cash equivalents and credit
exposure to the Group's customers. Over half of the Group's
customers pay in advance of works commencing, with the remaining
profile consisting of established businesses. The credit worthiness
of new customers is assessed by taking into account their financial
position, past experience and other factors. It is considered that
the failure of any single counterparty would not materially impact
the financial wellbeing of the Group, other than one customer, for
which the risk of failure is considered minimal based on current
market conditions and performance.
The Group has a policy of ensuring cash deposits are made with
the primary objective of security of the principal. Deposits are
held with Lloyds Bank plc, which is rated A+ by Fitch and A by
Standards and Poor. These credit ratings are regularly monitored to
ensure that they meet the required minimum criteria set by the
Board through the treasury policy.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. The Board is
responsible for ensuring that the Group has sufficient liquidity to
meet its financial liabilities as they fall due without incurring
unacceptable losses or risking damage to the Group and does so by
monitoring cash flow forecast and budgets. The Group's exposure to
liquidity risk reflects its ability to readily access the funds to
support its operations. The Group has an undrawn revolving credit
facility in order to provide the flexibility required in the
management of the Group's liquidity. The Group's liquidity
requirements are continually reviewed and additional facilities put
in place as appropriate.
Liquidity forecasts are produced on a regular basis and include
the expected cash flows that will occur on a weekly, monthly and
quarterly basis. This information is used in conjunction with the
weekly reporting of actual cash balances at bank in order to
calculate the level of funding that will be required in the short
and medium-term. The Group holds a combination of short and
medium-term deposits and a GBP4.0m revolving credit facility
committed to November 2018. These committed facilities are deemed
sufficient to meet projected liquidity requirements.
Market risk
The Group may be affected by general market trends, which are
unrelated to the performance of the Group itself, such as
fluctuations in interest rates. The Group is currently not exposed
to interest rate risk, as it has not drawn down on its GBP4.0m
(2016: GBP4.0m) revolving credit facility and has no market
debt.
Capital risk
The Group defines capital as total equity. The Group's
objectives when managing capital are to safeguard its ability to
continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain a
capital structure, which optimises the cost of capital. In order to
maintain or adjust the capital structure, the Group may adjust the
amount of dividends paid to shareholders, return capital to
shareholders or issue new shares. Decisions regarding the balance
of equity and borrowings, dividend policy and all major borrowing
facilities are reserved for the Board.
9. Related parties
There were no discloseable related party transactions during the
period.
INDEPENDENT REVIEW REPORT TO FULCRUM UTILITY SERVICES
LIMITED
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly report for the six
months ended 30 September 2017, which comprises the Consolidated
Interim Statement of Comprehensive Income, the Consolidated Interim
Statement of Changes in Equity, the Consolidated Interim Balance
Sheet, the Consolidated Interim Cash Flow Statement and the related
explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly report for the six months ended 30 September
2017 is not prepared, in all material respects, in accordance with
IAS 34 Interim Financial Reporting as adopted by the EU and the AIM
Rules.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. We read the other information contained in the
half-yearly report and consider whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Directors' responsibilities
The half-yearly report is the responsibility of, and has been
approved by, the directors. The directors are responsible for
preparing the half-yearly report in accordance with the AIM
Rules.
As disclosed in note 1.1 the annual financial statements of the
group are prepared in accordance with International Financial
Reporting Standards as adopted by the EU. The directors are
responsible for preparing the condensed set of financial statements
included in the half-yearly financial report in accordance with IAS
34 as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly report
based on our review
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the company in accordance with the
terms of our engagement. Our review has been undertaken so that we
might state to the company those matters we are required to state
to it in this report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company for our review work, for this
report, or for the conclusions we have reached.
Matthew Wilcox
for and on behalf of KPMG LLP
Chartered Accountants
1 Sovereign Square
Sovereign Street
Leeds
LS1 4DA
5 December 2017
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR VZLFBDLFXFBF
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