Fulcrum Utility Services Ltd – FCRM – Trading Update

Fulcrum Utility Services Ltd – FCRM – Trading Update

Fulcrum Utility Services Limited, a leading independent multi-utility services provider that delivers infrastructure for the UK's net-zero future, including the smart energy revolution and expansion of the EV charging network, provides a trading update ahead of its Annual General Meeting which is being held at 1.00pm today at Fulcrum's offices, 2 Europa View, Sheffield, S9 1XH.

Trading update

Fulcrum has made positive progress in executing its strategy in the first half of the year, with the Group trading in line with management's expectations for the first half of the year.

New contract wins deliver significant order book growth

In the first half of the year, Fulcrum has continued to make good progress in expanding its multi-utility contracting and smart metering businesses and secured a variety of new contract wins across all the sectors it operates in, resulting in order book growth of 45%, up £25.0 million to £81.1 million at 31 August 2021 (31 March 2021: £56.1 million).

The significant order book growth in the period was underpinned by the Group being awarded a series of high value contracts in its core markets.  This, the Board believes, demonstrates the Group's ability to win larger opportunities and validates the strategy of broadening the Group's offering in its core markets.

The Group has also refocused its attention on margin and cash generation, with actions in this regard delivering a non-operational headcount reduction of 15% since January 2021.

Smart Metering:

The Group significantly grew its smart metering order book in the period by £19.0 million to £29.4 million (31 March 2021: £10.4 million) and the order book is underpinned by £24.0 million in contracts with E and Ecotricity. The Board is pleased that this momentum is continuing into the second half of the year.  The Group's smart metering exchange and management services have seen a recovery post Covid-19 and the size of the addressable target market for the Group's offering in this regard remains, the Board believes, substantial.

As the UK's smart energy revolution continues, the Board further believes that 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.  These opportunities are underpinned by an increasing regulatory framework alongside other commercial drivers. 

Noteworthy contract wins:

  • 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 UK Housing market has continued to be buoyant in the period and the Group remains well positioned to expand on its currently low market share in this sector. In the first half of the year, the Group secured a strong flow of new contract wins, which were enabled by the Group's improved competitiveness in this sector.

Noteworthy contract wins:

Two contracts, with a combined value of £5.9 million, to deliver multi-utility infrastructure at a major new development, Fairham.  As preferred utility partner for the scheme, 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; and
  • 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's specialist high voltage and multi-utility infrastructure capabilities position it well to capitalise on the significant growth opportunities in the I&C and EV connections sector, as the UK transitions to a low carbon economy. Fulcrum secured a variety of major multi-utility infrastructure projects in the period.

Noteworthy contract wins:

  • A £5.5 million contract to design and install 21.1km of multi-utility infrastructure that will heat and power a large-scale greenhouse near Ely, Cambridgeshire;
  • A £4.9 million contract to design and install high voltage electricity, water, and gas infrastructure for a major new innovative employment park in the West Midlands;
  • A £1.6 million project to deliver a 7km gas pipeline to help power a significant new cereal processing plant in Northamptonshire;
  • 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; and
  • 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's portfolio of I&C utility assets continue to deliver attractive and predictable long-term returns with potential for further investment and growth, and the Group made good progress in the execution of its strategy in the period, with the Group successfully completing the planned transfer of the third tranche of its domestic customer gas connection assets to ESP on 1 June 2021, for a total consideration of £3.8 million. Cash of £3.7 million was received on 1 June 2021, with the retention balance of £0.1 million expected to be received on 31 May 2022. The cash received supports the ongoing strengthening of the business and assists the Group in capitalising on the growth opportunities available to it.

Noteworthy contract wins:

  • 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.

Outlook

The Board remains excited by the Group's growth potential, encouraged by the positive progress made and order book growth achieved in the period, and will continue to evaluate organic and strategic growth opportunities to ensure that the Group meets its fullest potential.

The extremely strong market drivers presented by the UK's energy transition, continues to provide clear and significant growth opportunities for Fulcrum, and the Board is confident that the Group is well positioned to capitalise on them now and in the future. 

Terry Dugdale, CEO, said:

"I am pleased with the progress the Group has made in the first half of the Financial Year. Our focus on growth in our core markets and our improved ability to win larger contracts, delivered a strong succession of significant contract wins and resulted in a healthy order book growth.  At the same time, our focus on financial strength, cost and margin has been unwavering.

The positive progress we are making across all our core markets gives me confidence for the full year and beyond. I see significant opportunities for the business and so it is pleasing that the Group continues to be increasingly better positioned to take advantage of the many and significant opportunities presented by the UK's smart energy revolution and the utility infrastructure the UK needs for a net-zero future."

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