TIDMFCRM

RNS Number : 7438X

Fulcrum Utility Services Ltd

23 December 2019

23 December 2019

FULCRUM UTILITY SERVICES LIMITED

("Fulcrum" or the "Company")

Unaudited interim results for the six months ended 30 September 2019

Fulcrum, the UK's market leading independent multi-utility infrastructure and services provider, today announces its interim results for the six-month period ended 30 September 2019.

Financial Highlights*

   --      Revenue GBP19.5 million (2018: GBP24.8 million) 
   --      Adjusted EBITDA GBP1.4 million (2018: GBP4.7 million) 
   --      Loss before tax GBP0.9 million (2018 profit before tax: GBP2.6 million) 

-- Net cash outflows from operations before Tax of GBP0.0 million (2018 inflows: GBP5.9 million)

   --      Basic loss per share of 0.4p (2018 earnings per share: 1.2p) 

-- Net debt at the period end of GBP2.3 million (31 March 2019 net cash GBP3.8 million) reflecting the investment of GBP5.1 million in acquiring utility assets

-- Interim dividend deferred until completion of the sale of the domestic gas asset portfolio, as described in the announcement published today

* comparative figures for the period to 30 September 2018 have been restated in accordance with IFRS 16 and IFRS 15, as explained in the Annual Report and Accounts to 31 March 2019.

Operational Highlights

-- Sustained growth in the infrastructure order book**, up 3.7% since March 2019 to GBP62.6 million (March 2019: GBP60.5 million)

-- Increased operational capacity across the Group, including the expansion of the Group's direct-delivery model into South East England and London

   --      Smart metering services business established and first meter exchanges complete 
   --      Sustained focus on operational efficiency to improve our capacity and optimise profits 

-- Increased direct delivery offering to strengthen our electrical and multi-utility capabilities

Post Period End

-- Sale of domestic customer gas connection assets, including the order book and associated meters, for net consideration of GBP33 million in cash to ESP Pipelines Limited ("ESP")

-- Total gross consideration of approximately GBP46 million in cash; the net consideration of GBP33 million is stated after deducting commitments in relation to external order book assets of GBP13 million

-- The Group will continue to focus on adopting Industrial and Commercial assets but intends to shift away from adopting domestic assets utilising ESP as its preferred asset adopter

-- The Group has seen positive order inflow in recent months, securing a variety of large contracts across all of its business areas at the end of H1 and in early H2. These will partially contribute to revenue within the second half of the current financial year

-- To date, sales order intake in Q3 has averaged GBP5.4 million** per month, up 40% on the monthly average achieved in H1

   --      The search for a permanent CEO is ongoing 

** The amount of secured infrastructure work representing the construction value and the utility asset value

Phil Holder, Chairman of Fulcrum, said:

"Performance in H1 has been impacted by ongoing economic uncertainty but, positively, the Group has recently seen improved sales order intake in Q3. In addition, we are hopeful that the General Election result will reduce economic and political uncertainty, providing greater clarity and improving decision making on contracts.

The sale of our domestic utility assets to ESP also significantly strengthens our balance sheet and will provide a basis for a return of capital to shareholders. The Group's core growth strategy will focus on its design and build utility connections activities, as well as on continuing to adopt assets in its traditional I&C market where appropriate. Our new relationship with ESP will enhance the Company's capabilities in the future in all segments of the market."

MAR

The information contained within the announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the publication of this announcement via Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.

Enquiries:

 
                                                        +44 (0)114 280 
Fulcrum Utility Services Limited                         4102 
 Daren Harris, Chief Financial Officer 
 
 Cenkos Securities plc (Nominated adviser and broker)    +44 (0)20 7397 
 Max Hartley (Nomad) / Michael Johnson (Sales)           8900 
 
 Camarco (Financial PR advisers) 
 Ginny Pulbrook / Tom Huddart                            +44(0)203 757 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 mainland UK. These range from the design, installation or alteration of utility services for single site properties to large complex multi-site projects. Through its subsidiaries, Fulcrum Pipelines Limited and Fulcrum Electricity Assets Limited, Fulcrum is also licensed as an Independent Gas Transporter and Independent Distribution Network Operator, owning and operating gas and electrical assets that connect properties to the main UK gas and electricity networks. Fulcrum is also a meter asset manager, owning and operating meter assets across mainland UK.

http://www.fulcrum.co.uk/

Overview

The results for the six months ended 30 September 2019 reflect a period of economic uncertainty in the UK and its impact in the form of customers' delayed decision making on utility infrastructure projects. The Group's financial performance in H1 has been affected by this ongoing economic uncertainty and other external factors, including the suspension of the UK capacity market during H1.

Operational Performance

Despite the UK economic uncertainty in the period, the Group has seen a substantial increase in order inflow in the first months of H2, securing a variety of large contracts.

The Group continues to win work in its chosen markets including a GBP3.2m contract to install new high voltage electrical infrastructure for two 50MW gas peaking plants, connecting them to Northern Powergrid's 132kV network in North East England. In addition, Fulcrum won a GBP2.4m contract to provide over six kilometres of new gas, water and electrical infrastructure to a new sustainable mixed-use residential, retail and commercial development in the East Midlands. These recent contract wins demonstrate continue successful execution of the Group's core strategy and high service reputation. The Company has also continued to secure a portfolio of projects up to GBP50,000 in revenue.

Since the acquisition of Dunamis, the Group has seen increasing numbers of collaborative gas and electricity opportunities being generated. Importantly, the electrical capabilities of Dunamis has enabled the Group to tender on, and win, new significant electricity, dual fuel and multi-utility opportunities previously unachievable to the business. During the period, decision making on the larger, high voltage, infrastructure projects that Dunamis specialises in, has been influenced by external pressures, including the Capacity Market Suspension, which have resulted in certain projects commencing later than expected. However, since the lifting of the Capacity Market Suspension in October 2019, the Group has also secured several orders, with a combined value of c.GBP2.0m, to provide utility infrastructure to Short Term Operating Reserve (STOR) sites across the UK.

The Group's ability to adopt and own the I&C electrical infrastructure delivered by Dunamis will also provide a portfolio of stable, secure, low risk and long-term income-generating I&C utility assets.

Positively, the Board also considers recent market developments, such as the decarbonisation of energy, announcement of a new 0% benefit-in-kind (BIK) rate for new Electric Vehicles and a commitment from the Conservative government to build at least a million homes over the next five years, as developments which will provide the Group with even greater levels of opportunity in these strategically important markets.

Proposed sale of domestic customer gas connection assets and order book

The Group has announced today that it has entered into a conditional sale and purchase agreement to sell its domestic customer gas connection assets, including the order book and associated meters, to ES Pipelines Limited ("ESP") for net consideration of GBP33 million in cash (the "Sale").

The Sale significantly strengthens the Group's balance sheet and the Company intends to repay existing borrowings of approximately GBP12 million in full on completion. The Group will retain its IGT and IDNO licences and continue to pursue opportunities to design, build and add Industrial and Commercial ("I&C") assets to its portfolio of assets.

Strategy

The market for the design, installation and ownership of these types of infrastructure assets has evolved significantly in the last few years. As the values being ascribed to domestic connection assets by participants in the market have increased materially, reflecting the attractions of the predictable, stable, long-term regulated cash flows associated with them, clients such as housebuilders have increasingly demanded that the value of the completed assets is reflected in the pricing structure agreed for undertaking these design and build projects. For larger domestic asset projects, this can result in all or a significant part of the effective profit margin on contracts being accounted for by the values ascribed to the completed assets, while the short-term net cash flows associated with larger domestic projects are often marginal or negative.

The Group's main competitors in the gas and electrical utility connection ownership sector (being other IGT and/or IDNO licence holders) are significantly larger businesses, which are typically owned by large, private, infrastructure investment funds, and which may not face the same funding constraints that The Group does as a quoted business.

The Board believes that the Sale will put the Group in a stronger position to pursue a strategy of winning design and build work across the multi-utility space, in partnership with asset owners and will provide the opportunity for the Group to generate substantial value for its shareholders, supported by a progressive dividend policy and share buy-back programme.

Following the Sale and excluding assets forming part of the Sale but yet to be transferred, the Group retains a portfolio of approximately 6,500 I&C connection assets, a small number of domestic connections which form part of mixed networks and a small portfolio of electrical connections.

The Group is retaining its IGT and IDNO licences and will continue to pursue opportunities to design, build and add I&C assets to its portfolio of assets, both independently and working with ESP. I&C has always been a particular strength of The Group's and the Group continues to win significant, attractively priced contracts for I&C projects and the Board sees this as key to the Group's future growth.

The Sale will also allow the Group to actively pursue opportunities for growth, including in the rapidly developing EV market.

The Group will continue to pursue opportunities for domestic gas and electrical connection assets, but will partner with third party IGT/IDNO licence holders when bidding for contracts involving new domestic utility connections, with the Group bidding for the design and build work based on back-to-back agreements with a partner which will acquire the connection assets once completed. The terms of the Sale provide for additional payments in respect of the Assets if certain milestones are achieved with ESP when jointly bidding for domestic gas assets over a five-year period.

Financial Performance

In the first six months the Group achieved an adjusted EBITDA of GBP1.44 million. Period-on-period revenue decreased by GBP5.3 million, or -21.4%, to GBP19.5 million (2018 restated: GBP24.8 million). Performance in the period was impacted by economic uncertainty and the Capacity Market Suspension, which resulted in the delay of the commencement of new contracts. Significantly, Dunamis' revenue from major energy generation contracts, which are influenced by these external factors, and was GBP3.9m down 55.6% (2018: GBP7.0 million).

Asset ownership revenues increased by 42.9% to GBP1.9 million (2018: GBP1.3 million).

Gross profit decreased by GBP3.2 million to GBP6.2 million (2018 restated: GBP9.4 million), with gross profit margins down to 32.0% (2018 restated: 38.0%). This change in margin was due to a combination of the profile of contracts delivered in the period, with a higher proportion of new housing schemes, coupled with decreased efficiencies of delivery, driven by a lower volume of work undertaken.

Loss before tax was GBP0.9 million (2018 restated profit before tax of GBP3.0 million). This reduction was driven by the lower EBITDA performance and additional depreciation costs following the revaluation of our asset base at March 2019.

At 30 September 2019, the Group had net debt of GBP2.2 million (31 March 2019: net cash of GBP3.8 million). This is driven by continued investment in utility assets of GBP5.1 million and a working capital unwind due to lower activity levels of GBP1.1 million, offset by the EBITDA of GBP1.4 million.

An interim dividend will be paid from the initial proceeds received from the sale of the domestic gas asset portfolio.

The order book continued to grow, up 3.7% since March 2019 to GBP62.6 million (March 2019: GBP60.5 million). The sustained growth in the infrastructure order book is encouraging and demonstrates the successful delivery of our sales growth strategy.

Delivering contracts safely, efficiently and profitably

Safety is paramount in our organisation. In the period, we received the Royal Society for the Prevention of Accidents (RoSPA) Order of Distinction, recognising 16 consecutive years of health and safety excellence. This reinforces our commitment to the health and safety of our customers, each other, suppliers, the public and the environment.

We continue to drive a safety-first culture within our business and bolstered our "SAFE" initiative in the period with additional behavioural safety awareness and training in addition to competence-based training. We also continued to recognise and reward the people and teams who go above and beyond to demonstrate safe behaviours with our quarterly "Safety Champion" and annual "Safety Champion of Champions" awards.

Our focus remains on developing and delivering exceptional customer service and driving operational efficiencies. In the period, we increased our direct delivery offering by investing in a new depot, delivery teams and vehicle fleet to serve the South East and London in support of the Group's strategy to increase its direct-delivery workforce and reduce the use of sub-contractors in the region. We also invested in additional training to upskill our operational people, to ensure that our service is always delivered in line with our vision of being the UK's first choice utility partner.

Our smart metering business continues to progress with positive momentum and we bolstered our in-house Smart Metering team in the period to meet the demand for its services.

We also look at ways to continually improve operational performance and simplify the way we work. In the period the Group successfully recruited a number of senior, highly experienced and successful operational people from within the utility infrastructure industry to drive continual improvements in efficiency of our operational delivery.

Management Changes

Martin Harrison, Chief Executive, stepped down with immediate effect during the period. Chairman Phil Holder has assumed day to day responsibilities for the business pending the appointment of a replacement. The Board is currently in the process of identifying a successor and a further announcement will be made in due course.

On 20 June, the Company announced the appointment of Daren Harris as Chief Financial Officer. Daren brings with him significant experience gained in various senior finance roles, with his most recent role being Group Finance Director and primary Board member of The Byrne Group, a construction services provider which during his tenure achieved turnover in excess of GBP300 million.

Outlook

There are indications that the utility connections market is improving with a number of substantial contracts being won, in contrast to the six months to September 2019 which were marked by continued political and economic uncertainty, resulting in a slowdown in the Group's core markets and the deferral by key customers of contract awards.

In addition, three legislative/regulatory announcements are expected to benefit the Group:

-- the lifting of the suspension to the electrical capacity market announced in October 2019 is expected to create a stronger project flow for Dunamis;

-- the more stringent requirement for electricity suppliers to exchange meters under the SMETS2 program will increase the opportunities for the Group's smart metering business; and

-- the announcement of 0% benefit-in-kind rate for company car drivers of electric vehicles is expected to stimulate demand for EV's and the supporting electrical infrastructure.

The Board believes that these factors will contribute to a stronger second half performance in the current year and underpin a recovery in financial performance in FY 2020/21. However, given the difficult trading conditions experienced in H1, offset by the improvement in activity experienced in Q3, the Board now expects that Adjusted EBITDA for FY 2019/20 will be approximately GBP5 million.

Consolidated Interim Statement of Comprehensive Income

For the six months ended 30 September 2019 (unaudited)

 
                                                                      Restated unaudited          Restated unaudited 
                                                   Unaudited         Six months ended 30    Year ended 31 March 2019 
                                         Six months ended 30              September 2018 
                                              September 2019 
                             Note                    GBP'000                     GBP'000                     GBP'000 
--------------------------  -----  -------------------------  --------------------------  -------------------------- 
 Revenue                     2, 3                     19,518                      24,835                      48,905 
 Cost of sales - 
  underlying                                        (13,421)                    (15,398)                    (29,708) 
 Cost of sales - 
  exceptional items             4                          -                           -                       (883) 
--------------------------  -----  -------------------------  --------------------------  -------------------------- 
 Total cost of sales                                (13,421)                    (15,398)                    (30,591) 
--------------------------  -----  -------------------------  --------------------------  -------------------------- 
 Gross profit                                          6,097                       9,437                      18,314 
 Administrative expenses - 
  underlying                                         (6,521)                     (6,181)                    (11,787) 
 Administrative expenses - 
  exceptional items             4                      (391)                       (221)                       (411) 
--------------------------  -----  -------------------------  --------------------------  -------------------------- 
 Total administrative 
  expenses                                           (6,912)                     (6,402)                    (12,198) 
--------------------------  -----  -------------------------  --------------------------  -------------------------- 
 Operating profit / (loss)                             (815)                       3,035                       6,116 
--------------------------  -----  -------------------------  --------------------------  -------------------------- 
 Net finance expense                                   (126)                        (61)                       (160) 
 Profit / (loss) before 
  tax                                                  (941)                       2,974                       5,956 
 Taxation                       6                        (1)                       (315)                     (1,035) 
--------------------------  -----  -------------------------  --------------------------  -------------------------- 
 Profit / (loss) for the 
  financial period                                     (942)                       2,659                       4,921 
--------------------------  -----  -------------------------  --------------------------  -------------------------- 
 Other comprehensive 
 income 
 Items that will never be 
 reclassified to profit 
 Revaluation of property, 
  plant and equipment                                      -                           -                      11,380 
 Surplus arising on 
  utility assets 
  internally adopted in 
  the year                                               649                         608                       1,100 
 Reversal of prior 
  increase of utility 
  assets                                               (153)                           -                     (2,544) 
 Deferred tax on items 
  that will never be 
  reclassified to profit 
  or loss                                                  -                           -                     (1,848) 
--------------------------  -----  -------------------------  --------------------------  -------------------------- 
 Total comprehensive 
  income for the period                                (446)                       3,267                      13,009 
--------------------------  -----  -------------------------  --------------------------  -------------------------- 
 Profit per share attributable to the owners of the business 
 Basic                          5                     (0.4)p                        1.2p                        2.3p 
 Diluted                        5                     (0.4)p                        1.1p                        2.2p 
--------------------------  -----  -------------------------  --------------------------  -------------------------- 
 

Adjusted EBITDA is the basis that the Board uses to measures and monitor the Group's financial performance as it is a more accurate reflection of the commercial reality of the Group's business.

 
Operating profit / (loss)               (815)  3,035   6,116 
Equity-settled share based payment 
 charges                                   31     52     115 
Exceptional items                         391    221   1,294 
Depreciation and amortisation           1,834  1,452   3,169 
--------------------------------------  -----  -----  ------ 
Adjusted EBITDA                         1,441  4,760  10,694 
Surplus arising on utility assets 
 internally adopted in year included 
 within Other Comprehensive Income        649    608   1,100 
--------------------------------------  -----  -----  ------ 
 Adjusted EBITDA plus increase 
  in value of internally adopted 
  utility assets included within 
  Other Comprehensive Income            2,090  5,368  11,794 
--------------------------------------  -----  -----  ------ 
 

Consolidated Interim Statement of Changes in Equity

For the six months ended 30 September 2019 (unaudited)

 
                    Share capital   Share premium       Revaluation   Merger reserve           Retained   Total equity 
                                                            reserve                            earnings 
                          GBP'000         GBP'000           GBP'000          GBP'000            GBP'000        GBP'000 
-----------------  --------------  --------------  ----------------  ---------------  -----------------  ------------- 
 Balance at 1 
  April 2019                  221             210            12,737           11,347             20,959         45,474 
 IFRS 16 
  adjustment                    -               -                 -                -              (245)          (245) 
 Restated balance 
  at 1 April 2019             221             210            12,737           11,347             20,714         45,229 
 Loss for the 
  period                        -               -                 -                -              (942)          (942) 
 Surplus arising 
  on utility 
  assets 
  internally 
  adopted in the 
  year                          -               -               649                -                  -            649 
 Reversal of 
  prior increase 
  of utility 
  assets                        -               -             (153)                -                153              - 
 Deferred tax 
  liability                     -               -              (85)                -                  -           (85) 
 Transactions 
 with equity 
 shareholders: 
 Issues of new 
  shares                        1             106                 -                -                  -            107 
 Equity settled 
  share-based 
  payments                      -               -                 -                -                 31             31 
 Balance at 30 
  September 2019              222             316            13,148           11,347             19,956         44,989 
 
  Six months 
  ended 30 
  September 2018 
 Balance at 1 
  April 2018                  211          21,042             4,649           11,347              (695)         36,554 
 IFRS 16 
  adjustment                    -               -                 -                -              (232)          (232) 
 Restated balance 
  at 1 April 2018             211          21,042             4,649           11,347              (927)         36,322 
 Profit for the 
  period                        -               -                 -                -              2,659          2,659 
 Surplus arising 
  on utility 
  assets 
  internally 
  adopted in the 
  year                          -               -               608                -                  -            608 
 Transactions 
 with equity 
 shareholders: 
 Issues of new 
  shares                        9             302                 -              407                  -            718 
 Equity settled 
  share-based 
  payments                      -               -                 -                -                 52             52 
 Balance at 30 
  September 2018              220          21,344             5,257           11,754              1,784         40,359 
-----------------  --------------  --------------  ----------------  ---------------  -----------------  ------------- 
 

Consolidated Interim Balance Sheet

At 30 September 2019 (unaudited)

 
                                                  Unaudited   Restated unaudited   Restated unaudited 
                                          30 September 2019    30 September 2018        31 March 2019 
                                  Note              GBP'000              GBP'000              GBP'000 
-------------------------------  -----  -------------------  -------------------  ------------------- 
 Non-current assets 
 Property, plant and equipment                       44,348               25,651               39,314 
 Intangible assets                   8               26,479               27,504               27,069 
 Right-of-use assets                                  2,152                2,457                2,464 
 Deferred tax assets                                  1,955                2,045                1,707 
-------------------------------  -----  -------------------  -------------------  ------------------- 
                                                     74,934               57,657               70,554 
-------------------------------  -----  -------------------  -------------------  ------------------- 
 Current assets 
 Contract Assets                                      9,108               10,934                9,132 
 Inventories                                            629                  207                  607 
 Trade and other receivables         9                6,090                4,614                6,392 
 Cash and cash equivalents          11                3,782               10,417                6,824 
                                                     19,609               26,172               22,955 
-------------------------------  -----  -------------------  -------------------  ------------------- 
 Total assets                                        94,543               83,829               93,509 
-------------------------------  -----  -------------------  -------------------  ------------------- 
 Current liabilities 
 Trade and other payables           10              (9,075)              (8,926)             (10,946) 
 Contract liabilities                              (26,460)             (28,417)             (26,343) 
 Borrowings                         11              (6,000)                    -              (3,000) 
 Lease liabilities                                    (574)                (351)                (613) 
 Provisions                                            (96)                 (98)                 (96) 
-------------------------------  -----  -------------------  -------------------  ------------------- 
                                                   (42,205)             (37,792)             (40,998) 
-------------------------------  -----  -------------------  -------------------  ------------------- 
 Non-current liabilities 
 Lease liabilities                                  (1,828)              (2,346)              (2,096) 
 Deferred tax liabilities                           (5,521)              (3,332)              (5,186) 
-------------------------------  -----  -------------------  -------------------  ------------------- 
                                                    (7,349)              (5,678)              (7,282) 
-------------------------------  -----  -------------------  -------------------  ------------------- 
 Total liabilities                                 (49,554)             (43,470)             (48,280) 
-------------------------------  -----  -------------------  -------------------  ------------------- 
 Net assets                                          44,989               40,359               45,229 
-------------------------------  -----  -------------------  -------------------  ------------------- 
 
 
 
 Equity 
 Share capital              222      220      221 
 Share premium              316   21,344      210 
 Revaluation reserve     13,148    5,257   12,737 
 Merger reserve          11,347   11,754   11,347 
 Retained earnings       19,956    1,784   20,714 
----------------------  -------  -------  ------- 
 Total equity            44,989   40,359   45,229 
----------------------  -------  -------  ------- 
 

Consolidated Interim Cash flow Statement

For the six months ended 30 September 2019 (unaudited)

 
                                                 Unaudited            Restated Unaudited 
                                       Six months ended 30           Six months ended 30          Restated unaudited 
                                            September 2019                September 2018    Year ended 31 March 2019 
                                                   GBP'000                       GBP'000                     GBP'000 
-----------------------------  ---------------------------  ----------------------------  -------------------------- 
 Cash flows from operating 
 activities 
 Profit / (loss) before tax 
  for the period                                     (941)                         2,974                       5,956 
 Depreciation                                        1,002                           727                       1,557 
 Amortisation of intangible 
  assets                                               832                           725                       1,612 
 Exceptional items - fixed 
  asset impairment                                       -                             -                         883 
 Net finance expense                                   147                            11                          60 
 Equity settled share based 
  payment charges                                       31                            52                         115 
 Decrease in Contract Assets                            23                           991                       1,245 
 Decrease in trade and other 
  receivables                                          154                           339                         385 
 Increase in inventories                              (22)                         (366)                       (399) 
 Increase / (decrease) in 
  trade and other payables                         (1,374)                           530                       (374) 
 Increase in contract 
  liabilities                                          118                             -                         443 
 Decrease in provisions                                  -                             -                         (2) 
 Cash generated from 
  operations                                          (30)                         5,983                      11,481 
 Tax paid                                            (345)                             -                        (42) 
 Net cash inflow from 
  operating activities                               (375)                         5,983                      11,439 
-----------------------------  ---------------------------  ----------------------------  -------------------------- 
 Cash flows from investing 
 activities 
 Acquisition of external 
  utility assets                                   (2,346)                       (1,758)                     (3,566) 
 Capitalisation of utility 
  assets                                           (2,707)                       (2,695)                     (7,374) 
 Acquisition of property, 
  plant and equipment                                 (23)                         (205)                       (376) 
 Acquisition of intangible 
  assets                                             (243)                         (353)                       (884) 
 Finance income received                                 -                             -                          13 
 Net cash used in investing 
  activities                                       (5,319)                       (5,011)                    (12,187) 
-----------------------------  ---------------------------  ----------------------------  -------------------------- 
 
 
 Cash flows from financing activities 
 Dividends paid                                                   -        -   (4,738) 
 Borrowings                                                   3,000        -     3,000 
 Payment of lease principal                                   (307)    (277)     (569) 
 Finance costs paid                                           (147)     (11)      (73) 
 Proceeds from issue of share capital                           106      302       521 
 Net cash from financing activities                           2,652       14   (1,859) 
---------------------------------------------------------  --------  -------  -------- 
 Net increase / (decrease) in cash and cash equivalents     (3,042)      986   (2,607) 
 Cash and cash equivalents at beginning of period             6,824    9,431     9,431 
---------------------------------------------------------  --------  -------  -------- 
 Cash and cash equivalents at end of period                   3,782   10,417     6,824 
---------------------------------------------------------  --------  -------  -------- 
 

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 2019 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 2019 is derived from the non-statutory accounts for that financial period. The non-statutory accounts for the year ended 31 March 2019 were approved on 19 September 2019. The Auditor's report on those accounts was unqualified and did not draw attention to any matters by way of emphasis of matter.

   1.1.   Basis of preparation 

The condensed consolidated interim financial information for the period ended 30 September 2019 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 2019, which have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 31 March 2019, as described in those financial statements.

   1.2.   Accounting policies 

The financial statements have been prepared using consistent accounting policies with those applied in the Group's financial statements for the year ended 31 March 2019 as set out on pages 43 to 49 of those financial statements, with the exception of the following:

The Group adopted IFRS 16 Leases for the period commencing 1 April 2019. This standard sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. It replaces IAS 17 Leases and IFRIC 4 Determining whether an arrangement contains a lease.

The Group has adopted IFRS 16 using the full retrospective application of the standard, restating prior year comparatives, and has applied the practical expedient to grandfather the definition of a lease on transition and apply the recognition exemption for both short term and low value assets. Revised accounting policies and the impact of the adoption of IFRS 16 are set out in note 12.

The following new and revised standards, amendments and interpretations, have been issued but have not been applied by the Group in the condensed consolidated interim financial information as there is no material impact:

   --      Prepayment features with Negative Compensation - Amendments to IFRS 9 
   --      Long-term Interests in Associates and Joint Ventures - Amendments to IAS 28 
   --      Annual Improvements to IFRS standards 2015 - 2017 Cycle 
   --      Plan Amendment, Curtailment or Settlement - Amendments to IAS 19 
   --      Interpretation 23 - Uncertainty over Income Tax Treatments 

IFRS 15 Revenue from Contracts with Customers

In the year end ended 31 March 2019, the group reconsidered the previous approach of recognising revenue in respect of the fair value of the infrastructure assets that it constructed and then owns and concluded that the asset is controlled by the Group throughout construction.

Disclosure of the impact of IFRS 15 is set out in the Group's Annual Report and Accounts for the period ended 31 March 2019 on pages 48 and 49. The financial statements have been prepared using a consistent accounting policy and comparatives have been amended in accordance with the adjustments made to the last financial statements.

   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 three operating segments, infrastructure services, gas transportation and Dunamis. 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 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 profit 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 2019                 Restated Six months to 30 September 2018 
                                  Utility                                              Utility 
               Infrastructure       asset                          Infrastructure        asset                   Total 
                     Services   ownership    Dunamis  Total Group        Services    ownership    Dunamis        Group 
                      GBP'000     GBP'000    GBP'000      GBP'000         GBP'000      GBP'000    GBP'000      GBP'000 
-------------  --------------  ----------  ---------  -----------  --------------  -----------  ---------  ----------- 
Revenue                14,534       1,894      3,090       19,518          16,550        1,325      6,960       24,835 
Adjusted 
 EBITDA                 1,010         781      (350)        1,441           3,479          658        623        4,760 
Share based 
 payment 
 charge                  (31)           -          -         (31)            (52)            -          -         (52) 
Depreciation 
 & 
 amortisation           (647)       (534)      (653)      (1,834)           (424)        (310)      (718)      (1,452) 
-------------  --------------  ----------  ---------  -----------  --------------  -----------  ---------  ----------- 
Operating 
 profit 
 before 
 exceptional 
 items                    332         247    (1,003)        (424)           3,003          348       (95)        3,256 
Exceptional 
 items                  (379)           -       (12)        (391)           (221)            -          -        (221) 
-------------  --------------  ----------  ---------  -----------  --------------  -----------  ---------  ----------- 
Operating 
 profit                  (47)         247    (1,015)        (815)           2,782          348       (95)        3,035 
Net finance 
 (expense) / 
 income                  (40)        (86)          -        (126)            (62)            -          1         (61) 
Profit before 
 Tax                     (87)         161    (1,015)        (941)           2,720          348       (94)        2,974 
-------------  --------------  ----------  ---------  -----------  --------------  -----------  ---------  ----------- 
 
 
                                                                Year ended 31 March 2019 
 
                                              Infrastructure 
                                                    Services  Utility asset ownership    Dunamis  Total Group 
                                                     GBP'000                  GBP'000    GBP'000      GBP'000 
------------------------------------------  ----------------  -----------------------  ---------  ----------- 
Revenue                                               34,815                    2,984     11,106       48,905 
Adjusted EBITDA                                        7,992                    1,792        910       10,694 
 
Share based payment charge                             (115)                        -          -        (115) 
 
Depreciation & amortisation                          (2,395)                    (701)       (73)      (3,169) 
------------------------------------------  ----------------  -----------------------  ---------  ----------- 
 
Operating profit before exceptional items              5,482                    1,091        837        7,410 
Exceptional items                                      (354)                    (898)       (42)      (1,294) 
------------------------------------------  ----------------  -----------------------  ---------  ----------- 
Operating profit                                       5,128                      193        795        6,116 
 
Net finance (expense) / income                         (164)                        2          2        (160) 
Profit before Tax                                      4,964                      195        797        5,956 
------------------------------------------  ----------------  -----------------------  ---------  ----------- 
 

The Group derives all of its revenue from the UK and all of the Group's customers are based in the UK.

   3.         Revenue 

The Group's operations and main revenue streams are those described in the last annual financial statements. The Group's revenue is derived from contracts with customers. The nature and effect of initially adopting IFRS 15 on the Group's interim financial statements are disclosed in Note 1.

A. Disaggregation of revenue

In the following table, revenue is disaggregated by primary geographic market, service lines and timing of revenue recognition. The table also includes a reconciliation of the disaggregated revenue with the Group reportable segments (See note 2):

 
                                            Infrastructure Services    Gas Transportation       Dunamis 
----------------------------------------  -------------------------  --------------------  ------------ 
                                 GBP'000          2019         2018       2019       2018   2019   2018 
----------------------------------------  ------------  -----------  ---------  ---------  -----  ----- 
Primary geographic markets 
United Kingdom                                  14,534       16,550      1,894      1,325  3,090  6,960 
----------------------------------------  ------------  -----------  ---------  ---------  -----  ----- 
                                                14,534       16,550      1,894      1,325  3,090  6,960 
----------------------------------------  ------------  -----------  ---------  ---------  -----  ----- 
Service line 
Service revenue on long term contracts           6,277        8,636          -          -  1,654  5,240 
Service revenue on short term contracts          8,257        7,914          -          -  1,217      4 
Maintenance contracts                                -            -          -          -    219  1,716 
Gas transportation                                   -            -      1,894      1,325      -      - 
----------------------------------------  ------------  -----------  ---------  ---------  -----  ----- 
                                                14,534       16,550      1,894      1,325  3,090  6,960 
----------------------------------------  ------------  -----------  ---------  ---------  -----  ----- 
 
  Timing of revenue recognition 
Services transferred over time                  14,534       16,550      1,894      1,325  3,090  6,960 
----------------------------------------  ------------  -----------  ---------  ---------  -----  ----- 
                                                14,534       16,550      1,894      1,325  3,090  6,960 
----------------------------------------  ------------  -----------  ---------  ---------  -----  ----- 
 
   4.     Exceptional items 
 
                                  Six months to 30 September     Six months to 30 September   Year ended 31 March 2019 
                                                        2019                           2018 
                                                     GBP'000                        GBP'000                    GBP'000 
 Exceptional items included 
  in cost of sales                                         -                              -                        883 
 Exceptional items included 
  in administrative expenses                             391                            221                        411 
-----------------------------  -----------------------------  -----------------------------  ------------------------- 
                                                         391                            221                      1,294 
-----------------------------  -----------------------------  -----------------------------  ------------------------- 
 
   (a)   Exceptional items included in cost of sales 
 
                                  Six months to 30 September     Six months to 30 September   Year ended 31 March 2019 
                                                        2019                           2018 
                                                     GBP'000                        GBP'000                    GBP'000 
-----------------------------  -----------------------------  -----------------------------  ------------------------- 
 Fixed asset impairment 
  arising on external 
  revaluation                                              -                              -                        883 
-----------------------------  -----------------------------  -----------------------------  ------------------------- 
                             -                                                            -                        883 
 -----------------------------  -----------------------------------------------------------  ------------------------- 
 
   (b)   Exceptional items included in administrative expenses 
 
                                  Six months to 30 September     Six months to 30 September   Year ended 31 March 2019 
                                                        2019                           2018 
                                                     GBP'000                        GBP'000                    GBP'000 
 Restructuring costs                                     276                            221                        276 
 One-off legal and advisor 
  costs                                                   40                              -                        135 
 Other one-off costs                                      75                              -                          - 
-----------------------------  -----------------------------  -----------------------------  ------------------------- 
                                                         391                            221                        411 
-----------------------------  -----------------------------  -----------------------------  ------------------------- 
 
   5.         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 221,650,686 (September 2018: 217,439,403, March 2019: 217,205,321). Diluted earnings per share is calculated by dividing the profit attributable to ordinary shareholders by the weighted average number of ordinary shares in issue adjusted to assume conversion of all potentially dilutive ordinary shares from the start of the year, producing a figure of 231,141,106 (September 2018: 235,146,684, March 2019:227,043,123).

The earnings per share from continued operations were as follows:

 
                               Six months to 30 September   Six months to 30 September 2018   Year ended 31 March 2019 
   Profit per share                                  2019 
------------------------  -------------------------------  --------------------------------  ------------------------- 
 Basic                                             (0.4)p                              1.2p                       2.3p 
------------------------  -------------------------------  --------------------------------  ------------------------- 
 Adjusted basic                                      0.1p                              1.6p                       3.5p 
------------------------  -------------------------------  --------------------------------  ------------------------- 
 Diluted basic                                     (0.4)p                              1.1p                       2.2p 
------------------------  -------------------------------  --------------------------------  ------------------------- 
 Diluted adjusted basic                              0.1p                              1.5p                       3.3p 
------------------------  -------------------------------  --------------------------------  ------------------------- 
 

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 2019 
                                                        2019                           2018 
 Profit for the period                               GBP'000                        GBP'000                    GBP'000 
 Profit / (loss) for the 
  period attributable to 
  shareholders                                         (942)                          2,659                      4,921 
 Add exceptional items                                   391                            221                      1,294 
 Less tax relief on 
  exceptional items                                     (74)                           (42)                      (246) 
 Add amortisation of 
  intangibles                                            832                            725                      1,612 
 Adjusted profit for the 
  period attributable to 
  shareholders                                           207                          3,563                      7,581 
-----------------------------  -----------------------------  -----------------------------  ------------------------- 
 
   6.         Taxation 
 
                   Six months to 30 September 2019  Six months to 30 September 2018      Year ended 
                                                                                      31 March 2019 
                                           GBP'000                          GBP'000         GBP'000 
-----------------  -------------------------------  -------------------------------  -------------- 
Current tax                                      -                              464             620 
Deferred tax                                     1                            (149)             415 
-----------------  -------------------------------  -------------------------------  -------------- 
Total tax charge                                 1                              315           1,035 
-----------------  -------------------------------  -------------------------------  -------------- 
 

Deferred tax has been recognised in respect of tax losses carried forward that are expected to be utilised against future taxable profits.

Further reductions 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 GBP1.5m (31 March 2019: GBP9.9 million) of tax losses of which an additional deferred tax asset of GBP0.2m has been recognised.

   7.     Capital commitments 

At the 30 September 2019 the Group had entered into contracts to purchase property, plant and equipment in the form of utility assets for the amount of GBP16.4 million. The capital commitment at 31 March 2019 was GBP18.7 million and at 30 September 2018 was GBP15.4 million.

   8.         Intangibles 
 
                                 Goodwill  Brand & customer relationships  Software    Total 
                                  GBP'000                         GBP'000   GBP'000  GBP'000 
-------------------------------  --------  ------------------------------  --------  ------- 
Balance at beginning of period     14,251                          11,045     1,773   27,069 
Additions                               -                               -       242      242 
Amortisation for the period             -                           (678)     (154)    (832) 
-------------------------------  --------  ------------------------------  --------  ------- 
Balance at end of period           14,251                          10,367     1,862   26,479 
-------------------------------  --------  ------------------------------  --------  ------- 
 
   9.     Trade and other receivables 
 
                      Six months to 30 September 2019   Six months to 30 September 2018   Year ended 31 March 2019 
                                              GBP'000                           GBP'000                    GBP'000 
-------------------  --------------------------------  --------------------------------  ------------------------- 
 Trade receivables                              3,448                             3,172                      3,972 
 Other receivables                              2,642                             1,442                      2,420 
-------------------  --------------------------------  --------------------------------  ------------------------- 
                                                6,090                             4,614                      6,392 
-------------------  --------------------------------  --------------------------------  ------------------------- 
 

10. Trade and other payables

 
                   Six months to 30 September 2019   Six months to 30 September 2018   Year ended 31 March 2019 
                                           GBP'000                           GBP'000                    GBP'000 
----------------  --------------------------------  --------------------------------  ------------------------- 
 Trade payables                              3,961                             2,979                      5,881 
 Other payables                              5,114                             5,947                      5,065 
----------------  --------------------------------  --------------------------------  ------------------------- 
                                             9,075                             8,926                     10,946 
----------------  --------------------------------  --------------------------------  ------------------------- 
 

11. Reconciliation to net funds

 
                            Six months to 30 September 2019  Six months to 30 September 2018      Year ended 
                                                                                               31 March 2019 
                                                    GBP'000                          GBP'000         GBP'000 
--------------------------  -------------------------------  -------------------------------  -------------- 
Cash and cash equivalents                             3,782                           10,417           6,824 
Borrowings                                          (6,000)                                -         (3,000) 
--------------------------  -------------------------------  -------------------------------  -------------- 
Net funds                                           (2,218)                           10,417           3,824 
--------------------------  -------------------------------  -------------------------------  -------------- 
 

12. IFRS 16 Leases adoption

Previously leases of property, plant and equipment were classified as either finance or operating leases under IAS 17. Payments made under operating leases (net of any incentives received from the lessor) were charged to profit or loss on a straight-line basis over the period of the lease. Under IFRS 16, which the Group has adopted effective for the period starting 1 April 2019, leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group. Each lease payment is allocated between the liability and the finance cost. The finance cost is charged to profit and loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. The Group has applied IFRS 16 on a fully retrospective basis with practical expedients from the date of initial application (1 April 2019).

In applying IFRS 16 for the first time, the Group has used the following practical expedients permitted by the standard:

-- The use of a single discount rate to a portfolio of leases with reasonably similar characteristics.

-- The accounting for short term operating leases under IAS 17, for leases with a remaining term of less than twelve months as at the initial application date.

-- The use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

-- The application of IFRS 16 to only those operating leases accounted for under IAS 17 as at the initial application date.

Upon transition, a lease liability has been recognised based on future lease payments discounted at an appropriate borrowing rate. Additionally, a right of use asset has been recognised along with a related lease liability. Within the income statement for the six months ended 30 September 2019, the operating lease charge (GBP349k) has been replaced by depreciation (GBP311k) and interest expense (GBP43k). This has resulted in a decrease in administrative expenses and an increase in finance costs.

The net impact on retained earnings at 31 March 2019 was a decrease of GBP245k. This arose as a result of the recognition of right-of-use assets (GBP2,464k) offset by lease liabilities (GBP2,709k) under a fully retrospective approach.

13. Principal risks

The Board have assessed the Principal Risks as disclosed in the 2019 Annual Report and accounts and have determined that there has been no change in risk faced or risk rating at 31 March 2019. The principal risks which may affect the business and the future performance of the Group are set out below:

 
Description                                         Mitigating actions                                  Change in risk 
--------------------------------------------------  -------------------------------------------------- 
Growth and strategy execution 
------------------------------------------------------------------------------------------------------  -------------- 
The Board has adopted its strategy, as it believes  The Group's strategy is agreed by the Board at an   No change 
it is the one most likely to add the greatest       annual strategy meeting and thereafter regularly 
sustainable value for shareholders and              reviewed at Board meetings and by the Executive 
stakeholders. It is possible that, with time,       Directors. The Board engages with management 
factors                                             and employees to ensure the strategy is 
become known that indicate that the strategy        communicated and understood and that all employees 
currently being pursued is not the most effective   have a clear understanding of the potential 
or efficient and that alternative strategies may    benefits and risks of the strategy. 
be more appropriate. 
--------------------------------------------------  -------------------------------------------------- 
Retention and recruitment 
------------------------------------------------------------------------------------------------------  -------------- 
Success depends on the continued retention and      The Group has put in place suitable reward and      No change 
performance of the Group's valued and talented      recognition packages to all staff, comprising 
employees across all business units and support     a blend of short and long-term incentives for 
functions to ensure that the business meets         senior managers and Executives. Appropriate 
it strategic goals. The Group operates in markets   staff development programmes are in place to 
with an ongoing demand for high calibre             assess, manage and develop the leadership skills 
people.                                             of staff throughout the organisation. In addition, 
                                                    we invest in succession planning and improving 
                                                    learning and development, giving opportunities for 
                                                    employees to upgrade skills. 
--------------------------------------------------  --------------------------------------------------  -------------- 
Macroeconomic conditions 
------------------------------------------------------------------------------------------------------  -------------- 
The Group derives all of its revenues from          We continue to closely monitor the impact of the    No change 
mainland UK and is therefore predominately          uncertainty on the UK economy and the Capacity 
dependent                                           Market auctions and how these factors could impact 
on the macroeconomic conditions in the UK. As the   the sectors in which we operate. The Group's 
UK negotiates the terms of its exit from            multi-channel, multi-utility strategy and the 
the European Union, there remains a degree of       increasingly diversified market position resulting 
uncertainty on the outlook for the UK economy.      from the Group's acquisitions in 2018 create a 
Also, the suspension of the Capacity Market         more balanced revenue base. Furthermore, we 
auction process throughout the reporting period     have been reducing reliance on larger electrical 
has delayed certain infrastructure projects. The    infrastructure projects and now offer the 
suspension was lifted in October 2019 and           end-to-end design and delivery of lower voltage, 
it is expected that related infrastructure          industrial, commercial and electric vehicle 
projects will re-commence.                          charging infrastructure projects. 
--------------------------------------------------  --------------------------------------------------  -------------- 
 
 
Competitive environment and reliance on key customers 
-----------------------------------------------------------------------------------------------------------  --------- 
The business strategy relies fundamentally on the     Our increasingly diversified position, including the   No change 
ability to increase revenues and ensuring             addition of Dunamis and CDS, has reduced 
that the cost base remains under control. However,    our exposure to volatility in individual competitive 
the markets in which the Group operates               markets. These risks are managed through 
are competitive. The actions of the Group's           the corporate planning and review processes. 
competitors, and/or our own inaction, can have 
a significant and adverse impact on the Group 
including those from organisations that may 
be larger and/or have greater capital resources. 
----------------------------------------------------  -----------------------------------------------------  --------- 
Gas and electricity connections market and regulatory environment 
-----------------------------------------------------------------------------------------------------------  --------- 
Operating in the gas industry carries with it         The Group seeks to reduce the risk of losses arising   No change 
inherent risks, such as reliance on ageing            from these circumstances through careful 
infrastructure,                                       planning, robust operational guidelines and the 
potential injury to, or loss of, human life or        sharing of risk with client and supplier 
equipment, as well as the risk of downtime            organisations 
or low productivity caused by weather interruptions   and by putting in place suitable insurance 
or equipment failures. Losses could result            arrangements. 
from litigation or interruption of the Group's 
business should these risks materialise. 
There are also associated regulatory risks relating 
to the Group's reliance on a number of 
different licences, which it requires in order to 
carry out the design and project management 
of connections to gas pipelines and the electric 
grid. Fulcrum Pipelines Limited, as an Independent 
Gas Transporter (iGT), and Fulcrum Electricity 
Assets Limited, as an Independent Network 
Distribution 
Operator (iDNO), are licensed by Ofgem. This brings 
with it the risk that the regulatory environment 
could change, which may have a direct and 
significant impact on the Group's regulated 
activities. 
----------------------------------------------------  -----------------------------------------------------  --------- 
Health and safety 
-----------------------------------------------------------------------------------------------------------  --------- 
The health and safety of our employees,               We ensure that the Board's health and safety strategy  No change 
subcontractors, suppliers and customers is of         is implemented by our comprehensive 
paramount                                             management systems and controls, overseen by our 
importance to us. Accidents on our sites could lead   Group health and safety department to minimise 
to reputational damage and financial penalties.       the likelihood and impact of accidents. 
----------------------------------------------------  ----------------------------------------------------- 
Working capital management and funding 
-----------------------------------------------------------------------------------------------------------  --------- 
A changing mix of new contract sales, moving away     In granting commercial credit terms, careful           No change 
from payments in advance toward credit terms,         attention is paid to the timing of cash receipts 
may place a strain on working capital as the volume   and payments over the period of contract delivery. 
of credit sales increases. The Group needs            Where necessary, a deposit is requested 
to ensure that it has the funding required to         from customers prior to commencing work and invoicing 
deliver on its strategy and future growth plans       milestones with customers are matched 
and that it manages its debt and cash balances        where possible to the invoicing patterns with 
effectively.                                          contractors. 
                                                      To support the forecast growth in utility asset 
                                                      ownership of gas and electricity assets, the 
                                                      Group has a debt facility of up to GBP20.0 million 
                                                      with our existing bank, Lloyds Banking 
                                                      Group plc. GBP6.0 million has been drawn down at the 
                                                      half-year end and all covenants have 
                                                      been complied with. Following the period end, the 
                                                      Group has agreed to the conditional sale 
                                                      of its residential and domestic portfolio which is 
                                                      expected to generate net cash proceeds 
                                                      of GBP33m over the next 3-4 years. 
----------------------------------------------------  -----------------------------------------------------  --------- 
IT systems and cyber security 
-----------------------------------------------------------------------------------------------------------  --------- 
Fulcrum uses a range of computer systems across the   The Group's IT strategies are reviewed regularly to    No change 
Group. Outages and interruptions could                ensure they remain appropriate, with business 
affect the ability to conduct day-to-day operations,  continuity and disaster recovery testing performed. 
which could result in loss of sales and               We have a dedicated internal IT support 
delays to cash flow. Key systems could be breached    team who work closely with external support providers 
causing financial loss, data loss, disruption         to ensure that regular updates to technology, 
or damage. In addition, any theft or misuse of data   infrastructure, communications and application 
held within the Group's systems could                 systems occur. The Group has advanced centralised 
have both reputational and financial implications     hardware and software security in place to ensure 
for the Group.                                        protection of commercial and sensitive data. 
                                                      For new IT projects, external consultants are 
                                                      utilised in conjunction with internal project 
                                                      management, restricting access to data, systems and 
                                                      code and ensuring all systems are secure 
                                                      and up to date. 
----------------------------------------------------  -----------------------------------------------------  --------- 
 

14. Related parties

The Group has a related party relationship with its subsidiaries and with its key management personnel. Details of the remuneration, share options and pension entitlement of the Directors are included in the Remuneration Report on page 30 of the Annual Report and Accounts, which are available on the Fulcrum Utility Services Limited's website at www.fulcrumutilityserviceslimited.co.uk.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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