Fulcrum Utility Services : Annual Report and Accounts 2023

Fulcrum Utility Services Limited

Annual Report and Accounts 2023

Contents

Strategic report

1. Highlights
2. Fulcrum at a glance
3. Chair's statement
4. Chief Executive Officer's statement

1. Stakeholder engagement

1. Key performance indicators
2. Risk

Corporate governance 16 Board of Directors

18 Corporate governance statement

20 Audit Committee report

22 Remuneration report

23 Directors' report

Financial statements

27 Independent auditor's report

32 Consolidated statement of comprehensive income

33 Consolidated statement of changes in equity

34 Consolidated balance sheet

35 Consolidated cash flow statement

36 Notes to the consolidated financial statements

1. Advisers
2. Group trading companies

Highlights

Revenue £50.6m

2023 50.6

2022 61.8

2021 47.1

Adjusted EBITDA1 £(6.2m)

2023 (6.2)

2022 0.5

2021 0.1

Net cash/(debt)2 £(2.6m)

2023 (2.6)

2022 11.2

2021 (1.5)

Net assets £20.7m

2023 20.7

2022 45.9

2021 35.4

Financial performance

• Revenue down 18% to £50.6 million (2022: £61.8 million)
• Adjusted EBITDA1 of £(6.2) million (2022: £0.5 million)
• Loss before tax of £25.7 million (2022: £14.2 million)3
• Cash outflow from operating activities of £12.5 million (2022: £7.6 million)
• Adjusted earnings per share of (3)p (2022: (1.4)p) and basic earnings per share of (6.3)p (2022: (5.2)p)
• Net debt of £2.6 million as at 31 March 2023 (2022: £11.2 million net cash)
• Net assets of £20.7 million (2022: £45.9 million)

1Adjusted EBITDA is operating loss excluding the impact of exceptional items, other net gains, fair value gains on derivatives, depreciation, amortisation and equity- settled share-based payment charges.

2 Net debt includes £6m (2022: £nil) of borrowings that has been accounted for as an embedded derivative.

3Includes £17.8 million of exceptional items (2022: £10.6 million) including £12.2 million for impairment of intangible assets (2022: £2.3 million) and £2.2 million for onerous

contracts (2022: £5.6 million).

Fulcrum at a glance

Providing essential services across three key sectors.

We use our capabilities and experience to provide multi-utility infrastructure services and solutions to three key sectors, nationally.

• HOUSING
• INDUSTRIAL AND COMMERCIAL (I&C) INCLUDING HIGH VOLTAGE (HV) CONNECTIONS
• MAINTENANCE AND OWNERSHIP

Read more about the sectors we operate in at investors.fulcrum.co.uk/how-we-work/sectors-we-operate-in/

Utility services delivered through our specialist group businesses:

• Multi-utilityconnections for the housing and I&C markets
• Utility asset ownership

• High Voltage electrical connections, up to and including 132kV
• Specialist electrical design

• High Voltage maintenance for electrical systems and renewable energy generating infrastructure
• Build of electricity distribution infrastructure

Chair's statement

2023 in summary

This year we reset, refocused, restructured and refinanced the business to lay better foundations to support our return to profitability. This focused on addressing identified issues, implementing improvements, and developing a clear strategy.

We are now in a stronger position, and I would like to share my personal thanks to all our team for their hard work and ongoing efforts in achieving this.

Results

The challenges faced by the business during the financial year ending 31 March 2023 are reflected in our full year results. However, encouragingly, the Group's full year performance was in line with the expectations set out in our Trading Update, published on 24 October 2022.

Dividend

Considering the full year performance, the Board will not be recommending the payment of a dividend in respect of the financial year ended 31 March 2023 but will continue to keep its dividend policy under review.

Laying a path back to profitability

In the year, we acted to protect the Group in uncertain market conditions and initiated a review of various strategic options, in order to maximise value for shareholders.

The review identified several opportunities and operational improvements leading to the divestment in Smart metering, the implementation of a leaner operating model, the formation of a streamlined Senior Leadership Team and the development of a more targeted sales strategy.

Facility extension

We are pleased to also confirm that our major shareholders have agreed to extend the Facility Agreement that previously ran to

1 November 2023 out further to 31 December 2024. The terms of the extended Facility are the same as those in the initial Facility Agreement.

Recommendation to delist

A further outcome of the Group's ongoing strategic review is the Board's recommendation to delist the business from the Alternative Investment Market (AIM). This recommendation supports the Group's return to profitability as it will remove significant ongoing costs associated with its listing, it will also help to simplify the business and improve its agility. We will be communicating with our Shareholders separately on this matter.

Outlook

Turning the Group's performance around has been a challenging task and is ongoing, but we are making good progress, at pace. The Board is pleased that the Group is on a path back to profitability and that its foundations are being continually strengthened to deliver a successful future.

Medium to long-term market fundamentals are supported by the UK's transition to a low carbon economy and also continue to be very strong. Considering all of this, I am confident that the Group is well positioned to take advantage of the many and significant opportunities available to it as we move forward.

Jennifer Babington

Non-executive Chair

18 August 2023