06 April 2023

FULCRUM UTILITY SERVICES LIMITED

("Fulcrum" or "the Group")

Trading Update and Amendment to Convertible Loan Facility

Fulcrum Utility Services Limited, a leading independent provider of essential utility services including multi-utility connections and renewable energy infrastructure, provides a trading update today for its financial year ended 31 March 2023, along with details of amendments to the Group's Convertible Loan Facility Agreement announced on 5 December 2022 (RNS No: 5184L).

Trading update

The Group has been focused on addressing identified issues, implementing improvements and developing a clear strategy that will support it to capitalise on various opportunities in its markets. Positive progress is being made and the Group confirms that its full year performance will be in line with the expectations set out in its Trading Update, published on 24 October 2022 (RNS 7933D).

Update on review of strategic options

As announced on 5 December 2022, the Group has initiated a review of the various strategic options available to it in order to maximise value for shareholders (the "Review"). The Group is pleased to share that, to date, the Review has identified several opportunities and operational improvements which includes the development of a new sales strategy.  A new, leaner, Senior Leadership Team has also been formed and tasked with the effective delivery of the Group's plans.

A further outcome of the Review is the Board's decision to exit from the smart metering market. Since the Company's fundraise in December 2021 the UK's energy sector has experienced significant volatility such that the market dynamics have changed to an extent that the Board no longer considers it an attractive opportunity or area of the market for the Group to operate in. This exit also enables the Group to focus on more attractive opportunities available to it.

As the Review remains ongoing, the Board is pleased to confirm that Interim CEO, Lindsay Austin, will continue in her role for a minimum of a further six months to lead the Group and oversee the Review. This includes the implementation of the identified operational improvements and sales strategy to support Fulcrum to capitalise on its core strengths.

Convertible Loan Facility amendment

Further to the Facility Agreement announced on 5 December 2022, the Group today also announces that it has agreed to amend the Facility Agreement (the "Amended Facility") under which the provision of funding has been increased by £5 million such that up to £11 million is provided as principal (being £8 million from Bayford and £3 million from Harwood on a pro-rata basis). The terms of the Amended Facility are the same as those in the initial Facility Agreement being:

• Repayable on or before 1 November 2023 ("Repayment Date") or such later date as may be agreed by the Lenders;
• Convertible into Ordinary Shares at the discretion of the Lenders from 1 April 2023 ("Conversion");
• If converted, the conversion price will be the lower of the volume weighted average market value of the Company's Ordinary Shares in the 5 trading days immediately preceding the date of the conversion notice or 0.5p per Ordinary Share of the Company (the "Conversion Price");
• At or around the point of Conversion, the Company's shareholders will be entitled to participate in an open offer or similar arrangement, at the same price as the Conversion Price;
• Interest will be accrued from the date monies are drawn down under the Facility at a rate of 20 per cent. per annum, repayable at the end of the term or on prepayment of the Facility;
• A prepayment fee of 20 per cent. of the amount of the Facility prepaid early and a non-utilisation fee of 6 per cent. per annum.
  
  

The Amended Facility will continue to support the ongoing Review and ensure the Group continues to have adequate working capital. Bayford has indicated to the Board that it is their current intention to provide the Company with financial support beyond the term of Amended Facility, if required, and the Board confirms that this, together with the Amended Facility is expected to provide the Group with the funding required for the trading year ahead and will support the continued execution of the Group's strategy and Fulcrum's journey back to profitability.

The entry into the Amended Facility by Bayford and Harwood, each being a substantial shareholder of the Company, constitutes a related party transaction with each Lender under rule 13 of the AIM Rules. Accordingly, the directors who are independent of the Facility, being Jennifer Babington and Dominic Lavelle, (the "Independent Directors") consider, having consulted with Cenkos Securities plc, acting in its capacity as the Company's nominated adviser and broker, that entering into the Amended Facility is fair and reasonable insofar as the Company's shareholders are concerned.

Important matters to note for minority shareholders

The exercise of equity conversion rights by either Lender under the Amended Facility may result in that Lender acquiring Ordinary Shares carrying more than 30 per cent. of the voting rights in Fulcrum, and in certain circumstances more than 50 per cent.

Although Fulcrum is not a company that is subject to the UK Takeover Code, the Company's Articles of Association (the "Articles") contain certain protections equivalent to that afforded to shareholders under Rule 9 of the City Code on Takeovers and Mergers. As a condition of the Amended Facility, the Independent Directors of Fulcrum have agreed to exercise their discretion, pursuant to the Articles, to waive any requirement for a mandatory offer for the remaining Ordinary Shares in the Company which may otherwise apply upon the exercise of equity conversion rights under the Facility. For these purposes, the Independent Directors have not made any determination that the Lenders are acting in concert and each Lender has been granted a separate waiver.

In order to enable minority shareholders to participate in the raising of funds for the Company on similar terms to the Lenders, the Amended Facility contains an entitlement for minority shareholders, at or around the point of Conversion, to participate in an open offer or similar arrangement at the Conversion Price, with a right to subscribe for additional shares in the capital of the Company pro rata to their existing shareholdings at that time. This offer is expected to be undertaken shortly following exercise by the Lenders of their Conversion right.

The issue of shares to the Lenders, resulting from Conversion, is also subject to shareholders approving certain resolutions (the "Resolutions"). A shareholder circular convening a general meeting for the purposes of seeking approval of the Resolutions will be sent to shareholders in due course. Shareholders should be aware that it is a term of the Amended Facility that these Resolutions are approved by the requisite majority and the Amended Facility may be terminated if they are not so approved. The termination of the Amended Facility would likely result in little or no value for Shareholders.  Accordingly, it is important that Shareholders vote in favour of all of the Resolutions so that Conversion may proceed and all funding options are available to the Board.

Capitalised terms used in this announcement have the meanings given to them in the announcement of 5 December 2022 (RNS No: 5184L) unless the context provides otherwise.

Jennifer Babington, Chair, said:

"The Board and I are pleased to confirm that the Group's full year performance will be in line with expectations. Turning the Group's performance around is an ongoing and challenging task, but we are making positive progress as we implement a clear strategy that puts the Group on a path back to profitability.

We are also pleased to confirm the continued support from our major shareholders as we execute our plans and move the business forward. Again, we view this as a clear indication of their confidence in Fulcrum and its return to profitability.

The Group's future is also supported by medium to long-term market fundamentals, which remain strong. This, coupled with the improvements we are implementing, means that the Group continues to be ever better positioned to capitalise on the long-term opportunities presented by the UK's transition to a low carbon economy."

This announcement contains inside information.

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Notes to Editors:

Fulcrum is a multi-utility infrastructure and services provider. The Group operates nationally with its head office in Sheffield, UK. It designs, builds, owns and maintains utility infrastructure and offers smart meter exchange programmes. https://investors.fulcrum.co.uk