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Fulcrum withdraws from AIM listing

21 Aug 23 Another construction sector company has handed in its notice to the London Stock Exchange.

Fulcrum Utility Services has begun the process of withdrawal from the Alternative Investment Market (AIM), the London Stock Exchange listing for smaller businesses.

Last week Kingspan – dual listed in Dublin and London – announced that it was cancelling its LSE listing. Earlier this year CRH announced switch from London to the New York Stock Exchange. CRH and Kingspan and both Irish suppliers of building materials that operate internationally. Fulcrum’s £50m turnover is of a different order, but it seems that the London Stock Exchange is losing its allure for construction sector firms both large and small.

Fulcrum is a multi-utility infrastructure and services provider. Based in Sheffield, it operates nationally, designing, building, owning and maintaining utility infrastructure.

It has been AIM listed since 2009 following a reverse takeover of Fulcrum Group Holdings by Marwyn Capital.

However, the board has now decided that AIM listing brings little or no benefit and a lot of extra cost.

A key benefit of stock market listing is the ability to raise money from investors.  Fulcrum tried that in December 2021 and got little support.

“The directors believe that an equity fundraise through the public markets would not be available to the company in the near or medium term at an appropriate valuation, if at all,” the company said today. “Accordingly, the board is of the view that the public markets do not provide the optimal platform to raise such funds.”

It added: “It is the directors' opinion that the admission of the ordinary shares to trading on AIM no longer provides the fundamental benefit of giving access to the required investor base for the company to raise growth capital….. The board's experience and opinion is that many smaller publicly traded companies do not attract sufficient institutional or retail investor attention which often leads to share price erosion and consequently impacts, inter alia, the ability to use fairly valued shares for acquisitive growth.”

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Stock market listings are costly, even AIM, with fees payable to the London Stock Exchange as well as legal, insurance, accounting and auditing fees. Fulcrum said that delisting would save it £250,000 next year and £500,000 in 2025.

A shareholder meeting on 26th September will vote on the delisting plan but 57.3% have already swung behind the plan.  Its two principal shareholders are Bayford Group and Harwood Capital.

Fulcrum’s financial results for the year ended 31st March 2023, published today, show a loss before tax of £25.7m on revenue down 18% to £50.6m (2022: £61.8m).

Interim chief executive Lindsay Austin said: “Since joining Fulcrum as interim CEO in January 2023 my priority has been to ensure the group is positioned to capitalise on its core strengths and return to profitability.

“Improvements have been made and positive outcomes were delivered in the year. We secured a healthy flow of new contracts, won under enhanced contractual terms to better protect margin and took action to mitigate loss making contracts.

“Strong progress has continued to be made post year end and our focus continues to be on reducing costs, reducing overheads, improving efficiency and simplifying the business. The group is now in a much-improved position, and we are pleased to have ongoing financial support from our major shareholders as we move forward.

“Our recommendation to delist the business proactively supports the group's path to profitability by significantly reducing costs in this financial year and on an enduring basis. It will also help us to simplify the business, its operations, and will improve the speed of decision making.”

Non-executive chair Jennifer Babington added: “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.”

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