REG - Yu Group PLC - Final Results
18/03/2025 07:00
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RNS Number : 0204B Yu Group PLC 18 March 2025
18 March 2025
Yü Group PLC
("Yü Group" or the "Group")
Final results for the year ended 31 December 2024
DELIVERING GROWTH AND SUSTAINABLE VALUE
Yü Group PLC (AIM; YU.), the independent supplier of gas and electricity, and
meter asset owner and installer of smart meters, to the UK corporate sector
announces its final audited results for the year to 31 December 2024.
The Group reports another year of increased revenue, Adjusted EBITDA, earnings
per share, cash generation and forward contracted customer book. The Board
reiterates its commitment to continued organic growth delivering sustainable
profitability growth as it takes advantage of the significant market
opportunity available.
Financial & Operational Highlights
31 December 2024 2023 Change
£'m unless stated
Financial:
Revenue 645.5 460.0 +40%
Adjusted EBITDA1 48.8 43.9 +11%
Profit before tax 44.5 39.7 +12%
Earnings per share:
Adjusted, fully diluted 210p 189p +21p
Statutory, basic 200p 185p +15p
Dividend per share (Interim & Final) 60p 40p +20p
Operating cash inflow 72.1 16.1 +56.0
Net cash(2) 80.2 32.1 +48.1
Overdue customer receivables (days)(3) 3 4 -1 day
Operational:
Meter points supplied (#'k) 88.0 53.4 +65%
Equivalent volume of energy supplied 2.21 TWh 1.24 TWh +78%
Market share(4) 2.7% 1.4% +1.3%
Average monthly bookings 42.6 55.5 -23%
Contracted revenue:
For next FY 566.0 520.0 +9%
In aggregate 1,034.0 826.0 +25%
TrustPilot score (#) 4.2 4.1 +0.1
Smart meter:
Installations in year (#'k) 22.9 8.5 +14.4
Index-linked annualised recurring revenue from asset ownership ("ILARR") 1.3 0.2 +1.1
Financial performance
· Revenue of £645.5m, up 40% in year (FY23: £460.0m) from strong
organic growth in delivered volume of energy, up 78% to 2.21 TWh. Market share
increased to 2.7%.
· Adjusted EBITDA increased to £48.8m (FY23: £43.9m), with robust and
"more normalised" margins on customer contracts, strong customer collection
rates and operational leverage in overheads.
· Profit before tax increased to £44.5m (FY23: £39.7m).
· Net cash of £80.2m, up £48.1m in year (FY23: £32.1m) following
successful implementation of a new hedging agreement with Shell Energy Europe
Limited ("Shell") removing the requirement to post cash collateral, and after
£30.5m of strategic cash investments and capital distributions(5).
· Investment in smart meters continues to provide benefits and is
building a material long-term index-linked annuity income. ILARR as at 31
December 2024 of £1.3m (FY23: £0.2m).
· Earnings per share, adjusted and fully diluted, increased to 210p
(FY23: 189p).
· Final recommended dividend of 41p per share, leading to total
distribution from FY24 of 60p, up 50% (FY23: 40p) in line with our progressive
dividend policy.
Operational delivery
· The Group continues to increase its market share, through its strong
customer offer and digital capability, with supplied meter points increasing
to 88,000 (FY23: 53,400). A substantial market opportunity remains, with a
current 2.7% of the £50bn addressable market served.
· Five-year commodity trading agreement with Shell continues to work
well and provides significant benefits via hedging execution and efficiency of
market access, whilst freeing cash to invest in the growth of the business.
· Yü Smart technical training and development centre became
operational, enabling the scaling of the Group's engineering capability to
provide national coverage and increased productivity.
· Yü Energy again recognised in The Sunday Times best 100 places to
work, graduating to the "Big Organisation" category in FY24.
Current trading and outlook
· Strong start to 2025, with new record monthly revenue, cash
collection and cash balance metrics achieved in January.
· Strong contracted revenue on which to build growth for FY25:
o £566m (FY23: £520m) contracted revenue for FY25 at the end of 2024.
o Energy prices expected to act as a headwind to sales growth in FY25, with
a c.9% year-on-year price reduction already embedded in the contract book.
Based on current tariffs, this is expected to be fully worked through the book
by FY26.
· Management targets continued growth in FY25, including:
o Over 120,000 supplied meter points and over 60,000 smart meter assets
owned.
o Sustainable profitability delivered via closely controlled margins on new
business; focused customer collections; scale benefits in overheads from
digital investments; and increasing benefits from smart meter installation and
ownership.
o Revenue expected to be in the range of £730m to £760m at this stage.
o Adjusted EBITDA, EPS and closing net cash for FY25 expected to be in line
with current market expectations.
· Progressive dividend policy remains, with forecasted earnings growth
and strong cash generation, and trending towards the target for 3x dividend
cover on EPS (FY24: 3.3x cover) in the short to medium term.
Bobby Kalar, Chief Executive Officer, stated:
"The team and I continue to focus on delivering our strategy, which has
delivered another new set of record results, with further strong growth in
revenue, profit and cash terms. I'm particularly pleased that this is our
6(th) year of profit growth, and we have taken revenue from £81m in 2018 to
£646m in 2024. This growth is set to continue, although at a slower pace in
percentage terms due to the larger base.
Our disciplined approach to growth and the focus on our core target market
remains, and our smart metering business is starting to bear considerable
fruits.
Whilst softened commodity markets provide a lower revenue per customer, our
78% growth in delivered energy volume demonstrates the opportunity being
taken. We continue to grow market share, nearly doubling year-on-year to 2.7%,
and we have a huge addressable market available and are set-up to scale.
Our smart metering business continues to perform well. I'm really pleased and
proud that from standstill in 2023 we now have a fully functioning engineering
capability across the Country, with our own training centre and a highly
skilled and driven management team. I'm very much looking forward to guiding
this business as it develops further.
We are again increasing our dividend payment, which has increased by 50% in
year, reflecting our progressive dividend policy and confidence in the future
with over £1 billion of forward revenue already contracted.
On behalf of my hard-working colleagues and my fellow shareholders, I remain
disappointed by the disconnect between our business performance and our market
rating. Notwithstanding this, we remain focused on the continued growth of our
business.
I am privileged to lead such a fantastic team and would like to thank them for
helping to deliver such fantastic results! My team is stronger than ever, and
I remain committed to ensuring we provide the environment for them to develop
their careers alongside the Group's continued development."
Analyst presentation and publication of annual report
A presentation for analysts will be held at 9am GMT today, Tuesday 18 March
2025. Anyone wishing to attend should please contact yugroup@teneo.com
(mailto:yugroup@teneo.com) for further information.
An electronic version of the full annual report will be published on the
Group's website, www.yugroupplc.com (http://www.yugroupplc.com) , later today
(18 March 2025).
1 Adjusted EBITDA is earnings before interest, tax, depreciation and
amortisation, and gains or losses on derivative contracts. See reconciliation
in note 7 to the financial statements below.
(2) Net cash refers to cash and cash equivalents less the debt in the Group,
excluding any lease liabilities.
(3) Overdue customer receivables is expressed in days of sales, and relates to
the total balance, net of provisions, of accrued income which is outside of
the normal billing cycle, plus overdue trade receivables (net of VAT and CCL).
(4) Analysis based on Cornwall Insight market share report, October 2024.
(5) £9.0m early payment of renewable obligation liability; £8.1m in smart
meter and property capital investment; and £13.4m in capital distributions.
For further information, please contact:
Yü Group PLC +44 (0) 115 975 8258
Bobby Kalar
Paul Rawson
Panmure Liberum +44 (0) 20 3100 2000
Bidhi Bhoma
Edward Mansfield
Satbir Kler
Gaya Bhatt
Teneo +44 (0) 20 7353 4200
Giles Kernick
Tom Davies
Notes to editors
Information on the Group
Yü Group PLC is a leading supplier of gas and electricity focused on
servicing the corporate sector throughout the UK. We drive innovation through
a combination of user-friendly digital solutions and personalised, high
quality customer service. The Group plays a key role supporting businesses in
their transition to lower carbon technologies with a commitment to providing
sustainable energy solutions.
Yü Group has a clear strategy to deliver sustainable profitable growth (in a
£50bn+ addressable market) and value for all of our stakeholders, built on
strong foundations and with a robust hedging policy. The Group has achieved a
compound annual growth rate of c.60% over the last four years, and has
significantly improved margin and profitability performance. In 2023 the Group
launched Yü Smart to support growth through new opportunities in smart
metering installation, including through the ownership of smart meter assets
to generate a recurring index-linked annuity income over a 15+year period.
Chairman's Statement
CONSISTENT DELIVERY SUPPORTING SUSTAINABLE VALUE
A seasoned and committed team sharing the determination to scale organic
growth within a framework of robust corporate governance and effective risk
management.
Dear Shareholders,
The ongoing benefits of the "roll out" of our short, medium and long-term
strategies allow me to report to you continuing success in the meeting of our
targeted financial and operational results.
Your Board continues to scale the business via having increased UK market
share to 2.7% (2023: 1.4%) and the delivery of a 78.2% growth in volume of
energy supplied.
A 40.3% year-on-year growth in revenues evidences our teams' ability to
maintain momentum and consistency in the delivery of results.
Dividends per share for FY24 increased by 50.0% to 60p (40p in 2023).
Profit before tax increased 12.1% to £44.5m (2023: £39.7m).
Earnings per share on an adjusted and fully diluted basis increased to 210p
(2023: 189p) and to 200p (2023: 185p) on a statutory reported basis.
Over £1.0bn of secured forward orders have been booked (2023: £826m). We
remain focused upon the opportunity to increase our market share in a £50bn
addressable market.
This year the net cash position has seen further improvement from £32.1m to
£80.2m.
Planning for controlled growth
The Yü Smart business has delivered an increase in meter numbers and 27,200
smart meters are now owned (2023: 4,100). This ongoing initiative unlocks
multiple benefits for our customers and provides a certain annuity
contribution to profitability. In part, this arises from the increase in both
the efficiency and scale of our internally managed commodity hedging programme
supported by our strategically aligned partnership with Shell.
Our teams, capably directed by Bobby Kalar as Chief Executive Officer, remain
focused on our agile "industry disruptor" ethos and approach.
A seasoned management team, accustomed to delivering well above-average
sectorial "out-performance", continues to be strengthened by its ability to
attract talent enthusiastic about the opportunity to make a highly engaged
"difference" within our entrepreneurial and faster-paced challenger company
environment.
Delivering for shareholders and stakeholders
It is encouraging that your Company has again been recognised by The Sunday
Times "Best Places to Work" list, and is now in their "Big Organisation"
category. Our shareholders now include a greater number of institutional
investors. We continue to maintain stakeholder engagement processes, carefully
designed to benefit existing, future, and long-term shareholders.
Summary
Your Board will continue to deliver judiciously controlled growth whilst it
continues to scale the Group. My colleagues and I remain committed to the
delivery of long- term value to our shareholders.
Robin Paynter Bryant
Chairman
Chief Executive Officer's Statement
DELIVERING GROWTH AND SUSTAINABLE VALUE
A new record performance for the Group as we continue to take market share.
I am pleased to note the evolution of the Group, with continued and
sustainable profitable growth as we increase our market share. The benefits
from our strategic investments are becoming clearer to see, with revenue,
earnings per share and cash all growing - alongside growth in key operational
metrics.
Yü Energy
Our retail supply of gas and electricity has grown 78.2% in terms of delivered
volume of energy supplied, and by 64.8% in terms of meter points supplied.
Contracts are over a longer period (at 25 months on new bookings) as energy
prices have softened and customers look to "lock-in" our fixed price, fixed
term core offering. We are also working with high calibre partners and third
parties to support our growth aspirations - though we remain selective on the
opportunities we pursue to ensure they meet our value and risk criteria.
Whilst total volume of energy sold increased 78.2% in the year, lower
commodity prices have dampened top-line growth, which will continue through
FY25. Despite this headwind we have still grown our revenue by 40.3% in the
year. We now see prices booked aligned with our forward book and therefore
most of the price drag on our revenue growth has washed through.
I am pleased with how the Group is positioned. Our approach to customer
acquisition, onboarding, customer service, billing and debtor management is
all focused on our target sector.
Our commodity trading agreement with Shell, signed February 2024, continues to
work well and provides a cost and capital efficient access to commodity
markets to allow us to hedge our risk. This has seen obvious cash benefits in
FY24, though just as pleasing is the ability to partner with a major company
which has aligned objectives to continue to grow our business, materially and
sustainably, over the coming weeks, months and years.
Our digital by default strategy remains a key facilitator in our success: from
securing and serving customers to enabling efficiency in our commercial
decision making and leveraging our overheads as we scale.
Whilst we see some additional competitive challenge in our area, as markets
have normalised, I believe we have a good head start and the right attitude to
stay ahead of the legacy suppliers which continue to hold the majority share
of the B2B market. We see this as an opportunity as we look to scale our 2.7%
market share.
Yü Smart and meter ownership
The scaling of our Yü Smart business, since we established it in 2023, is a
particularly proud and significant milestone for me! It has added depth to our
offering as well as a host of operational and financial benefits to the Group.
Establishing a new management team to drive performance, an engineering
workforce covering all of Great Britain, a training and development centre to
ensure control, and a clear value proposition for the customer and for our
business are all significant "wins" for the Group and is now a fundamental
part of our strategy.
We achieved 22,900 meter installations in the year (FY23: 8,500) and now own
27,200 assets. The 15+ year annuity income from meter assets has grown to
£1.3m at 31 December 2024 (FY23: £0.2m), providing the basis of a more
material contribution to Group profitability as we continue to scale.
We will look to further develop this smart metering business in 2025 and
beyond.
Institutional engagement and approach to capital markets
The investment case remains the same. We provide simple and easily available
energy to businesses across Great Britain, which provides a significant and
scalable market opportunity; we have a proven strategy of delivery; and a
focus on smart metering, digital innovation and commodity hedging to provide
the foundations to drive sustainable profitability.
That said, we will "stick to our knitting" and ensure we focus on delivering
our strategy, which is clearly demonstrated in our financial and operational
results.
As founder and majority shareholder, I am committed to the success of the
Group over the medium and long-term. In short, we will do whatever is
appropriate to ensure long term shareholders and stakeholders in the business
are considered and that our strategic goals are met.
Current trading and outlook
We have commenced 2025 continuing the strong momentum from 2024.
The forward contract book continues to provide a strong base for growth for
FY25 and beyond underpinned by lengthening contract durations. We have a small
but growing market share in a substantial market providing opportunity for
continued organic growth as we navigate through lower commodity markets that
will temper the FY25 growth rate. We expect to deliver revenue in the range of
£730m to £760m at this stage.
Management targets in excess of 120,000 supplied meter points and over 60,000
smart meter assets owned by the end of FY25.
Despite lower revenue growth reflecting softer commodity prices, the Group is
confident in achieving key market expectations related to adjusted EBITDA,
earnings per share and net cash growth.
The Board's stated progressive dividend policy remains in place. Potential
earnings growth and strong cash generation, with the target to reduce dividend
cover to 3x on EPS (FY24: 3.3x cover), provides a potential opportunity to
increase the FY24 payment of 60p per share in FY25.
Bobby Kalar
Chief Executive Officer
Finance Review
STRONG AND SUSTAINABLE EARNINGS ALONGSIDE SIGNIFICANT GROWTH
Providing sustainable, profitable growth, with strong momentum into 2025.
In overview
· Revenue increased 40.3% to £645.5m (2023: £460.0m)
· Adjusted EBITDA increased 11.2% to £48.8m (2023: £43.9m)
· Profit before tax increased 12.1% to £44.5m (2023: £39.7m)
· Net cash inflow of £52.7m
· Closing net cash of £80.2m, representing 478p per share
· Adjusted, fully diluted EPS of 210p, up 11.1% (2023: 189p)
· Delivering on progressive dividend policy, with return increased
50.0%
· Final dividend of 41p per share recommended, following 19p interim
payment
· Forward contracted revenue of £1.0bn (2023: £0.8bn)
· Investment in smart meters providing ILARR of £1.3m (2023: £0.2m)
Financial metrics
£'m unless stated 2024 2023 Change
(* % of revenue)
Revenue 645.5 460.0 +40.3%
Gross margin* % 14.5% 18.1% -3.6%
Net customer contribution(1)* % 12.4% 14.9% -2.5%
General overheads* % (4.9%) (5.4%) +0.5%
Adjusted EBITDA* % 7.6% 9.5% -1.9%
Adjusted EBITDA 48.8 43.9 +4.9
Profit before tax 44.5 39.7 +4.8
Net cash flow 52.7 13.5 +39.2
Net cash 80.2 32.1 +48.1
Earnings per share (adjusted, fully diluted) 210p 189p +21p
Dividend per share (interim and final) 60p 40p +20p
Other metrics
£'m unless stated 2024 2023 Change
One year forward contracted revenue 566 520 +8.8%
Aggregate contracted revenue 1,034 826 +25.2%
Non-contracted annualised revenue 39 29 +34.5%
Equiv. volume of energy supplied 2.21 TWh 1.24 TWh +78.2%
Smart meter assets, ILARR 1.3 0.2 +1.1
Overdue customer receivables 3 days 4 days -1 day
Results summary
The Group has continued delivering the strategy: to increase revenue
organically, delivering sustainable profitability through control of gross
margin, bad debt and overheads, and with strong cash generation enabling
strategic investment. Our growth in EPS and confidence in relation to the
Group's cash position allow for further progress in shareholder dividend
returns, with payments related to 2024 of 60p (including a 41p recommended
final dividend) per share up 50.0% on the 40p paid for 2023.
Delivering 78% organic growth in volume of energy supplied
Revenue of £645.5m (2023: £460m) is an increase of £185.5m, with revenue
achieving a compound annual growth rate ("CAGR") of 58.8% since 2020.
Volume of energy supplied to customers ("EQVS") increased by 78.2%, to 2.2 TWh
due to increased market share. However, because of softer global commodity
markets, revenue per megawatt hour ("MWh") of EQVS has decreased 21.3% from
£371 in 2023 to £292 in 2024. EQVS for 2024 was also diluted due to mild
temperatures reducing customer demand.
The subscription model characteristics of the Group's forward contract book
provide significant visibility of future revenues, and a base to supplement
through new bookings or renewals. In aggregate, the Group has over £1bn of
revenue secured in its forward customer book, of which £566m delivers in
2025. There is a further c.£30m of annualised value from non-contracted
customers.
This forward contracted revenue secured is, on aggregate, 25.2% up on the
prior year, and 8.8% up for delivery in the next calendar year, representing a
longer contract term being secured. We have seen H2 24 bookings and forward
contracted revenue converging at a price c.9% below that delivered in 2024,
demonstrating that the historical high prices have now largely washed through.
In short, based on current market conditions, the headline organic growth rate
should suffer a lower drag from commodity prices in 2025 (vs. 2024), and
minimal price impact is expected from 2026.
Sustainable profitability as we scale
Adjusted EBITDA, profit before tax and profit after tax increased in year by
£4.9m, £4.8m and £2.6m respectively. This has led to growth in earnings per
share of 8.1% on a basic, reported basis and 11.1% (to 210p) on an adjusted,
diluted basis.
Profitability exceeded management expectations, with adjusted EBITDA of
£48.8m (FY23: £43.9m), representing 7.6% margin (2023: 9.5%); and 6.9%
profit before tax margin (2023: 8.6%).
Gross margin decreased, as expected, to 14.5% (2023: 18.1%) as 2023 benefited
from a higher impact from non-contracted customers. FY24 also reflected some
higher industry and commodity costs, though such costs were partially
mitigated by previous accrued industry costs not materialising. Gross margin
on the over £1bn of contracted revenue continues to be underpinned by the
Group's closely managed commodity hedging strategy, which locks in contract
margin on signing of new contracts.
The focus on bad debt management is also delivering results, reducing the
charge to income from 3.1% of revenue in 2023 to 2.1% in 2024, whilst
management has retained a cautious approach to bad debt provisioning in view
of the wider economic context.
General overheads decreased to 4.9% of revenue (2023: 5.4%) from the leverage
benefit of the Group's digital strategy with cost to serve, systems and
certain fixed costs not increasing with revenue growth.
As further disclosed in note 7 of the financial statements, adjusted EBITDA
provides management with a profitability measure based on business trading
performance. It excludes £1.4m of non-recurring exit costs from the Group's
previous commodity hedging contract. This contract was replaced in February
2024 with an agreement with Shell, which provides significant benefits on
hedging and cash liquidity to the Group.
Adjusted EBITDA reconciliation
£'m 2024 2023
Adjusted EBITDA 48.8 43.9 (2)
% of revenue 7.6% 9.5%
Adjusted items:
Loss on derivative contracts - (3.0)
Non-recurring exit costs from previous hedging contract (1.4) -
Share-based payment charges (4.0) (1.3)
Depreciation and amortisation (2.5) (1.5)
Statutory operating profit 40.9 38.1
Net finance income 3.6 1.6
Profit before tax 44.5 39.7
Adjusted EBITDA also excludes £4.0m (2023: £1.3m) of share-based payment
charges as they are variable based on the Group's share price performance and
are not related to business operational trading.
There has been no derivative gain or loss in relation to derivative contracts
in the period, with a £3.0m charge in 2023.
As a result of the Group's increased cash balance, net finance income
increased to £3.6m in the year (2023: £1.6m). Profit before tax increased
£4.8m to £44.5m (2023: £39.7m).
Increasing net cash, whilst investing for future returns
Net cash, being cash held less borrowings (excluding leases), increased from
£32.1m to £80.2m. This significant cash generation, supported via the new
commodity arrangement with Shell, allows for strategic investments to unlock
additional value, whilst increasing shareholder distribution.
Movement in Net Cash
Cash flow £'m 2024 2023
Adjusted EBITDA 48.8 43.9
Commodity trading cash collateral 49.8 (49.8)
Early payment of industry ROC liability (9.0) -
Customer acquisition costs (12.3) (8.5)
Corporation tax payments (11.3) (0.6)
Other working capital movement 6.1 31.1
Operating cash flow 72.1 16.1
Investment in smart meter assets (4.6) (0.8)
Investment in freehold property (1.8) -
Other investing activities (3.3) (0.7)
Share buy-back (4.0) -
Dividends paid (9.4) (1.0)
Other financing activities (0.9) (0.5)
(impact on net cash only)
Net cash movement in year 48.1 13.1
Closing net cash balance 80.2 32.1
Opening net cash balance 32.1 19.0
The £49.8m benefit from hedging related cash collateral, previously paid in
2023, enabled the Group to early settle £9.0m of renewable obligation
industry liabilities, to secure a discount, which would otherwise be due in
August 2025. Additionally, the Group has invested £12.3m (2023: £8.5m) in
customer acquisition payments to support accelerated growth, and paid £11.3m
(2023: £0.6m) in corporation tax payments, with tax losses now largely
utilised.
In total, operating cash flow of £72.1m (2023: £16.1m) provides a continued
strong base despite significant investments in operating costs to drive growth
and/or margin improvement.
Net current assets increased £13.9m to £46.3m (2023: £32.4m) reflecting the
strength of the Group's cash position and balance sheet.
The Group is also scaling its investment in smart meter activities, with
£4.6m capital investment (2023: £0.8m). In addition to the clear customer
benefits of smart meters, they also provide the Group with increased hedging
and customer outcome benefits, as well as an index-linked annuity income
stream. The Group exited 2024 with ILARR of £1.3m, providing a growing impact
to forward EBITDA and cash generation for 2025 and beyond. Additional
investment in 2025 is expected to significantly increase this income stream.
As further disclosed in notes 12 and 25 of the financial statements, the Group
acquired for £1.8m (on an arm's length basis) the freehold Group head office
in Nottingham, and further invested in digital and other cap-ex costs of
£1.6m (2023: £0.7m) and smart meters ready for installation of £1.7m (FY23:
£nil).
Other financing activities include repayments of certain lease obligations in
respect of vehicles and, pre-acquisition, the Nottingham office rental,
together with interest on borrowings wholly secured on the investment in smart
meters.
Increased shareholder distributions and progressive dividend policy
The Group's cash performance enabled a share buy-back of £4.0m, and dividend
payments of £9.4m (2023: £1.0m).
An interim dividend of 19p (2023: 3p) per share is to be supplemented by a
final recommended dividend of 41p (2023: 37p) per share. The Group has
previously announced a progressive dividend policy, increasing returns with
expected EPS growth, and reducing dividend cover to 3x over the short to
medium term.
To provide flexibility in future distributions, the Group cancelled its share
premium account in the year. This cancellation resulted in a £12.3m increase
in distributable reserves. The holding company's retained earnings increased
in the year by £15.1m, to £37.4m, and cash and cash equivalents at the
holding company closed at £42.8m (2023: nil).
The final recommended dividend of 41p per share is payable on 19 June 2025.
The shares will go ex-dividend on 29 May 2025, and the record date is 30 May
2025.
Summary: continued financial progression
In summary, the Board is very pleased to present continued financial
progression and is delivering growth, sustainable profitability and cash
generation.
We have nearly doubled our market share over the past year and increased
energy volumes by 78.2. Revenue growth remains strong, at 40.3%, despite the
softer commodity price environment, and there is significant opportunity
available to the Group to scale further beyond the £1bn revenue already
contracted, in aggregate, at the end of 2024.
Our commodity hedging agreement, signed with Shell in February 2024, provides
clear efficiency benefits in our hedging activities to continue to manage
commodity volatility, and is sized to support significant growth. It has also
generated significant cash benefits, enabling investments in value enhancing
areas.
The development of smart meters provides material benefits in risk management
and optimisation in our supply business, alongside customer benefits. Smart
meter ownership also provides a beneficial investment case, resulting in a
growing and valuable 15+ year annuity income stream, already at £1.3m at the
end of 2024.
Our net cash position has increased by £48.1m during the year and closing net
cash represents 478p per share of value. This net cash increase includes the
benefit of adjusted EBITDA (£48.8m) and the return of cash collateral
(£49.8m), though is net of investments in smart meter assets and meters ready
for installation (£6.3m), freehold property acquisition (£1.8m), and early
settlement of industry costs (£9.0m).
Dividends and shareholder distributions have increased significantly in the
year, to £13.4m (2023: £1.0m), enabled by this strong cash generation. The
Board is confident that the stated progressive dividend policy and strong
positioning of the Group provide substantial onward potential for dividend and
distribution growth in 2025 and beyond.
Paul Rawson
Chief Financial Officer
1. Net customer contribution represents gross margin less bad debt
2. For 2023, adjusted EBITDA has been amended to reflect the exclusion
of share-based payment charges (£42.6m as previously reported).
Consolidated statement of profit and loss and other comprehensive income
For the year ended 31 December 2024
Notes 31 December 31 December
2024 2023
£'000 £'000
Revenue 645,456 460,001
Cost of sales (551,571) (376,959)
Gross profit 93,885 83,042
Operating costs before non-recurring items and share-based payment charges (34,088) (26,347)
Operating costs - non-recurring items (1,359) -
Operating costs - share-based payment charges 23 (3,987) (1,258)
Total operating costs (39,434) (27,605)
Net impairment losses on financial and contract assets 17 (13,527) (14,309)
Loss on derivatives 7 - (3,046)
Operating profit 4 40,924 38,082
Finance income 5 4,194 1,722
Finance costs 5 (641) (105)
Profit before tax 44,477 39,699
Taxation 9 (10,978) (8,839)
Profit and total comprehensive income for the year 33,499 30,860
Earnings per share
Basic 8 200p 185p
Diluted 8 187p 169p
Consolidated balance sheet
At 31 December 2024
31 December 31 December
2024 2023
£'000 £'000
ASSETS
Non-current assets
Intangible assets 11 2,993 2,561
Property, plant and equipment 12 12,318 4,613
Right-of-use assets 13 1,844 1,676
Deferred tax assets 15 2,842 1,969
Trade and other receivables 17 11,786 5,231
Investment in subsidiaries 14 - -
31,783 16,050
Current assets
Inventory 16 369 546
Trade and other receivables 17 97,115 127,222
Cash and cash equivalents 18 85,204 32,477
182,688 160,245
Total assets 214,471 176,295
LIABILITIES
Current liabilities
Trade and other payables 19 (133,664) (123,845)
Corporation tax payable 9 (2,546) (4,016)
Borrowings 20 (222) (3)
(136,432) (127,864)
Non-current liabilities
Trade and other payables 19 (2,970) (1,281)
Borrowings 20 (4,745) (352)
(7,715) (1,633)
Total liabilities (144,147) (129,497)
Net assets 70,324 46,798
EQUITY
Share capital 22 85 84
Share premium 22 - 11,909
Merger reserve 22 - (50)
Retained earnings 22 70,239 34,855
70,324 46,798
Consolidated statement of changes in equity
For the year ended 31 December 2024
Share Share Merger Retained Total
capital premium reserve earnings £'000
£'000 £'000 £'000 £'000
Balance at 1 January 2024 84 11,909 (50) 34,855 46,798
Total comprehensive income for the year
Profit for the year and other comprehensive income - - - 33,499 33,499
- - - 33,499 33,499
Transactions with owners of the Company
Contributions and distributions
Equity-settled share-based payments - - - 958 958
Deferred tax on share-based payments - - - 2,037 2,037
Proceeds from share issues 1 375 - - 376
Buy-back of shares - - - (3,995) (3,995)
Share premium cancellation - (12,284) - 12,284 -
Transfer from reserve - - 50 - 50
Equity dividends paid in the year - - - (9,399) (9,399)
Total transactions with owners of the Company 1 (11,909) 50 1,885 (9,973)
Balance at 31 December 2024 85 - - 70,239 70,324
Balance at 1 January 2023 83 11,785 (50) 2,981 14,799
Total comprehensive income for the year
Profit for the year and other comprehensive income - - - 30,860 30,860
- - - 30,860 30,860
Transactions with owners of the Company
Contributions and distributions
Equity-settled share based payments - - - 1,150 1,150
Deferred tax on share based payments - - - 866 866
Proceeds from share issues 1 124 - - 125
Equity dividends paid in the year - - - (1,002) (1,002)
Total transactions with owners of the Company 1 124 - 1,014 1,139
Balance at 31 December 2023 84 11,909 (50) 34,855 46,798
Consolidated statement of cash flows
For the year ended 31 December 2024
31 December 31 December
2024 2023
£'000 £'000
Cash flows from operating activities
Profit for the financial year 33,499 30,860
Adjustments for:
Depreciation of property, plant and equipment 704 400
Depreciation of right-of-use assets 994 408
Amortisation of intangible assets 848 680
Profit on disposal (39) -
Loss on derivative contracts - 3,046
Decrease / (increase) in inventory 177 (201)
Increase in trade and other receivables (11,174) (26,208)
Increase in customer acquisition costs (12,335) (8,478)
(Increase) / decrease in industry related deposits (2,586) 6,838
Decrease / (increase) in cash collateral for commodity trading arrangements 49,820 (49,820)
(Decrease) / increase in trade and other payables (4,921) 39,108
Increase in renewable obligation liability 13,457 10,476
National Insurance on share options exercised (570) (108)
Finance income (4,194) (1,722)
Interest received 4,071 1,278
Finance costs 641 105
Taxation charge 10,978 8,839
Corporation tax paid (11,282) (627)
Share based payment charge 3,987 1,258
Net cash from operating activities 72,075 16,132
Cash flows from investing activities
Proceeds from disposal of assets 1 -
Purchase of property, plant and equipment (2,152) (576)
Smart meter asset capital expenditure (4,571) (796)
Smart meter assets under construction (1,690) -
Payment of software development costs (1,280) (130)
Net cash used in investing activities (9,692) (1,502)
Cash flows from financing activities
Borrowings drawn down 4,647 356
Interest paid on borrowings (185) (4)
Interest paid on lease obligations (167) (81)
Other interest paid - (20)
Repayment of principal element of borrowings (89) (1)
Repayment of principal element of lease obligations (844) (496)
Net proceeds from share option exercises 376 125
Cash paid on repurchase of shares (3,995) -
Dividends paid (9,399) (1,002)
Net cash used in financing activities (9,656) (1,123)
Net increase in cash and cash equivalents 52,727 13,507
Cash and cash equivalents at the start of the year 32,477 18,970
Cash and cash equivalents at the end of the year 85,204 32,477
Notes to the consolidated financial statements
1. Significant accounting policies
Yü Group PLC (the "Company") is a public limited company incorporated in the
United Kingdom, with company number 10004236. The Company is limited by shares
and the Company's ordinary shares are traded on AIM. The Company is limited by
shares and the Company's ordinary shares are traded on AIM.
These condensed consolidated financial statements ("Financial Statements") as
at and for the year ended 31 December 2024 comprise the Company and its
subsidiaries (together referred to as the "Group"). The Group is primarily
involved in the supply of electricity, gas and water to small and medium sized
entities ("SMEs") and larger corporates in the UK, and the installation,
ownership and service of smart meters.
Basis of preparation
Whilst the financial information included in this preliminary announcement has
been prepared on the basis of the requirements of UK-adopted International
Accounting Standards in conformity with the requirements of the Companies Act
2006 and effective at 31 December 2024, this announcement does not itself
contain sufficient information to comply with International Accounting
Standards.
The financial information set out in this preliminary announcement does not
constitute the Company's statutory financial statements for the years ended 31
December 2024 or 2023 but is derived from those financial statements.
Statutory financial statements for 2023 have been delivered to the registrar
of companies and those for 2024 will be delivered in due course. The auditors
have reported on those financial statements; their reports were (i)
unqualified and (ii) did not contain a statement under section 498 (2) or (3)
of the Companies Act 2006.
The condensed consolidated Financial Statements are presented in British
pounds sterling (£), which is the presentational currency of the Group. All
values are rounded to the nearest thousand (£'000), except where otherwise
indicated.
Going concern
The financial statements are prepared on a going concern basis.
At 31 December 2024 the Group had net assets of £70.3m (2023: £46.8m), cash
of £85.2m (2023: £32.5m) and net current assets of £46.3m (2023: £32.4m).
Management prepares detailed budgets and forecasts of financial performance
and cash flow (including capital commitments) over the coming 14 months. The
Board has confidence in achieving such targets and forecasts and has performed
comprehensive analysis of various risks and sensitivities in relation to
performance, the energy market and the wider economy.
The Group continues to demonstrate significant progress in its results. This
has led to adjusted EBITDA (note 7) in 2024 of £48.8m (2023: £43.9m), which
continues the momentum in the Group's results occurring since 2018. Management
is confident in continuing this improvement in profitability based on its
business model.
Profitability metrics remain strong in 2024, and the Group continues to drive
sustainable, profitable growth. The Group's hedging strategy, approach to bad
debt, and investment in digital technologies all contribute to achieving
acceptable levels of profitability over the medium term.
Group cash liquidity is strong. The Group has cash of £85.2m (2023: £32.5m),
and net cash (net of borrowings, but before leases) of £80.2m (2023:
£32.1m). The five-year commodity trading agreement entered into in February
2024 with Shell Energy Europe Limited ("Shell") provides significant access to
commodity markets whilst preserving Group liquidity, and the contract is
performing well.
The Board actively seeks to utilise its strong cash reserves to further its
strategic operational aims, taking the benefit through a £9.0m early payment
of the renewable obligation certificate otherwise due in August 2025 and
continued investment in relationships with brokers requiring customer
acquisition costs in advance of contract commencement. Significant capital
investment continues in smart meter assets to provide a long-term annuity
income.
The Board has assessed risks and sensitivities and potential mitigation steps
available to it in detail and continues to monitor risk and mitigation
strategies in the normal course of business. These considerations include the
following:
Customer receivables and bad debt
The Board considers customer receivable risks in view of the wider market, the
energy price environment and the Group's ability to contract and protect its
position in respect of late or non-payment. The performance for 2024 has
continued the improvement from 2023, and benefits continue to be provided
through new approaches and strategies to debt management.
The Board performed sensitivities on material changes to customer payment
behaviour including the timing of payments or if bad debt levels were to
increase.
The Group has extensive mitigating actions in place. These include credit
checks at point of sale and throughout the customer lifecycle, the requirement
for some customers to pay reasonable security deposits at the point of sale,
and the offering (ensuring compliance with regulation and good industry
practice) of pay as you go products which enable certain customers to access
more favourable tariffs. The Group also supports customers with payment plan
arrangements, for those customers who will, when able, provide payment, and
will ultimately (for some customers, as appropriate based on the
circumstances) progress legal and/or disconnection proceedings to mitigate
further bad debt.
In view of the reduced market prices, and the Group's ability to manage debt
through various mitigating actions, the Board is confident that there will be
no material impact relevant to the going concern assumption.
Hedging arrangements and new Trading Agreement
A new five-year commodity trading arrangement between Shell and the main
entities of the Group (including Yü Group PLC, Yü Energy Holding Limited and
Yü Energy Retail Limited), signed February 2024 ("the Trading Agreement"),
enables the Group to purchase electricity and gas on forward commodity
markets. The Trading Agreement enables forecasted customer demand to be hedged
in accordance with an agreed risk mandate (further detailed in the Group's
risks and uncertainties reporting in the Strategic Report). This hedging
position and the Board-defined risk strategy has mitigated, and is expected to
continue to mitigate, the impact on the Group from underlying movements in
global commodity markets.
As part of the Trading Agreement, and is customary for such arrangements,
Shell provides access to commodity products and holds security over the main
trading assets of the Group which could, ultimately and in extreme and limited
circumstances, lead to a claim on some or all of the assets of the Group. In
return, Shell provides market access without the need to post cash collateral
in the normal course of operation.
The Board carefully modelled in detail, and continues to monitor, certain
covenants related to profitability, net worth and liquidity associated with
the new Trading Agreement to assess the likelihood of any breach of such
agreement and the impact any such breach would likely have. Such scenarios
include reduced gross margin and increased bad debt, and the impact these
might have on the ability to maintain compliance with covenants.
After a detailed review, the Board has concluded that there are no liquidity
or covenant compliance issues likely to arise based on worst-case scenario
modelling that would impact the going concern status of the Group.
Summary
Following an extensive review of the Group's forward business plan and
associated risks and sensitivities to these base forecasts (and available
mitigation strategies), the Board concludes that it is appropriate to prepare
the financial statements on a going concern basis. The Board also considers
that there is sufficient headroom to ensure the Group meets covenants based on
various downside scenarios assessed.
Basis of consolidation
The consolidated accounts of the Group include the assets, liabilities and
results of the Company and subsidiary undertakings in which Yü Group PLC has
a controlling interest. All intra-Group assets and liabilities, equity,
income, expenses and cash flows relating to transactions between members of
the Group are eliminated in full on consolidation.
Revenue recognition
The Group enters into contracts to supply gas, electricity and water to its
customers, and provides availability of smart meter assets. Revenue represents
the fair value of the consideration received or receivable from the sale of
actual and estimated gas, electricity and water supplied during the year, net
of discounts, climate change levy and value-added tax. Revenue is recognised
on consumption, being the point at which the transfer of the goods or services
to the customer takes place, and based on an assessment of the extent to which
performance obligations have been achieved.
Due to the nature of the energy supply industry and its reliance with some
traditional (non-smart) meter types upon estimated meter readings, gas,
electricity and water revenue includes the directors' best estimate of
differences between estimated sales and billed sales. The Group makes
estimates of customer consumption based on available industry data, and also
seasonal usage curves that have been estimated from industry available
historical actual usage data, as appropriate for each site supplied by the
Group.
Revenues for the supply of metering services or the installation of metering
assets are, where for Group companies, eliminated on consolidation.
Government support to customers
The Energy Bills Relief Scheme ("EBRS"), and certain less material (for the
Group) other schemes, implemented by HM Government through BEIS, were in place
from 1 October 2022 to 31 March 2023 and resulted in customers being provided
financial support through a contribution to their energy charges. The Energy
Bills Discount Scheme ("EBDS") was in place from 1 April 2023 to the 31 March
2024, replacing EBRS. Both schemes have now closed.
Under the EBRS and EBDS arrangement, amounts receivable from BEIS do not
impact the Group's contract with customers; therefore, the amounts contributed
under the schemes are treated as a cash payment towards customer bills. As
such, revenue recognised is based on the amount chargeable per the contract
with customers which is gross of the amount contributed through EBRS and EBDS.
Costs to obtain or fulfil a contract
Under IFRS 15 "Revenue from Contracts with Customers", the incremental costs
of obtaining a contract are recognised as an asset if they are expected to be
recovered. These costs include expenditures that would not have been incurred
if the contract had not been secured and include broker sales commissions
payable for energy contracts with customers.
Costs to fulfil a contract are recognised as an asset where they are directly
related to a contract and where they generate or enhance resources of the
entity that will be used in satisfying the performance obligations. Costs must
be expected to be recoverable. Assets relating to costs to obtain or fulfil a
contract are amortised over the period of the contract.
Financial instruments
Non-derivative financial instruments
Non-derivative financial instruments comprise trade and other receivables,
cash and cash equivalents and trade and other payables.
Trade and other receivables
Trade and other receivables are recognised initially at fair value. Subsequent
to initial recognition they are measured at amortised cost using the effective
interest method, less any specific impairments and expected credit losses.
Impairment
The Group has elected to measure credit loss allowances for trade receivables
and accrued income at an amount equal to lifetime expected credit losses
("ECLs"). Specific impairments are made when there is a known impairment need
against trade receivables and accrued income. When estimating ECLs, the Group
assesses reasonable, relevant and supportable information, which does not
require undue cost or effort to produce. This includes quantitative and
qualitative information and analysis, incorporating historical experience,
informed credit assessments and forward-looking information. Loss allowances
are deducted from the gross carrying amount of the assets.
Trade and other payables
Trade and other payables are recognised initially at fair value. Subsequent to
initial recognition they are measured at amortised cost using the effective
interest method.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and short-term deposits
(monies held on deposit are accessible with one month's written notice). Cash
and cash equivalents exclude any cash collateral posted with third parties and
bank accounts which are secured by the Group's bankers (or others). It also
excludes cash held in bank accounts which have, as part of Government schemes
such as EBRS or EBDS, cash balances which are not yet transferred to the
Group's main operating bank accounts.
Bank overdrafts that are repayable on demand and form an integral part of the
Group's cash management are included as a component of cash and cash
equivalents.
Derivative financial instruments
The Group uses commodity purchase contracts to hedge its exposures to
fluctuations in gas and electricity commodity prices. The Group's main
commodity trading activities are expected to be delivered entirely to the
Group's customers and therefore the Group classifies them as "own use"
contracts and outside the scope of IFRS 9 "Financial Instruments". This is
achieved when:
• a physical delivery takes place under all such contracts;
• the volumes purchased or sold under the contracts correspond to the
Group's operating requirements; and
• no part of the contract is settled net in cash.
This classification as "own use" allows the Group not to recognise the
commodity purchase contracts, at fair value, on its balance sheet at the year
end.
To the extent that any commodity purchase contracts do not meet the criteria
listed above, then such contracts are recognised at fair value under IFRS 9.
The gain or loss on remeasurement to fair value is recognised immediately in
profit or loss.
Classification of financial instruments issued by the Group
Financial instruments issued by the Group are treated as equity only to the
extent that they meet the following two conditions:
(a) they include no contractual obligations upon the Group to deliver cash
or other financial assets or to exchange financial assets or financial
liabilities with another party under conditions that are potentially
unfavourable to the Group; and
(b) where the instrument will or may be settled in the Group's own equity
instruments, it is either a non-derivative that includes no obligation to
deliver a variable number of the Company's own equity instruments or is a
derivative that will be settled by the Company exchanging a fixed amount of
cash or other financial assets for a fixed number of its own equity
instruments.
To the extent that this definition is not met, the proceeds of issue are
classified as a financial liability. Where the instrument so classified takes
the legal form of the Company's own shares, the amounts presented in these
financial statements for called up share capital and share premium account
exclude amounts in relation to those shares.
Details of the sensitivity analysis performed in relation to the Group's
financial instruments are included in note 21.
Intangible assets
Intangible assets that are acquired separately by the Group are stated at cost
less accumulated amortisation and accumulated impairment losses.
Intangible assets acquired in a business combination are initially recognised
at their fair value at the acquisition date. After initial recognition,
intangible assets acquired in a business combination are reported at their
initial fair value less amortisation and accumulated impairment losses.
Software and system assets are recognised at cost, including those internal
costs attributable to the development and implementation of the asset in order
to bring it into use. Cost comprises all directly attributable costs,
including costs of employee benefits arising directly from the development and
implementation of software and system assets.
Amortisation is charged to the statement of profit and loss on a straight-line
basis over the estimated useful lives of the intangible assets from the date
they are available for use. The estimated useful lives are as follows:
•
Licence
- 35 years
• Customer contract books
- Over the period of the contracts acquired (typically 2
years)
• Software and systems
- 3 to 5 years
Goodwill is not amortised, as it is subject to impairment review.
Goodwill has arisen on a business combination.
Property, plant and equipment
Items of property, plant and equipment are measured at cost less accumulated
depreciation and accumulated impairment losses.
Depreciation is recognised in profit or loss on a straight-line basis over the
estimated useful lives of each part of an item of property, plant and
equipment. The estimated useful lives for the current and comparative periods
are as follows:
• Freehold land
- Not depreciated
• Freehold
property
- 30 years
• Plant and machinery
- 5 years
• Installed smart meter assets
- 15 years
• Assets under construction
- Not depreciated
• Computer equipment
- 3 years
• Fixtures and fittings
- 3 years
Smart meter assets
The Group's meter asset portfolio recorded within property, plant and
equipment comprises both installed and uninstalled meter assets.
Newly purchased meter units and other significant ancillary parts which are
critical for the meter unit to operate upon installation (such as regulators)
are initially recognised within property, plant and equipment at cost.
Upon installation, an installed meter asset comprises three key components
including the meter unit, the significant ancillary parts and the cost of
installation (comprising labour and consumables).
Newly purchased uninstalled meter units and ancillary parts are not subject to
depreciation as they are not yet available for use in the location and
condition necessary to be capable of operating in the manner intended by
management. Depreciation on newly purchased meter units and ancillary parts
commences once the asset has been fully installed.
The estimated useful economic life of installed smart meter assets is defined
above.
Upon removal of an installed meter asset, the meter unit condition is reviewed
to determine re-installation viability and classified as temporarily idle
until re-installed. The meter continues to be depreciated throughout. Meter
units that are not deemed fit for re-use are disposed of.
Leased assets
The Group as a lessee
For any new contract entered into the Group considers whether a contract is,
or contains, a lease. A lease is defined as "a contract, or part of a
contract, that conveys the right to use an asset (the underlying asset) for a
period of time in exchange for consideration". To apply this definition, the
Group assesses whether the contract meets three key evaluations, which are
whether:
• the contract contains an identified asset, which is either
explicitly identified in the contract or implicitly specified by being
identified at the time the asset is made available to the Group;
• the Group has the right to obtain substantially all of the economic
benefits from use of the identified asset throughout the period of use,
considering its rights within the defined scope of the contract; and
• the Group has the right to direct the use of the identified asset
throughout the period of use. The Group assesses whether it has the right to
direct "how and for what purpose" the asset is used throughout the period of
use.
Measurement and recognition of leases as a lessee
At the lease commencement date, the Group recognises a right-of-use asset and
a lease liability on the balance sheet. The right-of-use asset is measured at
cost, which is made up of the initial measurement of the lease liability, any
initial direct costs incurred by the Group, an estimate of any costs to
dismantle and remove the asset at the end of the lease, and any lease payments
made in advance of the lease commencement date (net of any incentives
received).
The Group depreciates the right-of-use assets on a straight-line basis from
the lease commencement date to the earlier of the end of the useful life of
the right-of-use asset or the end of the lease term. The Group also assesses
the right-of-use asset for impairment when such indicators exist.
At the commencement date, the Group measures the lease liability at the
present value of the lease payments unpaid at that date, discounted using the
interest rate implicit in the lease, if that rate is readily available, or the
Group's incremental borrowing rate.
Lease payments included in the measurement of the lease liability are made up
of fixed payments (including in-substance fixed), variable payments based on
an index or rate, amounts expected to be payable under a residual value
guarantee and payments arising from options reasonably certain to be
exercised.
Subsequent to initial measurement, the liability will be reduced for payments
made and increased for interest. It is remeasured to reflect any reassessment
or modification, or if there are changes in in-substance fixed payments.
When the lease liability is remeasured, the corresponding adjustment is
reflected in the right-of-use asset, or profit and loss if the right-of-use
asset is already reduced to zero.
The Group has elected to account for short-term leases and leases of low value
assets using the practical expedients. Instead of recognising a right-of-use
asset and lease liability, the payments in relation to these are recognised as
an expense in profit or loss on a straight-line basis over the lease term.
On the statement of financial position, right-of-use assets are separately
identified and lease liabilities have been included in trade and other
payables.
Inventory
Inventory is held at the lower of cost, being all directly attributable costs,
and net realisable value.
Share based payments
Share based payment arrangements in which the Group receives goods or services
as consideration for its own equity instruments are accounted for as
equity-settled share-based payment transactions, regardless of how the equity
instruments are obtained by the Group.
The cost of equity-settled transactions with employees is measured by
reference to the fair value on the date they are granted. Where there are no
market conditions attaching to the exercise of the option, the fair value is
determined using a range of inputs into a Black-Scholes pricing model. Where
there are market conditions attaching to the exercise of the options a
Black-Scholes option pricing model is used to determine fair value based on a
range of inputs. The value of equity-settled transactions is charged to the
statement of comprehensive income over the period in which the service
conditions are fulfilled with a corresponding credit to a share-based payments
reserve in equity.
Cash-settled share-based awards are initially measured at fair value at the
date of grant. Subsequently the awards are fair valued at each reporting date
and a proportionate expense for the duration of the vesting period elapsed is
recognised in profit and loss together with a liability on the balance sheet.
Employer's National Insurance costs arising and settled in cash on exercise of
unapproved share options are included in the share-based payment charge in the
profit or loss, with no corresponding credit to reserves in equity.
Pension and post-retirement benefit
The Group operates a defined contribution scheme which is available to all
employees. The assets of the scheme are held separately from those of the
Group in independently administered funds. Payments are made by the Group to
this scheme and contributions are charged to the statement of comprehensive
income as they become payable.
Taxation
Tax on the profit or loss for the period comprises current and deferred tax.
Tax is recognised in the statement of profit and loss except to the extent
that it relates to items recognised directly in equity, in which case it is
recognised in equity.
Current tax is the expected tax payable or receivable on the taxable income or
loss for the period, using tax rates enacted or substantively enacted at the
balance sheet date, and any adjustment to tax payable in respect of previous
periods.
Deferred tax is provided on temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts
used for taxation purposes. The following temporary differences are not
provided for: the initial recognition of goodwill; the initial recognition of
an asset or liability in a transaction which is not a business combination and
at the time of the transaction affects neither accounting or taxable profit;
and investments in subsidiaries where the Group is able to control the timing
of the reversal of the difference and it is probable that the difference will
not reverse in the foreseeable future. The amount of deferred tax provided is
based on the expected manner of realisation or settlement of the carrying
amount of assets and liabilities, using tax rates enacted or substantively
enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that
the temporary difference can be utilised against future available taxable
profits.
Deferred tax assets and liabilities are only offset when there is both a legal
right to set-off and an intention to settle on a net basis.
Treasury shares
Consideration paid/received for the purchase/sale of treasury shares is
recognised directly in equity. Shares held by and disclosed as treasury shares
are deducted from contributed equity.
Any excess of the consideration received on the sale of treasury shares over
the weighted average cost of the shares sold is credited to retained earnings.
Segmental reporting
In accordance with IFRS 8 "Operating Segments", the Group has made the
following considerations to arrive at the disclosure made in this financial
information.
IFRS 8 requires consideration of the Chief Operating Decision Maker ("CODM")
within the Group. In line with the Group's internal reporting framework and
management structure, the key strategic and operating decisions are made by
the Board of directors, which regularly reviews the Group's performance and
balance sheet position and receives financial information for the Group as a
whole. Accordingly, the Board of directors is deemed to be the CODM.
The Group's revenue and profit were predominantly delivered from its principal
activity, which is the supply of utilities to business customers in the UK,
and with an increasing additional revenue stream from the supply and
installation of smart meters. The Group's operational segments are:
• Retail - being the supply of electricity, gas and water to business
customers in the UK;
• Smart - being the provision of engineering and related services to
install and maintain smart and other meters;
• Metering assets - being the ownership and rental of smart metering
assets; and
• Group - representing centrally managed Group functions, and other
items which are not directly attributable to the other operating segments.
Segmental profit is measured at two profit levels, being operating profit, as
shown on the face of the statement of profit and loss, and adjusted EBITDA, as
utilised by management to manage the business segment activity (and as
reconciled to operating profit in note 7).
Assets, liabilities and cash flows related to the various segments are managed
at the Group level and are therefore not allocated or disclosed for each
segment. The Group does disclose non-current assets and additions of such
assets, allocation of goodwill and trade and other receivables by segment in
line with its management of the Group's operations.
Alternative Performance Measures ("APMs")
The Group discloses Alternative Performance Measures ("APMs") that are not
defined by IFRS. The directors believe that the presentation of APMs provides
stakeholders with additional helpful information on the performance of the
business but does not consider them to be a substitute for or superior to IFRS
measures.
The Group's APMs are used to assist in measuring the performance of the
business. The APMs are determined to offer valuable insights to users of the
Group's financial statements by highlighting key value drivers and the effects
of certain events and transactions on the entity's performance, financial
position and cash flows. Adjusted results exclude certain items, because if
included, these could distort the understanding of the Group's performance.
The definition, purpose and how the measures are reconciled to statutory
measures are set out in note 7 and note 8.
Standards and interpretations
The Group has adopted all of the new or amended accounting standards and
interpretations that are mandatory for the current reporting period.
There are a number of standards, amendments to standards, and interpretations
which have been issued by the IASB that are effective in future accounting
periods that the Group has decided not to adopt early.
The following amendments are effective for the annual reporting period
beginning 1 January 2026:
• Amendments to the Classification and Measurement of Financial
Instruments (amendments to IFRS 9 and IFRS 7); and
• Contracts Referencing Nature-dependent Electricity (amendments to
IFRS 9 and IFRS 7)
The following standards and amendments are effective for the annual reporting
period beginning 1 January 2027:
• IFRS 18 "Presentation and Disclosure in Financial Statements"
• IFRS 19 "Subsidiaries without Public Accountability:
Disclosures".
The Group is currently assessing the effect of these new accounting standards
and amendments. IFRS 18 "Presentation and Disclosure in Financial Statements",
which was issued by the IASB in April 2024 supersedes IAS 1 and will result in
major consequential amendments to IFRS Accounting Standards including IAS 8
"Basis of Preparation of Financial Statements" (renamed from "Accounting
Policies, Changes in Accounting Estimates and Errors"). Even though IFRS 18
will not have any effect on the recognition and measurement of items in the
consolidated financial statements, it is expected to have a significant effect
on the presentation and disclosure of certain items. These changes include
categorisation and sub-totals in the statement of profit or loss,
aggregation/disaggregation and labelling of information, and disclosure of
management-defined performance measures.
The Group does not expect to apply IFRS 19.
Significant judgements and estimates
The Group makes certain estimates and assumptions regarding the future.
Estimates and judgements are continually evaluated based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances. In the future, actual
experience may differ from these estimates and assumptions. The estimates and
assumptions that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next financial year
are discussed below.
• the assessment of forward energy commodity contracts as "own use"
under IFRS 9;
The Group enters into forward purchase contracts to hedge its
position to closely match customers' expected demand over the term of the
contract and does not engage in speculative trading. Factors such as the
shape/granularity of traded products available (which do not perfectly align
with customer demand) and variations in energy consumed by customers (as a
result of varying customer behaviour and activity, and (particularly for gas)
the weather impact) can influence the demand of customers and the extent to
which the Group's forward commodity hedged position matches such customer
demand.
The Board considers the extent to which forward contracts are
entered into and continue to be held for the purpose of delivery of energy
that is matched to customer expected volume. Factors considered in making this
judgement include recent trading experience; historical accuracy in demand
forecasting; and growth in volumes supplied to customers. Based on an
assessment of these factors during the years ended 31 December 2023 and 31
December 2024, the Board considers that the forward commodity trades
outstanding at the balance sheet date are intended to be fully utilised for
the Group's "own use" to meet expected customer demand in the normal course of
business. The judgement in relation to forward contracts being for "own use"
results in such contracts not being assessed at fair value and therefore with
no unrealised financial derivative asset or liability recognised at the
balance sheet date.
• the estimated consumption (in lieu of accurate meter readings) of
energy by customers;
Revenue includes some sales invoices raised which, where no actual
meter read has been available, are based on industry data and estimates or
other source information. Such invoices can therefore represent estimates
which are lower or higher than the actual out-turn of energy consumption once
accurate meter readings are obtained. The utilisation of smart or automatic
meters is significant and growing in the Group, which reduces the amount
estimated on invoiced sales. Estimates of meter readings utilised for billing
customers are also utilised for settlement of costs, and therefore an over or
under-estimated revenue is largely mitigated by an opposite amendment to cost
of sales.
A change in estimated meter consumption volumes of +/-1% would impact revenue
and accrued income by £424,000 (2023: £293,000), with an approximate
£362,000 (2023: £240,000) corresponding adjustment to cost of sales and
accruals. The impact on gross profit for each +/-1% of estimated consumption
is therefore £62,000 (2023: £53,000).
• the accrual for certain energy and industry related costs;
Certain gas and electricity costs are based on industry or management
estimates based on knowledge of the market, historical norms and estimates of
the expected out-turn position which may be over or underestimated. There are
a number of specific cost areas that are material to the Group and include
elements of significant estimation and judgement to determine the carrying
amounts.
Industry settlement and impact on energy and industry costs
The energy industry involves settlement of industry costs to balance each
participant's position so that its purchased energy matches its used energy.
For the Group, as with other energy suppliers, this settlement of industry to
balance its position ("Settlement") occurs on the difference between energy
supplied to customers and energy purchased to settle such liability. These
costs can be reconciled over periods of several months and years, though
typically such costs have larger estimates over periods of up to three months
with Settlement adjustments reducing beyond that time period.
In addition to the cost of gas and electricity adjusted as part of the
Settlement process, other non-commodity related costs can also be subject to
adjustments based on the same or similar processes. Such costs include those
under the renewables obligation scheme, which requires the Group to settle a
liability based on its settled energy consumption; costs related to the
distribution and transmission of energy to end customers; and certain green
levies and other charges utilised in operating the energy network.
A change of +/-1% in settled volumes for the quarter preceding the year end,
being the directors' view of the most material months subject to potential
change (and which does not have a corresponding adjustment to revenue), would
impact costs and accruals by £825,000 (2023: £797,000).
Unidentified Gas
Unidentified Gas ("UIG") is the shortfall between the volume of gas that
enters the National Grid and what is consumed by end users, which the
industry spreads across market participants. The Group's cost is determined by
estimating the extent to which UIG is expected to arise from historical
consumption across the industry using market data available, settled UIG costs
to date and determining the expected net position for further payment or
rebate of cost. Expected UIG allocations have been volatile in 2020 as a
result of the pandemic, and also in 2023 as a result of the out-turns of
unexpected low gas demand caused by the energy crisis. This led to industry
under allocating gas to energy suppliers, requiring an estimation of accruals
in the prior year for industry settlement to 'catch up'. As energy prices have
returned to more stable and expected levels during 2024, the directors'
judgement is that there is no material over or under allocation of UIG at the
balance sheet date.
A change of +/-1% in estimated UIG rates that are expected to be attributable
to the Group for the month of December 2024 would impact costs and accruals by
£63,000 (2023: £85,000).
• the recoverability of trade receivables and accrued income and
related expected credit loss provision;
The Group has continued to grow its revenue and customer base which in turn
increases the levels of billed and unbilled debt as part of the customer
collections cycle. The customer base of the Group changes over time and the
expected impact of macroeconomic factors on our client base around increased
costs, interest rates, inflation and pressures on businesses creates increased
uncertainty over the recoverability of debt. New customers increase estimation
uncertainty as the Group does not have specific historical backwards-looking
data for these customers, and therefore may have a more delayed payment
history, or that the Group provides extended payment terms to customers to
secure new business.
Trade receivables and accrued income recoverability is estimated based on
historical performance and the directors' estimate of losses over the Group's
customer receivable balances. Management also conducts a detailed review of
significant debtor balances at the year end, including exposure after
recoverability of VAT and Climate Change Levy ("CCL"), and provisions and
other accounting adjustments. These estimation assumptions and factors above
are considered to have a significant risk of resulting in a material
adjustment to the carrying amount of trade receivable and accrued income net
of expected credit losses. Sensitivity analysis on expected credit loss
estimates is provided in note 21.
2. Segmental analysis
Operating segments
The directors consider there to be three operating segments, being the supply
of utilities to businesses ("Yü Retail"), the installation and maintenance of
energy meters and other assets ("Yü Smart"), and the financing of new smart
meters ("Metering assets"). In addition, the Group eliminates intra-segment
trading, where one segment trades with another, and has central income,
expenses, assets and liabilities ("Group") which are not directly attributable
to the three operating segments.
2024 Retail Metering Intra-segment Group Total
£'000 Smart assets trading £'000 £'000
£'000
£'000 £'000
Revenue 645,255 12,733 664 (13,196) - 645,456
Cost of sales (559,796) (8,819) - 17,044 - (551,571)
Gross profit 85,459 3,914 664 3,848 - 93,885
Operating costs, before non-recurring items, share-based payments and (29,047) (2,746) (60) 913 (602) (31,542)
depreciation and amortisation
Non-recurring items (1,359) - - - - (1,359)
Share-based payments (3,987) - - - - (3,987)
Depreciation and amortisation (1,507) (887) (277) 267 (142) (2,546)
Net impairment losses on financial and contract assets (13,511) (7) (9) - - (13,527)
Operating profit / (loss) 36,048 274 318 5,028 (744) 40,924
Adjusted EBITDA 42,899 1,162 595 4,762 (602) 48,816
Non-current assets 36,346 5,474 6,758 (34,201) 17,406 31,783
Non-current asset additions 3,409 5,369 4,850 (3,673) 1,784 11,739
Goodwill - 216 - - - 216
Trade and other receivables 134,317 3,664 758 (42,480) 12,642 108,901
2023 Retail Metering Intra-segment Group Total
£'000 Smart assets trading £'000 £'000
£'000
£'000 £'000
Revenue 459,797 5,555 76 (5,427) - 460,001
Cost of sales (377,797) (3,053) - 3,891 - (376,959)
Gross profit / (loss) 82,000 2,502 76 (1,536) - 83,042
Operating costs, before share-based payments and depreciation and amortisation (22,317) (2,027) (68) - (447) (24,859)
Share-based payments (1,258) - - - - (1,258)
Depreciation and amortisation (1,028) (329) (21) - (110) (1,488)
Net impairment losses on financial and contract assets (14,309) - - - - (14,309)
Loss on derivatives (3,046) - - - - (3,046)
Operating profit / (loss) 40,042 146 (13) (1,536) (557) 38,082
Adjusted EBITDA 45,374 475 8 (1,536) (447) 43,874
Non-current assets 9,814 804 1,018 (327) 4,741 16,050
Non-current asset additions 695 872 1,139 (335) 133 2,504
Goodwill - 216 - - - 216
Trade and other receivables 131,822 236 103 (224) 516 132,453
Geographical segments
100% of Group revenue, for both financial years, is generated from sales to
customers in the United Kingdom (2023: 100%).
The Group has no individual customers representing over 10% of revenue (2023:
none).
3. Auditor's remuneration
2024 2023
£'000 £'000
Audit of these financial statements 120 105
Amounts receivable by auditor in respect of:
Audit of financial statements of subsidiaries pursuant to legislation 65 60
185 165
4. Operating profit
2024 2023
£'000 £'000
Profit for the year has been arrived at after charging:
Staff costs (see note 6) 23,335 15,564
Costs to obtain customer contracts 24,885 14,836
Depreciation of property, plant and equipment 704 400
Depreciation of right-of-use assets 994 408
Amortisation of intangible assets 848 680
5. Net finance income/(expense)
2024 2023
£'000 £'000
Bank interest receivable 3,380 783
Other interest received 814 939
Total finance income 4,194 1,722
Bank interest and other finance charges payable (235) (20)
Interest on borrowings (239) (4)
Interest on lease liabilities (167) (81)
Total finance costs (641) (105)
Net finance income 3,553 1,617
Other interest received consists of amounts due on collateral posted with the
Group's previous commodity trading counterparty.
6. Staff numbers and costs
The average number of persons employed by the Group (including directors)
during the period, analysed by category, was as follows:
2024 2023
Number Number
Engineering 84 32
Sales 41 27
Administration 347 236
472 295
The aggregate payroll costs of these persons were as follows:
2024 2023
£'000 £'000
Wages and salaries 19,412 13,082
Social security costs 2,444 1,487
Pension costs 374 240
Share based payments 3,987 1,258
26,217 16,067
Of which:
Amounts charged to operating profit 23,335 15,564
Amounts related to smart metering installation in property, plant and 2,882 503
engineering assets
Included within accruals is a £590,000 (2023: £nil) employee benefit
liability relating to cash-settled share-based payments.
There were three persons employed directly by the Company during the year
ended 31 December 2024 (2023: three), being the
non-executive directors. The Company's two (2023: two) executive directors who
served during the year have service contracts with a wholly owned subsidiary
of the Company.
Key management personnel
The aggregate compensation made to directors and other members of key
management personnel (being members of the Group's Executive Committee,
comprising the Chief Executive Officer, Chief Financial Officer and other
senior leaders) is set out below:
2024 2023
£'000 £'000
Short-term employee benefits 2,188 2,581
Social security and pension costs 857 407
Share based payments 3,903 1,068
6,948 4,056
Remuneration of the executive and non-executive directors is as follows:
2024 2023
£'000 £'000
Short-term employee benefits 1,363 1,791
Social security and pension costs 476 264
Share based payments 2,008 927
3,847 2,982
The total remuneration received by the highest paid director was £2,840,000
in the year (2023: £1,148,000).
7. Alternative Performance Measures
Adjusted EBITDA
Non-GAAP measure. Adjusted EBITDA represents profit before interest and tax,
depreciation, amortisation, non-recurring business expense and equity-related
share-based payment charges.
The directors utilise adjusted EBITDA to make Group financial, strategic and
operating decisions. The measure separates out certain items from defined IFRS
measures because these are determined to assist users of these financial
statements to evaluate business performance from recurring and normalised
profitability that better align to operational cash flow (before the impact of
working capital movements) and to obtain profitability margins as a percentage
of revenue. This measure is frequently used by external stakeholders to
evaluate financial performance and compare performance of other industry
competitors, and will assist users to understand and evaluate, in the same
manner as management, the movement in Group's operational performance on a
comparable basis.
As adjusted EBITDA can exclude significant costs or gains, it should not be
regarded as a complete picture of the Group's financial performance, which is
presented in its total results.
The reconciliation of operating profit and adjusted EBITDA is as follows:
2024 Restated2
2023
Notes £'000 £'000
Adjusted EBITDA reconciliation
Operating profit 40,924 38,082
Add back:
Non-recurring operational costs1 1,359 -
Share-based payments2 23 3,987 1,258
Loss on derivative contracts3 - 3,046
Depreciation of property, plant and equipment 12 704 400
Depreciation of right-of-use assets 13 994 408
Amortisation of intangibles 11 848 680
Adjusted EBITDA 48,816 43,874
(1.) The non-recurring operational costs relate to fees incurred in the
termination of the Group's previous commodity trading agreement. A new
five-year commodity trading arrangement between Shell Energy Europe Limited
("Shell") and the main entities of the Group (including Yü Group PLC, Yü
Energy Holding Limited and Yü Energy Retail Limited) was signed February
2024. Given the non-recurring nature of these costs and basis for reporting
the APM measure, these costs have not been charged to adjusted EBITDA.
(2.) Share-based payment charges on share options are excluded from
adjusted EBITDA as they are variable based on the Group's share price
performance and are not related to business operational trading. Further
details of the share-based payments are documented in note 23. As the 2023
prior year comparative previously charged such costs against adjusted EBITDA,
the 2023 comparative has been restated (2023 as previously reported: £42.6m).
(3.) The loss on derivative contracts of £3,046,000 in 2023 arose on
the reversal of the financial derivative asset recognised at 31 December 2022.
There is no financial derivative asset or liability at 31 December 2023 or 31
December 2024 as the forward commodity trades outstanding are intended to be
fully utilised for the Group's "own use" (under IFRS 9) to meet expected
customer demand in the normal course of business.
Adjusted earnings per share
Adjusted earnings per share is defined as earnings per share excluding
adjusted items. The measure is determined by dividing profit after tax,
adjusted for post-tax adjusted items (relating to non-recurring operational
costs, share-based payment charges and loss on derivative contracts) by the
weighted average number of ordinary shares in issue during the financial
period, excluding treasury shares held, and on a basic and fully diluted
basis. This APM is a measure of management's view of the Group's underlying
earnings per share.
Refer to note 8 for a reconciliation between earnings per share and adjusted
earnings per share.
Net cash / (debt)
Net cash / (debt) is defined as unrestricted cash and cash equivalents
available for the Group less external borrowings (but before IFRS 16 lease
liabilities). The APM is utilised by the Group to reflect available capital
and liquidity reserves for the purposes of future operational activities. A
reconciliation of the measure is presented in note 26.
8. Earnings per share
Basic earnings per share
Basic earnings per share is based on the profit attributable to ordinary
shareholders and the weighted average number of ordinary shares outstanding.
2024 2023
£'000 £'000
Profit for the year attributable to ordinary shareholders 33,499 30,860
2024 2023
Weighted average number of ordinary shares
At the start of the year 16,741,195 16,649,618
Effect of shares issued in the year 175,825 36,607
Effect of purchase of treasury shares (146,861) -
Number of ordinary shares for basic earnings per share calculation 16,770,159 16,686,225
Dilutive effect of outstanding share options 1,170,383 1,533,324
Number of ordinary shares for diluted earnings per share calculation 17,940,542 18,219,549
2024 2023
p p
Basic earnings per share 200p 185p
Diluted earnings per share 187p 169p
Adjusted earnings per share
See note 7 for details on adjusted earnings per share.
2024 Restated1
£'000
2023
£'000
Adjusted earnings per share
Profit for the year attributable to ordinary shareholders 33,499 30,860
Add back operating profit adjusting items (per note 7):
Share-based payments after tax (gross cost of £3,987,000) 3,230 1,231
Non-recurring operational cost after tax (gross cost of £1,359,000) 1,019 -
Loss on derivative contracts after tax - 2,330
Adjusted basic profit for the year 37,748 34,421
2024 2023
p p
Adjusted earnings per share 225p 206p
Diluted adjusted earnings per share 210p 189p
(1.) Adjusted earnings per share has been reassessed for the 2024
financial year in relation to the effects of share-based payment charges on
the various schemes within the Group. As non-cash elements of the business
operational result that effect the purpose of the APM metric, these charges
have been excluded from adjusted basic profit. For consistency of the metric,
the 2023 prior year comparative has been restated to reflect such approach
(2023 as previously reported: 199p adjusted, and 182p adjusted and fully
diluted).
9. Taxation
2024 2023
£'000 £'000
Current tax charge
Current year 9,885 4,015
Adjustment in respect of prior years (71) 627
9,814 4,642
Deferred tax charge
Current year 1,071 5,648
Adjustment in respect of prior years 93 (1,451)
1,164 4,197
Total tax charge 10,978 8,839
Tax recognised directly in equity
Current tax recognised directly in equity - -
Deferred tax recognised directly in equity (2,037) (866)
Total tax recognised directly in equity (2,037) (866)
Deferred taxes at 31 December 2024 and 31 December 2023 have been measured
using the enacted tax rates at that date and are reflected in these financial
statements on that basis. Following the March 2021 Budget, the tax rate
effective from 1 April 2023 increased from 19% to 25%.
The corporation tax payable by the Group at 31 December 2024 was £2,546,000
(2023: £4,016,000).
10. Dividends
The Group paid an interim dividend of 19p per share in 2024 (2023: 3p per
share).
The directors propose a final dividend in relation to 2024 of 41p per share
(2023: 37p per share).
11. Intangible assets
Group Electricity Goodwill Customer Software and
licence £'000 books systems Total
£'000 £'000 £'000 £'000
Cost
At 1 January 2024 62 216 686 3,419 4,383
Additions - - - 1,280 1,280
At 31 December 2024 62 216 686 4,699 5,663
Amortisation
At 1 January 2024 18 - 686 1,118 1,822
Charge for the year 2 - - 846 848
At 31 December 2024 20 - 686 1,964 2,670
Net book value at 31 December 2024 42 216 - 2,735 2,993
Cost
At 1 January 2023 62 216 686 3,289 4,253
Additions - - - 130 130
At 31 December 2023 62 216 686 3,419 4,383
Amortisation
At 1 January 2023 16 - 686 440 1,142
Charge for the year 2 - - 678 680
At 31 December 2023 18 - 686 1,118 1,822
Net book value at 31 December 2023 44 216 - 2,301 2,561
The useful economic life of the acquired electricity licence is 35 years,
which represents the fact that the licence can be revoked by giving 25 years'
written notice but that this notice cannot be given any sooner than 10 years
after the licence came into force in January 2013.
Goodwill arose on the acquisition of the management and certain other assets
of Magnum Utilities Limited in May 2022, forming the foundations for the Yϋ
Smart business unit to deliver the Group's smart metering installation
activities. Goodwill is tested annually for signs of impairment. The
underlying assets related to the goodwill have been classified in a wider cash
generating unit related to smart metering activities.
The customer book intangibles relate to acquisitions that took place in 2020.
They represent the fair value of the customer contracts purchased in those
acquisitions. The intangible assets were amortised over a useful economic life
of two years, representing the average contract length of the customer books
acquired.
Software and systems assets relate to investments made in third-party software
packages, and directly attributable internal personnel costs in implementing
those platforms, as part of the Group's Digital by Default strategy.
The amortisation charge is recognised in operating costs in the income
statement.
12. Property, plant and equipment
Group Freehold land Freehold Fixtures and Plant and Assets under construction Computer Total
£'000 property fittings machinery £'000 equipment £'000
£'000 £'000 £'000 £'000
Cost
At 1 January 2024 150 3,274 738 869 - 670 5,701
Additions - 1,784 223 2,937 3,324 145 8,413
Disposals - - - (1) - (3) (4)
Reclassification - - - 1,634 (1,634) - -
At 31 December 2024 150 5,058 961 5,439 1,690 812 14,110
Depreciation
At 1 January 2024 - 291 355 24 - 418 1,088
Charge for the year - 108 233 202 - 161 704
At 31 December 2024 - 399 588 226 - 579 1,792
Net book value at 31 December 2024 150 4,659 373 5,213 1,690 233 12,318
Cost
At 1 January 2023 150 3,274 342 73 - 490 4,329
Additions - - 396 796 - 180 1,372
At 31 December 2023 150 3,274 738 869 - 670 5,701
Depreciation
At 1 January 2023 - 182 205 - - 301 688
Charge for the year - 109 150 24 - 117 400
At 31 December 2023 - 291 355 24 - 418 1,088
Net book value at 31 December 2023 150 2,983 383 845 252 4,613
-
The freehold land and building brought forward relates to the Leicester office
of the Group and was sold by the Company to Yü Propco Leicester Ltd, a wholly
owned subsidiary, at the estimated market value (equivalent to book value) of
£3,134,000 at the date of disposal. This transaction does not impact the
Group's consolidated balance sheet position.
In the year, the Company entered into an agreement to acquire freehold
property relating to the Nottingham office from a related party (as disclosed
in note 25). The Company acquired the property on an arm's length basis at the
estimated market value determined by an independent party. Subsequent to its
purchase, the Company sold the freehold building to Yü Propco Nottingham Ltd,
a wholly owned subsidiary, at the estimated market value (equivalent to book
value) of £1,709,000 at the date of disposal. The intergroup sale and
purchase transaction does not impact the Group's consolidated balance sheet
position.
13. Right-of-use assets
Group Buildings Motor vehicles Total
£'000 £'000 £'000
Cost
At 1 January 2024 1,966 804 2,770
Additions - 2,046 2,046
Disposals (1,832) - (1,832)
At 31 December 2024 134 2,850 2,984
Depreciation
At 1 January 2024 835 259 1,094
Charge for the year 140 854 994
Disposals (948) - (948)
At 31 December 2024 27 1,113 1,140
Net book value at 31 December 2024 107 1,737 1,844
Cost
At 1 January 2023 799 - 799
Additions 198 804 1,002
Lease modifications 969 - 969
At 31 December 2023 1,966 804 2,770
Depreciation
At 1 January 2023 686 - 686
Charge for the year 149 259 408
At 31 December 2023 835 259 1,094
Net book value at 31 December 2023 1,131 545 1,676
During 2024, as disclosed in note 12, the Group entered into an agreement to
purchase its main office facilities in Nottingham from a related party (as
disclosed in note 25). For the purposes of the Group consolidated balance
sheet position the lease has been disposed of in the year. In 2023, this lease
arrangement for the office was extended (on an arm's length basis) with the
same related party.
Other assets relate to lease arrangements for motor vehicles to undertake
engineering activities.
14. Investments in subsidiaries
The Company has the following direct and indirect investments in subsidiaries,
all of which are incorporated in the United Kingdom:
Company name Holding Proportion of Nature of business
shares held
Yü Energy Holding Limited Ordinary shares 100% Gas shipping services and holding company
Yü Energy Retail Limited1 Ordinary shares 100%1 Supply of energy to businesses
Yu Water Limited Ordinary shares 100% Supply of water to businesses
KAL Portfolio Trading Limited Ordinary shares 100% Dormant/holding company
Yü PropCo Leicester Limited2 Ordinary shares 100%2 Property ownership
Yü PropCo Nottingham Limited2 Ordinary shares 100%2 Property ownership
Yü-Smart Limited Ordinary shares 100% Smart metering installation and maintenance
Yü Services Limited Ordinary shares 100% Holding company
Kensington Meter Assets Limited3 Ordinary shares 100%3 Ownership of energy meter assets
All of the above entities are included in the consolidated financial
statements and are direct holdings of the Company except:
1. Yü Energy Retail Limited is a subsidiary of Yü Energy Holding
Limited.
2. Yü PropCo Leicester Limited and Yü PropCo Nottingham Limited
are subsidiaries of KAL Portfolio Trading Limited.
3. Kensington Meter Assets Limited is a subsidiary of Yü Services
Limited.
All entities have the same registered address as Yü Group PLC.
15. Deferred tax assets
Deferred tax assets are attributable to the following:
2024 2023
£'000 £'000
Property, plant and equipment (745) (293)
Tax value of loss carry-forwards - 792
Share based payments 3,587 1,470
2,842 1,969
Movement in deferred tax in the period:
At Recognised Recognised At
1 January in income directly 31 December
2024 £'000 in equity 2024
£'000 £'000 £'000
Property, plant and equipment (293) (452) - (745)
Tax value of loss carry-forwards 792 (792) - -
Share based payments 1,470 80 2,037 3,587
1,969 (1,164) 2,037 2,842
At Recognised Recognised At
1 January in income directly 31 December
2023 £'000 in equity 2023
£'000 £'000 £'000
Property, plant and equipment (21) (272) - (293)
Tax value of loss carry-forwards 4,717 (3,925) - 792
Share based payments 604 - 866 1,470
5,300 (4,197) 866 1,969
The deferred tax asset is expected to be utilised by the Group in the coming
years and there is no time limit to utilisation of such losses. The Board
forecasts sufficient taxable income as a result of the growth in the customer
base and increased profitability against which it will utilise these deferred
tax assets.
16. Inventory
The Group has the following inventory balances in relation to its engineering
activities:
2024 2023
£'000 £'000
Stock of goods for resale 369 546
369 546
17. Trade and other receivables
2024 2023
£'000 £'000
Current
Net trade receivables 16,065 11,784
Net accrued income 57,769 52,325
Prepayments 1,260 2,354
Costs to obtain customer contracts 9,670 3,890
Cash collateral deposited for commodity hedging - 49,822
Industry collateral deposits 7,029 4,443
Other receivables 5,322 2,604
97,115 127,222
Non-current
Costs to obtain customer contracts 11,786 5,231
11,786 5,231
The reconciliation of gross trade receivables and accrued income and expected
credit loss provision for the Group is as follows:
2024 2024 2023 2023
Trade Accrued Trade Accrued
receivables income receivables income
£'000 £'000 £'000 £'000
Gross carrying amount 50,432 60,002 39,435 54,035
Provision for doubtful debts and expected credit loss (34,367) (2,233) (27,651) (1,710)
Net carrying amount 16,065 57,769 11,784 52,325
The Group applies the simplified IFRS 9 approach in measuring expected credit
losses which uses a lifetime expected credit loss allowance for all trade
receivables and accrued income. To measure expected credit losses on a
collective basis, trade receivables and accrued income are grouped based on
similar credit risk and ageing. The expected credit loss of trade receivables
and accrued income are allocated between two credit risk groups made up of
active customer accounts ("Active"), which represent customers that remain on
supply at the balance sheet date, and those customers which have left the
supply ("Terminated") of the Group.
Provision rates for customer balances are determined based on the age of the
balance outstanding, whether the customer remains being supplied energy by the
Group, an assessment of historical debt and recovery on a customer basis and
the extent and position of the balance in the Group's credit control process.
Credit losses are adjusted to reflect current and forward-looking
macroeconomic factors affecting the customers' ability to settle the amounts
outstanding based on available information available at the reporting date
about past events, current conditions and a forward-looking view of future
economic conditions. There have been no significant changes in the estimation
techniques or significant assumptions made during the reporting period.
The gross amount of trade receivables and accrued income is stated inclusive
of VAT and CCL of approximately 17% which, on the write-off of debt, would
typically be recoverable and is therefore not provided for.
Expected credit losses and the recognition, where appropriate, of previous
customer credit balances are recognised in the income statement as net
impairment losses on financial and contract assets.
The lifetime expected loss provision for trade receivables and accrued income
is as follows:
Active Current More than 30 days past due More than 60 days past due More than 90 days past due Total
£'000 £'000 £'000 £'000 £'000
31 December 2024
Gross trade receivables 4,750 1,792 1,283 5,061 12,886
Gross accrued income 60,002 - - - 60,002
Expected credit loss rate 5% 36% 41% 66% 11%
Expected credit loss allowance (3,258) (638) (527) (3,345) (7,768)
31 December 2023
Gross trade receivables 4,738 2,724 1,308 6,693 15,463
Gross accrued income 54,035 - - - 54,035
Expected credit loss rate 6% 56% 67% 76% 16%
Expected credit loss allowance (3,622) (1,534) (870) (5,077) (11,103)
Terminated Current More than 30 days past due More than 60 days past due More than 90 days past due Total
£'000 £'000 £'000 £'000 £'000
31 December 2024
Gross trade receivables 2,356 1,637 1,493 32,060 37,546
Gross accrued income - - - - -
Expected credit loss rate 43% 68% 66% 80% 77%
Expected credit loss allowance (1,022) (1,113) (985) (25,712) (28,832)
31 December 2023
Gross trade receivables 2,090 1,403 808 19,671 23,972
Gross accrued income - - - - -
Expected credit loss rate 30% 50% 69% 83% 76%
Expected credit loss allowance (635) (703) (556) (16,364) (18,258)
Movements in the provision for doubtful debts and expected credit loss in
gross trade receivables are as follows:
2024 2023
£'000 £'000
Opening balance 27,651 19,499
Provisions recognised less unused amounts reversed 13,008 14,824
Provision utilised in the year (6,292) (6,672)
Closing balance - provision for doubtful debts and expected credit losses 34,367 27,651
Movements in the provision for doubtful debts and expected credit loss in
accrued income are as follows:
2024 2023
£'000 £'000
Opening balance 1,710 1,830
Provisions recognised less unused amounts reversed 523 (120)
Provision utilised in the year - -
Closing balance - provision for doubtful debts and expected credit losses 2,233 1,710
The net impairment losses on financial and contract assets of £13,527,000
(2023: £14,309,000) consist of £13,008,000 (2023: £14,824,000) provision
for bad debts and expected credit loss on trade receivables, a £523,000
charge (2023: £120,000 credit) for expected credit loss on accrued income and
£4,000 credit (2023: £526,000 credit) for other balances written back.
The directors consider that the carrying amount of trade and other receivables
approximates to their fair value due to their maturities being short term.
The Group other receivables balance contains £720,000 (2023: £522,000)
relating to bank cash deposits and restricted funds. These funds do not fulfil
the criteria of being classified as cash and cash equivalents in view of the
balance being secured for operational activities of the Group.
18. Cash and cash equivalents
2024 2023
£'000 £'000
Cash at bank and in hand 85,204 32,477
85,204 32,477
As disclosed in note 17, the cash and cash equivalents amounts exclude
£720,000 (2023: £522,000) of cash which is included in other receivables.
19. Trade and other payables
2024 2023
£'000 £'000
Current
Trade payables 10,237 6,492
Energy and industry cost accruals 47,337 60,335
Renewable obligation liability 35,374 21,917
Operating and other accruals 7,791 6,485
Lease liabilities 894 354
Tax and social security 17,172 15,347
Other payables 14,859 12,915
133,664 123,845
Non-current
Accrued expenses 2,064 -
Lease liabilities 906 1,281
2,970 1,281
Energy and industry cost accruals have decreased as a result of Unidentified
Gas ("UIG") stabilising after volatile fluctuations in 2020 as a result of the
pandemic, and in 2023 as a result of the outturns of unexpected low gas demand
caused by the energy crisis. Subsequently there has been a reduction in cost
accruals relating to customer contracts that are no longer required.
Lease liabilities
Group Buildings Motor vehicles Total
£'000 £'000 £'000
At 1 January 2024 1,081 554 1,635
Additions - 1,921 1,921
Interest expense 59 108 167
Disposals (912) - (912)
Payments (148) (863) (1,011)
At 31 December 2024 80 1,720 1,800
Current 25 869 894
Non-current 55 851 906
At 1 January 2023 160 - 160
Additions 134 868 1,002
Interest expense 45 36 81
Lease modification 969 - 969
Payments (227) (350) (577)
At 31 December 2023 1,081 554 1,635
Current 88 266 354
Non-current 993 288 1,281
The incremental borrowing rate used to measure lease liabilities was 6%. The
same rate was applicable for both the leased buildings and motor vehicles.
The contractual maturities (representing undiscounted contractual cash flows)
of the lease liabilities are disclosed in note 21. The total cash outflow for
Group leases in 2024 was £989,000 (2023: £577,000).
Lease payments not recognised as a liability
The Group has elected not to recognise a right-of-use asset or lease liability
for short-term leases (leases of expected terms of 12 months or less) or
leases of low value assets. Payments under such leases are expensed on a
straight-line basis. During 2024 the amount expensed to profit and loss was
£5,000 (2023: £1,000).
20. Borrowings
2024 2023
£'000 £'000
Current
Bank loan 222 3
Non-current
Bank loan 4,745 352
Total borrowings 4,967 355
Borrowings solely relate to the Group's investment in smart meters which
return an index-linked, recurring annuity over a 15+ year term. The amount
outstanding are from amounts drawn on a £5.2m facility, agreed during 2023,
with Siemens Finance in relation to the finance of such meters. Repayments are
over a 10-year period with a bullet repayment, and with an interest rate fixed
at the date of drawdown. The borrowings are fully secured on the assets of the
wholly owned subsidiary entity, Kensington Meter Assets Limited.
The loan is shown net of unamortised arrangement fees of £190,000 which are
being amortised over the life of the loan.
The contractual maturities (representing undiscounted contractual cash flows)
of the bank loans are disclosed in note 21.
21. Financial instruments and risk management
The Group's principal financial instruments are cash, trade and other
receivables, trade and other payables and derivative financial assets.
The categories of financial instruments, including contract assets and
liabilities, held by the Group are as follows:
2024 2023
£'000 £'000
Financial assets
Cash and cash equivalents 85,204 32,477
Financial assets recorded at amortised cost 86,185 120,978
Financial liabilities
Financial liabilities recorded at amortised cost (120,760) (108,499)
Lease liabilities (1,800) (1,635)
Management considers that the book value of financial assets and liabilities
recorded at amortised cost and their fair value are approximately equal.
Derivative instruments, related to the Group's hedging of forward gas and
electricity demand, are level 1 financial instruments and, should they not be
treated as for "own use" under IFRS 9, would be measured at fair value through
the statement of profit or loss. Such fair value would be measured by
reference to quoted prices in active markets for identical assets or
liabilities. All derivatives are held at a carrying amount equal to their fair
value at the period end.
The Group trades entirely in pounds sterling and therefore it has no foreign
currency risk.
The Group has exposure to the following risks from its use of financial
instruments:
a) commodity hedging and derivative instruments (related to customer
demand, market price volatility and counterparty credit risk);
b) customer, industry participants and financial institution credit
risk; and
c) liquidity risk.
(a) Commodity hedging and derivative instruments
The Group is exposed to market risk in that changes in the price of
electricity and gas may affect the Group's income or liquidity position. The
use of derivative financial instruments to hedge customer demand also results
in the Group being exposed to risks from significant changes in customer
demand (beyond that priced into the contracts), and counterparty credit risk
with the trading counterparty.
Commodity, energy prices and customer demand
The Group uses commodity purchase contracts to manage its exposures to
fluctuations in gas and electricity commodity prices. The Group's objective is
to reduce risk in energy price volatility by entering into back-to-back (to
the extent practical) energy contracts with its suppliers and customers, in
accordance with a Board-approved risk mandate. Commodity purchase contracts
are entered into as part of the Group's normal business activities.
Commodity purchase contracts are expected to be delivered entirely to the
Group's customers and are therefore classified as "own use" contracts. These
instruments do not fall into the scope of IFRS 9 and therefore are not
recognised in the financial statements.
If any of the contracts in the Group's portfolio are expected to be settled
net in cash and are not entered into so as to hedge, in the normal course of
business, the demand of customers, then such trades are measured at fair
value. The gain or loss on remeasurement to fair value is recognised
immediately in profit and loss. All forward trades were considered to meet the
criteria for "own use" at 31 December 2024.
As far as practical, in accordance with the risk mandate, the Group attempts
to match new sales contracts (based on estimated energy consumption, assuming
normal weather patterns, over the contract term) with corresponding commodity
purchase contracts. There is a risk that at any point in time the Group is
over or under-hedged. Holding an over or under-hedged position opens the Group
up to market risk which may result in either a positive or negative impact on
the Group's margin and cash flow, depending on the movement in commodity
prices. In view of the Group's commodity hedging position and available
mitigation, any major deviation in customer demand is not considered to
deliver a material impact on the Group's financial performance.
Increased volatility of global gas and electricity commodity prices had
increased the potential gain or loss for an over or under-hedged portfolio
over the 2023 and 2024 periods, and the Group continues to closely monitor its
customer demand forecast to manage volatility. The Group also applies premia
in its pricing of contracts to cover some market volatility (which has proven
to be robust despite the market context), and contracts with customers also
contain the ability to pass through costs which are incurred as a result of
customer demand being materially different to the estimated volume contracted.
As contracts are expected to be outside of IFRS 9, there is no sensitivity
analysis provided on such contracts.
Liquidity risk from commodity trading
The Group's trading arrangements can, in the absence of suitable credit lines
or other arrangements being in place, result in the need to post cash or other
collateral to trading counterparties when commodity markets are below the
Group's average weighted price contracted forward. A significant reduction in
electricity and gas markets could, therefore, lead to a material exposure
arising for any trading counterparty which, in the absence of a suitable
credit arrangement, could result in credit support such as cash being required
as collateral.
As part of the Group's new Trading Agreement with Shell, signed in February
2024, there is no requirement in the normal course to provide any such credit
support and, as such, no impact on liquidity risk in the normal course of
business.
Trading counterparty credit risk
In mirror opposite to the liquidity risk noted above, the Group carries credit
risk to trading counterparties where market prices are above the average
weighted price contracted forward. This risk is mitigated by energy delivered
and not yet paid for, and no credit risk is therefore assessed as held at 31
December 2024.
The Board monitors the position in respect of credit exposure with its trading
counterparties, and contracts only with major organisations which the Board
considers to be robust and of appropriate financial standing. The Group's new
agreement with a group of Shell's standing has significantly reduced the
exposure to counterparty risk, in view of the robust standing and contractual
protections.
(b) Customer and financial institution or other counterparty credit risk
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations and arises principally from the Group's receivables from
customers, the Group's bankers where cash despots are held, and the Group's
trading counterparties as noted in section (a) above. These operational
exposures are monitored and managed at Group level.
Credit risk related to customer trade receivables
All customers operate in the UK and turnover is made up of a large number of
customers each owing relatively small amounts. New customers have their credit
checked using an external credit reference agency prior to being accepted as a
customer. The provision of a smart meter is also mandatory for some sales
channels.
Credit risk is further managed through the Group's standard business terms,
which require all customers to make a monthly payment predominantly by direct
debit and requires security deposits in advance where appropriate. At 31
December 2024 there were no significant concentrations of credit risk. The
carrying amount of the financial assets (less the element of VAT and CCL
included in the invoiced balance, which is recoverable in the event of
non-payment by the customer) represents the maximum credit exposure at any
point in time.
The Board considers the exposure to debtors based on the status of customers
in its internal debt journey, the level of customer engagement in finding an
appropriate solution, the customer's creditworthiness, the provision for
doubtful debts and expected credit loss held, the level of reclaimable VAT and
CCL on the balances and cash received after the period end.
At 31 December 2024 the Group held a provision against doubtful debts and
expected credit loss of £36,600,000 (2023: £29,361,000). This is a combined
provision against both trade receivables at £34,367,000 (2023: £27,651,000)
and accrued income at £2,233,000 (2023: £1,710,000). The increase reflects
the growth in the Group's activities, which is mitigated by strong customer
collections recorded in 2024.
In relation to trade receivables, after provision and accounting for VAT and
CCL reclaimable the maximum exposure assessed by directors is less than 9% of
the gross balance, being £4,392,000, pre the consideration of any cash
received from customers post the balance sheet date. If expected customer
credit loss rate on trade receivables was +/-1% of that assessed, the gain or
loss arising recognised in the income statement and impacting net assets would
be +/-£504,000.
If the expected customer credit loss rate on accrued income was +/-1%, the
gain or loss arising would be +/-£600,000.
Credit risk related to industry participants
The Group holds exposure to certain industry participants which, under Ofgem
licence and market regulatory conditions, require payments in advance or other
credit support. The total paid and outstanding to such industry participants
at 31 December 2024 of £7,029,000 represents the maximum credit exposure.
Such amounts due are considered by management and refunds are requested, or
alternative security provided by non-cash means, to the extent practicable. In
view of the quasi-regulated nature of such counterparties, the directors
consider the credit exposure to be low risk.
Credit risk with financial institutions
Cash balances are held in current and deposit accounts with the Group's bank,
and short-term deposit accounts (which are either interest or non-interest
accounts) with other major financial institutions.
At 31 December 2024 the Group had £85,204,000 (2023: £32,477,000) of cash
and bank balances (as per note 18). This balance can also fluctuate materially
during the normal working capital cycle of the Group, reaching significantly
above the reported balance through each monthly cycle, and increasing to a
typical high point on 30 August of each year.
The Group only holds cash deposits with highly rated financial institutions,
with significant credit rating, and diversified from the Group's main banker
to at least one further institution.
(c) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its
financial obligations as they fall due. The Board is responsible for ensuring
that the Group has sufficient liquidity to meet its financial liabilities as
they fall due and does so by monitoring cash flow forecasts and budgets.
The Board also monitors the position in respect of the Group's performance
against covenants as part of its trading arrangements, and any requirements
under its licence to operate including its Ofgem energy supply licence.
As part of assessing the Group's liquidity, the Board considers: low
profitability; delays in customer receivable payments; major risks and
uncertainties; and the ability to comply with its Trading Agreement.
A deemed low cash collection scenario of +/-1% of billed cash in a month being
delayed, in which customers delay or default on payment, would result in cash
flow timing adjustments to management expectations of £455,000.
Undiscounted contractual cash flows
The tables below have been drawn up based on the undiscounted contractual
maturities of the Group's financial liabilities, including interest that will
be unwound on those liabilities:
Group Carrying amounts Within 1 year 2-5 years After 5 years Contractual
£'000 £'000 £'000 £'000 cash flows
£'000
Trade and other payables 115,793 114,857 976 - 115,833
Borrowings 4,967 629 2,517 4,324 7,470
Lease liabilities 1,800 976 947 - 1,923
At 31 December 2024 122,560 116,462 4,440 4,324 125,226
Trade and other payables 109,425 109,425 - - 109,425
Borrowings 355 67 268 530 865
Lease liabilities 1,635 450 954 595 1,999
At 31 December 2023 111,415 109,942 1,222 1,125 112,289
22. Share capital and reserves
Share capital 2024 2024 2023 2023
Number £'000 Number £'000
Allotted and fully paid ordinary shares of £0.005 each 17,019,315 85 16,741,195 84
The Company has one class of ordinary share with nominal value of £0.005
each, which carries no right to fixed income. The holders of ordinary shares
are entitled to receive dividends as declared and are entitled to one vote per
share at meetings of the Company. The Company holds 234,978 shares in treasury
and as at 31 December 2024, the total number of shares in issue with voting
rights was 16,784,337 (2023: 16,741,195).
The movement in share capital and reserves is as per the statement of changes
in equity.
Share capital represents the value of all called up, allotted and fully paid
shares of the Company. The movement in the year relates to the exercise of
various share options, at exercise prices of between £0.005 and £10.38.
The share premium movement in the year relates to:
- the excess of the price at which share options were exercised
during the year, over the £0.005 nominal value of those shares, being
£375,000 during the year (2023: £124,000); and
- the cancellation of the share premium account on 3 July 2024,
when such cancellation was approved and certified under the Companies Act
2006. The share premium account of £12,284,000 was credited to distributable
reserves on that date.
Treasury shares
On 22 May 2024 the Company purchased 234,978 ordinary shares at a price of
£17 a share totalling £3,995,000 to hold in treasury. It is intended that
these ordinary shares held in treasury will be utilised to satisfy future
option exercises. On 29 January 2025 the Group transferred 5,482 ordinary
shares from treasury to settle an exercise of employee share options.
Other equity 2024 2024 2023 2023
Number £'000 Number £'000
Treasury shares (234,978) (3,995) - -
Merger reserve
The merger reserve was previously created as part of the 2016 Group
reorganisation prior to listing and has been reclassified in the financial
year.
Retained earnings
Retained earnings comprises the Group's cumulative annual profits and losses,
including adjustments for equity-settled share-based payments (and related
tax), the purchase of shares to be held in treasury, and the credit as a
result of the cancellation of the share premium account.
23. Share based payments
The Group operates a number of share option plans for qualifying employees,
both as equity and cash-settled share-based remuneration schemes.
Equity-settled options in the plans are settled in equity in the Company.
The terms and conditions of the outstanding grants made under the Group's
schemes are as follows:
Exercisable between
Date of grant Expected Commencement Lapse Exercise Vesting Amount Amount
term price schedule outstanding at outstanding at
31 December 31 December
2024 2023
6 April 2017 3 6 April 2020 6 April 2027 £0.005 1 43,950 43,950
6 April 2017 6.5 6 April 2020 6 April 2027 £2.844 1 87,900 87,900
28 September 2017 6.5 28 September 2020 28 September 2027 £5.825 1 13,500 27,000
9 April 2018 6.5 9 April 2021 9 April 2028 £10.38 1 38,084 59,084
26 September 2018 6.5 26 September 2021 26 September 2028 £8.665 1 - 6,539
25 February 2019 6.5 25 February 2022 25 February 2029 £1.09 1 - 20,000
4 October 2020 3 30 April 2023 4 October 2030 £0.005 2 76,617 172,388
4 October 2020 3 30 April 2024 4 October 2030 £0.005 2 76,617 172,388
13 May 2022 2 30 April 2024 4 October 2030 £0.005 2 - 25,539
1 December 2022 3 1 January 2026 1 July 2026 £2.28 3 141,715 156,536
19 December 2022 3.3 31 March 2026 19 December 2032 £0.005 4 662,000 762,000
17 May 2024 2 31 March 2026 17 May 2034 £0.005 5 30,000 -
1,170,383 1,533,324
Weighted average remaining contractual life of options outstanding 6.1 years 7.1 years
The following vesting schedules apply to the options:
1 100% of options vest on the third anniversary of date of grant.
2 100% of options have vested on the achievement of a performance
condition related to the Group's share price at a pre-determined date.
3 100% of options vest on the third anniversary of the Save As You
Earn ("SAYE") savings contract start date.
4 The level of vesting is dependent on a performance condition,
being the Group's EBITDA over a qualifying period. Shares are expected to vest
in full.
5 The level of vesting is dependent on a performance condition,
being the number of meters owned over a qualifying period.
The number and weighted average exercise price of equity-settled share options
were as follows:
2024 2023
Shares Shares
Balance at the start of the period 1,533,324 1,722,632
Granted 30,000 -
Forfeited (114,821) (97,731)
Lapsed - -
Exercised (278,120) (91,577)
Balance at the end of the period 1,170,383 1,533,324
Vested at the end of the period 336,668 416,861
Exercisable at the end of the period 336,668 416,861
Weighted average exercise price for:
Options granted in the period £0.005 -
Options forfeited in the period £0.299 £0.534
Options exercised in the period £1.353 £1.354
Weighted average share price of exercised shares £17.03 £9.27
Exercise price in the range:
From £0.005 £0.005
To £10.38 £10.38
The fair value of each option grant is estimated on the grant date using an
appropriate option pricing model. The following fair value assumptions were
assumed in the year:
2024 2023
Dividend yield 2.4% -
Risk-free rate 4.3% -
Share price volatility 66% -
Expected life (years) 2 years -
Weighted average fair value of options granted during the period £16.40 -
For the cash-settled share scheme, the following information is relevant:
2024 2023
Options Options
Balance at the start of the period - -
Granted 240,000 -
Forfeited (65,500) -
Lapsed - -
Exercised - -
Balance at the end of the period 174,500 -
Weighted average exercise price for:
Options granted in the period £10.00 -
Options forfeited in the period £10.00 -
Options exercised in the period - -
Weighted average share price of exercised shares - -
The fair value of each option grant is estimated on the grant date using the
Black-Scholes option pricing model. The following fair value assumptions were
assumed in the year:
2024 2023
Risk-free rate 3.5% -
Share price volatility 60% -
Expected life (years) 3.25 years -
Weighted average fair value of options granted during the period £13.03 -
The share price volatility assumption in 2024 was based on the actual
historical share price of the Group since January 2023.
The total expenses recognised for the year arising from share-based payments
are as follows:
2024 2023
£'000 £'000
Equity-settled share-based payment expense 958 1,150
Cash-settled share-based payment expense 590 -
National Insurance costs related to share options 2,439 108
Total share-based payment charge 3,987 1,258
Employer's National Insurance contributions are accrued, where applicable on
unapproved (for tax purposes) share options, at the rate of 13.8% or 15.0%
(2023: 13.8%) which management expects to be the prevailing rate at the time
the options are exercised.
24. Commitments
Commodity purchase commitments
As disclosed in note 21, the Group has entered into commodity purchase
contracts to hedge its exposures to fluctuations in gas and electricity
commodity prices which meet the criteria for "own use" and are classified as
off-balance sheet arrangements. Such contracts to purchase gas and electricity
are set so as to match, to the extent possible, the demand from customers;
therefore, they play a significant role in securing the forward expected gross
margin on customer contracts which are set at the point of contracting new
customers.
As part of the Group's risk mandate, the total commodity purchase contracts at
31 December 2024 amount to £315,037,000 (2023: £302,857,000). Such purchase
contracts carry inherent risk to the Group through the value of such
contracts, being significant commitment costs, and the potential exposure
should customer contracts not cover commitment costs. The Group, however, has
a significant contract book in excess of the purchase commitments, which
limits the exposure risk, which is considered to be low, given they are
underpinned by customer contracts. The benefits to the Group of the commodity
purchase contract commitments arises through fixing future commodity costs
against contracted revenue where a pre-determined margin and profit are
realised.
Capital commitments
The Group has entered into contracts to develop its digital platform as part
of the Digital by Default strategy. Such contracts may be terminated with a
limited timescale and as such are not disclosed as a capital commitment.
The Group has no other capital commitments at 31 December 2024 (2023: £nil).
Security
The Group has entered into Trading Agreements with the Shell group in February
2024 to provide access to commodity markets. As part of this arrangement, as
is common for such structures, there is a requirement to meet certain
covenants, a fixed and floating charge (including mandate over certain banking
arrangements in the event of default) over the main trading subsidiaries of
the Group, being Yü Energy Holding Limited and Yü Energy Retail Limited, and
a parent company guarantee from the Company.
As part of the Group's activities in financing smart meters, a Group entity
has provided security over smart meter assets in relation to bank debt
provided by Siemens Finance.
Yü Group PLC provides parent company guarantees on behalf of its wholly owned
subsidiaries to a small number of industry counterparties as is commonplace
for the utilities sector.
As disclosed in note 17, included in other receivables of the Group is an
amount of £500,000 held in a separate bank account over which the Group's
bankers have a fixed and floating charge.
Contingent liabilities
The Group had no contingent liabilities at 31 December 2024 (2023: £nil).
25. Related parties and related party transactions
The Group has transacted with CPK Investments Limited (an entity owned by
Bobby Kalar). CPK Investments Limited previously owned and leased the
Nottingham office from which the Group operated via a lease to Yü Energy
Retail Limited. In 2023 the directors, after taking external advice including
from an external independent valuer, reviewed the terms of the lease with CPK
Investments Limited for the Nottingham head office. The Group entered into an
agreement in April 2023 to extend the term of the lease and amended certain
terms (which remained on an arm's length basis).
In 2024, the property was sold by CPK Investments Limited to the Group to
provide additional flexibility for the Group's property strategy. The
consideration paid of £1,709,000 was largely based on an independent
valuation of the building, together with an assessment of value of fixtures
and fittings acquired. The lease agreement between Yü Energy Retail Limited
and CPK Investments Limited was transferred between Group entities and
disposed of for the purposes of the consolidated Group accounts.
During 2024 the Group paid £92,000 in lease rental and service charges to CPK
Investments Limited (2023: £135,000). There was a net balance of £35,000
owed to the Group from CPK Investments Limited at 31 December 2024, which was
settled in full in January 2025 (2023: net payable of £35,000).
On 17 May 2024 the Company acquired 234,978 ordinary shares, at the
then-market rate of £17 per share, via its broker Liberum Wealth Limited.
These shares remain in treasury on 31 December 2024. On the same date as the
Company's purchase, Paul Rawson (Chief Financial Officer) and a person closely
related to him, and two employees of the Group, sold shares through Liberum
Capital Limited, of which some such shares were sold at the same market price
(less commission).
All transactions with related parties have been carried out on an arm's length
basis.
26. Net cash/(net debt) reconciliation
The net cash/(net debt) and movement in the year were as follows:
2024 2023
£'000 £'000
Cash and cash equivalents 85,204 32,477
Borrowings (4,967) (355)
Net cash 80,237 32,122
The movements in net cash/(net debt) and lease liabilities were as follows:
Cash Borrowings Sub-total Leases Net cash
£'000 £'000 net cash £'000 less leases
£'000 £'000
Balance as at 1 January 2023 18,970 - 18,970 (160) 18,810
Cash flows:
Movement in cash and cash equivalents 13,507 - 13,507 - 13,507
Drawdown of new borrowings - (356) (356) - (356)
Interest - (4) (4) (81) (85)
Repayment - 5 5 577 582
Recognition of leases on acquired right-of-use assets - - - (1,002) (1,002)
Modification of lease liabilities - - - (969) (969)
Balance as at 31 December 2023 32,477 (355) 32,122 (1,635) 30,487
Cash flows:
Movement in cash and cash equivalents 52,727 - 52,727 - 52,727
Drawdown of new borrowings - (4,647) (4,647) - (4,647)
Interest - (239) (239) (167) (406)
Repayment - 274 274 1,011 1,285
Recognition of leases on acquired right-of-use assets - - - (1,921) (1,921)
Disposal of lease liabilities - - - 912 912
Balance as at 31 December 2024 85,204 (4,967) 80,237 (1,800) 78,437
27. Subsidiary audit exemption
The following UK subsidiary undertakings are exempt from the requirements of
an audit for the year ended 31 December 2024, under section 479A of the
Companies Act 2006.
Company Number
Yu Water Limited 09918643
Yü PropCo Leicester Limited 14307346
Yü PropCo Nottingham Limited 15994888
Yü-Smart Limited 12311416
Yü Services Limited 11440201
28. Post-balance sheet events
On 29 January 2025 the Group transferred 5,482 ordinary shares from treasury
to settle an exercise of employee share options.
There are no other significant post-balance sheet events.
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