REG - Yu Group PLC - Transformational New Hedging Facility

YuAnnouncement

23/02/2024 07:00

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RNS Number : 1755E  Yu Group PLC  23 February 2024

Prior to publication the information communicated in this announcement was
deemed by the Company to constitute inside information for the purposes of
article 7 of the Market Abuse Regulations (EU) No 596/2014 as amended by
regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations No
2019/310 ('MAR'). With the publication of this announcement, this information
is now considered to be in the public domain.

 

23 February 2024

Yü Group PLC

("Yü Group" or the "Group")

 

Entry into transformational new Hedging Facility with Shell Energy Europe
Limited

 

Yü Group PLC (AIM: YU.), the independent supplier of gas, electricity, meter
asset owner and installer of smart meters to the UK business sector, is
delighted to announce that it has (through a wholly owned subsidiary, Yü
Energy Retail Limited) entered into a new structured trading agreement
("Hedging Facility") with Shell Energy Europe Limited ("Shell Energy") with an
initial five-year term.

 

Entry into the Hedging Facility represents the conclusion of a twelve-month
selection and due diligence process and is effective immediately. The Hedging
Facility replaces the previous arrangement entered into in 2019 with
SmartestEnergy Limited ("Old Facility").

 

The Old Facility enabled Yü Group to effectively scale up and formed a key
tenet of the Group's risk management approach allowing the business to procure
gas and electricity at fixed prices to support its growing customer base.

 

The unprecedented volatility in the energy markets, and Yü Group's rapid
growth, has recently resulted in the Group exceeding its available credit
under the Old Facility resulting in the requirement for the Group to post cash
on deposit to support its hedging strategy, with £49.8m posted as collateral
at 31 December 2023.

 

The Hedging Facility with Shell Energy has several significant benefits for
Yü Group. It is structured to allow access to commodity markets to support
the Group's ambitious growth agenda, and has the potential to support further
expansion opportunities should they arise.

 

Further, while the Group meets its ongoing obligations in the Hedging
Facility, Yü Group will not be required to deposit cash as collateral to
support mark to market movements, due to energy price fluctuations, as has
been required under the Old Facility. Finally, Yü Group will benefit from
Shell's leading and considerable commodity trading access to liquid commodity
markets, at market reflective prices.

 

The Hedging Facility fundamentally transforms Yü Group's working capital
profile releasing cash that would previously have to be held on balance sheet
to support the Group's robust hedging policy. £52.25m of cash previously
lodged under the Old Facility has now flowed back to Yü Group, with further
material cash benefits to be realised over the next month.

 

Notice of Results

The Group will announce its results for the year ended 31 December 2023 on 19
March 2024

 

Bobby Kalar, Chief Executive Officer of Yü Group, commented:

"I'm very excited for the future of the Group and look forward to working with
Shell Energy Europe Limited, one of Europe's largest traders of gas, power and
environmental products. This new strategically important facility is the
result of a thorough selection process and is further validation of the
strength and maturity of Yü Group following the extensive due diligence and
stress-testing of our business model.

 

The new hedging facility unlocks over £50m of cash currently posted as
collateral and removes a material working capital constraint to the business
lifting exposure to mark to market movements from future energy market
fluctuations. This provides us with substantial strategic and financial
benefits, enabling increased distributions whilst continuing to invest to
deliver our ambitious growth agenda.

 

I recognise it's been a very busy period for my team and would like to thank
them for their continued support. I look forward to the future with absolute
confidence."

 

 

For further information, please contact:

 

 Yü Group PLC                                  +44 (0) 115 975 8258

Bobby Kalar

Paul Rawson
 Liberum - Nominated Adviser and Broker        +44 (0) 20 3100 2000

 Edward Mansfield

 Satbir Kler

 Anake Singh
 Teneo                                         +44 (0) 20 7353 4200

Giles Kernick

 Tom Davies

 

 

Notes to Editors

Information on the Group

Yü Group PLC is a leading challenger 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. In 2023 the Group
launched Yü Smart to support growth through new opportunities in smart
metering installation.

 

 

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