REG - Yu Group PLC - Interim Results
24/09/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240924:nRSX3326Fa&default-theme=true
RNS Number : 3326F Yu Group PLC 24 September 2024
24 September 2024
Yü Group PLC
("Yü Group", the "Company" or the "Group")
Results for the six months to 30 June 2024
CONTINUED PROFITABLE GROWTH PROVIDING MATERIALLY INCREASED SHAREHOLDER RETURNS
Yü Group (AIM: YU.), the independent supplier of gas and electricity, meter
asset owner, and installer of smart meters to the UK corporate sector, is
pleased to announce its unaudited half-year results for the six months to 30
June 2024.
Key indicators
£m unless stated Six months to 30 June Twelve months to 31 December
H1 24 H1 23 Change FY 23
Financial
Revenue 312.7 194.9 +60% 460.0
Adjusted EBITDA(1) 20.4 13.7 +49% 42.6
Profit before tax 19.8 8.9 +122% 39.7
Net cash inflow 56.9 17.7 +221% 13.5
Net Cash 86.8 36.6 +137% 32.1
Earnings per share (pence) 88p 58p +52% 182p
(adjusted, fully diluted)
Dividend per share (pence) 19p 3p +533% 40p
Operational
Average monthly bookings 46.9 51.3 -9% 55.5
Meter points supplied (#'000) 72.3 39.7 +82% 53.4
Contracted revenue:
· for the next financial year 417 264 +58% 520
· in aggregate 945 557 +70% 826
TrustPilot Score (#) 4.3 3.5 +0.8 4.1
Smart meter installations (#'000) 9.0 4.0 +125% 8.5
Smart meter assets ILARR(2) 0.6 0.0 +0.6 0.2
Financial performance
· Revenue increased 60% to £312.7m (H1 23: £194.9m) with strong
organic growth in meter points.
· Adjusted EBITDA increased 49% to £20.4m (H1 23: £13.7m),
representing a 6.5% margin (H1 23: 7.0%) in line with management expectations.
· Strong net cash position of £86.8m (H1 23: £36.6m). Net cash
inflow of £56.9m (H1 23: £17.7m), including return of £49.8m cash on
deposit (H1 23: £16.5m outflow) from previous hedging counterparty, and after
£10.2m of capital payments through share buy-back and dividends.
· EPS grew 52% to 88p (H1 23: 58p) (adjusted, fully diluted basis).
· In line with our progressive dividend policy, a materially
increased interim dividend of 19p per ordinary share (H1 23: 3p) to be paid in
December 2024.
Operational highlights
· Continued strong organic growth with average monthly bookings of
£46.9m (H1 23: £51.3m) and volume of energy supplied to customers increasing
by 110% over the period despite more normalised commodity markets following
the high prices in 2022 and 2023.
· Commodity hedging arrangements working very well and providing
efficient and cost-effective access to gas, electricity and green markets
since the February 2024 signing of a bespoke five-year agreement with the
Shell group.
· Yü Smart continuing to scale, with 9,000 new smart meters
installations in H1 24, up 125% on H1 23 (4,000 meters). New in-house
engineering training and excellence centre fully embedded, allowing
flexibility to increase headcount quickly as smart meter installations scale.
Headcount increased to 101 field installation engineers (H1 23: 25).
· Trustpilot rating of 'excellent' following continued focus on
delivery of customer service and shift to digital channels to enable customers
to self-serve. Management continues to target further improvement in customer
service metrics.
· Recognised for the second consecutive year as a 'Top 100 Best
Places to Work' by The Sunday Times and promoted to the 'Big Organisations'
category.
Outlook
· On track to deliver continued growth in revenue, smart meter
installations, meter points and energy volume supplied in FY24 and FY25 as the
Group takes advantage of the £50bn+ market opportunity.
· EPS forecasted to increase in H2 24 (from H1 24), in line with
market expectations, as the Group continues to deliver on its strategy.
· Progressive dividend policy provides scope for increased
shareholder returns under growth whilst maintaining dividend cover of at least
3x in the medium term.
· Strong net cash position and cash generation, providing
additional opportunity including £9.0m early investment (otherwise due in
August 2025) of renewable obligation certificates to secure a discount.
· The Board remain focussed on targeting continued growth in
revenue, EPS and dividend over the medium term as returns are delivered from
the investments made in digital by default and Yü Smart.
Bobby Kalar, Chief Executive Officer, said:
"Once again, my team has delivered an excellent performance, and I'm in no
doubt that this continued momentum will deliver a strong full year performance
and further enhance our contracted forward order book. Our simple yet
effective strategy to build strong foundations has resulted in the continued
delivery of our rapid and sustainable growth.
I believe the numbers should do the 'talking'. Revenue is up 60%, adjusted
EBITDA is up 49%, cash in the bank up 137%, meter points on supply up 82% and
contracted revenue increased by 70%. I'm delighted and rightly proud of the
performance of the business against a challenging period of extreme volatility
in the market.
Yü Smart continues to go from strength to strength. Like all new startups,
we've experienced growing pains and building teams who share our values and
habits has required management attention. However, I'm satisfied good progress
has been made and we have positioned ourselves for significant meter
installation growth. Smart meter installations are up by 125% and engineering
headcount is up 300%.
Our February 2024 new trading deal with Shell Energy remains strong and their
mature and collaborative approach is already leveraging opportunities not
available to us before. I look forward to further strengthening our
relationship.
The lack of Institutional engagement has been disappointing, despite
management delivering colossal value year on year. Many AIM companies are
questioning the market's future and the desirability of remaining listed. This
has been reflected in the reduction of quoted companies. The AIM market's
future is delicately balanced and won't be helped if the current government
further punishes and disincentivises entrepreneurial high growth companies.
This lack of recognition is frustrating; however, we remain focussed on
delivering FY24 forecasts and positioning the Group for another
record-breaking performance in 2025. I would like to thank my fantastic team
and in particular the Board who continue to challenge and encourage the
executive team."
Analyst presentation
A presentation for analysts will be held at 9.00am today, 24 September 2024,
at the offices of Teneo, The Carter Building, 11 Pilgrim Street, London, EC4V
6RN.
(1) Adjusted EBITDA is reconciled to operating profit in the finance review
and note 5 to the interim financial statements.
(2) ILARR represented Index-linked annualised recurring revenue from
investment in Smart Meters.
For further information, please contact:
Yü Group PLC +44 (0) 115 975 8258
Bobby Kalar
Paul Rawson
Panmure Liberum +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 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 over 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.
Chief Executive Officer's Statement
Significant strategic progress
I'm pleased to report a further set of strong results, aligned with our high
growth, profitable evolution in a significant market, led by our digital by
default approach and adoption of smart meter technology and underpinned by our
experienced team and robust risk management.
Disrupting the energy supply market
The Group continues to be recognised as one of the fastest growing suppliers
in the business-to-business space, with market share increasing from 1.4% at
December 2023 to 1.8% 1 . Whilst a modest share of the market today, there
remains considerable opportunity ahead to take business from the established
and less focussed energy majors.
The 60% increase in revenue to £312.7m, and 82% increase in supplied meter
points to 72,300, provides evidence of our progress to date, which is all
organic and follows our robust business selection criteria.
Whilst I or my team will not be complacent, I am excited to report we see
further opportunities ahead. The Group continues to invest in its customer
acquisition activities and is exploring new partnerships and market segments
to provide new growth channels.
We exit H1 24 with record forward contracted revenue, with £945m (H1 23:
£557m, FY23: £826m) secured under contract to deliver over the coming four
years.
With the market opportunity available organically there is limited current
focus on acquisitions of customer books, though we will remain open should
opportunities become available.
Our Yütility Simplicity offering allows small and medium sized business
customers to access simple, reliable and value for money business utilities.
We are passionate in providing this service in a sector where often customers,
and third-party intermediaries, can be over-looked.
In short, our already secured contract book, investment in digital by default
and Yütility Simplicity approach, in a substantial £50bn+ market, provides
me with significant confidence in the opportunity ahead.
Scaling our smart metering activities
Our strategy to develop our internal smart metering capability continues to
deliver clear results. Smart meters provide significant benefits to the
customer in providing clear energy measurement to facilitate better energy
management decisions, and to allow accurate billing of energy supply. These
benefits also support the supplier, enabling better energy hedging decisions
and allowing the offering to new products or solutions to customers, such as
time of use or pay as you go tariffs.
I'm pleased to note the increase to 9,000 smart meter installations in the
first six months of the year, an increase of 125% on the same period in 2023.
This growth has been enabled through our investment in our specialist training
and excellence centre in Leicester, which provides our metering experts with
the technical, safety and customer service training to the Yü Smart way of
working.
The increase in engineering headcount to 101, from 25 at the end of June 2023,
has been facilitated through this new training and excellence centre. The
Group now benefits from a national coverage, with productivity efficiencies
expected as engineer headcount increases further.
The financial benefits to the Group from the strategy are also starting to
become more material. Billing from actual readings, rather than estimates,
provides support to cash collection rates from customers. The investment in
meter assets is also increasing, which provides an index-linked annuity income
expected for a period of 15 years+ as the meters continue to generate revenue
irrespective of whether the Group supply the end property.
In H1 24 the Group has invested £1.8m in 9,000 new smart meter assets, which
is in addition to the £0.8m invested in FY23 for 4,100 meters. The ILARR from
these 13,100 smart meter assets of £0.6m therefore represents an approximate
4.3 year payback on a long-term (15+ year) asset, with an index-linked income
stream.
We continue to scale our engineering capability and focus on efficiency of our
operations, and whilst we set an ambitious 25,000 full year target for new
meter installations during 2024, I am pleased to say that this is still within
reach.
Continually improving the Group's foundations
The Board remains focussed on ensuring the Group delivers for shareholders and
other stakeholders, and that we achieve controlled and well governed growth.
I was delighted that our investment in people and encouraging a challenging
yet rewarding culture has again been recognised in the Times' Top 100 Best
Places to Work awards, and this year being categorised as a Big Organisations
reflecting our increased scale.
It is also very rewarding to see colleagues join the team, and talent develop
within the business, who can take advantage of career opportunities that
present themselves as the business grows. We have also hired-in significant
and experienced talent where appropriate, with new colleagues often
flourishing when joining a disrupter business where their proven experience
(often from one of the large multi-national competitors) can make a real and
tangible impact.
Our TrustPilot score has improved though we continue to evolve further in this
area, to provide additional differentiation in our customer positioning. We
continue to invest in enabling customer journey improvements to allow our
customers the simple approach to their utility needs. Whilst recognising we
are not always perfect, the team and I are focussed on continually improving
our performance, systems and processes, and learning fast from any mistakes.
The Group's new five-year exclusive commodity trading agreement signed in
February 2024 with the Shell group is providing material benefit. The
agreement followed a significant period of due-diligence either way, enabling
the Group to access efficient, cost and capital-effective access to long term
commodity markets, and proving the Group's maturity in operations. This new
agreement with Shell is sized to meet substantial growth over the coming years
as the Group scales and I remain excited by the opportunity this enables.
Finally, the capital reduction process through the cancellation of the share
premium account of the Company in July 2024 has been concluded. Whilst largely
technical in nature, with the change increasing distributable reserves by
£12.3m through the reduction of capital, it provides additional balance sheet
flexibility in the context of the significant increase in the Group's cash
position.
Outlook
The Board targets continued substantial revenue growth based on the existing
forward contract book and through organic growth. An ambition of 100,000
meters supplied early in 2025 is a stretch milestone targeted by the Group.
Smart meter installations in 2024 of 25,000 are targeted, equivalent to
exiting the year with an approximate £1.2m ILARR, whilst also providing
further benefits to energy supply profitability.
We expect to maintain our strong EPS development in H2 24 from H1 24 is
forecasted as revenue growth flows through to increased profit.
Robust net cash balance expected at 31 December 2024, reflecting strong full
year operational cash inflow and after £9.0m ROCs purchased in advance.
Progressive dividends through higher EPS and reduction to dividend cover to
3x+ over the short to medium term provides for potential increased shareholder
distribution.
Finance review
Delivering robust financial metrics
The Group results continue to deliver against our robust financial framework,
leading to significant organic growth with increased profitability and
enabling increased dividend distributions to shareholders. In overview:
· Revenue increased 60% to £312.7m
· Aggregate forward contracted revenue up 70% to £945m
· EPS, adjusted and fully diluted, up 52% to 88p
· Adjusted EBITDA and Profit Before Tax increased by 49% and 122%
respectively
· Net cash inflow of £56.9m, with closing net cash up 137% to
£86.8m
· £1.8m investment in smart meters. ILARR(8) from smart metering
assets of £0.6m
· Interim dividend of 19p, up from 3p H1 23
Financial metrics Six months to 30 June Twelve months to 31 December
£m unless stated H1 24 H1 23 Change FY 23
Revenue 312.7 194.9 +60% 460.0
Gross margin % 13.7% 17.2% (3.5%) 18.1%
Net Customer Contribution(1) % 11.7% 13.1% (1.4%) 14.9%
General overheads(2) % (5.2%) (6.0%) +0.8% (5.7%)
Adjusted EBITDA % 6.5% 7.0% (0.5%) 9.3%
Adjusted EBITDA 20.4 13.7 +49% 42.6
Profit before tax 19.8 8.9 +122% 39.7
Net cash inflow 56.9 17.7 +221% 13.5
Net Cash(3) 86.8 36.6 +137% 32.1
Earnings per share (adjusted, fully diluted) 88p 58p +52% 182p
Dividend per share 19p 3p +533% 40p
1year forward contracted revenue(4) 417 264 +58% 520
Aggregate contracted revenue(5) 945 557 +70% 826
Non-contracted annualised revenue(6) 30 30 - 29
Equiv. volume of energy supplied(7) 1.0TWh 0.5TWh +110% 1.2TWh
Smart meter assets ILARR(8) 0.6 0.0 +0.6 0.2
Overdue customer receivables(9) 3 days 4 days +1 day 4 days
Substantial revenue progression
Revenue of £312.7m represents growth of 60% on H1 23; and is already 68% of
the FY23 total revenue.
This growth follows the substantial increase in meter points supplied by the
Group (from 39,700 at H1 23 to 72,300 at H1 24), and the 110% growth in the
equivalent volume of energy supplied (EQVS) (7) from 0.5TWh in H1 23 to 1.0TWh
in H1 24.
The increase is despite mild temperatures experienced in Spring 2024, which
softened customer consumption, reducing revenue by c£9m in the period. In
addition, tariffs charges to customers are based on a more normalised energy
market, which has led to a lower contribution from uncontracted customers (on
variable tariffs which track the prevailing energy market) and lower tariffs
secured in our contract portfolio.
Equivalent volume of energy supplied (EQVS) is a new measure to provide
additional insight as to the volume of energy delivered to customers, based on
electricity volume equivalent and measured in terawatt hours (being one
million megawatt-hours ("MWh")). This is after considering that a MWh of
electricity is worth, in revenue terms, approximately 4x a MWh of gas. Whilst
the volume delivered is at a lower revenue per MWh, this commodity market
reduction is now largely already priced in the tariffs included in forward
contracted revenue.
Continued revenue progression is forecast in view of the growth in volume and
meter points, on more normalised tariffs. The Group had £417m already
contracted to deliver in FY25, up 58% on the H1 23 position for FY24.
Aggregate contract revenue of £945m is up 70% on the prior year, a result of
increasing contract lengths.
In short, revenue growth has been maintained and expected to continue into H2
24 and beyond in view of increases in market share and visibility of forward
contracted revenue, though revenue growth in H1 24 has been limited to 60% due
to the lower commodity environment and mild spring temperatures.
Increased adjusted EBITDA, PBT and EPS
Group adjusted EBITDA of £20.4m is 49% up on H1 23 and is 6.5% of revenue (H1
23: 7.0%).
Gross margin of 13.7% is below the previous year (H1 23: 17.2%) reflecting the
reduced volume due to the weather impact, with some reduced margin as excess
energy is sold back. Margin is further reduced, in line with expectations, due
to a lower benefit from blend and extend customer offers, certain higher
industry costs and the reduced proportion of variable based tariffs as
commodity markets have normalised.
Net customer contribution margin of 11.7% (H1 23: 13.1%) is after a 2% bad
debt charge (H1 23: 4.1%) as customer collections and the benefits of smart
meters continue to produce improving results. Cash collection in H1 24 remains
strong at 97.3% (H1 23: 98%), particularly when considering the high growth in
the period.
General overheads at 5.2% of revenue are 0.8% lower than the 6.0% in H1 23.
This overhead leverage benefit, despite higher meter points and volume of
energy supplied, is a result of the cost to serve benefits from our digital by
default investments, and the continued scaling of Yü Smart.
Profit before tax for the period increased 122% to £19.8m (H1 23: £8.9m) and
is after a £1.4m charge incurred on exit of the Group's previous energy
trading arrangement. Net finance income increased to £1.8m reflecting
significant cash generation and cash deposits held by the Group.
Adjusted EBITDA reconciliation H1 24 H1 23 FY 23
£m
Adjusted EBITDA 20.4 13.7 42.6
Adjusted items:
Loss on derivative contracts - (4.2) (3.0)
Depreciation and amortisation (1.0) (0.7) (1.5)
Non-recurring operational costs (1.4) - -
Statutory operating profit 18.0 8.8 38.1
Net finance income 1.8 0.1 1.6
Profit before tax 19.8 8.9 39.7
Following the increased profit before tax, and after considering a higher
corporate tax rate, there remains significant growth in earnings per share on
a basic, reported, level, to 88p (H1 23: 44p) and on a fully diluted,
adjusted, basis also to 88p (H1 23: 58p).
Strong cash generation and cash position
Cashflow summary(10) H1 24 H1 23 FY 23
£m
Adjusted EBITDA 20.4 13.7 42.6
Operating cashflow items:
Hedging related cash collateral 49.8 (16.5) (49.8)
Non-recurring costs (1.4) - -
Corporation tax paid (6.6) - (0.6)
Other working capital movements 6.1 21.5 23.9
Operating cash flow 68.3 18.7 16.1
Investing activities (3.1) (0.4) (1.5)
Financing activities: Debt, leases and interest 1.9 (0.1) (0.1)
Financing activities: Dividends and buy-back (10.2) (0.5) (1.0)
Net cash movement in year 56.9 17.7 13.5
Closing cash balance 89.4 36.6 32.5
Net cash 86.8 36.6 32.1
The Group benefits from a strong net cash position of £86.8m (H1 23: £36.6m)
which is net of £2.6m of borrowings related to a specific £5.2m facility
ringfenced for smart meters.
The Group settled in August 2024 its c£33.2m liability to Renewable
Obligation Certificates ("ROCs") for the year to 31 March 2024. In August
2024, a benefit from the improved cash position, the Group purchased a further
£9.0m of ROCs in advance of the due date of 31 August 2025 to secure a
discount in costs.
Cash flow for the period includes the return of £49.8m cash collateral held
with our previous trading counterparty, less £1.0m non-recurring costs paid
on exit, as the new hedging agreement with the Shell Group was signed. The
Board do not foresee the need to post further cash collateral under this new
five-year arrangement with Shell.
As a result of increased profitability, the Group has utilised the majority of
corporation tax losses and therefore has made corporate tax payments of £6.6m
on account of FY23 and FY24 liabilities.
Other working capital movements include the benefit of delayed ROCs payments
(collected from customers) and the outflow from investment in customer
acquisition costs to support sales growth.
The Board current forecast a strong cash position building for the remainder
of FY24 and beyond. This considers continued capital investment (including in
smart metering and digital), the £9.0m of ROCs purchased in advance
(otherwise due August 2025) to secure a discount, and reflecting a forecast
for total dividends and share buy-back of £13.4m paid in the full year.
Capital and Dividend
As noted above, the Company reduced capital through a cancellation of the
share premium account after the 30 June 2024 reporting date. This capital
reduction, dated 3 July 2024, totalled £12.3m which transfers from capital to
retained and distributable earnings.
The Company purchased 234,978 of ordinary shares on 17 May 2024 for a
consideration of £4.0m and transferred the shares to treasury. These shares,
which do not attract voting rights or dividends whilst held in treasury, are
expected to be utilised to satisfy future option exercises.
In line with its progressive dividend policy, the Board declare an interim
dividend of 19p per share (H1 23: 3p per share), resulting in a forecasted
payment of £3.2m on the payment date of 20 December 2024. The Group's
ordinary shares will go ex-dividend on 21 November 2024, with a record date of
22 November 2024.
Notes to finance review:
(1) Net Customer Contribution is adjusted gross margin less bad debt.
(2) General overheads are overhead expenses, excluding bad debt, charged to
adjusted EBITDA.
(3) Net Cash is cash held less borrowings, excluding lease liabilities.
(4 & 5) 1year forward contract revenue represents contracted revenue under
energy supply contracts for the following annual financial year. Aggregate
contract revenue includes all revenue contracted from the reporting date.
(6) Non-contracted annualised revenue reflects the estimated value of
non-contracted energy supply to customers at the period end date, based on the
annualised volume of energy supplied and relevant prices on that date.
(7) Equivalent volume of energy supplied (EQVS) represents volume of energy
delivered to customers, where gas is converted to a proxy value of electricity
(utilising Ofgem benchmark's being 4MWh's of gas to 1MWh of electricity).
(8) ILARR represented Index-linked annualised recurring revenue from
investment in Smart Meters.
(9) Overdue customer receivables represent the amount outstanding and overdue,
net of provisions and deferrals, to key customer receivable balances compared
with the revenue recognised.
(10) The statutory format cashflow statement is presented in the condensed
financial statements.
Condensed consolidated statement of profit and loss and other comprehensive
income
For the six months ended 30 June 2024
6 months ended 6 months ended 12 months ended
30 June 30 June 31 December
2024 2023 2023
(Unaudited) (Unaudited) (Audited)
Notes £'000 £'000 £'000
Revenue 312,678 194,899 460,001
Cost of sales (269,799) (161,336) (376,959)
Gross profit 42,879 33,563 83,042
Operating costs before non-recurring items and share based payment charges (15,456) (26,347)
(12,027)
Operating costs - non-recurring items 5 (1,359) - -
Operating costs - share based payment charges 20 (1,705) (471) (1,258)
Total operating costs 3 (18,520) (12,498) (27,605)
Net impairment losses on financial and contract assets 13 (6,349) (8,085) (14,309)
Loss on derivatives 5 - (4,221) (3,046)
Operating profit 18,010 8,759 38,082
Finance income 4 2,177 178 1,722
Finance costs 4 (349) (36) (105)
Profit before tax 19,838 8,901 39,699
Taxation 7 (5,151) (1,591) (8,839)
Profit and total comprehensive income for the year 14,687 7,310 30,860
Earnings per share
Basic 6 £0.88 £0.44 £1.85
Diluted 6 £0.82 £0.40 £1.69
Condensed consolidated balance sheet
At 30 June 2024
Notes 30 June 30 June 31 December
2024 2023 2023
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
ASSETS
Non-current assets
Intangible assets 9 3,165 2,810 2,561
Property, plant and equipment 10 6,405 3,838 4,613
Right-of-use assets 11 2,736 1,533 1,676
Deferred tax assets 7 1,277 3,709 1,969
Trade and other receivables 13 9,109 - 5,231
22,692 11,890 16,050
Current assets
Inventory 12 1,838 297 546
Trade and other receivables 13 75,448 53,794 127,222
Cash and cash equivalents 14 89,426 36,621 32,477
166,712 90,712 160,245
Total assets 189,404 102,602 176,295
LIABILITIES
Current liabilities
Trade and other payables 15 (117,321) (73,070) (123,845)
Corporation tax payable 7 (1,832) - (4,016)
Borrowings 16 (102) - (3)
Financial derivative liability 17 - (1,049) -
(119,255) (74,119) (127,864)
Non-current liabilities
Trade and other payables 15 (15,450) (6,276) (1,281)
Borrowings 16 (2,515) - (352)
Financial derivative liability 17 - (126) -
(17,965) (6,402) (1,633)
Total liabilities (137,220) (80,521) (129,497)
Net assets 52,184 22,081 46,798
EQUITY
Share capital 19 85 83 84
Share premium 19 12,284 11,786 11,909
Merger reserve (50) (50) (50)
Retained earnings 39,865 10,262 34,855
52,184 22,081 46,798
Condensed consolidated statement of changes in equity
For the six months ended 30 June 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 period
Profit for the period - - - 14,687 14,687
Other comprehensive income - - - - -
- - - 14,687 14,687
Transactions with owners of the Company
Contributions and distributions
Equity-settled share based payments - - - 528 528
Deferred tax on share based payments - - - - -
Proceeds from share issues 1 375 - - 376
Buy-back of shares - - - (3,995) (3,995)
Equity dividend paid in the period - - - (6,210) (6,210)
Total transactions with owners of the Company 1 375 - (9,677) (9,301)
Balance at 30 June 2024 85 12,284 (50) 39,865 52,184
Balance at 1 January 2023 83 11,785 (50) 2,981 14,799
Total comprehensive income for the period
Profit for the period - - - 7,310 7,310
Other comprehensive income - - - - -
- - - 7,310 7,310
Transactions with owners of the Company
Contributions and distributions
Equity-settled share based payments - - - 471 471
Deferred tax on share based payments - - - - -
Proceeds from share issues - 1 - - 1
Equity dividend paid in the period - - - (500) (500)
Total transactions with owners of the Company - 1 - (29) (28)
Balance at 30 June 2023 83 11,786 (50) 10,262 22,081
Condensed consolidated statement of cash flows
For the six months ended 30 June 2024
Notes 6 months ended 6 months ended 12 months ended
30 June 30 June 31 December
2024 2023 2023
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Cash flows from operating activities
Profit for the financial period 14,687 7,310 30,860
Adjustments for:
Depreciation of property, plant and equipment 10 320 167 400
Depreciation of right-of-use assets 11 334 228 408
Amortisation of intangible assets 9 408 339 680
Loss on disposal 1 - -
Loss on derivative contracts - 4,221 3,046
(Increase) / decrease in inventory (1,292) 48 (201)
(Increase) / decrease in trade and other receivables (1,926) 17,045 (27,848)
Transfer of cash collateral from / (to) previous commodity trading 49,822 (16,500) (49,820)
counterparty
Increase in trade and other payables 5,339 3,900 49,584
National insurance on share options exercised - - (108)
Finance income (2,177) (178) (1,722)
Interest received 2,177 - 1,278
Finance costs 349 36 105
Taxation charge 5,151 1,591 8,839
Corporation tax paid (6,641) - (627)
Share based payment charge 1,705 471 1,258
Net cash from operating activities 68,257 18,678 16,132
Cash flows from investing activities
Purchase of property, plant and equipment (2,113) (364) (1,372)
Payment of software development costs (1,012) (38) (130)
Net cash used in investing activities (3,125) (402) (1,502)
Cash flows from financing activities
New borrowings 2,250 - 356
Interest paid on borrowings (20) - (4)
Interest paid on lease obligations (63) - (81)
Other interest (paid) / received (225) 142 (20)
Repayment of principal element of borrowings (29) - (1)
Repayment of principal element of lease obligations (267) (268) (496)
Net proceeds from share option exercises 376 1 125
Cash paid on repurchase of shares (3,995) - -
Dividends paid (6,210) (500) (1,002)
Net cash used in financing activities (8,183) (625) (1,123)
Net increase in cash and cash equivalents 56,949 17,651 13,507
Cash and cash equivalents at the start of the period 32,477 18,970 18,970
Cash and cash equivalents at the end of the period 89,426 36,621 32,477
Notes to the condensed 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.
These condensed consolidated half yearly financial statements as at and for
the six months ended 30 June 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 SMEs and larger corporates in the UK.
Basis of preparation
The condensed consolidated interim financial information for the six months
ended 30 June 2024 has been prepared in accordance with UK-adopted
International Accounting Standards.
The unaudited condensed consolidated interim financial report for the six
months ended 30 June 2024 does not include all of the information required for
full annual financial statements and does not comprise statutory accounts
within the meaning of section 434 of the Companies Act 2006. This report
should therefore be read in conjunction with the Group annual report for the
year ended 31 December 2023, which is available on the Group's investor
website (yugroupplc.com). The comparative figures for the year ended 31
December 2023 have been audited. The comparative figures for the half year
ended 30 June 2023, and the actual figures for the half year to 30 June 2024,
are unaudited.
The accounting policies adopted in these condensed consolidated half yearly
financial statements are consistent with the policies applied in the 2023
Group financial statements.
The consolidated financial statements are presented in British pounds sterling
(£), which is the functional and 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 30 June 2024 the Group had net assets of £52.2m (30 June 2023: £22.1m and
31 December 2023: £46.8m) and cash of £89.4m (30 June 2023: £36.6m and 31
December 2023: £32.5m).
Management prepares detailed budgets and forecasts of financial performance
and cash flow (including capital commitments) over the coming 18 months as a
minimum. 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 deliver strong results. This has led to adjusted EBITDA
(a close 'cash' profitability measure) in H1 2024 of £20.4m (H1 2023: £13.7m
and FY 2023: £42.6m), which continues the very strong 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 are in line with management expectations including
strong gross margin as the Group leverages its differentiated offer and
analytics to optimise its commercial position. Bad debt has decreased and is
currently under control, and the Group's investment in Digital by Default is
set to enable more efficient cost to acquire and cost to serve, as well as
further returns over the short to medium term.
Group cash liquidity at the operational level has remained strong, with the
key outflow related to energy commodity arrangements as covered below. The
Group has introduced a specific debt facility related to certain specific
smart metering asset financing arrangements. This debt facility is expected to
be repaid from the investment in such smart meters and provides some cost of
capital benefit. Despite this debt introduction, the Group remains in a
significant net cash position.
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.
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 H1 2024
continues from the significant improvement in 2023 as a result of improvements
to processes, including new analysis, changes in contracting strategies,
increase in teams and the expansion of the Group's smart meter rollout to
improve customer outcomes.
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. This includes 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.
The Board also notes that the prices now being quoted to customers are back to
a more normalised level, broadly equivalent to tariffs charged prior to the
rapid increase in global commodity markets experienced in 2021 and 2022.
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 Energy Europe
Limited ("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. 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, Shell provides exclusive 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's main trading entities. In return,
Shell provides cost and value efficient market access without the need to post
cash collateral in the normal course of operation. The new arrangement with
Shell provides significant advantages to the Group's arrangements, fully
supporting the Group's ambitious growth plans.
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 this would
have on the ability to maintain compliance with covenants.
After a detailed review, the Board has concluded that there are no liquidity
issues likely to arise in relation to the hedging arrangements and current
market context.
Summary
Following 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. Control is achieved when the Group is exposed, or has
rights, to variable returns from its involvement with the investee and can
affect those returns through its power over the investee. Specifically, the
Group controls an investee if, and only if, the Group has all of the
following: power over the investee (i.e. existing rights that give it the
current ability to direct the relevant activities of the investee); exposure,
or rights, to variable returns from its involvement with the investee; and the
ability to use its power over the investee to affect its returns. When
necessary, adjustments are made to the financial statements of subsidiaries to
bring their accounting policies into line with the Group's accounting
policies. 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.
Use of estimates and judgements
The preparation of the financial statements in conformity with adopted IFRSs
requires the use of estimates and judgements. Although these estimates are
based on management's best knowledge, actual results ultimately may differ
from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimates are revised and in any future periods affected. The key areas of
estimation and judgement remain as detailed in the Group's 2023 annual report.
Revenue recognition
The Group enters into contracts to supply gas, electricity and water to its
customers. 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 balance
sheet date, replacing EBRS.
Under the EBRS and EBDS arrangement, amounts receivable from BEIS do not
impact the Group's contract with customers, and 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.
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 impairment 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 fully secured and locked (for day to day access) 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, 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. Most commodity purchase
contracts 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 on its balance sheet at the period 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 18.
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.
Goodwill arising on business combination is accounted for in line with the
business combination disclosure.
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.
Property, plant and equipment
Items of property, plant and equipment are measured at cost less accumulated
depreciation and accumulated impairment losses.
Plant and machinery includes the Group's investment in smart metering assets,
which are recognised at cost, including those internal employee and other
costs attributable to the installation and commissioning of the asset to bring
it into use.
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 to 15 years
• Computer equipment
- 3 years
• Fixtures and fittings
- 3 years
Business combinations
The acquisition method of accounting is used to account for business
combinations regardless of whether equity instruments or other assets are
acquired. The Group's policy in relation to business combinations is as
disclosed in the Group's 2023 annual report.
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
trinomial 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.
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
assets or liabilities that affect neither accounting nor taxable profit other
than in a business combination; and differences relating to investments in
subsidiaries to the extent that they will probably 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
future taxable profits will be available against which the temporary
difference can be utilised.
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.
However, following the development of the Yü Smart activity and the ambition
to increase activities in the financing of smart meters, the Group introduced
new operational segments in 2023.
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 provide the underlying cash-like profitability of
the segment (and as reconciled to operating profit in note 5).
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. The 30 June 2023 segmental
analysis is not provided as a result of the introduction in the 2023 annual
report, though analysis is available at 30 June 2024 and 31 December 2023.
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 which had
no significant effect on the Group's results.
Any new or amended accounting standards or interpretations that are not yet
mandatory have not been early adopted. All amendments or standards are not
expected to have a material impact on the entity in the current or future
reporting periods, or on foreseeable future transactions.
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 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.
30 June 2024 Retail Smart Metering Intra-segment trading Group Total
£'000 £'000 assets £'000 £'000 £'000
£'000
Revenue 312,545 5,908 192 (5,967) - 312,678
Cost of sales (268,329) (4,032) - 2,562 - (269,799)
Gross profit 44,216 1,876 192 (3,405) - 42,879
Operating costs, before non-recurring items, share based payments and (12,844) (1,368) (20) - (162) (14,394)
depreciation
Non-recurring items (1,359) - - - - (1,359)
Share based payments (1,705) - - - - (1,705)
Depreciation (674) (273) (80) - (35) (1,062)
Net impairment losses on financial and contract assets (6,349) - - - - (6,349)
Operating profit 21,285 235 92 (3,405) (197) 18,010
Adjusted EBITDA 23,318 508 172 (3,405) (162) 20,431
Non-current assets 18,478 1,920 3,446 (2,744) 1,592 22,692
Additions of non-current assets 1,359 1,394 1,766 - - 4,519
Goodwill - 216 - - - 216
Trade and other receivables 85,553 2,115 253 (3,947) 583 84,557
31 December 2023 Retail Smart Metering Intra-segment trading Group Total
£'000 £'000 assets £'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 82,000 2,502 76 (1,536) - 83,042
Operating costs, before share based payments and depreciation (22,317) (2,027) (68) - (447) (24,859)
Share based payments (1,258) - - - - (1,258)
Depreciation (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 40,042 146 (13) (1,536) (557) 38,082
Adjusted EBITDA 44,116 475 8 (1,536) (447) 42,616
Non-current assets 9,814 804 1,018 (327) (4,741) 16,050
Additions of non-current assets 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 all reporting periods, 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. Operating profit
Notes 30 June 30 June 31 December
2024 2023 2023
£'000 £'000 £'000
Profit for the period has been arrived at after charging:
Staff costs 10,187 6,757 15,564
Depreciation of property, plant and equipment 10 320 167 400
Depreciation of right-of-use assets 11 334 228 408
Amortisation of intangible assets 9 408 339 680
4. Finance income and finance costs
30 June 30 June 31 December
2024 2023 2023
£'000 £'000 £'000
Bank interest receivable 2,112 92 783
Other interest receivable 65 86 939
Total finance income 2,177 178 1,722
Bank interest and other finance charges payable (225) - (20)
Interest on borrowings (61) - (4)
Interest on lease liabilities (63) (36) (81)
Total finance costs (349) (36) (105)
Net finance income 1,828 142 1,617
5. Reconciliation to adjusted EBITDA
A key alternative performance measure used by the directors to assess the
underlying performance of the business is adjusted EBITDA.
Notes 30 June 30 June 31 December
2024 2023 2023
£'000 £'000 £'000
Adjusted EBITDA reconciliation
Operating profit 18,010 8,759 38,082
Add back:
Non-recurring operational costs 1,359 - -
Loss on derivative contracts 17 - 4,221 3,046
Depreciation of property, plant and equipment 10 320 167 400
Depreciation of right-of-use assets 11 334 228 408
Amortisation of intangibles 9 408 339 680
Adjusted EBITDA 20,431 13,714 42,616
The directors consider adjusted EBITDA to be a more accurate representation of
underlying business performance (linked to cash from recurring and normalised
profitability) and therefore utilise it as the primary profit measure in
setting targets and managing financial performance.
The loss on derivative contracts of £3,046,000 for the year ended 31 December
2023 and £4,221,000 for the six months to 30 June 2023 arises on the movement
in the financial derivative asset or liability recognised in the period, as
referenced in note 17. The Board exclude such gain or loss from adjusted
EBITDA as it is unrealised, and as it is considered in the contract pricing
strategy and energy balancing operations of the Group. All forward commodity
contracts at 31 December 2023 and 30 June 2024 are for the Group's "own use"
(under IFRS 9) to meet expected customer demand in the normal course of
business, and therefore there was no gain or loss in respect of the six months
to 30 June 2024.
The non-recurring operational costs relate to fees incurred in the early
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 in February
2024, providing significant strategic benefits to the Group. Given the
non-recurring nature of these exit costs they have been excluded from adjusted
EBITDA.
6. 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
and excluding treasury shares.
30 June 30 June 31 December
2024 2023 2023
£'000 £'000 £'000
Profit for the year attributable to ordinary shareholders 14,687 7,310 30,860
30 June 30 June 31 December
2024 2023 2023
Weighted average number of ordinary shares
At the start of the period 16,741,195 16,649,618 16,649,618
Effect of shares issued in the period 50,353 12,938 36,607
Effect of purchase of treasury shares (39,163) - -
Number of ordinary shares for basic earnings per share calculation 16,752,385 16,662,556 16,686,225
Dilutive effect of outstanding share options 1,157,837 1,615,188 1,533,324
Number of ordinary shares for diluted earnings per share calculation 17,910,222 18,277,744 18,219,549
30 June 30 June 31 December
2024 2023 2023
Basic earnings per share £0.88 £0.44 £1.85
Diluted earnings per share £0.82 £0.40 £1.69
Adjusted earnings per share
Adjusted earnings per share is based on the after tax result attributable to
ordinary shareholders before non-recurring items and unrealised gains or
losses on derivative contracts and the weighted average number of ordinary
shares outstanding:
Notes 30 June 30 June 31 December
2024 2023 2023
£'000 £'000 £'000
Adjusted earnings per share
Profit for the year attributable to ordinary shareholders 14,687 7,310 30,860
Add back:
Non-recurring operational costs (gross cost, before tax, of £1,359,000) 5 1,040 - -
Loss on derivative contracts after tax - 3,292 2,330
Adjusted basic profit for the period 15,727 10,602 33,190
Adjusted earnings per share £0.94 £0.64 £1.99
Diluted adjusted earnings per share £0.88 £0.58 £1.82
7. Taxation
The tax charge for the period has been estimated using a rate of 19% for the
period to 31 March 2023 and 25% for the period after, considering certain
allowances and adjustments in calculating the Group's taxable profits.
Deferred taxes at 30 June 2024, 30 June 2023 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 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.
8. Dividends
The Group paid an interim dividend of 3p per share in 2023.
The directors proposed a final dividend in relation to 2023 of 37p per share
which was paid in the period to 30 June 2024.
The directors propose an interim dividend for the period to 30 June 2024 of
19p per share (2023: nil per share). The interim dividend is payable 20
December 2024.
9. Intangible assets
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 - - - 1,012 1,012
At 30 June 2024 62 216 686 4,431 5,395
Amortisation
At 1 January 2024 18 - 686 1,118 1,822
Charge for the period 1 - - 407 408
At 30 June 2024 19 - 686 1,525 2,230
Net book value at 30 June 2024 43 216 - 2,906 3,165
Cost
At 1 January 2023 62 216 686 3,289 4,253
Additions - - - 38 38
At 30 June 2023 62 216 686 3,327 4,291
Amortisation
At 1 January 2023 16 - 686 440 1,142
Charge for the period 1 - - 338 339
At 30 June 2023 17 - 686 778 1,481
Net book value at 30 June 2023 45 216 - 2,549 2,810
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.
10. Property, plant and equipment
Freehold land Freehold property Fixtures and Plant and Computer Total
£'000 £'000 fittings machinery equipment £'000
£'000 £'000 £'000
Cost
At 1 January 2024 150 3,274 738 869 670 5,701
Additions - - 223 1,766 124 2,113
Disposals - - - (1) - (1)
At 30 June 2024 150 3,274 961 2,634 794 7,813
Depreciation
At 1 January 2024 - 291 355 24 418 1,088
Charge for the period - 54 124 61 81 320
At 30 June 2024 - 345 479 85 499 1,408
Net book value at 30 June 2024 150 2,929 482 2,549 295 6,405
Cost
At 1 January 2023 150 3,274 342 73 490 4,329
Additions - - 94 227 43 364
At 30 June 2023 150 3,274 436 300 533 4,693
Depreciation
At 1 January 2023 - 182 205 - 301 688
Charge for the period - 55 51 7 54 167
At 30 June 2023 - 237 256 7 355 855
Net book value at 30 June 2023 150 3,037 180 293 178 3,838
The majority of plant and machinery additions relate to investment in smart
metering assets, which have an economic life of 15 years.
11. Right-of-use assets and lease liabilities
Buildings Motor Vehicles
£'000 £'000 Total
£'000
Cost
At 1 January 2024 1,966 804 2,770
Additions - 1,394 1,394
Disposals (65) - (65)
At 30 June 2024 1,901 2,198 4,099
Depreciation
At 1 January 2024 835 259 1,094
Charge for the period 83 251 334
Disposals (65) - (65)
At 30 June 2024 853 510 1,363
Net book value at 30 June 2024 1,048 1,688 2,736
Cost
At 1 January 2023 799 - 799
Additions 1,033 615 1,648
At 30 June 2023 1,832 615 2,447
Depreciation
At 1 January 2023 686 - 686
Charge for the period 76 152 228
At 30 June 2023 762 152 914
Net book value at 30 June 2023 1,070 463 1,533
The Group has a lease arrangement for its main office facilities in Nottingham
which was extended in the year 31 December 2023 (on an arm's length basis with
a related party as disclosed in note 22), and a number of motor vehicle lease
arrangements for engineering installation activities.
Other leases are short term or of low value underlying assets.
12. Inventory
30 June 30 June 31 December
2024 2023 2023
£'000 £'000 £'000
Stocks of goods for resale 1,838 297 546
1,838 297 546
Inventory relates to smart meters purchased which are expected to be installed
on customer sites as part of the Group's objective of installing and financing
new smart meters.
13. Trade and other receivables
30 June 30 June 31 December
2024 2023 2023
£'000 £'000 £'000
Current
Gross trade receivables 48,829 34,049 39,435
Provision for doubtful debts and expected credit loss (31,736) (23,329) (27,651)
Net trade receivables 17,093 10,720 11,784
Accrued income - net of provision 41,839 17,410 52,325
Prepayments and pre-contract costs 10,892 5,190 6,244
Cash collateral deposited for commodity hedging - 16,500 49,822
Other receivables 5,624 3,974 7,047
75,448 53,794 127,222
Non-current
Prepayments and pre-contract costs 9,109 - 5,231
9,109 - 5,231
Movements in the provision for doubtful debts and expected credit loss in
gross trade receivables are as follows:
30 June 30 June 31 December
2024 2023 2023
£'000 £'000 £'000
Opening balance 27,651 19,499 19,499
Provisions recognised less unused amounts reversed 7,103 7,864 14,824
Provision utilised in the year (3,018) (4,034) (6,672)
Closing balance - provision for doubtful debts and expected credit loss 31,736 23,329 27,651
The directors have assessed the level of provision at 30 June 2024 by
reference to the recoverability of customer receivable balances post the
period end, and believe the provision carried is appropriate and cautious in
view of the context of the wider energy market and economy. The provision for
expected credit loss on accrued income is £956,000 (30 June 2023: £2,051,000
and 31 December 2023: £1,710,000).
The total net impairment losses on financial and contract assets of
£6,349,000 (H1 2023: £8,085,000 and FY 2023: £14,309,000) consists of
£7,710,000 (H1 2023: £7,864,000 and FY 2023: £14,824,000) on trade
receivables, a £754,000 credit (H1 2023: £221,000 charge and FY 2023:
£120,000 credit) on accrued income plus £607,000 credit (H1 2023: £nil and
FY 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.
As at 31 December 2023, the Group balance of £49,822,000 of cash collateral
was deposited with the Group's previous trading commodity partner to cover
credit exposure of that counterparty on the forward hedges entered into by the
Group (30 June 2023: £16,500,000). As at 30 June 2024 this collateral has
been fully recovered as part of arrangements to secure new trading
arrangements with Shell.
Included within other receivables is a balance of £613,000 (30 June 2023:
£500,000 and 31 December 2023: £522,000) which relates to a bank cash
deposit. This cash deposit does not fulfil the criteria of being classified as
cash and cash equivalents in view of the balance being secured and locked for
operational activities of the Group. Group other receivables also includes
immaterial amounts due from BEIS related energy relief schemes.
Analysis of trade receivables and accrued income
Included within accrued income and trade receivables are the following gross
and expected credit loss provisions, allocated between active customer
accounts, which represent customers that remain on supply at the balance sheet
date, and those customers which have left the supply ("Terminated") of the
Group. Different provision rates are allocated to active and Terminated
customer balances, and based on the age of the debt, based on an assessment of
expected credit loss for each such category. The gross amount of trade
receivables is stated inclusive of VAT and CCL of approximately 19% which, on
the write-off of debt, would typically be recoverable and is therefore not
provided for.
As at 30 June 2024 Active Active Terminated Terminated Total Total
Gross carrying amount Loss Gross carrying amount Loss Gross carrying amount Loss
£'000 Allowance £'000 Allowance £'000 Allowance Net
£'000s £'000s £'000s £'000
Accrued income
Not overdue 42,795 (956) - - 42,795 (956) 41,839
Total accrued income 42,795 (956) - - 42,795 (956) 41,839
Trade receivables
Not overdue 4,229 (85) 2,761 (135) 6,991 (220) 6,771
Overdue less than 90 days 5,454 (1,766) 3,632 (2,409) 9,086 (4,175) 4,911
Overdue more than 90 days 7,800 (6,516) 24,952 (20,825) 32,752 (27,341) 5,411
Total trade receivables 17,484 (8,367) 31,345 (23,369) 48,829 (31,736) 17,093
Historical comparative amounts at 30 June 2023 were not disclosed.
14. Cash and cash equivalents
30 June 30 June 31 December
2024 2023 2023
£'000 £'000 £'000
Cash at bank and in hand 89,426 36,621 32,477
As disclosed in note 13, the cash and cash equivalents amount excludes
£613,000 (30 June 2023: £500,000 and 31 December 2023: £522,000) of cash
which is included in other receivables.
15. Trade and other payables
30 June 30 June 31 December
2024 2023 2023
£'000 £'000 £'000
Current
Trade payables 10,531 2,448 6,492
Accrued expenses 79,759 50,777 88,737
Lease liabilities 845 327 354
Tax and social security 12,858 8,023 15,347
Other payables 13,328 11,495 12,915
117,321 73,070 123,845
Non-current
Accrued expenses 13,538 5,063 -
Lease liabilities 1,912 1,213 1,281
15,450 6,276 1,281
Lease liabilities
The incremental borrowing rate determined for leases is 6%.
The contractual maturities (representing undiscounted contractual cash flows)
of the lease liabilities are as follows:
30 June 30 June 31 December
2024 2023 2023
£'000 £'000 £'000
Current
Expiring in less than one year 986 397 450
Expiring between two to five years 1,629 841 954
Expiring after more than five years 525 665 595
3,140 1,903 1,999
The remaining trade and other payables have undiscounted contractual cash
flows equal to their fair value and are payable within a year.
16. Borrowings
30 June 30 June 31 December
2024 2023 2023
£'000 £'000 £'000
Current
Bank loan 102 - 3
Non-current
Bank loan 2,515 - 352
Borrowings relate to the Group's investment in smart meters which return an
index-linked, recurring annuity over a 15+ year term. The amount outstanding
relates to 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 bank 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 as follows:
30 June 30 June 31 December
2024 2023 2023
£'000 £'000 £'000
Current
Expiring in less than one year 337 - 67
Expiring between two to five years 1,365 - 268
Expiring after more than five years 2,268 - 530
3,970 - 865
17. Financial derivative liability
30 June 30 June 31 December
2024 2023 2023
£'000 £'000 £'000
Current
Financial derivative liability - (1,049) -
Non-current
Financial derivative liability - (126) -
There is no financial derivative asset or liability as 30 June 2024 and 31
December 2023 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. At 30 June 2023, the
£1,175,000 financial derivative liability reflected the fair value of a small
proportion of the Group's forward commodity trades which were not judged to
meet the strict "own use" criteria under IFRS 9.
18. 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.
Derivative instruments, related to the Group's hedging of forward gas and
electricity demand, are level 1 financial instruments and are measured at fair
value through the statement of profit or loss where they are not treated as
"own use" under IFRS 9. Such fair value is 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 and market price volatility, and counterparty credit risk);
b) customer credit risk; and
c) liquidity risk.
(a) Commodity trading 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 30 June 2024 and 31 December 2023.
As far as practical, in accordance with the risk mandate, the Group attempts
to match new sales orders (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 has
increased the potential gain or loss for an over or under-hedged portfolio,
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. In view of the lower energy commodity
markets experienced at the end of 2023 and 2024, this credit risk is not held
at 30 June 2024 and 31 December 2023. However, any such credit exposure would
predominantly arise with the Group's main trading counterparty, being Shell
from February 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.
(b) Customer 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
(in addition to trading counterparties as noted in section (a) above).
These operational exposures are monitored and managed at Group level. 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 also 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 30 June 2024
and 31 December 2023 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 30 June 2024 the Group held a provision against doubtful debts and expected
credit loss of £32,692,000 (30 June 2023: £25,381,000 and 31 December 2023:
£29,361,000). This is a combined provision against both trade receivables at
£31,736,000 (30 June 2023: £23,329,000 and 31 December 2023: £27,651,000)
and accrued income at £956,000 (30 June 2023: £2,052,000 and 31 December
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 exposure assessed by directors is less than 3% of the
gross balance. If this exposure was +/-1% of that assessed, the gain or loss
arising recognised in the income statement and impacting net assets would be
+/-£488,000.
If the expected customer credit loss rate on accrued income was +/-1%, the
gain or loss arising would be +/-£428,000.
(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 Agreements.
Any excess cash balances are held in short-term deposit accounts which are
either interest or non-interest accounts. At 31 December 2024 the Group had
£89,426,000 (30 June 2023: £36,621,000 and 31 December 2023: £32,477,000)
of cash and bank balances (as per note 13).
19. Share capital and reserves
Share capital 30 June 30 June 31 December 31 December
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 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 Group movement in 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 period relates to the exercise of
share options at an exercise prices of between £0.005 and £10.38.
The share premium account represents amounts received on the issue of new
shares in excess of their nominal value, net of any direct costs of any shares
issued. The share premium movement in the period relates to the excess, where
appropriate, of the price at which options were exercised during the year over
the £0.005 nominal value of those shares.
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.
On 22 May 2024 the Company, utilising its existing authority to repurchase its
ordinary shares, purchased 234,978 Ordinary Shares at the market price at that
time of £17 per 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.
Other equity 30 June 30 June 31 December 31 December
2024 2024 2023 2023
Number £'000 Number £'000
Treasury shares (234,978) (3,995) - -
Merger reserve
The merger reserve was created as part of the 2016 Group reorganisation prior
to listing.
Retained earnings
Retained earnings comprises the Group's cumulative annual profits and losses.
20. Share based payments
The Group operates a number of share option plans for qualifying employees.
Options in the plans are settled in equity in the Company. In addition, the
Group operates a Shadow Share Scheme for qualifying employees, which is
settled in cash based on certain performance conditions.
The terms and conditions of the outstanding grants made under the Group's
share options schemes are as follows:
Exercisable between
Date of grant Expected Commencement Lapse Exercise Vesting Amount Amount
term price schedule outstanding at outstanding at
30 June 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 3 76,617 172,388
13 May 2022 2 30 April 2024 4 October 2030 £0.005 3 - 25,539
1 December 2022 3 1 January 2026 1 July 2026 £2.28 4 154,169 156,536
19 December 2022 3.3 31 March 2026 31 March 2033 £0.005 5 662,000 762,000
17 May 2024 2 31 March 2026 31 March 2033 £0.005 6 30,000 -
1,182,837 1,533,324
Weighted average remaining contractual life of options outstanding 6.7 years 7.1 years
The following vesting schedules apply:
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. The level of vesting is dependent on a performance condition, being
the Group's share price at a pre-determined date.
4. 100% of options vest on the third anniversary of the Save As You Earn
("SAYE") savings contract start date.
5. The level of vesting is dependent on a performance condition, being
the Group's EBITDA over a qualifying period.
6. The level of vesting is dependent on a performance condition, being
the number of meters owned at the end of a qualifying period.
The number and weighted average exercise price of share options were as
follows:
30 June 2024 31 December 2023
shares shares
Balance at the start of the period 1,533,324 1,722,632
Granted 30,000 -
Forfeited (102,367) (97,731)
Lapsed - -
Exercised (278,120) (91,577)
Balance at the end of the period 1,182,837 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 - -
Options forfeited in the period £0.058 £0.534
Options exercised in the period £1.353 £1.354
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. There were no options granted in 2023. The
following fair value assumptions were assumed in the year:
30 June 2024 31 December 2023
Dividend yield 2.4% -
Risk-free rate 4.31% -
Share price volatility 417% -
Expected life (years) 2 years -
Weighted average fair value of options granted during the period £0.005 -
The share price volatility assumption is based on the actual historical share
price of the Group since IPO in March 2016.
The total expenses recognised for the year arising from share based payments
are as follows:
30 June 31 December
2024 2023
£'000 £'000
Equity-settled share based payment expense 528 1,150
Cash-settled share based payment expense 607 -
National Insurance costs related to exercise of share options 570 108
Total share based payment charge 1,705 1,258
Cash-settled share based payment expense in the period to 30 June 2024 relates
to a shadow share scheme issued in the period.
National Insurance costs relate to Employer's National Insurance payable on
the exercise of unapproved (for tax purposes) share options.
21. Commitments
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 30 June 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 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 Yü
Group PLC.
As part of the Group's activities in financing smart meters, a Group entity
has provided security over such 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 13, included in other receivables of the Company and 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 30 June 2024 (2023: £nil).
22. Related parties and related party transactions
The Group has transacted with CPK Investments Limited (an entity owned by
Bobby Kalar). CPK Investments Limited owns one of the properties from which
the Group operates via a lease to Yü Energy Retail Limited. During the six
months to 30 June 2024 the Group paid £35,000 in lease rental and service
charges to CPK Investments Limited (30 June 2023: £65,000 and 31 December
2023: £135,000). There was no amount owing to or from CPK Investments Limited
at 30 June 2024 (30 June 2023: £nil and 31 December 2023: £35,000).
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
remain on an arms-length basis).
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 30 June 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.
23. Net cash / (net debt) reconciliation
The net cash / (net debt) and movement in the period were as follows:
30 June 30 June 31 December
2024 2023 2023
£'000 £'000 £'000
Cash and cash equivalents 89,426 36,621 32,477
Borrowings (2,617) - (355)
Net cash 86,809 36,621 32,122
The movements in net cash/ (net debt) and lease liabilities were as follows:
Cash Borrowings Sub-total Leases Total
£'000 £'000 Net Cash £'000 £'000
£'000
Balance as at 1 January 2024 32,477 (355) (32,122) (1,635) 30,487
Cash flows:
Movement in cash and cash equivalents 56,949 - 56,949 - 56,949
Drawdown of new borrowings - (2,250) (2,250) - (2,250)
Interest - (61) (61) (63) (124)
Repayment - 49 49 330 379
Recognition of leases acquired on right-of-use assets - - - (1,394) (1,394)
Modification of lease liabilities - - - 5 5
Balance as at 30 June 2024 89,426 (2,617) 86,809 (2,757) 84,052
Cash Borrowings Sub-total Leases Total
£'000 £'000 Net Cash £'000 £'000
£'000
Balance as at 1 January 2023 18,970 - 18,970 (160) 18,810
Cash flows:
Movement in cash and cash equivalents 17,651 - 17,651 - 17,651
Interest - - - (36) (36)
Repayment - - - 268 268
Recognition of leases acquired on right-of-use assets - - - (1,648) (1,648)
Modification of lease liabilities - - - 36 36
Balance as at 30 June 2023 36,621 - 36,621 (1,540) 35,081
24. Post-balance sheet events
On 3 July 2024, the Company's capital reduction was approved and certified
under section 649 of the Companies Act 2006, with the Company's then share
premium account balance reduced to nil. The share premium account of
£12,283,683 was credited to distributable reserves.
There are no other significant post-balance sheet events.
1 Cornwall Insight 'Market Share Survey' reports 30 April 2024 for the gas
and electricity segments.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR PPUQUBUPCPGWRecent news on Yu
See all newsREG - Yu Group PLC - Result of AGM and Confirmation of Dividend
AnnouncementREG - Yu Group PLC - Annual Report and Accounts and Notice of AGM
AnnouncementREG - Yu Group PLC - TR-1: Notification of Major Holdings
AnnouncementREG - Yu Group PLC - Grant of Share Options
AnnouncementREG - Yu Group PLC - Final Results
Announcement