REG - Yu Group PLC - Trading Update

YuAnnouncement

24/01/2023 07:00

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RNS Number : 6034N  Yu Group PLC  24 January 2023

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

 

24 January 2023

Yü Group PLC

("Yü Group" or the "Group")

 

Trading Update

 

Continued strong momentum

 

Record-breaking financial performance achieved in FY22 that surpasses market
expectations

 

 

"I'm thrilled to report a fantastic, record-breaking performance for FY22.
While the Board modelled a strong outcome for FY22 we may have underestimated
the accelerated contribution our strengthened business would have on the
Group's FY financial metrics. Record breaking organic revenues, profitability
and forward contracted revenues have all exceeded management expectations. We
are now in the fast lane of growth and expect to exceed current guidance that
had already been upgraded in March, July, September and November 2022.

 

Our balance sheet is very strong, with excellent cash conversion and I'm very
pleased to report a fourth consecutive year of EBITDA improvement. Cash has
also far exceeded management expectations, more than doubling from FY21. Net
customer contribution (being gross margin less bad debt) is being managed as
we grow. Adjusted EBITDA margin has also dwarfed the 2.1% achieved in H122
(FY21: 1.1%) and as such we have clear visibility of our stated £500m revenue
at 4%+ target.

 

As a consequence of our strong cash generation, management intends to make a
modest shareholder distribution in respect of the financial performance
achieved in FY22, details of which will be announced alongside publication of
the Company's audited results for FY22. In considering the level of dividend
management will ensure it does not constrain or hinder our growth ambitions or
abilities to take advantage of corporate and other growth opportunities as
they arise.

 

The impact of our "digital by default" transformation has exceeded management
expectations in terms of its contribution to margin and efficiency. Our single
platform seamless onboarding has created operational leverage alongside
opening up additional profitable sales streams. The full impact will become
materially beneficial in 2023 and beyond.

 

I'm pleased to welcome the Yü Smart team to our family, after completing the
purchase from Magnum Utilities in May 2022 using cash from our balance sheet.
The management have worked hard to achieve, from a standing start, full
industry accreditation and the necessary licences to install and maintain
metering infrastructure. Yü Smart installed its first SMETs meter in August
2022 and by year end was achieving hundreds of installs a month. As Yü Smart
gains national coverage and full operational scale in 2023 it will complement
our retail business in contributing significant Group profitability.

 

As always delivering such positive results takes a huge team effort and I
would like to thank all of my team for trusting the Board and believing
management's vision. The hard yards continue to bear fruit."

 

 

 

Financial & Operational Highlights

 

·    Very strong operating cash performance with net cash of £18.8m as at
31 December 2022, an increase of £12.0m in the year (FY21: £6.8m).

 

·    Extremely strong organic growth with full year revenue to exceed
£275m (FY21: £155m) an increase of over 76% on FY21.

·    Adjusted EBITDA margin for the year expected to be significantly
ahead of current market expectations.

 

·    Record breaking annualised contracts signed up in year has delivered
average monthly bookings of £24.5m (FY21: £13.8m), an increase of 78% in the
year. Particularly strong performance in Q4 2022 with average monthly bookings
of £48.6m.

·    Commercially leveraging a reduction in meter points in favour of
better value, better credit higher consumption meters has seen profitable
volume growth.

·    Continued strong customer service performance, delivered through an
improved digital customer journey.

·    Hedging strategy has continued to protect the Group from energy
market volatility.

·    Government's Energy Bill Relief Scheme providing significant support
to customers over Winter. Recent softening of forward commodity markets
provides some relief for customers, enabling the Group to lock in new
contracts, improving visibility for FY23 and beyond.

·    National coverage of our smart metering installation services, Yϋ
Smart, now fully operational and expected to scale profitably in 2023.

 

Outlook

 

·    High organic growth expected to continue in to FY23 and over the
medium term.

o  Very strong forward revenue visibility, exiting 2022 with £246.8m of
contracted revenue for FY23, up 57% on prior year (FY21: £156.5m for FY22).

o  Further revenue expected as the company continues to sell contracts that
will commence during FY23:

§ Management target annualised monthly bookings to continue the positive
momentum from FY22

§ Variable and out of contract revenue customers expected to provide further
revenue enhancement

 

·    Continued improvement expected in EBITDA profitability for FY23 and
beyond, as benefits are realised from our investments in Yϋ Smart and digital
by default.

 

·    The Board will, on release of the Company's FY22 results, provide
further guidance on the Company's ongoing capital allocation policy given the
Company's strong cash generation and growth prospects.

o  The Board currently intend to declare a modest dividend with the view to
adopting a progressive dividend policy thereafter, whilst ensuring the
Company's growth prospects are not constrained.

o  The Group is currently debt free but will examine the use of leverage to
support the growth of our meter asset business which will serve as an annuity
revenue stream.

 

 Yü Group PLC                              +44 (0) 115 975 8258

Bobby Kalar

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

 Edward Mansfield

 William Hall

 Cara Murphy

 Tulchan Group                             +44 (0) 20 7353 4200

Giles Kernick

                                          
 Olivia Peters

 

Notes to Editors

Information on the Group

Yü Group PLC, trading as Yü Energy, 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 and
value for all of our stakeholders built on strong foundations and with a
robust hedging policy. In 2022 the Group launched Yü Smart to support growth
through new opportunities in smart metering and EV charge installation. With a
significant opportunity in a £50bn addressable market Yü Group continues to
deliver on the medium-term goal of £500m of revenues with an adjusted EBITDA
margin in excess of 4%.

 

 

 

 

 

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