Yu Group PLC – Final Results

Yu Group PLC – Final Results

Yü Group PLC (AIM; YU.), the independent supplier of gas, electricity and water to the UK business sector, announces its final results for the year to 31 December 2019.

Financial Review:

31 December

2019

2018

£’000

£’000

Revenue

111,613

80,635

Adjusted EBITDA

(4,242)

(6,283)

Loss for the year

(4,968)

(6,267)

Operating cash outflow

(11,280)

(1,320)

Cash

2,377

14,612

Overdue customer receivables

7 days

9 days

Loss per share:

Adjusted

(24.0)p

(37.0)p

Statutory

(31.0)p

(42.0)p

Dividend per share

0p

1.2p

·      Revenue increased by 38 per cent. to £111.6m (2018: £80.6m). Statutory loss of £5.0m for FY 2019, an improvement of 20.7 per cent. on FY 2018 (£6.3m loss)

·      Gross margin improvement, with 4.9 per cent. for FY 2019 (2018 restated¹: 4 per cent.), and 6.7 per cent. for H2 2019 (2.1 per cent. for H2 2018)

·      Adjusted EBITDA² loss of £4.2m (2018 loss: £6.3m), above market expectations. H2 2019 losses less than 60 per cent. of H1 2019 loss as legacy, low margin contracts continue to expire

·      Overdue customer receivables of seven days at 31 December 2019, an improvement from nine days at 31 December 2018³

·      Net cash of £1.8m (net of lease liability under IFRS 16⁴) at 31 December 2019 (2018: £14.6m). Cash collateral of £10.4m, prior to the impact of the new £13.0m credit facility to support the Group’s hedging activities

·      Contracted revenue for 2020, as at 31 December 2019, of £79.5m (£88m at 31 December 2018 contracted for 2019) based on estimated usage of customers (prior to any impact from Covid-19)

o  Legacy, low margin contracts account for £35m of contracted revenue for FY 2020, and less than £5m for FY 2021

·      Financial impact from Covid-19, including available support from the Government, is evolving and is deemed to represent a material risk for the Group. Available cash at 31 March 2020 of £10.9m, with a further £6.1m in collateral deposits

Operational Review:

·      Business continuity plan deployed in reaction to Covid-19. Proactive monitoring and forward analysis of business and financial risks together with rolling mitigation programmes have been undertaken and are being implemented

·      Reshaping of the Board finalised and senior management team strengthened in key areas

·      Business fully reset with stronger governance, internal control and management. Further investment in systems and technology to automate key processes 

·      Reducing impact expected from legacy, low margin contracts in FY 2020. New contracts secured at higher margin

·      Sales bookings achieving higher gross margins and increasing in H2 2019. Significant market opportunity remains

·      Trustpilot score of 4.5 stars (2018: 3.5 stars), a leader in the B2B energy supply market

·      Commercial arrangements finalised for new Leicester office due to open in 2021 to support the Group’s growth ambition

Bobby Kalar, Group Chief Executive Officer, said:

“One of the main objectives of the year under review was to strengthen our internal processes so that scaling would not create further pressure points on the business as we have witnessed in the past. We have been working on transforming the customer journey from ‘prospect’ through to ‘cash’ and I’m pleased with the positive results so far.

Significant milestones have been achieved and we are now well placed to deliver profitable growth.   Improvements made during the year included adopting more disciplined processes and cost controls, and focusing on enhancing gross margin, and as a result the Group has exceeded market forecasts for revenues and adjusted EBITDA for 2019.

Whilst there has been, to date, a manageable financial and operational impact of Covid-19, the Board continues to assess the rapidly evolving situation which adds a level of uncertainty as we start the new year. Looking forward, we expect revenue, bad debt, operating cashflow to be impacted, as well as temporary reduced sales growth. However, the Group is in a more robust position than previously, with significantly improving margins on the contracts we have booked. The Group has available cash of £10.9m at 31 March 2020, with an additional £6.1m in cash collateral deposits with trading counterparties expected to be available in Q2 2020.

The health and welfare of our employees is paramount and I’m pleased we have been able to successfully transition all of our workforce to working remotely with negligible impact to the running of the business. As is the case with many UK businesses at this time, we have been focusing on cost savings as well as utilising the assistance offered by HMRC.

The fundamental market opportunity remains significant, with the Group at present only servicing 0.2 per cent. of the B2B market. The Group is now in a position, once the economic context recovers, to drive sustainable, profitable growth, with a fresh, new approach to businesses’ utility needs. As such, we continue to be confident in the medium and long term market opportunities, and look forward to getting back to disrupting the energy market through significant and profitable growth. I would like to thank all of our employees for their consistent hard work and I look forward to updating the market again in due course.” 

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