Yu Group PLC Trading Statement and Accounting Review (9669E)
24 October 2018 - 5:00PM
UK Regulatory
TIDMYU.
RNS Number : 9669E
Yu Group PLC
24 October 2018
Yü Group PLC
(the "Group" or "Company")
Trading Statement and Accounting Review
Yü Group PLC, the independent supplier of gas and electricity to
the UK corporate sector, announces that after an internal review of
the performance of the Group, the Board have identified several
areas of significant concern relating to the:
-- Recognition of historic accrued income;
-- Impairment of Trade Debtors; and
-- Gross margins being achieved against prior expectations.
The Board estimates the combined adjustments will lead to around
a GBP10 million reduction in profitability when compared with
current market expectations, with the Company reporting a loss for
the current financial year.
The Group has significant cash reserves (GBP11.5 million at 30
September 2018) and has no debt outstanding.
Accrued Income
In line with normal market practices, the Group routinely
invoices revenue in the first working days following the month for
which the consumption of energy relates, and accrues such revenue
in the balance sheet within the Accounts Receivable balance.
The Accrued Income balance in the Company's Annual Accounts is
income accrued which is not invoiced shortly following the
consumption month, being "Aged Accrued Income". Such balances
totalled GBP4.2 million in the Annual Accounts for the year ended
31 December 2017 and GBP4.3 million in the Interim Results as at 30
June 2018.
The Group has reviewed the level of the Aged Accrued Income for
each customer account, and compared it with the amounts that have
been or can be subsequently invoiced. The review has highlighted
that a significant amount of the Aged Accrued Income is not
recoverable and requires adjustment, thereby reducing profitability
in the current year.
Trade Debtor Recoverability
The Board has also reviewed the level of Trade Debtors held. The
Board have concluded that the level of non-payment being
experienced is significantly above that which has been previously
provided for. The requirement for an increase in the bad debt
provision held is in addition to any provision required due to the
first adoption of IFRS 9 (as disclosed in the Company's interim
results to 30 June 2018).
Gross Margin
The Company has re-evaluated business performance as a
consequence of the accrued income adjustment noted above. In
addition, the Board has taken into account market conditions which
continue to compress the gross margins available to energy
suppliers.
This re-evaluation has led the Directors to forecast a
significant reduction to gross margin in 2018 and beyond.
Summary
As a result of the above, the Board are extremely disappointed
to announce this substantial reduction in profitability. The Board
have committed to commissioning a forensic review of its systems to
fully identify the underlying issues and implement all necessary
further measures.
The Board are confident that the Group will achieve
profitability for the year ending 31 December 2019, albeit at a
lower margin than previous expectations, and is in the process of
preparing detailed budgets.
A further announcement will be made as appropriate.
Bobby Kalar, Chief Executive Officer, commented:
"As founder and majority shareholder, nobody is more
disappointed in this development than me. Our booked revenue from
new sales remains strong and contracted revenue for 2019 is already
GBP67 million as at the end of September 2018. We have improved
internal controls around working capital management and the Board
is absolutely focused on restoring the profitability of the
business."
For further information, please contact:
Yü Group PLC Via Alma PR
Bobby Kalar
Paul Rawson
Shore Capital
Edward Mansfield
James Thomas +44 (0) 20 7408 4090
Alma PR
Josh Royston
John Coles
Robyn Fisher +44 (0) 7780 901 979
Notes to Editors
Information on the Group
Yü Group PLC, trading as Yü Energy, is an independent supplier
of gas and electricity focused on servicing the corporate sector
throughout the UK. It has no involvement in the domestic retail
market. The Group was listed on the AIM market of the London Stock
Exchange following a successful IPO in March 2016.
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 or visit www.rns.com.
END
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