19 March 2024
Yü Group
PLC
("Yü
Group" or the "Group")
Final results for the year ended 31
December 2023
Yü Group PLC (AIM; YU.), the
independent supplier of gas and electricity, and meter asset owner
and installer of smart meters, to the UK corporate sector announces
its final audited results for the year to 31 December
2023.
The Group continues to report
significant growth in revenue, profitability, cash generation and
other key metrics. The Board expects to continue to deliver
sustainable and profitable growth as the significant market
opportunity available is seized by the Group's differentiated
position and digital capabilities.
Financial &
Operational Highlights
|
31
December
|
2023
|
2022
|
Change
|
|
£'000 unless stated
|
|
|
|
|
|
|
|
|
|
Financial:
|
|
|
|
|
Revenue
|
460,001
|
278,587
|
+65%
|
|
Adjusted EBITDA1
|
42,616
|
7,909
|
+439%
|
|
Profit before tax
|
39,699
|
5,840
|
+580%
|
|
Earnings per share:
|
|
|
|
|
Adjusted, fully diluted
|
£1.82
|
£0.30
|
+£1.52
|
|
Statutory, Basic
|
£1.85
|
£0.29
|
+£1.56
|
|
Dividend per share (Interim &
Final)
|
40p
|
3p
|
+37p
|
|
Operating cash inflow
|
16,132
|
14,737
|
+£1.4m
|
|
Net Cash2
|
32,122
|
18,970
|
+£13.2m
|
|
Net Cash plus
collateral3
|
81,944
|
18,970
|
+£63.0m
|
|
Overdue customer receivables
(days)4
|
4
|
5
|
-1
days
|
|
|
|
|
|
|
Operational:
|
|
|
|
|
Average Monthly Bookings
(£'m)
|
55.5
|
24.5
|
+127%
|
|
Contracted Revenue for next FY
(£'m)
|
520
|
247
|
+111%
|
|
Aggregate Contracted Revenue
(£'m)
|
826
|
361
|
+129%
|
|
Meter Points Supplied (#)
|
53,400
|
25,500
|
+109%
|
|
TrustPilot Score (#)
|
4.1
|
4.0
|
+0.1
|
|
Employee Engagement (%)
|
84%
|
80%
|
+4%
|
|
Smart meter installations
(#)
|
8,500
|
1,033
|
+7,467
|
|
Smart-Meter Index-linked, annualised
Income (£'m)
|
0.16
|
-
|
+£160k
|
Financial
performance
·
Revenue of £460.0m, up 65% in year (FY22: £278.6m) following
strong sales bookings.
·
Adjusted EBITDA at £42.6m (FY22: £7.9m), with strong Net
Customer Contribution5
performance as the Group scales and benefits from its market
positioning and investment in digital and smart meters.
·
Profit before tax increased to £39.7m (FY22: £5.8m) and fully
diluted, adjusted EPS of £1.82 (FY22: £0.30).
· Net
Cash plus collateral at 31 December 2023 of £81.9m (FY22: £19.0m),
representing £4.89 per share.
·
Operational cash inflow of £16.1m (FY22: £14.7m) after £49.8m
collateral outflow, now fully returned, as part of energy trading
arrangements.
·
Final recommended dividend of 37p per share (FY22: 3p),
providing total FY23 dividend of 40p per share (FY22: 3p) which is
covered 4.6x by earnings.
·
Capital reduction process commenced to cancel the share
premium account and increase distributable reserves by £11.9m to
enable further flexibility around future capital
distributions.
Strong
operational delivery
· New
five-year, transformational, trading agreement with Shell Energy
Europe Limited ("Shell"), provides efficient access to commodity
markets, sized for significant continued growth whilst transforming
the Group's working capital profile by removing the requirement to
post cash as collateral. Cash previously lodged as collateral has
now returned to the Group post period end.
·
Continued focus on customer service resulting in 4.1
TrustPilot score (FY22: 4.0). Investment in UK contact centre
capability and further shift towards digital-led contact provides
strong market positioning for the Group.
· Yü
Smart continues to scale providing operational benefits alongside a
growing high margin annuity income, with increasing headcount
expected to provide growth, efficiency benefits and national
coverage.
Current trading
and outlook
·
Strong bookings and margin performance is continuing into
2024, despite lower commodity market environment.
·
Expect to deliver organic growth of c. 50% in FY24 despite
lower commodity prices:
o £520m
contracted revenue at end of 2023 for FY24 delivery (2022: £247m
for FY23), plus strong bookings momentum and further non-contracted
book.
o Board targets
significant market-share growth (from current 1.4%).
· The
Board targets over 25,000 smart meters owned by the end of 2024 to
provide benefits on customer lifecycle value, together with a
recurring, index-linked, annuity income of c.£1m per
annum.
·
Strong profitability expected as the Group benefits from its
well-hedged commodity position; investment in digital; expansion of
smart meters; and service-led market positioning.
·
Very strong operational cash generation forecasted for FY24,
from EBITDA conversion to cash and the working capital benefits of
the new trading agreement with Shell.
·
Board confirms the intent to progressively increase dividend
distribution, in a sustainable manner, as earnings grow whilst
maintaining at least 3x cover on EPS in the short to medium
term.
Bobby Kalar,
Chief Executive Officer, stated:
"It's been an
extraordinary year and I'm very pleased with our strong
performance, delivering another record breaking set of results. We
have a strong forward order book which continues to build into
2024, and with this high degree of predictability, I remain
confident in delivering another strong performance and continuing
to deliver further shareholder value in 2024 and
beyond.
We've made
significant strategic and operational progress. I'm very excited by
the capability of Yü Smart and the value it creates for the
Group. We have a transformational new commodity trading agreement
with Shell, and all the foundations and digital-led systems in
place to ensure continued growth.
We are
increasing our dividend payment to reward our loyal investors and
we look forward to providing further growth in shareholder
distributions.
I'm grateful
to the Board who continue to deliver the right blend of challenge
and encouragement to me and my team."
Analyst
presentation and publication of annual report
A presentation for analysts will be
held at 9am GMT today, Tuesday 19 March 2024. Anyone wishing to
attend should please contact yugroup@teneo.com
for further information.
An electronic version of the full
annual report will be published on the Group's website,
www.yugroupplc.com,
later today (19 March 2024).
1 Adjusted
EBITDA is earnings before interest, tax, depreciation and
amortisation, and gains or losses on derivative contracts. See
reconciliation in note 7 to the financial statements
below.
2 Net Cash refers to cash and cash equivalents less the debt in
the Group, excluding any lease liabilities.
3 Net cash plus the £49.8m of cash held as collateral against
the previous hedging agreement at 31 December, since returned to
the Company, post year end, on entry into the new facility with
Shell.
4 Overdue customer receivables is expressed in days of sales,
and relates to the total balance, net of provisions, of accrued
income which is outside of the normal billing cycle, plus overdue
trade receivables (net of VAT and CCL).
5 Net Customer Contribution represents gross margin less bad
debt as a percentage of revenue.
For
further information, please contact:
|
Yü
Group PLC
Bobby Kalar
Paul Rawson
|
+44 (0) 115 975 8258
|
|
Liberum
Edward Mansfield
Satbir Kler
Anake Singh
|
+44 (0) 20 3100 2000
|
|
Teneo
Giles Kernick
Tom Davies
|
+44 (0) 20 7353 4200
|
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 consistently improved margin and
profitability performance. In 2023 the Group launched Yü Smart and
Yü Charge to support growth through new opportunities in smart
metering installation.
Chairman's Statement
DELIVERING OUR
STRATEGY
Delivering strong organic growth and sustainable returns
within the framework of a strong commitment to best-in-class
corporate governance and risk management.
In the face of a turbulent and
volatile year for commodity prices where energy prices experienced
a precipitous decline, Yü Group's financial results have continued
to demonstrate rapid and controlled positive momentum. Since
January 2020, we have scaled at a 65% compound annual growth sales
rate and now have achieved a modest 1.4% share of our £50
billion-plus addressable business-to-business energy supply market.
We have become an increasingly well-recognised challenger and
disruptor in our chosen markets and this has been recognised across
the board from winning the AIM Company of the Year to The Sunday
Times People awards.
In many ways, this has been an
exceptional year and I have confidence in the Group's ability to
continue its high organic growth in volumes sold and to maintain
attractive margins. Our platform has been established and proved
out and we are now seeking to materially grow our market share in
the coming years. We enter FY24 with a forward order book of £826m
to deliver in the coming years, of which £520m is contracted
revenue for FY24.
The team, under the energetic
stewardship of Bobby Kalar as Chief Executive Officer, continue to
focus on ensuring high customer service levels, introducing
innovative customer-centric products and increasing impetus on
meter supply and installation whilst maintaining strict controls
and processes that underpin our business. The further development
of our essential core "Digital by Default" technological platform
is proceeding apace.
The Group's unique market
positioning and clearly differentiated customer proposition offer
customers simple, quick and easy access to energy and to the
efficient management of that supply.
Delivering results
Since 2019 Yü Group has demonstrated
continued positive progress in financial results. Revenues
increased by 65% in the year to £460.0m (2022: £278.6m); adjusted
EBITDA rose to £42.6m (2022: £7.9m), representing a 9.3% EBITDA
margin (2022: 2.8%); and earnings per share (on an adjusted, fully
diluted basis) grew to £1.82 (2022: £0.30).
Our cash position has been robust
and will be materially enhanced in H1 24 by our new commodity
trading agreement with Shell. This arrangement provides the Group
with scalable, "capital light" access to the ability to supply and
to manage hedges on wholesale commodities without the previous
requirement to post significant amounts of cash collateral. At 31
December 2023, cash and collateral posted equated to £4.89 per
share, providing a strong foundation from which to accelerate
investment in further growth and increase returns.
In addition to the 3p interim
dividend, the Board is recommending a final 2023 dividend of 37p
per share (2022: 3p). Strong cash generation remains a focus, and
we hope to maintain and enhance our progressive dividend policy as
Group earnings and cash flow increase whilst retaining ample cover
of at least 3x earnings.
Recognition in The Sunday Times'
"Best Places to Work 2023" illustrates increasing maturity and the
fostering of a "can-do" and agile culture. We have continued to
attract industry-leading talent to key positions to assist in
driving further growth. Cohesive, highly engaged teams of seasoned,
industry-experienced professionals and colleagues are delivering in
a volatile market, and we continue to build our teams with our
sights firmly set on achieving revenue of £1 billion p.a. and
beyond.
Health and safety, customer service,
risk, credit, employee engagement and compliance indicators have
all performed strongly and continue to drive performance within an
agile and entrepreneurial culture.
We do not intend to rest on our
laurels and are highly ambitious for the future.
Our
commitment to shareholders and stakeholders
We remain steadfast in our
commitment to best-in-class corporate governance, details of which
are covered more fully in the corporate governance section of the
annual report.
Ahead of requirement, we have
adopted the 2023 Quoted Companies Alliance ("QCA") Code early to
assist in the promotion of best practice.
The Board, through activities
overseen by the Audit Committee and delivered through the Executive
Committee, has also continued to improve the Group's risk and
opportunity framework, ensuring that it is deeply embedded
throughout the organisation. During the course of FY23, this was
particularly robust in ensuring an "eyes wide open" approach to
assessing risk and the determination of judiciously balanced levels
of risk and opportunity appetite.
Focus on our commodity hedging
arrangements remains a large part of our risk management strategy.
Extensive external review and due diligence conducted in 2023 and
early 2024 as part of our major new commodity trading agreement
with Shell allowed us to enter into a mutually beneficial trading
and commodity hedging arrangement. Our commodity hedging programme
has been stress-tested over various black-swan events which
increased commodity volatility to 20 year highs and we have
demonstrated through our results that our hedging remains robust
even in highly volatile markets.
We remain focused on delivering for
shareholders and continue to evolve our engagement activities. This
year our first on-site "Capital Markets Day" was hosted by our
Chief Executive Officer and Leadership Team. I was particularly
pleased to hear the feedback from investors and potential investors
alike who were able to see, first hand, the "bench strength"
throughout our organisation.
We have made further appointments to
support our interactions with Ofgem, Ofwat and our other
regulators. We continue to deliver the BEIS energy support schemes
which supported our customers through a difficult period in energy
markets. As our business and market share grow, we will engage
proactively with regulators and all other stakeholders.
Summary
Yü Group continues to not just
weather the storms of the commodity markets and other "black-swan"
macro-events but is also able to succeed by agility, maturity and
determination, in turning threats into opportunities. This is
thanks to its highly committed team to whom I am grateful for all
their "beyond the call" efforts. We intend to continue to deliver
increasing and sustainable value to our shareholders.
Robin Paynter Bryant
Chairman
Chief Executive Officer's Statement
CONTINUING TO
DELIVER SIGNIFICANT AND SUSTAINABLE GROWTH
A fantastic
performance for the Group, and significant growth to
come.
I'm very pleased to report another
excellent performance for the Group achieved against the backdrop
of softening commodity markets. There is a substantial market
growth opportunity in the SME supply space for a challenger brand
like ours to focus on, and our growth strategy is delivering. Our
market share has grown 40% in a year but still only stands at 1.4%
providing ample scope for future growth; and we have the platform
in place and the opportunity is there.
I'm proud to say that my management
team has navigated the Group's performance such that we've exceeded
all our financial targets even accounting for three upgrades to
market guidance. We have a robust balance sheet, a very strong
forward order book and significant momentum in growth and customer
service metrics. With this backdrop I'm confident in the continued
growth trajectory and ability to outperform against our own
ambitious internal targets. I'm also very pleased that growth this
year has seen us become the thirteenth largest supplier in the UK
Business supply sector.
While there are challenges as well
as opportunities in every business, the gas and power market has
seen unprecedented volatility over the past years which has
impacted both suppliers and customers alike. In order to support
our customers during the cost of energy crisis we introduced a
number of support measures such as agreeing short term supply
contracts to "blending and extending" customers who were in
existing contracts. These initiatives worked well and helped our
customers overcome difficult periods. The Group's performance
exceeded expectations; and in a falling market has proved it can
continue scaling sustainably using our strong balance
sheet.
Yü
Energy
I'm delighted with the performance
of our retail energy supply business, with our digital platforms
performing well, enabling our growth by using data to drive
decisions. Our retail business has consistently exceeded its KPIs
delivering strong cash generation, growth in contracted meter
point numbers and commodity volumes. This is especially pleasing
given that wholesale commodity prices have been falling. Whilst
nobody can predict the future given what the industry has been
through over the past few years, I'm pleased we have a very strong
forward order book that has contracted revenues in excess of £500m
for 2024 and is now filling contracts into 2027.
Our market positioning, digital
tools and customer service focus are providing a huge opportunity
to scale in this significant market. We very much intend to "stick
to our knitting" and continue to scale our electricity and gas
supply activities materially over the coming months and years,
taking market share from established players. Our trajectory in
early 2024 has been on-track, with meter points supplied growing
from the 53,400 at 31 December 2023, and we intend to work hard to
accelerate growth in a sustainable manner.
Yü
Smart and meter ownership
Our Yü Smart business installs new
generation smart meters (known as SMETs2) onto our customers'
premises. These meters provide customers with significant benefits
to understand their energy consumption and expected costs. They
also provide greater insight into customer usage and payment habits
via real time data. Whilst 2023 was a year of learning and
understanding how best the Group could take advantage of this new
complementary opportunity, the Yü Smart team successfully installed
over 8,500 meters. As expected, we have encountered various hurdles
that are typical to a startup business. From combining the two
business capabilities in a single customer offer, to scaling
installation capability or securing enough metering assets, I'm
pleased we've tackled these challenges well, and with a new and
strengthened management team in place I am very confident we will
see significant asset installation growth in 2024 and
beyond.
The small quota of third-party
assets which we inherited and were obliged to install have now
fulfilled and I'm pleased that we now only install our own assets,
allowing the Group to grow our asset annuity income. On the whole
I'm very excited and looking forward to delivering new highs in Yü
Smart.
Transformational trading agreement with
Shell
In February 2024 the Group entered
into a transformational new five year exclusive trading agreement
with Shell. The old trading agreement, while not due to expire for
another year, was no longer fit for purpose or fit for the future
for two specific reasons. Firstly, the much talked about black-swan
events our industry experienced over the past few years caused
wholesale commodity prices to climb to all-time highs and then come
crashing down to historic norms over a three year period. A
mechanism in the old trading agreement meant that if our mark to
market exposure exceeded our agreed credit line the Group was
required to post cash as collateral for the excess or unwind the
hedge position. The Group was able to utilise its strong balance
sheet coupled with significant cash generation to post the required
cash as we weathered the storm, but the Board recognised this was
an inefficient use of capital. Secondly, in a falling commodity
market, our growth ambitions were at risk due to the limitations of
the previous hedging facility and our balance sheet.
Following a 14 month process the
agreement with Shell removes these obstacles, sees all of our cash
returned to our balance sheet and allows unhindered growth to
significant levels with no requirement to lodge cash. In terms of
the management team getting comfortable with our ability to
sustainably grow, this has been a game changing move and I'm
looking forward to building on our already positive relationship
with Shell.
Current trading and outlook
We have commenced 2024 continuing
the strong momentum from 2023.
Our forward contract book is
continuing to grow from the £520m at 31 December 2023 (£247m at 31
December 2022 for FY23) which is due to deliver this year. I
believe the substantial market opportunity, our offer, and our
small market share enables this significant growth to continue, and
we guide to a growth rate for FY24 of c.50% at this
stage.
We also continue to invest in sales,
marketing, digital and other projects which will increase the
Group's customer service, differentiation, and cost efficiency,
making use of our strong balance sheet and cash
position.
Our new agreement with Shell
provides significant cash benefits for FY24, and in recognition of
this I'm pleased to confirm a substantial increase in the final
dividend payment of 37p (FY22: 3p) which we recommend to
shareholders. We also guide that we will develop our progressive
dividend policy going forward such that the dividend over the short
to medium term will, after accounting for continued earnings
growth, reduce dividend cover to broadly 3x EPS which should see
further material progress to distributions.
I look forward to updating the
market on progress in the coming months.
Bobby Kalar
Chief Executive Officer
Finance Review
STRONG REVENUE
AND MARGIN GROWTH
Our financial framework allows a
clear focus as we continue to grow organically, improve margins and
maintain financial discipline.
In
overview
·
Revenue increased 65% to £460m.
·
Contracted revenue for FY24 delivery already at £520m (up
111% on prior year).
·
Adjusted EBITDA increased to £42.6m (2022: £7.9m) as the
Group scales.
·
Profit before tax increased to £39.7m (2022:
£5.8m).
· Net
cash inflow of £13.5m, with closing net cash of £32.1m and further
£49.8m collateral posted to support energy hedging prior to new
Shell agreement.
· Net
cash and collateral equates to £4.89 per share.
·
Adjusted, fully diluted EPS of £1.82, up from £0.30.
·
Final dividend of 37p per share recommended, with 3p interim
paid in year.
·
Dividend targeted to be increased over short to medium term
to approximately 3x cover from EPS, and capital reduction process
commenced to increase flexibility of distributable
reserves.
|
Financial metrics
|
|
|
|
|
|
£m unless stated
|
2023
|
2022
|
Change
|
|
|
Revenue
|
460.0
|
278.6
|
+65.1%
|
|
|
Gross margin %
|
18.1%
|
15.8%
|
+2.3%
|
|
|
Net Customer
Contribution1 %
|
14.9%
|
8.2%
|
+6.7%
|
|
|
General overheads2
%
|
(5.7%)
|
(5.3%)
|
(0.4%)
|
|
|
Adjusted EBITDA %
|
9.3%
|
2.8%
|
+6.5%
|
|
|
Adjusted EBITDA
|
42.6
|
7.9
|
+34.7
|
|
|
Profit before tax
|
39.7
|
5.8
|
+33.9
|
|
|
Net
cash flow
|
13.5
|
11.9
|
+1.6
|
|
|
Net
cash3
|
32.1
|
19.0
|
+13.1
|
|
|
Net
cash, plus cash collateral
|
81.9
|
19.0
|
+62.9
|
|
|
Overdue customer receivables
|
4 days
|
5
days
|
-1
day
|
|
|
Earnings per share (adjusted,
fully diluted)
|
£1.82
|
£0.30
|
+£1.52
|
|
|
Dividend per share (interim and
final)
|
40p
|
3p
|
+37p
|
|
Results summary
The Board is pleased to report a
continued strong trajectory in financial performance, with the year
ended 31 December 2023 being the fifth consecutive year of
consistent and significant revenue and profitability
improvement.
Revenue of £460.0m represents a
65.1% increase in year, with gross margin, Net Customer
Contribution, adjusted EBITDA, profit before tax and earnings per
share ("EPS") all materially improved year on year. This
performance reflects a clear focus on strong financial and
commercial discipline and our unique market position and customer
proposition (enabled through digital) despite the volatile market
environment.
The Group's cash generation has been
very strong during 2023, benefiting from good collections of
customer trade receivable balances, though impacted by £49.8m of
collateral posted to support our commodity hedging arrangements. As
part of our new commodity hedging arrangements with Shell, this
collateral has now returned to Group cash reserves, providing a
substantial uplift to operational cash flow in H1 24.
With adjusted, fully diluted EPS at
£1.82 and £4.89 net cash and collateral per share, the Board has
considered its capital allocation policy and confirmed the
intention to maintain a progressive dividend policy. An increased
final dividend of 37p (2022: 3p) is proposed, leading to a total
dividend for the year of 40p. The Board also confirms an intent to
reduce dividend cover to 3x, allowing for an increased dividend in
the short to medium term.
Very strong organic growth
The £181.4m (being 65.1%) increase
in revenue year on year continues the significant top-line growth,
with a 65.4% compound annual growth rate ("CAGR") delivered from
January 2020.
The Group is well positioned to
deliver further strong revenue growth in FY24 through an increased
contract book, with £520m already secured for delivery in FY24 and
a further £306m beyond.
In addition to this £520m contracted
for FY24, a further £29m of annualised equivalent
revenue4 is being delivered from customers who are not
in contract. There is also an expectation of further revenue from
contracts which are to be booked in 2024. For context, FY23
achieved £213m (86%) in additional revenue from the £247m
contracted at exit of 2022, through in-year bookings and customers
not in contract.
Such revenue growth reflects the
competitive positioning and sales efficiency delivered through our
digital platform and the scale of the addressable market
available.
The forward revenue growth has
increased significantly despite it being at a substantially lower
price per MWh of energy delivered than the price at the market peak
in late 2022. The significant decrease in global commodity markets
during FY23 has been countered by the Group taking increased market
share and the ability to contract customers for a longer period
than was the case in that extreme high price
environment.
Significant profitability increase
|
Adjusted EBITDA reconciliation
|
|
|
|
£m
|
2023
|
2022
|
|
Adjusted EBITDA
|
42.6
|
7.9
|
|
% of revenue
|
9.3%
|
2.8%
|
|
Adjusted items:
|
|
|
|
Loss on derivative
contracts
|
(3.0)
|
(0.9)
|
|
Depreciation and
amortisation
|
(1.5)
|
(1.1)
|
|
Statutory operating profit
|
38.1
|
5.9
|
The Board is very pleased to report
an improved profitability performance, with £42.6m adjusted EBITDA
(2022: £7.9m) and profit before tax of £39.7m (2022: £5.8m). This
has led to EPS on an adjusted, fully diluted basis increasing to
£1.82 (2022: £0.30).
Net Customer Contribution, being
gross margin less bad debt as a percentage of revenue, has
increased 6.7% to 14.9% in the year, which flows broadly to the
adjusted EBITDA improvement of 6.5% to 9.3%.
Gross margin has improved
significantly following strong performance on new bookings because
of the Group's market position. Customer lifecycle value has also
increased via deeper customer insight through data analytics and as
customers lock in blend and extend contracts to obtain the benefit
from declining global commodity markets.
Gross margin also includes the
benefit of certain industry costs reduced in the period and a
higher contribution from uncontracted customers, which the Board
forecasts to have a reduced impact in FY24 due to the lower
commodity price environment.
Bad debt at 3.1% of revenue
maintains the Board's caution in ensuring appropriate provisions
are made for potential bad debt on trade receivables and accrued
income, with customer collections running at 98% of the billed
value during FY23.
The Board is confident that gross
margin and net customer contribution will continue to perform
strongly and that the market characteristics and differentiated
customer proposition provide the opportunity for strong sustainable
margins to be available over the coming years.
The Board continues to set an
ambition to reduce overheads incurred to acquire and serve
customers utilising technology to allow operational investment in
core growth supporting overheads. General overheads have increased
by 0.4% to 5.7% of revenue, with operational efficiency savings
offset by further investment in marketing and sales, digital costs,
the mobilisation of Yü Smart, and in charges for equity-settled
share based payments.
Profit before tax includes £1.6m of
net finance income (2022: £0.1m net expense) from interest received
on the increased cash and collateral balances held and a £3.0m
(2022: £0.9m) loss on derivative accounting to reverse the 31
December 2022 asset. There is no derivative asset or liability at
the balance sheet date following assessment that all forward hedges
are for the Group's own use, and are therefore not fair
valued.
The tax charge of £8.8m (2022:
£1.1m) includes £4.2m of non-cash deferred tax charges as the Group
utilises brought forward tax losses.
Commodity hedging and cash collateral
Well-publicised commodity market
movements have led to a volatile market context over recent years.
The post-pandemic increases in global commodity markets further
increased in FY22 due to the Ukraine and Russia conflict. This was
followed by a significant and rapid softening in prices during FY23
and early FY24 as gas storage filled and UK supply became more
secure. The current wholesale price is now broadly comparable to
pre-pandemic levels, masking the large volatility over the past
years.
The Group's commodity hedging
strategy has protected the margins achieved during this volatile
period due to strict tolerance and risk limits. However, the
volatility in commodity markets (following a rapid decline in
commodity markets) and the high level of bookings growth achieved
did result in the credit limit with our previous trading
counterparty being exceeded, requiring the posting of cash
collateral. The Group had £49.8m of cash collateral posted at 31
December 2023 to cover that forward potential credit exposure in
full, which was an inefficient use of capital.
The new five-year strategic trading
agreement with Shell, signed in February 2024, does not require
cash collateral to be posted in the normal course and is set to
scale with the Group to over £1 billion in revenue. The agreement
with Shell followed a detailed market testing process and a period
of due diligence performed on the Group's operational and financial
performance and policies.
The Board is very pleased to be
working with a group of Shell's significant scale and standing and
looks forward to reporting the benefits through continued hedging
activities with increased cash flow and cash availability along
with wider benefits, in due course.
Cash and balance sheet management
Cash increased by £13.5m in the
year, or by £63.3m excluding the posting of cash collateral related
to hedging arrangements (since unwound) as referred to above. Net
cash, which is net of borrowings, increased from £19.0m to
£32.1m.
|
Cash flow £m
|
2023
|
2022
|
|
Adjusted EBITDA
|
42.6
|
7.9
|
|
Hedging related cash
collateral
|
(49.8)
|
-
|
|
Other working capital
movement
|
23.3
|
6.8
|
|
Operating cash flow
|
16.1
|
14.7
|
|
Investing activities
|
(1.5)
|
(2.6)
|
|
Financing activities
|
(1.1)
|
(0.2)
|
|
Net
cash movement in year
|
13.5
|
11.9
|
|
Closing cash balance
|
32.5
|
19.0
|
|
Net
cash
|
32.1
|
19.0
|
Group receivables increased by
£27.8m whilst payables increased by £49.6m as set out in the
statement of cash flows. These movements include the impact of
strong cash collection performance on customer trade receivables,
resulting in broadly flat trade receivables balances and increased
operational investment of prepaid customer acquisition and sales
costs to £10.7m (2022: £2.0m).
The Group's payable for renewable
obligation certificates increased to £21.8m at 31 December 2023, up
from £11.3m at 2022.
Net current assets increased to
£32.4m (2022: £1.3m), and net assets increased to £46.8m (2022:
£14.8m).
Capital investment of £1.5m (2022:
£2.6m) largely consists of £0.4m on fixtures and fittings
associated with the expansion of our wholly owned Leicester office
to facilitate growth in our customer contact centre and £0.8m
investment in smart metering assets.
The financed smart meter assets
relate to the Group's strategy to finance assets in return for a
15+ year index-linked annuity revenue stream. The £0.8m investment
represents c.4,100 meter assets which are expected to generate an
index-linked £0.16m/annum in rental income.
To facilitate increased investment
and provide a lower overall cost of capital, a Group special
purpose company entered into a new asset-backed debt financing
arrangement with Siemens Finance, which is non-recourse to the
wider Group and provides funding over a 10 year term. The initial
facility is £5.2m, to finance c.20,000 meters. In FY23, £0.5m of
the facility was drawn down, pre costs.
The Board target over 25,000 meters
owned by the end of 2024 to provide benefits on customer lifecycle
value, together with a recurring, index-linked, annuity income of
c.£1m per annum.
Dividend and capital management
The Group will continue to invest in
sales, marketing and assets, such as for the Digital by Default
initiatives and meter assets, from the cash generated from
operations. Surplus cash beyond the amount invested (or for the
meter assets, raised from efficient use of debt) is expected which
the Board intends to distribute to shareholders to the extent
inorganic investment opportunities are not identified.
The Board therefore recommends the
payment of a final dividend of 37p per share, being c.£6.2m payable
on 20 June 2024. The shares will go ex-dividend on 30 May 2024 and
the record date is 31 May 2024.
The Board has considered capital
allocation and confirm a progressive dividend policy with an intent
to increase dividends over the short to medium-term to
approximately 3x dividend cover on EPS. This provides significant
forward progression from FY23.
The Board also propose, for
consideration as a special resolution at the annual general meeting
(and subject to necessary court approvals) to cancel £11.9m of
share premium which would be credited to distributable reserves.
This provides further flexibility to increase distributions in FY24
or beyond.
Summary: controlled progression
In summary, the Board is very
pleased to report this substantially enhanced financial performance
which builds on the work to reset the Group's financial and
commercial strategies over recent years.
There remains a clear line of sight
to revenue growth based on the contracts already secured at 31
December 2023, which will be supplemented by uncontracted supply of
energy and new bookings secured and to deliver in FY24. Revenue
visibility for FY25 and beyond is already building
significantly.
Adjusted EBITDA and profit before
tax are expected to continue to benefit from our investment in
digital and our focus on optimising customer lifecycle value,
whilst the new hedging agreement with Shell provides a very
material benefit not least in H1 2024 as the £49.8m cash collateral
at 31 December 2023 returns to Group cash.
Adjusted (and reported), fully
diluted EPS has already grown significantly and is expected to
continue to grow, as is the £4.89 per share of net cash (including
collateral) held.
Dividends are expected to continue
to increase as earnings grow and the Group transitions to a
dividend cover ratio of c.3x in the short to medium
term.
The Board is therefore extremely
pleased to report these improved results for FY23 and assure
shareholders of a focus to deliver on further ambitious targets
over the medium term.
Paul
Rawson
Chief Financial Officer
1. Net Customer Contribution is
gross margin less bad debt.
2. General overheads is the overhead
expenses, excluding bad debt, charged to adjusted
EBITDA.
3. Net Cash is the cash less
borrowings as per note 27 to the financial statements.
4. Annualised equivalent revenue
from non-contracted customers reflects the 31 December 2023
annualised volume of energy and prices on that
date.
Consolidated statement of profit and
loss and other comprehensive income
For the year ended 31 December
2023
|
|
|
|
|
|
|
|
Revenue
|
|
460,001
|
278,587
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs before share based
payment charges
|
|
(26,347)
|
(15,565)
|
|
|
Operating costs - share based
payment charges
|
|
|
|
|
|
Total operating costs
|
|
(27,605)
|
(15,849)
|
|
|
Net impairment losses on financial
and contract assets
|
17
|
(14,309)
|
(21,420)
|
|
|
|
|
|
|
|
|
Operating profit
|
4
|
38,082
|
5,930
|
|
|
Finance income
|
5
|
1,722
|
1
|
|
|
|
|
|
|
|
|
Profit before tax
|
|
39,699
|
5,840
|
|
|
|
|
|
|
|
|
Profit and total comprehensive
income for the year
|
|
|
|
|
|
Earnings per share
|
|
|
|
|
|
Basic
|
8
|
£1.85
|
£0.29
|
|
|
|
|
|
|
Consolidated balance sheet
At 31 December 2023
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
|
Intangible assets
|
|
|
|
11
|
2,561
|
3,111
|
|
Property, plant and
equipment
|
|
|
|
12
|
4,613
|
3,641
|
|
Right-of-use assets
|
|
|
|
13
|
1,676
|
113
|
|
Deferred tax assets
|
|
|
|
15
|
1,969
|
5,300
|
|
Trade and other
receivables
|
|
|
|
17
|
5,231
|
-
|
Financial derivative
asset
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
Inventory
|
|
|
|
16
|
546
|
345
|
|
Trade and other
receivables
|
|
|
|
17
|
127,222
|
54,339
|
|
Financial derivative
asset
|
|
|
|
18
|
-
|
1,484
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
Trade and other payables
|
|
|
|
20
|
(123,845)
|
(73,860)
|
|
Corporation tax payable
|
|
|
|
9
|
(4,016)
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
Trade and other payables
|
|
|
|
20
|
(1,281)
|
(206)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
|
Share capital
|
|
|
|
23
|
84
|
83
|
|
Share premium
|
|
|
|
23
|
11,909
|
11,785
|
|
Merger reserve
|
|
|
|
23
|
(50)
|
(50)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated statement of changes in
equity
For the year ended 31 December
2023
|
|
|
|
|
|
|
Balance at 1 January 2023
|
|
|
|
|
|
|
Total comprehensive income for the
year
|
|
|
|
|
|
|
Profit for the year
|
-
|
-
|
-
|
30,860
|
30,860
|
Other comprehensive
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transactions with owners of the
Company
|
|
|
|
|
|
|
Contributions and
distributions
|
|
|
|
|
|
|
Equity-settled share based
payments
|
-
|
-
|
-
|
1,150
|
1,150
|
|
Deferred tax on share based
payments
|
-
|
-
|
-
|
866
|
866
|
|
Proceeds from share
issues
|
1
|
124
|
-
|
-
|
125
|
Equity dividends paid in the
year
|
|
|
|
|
|
Total transactions with owners of
the Company
|
|
|
|
|
|
Balance at 31 December
2023
|
|
|
|
|
|
Balance at 1 January 2022
|
|
|
|
|
|
|
Total comprehensive income for the
year
|
|
|
|
|
|
|
Profit for the year
|
-
|
-
|
-
|
4,769
|
4,769
|
Other comprehensive
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transactions with owners of the
Company
|
|
|
|
|
|
|
Contributions and
distributions
|
|
|
|
|
|
|
Equity-settled share based
payments
|
-
|
-
|
-
|
210
|
210
|
|
Deferred tax on share based
payments
|
-
|
-
|
-
|
439
|
439
|
|
Proceeds from share
issues
|
1
|
95
|
-
|
-
|
96
|
Equity dividends paid in the
year
|
|
|
|
|
|
Total transactions with owners of
the Company
|
|
|
|
|
|
Balance at 31 December
2022
|
|
|
|
|
|
Consolidated statement of cash
flows
For the year ended 31 December
2023
|
|
|
|
|
Cash flows from operating
activities
|
|
|
|
Profit for the financial
year
|
30,860
|
4,769
|
|
Adjustments for:
|
|
|
|
Depreciation of property, plant and
equipment
|
400
|
325
|
|
Depreciation of right-of-use
assets
|
408
|
80
|
|
Amortisation of intangible
assets
|
680
|
648
|
|
Loss on derivative
contracts
|
3,046
|
926
|
|
Increase in inventory
|
(201)
|
(345)
|
|
Increase in trade and other
receivables
|
(27,848)
|
(17,000)
|
|
Increase in cash collateral for
commodity trading arrangements
|
(49,820)
|
-
|
|
Increase in trade and other
payables
|
49,584
|
23,889
|
|
National insurance on share options
exercised
|
(108)
|
-
|
|
Finance income
|
(1,722)
|
(1)
|
|
Interest received
|
1,278
|
-
|
|
Finance costs
|
105
|
91
|
|
Taxation charge
|
8,839
|
1,071
|
|
Corporation tax paid
|
(627)
|
-
|
Share based payment
charge
|
|
|
Net cash from operating
activities
|
|
|
|
Cash flows from investing
activities
|
|
|
|
Purchase of property, plant and
equipment
|
(1,372)
|
(215)
|
|
Payment of software development
costs
|
(130)
|
(2,210)
|
Payment of consideration on business
combination
|
|
|
Net cash used in investing
activities
|
|
|
|
Cash flows from financing
activities
|
|
|
|
New borrowings
|
356
|
-
|
|
Net proceeds from share option
exercises
|
125
|
96
|
|
Cash-settled share based payment
charge
|
-
|
(74)
|
|
Interest paid on
borrowings
|
(4)
|
-
|
|
Interest paid on lease
obligations
|
(81)
|
(13)
|
|
Other interest paid
|
(20)
|
(63)
|
|
Repayment of principal element of
borrowings
|
(1)
|
-
|
|
Repayment of principal element of
lease obligations
|
(496)
|
(121)
|
|
|
|
|
Net cash from/(used in) financing
activities
|
|
|
|
Net increase in cash and cash
equivalents
|
13,507
|
11,921
|
Cash and cash equivalents at the
start of the year
|
|
|
Cash and cash equivalents at the end
of the year
|
|
|
Notes to the 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. The Company is limited
by shares and the Company's ordinary shares are traded on
AIM.
These condensed consolidated
financial statements ("Financial Statements") as at and for the
year ended 31 December 2023 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
small and medium sized entities ("SMEs") and larger corporates in
the UK, and the installation, ownership and service of smart
meters.
Basis of preparation
Whilst the financial information
included in this preliminary announcement has been prepared on the
basis of the requirements of UK-adopted International Accounting
Standards in conformity with the requirements of the Companies Act
2006 and effective at 31 December 2023, this announcement does not
itself contain sufficient information to comply with International
Accounting Standards.
The financial information set out in
this preliminary announcement does not constitute the Company's
statutory financial statements for the years ended 31 December 2023
or 2022 but is derived from those financial statements.
Statutory financial statements for
2022 have been delivered to the registrar of companies and those
for 2023 will be delivered in due course. The auditors have
reported on those financial statements; their reports were (i)
unqualified and (ii) did not contain a statement under section 498
(2) or (3) of the Companies Act 2006.
The condensed consolidated Financial
Statements are presented in British pounds sterling (£), which is
the 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 31 December 2023 the Group had
net assets of £46.8m (2022: £14.8m) and cash of £32.5m (2022:
£19.0m). The Group also had £49.8m of cash collateral posted with
the Group's previous commodity trading counterparty, SmartestEnergy
Ltd.
Management prepares detailed budgets
and forecasts of financial performance and cash flow (including
capital commitments) over the coming 18 months. The Board has
confidence in achieving such targets and forecasts and has
performed comprehensive analysis of various risks (including those
set out in the Strategic Report) and sensitivities in relation to
performance, the energy market and the wider economy.
The Group continues to demonstrate
significant progress in its results. This has led to adjusted
EBITDA (a close profitability measure to cash generated from
operations) in 2023 of £42.6m (2022: £7.9m), 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. The Board has secured
the full return of the £49.8m of cash collateral in 2024, providing
further confidence.
Profitability metrics have been
improved in 2023 due to increased gross margin as the Group
leverages its differentiated offer and analytics to optimise its
commercial position. Bad debt has decreased, 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. Such 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
2023 has improved significantly 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 (further detailed in the
Group's risks and uncertainties reporting in the Strategic Report).
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. In return, Shell
provides 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 in
effect at 31 December 2023. The significant benefits of transacting
with a major energy company such as Shell includes support to Group
cash liquidity through the release of the £49.8m of collateral
which was prepaid under legacy arrangements.
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,
and the new Trading Agreement should materially improve Group cash
liquidity and prospects for the future. The Board also considers
that there is sufficient headroom to ensure the Group meets
covenants based on various downside scenarios assessed.
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.
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 they 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 are:
• the estimated
consumption (in lieu of accurate meter readings) of energy by
customers;
Revenue includes some sales invoices
raised which, where no actual meter read has been available, are
based on industry data and estimates or other source information.
Such invoices can therefore represent estimates which are lower or
higher than the actual out-turn of energy consumption once accurate
meter readings are obtained. The utilisation of smart or automatic
meters is significant and growing in the Group, which reduces the
amount estimated on invoiced sales.
• the accrual for
certain energy costs;
Certain gas and electricity costs
(for example, balancing of the Group's commodity purchases across
industry participants, or the allocation to the Group of
"unidentified gas" which the industry spreads across market
participants) are based on industry or management estimates based
on knowledge of the market, historic norms and estimates of the
expected out-turn position which may be over or
underestimated.
• the recoverability of trade receivables
and related expected credit loss provision;
Trade receivables recoverability is
estimated, with appropriate allowance for expected credit loss
provisions, based on historical performance and the directors'
estimate of losses over the Group's customer receivable balances.
Management also conducts a detailed review of significant debtor
balances at the year end, including exposure after recoverability
of VAT and Climate Change Levy ("CCL"), and provisions and other
accounting adjustments. Sensitivity analysis on estimates is
provided in note 22.
• the assessment of forward energy commodity
contracts as "own use" under IFRS 9;
The Group enters into forward
purchase contracts to hedge its position to closely match
customers' expected demand over the term of the contract, and does
not engage in speculative trading. Factors such as the
shape/granularity of traded products available (which do not
perfectly align with customer demand) and variations in energy
consumed by customers (as a result of varying customer behaviour
and activity, and (particularly for gas) the weather impact) can
influence the demand of customers and the extent to which the
Group's forward commodity hedged position matches such customer
demand.
The Board considers the extent to
which forward contracts are entered into and continue to be held
for the purpose of delivery of energy that is matched to customer
expected volume. Factors considered in making this judgement
include: recent trading experience; historic accuracy in demand
forecasting; and growth in volumes supplied to customers. Based on
an assessment of these factors during the year ended 31 December
2023, the Board considers that the forward commodity trades
outstanding at the balance sheet date are intended to be fully
utilised for the Group's "own use" to meet expected customer demand
in the normal course of business, which is a change in judgement to
that assessed at 31 December 2022. The judgement in relation to
forward contracts being for "own use" results in such contracts not
being assessed at fair value and therefore with no unrealised
financial derivative asset or liability recognised at the balance
sheet date.
• the assumptions input to the IFRS 2 share
option charge calculations; and
The share option charge requires
certain estimates, including the volatility in share price,
risk-free rates and dividend yields, together with assessment of
the likelihood of achievement of certain vesting performance
conditions which are based on the Group's share price at
pre-determined dates, or based on EBITDA profitability over a
pre-determined period.
• the recoverability of deferred tax
assets.
Deferred tax asset recoverability is
assessed based on directors' judgement of the recoverability of the
tax losses by the realisation of future profits over the short to
medium term, which inherently is based on estimates.
Revenue recognition
The Group enters into contracts to
supply gas, electricity and water to its customers, and provides
availability of smart meter assets. 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 specific impairments 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 secured 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 or EBDS, 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. The Group's main commodity trading
activities 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,
at fair value, on its balance sheet at the year 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 22.
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 consideration transferred is the
sum of the acquisition-date fair values of the assets transferred,
equity instruments issued or liabilities incurred by the acquirer
to former owners of the acquiree and the amount of any
non-controlling interest in the acquiree.
All acquisition costs are expensed
as incurred to profit or loss.
On the acquisition of a business,
the consolidated entity assesses the financial assets acquired and
liabilities assumed for appropriate classification and designation
in accordance with the contractual terms, economic conditions, the
consolidated entity's operating or accounting policies and other
pertinent conditions in existence at the acquisition
date.
Contingent consideration to be
transferred by the Group is recognised at the acquisition-date fair
value. Subsequent changes in the fair value of the contingent
consideration classified as an asset or liability are recognised in
profit or loss. Contingent consideration classified as equity is
not remeasured and its subsequent settlement is accounted for
within equity.
The difference between the
acquisition-date fair value of assets acquired and liabilities
assumed and the fair value of the consideration transferred is
recognised as goodwill. If the consideration transferred and the
pre-existing fair values are less than the fair value of the
identifiable net assets acquired, being a bargain purchase to the
Group, the difference is recognised as a gain directly in profit or
loss on the acquisition date, but only after a reassessment of the
identification and measurement of the net assets acquired and the
consideration transferred.
Business combinations are initially
accounted for on a provisional basis. The Group retrospectively
adjusts the provisional amounts recognised and recognises
additional assets or liabilities during the measurement period,
based on new information obtained about the facts and circumstances
that existed at the acquisition date. The measurement period ends
on the earlier of: (i) 12 months from the date of the acquisition;
or (ii) when the acquirer receives all the information possible to
determine fair value.
In determining whether an
acquisition of an acquired set of activities and assets is a
business, the "concentration test" methodology as outlined in IFRS
3 is utilised. Where substantially all the fair value of the gross
assets acquired are attributable to a single identifiable asset
group, such as a customer list, then a business combination will
not occur.
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, after
development of the offering during 2022 and launch in 2023, and the
ambition to increase activities in the financing of smart meters,
the Group is introducing in 2023 new operational
segments:
• Retail - being
the supply of electricity, gas and water to business customers in
the UK, and the only operating segment generating revenue and gross
margin in the prior year;
• Smart - being
the provision of engineering and related services to install and
maintain smart and other meters, and EV charging solutions as a new
operational segment in the year;
• Metering assets
- being the ownership and rental of smart metering assets as a new
operational segment in the year; and
• Group - being a
newly introduced operating segment representing centrally managed
Group functions, and other items which are not directly
attributable to the other operating segments.
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 7.
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.
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.
Any new or amended accounting
standards or interpretations that are not yet mandatory have not
been early adopted. This includes amendments to IAS 1 (Non-current
liabilities with covenants) which is to be effective for periods
beginning on or after 1 January 2024 and the potential effects are
to be considered. All other 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.
|
|
|
|
|
Intra-segment trading
£'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 and amortisation
|
(22,317)
|
(2,027)
|
(68)
|
-
|
(447)
|
(24,859)
|
|
Share based payments
|
(1,258)
|
-
|
-
|
-
|
-
|
(1,258)
|
|
Depreciation and
amortisation
|
(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
|
In respect of the prior year, the
Group's revenue, operating profit, adjusted EBITDA and assets
predominantly related to the retail supply of utilities and
therefore segmental reporting is not provided.
Geographical segments
100% of Group revenue, for both
financial years, is generated from sales to customers in the United
Kingdom (2022: 100%).
The Group has no individual
customers representing over 10% of revenue (2022: none).
3. Auditor's remuneration
|
|
|
|
|
Audit of these financial
statements
|
105
|
95
|
|
Amounts receivable by auditor in
respect of:
|
|
|
Audit of financial statements of
subsidiaries pursuant to legislation
|
|
|
|
|
|
|
4. Operating profit
|
|
|
|
|
Profit for the year has been arrived
at after charging:
|
|
|
|
Staff costs (see note 6)
|
15,564
|
9,045
|
|
Depreciation of property, plant and
equipment
|
400
|
325
|
|
Depreciation of right-of-use
assets
|
408
|
80
|
Amortisation of intangible
assets
|
|
|
5. Net finance
income/(expense)
|
|
|
|
|
Bank interest receivable
|
783
|
1
|
|
|
|
|
|
Total finance income
|
1,722
|
1
|
|
Bank interest and other finance
charges payable
|
(20)
|
(77)
|
|
Interest on borrowings
|
(4)
|
-
|
Interest on lease
liabilities
|
|
|
|
Total finance costs
|
(105)
|
(91)
|
Net
finance income/(expense)
|
|
|
Other interest received consists of
amounts due on collateral posted with the Group's previous
commodity trading counterparty.
6. Staff numbers and costs
The average number of persons
employed by the Group (including directors) during the period,
analysed by category, was as follows:
|
|
|
|
|
Engineering
|
32
|
7
|
|
Sales
|
27
|
24
|
|
|
|
|
|
|
|
|
The aggregate payroll costs of these
persons were as follows:
|
|
|
|
|
Wages and salaries
|
13,082
|
8,004
|
|
Social security costs
|
1,487
|
719
|
|
Pension costs
|
240
|
144
|
|
|
|
|
|
|
|
|
|
Of which:
|
|
|
|
Amounts charged to operating
profit
|
15,564
|
9,045
|
|
Amounts related to smart metering
installation in property, plant and equipment assets
|
503
|
-
|
Amounts related to development and
implementation of computer software
|
|
|
There were three persons employed
directly by the Company during the year ended 31 December 2023
(2022: three), being the
non-executive directors. The Company's two (2022: two) executive
directors who served during the year have service contracts with a
wholly owned subsidiary of the Company.
Key management personnel
The aggregate compensation made to
directors and other members of key management personnel (being
members of the Group's Executive Committee comprising the Chief
Executive Officer, Chief Financial Officer and other senior
leaders) is set out below:
|
|
2023
|
2022
|
|
|
|
|
|
Short-term employee
benefits
|
2,581
|
2,445
|
|
Social security and pension
costs
|
407
|
375
|
|
|
|
|
|
|
|
|
The highest paid director and
remuneration of the executive directors are as disclosed in the
Remuneration Committee Report in the annual report.
7. Reconciliation to adjusted
EBITDA
A key alternative performance
measure used by the directors to assess the underlying performance
of the business is adjusted EBITDA.
|
|
2023
|
2022
|
|
|
|
|
|
Adjusted EBITDA
reconciliation
|
|
|
|
Operating profit
|
38,082
|
5,930
|
|
Add back:
|
|
|
|
Loss on derivative
contracts
|
3,046
|
926
|
|
Depreciation of property, plant and
equipment
|
400
|
325
|
|
Depreciation of right-of-use
assets
|
408
|
80
|
Amortisation of
intangibles
|
|
|
|
|
|
|
The directors consider adjusted
EBITDA to be a more accurate representation of underlying business
performance (linked to cash from recurring and normalised
profitability, and available for shareholders) 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 (2022: loss of £926,000) arises on the reversal of the
financial derivative asset recognised at 31 December 2022, as
referenced in note 18.
8. 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.
|
|
|
|
Profit for the year attributable to
ordinary shareholders
|
|
|
|
|
|
|
|
Weighted average number of ordinary
shares
|
|
|
|
At the start of the year
|
16,649,618
|
16,316,215
|
Effect of shares issued in the
year
|
|
|
|
Number of ordinary shares for basic
earnings per share calculation
|
16,686,225
|
16,497,033
|
Dilutive effect of outstanding share
options
|
|
|
Number of ordinary shares for
diluted earnings per share calculation
|
|
|
|
|
|
|
|
Basic earnings per share
|
£1.85
|
0.29
|
Diluted earnings per
share
|
|
|
Adjusted earnings per
share
Adjusted earnings per share is based
on the result attributable to ordinary shareholders before
non-recurring items after tax, unrealised losses or gains on
derivative contracts and the weighted average number of ordinary
shares outstanding:
|
|
|
|
|
Adjusted earnings per
share
|
|
|
|
Profit for the year attributable to
ordinary shareholders
|
30,860
|
4,769
|
|
Add back operating profit adjusting
items (per note 7):
|
|
|
|
Loss on derivative
contracts after tax (gross loss, before tax, of
£3,046,000)
|
2,330
|
750
|
Adjusted basic profit for the
year
|
|
|
|
Adjusted earnings per
share
|
£1.99
|
£0.33
|
Diluted adjusted earnings per
share
|
|
|
9. Taxation
|
|
|
|
Current tax charge
Current year
Adjustment in respect of prior
years
|
|
|
|
|
|
|
|
Deferred tax charge
|
|
|
|
Current year
|
5,648
|
1,365
|
Adjustment in respect of prior
years
|
|
|
|
|
|
|
|
|
|
|
|
Tax recognised directly in
equity
|
|
|
|
Current tax recognised directly in
equity
|
-
|
-
|
Deferred tax recognised directly in
equity
|
|
|
Total tax recognised directly in
equity
|
|
|
|
|
|
|
Deferred taxes at 31 December 2023
and 31 December 2022 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 corporation tax payable by the
Group at 31 December 2023 was £4,016,000 (2022: £nil).
10. Dividends
The Group paid an interim dividend
of 3p per share in 2023 (2022: nil per share).
The directors propose a final
dividend in relation to 2023 of 37p per share (2022: 3p per
share).
11. Intangible assets
|
|
Electricity
licence
£'000
|
|
|
Software
and
systems
£'000
|
|
|
Cost
|
|
|
|
|
|
|
At 1 January 2023
|
62
|
216
|
686
|
3,289
|
4,253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortisation
|
|
|
|
|
|
|
At 1 January 2023
|
16
|
-
|
686
|
440
|
1,142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value at 31 December
2023
|
|
|
|
|
|
|
Cost
|
|
|
|
|
|
|
At 1 January 2022
|
62
|
-
|
686
|
1,079
|
1,827
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortisation
|
|
|
|
|
|
|
At 1 January 2022
|
14
|
-
|
473
|
7
|
494
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value at 31 December
2022
|
|
|
|
|
|
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.
The above intangible assets are
Group assets only.
12. Property, plant and
equipment
|
|
|
|
Fixtures
and
fittings
£'000
|
Plant
and
machinery
£'000
|
|
|
|
Cost
|
|
|
|
|
|
|
|
At 1 January 2023
|
150
|
3,274
|
342
|
73
|
490
|
4,329
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
|
|
At 1 January 2023
|
-
|
182
|
205
|
-
|
301
|
688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value at 31 December
2023
|
|
|
|
|
|
|
|
Cost
|
|
|
|
|
|
|
|
At 1 January 2022
|
150
|
3,274
|
337
|
-
|
353
|
4,114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
|
|
At 1 January 2022
|
-
|
73
|
103
|
-
|
187
|
363
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value at 31 December
2022
|
|
|
|
|
|
|
13. Right-of-use assets and lease
liabilities
|
|
|
|
|
|
Cost
|
|
|
|
|
At 1 January 2023
|
799
|
-
|
799
|
|
Additions
|
198
|
804
|
1,002
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
At 1 January 2023
|
686
|
-
|
686
|
|
|
|
|
|
|
|
|
|
|
Net book value at 31 December
2023
|
|
|
|
|
Cost
|
|
|
|
|
At 1 January 2022
|
799
|
-
|
799
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
At 1 January 2022
|
606
|
-
|
606
|
|
|
|
|
|
|
|
|
|
|
Net book value at 31 December
2022
|
|
|
|
The Company entered into a new
property lease in the year with a cost of £134,000 (2022: £nil).
There was no depreciation charge for the year (2022: £nil). The net
book value at 31 December 2023 of £134,000 (2022: £nil) is included
within the Group right-of-use asset as above.
The Group has a lease arrangement
for its main office facilities in Nottingham which was extended in
the year (on an arm's-length basis with a related party as
disclosed in note 26), and a number of motor vehicle lease
arrangements for engineering installation activities. Other leases
are short term or of low value underlying assets.
The table below provides details of
the Group's right-of-use assets and lease liabilities recognised on
the balance sheet at 31 December 2023:
The total cash outflow for leases in
2023 was £577,000 (2022: £161,000).
Lease payments not recognised as a
liability
The Group has elected not to
recognise a right-of-use asset or lease liability for short-term
leases (leases of expected terms of 12 months or less) or leases of
low value assets. Payments under such leases are expensed on a
straight-line basis. During FY23 the amount expensed to profit and
loss was £1,000 (2022: £40,000).
14. Investments in
subsidiaries
The Company has the following direct
and indirect investments in subsidiaries, all of which are
incorporated in the United Kingdom:
|
|
|
Proportion
of
shares
held
|
|
|
|
Yü Energy Holding Limited
|
Ordinary
shares
|
100%
|
|
Gas shipping services and holding
company
|
|
Yü Energy Retail Limited
|
Ordinary
shares
|
100%1
|
|
Supply of energy to
businesses
|
|
Yu Water Limited
|
Ordinary
shares
|
100%
|
|
Supply of water to
businesses
|
|
KAL Portfolio Trading
Limited
|
Ordinary
shares
|
100%
|
|
Dormant / holding
company2
|
|
Yü PropCo Limited
|
Ordinary
shares
|
100%2
|
|
Dormant / property
ownership2
|
|
Yü-Smart Limited
|
Ordinary
shares
|
100%
|
|
Smart metering installation and
maintenance
|
|
Yü Services Limited
|
Ordinary
shares
|
100%
|
|
Holding company
|
Kensington Meter Assets
Limited
|
|
|
|
Ownership of energy meter
assets
|
All of the above entities are
included in the consolidated financial statements and are direct
holdings of the Company except:
1 Yü Energy Retail
Limited is a subsidiary of Yü Energy Holding Limited.
2 Yü PropCo Limited
was, after the balance sheet date, transferred to be a direct
subsidiary of KAL Portfolio Trading Limited. Both entities were
previously dormant.
3 Kensington Meter
Assets Limited is a subsidiary of Yü Services Limited.
All entities have the same
registered address as Yü Group PLC.
15. Deferred tax assets
Deferred tax assets are attributable
to the following:
|
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
|
|
(293)
|
(21)
|
|
Tax value of loss
carry-forwards
|
|
|
|
792
|
4,717
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Movement in deferred tax in the
period:
|
|
|
Recognised
in
income
£'000
|
Recognised
directly
in
equity
£'000
|
At
31
December
2023
£'000
|
|
Property, plant and
equipment
|
(21)
|
(272)
|
-
|
(293)
|
|
Tax value of loss
carry-forwards
|
4,717
|
(3,925)
|
-
|
792
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recognised
in
income
£'000
|
Recognised
directly
in
equity
£'000
|
At
31
December
2022
£'000
|
|
Property, plant and
equipment
|
(45)
|
24
|
-
|
(21)
|
|
Tax value of loss
carry-forwards
|
5,812
|
(1,095)
|
-
|
4,717
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
16. Inventory
The Group has the following inventory
balances in relation to its engineering activities:
|
|
|
|
Stock of goods for resale
|
|
|
|
|
|
|
17. Trade and other
receivables
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
Gross trade receivables
|
|
|
|
39,435
|
30,977
|
Provision for doubtful debts and
expected credit loss
|
|
|
|
|
|
|
Net trade receivables
|
|
|
|
11,784
|
11,478
|
|
Accrued income - net of
provision
|
|
|
|
52,325
|
31,842
|
|
Prepayments
|
|
|
|
6,244
|
3,065
|
|
Cash collateral deposited for
commodity hedging
|
|
|
|
49,822
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
|
|
|
|
|
|
|
|
|
|
|
|
|
Movements in the provision for
doubtful debts and expected credit loss in gross trade receivables
are as follows:
|
|
2023
|
2022
|
|
|
|
|
|
Opening balance
|
19,499
|
6,007
|
|
Provisions recognised less unused
amounts reversed
|
14,824
|
21,071
|
Provision utilised in the
year
|
|
|
Closing balance - provision for
doubtful debts and expected credit losses
|
|
|
The directors have assessed the
level of provision on net trade receivables at 31 December 2023 by
reference to the recoverability of customer receivable balances
post the year end, and believe the provision carried is
appropriate. The provision is calculated based on an assessment of
risk, including factors such as the age of the balance outstanding,
whether the customer remains being supplied energy by the Group,
and the extent and position of the balance in the Group's credit
control process.
A reduced provision of £120,000
(2022: increase of £349,000) for expected credit loss on accrued
income was credited (2022: charged) in the period, leading to a
total provision at 31 December 2023 of £1,710,000 (2022:
£1,830,000). Expected credit losses and the recognition, where
appropriate, of previous customer credit balances are recognised in
the income statement as net impairment losses on financial and
contract assets.
The net impairment losses on
financial and contract assets of £14,309,000 (2022: £21,420,000)
consist of a £120,000 credit (2022: £349,000 charge) for expected
credit loss on accrued income, £526,000 (2022: £nil) credit for
other balances written back, and £14,824,000 (2022: £21,071,000)
provision for bad debts and expected credit loss on trade
receivables.
The directors consider that the
carrying amount of trade and other receivables approximates to
their fair value due to their maturities being short
term.
The Group balance of £49,822,000
(2022: £nil) 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. This
collateral has been fully recovered as part of arrangements to
secure new trading arrangements with Shell. Group other receivables
also includes immaterial amounts due from BEIS related energy
relief schemes (2022: £2,100,000).
18. Financial derivative
asset
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
Financial derivative
asset
|
|
|
|
|
|
|
Non-current
|
|
|
|
|
|
Financial derivative
asset
|
|
|
|
|
|
There is no financial derivative
asset or liability at 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 31 December 2022, the
£3,046,000 financial derivative asset 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.
19. Cash and cash
equivalents
The cash and cash equivalents
amounts exclude £522,000 (2022: £569,000) of cash which is included
in other receivables.
20. Trade and other
payables
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
Trade payables
|
|
|
|
6,492
|
4,636
|
|
Accrued expenses
|
|
|
|
88,737
|
55,281
|
|
Lease liabilities
|
|
|
|
354
|
112
|
|
Tax and social security
|
|
|
|
15,347
|
5,587
|
|
Other payables
|
|
|
|
12,915
|
8,244
|
Amounts due to subsidiary
undertakings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
|
|
|
|
|
|
|
Accrued expenses
|
|
|
|
-
|
158
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The contractual maturities
(representing undiscounted contractual cash flows) of the lease
liabilities are as follows:
|
|
|
|
|
|
|
|
Maturity analysis
|
|
|
|
|
|
|
Expiring in less than one
year
|
|
|
|
450
|
120
|
|
Expiring between two to five
years
|
|
|
|
954
|
50
|
Expiring after more than five
years
|
|
|
|
|
|
|
|
|
|
|
|
|
The remaining trade and other
payables have undiscounted contractual cash flows equal to their
fair value and are payable within a year.
21. Borrowings
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 (2022: £nil) which are
being amortised over the life of the loan.
The contractual maturities
(representing undiscounted contractual cash-flows) of the bank loan
are as follows:
|
|
|
|
|
|
|
|
Maturity analysis
|
|
|
|
|
|
|
Expiring in less than one
year
|
|
|
|
67
|
-
|
|
Expiring between two to five
years
|
|
|
|
268
|
-
|
Expiring after more than five
years
|
|
|
|
|
|
|
|
|
|
|
|
|
22. 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,
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 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, this credit risk is not
held at 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 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 31 December 2023 the Group held a
provision against doubtful debts and expected credit loss of
£29,361,000 (2022: £21,329,000). This is a combined provision
against both trade receivables at £27,651,000 (2022: £19,499,000)
and accrued income at £1,710,000 (2022: £1,830,000). The increase
reflects the growth in the Group's activities, which is mitigated
by strong customer collections recorded in 2023.
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 +/-£394,000.
If the expected customer credit loss
rate on accrued income was +/-10%, the gain or loss arising would
be +/-£171,000.
(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 license.
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.
A low cash collection scenario,
whereby customers delay or default on payment, would result, per
each 10% of cash collections compared to management's base
assumptions, in a full year impact on cash of
£2,172,000.
Any excess cash balances are held in
short-term deposit accounts which are either interest or
non-interest accounts. At 31 December 2023 the Group had
£32,477,000 (2022: £18,970,000) of cash and bank balances (as per
note 19) in addition to £49,800,000 cash collateral posted with our
previous trading counterparty which was repaid in Q1
2024.
23. Share capital and
reserves
|
|
|
|
|
|
Allotted and fully paid ordinary
shares of £0.005 each
|
|
|
|
|
The Company has one class of
ordinary share with nominal value of £0.005 each, 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 and Company-only 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 year relates to the exercise of various share
options, at exercise prices of between £0.005 and
£5.825.
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 year 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. As
disclosed in note 30, the directors will propose a resolution to
shareholders at the Company's annual general meeting so as to,
subject to court approval, cancel the Company's share premium
account.
The merger reserve was created as
part of the 2016 Group reorganisation prior to listing.
Retained earnings comprises the
Group's cumulative annual profits and losses.
24. 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.
The terms and conditions of the
outstanding grants made under the Group's schemes are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount
outstanding at
31
December
2023
|
Amount
outstanding at
31
December
2022
|
|
17 February 2016
|
3
|
17
February 2019
|
17
February 2026
|
£0.09
|
1
|
-
|
13,500
|
|
22 December 2016
|
3
|
22
December 2019
|
22
December 2026
|
£3.25
|
1
|
-
|
13,500
|
|
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
|
27,000
|
40,500
|
|
9 April 2018
|
6.5
|
9 April
2021
|
9 April
2028
|
£10.38
|
1
|
59,084
|
59,084
|
|
26 September 2018
|
6.5
|
26
September 2021
|
26
September 2028
|
£8.665
|
1
|
6,539
|
6,539
|
|
25 February 2019
|
6.5
|
25
February 2022
|
25
February 2029
|
£1.09
|
1
|
20,000
|
20,000
|
|
4 October 2020
|
3
|
30 April
2023
|
4 October
2030
|
£0.005
|
2
|
172,388
|
210,696
|
|
4 October 2020
|
3
|
30 April
2024
|
4 October
2030
|
£0.005
|
3
|
172,388
|
172,388
|
|
13 May 2022
|
1
|
30 April
2023
|
4 October
2030
|
£0.005
|
2
|
-
|
12,769
|
|
13 May 2022
|
2
|
30 April
2024
|
4 October
2030
|
£0.005
|
3
|
25,539
|
25,539
|
|
1 December 2022
|
3
|
1 January
2026
|
1 July
2026
|
£2.28
|
4
|
156,536
|
179,267
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average remaining
contractual life of options outstanding
|
|
|
The following vesting schedules
apply to the options:
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 performance over a qualifying period.
There were no share options granted
during 2023.
The number and weighted average
exercise price of share options were as follows:
|
|
|
|
|
Balance at the start of the
period
|
1,722,632
|
1,099,153
|
|
Granted
|
-
|
1,055,364
|
|
Forfeited
|
(97,731)
|
(98,482)
|
|
Lapsed
|
-
|
-
|
|
|
|
|
Balance at the end of the
period
|
|
|
Vested at the end of the
period
|
|
|
Exercisable at the end of the
period
|
|
|
|
Weighted average exercise price
for:
|
|
|
|
Options granted in the
period
|
-
|
£0.393
|
|
Options forfeited in the
period
|
£0.534
|
£0.256
|
Options exercised in the
period
|
|
|
|
Exercise price in the
range:
|
|
|
|
From
|
£0.005
|
£0.005
|
|
|
|
|
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, and the following
fair value assumptions were assumed in the prior year:
|
|
|
|
|
Dividend yield
|
-
|
0%
|
|
Risk-free rate
|
-
|
2.1%
|
|
Share price volatility
|
-
|
117%
|
|
Expected life (years)
|
-
|
3
years
|
Weighted average fair value of
options granted during the period
|
|
|
The share price volatility
assumption in 2022 was based on the actual historical share price
of the Group since listing in March 2016.
The total expenses recognised for
the year arising from share based payments are as
follows:
|
|
|
|
|
Equity-settled share based payment
expense
|
1,150
|
210
|
National Insurance costs related to
exercise of share options
|
|
|
Total share based payment
charge
|
|
|
National Insurance costs relate to
Employer's National Insurance payable on the exercise of unapproved
(for tax purposes) share options.
25. 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 31 December 2023 (2022: £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 the Company.
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 17, 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 31 December 2023 (2022: £nil).
26. 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 2023 the
Group paid £135,000 in lease rental and service charges to CPK
Investments Limited (2022: £120,000). There was a balance of
£35,000 owing to CPK Investments Limited at 31 December 2023 (2022:
£nil).
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 arm's-length basis).
All transactions with related
parties have been carried out on an arm's length basis.
27. Net cash/(net debt)
reconciliation
The net cash/(net debt) and movement
in the year were as follows:
|
|
|
|
|
Cash and cash equivalents
|
32,477
|
18,970
|
|
Borrowings
|
(355)
|
-
|
|
|
|
|
The movements in net cash/(net debt)
and lease liabilities were as follows:
|
|
|
|
|
|
Net cash less
leases
£'000
|
|
Balance as at 1 January
2022
|
7,049
|
-
|
7,049
|
(267)
|
6,782
|
|
Cash flows
|
11,921
|
-
|
11,921
|
121
|
12,042
|
|
|
|
|
|
|
|
|
Balance as at 31 December
2022
|
18,970
|
-
|
18,970
|
(160)
|
18,810
|
|
Cash flows:
|
|
|
|
|
|
|
Movement in cash and cash
equivalents
|
13,507
|
-
|
13,507
|
-
|
13,507
|
|
Drawdown of new
borrowings
|
-
|
(356)
|
(356)
|
-
|
(356)
|
|
Interest
|
-
|
(4)
|
(4)
|
(81)
|
(85)
|
|
Repayment
|
-
|
5
|
5
|
577
|
582
|
|
Recognition of leases on acquired
right-of-use assets
|
-
|
-
|
-
|
(1,002)
|
(1,002)
|
Modification of lease
liabilities
|
|
|
|
|
|
Balance as at 31 December
2023
|
|
|
|
|
|
28. Business combinations
There were no business combinations
or acquisitions in 2023.
During 2022, the Group acquired
(from administration) certain assets of Magnum Utilities Limited,
including the management team of the business. The acquisition
provided the foundation to create Yü Smart, being the new Group
capability to install, service and maintain smart meters and EV
charging assets. The fair value of the identifiable assets acquired
was £224,000, which was settled through consideration paid at or
closely after completion.
29. Subsidiary audit
exemption
As further disclosed in the full
annual report, Yu Water Limited (company number 09918643), Yü
Services Limited (11440201) and Yü-Smart Limited (12311416) are
exempt from the requirements of an audit, for the year ended 31
December 2023, under section 479A of the Companies Act
2006.
30. Post-balance sheet
events
The Group entered into the Trading
Agreement with Shell Group in February 2024, and terminated its
legacy arrangements with the previous trading
counterparty.
As disclosed in note 23, the
directors will propose, for consideration as a special resolution
at the Company's annual general meeting and subject to the
necessary court approvals required for such a process, the
cancellation of the Company's share premium account. If successful,
the share premium account of £11,908,911 would be credited to
distributable reserves.
On 19 February 2024, the shares of
Yü PropCo Limited were sold (intra-Group) by the Company to KAL
Portfolio Trading Limited as part of a corporate reorganisation.
The freehold land and building held by the Company was then sold by
the Company to KAL Portfolio Trading Limited at the estimated
market value (equivalent to book value) of £3,133,777. These
transactions do not impact the Group's consolidated balance sheet
position.
There are no other significant
post-balance sheet events.