TIDMYU.
RNS Number : 5964N
Yu Group PLC
26 September 2023
Yü Group PLC
(the "Group")
Results for the six months to 30 June 2023
MOVING TO THE SCALE STAGE OF OUR JOURNEY
Yü Group PLC (AIM: YU.), the independent supplier of gas and
electricity, meter asset owner, and installer of smart meters to
the UK corporate sector, announces its unaudited half-year results
for the six months to 30 June 2023.
Highlights
GBP'm unless stated 6 months to 30 June 12 months
to 31 Dec
H1 2023 H1 2022 Change FY 2022
------------------------------- ------- ------- ------ ------------
Financial
Revenue 194.9 129.2 +51% 278.6
Adjusted EBITDA(1) 13.7 2.7 +407% 7.9
Profit before tax 8.9 5.5 +62% 5.8
Operating cash inflow 18.7 10.3 +82% 14.7
Net cash 36.6 15.7 +133% 19.0
Earnings per share (diluted):
Adjusted 58p 10p +480% 30p
Statutory 40p 26p +54% 26p
Dividend per share 3p - +3p 3p
Operational
Average monthly bookings 51.3 14.3 +259% 24.5
Meter points (#'000) 39.7 26.1 +52% 25.5
Funded Smart Meter Assets
(#'000) 1.3 - +1.3 -
------------------------------- ------- ------- ------ ----------
-- Revenue growth of 51% to GBP194.9m (H1 2022: GBP129.2m),
through continued execution of growth strategy.
-- Adjusted EBITDA increased to GBP13.7m (H1 2022: GBP2.7m) as
the Group benefits from increased net customer contribution through
differentiated market offering.
-- Profit before tax increased to GBP8.9m (H1 2022: GBP5.5m),
reflecting a GBP4.2m unrealised non-cash charge (H1 2022: GBP3.3m
gain) for financial derivatives due to the Group's hedging policy
and declining commodity prices.
-- Digital platform and market position have enabled average
monthly bookings to increase to GBP51.3m (H1 2022: GBP14.3m) while
the number of meter points has increased by 52%.
-- Expansion of Y ü Smart, the Group's smart metering business,
providing improved customer insights and enabling more favourable
customer and Group outcomes. Rollout of smart meters commenced with
c4,000 installed at the end of H1 2023, of which 1,300 owned and to
provide an annuity income for the Group.
-- Group remains well capitalised with strong cash position of
GBP36.6m (H1 2022: GBP15.7m). Operating cash inflow of GBP18.7m is
up 82% (H1 2022: GBP10.3m).
-- Interim dividend of 3 pence per share (H1 2022: nil) as part
of the Group's progressive dividend policy.
Outlook
-- The Board expects the strong revenue and margin performance
to continue for H2 2023, with adjusted EBITDA now expected to
exceed GBP33m for FY 2023, being substantially ahead of current
market expectations.
-- The Group has an established and scalable platform, and
management are confident that the Group can deliver continued
significant growth in FY 2024 as it benefits from its subscription
model and market positioning, and strong margins on forward
contracts. The Digital by Default platform, differentiated offering
and current small share of a substantial market provides the Board
with confidence in driving sustainable growth for the long
term.
-- As of 31 August 2023, contracted revenue of GBP358m is due to
deliver in 2024; a 201% year-on-year increase. In addition, the
Group has a further cGBP145m contracted revenue for FY 2025 and
beyond, underpinning the long-term growth trajectory of the
business.
-- The ambition of achieving revenues of GBP500m at a 5% EBITDA
margin is no longer a stretch target for the Group, with the margin
target already exceeded and as such management will re-evaluate its
ambition for 2024 and beyond.
Note:
1. Adjusted EBITDA represents earnings before interest, tax,
depreciation and amortisation. It also excludes the loss or gain in
relation to the movement in the Group's financial derivative asset
and liability.
Bobby Kalar, Chief Executive Officer, said :
"We have kept our promise and delivered profitable, sustainable
growth in H1 2023 and I look forward to doing the same in H2 2023
and beyond.
I'm pleased to report another set of excellent results
reflecting our continuing strong and predictable performance.
Keeping in mind this is our sixth consecutive and consistent set of
results improvement, our ability to sustainably grow the business
is well proven and we are now firmly in the scale stage of our
journey.
Our financial KPI's continue to perform ahead of expectations.
Revenue is up by 51% to GBP194.9m, cash has increased 133% to
GBP36.6m, average monthly bookings have increased by 259% to
GBP51.3m and EBITDA has grown over 400% to GBP13.7m, compared to H1
2022. We now forecast a new record performance to follow in H2 2023
and we expect to see EBITDA over GBP33m for FY 2023, up from
current market expectations of cGBP19m.
Our Y ü Smart business is now fully embedded and delivering
impressive results since its launch in January 2023 and I'm pleased
that meter installation numbers are growing by the month. I expect
the Group to have installed at least 10,000 meters by the end of
this year. I believe the integration of Y ü Smart to the supply
business will be a game changer in terms of the Group's ability to
better understand customer usage and payment habits.
We have strong foundations, a proven strategy and great momentum
in a substantial market. We look forward to continuing to deliver
in H2 2023 and beyond."
Yü Group PLC
Bobby Kalar
Paul Rawson +44 (0) 115 975 8258
Liberum - Nominated Adviser
and Broker
Edward Mansfield
Satbir Kler +44 (0) 20 3100 2000
--------------------
Teneo
Giles Kernick
Tom Davies +44 (0) 20 7353 4200
--------------------
Analyst presentation
A presentation for analysts will be held at 9.00am today, 26
September at the offices of Teneo, 85 Fleet Street, EC4Y 1AE. To
register to attend or for webcast details please contact
Yugroup@teneo.com.
Notes to Editors
Information on the Group
Yü Group PLC is a leading challenger supplier of gas and
electricity focused on servicing the corporate sector throughout
the UK. We drive innovation through a combination of user-friendly
digital solutions and personalised, high quality customer service.
The Group plays a key role supporting businesses in their
transition to lower carbon technologies with a commitment to
providing sustainable energy solutions.
Yü Group has a clear strategy to deliver sustainable profitable
growth and value for all of our stakeholders, built on strong
foundations and with a robust hedging policy. In 2023 the Group
launched Yü Smart to support growth through new opportunities in
smart metering installation.
With a significant opportunity in a GBP50bn+ addressable market,
Yü Group is fast approaching the stated goal of GBP500m revenue,
and is already exceeding the 5%+ EBITDA margin target.
Chief Executive Officer's Statement
I'm delighted to again announce a record performance and strong
continuing momentum, as we continue to benefit from our robust
strategic priorities:
-- Bigger - high organic growth in a significant market with a less competitive landscape.
-- Better - unlocking commercial opportunities using operational
leverage and focussed working capital management to drive improved
profitability above our stated 5% EBITDA margin target, and strong
cash generation.
-- Faster - our Digital by Default and smart metering
investments bring new market opportunities and operational
efficiency; and
-- Stronger - delivered through an experienced team, a focus on
customer service to differentiate our offer, and a robust commodity
hedging strategy to protect against volatile markets.
Delivering on our Vision
It's been a tough few years for the energy industry and we've
seen significant consolidation in the B2B gas and electricity
supply sector primarily due to the impacts and aftermath of the
pandemic and the 'energy crisis' compounded by the war in Ukraine.
I'm pleased that the Group has successfully navigated these
challenges and generated, from H1 2020, revenue CAGR of 51%
alongside improved margins and cash generation - which is testament
to the resilience of the business. With industry headwinds of the
past few years quickly becoming tail-winds, I am confident we will
continue seeing the financial benefits of our bigger, better,
faster, stronger strategy.
Energy commodity market prices have declined c75% compared to
the same time last year. Nevertheless, our differentiated offering
has enabled the Group to record significant organic growth and gain
further market share, cementing our position as a leading
challenger brand. Average monthly bookings are up 259% to GBP51.3m
on the same period in 2022, and meter points have increased 52% in
H1 2023 to 39,700. Our customers are 'locking in' longer term
supply contracts more quickly to avoid commodity volatility and
guarantee price certainty.
The addressable market is some 3.3m business meter points, which
today is largely dominated (though with a declining market share)
by large suppliers. The Group remains well positioned to continue
to grow its 1.2% market share as it differentiates through
market-leading customer experience and speed of delivery through
its leading digital platform, providing ample scope for sustainable
growth over the medium term. The Group's management team and
systems have been invested in to build a business capable of
delivering significant scale.
Our vision remains to scale our business sustainably, and while
the Group will continue to explore 'bolt on' value-add
opportunities, we have consistently demonstrated our ability to
grow organically.
The Group is well-positioned for continued growth in a market
that has consolidated competition, higher barriers to entry and
increased regulator financial fitness checks for all entrants. I'm
pleased our strong balance sheet and disciplined governance means
we are ideally positioned to benefit from this new environment.
I am also extremely pleased with the recognition received in the
Sunday Times Best Places to Work 2023, which is testament to the
culture our colleagues are collectively creating.
Delivering sustainable growth with strong momentum
The Board is pleased with progress in relation to top line
growth and margin expansion and believes its Digital by Default
platform and the investment in Y ü Smart, coupled with its
differentiated market position, will enable margin to continue to
expand in the short and medium term. Therefore, the ambition of
achieving revenues of GBP500m at a 5% EBITDA margin is no longer a
stretch target for the Group and as such management will
re-evaluate its ambition for 2024 and beyond.
The events of the past few years have stress-tested the Group's
ability to grow sustainably in a volatile market. Having
successfully navigated the challenges and emerged stronger,
management believe there is even more opportunity in this huge
addressable market. While energy has been a topical subject over
the past few years, I see no let-up or substitute for the UK's
appetite or reliance on the use of gas and electricity, and while
some businesses will close, others will open in their place. As
such I see the remaining B2B suppliers benefitting from this less
competitive, more orderly market. This is reflective of our growth
in our contracted meter points which we target to increase
significantly.
I am pleased to report that, from its establishment in late
2022, the investment in Yü Smart is now bearing fruit. The Group
has installed c4,000 meters, of which 1,300 were funded by the
Group at 30 June 2023, and we expect to reach over 10,000 meters
installed by the end of the year. As well as customer and
operational benefits due to this smart meter roll-out, the
financing of meters will, in the medium-term, drive an index-linked
and enduring annuity income stream for the Group, providing
positive ROI. There remains a significant opportunity to unlock
smart metering opportunities, with 48% of business-to-business
meters still requiring conversion and mandatory targets on
suppliers.
Outlook
With a very strong performance in H1, and visibility of our
forward looking contract book, I expect that H2 2023 will be even
stronger. While our focus remains on delivering our 2023 targets
our 2024 contract book is building significantly with GBP358m
already due to be delivered in 2024.
We will continue to invest in our Y ü Smart business and
accelerate our smart meter installations program, and take market
share as we move to the scale stage of our journey. I look forward
to reporting progress in the coming months.
Financial Review
GBP'm unless stated 6 months to 30 June 12 months
to 31 Dec
H1 2023 H1 2022 Change FY 2022
---------------------------------- ------- ------- ------- ------------
Revenue 194.9 129.2 +51% 278.6
Gross Margin 33.6 18.2 +85% 44.1
Gross margin % 17.2% 14.1% +3.1% 15.8%
Net customer contribution
% 13.1% 6.7% +6.4% 8.2%
General overheads % (6.0%) (4.6%) (1.4%) (5.3%)
Adjusted EBITDA % 7.0% 2.1% +4.9% 2.8%
Adjusted EBITDA(1) 13.7 2.7 +11.0 7.9
Depreciation (0.6) (0.6) - (1.1)
Financial derivative (loss)/gain (4.2) 3.3 (7.5) (0.9)
Tax (1.6) (1.0) (0.6) (1.1)
------- ------- ------- ----------
Profit after tax 7.3 4.4 +2.9 4.8
------- ------- ------- ----------
Earnings per share (diluted):
Adjusted 58p 10p +48p 30p
Statutory 40p 26p +14p 26p
Operating cash inflow 18.7 10.3 +8.4 14.7
Overdue customer receivables 4days 7days (3)days 5days
Net cash 36.6 15.7 +20.9 19.0
Dividend per share 3p - +3p 3p
---------------------------------- ------- ------- ------- ----------
Substantial revenue growth and margin expansion
The six months to 30 June 2023 delivered significant organic
growth, with revenue of GBP194.9m, up 51% on H1 2022 and already at
70% of the total for the 12 months to 31 December 2022.
Strong bookings provide confidence in continued revenue growth
into H2 2023 and beyond. Contracted revenues of GBP358m to deliver
in FY 2024 (at 31 August 2023) are up 201% on the same period last
year, and already above the GBP247m contracted for FY 2023 as we
exited 2022. In addition, the Group has contracted revenues of
cGBP145m for FY 2025 and beyond underpinning the long-term growth
trajectory of the business.
More pleasingly, gross margin, net customer contribution and
adjusted EBITDA margin continue to improve in parallel with strong
growth at the top line.
The competitive environment and the Group's market positioning
have enabled healthy margins to be secured. The Group's robust and
optimised pricing systems, focus on delivering to the otherwise
under-serviced SME segment, efficient customer service and vertical
integration via Yü Smart has delivered a 17.2% gross margin in H1
2023 (H1 2022: 14.1%). Margins secured (and hedged in relation to
commodity prices) on the forward contract book are also robust.
The utilisation of our Digital by Default platform and data
analytics allows further enhancement of customer lifecycle value,
including renewal strategies, customer receivables management and
operational and hedging efficiency.
The investments made in the people, systems and processes, and
the market opportunity available, manifest themselves in an
improved net customer contribution (which measures gross margin
less bad debt as a percentage of revenue). The Group achieved 13.1%
for H1 2023, a continued progression from 6.7% achieved for H1 2022
and 9.4% for H2 2022 (FY 2022: 8.2%).
In addition to the increased gross margin of 17.2%, the charge
for bad debt has reduced to 4.1% of revenue (from 7.4% in H1 2022)
reflecting strong cash collection from customers. The utilisation
of Yü Smart to support customer debt management services and
improve customer outcomes remains a significant management focus
for further improvement to NCC in H2 2023 and beyond.
It is also of note that Overdue Customer Receivables ("OCR"), a
measure of delayed billings and overdue debt net of provisions, is
at only 4 days' sales. This is a result of the closing bad debt
provision reflecting the uncertainty in energy markets and the
wider economic context and allowing for the removal of some BEIS
customer subsidies. Cash collection in H1 2023 was c98% of billed
value, suggesting a potential to achieve an ongoing 2% bad debt
charge should current performance continue. The Board continue to
monitor the level of bad debt and highlights the potential for
further significant upside to underlying profitability.
General overheads at 6.0% of revenue (H1 2022: 4.6%) reflect the
investment in mobilising Yü Smart activities, certain share-based
payment charges, and investment in sales and marketing to further
accelerate growth.
Adjusted EBITDA margin of 7.0% for H1 2023 is above the stated
5.0% management target and the Board will look to further invest in
growth and efficiency enabling overheads to further build market
share and take advantage of the Group's scalable platforms and
drive operational leverage.
Strong balance sheet and cash position
The Group's profit after tax of GBP7.3m (H1 2022: GBP4.4m) is
net of a GBP4.2m charge (H1 2022: GBP3.3m gain) on the movement in
the recognised financial derivative liability (31 December 2022:
asset) for a small proportion of forward commodity trades which do
not meet the strict criteria of own-use contracts under accounting
standards. This unrealised charge is a result of a declining
commodity market. The Board exclude such gain or loss from adjusted
EBITDA as it is unrealised, non-cash, and is considered in the
pricing strategy and energy balancing operations of the Group.
Adjusted EPS, fully diluted, for the six months to 30 June 2022
is 58p, up 48p (H1 2022: 10p). Reflecting the non-cash financial
derivative charge referred above, Statutory Reported EPS is 40p (H1
2022: 26p including gain on financial derivative).
Operating cash inflow of GBP18.7m (H1 2022: GBP10.3m) benefits
from strong customer receivable collection rates. The performance
is also net of GBP16.5m of outflow in respect of the prepayment of
energy commodity costs.
The Group has incurred capital-expenditure of GBP0.4m in H1 2023
(H1 2022: GBP1.6m) which is predominantly due to the investment in
smart meters. As the Group starts to scale its funding in smart
meter assets, an investment in c10,000 new smart meters would have
capital-expenditure of approximately GBP2m, with an index-linked,
recurring, 15+ year anticipated annuity income stream of cGBP0.4m
per year. This annuity provides additional margin value in addition
to the other very significant financial and operational benefits
that smart meters enable.
The Board expects a new GBP5.2m debt facility to close in the
short term, with debt drawdowns to commence in H2 2023 as the
Group's smart metering installations scale. The funding will
introduce a manageable level of debt to the Group, secured on the
smart meter assets and funded over a 12+ year term without recourse
to the wider Group.
During H1 2023, the Group recognised GBP1.6m of right-of use
assets, and related lease liabilities, under IFRS 16 (Leases). This
includes GBP1.0m in relation to the extension of the lease of the
Group's Nottingham head office and GBP0.6m for short term leases of
motor vehicles for utilisation by the Group's engineering team.
The Board notes net assets of GBP22.1m at 30 June 2023, an
increase on the GBP13.8m at 30 June 2022. Net current assets are
GBP16.6m, up GBP11.6m from the GBP5.0m at 30 June 2022.
Net cash of GBP36.6m is up GBP20.9m on 30 June 2022 after
accounting for the GBP16.5m of prepaid energy commodity costs
referred to above. As expected, the Group repaid its GBP15.2m
annual Renewable Obligation Certificate liability to Ofgem on 31
August 2023, and cash is now expected to significantly increase to
31 December 2023.
Dividend
The Board paid GBP0.5m in dividends in June 2023, following the
3p final FY 2022 dividend declared at the annual general meeting.
There was no interim dividend or payments in the previous year.
As part of its capital allocation policy balancing working
capital and investment for growth, the Board is establishing a
progressive dividend policy.
The Board is now declaring a 3p per share interim dividend (H1
2022: nil), equating to a payment of GBP0.5m. The shares will go
ex-dividend on 23 November 2023 and the record date is 24 November
2023, with a payment date of 20 December 2023.
Condensed consolidated statement of profit and loss and other
comprehensive income
For the six months ended 30 June 2023
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2023 2022 2022
(Unaudited) (Unaudited) (Audited)
Notes GBP'000 GBP'000 GBP'000
------------------------------------------- ------ ------------ ------------ ------------
Revenue 194,899 129,221 278,587
Cost of sales (161,336) (111,008) (234,462)
---------------------------------------------- ------ ------------ ------------ ------------
Gross profit 33,563 18,213 44,125
---------------------------------------------- ------ ------------ ------------ ------------
Operating costs before share based payment
charges (12,027) (6,405) (15,565)
Operating costs - share based payment
charges 19 (471) (48) (284)
---------------------------------------------- ------ ------------ ------------ ------------
Total operating costs 3 (12,498) (6,453) (15,849)
Net impairment losses on financial and
contract assets 13 (8,085) (9,614) (21,420)
Unrealised (loss) / gain on derivatives 5 (4,221) 3,355 (926)
---------------------------------------------- ------ ------------ ------------ ------------
Operating profit 8,759 5,501 5,930
Finance income 4 178 - 1
Finance costs 4 (36) (24) (91)
---------------------------------------------- ------ ------------ ------------ ------------
Profit before tax 8,901 5,477 5,840
Taxation 7 (1,591) (1,040) (1,071)
---------------------------------------------- ------ ------------ ------------ ------------
Profit and total comprehensive income
for the year 7,310 4,437 4,769
---------------------------------------------- ------ ------------ ------------ ------------
Earnings per share
Basic 6 GBP0.44 GBP0.27 GBP0.29
Diluted 6 GBP0.40 GBP0.26 GBP0.26
---------------------------------------------- ------ ------------ ------------ ------------
Condensed consolidated balance sheet
At 30 June 2023
30 June 30 June 31 December
2023 2022 2022
(Unaudited) (Unaudited) (Audited)
Notes GBP'000 GBP'000 GBP'000
------------------------------- ----- ------------ ------------ -----------
ASSETS
Non-current assets
Intangible assets 9 2,810 2,578 3,111
Property, plant and equipment 10 3,838 3,636 3,641
Right-of-use assets 11 1,533 153 113
Deferred tax assets 7 3,709 4,892 5,300
Financial derivative asset 16 - 1,793 1,562
------------------------------- ----- ------------ ------------ -----------
11,890 13,052 13,727
------------------------------- ----- ------------ ------------ -----------
Current assets
Stock 12 297 - 345
Trade and other receivables 13 53,794 32,525 54,339
Financial derivative asset 16 - 5,534 1,484
Cash and cash equivalents 14 36,621 15,657 18,970
------------------------------- ----- ------------ ------------ -----------
90,712 53,716 75,138
------------------------------- ----- ------------ ------------ -----------
Total assets 102,602 66,768 88,865
------------------------------- ----- ------------ ------------ -----------
LIABILITIES
Current liabilities
Trade and other payables 15 (73,070) (48,754) (73,860)
Financial derivative liability 16 (1,049) - -
------------------------------- ----- ------------ ------------ -----------
(74,119) (48,754) (73,860)
------------------------------- ----- ------------ ------------ -----------
Non-current liabilities
Trade and other payables 15 (6,276) (4,243) (206)
Financial derivative liability 16 (126) - -
------------------------------- ----- ------------ ------------ -----------
(6,402) (4,243) (206)
------------------------------- ----- ------------ ------------ -----------
Total liabilities (80,521) (52,997) (74,066)
------------------------------- ----- ------------ ------------ -----------
Net assets 22,081 13,771 14,799
------------------------------- ----- ------------ ------------ -----------
EQUITY
Share capital 83 83 83
Share premium 11,786 11,690 11,785
Merger reserve (50) (50) (50)
Retained earnings 10,262 2,048 2,981
------------------------------- ----- ------------ ------------ -----------
22,081 13,771 14,799
------------------------------- ----- ------------ ------------ -----------
Condensed consolidated statement of changes in equity
For the six months ended 30 June 2023
Share Share Merger Retained
capital premium reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- -------- -------- -------- --------- --------
Balance at 1 January 2023 83 11,785 (50) 2,981 14,799
-------------------------------- -------- -------- -------- --------- --------
Total comprehensive income
for the period
Profit for the period - - - 7,310 7,310
Other comprehensive income - - - - -
-------------------------------- -------- -------- -------- --------- --------
- - - 7,310 7,310
-------------------------------- -------- -------- -------- --------- --------
Transactions with owners
of the Company
Contributions and distributions
Equity-settled share based
payments - - - 471 471
Deferred tax on share based
payments - - - - -
Proceeds from share issues - 1 - - 1
Equity dividend paid in
the period - - - (500) (500)
-------------------------------- -------- -------- -------- --------- --------
Total transactions with
owners of the Company - 1 - (29) (28)
-------------------------------- -------- -------- -------- --------- --------
Balance at 30 June 2023 83 11,786 (50) 10,262 22,081
-------------------------------- -------- -------- -------- --------- --------
Balance at 1 January 2022 82 11,690 (50) (2,437) 9,285
-------------------------------- -------- -------- -------- --------- --------
Total comprehensive income
for the period
Profit for the period - - - 4,437 4,437
Other comprehensive income - - - - -
-------------------------------- -------- -------- -------- --------- --------
- - - 4,437 4,437
-------------------------------- -------- -------- -------- --------- --------
Transactions with owners
of the Company
Contributions and distributions
Equity-settled share based
payments - - - 48 48
Deferred tax on share based
payments - - - - -
Proceeds from share issues 1 - - - 1
-------------------------------- -------- -------- -------- --------- --------
Total transactions with
owners of the Company 1 - - 48 49
-------------------------------- -------- -------- -------- --------- --------
Balance at 30 June 2022 83 11,690 (50) 2,048 13,771
-------------------------------- -------- -------- -------- --------- --------
Condensed consolidated statement of cash flows
For the six months ended 30 June 2023
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2023 2022 2022
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
----------------------------------------------------- ------------ ------------ ------------
Cash flows from operating activities
Profit for the financial period 7,310 4,437 4,769
Adjustments for:
Depreciation of property, plant and equipment 167 168 325
Depreciation of right-of-use assets 228 40 80
Amortisation of intangible assets 339 332 648
Unrealised loss / (gain) on derivative contracts 4,221 (3,355) 926
Decrease / (increase) in stock 48 - (345)
Decrease / (increase) in trade and other receivables 545 4,814 (17,000)
Increase in trade and other payables 3,900 2,767 23,889
Finance income (178) - (1)
Finance costs 36 24 91
Taxation 1,591 1,040 1,071
Share based payment charge 471 48 284
----------------------------------------------------- ------------ ------------ ------------
Net cash from operating activities 18,678 10,315 14,737
----------------------------------------------------- ------------ ------------ ------------
Cash flows from investing activities
Purchase of property, plant and equipment (364) (53) (215)
Payment of software development costs (38) (1,205) (2,210)
Payment of consideration on business combination - (372) (216)
----------------------------------------------------- ------------ ------------ ------------
Net cash used in investing activities (402) (1,630) (2,641)
----------------------------------------------------- ------------ ------------ ------------
Cash flows from financing activities
Net proceeds from share option exercises 1 1 96
Cash-settled share based payment charge - - (74)
Interest received / (paid) 142 (17) (76)
Principal element of lease payments (268) (61) (121)
Equity dividends paid (500) - -
----------------------------------------------------- ------------ ------------ ------------
Net cash used in financing activities (625) (77) (175)
----------------------------------------------------- ------------ ------------ ------------
Net increase in cash and cash equivalents 17,651 8,608 11,921
Cash and cash equivalents at the start of the
period 18,970 7,049 7,049
----------------------------------------------------- ------------ ------------ ------------
Cash and cash equivalents at the end of the
period 36,621 15,657 18,970
----------------------------------------------------- ------------ ------------ ------------
Notes to the condensed consolidated financial statements
1. Significant accounting policies
Yü Group PLC (the "Company") is a public limited company
incorporated in the United Kingdom, with company number 10004236.
The Company is limited by shares and the Company's ordinary shares
are traded on AIM.
These condensed consolidated half yearly financial statements as
at and for the six months ended 30 June 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 SMEs and larger corporates in the UK.
Basis of preparation
The condensed consolidated interim financial information for the
six months ended 30 June 2023 has been prepared in accordance with
UK-adopted International Accounting Standards.
The unaudited condensed consolidated interim financial report
for the six months ended 30 June 2023 does not include all of the
information required for full annual financial statements and does
not comprise statutory accounts within the meaning of section 434
of the Companies Act 2006. This report should therefore be read in
conjunction with the Group annual report for the year ended 31
December 2022, which is available on the Group's investor website
(yugroupplc.com). The comparative figures for the year ended 31
December 2022 have been audited. The comparative figures for the
half year ended 30 June 2022, and the actual figures for the half
year to 30 June 2023, are unaudited.
The accounting policies adopted in these condensed consolidated
half yearly financial statements are consistent with the policies
applied in the 2022 Group financial statements.
The consolidated financial statements are presented in British
pounds sterling (GBP), which is the functional and presentational
currency of the Group. All values are rounded to the nearest
thousand (GBP'000), except where otherwise indicated.
Going concern
The financial statements are prepared on a going concern
basis.
At 30 June 2023, the Group had net assets of GBP22.1m (30 June
2022: GBP13.8m and 31 December 2022: GBP14.8m) and cash of GBP36.6m
(30 June 2022: GBP15.7m and 31 December 2022: GBP19.0m).
Management prepares detailed budgets and forecasts of financial
performance and cash flow (including capital commitments) over the
coming 18 months as a minimum. The Board has confidence in
achieving such targets and forecasts and has performed
comprehensive analysis of various risks and sensitivities in
relation to performance, the energy market and the wider
economy.
The Group continues to demonstrate significant progress in its
results and cash liquidity. This has led to adjusted EBITDA
profitability (a close profitability measure to cash generated from
operations) in H1 2023 which is significantly above the same period
in 2022. Cash available has also increased significantly, and is
above more cautious management forecasts.
The directors are pleased to note the increased cash balance,
and the consistent cash generation and improvement in the financial
position of the Group.
The Board continue to ensure the implementation of a hedging and
trading risk mandate which reduces profit risk whilst also
considering Group credit lines, and in particular to avoid margin
calls from counterparties which are beyond the Group's then cash
balance. The board is also considering potential medium term
approaches to hedging arrangements.
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 these estimates are based on management's best knowledge,
actual results ultimately may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and in any future periods
affected. The key areas of estimation and judgement remain as
detailed in the Group's 2022 annual report.
Revenue recognition
The Group enters into contracts to supply gas, electricity and
water to its customers. Revenue represents the fair value of the
consideration received or receivable from the sale of actual and
estimated gas, electricity and water supplied during the year, net
of discounts, climate change levy and value-added tax. Revenue is
recognised on consumption, being the point at which the transfer of
the goods or services to the customer takes place and based on an
assessment of the extent to which performance obligations have been
achieved.
Due to the nature of the energy supply industry and its reliance
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 through historical
actual usage data. It also considers any adjustments expected where
an estimated meter reading (using industry data) is expected to be
different to the consumption pattern of the customer.
The Group's operations include the supply of metering services,
or the installation of metering assets, on behalf of Group
companies. Such revenues are eliminated on consolidation. Where
services for metering services or metering installation services
are for the benefit of third parties, revenue is recognised in line
with the work performed. Revenue for smart metering services is
recognised at a point in time.
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, results in customers being provided
financial support through a contribution to their energy charges.
Under the EBRS arrangement, amounts receivable from BEIS do not
impact the Group's contract with customers, and therefore the
amounts contributed under EBRS 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.
Financial instruments
Non-derivative financial instruments
Non-derivative financial instruments comprise trade and other
receivables, cash and cash equivalents and trade and other
payables.
Trade and other receivables
Trade and other receivables are recognised initially at fair
value. Subsequent to initial recognition they are measured at
amortised cost using the effective interest method, less any
impairment and expected credit losses.
Impairment
The Group has elected to measure credit loss allowances for
trade receivables and accrued income at an amount equal to lifetime
expected credit losses ("ECLs"). Specific impairments are made when
there is a known impairment need against trade receivables and
accrued income. When estimating ECLs, the Group assesses
reasonable, relevant and supportable information, which does not
require undue cost or effort to produce. This includes quantitative
and qualitative information and analysis, incorporating historical
experience, informed credit assessments and forward looking
information. Loss allowances are deducted from the gross carrying
amount of the assets.
Trade and other payables
Trade and other payables are recognised initially at fair value.
Subsequent to initial recognition they are measured at amortised
cost using the effective interest method.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and short-term
deposits (monies held on deposit are accessible with one month's
written notice). Cash and cash equivalents exclude any cash
collateral posted with third parties and bank accounts which are
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, cash balances which are not yet transferred to the
Group's main operating bank accounts.
Bank overdrafts that are repayable on demand and form an
integral part of the Group's cash management are included as a
component of cash and cash equivalents.
Derivative financial instruments
The Group uses commodity purchase contracts to hedge its
exposures to fluctuations in gas and electricity commodity prices.
Most commodity purchase contracts are expected to be delivered
entirely to the Group's customers and therefore the Group
classifies them as "own use" contracts and outside the scope of
IFRS 9 "Financial Instruments". This is achieved when:
-- a physical delivery takes place under all such contracts;
-- the volumes purchased or sold under the contracts correspond
to the Group's operating requirements; and
-- no part of the contract is settled net in cash.
This classification as "own use" allows the Group not to
recognise the commodity purchase contracts on its balance sheet at
the year end.
The commodity purchase contracts that do not meet the criteria
listed above 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 17.
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.
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.
Stock
Stock is held at the lower of cost 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 derived from its principal
activity, which is the supply of utilities to business customers in
the UK. Consequently, the Group has one reportable segment, which
is the supply of electricity, gas and water to businesses.
Segmental profit is measured at operating profit level, as shown on
the face of the statement of profit and loss.
As there is only one reportable segment whose profit, expenses,
assets, liabilities and cash flows are measured and reported on a
basis consistent with the financial statements, no additional
numerical disclosures are necessary.
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.
2. Segmental analysis
Operating segments
The directors consider there to be two operating segments, being
the supply of utilities to businesses ("Yü Retail") and the
installation, maintenance and financing of energy assets ("Yü
Smart"). Information on the revenues arising from the installation,
maintenance and financing of energy assets will be disclosed
separately when the revenue becomes material to the Group.
Segmental assets and liabilities are not reviewed by the Board.
Geographical segments
100% of Group revenue is generated from sales to customers in
the United Kingdom (2022: 100%) and is recognised at a point in
time.
The Group has no individual customers representing over 10% of
revenue (2022: none).
3. Operating profit
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
---------------------------------------------- -------- -------- -----------
Profit for the period has been arrived at
after charging:
Staff costs 6,757 3,147 9,045
Depreciation of property, plant and equipment 167 168 325
Depreciation of right-of-use assets 228 40 80
Amortisation of intangible assets 339 332 648
---------------------------------------------- -------- -------- -----------
4. Net finance income / (expense)
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
------------------------------------------------ -------- -------- -----------
Bank interest receivable 92 - 1
Other interest receivable 86 - -
------------------------------------------------ -------- -------- -----------
Total finance income 178 - 1
------------------------------------------------ -------- -------- -----------
Bank interest and other finance charges payable - (17) (77)
Interest on lease liabilities (36) (7) (14)
------------------------------------------------ -------- -------- -----------
Total finance costs (36) (24) (91)
------------------------------------------------ -------- -------- -----------
5. Reconciliation to adjusted EBITDA
A key alternative performance measure used by the directors to
assess the underlying performance of the business is adjusted
EBITDA.
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
------------------------------------------------- -------- -------- -----------
Adjusted EBITDA reconciliation
Operating profit 8,759 5,501 5,930
Add back:
Unrealised loss / (gain) on derivative contracts 4,221 (3,355) 926
Depreciation of property, plant and equipment 167 168 325
Depreciation of right-of-use assets 228 40 80
Amortisation of intangibles 339 332 648
------------------------------------------------- -------- -------- -----------
Adjusted EBITDA 13,714 2,686 7,909
------------------------------------------------- -------- -------- -----------
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 unrealised loss on derivative contracts of GBP4,221,000 (30
June 2022: GBP3,355,000 gain, and 31 December 2022: GBP926,000
loss) arises from a small proportion of forward commodity hedges
which do not meet the strict "own use" criteria under IFRS 9
("Financial Instruments"). Such portion of forward commodity trades
are recognised at their fair value. The unrealised loss in the
period is a result of the declining value of global commodity
markets during H1 2023. The Board exclude such gain or loss from
adjusted EBITDA as it is unrealised, and as it is considered in the
contract pricing strategy and energy balancing operations of the
Group.
6. Earnings per share
Basic earnings per share
Basic earnings per share is based on the profit attributable to
ordinary shareholders and the weighted average number of ordinary
shares outstanding.
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
--------------------------------------------- -------- -------- -----------
Profit for the year attributable to ordinary
shareholders 7,310 4,437 4,769
--------------------------------------------- -------- -------- -----------
30 June 30 June 31 December
2023 2022 2022
----------------------------------------------- ---------- ---------- -----------
Weighted average number of ordinary shares
At the start of the period 16,649,618 16,316,215 16,316,215
Effect of shares issued in the period 12,938 125,000 180,818
----------------------------------------------- ---------- ---------- -----------
Number of ordinary shares for basic earnings
per share calculation 16,662,556 16,441,215 16,497,033
Dilutive effect of outstanding share options 1,615,188 804,932 1,722,632
----------------------------------------------- ---------- ---------- -----------
Number of ordinary shares for diluted earnings
per share calculation 18,277,744 17,246,147 18,219,665
----------------------------------------------- ---------- ---------- -----------
30 June 30 June 31 December
2023 2022 2022
-------------------------- ------- ------- -----------
Basic earnings per share GBP0.44 GBP0.27 GBP0.29
Diluted earnings per share GBP0.40 GBP0.26 GBP0.26
-------------------------- ------- ------- -----------
Adjusted earnings per share
Adjusted earnings per share is based on the result attributable
to ordinary shareholders before non-recurring items after tax and
unrealised gains on derivative contracts and the weighted average
number of ordinary shares outstanding:
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
------------------------------------------------- -------- -------- -----------
Adjusted earnings per share
Profit for the year attributable to ordinary
shareholders 7,310 4,437 4,769
Add back:
Unrealised loss / (gain) on derivative contracts
after tax (June 2023: gross loss, before tax,
of GBP4,221,000 per note 5) 3,292 (2,718) 750
------------------------------------------------- -------- -------- -----------
Adjusted basic profit for the period 10,602 1,719 5,519
------------------------------------------------- -------- -------- -----------
Adjusted earnings per share GBP0.64 GBP0.10 GBP0.33
Diluted adjusted earnings per share GBP0.58 GBP0.10 GBP0.30
------------------------------------------------- -------- -------- -----------
7. Taxation
The tax charge for the period has been estimated using a rate of
19% for the period to 31 March 2023 and 25% for the period after,
considering certain allowances and adjustments in calculating the
Group's taxable profits and an over provision in FY 2022.
The Group has incurred a charge against deferred tax in the
period, rather than a current tax charge.
Deferred taxes at the balance sheet date have been estimated
using the enacted tax rates at that date and are reflected in these
financial statements on that basis. The deferred tax arises in view
of significant tax losses available to set against future profits
of the Group.
8. Dividends
The Group reinstated its progressive dividend policy based on
the 2022 annual results. The 2022 final dividend of 3 pence per
share, being GBP500,000 in total, was paid in June 2023.
The directors propose an interim dividend for the period to 30
June 2023 of 3 pence per share (2022: nil per share). The interim
dividend is payable 20 December 2023.
9. Intangible assets
Software
Electricity Customer and
licence Goodwill books systems Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ----------- -------- -------- -------- ---------
Cost
At 1 January 2023 62 216 686 3,289 4,253
Additions - - - 38 38
------------------------------- ----------- -------- -------- -------- ---------
At 30 June 2023 62 216 686 3,327 4,291
------------------------------- ----------- -------- -------- -------- ---------
Amortisation
At 1 January 2023 16 - 686 440 1,142
Charge for the period 1 - - 338 339
------------------------------- ----------- -------- -------- -------- ---------
At 30 June 2023 17 - 686 778 1,481
------------------------------- ----------- -------- -------- -------- ---------
Net book value at 30 June 2023 45 216 - 2,549 2,810
------------------------------- ----------- -------- -------- -------- ---------
Cost
At 1 January 2022 62 - 686 1,079 1,827
Additions 142 230 - 1,205 1,577
------------------------------- ----------- -------- -------- -------- ---------
At 30 June 2022 204 230 686 2,284 3,404
------------------------------- ----------- -------- -------- -------- ---------
Amortisation
At 1 January 2022 14 - 473 7 494
Charge for the period 1 - 172 159 332
------------------------------- ----------- -------- -------- -------- ---------
At 30 June 2022 15 - 645 166 826
------------------------------- ----------- -------- -------- -------- ---------
Net book value at 30 June 2022 189 230 41 2,118 2,578
------------------------------- ----------- -------- -------- -------- ---------
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 of GBP216,000 arose on the acquisition of the
management and certain other assets of Magnum Utilities Limited in
May 2022, as disclosed in the 2022 annual report. The acquisition
created the foundations for the Y Smart business unit. The goodwill
and licence investment recognised in June 2022 was subsequently
reclassified in the 31 December 2022 balance sheet.
Goodwill is reviewed 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 the two separate
acquisitions that took place in 2020. They represent the fair value
of the customer contracts purchased in those acquisitions. The
intangible assets were amortised over a useful economic life of two
years, representing the average contract length of the customer
books acquired.
Software and systems assets relate to investments made in
third-party software packages, and directly attributable internal
personnel costs in implementing those platforms, as part of the
Group's Digital by Default strategy.
The amortisation charge is recognised in operating costs in the
income statement.
10. Property, plant and equipment
Fixtures
Freehold Freehold and Plant and Computer
land property fittings machinery equipment Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ -------- --------- --------- ---------- ---------- --------
Cost
At 1 January 2023 150 3,274 342 73 490 4,329
Additions - - 94 227 43 364
------------------ -------- --------- --------- ---------- ---------- --------
At 30 June 2023 150 3,274 436 300 533 4,693
------------------ -------- --------- --------- ---------- ---------- --------
Depreciation
At 1 January 2023 - 182 205 - 301 688
Charge for the
period - 55 51 7 54 167
------------------ -------- --------- --------- ---------- ---------- --------
At 30 June 2023 - 237 256 7 355 855
------------------ -------- --------- --------- ---------- ---------- --------
Net book value
at 30 June 2023 150 3,037 180 293 178 3,838
------------------ -------- --------- --------- ---------- ---------- --------
Cost
At 1 January 2022 150 3,274 337 - 353 4,114
Additions - - - - 53 53
------------------ -------- --------- --------- ---------- ---------- --------
At 30 June 2022 150 3,274 337 - 406 4,167
------------------ -------- --------- --------- ---------- ---------- --------
Depreciation
At 1 January 2022 - 73 103 - 187 363
Charge for the
period - 55 57 - 56 168
------------------ -------- --------- --------- ---------- ---------- --------
At 30 June 2022 - 128 160 - 243 531
------------------ -------- --------- --------- ---------- ---------- --------
Net book value
at 30 June 2022 150 3,146 177 - 163 3,636
------------------ -------- --------- --------- ---------- ---------- --------
Plant and machinery additions relate to investment in smart
metering assets, which are expected to have an economic life of 15
years.
11. Right-of-use assets and lease liabilities
Buildings Motor Vehicles Total
GBP'000 GBP'000 GBP'000
------------------------------- --------- -------------- ---------
Cost
At 1 January 2023 799 - 799
Additions 1,033 615 1,648
-------------------------------- --------- -------------- ---------
At 30 June 2023 1,832 615 2,447
-------------------------------- --------- -------------- ---------
Amortisation
At 1 January 2023 686 - 686
Charge for the period 76 152 228
-------------------------------- --------- -------------- ---------
At 30 June 2023 762 152 914
-------------------------------- --------- -------------- ---------
Net book value at 30 June 2023 1,070 463 1,533
-------------------------------- --------- -------------- ---------
Cost
At 1 January 2022 799 - 799
Additions - - -
------------------------------- --------- -------------- ---------
At 30 June 2022 799 - 799
-------------------------------- --------- -------------- ---------
Amortisation
At 1 January 2022 606 - 606
Charge for the period 40 - 40
-------------------------------- --------- -------------- ---------
At 30 June 2022 646 - 646
-------------------------------- --------- -------------- ---------
Net book value at 30 June 2022 153 - 153
-------------------------------- --------- -------------- ---------
The Group has a lease arrangement for its office facilities in
Nottingham and Bolton. The Nottingham lease has been extended (on
an arms-length basis) during the period, resulting in a
GBP1,033,000 increase in the right-of-use asset.
The Group leases vans for engineers in order to provide smart
metering installation services. Due to the increase in engineers
and associated vans, a GBP615,000 additional asset and lease
liability is recognised during the period.
12. Stock
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
--------------------------- -------- -------- -----------
Stocks of goods for resale 297 - 345
--------------------------- -------- -------- -----------
297 - 345
--------------------------- -------- -------- -----------
Stock relates to smart meters purchased which are expected to be
installed on customer sites as part of the Group's objective of
installing and financing new smart meters.
13. Trade and other receivables
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
------------------------------------------ -------- -------- -----------
Current
Gross trade receivables 34,049 23,320 30,977
Provision for doubtful debts and expected
credit loss (23,329) (13,672) (19,499)
------------------------------------------ -------- -------- -----------
Net trade receivables 10,720 9,648 11,478
Accrued income - net of provision 17,410 14,994 31,842
Prepayments 5,190 3,854 3,065
Other receivables 20,474 4,029 7,954
------------------------------------------ -------- -------- -----------
53,794 32,525 54,339
------------------------------------------ -------- -------- -----------
Movements in the provision for doubtful debts and expected
credit loss in gross trade receivables are as follows:
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
------------------------------------------ -------- -------- -----------
Opening balance 19,499 6,007 6,007
Provisions recognised less unused amounts
reversed 7,864 10,813 21,071
Provision utilised in the year (4,034) (3,148) (7,579)
------------------------------------------ -------- -------- -----------
Closing balance - provision for doubtful
debts and expected credit loss 23,329 13,672 19,499
------------------------------------------ -------- -------- -----------
The directors have assessed the level of provision at 30 June
2023 by reference to the recoverability of customer receivable
balances post the period end, and believe the provision carried is
appropriate and cautious in view of the context of the wider energy
market and economy. The provision for expected credit loss on
accrued income is GBP2,051,000 (30 June 2022: GBP340,000 and 31
December 2022: GBP1,830,000).
The total net impairment losses on financial and contract assets
of GBP8,085,000 (H1 2022: GBP9,614,000 and FY 2022: GBP21,420,000)
consists of GBP7,864,000 (H1 2022: GBP10,813,000 and FY 2022:
GBP21,071,000) on trade receivables, and GBP221,000 (H1 2022:
credit of GBP1,199,000 and FY 2022: charge of GBP349,000) on
accrued income.
The directors consider that the carrying amount of trade and
other receivables approximates to their fair value due to their
maturities being short term.
Other receivables include amounts paid in relation to the
Group's commodity hedging arrangements as cash collateral, and are
expected to be recoverable in the short term.
14. Cash and cash equivalents
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
------------------------- -------- -------- -----------
Cash at bank and in hand 36,621 15,657 18,970
------------------------- -------- -------- -----------
36,621 15,657 18,970
------------------------- -------- -------- -----------
The cash and cash equivalents balance exclude GBP500,000 of cash
which is included in other receivables, as it is held on deposit
and secured under arrangements with the Group's bankers.
15. Trade and other payables
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
------------------------ -------- -------- -----------
Current
Trade payables 2,448 3,134 4,636
Accrued expenses 50,777 31,783 55,281
Lease liabilities 327 109 112
Tax and social security 8,023 5,176 5,587
Other payables 11,495 8,552 8,244
------------------------ -------- -------- -----------
73,070 48,754 73,860
------------------------ -------- -------- -----------
Non-current
Accrued expenses 5,063 4,139 158
Lease liabilities 1,213 104 48
------------------------ -------- -------- -----------
6,276 4,243 206
------------------------ -------- -------- -----------
Current accrued expenses at 30 June 2023 include GBP15,204,000
for the Group's liability to pay Ofgem the Renewable Obligation
payment for the scheme period ended 31 March 2023, which was paid
in full on 31 August 2023.
Lease liabilities relate to the recognition of right-of-use
assets for operating leases in relation to offices and motor
vehicles leased.
16. Financial derivative (liability) / asset
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
------------------------------- -------- -------- -----------
Current
Financial derivative asset - 5,534 1,484
Financial derivative liability (1,049) - -
------------------------------- -------- -------- -----------
Non-current
Financial derivative asset - 1,793 1,562
Financial derivative liability (126) - -
------------------------------- -------- -------- -----------
The current and non-current financial derivative liability of
GBP1,175,000 (30 June 2022: asset of GBP7,327,000 and 31 December
2022: asset of GBP3,046,000) is the fair value of a small
proportion of the Group's overall forward gas and power purchase
contracts. Such contracts do not meet the strict criteria of being
for the Group's "own use" under IFRS 9. They are stated at their
Mark to Market fair value (being the excess of the volume of
commodity purchased valued at market prices available at the
balance sheet date over the traded price of the forward
contracts).
The directors consider the potential for tainting of hedges in
the Group's contract pricing strategy and balances the overall
hedge position through close operational management.
The liability has arisen in the period due to the decrease in
forward gas and power market prices and as previous trades
delivered in early 2023. The charge for the period is as disclosed
in note 5.
17. 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. 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 has exposure to the following risks from its use of
financial instruments:
a) commodity hedging and derivative instruments (related to
customer demand and market price volatility, and counterparty
credit risk);
b) customer credit risk; and
c) liquidity risk.
The Group trades entirely in pounds sterling and therefore it
has no foreign currency exchange 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 and 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.
The majority of 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. A proportion of the contracts in the Group's
portfolio are expected to be settled net in cash where 100% of the
volume hedged is not delivered to the Group's customers and is
instead sold back via the commodity settlement process in order to
smooth demand on a real-time basis. An assumption is made (based on
past experience) of the proportion of the portfolio expected to be
settled in this way and these contracts are measured at fair value.
The gain or loss on remeasurement to fair value is recognised
immediately in profit and loss.
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.
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.
The fair value Mark to Market adjustment at 30 June 2023 for
those contracts not assumed to be strictly for "own use" is a
charge of GBP4,221,000 (30 June 2022: GBP3,355,000 gain; and 31
December 2022: GBP926,000 loss). See note 16 for the corresponding
derivative financial liability or asset.
The Group's exposure to commodity price risk according to IFRS 7
is measured by reference to the Group's IFRS 9 commodity contracts.
IFRS 7 requires disclosure of a sensitivity analysis for market
risks that is intended to illustrate the sensitivity of the Group's
financial position and performance to changes in market variables
impacting upon the fair values or cash flows associated with the
Group's financial instruments.
Therefore, the sensitivity analysis provided below discloses the
impact on profit or loss at the balance sheet date assuming that a
reasonably possible change in commodity prices (determined based on
calculated or implied volatilities where available, or historical
data) had occurred and been applied to the risk exposures in place
at that date. In view of the volatile nature of commodity markets,
the sensitivity analysis is based on a change of up to +/-25% in
commodity markets, though additional volatility may be incurred in
view of the current, unprecedented, energy market context of
volatility.
The sensitivity analysis has been calculated on the basis that
the proportion of commodity contracts that are IFRS 9 financial
instruments remains consistent with those at that point. Excluded
from this analysis are all commodity contracts that are not
financial instruments under IFRS 9.
Reasonably 2023 FY 2022
possible Impact on Impact on
increase/ profit profit
decrease and net and net
in assets assets
Open market price of forward contracts variable GBP'000 GBP'000
--------------------------------------- ---------- ---------- ----------
UK gas (p/therm) +/-25% 312 831
UK power (GBP/MWh) +/-25% 1,122 2,227
--------------------------------------- ---------- ---------- ----------
1,434 3,058
--------------------------------------- ---------- ---------- ----------
In addition to the sensitivity noted above, the estimate of the
forward derivative contracts assessed as "own use" results in the
financial asset recognised. If the level of own use of such forward
contracts was amended by +/-1%, then the financial asset and
resulting impact on profit and net assets would be GBP351,000
(2022: GBP466,000). Such a sensitivity could occur if, for example,
the Group's estimated forecasted demand from customer contracts was
impacted by factors such as prolonged abnormal weather patterns, or
further unexpected and severe Covid-19 lockdowns. In mitigation,
however, demand balancing activities and trading will significantly
reduce any potential gain or loss arising from the sensitivity
noted above, and the Board approved hedging policy is designed to
protect (to the extent possible) the gross margin as sold on each
contract. Customer prices also include premia in their pricing to
account for certain levels of market risk because of the above in
order to reduce the potential for negative impact on Group
profitability.
Liquidity risk from commodity trading
The Group's trading arrangements can 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 (as noted above) in electricity
and gas markets could lead to a material cash call from these
trading counterparties in the absence of a suitable trading credit
limit. Whilst such a cash call would not impact the Group's profit
(as it represents a forward credit risk assessment of the
counterparty), it would have an impact on the Group's cash
reserves.
The structured trading arrangement, entered with SmartestEnergy
in December 2019, has reduced this liquidity risk in view of the
significant credit limit being provided. This arrangement provides
the trading credit limit (secured on the main trading entities of
the Group and subject to compliance with certain covenants) and as
such reduces the need to lodge cash collateral when commodity
markets decrease. The Board has considered the cash flow forecasts,
along with the interaction in trading credit limits and the
potential need for cash collateral or letter of credit support. The
Board also monitors the position in respect of commodity markets
and has mitigation plans in place where credit limits are predicted
to be exceeded to reduce, where possible, the potential impact on
the Group due to short-term cash calls. Where markets fall rapidly
and unexpectedly, the cash collateral requirement may be greater
than the Group's cash reserves. In extreme circumstances,
mitigation may include (prior to security being enacted) reducing
the Group's hedged position (reducing liquidity risk in exchange
for increased risk to future market increases) through to
commercial discussion to waive the requirement to post cash
collateral over a short to medium-term period; or the agreement to
provide additional remedial action such as holding growth
activities.
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. This
credit exposure is predominantly with the Group's main trading
counterparty. With lower commodity prices, such risk has reduced
significantly during the period.
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,
though increased prices have resulted in greater amounts owed by
some customers. New customers have their credit checked using an
external credit reference agency prior to being accepted as a
customer. The provision of a smart meter is also mandatory for some
sales channels.
Credit risk is also managed through the Group's standard
business terms, which require all customers to make a monthly
payment predominantly by direct debit, and requires security
deposits in advance where appropriate. At 30 June 2023 there were
no significant concentrations of credit risk. The carrying amount
of the financial assets (less the element of VAT and climate change
levy ("CCL") included in the invoiced balance, which is recoverable
in the event of non-payment by the customer) represents the maximum
credit exposure at any point in time.
The Board considers the exposure to debtors based on the status
of customers in its internal debt journey, the level of customer
engagement in finding an appropriate solution, the customer's
creditworthiness, the provision for doubtful debts and expected
credit loss held, the level of reclaimable VAT and CCL on the
balances, and cash received after the period end.
At 30 June 2023 the Group held a provision against doubtful
debts and expected credit loss of GBP23,329,000 (31 December 2022:
GBP19,499,000) and GBP2,052,000 (31 December 2022: GBP1,830,000)
against accrued income. The directors consider the provision to be
cautious on the basis of recent cash recovery rates, though is
maintained in view of the wider economic context.
In relation to trade receivables, after provision and accounting
for VAT and CCL reclaimable, the exposure assessed by directors is
remains less than 5% 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
+/-GBP800,000.
If the expected customer credit loss rate on accrued income was
+/-10%, the gain or loss arising would be +/-GBP205,000.
(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,
to ensure credit limits as part of such transactions are monitored,
and any credit cover requirements for other industry participants
which are standard in the energy sector. Scenarios of falling
commodity markets, including potential to mitigate by reducing the
hedges places to avoid significant margin calls for cash
collateral, are also considered by the Board. In particular, the
Board assess a drop in prices of above 40% from current levels
would require some mitigation action.
Any excess cash balances are held in short-term deposit accounts
which are either interest or non-interest accounts. At 30 June 2023
the Group had GBP36,621,000 (30 June 2022: GBP15,657,000; 31
December 2022: GBP18,970,000) of cash and bank balances (as per
note 14).
18. Share capital and reserves
30 June 30 June 31 December 31 December
2023 2023 2022 2022
Share capital Number GBP'000 Number GBP'000
--------------------------------- ---------- -------- ----------- -----------
Allotted and fully paid ordinary
shares of GBP0.005 each 16,663,118 83 16,649,618 83
--------------------------------- ---------- -------- ----------- -----------
The Company has one class of ordinary share which carries no
right to fixed income. The holders of ordinary shares are entitled
to receive dividends as declared and are entitled to one vote per
share at meetings of the Company.
The Group movement in reserves is as per the statement of
changes in equity.
Share capital represents the value of all called up, allotted
and fully paid shares of the Company. The movement in the period
relates to the exercise of share options at an exercise price of
GBP0.09.
The share premium account represents amounts received on the
issue of new shares in excess of their nominal value, net of any
direct costs of any shares issued. The share premium movement in
the period relates to the excess, where appropriate, of the price
at which options were exercised during the year over the GBP0.005
par value of those shares.
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.
19. 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 options are subject to a vesting schedule, details of
which are listed below.
The terms and conditions of the outstanding grants made under
the Group's schemes are as follows:
Exercisable between
------------------------------
Amount Amount
outstanding outstanding
at at
Expected Exercise Vesting 30 June 31 December
Date of grant term Commencement Lapse price schedule 2023 2022
--------------- -------- -------------- -------------- -------- --------- ------------ --------------
17 February 17 February 17 February
2016 3 2019 2026 GBP0.09 1 - 13,500
22 December 22 December 22 December
2016 3 2019 2026 GBP3.25 1 13,500 13,500
6 April 2017 3 6 April 2020 6 April 2027 GBP0.005 1 43,950 43,950
6 April 2017 6.5 6 April 2020 6 April 2027 GBP2.844 1 87,900 87,900
28 September 28 September 28 September
2017 6.5 2020 2027 GBP5.825 1 40,500 40,500
9 April 2018 6.5 9 April 2021 9 April 2028 GBP10.38 1 59,084 59,084
26 September 26 September 26 September
2018 6.5 2021 2028 GBP8.665 1 6,539 6,539
25 February 25 February 25 February
2019 6.5 2022 2029 GBP1.09 1 20,000 20,000
4 October 2020 3 30 April 2023 4 October 2030 GBP0.005 3 210,696 210,696
4 October 2020 3 30 April 2024 4 October 2030 GBP0.005 3 172,388 172,388
13 May 2022 1 30 April 2023 4 October 2030 GBP0.005 3 12,769 12,769
13 May 2022 2 30 April 2024 4 October 2030 GBP0.005 3 25,539 25,539
1 December
2022 3 1 January 2026 4 October 2030 GBP0.005 2 160,323 179,267
19 December
2022 3.3 30 April 2024 4 October 2030 GBP0.005 4 762,000 837,000
--------------- -------- -------------- -------------- -------- --------- ------------ --------------
1,615,188 1,722,632
--------------- -------- -------------- -------------- -------- --------- ------------ --------------
Weighted average remaining contractual life of options
outstanding 7.5 years 8.0 years
------------------------------------------------------------------------------ ------------ --------------
The following vesting schedules apply:
1. 100% of options vest on the third anniversary of date of grant.
2. 100% of options vest on the third anniversary of the Save As
You Earn ("SAYE") savings contract start date.
3. The level of vesting is dependent on a performance condition,
being the Group's share price at pre-determined dates.
4. The level of vesting is dependent on a performance condition,
being the Group's EBITDA over a qualifying period.
The number and weighted average exercise price of share options
were as follows:
30 June 31 December
2023 2022
shares shares
------------------------------------- --------- -----------
Balance at the start of the period 1,722,632 1,099,153
Granted - 1,055,364
Forfeited (93,944) (98,482)
Lapsed - -
Exercised (13,500) (333,403)
------------------------------------- --------- -----------
Balance at the end of the period 1,615,188 1,722,632
------------------------------------- --------- -----------
Vested at the end of the period 494,938 284,973
------------------------------------- --------- -----------
Exercisable at the end of the period 494,938 284,973
------------------------------------- --------- -----------
Weighted average exercise price for:
Options granted in the period - GBP0.393
Options forfeited in the period GBP0.464 GBP0.256
Options exercised in the period GBP0.090 GBP0.289
------------------------------------- --------- -----------
Exercise price in the range:
From GBP0.005 GBP0.005
To GBP10.38 GBP10.38
------------------------------------- --------- -----------
The fair value of each option grant is estimated on the grant
date using an appropriate option pricing model. There were no
options granted in the period and the assumptions for FY 2022 are
as follows:
30 June 31 December
2023 2022
------------------------------------------------------ -------- -----------
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 - GBP3.87
------------------------------------------------------ -------- -----------
The share price volatility assumption is based on the actual
historical share price of the Group since IPO in March 2016.
The total expenses recognised for the year arising from share
based payments are as follows:
30 June 31 December
2023 2022
GBP'000 GBP'000
------------------------------------------- -------- -----------
Equity-settled share based payment expense 471 210
Cash-settled share based payment expense - 74
------------------------------------------- -------- -----------
Total share based payment charge 471 284
------------------------------------------- -------- -----------
Cash-settled share based payment expense in 2022 relates to
employer's National Insurance payable on unapproved share options
when exercised.
20. Commitments
Capital commitments
The Group has entered into contracts to develop its digital
platform as part of the Digital by Default strategy. Such contracts
may be terminated with a limited timescale and as such are not
disclosed as a capital commitment.
The Group has no other capital commitments at 30 June 2023 (30
June 2022: nil).
Security
The Group entered an arrangement with a commodity trading
counterparty, SmartestEnergy Ltd, in December 2019. As part of the
arrangement, there is a requirement to meet certain covenants and a
fixed and floating charge over the main trading subsidiaries of the
Group, Yü Energy Holding Limited and Yü Energy Retail Limited.
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.
Included in other receivables of the Group is an amount of
GBP500,000 held in a separate bank account over which the Group's
bankers have a fixed and floating charge.
Contingent liabilities
The Group had no contingent liabilities at 30 June 2023 (2022:
GBPnil).
21. Related parties and related party transactions
The Group has transacted with CPK Investments Limited (an entity
owned by Bobby Kalar). CPK Investments Limited owns one of the
properties from which the Group operates via a lease to Yü Energy
Retail Limited. During the six months to 30 June 2023 the Group
paid GBP65,000 in lease rental and service charges to CPK
Investments Limited (30 June 2022: GBP60,000). There was no amount
owing to or from CPK Investments Limited at 30 June 2023 (2022:
GBPnil).
The directors, after taking external advice including from an
external independent valuer, reviewed the terms of the lease with
CPK Investments Limited for the Nottingham head-office. The Group
entered into an agreement in April 2023 to extend the term of the
lease and amended certain terms (which remain on an arms-length
basis).
All transactions with related parties have been carried out on
an arm's length basis.
22. Net cash / (net debt) reconciliation
The net cash / (net debt) in the period was as follows:
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
-------------------------- -------- -------- -----------
Cash and cash equivalents 36,621 15,657 18,970
Borrowings - - -
-------------------------- -------- -------- -----------
Net cash 36,621 15,657 18,970
-------------------------- -------- -------- -----------
The movement in net cash / (net debt) and lease liabilities were
as follows:
Sub-total Net Cash
Cash Borrowings Net Cash Leases less leases
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- --------- ------------ --------- --------- ------------
Balance as at 1 January
2023 18,970 - 18,970 (160) 18,810
Cashflows 17,651 - 17,651 268 17,919
Recognition of leases on
acquired right-of-use assets - - - (1,648) (1,648)
Remeasurement of lease liabilities - - - 36 36
Interest - - - (36) (36)
Balance as at 30 June 2023 36,621 - 36,621 (1,540) 35,081
----------------------------------- --------- ------------ --------- --------- ------------
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END
IR FFFFIAIIEFIV
(END) Dow Jones Newswires
September 26, 2023 02:00 ET (06:00 GMT)
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