TIDMYU.
RNS Number : 2762N
Yu Group PLC
29 September 2021
Yü Group PLC
(the "Group")
Results for the six months to 30 June 2021
CONTINUED STRONG PERFORMANCE DRIVING PROFITABLE GROWTH AHEAD OF
MARKET EXPECTATIONS
Yü Group PLC (AIM; YU.), the independent supplier of gas,
electricity and water to the UK corporate sector, announces its
unaudited half year results for the six months to 30 June 2021.
Bobby Kalar, Group Chief Executive Officer, said :
" I am delighted to report a solid H1 performance with positive
momentum continuing into H2. I'm especially pleased to be
delivering profitable growth as promised .
With better than expected results for H1 2021, it is clear our
business model is more than delivering and we're on track to exceed
market profitability forecasts. The Group's strength, maturity and
discipline is now firmly stamped into its fabric and our drive to
transform into a data driven, 'digital by default', business will
further accelerate our growth and profitability. Building on the
significant progress made over the past few years, our laser focus
remains on gross margin improvement, lowering operational costs and
further commercialising the order book.
Our hedging strategy is solid and in line with our risk
policies. The recent gas price and industry turbulence have had no
material impact on the Group to date due to our robust hedging
policy. We continue to explore acquisition opportunities that sit
in our sweet spot and will further accelerate our growth
strategy.
I'd like to thank my amazing team and I look forward to the
future with excitement and confidence. "
Highlights
Six months to
30 June
2021 2020
---------------------------- -------- --------
Financial
GBP'000 unless stated
Revenue 65,816 45,873
Adjusted EBITDA(1) 478 (1,846)
Profit / (loss) for the
period 920 (1,711)
Cash 11,473 17,886
Profit / (loss) per share:
Adjusted 0.5p (10)p
Statutory 6P (11)p
Operational
Average monthly bookings GBP9.6m GBP6.2m
Meter points (#'000) 20.8 9.8
---------------------------- -------- --------
-- Revenue growth of 43% to GBP65.8m (H1 2020: GBP45.9m) driven
by strong organic growth and recovery of customer demand.
-- Profit for the period after tax of GBP0.9m, an increase of
GBP2.6m year-on-year (H1 2020: GBP1.7m loss).
-- Underlying profitability continues to see significant
improvement, with adjusted EBITDA of GBP0.5m (H1 2020: GBP1.8m
loss):
o Gross margin increasing by 2.1% to 7.8% (H1 2020: 5.7%).
o Strong customer collection performance driving lower provision
for bad debt.
-- Ambitious organic growth strategy delivering results:
o Average monthly bookings increased by 55% to GBP9.6m (H1 2020:
GBP6.2m).
o Number of meter points on supply or contracted to start has
increased by 112% from 30 June 2020.
-- Continued progress on our digital programme as we transform
the business to be 'digital by default'.
-- Strong cash position and strong balance sheet remains:
o Cash held at 30 June 2021 of GBP11.5m (31 December 2020:
GBP11.7m).
o Group remains debt free(2) . Capital expenditure of GBP2.4m
for the new innovation centre in Leicester remains funded from cash
reserves.
Current Trading
-- Contracted revenue of GBP90.5m secured for 2022 at 31 August
2021 providing good forward revenue visibility.
-- Further enhancement to gross margin as the Group prioritises
higher margin contracts and customer collections remains
strong.
-- Strong bookings in July and August continue to support high organic growth rates.
-- Exposure to record high global commodity prices continues to
be mitigated by Smartest Energy agreement and robust hedging
strategy albeit with some delay in customers 'locking-in' renewals
at increased prices.
-- The Group's current cash position remains robust and in line with management expectations.
Outlook
-- Revenue for FY 2021 expected to be in line with market
expectations with strong organic growth expected to continue for H2
2021.
-- Adjusted EBITDA for FY 2021 expected to be ahead of market
expectations based on strong net customer contribution
performance.
-- Further increase in monthly bookings expected in H2,
following exceptional performance in July and August 2021 and
continued focus on digital routes to market.
-- Customer book acquisitions continue to be assessed against
the Group's strict criteria to allow further potential value
enhancement with supportive market consolidation expected to
continue in the short and medium term.
(1) Adjusted EBITDA is earnings before interest, tax,
depreciation and amortisation, and also before non-recurring items,
share based payments and unrealised gains or losses on derivative
contracts.
(2) Debt excludes GBP314,000 of operating lease liabilities
recognised under IFRS16 .
For further information, please contact:
Yü Group PLC
Bobby Kalar
Paul Rawson +44 (0) 115 975 8258
SP Angel Corporate Finance
LLP
Jeff Keating
Bruce Fraser
Caroline Rowe +44 (0) 20 3470 0470
Tulchan Group
David Allchurch
Giles Kernick +44 (0) 20 7353 4200
Analyst presentation
A presentation for analysts will be held at 9am BST today,
Wednesday 29 September 2021. Anyone wishing to attend should please
contact yugroup@tulchangroup.com for further information.
Notes to Editors
Information on the Group
Yü Group PLC, trading as Yü Energy, is an independent supplier
of gas, electricity and water focused on servicing the corporate
sector throughout the UK. It has no involvement in the domestic
retail market. The Group was listed on the AIM market of the London
Stock Exchange in March 2016.
Regulatory information
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ('MAR') which has
been incorporated into UK law by the European Union (Withdrawal)
Act 2018. Upon the publication of this announcement via Regulatory
Information Service ('RIS'), this inside is now considered to be in
the public domain.
Chief Executive Officer's Statement
The Board is pleased to report its significant growth during the
six months to 30 June 2021 which highlights a strong improvement on
financial performance in H1 2021 driven by a continued increase in
organic growth.
Business Review
The team continue to deliver on the business strategy:
- Bigger: via strong organic growth and, where value accretive, strategic acquisitions.
- Better: with robust financial and commercial discipline to
deliver our financial plan to improve net customer contribution, to
reduce overheads as we scale, and manage our cash position.
- Faster: digital by default and innovative solutions provided
to improve market share and the ability to unlock scale
benefits.
- Stronger: to ensure our organisation is able to deliver a
great customer experience, delivered by an experienced and capable
team with strong corporate governance.
Our strategic growth plan is achieving results, with revenues
increasing by 43% year-on-year. With continued momentum in Q3 2021,
we see further growth ahead as we take advantage of our strength
and discipline in a significant target market available to us.
The Group's average monthly bookings (being the annualised
revenue booked on new contracts) significantly increased in H1 2021
to GBP9.6m - a 55% increase on H1 2020 bookings of GBP6.2m. Monthly
bookings in Q3 have been very strong and we are confident we will
at least meet our target forecasts.
Booked contracted revenue to positively impact FY 2022 was
already GBP90.5m at 31 August 2021, representing a 26% increase on
the GBP71.7m contacted at the same time (for FY 2021) last year.
This 'subscription model' forward revenue provides the Board with
confidence that our sales strategy is working and we will continue
to deliver growth into FY 2022 and beyond.
Profitability has also increased significantly, and we are
confident that we will unlock further value as we scale the
business.
Operational Review
From our position of strength, I'm very excited to be embarking
on our 'digital by default' programme, designed to bring disruptive
innovation to this sector. Our digital by default self-service
platform will give greater control to our business customers whilst
quoting, onboarding and ongoing management simply and quickly,
24/7. This digital programme covers three core areas:
- Driving and scaling new digital sales channels whilst simplifying customer service;
- Driving cost efficiency by using efficient systems and RPA to
automate business processes to reduce overheads (cost to acquire
and cost to serve); and
- Utilising data science and technology to identify
opportunities to create value and provide a 'single lens' for the
business.
As part of this programme, we have successfully launched our new
innovation centre in Leicester. This hub provides us with a new,
state-of-art, centre to drive our sales, marketing and digital
initiatives. I am convinced this new space will further enhance our
growth and innovation focus - already a differentiator for the
Group. I look forward to updating investors on performance in due
course.
I believe this fully budgeted and defined project will enable
further sales channels, offers and benefits to be unlocked for the
Group, which will provide the potential for significant enhancement
of value.
The Group has seamlessly integrated the two book acquisitions
made in H2 2020 which have delivered results. We continue to assess
other M&A opportunities which meet our strict criteria to
further enhance our strong organic growth ambition.
High global commodity markets have been experienced during 2021,
leading to significant public comment on the position of energy
suppliers. We note that a number of domestic energy suppliers have
failed, largely a result of limited hedging of their portfolio (due
to constraints on credit limits or cash) and the consequence of the
domestic focussed price cap. Whilst these issues are impacting the
domestic market, the Board are confident in the Group's hedging
strategy and positioning. We continue to assess the regulatory
consequences in relation to certain industry mutualisation costs
because of domestic supplier failures.
The Group's mature and stable hedging strategy is mitigating
impact of the high commodity prices, and its arrangements with
trading counterparties have placed the Group in a good position.
The Board monitors a risk mandate with the purpose of being largely
'back-to-back' between the contracts secured with customers and our
hedge performance. Whilst Covid-19 impacted customer demand during
2020, it has now broadly returned to 'pre-pandemic' levels and the
risk position is being proactively managed.
The high global commodity markets have also led to some
increased competition on renewals of contracts as customers 'shop
around' for a better deal. Whilst a risk to Yu Group's own contract
renewal rate, which stood at 45% for H1 2021, it does provide
additional new business opportunity which is assisting in the
increased bookings being achieved.
In short, the Group is well positioned to continue in its
business objectives despite the increased commodity markets.
Customer experience metrics have remained positive, positioning
us as one of the leaders in the B2B supply sector. Our 4-star
Trustpilot score provides a good indication of our focus in this
area, based on existing systems.
Our experienced and passionate team remain motivated an able to
execute our plan and we have made great strides in strengthening
throughout the organisation to meet our strategic aims.
Financial Review
GBP'000 / % of revenue Six months to
30 June
2021 2020
--------------------------------- ------- --------
Revenue 65,816 45,873
Adjusted EBITDA(1) 478 (1,846)
Profit / (loss) for the
period 920 (1,711)
Gross margin % 7.8% 5.7%
Bad debt % (0.9%) (3.4%)
------- --------
Net customer contribution
%(2) 6.9% 2.3%
General overheads %(3) (6.2%) (6.3%)
------- --------
Adjusted EBITDA % 0.7% (4.0%)
Cash 11,473 17,886
Operating cash inflow 2,296 16,476
Overdue customer receivables(4) 7 days 9 days
Net current assets /
(liabilities) 219 (573)
Net assets 5,624 3,753
--------------------------------- ------- --------
(1) Adjusted EBITDA is earnings before interest, tax,
depreciation and amortisation, and also before non-recurring items,
share based payments and unrealised gains or losses on derivative
contracts.
(2) Net customer contribution represents, as a percentage of
revenue, gross margin less bad debt. For FY 2020, this includes the
impact of Covid-19. Excluding Covid-19 impact, the net customer
contribution for the period would have been c.5.8%.
(3) General overheads represent the overheads (excluding bad
debt) charged to adjusted EBITDA as a percentage of revenue.
(4) Overdue Customer Receivables ("OCR") represents the amounts
outstanding and overdue, net of provisions and deferred income, to
key customer receivables balances, compared with the revenue
recognised.
The Group achieved revenues of GBP65.8m, up from GBP45.9m for H1
2020. This GBP19.9m increase in revenues achieved includes
approximately GBP3.0m impact of the two customer book acquisitions
made during H2 2020, and c.GBP8.0m recovery of energy consumption
post the impact of the first lock-down due to Covid-19.
Strong organic growth has driven the remainder of the revenue
increase. Average monthly bookings from H2 2020 have resulted in a
16.5% growth rate on an organic basis for H1 2021. The increased
level of average monthly bookings achieved in H1 2021 is expected
to contribute to continued strong organic growth into H2 2021 and
beyond.
The Board continues to refocus activities on smaller and medium
sized businesses which provide a greater value opportunity and
further diversifies exposure to bad debt. Management have reviewed
its product offers and has successfully negotiated an exit of a
high consuming, low margin contract which provided some energy
volatility risk. Whilst this contract exit will reduce revenue
growth in H2 2021 by c.GBP4m (replaced by new bookings of new
contracts), the Group's gross margin % is expected to be
improved.
Adjusted EBITDA of GBP0.5m is ahead of management expectations
for the period and represents a significant increase on the
previous year H1 loss of GBP1.8m.
Gross margin has increased from 5.7% in H1 2020 to 7.8% in H1
2021, following the strategy to improve the quality of customer
contracts secured, and the one-off impact in H1 2020 from the
initial Covid-19 lock-down.
Net customer contribution has also increased from 2.3% in H1
2020 to 6.9%, with bad debt lower based on strong customer cash
collection performance. General overheads for the period have
reduced slightly to 6.2% of revenue, from 6.3% in H1 2020.
Whilst the Board are pleased to report adjusted EBITDA of 0.7%
of revenues, ambitious targets remain to increase profitability
further. In summary, the Group targets overhead reductions to be
achieved as economies of scale and benefit of the digital programme
support are factored in; whilst continuing to improve net customer
contribution as the mix of contracts develops.
Statutory profit after tax increased to GBP1.0m for the period,
an increase of GBP2.7m from the GBP1.7m loss in H1 2020. This
profit includes the non-cash benefit of a gain on derivatives due
to significant increases in commodity markets.
Cash remains robust, with GBP11.5m held as at 30 June 2021 (30
June 2021: GBP17.9m, 31 December 2021: GBP11.7m). The Group
continues to have no debt. Cash has remained relatively flat during
H1 2021, though has decreased by GBP6.4m from 30 June 2020. The
reduction is partially due to a total investment of GBP3.5m in the
new innovation centre in Leicester, for which GBP2.4m cash was
invested in H1 2021. In addition, the Group took advantage of its
cash position to prepay certain industry obligations which would
otherwise be due in H2 2021, and acquired two customer books in H2
2020 to accelerate growth.
In line with expectations the Group settled the balance of its
industry obligations, on schedule, during Q3 2021 which will, as
normal, reduce operating cashflow for H2 2021.The Group's current
cash position remains robust and in line with management
expectations.
Operating cash inflow has decreased from GBP16.5m in H1 2020 to
GBP2.3m in H1 2021 largely as a result of the prepayment of
industry regulatory liabilities described above, and the one-off
benefit from returned cash collateral deposits in H1 2020 from our
trading agreement with SmartestEnergy signed in late December
2019.
Net assets of GBP5.6m as at 30 June 2021 are up GBP1.9m from 30
June 2020, further strengthening the balance sheet. Net Current
Assets of GBP0.2m have also significantly increased (GBP0.6m net
current liabilities at 30 June 2020). The Group continues to
benefit from good working capital management, with customer
receivables at controllable levels (with overdue customer
receivables performing well at 7 days) coupled with the benefit of
the annual industry payment paid in arrears.
Summary
In summary, and in keeping with our cornerstones of being
bigger, better, faster and stronger I'm pleased with the Group's
performance in H1 and beyond. I would like to extend huge gratitude
to all my team who have a vested interest in the Group's success.
I'm pleased the Group maintains high standards of Corporate
Governance at all times, complemented with entrepreneurial flair.
I'm excited and confident in the Group's future and look forward to
updating the market in due course.
Condensed consolidated statement of profit and loss and other
comprehensive income
For the six months ended 30 June 2021
6 months 6 months 12 months
ended ended ended 31
30 June 30 June December
2021 2020 2020
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
------------------------------------------ --- --- ------------ ------------ ----------
Revenue 65,816 45,873 101,527
Cost of sales (60,673) (43,246) (93,858)
---------------------------------------------------- ------------ ------------ ----------
Gross profit 5,143 2,627 7,669
---------------------------------------------------- ------------ ------------ ----------
Operating costs before non-recurring
items, unrealised gains on derivative
contracts and IFRS 2 charges (5,032) (4,660) (9,934)
Operating costs - non-recurring items - - -
Operating costs - unrealised gains on
derivative contracts 1,248 137 1,011
Operating costs - IFRS 2 charges (191) (166) (320)
---------------------------------------------------- ------------ ------------ ----------
Total operating costs (3,975) (4,689) (9,243)
---------------------------------------------------- ------------ ------------ ----------
Profit/(loss) from operations 1,168 (2,062) (1,574)
Finance income 1 7 74
Finance costs (25) (31) (39)
---------------------------------------------------- ------------ ------------ ----------
Profit/(loss) before tax 1,144 (2,086) (1,539)
Taxation (224) 375 374
---------------------------------------------------- ------------ ------------ ----------
Profit/(loss) for the period 920 (1,711) (1,165)
----------------------------------------------- ------- ------------ ------------ ----------
Other comprehensive income - - -
----------------------------------------------- --- ------------ ------------ ----------
Total comprehensive income for the period 920 (1,711) (1,165)
---------------------------------------------------- ------------ ------------ ----------
Earnings per share
Basic GBP0.06 GBP(0.11) GBP(0.07)
Diluted GBP0.05 GBP(0.11) GBP(0.07)
---------------------------------------------------- ------------ ------------ ----------
Condensed consolidated balance sheet
At 30 June 2021
30 June 30 June 31 December
2021 (Unaudited) 2020 (Unaudited) 2020 (Audited)
GBP'000 GBP'000 GBP'000
------------------------------- --------------------- --------------------- ----------------
ASSETS
Non-current assets
Property, plant and equipment 3,776 1,429 1,377
Right-of-use asset 233 415 273
Intangible assets 359 51 606
Deferred tax 4,566 4,730 4,789
------------------------------- --------------------- --------------------- ----------------
8,934 6,625 7,045
------------------------------- --------------------- --------------------- ----------------
Current assets
Trade and other receivables 19,185 10,985 18,267
Cash and cash equivalents 11,473 17,886 11,740
------------------------------- --------------------- --------------------- ----------------
30,658 28,871 30,007
------------------------------- --------------------- --------------------- ----------------
Total assets 39,592 35,496 37,052
------------------------------- --------------------- --------------------- ----------------
LIABILITIES
Current liabilities
Trade and other payables (30,439) (29,444) (31,430)
Non-current liabilities (3,564) (2,299) (1,109)
------------------------------- --------------------- --------------------- ----------------
Total liabilities (34,003) (31,743) (32,539)
------------------------------- --------------------- --------------------- ----------------
Net assets 5,589 3,753 4,513
------------------------------- --------------------- --------------------- ----------------
EQUITY
Share capital 82 82 82
Share premium 11,690 11,690 11,690
Merger reserve (50) (50) (50)
Retained earnings (6,133) (7,969) (7,209)
------------------------------- --------------------- --------------------- ----------------
5,589 3,753 4,513
------------------------------- --------------------- --------------------- ----------------
Condensed consolidated statement of changes in equity
For the six months ended 30 June 2021
Share Share Merger Retained
capital premium reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- -------- -------- -------- --------- --------
Balance at 1 January 2021 82 11,690 (50) (7,209) 4,513
-------------------------------- -------- -------- -------- --------- --------
Total comprehensive income
for the period
Profit for the period - - - 920 920
Other comprehensive income - - - - -
-------------------------------- -------- -------- -------- --------- --------
- - - 920 920
-------------------------------- -------- -------- -------- --------- --------
Transactions with owners
of the Company
Contributions and distributions
Equity-settled share based
payments - - - 156 156
Deferred tax on share based - - - - -
payments
Proceeds from share issues - - - - -
Equity dividend paid in - - - - -
the year
-------------------------------- -------- -------- -------- --------- --------
Total transactions with
owners of the Company - - - 156 156
-------------------------------- -------- -------- -------- --------- --------
Balance at 30 June 2021 82 11,690 (50) (6,133) 5,589
-------------------------------- -------- -------- -------- --------- --------
Balance at 1 January 2020 82 11,690 (50) (6,424) 5,298
Total comprehensive income
for the period
Loss for the period - - - (1,711) (1,711)
Other comprehensive income - - - - -
-------------------------------- -------- -------- -------- --------- --------
- - - (1,711) (1,711)
-------------------------------- -------- -------- -------- --------- --------
Transactions with owners
of the Company
Contributions and distributions
Equity-settled share based
payments - - - 166 166
Deferred tax on share based
payments - - - - -
Proceeds from share issues - - - - -
Equity dividend paid in
the year - - - - -
-------------------------------- -------- -------- -------- --------- --------
Total transactions with
owners of the Company - - - 166 166
-------------------------------- -------- -------- -------- --------- --------
Balance at 30 June 2020 82 11,690 (50) (7,969) 3,753
-------------------------------- -------- -------- -------- --------- --------
Condensed consolidated statement of cash flows
For the six months ended 30 June 2021
6 months 6 months 12 months
ended ended ended 31
30 June 30 June December
2021 2020 2020
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
----------------------------------------------------- ------------ ------------ ----------
Cash flows from operating activities
Profit/(loss) for the financial period 920 (1,711) (1,165)
Adjustments for:
Depreciation of property, plant and equipment 72 186 215
Depreciation of right of use assets 48 - 204
Amortisation of intangible assets 247 1 132
Finance income (1) (7) (74)
Finance costs 25 31 39
Taxation 224 (375) (374)
Equity settled share based payment charge 156 166 320
Unrealised gain on derivative contracts (1,248) (137) (1,011)
Decrease in cash collateral deposits lodged
with trading counterparties - 9,358 10,158
Decrease in trade and other receivables 330 5,680 63
Increase in trade and other creditors 1,523 3,284 3,595
Net cash from operating activities 2,296 16,476 12,102
----------------------------------------------------- ------------ ------------ ----------
Cash flows from investing activities
Purchase of property, plant and equipment (2,479) (878) (921)
Purchase of customer books - - (1,673)
----------------------------------------------------- ------------ ------------ ----------
Net cash used in investing activities (2,479) (878) (2,594)
----------------------------------------------------- ------------ ------------ ----------
Cash flows from financing activities
Net proceeds from share placing and option exercises - - -
Net interest (24) (24) 35
Dividend paid during the period - - -
Repayment of borrowings and lease liabilities (60) (65) (180)
----------------------------------------------------- ------------ ------------ ----------
Net cash used in financing activities (84) (89) (145)
----------------------------------------------------- ------------ ------------ ----------
Net (decrease)/increase in cash and cash equivalents (267) 15,509 9,363
Cash and cash equivalents at the start of the
period 11,740 2,377 2,377
----------------------------------------------------- ------------ ------------ ----------
Cash and cash equivalents at the end of the
period 11,473 17,886 11,740
----------------------------------------------------- ------------ ------------ ----------
Notes to the condensed consolidated half yearly financial
statements
1. Reporting entity
Yü Group PLC (the "Company") is a public limited company
incorporated and domiciled in the United Kingdom. The Company's
ordinary shares are traded on AIM. These condensed consolidated
half yearly financial statements ("Half yearly financial
statements") as at and for the six months ended 30 June 2021
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 2021 has been prepared in accordance with
the presentation, recognition and measurement requirements of
applicable International Financial Reporting Standards adopted by
the European Union ('IFRS') except that the Group has not applied
IAS 34, Interim Financial Reporting, which is not mandatory for UK
Companies listed on AIM, in the preparation of the condensed
consolidated interim financial information.
The unaudited condensed consolidated interim financial report
for the six months ended 30 June 2021 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 financial statements for the year ended
31 December 2020, which is available on the Group's investor
website. The comparative figures for the year ended 31 December
2020 have been audited. The comparative figures for the half year
ended 30 June 2020 are unaudited.
The accounting policies adopted in these condensed consolidated
half yearly financial statements are consistent with the policies
applied in the 2020 group financial statements.
The condensed consolidated financial information is presented in
British pounds sterling (GBP) and all values are rounded to the
nearest thousand (GBP000) except where otherwise indicated.
Going concern
At 30 June 2021 the Group had net assets of GBP5.6m (30 June
2020: GBP3.8m) and net cash of GBP11.2m (30 June 2020: GBP17.5m).
Net current assets of GBP0.2m have increased significantly (30 June
2020: GBP0.6m net current liabilities) and the Group benefits from
a positive working capital cycle due to some annual industry
payments.
Management prepare detailed budgets and forecasts of financial
performance and cash flow (including capital commitments as
disclosed in note 12) over the coming 12 to 36 months. 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 Group has demonstrated significant progress in its results
due to various actions taken by the Board over the last three
years. Losses have decreased significantly from 2018,
notwithstanding the initial impact of Covid-19 particularly
experienced in H1 2020. This strong momentum continues and is
evident in the return to profitability in H1 2021. The turnaround
has been as a result of clear commercial action to focus on
contract lifecycle value, including the termination of low margin
legacy contracts which are now replaced by higher margin contracts
with more robust customers.
The Group continues to have no debt other than GBP0.2m (at 30
June 2021) recognised from IFRS 16 as a consequence of operating
leases for the Group's premises.
Recently well publicised domestic supplier failures have been
noted, though the Board have reviewed the Group's business model
and note significant differences in the B2B and B2C markets. The
increase in global and UK commodity forecasts is also mitigated by
the Group's hedging strategy.
The Group benefits from a hedging strategy to consider commodity
market volatility and has a trading agreement with SmartestEnergy
Ltd which enables competitive access to forward commodity markets.
As part of the arrangement, SmartestEnergy Ltd holds security over
the trading assets of the Group. In return, a variable commodity
trading limit is provided, which scales with the Group, having the
benefit of significantly reducing the need to post cash collateral
from cash reserves. The Board carefully monitors covenants
associated with this agreement to assess the likelihood of the
credit facility being reduced.
The Group has successfully managed its financial position
throughout the Covid-19 lockdown period, and the Board remain
confident in the ability to grow market share and manage its cost
base, despite the wider economic context caused by the
pandemic.
The Group has seen strong performance in cash collection since
the pandemic began. The Board remains vigilant, however, over the
short to medium term, on the basis of the increased risk of
business failures in some markets.
The Board has adequate visibility, based on the outcome from
previous lockdowns, of scenarios to consider when assessing risks
to the Group from Covid-19 and has assessed such risks in its
assessment of the ability of the Group to continue as a going
concern.
Summary
Following extensive review of the Group's forward business plan
and associated risks and sensitivities to these base forecasts, the
Board concludes that it is appropriate to prepare the financial
statements on a going concern basis.
Use of estimates and judgements
The preparation of the financial information in conformity with
adopted IFRSs requires the use of estimates and assumptions.
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 are the level
of accrual for unbilled revenue, the inputs to the IFRS 2 share
option charge calculations and the recoverability of deferred tax
assets and trade receivables.
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 period,
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, both gas and electricity 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.
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 losses.
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). Bank overdrafts that are repayable on demand and
form an integral part of the Group's cash management are included
as a component of cash and cash equivalents.
Derivative financial instruments
The Group uses commodity purchase contracts to hedge its
exposures to fluctuations in gas and electricity commodity prices.
The majority of 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. 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 period 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
Following the adoption of IAS 32, 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's 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.
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 grant date fair value of share based payment awards granted
to employees is recognised as an employee expense, with a
corresponding increase in equity, over the period that the
employees become unconditionally entitled to the awards. The fair
value of the options granted is measured using an option valuation
model, taking into account the terms and conditions upon which the
options were granted. The amount recognised as an expense is
adjusted to reflect the actual number of awards for which the
related service and non-market vesting conditions are expected to
be met, such that the amount ultimately recognised as an expense is
based on the number of awards that do meet the related service and
non-market performance conditions at the vesting date. For share
based payment awards with non-vesting conditions, the grant date
fair value of the share based payment is measured to reflect such
conditions and there is no true-up for differences between expected
and actual outcomes.
Leases
The Group as a lessee
For any new contracts 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;
-- the Group has the right to direct the use of the identified
asset throughout the period of use. The Group assess 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 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 have
been included in the non-current assets balance and lease
liabilities have been included in trade and other payables.
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.
2. Segmental analysis
Operating segments
The Directors consider there to be one operating segment, being
the supply of electricity, gas and water to SMEs and larger
corporates.
Geographical segments
100 per cent of the Group revenue is generated from sales to
customers in the United Kingdom (2020: 100 per cent).
The Group has no individual customers representing over 10 per
cent of revenue (2020: nil).
3. 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 2021 30 June 31 December
GBP'000 2020 2020
GBP'000 GBP'000
--------------------------------------------- ------------ -------- -----------
Adjusted EBITDA Reconciliation
Profit/(loss) from operations 1,168 (2,062) (1,574)
Add back:
Unrealised gain on derivative contracts (1,248) (137) (1,011)
Depreciation of property plant and equipment 72 96 215
Depreciation of right-of-use assets 48 90 204
Amortisation of intangibles 247 1 132
Share based payment charge 191 166 320
--------------------------------------------- ------------ -------- -----------
Adjusted EBITDA 478 (1,846) (1,714)
--------------------------------------------- ------------ -------- -----------
4. Earnings per share
Basic earnings per share
Basic earnings per share is based on the profit/(loss)
attributable to ordinary shareholders and the weighted average
number of ordinary shares outstanding.
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
---------------------------------------------------- -------- -------- -----------
Profit/(loss) for the year attributable to ordinary
shareholders 920 (1,711) (1,165)
---------------------------------------------------- -------- -------- -----------
30 June 30 June 31 December
2021 2020 2020
------------------------------------------------- ---------- ---------- -----------
Weighted average number of ordinary shares
At the start of the period 16,281,055 16,281,055 16,281,055
Effect of shares issued in the period - - -
------------------------------------------------- ---------- ---------- -----------
Number of ordinary shares for basic earnings per
share calculation 16,281,055 16,281,055 16,281,055
Dilutive effect of outstanding share options 1,303,043 813,414 929,830
------------------------------------------------- ---------- ---------- -----------
Number of ordinary shares for diluted earnings
per share calculation 17,584,098 17,094,469 17,210,885
------------------------------------------------- ---------- ---------- -----------
30 June 30 June 31 December
2021 2020 2020
GBP GBP GBP
-------------------------------- -------------- ------- -----------
Basic earnings/(loss) per share 0.06 (0.11) (0.07)
Diluted earnings per share 0.05 (0.11) (0.07)
-------------------------------- -------------- ------- -----------
Adjusted earnings per share
Adjusted earnings per share is based on the result attributable
to ordinary shareholders before exceptional items and the cost of
equity-settled share based payments, and the weighted average
number of ordinary shares outstanding:
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
------------------------------------------------------ -------- -------- -----------
Adjusted earnings per share
Profit/(loss) for the period attributable to ordinary
shareholders 920 (1,711) (1,165)
Add back:
Non-recurring items after tax - - -
Unrealised gain on derivative contracts after tax (1,011) (111) (819)
Share based payments after tax 155 134 259
------------------------------------------------------ -------- -------- -----------
Adjusted basic earnings/(loss) for the period 64 (1,688) (1,725)
------------------------------------------------------ -------- -------- -----------
30 June 30 June 31 December
2021 2020 2020
GBP GBP GBP
----------------------------------- ------- ------- -----------
Adjusted earnings/(loss) per share 0.005 (0.10) (0.11)
----------------------------------- ------- ------- -----------
5. Taxation
The tax charge for the period has been estimated using a rate of
19.0% on taxable profits and losses. The Group has incurred a
charge against deferred tax in the period, rather than a current
tax charge.
6. Dividends
The directors do not propose the payment of an interim dividend
in relation to 2021 (2020: GBPnil per share).
7. Trade and other receivables
31 December
30 June 30 June 2020
2021 2020 GBP'000
GBP'000 GBP'000
------------------------------------------ --------- --------- ------------
Gross trade receivables 11,017 7,909 8,129
Provision for doubtful debts and expected
credit loss (6,272) (5,381) (5,162)
4,745 2,528 2,967
Accrued income - net of provision 8,569 5,338 11,169
Prepayments 2,094 783 1,355
Other receivables 1,901 2,336 2,148
Financial derivative asset 1,876 - 628
14,440 8,457 15,300
------------------------------------------ --------- --------- ------------
Total trade and other receivables 19,185 10,985 18,267
------------------------------------------ --------- --------- ------------
Movements in the provision for doubtful debts and expected
credit loss are as follows:
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
--------------------------------- -------- -------- -----------
Opening balance 5,162 4,901 4,901
Additional provisions recognised 1,110 1,902 2,420
Provision utilised in the period - (1,422) (2,159)
Closing balance 6,272 5,381 5,162
--------------------------------- -------- -------- -----------
In addition to the GBP1,110,000 (30 June 2020: GBP1,902,000)
provision recognised in relation to trade receivables, there was a
reduction in the provision made against accrued income of
GBP478,000 (30 June 2020: reduction of GBP300,000). The net bad
debt and expected credit loss charge for the 6 months ended 30 June
2021 was therefore GBP632,000 (30 June 2020: GBP1,602,000).
None of the Group's receivables fall due after more than one
year.
The Directors consider that the carrying amount of trade and
other receivables approximates to their fair value.
Included in other receivables at 30 June 2021 is GBP500,000
relating to a bank cash deposit. The cash deposit does not fulfil
the criteria of being classified as cash and cash equivalents in
view of the balance being secured for operational activities of the
Group. (30 June 2020: GBP500,000).
8. Cash and cash equivalents
30 June 2021 30 June 31 December
GBP'000 2020 2020
GBP'000 GBP'000
---------------------------------------- -------- -----------
Cash at bank and in hand 11,473 17,886 11,740
Total cash and cash equivalents 11,473 17,886 11,740
--------------------------------- ------ -------- -----------
9. Trade and other payables
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
------------------------------------------- -------- -------- -----------
Current
Trade payables 2,272 350 2,319
Accrued expenses and deferred income 17,589 20,453 19,250
Corporation tax - - -
Derivative financial liability - 246 -
Lease liabilities 80 149 102
Other payables 10,498 8,246 9,759
------------------------------------------- -------- -------- -----------
Total current trade and other payables 30,439 29,444 31,430
------------------------------------------- -------- -------- -----------
Non-current
Lease liabilities 234 374 448
Accrued expenses and deferred income 3,330 1,925 -
Other payables - - 843
------------------------------------------- -------- -------- -----------
Total Non-current trade and other payables 3,564 2,299 1,109
------------------------------------------- -------- -------- -----------
At 30 June 2021 GBP3,330,000 of accrued industry liabilities are
due for settlement in more than 1 year, and so have been identified
separately as non-current liabilities (30 June 2020: GBP1,925,000
of industry liabilities previously classified as current have now
been categorised and re-stated as non-current). There were no
equivalent industry liabilities falling due for payment after more
than 1 year at 31 December 2020.
10. Financial instruments and risk management
The Group's principal financial instruments are cash, trade
receivables, trade payables and derivative financial assets and
liabilities. The Group has exposure to the following risks from its
use of financial instruments:
(a) Fair values of financial instruments
Fair values
Derivative financial instruments are measured at fair value
through profit and loss. The derivative instruments are level 1
financial instruments and their fair value is therefore 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.
(b) Market risk
Market risk is the risk that changes in market prices, such as
commodity and energy prices, will affect the Group's income.
Accessing such commodity forward markets can also increase
liquidity risk.
Commodity and energy prices
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 from fluctuations in energy
prices by entering into back to back 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 per cent of the volume hedged
is not delivered to the Group's customers and is instead sold back
to the grid 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 or
loss.
As far as possible, in accordance with the risk mandate, the
Group attempts to match new sales orders 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.
All commodity purchase contracts are entered into exclusively
for own use, to supply energy to business customers. However as
noted above, a number of these contracts don't meet the stringent
requirements of IFRS 9, and so are subject to fair value
measurement through the income statement.
The fair value mark to market adjustment at 30 June 2021 is a
gain of GBP1,248,000 (6 months ended 30 June 2020: gain of
GBP137,000). See note 7 for the corresponding derivative financial
asset.
Liquidity risk from commodity trading
The Group's trading arrangements can result in a cash call being
made by counter-parties when commodity markets are below the
Group's traded position. A significant reduction in electricity and
gas markets could lead to a material cash call from the Group's
trading counter-parties. Whilst such a cash call would not
materially impact the Group's profit, it would have an impact on
the Group's cash reserves. The new structured trading arrangement
with SmartestEnergy has reduced this liquidity risk, by providing a
significant credit facility secured on the customer contracts,
accounts receivable and other assets of the Group which should
scale with the Group. This facility also contains covenants, which
the Group must meet, to maintain the credit facility. This trading
facility is secured on the main operating assets of the Group and
failure to adhere to covenants may reduce the credit line, which
could result in cash calls which the Group would have to lodge cash
collateral to meet. The Board monitors its compliance with
covenants, and the level of credit line and forward market
movements which could increase liquidity risk.
(c) 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.
These trading exposures are monitored and managed at Group
level. All customers are UK based and turnover is made up of a
large number of customers each owing relatively small amounts. New
customers have their credit checked using an external credit
reference agency prior to being accepted as a customer.
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. At the period end there were
no significant concentrations of credit risk. The carrying amount
of the financial assets represents the maximum credit exposure at
any point in time.
At 30 June 2021 the Group held a provision against doubtful
debts and expected credit loss of GBP6,661,000 (30 June 2020:
GBP5,832,000). The provision is a combined provision against both
trade receivables (GBP6,272,000) and accrued income
(GBP389,000).
(d) 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.
In 2019 the Group announced a new structured trading arrangement
with SmartestEnergy Limited. This arrangement provides a
significant trading credit facility and as such reduces the need to
lodge cash collateral. At 30 June 2021 the Group had GBP0.25m
lodged as cash collateral with trading counterparties (31 December
2020 and 30 June 2020: GBP0.25m). This balance and credit line is
at a manageable and appropriate level. The Board continue to assess
required credit lines and use of such credit lines to monitor
liquidity risk caused by commodity trading arrangements.
Any excess cash balances are held in short-term deposit accounts
which are either interest or non-interest accounts. At 30 June 2021
the Group had GBP11.5m of cash and bank balances, as per note
8.
(e) Foreign currency risk
The Group trades entirely in pounds sterling and therefore it
has no foreign currency risk.
(f) Impact from the COVID-19 virus outbreak
The Covid-19 pandemic continues to have a significant impact on
the UK economy. Businesses have been able to take advantage of
various Government incentive schemes to help them through 2020 and
the first half of 2021; however there is a risk that once this
Government support ends there could be an increase in customer
payment defaults and a reduction in the recoverability of customer
receivables (being trade receivables and accrued income).
The total customer receivable balance (comprising trade
receivables and accrued income) at 30 June 2021, net of provision
for doubtful debts and expected credit losses, is GBP13,314,000 (30
June 2020: GBP7,866,000). The Directors assess the level of
provision as adequate after consideration of cash received post 30
June 2021.
The risk of the Government re-introducing enforced lockdowns or
removing previous support, impacting the recoverability of customer
receivables balances in the future is being monitored closely by
the Board. The Board also continues to monitor any impact on the
reduction of customer volume and therefore the revenue of the
Group.
In assessing sensitivity to the level of credit risk on customer
receivables, a 10% increase in the level of bad debt will result in
approximately GBP110,000 of additional expected credit loss in the
6 months ended 30 June 2021.
11. Share based payments
The Group operates a number of share option plans for qualifying
employees of the Group. Options in the plans are settled in equity
in the Company. The options are subject to a vesting schedule, but
not conditional on any performance criteria being achieved. The
only vesting condition is that the employee is employed by the
Group at the date when the option vests.
The terms and conditions of the grants made under the schemes
are as follows:
Exercisable between
-----------------------------
Amount
outstanding
at
Expected Exercise Vesting 30 June
Date of grant term Commencement Lapse price schedule 2021
--------------- -------- ------------- -------------- -------- --------- ------------
17 February 17 February 17 February
2016 3 2019 2026 GBP0.09 1 27,000
22 December 22 December 22 December
2016 3 2019 2026 GBP3.25 1 13,500
6 April 2017 3 6 April 2020 6 April 2027 GBP0.005 1 79,110
6 April 2017 6.5 6 April 2020 6 April 2027 GBP2.844 1 158,220
28 September 28 September 28 September
2017 6.5 2020 2027 GBP5.825 1 40,500
9 April 2018 6.5 9 April 2021 9 April 2028 GBP10.38 1 78,351
26 September 26 September 26 September
2018 6.5 2021 2028 GBP8.665 1 6,539
25 February 25 February 25 February
2019 6.5 2022 2029 GBP1.090 1 53,333
25 February 25 February 25 February
2019 3 2022 2029 GBP0.005 1 250,000
1 February
18 June 2019 3 1 August 2022 2023 GBP1.400 2 86,138
4 October 2020 3 30 April 2023 4 October 2030 GBP0.005 3 287,312
4 October 2020 3 30 April 2024 4 October 2030 GBP0.005 3 210,696
2 June 2021 3 30 April 2024 2 June 2031 GBP0.005 3 76,616
--------------- -------- ------------- -------------- -------- --------- ------------
1,367,315
--------------- -------- ------------- -------------- -------- --------- ------------
The following vesting schedules apply:
1. 100 per cent of options vest on third anniversary of date of grant.
2. 100 per cent of options vest on third anniversary of savings contract start date.
3. Level of vesting is dependent on a vesting condition, being
the Group's share performance at a pre-determined date in the
future.
The number and weighted average exercise price of share options
were as follows:
30 June 31 December
2021 30 June 2020 2020
------------------------------------- --------- ------------ -----------
Balance at the start of the period 1,290,699 830,468 830,468
Granted 76,616 - 498,008
Forfeited - (33,921) (37,777)
Lapsed - - -
Exercised - - -
------------------------------------- --------- ------------ -----------
Balance at the end of the period 1,367,315 796,547 1,290,699
------------------------------------- --------- ------------ -----------
Vested at the end of the period 396,681 250,830 318,330
------------------------------------- --------- ------------ -----------
Exercisable at the end of the period 396,681 250,830 318,330
------------------------------------- --------- ------------ -----------
Weighted average exercise price for:
Options granted in the period GBP0.005 - GBP0.005
Options forfeited in the period - GBP1.34 GBP1.35
Options exercised in the period - - -
------------------------------------- --------- ------------ -----------
Exercise price in the range:
From GBP0.005 GBP0.005 GBP0.005
To GBP10.380 GBP10.380 GBP10.380
------------------------------------- --------- ------------ -----------
The fair value of each option grant is estimated on the grant
date using a Black Scholes option pricing model with the following
fair value assumptions:
30 June 30 June 31 December
2021 2020 2020
----------------------------------------------- ------- ------- -----------
Dividend yield 0% - 0%
Risk-free rate 1.5% - 1.5%
Share price volatility 114.6% - 117.1%
Expected life (years) 3 years - 3 years
Weighted average fair value of options granted GBP2.30 - GBP0.90
during the period
----------------------------------------------- ------- ------- -----------
The share price volatility assumption is based on the actual
historical share price of the Group since IPO in March 2016.
The Group also operates a share bonus plan for certain key
employees of the Group. The plan will be settled in cash and is
subject to certain financial and share price performance targets
being achieved.
The total expense recognised for the period arising from share
based payments is as follows:
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
------------------------------------------- -------- -------- -----------
Equity-settled share based payment expense 156 166 320
Cash-settled share based payment expense 35 - -
------------------------------------------- -------- -------- -----------
191 166 320
------------------------------------------- -------- -------- -----------
On 12 July 2021 an employee exercised 35,160 ordinary shares at
par value.
12. Commitments
Capital commitments
The Group has no outstanding capital commitments at 30 June 2021
(at 30 June 2020 the Group had a capital commitment of GBP2,250,000
in relation to the new office building in Leicester city
centre).
Security
As part of the Group's structured trading arrangement with
SmartestEnergy Limited, entered in to in December 2019, Smartest
has a fixed and floating charge over the main trading subsidiaries
of the Group, Yü Energy Holding Limited and Yü Energy Retail
Limited.
Included in other receivables is an amount of GBP500,000 held in
a separate bank account over which the Group bankers have a fixed
and floating charge.
Contingent liabilities
The Group had no contingent liabilities at 30 June 2021 (30 June
2020: GBPnil).
13. Related parties and related party transactions
The Group has transacted with CPK Investments Limited, an entity
owned by Bobby Kalar, during the current and prior financial
period.
CPK Investments Limited owns the Nottingham property from which
the Group operates and rents it to Yü Energy Retail Limited under
an operating lease. During H1 2021 the Group paid GBP60,000 in
lease rentals and service charges to CPK Investments Limited (H1
2019: GBP60,000). The amount owing to CPK Investments at 30 June
2021 was GBPnil.
All transactions with related parties have been carried out on
an arm's length basis.
14. Post-balance sheet events
There are no significant or disclosable post balance sheet
events.
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END
IR FLFEEAIITFIL
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