Yü Group (YU. ), supplier of energy and utility solutions to UK businesses, announced this morning unaudited interim results for the 6 months to 30 June 2022.
The company reported solid year-on-year growth across its balance sheet in 1H22.
Revenue increased 96.3% to £129.2m, compared to £65.8m a year ago on strong organic growth as the company benefited from its improved customer proposition. Yü's Digital by Default strategy drove margin expansion to 2.1% from 0.8% a year ago, with a gross margin improvement to 14.1% from 7.8%. The company reduced its overhead costs to 4.6% from 6.1% of revenue in 1H21.
Adjusted EBITDA increased to £2.7m, a 440% improvement over £0.5m a year ago, with profit after tax up an equally impressive 389% to £4.4m. Profits benefited from a £3.3m gain based on Yü's ~£300m MtM hedge position, leading to a £7.3m financial derivative asset in 1H.
Average monthly bookings increased 49% to £14.3m from £9.6m a year ago, while the number of meter points increased 25% from the year prior.
Yü Group successfully launched Yü Smart during the period, a new smart metering division. Yü says the new division will improve debtor control, margins, and profitability as it scales, and the new smart meter assets will unlock new annuity incomes for the company.
Yü's cash position increased by 37% to £15.7m, and the company said it is considering a progressive dividend, to be announced at Yü's full-year results.
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Yü Group delivered a stellar set of results in 1H22, with a doubling of revenues, quintupling of profits, and overall great performance across all key financial KPIs. Results exceeded forecasts even after 2 recent upgrades.
The company's robust commodity hedging position further underpinned its strong performance in 1H as the business remained protected from high price volatility in energy markets. The company estimates the value of its hedge book, on an MtM basis, to be £300m as of 20 September 2022, providing a significant market opportunity for the rest of FY22, as well as FY23 and FY24.
Yü's digital initiatives, Digital by Default and Yü Smart, are progressing well and quickly becoming integrated into the company's core business. These programs bring benefits of lower operating costs, increased efficiencies, and easier planning as the business scales. This in turn leads to faster growth and improved gross margins, already up to 14.1% from 7.8% last year.
Yü Smart will enable the company to own its own smart meters, beginning in Q4 2022, which will provide a long-term recurring annuity. With soaring energy prices, more and more businesses are looking to optimise their energy usage through digital monitoring, with an estimated £50bn addressable market in that space. Yü Smart is forecast to become profitable in FY23.
Yü Group has now delivered four consecutive half-year periods of consistent growth, with strong momentum continuing into 2H22 and beyond. Contracted revenue of £119m is already secured for 2023, providing good forward revenue visibility. The company is very well-funded with £15.7m in cash, and well-positioned to meet its stated medium-term goal of £500m in revenues with an adjusted EBITDA margin of over 4%.
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