Yu Group (YU. ) said it has been appointed by Ofgem as the supplier of last resort (SOLR) for Ampoweruk to take on their electricity and gas customer book from Sunday 7 November.
Yu, an independent supplier of gas, electricity and water to the UK corporate sector, said it is confident in its ability to retain a significant proportion of the Ampower business customer book, which it believes will lead to substantial increase in forward contracted revenue.
Ampower supplies 8,158 predominantly electricity business sites, thereby increasing the Company’s meter portfolio by 38%. Yu said group revenues are forecasted to immediately increase by over £7.5 million per month and that earnings will be enhanced immediately.
Under Ofgem’s SOLR process, business customers transfer to a new supplier on a flexible, “deemed”, basis with a variable tariff reflective of current market conditions, it told investors.
Yü Group has already integrated the new customers on to the Group’s scalable platform; and says certain industry processes will continue in the coming days to complete the transfer.
It is also now in the process of contacting the customers impacted and will ensure they continue to receive an uninterrupted supply after Ampower ceased trading on Saturday.
Whilst Yü’s focus will remain on serving the UK corporate sector, it has the necessary capability and experience to serve Ampower’s very small number of domestic customers.
The Group has already taken steps to hedge the increased customer demand forecasted in accordance with its robust trading risk mandate. It added that underlying trading remains strong as reported at the half year results with the firm continuing to drive profitable growth.
Bobby Kalar, Yu’s CEO, said: “I’m very pleased to have been awarded the Ampower customer book. In recognition of our strong systems and experienced team these customers have already been migrated onto our scalable operating platform seamlessly over the weekend with negligible impact on resource or capacity. Our experience and track record means we are confident the customer transition will be seamless, quick and well communicated.”
Our robust hedging strategy and strength of balance sheet are underpinned by a proven business model and a solid and scalable platform. This gives the Board confidence that we are well positioned to deliver a good blended mix of both organic and inorganic growth and we are proud to be in a strong position to allow us to play a part in supporting the industry.”
In recent weeks, Yu Group appointed Adam Young as Digital Marketing and Sales Director to support its growth strategy by unlocking new routes to market via a new digital programme.
Yu said Young is expected to lead its transformation into a data-driven, ‘digital by default’ business that will further accelerate the Company’s growth, profitability and ability to scale.
The appointment also followed the recent publication of the Company’s half-year results for the six months to 30 June 2021 in which the Group reported a strong financial and operational performance alongside positive momentum heading into the second half of the year.
Bobby Kalar, CEO of Yu Group commented: “I am delighted to welcome Adam as our Digital Marketing and Sales Director. Adam has a proven track record of driving digital change and will bring relevant expertise and experience to support our digital transformation programme.”
In September, in its half-year results for the six months to 30 June 2021, Yu told investors that it has seen a “solid” 1H performance with this positive momentum continuing into 2H21.
CEO of Yu Group, Bobby Kalar said he believes the company’s business model “is more than delivering” and that it remains on track to exceed market profitability forecasts going forward.
During 1H21, the Company reported revenue growth of 43% to £65.8m up from £45.9min 1H20 which is said was driven by strong organic growth and recovery of customer demand.
Profit after tax came to £0.9m, an increase of £2.6m year-on-year, up from a loss of £1.7m.
The Company highlighted that underlying profitability ‘continues to see significant improvement,’ after reporting adjusted EBITDA at £0.5m, up from a £1.8m loss in 1H20.
In particular, gross margin rose by 2.1% to 7.8% (1H20: 5.7%) while strong customer collection performance drove lower provision for bad debt. Average monthly bookings rose 55% to £9.6m while the number of meter points also increased by 112% from 30 June 2020.
Yu Group said its business maintains both a strong cash position and strong balance sheet and remains debt free. As at 30 June 2021, held £11.5m (31 December 2020: £11.7m).
In terms of current trading, the Company has now secured £90.5m of contracted revenue for 2022 at 31 August 2021 which it outlined would provide ‘good forward revenue visibility.’
In short, Yu said it believes it is well positioned to continue in its business objectives despite the increased commodity markets which has led to some increased competition on renewals.
Going forward, the Company expects FY21 to be in line with market expectations with strong organic growth expected to continue for 2H21 while adjusted EBITDA for FY21 expected to be ahead of market expectations based on strong net customer contribution performance.
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