In its half-year results for the six months to 30 June 2021, Yu Group (YU.) informed investors that it has seen a “solid” 1H performance with this positive momentum continuing into 2H21.
The Group, which supplies gas, electricity and water to the UK corporate sector, said it had come out with “better than expected” results for 1H21 after revenue grew by 43% to £65.8m.
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.’
The Company noted that strong bookings throughout July and August 2021 continue to support high organic growth rates while customer collections also remain ‘strong.’ As a result, the Company told investors that it is confident that it will at least meet its target forecasts.
Yu acknowledged the exposure to record high global commodity prices in 1H21, noting that its ‘mature and stable hedging strategy’ has mitigated the impact of the high commodity prices, and that its arrangements with trading counterparties have placed it in ‘a good position.’
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.
A further increase in monthly bookings is expected in 2H, following the Group’s strong performance in July and August as it continues its focus on digital routes to market.
“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,” commented Kalar.
Following the last few years of ‘significant progress’, Yu said its laser focus remains on gross margin improvement, lowering operational costs and further commercialising the order book.
He added, “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.”
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In its final results for the year to 31 December 2020 released in March 2021, Yu said it was “primed and ready for profitable growth” in 2021 following a strong performance in 2020.
Yu said its strong top line performance and earnings in FY20 had exceeded market expectations and that this was “a clear indicator of its positive trajectory and speed of travel.”
At the time, Yu Group also described its two successful acquisitions in 2020 as immediately earnings-enhancing, saying this was “a clear demonstration” of both intent and capability.
On the back of its final results, CEO, Bobby Kalar said 2020 had been a “defining year” for the company “underscoring the strength, maturity and momentum” of the overall business.
As a result of a strong performance, Yu told investors that it expects revenue in FY21 to be ‘significantly above’ the £101.5 million delivered in FY20 and ahead of market expectations.
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