Yu Group confident after first-half growth
By Josh White
Date: Tuesday 24 Sep 2024
(Sharecast News) - Yu Group reported a robust first-half performance on Tuesday, with revenue surging 60% to £312.7m, driven by strong organic growth in meter points.
The AIM-traded firm said adjusted EBITDA rose 49% to £20.4m for the six months ended 30 June, in line with management expectations, despite a slight reduction in EBITDA margin to 6.5% from 7.0% in the prior year.
Earnings per share increased by 52% to 88p on an adjusted, fully diluted basis.
The company maintained a strong net cash position of £86.8m, bolstered by a net cash inflow of £56.9m, including a return of £49.8m from a previous hedging counterparty.
It said that supported capital distributions, including a £10.2m outlay for share buybacks and dividends.
Reflecting its confidence in continued growth, Yu Group announced a materially increased interim dividend of 19p per share, up from 3p a year earlier, to be paid in December.
Operationally, the company saw a 110% increase in energy volume supplied to customers, despite a return to more stable commodity markets compared to the volatility of 2022 and 2023.
Its smart meter business, Yu Smart, expanded significantly, with 9,000 new installations in the first half, up from 4,000 year-on-year.
The company also increased its field engineer workforce to 101 from 25, supported by a new in-house training and excellence centre.
Yu Group's commodity hedging arrangements performed well, providing efficient access to energy markets under a five-year agreement signed with Shell in February.
The company also maintained a high level of customer satisfaction, achieving an 'excellent' rating on Trustpilot and being recognised as a 'Top 100 Best Places to Work' by the Sunday Times for the second consecutive year.
Looking ahead, Yu Group said it expected continued growth in revenue, smart meter installations, and energy supply volume for 2024 and 2025.
The company was confident in meeting earnings per share growth expectations for the second half, and planned to maintain its progressive dividend policy, aiming for a dividend cover of at least three times in the medium term.
It said its strong cash position also enabled it to explore additional opportunities, such as early investments in renewable obligation certificates to secure discounts.
"Once again, my team has delivered an excellent performance, and I'm in no doubt that this continued momentum will deliver a strong full year performance and further enhance our contracted forward order book," said chief executive officer Bobby Kalar.
"Our simple yet effective strategy to build strong foundations has resulted in the continued delivery of our rapid and sustainable growth.
"Yu Smart continues to go from strength to strength - like all new startups, we've experienced growing pains and building teams who share our values and habits has required management attention."
However, Kalar said he was "satisfied" good progress had been made, adding that the company had positioned itself for "significant" meter installation growth.
He said smart meter installations were up by 125%, and engineering headcount was up 300%.
"Our February new trading deal with Shell Energy remains strong and their mature and collaborative approach is already leveraging opportunities not available to us before.
"The lack of Institutional engagement has been disappointing, despite management delivering colossal value year on year.
"Many AIM companies are questioning the market's future and the desirability of remaining listed."
Bobby Kalar said that had been reflected in the reduction of quoted companies, adding that the AIM market's future was "delicately balanced", and "won't be helped" if the current government "further punishes and disincentivises" entrepreneurial high-growth companies.
"This lack of recognition is frustrating; however, we remain focussed on delivering 2024 forecasts and positioning the group for another record-breaking performance in 2025."
At 1154 BST, shares in Yu Group were up 2.87% at 1,594.5p.
Reporting by Josh White for Sharecast.com.
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