Transformational New Hedging Facility

Yu Group PLC

23 February 2024

 

Prior to publication the information communicated in this announcement was deemed by the Company to constitute inside information for the purposes of article 7 of the Market Abuse Regulations (EU) No 596/2014 as amended by regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations No 2019/310 ('MAR'). With the publication of this announcement, this information is now considered to be in the public domain. 

23 February 2024  

Yü Group PLC

("Yü Group" or the "Group")

Entry into transformational new Hedging Facility with Shell Energy Europe Limited

Yü Group PLC (AIM: YU.), the independent supplier of gas, electricity, meter asset owner and installer of smart meters to the UK business sector, is delighted to announce that it has (through a wholly owned subsidiary, Yü Energy Retail Limited) entered into a new structured trading agreement ("Hedging Facility") with Shell Energy Europe Limited ("Shell Energy") with an initial five-year term.

Entry into the Hedging Facility represents the conclusion of a twelve-month selection and due diligence process and is effective immediately. The Hedging Facility replaces the previous arrangement entered into in 2019 with SmartestEnergy Limited ("Old Facility").

The Old Facility enabled Yü Group to effectively scale up and formed a key tenet of the Group's risk management approach allowing the business to procure gas and electricity at fixed prices to support its growing customer base.

The unprecedented volatility in the energy markets, and Yü Group's rapid growth, has recently resulted in the Group exceeding its available credit under the Old Facility resulting in the requirement for the Group to post cash on deposit to support its hedging strategy, with £49.8m posted as collateral at 31 December 2023.

The Hedging Facility with Shell Energy has several significant benefits for Yü Group. It is structured to allow access to commodity markets to support the Group's ambitious growth agenda, and has the potential to support further expansion opportunities should they arise.

Further, while the Group meets its ongoing obligations in the Hedging Facility, Yü Group will not be required to deposit cash as collateral to support mark to market movements, due to energy price fluctuations, as has been required under the Old Facility. Finally, Yü Group will benefit from Shell's leading and considerable commodity trading access to liquid commodity markets, at market reflective prices.

The Hedging Facility fundamentally transforms Yü Group's working capital profile releasing cash that would previously have to be held on balance sheet to support the Group's robust hedging policy. £52.25m of cash previously lodged under the Old Facility has now flowed back to Yü Group, with further material cash benefits to be realised over the next month.

Notice of Results

The Group will announce its results for the year ended 31 December 2023 on 19 March 2024

Bobby Kalar, Chief Executive Officer of Yü Group, commented:

"I'm very excited for the future of the Group and look forward to working with Shell Energy Europe Limited, one of Europe's largest traders of gas, power and environmental products. This new strategically important facility is the result of a thorough selection process and is further validation of the strength and maturity of Yü Group following the extensive due diligence and stress-testing of our business model.

The new hedging facility unlocks over £50m of cash currently posted as collateral and removes a material working capital constraint to the business lifting exposure to mark to market movements from future energy market fluctuations. This provides us with substantial strategic and financial benefits, enabling increased distributions whilst continuing to invest to deliver our ambitious growth agenda.

I recognise it's been a very busy period for my team and would like to thank them for their continued support. I look forward to the future with absolute confidence."

For further information, please contact:

Yü Group PLC   Bobby Kalar   Paul Rawson	[phone]
Liberum - Nominated Adviser and Broker    Edward Mansfield   Satbir Kler Anake Singh	[phone]
Teneo   Giles Kernick   Tom Davies	[phone]

Notes to Editors  

Information on the Group 

Yü Group PLC is a leading challenger supplier of gas and electricity focused on servicing the corporate sector throughout the UK. We drive innovation through a combination of user-friendly digital solutions and personalised, high quality customer service. The Group plays a key role supporting businesses in their transition to lower carbon technologies with a commitment to providing sustainable energy solutions.

Yü Group has a clear strategy to deliver sustainable profitable growth (in a £50bn+ addressable market) and value for all of our stakeholders, built on strong foundations and with a robust hedging policy. In 2023 the Group launched Yü Smart to support growth through new opportunities in smart metering installation.

 

END