Yü Group PLC (LON:YU), the gas and electricity supplier, said revenue for 2017 was significantly ahead of current market forecasts.
The shares were up 11.2% at 1,140p as the company, which caters predominantly to the UK corporate and small-to-medium enterprises sector, said its success in the middle market had prompted it to increase its expectations for growth in the current and future years.
New investment
The board has sanctioned additional investment in headcount and fixed costs to take advantage of market opportunities, and despite these increased overheads, it remains confident of reporting operating profits ahead of current market expectations.
The group ended the year with net cash of £5.0mln, down from £5.2mln a year earlier. Yü intends to continue using the funds to support its hedging policy.
Cash generation in the second half of the year was, as expected, lower than the first half due to the payment of certain industry levies during this period. The group's balance sheet remains strong and the business continues to be cash positive going forward, Yü said.
"We are once again delighted with the group's continued progress. The business is developing well and our focus on our long-term sales growth is paying dividends," said Bobby Kalar, the group’s chief executive.
“We are now in the process of opening a new office in central Leicester in order to accommodate the growing number of people within the business who will deliver and service this growth potential. Investment in our people, culture and procedures is important to accelerate our rapid growth while maintaining customer satisfaction. I look forward to the future with confidence," he said.
Young company
Neil Wilson of ETX Capital noted that the business is young and therefore sensitive to any increase in fixed costs but “management appears to be managing this well”.
“This is very much a task of managing the growth and retaining the focus on customer care in order to retain the existing customer base,” Wilson said.
“Net cash stood at £5mln and importantly this is being used as collateral for the business to remain fully hedged in the energy markets. This is vital for reducing risk – as we have seen in recent months, wholesale price shocks have killed off a number of small start-up suppliers because they’ve not been properly hedged in the market,” Wilson noted.