Business energy supplier Yü Group has revealed a hole in its accounts that will lead it to post a loss for the current year. Its share price plunged 80% on the news.
Last month Yü posted 57% year-on-year profit increase for the six months to 30 June. Revenue increased 73%. Adjusted profit before tax stood at £1.8m, up from £1.15m. Revenue was £35.8m up from £20.8m.
The company predicted a strong full year result, but said yesterday that it had looked at Aged Accrued Income and realised that much of it cannot be recovered.
Aged Accrued Income balances totalled £4.2 million in the annual accounts for the year ended 31 December 2017 and £4.3 million in the Interim Results as at 30 June 2018.
The company has also reexamined its trade debtors and concluded that what is recoverable is less than its provisions.
As such, the company will post a loss for the year, stating the combined adjustments will reduce profits by around £10 million.
Yü Group said it expects to return to profitability in 2019, but at a much reduced level.
“Nobody is more disappointed in this development than me,” said CEO Bobby Kalar, who is founder and majority shareholder.
“Our booked revenue from new sales remains strong and contracted revenue for 2019 is already £67 million as at the end of September 2018. We have improved internal controls around working capital management and the Board is absolutely focused on restoring the profitability of the business.”
The company said it has £11.5m in cash reserves and no outstanding debt.
Meanwhile, share prices at third party intermediary Utilitywise hit a new low this week as the company continues to feel the effects of its own overstatements of profits due to miscalculating how much energy its clients were consuming.
Shares in the company are now trading at around 17 pence compared to 72 pence at 31 October 2017. Utilitywise shares peaked at 370 pence in April 2014.
The company announced earlier this month that it plans to axe around 60 jobs in a bid to cut costs.