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Yu Group: New Hedging Facility with Shell Energy Europe Limited


Transformational Hedging Facility

- Landmark agreement with Shell Energy Ltd

- Replaces previous facility with SmartestEnergy Ltd

- Previous facility forced Yu. to put cash on deposit and post collateral of £49.8m as at 31.12.23

New Terms

- Significant benefits of the new facility include:

- Structured to allow access to commodity markets

- Potential to support further expansion opportunities should they arise

- Yu Group not required to deposit cash collateral

- Benefit from Shell's significant commodity trading footprint

Transformational

- Fundamentally transforms Yu Group's working capital profile

- Releasing cash benefits to be released over the next month

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."

Market Intelligence

- The original facility was signed in 2019

- Negotiations undoubtedly exacerbated by recent volatility in the energy markets

- Releases significant capital for further growth

- Analysts at Liberum increase their TP from 1,676p to 1,883

Yü Group FY23 Trading update and outlook for FY24 and beyond

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