ANOTHER AIM SCAM -Paul Scott report19 Dec 2018 22:04
Yu (LON:YU.)
Share price: 75p (-30%)
No. of shares: 16 million
Market cap: £12 million
Notice of Appointment of FCA Investigators
This company has suffered a shocking fall from grace, and in tandem with Patisserie Holdings, you might even go so far as to say that it has brought AIM into disrepute.
It launched at 200p in 2016 and reached a high at 1345p earlier this year, before admitting that its figures were, in a word, rubbish.
Income had been accrued (not invoiced) which would never be paid by customers. There were also significant additional amounts which had been invoiced but would never be paid by customers. The company was running at a loss instead of a large profit.
Today we learn:
The Financial Conduct Authority (the "FCA") has notified the Groupthat it intends to conduct an investigation into accuracy of the Group's announcements made between 6 March 2018 and 24 October 2018 and whether these announcements accurately reflected the Group's financial status.
I must be too simple-minded, but when a company admits that its accounts have "several areas of significant concern", resulting in £10 million of "adjustments" and a "substantial reduction in profitability", has it not already admitted that its announcements did not accurately reflect its financial status?
I wonder what the upshot of all this might be. It's not good for investor trust in AIM, that's for sure.
I studied Yu during its meteoric rise - I was impressed by its growth, but I did think that the share price had gotten ahead of itself by at least a few years.
A bit like Patisserie Holdings, it now turns out that the story was too good be true. It was surprising that a small gas and electricity supplier could do so well. On the other hand, it had peers who achieved similar success before it.
It now looks like the growth was a mirage. Hopefully, we will find out if there was a deliberate plot to mislead.
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