SMALL CAP MOVERS: Yu Group manages to keep the lights on and avoid energy firm graveyard 

SMALL CAP MOVERS: Energy supplier Yu Group manages to keep the lights on and avoid energy firm graveyard

To say the last year has been a tricky one for energy retailers would perhaps be a bit of an understatement.

Over 2018 and the start of 2019, the industry has been rocked by a number of smaller providers collapsing into bankruptcy, with the sector graveyard totalling around ten companies so far.

One of the more recent failures in January was Economy Energy, which went bust and left 235,000 of its customers (quite literally) in the dark.

Yu Group reported a smaller than expected loss for last year

Yu Group reported a smaller than expected loss for last year

Matters have deteriorated so far that sector regulator Ofgem is due to implement new guidelines in June that will effectively stress test a supplier’s finances to make sure it has enough cash to meet the expectations of their customers.

With a track record like that, investors in business energy supplier Yü Group breathed a heavy sigh of relief last week after the firm reported a smaller than expected loss for last year.

While better than expected results are not rare, Yü’s figures were particularly critical after it warned in October that an accounting snafu could see £10million wiped from its profits, causing it to lose around 80 per cent of its market value.

The error also attracted the attention of the Financial Conduct Authority (FCA), which began an investigation into the company’s accounts following the profit warning.

However, Yü’s shares were given another jolt on Thursday when the FCA decided to pursue the investigation and had ‘no present intention’ of taking action against the company.

The double whammy of good news sent the shares surging 195 per cent to 280p over the week, although the stock is still well off its level of 580p from the day before the error came to light.

From suppliers to producers: Edenville Energy shot up 64 per cent to 0.09p in the week after it received funds from a recent placing and recommenced development of its Rukwa coal to power project in south-west Tanzania.

Meanwhile, shares in tubing specialist Tricorn flowed 8.8 per cent higher to 18.5p after it unveiled an expansion of its business in the US with a custom built, powder coat and wet spray-painting line facility.

Digital promotions and loyalty group Eagle Eye was flying high as its shares jumped 6.9 per cent to 163p. The firm, which is headed by former Tesco boss Tim Mason, unveiled a partnership with News America Marketing, described as the premier marketing services company in the US and Canada.

There was good news from the miners with Europa Metals climbing 38 per cent to 0.02p after unveiling plans to begin drilling at its Toral zinc project in Spain within days.

Recruiter Staffline issued a Brexit-inspired profit warning

Recruiter Staffline issued a Brexit-inspired profit warning

A good start to the year for blood flow monitoring firm LiDCO also got investor hearts racing, with the shares rising 25 per cent to 5p after its first quarter revenues came in ahead of expectations.

Looking at the wider market, the AIM All-Share dipped 0.1 per cent in the week to 956.3 while the FTSE 100 was up 1.8 per cent at 7,331.

In the fallers, recruiter Staffline plunged 55 per cent to 395p after a Brexit-inspired profit warning sent investors running for the door. The firm, which earns a substantial amount from providing temporary workers, said the ongoing uncertainty was pushing companies to move temporary staff over to the permanent payroll, reducing demand for its services.

Sticking with exits, procurement specialist Maistro saw its shares crash 72 per cent to 0.35p after the company unveiled plans to de-list from AIM and re-register as a private company.

Profit warnings were also causing a headache for gambling marketing group Veltyco, which tumbled 38 per cent to 2.3p after saying its revenues for the first four months of 2019 had been below management expectations.

Elsewhere, CyanConnode sank 15 per cent to 5.8p over the week after investors in the smart metering specialist were not impressed with its latest results despite reporting a narrowed loss in its latest full year.

 

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Markets | Mail Online

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