Shares in energy firm Yu have tumbled again following a forensic accounting probe. The gas and electricity supplier made the news in October after a £10 million knock to its profits.
The group said just before Christmas that it expects a further reduction in profitability of between £2.75 million and £3.25 million following the forensic investigation that uncovered the original fall in profits. The Group has now forecasted an Adjusted Loss Before Tax of between £7.35 million and £7.85 million for the year ended 31 December 2018.
Chairman Ralph Cohen said the results of the review confirmed “serious historic failures” in the systems and processes within the group’s finance function. Shares dropped more than 20 per cent, having already seen their value decimated since the accounting issues came to light. The Financial Conduct Authority (FCA) has said it will investigate the accuracy of the group’s announcements.
Back in October, Yu announced it had identified several areas of “significant concern” relating to its recognition of historic income, impairment of trade debtors, and gross margins achieved against prior expectations.
The energy firm said at the time that problems with the way historic accrued income is recognised and higher-than-expected non-payments from trade debtors would push it to an annual loss.
Forensic accountants are often brought in when there is a major discrepancy in forecast and actual profits, as it has a detrimental effect on share value. These experts will examine the accounts to ensure that no monies have been misappropriated and that the correct processes have been followed.