Yu Group shares (LON:YU) took a tumble on Wednesday after the FCA confirmed its intention to a launch an investigation into the company.
The Financial Conduct Authority (FCA) notified Yu Group that it plans to launch an investigation into the accuracy of its financial announcements made between 6 March and 24 October 2018.
The company, which supplies electricity and gas, said in the statement that it plans “to work collaboratively with and cooperate fully with the FCA in its enquiries.”
Back in October, the energy supplier issued a profit warning revising its guidance by £10 million after it concluded that it had miscalculated revenue.
As a result of the overestimations, the firm said it did not expect to return to profitability until 2019.
Nevertheless, Yu Energy assured that it had “significant cash reserves” of £11.5 million, with no outstanding debts.
Founder Bobby Kalar said at the time of the warning:
“As founder and majority shareholder, nobody is more disappointed in this development than me. 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.”
Yu Group is listed on the AIM market of the London Stock Exchange.
The business focuses upon supplying energy to small businesses, as opposed to the domestic retail market, such as British Gas and SSE (LON:SSE).
Yu Group shares are down -31.16% as of 13:12PM (GMT), as the market reacts to the news.