Member Info for Discodave4561

From DRX interims:

“Opus Energy (Opus), the Group's SME business, was loss making at the Adjusted EBITDA level, reflecting an exit from gas supply as part of the Group's decarbonisation strategy and lower customer numbers.”

The deal won’t complete until Q3 2024 so guess no financial numbers will be available until then.

Just noticed I posted incorrectly - £700m Rev someone posted up was FY25, my apologies. That said it’s below current consensus anyway at £746m. IMO forecasts for FY25 will more than likely change.

Nice for holders to see it recover at close today.

RSI isn’t oversold, gap filled at 1358 this morning, support at close from lower trend line on descending channel. No chartist mind so DYOR.

Surprised NG hasn’t commented since the TU.

Dodger - spot on with your earlier posting. Egg on face for some, say no more.

Rev Growth - Just another observation - In their finals the forecast for Rev growth was +50% this FY. H1 is +60% so unless I’m missing something that means H2 will be +40% now they’ve said they are in line (which IMO is questionable). FY23 H2 Growth was +77%, so FY24 H2 growth has nearly halved.

Shell - They are hedging / purchasing the energy requirements, so the business profitability is dependent on how well Shell perform and the relative margins. However, their covenants with Shell includes profitability, errr am I missing the obvious?, Bobby can’t be that stupid can he?, must be some performance targets in favour of YU to mitigate any breach, but we simply don’t know the details.

Still note someone posted £700m rev this year - consensus is £674m, they’ve said they are in line.

Will the BOD start to buy at this level?, expect at least six figs otherwise is an orchestrated PR job IMO.

PS kicking myself for not hanging on in with my short, oh well.

SNN

Sorry but I don’t agree. Numbers of meters isn’t how their forecast income has been determined. Surely it’s based on their forecast of customer usage, and potential customer usage. The consensus revenue for this FY is £674m, they’ve just stated they are in line so why assume anything different. Yes they may be being conservative but no where near to the extent you imply, a few percent perhaps.

Think the expectations of PI’s via numerous BB’s has been, being a bit blunt, OTT. This is also something I look for when trading as momentum in either direction is more likely to be excessive.

Will leave it there until later in the year and see if any further scope for decent trades. Pity I closed yesterday!.

All the best

Ipc

ROC - thanks for clarifying.

Shell - Good point, perhaps that is the deal. Hopefully at some point they will provide some clarity.

Energy Supplied - Yes I’m aware it’s in the AR, as I flagged that to Sparky previously. My point is that was the first time it’s been stated (having quickly scanned other AR’s) and they don’t freely give that info throughout the year yet it’s fundamentally the core element of their business, no forecasts and no KPI / Target which I do find very strange. Constant reference to the number of customer meters as an indication of growth (along with income obviously) isn’t the full story. CNA regularly provide energy supplied data along with number of meters and customer numbers (which is also very useful for analysis).

Did think today there might be a bounce, so I did close too early. Will sit on hands now and wait for trading opportunities at interims, possibly before who knows. All the best.

Typos - ROC pay £33m not £43m. Shell deal not Shell desk.

Sorry it’s posting using my phone and not aware you can edit postings.

Ipc

Thanks, got the revenue fairly accurate but not eps according to the broker it’s 85p apparently (Sparky posted). Given their organic Rev growth was 60% and they have confirmed in line for the year, that must I guess mean H2 Rev growth will be less than H2 (as they’ve said +50% for the year) and / or margins lower to hit EBITDA forecast? may have missed something been a long day!.

Thought also their margin target was 6% to 8% so broker is going for the lower target.

Agree meters 100k looks achievable, but once again. the glass half empty in me says it means relatively nothing in terms of income growth because they never mention the actual volume of energy supplied, which in my opinion is the primary service they provide plus no KPI’s which seems ridiculous to me.

You stated: “Cash is looking good, if they continue on track then circa £100m at year end (albeit with circa £25m of ROC included) still leaves a sizeable cash pile”.

Why £25m ROC included?, next month they will pat £43m, then surely as sales increase it will be in excess of this for FY25? (apologies again if misinterpreted what you are saying). As for cash it may be as you say but how much will they need to keep on the books in order to not breach their liquidity covenant associated with the Shell desk. Plus as posted previously I can’t imagine Shell are hedging for zero charge / commission and only entered the deal on the off chance YU default and they acquire assets. Neither brokers to my knowledge are mentioning an additional cost associated with the deal which I find very odd, I may be barking up the wrong tree but you tell me what’s in this deal for them if not a profit and potential asset/s (which according to the YU BoD isn’t likely to happen - them defaulting on profit, liquidity etc).

Yep agree completely, no need for folks to get personal.

Was trying not to respond but you can’t compare tonTEP, different business model and besides which they actually report a they beat profit forecasts despite the reduced income when compared to their previous FY. Despite that the sp now is lower than the day of their results, so given the rise up to today here, and so far over one year, with an in line what exactly did you expect?. Even when others here including myself gave our predictions you seem amazed, shocked and angry at the market response, unbelievable IMO.

Closed my trade earlier (200 pips in the bank), don’t really give a monkeys if folks believe that or not!.

Just wanted to post the following up as SNN and NG were kind enough to discuss / debate the terms of then shell deal, which wasn’t quite as thought. For reference it’s from the last AR Page 85 and it looks like the covenants include profitability, net worth and liquidity, which by the sounds of it any breaches determine which or all of YU assets Shell acquire.

From the AR:-

“As part of the Trading Agreement, Shell provides exclusive access to commodity products and holds security over the main trading assets of the Group which could, ultimately and in extreme and limited circumstances, lead to a claim on some or all of the assets of the Group. In return, Shell provides market access without the need to post cash collateral in the normal course of operation. The new arrangement with Shell provides significant advantages to the Group's arrangements in effect at 31 December 2023. The significant benefits of transacting with a major energy company such as Shell includes support to Group cash liquidity through the release of the £49.8m of collateral which was prepaid under legacy arrangements.

The Board carefully modelled in detail, and continues to monitor, certain covenants related to profitability, net worth and liquidity associated with the new Trading Agreement to assess the likelihood of any breach of such agreement and the impact any such breach would likely have. Such scenarios include reduced gross margin and increased bad debt, and the impact this would have on the ability to maintain compliance with covenants.

After a detailed review, the Board has concluded that there are no liquidity issues likely to arise in relation to the hedging arrangements and current market context, and the new Trading Agreement should materially improve Group cash liquidity and prospects for the future.”

SP1

As posted earlier, not lowering myself by getting into arguments on a personal level.

See you possibly around August leading to the interims, which will be very interesting!.

PMSL

Posted more than once the market reaction to just an in line, the rise to today and sell on news - so will leave it to you to guess what my trade was this morning. Believe it or not I don’t really care.

SP1

Not getting into that here. Read back the comments on both threads there since I first went long around mid October last year.

Prefer you stick to discussing YU.

SMA50 support seems to have been broken, could end up back at around 1680 the closing price the day before they confirmed the TU date.

Fez - the ROC payments are a liability.

Job done for me in terms of trading, just seeing how this goes for the rest of the day (possibly beyond but I doubt it) then I look forward to the Interims in Sept.

Thanks SNN and NG for passing on some of your knowledge.

Certain posters on here were saying a special dividend and buyback. May have meant the interims but posted comment against header of TU and weren’t clear IMO.

Chaps please leave out the personal accusations. I posted what the reactions were likely to be if an in-line update today.

Folks selling on news, only an in-line and no mention of dividend or buyback. Perhaps in the interims?.

IMO the TU was underwhelming and reaction as expected.

Sparky

What would be expected with such elevated pricing in energy. How does it compare to other suppliers?.

Fixated with PE alone doesn’t determine value.

Rev £310m

Meters H1 only c18¥

Monthly average bookings down. 8.5% to H1 FY23

ROC higher than I thought

Overall an in line which may be seen as soft compared to what some may have expected. No mention of a dividend or buyback.

Numbers look good though in terms of percentage change, so not too certain how the market will react.

Sparky

I’ve never ever said that Shell are out to destroy YU, as SNN has also posted: YU breach their covenant and Shell get the business. As per Note 25 in the AR. That’s a fact not an assumption.

Rawson messed up that’s a fact not an assumption, Shell couldn’t make their own energy retail business work at a profit so they offloaded that’s fact not an assumption. nobody yet knows how well Shell have performed compared to say SmartestEnergy that’s a fact not an assumption, nobody knows they rue cost of the deal that’s a fact too. Hopefully the TU and H1 will in part answer this latter fact.

Folks who have used energy brokers are suing their suppliers that’s a fact too and the majority of YU customers use energy brokers.

https://www.bbc.co.uk/news/uk-england-tyne-68072768.amp

I don’t want the sp to fall, not unless I’m short, likewise I wanted the sp to go up when I was long and thankfully it duly obliged.

I’m not positive or negative on YU short / medium term have stated that quite clearly. I’m trading the momentum whichever way that is. Can’t be any clearer really. If you believe my posts have any influence whatsoever then you are in the wrong game.

Today’s volume hasn’t been too bad but it’s not likely to make a new high (which I thought it might). Perhaps tomorrow on news it will, who knows. I’ve also posted my views on that too.

Sparky

Sparky

Thanks for flagging some risks but IMO the majority you cite are sectorial and applicable to most businesses.

You mention covemants and if breached most get resolved amicably - IMO the Shell deal is my main area of concern on a few major points: 1/ In this case if they breach covenants, which nobody actually knows the specific details, then Shell will simply and happily walk away with the business, no amiable discussions there!. 2/ You then mention there’s a risk if the CFO screws up, well within a month of his appointment he stated (the business stated based on his financial forecasts) via RNS that they would be making a profit the following year FY19, they made a £4.97m loss!. Yes it was 5 years ago but personally I’ve little confidence with the CFO and perhaps the market does too?. 3/ How good are Shell at hedging for YU?. They couldn’t make a profit for their own energy retail business, they piled in over £1bn to try and make it work and failed. They sold to Octopus who made a decent profit in 2022 (be interesting to see if they did in 2023 after taking on Shells customers).

Then there’s potentially major issues with YU’s customers being miss-sold contracts by using energy brokers (most of YU’s customers use energy brokers) and claiming compensation (it’s been highlighted recently in the press). Perhaps the brokers are all above board and it’s not significant, but I’d be somewhat concerned if the Ombudsman /FCA get involved.

Do have other concerns I’ve researched but these two are the main ones. Yes I’m not a long term holder, so yes it’s arguably not my concern anyway, but I do research thoroughly as that identifies trading options / potential for the short term. Folks can DYOR.

As for my current position Sparky, I’ve already stated that quite clearly.

Of course there are. Make the most of the elevated charges and margins due to higher energy costs, there is scope for growth, like to see Smart meter installs for other suppliers.

Any negatives?