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Yep. Hence, the word 'transformational'. Yu's business is a drop in the ocean to Shell. Shell is just huge, and will have very favourable payments terms from its suppliers. It can easily finance the working capital / collateral which it has passed some of it down the line to Yu. It will enable Yu to super charge growth, a combination of sharper prices to customers and possibly slightly relaxed credit terms, without losing profit margins to Yu. Yu should be able to go after significantly larger customers, with a solid balance sheet and a global player on board as a partner.

Worth looking back to early December 2022 on here, when we were discussing that £1 dividend was possible for 2023 and talk was for eps in the region of 150p. (2022 results weren't anywhere near out and brokers were at 60p!!!)

Yep. Mind boggling, Sparky. It's explicitly stated now that they don't need it for working capital (ie collateral), and as Liberum say it's a capital light business. What's all the cash for? Either very substantially up the dividends, say 60 - 80% payout ratio every year, or they are perusing acquisitions.

Not keen on acquisitions - no control over the quality of customer, as with Solrs, bring in a lot of bad debt, and the customers are free to churn elsewhere. A major acquisition is not just buying a customer book, but may involve buying premises, the staff and all the IT systems - not really integratable with Yu's unique approach. Easily waste a lot of money here.

It's all uncertainty which needs resolving. A drag on the SP, off-putting to new institutions. All to be revealed with the results and in the roadshow presentations.

"with further material cash benefits to be realised over the next month."

A bit cryptic. Sounds like they have also got an extra month on their credit payment terms, an extra month before they pay the cost of sales. So, worth another £40m or so, permanently added on to cash / net current assets. More interest, more flexibility. Will also enable them to offer an extra month credit to their own customers, which is crucial if they want to attract larger blue chip type customers. Could be more of a partnership type agreement with Shell, to do this, as Shell will also benefit greatly here. £2bn revenue is the new medium term ambition?

Looking forward to results and roadshow presentation.

IPC - re market makers. What are the implications of that? Presumably, Yu is gaining more attention, and greater daily volume expected?

RNS clears a good few uncertainties and some of the market's concerns with this stock (hence, the low SP). But also confirms that the remaining concerns are real, which will limit the level this will trade at.

Gone is the uncertainty over what happens when the Smartest deal expires. Shell is a much bigger and stronger partner, should allow for better margins to Yu and removes all working capital collateral and MTM hedging issues. Probably now scaled to £2bn mark for revenue.

Capital allocation / dividends / acquisitions now wide open - allows full flexibility. The market is desperate for concrete guidance here, going forwards. I am guessing that we'll get this on the 19th. Liberum 'speculate' over £1 special dividend. What should we read between the lines here? My opinion - it's in the right area, and allows for any acquisitions that may 'pop up' (BKs words). I hope they will set a minimum payout ratio, which can then be supplemented by special dividends, if no acquisitions come up. (25%, perhaps a third, 33%)

Yu is ultimately a utility and growth is limited. Once they hit 2-3% of the market they are in a bigger pond with 10 or so other similar sized suppliers. Revenue growth will slow significantly, meaning it becomes a dividend play and will trade off the dividend yield. Dividends of say 120p and a 6% yield gives a SP in the region of £20 (for now). And this could easily double two years out, with eps at 300p then 400p.

As Liberum note, falling prices will hold back growth - they need additional customers to make up for lower prices, just to stand still. The forward booked revenue will actually come out lower than stated, as contracts get blended and extended on to lower rates. Liberum's target price is still only 10 PER and is a reflection of such issues. We on here may choose to disagree, but we are not the market consensus! Utilities are not growth stocks - the growth here, is here for now, but is not sustainable beyond say £2bn revenue.

Mind you, £2bn revenue could be 800p eps, with £6 dividends. Not bad if your entry price was 100p or less!!!!

Results are also confirmed for the 19th March.

Looking at Liberum's note from January 2023, they pretty much had every figure spot on - including an estimate 3p dividend. On this basis, it would be safest to assume their forecast 17p will turn out correct. This is the total for the year, making the final 14p (3p interim plus final). This then sets the bar for the dividend policy at around a 10% payout ratio. Expect a clearer and definitive statement on how this will be progressively raised going forwards.

Gacky - "I think however, you are a little optimistic about 50,000 smart meters by the end of 2024. Even though the company pays the highest wages in the sector, there seems to be a problem getting the engineers."

Exactly, a major shortage of qualified engineers. Liberum say a total 25,000 meter installs by end of 2025, so say 12,500 a year is targeted. At £200 a pop is £5m cost, which is the amount of finance drawn down (5.5 in total). Basically, Yu Smart is a very slow burner and to me is now an area of concern. There is no chance at the moment of becoming an installer for other suppliers. The smart meter installs are below the targeted meter growth, so in percentage terms, the number of smart meters will fall seriously behind the total meters on supply. I have written off Yu Smart as having any value, there is little to no meaningful revenue on the horizon.

Gacky - quite. Back of a postage stamp calculation gives a better estimate than the brokers! If that sort of eps growth rate was forecast, would we be on a PER (and forward PER) of where we are? I would probably guess no!

Last RNS clearly references growth going forwards, hence, confidence in allowing a bigger dividend.

Gacky, re brokers - agree totally. The revenue, the hedging and hence gross margin is locked in at contracting. Either poor broker understanding / analysis or poor briefing by Yu to the brokers. The problem then is that brokers have flat profits for 2024 and 2025, on bigger revenues. So no growth and no premium SP. Flat profits for 2 years are only worth a PER of 5 to 8! Is this why tip sheets are exiting? The shares are fully valued on brokers numbers going forwards?

They are clearly courting for new IIs with each results roadshows. But as we know, at least 90% is in very tight long term holders' hands. It is difficult for IIs to buy in any quantity, though not impossible (given Miton increased recently). A placing is the cleanest and most efficient way of doing it, without causing serious dysfunctional movement in the price. It may not happen, but can't happen until trading at a sensible price. With an increasing dividend this year and into next, we should move higher - but another year on only will increase what a sensible price is!

Have SCSW issued something? A sell or take profits advice?

Following a series of meetings with both new and existing institutional investors, it became apparent that demand for Ordinary Shares was in excess of those readily available for sale. The Selling Shareholders recognise the strategic importance to hVIVO of a strong and supportive institutional shareholder base, and have therefore decided to release a portion of their own holdings in order to help satisfy this demand.

Directors' secondary placing to satisfy institutional demand (standard wording)

https://www.lse.co.uk/rns/HVO/proposed-secondary-placing-of-ordinary-shares-43e2xh4pvb5zjxt.html

Won't happen here until a sensible share price.

Was a good buy at 10p last October, now 30p. Would be same as Yu going from 1000p to 3000p!

Just some wishful thinking from Cloud Cuckoo Land.

Just been watching some stuff on YouTube - up popped a Get A Business energy quote from Yu energy advert in the middle of the video! It was a bit weird, and very short, about 10 - 15 secs. The bots clearly tracking my browser activity. Any one else had this / seen this?

Looking at last year dates of results and meetings - 19th is the more likely.

Maybe mis-understanding each other here. I am aware the cash collateral will be returned back to Yu. I was suggesting that Yu will perhaps now want to hold more than the previously indicated £20m cash on its own balance sheet to meet any similar collateral cash calls in the future. As the business grows £20m doesn't look enough.

I have paid the £8 to Research Tree and gone through their past notes. As me and Ipc have said, it's difficult to tell what has been briefed to them and what is their own point of view. On dividends, the suggested 17p now looks to me like Liberum are following the same 10% payout ratio as 2022 (3p on 30p eps). I think it could be more, especially if a large part of the collateral is received back.

Shareholder analysis - % and no. of shares

Kallar Bobby 51.8 8,665,506

Premier Miton Group 6.1 1,020,723

Interactive Investor 4.9 820,822

Barclays PLC 3.3 558,749

Hargreaves Lansdown 3.3 547,353

AJ Bell Securities Ltd 3.2 534,089

Parker Nicholas Sher 3.0 495,000

Parker Anthony Nicho 3.0 495,000

Halifax Share Dealing 2.8 458,962

Jamiesons Principal 2.4 393,946

Turner Jonathan 2.3 382,043

Jamieson D 2.1 353,980

Jamieson Betsy 2.1 352,980

Rawson Paul 1.0 171,360

HSBC Holdings PLC 0.9 154,074

Bayford & Co Ltd 0.9 150,000

Investec PLC 0.8 136,922

IG Markets Ltd 0.8 131,580

Shore Capital Group 0.6 104,054

Hedley & Co Stockbrokers 0.6 103,947

Source is Bloomberg, and taken from Liberum's broker note in September

Basically all PIs holdings on platforms. No institutions other than Miton, plus Jamieson Pension. Adding on Miton's latest batch, there's roughly 97% of the shares listed. Liquidity!

Dividend and capital management

The Board recommends the payment of a final dividend of 3p per share, being circa £0.5m payable in June 2023. The level of dividend is sized to represent the significant potential opportunities to utilise Group cash to further develop the business.

Capital plans, in order of priority, for the Group are:

1. Working capital and securitisation management, including maintaining or enhancing credit lines for commodity hedging

2. Operational investment in marketing and sales to drive additional organic growth

3. Capital investment in Digital by Default to drive growth and/or overhead efficiency

4. Asset investment, including in smart meters or EV infrastructure, largely supported through debt

5. Inorganic growth, with targeted acquisitions which meet our hurdle rate

6. Dividend or other shareholder return of investment

The Board targets a progressive dividend policy, broadly aligned to earnings growth as the Group benefits from the stated strategy. (2022 Annual Report, p27)

No.1 on the list - capital required for hedging, in case of a collateral call. I think they will need to keep back at least 1 month's revenue / cost of sales - quite a substantial figure.

2022 - eps was 30p, dividend was 3p, so 10% again! The clues are lining up!

Forecast eps is 170p, dividend expected is 17p.

There's our answer - dividend is being pegged to 10% of earnings. To expect more will lead to disappointment. Then for 2024, they may lift it 20%, perhaps 25% (of a bigger eps).

Not sure why Sam was picked on - sounds perfectly genuine poster to me. In fact there's been a good many newish names of late, who are clearly holders and more than welcome to 'eavesdrop' on the board. It's good to know that they are there, as it means there are more long term PIs in this than is perhaps apparent at first sight - means the share is even more illiquid.

Sparks and others have disclosed they are big holders, some at the 1% mark. In the past I confessed to holding in the 50,000 - 100,000 range and others said they were in the same area. I now hold over 100,000. I would estimate that PIs who hold around the 1% mark, plus those who hold half on 1% must in total come to say 20% of the company. Add to the 70% listed on the website (directors, Miton etc), means there is under 10% left for other PIs and traders and any other II. Hence, quite big moves happen, up or down, more so on sometimes very large spreads.

Given the expected eps for 2023, at over 170p (and more if they reduce the bad debt provision - getting on for 190p eps), massive cash balances, no long term holder should have concerns holding this at the moment. Yes, the SP is infuriating, but still unmistakeably in a very firm rising trend. Traders trade the trend and the peaks and troughs within it.

Looking back, I can see 6 peaks at around 1240, 1250, 1260, so strong resistance here. This in time will become a support level, so no real concerns at a pull back to 1250p (now support point). 1300p is also very strong resistance. One of these bounds will give shortly - it's a traders' share. Long term holders aren't selling, and no liquidity for new LTHs to buy in. As Ipc suggests, it may be the final results before 1300p goes (results are more decisive than TUs).

Yes, I'd be pleased with 20-30p. Especially 30p, which is only £5m (on 17m shares).

BK refers to showcasing the results in March - so more buttering up institutions. Hopefully, a dividend worthy of showcasing.

Talking of GW, latest on Yu mentioned here, clearly filmed before the TU.

https://www.youtube.com/watch?v=Rdk7az1bdqo

Cheers Ipc.

Is that 17p a final dividend, or does it include the 3p already paid? When the divi is paid in June, that's at H1 date basically, so another 6 months profits cash in hand too - so will be drowning in cash by then if collateral comes back. Without acquisitions, I think it will be very difficult to justify holding all that cash (but obviously they'll still be cautious in case collateral needed again). The 17p can't be a guess - sticking a pin in a map job - must have had some tentative guidance from the company, which allows scope to increase it - so, probably 17p is a minimum?

I can't see special dividends in sight - they won't compromise their ability to grow by not having enough cash collateral, if needed.

Interest - would be twice or more without the collateral!

ROCs - I thought these were 5-6% of revenue. So, 9/12 * 454 at balance sheet date - so £19m. Maybe another £10 to end of March - so £29m? due in August?

My rough and ready cash numbers - 2022, £19m, less ROCs of £11m = £8m of their own cash, end of 2022. Add 2023 EBITDA of £40m, add extra working capital in hand due to growth (PAYE payments, but mainly VAT collected and not paid until January) of £15m = £63m of their own cash at 2023. Add ROCs of £19m = £82m. (RNS £32m plus £50m collateral).

With £63m of their own cash, how much is distributable, if they need to hold back cash for collateral? Having said that, they only seem to need collateral in periods of sharply falling prices (in case they have over bought, and need to sell back to the market at a loss?)

In all, I think it will be this year 2024 interim dividend onwards when they'll distribute more, a decent cash pile will always be kept in reserve.

The note is on Research Tree - looks like £8 per month cost. Is it available elsewhere?