Stockopedia20 Mar 2025 17:59
If anyone's interested here's a snippet from Stockopedia's assessment from yesterday. I'll post in 2 parts:
"2024 results summary: Yu’s revenue is heavily influenced by energy prices, so I think profit is a more useful measure of growth than the top line gain here:
Revenue up 40% to £645.5m
Pre-tax profit up 12% to £44.5m
Operating margin of 6.4% (2023: 8.3%)
Earnings per share up 8.1% to 200p
Dividend up 50% to 60p per share
Net cash of £80.2m (2023: £32.1m)
Overdue customer receivable: 3 days’ sales (2023: 4 days’ sales)
The decrease in operating margin last year reflects a couple of factors:
An 29% increase in operating costs to “drive growth and/or margin improvement”
A reduction in gross margin to 14.5% (2023: 18.1%). The company says this was due to a higher proportion of non-contracted customers in 2023 – presumably these pay higher prices but provide less visibility than contracted customers.
It’s also worth pointing out that the c.£50m increase in net cash last year was primarily the result of a one-off return of collateral previously required for hedging. My sums suggest free cash flow was just £11.4m last year, due to adverse working capital movements and capex.
I don’t see a problem with the balance sheet but I do think it’s worth remembering that working capital movements can be large and frequent during the year. I tend to view the group’s cash position as an important source of liquidity, rather than as surplus to requirements.
Trading commentary: Yu provides some useful operating metrics to illustrate the progress of its business. In my view, growth in meter points and energy supplied highlight strong underlying growth here:
Meter points supplied up 65% to 88k
Equivalent volume of energy supplied up 78% to 2.21 TWh
Market share up 1.3% to 2.7% - almost double vs 2023
Average monthly bookings down 23% to 42.6
Many customers are on fixed-rate contracts, which Yu is able to secure through its commodity trading agreement with Shell. These provide good visibility on future revenue:
Contracted revenue for FY25 up 9% to £566m
Total contracted revenue up 25% to £1,034m
The company’s smart meter rollout is also gathering pace and is being funded with a secured debt facility, to preserve the group’s cash. Smart meters remain a small component of revenue, but can hopefully be scaled up:
2024 installations up 14.4% to 22.9k
Index-linked annualised recurring revenue up £1.1m to £1.3m"
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