Centrica announcement

[idpickering]

HYP fave Centrica put this interesting item out today;

Centrica acquires Europe’s leading demand response aggregator

Centrica plc has acquired REstore NV (“REstore”), Europe’s leading demand response aggregator, for €70 million (£62 million) in cash.

Headquartered in Antwerp, Belgium, REstore manages 1.7GW of peak load from a portfolio of industrial and commercial (I&C) customers across Belgium, the UK, France and Germany, generating value for businesses through ancillary services including frequency response and capacity markets. The company’s world-leading software and international patents are currently used by over 150 of Europe’s largest energy users, including chemical, steel and food manufacturers.

https://www.investegate.co.uk/centrica- ... 0000Z5232/

[baldchap]

I am really quite positive about this, even though I am very cautious about 'new tech'.
That being said, the technology involved here is in use, and a list of business and utility companies already using their product is quite encouraging.

It is a very small acquisition, but I am all for anything that makes CNA more of an International company. I just wonder if they paid too much for it?

I currently hold and am happy to top up at current prices.

[idpickering]

I am really quite positive about this, even though I am very cautious about 'new tech'.
That being said, the technology involved here is in use, and a list of business and utility companies already using their product is quite encouraging.

It is a very small acquisition, but I am all for anything that makes CNA more of an International company. I just wonder if they paid too much for it?

I currently hold and am happy to top up at current prices.

Thanks for your input baldchap, (cool name btw), my thoughts are very much in line with your own. It is small, but to my mind, it shows that CNA are looking forward, and want to progress in that area. All to the good IMHO.

Ian.

[idpickering]

Sorry, I meant to say that I would top up too. They've not been my best, nor most reliable performer though. Probably unconnected to this announcement, but they're down 0.5% as of now. Not that that matters here of course.

Ian.

[richfool]

Note Centrica is a cutter. I understood strict HYP'ers avoided cutters.

[tjh290633]

Note Centrica is a cutter. I understood strict HYP'ers avoided cutters.

If they are still paying dividends and the yield is attractive, then it can make sense to add to your holding. It makes you an "impure" HYP-er, of course, or should that be "lenient"?

TJH

[moorfield]

On the flip side this kind of technology will eventually be integrated with domestic customers' smart meters (if not already). Done properly, shareholders will be happy. Done badly, customers won't be, and something that many are already suspicious of. Monsieur Colbert's goose springs to mind.

[StepOne]

Note Centrica is a cutter. I understood strict HYP'ers avoided cutters.

It's not my understanding. 'Strict' HYPs never sell, so will end up holding cutters. Even when buying, 5 years of rising dividends are preferred but it's not a hard and fast rule.

StepOne

[kempiejon]

Note Centrica is a cutter. I understood strict HYP'ers avoided cutters.

It's not my understanding. 'Strict' HYPs never sell, so will end up holding cutters. Even when buying, 5 years of rising dividends are preferred but it's not a hard and fast rule.

StepOne

I hold CNA, but would not add as in my portfolio they've reduced income, I'm not for selling and as tjh says up thread they are still paying a dividend, some of my cutters are not.

[idpickering]

Note Centrica is a cutter. I understood strict HYP'ers avoided cutters.

If they are still paying dividends and the yield is attractive, then it can make sense to add to your holding. It makes you an "impure" HYP-er, of course, or should that be "lenient"?

TJH

Thanks richfool, I get that, but I'm very much in line with Terry's comment there. OK, the purists would rule them out, but if it's a high yield, with a progressive divi now, I'd cut them some slack.

Ian.

[vrdiver]

I'm not adding to utilities in general at the moment. IF Labour, under Corbyn (or McDonald) were to form the next government, then the risk of a below-par compensation for any nationalized company is something I can do without.

If they don't get in, or re-nationalization threats turn out to be hollow, the utilities will probably soar, to my loss, but I'm erring on the side of fear, rather than greed on this one.

VRD

(Yes, I know SI and all that, but this is a "sleep better" call)

[idpickering]

I'm not adding to utilities in general at the moment. IF Labour, under Corbyn (or McDonald) were to form the next government, then the risk of a below-par compensation for any nationalized company is something I can do without.

If they don't get in, or re-nationalization threats turn out to be hollow, the utilities will probably soar, to my loss, but I'm erring on the side of fear, rather than greed on this one.

VRD

(Yes, I know SI and all that, but this is a "sleep better" call)

That's a fair point vrdiver. I'm not buying utilities at the moment because I'm 'up to over average HYP weighting' in capital value terms with them, as I'm currently at 11% overall weighting with them added together (SSE, CNA,NG. and UU.). Perversely though, I'm quite green of those starting out as a HYPer now, as the utility shares, of whatever ilk, are cheap at the moment. I do like your replacement to 'strategic ignorance' (SI.) though, 'sleep better' (SB.)

Ian.

[monabri]

Here's a little bit more info on what we've ( collectively) just purchased

http://www.telegraph.co.uk/business/201 ... trol-firm/

[idpickering]

This from TMF may be of interest;

I’m warming to this 7% yield

Utility group Centrica (LSE: CNA) has fallen firmly out of favour with the market this year. The group’s stock has lost 28% of its value so far in 2017. Only three of the 20 brokers who cover the stock have a ‘buy’ recommendation on it.

But all is not necessarily lost. Work is ongoing to position the business for the future. One example of this is today’s news that the firm has acquired REstore NV, a company which helps a number of large European industrial businesses manage their power requirements cost-effectively.

UK investors should also remember that in addition to British Gas, Centrica has a US utility business and an oil and gas production unit, which could benefit from the recent rise in oil prices.

http://www.fool.co.uk/investing/2017/11 ... trica-plc/

[monabri]

"The group’s dividend is also expected to remain safe. Cash generation has been good over the last couple of years and net debt has fallen from a peak of £6.5bn to about £3.8bn"

[moorfield]

On the flip side this kind of technology will eventually be integrated with domestic customers' smart meters (if not already). Done properly, shareholders will be happy. Done badly, customers won't be, and something that many are already suspicious of. Monsieur Colbert's goose springs to mind.

Further to previous, this is how they hook you in...!

British Gas is latest supplier to offer new cheap deal - but only to customers with smart meters

http://www.telegraph.co.uk/bills-and-ut ... customers/

[bluedonkey]

7% yield - that got my attention!

So is the high yield:
a) a temporary blip caused by worries over political interference, or
b) a portend of an unsustainable dividend?

[idpickering]

7% yield - that got my attention!

So is the high yield:
a) a temporary blip caused by worries over political interference, or
b) a portend of an unsustainable dividend?

I must admit that such a high yield would certainly raise red flags for me. But I think you have to use a bit of common sense, and provided you buy fully aware of the risks, then each to their own I say. TBH, if it were an option for me, I would top up my CNA holdings.

Ian.

[kempiejon]

7% yield - that got my attention!

So is the high yield:
a) a temporary blip caused by worries over political interference, or
b) a portend of an unsustainable dividend?

a) I guess the question is how temporary?
b) Well unlike SSE, National G.rid and Pennon which all have 10 years odd income increases; CNA have form they've cut twice and held once in the past 4 years.

[Gengulphus]

... CNA have form they've cut twice and held once in the past 4 years.

No, they've only cut once and held since then (*). Like all cuts, of course, it affects all the dividends the company pays during the course of a year - in Centrica's case, an interim and a final. Specifically, the final for 2014 and the interim for 2015, so the cut affected the totals for two years, but it was just one cut working its way through a year's worth of payments.

(*) Apart from some tiny +/- 0.03p adjustments whose net effect is zero. Don't know why they bothered with them, but they're trivial and not worth getting concerned about.

Gengulphus