Directors’ Deals: Yu Group bosses ditch shares 

Yu Group has had an extraordinary run since the pandemic. Shares in the Aim-traded small-cap, which supplies electricity, gas and water directly to UK businesses, have increased 20-fold since the start of 2020.

Its success has been attributed to a variety of factors, including high energy prices, the implosion of several rivals in 2021, its specialised business-to-business offering, and growing brand recognition.

Last year showed excellent growth, with sales jumping by 65 per cent to £460mn and adjusted Ebitda rising from £7.9mn to £42.6mn. Bookings were also strong in the first quarter of 2024, and the company expects to deliver organic growth of roughly 50 per cent across the whole year. 

However, parts of the management team have started to shift shares. David Crowe, managing director of Yu Energy, has sold 7,354 shares for £19.33 each, or a total of over £140,000. This amounted to almost half his stake, but he still has options over 132,894 shares. 

On the same day, senior independent director Anthony Perkins sold 4,000 shares for £19.20 each, or a total of £76,800. Perkins now holds 15,500 ordinary shares. 

No reasons were given for these sales. In March, however, management flagged a “precipitous decline” in energy prices. Analysts at Liberum said this was restraining revenue and operating margins are expected to fall this year from 8.9 per cent to 6.2 per cent as a result of the commodity market environment. Liberum forecasts them staying at this level for the next couple of years.

Momentum at Yu Group is yet to show signs of waning, however. Earnings and net cash consensus estimates have kept rising over the past two years. Shares trade on a forward price/earnings ratio of 9.3 times, compared with a five-year average of 15.8 times.

Games Workshop CFO trims stake

Shares in fantasy war-games maker Games Workshop have gone from strength to strength, rising by around 140 per cent over the past five years on the back of strong results. 

But the shares have fallen slightly over the past 12 months, highlighting that the market is unforgiving about this UK stock market darling when any signs of weakness are displayed. For example, when a slight slowdown in the core revenue growth rate was trailed last December, the shares dropped by almost 15 per cent. 

The most recent update from the company came via a brief disclosure in March. Management said that trading for the three months to February was in line with its expectations and confirmed an increase in the dividend. Payouts declared so far in this financial year amount to 420p per share, up from 415p per share last year.  

A material revenue boost could be on the table through the company’s agreement with Amazon to explore the potential development of Warhammer films and TV shows. Announced in December, this gave the two parties a year to agree on creative guidelines. 

Analysts expect revenue and profits to continue to grow in the coming years. The consensus, per FactSet, is for revenue and pre-tax profit to grow by 21 per cent and 29 per cent over the three years to 2026. 

Chief financial officer Rachel Tongue will bid farewell to the business in January. She is stepping down at the AGM this year after nine years on the board, with no update yet on the hunt for her successor. She sold £712,000-worth of shares on 19 April, which given the context probably shouldn’t be taken as an omen that she expects an impending share price dip. 

The shares are rated at 20-times forward consensus earnings, a discount of a fifth to their five-year average and well under the fantasy valuation levels seen during the pandemic.