Year End Financials1.) Customer Numbers Not Renewing.
When you go back to last year's numbers of customers and the percent due for renewal in 2006, you get 145,865 customers (61,518 gas (8% of 65.7% of 1,171,000) and 84,647 electricity (21% of 34.3% of 1,171,000)). The attrition actually realized in 2006 ws 143,000 customers = 98% of all renewals.
I conclude that the well worn assumption that any customers gained would stay for life is completely wrong.
2.) Gross Margins (2005 comparables).
Year 15.3% (18.1%)
Q4 15.8% (17.9%)
I conclude their hedges are not working, or else they cannot control their profitablity.
3.) Decrease in Cash
Opening Balance $16,058
Closing Balance <13,521>
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Decrease in cash <29,579>
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4.) Uses of Cash.
Operations $69,128
Investments <10,073>
New Debt/Equity 7,562
Distributions <96,196>
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Decreased cash <29,579>
I conclude their distribution far exceed earnings and it cannot be defended by any argument for capitalizing sales costs (see 1.). Investors should ignore distributions and value the company using normal equity valuation techniques, like P/R, ROE, etc.