TIDMGOOD
RNS Number : 3710G
Good Energy Group PLC
17 March 2020
Good Energy Group PLC
Un-audited Preliminary Results for the 12 months ended 31
December 2019
Continued delivery against our strategic goals and investment in
technology
Good Energy Group PLC, the 100% renewable electricity supplier
and innovative energy services provider ("Good Energy" or "the
Company"), today announces its preliminary results for the twelve
months ended 31 December 2019.
Year ended 31 December 2019 2019 2019 2018 % Change
GBPm* Continued Discontinued Reported Continued Continued
operations operations operations operations
Revenue GBP124.3m GBP0.1m GBP124.3m GBP116.9m 6.3%
------------ -------------- ----------- ------------ ------------
Gross Profit GBP31.7m GBP(1.2)m GBP30.5m GBP33.4m (5.4)%
------------ -------------- ----------- ------------ ------------
Administration costs GBP(25.2)m GBP0.2m GBP(25.0)m GBP(26.8)m (5.9)%
------------ -------------- ----------- ------------ ------------
Operating profit GBP6.4m GBP(0.9)m GBP5.5m GBP6.6m (3.2)%
------------ -------------- ----------- ------------ ------------
Underlying profit
before tax GBP2.1m GBP(0.9)m GBP1.2m GBP2.3m (7.9)%
------------ -------------- ----------- ------------ ------------
Non - underlying GBP(0.9)m - GBP(0.9)m - -
costs
------------ -------------- ----------- ------------ ------------
Profit before tax GBP1.3m GBP(0.9)m GBP0.3m GBP2.3m (45.4)%
------------ -------------- ----------- ------------ ------------
Cash and cash equivalents GBP13.7m GBP13.7m GBP15.7m (12.7%)
------------ -------------- ----------- ------------ ------------
Basic earnings per
share (p) 7.5p 1.6p 10.2p (26.5%)
------------ -------------- ----------- ------------ ------------
Full year dividend
per share (p) 3.7p 3.5p 5.7%
------------ -------------- ----------- ------------ ------------
* Due to rounding, figures in the table above may not cast.
Figures are rounded to the nearest GBP0.1m.
Juliet Davenport, Founder and Chief Executive Officer of Good
Energy, said:
"In 2019 Good Energy made great strides to stay ahead of the
market in its transition towards innovative technology based clean
energy services. We are operationally resilient, despite a
challenging retail market, underpinned by a good cash position and
a cash generative business model.
"We are building the infrastructure and systems to underpin
future growth. Our investment in the Kraken customer technology
platform gives us the scalability and flexibility to serve more
customers with more services, whilst reducing the cost of adding
new customers. Our investment in Zap-Map and launch of business
electric vehicle charging sets out a road towards clean transport -
a crucial pillar of a zero carbon UK, alongside electricity and
heat.
"We are witnessing a sea change in the relationship the UK has
with energy - a shift from supplying to sharing. We have helped
drive this for 20 years and today, as decentralisation,
digitalisation and decarbonization become the new norms, are
anticipating a gearshift that will lead to significant growth
opportunities. We will continue to focus on innovative solutions
that hasten a cleaner, greener future. With our strong market
presence this is an exciting time for Good Energy's growth
strategy."
* Due to rounding, figures in the table above may not cast.
Figures are correct to the nearest GBP0.1m
Enquiries:
Good Energy Group PLC Via Walbrook PR
Juliet Davenport, Chief Executive
Charles Parry, Investor Relations
Investec Bank plc (Nominated Tel: +44 (0) 20 7597 5970
Adviser)
Jeremy Ellis
Sara Hale
Walbrook (Financial PR) goodenergy@walbrookpr.com
Nick Rome Tel: +44 (0) 20 7933 8783
Tom Cooper
Analyst Briefing:
A briefing for Analysts will be held at 9:30 AM today via web
conference. Analysts wishing to join should contact
goodenergy@walbrookpr.com.
Notes to editors:
About Good Energy www.goodenergy.co.uk
Good Energy is a generator and supplier of 100% renewable power
and an innovator in energy services. It currently owns two wind
farms, six solar farms and sources electricity from a community of
1,500 independent UK generators.
Since it was founded 20 years ago, the company has been at the
forefront of the charge towards a cleaner, distributed energy
system. Its mission is to support UK households and businesses
generate, store and share clean power.
Financial highlights - continuing operations
-- Revenue increased by 6.3% to GBP124.3m, driven by growth in
business supply customers and domestic price rise in January
2019
-- Gross profit of GBP31.7m decreased 5.4% with a gross profit
margin of 25.5% (2018: 28.6%) due to the planned shift to lower
gross margin business growth, impact of rising commodity costs and
one off impact of the 2018 'Beast from the East', consistent with
our communication in H1 2019
-- Underlying profit before tax of GBP2.1m decreased 7.9%, as
lower gross profit flowed down the P&L. After the GBP865k
non-underlying costs associated to the Kraken customer services
investment, profit before tax from continuing operations was
GBP1.3m (2018: GBP2.3m)
-- Strong operating cashflow of GBP8.1m leading to a cash
balance of GBP13.7m at year end (2018: GBP15.7m), funding
investment across the business and a continued paydown of debt
-- Basic earnings per share decreased to 7.5p (2018: 10.2p)
-- Recommended final dividend of 2.6p, leading to a full year dividend of 3.7p (2018: 3.5p)
Operational highlights
-- Business supply customers saw significant growth of 33%,
largely driven by SME growth following increased investment across
the sales team. Total business customers grew by 4.9%
-- Domestic FiT customers grew strongly by 32.5%, following a
surge in registrations before the scheme closure in Q1 2019
-- Overall customer numbers increased by 2.5% to 266.5k, as we
continue to transition to higher volume business supply
customers
-- Investment in Kraken customer services technology platform.
The system implementation and associated operating model
transformation, a market leading service technology, is expected to
drive material operating cost savings, while delivering significant
customer experience benefits and driving future growth
-- Kraken implementation and rollout progressing on track.
Existing customers will be onboarded in waves throughout H1
2020
-- Strategic investment in ZapMap, a platform for the energy
sharing economy and at the forefront of electric vehicle market
growth. The transaction was structured so that the initial 12.9%
minority equity investment will increase to 50.1%. Able to convert
GBP 800k convertible loan to equity from April 2020. Total
investment of GBP 1.07m, with GBP 0.87m invested to date and final
GBP 0.2m due in March 2020.
-- We have seen no significant financial impact from the
coronavirus (COVID-19) outbreak to date, however we are monitoring
the situation closely while planning for a range of scenarios
including changes to current government guidance or policy
Chairman's statement
In 2019, we had another year of good performance as we continued
to deliver against our stated strategic shift to the energy
services world of the future. We continue to demonstrate our
resilience to changing and difficult markets and remain well
positioned both financially and operationally. We made tangible
investments in our future strategy, progressing in our transition
towards technology enabled energy services for the generation,
supply and sharing of 100% renewable clean power for all.
Our market: Opportunities and challenges
Looking back, we saw a significant amount of uncertainty: Brexit
negotiations, parliamentary inertia and a sense of constant
macroeconomic volatility dominated the landscape. The UK economy
remains buoyant but highly sensitive. Recent events have only
served to heighten this. Following genuine signs of an economic
resurgence in 2020, the ongoing impact of Coronavirus (COVID - 19)
has become a global issue.
We are witnessing unprecedented actions from both Governments
and businesses: The Bank of England slashing interest rates, mass
cancellations of sporting events and tangible impacts on global
supply chains. As a business, we believe that our financial and
operational resilience will allow us to react to these market
challenges. We remain cash generative and have a good cash balance.
Operationally, our UK focused business is well placed to respond.
The implementation of our new customer technology platform is
progressing as planned, which provides us with further flexibility
to operate and deliver all our products and services to
customers.
We have seen no significant financial impact from the
coronavirus (COVID-19) outbreak to date, however we are monitoring
the situation closely while planning for a range of scenarios
including changes to current government guidance or policy. As a
business, the health and wellbeing of our employees remains of
critical importance. We have a strong business continuity process
in place to ensure we can safeguard against future developments.
Whilst the potential impact of the virus remains unknown, we remain
confident in our capabilities as a business to protect our
employees and continue to deliver products and services for our
customers.
I believe that as a business our financial and operational
resilience provides us with the flexibility to handle significant
market volatility. We have a good cash position, a high proportion
of our customers on direct debit and an operating model which can
handle remote working.
Strategic developments
As a Board, a key area of focus is to create and deliver a
strategy to navigate the many challenges and opportunities the
business faces. We must ensure that the business is well positioned
to capitalise on these growth opportunities, both now and in a way
that is sustainable for the long term.
As the energy market evolves, so do we. We have been actively
updating our business model to position ourselves to prosper in
these new markets. Decentralisation, digital products and data
analytics will help us thrive and deliver energy as a service to
our customers. We continue to invest across the business to make
this transition a reality. We remain focused on technology,
strategic partnerships and our people. Our investments in both
Kraken and Zap Map continue to progress at pace and allow us to
have the technological capabilities to play in the right markets
and deliver our vision of a zero-carbon future. We will ensure that
these decisions are taken in the context of the evolving situation
regarding COVID-19.
Board update
In February 2019 Nemone Wynn-Evans joined the Board as a
Non-Executive and has taken on the role of Chair of Audit and Risk.
Nemone has extensive experience across the financial services
sectors and has listed plc and PRA, FCA/FSA regulated experience,
having acted as finance director on the main board of a stock
exchange. Nemone is also a Fellow of the Chartered Institute of
Securities and Investments. Nemone's experience continues to be an
asset to the group as we continue to reshape the company, leading
the shift from supplying to sharing energy.
In January 2020, Rupert Sanderson was appointed Chief Financial
Officer. Rupert joined Good Energy in February 2017 and was
appointed Finance Director in January 2018 and is responsible for
finance, trading, legal and investor relations. His previous roles
include senior financial and commercial positions at Centrica,
British Gas, Serco and Avis Europe. Rupert began his career as an
accountant for PwC and is a Fellow of the Institute of Chartered
Accountants in England and Wales.
We are proud that we continue to live our values as a company
and our board composition has an equal representation of men and
women. Diversity and inclusivity are principles which we are
passionate about and continue to promote throughout the company. We
now have a Board in place to guide and oversee the company to meet
its strategic objective and goals.
Dividend
Alongside our ongoing investments, we aim to deliver a
progressive dividend policy. The policy has the objective of
increasing the dividend over time as profitability grows to provide
an appropriate return to shareholders. We remain mindful of
maintaining and balancing the ability to invest in long term growth
opportunities.
Following a good performance in 2019 and reflecting our
confidence in the ongoing business, the Board has recommended an
increased final dividend for 2019 of 2.6p per ordinary share,
taking our full year dividend to 3.7p. The Board is pleased to
confirm the continued operation of the Good Energy's scrip dividend
scheme and will confirm the timetable for payment of the final
dividend alongside circulating notice of Good Energy's annual
general meeting in the coming weeks.
Will Whitehorn,
Chairman
Chief Executive Officer's review
Business update
In 2019, we delivered another year of good performance, as we
continue to support our customers on their journey to have a
zero-carbon footprint.
We witnessed a radical change in the attitudes towards
addressing the climate crisis. We have always been, and always will
be, a 100% renewable energy business. This secular shift in
attitudes represents a growing opportunity to help both consumers
and businesses have an impact in the fight against climate
change.
We remain committed to focusing on our goals to drive growth.
Lowering customer acquisition cost, improving customer retention
and increasing overall customer lifetime value. We believe that the
benefits to our customers will be more compelling propositions at a
competitive price that will simplify their lives, meet their needs
and cut carbon. This is true across all our markets.
Strong growth in the business sector underpinned our performance
in 2019. This was driven by a 4.9% increase in our total business
customers. This planned shift towards business provides us with
greater stability, longer term contracts and more certain revenues.
Whilst we saw gross margins fall as a result of this shift,
operating margins have the potential to increase over time due to
the lower cost per acquisition and cost to serve these customers.
We continue to partner with a growing number of like-minded
businesses, ranging from small, owner managed businesses to large
corporates. We are confident about the opportunity in this
market.
In the domestic supply market, we continue to avoid the price
war that a growing number of companies remain engaged in. We do not
see the race to bottom in price a viable long-term business model.
Whilst we know that a significant number of customers remain highly
price sensitive, there are an expanding number who want a truly
green energy provider. The recognition from both OFGEM and Which?
as a 100% green supplier, is evidence of our credentials in this
space. Whilst we saw domestic customer numbers decrease by over 8%
in 2019, we remained focused on reducing churn and improving the
cost to acquire new customers. Our domestic customer churn levels,
at 16%, remain significantly lower than industry levels. We have
seen positive trends in reducing domestic churn.
Despite the feed in tariff (FIT) scheme closing to new entrants
in March 2019, we continue to administer the scheme for both our
domestic and business customers. We saw domestic customer numbers
increase 32.5% and business customers increase 3.8%. We continue to
have one of the largest market shares in this industry and it
remains an important aspect of our business, as it is the
foundation of energy as a service in our business model.
Technology and digitalisation will underpin all our future
growth plans. In 2019, we made tangible steps to invest across the
business in order to make this a reality. A new market leading
customer services technology platform will enable us to deliver new
products and services more effectively to all our customers and our
investment in Zap - Map (Zap), the UK's leading electric vehicle
(EV) mapping platform accelerates our shift into the EV market.
The implementation of our new customer services technology
platform, Kraken, is a significant step on our journey. We have
already begun the implementation phase, with a growing number of
customers already live on the platform. The implementation is
progressing well. This will be rolled out to our customers in
several waves throughout the first half of 2020.
Zap continue to represent a market leading position, with both
the large majority of EV drivers and network operators on their
platform. In 2020, they will continue to provide real time data
analytics and insights, whilst delivering several innovative
products and services for EV drivers.
We continue to operate a cash generative business model, as a
result of our good operating performance, ongoing focus on cost
control and prudent financial management. As a result, we have a
strong cash balance and believe that this financial resilience
leaves us well positioned to deal with the myriad uncertainties in
both the energy and wider UK economy.
Our market and positioning
Our addressable markets in both the domestic and business
markets continue to grow. We have seen a secular shift in customer
demand following a growing societal awareness. This focus has not
been limited to customers. But businesses and financial
institutions as well. BlackRock, Goldman Sachs and Microsoft have
all recently released bold visions for the future focused on
combatting the climate emergency. Businesses recognise that they
need to provide solutions for their own customers and staff. Demand
for green propositions is now firmly part of the mainstream
conversation.
In 2018 and 2019 we have successfully put Good Energy on a new
trajectory. Embracing the potential in the business sector,
focusing on generating and managing power behind the meter and
sharing power rather than supplying. We believe we have found a
niche that we can utilize the expertise in the business effectively
and compete in this ever-changing market.
Twenty years ago, we launched net zero electricity to support
100% renewable Britain. Over the next twenty, we will continue to
support the transformation of the electricity market to zero
carbon, and work to transform the heat and transport markets
too.
Our objective
Overall, our aim is to support the wider transition to a
zero-carbon Britain, whilst delivering value for all our
stakeholders. Our long-term goal is to support Good Energy
customers on their journey to having a zero-carbon footprint in
electricity, heat and transport. In 2020, our focus is on building
the platform to allow customers to start their journey towards a
zero-carbon future. We will deliver this through genuinely SMART
tariffs and products, electric vehicle (EV) propositions and
continued supply backed by 100% green power.
Our opportunity in a decentralising market
The Group was founded twenty years ago, at a time when 98% of
the UK's power was from non-renewables and customers had less
choice than they do today about where their energy came from. Over
40% of the UK energy mix is now from renewable energy sources.
Today, we supply 100% renewable electricity from over 1,500
different locations across the UK, are one of the largest Feed-In
Tariff providers and have a top ranking from Which? for green
tariffs. OFGEMs decision to award a derogation from the standard
variable tariff price cap in August 2019, recognised the need for a
genuine green choice to be available, and that our model genuinely
supports renewable generation in the UK.
Our purpose remains to power the choice of a cleaner, greener
future together by helping people to be part of the solution to the
climate crisis; it is at the core of who we are. It remains central
to our strategy today and into the future.
It is our belief that the clean energy grid of the future will
no longer be dominated by a few large fossil fuel and nuclear based
gigawatt generators, but will instead be comprised of millions of
households and businesses generating, using and sharing their own
renewable and clean energy. These new generators will need energy
services to support this investment and this shift represents a
major opportunity for us. We estimate that today there are
approximately one million renewable energy generators powering the
grid. We are a UK energy company with more home generation
customers than supply customers. Our vision of the energy sharing
future is one in which we will no longer simply be selling energy
but selling the services that enable energy sharing. We see a
significant opportunity to build upon the foothold we have already
established in this future in establishing ourselves as a leading
100% renewable brand. The key will be to make being a low carbon
household or business of the future simple.
Energy as a service - the business model
Delivering this opportunity will require an evolution of our
business model. Energy as a service reflects the transition to a
sharing economy. A shift from passive energy supply. Engaging with
customers and providing products and services to increase their
ability towards zero carbon. In our vision of the energy sharing
future, we will no longer simply be selling energy, we will be
selling the services that enable energy sharing. Our business
already has a foothold in this future, proven by our Feed in Tariff
business. This manifests in four key themes. Decentralisation,
digitalisation, data analytics and decarbonisation.
The future of Good
Our business model allows us to directly interact with customers
throughout the entire value chain. From energy generation,
consuming clean energy and all the way through to how customers
utilise, interact and enhance their individual energy consumption.
This is driven by the provision, understanding and analysis of the
data that sits alongside this. We are at the heart of this
change.
We see our medium-term growth focused on two key areas: (i) the
home and (ii) businesses. This is underpinned by both the
utilisation of 47.5MW of installed renewable capacity, and our
access to power purchase agreements (PPAs) and export from
generators in the future.
In both home and business, we intend to build a platform for
future growth through system investments, which will enable us to
benefit from scale and drive efficiencies. In the home, this will
be realised through the investment in the Kraken customer
technology platform while business will enhance its existing
customer services capabilities.
This platform will allow us to expand the customer proposition
through a suite of new products and services. We have a clear
roadmap for future energy services, ranging from expanding the
number of business customers the Group supplies gas to and electric
vehicle (EV) opportunities including leveraging our investment in
Zap-Map. We will invest in the right systems, technology and
customer service levels to benefit all our customers and drive
growth and sustainable stakeholder value.
Strategic goals to drive growth
Our business plan is fundamentally built upon three underlying
strategic pillars. Successful delivery will drive long term,
sustainable growth through:
1. Lower customer acquisition cost
o Implementing the systems and scale to acquire customers more
effectively.
2. Improve customer retention
o Complementary new products and services for them to stay with
the Group for longer.
3. Increase customer lifetime value
o Drive greater value from the Group's customers through selling
more products and services and improved efficiencies.
Our ability to deliver these goals successfully will provide
clear benefits for our customers. Our aim is to create more
compelling customer-led propositions to help cut their carbon.
These propositions will simplify customers' lives and meet their
needs.
Investing for growth
Our Strengths
Our 100% renewable status, over the past twenty years, gives us
credibility with customers and the experience and knowledge to
attract leading partners in the energy sector. We have developed a
proven expertise and an understanding of the renewable energy and
clean technology markets underpinned by partnerships with
like-minded companies.
Our people are experts in their field and have high levels of
engagement. This has been fundamental to help us build a strong
reputation over time. Leveraging this expertise, working in
partnerships and focusing on innovative technology is at the heart
of what we have always done as a business. We continue to develop
research into clean energy technologies, and work in close
partnerships to deliver these innovative products and services.
Recent projects with Octopus Energy, Orsted and Zap-Map are
evidence of our continued progress in our markets.
Accelerating the rollout of products and services
In order to achieve the Group's strategic goals, there are
several key strands we will be accelerating our investment in.
Covering both our domestic and business customers, as well as
having the appropriate capital structures to achieve scalable
growth.
Investing in transformation technology - Kraken platform
investment
Last year's announcement of our investment in a new customer
services technology platform with Kraken Technologies Ltd, part of
Octopus Group, is evidence of our commitment to invest in our
future. We identified this investment, in a proven platform and
operating model, as a required first step to facilitate expansion
plans and that a step change in performance was needed: leveraging
automation, case management and technology that supports the
business processes. The new platform provides us with this
transformational step change. Its technological capabilities will
allow us to better serve our customers.
This investment is in line with our strategic goal of lowering
customer acquisition cost, improving customer retention and
increasing overall customer lifetime value through an improved
offering of products and services. This platform will enable
significant future growth potential in our domestic business.
Total forecast investment of GBP4m will be split approximately
equally between cash and non-cash elements. Operating cost savings
will be realised through a significant reduction in headcount and
operating cost efficiencies. They are expected to achieve payback
of the forecast investment within 18 months of the April 2020 full
implementation. The write down of previous systems and the cash
investment into implementation and transition will be taken across
2019 and H1 2020. Transformation costs of GBP865k were incurred in
2019.
Expected efficiency savings will be reinvested in both price and
further proposition development and roll-out. This will enhance
existing products, services and competitiveness. The new platform
will provide significant scalability and flexibility. It will
enable digital and clean technology innovation of significant
benefit to customers.
Home
Our addressable market size in the domestic supply business
continues to grow in line with the increasing societal shift
towards action against climate change. Around half of the
twenty-five million households in the UK feel climate change issues
are important and are actively involved in decision-making in
relation to energy management. These households with 'good
intentions' account for roughly 25% of this addressable market,
providing a significant growth opportunity.
However, the domestic market remains highly price competitive
reflecting the ongoing energy price sensitivity across the wider
economy. We have seen substantial market volatility and since the
start of 2018, at least 18 companies have exited the market and
there has been a fundamental shift in politics, policies and
society as the climate crisis begins to play a larger role in
people's everyday decision making.
The investment in our new Kraken customer services technology
platform, will allow us to deliver improved customer service, to
deliver decreased customer acquisition costs through increased
ability to take on customers at scale and to realise expected
operating efficiencies through a lower cost to serve. These savings
will allow the Group to reinvest in the customer proposition to
help make its tariffs more competitive and improve customer
retention over the medium term.
In order to sustainably improve customer retention, we are also
planning to accelerate the roll out of a suite of low carbon home
services to help our customers be part of the energy services
future. The market for carbon reduction home products is
anticipated to grow significantly to over GBP5 billion by 2023.
This market is split between smart appliances, control and
connectivity, security, home entertainment, energy management and
comfort and lighting. The Group's propositions will focus on energy
management, control, and connectivity in line with its addressable
market and customer demand. These will include the continued roll
out of SMART metering services (SMETS II) with the latest
technology, in home devices, connected sensors and home hub and
SMART thermostats. We are already rolling these out to a small
number of our customers and will begin a larger scale rollout
throughout 2020.
Our strategy is clear: we will reduce our cost to serve through
our plans for improved customer service systems. We are developing
new propositions with existing customers and will acquire new
customers with a lower cost to serve and acquisition cost, through
an improved bundle of propositions.
Business
We see a significant opportunity to expand our offering in the
mid-market industrial and commercials. There is an increasing
awareness from corporations as they demand greater energy
sustainability or 100% renewable energy. This continues to grow our
overall addressable market, expanding the number of larger
electricity supply customers and extending into gas. We will
continue to target consumer facing brands in the leisure, tourism,
arts, property and services sectors.
In 2019, business supply volumes outstripped domestic supply for
the first time ever. There is a growing opportunity to continue to
build our business proposition, while maintaining healthy margins
with a substantially lower cost to acquire than and better rates of
retention than within the domestic supply base.
We have a strong pipeline of planned propositions to further
enhance relationships with our business customers ranging from
supply to carbon reduction services, to help businesses both
understand their energy usage and provide benefits for their
employees and customers
For example, we recently launched an electric vehicle (EV)
charging solution for businesses, One Point, which was developed
following detailed market positioning work and insights with
existing customers. Pilot sites and propositions were refined,
ahead of soft launches with existing customers before a full
roll-out available for all our existing and potential customers.
This solution provides organisations with the infrastructure and
capabilities to deliver EV charging for their customers and
employees and act as a dedicated EV destination for both new and
existing customers. We are working closely with Zap - Map to
leverage an increasing number of propositions and services for both
our existing and potential customers.
Alongside further propositions, we continue to invest in systems
and people within our business sectors. The intention is to have
the right systems and people in place to provide the foundations
for future growth. These investments will allow us to reduce
customer acquisition cost and build relationships that both grow
our existing customer base and improve retention.
Zap - Map: leveraging the UK's leading EV platform
In Zap-Map (Zap), we have invested in the UK's leading electric
vehicle data platform, creating huge opportunities for rolling out
several products and services in the crucial area of zero-emission
transport and a catalyst for the sharing economy. These products
are for both EV drivers and businesses. Covering mapping, payment,
data and insights.
Zap is the go-to app for the UK's fast growing 280,000 EV
drivers - planning routes, identifying charge points, checking
their availability and sharing power. With close to 250,000 app
downloads and more than 90,000 registered users, Zap is used by the
vast majority of the fully electric EV market. Both the number of
EV drivers in the Zap community and the number of charge points in
its network have been increasing rapidly, which enhances the
breadth and quality of the available data. By actively logging the
status and availability of the public charging network, Zap
provides crucial insights on individual users charging experience
and requirements.
The growth potential for the UK EV market is compelling. The
recent government announcement to ban the sale of new petrol,
diesel and hybrid vehicles by 2035 (currently under consultation),
will bring forward the original date by five years. The UK EV
market is forecast to grow at an accelerated rate within that
timeframe with more than 1 million EVs on UK roads forecast by
2025. Government subsidies & exemptions for EV purchases, home
& workplace charging, and annual road tax exemptions are
encouraging rapid adoption of EVs - including the introduction of
the new 0% Benefit in Kind tax rate for company cars. With over 30
new EV models expected to enter the market in the next twelve
months alone, the market is set to expand at a rapid rate. In May
2019 the number of EV charging locations in the UK overtook the
number of petrol stations in the UK; a key milestone in diminishing
the perceived range anxiety for current and future EV drivers. We
are at the birth of a growing market, on the route to zero emission
motoring. We invested in this market to be part of this future.
Zap offers several services for both EV drivers and
businesses.
EV users - smoothing the transition to EV
Zap provides the right tools and products to help existing and
potential customers with the transition to EV driving. Zap is the
foundation, allowing customers to plan, check and communicate with
their desired charging route. Zap-Pay, soon to be launched, will
provide the solution to interoperability by allowing users to
access and pay across multiple networks through one single app,
reducing one of the key barriers for mass EV adoption.
Alongside mapping functionality, users can now plan and save
driving routes. With real world driving distances linked to journey
planning, users can effectively plan electric journeys to best suit
their needs. Range anxiety persists as a genuine concern for many
potential EV drivers. However, route planning, real world driving
distance and availability of various charging infrastructure
provides users with the information to overcome this perceived
difficulty.
EV for businesses - delivering value
As the adoption of EVs continues to grow, businesses will play
an ever-increasing role. Zap is well placed to provide data
products and services to match the range of requirements,
capitalising on market growth.
As businesses look to evolve their own EV propositions,
understanding the data will be key. Zap are building a platform,
with the data they possess, to allow businesses to understand and
self-serve. This customisable data provides businesses with the
answers to their most pressing questions. Additionally, Zap
provides regular market insights and reports. Through their
independent stance on data, they can provide businesses with
genuine insight on the state of the market and their next
steps.
Strategy in action - recent, ongoing and future initiatives
In 2019, we have been focused on laying the right foundations
for growth. This has consisted of systems, people and proposition
investment. We have already begun to implement the Kraken customer
technology platform, have invested in our leadership team and have
a clear proposition roadmap in place for 2020 and beyond.
We continue to refine our proposition pipeline, with several
products in development.
One Point - Innovative solutions for a growing and fragmented
market
The EV market is currently fragmented and complex, but it will
soon be essential for UK businesses to offer EV charging facilities
and services. We have launched a new solution to make it easier for
businesses to install chargers and to secure available network
capacity. 2019 saw the launch of One Point - our simple,
easy-to-use service which supports businesses wanting to offer EV
charging to their staff, customers and visitors, powered by 100%
renewable energy. A pilot scheme was put in place at the Watergate
Bay Hotel in Cornwall, managing the installation of four charging
points on the premises, with two more planned. Further pilot
projects will be launched soon with our partners. Lessons from the
pilot schemes will help us expand One Point to companies up and
down the country; including the potential integration of Zap-Pay to
enable open and simple access to all One Point charging
locations.
Investing in innovation
The clean energy sector is constantly evolving, and we want our
customers to be a part of it.
That's why we're working on new products and services to help
customers support a clean energy future, along with investing in
new technologies and research. Aside from our investments with Zap,
Smart meters and One Point, we continue to innovate in a number of
ways. Recent research projects with both Honda and BestRes as
examples.
HAVEN: using EVs for home energy storage
We recently completed an innovative research project with Honda,
Upside Energy and Salford University. The study was designed to
examine the value of 'vehicle-to-grid' (V2G) technology, where an
electric vehicle is used alongside a special charger and other home
systems: battery storage, solar panels, a smart hot water tank, and
heat pumps. The technology is designed to maximise efficient energy
usage, save money, and cut carbon emissions.
BestRes
Our Home Innovation Trial is part of the European-wide BestRes
project, which is researching how to better integrate renewable
generation into energy grids. We provided each household that
signed up to the trial with a smart hub and linked app, which
measured energy usage by different types of appliance. The aim is
to explore and better understand energy usage and management in the
home.
Operating review
2019 performance - continued delivery against our strategy
In 2019 we continued to deliver against our strategic objectives
and progress on our journey from energy generation and supply to
energy services as a business model for the future. We have made
tangible steps on the road to achieving this goal by further
developing our capabilities across SMART metering and investing in
technology enabled services to support the rapidly growing electric
vehicle (EV) market. Our shift towards business supply was in line
with our plans to expand our products into the fast-growing
business markets.
Supply - a continued shift to business
Total customer numbers increased by 2.5% to 266.5k. Within that,
we saw a continued shift in customer mix in line with our ambitions
to focus on the business sector. Total business customer numbers
increased 4.9% to 127.8k, whilst total domestic customer numbers
increased marginally by 0.6% to 138.6k. Customer number growth was
driven by an overall increase in FiT customers of 10% to 167k
customers. The Business supply growth aligns to the longer-term
strategy of a more balanced earning supply portfolio and is the
third year in a row of consistent growth in this segment. Domestic
supply meters fell by 8.4% in 2019. In line with our stated plans,
the ongoing price sensitive nature of the domestic supply market
remains challenging. However, OFGEM's decision to award a
derogation from the standard variable price cap on a permanent
basis, provides external validation of our green credentials.
The Kraken system implementation and associated operating model
transformation is expected to drive operating cost savings,
customer experience benefits and future growth. This will enable
more customers to access competitively positioned clean energy and
technology services. This agreement is in line with the Company's
strategic goals of lowering customer acquisition cost, improving
customer retention and increasing overall customer lifetime value
through an improved offering of products and services.
Electricity supply volumes grew by 5.5% in 2019 to 542GWh, with
business supply slightly exceeding domestic for the first time. Gas
volumes fell by 8% to 532 GWh, driven by a reduction in domestic
supply meters and the non-repeat of the extreme cold weather seen
in Q1 2018. Gas volumes in Q1 2019 were 42GWhs lower than the same
period in 2019.
Our overall customer mix was split 52% domestic customers and
48% business customers based. This has shifted from a 53% domestic
to 47% business split in 2018. We anticipate this shifting focus
from domestic to business customers will result in our overall
volumes increasing, assuming seasonal weather conditions follow a
normal pattern.
Importantly, the business market is driven through quality
renewable products and our ability to deliver a more sophisticated
solution for businesses than the consumer market. This creates a
wide range of potential customers to engage with, particularly in
the SME segment of the business supply market. We have a clear
policy focused on delivering profitable growth, built around a fair
price and better service.
Feed in Tariff (FIT)
The FiT scheme closed to new entrants on 31 March 2019, however,
FiT payments will continue for existing customers for up to 20
years. We continue to administer the scheme for both our domestic
and business FiT customers. The FiT proposition, in which we have
one of the largest market positions, remains an important aspect of
our business as it is the foundation of energy as a service in our
business model.
Business FiT customers increased 3.8% to 120.0k in the period.
Domestic FiT customer growth increased by 32.5% to 46.7k customers,
driven by an uptake in registrations ahead of the scheme closure in
Q1 2019.
Generation
Our 47.5MW generation portfolio now consists of 6 solar and 2
wind sites, following the successful sale of Brynwhilach solar site
during the year. The sale of the Brynwhilach solar site complete in
May 2019, with the site planned to end up in community ownership
longer term. The focus has shifted to delivering value from our
existing sites, where generation levels performed well in the
period. We are committed to working on our existing sites and
delivering value to stakeholders.
We continue to take a prudent approach to the value of the
generation business, reflecting the underlying economics of each
asset. We are monitoring both the performance and outlook of all
the sites and plan to undertake a review in 2020 to ensure that our
valuation is reflective of current market conditions.
Financial performance
Profit and loss
Revenue increased by 6.3% in the period to GBP124.3m (2018:
GBP116.9m) driven by strong business supply growth particularly in
the second half of the year, offset by lower domestic supply
customers.
Cost of sales increased by 10.9% to GBP92.6m (2018: GBP83.5m).
This was predominantly driven by a market wide increase in
commodity prices during 2018, which flowed into the cost base at
the beginning of the year. There was also a rise in compliance
costs, with significantly increased costs for ROC, CFD and capacity
market contributions in 2019.
Gross profit decreased by 5.4% to GBP31.7m (2018: GBP33.4m)
driven by the increase in commodity prices, lower domestic gas
volumes and planned shift to lower margin but more stable business
supply customers. Gross profit margin decreased to 25.5% (2018:
28.6%).
Administration costs decreased 5.9% to GBP25.2m (2018:
GBP26.8m), excluding the one-off GBP0.9m impact of the Kraken
platform investment incurred in 2019, costs decreased 2.7%. To help
offset the increased compliance and commodity costs the business
kept close control over costs in 2019. Through this we were able to
deliver a GBP1.6m reduction in like for like costs versus 2018. In
2019 we commenced the Customer Services 2020 project (CS2020).
Total forecast investment in Kraken of GBP4m will be split
approximately equally between cash and non-cash elements. Operating
cost savings are expected to achieve payback of the forecast
investment within 18 months of the full implementation by Q2 2020.
It is anticipated that the write down of existing systems and the
cash investment into implementation and transition will be taken
across 2019 and H1 2020.
Operating margin decreased to 4.5% (2018 5.7%). Excluding the
impact of GBP0.9m investment costs above, operating margin was
5.2%.
Finance costs decreased by 1.7% to GBP4.3m, as overall debt
paydown was offset by an increase in reported finance costs
following the implementation of IFRS16.
Underlying profit before tax decreased by 7.9% to GBP2.1m (2018:
GBP2.3m). Continuing profit before tax, after the impact of the
one-off Kraken platform investment decreased 45.4% to GBP1.3m.
The tax charge includes the effects of the increase in the
Annual Investment Allowance effective 1(st) January 2019 and
Substantial Shareholder Exemption on the sale of Good Energy
Brynwhilach Solar Park Ltd.
Cash Flow and Cash Generation
Our business model is cash generative with GBP8.1m cash
generated from operations (2018: GBP18.1m), with GBP10.0m generated
before movements in working capital (2018: GBP10.6m). The
performance in 2018 included the recovery from delayed billing and
cash collection during 2017.
There was a cash inflow of GBP1.4m from investing activities
(2018: outflow GBP2.6m) following the sale of Brynwhilach solar
site in May 2019. This was offset by a net outflow of GBP7.5m
(2018: GBP9.5m) from financing activities following the repayment
in full of Good Energy Bond I June 2019 and continued debt
paydown.
Funding and Debt
The remaining GBP3.6m of Good Energy Bond I was repaid in full
in June 2019. Following the repayment of Bond I, Group finance
costs will be significantly lower and this represents a positive
step towards lowering the Company's ongoing financing costs and
reducing the gearing ratio over the medium term.
Net debt increased 1.7% to GBP41.6m (2018: GBP40.9m). Excluding
the impact of IFRS 16, net debt decreased 11.5% to GBP36.2m
following the bond repayment. Gearing ratio increased to 68.9% from
68.5%. Excluding the impact of IFRS16, the gearing ratio was
65.8%.
The Group continues to maintain a robust financial position. We
look to ensure we optimise our use of capital by continually
reviewing the returns on our assets, balancing operating
requirements, investment for growth, and payment of dividends back
to shareholders.
The Group is currently evolving its strategy towards energy
services and remains mindful of the need to capitalise on strategic
business development and investment opportunities. Prudent balance
sheet management remains a key priority.
Earnings and dividend
Basic Earnings per share (continuing) decreased to 7.5p from
10.2p as a result of the underlying performance and decreased
profitability. The Group has maintained a progressive dividend
policy, and a final dividend of 2.6p has been declared, taking our
full year dividend to 3.7p, up from 3.5p in 2018 and reflecting the
Board's confidence in the Group's prospects.
Investment valuations
As part of our overall financial review, we continue to monitor
the fair value of all our investments thorough both an
understanding of the wider environment in addition to the
underlying economics of all assets across the business. As a result
of this process, the Board has decided to fully write down the
value of our investment in its remaining un-developed wind farm
site.
The investment had a carrying value as at 31 December 2018 of
GBP1.3m and is reported under Discontinued Operations.
Non underlying costs
An amount of GBP865k has been incurred as non-underlying costs
within the period. These relate to the one-off expenditure relating
to the implementation of the Kraken technology platform and
associated restructuring costs.
IFRS16
The business implemented IFRS16 as a new accounting standard in
the period. Further details can be found in the notes to the
accounts.
Investment in associate
The share in loss of associate of GBP42k in the period, relates
to the equity stake investment in Next Green Car Ltd. Further
details can be found in the notes to the accounts.
Outlook
The business continues to perform in line with management
expectations. We have seen no significant financial impact from the
coronavirus (COVID-19) outbreak to date, however we are monitoring
the situation closely while planning for a range of scenarios
including changes to current Government guidance or policy.
In 2020, underlying profit growth is expected from both core
business growth and finance cost savings. Following increased
investment throughout 2019, we are focused on execution in 2020. We
will monitor our execution to deliver system improvements, digital
and online capabilities in order to drive future growth and the
longer-term strategy. These investments will provide us with a
platform for future growth beyond 2021. The Group will maintain a
progressive dividend policy.
Juliet Davenport,
Chief Executive
Notes: To present the performance of the Company in a clear and
consistent format, unless otherwise stated, all references to
revenue, profit, costs, tax and EPS refer to the continuing
operations.
Consolidated Statement of Comprehensive Income (Unaudited)
For the year ended 31 December 2019
2019 2018
GBP'000 GBP'000
Unaudited Audited
REVENUE 124,258 116,915
Cost of sales (92,601) (83,466)
---------- ---------
GROSS PROFIT 31,657 33,449
Administrative expenses (25,219) (26,800)
OPERATING PROFIT 6,438 6,649
Finance income 166 16
Finance costs (4,439) (4,361)
Share of loss of associate (42) -
---------- ---------
UNDERLYING PROFIT 2,123 2,304
Non-underlying costs (865) -
---------- ---------
PROFIT BEFORE TAX 1,258 2,304
Taxation (42) (660)
---------- ---------
PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS 1,216 1,644
DISCONTINUED OPERATIONS
Loss from discontinued operations, after tax (962) (743)
---------- ---------
PROFIT FOR THE PERIOD 254 901
========== =========
OTHER COMPREHENSIVE INCOME:
Other comprehensive income for the year, net of - -
tax
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
ATTRIBUTABLE TO OWNERS OF THE PARENT COMPANY 254 901
========== =========
Earnings per share from profit for the year -
Basic 1.6 p 5.6p
-
Diluted 1.5 p 5.5p
Earnings per share from profit for the year -
Basic 7.5 p 10.2p
(continuing operations) - Diluted 7.2 p 10.0p
Consolidated Statement of Financial Position (Unaudited)
As at 31 December 2019
2019 2018
GBP '000 GBP'000
Unaudited Audited
ASSETS
Non-current assets
Property, plant and equipment 46,326 50,351
Intangible assets 4,454 3,586
Right of use assets 6,483 -
Long term security deposits 4,548 4,166
Equity investment in associate 426 -
Other investment in associate 615 -
---------- --------
Total non-current assets 62,852 58,103
Current assets
Inventories 9,941 8,580
Trade and other receivables 29,430 29,796
Short term security deposits 474 -
Cash and cash equivalents 13,667 15,662
Current assets held for sale - 6,649
---------- --------
Total current assets 53,512 60,687
---------- --------
TOTAL ASSETS 116,364 118,790
---------- --------
EQUITY AND LIABILITIES
Capital and reserves
Called up share capital 832 829
Share premium account 12,790 12,719
Employee benefit trust shares (549) (810)
Retained earnings 5,707 6,088
---------- --------
Total equity attributable to members of the parent
company 18,780 18,826
Non-current liabilities
Deferred taxation 903 927
Borrowings 56,744 54,464
Provisions for liabilities 1,294 1,446
Long term financial Liabilities 39 -
---------- --------
Total non-current liabilities 58,980 56,837
Current liabilities
Borrowings 3,057 6,263
Trade and other payables 35,487 36,864
Short term financial liabilities 60 -
Total current liabilities 38,604 43,127
---------- --------
Total liabilities 97,584 99,964
---------- --------
TOTAL EQUITY AND LIABILITIES 116,364 118,790
---------- --------
Consolidated Statement of Changes in Equity (Unaudited)
For the year ended 31 December 2019
Share capital Share premium Employee Retained Total
benefit earnings
trust shares
GBP'000 GBP'000 GBP'000 GBP '000 GBP '000
-------------- -------------- -------------- ---------- ---------
At 1 January 2018 826 12,652 (946) 5,553 18,085
-------------- -------------- -------------- ---------- ---------
Profit for the year - - - 901 901
Other comprehensive income - - - - -
for the year
-------------- -------------- -------------- ---------- ---------
Total comprehensive income
for the year - - - 901 901
Share based payments - - - 358 358
Tax charge relating to
share option scheme - - - ( 65 ) (65)
Issue of ordinary shares 3 67 - - 70
Exercise of options - - 136 ( 127 ) 9
Dividend paid - - - ( 532 ) (532)
Total contributions by
and distributions to owners
of the parent, recognised
directly in equity 3 67 136 ( 366 ) (160)
-------------- -------------- -------------- ---------- ---------
At 31 December 2018 829 12,719 (810) 6,088 18,826
============== ============== ============== ========== =========
At 1 January 2019 829 12,719 (810) 6,088 18,826
-------------- -------------- -------------- ---------- ---------
Profit for the year - - - 254 254
Other comprehensive income - - - - -
for the year
-------------- -------------- -------------- ---------- ---------
Total comprehensive income
for the year - - - 254 254
Share based payments - - - 81 81
Exercise of options - - 262 (133) 129
Dividend paid 2 72 - (584) (510)
Total contributions by
and distributions to owners
of the parent, recognised
directly in equity 2 72 262 (636) (300)
-------------- -------------- -------------- ---------- ---------
At 31 December 2019 832 12,790 (549) 5,707 18,780
============== ============== ============== ========== =========
Consolidated Statement of Cash Flows (Unaudited)
For the year ended 31 December 2019
2019 2018
GBP'000 GBP'000
Unaudited Audited
Cash flows from operating activities
Cash generated from operations 8,146 18,069
Finance income 59 16
Finance cost (4,090) (4,156)
Income tax received/(paid) - 66
---------- ---------
Net cash flows generated from operating activities 4,115 13,995
---------- ---------
Cash flows from investing activities
Purchase of property, plant and equipment (112) (326)
Purchase of intangible fixed assets (1,834) ( 1,287)
Disposal of assets 5,037 -
Transfers (to)/from security deposits (857) ( 946)
Equity investment in associate (277) -
Other investment in associate (600) -
Net cash flows generated from investing activities 1,357 (2,559)
---------- ---------
Cash flows from financing activities
Payments of dividends (510) ( 462)
Proceeds from borrowings - -
Repayment of borrowings (6,311) (8,655)
Capital repayments of leases (769) ( 447)
Proceeds from issue of shares net of share issue
costs - 70
Proceeds from sale of share options 123 -
---------- ---------
Net cash flows used in financing activities (7,467) (9,494)
---------- ---------
Net decrease in cash and cash equivalents (1,995) 1,942
Cash and cash equivalents at beginning of year 15,662 13,720
---------- ---------
Cash and cash equivalents at end of year 13,667 15,662
========== =========
Notes to the Financial Information (Unaudited)
For the year ended 31 December 2019
1. Basis of Preparation
Good Energy Group PLC is an AIM listed company, incorporated in
England and Wales and domiciled in the United Kingdom, under the
Companies Act 2006.
The principal activity of Good Energy Group PLC is that of a
holding and management company to the Group. More detailed
information on the Group's activities is set out in the Chairman's
statement, the Chief Executive's review and the Finance Director's
review.
The unaudited Preliminary Report has been prepared under the
historical cost convention and in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the European
Union and interpretations in issue at 31 December 2019 .
The Preliminary Report was approved by the Approvals Committee
and the Audit Committee and adopted by the Board of Directors. The
Preliminary Report does not constitute statutory financial
statements within the meaning of section 434 of the Companies Act
2006 and has not been audited.
Statutory accounts for the year to 31 December 2018 have been
delivered to the Registrar of Companies. The audit report for those
accounts was unqualified and did not contain statements under
section 498 (2) or (3) of the Companies Act 2006 and did not
contain any emphasis of matter.
The accounting policies adopted are consistent with those of the
annual financial statements for the year ended 31 December 2018 ,
as described in those financial statements, except as noted
below.
The Group applied IFRS 16 Leases for the first time. The nature
and effect of the changes as a result of adoption of this new
accounting standard are described below. Several other amendments
and interpretations apply for the first time in 2019, but do not
have an impact on the consolidated financial statements of the
Group. The Group has not early adopted any standards,
interpretations or amendments that have been issued but are not yet
effective.
The Group adopted IFRS 16 using the modified retrospective
approach, with the date of initial application of 1 January 2019.
Under this approach, the standard is applied retrospectively, with
any cumulative effect of initially adopting IFRS 16 being
recognised within equity as an adjustment to the opening balance of
retained earnings for the current period.
The effect of adoption of IFRS 16 as at 1 January 2019 is as
follows:
-- Right-of-use assets with a net book value of GBP7,636,179
were recognised and presented separately in the Statement of
Financial Position. This includes:
-- Lease assets recognised previously under finance leases with
a net book value of GBP752,231, reclassified from property, plant
and equipment, and
-- Decommissioning provisions related to the right-of-use assets
with a net book value of GBP1,200,070 were also reclassified from
property plant and equipment.
-- Additional lease liabilities of GBP5,683,878 were recognised within borrowings.
For the year ended 31 December 2019:
-- The depreciation expense increased due to the
depreciation/amortisation of additional assets recognised (being
the increase in right-of-use assets, net of the decrease in
property, plant and equipment). This resulted in increases in cost
of sales and administrative expenses of GBP202,032 and GBP387,935
respectively.
-- The rent expense included within administration expenses
relating to previous operating leases decreased by GBP728,515.
-- Finance costs increased by GBP369,926, relating to the
interest expense on additional lease liabilities recognised.
-- Cash outflows from operating activities decreased by
GBP358,588 relating to lease payments in respect of previous
operating leases. Cash outflows from financing activities increased
by the same amount as a result, relating to the principal element
of lease payment related to these new finance leases recognised
under IFRS 16 as at 1 January 2019.
The Preliminary Report is presented in pounds sterling because
that is the currency of the primary economic environment in which
the Group operates.
The Preliminary Report will be announced to all shareholders on
the London Stock Exchange and published on the Group's website on
17 March 2020 . Copies will be available to members of the public
upon application to the Company Secretary at Monkton Reach, Monkton
Hill, Chippenham, Wiltshire, SN15 1EE.
2. Segmental Analysis
The chief operating decision-maker has been identified as the
Board of Directors (the 'Board'). The Board reviews the Group's
internal reporting in order to assess performance and allocate
resources. Management has determined the operating segments based
on these reports. The Board considers the business from a business
class perspective, with each of the main trading subsidiaries
accounting for each of the business classes. The main segments
are:
-- Supply companies (including electricity supply, FiT administration and gas supply);
-- Electricity generation companies (including wind and solar generation companies);
-- Generation development (including early stage development companies);
-- Holding companies, being the activity of Good Energy Group PLC.
The Board assesses the performance of the operating segments
based primarily on summary financial information, extracts of which
are reproduced below. An analysis of profit and loss, assets and
liabilities and additions to non-current assets, by class of
business, with a reconciliation of segmental analysis to reported
results follows:
Segmental analysis: 31 December 2019 (Unaudited)
Electricity FIT Gas Total Electricity Holding Total Generation Total
Supply Adminis-tration Supply Supply Gener-ation Companies/Consoli-dation - Develop-ment
Comp-anies Adjustments Continu-ing (Discon-tinued)
Opera-tions
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue
Revenue
from external
customers 89,981 5,247 26,335 121,563 1,697 - 123,260 91 123,351
FiT/ROC
subsidy
revenue - - - - 998 - 998 - 998
Inter-segment
revenue - - - - 6,084 (6,084) - - -
------------ ---------------- --------- ----------- ------------ ------------------------- ------------ ---------------- ---------
Total revenue 89,981 5,247 26,335 121,563 8,779 (6,084) 124,258 91 124,349
------------ ---------------- --------- ----------- ------------ ------------------------- ------------ ---------------- ---------
Expenditure
Cost of
sales (69,382) (462) (18,835) (88,679) (3,922) - (92,601) (1,246) (93,847)
Inter-segment
cost of
sales (6,084) - - (6,084) - 6,084 - - -
------------ ---------------- --------- ----------- ------------ ------------------------- ------------ ---------------- ---------
Gross Profit 14,515 4,785 7,500 26,800 4,857 - 31,657 (1,155) 30,502
Administrative
expenses (20,724) (426) (2,780) (23,930) 225 (23,705)
Depreciation
& amortisation (1,091) - (198) (1,289) - (1,289)
------------ ---------------- --------- ----------- ------------ ------------------------- ------------ ---------------- ---------
Operating
profit/(loss) 4,985 4,431 (2,978) 6,438 (930) 5,508
Net finance
income/(costs) 27 (3,377) (923) (4,273) - (4,273)
Share of
loss of
associate - - (42) (42) - (42)
------------ ---------------- --------- ----------- ------------ ------------------------- ------------ ---------------- ---------
Underlying
Profit 5,012 1,054 (3,943) 2,123 (930) 1,193
Non-underlying
items (865) - - (865) - (865)
------------ ---------------- --------- ----------- ------------ ------------------------- ------------ ---------------- ---------
Profit/(loss)
before
tax 4,147 1,054 (3,943) 1,258 (930) 328
Segments
assets
& liabilities
Segment
assets 54,410 63,633 (2,184) 115,859 505 116,364
Segment
liabilities 43,981 65,176 (23,808) 85,349 12,235 97,584
---------------- ------------ ---------------- --------- ----------- ------------ ------------------------- ------------ ---------------- ---------
Net asset/
(liabilities) 10,429 (1,543) 21,624 30,510 (11,730) 18,780
---------------- ------------ ---------------- --------- ----------- ------------ ------------------------- ------------ ---------------- ---------
Additions
to non-current
assets 2,923 5,090 1,041 9,054 - 9,054
All turnover arose within the United Kingdom.
Consolidation adjustments relate to intercompany sales of
generated electricity and the elimination of intercompany
balances.
Segmental analysis: 31 December 2018 (Audited)
Electricity FIT Gas Total Electricity Holding Total Generation Total
Supply Adminis-tration Supply Supply Gener-ation Companies/ - Develop-ment
Comp-anies Consoli-dation Continu-ing (Discon-tinued)
Adjustments Opera-tions
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue
Revenue
from contracts
with customers 80,121 4,856 27,998 112,975 195 - 113,170 9 113,179
FiT/ROC
subsidy
revenue - - - - 3,745 - 3,745 - 3,745
Inter-segment
revenue - - - - 4,369 (4,369) - - -
------------ ---------------- --------- ----------- ------------ --------------- ------------ ---------------- ---------
Total revenue 80,121 4,856 27,998 112,975 8,309 (4,369) 116,915 9 116,924
------------ ---------------- --------- ----------- ------------ --------------- ------------ ---------------- ---------
Expenditure
Cost of
sales (60,190) (873) (18,575) (79,638) (3,828) - (83,466) (72) (83,538)
Inter-segment
cost of
sales (4,369) - - (4,369) - 4,369 - - -
------------ ---------------- --------- ----------- ------------ --------------- ------------ ---------------- ---------
Gross profit 15,562 3,983 9,423 28,968 4,481 - 33,449 (63) 33,386
Administrative
expenses (22,172) (315) (3,087) (25,574) (124) (25,698)
Tidal Lagoon
write off - - 500 500 (500) -
Depreciation
& amortisation (1,081) - (645) (1,726) - (1,726)
------------ ---------------- --------- ----------- ------------ --------------- ------------ ---------------- ---------
Operating
profit/(loss) 5,715 4,166 (3,232) 6,649 (687) 5,962
Net finance
income/(costs) 12 (3,574) (783) (4,345) - (4,345)
------------ ---------------- --------- ----------- ------------ --------------- ------------ ---------------- ---------
Profit/(loss)
before
tax 5,727 592 (4,015) 2,304 (687) 1,617
------------ ---------------- --------- ----------- ------------ --------------- ------------ ---------------- ---------
Segments
assets
& liabilities
Segment
assets 63,898 99,253 (52,095) 111,056 7,734 118,790
Segment
liabilities 51,116 104,897 (73,546) 82,467 17,497 99,964
------------ ---------------- --------- ----------- ------------ --------------- ------------ ---------------- ---------
Net assets/
(liabilities) 12,782 (5,644) 21,451 28,589 (9,763) 18,826
------------ ---------------- --------- ----------- ------------ --------------- ------------ ---------------- ---------
Additions
to non-current
assets 1,577 34 6 1,617 (4) 1,613
All turnover arose within the United Kingdom.
Consolidation adjustments relate to intercompany sales of
generated electricity and the elimination of intercompany
balances.
3. Finance Income and Finance Costs
Finance income: 2019 2018
GBP'000 GBP'000
Unaudited Audited
Bank and other interest receivables 80 16
Gains on fair value adjustment 86 -
---------- --------
166 16
========== ========
Finance costs: 2019 2018
GBP000 GBP000
Unaudited Audited
On bank loans and overdrafts 2,956 3,051
On corporate bond 908 1,092
Other interest payable 8 26
Lease interest payable 374 -
Amortisation of debt issue cost 193 192
---------- --------
4,439 4,361
========== ========
4. Non-underlying costs
Non-underlying costs in the year relate to our investment in a
new customer services technology platform with Kraken Technologies
Ltd. These costs comprise of a restructuring provision of
GBP351,401 as part of our operating model transformation and the
costs of the Kraken system implementation of GBP513,690.
Capitalised expenditure on the Kraken system implementation in
the year totaled GBP663,596, these are additions to intangible
assets as assets under the course of development.
5. Earnings per Ordinary Share
Basic
Basic earnings per share is calculated by dividing the profit
attributable to owners of the Company by the weighted average
number of ordinary shares during the year, after excluding 293,270
(2018: 403,270) shares held by Clarke Willmott Trust Corporation
Limited in trust for the Good Energy Group Employee Benefit
Trust.
2019 2018
Unaudited Audited
Profit attributable to owners of the Company (GBP'000) 254 901
Basic weighted average number of ordinary shares
(000's) 16,294 16,109
---------- --------
Basic earnings per share 1.6 p 5.6p
Continuing operations 2019 2018
Unaudited Audited
Profit attributable to owners of the Company (GBP'000) 1,216 1,644
Basic weighted average number of ordinary shares
(000's) 16,294 16,109
---------- --------
Basic earnings per share 7.5 p 10.2p
5. Earnings per Ordinary Share (continued)
Diluted
Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares to assume conversion of
all potentially dilutive ordinary shares. Potentially dilutive
ordinary shares arise from awards made under the Group's
share-based incentive plans.
Where the vesting of these awards is contingent on satisfying a
service or performance condition, the number of potentially
dilutive ordinary shares is calculated based on the status of the
condition at the end of the period.
Potentially dilutive ordinary shares are dilutive only when the
average market price of the Company's ordinary shares during the
period exceeds their exercise price (options) or issue price (other
awards). The greater any such excess, the greater the dilutive
effect.
The average market price of the Company's ordinary shares during
the year was 138p (2018: 126p).
The dilutive effect of share-based incentives was 513,596 shares
(2018: 289,262 shares). The dilutive effect of share-based
incentives for continuing operations was 513,596 shares (2018:
289,262 shares).
2019 2018
Unaudited Audited
Profit attributable to owners of the Company (GBP'000) 254 901
Weighted average number of diluted ordinary shares
(000's) 16,807 16,399
---------- --------
Diluted earnings per share 1.5 p 5.5p
Continuing operations 2019 2018
Unaudited Audited
Profit attributable to owners of the Company (GBP'000) 1,216 1,664
Weighted average number of diluted ordinary shares
(000's) 16,807 16,399
---------- --------
Diluted earnings per share 7.2 p 10.0p
6. Assets and Liabilities Classified as Held for Sale
2019 2018
GBP'000 GBP'000
Unaudited Audited
Property, plant and equipment - 6,649
Total assets - 6,649
----------- --------
Deferred taxation - -
----------- --------
Total liabilities - -
----------- --------
Carrying value - 6,649
----------- --------
6. Assets and Liabilities Classified as Held for Sale
(continued)
The property, plant and equipment assets held for sale at 31
December 2018 related to Good Energy Brynwhilach Solar Park
Limited. The sale agreement was completed, and this company sold in
the year ending 31 December 2019.
The assets also related to a wind development project,
residential property and a transformer. The residential property
was also sold in the year ending 31 December 2019, however despite
active marketing a buyer has not currently been found for the
transformer nor wind development project. As such the value of
these items have been written down to nil. The transformer
continues to be actively marketed, and if a buyer is found the
impairment recognised will be reversed as appropriate.
7. Borrowings
2019 2018
GBP'000 GBP'000
Unaudited Audited
Current
Bank and other borrowings 1,950 2,668
Bond 395 3,595
Lease liabilities 711 -
Total 3,057 6,263
2019 2018
GBP'000 GBP'000
Unaudited Audited
Non-current
Bank and other borrowings 35,313 37,297
Bond 16,757 17,167
Lease liabilities 4,673
Total 56,744 54,464
The Group has undrawn bank overdraft facilities of GBP
10,000,000 (2018: GBP 10,000,00) as at 31 December 2019.
At 31 December 2019, GBP5,449,283 (2018: GBP 6,193,641) of the
bank loans relate to the Company's subsidiary, Good Energy Delabole
Wind Farm Limited and is secured by a mortgage debenture on that
company.
At 31 December 2019, GBP 33,882,698 inclusive of GBPnil of
accrued interest (2018: GBP34,990,240 inclusive of GBPnil of
accrued interest) of the bank loans relate to the Company's
subsidiary, Good Energy Generation Assets No. 1 Limited. Repayments
of capital and interest are scheduled quarterly over a remaining
period of 14 years. Interest is payable at 6.85% and the
outstanding principal balance is partially exposed to annual RPI
inflation over 3%. Costs incurred in raising finance were
GBP2,754,299 (2018: GBP2,754,299) and are being amortised over the
life of the loan in accordance with IFRS 9.
Good Energy Bond I was fully redeemed in 2019, with GBP3.6m
repaid in June 2019.
8. Cash Generated from Operations
For the year ended 31 December 2019
2019 2018
GBP'000 GBP'000
Unaudited Audited
Profit before tax from continuing operations 1,258 2,304
Loss before tax from discontinued operations (937) (687)
---------- --------
Profit before tax 321 1,617
Adjustments for:
Depreciation 3,467 2,948
Amortisation 487 858
(Gain)/Loss on asset disposals & writedowns 1,435 -
Tidal Lagoon impairment - 500
Fair value adjustment of contingent consideration (72) -
Net gain on financial assets at FVTPL (15) -
Share based payments 81 358
Share of loss of associates 42 -
Finance costs - net 4,244 4,345
Changes in working capital (excluding the
effects of acquisition and exchange differences
on consolidation):
Inventories (1,012) 346
Trade and other receivables 366 2,682
Trade and other payables (1,198) 4,415
---------- --------
Cash generated from operations 8,146 18,069
========== ========
9. Interests in Equity Associates
In the year, the Group acquired a 12.9% interest in Next Green
Cars Ltd ("NGCL"), which develops Zap-Map the UK's leading charging
point platform allowing electric vehicle (EV) drivers to plan
routes, identify charge points, checking their availability and
share power. It also develops the nextgreencar platform, the UK's
number one green car website.
NGCL is a private entity that is not listed on any public
exchange.
9.1 Summary of interests in equity associates
2019 2018
GBP'000 GBP'000
Unaudited Audited
Non-current assets
Equity investment in associate 426 -
Other interests in associates 615 -
Non-current Liabilities
Long term Financial Liabilities 39 -
Current Liabilities
Short term Financial Liabilities 60 -
9.2 Investment in associate
As part of the investment in NGCL, the Group appointed a
director to the board. This grants 33% of the board's voting rights
and constitutes significant influence to direct the relevant
activities of NGCL. As such NGCL is accounted for as an associate
using the equity method in the consolidated financial
statements.
The associate had no contingent liabilities or capital
commitments as at 31 December 2019 and 2018.
No dividends were paid by the associate in the period.
9.3 Other interests in associate
At 31 December 2019 the group held GBP600,000 of the authorised
GBP800,000 secured convertible loan notes in NGCL. This consists of
the first two drawn down tranches of the loan. After the final
tranche of GBP200,000 has been drawn down in Q1 2020 the Group will
have the option to convert the entirety of the secured loan notes
into a total shareholding of 50.1% together with the already held
shareholding. These secured convertible loan notes are convertible
at the option of the Group until 31 December 2021.
If the convertible loan note is not exercised by Good Energy, it
becomes repayable half yearly in arrears on 30 June and 31
December, by NGCL over the following five years until 31 December
2026, accruing interest annually at 8%.
9.4 Other financial liabilities
2019 2018
GBP'000 GBP'000
Unaudited Audited
Financial liabilities at fair value through profit
and loss
Contingent consideration 99 -
Total non-current 39 -
Total current 60 -
The carrying amount of these liabilities is equivalent to the
fair value.
As part of the purchase of share in NGCL a contingent
consideration has been agreed. Contingent consideration is payable
dependant on the satisfaction of product milestones in July 2020
and stretching financial milestone targets in December 2021. The
maximum possible deferred consideration is GBP0.72m.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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