TIDMGOOD
RNS Number : 9622Y
Good Energy Group PLC
15 September 2020
Good Energy Group PLC
Un-audited Interim Results for the 6 months ended 30 June
2020
Underlying strong business performance and continued delivery
against our strategic goals with 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 Half Year report for the six months
ended 30 June 2020.
Financial highlights - continuing operations
-- Underlying performance of the core business in line with
management expectations, adjusting for the impact of COVID-19
-- Strong operating cashflow of GBP7.0m leading to a gross cash
balance of GBP18.2m (2019: GBP13.7m), funding investment across the
business, and providing increased capital flexibility
-- Net debt decreased to GBP36.5m, with GBP33.8m of this secured
against GBP63.2m generation portfolio that remain cash
generative
-- Revenue increased by 6.2% to GBP67.5m, driven by growth in
Business supply and FIT customers, more than offsetting a decline
in Domestic supply customers
-- Gross profit of GBP14.8m decreased 13.3% with a gross profit
margin of 22.0% (H1 2019: 26.9%) in line with the strategic shift
toward longer term, lower gross margin Business supply and selling
back excess contracted power and higher network reconciliation
costs
-- Revaluation undertaken of the entire 47.5MW generation
portfolio delivered a net GBP19.0m uplift to asset values, at 1
January 2020, and an increase in reserves resulting in the headline
gearing declining from 63.6% to 51.9%.
-- Within underlying loss before tax of GBP0.5m (H1 2019 GBP2.5m
profit), are GBP3.1m of increased non-cash costs, driven by an
incremental GBP1.9m expected credit loss (ECL) and GBP1.2m
resulting from the positive revaluation of the generation portfolio
and the write down in value of the small Creathorne solar site
-- Non underlying costs of GBP0.6m associated with restructuring
costs, delivered a loss before tax from continuing operations of
GBP1.1m
-- Basic loss per share decreased to 2.8p, with reported loss
per share decreasing to 6.6p (H1 2019: profit per share 15.3p).
-- The Board recognises the importance of the dividend to our
shareholders and therefore intends to resume dividend payments in
2021, if broader macro-economic conditions permit. In order to
maintain the appropriate level of near-term flexibility, the Board
has decided not to declare or pay an interim dividend.
Operational highlights
-- Notwithstanding the challenges of the coronavirus pandemic,
Good Energy delivered a resilient performance in the first half.
The Group continued to invest across the business in the
development of energy services propositions and a range of
innovation projects to drive future profit growth and supporting
the journey to a zero-carbon Britain.
-- Good underlying business growth mitigating COVID impact, with
overall customer numbers increased by 4.3% to 272.6k. Total
Business customers increased 8.0%, with Business FIT customers
increasing 7.9%. Total Domestic customers increased marginally by
0.9%, with Domestic FIT customers growing strongly by 16.8%.
-- Continued focus on delivering profitable returns alongside
continued investment in people, processes, and technology to enable
customers to take control of their energy usage in the future.
o Kraken implementation and rollout progressing on track with
over 85% of customers migrated to date. The remainder of the
rollout will be completed in late Q3 2020 and early Q4 2020. The
system implementation and associated operating model transformation
has delivered cost savings in H1, significant improvements in
customer experience and is on track to payback within 18 months as
forecast.
o Zap - Map recently launched Zap - Pay, a ground-breaking
payment solution across EV charging point networks. Good Energy
converted its initial investment into a majority 50.1% equity stake
in June 2020.
o Given future requirement for smaller, flexible working spaces,
Good will no longer be developing a new head office in Chippenham,
which was due to complete in 2022. Future Group talent strategy
will be aligned to a more remote, flexible business model.
o SMART meter rollout impacted by COVID restrictions. Demand and
installation numbers improving as lockdown restrictions ease and in
line with expectations.
Financial performance for the six months to 30 June 2020
Period ended 30 H1 2020 H1 2020 H1 2020 H1 2019
June Underlying Non underlying Reported Underlying
GBPm* continued continued
operations operations
Revenue GBP67.5m GBP0.0m GBP67.5m GBP63.5m
------------ ---------------- ----------- ------------
Gross Profit GBP14.8m GBP0.0m GBP14.8m GBP17.1m
------------ ---------------- ----------- ------------
Administration costs GBP(13.3)m GBP(0.6)m GBP(13.9)m GBP(12.3)m
------------ ---------------- ----------- ------------
Operating profit GBP1.5m GBP(0.6)m GBP0.9m GBP4.8m
------------ ---------------- ----------- ------------
Profit before tax GBP(0.5)m GBP(0.6)m GBP(1.1)m GBP2.5m
------------ ---------------- ----------- ------------
Profit after tax GBP(0.5)m GBP(0.6)m GBP(1.1)m GBP2.5m
------------ ---------------- ----------- ------------
Cash and cash equivalents GBP18.2m GBP18.2m GBP16.5
m
------------ ---------------- ----------- ------------
Net debt GBP36.5m GBP35.5m
------------ ---------------- ----------- ------------
Basic (loss) / earnings
per share (p) (2.8)p (6.6)p 15.3p
------------ ---------------- ----------- ------------
Interim dividend
per share (p) - 1.1p
------------ ---------------- ----------- ------------
Juliet Davenport, Founder and Chief Executive Officer of Good
Energy, said:
"In the context of the COVID 19 pandemic Good Energy has
delivered a strong performance in the first half of the year, with
total customer numbers up, driven by continued business and Feed in
Tariff growth.
Amid economic uncertainty, Good Energy is financially and
operationally resilient with a strong cash position.
Despite the significant challenges over the past six months, we
have made good progress with our strategy and continued to invest
across the business - in the development of energy services
propositions, innovation projects, our people, processes and
technology.
Therefore, Good Energy is well positioned to play a key role in
the green recovery and help businesses and customers to "build back
better". We look forward to continuing our strategy to provide
people and organisations with the tools to have a zero-carbon
footprint across electricity, transport and heat."
* 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
Luke Bigwood, Communications
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
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
1,600 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.
Good Energy is recognised as a leader in this market, through
our green kite accreditation with the London Stock Exchange and as
a top rated Green energy supplier by Which?.
CEO REPORT
MARKET ENVIRONMENT
Growing green momentum despite uncertain macroeconomic
conditions
The market in the first two months of 2020 began in line with
expectations with the underlying business performing strongly.
However, from March, the breadth and depth of COVID-19 began to be
felt across the economy as business premises largely closed and
employees shifted to a remote working model. We witnessed Business
energy supply demand reduce by almost 35% vs our expectations. We
have seen signs of recovery since the lockdown easing in May.
Nevertheless, it is pleasing that despite the challenges over the
past six months, our business has remained resilient and responded
well to the new normal.
The macroeconomic, consumer and competitive backdrop contain
considerable uncertainties. Many economic forecasts continue to
outline a muted outlook on growth and employment levels, given the
ongoing uncertainty surrounding the virus. However, as lockdowns
ease, we are seeing energy demand starting to recover. Without a
second wave, we expect this to continue back to more normalised
levels. However, we remain aware of the impact any subsequent
lockdown and impact this could have on the sector in general.
Despite the continued impact of COVID - 19, the desire for a
green recovery and to build back better continues to gather
momentum. The concept of a green recovery has quickly gathered
strong support from the business community. In May, more than 60
leaders of major businesses and environmental organisations sent an
open letter to the Prime Minister calling for the climate to be put
at the heart of the recovery effort. Tangible investments have
already been made in schemes committed to low carbon homes, low
carbon transport infrastructure and investments dedicated to
support green innovation. Both corporations and investment and
pension fund managers are now also placing increasing scrutiny on
green credentials as key investment requirements.
The UK Government has committed to "build back better and build
back greener", whilst the commitment to achieving net zero carbon
emissions by 2050 represents a significant opportunity for long
term green economic growth. The Grantham institute highlighted
GBP21bn of new value available to electricity utilities per year by
2050. Local low carbon generation, service provision and network
flexibility are key to our future and represent a market potential
of almost GBP16bn.
STRATEGIC FOUNDATIONS FOR GROWTH IN H1 2020
Our key strategic goals are to:
o Lower customer acquisition cost;
o Improve customer retention;
o Increase overall customer lifetime value through an improved
offering of products and services.
Kraken customer services platform
The investment in Kraken is a fundamental steppingstone towards
achieving our strategic goals. Not only will Kraken enable us to
better serve our customers through a scalable and more efficient
customer services platform, it will also increase our capacity to
deliver future growth in our Domestic business.
Implementation of Kraken is nearing completion. Despite the
impact of COVID and shift to home working, we have migrated over
85% of our customer base successfully. The remainder of the rollout
will be completed in late Q3 2020 and early Q4 2020.
We previously communicated that the total forecast investment of
GBP4m would be split approximately equally between cash and
non-cash elements. In 2020, operating cost savings have already
been realised, relating to lower headcount and service
efficiencies. The investment is still expected to achieve payback
of the forecast investment within 18 months of the April 2020 full
implementation.
Expected efficiency savings will be reinvested in both price and
further proposition development and roll-out, principally within
our Domestic supply business. This will enhance existing products,
services and competitiveness. The new platform will also provide
significant scalability and flexibility, enabling digital and clean
technology innovation of significant benefit to customers.
Zap - Map launches innovative new payment solution
In June, we announced that we had exercised our right to
increase the equity stake in Zap - Map to 50.1%. In September, Zap
- Map launched an innovative new product to provide all EV drivers
and charge point operators with an interoperable payment solution,
providing EV drivers with simple, single point of access to a range
of public charging networks through the Zap-Map app. Zap Pay, will
continue to add charging networks to its offering, including
providing fleet drivers with a simple payment solution as more
businesses look to make the switch to electric vehicles.
This is the first in a range of products and services for the EV
market. Future products will be focused on payment solutions for
fleets, improved mapping services and in car functionality to
improve the overall EV experience, all underpinned by data
insights.
Zap-Map holds a market leading position in the UK, with both the
large majority of EV drivers and network operators on their
platform. The investment in Zap-Map aligns Good Energy with a
platform for the energy sharing economy which is at the forefront
of EV market growth. Technology and digitalisation are core to Good
Energy's future growth plans. The investment in the UK's leading EV
mapping platform is accelerating the company's shift into the EV
market and will allow Good Energy to leverage several existing and
future products and services for customers of both Good Energy and
Zap - Map.
We will continue to work closely with Zap - Map to ensure the
delivery of these innovative products and services, including
senior advisory support to accelerate the implementation of the
strategy. Zap-Map will continue to benefit from the scale and
resources supported by Good Energy, whilst leveraging the expertise
within Good Energy on innovative technology solutions.
Service propositions - customer centric approach towards zero
carbon
Our ambition is to provide customers with the tools to achieve a
zero-carbon footprint across electricity, transport and heat in
both Business and Domestic settings.
o In electricity, our aim is to provide electricity from
decentralised renewable energy sources which support decentralised
generation for homes and businesses.
o In transport, we must be part of the electric vehicle
revolution and electrification of the infrastructure network
through providing homes and businesses with charging hardware and
solutions.
o In heat, our focus is on the electrification of heating
systems and movement to renewable heat by providing access to
heating care products and heat demand reduction technologies.
Using our expertise, we will help customers to better understand
the energy requirements and uses. Knowing where, when, and how you
consume energy is the first hurdle. Providing accurate live data on
device usage through consumer access devices and SMART metering
technology will empower customers to be part of the zero-carbon
journey
Domestic propositions
One Home. We are continuing to develop our One Home proposition,
which will incorporate our FIT export rate (FER) and Smart export
guarantee (SEG) tariffs, supported by our GenEx SMART metering
solutions, bundled with a supply offering and the installation of
solar panels.
UK's first smart three phase meter. We have been working with
Smart Metering Systems PLC on the UK's first installation of a
SMETS2 smart meter on a three-phase grid connection.
Heat pump tariff. We have announced a new specialised heat pump
tariff, following the Government announcements of a 'Green Home
Grant'. This scheme will make GBP2bn available to homeowners for
energy efficiency improvements. The response has been
overwhelmingly positive, generating significant customer
interest.
Business propositions
One Point. Successful roll out has started with initial EV
charging installations at Watergate Bay Hotel & Ealing studios.
There is a growing range of opportunities in the pipeline as
businesses look to address their own EV services. This market is
expanding to include a range of solutions for fleet services, as
well as destination charging.
Selectricity. This is a power sharing platform, through which
businesses can partner with independent local generators. This
peer-to-peer platform lets businesses choose where and how their
electricity is generated. Selectricity customers will know that
every kWh being used is paired with electricity generated from 100%
renewable sources in the UK. This will be available to business
customers from Q4 2020.
WHOLESALE ENERGY MARKET CONDITIONS
Demand
Our revenues are sensitive to changes in the demand for
electricity and gas. At the outset of the pandemic, market trends
showed a 15% increase in Domestic electricity demand and a
reduction close to 35% in overall Business demand.
However, over the last couple of months we have started to see
the impact of lockdown easing and the partial return to the office.
Domestic demand has dropped relative to earlier in the pandemic and
is now trending around 7.5% above normalised levels, while Business
demand has picked up and is now closer to a 15% reduction on
normalised levels. We continue to monitor the data closely.
We also witnessed a warmer winter than average which has further
impacted energy demand. Following a very sunny and warm spring,
June returned to more seasonal norms. In H1, average temperatures
were 0.95 degrees warmer than seasonal averages for 5 out of the
first 6 months of the year. This has led to a downward impact on
gas demand, with a less material impact on electricity volumes.
Power prices & supply volume
Since lockdown, wholesale power prices have dropped
significantly. Following global trends in the fossil fuel markets,
during the lockdown period electricity prices had fallen by 42%
from H1 2019 and gas prices had fallen by 52% from H1 2019. As a
result of decreased demand, excess forward bought power was sold
back into this market at a loss.
Today, we are seeing a more bullish market, with power prices
rising back towards pre-COVID levels. Longer term pricing depends
on the worldwide changes in demand sentiment.
We have reviewed our traded positions and feel comfortable that
we have already sufficiently procured in gas and electricity to
manage this position over winter.
Overall supply volumes were 6% down in H1. Total gas supply
volumes decreased 18% to 258 Mwh (H1 2019: 316Mwh), driven by the
warmer weather. Electricity volumes increased 9%, driven by growth
in Business supply volumes, following an increase in contracted
business in late 2019. Half hourly (larger) business volumes
increased 27% to 116 Mwh and SME business volumes increased 2%.
This was marginally offset by an 8% decrease in Domestic supply
volumes.
A STRONG AND GROWING CORE BUSINESS
Total customer numbers in the period increased 4.3% to 272.6k,
driven by continued business and FIT growth which was pleasing to
see. The impact of COVID, warmer weather and accounting adjustments
in the first half has masked the underlying good performance of the
core business.
Business
Total Business customers increased 8.0% to 134k. Business FIT
customers increased 7.9% to 125.7k, as we continue to maintain our
position as one of the market leaders in operating the feed in
tariff scheme. Total Business supply customers increased by 10.6%
to 8.3k, driven by a 38% increase in larger half hourly Business
customers.
Growth in Business customers has underpinned our strategy in
recent years, and this planned shift towards Business provides us
with greater stability through longer term contracts and higher
retention levels compared to Domestic supply. Whilst we saw gross
margins fall because 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, providing
confidence for the future.
Domestic
Total Domestic customers increased marginally by 0.9% to 138.6k.
Domestic FIT customers numbers grew strongly by 16.8% to 50.0k.
Whilst domestic supply customers decreased by 6.4% to 88.6k.
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.
However, we remain committed to ensuring that we have a highly
competitive price point for our unique proposition. 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? Of Good
Energy as a genuinely 100% green supplier, is evidence of our
credentials in this space.
We remained focused on reducing churn and improving the cost to
acquire new customers. Our recent investment and migration onto the
new Kraken system will address these points and provide the
platform for a return to growth in future years. Domestic customer
churn is currently at 14%, significantly lower than mid - 20's
industry average, and is an improvement on our 2019 level of 16%.
We are targeting significant further progress in this area.
Feed in tariff (FIT)
As described above, we witnessed further strong growth across
our FIT business in the first half of 2020 and we continue to have
one of the largest market shares in this industry. FIT remains an
important aspect of our business, as it provides the foundation of
our 'energy as a service' business model.
Despite the 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 16.8%
to 50k and business customers increase 7.9% to 125.7k in the
period. We look to make further incremental market share gains in
future periods.
Generation performance
Our 47.5MW generation portfolio consists of 6 solar (30.1MW) and
2 wind sites (17.4 MW).
We have seen an exceptional summer from a renewable generation
point of view, with all sites exceeding their P50 performance, with
the exception of Creathorne, our smallest site, which experienced
transformer issues.
More generally, wind and solar have performed well during
lockdown and recently wind energy alone powered 59% of the UK's
energy needs, as a result of the tail end of Storm Ellen. We expect
these high renewable days to be increasingly part of the trading
landscape that we will have to navigate.
Generation revaluation
Our focus remains to delivering value from our generation sites,
which continue to perform well. We are committed to working on our
existing sites and delivering value to stakeholders.
In the period, we undertook a revaluation exercise on the entire
generation portfolio. We have historically marked the assets at
cost less accumulated depreciation. We have also noted that over
recent years the relative values of the generation assets and the
long term loans that finance them have become more disconnected,
given that the generation sites are depreciated on a straight line
basis whilst the loan repayments are scheduled on an amortising
basis, with the majority of the total cash payments in the earlier
years allocated to interest costs. The revaluation therefore
provides greater transparency of the generation sites current value
on the balance sheet, notably gross assets, total equity and
gearing.
This exercise resulted in a revaluation uplift of GBP19.5m for
all but one asset, which had an impairment of GBP0.5m. This
represents a total uplift of 41% to GBP65.1m at 1 January 2020.
The revaluation, which was planned for H1 2020 includes the
impact of the current, COVID impacted, power price market.
COVID-19 UPDATES
Expected credit loss provision (ECL)
We have undertaken a detailed analysis of both the future
macroeconomic indicators, as well as our own operational billing
performance to evaluate the impact on our expected credit loss
reporting. Changes driven by COVID and subsequent macro uncertainty
are the main drivers behind an incremental provision, recognised
through the P&L.
The Group's outlook and base case economic scenario used to
calculate expected credit loss (ECL) allowance has been updated
since the 2019 year end to reflect the Group's best estimate of the
impact of the coronavirus outbreak on the Group's customer and
client base, has resulted in an additional provision charge of
GBP1.9 million in the period. The Group's ECL allowance continues
to reflect a probability-weighted view of future economic scenarios
where future macroeconomic forecasts have deteriorated
significantly since the 2019 year end.
External forecasts are based on future unemployment estimates
and economic growth. Internal forecasts are driven by actual and
expected collection rates of both our business and domestic
customers.
Currently UK unemployment is 3.9% (April - June 2020). Current
OECD estimates on unemployment rates have increased to 12% with no
second wave and 15% if there is one whilst their GDP estimate
suggests that the UK economy could contract by as much as 11.5%
during 2020. However, these forecasts have increased sharply since
our full year reporting. These estimates are compared against our
customer base and ability to pay using appropriate segmentation and
with reference to external agency data such as Experian for
Domestic customers and credit agencies for Business customers. We
have also referenced our forecasts against analysis being compiled
by OFGEM on the expectations and experience across the energy
supply industry on customer collections.
If economic conditions improve, or if our total debt and overdue
debt reduces significantly by the year end, then a portion of the
ECL provision can be release. Conversely, if economic conditions
worsen materially, or if our commercial customers struggle to pay,
then the ECL provision could increase further. The provision is
sensitive to changes in future assumptions, particularly macro
forecasts which are key determinants in the model.
Our ECL is a reasonable downside case, with assumptions driven
by future economic conditions, based on today's forecasts.
Billing and debt performance
We have seen good progress in our billing and debt collection
throughout the first half. Automation for our non HH customer has
been implemented successfully, meaning 75% of our bespoke B2B bills
are now automatic, which is driving incremental operational cost
savings. We have also made significant improvements to our billing
accuracy and timeliness throughout the year.
Business operations have taken on the management and ownership
of arrears debt and a more pro active management of middle tier
debts. External training was provided to help manage this more
proactive approach and initial results have been positive.
The volume and value of defaulting direct debits remains low.
This has ensured a steady cash flow into the business.
Simultaneously, the number of commercial customers on direct debits
has risen.
Remote working model and new HQ
The Company has responded well to the ongoing COVID - 19
pandemic, with colleagues continuing to work successfully in a
fully remote model. As part of this transition, there has been a
desire for significantly more homeworking from staff, which means a
smaller office space geared towards collaboration. The Company will
continue to review its existing office space against future
requirements and has the option to use flexible space at its
current Monkton Park offices. In July we reopened our office on a
limited capacity for those employees wishing to return. However,
our workforce will remain largely remote until 2021, backed by the
large majority of our employees, as we continue to follow
Government guidelines.
As part of this ongoing business planning review, we have
cancelled plans to continue to develop and build a new head office
in Chippenham in partnership with Wiltshire Council, which was due
to complete in 2022. With smaller, flexible office space required
in the future, the Company will benefit from longer-term cost
savings. We will continue to engage with Wiltshire Council on
future developments with the project.
SMART meter rollout
Our SMART meter rollout was impacted by the COVID lockdown
restrictions implemented in March. As a result, we were unable to
visit customers homes to install new devices. However, we have seen
both demand and installation numbers improve as lockdown
restrictions eased, with SMART meter installs restarting in July.
Without further lockdowns, we expect to see this trend continue and
installations are now back on track and in line with our
expectations.
CURRENT TRADING AND OUTLOOK
We remain a leading player in the decentralised market and have
the foundations in place to deliver growth through scale. Growth in
our business customers and energy services will continue to fuel
our growth plans. There is upside potential from investments
facilitated by technology, and we remain financially and
operationally resilient with a strong cash position. Our aim is to
accelerate the transformation of Good Energy into one of the
leading renewable services brands in the UK.
FINANCIAL OUTLOOK
Underlying business performance continues to perform in line
with management expectations. This includes lower margins from our
faster growing Business segment and a planned reduction in
operating costs.
As lockdowns ease, we are seeing energy demand slowly start to
recover. Without a second wave, we expect to see this continue.
However, the macroeconomic, consumer and competitive backdrop
contains considerable uncertainties. The Group is unable to give
full year guidance due to the ongoing impact of these ongoing
uncertainties.
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. With these foundations in
place, they provide increased opportunities to unlock growth
potential.
The Board recognises the importance of dividends to many
shareholders, but it is important that we retain a prudent approach
to balance sheet management at this stage. The Board will review
the appropriate balance between investment in the core business and
shareholder returns and is proposing to restart dividend payments
in 2021 when economic conditions and the impact on our business
allow.
FINANCIAL UPDATE
Profit bridge for the period 30 June 2019 to 30 June 2020
Below, are the key profit before tax movements between H1 2020
and H1 2019
To period ended 30 June 2020 Continued
GBPm* operations
GBPm
H1 2019 continuing PBT GBP2.5m
------------
Gross margin impact - volume (COVID (GBP1.0m)
/ weather)
------------
Gross margin impact - pricing / mix (GBP0.8m)
/ other (COVID / Weather)
------------
Staff cost savings GBP1.6m
------------
Non - staff opex & D&A savings GBP0.3m
------------
Finance cost savings GBP0.2m
------------
H1 2020 'like for like' continuing GBP2.8m
PBT*
------------
ECL impacts - COVID (non-cash) (GBP1.9m)
------------
Generation asset revaluation - depreciation (GBP1.2m)
and write off (non - cash)
------------
Zap - Map - share of loss on consolidation (GBP0.1m)
(non - cash)
------------
H1 2020 underlying continuing PBT (GBP0.5m)
------------
Restructuring costs - non underlying (GBP0.6m)
------------
H1 2020 continuing PBT (GBP1.1m)
------------
* Like for like is not an IFRS accounting definition. Used for
illustrative purposes
Overview
The impact of COVID and warmer weather has masked the underlying
good performance of the core business. Performance in the period
can be broadly split into three key areas. Good internal cost
management of factors within our control, external market factors
outside of our control and proactive decisions made on structural
changes.
Underlying profit before tax would have seen year on year
growth, excluding the incremental impact of the expected credit
loss provision and impact of the generation revaluation and one-off
restructuring costs associated with the Kraken customer services
technology platform integration.
Internal cost management
Combatting the ongoing COVID impact, prudent cost control across
the business has helped to deliver admin costs GBP2.1m lower in the
period (excluding the non-cash impact of ECL provision and
increased generation portfolio depreciation). Within this, staff
costs reduced GBP1.6m realising the impact of the Kraken investment
returns and operating leverage as well as overhead savings across
consultancy services, projects, and outsourcing costs. Further
realised savings from reduced operating costs including marketing
expenditure and finance costs of GBP0.5m.
External market factors
There was a gross margin impact of GBP1.0m as gas volumes
decreased 18% vs H1 2019. The reduction in electricity demand was
offset by business customer wind.
Selling back excess power and network reconciliation charges
impacts due to weather extremes and reduced COVID demand had a
negative GBP0.8m impact.
Incremental GBP1.9m expected credit loss provision taken, driven
by uncertain macroeconomic outlook. This is a noncash impact.
Structural changes
The generation asset portfolio was revalued in the period.
Included with the GBP19.0m uplift in asset valuation, was a one off
GBP0.5m write down relating to the small Creathorne solar site.
There was a further incremental GBP0.6m depreciation charge as a
result of the revaluation.
As planned, there has been a realisation of a further GBP0.6m on
restructuring costs relating to the new customer services
technology platform. There was an initial GBP0.8m recognised in
2019.
FINANCIAL PERFORMANCE
Profit and loss
Revenue increased by 6.2% in the period to GBP67.5m (H1 2019:
GBP63.5m) driven by business supply volume growth offset by lower
domestic supply customers. The impact of COVID - 19 and warmer
weather masked underlying increase in contracted business in
2019
Cost of sales increased by 13.3% to GBP52.6m (H1 2019:
GBP46.4m). Gross profit decreased by 13.3% to GBP14.8m (H1 2019:
GBP17.1m). Gross profit margin decreased to 22.0% (H1 2019
continuing: 26.9%).
Administration costs increased 8.5% to GBP13.3m (H1 2019:
GBP12.3m) primarily because of an incremental GBP1.9m charge for
expected credit loss provisioning and a GBP1.2m charge relating to
the generation asset revaluation. This was broadly offset by
prudent cost control across the business. Lower staff costs of
GBP1.6m, realising the impact of the Kraken investment and further
savings from marketing and project expenditure of GBP0.5m.
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 from April
2020. To date GBP1.6m of cash costs have been incurred and GBP0.6m
of non-cash costs incurred.
The generation asset portfolio was revalued in the period.
Included with the GBP19.0m uplift in asset valuation, was a one off
GBP0.5m write down relating to the small Creathorne solar site.
There was a further incremental GBP0.6m depreciation charge as a
result of the revaluation.
Operating margin decreased to 2.3% (H1 2019: 7.6%).
Finance costs decreased by 11.0% to GBP2.0m, as overall debt
paydown continued to be offset by an increase in reported finance
costs following the implementation of IFRS16.
Non underlying costs of GBP0.6m associated with restructuring
costs, delivered a loss before tax from continuing operations of
GBP0.9m
Underlying loss before tax of GBP0.5m, with a reported loss
before tax of GBP1.1m (H1 2019 GBP2.5m profit)
The tax movement is as a result of losses in the period offset
by a movement in the deferred tax liabilities due to the tax rate
used changing from 17% to 19% as a result of the 2020 spring
budget.
Cash Flow and Cash Generation
Our business model remains highly cash generative with GBP7.0m
cash generated from operations (H1 2019: GBP3.1m), with GBP4.7m
generated before movements in working capital (H1 2019: GBP5.8m).
Working capital movements remain in line with seasonal trends,
despite the part impact in the period of COVID-19.
There was a net increase in cash of GBP4.6m, delivering a strong
cash balance of GBP18.2m (2019: GBP13.7m) funding investment across
the business, continued paydown of debt and capital
flexibility.
Funding and Debt
Net debt decreased 12.3% to GBP36.5m (FY 2019: GBP41.6m)
following further debt repayment and good cash generation. Gearing
reduced to 51.9% in the period (H1 2019: 63.6%) primarily as a
result of the upward valuation of the generation portfolio.
Following the repayment of Bond I in June 2019, group finance
costs have been lower and is a positive step towards lowering the
Company's ongoing financing costs and continuing to reduce the
gearing ratio over the medium term. Good Energy bonds are now
reported within current liabilities, as redemption is possible from
June 2021.
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
Basic underlying loss per share decreased to 2.8p. Reported loss
per share decreased to 6.6p (H1 2019: profit per share 15.3p).
Dividend
The Board recognises the importance of the dividend to many
shareholders. It is important that we retain a prudent approach to
balance sheet management at this stage. The Board continue to
review the appropriate balance between investment in the core
business and shareholder returns.
Previously the payment of bonus and dividends were placed on
pause until two criteria were met, these criteria being:
-- Good Energy maintaining a strong liquidity position
-- A greater level of clarity on the lockdown status and future
economic outlook allowing some certainty over future working
capital, debt impacts and future liquidity position
The Board is proposing to restart dividend declaration and
payments in 2021 if economic conditions and the impact on our
business allow. As a result, no interim dividend will be declared
or paid.
Non underlying costs
An amount of GBP0.6m 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
accelerated depreciation.
Expected credit loss
Expected credit loss provision. The Group's outlook and base
case economic scenario used to calculate expected credit loss (ECL)
allowance has been updated since the 2019 year end to reflect the
Group's best estimate of the impact of the coronavirus outbreak on
the Group's customer and client base, has resulted in an additional
provision charge of GBP1.9 million in the period. The Group's ECL
allowance continues to reflect a probability-weighted view of
future economic scenarios where future macroeconomic forecasts have
deteriorated significantly since the 2019 year end.
Going concern
With the ongoing outbreak of COVID-19 in the UK, and the
economic downturn associated with it, there is uncertainty over
future economic conditions which may decrease the ability of
customers to pay debts as they fall due. Indicators to date show a
similarity to management's base COVID impact scenario model,
performed as part of the 2019 year-end financial results. However,
management remain conscious of the potential volatility of future
macroeconomic conditions. This uncertainty means the Group may be
unable to fully repay its bondholders if 100% of this becomes due
in June 2021 and may mean the Group breaches its counterparty
covenants.
There are other financial mitigations available to management,
but these are not yet in place and therefore are not able to be
relied upon for reporting purposes as part of management's going
concern assessment at this time. Therefore, management assess that,
in line with the 2019 Annual Report, there is a material
uncertainty over the going concern of the Group.
Strategic investment
The Group converted its equity position in Zap - Map (Next Green
Car Limited) to take a majority 50.1% position in the period. As a
result, Zap-map has been consolidated as a subsidiary under IFRS 3
from the date control was obtained. Non-controlling interests have
been recognised at their share of the fair value of net asset
Generation portfolio
Our 47.5MW generation portfolio consists of 6 solar and 2 wind
sites.
In the period we have revalued the entire generation portfolio
to accurately reflect the current value of these assets. As
outlined in our 2019 Annual Report, we undertook a review to ensure
that our valuation was reflective of market conditions.
Generation asset revaluation delivered upwards asset value of
GBP19.5m. However, there is an incremental ongoing GBP0.6m
depreciation charge, for the half year, and further GBP0.5m write
down on the small Creathorne solar site. The revaluation includes
the impact of current, COVID impacted, power price market.
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 underlying
continuing operations.
Consolidated Statement of profit or loss (Un-audited)
For the 6 months ended 30 June 2020
Notes Unaudited Unaudited Unaudited Unaudited Audited
6 months 6 months 6 months 6 months 12 months
underlying non to 30/06/2020 to 30/06/2019 to 31/12/2019
to 30/06/2020 underlying
to 30/06/2020
GBP000's GBP000's GBP000's GBP000's GBP000's
REVENUE 67,461 - 67,461 63,544 124,258
Cost of Sales (52,615) - (52,615) (46,425) (92,601)
-------------- -------------- -------------- --------------- ---------------
GROSS PROFIT 14,846 - 14,846 17,119 31,657
Administrative Expenses (13,325) (615) (13,940) (12,280) (26,084)
-------------- -------------- -------------- --------------- ---------------
OPERATING PROFIT 1,521 (615) 906 4,839 5,573
Finance Income 81 - 81 16 166
Finance Costs (2,118) - (2,118) (2,306) (4,439)
Share of loss of associate (12) - (12) - (42)
-------------- -------------- -------------- --------------- ---------------
PROFIT / (LOSS) BEFORE
TAX (528) (615) (1,143) 2,549 1,258
Taxation 5 6 11 (85) (42)
-------------- -------------- -------------- --------------- ---------------
PROFIT / (LOSS) FOR
THE PERIOD FROM CONTINUING
OPERATIONS (523) (609) (1,132) 2,464 1,216
DISCONTINUED OPERATIONS
Loss from discontinued
operations,
after tax 7 - - - (1,031) (962)
-------------- -------------- -------------- --------------- ---------------
PROFIT/(LOSS) FOR THE
PERIOD (523) (609) (1,132) 1,433 254
Attributable to:
Equity holders of the
parent (462) (609) (1,071) 1,433 254
Non-controlling interest (61) - (61) - -
Earnings
per share - Basic 8 (2.8p) (3.7p) (6.6p) 8.9p 1.6p
- Diluted 8 (2.7p) (3.6p) (6.3p) 8.8p 1.5p
Earnings
per share
from
continuing
ops - Basic 8 (2.8p) (3.7p) (6.6p) 15.3p 7.5p
- Diluted 8 (2.7p) (3.6p) (6.3p) 15.1p 7.2p
Consolidated Statement of profit or loss (Un-audited)
For the 6 months ended 30 June 2020
Notes Unaudited Unaudited Unaudited Unaudited Audited
6 months 6 months 6 months 6 months 12 months
underlying non underlying to 30/06/2020 to 30/06/2019 to 31/12/2019
to 30/06/2020 to 30/06/2020
GBP000's GBP000's GBP000's GBP000's GBP000's
Profit/(loss) for
the period (523) (609) (1,132) 1,433 254
Other comprehensive
income
Other comprehensive
income that will
not be reclassified
to profit or loss
in subsequent periods
(net of tax):
Revaluation of generation
assets 15,755 - 15,755 - -
--------------- ---------------- --------------- --------------- ---------------
Net other comprehensive
income/(loss) that
will not be reclassified
to profit or loss
in subsequent periods 15,755 - 15,755 - -
--------------- ---------------- --------------- --------------- ---------------
TOTAL COMPREHENSIVE
INCOME FOR THE PERIOD
ATTRIBUTABLE TO OWNERS
OF THE PARENT COMPANY 15,232 (609) 14,623 1,433 254
Attributable to:
Equity holders of
the parent 15,293 (609) 14,684 1,433 254
Non-controlling interest (61) - (61) - -
Consolidated Statement of Financial Position (Un-audited)
As at 30 June 2020
Notes Un-audited Un-audited(1) Audited
30/06/2020 30/06/2019 31/12/2019
GBP000's GBP000's GBP000's
ASSETS
Non-current assets
Property, plant and equipment 63,310 48,627 46,326
Right-of-use assets(1) 6,209 4,406 6,483
Intangible assets 5,088 4,156 4,454
Restricted deposit assets 4,555 4,337 4,548
Fair value through profit
or loss assets 5 - 681 -
Equity investment in associate - - 426
Other interests in associate - - 615
------ ------------ -------------- ------------
Total non-current assets 79,162 62,207 62,852
Current assets
Inventories 17,327 15,589 9,941
Trade and other receivables 30,482 28,270 29,430
Current Tax receivable 3 - -
Cash and cash equivalents 18,234 16,452 13,667
Restricted deposit assets 504 - 474
Current assets held for - 520 -
sale
------ ------------ -------------- ------------
Total current assets 66,550 60,831 53,512
------ ------------ -------------- ------------
TOTAL ASSETS 145,712 123,038 116,364
------ ------------ -------------- ------------
EQUITY AND LIABILITIES
Capital and reserves
Called up share capital 832 829 832
Share premium account 12,790 12,719 12,790
EBT shares (549) (816) (549)
Retained earnings 5,205 7,521 5,707
Revaluation surplus 15,254 - -
Non-controlling Interest 225 - -
------ ------------ -------------- ------------
Total equity attributable
to members of the parent
company 33,757 20,253 18,780
Non-current liabilities
Deferred taxation 4,428 960 903
Borrowings 39,434 57,765 56,744
Long term financial liabilities 39 - 39
Provision for liabilities 1,294 1,272 1,294
------ ------------ -------------- ------------
Total non-current liabilities 45,195 59,997 58,980
Current liabilities
Borrowings 20,332 3,407 3,057
Trade and other payables 46,211 39,381 35,487
Short term financial liabilities 12 - 60
Total current liabilities 66,555 42,788 38,604
------ ------------ -------------- ------------
Total liabilities 111,955 102,785 97,584
------ ------------ -------------- ------------
TOTAL EQUITY AND LIABILITIES 145,712 123,038 116,364
------ ------------ -------------- ------------
(1) In the 2019 unaudited interim accounts, the Right-of-use
assets were presented together within Property, plant and
equipment. These have been split out and presented separately for
comparability with other reporting periods.
Consolidated Statement of Changes in Equity (Un-audited) (1)
For the 6 months ended 30 June 2020
Share Share Other Retained Revaluation Non-controlling Total
Capital Premium Reserves Earnings surplus interest
GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's
--------- --------- ---------- ---------- ------------ ---------------- ---------
At 1 January 2019 829 12,719 (810) 6,088 - - 18,826
--------- --------- ---------- ---------- ------------ ---------------- ---------
Profit for the period - - - 1,433 - - 1,433
Other comprehensive - - - - - - -
income for the period
--------- --------- ---------- ---------- ------------ ---------------- ---------
Total comprehensive
income for the period - - - 1,433 - - 1,433
Exercise of options - - (6) - - - (6)
--------- --------- ---------- ---------- ------------ ---------------- ---------
Total contributions
by and distributions
to owners of the parent,
recognised directly
in equity - - (6) - - - (6)
--------- --------- ---------- ---------- ------------ ---------------- ---------
At 30 June 2019 829 12,719 (816) 7,521 - - 20,253
At 1 July 2019 829 12,719 (816) 7,521 - - 20,253
--------- --------- ---------- ---------- ------------ ---------------- ---------
Loss for the period - - - (1,179) - - (1,179)
Other comprehensive - - - - - - -
income for the period
--------- --------- ---------- ---------- ------------ ---------------- ---------
Total comprehensive
income for the period - - - (1,179) - - (1,179)
Share based payments - - - 81 - - 81
Exercise of options - - 268 (133) - - 135
Dividend paid 2 72 - (584) - - (510)
--------- --------- ---------- ---------- ------------ ---------------- ---------
Total contributions
by and distributions
to owners of the parent,
recognised directly
in equity 2 72 268 (636) - - (294)
--------- --------- ---------- ---------- ------------ ---------------- ---------
At 31 December 2019 832 12,790 (549) 5,707 - - 18,780
--------- --------- ---------- ---------- ------------ ---------------- ---------
At 1 January 2020 832 12,790 (549) 5,707 - - 18,780
--------- --------- ---------- ---------- ------------ ---------------- ---------
Loss for the period - - - (1,071) - (61) (1,132)
Other comprehensive
income for the period - - - - 15,755 - 15,755
--------- --------- ---------- ---------- ------------ ---------------- ---------
Total comprehensive
income for the period - - - (1,071) 15,755 (61) 14,623
Share based payments - - - 68 - - 68
Acquisition of subsidiary - - - - - 286 286
Depreciation transfer
for revalued assets - - - 501 (501) - -
Total contributions
by and distributions
to owners of the parent,
recognised directly
in equity - - - 569 (501) 286 354
--------- --------- ---------- ---------- ------------ ---------------- ---------
At 30 June 2020 832 12,790 (549) 5,205 15,254 225 33,757
--------- --------- ---------- ---------- ------------ ---------------- ---------
Consolidated Statement of Cash Flows (Un-audited)(1)
For the 6 months ended 30 June 2020
Notes Un-audited Un-audited Audited
30/06/2020 30/06/2019 31/12/2019
GBP000's GBP000's GBP000's
Cash flows from operating
activities(2)
Cash inflow from continuing
operations 7,021 3,140 8,146
Finance income 18 16 59
Finance cost (1,707) (1,833) (4,090)
Income tax repaid - (83) -
------------ ------------ ------------
Net cash flows from operating
activities 9 5,332 1,240 4,115
Cash flows from investing
activities
Purchase of property, plant
and equipment (6) (404) (112)
Purchase of intangible
fixed assets (287) (192) (1,834)
Disposal of assets - 4,692 5,037
Deposit into restricted
accounts (37) (171) (857)
Equity investment in associate - - (277)
Other investment in associate (200) - (600)
Cash acquired from subsidiary 306 - -
Net cash flows used in
investing activities (224) 3,925 1,357
Cash flows from financing
activities
Payments of dividends - - (510)
Proceeds from borrowings - - -
Repayment of borrowings (166) (4,142) (6,311)
Capital repayment of leases (375) (232) (769)
Proceeds from issue of - - -
shares
Proceeds from sale of share
options - - 123
------------ ------------ ------------
Net cash flows from financing
activities (541) (4,374) (7,467)
Net increase/(decrease)
in cash and cash equivalents 4,567 790 (1,995)
Cash and cash equivalents
at beginning of period 13,667 15,662 15,662
Cash and cash equivalents
at end of period 18,234 16,452 13,667
(2) Short-term lease payments, payments for leases of low-value
assets, and variable lease payments not included in the measurement
of the lease liability are classified within operating
activities.
Notes to the Interim Accounts
For the 6 months ended 30 June 2020
1. General information and basis of preparation
Good Energy Group PLC is an AIM listed company incorporated and
domiciled in the United Kingdom under the Companies Act 2006. The
Company's registered office and its principal place of business is
Monkton Reach, Monkton Hill, Chippenham, Wiltshire, SN15 1EE.
The Interim Financial Statements were prepared by the Directors
and approved for issue on 15(th) September 2020. These Interim
Financial Statements do not comprise statutory accounts within the
meaning of section 434 of the Companies Act 2006. Statutory
accounts for the year ended 31 December 2019 were approved by the
Board of Directors on 3 June 2020 and delivered to the Registrar of
Companies. The report of the auditors on those accounts was
unqualified and did not contain statements under 498 (2) or (3) of
the Companies Act 2006 and did not contain any emphasis of
matter.
As permitted these Interim Financial Statements have been
prepared in accordance with UK AIM rules and the IAS 34, 'Interim
financial reporting' as adopted by the European Union. They should
be read in conjunction with the Annual Financial Statements for the
year ended 31 December 2019 which have been prepared in accordance
with IFRS as adopted by the European Union. The accounting policies
applied are consistent with those of the Annual Financial
Statements for the year ended 31 December 2019, as described in
those Annual Financial Statements.
Changes in accounting policies:
During the year the Group have adopted the revaluation policy
for the Generation assets under IAS 16. This policy has been
applied prospectively from the asset revaluation date of 01 Jan
2020. The Group's policy is to revalue these assets at a minimum of
every 5 years. These assets were previously held at cost less
accumulated depreciation.
Certain statements within this report are forward looking. The
expectations reflected in these statements are considered
reasonable. However, no assurance can be given that they are
correct. As these statements involve risks and uncertainties the
actual results may differ materially from those expressed or
implied by these statements.
The Interim Financial Statements have not been audited.
2. Going concern basis
With the ongoing outbreak of COVID-19 in the UK, and the
economic downturn associated with it, there is uncertainty over
future economic conditions which may decrease the ability of
customers to pay debts as they fall due. Indicators to date show a
similarity to management's base COVID impact scenario model,
performed as part of the 2019 year-end financial results. However,
management remain conscious of the potential volatility of future
macroeconomic conditions. This uncertainty means the Group may be
unable to fully repay its bondholders if 100% of this becomes due
in June 2021 and may mean the Group breaches its counterparty
covenants.
There are other financial mitigations available to management,
but these are not yet in place and therefore are not able to be
relied upon for reporting purposes as part of management's going
concern assessment at this time. Therefore, management assess that,
in line with the 2019 Annual Report, there is a material
uncertainty over the going concern of the Group.
3. Estimates
The preparation of Interim Financial Statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates.
In preparing this set of condensed Interim Financial Statements,
the significant judgements made by management in applying the
Group's accounting policies and the key sources of estimation
uncertainty were the same as those that applied to the Annual
Financial Statements for the year ended 31 December 2019.
Additional judgements are due to the revaluation of generation
assets under the revaluation policy of IAS 16, and have been
described in note 1 above.
4. Financial risk factors
The Group's activities expose it to a variety of financial
risks: market risk, currency risk, credit risk and liquidity risk.
The condensed Interim Financial Statements do not include all
financial risk management information and disclosures required in
the Annual Financial Statements. They should be read in conjunction
with the Annual Financial Statements as at 31 December 2019.
5. Equity investment
On 29th March 2020 Good Energy gained effective control of Next
Green Cars Ltd, owner of the Zap-Map brand with the drawdown of the
final tranche of convertible loan notes. Good Energy subsequently
on the 25 June converted the loan notes into 50.1% Equity to
solidify the control of the company.
The estimated net assets at the date of acquisition are stated
at their provisional fair value as set out below.
Fair value Acquisition
NBV at 31/03/2020 adjustment balance sheet
Property, plant and equipment 9 - 9
Intangible assets 80 238 318
Trade and other receivables 124 - 124
Cash and cash equivalents 306 - 306
Deferred taxation - NC - (45) (45)
ST Borrowings (46) - (46)
Trade and other payables (86) - (86)
Current Tax payable 3 - 3
Net assets acquired 390 193 583
NCI (190) (96) (286)
Net assets attributable to Group 297
Goodwill 959
Total Consideration transferred 1256
6. Trade Receivables
Unaudited Audited
As at 30/06/2020 As at 31/12/2019
GBP000s GBP000s
Gross trade receivables 34,046 33,724
Provision for impairment/non-payment
of trade receivables (9,259) (7,345)
------------------ ------------------
Net trade receivables 24,787 26,379
Prepayments and other
debtors 5,350 2,951
Other taxation 342 100
------------------ ------------------
Total 30,482 29,430
The movements on the provision for impairment and non-payment of
trade receivables is shown below:
Movement on the provision for impairment Unaudited Audited
and non-payment of trade receivables As at 30/06/2020 As at 31/12/2019
GBP000's GBP000's
Balance at 1 January 7,345 5,922
Increase in allowance for impairment/non-payment 3,512 3,674
Impairment/non-payment losses recognised (1,598) (2,251)
Balance at 31 December 9,259 7,345
Days past due
Unaudited
As at Contract <30 30-60 61-90 >91
30/06/2020 assets Current days days days days Total
GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's
Expected
credit
loss
rate - 8.6% 14.9% 23.8% 31.9% 73.8%
Estimated
total
gross
carrying
amount at
default - 15,108 5,177 3,716 2,629 7,416 34,046
Expected
credit
loss - 1,292 771 883 839 5,474 9,259
Days past due
Audited Contract Current <30 30-60 61-90 >91 Total
As at assets days days days days
31/12/2019
GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's
Expected
credit
loss
rate - 5.5% 5.5% 12.4% 19.9% 70.9%
Estimated
total
gross
carrying
amount at
default - 15,703 6,230 2,518 1,475 7,800 33,724
Expected
credit
loss - 864 343 313 294 5,531 7,345
7.Segmental analysis
H1 2020 Electricity FIT Gas Total Electricity Energy Holding Total
Supply Administration Supply Supply Generation as a Company/
Companies service Consolidated
Adjustments
GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
------------ --------------- --------- ---------- ------------ -------- ------------- ----------
Revenue 49,058 2,652 14,108 65,818 4,704 71 (3,132) 67,461
Cost of
sales (42,800) (321) (9,619) (52,740) (2,992) (15) 3,132 (52,615)
Gross
profit/(loss) 6,258 2,331 4,489 13,078 1,712 56 - 14,846
Gross margin 13% 88% 32% 20% 36% 79% 0% 22%
Admin costs (11,991) (661) (178) (1,110) (13,940)
---------- ------------ -------- ------------- ----------
Operating
profit/(loss) 1,087 1,051 (122) (1,110) 906
Net finance
costs - (1,644) - (393) (2,037)
Share of
loss of
associate - - - (12) (12)
---------- ------------ -------- ------------- ----------
Profit/(loss)
before tax 1,087 (593) (122) (1,515) (1,143)
H1 2019 Electricity FIT Gas Total Electricity Holding Total Generation Total
Supply Administration Supply Supply Generation Company/ - development
Companies Consolidated Continuing (discontinued)
Adjustments Operations
GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s GBP000s
------------ --------------- --------- ---------- ------------ ------------- ----------- --------------- ---------
Revenue 43,993 2,641 15,585 62,219 4,399 (3,074) 63,544 - 63,544
Cost of
sales(1) (36,993) (295) (10,185) (47,473) (2,026) 3,074 (46,425) (995) (47,420)
------------ --------------- --------- ---------- ------------ ------------- ----------- --------------- ---------
Gross
profit(1) 7,001 2,346 5,400 14,746 2,373 - 17,119 (995) 16,124
Gross
margin(1) 16% 89% 35% 24% 54% - 27% N/a 25%
Admin costs (11,035) (167) (1,078) (12,280) (38) (12,318)
Operating
profit/(loss) 3,711 2,206 (1,078) 4,838 (1,033) 3,806
Net finance
costs (129) (1,509) (652) (2,290) - (2,290)
---------- ------------ ------------- ----------- --------------- ---------
Profit/(loss)
before tax 3,582 697 (1,730) 2,548 (1,033) 1,516
(1) The comparative Cost of sales split between the Electricity
Supply and FIT Administration segments have been corrected for a
GBP1,189k cost that was mis-allocated to FIT Administration in the
prior year interim accounts. This has been corrected above and
allocated to the Electricity Supply segment in line with the 2019
annual report. The Gross Profit and Gross Margin for these two
segments have also been updated accordingly. This correction has
not changed the balances for the Total Supply Companies segment,
nor the Total figures.
8. Earnings per share
The calculation of basic earnings per share at 30 June 2020 was
based on a weighted average number of ordinary shares outstanding
for the six months to 30 June 2020 of 16,236,150 (for the six
months to 30 June 2019: 16,128,305 and for the full year 2019:
16,293,887 after excluding the shares held by Clarke Willmott Trust
Corporation Limited in trust for the Good Energy Group Employee
Benefit Trust.
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. When the vesting of these awards is
contingent on satisfying a service or performance condition, the
number of the potentially dilutive ordinary shares is calculated
based on the status of the condition at the end of the period.
Potentially dilutive ordinary shares are actually dilutive only
when 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 over the six month
period to 30 June 2020 was 189p (for the six months to 30 June
2019: 118p and for the full year 2019: 138p). The dilutive effect
of share-based incentives was 714,832 shares (for the six months to
30 June 2019: 163,886 shares and for the full year 2019:
513,596).
9. Net cash flows from operating activities
The operating cashflow for the six months to 30 June 2020 is an
inflow of GBP5.3m (for the six months to 30 June 2019: GBP1.2m
inflow and for the full year 2019: GBP4.1m inflow). The difference
in the cashflow between the half year 2020 and its comparative for
the same period is mainly due to timing of working capital related
items.
10. Related party transactions
As at 30th June 2020, Tidal Lagoon Power Ltd owed the Group
GBP21,153 in respect of electricity supplied to its head office.
Tidal Lagoon Power Ltd entered into a company voluntary agreement
(CVA) in 2018 and this process is ongoing. The electricity was
supplied by the Group in the ordinary course of its business and on
arm's length rates and terms. The CEO of Tidal Lagoon Power Ltd is
Mark Shorrock, the husband of Juliet Davenport.
During 2018, the Group entered into an arm's length agreement
with Martin Edwards for the provision of consultancy services
related to the evaluation of emerging renewable energy technologies
and related products and services. The agreement commenced on 1
June 2018 and can be terminated by either party on 1 months notice.
The contracted annual value of the consultancy services is
GBP18,000. Martin Edwards is a former Non-Executive Director of
Good Energy Limited, and a former director of Good Energy Group
PLC.
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END
IR SFLESLESSESU
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