TIDMGOOD
RNS Number : 4918I
Good Energy Group PLC
02 December 2022
Good Energy Group PLC
("Good Energy" or the "Company")
Acquisition of Igloo Works Limited
Good Energy, the 100% renewable electricity and energy services
provider, has acquired the entire share capital of Igloo Works
Limited ("Igloo"), an established UK based heat pump installation
business (the "Acquisition"), for an initial consideration of
GBP1.75 million.
The Acquisition represents a significant milestone in delivering
on Good Energy's strategy to accelerate its capability in
decentralised energy services, complementing its established energy
supply business. It also supports Good Energy's ambition to help
one million customers cut carbon by 2025, creating a new service in
the crucial clean, green heating space.
Strategic Highlights
-- Good Energy can now offer affordable heat pump installations,
positioning it to benefit from the rapid growth in demand for heat
pumps - the market is expected to grow to GBP11bn and at up to 40%
CAGR to 2030, with annual installs of up to 600,000 per year.
-- Igloo will be incorporated into the Good Energy brand and
form a new energy services division for the Company.
-- Services will be marketed to both Good Energy's existing
customers and new prospects. Installations are expected to drive
earnings growth in the short term, leveraging corporate overheads
to deliver effective customer acquisition and cost to serve.
-- Igloo's tested model for installation, services and
maintenance of heat pumps will initially be scaled up through Good
Energy's more than 270,000 strong current community of green-minded
customers.
-- Igloo is a fully packaged air source heat pump installer and
service provider for domestic customers with an established team of
engineers, technicians and operations specialists.
-- Igloo benefits from a lean and agile operating model with
minimal fixed overheads. It was among the first to offer heat pump
installation at an equivalent cost to a fossil fuel boiler in 2021
and places a strong emphasis on transparent pricing and a seamless
customer experience.
-- It is a virtual energy services business with no fixed
premises or other significant overheads, that is ready to scale
with rapidly growing market demand.
-- The Acquisition provides a platform to build on Good Energy's
energy service offering across other product areas including solar,
storage and electric vehicles. Good Energy will seek to accelerate
growth in these areas through further bolt-on acquisitions.
Transaction Highlights
-- Good Energy has acquired 100% of Igloo's share capital for an
initial consideration of GBP1.75 million, payable in cash on
completion (the "Initial Consideration"). Igloo is a subsidiary of
Lightbulb ES Limited.
-- For the financial year ended 31 March 2022, Igloo reported
sales of GBP1.0 million and a net loss of GBP1.2m. Gross assets as
at 31 March 2022 were GBP0.9m.
-- Working capital will be required over the coming 15 months to
allow the business to reach breakeven point and to scale. Good
Energy expects to invest GBP3.4m in working capital to reach this
point and GBP0.3m of this will contributed by the two Igloo
founders. Working capital will be provided by the parties as debt,
bearing 8% interest.
-- 2023 is a year of investment as we look to build out the
Igloo platform. Installations are expected to drive earnings
accretion from 2024, leveraging corporate overheads to deliver
effective customer acquisition and cost to serve.
-- The Initial Consideration, rest of the working capital and
any future pay-outs will be funded through the Company's existing
resources.
-- To incentivise the two founders to help grow the business,
Good Energy is putting in place a growth share plan. This involves
the issue of shares in Igloo that carry economic but not voting
rights equivalent to 15% of Igloo that vest (subject to certain
conditions) after three years (10%) and four years (5%). The value
of the shares will be determined by calculating their proportion of
Igloo's equity value. The equity value is calculated by reference
to a 6.2x multiple of Igloo's EBITDA less the value of the working
capital requirement, which is expected to be approximately GBP3.4m.
The founders will also be repaid the GBP300,000 they re-invested
plus rolled up interest.
-- The founders have a put option to sell the shares which have
vested after December 2025 while Good Energy has a call option to
buy those shares which have vested from December 2026.
Nigel Pocklington, Chief Executive of Good Energy said:
"The heat pump market is hotter than ever. As everyone feels the
crunch of gas prices, more customers than ever are eager to cut
loose from fossil fuels and take control of their energy by
switching to clean power.
"Bringing the Igloo Works team on board is a big step towards
building out our decentralised energy services and delivering on
our ambition to help a million customers cut their carbon. It also
targets a vital area where that's needed - the electrification of
heating. With Igloo's established expertise and technology Good
Energy will be right at the forefront of this transition. Acquiring
an established heat pump provider 'off the shelf' to slot into Good
Energy's existing offering helps the Company to achieve its
strategic shift towards services at pace.
"2023 will be a very exciting year for Good Energy's services
expansion, with new products being launched for home generators
alongside those for heating. We are excited to scale up an
established end-to-end business and expect material earnings growth
to be driven from H2 2024 onwards, following relatively low
investment. Good Energy will soon be the complete package for homes
and businesses looking to go green and save money."
Matt Clemow, Founder and Chief Executive of Igloo Works
said:
"We have a shared vision with Good Energy in helping customers
move away from their reliance on fossil fuels. Having clearly
demonstrated the market interest, joining a business that has the
capital and the existing customer base allows us to accelerate
towards this vision. The market for heat pump installations is
continuing to grow significantly and as one of the first to offer a
heat pump for the same price as a fossil fuelled boiler back in
2021, we see it competing with the 1.5m homes per year replacing
their boiler. We are looking forward to growing with Good Energy
and helping people make an impact on climate change."
Enquiries
Good Energy Group PLC
Nigel Pocklington, Chief Executive
Charlie Parry, Director of Corporate
Strategy & Investor Relations
Ian McKee, Head of Communications Email: press@goodenergy.co.uk
SEC Newgate UK (Financial PR)
Elisabeth Cowell / Molly Gretton Email: GoodEnergy@secnewgate.co.uk
Tel: +44 (0)7900 248213
Investec Bank plc (Nominated Adviser and Joint Broker)
Daniel Adams / Henry Reast Tel: +44 (0) 20 7597 5970
Canaccord Genuity Limited (Joint Broker)
Henry Fitzgerald - O'Connor /
Harry Rees Tel: +44 (0) 20 7523 4617
About Good Energy www.goodenergy.co.uk
Good Energy is a supplier of 100% renewable power and an
innovator in energy services. It has long term power purchase
agreements with a community of 1,700 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 power a cleaner, greener world and make
it simple to generate, share, store, use and travel by clean power.
Its ambition is to support one million homes and businesses to cut
carbon from their energy and transport used by 2025.
Good Energy is recognised as a leader in this market, through
our green kite accreditation with the London Stock Exchange, Which?
Eco Provider status and as the only energy supplier with Gold
Standard Uswitch Green Tariff Accreditation for all tariffs.
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