TIDMGOOD
RNS Number : 3432A
Good Energy Group PLC
11 September 2018
Good Energy Group PLC
Un-audited Interim Results for the 6 months ended 30 June
2018
Strong performance despite challenging market
The continuing business delivered a profit before tax of
GBP2.4m
Good Energy Group PLC ("Good Energy" or "the Company"), an
established renewable energy company supplying 100% renewable
electricity and green gas to homes and businesses, and providing
FIT services for renewable generators, today announces its interim
results for the six months ended 30 June 2018.
Period ended 30 June H1 2018 H1 2018 H1 2018 H1 2017 % Change
GBPm Continued Discontinued Reported Continued Continued
operations operations operations operations
Revenue GBP61.8m - GBP61.8m GBP52.0m +18.8%
------------ -------------- ----------- ------------ ------------
Gross Profit GBP18.4m GBP(0.1)m GBP18.3m GBP14.4m +27.8%
------------ -------------- ----------- ------------ ------------
Administration costs GBP(13.8)m GBP(0.6)m GBP(14.4)m GBP(11.4)m +21.2%
------------ -------------- ----------- ------------ ------------
Operating profit GBP4.6m GBP(0.7)m GBP3.9m GBP3.0m +52.3%
------------ -------------- ----------- ------------ ------------
Profit before tax GBP2.4m GBP(0.7)m GBP1.7m GBP0.7m +223.1%
------------ -------------- ----------- ------------ ------------
Net Debt GBP51.4m - GBP51.4m GBP60.4m -15.0%
------------ -------------- ----------- ------------ ------------
Cash balance GBP6.1m - GBP6.1m GBP8.1m -25.5%
------------ -------------- ----------- ------------ ------------
Basic earnings per share
(p) 10.8p - 6.5p 4.7p +128.5%
------------ -------------- ----------- ------------ ------------
Interim dividend per share
(p) 1.0p - 1.0p 1.0p 0.0%
------------ -------------- ----------- ------------ ------------
Juliet Davenport, Founder and Chief Executive Officer, said:
"This is a good set of results. I believe this reflects the
investment in the senior leadership team and the continued shift in
our new business strategy as we move to align to our decentralised
energy model of the future.
We continue to roll out digital improvements and upgrades which
is beginning to receive positive feedback from our customers on
their experience of Good Energy. Our customer service is getting
back on track and we continue to listen to our customers to help us
improve our future service. The brand and marketing campaign for
all of our customers is now taking shape, and will be seen in
market from this autumn.
It's an exciting time for Good Energy, with a large addressable
market of business customers and the "eco worrier" householders who
want to do their bit to stop climate change. We have some great
strategic partnerships beginning to take shape and innovative
technology solutions being delivered, all of which provide us with
strong growth opportunities for both the short term and the longer
term."
Financial highlights
Continuing operations
-- Revenue of GBP61.8m up 18.8% driven by supply volumes and
extreme weather conditions in February and March
-- Gross profit of GBP18.4m increased 27.8% with a gross profit
margin of 29.8% (H1 2017: 27.7%) driven by business and domestic
gas volumes and the implementation of the domestic price rise
earlier in the year
-- Profit before tax of GBP2.4m increased GBP1.6m despite a one
off increase in bad debt provision
-- Strong operating cash generation as billing improvements continue throughout 2018
-- Partial redemption of Good Energy Bond I following the sale of solar sites in 2017
-- Basic Earnings Per Share (EPS) increased significantly to 10.8p (H1 2017: 4.7p)
-- Interim dividend of 1.0p in line with prior years (dividend
timetable and details of scrip dividend alternative to be announced
separately in due course)
Discontinued operations
-- The discontinued generation business reported a loss of
GBP0.7m, which includes the GBP0.5m write down of our investment in
Swansea Bay Tidal Lagoon Plc. This increased from GBP0.3m in H1
2017.
-- The Board has decided to write down the value of our
investment in Swansea Bay Tidal Lagoon plc to nil, following recent
news announcements on the future of the project. The investment had
a carrying value as at 31 December 2017 of GBP0.5m.
Business highlights
2018 has been a year of transition and progress where we have
continued to perform strongly across our business segments and have
seen progress implementing our strategic priorities.
-- Performance
o Customer numbers remain broadly flat in a challenging market
while retention rates continue to improve
o Marketing spend reprioritised in the first half ahead of
planned brand relaunch in the second half
o Increased investment in business sales team delivering a
strong customer pipeline
o Focused marketing, updated tariffs and digital investment
starting to drive customer growth in business
-- Strategic
o Well positioned to deliver future growth through implementing
our key strategic goals
o Customer - focused on putting the customers at the heart of
everything that we do and striving to make clean energy the natural
choice.
-- Brand relaunch planned for the second half
o Technology - the enabler for customer engagement and
growth
-- New app and enhanced digital proposition in 2019 and rollout
of SMART technology to customers planned
o People - the right people, in the right roles to deliver our
strategy
-- Executive and Senior leadership team now in place to drive
the strategy
o Partnerships - to invest, innovate and accelerate our growth
potential
-- Delivering new customer propositions, including energy
storage, SMART metering and electric vehicles
Enquiries:
Good Energy Group PLC
Juliet Davenport, Chief Executive Tel: +44 (0)1249 766795
Charles Parry, Investor Relations
Investec Bank plc (Nominated Adviser)
Jeremy Ellis Tel: +44 (0) 20 7597 5970
Sara Hale
Alexander Ruffman
Smithfield (Financial PR)
Alex Simmons Tel: +44 (0) 20 3047 2543
Notes to editors:
-- Good Energy is a pioneering clean energy company, powering
the choice of a cleaner, greener future together with its people,
customers and shareholders. Having led the way in renewable energy
development since 1999 in areas including small and larger scale
wind turbines, solar panels, biogen and hydro, and now in
technologies like battery storage and electric vehicles, Good
Energy is making it easier for people and businesses to make
renewable energy part of their lives.
-- Good Energy powers homes and businesses with 100% renewable
electricity from a community of over 1,400 UK generators and owns
and operate two wind farms, including the UK's first commercial
wind farm, and six solar farms. In addition, Good Energy offers a
green gas product which contains 6% biomethane - gas produced here
in the UK from food waste. To make it completely carbon neutral,
emissions from the rest of the gas its customers use is balanced
through supporting verified carbon-reduction schemes in Malawi,
Vietnam and Nepal.
-- Established to tackle climate change and help deliver energy security for the UK.
-- Founded in 1999 by Juliet Davenport OBE.
-- A British company based in Chippenham, Wiltshire.
-- Good Energy's electricity comes from local, natural sources like sunshine, wind and rain.
-- In 2017 Good Energy's generation output was 87.6GWh (2016: 80.7GWh).
-- As at 30 December 2017, Good Energy had over 250,000 domestic and business customers.
Twitter: twitter.com/goodenergy
Facebook: facebook.com/goodenergy.co.uk
Instagram: Instagram.com/GoodEnergy
Website: https://group.goodenergy.co.uk/
Business review
Business update
Good Energy has had a strong start to 2018 despite ongoing
challenging conditions within the UK supply market, which continues
to witness a number of new entrants looking to compete
predominantly on price, as well as experiencing a period of
sustained rising commodity prices.
The beginning of the year was dominated by extreme winter
weather conditions, as the 'Beast from the East' delivered a
sustained cold snap for the UK, meaning the demand for gas soared
throughout this period.
We made the proactive decision to implement a price rise earlier
in 2018 than in prior years. This allowed us to protect our margins
in the short term, in order to be able to reinvest in growth
initiatives for the future.
Ahead of our planned brand relaunch in Q3 2018, investment in
marketing was lowered in the first half as we looked to reallocate
resources to provide greater impact later this year.
Billing has now improved to over 99%, which alongside investment
in customer services is continuing to improve the overall customer
experience. Customer debt and accrued income are now returning to
more normalised levels. We have increased the bad debt provision by
a one-off GBP1.4m to reflect a deterioration in the collection
rates of certain customer segments a result of the issues
surrounding the billing system implementation and billing delays in
2017.
Overall, we have delivered a strong performance in the first
half of 2018 whilst broadly maintaining overall customer numbers,
as we ensured that our customers have been at the heart of every
decision we have made and we remain on track to deliver a year of
financial progress for the Group and meet full year
expectations.
Supply
Retail Supply
The UK supply market has continued to be a challenging market
place in 2018 as a number of new entrants have entered the market,
whilst wholesale commodity prices have continued to rise,
increasing by 30% in the period.
However, despite the challenging backdrop in the retail supply
market, we have been pleased with the overall performance of the
business. Customer numbers have remained broadly flat following
good growth in 2017, whilst we are pleased to see improvements in
the overall customer retention rate, reflecting the actions we have
taken to rectify operational issues from 2017. Billing has now
improved to over 99%, which alongside investment in customer
services is continuing to improve the overall customer
experience.
Business supply
The business supply market performed well, as we increased
investment in our team, resources and overall capabilities.
Alongside this, we are implementing a new Customer Relationship
management (CRM) system from market leader Salesforce, which has
enabled the team to make a more targeted approach to growing our
customer base. Retention rates continue to be high as the business
focuses on profitable and sustainable growth. As a result, we have
seen steady improvements in customer numbers, with a strong
pipeline ready to go live and drive growth in the second half of
the year.
Ahead of our planned brand relaunch, overall marketing spend was
reduced in the period as we began to prioritise investment in the
second half of the year to deliver an enhanced customer
proposition.
Looking ahead, growth in the supply business will be focused on
acquiring customers in a targeted manner and enhancing our overall
customer experience through an improved digital proposition.
Our aim is to sustainably grow our customer base, whilst
improving retention rates and maintaining margin. We will achieve
this by having a clear and effective marketing plan and brand
promise aimed at driving customer engagement and brand awareness.
Our digital proposition will be enhanced through the launch of our
new app and improvements to our online portal and customer
switching tool.
Generation
Our generation portfolio now consists of 7 solar and 2 wind
sites, following the successful sale of Newton Downs at the end of
2017. The focus has shifted to delivering value from our existing
sites, where generation levels performed well in the period.
Looking to the future we are committed to working on our
existing sites and delivering value to stakeholders. The planned
sale of the Brynwhilach solar site is expected to complete in the
second half of 2018, which should see the site end up in community
ownership longer term.
We continue to take a prudent approach to the value of the
generation business, reflecting the underlying economics of each
asset. We constantly monitor both the performance and outlook of
all of the sites to ensure that our valuation is reflective of
current market conditions.
Strategy - 2018 and beyond
As we have continued to grow the business we have continued to
focus on our customers and delivering returns for our shareholders,
people and future holders; but in order to deliver ongoing
sustainable benefits we have to look at how we evolve as a business
and adapt to ever changing markets and environments. The world of
energy is changing, as we have seen a shift from generation, to
supply and even more as we begin to move towards empowering
decentralised energy in the future.
As a business, we strive to be at the forefront of this shift
from the old world. The old energy model of production is evolving
to a new generation of energy services, with customers and
technology driving this change. We believe this is an opportunity
to invest further in our proven capability and skill sets, to
become a leader in this new world.
Energy, or rather the consumption and control of it, is
shifting. It is not simply about the proliferation of new energy
suppliers and tariffs; it is about the way we use and generate
energy in our own homes and businesses. This means that the energy
market is changing. More suppliers and more choice, but with a
fundamental shift at its core, decentralisation.
Decentralised energy flips the axis of power, as households and
businesses begin to generate, store, manage and sell energy rather
than simply consume it. People are increasingly energy aware. Solar
panels are more affordable. SMART (Self-Monitoring Analysis and
Reporting Technology) innovations are allowing homes and businesses
to track and manage consumption. Newsworthy price hikes, and a
proliferation of price comparison sites and switching services,
mean more than ever they're paying more attention to their bills
too.
There is an environmental and ethical awakening happening across
society, with greater awareness of personal and corporate
environmental footprints.
We are committed to providing 100% renewable energy, with the
customer and their needs at our core. As we look to take the next
steps on our journey, we believe that we are in a good position to
deliver this through three key channels;
-- Technology - as the enabler for customer engagement and growth
-- People - the right people, in the right roles to deliver our strategy
-- Partnerships - to invest, innovate and accelerate our growth potential
Customer
We are focused on putting the customers at the heart of
everything that we do and striving to make clean energy the natural
choice.
Our target market is broadening. Caring about ethics and the
environment is not just for "Eco Warriors". There is a growing
number of "Eco Worriers" who want to be part of a movement to "do
the right thing", but in a way that is straightforward and
efficient; the customer experience is crucial and we believe that
by providing them with a broader proposition through an improved
digital offering, with straightforward and trusted customer service
is the answer.
Our traditional customers, Eco Warriors, had a passion for
sustainability, renewable energy and even Good Energy as a brand.
They recognised themselves as trend setters and early adopters and
needed help to spread the word and to make these choices normal.
But it was hard to be good and harder still to choose Good
Energy.
We believe that there is a significant opportunity to not only
make it easier for people to be good, but to provide them with the
opportunity to make the largest and sustainable impact on their
world. From undertaking our own market research, we have been able
to quantify this expansion and impact on our own addressable
market, with we believe provides us with a significant growth
opportunity.
In the domestic market, by expanding to those customer who are
looking to do the right thing and not just Eco Warriors, we believe
that our potential customer base increases from 2.1m households to
5m households, representing around 20% of the overall market.
Similarly in the business market, we believe that by partnering
with the right companies who share our values and are looking to
make a difference, the addressable market is around 11.5m household
equivalents, or 20% of the overall business market.
By providing both businesses and customers with the right
product and right service we will be able to reach a wider range of
customers and ultimately deliver significant long term growth.
Brand promise - delivering for our customers
In order to deliver this tangibly to our customers, we need to
provide an engaging and informative brand that lives and breathes
these ideals. We live in a world that's changing beyond all
recognition where making a difference seems impossible, but change
doesn't need endless debates or drastic action and it needn't feel
impossible. We know it is possible and that consumers are already
changing their habits; Meat-free Mondays, switching off switches,
recycling more rubbish, keeping reusable coffee cups, swerving
plastic straws and refusing to carry carrier bags.
We're committed to delivering on our promise too. 100% renewable
energy, thermostats that think, batteries that help battle
price-surges, and committed staff ready to help our customers do
the right thing.
Our brand promise is designed to drive awareness and ensure that
clean energy and Good Energy are the natural choice.
We have already begun to focus on this promise through
appointing a new digital agency, to deliver a new digital media
plan to reach our retail and business segments and our new brand
and creative agency will bring the brand promise to life and drive
up overall awareness.
Our brand relaunch is planned for Q3 2018 and we look forward to
bringing our brand to life, providing an engaging experience for
our customers and helping to make clean energy the natural
choice.
Technology
The rapid advancement and accessibility of technology has become
central to consumers experiences with brands and has become the
enabler for overall customer engagement and growth.
In order to continue developing our proposition and engagement
with both our existing and potential customers, we will be
launching a new app in Q3 2018 alongside an improved online and
digital proposition. Not only does this drive engagement with
customers, but it helps to build loyalty, enable them to better
understand and relate to our brand and ultimately lower customer
churn and drive customer lifetime value.
One of our key investments is in the new SMART metering
technology, which is allowing households and businesses to track
and manage energy consumption. Moreover, the Government has called
on all energy suppliers to install SMART meters in 53m British
homes by 2020.
Our SMART Programme will use the SMETS2 metering, the most
advanced technologies being rolled out, with a setup that will give
our home and business customers greater insight and control over
their energy use. This second generation of SMART meters start to
become a central hub within the home, helping appliances talk to
one another, customers to better understand their consumption and
for us as a business to better understand our customers. We have
entered into an agreement with Smart Metering Systems PLC (SMS) to
provide these units, which we will be trialling over the coming
months before rolling out to all of our customers in 2019.
Whilst SMART meters are the foundation of this new energy
market, it is the data they produce, distilled at the right time,
securely, with the required permissions, that provides real
customer value. The data will provide with greater insight into our
customer's behaviours, preferences and habits. It is this added
focus on data across the organisation which is allowing us to
develop better business intelligence and integration capability. A
better understanding of when our customers consume their power
allows us to refine our tariffs and purchase more effectively,
allows us to forecast and bill more accurately and provide greater
insight to improve customer service and working capital
improvements.
Data will empower consumers of all types to understand the
potential value of investment in new technologies like energy usage
control, storage, electric vehicles and renewable energy.
Ultimately technology allows us to deliver on our brand and
customer promises, become more engaged with our customers and help
to deliver a truly tailored product to address customer needs.
People
People are key to delivering this change for Good Energy.
Reshaping our senior team to provide the right leadership and
expertise to help Good Energy to match the change and the
challenges in the energy market, to drive both our technology
capability and customer experience.
We have assembled a talented team to achieve these goals; our
new Executive team, in--house digital expertise, modernised
customer care and marketing leadership will accelerate our ability
to deliver on our growth plans.
This investment, alongside new executive members in each of
these areas, is allowing us to focus on our strategic priorities,
drive growth and ultimately provide a better quality service both
now and in the future for our customers.
Following our new Executive hires in May and June, we continue
to boost our senior leadership team with a number of new hires
joining our team in IT & Digital, Marketing and Customer
Services departments. The Executive team will now be able to drive
our new strategy, delivering key initiatives for 2018/19 including
enhanced customer services, a new digital app launch and a new
brand and advertising campaign and to drive forward the new
strategy.
Alongside enhancing our capabilities, we have also continued to
introduce and implement both new and existing systems in order to
help our people do a better job for our customers and stakeholders.
Upgraded IT systems, new workplace meeting environments and
Salesforce CRM capabilities are all providing our people with the
tools, platform and environment to produce excellent output and
provide an improved experience for our customers on a daily
basis.
Partnerships
We have developed a platform to accelerate innovation and bring
new products and services to market faster for the benefit of our
customers - through a range of partnerships in academia and
business. We believe that partnering with the right companies and
institutions is the most effective and efficient way to deliver
innovative future technologies to our customers and the market.
These high--profile strategic partnerships, with leading lights
in industry, technology and research, are beginning to deliver new
customer propositions, which include energy storage, SMART metering
and Electric vehicles. These continue to progress well and we are
already collaborating with Honda, the Eden Project, Salford
University and the London School of Economics and several more in
discussion. In the medium term, we are continuing to invest in
future products and services for empowering home and business users
through improved generation, service and analytics, to be a key
part of a future decentralised energy market
Alongside these partnerships, we are creating in--house
intellectual property generation to build new systems and
methodologies, which brings value to the market whilst ensuring
that our customers share in the upside of these technologies. We
are excited as a team in the progress of our journey towards
building the technology required to deliver the new generation of
energy and empowering customers through technology and
innovation.
Summary
Overall the first half of 2018 was a period of strong
performance, as we invested in our senior leadership team and
technological capabilities to build the platform to ensure that we
are well positioned for future growth and the decentralised
market
The business has continued to demonstrate resilience to
challenging conditions in the supply market, through diversified
activities and we are well placed for developing opportunities in
tomorrow's distributed, technology enabled, but uncertain
world.
We continue to expect 2018 to be a year of financial progress
for the group, as we continue to reshape the business to reflect
our view of the future market, as we continue to lead the change
from old energy to the new generation.
Financial performance
Profit and loss
Revenue increased by 18.8% in the period to GBP61.8m (H1 2017:
GBP52.0m) driven by supply volumes following extreme weather
conditions at the start of the year, while gross profit increased
27.8% to GBP18.4m (H1 2017: GBP14.4m) driven by business and
domestic gas volumes and the implementation of the domestic price
rise earlier in the year.
Cost of sales increased by 15.4% to GBP43.4m (H1 2017:
GBP37.6m). This was predominantly driven by a market wide increase
in the wholesale commodity prices.
Gross profit margin increased to 29.8% (H1 2017: 27.7%) and
operating margin grew strongly to 7.5% (H1: 2017 5.8%).
Administration costs increased 21.2% to GBP13.8m (H1 2017:
GBP11.4m) primarily because of a one-off bad debt provision
increase of GBP1.4m and continued investment in overall
capabilities and resourcing. Finance costs decreased by 1.7% to
GBP2.3m, as we saw the impact of lower borrowing rates and a
reduction in overall net debt.
Profit before tax increased by 223.1% to GBP2.4m (H1 2017:
GBP0.7m).
Cash Flow and Cash Generation
We continue to have a cash generative business model with
GBP4.5m cash generated from operations in a period of billing
improvement, an increase from a GBP5.9m outflow caused by the
operational issues in the corresponding period in 2017. Working
capital movements are in line with seasonal trends where demand is
higher in the first half of the year.
There was a net outflow of GBP8.5m from financing activities as
a result of the partial redemption of Good Energy Bond I following
the sale of Newton Downs solar site in 2017, and the repayment of
the bank facility supporting the discontinued development
business.
Following the strong operational cash performance and repayment
of our first bond, overall cash and cash equivalents decreased
GBP7.7m in the period to GBP6.1m whilst reducing our overall levels
of net debt.
Funding and Debt
Good Energy continues to have good access to a range of funding
on good terms to support our growth.
Good Energy Bond I was partially redeemed in 2018, with GBP3.6m
continuing in Good Energy Bond I at a lower rate of 4.25% and
GBP4.3m was repaid in March 2018. Following the repayment of Bond
I, the reduced interest cost on Bond II will be around GBP0.3m
lower on a comparable annualised basis and is a positive step
towards lowering the Company's ongoing financing costs and reducing
the gearing ratio over the medium term.
Net debt decreased 15.0% to GBP51.4m (H1 2017: GBP60.4m)
following the bond repayment with gearing ratio decreasing to 72.8%
down from 73.6%.
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.
Billing & Customer Debt
Following the implementation issues of 2017, the billing system
is now fully operational with overall billing at 99% and cash
collections are improving.
Overall customer receivables increased by GBP3.5m to GBP31.0m
from December 2017 driven by higher consumption levels following
extreme weather conditions and implementation of the domestic price
rise early in the year. We are now beginning to see debt and
accrued income returning to more normalised levels.
A systematic review of all outstanding customer balances has
been undertaken in the first half of 2018, following the billing
delays in 2017.
In order to address these outstanding balances, we have utilised
both internal and specialist collections agency resources, as well
as improving internal customer services procedures to accelerate
our collections. This review highlighted the impact the billing
delays had in the deterioration in the collection rates of certain
customer accounts where debt was outstanding at the end of
2017.
As a result of this activity, we have increased the bad debt
provision by a one off GBP1.4m in the period, in respect of these
specific segments, reflecting the level of risk outstanding above
our normal bad debt provision.
Earnings and dividend
Basic Earnings per share increased to 10.8p from 4.7p as a
result of the strong performance and increased profitability. In
line with prior years and the Group's policy, an interim dividend
of 1.0p has been declared.
Investment valuations
As part of our overall financial review, we continue to monitor
the fair value of all of 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 write down
the value of our investment in Swansea Bay Tidal Lagoon plc to Nil,
following recent news announcements on government position on
offering a contract for difference to the project. The Board have
decided that due to the uncertainty regarding ongoing investment in
the project and the likelihood of realising a return on the initial
investment, it is prudent to reflect this in a lower valuation.
Under IFRS 13, this impairment would not be permanent and could be
uplifted again should the circumstances change.
The investment had a carrying value as at 31 December 2017 of
GBP0.5m and will be reported under Discontinued Operations.
Financial outlook
In 2018, profits are expected to be weighted towards the first
half of the year, in line with cyclical trends and exacerbated by
the warmer weather throughout the summer, leading to lower overall
consumption. Increased investment is planned for the second half,
including the brand relaunch and digital and online capabilities in
order to drive future growth.
Overall, we continue to expect 2018 to be a year of financial
progress for the Group.
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 (Un-audited)
For the 6 months ended 30 June 2018
Notes Un-audited Un-audited Audited
6 months 6 months 12 months
to 30/06/2018 to 30/06/2017 to 31/12/2017
GBP000's GBP000's GBP000's
REVENUE 61,820 52,038 104,509
Cost of Sales (43,414) (37,633) (75,178)
--------------- --------------- ---------------
GROSS PROFIT 18,406 14,405 29,331
Administrative Expenses (13,780) (11,368) (23,739)
--------------- --------------- ---------------
OPERATING PROFIT 4,626 3,037 5,592
Finance Income 5 19 2
Finance Costs (2,272) (2,326) (4,860)
--------------- --------------- ---------------
PROFIT BEFORE TAX 2,359 730 734
Taxation (619) 28 566
--------------- --------------- ---------------
PROFIT FOR THE PERIOD FROM CONTINUING
OPERATIONS 1,740 758 1,300
DISCONTINUED OPERATIONS
Loss from discontinued operations,
after tax 6 (698) (262) (4,033)
--------------- --------------- ---------------
PROFIT/(LOSS) FOR THE PERIOD 1,042 496 (2,733)
Other comprehensive income for the - - -
period, net of tax
--------------- --------------- ---------------
TOTAL COMPREHENSIVE INCOME FOR THE
PERIOD ATTRIBUTABLE TO OWNERS OF THE
PARENT COMPANY 1,042 496 (2,733)
Earnings per share - Basic 8 6.5p 3.1p (17.1p)
- Diluted 8 6.4p 2.9p (17.1p)
Earnings per share from
continuing operations - Basic 8 10.8p 4.7p 8.1p
- Diluted 8 10.7p 4.5p 7.7p
Consolidated Statement of Financial Position (Un-audited)
As at 30 June 2018
Notes Un-audited Un-audited Audited
30/06/2018 30/06/2017 31/12/2017
GBP000's GBP000's GBP000's
ASSETS
Non-current assets
Property, plant and equipment 51,829 62,393 52,973
Intangible assets 3,499 3,694 3,544
Restricted deposit assets 4,168 3,085 3,220
Available-for-sale financial
assets 5 - 500 500
------ ------------ ------------ ------------
Total non-current assets 59,496 69,672 60,237
Current assets
Inventories 10,284 6,676 9,881
Trade and other receivables 35,211 25,581 32,698
Cash and cash equivalents 6,059 8,132 13,720
Current assets held for sale 6 5,453 5,952 5,553
------ ------------ ------------ ------------
Total current assets 57,007 46,341 61,852
------ ------------ ------------ ------------
TOTAL ASSETS 116,503 116,013 122,089
------ ------------ ------------ ------------
EQUITY AND LIABILITIES
Capital and reserves
Called up share capital 826 825 826
Share premium account 12,652 12,546 12,652
EBT shares (804) (1,015) (946)
Retained earnings 6,526 9,288 5,553
------ ------------ ------------ ------------
Total equity attributable
to members of the parent company 19,200 21,644 18,085
Non-current liabilities
Deferred taxation 352 600 145
Borrowings 59,132 57,413 56,044
Provision for liabilities 1,250 - 1,250
------ ------------ ------------ ------------
Total non-current liabilities 60,734 58,013 57,439
Current liabilities
Borrowings 2,445 14,226 13,894
Trade and other payables 34,124 22,130 32,671
Total current liabilities 36,569 36,356 46,565
------ ------------ ------------ ------------
Total liabilities 97,303 94,369 104,004
------ ------------ ------------ ------------
TOTAL EQUITY AND LIABILITIES 116,503 116,013 122,089
------ ------------ ------------ ------------
Consolidated Statement of Changes in Equity (Un-audited)
For the 6 months ended 30 June 2018
Share Share Other Retained Total
Capital Premium Reserves Earnings
GBP000's GBP000's GBP000's GBP000's GBP000's
--------- --------- ---------- ---------- ---------
At 1 January 2017 825 12,546 (1,015) 8,689 21,045
--------- --------- ---------- ---------- ---------
Profit for the period - - - 496 496
Other comprehensive income for - - - - -
the period
--------- --------- ---------- ---------- ---------
Total comprehensive income for
the period - - - 496 496
Share based payments - - - 148 148
Tax charge relating to share
option scheme - - - (45) (45)
--------- --------- ---------- ---------- ---------
Total contributions by and distributions
to owners of the parent, recognised
directly in equity - - - 103 103
--------- --------- ---------- ---------- ---------
At 30 June 2017 825 12,546 (1,015) 9,288 21,644
At 1 July 2017 825 12,546 (1,015) 9,288 21,644
--------- --------- ---------- ---------- ---------
Loss for the period - - - (3,229) (3,229)
Other comprehensive income for - - - - -
the period
--------- --------- ---------- ---------- ---------
Total comprehensive income for
the period - - - (3,229) (3,229)
Share based payments - - - 115 115
Tax credit relating to share
option scheme - - - (61) (61)
Issue of ordinary shares 1 106 - - 107
Exercise of options - - 69 (31) 38
Dividend paid - - - (529) (529)
--------- --------- ---------- ---------- ---------
Total contributions by and distributions
to owners of the parent, recognised
directly in equity 1 106 69 (506) (330)
--------- --------- ---------- ---------- ---------
At 31 December 2017 826 12,652 (946) 5,553 18,085
--------- --------- ---------- ---------- ---------
At 1 January 2018 826 12,652 (946) 5,553 18,085
--------- --------- ---------- ---------- ---------
Profit for the period - - - 1,042 1,042
Other comprehensive income for - - - - -
the period
--------- --------- ---------- ---------- ---------
Total comprehensive income for
the period - - - 1,042 1,042
Share based payments - - - 127 127
Tax charge relating to share
option scheme - - - (69) (69)
Sale of shares by EBT - - 142 (127) 15
--------- --------- ---------- ---------- ---------
Total contributions by and distributions
to owners of the parent, recognised
directly in equity - - 142 (69) 73
--------- --------- ---------- ---------- ---------
At 30 June 2018 826 12,652 (804) 6,526 19,200
--------- --------- ---------- ---------- ---------
Consolidated Statement of Cash Flows (Un-audited)
For the 6 months ended 30 June 2018
Notes Un-audited Un-audited Audited
30/06/2018 30/06/2017 31/12/2017
GBP000's GBP000's GBP000's
Cash flows from operating
activities
Cash inflow from continuing
operations 4,460 (5,533) 4,040
Cash outflow from discontinued
operations 6 - (403) (4,013)
Finance income 5 19 2
Finance cost (2,111) (2,696) (5,125)
Income tax repaid - 167 167
------------ ------------ ------------
Net cash flows from operating
activities 9 2,354 (8,446) (4,929)
Cash flows from investing
activities
Purchase of property, plant
and equipment (135) (5,568) (4,828)
Purchase of intangible fixed
assets (429) (435) (752)
Deposit into restricted accounts (948) (254) (389)
Disposal of subsidiaries - 5,795 9,769
Net cash flows used in investing
activities (1,512) (462) 3,800
Cash flows from financing
activities
Payments of dividends - - (459)
Proceeds from borrowings 1,147 11,408 19,646
Repayment of borrowings (9,620) (595) (10,518)
Capital repayment of finance
leases (45) (62) (147)
Sale of own shares 15 - 38
------------ ------------ ------------
Net cash flows from financing
activities (8,503) 10,751 8,560
Net increase/(decrease) in
cash and cash equivalents (7,661) 1,843 7,431
Cash and cash equivalents
at beginning of period 13,720 6,289 6,289
Cash and cash equivalents
at end of period 6,059 8,132 13,720
Notes to the Interim Accounts
For the 6 months ended 30 June 2018
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 11(th) September 2018. 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 2017 were approved by the
Board of Directors on 11 April 2018 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 2017 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 2017, as described in
those Annual Financial Statements. The significant new accounting
standards or amendments to existing standards which have become
effective during the year are:-
IFRS 9 - Financial instruments
The Group recognises an allowance for expected credit losses
(ECLs) for all debt instruments not held at fair value through
profit or loss. For trade receivables and contract assets, the
Group applies a simplified approach in calculating ECLs. Therefore,
the Group does not track changes in credit risk, but instead
recognises a loss allowance based on lifetime ECLs at each
reporting date. The Group has established a provision matrix that
is based on its historical credit loss experience, adjusted for
forward-looking factors specific to the debtors and the economic
environment.
The loss allowance policy applied in the Annual Financial
Statements for the year ended 31 December 2017 is consistent with
the new IFRS 9 standard, therefore there is no change in valuation
to note to either the current or comparative periods as a result of
the application of the new accounting policy.
IFRS 15 - Revenue from Contracts with Customers
IFRS 15 establishes a five-step model to account for revenue
arising from contracts with customers and requires that revenue be
recognised at an amount that reflects the consideration to which an
entity expects to be entitled in exchange for transferring goods or
services to a customer.
IFRS 15 requires entities to exercise judgement, taking into
consideration all of the relevant facts and circumstances when
applying each step of the model to contracts with their customers.
The standard also specifies the accounting for the incremental
costs of obtaining a contract and the costs directly related to
fulfilling a contract. In addition, the standard requires extensive
disclosures and these will be included in the Annual Financial
Statements for the full year.
Management have carried out a detailed review of the nature and
effect of the changes to IFRS 15 on the existing contracts with
customers and concluded that there is no material impact on the
financial statements of the Group compared to the previous
accounting policy.
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
The Group meets its day to day capital requirements through
positive cash balances held on deposit or through its bank
facilities. The current economic conditions continue to create
opportunities and uncertainties which can impact the level of
demand for the Group's products and the availability of bank
finance for the foreseeable future. The Group's forecasts and
projections, taking account of the possible changes in trading
performance, show that the Group should be able to operate within
the level of its current facilities.
After making enquiries, the Directors have a reasonable
expectation that the group has adequate resources to continue in
operational existence for the foreseeable future. The Group
therefore continues to adopt the going concern basis in preparing
its consolidated financial statements.
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 2017.
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 2017.
5. Equity investment
Available-for-sale financial assets GBPnil (for the six months
to 30 June 2017: GBP500,000 and for the full year 2017: GBP500,000)
relate to an investment in the unlisted securities of Swansea Bay
Tidal Lagoon plc.
As a result of periodic monitoring of the fair value of the
Group's assets, the Board has decided to write down the value of
our investment in Swansea Bay Tidal Lagoon plc to Nil, following
recent news announcements on the government position on offering a
Contract for Difference (CFD) to the project. The impairment of the
value of the investment is disclosed in discontinued
operations.
6. Discontinued operations
As announced in the previous financial year, the Group is
discontinuing its Generation Development activities and continues
to explore a number of potential options to realise value from the
portfolio of development sites. The results of this segment are
shown in the segmental analysis of the Group statement of
comprehensive income in note 7.
The major class of assets of the Generation Development segment
relate solely to Generation development site inventories. These
assets are included in current assets held for sale on the
consolidated statement of financial position and at 30 June 2018
are valued at GBP1.3m (for the six months to 30 June 2017: GBP6.0m
and for the full year 2017: GBP1.3m).
7. Segmental analysis
H1 2018 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 GBP'000's
------------ --------------- --------- ---------- ------------ ------------- ----------- --------------- ---------
Revenue 40,096 2,418 16,932 59,446 4,412 (2,038) 61,820 8 61,828
Cost of sales (30,715) (1,824) (10,677) (43,216) (2,236) 2,038 (43,414) (123) (43,537)
------------ --------------- --------- ---------- ------------ ------------- ----------- --------------- ---------
Gross profit 9,381 594 6,255 16,230 2,176 - 18,406 (115) 18,291
Gross margin 23% 25% 37% 27% 49% 0% 30% n/a 30%
Admin costs (11,750) (163) (1,867) (13,780) (583) (14,363)
Operating
profit/(loss) 4,480 2,013 (1,867) 4,626 (698) 3,928
Net finance
costs 2 (1,847) (422) (2,267) - (2,267)
---------- ------------ ------------- ----------- --------------- ---------
Profit/(loss)
before tax 4,482 166 (2,289) 2,359 (698) 1,661
Taxation (596) (39) 16 (619) - (619)
---------- ------------ ------------- ----------- --------------- ---------
Net
profit/(loss)
for the
period 3,886 127 (2,273) 1,740 (698) 1,042
Depreciation
&
amortisation (583) (1,277) (69) (1,929) - (1,929)
EBITDA 5,063 3,290 (1,798) 6,555 (698) 5,857
EBITDA is calculated using operating profit before exceptional
costs and any depreciation or amortisation charges in the year.
H1 2017 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 GBP'000's GBP000s
------------ --------------- -------- ---------- ------------ ------------- ----------- --------------- ---------
Revenue 32,407 2,619 14,340 49,366 4,377 (1,705) 52,038 8 52,046
Cost of sales (25,949) (1,576) (9,386) (36,911) (2,427) 1,705 (37,633) 70 (37,563)
------------ --------------- -------- ---------- ------------ ------------- ----------- --------------- ---------
Gross
profit/(loss) 6,458 1,043 4,954 12,455 1,950 - 14,405 78 14,483
Gross margin 20% 40% 35% 25% 45% 0% 28% n/a 28%
Admin costs (10,478) 579 (1,469) (11,368) (340) (11,708)
Operating
profit/(loss) 1,977 2,529 (1,469) 3,037 (262) 2,775
Net finance
costs (28) (2,265) (14) (2,307) - (2,307)
---------- ------------ ------------- ----------- --------------- ---------
Profit/(loss)
before tax 1,949 264 (1,483) 730 (262) 468
Taxation (6) 103 (69) 28 - 28
---------- ------------ ------------- ----------- --------------- ---------
Net
profit/(loss)
for the
period 1,943 367 (1,552) 758 (262) 496
Depreciation
&
amortisation (654) (1,310) 286 (1,678) (1) (1,679)
EBITDA 2,631 3,839 (1,755) 4,715 (261) 4,454
8. Earnings per share
The calculation of basic earnings per share at 30 June 2018 was
based on a weighted average number of ordinary shares outstanding
for the six months to 30 June 2018 of 16,063,243 (for the six
months to 30 June 2017: 15,988,964 and for the full year 2017:
16,006,272) 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 2018 was 140p (for the six months to 30 June
2017: 250p and for the full year 2017: 230p). The dilutive effect
of share-based incentives was 199,221 shares (for the six months to
30 June 2017: 866,206 shares and for the full year 2017: nil).
9. Net cash flows from operating activities
The operating cashflow for the six months to 30 June 2018 is an
inflow of GBP2.0m (for the six months to 30 June 2017: GBP8.4m
outflow and for the full year 2017: GBP4.9m outflow). The
difference in the cashflow between the half year 2018 and it's
comparative for the same period is mainly due to trade receivables
and accrued income which were temporarily elevated as a result of
the new billing system implementation.
10. Related party transactions
During the period, 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 non-executive director
of Good Energy Ltd and a former director of Good Energy Group
plc.
As at 30th June 2018, Tidal Lagoon Power Ltd owed the Group
GBP22,987 in respect of electricity supplied to its head office.
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.
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
IR FMGMLZGKGRZZ
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September 11, 2018 02:01 ET (06:01 GMT)
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