REG - Good Energy Group - Un-audited Final Results 2022
28/03/2023 07:00
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RNS Number : 3813U Good Energy Group PLC 28 March 2023
Good Energy Group PLC
("Good Energy" or "the Company")
Un-audited results for the 12 months ended 31 December 2022
Executing our strategy by transitioning our business to a green energy
services model
Good Energy, the 100% renewable electricity supplier and innovative energy
services provider, today announces its preliminary results for the twelve
months ended 31 December 2022.
Financial highlights
· Revenue increased 70.3% to £248.7m (2021: £146.0m) driven by
rising wholesale costs which have led price rises throughout the year.
· Government support for customers mitigated impact of very high
commodity driven price points across the industry in Q4 2022.
· 10.7% increase in gross profit to £29.9m (2021: £27.0m) with a
gross profit margin of 12.0% (2021: 18.5%). The decline in underlying margins
reflects that pricing, whilst rising, could not keep pace with rapidly
increasing wholesale costs through H1 2022 (price cap).
· Profit before tax of £8.5m (2021: £1.8m) including net £4.9m
recognised value on the Zap Map investment. Underlying PBT in the period was
£3.1m with EBITDA of £4.4m.
· Following the recent funding round, Zap-Map has been
deconsolidated from full year PBT figures, FY 2022 included a loss of £2.0m
for Zap-Map and a revaluation uplift of £ 6.9m.
· Reported profit after tax for the period of £9.2m (2021:
£1.6m).
· Reported earnings per share of 59.7p (2021: -20.7p).
· Cash and cash equivalents at the end of Dec 2022 were £24.5m,
with a further £8.4m in restricted deposit accounts. Within restricted
deposits, £4.5m relates to Government support scheme monies received in late
December for application to business and domestic customer accounts in January
· Following a good operational performance in 2022 and reflecting
our confidence in the ongoing business, the Board recommend a final dividend
for 2022 of 2.0p per ordinary share, taking our full year dividend to 2.75p
(2021: 2.55p)
Operational highlights
· Successful execution on our strategy to transition to a leading
green energy services company:
o Sale of 47.5MW generation portfolio in January 2022 for £21.2m to
facilitate future investment and M&A.
o Acquisition of heat pump and solar installation business, Igloo Works, in
December 2022, creating a new high margin revenue stream.
o Completed Zap-Map £9m series A fundraise with Fleetcor, valuing Zap-Map
at £26.3m post money equity value.
o 63% increase in Zap-Map registered users to 550,000, reflecting continued
strong growth in electric vehicle uptake.
· Renewable Supply business goals for 2022 achieved:
o New product launched for businesses, matching their supply demands
directly with generators. This reduces our exposure to wholesale markets and
gives our customers comfort as to the provenance of their renewable
electricity.
o Achieved target to install 13,000 smart meters during 2022, increasing
total number of smart meters installed to date to over 40,000 (47% of our
customer's meter points).
Post period end and outlook highlights
· Ambition to be the UK's leading provider of green energy
services, with the ability to install green energy infrastructure and provide
the best tariffs for the energy produced by our customers:
o Launched a new market leading smart export tariff for households with
solar panels in March 2023.
o First domestic rooftop solar installation completed, following Igloo
acquisition.
· We assess that energy services represents a £5 - £10 billion
market opportunity.(( i (#_edn1) ))
· Strategy is focused on driving high margin, low capital intensity
sales growth.
· Further M&A is a core near term focus, following recent buy
and build acquisitions.
· Our community of green-minded domestic customers provide a strong
initial pipeline for acquired businesses and enquiries to date following the
Igloo acquisition have been highly encouraging.
· Complemented through organic growth from product diversification
including new generation product development and our ongoing relationship with
Zap-Map and electric vehicle drivers.
· Trading in 2023 has started in line with management expectations.
Energy services continues to make good early progress. Wholesale power prices
are softening but remain elevated and we anticipate the end of Government
support schemes this month.
Nigel Pocklington, Chief Executive Officer of Good Energy, said:
"2022 was an enormously challenging year in energy. The knock-on effects of
the Ukraine conflict saw energy prices surge, driving increased costs which we
were forced to pass on to supply customers in the form of price rises.
Therefore, the vast majority of Good Energy's positive performance came from
areas other than energy supply.
"We have made significant strides in delivering on our strategy to become a
leader in green energy services, and this momentum has continued with
strategic milestones already achieved in the first quarter of 2023.
"As the UK's second biggest solar power payments company with more generator
customers than supply, and which paid out a record amount to renewable
generators in 2022, we are already the go-to energy company for solar
generators.
"There is a potential £5 to £10 billion growth market in clean energy
technology installations among climate conscious customers. We are ideally
positioned for this, and are kitting homes out homes with solar panels and
batteries now and plan to install 12,000 heat pumps by 2026.
A video overview of the results from the Chief Executive Officer, Nigel
Pocklington, is available to watch here:
https://www.fmp-tv.co.uk/2023/03/28/good-energy-strong-momentum-in-year-end-results/
(https://www.fmp-tv.co.uk/2023/03/28/good-energy-strong-momentum-in-year-end-results/)
Enquiries
Good Energy Group PLC Email: press@goodenergy.co.uk (mailto:press@goodenergy.co.uk)
Nigel Pocklington, Chief Executive
Charlie Parry, Director of Corporate Strategy & Investor Relations
Ian McKee, Head of Communications
SEC Newgate UK Email: GoodEnergy@secnewgate.co.uk (mailto:GoodEnergy@secnewgate.co.uk)
Elisabeth Cowell / Molly Gretton Tel: +44 (0)7900 248213
Investec Bank plc (Nominated Adviser and Joint Broker)
Henry Reast / James Rudd Tel: +44 (0) 20 7597 5970
Canaccord Genuity Limited (Joint Broker) Tel: +44 (0) 20 7523 4617
Henry Fitzgerald - O'Connor / Harry Rees
About Good Energy www.goodenergy.co.uk (http://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 green kite
accreditation with the London Stock Exchange, Which? Eco Provider status and
Gold Standard Uswitch Green Tariff Accreditation for all tariffs.
Chair's review
Overview
Setting out in 2022 we aimed to make progress on our strategy across supply,
generation and transport to deliver on our ambition of helping one million
homes and businesses cut their carbon by 2025. We made substantial strides
in executing our strategy by funding Zap-Map's growth, investing in generation
services by launching smart export and acquiring a clean technology
installation business, and maintaining a trusted truly green supply business
against a very volatile backdrop.
We have entered 2023 a very different business to the one we were 12 months
before, having taken these tangible steps in our transition to become a green
energy services business during the year under review. This, together with
the fact that we remain substantially debt free and have a strong cash
position for continued investment, is of benefit to all our stakeholders.
For our customers, they have access to a trusted partner which can now
facilitate their ambition to generate green power for their home, and which
can also ensure they earn more from the power they generate. For our
investors, they have exposure to a highly exciting growth market and are
benefitting from the value creation achieved through our investment into
Zap-Map. Plus, this growth and expansion is underpinned by a stable energy
supply business.
I opened my statement last year noting the tumultuous prior year we had
witnessed. 2021 was dominated by the continuation of the global pandemic and
national lockdowns and 2022 saw this volatility continue, driven by Russia's
aggression in Ukraine and the ensuing global supply chain issues.
Forward prices for electricity and gas hit extraordinary levels, hitting highs
of over 10 times the norms of recent years. ii (#_edn2) As a supplier which
buys all of its power from renewable sources, due to the mechanics of the UK
market Good Energy was far from immune from the knock-on effects. These
increased costs drove a 70.7% increase in revenues and forced multiple price
increases upon customers.
The rising costs emphasised the need to shift away from fossil fuels and
encouraged people to insulate themselves from the high prices by switching to
solar power, with double the number of rooftop installations taking place in
the year versus 2021. iii (#_edn3)
Amidst this volatile backdrop, we exited the year in a strong position. We
have a robust balance sheet, continue to invest in high growth markets and are
helping more homes and businesses save money and decarbonise.
Strategic developments
Despite the challenging market context, 2022 was a transformational year for
Good Energy. We are well positioned for high margin sales growth from green
energy services going forward. We now have a strong platform from which to
execute on an extremely compelling opportunity, and we are excited to take
this part of the business to the next level in 2023.
In January, we completed the sale of our generation assets. This provided us
with a robust and substantially debt-free balance sheet as well as funds to
invest in our green energy services proposition and in turn, the next wave of
decarbonisation.
Not long after, we participated in a £9m Series A fundraise by Zap-Map, the
UK's leading electric vehicle mapping platform. Fleetcor, one of the world's
leading business payment firms took a minority stake, as they look to build on
their leading fuel card offering and help businesses transition to electric
vehicles. This deal values Zap-Map at £26.3m post money and adds non-cash
profit to our balance sheet.
In December, we completed the acquisition of Igloo Works, an established UK
based heat pump installation business with capability for solar installs too.
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. We
expect to see further acquisitions in the domestic energy services space and
we look forward to updating the market on progress in due course.
Capital allocation
Our substantially debt free position and strong cash balance allows us to
continue to invest for sustainable growth, including further acquisitions in
energy services and our capital allocation policy reflects this. However, we
recognise the importance of a dividend to many shareholders.
Following a good operational performance in 2022 and reflecting our confidence
in the ongoing business, the Board recommend a final dividend for 2022 of 2.0p
per ordinary share, taking our full year dividend to 2.75p (2021: 2.55p).
Board
At the AGM in June, Juliet Davenport, founder, former CEO and then
Non-Executive Director stood down from the Good Energy Board. I want to take
this opportunity to thank Juliet for her enormous contribution to the wider
energy transition. On behalf of the Board, I want to thank her deeply for
her contribution and look forward to seeing her continue to inspire and lead
the way towards a cleaner, greener future.
Looking ahead
We are seeing a softening in volatility of the energy market currently. Good
Energy remains well positioned both from a shorter-term balance sheet
perspective, but also from a longer-term strategic growth perspective. The
climate crisis already provided urgency to transition to a clean energy
system. The current economic and political turmoil provides geopolitical
urgency to achieve greater energy independence too.
The opportunity ahead of us is a compelling one. We are focussed on fast
growth areas, with good margin and low working capital intensity. We have
identified a target addressable market of almost 900,000 households in the
next two years, which equates to a c. £5 billion target addressable market.
Including the medium term meaningful green actions households, this
increases to a c. £10 billion opportunity. Our engaged customer base of
green-minded households provides us with a strong initial pipeline for our
energy services and the interest in our new services from this community has
been highly encouraging.
Good Energy has a more powerful role than ever to play in accelerating the
transition to renewables and we look forward to providing updates during what
we expect to be another busy year for your company.
Will Whitehorn, Chair
CEO's review
Our future energy system will not be a handful of suppliers billing customers
for energy produced by a few generators. It will be a decentralised,
digitised, cleaner, greener grid where homes and businesses play an active
role. Generating, sharing, storing, using and travelling with clean power.
This is a vision Good Energy has driven towards for years. And its urgency
was more apparent than ever in 2022 as the volatility of our current
centralised largely fossil fuel-based system was abundantly clear by surging
costs and rising bills for customers.
This future energy system is one in which Good Energy is already a major
player and our goal is to become the leading green energy services company in
the UK. As the UK's largest voluntary Feed-in Tariff (FiT) administrator,
and second largest overall, we are the only energy supplier today which has
more customers generating their own power than buying ours. With over
180,000 FiT customers we have more than 20% market share of the biggest
decentralised energy scheme in the UK today.
Robust financial performance and strong cash balance
During the energy crisis, which took hold in late 2021 and did not let up
throughout 2022, Good Energy continued to show robustness. We sold our two
wind and six solar farm generation assets early in the year, a departure from
our past enabling us to invest in our future strategy and the next wave of
decarbonisation. The cash, alongside our prudent approach to hedging
throughout the year, has resulted in a strong balance sheet.
Our supply business has been a steady ship in choppy waters. After two years
without a price change we implemented several throughout 2022, moving our
prices as the market required. We called for government support on bills,
seeing the onset of extraordinary rises during the critical winter months.
This came through the Energy Bill Support Scheme and the later announced
Energy Price Guarantee, in addition to the Energy Bill Discount Scheme for
businesses. Implementing these schemes often at very short notice was a not
insignificant task and we are proud to have done so efficiently and
effectively. With clear communication to customers, we maintained the trust
we have built over years and this will be essential as we evolve into a green
energy services business.
Post period end, we are pleased to have signed our largest ever deal with
renewable energy giant Ørsted to provide clean power to UK homes and
businesses. Utilising the power from one of the world's largest offshore
windfarms, Ørsted's Hornsea 1 offshore windfarm in the North Sea, the three
year deal will provide 110GWh per annum, the most significant in terms of
volume in Good Energy's history - and enough for almost 38,000 homes. This
is testament to the strong working relationship we have built with Ørsted and
speaks to the strong partnership approach we have.
Green shoots for decentralised energy
Through the challenges of 2022 there were some green shoots for a cleaner,
decentralised energy system. 2022 saw a surge in rooftop solar
installations, more than doubling the year previous to hit highs not seen
since the peak of the FiT scheme in 2015. iv (#_edn4) This was largely
driven by customers looking to curb their bills by gaining energy independence
and took place without an especially competitive export tariff market. The
rates offered under the government's replacement to FiT, the Smart Export
Guarantee, were especially low in the context of high import prices.
The rapidly growing rooftop solar market is one Good Energy is perfectly
positioned for and we have launched new tariffs to ensure more people are
rewarded fairly for their switch to green energy sources. We launched smart
export for Feed-in Tariff customers towards the end of 2022, meaning these
customers could earn more for their power than the deemed 50% rate for export
under the scheme. And now we have launched Power for Good, a leading
variable export tariff for households with solar power, offering a better
export rate than under FiT or the standard rates under the government's Smart
Export Guarantee.
Igloo Works' was established as an installer of heat pumps, a crucial
technology to get the UK off gas, the fuel which is not only contributing to
climate change but been the cause of stratospheric energy prices over the past
12 to 18 months. This represents another significant growth opportunity,
considering the government's stated target of 600,000 annual heat pump sales
by 2028. v (#_edn5) Following the December acquisition the company has been
fully incorporated into the Good Energy brand and we have also built out this
business' ability to install domestic solar panels. Having set to work
quickly, we have since completed our first solar installation meaning that
customers can now get a heat pump or solar panels from Good Energy as well as
the truly 100% renewable electricity to power it, or payment for what they
export. We have an ambitious plan to ramp up sales from our current customer
base - which has already expressed strong interest in our new services - as
well as from new customers. Another significant growth opportunity as we
approach the government's stated target of 600,000 annual heat pump sales by
2028.
Travel with clean power
Another pillar of our strategy which saw growth through 2022 is
electrification of transport. Despite supply chain issues and rising
electricity prices, more than 265,000 electric cars were registered in 2022, a
growth of 40% on 2021 with a total on UK roads now counting nearly 700,000 vi
(#_edn6) . Zap-Map continued to maintain its strong market share in this
rapidly growing contingent, reaching 1,000,000 downloads and over 500,000
registered users.
In its Series A Zap-Map raised £9m, including a further £3.7m from Good
Energy in addition to £5.3m new strategic investment from global fleet
payments giant Fleetcor. The transaction values the business at £26.3m with
Good Energy's shareholding at 49.9%.
Zap-Map's revenue channels are all growing. Subscriptions are showing
particular strength among new registered users. Zap-Pay, Zap-Map's solution to
a fragmented EV charging payments experience, is now available for use on 25%
of the UK's rapid chargers. Demand for Zap-Map's unique data and insights is
growing in lockstep with the market, and a new dedicated insights business
unit is successfully fulfilling this as a strong commercial proposition.
Outlook
Having established our goal to help one million homes and businesses cut their
carbon by 2025 last year, we are already well on our way. We believe that
our target customer opportunity in energy services is a £5bn - £10bn market
where we are focused on driving high margin, low capital intensity sales
growth.
Further M&A will be a core near term focus, following the success of
recent buy and build acquisitions and a way to capitalise on the market
opportunity. Our strong community of green-minded domestic customers provide
a strong initial pipeline for acquired businesses and enquiries to date
following the Igloo acquisition have been highly encouraging. Wholesale
energy prices have eased into 2023, but we continue to take a prudent approach
to trading to maintain our robust position.
With a strong balance sheet, a strategy of investment in high growth markets
to help more to decarbonise, Good Energy's cleaner, greener future as a
services company looks very positive. Our ambition is to be the UK's leading
provider of green energy services, with the ability to install green energy
infrastructure and provide the best tariffs for the energy produced by our
customers. The tangible steps made in 2022 have set the scene for an
exciting 2023.
Nigel Pocklington, CEO
Market review
The energy market saw unprecedented volatility in 2022. Wholesale energy
prices hit highs of over 10 times pre-2022 norms, fluctuating throughout the
year but remaining at extreme levels.
These extreme highs and volatility were driven overwhelmingly by global gas
prices due to the conflict in Ukraine and sanctions on Russia, and the UK was
especially impacted due to its reliance on gas for both heating and
electricity generation. The mechanics of the capacity market in the UK meant
that even renewable electricity prices were driven upwards, increasing Good
Energy's costs.
In 2022, in a more consolidated supply market, these increased costs impacted
customers' bills. The energy price cap rose by 54% in April 2022, and soon
looked to be three times the year prior from 1 October.
Government schemes
The government had announced it would be stepping in to support through the
Energy Bills Support Scheme (EBSS), but as October approached it became clear
that a greater level of intervention would be required.
The Energy Price Guarantee (EPG) was announced in September. A unit rate
discount, it was applied from 1 October to reduce a typical annual dual fuel
bill on a price capped tariff to £2,500, with the EBSS £400 payment made in
monthly instalments over the winter period reducing this further.
Support for businesses was also introduced in the form of the Energy Bill
Relief Scheme, operating similarly to the EPG by discounting unit rates.
Regulatory environment
Following the widespread failure of energy suppliers in 2021 the regulatory
environment changed significantly, from a largely liberal approach to one of
greatly increased scrutiny.
Ofgem's Market Compliance Review process demanded a new level of transparency
from suppliers and has been applied with haste as the regulator looks to
reform the market. The reviews have looked in detail at areas including Direct
Debit processes, general standards of performance, customer service and
customers in payment difficulty.
Vulnerable customers
Of greatest concern throughout this crisis has been the impact of increasing
bills on vulnerable customers and the growing number in fuel poverty
- defined as spending 10% or more of income on energy.
Whilst the government schemes shielded millions from the very worst of rising
bills, the price cap of £2,500 in place from October is still nearly double
the level a year prior, meaning significant bill shock for many. For those
previously on cheaper fixed deals which largely do not exist in the market any
longer, this increase will have been even sharper.
Particular focus has been given to prepayment customers, as the method of
payment more common for lower income households. Good Energy has a very small
proportion of customers which pay via this method - just 1% compared to
upwards of 15% across the industry vii (#_edn7) . We do not install
traditional prepayment meters, as we believe they are not a good solution for
any customer. We offer smart prepayment in conjunction with debt management
plans as a way for customers to take control of their usage.
Good Energy campaigned vocally not only for the government support schemes to
shield customers in the short term, but for investment into energy efficiency
and renewables to reduce bills for the longer term. We joined Energy UK's
Vulnerability Commitment and began offering the Warm Home Discount. As part of
the latter we donated to the fuel poverty charity National Energy Action. We
also made a special donation to our long-term partners Friends of the Earth in
support of their United for Warm Homes campaign.
We are now reducing our smart prepayment prices, making our smart prepay
tariff the cheapest price capped tariff on the market from 1 April - ahead of
the government announcing its plans for all suppliers to do this.
Good Energy has called for the implementation of a social tariff available to
lower income customers industry wide to make energy bills fairer. Ultimately,
we believe the most important aspect of the pathway to a permanently fairer
energy system is greater investment in renewables, flexibility and energy
efficiency to make energy cheaper and greener for everyone.
Strategic update - Our transition to a green energy services company
We have a clear strategic vision. To support one million homes and
businesses cut carbon from their energy and transport use by 2025. Our aim
is to power a cleaner, greener, world by making it simple to generate, share,
store, use and travel by clean power.
Aligning the business to our strategic vision
Our history has seen us evolve as the renewable energy industry has gathered
pace over the past twenty years. Whilst our purpose and mission remains
unchanged, how we are best placed to achieve that mission is evolving. Where
our recent past focused on large scale generation and renewable supply, we now
believe that we can have a greater impact through the provision of energy
services, underpinned by renewable supply.
Energy services
Our definition of energy services focuses on three core areas:
· Solar and generation
· Heat
· Transport
Services and tariffs for domestic and small generators, the installation of
solar, battery storage and heat pumps and the provision of electric vehicle
services that help drivers search, plan, route and pay.
These are high growth markets, typically requiring less working capital. We
will be deploying capital for both organic growth and M&A in these markets
to build on our existing capabilities.
Renewable supply
We serve both domestic and business customers, with fairly priced, real 100%
renewable electricity. This is what underpins our energy services offering.
We have proven operating capability and stable growth in a highly regulated
market.
Energy services - a £5 billion to £10 billion opportunity
In the summer of 2022, we undertook a detailed assessment of UK households to
develop an extensive understanding of our target customers. In the UK, there
are approximately 29 million domestic households. Our target customers want
to go green, make a difference and save money. Of the 29 million households,
we view 4.1 million households as our target customers.
Of these 4.1 million, our immediate focus is on a 1.1 million segment we label
as 'green champions'. Typically older, wealthier, own their own homes and
willing to invest to save money and combat climate change. A larger, but
more medium-term focus of a further 3 million households are the 'meaningful
green actions'. Typically younger, wanting to make bold climate decisions,
but require more barriers of adoption removing.
This detailed analysis showed that 16% of these green champions already had
solar installed, 6% had a battery and 9% a heat pump. This compares to the
national average of 4% of households who have solar installed. They are the
early adopters. Of the remaining pool of customers, 32% said they would
consider solar in the next two years, 35% a battery and 22% a heat pump.
There were larger, albeit potentially more aspirational, figures for our
meaningful green actions segment. We therefore see a target addressable
market of almost 900,000 households in the next two years, which equates to a
c. £5 billion target addressable market. Including the medium term
meaningful green actions households, this increases to a c. £10 billion
opportunity. Whilst we will be unable to serve all of those customers, it
identifies the scale of opportunity that exists today. This is no longer an
early adopter market for energy enthusiasts.
Solar, heat pumps and EV markets are fast growth markets, with good margin and
low working capital intensity. In comparison, there is unlikely to be growth
in the domestic energy supply market in the near term and business supply
growth must be selective. Margins are low, and working capital is higher as
a result of elevated energy costs and trading collateral requirements.
Energy services offers better returns than energy supply in both the short
and long term.
Solar and generation
The UK solar market has seen near record levels of growth through 2022 as
energy prices remained high. Installs increased over 125% to 132,000 and are
near the record highs of 2015 at the peak of the feed in tariff
administration. The vast majority of this demand was domestic installs which
accounted for 88% of the volumes in 2022, as people looked to shield
themselves from the rising energy costs.
We anticipate cumulative capacity on the grid to be 7.5GWh by 2030 in order to
be on track with net zero targets, which outlines a 9.9% CAGR to 2030. viii
(#_edn8) However, from install levels seen in 2022, we calculate that this
only requires a 2.9% annual growth in install levels to c. 167k per year.
With energy costs unlikely to be falling quickly in the short term, we see
this as the main driver for install growth, which will continue to build
momentum.
Solar tariffs and innovation
In early 2023 we launched a new market leading smart export tariff for
households with solar panels. 'Power for Good' will pay 10p per kWh, a
leading variable export tariff rate aligned to the market and reviewed on a
quarterly basis and better than the standard rates offered under the
Government's Smart Export Guarantee.
The new tariff, which will require homes with solar panels to have a
compatible smart meter, means a typical solar powered home could get paid
around £150 per year for the energy they share. That's in addition to
saving around £500 off their annual energy bills for what they use
themselves.
We believe that people who have solar panels should be getting a fair price
for their power and our ambition is for Good Energy to be known as the as the
go-to supplier if you want the best tariffs for the power you generate from
the panels on your roof.
We are already the second biggest solar power payment company in the UK
through the Feed-in Tariff (FiT), with over 180,000 customers for whom we
administrate hundreds of millions of pounds in payments. We recently
launched smart export for our FiT customers, meaning these micro-generators
could be paid more for their export as it is based on what they actually share
with the grid rather than the deemed 50% normally paid.
Power for Good will be Good Energy's first smart export tariff available to
non-FiT customers including those who installed their solar panels after the
scheme closed in 2019.
Scaling solar and generation services
Following the acquisition of Igloo Works in December 2022, we also recently
announced that we will be installing solar panels. The number of
installations on rooftops surged in 2022 as people looked to shield themselves
from high energy bills and take control of their power. The trend is set to
continue as energy prices remain high and demand for clean energy remains
strong, and we are looking to help customers with its install offer and the
new market leading tariff.
We will continue to be acquisitive in this space in order to bolster our
expertise in solar installation and increase our installation capacity.
Whilst we have significant national demand from our own customer base, we
will take a highly regionalised approach to developing installation
capability.
The solar installation market remains highly fragmented with over 3,000
registered installers and the vast majority installing less than 200 installs
per year. Our growth strategy is focused on a regional roll up of these
companies to act as installation arms. We anticipate a number of
acquisitions, similar to our approach with Igloo Works, in order to build a
footprint to meet this demand. From this acquired base, we will look to grow
install capacity organically and leverage the Good Energy credentials of a
strong brand and corporate functions to drive increased reach and help
customers cut carbon and save money.
We expect to complete further acquisitions throughout 2023, whilst continuing
to target our existing customer base.
Heat
Like solar installation the heat pump installation market has seen significant
growth throughout 2022 and a 35% CAGR over the two years since 2020. ix
(#_edn9) , with air source heat pumps accounting for over 85% of
installations, as people looked to benefit from solar generation and shield
themselves from rising gas costs.
The boiler upgrade scheme was introduced in March 2022, offering a £5,000
reduction from the total cost of installation. This replaced the former
renewable heat incentive, but uptake has been slow. A combination of higher
up-front costs and underwhelming Government support.
Whilst growth in 2022 has been positive, a lot more needs to be done to hit
net zero targets. Our modelling outlines over 400,000 installs per year by
2030 targets, with a 20% CAGR growth in installation volumes required to
achieve this. This year has been a tipping point for heat pump installations
but more needs to be done to reduce up front costs, promote awareness and
debunk performance myths.
To date, around 60% of people with heat pumps have had solar installed
first, x (#_edn10) outlining the benefit of using excess solar generation to
power the electricity required for an air source heat pump. We see this as a
clear opportunity to market to our solar installation customers and Feed-in
Tariff customer base.
Heat pump installations underway and growing
Following the acquisition of Igloo Works, heat pump installations have
continued to grow and we are targeting 500 installations in 2023 and to build
the capacity for 12,000 per year by 2026. Whilst these targets are ambitious,
we believe we have a customer base and audience who are open to this.
Initially our focus is on serving our c. 60k domestic energy supply
customers, and selectively targeting both electric vehicle drivers and those
with solar generation. In time, we have a future ambition to target the 1.5
million boiler replacement market, but this will take a meaningful shift in
volume to reduce the up front cost for mainstream consumers.
In March 2023 we incorporated the business into the Good Energy brand and have
continued to develop a range of services to improve overall user experience.
This will include energy tariffs to underpin the overall renewable offering
and reduce the total cost of ownership.
Transport
The electric vehicle market saw continued growth in 2022, following impressive
growth in recent years. Total EVs on the road now totals over 1.1m, with
over 60% of these being battery electric vehicles in 2022. These battery
electric vehicles are Zap-Map's core market.
The Battery EV market grew 67% to over 700,000 in 2022 and has a 2-year CAGR
of 80%. Cumulatively, Zap-Map now has over 1 million downloads of the app and
over 550,000 registered users, up 63% in 2022 and a 2 year CAGR of 83%. It
continues to retain its position as the market leader in the high growth
electric vehicle market, with registered user penetration at over 80% of all
electric vehicle drivers.
Zap-Map: Building scale and recurring revenue
In August 2022, Zap-Map closed a £9m series A funding round including
investment from Good Energy and Fleetcor:
· £5.3m new investment from Fleetcor provided strategic
opportunities to leverage Fleetcor's global footprint and partnerships with
electric vehicle fleets and charging providers in support of Zap-Map's
international expansion plans.
· Good Energy invested £3.7m in line with its strategy to make it
simple for people to generate, share, store, use and travel with clean power.
Zap-Map's commercial goals include building on its paid-subscription services
and initiating international expansion. The funds raised are being deployed
to fuel the expansion of Zap-Map's development team to deliver its product
roadmap and could pave the way for Zap-Map's international expansion, which
began in late 2022. Zap-Map registered users as a share of battery EV
drivers was stable around 80% and the first steps have been taken in
international expansion.
Zap-Map's share of EV market has continued to transfer into revenue growth and
they delivered over £1m in revenue in 2022 and are on track to double this
recurring revenue in 2023 growing across its three core revenue streams.
· Subscriptions
o Monthly or annual subscriptions for added-value features on mobile and
in-car.
o Active app users growing in line with BEV market growth. Targeting 10% of
registered users on paid subscription services.
· Pay
o 12 charging networks now signed covering 25% of the rapid charger network.
o Zap-Pay utilisation continuing to increase. Higher charging costs on the
public network allowing for more flexible payment offers.
o Integration with fleet Allstar Electric card for payment, with Fleetcor.
· Data and insights
o Dedicated insights business unit created to serve growing demand.
o Increased need to understand the EV landscape for a growing range of
businesses and organisations.
o Zap-Map possesses the broadest and deepest data set, excellent market
knowledge and a wide range of recurring data services. High growth potential.
Zap-Map growth
A major part of the Series A investment is to allow Zap-Map to build on its
market leading data and mapping, to develop its user experience. This will
allow for existing services to be improved and new revenue streams to be
developed. These include increasing subscriptions through value-add
services, improve Zap-Pay functionality within the user journey and develop an
API (application programme interface) solution to allow the app functionality
to be utilised within partner apps and platforms.
The API solution is a single-entry point to enable third party digital
products. The Zap-Map platform is powered by scalable, secure, and tested
APIs. The first iteration of this has been developed along Allstar, Fleetcor's
UK fuel brand, as part of the Allstar Electric fuel card. Further API
capability will be rolled out to a wide range of partners for search, payment,
and planning. This provides a range of other companies one integration to
leverage Zap-Map's unique applications.
Growth will be targeted across segments.
· Free users will have the widest choice, best data, and the
simplest way to pay.
· Premium users can access added value charging features on mobile
and in car.
· Insights and data services use rich data to support required
growth in UK EV charging infrastructure.
· Strategic partners can gain the ability to build their own
digital EV product set.
Monetisation will focus on the development of recurring revenue streams by
growing subscriptions, data API sales, insights and partner transaction fees.
Payment transactions and advertising revenue will enhance revenues further.
Renewable supply
We continue to operate in both the domestic and business UK energy supply
markets, but remain a premium provider for green-minded customers. We
provide a range of import and export services, which underpin our overall
offering. Our import services provide 100% real renewable electricity to
domestic, small businesses and smaller half hourly business customers. We do
not focus on large scale industrial customers. Our export services provide
power purchase agreements (PPAs), Feed-in Tariff administration services and
smart generation offers for domestic and business customers.
In domestic supply, we are witnessing a market with limited growth potential
with the introduction of the market stabilisation charge, high wholesale costs
and increased working capital requirements for purchasing power. We have
continued to make good progress with our smart meter roll out and now have
over 40,000 installed to date.
In Business supply, we have a clear size and sectoral targeting. Small,
medium sized enterprises (SMEs), and half hourly metered business sites, with
a focus on purpose driven businesses looking for a truly green supply product.
Recent customer renewals include The Crown Estate, PriceWaterhouseCoopers,
Rapanui and BNP Paribas.
Our purchasing of PPA's is what sets us apart and allows us to provide 100%
renewable electricity. This is sourced from over 1,700 individual generators
including a mix of wind, solar, hydro and anaerobic digestion.
Near term growth pathway
Our strategic vision remains unchanged, in helping one million homes and
businesses cut carbon from their energy and transport use by 2025. Our growth
in 2023 will be achieved through.
· Roll out of solar services to our existing client base.
· Roll out of solar and heat pump installations.
· Acquire more capacity to accelerate services strategy faster.
· Drive uptake of new tariffs to maximise our customer base and
potential customers.
For many, the purchase of an electric vehicle will be the trigger into further
energy services products. Initially this will require the need to search, plan
and pay for EV charging on the road, and charge at home with cheaper, smarter
off-peak tariffs. Research by Zap-Map indicates that EV drivers are seven
times more likely to have solar PV installed than the national average, with
29% of respondents having solar panels on their home.
For those with EVs, solar PV allows you to reduce your overall energy costs,
support off grid consumption and increase value through flexibility by
exporting excess generation or storing it for avoiding expensive on peak
consumption. Our installation partner data shows that on average 80% of
solar PV installs are now also selling a battery storage system to maximise
this benefit.
MCS (Microgeneration Certification Scheme) data shows that on average 60% of
recent heat pump installations had solar PV installed first. This allows
consumers to minimise overall heating costs by powering from solar, or replace
increasingly expensive gas and oil products.
What ties this all together are smart energy tariffs that maximise the ability
to save money and reduce carbon. These are smart meter enabled, and bespoke
recommendations will allow us to remove complexity for consumers. In time, the
technology potential will allow much of this to be automated to increase cost
savings further. Smart charging, load shifting and further flexibility
services provide material upside.
We remain committed to building out these range of services through our
investments in Zap-Map, Igloo Works and further M&A activity. Initially
through the installation of solar, storage and heat pump hardware, before
wrapping appropriate tariffs to optimise consumption. And finally monetising
these assets as scale is built.
OPERATING REVIEW
Wholesale energy market conditions
Power prices
The development of power prices in the last 24 months has been significant,
with COVID impacts and subsequent recovery before geopolitical matters drove a
dramatic, rapid, and fluctuating upward trend in wholesale power and gas
costs. Day ahead gas prices started the year at £1.53/therm, peaked at
£6.44/therm on 26 August, and had dropped/stabilised to £1.30/therm by
mid-January 2023 driven by high European gas storage levels, LNG imports into
Europe, a warmer than seasonal normal winter and a general removal of risk
pricing as the industry adapted to the loss of Russian Oil and Gas flows.
Weather conditions in 2022 have reflected a warmer year than ever recorded
before. The provisional UK mean temperature for 2022 was 10.0 °C, which is
0.9 °C above average, reaching 10 °C for the first time and exceeding the
UK's previous warmest year (2014, 9.9 °C). Overall Good Energy gas supply
volume was down 17% in 2022 (vs 2021) as the warm temperature combined with
price and political reasons to drive down usage.
Overall electricity supply volumes were up 2.5% (vs 2021) reflecting continued
COVID recovery and increased business supply volumes.
Our renewable supply business
Cash collections
Significant rise in cash collections in 2022 driven by increased tariffs
(SVT's Price Cap and Commercial tariffs) and the recovery from teething
problems experienced in the implementation of our new business billing
platform (Ensek) which impacted collection during Q2 and Q3 2021.
There is a continued focus on good quality business partners to ensure future
growth comes hand in hand with good collections performance.
Cash collections continue to be a priority for the business, with rising
wholesale prices requiring tariff increases and increased collections to
continue to sustain the business.
Business
Total business supply customers fell by 30.6% to 8,000. Despite this
reduction in customer numbers, business supply volumes grew by 5% reflecting
higher usage contracts. (2022: 457 GWh (Gigawatt hours), 2021: 435 GWh).
Domestic
We remain committed to ensuring that we offer fair priced, transparent 100%
renewable electricity proposition. Elevated energy prices will drive
increasing awareness in the sector.
Feed in Tariff ("FIT")
FIT administration provides the foundation of our energy services model.
Despite the FIT scheme closing to new entrants in March 2019, we continue to
administer the scheme for domestic and business customers. Customer numbers
increased 0.1% to 180,300 versus 2021.
Generation performance
In January 2022 we announced the disposal of the renewable generation asset
portfolio (47.5MW) as part of an ongoing strategic shift to energy and
mobility services.
Smart metering
Following delays in 2020 and the first half 2021 due to COVID-19 restrictions,
installations are now progressing well. In 2022,13,000 meters were installed
in the year delivering on our 2022 target. Over 40,000 meters have been
installed to date.
CFO REVIEW
Overview
The Group has had a resilient financial performance despite continued and
significant pressure from commodity markets impacting on the year's
performance.
Financial performance
Profit and loss
Revenue increased 70% in the period to £248.7m (2021: £146.0m) driven by
increased tariffs which have followed the volatility seen in worldwide
wholesale power and gas costs. Cost of sales increased by 84% to £218.8m
(2021 £119.0m) driven by geopolitical impacts on wholesale costs.
Reported gross profit increased 10.7% to £29.9m (2021: £27.0m). Gross
margin decreased to 12.0% (2021 Reported: 18.5%, 2021 Underlying 14.5%). The
2.5% decline in underlying margins reflects that pricing whilst rising could
not keep pace with rapidly increasing wholesale costs through H1 2022 (price
cap).
Total administration costs increased 20% to £28.8m. This increase relates
to the booking of expected credit loss (ECL) provisions at 2022 year-end
rates, alongside the planned expansion of Zap-Map, energy services
investments, and inflationary pressures experienced by all businesses during
2022.
Finance costs decreased by 40% to £0.4m due to a combination of significant
debt reduction over the past few years and the sale of the generation asset
portfolio.
Reported profit before tax of £8.5m includes £7m of profit recognised on the
deconsolidation of the Zap Map investment due to relevant accounting
treatment, alongside £(2.0)m of losses related to the costs associated with
the ZAPMAP business in 2022. Underlying profit before tax is £3.1m which
includes price, weather, industry and the non-repeat of 2021 impairment.
Adding back £1.3m of depreciation and amortisation gives £4.4m EBITDA for
the period.
Reported tax credit at H1 2022 include the impact one-off benefits related to
generation business sale.
The reported profit for the period was £9.2m (2021: -£3.9m). This reflects
the increase in value of the Zap Map investment as explained above and
extraordinary market conditions seen since H2 2021 and continuing to this day.
*A profit bridge slide has been included in the Investor presentation, which
is available on the Company's website.
(https://group.goodenergy.co.uk/home/default.aspx)
Cash flow and cash generation
The increased tariffs alongside the recovery from 2021 business billing
migration issues has seen a significant improvement in collections year on
year. Collections in H1 were up 72% and in H2 were up 88% versus the same
periods in 2021.
There was a net increase in cash of £17.8m, which includes the proceeds from
the sale of the Generation assets (£21.2m - gross of fees) alongside the
further strategic investment in Zap-Map of £2.7m and the acquisition of Igloo
Works for £1.8m.
Cash and cash equivalents at the end of Dec 2022 were £24.5m, with a further
£8.4m sat in restricted deposit accounts. £4.5m of which relates to
Government support scheme monies received in late December for application to
business and domestic customer accounts in January.
Funding and debt
Our business is debt free on a net basis.
Substantial progress has been made against reducing Group finance costs and
reducing the gearing ratio. The remaining Good Energy Bonds II outstanding
(£4.9m) is split £10k short term liabilities and £4.9m within long term
liabilities. This is due to an annual redemption request window for
bondholders in December of each year.
The Group continues to maintain capital flexibility, balancing operating
requirements, investments for growth and payment of dividends. Our business
remains mindful of the need to capitalise on strategic business development
and investment opportunities. Prudent balance sheet management remains a key
priority.
Earnings
Reported basic earnings per share increased to 59.7p (2021: -20.7p).
Dividend
Following stable operational performance in 2022, the sale of the generation
portfolio and reflecting our confidence in the ongoing business, the Board
recommend a final dividend for 2022 of 2.0p per ordinary share.
Good Energy continues to operate a scrip dividend scheme and the payment
timetable of the final dividend will be announced in due course.
Expected Credit Loss (ECL)
ECL charge in the year was £3.9m, this is an increase of £1.0m (2021:
£2.9m).
The main impact of the year is elevated tariffs. Revenues have significantly
increased but this has been partially offset by Government support schemes
reducing the impact of higher prices on end customers.
Zap-Map investment
2022 saw a P&L loss related to Zap Map of £(2.0)m which increased
£(1.0)m from 2021, following a period of continued investment. This was
expected and related to Zap Map's growth plan. From 8 August 2022 Good Energy
decreased its stake to a 49.9% minority shareholding and deconsolidated Zap
Map which is now an Associate.
Generation portfolio sale
On 25 November 2021, the Company appointed KPMG LLP to lead a sale process for
the Company's entire 47.5MW generation portfolio.
On 20 January 2022 the Company announced, that following a competitive
process, the disposal of the 47.5MW generation portfolio was complete with
Bluefield Solar Income Fund. Total consideration of £21.2m was received for
the sale.
We are committed to delivering value to stakeholders and the sale of our
generation portfolio, at a significant premium to book value, was a good deal.
It is also a significant moment for Good Energy - we are using the capital
from our past to invest in our future.
Events after the balance sheet
Good Energy will voluntarily withdraw the Company's ordinary shares ("Ordinary
Shares") from trading on the AQSE Growth Market. Therefore, trading in the
Ordinary Shares will cease at 4:30 p.m. on 31 March 2023. Trading in the
Ordinary Shares will continue on the AIM market of the London Stock Exchange.
Consolidated Statement of Comprehensive Income (Unaudited)
For the year ended 31 December 2022 2022 2021
£'000 £'000
Notes Unaudited
REVENUE 2 248,682 146,045
Cost of sales (218,768) (119,019)
GROSS PROFIT 29,914 27,026
Administrative expenses (28,805) (23,816)
Non-underlying costs - (806)
Other operating income 66 -
OPERATING PROFIT 1,175 2,404
Finance income 4 633 14
Finance costs 4 (351) (584)
Gain arising on loss of control of subsidiary 6,884 -
Share of loss of associate (712) -
PROFIT BEFORE TAX 7,629 1,834
Taxation 737 (187)
PROFIT FOR THE YEAR FROM CONTINUING OPERATIONS 8,366 1,647
DISCONTINUED OPERATIONS
Profit/(Loss) from discontinued operations, after tax 858 (5,546)
PROFIT/ (LOSS) FOR THE PERIOD 9,224 (3,899)
Attributable to
Good Energy Group PLC 9,816 (3,389)
Non-Controlling Interest (592) (510)
OTHER COMPREHENSIVE INCOME:
Other comprehensive income for the year, net of tax - 677
TOTAL COMPREHENSIVE INCOME FOR THE YEAR ATTRIBUTABLE TO OWNERS OF THE PARENT 9,224 (3,222)
COMPANY
Earnings per share for the 5 Basic 59.7p (20.7)p
year
5 Diluted 59.7p (20.7)p
Earnings per share for the year (continuing operations) 5 Basic 50.9p 13.2p
5 Diluted 50.9p 13.0p
Consolidated Statement of Financial Position (Unaudited)
As at 31 December 2022
2022 2021
£'000 £'000
Unaudited
ASSETS
Non-current assets
Property, plant and equipment 117 209
Intangible assets 3,507 3,891
Right of use assets 324 851
Deferred Tax asset 162 173
Equity investments in associate 12,578 -
Total non-current assets 16,688 5,124
Current assets
Inventories 9,211 7,682
Trade and other receivables 56,882 35,928
Restricted deposit accounts 8,462 2,414
Cash and cash equivalents 24,487 6,699
Total current assets 99,042 52,723
Held for sale assets - 64,798
TOTAL ASSETS 115,730 122,645
EQUITY AND LIABILITIES
Capital and reserves
Called up share capital 844 840
Share premium account 12,915 12,790
Employee Benefit Trust shares (7) (444)
Retained earnings 25,231 4,774
Revaluation surplus - 11,693
Total equity attributable to members of the parent company 38,983 29,653
Non-Controlling Interests - (325)
Total equity 38,983 29,328
Non-current liabilities
Borrowings 4,927 5,066
Total non-current liabilities 4,927 5,066
Current liabilities
Borrowings 294 2,118
Trade and other payables 71,526 40,911
Total current liabilities 71,820 43,029
Liabilities associated with held for sale assets - 45,223
Total liabilities 76,747 93,318
TOTAL EQUITY AND LIABILITIES 115,730 122,646
Consolidated Statement of Changes in Equity (Unaudited)
For the year ended 31 December 2022
Share capital Share premium EBT shares Retained earnings Revaluation surplus Total equity attributable to members of the Parent Company Non-controlling interests Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2021 833 12,790 (502) 6,854 12,472 32,447 185 32,632
(Loss) for the year - - - (3,389) - (3,389) (510) (3,899)
Other comprehensive income for the year - - - 677 - 677 - 677
Total comprehensive income for the year - - - (2,712) - (2,712) (510) (3,222)
Exercise of options 7 58 (40) - 25 - 25
Dividends paid - - - (108) - (108) - (108)
Transfer of revaluation to retained earnings - - - 779 (779) - - -
Total contributions by and distributions to owners of the parent, recognised 7 - 58 631 (779) (83) - (83)
directly in equity
At 31 December 2021 840 12,790 (444) 4,773 11,693 29,652 (325) 29,327
At 1 January 2022 840 12,790 (444) 4,773 11,693 29,652 (325) 29,327
Profit for the year - - - 9,816 - 9,816 (592) 9,224
Other comprehensive income for the year - - - - - - - -
Total comprehensive income for the year - - - 9,816 - 9,816 (592) 9,224
Share based payments - - - 198 - 198 - 198
Dividend Paid - - - (297) - (297) - (297)
Scrip dividends issued 3 125 - (128) - - - -
Transaction arising from loss of control of subsidiary - - - (592) - (592) 917 325
Exercise of options 1 - 437 (232) - 206 - 206
Transfer of revaluation to retained earnings - - - 11,693 (11,693) - - -
Total contributions by and distributions to owners of the parent, recognised 4 125 437 10,642 (11,693) (485) 917 432
directly in equity
At 31 December 2022 844 12,915 (7) 25,231 - 38,983 - 38,983
Consolidated Statement of Cash Flows (Unaudited)
For the year ended 31 December 2022
2022 2021
£'000 £'000
Unaudited
Cash flows from operating activities
Cash generated from operations 5,763 3,900
Finance income 17 620
Finance cost (351) (2,902)
Income tax received - -
Net cash flows generated from operating activities 5,429 1,618
Cash flows from investing activities
Purchase of property, plant and equipment (9) (248)
Purchase of intangible fixed assets (125) (760)
Transfers (to)/from restricted deposit accounts (1,515) 1,971
Acquisition of subsidiary, net of cash held in the subsidiary (1,725) -
Investment in associate (2,794) -
Proceeds from disposal of held for sale assets 20,351 -
Net cash flows used in investing activities 14,183 963
Cash flows from financing activities
Payments of dividends (297) (108)
Proceeds from borrowings - 6,786
Repayment of borrowings (1,382) (18,076)
Capital repayments of leases (582) (616)
Proceeds from exercise of share options 437 26
Net cash flows used in financing activities (1,824) (11,988)
Net increase/(decrease) in cash and cash equivalents 17,788 (9,408)
Cash and cash equivalents at beginning of year 6,699 18,282
Cash and cash equivalents at end of year 24,487 8,874
Represented by:
Cash and cash equivalents for discontinued operations - 2,175
Cash and cash equivalents for continuing operations 24,487 6,699
Notes to the Financial Information (Unaudited)
For the year ended 31 December 2022
1. Basis of Preparation
Good Energy Group PLC is an AIM listed company, incorporated in England and
Wales and domiciled in the United Kingdom, under the Companies Act 2006.
The principal activity of Good Energy Group PLC is that of a holding and
management company to the Group. More detailed information on the Group's
activities is set out in the Chairman's statement, the Chief Executive's
review and the Finance Director's review.
The unaudited Preliminary Report has been prepared using consistent accounting
policies with those of the previous financial year. It does not contain
sufficient information to comply with the disclosure requirements of
UK-adopted international accounting standards.
The Preliminary Report was approved by the Approvals Committee and the Audit
Committee and adopted by the Board of Directors. The Preliminary Report does
not constitute statutory financial statements within the meaning of section
434 of the Companies Act 2006 and has not been audited.
On 24 November 2021, the Group publicly announced the decision of its Board of
Directors to sell the Good Energy Holding Company No. 1 Limited group
including its wholly owned subsidiaries ("GEGAN
group"). The sale of the GEGAN group was completed on 19 January 2022. At 31
December 2021 the GEGAN group was classified as a disposal group held for sale
and as a discontinued operation. The business of GEGAN group represented the
entirety of the Group's Electricity Generation operating segment until 24
November 2021. With GEGAN group being classified as discontinued operations,
the Electricity Generation segment is no longer presented in the segment note.
On 8 August 2022, a subsidiary of the Group (Zap-Map Limited) completed a £9m
Series A fundraise. This included a further £3.7m investment from Good Energy
and a £5.3m investment from new strategic investor Fleetcor UK Acquisition
Limited ("Fleetcor"), the leading global fuel card and payment provider with a
US$17 billion market cap. From the date of the fundraise Good Energy no longer
includes Zap-Map as a subsidiary within the financial statements. The results
of Zap-Map are now recognised in line with accounting for associates. A gain
of £6.9m has been recognised on disposal of the former subsidiary. Good
Energy Group PLC remains a significant investor in Zap-Map.
On 2 December 2022, the Group 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 £1.75 million. The
results of Igloo Works are consolidated within the financial statements.
The accounting policies adopted, other than as documented above, are
consistent with those of the annual financial statements for the year ended 31
December 2022, as described in those financial statements.
The Preliminary Report is presented in pounds sterling because that is the
currency of the primary economic environment in which the Group operates.
The Preliminary Report will be announced to all shareholders on the London
Stock Exchange and published on the Group's website on 28 March 2023. Copies
will be available to members of the public upon application to the Company
Secretary at Good Energy, Monkton Park Offices, Monkton Park, Chippenham,
Wiltshire, United Kingdom, SN15 1GH.
2. Segmental Analysis
The chief operating decision-maker has been identified as the Board of
Directors (the 'Board'). The Board reviews the Group's internal reporting in
order to assess performance and allocate resources. Management has determined
the operating segments based on these reports. The Board considers the
business from a business class perspective, with each of the main trading
subsidiaries accounting for each of the business classes. The main segments
are:
· Supply companies (including electricity supply, FiT administration
and gas supply);
· Energy as a service (including Igloo Works, Zap-Map and
nextgreencar.com)
· Holding companies, being the activity of Good Energy Group PLC.
The Board assesses the performance of the operating segments based primarily
on summary financial information, extracts of which are reproduced below. An
analysis of profit and loss, assets and liabilities and additions to
non-current assets, by class of business, with a reconciliation of segmental
analysis to reported results follows:
Segmental analysis: 31 December 2022 - Unaudited
Electricity Supply FIT Administration Gas Supply Total Supply Companies Energy as a service Holding Companies/Consoli-dation Adjustments Total - Continuing Operations
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue
Revenue from external customers 205,942 5,588 36,500 248,030 652 - 248,682
Total revenue 205,942 5,588 36,500 248,030 652 - 248,682
Expenditure
Cost of sales (190,391) (688) (27,516) (218,595) (196) 23 (218,768)
Gross Profit 15,551 4,900 8,984 29,435 456 23 29,914
Administrative expenses (20,685) (2,041) (4,273) (26,999)
Net other operating income/ (costs) (156) 170 52 66
Depreciation & amortisation (1,806) - - (1,806)
Operating profit/(loss) 6,788 (1,415) (4,198) 1,175
Net finance costs (96) (3) 381 282
Gain arising on loss of control of subsidiary - 6,884 6,884
Share of loss of associate - - (712) (712)
Profit/(loss) before tax 6,692 (1,418) 2,355 7,629
Segments assets & liabilities
Segment assets 67,636 56 48,041 115,733
Segment liabilities (59,544) (279) (16,924) (76,747)
Net asset/ (liabilities) 8,092 (223) 31,117 38,936
Additions to non-current assets - - 1,929 1,929
All turnover arose within the United Kingdom.
Segmental analysis: 31 December 2021
Electricity Supply FIT Admin-isration Gas Supply Total Supply Companies Energy as a service Holding Companies/Consoli-dation Adjustments Total - Continuing Operations
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue
Revenue from external customers 116,521 5,323 23,491 145,335 643 1 145,979
FiT/ROC subsidy revenue 66 - - 66 - - 66
Total revenue 116,587 5,323 23,491 145,401 643 1 146,045
Expenditure
Cost of sales (103,339) (647) (14,851) (118,837) (154) (28) (119,019)
Gross Profit 13,248 4,676 8,640 26,564 489 (27) 27,026
Administrative expenses (17,849) (1,448) (3,612) (22,103)
Depreciation & amortisation (1,578) (134) (1) (1,713)
Operating profit/(loss) 7,137 (1,093) (3,640) 3,210
Net finance costs (67) (2) (501) (570)
Share of loss of associate - - - -
Profit/(loss) before tax 7,070 (1,095) (4,141) 1,834
Segments assets & liabilities
Segment assets 63,415 633 (6,201) 57,847
Segment liabilities (47,826) 1,549 (1,281) 48,094
Net asset/ (liabilities) 15,589 (916) (4,920) 9,753
Additions to non-current assets 1,746 3 - 1,749
All turnover arose within the United Kingdom.
4. Finance Income and Finance Costs
Finance income: 2022 2021
£'000 £'000
Unaudited
Bank and other interest receivables 17 14
Preference share dividends 187 -
Discount on purchase of preference shares 429 -
633 14
Finance costs: 2022 2021
£000 £000
Unaudited
On bank loans and overdrafts - 3
On corporate bond 237 485
Other interest payable 70 27
Lease interest payable 44 69
351 584
5. Earnings / (loss) per Ordinary Share
Basic
Basic earnings per share is calculated by dividing the profit attributable to
owners of the Company by the weighted average number of ordinary shares during
the year, after excluding 79,924 (2021: 250,880) shares held by Clarke
Willmott Trust Corporation Limited in trust for the Good Energy Group Employee
Benefit Trust.
2022 2021
Unaudited
Profit/ (Loss) attributable to owners of the Company (£'000) 9,816 (3,389)
Basic weighted average number of ordinary shares (000's) 16,440 16,399
Basic earnings per share 59.7p (20.7p)
Continuing operations 2022 2021
Unaudited
Profit attributable to owners of the Company (£'000) 8,366 2,157
Basic weighted average number of ordinary shares (000's) 16,440 16,399
Basic earnings per share 50.9p 13.2p
Diluted
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares to assume conversion of all potentially dilutive
ordinary shares. Potentially dilutive ordinary shares arise from awards made
under the Group's share-based incentive plans.
Where the vesting of these awards is contingent on satisfying a service or
performance condition, the number of potentially dilutive ordinary shares is
calculated based on the status of the condition at the end of the period.
Potentially dilutive ordinary shares are dilutive only when the average market
price of the Company's ordinary shares during the period exceeds their
exercise price (options) or issue price (other awards). The greater any such
excess, the greater the dilutive effect.
The average market price of the Company's ordinary shares during the year was
242p (2021: 269p).
5. Earnings per Ordinary Share (continued)
The dilutive effect of share-based incentives was 10,497 shares (2021: 145,752
shares). The dilutive effect of share-based incentives for continuing
operations was 10,497 shares (2021: 145,752 shares).
2022 2021
Unaudited
Profit/ (Loss) attributable to owners of the Company (£'000) 9,816 (3,389)
Basic weighted average number of ordinary shares (000's) 16,451 16,544
Diluted earnings per share 59.7p (20.7p)
Diluted (continuing operations) 2022 2021
Unaudited
Profit attributable to owners of the Company (£'000) 8,366 2,157
Weighted average number of diluted ordinary shares (000's) 16,451 16,544
Diluted earnings per share 50.9p 13.0p
6. Borrowings
2022 2021
£'000 £'000
Current Unaudited
Bank and other borrowings - 1,007
Bond 10 557
Lease liabilities 284 555
Total 294 2,119
2022 2021
£'000 £'000
Unaudited
Non-current
Bond 4,921 4,749
Lease liabilities 6 317
Total 4,927 5,066
The current portion of the bond repayment represents the interest accrued and
the amount of principal repayments requested prior to the end of the year. The
latest redemption request deadline was in December 2022, for repayment of the
remaining bond in June 2023.
The bank and other borrowings are made of interest accrued and amount of
principal repayments under a Revolving Credit Facility.
7. Cash Generated from Operations
For the year ended 31 December 2022
2022 2022
£'000 £'000
Unaudited
Profit before tax from continuing operations 7,629 1,834
Loss before tax from discontinued operations 858 (6,752)
Profit/ (Loss) before tax 8,487 (4,918)
Adjustments for:
Depreciation 624 4,014
Amortisation 951 1,133
Revaluation of generation site - 1,324
Loss on asset disposals & writedowns - 182
Share options exercised (232) -
Gain arising on loss of control of subsidiary (6,884) -
Gain on sale of assets held for sale (776) -
Share based payments 198 -
Share of loss of associates 712 -
Other Finance (income)/costs - net (281) 2,257
Changes in working capital (excluding the effects of acquisition and exchange
differences on consolidation):
Inventories (1,509) 5,582
Trade and other receivables (20,642) (10,098)
Trade and other payables 25,115 4,424
Cash generated from operations 5,763 3,900
9. Subsequent Events
A final dividend of 2.0p per share (2021: 1.80p) was proposed on 23 March
2023, subject to shareholder approval at the Group's AGM.
i (#_ednref1) Based on growth market modelling carried out by Good Energy
using market research conducted by Hall & Partners in 2022
ii (#_ednref2) Ofgem wholesale market indicators
https://www.ofgem.gov.uk/energy-data-and-research/data-portal/wholesale-market-indicators
iii (#_ednref3) MCS data for 2022
https://solarenergyuk.org/news/rooftop-solar-power-installations-double-in-a-year/
(https://solarenergyuk.org/news/rooftop-solar-power-installations-double-in-a-year/)
iv (#_ednref4) MCS data for 2022
https://solarenergyuk.org/news/rooftop-solar-power-installations-double-in-a-year/
(https://solarenergyuk.org/news/rooftop-solar-power-installations-double-in-a-year/)
v (#_ednref5) Energy Security Bill factsheet: Low carbon heat scheme
https://www.gov.uk/government/publications/energy-security-bill-factsheets/energy-security-bill-factsheet-low-carbon-heat-scheme
vi (#_ednref6) SMMT statistics, outlined by Zap-Map:
https://www.zap-map.com/ev-market-statistics/
(https://www.zap-map.com/ev-market-statistics/)
vii (#_ednref7) 4 million customers on prepayment meter reported by Ofgem in
2020, with increases reported since
https://www.ofgem.gov.uk/publications/more-help-prepayment-customers-and-those-struggling-bills
viii (#_ednref8) Based on Acuity Knowledge Partners research conducted for
Good Energy combined with government targets - 9.9% CAGR based on current
volume installed today, vs requirement by 2030
ix (#_ednref9) MCS data, reported by Current+
https://www.current-news.co.uk/mcs-announces-2022-as-record-year-for-certified-heat-pump-installations/
(https://www.current-news.co.uk/mcs-announces-2022-as-record-year-for-certified-heat-pump-installations/)
x (#_ednref10) Calculated using MCS data
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