REG - Good Energy Group - Un-audited Interim Results
19/09/2023 07:15
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RNS Number : 8267M Good Energy Group PLC 19 September 2023
19 September 2023
Good Energy Group PLC
("Good Energy" or the "Company")
Un-audited interim results for the six months ended 30 June 2023
Strong financial performance and delivery of strategy
Good Energy, the 100% renewable electricity supplier and innovative energy
services provider, today announces its interim results for the six months
ended 30 June 2023.
Financial highlights
· Revenue increased 45.6% to £156.1m (H1 2022: £107.6m) driven by
rising wholesale costs leading to price rises throughout the year.
· Gross profit increased 168% to £32.7m (H1 2022: £12.2m) with
gross profit margin of 20.9% (H1 2022: 11.4%). 683
· Gross profit increased due to a strong H1 2023 performance and
cost advantages from our power purchase agreements. However, we anticipate a
one-off loss in H2 2023 due to lagging commodity costs and tariff reductions.
· Operating profit of £14.1m (H1 2022: -£0.5m loss). Some of this
is expected to unwind in H2 given the falling commodity cost environment since
late last year.
· Zapmap reported a loss of £1.1m for our 49.9% shareholding.
· Reported profit after tax for the period of £12.0m (H1 2022:
£0.3m).
· Reported earnings per share of 72.0p (H1 2022: 7.4p).
· Cash and cash equivalents of £34.9m (FY2022: £24.5m) reflecting
strong profitability in H1 and continued focus on working capital management.
· Following a good operational performance in H1 2023 and
reflecting our confidence in the ongoing business, the Board has declared an
interim dividend for 2023 of 1.00p per ordinary share (H1 2022: 0.75p).
Operational highlights
The first half of 2023 demonstrates significant evidence that our transition
has accelerated and is beginning to scale. Achievements made during the period
include:
· Launched new services to help scale our energy services offering.
· A new market leading smart export tariff for households with
solar panels live in March 2023.
· Rolled out smart export and Solar Savings propositions to 40,000
customers. Targeting 75,000 by end of 2023.
· Further propositions for businesses planned to launch in H2 2023.
· Growing our solar and heat installation footprint through two
acquisitions of installers.
· Acquisition of WessexECO Energy in June 2023, an established UK
based solar installation business for £2.5 million.
· Wessex completed 155 installs in 2022 and is on track for 200
installs in 2023. The new business plan looks to double capacity by the end of
2024.
· The heat pump business will see 2023 as a year of investment as
we look to build out the acquired Igloo platform and installation capacity. We
are targeting 100 installs in 2023, with increasing uptake in recent months.
Earnings growth is expected from H2 2024.
· The balance of 2023 and the first half of 2024 are a period of
planned investment. Elevated installation capacity is expected to drive
material earnings accretion from 2025, leveraging corporate overheads to
deliver effective customer acquisition and cost to serve. Performance since
the acquisitions has been in line with expectations.
· Wessex will continue to operate under its own brand, whilst the
heat pump business has been rebranded to Good Energy Works.
· Zapmap growth provides a pathway of electric vehicle (EV) drivers
for energy services propositions.
· Registered users increased 52% to 683k and 80% of all EV drivers
registered on the platform.
· Monthly active users increased to record number at 285k.
· Subscriptions, data insights and B2B API tools continue to drive
growth ahead of planned fundraise.
· Continued delivery of energy services enabling functions.
· Smart meter rollout progressing, with 44,000 installed to date.
· Maintaining excellent service quality with 4.7* Trustpilot rating
achieved in supply and installations.
Outlook highlights
· Good Energy has successfully evolved into an energy services
business and much of this has been achieved over the past six months.
· We have acquired installation capability and launched new
services across the solar, heat pump and EV market during the period and are
rolling these out to our established customer base.
· Our established customer base is showing strong interest in these
new services, creating a strong pipeline for the future.
· Impressive solar and EV market growth continues, and we are well
placed to capitalise on this.
· We will continue to capitalise on this market growth by building
our installation capabilities and increasing our presence across the UK. We
continue to invest across energy services through a clear buy and build
strategy.
· Our FY23 expectations remain unchanged, with a strong H1
performance partly offset with an expected one-off loss in H2 due to lagging
commodity costs and tariff reductions
· The strong cash generated during the period positions us well to
meet our working capital requirements and to invest for further growth.
Nigel Pocklington, Chief Executive Officer of Good Energy, said:
"Good Energy has hit an inflection point in the past six months. The company
is now more than an energy supplier, it's a heat pump and solar installer with
over 40,000 customers live on smart export tariffs. Combined with continued
strong growth in Zapmap, we are delivering our strategy and well on our way
to achieving our mission of helping one million homes and businesses cut their
carbon.
"We have made great strides through acquisitions to offer new hardware
services and launching new services whilst delivering a positive performance
for the first half of the year as we continue to navigate a volatile energy
market. Our robust cash position serves dual purposes: enabling strategic
growth initiatives and providing a buffer against market uncertainties. Whilst
we expect some of the energy trading factors which have bolstered profit to
unwind through the remainder of the year, we are in a very positive financial
position for Good Energy to continue to grow and capitalise on its untapped
potential.
"With its legacy as a truly renewable supplier serving one of the UK's largest
solar microgenerator customer bases, Good Energy is uniquely positioned to
continue to launch and grow services that make it easy for customers to go
green. Our goal is to be a one-stop solution for green-minded customers,
offering a suite of products that help them reduce carbon, save money, and
stay with us longer. By focusing on multiple product areas that function
harmoniously, we aim to lower churn rates, cut acquisition costs, cross-sell
services and boost the overall lifetime value of our growing number of
customers."
A briefing for Analysts will be held at 9:00am today. Analysts wishing to
attend the presentation either in person or virtually should register their
interest by emailing investor.relations@goodenergy.co.uk
(mailto:investor.relations@goodenergy.co.uk) or telephoning 0124 976 5573.
An investor presentation and Q&A will be held today at 11:00am. Investors
can sign up to Investor Meet Company for free and add to meet Good Energy via:
https://www.investormeetcompany.com/good-energy-group-plc/register-investor
(https://www.investormeetcompany.com/good-energy-group-plc/register-investor)
.
A video overview of the results from the Chief Executive Officer, Nigel
Pocklington, is available to watch here
https://www.fmp-tv.co.uk/2023/09/15/good-energy-h1-results/
(https://www.fmp-tv.co.uk/2023/09/15/good-energy-h1-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 / Maria Gomez de Olea 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 over 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.
CEO's review
Overview
Good Energy's direction is crystal clear: we're on a journey to become the
UK's leading green energy services company in a future where energy is
decentralised, digitised, and green. This vision gained urgency in 2022, as
the flaws of our current fossil fuel-based system became painfully obvious and
in 2023 we have made great strides delivering against this. As one of the UK's
largest administrators of the Feed-in-Tariff (FiT) serving a large
microgenerator customer base, we're already a major player in this future
grid. With a greater number of our customers generating their own power than
buying ours, we hold a c. 20% market share in the UK's largest decentralised
energy scheme, setting us up for a transformative role in the energy
landscape.
Strong financial performance and continuing to invest
The first six months of 2023 have seen Good Energy focus on delivering against
our exciting growth strategy in energy services. We have continued the
expansion of our energy services portfolio, launched new services for
customers and acquired a further solar installation business, following the
acquisition of a heat pump installation business in December 2022. These
businesses will help to build out installation capacity in solar PV, storage
and heat pumps. We have launched new export tariffs, as well as trialled
innovative new solutions for our business customers.
Throughout the energy crisis over the past 18 to 24 months, our energy supply
business had remained robust despite the market volatility surrounding us.
With clear communication to customers, we maintained and even built on the
trust we have secured over years - essential as we expand our green energy
services business. However, as the energy market has stabilised, wider
macroeconomic uncertainty has grown, with rising inflation rates demanding an
elevated interest rate environment. We are conscious of the impact this could
have on many of our customers and we continue to work closely with them.
Earlier this year, we were 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 to supply almost 38,000 homes.
This is testament to the strong working relationship we have built with
Ørsted and speaks to the partnership approach we have.
We remain in robust financial health and have continued to invest throughout
the period, both organically in new product launches and inorganically through
our acquisitions. Our financial performance in the first half of the year has
been excellent, and whilst we expect to see some of this unwind in the second
half given the falling commodity cost environment since late last year, we
foresee closing the year in a strong position. We have a strong cash balance
and are committed to investing to accelerate the growth across our energy
services offering.
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 2023 and reflecting our confidence
in the ongoing business, the Board has therefore declared an interim dividend
for 2023 of 1.00p per ordinary share. This dividend will be paid on 27 October
2023 to shareholders on the register at the close of business on 29 September
2023.
Outlook
Good Energy is now well on its way to becoming the UK's top green energy
services company. We're expanding solar services and heat installations and
eyeing further M&A to boost our capabilities. Zapmap's Series B fundraise
is on the horizon, which will set the stage for its B2B and international
growth. Our FY23 expectations remain unchanged, with a strong H1 performance
partly offset with an expected one-off loss in H2 due to lagging commodity
costs and tariff reductions.
Nigel Pocklington, CEO
Strategic update - our transition to a green energy services company
Good Energy's purpose is to power a cleaner, greener world by making it simple
to generate, share, store, use and travel by clean power. We work towards this
purpose by supporting one million homes and businesses cut carbon from their
energy and transport use by 2025.
The first half of 2023 has been a critical period in which that shift has
truly begun to take place, as we have delivered new services, underpinned by
energy supply.
Clean energy services operate as a harmonious 'virtuous circle'. For example
for many customers, electric vehicles are the starting point. According to
Zapmap data, if you drive an EV, you're seven times more likely to have solar
panels installed than the national average. And with our investment in Zapmap,
the UK's leading EV mapping platform, we're positioned to take advantage of
this. To build on this insight, our installation partner data shows that over
80% of our solar installs now include a battery storage system. Continuing the
trend, historic MCS data shows that around 60% of new heat pump installations
are in homes that already have solar. We're launching smart tariffs and this
Winter we will be participating in the upcoming demand flexibility events with
the National Grid to make all of this as cost-effective and carbon-friendly as
possible. Helping our customers go green, cut carbon and save money.
We see ourselves as not an energy supply firm that offers energy services but
as an energy services firm, of which energy supply is just one part of what we
can offer our customers. In 2023, we have made good progress delivering
against this strategy to date.
We have rolled out solar services and export tariffs for our microgeneration
customers, including launching smart export for our Feed-in-Tariff customers
and piloted Solar Savings (formerly Power for Good) at a market leading
10p/kwh export rate. As Solar Savings now comes out of its beta phase, we are
bolstering the rates to 15p/kWh with an even more attractive 20p/kWh rate for
customers who install their solar PV with us through Wessex ECOEnergy. This
positions our export tariffs among the best rate on the market, level with the
highest per unit payments for flat rate tariffs available.
We intend to launch a time of use tariff for electric vehicles in the final
quarter of 2023, to help EV drivers charge at cheaper and greener times. We
have developed our capability to install both solar and heat pumps and are
looking to double this by the end of 2024. We acquired Wessex Eco Energy in
June to increase our solar installation capability and expect to acquire
further businesses to help increase our installation capacity. We have
supported Zapmap on its journey as to launch new B2B API services, simplified
and grow its B2C subscription offering and built a strong data business relied
on across the industry. We are pleased with how we are executing our vision.
We believe that this is both the future of energy and makes us a better
business in the long term. We're excited about the road ahead, not just
because we're targeting a £5 billion market that could grow to £10 billion
(company research and MCS data), but because we're doing it in sectors like
solar, heat pumps, and EVs that offer fast growth, good margins, and low
working capital requirements. This positions us well for both short-term and
long-term returns, especially compared to the lower margin and more working
capital intense energy supply markets. Our research indicated that our already
engaged, green-minded customer base is showing strong interest in these new
services, reinforcing our role in accelerating the transition to renewables.
We're eager to share updates in what promises to be another transformative
year for Good Energy.
By offering multiple harmonious cleaner energy products, we aim to lower churn
rates, cut acquisition costs, and boost customer lifetime value. We are
carving out a suite of services that can allow our customers to become energy
efficient in every aspect of their lives.
A targeted energy supply offering
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. For generators who take both
services, our intention is to make it cheaper than a comparable standard
supply contract without generation. We want to incentivise people to go green
and save money.
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 progress with our smart meter roll out and now have nearly
44,000 installed to date. Earlier this year, we achieved a 5* Trust pilot
rating, making us one of the most trusted energy suppliers in the country.
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. Where
possible we are also starting to offer smart export and solar installation
propositions to our business customers. We have recently launched innovative
new services for business customers to match their hourly energy use to
time-based renewable generation, giving them even greater transparency on
their carbon footprint.
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.
We believe it is important that we have the right type of customers. Those
individuals and businesses that support our mission and are more likely to go
on this journey with us.
Delivering a leading position in electric vehicles through Zapmap
The electric vehicle market saw continued growth into 2023, following
impressive growth in recent years. Total EVs on the road now totals almost
1.4m as of August 2023, with over 60% of these being battery electric vehicles
(Zapmap and SMMT data 2023). These battery electric vehicles are Zapmap's core
market.
The Battery EV market grew 60% to over 817,000 in the 12 months to June 2023
and has a 2-year CAGR of 71% (June 2021 to June 2023). Cumulatively, Zapmap
now has over 1.2 million downloads of the app and over 683,000 registered
users, up over 50% in 2023 and a 2 year CAGR of 70%. It continues to retain
its position as the market leader in the high growth electric vehicle market,
with registered user penetration at 80% of all electric vehicle drivers.
Zapmap: Building scale and recurring revenue
Zapmap has made good progress against its business plan throughout 2023, and
since their £9m series A fundraise in August 2022. Zapmap has seen both
registered users (683k +51%) and monthly active users (285k +16%) rise, and
they are on track to more than double revenue in 2023, and close Q4 2023 on a
£2m annual recurring revenue run rate.
Alongside a refreshed brand and website, subscriptions were simplified and
relaunched earlier in the year. This allows drivers to access everything
needed for simple EV charging, including the location and live availability of
chargers on the move using Android Auto or Apple CarPlay. Zapmap plus and
premium were combined to one premium offer at a lower monthly price of £2.99
/ month, or £29.99 / year. This led to material increases in subscriber
numbers.
Zapmap Spark was launched to enable third party digital platforms with EV
charging search, plan and payment services and has a strong pipeline of
commercial customers. The data and insights business has expanded
significantly with new products and channel revenues driving strong
performance in 2023.
In 2024 and beyond, Zapmap will focus on four key areas. First, the consumer
app aims to simplify charging solutions in the UK, with plans to expand
internationally, including the EU and North America. Second, B2B services will
offer comprehensive charging data and insights. Third, Zapmap Spark plans to
scale through API-enabled tech solutions. Finally, a Series B funding round in
2024 will enable further growth and scaling of these services into new
markets. We expect to participate in this round to support Zapmap's growth
plan. Our collaboration with Zapmap will also extend to developing energy
services products, aimed at helping the UK's EV drivers cut carbon and save
money.
Solar and generation
Impressive solar market growth continues whilst heat market is slower
The UK solar market saw near record levels of growth through 2022 as energy
prices remained high. Installs increased over 125% to over 130,000 rising to
the near the record highs of 2015. In 2023 H1 sales started strongly, with
sales in the first six months rising to over 90k installs and forecast to
increase over 18% year on year (Company research and MCS database 2023).
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. This
requires a 2.9% annual growth in install levels to c. 167k per year, with
almost that number expected to be achieved in 2023. 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.
New services for generators
In early 2023 we launched a beta market leading smart export tariff for a
limited number of households with solar panels. 'Solar Savings' (formerly
Power for Good) pays a 10p per kWh variable export tariff rate, materially
better than the standard rates offered under the Government's Smart Export
Guarantee. Solar Savings is Good Energy's first tariff available to generators
that installed their solar panels after the Feed-in-Tariff scheme closed in
2019.
It is now moving out of beta, with enhanced rates of 15p/kWh and 20p/kWh for
customers who install their solar through Good Energy, positioning Solar
Savings amongst the best flat rate export tariffs available on the market. We
are targeting rolling this out to c. 5,000 customers by the end of 2023.
This is in addition to our new smart export services for existing FiT
customers, allowing them to receive an export payment based on the actual
amount of power that they provide to the grid, rather than the volume they are
deemed to have exported. Our data shows that at times many customers have
exported around 20% more than the deemed amount, meaning that smart export
provides an opportunity for these customers to earn more. With the enhanced
rates offered by Solar Savings enabling them to earn further still.
As the largest voluntary FiT administrator with over 180,000 customers for
whom we process hundreds of millions of pounds in payments, this is a
significant shift. And we have already rolled the service out to over 40,000
customers, targeting more than 70,000 by the end of the year.
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. Customers still get paid for what they generate, but
now also get paid for everything that they export, using readings from their
smart meter.
There are significant commercial benefits for Good Energy in this shift too,
providing substantial tradeable power and efficiencies through lower costs to
serve. We expect this to start providing a very tangible positive financial
impact in 2024.
Scaling installation services
Installation of solar panels, battery storage and heat pumps are a key step on
the path to decarbonisation. They are a building block of our energy services
strategy and provide access to high growth, high margin and low working
capital markets. In December 2022, we acquired Igloo Works a heat pump
installer and in June 2023 we acquired Wessex Eco Energy, a solar installer
based in the South West of the UK.
Wessex completed 155 installs in 2022 and is on track for 200 installs in
2023. The new business plan looks to double capacity by the end of 2024.
The heat pump business will see 2023 as a year of investment as we look to
build out the acquired Igloo platform and installation capacity. We are
targeting 100 installs in 2023, with increasing uptake in recent months.
Earnings growth is expected from H2 2024.
The balance of 2023 and the first half of 2024 are a period of planned
investment. Elevated installation capacity is expected to drive material
earnings accretion from 2025, leveraging corporate overheads to deliver
effective customer acquisition and cost to serve. Performance since the
acquisitions has been in line with expectations.
Coupled with installations, we have been working with Wessex to provide
improved export tariffs for Customers to increase their overall savings.
Our ambition is to continue to increase our installation capacity, through
both organic and inorganic growth in the near term. The solar installation
market remains highly fragmented with over 2,000 registered installers and the
vast majority installing less than 200 installs per year. Our growth
strategy is focused on targeting specific regions to develop a fully national
capacity in time.
OPERATING REVIEW
Wholesale energy market conditions
Wholesale Power & Gas prices
Over the past 12 months we have seen a period of decline from the peak pricing
pressures seen in H2 2022. Since late August 2022, when the day ahead gas
prices hit at £6.44/therm, we have seen a significant decline in wholesale
costs. By the end of 2022 gas prices had fallen to £1.75/therm and have
averaged c.£0.90/therm since late April 2023. However significant
unpredictability is still present, and whilst the trend has been downwards
there have still been periods of significant volatility. This general
reduction in wholesale costs takes time to flow into lower tariffs. Hedging
agreements, fixed tariff durations, and an OFGEM managed price cap window all
impact when wholesale cost benefits are seen for end consumers.
Weather conditions seen in 2023 continue to reflect what is a warming and
uncertain climate future. Worldwide temperature records have been broken, and
the UK is no exception to this. Provisionally H1 2023 saw a mean UK
temperature of 8.5 degrees, which is highest it has been since 2007. These
warmer, milder conditions, coupled with the higher tariffs facing consumers in
H1 2023 has seen reduction in average usage by consumers. Good Energy's
customers are no exception to this with gas usage down 13% to 227 GWh in H1
2023 (H1 2022 259GWh). Electricity supplied volumes are also reduced year-on
year by 28% to 257 GWh (2022 356), but this is down to a combination of
factors including a strategic shift within the business supply sector,
alongside lower average domestic consumption.
Our renewable supply business
Cash collections
Cash collections in H1 2023 remained strong with customer bills and payments
being augmented by continued Government support scheme payments through the
winter and spring period.
There is a continued focus on good quality business partners to ensure the
supply of energy comes hand in hand with good collections performance - the
business is very much focused on quality over quantity when it comes to
customer acquisition and renewal.
Whilst wholesale costs are showing signs of stabilisation, volatility still
exists, and cash management is key to managing well through this environment.
The economic environment remains challenging for consumers and businesses
alike, and whilst certain customers have seen debt levels increase, total
live-customer aged debt has remained at a similar level to the end of 2022,
with an increase in domestic customer debt offset by a corresponding reduction
in business debt. We remain particularly vigilant to ongoing trends across the
industry as we approach the winter.
Business
Total business supply customers fell by 12.1% to 7.0k (8.0k). This reflects
the company's focus on good quality business partners).
Domestic
We remain committed to ensuring that we offer fair priced, transparent 100%
renewable electricity proposition. High but stabilising energy prices have the
potential to open up the domestic supply market to increased switching in the
future. The business will continue to counter this by being very clear on its
renewable credentials alongside its strategic energy services offering.
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 3.6% to 184k versus 2022.
CFO REVIEW
Overview
Financial performance
Profit and loss
Revenue increased 45% in the period to £156.1m (2022: £107.6m) driven by
higher tariffs which now reflected the full effect of the steep rise in
wholesale costs in 2022 caused by worldwide volatility in wholesale power and
gas costs. Cost of sales increased by 29% to £122.8m (2022 £95.4m) driven
largely by geopolitical impacts on wholesale costs.
Reported gross profit increased 168% to £32.7m (2022: £12.2m). The increase
reflects a recovery from a loss making H1 2022 as well as a strong H1 2023
performance. Our electricity power purchase agreements(PPAs), which are
typically contracted over a 12-18 month period, provided a cost advantage over
the H1 period, although this will reverse in H2 as commodity costs have
fallen steadily since Sept-22 and tariffs have significantly reduced from
Apr-23 onwards following those wholesale cost reductions. We had planned and
are managing the financial outcome of the year as a whole, recognising that H2
2023 will be a one-off loss making period as those commodity input costs lag
the sales tariff reductions that we have continued to provide for our variable
tariff Domestic and SME supply customers since the start of July.
Total administration costs increased 47% to £18.6m. This increase relates to
the strategic expansion into Energy Services; additional debt provisioning
reflecting the higher revenue levels; and regulatory costs.
The business reported net finance income of £0.1m as a result of the higher
cash balance, whilst gross debt remained at £5m.
Reported profit before tax of £13.1m. Adding back £1.7m of depreciation,
amortisation, finance income & share in loss of associate gives £14.9m
EBITDA for the period.
The tax liability for H1 2023 was £1.2m (2022 credit of £1.0m).
The reported profit for the period was £12.0m (2022: £0.8m).
*A profit bridge slide has been included in the Investor presentation, which
is available on the Company's website.
(https://www.goodenergy.co.uk/investors/results-presentations/
(https://www.goodenergy.co.uk/investors/results-presentations/) )
Cash flow and cash generation
The profitability seen in H1 2023 has driven strong cash generation alongside
it.
There was a net increase in cash of £10.4m and this is after an initial
investment of £2.5m for the purchase of the Wessex EcoEnergy Business.
Cash and cash equivalents at the end of June 2023 were £34.9m, with a further
£8.4m held in restricted deposit accounts; £3.0m of which relates to
Government support scheme monies held separately pending the full scheme
reconciliations being concluded.
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 over the last 2 years. The remaining Good Energy
Bonds II outstanding (£4.9m) is held within short term liabilities. This is
due to an annual redemption request window for bondholders in December with
repayment in June 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 72.0p (HY 2022 7.4p).
Dividend
The Board has declared an interim dividend for H1 2023 of 1.00p per ordinary
share.
Good Energy continues to operate a scrip dividend scheme and the payment
timetable of the interim dividend will be announced in due course.
Expected Credit Loss (ECL)
ECL charge for H1 2023 was £3.7m, this is an increase of £2.2m (2022:
£1.5m).
The main impact in year, is significantly elevated revenue from the higher
tariffs resulting in a larger H1 provision level. H2 2023 ECL charges are
expected to be lower reflecting reductions in tariffs for this period.
Wessex EcoEnergy
On 21 June 2023, Good Energy acquired the entire share capital of Wessex
EcoEnergy Limited for an initial consideration of £2.5m.
Consolidated Statement of profit or loss (Un-audited)
For the 6 months ended 30 June 2023
Notes Unaudited Unaudited Audited
6 months to 30/06/2023 6 months to 30/06/2022 12 months to 31/12/2022
£000's £000's £000's
REVENUE 156,114 107,600 248,682
Cost of Sales (123,457) (95,379) (218,768)
GROSS PROFIT 32,657 12,221 29,914
Administration Expenses (18,574) (12,725) (28,109)
Other operating income 47 - 66
OPERATING PROFIT 14,130 (504) 1,871
Finance Income 299 1 633
Finance Costs (169) (247) (351)
Gain on loss of control of subsidiary - - 7,767
Share of loss of associate (1,139) - (712)
PROFIT BEFORE TAX 13,121 (750) 9,208
Taxation (1,156) 1,044 (637)
PROFIT FOR THE PERIOD 11,965 294 8,571
Profit from discontinued operations before tax - 82 64
Tax on discontinued operations - 440 -
Profit for the period 11,965 816 8,635
Attributable to:
Equity holders of the parent 11,965 1,217 9,227
Non-controlling interest - (401) (592)
Earnings per Share
· Basic 10 72.0p 7.4p 55.7p
· Diluted 10 68.6p 7.4p 55.6p
· Basic (continuing operations) 72.0p 4.2p 51.7p
· -Diluted (continuing operations) 68.6p 4.2p 51.7p
Consolidated Statement of profit or loss (Un-audited)
For the 6 months ended 30 June 2023
Notes Unaudited Unaudited Audited
6 months to 30/06/2023 6 months to 30/06/2022 12 months to 31/12/2022
£000's £000's £000's
Profit for the period 11,965 816 8,635
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ATTRIBUTABLE TO OWNERS OF THE PARENT 11,965 816 8,635
COMPANY
Attributable to: Equity holders of the parent 11,965 1,217 9,227
Non-controlling interest - (401) (592)
Consolidated Statement of Financial Position (Un-audited)
As at 30 June 2023
Notes Unaudited Unaudited Audited
6 months to 30/06/2023 6 months to 30/06/2022 12 months to 31/12/2022
£000's
£000's
£000's
ASSETS
Non-current assets
Property, plant and equipment 306 171 117
Right-of-use assets 46 850 324
Intangible assets 12 5,517 4,233 3,503
Deferred tax asset 87 1,280 162
Equity investments in associate 11,440 - 12,578
Total non-current assets 17,396 6,534 16,684
Current assets
Inventories 20,252 17,893 9,212
Trade and other receivables 6 49,482 38,262 57,497
Restricted deposit accounts 7 8,489 2,816 8,462
Cash and cash equivalents 8 34,926 21,690 24,487
Total current assets 113,149 80,661 99,658
TOTAL ASSETS 130,545 87,195 116,342
EQUITY AND LIABILITIES
Capital and reserves
Called up share capital 844 842 844
Share premium account 12,915 12,790 12,915
EBT shares (7) (444) (7)
Retained earnings 36,863 17,281 25,234
Total equity attributable to members of the parent company 50,615 30,469 38,986
Non-controlling Interest - (726) -
Total equity 50,635 29,743 38,986
Consolidated Statement of Financial Position (Un-audited)
As at 30 June 2023
Non-current liabilities
Borrowings 9 89 276 4,927
Total non-current liabilities 89 276 4,927
Current liabilities
Borrowings 9 5,169 5,436 294
Trade and other payables 73,517 51,683 72,135
Current tax payable 1,155 59 -
Total current liabilities 79,841 57,176 72,429
Total liabilities 79,930 57,452 77,356
TOTAL EQUITY AND LIABILITIES 130,545 87,195 116,342
Consolidated Statement of Changes in Equity (Un-audited)
For the 6 months ended 30 June 2023
Share Capital Share Premium Other Reserves Retained Earnings Revaluation surplus Non-controlling interest Total
£000's £000's £000's £000's £000's £000's £000's
At 1 January 2022 840 12,790 (444) 4,773 11,693 (325) 29,327
Profit for the year - - - 816 - (401) 415
Other comprehensive income for the year - - - - - - -
Total comprehensive income for the year - - - 816 - (401) 415
Transfer of revaluation to retained earnings - - - 11,693 (11,693) - -
Dividend paid - - - (187) - - (187)
Total contributions by and distributions to owners of the parent, recognised - - - 11,506 (11,693) - (187)
directly in equity
At 1 July 2022 840 12,790 (444) 17,095 - (726) 29,555
Profit / (Loss) for the period - - - 8,411 - (191) 8,220
Other comprehensive income for the period - - - - - - -
Total comprehensive income for the period - - - 8,411 - (191) 8,220
Exercise of options 1 - 437 (232) - - 206
Share based payments - - - 198 - - 198
Scrip dividends issued 3 125 - (128) - - -
Dividend paid - - - (110) - - (110)
Disposal of Subsidiary - - - - - 917 917
Total contributions by and distributions to owners of the parent, recognised 4 125 437 (272) - 917 1,211
directly in equity
At 31 December 2022 844 12,915 (7) 25,234 - - 38,986
Consolidated Statement of Changes in Equity (Un-audited)
For the 6 months ended 30 June 2023
At 1 January 2023 844 12,915 (7) 25,234 - - 38,986
Profit/(Loss) for the period 11,965 - - 11,965
Other comprehensive income for the period - - - - - - -
Total comprehensive income for the period - - - 11,965 - - 11,965
Dividends declared - - - (336) - - (336)
Total contributions by and distributions to owners of the parent, recognised - - - (336) - - (336)
directly in equity
At 30 June 2023 844 12,915 (7) 36,863 - - 50,615
Consolidated Statement of Cash Flows (Un-audited)
For the 6 months ended 30 June 2023
Notes Un-audited Un-audited Audited
30/06/2023 30/06/2022 31/12/2022
£000's £000's £000's
Cash flows from operating activities
Cash inflow from continuing operations 13,033 (2,173) 5,180
Finance income 65 (1) 17
Finance cost (145) (348) (70)
Net cash flows from operating activities 11 12,953 (2,522) 5,127
Cash flows from investing activities
Purchase of property, plant and equipment (61) - (9)
Purchase of intangible fixed assets (3) (342) (125)
Deposit into restricted accounts - (401) -
Investment in associate - - (3,494)
Proceeds from disposal of held for sale assets - 19,575 20,351
Acquisition of subsidiary, net of cash acquired (2,163) - (1,725)
Net cash flows used in investing activities (2,227) 18,832 14,998
Cash flows from financing activities
Payments of dividends - - (297)
Repayment of borrowings (30) (1,000) (1,619)
Capital repayment of leases (257) (321) (626)
Proceeds from issue of shares - - -
Proceeds from sale of share options - 2 205
Net cash flows from financing activities (287) (1,319) (2,337)
Net increase/(decrease) in cash and cash equivalents 10,439 14,991 17,788
Cash and cash equivalents at beginning of period 24,487 6,699 6,699
Cash and cash equivalents at end of period 34,926 21,690 24,487
Notes to the Interim Accounts
For the 6 months ended 30 June 2023
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 Park Offices, Monkton
Park, Chippenham, Wiltshire, United Kingdom, SN15 1GH.
The Interim Financial Statements were prepared by the Directors and approved
for issue on 18 September 2023. 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 2022 were approved
by the Board of Directors on 5 May 2023 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 United Kingdom. They should be read in conjunction with the
Annual Financial Statements for the year ended 31 December 2022 which have
been prepared in accordance with IFRS as adopted by the European Union.
In accordance with IAS 34, the tax charge is estimated on the weighted average
annual income tax rate expected for the full financial year. The accounting
policies applied are consistent with those of the Annual Financial Statements
for the year ended 31 December 2022, as described in those Annual Financial
Statements.
The Interim Financial Statements have not been audited.
2. Going concern basis
The Group has seen a strong start to 2023 reflecting the benefit from when
power purchase agreements were secured versus market tariffs. The Group has
performed a going concern review, going out until the mid-2025 considering
both an internal base case, and various externally provided scenarios. The
scenarios were provided by Ofgem in mid-2023 as part of their ongoing check
into the financial stability of UK Energy suppliers. Having reviewed this
forecast, and having applied a reverse stress test, the possibly that
financial headroom could be exhausted is remote.
The Directors are confident in the ongoing stability of the Group, and its
ability to continue operation and meet commitments as they fall due over the
going concern period. 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
2022.
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 2022.
5. Segmental analysis
H1 2023 Electricity Supply FIT Administration Gas Supply Total Supply Companies Energy as a service Holding Company/ Total
Consolidated Adjustments
£000s £000s £000s £000s £000s £000s £000s
Revenue 122,092 2,730 30,890 155,712 402 - 156,114
Cost of sales (92,003) (93) (30,797) (122,893) (564) - (123,457)
Gross profit/(loss) 30,089 2,637 93 32,819 (162) - 32,657
Gross margin 25% 97% 0% 21% -40% 21%
Admin costs (16,102) (1,500) (925) (18,527)
Operating profit/(loss) 16,717 (1,662) (925) 14,130
Net finance costs - (53) 183 130
Share of loss of associate - (1,139) - (1,139)
Profit/(loss) before tax 16,717 (2,854) (742) 13,121
H1 2022 Electricity Supply FIT Administration Gas Supply Total Supply Companies Electricity Generation Energy as a service Holding Company/ Total
Consolidated Adjustments
£000s £000s £000s £000s £000s £000s £000s £000s
Revenue 88,510 2,849 15,638 106,997 - 603 - 107,600
Cost of sales (84,282) (325) (10,573) (95,180) - (155) (45) (95,380)
Gross profit/(loss) 4,228 2,524 5,065 11,817 - 448 (45) 12,220
Gross margin 5% 89% 32% 11% - 74% 0% 11%
Admin costs (9,716) - (1,227) (1,779) (12,725)
Operating profit/(loss) 2,098 - (779) (1,824) (505)
Net finance costs (5) - (24) (216) (245)
Share of loss of associate - - - - -
Profit/(loss) before tax 2,093 - (803) (2,040) (750)
6. Trade Receivables
Unaudited Audited
As at 30/06/2023 As at 31/12/2022
£000s £000s
Gross trade receivables 63,919 69,007
Provision for impairment/non-payment of trade receivables (17,203) (15,428)
Net trade receivables 46,716 53,579
Prepayments and other taxation 2,766 3,918
Total 49,482 57,497
The movements on the provision for impairment and non-payment of trade
receivables is shown below:
Movement on the provision for impairment and non-payment of trade receivables Unaudited Audited
As at 30/06/2023 As at 31/12/2022
£000's £000's
Balance at 1 January 15,428 11,792
Increase in allowance for impairment/non-payment 1,775 3,636
Balance at 30 June 2023 / 31 December 2022 17,203 15,428
Days past due
Unaudited Current <30 days 30-60 days 61-90 days >91 days Total
As at 30/06/2023
£000's £000's £000's £000's £000's £000's
Expected credit loss rate 9.7% 14.0% 26.0% 41.6% 86.9%
Estimated total gross carrying amount at default 27,162 4,271 1,970 1,564 14,755 49,722
Expected credit loss 2,622 600 513 650 12,818 17,203
Days past due
Audited Current <30 days 30-60 days 61-90 days >91 days Total
As at 31/12/2022
£000's £000's £000's £000's £000's £000's
Expected credit loss rate 6.4% 15.0% 27.1% 39.1% 87.9%
Estimated total gross carrying amount at default 41,471 3,041 1,805 1,492 12,780 60,589
Expected credit loss 2,662 456 490 584 11,236 15,428
7. Restricted deposit accounts
Unaudited Audited
As at 30/06/2023 As at 31/12/2022
£000s £000s
Restricted deposit accounts 8,489 8,462
Total 8,489 8,462
Restricted deposit accounts include an amount of £2,984,085 (December 2022:
£4,533,381) that relates to Government support scheme monies received for
application to business and domestic customer accounts. At the end of each
scheme all unallocated funds are due to be returned to the Government.
8. Cash and cash equivalents
Unaudited Audited
As at 30/06/2023 As at 31/12/2022
£000s £000s
Cash at bank and in hand 34,545 24,063
Security deposits 381 424
Total 34,926 24,487
Included within cash at bank and in hand for both the Parent Company and the
Group is £6,911 (December 2022: £592,893) in respect of monies held by the
Good Energy Employee Benefit Trust.
9. Borrowings
Unaudited Audited
As at 30/06/2023 As at 31/12/2022
Current: £000s £000s
Bond 4,926 10
Bank loans 178 -
Lease liabilities 65 284
Total 5,169 294
Unaudited Audited
As at 30/06/2023 As at 31/12/2022
Non-current: £000s £000s
Bond - 4,921
Bank Loans 19 -
Lease liabilities 70 6
Total 89 4,927
The fair values of borrowings have been calculated taking into account the
interest rate risk inherent in the bond. The fair value estimates and carrying
values of borrowings (excluding issue costs) in place are:
Unaudited Unaudited Audited Audited
As at 30/06/2023 As at 30/06/2023 As at 31/12/2022 As at 31/12/2022
Fair value Carrying value Fair value Carrying value
£000s £000s £000s £000s
Corporate bond 4,847 4,456 4,820 4,486
10. Earnings per share
The calculation of basic earnings per share at 30 June 2023 was based on a
weighted average number of ordinary shares outstanding for the six months to
30 June 2023 of 16,609,219 (for the six months to 30 June 2022: 16,528,000 and
for the full year 2022: 16,574,697) 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 2023 was 187p (for the six months to 30 June 2022: 258p and
for the full year 2022: 242p). The dilutive effect of share-based incentives
was 839 shares (for the six months to 30 June 2022: 208,252 shares and for the
full year 2022: 10,497).
11. Net cash flows from operating activities
The operating cashflow for the six months to 30 June 2023 is an inflow of
£13m (for the six months to 30 June 2022: £2.5m outflow and for the full
year 2022: £5.1m inflow). The difference in the cashflow between the half
year 2023 and its comparative for the same period is primarily due to timing
of working capital related items.
12. Business Combinations
On 21 June 2023, Good Energy Group PLC acquired the entire share capital of
Wessex EcoEnergy Limited, an established UK based solar installation business.
Building on its acquisition of Igloo Works in December 2022, the acquisition
represents a further milestone in delivering on Good Energy's strategy to
expand its capability in decentralised energy services.
Unaudited Unaudited Audited Audited
As at 30/06/2023 As at 30/06/2023 As at 31/12/2022 As at 31/12/2022
Fair value Carrying value Fair value Carrying value
£000s £000s £000s £000s
Property, plant and equipment 171 171 23 23
Inventories 362 362 20 20
Receivables 243 243 125 125
Cash 353 353 34 34
Payables (1,010) (1,010) (194) (194)
Total identifiable net assets 119 119 8 8
Unaudited Audited
As at 30/06/2023 As at 31/12/2022
£000s £000s
Goodwill 2,401 1,805
Consideration 2,520 1,813
The goodwill recognised in respect of the acquisition of Wessex EcoEnergy at
30th June 2023 is provisional, subject to a fair value assessment of
identifiable intangible assets separable from goodwill in accordance with the
provisions of IFRS3: Business Combinations.
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