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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Good Energy Group Plc | LSE:GOOD | London | Ordinary Share | GB0033600353 | ORD 5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -5.00 | -1.96% | 250.00 | 250.00 | 253.00 | 258.00 | 251.50 | 255.00 | 123,706 | 16:35:03 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Electric Services | 248.68M | 9.23M | 0.5555 | 4.53 | 41.77M |
From Apr 2019 to Apr 2024
TIDMGOOD
RNS Number : 3979I
Good Energy Group PLC
21 March 2018
Good Energy Group PLC
Un-audited Preliminary Results for the 12 months ended 31 December 2017
Resilient performance in a challenging market
The continuing business delivered a profit before tax of GBP0.7m
Good Energy Group PLC ("Good Energy" or "the Company"), an established renewable energy company supplying 100% renewable electricity and green gas to homes and businesses, and providing FIT services for renewable generators, today announces its preliminary results for the twelve months ended 31 December 2017.
Hot Features
Premium
Year ended 31 December 2017 2017 2017 2016 % Change
GBPm Continued Discontinued Reported Continued Continued
operations operations operations operations
------------------------ ------------ -------------- ----------- ------------ ------------
Revenue GBP104.5m GBP0.01m GBP104.5m GBP89.7m +16.6%
------------------------ ------------ -------------- ----------- ------------ ------------
Gross Profit GBP29.3m GBP(3.7)m GBP25.6m GBP27.1m +8.2%
------------------------ ------------ -------------- ----------- ------------ ------------
Administration costs GBP(23.7)m GBP(0.3)m GBP(24.1)m GBP(20.9)m +13.5%
------------------------ ------------ -------------- ----------- ------------ ------------
Operating profit GBP5.6m GBP(4.0)m GBP1.6m GBP6.2m -9.8%
------------------------ ------------ -------------- ----------- ------------ ------------
Profit before tax GBP0.7m GBP(4.0)m GBP(3.3)m GBP2.0m -63.7%
------------------------ ------------ -------------- ----------- ------------ ------------
Net Debt GBP53.1m - GBP53.1m GBP52.1m +1.9%
------------------------ ------------ -------------- ----------- ------------ ------------
Cash balance GBP13.7m - GBP13.7m GBP6.3m 118.2%
------------------------ ------------ -------------- ----------- ------------ ------------
Basic earnings per
share (p) 8.1p - (17.1)p 12.9p -37.2%
------------------------ ------------ -------------- ----------- ------------ ------------
Full year dividend
per share (p) 3.3p - 3.3p 3.3p 0.0%
------------------------ ------------ -------------- ----------- ------------ ------------
Juliet Davenport, Founder and Chief Executive Officer, said:
Good Energy has delivered another year of robust growth in line with expectations. During 2017, we built and focussed on optimising our future operations in an energy market that is in transition.
These are solid results given the tough market conditions in the retail supply market. We have also delivered good growth in the business supply market with some new key accounts.
During 2017, through our Fit for Growth programme we have invested in new systems and technology to enhance customer experience, reduced our costs to serve and created a platform for future growth and greater profitability. We have seen growth in our FIT services business and commenced pilot projects to launch our first storage and electrical vehicle charging solutions.
Good Energy's purpose is to power the choice of a greener, cleaner future together, with our people, our customers and our investors. We believe that the energy market is undergoing fundamental change, where the future value will be in energy services in a decentralised market.
As regulation and policy to support the transition of the UK to a low-carbon economy continues to expand, new technologies and innovation are broadening the market for energy services.
Good Energy's position as an established player in the decentralised energy market leaves us well placed to benefit from these industry shifts. Our vision is to become an expert integrator of green energy services in homes and businesses.
This is an exciting position for Good Energy. Looking ahead, we expect to perform in line with market expectations in 2018 and that our strategic developments will deliver growth in profitability and in value, plus deliver a green dividend yield over the longer term."
Financial highlights
Continuing operations
-- Revenue of GBP104.5m up 16.6% driven by business supply volume
-- Gross profit of GBP29.3m increased 8.2% with gross profit margin of 28.1% (2016: 30.2%). Despite the shift in margin mix from B2C to B2B in the supply business, reflecting the careful attention to the quality of business given the ongoing price war in the retail supply market
-- Profit before tax of GBP0.7m decreased 63.7% including GBP1.1m of one-off and restructuring costs
-- A solid and improving cash position which increased 118.2% to GBP13.7m, despite previous billing issues, which we expect to normalise in 2018.
-- Successfully raised GBP16.8m from our second corporate bond in June 2017 -- Basic Earnings Per Share (EPS) was down 37.2% to 8.1p (2016: 12.9p) -- Recommended full year dividend of 3.3p
Discontinued operations
-- In September 2017 we announced that our development business had been discontinued.
-- The discontinued generation business reported an operating loss of GBP4.0m up from GBP0.2m in 2016.
-- As a matter of prudence, reflecting the changing conditions for on-shore renewable developments in England, the combined carrying value of these assets of GBP5.8m has been reduced by GBP3.6m to GBP2.2m, including GBP1.3m classified as held for sale.
-- Good Energy is continuing to explore options for the further sale of remaining sites-under-development, to realise value from the existing portfolio, through partnerships or sales to external parties who will continue to develop the sites, including two wind farms and two solar parks.
Operational highlights
2017 has been a year of transition, however we have continued to perform strongly across our business segments and have seen progress implementing our strategic priorities
-- Supply - FIT services
o Increase in market share of 1% in 2017 and now represents 18% of the addressable market
o Over 99,000 B2B new sites now live with strong NPS business score driving new business
o Continued automation of processes while upgrading B2B and B2C systems for customers
-- Supply - Business Customers
o Strong volume growth of 46% driving increased performance
o New fixed tariffs, dedicated SME sales team and digital upgrades enhancing customer experience
o Fit for Growth restructure is delivering cost to serve improvements
-- Supply -Retail customers
o Customer electricity volumes and meters broadly stable on prior year, despite increasingly price competitive market with clear focus on profitable growth
o New scalable customer system implemented driving customer insight
o Fir for Growth restructuring expected to deliver further cost to serve improvements
Business review
Strategic overview
In 2017 Good Energy has been responding to an energy market in transition as we continue to update our strategy in order to adapt and exploit the changing conditions within this market.
We have gradually begun to shift our focus away from the retail supply market, which is becoming characterised by an increasing number of new entrants driving aggressive pricing and creating a price war, with the majority of smaller suppliers remaining unprofitable.
While we will continue to consolidate our position within this market and deliver value for our retail supply customers, our core business focus has been shifting towards FIT services, where we can leverage our existing 18% market share, and to the business supply market where we have seen strong customer growth already, evidenced by a 46% increase in business volumes in 2017
We will continue to enhance our Fit for Growth operating model to increase our capabilities, drive further efficiencies and support future profitability.
As we continue to evolve, we believe the future of our core business will move out of energy supply and into energy services covering the FIT, business and domestic markets. This reflects our vision to become an expert integrator of green energy and value added technical services in the home and in businesses.
Our aim is to enhance our business model to focus on delivering energy services in a decentralised market. We believe this market has significant potential and where we are already an established player. We believe we can achieve this goal by focusing on three key actions;
o Build - build on our successes and growing our core business through retaining existing domestic customers, continuing to grow our business customers and enhancing services to FIT customers
o Economise - continue to roll out our Fit for Growth programme ensuring we have a lean operating model to improve margins, whilst increasing our technical capability within operations to leverage the investment in our systems, reduce our costs and improve service
o Invest - generate future business opportunities by investing in new service development, an improved digital platform and research to drive new services into the pipeline
Our future vision for the customer remains clear. We will allow our customers to reduce their environmental impact, improve their energy security and lower their costs. In addition, our vision allows for increased participation through continued investment into energy balancing and renewable generation for homes and businesses, standalone battery storage solutions and increased accessibility.
In order to ensure the business is well positioned to maximise this future growth potential, we will continue to invest in data and digital capabilities improving the customer experience which underpins our offering and the strength of the Good Energy brand.
Strategic initiatives
We believe that coupling of continued innovation with our unique customer base of early adopters is setting our strategy up for success. We are already undertaking a number of strategic initiatives and projects with partners, as pilot projects and new services development;
o Launched pilot project in Q4 2017 with New Motion for electric vehicle charging stations
o Partnered with the Eden project for our first bespoke battery storage solution in Q4 2017
o Behind the meter storage, solar and thermostatic propositions for business and domestic customers
o Energy management digital app for customers pre and post SMART
Summary
The business remains well positioned for future growth and has performed resiliently in a challenging market in 2017. The core business continues to grow profitability providing a stable platform for a sustainable green yield for our stakeholders, while 2017 was the first year in our transformation programme for the Group as we continue to evolve towards the business to focus on energy services, which we will deliver by building on successes, economising and investing in the business to maximise our future potential.
While our core business growth continues to drive performance, we believe that our future value will be enhanced by investment in new energy services. Our Strategic initiatives continue to progress at pace with a number of exciting collaborations, pilot projects and new product development creating the platform for the business to become an expert integrator of green and value add technical services in the home and in businesses.
Financial performance
Good Energy made good financial progress in 2017 with 16.6% growth in revenue from ongoing activities, gross profit up 8.2%, and asset sales completed during the year supporting an increase in cash position of 118% to GBP13.2m.
Revenue
In 2017, revenue grew by 16.6% to GBP104.5m (2016: GBP89.7m) driven by growth in the Supply segment with an increase in business volumes and a return to growth in the second half from domestic customers.
Business customer volume growth was due to our increased sales and marketing focus on this segment during the year, with the addition of new business half hourly and small business customers. Performance was also supported by FIT revenue from new business sites, (FIT B2B) driven by our strong customer service.
Profitability
Gross profit increased by 8.2% to GBP29.3m in 2017 (2016: GBP27.1m). EBITDA decreased by 4.3% to GBP9.9m (2016: GBP10.1m), operating profit decreased by 9.8% to GBP5.6m (2016: GBP6.2m). This was due to lower profit in the Supply segment, which included GBP1.1m of restructuring and one-off costs.
The Supply business also saw a reduction in gross margins as a result of increased wholesale power costs; the changing revenue mix and faster growth with lower-margin business customers and our decision to delay our customer price rise within the first quarter. The impact of the restructuring and investment costs and lower gross margin, together with increased marketing and customer acquisition costs in the competitive Supply market, meant that operating profit in Supply was below 2016.
Gross profit margin was 28.1% (2016: 30.2%), and operating margin 5.4% (2016: 6.9%).
Cost of sales increased 20.2% to GBP75.2m (2016: GBP62.5m). This was driven by market-wide increased wholesale power costs in 2017. Administration costs increased 13.3% to GBP23.7m, (2016: GBP20.9m) and included the GBP1.1m of restructuring and one off costs.
Our Finance costs increased 16.3% in 2017, due to temporary phasing between the completion and repayment of Good Energy Bonds I in March 2018 and the commencement of Bond II in June 2017 which has successfully raised GBP16.8m. In 2018, following the repayment of Good Energy Bonds I, finance costs will reduce with lower on-going
funding costs. As a result, profit before tax was 63.7% lower at GBP0.7m (2016: GBP2.0m).
Fit for Growth: Restructuring and Investing for the Future
Enhancing the efficiency and economics of our operations and optimising the business for growth is a key priority for the group. In 2017 we completed the first phase of our Fit for Growth programme as we transition to more efficient operations. These activities included restructuring our business to reduce our long term cost base, and reviewing our asset base and investments to ensure that we are optimising our allocation of capital.
We have also simplified our operating model and upgraded systems and processes that will improve our cost base, leverage the investment in our systems and support profitable growth over the long term. The annualised cost savings of our Fit for Growth programme delivered in 2017 were GBP1m.
Generation Assets, Discontinued Operations and Work in Progress
In 2017 we ceased all new generation development activities, in response to changes in the UK government subsidy schemes and our long term capital allocation objectives. During the year, our 5MW Oaklands solar site was sold for GBP5.8m cash consideration and our 5MW solar farm at Newton Downs in Devon, sold for a cash consideration of GBP5.8m. We have also agreed terms for the sale of our 5MW solar park at Brynwhilach Farm near Swansea in December, and expect the transaction to complete later in 2018 for a cash consideration of GBP5.6m.
We are pleased that the Newton Downs and Brynwhilach sites have been sold into community hands to realise the benefits of renewable generation. The proceeds from these sales have supported the repayment of Good Energy Bonds I and will be reinvested in our other initiatives to deliver shareholder value as outlined in this annual report.
Good Energy is exploring a number of options to realise value from its portfolio of generation assets that are still at development stage ('WIP assets'). This includes several development sites which have not yet obtained planning permission and are at different stages in the process.
The carrying value and treatment of these WIP assets is reviewed against the likelihood of sale or planning outcomes, which by their nature have uncertainty on the timing and outcome of such activities. A provision is made for any change in value in accordance with the policy set out in note 4 to the Financial Statements. As a matter of prudence, reflecting the changing conditions in the market regimes for on-shore renewable developments in England, the combined carrying value of these assets of GBP5.8m has been reduced by GBP3.6m to GBP2.2m, with GBP1.3m shown as held for sale.
As a result, the discontinued generation business reported an operating loss of GBP4.0m up from GBP0.2m in 2016, driven by this increased provision against the work in progress.
Cash Flow and Cash Generation
Good Energy has a cash generative business model with an increase in cash position of 118%. 2017 operational cash outflow was GBP0.02m (2016: operational cash inflow of GBP10.7m) which was impacted by delays in the implementation of the new customer information system (CIS), resulting in customer billing delays. Accrued income peaked during the year in June at around GBP10m higher at the same time in the prior year, with around 60% of customers billed. By year end, accrued income was only GBP3m higher as customer billing reached 95% and has now moved into debt to be collected. The remaining accrued income gap will largely be eliminated in the first half of 2018, with billing on track to hit 99% and payment collections normalising.
We recognise anticipated future bad debts as well as those debts which we know are either in dispute or unrecoverable. We have therefore looked at the provision for bad debts in this context. We have considered the impact that the delay in billing has had on our likely future debt recovery. In some cases customer repayments of their delayed bills are being received over 12 months and we expect cash flow and cash collection to further improve in 2018 as the remaining delayed bill repayments are received. We have continued to take a prudent approach by providing for bad debts at around 2% of electricity and gas revenue. We have reviewed the adequacy of the provision and concluded that a further GBP0.4m needs to be provided in 2017.
Financial Position and Capital Management
The Group continues to maintain a robust financial position. We look to ensure we optimise our use of capital by continually reviewing the returns on our assets, balancing operating requirements, investment for growth, and payment of dividends back to shareholders.
Funding and Debt
Good Energy has good access to a range of funding on good terms to support our growth.
Good Energy is proud of its history of inviting customers to invest in the business through our corporate bond programme. In 2013 we issued our first corporate bond, Good Energy Bond I. These reached initial maturity in November 2017 and will be repaid in March 2018, with the option for existing bondholders to extend them until November 2019 at a coupon rate of 4.25% (effective 4.50% for Good Energy customers). We launched Good Energy Bonds II in November allowing existing bondholders to extend or rollover their bonds, and to allow new investors to partake in this offering. The bond has a coupon rate of 4.75% (effective 5.00% for Good Energy customers) and a four year term.
Together these bonds have raised over GBP25m. Following the repayment of Bond I, the reduced interest cost on Bond II will be around GBP0.3m lower on a comparable annualised basis and is a positive step towards lowering the Company's ongoing financing costs and reducing the gearing ratio over the medium term.
Due to the phasing between the two bonds, Net Debt increased by 1.9% to GBP53.1m (2016: GBP52.1m). In December we reduced some of our working capital overdraft facility with Lloyds Bank with proceeds from the wind farm sale. The amount of the facility is now GBP10m, which was undrawn as at 31 December 2017.
Assets
Total Assets increased 17.4% to GBP120.8m (2016: GBP102.9m) due to increased trade receivables which reflects a temporary increase in debtors and accrued income due to the delays in billing following the implementation of the new CIS and an increased cash position.
Earnings & Dividend
In 2017, Basic Earnings Per Share (EPS) was down 37.2% to 8.1p (2016: 12.9p), due to the lower profit in the Supply segment including restructuring and investment costs and increased Finance costs as set out previously. The Board has recommended a final dividend of 2.3p per ordinary share which is in line with 2016.
Finance Director
On 1 March 2018, we announced the Denise Cockrem would step down as Chief Financial Officer from 31 March 2018. We are proud of the financial and corporate development of the Company over the last four years, including the significant progress we have made in adapting our business model to address our stakeholder needs in a highly competitive and dynamic energy market. Rupert Sanderson joined Good Energy in January 2017 and will lead the company's financial direction in its next stage of development as Finance Director from April. It has been a pleasure to work with Rupert Sanderson in ensuring a smooth transition.
Financial Outlook
In 2018 we expect to perform in line with market expectations through growth momentum in our business and FIT services segments and continued progress of our Fit for Growth programme. We will also see a reduction in our funding costs, following the repayment of Good Energy Bonds I and the lower coupon on Good Energy Bonds II.
In the medium term, we expect to deliver improved profitability from our Fit for Growth operating model and strategic initiatives and as we transition to a more cost-efficient operating model.
With a robust financial position, our continued investment in growth and the transformation of our cost base and efficiency underway, Good Energy is well positioned to deliver sustainable growth in our chosen segments and enhanced profitability in the long term.
Notes:
To present the performance of the company in a clear and consistent format, unless otherwise stated, all references to revenue, profit, costs, tax and EPS refer to the continuing operations.
Operating Review by Segment
Supply
What we do
Good Energy is an established energy supplier, with the core of the business being rooted in the decentralised energy market. Since 2004 we have been a key player in the decentralised energy market, working with a significant numbers of smaller, renewable generators, delivering a market that would otherwise not exist. We are currently the third largest provider of Feed in Tariff (FIT) services to this market with over 18% of the market with potential to grow.
Our energy supply business, supplying electricity and gas to business and domestic householders is a relatively focused business, supplying 0.2% of the domestic market and 0.1% of the business (half hourly) market with 100% renewable electricity and green gas, backed with a combination of green gas and offset certificates.
The company has traditionally been well known for our focus on good customer services historically being ranked well in independent surveys like Which? and money saving expert Martin Lewis. In 2017, we implemented a new billing system, which impacted on our ability to deliver great customer services, and we are only now beginning to see that recover in 2018.
The proposition we promise to our customers is 100% renewable electricity, with customers being on average no further than four miles from one of our local, renewable generators.
Market conditions 2017
The UK retail supply market is fiercely competitive with a significant number of new entrants chasing low or negative margin, less sticky segment of the market. 2017 saw record household customer switching rates across the marketplace and the maturing of many collective switching deals, with overall switching at around 28% of customers.
Comparatively the business market has been stable, with little change in competition, and a relatively buoyant market for green supply, as businesses consider closely their corporate social responsibility targets and any commitments they have made to the UN Sustainable Development goals.
The FIT market has continued to grow, albeit relatively slowly in comparison to earlier years. It has still seen an overall growth in this market of around 3%. We expect this to continue and perhaps accelerate in 2018 until the close of the scheme to new sites in April 2019.
Performance in 2017
Supply revenue grew strongly by 16.7% to GBP99.3m (2016: GBP85.1m) driven by strong growth in business customer volumes. Electricity revenue grew by 24.4%, Gas revenue by 6.8%, while FIT revenue was 15.2% lower due to lower.
Supply operating profit of GBP3.5m (2016: GBP4.9m) was 27.7% below the prior year, due the changing business mix as we saw faster growth with lower-margin, higher-volume business customers. In addition, the challenging market conditions in the retail business, led us to increase investment in marketing and customer support whilst maintaining fair pricing. The anticipated decline in FIT profit was due to lower new customer revenue which generates a greater administration fee receivable in the first year of sign up.
In 2017, the total volume of all energy delivered to customers grew by 5.4% to 1.06m MWh (2016:1.01m MWh). We achieved significant growth in business electricity supply volumes of over 46%. Total Supply customer meter numbers were stable at just over 115,755 (2016: 115,593). The competitive environment and high switching rates across the market led to broadly flat growth in the retail business by volume and by meters. Our strong customer service and reputation in the FIT market enabled us to grow FIT customer installations by 8.0%, adding 10,595 new FIT installations to 143,607 in total.
Due to the implementation of our Customer Information System (CIS) in 2017 we experienced delays and disruption to billing through the systems change, and restructured our customer support team in the second half of 2017 to address these issues. We are now back to 99% customer billed and front line service levels are improving.
Highlights in 2017
-- Our FIT market share increased from 16.8% in 2016 to 17.6% in 2017 adding 10,595 new installations in the year and achieving a strong NPS score with FIT business customers. We have also increased our customer and sales support to FIT during the year.
-- Began our Smart and Digital rollout, with our new CIS in 2017 and we began preparations to roll-out SMART meters from 2018.
-- Expanded our SME and business offering: During the year we have set up a dedicated business sales team, launched a new online quoting tool, new fixed tariffs and our new CIS system is delivering greater customer insights.
-- Restructured our Executive team and the Senior Leadership team to realign with our strategic objectives of Build, Economise and Invest, with further improvements in efficiency expected in 2018.
-- Signed up leading brands as customers and partners including Neal's Yard Remedies, BAFTA, Hay Festival and Innocent Drinks
-- Introduced offshore wind into our fuel mix for the first time in 2017, through an agreement with DONG, now Orsted, to buy power from their Westermost Rough Wind Farm in the North Sea.
2018 Outlook
We will continue to focus on the three key areas for the core business and building on our success by:
-- Retaining retail customers, through better proposition, customer service and improved content and communications
-- Grow business sales in the SME and medium business sector, with an upskilled team, better systems and data and improvements in customer experience. This year the marketing team will focus on lead generation for the business sector and away from the retail sector
-- Grow our FIT services business through organic growth for retail customers, and portfolio switching for business customers and portfolios.
Underpinning all of this is the need for Good Energy to have a bigger focus on digital platforms and data strategy. The development of our Smart metering business has given us the opportunity to invest, particularly in digital, and develop that capability in-house. This will form the foundation for further investment in a suite of digital services across our customer bases.
We have already undertaken a significant transformation of the business, from a more traditional sales and operations model, towards an agile development team and a tech-savvy operations team. Ongoing, our plans are to develop a new product delivery team, dedicated to bring new propositions for energy services to market, and enhance the brand and customer experience capability in the company.
Our future proposition to our customers is simple. By investment in technology a home or business will have a lower environmental impact, have better energy security and save money. For Good Energy, the value is through providing services with a charging model similar to the current model for FIT administration.
Energy supply underpins this offering and gives us the permission to provide these services. Using the concept of the virtual power station, Good Energy plans to use its access to the market and expertise in the decentralised energy market to bring value to investments made in behind the meter technology as a route to market, an integrating platform.
In Summary, Good Energy is pivoting its business to focus more on energy services such as FIT. It will continue to operate in the supply market focusing on digital customer experience and improved value for supply customers, with growth expected to be significant in the SME and business sectors. We expect to begin to see the benefits of this transition by the end of 2018, but do not expect to see significant market penetration of energy services until later in 2019 and 2020.
This is an exciting position for Good Energy, aligned with our purpose of delivering a cleaner, greener world, as we work closely with our customers, our people and our shareholders to achieve this.
Generation
What we do
Good Energy owns and operates nine renewable energy facilities across the UK that deliver 100% renewable electricity to the UK electricity grid. There are seven solar sites and two wind farms, with a total of 52.5MW of installed capacity in our continuing generation portfolio. We use the renewable energy that we generate to supply our customers with 100% renewable energy. Until 2017 Good Energy also developed new generation assets, which it either held as a generation asset or sold these back into the market, where possible into community hands.
Market conditions 2017
As previously announced, Government policy changes over the last two years have led Good Energy to stop new generation development activities in 2017 and the development business is now reported as a discontinued business. While we have been successful in creating, utilising and monetising energy generation assets, the market has moved in favour of large scale developers with better purchasing power for renewable assets and access to low-cost finance. The removal of government subsidies for many renewable energy technologies however does not affect the financial performance of Good Energy's continuing generation sites.
Performance in 2017
In 2017, revenue from continuing Generation operations increased by 13.1% to GBP8.9m (2016: GBP7.8m).
Operating Profit in Generation increased by 14.6% to GBP3.7m (2016: GBP3.2m).
In 2017, the total output from our generation portfolio increased by 8.7% to 87.6 GWh (2016: 80.6 GWh). Solar output increased by 11.4% to 38.6 GWh (2016: 34.7 GWh) with output increase from the two new sites being offset by the sale of Oaklands. Wind output was 6.6% higher to 49.0 GWh (2016: 45.9 GWh).
Highlights in 2017
In 2017 we completed our development of two new 5MW solar sites, "Newton Downs" in Devon and "Brynwhilach" near Swansea. This was an important step towards maximising the value of our development activities over the past five years for our stakeholders.
In 2017, we reached agreements to sell three generation sites for GBP17.2m combined. Our 5MW Oaklands solar site was sold for GBP5.8m, and was our first sale of a site fully constructed and developed by Good Energy. Importantly Good Energy retains an option to purchase up to 50% of the site's power and continue to provide management services. In the second half of 2017, we sold Newton Downs for GBP5.8m, and reached an agreement to sell Brynwhilach for GBP5.6m which is expected to complete in 2018 and returning these back into community hands. We have the option to buy 100% of the power from both of these sites.
2018 Outlook
Our continuing generation assets and 52.5 MGW capacity forms an important part of our operating portfolio, allowing us to match demand from our Supply business from our own generation. We expect continuing good energy production from our continuing generation assets in 2018, in keeping with local weather conditions
Discontinued Business - Development
In 2017 we announced that our development business was discontinued and restructured our development team
This discontinued Development Business reported a loss before tax of GBP4.0m, (2016 loss of GBP0.2m). The main driver for this was a provision against the work in progress portfolio of GBP3.6m, which is part of the normal treatment of such assets at this stage in their development.
Good Energy is exploring options for the further sale of remaining sites-under-development, to realise value from the portfolio, through partnerships or sales to external parties who will continue to develop the sites, including two wind farms and two solar parks.
Further detail on this provision is set out in the Financial performance section above.
Consolidated Statement of Comprehensive Income (Unaudited)
For the year ended 31 December 2017
2017 2016
GBP000's GBP000's
Unaudited Audited
REVENUE 104,509 89,651
Cost of Sales (75,178) (62,538)
GROSS PROFIT 29,331 27,113
Administrative Expenses (23,739) (20,914)
OPERATING PROFIT 5,592 6,199
Finance Income 2 18
Finance Costs (4,860) (4,195)
PROFIT BEFORE TAX 734 2,022
Taxation 566 (51)
PROFIT FOR THE YEAR FROM CONTINUING
OPERATIONS 1,300 1,971
DISCONTINUED OPERATIONS
Loss from discontinued operations,
after tax (4,033) (588)
(LOSS)/PROFIT FOR THE PERIOD (2,733) 1,383
OTHER COMPREHENSIVE INCOME:
Items that may subsequently be reclassified
to profit or loss
Loss on cash flow hedge - -
Other comprehensive loss for the year, - -
net of tax
TOTAL COMPREHENSIVE (LOSS)/INCOME
FOR THE YEAR
ATTRIBUTABLE TO OWNERS OF THE PARENT
COMPANY (2,733) 1,383
Earnings per share from loss for the
year - Basic (17.1p) 9.1p
- Diluted (17.1p) 8.8p
Earnings per share from profit for
the year - Basic 8.1p 12.9p
(continuing operations) - Diluted 7.7p 12.5p
Consolidated Statement of Financial Position (Unaudited)
As at 31 December 2017
2017 2016
GBP000's GBP000's
Unaudited Audited
ASSETS
Non-current assets
Property, plant and equipment 51,723 58,247
Intangible assets 3,544 3,801
Long term security deposits 3,220 2,831
Investments 500 500
---------- ---------
Total non-current assets 58,987 65,379
Current assets
Inventories 9,881 9,799
Trade and other receivables 32,698 16,204
Current tax receivable - 167
Cash and cash equivalents 13,720 6,289
Current assets held for sale 5,553 5,095
---------- ---------
Total current assets 61,852 37,554
---------- ---------
TOTAL ASSETS 120,839 102,933
---------- ---------
EQUITY AND LIABILITIES
Capital and reserves
Called up share capital 826 825
Share premium account 12,652 12,546
EBT shares (946) (1,015)
Retained earnings 5,553 8,689
---------- ---------
Total equity attributable to members
of the parent company 18,085 21,045
Non-current liabilities
Deferred taxation 145 684
Borrowings 56,044 40,277
---------- ---------
Total non-current liabilities 56,189 40,961
Current liabilities
Borrowings 13,894 20,981
Trade and other payables 32,671 19,936
Current liabilities held for sale - 10
Total current liabilities 46,565 40,927
---------- ---------
Total liabilities 102,754 81,888
---------- ---------
TOTAL EQUITY AND LIABILITIES 120,839 102,933
---------- ---------
Consolidated Statement of Changes in Equity (Unaudited)
For the year ended 31 December 2017
Share Share EBT Retained Total
Capital Premium Shares Earnings
GBP000's GBP000's GBP000's GBP000's GBP000's
--------- --------- --------- ---------- ---------
At 1 January 2016 748 9,786 (1,074) 7,483 16,943
--------- --------- --------- ---------- ---------
Profit for the year - - - 1,383 1,383
Other comprehensive - - - - -
income for the year
--------- --------- --------- ---------- ---------
Total comprehensive
income for the year - - - 1,383 1,383
Share based payments - - - 230 230
Tax charge relating
to share option scheme - - - 98 98
Issue of ordinary
shares 77 2,760 - - 2,837
Sale of shares by
EBT - - 59 (14) 45
Dividend paid - - - (491) (491)
Total contributions
by and distributions
to owners of the
parent, recognised
directly in equity 77 2,760 59 (177) 2,719
--------- --------- --------- ---------- ---------
At 31 December 2016 825 12,546 (1,015) 8,689 21,045
--------- --------- --------- ---------- ---------
At 1 January 2017 825 12,546 (1,015) 8,689 21,045
--------- --------- --------- ---------- ---------
Loss for the year - - - (2,733) (2,733)
Other comprehensive - - - - -
income for the year
--------- --------- --------- ---------- ---------
Total comprehensive
income for the year - - - (2,733) (2,733)
Share based payments - - - 263 263
Tax credit relating
to share option scheme - - - (106) (106)
Issue of ordinary
shares 1 106 - - 107
Sale of shares by
EBT - - 69 (31) 38
Dividend paid - - - (529) (529)
--------- --------- --------- ---------- ---------
Total contributions
by and distributions
to owners of the
parent, recognised
directly in equity 1 106 69 (403) (227)
--------- --------- --------- ---------- ---------
At 31 December 2017 826 12,652 (946) 5,553 18,085
--------- --------- --------- ---------- ---------
Consolidated Statement of Cash Flows (Unaudited)
For the year ended 31 December 2017
2017 2016
GBP000's GBP000's
Unaudited Audited
Cash flows from operating activities
Cash generated from operations 27 10,656
Finance income 2 18
Finance cost (5,016) (4,208)
Income tax received 68 133
---------- ---------
Net cash flows from operating activities (4,919) 6,599
Cash flows from investing activities
Purchase of property, plant and
equipment (4,828) (4,958)
Purchase of intangible fixed assets (752) (1,851)
Disposal of assets 9,868 -
Long term security deposits (389) (29)
Net cash flows used in investing
activities 3,899 (6,838)
Cash flows from financing activities
Payments of dividends (422) (491)
Proceeds from borrowings 13,086 387
Repayment of borrowings (4,126) (951)
Capital repayments of finance lease (125) (50)
Proceeds from issue of shares net
of share issue costs - 2,837
Sale of own shares 38 45
---------- ---------
Net cash flows from financing activities 8,451 1,777
Net increase in cash and cash equivalents 7,431 1,538
Cash and cash equivalents at beginning
of year 6,289 4,751
Cash and cash equivalents at end
of year 13,720 6,289
Notes to the Financial Information
1. 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 principal activity of Good Energy Group plc is that of a holding and management company to the Group. Fuller information on the Group's activities is set out in the Chairman's statement, Chief Executive's review and the Chief Financial Officer's review.
The unaudited Preliminary Report has been prepared under the historical cost convention and in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and interpretations in issue at 31 December 2017.
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.
Statutory accounts for the year to 31 December 2016 have been delivered to the Registrar of Companies. The audit report for 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.
The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 December 2016, as described in those financial statements. New standards or interpretations which came into effect for the current reporting period did not have a material impact on the net assets or results of the Group.
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 21 March 2018. Copies will be available to members of the public upon application to the Company Secretary at Monkton Reach, Monkton Hill, Chippenham, Wiltshire, SN15 1EE.
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); -- Electricity Generation Companies (including wind and solar generation companies); -- Generation Development (including early stage development companies); -- 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 asset, by class of business, with a reconciliation of segmental analysis to reported results follows:
Segmental Analysis: 31 December 2017
Electricity FIT Gas Total Electricity Holding Total Generation Total
Supply Administration Supply Supply Generation Companies/Consolidation - Development
Companies Adjustments Continuing (Discontinued)
Operations
GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's
Revenue
Revenue
from
external
customers 68,801 5,006 25,517 99,324 5,185 - 104,509 17 104,526
Inter-segment
revenue - - - - 3,688 (3,688) - - -
------------ --------------- --------- ---------- ------------ ------------------------ ----------- --------------- ---------
Total
revenue 68,801 5,006 25,517 99,324 8,873 (3,688) 104,509 17 104,526
------------ --------------- --------- ---------- ------------ ------------------------ ----------- --------------- ---------
Expenditure
Cost
of sales (52,139) (505) (17,710) (70,354) (4,824) - (75,178) (3,700) (78,878)
Inter-segment
cost
of sales (3,688) - - (3,688) - 3,688 - - -
------------ --------------- --------- ---------- ------------ ------------------------ ----------- --------------- ---------
Gross
Profit 12,974 4,501 7,807 25,282 4,049 - 29,331 (3,683) 25,648
Administrative
expenses (20,529) (391) (1,436) (22,356) (328) (22,684)
Depreciation
& amortisation (1,229) - (154) (1,383) (1) (1,384)
------------ --------------- --------- ---------- ------------ ------------------------ ----------- --------------- ---------
Operating
profit/(loss) 3,524 3,658 (1,590) 5,592 (4,012) 1,580
Net
finance
income/(costs) (32) (4,947) 121 (4,858) - (4,858)
------------ --------------- --------- ---------- ------------ ------------------------ ----------- --------------- ---------
Profit/(loss)
before
tax 3,492 (1,289) (1,469) 734 (4,012) (3,278)
------------ --------------- --------- ---------- ------------ ------------------------ ----------- --------------- ---------
Segments
assets
& liabilities
Segment
assets 58,466 104,945 (56,315) 107,096 8,453 115,549
Segment
liabilities 51,057 110,697 (72,741) 89,013 12,451 101,464
------------ --------------- --------- ---------- ------------ ------------------------ ----------- --------------- ---------
Net
asset/(liabilities 7,409 (5,752) 16,426 18,083 (3,998) 14,085
------------ --------------- --------- ---------- ------------ ------------------------ ----------- --------------- ---------
Additions
to non-current
assets 817 5,677 159 6,653 - 6,653
Segmental Analysis: 31 December 2016
Electricity FIT Gas Total Electricity Holding Total Generation Total
Supply Administration Supply Supply Generation Companies/Consolidation - Development
Companies Adjustments Continuing (Discontinued)
Operations
GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's
Revenue
Revenue
from
external
customers 55,324 5,904 23,903 85,131 4,520 - 89,651 786 90,437
Inter-segment
revenue - - - - 3,324 (3,324) - - -
------------ --------------- --------- ---------- ------------ ------------------------ ----------- --------------- ---------
Total
revenue 55,324 5,904 23,903 85,131 7,844 (3.324) 89,651 786 90,437
------------ --------------- --------- ---------- ------------ ------------------------ ----------- --------------- ---------
Expenditure
Cost
of sales (40,559) (1,415) (16,269) (58,243) (4,295) - (62,538) (367) (62,905)
Inter-segment
cost
of sales (3,324) - - (3,324) - 3,324 - - -
------------ --------------- --------- ---------- ------------ ------------------------ ----------- --------------- ---------
Gross
Profit 11,441 4,489 7,634 23,564 3,549 - 27,113 419 27,532
Administrative
expenses (17,080) (357) (1,868) (19,305) (666) (19,971)
Depreciation
& amortisation (1,609) - - (1,609) (2) (1,611)
------------ --------------- --------- ---------- ------------ ------------------------ ----------- --------------- ---------
Operating
profit/(loss) 4,875 3,192 (1,868) 6,199 (249) 5,950
Net finance
income/(costs) 140 (5,352) 1,035 (4,177) (339) (4,516)
------------ --------------- --------- ---------- ------------ ------------------------ ----------- --------------- ---------
Profit/(loss)
before
tax 5,015 (2,160) (833) 2,022 (588) 1,434
------------ --------------- --------- ---------- ------------ ------------------------ ----------- --------------- ---------
Segments
assets
& liabilities
Segment
assets 45,704 116,337 (70,270) 91,771 11,162 102,933
Segment
liabilities 38,008 116,948 (90,273) 64,683 17,205 81,888
------------ --------------- --------- ---------- ------------ ------------------------ ----------- --------------- ---------
Net
asset/(liabilities 7,696 (611) 20,003 27,088 (6,043) 21,045
------------ --------------- --------- ---------- ------------ ------------------------ ----------- --------------- ---------
Additions
to non-current
assets 2,264 1,120 387 3,771 3,725 7,496
All turnover arose within the United Kingdom.
Consolidation adjustments relate to intercompany sales of generated electricity and the elimination of intercompany balances.
3. Finance Income & Cost
Finance Income: 2017 2016
GBP000's GBP000's
Bank and other interest receivables 2 18
Finance Cost: 2017 2016
GBP000's GBP000's
On bank loans and overdrafts 2,917 3,072
On corporate bond 1,345 1,113
Other interest payable 203 13
Amortisation of debt issue cost 395 336
Total finance costs 4,860 4,534
Less: amounts capitalised on qualifying - -
assets
--------- ---------
Total 4,860 4,534
--------- ---------
4. Taxation
2017 2016
GBP000's GBP000's
Analysis of Tax Charge in Year
Current tax (see note below) - -
Adjustments in respect of prior years - (164)
--------- ---------
Total current tax - (164)
Deferred Tax
Origination and reversal of temporary
differences (732) 217
Adjustments in respect of prior years 187 (2)
--------- ---------
Total deferred tax (545) 215
--------- ---------
Tax on profit on ordinary activities (545) 51
--------- ---------
Factors affecting the tax charge for the year
The tax assessed for the year is lower (2016: lower) than the standard weighted average rate of Corporation Tax in the UK of 19.25% (2016: 20.00%). The differences are explained as follows:
2017 2016
GBP000's GBP000's
(Loss)/Profit before tax (3,278) 1,434
--------- ---------
Profit before tax multiplied by the
weighted average rate of Corporation
Tax in the UK of 19.25% (2016: 20.00%) (631) 287
Tax effects of:
Expenses not deductible for tax purposes 48 42
Non-taxable gain on sale of investment (298) (73)
Effects of changes in tax rate 97 (39)
Restricted interest costs deduction 52 -
Prior year adjustment - current tax - (164)
Prior year adjustment - deferred tax 187 (2)
Total tax charge for year (545) 51
--------- ---------
5. Earnings 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 463,239 (2016: 495,739) shares held by Clarke Willmott Trust Corporation Limited in trust for the Good Energy Group Employee Benefit Trust.
2017 2016
Profit attributable to owners of
the Company (GBP000's) (2,733) 1,383
Basic weighted average number of
ordinary shares (000's) 16,006 15,239
-------- -------
Basic earnings per share (17.1p) 9.1p
Continuing operations 2017 2016
Profit attributable to owners of
the Company (GBP000's) 1,300 1,971
Basic weighted average number of
ordinary shares (000's) 16,006 15,239
------- -------
Basic earnings per share 8.1p 12.9p
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 actually 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. In accordance with IAS 33 'Earnings per share', for the purposes of calculating diluted loss per share, the effect of potentially dilutive ordinary shares has not been taken into account for the year ended 31 December 2017 due to there being a loss for the year. The average market price of the Company's ordinary shares during the year was 230p (2016: 223p). The dilutive effect of share-based incentives was nil shares (2016: 563,595 shares). The dilutive effect of share-based incentives for continuing operations was 918,989 shares (2016: 563,595 shares).
2017 2016
Profit attributable to owners of the
Company (GBP000's) (2,733) 1,383
Weighted average number of diluted ordinary
shares (000's) 16,006 15,802
-------- -------
Diluted earnings per share (17.1p) 8.8p
Continuing operations 2017 2016
Profit attributable to owners of the
Company (GBP000's) 1,300 1,971
Weighted average number of diluted ordinary
shares (000's) 16,925 15,802
------- -------
Diluted earnings per share 7.7p 12.5p
6. Assets and Liabilities Classified as Held for Sale
2017 2016
GBP000's GBP000's
Property, plant and equipment 4,288 5,095
Work in progress 1,265 -
--------- ---------
Total assets 5,553 5,095
--------- ---------
Deferred taxation - (10)
--------- ---------
Total liabilities - (10)
--------- ---------
Carrying value 5,553 5,085
--------- ---------
The property, plant and equipment assets held for sale at 31 December 2017 relate to Good Energy Brynwhilach Solar Park Limited, sale contracts were exchanged before the balance sheet date.
Held for sale work in progress costs relate to a wind development project held within Good Energy Development (No.7) Limited. This entity was actively marketed for sale in the year ended 31 December 2017 and various offers are under consideration.
7. Borrowings
2017 2016
GBP000's GBP000's
Current:
Bank and other borrowings 5,606 5,891
Bond 8,288 15,090
Total 13,894 20,981
2017 2016
GBP000's GBP000's
Non-Current
Bank and other borrowings 39,378 40,277
Bond 16,666 -
Total 56,044 40,277
The Group has undrawn bank overdraft facilities of GBP10,000,000 (2016: GBP6,757,144) as at 31 December 2017 and undrawn revolving credit facilities of GBP822,140 (2016: GBP822,140).
At 31 December 2017, GBP6,834,591 (2016: GBP7,279,171) of the bank loans relate to the Company's subsidiary, Good Energy Delabole Wind Farm Limited and is secured by a mortgage debenture on that Company.
At 31 December 2017, GBP35,704,211 inclusive of GBPnil of accrued interest (2016: 37,399,386 inclusive of GBP627,985 of accrued interest) of the bank loans relate to the Company's subsidiary, Good Energy Generation Assets No. 1 Limited. Repayments of capital and interest are scheduled quarterly over a period of 18 years. Interest is payable at 6.85% and the outstanding principal balance is partially exposed to annual RPI inflation over 3%. Costs incurred in raising finance were GBP2,754,299 (2016: GBP2,754,299) and are being amortised over the life of the loan in accordance with IAS39.
On 2 October 2013 Good Energy Group launched a corporate bond which closed on 24 October 2013 with subscriptions having reached the maximum target of GBP15,000,000. The bond was issued to bondholders on 22 November 2013 with interest scheduled bi-annually. The coupon rate is 7.25% or 7.50% for bondholders that are customers of the Group. Capital repayment of the bond is payable following notice being received from the bond holder no earlier than 4 years from inception. The total costs of issue were GBP770,879 which are being amortised over the life of the bond. As at 31 December 2017 the amortisation recognised in 'finance costs' totalled GBP199,563 (2016: 191,248).
On 10 May 2017 Good Energy Group launched a second corporate bond with online applications closing on 5 June 2017 and paper applications closing on 12 June 2017. Total valid applications reached GBP16.8 million (the maximum target was GBP20 million). The bond was issued to bondholders on 30 June 2017 with interest scheduled bi-annually. The interest rate is 4.75% or 5.00% for bondholders that are customers of the Group. Capital repayment of the bond is payable following notice being received from the bond holder no earlier than 4 years from inception.
Good Energy Bonds I holders were able to roll over their first bond and this amounted to GBP6,509,750 of the total amount.
On 13 February 2018 we announced the repayment of Good Energy Bonds I offering bondholders the option to continue their investment at a revised interest rate of 4.25% or 4.50% for customers of the Group. GBP3.6m of valid continuation forms were received at the deadline date. On 29 March 2019, GBP4.2m will be repaid to Good Energy Bonds I bondholders.
8. Cash flows
2017 2016
GBP000's GBP000's
Profit before income tax (3,278) 1,434
Adjustment for:
Depreciation 3,329 2,808
Amortisation 1,008 1,368
Gain on asset disposals (1,048) -
Write down of generation development work
in progress 3,651 -
Share based payments 263 230
Finance costs - net 4,858 4,516
Changes in working capital (excluding the
effects of acquisition and exchange differences
on consolidation)
Inventories (4,998) (517)
Trade and other receivables (16,494) (4,605)
Trade and other payables 12,736 5,422
--------- ---------
Cash generated from operations 27 10,656
The company news service from the London Stock Exchange
END
FR JBMATMBATMIP
(END) Dow Jones Newswires
March 21, 2018 03:01 ET (07:01 GMT)
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