Last checked at 18 Mar 2016 07:00
18 March 2016
Good Energy Group PLC
("Good Energy" or the "Group" or the "Company")
Un-audited Preliminary Results for the 12 months ended 31 December 2015
Rising customer demand and investment in 2015 supports outlook for growth
"Good Energy has seen significant growth during the last 12 months. It has continued to deliver against its strategic business plan - investing in systems and assets, and driving growth across all sectors of its customer base.
"At the same time, the company has demonstrated high levels of flexibility and nimbleness in adapting its business approach to reflect the changes in Government energy policy, successfully delivering growth against this challenging backdrop.
"I'm confident that Good Energy is well placed to continue to deliver on its growth plans, through responding to the needs of the market and adapting to the changes in the energy policy landscape."
Juliet Davenport OBE, Chief Executive
Good Energy, the AIM listed renewable electricity supplier and generator, announces its unaudited preliminary results for the 12 months ended 31 December 2015.
KEY HIGHLIGHTS:
Financial summary
Year ended 31 December | 2015 | 2014 | Change |
Revenue | £64.3m | £57.6m | 12% |
Gross profit | £21.3m | £18.8m | 13% |
EBITDA | £7.3m | £5.7m | 28% |
Profit before tax | £0.1m | £1.3m | -92% |
Cash balance | £4.8m | £13.7m | -65% |
Net debt | £54.0m | £32.6m | 66% |
Basic (loss)/earnings per share (p.) | (1.4p) | 12.6p | - |
Final dividend per share (p.) | 2.3p | 2.3p | 0% |
Full year dividend per share (p.) | 3.3p | 3.3p | 0% |
· Significant customer growth with overall customer numbers up 44% to more than 219,400 (FY 2014: 152,500)
- Electricity customer numbers up 32% to around 68,000 (FY 2014: 51,500)
- Gas customer numbers up 55% to just over 38,800 (FY 2014: 25,000)
- Feed-in tariff (FIT) administration sites up by 48% to more than 112,600 (FY 2014: 76,000)
· Continued progress and investment made in pipeline of generation assets
- Total owned generation output up 83% to 77GWh (2014: 42GWh)
- Four solar farms built and commissioned bringing the total number of owned and operated solar sites to six, with a combined installed capacity of 30MW. Construction of a seventh 5MW solar farm began during Q4 2015 and is now 'live'
- Two wind farms at Delabole in Cornwall and Hampole in Yorkshire exceeded expectations, with a total output of 53.2GWh up 37% (2014: 38.7GWh)
- Work continues on two new wind farm projects
· Total of £37.3m (2014: £18.7m) drawn down from the debt facility to support the development of generation assets
· Profit before tax from the Supply business has increased from £0.5m to £3.7m due to growth in domestic customers, business customer volume and a non-recurring uplift of £1.0m on recognition of excess Levy Exemption Certificates (LECs) stock following the Government announcement in August 2015.
· Group profit before tax reduced by £1.2m to £0.1m. 2014 figures included profit of £3.6m on the sale of West Raynham solar park.
· A new five year strategy for future profitable growth announced targeting a five-fold growth in customer numbers by the end of 2020 focusing on:
- Improving efficiency
- Investing in technology to improve customer experience
- Developing new and differentiated propositions for domestic and business customers
- Identifying scalable acquisition channels
For further information, please contact:
Good Energy Group PLC Juliet Davenport, Chief Executive Denise Cockrem, Chief Financial Officer | 01249 766795 |
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Arden Partners plc (Nomad & Broker) Steve Douglas, Patrick Caulfield | 01214 238900
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Camarco (Financial PR Adviser) Geoffrey Pelham-Lane, Georgia Mann | 0203 757 4980 |
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Good Energy Press Office Gill Dickinson | 01249 765540
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- Good Energy is a fast-growing 100% renewable electricity supply and generation company, offering value for money and award-winning customer service.
- An AIM-listed PLC, and founder member of the Social Stock Exchange, its mission is to support change in the energy market, address climate change and boost energy security.
- The company has consistently performed well in the annual Which? energy company customer satisfaction survey, winning first or second place in each of the last five years.
- It has more than 68,000 renewable electricity customers and 38,800 gas customers. It works with a community of 112,600 small and medium scale renewable electricity generators (all figures as at 31 December 2015).
- Good Energy is the owner of Delabole Wind Farm, the UK's first commercial wind farm, and owns and operates Hampole Wind Farm, near Doncaster. The company also owns and operates seven solar farms.
- Good Energy has won a number of awards including Business Green Company of the Year 2015, British Renewable Energy Association Leadership Award 2015 and, for the second year running, Small Cap Awards - Social Impact Company of the Year.
Chairman's Statement
Good Energy's strategic objectives for 2015 were to grow its customer base, to continue to invest in renewable generation capacity and to diversify its funding stream to support this investment.
In 2015, overall customer numbers grew by 44% and Good Energy invested in bringing four new solar sites on stream, bringing its total as at year end to six. It also drew down £18.6m of funding from its debt facility to support the development of these generation assets.
The company delivered profit before tax of £128k, in line with expectations.
There was considerable focus on the renewable energy sector in the UK during the year. The Paris climate summit in December 2015 demonstrated a renewed commitment by all participating governments to take action to address climate change, representing a turning point in history.
At the same time, the UK has seen demand for renewable energy grow year on year. Nearly a quarter of the country's electricity needs are now being met by renewable sources such as wind and solar - evidence that there is a clear growth market for renewable energy in the medium to long term.
Good Energy, which was set up more than 15 years ago, continues to offer a proven blueprint for a commercially viable and sustainable 100% renewable power supply and generation business.
2015 saw a number of changes to UK energy policy and subsidy landscape which negatively impacted plans for wind and solar development and generation. It was also the UK's warmest year on record, resulting in decreased energy usage.
However, as a vertically integrated utility business, both generating and supplying renewable electricity, Good Energy is well placed to deal with such headwinds.
In September, it announced its new strategic focus and five-year business plan. This is designed to deliver the company's growth target of a five-fold increase in customer numbers (household equivalents) from a total of 176,500 as at June 2015 to approximately 900,000 as at 31 December 2020. This will enable Good Energy to leverage scale from its operating model in order to deliver sustainable, profitable growth.
The strategy focuses on four key areas:
· Improving efficiency
· Investing in technology to improve customer experience
· Developing new and differentiated propositions for domestic and business customers
· Identifying scalable acquisition channels
Good Energy's ethical approach and focus on excellent service has been a consistent driver of both customer growth and retention. I'm delighted to report that the company scored an impressive 81% in the latest Which? energy company customer satisfaction survey, putting it in second place, just one percentage point behind the leaders. The company has consistently secured first or second place in each of the last five years. At the same time, Good Energy has topped the three most recent Martin Lewis MoneySavingExpert energy company polls.
Matters of sustainability and corporate social responsibility are becoming increasingly important for businesses, and Good Energy received new accreditation during the year for its brand promise of delivering 100% renewable electricity to its customers. Renewable energy supplies are becoming of increasing importance to the business sector. The company is clearly in a strong position to respond to this, backed up by independent accreditation. This presents the company with a promising commercial opportunity.
A founder member of the Social Stock Exchange, Good Energy is now dual listed on the social impact segment of the ISDX, having successfully completed a social impact report and passed the high standards set by independent auditors.
During the year, the company further invested in its management team and leadership capability, bringing new people on board with a broad range of skills and experience. The benefits of this additional strength are already being felt across the business. In addition, the company is proposing to introduce a long term incentive plan (LTIP) for the Executive team.
All these factors provide a good foundation from which to support the company's ambitions for growth. There has been an encouraging start to 2016, with planning permission received for three solar farms, and continued momentum in customer growth. This gives confidence in the outlook for the remainder of the year.
I would like to set on record my thanks to everyone at Good Energy for all their hard work and dedication throughout what has undoubtedly been a challenging year. Thanks to their commitment, the company has been able to continue to deliver strong customer growth and offer great levels of service.
I would also like to thank all our customers for their support and commitment in helping us to address climate change.
Strategic review
As noted in the company's 2015 interim report, Good Energy has undertaken a strategic review and set out clear priorities for the next five years.
The company sees strong prospects for growth in the renewables sector as evidenced by the momentum achieved at the 2015 Paris climate talks, where governments around the world united in their commitment to tackle climate change.
The challenge of delivering a climate change programme that keeps to the agreed pathway presents a major risk to the balance sheets of some of the world's largest companies. The Governor of the Bank of England has noted that the vast majority of reserves are 'unburnable' if global temperature rises are to be limited. As a result, fossil fuel assets such as coal, oil and gas are likely to continue to devalue as companies write down their reserves to reflect useable amounts.
At the same time, in the UK, there has been steady year on year growth in renewable generation.
Customers
Good Energy is looking to deliver growth across both its domestic and business customer bases, targeting a five-fold increase in customer numbers (household equivalents) to approximately 900,000 by 31 December 2020.
It seeks to achieve this by delivering improved efficiency, investing in technology to improve customer experience, developing new and differentiated propositions for domestic and business customers, and identifying scalable acquisition channels.
In the business sector, Good Energy will pursue significant growth driven by corporate social responsibility requirements and carbon reduction commitments.
The focus on the domestic sector will be to drive down the cost to serve and introduce enhanced digital technology which will deliver a better experience for customers.
Similarly, it will target efficiencies in its Feed-in Tariff (FIT) business and explore new opportunities for solar and battery storage.
Generation
The focus on generation will shift to wind power in the medium term. In the longer term, Good Energy will seek new investment opportunities in the hydro and tidal sectors.
The company will also seek to secure access to long term supplies of renewable electricity through growing its network of power purchase agreements.
Research and innovation
Good Energy recognises the important role that innovation has to play in helping it meet its targets, and will continue to explore the potential offered by peer-to-peer energy trading in the form of its Piclo trial, and battery storage solutions.
As part of this approach, the company plans to launch a new 'green gas' product during April 2016, which will further differentiate it from its competitors.
The new five-year strategy will support Good Energy's focus on targeting the delivery of sustainable, profitable growth.
Although there are risks and uncertainties, Good Energy benefits from its vertically integrated structure and has robust plans in place to manage and mitigate these wherever possible.
Investments
Good Energy continues to make strategic investments to underpin growth in its supply business and maintain its ability to capitalise on the long-term growth opportunity that exists. During 2015, this included investment in people and processes within our customer operations area.
For example, a new smart phone 'app' was launched to help customers take and submit meter readings. At the same time, the company has introduced a new on-line portal, enabling customers to opt for on-line billing, submit meter readings or activate other services.
2015 also saw the company's first successful 'clean energy' collective switch which delivered just under 10,000 new domestic customers, nearly 80% of which are dual fuel. It has also continued to invest in the planning and development of new generation projects with four solar farms coming on stream in 2015. A further three received planning permission early in 2016.
Planned investment for 2016 includes a new billing system, and enhancements to existing processes and systems.
Key Performance Indicators
Good Energy uses a range of performance indicators (KPIs) to monitor business performance in four key areas - Customer, Operational, Financial and People. As part of the strategic review undertaken in 2015, enhancements were made to these metrics to align them to the delivery of the company's five year plan.
The strategic KPIs are reported to the Board, Executive and Heads of Function on a monthly basis with lead and lag success indicators reported more frequently within the business. This enables consistency of reporting at all levels and provides a balanced overview of the health and performance of the company.
CUSTOMERS
Good Energy continues to focus on building its customer base and delivering high quality customer service.
Good Energy monitors KPIs which will support the delivery of its customer strategy, including customer growth, and customer churn and retention. 2016 will see the introduction of three additional KPIs to measure customer satisfaction, competitiveness and brand awareness.
OPERATIONAL
Supply
Good Energy's operational strategy for its supply businesses is to drive efficiency whilst delivering a great customer experience. Primary operational KPIs are 'cost to serve' for existing supply customers and 'cost to acquire' for new supply customers.
The customer is at the heart of the company's enhancements to its systems, processes and staff training and this ensures cost to serve reductions are managed alongside continual improvements in the whole Good Energy customer experience.
Good Energy also monitors the cost of power from the market and from the company's own generation assets to understand the effectiveness of its energy procurement approach.
Generation
Its generation business goal is to maximise efficiency and return on investment across its portfolio of wind and solar sites. Performance will be measured by availability - the % of time each site is available to generate.
Across the company
Two further operational KPIs, introduced early in 2016, will have an impact across Good Energy. One will measure the equivalent emissions of its activities.
The second will monitor the effectiveness of its risk management processes.
FINANCIAL PERFORMANCE
The company's financial performance is of fundamental importance to all stakeholders. Good Energy's main objectives are to deliver growth in profit and value and to ensure it is adequately funded to meet its on-going requirements and long term objectives. The business monitors growth in revenue, gross margin and overhead costs to support the delivery of its financial targets.
The funding strategy of the business is also reviewed on a regular basis to ensure that both the cost of funding and the balance between debt and equity funding are appropriate for the business and provide the foundation to support its future growth plans.
PEOPLE
The Executive team is focused on developing the culture of Good Energy in a way which enables it to attract and retain employees with the right skills, knowledge and mind-set to help deliver its growth plans.
To achieve this, the company has invested in a programme to embed its core values into its people management processes. This is supported by an improved learning and development programme and company reward strategy.
Additional KPIs introduced in 2015 included employee engagement and employee retention. Employee engagement is measured company-wide on an annual basis. The first set of results, collected in Q4 2015, showed an engagement score of 78%, which is an extremely strong result for the organisation's first formal engagement survey. The highest performing businesses industry-wide aim for a score of 80% or higher.
Employee retention is also an important enabler of the company's growth plans, ensuring the business can retain the skills and knowledge it requires. By investing in employee development and encouraging internal promotions, Good Energy aims to offer employees longer term career growth opportunities.
To support the company's ambition for continued growth, investment in people, capability development and systems during the year was maintained. This investment enabled the company to hire a number of new senior roles, bringing in additional skills to ensure it is able to respond effectively to maximise the business growth opportunities.
Chief Executive's Review
2015 was a year of political change and uncertainty for the renewable energy industry. Throughout this period, Good Energy demonstrated that as a business it is both flexible and responsive to change, while it continues to grow. It has delivered a year end performance in line with expectations.
In the autumn of 2015, Good Energy announced a renewed five-year strategy for profitable growth, setting out its future customer growth targets. Its goal is to have 900,000 domestic customers (household equivalents) by 2020. This growth path will enable the company to further pursue its mission to tackle climate change, capitalising on the strengths of its vertically integrated supply and asset business model, and using its approach to innovation to gain market share, whilst growing profitably.
Supply
Good Energy's electricity, gas and Feed-in Tariff (FIT) customer numbers continued to show strong growth, with 219,400 in total by 31 December 2015 (2014: 152,500). The company's domestic supply base received a major boost as a result of winning the Big Deal clean energy collective switch in the autumn, and by 31 December 2015, total electricity customers numbers had risen by 32% to 68,000 (2014: 51,500).
Gas customer numbers rose by 55% to 38,800 (2014: 25,000) while there was a 48% rise in FIT customer numbers to 112,600 (2014: 76,000). Business sales revenue grew 30% during the year (2014: 22%), reflecting a number of factors including a year on year improved competitive pricing position, rising brand awareness through avenues such as social media and increased interest in corporate social responsibility. The number of sites supplied almost doubled, while the amount of power delivered to business customers grew by more than 52%.
These figures reflect Good Energy's record of consistent year on year growth in customer numbers and reflect the ongoing investment in customer service, staff, and back office systems. Third-party endorsements from Which? and MoneySavingExpert have also helped drive customer growth and high levels of customer retention, along with endorsements from organisations such as Ethical Company Organisation, the Good Shopping Guide and the Social Stock Exchange.
Generation & development
During the year, the company also continued to invest in its pipeline of generation sites. Four solar farms were built and commissioned during the 12-month period, bringing the total number of owned and operated solar sites to six, with a combined installed capacity of 30MW. Construction of a seventh 5MW solar farm began during the last quarter of 2015 and the site is now 'live'. Planning consent for a further three sites was received early in 2016. These sites will be developed to balance appropriate returns on the company's assets with an objective of securing access to long term renewable electricity to support customer growth.
Output from its two wind farms at Delabole (Cornwall) and Hampole (Yorkshire) during the full year totalled 53.2GWh, up 37% (2014:38.7GWh). Work continued in 2015 on two new wind farm projects - one in Scotland and one in Cornwall - which together could power tens of thousands of homes.
Good Energy continues to review its ongoing strategy on asset development in light of the Government's review of renewable energy policy. As part of this, the company has taken the decision to write off £575k of early-stage development costs on a number of small sites which are now unable to progress, reduce the size of the development team, redeploying staff into other business roles where appropriate and reviewing the on-going focus.
As a result, the team will now concentrate on Good Energy's existing portfolio, and consider what development plans the company will explore in 2017 and beyond.
The company invested in a new finance system during the year to facilitate improved internal reporting and as an ongoing driver to reduce costs as the organisation continues to grow. It also rolled out a new on-line portal, which more than 25% of the customer base has already signed up to. A new meter reading 'app' was also unveiled, which is supporting the company to produce regular accurate bills.
The company has grown considerably since its creation and 2015 was a year of particularly strong expansion. It now employs more than 300 staff at its Chippenham, Wiltshire offices and this figure is set to rise in 2016.
A project to refresh and further embed the company's core values across the organisation was rolled out during the year. This has provided the framework to help all employees maximise their potential and successfully deliver the company's strategy and objectives. The work on this has been reflected in relatively high employee engagement scores, which compare well with other high performing organisations.
Corporate Social Responsibility (CSR)
Good Energy has sustainability at the heart of its strategy, and as a progressive business, it understands that its role in society is far more than just delivering profit. It is committed to using its business as a force for good.
The company continued to make a positive impact on addressing climate change during the year. It added four new solar farms to its portfolio by the year end, increasing the amount of renewable electricity generation.
An increasing number of customers also opted to buy the company's 100% renewable electricity, enabling each individual to reduce their carbon footprint. The average Good Energy electricity customer saved 1.12 tonnes of carbon last year by being 100% renewable - the equivalent of not driving 5,700 miles. As generation and usage of renewable electricity increases, this in turn reduces the reliance on fossil fuels and energy imports.
The company will shortly be releasing its first Sustainability Report, which addresses and refreshes the company's approach to CSR and associated reporting. Good Energy is a founder member of the Social Stock Exchange and at the end of the year, was dual listed on the social impact segment of the ISDX Growth Market.
The company has continued to build upon its work with a range of like-minded partners during the year, including the Soil Association, Friends of the Earth, 10:10 Solar Schools and the Eden Project. In the fourth quarter, the company also further cemented its relationship with the National Trust, and will now be the charity's energy partner for an additional two years.
The company remains committed to supporting and working with local communities so that they can benefit from its wind and solar development activities, and has set up community funds alongside each of the new solar farms it commissioned during the year. The local tariffs for customers living close to the company's two wind farms remain in place and in August, Delabole residents enjoyed a windfall payment to reflect the high performance of the site's four turbines.
Good Energy believes that innovation and technology will play a vital role in helping the UK move towards a future powered exclusively by renewables. Work on battery storage and peer-to-peer trading which it undertook during 2015 and will continue to explore, will help the company develop new 100% renewable solutions. These will play an important role in helping the drive to reduce carbon emissions in the future.
Looking ahead
Good Energy believes there is real potential for it to take full advantage of the long-term opportunity as the UK begins to embrace a new decentralised, low carbon energy market. Since 2010, more than one million homes are now producing power in their own homes from sustainable sources of energy, and in 2015, in quarter two alone, renewable energy provided over 25% of the UK's electricity. Good Energy is at the heart of this change, and has the right long-term proposition, the right experience and a proven strategic approach to deliver growth going forward.
The business sector will be a focus for Good Energy in 2016 and beyond. For example, the commitments of the RE100, a collaboration of the world's most influential companies which have pledged to work towards 100% renewable power, play well to Good Energy's strengths. The company is in an excellent position to support these organisations in their drive both to reduce carbon emissions and demonstrate their CSR and carbon credentials to customers.
The domestic customer proposition will continue to develop and build on the progress made in 2015, such as the on-line portal and the Good Energy 'app'. The company's long- term vision is for the domestic customer to be the central hub for all sustainable energy initiatives in the home, and to help consumers take advantage of a smart-enabled future. It will seek to engage with its customers and make it possible for them to manage and understand their energy use more effectively than ever before.
The company's approach to its development of assets will be adapted in the short term to reflect the impact of government policy. It remains optimistic about the available returns from operational assets and its ability to secure the long term supply of renewable electricity required to match growing customer demand.
Good Energy's customer numbers have risen an average 36% year on year for the last three years, demonstrating a clear, consistent record of growth. During 2015, it has continued to build on these strong foundations already laid and I am confident Good Energy will be able to both continue to maximise the opportunities for growth and respond to changing energy policy throughout the coming year and beyond.
Chief Financial Officer's Review
Financial performance overview
Good Energy's strategic objectives for 2015 were to continue to deliver customer growth, improve the profitability of the supply business and invest in renewable generation assets.
It delivered a profit before tax of £128k which was in line with expectations. Revenue grew by 12%, supported by strong growth in customers up 44% in the supply business and 93% growth in generation revenue. 2014 results included revenue from the sale of West Raynham. Total assets grew by 18% as a result of continued investment in generation. The company had cash balances of £4.8m at the year end and borrowing had increased from £46m in 2014 to £62m as further drawdowns were made from the fixed rate debt facility announced at the end of 2014 to finance the construction of the four solar farms built and commissioned during 2015, and to start work on the two new wind farm projects noted previously.
Profit before tax and exceptional items of £128k was down by £1.2m compared with 2014, despite an improvement of £3.2m PBT in the Supply business. The results for 2014 included a profit from the sale of West Raynham of £3.6m. The 2015 results included £113k PBT in relation to site sales and a write-off of £575k for sites no longer to be developed.
Financial performance by segment
The Supply business delivered a profit before tax of £3.7m in 2015, up by £3.2m from 2014. Revenue grew by 32%, with gross margin flat at 29%. Overall customer numbers grew by 44%, and the business has benefited from falling power prices, partially offset by the over-purchase of gas referred to in the interim results.
The Supply business benefitted from a non-recurring credit of £1.0m which arose following the removal of Levy Exemption Certificates (LECs) announced by Government with effect from 1 August 2015. Good Energy had purchased LECs in excess of those needed to ensure compliance with regulatory requirements for supplying 100% renewable energy and had written back this excess cost to the income statement. The Autumn Statement confirmed that these LECs could be used up to March 2018 to offset the cost of Climate Change Levy for business customers. For this reason, the LEC inventory has been written back with a corresponding credit to the income statement.
Administration costs grew by 13%, reflecting strong cost control. The Supply business generated a positive cash flow in 2015.
The Generation business delivered a loss before tax of £636k, which was in line with expectations. This reflects the performance of solar sites, which are cash positive but profit negative in their first few years and also reflects the removal of the benefit of LECs from 1st August 2015. Overall generation revenue grew by 93%. The Development business reported a loss before tax of £2.1m. This includes the costs of the development team that cannot be capitalised against on-going projects and a write-off of early-stage development costs on sites that will not be developed. As a result of the strategic review undertaken during the year, the Development team has been reduced in size going forward to reflect the change in focus with a reduction in investment in solar development anticipated in the future.
Financial position and financing
The long term fixed rate funding facility secured at the end of 2014 has supported the growth of £16m of solar assets with an additional four sites having been completed in 2015. The company has adopted a prudent approach to drawing down against this facility, in order to optimise the overall level of borrowings.
Good Energy continually reviews the funding requirements for the business to ensure that it can meet its strategic growth objectives with appropriate funding products taking into account the cost of capital, duration and overall gearing levels.
In the autumn, Good Energy announced its new strategy and growth targets for 2020. There is good potential for growth in the supply of renewable energy for both business and domestic customers and the company continues to invest to take advantage of these opportunities. The planned implementation of the billing system in 2016 and further process improvements in our operations teams will deliver reductions in cost to serve as well as improving customer experience and enable the business to deliver increased profitability as it leverages its cost base.
Consolidated Statement of Comprehensive Income (Unaudited)
For the year ended 31 December 2015
| 2015 | 2014 |
| £000's Unaudited
| £000's Audited |
REVENUE | 64,281 | 57,618 |
Cost of Sales | (42,982) | (38,782) |
GROSS PROFIT | 21,299 | 18,836 |
Administrative Expenses | (17,065) | (15,045) |
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OPERATING PROFIT | 4,234 | 3,791 |
Finance Income | 23 | 87 |
Finance Costs - including exceptional item | (4,129) | (2,590) |
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PROFIT BEFORE TAX AND EXCEPTIONAL FINANCE COST | - | 2,169 |
Exceptional Finance Cost | - | (881) |
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PROFIT BEFORE TAX | 128 | 1,288 |
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Taxation | (323) | 520 |
(LOSS)/PROFIT FOR THE YEAR
| (195) | 1,808 |
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OTHER COMPREHENSIVE INCOME: |
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Items that may subsequently be reclassified to profit or loss |
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Loss on cash flow hedge | - | (328) |
Other comprehensive loss for the year, net of tax | - | (328) |
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TOTAL COMPREHENSIVE (EXPENSE)/INCOME FOR THE YEAR ATTRIBUTABLE TO OWNERS OF THE PARENT COMPANY | (195) | 1,480 |
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(Loss)/earnings per share from profit for the year - Basic | (1.4p) | 12.6p |
- Diluted | (1.4p) | 11.9p |
Consolidated Statement of Financial Position (Unaudited)
As at 31 December 2015
| 2015 | 2014 |
| £000's | £000's |
| Unaudited | Audited |
ASSETS |
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Non-current assets |
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Property, plant and equipment | 60,984 | 44,729 |
Intangible assets | 3,317 | 3,530 |
Restricted deposit accounts | 2,801 | - |
Investments | 502 | 500 |
Total non-current assets | 67,604 | 48,759 |
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Current assets |
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Inventories | 9,482 | 6,466 |
Trade and other receivables | 11,598 | 10,281 |
Current tax receivable | 126 | 109 |
Cash and cash equivalents | 4,751 | 13,703 |
Total current assets | 25,957 | 30,559 |
TOTAL ASSETS | 93,561 | 79,318 |
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EQUITY AND LIABILITIES |
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Capital and reserves |
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Called up share capital | 748 | 733 |
Share premium account | 9,786 | 9,077 |
EBT shares | (1,074) | (127) |
Retained earnings | 7,483 | 8,260 |
Total equity attributable to members of the parent company | 16,943 | 17,943 |
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Non-current liabilities |
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Deferred taxation | 567 | 15 |
Borrowings | 55,911 | 39,676 |
Total non-current liabilities | 56,478 | 39,691 |
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Current liabilities |
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Borrowings | 5,626 | 6,608 |
Trade and other payables | 14,514 | 15,076 |
Total current liabilities | 20,140 | 21,684 |
Total liabilities | 76,618 | 61,375 |
TOTAL EQUITY AND LIABILITIES | 93,561 | 79,318 |
Consolidated Statement of Changes in Equity (Unaudited)
For the year ended 31 December 2015
| Share Capital | Share Premium | EBT Shares | Retained Earnings | Total |
| £000's | £000's | £000's | £000's | £000's |
At 1 January 2014 | 733 | 9,077 | (236) | 6,890 | 16,464 |
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Profit for the year | - | - | - | 1,808 | 1,808 |
Other comprehensive expense for the year | - | - | - | (328) | (328) |
Total comprehensive income for the year | - | - | - | 1,480 | 1,480 |
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Share based payments | - | - | - | 30 | 30 |
Tax credit relating to share option scheme | - | - | - | 311 | 311 |
Sale of shares by EBT | - | - | 109 | 21 | 130 |
Dividend paid | - | - | - | (472) | (472) |
Total contributions by and distributions to owners of the parent, recognised directly in equity | - | - | 109 | (110) | (1) |
At 31 December 2014 | 733 | 9,077 | (127) | 8,260 | 17,943 |
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At 1 January 2015 | 733 | 9,077 | (127) | 8,260 | 17,943 |
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Loss for the year | - | - | - | (195) | (195) |
Other comprehensive expense for the year | - | - | - | - | - |
Total comprehensive expense for the year | - | - | - | (195) | (195) |
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Share based payments | - | - | - | 51 | 51 |
Tax credit relating to share option scheme | - | - | - | (151) | (151) |
Issue of ordinary shares | 15 | 709 | - | - | 724 |
Purchase of shares by EBT | - | - | (1,150) | - | (1,150) |
Sale of shares by EBT | - | - | 203 | (4) | 199 |
Dividend paid | - | - | - | (478) | (478) |
Total contributions by and distributions to owners of the parent, recognised directly in equity | 15 | 709 | (947) | (582) | (805) |
At 31 December 2015 | 748 | 9,786 | (1,074) | 7,483 | 16,943 |
Consolidated Statement of Cash Flows (Unaudited)
For the year ended 31 December 2015
| 2015 | 2014 |
| £000's | £000's |
| Unaudited | Audited |
Cash flows from operating activities |
|
|
Cash generated from operations | 1,590 | 3,697 |
Finance income | 23 | 87 |
Finance cost | (3,277) | (2,644) |
Income tax received/(paid) | 59 | (500) |
Net cash flows from operating activities | (1,605) | 640 |
|
|
|
Cash flows from investing activities |
|
|
Purchase of property, plant and equipment | (17,750) | (18,316) |
Purchase of intangible fixed assets | (492) | (619) |
Deposit into restricted accounts | (2,801) | - |
Acquisition of unquoted investment | - | (500) |
Net cash flows used in investing activities | (21,043) | (19,435) |
|
|
|
Cash flows from financing activities |
|
|
Payments of dividends | (451) | (472) |
Proceeds from borrowings | 24,749 | 25,983 |
Repayment of borrowings | (10,348) | (11,035) |
Capital repayments of finance leases | - | (83) |
Purchase of own shares | (453) | - |
Sale of own shares | 199 | 130 |
Net cash flows from financing activities | 13,696 | 14,523 |
|
|
|
Net (decrease)/increase in cash and cash equivalents | (8,952) | (4,272) |
Cash and cash equivalents at beginning of year | 13,703 | 17,975 |
Cash and cash equivalents at end of year | 4,751 | 13,703 |
Included in cash and cash equivalents is £1.7m (2014: £nil) which is available for use in specific circumstances (such as repayment of financing costs) as set out in the Company's loan agreement
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 2015.
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 2014 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 2014, 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 18 March 2016. Copies of the announcement 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 2015
| Electricity Supply | FIT Admini-stration | Gas Supply | Total Supply Companies | Electricity Generation | Generation Development | Holding Companies / Consolidation Adjustments | Total | |
| £000's | £000's | £000's | £000's | £000's | £000's | £000's | £000's |
|
Revenue |
|
|
|
|
|
|
|
|
|
Revenue from external customers | 40,192 | 3,902 | 16,411 | 60,505 | 3,576 | 200 | - | 64,281 |
|
Inter-segment revenue | - | - | - | - | 3,882 | - | (3,882) | - |
|
Total revenue | 40,192 | 3,902 | 16,411 | 60,505 | 7,458 | 200 | (3,882) | 64,281 |
|
|
|
|
|
|
|
|
|
|
|
Expenditure |
|
|
|
|
|
|
|
|
|
Cost of sales | (24,542) | (1,655) | (12,987) | (39,184) | (3,440) | (358) | - | (42,982) |
|
Inter-segment cost of sales | (3,882) | - | - | (3,882) | - | - | 3,882 | - |
|
Gross Profit | 11,768 | 2,247 | 3,424 | 17,439 | 4,018 | (158) | - | 21,299 |
|
Administrative expenses |
|
|
| (12,877) | (353) | (1,448) | (1,408) | (16,086) |
|
Depreciation & amortisation |
|
|
| (975) | - | (3) | (1) | (979) |
|
Operating profit/(loss) |
|
|
| 3,587 | 3,665 | (1,609) | (1,409) | 4,234 |
|
Net finance income/(costs) |
|
|
| 136 | (4,301) | (494) | 553 | (4,106) |
|
Profit/(loss) before tax |
|
|
| 3,723 | (636) | (2,103) | (856) | 128 |
|
|
|
|
|
|
|
|
|
|
|
Segments assets & liabilities |
|
|
|
|
|
|
|
|
|
Segment assets |
|
|
| 34,628 | 96,091 | 6,778 | (43,936) | 93,561 |
|
Segment liabilities |
|
|
| 29,040 | 94,239 | 12,414 | (59,075) | 76,618 |
|
Net assets/(liabilities) |
|
|
| 5,587 | 1,852 | (5,636) | 15,140 | 16,943 |
|
Additions to non-current assets |
|
|
| 755 | 18,090 | - | - | 18,845 |
|
Segmental Analysis: 31 December 2014
| Electricity Supply | FIT Admini-stration | Gas Supply | Total Supply Companies | Electricity Generation | Generation Development | Holding Companies / Consolidation Adjustments | Total |
| £000's | £000's | £000's | £000's | £000's | £000's | £000's | £000's |
Revenue |
|
|
|
|
|
|
|
|
Revenue from external customers | 31,593 | 2,544 | 11,568 | 45,705 | 1,754 | 10,159 | - | 57,618 |
Inter-segment revenue | - | - | - | - | 2,106 | - | (2,106) | - |
Total revenue | 31,593 | 2,544 | 11,568 | 45,705 | 3,860 | 10,159 | (2,106) | 57,618 |
|
|
|
|
|
|
|
|
|
Expenditure |
|
|
|
|
|
|
|
|
Cost of sales | (19,789) | (1,619) | (9,064) | (30,472) | (1,840) | (6,470) | - | (38,782) |
Inter-segment cost of sales | (2,106) | - | - | (2,106) | - | - | 2,106 | - |
Gross profit | 9,698 | 925 | 2,504 | 13,127 | 2,020 | 3,689 | - | 18,836 |
Administrative expenses |
|
|
| (11,812) | (271) | (1,251) | (895) | (14,229) |
Depreciation & amortisation |
|
|
| (808) | - | (4) | (4) | (816) |
Operating profit/(loss) |
|
|
| 507 | 1,749 | 2,434 | (899) | 3,791 |
Net finance income/(costs) |
|
|
| (13) | (2,346) | (430) | 286 | (2,503) |
Profit/(loss) before tax |
|
|
| 494 | (597) | 2,004 | (613) | 1,288 |
Segments assets & liabilities |
|
|
|
|
|
|
|
|
Segment assets |
|
|
| 21,910 | 63,214 | 13,626 | (19,432) | 79,318 |
Segment liabilities |
|
|
| (15,000) | (58,518) | (16,889) | 29,032 | (61,375) |
Net assets/(liabilities) |
|
|
| 6,910 | 4,696 | (3,263) | 9,600 | 17,943 |
Additions to non-current assets |
|
|
| 247 | 25,208 | - | - | 25,455 |
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: | 2015 | 2014 | |
| £000's | £000's | |
Bank and other interest receivables | 23 | 87 | |
|
|
| |
Finance Cost: | 2015 | 2014 | |
| £000's | £000's | |
On bank loans and overdrafts | 3,192 | 1,467 | |
On corporate bond | 1,110 | 929 | |
Other interest payable | 1 | 56 | |
Amortisation of debt issue cost | 327 | 196 | |
Exceptional finance cost on repayment of borrowings | - | 881 | |
Total finance costs | 4,630 | 3,529 | |
Less: amounts capitalised on qualifying assets | (501) | (939) | |
Total | 4,129 | 2,590 | |
4. Taxation
| 2015 | 2014 |
| £000's | £000's |
Analysis of Tax Charge in Year |
|
|
Current tax | 167 | - |
Adjustments in respect of prior years | (243) | (108) |
Total current tax | (76) | (108) |
|
|
|
Deferred Tax |
|
|
Origination and reversal of temporary differences | (134) | (420) |
Adjustments in respect of prior years | 533 | 8 |
Total deferred tax | 399 | (412) |
Tax on profit on ordinary activities | 323 | (520) |
Factors affecting the tax charge for the year
The tax assessed for the year is higher (2014: lower) than the standard weighted average rate of Corporation Tax in the UK of 20.25% (2014: 21.5%). The differences are explained as follows:
| 2015 | 2014 |
| £000's | £000's |
Profit before tax | 128 | 1,288 |
Profit before tax multiplied by the weighted average rate of Corporation Tax in the UK of 20.25% (2014: 21.5%)
| 26 | 277 |
Tax effects of: |
|
|
Expenses not deductible for tax purposes | (9) | (2) |
Non-taxable gain on sale of investment | - | (728) |
Effects in changes in tax rate | 16 | 33 |
Prior year adjustment - current tax | (243) | (108) |
Prior year adjustment - deferred tax | 533 | 8 |
Total tax charge/(credit) for year | 323 | (520) |
5. Loss/earnings per Ordinary Share
Basic
Basic (loss)/earnings per share is calculated by dividing the (loss)/profit attributable to owners of the Company by the weighted average number of ordinary shares during the year after excluding 521,989 (2014: 208,863) shares held by Clarke Willmott Trust Corporation Limited in trust for the Good Energy Group Employee Benefit Trust.
| 2015
| 2014
|
(Loss)/profit attributable to owners of the Company (£000's) | (195) | 1,808 |
Basic weighted average number of ordinary shares (000's) | 14,455 | 14,322 |
Basic (loss)/earnings per share | (1.4p) | 12.6p |
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 2015. The average market price of the Company's ordinary shares during the year was 222p (2014: 243p). The dilutive effect of share-based incentives was nil (2014: 863,326 shares).
| 2015
| 2014
|
Profit attributable to owners of the Company (£000's) | (195) | 1,808 |
Weighted average number of diluted ordinary shares (000's) | 14,455 | 15,185 |
Diluted (loss)/earnings per share | (1.4p) | 11.9p |
6. Borrowings
| 2015 | 2014 | |||
| £000's | £000's | |||
Current: |
|
| |||
Bank and other borrowings | 5,626 | 6,608 | |||
Total | 5,626 | 6,608 | |||
|
|
|
| ||
| 2015 | 2014 | |||
| £000's | £000's | |||
Non-Current |
|
| |||
Bank and other borrowings | 41,265 | 24,981 | |||
Bond | 14,646 | 14,695 | |||
Total | 55,911 | 39,676 | |||
The Group has undrawn bank overdraft facilities of £5,000,000 (2014: £5,000,000) as at 31 December 2015 and undrawn revolving credit facilities of £2,882,140 (2014: £6,500,000).
At 31 December 2015, £7,681,950 (2014: £8,102,446) 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 2015, £37,959,777 inclusive of £659,777 of accrued interest (2014: £18,799,264 inclusive of £49,264 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 £2,627,109 (2014: £1,393,313) and are being amortised over the life of the loan in accordance with IAS39. The Company has drawn down £37,300,000 of the £53,500,000 loan facility as at 31 December 2015.
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 £15,000,000. 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 £770,879 which are being amortised over the life of the bond. As at 31 December 2015 the amortisation recognised in 'finance costs' totalled £165,982 (2014: £76,424).
|
|
|
7. Cash flows
| 2015 | 2014 |
| £000's | £000's |
Profit before income tax | 128 | 1,288 |
Adjustment for: |
|
|
Depreciation | 2,351 | 1,347 |
Amortisation | 703 | 567 |
Share based payments | 51 | 30 |
Finance costs - net | 4,106 | 2,503 |
Changes in working capital (excluding the effects of acquisition and exchange differences on consolidation) |
|
|
Inventories | (3,871) | (1,908) |
Trade and other receivables | (1,317) | (2,329) |
Trade and other payables | (561) | 2,199 |
Cash generated from operations | 1,590 | 3,697 |