Last checked at 22 Dec 2021 07:00
Good Energy Group PLC
("Good Energy" or "the Company")
Trading Update
Good Energy Group PLC (AIM: GOOD), the 100% renewable electricity supplier and innovative energy services provider, today provides a further trading outlook for the business ahead of the year ending 31 December 2021.
Market update
The financial performance for November was in line with expectations. Our first domestic standard variable tariff ("SVT") rise became effective on 1 November 2021, which provided some mitigation against another low wind month, with wind levels 18% below seasonal norms.
During December, power and gas prices have increased sharply to unprecedented levels, driven in part again by tension between Russia and Ukraine, the gateway of European gas imports, together with colder, calmer weather forecasts and a French nuclear plant being taken offline.
Since our last trading update on 25 November 2021, a little over three weeks ago:
- Power and gas prices on a Day Ahead basis for December compared to November have been on average 36% and 35% more expensive respectively at £256/Mwh and £2.71/therm
- Q1 2022 baseload power and gas prices at £489/Mwh and £4.39/therm are 102% and 89% higher respectively
- The increases in nearer term power and gas prices are all now feeding very strongly in 2022/2023 seasonal contracts
The industry has also experienced a further sustained period of low wind since 16 December 2021, which is expected to continue until Christmas. Current wind levels are approximately 33% of seasonal norms and the impact of this shortfall has been material across the industry.
These changed conditions are expected to adversely impact full year profits by approximately a further £3m, since guidance given in our last update to the market on 25 November 2021.
Trading outlook
In November, we highlighted the impact of incurring additional commodity costs from a higher number of business and domestic customers than expected. This is now expected to continue into the first quarter of 2022, at sustained high commodity prices.
To absorb some of the higher input costs, we announced a second domestic SVT price rise of 30% to be effective from 17 January 2022. We expect this to minimise the impact of the rising forward prices over the medium term. We will continue to monitor the need to increase prices further, given our exemption from the price cap.
Colder and calmer weather conditions, coupled with higher customer volumes and elevated market prices throughout the winter will require additional working capital so we are actively engaged with our financing partners to help ensure we can meet these short term working capital requirements as appropriate.
Nigel Pocklington, Chief Executive Officer of Good Energy, said:
"This is a national crisis. Wholesale gas and power prices have increased to unprecedented levels over the last three weeks, creating an extremely difficult operating environment for every business in the industry.
"While we have a very strong track record in forecasting and hedging, these unparalleled price hikes, together with the very low levels of churn within our customer base, means that we require far greater working capital to trade similar volumes at these stratospheric price levels. No one in the industry is immune. We urge the UK Government to support the industry at large in navigating these short-term challenges to protect bill-payers and those that serve them."
Enquiries
Good Energy Group PLC Nigel Pocklington, Chief Executive Charlie Parry, Head of Investor Relations & CoSec Luke Bigwood, Head of Communications | Email: press@goodenergy.co.uk
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SEC Newgate UK | Email: GoodEnergy@secnewgate.co.uk |
Elisabeth Cowell | Tel: +44 (0)7900 248213 |
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Investec Bank plc (Nominated Adviser and Joint Broker) | Tel: +44 (0) 20 7597 5970 |
Sara Hale / Jeremy Ellis |
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Tel: +44 (0) 20 7523 4617 |
Canaccord Genuity Limited (Joint Broker) Henry Fitzgerald - O'Connor |
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About Good Energy www.goodenergy.co.uk
Good Energy is a generator and supplier of 100% renewable power and an innovator in energy services. It currently owns two wind farms, six solar farms and sources electricity from a community of 1,600 independent UK generators.
Since it was founded 20 years ago, the company has been at the forefront of the charge towards a cleaner, distributed energy system. Its mission is to support UK households and businesses generate, store and share clean power.
Good Energy is recognised as a leader in this market, through our green kite accreditation with the London Stock Exchange and as the only energy supplier with Gold Standard Uswitch Green Tariff Accreditation for all tariffs.