Final Results

RNS Number : 5955H

Good Energy Group PLC

17 March 2015

 

17 March 2015

Good Energy Group PLC

("Good Energy" or the "Group" or the "Company")

Un-audited Preliminary Results for the twelve months ended 31 December 2014

Good Energy reports a year of customer growth, continued investment and strategic progress

"2014 has been a year of good progress towards Good Energy's strategic objectives. We have delivered strong customer growth, continued to invest in customer service excellence and in our growing generation portfolio, and have secured the funding required for the next phase of our growth strategy. Although 2014 proved to be the warmest year on record, with a resulting reduction incustomer energy usage in line with the wider market, we nonetheless saw healthy customer growth with overall numbers up 34%. As such, we are confident that we are well positioned to respond and adapt to further changes in the market place and to continue to deliver growth."

Juliet Davenport OBE, Chief Executive

Good Energy, the AIM listed renewable electricity supplier and generator, is pleased to announce its unaudited preliminary results for the twelve months ended 31 December 2014. This has been a period of considerable activity for the Company delivering good progress towards its strategic objectives.

KEY HIGHLIGHTS:

Financial summary

Year ended 31 December	2014	2013	Change
Revenue	£57.6m	£40.4m	+43%
Gross profit	£18.8m	£13.6m	+38%
EBITDA	£5.7m	£5.0m	+14%
Profit before tax*	£2.2m	£3.3m	-33%
Cash balance	£13.7m	£18.0m	-24%
Basic earnings per share (p.)	12.6p	20.9p	-40%
Adjusted earnings per share**	17.5p	20.9p	-16%
Final dividend per share (p.)	2.3p	2.3p	0%
Full year dividend per share (p.)	3.3p	3.3p	0%

*before exceptional finance costs of £0.9m (2013: nil)

**before exceptional finance costs of £0.9m and the tax effect of this item (2013: nil)

·      Significant customer growth with overall customer numbers up 34%.

-     Electricity customer numbers up 30% to around 51,500 (FY 2013: 40,000)

-     Gas customer numbers up 67% to just under 25,000 (FY 2013: 15,000)

-     Feed-in tariff (FIT) administration sites up by 29% to more than 76,000 (FY 2013: 59,000)

·      In common with the rest of the market, challenging trading conditions resulting from the warmest year since records began led to reduced energy use by consumers, impacting on profit before tax for the full year

·      Strong progress and investment made in expanding and diversifying the portfolio of generation assets and securing a robust pipeline of future sites

-     Total owned generation output up 55% to 42GWh (2013: 27GWh) 

-     Wind - two wind farms accounted for 39GWh, up 44%, including Hampole, Yorkshire, commissioned in Q1 2014

-     Solar - first two solar farms built and commissioned in the year accounted for 3GWh power output.

-     Further 30MW of consented solar sites in pipeline for 2015

-     Two solar sites energised Q1 2015: Rook Wood, Wiltshire (5MW), and Carloggas, Cornwall (8MW)

-     Tidal - first investment in tidal energy through the Tidal Lagoon Power Swansea Bay project with a right to purchase the first 10% of the output from the development project

·      Completed successful sale of 49.9MW West Raynham solar site, receiving £6.8m of consideration for the site and £3.2m of reimbursed capital costs, and achieving £3.6m profit

·      £45 million debt facility secured, following repayment of £10.6m under previous facility. At year end, £18.8m of the new facility had been drawn against operational sites. The remainder will enable the construction of further generation sites in 2015

For further information, please contact:

Good Energy Group PLC	01249 766795
Juliet Davenport, Chief Executive
Denise Cockrem, Chief Financial Officer
Arden Partners plc (Nomad & Broker)	01214 238900
Steve Douglas
Michael McNeilly
Camarco (Financial PR Adviser)	020 3757 4980
Geoffrey Pelham-Lane, Billy Clegg, Georgia Mann
Good Energy Press Office	01249 765540
Gill Dickinson

Notes to editors

- Good Energy is a fast-growing 100% renewable electricity supply 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.

- Good Energy matches over the course of a year all the electricity its customers use with power from renewable sources.

- The company has consistently won first or second place in the annual Which? energy company customer satisfaction survey over the past four years.

- Good Energy is the owner of Delabole Wind Farm, the UK's first commercial wind farm, and also owns and operates Hampole Wind Farm, near Doncaster. As of March 2015, it owns and operates three solar farms.

- It won Company of the Year in the British Renewable Energy Awards 2013 and was named as the best green electricity supplier 2013 by the UK's leading ethical and environmental magazine, Ethical Consumer. Most recently, it won Best Utilities PLC 2014 in the UK Stock Markets Awards.

Chairman's Statement

(for the year ended 31 December 2014)

Good Energy was established with a mission to tackle climate change, and help deliver energy security for the UK. This goal remains as relevant today as it did when we first opened for business and we continue to provide the blueprint for how energy companies can and should look in the 21st century.

Fifteen years on, our business continues to grow. Year on year, we have built our customer numbers in both electricity and gas supply. We have invested in a continually growing portfolio of wind and solar generation sites. We launched the precursor to the scheme now known as the Feed-in Tariff (FIT) and today are one of the largest FIT administrators in the country. We contract to buy renewable electricity from an ever-growing network of small and medium independent generators - currently more than 800 - across the UK, and have an enviable reputation for quality customer service.

Throughout 2014, we have demonstrated business resilience and an ability to manage external pressures. The result is, that in spite of the external headwinds of challenging trading conditions, we have been able to make progress towards our strategic objectives of building up both our generation portfolio and customer base.

At the same time, we have maintained a high standard of customer service excellence, coming second in the 2015 annual Which? energy company customer satisfaction survey, with the same score as we achieved in 2014. We have won the top slot in three out of the last four years, clearly demonstrating consistency and a strong customer focus.  We also came first in a high profile MoneySavingExpert poll which aired at peak time on ITV.

We know that our independently-assessed top-rated customer service, combined with our offer of 100% renewable electricity and competitive pricing including a price freeze, followed by a below-inflation price rise, acts as a strong driver for customer growth and plays an important part in reinforcing our reputation and maintaining our competitive advantage. We would anticipate that our price reductions, announced earlier in 2015 and taking effect after Easter, will help reinforce this.

The overall 34% growth in customer numbers is in part attributable to an increased willingness by customers to switch to smaller suppliers. This reflects a continued trend which shows that during 2014, a total of 1.3 million people switched from a larger supplier to a smaller one (source: Energy UK).

Despite challenging trading conditions, with the whole energy sector being impacted by the warmest year since records began, and by lower wind speeds over the last few months of the year, the Company's overall revenues were up 43% to £57.6m.

This rise can be attributed principally to customer growth and the sale of the solar site at West Raynham. This latter transaction is part of Good Energy's strategy to develop its portfolio through a combination of selling some sites and building and holding others.

Gross profit was £18.8m, up by 38% on the previous year, reflecting growth in customer numbers and the sale of West Raynham, partially offset by lower usage as a result of the warmer weather. The year-end profit before tax and exceptional items figure of £2.2m is in line with expectations announced to the market in December 2014.

Government figures indicate that in the first nine months of 2014, renewable electricity provided 18.3% of total UK electricity generation compared to 14% in the first nine months of 2013. This serves to demonstrate the growing contribution of renewable sources such as wind and solar to the UK's electricity mix, aligning well with our own strategic objectives.

Our cash position remains healthy, reflecting the positive operational cash flows from the business and the proceeds from both West Raynham and the new debt facility.

The Directors intend to maintain an efficient capital structure that provides the funds for further development, construction and/or acquisition of generating assets to add to Good Energy's existing generating portfolio together with the provision of returns to shareholders.  With this ambition in mind, the Directors target a prudent level of dividend cover.  Consequently, the Directors recommend a final dividend of 2.3p per share, in-line with the 2013 final dividend. Subject to shareholder approval at the Company's AGM, the final dividend will be payable on 29 May 2015 to shareholders on the register on 8 May 2015. 

The Board is confident that the Company remains well placed to continue to make good progress on all its objectives, delivering a consistently reliable performance which will enable it to build on its investment for long term growth.

I would like to thank all the staff at Good Energy for the energy and commitment they have shown throughout 2014.  This provides an excellent foundation from which to continue to build as we seek to pursue our goal of being a catalyst for change in the UK energy market.

John Maltby        

Chairman

17 March 2015

Chief Executive's Review

(for the year ended 31 December 2014)

During 2014, we've seen Good Energy continue to deliver a strong performance against its objectives of driving customer growth and investing in a pipeline of renewable generation assets. At the same time, the Company has continued to invest in its people, systems and processes ensuring the business is flexible and able to build and deliver its plans for further growth.

Customers

Our unique proposition of 100% renewable electricity, independently-rated high quality customer service and competitive pricing has continued to help drive both customer growth and retention across electricity, gas and FIT.

By the end of December 2014, we had seen overall growth in customer numbers of 34%. Our electricity customers grew 30% from 40,000 (end 2013) to 51,500 as of end December 2014, while our gas customer base grew at an even greater rate from 15,000 (end 2013) to just under 25,000 (end 2014). We've recorded consistent year-on-year growth in both categories - in the last five years alone we've seen overall growth of 97% and 654% respectively.  We continue to see high levels of customer retention, with a consistently low level of customer churn.

Business sales revenues have also risen by 22% and we are confident this positive growth momentum will continue throughout 2015 and beyond. 

Good Energy is one of the largest FIT administrators in the UK. Encouraging and developing independent renewable energy generation has always been at the heart of what Good Energy does. It is the foundation upon which we see a 100% renewable future for the country being built, and one which empowers individuals both to generate electricity and benefit from an income from installing solar panels on their roofs.

By the end of 2014, we had seen FIT customer numbers rise 29% from 59,000 to more than 76,000. Again, we have seen a pattern of strong year-on-year growth in this sector establishing the Company's position as one of the largest FIT administrators in the UK.

Our quality service proposition, which ensures that customers have the best consumer experience, remains integral to our offering. We have invested further during the year to ensure these high levels of service are maintained and improved.  In particular we have recruited additional personnel, developed our training, and introduced internet-based services such as on-line direct debits and e-billing. As a result, we expect to see further examples of new and improved customer service processes as the year progresses.

On the generation side of the business, during 2014 we successfully expanded and diversified our portfolio and invested further in our pipeline of renewable electricity sites. By the end of the year, our total owned generation capacity had risen to 24.2MW (2013: 9.2MW).

The additional capacity brought on stream during 2014 came principally from our second wind farm, in Hampole, Yorkshire. This was commissioned in the first quarter of the year, adding 8.2MW of installed capacity to our total generation mix. During 2014, the combined power output from Hampole, and our other wind farm at Delabole, was 39GWh, up 44% on 2013.

Subsequently, we built and commissioned our first two solar farms - Woolbridge in Dorset and Creathorne Farm in Cornwall - adding a further 6.8MW of installed capacity. We also began work on a further three solar sites, one of which was commissioned in January 2015.

A number of submissions for further solar sites are at various stages in the planning process, and we expect to see these bear fruit during the first half of 2015.

We have continued to purchase power from and grow our network of independent renewable electricity generators across the UK, in an approach that further differentiates us from others in the sector. We now work with around 800 individuals and small businesses in this way. 

These power purchase agreements (PPAs) form an important part of our plans and during 2014 we expanded our PPA base by more than 70% to around 190.

We further demonstrated this commitment during the year with our first ever investment in tidal energy through the Tidal Lagoon Power Swansea Bay project.  Our investment in this development project gives us an option over 10% of the output from the project, currently forecast at 495GWh per annum, should the proposal receive planning approval later this year. The tidal lagoon is expected to generate sufficient electricity to power more than 155,000 homes. This investment enables us to further diversify our future sources of renewable electricity, to supply our growing number of customers and enhance our forecasting capability through predictable generation.

Finance

This has been a busy year as we put in place some key financial foundations to sustain our future growth and realise our strategic ambitions.  Our successful refinancing towards the end of the fourth quarter and the successful sale of the West Raynham solar site in the summer formed an important part of our strategy to invest for growth and to ensure access to funding for our projects going forward.

Trading environment

2014 proved to be the warmest year since records began, resulting in a prolonged period of over-supply and under-demand.  This lower than expected customer demand fed through to lower revenue per customer for the Company.

Overall, Good Energy's generation volume increased 55% to 42GWh compared with the previous year's output. This rise was driven by the commissioning of the Company's second wind farm, in Hampole, Yorkshire and the addition of its first two solar farms. Wind generation from the PPA portfolio contributed 146GWh, a rise of 15% on 2013.

A combination of factors including  reduced wholesale power prices, falling wholesale gas prices and mild weather resulted in corresponding reductions in gas power plant operating costs. Wholesale gas prices fell, driven by high global supply and the mild weather conditions.

Regulatory, political and market environment

The energy sector continues to be subject to an ever changing regulatory, political and market environment.  For example, 2014 saw proposals from the Government to radically alter the solar subsidy framework for the third time in just four years.  We strongly believe solar could be subsidy free by 2020, unlike coal, gas and nuclear, and we're pleased to report that we were listened to, with many of our comments submitted during the consultation period reflected in the final policy framework.

During 2014, Ofgem outlined new delivery requirements through both its Retail Market and Electricity Market Reviews bringing with them greater transparency and improved service for consumers.  These changes necessitated additional investment in new Company systems and processes in order to comply with the requirements.

Energy issues continue to dominate the political agenda ahead of the General Election, polarising into debates over cost-reflective prices, customer service standards, ease of switching and transparency. The Labour Party has maintained its pledge to introduce a price freeze if elected. Meanwhile, the Conservative Party has stated its plans for reducing support for onshore wind and large-scale solar if it is returned with a majority.

The Competition and Markets Authority announced in June 2014 that it would be investigating the energy market, and early workings from the investigation were announced in February. We welcome the CMA inquiry as it represents an opportunity to review the energy market to ensure it works for the benefit of consumers not only for the historically established suppliers. Improved competition means more choice for consumers. The final report is due out towards the end of the year, and while Good Energy is not directly impacted by the focus of the inquiry, it is likely that we will be affected by its outcomes.

Other challenges which will face us throughout the remainder of the year will be the implications for energy policy post-election, and the associated uncertainty surrounding the financial, regulatory and planning regime for renewable energy. Equally, uncertainty surrounds whether the new regime for long-term contracts, designed to encourage investment in new, low-carbon generation, will work effectively and meet the need of onshore renewables.

We will also be looking at the most appropriate and cost-effective way for Good Energy to deliver the government's smart metering programme. The energy industry is currently obliged to provide smart meters to all customers by 2020 but there is acknowledgement that the challenges this programme brings to the smaller, independent suppliers may be disproportionate in comparison with the economies of scale enjoyed by the Big Six. The programme timescale has already been subject to delays.

Outlook

Good Energy has firmly established itself as a leading renewable energy company with a resilient business model.  It is well positioned to respond and adapt to changes in the market place.  We have a growing number of customers who want to use our renewable electricity; we have more assets under development which will increase our ability to own a greater proportion of the electricity we supply, and we have successfully secured the financing we need to fund the next stage of our growth strategy.

Further development of our proposition and investment in people and systems mean that we will be able to continue to grow our customer base.  Good Energy has firmly established itself as a leading renewable energy company well positioned to respond and adapt to changes in the market place.

Juliet Davenport

Chief Executive

17 March 2015

Chief Financial Officer's Review

(for the year ended 31 December 2014)

Financial performance

Consolidated revenue continued to grow strongly in 2014, increasing 43% to £57.6m (2013: £40.4m) with all segments of the Group contributing to the rise. This reflects the benefits of continued customer growth, the increase in generation assets and the sale of West Raynham.

Consolidated gross profit increased by 38% to £18.8m (2013: £13.6m) with strong customer growth partially offset by lower energy usage that affected the energy industry as a whole.   Consolidated gross margin reduced to 33% (2013: 34%) reflecting the impact of our price freeze in Q1 2014, the increased proportion of total revenues coming from lower margin business sales and a partial year of generation from our new renewable assets. 

Administration expenses increased 55% to £15.1m (2013: £9.7m). This increase reflects the associated costs to serve our growing customer base, together with investment in marketing and brand expenditure, people and process improvements and an increase in regulatory costs.

Profit before tax and exceptional items is £2.2m (2013: £3.3m) reflecting strong customer growth and the sale of West Raynham, offset by lower energy usage, in common with the rest of the energy sector, and our increased investment in the business. 

Finance costs increased in 2014 due to increased borrowings in the year, associated costs of borrowing and the re-financing of the Hampole loan at a more competitive rate, which incurred an exceptional cost of £0.9m.

Financial positioning and financing

The Consolidated Statement of Financial Position for the Group shows a Shareholders' Equity of £17.9m (2013: £16.5m) representing growth of 8% (£1.4m) as a result of the profit generated in the year.

Total assets have increased by 42% (£23.3m) to £79.3m (2013: £56.0m), reflecting our continued investment in generation assets at both the early stage of development and through to full construction and operation.

To support further growth, we announced in December 2014 that we had entered into a non-recourse debt financing facility of up to £45 million with GCP Infrastructure Investments Limited, a London listed infrastructure debt fund (the "Facility").

The Facility represents the next stage of our strategy, enabling the construction of a further 18MW of solar sites. The Facility will support the further development and construction of Good Energy's solar generation portfolio, bringing the total capacity of wind and solar to 42MW by the end of Q2.

Good Energy will retain 100% of the equity in each of the sites and the Facility will also be used to refinance the existing debt facility on the Hampole wind farm and its two existing operational solar sites. The Facility has a fixed rate of interest of 6.85%.

Principal risks and uncertainties

The Group maintains a risk register which identifies and monitors key risks and sets out actions to avoid or mitigate them.  Responsibilities for actions are assigned to senior management. The register is monitored by the Audit and Risk Management Committee and reviewed annually by the Board.

The principal risks to the Company include:

Political risk - Regulation of the energy sector continues to be a significant factor as noted in the Chief Executive's Review.  Regulations are frequently modified, requiring further action by the renewable generation industry.  Modifications may impact existing or early stage renewable energy projects or customer service requirements.  These could lead to changes in operating conditions (requiring increased capital or operational spend) or could act as barriers to future development.  Changes to regulations or utility policies are considered as part of the review of the Group's operating strategy and our robust operating model is a key mitigation for these risks.

Energy price volatility - Revenues from energy sales may be affected by fluctuations in the wholesale price of energy and the associated costs of buying.  This could lead to necessary pricing action taken by the Company resulting in a possible loss of customers if other energy providers with larger portfolios could remain more competitive.  The Company's vertical integration and forward looking operating model helps to mitigate this risk.

Financial risks - Default loan covenants relating to the financing agreements on generation assets are in place.  At the time the financing was agreed assumptions were used to ensure that sufficient cash flows would be generated to ensure default is unlikely.   There are also insurance and maintenance agreements in place to mitigate lost revenues from unforeseen operational issues. The revolving credit facility contains covenants based on the performance of trading and supply companies which, if breached, would require the facility to be repaid.  The Group's financial performance against its covenants is reviewed on a regular basis to ensure that the mitigation remains appropriate for the business.

Outlook

2014 has seen good progress towards our strategic objectives of delivering customer growth, increasing investment in renewable energy assets and securing long term finance to support the development of our generation portfolio. We have also continued to invest in the business to support its continued growth. Despite the challenging trading conditions in 2014, we remain confident of the outlook for the business in 2015 and beyond and are well positioned to take advantage of the opportunities for growth that we see in the energy sector.

Denise Cockrem

Chief Financial Officer

17 March 2015

Consolidated Statement of Comprehensive Income (Unaudited)

For the year ended 31 December 2014

	2014	2013
	£000's Unaudited	£000's Audited
REVENUE	57,618	40,407
Cost of Sales	(38,782)	(26,822)
GROSS PROFIT	18,836	13,585
Administrative Expenses	(15,045)	(9,727)
OPERATING PROFIT	3,791	3,858
Finance Income	87	116
Finance Costs - including exceptional item	(2,590)	(719)
PROFIT BEFORE TAX AND EXCEPTIONAL FINANCE COST	2,169	3,255
Exceptional Finance Cost	(881)	-
PROFIT BEFORE TAX	1,288	3,255
Taxation	520	(586)
PROFIT FOR THE YEAR	1,808	2,669
OTHER COMPREHENSIVE INCOME:
Items that may subsequently be reclassified to profit or loss
(Loss)/gain on cash flow hedge	(328)	328
Other comprehensive income for the year, net of tax	(328)	328
TOTAL COMPREHENSIVE INCOME FOR THE YEAR ATTRIBUTABLE TO OWNERS OF THE PARENT COMPANY	1,480	2,997
Earnings per share from profit for the year         - Basic	12.6p	20.9p
- Diluted	11.9p	19.6p

Consolidated Statement of Financial Position (Unaudited)

As at 31 December 2014

	2014	2013
	£000's	£000's
	Unaudited	Audited
ASSETS
Non-current assets
Property, plant and equipment	44,729	20,112
Intangible assets	3,530	3,478
Derivative financial instruments	-	328
Investments	500	-
Total non-current assets	48,759	23,918
Current assets
Inventories	6,466	6,128
Trade and other receivables	10,281	7,952
Current tax receivable	109	-
Cash and cash equivalents	13,703	17,975
Total current assets	30,559	32,055
TOTAL ASSETS	79,318	55,973
EQUITY AND LIABILITIES
Capital and reserves
Called up share capital	733	733
Share premium account	9,077	9,077
EBT shares	(127)	(236)
Retained earnings	8,260	6,890
Total equity attributable to members of the parent company	17,943	16,464
Non-current liabilities
Deferred taxation	15	738
Borrowings	39,676	24,667
Total non-current liabilities	39,691	25,405
Current liabilities
Borrowings	6,608	674
Derivative financial instruments	-	52
Trade and other payables	15,076	12,875
Current tax payable	-	503
Total current liabilities	21,684	14,104
Total liabilities	61,375	39,509
TOTAL EQUITY AND LIABILITIES	79,318	55,973

Consolidated Statement of Changes in Equity (Unaudited)

For the year ended 31 December 2014

	Share Capital	Share Premium	EBT Shares	Retained Earnings	Total
	£000's	£000's	£000's	£000's	£000's
At 1 January 2013	626	6,729	(470)	4,167	11,052
Profit for the year	-	-	-	2,669	2,669
Other comprehensive income for the year	-	-	-	328	328
Total comprehensive income for the year	-	-	-	2,997	2,997
Issue of ordinary shares	107	2,574	-	-	2,681
Cost of shares issued in the year	-	(226)	-	-	(226)
Purchase of shares by EBT	-	-	(3)	-	(3)
Sale of shares by EBT	-	-	237	103	340
Dividend paid	-	-	-	(377)	(377)
Total contributions by and distributions to owners of the parent, recognised directly in equity	107	2,348	234	(274)	2,415
At 31 December 2013	733	9,077	(236)	6,890	16,464
At 1 January 2014	733	9,077	(236)	6,890	16,464
Profit for the year	-	-	-	1,808	1,808
Other comprehensive income for the year	-	-	-	(328)	(328)
Total comprehensive income for the year	-	-	-	1,480	1,480
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

Consolidated Statement of Cash Flows (Unaudited)

For the year ended 31 December 2014

	2014	2013
	£000's	£000's
	Unaudited	Audited
Cash flows from operating activities
Cash generated from operations	3,697	938
Finance income	87	116
Finance cost	(2,644)	(647)
Income tax paid	(500)	(64)
Net cash flows from operating activities	640	343
Cash flows from investing activities
Purchase of property, plant and equipment	(18,316)	(9,364)
Purchase of intangible fixed assets	(619)	(1,073)
Acquisition of unquoted investment	(500)	-
Net cash flows used in investing activities	(19,435)	(10,437)
Cash flows from financing activities
Payments of dividends	(472)	(377)
Proceeds from borrowings	25,983	2,433
Repayment of borrowings	(11,035)	(390)
Proceeds from issue of corporate bond	-	14,229
Capital repayments of finance leases	(83)	(153)
Proceeds from issue of shares	-	2,455
Purchase of own shares	-	(3)
Sale of own shares	130	340
Net cash flows from financing activities	14,523	18,534
Net (decrease)/increase in cash and cash equivalents	(4,272)	8,440
Cash and cash equivalents at beginning of year	17,975	9,535
Cash and cash equivalents at end of year	13,703	17,975

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 2014.

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 2013 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 2013, 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 17 March 2015. 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. Following a change to the internal reporting structure in the year, 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 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				(11,782)	(271)	(1,251)	(925)	(14,229)
Depreciation & amortisation				(808)	-	(4)	(4)	(816)
Operating profit/(loss)				537	1,749	2,434	(929)	3,791
Net finance income/(costs)				(13)	(2,346)	(430)	286	(2,503)
Profit/(loss) before tax				524	(597)	2,004	(643)	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

Segmental Analysis: 31 December 2013

	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	25,000	2,316	7,032	34,348	1,112	4,947	-	40,407
Inter-segment revenue	-	-	-	-	1,369	-	(1,369)	-
Total revenue	25,000	2,316	7,032	34,348	2,481	4,947	(1,369)	40,407
Expenditure
Cost of sales	(16,133)	(890)	(5,619)	(22,642)	(833)	(3,347)	-	(26,822)
Inter-segment cost of sales	(1,369)	-	-	(1,369)	-	-	1,369	-
Gross Profit	7,498	1,426	1,413	10,337	1,648	1,600	-	13,585
Administrative expenses				(6,744)	(188)	(977)	(1,137)	(9,046)
Depreciation & amortisation				(674)	-	(4)	(3)	(681)
Operating profit/(loss)				2,919	1,460	619	(1,140)	3,858
Net finance income/(costs)				158	(652)	(185)	76	(603)
Profit/(loss) before tax				3,077	808	434	(1,064)	3,255
Segments assets & liabilities
Segment assets				27,860	20,738	4,503	2,872	55,973
Segment liabilities				(21,359)	(16,667)	(6,657)	5,174	(39,509)
Net assets/(liabilities)				6,501	4,071	(2,154)	8,046	16,464
Additions to non-current assets				1,349	9,453	6	-	10,808

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:	2014	2013
	£000's	£000's
Bank and other interest receivables	87	116

Finance Cost:	2014	2013
	£000's	£000's
On bank loans and overdrafts	1,467	725
On corporate bond	929	125
Other interest payable	56	13
Fair value losses on foreign currency forward contracts	-	52
Amortisation of debt issue cost	196	20
Exceptional finance cost on repayment of borrowings	881	-
Total finance costs	3,529	935
Less: amounts capitalised on qualifying assets	(939)	(216)
Total	2,590	719

The exceptional cost relates to the cost incurred on 17 December 2014 in the settlement of the senior debt used to fund the Hampole wind farm development.

4. Taxation

	2014	2013
	£000's	£000's
Analysis of Tax Charge in Year
Current tax (see note below)	-	537
Adjustments in respect of prior years	(109)	(46)
Total current tax	(109)	491
Deferred Tax
Origination and reversal of temporary differences	(420)	176
Adjustments in respect of prior years	9	(81)
Total deferred tax	(411)	95
Tax on profit on ordinary activities	(520)	586

Factors affecting the tax charge for the year

The tax assessed for the year is lower (2013: lower) than the standard weighted average rate of Corporation Tax in the UK of 21.50% (2013: 23.25%). The differences are explained as follows:

	2014	2013
	£000's	£000's
Profit before tax	1,288	3,255
Profit before tax multiplied by the weighted average rate of Corporation Tax in the UK of 21.5% (2013: 23.25%)	277	756
Tax effects of:
Expenses not deductible for tax purposes	(2)	27
Non-taxable gain on sale of investment	(728)	-
Effects in changes in tax rate	33	(29)
Losses utilised	-	(41)
Prior year adjustment - current tax	(109)	(46)
Prior year adjustment - deferred tax	9	(81)
Total tax (credit)/charge for year	(520)	586

During the year, the Group sold one of its subsidiaries (Good Energy West Raynham Solar Park Limited) and claimed Substantial Shareholding Exemption on the profit from sale. Primarily as a result of this, the Group incurred a net tax credit in the year.

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 208,863 (2013: 387,998) shares held by Clarke Willmott Trust Corporation Limited in trust for the Good Energy Group Employee Benefit Trust.

	2014	2013
Profit attributable to owners of the Company (£000's)	1,808	2,669
Basic weighted average number of ordinary shares (000's)	14,322	12,785
Basic earnings per share	12.6p	20.9p

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.  The average market price of the Company's ordinary shares during the year was 243p (2013: 164p).  The dilutive effect of share-based incentives was 863,326 shares (2013: 815,943 shares).

	2014	2013
Profit attributable to owners of the Company (£000's)	1,808	2,669
Weighted average number of diluted ordinary shares (000's)	15,185	13,601
Diluted earnings per share	11.9p	19.6p

Adjusted earnings per share

Adjusted earnings per share measures are calculated based on profit for the year from continuing operations attributable to owners of the Company before adjusting items as below:

	2014 £000s	2013 £000s
Profit attributable to owners of the Company	1,808	2,669
Adjusting items:
-     Exceptional finance costs	881	-
-     Tax effect of above adjustment	(189)	-
Adjusted earnings	2,500	2,669
Adjusted basic earnings per share	17.5p	20.9p
Adjusted diluted earnings per share	16.5p	19.6p

6. Borrowings

			2014	2013
			£000's	£000's
Current:
Bank and other borrowings			6,608	553
Finance lease liabilities			-	121
Total			6,608	674
			2014		2013
			£000's		£000's
Non-Current
Bank and other borrowings			24,981		10,417
Bond			14,695		14,250
Total			39,676		24,667

The Group has undrawn bank overdraft facilities of £5,000,000 (2013: £5,000,000) as at 31 December 2014 and undrawn revolving credit facilities of £6,500,000 (2013: £6,500,000).

At 31 December 2014, £8,102,446 (2013: £8,537,720) 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.

On 17 December 2014 the outstanding balance of the loan of £10,600,000 (2013: £2,675,450) relating to the Company's subsidiary, Good Energy Hampole Windfarm Limited was paid down in full with all charges to that lender fully released. There was a one off exceptional charge of £880,565 incurred relating to the costs of closing out the loan during its initial period.

At 31 December 2014, £18,799,264 inclusive of £49,264 of accrued interest (2013: nil) 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 19 years commencing 17 December 2014. 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 £1,393,313 (2013: nil) and are being amortised over the life of the loan in accordance with IAS39.

At 31 December 2014, £6,077,658 inclusive of £72,538 of accrued interest (2013: nil) of bank and other borrowings relate to the Company's subsidiary, Good Energy Carloggas Solar Park Limited. The lending constitutes short term construction finance, secured by a mortgage debenture on that Company.  The interest is payable at a rate of 15%. It is anticipated that the facility will be repaid in the month following commissioning of the site (expected March 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 2014 the amortisation recognised in 'finance costs' totaled £76,424 (2013: £20,592).

7. Cash flows

	2014	2013
	£000's	£000's
Profit before income tax	1,288	3,255
Adjustment for:
Depreciation	1,347	634
Amortisation	567	533
Share based payments	30	-
Finance costs - net	2,503	603
Changes in working capital (excluding the effects of acquisition and exchange differences on consolidation)
Inventories	(1,908)	(3,452)
Trade and other receivables	(2,329)	(4,139)
Trade and other payables	2,199	3,504
Cash generated from operations	3,697	938

 

END

 

 

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