Strategic Update and Trading Outlook

RNS Number : 5194T

Good Energy Group PLC

24 November 2021

 

Good Energy Group PLC

("Good Energy" or "the Company")

Acceleration of strategic shift to Energy & Mobility services and Trading Outlook

Good Energy Group PLC (AIM:  GOOD), the 100% renewable electricity supplier and innovative energy services provider, today announces the intended sale of its 47.5MW renewable asset portfolio (the "Disposal") as part of an ongoing strategic shift to energy and mobility services, driven by further investment in Zap - Map, the UK's leading electric vehicle ("EV") mapping platform. The Company also provides a trading outlook for the business ahead of the year ending 31 December 2021.

Acceleration of strategic shift to Energy & Mobility services

The company has outlined a clear strategic direction to capitalise on a rapidly growing market in decentralised, digitised clean energy and transport services based on 100% 'real' renewable power. This strategic direction received strong shareholder support throughout our successful defence, following the lapse of a recent hostile takeover attempt.

As part of delivering this strategy, and after careful review of Good Energy's capital requirement and balance sheet efficiency, the Company is accelerating its transition from a renewable utility to an energy services provider, leading in selected areas of electric transport and decentralised generation as the energy transition continues to gather pace.

With 100% renewable energy remaining core to the business, the Company today announces three important steps towards accelerating this strategic shift.

Generation portfolio sale process

The Company today announces the commencement of a sale process of the entire 47.5MW generation portfolio. Proceeds from the transaction will be used to accelerate and support previously identified strategic growth opportunities. These investments will not occur all at once and in the meantime, proceeds will further strengthen the Company's balance sheet.

The generation portfolio was refinanced and restructured in April 2021 as part of a balance sheet simplification exercise. As of the 30 June 2021, the portfolio was held on the balance sheet at a net book value of £56.8m. In early 2020 Good Energy undertook a formal revaluation exercise of these assets as their historic carrying value was not fully reflective of their open market value.

As a reminder, at the half year the group reported a gross cash position of £9.0m (following the £11m repayment of Good Energy Bond II). Headline net debt at the half year was £36.4m, of which £39.1m was represented by the refinanced debt secured against the generation portfolio.

The Company has appointed KPMG LLP as Financial Advisor regarding the Disposal and anticipates completion of this process during Q1 2022.

Zap - Map investment and international expansion

Zap-Map, the UK's leading EV mapping platform, currently has more than 290,000 registered users, over 95% of the UK's public points on its network and over 75% of UK EV drivers have downloaded the platform.

The Company intends to participate in the current founding round being undertaken by Zap-Map. The anticipated size of the funding round is £7m. This will allow Zap-Map to embark on its next course of commercial and development goals, which will crystallise its leading position for its market services in the UK and initiate steps of international expansion to selected territories.

This is expected to complete on a similar timescale to the Disposal.

Decentralised energy services platform

Alongside the electrification of transport; helping users generate, consume and share their power will be one of the key platforms to delivering a truly decentralised energy network. We have a strong platform to build from, as we are already one of the leading players in decentralised energy with over 175,000 small-scale Feed-in Tariff generation customers.

The Company is currently building a new platform for its decentralised energy service business, to enhance existing products and propositions and deliver new services for feed in tariff customers. This platform will enable smart export for solar customers, and the ability to pay actual as opposed to deemed rates, providing material benefits to the business and customers.

We expect payback on the £1m investment to deliver this platform within 12 months and will be rolled out during H1 2022 to support growth in this segment.

We expect to make further investments across both transport and decentralised energy to deliver our strategic plan.

Trading Outlook

The energy supply landscape has changed significantly in recent months. By the spring of 2022 we expect a certain normalisation to have occurred within the domestic market with significantly fewer participants competing in a more balanced manner on product attributes, differentiated service and price. We expect a degree of industry restructure, with an increased level of regulatory scrutiny particularly on capital adequacy, consumer protection and operational and financial governance.

We welcome this direction, as we believe it benefits customers and allows us to perform consistently in this domestic supply market.

The market has continued to experience high wholesale energy prices, which has led to 22 supply companies failing since the start of September 2021, of which 13 have been announced since 13 October 2021. These market exits will have a short-term impact on the business. We expect to incur unforecasted costs of up to £1m through the Renewables Obligation ("RO") and Feed in Tariffs ("FIT") levy mutualisation processes and £1.5m of additional commodity costs from a higher number of business and domestic customers than expected.

However, given our exemption from the price cap, we have flexibility to change tariff pricing further where necessary and we will continue to monitor this closely as the winter continues.

Continued volatility in the energy industry will put short term financial pressure on the business, however, there remains a route to achieve Good Energy's full year expectations.

Nigel Pocklington, Chief Executive Officer of Good Energy, said:

"I'm very pleased to announce the acceleration of our strategy.

Good Energy has been at the forefront of the UK's energy transition for over 20 years, stimulating the growth of renewable power generation. Our job is done as a developer and asset owner as we focus on the new frontiers - the electrification of transport and decentralised energy generation.

Bigger investment in Zap-Map, will reinforce their market position and help deliver the products and services for EV drivers. We see significant opportunities to scale this business internationally.

We are also increasing investment in a brand-new platform to better serve our decentralised energy customers. With one of the largest feed in tariff customer bases, we are investing in new products and services to better serve their needs. 

Whilst the retail energy market continues to experience some short-term challenges, we remain positive about the future. We will largely be a debt free company, with a strong balance sheet for growth."

Enquiries

Good Energy Group PLC Nigel Pocklington, Chief Executive Charlie Parry, Head of Investor Relations & CoSec Luke Bigwood, Head of Communications	Email: [e-mail]
SEC Newgate UK	Email: [e-mail]
Elisabeth Cowell	Tel: [phone]
Emma Kane	Tel: [phone]
Investec Bank plc (Nominated Adviser and Joint Broker)
Sara Hale / Jeremy Ellis	Tel: [phone]
Canaccord Genuity Limited (Joint Broker) Henry Fitzgerald - O'Connor	Tel: [phone]

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.

About Zap-Map  www.zap-map.com/live/

Launched in June 2014, with a mission to accelerate the shift to electric vehicles (EV) and help the drive towards zero carbon mobility, Zap-Map is the UK's leading EV mapping service. The charging point map, available on desktop and iOS/Android apps, helps EV drivers to search for available charge points, plan longer journeys, pay for charging on participating networks and share updates with other drivers.

Zap-Map currently has more than 290,000 registered users, and over 95% of the UK's public points on its network. Over 75% of UK EV drivers have downloaded Zap-Map, with growth in Zap-Map downloads more than keeping pace with the rapid growth in the EV market.

For more information, please visit www.zap-map.com.

 

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