Good Energy pleased with performance as it pivots focus

Renewable electricity provider Good Energy Group reported a positive financial performance from its core business in its preliminary results on Tuesday, despite the ongoing macroeconomic conditions impacted by the Covid-19 pandemic.

The AIM-traded firm said its revenue increased 5.1% to £130.6m, driven by growth in business supply and feed-in tariff customers, more than offsetting a decline in domestic supply customers.

Gross profit totalled £29.6m, making for a decrease of 6.6%, with a gross profit margin of 22.6%, down from 25.5% in 2019.

The board said that was in line with its strategic shift toward longer term, lower gross margin business supply, and selling back excess contracted power and higher network reconciliation costs.

On a fully comparable basis, normalised profit before tax rose to £2.4m for the year ended 31 December, from £2.1m 12 months earlier.

Underlying profit before tax came in at £0.4m, and the company reported a loss before tax of £0.1m, which included non-underlying costs of £0.5m associated with restructuring costs.

The loss also included increased non-cash costs of £1.7m, driven by additional depreciation on the revalued generation portfolio and the write-down in value of the small Creathorne solar site, as well as an additional £0.8m expected credit loss provision reflecting its best estimate of the impact of the coronavirus pandemic on its customer and client base.

Basic earnings per share slipped to 0.4p, with reported earnings per share also 0.4p, compared to 7.5p in 2019.

The directors reported a “strong” operating cash flow of £7.8m, leading to a gross cash balance of £18.3m, up from £13.7m year-on-year, funding investment across the business, and providing increased capital flexibility.

In April, the firm restructured the financing on its renewable generation asset portfolio, providing an additional £7.8m of unrestricted cash.

Net debt decreased to £34.6m, with a revaluation of its 47.5MW generation portfolio resulting in a £13.3m uplift to reserves.

Good Energy’s gearing ratio decreased “significantly” to 51.6% from 68.9%.

The board said it recognised the importance of the dividend to shareholders, and thus intended to resume dividend payments in 2021.

In order to maintain the appropriate level of near-term flexibility, however, it said it had decided not to declare or pay a final dividend.

“Good Energy has shown strength and weathered the Covid-19 storm well,” said founder and chief executive officer Juliet Davenport.

“Total customer numbers are up, driven by continued business and feed-in tariff growth.

“Despite the obvious challenges that 2020 brought, Good Energy has remained financially and operationally resilient with a strong cash position.”

Davenport said the company had made progress with its strategy, and continued to invest across the business in the development of energy service propositions, innovation projects, its workforce, processes and technology.

“The economy is now opening up, consumer and business confidence is returning with an appetite to 'build back greener'.

“With our solid business performance and a clear strategy supporting us, Good Energy is in a great place to provide the products and services that people and businesses need to help them achieve net-zero.”

At 1502 BST, shares in Good Energy Group were down 2.52% at 213p.