Good Energy still trading in line, restarts dividend

Renewable energy supplier Good Energy updated the market on its trading for the first nine months of the year on Monday, reporting that despite ongoing volatility in the UK energy sector and low wind speeds in the third quarter, there was no change to its full-year expectations.

The AIM-traded firm said it was taking a “very cautious” stance in the current environment, and implementing a prudent approach to risk management.

In line with previous years, it was following a “clear” hedging strategy, and had also continued to meet all recent regulatory obligations and payments.

The company said it was over 90% hedged for the next 12 months, weighted to the coming winter, limiting its exposure to the current price volatility in the UK domestic energy market.

“However, the business, like the sector at large given recent supplier exits, remains subject to a higher level of market risk,” the board said in its statement.

“The business has recently implemented material price increases in both domestic and business supply segments reflecting the rapidly changing current market conditions, effectively leveraging the flexibility of the new billing systems implemented over the last 12 months.

“While we have made positive strides in addressing the changing nature of our industry, we remain vigilant to the speed of changes and volatility in supply markets.”

Good Energy said customer billing and collections remained a core short term focus to minimise working capital stress, and maintain a cash buffer over the winter.

The board described the company as having a “vertically-integrated business model” with a “strong and competitive” core business, a “mature” wind and solar generation portfolio, and an “increasing focus” on small businesses and electric mobility, helping it to stand out in a crowded marketplace.

It said its 47.5MW generation portfolio powered about 15% of its customer base, adding that it was continuing to steer clear of the price war in the domestic supply market, with limited reliance on price comparison sites.

Good Energy noted that September saw record-breaking growth in the UK electric vehicle market, with one in seven cars sold being a battery EV, representing a 49.4% increase year-on-year, with more than three times as many battery EV's sold compared to diesel cars.

Those positive trends reinforced the scale of opportunity within the UK EV market, where EVs in use were expected to grow at a compound annual growth rate of about 47% through to 2026, as sales ramped up prior to an expected 2030 ban on internal combustion engines.

Overall power demand from EVs was set to grow dramatically at a rate of 52% annually between 2020 and 2026, linked to EV parc growth, reaching nearly 14TWh of annual demand by 2026.

“Good Energy is perfectly placed to capitalise, through our investment in Zap-Map and EV services and products,” the board said.

It added that the Zap-Map EV mapping platform was performing “strongly” with positive trends on recurring revenue subscriptions, further rollout of Zap-Pay with key chargepoint operators, and a pipeline of products for the rest of 2021.

Good Energy said it had reinforced its desire to partake in upcoming fundraising activities for Zap-Map to build on the market opportunity, and accelerate its growth ambitions.

The board said it was restarting the company’s dividend, announcing an interim dividend of 0.75p per share for the period ended 30 June, as set out in its interim results on 14 September.

It said the dividend would be payable on 29 November to shareholders on the register at the close on 22 October.

Looking ahead, Good Energy said that despite the short-term volatility in UK energy markets, the long-term growth drivers, particularly in the EV market, remained buoyant.

The directors said they were still expecting a full-year financial performance in line with its previous expectations, assuming normalised consumption and weather for the rest of the year, representing “another year of good financial progress”, and delivery of its core strategic goals.

“Despite the recent volatility in wholesale energy prices, we remain positive on the long-term opportunity in our chosen markets,” said chief executive officer Nigel Pocklington.

“Recent electric vehicle sales data proves the acceleration of adoption and reinforces the scale of opportunity for Good Energy in this market.

“Zap-Map continues to have an exciting future as the leading EV mapping platform.”

Pocklington said the company was looking forward to continuing to invest in the EV market and supporting Zap on the next stage of its journey.

“The challenges within the UK energy sector have been well documented, but - with 20 years' experience - we remain differentiated through strong governance, a prudent approach to risk management and a genuinely differentiated green product.

“Now that Ecotricity's cash offer has lapsed, I am pleased to be re-starting the dividend for our loyal shareholders.”

Nigel Pocklington noted that the company reiterated its intention to resume the dividend this year, and intended to maintain a progressive dividend policy.

“This evidences our continued commitment to all our stakeholders and progress in delivering Good Energy's strategy.”

At 0924 BST, shares in Good Energy Group were down 2.54% at 345p.