Annual
Report and
Financial
Statements
Annual Report and Financial Statements
Year ended 31 December 2013
CONTENTS
Chairman’s Statement
Chief Executive’s Overview
Strategic Report
Directors’ Report
Directors’ Remuneration Report
1
Page
2 - 3
4 - 8
9 - 10
11 - 16
17 - 18
Independent Auditors’ Report to the members of Good Energy Group PLC
19 - 20
FINANCIAL STATEmENTS
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Parent Company Statement of Financial Position
Consolidated Statement of Changes in Equity
Parent Company Statement of Changes in Equity
Consolidated Statement of Cash Flows
Parent Company Statement of Cash Flows
Notes to the Financial Statements
Operational Highlights
Notes to the Financial Statements (continued)
Directors and Corporate Resources
21
22
23
24
25
26
27
28 - 33
34 - 35
36 - 67
68
2
Chairman’s Statement
For the year ended 31 December 2013
Good Energy Group PLC (the “Group” or the “Company”) achieved a year of strong growth during
2013, delivering an overall business performance ahead of market expectations. Growth was
delivered across the electricity generation, electricity and gas supply, and Feed-in Tariff (FIT)
administration businesses. In addition, there was an increase in gross profit due to the sale of some
solar generation development sites. This resulted in a total gross profit increase of 42%, to £13.6m.
The Company’s cash flow position remains healthy and combined with the Board’s expectations
for continued future growth, the Board is recommending for approval by shareholders at our AGm,
a final dividend for the year of 2.30p per Ordinary Share (2012: 2.00p). This gives a full-year dividend
of 3.30p (2012: 3.00p).
Growth was achieved through the delivery of our strategy, which is focused on the customer
offer, investment in generating capacity and improvements in cost controls. The combination
of competitive pricing, renewables-only electricity generation and award-winning customer
service has driven customer numbers and retention. The introduction of a new trading platform,
diversification of the supply base and investment in Group owned and operated energy assets
has delivered improvements in energy price stability, reduced power costs and improved margin.
2013 saw the successful launch of a £15m (before costs) Good Energy Bond, an equity raising of
£2.7m (before costs), and an 89% increase in the cash balance at £18m. The Group is therefore
financially well placed to continue to deliver on its objectives.
The UK energy market was subject to continued political and public market commentary and
scrutiny. The Government’s Energy Bill received Royal Assent during the year, establishing
a roadmap for the UK’s switch to a low-carbon economy and demonstrating its continued
commitment towards the renewal and expansion of the energy market to enhance energy
independence and security, and to reduce reliance on fossil fuels. Provisional government figures
show that renewable sources accounted for 14.8% of the electricity generated in the UK during the
12 months to December 2013, demonstrating that renewable electricity sources such as wind and
solar have a valuable contribution to make towards the UK’s energy mix. We are determined that the
Group will continue to be at the forefront of investment in the generation and supply of renewable
electricity to UK households and businesses.
Consumer distrust of the larger, established energy companies continued to be an issue during the
year, as did debate over the inclusion of Energy Company Obligation costs in household energy bills.
While many suppliers introduced price increases during the latter part of the year, we were able to
hold our prices until the end of march 2014. These factors, together with our growing reputation for
customer service, contributed towards a strong uplift in sales during the last quarter.
During the year, we continued to deliver our programme of investment in our project pipeline and
good progress was made towards delivering a total development portfolio of 200mW, comprising
new solar and wind assets. Construction of our £16m Hampole Wind Farm near Doncaster began in
the last quarter with commissioning now complete. In the second half of 2013 alone, we received
consent to build 100mW of solar parks.
The Group’s strategy of recognising value and reinvesting in the pipeline was evidenced with the
sale of solar sites, with full planning permission, totalling 40.5mW, and the start of construction
for a further 6.4mW of new sites. With some 60mW of additional consented solar sites including
the recently fully-approved 49.9mW site at West Raynham, Norfolk, and an ongoing development
portfolio, the Group is well placed to respond to increasing demand for renewable electricity supply.
The Company has continued to invest, not only in our project pipeline but also in our existing
infrastructure and business operations. This enabled us to deliver efficiencies from our trading and
forecasting systems, and from processes. In addition, our wind farm at Delabole, North Cornwall,
exceeded operational expectations, generating around 14% of the business’s total renewable
electricity supply. These all contributed to our ability to drive down power purchase costs.
3
These investment plans were further underpinned by the success of the Good Energy Bond,
which was launched in the autumn of 2013 and raised the maximum permissible subscription of
£15m (before costs). It is a mark of the confidence which our customers place in us and our ethos
that more than 80% of the applications for the Bond came from our customers. We also raised
additional equity of £2.7m (before costs) through a Share Placing and Open Offer of a total of
2,145,247 new Ordinary Shares. These two initiatives have helped us towards achieving our goal of
accelerating the development of our renewable energy generation capacity.
Looking ahead, our new trading systems, the launch of a Customer Relationship management
(CRm) system and evidence of the continued high levels of customer satisfaction (as demonstrated
by our success in securing first place in the Which? energy company customer satisfaction survey for
the third year in a row), will position the Group well to enjoy further growth and market consolidation
during 2014.
We have continued to invest in the Board with the appointment this year of Denise Cockrem as
Chief Finance Officer, a role she takes up from 1 may. Denise joins us from the Royal & Sun Alliance
Insurance Group where she is currently UK & Western Europe Finance Director.
On behalf of the Board, I would like to thank Garry Peagam, Group Finance Director, for his
contribution to the Group since his appointment in 2010. Under Garry’s financial direction, the Group
achieved AIm listing and has grown significantly in terms of its project development and supply
businesses.
I would also like, on behalf of the Board, to thank Juliet Davenport and all her staff for the energy,
enthusiasm and commitment with which they continue to pursue the goals of the Group . We thank,
too, all the Group’s customers, generators, shareholders and bond holders for their on-going support
as we seek to continue to be catalysts for change in the UK energy market.
John maltby
Chairman
7th April 2014
4
Chief Executive’s Overview
For the year ended 31 December 2013
For Good Energy Group PLC, the over-riding theme of 2013 has undoubtedly been one of growth.
Revenue increased by 43% to £40.4m and profit before tax increased by 136% to £3.3m.
We have delivered on our promises and our ‘customer first’ strategy of competitive pricing,
renewables-only electricity generation and award winning customer service is continuing to drive
both customer numbers and retention. We have seen substantial growth in the numbers of our
electricity and gas customers, and Feed-in Tariff sites, with an overall increase of 32% to more than
114,000 by the end of 2013.
The focus on cost controls, investment in generation and successful implementation of a new
dynamic trading platform has reduced power costs and improved margins. We have increased the
number of projects in our wind and solar pipeline, helping us to move closer towards our target of
developing, owning and operating more renewable generation capacity, and generating 50% of
all the electrons we require by 2016. The Group has continued to diversify its supply base and the
number of generators from whom we contract to purchase renewable electricity has risen to more
than 640 sites across the UK.
The Group’s strong financial position has enabled continued investment to deliver growth and
margin. We have a strong, positive cash position and we’ve added to our sources of funding through
the Group’s successful, over-subscribed Bond, which we launched in the final quarter of the year,
and an equity raise. This will enable our planned continued investment in generation and cost-
efficiency improvements.
The year has not been without its challenges, particularly from the regulatory, political and market
perspective. Work has been required to begin preparations for the smart metering programme; to
implement the Retail market Review; and prepare for the Electricity market Reform due to be fully
implemented in 2017. There has also been considerable debate over the Labour Party’s plans to
introduce an 18-month price freeze should it be successful in the 2015 General Election. Public trust
is at an all-time low due to its perception of a lack of transparency of energy prices. Despite this,
the Group managed to maintain a high level of satisfaction in the Which? annual energy company
customer satisfaction survey.
Financial highlights
•
•
•
•
•
•
Revenue increased by 43% to £40.4m
(2012 - £28.2m)
Gross profit increased 42% to £13.6m
EBITDA increased 85% to £5.0m
(2012 - £9.6m)
(2012 – £2.7m)
Profit before tax increased 136% to £3.3m
(2012 - £1.4m)
Cash balance total as at December 31 was £18m
(2012 - £9.5m)
Basic earnings per share rose by 58% to 20.9p
(2012 – 13.2p)
5
Electricity and gas market positioning
By the close of 2013 we had 40,000 electricity and 15,000 gas customers (compared to 32,000
electricity and 8,500 gas customers at the end of 2012), representing growth of 25% and 76%
respectively. Our Feed-in Tariff (FIT) site base also experienced growth, rising 28% from 46,000 to
59,000. We continue to be one of the largest administrators of the FIT scheme in the UK.
We were pleased that for a third year in a row, Which? ranked us top of its energy company customer
satisfaction survey, giving us a five star rating in every category including ‘value for money’ and our
Energy Savings Trust-accredited energy saving advice. We continue to believe that helping our
customers reduce the amount of gas and electricity they use is important, reflecting our view that we
all have a role to play in managing and becoming smarter in our energy usage.
Independent endorsement of this nature is valuable to us as it offers customers clarity on what they
can expect from us as their energy supplier, and allows them to compare our performance with that
of others. At a time when the energy market is seldom out of the public spotlight, this additional
third-party perspective is welcome.
Our price freeze in November, increasingly competitive pricing structure and third-party
endorsement have all contributed to our continued growth in customer numbers. We know
our customers are also attracted to the Group’s core proposition of offering a 100% renewable
electricity mix, and developing, owning and operating more renewable energy capacity to meet the
growing demand for energy.
Following our subsequent announcement of a price change of 2.2% across dual fuel, we may see a
slow-down in customer growth, but we expect to maintain a competitive position where we are no
more expensive than the big six energy suppliers, based on tariffs with no discounts. We will seek to
consolidate our performance in 2014 and continue to invest to grow the customer base.
At the end of 2011 we began work on a new Customer Relations management (CRm) system,
which we rolled out in the last quarter of 2013. We invested in the system to support the Company’s
ability to take advantage of economies of scale as we grow. The first quarter of 2014 has been the
first operational period of the new CRm system, and while there are some challenges anticipated
with bedding in the system and ensuring we are using it effectively, we expect to see the benefit as
the year progresses.
Trading
A key area of focus for the business during 2013 has been the continued drive to improve and refine
our forecasting and trading systems, and improve our access to the markets. This was implemented
in march 2013, and we have seen a significant improvement in our key performance indicators (KPIs)
including, improved forecasting, better market access in the day ahead and within day markets, and
less use of the imbalance markets. We have achieved a reduction of more than 50% in the volume
of power traded in the imbalance market. The cumulative impact of these KPI improvements in 2013
alone was in excess of £275,000.
We now have a more responsive and flexible trading platform, which enables us to better reflect
the dynamic nature of the renewables market. Our resulting enhanced performance, along with
the above-forecast electricity generation contribution from Delabole wind farm, has enabled us to
reduce our power purchase costs and improve our competitive position while maintaining margins.
Renewable support scheme
A percentage of the charges paid by the Group’s gas customers has historically been used for the
renewable support scheme, in the form of our HotROCs scheme. The growth in our gas customer
numbers during the year has resulted in a fund surplus, which will enable us to extend our support of
renewables in 2014. In addition to encouraging solar thermal projects, we will be looking to support a
number of community-based projects.
6
Generation
We are progressing well towards our target of creating a portfolio of wind, solar and small hydro
generation assets to enable us to deliver 50% of electricity from our own renewable generation
assets by 2016.
We have received planning permission for more than 100mW of solar parks including Woolbridge in
Dorset (5mW solar farm), Carloggas (9mW solar farm) and Creathorne Farm (1.4mW solar farm),
both in Cornwall. West Raynham, in Norfolk (49.9mW solar farm), received final planning approval
in January 2014. We are now constructing the Woolbridge and Creathorne Farm sites which should
be commissioned by Q3 2014, and are considering strategic funding requirements for the rest of the
portfolio. In South Yorkshire, work was progressed on our £16m, four-turbine wind farm development,
which began generating at the end of march this year. The site, at Hampole, near Doncaster, is
expected to generate 8.2mW (20,000 mWh), enough electricity for between 4,000-5,000 homes1
- and almost double the amount of renewable electricity we currently produce. The wind turbine
towers for Hampole have all been manufactured by UK company mabey Bridge, at its Chepstow
facility.
Our existing 9.2mW wind farm in Delabole, Cornwall, had a particularly strong year, due to a windy 12
months, and generated more than had been forecast. The 27GWh produced during 2013 contributed
around 14% of our renewable electricity supply base requirement.
Good Energy Bond
The Group has a long history of inviting its customers to invest directly in the Company and in October
2013 we launched our first Corporate Bond. Seeking to raise a minimum of £5m from both individual
and institutional investors, there was significant interest and we closed the Bond three weeks ahead
of schedule having achieved the £15m maximum subscription amount.
Of particular note was that 80% of the applications came from the Group’s customers. We believe
that this success is indicative of strong brand confidence in Good Energy. The Good Energy Bond
is now part of a set of instruments the Group is using to provide funding for the future growth of
the Company.
Financial Overview
The statutory Financial Statements of Good Energy Group PLC for the year ended 31 December
2013 are set out on pages 21-33 and 36-67, together with explanatory notes and comparisons with
previous years where appropriate.
Revenue and Gross Profit
Revenue for the year, at £40.4m, was 43% up on 2012 (£28.2m). Of this, £4.9m was due to
the successful sale of two solar farm development sites. The balance of £7.3m was from an
increase in customer numbers and the strong performance at our Delabole Wind Farm. Revenue
from supply of gas increased by £3m compared with 2012, driven by the 76% growth in gas
customers. Revenue from electricity supply and FIT administration combined was up 18% (£4.2m)
compared with last year, due to customer growth of 27%, which was moderated by a reduced
average consumption per customer.
Gross profit increased by £4.0m (42%) to £13.6m. This is partly due to £1.6m (17%) from electricity
and FIT administration and £0.5m (5%) from gas. These entities benefited from strong customer
growth. In addition, £1.6m (17%) related to the profit on sale of the solar farms which is net of £1.2m
of attributable provisions and early stage write off costs on solar generation projects. Overall, these
costs were incurred against a backdrop of two successful site sales in 2013 and a strong pipeline
of generation projects (both solar and wind) by the end of the year. This activity is enabling us to
continue to build a healthy portfolio of wind and solar generation.
As a result of these factors, gross margin was maintained at 34% (2012: 34%).
1
A typical 1MW turbine in the UK produces 2,295,120kWh of electricity per year. Our 8.2MW wind farm is expected to produce
18,819,984Wh of electricity per year, divided by the average consumption of a home (4,266kWh - Renewable UK) equals 4,411
homes. Assumed capacity figure of 26.2% from Digest of UK Energy Statistics (DUKES) 2012 figures, available at www.gov.uk,
not based on site specific data.
7
Administration Expenses
Growth in our customer numbers and the associated costs to serve the growing customer base are
the main reason for a £2.2m (29%) increase in administration costs.
Depreciation charges increased as our Customer Relationship management system, which seeks
to deliver improved customer service, went live and became fully operational in Q4. In addition,
investment in recruitment, and staff skills to support all areas of the business increased. Further
analysis of the increase in administration expenses is provided in the notes to the Financial
Statements (pages 28-33 and 36-67).
Earnings before interest, taxes, depreciation and amortization (EBITDA)
EBITDA of £5.0m has increased by 85% (£2.7m) compared with 2012. This represents 12.4% of
consolidated revenue (2012: 9.4%).
Financial Position and Financing
The Consolidated Statement of Financial Position for the Group shows a Shareholders’ Equity of
£16.5m (2012: £11.1m) representing growth of 49%, due to the equity raise and financial performance
in 2013.
Investment in our Hampole wind farm and generation pipeline has supported our increased asset
position of £56m (2012: £30m). The diversified funding strategy adopted by the Group resulted in
£19.1m of new funds (after costs) being made available throughout the year.
In July 2013, the Group raised £2.7m (before costs), by way of placing an offer on the AIm market of
the London Stock Exchange for 2.15m Ordinary Shares. A further £15m (before costs) was raised
through the launch of the Good Energy Corporate Bond and £2.7m was drawn down on loans against
the construction of Hampole. Operating cash flow was £0.9m positive after £3.5m of investment
in generation development sites. The underlying operating cash flow before the investment in
generation was £4.4m positive. The net increase in cash was £8.4m with a cash balance of £18.0m
at the year-end (2012: £9.5m).
The Group has a long term financing arrangement in place to support investment in its wind farm at
Delabole, with a balance of £8.5m at the end of 2013 (2012: £8.9m). The majority of debt interest
payable in 2013 was attributable to this loan.
Dividend
The Directors declared an interim dividend of 1.00p per Ordinary Share with a total value of
£146,000 (2012: £125,000), which was paid to shareholders on 25 October 2013.
The Directors recommend a final dividend of 2.30p per Ordinary Share with a total value of £337,362
based on issued shares as at 1 April 2014 (2012: £251,000). The final dividend for the year will be
paid on 30 may 2014, subject to shareholder approval at the Annual General meeting, to Ordinary
Shareholders on the register on 9 may 2014. The total dividend per Ordinary Share for the year ended
31 December 2013 is 3.30p (2012: 3.00p).
Market & Regulatory Framework
The energy market was subject to considerable regulatory, political and consumer focus during
the year. We welcomed this scrutiny which acted as a catalyst to drive customer growth and we
anticipate that this much-needed focus will continue throughout 2014 in the build up to the General
Election in 2015.
The energy industry regulator recently announced a consultation to consider whether a full market
review should be carried out by the Competition and markets Authority (CmA). We welcome this
focus on our sector: it is an opportunity to ensure it is delivering the right competitive environment,
which benefits consumers. We are considering the detail of review and its scope, and will participate
fully in the inquiry. We look forward to the outcome. In the meantime, the Group will continue to
focus its energies on delivering best-in-class services for its customers and working with them to
create a more secure, renewable energy future for the UK.
8
The launch of the Department of Energy and Climate Change Community Energy Strategy in the first
quarter of the year lays a useful foundation for developing energy generation and ownership in the
heart of communities. We look forward to seeing how the detail of this unfolds and to exploring the
opportunities we believe this will present us with.
Employees
As at 31 December 2013, the Group employed 181 people (2012: 157). The Group aims to provide all its
employees with a safe and productive working environment. It offers a structured internal training
programme through its Fluent in Energy Academy and external courses to enhance employee skills
and capabilities. It also has an employee bonus scheme, which seeks to reward staff and is aligned
with performance management and value creation. In addition, it operates a defined contribution
pension scheme. The Group expects the highest standards of social and commercial behaviour
from its employees.
Future developments
Following a strong performance in 2013, the Group is focused on continued growth in all sectors
within the electricity, gas and FIT customer markets. Work will continue on integrating people and
systems and we expect systems improvements to positively impact trading margins and cost to
serve. Investment will be directed towards two key areas: the Good Energy brand and new sources
of renewable electricity generation (wind, solar and hydro), to better enable us to achieve 50% of
our own renewable electricity supply by 2016. The political focus on the domestic energy market and
energy price increases look set to continue through 2014 and beyond. The Group intends to continue
to remain active in the political debate over these issues whilst focusing on offering customer value
for money, good customer service and a strong renewable ethos.
Juliet Davenport
Chief Executive
7th April 2014
9
Strategic Report
For the year ended 31 December 2013
The Directors present their strategic report on the Group for the year ended 31 December 2013.
Review of the business
Good Energy Group PLC has continued to perform strongly across all its business areas throughout
2013. Full details of the Group’s performance and future developments can be found in the Chief
Executive’s Overview.
Highlights include:
•
•
•
•
•
Growth of the Group’s core electricity, gas and FIT customer bases;
Development and construction of renewable generation capacity, to support the
strategy of supplying 50% of purchased power by 2016;
Improvement in power trading through direct access to markets and more granular
forecasting;
Implementation of a CRM system to allow operational scalability to support growth;
Diversification of funding streams for investment in renewable assets.
Revenue increased by 43% to £40.4m and EBITDA increased by 85% to £5.0m. Following
successful equity and debt raises throughout the year, an investment of £14.3m was made into
generation assets and development projects, growing the total asset position by 87% to £56.0m.
At the year end, the Group had £18.0m cash available. Further details on the financial results can be
found in the Chief Executive’s Overview and in the Financial Statements and notes to the accounts.
Principal Risks and Uncertainties
Principal risks and uncertainties facing the Group are outlined below. The Group maintains a risk
register which identifies key risks for the business, the actions agreed by senior management to
avoid those risks or mitigate their effects, and assigns specific responsibility for the relevant actions.
The register is monitored by the Audit and Risk management Committee and reviewed annually by
the Board.
Political risk
The renewable energy generation industry is subject to national and regional regulatory oversight,
such as national and local regulations relating to building codes, safety, environmental protection,
utility interconnection and metering and related matters. These regulations and policies have
been modified in the past and may be modified in the future. The regulations applicable to the
generation of electricity from renewable energy sources may be subject to modifications that
may be more restrictive or unfavourable to the wind energy or solar industry. more restrictive or
unfavourable regulations, such as an obligation to modify existing renewable energy projects or
the implementation of additional inspection and monitoring procedures, could lead to changes in
operating conditions that might require increased capital expenditure, increased operating costs
or otherwise hinder the development of the renewable energy industry. Any new, government
regulations or utility policies pertaining to renewable energy may result in a review of the Group’s
operating strategy.
Energy price volatility
The Group’s revenue from energy sales may be affected by fluctuations in energy prices (e.g. the
price of wholesale electricity) and the associated costs with buying in any volatile market-place.
This in turn would lead to necessary pricing action to be taken by the Group and could result in a loss
of customers if other energy providers with larger portfolios were better able to mitigate the increase
and remain more competitive.
10
Financial risks
There exist certain default loan covenants relating to the financing agreement of the Delabole
and Hampole wind farms. When the financing was put in place assumptions were used to ensure
that the Group has a cushion in the cash flows arising from the wind farms which should ensure
that any default is unlikely. Also, the Group has insurance and maintenance agreements in place
which mitigate much of the lost revenues from unforeseen operational issues. The £6.5 million
Revolving Credit Facility (RCF) with Lloyds TSB Bank PLC contains certain covenants requiring the
maintenance of certain EBITDA coverage ratios. If these covenant ratios were breached, advances
made under RCF could become repayable.
Other financial risks of the Group are set out in Note 3.
By order of the Board
Juliet Davenport
Chief Executive
7th April 2014
11
Directors’ Report
The Directors submit their report together with the audited consolidated financial statements
of the Good Energy group of companies for the year ended 31 December 2013. This Directors’
Report includes the Chairman’s Statement, the Chief Executive’s Overview, the Strategic Report,
the Corporate Governance section and the Directors’ responsibility statement. The Company is
required to set out a fair review of the business of the Group and a description of the principal risks
and uncertainties facing the business, which can be found in the Strategic Report on pages 9 to
10. This requirement includes an analysis of the development and performance of the Company’s
business during the reporting period, and the position of the Group at the end of the reporting period
consistent with our size and complexity.
The Directors’ Report has been prepared, and is published, in accordance with, and in reliance upon,
applicable English company law and the liabilities of the Directors in relation to that report are
subject to the limitations and restrictions provided by such law.
General company information
The Group is a public limited company incorporated in the United Kingdom under the Companies Act
1985, and is listed on the Alternative Investment market (AIm) of the London Stock Exchange.
The Company’s registered office and principal place of business is monkton Reach, monkton Hill,
Chippenham, Wiltshire, SN15 1EE. The Company’s registered number is 04000623.
Capital structure
The Group is financed through both equity share capital and debt instruments.
Share capital
As at the 31 December 2013, the Company’s issued share capital was 14,667,896 of Ordinary Shares
of 5p each. During the year the Company issued 2,145,247 (2012: 4,705,882) Ordinary Shares of
5p each for total consideration of £2,681,559 (2012:£4,000,000) resulting in a share premium
of £2,574,296 (2012:£ 3,764,706). Ordinary Shares in the Group carry rights to dividends and are
entitled to attend and vote at general meetings. The Company’s share register is maintained and
managed by Computershare Investor Services PLC for which contact details can be found in our
Directors and Corporate Resources section on page 68.
The Company does not have shareholder authority to acquire its own shares. Clarke Willmott Trust
Corporation Limited holds in trust for the present and the future beneficiaries of the Good Energy
Group Employee Share Option Scheme 387,998 (2012: 776,430) Ordinary Shares of the Company.
These are deducted from equity as shown in the Consolidated and Parent Company Statements of
Changes in Equity. During the year the trust disposed of 390,832 (2012: 200,000) shares as a result
of options exercised and acquired 2,400 (2012: 31,000) shares.
Dividend
The Directors declared an interim dividend of 1.00p per Ordinary Share with a total value of
£146,000 (2012: £125,000), which was paid to shareholders on 25 October 2013.
The Directors recommend a final dividend of 2.30p per Ordinary Share with a total value of £337,362
based on issued shares as at 1 April 2014 (2012: £251,000). The final dividend for the year will be
paid on 30 may 2014, subject to shareholder approval at the Annual General meeting, to Ordinary
Shareholders on the register on 9 may 2014. The total dividend per Ordinary Share for the year ended
31 December 2013 is 3.30p (2012: 3.00p).
12
Significant shareholders
Significant shareholders holding over 3% of the issued share capital as at 31 December 2013, other
than any Directors and their family as defined in the AIm rules, whose holdings are detailed below
are:
Schroders PLC
3,059,262
20.86%
2,424,941
19.36%
31 December
2013
% of issued
share capital
31 December
2012
% of issued
share capital
Legal and General investment
management
John Sellers
Peter Dixon Edwards
Clarke Willmott Trust
Corporation Limited (Trustee
of the Good Energy Group
Employee Benefit Trust)
1,176,471
640,797
451,098
8.02%
4.37%
3.08%
1,176,471
664,797
451,098
9.39%
5.31%
3.60%
387,998
2.65%
776,430
6.20%
Directors’ interests and their interests in the Company’s shares
Details of the Company’s Directors who served during the year and up to the date of approval of this
report (unless otherwise stated) are detailed on page 14.
The interests (all of which are beneficial unless otherwise stated) of the Directors and their families
as defined in the AIm Rules in the issued share capital of the parent company are:
martin Edwards
Juliet Davenport
Garry Peagam
Richard Squires
John maltby
Francesca Ecsery
31 December
2013
% of issued
share capital
31 December
2012
% of issued
share capital
686,827
475,194
201,000
36,000
120,000
2,400
4.68%
3.24%
1.37%
0.25%
0.82%
0.02%
686,827
394,161
36,000
28,000
-
-
5.48%
3.15%
0.29%
0.22%
-
-
Notes:
1.
2.
Certain of the Directors hold share options for which details are set out in the Directors’ Remuneration
Report (on page 17-18).
In addition to the shareholding of martin Edwards detailed above, his father Peter Dixon Edwards holds
123,450 Ordinary Shares as trustee of a discretionary trust under which, martin Edwards is one of the
potential beneficiaries.
3.
17,000 Ordinary Shares comprised in the shareholding of martin Edwards are held by him in trust for the
Good Energy Group Employee Benefits Trust.
13
Good Energy Bonds (Bonds)
On the 2 October 2013, the Group issued an invitation to its corporate bond. The invitation closed
on the 24 October and raised the maximum allowable subscription amount of £15 million (before
costs). The bonds are non-convertible and non-transferrable and have an initial term of four years.
The Bonds carry an interest rate of 7.25% per annum, paid half-yearly. Customers are entitled to an
additional 0.25% per annum (gross 7.5% per annum), which is cumulative and payable on the date
of maturity. The Bond register is maintained and managed by Computershare Investor Services PLC
for which contact details can be found in our Directors’ and Corporate Resources section on page 68.
Directors’ Indemnity Statement
As permitted by the Group’s Articles of Association, the Directors have the benefit of an indemnity
which is a qualifying third party indemnity provision as defined by Section 234 of the Companies
Act 2006. The indemnity was in force throughout the last financial year and is currently in force.
The Company also purchased and maintained throughout the financial year Directors’ and Officers’
liability insurance in respect of itself and its Directors.
Financial instruments
The Group’s financial instruments include bank loans, a corporate bond, finance leases, overdraft
and revolving credit facilities. The Group has interest rate swap and forward foreign exchange
derivative financial instruments in place. The principal objective of these instruments is to raise
funds for general corporate purposes and to manage financial risk. Further details of these
instruments are given in Notes 22 and 24 in the Financial Statements.
Events after the balance sheet date
On 28 January 2014, the Group announced final consent for a 49.9mW solar farm in Norfolk. The
Board is considering the options available for the site, including potential partners for the possible
sale or development of the solar farm by the Group.
Future developments
Details of future developments are given in the Chief Executive’s Overview on page 8.
Research and development
Given the nature of the Group’s activities it does not carry out any material research and
development work.
Annual General Meeting (AGM)
The Group’s AGm will be held on 30 April 2014 at 12 noon at The Lansdowne Club, 9 Fitzmaurice
Place, mayfair, London, W1J 5JD.
Corporate Governance
The Group recognises the importance of good corporate governance practices. The Board is familiar
with the UK Corporate Governance Code, and although it is not currently required to comply with
the Code, it aims to adopt this Corporate Governance framework progressively, and so far as is
practicable and appropriate to the size and complexity of the business as the Group increases.
In addition, the Group aims to comply with the Disclosure Rules and Transparency Rules (DTR) 7.1
and 7.2.
14
The Board and its Committees
Board of Directors
The Board comprises the following individuals:
Executive Directors
Non- Executive Directors
Juliet Davenport
Chief Executive
John maltby2
Garry Peagam1
Group Finance
Director
Richard Squires
martin Edwards
Francesa Ecsery2
Non- Executive
Chairman of the Board;
member of the Audit
and Remuneration
Committees
Chair of the Audit and
Risk management
Committee
Chair of the
Remuneration
Committee
member of the Audit
and Remuneration
Committee; and
Chair of the Customer
Board
Notes:
1.
2.
3.
Garry Peagam will step down as Group Finance Director on 30 April but would remain on the Board as a
Non-Executive Director to be re-appointed at the Annual General meeting. On 31 January 2014 the Group
announced that with effect from 1 may 2014, Denise Cockrem will be appointed to the Board as Chief
Financial Officer.
Independent Non-Executive Directors.
The Customer Board is a cross-functional forum set up to regularly review, monitor, discuss and facilitate
agreement on matters such as customer vision, customer service and strategy, planning and
delivering, and regular reporting against related key performance indicators to the Board.
Operations of the Board
The roles of Chief Executive and Chairman have always been split, with the Chairman operating
in a Non-Executive capacity. The Chief Executive is responsible for the day-to-day management
and running of the business and is supported by a team of senior management including a Chief
Operating Officer, Head of People and Culture and Director for Sales and Development. During
the year ended 31 December 2013, there were eight scheduled Board meetings. Additional Board
meetings were convened when the Board was required to deal with the review and approval of
material matters affecting the Group.
Scheduled meetings review the Group’s performance and the Board is responsible for agreeing and
reviewing the strategy for the Group, for which it maintains both short term (12 months) and longer
term plans (5 year). In addition, it is also responsible for matters relating to Director and employee
recruitment and remuneration, audit and accounting policies, risk management, strategy, health
and safety and other specific subjects. Directors have the right to request that any concerns they
have are recorded in the appropriate committee or Board minutes.
The Board reviews the operational and financial results of the Group on a monthly basis against
a pre-agreed set of performance targets operating within the delegated authorities, which are
reviewed annually by the Board or as and when changes are required. In addition, the Board receives
information obtained through a system of continuous financial planning which is used to better
manage profit and cash flow forecasting, and to inform investment decision-making. The formal
financial plan for the forthcoming year is set out as a detailed proposition and authorised by the
Board prior to the end of each year.
15
The Remuneration Committee
The members of the Remuneration Committee are John maltby, Francesca Ecsery and martin
Edwards, the committee convened three times in the year ended 31 December 2013.
The primary duty of the Remuneration Committee is to supervise and advise on behalf of the Board
the Group’s policy in relation to the remuneration of the Executive Directors and senior managers
of the Group. No Director may be involved in any decisions as to their own remuneration. Further
details of the Remuneration Committee and remuneration policy are set out in the Directors’
Remuneration Report on pages 17 to 18.
Audit and Risk Management Committee
The members of the Audit and Risk management Committee are Richard Squires, John maltby and
Francesca Escery. John maltby is considered to have recent, relevant financial experience. The Chief
Executive and Group Finance Director are normally invited to attend meetings of the committee. For
the year ended 2013, the Committee met three times in the year.
The primary duty of the Audit and Risk management Committee is to oversee the accounting and
financial reporting process, the internal accounting practices, external audit arrangements and
effectiveness of the Group’s risk management and internal control system. The Audit and Risk
management Committee also meets with the Group’s external auditors annually to review and
agree the auditor services being provided to the Group, including any non-audit services; and also
meets with external auditors, without management being present to discuss audit process.
Risk management and internal control
The Board has overall responsibility for the Group’s system of internal control. The responsibility for
reviewing the effectiveness of its internal control systems have been delegated to the Audit and Risk
management Committee, who reviews the systems and processes for internal control on an annual
basis. The system of internal control is designed to manage, rather than eliminate, the risk of failure
to achieve business objectives.
Going Concern
The Group and Board closely monitor and manage liquidity. The Directors have taken account of
the current financial position of the Group, its anticipated future performance and investment plans
in assessing the Group’s going concern status. The Directors consider that the Group has adequate
resources to continue in operation for the foreseeable future and continue to adopt the going
concern basis in preparing the 2013 accounts.
Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under
that law the Directors have prepared the Group and Parent Company Financial Statements in
accordance with International Financial Reporting Standards (IFRSs) as adopted by the European
Union. Under company law the Directors must not approve the Financial Statements unless they
are satisfied that they give a true and fair view of the state of affairs of the Group and the Company
and of the profit or loss of the Group for that period. In preparing these Financial Statements, the
Directors are required to:
•
•
•
•
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable IFRSs as adopted by the European Union have been followed,
subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to
presume that the Company and the Group will continue in business.
16
The Directors are responsible for keeping adequate accounting records that are sufficient to show
and explain the Company’s transactions and disclose with reasonable accuracy at any time the
financial position of the Company and the Group and enable them to ensure that the Financial
Statements comply with the Companies Act 2006. They are also responsible for safeguarding the
assets of the Company and the Group and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the Company’s website.
Legislation in the United Kingdom governing the preparation and dissemination of Financial
Statements may differ from legislation in other jurisdictions.
Disclosure of Information to Auditors
So far as each Director is aware, there is no relevant audit information of which the Company’s
auditors are unaware and each Director has taken all the steps that he/she ought to have taken as
a Director in order to make himself/herself aware of any relevant audit information and to establish
that the company’s auditors are aware of that information.
Reappointment of Auditors
PricewaterhouseCoopers LLP acted as auditors for the financial year to 31 December 2013. A
resolution to reappoint PricewaterhouseCoopers LLP as auditors will be proposed at the Annual
General meeting.
By order of the Board
David Ford
Company Secretary
7th April 2014
17
Directors’ Remuneration Report
Introduction
This report sets out the information about the remuneration of the Directors of the Company for the
year ended 31 December 2013. This report has been prepared in accordance with the requirements
for AIm listed companies set out in the Companies Act 2006 and the AIm rules.
Remuneration Committee and policy
Details of the Company’s Remuneration Committee are set out on page 15. The Remuneration
Committee has agreed a remuneration policy to ensure that the Company is able to attract, retain
and motivate its Executive Directors and senior management.
The Group operates in a competitive environment, it therefore sets out to provide competitive
remuneration to all its employees, appropriate to the business environment and geographical
location.
The Group aims to align the interests of shareholders with those of Directors and senior
management by giving the latter the opportunity to build up a shareholding interest in the Company.
Service agreements, notice periods and termination payments
Executive Directors
The service agreements for the Executive Directors are not for a fixed term and may in normal
circumstances be terminated on the notice periods listed below:
Name
Position
Date of contract Notice Period 2013 salary £
Juliet Davenport
Chief Executive
2 August 2007
Garry Peagam
Group Finance Director
24 June 2010
9 months
9 months
180,000
145,000
The Company reserves the right to pay Executive Directors in lieu of notice.
Chairman and Non-Executive Directors
The remuneration of the Chairman of the Company and the Non-Executive Directors consists of fees
that are paid monthly in arrears. The Chairman and the Non-Executive Directors did not participate
in any bonus scheme or long-term incentive reward schemes, nor did they accrue any pension
entitlement.
The key terms of the Non-Executives appointments are as follows:
Director
Date of appointment
Notice period
John maltby
15 October 2012
Richard Squires
28 June 2011
martin Edwards
7 may 2008
Francesca Ecsery
15 November 2012
3 months
3 months
3 months
3 months
Fees paid (p.a)
2013 £
40,000
27,500
20,500
32,800
The remuneration of £32,800 to Francesca Ecsery covers her roles as a Non-Executive Director
(£20,800) and as Chair of the monthly Customer Board (£12,000).
It is the Board’s policy to allow the Executive Directors to accept directorships of other companies
provided that they have obtained the consent of the Board.
18
Salary, annual bonus and benefits
Non- Executive
Chairman
Salary/
fees
Pension
Contributions
Benefits
in kind
Annual
Bonus
Total
2013
John maltby
40,213
-
£000’ -
£000-
40,213
Total
2012
8,529
Executive Directors
Juliet Davenport
Garry Peagam
Non- Executive
Directors
Richard Squires
martin Edwards
Francesca Ecsery
Lawrence Churchill
184,530
145,000
27,500
20,500
32,800
-
19,000
1,902
90,000
295,432
243,056
15,300
2,798
58,000
221,098
210,709
-
-
-
-
-
-
-
-
-
-
-
-
27,500
36,900
20,500
20,500
32,800
-
3,056
9,157
TOTAL
450,543
34,300
4,700 148,000
637,543
531,907
Directors’ share options
Details of the Directors’ share options outstanding at 31 December 2013 are shown below.
Name
Date option
granted
Number
of options
Option
price Exercised
Cancelled/
surrendered
Juliet Davenport 01/05/2002
130,948 £0.50
13,332
Juliet Davenport 01/06/2004
35,000 £0.75
Juliet Davenport
13/02/2012
86,956
Juliet Davenport
13/02/2012
17,390
£1.15
£1.15
Juliet Davenport
18/09/2012
189,052
£0.50
Juliet Davenport
13/07/2013
144,000
£1.25
-
-
-
-
-
Total
603,346
13,332
Garry Peagam
18/07/2011
200,000
£1.00 200,000
Garry Peagam
13/02/2012
100,000
£1.15
Garry Peagam
13/07/2013
116,000
£1.25
-
-
Total
416,000
200,000
Richard Squires
13/02/2012
75,000
£1.15
-
Overall Total
1,094,346
213,332
-
-
-
-
-
-
-
-
-
-
-
-
-
Options
outstanding
at 31
December 2013
117,616
35,000
86,956
17,390
189,052
144,000
590,014
-
100,000
116,000
216,000
75,000
881,014
On the exercise of options during 2013, the Executive Directors realised a total gain of £262,365 of
which £10,865 related to the highest paid Director.
Independent auditors’ report to the members of
Good Energy Group PLC
19
In applying the financial reporting framework, the directors
have made a number of subjective judgements, for example
in respect of significant accounting estimates. In making
such estimates, they have made assumptions and considered
future events.
What an audit of financial statements involves
We conducted our audit in accordance with International
Standards on Auditing (UK and Ireland) (“ISAs (UK &
Ireland)”). An audit involves obtaining evidence about
the amounts and disclosures in the financial statements
sufficient to give reasonable assurance that the financial
statements are free from material misstatement, whether
caused by fraud or error. This includes an assessment of:
• whether the accounting policies are appropriate to
the group’s and the parent company’s circumstances
and have been consistently applied and adequately
disclosed;
•
the reasonableness of significant accounting
estimates made by the directors; and
•
the overall presentation of the financial statements.
In addition, we read all the financial and non-financial
information in the Annual Report to identify material
inconsistencies with the audited financial statements and
to identify any information that is apparently materially
incorrect based on, or materially inconsistent with, the
knowledge acquired by us in the course of performing
the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the
implications for our report.
Report on the financial
statements
Our opinion
In our opinion:
•
•
•
the financial statements, defined below, give a true
and fair view of the state of the group’s and of the
parent company’s affairs as at 31 December 2013 and
of the group’s profit and the group’s and the parent
company’s cash flows for the year then ended;
the group financial statements have been properly
prepared in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the
European Union;
the parent company financial statements have been
properly prepared in accordance with International
Financial Reporting Standards (IFRSs) as adopted
by the European Union and as applied in accordance
with the provisions of the Companies Act 2006; and
•
the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
This opinion is to be read in the context of what we say in the
remainder of this report.
What we have audited
The group financial statements and parent company
financial statements (the “financial statements”), which are
prepared by Good Energy Group PLC, comprise:
•
•
•
•
•
the group and parent company statement of financial
position as at 31 December 2013;
the group income statement and statement of
comprehensive income for the year then ended;
the group and parent company statement of cash
flows for the year then ended;
the group and parent company statement of changes
in equity for the year then ended; and
the notes to the financial statements, which include a
summary of significant accounting policies and other
explanatory information.
The financial reporting framework that has been applied in
their preparation is applicable law and IFRSs as adopted by
the European Union and, as regards the parent company
financial statements, as applied in accordance with the
provisions of the Companies Act 2006.
20
Independent auditors’ report to the members of
Good Energy Group PLC (continued)
Opinion on other matter
prescribed by the Companies
Act 2006
In our opinion the information given in the Strategic Report
and Directors’ Report for the financial year for which the
financial statements are prepared is consistent with the
financial statements.
Other matters on which we are
required to report by exception
Adequacy of accounting records and
information and explanations received
Under the Companies Act 2006 we are required to report to
you if, in our opinion:
• we have not received all the information and
explanations we require for our audit; or
• adequate accounting records have not been kept by
the parent company, or returns adequate for our audit
have not been received from branches not visited by
us; or
•
the parent company financial statements are not in
agreement with the accounting records and returns.
We have no exceptions to report arising from this
responsibility.
Directors’ remuneration
Under the Companies Act 2006 we are required to report
to you if, in our opinion, certain disclosures of directors’
remuneration specified by law are not made. We have no
exceptions to report arising from this responsibility.
Responsibilities for the financial
statements and the audit
Our responsibilities and those of the directors
As explained more fully in the Directors’ Responsibilities
Statement set out on page 15, the directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the
financial statements in accordance with applicable law and
ISAs (UK & Ireland). Those standards require us to comply
with the Auditing Practices Board’s Ethical Standards for
Auditors.
This report, including the opinions, has been prepared for
and only for the company’s members as a body in accordance
with Chapter 3 of Part 16 of the Companies Act 2006 and
for no other purpose. We do not, in giving these opinions,
accept or assume responsibility for any other purpose or to
any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior
consent in writing.
Colin Bates (Senior Statutory Auditor)
for and on behalf of
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Bristol
7th April 2014
21
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2013
REVENUE
Cost of Sales
GROSS PROFIT
Administrative Expenses
OPERATING PROFIT
Finance Income
Finance Costs
PROFIT BEFORE TAX
Taxation
PROFIT FOR THE YEAR
Other comprehensive income:
Items that may subsequently be reclassified to profit or loss
Net gains on cash flow hedge
Other comprehensive income for the year, net of tax
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
ATTRIBUTABLE TO OWNERS OF THE PARENT COMPANY
Profit
Total comprehensive income
Earnings per share from profit for the year - Basic
- Diluted
Note
5
6
6
10
11
12
24
13
13
2013
£000’s
40,407
2012
£000’s
28,202
(26,822)
(18,653)
13,585
(9,727)
3,858
116
(719)
3,255
(586)
2,669
328
328
2,997
2,669
2,997
20.9p
19.6p
9,549
(7,525)
2,024
39
(688)
1,375
(191)
1,184
-
-
1,184
1,184
1,184
13.2p
12.6p
The notes on pages 28 to 33 and 36 to 67 form part of these Financial Statements.
Consolidated Statement of Financial Position
As at 31 December 2013
Company registered no: 04000623
Non-current assets
Property, plant and equipment
Intangible assets
Derivative financial instruments
Total non- current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
TOTAL ASSETS
Equity and Liabilities
Capital and reserves
Called up share capital
Share premium account
EBT shares
Retained Earnings
Total Equity
Non- current liabilities
Deferred taxation
Borrowings
Total non- ‐current liabilities
Current liabilities
Borrowings
Derivative financial instruments
Trade and other payables
Current tax payable
Total current liabilities
Total liabilities
TOTAL EQUITY AND LIABILITIES
Note
14
15
24
17
18
19
20
20
21
22
22
24
23
12
2013
£000’s
20,112
3,478
328
23,918
6,128
7,952
17,975
32,055
55,973
733
9,077
(236)
6,890
16,464
738
24,667
25,405
674
52
12,875
503
14,104
39,509
55,973
22
2012
£000’s
11,012
2,938
-
13,950
2,677
3,813
9,535
16,025
29,975
626
6,729
(470)
4,167
11,052
644
8,659
9,303
543
-
9,001
76
9,620
18,923
29,975
The Financial Statements on pages 21 to 33 and 36 to 67 were approved by the Board of Directors on
7th April 2014 and signed on its behalf by:
Juliet Davenport
Chief Executive
7th April 2014
The notes on pages 28 to 33 and 36 to 67 form part of these Financial Statements.
Parent Company Statement of Financial Position
As at 31 December 2013
Company registered no: 04000623
Non-current assets
Investments
Intangible assets
Total non- current assets
Current assets
Current tax receivable
Trade and other receivables
Cash and cash equivalents
Total current assets
TOTAL ASSETS
Equity and Liabilities
Capital and reserves
Called up share capital
Share premium account
EBT shares
Retained Earnings
Total Equity
Non- current liabilities
Borrowings
Total non- ‐current liabilities
Current liabilities
Borrowings
Trade and other payables
Current tax payable
Total current liabilities
Total liabilities
TOTAL EQUITY AND LIABILITIES
Note
16
12
18
19
20
20
22
22
23
12
2013
£000’s
27,728
4
27,732
-
136
379
515
28,247
733
9,077
(236)
1,602
11,176
14,250
14,250
1,374
1,357
90
2,821
17,071
28,247
23
2012
£000’s
8,332
7
8,339
286
37
164
487
8,826
626
6,729
(470)
1,359
8,244
-
-
-
582
-
582
582
8,826
The Financial Statements on pages 21 to 33 and 36 to 67 were approved by the Board of Directors on 7th
April 2014 and signed on its behalf by:
Juliet Davenport
Chief Executive
7th April 2014
The notes on pages 28 to 33 and 36 to 67 form part of these Financial Statements.
24
Consolidated Statement of Changes in Equity
For the year ended 31 December 2013
Share Capital Share Premium EBT Shares Retained
Total
At 1 January 2012
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Issue of ordinary shares
Cost of shares issued in the year
Purchase of shares by EBT
Sale of shares by EBT
Dividend Paid
Total contributions by and distributions
to owners of the parent, recognised
directly in equity
At 31 December 2012
At 1 January 2013
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Issue of ordinary shares
Cost of shares issued in the year
Purchase of shares by EBT
Sale of shares by EBT
Dividend Paid
Total contributions by and distributions
to owners of the parent, recognised
directly in equity
At 31 December 2013
£000’s
391
-
-
-
235
-
-
-
-
235
626
626
-
-
-
107
-
-
-
-
107
733
£000’s
£000’s
£000’s
£000’s
Earnings
3,536
(537)
-
-
-
3,765
(572)
-
-
-
-
-
-
-
-
(50)
117
-
3,313
1,184
-
1,184
-
-
-
(19)
(311)
6,703
1,184
-
1,184
4,000
(572)
(50)
98
(311)
3,193
67
(330)
3,165
6,729
(470)
4,167
11,052
6,729
(470)
-
-
-
2,574
(226)
-
-
-
-
-
-
-
-
(3)
237
-
4,167
2,669
328
2,997
-
-
-
103
(377)
11,052
2,669
328
2,997
2,681
(226)
(3)
340
(377)
2,348
234
(274)
2,415
9,077
(236)
6,890
16,464
The notes on pages 28 to 33 and 36 to 67 form part of these Financial Statements.
25
Parent Company Statement of Changes in Equity
For the year ended 31 December 2013
At 1 January 2012
Profit for the year and total
comprehensive income
Issue of ordinary shares
Cost of shares issued in the year
Purchase of shares by EBT
Sale of shares by EBT
Dividend Paid
Total contributions by and
distributions to owners of the parent,
recognised directly in equity
At 31 December 2012
At 1 January 2013
Profit for the year and total
comprehensive income
Issue of ordinary shares
Cost of shares issued in the year
Purchase of shares by EBT
Sale of shares by EBT
Dividend Paid
Total contributions by and
distributions to owners of the parent,
recognised directly in equity
At 31 December 2013
Share
Capital
£000’s
391
Share
EBT Shares
Retained
Total
Premium
Earnings
£000’s
£000’s
£000’s
£000’s
3,536
(537)
1,269
4,659
-
235
-
-
-
-
235
626
626
-
107
-
-
-
-
107
733
-
3,765
(572)
-
-
-
-
-
(50)
117
-
420
420
-
-
-
(19)
(311)
4,000
(572)
(50)
98
(311)
3,193
6,729
67
(470)
(330)
1,359
3,165
8,244
6,729
(470)
1,359
8,244
-
2,574
(226)
-
-
-
-
-
-
(3)
237
-
517
517
-
-
-
103
(377)
2,681
(226)
(3)
340
(377)
2,348
9,077
234
(236)
(274)
1,602
2,415
11,176
The notes on pages 28 to 33 and 36 to 67 form part of these Financial Statements.
Consolidated Statement of Cash Flows
For the year ended 31 December 2013
Note
26
14
15
25
22
Cash flows from operating activities
Cash generated from operations
Interest received
Interest paid
Income tax received/(paid)
Net cash flows from operating activities
Cash flows from investing activities
Acquisitions of property, plant and equipment
Acquisitions of intangible fixed assets
Net cash flows used in investing activities
Cash flows from financing activities
Payments of dividends
Bank financing advanced
Bank financing repaid
Proceeds from issue of corporate bond
Capital repayments of finance leases
Proceeds from issue of shares
Purchase of own shares
Sale of own shares
Net cash flows from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
26
2013
£000’s
2012
£000’s
938
116
(647)
(64)
343
(9,364)
(1,073)
(10,437)
(377)
2,433
(390)
14,229
(153)
2,455
(3)
340
18,534
8,440
9,535
17,975
6,045
39
(688)
178
5,574
(275)
(786)
(1,061)
(311)
-
(369)
-
(143)
3,428
(50)
98
2,653
7,166
2,369
9,535
The notes on pages 28 to 33 and 36 to 67 form part of these Financial Statements.
Parent Company Statement of Cash Flows
For the year ended 31 December 2013
Cash flows from operating activities
Cash generated from operations
Interest received
Interest paid
Income tax paid
Net cash flows from/(used in) operating activities
Cash flows from investing activities
Purchase of subsidiary company
Acquisitions of intangible fixed assets
Net cash flows used in investing activities
Cash flows from financing activities
Payment of dividends
Intercompany loans
Proceeds from issue of corporate bond
Proceeds from issue of shares
Purchase of own shares
Sale of own shares
Net cash flows (used in)/from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Note
26
25
22
20
2013
£000’s
1,224
185
(89)
(1)
1,319
(3,014)
-
(3,014)
(377)
(14,734)
14,229
2,455
(3)
340
1,910
215
164
379
The notes on pages 28 to 33 and 36 to 67 form part of these Financial Statements.
27
2012
£000’s
(1,082)
8
-
-
(1,074)
-
(9)
(9)
(311)
(2,023)
-
3,428
(50)
98
1,142
59
105
164
28
Notes to the Financial Statements
For the year ended 31 December 2013
1. General Information
Good Energy Group PLC is listed on the Alternative Investment market of the London Stock
Exchange and is incorporated and domiciled in the United Kingdom.
The principal activity of Good Energy Group PLC is that of a holding and management company to
the Group.
The principal activities of its subsidiaries are the purchase, generation and sale of electricity from
renewable sources, the sale of gas and services relating to micro-renewable generation and the
development of new electricity generation sites.
The purpose of the Annual Report and Financial Statements is to provide information to members
of the Company. It contains certain forward looking statements relating to the operations,
performance and financial condition of the Group. By their nature these statements involve
uncertainty since future events and circumstances can differ from those anticipated. Nothing in the
Annual Report and Financial Statements should be construed as a profit forecast.
These Financial Statements are presented in pounds sterling because that is the currency of the
primary economic environment in which the Group operates.
The principal accounting policies applied in preparation of these Consolidated Financial Statements
are set out below. These policies have been consistently applied to all the years presented unless
otherwise stated.
2. Summary of Significant Accounting Policies
2.1 Basis of preparation of Financial Statements
These Financial Statements have been prepared in accordance with International Financial
Reporting Standards (IFRS) as adopted by the European Union and IFRS Interpretations Committee
(IFRISIC) and with those parts of the Companies Act 2006 applicable to companies reporting under
IFRS.
The Financial Statements have been prepared on a going concern basis and under the historical cost
convention.
The preparation of Financial Statements in conformity with IFRSs requires the use of estimates and
assumptions that affect the reported amounts of assets and liabilities at the date of the Financial
Statements and the reported amounts of revenues and expenses during the reporting period.
Although these estimates are based on management’s reasonable knowledge of the amount,
event or actions, actual results ultimately may differ from those estimates. The critical accounting
judgements, estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year are
discussed in note 4 and the following accounting policy notes: Revenue recognition (2.5), Intangible
assets (2.6), Inventories (2.10) and Credit risk (3.1.3).
29
Notes to the Financial Statements
For the year ended 31 December 2013
2. Summary of Significant Accounting Policies (continued)
2.2 Going Concern
The Group meets its day to day capital requirements through its bank facilities. The current
economic conditions continue to create uncertainty particularly over the (a) the level of demand
for the Group’s products and (b) the availability of bank finance for the foreseeable future. The
Group’s forecasts and projections , taking account of the reasonably possible changes in trading
performance, show that the Group should be able to operate within the level of its current facilities.
After making enquires, the Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future. The Group therefore
continues to adopt the going concern basis in preparing its consolidated financial statements.
Further information on the Group’s borrowings can be found in note 22.
2.3 Change in Accounting Policies and Disclosures
Adoption of new and revised accounting standards
The Group has adopted the following new and amended IFRSs as of 1 January 2013:
Accounting periods commencing on or after
Effective date:
IFRS 13, ‘Fair value measurement’
Annual improvements 2011
Amendments to IFRS 1, ‘First time adoption’, on government loans
Amendment to IFRS 1, ‘First time adoption’ on fixed dates and hyperinflation
Amendment to IFRS 7, ‘Financial instruments: Disclosures’ on offsetting financial
assets and financial liabilities
Amendment to IAS 12, ‘Income taxes’ on deferred tax
Amendment to IAS 19, ‘Employee benefits’
Amendment to IAS 1, ‘Financial statement presentation’
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
1 January 2013
The adoption of these standards and interpretations have had no material impact on the
Financial Statements of Good Energy Group PLC, with relevant changes impacting on
presentational aspects only.
30
Notes to the Financial Statements
For the year ended 31 December 2013
2. Summary of Significant Accounting Policies (continued)
At the date of authorisation of these Financial Statements, the following standards and relevant
interpretations, which have not been applied in these Financial Statements, were in issue but not yet
effective, and have not been early adopted by the Group:
Accounting periods commencing on or after
Effective date:
IFRS 10, ‘Consolidated financial statements’
IFRS 11, ‘Joint arrangements’
IFRS 12, ‘Disclosures of interests in other entities’
Amendment to IFRS 10, 11, and 12 on transition guidance
IAS 27 (revised 2011) ‘Separate financial statements’
IAS 28 (revised 2011) ‘Associates and joint ventures’
Amendment to IAS 32, ‘Financial instruments Presentation’ on offsetting financial
assets and financial liabilities
Amendment to IFRS 10, ‘Consolidated financial statements ‘ IFRS 12 and IAS 27 for
investment entities
IFRS 9, ‘Financial instruments’ – classification and measurement
Amendments to IFRS 9, ‘Financial instruments’ – regarding hedge accounting
Amendments to IAS 36, ‘Impairment of assets’
Amendment to IAS 39, ‘Financial instruments: Recognition and measurement’, on
novation of derivatives and hedge accounting
Amendment to IAS 19 regarding defined benefits plans
Annual improvements 2012
Annual improvements 2013
IFRIC 21, ‘Levies’
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
The adoption of these standards and interpretations are not expected to have a material impact on
the Financial Statements of Good Energy Group PLC in the period they are applied.
2.4 Basis of Consolidation
The Group Financial Statements incorporate the Financial Statements of the Company and
enterprises controlled by the Company (and its subsidiaries) made up to 31 December each year.
Control is achieved where the Company has the power to govern the financial and operating policies
of an investee enterprise so as to obtain benefits from its activities.
The acquisition of subsidiaries is accounted for using the purchase method. On acquisition, the
identifiable assets, liabilities and contingent liabilities of a subsidiary are measured at their fair
values on the date of acquisition. The interest of non-controlling minority shareholders is stated
at the minority’s proportion of the fair values of the identifiable assets, liabilities and contingent
liabilities recognised. Consideration payable on acquisition is measured at fair value.
For business combinations made after 1 July 2009, costs directly attributable to the business
combination are not included in the measurement of cost, but expensed in the income statement in
line with IFRS 3 (revised).
The results of subsidiaries acquired or disposed of during the year are included in the Consolidated
Statement of Comprehensive Income from the effective date of acquisition or up to the effective
date of disposal, as appropriate.
31
Notes to the Financial Statements
For the year ended 31 December 2013
2. Summary of Significant Accounting Policies (continued)
Where necessary, adjustments are made to the Financial Statements of subsidiaries to bring the
accounting policies used into line with those used by other members of the Group.
Intercompany transactions and balances between Group enterprises are eliminated on
Consolidation.
2.5 Revenue Recognition
Revenue represents the fair value of the consideration received or receivable for the provision of
goods and services which fall within the Group’s ordinary activities, excluding transactions with or
between subsidiaries. All revenue and profit before tax arose within the United Kingdom.
Revenue represents amounts recoverable from customers for supply of gas, electricity generation
of power and sale of generation development sites and is measured at the fair value of the
consideration received or receivable, stated net of discounts, returns and value added taxes.
The Group recognises revenue when the amount of revenue can be reliably measured; when it is
probable that future economic benefits will flow to the Group; and when specific criteria have been
met for each of the group’s activities, as described below.
2.5.1 Power supply
Revenue for the supply of electricity is accrued based on industry data flows and national grid data.
These include an estimate of power used based on the estimated annual consumption of each
customer. Accrued income is superseded when customer meter reads are received at which point
estimates are adjusted to actual usage.
For gas, revenue is accrued based on information received from the group’s gas shipper, which
includes details of all the sites held, their estimated annual quantities of gas used adjusted by a
pre-determined weather correction factor. This information is subsequently adjusted; and invoiced
based on customer and industry meter reads.
For electricity and gas supply, payment is collected either as a direct debit or paid on receipt of bill in
arrears. Overdue amounts are reviewed regularly for impairment and provision made as necessary.
2.5.2 Feed-in Tariff (FIT) administration services
Good Energy provide FIT administration services to micro-generators who are signed up to the FIT
scheme. For FIT services, revenue is earned from OFGEm for administering the scheme. For FIT
services, revenue is recognised in two parts; there is an initial fee paid by OFGEm for taking on a
generator, and then an ongoing amount that is received annually for provision of FIT services. The
initial fee is spread over the ‘take on’ period for a new customer and the ongoing fee that is received is
spread over the 12 month compliance period.
2.5.3 Renewable Obligation Certificates (ROCs) revenue recognition
ROCs are awarded to the Group from OFGEm based on generation of power. These ROCs are sold on
receipt of certificate from OFGEm allowing transfer of title.
The amount of revenue recognised on sale is in accordance with a contractual agreement where
the pricing is based on OFGEm’s minimum ROC value (the buy-out) and a prudent estimate of the
re-cycle element of the final value of a ROC once all energy suppliers have complied or paid the
penalty for non-compliance with the renewables obligation (the recycle). A final adjustment to ROC
revenue and profit is recognised once OFGEm have announced the final out-turn ROC price.
32
Notes to the Financial Statements
For the year ended 31 December 2013
2. Summary of Significant Accounting Policies (continued)
2.5.4 Generation development site revenue recognition
Revenue is recognised on the completion date of the sale and purchase agreement pertaining to
each site sold. Where there is contingent revenue included in the sale and purchase agreement,
revenue is recognised based on management’s assessment of the likelihood of the contingent
revenue being received based on latest information available.
2.6 Intangible assets and amortisation
Goodwill represents the excess of the cost of acquisition of a business combination over the Group’s
share of the fair value of identifiable assets, liabilities and contingent liabilities of the business
acquired at the date of acquisition and is carried as an indefinite life asset. Goodwill is initially
recognised at cost. After initial recognition, goodwill is measured at cost less any accumulated
impairment losses. Gains and losses on disposal of a business include the carrying amount of
goodwill relating to the business sold.
At the date of acquisition, the amount of goodwill is allocated to Cash Generating Units (“CGUs”) for
the purpose of impairment testing and is tested annually for impairment, or more frequently if there
is an indication that the value of the goodwill may be impaired.
Amortisation of intangible assets is included in the Consolidated Statement of Comprehensive
Income in ‘Administrative Expenses’.
2.6.1 Definite Life Intangible assets
Definite life intangible assets comprise software licences and website development costs, which
meet the criteria of IAS 38 “Intangible assets”. The software licences and website development
costs are carried at cost less accumulated amortisation and impairment losses. Cost comprises
purchase price from third parties as well as directly attributable internally generated development
costs where relevant.
2.6.2 Indefinite Life Intangible assets
The Power Supply Licence is held as an indefinite life intangible according to the criteria of IAS 38
“Intangible assets”. The Power Supply Licence is carried at cost less accumulated impairment
losses. Cost comprises purchase price from third parties as well as directly attributable internally
generated development costs where relevant.
2.6.3 Amortisation
Amortisation on definite life intangible assets is charged to the Consolidated Statement of
Comprehensive Income on a straight-line basis over the estimated useful lives of intangible assets.
The estimated useful lives for intangibles with definite lives are as follows:
Software Licenses
over the shorter of the lease term or up to 10 years
Website development costs
between 2 and 5 years
33
Notes to the Financial Statements
For the year ended 31 December 2013
2. Summary of Significant Accounting Policies (continued)
2.6.4 Impairment
The Directors regularly review the intangible assets for impairment and provision is made if
necessary. Assets that have an indefinite useful life, for example goodwill and the power supply
licence are not subject to amortisation and are tested annually for impairment. Assets that are
subject to amortisation are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the
amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes
of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that
suffered an impairment are reviewed for possible reversal of the impairment at the end of each
reporting period.
2.7 Property, plant and equipment
Property, plant and equipment is stated at cost less depreciation. Cost includes the original
purchase price of the asset and the costs attributable to bringing the asset to its working condition
for its intended use. Depreciation is provided at rates calculated to write off the cost of fixed assets,
less their estimated residual value, over their expected useful lives on the following bases:
Furniture, fittings & equipment
between 3 and 5 years
Leasehold improvements
over the life of the lease, until 2016
Turbines & ancillaries
24 years
Assets under construction
24 years from operational start date
The useful economic lives of assets and their residual values are reviewed on an annual basis and
revised where considered appropriate. The carrying value of property, plant and equipment is
reviewed for impairment when events or changes in circumstance indicate that the carrying value
may not be recoverable.
2.8 Leases
Assets financed by leasing agreements that give rights approximating to ownership (finance leases)
are capitalised at their fair value and depreciation or amortisation is provided over the lower of the
useful life and term of the lease. The capital elements of future obligations under finance leases are
included as liabilities in the Statement of Financial Position and the current year’s interest element,
having been allocated to accounting periods to give a constant periodic rate of charge on the
outstanding liability, is charged to the Statement of Comprehensive Income.
Rentals applicable to operating leases where substantially all of the benefits and risks of ownership
remain with the lessor are charged to the Statement of Comprehensive Income on a straight line
basis over the term of the lease.
2.9 Pensions
The Group operates a defined contribution pension scheme. Under this scheme the Group
pays contributions to publicly or privately administered pension insurance plans on a mandatory,
contractual or voluntary basis. The Group has no further payment obligations once the contributions
have been paid. The contributions are recognised as an employee benefit expense when they are
due. The pension charge for the year represents the amounts payable by the Group in respect of
the year.
01 Good Energy’s solar and wind projects’ footprint
34
Operational sites
In planning and
development
Scotland
1.6mW
Hampole
Doncaster
8.2mW
Norfolk
50mW
Wiltshire
10mW
Cornwall
45.63mW
Dorset
5mW
Delabole
Cornwall
9.2mW
This page does not form part of the notes to the Financial Statements
02 Financial highlights
35
2012
2013
03 Funding highlights
04 Customers
This page does not form part of the notes to the Financial Statements
£15 million bond raise80% are existing customers59,000Feed-in Tariff customers40,000Electricity customers15,000Gas customers£0m£10m£20m£30m£40mRevenueGross ProfitProfit Before TaxCash Balance 36
Notes to the Financial Statements
For the year ended 31 December 2013
2. Summary of Significant Accounting Policies (continued)
2.10 Inventories
2.10.1 Renewable Obligation Certificates
Under the provisions of the Utilities Act 2000, all electricity suppliers are required to procure a set
percentage of their supplies from accredited renewable electricity generators. This obligation can
be fulfilled by the purchase and surrender of ROCs originally issued to generators, or by making
payments to OFGEm who then recycle the payments to purchasers of ROCs. Notwithstanding that
Good Energy Limited, a Subsidiary company, supplies electricity sourced entirely from renewable
generation, its percentage obligation to submit ROCs is set by OFGEm. The cost obligation is
recognised as electricity is supplied and charged as a cost of sale in the Consolidated Statement of
Comprehensive Income. Any gains or losses on disposal of ROCs which are in excess of the Group’s
compliance obligations are included as an adjustment to the compliance cost included within cost
of sales. ROCs are valued at the lower of purchase cost and estimated realisable value.
2.10.2 Generation Development Sites
The group incurs costs in respect of Generation development sites to secure development rights and
planning permission to establish power generation units on a number of different sites. These are
recognised as inventory at the lower of cost and net realisable value.
2.11 Current and Deferred Taxation
The tax expense represents the sum of the tax currently payable and Deferred tax. The tax currently
payable is based on taxable profit for the year. Taxable profit differs from net profit as reported
in the Statement of Comprehensive Income because it excludes items of income or expense
that are taxable or deductible in other years and it further excludes items that are never taxable
or deductible. The Group’s liability for current tax is calculated by using tax rates that have been
enacted or substantively enacted by the end of each reporting period.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying
amount of assets and liabilities in the Financial Statements and the corresponding tax bases used
in the computation of taxable profit, and is accounted for using the statement of financial position
liability method. Deferred tax liabilities are recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is probable that taxable profits will be
available against which deductible temporary differences can be utilised. Such assets and liabilities
are not recognised if the temporary difference arises from goodwill or from the initial recognition
(other than in a business combination) of other assets and liabilities in a transaction which affects
neither the tax profit nor the accounting profit. Deferred tax liabilities are recognised for taxable
temporary differences arising in investments in subsidiaries except where the Group is able to
control the reversal of the temporary difference and it is probable that the temporary difference will
not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and
reduced to the extent that it is no longer probable that sufficient taxable profits will be available
to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are
expected to apply to the period when the asset is realised or the liability is settled. Deferred tax is
charged or credited in the Statement of Comprehensive Income, except when it relates to items
credited or charged directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off
current tax assets against current tax liabilities and when they relate to income taxes levied by the
same taxation authority, and the Group intends to settle its current tax assets and liabilities on a net
basis.
37
Notes to the Financial Statements
For the year ended 31 December 2013
2. Summary of Significant Accounting Policies (continued)
2.12 Financial instruments
The Group uses certain financial instruments in its operating and investing activities that are
deemed appropriate for its strategy and circumstances.
Financial instruments recognised on the Consolidated Statement of Financial Position include
cash and cash equivalents, trade receivables, trade payables and borrowings. Financial assets and
liabilities are recognised on the Consolidated Statement of Financial Position when the Company
has become a party to the contractual provisions of the instrument.
2.12.1 Loans and receivables
The Group’s loans and receivables comprise trade and other receivables and cash and cash
equivalents in the Consolidated Statement of Financial Position. These assets are non-derivative
financial assets with fixed or determinable payments that are not quoted in an active market.
They arise principally through the provision of goods and services to customers (e.g. trade
receivables),but also incorporate other types of contractual monetary asset. They are initially
recognised at fair value plus transaction costs that are directly attributable to their acquisition or
issue, and are subsequently carried at amortised cost using the effective interest rate method, less
provision for impairment. Trade receivables are shown inclusive of unbilled amounts to customers
and of payments made in advance by customers, reflecting the underlying nature of customer
account balances.
Impairment provisions are recognised when there is objective evidence (such as significant financial
difficulties on the part of the counterparty or default or significant delay in payment) that the
Group will be unable to collect all of the amounts due under the terms receivable, the amount of
such a provision being the difference between the net carrying amount and the present value of
the future expected cash flows associated with the impaired receivable. For trade receivables,
which are reported net, such provisions are recorded in a separate allowance account with the loss
being recognised within administrative expenses in the consolidated statement of comprehensive
income. On confirmation that the trade receivable will not be collectable, the gross carrying value of
the asset is written off against the associated provision.
Cash and cash equivalents comprise cash on hand and on demand deposits, and other short term,
highly liquid investments that are readily convertible to a known amount of cash and are subject to
an insignificant risk of changes in value.
2.12.2 Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the
contractual arrangements entered into. An equity instrument is any contract that evidences a
residual interest in the assets of the Group after deducting all of its liabilities.
Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue
costs. Details of the Group’s equity are included in note 20.
2.12.3 Trade and other payables
Trade payables are obligations to pay for goods or services that have been acquired in the course of
ordinary business from suppliers. Accounts payable are classified as current liabilities if payment is
due within one year or less. If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently held at amortised cost.
38
Notes to the Financial Statements
For the year ended 31 December 2013
2. Summary of Significant Accounting Policies (continued)
2.12.4 Borrowings
The Group expenses borrowing costs in the period the costs are incurred. Where borrowing costs
are attributable to the acquisition, construction or production of a qualifying asset, such costs are
capitalised as part of the specific asset. Details of the Group’s borrowings are included in note 22.
2.13 Share based payments
The Group applies IFRS 2 to share based payments. The Group operates a share-based payment
compensation plan, under which the entity grants key employees the option to purchase shares in
the Company at a specified price maintained for a certain duration.
The group operates an equity-settled, share-based compensation plan, under which the entity
receives services from employees as consideration for equity instruments (options) of the
group. The fair value of the employee services received in exchange for the grant of the options is
recognised as an expense. The total amount to be expensed is determined by reference to the fair
value of the options granted:
•
•
•
including any market performance conditions; (for example, an entity’s share price);
excluding the impact of any service and non-market performance vesting conditions (for
example, profitability, sales growth targets and remaining an employee of the entity over a
specified time period); and
including the impact of any non-vesting conditions (for example, the requirement for
employees to save).
Non-market performance and service conditions are included in assumptions about the number of
options that are expected to vest. The total expense is recognised over the vesting period, which is
the period over which all of the specified vesting conditions are to be satisfied.
At the end of each reporting period, the group revises its estimates of the number of options that
are expected to vest based on the non-market vesting conditions. It recognises the impact of the
revision to original estimates, if any, in the Consolidated Statement of Comprehensive Income, with
a corresponding adjustment to equity.
When the options are exercised, and the company issues new shares, the proceeds received net of
any directly attributable transaction costs are credited to share capital (nominal value) and share
premium.
2.14 Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to
the chief operating decision maker. The chief operating decision maker has been identified as the
Board of Directors. The Board of Directors review the Group’s internal reporting in order to assess
performance and allocate resources.
2.15 Derivative financial instruments and hedging activities
Derivatives are initially recognised at fair value on the date of contract and subsequently
re-measured at their fair value. The method of recognising the resulting gain or loss depends on
whether the derivative is designated as a hedging instrument, and if so, the nature of the item
being hedged. The Group designates derivatives as hedges of a particular risk associated with a
recognised asset or liability or a highly probable forecast transaction (cash flow hedge).
At inception, the Group documents the relationship between the hedging instruments and hedged
items as well as risk management objectives and its strategy for undertaking hedging transactions.
The Group also documents, at inception and on-going, its assessment of whether the derivatives
used in hedging transactions are highly effective in offsetting changes in cash flows of hedged items.
39
Notes to the Financial Statements
For the year ended 31 December 2013
2. Summary of Significant Accounting Policies (continued)
The fair values of derivative financial instruments and the movements on the hedging reserve in
other comprehensive income (‘OCI’) are shown in note 24. The full fair value of hedging derivatives
are classified as non-current assets since the maturity of the hedged items is more than 12 months.
The trading derivatives are classified as current liabilities.
2.15.1 Cash flow hedge
The effective portion of the changes in the fair value of derivatives that are designated and qualify
as cash flow hedges is recognised in OCI. The gain or loss relating to the ineffective portion is
recognised immediately in the income statement within ‘Finance Costs’.
2.16 Share Capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new
ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.
2.17 Interest Income
Interest income is recognised using the effective interest method. When a loan and receivable is
impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated
future cash flow discounted at the original effective interest rate of the instrument, and continues
unwinding the discount as interest income. Interest income on impaired loan and receivables is
recognised using the original effective interest rates.
2.18 Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s
Financial Statements in the period in which the dividends are approved by the Company’s
shareholders.
3. Financial and capital risk management
3.1 Financial risk factors
The Group’s activities expose it to a variety of financial risks: liquidity risk, market risk (including
currency risk, cash flow and fair value interest rate risk and commodity price risk) and credit risk. The
Group’s overall risk management programme focuses on the unpredictability of financial markets
and seeks to minimise potential adverse effects on the Group’s financial performance. The Group
uses derivative financial instruments to hedge certain risk exposures.
3.1.1 Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in raising funds to meet cash flow
commitments associated with financial instruments. The Group has cash resources available to
it and prepares, in the operating entities of the Group, forecasts for the forthcoming year which
indicate that in the Directors’ opinion it will have sufficient resources to fund the continuation of
trade. The Group monitors cash flow forecasts on a ‘rolling forecast’ basis to ensure it has sufficient
cash to meet operational needs while maintaining enough headroom on its undrawn committed
borrowing facilities at all times so as not to breach borrowing limits or covenants.
40
Notes to the Financial Statements
For the year ended 31 December 2013
3. Financial and capital risk management (continued)
A liquidity analysis of financial instruments is provided below:-
Parent Company
31 December 2013
Corporate bond
Loan from group companies
Trade and other payables
Total
Parent Company
31 December 2012
Trade and other payables
Total
Consolidated
31 December 2013
Finance lease liabilities
Bank loans
Corporate bond
Trade and other payables
Total
Consolidated
31 December 2012
Finance lease liabilities
Bank loans
Trade and other payables
Total
3.1.2 Market Risk
3.1.2a Currency risk
Less than
1 year
£000’s
1,113
1,374
1,232
3,719
Less than
1 year
£000’s
582
582
Less than
1 year
£000’s
125
1,294
1,113
13,148
15,680
Between
Between
Over 5 years
1 and 2 years
2 and 5 years
£000’s
1,113
-
-
1,113
£000’s
17,226
-
-
17,226
£000’s
-
-
-
-
Between
Between
Over 5 years
1 and 2 years
2 and 5 years
£000’s
£000’s
£000’s
-
-
-
-
-
-
Between
Between
Over 5 years
1 and 2 years
2 and 5 years
£000’s
£000’s
£000’s
-
1,379
1,113
-
2,492
-
5,369
17,226
-
22,595
-
8,147
-
-
8,147
Less than
Between
Between
Over 5 years
1 year
£000’s
166
1,022
8,885
10,073
1 and 2 years
2 and 5 years
£000’s
£000’s
£000’s
125
1,038
-
1,163
-
2,893
-
2,893
-
9,141
-
9,141
The Group is exposed to foreign exchange risk arising from the purchase of capital equipment
items from European countries. The primary currency exposure is with respect to the Euro.
management have set up a policy to forward buy Euros against major contracts to reduce
foreign exchange exposure.
41
Notes to the Financial Statements
For the year ended 31 December 2013
3. Financial and capital risk management (continued)
The only currency exposure is with respect to the Euro and the UK pound and relates solely to
management setting a policy to forward buy Euros against the purchase of windfarm machinery
from European countries. The forward currency contracts are matched to the contractual payment
dates related to this machinery. At 31 December 2013, if the currency had weakened/strengthened
by 10% against the Euro with all other variables held constant, post tax profit for the year would
have been £264,963/£216,788 (2012: £nil/£nil), higher/lower, mainly as a result of foreign exchange
gains/losses on translation of Euro denominated accruals. Profit is more sensitive to movement
in Euro exchange rates in 2013 than 2012 because of the increased amount of Euro denominated
borrowing.
3.1.2b Cash flow and fair value interest rate risk
The financial risk is the risk to the Group’s earnings that arises from fluctuations in interest rates and
the degree of volatility of these rates. For short term bank overdraft facilities, the Group does not
use derivative instruments to reduce its exposure to interest rate fluctuations as the policy of the
Group is not to rely on short term borrowing facilities for any significant duration. The Directors use
interest rate swaps if they consider their exposure to interest rate risk to be material. For long term
borrowings, the Group uses interest rate swaps to fix the interest rate payable on these material
balances in order to mitigate the risk of any fluctuations in interest rates. As all material interest rate
risks have been effectively hedged as at 31 December 2013, interest rate exposure scenarios are not
required to be simulated.
3.1.2c Commodity price risk
The Group’s operations results in exposure to fluctuations in energy prices. management monitors
energy prices and analyses supply and demand volumes to manage exposure to these risks. The
Group typically buys power forwards in order to mitigate some of the risk of commodity price
fluctuations.
If the wholesale market moves significantly upwards or downwards, the price risk to the Group
will depend upon a number of factors including the excess or deficiency of power being supplied
by Renewable Power Purchase contracts in place at the time. The Group may be required to pass
on the price risk to customers. Retail prices can be amended with 30 days advance notification to
customers. The Group closely monitors movements in the wholesale market and assess trends so it
is ready to take necessary action when required.
3.1.3 Credit risk
The Group’s exposure to credit risk arises from its receivables from customers. At 31 December 2013
and 2012, the Group’s trade and other receivables were classed as due within one year, details of
which are included in note 18. The Group’s policy is to undertake credit checks where appropriate
on new customers and to provide for doubtful debts based on estimated irrecoverable amounts
determined by reference to specific circumstances and past default experience. Credit risk is also in
part mitigated by the policy to offer direct debit as a preferred method payment for customers. At
the end of the reporting period the Directors have provided for specific doubtful debts and believe
that there is no further credit risk. Should the level of bad debt increase by 0.25 per cent, this would
have an impact of £50,000 on the Statement of Comprehensive Income.
Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions.
The Directors monitor credit quality of the institutions used when considering which banks and
financial institutions funds should be placed with.
42
Notes to the Financial Statements
For the year ended 31 December 2013
3. Financial and capital risk management (continued)
3.2 Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a
going concern in order, in due course, to provide returns to shareholders, and to maintain an optimal
capital structure. The Group monitors capital on the basis of the gearing ratio calculated as net debt
divided by total capital (equity plus net debt). The capital structure of the Group is as follows:
Total borrowings
Less: cash and cash equivalents
Net debt
Total equity
Total capital
Gearing ratio
Note
22
19
2013
£000’s
25,341
(17,975)
7,366
16,464
23,830
30.9%
2012
£000’s
9,202
(9,535)
(333)
11,052
10,718
n/a
The Group’s borrowings are subject to maintaining covenants as defined by the debt funder.
Throughout the year ended 31 December 2013 the Group complied with all external borrowing
covenants and management monitors the continued compliance with these covenants on a
monthly basis.
3.3 Fair value estimation
The following table presents the Group’s financial assets and liabilities that are measured at fair
value (by valuation method) at 31 December 2013.
The fair value of financial instruments used by the Group is determined by using valuation
techniques (level 2) since the instruments are not traded in an active market (eg over the counter
derivatives). The valuation techniques used maximize the use of observable market data where it is
available and rely as little as possible on entity specific estimates. If all significant inputs are required
to fair value an instrument are observable, the instrument is included in level 2. If one or more of
the significant inputs is not based on observable market data, the instrument is included in level 3.
Specific valuation techniques used to fair value financial instruments include:
•
•
The fair value of interest rate swaps is calculated as the present value of the
estimated future cash flows based on observable yield curves;
The fair value of forward foreign exchange contracts is determined using forward
exchange rates at the balance sheet date, with the resulting value discounted back to
the present value;
Other techniques (eg discounted cash flow analysis) are used to determine fair value for remaining
financial instruments.The following table presents the Group’s financial assets and liabilities that
are measured at fair value at 31 December 2013. There is no comparative table for 2012 as no such
instruments were held at this time.
43
Notes to the Financial Statements
For the year ended 31 December 2013
3. Financial and capital risk management (continued)
Assets
Derivatives used for hedging
Interest rate contracts
Total assets
Liabilities
Derivatives used for hedging
Foreign exchange contracts
Total Liabilities
Level 1
£000’s
Level 2
£000’s
Level 3
Total
£000’s
£000’s
-
-
-
328
328
52
52
-
-
-
-
328
328
52
52
There were no transfers between levels during the year.
4. Critical accounting estimates
In the process of applying the Group’s accounting policies, management has to make judgements
and estimates that have a significant effect on the amounts recognised in the Financial Information.
These estimates and judgements are evaluated continually and are based on historical experience
and other factors, including expectations of future events. The most critical of these accounting
judgements and estimates are noted. Given the nature of the estimates and judgements made,
unless explicitly stated otherwise, it is not appropriate to provide a sensitivity analysis of the
judgements and estimates noted.
4.1 Revenue recognition
Revenue calculated from energy sales includes an estimate of the value of electricity or gas supplied
to customers between the date of the last meter reading and the end of the reporting period. This
will have been estimated by using historical consumption patterns and data available, and takes
into consideration industry reconciliation processes, upon which the group takes a prudent position
until final reconciliation data is available from the industry.
4.2 Power purchase costs
Power purchase costs can typically take 14 months to be finalised due to the processes that the
energy market has to complete in order to finalise generation and consumption data for any one
particular month. Therefore there is an element of power purchase costs that needs to be estimated
based on a combination of in-house and industry data that is available at any particular point in time.
4.3 Inventories
The Group carries ROCs as stock in its balance sheet. These are valued at the lower of cost or
estimated realisable value. Gains or losses made on ROCs which are subsequently sold, are only
recognised in the Statement of Comprehensive Income when they crystallise.
The final out-turn value of a ROC is only published by OFGEm in October following the compliance
year (April to march) which may require a final adjustment to gains or losses on the sale or purchase
of ROCs previously recognised in the Consolidated Statement of Comprehensive Income.
44
Notes to the Financial Statements
For the year ended 31 December 2013
4. Critical accounting estimates (continued)
4.4 Consideration of the impairment of Goodwill and other indefinite lived intangible assets
The Group test annually whether Goodwill and other indefinite lived intangible assets has suffered
any impairment, in accordance with the accounting policy with detailed disclosure in note 15. In
assessing for impairment, assets that do not generate independent cash flows are allocated to an
appropriate cash generating unit (CGU).
The recoverable amount of the assets, or the appropriate CGU, is measured as the higher of their fair
value less costs to sell and value in use. Value in use calculations require the estimation of future
cash flows to be derived from the respective CGUs and to select and an appropriate discount rate in
order to calculate their present value.
The estimation of the timing and value of underlying projected cash flows and the selection of
appropriate discount rates involves management judgement. Subsequent changes to these
estimates or judgements may impact the carrying value of the assets within the respective CGUs.
4.5 Provisions for bad and doubtful debt
The assessments undertaken in recognising provisions and contingencies have been made in
accordance with IAS 39. A provision for impairment of trade receivables is established when there is
objective evidence that the group will not be able to collect all amounts due according to the original
terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor
will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than
30 days overdue) are considered indicators that the trade receivable is impaired.
The amount of any loss is recognised in the income statement within administrative expenses.
Subsequent recoveries of amounts previously written off are credited against administrative
expenses in the income statement.
5. 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. The main segments are:-
•
•
•
•
•
Electricity supply and FIT administration
Gas supply
Electricity generation
Generation development
Holding companies, being the activity of Good Energy Group PLC
45
Notes to the Financial Statements
For the year ended 31 December 2013
5. Segmental Analysis (continued)
The Board assesses the performance of the operating segments based primarily on summary
Financial Statements, 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:
Year ended
Electricity
Gas
Electricity
Generation
Holding
Consolidation
Total
31 December
supply and FIT
supply
Generation
Development
Companies
Adjustments
2013
administrations
£000’s
£000’s
£000’s
£000’s
£000’s
£000’s
£000’s
Revenue
Revenue
from external
customers
Inter-segment
revenue
Expenditure
Cost of sales
Administrative
expenses
Depreciation &
amortisation
Operating
profit/(loss)
Net finance
income/(costs)
Profit/(loss)
before tax
Taxation
Net profit /
(loss) for year
27,316
7,032
1,112
4,947
Total Revenue
27,316
7,032
-
-
1,369
2,481
-
4,947
-
-
-
-
-
40,407
(1,369)
-
(1,369) 40,407
1,369
(26,822)
(18,392)
(5,619)
(833)
(3,347)
(5,998)
(746)
(188)
(977)
(1,137)
(674)
-
-
(4)
(3)
2,252
667
1,460
619
(1,140)
150
8
(652)
(185)
76
2,402
(514)
675
(167)
808
(83)
434
281
(1,064)
(103)
1,888
508
725
715
(1,167)
-
-
-
-
-
-
(9,046)
(681)
3,858
(603)
3,255
(586)
2,669
Segments assets & liabilities
Segment
assets
Segment
liabilities
Net assets/
(liabilities)
Additions to
non- current
assets
25,686
2,174
20,738
4,503
28,248
(25,376)
55,973
20,066
1,293
16,667
6,657
17,072
(22,246)
39,509
5,620
881
4,071
(2,154)
11,176
(3,130)
16,464
1,347
2
9,453
6
-
-
10,808
The Generation development segment is a new business segment recognised in the Group in 2013.
There is no comparative segment for 2012.
46
Notes to the Financial Statements
For the year ended 31 December 2013
5. Segmental Analysis (continued)
Year ended 31 December
Electricity supply
Gas
Electricity
Holding
Consolidation
Total
2012
and FIT
supply
Generation
Companies
Adjustments
administration
£000’s
£000’s
£000’s
£000’s
£000’s
£000’s
Revenue
Revenue from external
customers
Inter-segment
revenue
Total Revenue
Expenditure
Cost of sales
Administrative
expenses
Depreciation &
amortisation
Operating profit/(loss)
Net finance
income/(costs)
Profit/(loss)
before tax
Taxation
Net profit/(loss)
for year
Segments assets & liabilities
23,100
3,998
1,086
-
-
23,100
3,998
1,208
2,294
(15,810)
(3,134)
(917)
18
-
18
-
(4,884)
(651)
(119)
(1,729)
(137)
2,269
4
2,273
(427)
-
213
6
219
(44)
-
1,258
(5)
(1,716)
(657)
(2)
601
(143)
(1,718)
423
1,846
175
458
(1,295)
-
28,202
(1,208)
-
(1,208)
28,202
1,208
(18,653)
-
-
-
-
-
-
-
(7,383)
(142)
2,024
(649)
1,375
(191)
1,184
Segment assets
14,753
1,257
13,303
8,312
(7,650)
29,975
Segment liabilities
(11,003)
(865)
(10,160)
Net assets/(liabilities)
3,750
392
3,143
(746)
7,565
3,851
(18,923)
(3,799)
11,052
Additions to
non- ‐current
assets
1,048
-
4
3,099
(3,090)
1,061
All turnover arose within the United Kingdom.
Consolidation adjustments relate to intercompany sales of generated electricity and the elimination
of intercompany balances.
Notes to the Financial Statements
For the year ended 31 December 2013
6. Operating Profit and Administrative Expenses
The operating profit is stated after charging:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Operating lease rentals
Auditors’ Remuneration
Audit of parent and consolidated
Audit of subsidiaries
Audit related assurance services
Subtotal (audit)
Other services-Financial statement preparation
Tax
Subtotal (non-audit)
The administrative expenses comprise the following:
Staff costs
Rent and office costs
marketing costs
Professional fees and bank charges
Bad Debts
Depreciation and amortisation
Total
47
2013
£000’s
2012
£000’s
634
533
315
15
56
12
83
11
34
45
4,753
2,174
836
906
377
681
9,727
559
75
263
10
50
110
170
10
15
25
4,099
1,248
697
762
577
142
7,525
7. Profit of the Parent Company
As permitted by Section 408 of the Companies Act 2006, the Statement of Comprehensive
Income of the Parent Company is not presented as part of these Financial Statements. The Parent
Company’s profit for the financial year was £517,592 (2012:£420,025).
Notes to the Financial Statements
For the year ended 31 December 2013
8. Staff costs
Staff costs, including Directors’ remuneration, were as follows:
Wages and salaries
Social security costs
Share based payments
Other pension costs
Total
48
2013
£000’s
4,388
444
39
218
2012
£000’s
3,472
419
-
208
5,089
4,099
Details of share based payments can be found in note 27
The average monthly number of employees, including the Directors, during the year was as follows:
Operations
Business services
Total management and administration
9. Directors’ and Key Management Remuneration
Directors’ and Key management emoluments
Aggregate emoluments
Contributions to money purchase pension schemes
2013
2012
Number
Number
71
94
165
63
67
130
2013
2012
£000’s
£000’s
761
43
504
28
Key management are considered to be the Directors of Good Energy Group PLC and the Director
of Operations in Good Energy Limited. The emoluments relating to the Director of Operations are
included in the table above.
During the year retirement benefits were accruing to 2 Directors of the Group (2012: 2) in respect of
money purchase pension schemes.
In respect of the highest paid Director, the Group paid remuneration of £276,432 (2012: £228,056),
and made contributions to the money purchase pension scheme of £19,000 (2012: £15,000).
Individual remuneration for the Directors is set by the Remuneration Committee of the Board which
consists entirely of Non-Executive Directors. Appropriate Keyman insurance policies are in place.
Details of Directors’ emoluments are given in the Directors’ remuneration report on page 18.
10. Finance Income
Bank and other interest receivable
2013
2012
£000’s
£000’s
116
39
Notes to the Financial Statements
For the year ended 31 December 2013
11. Finance Costs
On bank loans and overdrafts
On corporate bond
Other interest payable
Fair value losses on foreign currency forward contracts
Amortisation of debt issue cost
Total finance costs
Less: amounts capitalised on qualifying assets
Total
12. Taxation
Analysis of tax charge in year
Current tax (see note below)
Current Tax on profits for the year
Adjustments in respect of prior years
Total current tax
Deferred tax
Origination and reversal of temporary differences
Adjustments in respect of prior years
Total deferred tax (see note 21)
Tax on profit on ordinary activities
49
2013
2012
£000’s
£000’s
725
125
13
52
20
935
(216)
719
664
-
24
-
-
688
-
688
2013
2012
£000’s
£000’s
537
(46)
491
176
(81)
95
586
76
(132)
(56)
258
(11)
247
191
50
Notes to the Financial Statements
For the year ended 31 December 2013
12. Taxation (continued)
Factors affecting the tax charge for the year
The tax assessed for the year is lower (2012:lower) than the standard weighted average rate of
Corporation Tax in the UK of 23.25% (2012: 24.5%). The differences are explained as follows:
Profit before tax
Profit before tax multiplied by the weighted average rate of
Corporation Tax in the UK of 23.25% (2012: 24.5%)
Tax effects of:
Expenses not deductible for tax purposes
Research and development enhanced relief
Effects in changes in tax rate
Losses utilised
Prior year adjustments - current tax
Prior year adjustment - deferred tax
Total tax charge for year (see note above)
2013
2012
£000’s
£000’s
3,255
1,375
756
337
27
-
(29)
(41)
(46)
(81)
586
28
(15)
(17)
-
(132)
(10)
191
Factors that may affect future tax charges
During the year, further reductions to the main corporation tax rate have been substantively enacted
to reduce the rate from 23% to 21% from 1 April 2014 and to 20% from 1 April 2015. As the reductions
were substantively enacted at the balance sheet date the relevant deferred tax balances have been
re-measured at 20%. Apart from these changes, the factors that may affect future tax charges are
expected to be similar to those in 2013.
Corporation tax payable/(recoverable) as per Statement of Financial Position
UK Corporation Tax on profits for the year
90
(286)
503
76
Parent Company
Consolidated
2013
2012
2013
2012
£000’s
£000’s
£000’s
£000’s
51
Notes to the Financial Statements
For the year ended 31 December 2013
13. Earnings per Ordinary Share
The calculation of basic earnings per share at 31 December 2013 was based on the net profit
attributable to owners of the parent of £2,669,000 (2012: £1,184,175) and a weighted average
number of ordinary shares outstanding during the year ended 31 December 2013 of 12,784,912
(2012:8,991,576) after excluding the shares held by Clarke Willmott Trust Corporation Limited in
trust for the Good Energy Group Employee Benefit Trust.
The calculation of diluted earnings per share at 31 December 2013 was based on the net profit
attributable to owners of the parent of £2,669,000 (2012: £1,184,175) and a weighted average
number of ordinary shares outstanding during the year ended 31 December 2013 of 13,600,855
(2012:9,375,514), calculated as follows:
Basic weighted average number of ordinary shares
Dilutive potential Ordinary Shares:
Weighted average number of Ordinary Shares (diluted)
Consolidated
2013 (number)
2012 (number)
12,784,912
815,943
13,600,855
8,991,576
383,938
9,375,514
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary
shares outstanding to assume conversion of all potential dilutive ordinary shares. The Company has
one category of dilutive potential ordinary shares, share options. For the share options a calculation
is done to determine the number of shares that could have been acquired at fair value (determined
as the average annual market share price of the Company’s shares) based on the monetary value of
the subscription rights attached to the outstanding share options. The number of shares calculated
in this way is compared with the number of shares that would have been issued assuming exercise of
the share options.
52
Notes to the Financial Statements
For the year ended 31 December 2013
14. Property, plant and equipment
Consolidated
Year ended 31
December 2013
Cost
At 1 January 2013
Additions
At 31 December 2013
Accumulated depreciation
At 1 January 2013
Charge for the year
At 31 December 2013
Net book value
At 1 January 2013
At 31 December 2013
Leasehold
Furniture,
Turbines and
Assets under
Total
improvements
fittings &
ancillaries
construction
equipment
£000’s
£000’s
£000’s
£000’s
£000’s
111
101
212
(69)
(34)
(103)
42
109
799
181
980
(558)
(114)
(672)
11,729
4
11,733
(1,001)
(486)
(1,487)
241
308
10,728
10,246
-
9,449
9,449
-
-
-
-
9,449
12,639
9,735
22,374
(1,628)
(634)
(2,262)
11,012
20,112
Consolidated
Leasehold
Furniture,
Turbines and
Assets under
Total
Year ended 31 December
improvements
fittings &
ancillaries
construction
2012
Cost
At 1 January 2012
Additions
At 31 December 2012
Accumulated depreciation
At 1 January 2012
Charge for the year
At 31 December 2012
Net book value
At 1 January 2012
At 31 December 2012
equipment
£000’s
£000’s
£000’s
£000’s
£000’s
94
17
111
(56)
(13)
(69)
38
42
545
254
799
(504)
(54)
(558)
11,725
4
11,729
(509)
(492)
(1,001)
41
241
11,216
10,728
-
-
-
-
-
-
-
-
12,364
275
12,639
(1,069)
(559)
(1,628)
11,295
11,012
The turbines and ancillaries relate entirely to the Company’s subsidiary, Good Energy Delabole Wind
Farm Limited, have been pledged as security against its bank loan liability.
53
Notes to the Financial Statements
For the year ended 31 December 2013
15. Intangible Assets
Consolidated
Power supply
Software
Website
Goodwill
Total
Year ended 31 December 2013
Licences
Licences
development
£000’s
£000’s
costs
£000’s
£000’s
£000’s
Cost
At 1 January 2013
Additions
At 31 December 2013
Accumulated amortisation
At 1 January 2013
Charge for the year
At 31 December 2013
Net book value
At 1 January 2013
At 31 December 2013
180
-
180
-
-
-
180
180
2,176
1,073
3,249
(870)
(530)
(1,400)
1,306
1,849
132
-
132
(126)
(3)
(129)
1,446
-
1,446
3,934
1,073
5,007
-
-
-
(996)
(533)
(1,529)
6
3
1,446
1,446
2,938
3,478
Consolidated
Power supply
Software
Website
Goodwill
Total
Year ended 31 December 2012
Licences
Licences
development
£000’s
£000’s
costs
£000’s
£000’s
£000’s
Cost
At 1 January 2012
Additions
At 31 December 2012
Accumulated amortisation
At 1 January 2012
Charge for the year
At 31 December 2012
Net book value
At 1 January 2012
At 31 December 2012
180
-
180
-
-
-
180
180
1,398
777
2,175
(798)
(72)
(870)
600
1,305
123
9
132
(123)
(2)
(125)
1,446
-
1,446
-
-
-
3,147
786
3,933
(921)
(74)
(995)
-
7
1,446
1,446
2,226
2,938
54
Notes to the Financial Statements
For the year ended 31 December 2013
15. Intangible Assets (continued)
Goodwill of £1,446,453 (2012: £1,446,453) comprises £1,060,996 (2012: £1,060,996) arising from
the original acquisition of Good Energy Limited, and £385,457 (2012: £385,457) from the original
acquisition of the Group’s generation business.
The carrying values of indefinite life assets included in intangible assets are: Goodwill of £1,446,453
(2012: £1,446,453) and power supply licence of £180,000 (2012: £180,000) which relates to the
subsidiary, Good Energy Limited. In arriving at the conclusion that these assets have an indefinite
life, management considers the fact that the Group is a profitable business and expects to hold and
support these assets for an indefinite period.
An impairment review is undertaken annually or more frequently value-in use calculations, based on
pre-tax cash flow projections over a five year period approved by management and discounted at
appropriate rates.
The result of this review was that no impairment is required in respect of the carrying values of the
indefinite life assets. The key assumptions for value-in use are as follows:
Value-in use assumptions
Gross margin
Growth rate
Pre tax discount rate
2013
30%
2%
14%
2012
30%
2%
14%
Based on these assumptions the Directors consider there to be significant headroom and the
assumptions accordingly, not sensitive.
Included in software licences is an asset held under finance lease agreements with a carrying value
at 31 December 2013 of £450,000 (2012: £450,000). This asset will continue to be amortised over
its useful economic life.
Parent Company
Year ended 31 December 2013
Cost
At 1 January 2013
Additions
At 31 December 2013
Accumulated amortisation
At 1 January 2013
Charge for the year
At 31 December 2013
Net book value
At 1 January 2013
At 31 December 2013
Website development costs
£000’s
9
-
9
(2)
(3)
(5)
7
4
55
Website development costs
£000’s
Notes to the Financial Statements
For the year ended 31 December 2013
15. Intangible Assets (continued)
Parent Company
Year ended 31 December 2012
Cost
At 1 January 2012
Additions
At 31 December 2012
Accumulated amortisation
At 1 January 2012
Charge for the year
At 31 December 2012
Net book value
At 1 January 2012
At 31 December 2012
16. Investments and Subsidiaries
Parent Company
Year ended 31 December 2013
Cost and net book value
At 1 January 2013
Additions
Repayments
At 31 December 2013
Parent Company
Year ended 31 December 2012
Cost and Net book value
At 1 January 2012
Advances
Repayments
At 31 December 2012
-
9
9
-
(2)
(2)
-
7
Total
£000’s
8,332
45,683
(26,287)
27,728
Total
£000’s
5,242
3,284
(194)
8,332
Shares in Group
Loans to Group
undertakings
undertakings
£000’s
£000’s
4,646
4,435
-
9,081
3,686
41,248
(26,287)
18,647
Shares in Group
Loans to Group
undertakings
undertakings
£000’s
£000’s
4,646
-
-
4,646
596
3,284
(194)
3,686
The addition to shares in Group undertakings in the year relates to acquisition of Good Energy
Hampole Windfarm Limited. The substance of this acquisition was to acquire the leasehold site on
which power generating capacity is being developed. As such no goodwill arises on consolidation as
the cost relates wholly to assets under construction. The increase in advances and repayments of
Loans to Group undertakings is due to the allocation to operational Group entities of the proceeds
from the equity raise and corporate bond issue completed in the year ended 31 December 2013.
56
Notes to the Financial Statements
For the year ended 31 December 2013
16. Investments and Subsidiaries (continued)
The Group had the following principal subsidiaries at 31 December 2013:
Name
Country of
Proportion of
Nature of business
incorporation
ordinary shares
and place of
directly held by
business
Parent
Good Energy Limited
Good Energy Generation
Limited
Good Energy Gas Limited
Good Energy Delabole Wind
Farm Limited
Good Energy Hampole Wind
Farm Limited
UK
UK
UK
UK
UK
supply of renewably sourced electricity and FIT
100%
administration
100%
100%
an investor in potential new generation sites
supply of gas
generation of electric power by wind turbine
100%
machinery
generation of electric power by wind turbine
100%
machinery
The subsidiaries above have all been included in the consolidated accounts.
At 31 December 2013, 25 special purpose vehicles (SPVs) had been set up for solar generation
projects. These SPVs are not Included in the consolidation due to their immaterial impact. At the
year end each SPV held only a minimum share capital of £1 and equivalent investment by Good
Energy Group PLC.
17. Inventories
Renewable Obligation Certificates
Generation development sites
Total
Parent Company
Consolidated
2013
2012
2013
£000’s
£000’s
£000’s
-
-
-
-
-
-
2,199
3,929
6,128
2012
£000’s
2,259
418
2,677
As at 31 December 2013 there were Renewable Obligation Certificates (ROCs) of £1,343,077 (2012:
£1,006,964) included in the above amount that were unissued for generation that had already taken
place and therefore these ROCs were not available for sale before the end of the reporting period.
As at 31 December 2013, there were no ROCs pledged as security under the ROC repurchase
agreement (ROC REPO) with a trading counterparty (2012: £669,231).
Costs shown in respect of Generation development sites are for ongoing projects to secure
development rights and planning permission to establish power generation units on a number of
different sites. The cost of inventories recognised as an expense and included in ‘cost of sales’
amounted to £2,401,505 (2012: £nil). The cost of Generation development site inventories
recognised as an expense and included in ‘administrative expenses’ amounted to £ nil (2012:
£91,297). At 31 December 2013, a write down provision of £850,000 (2012: £106,931) had been
made against these sites resulting in a net expense of £743,069 which is included in ‘cost of sales’.
57
Notes to the Financial Statements
For the year ended 31 December 2013
18. Trade and other receivables
Gross trade receivables
Provision for impairment/non-payment of trade receivables
Net trade receivables
Prepayments
Value added tax recoverable
Total
Parent Company
Consolidated
2013
2012
2013
2012
£000’s
£000’s
£000’s
£000’s
-
-
-
4
132
136
-
-
-
27
10
37
6,066
(864)
5,202
1,696
1,054
7,952
3,788
(839)
2,949
538
326
3,813
The Group has a provision in place to set aside an allowance to cover potential impairment and non-
payment of trade receivables. Those debts which are neither past due nor impaired are considered
to be good and are expected to be recoverable. Trade receivables are with customers who do not
have externally available credit ratings.
The movements on the provision for impairment and non-payment of trade receivables is shown
below:
Movement on the provision for impairment and non-payment of
trade receivables
Balance at 1 January
Increase in allowance for impairment/non-payment
Impairment/non-payment losses recognised
Balance at 31 December
Ageing analysis of trade receivables past due but not impaired
Current and not past due
1 to 2 months
2 to 3 months
Over 3 months
Total
2013
£000’s
839
377
(352)
864
2013
£000’s
3,896
678
121
507
5,202
2012
£000’s
709
576
(446)
839
2012
£000’s
2,590
209
102
51
2,949
Trade receivables past due but not impaired relate entirely to a number of independent customers
for whom there is no recent history of default.
Trade and other receivables are all financial assets designated as loans and receivables.
58
Notes to the Financial Statements
For the year ended 31 December 2013
19. Cash and cash equivalents
Cash at bank and in hand
Short-term bank deposits
Total
Parent Company
Consolidated
2013
2012
2013
2012
£000’s
£000’s
£000’s
£000’s
379
-
379
164
-
164
17,311
664
17,975
4,403
5,132
9,535
As part of the bank loan agreement, the Lender requires a minimum cash balance to be held in
separate debt service reserve accounts. At the end of the year the amount was £664,631 (2012:
£632,603), which is included in short-term bank deposits in 2013.
Included within cash at bank and in hand for both the parent company and the consolidated position
is £284,972 (2012:£81,006) in respect of monies held by the Good Energy Employee Benefits Trust.
The credit quality of cash and cash equivalents can be assessed by reference to external credit
ratings as follows:-
AA-
A
BBB+
BB
Total
Parent Company
Consolidated
2013
2012
2013
2012
£000’s
£000’s
£000’s
£000’s
285
-
-
94
379
81
-
83
-
285
16,508
11
1,171
81
7,474
1,980
-
164
17,975
9,535
Cash and cash equivalents are all financial assets designated as loans and receivables.
20. Share Capital and Share Premium
At 1 January 2012
Proceeds from shares issued
At 31 December 2012
Proceeds from shares issued
At 31 December 2013
Number of
Ordinary
Shares
(thousands)
7,816,767
4,705,882
12,522,649
2,145,247
14,667,896
Shares
£000’s
391
235
626
107
733
Share
Premium
£000’s
3,536
3,193
6,729
2,348
9,077
Total
£000’s
3,927
-
3,428
7,355
2,455
9,810
During the year the company issued 2,145,247 (2012: 4,705,882) ordinary shares of 5p each for total
consideration of £2,681,559 (2012: £4,000,000) resulting in a share premium of £2,574,297 (2012:
£3,764,706). Costs of £225,900 (2012: £572,461) were incurred as a result of this issue and these
have been debited against the share premium account.
Clarke Willmott Trust Corporation Limited holds in trust for the present and the future beneficiaries
of the Good Energy Group Employee Share Option Scheme 387,998 (2012: 776,430) ordinary shares
of the company. These are deducted from equity as shown in the Consolidated and Parent Company
Statements of Changes in Equity. During the year the trust disposed of 390,832 (2012: 200,000)
shares as a result of options exercised and acquired 2,400 (2012: 31,000) shares.
Notes to the Financial Statements
For the year ended 31 December 2013
21. Deferred Taxation
The provision for Deferred Taxation is made up as follows:
Consolidated
At 1 January
Charged/(credited) to the Consolidated Statement of Comprehensive Income
At 31 December
Deferred tax asset to be recovered after more than 12 months
Deferred tax asset to be recovered within 12 months
Sub total-deferred tax assets
Deferred tax liabilities to be settled after more than 12 months
Deferred tax liabilities to be settled within 12 months
Sub total- deferred tax liabilities
Total net deferred tax
Deferred tax assets
On short term timing differences
Losses
Total
Deferred tax liabilities
On accelerated capital allowances
59
2013
2012
£000’s
£000’s
643
95
738
395
248
643
2013
2012
£000’s
£000’s
-
(92)
(92)
830
-
830
738
-
(103)
(103)
746
-
746
643
2013
2012
£000’s
£000’s
92
-
92
103
-
103
2013
2012
£000’s
£000’s
830
746
Deferred tax assets/(liabilities)
At 1 January 2012
(Charged)/Credited to the income statement
At 31 December 2012
(Charged)/Credited to the income statement
At 31 December 2013
Accelerated
Short-term
capital
timing
allowances
differences
£000’s
£000’s
(545)
(201)
(746)
(84)
(830)
82
21
103
(11)
92
Losses
£000’s
Total
£000’s
68
(68)
-
-
-
(395)
(248)
(643)
(95)
(738)
The Group and Company has unutilised capital losses of £nil (2012: £130,822) and unutilised
management charges of £19,261 (2012: £19,261) resulting in a deferred tax asset which has not been
recognised.
60
Notes to the Financial Statements
For the year ended 31 December 2013
22. Borrowings and other financial liabilities
Current:
Bank loan
Finance lease liabilities
Loans from Group companies
Total
Non current:
Bank loan
Bond
Finance lease liabilities
Total
Parent Company
Consolidated
2013
2012
2013
2012
£000’s
£000’s
£000’s
£000’s
-
-
1,374
1,374
-
-
-
-
553
121
-
674
390
153
-
543
Parent Company
Consolidated
2013
2012
2013
2012
£000’s
£000’s
£000’s
£000’s
-
14,250
-
14,250
-
-
-
-
10,417
14,250
-
8,538
-
121
24,667
8,659
The Group has undrawn bank overdraft facilities of £5,000,000 (2012 : £4,000,000) as at 31
December 2013 and undrawn revolving credit facilities of £6,500,000 (2012 : £nil).
£8,537,720 (2012: £8,928,000) 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 dated 16
January 2010 incorporating a fixed and floating charge over all current and future assets of that
subsidiary. The facility will be repaid from future cash flows arising from the wind farm of this
Company.
On 7 January 2011, the loan balance was transferred from the build phase to the repayment phase,
with repayments of Capital and Interest scheduled bi-annually over 15 years.
As part of the facility Good Energy Delabole Wind Farm Limited entered into a floating rate interest
to fixed rate interest swap. They were entered into at the same time and in contemplation of one
another, have the same counterparty, relate to the same risk and amortise concurrently. Given
these circumstances and the fact that there is no economic need or substantive business purpose
for structuring the transactions separately that could not also have been accomplished in a single
transaction these instruments are treated as one fixed rate loan instrument in accordance with IAS
39. The fixed rate interest is payable at an annual rate of 7.15 per cent.
61
Notes to the Financial Statements
For the year ended 31 December 2013
22. Borrowings and other financial liabilities (continued)
£2,675,450 (2012: £nil) of the bank loans relate to the Company’s subsidiary, Good Energy Hampole
Windfarm Limited and is secured by a mortgage debenture on that Company dated 23 may 2013
incorporating a fixed and floating charge over all current and future assets of that subsidiary.
The facility will be repaid from future cash flows arising from the wind farm of this Company with
repayments of Capital and Interest scheduled bi-annually over an initial period of three years
commencing 31 December 2014. Interest is payable at LIBOR plus a margin of 5.00 per cent. The
facility is subject to refinancing after the initial period and the Group intends to refinance on a margin
plus LIBOR basis for a further eleven years. The subsidiary has entered in to a seventeen year interest
rate swap to hedge the interest rate risk on the LIBOR element of the interest.
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 per
cent or 7.50 per cent 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 2013 the amortisation recognised in ‘finance costs’ totalled £20,592.
Parent Company
31 December 2013
Due less than 1 year
Due between 1 and 5 years
Due more than 5 years
Total
Intercompany
loan
£000’s
1,374
-
-
Bond
£000’s
-
14,250
-
Total
£000’s
1,374
14,250
-
1,374
14,250
15,624
The Parent Company had no borrowings or other financial liabilities in the year ended 31 December
2012.
Consolidated
31 December 2013
Due less than 1 year
Due between 1 and 5 years
Due more than 5 years
Total
Finance lease
Bank loan
£000’s
£000’s
Bond
£000’s
-
14,250
-
121
-
-
121
553
3,701
6,716
10,970
14,250
Total
£000’s
674
17,951
6,716
25,341
62
Notes to the Financial Statements
For the year ended 31 December 2013
22. Borrowings and other financial liabilities (continued)
Consolidated
31 December 2012
Due less than 1 year
Due between 1 and 5 years
Due more than 5 years
Total
Finance lease
Bank loan
£000’s
£000’s
Bond
£000’s
Total
£000’s
153
121
-
274
390
1,703
6,835
8,928
-
-
-
-
543
1,824
6,835
9,202
The estimated fair value of Good Energy Delabole Windfarm Ltd loan is £8,538,333 (2012:
£9,093,975). The estimated fair value of the Good Energy Hampole Windfarm Limited loan is
£2,555,434 (2012: £nil). The estimated fair value of the corporate bond is £15,134,990 (2012: £nil).
The fair values have been calculated taking into account the interest rate risk inherent in the loans
and bond.
The fair value of the finance lease and current borrowings equal the carrying amount as the impact
of the discounts is not significant. The fair values are based on the cash flows discounted using a rate
based on the borrowing rate of 7.15 per cent.
Consolidated
Gross finance lease liabilities - minimum lease payments:
Due less than 1 year
Due between 1 and 5 years
Due more than 5 years
Total
Future finance charges on finance lease liabilities
Present value of finance lease liabilities
2013
£000’s
2012
£000’s
125
-
-
125
(4)
121
166
125
-
291
(17)
274
Borrowings are designated as other financial liabilities held at amortised cost.
23. Trade and other payables
Trade payables
Accruals and deferred income
Social security and other taxes
Other payables
Total
Parent Company
Consolidated
2013
£000’s
2012
£000’s
747
610
-
-
1,357
16
539
-
27
582
2013
£000’s
2,240
9,006
143
1,486
12,875
2012
£000’s
2,092
5,825
116
968
9,001
Trade and other payables are designated as other financial liabilities held at amortised cost.
63
Notes to the Financial Statements
For the year ended 31 December 2013
24. Derivative Financial Instruments
Trading derivatives are classified as a current asset or liability. The full fair value of a hedging
derivative is classified as a non-current asset or liability if the remaining maturity of the hedged item
is more than 12 months and, as a current asset or liability, if the maturity of the hedged item is less
than 12 months.
The Group had the following fair value derivative financial instruments in place at 31 December 2013:
Group
Interest rate swaps - cash flow hedge
Forward foreign exchange contracts - cash flow
hedges
Total
Less non current portion:
Interest rate swaps - cash flow hedge
Current portion
2013
Assets
Liabilities
£000’s
£000’s
Assets
£000’s
2012
Liabilities
£000’s
328
-
328
(328)
-
-
52
52
-
52
-
-
-
-
-
-
-
-
-
-
The notional principal amounts of the outstanding interest rate swap contracts at 31 December 2013
were £5,189,641 (2012: nil). The swap is designated as a hedge against the Group’s borrowings in
Good Energy Hampole Windfarm Limited. The fair value of the borrowing was £2,555,434 (2012:
£nil). The gain on the interest rate swap at the end of the reporting period is recognised in other
comprehensive income. The hedging is based on highly probable transactions (capital drawdowns
and repayments in Good Energy Hampole Windfarm Limited) that are expected to occur at various
dates during the next four years.
The notional principal amounts of the outstanding forward foreign exchange contracts at 31
December 2013 were €2,869,000 (2012: nil).
64
Notes to the Financial Statements
For the year ended 31 December 2013
25. Dividends
Amounts recognised as distributions to shareholders in the year (based on the number of shares in
issue at the record date):
Consolidated
Final dividend prior year of 2.00p per share (2012: 2.75p)
Interim dividend current year of 1.00p per share (2012: 1.00p)
Sub-total
Dividends waived
Total
2013
£000’s
2012
£000’s
251
146
397
(20)
377
215
125
340
(29)
311
Dividends waived represent dividends that would accrue on shares held by the Good Energy Group
Employee Benefits Trust were they not held by the Trust.
26. Cash Flows
Reconciliation of net income to net cash provided by operating activities:
Parent Company
Consolidated
Profit before income tax
Adjustments for:
Depreciation
Amortisation
Dividends received
Finance costs - net
Changes in working capital (excluding the effects
of acquisition and exchange differences on
consolidation)
Inventories
Trade and other receivables
Trade and other payables
2013
£000’s
621
-
3
-
(76)
-
(99)
775
2012
£000’s
134
2
-
(1,200)
(18)
-
(20)
20
Cash generated from operations
1,224
(1,082)
2013
£000’s
3,255
634
533
-
603
2012
£000’s
1,375
559
75
-
649
(3,452)
(4,139)
3,504
938
629
(245)
3,003
6,045
Consolidated cash generated from operations have reduced in the year ended 31 December 2013
mainly due to the increase in spend on Generation development sites in the year of £3,511,997 (2012:
£417,876) which is included in Inventories (Note 17).
65
Notes to the Financial Statements
For the year ended 31 December 2013
27. Share Based Payments
In order to retain the services of key employees and to incentivise their performance, the Parent
Company operates the Good Energy Employee Share Option Scheme under which certain
employees of the Group are granted options to acquire Ordinary 5p Shares at future dates. Costs in
respect of these options of £39,000 (2012:£nil) are recognised in the Consolidated Statement of
Comprehensive Income. As at 31 December 2013, the following options had been issued:
Number of options
exercise price
Weighted average
Total exercise
consideration
Outstanding at the beginning
of the year
Granted
Exercised
2013
2012
(Number)
(Number)
1,659,346
1,496,400
910,000
562,946
(390,832)
(200,000)
Cancelled/surrendered
(130,000)
(200,000)
Outstanding at the end of
2013
(£)
0.87
1.25
0.87
1.00
2012
(£)
£000’s
£000’s
0.73
1.15
0.50
1.00
1,445
1,137
(340)
(130)
1,098
647
(100)
(200)
the year
2,048,514
1,659,346
1.03
0.87
2,112
1,445
In order to partially fulfil the options granted, 387,998 (2012: 776,430) shares representing
approximately 22% (2012: 47%) of the options outstanding have already been issued and held
by Clarke Willmott Trust Corporation Limited as the Trustee of the Good Energy Group Employee
Benefits Trust. Dividends have been waived on these shares.
The options expire at various dates between June 2014 and February 2023.
Share options outstanding at the end of the year have the following expiry date and exercise price:
Grant-vest
Expiry year
Exercise price in £ per
share options
Share options
(thousands)
2013
2012
2002-2005
2003-2006
2004-2007
2005-2008
2006-2009
2007-2010
2011-2013
2012-2015
2012-2015
2013-2016
2015
2014
2014
2015
2016
2017
2021
2022
2022
2026
0.50
0.75
0.75
0.80
0.75
0.75
1.00
0.50
1.15
1.25
118
45
120
100
114
20
-
189
503
840
131
45
120
100
193
118
141
189
563
-
2,049
1,659
The weighted average fair value of options granted during the period determined using the Black-
Scholes valuation model was £0.15 per option. The significant inputs into the model were weighted
average share price of £1.33 at the grant date, exercise price shown above, volatility of 19%, dividend
yield of 3%, an expected option life of three years and an annual risk-free interest rate of 0.3%.
The volatility measured at the standard deviation of continuously compounded share returns is
based on statistical analysis of daily share prices over the last year. See note 8 for the total expense
recognised in the income statement for share options granted to Directors and employees.
66
Notes to the Financial Statements
For the year ended 31 December 2013
28. Pensions
The Group operates a defined contributions pension scheme. The assets of the scheme are held
separately from those of the Group in an independently administered fund. The pension cost
represents contributions payable by the Group to the fund and amounted to £256,643 (2012:
£207,761).
Contributions totalling £35,707 (2012: £26,910) were payable to the fund at the end of the reporting
period and are included in other payables.
The Group has no further pension liability either realised or contingent and in line with the Group’s
environmental position all employer contributions are invested within a suitable fund.
29. Commitments
29.1 Operating Lease Commitments
Rentals payable over the life of non-cancellable operating leases are as follows:
Land and Buildings
Leases as lessee:
Less than one year
Between one and five years
more than five years
Total
Other operating leases
Leases as lessee:
Less than one year
Between one and five years
more than five years
Total
2013
£000’s
2012
£000’s
262
547
792
1,601
200
526
151
877
2013
£000’s
2012
£000’s
9
24
-
33
47
7
-
54
Details of commitments under variable term operating leases are contained in note 30.
29.2 Capital Commitments
At 31 December 2013, the total capital commitments amount is £15,195,822 (2012: nil). Of this
£9,546,236 related to contracts agreed on solar generation projects and £5,649,586 related to
contracts agreed on the construction of Good Energy Hampole Windfarm Limited.
The figure for solar generation projects represents the maximum liability assuming all sites continue
in development. If sites abort during 2014, only costs incurred to date on grid will be incurred, not the
full amount.
67
Notes to the Financial Statements
For the year ended 31 December 2013
30. Related Party Transactions
The Company’s significant subsidiary undertakings, including the name and proportion of ownership
interest for each, are disclosed in note 16. Transactions between subsidiaries and between the
Company and its subsidiaries are eliminated on consolidation. During the year the Company had
intercompany balances with its subsidiaries. Interest is charged on these balances at 2.5% above
the Bank of England base rate. Details of the amounts outstanding and received during the year are
contained in note 16.
In January 2010 Good Energy Delabole Wind Farm Limited, a subsidiary company, entered into an
agreement with Windelectric management Limited, a company in which martin Edwards (a director
of the company) has a controlling interest, to provide site management for the new wind farm at
Delabole. The amount payable each year is £75,000 index linked. The amount payable under this
agreement during the current year was £80,568 (2012: £75,367). Of these figures no amounts were
outstanding at the end of the reporting period (2012: £nil).
In January 2010, Good Energy Delabole Wind Farm Limited entered into a 25 year lease with martin
Edwards and other parties, in respect of the land which some of the new turbines occupy. For the
first 10 years of operation the rent will be the higher of an annual base rent of £50,240 or 3.25% of
gross income from the wind farm and from the 10th anniversary onwards it will be 4.5% of gross
income from the wind farm.
The amount payable under this agreement during the current year was £81,782 (2012: £55,732). Of
these figures no amounts were outstanding at the end of the reporting period (2012: £nil).
During the year the Good Energy Employee Benefits Trust acquired nil (2012: 31,000) ordinary shares
from Juliet Davenport for £nil (2012: £34,100).
In 2012, the Group entered in to an agreement in connection with generation development activities
with Shire Oak Energy Limited, a company wholly owned by mark Shorrock who is the husband
of Juliet Davenport. The agreement was amended dated 10 July 2013. Under the terms of that
agreement, Shire Oak Energy Limited receives consultancy fees of £750 per day and commission
payments as follows:-
(a) in relation to the development or sale of a solar site, a commission of up to £40,000 per mW
installed
(b) in relation to the development or sale of a wind farm site, a commission of up to £75,000 per mW
installed
As at 31 December 2013 Shire Oak Energy Limited was entitled to receive £945,000 in 2013 (2012:
£46,468), of which £945,000 (2012: £10,588) remains outstanding. As at 31 December 2013,
178mW of solar and 46mW of wind power production capacity in which Shire Oak Energy Limited
has a meaningful involvement remains in development. No estimate has been prepared of the
amount which may be payable in the future under this agreement due to the number of uncertain
factors which would impact the calculation, some of which are outside the control of the Group.
31. Subsequent events
On 28 January 2014, the Group announced final consent for a 49.9mW solar farm in Norfolk. The
Board is considering the options available for the site, including potential partners for the possible
sale or development of the solar farm by the Group.
68
Directors and Corporate Resources
Directors
John maltby (Non-Executive Chairman)
Juliet Davenport (Chief Executive)
Garry Peagam (Group Finance Director)
Richard Squires (Non-Executive Director)
martin Edwards (Non-Executive Director)
Francesca Ecsery (Non-Executive Director)
Company Secretary
and Registered Office
David Ford
monkton Reach
monkton Hill, Chippenham
Wiltshire SN15 1EE
Company Number
04000623
Principal place of business monkton Reach
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Annual Report 2013
Good Energy Group Plc
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