Annual
Report
& Financial Statements
2014
Annual
Report
& Financial Statements
2014
Contents
Annual Report & Financial Statements
Year ended 31 December 2014
2014
Annual Report
Strategic Report
Chairman’s Statement
Chief Executive’s Review
Chief Financial Officer’s Review
Directors’ Report
Directors’ Remuneration Report
Independent Auditors’ Report to the members of Good Energy Group PLC
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
Directors and Corporate Resources
4 – 15
5 – 7
8 – 12
13 – 15
16 – 28
25 – 28
30 – 32
35
36
37
38
39
40
41
42 – 81
82
3
Strategic ReportDirectors’ ReportFinancial Statements Strategic
Report
Chairman’s Statement 5 – 7
Chief Executive’s Review 8 – 12
Chief Financial Officer’s Review 13 – 15
4–15
Our Strategic Report for 2014 contains contributions from Good Energy’s
Chairman, its Chief Executive and its Chief Financial Officer. Detailed financial
information and data can be found in later sections of the document.
Chairman’s Statement
Good Energy was established with a mission to
tackle climate change, and help deliver energy
security for the UK. This goal remains as relevant
today as it did when we first opened for business and
we continue to provide the blueprint for how energy
companies can and should look in the 21st century.
Fifteen years on, our business continues to grow.
Year on year, we have built our customer numbers
in both electricity and gas supply. We have invested
in a continually growing portfolio of wind and solar
generation sites. We launched the precursor to the
scheme now known as the Feed-in Tariff (FIT) and
today are one of the largest FIT administrators in the
country. We contract to buy renewable electricity
from an ever-growing network of small and medium
independent generators – currently more than 800
- across the UK, and have an enviable reputation for
quality customer service.
Throughout 2014, we have demonstrated business
resilience and an ability to manage external
pressures. The result is, that in spite of the external
headwinds of challenging trading conditions,
we have been able to make progress towards
our strategic objectives of building up both our
generation portfolio and customer base.
At the same time, we have maintained a high
standard of customer service excellence, coming
second in the 2015 annual Which? energy company
customer satisfaction survey, with the same score
as we achieved in 2014. We have won the top slot in
three out of the last four years, clearly demonstrating
consistency and a strong customer focus. We also
came first in a high profile MoneySavingExpert poll
which aired at peak time on ITV.
We know that our independently-assessed top-
rated customer service, combined with our offer
of 100% renewable electricity and competitive
pricing including a price freeze, followed by a below-
inflation price rise, acts as strong driver for customer
growth and plays an important part in reinforcing
Despite challenging trading
conditions affecting the whole
sector, the Company’s overall
revenues for 2014 were up 43%
to £57.6m.
our reputation and maintaining our competitive
advantage. We would anticipate that our price
reductions, announced earlier in 2015 and taking
effect after Easter, will help reinforce this.
The overall 34% growth in customer numbers is
in part attributable to an increased willingness
by customers to switch to smaller suppliers. This
reflects a continued trend which shows that during
2014, a total of 1.3 million people switched from a
larger supplier to a smaller one (source: Energy UK).
Despite challenging trading conditions, with the
whole energy sector being impacted by the warmest
year since records began, and by lower wind speeds
over the last few months of the year, the Company’s
overall revenues were up 43% to £57.6m.
Dividend details
The Directors recommend a final dividend of 2.3p per
share, in line with the 2013 final dividend. Subject
to shareholder approval at the Company’s AGM, the
final dividend will be payable on 29 May 2015 to
shareholders on the register on 24 April 2015 .
Strategic Report 4 – 15
Chairman’s Statement
5
Strategic ReportDirectors’ ReportFinancial Statements Key performance indicators
Revenue
Gross profit
Key performance indicators
Key performance indicators
Strong revenue growth has been achieved across all
segments of the business. This is a key indicator of
business performance and health.
Revenue
Strong revenue growth is an important indicator of the health and
trajectory of the Group
Revenue
Strong revenue growth is an important indicator of the health and
trajectory of the Group
Key performance indicators
Key performance indicators
Achieved strong growth in gross profit across
all segments in 2014, particularly in generation
development due to the sale of solar assets. Growth
Gross profit
in supply companies achieved despite lower energy
use per customer.
Continued strong growth in gross profit in 2014
Gross profit
Continued strong growth in gross profit in 2014
£60m
£60m
£20m
£20m
Revenue
£50m
Strong revenue growth is an important indicator of the health and
trajectory of the Group
£40m
£60m
Revenue
£50m
Strong revenue growth is an important indicator of the health and
trajectory of the Group
£40m
£60m
£30m
£50m
£20m
£40m
£10m
£30m
£0
£20m
£30m
£50m
£20m
£40m
£10m
£30m
2010
2011
2012
2013
2010
2014
2011
2012
2013
2014
£0
Gross profit
Continued strong growth in gross profit in 2014
£15m
Gross profit
Continued strong growth in gross profit in 2014
£15m
£20m
£10m
£15m
£5m
£10m
£0
£20m
£10m
£15m
£5m
£10m
2010
2011
2012
2013
2010
2014
2011
2012
2013
2014
£0
PBT
£10m
2014 PBT (before exceptional costs)* reflects the challenging trading conditions
and lower energy usage by customers, experienced across the sector
2013
£20m
PBT
2014 PBT (before exceptional costs)* reflects the challenging trading conditions
£10m
PBT (before exceptional costs)*
and lower energy usage by customers, experienced across the sector
2013
2012
£0
£3.5m
2014 PBT (before exceptional costs)* reflects the
PBT
PBT
challenging trading conditions, investment costs and
£3.0m
£3.0m
2014 PBT (before exceptional costs)* reflects the challenging trading conditions
2014 PBT (before exceptional costs)* reflects the challenging trading conditions
increased finance costs.
and lower energy usage by customers, experienced across the sector
and lower energy usage by customers, experienced across the sector
£2.5m
£2.5m
£0
£3.5m
£5m
2010
2010
2014
2014
2012
2011
2011
£0
Non current assets
The level of investment in non current assets indicates performance
against the Group’s strategic objective of building its generation portfolio.
2013
Non current assets
The level of investment in non current assets indicates performance
against the Group’s strategic objective of building its generation portfolio.
2013
Non current assets
£5m
2010
2010
2014
2014
2012
2011
2011
£50m
The level of investment in non current assets
Non current assets
Non current assets
indicates performance against the Group’s strategic
The level of investment in non current assets indicates performance
The level of investment in non current assets indicates performance
objective of building its generation portfolio.
£40m
against the Group’s strategic objective of building its generation portfolio.
against the Group’s strategic objective of building its generation portfolio.
£40m
2012
£0
£50m
£3.5m
£2.0m
£3.0m
£1.5m
£2.5m
£1.0m
£2.0m
£0.5m
£1.5m
£0
£3.5m
£2.0m
£3.0m
£1.5m
£2.5m
£1.0m
£2.0m
£0.5m
£1.5m
2012
£0
2010
2011
2013
2010
2014*
2011
2012
2013
2014*
£50m
£30m
£40m
£20m
£30m
£10m
£20m
£0
£50m
£30m
£40m
£20m
£30m
£10m
2012
£20m
£0
2010
2011
2013
2010
2014
2011
2012
2013
2014
£1.0m
£0.5m
Good Energy uses a range of financial and non financial key performance indicators (KPIs) to monitor the performance of the
business. Financial KPIs include revenue, gross profit, profit before tax (PBT) and non current assets. Non financial KPIs include
customer number growth within supply businesses (see pg 9).
Good Energy uses a range of financial and non financial key performance indicators (KPIs) to monitor the performance of the
business. Financial KPIs include revenue, gross profit, profit before tax (PBT) and non current assets. Non financial KPIs include
customer number growth within supply businesses (see pg 9).
£10m
£10m
£1.0m
£0.5m
£0
2010
2011
2012
£0
2013
2010
2014*
2011
2012
2013
2014*
£0
2010
2011
2012
2013
2014
2010
2011
2012
2013
2014
£0
Good Energy uses a range of financial and non financial key performance indicators (KPIs) to monitor the performance of the
business. Financial KPIs include revenue, gross profit, profit before tax (PBT) and non current assets. Non financial KPIs include
customer number growth within supply businesses (see pg 9).
Good Energy uses a range of financial and non financial key performance indicators (KPIs) to monitor the performance of the
*exceptional costs were incurred in closing out the
business. Financial KPIs include revenue, gross profit, profit before tax (PBT) and non current assets. Non financial KPIs include
loan and related derivative on Good Energy Hampole
customer number growth within supply businesses (see pg 9).
Wind Farm Limited during its initial period.
Good Energy uses a range of financial and non financial key performance indicators (KPIs) to monitor the
performance of the Group. Financial KPIs include revenue, gross profit, profit before tax and exceptional
items (PBT) and non current assets. Non financial KPIs are customer numbers and customer number growth
within supply businesses (see pg 9).
6
This rise can be attributed principally to customer
growth and the sale of the solar site at West
Raynham. This latter transaction is part of Good
Energy’s strategy to develop its portfolio through a
combination of selling some sites and building and
holding others.
Gross profit was £18.8m, up by 38% on the previous
year, reflecting growth in customer numbers and
the sale of West Raynham, partially offset by lower
usage as a result of the warmer weather. The year-
end profit before tax and exceptional items figure of
£2.2m is in line with expectations announced to the
market in December 2014.
Government figures indicate that in the first nine
months of 2014, renewable electricity provided
18.3% of total UK electricity generation compared to
14% in the first nine months of 2013. This serves to
demonstrate the growing contribution of renewable
sources such as wind and solar to the UK’s electricity
mix, aligning well with our own strategic objectives.
Our cash flow position remains healthy, reflecting
the positive operational cash flows from the
business and the proceeds from both West Raynham
and the new debt facility.
The Directors intend to maintain an efficient
capital structure that provides the funds for further
development, construction and/or acquisition of
generating assets to add to Good Energy’s existing
generating portfolio, together with the provision of
returns to shareholders. With this ambition in mind,
the Directors target a prudent level of dividend cover.
We remain well-placed to
make good progress towards
all our objectives.
Consequently, the Directors recommend a final
dividend of 2.3p per share, in line with the 2013
final dividend.
Subject to shareholder approval at the Company’s
AGM, the final dividend will be payable on 29 May
2015 to shareholders on the register on 24 April 2015.
The Board is confident that the Company remains
well placed to continue to make good progress on
all its objectives, delivering a consistently reliable
performance which will enable it to build on its
investment for long term growth.
I would like to thank all the staff at Good Energy
for the energy and commitment they have shown
throughout 2014. This provides an excellent
foundation from which to continue to build as
we seek to pursue our goal of being a catalyst for
change in the UK energy market.
John Maltby
Chairman
24 March 2015
Strategic Report 4 – 15
Chairman’s Statement
7
Strategic ReportDirectors’ ReportFinancial Statements Ours is a unique proposition of
100% renewable electricity,
high quality customer service
and competitive pricing.
Hampole wind farm, Yorkshire.
Chief Executive’s
Review
During 2014, we’ve seen Good Energy continue to
deliver a strong performance against its objectives
of driving customer growth and investing in a
pipeline of renewable generation assets. At the
same time, the Company has continued to invest
in its people, systems and processes ensuring the
business is flexible and able to build and deliver its
plans for further growth.
Supply companies
Our unique proposition of 100% renewable
electricity, independently-rated high quality
customer service and competitive pricing has
continued to help drive both customer growth
and retention across electricity, gas and Feed-in
Tariff (FIT).
By the end of December 2014, we had seen overall
growth in customer numbers of 34%. Our electricity
customers grew 30% from 40,000 (end 2013) to
around 51,500 as of end December 2014, while our
gas customer base grew at an even greater rate from
15,000 (end 2013) to just under 25,000 (end 2014).
We’ve recorded consistent year-on-year growth in
both categories – in the last five years alone we’ve
seen overall growth of 97% and 654% respectively.
We continue to see high levels of customer retention,
with a consistently low level of customer churn.
Business sales revenues have also risen by 22% and
we are confident this positive growth momentum
will continue throughout 2015 and beyond.
Good Energy is one of the largest FIT administrators
in the UK. Encouraging and developing independent
renewable energy generation has always been at
the heart of what Good Energy does. It is the
foundation upon which we see a 100% renewable
future for the country being built, and one which
empowers individuals both to generate electricity
and benefit from an income from installing solar
panels on their roofs.
By the end of 2014, we had seen FIT customer
numbers rise 29% from 59,000 (end 2013) to
more than 76,000 (end 2014). Again, we have seen
a pattern of year-on-year growth in this sector,
establishing the Company’s position as one of the
largest FIT administrators in the UK.
Our quality service proposition and ensuring that
customers have the best consumer experience
remains integral to our offering. We have invested
further during the year to ensure these high levels of
service are maintained and improved. In particular
we have recruited additional personnel, developed
our training, and introduced internet-based services
such as on-line direct debits and e-billing.
As a result, we expect to see further examples of
new and improved customer service processes as
the year progresses.
Customer growth
Customer growth
Non financial KPIs include customer growth within each areas of the supply
Non financial KPIs include customer growth within each area of the supply
businesses. The growth of customer numbers is a key component of the
businesses. The increase in customer numbers is a key component of the Group’s
Group’s long term growth strategy.
long term growth strategy.
s
r
e
b
m
u
n
r
e
m
o
t
s
u
C
60,000
50,000
40,000
30,000
20,000
10,000
0
2010
2010
2011
2011
2010 2011
2012
2012
2013
2013
2012 2013 2014
2014
2014
s
r
e
b
m
u
n
r
e
m
o
t
s
u
C
25,000
20,000
15,000
10,000
5,000
0
2010 2011
2012 2013 2014
s
r
e
b
m
u
n
r
e
m
o
t
s
u
C
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
Electricity
Gas
2011
2012 2013 2014
FiT
Strategic Report 4 – 15
Chief Executive’s Review
9
Strategic ReportDirectors’ ReportFinancial Statements
Electricity generation
On the generation side of the business, during
2014 we successfully expanded and diversified
our portfolio and invested further in our pipeline of
renewable electricity sites. By the end of the year,
our total owned generation capacity had risen to
24.2MW (2013: 9.2MW).
The additional capacity brought on stream during
2014 came principally from our second wind farm, in
Hampole, Yorkshire. This was commissioned in the
first quarter of the year, adding 8.2MW of installed
capacity to our total generation mix. During 2014,
the combined power output from Hampole, and our
other wind farm at Delabole, was 39GWh, up 44%
on 2013.
Subsequently, we built and commissioned our
first two solar farms - Woolbridge in Dorset and
Creathorne Farm in Cornwall - adding a further
6.8MW of installed capacity. We also began work
on two further solar sites, both of which have since
been commissioned.
We built and commissioned
our first two solar farms during
2014 and began construction
on two more towards the end
of the year.
A number of submissions for further solar sites are at
various stages in the planning process, and we expect
to see these bear fruit during the first half of 2015.
We have continued to purchase power from and
grow our network of independent renewable
electricity generators across the UK, in an approach
that further differentiates us from others in the
sector. We now work with more than 800 individuals
and small businesses in this way.
These power purchase agreements (PPAs) form
an important part of our plans and during 2014,
we expanded our PPA base by more than 70% to
around 190.
Good Energy Generation - 2014
Good Energy Generation - 2014
Woolbridge
solar farm begins
generating
electricty
Oaklands
solar farm
receives planning
consent
Investment in
tidal lagoon
project
Swansea
Bay
West Raynham
solar farm sold
Rook Wood
solar farm
construction
begins
Colour Key
Consented / construction
Generating
Sale
Other
2014
2015
Continued investment
in wind and solar
pipeline
Hampole
wind farm begins
generating
electricty
Lower End
solar farm
recieves planning
consent
Crossroads
solar farm
receives planning
consent
Rook Wood
solar farm
receives
consent
Creathorne
solar farm begins
generating
electricity
Carloggas
solar farm
construction
begins
10
Regulatory, political and
market environment
The energy sector continues to be subject to an
ever changing regulatory, political and market
environment. For example, 2014 saw proposals from
the Government to radically alter the solar subsidy
framework for the third time in just four years. We
strongly believe solar could be subsidy free by 2020,
unlike coal, gas and nuclear, and we’re pleased to
report that we were listened to, with many of our
comments submitted during the consultation period
reflected in the final policy framework.
During 2014, Ofgem outlined new delivery
requirements through both its Retail Market and
Electricity Market Reviews, bringing with them
greater transparency and improved service for
consumers. These changes necessitated additional
investment in new Company systems and processes
in order to comply with the requirements.
Energy issues continue to dominate the political
agenda ahead of the General Election, polarising into
debates over cost-reflective prices, customer service
standards, ease of switching and transparency.
The Labour Party has maintained its pledge to
introduce a price freeze if elected. Meanwhile, the
Conservatives have stated their plans for reducing
support for onshore wind and large-scale solar if
they are returned with a majority.
The Competition and Markets Authority (CMA)
announced in June 2014 that it would be
investigating the energy market, and early workings
from the investigation were announced in February.
We welcome the CMA inquiry as it represents an
opportunity to review the energy market to ensure
it works for the benefit of consumers and not only
for the historically established suppliers. Improved
competition means more choice for consumers. The
final report is due out towards the end of the year,
and while Good Energy is not directly impacted by
the focus of the inquiry, it is likely that we will be
affected by its outcomes.
We further demonstrated this commitment during
the year with our first ever investment in tidal energy
through the Tidal Lagoon Power Swansea Bay
project. Our investment in this development project
gives us the right to purchase 10% of the output
from the project, currently forecast at 495GWh
per annum, should the proposal receive planning
approval later this year. The tidal lagoon is expected
to generate sufficient electricity to power more than
155,000 homes.
This investment enables us to further diversify
our future sources of renewable electricity, to
supply our growing number of customers and
enhance our forecasting capability through
predictable generation.
Generation development and finance
This has been a busy year as we put in place some
key financial foundations to sustain our future
growth and realise our strategic ambitions. Our
successful refinancing towards the end of the
fourth quarter and the successful sale of the West
Raynham solar site in the summer formed an
important part of our strategy to invest for growth
and to ensure access to funding for our projects
going forward.
Trading environment
2014 proved to be the warmest year since records
began, resulting in a prolonged period of over-supply
and under-demand. This lower-than-expected
customer demand fed through to lower revenue per
customer for the Company.
Overall, Good Energy’s generation volume increased
5% to 42GWh compared with the previous year’s
output. This rise was driven by the commissioning
of the Company’s second wind farm, in Hampole,
Yorkshire and the addition of its first two solar farms.
Wind generation from the PPA portfolio contributed
146GWh, a rise of 15% on 2013.
A combination of factors including reduced
wholesale power prices, falling wholesale gas
prices and mild weather resulted in corresponding
reductions in gas power plant operating costs.
Wholesale gas prices fell, driven by high global
supply and the mild weather conditions.
Strategic Report 4 – 15
Chief Executive’s Review
11
Woolbridge solar farm, Dorset.
Strategic ReportDirectors’ ReportFinancial Statements Other challenges which will face us throughout
the remainder of the year will be the implications
for energy policy post-election, and the associated
uncertainty surrounding the financial, regulatory
and planning regime for renewable energy. Equally,
uncertainty surrounds whether the new regime
for long-term contracts, designed to encourage
investment in new, low-carbon generation, will
work effectively and meet the need of onshore
renewables.
We will also be looking at the most appropriate
and cost-effective way for Good Energy to deliver
the government’s smart metering programme.
The energy industry is currently obliged to provide
smart meters to all customers by 2020 but there
is acknowledgement that the challenges this
programme brings to the smaller, independent
suppliers may be disproportionate in comparison
with the economies of scale enjoyed by the Big Six.
The programme timescale has already been subject
to delays.
Outlook
We have a growing number of customers who want
to use our renewable electricity; we have more
assets under development which will increase our
ability to own a greater proportion of the electricity
we supply, and we have successfully secured
the financing we need to fund the next stage of
our growth strategy. Further development of our
proposition and investment in people and systems
means that we will be able to continue to grow our
customer base.
Good Energy has firmly established itself as a
leading renewable energy company, with a resilient
business model. It is well positioned to respond and
adapt to changes in the market place.
Good Energy has firmly
established itself as a leading
renewable energy company...
...well positioned to respond
and adapt to changes in the
market place.
Woolbridge school pupils find out about their
Good Energy-funded solar panels.
Juliet Davenport
Chief Executive
24 March 2015
12
Chief Financial Officer’s
Review
Financial performance
Consolidated revenue continued to grow strongly
in 2014 , increasing 43% to £57.6m (2013: £40.4m,)
with all segments of the Group contributing to the
rise. This reflects the benefits of continued customer
growth, the increase in generation assets and the
sale of West Raynham.
Consolidated gross profit increased by 38% to
£18.8m (2013: £13.6m) with strong customer growth
partially offset by lower energy usage that affected
the energy industry as a whole. Consolidated gross
margin reduced to 33% (2013: 34%) reflecting
the impact of our price freeze in Q1 2014, the
increased proportion of total revenues coming from
lower margin business sales and a partial year of
generation from our new renewable assets.
Administration expenses increased 55% to £15.0m
(2013: £9.7m). This increase reflects the associated
costs to serve our growing customer base, together
with investment in marketing and brand expenditure,
people and process improvements and an increase
in regulatory costs.
Profit before tax and exceptional items is £2.2m
(2013: £3.3m) reflecting strong customer growth and
the sale of West Raynham, offset by lower energy
usage, in common with the rest of the energy sector,
and our increased investment in the business.
Finance costs increased in 2014 due to increased
Revenue growth by segment
Delabole wind farm, Cornwall.
borrowings in the year, associated costs of borrowing
and the re-financing of the Hampole loan at a more
competitive rate, which incurred an exceptional cost
of £0.9m.
Financial positioning and financing
The Consolidated Statement of Financial Position
for the Group shows a Shareholders’ Equity of £17.9m
(2013: £16.5m) representing growth of 8% (£1.4m)
as a result of the profit generated in the year.
Total assets have increased by 42% (£23.3m) to
£79.3m (2013: £56.0m), reflecting our continued
investment in generation assets at both the
early stage of development and through to full
construction and operation.
2014
2013
%
Notes
Supply
£45.7m £34.3m
+33%
Strong customer growth, partly
offset by lower average usage
Generation
£3.9m
£2.5m
+56%
New wind and solar sites
commissioned
Development
£10.2m
£5.0m +104%
Sale of West Raynham
Strategic Report 4 – 15
Chief Financial Officer’s Review
13
Strategic ReportDirectors’ ReportFinancial Statements To support further growth, we announced in
December 2014 that we had entered into a non-
recourse debt financing facility of up to £45
million with GCP Infrastructure Investments
Limited, a London listed infrastructure debt fund
(the “Facility”).
The Facility represents the next stage of our strategy,
enabling the construction of a further 18MW of
solar sites. The Facility will support the further
development and construction of Good Energy’s
solar generation portfolio, bringing the total capacity
of wind and solar to 42MW by the end of Q2.
Good Energy will retain 100% of the equity in each
of the sites and the Facility will also be used to
refinance the existing debt facility on the Hampole
wind farm and its two existing operational solar sites.
The Facility has a fixed rate of interest of 6.85%.
Principal risks and uncertainties
The Group maintains a risk register which identifies
and monitors key risks and sets out actions to
avoid or mitigate them. Responsibilities for actions
are assigned to senior management. The register
is monitored by the Audit and Risk Management
Committee and reviewed annually by the Board.
The principal risks to the Company are:
Political risk - Regulation of the energy sector
continues to be a significant factor as noted in the
Chief Executive’s Review. Regulations are frequently
modified, requiring further action by the renewable
generation industry. Modifications may impact
existing or early stage renewable energy projects or
customer service requirements. These could lead to
changes in operating conditions (requiring increased
capital or operational spend) or could act as barriers
Profit Bridge
Profit Bridge
£10,500k
£8,500k
£6,500k
£4,500k
£2,500k
£500k
£0
PBT 2013
Contribution
from
customer
growth - Elec
Contribution
from
customer
growth - Gas
Contribution
from
customer
growth - FiT
Sale of
generation
assets
Growth in
generation
assets
Lower
usage
FiT admin
costs
Admin costs
excl.
investment
spent
Increase
finance costs
Investment
costs
PBT 2014
before
exceptional
costs
2014 PBT was impacted by lower energy usage,
in common with the rest of the industry, and
investment to support growth.
14
to future development. Changes to regulations or
utility policies are considered as part of the review
of the Group’s operating strategy and our robust
operating model is a key mitigation for these risks.
Energy price volatility - Revenues from energy sales
may be affected by fluctuations in the wholesale
price of energy and the associated costs of buying.
This could lead to necessary pricing action taken
by the Company resulting in a possible loss of
customers if other energy providers with larger
portfolios could remain more competitive. The
Company’s vertical integration and forward-looking
operating model helps to mitigate this risk.
Financial risks - Default loan covenants relating
to the financing agreements on generation assets
are in place. At the time the financing was agreed,
assumptions were used to ensure that sufficient
cash flows would be generated to ensure default is
unlikely. There are also insurance and maintenance
agreements in place to mitigate lost revenues
from unforeseen operational issues. The revolving
credit facility contains covenants based on the
performance of trading and supply companies
which, if breached, would require the facility to be
repaid. The Group’s financial performance against
its covenants are reviewed on a regular basis to
ensure that the mitigation remains appropriate for
the business.
Total assets have increased
by 42% to £79.3m, reflecting
our continued investment in
generation assets.
Outlook
2014 has seen good progress towards our strategic
objectives of delivering customer growth, increasing
investment in renewable energy assets and securing
long term finance to support the development of
our generation portfolio. We have also continued
to invest in the business to support its continued
growth. Despite the challenging trading conditions
in 2014, we remain confident of the outlook for the
business in 2015 and beyond, and are well positioned
to take advantage of the opportunities for growth
that we see in the energy sector.
Denise Cockrem
Chief Financial Officer
24 March 2015
Strategic Report 4 – 15
Chief Financial Officer’s Review
15
Strategic ReportDirectors’ ReportFinancial Statements Directors’
Report
Directors’ Remuneration Report 25 – 28
16
16–28
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 2014. This report includes the Corporate Governance
section and the Directors’ responsibility statement.
The Company is required to set out a fair review
of the group’s activities and a description of the
principal risks and uncertainties facing the business,
which can be found in the Strategic Report on pages
5 to 15. This requirement includes an analysis of the
development and performance of the Company’s
business during the financial year, and the position
of the Group at the end of the reporting period
consistent with its size and complexity.
The Directors’ Report has been prepared and is
published in accordance with, and with 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 2014, the
Company’s issued share capital was 14,667,896
of Ordinary Shares of 5p each. Ordinary Shares in
the Group carry rights to dividends and Ordinary
shareholders 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 82.
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 208,863 (2013:
387,998) 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 179,135
(2013: 390,832) shares as a result of exercised
options.
Registered office details
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.
Directors’ Report 16 – 28
Director’s Report
17
Strategic ReportDirectors’ ReportFinancial Statements Significant shareholders
Significant shareholders holding over 3% of the issued share capital as at 31 December 2014, other than any
Directors and their family as defined in the AIM rules, are detailed below:
31 December 2014
% of Issued
Share Capital
31 December 2013
% of Issued
Share Capital
Green Beannie Limited
2,352,597
16.04%
-
0%
Legal and General
Investment
1,176,471
8.02%
1,176,471
8.02%
Schroders PLC
592,685
4.04%
3,059,262
20.86%
John Sellers
588,797
4.01%
640,797
4.37%
Berti Investment Limited
486,318
3.32%
-
0%
Peter Dixon Edwards
451,098
3.08%
451,098
3.08%
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 21.
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:
31 December 2014
% of Issued
Share Capital
31 December 2013
% of Issued
Share Capital
Martin Edwards 2
686,827
4.68%
686,827
4.68%
Juliet Davenport
592,810
4.04%
475,194
3.24%
John Maltby
120,000
0.82%
120,000
0.82%
Garry Peagam 3
14,000
0.10%
201,000
1.37%
Richard Squires
36,000
0.25%
36,000
0.25%
Francesca Ecsery
2,400
0.02%
2,400
0.02%
Notes
1. Certain of the Directors hold share options for which details are set out in the Directors’ Remuneration Report (on page 28).
2. 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. Garry Peagam stepped down as Group Financial Director on 30 April 2014.
18
Dusk falls at Delabole wind farm, Cornwall.
Directors’ Indemnity Statement
Future developments
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.
Details of future developments are given in the Chief
Executive’s Overview on page 12.
Research and development
Given the nature of the Group’s activities it does
not carry out any material research and
development work.
Financial instruments
The Group’s financial instruments include bank
loans, a corporate bond, overdraft and revolving
credit facilities.
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.
Directors’ Report 16 – 28
Director’s Report
19
Strategic ReportDirectors’ ReportFinancial Statements We buy power
from the National
Trust’s new hydro
electric turbine at
Hafod y Llan farm
in Snowdonia.
20
Corporate Governance
The Group recognises the importance of good
corporate governance practices. The Board is
familiar with the UK Corporate Governance Code,
although it is not currently required to comply with
the Code. The directors have decided to provide
certain corporate governance disclosures that would
be required of a fully listed company.
Annual General Meeting (AGM) 2015
Date
27 April 2015
Time
10:30 am
Venue
The Lansdowne Club
9 Fitzmaurice Place
Mayfair
London, W1J 5JD
The Board and its Committees
Board of Directors
The Board comprises the following individuals:
Executive Directors
Non-Executive Directors
Juliet Davenport
Chief Executive
John Maltby 2
Denise Cockrem 1
Chief Financial Officer
Richard Squires
Martin Edwards
Francesca Ecsery 2
Non-Executive Chairman
of the Board; Member
of the Audit and
Risk Management
Committee; Member
of the Remuneration
Committee
Chair of the Audit and
Risk Management
Committee
Chair of the
Remuneration
Committee
Member of the Audit
and Risk Management
Committee; Member
of the Remuneration
Committee
Notes
1. Denise Cockrem was appointed to the Board as Chief Financial Officer on 1 May 2014. Garry Peagam stepped down as Group Finance Director
on 30 April 2014.
2. Independent Non-Executive Directors.
Directors’ Report 16 – 28
Director’s Report
21
Strategic ReportDirectors’ ReportFinancial Statements
Operations of the Board
Audit and Risk Management Committee
The members of the Audit and Risk Management
Committee are Richard Squires, John Maltby and
Francesca Ecsery. John Maltby is considered to have
recent, relevant financial experience. The Chief
Executive and Chief Financial Officer are normally
invited to attend meetings of the committee. The
Committee met three times in the year ending 31
December 2014.
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 at least
annually with the Group’s external auditors to review
and agree the auditor services being provided to
the Group, including any non-audit services. It 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 controls. The responsibility for
reviewing the effectiveness of its internal control
system has been delegated to the Audit and Risk
Management Committee, which reviews this 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 2014 accounts. Refer
to page 43 for further details.
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, Director of People and Culture and Director
of Communications. During the year ended 31
December 2014, there were seven 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.
The Group’s performance is reviewed at these
scheduled meetings 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.
The Remuneration Committee
The members of the Remuneration Committee
are John Maltby, Francesca Ecsery and Martin
Edwards. This committee convened twice in the year
ended 31 December 2014. The primary duty of the
Remuneration Committee is to supervise and advise
the Group’s policy in relation to the remuneration
of the Executive Directors and senior managers
of the Group, on behalf of the Board. 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 25-28.
22
The Solar Schools 10:10 programme benefited from Good Energy’s support during 2014.
Directors’ responsibilities statement
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
this 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.
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.
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
Directors’ Report 16 – 28
Director’s Report
23
Strategic ReportDirectors’ ReportFinancial Statements Disclosure of Information to Auditors
Reappointment of 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.
PricewaterhouseCoopers LLP acted as auditors for
the financial year to 31 December 2014. A resolution
to reappoint PricewaterhouseCoopers LLP as auditors
will be proposed at the Annual General Meeting.
By order of the Board
Stephen Rosser
Company Secretary
24 March 2015
24
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 2014. 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 22. 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
2014 Salary £
Juliet Davenport
Chief Executive
2 August 2007
9 months
185,940
Denise Cockrem
Chief Financial
Officer
22 January 2014
6 months
175,000
The Company reserves the right to pay Executive Directors in lieu of notice.
Directors’ Report 16 – 28
Directors’ Remuneration Report
25
Strategic ReportDirectors’ ReportFinancial Statements 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:
Name
Date of appointment
Notice period
2014 Salary £
John Maltby
15 October 2012
3 months
40,800
Richard Squires
28 June 2011
3 months
28,050
Martin Edwards
7 May 2008
3 months
24,000
Francesca Ecsery
15 November 2012
3 months
33,456
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.
Good Energy’s solar site at Creathorne Farm, north Cornwall, was commissioned in the summer of 2014.
26
Salary, annual bonus and benefits
Non-Executive
Chairman
Salary/
fees £
Compensation for
loss of office £
Pension
Contributions £
Benefits
in kind £
Annual
Bonus £
Total
2014 £
Total
2013 £
John Maltby
40,800
Executive Directors
Juliet Davenport
185,940
Denise Cockrem 1
231,7062
-
-
-
-
-
-
40,800
40,213
22,950
1,983
41,310
252,183 295,432
11,667
1,048 27,708
272,129
-
Garry Peagam 1
50,733
182,475
4,833
985
- 239,026 221,098
Non-Executive
Directors
Richard Squires
28,050
Martin Edwards
24,000
Francesca Ecsery
33,456
-
-
-
-
-
-
-
-
-
-
-
-
28,050
27,500
24,000
20,500
33,456
32,800
Total
594,685
182,475
39,450
4,016 69,018 889,644 637,543
Notes
1. Denise Cockrem was appointed to the Board as Chief Financial Officer on 1 May 2014. Garry Peagam stepped down as Group Finance Director
on 30 April 2014.
2. Included within salary is a signing on bonus of £108,373.
Directors’ Report 16 – 28
Directors’ Remuneration Report
27
Strategic ReportDirectors’ ReportFinancial Statements Directors’ share options
Details of the Directors’ share options outstanding at 31 December 2014 are shown below.
Name
Date option
granted
Number of
options
Option price
Exercised
Cancelled/
surrendered
Juliet Davenport
01/05/2002
117,616
£0.50
117,616
Juliet Davenport
01/06/2004
35,000
£0.75
Juliet Davenport
13/02/2012
86,956
£1.15
Juliet Davenport
13/02/2012
17,390
£1.15
Juliet Davenport
18/09/2012
189,052
£0.50
Juliet Davenport
13/07/2013
144,000
£1.25
-
-
-
-
-
Total
-
590,014
-
117,616
Richard Squires
13/02/2012
75,000
£1.15
-
Overall Total
-
665,014
-
117,616
-
-
-
-
-
-
-
-
-
Options
outstanding
at 31
December
2014
-
35,000
86,956
17,390
189,052
144,000
472,398
75,000
547,398
On the exercise of options during 2014, the Executive Directors realised a total gain of £187,077 which related
to the Chief Executive.
28
Independent
Auditors’
Report
To the members of Good Energy Group PLC
30–32
29
Independent Auditors’ Report to the
members of Good Energy Group PLC.
Report on the financial
statements
Our opinion
In our opinion:
•
Good Energy Group PLC’s group financial
statements and parent company financial
statements (the “financial statements”) give a
true and fair view of the state of the group’s and
of the parent company’s affairs as at 31 December
2014 and of the group’s profit and the group’s and
the parent company’s cash flows for the year
then ended;
What we have audited
Good Energy Group PLC’s financial statements
comprise:
• the Consolidated and Parent Company
Statements of Financial Position as at 31
December 2014;
• the Consolidated Statement of Comprehensive
Income for the year then ended;
• the Consolidated and Parent Company
• the group financial statements have been properly
Statements of Cash Flows for the year then ended;
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
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.
• the Consolidated and Parent Company
Statements 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 the preparation of the financial
statements 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.
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.
30
Opinion on other matter
prescribed by the
Companies Act 2006
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 23, 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 International Standards on
Auditing (UK and Ireland) (“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.
In our opinion, the information given in the Strategic
Report and the 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.
Independent Auditors’ Report
31
Strategic ReportDirectors’ ReportFinancial Statements What an audit of financial statements
involves
We conducted our audit in accordance with 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.
We primarily focus our work in these areas by assessing
the directors’ judgements against available evidence,
forming our own judgements, and evaluating the
disclosures in the financial statements.
We test and examine information, using sampling and
other auditing techniques, to the extent we consider
necessary to provide a reasonable basis for us to draw
conclusions. We obtain audit evidence through testing
the effectiveness of controls, substantive procedures
or a combination of both.
In addition, we read all the financial and non-
financial information in the Annual Report & Financial
Statements 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.
Colin Bates (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Bristol
24th March 2015
32
Turbine blades are lifted into
place at our new wind farm in
Hampole, near Doncaster.
33
Strategic ReportDirectors’ ReportFinancial Statements Financial
Statements
Consolidated Statement of Comprehensive Income 35
Consolidated Statement of Financial Position 36
Parent Company Statement of Financial Position 37
Consolidated Statement of Changes in Equity 38
Parent Company Statement of Changes in Equity 39
Consolidated Statement of Cash Flows 40
Parent Company Statement of Cash Flows 41
Notes to the Financial Statements 42
Directors and Corporate Resources 82
34–82
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2014
Note
5
5
6
6
10
11
11
12
REVENUE
Cost of Sales
GROSS PROFIT
Administrative Expenses
OPERATING PROFIT
Finance Income
Finance Costs (including exceptional items)
PROFIT BEFORE TAX AND EXCEPTIONAL FINANCE COSTS
Exceptional finance cost
PROFIT BEFORE TAX
Taxation
PROFIT FOR THE YEAR
OTHER COMPREHENSIVE INCOME:
Items that may subsequently be reclassified to profit or loss
(Loss)/gain on cash flow hedge
Other comprehensive income for the year, net of tax
2014
£000’s
57,618
2013
£000’s
40,407
(38,782)
(26,822)
18,836
(15,045)
3,791
87
(2,590)
2,169
(881)
1,288
520
1,808
(328)
(328)
13,585
(9,727)
3,858
116
(719)
3,255
-
3,255
(586)
2,669
328
328
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
1,480
2,997
ATTRIBUTABLE TO OWNERS OF THE PARENT COMPANY
Earnings per share from profit for the year - Basic
- Diluted
13
13
12.6p
11.9p
20.9p
19.6p
The notes on pages 42 to 81 form part of these Financial Statements.
35
Strategic ReportDirectors’ ReportFinancial Statements
Consolidated Statement of Financial Position
As at 31 December 2014
Company registered no: 04000623
Non-current assets
Property, plant and equipment
Intangible assets
Derivative financial instruments
Available-for-sale financial assets
Total non- current assets
Current assets
Inventories
Trade and other receivables
Current tax receivable
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 attributable to members of the parent company
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
16
17
18
12
19
20
20
21
22
22
24
23
12
2014
£000’s
44,729
3,530
-
500
48,759
6,466
10,281
109
13,703
30,559
79,318
733
9,077
(127)
8,260
17,943
15
39,676
39,691
6,608
-
15,076
-
21,684
61,375
79,318
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
The Financial Statements on pages 35 to 81 were approved by the Board of Directors on 24 March 2015 and
signed on its behalf by:
Juliet Davenport
Chief Executive
24 March 2015
The notes on pages 42 to 81 form part of these Financial Statements.
36
Parent Company Statement of Financial Position
As at 31 December 2014
Company registered no: 04000623
Non-current assets
Intangible assets
Investments
Total non- current assets
Current assets
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
15
16
18
19
20
20
22
22
23
12
2014
£000’s
-
29,941
29,941
365
509
874
2013
£000’s
4
27,728
27,732
136
379
515
30,815
28,247
733
9,077
(127)
4,071
13,754
14,695
14,695
2,272
94
-
2,366
17,061
30,815
733
9,077
(236)
1,602
11,176
14,250
14,250
1,374
1,357
90
2,821
17,071
28,247
The Financial Statements on pages 35 to 81 were approved by the Board of Directors on 24 March 2015 and
signed on its behalf by:
Juliet Davenport
Chief Executive
24 March 2015
The notes on pages 42 to 81 form part of these Financial Statements.
37
Strategic ReportDirectors’ ReportFinancial Statements
Consolidated Statement of Changes in Equity
For the year ended 31 December 2014
Share
Share
EBT
Retained
Total
Capital
Premium
Shares
Earnings
Equity
Account
£000’s
£000’s
£000’s
£000’s
£000’s
626
6,729
(470)
-
-
-
107
-
-
-
-
-
-
-
2,574
(226)
-
-
-
-
-
-
-
-
(3)
237
-
4,167
2,669
328
11,052
2,669
328
2,997
2,997
-
-
-
103
(377)
2,681
(226)
(3)
340
(377)
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
107
2,348
234
(274)
2,415
At 31 December 2013
733
9,077
(236)
6,890
16,464
At 1 January 2014
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Share based payments
Tax credit relating to share option scheme
Sale of shares by EBT
Dividend Paid
Total contributions by and distributions to
owners of the parent, recognised directly
in equity
733
9,077
(236)
6,890
16,464
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
109
-
1,808
1,808
(328)
(328)
1,480
1,480
30
311
21
30
311
130
(472)
(472)
109
(110)
(1)
At 31 December 2014
733
9,077
(127)
8,260
17,943
The notes on pages 42 to 81 form part of these Financial Statements.
38
Parent Company Statement of Changes in Equity
For the year ended 31 December 2014
Share
Share
EBT
Retained
Capital
Premium
Shares
Earnings
Total
Equity
Account
£000’s
£000’s
£000’s
£000’s
£000’s
At 1 January 2013
626
6,729
(470)
1,359
8,244
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
-
107
-
-
-
-
107
733
-
2,574
(226)
-
-
-
-
-
-
(3)
237
-
517
517
-
-
-
103
(377)
2,681
(226)
(3)
340
(377)
2,348
9,077
234
(274)
(236)
1,602
2,415
11,176
At 1 January 2014
733
9,077
(236)
1,602
11,176
Profit for the year and total
comprehensive income
Sale of shares by EBT
Dividend Paid
Total contributions by and
distributions to owners of the parent,
recognised directly in equity
-
-
-
-
-
-
-
-
At 31 December 2014
733
9,077
The notes on pages 42 to 81 form part of these Financial Statements.
-
2,920
2,920
109
-
21
(472)
130
(472)
109
(127)
(451)
(342)
4,071
13,754
39
Strategic ReportDirectors’ ReportFinancial Statements Consolidated Statement of Cash Flows
For the year ended 31 December 2014
Note
26
15
25
Cash flows from operating activities
Cash generated from operations
Finance income
Finance cost
Income tax paid
Net cash flows from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible fixed assets
Acquisition of available-for-sale financial assets
Net cash flows used in investing activities
Cash flows from financing activities
Payments of dividends
Proceeds from borrowings
Repayment of borrowings
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 (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
The notes on pages 42 to 81 form part of these Financial Statements.
2014
£000’s
3,697
87
(2,644)
(500)
640
(18,316)
(619)
(500)
2013
£000’s
938
116
(647)
(64)
343
(9,364)
(1,073)
-
(19,435)
(10,437)
(472)
25,983
(11,035)
-
(83)
-
-
130
14,523
(4,272)
17,975
13,703
(377)
2,433
(390)
14,229
(153)
2,455
(3)
340
18,534
8,440
9,535
17,975
40
Parent Company Statement of Cash Flows
For the year ended 31 December 2014
Cash flows from operating activities
Cash generated from operations
Finance income
Finance cost
Income tax paid
Net cash flows from/(used in) operating activities
Cash flows from investing activities
Purchase of subsidiary company
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
2014
£000’s
2013
£000’s
1,424
-
(1,087)
-
337
1,224
185
(89)
(1)
1,319
-
-
(3,014)
(3,014)
(472)
135
-
-
-
130
(207)
130
379
509
(377)
(14,734)
14,229
2,455
(3)
340
1,910
215
164
379
The notes on pages 42 to 81 form part of these Financial Statements.
41
Strategic ReportDirectors’ ReportFinancial Statements Notes to the Financial Statements
For the year ended 31 December 2014
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 activities of Good Energy Group PLC are those of a holding and management company to the
Group and a lender to, and seller of, generation development sites.
The principal activities of its subsidiaries are: the purchase, generation and sale of electricity from renewable
sources; the sale of gas; 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 (IFRIC) 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 or historic cost modified by revaluation of financial assets and financial liabilities held at fair value.
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 financial year.
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), Goodwill, intangible assets and amortisation (2.6), Inventories (2.11) and Credit
risk (3.1.3).
42
Notes to the Financial Statements
For the year ended 31 December 2014
2. Summary of Significant Accounting Policies (continued)
2.2 Going Concern
The Group meets its day to day capital requirements through positive cash balances held on deposit
or through its bank facilities. The current economic conditions continue to create opportunities and
uncertainties which can impact the level of demand for the Group’s products and the availability of bank
finance for the foreseeable future. The Group’s forecasts and projections , taking account of the possible
changes in trading performance, show that the Group should be able to operate within the level of its current
facilities, particularly in light of its recently negotiated £45m facility.
The Parent Company has net current liabilities but this is mainly due to a large inter-company creditor which
is expected to be settled in 2015.
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 2014:
IFRS 10, ‘Consolidated financial statements’
IFRS 11, ‘Joint arrangements’
IFRS 12, ‘Disclosures of interests in other entities’
IAS 27 (revised 2011) ‘Separate financial statements’
IAS 28 (revised 2011) ‘Associates and joint ventures’
Amendments to IFRS 10, 11 and 12 on transition guidance
Accounting periods commencing on or after
Effective date:
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
Amendments to IFRS 10, 12 and IAS 27 on consolidation for investment entities
1 January 2014
Amendment to IAS 32 on Financial instruments asset and liability offsetting
1 January 2014
Amendment to IAS 36, ‘Impairment of assets’ on recoverable amount disclosures
1 January 2014
Amendment to IAS 39 ‘Financial instruments: Recognition and measurement’ on
novation of derivatives and hedge accounting
IFRIC 21, ‘Levies’
1 January 2014
1 January 2014
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.
43
Strategic ReportDirectors’ ReportFinancial Statements
Notes to the Financial Statements
For the year ended 31 December 2014
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 9, ‘Financial instruments’ – classification and measurement
Amendments to IFRS 9, ‘Financial instruments’ – regarding hedge accounting
Amendment to IAS 19 regarding defined benefits plans
Annual improvements 2012
Annual improvements 2013
1 January 2015
1 January 2015
1 January 2015
1 January 2015
1 January 2015
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 its subsidiaries
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. 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.
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.
Inter-company transactions and balances between Group enterprises are eliminated on Consolidation.
44
Notes to the Financial Statements
For the year ended 31 December 2014
2. Summary of Significant Accounting Policies (continued)
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 electricity, gas, 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 provides 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.
45
Strategic ReportDirectors’ ReportFinancial Statements Notes to the Financial Statements
For the year ended 31 December 2014
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 Goodwill, 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 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.
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 asset 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
between 3 and 10 years
Website development costs
between 2 and 5 years
Amortisation of intangible assets is included in the Consolidated Statement of Comprehensive Income in
‘administrative expenses’.
46
Notes to the Financial Statements
For the year ended 31 December 2014
2. Summary of Significant Accounting Policies (continued)
2.6.4 Impairment
The Directors regularly review intangible assets for impairment and provision is made if necessary. Assets
with an indefinite useful life, eg 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
Turbines & ancillaries
24 years
Solar panels & ancillaries
between 27 years and 29 years
Assets under construction
not depreciated
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 Investments
An undertaking is regarded as a subsidiary undertaking if the Company has control over its operating and
financial policies. Investments in subsidiary undertakings that are directly owned by the Company are stated
at cost less amounts written-off for any permanent diminution in value.
2.9 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
financial 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.
47
Strategic ReportDirectors’ ReportFinancial Statements
Notes to the Financial Statements
For the year ended 31 December 2014
2. Summary of Significant Accounting Policies (continued)
2.10 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.
2.11 Inventories
2.11.1 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 over a 12 month period,
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.
2.11.2 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.
2.12 Current and Deferred Taxation
The tax credit represents the sum of the tax currently receivable and deferred tax. The tax currently
receivable 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 financial 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 financial 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.
48
Notes to the Financial Statements
For the year ended 31 December 2014
2. Summary of Significant Accounting Policies (continued)
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.
2.13 Available-for-sale financial assets
Equity instruments held by the Group and designated as available-for-sale are carried at fair value, with
movements in fair value recognised in other comprehensive income. Where fair value cannot be reliably
measured, the assets are approximated at cost. Cumulative fair value gains or losses on an asset are recycled
through the income statement when the asset is disposed or impaired. A significant or prolonged decline
in the fair value of a security below its cost is considered as an indicator that the securities are impaired.
Impairments are recognised in the income statement.
2.14 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.
2.14.1 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 counter-party 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.
2.14.2 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.
49
Strategic ReportDirectors’ ReportFinancial Statements Notes to the Financial Statements
For the year ended 31 December 2014
2. Summary of Significant Accounting Policies (continued)
2.14.3 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.
2.14.4 Borrowings
The Group expenses borrowing costs over the term of the loan facility. 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.
2.15 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 financial 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 to meet that obligation, the proceeds
received net of any directly attributable transaction costs are credited to share capital (nominal value) and
share premium.
2.16 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.
50
Notes to the Financial Statements
For the year ended 31 December 2014
2. Summary of Significant Accounting Policies (continued)
2.17 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.
The fair values of derivative financial instruments and the movements on the hedging reserve in other
comprehensive income (‘OCI’) are shown in note 24.
2.17.1 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’.
2.18 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.
2.19 Finance income
Finance income is received in respect of cash deposits and 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 finance income. Finance income on impaired loan and receivables is
recognised using the original effective interest rates.
2.20 Exceptional items
Exceptional items are disclosed separately in the financial statements where it is necessary to do so to
provide further understanding of the financial performance of the Group. They are material items of income
or expense that have been shown separately due to the significance of their nature or amount.
2.20 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.
51
Strategic ReportDirectors’ ReportFinancial Statements Notes to the Financial Statements
For the year ended 31 December 2014
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 may use 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 recasts 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.
A liquidity analysis of financial instruments is provided below:
Parent Company
31 December 2014
Less than
Between
Between
Over 5 years
1 year
1 and 2 years
2 and 5 years
Corporate bond
Loan from group companies
Trade and other payables
Total
£000’s
1,088
2,272
94
3,454
£000’s
1,088
-
-
£000’s
16,189
-
-
1,088
16,189
£000’s
-
-
-
-
Parent Company
31 December 2013
Less than
Between
Between
Over 5 years
1 year
1 and 2 years
2 and 5 years
Corporate bond
Loan from group companies
Trade and other payables
Total
£000’s
1,113
1,374
1,232
3,719
£000’s
1,113
-
-
1,113
£000’s
17,226
-
-
17,226
£000’s
-
-
-
-
52
Notes to the Financial Statements
For the year ended 31 December 2014
3. Financial and Capital Risk Management (continued)
Consolidated
31 December 2014
Less than
Between
Between
Over 5 years
1 year
1 and 2 years
2 and 5 years
£000’s
8,874
1,088
15,076
25,038
£000’s
£000’s
£000’s
2,620
1,088
-
3,708
8,333
16,189
-
32,982
-
-
24,522
32,982
Less than
Between
Between
Over 5 years
1 year
1 and 2 years
2 and 5 years
£000’s
£000’s
£000’s
£000’s
125
1,294
1,113
13,148
15,680
-
1,379
1,113
-
2,492
-
5,369
17,226
-
22,595
-
8,147
-
-
8,147
Borrowings
Corporate bond
Trade and other payables
Total
Consolidated
31 December 2013
Finance lease liabilities
Borrowings
Corporate bond
Trade and other payables
Total
3.1.2 Market Risk
3.1.2a Currency risk
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, that when it is deemed appropriate, the Group will forward buy Euros against major
contracts to reduce foreign exchange exposure. As at 31 December 2014 €nil (2013: €2,869,000) were
purchased forward.
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 may use
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.
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.
53
Strategic ReportDirectors’ ReportFinancial Statements
Notes to the Financial Statements
For the year ended 31 December 2014
3. Financial and Capital Risk Management (continued)
3.1.3 Credit risk
The Group’s exposure to credit risk arises from its receivables from customers. At 31 December 2014 and
2013, 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 of 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 £30,000 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.
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 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
2014
£000’s
46,284
(13,703)
32,581
17,943
50,524
64.5%
2013
£000’s
25,341
(17,975)
7,366
16,464
23,830
30.9%
The Group’s borrowings are subject to maintaining covenants as defined by the debt funder. Throughout the
year ended 31 December 2014 the Group complied with all external borrowing covenants and management
monitors the continued compliance with these covenants on a monthly or quarterly basis.
The Group is satisfied the increase in gearing is appropriate as it is due to the debt drawn against long term
power generation assets with highly predictable revenue streams.
54
Notes to the Financial Statements
For the year ended 31 December 2014
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
detailed below. 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 fourteen months after the supply date.
4.2 Power purchase costs
Power purchase costs can typically take 14 months from the date of supply 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.
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 the selection of 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.
55
Strategic ReportDirectors’ ReportFinancial Statements Notes to the Financial Statements
For the year ended 31 December 2014
4. Critical Accounting Estimates (continued)
4.5 Provisions for bad and doubtful debt
The assessments undertaken in recognising provisions 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.
4.6 Recoverability of capitalised generation project costs
Generation project costs capitalised in inventory are reviewed by management on a monthly basis. Where
management deem that on balance of probability, the likely planning outcome for a given generation site will
prevent it being constructed or sold, a write off provision is made for the full amount of the inventory relating
to that site after excluding a prudent assessment of recoverable costs. Where possible, recoverable costs will
be estimated based on known market values.
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. Following a change to the internal reporting structure in the year, the main segments are:-
•
•
•
•
Supply Companies (including electricity supply, FIT administration and gas supply);
Electricity Generation Companies (including wind and solar generation companies);
Generation Development (including early stage development companies); and
Holding companies, being the activity of Good Energy Group PLC.
The Board assesses the performance of the operating segments based primarily on summary financial
information, extracts of which are reproduced below. An analysis of profit and loss, assets and liabilities and
additions to non-current asset, by class of business, with a reconciliation of segmental analysis to reported
results follows:
56
Notes to the Financial Statements
For the year ended 31 December 2014
5. Segmental Analysis (continued)
Year ended 31
Electricity
FIT
Gas
Total
Electricity
Generation
Holding
Total
December 2014
Supply
admin-
Supply
Supply
Generation
Development
Companies/
istration
Companies
Consolidation
Adjustments
£000’s
£000’s
£000’s
£000’s
£000’s
£000’s
£000’s
£000’s
Revenue
Revenue
from external
customers
31,593
2,544
11,568
45,705
1,754
10,159
-
57,618
Inter-segment
revenue
-
-
-
-
2,106
-
(2,106)
-
Total revenue
31,593
2,544
11,568
45,705
3,860
10,159
(2,106)
57,618
Expenditure
Cost of sales
(19,789)
(1,619)
(9,064)
(30,472)
(1,840)
(6,470)
-
(38,782)
Inter-segment
cost of sales
(2,106)
-
-
(2,106)
-
-
2,106
-
Gross profit
9,698
925
2,504
13,127
2,020
3,689
-
18,836
Administrative
expenses
Depreciation &
amortisation
Operating
profit/(loss)
Net finance
income/(costs)
Profit/(loss)
before tax
Segments assets & liabilities
Segment
assets
Segment
liabilities
Net assets/
(liabilities)
Additions to
non- current
assets
(11,812)
(271)
(1,251)
(895)
(14,229)
(808)
-
(4)
(4)
(816)
507
1,749
2,434
(899)
3,791
(13)
(2,346)
(430)
286
(2,503)
494
(597)
2,004
(613)
1,288
21,910
63,214
13,626
(19,432)
79,318
(15,000)
(58,518)
(16,889)
29,032
(61,375)
6,910
4,696
(3,263)
9,600
17,943
247
25,208
-
-
25,455
57
Strategic ReportDirectors’ ReportFinancial Statements
Notes to the Financial Statements
For the year ended 31 December 2014
5. Segmental Analysis (continued)
Year ended 31
Electricity
FIT
Gas
Total
Electricity
Generation
Holding
Total
December 2013
Supply
admin-
Supply
Supply
Generation
Development
Companies/
istration
Companies
consolidation
adjustments
£000’s
£000’s £000’s
£000’s
£000’s
£000’s
£000’s
£000’s
Revenue
Revenue from
external
customers
Inter-segment
revenue
25,000
2,316
7,032
34,348
1,112
4,947
-
40,407
Total Revenue
25,000
2,316
7,032
34,348
-
-
-
-
1,369
2,481
-
(1,369)
-
4,947
(1,369) 40,407
Expenditure
Cost of sales
(16,133)
(890) (5,619)
(22,642)
(833)
(3,347)
-
(26,822)
Inter-segment
cost of sales
(1,369)
-
-
(1,369)
-
-
1,369
-
Gross Profit
7,498
1,426
1,413
10,337
1,648
1,600
-
13,585
Administrative
expenses
Depreciation &
amortisation
Operating
profit/(loss)
Net finance
income/(costs)
Profit/(loss)
before tax
(6,744)
(188)
(977)
(1,137)
(9,046)
(674)
-
(4)
(3)
(681)
2,919
1,460
619
(1,140)
3,858
158
(652)
(185)
76
(603)
3,077
808
434
(1,064)
3,255
Segments assets & liabilities
Segment assets
27,860
20,738
4,503
2,872
55,973
Segment
liabilities
Net assets/
(liabilities)
Additions to
non- ‐current
assets
(21,359)
(16,667)
(6,657)
5,174 (39,509)
6,501
4,071
(2,154)
8,046
16,464
1,349
9,453
6
-
10,808
All turnover arose within the United Kingdom.
Consolidation adjustments relate to inter-company sales of generated electricity and the elimination of inter-
company balances.
58
Notes to the Financial Statements
For the year ended 31 December 2014
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 accounts
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
7. Profit of the Parent Company
Note
14
15
2014
£000’s
2013
£000’s
1,347
567
329
20
95
7
122
22
20
42
6,640
3,759
1,619
1,528
633
866
15,045
634
533
315
15
56
12
83
11
34
45
4,753
2,174
836
906
377
681
9,727
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 £2,919,980 (2013: £517,592).
59
Strategic ReportDirectors’ ReportFinancial Statements
Notes to the Financial Statements
For the year ended 31 December 2014
8. Staff Costs
Staff costs, including Directors’ remuneration, were as follows:
Wages and salaries
Social security costs
Share based payments
Other pension costs
Total
2014
2013
£000’s
£000’s
6,658
4,388
620
30
272
444
39
218
7,580
5,089
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
2014
2013
Number
Number
101
127
228
71
94
165
2014
2013
£000’s
£000’s
1,208
57
761
43
Key management are considered to be the Directors of Good Energy Group PLC in the year and the Directors
of Operations and Business Development within Good Energy Limited. The emoluments relating to the
Directors of Operations and Business Development are included in the table above.
During the year retirement benefits were accruing to 3 Directors of the Group (2013: 2) in respect of money
purchase pension schemes.
In respect of the highest paid Director, the Group paid remuneration of £252,183 (2013: £276,432), including
contributions to the money purchase pension scheme of £22,950 (2013: £19,000).
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 27.
10. Finance Income
Bank and other interest receivable
60
2014
2013
£000’s
£000’s
87
116
Notes to the Financial Statements
For the year ended 31 December 2014
11. Finance Costs
On borrowings and overdrafts
On corporate bond
Other interest payable
Fair value losses on foreign currency forward contracts
Amortisation of debt issue cost
Exceptional finance cost on repayment of borrowings
Total finance costs
Less: amounts capitalised on qualifying assets
Total
2014
2013
£000’s
£000’s
1,467
929
56
-
196
881
3,529
(939)
2,590
725
125
13
52
20
-
935
(216)
719
The exceptional cost relates to the cost incurred on 17 December 2014 in the settlement of the senior debt
and related derivative used to fund the Hampole wind farm development.
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
2014
2013
£000’s
£000’s
-
(108)
(108)
(420)
8
(412)
(520)
537
(46)
491
176
(81)
95
586
61
Strategic ReportDirectors’ ReportFinancial Statements Notes to the Financial Statements
For the year ended 31 December 2014
12. Taxation (continued)
Factors affecting the tax charge for the year
The tax assessed for the year is lower (2013: lower) than the standard weighted average rate of Corporation
Tax in the UK of 21.50% (2013: 23.25%). The differences are explained as follows:
Profit before tax
Profit before tax multiplied by the weighted average rate of
2014
2013
£000’s
£000’s
1,288
3,255
Corporation Tax in the UK of 21.5% (2013: 23.25%)
277
756
Tax effects of:
Expenses not deductible for tax purposes
Non-taxable gain on sale of investment
Effects of changes in tax rate
Losses utilised
Adjustments in respect of prior year - current tax
Adjustments in respect of prior year - deferred tax
Total tax (credit)/charge for year (see note above)
(2)
(728)
33
-
(108)
8
(520)
27
-
(29)
(41)
(46)
(81)
586
During the year, the Group sold one of its subsidiaries (Good Energy West Raynham Solar Park Limited) and
claimed Substantial Shareholding Exemption on the profit from sale. Primarily as a result of this, the Group
incurred a net tax credit in the year.
Factors that may affect future tax charges
The main corporation tax rate was reduced from 23% to 21% from 1 April 2014 and to 20% from 1 April 2015
under the Finance Act 2013. As no further reductions were substantively enacted at the balance sheet date,
the relevant deferred tax balances continue to be measured at 20%. Apart from these changes, the factors
that may affect future tax charges are expected to be similar to those in 2014.
Corporation tax payable/(recoverable) as per Statement of Financial Position
UK Corporation Tax on profits for the year
-
90
(109)
503
Parent Company
Consolidated
2014
2013
2014
2013
£000’s
£000’s
£000’s
£000’s
62
Notes to the Financial Statements
For the year ended 31 December 2014
13. Earnings Per Ordinary Share
Basic
Basic earnings per share is calculated by dividing the profit attributable to owners of the Company by the
weighted average number of ordinary shares during the year after excluding 208,863 (2013: 387,998) shares
held by Clarke Willmott Trust Corporation Limited in trust for the Good Energy Group Employee Benefit Trust.
Profit attributable to owners of the Company (£000’s)
Basic weighted average number of ordinary shares (000’s)
Basic earnings per share
Diluted
Consolidated
2014
1,808
14,322
12.6p
2013
2,669
12,785
20.9p
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares to
assume conversion of all potentially dilutive ordinary shares. Potentially dilutive ordinary shares arise
from awards made under the Group’s share-based incentive plans. Where the vesting of these awards is
contingent on satisfying a service or performance condition, the number of potentially dilutive ordinary
shares is calculated based on the status of the condition at the end of the period. Potentially dilutive
ordinary shares are actually dilutive only when the average market price of the Company’s ordinary shares
during the period exceeds their exercise price (options) or issue price (other awards). The greater any such
excess, the greater the dilutive effect. The average market price of the Company’s ordinary shares during
the year was 243p (2013: 164p). The dilutive effect of share-based incentives was 863,326 shares (2013:
815,943 shares).
Profit attributable to owners of the Company (£000’s)
Weighted average number of diluted ordinary shares (000’s)
Diluted earnings per share
Adjusted earnings per share
Consolidated
2014
1,808
15,185
11.9p
2013
2,669
13,601
19.6p
Adjusted earnings per share measures are calculated based on profit for the year from continuing operations
attributable to owners of the Company before the adjusting items as below:
Profit attributable to owners of the Company (£000’s)
Adjusting items:
Exceptional finance costs (£000’s)
Tax effect of above adjustment (£000’s)
Adjusted earnings (£000’s)
Adjusted basic earnings per share
Adjusted diluted earnings per share
Consolidated
2014
1,808
881
(189)
2,500
17.5p
16.5p
2013
2,669
-
-
2,669
20.9p
19.6p
63
Strategic ReportDirectors’ ReportFinancial Statements Notes to the Financial Statements
For the year ended 31 December 2014
14. Property, Plant and Equipment
Consolidated
Year ended 31
December 2014
Cost
At 1 January 2014
Transfer of Assets under
construction to Generation assets
Additions
At 31 December 2014
Accumulated depreciation
At 1 January 2014
Charge for the year
At 31 December 2014
Net book value
At 1 January 2014
At 31 December 2014
Leasehold
Furniture,
Generation
Assets under
Total
improvements
fittings &
assets
construction
equipment
£000’s
£000’s
£000’s
£000’s
£000’s
212
980
11,733
9,449
9,449
22,374
(9,449)
-
35
247
213
1,193
14,057
35,239
11,659
25,964
11,659
48,338
(103)
(53)
(156)
(672)
(189)
(861)
(1,487)
(1,105)
(2,592)
-
-
-
(2,262)
(1,347)
(3,609)
109
91
308
332
10,246
32,647
9,449
20,112
11,659
44,729
Consolidated
Leasehold
Furniture,
Generation
Assets under
Total
Year ended 31 December 2013
improvements
fittings &
assets
construction
equipment
£000’s
£000’s
£000’s
£000’s
£000’s
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
111
101
212
(69)
(34)
(103)
42
109
799
181
980
11,729
4
11,733
-
12,639
9,449
9,735
9,449
22,374
(558)
(114)
(672)
(1,001)
(486)
(1,487)
241
308
10,728
10,246
-
-
-
-
(1,628)
(634)
(2,262)
11,012
9,449
20,112
The Generation assets relate to electricity generating assets (wind turbines, solar panels and ancillaries).
Those assets held within the Company’s subsidiaries: Good Energy Delabole Wind Farm Limited; Good
Energy Hampole Wind Farm Limited; Good Energy Woolbridge Solar Park Limited; Good Energy Creathorne
Solar Park Limited have been pledged as security against bank and other loan liabilities. There is no charge
against the assets held within Good Energy Rookwood Solar Park Limited.
64
Notes to the Financial Statements
For the year ended 31 December 2014
15. Intangible Assets
Consolidated
Power supply
Software
Website
Goodwill
Total
Year ended 31 December 2014
Licences
Licences
development
£000’s
£000’s
£000’s
£000’s
£000’s
costs
Cost
At 1 January 2014
Additions
At 31 December 2014
Accumulated amortisation
At 1 January 2014
Charge for the year
At 31 December 2014
Net book value
At 1 January 2014
At 31 December 2014
180
-
180
-
-
-
3,249
619
3,868
(1,400)
(564)
(1,964)
132
-
132
(129)
(3)
(132)
1,446
5,007
-
619
1,446
5,626
-
-
-
(1,529)
(567)
(2,096)
180
180
1,849
1,904
3
-
1,446
1,446
3,478
3,530
Consolidated
Power
Software
Website
Goodwill
Total
Year ended 31 December 2013
supply
Licences
development
Licences
costs
£000’s
£000’s
£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
-
-
-
2,176
1,073
3,249
(870)
(530)
(1,400)
132
-
132
(126)
(3)
(129)
1,446
-
1,446
3,934
1,073
5,007
-
-
-
(996)
(533)
(1,529)
180
180
1,306
1,849
6
3
1,446
1,446
2,938
3,478
65
Strategic ReportDirectors’ ReportFinancial Statements Notes to the Financial Statements
For the year ended 31 December 2014
15. Intangible Assets (continued)
Goodwill of £1,446,453 (2013: £1,446,453) comprises £1,060,996 (2013: £1,060,996) arising from the original
acquisition of Good Energy Limited, and £385,457 (2013: £385,457) from the original acquisition of the wind
farm at Delabole.
The carrying values of indefinite life assets included in intangible assets are: Goodwill of £1,446,453 (2013:
£1,446,453) and Power Supply Licence of £180,000 (2013: £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 beyond five year plan
Pre tax discount rate
2014
26%
2%
11%
2013
30%
2%
14%
Based on these assumptions the Directors consider there to be significant headroom and the assumptions
accordingly are not sensitive.
Website development costs
£000’s
9
-
9
(5)
(4)
(9)
4
-
Parent Company
Year ended 31 December 2014
Cost
At 1 January 2014
Additions
At 31 December 2014
Accumulated amortisation
At 1 January 2014
Charge for the year
At 31 December 2014
Net book value
At 1 January 2014
At 31 December 2014
66
Notes to the Financial Statements
For the year ended 31 December 2014
15. Intangible Assets (continued)
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
Total
£000’s
27,728
-
65,763
16a. Investments and Subsidiaries
Parent Company
Shares in Group
Loans to Group
Year ended 31 December 2014
undertakings
undertakings
£000’s
£000’s
Cost and net book value
At 1 January 2014
Intra-group share transfers
Additions
Repayments
9,081
(4,435)
-
-
18,647
4,435
65,763
(63,550)
(63,550)
At 31 December 2014
4,646
25,295
29,941
The intra-group share transfer relates to Good Energy Hampole Wind Farm Limited being transferred to
ownership of Good Energy Generation Assets No.1 Limited.
Parent Company
Shares in Group
Loans to Group
Year ended 31 December 2013
undertakings
undertakings
Cost and Net book value
At 1 January 2013
Additions
Repayments
At 31 December 2013
£000’s
£000’s
4,646
4,435
-
9,081
3,686
41,248
(26,287)
18,647
Total
£000’s
8,332
45,683
(26,287)
27,728
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 2014.
67
Strategic ReportDirectors’ ReportFinancial Statements
Notes to the Financial Statements
For the year ended 31 December 2014
16a. Investments and Subsidiaries (continued)
The Group had the following principal subsidiaries at 31 December 2014:
Name
Country of
Proportion
Nature of business
incorporation
of ordinary
and place of
shares directly
business
held by Parent
Good Energy Limited
Good Energy Generation
Limited
Good Energy Gas Limited
Good Energy Generation Holding
Company No.1 Limited
Good Energy Generation Assets
No.1 Limited
Good Energy Delabole Wind
Farm Limited
Good Energy Hampole Wind
Farm Limited
Good Energy Woolbridge Solar
Park Limited
Good Energy Creathorne Solar
Park Limited
Good Energy Rookwood Solar
Park Limited
Good Energy Carloggas Solar
Park Limited
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
supply of renewably sourced electricity and
100%
FIT administration
an investor in potential new generation
100%
100%
sites
supply of gas
holding company for a generating asset
100%
sub group
holding company for generating assets
subsidiaries
generation of electric power by wind
100%
turbine machinery
generation of electric power by wind
turbine machinery
generation of electric power by solar
panels
generation of electric power by solar
panels
generation of electric power by solar
100%
panels
generation of electric power by solar
100%
panels
The subsidiaries above have all been included in the consolidated financial statements and all have 31
December year ends.
At 31 December 2014, a further 13 special purpose vehicles (SPVs) had been set up for electricity 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.
16b. Available-for-sale Financial Assets
Consolidated
Year ended 31 December 2014
Cost and Net book value
At 1 January 2014
Additions
At 31 December 2014
Available-for-sale
financial assets
£000’s
-
500
500
Available-for-sale financial assets comprise £500,000 (2013: £nil) of unlisted securities denominated
in sterling.
68
Notes to the Financial Statements
For the year ended 31 December 2014
17. Inventories
Renewable Obligation Certificates
Generation development sites
Total
Parent Company
Consolidated
2014
2013
2014
2013
£000’s
£000’s
£000’s
£000’s
-
-
-
-
-
-
1,787
4,679
6,466
2,199
3,929
6,128
As at 31 December 2014 there were Renewable Obligation Certificates (ROCs) of £896,223 (2013:
£1,343,077) 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 financial period.
Costs shown in respect of Generation development sites are for on-going 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 £4,663,330 (2013:
£2,401,505). At 31 December 2014, an impairment of £742,138 (2013: £850,000) had been made against
these sites resulting in a net credit of £108,000 (2013: expense of £743,069) which is included in ‘cost
of sales’.
69
Strategic ReportDirectors’ ReportFinancial Statements
Notes to the Financial Statements
For the year ended 31 December 2014
18. Trade and Other Receivables
Parent Company
Consolidated
2014
2013
2014
2013
£000’s
£000’s
£000’s
£000’s
Gross trade receivables
Provision for impairment/non-payment of trade receivables
Net trade receivables
Prepayments
Inter-company receivables
Group relief receivable
Other taxation
Total
-
-
-
6
347
-
12
365
10,251
6,066
(1,424)
(864)
-
-
-
4
-
-
8,827
900
-
-
132
136
554
10,281
5,202
1,696
-
-
1,054
7,952
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. Some 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
2014
£000’s
864
624
(64)
1,424
2014
£000’s
7,117
243
267
1,200
8,827
2013
£000’s
839
377
(352)
864
2013
£000’s
3,896
678
121
507
5,202
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.
70
Notes to the Financial Statements
For the year ended 31 December 2014
19. Cash and Cash Equivalents
Cash at bank and in hand
Short-term bank deposits
Security deposits
Total
Parent Company
Consolidated
2014
2013
2014
2013
£000’s
£000’s
£000’s
£000’s
509
379
12,354
-
-
-
-
671
678
17,311
664
-
509
379
13,703
17,975
As part of the bank loan agreements, the lenders require a minimum cash balance to be held in separate
reserve accounts. At the end of the year the total amount was £670,717 (2013: £664,631), which is included
in short-term bank deposits in 2014. Included within cash at bank and in hand for both the parent company
and the consolidated position is £415,434 (2013: £284,972) 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+
A
BBB+
BB
B
Total
Parent Company
Consolidated
2014
2013
2014
2013
£000’s
£000’s
£000’s
£000’s
415
285
-
-
-
-
94
509
-
-
-
94
-
379
415
103
285
-
12,162
16,508
-
-
1,023
13,703
11
1,171
-
17,975
Cash and cash equivalents are all financial assets designated as loans and receivables.
20. Share Capital and Share Premium
At 1 January 2013
Proceeds from shares issued
At 31 December 2013
Proceeds from shares issued
At 31 December 2014
Number of
Ordinary
Share
Shares
Shares
Premium
Total
£000’s
£000’s
£000’s
12,522,649
2,145,247
14,667,896
-
14,667,896
626
107
733
-
733
6,729
2,348
9,077
-
7,355
2,455
9,810
-
9,077
9,810
There was no issue of shares in 2014. In 2013, the Company issued 2,145,247 ordinary shares of 5p each
for total consideration of £2,681,559 resulting in a share premium of £2,574,297. Costs of £225,900 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 208,863 (2013: 387,998) ordinary shares of the Company
for the present and the future beneficiaries of the Good Energy Group Employee Share Option Scheme.
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 179,135 (2013: 390,832) shares as a result of options exercised
and acquired nil (2013: 2,400) shares.
71
Strategic ReportDirectors’ ReportFinancial Statements
Notes to the Financial Statements
For the year ended 31 December 2014
21. Deferred Taxation
The provision for Deferred Taxation is made up as follows:
Consolidated
At 1 January
(Credited)/charged to the Consolidated Statement of Comprehensive Income
Credited to equity
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
2014
2013
£000’s
£000’s
738
(412)
(311)
15
643
95
-
738
2014
2013
£000’s
£000’s
(300)
(376)
(676)
691
-
691
15
-
(92)
(92)
830
-
830
738
2014
2013
£000’s
£000’s
376
300
676
92
-
92
2014
2013
£000’s
£000’s
691
830
Accelerated
Short-term
capital
timing
allowances
differences
Losses
Total
Deferred tax assets/(liabilities)
£000’s
£000’s
£000’s
£000’s
At 1 January 2013
Charged to the income statement
At 31 December 2013
Credited to the income statement
Credited to equity
At 31 December 2014
(746)
(84)
(830)
152
-
(678)
103
(11)
92
(40)
311
363
-
-
-
300
-
300
(643)
(95)
(738)
412
311
(15)
The Group and Company has unutilised management charges of £19,261 (2013: £19,261) resulting in a
deferred tax asset which has not been recognised.
72
Notes to the Financial Statements
For the year ended 31 December 2014
22. Borrowings and Other Financial Liabilities
Current:
Bank and other borrowings
Finance lease liabilities
Loans from Group companies
Total
Non current:
Bank and other borrowings
Bond
Total
Parent Company
Consolidated
2014
2013
2014
2013
£000’s
£000’s
£000’s
£000’s
-
-
2,272
2,272
-
-
1,374
1,374
6,608
-
-
6,608
553
121
-
674
Parent Company
Consolidated
2014
2013
2014
2013
£000’s
£000’s
£000’s
£000’s
-
14,695
14,695
-
14,250
14,250
24,981
14,695
10,417
14,250
39,676
24,667
The Group has undrawn bank overdraft facilities of £5,000,000 (2013 : £5,000,000) as at 31 December 2014
and undrawn revolving credit facilities of £6,500,000 (2013 : £6,500,000).
At 31 December 2014, £8,102,446 (2013: £8,537,720) of the bank loans relate to the Company’s subsidiary,
Good Energy Delabole Wind Farm Limited and is secured by a mortgage debenture on that Company 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 to fixed rate
interest swap. They were entered into at the same time and in contemplation of one another, have the same
counter-party, 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%.
73
Strategic ReportDirectors’ ReportFinancial Statements
Notes to the Financial Statements
For the year ended 31 December 2014
22. Borrowings and Other Financial Liabilities (continued)
On 17 December 2014 the outstanding balance of the loan of £10,600,000 (2013: £2,675,450) relating to the
Company’s subsidiary, Good Energy Hampole Wind farm Limited was paid down in full with all charges to
that lender fully released. There was a one off exceptional charge of £880,565 incurred relating to the costs
of closing out the loan and related derivative during its initial period.
At 31 December 2014, £18,799,264 inclusive of £49,264 of accrued interest (2013: ￡nil) of the bank loans
relate to the Company’s subsidiary, Good Energy Generation Assets No. 1 Limited. The loan is secured by a
mortgage debenture on that Company and its subsidiaries dated 17 December 2014 incorporating charges
over the shares of that Company and those of its subsidiaries. The facility will be repaid from future cash
flows arising from the subsidiaries of that Company with repayments of capital and interest scheduled
quarterly over a period of 19 years commencing 17 December 2014. Interest is payable at 6.85% and the
outstanding principal balance is partially exposed if annual RPI inflation exceeds 3%. Costs incurred in
raising finance were £1,393,313 (2013: nil) and are being amortised over the life of the loan in accordance with
IAS39. The total facility secured is £45,000,000 of which £26,250,000 was undrawn at 31 December 2014.
At 31 December 2014, £6,077,658 inclusive of £72,538 of accrued interest (2013:nil) of bank and other
borrowings relate to the Company’s subsidiary, Good Energy Carloggas Solar Park Limited. The lending
constitutes short term construction finance, secured by a mortgage debenture on that Company dated 30
September 2014 incorporating a charge over the shares of that Company. The interest is payable at a rate
of 15%. It is anticipated that the facility will be repaid in the month following commissioning of the site
(expected March 2015).
On 2 October 2013 Good Energy Group launched a corporate bond which closed on 24 October 2013 with
subscriptions having reached the maximum target of £15,000,000. The bond was issued to bondholders on
22 November 2013 with Interest scheduled bi-annually. The coupon rate is 7.25% or 7.50% for bondholders
that are customers of the Group. Capital repayment of the bond is payable following notice being received
from the bondholder no earlier than 4 years from inception. The total costs of issue were £770,879 which are
being amortised over the life of the bond. As at 31 December 2014 the amortisation recognised in ‘finance
costs’ totalled £76,424 (2013: £20,592).
Parent Company
31 December 2014
Due less than 1 year
Due between 1 and 5 years
Due more than 5 years
Total
Parent Company
31 December 2013
Due less than 1 year
Due between 1 and 5 years
Due more than 5 years
Total
74
Inter-company
loan
Bond
Total
£000’s
£000’s
£000’s
2,272
-
-
-
14,695
-
2,272
14,695
-
2,272
14,695
16,967
Inter-company
loan
Bond
Total
£000’s
£000’s
£000’s
1,374
-
-
-
14,250
-
1,374
14,250
-
1,374
14,250
15,624
Notes to the Financial Statements
For the year ended 31 December 2014
22. Borrowings and Other Financial Liabilities (continued)
Bank and
other
Consolidated
Finance lease
borrowings
Bond
Total
£000’s
£000’s
£000’s
£000’s
31 December 2014
Due less than 1 year
Due between 1 and 5 years
Due more than 5 years
Total
-
14,695
-
14,695
6,608
22,982
16,694
46,284
-
-
-
-
6,608
8,287
16,694
31,589
Bank and
other
Consolidated
Finance lease
borrowings
Bond
Total
£000’s
£000’s
£000’s
£000’s
31 December 2013
Due less than 1 year
Due between 1 and 5 years
Due more than 5 years
Total
121
-
-
121
553
3,701
6,716
-
14,250
-
10,970
14,250
674
17,951
6,716
25,341
The estimated fair value of Good Energy Delabole Wind farm Limited loan is £8,102,427 (2013: £8,538,333).
The estimated fair value of the Good Energy Generation Assets No. 1 Limited loan is £18,783,848 (2013: nil).
The estimated fair value of the corporate bond is £14,724,711 (2013: £15,134,990). The fair values have been
calculated taking into account the interest rate risk inherent in the loans and bond.
The fair value of the Good Energy Carloggas Solar Park Limited loan is £6,077,658 (2013: nil) which is equal
to the carrying amount as the impact of the discounts is not significant. The fair value is based on the cash
flows discounted using a rate based on the borrowing rate.
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
2014
2013
£000’s
£000’s
-
-
-
-
-
-
125
-
-
125
(4)
121
Borrowings are designated as other financial liabilities held at amortised cost.
75
Strategic ReportDirectors’ ReportFinancial Statements
Notes to the Financial Statements
For the year ended 31 December 2014
23. Trade and Other Payables
Trade payables
Accruals and deferred income
Social security and other taxes
Other payables
Total
Parent Company
Consolidated
2014
2013
2014
2013
£000’s
£000’s
£000’s
£000’s
34
60
-
-
94
747
610
-
-
4,669
8,302
238
1,867
1,357
15,076
2,240
9,006
143
1,486
12,875
Trade and other payables are designated as other financial liabilities held at amortised cost.
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.
At 31 December 2014 the Group had closed out the fair value derivative financial instruments in place at 31
December 2013.
Group
2014
2013
Assets
Liabilities
Assets
Liabilities
£000’s
£000’s
£000’s
£000’s
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
-
-
-
-
-
-
-
-
-
-
328
-
328
(328)
-
-
52
52
-
52
The notional principal amounts of the outstanding interest rate swap contracts at 31 December 2014 were
£nil (2013: £5,189,641). The swap was designated as a hedge against the Group’s borrowings in Good
Energy Hampole Wind farm Limited. The fair value of the borrowing at 31 December 2014 was £nil (2013:
£2,555,434). The loss on the interest rate swap at the end of the reporting period is recognised in other
comprehensive income.
The notional principal amounts of the outstanding forward foreign exchange contracts at 31 December 2014
were €nil (2013: €2,869,000).
76
Notes to the Financial Statements
For the year ended 31 December 2014
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 2.30p per share (2013: 2.00p)
Interim dividend current year of 1.00p per share (2013: 1.00p)
Sub-total
Dividends waived
Total
2014
2013
£000’s
£000’s
337
147
484
(12)
472
251
146
397
(20)
377
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:
Profit before income tax
Adjustments for:
Depreciation
Amortisation
Share based payments
Finance costs - net
Parent Company
Consolidated
2014
2013
2014
£000’s
£000’s
£000’s
2,772
621
1,288
2013
£000’s
3,255
-
4
-
-
3
-
1,347
567
30
(208)
(76)
2,503
634
533
-
603
Changes in working capital (excluding the effects
of acquisition and exchange differences on
consolidation)
Inventories
Trade and other receivables
Trade and other payables
-
120
(1,264)
-
(99)
775
Cash generated from operations
1,424
1,224
(1,908)
(2,329)
2,199
3,697
(3,452)
(4,139)
3,504
938
77
Strategic ReportDirectors’ ReportFinancial Statements
Notes to the Financial Statements
For the year ended 31 December 2014
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
£30,040 (2013: £39,000) are recognised in the Consolidated Statement of Comprehensive Income. As at 31
December 2014, the following options had been issued:
Weighted average
Number of options
exercise price
2014
2013
2014
2013
Total exercise
consideration
(Number)
(Number)
(£)
(£)
£000’s
£000’s
Outstanding at the beginning
of the year
Granted
Exercised
2,048,514
1,659,346
25,000
910,000
(179,135)
(390,832)
Cancelled/surrendered
(399,481)
(130,000)
Outstanding at the end of year
1,494,898
2,048,514
1.03
1.25
0.72
1.19
1.03
0.87
1.25
0.87
1.00
1.03
2,110
31
1,445
1,137
(130)
(340)
(475)
1,536
(130)
2,112
In order to partially fulfil the options granted, 208,863 (2013: 387,998) shares representing approximately
18% (2013: 22%) 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 February 2015 and September 2027.
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
2002-2005
2003-2006
2004-2007
2005-2008
2006-2009
2007-2010
2012-2015
2012-2015
2013-2016
2014-2017
2015
2014
2014
2015
2016
2017
2022
2022
2026
2027
0.50
0.75
0.75
0.80
0.75
0.75
0.50
1.15
1.25
1.25
Share options
(thousands)
2014
2013
-
45
120
100
114
20
189
328
554
25
118
45
120
100
114
20
189
503
840
-
1,495
2,049
The weighted average fair value of options granted during the period determined using the Black-Scholes
valuation model was £0.79 per option. The significant inputs into the model were weighted average share
price of £2.21 at the grant date, exercise price shown above, volatility of 17%, 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.
78
Notes to the Financial Statements
For the year ended 31 December 2014
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 £333,644 (2013: £256,643).
Contributions totalling £41,142 (2013: £35,707) were payable to the fund at the end of the financial 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
The future aggregate minimum lease payments 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
29.2 Capital Commitments
2014
2013
£000’s
£000’s
391
769
4,050
5,210
262
547
792
1,601
2014
2013
£000’s
£000’s
6
18
-
24
9
24
-
33
At 31 December 2014, the total capital commitments amount is £2,978,206 (2013: £15,195,822). Of this
£2,978,206 (2013: £9,546,236) related to contracts agreed on solar generation projects and £nil (2013:
£5,649,586) related to contracts agreed on the construction of Good Energy Hampole Wind farm Limited.
The figure for solar generation projects represents the maximum liability assuming all sites continue
in development.
79
Strategic ReportDirectors’ ReportFinancial Statements
Notes to the Financial Statements
For the year ended 31 December 2014
30. Related Party Transactions
The Group maintains processes to identify related party transactions which include ensuring that all meetings
of the Board of Directors begin with a declaration of interest in the matters arising. When related party
transactions are identified, steps are taken to ensure they are transparent and contracted on an arm’s length
basis. Dependent on the perceived risk and materiality of the transaction, these steps may include forming
an independent sub-committee of the board to consider the transaction and requesting that the Group’s
Nominated Advisor reviews the contractual terms.
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 inter-company balances with
its subsidiaries. Interest is charged on these balances at either 2.5% above the Bank of England base rate or at
8.85%. The higher rate is charged on inter-company loans drawing on the GCP loan which carries an external
rate of interest of 6.85%. Details of the amounts outstanding and received during the year on inter-company
loans 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
£82,729 (2013: £80,568). No amounts were outstanding at the end of the financial year (2013: £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 £70,268 (2013: £81,782). Of these
figures no amounts were outstanding at the end of the financial period (2013: £nil).
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.
In the year ended 31 December 2014 Shire Oak Energy Limited was entitled to receive £1,806,211 (2013:
£945,000) of which £1,015,200 (2013: £945,000) remains outstanding. The agreement was terminated
with effect from 10 October 2014 and the agreement contains post termination provisions which reduce the
maximum commission payable on some development sites.
No estimate has been prepared of the remaining amounts payable 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.
In April 2014, Good Energy Tidal Lagoon Limited, a subsidiary of the Group, made a £500,000 investment
into Tidal Lagoon (Swansea Bay) plc. Mark Shorrock (the husband of Juliet Davenport) is employed as its
Chief Executive.
The investment is structured with an option to purchase up to 10% of the power output from the Tidal Lagoon
project at market rates once completed. The project is seeking planning permission in 2015.
80
Notes to the Financial Statements
For the year ended 31 December 2014
31. Subsequent Events
None.
32. Subsidiary Undertakings Exempt From Audit
The Group has provided the necessary parental guarantees under section 479A of the Companies Act 2006,
to enable the following companies exemption from audit:
Good Energy Development (No. 1) Limited
Good Energy Development (No. 2) Limited
Good Energy Development (No. 3) Limited
Good Energy Development (No. 6) Limited
Good Energy Development (No. 7) Limited
Good Energy Development (No. 8) Limited
Good Energy Development (No. 10) Limited
Good Energy Development (No. 12) Limited
Good Energy Development (No. 14) Limited
Good Energy Development (No. 15) Limited
Good Energy Development (No. 16) Limited
Good Energy Development (No. 17) Limited
Good Energy Development (No. 18) Limited
Good Energy Development (No. 19) Limited
Good Energy Development (No. 20) Limited
Good Energy Development (No. 21) Limited
Good Energy Development (No. 22) Limited
Good Energy Development (No. 24) Limited
Good Energy Wigsley Airfield Solar Park (063) Limited
81
Strategic ReportDirectors’ ReportFinancial Statements Directors and Corporate Resources
Directors
John Maltby (Non-Executive Chairman)
Juliet Davenport (Chief Executive)
Denise Cockrem (Chief Financial Officer - 1st May 2014)
Garry Peagam (Group Finance Director - resigned 30th April 2014)
Richard Squires (Non-Executive Director)
Martin Edwards (Non-Executive Director)
Francesca Ecsery (Non-Executive Director)
Company Secretary
and Registered Office
Stephen Rosser
Monkton Reach
Monkton Hill, Chippenham
Wiltshire SN15 1EE
Company Number
04000623
Principal place of business
Independent Auditors
Financial Advisors
Bankers
Legal Advisors
Registrars
Monkton Reach
Monkton Hill, Chippenham
Wiltshire SN15 1EE
PricewaterhouseCoopers LLP
31 Great George Street
Bristol BS1 5QD
Arden Partners plc
125 Old Broad Street
London, EC2N 1AR
Lloyds Bank
PO Box 112, Canons House, Canons Way
Bristol BS99 7LB
The Co-operative Bank PLC
PO Box 101, 1 Balloon Street
Manchester M60 4EP
Norton Rose LLP
3 More London, Riverside
London, SE1 2AQ
Computershare Investor Services PLC
The Pavilions, Bridgwater Road
Bristol BS99 6ZY
82
Printed by Apple Litho, a Good Energy customer, on
Cocoon Offset, FSC certified paper.
Annual Report 2014
Good Energy Group PLC
Monkton Reach
Monkton Hill
Chippenham
SN15 1EE
goodenergygroup.co.uk