ANNUAL REPORT
& FINANCIAL STATEMENTS
2016
Contents
Annual Report
Good Energy - 2016 highlights
Strategic Report
Chairman’s Statement
Strategic Review
Corporate Responsibility
Chief Executive’s Review
Chief Financial Officer’s Review
Approval of Strategic Report
The Good Energy Group PLC Board
Directors’ Report
Corporate Governance 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
1 – 5
6 – 21
7 – 8
9 – 12
13 – 14
16 – 18
19 – 20
21
22 – 23
26 – 30
31 – 39
40 – 47
48 – 51
53
54
55
56
57
58
59
60 – 103
104
2016 ACHIEVEMENTS
our
energy
became
*
Good Energy launched the
UK’s first peer to peer
platform for buying and
selling renewable electricity,
enabling commercial
customers and renewable
generators to trade electricity
online themselves.
DIGITAL UPGRADES
Our new website and customer information system will enhance our customer
experience, enable the testing of new marketing channels with innovative tariffs
and drive internal efficiencies reducing operational costs.
OUR COMPETITIVE
ADVANTAGE
*2016 average net promoter score
1
Strategic ReportDirectors’ ReportFinancial Statements Who are we?
Good Energy’s purpose
2
Good Energy’s ambition
Our objectives
Our focus
3
Strategic ReportDirectors’ ReportFinancial Statements Good Energy - 2016 financial highlights
We have
strengthened our
financial position
and improved
cash generation
4
Customer meter growth
Generation & Development
Our customer meter numbers have continued to grow as we
focused on investing in new systems to support future growth,
whilst maintaining gross margin levels and realising value from our
generation portfolio
5
Strategic ReportDirectors’ ReportFinancial Statements Strategic
Report
Chairman’s Statement 7 – 8
Strategic Review 9 – 12
Corporate Responsibility 13 – 14
Chief Executive’s Review 16 – 18
Chief Financial Officer’s Review 19 – 20
Approval of Strategic Report 21
6
6–21
Our Strategic Report for 2016 contains contributions from Good Energy’s
Chairman, its Chief Executive and its Chief Financial Officer, in addition to a
strategic review. Detailed financial information and data can be found in later
sections of the document.
Chairman’s Statement
In 2016, Good Energy delivered a robust financial
performance in line with market expectations
and increased customer meter numbers and
engagement, while continuing to invest in the
Company to achieve its purpose to tackle climate
change in the UK.
Revenue rose 41% to £90.4 million on 13%
customer meter growth; operating profit grew 41%
to £6.0 million and profit before tax increased from
£0.1m to £1.4m, delivering basic earnings per share
of 9.1 pence.
Climate change remains a priority for the developed
and developing world, with 129 countries ratifying
the 2015 Paris Climate agreement including the UK,
USA, China and India. The UK has now taken the
next steps and approved the fifth carbon budget.
In the UK, there continues to be a high level of
public support for renewables, and in 2016 wind
generated more electricity than coal. There is
continued Government support for innovation in
the UK energy market, and the recent alignment of
energy and business strategy in the Business Energy
and Industrial Strategy Department (BEIS) means
there should be a more joined up approach from
policy makers.
As the UK energy market evolves, Good Energy
continues to invest in the Company. The focus for
2016 has been to improve our digital capabilities.
This year, we updated our customer website and
delivered the first stage of our new customer
information and billing system (Customer System),
with additional Customer System rollouts planned
throughout 2017. This combination will allow Good
Energy to reduce cost, deliver an improved customer
experience, test new marketing channels for
investment in growth and support the Company’s
roll out of the Smart Metering program.
In the final quarter of 2016, the UK energy market
experienced a period of heightened volatility, driven
We are focussed on growing
profitably, understanding
our customers’ needs and
delivering 100% renewable
and carbon neutral solutions
to more UK customers
by a number of internal and external market factors,
which in part led to the collapse of GB Energy. While
Good Energy is not immune from these conditions,
our vertically integrated business model, together
with a prudent hedging policy, helped to mitigate
the impact of these factors, enabling the Company
to deliver a profit before tax of £1.4m, in line with
market expectations.
Good Energy was set up to help people tackle
climate change through their choice of energy
supplier, and we remain a purpose and customer
led organisation. We demonstrate this through
our continued commitment to 100% certified
renewable electricity and our launch, in 2016, of a
carbon neutral gas offering; our customer advocacy
or average net promoter score (NPS) of 45; and
our oversubscribed retail share offering where we
welcomed over 1,800 shareholders from our £3.1m
share raise in June 2016.
In 2015, Good Energy outlined growth targets that
would be built off a combination of improving
efficiency and developing customer focussed
propositions and innovation. In 2016, the Company
continued to make strides to prepare itself for further
growth through continued investment in systems,
and generation portfolio, the launch of Selectricity
and our successful share raise, as highlighted in the
2016 Progress Report.
Strategic Report 6 – 21
Chairman’s Statement
7
Strategic ReportDirectors’ ReportFinancial Statements Good Energy recognises that its growth target is
ambitious. While other market participants have
delivered high growth rates through low pricing, this
comes with risks. Good Energy’s focus is on growing
profitably through efficiency, new propositions and
innovation, all underpinned by an understanding of
our customers’ needs. Through profitable growth
Good Energy will deliver 100% renewable and
carbon neutral solutions to more UK customers,
further reducing the UK carbon footprint in line with
the Company’s purpose.
Therefore, the Board has concluded that it is
more appropriate to express its ambition in terms
of delivering sustainable profitable growth and
enhanced customer service, as this is more aligned
to our focus on delivering increased shareholder
value. As a result, Good Energy will look to streamline
its operating model to drive further improvements in
costs to serve, above and beyond that which comes
from economies of scale from additional revenue
growth, which has meant some changes in our senior
leadership team and will mean that David Brooks,
Managing Director - Supply, will leave Good Energy
on April 7th. We would like to thank David for the
significant contribution he has made since joining
Good Energy and wish him all the best.
Dividend
We continue to review the balance of continued
investment in the business and providing an
appropriate return to shareholders, the board
recommends a final dividend of 2.3 pence per share.
In line with this focus, Good Energy continues
to invest in the leadership and capability of our
management team and Corporate Governance.
Ensuring the team has the right skills and capability
to support our employees is important in order
for us to achieve our ambitions, and the Company
continues to shape and develop this as we grow
and mature.
Francesca Ecsery has informed the Board of
her intention to step down as a Non-Executive
Director over the coming year. As part of ongoing
succession planning, the Nominations Committee
has commissioned a search for a new Non-Executive
Director and this is well-advanced. Francesca will
remain a member of the Board until her successor
is appointed. Francesca joined the Board in 2012,
since then the Company has benefitted from her
consumer expertise and strategic counsel. The
Board would like to thank Francesca for her valuable
contribution and wishes her well in the future.
In addition, Good Energy has made good progress in
2016 on our Corporate Governance practices. This
combination is key to the future success of Good
Energy.
We have had an encouraging start to 2017, with the
completion of the sale of Oaklands and trading in
line with market expectations.
The UK Energy market remains an attractive sector,
with exciting opportunities in the future, and
Good Energy continues to deliver sound financial,
operational and strategic performance. This would
not have been possible without the commitment of
all of Good Energy’s employees and the continued
support from our customers and shareholders. On
behalf of the Board, I would like to thank you all.
John Maltby
Chairman
27 March 2017
8
Strategy Review
In 2015, we set a five year growth ambition which
was expressed in terms of achieving a target number
of customers (household equivalents). The Board
has now concluded that it is more appropriate
to express its ambition in terms of delivering
sustainable profitable growth and enhanced
customer service, as this is more aligned to our focus
on delivering increased shareholder value.
In 2015 and 2016, we have focussed on building
the capability and systems required to support the
delivery of sustainable profitable growth, through
strengthening our capability in sales & marketing,
and with the investment in systems, including the
first stage roll out of our new Customer System
in January 2017. One of the focuses for 2017 and
beyond is to streamline the operating model of the
business and to drive further improvements in costs
to serve above and beyond that which comes from
economies of scale from additional revenue growth.
Strategic pillar
2016 Progress
Drive down cost to serve, improve customer
experience
Improved customer experience with investments in
new Customer System, middleware and website
Build a platform for 2020 growth
Sold the 5MW Wrotham Heath solar site for £0.5m
profit and announced the sale of Oaklands solar
site for £5.8m, reinvesting the proceeds into our
development portfolio, appointed Head of Digital
Marketing and Brand
Create compelling and differentiated propositions Launched Selectricity, published our first Progress
Drive scale, brand awareness and profitability
Report on environmental performance, launched
Green Gas
Connected Newton Downs solar farm, REA
customer service and company of the year awards,
successfully completed an oversubscribed customer
share offer
Initiatives are underway to simplify the operating
model and to align it to support the strategic focus
of the business. These changes reflect the focus on
continuing to grow the supply business, building on
our strong customer franchise and a change in the
focus for our generation business, where we will
move away from looking at new developments and
instead deliver security of renewable energy supply
from partnering with other providers and introducing
new sources of renewable energy into our mix.
As a consequence of these changes, we will deliver
improved efficiencies, enhanced customer service,
focussed risk management and create the capacity
to invest in areas where we see opportunities for
future growth.
Our ambition, and these initiatives, are supported
by our strategic pillars of: driving down cost to
serve, improving customer experience; building a
platform for 2020 growth; creating compelling and
differentiated propositions; and driving scale, brand
awareness and profitability.
Over the period, the Company has continued to
make progress towards delivering on our ambitions
in each of the strategic pillars.
The UK energy market is competitive. In 2007 there
were eight domestic suppliers, by the end of 2016
this had risen to 50, an increase of over 500%. Good
Energy has always sought to differentiate itself in the
market not just by offering 100% certified renewable
electricity, but through our focus on the customer
and our people. We continue to see demand in the
UK energy market for ethical companies that offer a
value based proposition for sustainable energy.
Strategic Report 6 – 21
Strategy Review
9
Strategic ReportDirectors’ ReportFinancial Statements Since 2014, the UK’s, cumulative installed renewable
capacity has increased by 35% to over 33GW. While
the trajectory of renewable generation growth may
flatten in the short to medium term as a result of
changes in Government policy, the UK renewable
energy market continues to evolve due to the:
With the first phase of the Customer System in place,
Good Energy is focussed on implementing the next
phases through 2017. Once the Customer System is
fully operational, Good Energy will be able to test
different marketing channels, enhance our customer
experience, offer innovative tariffs to the market and
drive internal efficiencies.
•
decreasing cost of renewable generation and
battery storage;
•
electrification of heat and transport networks;
•
roll out of Smart Meters; and
•
sustainability ambitions of large corporates as
demonstrated by the RE100.
EVs' peak demand
W
G
8
7
6
5
4
3
2
1
0
2010
2015
2020
2025
2030
2035
2040
Gone Green
Slow Progression
Consumer Power
Historic
No Progression
Source: National Grid Future Energy Scenarios July 2016
Lithium-ion battery costs are falling
US$/kWh
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
0
5
9
,
1
0
1
4
,
1
0
0
9
8
3
7
,
1
5
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1
8
8
7
2
8
9
5
7
6
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6
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1
9
5
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1
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7
4
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1
6
6
2
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1
3
6
1
,
1
5
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8
4
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1
0
,
1
4
4
9
0
7
8
5
2
8
2010 2011
2012
2013
2014 2015
2016 2017
2018 2019
Energy cell average
Automotive
system average
Stationary Energy system average
Source: Deutsche Bank; Cairn ERA
Good Energy’s brand, compelling proposition and
history of innovation mean that the Company
is well placed to provide personalisation to its
different customer segments and develop tech
savvy propositions for its customer base. Good
Energy is trusted by its customer base, and new
smart technology is an area in which over 25% of
Good Energy customers surveyed have said they are
interested.
Key Performance Indicators
Good Energy measures its progress with a number
of key performance indicators (KPIs). We have
highlighted nine KPIs across the four key areas of
Customer, Operations, Financial and People, which
enable us to report on and track our progress. In
2016 we added the ratio of revenue per employee
to the Operations KPIs, and operating margin to the
Financial KPIs.
Customer
Customer KPIs monitor how the Company is
delivering its growth strategy, as well as customer
advocacy and focuses on growth, annualised
average customer churn and average NPS.
Customer KPIs
Net customer meter
growth
Average
annualised churn
2016
13%
2015
44%
<8.5%
<8.0%
Average NPS
45
42
These trends, combined with Good Energy’s
customer focus, Feed-in-Tariff (FIT) customer base
and competitive advantage, present opportunities.
In order to take advantage of these opportunities,
Good Energy will continue to focus on our strengths,
efficiencies and customers relationships.
2016 net customer growth was lower than 2015,
due to the Company taking the decision to slow its
growth in the final quarter of 2016 as the first phase
of the Customer System was implemented, and the
impact of the Big Deal customers who joined Good
Energy as part of the 2015 collective switch.
A key component of improving Good Energy’s
efficiency and customer relationships will be
expanding our digital footprint.
The collective switch in November 2015 was
the first by Good Energy, adding approximately
10
10,000 customers. It presented Good Energy with
an opportunity to test and learn about collective
switching as we look to grow in the future. As
expected, the collective switch customers did see
higher churn, as the business model of collective
switching agents is to continually switch customers.
Good Energy will be considering how to use
collective switches in the future, depending on the
final outcome.
The impact of the collective switch customers and
lower growth meant that our average annualised
customer churn rose slightly for the 2016 period, to
below 8.5% from less than 8.0% in 2015.
NPS measures how likely a customer is to
recommend Good Energy, our products and services.
It is a key indicator of customer advocacy, and Good
Energy is extremely proud of the increase in its
average NPS score from 42 to 45.
Operations
Operational KPIs focus on the efficiency of the
Company. While internally we continue to monitor
cost to serve and cost per acquisition, we also
monitor administration cost (including depreciation
and amortisation) growth and the ratio of
revenue per employee, which enables us to review
performance and assess operational efficiency.
Operations KPIs
2016
2015
Administration
cost (including
depreciation and
amortisation)
growth
Revenue per
employee
27%
14%
£284k
£233k
Administration cost (including depreciation and
amortisation) growth should be compared with
gross and operating profit growth to understand how
growth in the business is being supported.
Over the period, Good Energy has grown gross and
operating profit 29% and 41% respectively, while
administration costs have only grown 27%. The 2016
administration cost growth is a mix of:
•
12% variable and semi-variable overheads;
•
6% costs associated with investment for growth,
such as the Customer System; and
•
9% for other fixed overheads.
The increase in growth of operating profit, compared
to gross profit, implies that Good Energy is leveraging
our cost base.
The ratio of revenue per employee is compared to our
average NPS to make sure that the balance between
efficiency and customer advocacy is appropriate.
This is the first time we have outlined this figure and
in 2016 this implied a ratio of £284k per employee, an
improvement of £51k per employee on 2015, and is
particularly pleasing given the increase in average NPS
over the period.
Financial
Financial KPIs focus on the profitability of Good
Energy, as the Company seeks to deliver profitable
growth to our stakeholders.
Financial KPIs focus on revenue growth, gross and
operating margins.
Finance KPIs
Revenue growth
2016
41%
2015
12%
Gross margin
30%
33%
Operating margin
7%
7%
2016 has seen robust revenue growth, a decrease
in gross margins and maintenance of our operating
margin.
Revenue growth was driven by the full year impact of
the 2015 collective switch customers, growth in FIT
customers and business volumes.
Our 2016 gross margin decreased due to an increase
in lower margin business customers, reduced wind
output and volatile trading conditions in Q4 2016.
Our operating margin was maintained as the
Company grew and invested for the future.
Strategic Report 6 – 21
Strategy Review
11
Strategic ReportDirectors’ ReportFinancial Statements We continue to strengthen
our operational platform
through investing in Smart,
digital capabilities and new
customer propositions
People
People KPIs focus on Good Energy employee
engagement. This is an important factor, as we look
to attract the best people to support our customer
service proposition and achieve our ambitions.
People KPIs
2016
2015
Employee
engagement
82%
78%
As a customer focussed organisation, it is critical
that our employees are engaged and feel a
connection to the Company’s values, purpose
and strategy.
In 2015, Good Energy performed its first employee
engagement survey. The survey included Gallup 12
questions, which are used by the Times Top 100
Companies, and gives the Company information
to benchmark itself with other organisations
across different industries and identify areas for
improvement. We have used the feedback to help
us improve in certain practical areas like working
environment, systems and training, and we are
pleased with the improvement between 2015
and 2016.
12
Corporate Responsibility
Good Energy is committed to doing the right
thing. This means that we seek to make a positive
difference to the environment, communities,
customers, investors and our people, and this
commitment extends to all parts of the business.
In practice, it’s about living up to our own ethical
standards in everything we do, for example by:
• Bath Rugby HITZ: Participants from Bath Rugby
Foundation HITZ visited us to hear about our
renewable purpose, before visiting a solar farm.
The HITZ programme works with young people
near Bath who are not in education, employment
or training, helping to build their confidence and
get them back on track.
• treating customers fairly;
• investing in local communities;
• managing the environmental impacts of our own
operations and supply chain;
• looking after the wellbeing and development of
employees.
We do this because it’s the right thing to do, but also
because it helps protect our reputation, is core to our
purpose and sets us apart from other suppliers in an
increasingly competitive ‘green energy’ market.
Customers
Our customers are the key to our business, its growth
and success, so we put them at the heart of every
decision we make and action we take. We listen to
our customers to ensure that we fully understand
their needs, and act on the information provided to
ensure that we always do our best to meet the needs
of both the customers and our business.
Communities
• Supporting education and employment: We are
working with Wiltshire College and local schools
to support education and employment in the local
area. We hosted a group of business students from
the college to give them a taste of what working
at Good Energy is like, and have introduced a
new apprenticeship scheme which offers exciting
opportunities to join our teams.
• Investing in communities: Wherever we work,
we strive to have a positive impact on local
communities and the environment. Around
Woolbridge solar farm in Dorset, we ensured a full
biodiversity programme was in place, including
2,000 new trees, 7,000 hedgerow plants, bird
and bat boxes, a wildlife hibernaculum and a new
grassland and wildflower meadow. We also fitted
solar PV systems at three local primary schools.
We provide community benefit funds through a
‘£ per megawatt’ formula at all of our wind and
solar farms, which support local charitable and
community projects for the lifetime of the solar
or wind farm. For each fund, a committee of
local people review the funding applications and
recommend how the grants should be allocated.
The Hampole wind farm in South Yorkshire will
generate investment in the local community worth
more than £200,000 over its lifetime.
Hampole wind farm
Grants from the community benefit fund have
supported projects such as an upgraded heating
system for one local village church, fixing broken
bells in another and planting new community
flowerbeds.
Strategic Report 6 – 21
Corporate Responsibility
13
Strategic ReportDirectors’ ReportFinancial Statements Training and development: As part of the
induction process, every new starter visits one of
our solar farms, learns about our unique trading
process and takes part in a values workshop, which
provides a solid foundation and understanding
of who we are and what we do. During 2016,
we introduced a learning library and series of
“lunch’n’learns” covering a broad range of topics.
We also launched our Leadership Development
Plan, to allow all leaders to continue to develop
their skills. We are often able to fill roles internally,
and many of our employees began in entry level
roles and have progressed to management or
leadership positions within the Company. Our
“Pathways to Progress” career development tool
enables employees to follow a clear and structured
career journey within the Company.
Gender equality: We are committed to attracting
women to work across the energy sector, and are
proud that our Board and the Executive team have
an equal split of men and women, with the female
to male ratio across the Group being even higher at
52:48. We are working to ensure that we provide all
employees with equal opportunities to achieve their
full potential.
Suppliers
As an ethical business, we select and perform due
diligence on potential suppliers to ensure that
their business practices promote and support our
purpose: consideration is given to price, quality,
timeliness of delivery and the ethical credentials of
each potential supplier.
Good Energy is committed to reducing resource
consumption across the business. We avoid the use
of printed material where possible by encouraging
digital forms of communication, purchasing paper
that is certified by the Forest Stewardship Council
as being made from wood pulp sourced from
sustainably managed forests and is totally chlorine-
free or processed chlorine-free and, where possible,
our print suppliers use vegetable-based printing inks
and avoid use of Volatile Organic Compounds, for
print press cleaning and other harmful chemicals.
Our people
Health and wellbeing: From lunchtime sports clubs,
to providing fresh fruit each week, we do what we
can to keep our employees healthy and happy. Good
Energy offers subsidised gym memberships, as well
as lunchtime football, badminton and squash.
Active travel: Our Active Travel Champions have
been trained by Sustrans, the sustainable travel
charity, to promote cycling and walking. They
organise lunchtime bike rides, safety training, run our
folding bike scheme and encourage staff to make the
most of pedal power. Good Energy operates the Bike
to Work scheme which helps employees spread the
cost of a new bike.
14
15
Strategic ReportDirectors’ ReportFinancial Statements Chief Executive’s Review
In 2016, Good Energy delivered growth of 41% in
revenue, 29% in gross profit and 41% in operating
profit, while managing the challenges of an
increasingly competitive UK energy market and
volatile wholesale energy market.
By being a customer focussed organisation, Good
Energy has created a business model that is
delivering financial returns for our shareholders,
allowing us to invest in our people and systems, and
deliver on our purpose.
Good Energy’s key competitive advantages can be
split into five areas:
• Our story and brand - since 1999 we have
been offering customers the opportunity to
combat climate change through their choice
of energy supplier;
• Our green credentials – we offer 100% certified
renewable energy and carbon neutral gas;
• Our customer focus – affordable energy
delivered with excellent customer service;
• Our people and values – through our employee
engagement score; and
• Our track record in innovation – since our
inception we have successfully launched
HomeGen, Renewable Heat Incentive
Scheme and Selectricity.
These provide the basis for the future growth
of Good Energy, with the principal risks and
uncertainties faced by the business set out on pages
27 and 28 of the Directors’ Report.
Supply
In 2016, total customer meter numbers grew 13% to
248,605 (2015: 219,479), with electricity customer
meters growing 5% to 71,486 (2015: 68,024), gas
customer meters growing 14% to 44,107 (2015:
38,838) and FIT customer meters up 18% to 133,012
(2015: 112,617).
While total customer meter growth in 2016 was
lower than 2015, Good Energy delivered significant
growth in business supply volumes of over 95% and
added over 20,000 new FIT customers in 2016.
During the year, the UK experienced heightened
volatility in the short term UK power trading market
due to several market factors, including unplanned
maintenance work with French nuclear plants
combined with lower than normal renewables
generation and some irregular generation activities.
As an electricity trader, Good Energy was operating
in this challenging market. However, the Company’s
risk management and hedging policy mitigated the
impact on the Company.
To support our growth, Good Energy has continued
to invest in systems with over £1.7m invested in our
Customer System and the relaunch of our customer
website to improve our customers’ experience, and
in people with the appointment of Hannah Darby as
the Head of Digital, Marketing and Brand.
Further phases of the Customer System will be
implemented through 2017 and, once complete,
Good Energy will have a system that is capable of
driving scalable growth and internal efficiencies.
The system will also allow Good Energy to test new
marketing channels and assist us to meet our Smart
obligations, as well as offering a platform for future
customer propositions.
Good Energy’s growth targets are ambitious. While
UK energy market participants have traditionally
used price as the primary driver for growth, the
consequence of this has caused some companies to
exit with volatile market conditions.
In order to achieve our ambitions and deliver on our
purpose, Good Energy needs to protect and grow its
core business, build momentum in new business,
and generate future business opportunities.
All of this is underpinned by developing deeper
relationships with our customers.
16
Good Energy recognises that growth will be in
an evolving UK energy market, but this is nothing
new for us. Good Energy is well placed to protect
and grow our core business with our vertically
integrated business model, customer focus, brand,
green credentials, trading capability and track record
of innovation.
The Company has identified the following three
areas to build momentum in new business and
generate future business opportunities. These are:
• battery storage - developing and delivering
propositions for our business customers and
renewable generators;
• electric vehicle network development - to enable
customers to be able to experience the full
benefits of electric vehicles (EVs); and
• green business consultancy - traditionally not a
target audience for Good Energy to supply, due
to their large size or operating domain, but with
our commitment to reducing carbon with our
expertise in trading and generation, we are well
placed to support businesses looking to meet their
sustainability goals.
These areas play to Good Energy’s competitive
advantages and will support the Company’s growth
ambitions, as well as lowering the UK’s carbon
footprint, which is our purpose.
Alongside Good Energy’s robust 2016 financial
performance, the Company has also increased its
average NPS and employee engagement KPIs. As
a customer focussed organisation, these KPI’s are
important. They provide feedback on customer
advocacy and how Good Energy employees are
engaged with our purpose and values, and it is
heartening to see the increase in these measures
over the year.
Generation and development
In 2016, Good Energy continued to develop, manage
and review its wind and solar generation sites to
both secure access to long term power and realise
value where appropriate, enabling us to reinvest in
our portfolio.
Export from Good Energy’s owned sites increased
5% to 80.7GWh in 2016, from a portfolio of 52MW
made up of solar (35MW) and wind (17MW) assets.
While wind output was down approximately 16%
compared to 2015 due to lower wind resource, solar
output increased 54% due to full year production
from sites connected during 2015.
Our focus is on protecting
and growing our core
business and on delivering
new propositions for electric
vehicles, storage and
business consultancy
Good Energy continued to develop and actively
manage our generation sites to both secure access
to long term power, and realise value where
appropriate, to enhance returns. During 2016, we
have been constructing two 5MW solar sites, with
Newton Downs connected at the end of the year, and
Brynwhilach expecting to be connected before the
end of March 2017.
Good Energy successfully sold Wrotham Heath
pre construction to Trina Solar Group for a profit
of £0.5m in 2016, and agreed the sale of our 5MW
Oaklands solar site to Eneco UK Limited for £5.8m in
December 2016, with the transaction completing in
January 2017.
Oaklands was the first sale of a site fully constructed
and developed by Good Energy and clearly
showcased the capabilities of our generation team.
Good Energy will continue to provide management
services to Oaklands, and we retain an option to
purchase up to 50% of the site’s power.
Over the short to medium term, Good Energy will
continue to develop its wind assets in Cornwall and
Scotland, as well as to look to realise value from its
existing solar development portfolio.
Good Energy was pleased with the conclusions of
the Rt Hon Charles Hendry‘s independent review
into the feasibility and practicality of tidal lagoon
energy in the UK. The report concluded that tidal
lagoons have a vital role to play in powering UK
homes and businesses. Good Energy’s investment in
Swansea Bay Tidal Lagoon plc allows us to purchase
up to 10% of the output from the scheme, and we
look forward to the Government incorporating tidal
lagoons into their industrial and renewable strategies
in response to the 5th Carbon Budget.
Strategic Report 6 – 21
Chief Executive’s Review
17
Strategic ReportDirectors’ ReportFinancial Statements Research partnerships and innovation
development
Good Energy has a history of innovation.
In 2016, we continued this tradition with the launch
of Selectricty, the UK’s first peer to peer platform for
buying and selling renewable electricity, enabling
commercial customers and renewable generators
to trade electricity online themselves. Selectricity
commercialised following the successful trial in
late 2015 and early 2016 between Open Utility and
Good Energy.
In 2016, Good Energy signed a Memorandum of
Understanding with the UK clean fuel company, ITM
Power, and is supplying 100% certified renewable
electricity to one of ITM’s refuelling stations. We are
also working with the Smart Fintry Project to deliver
affordable sustainable energy to Fintry residents by
enabling the purchase of power directly from nearby
renewable energy generators.
As the UK energy market evolves, Good Energy will
continue to develop innovative partnerships and
projects to broaden our offering to customers.
Sustainable development goals
Good Energy is committed to serving all of its
stakeholders, fulfilling our responsibilities to
society and delivering sustainable returns to our
shareholders, while also ensuring that the Company
is a social and environmental force for good.
Like other progressive, values-driven businesses,
Good Energy has undertaken some early work
to consider the relevance of the United Nations
Sustainable Development Goals (SDGs). For
example, the Company has started to use the SDGs
to inform the evolution of the Good Energy brand
and to guide formal decision-making in the business.
Where Good Energy is considering doing something
new or differently, we believe the SDGs can be
a helpful reference point. Good Energy has also
started to test the SDGs as a framework for
external reporting as part of our most recent annual
submission to the Social Stock Exchange.
Outlook
2016 was focussed on investment in systems to
support the continued growth of the business,
maximising the value of the generation assets
and continuing to build capability in key areas of
the Company.
The end of 2016 and the beginning of 2017 have seen
price rises from a number of UK energy companies as
a result of upward pressure on wholesale, regulatory
and transportation costs.
In 2017 we will look to simplify our operating model,
deliver further efficiencies in cost to serve, grow the
supply business and reduce activity in our generation
business. This will be done by continuing our digital
journey with the full rollout of the Customer System,
streamlining processes enabling us to invest in
Smart and the areas where we see potential for
growth in an evolving marketplace.
Juliet Davenport
Chief Executive
27 March 2017
18
Chief Financial Officer’s Review
Financial performance overview
Good Energy has continued to deliver customer
meter growth, albeit at a slower level than in
previous years, as we focused on investing in new
systems to support future growth, maintaining
gross margins and realising value from its
generation portfolio.
It delivered a profit before tax of £1.4m, up £1.3m
on 2015 which was in line with market expectations.
Revenue grew by 41%, reflecting the addition of
Big Deal customers in the second half of 2015 and
continued growth in generation revenue. Underlying
customer growth was steady at 13%, and gross
margin remained strong at 30%. Total assets grew
by 10% reflecting the continued growth of the supply
business. The Company had cash balances of £6.3m
at the year end and borrowings were in line with 2015
levels at £61m.
Total administration costs (including depreciation
and amortisation) grew 27%, with growth in variable
and semi variable costs of 12%, investments for
growth of 6% and an increase in fixed overheads
of 9%.
Profit before tax of £1.4m was up £1.3m on 2015,
with strong growth in profitability of 35% in the
Supply Business.
Financial performance by segment
The Supply business delivered a profit before tax of
£5.0m in 2016, up by £1.3m from 2015. Revenue grew
by 41%, with gross margin down 1% to 28%. Overall
customer meter numbers grew by 13%, with the
underlying customer base (excluding the Big Deal)
growing at 16%, reflecting continued strong growth
in business customer volumes and an increase in the
market share of our Feed in Tariff customer meters.
Retention remained strong, as average annualised
churn for domestic customers was below 8.5%.
In the period from the end of October to the end
of November, we saw an exceptional level of
volatility in power prices, reflecting lower supply as a
consequence of the French nuclear generators being
taken out of action, and lower wind generation than
in previous years. Although we operate a prudent
hedging policy, these exceptional trading conditions
impacted the performance of the Supply business
in this period and, together with the strong growth
in lower margin business sales, contributed to the
reduction in gross margin.
The Supply business generated a positive cash flow
in 2016.
The Generation business delivered a loss before tax
of £2.2m, compared to a loss before tax of £0.6m
in 2015. This reflects lower wind output in 2016
than in 2015 and the removal of the benefit of levy
exemption certificates (LECs) from 1st August 2015,
which had a full year cost impact of £0.4m. Overall,
Generation revenue grew by 5%.
The Development business reported a loss before
tax of £0.6m, an improvement of £1.5m on 2015. The
results for 2016 included a profit from the sale of
Wrotham Heath of £0.5m and write offs of £0.2m.
The 2015 results included profit before tax of £0.1m
in relation to site sales, and a write-off of £0.6m for
sites no longer to be developed.
As a result of the strategic review undertaken during
2015, the Development team has been reduced in
size going forward to reflect the change in focus,
with a reduction in investment in solar development
anticipated in the future.
Financial position and financing
In 2016, we began the construction of two further
solar sites with one connecting in December 2016
and the other expected to be completed ahead of
the 31 March 2017 subsidy deadline. The sale of the
5MW Oaklands solar farm to Eneco UK Limited, with
the option to purchase 50% of the power, reflects
our strategic focus to optimise value from our
renewable asset portfolio.
In March 2016 we agreed an increase in our overdraft
facility with Lloyds Bank from £5.0m to £7.5m. This
had £0.7m drawn against it as at 31 December 2016,
but gives us flexibility to support the growth and
seasonality of the cash flows of the business.
A new loan facility was also agreed with RBS to
finance the investment in the new billing system. No
further drawdowns have been made against the long
term fixed rate funding facility.
Good Energy’s 4-year bond, issued in November
2013, is due to mature in November 2017. The
Company has the option to redeem this bond,
replace it with another bond or roll on the bond
for another 12 months, subject to any redemption
Strategic Report 6 – 21
Chief Financial Officer’s Review
19
Strategic ReportDirectors’ ReportFinancial Statements notices that may be received from bondholders, and
is currently reviewing the most appropriate option.
As a consequence of the existing bond’s terms
ending within the next twelve months, the facilities’
outstanding balance of £15.1m has been reclassified
as a current liability and the balance sheet, as a
result, shows a net current liability position of £3.4m
as at 31 December 2016, compared to a net current
asset position of £5.8m in 2015. The balance sheet is
expected to return to a net current asset position for
the year ended 31 December 2017.
In June 2016, we launched a share offer which raised
£3.1m gross, and was oversubscribed. This reflects
our continued commitment to encourage customer
ownership of the business. Following the share raise,
the yearend gearing ratio for the business is 71%
compared to 76% in 2015.
Good Energy continually reviews the funding
requirements for the business to ensure that it can
meet its strategic growth objectives with appropriate
funding products, taking into account the cost of
capital, duration and overall gearing levels.
In 2016, the Company implemented the first phase
of our Customer System, and commenced
investment in improving our digital capability. Good
Energy’s focus in 2017 is to complete the rollout
and full implementation of the Customer System
to provide a strong platform for customer growth,
improve customer experience and investigate
new revenue channels, as the UK energy market
continues to evolve.
Good Energy has seen significant growth in
customer meter numbers and financial scale over
the last five years, and has maintained its gross
margin and customer satisfaction throughout this
period. There are opportunities to deliver further
efficiencies in both our costs to serve, and our
overhead costs, by simplifying our processes and
structures, and this will be a strong focus for 2017.
This will provide us with a more efficient core
operating business, and create capacity for us to
invest in our Smart program and in opportunities for
growth in future revenue channels to support our
changing customer demands.
Dividends
The Board’s dividend policy is to ensure that there
is an underlying dividend cover of at least three
times in the Supply business and that any dividend
payment, and the amount thereof, is balanced
against the need to continually invest in the business
for its long term growth.
The Board is pleased to recommend a final dividend
of 2.3p per Ordinary Share.
Key financial
highlights
2016
2015
Movement
Revenue
£90.4m £64.3m
+£26.1m
Gross profit
£27.5m
£21.3m
+£6.2m
Operating
profit
Profit before
tax and
exceptional
items
£6.0m
£4.2m
+£1.8m
£1.4m
£0.1m
+£1.3m
Net debt
£52.2m £54.0m
-£1.8m
Basic earnings
per share
9.1p
-1.4p
+10.5p
Denise Cockrem
Chief Financial Officer
27 March 2017
20
Approval of Strategic Report
A report of the Group’s performance during the year,
and future developments, is given in the Chairman’s
Statement on pages 7 and 8, Chief Executive’s
Review on pages 16 to 18 and Chief Financial
Officers’ Review on pages 19 to 20.
These areas form the required elements of the
Strategic Report presented on pages 6 to 21, and
have been approved by the Board of Directors and
signed on its behalf by:
The Directors use a number of key performance
indicators to manage the business, which are
disclosed in the Strategy Review on pages 9 to 12.
Juliet Davenport
Chief Executive
27 March 2017
Strategic Report 6 – 21
Strategic Report
21
Strategic ReportDirectors’ ReportFinancial Statements Introducing the Good Energy Group PLC Board
Joined Board:
October 2012
Responsibilities:
Member of Audit &
Risk Committee
Member of Nominations &
Remuneration Committee
Appointed CEO:
2002
John Maltby – Non-Executive Chairman (Independent)
Juliet Davenport – Chief Executive Officer
John holds a number of roles in UK and international
companies including Chairman of the Swedish
bank BlueStep Bank, Non-Executive Director of
Bank of Ireland UK, and Non-Executive Director
and Chairman of Risk & Audit for Tandem Bank
plc. Previous roles include CEO of Williams & Glyn,
Senior Advisor to Corsair Capital, Group Director of
Commercial Banking at Lloyds Banking Group,
Group Chief Executive of Kensington Group plc and
several senior positions in the financial services
sector, including NatWest Group, Barclays Bank
and Abbey National.
Juliet started her career in renewable energy at
Energy for Sustainable Development Ltd (ESD) in
1995 and was appointed Executive Director of both
ESD (now CAMCO) and ESD Ventures Ltd in 1996.
Passionate about renewable energy and its potential
to impact on climate change, in 2013 she was
awarded the OBE for services to the sector. Juliet is
highly regarded in the renewable energy industry and
has held positions on many strategic and advisory
boards, including DECC’s Renewable Advisory Board,
OFGEM’s Environmental Advisory Committee,
Ministerial Smart Metering, and Regen SW. She is
also a council member of NERC.
Skills and Expertise: Has a wealth of experience
with small businesses and publicly listed companies
and a reputation for delivering growth, which is
invaluable to the Company as it continues its
development.
Skills and Expertise: Worked for a year at the
European Commission on European energy policy,
then at the European Parliament on carbon taxation
and holds a masters in environmental economics.
Appointed CFO:
May 2014
Joined Board:
September 2016
Denise Cockrem – Chief Financial Officer
David Brooks – Managing Director
Denise has held senior finance roles in FTSE 100
companies in the financial services sector including
Finance Director for RSA Insurance Group’s UK &
Western Europe region. She worked as Finance
Director for Direct Line Insurance, and her career
includes finance roles with Royal Bank of Scotland,
Barclays Bank and Ernst & Young. Denise is also
a Trustee on the Board of Macintyre, a charity
providing learning, support and care for more than
900 children and adults with learning disabilities.
She is a member of the CBI South West Council and
a Non-Executive Director of Skipton Building Society.
Skills and Expertise: A Chartered Accountant with an
MA in Law from Oxford, and broad experience in the
financial services sector over the last 20 years.
22
David joined the Company in September 2015
and is Managing Director of Good Energy’s supply
business. He was previously at AXA, as Managing
Director for the self-investor business and
Distribution Director for AXA Sunlife.
Skills and Expertise: Has extensive experience of
transforming business performance through his
leadership of both commercial strategy and his
development of people and organisations.
Joined Board:
November 2012
Responsibilities:
Member of Audit &
Risk Committee
Member of Nominations &
Remuneration Committee
Joined Board:
March 2008
Responsibilities:
Chairman of Audit & Risk
Committee
Francesca Ecsery – Non-Executive Director (Independent)
Rick Squires – Non-Executive Director (Independent)
Francesca is an experienced Non-Executive Director
with 23+ years’ experience in directing both blue chip
companies and start-ups in the digital, retail, FMCG,
leisure and travel industries. She is an investor in a
number of start-ups, acts as advisor in the leisure,
travel, retail and digital marketing sectors and
is a commercial coach to several entrepreneurs.
Francesca is also the founder and Director of
Advantage Portugal. Previously, Francesca worked
as Global Business Development Director and UK
General Manager at Cheapflights Media. Francesca
is a Director of Marshall Motor Holdings, Advantage
Portugal LLP, Foreign & Colonial Investment Trust
plc, Share plc, The Share Centre Limited, Sharefunds
Limited and VISTA (Logistik Holdings Ltd).
Rick holds a number of Non-Executive board
directorships of companies with investments in the
renewable energy sector, including Green Investment
Bank Financial Services, Milford Haven Port
Authority and Green Energy For Education Limited.
Until 2009, Rick was the Non-Executive Chairman of
Eclipse Energy Company Ltd, a UK-based privately
owned wind power company with a development
portfolio of approximately 250MW. Rick is also
the founder of PiEnergy Ltd providing consultancy
and management education services to the energy
sector. He has held senior commercial positions with
Royal Dutch Shell Group and InterGen, a US-based
power developer and producer.
Skills and Expertise: Has extensive experience
encompassing consultancy with McKinsey & Co,
marketing with PepsiCo, and general management in
a range of blue-chip travel companies.
Skills and Expertise: Has extensive Non-Executive
Director experience, and an overview of the
international energy sector with specific focus on
the development, construction and operation of
renewable energy assets.
Joined Board:
June 2000
Responsibilities:
Member of Noninations &
Remuneration Committee
Joined Board:
September 2016
Responsibilities:
Chair of Nominations &
Remuneration Committee
Martin Edwards – Non-Executive Director
Emma Tinker – Non-Executive Director (Independent)
Martin was appointed as a Director of Good Energy
Group at its formation. He was instrumental in taking
Delabole wind farm – the UK’s first commercial
wind farm – from concept to completion in the
1990s. Delabole wind farm was acquired by Good
Energy Group in 2002 and Martin continued to direct
all local operations, maintenance and contract
negotiations associated with it. He also played a key
role in implementing the £12 million redevelopment
of the site during 2010/11. Martin is also a Director of
Windelectric Ltd and Windelectric Management Ltd.
Emma is a private equity investment Director who
brings a wealth of investment experience. She is a
Director of numerous renewable energy companies,
established the renewable energy business at HG
Capital in 2002 and founded Asper Investment
Management in 2016 as the spin-out of that
business. She has been a Director for renewable
developers and independent power producers,
working across a range of renewable technologies.
Emma is also a Director of Gardeners’ Royalty
Benevolent Society.
Skills and Expertise: Has commercial awareness and
valuable knowledge of the renewable generation
business and key aspects of getting developments
completed.
Skills and Expertise: Has substantial commercial
experience spanning the entire lifecycle of
investments in energy businesses, and has worked
across a range of renewable technologies.
23
Strategic ReportDirectors’ ReportFinancial Statements
Our agreement with DONG
Energy will help us meet
ever-increasing demand for
100% renewable electricity
as our customer base
continues to grow
24
Directors’
Report
Directors’ Report 26 – 30
Corporate Governance Report 31 – 39
Directors’ Remuneration Report 40 – 47
25–47
25
Directors’ Report
The Directors submit their report, together with the audited consolidated
financial statements of the Good Energy Group of companies, for the year
ended 31 December 2016.
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.
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
Good Energy Group PLC is a public limited company
incorporated in the United Kingdom under the
Companies Act 1985. The Company is listed on the
Alternative Investment Market (AIM) of the London
Stock Exchange, is a founding member of the Social
Stock Exchange (SSE) and its shares have been
trading on the Social Impact segment of the NEX
Growth Market since 5 January 2016.
The Company’s registered office and principal
place of business is: Monkton Reach, Monkton Hill,
Chippenham, Wiltshire, SN15 1EE and the registered
number is 04000623.
Risk Management Approach
Good Energy recognises that effective risk
management is critical to enable it to meet its
strategic objectives.
The Company has a clear framework for identifying
and managing risk, both at an operational and
strategic level. Its risk identification and mitigation
processes have been designed to be responsive to
the changing environment in which it operates. The
impact of emerging risks on the Company’s business
model are also considered and used to make
informed decisions, including as to the delivery and
evolution of the Group’s strategy.
The Board’s review of internal control
The Board retains overall responsibility for the
Company’s risk management and internal
controls framework. While the Board reviews
the suitability of the internal controls annually,
responsibility for reviewing the effectiveness of
internal controls is delegated to the Audit and Risk
Management Committee.
The Audit and Risk function is responsible for
Good Energy’s risk management activities, and
for provision of its internal audit service. As such,
its activities include ensuring the regular review
of internal controls relating to key risks, reporting
on risk events to the Audit and Risk Management
Committee, and reviewing and testing the
effectiveness of internal controls through
audit reviews.
In 2015, the Audit and Risk function led a Group-wide
initiative to upgrade the control environment - the
Group’s Code of Conduct, a ‘Guiding Principles’
approach that is appropriate for a fast-growing
business. This helped to ensure that everyone who
works at Good Energy adheres to a way of working
together that reflects the Company’s ethos.
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.
26
The Guiding Principles provide a framework which
empowers all Good Energy employees to make
informed decisions that are in the best interests of
the Company, its customers and other stakeholders,
reflect the environment in which the Company
operates, mitigates risk, and provides clarity on
where advice can be sought. The Guiding
Principles demonstrate the Group’s commitment
to working with honesty, respect and transparency,
and include policies relating to, amongst other
things, customer service, data handling, health &
safety, approvals & authorities, procurement, and
corporate responsibility.
Principal risks and uncertainties
Political risk: Under the Cameron government
there was a systematic removal of renewable
support and increasing support for nuclear, gas and
fracking which put the Company at odds with the
government agenda. Further withdrawals of support
could lead to operating conditions that might require
increased capital expenditure, increased operating
costs or otherwise hinder the development of the
renewable energy industry.
Parliament has since approved the 5th carbon
budget – this means we have a trajectory out to
2030 for emissions (this will impact energy as well
as other industries e.g. transport).
The 2016 Autumn Statement was a low-key event,
particularly from an energy point of view. Climate
change and renewable energy were not mentioned
at all.
Following the decision to exit the EU, the UK remains
in a period of uncertainty which may continue for at
least the next two years. However, the Company is
adaptable and well placed to meet any regulatory
changes. “Brexit” may lead to higher energy prices for
UK households and businesses, as a possible decline
in the value of sterling and new trade tariffs could
make imported energy relatively more expensive.
However, this could have a positive impact on UK
renewables, the costs of which would become
increasingly competitive as the costs of imported
energy rise.
The election of Donald Trump in the US, and the
appointments made to the new administration,
raise questions about the future of international
environmental agreements, including the 2015
Paris Agreement. It is possible that other countries,
including the UK, could react to the US’ new stance
by lowering their own ambitions, although equally
possible that they continue to honour
previous commitments.
Good Energy has developed strong relationships with
stakeholders including Department for Business,
Energy and Industrial Strategy (BEIS), HM Treasury
(HMT), Department for Communities and Local
Government, OFGEM (Office of Gas and Electricity
Markets) and a range of other stakeholders including
think-tanks, academics, opposition parties etc.
The Company has continued its efforts to influence
policy makers through data driven research and
proposals, responding to relevant consultations
and working through trade associations. The
Company has also sought to diversify its portfolio
where possible, for example through its investment
in Tidal Lagoon, Swansea Bay: a scheme which
received independent backing from a government-
commissioned review in January 2017.
Regulatory risk: There have been a significant
number of changes to the regulations governing
the energy industry and businesses generally
(e.g. SMART, Nexus, CMA, EU General Data
Protection Regulation etc.). These regulations
require the Company to make various changes
to its procedures within set timelines, and have
already led and will continue to lead to the Company
incurring additional time and cost in order to ensure
compliance with these new regulations. A significant
volume of regulatory change is a risk to the Company
as it can divert time and resource away from
growth initiatives as well as the risk of not meeting
regulatory deadlines.
Some targeted investment has been made to
strengthen the regulatory and compliance function
and has enabled the Company to respond effectively
to the volume of change, thereby reducing the risk.
Wholesale market and price volatility: Margin from
energy sales may be affected by fluctuations in price
of wholesale gas and electricity and the associated
costs with buying in any volatile marketplace.
This impacts the price the Company can offer to
customers and could result in a significant loss of
customers if other energy suppliers were able to
absorb more of thse costs before needing to alter
customer prices. The fourth quarter of 2016 saw
greater volatility in the market, of a nature that the
Company could not fully mitigate through existing
counterparty relationships.
This risk is mitigated partly through the benefits of
its vertical integration, and partly via the Company’s
forward-looking and prudent hedging policy.
Directors’ Report 25 – 47
Directors’ Report
27
Strategic ReportDirectors’ ReportFinancial Statements The Company is also diversifying its portfolio of
counterparty relationships.
Weather, forecasting demand and generation: On
the supply side, temperature drives demand and
customer behaviour. From a generation perspective,
the annual variability of wind speeds and solar
radiation can result in year-to-year fluctuations. Any
material reduction could have an adverse impact
on financial results and, potentially, the future
prospects for the business.
Accurate forecasting is key, in the long term, to
informed hedging and thus mitigating against
adverse market movements, and in the short term
to avoiding imbalance risk. Investment in forecasting
systems has provided Good Energy with improved
visibility and improved forecasting performance.
Cyber-attack: As with many businesses, a
successful cyber-attack on Good Energy’s network
could result in the Company being unable to deliver
service to its customers, potentially damaging its
reputation, and leading to consequential customer
and revenue loss. It could also lead to the imposition
of financial penalties.
Good Energy continually assesses its security
policies, standards and procedures and adjusts them
so they are proportionate to the threat profile the
Company faces.
Data management: Good Energy receives,
processes and stores confidential, personal and
commercially sensitive information. Failure to
protect or correctly use this data could result in
unintentional loss of, or unauthorised access to,
customer data which could lead to enforcement
action being taken and/or the imposition of financial
penalties, and could adversely affect the reputation
of the Company and the trust of our customers,
employees, shareholders, bondholders and
other stakeholders.
An organisation wide project is underway to
implement the changes required to be compliant
against the new EU General Data Protection
Regulations which come into force on 25th May
2018. In addition to personal data, Good Energy
holds commercially sensitive information in terms
of energy trading, financial statements and
investment records.
Good Energy takes the security of all personal data
very seriously and manages the risk in a number of
ways to ensure our customer and employee data is
protected. There are a number of controls in place
to minimise the risks, such as system access rights,
mandatory training for all employees upon induction
with periodic refresher training appropriate to the
employee’s role. A schedule of assurance reviews and
internal audit is planned on a yearly cycle to test our
processes, security measures and general awareness
of data protection. Our Guiding Principles set the
requirements for all employees and contractors which
include consequences for non-adherence.
Financial risk management: This has been
considered within note 3.1 in the Notes to the
Financial Statements.
Capital structure
The Group is financed through both equity share
capital and debt instruments.
As at 31 December 2016, the Company’s issued share
capital was 16,484,703 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 104.
The Company does not have shareholder authority
to acquire its own shares. The Good Energy Group
PLC EBT (adminstered by Clarke Willmott Trust
Corporation Limited) holds 495,739 (2015: 521,989)
Ordinary Shares of the Company in trust for current
and 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 2016, the trust disposed of 26,250 (2015:
197,000) Ordinary Shares as a result of exercised
options and the long service awards of shares made
to employees.
28
Significant shareholders
Significant shareholders holding over 3% of the issued share capital as at 31 December 2016, other than any
Directors and their family as defined in the AIM rules, are detailed below:
Shareholder
No. shares held as at 31
December 2016
%age of issued
share capital
Ecotricity Group Limited
4,169,948
25.30
Schroder & Co
Good Energy Group PLC EBT
743,874
495,739
4.51
3.01
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 31. 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 Good
Energy Group plc are 1 :
No. shares as at 31
December 2016
%age of issued
share capital
No. shares as at 31
December 2015
%age of issued
share capital
Martin Edwards 2
669,827
4.06
686,827
Juliet Davenport 3
569,086
3.45
592,810
4.47
3.96
John Maltby 4
122,703
0.74
120,000
0.80
Richard Squires 5
39,759
0.24
36,000
Francesca Ecsery 4, 6
3,328
0.02
2,400
Denise Cockrem 4
2,703
0.02
Emma Tinker 4, 6
1,461
0.01
-
-
0.24
0.02
-
-
Notes
1. Certain of the Directors hold share options for which details are set out in the Directors’ Remuneration Report (on pages 46 and 47).
2. In addition to Martin Edwards’ shareholding noted above, his father Peter Dixon Edwards holds 123,450 Ordinary Shares as trustee of a
discretionary trust under which Martin is one of the potential beneficiaries. Martin previously held 17,000 Ordinary Shares on behalf of the
Good Energy Group PLC EBT. These shares are now held by the Good Energy Group PLC EBT.
3. Juliet Davenport holds 524,810 Ordinary Shares in the Company in her own name. Her husband owns 43,000 Ordinary Shares. One daughter
owns 638 Ordinary Shares, and Juliet holds a further 638 Ordinary Shares on behalf of another daughter.
4. John Maltby, Francesca Ecsery, Denise Cockrem and Emma Tinker purchased Ordinary Shares in the Company as a result of their participation
in the share offer in June 2016.
5. Richard Squires holds 37,046 Ordinary Shares in the Company. His shareholding increased during the year as a result of participation in the
scrip dividend. His wife holds 2,713 Ordinary Shares as a result of her participation in the share offer in June 2016 and the scrip dividend.
6. Francesca Ecsery and Emma Tinker’s shareholdings increased as a result of their participation in the scrip dividend scheme.
Directors’ Report 25 – 47
Directors’ Report
29
Strategic ReportDirectors’ ReportFinancial Statements Directors’ Indemnity Statement
Future developments
As permitted by the Company’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
and Officers.
Financial instruments
The Group’s financial instruments include bank loans
and other borrowings, 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 Note 23 in the
Financial Statements.
Details of future developments are given in the Chief
Executive’s Review on pages 16 to 18.
Research and development
Given the nature of the Group’s activities it does not
carry out any material research and development
work. However, the Company does invest in small-
scale R&D projects, often grant-funded, as it believes
innovation is key to the future development of its
business proposition.
Dividends
Details relating to the proposed 2016 final dividend
are set out in the Chairman’s Statement on page 8.
By order of the Board
Stephen Rosser
Company Secretary
27 March 2017
30
Corporate Governance Report
The Group recognises the importance of good
corporate governance practices and seeks to embed
good governance at the heart of the business.
Although the Company is not required to comply
with the UK Corporate Governance Code (the Code)
since it is AIM listed, the Directors have decided to
provide certain corporate governance disclosures
that would be required of a fully listed company.
The Group considers the Code as a benchmark for
best practice and seeks, where it considers it to be
appropriate, to comply with the Code.
The Board has implemented a number of
governance enhancements through the period, as
more particularly described in this section.
The Board and its committees
Board changes
The Board was pleased to announce the
appointment during the year of Emma Tinker
as Non-Executive Director. Emma’s skills were
Board of Directors
specifically sought out following a review of the
composition of the Board and the balance of
skills and experience of the Directors during the
2015 Board Evaluation process. Emma is a private
equity investment director who brings a wealth of
investment and commercial experience spanning the
entire lifecycle of investments in energy businesses.
The Board appointed a recruitment consultant to
assist with the recruitment of Emma Tinker as an
independent Non-Executive Director.
David Brooks joined Good Energy in 2015 with
extensive experience in transforming business
performance. The Board welcomed David Brooks
as Managing Director, Supply during the year. As
described earlier in this report, streamlining Good
Energy’s operating model will result in changes to
the senior leadership team and will mean that David
will leave Good Energy on April 7th.
The Board comprises the following individuals:
Executive Directors
Non-Executive Directors
Juliet Davenport
Chief Executive
John Maltby 1
Denise Cockrem
Chief Financial Officer
Richard Squires 1
Non-executive Chairman
of the Board; Member of
Audit & Risk Committee;
Member of Nominations &
Remuneration Committee
Chair of Audit & Risk
Committee
David Brooks 2
Managing Director,
Supply
Martin Edwards
Member of Nominations &
Remuneration Committee
Francesca Ecsery 1,2
Member of Audit & Risk
Committee, Member
of Nominations &
Remuneration Committee
Emma Tinker ¹
Chair of Nominations &
Remuneration Committee
Notes
1. Independent Non-Executive Directors.
2. Will leave Board during 2017
Directors’ Report 25 – 47
Corporate Governance Report
31
Strategic ReportDirectors’ ReportFinancial Statements Independence of the Board
The Chairman was independent upon appointment
to the Board in October 2012. All of the Board’s
Non-Executive Directors are independent with the
exception of Martin Edwards, who has served as
a Director for more than nine years, having been
appointed to the Board in June 2000.
The Board considers Richard Squires, who holds
75,000 share options in the Company, to be
independent. The share options were issued to
Richard in March 2012, before the Company listed
Board and Committee meetings and attendance
on AIM. These options were disclosed as part of
the AIM listing and have also been reported in the
Annual Report & Accounts each year since they were
issued. Since the Company listed on AIM, Richard
has purchased shares in the Company himself.
The share options were granted at market value as
part of Richard’s appointment as interim Chairman
and represented the most effective method of
incentivising performance aligned to the interests of
the Company and shareholders.
Board
Audit and Risk
Committee
Nominations and
Remuneration Committee
Executive Directors
Juliet Davenport 3
Denise Cockrem 3
David Brooks 1, 3
Non-Executive Directors
Francesca Ecsery
Martin Edwards
John Maltby
Richard Squires 2
Emma Tinker 1
Notes
1. Appointed 2 September 2016.
8/8
8/8
3/3
8/8
8/8
8/8
7/8
3/3
-
-
-
4/4
-
4/4
3/4
-
-
-
-
3/3
3/3
3/3
-
2/2
2. Richard Squires was unable to attend the Board and subsequent Audit Committee meeting due to family illness.
3. The Executive Directors are not members of either of the Committees, and attend by invitation only. As such, their attendance at Committee
meetings is not noted in this table.
32
Operations of the Board
The roles of Chief Executive and Chairman have
always been split, with the Chairman operating in
a Non-Executive capacity. The Chief Executive is
responsible for the day-to-day management and
running of the business and is supported by an
Executive team which during the year included a
Chief Financial Officer, Managing Director - Supply,
Director of Trading & Origination, Director of People
& Culture, General Counsel & Company Secretary,
IT and Transformation Director and Customer
Service Director.
Details of the number of scheduled Board meetings
and attendance of Directors is set out in the table
opposite. 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 (five years) plans.
In addition, it is responsible for matters relating to
employee recruitment and remuneration, strategy,
health and safety and other specific subjects.
Where relevant, members of the Executive team
and other senior leaders within the business attend
Board and Committee discussions. Members of the
Board also engage with members of the Executive
team and other senior leaders directly on relevant
initiatives. During 2016, the Board hosted a number
of evening events, particularly where Board and
Committee meetings spanned consecutive days.
Those attending any of the Board or Committee
meetings on those days were invited to participate,
and attendance was high.
In addition, the Board or relevant Committees held
regular informal discussions on a variety of topics
to consider impacts of macro-economic events
and provide guidance and insight to support the
Company in delivering its objectives. The Board
conducts an off-site strategy discussion at least
annually, at which all Board members and all of the
Executive team are present.
Board packs are generally circulated one week ahead
of scheduled Board and/or Committee meetings to
give Directors adequate time to review information
and prepare. The Chairman and Non-Executive
Directors regularly convene briefing sessions in
advance of scheduled Board and Committee
meetings, and de-brief afterwards.
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 for each month 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.
The Board has a formal list of Matters Reserved for
the Board, which is reviewed and, if required, updated
annually by the Board. During the year, approximately
half of the matters on this list were considered by
the Board. There is a formal Delegated Authorities
policy incorporated within the Guiding Principles
which includes a detailed authorisation matrix
covering financial limits and approvals needed when
conducting business on behalf of the Company, as
well as those business decisions that need to be
approved by the Board.
The Board has access to the services of the Company
Secretary and external advisers as necessary.
Board Performance Evaluation
The Board is committed to continually improving
its performance.
During 2015, the Board implemented an annual board
performance evaluation. Evaluations are carried out
internally, and the Board is reviewing the potential
benefits of introducing periodic externally facilitated
reviews. For internal reviews, Board members and
other regular Board attendees respond to a detailed
questionnaire. Board members are also interviewed.
In 2015, the Chairman co-ordinated the evaluation
of the Board, and the Chairman of the Audit & Risk
Committee co-ordinated the evaluation of the
Chairman. In 2016, the Company Secretary collated
and analysed questionnaire responses and the
Chairman discussed feedback with individual Board
members as appropriate.
Non-Executive Directors meet without the presence
of Executive Directors to evaluate the performance of
the Executive Directors. The Chairman’s performance
is reviewed by the Non-Executive Directors. The time
commitment required from Non-Executive Directors
is reviewed as part of the annual performance
evaluation.
Directors’ Report 25 – 47
Corporate Governance Report
33
Strategic ReportDirectors’ ReportFinancial Statements Areas for improvement and/or key objectives for the
Board are identified and discussed, including the
training and development needs of the Directors,
and objectives for the forthcoming financial year are
agreed and set. The table below sets out certain key
objectives set during the 2015 evaluation process and
how those objectives were achieved during 2016.
The Board is discussing the insights gained through
the 2016 evaluation process and corresponding
objectives for 2017. Themes include: (i) ensuring that
the Board is able to draw upon an effective balance
of skills and experience to deliver the Company’s
strategic objectives, (ii) supporting the delivery
of strategic objectives through clear and effective
prioritisation of investment and resources, (iii)
2016 Objectives
2016 Achievements
Supplement the Board’s expertise through
appointment of an independent Non-Executive
Director with corporate finance experience
Emma Tinker was appointed as independent Non-
Executive Director in September 2016.
Review Chairmanship of all Board Committees
Ensure all Board and Committee Terms of
Reference are up to date and fit for purpose
Review Board appointment processes and consider
establishment of Nominations Committee
Improve consistency of the Company’s
remuneration for Executive and Non-Executive
Directors and improve clarity and transparency of
remuneration for Executive Directors
Following the review, Emma Tinker succeeded Martin
Edwards as Chair of the Remuneration Committee in
September 2016.
The Board adopted new Terms of Reference in the
first quarter of 2016, including an up to date list of
Matters Reserved for the Board.
The existing Terms of Reference for the Audit & Risk
Committee were reviewed and remain up to date
and fit for purpose.
The Board adopted updated Terms of Reference for
the Remuneration Committee in the first quarter of
2016.
As an intermediate step, the Board resolved to
expand the scope of the existing Remuneration
Committee to include the functions of a
Nominations Committee. New Terms of
Reference for the dual-purpose Nominations and
Remuneration Committee were adopted during the
final quarter of 2016.
Non-Executive Director fees have been calibrated
against an external benchmark and changes
implemented.
Previous bonus and incentive schemes for Executive
Directors were replaced with a new bonus structure
and long-term incentive plan, as detailed in the
Directors’ Remuneration Report .
Increase participation of senior leaders from
across the business in Board proceedings wherever
relevant and appropriate
Members of the Executive team and other senior
leaders across the business regularly present directly
to the Board or relevant Committee. Informal events
also took place throughout the year.
34
continuing to enhance the Company’s approach to
corporate governance, including whether there may
be a requirement to appoint a senior independent
director, and (iv) improving transparency of the
corporate governance improvements the Board is
pursuing. The Board will be pleased to report further
developments in due course.
business, having due consideration for the benefits
of diversity, and support the Group in developing
appropriate succession plans to meet its needs. The
Board remains focussed on gender diversity across
the organisation and notes in particular the 1:1 ratio
of women and men amongst Board Directors and
the Executive team.
The Nominations and Remuneration Committee
The members of the Nominations and Remuneration
Committee are Emma Tinker (Chair), John Maltby,
Francesca Ecsery and Martin Edwards. Emma Tinker
was appointed as Chair of the Committee on 2
September 2016 and succeeds Martin Edwards, who
remains a member of the Committee.
Details of the number of Committee meetings and
the attendance of Committee members during the
year ended 31 December 2016 are set out in the table
on page 32.
Following the appointment of Emma Tinker and
David Brooks to the Board during the year, the Board
recognised the need to establish a Nominations
Committee to deal specifically with matters such
as succession planning, and the recruitment and
appointment of new Directors. The members of
the Nominations Committee being the same as
the members of the Remuneration Committee,
the Board decided to form one Committee
responsible for dealing with both Nominations and
Remuneration, with formal Terms of Reference for
this Committee clearly setting out separately the
duties relating to Nominations and Remuneration.
This change to the Remuneration Committee was
established during the year.
The primary duty of the Nominations and
Remuneration Committee is to ensure there is a
formal, rigorous and transparent process for the
appointment of new Directors to the Board, that
the Group considers and develops appropriate
succession plans, and to determine the Group’s
approach 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.
Nominations
The Committee will keep under review the
composition of the Board, the mix of skills and
experience of the Directors and the needs of the
The Committee is responsible for reviewing the
time commitments of each Director both prior to
all appointments and annually, as part of the Board
Evaluation process, to ensure that all Directors
devote sufficient time to the Company to discharge
their duties effectively.
Remuneration
Further details of the work of the Nominations and
Remuneration Committee during the year in relation
to Company’s remuneration policy are set out in the
Directors’ Remuneration Report on pages 40 to 47.
Audit and Risk Management Committee
The members of the Audit and Risk Management
Committee are Richard Squires (Chair), John Maltby
and Francesca Ecsery. John Maltby is considered
to have recent, relevant financial experience. The
Chief Executive and Chief Financial Officer attend
meetings of the Committee by invitation only. Details
of the number of meetings held during the year and
attendance of Committee members are set out in
the table on page 32.
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 the
audit process.
Directors’ Report 25 – 47
Corporate Governance Report
35
Strategic ReportDirectors’ ReportFinancial Statements During the year, Good Energy announced that its partnership with the
National Trust would continue for a further two years.
Risk management and internal controls
Whistleblowing Policy
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 controls is
designed to manage, rather than eliminate, the risk
of failure to achieve business objectives.
Internal audit function
The Group’s whistleblowing policy is supported by a
clear process, which includes a secure, independent
third party helpline, through which any person,
including employees, consultants, contractors,
interns, casual or agency workers, may raise
concerns about wrong doing, poor practices and/
or dangers in relation to the Company’s business
dealings or activities, including bribery, fraud (or
other criminal activity), miscarriages of justice,
health and safety risks, damage to the environment
and any breach of legal or professional obligations.
The Company recognised the need to have an
internal audit function in 2014, and appointed a Head
of Internal Risk and Audit who reports directly to the
Chief Financial Officer.
The Whistleblowing Policy is reviewed annually by
the Audit and Risk Management Committee. Any
whistleblowing incidents and their outcomes are
reported to the Committee. No reports were made
during 2016.
The Company’s internal audit function seeks to
build on initiatives such as the Company’s Guiding
Principles, which were designed to enhance the
control environment. Reporting into the Audit and
Risk Management Committee, the function has
carried out audit activity to provide assurance that
key risks are being identified and mitigated, and
associated controls are operating effectively.
36
Referral Arrangements
The Company has operated and continues to
operate referral arrangements with certain political
parties. It considers these to be commercial
arrangements, with a referral payment made for
each customer referred to Good Energy. However,
the Companies Act 2006 definitions of the making
of political donations or the incurring of political
expenditure are capable of a wide interpretation. In
the interests of transparency, the Company obtained
shareholder approval for the referral arrangements
at its Annual General Meetings in 2015 and 2016,
and anticipates requesting that authorisation be
refreshed at the Annual General Meeting in 2017.
Going concern
• select suitable accounting policies and then apply
them consistently;
• state whether applicable IFRSs as adopted by
the European Union have been followed for the
Group financial statements and IFRSs as adopted
by the European Union have been followed for
the Company financial statements, subject to any
material departures disclosed and explained in the
financial statements;
• make judgements and accounting estimates that
are reasonable and prudent; and
• prepare the financial statements on the going
concern basis unless it is inappropriate to presume
that the Group and parent company will continue
in business.
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.
Consideration has also been given to the net current
liabilities position as at 31 December 2016, as set out
on pages 19 to 20 and in Note 2.2 to the Financial
Statements. 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 2016 financial
statements. Further details on this can be found in
Note 2.2 to the Financial Statements.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show
and explain the Group and parent company’s
transactions and disclose with reasonable accuracy
at any time the financial position of the Group and
parent company and enable them to ensure that the
financial statements comply with the Companies
Act 2006 and, as regards the Group financial
statements, Article 4 of the IAS Regulation.
The Directors are also responsible for safeguarding
the assets of the Group and parent company and
hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
Directors’ responsibilities statement
The Directors are responsible for preparing the
Annual Report and the financial statements in
accordance with applicable law and regulation.
The Directors of the ultimate parent company are
responsible for the maintenance and integrity of the
ultimate parent company’s website. Legislation in
the United Kingdom governing the preparation and
dissemination of financial statements may differ
from legislation in other jurisdictions.
Company law requires the Directors to prepare
financial statements for each financial year.
Under that law the Directors have prepared the
Group financial statements in accordance with
International Financial Reporting Standards (IFRSs)
as adopted by the European Union 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 parent company and of the profit or loss
of the Group and parent company for that period. In
preparing the financial statements, the Directors are
required to:
The Directors consider that the Annual Report
and Accounts, taken as a whole, is fair, balanced
and understandable and provides the information
necessary for shareholders to assess the Group and
parent company’s performance, business model and
strategy.
Each of the Directors, whose names and functions
are listed in the Directors’ report confirm that, to the
best of their knowledge:
• the parent company financial statements, which
have been prepared in accordance with IFRSs as
adopted by the European Union, give a true and
fair view of the assets, liabilities, financial position
and result of the Company;
Directors’ Report 25 – 47
Corporate Governance Report
37
Strategic ReportDirectors’ ReportFinancial Statements • the Group financial statements, which have been
prepared in accordance with IFRSs as adopted by
the European Union, give a true and fair view of the
assets, liabilities, financial position and profit of
the Group; and
their cost, reviewing whether the auditors believe
there are any relationships that may affect their
independence and obtaining written confirmation
from the auditors that they are independent.
• the Directors’ Report includes a fair review of the
development and performance of the business
and the position of the Group and parent
company, together with a description of the
principal risks and uncertainties.
In the case of each Director in office at the date the
Directors’ Report is approved:
For the financial year ended 31 December 2016, the
Committee has conducted its review of the auditors’
independence and concluded that no conflict of
interest exists between PricewaterhouseCoopers
LLP audit and non-audit work, and that their
involvement in non-audit matters, which mainly
comprised advice in respect of the Company’s
Performance Share Plan, was the most effective
way of conducting the Company’s business during
the year.
•
so far as the Director is aware, there is no relevant
audit information of which the Group and parent
company’s auditors are unaware; and
Auditor appointment policy
• they have taken all the steps that they ought
to have taken as a Director in order to make
themselves aware of any relevant audit
information and to establish that the Group and
parent company’s auditors are aware of that
information.
Disclosure of Information to Auditors
So far as each Director is aware, there is no relevant
audit information of which the Company’s auditors
are unaware, and each Director has taken all
the steps that he/she ought to have taken as a
Director in order to make him/herself aware of any
relevant audit information and to establish that the
Company’s auditors are aware of that information.
Audit fees
The Audit and Risk Management Committee
has reviewed the remuneration received by
PricewaterhouseCoopers LLP for non-audit work
conducted during the year. The fees for non-audit
work were lower than the audit fee. For further
details regarding fees paid, see note 6 to the
financial statements on page 77.
Auditor independence
The Audit and Risk Management Committee
monitors the Company’s safeguards against
compromising the objectivity and independence of
the external auditors by performing an annual review
of non-audit services provided to the Group and
The Audit and Risk Management Committee has
reviewed its policy for awarding non-audit work.
The Company has used PricewaterhouseCoopers
LLP for advice in relation to the design and
implementation of the new Performance Share
Plan which was implented during the year. The
Committee considered whether this constituted a
threat to independence and confirmed that it was
comfortable that there were appropriate safeguards
in place. The Committee will consider whether to
re-tender the audit after a five year period, or earlier
if appropriate.
Reappointment of Auditors
PricewaterhouseCoopers LLP acted as auditors for
the financial year to 31 December 2016. A resolution
to reappoint PricewaterhouseCoopers LLP as
auditors will be proposed at the Annual General
Meeting.
Communications with Shareholders
The Company engages with institutional
shareholders via investor road shows which are
held twice a year, after release of the Company’s
interim and full year results. Meetings are held with
current and prospective shareholders, seeking their
input as to what initiatives they wish to hear more
about and gathering feedback as to what additional
information they would like the Company to provide
and what they would like to see the Company
38
do. In addition to these meetings, the Company’s
brokers provide feedback to the Company from any
institutional investors who use the brokers’ services
to buy or sell shares in the Company.
A large proportion of the Company’s shareholder
base is comprised of private shareholders, many of
whom are customers of the Company. The Company
takes steps to ensure that communications with
private shareholders are effective and appropriate
for that group. Following a survey of bondholders
and customers, the results of which indicated that
there was high demand to invest further in the
Company, the Company conducted a share offer in
June 2016 for which take-up was oversubscribed.
The Company is mindful of AIM Rules, MIFID and
Market Abuse Regulations when communicating
with its shareholders.
differences are valued creates a more productive,
innovative and effective organisation. Consultation
with employees or their representatives has
continued at all levels, with the aim of ensuring
that views are taken into account when decisions
are made that are likely to affect their interests
and that all employees are aware of the financial
and economic performance of the business.
Communication with all employees continues
through a variety of mechanisms, including regular
team briefs and twice-yearly off-site all-company
meetings. A network of Company champions was
established during 2015 to encourage grassroots
involvement and has made a significant contribution
to all aspects of working at Good Energy during
the year.
Further details relating to employees are set out in
the Corporate Responsibility report on pages 13 to 14.
Employees
By order of the Board
The Group’s employment policies follow best
practice based on equal opportunities for all
employees, irrespective of race, gender, nationality,
colour, sexual orientation, disability, marital status,
religion or age. All decisions relating to employment
are objective, free from bias and based upon work
criteria and individual merit. The Company operates
on the principle that a workplace where people’s
Stephen Rosser
Company Secretary
27 March 2017
Directors’ Report 25 – 47
Corporate Governance Report
39
Strategic ReportDirectors’ ReportFinancial Statements 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 2016. 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.
Following a review of the Company’s remuneration
policy, the Remuneration Committee determined
that the existing bonus and share-based incentive
schemes should be replaced with new schemes
that align with current best practice and which
are designed to motivate and incentivise key
talent to assist the Company in achieving its
strategic aims. The Remuneration Committee
conducted a tender process and, subsequently,
appointed PricewaterhouseCoopers LLP as external
remuneration consultant to assist with the review
of the Company’s remuneration policy and the
implementation of a new share-based incentive
scheme for Executive Directors.
The Company consulted with its largest ten
shareholders with regard to the implementation of:
•
a revised Annual Bonus Plan that encompasses
both financial and non-financial annual
performance targets, details of which are set out
on page 43, and
•
a new Performance Share Plan for Executive
Directors and members of the senior management
team, details of which are set out on page 45.
Remuneration Committee and policy
Details of the Company’s Remuneration Committee
are set out on page 35.
The Remuneration Committee has designed 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 of its employees, appropriate to
the business environment, geographical location and
strategic aims of the Company.
The Group aims to align the interests of shareholders
with those of Executive 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
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 opposite. 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. Following the publication in
August 2015 of HMRC’s express confirmation of the
travel rules that apply to Non-Executive Directors,
the Company reimburses Non-Executive Directors’
travel expenses between home and the Company’s
Head Office. The key terms of the Non-Executives
Directors’ appointments are set out in the
table below.
The Committee carried out a Non-Executive Director
fees benchmarking exercise during the year, as a
result of which the Committee determined that
Non-Executive Director fees should be updated and
aligned. With effect from 1 April 2016, the annual
fee payable to the Chairman shall be £45,000, to
all Non-Executive Directors the annual fee shall be
£25,000, and an additional fee of £5,000 shall be
payable for chairing a Committee.
Executive salaries were also benchmarked during the
year against AIM company data, adjusted to reflect
the size of the Company. Juliet Davenport’s salary
was increased by 4.5% as a result, which increase
was broadly in line with pay rises across the Group.
40
Name
Position
Date of contract
Notice period
Annual Salary /
Fee (£)
Executive Directors
Juliet Davenport
Chief Executive
02 August 2007
9 months
200,000
Denise Cockrem
Chief Financial Officer
22 January 2014
6 months
182,000
David Brooks
Managing Director
02 September 2016
6 months
175,000
Non-Executive Directors
John Maltby
15 October 2012
3 months
45,000
Richard Squires
28 June 2011
3 months
30,000
Martin Edwards
07 May 2008
3 months
25,000
Francesca Ecsery
15 November 2012
3 months
25,000
Emma Tinker
02 September 2016
3 months
30,000
Directors’ Report 25 – 47
Directors’ Remuneration Report
41
Strategic ReportDirectors’ ReportFinancial Statements Salaries/fees, annual bonus and benefits (Audited)
Salary / fee
2016 (£)
Pension
2016 (£)
Benefits in
kind 2016
(£)
Annual Bonus
2016 (£)
Total
2016 (£)
Total
2015 (£)
Executive Directors
Juliet Davenport
198,942
25,000
12,009
42,963
278,914
222,740
Denise Cockrem
182,000
18,200
11,592
40,950
252,742
211,957
David Brooks ¹
58,333
5,833
4,043
12,000
80,209
-
Total
439,275
49,033
27,644
95,913
611,865
434,697
Non-Executive Directors
John Maltby
43,950
Richard Squires
29,513
Martin Edwards
24,750
Francesca Ecsery
23,977
Emma Tinker ¹, 2
21,000
Total
143,190
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
43,950
41,303
29,513
28,050
24,750
24,000
23,977
20,910
21,000
-
143,190
114,263
Overall total
582,465
49,033
27,644
95,913
755,055 548,960
Notes
1. Pro-rated for period of directorship. Joined the Board on 2 September 2016
2. Includes an additional fee for work carried out by Emma Tinker to assist the Corporate Finance team with asset funding options.
42
Annual Bonus scheme
Operation of the scheme
In previous years, the Company has operated a
bonus pool that was generated from profits and
distributed based on grade and performance. The
Remuneration Committee determined that a new
bonus scheme should be implemented to better
suit the size and culture of the Company, and ensure
that performance against the Company’s key
performance indicators is rewarded. The new annual
bonus scheme, which operates across the Group for
employees at all levels, was implemented during the
year and has effect in respect of the year ended 31
December 2016.
All bonuses under the new scheme are individually
capped. A maximum potential bonus of 75% of
Executive Directors’ salary is payable in relation
to the Company’s performance against four key
performance metrics. The performance metrics
and their relative weightings are shown in the
table below.
Maximum bonus will only be payable in the event
that stretch targets for all four of these performance
metrics are met. Performance against the targets
is measured on a sliding scale basis between the
achievement of threshold, on-target and stretch
targets, starting with one third of the potential
bonus being payable where threshold targets are
met. No bonus will be payable unless the Group’s
profit before tax meets the threshold targets unless
the Remuneration Committee, in its discretion,
determines otherwise.
The Committee also retains discretion, under the
bonus scheme rules, to adjust any payments in line
with individual performance.
Individual performance targets are set annually and
reviewed at the end of the relevant financial year,
and annual targets for each of the four Company
performance metrics will be set by the Remuneration
Committee prior to commencement of each
financial year.
The targets for 2017 are deemed to be commercially
sensitive and are not therefore disclosed. However,
retrospective disclosure of performance against
targets will be provided in the Company’s
Remuneration Report for the year ending 31
December 2017.
Measure
Strategic objective
Weighting
Group profit before tax
Deliver profit growth
60%
Absolute net promoter score
Maintain customer satisfaction
ratings
20%
Employee engagement
Attract and retain employees
with the right skills, knowledge
and mind-set to help deliver the
Company’s growth plans
10%
Corporate CO2 reduction
Help to reduce carbon emissions
10%
Directors’ Report 25 – 47
Directors’ Remuneration Report
43
Strategic ReportDirectors’ ReportFinancial Statements 2016 targets and performance
The Company’s performance against targets and
actual outturn for the financial year ended 31
December 2016 are set out in the table below.
salary, which will be charged against the gain
on sale reported in the 2017 results. These items
will be excluded for the purpose of calculating
whether financial targets have been met for 2017
bonus purposes.
Although the Group profit before tax was below
threshold for 2016, the Remuneration Committee
considered that the profit on the sale of Oaklands
site, which exchanged on 21 December 2016 and
completed on 3 January 2017, should be taken into
account when considering whether or not a bonus
should be paid. Accordingly, the Remuneration
Committee has approved payment to eligible
participants of a bonus of approximately 20% of
No Executive bonus costs in respect of 2016
performance have been reflected in the results
for 31 December 2016. A bonus payment was paid
during the year relating to the completion of a site
sale during 2016 which commenced during 2015.
This profit on sale is reflected in the results for 31
December 2016, however the profit and related
bonus costs were excluded for the purpose of
calculating whether 2016 financial targets were met.
Measure
2016 outturn
2015 outturn
2016 performance
against target
Profit before tax
£ 1.4m
£ 0.1m
Below threshold
NPS
Employee
engagement
Corporate CO2
reduction
45
82%
40
Stretch
78.5%
Between on target and
stretch
To create a baseline
for carbon footprint of
operations
N/A
Threshold
44
The Committee has, exceptionally, approved the
grant of awards equivalent to 100% of salary for
both the Chief Executive Officer and the Chief
Financial Officer during 2016 to reflect the fact that
no awards were granted in respect of 2015.
The Committee may, at any time up to and including
vesting, reduce the vesting level of awards where
there has been, amongst other things, a material
mis-statement in the accounts, an error in any
information on which performance targets were
based, gross misconduct or fraud by the employee.
Performance targets
The performance metrics and their relative
weightings for the 2016 grant of awards are shown in
the table below. The targets themselves are deemed
to be commercially sensitive and are not therefore
disclosed. However, retrospective disclosure of
performance against targets will be provided at the
end of the relevant measurement period.
Performance Share Plan (“PSP”)
Operation of the scheme
This new scheme, implemented during 2016
following consultation with the Company’s ten
largest shareholders, is designed to enhance
alignment between Executive Directors and
shareholders, and better reflect current market
practice, including the addition of performance
conditions for the vesting of awards, which are
described in detail below, where previously there
were none.
Usual policy is to grant awards to Executive Directors
over shares worth up to 50% of salary at the time
of grant. The maximum limit of an award to any
individual under the PSP in any financial year
would be 100% of annual salary, subject to the
Remuneration Committee’s discretion to increase to
150% of salary in exceptional circumstances.
Awards granted under the scheme shall vest three
years from the date of grant, subject to continued
employment and satisfaction of performance criteria
which shall be measured over a three year period.
Performance against targets is measured on a sliding
scale, with 20% of the relevant part of the award
vesting at threshold level, 50% vesting for on-target
performance through to 100% vesting for achieving
stretch targets. No award will vest unless Total
Shareholder Return is positive over the three year
measurement period.
Measure
Strategic objective
Weighting
Earnings Per Share
Drive shareholder value
60%
Relative net promoter score
(relative to ‘Big 6’ energy
companies)
Maintain higher customer
satisfaction ratings than ‘Big 6’
energy firms
20%
Customer CO2 reduction
Ensure long term sustainability
of our own operations
20%
Directors’ Report 25 – 47
Directors’ Remuneration Report
45
Strategic ReportDirectors’ ReportFinancial Statements Directors’ share options
Details of the Directors’ share options outstanding at 31 December 2016 are shown below.
Name
Date option
granted
Number of options
outstanding as at
31 December 2016
Option price
Exercised during
2016
Cancelled/
surrendered
during 2016
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
Juliet Davenport ¹
07/07/2015
80,350
£0
Juliet Davenport
22/04/2016
88,496
£0.05
Total
-
641,244
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Notes
1. These awards shall vest 2 years from the date of grant. The reason for this is that, although the Remuneration Committee resolved to grant the
awards during the summer of 2014, as the Company was in a close period for a prolonged period of time and there were a number of changes
in the Company Secretariat function, the awards were not granted until July 2015.
46
Directors’ share options continued
Name
Date option
granted
Number of options
outstanding as at
31 December 2016
Option price
Exercised during
2016
Cancelled/
surrendered
during 2016
Denise Cockrem ¹
07/07/2015
21,822
£0
Denise Cockrem ¹
07/07/2015
200,000
£2.285
Denise Cockrem
22/04/2016
80,531
£0.05
Total
-
302,353
-
David Brooks
15/10/2015
100,000
£2.265
David Brooks
22/04/2016
38,717
£0.05
Total
-
138,717
-
Richard Squires
13/02/2012
75,000
£1.15
Overall Total
-
1,018,597
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Emma Tinker
Chair of Nominations and Remuneration Committee
27 March 2017
Directors’ Report 25 – 47
Directors’ Remuneration Report
47
Strategic ReportDirectors’ ReportFinancial Statements Independent
Auditors’ Report
To the members of Good Energy Group PLC
48–51
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
2016 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
The financial statements, included within the Annual
Report and Financial Statements (the “Annual
Report”), comprise:
• the Consolidated and Parent Company
Statements of Financial Position as at 31
December 2016;
• the Consolidated Statement of Comprehensive
Income for the year then ended;
• the group financial statements have been properly
• the Consolidated and Parent Company
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.
Statements of Cash Flows for the year then ended;
• 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.
Certain required disclosures have been presented
elsewhere in the Annual Report, rather than in the
notes to the financial statements. These are cross-
referenced from the financial statements and are
identified as audited.
The financial reporting framework that has been
applied in the preparation of the financial statements
is 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, and applicable law.
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.
Independent Auditors’ Report
49
Strategic ReportDirectors’ ReportFinancial Statements Opinions on other matters
prescribed by the Companies
Act 2006
Directors’ remuneration
Under the Companies Act 2006 we are required to
report to you if, in our opinion, certain disclosures
of directors’ remuneration specified by law are not
made. We have no exceptions to report arising from
this responsibility.
Responsibilities for the financial
statements and the audit
Our responsibilities and those of the directors
As explained more fully in the Directors’
responsibilities statement set out on pages 37 & 38,
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 parent 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, based on the work undertaken in the
course of the audit:
• 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; and
• the Strategic Report and the Directors’ Report
have been prepared in accordance with applicable
legal requirements.
In addition, in light of the knowledge and
understanding of the group, the parent company
and their environment obtained in the course of the
audit, we are required to report if we have identified
any material misstatements in the Strategic Report
and the Directors’ Report. We have nothing to report
in this respect.
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.
50
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 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. With
respect to the Strategic Report and Directors’ Report,
we consider whether those reports include the
disclosures required by applicable legal requirements.
Colin Bates (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Bristol
27 March 2017
Independent Auditors’ Report
51
Strategic ReportDirectors’ ReportFinancial Statements Financial
Statements
Consolidated Statement of Comprehensive Income 53
Consolidated Statement of Financial Position 54
Parent Company Statement of Financial Position 55
Consolidated Statement of Changes in Equity 56
Parent Company Statement of Changes in Equity 57
Consolidated Statement of Cash Flows 58
Parent Company Statement of Cash Flows 59
Notes to the Financial Statements 60 – 103
Directors and Corporate Resources 104
52–104
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2016
REVENUE
Cost of Sales
GROSS PROFIT
Administrative Expenses
OPERATING PROFIT
Finance Income
Finance Costs
PROFIT BEFORE TAX
Taxation
PROFIT/(LOSS) FOR THE YEAR
OTHER COMPREHENSIVE INCOME:
Note
5
5
6
6
10
11
12
2016
£000’s
90,437
2015
£000’s
64,281
(62,905)
(42,982)
27,532
(21,582)
5,950
18
(4,534)
1,434
(51)
1,383
21,299
(17,065)
4,234
23
(4,129)
128
(323)
(195)
Other comprehensive income for the year, net of tax
-
-
TOTAL COMPREHENSIVE INCOME/(EXPENSE) FOR THE YEAR
ATTRIBUTABLE TO OWNERS OF THE PARENT COMPANY
1,383
(195)
Earnings/(Loss) per share
- Basic
- Diluted
13
13
9.1p
8.8p
(1.4p)
(1.4p)
The notes on pages 60 to 103 form part of these Financial Statements.
Financial Statements 52 – 104
53
Strategic ReportDirectors’ ReportFinancial Statements
Consolidated Statement of Financial Position
As at 31 December 2016
Company registered no: 04000623
Non-current assets
Property, plant and equipment
Intangible assets
Restricted deposit accounts
Available-for-sale financial assets
Total non- current assets
Current assets
Inventories
Trade and other receivables
Current tax receivable
Cash and cash equivalents
Current assets held for sale
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
Trade and other payables
Current liabilities held for sale
Total current liabilities
Total liabilities
TOTAL EQUITY AND LIABILITIES
Note
2016
£000’s
2015
£000’s
14
15
3
16b
17
18
12
19
20
21
21
21
22
23
23
24
20
58,247
60,984
3,801
2,831
500
3,317
2,803
500
65,379
67,604
9,799
16,204
167
6,289
5,095
37,554
102,933
825
12,546
(1,015)
8,689
21,045
684
40,277
40,961
20,981
19,936
10
40,927
81,888
102,933
9,482
11,598
126
4,751
-
25,957
93,561
748
9,786
(1,074)
7,483
16,943
567
55,911
56,478
5,626
14,514
-
20,140
76,618
93,561
The Financial Statements on pages 53 to 103 were approved by the Board of Directors on 27 March 2017 and
signed on its behalf by:
Juliet Davenport
Chief Executive
27 March 2017
The notes on pages 60 to 103 form part of these Financial Statements.
54
Parent Company Statement of Financial Position
As at 31 December 2016
Company registered no: 04000623
Non-current assets
Property, plant and equipment
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
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
Total current liabilities
Total liabilities
TOTAL EQUITY AND LIABILITIES
Note
16a
18
19
21
21
21
23
23
24
2016
£000’s
387
42,256
42,643
74
266
340
2015
£000’s
-
35,206
35,206
22
234
256
42,983
35,462
825
12,546
(1,015)
6,997
19,353
211
211
23,089
330
23,419
23,630
42,983
748
9,786
(1,074)
4,713
14,173
14,646
14,646
6,511
132
6,643
21,289
35,462
The Financial Statements on pages 53 to 103 were approved by the Board of Directors on 27 March 2017 and
signed on its behalf by:
Juliet Davenport
Chief Executive
27 March 2017
The notes on pages 60 to 103 form part of these Financial Statements.
Financial Statements 52 – 104
55
Strategic ReportDirectors’ ReportFinancial Statements Consolidated Statement of Changes in Equity
For the year ended 31 December 2016
Note
Called
Share
EBT
Retained
Total
Up Share
Premium
Shares
Earnings
Equity
Capital
Account
£000’s
£000’s
£000’s
£000’s £000’s
733
9,077
(127)
8260
17,943
-
-
-
-
-
15
-
-
-
-
-
-
-
-
709
-
-
-
-
-
-
-
-
-
(195)
(195)
-
-
(195)
(195)
51
51
(151)
(151)
724
(1,150)
-
(1,150)
203
-
(4)
199
(478)
(478)
At 1 January 2015
Loss for the year
Other comprehensive income for the year
Total comprehensive expense for the year
Share based payments
Tax charge relating to share option
scheme
Issue of ordinary shares
Purchase of ordinary shares by EBT
Sale of shares by EBT
Dividend Paid
Total contributions by and distributions
to owners of the parent, recognised
27
22
21
21
21
25
directly in equity
15
709
(947)
(582)
(805)
At 31 December 2015
748
9,786
(1,074)
7,483
16,943
At 1 January 2016
Profit for the year
Other comprehensive income for
the year
Total comprehensive income for the year
Share based payments
Tax charge relating to share option
scheme
Issue of ordinary shares
Sale of shares by EBT
Dividend Paid
Total contributions by and distributions
to owners of the parent, recognised
directly in equity
At 31 December 2016
27
22
21
21
25
748
9,786
(1,074)
7,483
16,943
-
-
-
-
-
77
-
-
-
-
-
-
-
2,760
-
-
-
-
-
-
-
-
59
-
1,383
1,383
-
-
1,383
1,383
230
230
98
98
-
2,837
(14)
45
(491)
(491)
77
825
2,760
59
(177)
2,719
12,546
(1,015)
8,689 21,045
The notes on pages 60 to 103 form part of these Financial Statements.
56
Parent Company Statement of Changes in Equity
For the year ended 31 December 2016
Note
Share
Share
EBT
Retained
Total
Capital
Premium
Shares
Earnings
Equity
Account
£000’s
£000’s
£000’s
£000’s £000’s
At 1 January 2015
733
9,077
(127)
4,071
13,754
Profit for the year and total
comprehensive income
Issue of ordinary shares
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 2015
21
21
21
25
-
15
-
-
-
15
748
-
709
-
-
-
-
-
(1,150)
203
-
1,124
-
-
1,124
724
(1,150)
(4)
199
(478)
(478)
709
(947)
(482)
(705)
9,786
(1,074)
4,713
14,173
At 1 January 2016
748
9,786
(1,074)
4,713
14,173
Profit for the year and total
comprehensive income
Issue of ordinary shares
Sale of shares by EBT
Dividend Paid
Total contributions by and
distributions to owners of the parent,
recognised directly in equity
At 31 December 2016
-
77
-
-
-
2,760
-
-
21
21
25
-
-
59
-
2,789
2,789
-
2,837
(14)
45
(491)
(491)
77
825
2,760
12,546
59
(505)
2,391
(1,015)
6,997
19,353
The notes on pages 60 to 103 form part of these Financial Statements.
Financial Statements 52 – 104
57
Strategic ReportDirectors’ ReportFinancial Statements Consolidated Statement of Cash Flows
For the year ended 31 December 2016
Cash flows from operating activities
Cash generated from operations
Finance income
Finance cost
Income tax received
Note
26
2016
£000’s
10,656
18
(4,208)
133
2015
£000’s
1,590
23
(3,277)
59
Net cash flows generated from/(used in) operating
activities
6,599
(1,605)
15
25
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible fixed assets
Deposit into restricted accounts
Net cash flows used in investing activities
Cash flows from financing activities
Payments of dividends
Proceeds from borrowings
Repayment of borrowings
Capital repayments of finance lease
Proceeds from issue of shares
Purchase of own shares
Sale of own shares
Net cash flows generated from financing activities
Net increase/(decrease) 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 60 to 103 form part of these Financial Statements.
(4,958)
(1,851)
(29)
(6,838)
(491)
387
(951)
(50)
2,837
-
45
1,777
1,538
4,751
6,289
(17,748)
(492)
(2,803)
(21,043)
(451)
24,749
(10,348)
-
-
(453)
199
13,696
(8,952)
13,703
4,751
58
Parent Company Statement of Cash Flows
For the year ended 31 December 2016
Note
26
25
Cash flows from operating activities
Cash used in operations
Finance income
Finance cost
Income tax paid
Net cash flows used in operating activities
Cash Flows from investing activities
Purchase of property, plant and equipment
Net cash flows used in investing activities
Cash flows from financing activities
Payment of dividends
Repayment of borrowings
Intercompany loans movement
Capital repayments of finance lease
Proceeds from issue of shares
Purchase of own shares
Sale of own shares
Net cash generated from financing activities
Net increase/(decrease) 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 60 to 103 form part of these Financial Statements.
2016
£000’s
(1,725)
-
(977)
-
(2,702)
(387)
(387)
(491)
-
780
(50)
2,837
-
45
3,121
32
234
266
2015
£000’s
(1,204)
786
(1,195)
(20)
(1,633)
-
-
(451)
(35)
2,098
-
-
(453)
199
1,358
(275)
509
234
Financial Statements 52 – 104
59
Strategic ReportDirectors’ ReportFinancial Statements Notes to the Financial Statements
For the year ended 31 December 2016
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 the 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 (IFRSIC) 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 through profit or loss.
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), property, plant and equipment (2.7), inventories (2.11)
including generation development sites (2.11.3) and credit risk (3.1.3).
60
Notes to the Financial Statements
For the year ended 31 December 2016
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.
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 23.
Good Energy’s 4 year bond issued in November 2013, is due to mature in November 2017. The Company
has the option to redeem this bond, replace it with another bond or roll on the bond for another 12 months
(subject to redemption requests by bondholders) and is currently reviewing the most appropriate option.
As a consequence of the existing bond’s terms ending within the next twelve months, this facility has had to
be reclassified as a current liability and the balance sheet, as a result, shows a net current liability position
of (£3.4m) as at 31 December 2016, compared to a net current asset position of £5.8m in 2015. The balance
sheet is expected to return to a net current asset position for the year ended 31 December 2017.
2.3 Change in accounting policies and disclosures
There have been a number of new standards and interpretations issued in 2016, none of which are yet
effective. At this stage, management have not applied these new standards in the preparation of these
consolidated financial statements. Management has yet to fully assess the impact of IFRS 9 Financial
Instruments and IFRS 15 Revenue from Contracts with Customers which are both effective for the Group for
its 2018 financial statements.
There are no other standards or interpretations that are not yet effective, that are expected to have a material
effect on the Group’s net assets or results.
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.
61
Strategic ReportDirectors’ ReportFinancial Statements Notes to the Financial Statements
For the year ended 31 December 2016
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 Group Plc 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.
62
Notes to the Financial Statements
For the year ended 31 December 2016
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’.
Financial Statements 52 – 104
63
Strategic ReportDirectors’ ReportFinancial Statements
Notes to the Financial Statements
For the year ended 31 December 2016
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 circumstance 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:
Fixtures, fittings and equipment
between 3 and 5 years
Leasehold improvements
over the life of the lease
Generation assets
between 24 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.
64
Notes to the Financial Statements
For the year ended 31 December 2016
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 (ROCs)
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 Levy Exemption Certificates (LECs)
The removal of Levy Exemption Certificates was announced by the Government in 2015, starting 1 August
2015. Excess inventory of LECs had been purchased by the company in the years prior to this date. The cost
of this inventory was written back to the income statement in 2015, resulting in a non-recurring credit. During
the year inventories were utilised against the cost of Climate Change Levy for business customers, with costs
charged through the income statement. The inventory balance remaining at the balance sheet date will be
utilised fully in 2017. LECs are valued at the lower of purchase cost and estimated realisable value.
2.11.3 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
Financial Statements 52 – 104
65
Strategic ReportDirectors’ ReportFinancial Statements Notes to the Financial Statements
For the year ended 31 December 2016
2. Summary of Significant Accounting Policies (continued)
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.
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 Assets and liabilities classified as held for sale
Assets and liabilities are classified as held for sale when their carrying amount is to be recovered principally
through a sale transaction and the sale is highly probable. Assets and liabilites classified as held for sale are
stated at the lower of carrying amount and fair value less costs to sell. They are not depreciated or amortised.
2.15 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.
2.15.1 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.
66
Notes to the Financial Statements
For the year ended 31 December 2016
2. Summary of Significant Accounting Policies (continued)
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.
Restricted deposits are held by financing providers to cover debt service and maintenance expenses on
generation sites to which the funding relates.
Short-term security deposits are held by trading exchanges to cover short term electricity trades.
2.15.2 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.
2.15.3 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.
2.15.4 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 23.
2.16 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).
Financial Statements 52 – 104
67
Strategic ReportDirectors’ ReportFinancial Statements Notes to the Financial Statements
For the year ended 31 December 2016
2. Summary of Significant Accounting Policies (continued)
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.
2.17 Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision maker. The chief operating decision maker has been identified as the Board of Directors.
The Board of Directors review the Group’s internal reporting in order to assess performance and
allocate resources.
2.18 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.
2.21 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.
68
Notes to the Financial Statements
For the year ended 31 December 2016
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 forecasts on a ‘rolling forecast’ basis to ensure it has sufficient cash to meet
operational needs while maintaining enough headroom on its undrawn committed borrowing facilities at all
times so as not to breach borrowing limits or covenants.
A liquidity analysis of financial instruments based on contractual undiscounted cash flows is provided below:
Parent Company
31 December 2016
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
16,075
7,874
330
24,279
£000’s
£000’s
£000’s
-
-
-
-
-
-
-
-
-
-
-
-
Parent Company
31 December 2015
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
1,110
6,389
132
7,631
£000’s
16,075
-
-
16,075
£000’s
£000’s
-
-
-
-
-
-
-
-
Financial Statements 52 – 104
69
Strategic ReportDirectors’ ReportFinancial Statements Notes to the Financial Statements
For the year ended 31 December 2016
3. Financial and Capital Risk Management (continued)
Consolidated
31 December 2016
Less than
Between
Between
Over 5 years
1 year
1 and 2 years
2 and 5 years
Borrowings
Corporate bond
Trade and other payables
Total
£000’s
9,765
16,075
17,657
43,497
£000’s
4,527
-
-
£000’s
14,171
-
-
£000’s
50,660
-
-
4,527
14,171
50,660
Consolidated
31 December 2015
Less than
Between
Between
Over 5 years
1 year
1 and 2 years
2 and 5 years
£000’s
7,702
1,110
14,514
23,326
£000’s
4,220
16,075
-
20,295
£000’s
13,828
-
-
£000’s
55,311
-
-
13,828
55,311
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 2016 no euros (2015: no euros) 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.
Vertical integration of the Group helps further mitigate exposure to to changes in power prices.
70
Notes to the Financial Statements
For the year ended 31 December 2016
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 2016 and
2015, 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 £9,829 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.
Net debt is calculated as total borrowings (including ‘current and non-current borrowings’ as shown in the
Consolidated Statement of Financial Position) less cash and cash equivalents. Total capital is calculated as
‘equity’ as shown in the consolidated statement of financial position plus net debt. The capital structure of
the Group is as follows:
Total borrowings
Less: cash in restricted deposit accounts
Less: cash and cash equivalents
Net debt
Total equity
Total capital
Gearing ratio
Note
23
19
2016
£000’s
61,258
(2,831)
(6,289)
52,138
21,045
73,183
71.2%
2015
£000’s
61,537
(2,803)
(4,751)
53,983
16,943
70,926
76.1%
During 2016, the Group’s strategy, which was unchanged from 2015, was to seek debt funding at appropriate
margins from lenders against long term power generation assets. These assets have highly predictable
revenue streams and are considered stable for long term borrowing. In future, in order to maintain or adjust
its capital structure, the Group may re-structure its debt, issue new shares or sell assets.
The Group’s borrowings are subject to maintaining covenants as defined by the debt funders. Throughout the
year ended 31 December 2016 the Group complied with all external borrowing covenants and management
monitors the continued compliance with these covenants on a monthly or quarterly basis.
Financial Statements 52 – 104
71
Strategic ReportDirectors’ ReportFinancial Statements
Notes to the Financial Statements
For the year ended 31 December 2016
3. Financial and Capital Risk Management (continued)
3.3 Fair value estimation
The table below presents the Group’s financial assets that are measured at fair value, by valuation method at
31 December 2016. The different levels have been defined as follows:
• Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
• Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2);
• Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs)
(Level 3);
If one or more of the significant inputs is not based on observable market data, the instrument is included in
Level 3. Specific valuation techniques used to value the unlisted securities included the assessment of the
current status of the project and a review of any changes to circumstances since the initial acquisition
of shares.
All financial instruments with the exclusion of the amounts below are classified as level 2 per the fair
value hierarchy
2016
Assets
Available for sale financial assets
Unlisted securities
Total assets
2015
Assets
Available for sale financial assets
Unlisted securities
Total assets
Level 1
£000’s
Level 2
£000’s
Level 3
£000’s
Total
£000’s
-
-
-
-
500
500
500
500
Level 1
£000’s
Level 2
£000’s
Level 3
£000’s
Total
£000’s
-
-
-
-
500
500
500
500
There were no changes in Level 3 instruments for the year ended 31 December 2016.
72
Notes to the Financial Statements
For the year ended 31 December 2016
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 statements.
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.
Financial Statements 52 – 104
73
Strategic ReportDirectors’ ReportFinancial Statements Notes to the Financial Statements
For the year ended 31 December 2016
4. Critical Accounting Estimates (continued)
4.4 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.
4.5 Recoverability of capitalised generation project costs and generation assets
Generation project costs capitalised in inventory are reviewed by management on a monthly basis. Where
management deem at the balance sheet date that on the 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 an assessment of recoverable costs. Where
possible, recoverable costs will be estimated based on known market values.
The carrying value of the generating sites is considered in relation to the value in use and a provision will be
recognised for any excess. For the current year no provision was deemed necessary.
5. Segmental Analysis
The chief operating decision-maker has been identified as the Board of Directors (the ‘Board’). The Board
reviews the Group’s internal reporting in order to assess performance and allocate resources. Management
has determined the operating segments based on these reports. The Board considers the business from
a business class perspective, with each of the main trading subsidiaries accounting for each of the
business classes.
The main segments are:-
• Supply Companies (including electricity supply, FIT administration and gas supply);
• Electricity Generation Companies (including wind and solar generation companies);
• Generation Development (44 early stage development companies)
• 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:
74
Notes to the Financial Statements
For the year ended 31 December 2016
5. Segmental Analysis (continued)
Year ended 31
Electricity
FIT
Gas
Total
Electricity
Generation
Holding
Total
December 2016
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
55,324
5,904
23,903
85,131
4,520
786
-
90,437
Inter-segment
revenue
-
-
-
-
Total revenue
55,324
5,904
23,903
85,131
3,324
7,844
-
786
(3,324)
-
(3,324) 90,437
Expenditure
Cost of sales
(40,559)
(1,415) (16,269)
(58,243)
(4,295)
(367)
-
(62,905)
Inter-segment
cost of sales
(3,324)
-
-
(3,324)
-
Gross profit
11,441
4,489
7,634
23,564
3,549
-
419
3,324
-
-
27,532
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
(17,080)
(357)
(666)
(1,868)
(19,971)
(1,609)
-
(2)
-
(1,611)
4,875
3,192
(249)
(1,868)
5,950
140
(5,352)
(339)
1,035
(4,516)
5,015
(2,160)
(588)
(833)
1,434
45,704
116,337
11,162
(70,270) 102,933
38,008
116,948
17,205
(90,273) 81,888
7,696
(611)
(6,043)
20,003
21,045
2,264
1,120
3,725
387
7,496
Financial Statements 52 – 104
75
Strategic ReportDirectors’ ReportFinancial Statements
Notes to the Financial Statements
For the year ended 31 December 2016
5. Segmental Analysis (continued)
Year ended 31
Electricity
FIT
Gas
Total
Electricity
Generation
Holding
Total
December 2015
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
40,192
3,902
16,411
60,505
3,576
200
-
64,281
-
-
-
-
Total Revenue
40,192
3,902
16,411
60,505
Expenditure
3,882
7,458
-
200
(3,882)
-
(3,882) 64,281
Cost of sales
(24,542)
(1,655)
(12,987)
(39,184)
(3,440)
(358)
- (42,982)
Inter-segment
cost of sales
(3,882)
-
-
(3,882)
-
-
3,882
-
Gross Profit/
(loss)
Administrative
expenses
Depreciation &
amortisation
Operating profit/
(loss)
Net finance
income/(costs)
Profit/(loss)
before tax
11,768
2,247
3,424
17,439
4,018
(158)
-
21,299
(12,877)
(353)
(1,448)
(1,408) (16,086)
(975)
-
(3)
(1)
(979)
3,587
3,665
(1,609)
(1,409)
4,234
136
(4,301)
(494)
553
(4,106)
3,723
(636)
(2,103)
(856)
128
Segments assets & liabilities
Segment assets
34,628
96,091
6,778
(43,936) 93,561
Segment
liabilities
Net assets/
(liabilities)
Additions to
non- ‐current
assets
29,040
94,239
12,414
(59,075)
76,618
5,588
1,852
(5,636)
15,139
16,943
755
18,090
-
-
18,845
All turnover arose within the United Kingdom.
Consolidation adjustments relate to inter-company sales of generated electricity and the elimination of inter-
company balances.
76
Notes to the Financial Statements
For the year ended 31 December 2016
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 financial statements
Audit of subsidiaries
Subtotal (audit)
Other services - financial statement preparation
Other services
Tax services
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
2016
£000’s
2,809
1,367
1,078
28
98
126
15
-
22
37
9,286
4,514
1,987
2,383
1,801
1,611
21,582
2015
£000’s
2,351
705
676
27
108
135
25
34
60
119
7,345
3,573
1,776
2,152
1,240
979
17,065
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 £2,789,472 (2015: profit £1,123,794).
The profit for the parent company in 2016 included part of the proceeds from the sale of Wrotham Heath
solar site. In the segmental analysis 100% of the proceeds from Wrotham Heath were shown within
Generation Development reflecting the operational performance of the segment.
Financial Statements 52 – 104
77
Strategic ReportDirectors’ ReportFinancial Statements
Notes to the Financial Statements
For the year ended 31 December 2016
8. Staff Costs
Staff costs, including Directors’ remuneration, were as follows:
Wages and salaries
Social security costs
Share based payments
Other pension costs
Total staff costs
Capitalised staff costs
Total expensed staff costs
2016
2015
£000’s
£000’s
10,258
1,062
230
433
8,741
866
51
343
11,983
10,001
(677)
11,306
(729)
9,272
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
2016
2015
Number
Number
165
154
319
135
141
276
2016
2015
£000’s
£000’s
872
73
922
69
Key management are considered to be the directors of Good Energy Group PLC and the executive team. The
emoluments relating to these teams are included in the table above.
During the year retirement benefits were accruing to 3 Directors of the Group (2015: 2) in respect of money
purchase pension schemes.
In respect of the highest paid Director, the Group paid remuneration of £235,951 (2015: £222,740), including
contributions to the money purchase pension scheme of £25,000 (2015: £23,868).
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.
During the year, no share options were exercised by Directors or key management (2015: nil). The aggregate
amount of gains made by directors or key management on the exercise of share options was nil (2015: nil).
Details of Directors’ emoluments are given in the Directors’ Remuneration Report on page 40.
78
Notes to the Financial Statements
For the year ended 31 December 2016
10. Finance Income
Bank and other interest receivables
11. Finance Costs
On bank loans and overdrafts
On corporate bond
Other interest payable
Amortisation of debt issue costs
Total finance costs
Less: amounts capitalised on qualifying assets
Total
12. Taxation
Analysis of tax charge in year
Current tax (see note below)
Current Tax
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 22)
Tax on profit on ordinary activities
2016
2015
£000’s
£000’s
18
23
2016
2015
£000’s
£000’s
3,072
1,113
13
336
3,192
1,110
1
327
4,534
4,630
-
4,534
(501)
4,129
2016
£000’s
2015
£000’
-
(164)
(164)
217
(2)
215
51
165
(243)
(78)
(132)
533
401
323
Adjustments in respect of prior years’ deferred tax amounts are from updated assumptions used in the
treatment of Group relieved losses and capital allowances.
Financial Statements 52 – 104
79
Strategic ReportDirectors’ ReportFinancial Statements Notes to the Financial Statements
For the year ended 31 December 2016
12. Taxation (continued)
Factors affecting the tax credit for the year
The tax assessed for the year is lower (2015: higher) than the standard weighted average rate of corporation
tax in the UK of 20.00% (2015: 20.25%). The differences are explained as follows:
Profit before tax
Profit before tax multiplied by the weighted average rate of
Corporation Tax in the UK of 20.00% (2015: 20.25%)
Tax effects of:
Expenses not deductible for tax purposes
Non-taxable gain on sale of investment
Effects of changes in tax rate
Prior year adjustment - current tax
Prior year adjustment - deferred tax
Total tax charge for year
Factors that may affect future tax charges
2016
2015
£000’s
£000’s
1,434
287
42
(73)
(39)
128
26
(9)
-
16
(164)
(243)
(2)
51
533
323
Changes to the UK corporation tax rates were substantively enacted as part of Finance Bill 2015 (on 26
October 2015) and Finance Bill 2016 (on 7 September 2016). These include reductions to the main rate to
reduce the rates to 19% from 1 April 2017 and to 17% from 1 April 2020. Deferred taxes at the balance sheet
date have been measured using these enacted tax rates and reflected in these financial statements.
Corporation tax payable/(recoverable) as per Statement of Financial Position
UK Corporation Tax on profits for the year
-
-
(167)
(126)
Parent Company
Consolidated
2016
2015
2016
2015
£000’s
£000’s
£000’s
£000’s
80
Notes to the Financial Statements
For the year ended 31 December 2016
13. Earnings/(loss) Per Ordinary Share
Basic
Basic earnings/(loss) per share is calculated by dividing the profit/(loss) attributable to owners of the
company by the weighted average number of ordinary shares during the year after excluding 495,739 (2015:
521,989) shares held by Clarke Willmott Trust Corporation Limited in trust for the Good Energy Group
Employee Benefit Trust.
Profit/(loss) attributable to owners of the Company (£000’s)
Basic weighted average number of ordinary shares (000’s)
Basic earnings/(loss) per share
Diluted
Consolidated
2016
1,383
15,239
9.1p
2015
(195)
14,455
(1.4p)
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 223p (2015: 222p). The dilutive effect of share-based incentives was 563,595 (2015: nil shares).
Profit/(loss) attributable to owners of the Company (£000’s)
Weighted average number of diluted ordinary shares (000’s)
Diluted earnings/(loss) per share
Consolidated
2016
1,383
15,802
8.8p
2015
(195)
14,455
(1.4p)
Financial Statements 52 – 104
81
Strategic ReportDirectors’ ReportFinancial Statements Notes to the Financial Statements
For the year ended 31 December 2016
14. Property, Plant and Equipment
Consolidated
Year ended 31
December 2016
Leasehold
Furniture,
Generation
Assets under
Total
improvements
fittings &
assets
construction
equipment
£000’s
£000’s
£000’s
£000’s
£000’s
Cost
At 1 January 2016 (per AR 2015)
Assets held for sale
Additions
Disposals
At 31 December 2016
Accumulated depreciation
At 1 January 2016 (per AR 2015)
Assets held for sale
Charge for the year
Disposals
At 31 December 2016
Net book value
429
-
81
-
510
(274)
-
(60)
-
(334)
875
-
118
65,247
(5,308)
4,848
(5)
(55)
-
-
180
-
66,551
(5,308)
5,227
(60)
988
64,732
180
66,410
(625)
(4,668)
-
213
(206)
(2,601)
5
53
(826)
(7,003)
-
-
-
-
-
(5,567)
213
(2,867)
58
(8,163)
At 1 January 2016 (per AR 2015)
At 31 December 2016
155
176
250
162
60,579
57,729
-
60,984
180
58,247
82
Notes to the Financial Statements
For the year ended 31 December 2016
14. Property, Plant and Equipment (continued)
Consolidated
Leasehold
Furniture,
Generation
Assets under
Total
Year ended 31 December
improvements
fittings &
assets
construction
2015
Cost
At 1 January 2015
Transfer of Assets under
construction to Generation
assets
Additions
Disposals
At 31 December 2015
Accumulated depreciation
At 1 January 2015
Charge for the year
Disposals
At 31 December 2015
Net book value
At 1 January 2015
At 31 December 2015
equipment
£000’s
£000’s
£000’s
£000’s
£000’s
247
-
182
-
429
(156)
(118)
-
(274)
1,193
-
35,239
11,659
11,659
48,338
(11,659)
-
75
18,349
(393)
875
-
65,247
(861)
(157)
393
(2,592)
(2,076)
-
(625)
(4,668)
-
-
-
-
-
-
-
18,606
(393)
66,551
(3,609)
(2,351)
393
(5,567)
91
155
332
250
32,647
60,579
11,659
44,729
-
60,984
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, Good Energy Rook Wood Solar Park Limited, Good Energy Carloggas Solar Park Limited,
Good Energy Lower End Solar Park Limited and Good Energy Cross Roads 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 Oaklands Plantation Solar Park Limited.
Financial Statements 52 – 104
83
Strategic ReportDirectors’ ReportFinancial Statements Notes to the Financial Statements
For the year ended 31 December 2016
15. Intangible Assets
Consolidated
Year ended 31
December 2016
Licences
costs
supply
Licences
development
the course of
development
Power
Software
Website
Goodwill Assets under
Total
Cost
At 1 January 2016
Additions
At 31 December 2016
Accumulated
amortisation
At 1 January 2016
Charge for the year
At 31 December 2016
Net book value
At 1 January 2016
At 31 December 2016
Consolidated
Year ended 31
£000’s
£000’s
£000’s
£000’s
£000’s
£000’s
180
-
180
3,351
111
3,462
9
-
9
1,446
-
1,446
-
1,740
1,740
4,986
1,851
6,837
-
-
-
(1,660)
(1,367)
(3,027)
(9)
-
(9)
-
-
-
180
180
1,691
435
-
-
1,446
1,446
-
-
-
-
1,740
(1,669)
(1,367)
(3,036)
3,317
3,801
Power
Software
Website
Goodwill Assets under
Total
December 2015
Licences
costs
supply
Licences
development
the course of
development
£000’s
£000’s
£000’s
£000’s
£000s
£000’s
Cost
At 1 January 2015
Additions
Disposals
180
-
-
At 31 December 2015
180
3,868
492
(1,009)
3,351
132
-
(123)
1,446
-
-
9
1,446
Accumulated
amortisation
At 1 January 2015
Charge for the year
Disposals
At 31 December 2015
Net book value
At 1 January 2015
At 31 December 2015
-
-
-
-
(1,964)
(705)
1,009
(1,660)
(132)
-
123
(9)
-
-
-
-
180
180
1,904
1,691
-
-
1,446
1,446
-
-
-
-
-
-
-
-
-
-
5,626
492
(1,132)
4,986
(2,096)
(705)
1,132
(1,669)
3,530
3,317
84
Notes to the Financial Statements
For the year ended 31 December 2016
15. Intangible Assets (continued)
Assets under the course of development relate to the implementation of a new billing system and the launch
of our new website.
All amortisation amounts are included within administration expenses.
Goodwill of £1,446,453 (2015: £1,446,453) comprises £1,060,996 (2015: £1,060,996) arising from the
original acquisition of Good Energy Limited, and £385,457 (2015: £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
(2015: £1,446,453) and Power Supply Licence of £180,000 (2015: £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, using 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
2016
2015
20%-30% 20%-30%
2%
11%
2%
11%
*annual margins have been modelled in the five year cashflow at varying levels.
Sensitivity analysis has been performed on the impairment review and it has been illustrated that a discount
rate of 400% would still not indicate a potential impairment. Accordingly, the Directors consider there to be
significant headroom.
Financial Statements 52 – 104
85
Strategic ReportDirectors’ ReportFinancial Statements
Notes to the Financial Statements
For the year ended 31 December 2016
16a. Investments and Subsidiaries
Parent Company
Shares in Group
Loans to Group
Year ended 31 December 2016
undertakings
undertakings
Cost and net book value
At 1 January 2016
Additions
Repayments
At 31 December 2016
£000’s
£000’s
4,646
-
-
4,646
30,560
17,464
(10,414)
37,610
Parent Company
Shares in Group
Loans to Group
Year ended 31 December 2015
undertakings
undertakings
Cost and Net book value
At 1 January 2015
Additions
Provisions
Repayments
At 31 December 2015
£000’s
£000’s
4,646
-
-
-
4,646
25,295
56,555
(6,000)
(45,290)
30,560
Total
£000’s
35,206
17,464
(10,414)
42,256
Total
£000’s
29,941
56,555
(6,000)
(45,290)
35,206
A provision for £6,000,000 was recorded against the intercompany receivable loan for Good Energy
Generation Limited in 2015. No additional provision has been recognised in 2016. This has no impact on the
consolidated results of the Group.
86
Notes to the Financial Statements
For the year ended 31 December 2016
16a. Investments and Subsidiaries (continued)
The Group had the following subsidiaries at 31 December 2016 (all of which have the same reigistered
address as Good Energy Group PLC, which can be found within the Directors and Corporate Resources
section on the final page of this report):
Name
Country of
Proportion of ordinary
Nature of business
incorporation and
shares directly held
place of business
by Parent
Good Energy Limited
Good Energy Gas Limited
UK
UK
Good Energy Generation Limited UK
Good Energy Generation Holding
Company No.1 Limited
Good Energy Generation Assets
No.1 Limited*
Good Energy Hampole Windfarm
Limited*
Good Energy Woolbridge Solar
Park Limited*
Good Energy Creathorne Solar
Park Limited*
Good Energy Rook Wood Solar
Park Limited*
Good Energy Carloggas Solar
Park Limited*
Good Energy Lower End Solar
Park Limited*
Good Energy Cross Roads
UK
UK
UK
UK
UK
UK
UK
UK
Plantation Solar Park Limited*
UK
Good Energy Delabole Wind
Farm Limited
Good Energy Cedar Windfarm
Limited
UK
UK
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
85%
supply of renewably
sourced electricity and FIT
administration
supply of gas
an investor in potential new
generation sites
holding company for a
generating asset sub group
holding company for
generating assets
subsidiaries
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 panels
generation of electric power
by solar panels
generation of electric power
by solar panels
generation of electric power
by solar panels
generation of electric power
by wind turbine machinery
development of an energy
generating asset
Financial Statements 52 – 104
87
Strategic ReportDirectors’ ReportFinancial Statements
Notes to the Financial Statements
For the year ended 31 December 2016
16a. Investments and Subsidiaries (continued)
Good Energy Lanyon Solar Park
Limited
Good Energy Mapperton Solar
Park Limited
Good Energy Brynwhilach Solar
Park Limited
Good Energy Oaklands
Plantation Solar Park Limited
Good Energy Tidal Limited
Good Energy Development (No.1)
Limited
Good Energy Development
(No.2) Limited
Good Energy Development
(No.3) Limited
Good Energy Development
(No.4) Limited
Good Energy Development
(No.5) Limited
Good Energy Development
(No.6) Limited
Good Energy Development
(No.7) Limited
Good Energy Development
(No.8) Limited
Good Energy Development
(No.9) 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
Llangyfelach Community Solar
Farm C.I.C
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
Worminster Down Somerset
Community Solar Farm C.I.C
UK
Good Energy Development
(No.20) Limited
UK
88
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
development of an energy
generating asset
development of an energy
generating asset
development of an energy
generating asset
development of an energy
generating asset
investment holding company
development of an energy
generating asset
development of an energy
generating asset
development of an energy
generating asset
development of an energy
generating asset
development of an energy
generating asset
development of an energy
generating asset
development of an energy
generating asset
development of an energy
generating asset
development of an energy
generating asset
development of an energy
generating asset
development of an energy
generating asset
development of an energy
generating asset
development of an energy
generating asset
development of an energy
generating asset
development of an energy
generating asset
development of an energy
generating asset
development of an energy
generating asset
development of an energy
generating asset
Notes to the Financial Statements
For the year ended 31 December 2016
16a. Investments and Subsidiaries (continued)
Good Energy Development
(No.21) Limited
Good Energy Development
(No.22) Limited
Good Energy Development
(No.23) Limited
Good Energy Development
(No.24) Limited
Good Energy Development
(No.25) Limited
Good Energy Development
(No.26) Limited
Good Energy Development
(No.27) Limited
Good Energy Development
(No.28) Limited
Good Energy Development
(No.29) Limited
Good Energy Development
(No.30) Limited
Homegrown Energy Limited
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
development of an energy
generating asset
development of an energy
generating asset
development of an energy
generating asset
development of an energy
generating asset
development of an energy
generating asset
development of an energy
generating asset
development of an energy
generating asset
development of an energy
generating asset
development of an energy
generating asset
development of an energy
generating asset
dormant
* Entities indirectly owned by Good Energy Group PLC.
The subsidiaries above have all been included in the consolidated financial statements.
16b. Available-for-sale Financial Assets
Consolidated
Year ended 31 December 2016
Cost and Net book value
At 1 January 2016
Additions
At 31 December 2016
Available-for-sale
financial assets
£000’s
500
-
500
Available-for-sale financial assets comprise £500,000 (2015: £500,000) of unlisted securities denominated
in sterling.
Financial Statements 52 – 104
89
Strategic ReportDirectors’ ReportFinancial Statements
Notes to the Financial Statements
For the year ended 31 December 2016
17. Inventories
Renewable Obligation Certificates
Levy Exemption Certificates
Generation development sites
Total
Parent Company
Consolidated
2016
2015
2016
2015
£000’s
£000’s
£000’s
£000’s
-
-
-
-
-
-
-
-
2,530
328
6,941
9,799
2,426
977
6,079
9,482
As at 31 December 2016 there were Renewable Obligation Certificates (ROCs) of £771,559 (2015: £537,265)
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 year.
As at 31 December 2016 there were Levy Exemption Certificates (LECs) of £327,852 (2015: 977,001) included
in the above amount.
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 £267,386 (2015:
£147,416). At 31 December 2016, an impairment of £201,457 (2015: £1,041,077) had been made against these
sites resulting in an expense of nil (2015: net credit of £298,939 which is included in ‘cost of sales’).
18. Trade and Other Receivables
Gross trade receivables
Provision for impairment/non-payment of trade receivables
Net trade receivables
Prepayments
Other taxation
Total
Parent Company
Consolidated
2016
2015
2016
2015
£000’s
£000’s
£000’s
£000’s
-
-
-
58
16
74
16
-
16
6
-
22
17,571
11,444
(3,932)
(2,131)
13,639
552
2,013
9,313
1,610
675
16,204
11,598
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.
90
Notes to the Financial Statements
For the year ended 31 December 2016
18. Trade and Other Receivables (continued)
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
2016
£000’s
2,131
1,801
-
3,932
2016
£000’s
10,031
1,485
965
1,158
13,639
2015
£000’s
1,424
1,135
(428)
2,131
2015
£000’s
6,636
71
793
1,813
9,313
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 receivables are all financial assets designated as loans and receivables.
19. Cash and Cash Equivalents
Cash at bank and in hand
Short-term bank deposits
Security deposits
Total
Parent Company
Consolidated
2016
2015
2016
2015
£000’s
£000’s
£000’s
£000’s
266
234
-
-
-
-
266
234
2,296
2,879
1,114
6,289
1,956
1,871
924
4,751
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 £2,456,426 (2015: £1,722,653), which is
included in short-term bank deposits. Included within cash at bank and in hand for both the parent company
and the consolidated position is £162,676 (2015: £139,680) 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:-
Financial Statements 52 – 104
91
Strategic ReportDirectors’ ReportFinancial Statements
Notes to the Financial Statements
For the year ended 31 December 2016
19. Cash and Cash Equivalents (continued)
AA-
A+
A
A-
B
Total
Parent Company
Consolidated
2016
2015
2016
2015
£000’s
£000’s
£000’s
£000’s
163
140
-
-
-
103
266
-
-
-
94
234
163
4,447
450
-
1,229
6,289
140
-
3,568
450
593
4,751
Cash and cash equivalents are all financial assets designated as loans and receivables.
20. Assets and liabilities classified as held for sale
Property, plant and equipment
Total assets
Deferred taxation
Total liabilities
Carrying value
Consolidated
2016
£000’s
5,095
5,095
(10)
(10)
5,085
The figures in the above table refer to the sale by Good Energy Group PLC of 100% of its shareholding in
Good Energy Oaklands Planatation Solar Park (031) Limited to a third party. Further detail can be seen in
note 31.
92
Notes to the Financial Statements
For the year ended 31 December 2016
21. Share Capital and Share Premium
Parent Company & Consolidated
Number of
Number of
Share
authorised
shares issued
Share
Premium
shares
and fully paid
Capital
Account
Total
At 1 January 2015
20,000,000
14,667,896
Proceeds from shares issued
-
302,784
At 31 December 2015
20,000,000
14,970,680
Proceeds from shares issued
-
1,514,023
At 31 December 2016
20,000,000
16,484,703
£000’s
£000’s
£000’s
733
15
748
77
825
9,077
709
9,786
2,760
12,546
9,810
724
10,534
2.837
13,371
In 2016, the company issued 1,514,023 ordinary shares of 5p each for total consideration of £2,836,748
resulting in a share premium of £2,760,047. This included the issue of 5,950 (2015: 291,137) shares to the
EBT and 2 scrip dividend issues in lieu of full year and interim dividend cash payments (10,763 and 7,361
shares respectively) (2015: 7,566 and 4,081 shares respectively).
Clarke Willmott Trust Corporation Limited holds in trust 495,739 (2015: 521,989) 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 20,000 (2015: 197,000) shares as a result of options
exercised and acquired nil (2015: 493,137) shares.
The Directors recommend a final dividend of 2.3p per share (2015: 2.3p) subject to shareholder approval at
the Company’s AGM.
Financial Statements 52 – 104
93
Strategic ReportDirectors’ ReportFinancial Statements Notes to the Financial Statements
For the year ended 31 December 2016
22. Deferred Taxation
The provision for deferred taxation is made up as follows:
Consolidated
At 1 January
Charged to the Consolidated Statement of Comprehensive Income
Charged 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 liabilities
Deferred tax assets
On short term timing differences
Losses
Total
Deferred tax liabilities
On accelerated capital allowances
2016
2015
£000’s
£000’s
567
215
(98)
684
15
401
151
567
2016
2015
£000’s
£000’s
(722)
(236)
(958)
1,642
-
1,642
684
(142)
(186)
(328)
895
-
895
567
2016
2015
£000’s
£000’s
236
722
958
186
142
328
2016
2015
£000’s
£000’s
1,642
895
Accelerated
Short-term
capital
timing
allowances
differences
Losses
Total
Deferred tax assets/(liabilities)
£000’s
£000’s
£000’s
£000’s
At 1 January 2015
(Charged) to income statement
(Charged) to equity
At 31 December 2015
Credited/(charged) to the income statement
Credited to equity
At 31 December 2016
(678)
(217)
-
(895)
(747)
-
(1,642)
363
(26)
(151)
186
(48)
98
236
300
(158)
-
142
580
-
722
(15)
(401)
(151)
(567)
(215)
98
(684)
94
Notes to the Financial Statements
For the year ended 31 December 2016
23. Borrowings and Other Financial Liabilities
Parent Company
Consolidated
2016
2015
2016
2015
£000’s
£000’s
£000’s
£000’s
Current:
Bank and other borrowings
Bond
125
15,090
122
-
5,891
5,626
15,090
-
-
Loans from Group companies
7,874
6,389
-
Total
23,089
6,511
20,981
5,626
Non current:
Bank and other borrowings
Bond
Total
Parent Company
Consolidated
2016
2015
2016
2015
£000’s
£000’s
£000’s
£000’s
211
-
211
-
40,277
14,646
14,646
-
40,277
41,265
14,646
55,911
The Group has undrawn bank overdraft facilities of £6,757,144 (2015 : £5,000,000) as at 31 December
2016 and undrawn revolving credit facilities of £822,140 (2015 : £2,882,140. These facilities are secured by
guarantees from Good Energy Limited, Good Energy Gas Limited and other group entities.
At 31 December 2016, £7,279,171 (2015: £7,681,950) 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%.
At 31 December 2016, £37,399,386 inclusive of £627,985 of accrued interest (2015: £37,959,777 inclusive of
£659,777 of accrued interest) 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 18 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 £2,754,299 (2015: £2,627,109) and are being
amortised over the life of the loan in accordance with IAS39.
Financial Statements 52 – 104
95
Strategic ReportDirectors’ ReportFinancial Statements
Notes to the Financial Statements
For the year ended 31 December 2016
23. Borrowings and Other Financial Liabilities (continued)
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 2016 the amortisation recognised in ‘finance
costs’ totalled £191,248 (2015: £165,982).
Parent Company
31 December 2016
Due less than 1 year
Due between 1 and 5 years
Total
Parent Company
31 December 2015
Due less than 1 year
Due between 1 and 5 years
Total
Inter-company
loan
Finance
Bond
Lease
Total
£000’s
£000’s
£000’s
£000’s
7,874
15,090
-
-
7,874
15,090
125
211
336
23,089
211
23,300
Inter-company
loan
Bond
Finance
Lease
Total
£000’s
£000’s
£000’s
£000’s
6,389
-
6,389
122
14,646
14,768
-
-
-
6,511
14,646
21,157
96
Notes to the Financial Statements
For the year ended 31 December 2016
23. Borrowings and Other Financial Liabilities (continued)
Consolidated
31 December 2016
Due less than 1 year
Due between 1 and 5 years
Due more than 5 years
Total
Consolidated
31 December 2015
Due less than 1 year
Due between 1 and 5 years
Due more than 5 years
Total
Bank and
other
borrowings
Bond
Total
£000’s
£000’s
£000’s
5,753
7,204
33,211
15,090
20,843
-
-
7,204
33,211
46,168
15,090
61,258
Bank and
other
borrowings
Bond
Total
£000’s
£000’s
£000’s
5,626
8,802
32,463
46,891
-
14,646
-
14,646
5,626
23,448
32,463
61,537
The fair values of borrowings have been calculated taking into account the interest rate risk inherent in the
loans and the bond. The fair value estimates and carrying values of borrowings (excluding issue costs) in
place at 31 December 2016 are:
2016
2016
2015
2015
Carrying
Fair value
value
Fair value
£000s
£000s
£000s
Good Energy Delabole Wind farm Ltd
Good Energy Generation Assets No. 1 Limited
Corporate bond
7,351
37,839
15,099
7,279
37,399
15,090
7,759
37,553
15,114
Borrowings are designated as other financial liabilities held at amortised cost.
Carrying
value
£000s
7,682
37,300
14,965
Financial Statements 52 – 104
97
Strategic ReportDirectors’ ReportFinancial Statements
Notes to the Financial Statements
For the year ended 31 December 2016
24. Trade and Other Payables
Parent Company
Consolidated
2016
2015
2016
£000’s
£000’s
£000’s
Trade payables
Accruals and deferred income
Social security and other taxes
Other payables
Total
96
234
-
-
330
68
64
-
-
132
4,934
14,104
898
-
19,936
14,514
2015
£000’s
3,439
10,655
351
69
Trade payables, accruals and other payables are designated as other financial liabilities held at
amortised cost.
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 (2015: 2.30p)
Interim dividend current year of 1.00p per share (2015: 1.00p)
Sub-total
Dividends waived
Total
2016
2015
£000’s
£000’s
368
140
508
(17)
491
344
150
494
(16)
478
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.
A final dividend of 2.3p per share was proposed on 20 March 2017, subject to shareholder approval at the
company’s AGM.
Of the total dividend distributed for the year, £42,288 (2015: £27,009) was paid in the form of scrip dividends
with the balance of £448,792 (2015: £451,998) settled in cash.
98
Notes to the Financial Statements
For the year ended 31 December 2016
26. Cash Generated from Operations
Reconciliation of net income to net cash provided by operating activities:
Profit before income tax
Adjustments for:
Depreciation
Amortisation
Share based payments
Provision against investments in and loans to
subsidiaries
Parent Company
Consolidated
2016
2015
2016
2015
£000’s
£000’s
£000’s
£000’s
2,966
1,144
1,434
128
-
-
-
-
-
1
-
6,000
2,808
1,368
230
-
-
2,351
705
51
-
-
Dividend income from subsidiaries
(3,800)
(8,000)
Finance (income)/costs - net
(1,036)
(552)
4,516
4,106
Changes in working capital (excluding the effects
of acquisition and exchange differences on
consolidation)
Inventories
Trade and other receivables
Trade and other payables
-
(52)
197
-
165
38
Cash (outflow)/inflow from operations
(1,725)
(1,204)
10,656
(517)
(3,872)
(4,605)
5,422
(1,318)
(561)
1,590
Financial Statements 52 – 104
99
Strategic ReportDirectors’ ReportFinancial Statements Notes to the Financial Statements
For the year ended 31 December 2016
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 £229,921
(2015: £51,428 are recognised in the Consolidated Statement of Comprehensive Income. As at 31 December
2016, the following options had been issued:
Number of options
exercise price
Weighted average
Total exercise
consideration
2016
2015
2016
2015
2016
2015
(Number)
(Number)
(£)
(£)
£000’s
£000’s
Outstanding at beginning of year
1,540,070 1,494,898
Granted
Exercised
270,001
552,172
(20,000)
(197,000)
Cancelled/surrendered
(55,000)
(310,000)
Outstanding at the end of year
1,735,071
1,540,070
1.28
2.26
1.25
1.25
1.51
1.03
1.85
1.01
1.25
1.28
1,964
610
(25)
(69)
2,480
1,536
1,022
(199)
(388)
1,971
In order to partially fulfil the options granted, 495,739 (2015: 521,989) shares representing approximately
29% (2015: 42%) 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 up to September 2029. 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
2004-2007
2012-2015
2012-2015
2013-2016
2015-2018
2015-2018
2015-2018
2015-2018
2016-2019
2017
2025
2025
2026
2028
2028
2028
2028
2029
0.75
0.50
1.15
1.25
0
2.25
2.27
2.29
0.05
Share options
(thousands)
2016
2015
35
189
179
259
102
100
150
200
270
35
189
179
289
102
100
150
200
-
1,484
1,244
The weighted average fair value of options granted during the year determined using the Black-Scholes
valuation model was £2.11 per option. The significant inputs into the model were weighted average share
price of £2.26 at the grant date, exercise price shown above, volatility of 13%, 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.
100
Notes to the Financial Statements
For the year ended 31 December 2016
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 £433,320 (2015: £343,294).
Contributions totalling £51,823 (2015: £42,060) were payable to the fund at the end of the financial year 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
2016
2015
£000’s
£000’s
724
2,296
6,410
9,430
341
1,184
6,583
8,108
2016
2015
£000’s
£000’s
8
8
-
16
6
12
-
18
At 31 December 2016, the total capital commitments amount is £5,702,212 (2015: £418,134). Of this
£4,910,212 (2015: £418,134) related to contracts agreed on solar generation projects.
The figure for solar generation projects represents the maximum liability assuming sites continue
in development.
Financial Statements 52 – 104
101
Strategic ReportDirectors’ ReportFinancial Statements
Notes to the Financial Statements
For the year ended 31 December 2016
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 16a.
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
£84,481 (2015: £83,647). No amounts were outstanding at the end of the financial year (2015: £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 £57,915 (2015: £76,649). Of these
figures no amounts were outstanding at the end of the financial year (2015: £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. During 2016, a payment of nil (2015: £500,000) was made to Shire Oak under the terms of
the contract. A final payment, capped at £150,000 is due on the successful energisation of one remaining
solar farm under the agreement. 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.
102
Notes to the Financial Statements
For the year ended 31 December 2016
31. Subsequent Events
On 3rd January 2017, Good Energy Group PLC sold 100% of its shareholding in Good Energy Oaklands
Plantation Solar Park (031) Limited to a third party. The assets and liabilities of Good Energy Oaklands
Plantation Solar Park (031) Limited have been presented as held for sale in note 20.
32. Subsidiary Undertakings Exempt From Audit
Good Energy Group PLC has provided the necessary parental guarantees under section 479A of the
Companies Act 2006, to enable the following companies exemption from audit:
Good Energy Lanyon Solar Park (011) Limited
Llangyfelach Community Solar Farm C.I.C.
Worminster Down Somerset Community
Solar Farm C.I.C.
Good Energy Development (No.1) Limited
Good Energy Development (No.3) Limited
Good Energy Development (No.4) Limited
Good Energy Development (No.5) Limited
Good Energy Development (No.6) Limited
Good Energy Development (No.8) Limited
Good Energy Development (No.9) Limited
Good Energy Development (No.10) Limited
Good Energy Development (No.12) Limited
Good Energy Development (No.14) Limited
33. Generation assets – technical data
Good Energy Development (No.15) Limited
Good Energy Development (No.16) Limited
Good Energy Development (No.17) 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 Development (No.25) Limited
Good Energy Development (No.26) Limited
Good Energy Development (No.27) Limited
Good Energy Development (No.28) Limited
Good Energy Development (No.29) Limited
Good Energy Development (No.30) Limited
Wind farms
Solar farms (continued)
Rook Wood, Wiltshire
Solar modules: ReneSola
Nominal capacity DC: 4,981 kWp
Lower End, Wiltshire
Solar modules: Jinko Solar
Nominal capacity DC: 4,999 kWp
Crossroads, Dorset
Solar modules: Jinko Solar
Nominal capacity DC: 4,999 kWp
Carloggas, Cornwall
Solar modules: ReneSola
Nominal capacity DC: 8,304 kWp
Oaklands, Dorset
Solar modules: REC
Nominal capacity DC: 4,992 kWp
Hampole, South Yorkshire
Turbine manufacturer: Senvion
No. of turbines: 4
Installed capacity: 8.2MW
Turbine power output: 2.05 MW
Delabole, Cornwall
Turbine manufacturer: Enercon
No. of turbines: 4
Installed capacity: 9.2MW
Turbine power output: 2.3 MW
Solar farms
Woolbridge, Dorset
Solar modules: Yingli
Nominal capacity DC: 4,996 kWp
Creathorne, Cornwall
Solar modules: Yingli
Nominal capacity DC: 1,841 kWp
Financial Statements 52 – 104
103
Strategic ReportDirectors’ ReportFinancial Statements
Directors and Corporate Resources
Directors
John Maltby (Non-Executive Chairman)
Juliet Davenport (Chief Executive)
Denise Cockrem (Chief Financial Officer)
David Brooks
Richard Squires (Non-Executive Director)
Martin Edwards (Non-Executive Director)
Francesca Ecsery (Non-Executive Director)
Emma Tinker (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 Monkton Reach
Independent Auditors
Monkton Hill, Chippenham
Wiltshire SN15 1EE
PricewaterhouseCoopers LLP
2 Glass Wharf
Bristol BS2 0FR
Financial Advisors
Arden Partners plc
125 Old Broad Street
London, EC2N 1AR
Bankers
Lloyds Bank
PO Box 112, Canons House, Canons Way
Bristol BS99 7LB
Legal Advisors
Registrars
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
104
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Annual Report &
Financial Statements 2016
Good Energy Group PLC
Monkton Reach
Monkton Hill
Chippenham
SN15 1EE
goodenergygroup.co.uk