Gladstone Commercial Corporation Annual Report 2020

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FY2020 Annual Report · Gladstone Commercial Corporation

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Annual Report
& accounts

2020

Climate change is our responsibility

Let’s keep the world our home

Good Energy Annual Report 2020Annual Report &
Accounts 2020

Contents

Strategic Report

Why we exist: Let’s keep the world our home

How we achieve our purpose:
Powering a cleaner, greener future together

What we do to achieve our purpose:
Empowering you to use, share, generate and store clean energy

Governance Report

Board of Directors

Governance & Directors’ Report

Audit & Risk Report

Remuneration & Nomination Report

Independent Auditors’ Report

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

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Contents

Good Energy Annual Report 2020Strategic report

Why we exist:
Let’s keep the world our home

Our purpose and manifesto

Sustainable development goals

2020 achievements

Chairman’s statement

Chief Executive Officer’s review

How we achieve our purpose:
Powering a cleaner, greener future together

Strategic review

In Focus: Mobility & EV

The business model

Key performance indicators

Operating review

Key risks

Chief financial officer’s review

What we do to achieve our purpose:
Empowering you to use, share, generate
and store clean energy

Engaging with our community

Our response to COVID-19

Innovating to achieve net-zero

Our environmental impact

Our social impact

Our people

Good Energy Annual Report 2020

Contents

Why we exist:
Let’s keep the
world our home

Foreword from our CEO and Founder, Juliet Davenport

In February 2020 Prime Minister Boris Johnson joined environmentalist David Attenborough on stage at the
Science Museum to declare a ‘year of climate action’. This would culminate with COP26, the UN’s climate
conference, which was scheduled to be hosted in Glasgow in November.

Just a couple of weeks after Johnson’s climate commitment, environmental activist Greta Thunberg came to
Bristol. The city is only a short train ride from our offices, so we told everyone at Good Energy that they could
take the once in a lifetime opportunity to march alongside her. I am proud to say that Good Energy was a
loud and visible presence alongside Greta and the 30,000 activists calling for leaders like the PM to put words
into action on climate.

Then like so much in 2020, COVID-19 disrupted plans, derailing COP26. It was postponed to 2021.

2020 became the year of COVID-19, rather than climate action. For Good Energy’s part I am proud of how
we were able to respond, switching rapidly to remote working and developing new policies to support our
people. We remained committed to our purpose, perhaps stronger than ever in our resolve. Many examples
of which are detailed in this report.

It has been a time of anguish and pain for many, but one with some silver, or indeed green, linings too.
Climate change may not have been number one on any government’s agenda, but as soon as there was
discussion about recovery from the pandemic, the focus was on green recovery.

Today we are still battling the pandemic. But there is widespread public support for climate action and we
are beginning to see positive policies coming from government on things like support for offshore wind and
a 2030 cut-off for sales of petrol and diesel cars.

I cannot help the feeling of déjà vu when I say, we have COP26 to look forward to this November. It is
difficult to say what the conference will look like, but it remains the UK’s opportunity to show leadership
on climate action to a global audience.

It feels like we may have reasons to be hopeful for action on climate change, and this only makes Good
Energy’s purpose more relevant than ever.

Juliet Davenport

Our purpose

Climate change is our responsibility,
let’s keep the world our home.

Our manifesto

We believe that everyone deserves a future on our home planet.
Swimming in our rivers, walking in the forest or simply breathing
clean air should always be an option; for us, for our children and
for their children.

We know that to keep the planet our home we have to get to
100% renewable energy. So that’s what we are working towards
every single day.

We exist to give you the ability to generate your own power,
not just buy ours. No one owns the sunshine, the wind or the rain,
so let’s share it.

Our goal is to turn every home and business into its own clean
power station. Get your clean energy from families and businesses
in your local community. Power generated by people like you, for
people like you.

We believe that we all have our part to play. We do ours not only
by empowering you to buy and share clean energy but also by
investing in clean technologies.

We must be bold, stand up and take action to tackle climate change.
We are more powerful together with our customers, generators,
shareholders, partners and people. We invite you to stand up with us.

Good Energy Annual Report 2020

Strategic report

Sustainable Development Goals

Sustainability is why we’re in business

Sustainability is a broad term, but it captures the need to protect
and preserve our planet.

The UN’s Sustainable Development Goals (SDGs) provide a strong framework
and guide for businesses to work towards. These 17 goals range across
environmental and social factors, from protecting life on land to ending hunger.

Good Energy is a member of the UN Global Compact, the world’s largest
corporate sustainability initiative, founded to encourage businesses to support
the SDGs. Our business has two of the goals at its heart:

Affordable & clean energy (Goal 7)

Our unique model has remained unchanged for over 20 years: support
the growth of independent, renewable generation in the UK. This means
we offer our community of over 1,600 generators a fair price for their
power and a route to market for small clean energy projects. Our
customers, employees, and investors are given an opportunity to support
this model and be part of the solution to the climate crisis.

Climate action (Goal 13)

Good Energy was set up to tackle climate change, and this defining
global challenge continues to inform how we operate as a company. Our
financial decisions; new customer propositions; or policy and regulatory
positions, are based on this starting point.

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Good Energy Annual Report 2020

Strategic report

2020 Achievements

Good Energy maintained a resilient financial performance despite the ongoing impact of COVID-19.
The foundations are now in place for the company and its stakeholders to benefit from new energy services.
Here are some of the highlights of our year:

Invested in our people

From clean energy awareness
courses to the Signature Skills
programme, which enables all
employees to develop and practice
personal leadership skills.

Zap-Map and Zap-Pay

Good Energy converted its
initial investment in Zap-Map into
a majority 50.1% equity stake.
Zap-Pay was also launched,
enabling EV drivers to use the
app to pay for charging across
different networks.

Investment in technology

Domestic customers migrated
to the Kraken customer services
platform and business customers
are migrating to the ENSEK
platform, which will enable us
to better serve them with new
products and services.

Strong cash balance

Financial and operational resilience
provided us with the flexibility
against significant market volatility.

Workplace and workforce

We have quickly adapted to remote
working in response to the pandemic
as well as adapting our office to
make it Covid secure, with learnings
paving the way for a more flexible
future operating model.

‘Outstanding’ Best Companies
accreditation

Awarded the gold standard for
workplace engagement, based
entirely on feedback of employees.

Strategic partnerships
and time of use tariff for
EV drivers

Announced a ToU tariff and new
partnerships in electric mobility,
helping drive a cleaner greener
future for transport.

Revaluation of the generation
assets portfolio

Delivered a net £16m uplift to
asset values, and an increase in
non-distributable reserves
resulting in gearing decline from
68.6% to 51.6%.

Lower operating expenditure

Which allowed us to minimise
outflow in times of uncertainty
during the pandemic, and build
for a more sustainable and
efficient future.

Heat pump tariff

UK’s first ever heat pump tariff
released, called ‘Green Heat’.

Strong cash collections

Despite Covid, business cash
collections and billing rates improved,
and domestic cash collections were
maintained and we remain highly
cash generative.

Increased digital sales

Online sales increased 90% and
marketing spend decreased by
25% year on year.

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Good Energy Annual Report 2020

Strategic Report

Chairman’s statement

“We have continued to make
excellent progress in building our
position within the new world of
energy as a service, including
successfully implementing new
customer technology platforms
for domestic and business
customers. ”

In 2020 we witnessed one of the most tumultuous
years in recent history, with the onset of a global
pandemic and national lockdowns. Against this
backdrop, I am incredibly proud of the resilience
shown by all our colleagues in adapting so effectively
to new working conditions at all levels within
our organisation. Regardless of this challenging
environment we had another good year of progress,
as we delivered on key projects and milestones
which will enable growth in 2021. Our strong cash
performance in the year reflects that we remain well
positioned both financially and operationally. Despite
being prudent on cost control, we were still able to
make tangible investments in our future strategy,
progressing in our transition towards technology
enabled energy services for the generation, supply
and sharing of 100% renewable power for all.

Our market: opportunities and challenges

In 2019, I said that the UK economy remained
buoyant but highly sensitive due to the ongoing
uncertainty caused by Brexit negotiations and
macroeconomic volatility. It transpired that 2020
was a year unlike any we had ever witnessed. The
COVID-19 pandemic caused national lockdowns
across the world, severely impacting economies. The
UK economy took its biggest hit since the second
world war, causing the UK Government to take
unprecedented action to limit the impact on UK
businesses and workers through the furlough scheme
and other job retention and stimulus packages.

As a business, we have proven that our financial and
operational resilience allowed us to react to these
market challenges. We remain highly cash generative
and have seen improvements in cash collection
and billing rates in 2020. While we have obviously
seen an impact from COVID, this impact has been
limited compared to other companies in the market.
We have made positive strides in addressing the
changing nature of our industry, especially given the
reduced consumption in business energy and a more
volatile wholesale energy market.

Strategic developments

Despite COVID, we have not rested on our laurels in
2020. We have continued to make excellent progress
in building our position within the new world of energy
as a service, including successfully implementing new
customer technology platforms for domestic and
business customers. These platforms will enable us to
operate more flexibly to deliver new, digitally focused
products and services to customers at scale.

We remain focused on technology, strategic
partnerships and our people. Our investments in
both Kraken and Zap-Map continue to progress
and allow us to have the technological capabilities to
play in the right markets and deliver our vision of
a zero-carbon future.

Board update

Good energy bonds

In February 2021 we announced that Juliet
Davenport has decided to leave her role as CEO
and take up a Non-Executive Director position with
the business, as well as remaining Chair of subsidiary
company, Zap-Map. This transition is part of the
continuing evolution of Good Energy from its roots
as a simple green energy provider to the new world
of providing energy and mobility as a service. With
Good Energy now well established as a leading
renewable energy provider and following a period of
significant internal investment and progress, Juliet has
decided that now is the appropriate time to bring in a
new CEO to take the business forward.

Juliet is a recognised and influential industry figure,
and her ongoing commitment as a Non - Executive
Director of Good Energy and Zap-Map will provide
a strong platform to support both the Board
and new CEO.

I would like to personally thank Juliet for her
commitment over the past 20 years to Good
Energy and celebrate her achievement of growing
the business into what it has become today. Her
experience and insights will continue to play an
important role in both Good Energy and Zap-Map
and I look forward to this next stage of the
company’s growth.

CEO appointment

In April 2021 we announced the appointment of Nigel
Pocklington as Chief Executive Officer. Nigel has
strong, relevant, and current commercial experience
at a senior executive level in a variety of global digital
businesses, ranging from global e-commerce to
financial technology.

Nigel most recently served as Chief Commercial
Officer of Moneysupermarket.com Group plc. Prior to
this, he held senior roles within Expedia Inc., including
Chief Marketing Officer of Hotels.com. He spent a
decade of his early career at Pearson plc, including a
period leading the digital operations of the Financial
Times. Nigel is also a Non-Executive Director for
global digital transformation business Kin and
Carta plc, where he chairs the Remuneration
Committee and is a member of the Audit and
Nomination Committees.

We are delighted to welcome Nigel as our new Chief
Executive Officer. Following an extensive search and
a thorough evaluation of high-quality candidates, we
are confident that Nigel’s digital and transformation
experience will be an asset to Good Energy in the
next stage of the Group’s development.

In April 2021, we announced the successful
restructuring of the financing on our renewable
generation asset portfolio, which we undertook to
consolidate and simplify funding facilities. Together
with a strong net cash position, the restructuring gives
us greater capital flexibility going forwards. More
details are in the CFO review.

Longer term, the transaction also provides on-going
improved visibility of cash flows and frees up future
cash generated by the generation portfolio to be
utilised by the Company.

The upfront cash provided, combined with existing
strong levels of cash on the balance sheet, gives the
Company the ability to wholly repay Good Energy
Bonds II. It is anticipated that this will be completed
during FY2022.

We recognise the importance of optimising our
balance sheet, which this move allows us to do.
We are in a strong position to continue making
investments across the Group and consider all
relevant funding sources when appropriate.

Dividend

Alongside our ongoing investments, we aim to deliver
a progressive dividend policy. The policy has the
objective of increasing the dividend over time as
profitability grows to provide an appropriate return to
shareholders. We remain mindful of maintaining and
balancing the ability to invest in long term growth
opportunities.

The Board recognises the importance of dividends to
many shareholders, but it is important that we retain
a prudent approach to balance sheet management
at this stage. The Board has determined that
due to the strong underlying performance of the
business in 2020, and the continued improvement of
macroeconomic conditions, that the dividend policy
will resume in 2021.

Will Whitehorn

Chairman

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Good Energy Annual Report 2020

Strategic Report

Chief Executive Officer’s review

“Despite the continuing
challenges presented by
COVID-19, the desire for a
green recovery and to Build
Back Better continues to build.”

Market environment

A year like no other

2020 will go down as one of the most unique in our
history as a nation. The impact of COVID-19 has been
felt throughout society, from politics to the economy.

The retail and business supply markets in the first two
months of 2020 aligned with expectations , and our
underlying business performed strongly. However,
from March, the breadth and depth of COVID–19
impacts began to be felt across the economy
following the start of the first national lockdown.
Business premises largely closed and employees
shifted to a remote working model. We witnessed
Business energy supply demand reduce by almost
35% during the first lockdown, compared to our
expectations. We saw signs of recovery throughout
the summer after the first lockdown eased in May.
Despite a second national lockdown in the latter
half of the year, the UK economy managed to
avoid a contraction in the fourth quarter of 2020
as individuals and businesses were better prepared
for the impact of a lockdown and remote working
business models. Despite the adaptability of many UK
businesses, the rolling lockdowns negatively impacted
growth momentum and saw the economy contract
by 9.9% overall in 2020.

Nevertheless, it is pleasing that despite these
challenges, our business responded well and achieved
a strong performance in context of the ‘new normal’.

The macroeconomic, consumer and competitive
backdrop contain considerable uncertainties. A
lockdown prolonged beyond the first quarter of
2021 will inevitably see GDP contract, although by
much less than 2020. A rapid vaccine roll-out is now
underway and expected to facilitate relatively strong
growth from Q2 2021 onwards, whilst Brexit-related
frictions are also expected to ease in the second half
of the year.

Many economic forecasts continue to outline muted
projections on growth and employment levels, given
the ongoing global uncertainty surrounding the virus.
However, as lockdowns ease, we are seeing energy
demand starting to recover. Without a third wave,
we expect this to continue back to more normalised
levels. However, we remain aware that subsequent
lockdowns are a possibility and could impact the
energy sector in general.

The Uswitch Green Accreditation aims to provide
transparency to customers looking to switch to a
green tariff. Research from the comparison service
found that whilst a third of households are now on a
‘green’ tariff, more than half (52%) of UK consumers
are confused about what actually makes up the
many ‘green’ deals on the market.

Criteria verified by an independent panel of experts
require Gold standard tariffs to be backed with 100%
renewable electricity purchased from renewable
generators directly through Power Purchase
Agreements, and 10% of gas from biogas producers.
Good Energy, which is also rated ‘Excellent’ on
customer service reviews site Trustpilot, was awarded
the standard for all tariffs it submitted.

There are more than 6 million domestic energy
customers who switch supplier every year, with the
majority via switching and comparison sites. Uswitch
is the most popular, receiving over 5 million visits
per month.

This new accreditation is a watershed moment
for transparency around green tariffs. For years
now, energy suppliers have been able to mislead
customers who are trying to do the right thing
in choosing green. So it’s brilliant to see Uswitch
take action, and do it in the right way by asking
independent experts. We hope to see other
comparison and switching services follow suit.

The UK cannot achieve net zero without bringing
everyone along. Being dishonest with the very people
trying to help is not the way to go about that. To build
a greener future together, we have to give people
the facts about the renewable choices they are
making. As we build up to COP26 in the second half
of 2021, decisions like this will only help to address the
underlying issues we need to fix in the UK
energy landscape.

Juliet Davenport

Founder and Chief Executive Officer

Continued green momentum despite
COVID-19 and macroeconomic conditions

Despite the continuing challenges presented by
COVID-19, the desire for a green recovery and to
Build Back Better continues to build. The concept
of a green recovery has quickly gathered strong
support from the business community. Tangible
investments have already been made in schemes
committed to low carbon homes, low carbon
transport infrastructure and investments dedicated
to supporting green innovation. Both corporations
and investment and pension fund managers are
increasingly considering environmental credentials as
key requirements for potential investments.

Even with the pandemic, 2020 has been a seminal
year for policy and investment decisions in green
technology. The government set out their Ten Point
Plan for a Green Industrial Revolution. Implementing
this plan will mobilise £12 billion of government
investment, and potentially three times as much
from the private sector, to create and support up to
250,000 green jobs. The ambition is to turn the UK into
the world’s number one centre for green technology
and finance, laying the foundations for decades of
economic growth by delivering net zero emissions
in a way that creates jobs and allows us to carry on
living our lives.

Focus has been put on developing offshore wind
and electrifying transport and heat. The plans for
transport include bringing the ban on petrol and
diesel cars forward from 2040 to 2030; accelerating
plans for EV charge points; providing grants and
incentives; and mass production of EV batteries.

It may be too soon to talk about market recovery,
but resilience and adaptability are key. With green
recovery front of mind for climate conscious Brits,
pressure from Ed Miliband to bring the Green
recovery forward to align and prove it at COP26 in
November 2021 and pressure on the UK to match
President Biden’s clean energy goals to 2035, building
back better could be a fantastic opportunity for hope
and positive action following a challenging year

Green accreditation

In March 2021, we became the first and only energy
supplier to have our standard variable and fixed tariffs
accredited as Uswitch Green Tariff Gold Standard.
The comparison and switching service’s independent
panel judged our electricity and gas tariffs to be
‘market leading in their environmental credentials’.
This ‘first of its kind’ scheme from a comparison and
switching site categorises green energy tariffs into
Bronze, Silver and Gold, with Good Energy the only
supplier so far awarded Gold.

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Good Energy Annual Report 2020Strategic ReportGovernance ReportFinancial StatementsStrategic Report

How we achieve
our purpose:
Powering a
cleaner, greener
future together

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Good Energy Annual Report 2020

Strategic report

•

Integration

Smart meter rollout

Strategic review

Compliance with section 172 of the
Companies Act 2006

Section 172 of the Companies Act 2006 requires
directors to promote the success of the Company
for the benefit of the members as a whole and in
doing so have regard to the interests of stakeholders
including shareholders, clients, employees, regulators
and the wider society in which it operates.
Throughout this Strategic Report, we have set out
how we have engaged with our key stakeholders and
how the Board have considered their interests during
the year when making strategic decisions.

Overview

Good Energy is a next-generation energy company
with over 20 years’ experience, founded on a deep
green domestic offering. We have a vertically
integrated business model with a strong and
competitive core business; a mature wind and solar
generation portfolio; and an increasing focus on small
businesses and electric mobility which helps us stand
out in a crowded marketplace.

Our 47.5MW generation portfolio powers
approximately 15% of our customer base. While
our power purchase agreements (PPAs) with over
1,600 small generators mean that on average our
customers are never more than 4 miles away from
a generator. This foundation, coupled with our
experience, will help place us at the forefront of the
transition from the old world of passive energy supply
to the new world of energy as a service, with the
consumer at the heart.

100% of Domestic customer accounts have now
been migrated to Kraken. We are already seeing
the benefits, from both an investment case and
customer service perspective.

•

Service

Our service levels have continued to shift online,
which has helped halve our average response
time from 48 hours to 24 hours. We have seen
positive impacts on our net promoter score (NPS),
which has been consistently +30, whilst our Trust
Pilot rating has reached 4.3 stars – our highest
level yet.

•

Building scalable performance

Increased digitalisation will be a hallmark of
success as we grow. The platform improves
planned paperless billing levels from 82% to 90%,
whilst driving increased use of the customer app
and online account. While a high percentage
of our customers already pay via Direct Debit
(DD), it is anticipated that the platform will allow
us to have more than 85% on DD by the end of
2021. Alongside our smart meter rollout, Kraken
accelerates our digital offering and is a building
block for energy services including new, smart
enabled tariffs. Increased digitalisation also
improves the speed of our product launches. The
Zap Flash tariff launched in April 2021 is the first
example of this and a step towards genuinely
smart products that enable half hourly settlement
for domestic customers.

Building blocks in place

•

Financial returns

We spent 2020 ensuring that we have the
fundamental building blocks of the business in place,
as they are crucial to unlocking future growth
opportunities. We have implemented two service and
billing platforms for domestic and business customers,
continued the roll out of smart meters and begun to
develop a pipeline of innovative propositions to drive
long term value. Given the COVID disruption across all
industries, these achievements have put the business
in a strong position to scale in 2021, as the economy
begins to recover, the green revolution gathers
momentum and EV adoption increases.

Kraken customer services platform

The investment in Kraken lays the foundation of
achieving our strategy. It provides core functionality
that enables us to serve customers more efficiently,
but has the scope to support us to develop smart
tariffs and adapt to the changing landscape. Both
these capabilities make the platform highly scalable
for future organic and inorganic growth opportunities.

We previously communicated that the total
forecast investment of £4m would be split
approximately equally between cash and non-
cash elements. In 2020, operating cost savings
have already been realised through lower
headcount and service efficiencies. We had lower
staff costs and other contractor costs of £2.7m
and are on track to achieve payback of the
forecast investment in Kraken within 18 months
of the April 2020 full implementation. Efficiency
savings and future operating leverage benefits
will be reinvested in reducing our price point and
developing and launching further propositions,
principally within our Domestic supply business.
This will enhance existing products, services and
competitiveness.

of use tariffs, we are continuing to develop our
One Home proposition, which will incorporate FIT
export rate (FER) and Smart export guarantee
(SEG) tariffs supported by our GenEx SMART
metering, bundled with a supply offering and the
installation of EV charging hardware, solar panels
and eventually storage solutions.

•

Transport

We must support electric vehicle adoption and
the electrification of infrastructure through
providing homes and businesses with charging
hardware and services. We continue to develop
our mobility as a service solution, which positions
Good Energy as one point of contact for supply,
EV hardware and services that help businesses
and consumers shift to EVs.

•

Heat

Our focus is supporting the movement to
electrified and renewable heating systems
by providing access to heating care products
and heat demand reduction technologies. In
September we announced a new heat pump
tariff, which generated positive demand. In 2021,
we will roll out smart time of use tariffs for heat
solutions and continue to evolve how we
support the necessary societal shift away
from gas heating.

We position ourselves as an expert able to help
customers better understand and reduce their
energy use. Providing accurate live data on
device usage through consumer access devices
and smart metering technology will empower
customers to be part of the zero-carbon journey.

The first COVID lockdown in March 2020 paused our
smart meter rollout, as restrictions meant we were
unable to visit customers’ homes to install meters.
However, demand improved as lockdown restrictions
eased, with installations restarting in July. Without
further lockdowns, we expect to see this trend
continue and installations are now back in line with
our expectations.

Our ambition is to roll out 20,000 smart meters
by the end of 2021. By the end of 2020 we had
installed 5,100 smart meters. We expect installation
numbers to increase throughout the year as
lockdown restrictions ease. Not only do Smart meters
help customers better understand their energy
consumption and how to reduce it, but they are key
to enabling products that will support the transition
to net zero. Half hourly settlement, optimised time
of use tariffs and flexibility services will all help
customers play practical roles in creating a
greener energy system.

Ensek business billing platform

In the second half of the year, we partnered with
Ensek, one of the leading software suppliers to UK
energy providers by moving our B2B supply customers
onto their Ignition platform.

The move brings a more efficient digital service –
enhancing customer experience and supporting
the launch of new services. The platform enables
us to serve everyone from small businesses to large
industrial consumers with greater speed
and accuracy.

Alongside Ensek comes a new B2B online account
that allows customers to digitally self serve on a wide
range of tasks, providing a simplified view of complex
billing and pricing through to import and PPA. Ensek’s
highly automated software-as-a-service platform
gives us the flexibility to serve a large range of
business customers more efficiently and better focus
on their needs. The platform will support our growth
plans by reducing the cost to serve and improving
customer experience.

We have currently migrated over 80% of our
business customers to the new platform and aim to
fully transition all business customers by the end
of Q2 2021.

Proposition development

Our ambition is to provide customers with the
tools to achieve a zero-carbon footprint across
electricity, transport and heat in both Business
and Domestic settings.

•

Electricity

Our aim is to provide electricity from renewable
sources and support decentralised generation
for homes and businesses. Alongside smart time

Good Energy Annual Report 2020Strategic ReportGovernance ReportFinancial StatementsStrategic Report

Energy as a service

Our aim remains to help households and businesses generate, store and share clean power. We use our
demonstrated expertise as a leader in 100% renewable electricity supply to create sustainable value
for our stakeholders. Societal and regulatory changes are increasing green momentum, and a growing
market of business and domestic customers want to reduce their environmental impact.

But as the energy sector moves rapidly from being about Megawatts to Megabytes, we recognise that
it will be consumers who will be responsible for over 60% of the activities that will drive this change. Our
business model has evolved to reflect this.

•

Purpose brand: Helping customers make a tangible difference in the fight against climate change.

Renewable electrification: 100% renewable electricity and innovative services to support the
electrification of transport and heat.

Proven credentials: Deep long-term relationships at all levels of energy supply chain, based on over
20 years’ experience.

• Data & digitalisation: Business underpinned by highly scalable, modular platform that links users to

energy services throughout the value chain and ecosystem.

•

Evolution: An increasingly agile organisation, using innovation and acquisitions to
complement growth.

Scaling the business through innovation

This customer centric model is being applied to our mobility as a service offering, but can be replicated
across heat, solar, storage and demand side flexibility to provide an innovative offering to a broad
range of customers, in an ever-increasing market. Good Energy has the tools to replicate this offering in
multiple verticals and solidify its place at the heart of the energy ecosystem.

Corporate development in this space will focus around understanding the right approach to building
our own capabilities, investing in proven technologies and skills, or forming strategic partnerships to take
advantage of growing markets.

In Focus: Mobility & EV

Good Energy as an EV supply business
The UK’s plans for decarbonisation as presented in the Prime Minister’s 10-point plan in November 2020
include the expectation that electricity demand will roughly double over the next 20 years, driven by increased
demand resulting from electrification of heat and transport. Good Energy has a huge opportunity to address
a completely new market – that of transportation. EV adoption is moving fast, with battery electric or hybrid
vehicles making up more than 20% of new vehicle sales in the first months of 2021.

Future ecosystem

Future energy and mobility customer needs should
merge to form an intricate ecosystem and unlock
innovative ways to grow market share. It is uncertain
how the EV market will develop over time, but we
believe, as customers demand more flexibility over
transport options, the mobility system will shift from
vehicle-centric to customer-centric, whilst trusted
relationships between customer and mobility
providers will serve as a platform for players in the
emerging EV value chain to centre themselves in the
mobility market.

Energy suppliers, who already have strong capabilities
in the highly regulated energy value chain, are ideally
placed to enter this market. Placed at the heart of
the future mobility eco system, suppliers can provide
interconnected services spanning the four main
mobility value chains: Energy, EV infrastructure, asset
management/services and EVs.

EV adoption will alter how consumers view mobility.
The traditional vehicle-centric (petrol/diesel) system
will be replaced by a more flexible, customer-
centric (electric) system, where mobility as a service
dominates. In this system, direct vehicle ownership
declines and brands will serve customers that fall
into three clear categories: direct vehicle ownership;
decentralised or hybrid fleets; and traditional
centralised fleets.

This shift to EV also means that every B2C and
B2B electric mobility customer is also a potential
electricity supply customer. Energy Retailers have
typically focused less on B2B EV business models,
creating a clear gap for us to lead the way.
Focusing on B2B mobility customers fits with Good
Energy’s strategy and creates an opportunity to
scale our mobility platform, all while continuing to
supply energy to both domestic and non-domestic
customers. We can operate a B2B2C model which
engages the business, fleet manager, vehicle drivers
and employees.

EV market outlook

We are at the outset of a rapid uptake in EVs, with
91% of UK new car sales expected to be EV by 2030.
Drivers for adoption include favourable regulation/
policy, growing auto industry investment, increased
EV model availability and continued infrastructure
development. Declining battery manufacturing costs
suggest that EV total cost of ownership (TCO) will
compare favourably with internal combustion engines
(ICE) by 2021-23 (varying by vehicle and use case),
providing the tipping point for mass adoption by
consumers and fleets.

EVs in use are expected to grow at ~47% CAGR
through to 2026, as UK EV sales ramp-up prior to
the announced 2030 ICE ban. Company owned
EVs are expected to form a significant share of the
early fleet as companies are disproportionately
responsible for purchasing new vehicles (~60% of new
car registrations today) and can take advantage of
specific UK EV incentives (e.g. 0% BiK and 100% first
year capital deductions).

Overall power demand from EVs is set to grow at a
rate of 52% CAGR 2020-26, linked to EV parc growth,
reaching nearly 14TWh of annual demand by 2026.
B2B customer segments represent the largest share
of power usage, reflecting the high proportion (and
comparatively higher mileages) of company vehicles.
This balance will shift more towards retail customers
over time through increased used EV sales.

Good Energy Annual Report 2020Strategic ReportGovernance ReportFinancial StatementsStrategic Report
Mobility as a service

Zap-Map: the UK’s leading EV mapping app

To build a customer centric ‘Mobility as a Service’
proposition, Good Energy will couple its core skills as
a 100% renewable electricity supplier and services
provider, with strategic partnerships to enhance its
customer offering.

In 2019 we made a strategic investment for a
majority share in the UK’s leading EV mapping service,
as part of the development of GE’s own mobility
propositions. This investment was predicated on the
planned electrification of transport.

In December 2020, we announced our first strategic
partnerships with leading companies in the mobility
space. We will continue to develop our EV services
through internal development, partnerships and
inorganic options.

Mina Energy

Mina’s innovative and unique
technology solution helps make
home charging simple and cost
effective for fleets and their
drivers. By integrating with drivers’
home charging infrastructure and
energy providers, Mina supports
fleets with paying for work vehicles
charged from home.

Horizon Energy Infrastructure

Horizon provide specialist funding
and partnership solutions to
support the deployment of
low carbon assets.

Horizon provides Good Energy
customers with asset-backed
funding for their charging
infrastructure, which is a key
financial service offered as part
of Good Energy’s ‘One Point’
charging hardware solution.

Select Car Leasing

One of the UK’s largest
independent car and van leasing
specialists, Select works with
manufacturers, large motor groups
and key finance partners to offer
competitive services for drivers
and fleets.

Good Energy will be Select’s
green energy partner, providing
Select customers with smart, 100%
renewable energy tariffs to assist
them on their green journey.

EV charging made simple

Zap-Map has established a position as the go-to
brand in the UK EV app market. With a capital light
model and technology agnostic digital platform, Zap
focuses on three core areas in the EV industry:

• Mapping

The core of the platform is mapping of available
EV charge points – essential for EV route planning.

•

Payment

Zap-Pay enables in-app payment for
using charge points operated by different
providers, easing a pain point for current
and future EV drivers.

•

Data & insights

Zap-Map provides insights across the EV
ecosystem to help futureproof new EV
propositions, using over 10 years of unique data
sets to help understand EV adoption and driver
behaviours.

Zap-Map currently has over 95% of the UK’s
public points on its network, with live dynamic
data for over 70% of the UK EV charging network.
It is the number one app used by EV drivers to
locate chargers. Over 75% of UK EV drivers have
downloaded Zap-Map, which has grown over
50% in 2020 in line with the UK EV market. With
over 180k registered users, 140k cross platform
users, 130k saved route plans and over 12k user
comments per month, Zap-Map is securing its
position as the voice of the EV driver, and an
indispensable tool for new and existing drivers.

Despite positive performance in the year, it is
unlikely that product or financial milestones per
the initial investment agreement will be met in
2021, as a result of conscious scaling back of
projects during the pandemic.

Commercial milestones

As the EV market grows, Zap is focused on providing
further value across its core segments of mapping,
payment and data services. Zap is in the very early
stages of monetising these segments. These critical
business milestones underpin investment strategy,
driving customer loyalty and maintaining an engaged
userbase, which is key to ensuring its growth.

‘Zap-Pay’, released by Zap-Map in September 2020, is
a new service that enables EV drivers to use a single
interoperable app to pay for public charging across
different networks. This removes the challenge of
having to navigate multiple payment systems, which
is a barrier to EV adoption. Zap-Pay will be rolled out

across UK networks in 2021, providing unrivalled coverage
across the country. Providing a seamless charging
experience is crucial to mass adoption and this genuinely
innovative service allows EV drivers to search, plan and
pay all in one app. We continue to make good progress
working with an increasing number of charge-point
operators and will continue to grow the network
of Zap-Pay enabled chargers.

The business continues to innovate and will be launching
a new fleet payment solution, improved routing, and
a ‘freemium’ subscription model of the app for both
consumers and fleet users. In 2021, the business
plans to invest to leverage its market leading position,
commercialise existing products and services (Zap-Map
and Zap-Pay) and cement itself as a leading player in the
new and evolving EV market.

Commercial partnership with Fleetcor UK

As part of making charging simple for all EV drivers,
Zap-Map have entered a heads of terms agreement with
Fleetcor UK (part of Fleetcor, global business payments
company) to integrate its Zap-Pay solution with the Allstar
payment platform. This agreement aims to deliver a
solution to remove payment complexities for businesses
and commercial fleets.

As part of an on the road solution, the Allstar One Electric
fuel card enables fleet operators to manage all fuel types,
whether traditional (petrol or diesel) or an alternative
such as electric, hydrogen or hybrid, on one payment
card. Allstar has already partnered with nine leading EV
charging providers, including Chargepoint services, ESB
Energy, Engenie, and Source London, to create one of
the largest multi-branded EV fuel networks in the UK. It
now provides fleet operators and drivers with access to
more than 4,277 charging points across 1,700 locations
throughout the UK. Allstar is continually working to grow its
electric charging network, easing access to charge points
and reducing range anxiety.

Zap Flash tariff

Leveraging Zap’s market leading position in the EV industry,
Zap and Good Energy have launched a new smart EV
tariff, designed with input from Zap users. The tariff will
allow EV drivers to be powered by 100% renewable
electricity on an innovative time of use tariff from
Good Energy.

By utilising smart meters, the tariff will provide weekly
four-hour ‘flash’ windows of free electricity. The ‘flash’
windows are based on times of abundant renewable
electricity and signalled to customers in advance, making
it easier for customers to benefit from cost effective,
greener EV charging.

Good Energy will use smart technology and its core
capabilities as a renewable energy supplier, utilising Zap
Map’s customer base as an effective route to market.
Good Energy will be rolling out smart EV chargers and an
updated app to work alongside this tariff. Whilst initially the
tariff will be a beta, further evolutions should allow Good
Energy to transition to more sophisticated smart tariffs
and technology aimed at optimising energy consumption
for customers.

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Good Energy Annual Report 2020

Strategic Report

To build a customer centric
‘Mobility as a Service’
proposition, Good Energy
will couple its core skills as a
100% renewable electricity
supplier and services
provider, with strategic
partnerships to enhance its
customer offering

The business model – energy as a service

Vertically integrated next-generation energy company

Good Energy is a next-generation energy company, founded on a deep green domestic offering. A strong and
competitive core business, with a mature wind & solar generation portfolio, and an increasing focus on small
businesses and electric mobility.

The green revolution

Good Energy is a leader in renewable energy supply and services, with proven credentials as a 100%
renewable electricity supplier.

We serve a growing market of domestic and business customers looking to make an impact on the climate
crisis, making us well placed to capitalise on the wider social and regulatory attention to the need for a mass
shift to green energy.

22
22

Good Energy Annual Report 2020

Good Energy Annual Report 2020Strategic ReportGovernance ReportFinancial StatementsStrategic Report
Cost to serve
(£ per meter)

Cost to serve (£)

-2.2%

Key performance indicators

Good Energy measures its progress with a number of key performance indicators (KPIs) which closely
align with our business.

Further detail on the factors driving the KPI performances is set out in the Chief Executive, Financial and
Operating Reviews within this Strategic Report.

Total customer numbers
(000’s)

Total customer meters
(000’s)

Measures
domestic,
business and
FIT supply
customers

1.8%

280

260

240

220

200

Churn (%)

Reflects
the rate of
turnover
or loss of
customers

-1.0%

Churn (%)

16.0%

15.5%

15.0%

14.5%

14.0%

2019

2020

2019

2020

-2.9%

Measures the
overhead cost
per customer
excluding
acquisition
costs (ie.
sales and
marketing)

2019

2020

Supply volume

Revenue growth (%)

Gross margin (%)

Electricity (GWh)

Supply volume (E)

Measures
the
amount of
electricity
we
supplied to
customers

2.7%

600

560

520

480

440

400

Measures
growth in
sales over
the period

5.1%

Revenue growth

140

130

120

110

100

Measures
profitability
as a
proportion
of revenue
after the
cost of sales

-2.8%

Gross margin

26%

24%

22%

20%

2019

2020

2019

2020

2019

2020

Gas (GWh)

Supply volume (G)

Measures
the amount
of gas we
supplied to
customers

-8.5%

600

560

520

480

440

400

Admin cost growth (£m)2
Admin cost (£m)

Measures
operational
efficiency by
looking at
administration
cost growth

2019

2020

Operating margin (%)1

PBT - Underlying (£m)

Measures
profitability as
a proportion of
revenue after
operating costs

-1.7%

Operating margin

2019

2020

Measures
profitability as
a proportion of
revenue after
operating costs

-69.2%

PBT

2.0

1.5

1.0

0.5

0.0

2019

2020

Net debt

EBITDA (£m)2

Net debt (£m)

Measures
profitability of
the company
before the
cost of
interest, tax,
depreciation
and
amortisation

1.7%

EBITDA

9.5

2019

2020

Measures the
Company’s
ability to repay
all debts if
they were due
immediately

16.8%

Employee engagement
(%)

Employee engage

85%

Measures how
engaged our
people are
based on Gallup
12 survey

80%

75%

0.0%

NPS

Measures
how likely a
customer is to
recommend
Good Energy

1.9%

NPS

Cash & cash
equivalents (£m)

Cash & cash equi.

Measures the
un-restricted
cash and cash
equivalents
held by the
business at a
point in time

33.8%

2019

2020

2019

2020

Carbon avoided (GWh)

Measures the
carbon we
avoided in
the year

5.5%

Carbon avoided

650

600

550

500

2019

2020

1 Operating Margin reflects continuing underlying operations

2 EBITDA and Admin cost growth reflect continuing operations.

2019

2020

2019

2020

2019

2020

Good Energy Annual Report 2020Strategic ReportGovernance ReportFinancial StatementsStrategic ReportOperating review

Wholesale energy market conditions

Demand

Our revenues are sensitive to changes in electricity and gas demand. At the outset of the pandemic,
market trends showed a 15% increase in Domestic electricity demand and a close to 35% reduction in
overall Business demand.

As lockdown eased, the picture changed again. Towards the end of 2020, domestic demand dropped relative
to earlier in the pandemic, trending around 7.5% above normalised levels, while Business demand picked up
and was closer to a 10-15% reduction on normalised levels. We continue to monitor the data closely.

Weather conditions further impacted energy demand. In H1, average temperatures were 0.95 degrees
warmer than seasonal averages for 5 out of the first 6 months of the year. This reduced demand for gas but
had a less material impact on electricity volumes.

Power prices & supply volume

In the first half of 2020, wholesale power prices dropped significantly. Following global trends in the fossil
fuel markets, electricity prices fell 42% from H1 2019 and gas prices fell by 52% from H1 2019. As a result of
decreased demand, excess forward-bought power was sold back into this market at a loss.

We saw a more bullish market in the second half of the year, with power prices rising back towards pre–
COVID levels. Longer term pricing depends on the worldwide changes in demand sentiment. We have
reviewed our traded positions and feel comfortable that we are sufficiently procured in gas and electricity to
manage this position over this winter.

Overall supply volumes were 2.9% down, an improvement on the 6% saw in H1. Total gas supply volumes
decreased 8.5% to 486 Mwh (FY 2019: 532Mwh), driven by the warmer weather. Electricity volumes increased
2.7%, driven by growth in Business supply volumes, following an increase in contracted business in late 2019.
Half hourly (larger) business volumes increased 12.6% to 292 Mwh whilst our combined SME & Domestic
supply volumes decreased 6.4%.

A strong and growing core business

Total customer numbers in the period increased 1.8% to 271.3k, driven by continued business and FIT growth.
The impact of COVID, warmer weather and the revaluation of the generation assets in the first half masked
the underlying good performance of the core business.

Business

Total Business customers increased 9.0% to 139.3k. Business FIT customers increased 8.8% to 130.5k,
maintaining our position as a market leader in voluntary FiT administration. Total Business supply customers
increased 12.3% to 8.8k.

Business customer growth has underpinned our strategy in recent years; a planned shift that has brought
greater stability through longer term contracts and higher retention compared to Domestic supply. Whilst we
saw gross margins fall because of this shift, operating margins have the potential to increase over time due to
the lower cost per acquisition and cost to serve these customers.

Domestic

Total Domestic customers decreased 4.7% to 132.0k. Domestic FIT customer numbers increased 1.1% to 47.1k,
whilst domestic supply customers decreased 7.7% to 84.9k.

We remain committed to having a competitive price point for our unique proposition, while avoiding the
price war that many energy companies are engaged in. Although many customers remain price sensitive,
an expanding number want a truly green energy provider. Recognition from OFGEM, Uswitch and Which? of
Good Energy as a genuinely 100% renewable supplier strengthens our brand position.

Our recent migration onto the Kraken customer service system will aid our target to reduce churn and the
cost to acquire new customers. Domestic customer churn is currently approximately 14.9% - an improvement
of our 2019 level of 16% and lower than the mid-20s industry average.

Feed in tariff (FIT)

FIT administration provides the foundation of our ‘energy as a service’ model. Despite the FIT scheme closing
to new entrants in March 2019, we continue to administer the scheme for domestic and business customers.
We saw domestic customer numbers increase 1.1% to 47.1k and business customers increase 8.8% to
130.5k in the period.

Generation performance

Our 47.5MW generation portfolio consists of 6 solar (30.1MW) and 2 wind sites (17.4 MW). In the summer,
all our sites exceeded their P50 performance except for our smallest site, Creathorne, which experienced
transformer issues.

Weather conditions and reduced energy demand saw renewables break new records, with wind meeting 59%
of electricity demand following Storm Ellen in August. We expect these high renewable days to increasingly
become part of the trading landscape.

Generation revaluation

We are committed to delivering value to stakeholders by working on our existing generation sites, which
continue to perform well.

In the first half of the year, we revalued our entire generation portfolio. We have historically marked the assets
at cost less accumulated depreciation. We also noted that in recent years the relative values of the generation
assets and the long-term loans that finance them have become more disconnected, given the generation sites
are depreciated on a straight-line basis whilst the loan repayments are scheduled on an amortising basis, with
the majority of the total cash payments in the earlier years allocated to interest costs. The revaluation provides
more accurate information on the value of the future economic benefits expected to be realised from these
assets. These assets have been pledged as security for the debt against them and therefore the revaluation
policy provides more accurate and transparent picture of the asset value against its related debt obligations.

The revaluation provides greater transparency of the generation sites’ current value on the balance sheet;
notably gross assets, total equity and gearing. It results in additional depreciation going forward which
decreases profits, but the additional depreciation does not impact distributable profits available
to shareholders.

The revaluation, which was planned for H1 2020, considered the current, COVID-19 impacted power
price market.

Restructure and refinance of generation portfolio

In April 2021 we announced the restructuring of the financing on our renewable generation asset portfolio
to consolidate and simplify funding facilities. The restructuring consolidates the generation assets into one
portfolio that will be solely financed by funds managed by Gravis.

Whilst headline gearing will not change, the restructuring and refinancing provides real short- and long-term
benefits to Good Energy.

Initially, it will provide £7.8m of unrestricted cash on completion, of which:

•

£4.7m relates to the release of various reserve accounts and other restricted cash balances which form
part of the existing facilities,

£3.1m of additional debt raised against the Delabole windfarm, associated with mirroring the terms of
Delabole in line with the rest of the portfolio.

Longer term, the transaction also improves cash flow visibility, with a rebalancing of the performance
covenants over the entire generation portfolio. This frees up future cash generated by the generation portfolio
to be utilised by the Company.

The upfront cash provided, combined with existing strong levels of cash on the balance sheet gives the
Company the ability to wholly repay Good Energy Bonds II. It is anticipated that this will be completed during
FY2022. At the end of December 2020, the outstanding capital on Good Energy Bonds II was £16.8m, while
associated interest costs are £0.8m per annum.

Good Energy Annual Report 2020Strategic ReportGovernance ReportFinancial StatementsStrategic ReportKey risks

Risk management approach:

Our business model

Good Energy has two principal business areas: Supply and Generation. Through our Supply business
we serve over 270,000 domestic and business customers, matching the electricity they use with power
from 100% renewable sources. Within Supply, our Feed-in Tariff (FIT) administration services help
households and businesses meet either all or part of their electricity demand directly from their own
renewable technology.

Our Generation business delivers 100% renewable electricity to the UK electricity grid from eight renewable
energy facilities that Good Energy owns and operates.

Operationally, we keep functions relating to both business areas as centralised as possible, such as sales,
IT, marketing etc. To support this centralised way of working, we have invested in software platforms that
will allow us to scale growth efficiently and cross-sell services to different customer types. In 2020 we
introduced a new domestic customer services platform with Kraken Technologies, and a new software
platform tailored to our Business customers from ENSEK Limited. Built to efficiently handle large data volumes,
they will support the continued roll out of smart products and services. This will allow Good Energy to play to
its strengths in the home and business clean energy services market through simplifying its customer service
and enabling the company to adapt to meet future customer needs.

Our business model relies on important partnerships and communities, in addition to customers that
range from individual households and small businesses through to large corporations.

Our proposition to our customers is to be a trusted and fair customer-focused supplier of 100% clean
energy, who is driven by a clear purpose to power the choice of a cleaner, greener future together.
This unique proposition, along with our strong brand, are important elements of our business model.

In our Supply and Generation business areas, we continue to support our operational and financial
resilience through robust continuity planning. The coronavirus (COVID-19) pandemic provides an example
of an exogenous shock we have prepared for. We have seen no significant impact from the pandemic to
date, however we are monitoring the situation closely while planning for a range of scenarios including
changes to current government guidance or policy. The business is confident that it has the flexibility and
plans in place to mitigate the material impacts of the crisis.

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 respond 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 table below captures those risks that would have the most significant adverse impact
on the company, based on their impact and/or likelihood. While the risks are typical of the risks faced by
other energy suppliers, we believe the Company is well positioned to mitigate through a combination of our
risk management processes, our control activity and our evolving strategic direction.

Generation

Energy supply

Sharing services

Generation

PPA

Supply
B2C

Supply
B2B

FiT

Services

Political

Regulatory

Financial risk
management

Cyber

Wholesale market and
price volatility

Weather, forecasting
demand and generation

Brand, trust and
reputation

COVID-19

lower risk

lower/medium risk

medium risk

elevated risk

Power purchase agreements (PPA)

Feed-in-Tariff (FIT)

Domestic customer supply (Supply B2C)

Energy services (Services)

Business customer supply (Supply B2B)

Good Energy Annual Report 2020Strategic ReportGovernance ReportFinancial StatementsStrategic ReportPrincipal risks and uncertainties

Political risk

Political risk is ever present. Good Energy was minimally impacted by the UK’s formal departure from
the EU in 2020 due to its largely UK-based supply chain. However with the political focus on COVID and
BREXIT the business has faced a fight to keep political focus on climate change and the green economy.
2021 is a key year in the fight against global heating and climate breakdown. With the UK hosting COP26,
Good Energy will continue to push hard to be part of the climate conversation - supporting, lobbying and
influencing UK green policy wherever appropriate.

In 2018, the government introduced a market-wide Standard Variable Tariff (SVT) price cap, which
sets the maximum price suppliers can charge for domestic electricity and gas. The cap is intended to
protect consumers that have not proactively chosen a tariff and are therefore on an SVT or other default
tariff. On 1 August 2019, Ofgem awarded us a permanent derogation from the price cap for our SVT in
recognition of how we support renewable energy; the costs associated with providing green energy; and
because our customers actively chose to switch to our SVT to support our purpose. Successfully proving
all these factors means our SVT is exempt from the price cap until its removal in 2023.

Regulatory risk

The energy industry is constantly changing. Government policy, the push for a low carbon economy,
technology advances and consumer needs all affect our business and industry. Complying with new
regulations requires the Company to make changes within set timelines and has already led (and will
continue to lead) to the Company incurring additional time and cost.

A significant volume of regulatory change is a risk as it can divert time and resource away from growth
initiatives as well as the risk of not meeting regulatory deadlines. The Company has invested in its
regulatory and compliance capability, which enables us to respond effectively to change and reduce risk.

GDPR came into effect from May 2018. Good Energy promotes diligence and high ethical standards when it
comes to collecting customers’ personal information. We aim for a high level of security through education,
training, and sharing skills, experiences, and information. We encourage a culture of risk awareness and the
constructive challenging of decisions and follow sound data protection principles. We comply with internal
and government policies, regulations and procedures, and respect their spirit. All individuals, including our
partners and suppliers, are expected to share this culture of safety and awareness.

Cyber-attack

Business growth and technological advances mean we are increasingly exposed to the threat of
cyber-attack. As with many businesses, a successful cyberattack on Good Energy could result in the
Company being unable to serve customers, potentially damaging its reputation and leading to customer
and revenue loss. It could also result in financial penalties.

Good Energy continually assesses its security policies, standards and procedures, adjusting them so they
are proportionate to the threat profile the Company faces. The Company trains all staff annually on cyber
security and potential threats and actively monitors risks using the National Cyber Security Centre (NCSC),
which provides weekly updates on the cyber threat landscape.

Wholesale market and price volatility

Electricity and gas sales revenue is affected by fluctuations in wholesale prices and the associated costs of
purchases during volatile market conditions. Good Energy mitigates this risk through vertical integration and
its forward-looking and prudent hedging policy. Due to these policies Good Energy was able to hold its SVT
prices unchanged through 2020, providing certainty to customers.

Weather, forecasting demand and generation

On the supply side, weather drives demand and customer behavior. From a generation perspective, the
impacts of climate change, alongside the annual variability of wind speeds and solar radiation, can result
in year-to-year fluctuations. Any material reduction could adversely impact financial results.

Accurate forecasting reduces risk by enabling informed hedging, which mitigates adverse market
movements and short-term balancing risks. Continued investment in staff and systems has provided
Good Energy with good visibility and forecasting performance.

Brand, trust and reputation

Good Energy’s purpose is key to its proposition. Damage to its brand and reputation would compromise
its competitive position. Good Energy was founded in 1999 to help homes and businesses be part of a
sustainable solution to climate change. To ensure we are being true to our purpose we put the business
through a comprehensive Green Audit in Q1 2021.

Our community of shareholders, bondholders, generators, customers, and employees are helping create
a cleaner, greener future powered by renewables. From using digital innovation to help UK households and
businesses manage their energy usage, to empowering them to generate, store and share their own clean
power, we are leading the charge towards a cleaner, distributed energy system.

COVID-19

The national and international response to the COVID-19 pandemic has created unique risks for all
businesses. For Good Energy, those risks can be summarised as cashflow, business continuity, employee
welfare and supplier/customer relationships.

During 2020 the group quickly adapted to remote working, mitigating some operational impacts posed by
COVID-19. The Company expects to maintain a more flexible approach to home and office based working.

The more macroeconomic challenges driven by COVID-19 continue to require active review and
management by the business. The Group continues to identify drivers to preserve and improve cash
and balance sheet strength to counter any potential reductions in revenues/increases in customer debt
resulting from the economic downturn. To date the ongoing Government support packages have helped
mitigate economic impacts, but as the vaccine program is delivered the economic support for individuals
and businesses is going to be scaled back. Good Energy continues to plan ahead and is ready to face the
challenges this situation presents. Please see the Going Concern disclosure (page 68) for more details.

Financial risk management

This has been considered within note 3 in the Notes to the Financial Statements.

Good Energy Annual Report 2020Strategic ReportGovernance ReportFinancial StatementsStrategic ReportChief Financial Officer’s review

“Despite the impact of
COVID-19, the Group has
had a positive financial
performance from the core
business and maintained a
strong cash balance.”

Financial outlook

Despite the impact of COVID-19, the Group has had a
positive financial performance from the core business
and maintained a strong cash balance. This includes
reduced operating costs following the implementation
of new digital platforms. Customer numbers have
remained stable, whilst cash collections have been
strong and the overall working capital position has
remained healthy. The implementation of our Kraken
technology platform is complete and the smart meter
roll-out is on track. We remain vigilant to the potential
impacts of the withdrawal of various government
support schemes for individuals and businesses later
in 2021, and plan to retain a cash buffer through to
the end of winter 2021/22 as a result.

The first quarter of 2021 has seen power price
volatility, most notably in January, and periods of
colder than average weather which has led to
domestic customer demand being higher. The
Delabole site experienced outages following storms
at the start of the year together with some delays
to parts being available from Europe as a result of
Brexit. Availability at the Delabole site in 2021 to
date is slightly under 80% as a result. These factors
do not affect management’s expectations of the
performance of the business for the full year.

Financial update

Overview

Performance in the year can be broadly split into
three key areas: good internal cost management of
factors within our control; external market factors
outside of our control; and proactive decisions made
on structural changes.

Underlying profit before tax would have seen year
on year growth, after normalising to exclude the
impact of the generation revaluation and one-
off restructuring costs associated with the Kraken
customer services technology platform integration.

Internal cost management

Combatting the ongoing COVID-19 impact, Kraken
investment returns and prudent cost control across
the business has helped to deliver cash cost reduction
of £2.7m in the period. Normalised admin costs
are £2.3m better. These values are after removing
the additional COVID-19 related ECL provision,
Creathorne write down, HQ cancellation and
Brynwhilach profit on disposal in 2019.

External market factors

Electricity margin has been negatively impacted
by reduced half hourly (“HH”) volumes and the sale
of excess power back to the market at a time of

reduced prices and additional network charges,
which resulted from reduced demand during
lockdown. In aggregate these account for a £1.9m
negative impact to gross margin. There was some
compensation from £0.7m additional PPA benefits on
account of the lower power prices.

Gas margin is flat year on year, with the impact of
lower demand at the start of 2020 being reversed
with higher margins in the second half due to
increased home working and lower prices
providing upside.

An incremental £0.8m expected credit loss provision
was taken, driven by the macroeconomic outlook. In
2020 this is a non-cash impact.

Structural changes

We commenced planning for the revaluation
of our generation asset portfolio at the end of
2019 and completed the exercise in H1 2020. We
have historically marked the assets at cost less
accumulated depreciation. We have also noted that
over recent years the relative values of the generation
assets and the long-term loans that finance them
have become more disconnected, given that the
generation sites are depreciated on a straight-line
basis whilst the loan repayments are scheduled on an
amortising basis, with the majority of the total cash
payments in the earlier years allocated to interest
costs. The revaluation therefore provides greater
transparency of the generation sites’ current value on
the balance sheet, notably gross assets, total equity
and gearing.

Generation asset revaluation delivered net upwards
asset value of £15.9m. This comprised of uplift on
seven assets totalling £16.4m, and the £0.5m write
down on the small Creathorne solar site There is also
an incremental ongoing £1.1m depreciation charge,
which does not impact distributable profits available
to shareholders.

As planned, there has been a realisation of a further
£0.5m on restructuring costs relating to the new
customer services technology platform. There was an
initial £0.9m recognised in 2019.

Financial performance

Profit and loss

Revenue increased by 5.1% in the period to £130.6m
(2019: £124.3m) driven by business supply volume
growth offset by lower domestic supply customers.
The impact of COVID masked an underlying increase
in contracted business.

Cost of sales increased by 9.2% to £101.1m (2019:
£92.6m). Gross profit decreased by 6.6% to £29.6m
(2019: £31.7m). Gross profit margin decreased to
22.6% (2019: 25.5%).

Administration costs excluding non-underlying
administration costs decreased 0.7% to £25.0m (2019:
£25.2m). This was primarily driven by Kraken cost
savings of £2.7m mostly offset by an incremental
£0.8m charge for expected credit loss provisioning,
Creathorne write down, cancellation of the move
of headquarters and Brynwhilach profit on disposal
in 2019. Total administration costs decreased 2.2% to
£25.5m (2019: £26.1m).

Underlying operating margin decreased to
3.5% (2019: 5.2%).

Net finance costs decreased by 3.3% to £4.1m, as
overall debt paydown continued to be offset by an
increase in reported finance costs following the
implementation of IFRS16.

Non underlying costs of £0.5m associated with
restructuring costs, delivered a loss before tax from
continuing operations of £0.1m. Overall £0.1m of
profit is attributable to the Group, after removing the
losses attributable to NCI (minority shareholders of
Zap Map).

Cash flow and cash generation

Our business model remains highly cash generative
with £11.4m cash generated from operations (2019:
£8.1m), with £10.6m generated before movements
in working capital (2019: £10.0m). Working capital
movements remain in line with seasonal trends,
despite the impact in the year of COVID-19.

There was a net increase in cash of £4.6m, delivering
a strong cash balance of £18.3m (2019: £13.7m)
funding investment across the business, continued
paydown of debt and capital flexibility.

Funding and debt

Net debt decreased 16.8% to £34.6m (FY 2019:
£41.6m) following further debt repayment and good
cash generation. Gearing reduced to 51.6% (2019:
68.9%) primarily as a result of the upward valuation of
the generation portfolio.

Following the repayment of Bond I in June 2019,
Group finance costs have been lower and this is
a positive step towards lowering the Company’s
ongoing financing costs and reducing the gearing
ratio over the medium term. There is a change since
the interim accounts in that the Good Energy bond
is now reported mostly within non-current liabilities.
This is due to an annual redemption request window
for bondholders in December of each year, with
upcoming bond redemptions set at June 2021
or June 2022.

The Group continues to maintain a robust financial
position. We look to optimise our use of capital
by continually reviewing the returns on our assets,
balancing operating requirements, investment for
growth, and payment of dividends back
to shareholders.

Good Energy Annual Report 2020Strategic ReportGovernance ReportFinancial StatementsStrategic ReportGeneration portfolio

Our 47.5MW generation portfolio consists of 6 solar
and 2 wind sites. In the period we have revalued the
entire generation portfolio to accurately reflect the
current value of these assets. As outlined in our 2019
Annual Report, we undertook a review to ensure that
our valuation was reflective of market conditions.

Generation asset revaluation delivered upwards asset
value of £16.4m. However, there is an incremental
ongoing £1.1m depreciation charge, and further
£0.5m write down on the small Creathorne solar site.
The revaluation includes the impact of the current,
COVID-19 impacted power price market.

Events after the balance sheet

On 1 April 2021 the Group announced the
restructuring of the financing on its renewable
generation asset portfolio to consolidate and
simplify funding facilities. On 8 April, the Group
announced a further £1m strategic investment into
Zap Map’s parent company Next Green Car Ltd, via a
convertible loan note. See page 82 for further detail.

Rupert Sanderson

Chief Financial Officer

The Group is currently evolving its strategy towards
energy services and remains mindful of the need to
capitalise on strategic business development and
investment opportunities. Prudent balance sheet
management remains a key priority.

Earnings

Basic underlying profit per share decreased to 3.3p.
Reported profit per share decreased to 0.4p (2019:
profit per share 7.5p).

Dividend

Due to the need to appropriately balance between
investment in the core business and shareholder
returns, no final dividend has been proposed for 2020.
The Board recognises the importance of the dividend
to many shareholders; therefore the Board will resume
the company dividend from 2021.

Non underlying costs

An amount of £0.5m has been incurred as non-
underlying costs within the period. These relate to
the one-off expenditure of implementing the Kraken
technology platform and accelerated depreciation.

Expected credit loss

The Group’s outlook and base case economic
scenario used to calculate expected credit loss
(ECL) allowance has been updated since both the
2019 year-end and H1 2020, to reflect the Group’s
best estimate of the future economic outlook of the
Group’s customer and client base, has resulted in
an incremental provision charge of £0.8 million in
the period. The Group’s ECL allowance continues
to reflect a probability-weighted view of future
economic scenarios where future macroeconomic
forecasts deteriorate further from the 2020 year-
end. We remain mindful of the potential economic
impact on both our SME and domestic customers.
The provision reflects external benchmarks of future
macroeconomic performance, as well as our own
internal debt collection performance in year.

Strategic investment

The Group converted its equity position in Zap-Map
(Next Green Car Limited) to take a majority 50.1%
position in the period. As a result, Zap-map has been
consolidated as a subsidiary under IFRS 3 from the
date control was obtained. Non-controlling interests
have been recognised at their share of the fair value
of net assets.

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Good Energy Annual Report 2020

Strategic Report

35
35

What we do to
achieve our purpose:
Empowering you
to use, share,
generate and store
clean energy

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Engaging with our community

Partners for change

Forming partnerships with like-minded organisations helps to further our purpose and reach new
audiences. We’re currently working with partners from a range of different sectors, from the creative arts
to sustainable agriculture.

BAFTA Albert

We are proud to have strong links with BAFTA (British Academy of Films and Television Arts) and
its sustainability initiative, albert.

Since 2017, we have worked with albert on the Creative Energy Project, a scheme which makes it easier
for film and TV companies to switch to 100% renewable electricity. In 2020 we signed up 25 new companies
to the project, bringing the total to 69.

“Good Energy’s green credentials and their successful tender makes them a leading
choice of energy partner for albert’s Creative Energy Project. Together we aim to
make clean renewable energy easier and more accessible than ever before helping
you reduce your environmental impact for all film and TV production.”

Kevin Price, Chair of the BAFTA albert Consortium

Julie’s Bicycle

Julie’s Bicycle is a charity that supports the creative arts to reduce their environmental impact and tackle the
climate crisis. With their help, we expanded the Creative Energy Project to reach more businesses which are
starting out on their sustainability journey. Over the past couple of years, we have worked with Julie’s Bicycle
on their flagship Creative Green Awards. The event aims to recognise the achievements of arts organisations
taking action on climate change.

“Clean, renewable energy is the simplest of the many solutions to climate change
and Good Energy have been pioneering this solution for many years. We have been
really grateful to be in partnership with Good Energy, driving demand for renewables
as well as celebrating their work with the creative sector”

Alison Tickell, CEO and Founder

Friends of the Earth

We have been working with Friends of the Earth for over a decade. As one of the UK’s most well-known
environmental organisations, their support is invaluable in promoting our purpose. We remain one of only
two energy suppliers the charity recommends to its large number of supporters.

“We’re deeply concerned about climate change and its impacts on the planet and
people. But by working with Good Energy to move Britain away from imported fossil
fuels and towards green energy generated locally, we’re helping to reduce one of its
greatest causes.”

Guy Shrubsole, Climate & Energy Campaigner.

We also work with these businesses and organisations to promote sustainability and fight climate change:

Better Business

Like millions of others during lockdown, our CEO
and Founder Juliet Davenport was now working
from home. She found that as many other business
founders were doing the same it was easier to stop,
reflect, and have valuable conversations about how
businesses can be a force for good.

This was behind the idea behind Better Business,
our video series where Juliet speaks to some of the
UK’s most prominent sustainable and purpose-led
business leaders. Featuring the likes of Tom Kay
of Finisterre, Anne-Marie Imafidon of STEMettes,
Richard Ballard of Growing Underground and Mart
Drake-Knight of Rapanui, the series of discussions
covers the themes of purpose in business, coping
with crises and building back better.

The interviews can be watched back on our
YouTube channel and our website here:
goodenergy.co.uk/business/better-business

Investing in a green future:
our pensions

Pensions could be the next frontline in the fight
against climate change.

Historically, many pension funds have invested in
companies that have a negative impact on our
climate, supply chains that are unsustainable,
and industries that accelerate climate change.
When people find out they’re accidental investors
in these companies, they’re often horrified.

We have partnered with the ‘Make My Money Matter’
campaign, which is creating a movement calling for
the trillions of pounds invested in our UK pensions to
build a better world.

We also published our own research into Britain’s
ethical pensions market, having contacted 54 pension
schemes and funds which collectively hold £2.9 trillion
of assets under management. Our own progress
will continue as we seek to provide our people with
pensions options that match their desire to protect
the planet.

Good Energy Annual Report 2020

Strategic report

Case studies: supplying sustainable businesses

Farmdrop: The online grocer powered by renewables

Like Good Energy, Farmdrop’s passion lies in getting their customers closer to the producer.
The online grocer currently supports a network of over 450 farmers, producers and makers.

They chose Good Energy as their supplier to help make sure they could apply their
sustainable thinking throughout their business. They have two warehouses to power, as well as
a fleet of electric vans to make their deliveries. All of that requires energy, so they make sure that
it’s renewable.

“Switching to renewables with Good Energy was a no brainer for us. We’ve dramatically lowered our
emissions, and we’re encouraging our producers to switch too”, Ben said.

During the 2020 pandemic and lockdown, Farmdrop found their offering is more important than ever
before – with a sharp increase in the volume, size and frequency of orders.

“I think aside from the convenience, people really are passionate about supporting small businesses and
prioritising sustainability in times like these”, said Ben.

“Switching to renewables with Good Energy was a no brainer for us.
We’ve dramatically lowered our emissions, and we’re encouraging our
producers to switch too.”

Farmdrop

Good Things Brewing:
beer that’s good for
the planet

The way beer is traditionally
brewed is incredibly inefficient,
with huge amounts of water,
energy and grain wasted. So in 2017,
sustainability engineer Chris Drummond decided
to see if he could brew better – and set about the
small task of creating the world’s first closed-loop,
fully sustainable brewery.

The result was Good Things Brewing. And Chris
turned to Good Energy to supply 100% renewable
electricity to make all that beer.

Like many other businesses founded on a purpose,
Good Things Brewing have found that doing things
differently makes them stand out, and has even
increased their resilience during tough times.

“Our sustainability credentials may not always be
what makes the first sale”, explains Chris, “That’s the
beer itself. But it definitely increases loyalty towards
our brand.”

Now, Chris wants to help as many businesses in his
industry reduce their impact as well, by showing
them that by cutting energy and waste, you can
become more profitable and wholly sustainable.

Our response to COVID-19

Responding to the pandemic changed many people’s perceptions of how businesses can operate.
We were no exception, and have developed new ways of working across the company.

As lockdown started, we worked with speed to move over 250 people to remote working. This included
our IT and Facilities teams working flat-out to ensure everyone had access to quality office furniture and
IT equipment they needed, including the business’s 100-strong Customer Operations team.

Supporting working parents and ensuring our people could continue with personal development was
central to how we responded. We created a suite of new flexible working options to enable our people
to juggle the demands of homeschooling, supporting dependents, volunteering in pandemic related
schemes or – recognising the impact of lockdown on mental health - simply to take more time out. We also
significantly increased communication from our leadership team and expanded our mental health support
and wellbeing services.

Before COVID-19, we had started the shift towards a more flexible working environment. The pandemic
accelerated this change, giving people more freedom to balance work with their other responsibilities.
We plan to take what we’ve learnt forward long term, by enabling people to increase the days they work
from home (if they want to), while retaining ‘Anchor days’ in the office to support teams to work together.

“The company has been incredibly supportive throughout the lockdown period.
The ability to work more flexibly during this time and take exceptional leave removed
a lot of the stress of working from home whilst home schooling my young children.”

“Having access to the latest remote working technology has
meant that online meetings have been more efficient and
allows us to be more effective with our time. It’s also given
everyone more access to our Executive Team who hosted
fortnightly all company calls.

“Staying connected while working flexibly has allowed
me to continue to raise my profile within the business.
As a result, I’ve been invited on the new leadership
development programme, which will help me to continue
to raise my profile within the business and the industry.”

Laura Wildish, Senior Marketing Campaigns Manager

Fundraising for the NHS

Mental Health Awareness Week takes place in May each year. As one way to support mental wellbeing is
through exercise, we decided to get moving for minds and raise some money for NHS Charities Together
along the way.

The challenge was set: with a promise to donate £1 per kilometre travelled, how far could our people move in
one week? As a result of the combined walking, running, and cycling efforts, we managed to reach 1,400 km,
a greater distance than from Land’s End to John O’Groats. We rounded up the final figure of £1,400 to £2,000,
with an extra £260 added when staff donated money by buying surplus office equipment.

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Innovating to achieve net-zero

As we think about the future of energy there are three areas we need to tackle: electricity, heat and transport.
The transition to net-zero emissions means supporting our customers to do their bit across all three. 2020 saw
us develop our propositions, partnerships and philosophy around how to do just that.

These new propositions include the UK’s first ever heat pump tariff, called Green Heat, and the trial of smart
time of use tariff for electric vehicle drivers. Creating these unique tariffs is an important way to support
people who are shifting from using fossil fuels to clean alternatives.

Greener heating

Renewable heat pumps are an essential solution for freeing Britain’s homes from the gas grid. Our Green Heat
tariff offers lower rates and zero standing charge over the winter months to help make running a heat pump
more affordable. This will help customers pay less to heat their home at a time of year they use their heat
pump most intensively.

We understand that investing in a heat pump may not be possible for everyone. So we’ve also looked to
provide ways for people to make sure their existing gas heating is running as efficiently as possible. An annual
boiler service can improve efficiency by up to 15%, which not only saves people money, but cuts carbon
emissions as well. Our strategic partnership with home and boiler care provider Hometree will help give people
peace of mind over their heating – especially important with more people than ever working from home and
using more energy through the winter.

Driving change

Our new EV tariff, called ‘Green Driver’ is another example of innovation in action. The tariff - now in trial
stage - is a smart, insight-driven “time of use” tariff developed using Zap-Map’s rich data. Green Driver offers
customers a lower cost and longer off-peak charging window, starting earlier in the evening at 10pm. The
tariff will help customers shift consumption, providing a cost saving while also supporting the grid at a time of
day when a higher proportion of demand is met by renewable energy.

Pathways to a Zero Carbon Britain

In 2019, the UK government legislated to reduce greenhouse gas emissions to zero by 2050. This major
commitment was the first of its kind in the world, and a significant increase on the existing target of an
80% reduction. The move was the starting gun in the race to develop new policies and ideas to support the
transformation to a zero-carbon economy.

Good Energy has a strong track record of influencing climate policy and we decided the time was right to
make a fresh contribution to the debate. We commissioned Energy Systems Catapult, a research centre, to
model our vision for how Britain can reach zero carbon emissions under a set of innovative scenarios. These
scenarios imagined a world where millions of homes have roof-top solar panels and battery storage devices;
where renewables provide 98% of our electricity demand; and where we develop new homegrown renewable
technologies, such as tidal and geothermal power.

The full results of the report are to be published in 2021 and we will follow the work with a range of events for
policymakers, investors, and businesses.

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Our environmental impact

We are committed to reducing our environmental impact across the entire business.
This means carefully analysing the main sources of emissions and providing detailed
reporting on an annual basis. We have achieved ISO14001 accreditation, which
confirms we’re meeting international standards for measuring and improving our
environmental performance.

In 2020 we joined the UN’s Race to Zero campaign as part of its SME Climate Hub.
The campaign brings together a diverse group of international companies united by a
commitment to achieve net-zero emissions before 2050. But we want to go further than this and are
looking into setting a bolder climate target.

2020 reductions
COVID-19 had a significant impact on our carbon footprint and 2020 saw a 64% reduction in total emissions.
This was driven by declines in our Scope 3 emissions which includes employee travel and companies in our
supply chain. We work with ClimateCare to neutralise our remaining emissions by investing in internationally
recognised carbon offset schemes.

58.96

314.56

Total
373.51

45.85

72.23

Total
118.09

1. Direct emissions

2. Indirect emissions from electricity
2. Indirect emissions from electricity used
used (0, due to 100% renewable
(0, due to 100% renewable electricity self-supply)
electricity self-supply)

3. Indirect emissions such as

3. Indirect emissions such as employee

employee travel & procurement

travel & procurement

Greenwashing update
Over the past few years, we have worked
continuously to raise awareness of the problem
of greenwashing in the energy market. 2020
saw significant progress with our campaign to
engage our customers, the media and relevant
government bodies with the issue.

In early 2020, the regulator, Ofgem, published its
new Decarbonisation Action Plan, which sets out its
priorities on net-zero for the next 18 months. The
plan includes a new commitment to crack down on
greenwashing, stating: “We are aware of growing
concerns about ‘greenwashing’…we expect suppliers
to be transparent about what constitutes a ‘green
tariff’ and we will undertake work to ensure that
consumers are not misled”.

Media awareness of greenwashing grew over
the following 12 months, and we worked closely
with national newspapers, broadcast journalists,
and energy reporters to explain the problem in
more detail.

Along with background briefings, we published two
papers which focussed both on the problem within
Britain, and how suppliers look to the rest of Europe
to avoid environmental levies at home.

As a result of this work, we obtained media
coverage for our campaign among some of the
UK’s largest media outlets, including BBC Morning
Live and The Sunday Times.

Following on from this success, greenwashing has
been taken up as an issue among price comparison
sites such as USwitch, and is being investigated by
the Competition and Markets Authority.

Towards the end of 2020, the government
released its long-awaited Energy White Paper.
This significant policy document outlines how
the current administration will shift the economy
towards net-zero emissions.

The paper included a section on transparency in
the energy market, and included a commitment
to investigate environmental claims made by
energy suppliers:

“We will consult in 2021 on how to
ensure consumers receive transparent
information when choosing an energy
product, for example quantifying the
additional environmental benefits of a
tariff marketed as green”. - Ofgem

This commitment is strong validation for our
campaign and echoes our call for increased
clarity. We have already started engaging with the
government on its consultation, a process which
will continue throughout 2021. We are similarly
scaling up our campaign with the national media,
energy trade associations, regulatory bodies and
non-government departments.

Good Energy Annual Report 2020

Strategic report

Carbon-neutral gas

In 2016 we launched carbon neutral gas, made up of 6% green gas with the remainder carbon offset.
This year we increased the proportion of biogas to 10%, and supported three new gold standard biogas-based
carbon offset projects so that we are promoting green energy worldwide, too.

Green gas, or biomethane, is gas that’s not from fossil fuels. It’s made when organic materials — like food
waste — decomposes and releases methane, in a process called anaerobic digestion. This biomethane gas is
then captured and fed into the national gas grid to be used in your home.

It’s not possible to simply swap all of the fossil fuel gas in the UK with green gas, but we’re leading the way
with our 10% for customers.

Carbon offsetting is not the final answer to decarbonising either. But what offsetting can do is fill a gap in
time, finance or ambition. To make real reductions in the amount of carbon in the atmosphere and have other
positive social benefits at the same time.

It is with this in mind that we chose a set of new carbon offset projects with our partners Climate Care.
10% may be the limit for biogas in the UK, but we can go further through supporting it elsewhere in the world.
Climate change is a global problem after all. We are now supporting three new biogas projects in India, China
and Turkey, all of which are Gold Standard accredited, which is one of the highest levels of internationally
recognised verification schemes.

Good Housekeeping Accreditation

For almost 100 years, the Good Housekeeping Institute has been a trusted
source for the best and most reliable products in the consumer market.
Its experts provide recommendations to consumers off the back of this, on
everything from food recipes to freezers.

2021

In 2020, and after a rigorous period of testing, the institute announced that Good
Energy was approved as a “100% renewable electricity provider”. This was an important recognition
of everything Good Energy stands for and has practised in the energy market for 20 years.

We know that not all suppliers have the same high standards when it comes to evidencing their green claims.
Receiving the Good Housekeeping Institute’s coveted Getting Greener endorsement is another way of showing
people what we do is different.

Good Energy Annual Report 2020

Strategic report

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Our social impact

Marching with Greta Thunberg

Greta Thunberg and other young activists have
mobilised an entire generation to call for climate
action, creating a movement that has put increased
pressure on those in power to combat climate
change. And in February 2020 she announced that
she was coming to Bristol, which is just a short train
ride from Good Energy’s headquarters, and the
home city for many of our team.

We told everyone in Good Energy that provided
there was enough cover to ensure adequate
support for customers that they could go to Bristol
to see Greta speak and march with the 30,000
strong crowd. Good Energy’s yellow banners were
very visible on the day, and widely featured on the
extensive national news coverage.

Following the event, which took place in pouring rain,
College Green where the march started and finished
had been turned to mud. A crowdfund campaign
was started to ‘make College Green green again’,
and Good Energy quickly responded to become
the biggest donor. We then became involved in the
plans to use the donations to rewild the green, which
will involve planting wildflowers and trees to make it
more ecologically friendly than before.

Strengthening our ties with rural communities

Our two wind and six solar farms were developed in the early 2010s with
community support. Each one of these projects has a community fund
attached to ensure local people benefit from hosting renewables.

In 2020, our funds reached an important milestone, having generated
£400,000 in direct contributions since they were established. These
ongoing donations have helped a range of initiatives come to life in only
a few short years, from creating new green spaces to investing in digital
equipment for schoolchildren.

The Alderholt Community Fund in Dorset is one such example. The fund
was created in 2015 alongside Good Energy’s Crossroads solar farm, located
nearby. The fund will last for 30 years with an average of £7,000 committed
annually by Good Energy for the lifetime of the green power plant. The Alderholt
fund has provided a helping hand to 27 community projects, ranging from health to sporting needs.
Local leaders also put £1,300 towards the Alderholt Coronavirus Response Group.

“In the time since it was set up the fund has played a major role in supporting the
local community. That good work will continue as we recover from coronavirus,
and in the years to come.”

James Grazebrook, chair of the Alderholt Community Fund.

Good Energy Annual Report 2020

An ‘outstanding’ place to work

As a business we try to ensure our values flow through everything we do. We set ourselves high standards for
our workplace and want our staff to have a job they genuinely believe in.

The hard work we put into this part of the business was recently recognised with an ‘outstanding’ rating
by Best Companies. The accreditation offered by Best Companies is the gold standard for workplace
engagement. The results we received were based entirely on the feedback of employees, which makes it even
more special to receive.

2020 was a challenging year for all our people. The impact of the pandemic meant we’ve had to completely
change how we work together. So, to be recognised as outstanding truly reflects the resilience and optimism
of our fantastic team. We know we’re all more powerful when we work together, and 2020 proved that more
than ever.

The Good Future Board

Good Energy has long had four stakeholder groups. Like most companies, our investors, our customer and our
people are vitally important. But we also always consider a fourth — our futureholders.

Futureholders are the young people who will be most impacted by climate change if we do not take sufficient
action. They are at the heart of Good Energy’s purpose, and in 2020 we decided to make their voice better
heard within the business.

This was the idea behind the Good Future Board. Designed to mirror our existing company board, but with the
notable difference of all members being aged 18 or under.

Announced in November 2020, we worked with environmental education charity Eco-Schools to gather
applications, asking for a personal statement of 500 words or fewer.

Phenomenally, we received close to 1000 applications for the six places on the board. Eco-Schools helped
shortlist the 1000 down to just 24, which were then voted on within the business to select the six.

The final six Good Future Board members will now attend at least two board meetings a year where Good
Energy will get their feedback and ideas, helping us to stay true to our purpose and commitment of protecting
their futures. They are —

Shaina Shah
Shaina is a Girl Guide who
completed her ‘conscious
consumer’ badge by creating
an ethical fashion brand.

Jack Solly
In Jack’s application he pitched
a new certification called
CarbonCorp, for businesses
which are carbon negative.

Kathryn Gornall
She expressed dismay that the
average age of a board member
of a top UK company is nearly
sixty, while the average age of
a US senator is 62 and UK MP
around 50.

Ada Wood
Having achieved an A* in an
Environmental Management
GCSE last year, Ada is
forthcoming on the need to listen
to science and not be drawn by
economics or public opinion.

Akash Thaker
In his first year of A Levels, having
worked with circular economy
start-up The Good Plate Company
and been waste manager at
festivals, Akash has an excellent
grasp of sustainability.

Mahnoor Kamran
Having migrated to the UK after
living in the Middle East and South
Asia, at only 17 Mahnoor has seen
severe effects of climate change
firsthand. She is a regular public
speaker, well-informed on the
global inequalities caused and
exacerbated by climate change.

Strategic report

Our people

Each year we celebrate our people with our Purpose and Values Awards. We encourage everyone to
nominate a colleague for demonstrating how they have lived out our purpose and values during the year
when dealing with our customers, each other, shareholders, future holders, business partners and our
local communities.

We usually have five award categories based on our values of Inclusive, Straightforward, Determined and
Fair. As well as our Customer Champion Award, which is for those people who go above and beyond to put
the customer at the heart of everything they do.

Champions

Our employee Champions play an important role in our team. They’re a group of over 20 employees who
test new ideas, give feedback and collaborate on plans to make Good Energy a better place for all of us,
our customers and our planet.

During 2020 the Champions played a key role in two focus areas:

• Our approach to Diversity and Inclusion

• Our 2021 workplace and new ways of working

They were also instrumental on keeping us informed of how our people were feeling as we navigated
through tricky waters with the pandemic.

Diversity and Inclusion Working Group

In late 2020 we refreshed our Diversity and Inclusion plan. As part of this we asked people across the business
to volunteer to be part of a Diversity and Inclusion Working Group. This group of people is responsible for
helping us drive our plan and for engaging our people along the way. This includes a range of initiatives across
education and development, engagement, representation, selection and monitoring, all designed to improve
the inclusiveness of our culture and customer propositions, and to increase the diversity of our workforce.

Harry

“I am our Operational Learning and
Development Manager. This means
I get to work with all our wonderful
Specialists to help them realise and
achieve their career goals. It’s also my
job to ensure our people are engaged,
informed and motivated to deliver the
best service possible.”

Araba

“I’m Canadian and I live in Chippenham
with my firefighter husband and our
spirited toddler. I’m a Clean Energy
Specialist at Good Energy. I talk to
our domestic customers and Feed in
Tariff generators and make sure their
accounts are running smoothly. I’ve just
accepted an internal opportunity to be
a Business Account Manager and can’t
wait to get started.”

Our diversity data

To give us a clearer picture of the work we have
to do to be a more inclusive business, we asked
our people to disclose their ethnicity so that we
have accurate data. 92% responded, reflecting
strong engagement and high levels of trust across
the company. As the chart shows, ethnic minority
colleagues currently make up 9% of the workforce.

Several steps are being taken to improve diversity.
These include meeting the following objectives:

• Attracting and hiring diverse talent

•

Increasing an inclusive culture by learning
about and celebrating diversity

• Accountability and good diversity governance

•

Inclusive development opportunities.

Good Energy Annual Report 2020

Strategic report

Governance Report

Board of Directors

Governance & Directors’ Report

Audit & Risk Report

Remuneration & Nomination Report

Independent Auditors’ Report

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Governance Report

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Board of Directors

William (Will) Whitehorn – Non-Executive Chairman
(Independent)

Will focuses on fast-moving and growing companies, with extensive
experience across a broad range of sectors, especially in technology,
digital and branding.

Will currently holds a number of other Non-Executive roles across a range
of companies, including space technology company AAC Clyde Space AB
of Sweden. He is also Chairman of Craneware PLC and the Scottish Event
Campus, host of COP 26. He was also one of the founding shareholders of
Purplebricks Group PLC. He is a Non-Executive Director on the Royal Air
Force Board with the rank equivalent to Air Vice-Marshal. In 2020, he was
appointed President of UKspace.

Skills and Expertise: Will spent more than 20 years with Virgin Group, where
he was responsible for global brand development and corporate affairs. He
also played a key role in founding several Virgin businesses including Virgin
Rail and Virgin Galactic and was special advisor to Sir Richard Branson.

Juliet Davenport – Chief Executive Officer

Juliet is founder and Chief Executive Officer of Good Energy – a
renewable energy company with a mission to power a greener, cleaner
future together with its customers. Juliet has been an innovator for over 20
years, developing technologies and services to fight climate change and
transform the energy sector for the better. In 2013, she was awarded an
OBE for services to renewables. In 2020 Juliet was appointed Chair of
Zap-Map and appointed to the board of The Crown Estate. She currently
sits on the board of the Renewable Energy Association, Innovate UK
and is Vice President of the Energy Institute. In addition, she sits on the
advisory boards of leading UK think tanks, including Aurora, Oxford
Energy and Grantham Institute.

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.

Joined Board:
July 2018

Responsibilities:
Chairman of the Board

Member of Nominations
& Remuneration
Committee and
Member of Audit & Risk
Committee

Appointed CEO:
2002

Rupert Sanderson - Chief Financial Officer

Rupert joined us in February 2017 and is responsible for all finance,
legal, company secretariat and trading matters, including managing our
financial stakeholders. Having worked widely in larger support services and
energy organisations as well as in supporting smaller organisations through
growth programmes, Rupert brings valuable experience to Good Energy
as it develops its services and propositions. His previous roles include senior
financial and commercial positions at Centrica, British Gas, Serco and Avis
Europe. In January 2020 Rupert was appointed to the Good Energy Board
as Chief Financial Officer.

Joined Board:
January 2020

Rupert began his career as an accountant for PwC and is a Fellow of the
Institute of Chartered Accountants in England and Wales.

Emma Tinker – Non-Executive Director (Independent)

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 where she is Chief Investment Officer. 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 the Gardeners’ Royal Benevolent Society.

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.

Timothy (Tim) Jones – Non-Executive Director (Independent)

Tim was appointed Non-Executive Director in December 2017 and is a
Technology Executive, Advisor and Angel Investor who brings 25 years of
digital innovation, execution and operation experience to the Board.

A former executive of Moneysupermarket Group PLC where he was CIO
for 7 years and a co-founder and former Executive at AutoTrader UK. Now
founder and CEO of Disrupt Club, a specialist digital advisory firm. In 2020,
Tim was appointed a Non-Executive Director to the Zap-Map Board.

Skills and Expertise: Tim is a chartered engineer (CEng) and chartered
IT professional (MBCS CITP) with a depth of experience in leading
digital transformation and commercial growth; both scaling early stage
companies and the formation and leadership of highly performing teams
in established organisations. Tim has extensive experience in delivering
innovative consumer propositions in various online sectors such as retail,
automotive, travel, marketplace and the highly regulated verticals of
insurance, financial services, energy and telecommunications.

Nemone Wynn-Evans - Non-Executive Director (Independent)

With extensive experience in the financial services sector, Nemone brings a
broad range of skills across audit, risk management, business development,
corporate finance, corporate governance, investor relations and marketing.
She is currently Chair of the Nominations Committee, a member of
the Audit Committee and is Senior Independent Director of Shepherds
Friendly Society. Nemone also holds a number of roles across a range of
companies, including as a Non-Executive at Hinckley & Rugby Building
Society where she sits on both the Audit & Nominations Committees, is a
Board Advisor at SORBUS Partners LLP and is a member of the Commercial
Advisory Committee at Coventry University. She is also a Fellow of the
Chartered Institute of Securities and Investments.

Skills and Expertise: Nemone began her career in the City of London
and has worked with many listed PLC and PRA/FCA/FSA regulated
companies, having acted as a Finance Director on the main board of a
stock exchange.

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Joined Board:
September 2016

Responsibilities:
Chair of Nominations &
Remuneration Committee

Member of Audit & Risk
Committee

Joined Board:
December 2017

Responsibilities:
Member of Audit & Risk
Committee

Member of Nominations &
Remuneration Committee

Joined Board:
February 2019

Responsibilities:
Chair of Audit & Risk
Committee

Member of Nominations &
Remuneration Committee

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Good Energy Annual Report 2020

Governance Report
Governance Report

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Strategic ReportGovernance ReportFinancial StatementsGood Energy Annual Report 2020Governance Report

Governance & Directors’ report

Overview

Good Energy is committed to high standards of
corporate governance and places good governance
at the heart of the business. In July 2018, the Board
of Good Energy formally adopted the Quoted
Companies Alliance’s (“QCA”) code of corporate
governance (“the Code”) in line with requirements of
the London Stock Exchange’s AIM Rules. The Board
believes that the QCA Code provides the Company
with a rigorous corporate governance framework
to support the business and its success in the long-
term. The Code sets out 10 corporate governance
principles. The ways in which Good Energy meets
these principles is described in the following sections
and incorporates information about the ways in which
the Board discharges its duties under the Companies
Act 2006, s172. This is also available to view on our
website at group.goodenergy.co.uk.

1. Establish a strategy and business
model which promote long-term value for
shareholders

Good Energy is a different kind of energy company,
powering the choice of a cleaner, greener future
together. Guided by our principles and values, Good
Energy has a track record of successfully challenging
the way things are done, putting power back into the
hands of families, communities and businesses across
the country.

In establishing Good Energy’s strategy, the Board
considered the long-term interests of Good Energy’s
stakeholders and set a course which aligns those
interests with those of the Company, promoting the
long-term interests of the Company and long-term
value for shareholders.

Good Energy’s strategy aims to provide customers
with the tools to achieve a zero-carbon footprint
across electricity, transport and heat in both Business
and Domestic settings. Good Energy continue to invest
across the business as we develop our propositions
and a range of innovation projects to drive future
profit growth and support the journey to a zero-
carbon Britain.

Good Energy is well positioned to deliver long-term
value for shareholders through the implementation of
its strategy, focusing on:

• Core supply and generation business is able to
operate efficiently and provide the ability to
unlock future opportunities

Energy as a service to help households and
businesses generate, store and share clean power,
using our deep green credentials and expertise in
100% renewable energy supply

Scaling through innovation to apply our customer
centric model to transport, heat, solar, storage
and demand side flexibility

•

Good Energy continually reviews and aligns its
business model to better enable delivery of its
strategic ambitions. We have engaged our people
through ongoing communication, using multiple
channels to reinforce the pioneering, agile culture that
enables Good Energy to continue to innovate and
drive change.

The Strategic Report describes the excellent progress
Good Energy has made in pursuit of its strategic
ambitions and the momentum we are building to
deliver the energy market of the future.

2. Seek to understand and meet shareholder
needs and expectations

Good Energy is proud to have a diverse shareholder
base, including a significant proportion of private
shareholders (many of whom are also Good Energy
customers) and other long-term investors. The Board
seeks to understand the needs and expectations of
its stakeholders, particularly shareholders, through
insight gained from regular customer surveys and
focus groups, periodic investor surveys and obtaining
structured feedback from investor roadshows. Good
Energy’s strategy responds to the insight gained
through these consultations.

Good Energy provides shareholders and other
stakeholders with relevant information in a timely
and balanced manner and meets with its largest
shareholders periodically to understand their views
on Good Energy’s performance and future plans.
Good Energy actively encourages shareholders
to participate in its AGM as an opportunity for all
shareholders to share their views openly with the
whole Board and other shareholders. Please see
principle 10 for more details about the AGM and
shareholder engagement.

3. Consider wider stakeholder and social
responsibilities and their implications for
long-term success

The Board recognises its primary legal responsibility
to promote the success of the Company for the
benefit of its members as a whole, taking into
account the interests of other stakeholders including
customers, employees, partners, suppliers, regulators,
the environment and the local communities in which
Good Energy operates. Interpreting this responsibility,
and in line with recommendations published by the
GC 100, the Board considers that its duty is not to
balance the interests of the Company and those of
other stakeholders identified but instead to determine,
after weighing up the relevant factors, the course of
action it considers best leads to the long-term success
of the Company.

Purpose-led from the outset, Good Energy continues
to prove that the “other way” is better:

Key Risks faced by the Company are described on
pages 28-31. While the risks are typical of the risks
faced by other energy suppliers, we believe the
Company is well positioned to mitigate these through
a combination of our risk management processes,
our control activity and the strategic direction we
are pursuing.

Further information on risk management and controls
are described in the Audit & Risk Committee Report
on page 67.

5. Maintain the Board as a well-functioning,
balanced team led by the Chair

The Board currently comprises two Executive and
four Non-Executive Directors as described on pages
54-55. The roles and responsibilities of the Chairman,
Non-Executive Directors, Executive Directors and the
Company Secretary are clearly defined and regularly
reviewed. Details of current roles and responsibilities
are set out in the table overleaf.

The Board meets at least four times a year. For Board
meetings, the management team submit reports for
consideration and the Board has a formal schedule
of matters reserved to it. The Board have access to
the company secretarial team and are able to
take independent advice in the furtherance of
duties if necessary.

The Nominations & Remuneration Committee
discusses members time commitments from Directors,
particularly Non-Executive Directors. Over the period
Non-Executive Directors spent 20-25 days with Good
Energy, the latter if they are Chair of a Committee.

•

In recognition of the many ways in which we
continue to support renewable energy generation
across the UK, we secured a permanent
derogation from OFGEM’s price cap in
August 2019

• We’re the first energy company to be awarded

the Good Housekeeping Institute’s new green
accreditation after being verified as an “100%
renewable electricity provider”. This is another
way of showing people what we do is different.

• We were named “best green electricity supplier”

and one of the UK’s most ethical companies of
the last 25 years by Ethical Consumer Magazine

• We are also proud to have been an accredited

Living Wage employer since 2015

Establishing the right culture is an integral part
of delivering Good Energy’s strategy, in which
employees are key internal stakeholders within the
business and developing its culture. More information
on this is outlined in principle 8.

You can find out more about where and how we
source our energy, how we look after our people and
how we treat our customers in the Strategic Report
and at: group.goodenergy.co.uk.

As a purpose-led business, we aspire to be as
transparent as possible about our activities. The
Strategic Report describes what we’ve been doing
to deliver our mission and reflects on our progress
towards achieving our purpose.

4. Embed effective risk management,
considering both opportunities and threats,
throughout the organisation

Good Energy recognises that effective enterprise
risk management is critical to enable it to meet its
strategic objectives.

We have a clear framework for identifying and
managing risk, both at an operational and strategic
level. Our risk identification and mitigation processes
have been designed to be responsive to the changing
environment in which we operate. 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
our strategy.

Strategic ReportGovernance ReportFinancial StatementsGood Energy Annual Report 2020Governance Report
The Board

Role of the Board

Chairman
William Whitehorn

•

Setting Group strategy and
objectives in collaboration
with the Executive.

Providing leadership, knowledge and
experience to support and guide
the Executive.

Engaging with shareholders.

•

Overseeing and monitoring business
performance, internal controls,
corporate governance and
risk management.

Oversight of principal risks – including
competitive position, political risk and
programme delivery.

Effective running of the Board
and its Committees in accordance
with principles of good
corporate governance.

• Managing the Board to ensure
adequate time is allocated at
Board meetings for discussion of
all agenda items.

•

Setting the Board agenda.

•

Ensuring the Board receives
accurate, timely and
clear information.

Other Non-Executive
Directors

•

Providing knowledge, skills and external experience to support the Chairman
and the Executive.

Chief Executive
Juliet Davenport

• Overseeing the day-to-day

•

operation of the Group’s business.

• Developing and implementing

Establishing and maintaining
formal and appropriate
delegations of authority.

the Group’s strategy as approved
by the Board.

• Maintaining a close working

relationship with the Chairman.

Chief Financial
Officer
Rupert Sanderson

Role of the Company
Secretary

•

Developing and implementing the
Group’s strategy as approved
by the Board.

• Overseeing and managing

financial resources for the Group
and its subsidiaries.

Establishing and maintaining
formal and appropriate
delegations of authority.

• Maintaining a close working

relationship with the Chair of
Audit & Risk Committee.

•

The Board and each Director has
unlimited access to the Company
Secretary. Eversecretary Limited
served as the Company Secretary
from 2 January 2020 to 1 February
2021 when the Company secretarial
team transferred to LDC Nominee
Secretary Limited, which currently
serves as the Company Secretary
and is responsible for:

Acting as Secretary to the Board and
its Committees, ensuring compliance
with Board procedures and
corporate governance requirements,
Directors’ induction and ongoing
training requirements.

Providing governance, advisory and
administrative support to the Board
and its Committees.

The UK Corporate Secretarial Team
at Konexo UK, a division of Eversheds
Sutherland (International) LLP
appointed as Eversecretary Limited
transferred to the Law Debenture
Corporation p.l.c. (“LawDeb”) on
1 February 2021. The LawDeb
appointed company secretary is LDC
Nominee Secretary Limited.

Other information:

•

The roles of Chairman and Chief Executive have
always been split with the Chairman acting in a
non-executive capacity.

The Executive Directors are accountable to
the Board for the operating and financial
performance of the Group.

The Board is also responsible for approving the
appointment of Executives, setting Executive
remuneration and devising incentive programmes,
agreeing financial and accounting policies
and ensuring that the shareholders are
properly informed about the state of the
businesses. In addition, the Board is responsible
for the appointment and removal of the
Company Secretary.

• At the end of the reporting period, the Board

comprised the Chairman, Chief Executive Officer,
Chief Financial Officer and three Non-Executive
Directors, each of whom the Board considers to
be independent.

•

The Board is satisfied that it currently has a
sufficient range of relevant operational and
financial experience to be able to discharge
its responsibilities.

The Board has constituted two Committees:
Audit & Risk and Nominations & Remuneration.
Both Committees comprise only Non-Executive
Directors.

• One of the Directors has a substantial

shareholding in the Company, in aggregate
representing approximately 3.8% of the issued
capital. All current Directors hold shares in the
Company although the Company does not
require them to do so.

• Over the period, the Board and the Executive

team have worked together to evolve the flow
of information to the Board. This has resulted in
simpler, insight- focussed reporting to facilitate
effective debate and enable robust and timely
decision-making.

6. Ensure that between them the Directors
have the necessary up-to-date experience,
skills and capabilities

The Board is satisfied that it has an appropriate
balance of skills and experience as well as an
appropriate balance of personal qualities and
capabilities to deliver the Company’s long-term
strategic objectives. The Board is committed to
maintaining balanced representation of both women
and men across the organisation, including at Board
level and within the Executive team.

The Board regularly reviews its composition and
that of its Committees to ensure it has access to
diverse perspectives and the necessary up-to-date

experience, skills and capabilities to discharge its duties
effectively. The Board also reviews the length of time
each Director has served on the Board and assesses
if contributions made by each Director remain
effective. Details of the Director’s tenure can be
found on page 60.

Changes are made to the composition of the Board
and its Committees to ensure the right balance of
complementary skills and capabilities for the next
phase of Good Energy’s strategic direction. The
Nomination and Remuneration Committee also works
to ensure the right balance of skills, knowledge and
capabilities on the Board.

Further information about the Board, including
biographies describing each Director’s experience,
are set out on pages 54-55 and the Nomination and
Remuneration can be found on pages 71-77.

The Company encourages each Director to identify
their individual training needs to support the effective
operation of the Board and the delivery of the
Company’s strategy. The Company provides specific
training on renewable energy and energy markets both
in house and using external providers as appropriate.
Over the period, the Board have also received briefings
on a variety of topics including developments in
corporate governance and appropriate handling of
personal data, insight from shareholders, customers
and staff on their views and expectations of Good
Energy as well as formal briefing from the Company’s
nominated adviser on updates to the AIM rules and
other capital markets matters.

Procedures are in place to enable individual Directors
to seek independent advice at the expense of the
Company and appropriate cover is in place. The
Board and its Committees may take external
advice as appropriate.

7. Evaluate board performance based
on clear and relevant objectives, seeking
continuous improvement

The Board conducts an annual evaluation process
to assess its effectiveness, as well as that of its
Committees and the individual Directors, to drive its
continuous improvement. The process is described in
more detail on page 65.

8. Promote a corporate culture that is based
on ethical values and behaviours

The Board recognises the importance of its role in
promoting and monitoring the Company’s desired
culture and ensuring it is consistent with the Company’s
long-term strategic objectives.

Good Energy is a different kind of energy company.
Our core values - fair, straightforward, determined
and inclusive – underpin the delivery of our
purpose to power the choice of a cleaner, greener
future together.

Strategic ReportGovernance ReportFinancial StatementsGood Energy Annual Report 2020Governance ReportSee Principle 3 and further information in the
Strategic Report on pages 38-51 and the Nomination
& Remuneration Report on pages 71-77.

values when working together and that our policy
and procedural framework supports the Board in
discharging its duties.

The Board’s Committees

Our Guiding Principles:

Nomination & Remuneration Committee

Audit & Risk Committee

Good Energy operates on the principle that a
workplace where people’s differences are valued
creates a more productive, innovative and effective
organisation. We also recognise that attracting,
retaining and incentivising key talent is integral to its
ability to meet its strategic objectives.

The Group’s employment policies follow best practice
based on equal opportunities for all employees,
irrespective of race, gender, nationality, 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. 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.

In 2020, Good Energy introduced a Diversity and
Inclusion working group to enhance the Company’s
commitment to a diverse workplace beyond
gender. Find out more about Diversity and Inclusion,
gender pay and our approach to modern slavery
in the strategic report and in the Nomination &
Remuneration report as well as on the Company’s
website group.goodenergy.co.uk

Good Energy completed a group-wide upgrade of
its control environment in 2015, introducing a code
of conduct: a ‘Guiding Principles’ approach that is
appropriate for a fast-growing business. By design,
our Guiding Principles reflect the Board’s duties under
the Companies Act 2006, s172. This ensures everyone
who works at Good Energy reflects our ethos and

•

provide a framework to empower Good Energy
employees to make informed decisions that
are in the best interests of the Company and its
customers and other stakeholders

reflect the environment in which the
Company operates

• mitigate risk

•

explain where our employees can get advice

demonstrate the Group’s commitment to working
with honesty, respect and transparency

Include policies relating to, amongst other things,
customer service, data handling, health & safety,
approvals & authorities, procurement, and
corporate responsibility

The Guiding Principles are refreshed at least annually
and the Group continues to evolve the way in which
it secures engagement from employees at all levels
across the organisation.

In addition, in 2020 we launched an internal
Governance Hub for our people. The hub contains
all policies, information security, data protection and
wider information management such as training
material and FAQs. This enables collaboration
between our people in an easy to access format.

Gender
Diversity1

Balance of
the Board1

Non-Executive
Tenure1

Female

Male

Non-executive

Executive

0-2 Yrs

2-5 Yrs

1. Data as at 31 December 2020.

Board Composition

Corporate Governance

Succession planning

Financial Reporting

Board nominations

Internal Controls

Remuneration policy

Risk Management

Incentive design and target setting

External Auditor

Executive remuneration review

Oversight of principal risks

9. Maintain governance structures and
processes that are fit for purpose and
support good decision-making by the Board

Good Energy’s governance structures support its
corporate culture and are appropriate to its stage
of development and the complexity of the business.
The Board has established a Nominations and
Governance Committee and an Audit and Risk
Committee to support effective governance
and decision-making.

The key areas for focus for the Committees are listed
on the next page.

The Board continuously monitors the effectiveness of
its governance structures, enabling them to evolve
over time to support Good Energy’s growth
and development.

10. Communicate how the Company is
governed and is performing by maintaining
a dialogue with shareholders and other
relevant stakeholders

As described above, the Board considers that its duty
is not to balance the interests of the Company and
those of other stakeholders but instead to determine,
after weighing up the relevant factors, the course
of action it considers best leads to the long-term
success of the company. Good Energy welcomes
dialogue with shareholders, particularly the need for
open communication on the Company’s strategy and
takes care to calibrate perspectives expressed by
individual members in the context of Good Energy’s
members as a whole.

Principal communications with shareholders are
conducted through the Annual and Interim results,
AGM and interim RNS announcements on key

business developments. Good Energy supplements
its Annual and Interim results with presentations
to analysts and other interested stakeholders (all
available on its website) and meets with larger
shareholders at least twice annually to discuss
both performance and governance, as well as our
future plans as well as one to one meetings.

Good Energy’s Investor Relations team supports
effective communications with shareholders and
other investors and can be contacted at: investor.
relations@goodenergy.co.uk. In addition, there is a
dedicated group website and option to sign up to
investor related alerts.

The Board actively encourages shareholder
participation at its Annual General Meeting and other
general meetings from time to time. As such, in 2020
Good Energy introduced the Investor Meet Company
platform enabling all shareholders to interact with
the CEO and CFO at key financial events.

The Board also recognises the importance of ensuring
that the Company maintains effective engagement
with other stakeholders and taking into account the
interests of internal and external stakeholders when
making decisions at Board level. Examples of ways in
which Good Energy maintains active communication
with other stakeholders include:

Customers:

•

updating customers on Good Energy’s activities
through regular newsletters, communications via
digital platforms and publication of content on
goodenergy.co.uk and on the Company’s social
media channels;

hearing customers views and expectations of
Good Energy through thematic assessment of
customer contact, gathering in the moment
feedback from customers during or immediately

Strategic ReportGovernance ReportFinancial StatementsGood Energy Annual Report 2020Governance ReportThe Board and its Committees

The Board is ultimately responsible to shareholders
for the direction, management and performance of
the Company and its business.

Biographies of the Board’s Directors are set out
pages 55-55. Details of the Directors’ remuneration,
including share options, are set out in the
Nominations and Remuneration report on pages
71-77. Details of the Directors’ interests in ordinary
shares in the capital of the Company are set out on
page 80 under Statutory and other information.

The Board maintains a list of matters reserved for
its approval, generally being items which affect the
shape, risk profile or strategic direction of the Group,
as well as the key financial items. The Board reviews
this schedule annually and it is updated
as necessary.

The Board has established two principal committees
which focus on particular areas as set out overleaf.
The Chair of each Committee reports to the Board
on its activities after each Committee meeting.
Reports from each Committee are included later in
this section.

Matters that are not reserved to shareholders, the
Board or one of its Committees are the responsibility
of the Executive Directors who have established and
maintains a documented schedule of delegations
of authority to members of the Executive and
other management. This delegation of authority
is incorporated within the Company’s Guiding
Principles and includes a detailed authorisation
matrix covering financial limits and approvals
needed when conducting business on behalf of the
Group. The delegation of authority is reviewed by the
Board at regular intervals.

following calls, conducting periodic consumer
focus groups and regular customer surveys; and

•

involving customers in trials of new products
and services.

People

•

engaging our people regularly with Good
Energy’s purpose and performance through
structured, monthly company-wide briefings
with Q&A;

• maintaining regular engagement with our people
both individually and through an established
group of employee champions from across
the business;

•

encouraging information sharing and debate
via our internal Intranet and communication
forum Yammer; and

conducting regular engagement surveys and
taking into account the feedback received.

Bondholders

•

progress updates are provided via the Company’s
websites, investor newsletters and periodically as
part of other communications to bondholders,
for example within letters enclosing notice of
interest payments.

Delivery partners and suppliers

•

operating a tailored approach to support
the development and maintenance of
strategic relationships.

Local communities

• maintaining open relationships with local

authorities and key business groups in Wiltshire
and the South West;

•

continuing our engagement with communities
hosting Good Energy’s renewable generation
assets and publicising externally; and

assisting community funds to support COVID-19
related projects;

providing talks in local schools.

Policy-makers and regulators

• maintaining a constructive dialogue with policy-
makers on matters relevant to Good Energy’s
strategy and current operations;

regular engagement with the energy regulator,
Ofgem, both bilaterally as well as through public
consultations and industry forums; and

engagement with thinktanks and consumer
groups who hold positions of policy influence in
the energy sector; and

targeted participation in industry groups aligned
to Good Energy’s purpose, values and strategy.

•

Board and Committee composition

The following table sets out the composition of the Board and its committees as at 31 December 2020:

Board

Nominations &
Renumeration

Audit & Risk
Management

–

Juliet Davenport (CEO)

Rupert Sanderson (CFO)

Will Whitehorn (Chairman)

Emma Tinker (Non-Executive)

Tim Jones (Non-Executive)

Nemone Wynn-Evans
(Non-Executive)

Chair

Member

– Not applicable/invitation only

Board & Committee Changes

As part of its annual evaluation process and
otherwise as required, the Board reviews its
composition to ensure that the Group has access to
a balance of complementary skills and experience
to enable the Group to achieve its strategic
ambitions and wider purpose.

Rupert Sanderson, Chief Financial Officer, was
appointed to the Board on 8 January 2020.

In February 2021, the Company announced Juliet
Davenport will be transitioning from Chief Executive
Officer to a Non-Executive Director position. In April
2021 the Company announced the appointment of
Nigel Pocklington as Chief Executive Officer.

Independence of the
Non-Executive Directors

The Board conducts an annual review of the
independence of the Non-Executive Directors and
considers all of its Non-Executive Directors to be
independent in both character and judgement.

The Chairman, Will Whitehorn, was independent
upon appointment to the Board in July 2018.

Directors’ Indemnities and Insurance

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.

Strategic ReportGovernance ReportFinancial StatementsGood Energy Annual Report 2020Governance Report

Board and Committee Attendance

Executive Directors

Juliet Davenport

Rupert Sanderson

Non-Executive Directors

Will Whitehorn

Emma Tinker

Tim Jones

Nemone Wynn-Evans

Board

Audit & Risk
Committee

Nominations &
Remuneration
Committee

6/6

4/4

3/3

2/32

3/3

2. Rupert Sanderson part-attended the Remuneration & Nomination Committee meetings

Operations of the Board

Details of the number of scheduled Board meetings
and attendance of Directors is set out in the table on
page 64. 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 (twelve months)
and longer-term (three to five years) plans.

In addition, it is responsible for matters relating to
employee recruitment and remuneration, strategy,
health and safety and other specific subject areas.

Where relevant, members of the Executive team and
other senior leaders within the business are invited to
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 the year, the Board and relevant Committees
convened a number of ad-hoc proceedings to support
the Group in developing, refining and implementing
initiatives in support of its strategic ambitions. In
addition, the Board or relevant Committees held
regular informal discussions on a variety of topics to
consider the impacts of macro-economic events,
developments in Government policy and to provide
guidance and insight to support the Company in
delivering its short term and longer term objectives.

The Board conducts a formal review of the Group’s
strategy at least annually, at which all Board members
and all of the Executive team are present.

Board packs are generally circulated at least one week
ahead of scheduled meetings to allow adequate time
for the Board and/or Committee Members to review
information and prepare. Where a Director is unable
to attend a meeting, the materials for the meeting
are provided to them and subsequent briefings are
provided as appropriate.

The Chairman and Chief Executive maintain regular
contact and the Chairman receives a briefing from the
Chief Executive before each scheduled Board meeting.
The Chairman provides a briefing to the Non-Executive
Directors before each scheduled Board meeting to
align priorities and maximise the Board’s effectiveness
at meetings. The Chairman also regularly de-briefs
with the Non-Executive Directors after meetings
to capture feedback and identify opportunities
for improvement. The Executive Directors do not
participate in these discussions.

All 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
performance of the Group for each month against a
pre-agreed set of performance targets. In addition,
the Board receives information through a system of
continuous financial planning which enables it to better
manage profit and cash flow forecasting, and to inform
investment decision making. The formal financial plan

for the forthcoming year is reviewed and authorised
by the Board.

The Board and each of its Committees have access
to the services of the Company Secretary and
external advisers as necessary.

Executive Team

The roles of Chief Executive and Chairman have
always been split, with the Chairman operating in a
Non-Executive capacity. An outline of the roles and
responsibilities of the Chairman, Chief Executive,
other Executive Directors and, Non-Executive
Directors are provided on page 58.

As at 31 December 2020 the Executive comprised
the Chief Executive, Chief Financial Officer, Chief
Commercial Officer, and Director of People &
Customer Operations. The Chief Financial Officer
was appointed to the Board on 2 January 2020.

The Executive team is an executive-level forum
of the Group’s most senior leaders, chaired by the
Chief Executive. It comes together to communicate,
review and agree on issues and actions of Group-
wide significance. It helps to develop, implement and
monitor strategic and operational plans, considers
the continuing applicability, appropriateness and
impact of risks, leads the Group’s culture and aids the
decision-making of the Chief Executive and Chief
Financial Officer in managing the business in the
performance of their duties.

In 2020 we implemented regular forums to provide
clearer governance allowing the Company to
strengthen in good decisions, reduce risks, and review
strategic plans, alongside the Audit
& Risk Committee and the Nominations &
Remuneration Committee. Monthly forums include
the Executive Committee, Customer Board
and People & Operations Board. The Budget &
Forecasting Board are held quarterly and the Energy
& Assets Board is held monthly. The Executive and
Sales & Operations meetings are weekly.

Board and Directors’
Performance Evaluation

In the period a full evaluation was undertaken by
way of a Board effectiveness questionnaire. Results
were analysed, discussed and actions set for 2021 to
ensure an effective Board.

Strategic ReportGovernance ReportFinancial StatementsGood Energy Annual Report 2020Governance Report
Succession planning

The Board considers succession planning a vital task
and periodic reviews of the approach to succession
planning will include contingency, short-medium-long
term planning for the Chair, CEO and Executitive
team. As noted above, CEO succession planning
took place in early 2021. The Company appointed
an Executive search firm to recruit a new CEO. The
process covered a pool of external and internal
candidates. As internal candidates were considered,
the Good Energy NEDs operated an independent
process for this exciting role to take the Company into
its next phase of growth.

Performance of Individual Directors

The individual performance of Executive and Non-
Executive Directors is reviewed periodically.

The Chairman conducts an individual annual appraisal
with the Executive Directors and each Non-Executive
Director. The cumulative time commitments of
Non-Executive Directors are reviewed as part of the
annual performance evaluation to ensure that no
Non-Executive Director becomes over-committed
and is able to devote sufficient time to the Company
to discharge duties effectively. The Chairman’s
performance is reviewed by the Non-Executive
Directors, with input from the Executive Directors and
members of the Executive Team as part of the Board
effectiveness review.

The performance of members of the Executive team
is discussed at the Nominations & Remuneration
Committee during the first quarter each year and
on an ad hoc basis as required. Aside from the CEO
attending when relevant, members of the exec team
do not attend that discussion.

Annual General Meeting (AGM)

Our preference had been to welcome shareholders
in person to our 2021 Annual General Meeting,
particularly given the constraints we faced in 2020
due to the COVID-19 pandemic. However, at present
this will not be possible due to restrictions still in place.

We are therefore proposing to hold the Annual
General Meeting with the minimum attendance

required to form a quorum. Shareholders are strongly
encouraged to appoint the Chairman as their proxy
in advance, to ensure that they can vote and be
represented at the 2021 AGM.

The health and wellbeing of our shareholders is
of paramount importance to us. Any shareholders
attempting to attend in person will be refused entry.

Given the constantly evolving nature of the situation,
should circumstances change before the time of the
Annual General Meeting we will notify shareholders
of the change by RNS and on our website as early as
possible before the date of the meeting.

There will be opportunity for shareholders to
ask questions ahead of the meeting and the details will
be provided to shareholders in due course.

The AGM notice will be circulated to members through
their preferred communication methods and will
also be available to view on the Group’s website at
group.goodenergy.co.uk.

A poll is conducted on each resolution at all Company
general meetings except in the circumstance of a
closed meeting. All shareholders have the opportunity
to cast their votes in respect of proposed resolutions
by proxy, either electronically or by post. Following the
AGM, voting outcomes are published and are made
available on the Group’s website.

Good Energy Bonds

The first repayment date for Good Energy Bonds II is 30
June 2021. The Company received £420,750 worth of
redemption requests for repayment on 30 June 2021.

On 1 April 2021, Good Energy announced it anticipates
repayment of the bond in 2022. Further details are
available on the Group’s website: group.goodenergy.
co.uk/investor-centre/bond-information/good-
energy-bonds-two, and will be communicated directly
to bondholders.

Audit & Risk Management report

internal controls is designed effectively to manage,
rather than eliminate, the risk of failure to achieve
business objectives.

Audit & Risk Committee

The members of the Audit and Risk Management
Committee are shown on page 63.

Emma Tinker and Nemone Wynn-Evans are
considered to have recent and relevant financial
experience. The Chief Executive attends meetings of
the Committee by invitation only together with the
Chief Financial Officer and Audit & Risk Specialist.

The primary duty of the Audit and Risk 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. Further
reviews were undertaken throughout 2020 in light of
the COVID-19 outbreak.

The Audit and Risk Committee also meets at least
annually with the Group’s external auditors to review
and agree the audit 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.

During the period, the Committee:

•

oversaw an upgrade of the enterprise risk
management framework to improve business
integration;

oversaw ongoing improvement of financial and
operational reporting and controls;

• were consulted on the implementation plan for

the Kraken and Ensek projects; and

• were consulted on the adjustments to financial
reporting and provisioning as a result of the
Covid-19 outbreak and its economic impact.

Risk control environment and internal audit

The Company has an established risk and internal
audit function which falls under the remit of the
Chief Financial Officer and was led by the Head of
Commercial Finance and Internal Audit throughout
the year.

The function is responsible for Good Energy’s risk
management activities, and internal audits. As such,
its activities include ensuring the regular review of
internal controls relating to key risks, reporting on risk
events to the Audit & Risk Committee and reviewing
and testing the effectiveness of internal controls
through audit reviews. The Company has a dedicated
Compliance Team in place to provide context to
company risk and assurance at an operational level
to support the internal audit function. Key Risks are
shown on pages 28-31 in the Strategic report.

Nemone Wynn-Evans

Chair of Audit & Risk Committee

“Good Energy recognises that
effective risk management is
critical to enable it to meet its
strategic objectives”

Overview

Good Energy recognises that effective risk
management is critical to enable it to meet its
strategic objectives.

A summary of the key risks facing the Group is set out
in the Strategic Report on page 28.

The Board retains overall responsibility for the
Company’s risk management and internal controls
framework. While the Board reviews the Company’s
principal risks and the suitability of the internal
controls annually, responsibility for reviewing the
effectiveness of risk management and internal
controls is delegated to the Audit and Risk Committee
which reviews this on an annual basis. The system of

Strategic ReportGovernance ReportFinancial StatementsGood Energy Annual Report 2020Governance Report
Since completing its groupwide upgrade of the
control environment in 2015, Good Energy has
continued to evolve its code of conduct, a ‘Guiding
Principles’ approach that is appropriate for a fast-
growing business. This ensures everyone who works
at Good Energy reflects the Company’s ethos when
working together.

Directors consider the main risks to going concern
to be liquidity and compliance with covenants, and
so have performed a Reverse Cash Stress Test. This
shows that it is very unlikely that the Group will have
problems with liquidity or covenants during the year,
as there is significant headroom above both the Base
case and the Downside case.

The internal audit and risk management function
aims to build on initiatives such as the Company’s
Guiding Principles, to enhance the control
environment. Reporting into the Audit and Risk
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.

Going Concern

The financial statements have been prepared on the
going concern basis as the Directors have assessed
that there is a reasonable expectation that the
Group will be able to continue in operation and meet
its commitments as they fall due over the going
concern period.

The Group continues to respond well to the
challenges associated with the Covid-19 pandemic.
All core business functions continue to perform as
expected during remote working, and the operation
of generation sites has not been affected by
lockdown periods. The implementation of our new
customer technology platform is progressing as
planned which provides us with flexibility to operate
and deliver all services to customers.

The additional cash released through the
restructuring of the financing of the Group’s
renewable generation asset portfolio, has provided
the Group with £7.8m of unrestricted cash.
This financing restructure also represents a
loosening of covenant ratios compared to the
existing GCP facility.

Looking to the future, the Group has performed a
going concern review, going out until December
2022 for prudence, considering both a Base
Case and a Downside Case. Having reviewed this
forecast, and having applied a reverse stress test,
the possibility that financial headroom could be
exhausted is considered to be extremely remote.

The Base case assumes continued depressed
Commercial volumes for the first half of 2021 due to
Covid-19 related lockdowns, recovering to normal
levels by the end of 2021. It also assumes no cash
flow mitigations are actioned during the years
covered by the Going Concern review and that
the Group will repay the bond on its entirety
by June 2022.

The Downside case assumes Commercial volumes
remain depressed until the end of December 2021
and assumes higher levels of customer churn than
expected in the Base case.

The Group has long standing and well operated
trading relationships with a number of
counterparties, the majority of which contain an
agreement that the Group’s Tangible Net Worth
(defined as paid up shareholder cash contributions
plus retained earnings) should not decrease by more
than 25% over a 12 month period or fall to below
a certain level. Tangible Net Worth covenants are
tested annually on publication of audited financial
statements. Breach of this financial covenant
allows counterparties, if they so decide, to request
additional financial support (which may be in the
form of a parent company guarantee, letter of credit
or other financial security). The counterparty may
terminate the contract if appropriate additional
financial security is not provided, if requested,
within a timely manner. The value at risk with
counterparties based upon current commodity
contracts and current market prices is estimated
at approximately £0.3m. The Group’s electricity is
purchased from direct relationships with generators,
with power hedged and balanced by trading with
counterparties. This reduces the Group’s reliance on
trading counterparties when compared to a supplier
without such supplier relationships.

The Group’s borrowings with GCP, amounting to
£39.8m after the restructure performed in April 2021,
contains three covenants being two debt service
cover ratios (DSCR) and a loan life cover ratio
(LLCR) specifically associated with the generation
assets. The new loan facility has reset the DSCR and
LLCR cover ratios . Compliance with these covenants
is based on generation prices and volumes, which
the Board has concluded are unlikely to materially
decrease due to any foreseeable reason. Covenant
over Cooperative Bank has been extinguished and
the GCP covenant has been reset due to
the refinancing.

In order for the business to run out of cash and
breach a counterparty covenant, the Reverse Cash
Stress Test requires that 31% of commercial debts,
and 32% of domestic debts are not collected after
government Covid-19 reliefs start to taper off, for
a period lasting 6 months, and that only 50% of
these debts not originally collected are subsequently
collected over a period of 9 months post-March
2022. In this case, cash flow mitigations would be
implemented, mostly reductions in discretionary
spending. The directors believe that this scenario
is very unlikely as a result of the historic evidence
gained from our sustained performance during 2020,
which was a year impacted significantly by Covid.
Throughout 2020 the Group’s cash collections have
remained strong, with bad debt write offs similar to
a usual year.

Therefore, Directors are confident in the ongoing
stability of the Group, and its ability to continue
operation and meet its commitments as they fall
due over the going concern period. Accordingly, the
Directors adopt the going concern basis in preparing
the financial statements.

The Whistleblowing Policy is reviewed annually by
the Audit and Risk Committee. Any whistleblowing
incidents and their outcomes are reported to the
Committee. No reports were made during 2020.

External Audit

Auditor appointment

Following a competitive tender process, the Group
appointed Ernst & Young as auditors during 2017.
Ernst & Young’s appointment was confirmed by
members at the 2018 AGM. Ernst & Young LLP
continue as the Company’s auditors. The Committee
has been considering re-tendering during the year.
This will be finalised over the course of 2021.

Auditor independence

The Audit and Risk Committee monitors the Group’s
safeguards against compromising the objectivity and
independence of the external auditors. It annually
reviews any non-audit services provided to the Group
and their cost, and 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 Audit and Risk Committee has also reviewed its
policy for awarding non-audit work.

For the financial year ended 31 December 2020, the
Committee has conducted its review of the auditors’
independence and concluded that no conflict of
interest exists between Ernst & Young LLP audit and
non-audit work. The Audit and Risk Committee is
using Ernst & Young for audit only services.

Audit and non-audit fees

The Audit & Risk Committee reviewed the
remuneration received by Ernst & Young for non-
audit work conducted during the period as part
of assessing their independence. For further
details regarding fees paid, see note 7 to the
financial statements.

Whistleblowing Policy

The Group’s whistleblowing policy is supported
by a clear process where concerns can be raised
internally at all levels as well as to the Non-Executive
Directors. An independent person may be engaged
in some cases. The policy also includes reference
to the list of prescribed persons or bodies that may
be contacted outside of Good Energy, with contact
details. The policy applies to any person, from
employees to casual contract workers, who may
raise concerns about wrong doing, poor practices,
risks or dangers in relation to the Company’s business
dealings or activities.

Strategic ReportGovernance ReportFinancial StatementsGood Energy Annual Report 2020Governance ReportNomination & Remuneration report

equality & inclusion guidance and online training is
provided to all employees during induction.

The Diversity and Inclusion volunteer working group
have been working hard on employee engagement,
analysing data and implementing initiatives to
enhance the Company’s commitment to a diverse
workplace beyond gender. More details are available
in the Strategic Report.

While the Board reviews the suitability of these
strategies annually, responsibility for reviewing the
effectiveness of these strategies and underlying
plans is delegated to the Nominations &
Remuneration Committee.

The Nominations & Remuneration
Committee

The members of the Nominations and Remuneration
Committee are Emma Tinker (Chair), Will Whitehorn,
Tim Jones and Nemone Wynn-Evans, all of whom are
independent Non-Executive Directors.

The primary duties of the Nominations &
Remuneration Committee are to:

•

review the structure, size and composition of
the Board and its Committees to ensure that they
remain appropriate to support the Company’s
growth and development, and making
recommendations to the Board;

ensure that there is a formal, rigorous and
transparent process for the appointment of
new Directors to the Board;

to consider and develop succession plans
appropriate for the Group;

determine the Group’s approach to the
remuneration of the Executive Directors and
senior managers of the Group, on behalf of
the Board;

conduct an annual appraisal of the performance
of the Executive Directors;

assess Company performance against
performance targets within reward schemes; and

oversee the group-wide remuneration strategy,
particularly with respect to diversity, inclusion and
gender pay.

No Director may be involved in any decisions as to
their own remuneration.

The functions of a Nominations Committee were
introduced to the pre-existing Remuneration
Committee during 2016. In 2019, the Board
considered whether these functions would be
better separated into two separate committees
and concluded that it remained appropriate for the
functions to be combined within a single committee.
The Board will review this periodically.

Emma Tinker

Chair of Nomination and
Remuneration Committee

“A workplace where people’s
differences are valued creates a
more productive, innovative and
effective organisation”

Overview

Good Energy operates on the principle that a
workplace where people’s differences are valued
creates a more productive, innovative and effective
organisation. The Company also recognises that
attracting, retaining and incentivising key talent is
integral to its ability to meet its strategic objectives.

The Board retains overall responsibility for the
Company’s people and reward strategies.

Diversity and inclusion are beliefs which Good Energy
are passionate about and continue to promote
throughout the company and in 2020 a Diversity &
Inclusion working group was established involving
employees from across the business. Diversity at
Good Energy provides different perspectives which
are highly valued as these differences support the
Company in achieving its purpose. The Company
believe inclusion and diversity are consistent with its
values and are considered in recruitment selection
processes, opportunities for development and
promotion, pay and benefits for its people. Diversity,

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Strategic ReportGovernance ReportFinancial StatementsGood Energy Annual Report 2020Governance ReportNominations

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
business, having due consideration for the benefits
of diversity, and support the Group in developing
appropriate succession plans to meet its
long-term objectives.

The Board remains focused on promoting diversity
across the organisation and notes that women and
men were equally represented at both Board and
Executive level during the period.

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.

During the period, the Committee:

•

received and considered proposals to implement
the role of Chief Financial Officer, including
reviewing the resulting composition of the Board
and the availability of a suitable mix of skills,
experience and expertise;

oversaw the recruitment, appointment and
induction of Rupert Sanderson following its
recommendation that the Board appoint a Chief
Financial Officer to the Board; and

reviewed overall appropriateness of the new
Executive management structure in order to
implement and deliver company strategy.

On 2 February, the Group announced that Juliet
Davenport would be stepping down as CEO and
would move into a non-executive director position
on the Group’s board, as well as remaining Chair of
the Zap Map board. A settlement agreement has
been reached regarding this change. On 7 April Nigel
Pocklington was announced as new Group CEO, with
his role starting from 1 May 2021.

Remuneration

Information about the remuneration of the Directors
of the Company for the year ended 31 December
2020 is set out in the following section. This report is
unaudited and has been prepared in accordance
with the requirements for AIM listed companies set
out in the Companies Act 2006 and the AIM rules.

The Group’s bonus and share-based incentive
schemes have been in place since 2016 and remain
aligned with current best practice. They are designed
to motivate and incentivise key talent to assist the
Group in achieving its strategic aims and comprise:

•

an Annual Bonus Plan that encompasses both
financial and non-financial annual performance
targets, details of which are set out on page 75;
and

•

a Performance Share Plan for Executive Directors
and members of the senior management team,
details of which are set out on page 76.

The Company has reported its first CEO pay
ratio relative to its employees. Going forward,
a comparative table will be built up providing a
transparent view to the ratio. See page 81 for details.

Remuneration Policy

Details of the Company’s Nominations &
Remuneration Committee are set out on page 63.

The Nomination & Remuneration Committee
has designed and adopted 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
and 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 on the following page.

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 during the period. 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 on the following page.

The Group reviewed Non-Executive Director fees and
concluded that the existing annual fees and structure
remain appropriate. See table overleaf. The fee for
each Non- Executive Director is £25,000, with an
additional fee for those that chair a committee. The
fee payable to the Chairman is £45,000.

Executive salaries were also benchmarked during the
year against AIM company data and adjusted where
necessary to reflect the size of the Company.

Service agreements, notice periods and termination payments

Name

Position

Date of contract Notice period Annual Salary (£)

Executive Directors

Juliet Davenport

Chief Executive

02 August 2007

9 months

222,572

Rupert Sanderson

Chief Financial
Officer

8 January 2020

6 months

155,000

Non-Executive
Directors

Emma Tinker

02 September 2016

Tim Jones

01 December 2017

Will Whitehorn

26 July 20181

Nemone Wynn-Evans

01 January 2019

30,000

25,000

45,000

32,000

1. Formal appointment to the Board took effect on 4 July 2018.

Strategic ReportGovernance ReportFinancial StatementsGood Energy Annual Report 2020Governance ReportSalaries/Fees, annual bonus and benefits

Name

Salary/fee

Pension

Benefits in Kind

Annual Bonus

Total

2020 (£)

2019 (£)

Executive Directors

Juliet Davenport

222,572

28,232

15,887

Rupert Sanderson2

155,000

15,500

11,710

Sub-total

377,572

43,823

27,597

Non-Executive Directors

Will Whitehorn

Emma Tinker

Tim Jones

45,470

30,763

25,000

Nemone Wynn-Evans

32,165

Sub-total

Overall total

133,398

510,970

266,691

367,902

182,210

448,901

367,902

45,470

46,278

30,763

31,864

25,000

25,109

32,165

32,719

133,398

169,720

582,299

537,6223

Annual bonus scheme

Operation of the scheme

In 2018, the Remuneration Committee agreed a
non-material alteration to the performance criteria
for the scheme, introducing an objective measure
which considers retention of key talent in place of the
previous employee engagement criterion. No other
changes were made to the operation of the bonus
scheme during the period.

All bonuses under the bonus 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 Nominations & Remuneration Committee, in its
discretion, determines otherwise.

The Nominations & Remuneration 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
Nominations and Remuneration Committee.

The Group considers that the targets for 2021
are commercially sensitive and are not therefore
disclosed. However, retrospective disclosure of
performance against targets for the year ending 31
December 2020 is provided on the following page.

Measure

Strategic objective

Weighting

Group profit before tax

Deliver profit growth

Absolute net promoter score Maintain customer satisfaction ratings

Employee retention

Attract and retain employees with the right skills, knowledge
and mind-set to help deliver the Company’s growth plans

CO2 reduction

Help to reduce carbon emissions

60%

20%

10%

2020 targets and performance

In 2020 we retained bonus targets of profit before tax, employee retention and CO2 reduction. The payment
of any bonus requires a threshold level of profit before tax to be achieved before performance of non-financial
metrics is considered. In light of the COVID-19 challenges in particular, which are described within the
Operating Review on pages 26-27, this threshold has not be achieved and therefore no bonus will be paid.

In light of the ongoing COVID-19 pandemic the staff bonus was deferred for 2019. Management authorised
payment of the 2019 bonus in January 2021.

2. Pro-rata for the period of directorship. Joined the Board effective 08 January 2020.

3. 2018 bonus paid in 2019.

Strategic ReportGovernance ReportFinancial StatementsGood Energy Annual Report 2020Governance Report

Performance share plan (“PSP”)

Directors’ share options

for achieving stretch targets. No award will vest
unless Total Shareholder Return is positive over the
measurement period.

The Nominations & Remuneration 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 misstatement 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 2020 grant of awards are shown
in the table below. The Group considers the targets
themselves to be commercially sensitive and these
are not therefore disclosed. However, retrospective
disclosure of performance against targets will
be provided at the end of the relevant
measurement period.

Operation of the scheme

The existing scheme was implemented during
2016 following advice from external remuneration
consultants and in consultation with the Company’s
ten largest shareholders. It 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 more detail below, where previously
there were none.

The 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 normally
vest three years from the date of grant, subject
to continued employment and satisfaction of
performance criteria 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

Measure

Strategic objective

Weighting

Earnings per share

Drive shareholder value

60%

Relative net promoter score (relative to
large energy companies)

Maintain higher customer
satisfaction rating than the
large energy firms

20%

Customer CO2 reduction

Ensure long term sustainability
of our own operation

20%

Details of the Directors’ share options outstanding at 31 December 2020 are shown below.

Name

Date option
granted

Number of options
outstanding as at
31 December 2020

Option
price

Exercised
during
period

Cancelled/
surrendered
during period

Rupert Sanderson

15/11/2018

58,427

£0.05

Total

58,427

Juliet Davenport

13/02/2012

86,956

13/02/2012

17,390

18/09/2012

13/07/2013

144,000

10/05/2017

15/11/2018

122,472

Total

370,818

£1.15

£0.50

£1.25

£0.05

189,052

42,363

231,415

Strategic ReportGovernance ReportFinancial StatementsGood Energy Annual Report 2020Governance Report
Statutory and other information

General company information

Shareholder agreements and consent requirements

Good Energy Group PLC is a public limited company
incorporated in England and Wales.

The Company’s registered office, which changed on
1 February 2021, and principal place of business is:
Monkton Park Offices, Monkton Park, Chippenham,
Wiltshire, SN15 1GH and the registered number is
04000623.

Share capital

On 31 December 2020, 16,643,067 ordinary shares of
5p each were in issue. The Company is listed on the
Alternative Investment Market (AIM) of the London
Stock Exchange, and its shares have been trading on
the Aquis Exchange (formally NEX Growth Market)
since 5 January 2016.

Significant shareholders

At 31 December 2020, the following shareholders
had notified an interest exceeding 3% of the issued
ordinary share capital of the Company (excluding
Directors and their respective families as defined
in the AIM rules, details of which are set out on
the next page):

Shareholder

Number
of shares

There are no known arrangements under which
financial rights carried by any of the shares in the
Company are held by a person other than the holder
of the shares and no known agreements between the
holders of shares with restrictions on the transfer of
shares or exercise of voting rights.

Authority to issue shares

At the AGM in 2020, authority was given to the
Directors to allot new ordinary shares up to a nominal
value of £277,384, equivalent to one-third of the
issued share capital of the Company at that time. The
Directors were also authorised to allot up to two thirds
of the total issued share capital of the Company, but
only in the case of a rights issue.

These authorities are valid until the AGM in 2021,
and the Directors propose to renew this authority at
the AGM.

The Board believes this authority will allow
the Company to retain flexibility to respond to
circumstances and opportunities as they arise.

Deadlines for exercising voting rights

Electronic and paper proxy appointments, and
voting instructions, must be received by the
company’s Registrar not less than 48 hours before
a general meeting.

Ecotricity Group Limited

4,169,948

25.1%

Dividends

Hargreaves Lansdown plc

1,166,706

7.0%

Details relating to dividends are set out in the
Chairman’s Statement on page 10.

Martin Edwards

669,827

4.0%

Directors

The names of the Directors that held office during the
financial year are set out on page 54-55.

Share class rights

Ordinary shares

The full share class rights are set out in the Company’s
Articles of Association which are available to view at
goodenergygroup.co.uk, at Companies House and
summarised below:

Each member has one vote for each ordinary share
held. Holders of ordinary shares are entitled to:
receive the Company’s Annual Report and Accounts;
attend and speak at general meetings of the
Company; appoint one or more proxies or, if they are
corporations, corporate representatives; and exercise
voting rights. Holders of ordinary shares may receive
a dividend in cash or ordinary shares under the
Company’s scrip dividend scheme and on liquidation
may share in the assets of the Company.

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Strategic ReportGovernance ReportFinancial StatementsGood Energy Annual Report 2020Governance ReportDirectors’ interests and their interests in the Company’s shares1

CEO pay ratio

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:

Good Energy have voluntaritly chosen to disclose CEO pay ratio with employee pay, and 2020 is the first year
reporting on this.

No. shares
as at 31
December
2020

%age of
issued share
capital

No. shares
as at 31
December
2019

%age of
issued share
capital

627,455

22,270

52,000

1,560

9,489

9,500

3.78

0.13

0.31

0.01

0.06

627,455

16,770

52,000

1,560

9,489

9,500

3.78

0.10

0.31

0.01

0.06

Current Directors

Juliet Davenport2

Rupert Sanderson

Will Whitehorn

Emma Tinker

Tim Jones

Nemone Wynn-Evans

Year

2020

25th percentile pay ratio

Median pay ratio

75th percentile pay ratio

12:1

10:1

6:1

The table compares the 2020 total figure of remuneration for the Chief Executive Officer with Group
employees who are paid at the 25th percentile (lower quartile), 50th percentile (median) and 75th percentile
(upper quartile).

Although Good Energy are not required to report CEO pay ratio at present, we have voluntarily chosen
to disclose requirements under the Government’s methodology of ‘Option A’. All individuals employed at
31 December 2020 have been included in the calculation, and where applicable, remuneration has been
annualised for employees not employed on a full time basis and/or for the twelve months reported on.

The total remuneration for full-time equivalent employees includes (but is not restricted to):

- annual salary and allowances

- annual bonus (not applicable for 2020)

- employer’s pension contributions

Average annual
salary (£’000)

CEO

25th percentile

Median

75th percentile

Financial instruments

Impact on the environment

Salary

£222,572

£20,500

£25,350

£39,125

The Group’s financial instruments include bank
loans and other borrowings, a corporate bond
and overdraft.

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 26 in the Financial Statements.

Future developments & research

Details of future developments are given in the Chief
Executive’s Review within the Strategic Review.
Innovation is key to the future development of the
Group’s business propositions. The Group does not
incur material research and development expenditure
but does undertake selected research, development
and innovation projects which are often grant-funded.

Referral Arrangements/ Political Donations

The Company no longer operates referral
arrangements with any political parties.

However, in March 2020 the Company donated
B£10,000 (Bristol pounds) to the Bristol and Bath Parks
Foundation in charge of making College Green green
again following the climate strike march. More details
are in the Strategic Report.

The Company is committed to reducing its
environmental impact and the carbon emissions from
its operations. ISO14001 accreditation was achieved
during 2017, providing independent confirmation that
the Group meets international standards for measuring
and continually improving environmental performance.
The Company regularly measures its Scope 1 and
Scope 2 emissions and as many indirect Scope 3
emissions as possible. Where it is not yet possible to
avoid or eliminate emissions, these are neutralised
through international carbon reduction projects. More
information can be found in the Strategic Report.

Gender Pay

The Board welcomed the introduction in 2017 of
Gender Pay gap reporting. The Group has a strong
commitment to gender balance and equality at all
levels of the business. The Board is proud to have
an equal gender balance (female : male) at Board
level and 49% women within the business overall.
The Group’s mean pay gap for 2020 is 17%. The gap
predominantly arises because the Group currently
employs more men than women at senior leader
level, particularly in Science, Engineering, Technology
and Maths (STEM) related functions. The Group’s full
Gender Pay Report, which also details the actions
initiated by the Board to close the Group’s gender
pay gap, is published on its website www.goodenergy.
co.uk/about-us/gender-pay/.

1. Certain Directors hold share options as detailed on page 77 within the Nominations & Remuneration Report.

2. Juliet Davenport holds 583,179 Ordinary Shares in the Company in her own name. Her husband owns 43,000 Ordinary Shares. One daughter owns 638 Ordinary
Shares and Juliet Davenport holds a further 638 Ordinary Shares on behalf of another daughter.

Total pay and
benefits

£238,459

£22,375

£26,606

£41,347

The table shows the salary and total pay amounts. Quartile groups of employees are displayed using the
median values at the 25th, 50th and 75th percentiles providing a fair representation rather than basing it on
individual employees, to minimise the influence of anomalies.

Modern Slavery

Although the Group considers the inherent risk of encountering issues of modern slavery within its business,
supply chains and strategic affiliations to be low, it is nonetheless an issue that the Group and the Board
takes very seriously. The Group’s full statement under section 54 of the Modern Slavery Act 2015 for
the period ended 31 December 2020 is published on its website www.goodenergy.co.uk/modern-
slavery-act-statement/.

Related Party Transactions

Related party transactions are set out in note 33 in the Financial statements.

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 they ought to have taken as a Director in order to make
themselves aware of any relevant audit information and to establish that the Company’s auditors are aware
of that information. This confirmation is given, and should be interpreted, in accordance with the provisions of
Section 418 of the Companies Act 2006.

Strategic ReportGovernance ReportFinancial StatementsGood Energy Annual Report 2020Governance ReportEvents after the Balance Sheet date

There have been three events subsequent to the year-end which may be of note to users of
the financial statements.

On 2 February, the Group announced that Juliet Davenport would be stepping down as CEO and would move
into a non-executive director position on the Group’s board, as well as remaining Chair of the Zap Map board.
A settlement agreement has been reached regarding this change. On 7 April Nigel Pocklington was announced
as new Group CEO, with his role starting from 1 May 2021.

On 1 April 2021 the Group announced the restructuring of the financing on its renewable generation asset
portfolio to consolidate and simplify funding facilities. At the year end the Group had two secured bank loans
against its 50MW of wind and solar assets, comprising: £4.5m secured against Good Energy’s Delabole wind
farm financed by the Cooperative Bank (“Co-Op”) and £32.6m secured against the rest of the solar and wind
asset portfolio, financed by funds managed by Gravis Capital Management Limited (“Gravis”).

This refinancing and restructuring consolidates the generation assets into one portfolio, with a transfer of direct
ownership of Delabole to Good Energy Generation Assets No.1 Limited, from Good Energy Group PLC. This
portfolio will be solely financed by a revised facility of £39.8m managed by Gravis and will amortise through to
June 2035. The Co-Op Facility was previously used to finance the 9MW Delabole windfarm on a standalone
basis. The cost of settling the Co-Op debt is de minimis.

On completion, the transaction provides £7.8m of unrestricted cash, this relates to the release of reserve
accounts and other restricted cash balances which form part of the existing facilities (£4.7m), and additional
debt raised against the Delabole windfarm, associated with mirroring the terms of Delabole in line with the rest
of the portfolio (£3.1m). The transaction also rebalances the performance covenants over the entire generation
portfolio. This frees up future cash generated by the generation portfolio to be utilised by the Company.

On 8 April, the Group announced a further £1m strategic investment into Zap Map’s parent company
Next Green Car Ltd, via a convertible loan note. The loan note comprises three broadly equal and separate
tranches of investment throughout 2021, and the Good Energy can exercise the conversion of the loan at the
earlier of subsequent funding rounds, or a longstop date of 12 months from the date of agreement,
at a material discount.

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Strategic ReportGovernance ReportFinancial StatementsGood Energy Annual Report 2020Governance Report

Statement of Directors’ responsibilities
in respect of the annual report and the
financial statements

law and regulation, including company law which
requires the Directors to prepare financial statements
for each financial year. 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:

•

select suitable accounting policies and then apply
them consistently;

state whether applicable International Financial
Reporting Standards (IFRSs) in conformity with
the requirements of the Companies Act 2006
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 Directors have prepared the Group financial
statements in accordance with (IFRSs) in conformity
with the requirements of the Companies Act
2006 and parent company financial statements in
accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union.

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. These records must also 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 the system
of internal controls, for safeguarding the assets of
the Group and parent company and for taking
reasonable steps for the prevention and detection of
fraud and other irregularities.

Will Whitehorn

Chairman

“The Directors submit their
Annual Report and Accounts or
Good Energy Group plc for the
year ended 31 December 2020”

The Directors submit their Annual Report and
Financial Statements (Annual Report and Accounts)
for Good Energy Group plc for the year ended
31 December 2020. The directors’ report required
under the Companies Act 2006 comprises this
Governance & Directors’ Report and the Nominations
& Remuneration Report.

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
as detailed in the Strategic Report. This requirement
includes an analysis of the development and
performance of the Group’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 are responsible for preparing the Annual
Report and Accounts in accordance with applicable

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.

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 position and performance, business
model and strategy.

Each of the Directors, whose names and functions are
listed in the Governance & 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 profit of the Company

the Group’s consolidated 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

the Annual Report and Accounts 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 that it faces.

In the case of each Director in office at the date the
Governance Report is approved:

•

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

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.

The Annual Report and Accounts, including the
Strategic Report, Governance & Directors’ Report,
Remuneration Report and Financial Statements, have
been prepared and approved by the Board and are
published in accordance with, and with reliance
on, applicable English company law. The liabilities
of Directors in relation to the Annual Report and
Accounts are subject to the limitations and restrictions
provided by such law.

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Good Energy Annual Report 2020

Governance Report

Independent Auditors’ report to the
members of Good Energy Group plc

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 2020 and of the group’s loss for the
year then ended;

•

the group financial statements have been
properly prepared in accordance with
international accounting standards in
conformity with the requirements of the
Companies Act 2006;

•

the parent company financial statements have
been properly prepared in accordance with
International Accounting Standards in conformity
with the requirements of the Companies Act
2006 as applied in accordance with section 408
of the Companies Act 2006; and

the financial statements have been prepared
in accordance with the requirements of the
Companies Act 2006.

We have audited the financial statements of Good Energy Group plc (the ‘parent company’) and its
subsidiaries (the ‘group’) for the year ended 31 December 2020 which comprise:

Group

Parent company

Consolidated Statement of Financial Position as at
31 December 2020

Parent Company Statement of Financial Position as at
31 December 2020

Consolidated Statement of Comprehensive
Income for the year then ended

Consolidated Statement of Changes in
Equity for the year then ended

Parent Company Statement of Changes in
Equity for the year then ended

Consolidated Statement of Cash Flows
for the year then ended

Parent Company Statement of Cash Flows
for the year then ended

Related notes 1 to 36 to the financial
statements, including a summary of
significant accounting policies

Related notes 1 to 36 to the financial
statements including a summary of significant
accounting policies

The financial reporting framework that has been applied in their preparation is applicable law and
International Accounting Standards in conformity with the requirements of the Companies Act 2006 and,
as regards the parent company financial statements, as applied in accordance with section 408 of the
Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with
International Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our responsibilities
under those standards are further described in the
Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent
of the group in accordance with the ethical
requirements that are relevant to our audit of
the financial statements in the UK, including
the FRC’s Ethical Standard as applied to listed
public interest entities, and we have fulfilled our
other ethical responsibilities in accordance with
these requirements.

We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for
our opinion.

Conclusions relating to Going Concern

In auditing the financial statements, we have
concluded that the directors use of the going
concern basis of accounting in the preparation of
the financial statements is appropriate. Our
evaluation of the directors’ assessment of the group
and parent company’s ability to continue to adopt
the going concern basis of accounting included the
following procedures:

• We gained an understanding of the process
undertaken by management to perform the
going concern assessment, including their
assessment of risks and evaluation of the ongoing
impact of COVID-19 on the group including
discussion with management to ensure all key
factors were taken into account.

• We obtained management’s forecast cash flows

and covenant calculations covering the period
from the date of signing to 31 December 2022
and we agreed these to the Board approved
budgets and forecasts.

• We tested the mathematical accuracy of the
cash flows, as well as the calculation of the
forecast covenants.

• We considered the group’s access to available

sources of liquidity and agreed available facilities
to underlying agreements and the extent of
drawings thereunder to external confirmations.

• We obtained the confirmation from the lender
for the expected covenant ratios for the going
concern period until 31 December 2022.

• We obtained the deed of release and other
relevant document regarding the group’s
refinancing of their generation assets portfolio.

• We challenged management in respect of
the assumptions used in the going concern
assessment and reverse stress test reflecting
their principal risks and uncertainties, including
the risk of a further lockdown later in FY21 and
the impact this would have on liquidity and on
compliance with financial covenants.

• We understood and challenged the Board’s

controllable mitigation plans and the forecast

impact on the ability of the business to operate
within its financial covenants. We obtained
supporting documentation to evaluate the
plausibility and achievability of management’s
mitigation plans considering actions delivered
to date.

• We compared forecast future cashflows to

historical data, ensuring variations are in line with
our expectations, such as historical performance,
peer’s result and understanding of the business
and considered the reliability of past forecasts.

• We considered the results of other audit

procedures and other knowledge obtained in
the audit and whether it was consistent with or
contradicted management’s assumptions.

• We performed our own sensitivity analysis
on management’s forecast cashflows
and considered the reverse stress tested
management model to understand how severe
conditions would have to be to breach liquidity
and/or covenant headroom, and whether the
scenario has no more than a remote possibility
of occurring.

•

Inquired of management as to their knowledge
of events or conditions beyond the period of their
assessment that may cast significant doubt on
the entity’s ability to continue as a going concern
and compared their response to the maturity of
the group’s liabilities, review of subsequent events,
contracts and minutes of meetings.

• We assessed the appropriateness of disclosures

within the Annual Report and Accounts.

Our key observations

• We have observed that the group is experiencing
a minimal level of disruption from the impact
of the pandemic from both a revenue and
profitability perspective.

•

In April 2021, the Group has refinanced its
generation assets with a new loan from Gravis
Capital Partners (GCP). The refinancing
enabled repayment of the Co-op loan reset
the underlying covenants and has made an
additional cash available to the Group – this is
being disclosed as a non-adjusting post balance
sheet event.

Based on the work we have performed, we have
not identified any material uncertainties relating to
events or conditions that, individually or collectively,
may cast significant doubt on the group and parent
company’s ability to continue as a going concern
over a period of 20 months from when the financial
statements are authorised for issue to 31 December
2022. Going concern has also been determined to be
a key audit matter.

Our responsibilities and the responsibilities of
the directors with respect to going concern are
described in the relevant sections of this report.
However, because not all future events or conditions
can be predicted, this statement is not a guarantee as
to the group’s ability to continue as a going concern.

Strategic ReportGovernance ReportFinancial StatementsGood Energy Annual Report 2020Governance ReportOverview of our audit approach

Audit scope

• We performed an audit of the complete financial information of 3 components

and audit procedures on specific balances for a further 9 components.

Key audit matters

•

The components where we performed full or specific audit procedures
accounted for 100% of Earnings before interest and tac from continuing
operations (EBIT) measure used to calculate materiality, 99% of Revenue and
96% of Total assets.

Revenue recognition, specifically the estimated unbilled income

Revenue recognition due to the susceptibility to management override through
inappropriate, manual entries

Valuation of the expected credit loss provision

• Generation asset revaluation

• Going Concern basis used in preparation of the Annual Report & Accounts

Materiality

• Overall group materiality of £0.3m which represents 5% of EBIT from continuing

operations.

An overview of the scope of our audit

Tailoring the scope

Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality
determine our audit scope for each company within the group. Taken together, this enables us to form an
opinion on the consolidated financial statements. We take into account size, risk profile, the organisation of the
group and effectiveness of group-wide controls, changes in the business environment and other factors such
as recent Internal audit results when assessing the level of work to be performed at each company.

In assessing the risk of material misstatement to the group financial statements, and to ensure we had
adequate quantitative coverage of significant accounts in the financial statements, of the 14 reporting
components of the group, we selected all components covering entities within the UK, which represent the
principal business units within the group.

Of the 14 components selected, we performed an audit of the complete financial information of 4
components (“full scope components”) which were selected based on their size or risk characteristics. For the
remaining 10 components (9 “specific scope components” and 1 “specific procedures”), we performed audit
procedures on specific accounts within that component that we considered had the potential for the greatest
impact on the significant accounts in the financial statements either because of the size of these accounts or
their risk profile.

The reporting components where we performed audit procedures accounted for 100% (2019: 100%) of the
group’s EBIT from continuing operations, 99% (2019: 100%) of the group’s Revenue and 96% (2019: 95%)
of the group’s Total assets. For the current year, the full scope components contributed 75% (2019: 88%) of
the group’s EBIT, 93% (2019: 93%) of the group’s Revenue and 59% (2019: 43%) of the group’s Total assets.
The specific scope component contributed 8% (2019: 3%) of the group’s EBIT, 6% (2019: 7%) of the group’s
Revenue and 54% (2019: 40%) of the group’s Total assets. The audit scope of these components may not have
included testing of all significant accounts of the component but will have contributed to the coverage of
significant tested for the group. We also perform specified procedures over the acquisition of Next
Green Ltd (Zap Map), as described in the Risk section below.

Of the remaining 2 components that together represent 11% (2019: 3%) of the group’s earnings before
interest and tax, these components are part of the generation side of business and do not have external
revenue. For these components, we performed other procedures, including analytical review and testing
of intercompany eliminations to respond to any potential risks of material misstatement to the group
financial statements.

The charts below illustrate the coverage obtained from the work performed by our audit teams.

Changes from the prior year

No significant changes identified in relation to prior year scoping.

Involvement with component teams

All audit work performed for the purposes of the audit was undertaken by the group audit team.

Strategic ReportGovernance ReportFinancial StatementsGood Energy Annual Report 2020Governance ReportKey observations
communicated to the
Audit Committee

Based on the audit procedures
performed manual entries were
appropriate, including post
close adjustments during the
consolidation process.

Our journal entry testing
procedures did not identify
instances of inappropriate
management override in the
recognition of revenue.

Key audit matters

Risk

Our response to the risk

Revenue recognition due to the
susceptibility to management
override through inappropriate
manual entries.

Accounting policies (page 115);
and Note 4 of the Consolidated
Financial Statements (page 131).

We consider that all except the
accrued income of Good Energy’s
revenue transactions reported
under existing IFRS guidance are
routine, non-complex, and systems
driven, with no judgement applied
over the recorded amount.

However, the accounting for
revenues is susceptible to
management override through
the recording of manual topside
journal entries either in the
underlying ledgers or during the
consolidation process.

We focused on this area due
to the manual nature of the
consolidation process and the
non-routine judgemental
nature of some of the manual
journals posted.

Our procedures included:

• We performed walkthroughs
of the consolidation process
at various month ends
throughout the year, including
the interim and year end
to assess the design and
implementation of key
controls over the manual
consolidation process.

• Audit procedures specifically
designed to address the risk
of management override
included using data extracted
from the accounting system
to test the appropriateness
of journal entries impacting
revenue, as well as other
adjustments made in the
preparation of the financial
statements, with a focus on
selecting and testing
manual journals.

•

For all locations we assessed
the results of the consolidated
entities used in the manual
consolidation by agreeing
the results included in the
consolidation directly to
the results audited by the
audit team.

• We selected all consolidation
journals exceeding 15% of
performance materiality and
obtained evidence to assess
the validity and accuracy of
the journals being posted.

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified. These matters included those which had
the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the
efforts of the engagement team. These matters were addressed in the context of our audit of the financial
statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.

Key observations
communicated to
the
Audit Committee

We did not identify
material errors in
the unbilled income
report, nor evidence
of management
manipulation of
revenue within
this report.

We concluded that
management’s
assumptions in
respect of customer
demand are within
an acceptable range
and that the basis
of calculation of
the unbilled income
accrual is appropriate.

Risk

Our response to the risk

Revenue recognition,
specifically the estimated
unbilled income

Accounting policies (page
115); and Note 21 of the
Consolidated Financial
Statements (page 163)

The group’s material revenue
streams relate to the provision
of gas and electricity services.

This risk over revenue
recognition specifically arises
in income from metered
services amounting to £16.4m
(2019: £18.7m), which requires
an estimation of the amount
of unbilled charges at the
year end.

This is calculated using
a combination of system
generated information,
based on previous customer
volume usage, together with
management judgements as
to the likely impact on usage
of factors such as seasonal
variations.

Due to the accrued income
being an estimation, the risk
of management bias is high.

The risk has decreased in
the current year due to the
new billing system that was
fully implemented during
the year and estimation
and calculation process of
accrued income now being
fully operational for two years.

Our procedures included:

• We obtained an understanding of the process
for the supply of gas and electric services,
meter reading and related billing in order to
ascertain the completeness of adjustments to
reflect the accrual or deferral of revenue.

• We assessed the design of key controls linked

to system generated information relating to
the estimation process for measured revenue.

• We tested the inputs into the billing system,
including meter reads, tariffs and estimated
average consumption. This was to assess
whether calculated bills and the resultant
revenues reflected accurate contract agreed
prices and usage.

• We compared the accrued income to

bills raised post year end for a sample of
customers to check the accuracy of the
estimated usage and revenue recorded.

• We corroborated the key assumptions
made by management in recognising
revenue, by obtaining internal and external
data on demand.

• We tested whether revenue was recognised
in the correct period by recalculating the
accrued income based on the last billed date
and compared that to the amount billed.

• We performed analytical procedures

by comparing revenue balances for the
year against expectation from industry
consumption data and obtaining support for
significant variances against that data.

•

In performing our journal testing, we paid
increased attention to entries impacting
revenue focusing on non-system postings and
those raised in the last two weeks of the year.

• We have performed testing over

completeness of the data migration from the
old billing system to the new billing system.

• We performed full scope audit procedures

over this risk area in two locations, which
covered 100% of the risk amount.

Strategic ReportGovernance ReportFinancial StatementsGood Energy Annual Report 2020Governance ReportKey observations
communicated to the
Audit Committee

We assessed management’s
judgments and concluded
that the ECL provision is
within an acceptable range
and reflects likelihood of
collections in future periods.

Risk

Our response to the risk

Expected Credit Losses

Our procedures included:

Accounting policies (page 124);
and Note 21 of the Financial
Statements (page 163)

There is an expected credit loss
(ECL) provision of £8.9m (2019:
£7.3m) at the year-end against
gross amounts receivable from
customers of £34.3m
(2019: £33.7m).

The simplified approach to ECL
under IFRS 9 was calculated using
management’s judgement of the
future likely recovery rates.

There is a risk that the assumptions
used by management in
calculating the ECL provision may
be susceptible to management
bias and the valuation of ECL
amounts against trade receivables
and unbilled income may
be misstated.

• We performed a walkthrough of

the process for calculating the ECL
provision and assessed the design
effectiveness of key controls.

• We tested the integrity of data and

the report utilised to generate the
ageing and categorisation of debt
within the group’s billing system.

• We corroborated assumptions made
by management on collection rates,
by analysing historical information,
subsequent collection data, and
performed sensitivity analysis on
the impact of these rates on the
ECL provision.

• We formed a view that the

assumptions made by management
on collection rates were within our
expected range and performed
sensitivity analysis on the impact of
these rates on the ECL provision. We
also compared the outstanding sales
days to peers and competitors within
the industry to ensure these were
reasonable.

• We assessed the use of IFRS 9

on the calculation prepared by
management and challenged
provisioning rates based on expected
credit losses through past history and
predicted market conditions.

• We performed analysis against

debt held at year end compared
to cash collected post year
end disaggregated into the
categorisation of customers
used by management in the
provision calculation to assess the
reasonableness of provisioning rates.

• We tested the appropriateness of
journal entries and adjustments
impacting the ECL provision
particularly those raised close to the
balance sheet date.

• We performed full scope audit

procedures over this risk area in two
locations, which covered 100% of
the risk amount.

Risk

Our response to the risk

Generation asset revaluation:

Our procedures included:

Accounting policies (page 117);
and Note 15 of the Financial
Statements (page 145)

The group changed the
accounting policy with respect to
the measurement of Generation
assets as at 1 January 2020 on a
prospective basis.

The properties’ fair values are
based on valuations performed by
an accredited independent valuer,
which was determined using a
Discounted Cashflow
(DCF) method.

The revaluation gain recognised as
at 1 January 2020 is £15.9 million,
net of £0.5 million revaluation loss
from one of the generation assets.

The net book value of Property
Plant and Equipment (PPE), after
revaluation as at 31 December
2020 is £58.6 million (2019: £46.3
million)

The risk involves significant
estimation uncertainty, subjectivity
and complexity in the fair value
determination by the group’s
external specialist, which could
impact key ratios of the group,
such as lowering the gearing ratio.

• We have reviewed the valuation

report and calculation from Good
Energy over the accounting
treatment and the proposed
disclosures required under IFRS.

• We have obtained and reviewed the
revaluation report provided by
the external specialist engaged
by management.

• We involved EY Valuation specialists

to provide assessment on the
reliability of the process and
methods used in the valuation of
generation assets.

• We discussed with management

the frequency of revaluations which
depends upon the whether the fair
values of the revalued assets differ
materially with its carrying amount
and the appropriate and adequate
disclosures regarding the matter.

• We also focused on corroborating

management reasons why applying
this policy change provides reliable
and more relevant information, in
particular to the economic decision-
making needs of the users of the
financial statements.

• We performed sensitivity analysis
over key assumptions within
the estimate.

Key observations
communicated to the
Audit Committee

We concluded that
the proposed voluntary
change in the accounting
policy from cost model
to revaluation model for
subsequent measurement
of PPE is in accordance
with IFRS and is allowed by
IAS 8, IAS 16 and related
standards as it results in
the financial statements of
the group, its subsidiaries,
immediate and ultimate
parents providing reliable
and more relevant
information about the
effects of transactions, other
events or conditions on the
entity’s financial position,
financial performance or
cash flows.

We also concluded that
the proposed prospective
application of the change
in the accounting policy
is conformant to the
requirements of IFRSs and
we concluded that to
the material extent the
proposed disclosure satisfies
and is compliant with
the relevant requirements
of IFRSs.

Strategic ReportGovernance ReportFinancial StatementsGood Energy Annual Report 2020Governance ReportKey observations
communicated to the
Audit Committee

We concluded that the
fair value of the software
assets at acquisition are
fairly stated and that the
amortisation period of three
years is appropriate.

Risk

Our response to the risk

Zap Map acquisition

Our procedures included:

Accounting policies (page 119);
and Note 17 of the Financial
Statements (page 152)

Good Energy made an equity
investment in Zap-Map through
Next Green Car Limited in the
previous year. The transaction is
complex due to the ownership
structure and financing
arrangements of the investment,
from investment in associate to
a subsidiary.

Zap Map acquisition resulted to
£0.9 million of goodwill, £0.4 million
software licenses through £1.2
million consideration paid by
the Group.

The risk involves significant
estimation uncertainty, subjectivity
and complexity in the fair value
determination with respect to
the investment acquired and the
impairment assessment of the
goodwill recognised.

• We have validated all material fair
value adjustments through third
part documentations and
underlying supports.

• We have checked the clerical

accuracy of the fair value calculation
and the DCF used for the assessment
of goodwill impairment.

• We have reviewed the sensitivity

analysis and inflationary increases
to assess whether they have been
correctly applied and considered the
impact of changing any assumptions
in the model within a reasonable
range and the consequential effect
on goodwill headroom.

• We have involved the EY Valuation

team to support us in our evaluation
of the assumptions used in the
discounted cash flow analysis
to assess impairment, including
evaluation of the growth rates,
discount rate and terminal value,
comparing against past experience
and independently assessing future
market outlook.

• We have checked the disclosures
made to ensure that this is in
accordance with the applicable
standards.

There were no changes in the key audit matters in the prior year auditor’s report compared to the current
year auditor’s report.

our understanding of the group and the past history
of misstatements, is that the likelihood of material
misstatement is higher.

Audit work at component locations for the purpose
of obtaining audit coverage over significant financial
statement accounts is undertaken based on a
percentage of total performance materiality. The
performance materiality set for each component is
based on the relative scale and risk of the component
to the group as a whole and our assessment of
the risk of misstatement at that component. In the
current year, the range of performance materiality
allocated to components was £0.05 million to £0.2
million (2019: £0.1 million to £0.4 million).

Reporting threshold

An amount below which identified misstatements are
considered as being clearly trivial.

We agreed with the Audit Committee that we would
report to them all uncorrected audit differences in
excess of £15,000 (2019: £0.05 million), which is set
at 5% of planning materiality, as well as differences
below that threshold that, in our view, warranted
reporting on qualitative grounds..

We evaluate any uncorrected misstatements against
both the quantitative measures of materiality
discussed above and in light of other relevant
qualitative considerations in forming our opinion.

Other information

The other information comprises the information
included in the annual report set out on pages 4-85
other than the financial statements and our auditor’s
report thereon. The directors are responsible for the
other information contained within the annual report.

Our opinion on the financial statements does not
cover the other information and, except to the extent
otherwise explicitly stated in this report, we do not
express any form of assurance conclusion thereon.

Our responsibility is to read the other information and,
in doing so, consider whether the other information is
materially inconsistent with the financial statements
or our knowledge obtained in the course of the audit
or otherwise appears to be materially misstated. If
we identify such material inconsistencies or apparent
material misstatements, we are required to determine
whether there is a material misstatement in the
financial statements themselves. If, based on the
work we have performed, we conclude that there is
a material misstatement of the other information, we
are required to report that fact.

We have nothing to report in this regard.

Our application of materiality

We apply the concept of materiality in planning
and performing the audit, in evaluating the effect of
identified misstatements on the audit and in forming
our audit opinion.

Materiality

The magnitude of an omission or misstatement that,
individually or in the aggregate, could reasonably be
expected to influence the economic decisions of the
users of the financial statements. Materiality provides
a basis for determining the nature and extent of our
audit procedures.

We determined materiality for the Group to be £0.3
million (2019: £1.0 million), which is 5% of EBIT (2019:
0.8% of revenue). We believe that earnings before
interest and tax provides us with an appropriate basis
for determining the nature and extent of our audit
procedures. The assessed materiality is less than the
prior year’s materiality mainly due to the change of
the basis of materiality.

The generation asset development segment has been
discontinued, and there is new investment into the
technology solutions side of the business including
demand management managing supply. This change
meant 2018 and 2019 profitability increase. However,
in part as a result of decreased demand and
increased risk of credit default due to COVID-19, the
group made a loss before tax in the 2020 half year
interim results released to the market. This business
has reached its peaked in terms of generation and
supply of energy therefore diversifying their business
model towards high margin, which is focused more on
earnings than the growth or activity. We concluded
that based on these considerations that earnings
before interest and tax is reflective of the Company’s
position and would be the measure of most interest
to the users of the financial statements, being a listed
company.

We determined materiality for the parent company
to be £0.2 million (2019: £0.3 million), which is 1.4%
(2019: 1.6%) of equity. Equity is the most appropriate
measure given the parent company is an investment
holding company with no revenue.

During the course of our audit, we reassessed initial
materiality and updated it to reflect actual earnings
before interest and tax having based our initial
materiality on forecast earnings before interest
and tax.

Performance materiality

The application of materiality at the individual account
or balance level. It is set at an amount to reduce to an
appropriately low level the probability that the
aggregate of uncorrected and undetected
misstatements exceeds materiality.

On the basis of our risk assessments, together
with our assessment of the Group’s overall control
environment, our judgement was that performance
materiality was 50% (2019: 50%) of our materiality
£0.15 million (2019: £0.5 million). We have set
performance materiality at this percentage due to

Strategic ReportGovernance ReportFinancial StatementsGood Energy Annual Report 2020Governance ReportOpinions on other matters prescribed by the
Companies Act 2006

Auditor’s responsibilities for the audit of the
financial statements

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 directors’ report have
been prepared in accordance with applicable
legal requirements.

Matters on which we are required to report
by exception

In the light of the knowledge and understanding
of the group and the parent company and its
environment obtained in the course of the audit, we
have not identified material misstatements in the
strategic report or the directors’ report.

We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:

•

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 and
the part of the Directors’ Remuneration Report
to be audited are not in agreement with the
accounting records and returns; or

certain disclosures of directors’ remuneration
specified by law are not made; or

• we have not received all the information and

explanations we require for our audit.

Our objectives are to obtain reasonable assurance
about whether the financial statements as a whole
are free from material misstatement, whether due
to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK)
will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the
aggregate, they could reasonably be expected to
influence the economic decisions of users taken on
the basis of these financial statements.

Explanation as to what extent the audit
was considered capable of detecting
irregularities, including fraud

Irregularities, including fraud, are instances of non-
compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined
above, to detect irregularities, including fraud. The
risk of not detecting a material misstatement due
to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate
concealment by, for example, forgery or intentional
misrepresentations, or through collusion. The extent
to which our procedures are capable of detecting
irregularities, including fraud is detailed below.

However, the primary responsibility for the prevention
and detection of fraud rests with both those charged
with governance of the group and management.

• We obtained an understanding of the legal

and regulatory frameworks that are applicable
to the group and determined that the most
significant are:

Responsibilities of directors

o IFRS, FRS101 and the Companies Act 2006

As explained more fully in the directors’ responsibilities
statement set out on page 84, the directors are
responsible for the preparation of the financial
statements and for being satisfied that they give a
true and fair view, and for such internal control as
the directors determine is necessary to enable the
preparation of financial statements that are free from
material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors
are responsible for assessing the group and parent
company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going
concern and using the going concern basis of
accounting unless the directors either intend to
liquidate the group or the parent company or to
cease operations, or have no realistic alternative but
to do so.

o Financial reporting Council (FRC)

o Tax legislation (Governed by HM
Revenue and Customs)

o General Data Protection Regulation

o The UK Bribery Act

o Anti-Money Laundering Legislation

o Consumer rights laws

o Office of Gas and Electricity Markets

• We understood how Good Energy Group plc is

complying with those frameworks by reading
internal policies and codes of conduct and
assessing the entity level control environment,
including the level of oversight of the directors.
We made enquiries of the group’s legal counsel

and internal audit of known instances of non-
compliance or suspected non-compliance with
laws and regulations. We designed our audit
procedures to identify non-compliance with such
laws and regulations identified in the paragraph
above. As well as enquiry and attendance at
meetings, our procedures involved a review of the
reporting to the tax and treasury committee and
a review of board meetings and other committee
minutes to identify any non-compliance with
laws and regulations. We understood any controls
put in place by management to reduce the
opportunities for fraudulent transactions.

Use of our report

This report is made solely to the company’s members,
as a body, in accordance with Chapter 3 of Part 16
of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company’s
members those matters we are required to state to
them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other
than the company and the company’s members as
a body, for our audit work, for this report, or for the
opinions we have formed.

John Howarth
(Senior statutory auditor)

for and on behalf of Ernst & Young LLP, Statutory
Auditor

Bristol

30 April 2021

• We assessed the susceptibility of the group’s

financial statements to material misstatement,
including how fraud might occur by making
enquiries of senior management and those
charged with governance. We understood the
programmes and controls that the group has
established to address risks identiﬁed, or that
otherwise prevent, deter and detect fraud;
and how senior management monitors those
programmes and controls. We planned our
audit to identify risks of management override,
tested higher risk journal entries and performed
audit procedures to address the potential for
management bias, particularly over areas
involving significant estimation and judgement.
Our procedures were designed to provide
reasonable assurance that the group and parent
company financial statements were free from
material misstatement.

•

Based on this understanding we designed our
audit procedures to identify non-compliance
with such laws and regulations including all
the subsidiaries included on the Group. Our
procedures involved making enquiries of key
management and legal counsel, reviewing
key policies, inspecting legal registers and
correspondence with regulators and reading
key management meeting minutes. We also
completed procedures to conclude on the
compliance of significant disclosures in the
Annual Report and Financial Statements with
the requirements of the relevant accounting
standards and UK legislation.

A further description of our responsibilities for the
audit of the financial statements is located on the
Financial Reporting Council’s website at https://www.
frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor’s report.

Strategic ReportGovernance ReportFinancial StatementsGood Energy Annual Report 2020Governance ReportFinancial 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

100

102

104

106

108

109

110

111

98
98

Good Energy Annual Report 2020

Good Energy Annual Report 2020Strategic ReportGovernance ReportFinancial StatementsStrategic ReportConsolidated Statement of Comprehensive Income

For the year ended 31 December 2020

2020

Note

Underlying

2020
Non-
underlying
items (note 7)

2020

2019

Non-

2019

Underlying

underlying

items

REVENUE

Cost of sales

GROSS PROFIT

Administrative expenses

OPERATING PROFIT

Finance income

Finance costs

Share of loss of associate

(LOSS)/PROFIT BEFORE TAX

Taxation

(LOSS)/PROFIT FOR THE
YEAR FROM CONTINUING
OPERATIONS

(Loss) from discontinued
operations, before tax

Taxation on discontinued
operations

£000’s

130,649

(101,082)

29,567

130,649

124,258

(101,082)

(92,601)

29,567

31,657

124,258

(92,601)

31,657

(25,029)

(477)

(25,506)

(25,219)

(865)

(26,084)

4,538

(477)

4,061

6,438

(865)

5,573

109

(4,239)

(13)

395

(72)

109

166

(4,239)

(4,439)

(13)

(42)

166

(4,439)

(42)

(477)

(82)

2,123

(865)

1,258

(206)

164

(42)

323

(386)

(63)

1,917

(701)

1,216

(930)

(32)

(930)

(32)

(LOSS)/PROFIT FOR THE PERIOD

323

(386)

(63)

955

(701)

254

Attributable to:
Good Energy Group PLC

Attributable to:
Non-controlling Interests

448

(386)

955

(701)

254

(125)

Earnings per share Basic

Diluted 14

2.7p

(2.4p)

(2.3p)

0.4p

5.9p

5.7p

(4.3p)

(4.2p)

Earnings per share
(continuing operations)

Basic

2.7p

(2.4p)

0.4p

11.8p

(4.3p)

1.6p

1.5p

7.5p

Diluted 14

2.7p

(2.3p)

0.4p

11.4p

(4.2p)

7.2p

Consolidated Statement of
Comprehensive Income (continued)

For the year ended 31 December 2020

2020

Note

Underlying

2020
Non-
underlying
items
(note 7)

2020

2019

Underlying

2019

Non-

underlying

items

£000’s

PROFIT FOR THE PERIOD

323

(386)

(63)

955

(701)

254

OTHER COMPREHENSIVE
INCOME

Other Comprehensive income that
will not be reclassified to profit or
loss in subsequent periods (net of
tax)

Revaluation of Generation sites

13,313

Other comprehensive income for
the year, net of tax

13,313

Total comprehensive income for
the year attributable to owners of
the parent company

Attributable to:
Good Energy Group PLC

Attributable to:
Non-controlling Interests

13,636

(386)

13,250

955

(701)

254

13,761

(386)

13,375

955

(701)

254

(125)

The notes on pages 111 to 177 form part of these financial statements.

100

101

Strategic ReportGovernance ReportFinancial StatementsGood Energy Annual Report 2020Financial statements

Consolidated Statement of Financial Position

As at 31 December 2020

Company registered no: 04000623

Note

2020

£000’s

2019

£000’s

Non-current assets

Property, plant and equipment

Right of use assets

Intangible assets

Restricted deposit accounts

Equity investment in associate

Other interests in associate

Total non- current assets

Current assets

Inventories

Trade and other receivables

Restricted deposit accounts

Cash and cash equivalents

Total current assets

TOTAL ASSETS

Equity and liabilities

Capital and reserves

Called up share capital

Share premium account

Employee Benefit Trust shares

Revaluation Surplus

Retained earnings

Total equity attributable to members of the Parent
Company

Non-controlling interest

Total equity

58,602

46,326

5,924

4,833

4,552

6,483

4,454

4,548

426

615

Non- current liabilities

Deferred taxation

Borrowings

Provisions for liabilities

Long term financial liabilties

Total non- current liabilities

Current liabilities

73,911

62,852

Borrowings and other financial liabilities

14,625

26,715

698

18,282

60,320

9,941

29,430

474

13,667

53,512

Trade and other payables

Short term financial liabilities

Total current liabilities

Total liabilities

TOTAL EQUITY AND LIABILITIES

4,135

54,464

1,316

903

56,744

1,294

59,928

58,980

3,633

38,258

41,891

101,819

134,231

3,057

35,487

38,604

97,584

116,364

134,231

116,364

The financial statements on pages 100 to 177 were approved by the Board of Directors on 30 April 2021 and
signed on its behalf by:

Juliet Davenport

Chief Executive
30 April 2021

The notes on pages 111 to 177 form part of these financial statements.

833

12,790

(502)

12,472

6,634

832

12,790

(549)

5,707

32,227

18,780

185

32,412

18,780

S
t
r
a
t
e
g
c

R
e
p
o
r
t

G
o
v
e
r
n
a
n
c
e

R
e
p
o
r
t

n
a
n
c
a

S
t
a
t
e
m
e
n
t
s

102

Good Energy Annual Report 2020

Financial statements

103

Parent Company Statement of Financial Position

As at 31 December 2020

Company registered no: 04000623

Non-current assets

Right of use assets

Intangible assets

Deferred taxation

Equity investment in associate

Other investment in associate

Investments

Total non- current assets

Current assets

Trade and other receivables

Amounts due from other group companies

Cash and cash equivalents

Total current assets

TOTAL ASSETS

Equity and Liabilities

Capital and reserves

Share capital

Share premium account

Employee Benefit Trust shares

Retained Earnings

Total Equity

Note

2020

£000’s

313

27,934

28,251

176

4,948

5,124

33,375

833

12,790

(502)

2,424

15,545

2019

£000’s

232

426

615

29,160

30,482

3,500

5,603

9,201

39,683

832

12,790

(549)

1,671

14,744

Non- current liabilities

Long term financial liabilities

Borrowings

Total non- current liabilities

Current liabilities

Borrowings and other financial liabilities

Trade and other payables

Short term financial liabilities

Total current liabilities

Total liabilities

TOTAL EQUITY AND LIABILITIES

16,338

16,351

16,790

16,829

1,089

7,802

390

1,479

17,830

33,375

248

8,110

24,939

39,683

The Parent Company’s profit for the financial year was £729,000 (2019: loss of £1,554,978). The financial
statements on pages 98 to 172 were approved by the Board of Directors on 30 April 2021 and signed on its
behalf by:

Juliet Davenport

Chief Executive
30 April 2021

The notes on pages 111 to 177 form part of these financial statements.

104

105

Strategic ReportGovernance ReportFinancial StatementsGood Energy Annual Report 2020Financial statements

Consolidated Statement of Changes in Equity

For the year ended 31 December 2020

Note

Called
up share
capital

Share
premium
account

EBT shares

Retained
earnings

Total
equity

£000’s

829

12,719

(810)

6,088

18,826

261

254

(132)

254

129

(584)

(510)

261

(635)

(300)

At 1 January 2019

Profit for the year

Other comprehensive income for the year

Total comprehensive income for the year

Share based payments

Exercise of options

Dividend paid

Total contributions by and distributions to
owners of the parent, recognised directly
in equity

At 31 December 2019

832

12,790

(549)

5,707

18,780

Note

Share
captial

Share
premium
account

EBT shares

Retained
earnings

Revaluation
surplus

Non-
controlling
interest

Total
equity

£000’s

832

12,790

(549)

5,707

18,780

(125)

(63)

13,313

(125)

13,250

(15)

310

841

(841)

865

(841)

310

382

833

12,790

(502)

6,634

12,472

185

32,412

At 1 January
2020

Profit/(Loss) for
the year

Other
comprehensive
income for the
year

Total
comprehensive
income for the
year

Share based
payments

Exercise of
options

Acquisition of
subsidiary

Transfer of
revaluation to
retained earnings

Total contributions
by and
distributions to
owners of the
parent, recognised
directly in equity

At 31 December
2020

The notes on pages 111 to 177 form part of these financial statements.

106

107

Strategic ReportGovernance ReportFinancial StatementsGood Energy Annual Report 2020Financial statementsParent Company Statement of Changes in Equity

Consolidated Statement of Cash Flows

For the year ended 31 December 2020

Note

Share
capital

Share
premium
account

EBT
shares

Retained
earnings

Total
equity

Note

At 1 January 2019

829

12,719

(804)

3,862

16,606

Cash generated from operations

£000’s

Cash flows from operating activities

Loss for the year and total
comprehensive income

Share based payments

Exercise of options

Dividend paid

At 31 December 2019

At 1 January 2020

Profit for the year and total
comprehensive income

Share based payments

Exercise of options

Dividend paid

255

(1,555)

(133)

122

(584)

(510)

832

12,790

(549)

1,671

14,744

832

12,790

(549)

1,671

14,744

729

(15)

At 31 December 2020

833

12,790

(502)

2,424

15,545

The notes on pages 111 to 177 form part of these financial statements.

2020

£000’s

11,425

2019

£000’s

8,146

(3,735)

(4,090)

Finance income

Finance cost

Income tax received

Net cash flows generated from operating activities

7,775

4,115

Cash flows from investing activities

Purchase of property, plant and equipment

Purchase of intangible fixed assets

Disposal of assets

Deposits into restricted accounts

Equity investment in associate

Other investment in associate

Acquisition of subsidiary

Net cash flows generated from/(used in)
investing activities

Cash flows from financing activities

Payments of dividends

Repayment of borrowings

Capital repayments of leases

Proceeds from sale of share options

(4)

(473)

(228)

(200)

307

(598)

(2,184)

(411)

(112)

(1,834)

5,037

(857)

(277)

(600)

1,357

(510)

(6,311)

(769)

123

Net cash flows used in financing activities

(2,562)

(7,467)

Net (decrease)/increase in cash and cash
equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

4,615

(1,995)

13,667

18,282

15,662

13,667

The notes on pages 111 to 177 form part of these financial statements.

108

109

Strategic ReportGovernance ReportFinancial StatementsGood Energy Annual Report 2020Financial statements
Parent Company Statement of Cash Flows

Notes to the Financial Statements

For the year ended 31 December 2020

1. General Information

Cash flows from operating activities

Cash used in operations

(2,365)

(2,025)

Note

2020

£000’s

2019

£000’s

Finance income

Finance cost

Corporation tax

(640)

(789)

Net cash flows used in operating activities

(3,005)

(2,812)

Cash flows from investing activities

Disposal of assets

Equity investment in associate

Other investment in associate

Net cash flows generated from/(used in)
investing activities

Cash flows from financing activities

Payment of dividends

Cash dividend received

Repayment of borrowings

Proceeds from intercompany loans

Capital repayments of leases liabilities

Proceeds from the exercise of share options

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 111 to 177 form part of these financial statements.

(200)

2,517

2,550

(655)

5,603

4,948

5,423

(277)

(600)

4,546

(510)

5,000

(3,625)

2,983

(411)

123

3,560

5,294

309

5,603

Good Energy Group PLC ("the Company") is listed on the Alternative Investment Market of the London Stock
Exchange, is incorporated in England and Wales and domiciled in the United Kingdom. The Group's shares
are publicly traded. The registered office is located at Good Energy, Monkton Park Offices, Monkton Park,
Chippenham, Wiltshire, United Kingdom, SN15 1GH.

The ultimate parent of the Group is Good Energy Group PLC. There is no ultimate controlling party of
the Group.

The principal activities of Good Energy Group PLC are those of a holding and management company to the
Group and a lender to, generation development sites.

The principal activities of its subsidiaries include the purchase, generation and sale of electricity from
renewable sources, as well as the sale of gas and services relating to micro-renewable generation, and the
sale of EV market data services.

The purpose of the Annual Report and Financial Statements is to provide information to members of the
Company and its subsidiaries (together "the Group"). 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, which is the functional currency and
presentational currency of the Group, as this is the currency of the primary environment in which the Group
operates. All values are rounded to the nearest thousand (£000), except where otherwise indicated.

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 (IFRIC) and with
those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The financial statements have been prepared on a going concern basis and under the historical cost
convention, except for Generation sites (classified as Property, plant and equipment) that have been
measured under the revaluation model, 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 IFRS 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 in the following accounting policy
notes: revenue recognition (2.5), property, plant and equipment (2.6), leases (2.7), inventories (2.11) and
credit risk (3.1.3).

110

111

Strategic ReportGovernance ReportFinancial StatementsGood Energy Annual Report 2020Financial statementsNotes to the Financial Statements

Notes to the Financial Statements

2. Summary of Significant Accounting Policies (continued)

2.2 Basis of consolidation

2.3 Going concern

The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as
at 31 December 2020. Control is achieved when the Group is exposed, or has rights, to variable returns from
its involvement with the investee and has the ability to affect those returns through its power over the investee.
Specifically, the Group controls an investee if, and only if, the Group has:

•

Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of
the investee).

Exposure, or rights, to variable returns from its involvement with the investee.

The ability to use its power over the investee to affect its returns.

Generally, there is a presumption that a majority of voting rights result in control. To support this presumption,
and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers
all relevant facts and circumstances in assessing whether it has power over an investee, including:

•

The contractual arrangement with the other vote holders of the investee.

Rights arising from other contractual arrangements.

The Group’s voting rights and potential voting rights.

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group
obtains control over the subsidiary and ceases when the Group loses control of the subsidiary.

Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in
the consolidated financial statements from the date the Group gains control until the date the Group ceases
to control the subsidiary.

Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders
of the Parent of the Group and to the non-controlling interests, even if this results in the non-controlling
interests having a deficit balance. When necessary, adjustments are made to the financial statements of
subsidiaries to bring their accounting policies into line with the Group’s accounting policies.

All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between
members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an
equity transaction.

If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities,
non-controlling interest and other components of equity while any resultant gain or loss is recognised in profit
or loss. Any investment retained is recognised at fair value.

The financial statements have been prepared on the going concern basis as the Directors have assessed
that there is a reasonable expectation that the Group will be able to continue in operation and meet its
commitments as they fall due over the going concern period.

The Group continues to respond well to the challenges associated with the Covid-19 pandemic. All core
business functions continue to perform as expected during remote working, and the operation of generation
sites has not been affected by lockdown periods. The implementation of our new customer technology
platform is progressing as planned which provides us with flexibility to operate and deliver all services
to customers.

The additional cash released through the restructuring of the financing of the Group’s renewable generation
asset portfolio, has provided the Group with £7.8m of unrestricted cash. This financing restructure also
represents a loosening of covenant ratios compared to the existing GCP facility.

Looking to the future, the Group has performed a going concern review, going out until December 2022 for
prudence, considering both a Base Case and a Downside Case. Having reviewed this forecast, and having
applied a reverse stress test, the possibility that financial headroom could be exhausted is considered to be
extremely remote.

The Base case assumes continued depressed Commercial volumes for the first half of 2021 due to Covid-19
related lockdowns, recovering to normal levels by the end of 2021. It also assumes no cash flow mitigations are
actioned during the years covered by the Going Concern review and that the Group will repay the bond on its
entirety by June 2022.

The Downside case assumes Commercial volumes remain depressed until the end of December 2021 and
assumes higher levels of customer churn than expected in the Base case.

Directors consider the main risks to going concern to be liquidity and compliance with covenants, and so have
performed a Reverse Cash Stress Test. This shows that it is very unlikely that the Group will have problems with
liquidity or covenants during the year, as there is significant headroom above both the Base case and the
Downside case.

The Group has long standing and well operated trading relationships with a number of counterparties, the
majority of which contain an agreement that the Group’s Tangible Net Worth (defined as paid up shareholder
cash contributions plus retained earnings) should not decrease by more than 25% over a 12 month period
or fall to below a certain level. Tangible Net Worth covenants are tested annually on publication of audited
financial statements. Breach of this financial covenant allows counterparties, if they so decide, to request
additional financial support (which may be in the form of a parent company guarantee, letter of credit or
other financial security). The counterparty may terminate the contract if appropriate additional financial
security is not provided, if requested, within a timely manner. The value at risk with counterparties based upon
current commodity contracts and current market prices is estimated at approximately £0.3m. The Group’s
electricity is purchased from direct relationships with generators, with power hedged and balanced by trading
with counterparties. This reduces the Group’s reliance on trading counterparties when compared to a supplier
without such supplier relationships.

The Group’s borrowings with GCP, amounting to £39.8m after the restructure performed in April 2021, contains
three covenants being two debt service cover ratios (DSCR) and a loan life cover ratio (LLCR) specifically
associated with the generation assets. The new loan facility has reset the DSCR and LLCR cover ratios .
Compliance with these covenants is based on generation prices and volumes, which the Board has concluded
are unlikely to materially decrease due to any foreseeable reason. Covenant over Cooperative Bank has been
extinguished and the GCP covenant has been reset due to the refinancing.

In order for the business to run out of cash and breach a counterparty covenant, the Reverse Cash Stress
Test requires that 31% of commercial debts, and 32% of domestic debts are not collected after government
Covid-19 reliefs start to taper off, for a period lasting 6 months, and that only 50% of these debts not originally
collected are subsequently collected over a period of 9 months post-March 2022. In this case, cash flow
mitigations would be implemented, mostly reductions in discretionary spending. The directors believe that this
scenario is very unlikely as a result of the historic evidence gained from our sustained performance during
2020, which was a year impacted significantly by Covid. Throughout 2020 the Group’s cash collections have
remained strong, with bad debt write offs similar to a usual year.

Therefore, Directors are confident in the ongoing stability of the Group, and its ability to continue operation and
meet its commitments as they fall due over the going concern period. Accordingly, the Directors adopt the
going concern basis in preparing the financial statements.

112

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Strategic ReportGovernance ReportFinancial StatementsGood Energy Annual Report 2020Financial statementsNotes to the Financial Statements

Notes to the Financial Statements

2. Summary of Significant Accounting Policies (continued)

2.4 Change in accounting policies and disclosures

Revaluation of Generation assets

The Group re-assessed its accounting for property, plant and equipment with respect to measurement of a
certain class of property, plant and equipment after initial recognition. The Group had previously measured all
property, plant and equipment using the historical cost model whereby, after initial recognition, the asset was
carried at cost less accumulated depreciation and accumulated impairment losses.

On 1 January 2020, the Group elected to change the method of accounting for its generation assets classified
as property, plant and equipment, as the Group believes that the revaluation model provides more relevant
information to the users of its financial statements.

The generation assets are a key part of the Group’s Electricity Generation segment and underpin the majority
of the Group’s long-term debt. The election to adopt the revaluation model for these assets provides more
accurate information on the value of the future economic benefits expected to be realised from these assets.
These assets have been pledged as security for the debt against them and therefore the revaluation policy
provides more accurate and transparent picture of the asset value against its related debt obligations. The
adoption of the revaluation policy will only provide users with additional information with which to assess
the Group’s position, and will not remove any information previously presented to users. In addition, available
valuation techniques provide reliable estimates of the generation assets’ fair value. The Group has applied the
revaluation model prospectively.

2. Summary of Significant Accounting Policies (continued)

2.5 Revenue recognition

The Group is in the business of providing supplies of electricity and gas, the generation of power, the sale of
advertising space and EV market data, as well as Feed-in-Tariff (FiT) administration services. Revenue from
contracts with customers is recognised when control of the goods or services is transferred to the customer
at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those
goods or services. The Group has generally concluded that it is the principal in its revenue arrangements,
except for the FiT administration services below, because it typically controls the goods or services before
transferring to the customer.

The disclosures of significant accounting judgements, estimates and assumptions relating to revenue from
contracts with customers are provided in notes 4.1.1 and 4.2.1.

A contract liability is the obligation to transfer goods or services to a customer for which the Group has
received consideration from the customer.

If a customer pays consideration before the Group transfers goods or services to the customer, a contract
liability is recognised when the payment is made. Contract liabilities are recognised as revenue when the
Group performs under the contract. The Group recognises contract liabilities when customers are in a credit
position.

2.5.1 Power supply

Revenue for the supply of electricity is accrued based on industry data flows and National Grid data. Revenue
calculated from energy sales includes an estimate of the quantity in units of electricity or gas supplied to
customers by profile class in the 12 months preceding the end of the period, and an estimate of the average
sales price per unit, and standing charge.

10% of the total revenue figure is estimated, with a fixed transaction price and estimated unit consumption.
The estimate is made using historical consumption patterns, industry estimated consumption rates, and takes
into consideration industry reconciliation processes, upon which the Group takes a prudent position until final
reconciliation data is available from the industry 14 months after the supply date.

Unbilled revenue is superseded when customer meter reads are received; at which point estimates are
adjusted to actual usage. Transaction price is explicitly stated per unit and per day. Unbilled revenue is
estimated using the most likely outcome approach.

For gas, revenue is accrued based on information received from the Group’s gas shipper, Contract Natural
Gas Limited, 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. Transaction price is explicitly stated per unit and per day.

Revenue is recognised over time as the electricity or gas is delivered to the customer. The transaction price
is clearly stated, there are no separate performance obligations to which a portion of the transaction price
needs to be allocated, and there is no variable consideration. Discounts are given to 100% of customers who
meet certain criteria, and a provision is built up monthly to account for these, offsetting against revenue over
time as the discount is incurred, which is in line with IFRS 15 Revenue from Contracts with Customers.

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. No refunds, returns
or warranties are applicable.

2.5.2 Feed-in-Tariff (FiT) revenue

Some of the generation sites receive FiT subsidy revenue from OFGEM. The FiT scheme (introduced in April
2010) is a government scheme designed to promote the uptake of renewable generation technologies. FiT
payments are received quarterly for the electricity that the generating asset has generated and exported in
the period, based on meter readings supplied. This is a single performance obligation (to generate renewable
electricity) and the transaction price is explicitly set out per unit of electricity generated. The performance
obligation is satisfied immediately when the power is generated. Payment is received from OFGEM
approximately 45 days after the end of the period of generation. No refunds, returns or warranties
are applicable.

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2. Summary of Significant Accounting Policies (continued)

2.5 Revenue recognition (continued)

2.5.3 Feed-in-Tariff (FiT) administration services

The Group 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, which is deemed to be the
transaction price. For FiT services, 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 period from when the customer signs up with Good Energy until the following
April, when the FiT compliance year ends for a new customer, and the ongoing fee that is received is spread
over the 12 month compliance period. No refunds, returns or warranties are applicable.

2.5.4 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 certificates from OFGEM allowing transfer of title. ROC revenue is deemed to be subsidy revenue rather
than revenue from contracts with customers.

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, but this is not accounted for in advance of the
receipt of the final out-turn price as the transaction price is not measurable. The amount receivable is a
contingent asset.

The performance obligation is satisfied when the power is generated as this ensures the certificates are
generated by OFGEM. There is a three-month delay from generation to invoice, and payment is made 5 days
after receipt of the invoice. No refunds, returns or warranties are applicable.

2.5.5 Power generation revenue

Revenue is generated when the wind or solar asset produced power that is sold to Good Energy Limited
through a Power Purchase Agreement at an arms length fixed price per MWh, which is the transaction
price. The performance obligation is satisfied at a point in time; immediately when the power is generated.
Payment is made no more than one month after the delivery month of the power ends. No refunds, returns or
warranties are applicable.

2.5.6 Advertising revenue

The Group has contracts to provide advertising space to companies on the nextgreencar.com website and
Zap-map app. Advertising contracts are entered into for adverts to run for a set period of time, and explicitly
state the transaction price. Payment is made on receipt of bill in advance. The performance obligation for
revenue recognition is satisfied over time based upon the amount of time that the advert has been running on
the platforms. No refunds, returns or warranties are applicable.

2.5.7 Sale of EV market data

The Group sells licences for access to data feeds on the EV market and sells data insight reports. The
transaction is explicitly stated in the contract. The performance obligation for the data feed licence is satisfied
over time as the customer has a licence to access data when they require for a set contracted time period.
Payment is made on receipt of bill in advance. The performance obligation for the sale of data insight
reports is satisfied at the point in time the report is delivered to the customer. No refunds, returns or
warranties are applicable.

2.6 Property, plant and equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated
impairment losses. Cost includes the original purchase price of the asset and any costs attributable to bringing
the asset to its working condition for its intended use.

The Group recognises part of an asset when that cost is incurred, if the recognition criteria are satisfied. The
carrying amount of the replaced part is derecognised. All other repaid and maintenance costs are charged to
profit or loss in the period in which they are incurred.

Generation assets are measured at fair value less accumulated depreciation and impairment losses
recognised after the date of revaluation. Valuations are performed with sufficient frequency to ensure that the
carrying amount of a revalued asset does not differ materially from its fair value. A valuation is completed at
least every 3 years, with a formal external valuation taking place at least every 5 years.

A revaluation surplus is recorded in OCI and credited to the asset revaluation surplus in equity. However, to the
extent that it reverses a revaluation deficit of the same asset previously recognised in profit or loss, the increase
is recognised in profit and loss. A revaluation deficit is recognised in the statement of profit or loss, except to
the extent that it offsets an existing surplus on the same asset recognised in the asset revaluation surplus.

An annual transfer from the asset revaluation surplus to retained earnings is made for the difference between
depreciation based on the revalued carrying amount of the asset and depreciation based on the asset’s
original cost. Additionally, accumulated depreciation as at the revaluation date is eliminated against the gross
carrying amount of the asset and the net amount is restated to the revalued amount of the asset.

Upon disposal, any revaluation surplus relating to the particular asset being sold is transferred to
retained earnings.

Depreciation is calculated on a straight-line basis over the estimated useful life of the asset, less any estimated
residual value, on the following bases:

Fixtures, fittings and equipment

between 3 and 5 years

Leasehold improvements

over the life of the lease

Generation assets

between 20 and 29 years

Assets under construction

not depreciated

Depreciation of property, plant and equipment is included in the Consolidated Statement of Comprehensive
Income in those expense categories consistent with the function of the asset.

An item of property, plant and equipment is derecognised upon disposal (i.e. at the date on which the
recipient obtains control), or when no future economic benefits are expected from its use or disposal. Any gain
or loss arising on derecognition (being the difference between the carrying amount of the asset and the net
disposal proceeds) is included in profit or loss, upon derecognition.

2.6.1 Impairment of property, plant and equipment (including right-of-use assets)

The useful economic lives of assets and their residual values are reviewed on an annual basis and revised
where considered appropriate.

At each reporting date, property, plant and equipment is reviewed for impairment if events or changes in
circumstances indicate that the carrying amount may not be recoverable. Any impairment in carrying value is
charged to the Statement of Comprehensive Income in those expense categories consistent with the function
of the impaired asset, and is recognised in the period in which it occurs.

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2. Summary of Significant Accounting Policies (continued)

2.7 Leases (the Group as a lessee)

For any new contracts entered into on or after 1 January 2019, the Group performs an assessment at the
inception of a contract to determine whether the contract is, or contains, a lease. A lease is defined as “a
contract, or part of a contract, that conveys the right to control the use of an identified asset for a period of
time in exchange for consideration”.

The Group applies a single recognition and measurement approach for all leases, with the exception of those
which are short-term, or which comprise low-value assets. The Group recognises lease liabilities to make lease
payments and right-of-use assets representing the right to use the underlying assets.

(a)

Right-of-use assets

At the lease commencement date (i.e. the date on which the underlying asset is made available for use), the
Group recognises a right-of-use asset on the Statement of Financial Position. Right-of-use assets are measured
at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of
lease liabilities.

The cost of the right-of-use asset comprises:

•

the initial measurement of the lease liability,

any initial direct costs incurred by the Group,

an estimate of any costs required to dismantle or remove the asset at the end of the lease, and

any lease payments made in advance of the lease commencement date, net of any incentives received.

Right-of-use assets are depreciated on a straight-line basis from the lease commencement date to the earlier
of the end of the estimated useful life of the right-of-use assets and the end of the lease term. If ownership
of the leased asset transfers to the Group at the end of the lease term, or the cost reflects the exercise of a
purchase option, depreciation is calculated using the estimated useful life of the asset.

The Group classifies its right-of-use assets in a manner consistent with that of its property, plant and
equipment, which includes the application of the same estimated useful life bases - please see note
2.6 for details.

The Group also assesses the right-of-use assets for impairment, when such indicators exist. Please refer to note
2.6.1 for the accounting policy in respect of impairment.

(b)

Lease liabilities

At the commencement date of the lease, the Group recognises lease liabilities measured at the present value
of the lease payments to be made over the lease term. Lease payments included in the measurement of the
lease liability include:

•

fixed payments (including in-substance fixed payments) less any incentives receivable,

variable lease payments that depend on an index or rate, and

amounts expected to be paid under residual value guarantees.

The lease payments also include the exercise price of a purchase option that is reasonably certain to be
exercised by the Group, along with payments of penalties for termination of the lease if the lease term reflects
the Group exercising the option to terminate. Variable lease payments that do not depend on an index or rate
are recognised as expenses in the period in which the event of condition that triggers the payment occurs.

In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the
lease commencement date if the rate implicit in the lease is not readily determinable. Subsequent to initial
measurement, the amount of lease liabilities is increased to reflect the accretion of interest and reduced to
reflect lease payments made.

The carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a
change in the lease payments (e.g. changes to future payments resulting from a change in an index or rate
used to determine the lease payments) or a change in the assessment of an option to purchase the
underlying asset.

In the Statement of Financial Position, the Group’s lease liabilities are included within borrowings (please refer
to note 26).

2.7 Leases (the Group as a lessee) (continued)

(c)

Short-term leases and leases of low value assets

The Group has elected to apply the recognition exemption in respect of short-term leases (i.e. those which
have a lease term of 12 months from the lease commencement date, and do not contain a purchase option),
as well as the recognition exemption applicable to leases of assets that are considered to be low value.

Instead of recognising a right-of-use asset and lease liability, lease payments in relation to these are
recognised as an expense in the Statement of Comprehensive Income, on a straight-line basis over the
lease term.

2.8 Goodwill, intangible assets and amortisation

Goodwill is measured as the difference between:

•

the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed, and

the aggregate of:

(i) the value of consideration transferred (at fair value),

(ii) the amount of any non-controlling interest, and

(iii) in a business combination achieved in stages, the acquisition date fair value of the acquirer's

previously held equity interest in the acquiree.

2.8.1 Definite life intangible assets

Definite life intangible assets comprise software licences and website development costs, which meet the
criteria of IAS 38 Intangible Assets, and 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.

2.8.2 Indefinite life intangible assets

Indefinite life intangible assets comprise goodwill and the power supply licence. The power supply licence is
held as an indefinite life intangible asset according to the criteria of IAS 38 Intangible Assets, and 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.

2.8.3 Amortisation

Amortisation on definite life intangible assets is charged to the Consolidated Statement of Comprehensive
Income (included within administrative expenses) on a straight-line basis over the estimated useful life of the
intangible asset. The estimated useful lives for intangible assets with definite lives are as follows:

Software licenses

between 3 and 10 years

Website development costs

between 2 and 5 years

Assets under the course of development

not amortised

An intangible asset is derecognised upon disposal (i.e. at the date on which the recipient obtains control),
or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on
derecognition (being the difference between the carrying amount of the asset and the net disposal proceeds)
is included in profit or loss, upon derecognition.

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2. Summary of Significant Accounting Policies (continued)

2.8 Goodwill, intangible assets and amortisation (continued)

2.8.4 Impairment of intangible assets

The Directors regularly review intangible assets for impairment and provision is made if necessary. Assets
with indefinite useful lives are not subject to amortisation, therefore 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. Any
impairment in carrying value is charged to the Statement of Comprehensive Income within administrative
expenses and is recognised in the period in which it occurs.

2.9 Investments in associates

An associate is an entity over which the Group has significant influence. Significant influence is defined as "the
power to participate in the financial and operating policy decisions of the investee, but is not control or joint
control of those policies".

The considerations made in determining significant influence are similar to those necessary to determine
control over subsidiaries. Generally, there is a presumption that a holding of 20% or more of the voting power
of the investee results in significant influence.

To support this presumption - and when the Group has less than a 20% holding - the Group considers all
relevant facts and circumstances in assessing whether it has significant influence, including:

•

Representation on the Board of Directors or equivalent governing body of the investee.

Participation in policy making processes.

The interchange of managerial personnel.

The Group reassesses whether or not there is significant influence over an investee if facts and circumstances
indicate that there are one or more changes to the above.

The Group's investments in associates are accounted for using the equity method. Under this method, the
investment in the associate is initially recognised at cost. Subsequent movements in the carrying value of
the investment are accounted for by recognising the Group's share of the associate's profit or loss since the
acquisition date, as well as any fair value movements in the associate's net assets.

Gains or losses from the associate's operating activities are recognised in the Consolidated Statement of
Comprehensive Income, outside of operating profit. Any changes in OCI of the associate is presented as part
of the Group's OCI.

Goodwill relating to the associate is included in the carrying value of the investment, and is not separately
tested for impairment. Rather, the entire carrying amount of the investment is tested for impairment.

2.9.1 Impairment of investments in associates

The Group recognises an impairment loss if, and only if, there is a triggering event giving rise to objective
evidence that the associate is impaired, and that the triggering event has an impact on the future estimated
cash flows from the net investment that can be reliably estimated. Where such evidence exists, the Group
calculates the amount of the impairment as the difference between the recoverable amount of the
investment (being the higher of its value in use and its fair value less costs to sell) and its carrying value.

Any impairment is recognised within the "Share of Profit of Associate" line in the Consolidated Statement of
Comprehensive Income.

2.10 Investments in subsidiaries

The Parent Company holds investments in subsidiary companies and these are accounted for at cost less
impairment in the Parent Company financial statements only.

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 Carbon Offset Instruments

Carbon Offset Instruments are used by the Group to offset emissions generated by gas supply, as part of
the Group's green gas offering. These instruments are recognised as inventory at the lower of cost and net
realisable value.

2.12 Financial instruments

The Group uses certain financial instruments in its operating and investing activities that are deemed
appropriate for its strategy and circumstances.

Financial instruments recognised on the Consolidated Statement of Financial Position include: cash and cash
equivalents, trade receivables, trade payables, borrowings, and financial assets and financial liabilities at fair
value through profit and loss.

Financial assets and liabilities are recognised on the Consolidated Statement of Financial Position when the
Group has become a party to the contractual provisions of the instrument.

2.12.1 Financial assets at amortised cost

The Group’s financial assets at amortised cost 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, and are solely payments
of principal and interest. 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 and are subsequently carried at amortised cost using the effective interest rate
method, less allowances for expected credit losses (ECLs). These are held in a business model which intends to
hold the financial assets to collect the contractual cash flows rather than through sale. Trade receivables are
shown inclusive of unbilled amounts to customers.

The Group recognises an allowance for ECLs for all financial assets measured at amortised cost. ECLs are
based on the difference between the contractual cash flows due in accordance with the contract and all the
cash flows that the Group expects to receive.

For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs.
Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on
lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its
historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the
economic environment.

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2. Summary of Significant Accounting Policies (continued)

2.12 Financial instruments (continued)

2.12.1 Financial assets at amortised cost (continued)

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.

2.12.2 Financial assets and financial liabilities at fair value through profit or loss (FVTPL) and equity instruments

Financial instruments at fair value through profit or loss comprise financial assets consisting of secured
convertible loan stock, and financial liabilities consisting of contingent consideration.

Both financial assets and financial liabilities at FVTPL are initially recognised at fair value in the Statement of
Financial Position. Any fair value gains and losses on subsequent remeasurement are recognised directly in
profit or loss.

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.

Details of the fair value estimation attributable to financial instruments at FVTPL can be found per note 3.3.

2.12.3 Trade and other payables

Trade payables are obligations to pay for goods or services that have been acquired in the course of ordinary
business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year
or less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at fair value
and subsequently held at amortised cost.

2.12.4 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 25.

2.13 Disposal groups held for sale

Disposal groups 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. Disposal groups 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.

2.14 Non-underlying costs

Non-underlying items are those that in the Directors’ view should be separately disclosed by virtue of their size,
nature or incidence to enable a full understanding of the Group’s financial performance.

2.15 Current and deferred taxation

The tax charge or credit included in the Consolidated Statement of Comprehensive Income for the period
comprises current and deferred tax. Current and deferred tax is charged or credited to the Consolidated
Statement of Comprehensive Income, except when it relates to items charged or credited directly to equity, in
which case the current or deferred tax is also recognised within equity.

Current tax is the expected tax payable or receivable based on the taxable profit for the period. Taxable profit
differs from net profit as reported in the Statement of Comprehensive Income as it excludes items of income
or expense that are taxable or deductible in other years, and it further excludes permanent differences (i.e.
items that are never taxable or deductible).

Current income tax assets and liabilities are measured at the amount expected to be recovered from or
paid to the taxation authorities. The tax rates and tax laws used to compute these amounts are those that
are enacted or substantively enacted at the reporting date in the countries where the Group operates and
generates taxable income.

Management periodically evaluates positions taken in the tax returns with respect to situations in which
applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred tax is the expected tax payable or recoverable on temporary differences which arise 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 provided for using the liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences, and deferred tax assets are recognised to the
extent that it is probable that taxable profits will be available against which deductible temporary differences
can be utilised.

Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the
initial recognition (other than in a business combination) of other assets and liabilities in a transaction which
affects neither the tax profit nor the accounting profit. Deferred tax liabilities are recognised for taxable
temporary differences arising in investments in subsidiaries except where the Group is able to control the
reversal of the temporary difference and it is probable that the temporary difference will not reverse in the
foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each financial period and reduced to
the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the
asset to be recovered. Deferred tax is calculated based on tax rates and tax laws that are expected to apply
in the period when the asset is realised or the liability is settled.

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. The Group intends to settle its current tax assets and current tax liabilities on a net basis.

2.16 Decommissioning costs

Liabilities for decommissioning costs are recognised when the Group has an obligation to dismantle
and remove the generation assets and restore the land on which it is located. Liabilities may arise upon
construction of such facilities, upon acquisition or through a subsequent change in legislation or regulations.
The amount recognised is the estimated present value of expenditure determined in accordance with local
conditions and requirements. A corresponding tangible item of property, plant and equipment to the provision
is also created.

Any changes in the present value of the estimated expenditure is added to or deducted from the cost of the
assets to which it relates. The adjusted depreciated amount is then depreciated prospectively over its useful
economic life. The unwinding of the discount on the decommissioning provision is included in the Consolidated
Statement of Comprehensive Income as a finance cost. The estimated future costs of decommissioning are
reviewed annually and adjusted as appropriate.

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2. Summary of Significant Accounting Policies (continued)

3. Financial and Capital Risk Management

2.17 Share-based payments

3.1 Financial risk factors

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 (e.g. an entity’s share price);

excluding the impact of any service and non-market performance vesting conditions (e.g. 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 (e.g. the requirement for employees to save).

Non-market performance and service conditions are included in assumptions about the number of options
that are expected to vest. The total expense is recognised over the vesting period, which is the period over
which all of the specified vesting conditions are to be satisfied.

At the end of each financial period, the Group revises its estimates of the number of options that are expected
to vest based on the non-market vesting conditions. It recognises the impact of the revision to original
estimates, if any, in the Consolidated Statement of Comprehensive Income, with a corresponding adjustment
to equity.

When the options are exercised, and the Group 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.

2.18 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 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.

2.20 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.

2.21 Finance income and finance costs

Finance income is received in respect of cash deposits and is recognised in the Statement of Comprehensive
Income using the effective interest method. Finance costs comprise interest on external debt, finance lease
interest costs and the amortisation of loan issue costs. Finance costs are charged to the Statement of
Comprehensive Income over the term of the debt using the effective interest method. Issue costs are initially
recognised as a reduction in the proceeds of the associated capital instrument.

2.22 Dividend distribution

Dividend distribution to the Parent 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 Parent Company’s shareholders.

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.

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. In the Directors' opinion, these forecasts
indicate that the Group 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 maturity analysis of financial instruments based on contractual undiscounted cash flows is provided below:

Consolidated
31 December 2020

Less than
1 year

Between
1 and 2 years

Between
2 and 5 years

Over 5 years

Corporate bond

Borrowings

Lease liabilities

Trade and other payables

Total

£000’s

1,357

4,671

624

38,258

44,910

£000’s

16,359

4,761

612

£000’s

14,940

1,280

31,221

7,942

21,732

16,220

39,163

Consolidated
31 December 2019

Less than
1 year

Between
1 and 2 years

Between
2 and 5 years

Over 5 years

Corporate bond

Borrowings

Lease liabilities

Trade and other payables

Total

£000’s

797

4,891

753

35,487

41,928

£000’s

17,722

4,694

626

£000’s

14,571

1,073

37,109

8,457

23,042

15,644

45,566

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Notes to the Financial Statements

3. Financial and Capital Risk Management (continued)

3.1 Financial risk factors (continued)

3.1.1 Liquidity risk (continued)

Parent
31 December 2020

Less than
1 year

Between
1 and 2 years

Between
2 and 5 years

Over 5 years

Corporate bond

Lease liabilities

Loans from group companies

Trade and other payables

Total

£000’s

1,357

390

1,774

£000’s

16,359

16,366

£000’s

3.1 Financial risk factors (continued)

3.1.2 Market Risk

3.1.2a Currency risk

The Group is exposed to foreign exchange risk arising from certain generation asset maintenance contracts
which are payable in euros. Management have set up a policy, that when it is deemed appropriate, the Group
will forward buy euros against these contracts to reduce foreign exchange exposure. As at 31 December
2020, no euros (2019: no euros) were purchased forward. The annual exposure to sterling euro exchange rate
movements is currently £2,770 per one percent movement in the exchange rate.

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.

Parent
31 December 2019

Less than
1 year

Between
1 and 2 years

Between
2 and 5 years

Over 5 years

3.1.2c Commodity price risk

Corporate bond

Borrowings

Lease liabilities

£000’s

797

Loans from group companies

7,330

Trade and other payables

Total

248

8,453

£000’s

17,722

17,749

£000’s

IFRS 16 requires that the maturity analysis of lease liabilities are disclosed separately from the maturity
analyses of other financial liabilities.

The Group’s operations result 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 assesses trends, so it is ready to take necessary action
when required.

Vertical integration of the Group helps further mitigate exposure to changes in power prices.

3.1.3 Credit risk

The Group’s exposure to credit risk arises from its receivables from customers. At 31 December 2020 and 31
December 2019, the Group’s trade and other receivables were classed as due within one year, details of which
are included in note 21. The Group’s policy is to undertake credit checks where appropriate on new customers
and to provide for expected credit losses (ECLs) 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 expected credit losses and believe that there is no further credit risk.

Credit risk also arises from cash and cash equivalents, and deposits with banks and financial institutions.
The Directors monitor the credit quality of the institutions used when considering which banks and financial
institutions funds should be placed with.

The ECL model has been calculated in line with requirements under IFRS 9. The Group’s trade receivables
have no significant financing component, so the Group has used the simplified method for providing for these
under IFRS 9. Therefore, the impairment loss is measured at lifetime ECL. Trade debtors have been segmented
into categories of customer type and age, meaning the debt is split into categories with similar expected
credit losses.

An impairment analysis is performed at each reporting date using a provision matrix to measure the expected
credit losses. The calculation reflects the probability-weighted outcome, the time value of money, and
reasonable and supportable information that is available at the reporting date about past events, current
conditions and forecasts of future economic conditions.

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Notes to the Financial Statements

Notes to the Financial Statements

3. Financial and Capital Risk Management (continued)

3.2 Capital risk management

3.3 Fair value estimation (continued)

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.

If one or more of the significant inputs is not based on observable market data, the instrument is included
within Level 3.

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:

As part of our overall financial review, we continue to monitor the fair value of all of our investments through
both an understanding of the wider environment in addition to the underlying economics of all assets across
the business.

The table below presents the Group’s financial assets that are measured at fair value, by valuation method at
31 December 2020.

Total borrowings

Less: cash in restricted deposit accounts (non-
current)

Note

2020

£000’s

58,097

2019

£000’s

59,801

(4,552)

(4,548)

Less: cash in restricted deposit accounts (current)

(698)

(474)

Less: cash and cash equivalents

(18,282)

(13,667)

Net debt

Total equity

Total capital

Gearing ratio

34,565

32,412

66,977

51.6%

41,112

18,780

59,892

68.6%

During 2020 the Group’s strategy was to ensure debt funding from lenders was sustainable against long term
power generation assets. These assets have highly predictable revenue streams and are considered stable for
long-term borrowing. After the year end, the Group restructured the financing on its renewable generation
asset portfolio to consolidate and simplify funding facilities (See note 35 for information on this restructuring).

The Group's borrowings are subject to maintaining covenants as defined by the debt funders. Throughout the
year ended 31 December 2020 the Group complied with all external borrowing covenants and management
monitors the continued compliance with these covenants on a monthly or quarterly basis.

3.3 Fair value estimation

The Group measures certain financial instruments at fair value, at each reporting date. Fair value is defined
as "the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction
between market participants at the measurement date". The fair value measurement assumes that the
transaction to sell the asset or to transfer the liability takes place either:

•

in the principal market for the asset or liability; or

in the absence of a principal market, in the most advantageous market available for the asset or liability,
which must be accessible by the Group.

All financial assets and financial liabilities subject to measurement at fair value and disclosed within these
financial statements are categorised within the fair value hierarchy, the levels of which are defined as follows:

•

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

Level 3 - Inputs for the asset or liability that are not based on observable market data
(i.e., unobservable inputs).

2020

Assets

Revalued property, plant and
equipment

Generation sites

Fair value through profit or
loss financial assets

Other interests in associates

Total financial assets

2020

Liabilities

Fair value through profit or
loss financial liabilities

Contingent consideration

Total financial liabilities

Level 1

£000’s

Level 2

£000’s

Level 3

£000’s

Total

£000’s

62,045

Level 1

£000’s

Level 2

£000’s

Level 3

£000’s

Total

£000’s

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Notes to the Financial Statements

3. Financial and Capital Risk Management (continued)

4. Critical Accounting Judgements and Estimates

3.3 Fair value estimation (continued)

2019

Assets

Fair value through profit or
loss financial assets

Other interests in associates

Total financial assets

2019

Liabilities

Fair value through profit or
loss financial liabilities

Contingent consideration

Total financial liabilities

Level 1

£000’s

Level 2

£000’s

Level 3

£000’s

Total

£000’s

615

Level 1

£000’s

Level 2

£000’s

Level 3

£000’s

615

Total

£000’s

During the year, the group adopted the revaluation policy for its generation site assets recognising a
valuation of £62,045,000. The valuation was performed by Jones Lang LaSalle Limited an accredited external
independent valuerusing the discounted cash flow methodology. This financial asset has been defined as
Level 3. Further details about this policy adoption can be found in Note 2.4, disclosures on the Significant
unobservable inputs and sensitivities are provided in Note 15.

During the year, the Group converted the secured convertible loan stock into a controlling stake in Next Green
Cars Ltd, details over this transaction are provided in Note 17. Part of the contingent consideration recognised
in the prior year on the initial investment in Next Green Cars Ltd has been written off in the current year due to
milestone targets not being achieved. The contigent consideration financial liability has been defined as Level
3. Further details are provided in Note 17 and Note 19.

Following the initial recognition of the financial instruments above, there were no subsequent changes in, or
transfers to or from, Level 3 instruments for the year ended 31 December 2020.

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
judgements and estimates are evaluated continually and are based on historical experience and other factors,
including expectations of future events.

Given the nature of the estimates and judgements made, it is not appropriate to provide sensitivity analyses,
unless explicitly stated otherwise. Actual results may differ from the initial judgement or estimate, and any
subsequent changes are accounted for at a time when updated information becomes available.

The most critical of these accounting judgements and estimates are detailed below.

4.1 Judgements

4.1.1 Judgements over revenue from contracts with customers

The Group applied the following judgements that affect the determination of the amount and timing of
revenue from contracts with customers:

(a)

Identifying performance obligations in contracts

Good Energy’s revenues from contracts with customers include unit charges and standing charges for the
supply of electricity and gas, operational generation site revenue, and FiT administration fees. Most of these
performance obligations are easily identifiable and are separable.

For FiT administration revenue from customers who are new to the FiT scheme, Good Energy is required
to both register and administer that customer for a year, and there is a higher administration payment
from OFGEM as a result. Registering a customer to the FiT scheme and administering their account are not
separable performance obligations, as there is no fee for registering and not administering the customer.

(b)

Principal versus agent considerations

Contracts are entered into with customers to supply electricity and gas, which is a service delivered over time
(as the customer consumes the electricity or gas), in which the Group is the principal.

FiT administration contracts are entered into with the customer, to supply administration services on behalf of
OFGEM. The Group acts as an agent for OFGEM, not a principal, because the Group is not entitled to revenue
from the customers’ FiT sites, only the administration fee.

Payment normally takes place after performance by the Group; NHH customers with 15-day payment terms
and HH customers with 30-day payment terms. Some customers pay by monthly direct debit and the Group
aims to recover billed amounts every 3 months.

4.1.2 Leases: determining if a contract contains a lease

Under IFRS 16, a contract contains a lease if it conveys the right to control the use of an identified asset for a
period of time, in exchange for consideration.

The Group assesses whether it has the right to obtain substantially all of the economic benefits from use of the
identified asset, as well as the right to direct the use of that asset.

The Group also determines the lease term as the non-cancellable term of the lease, together with any periods
covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by
an option to terminate the lease if it is reasonably certain not to be exercised.

The majority of the Group’s lease arrangements concern the sites on which its generation assets are located.
These arrangements require additional consideration in respect of various lease costs associated with the sites,
being primarily base rent, substation rent and easements/access rights.

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Notes to the Financial Statements

4. Critical Accounting Judgements and Estimates (continued)

4.1 Judgements (continued)

4.1.2 Leases: determining if a contract contains a lease (continued)

Access rights in particular refer to land easements or rights to use, access or cross the land of another entity or
individual, for a specified purpose. The lease arrangements give the Group the right to use the land but do not
give the Group exclusivity of use or right to control.

In assessing whether these land easements and access rights form part of the relevant leases, management
have determined the following;

4.2 Estimates (continued)

4.2.2 Provision for expected credit losses of trade and intercompany receivables, and contract assets
(continued)

The Parent Company also holds material receivable balances with its subsidiaries, for which the expected
credit loss model is also used in establishing a provision for impairment, in accordance with IFRS 9. Information
about the Parent Company loans to Group undertakings can be found per note 18.

4.2.3 Power purchase costs

The land easements and access rights are distinct identified assets, which enable to Group to access
the land and wind/solar farms, for the specific purposes of power generation, and maintenance of the
generation equipment. These land easements and access rights are active for the duration of the lease
term, meaning that they are deemed specific, not perpetual, in nature.

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.

The Group receives substantially all of the economic benefits from the use of those easements and access
right, for the specific purposes of power generation and maintenance of the generation equipment.

4.2.4 Inventories

•

The leases state that the landlord must not breach the Group's right as a tenant to access the land. The
Group instructs maintenance, repair and replacement work to be completed on the generation assets by
third parties, which requires the Group to have the right to direct the use of the identified assets - being
the land easements and access rights.

On the basis of the above, management have concluded that these land easements and access rights
therefore be treated as part of the underlying lease.

4.2 Estimates

4.2.1 Estimates over revenue from contracts with customers

Revenue calculated from energy sales includes an industry estimate of the quantity in units of electricity or
gas supplied to the Group's customers during the 12 months preceding the end of the reporting period. It also
includes an estimate in the form of the average sales price per unit, and standing charge.

10% of the total revenue figure is estimated, with a fixed transaction price and estimated unit consumption.

The estimate is made using historical consumption patterns, industry estimated consumption rates, seasonality
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 14 months after the supply date.

The Group identified the amount of accrued income subject to estimation uncertainty is approximately £0.5m.

4.2.2 Provision for expected credit losses of trade and intercompany receivables, and contract assets

The Group uses a provision matrix to calculate expected credit losses (ECLs) for trade receivables. The
provision rates are based on days past due for groupings of various customer segments that have similar loss
patterns (e.g. by customer type).

The provision matrix is initially based on the Group’s historic observed default rates, calibrated to adjust the
historic credit loss experience with forward-looking information. For instance, if forecast economic conditions
are expected to deteriorate over the next year which can lead to an increased number of defaults, the
historical default rates are adjusted. At every reporting date, the historical observed default rates are updated
and changes in the forward-looking estimates are analysed.

The amount of ECLs is sensitive to changes in circumstances and of forecasted economic conditions. The
group has used external benchmarks for future macroeconomic indicators (e.g. GDP, unemployment
rates), applied against our segmented customer base to reach an estimate of the future impact caused by
COVID-19. This overlay of macro economic indicators has resulted in an incremental provision charge of
£0.8m. The Group’s historical credit loss experience and forecast of economic conditions may also not be
representative of customers’ actual default in the future.

The assessments undertaken in recognising provisions have been made in accordance with IFRS 9. A provision
for impairment of trade receivables is established based on an expected credit loss model. Information about
the ECLs on the Group’s trade receivables is disclosed in note 21.

The Group carries Renewable Obligation Certificates (ROCs) as inventory in its Consolidated Statement of
Financial Position. These are valued at the lower of cost or estimated realisable value. Gains or losses made
on ROCs which are subsequently sold, are only recognised in the Statement of Comprehensive Income when
they crystallise.

The final out-turn value of a ROC is only published by OFGEM in October following the compliance year (April
to March) which may require a final adjustment to gains or losses on the sale or purchase of ROCs previously
recognised in the Consolidated Statement of Comprehensive Income.

4.2.5 Impairment of indefinite life assets

In line with Next Green Car Ltd’s (“Zap-Map”) status as a start-up, management believe that Fair Value less
cost to sell method of valuation using earnings multiples is the most appropriate way of valuing the business,
and use this methodology in our ongoing investment decision making. We are required for the purposes of
impairment testing to perform a value-in-use assessment using discounted cashflows. This assessment is
subject to significant estimation uncertainty surrounding appropriate growth and discount rates. As a result of
the impairment assessment the directors do not believe there is any reason for impairment at this time.

The projected cash flows have been based on financial forecasts by senior management for a 10 year period
with a 10% nominal growth rate applied to periods post the forecasted period. This long term growth rate
for Zap Map has been based on the expected long term growth rate for the EV market. A period longer than
5 years has been used in this assessment because of expected short-term negative net cashflows, and an
expected higher growth rate in the EV market over the next 10 years compared with the terminal growth
rate. The post-tax discount rate applied to cash flow projections for the Zap Map is 25%. This post-tax cost of
capital was assessed at a higher rate than all other CGUs due to Zap-Map’s moving into its scale-up phase, as
well as the specific risk characteristics of the forecast cash flows.

Sensitivity analysis has been conducted on the cost of capital for the Zap Map and the Directors noted that an
increase of the post-tax discount rate by 6% was required before the carrying value of the CGU is lower than
its recoverable amount.

4.2.6 Revaluation of property, plant and equipment

The Group carries its Generation sites at revalued amounts, changes in fair value are recognised in OCI, using
valuation methodology based on a discounted cash flow (DCF) model. The Group engaged an independent
valuation specialist to assess fair values at 1 January 2020. Key assumptions are provide in Note 15.

4.3 Change in Estimates

In the year, the Group has revised its accounting estimate for the life of the generation assets to more
accurately reflect the period in which the assets will generate future economic benefits to the group. The
revised lives of the assets are still within the policy range for generation asset lives, however the lives of
individual assets have changed by between -7 to +2.5 years.

The expected annual impact of this change in estimate is £35,000 less depreciation expense in the current
and future years.

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Notes to the Financial Statements

5. Discontinued Operations

6. Segmental Analysis

The Group had no discontinued operations during the year. In the prior year, efforts were made to realise
value from the Groups discontinued Generation Development portfolio, in part through sales to external parties
who will continue to develop the sites. The results of this segment are shown in the segmental analysis of the
Consolidated Statement of Comprehensive Income, per note 6.

On 3 May 2019, a subsidiary of the Group - Good Energy Brynwhilach Solar Park Limited - was sold, following
the successful completion of the sale agreement. The sale realised a net gain of £362,934. The Group
recognised an impairment loss on a residential property, prior to that property being sold during the year. The
impairment recognised prior to sale amounted to £199,982 with the sale itself realising a net loss of £48,000.

During 2019, the Group recognised impairment losses in respect of a wind development project and the
Mapperton transformer, of £1,293,733 and £299,875 respectively, thereby fully writing both of these assets
down to £nil. Please refer to note 23 for additional information.

There is no tax charge on discontinued operations in the current year. The tax charge related to discontinued
operations in 2019 was £32,008.

The net cash flows of the discontinued operations in the year are as follows:

2020

£000’s

2020

£000’s

2019

£000’s

(859)

343

233

(283)

2019

£000’s

(5.9p)

(5.7p)

Operating

Investing

Financing

Net cash inflow

Loss per share: discontinued operations

Basic

Diluted

134

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),

Energy as a Service (including Zap-map and nextgreencar.com),

• Generation Development (29 early stage development companies),

•

Holding companies, being the activity of Good Energy Group PLC.

No operating segments have been aggregated to form the above reportable operating segments.

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.

Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions
with third parties.

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Notes to the Financial Statements

Notes to the Financial Statements

6. Segmental Analysis (continued)

Year ended 31
December 2020

Electricity
Supply

FIT
Admin-
istration

Gas
Supply

Total supply
companies

Electricity
Generation

Energy as a
Service

Holding
companies/
consolidation
adjustments

Total

Year ended
31 December
2019

Electricity
Supply

FIT
Admin-
istration

Gas
Supply

Total
supply
companies

Electricity
Generation

Holidng
companies/
consolidation
adjustments

Total -
continuing
operations

Generation
Development
(discontinued)

Total

£000’s

Revenue

Revenue from
contracts with
customers

FiT/ROC subsidy
revenue

Inter-segment
revenue

97,385

5,467

24,462

127,314

1,761

342

1,232

5,786

129,417

1,232

Revenue

Revenue from
contracts with
customers

FiT/ROC
subsidy
revenue

Inter-segment
revenue

89,981

5,247

26,335

121,563

1,697

123,260

123,351

998

6,084

(6,084)

998

(5,786)

Total Revenue

89,981

5,247

26,335

121,563

8,779

(6,084)

124,258

124,349

Total revenue

97,385

5,467

24,462

127.314

8,779

342

(5,786)

130,649

Expenditure

Cost of sales

(77,826)

(600)

(16,909)

(95,335)

(5,526)

(60)

(161)

(101,082)

Inter-segment
cost of sales

(5,786)

Gross profit

13,773

4,867

7,553

26,193

3,253

282

5,786

(161)

29,567

Administrative
expenses

Depreciation &
amortisation

Operating profit/
(loss)

Net finance
income/(costs)

Share of Loss of
Associate

Profit/(loss)
before tax

Segments assets & liabilities

Segment assets

Segment liabilities

Net assets/
(liabilities)

Additions to non-
current assets

(19,622)

(869)

(598)

(2,481)

(23,570)

(1,812)

(124)

(1,936)

4,759

2,384

(316)

(2,766)

4,061

(42)

(3,261)

(827)

(4,130)

(13)

(82)

4,717

(877)

(316)

(3,606)

54,502

74,631

41,217

62,759

320

215

4,778

134,231

(2,372)

101,819

13,285

11,872

105

7,150

32,412

899

928

Cost of sales

(69,382)

(462) (18,835)

(88,679)

(3,922)

(92,601)

(1,246)

(93,847)

Inter-segment
cost of sales

Gross Profit/
(loss)

Administrative
expenses

Depreciation &
amortisation

Operating
profit/(loss)

Net finance
income/(costs)

Share of Loss
of Associate

Profit/(loss)
before tax

(6,084)

6,084

14,515

4,785

7,500

26,800

4,857

31,657

(1,155)

30,502

(21,589)

(426)

(2,780)

(24,795)

225

(24,570)

(1,091)

(198)

(1,289)

4,120

4,431

(2,978)

5,573

(930)

4,643

(3,377)

(923)

(4,273)

(42)

4,147

1,054

(3,943)

1,258

(930)

328

Segments assets & liabilities

Segment assets

54,410

63,633

(2,184)

115,859

505

116,364

Segment
liabilities

Net assets/
(liabilities)

Additions to
non- current
assets

43,981

65,176

(23,808)

85,349

12,235

97,584

10,429

(1,543)

21,624

30,510

(11,730)

18,780

2,923

5,090

1,041

9,054

All turnover arose within the United Kingdom.

Consolidation adjustments relate to inter-company sales of generated electricity and the elimination of
inter-company balances.

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Notes to the Financial Statements

7. Operating Profit and Administrative Expenses

7. Operating Profit and Administrative Expenses (continued)

Note

The operating profit is stated after charging:

Depreciation of property, plant and equipment

Depreciation of right of use assets

Amortisation of intangible assets

Auditors’ remuneration

Audit of parent and consolidated financial statements

Audit of subsidiaries

Additional fees in relation to prior year audit

Subtotal (audit)

Other services

Subtotal (non-audit)

The administrative expenses comprise the following:

Staff costs

Rent and office costs

Marketing costs

Professional fees and bank charges

Expected credit loss provision

Depreciation and amortisation

WIP writedown

Impairment loss

Revaluation loss

(Gain)/loss on disposals

Total

Split between:

Continuing administrative expenses

Non-underlying costs

Discontinued

Total

2020

£000’s

3,621

856

1,218

132

143

353

2019

£000’s

2,700

1,154

171

100

227

11,475

14,034

3,080

1,344

2,783

3,719

1,960

325

522

221

25,506

25,029

477

25,506

3,050

1,019

2,974

3,674

1,285

139

(316)

25,859

25,219

865

(225)

25,859

Non-underlying costs in the year relate to our investment in a new customer services technology platform
with Kraken Technologies Ltd. These costs comprise of the costs of the Kraken system implementation of
£477,000. Capitalised expenditure on the Kraken system implementation in the year totalled £318,000; these
are additions to intangible assets.

8. Parent Company Statement of Comprehensive Income

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 profit or loss for
the year (after taxation) is disclosed at the foot of the Parent Company Statement of Financial Position.

9. 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

2020

£000’s

10,719

1,024

498

12,280

2019

£000’s

11,666

1,159

529

13,435

(356)

13,079

Details of share based payments can be found in note 31.

The average monthly number of employees, including the Directors, during the year was as follows:

Operations

Business services

Total management and administration

2020

Number

183

272

The total numbers of employees, including the Directors, at the year end were as follows:

Operations

Business services

Total management and administration

2020

Number

184

269

2019

Number

121

185

306

2019

Number

107

177

284

138

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Notes to the Financial Statements

Notes to the Financial Statements

10. Directors' and Key Management Remuneration

12. Finance Costs

Directors’ and Key Management emoluments

Short term employee benefits

Post employment benefits

Share based payments

Total

2020

£000’s

1,031

1,111

2019

£000’s

1,304

1,481

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 (2019: 2) in respect of money
purchase pension schemes.

On bank loans and overdrafts

On corporate bond

Other interest payable

Interest on lease liabilities

Amortisation of debt issue costs

Total

In respect of the highest paid Director, the Group paid remuneration of £237,000 (2019: £339,186), including
contributions to money purchase pension schemes of £28,000 (2019: £27,580).

13. Taxation

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, 21,822 share options were exercised by current or former Directors and Key Management
(2019: 90,000). The aggregate amount of gains made by current Directors or Key Management on the
exercise of share options was £nil (2019: £4,785).

Details of the Directors’ remuneration as required by AIM rule 19 are given in the table in the Directors’
remuneration report on page 73 and are included in this note by cross reference.

11. Finance Income

Bank and other interest receivables

Fair value gains

Total finance income

2020

£000’s

109

2019

£000’s

166

Analysis of tax charge for the year

Current tax

Adjustments in respect of prior years

Total current tax (see below)

Deferred tax

Origination and reversal of temporary differences

Adjustments in respect of prior years

Total deferred tax (see note 24)

Tax on profit on ordinary activities

2020

£000’s

2,782

831

394

194

4,239

2020

£000’s

(66)

225

(178)

(19)

2019

£000’s

2,956

908

374

193

4,439

2019

£000’s

(47)

Fair value gains primarly relate to the reduction in the fair value related to the contingent consideration liability
as disclosed in note 19.4.

Adjustments in respect of prior year deferred tax amounts are from differences in profit before tax and
qualifying fixed assets arising on finalisation of tax computations.

140

Income tax expense reported in the statement of
profit and loss - continuing operations

Tax from Discontinued operations

Total tax charge for the year

2020

£000’s

(19)

2019

£000’s

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Notes to the Financial Statements

Notes to the Financial Statements

13. Taxation (continued)

Factors affecting the tax charge for the year

The tax assessed for the year is higher (2019: higher) than the standard rate of corporation tax in the UK of
19.00% (2019: 19.00%). The differences are explained as follows:

13. Taxation (continued)

Corporation tax payable

Accounting profit before tax from continuing
operations

Loss before tax from discontinued operations

Accounting profit before income tax

Profit before tax multiplied by the standard rate of
corporation tax in the UK of 19.00% (2018: 19.00%)

Tax effects of:

Expenses not deductible for tax purposes

Share of loss in associate

Non-taxable gain on sale of investment

Effects of changes in tax rate

Share-based payment adjustment

Prior year adjustments

Deferred tax on losses not recognised

Recognition of deferred tax on losses previously
unrecognised

Total tax charge for the year

Factors that may affect future tax charges

2020

£000’s

(82)

(16)

(244)

(19)

2019

£000’s

1,258

(930)

328

323

(79)

(15)

(148)

(29)

(48)

The Finance (No.2) Act 2015 reduced the main rate of UK corporation tax to 19%, effective from 1 April 2017.
A further reduction in the UK corporation tax rate to 17% was expected to come into effect from 1 April 2020
(as enacted by Finance Act 2016 on 15 September 2016). However, legislation introduced in the Finance
Act 2020 (enacted on 22 July 2020) repealed the reduction of the corporation tax, thereby maintaining the
current rate of 19%. Deferred taxes on the balance sheet have been measured at 19% (2019 – 17%) which
represents the future corporation tax rate that was enacted at the balance sheet date.

The UK Budget 2021 announcements on 3 March 2021 included measures to support economic recovery as a
result of the ongoing COVID-19 pandemic. These included an increase to the UK’s main corporation tax rate
to 25%, which is due to be effective from 1 April 2023. These changes were not substantively enacted at the
balance sheet date and hence have not been reflected in the measurement of deferred tax balances at the
period end. If the group’s deferred tax balances at the period end were remeasured at 25% this would result in
a deferred tax charge of £1.5m.

Parent Company

Consolidated

2020

2019

2020

2019

£000’s

UK Corporation Tax on profits for the year

14. Earnings/(Loss) per 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 268,270
(2019: 293,270) 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

Continuing operations

Profit/(loss) attributable to owners of the Company
(£000’s)

Basic weighted average number of ordinary shares
(000’s)

Basic earnings/(loss) per share

Consolidated

2020

16,350

0.4p

2020

16,350

0.4p

2019

254

16,294

1.6p

2019

1,216

16,294

7.5p

Diluted

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).

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Notes to the Financial Statements

Notes to the Financial Statements

14. Earnings/(Loss) per Share (continued)

15. Property, Plant and Equipment

The greater any such excess, the greater the dilutive effect. The average market price of the Company’s
ordinary shares during the year was 184p (2019: 138p). The dilutive effect of share-based incentives was
395,697 (2019: 513,596). The dilutive effect of share-based incentives for continuing operations was 395,697
shares (2019: 513,596 shares).

Consolidated
Year ended 31 December 2020

Leasehold
improvements

Furniture,
fittings &
equipment

Generation
assets

Total

£000’s

Profit/(loss) attributable to owners of the
Company (£000’s)

Weighted average number of diluted ordinary
shares (000’s)

Diluted earnings/(loss) per share

Continuing operations

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

2020

16,746

0.4p

2020

16,746

0.4p

2019

254

16,807

1.5p

2019

1,216

16,807

7.2p

Cost or valuation

At 1 January 2020

Revaluation adjustment

Transfer of depreciation at revaluation
date*

Acquisition of a subsidiary

Additions

Disposals

At 31 December 2020

Accumulated depreciation

677

1,317

(337)

340

(258)

1,072

60,721

15,914

62,715

15,914

(14,590)

(595)

62,045

63,457

At 1 January 2020

(543)

(1,256)

(14,590)

(16,389)

Transfer of depreciation at revaluation
date*

Charge for the year

Impairment

Disposals

(118)

321

(12)

(5)

249

14,590

(3,491)

(3,621)

(5)

570

At 31 December 2020

(340)

(1,024)

(3,491)

(4,855)

Net book value

At 1 January 2020

At 31 December 2020

134

46,131

58,554

46,326

58,602

*This transfer relates to the accumulated depreciation as at the revaluation date that was eliminated against
the gross carrying amount of the revalued asset.

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Notes to the Financial Statements

15. Property, Plant and Equipment (continued)

Consolidated
Year ended 31 December 2019

Leasehold
improvements

Furniture,
fittings &
equipment

Generation
assets

Total

£000’s

Reconciliation of carrying amount

Cost

At 1 January 2019

Assets held for sale

Additions

Disposals

677

1,800

(545)

62,081

64,558

(1,250)

(1,795)

(160)

112

(160)

At 31 December 2019

677

1,317

60,721

62,715

Accumulated depreciation

At 1 January 2019

Assets held for sale

Charge for the year

Disposals

(479)

(1,406)

(12,322)

(14,207)

(64)

304

(154)

354

(2,482)

(2,700)

164

At 31 December 2019

(543)

(1,256)

(14,590)

(16,389)

Net book value

At 1 January 2019

At 31 December 2019

198

134

394

49,759

50,351

46,131

46,326

The generation assets relate to electricity generating assets (wind turbines, solar panels and ancillaries).
These assets are 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.

These assets have been pledged as security against bank and other loan liabilities.

Details of the right-of-use assets and their associated lease liabilities are disclosed in note 16.

Carrying amount at 1 January 2020

Level 3 valuation gain recognised due to change in accounting policy to
revaluation model as at 1 January 2020

Level 3 valuation loss recognised due to change in accounting policy to
revaluation model as at 1 January 2020

Carrying amount and fair value at 1 January 2020

Depreciation for the year

Carrying amount at 31 December 2020

£000’s

46,131

16,436

(522)

62,045

(3,491)

58,554

The group changed the accounting policy with respect to the measurement of Generation assets as at 1
January 2020 on a prospective basis. Therefore, the fair value of the generation assets was not measured at
1 January 2019. The effective date of the revaluation was 1 January 2020. The properties’ fair values are
based on valuations performed by Jones Lang LaSalle Limited, an accredited independent valuer who
has extensive valuation experience in wind and solar assets. The fair values were determined using a
Discounted Cashflow method.

If the generation assets were measured using the cost model, the carrying amount would be, as follows:

Opening NBV at 1 January 2020

Accumulated depreciation & impairment

Closing NBV at 31 December 2020

Significant unobservable valuation inputs

Discount rate

Inflation

Power prices

Energy yield

Degradation

2020

£000’s

46,131

(2,964)

43,167

Range

6-7%

Sensitivity

±1%: (£4.1m) - £4.7m

Inflation curve

±1%: (£3.5m) - ££3.8m

Power curve

±10%: (£2.4m) - £2.4m

P50 (1,900-26,000MWh)

±2%: (£1.8m) - £1.8m

0.4%-0.5%

±0.2%: (£1.3m) - £1.3m

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Notes to the Financial Statements

16. Right of Use Assets and Leases

The Group has lease contracts for the access to, and use of, land on which its generation assets are located,
office buildings, other equipment and software licences.

Leases of land (inclusive of access rights) typically have lease terms of between 20 and 30 years, office
buildings of between 4 to 6 years, whilst other equipment and software licences have lease terms of between
3 and 10 years. The Group's obligations under its leases are secured by the lessor's title to the leased assets.

The Group also has certain leases of printers, laptops, and coffee and water machines, with low value
underlying assets. The Group has applied the recognition exemption in respect of these leases.

Each lease generally imposes a restriction from subleasing the underlying assets to another party, therefore
the right-of-use assets can only be used by the Group.

The lease payments within all of the Group's lease agreements (with the exception of short-term leases, leases
of low value underlying assets, and those leases containing a variable lease payment component) are linked to
annual charges in the Retail Price Index.

The Group has several leases subject to variable lease payments which do not depend on an index or
rate. These relate to the Group's generation assets, where the lease payments are based on the actual
performance of the asset (which in turn is dependent upon the weather). These payments are not, in
substance, fixed, and therefore are excluded from the initial measurement of the lease liability and
right-of-use asset.

The Group classifies its right-of-use assets in a manner consistent with that of its property, plant and
equipment. The carrying values of the right-of-use assets, together with the depreciation charge split by
class of underlying asset, are shown below:

Notes to the Financial Statements

16. Right of Use Assets and Leases (continued)

Consolidated
Year ended 31 December 2020

Land, land
easements and
buildings

Furniture, fittings
and equipment

Generation
assets

Total

£000s

£000’s

£000s

£000’s

Cost

At 1 January 2020

5,684

1,393

1,250

Reassessment of lease liabilities

370

At 31 December 2020

6,054

1,393

1,250

Accumulated depreciation

At 1 January 2020

Charge for the year

Impairment

(590)

(563)

(73)

(1,154)

(239)

At 31 December 2020

(1,226)

(1,393)

Net book value

At 1 January 2020

At 31 December 2020

5,094

4,828

239

(100)

(54)

(154)

1,150

1,096

8,327

370

8,697

(1,844)

(856)

(73)

(2,773)

6,483

5,924

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Notes to the Financial Statements

16. Right of Use Assets and Leases (continued)

Consolidated
Year ended 31 December 2019

Land, land
easements and
buildings

Furniture, fittings
and equipment

Generation
assets

Total

£000s

£000’s

Cost

At 1 January 2019

Adjustments on transition to
IFRS 16

At 31 December 2019

Accumulated depreciation

At 1 January 2019

Adjustments on transition to
IFRS 16

Charge for the year

At 31 December 2019

Net book value

At 1 January 2019

At 31 December 2019

5,684

(590)

5,094

1,393

(640)

(514)

(1,154)

239

1,250

(50)

(100)

1,150

8,327

(690)

(1,154)

(1,844)

6,483

Set out below are the carrying amounts of lease liabilities (included within borrowings) and the movements
during the period:

At 1 January

Additions

Remeasurement of Lease liabilities

Accretion of interest

Payments

At 31 December

Current (see note 26)

Non-current (see note 26)

Total

2020

£000s

5,385

370

371

(783)

5,343

615

4,728

5,343

The maturity analysis of lease liabilities is disclosed in note 25.

The following are the amounts recognised in the Statement of Comprehensive Income:

Depreciation of right-of-use assets (included within cost-of-sales
and administration expenses)

Interest expense on lease liabilities

Expense relating to leases of low-value assets (included within
administration expenses)

Variable lease payments (included within administration expenses)

Total amount recognised in the Statement of Comprehensive Income

During the year, the Group had the following:

•

Total cash outflows for leases of £782,000;

• No additions to right-of-use assets or liabilities;

2020

£000s

856

371

115

1,429

2019

£000s

126

5,684

373

(799)

5,384

711

4,673

5,384

2019

£000s

1,154

385

1,648

• No transactions giving rise to gains or losses arising from sale and leaseback transactions;

• No amounts relating to short-term leases.

The Group has lease contracts for the land on which its generation assets sit. Included within these lease
arrangements are variable lease payments, which are based on the actual performance of each site (which
itself is dependent upon the weather).

Each lease arrangement contains a base rent payment, reflective of the minimum rental payments within the
contract. This rental obligation is guaranteed to the landlord. Additional rental payments included are based on
the revenue generated by each site.

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Notes to the Financial Statements

16. Right of Use Assets and Leases (continued)

17. Intangible Assets (continued)

If a site performs particularly well, the landlord will receive a top-up payment - known as 'revenue rent' -
which is calculated at a percentage of the revenue generated and is considered a variable lease payment.
These amounts are not considered to be material.

The Group also has lease contracts concerning office buildings which include extension and
termination options.

Consolidated
Year ended 31 December
2019

Power
supply
licence

Software
licences

Website
development
costs

Goodwill

Assets under
the course of
development

Total

£000’s

Materially, for all leases, management do not expect to exercise any options to extend the lease term and
expect to not exercise any options to terminate the lease.

Cost

At the Statement of Financial Position date, the Group had no lease commitments in respect of leases
committed to, but not yet commenced. The Group has not yet entered into any lease agreements in
respect of the construction of new premises.

17. Intangible Assets

Consolidated
Year ended 31 December
2020

Power
supply
licence

Software
licences

Website
development
costs

Goodwill

Assets under
the course of
development

Total

£000’s

Cost

At 1 January 2020

180

6,468

149

1,446

949

9,192

Acquired in business
combination

Additions

Transfers from assets
under development

Disposals

402

875

(320)

923

1,333

473

(939)

(320)

At 31 December 2020

180

7,425

213

2,369

491

10,678

Accumulated
amortisation

At 1 January 2020

Charge for the year

Impairment

Disposals

At 31 December 2020

Net book value

At 1 January 2020

At 31 December 2020

152

(4,640)

(98)

(1,150)

(68)

320

(5,470)

(166)

(4,738)

(1,218)

(209)

320

(209)

(5,845)

180

1,828

1,955

1,446

2,369

949

282

4,454

4,833

At 1 January 2019

180

5,604

149

1,446

1,110

8,489

Reclasses to right-of-use
assets under IFRS 16

Additions

Impairment

(847)

1,711

At 31 December 2019

180

6,468

149

1,446

(847)

123

(284)

949

1,834

(284)

9,192

Accumulated
amortisation

At 1 January 2019

Reclasses to right-of-use
assets under IFRS 16

Charge for the year

At 31 December 2019

(4,903)

336

(73)

(4,640)

Net book value

At 1 January 2019

At 31 December 2019

180

701

1,828

(98)

149

(4,903)

336

(171)

(4,738)

1,446

1,110

949

3,586

4,454

Assets under the course of development relate largely to the development of the Selectricity business solution
and implementation of a new business customer billing system (Ensek). All amortisation amounts are included
within administration expenses.

17.1 Acquisition of Next Green Cars Ltd

On 29th March 2020 Good Energy Group PLC identified it gained effective control of its associate, Next Green
Cars Ltd, owner of the Zap-Map brand. This effective control was identified as a result of the drawdown of
the final tranche of convertible loan notes, granting the Group the right to convert the loan notes to obtain a
controlling stake in the company. The Group has assessed there are no material differences between the date
of the final tranche drawdown and the 31st March 2020, it has therefore designated the 31st March as the
acquisition date in line with IFRS standards.

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17. Intangible Assets (continued)

The carrying values of indefinite life assets included in intangible assets are: goodwill of £2,369,000 (2019:
£1,446,453), and a power supply licence of £180,000 (2019: £180,000) which relates to the subsidiary, Good
Energy Limited. In arriving at the conclusion that these assets have an indefinite life, management have
observed that the power supply licence is awarded until any breach of conditions stipulated by OFGEM. The
treatment of goodwill is aligned with relevant accounting standards. An impairment review is undertaken
annually or more frequently.

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 excluding goodwill in Next Green Car Ltd are as follows:

Value in use assumptions

Gross margin*

Growth rate beyond five year plan

Pre-tax discount rate

2020

20%-30%

2019

20%-30%

*Annual margins have been modelled in the five year cashflow at varying levels.

Sensitivity analysis has been performed on the impairment review. It has been noted that an increase in the
discount rate by 100% would not result in an impairment of the goodwill. Management believe any increase in
discount rates above 10% to be remote and therefore the Directors believe there to be significant headroom.

The projected cash flows have been based on financial forecasts by senior management for a 10 year period
with a 10% nominal growth rate applied to periods post the forecasted period. This long term growth rate
for Zap Map has been based on the expected long term growth rate for the EV market. A period longer than
5 years has been used in this assessment because of expected short-term negative net cashflows, and an
expected higher growth rate in the EV market over the next 10 years compared with the terminal growth
rate. The post-tax discount rate applied to cash flow projections for the Zap Map is 25%. This post-tax cost of
capital was assessed at a higher rate than all other CGUs due to Zap-Map’s entering its scale-up phase, as
well as the specific risk characteristics of the forecast cash flows.

Notes to the Financial Statements

17. Intangible Assets (continued)

17.1 Acquisition of Next Green Cars Ltd (continued)

Next Green Cars Ltd was previously accounted for as an equity associate, with Good Energy Group PLC owning
a 12.9% stake in the business and a director appointed to the board granting 33% of the boards voting rights.
This was identified as constituting significant influence to direct the relevant activities of NGCL.

As part of the initial purchase of shares in Next Green Cars Ltd a contingent consideration was agreed.
Contingent consideration was payable dependent on the satisfaction of product milestones in July 2020 and
stretching financial milestone targets in December 2021. The product milestones were not met in July 2020 and
this contingent consideration was written to the profit and loss. The maximum possible deferred consideration is
£0.6m. The value of the remaining contingent consideration liability is disclosed in Note 19.

At 31 December 2019 the group held £600,000 of the authorised £800,000 secured convertible loan notes in
NGCL, carried at a fair value of £614,000. At the drawdown date of the final tranche of convertible loan stock,
the entire loan stock was valued at £821,000.

£410,000 of separately identifiable intangible assets were acquired on 31 March 2020 as part of the acquisition
of NGCL. A valuation of these internally developed intangible assets was performed by the Group using the
replacement cost as the basis for valuation. The goodwill arising on the acquisition of the above company is
attributable to the anticipated profitability of NGCLs software in the EV market and the synergies expected as
part of the Group’s wider Energy as a Service offering.

Good Energy Group PLC on the 25 June 2020 formally converted the loan notes into a combined total 50.1%
equity holding.

The net assets at the date of acquisition are stated at their fair value as set out below.

NBV at 31
March 2020

Fair value
adjustment

Next Green Car Ltd
acquisition balance
sheet at 31 March
2020

£000’s

Property, plant and equipment

Intangible assets

Trade and other receivables

Cash and cash equivalents

Deferred tax

ST borrowings

Trade and other payables

Net assets acquired

129

307

(46)

(126)

355

328

(62)

266

NCI interest in net assets

49.90%

Net assets attributable to Group

Goodwill at acquisition

Consideration transferred

410

129

307

(62)

(46)

(126)

621

(310)

311

923

1,234

Goodwill of £2,369,000 (2019: £1,446,453) comprises: £1,061,000 (2018: £1,060,996) arising from the original
acquisition of Good Energy Limited, £385,000 (2019: £385,457) from the original acquisition of the wind farm
at Delabole, and £923,000 (2019: £nil) from the acquisition of Next Green Car Ltd and the Zap-map brand.

154

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Notes to the Financial Statements

18. Investments and Subsidiaries

Parent Company
Year ended 31 December 2020

Shares in Group
undertakings

Loans to Group
undertakings

Cost and net book value

At 1 January 2020

Additions

Repayments

At 31 December 2020

£000’s

4,646

1,234

5,880

24,514

9,046

(11,506)

22,054

Parent Company
Year ended 31 December 2019

Shares in Group
undertakings

Loans to Group
undertakings

£000’s

Cost and net book value

At 1 January 2019

Additions

Provisions

Repayments

4,646

At 31 December 2019

4,646

30,602

14,882

(2,102)

(18,868)

24,514

Total

£000’s

29,160

10,280

(11,506)

27,934

Total

£000’s

35,248

14,882

(2,102)

(18,868)

29,160

Loans to Group undertakings are repayable by 31 December 2035. Interest rates charged on these loans
range from 0.00% to 8.85%. Repayments include dividends not settled in cash.

The Group had the following subsidiaries at 31 December 2020 (all of which have the same registered address
as Good Energy Group PLC unless otherwise noted, which can be found within the Directors and Corporate
Resources section on the final page of this report):

Country of
incorporation and
place of business

Proportion of ordinary
shares directly held by
Parent Company

100%

Nature of business

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

Name

Good Energy Limited

Good Energy Gas Limited

Good Energy Generation
Limited

Good Energy Generation
Holding Company No.1
Limited

Good Energy Generation
Assets No.1 Limited*

Good Energy Hampole
Windfarm Limited*

156

Notes to the Financial Statements

18. Investments and Subsidiaries (continued)

Good Energy Woolbridge
Solar Park (010) Limited*

Good Energy Creathorne
Farm Solar Park (003)
Limited*

Good Energy Rook Wood
Solar Park (057) Limited*

Good Energy Carloggas
Solar Park (009) Limited*

Good Energy Lower End
Farm Solar Park (026)
Limited*

Good Energy Cross Road
Plantation Solar Park (028)
Limited*

Good Energy Delabole
Windfarm Limited

Good Energy Cedar
Windfarm Limited*

Good Energy Lanyon Solar
Park (011) Limited

Good Energy Mapperton
Solar Park (007) Limited

Good Energy Tidal Limited

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.7) Limited

Good Energy Development
(No.8) Limited

Good Energy Development
(No.9) Limited

100%

85%

100%

Generation of electric
power by solar panels

Generation of electric
power by wind turbine
machinery

Development of an energy
generating asset

Investment holding
company

Development of an energy
generating asset

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Notes to the Financial Statements
18. Investments and Subsidiaries (continued)
Impairment

The Group performed an impairment test in December 2020. The Group considers the relationship between its
market capitalisation and its book value, as well as forward looking estimates of cash flows, when reviewing for
indicators of impairment. As at 31 December 2020, the market capitalisation of the Group was higher than the
book value of its equity. Management concluded from these reviews that no indicators of impairment existed.

The recoverable amount of the intercompany loan receivable balance in the Parent Company has been
determined based on an assessment of forward looking estimates of cash flows and a probability of default.
The projected cash flows have been adjusted to allow for normalised business (i.e. no new business activity
costs or revenue are included), and are considering a prudent case. The pre-tax discount rate applied to cash
flow projections is 8.0%, and cash flows beyond the five-year period are extrapolated using a 3.0% growth
rate. It was concluded that the future cash flows do exceed the value of the intercompany loan receivable,
and therefore no expected credit loss provision is required.

Key assumptions used in impairment calculations and sensitivity to changes in assumptions

The calculation of value in use is most sensitive to the following assumptions:

• Discount rate

• Growth rates used to extrapolate cash flows beyond the forecast period

Discount rate – the discount rate represents the current market assessment of the risks specific to the Group,
taking into consideration the time value of money. The discount rate is derived from the Group’s weighted
average cost of capital (WACC). The WACC takes into account both debt and equity. A rise in the pre-tax
discount rate to 11.17% would result in impairment.

Growth rate estimates – rates are based on management’s prudent estimates of expected growth.
A decrease in the growth rate estimate to 0% would still leave significant headroom, and would not
trigger an indication of impairment.

Notes to the Financial Statements

18. Investments and Subsidiaries (continued)

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

Worminster Down Somerset
Community Solar Farm C.I.C

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

Homegrown Energy Ltd

Next Green Car Ltd**

100%

50.1%

Development of an energy
generating asset

Dormant

Development of EV Charging
point platform app

*Entities indirectly owned by Good Energy Group PLC.

** Registered address: Unit 66, Spike Island, 133 Cumberland Road, Bristol, England, BS1 6UX.

The subsidiaries above have all been included in the consolidated financial statements.

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Notes to the Financial Statements

19. Interests in Equity Associates

19. Interests in Equity Associates (continued)

In the year the Group increased its interest in its equity associate, Next Green Cars Ltd, from 12.9% to a
controlling stake of 50.1%. Information around this acquisition, and the previous equity holding of the entity has
been disclosed separately in Note 17.1, please refer to this note for more information.

NGCL is a private entity, incorporated and operating in the UK, that is not listed on any public exchange.

19.1 Summary of interests in equity associates

Notes

19.2

19.3

19.4

2020

£000's

2019

£000’s

426

615

Non-current assets

Equity investment in associate

Other interests in associates

Non-current Liabilities

LT Financial Liabilities

Current Liabilities

ST Financial Liabilities

19.2 Investment in associate

As part of the 2019 initial investment in NGCL, the Group appointed a Director to the board. This granted 33%
of the board’s voting rights and constitutes significant influence to direct the relevant activities of NGCL. As
such, NGCL is accounted for as an associate using the equity method prior to acquisition in the consolidated
financial statements. Please refer to Note 17.1 for information on the acquisition of the subsidiary, including
acquisition date summary net assets.

Current assets

Non current assets

Current liabilities

Non current liabilities

Equity

Group's share in equity -

Goodwill

Group's carrying amount of the investment

2019

£000’s

338

(153)

(600)

(324)

(42)

468

426

19.2 Investment in associate (continued)

Revenue from contracts with customers in the period

Loss for the period

Total comprehensive loss

Group's share of loss for the period

2020

£000's

(119)

(13)

2019

£000’s

347

(328)

(42)

The Group’s share of loss of associate for 2020 is recognised up until the acquisition date the subsidiary. The
reported 2020 figures shown above are for the period up to acquisition. The details of the acquisition are
provided in Note 17.

The associate had no contingent liabilities or capital commitments as at acquisition date nor 31 December
2019. No dividends were paid by the associate in the period.

19.3 Other interests in associate

2020

£000's

2019

£000’s

Financial assets at fair value through profit and loss

Secured convertible loan notes

615

Secured convertible loan notes

At 31 December 2019 the group held £600,000 of the authorised £800,000 secured convertible loan notes in
NGCL, the carrying value of which equalled its fair value of £615,000. The final tranche of the convertible loan
was drawn down in March 2020 and formally converted to equity in June 2020. For more information on this,
please see the information provided on the acquisition in Note 17.

These secured convertible loan notes were convertible at the option of the Group until 31 December 2021.
Had the convertible loan note not been exercised by Good Energy, it would have become repayable half
yearly in arrears on 30 June and 31 December by NGCL, over the following five years until 31 December 2026,
accruing interest annually at 8.0%.

2020

2019

Carrying
amount

Fair Value

Carrying
amount

Fair value

£000's

£000’s

Secured convertible loan notes

615

The fair value has been calculated using the discounted cash flow method over the contractual cashflows.

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Notes to the Financial Statements

19. Interests in Equity Associates (continued)

21. Trade and Other Receivables

19.4 Other financial liabilities

Financial liabilities at fair value through profit and loss

Contingent consideration at 1 January/initial recognition

Fair value gain

Contingent consideration at 31 December

Total current

Total non-current

2020

£000's

(86)

2019

£000’s

171

(72)

The carrying amount of these liabilities is equivalent to the fair value.

Contingent consideration

As part of the initial purchase of shares in Next Green Cars Ltd a contingent consideration was been agreed.
Contingent consideration was payable dependant on the satisfaction of product milestones in July 2020
and stretching financial milestone targets in December 2021. The product milestones were not met in July
2020 and this contingent consideration was written to the profit and loss. The maximum possible deferred
consideration is £0.6m.

20. Inventories

Renewable Obligation Certificates

Emission Certificates

Total

Parent Company

Consolidated

2020

2019

2020

2019

£000’s

14,477

9,506

148

435

14,625

9,941

As at 31 December 2020 there were Renewable Obligation Certificates (ROCs) of £7,447,000 (2019:
£6,263,879) 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. The cost of
inventories recognised as an expense, including any impairment value, and included in 'cost of sales' amounted
to £12.1m (2019: £12.5m).

Gross trade receivables and unbilled receivables

Provision for impairment/non-payment of trade
receivables

Net trade receivables and unbilled receivables

Prepayments and other debtors

Other taxation

Total

Parent Company

Consolidated

2020

2019

2020

2019

£000’s

112

176

34,278

33,724

(8,882)

(7,345)

25,396

26,379

1,157

2,951

162

100

26,715

29,430

Where a customer account is in credit this is included in contract liabilities (see note 28 Trade and
Other Payables).

The Group has identified that the amount of accrued income subject to estimation uncertainty is
approximately £0.5m.

The Group has a provision in place to set aside an allowance to cover potential impairment and non-
payment of trade receivables. An expected credit loss provision has been calculated on trade receivables in
accordance with IFRS 9 Financial Instruments. Some trade receivables are with customers who do not have
externally available credit ratings.

The movements on the provision for impairment and non-payment of trade receivables is shown below:

Movement on the provision for impairment and
non-payment of trade receivables

Balance at 1 January

Increase in allowance for impairment/non-payment

Impairment/non-payment losses recognised

Balance at 31 December

2020

£000’s

7,345

3,719

(2,182)

8,882

2019

£000’s

5,922

3,674

(2,251)

7,345

Trade receivables
31 December 2020

Contract
assets

Current

<30 days

Days past due

30-60
days

61-90
days

>91 days

Total

£000's

Expected credit
loss rate

Estimated total gross
carrying amount at
default

Expected credit
loss rate

8.0%

8.1%

13.9%

23.3%

80.8%

17,891

4,984

2,193

1,211

7,999

34,278

1,426

403

304

282

6,467

8,882

162

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Notes to the Financial Statements

21. Trade and Other Receivables (continued)

23. Share Capital and Share Premium

Trade receivables
31 December 2019

Contract
assets

Current

<30 days

Days past due

30-60
days

61-90
days

>91 days

Total

£000's

Expected credit
loss rate

Estimated total gross
carrying amount at
default

Expected credit
loss rate

5.5%

12.4%

19.9%

70.9%

15,703

6,230

2,518

1,475

7,798

33,724

864

343

313

294

5,531

7,345

Parent Company & Consolidated

Number of
shares issued and
fully paid

Share Capital

Share Premium
Account

At 1 January 2019

16,571,521

Proceeds from shares issued

49,724

At 31 December 2019

16,621,245

Proceeds from shares issued

21,822

£000’s

829

832

Total

£000’s

13,548

£000’s

12,719

12,790

13,622

All trade receivables are designated as financial assets measured at amortised cost.

At 31 December 2020

16,643,067

833

12,790

13,623

The ordinary shares are the only class of shares in the Company. Holders of ordinary shares are entitled to vote
at general meetings of the Company and receive dividends as declared. The Articles of Association of the
Company do not contain any restrictions on the transfer of shares or on voting rights.

In 2020, the Company issued 21,822 ordinary shares of 5p each in settlement of the exercise of share options,
for a total exercise consideration of £1k. There were no scrip dividend issues in the year (2019: 34,641 and
15,083 shares respectively).

Clarke Willmott Trust Corporation Limited holds in trust 268,270 (2019: 293,270) 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 the Employee Benefit Trust shares shown in the Consolidated
and Parent Company Statements of Changes in Equity. During the year the Trust disposed of 25,000 (2019:
110,000) shares as a result of options exercised and acquired nil (2019: nil) shares.

No final dividend has been proposed in the current year considering the ongoing COVID-19 pandemic and
prudent cashflow management (2019: 2.6p).

22. Cash and Cash Equivalents

Cash at bank and in hand

Short-term bank deposits

Security deposits

Total

Parent Company

Consolidated

2020

2019

2020

2019

£000’s

4,948

5,603

14,259

9,476

1,895

952

2,128

3,239

4,948

5,603

18,282

13,667

As part of the bank loan agreements, the lenders require a minimum cash balance to be held in separate
reserve accounts, these balances are disclosed as "restricted deposit accounts" in non-current assets on the
Statement of Financial Position. Included within cash at bank and in hand for both the Parent Company and
the Group is £372,000 (2019: £340,038 in respect of monies held by the Good Energy Employee Benefits Trust.
As a result of a subsequent event, some funds in restricted deposit accounts have been released, see Note 34.

The credit quality of cash and cash equivalents can be assessed by reference to external credit ratings
as follows:

A+

A-

BBB+

Total

Parent Company

Consolidated

2020

2019

2020

2019

£000’s

4,854

5,509

15,628

10,032

950

1,000

1,178

526

397

2,143

4,948

5,603

18,282

13,667

Cash and cash equivalents are all financial assets designated as financial assets at amortised cost.

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Notes to the Financial Statements

Notes to the Financial Statements

24. Deferred Taxation

The provision for deferred taxation is made up as follows:

Consolidated

At 1 January

Charged to the Consolidated Statement of
Comprehensive Income

Elimination on disposal of subsidiaries

Acquisition of subsidiaries

Charged to equity

At 31 December

Deferred tax assets

On short term timing differences

Losses

Interest deductible

Total

Deferred tax liabilities

On accelerated capital allowances

Revaluation of Generation sites

Acquisition of subsidiary fair values

Total

2020

£000’s

903

3,123

4,135

2020

£000’s

132

878

1,064

2020

£000’s

(2,029)

(3,123)

(47)

(5,199)

2019

£000’s

927

(70)

903

2019

£000’s

181

976

1,157

2019

£000’s

(2,060)

24. Deferred Taxation (continued)

Accelerated
capital
allowances

Revaluation
of
Generation
sites

Acquisition
of subsidiary
fair values

Short-term
timing
differences

Losses

Interest
deductible

Total

£000’s

860

(927)

116

(11)

(46)

181

976

(903)

(49)

(98)

(47)

Deferred tax
assets/(liabilities)

At 1 January 2019

(1,863)

Credited/
(charged) to the
income statement

Elimination on
disposal
of subsidiaries

At 31 December
2019

Credited/
(charged) to the
income statement

Acquisition of
subsidiary

(Charged) to other
comprehensive
income

At 31 December
2020

(267)

(2,060)

(62)

(3,123)

(2,029)

(3,123)

(47)

132

878

(4,135)

Deferred tax on losses incurred pre 1 April 2017 has only been recognised to the extent that the relevant
companies which incurred the losses have sufficient deferred tax liabilities available for offset. Should deferred
tax be recognised on all such losses, the deferred tax asset and profit after tax would increase by £195,000.

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Notes to the Financial Statements

25. Borrowings and Other Financial Liabilities

25. Borrowings and Other Financial Liabilities (continued)

Current:

Bank and other borrowings

Bond

Loans from Group companies

Lease liabilities

Total

Parent Company

Consolidated

2020

2019

2020

2019

£000’s

1,063

395

7,330

1,955

1,063

615

1,951

395

711

1,089

7,802

3,633

3,057

Parent Company

Consolidated

2020

2019

2020

2019

£000’s

Non current:

Bank and other borrowings

33,405

35,314

Bond

Lease liabilities

Total

16,331

16,757

16,331

16,757

4,728

4,673

16,338

16,790

54,464

56,744

The Group has no bank overdraft facilities (2019 undrawn bank overdraft: £10,000,000) as at 31 December
2020. The facility in the prior year was secured by guarantees from Good Energy Limited, Good Energy Gas
Limited and other Group entities.

At 31 December 2020, £4,585,000 (2019: £5,449,283) of the bank loans relate to the Parent 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. The fixed rate interest is payable at an annual rate of 7.15%.

At 31 December 2020, £30,728,000 (2019: £33,882,698) of the bank loans relate to the Parent 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 £2,754,000 (2019:
£2,754,299) and are being amortised over the life of the loan.

After the year end the group completed a group restructuring. As part of this Good Energy Delabole Wind
Farm Limited was brought within the Good Energy Generation Assets No. 1 Limited sub-group, its bank loans
were repaid in full with additional debt issued to Good Energy Generation Assets No. 1 Limited as part of a
revised facility with Gravis Capital Partners LLP. This is a non-adjusting subsequent event, more details of this
transaction are disclosed within Note 34.

Parent Company

31 December 2020

Due less than 1 year

Due between 1 and 5 years

Total

Parent Company

31 December 2019

Inter-
company
loan

Bond

Bank and
other
borrowings

Lease
liabilities

Total

£000’s

Inter-
company
loan

1,063

16,331

17,394

Bond

1,089

16,338

17,427

Bank and
other
borrowings

Lease
liabilities

Total

£000’s

Due less than 1 year

7,330

395

Due between 1 and 5 years

16,757

Total

7,330

17,152

7,802

16,790

24,592

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Notes to the Financial Statements

Notes to the Financial Statements

25. Borrowings and Other Financial Liabilities (continued)

26. Changes in Liabilities Arising from Financing Activities

Consolidated

Bond

Bank and
other
borrowings

Lease
liabilities

Total

£000’s

31 December 2020

Due less than 1 year

1,063

1,955

Due between 1 and 5 years

16,331

10,404

Due more than 5 years

Total

23,001

17,394

35,360

615

1,541

3,187

5,343

3,633

28,276

26,188

58,097

Consolidated

Bond

Bank and
other
borrowings

Lease
liabilities

Total

£000’s

31 December 2019

Due less than 1 year

Due between 1 and 5 years

Due more than 5 years

Total

395

16,757

17,152

1,951

9,115

26,199

37,265

711

1,381

3,292

5,384

3,057

27,253

29,491

59,801

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 2020 are:

2020

Fair
value

2020

Carrying
value

2019

Fair
value

2019

Carrying
value

£000s

Good Energy Delabole Wind farm Ltd

4,672

4,657

5,565

5,546

Good Energy Generation Assets No. 1 Limited

32,962

32,645

34,683

33,883

Corporate bond

16,586

17,422

17,309

16,785

Borrowings are designated as other financial liabilities held at amortised cost.

1 January

Additions to provisions

Disposals

Charged to profit or loss

31 December

1 January
2020

Cash flows

Acquisition
of
Subsidiary

Lease liability
remeasure
-ment

Other

31 December
2020

£000's

£000’s

£000's

2,346

(2,184)

(46)

Current interest-bearing
loans and borrowings
(excluding items listed
below)

Non-current interest-
bearing loans and
borrowings (excluding
items listed below)

Non-current lease
obligations

Total liabilities from
financing activities

Current lease obligations

711

(411)

52,071

4,673

2,902

3,018

(2,335)

49,736

315

615

370

(315)

4,728

59,801

(2,595)

(46)

370

567

58,097

The 'Other' column includes the effect of reclassification of the non-current portion of interest-bearing loans
and borrowings, including obligations under leases to current due to the passage of time, and the effect of
accrued but not yet paid interest on interest-bear ing loans and borrowings. The Group classifies interest paid
as cash flows from operating activities.

27. Provisions for Liabilities

A provision has been recognised for decommissioning costs associated with wind farms and solar parks owned
and operated by the Group. The value of the provision below wholly relates to the decommissioning provision.
The decommissioning provision is based on MWh or number of turbines for the respective generating sites.

2020

£000s

1,294

1,316

2019

£000s

1,446

(174)

1,294

170

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Notes to the Financial Statements

28. Trade and Other Payables

Parent Company

Consolidated

2020

£000's

373

2019

£000's

180

390

248

2020

£000's

1,905

28,821

1,050

6,482

38,258

2019

£000's

1,277

28,751

1,297

4,144

35,487

Trade payables

Accruals

Social security and other taxes

Other payables

Contract liabilities

Total

Trade payables, accruals and other payables are designated as other financial liabilities held at
amortised cost. The accruals include liabilities such as the ROC accruals for the current compliance period,
unbilled transmission network charges and the Groups FIT pot contribution.

All of the contract liabilities in 2019 as shown above were recognised as revenue in 2020.

29. Dividends Paid

Amounts recognised as distributions to shareholders in the year (based on the number of shares in issue at the
record date) are as follows:

Consolidated

Final dividend for prior year of 0p per share (2019:
2.50p)

Interim dividend for current year of 0p per share
(2019: 1.10p)

Sub-total

Dividends waived

Total

2020

£000’s

2019

£000’s

414

183

597

(13)

584

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 2.60p per share was proposed on 16 March 2020. However, in light of the ongoing COVID-19
pandemic and prudent cashflow management the payment of the 2019 full year final dividend was deferred.

No dividend was paid in the year in the form of scrip (2019: £74,414) nor settled in cash (2019: £510,398).

30. Cash Generated from Operations

Reconciliation of net income to net cash provided by operating activities:

Parent Company

Consolidated

2020

2019

2020

2019

£000’s

Profit/(loss) before tax from continuing operations

Loss before tax from discontinuing operations

Profit/(loss) before income tax

Adjustments for:

Depreciation

Amortisation & impairment of intangibles

Loss/(Gain) on assets disposals

Impairment of assets

Revaluation of generation site

Fair value adjustment of contingent consideration

Net gain on financial assets at FVTPL

Provision against investments in and loans
to subsidiaries

Share based payments

Share of loss of associate

649

(2)

(86)

(6)

(1,755)

(82)

(1,755)

(82)

194

(765)

(72)

(15)

2,102

4,476

1,218

287

522

(86)

(6)

1,258

(937)

321

3,467

487

1,435

(72)

(15)

Dividend income from subsidiaries

(4,000)

(3,500)

Finance costs/(income) - net

917

1,011

4,222

4,244

Changes in working capital (excluding the effects
of acquisition and exchange differences on
consolidation)

Inventories

Trade and other receivables

Trade and other payables

(78)

142

822

(92)

(4,684)

(1,012)

2,844

2,637

366

(1,198)

Cash (outflow)/inflow from operations

(2,365)

(2,025)

11,425

8,146

172

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Notes to the Financial Statements

31. Share-Based Payments

31. Share-Based Payments (continued)

In order to retain the services of key employees and to incentivise their performance, the Parent Company
operates the Good Energy Employee Share Option Scheme under which certain employees of the Group are
granted options to acquire Ordinary 5p shares at future dates. Costs in respect of these options of £39,000
(2019: £81,271) are recognised in the Consolidated Statement of Comprehensive Income. As at 31 December
2020, the following options had been issued:

The options expire at various dates up to November 2028. Share options outstanding at the end of the year
have the following expiry date and exercise price:

Grant-vest

Expiry year

Exercise price in £ per
share options

Share options
(thousands)

Number of options

Weighted average
exercise price

Total exercise
consideration

2020

2019

2020

2019

2020

2019

(Number)

(£)

£000’s

Outstanding at beginning
of year

1,255,293

1,627,271

0.81

1,022

1,321

Granted

Exercised

(46,822)

(110,000)

Cancelled/surrendered

(580,462)

(261,978)

0.68

0.97

1.11

0.67

(32)

(562)

(122)

(177)

Outstanding at the end
of year

628,009

1,255,293

0.68

0.81

428

1,022

In order to partially fulfil the options granted, 268,270 (2019: 293,270) shares representing approximately
43% (2019: 23%) 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.

2012-2015

2013-2016

2015-2017

2015-2018

2016-2019

2017-2020

2018-2021

2025

2026

2027

2028

2029

2030

2031

0.50

1.15

1.25

2.29

2.25

0.05

2020

2019

104

144

330

628

189

104

169

200

424

1,255

There were no share options granted in the current year. The right to exercise share options expires in line
with contractual agreements between the group and the holder made at the grant date date, or varied by
agreement with both the Group and the holder.

See note 10 for the total expense recognised in the Income Statement for share options granted to Directors
and employees.

32. Pensions

The Group operates a defined contribution 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 £485,000 (2019: £528,781).

Total contributions of £148,000 (2019: £41,250) 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.

174

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Notes to the Financial Statements

33. Related Party Transactions

35. Subsidiary Undertakings Exempt from Audit

As at 31st December 2020, Tidal Lagoon Power Ltd owed the Group £17,000 in respect of electricity supplied
to its head office. The electricity was supplied by the Group in the ordinary course of its business and on arm’s
length rates and terms. The CEO of Tidal Lagoon Power Ltd is Mark Shorrock, the husband of Juliet Davenport.
£15,000 of this debt has been provided for through the Group's expected credit loss provision.

34. Subsequent Events

On 2 February, the Group announced that Juliet Davenport would be stepping down as CEO and would
move into a non-executive director position on the Group’s board, as well as remaining Chair of the Zap Map
board. A settlement agreement has been reached regarding this change. On 7 April Nigel Pocklington was
announced as new Group CEO, with his role starting from 1 May 2021.

On completion, the transaction provides £7.8m of unrestricted cash, this relates to the release of reserve
accounts and other restricted cash balances which form part of the existing facilities (£4.7m), and
additional debt raised against the Delabole windfarm, associated with mirroring the terms of Delabole in
line with the rest of the portfolio (£3.1m). The transaction also rebalances the performance covenants over
the entire generation portfolio. This frees up future cash generated by the generation portfolio to be utilised
by the Company.

On 8 April, the Group announced a further £1m strategic investment into Zap Map’s parent company Next
Green Car Ltd, via a convertible loan note. The loan note comprises three broadly equal and separate
tranches of investment throughout 2021, and the Good Energy can exercise the conversion of the loan at
the earlier of subsequent funding rounds, or a longstop date of 12 months from the date of agreement, at
a material discount.

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:

Directly held subsidiaries:

Good Energy Cedar Windfarm Limited
Good Energy Lanyon Solar Park (011) Limited
Good Energy Mapperton Solar Park (007) Limited
Good Energy Tidal 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.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
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

Indirectly held subsidiaries:

Good Energy Carloggas Solar Park (009) Limited
Good Energy Creathorne Farm Solar Park (003) Limited
Good Energy Cross Road Plantation Solar Park (028) Limited
Good Energy Hampole Windfarm Limited
Good Energy Lower End Farm Solar Park (026) Limited
Good Energy Rook Wood Solar Park (057) Limited
Good Energy Woolbridge Solar Park (010) Limited.

36. Generation Assets: Technical Data

Wind Farms

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

Solar Farms (continued)

Creathorne, Cornwall

Solar modules: Yingli

Nominal capacity DC: 1,841 kWp

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

176

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Bankers

Lloyds Bank
3rd Floor, 125 London Wall
London, EC2Y 5AS

The Co-operative Bank PLC
PO Box 101, 1 Balloon Street
Manchester M60 4EP

Gravis Capital Partners LLP
24 Savile Row
London, W1S 2ES

Legal Advisors

Norton Rose LLP
3 More London, Riverside
London, SE1 2AQ

Registrars

Computershare Investor Services PLC
The Pavilions, Bridgwater Road
Bristol BS99 6ZY

Directors

William Whitehorn
(Non-Executive Chairman)
Juliet Davenport (Chief Executive)
Emma Tinker (Non-Executive Director)
Timothy Jones (Non-Executive Director)
Nemone Wynn-Evans
(Non-Executive Director)
Rupert Sanderson (Chief Financial Officer)

Company Secretary

LDC NOMINEE SECRETARY LIMITED
70 Great Bridgewater Street
Manchester M1 5ES

Company Number

04000623

Principal Place of Business and Registered
Office

Monkton Park Offices
Monkton Park, Chippenham
Wiltshire SN15 1GH

Independent Auditors

EY
The Paragon, 32 Counterslip
Bristol BS1 6BX

Financial Advisors

Investec Bank plc
30 Gresham Street
London, EC2V 7QP

Canaccord Genuity Limited
88 Wood Street
London, EC2V 7QR

178

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Annual Report & Accounts 2020

Good Energy Group PLC
Monkton Park Offices
Monkton Park
Chippenham
SN15 1GH

goodenergygroup.co.uk

180

Good Energy Annual Report 2020