Good Energy Group PLC (LON:GOOD), the supplier and generator of renewable electricity, posted a 12% rise in annual revenues as customer numbers increased by 44% to 219,400.
However profits were all but wiped out by the cost of servicing £54mln-worth of debt and a rise in administrative expenses.
The underlying momentum was upward. So EBITDA, that’s earnings calculated before the inclusion of interest costs, was £7.3mln, representing a rise of 28%.
However pretax profit, the performance benchmark used in the City, was a little over £128,000 compared with £1.29mln a year earlier.
The company is maintaining the dividend payment at 3.3p a share, which, based on the current share price, represents a yield of 1.6%.
Good Energy is not just an energy supplier, it actually owns generating assets such as Delabole, the UK's first commercial wind farm and the Hampole wind farm, near Doncaster.
In fact its total owned generation output was 77 gigawatts, up 83% on a year ago.
The firm also helps customers – 112,000 of them – to make money from supplying the national grid with green electricity via government-backed feed-in tariffs. It has 68,000 electricity and 38,800 gas customers.
FROM MANAGEMENT
Finance director Denise Cockrem, in conversation with Proactive’s Sarah Lowther, said:
About the results….
The biggest change year-on-year is that in 2014 we sold one of our large solar sites and that generated a profit for us of £3.6mln. So, actually, if you take that out, you can see there has been really strong improvement in profitability (in 2015), particularly in the supply business.
Debt…
It has enabled us to build out another four solar farms; so we have six solar sites operating. And we have the two wind farms. That has been a real achievement for us and helped us supply renewable energy to our customers.
WHAT THE BROKERS SAY
Cantor Fitzgerald – target price 230p
Good Energy has delivered preliminary results ahead of our expectations. Some of this is due to a better wind year that cannot be guaranteed to recur but much is due to gains in supply. These have flowed through to increased profitability in supply which is encouraging with no sign that the cost of customer acquisition has been excessive.
Arden Partners – target price 280p
We estimate the generating business could be worth around £60m on an EV basis whilst the rest of the group might be worth around £45m (after taking account of plc cost) giving a sum-of-the-parts equity valuation in the region of 280p per share. In our opinion the likely increased demand for renewable energy will continue to make Good Energy an attractive investment proposition whilst over time we anticipate likely industry consolidation, adding speculative interest.
FORECASTS
2016: Revenues: £85.8mln, adjusted profits £1.5mln
2017: Revenues: £99.1mln, adjusted profits £2.2mln
THE SHARE PRICE
Up 1.25% at 203p.