Good Energy Group (GOOD) — Preliminary results - year ended 2022

0:01 Good afternoon, ladies and gentlemen, and welcome to the GOOD ENERGY GROUP PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the Q and A tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so, and these will be available via your investor meet company dashboard.

0:34 Before we begin, I would like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to CEO, Nigel Pocklington. Good afternoon, sir. Good afternoon. Thank you very much, and welcome to the GOOD ENERGY preliminary results presentation. I'm Nigel Pocklington, and I'm joined by Rupert Sanderson, who is GOOD ENERGY's Chief Financial Officer. And just to give you a sense for what we'll cover before we open the meeting up to question and answers, After a brief overview from me, Rupert will take you through the company's financial performance in 2022, and then I will update investors on the progress we've made on executing on our strategy.

1:21 And then just by way of an overview, I really wanted to leave you with one introductory thought, which is, first of all, obviously, it's been an extraordinarily difficult period for energy consumers and indeed energy companies in The UK because of the very high wholesale cost of commodities. However, despite that, I think the company has made very strong progress this year in its transition away from a company based on generation and supply and to being one which is much more focused on green energy services. We're going to take you through both results and a strategic update that points out that last year was one of important milestones in this transition. You can see some of them listed out on the slide there. Many of them will be familiar to you. Significant change in our business because we sold our generation assets and injected a lot of cash as results doing so.

2:19 Progress and pace for ZapMap. We've, taken a step into the installation of heat pumps this year to add to our energy services portfolio, and we've rounded it out by launching new and, I think, innovative tariffs for solar generators. And the other message we will be leaving you with is we think there is more to come and we have the wherewithal to do more, and that is because we have a strong balance sheet despite the difficult

2:44 market conditions we've been through. We are investing in markets which offer higher growth and higher returns, and equally importantly, frankly, help the company to deliver on its founding mission, which is around helping drive a cleaner and greener world for as many people as possible. So with that as an introduction, I shall hand over to Rupert, who will take you through the year's financial performance. Thank you, Nigel, and good afternoon, everybody. As well. So just to talk you through the shape of the p and l in 2022, and there's really two parts of the business I want to describe, the the core energy supply feed and tariff business, and then our investment in ZAPMAP, which has created quite a lot of sort of p and l entries in 2022.

3:41 But the sort of key takeaway, I think, for our result this year is a very sharp increase in revenue. We've got a 70% increase in revenue, which is wholly driven by the wholesale price movement, the energy that we now exclusively buy from generators at a higher cost and passing that through to both our domestic and business consumers. But the but the core business has returned to profitability in 2022 after a challenging period at the back end of 2021, which we described fairly fully during the course of the year. And ZapMap has undergone quite a lot of change in 2022, and Nigel had described that from a business perspective.

4:32 But from GOOD ENERGY's relationship and investment relationship with ZapMap, We were the majority of... Owner of that business until early August of last year. We reduced our equity stake to just under 50%, and that business went through a series a fundraising at that time. So our profit and loss account includes sort of three steps effectively in that ZapMap transaction. The first, we consolidate the financial performance for the first eight months of the year, and that generated a loss of about £1,300,000 In the second period of ownership, there are 49.9% ownership. We take an associate share. So just a proportion of those losses, that's another £700,000.

5:26 But the revaluovation of our investments, so we'd invested between 5,000,000 and £6,000,000 into that business over our period of ownership. The Series A valued that business at £26,000,000. And so we've seen an uplift of nearly £7,000,000 in the value of that business that we still own 50% of. So quite a a lot going on from a ZapMap perspective, which sort of really impacts the sort of description and articulation of our financial performance in 2022. And we did this bridge last year. Unfortunately, it's not quite as confusing as last year, but still a lot going on. So we go on the left hand side from our reported loss before tax in 2021 all the way over to the right hand side and our reported profit before tax of a little under £9,000,000 in 2022.

6:24 And I'll just pull out a couple of items here. The the the ZAP Map impact is that significant yellow bar right on the right hand side next to the 9,000,000. So I've described the impact of that within our result. I then just want to focus on what's happening between the two black bars in the middle. So minus 3,000,000. So minus 3,000,000 was the result that we described as the best representation of our underlying performance in 2021 when we had that very challenging Q4. The volume reduction is quite a significant reduction in the average usage of our customers within our domestic supply base.

7:09 It was both a warm 2022, but also a lot of consumers are taking actions to reduce their heating load to turn down thermostats, particularly during the the very, very high price environment that we've seen. And then the very big positive of £7,000,000 is really the actions that we took to address the challenges we saw in late twenty twenty one. So these are all of the changes we've made to hedging, the changes we've made to our risk management processes, the changes we've made to pricing to both customers and to our PPAs in order to show the ability for that supply business to continue to operate profitably in what has still been a very challenging market for the energy industry in 2022.

8:05 And then on to cash. And given the very high prices we've seen, the the working capital demands within the business have been really at some sort of elevated level in 2022. But we're very pleased that the business has generated cash within that period. So we've generated a little under £6,000,000 of cash from all of our business operations, navigating the very high prices and volatility in the commodity markets. And then we have taken the proceeds that we had from the sale of the generation assets, and we've continued our track record in terms of investing a proportion of those proceeds. So we've made further investment into ZapMap.

8:53 We acquired the Igloo Works business, back at the end of twenty twenty two, and we've continued to pay down a small amount of debt. So we repaid nearly £2,000,000 of debt in 2022, leaving us with a little under 5,000,000 of total debt, on the balance sheet now. So a strong performance in terms of operational cash flow, reinvestment over a proportion of our generation asset proceeds, both investment and debt repayment, and we've increased our cash and cash equivalents from £6,000,000 to £24,000,000 at the end of the year. So a very robust position that we take into 2023. And what underpins that, has been continued focus and strength of performance on collections.

9:46 The total amount of cash collected has obviously increased very sharply, and it has followed the movement in revenue over the course of the year. A proportion of the money that we received in q four that highlighted gray bar, £27,000,000 we received in q four from the government on behalf of our customers, the very high prices we've seen in Q4 and Q1 of this year will be the same. The government has effectively top sliced the amount of collections that... And and billings we've made to our customers. And I think it's a sort of bit of a mixed outlook in terms of where we go from here. So the commodity environment is starting to reduce now, so prices coming down.

10:35 But customers will see high bills probably for another three to four months to come until those feed through into reduced total bills. And the government subsidy schemes are being removed as quickly as the wholesale prices are starting to fall. So it's something we continue to remain very conscious of in terms of the experience and the activity that we undertake as we go through 2023.

11:09 And I just wanted to spend a minute or so just talking about, some of the actions that we took and planned over 2022, learning the lessons of some of the challenges we faced in 2021. We have been very active in managing the winter trading risk and the trading position and the hedge position that we have for both the sort of medium and short term, given the volatility of commodity prices.

11:36 We are very well hedged for this forthcoming summer, which which really starts in a few days now, but we have done all of the balancing for this coming summer, and we start to think about the following winter already. The the the the trading environment remains harder than it was in 2021, but we have still got a very strong mix and a and a broad range of technologies and PPA relationships that support the power that we sell to our customers, and we still work with a number of counterparties. There is an element of normality returning. However, it is a different environment pre energy crisis and where we are now. But we're we're very pleased with the work that we have done over the course of the last twelve months, really to focus on on that trading market and supporting our customers over the course of the last twelve months.

12:40 A quick slide just to focus on. We've talked about our cash position. So we just wanted to highlight where we see the the the core value in the business and and how it is sort of represented externally. So with a little over £20,000,000 worth of available cash to the business after taking out debt and money that we that we cannot use within the day... Business on a day to day basis. That supports a little over 70% of our market capitalization. And with a third party investment in ZapMap validated by the fundraising later... Sorry, earlier in 2022, that supports a greater than a 100% of our market capitalization.

13:29 So the board sees significant value both within our renewable supply business, profitably trading and alongside the feed and tariff administration service that we have run for a number of years. And Nigel will talk more fully about some of the opportunities and profit pools within within energy services. But the value of those businesses, see as being very clear and are considerably in excess of the market capitalization that that is is is is seen today.

14:12 And just a final slide on capital. So the business does have a a strong cash position at this point in time, and we'll continue to invest in energy services such as the... Both inorganic opportunities we've seen with ZAPMAP and with Igloo, but also our own products and services. Nigel, again, will talk about some of our developments that support solar generators and other customers within our portfolio. However, we also recognize that a proportion of our shareholders would like to see ongoing reward in the form of a dividend, and we've increased that over the course of the last year, recognizing the strong financial performance that we have had.

15:06 But we do see a prioritization of that capital allocation into further growth. With that, I will hand back to Nigel. Thank you. Thank you, Rufus. So I'm gonna begin my strategic update by reminding everybody of the, statement we made at this point last year, which is really that, actually, the company's underlying mission is unchanged, and it's unchanged from Juliet's founding of it more than twenty years ago, which is we're here to power a cleaner and greener world and make it simple for people to take more control of that transition to a clean powered world. What has changed is the vision of how we get there, and it has moved from initially generation through to focus on generation and supply and now onto a renewed focus on energy services.

16:01 And we've done that. We'll come on to some of the rationale for that, really. We've really done that because time has moved on. And, the amount of capital needed and available to, for example, invest in renewable generation has far exceeded now the power of this company, but we can make a much bigger difference in other parts of the energy market, and that's where we're focused. So our ambition is now to help a million homes and businesses cut carbon from their energy and transport use by 2025 across the products and services that we offer, and we are well underway. So at the end of last year, we touched 795 households, be they electric vehicle drivers, generators, users of our power, and now in a nascent level installers of new energy technology like heat pumps and solar panels. So we're well on the way to our ambition, but we're supporting it through energy services.

16:55 And in fact, that is how now we think about the business, really. We have an energy services offer which spans a number of areas. So we have always had a root in, supporting solar generators, particularly small generators, and continue to do so. We've added to that. We now have the capability to actually install solar panels and generation equipment as well as maintain, the feed of power from them. We have a newly acquired focus on the ability to install, heat pumps and the electrification of heat. And for the last couple of years, we've been active in the electrification of transport mostly through our investment in ZapApp. And these are capabilities which we intend to, acquire further companies and capabilities in to build out that offer. That is underpinned by an ongoing commitment to a green renewable supply proposition.

17:50 And and we have consistently shown, I think, that we can offer what the market considers to be one of the greenest propositions available to consumers, and we can do so in a way that has survived the worst energy crisis since the nineteen seventies, despite continued... Continuous headwinds over the last eighteen months. And we can do so in a way that is transparent and fairly priced, and that underpins our capability. There will be a role for a supplier as energy services roll out in the future, and it supports the brand values that we stand for. But that's now how we think about our business.

18:28 Why is that? So if that's the what, here's the why. Well, it actually offers a far better chance for us to really kind of deliver on our mission for as many consumers as possible. So you focus on the right hand side of that slide. The energy service market is growing very quickly, and that is because energy prices are high. The cost of installing some of this equipment is coming down. There is regulatory change around phasing out of, gas boilers and other sources of heat coming through in the next few years along eventually with a phase out of, new internal combustion engine cars. So those driving considerable market growth. So we think of the order of 10 to... At least 10, if not 20% or more for the next few years. They tend to be higher margin businesses, so they're offering margins approaching 20%.

19:16 And compared with energy supply, which has seen an extraordinary amount of working capital investment needed for the last year or so as prices fluctuate often within a month or quarter, the working capital intensity is low. So we think energy services offer our investors a chance to access higher growth markets with better return characteristics, and we think we're well positioned to access those markets. And the chart on the left, is based on a segmentation study we did last year of The UK energy consuming market. And what we've uncovered there, what we can see there is really there are two segments of consumers for whom green and environmental considerations are primary in their decision making. And each of them, is likely to be moving into the world of solar and panel installation, battery storage, or heat pumps over the next few years. And that gives us an addressable market which starts in value about 5,000,000,000, could be as high as £10,000,000,000 to promote these services too. So it's a big market.

20:18 It's a growing market. It's a market with a higher margin than our energy supply routes.

20:26 Let's take into each in turn. I want to start with very much the place that is the company's roots, and that is in support for solar power generation and small generators. Now first point to make, this is now a fast growth market again. So, the rate of solar installations more than doubled over the course of the last year. We shouldn't be surprised by that. Energy prices have been very high, and the cost of installation is falling. But what we've now got to is a level of installs we've not seen since the heyday of the feed in tariff period, in 2015. So this is a a soaring market for solar panel installation. So that's attractive growth. And our ambition is simply to be the go to company for small solar generators.

21:17 The energy market crisis has got in the way of innovation in this area for much of the last year or so, but I'm very pleased to say that we are now innovating an outing market with two new products for this area. First off, for feed in tariff customers, we are now live and using smart meter data to pay people on the amount of energy they generate rather than a deemed or assumed amount. That's been rolled out to pretty much all of our domestic fit customers already, and We'll be rolling that to some of the small business and multisite fit customers through the rest of the year. That is, we think, an advantage for them. They're being paid more fairly, and they're probably being paid more overall for their generation. And this is advantage to us because it allows us to include that generation capacity in our overall position of power to trade.

22:05 So that's one innovation. And the second, we launched this week, and it's called Power for GOOD. And this is our entry into the, the newer market for sort of post fit small generators. So this is a tariff for domestic export initially and soon to be business export as well. It is open to customers who aren't on the feed in tariffs. They're open to newer customers, although feed in tariff customers are welcome to join us as well. And we are committed to paying a, if not the, leading rate in the market... Variable rates in the market for that generation for customers who are also on standard variable tariff supply with us. So we are launching the product with a rate of 10p per kilowatt hour, which is at least twice what most of the suppliers in the seg market, which is where this is loosely based, are doing. So quite rightly, we are, I hope, leading both for fit customers and newer export customers with these innovations. We will be paying more for people who are generating their own power.

23:07 And this will make a meaningful difference. So if you're on power for good and you are in in the the mythical standard domestic tariff, a typical domestic consumption value home, then it is of the order of about £500 a year of saved electricity costs and a further a £150 of paid generation on top of that for a customer in that sort of market. So that's what we're doing. And why do we believe in it? Well, we think our customer base is very interested in taking for... These services up further. We already know that we've got a very strong position in this marketplace. What the map shows is, expressions of interest in new solar installation from GOOD ENERGY customers when we put up a register for interest page for a week or so in February. So we got a very significant response very So there's a lot of pent up demand for solar installation, And it is an area which we think we can use some of that cash on the balance sheet to increase our capabilities in.

24:09 So we are actively looking for further m and a opportunities, around solar installation and solar services to add to what we can already do.

24:19 If solar and generation is the first part of our services offer, the electrification of heat is the second and newer part of it. Now the growth rate in heat pumps isn't quite what we've seen in solar panels, but it is still clearly the case that there is a meaningful compound annual growth rate in the installation of heat pumps in The UK. We are actually, as a country, lagging behind many markets for a number of reasons. This has been the subject of parliamentary inquiries in the last few weeks. But we can anticipate further growth, I think, as, older and more traditional, more carbon intensive forms of domestic heating are outlawed and as more and more people begin to want to install heat pumps as an alternative technology. And that is why we bought the heat pump insulation business from Igloo, then called IglooWorks.

25:10 It is now rebranded. So it is now trading as GOOD ENERGY, and there will indeed be GOOD ENERGY branded vans visible, with that on. And that means that we can then market these services to GOOD ENERGY's supply base more seamlessly. So we are now actively marketing, slots for, surveys and to begin the journey of installing a heat pump to our own customers. We have a target of, getting towards about 500 heat pump installation... Installations this year as we begin to scale up the business. And we look to build capacity for about 12,000 installs per year by 2026, which is still a relatively small proportion of the expected market size. We have a differentiated business. We are not competing to be the absolute cheapest in the marketplace.

25:56 We're focusing on semi detached homes and above by and large on a more comprehensive service offer that includes, optimization of the pump's performance and potentially changes to domestic plumbing arrangements to make it suit as well. But we have a, I think, a credible offer now and a offer for growth in terms of heat pump installation. And a final point in terms of our heat capability, it also means for the first time, we have a team of installers or installers and the supporting health and safety other ins... And another points within the staff, and we have taken the opportunity very quickly to train them up on the installation of solar panels. So the works... The GOOD ENERGY team can now install heat pumps, but also install solar panels, giving us a platform for further growth in this marketplace.

26:45 And the last services business line I would draw your attention to is the electrification of transport. We want to make it easy not just to heat and power your home with clean energy, but for you to drive with green energy. Most of that activity has been focused on our interest in ZapMap for the last couple of years, and here is an update on where that business has got to. So first point to make, one of ZAP's attractive characteristics is that it maintains a very high penetration of the electric vehicle market in The UK with very little to no marketing expense. So it continues, as you can see from the black line there, to register a very high percentage of the electric vehicle park as its users. We've included some of the statistics on ZapMap on the left of the slide there. So it's a growing market. So we've seen 64% growth in electric vehicles on the road to 700,000 for fully battery electric vehicles. There've been over a million downloads of ZapMap, over half a million registered users now, and that user growth grew over 63% in the last year. So ZapMap continues to be the go to app for EV drivers who want to plan and pay for their charging.

27:51 And we're beginning to disclose a lot more about its kind of maturing as a business. So on the left, you can see that Zap's now passed a million pounds in, revenue from very nascent beginnings when we got involved with the business. We're expecting that to at least double again this year, and it is building that on some very strong and attractive recurring revenue streams. So that's subscriptions where we have a target in the long run of getting to about 10% of registered users as paying subscribers. It includes a a pay per charge model with ZapPay where we're trying to take the complexity out of, the multiple number of charge point operators on the road in The UK. And increasingly, it's a data offer where we have a most comp... The most comprehensive view possible of electric vehicle driving habits, and we can sell that as a data product back to the marketplace.

28:44 There are a number of milestones for the business to hit this year as it scales up and and begins to invest its series a fundraise from last summer. And the best way of summarizing that is that quite soon, we will simplify and improve Zap's user experience. There'll be a free tier, which is the mapping service really, which will will then earn its keep through advertising sales and sales of that data back to interested parties, but also to a growing transaction payment business. There'll be a one single simple subscription tier. And for $2.99 a month or equivalent, we will be able... You'll be able to use that map in your card dashboard and use some of the more advanced functionality. We see a lot of growth coming on the data platform that we're building because of this, and it isn't all ZapMap doing this work now. We have a almost an out of the box ability to help everybody from, breakdown companies or other players in the car industry to offer ZapMap subscriptions in a package as part of their own marketing.

29:42 Eventually, obviously, the users and the monetization going back to ZapMap. So another key element in scaling this business. So I want to conclude by updating you on where the supply business has got to. So we are building this energy services portfolio and access... Accessing these growth markets on the back of our position as a supplier of a 100% renewable electricity. As a reminder, the diagram on the right there just summarizes really what we do. So we sell renew... A 100% renewable electricity product to those, segments, so domestic and small and medium sized enterprise and all enterprises, and to some half hourly, so larger customers, of... For electricity. We don't sell into particularly energy intensive markets, and we don't sell gas into the business market. That's only for the domestic market.

30:37 We're sourcing that electricity through our network of independent generators. We got over 1,700 partners in this area on the larger scale through power purchasing agreements and from smaller scale microgeneration as well. And that has been a pretty stable business for us over the course of the year. So in fact, the regulator of Gem is very keen to maintain a stable domestic energy environment at the moment. We... That's what we've seen as well. Our pricing is now in... Is now consistent with the energy price guarantee level pretty much.

31:08 We've continued to focus on rolling out smart metering, which is a key enabler for future energy services, and we now have about 47% of our domestic business on smart meters, which is pretty much consistent with where the industry has got to. On the business side, we have continued to focus on managing the risk of being a larger supplier by matching PPAs with new business volume and by focusing that business on sectors who particularly want to consume a deep green, you know, heavily renewable based proposition. And the last point I would make before handing over to q and a is that that supply business potentially has a very important role to play in the eventual future of domestic and business energy consumption in The UK.

31:56 What we are increasingly seeing is an interesting virtuous circle where, excuse me, the purchase of an electric vehicle is often the first point of adoption for new technologies for many households. We now know from the ZapMap annual survey that electric vehicle owners are seven times more likely to be investing in solar and battery storage products. That's perhaps unsurprising. If you own electric vehicle, you're suddenly using a lot more electricity and a lot less petrol. But, also, they say that they are... Two thirds of them are also interested in installing a heat pump and further embedding new clean energy technologies within the home. And at that point, and this is still something that is by and large two, three years away, the position of a supplier will become more interesting and potentially more valuable again as we can optimize the different, patterns of energy usage, to accommodate all of these new services, and we can offer further flexibility in all the services, for example, storing electricity in your car,

33:00 which are very difficult to achieve today. So we see our supply business as both underpinning our green credentials as offering, an invaluable service to the the segment... The target market we want it, but in the future, eventually, as underpinning, the transition in terms of domestic energy provision, which we need to make as a country if we're going to get somewhere near our net zero goals. And that concludes our formal remarks and gives us twenty five minutes to answer questions for investors. Nigel, Rupert, that's great. And thank you very much indeed for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the top right hand corner of your screen. But just while the team take a few moments to review those questions that were submitted already, I would like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard.

33:55 Nigel, Rupert, we did receive a number of pre submitted questions ahead of today's event. And as you can see in the q and a tab, we've also received a number of questions throughout your presentation this afternoon as well. So firstly, thank you to all of those on the call for taking the time to submit their questions. And, Rupert, Nigel, if I could just hand back to you to respond to those questions where it's appropriate to do so, and then I'll pick up from you at the end. Thank you. Thank you, Jake. We will absolutely start off from the top with the questions. So I'll just have a glass of water while my voice recovering. Right. So the first question is around seg payments to eligible customers. So seg is a scheme which followed the the feed in... The end of the feed in tariff, which requires that suppliers with a... I think it's over a 150,000 meter points offer an export rate to consumers. And so most larger suppliers do that. And by and

34:49 large, they offer a fairly low export rate. So it can be sort of $4.05 pence a kilowatt hour. GOOD ENERGY isn't that big, so it has no regulatory requirement to actually formally offer a SEG tariff. In fact, the presentation has just covered what we are doing in that market. So for customers who aren't in the feed in tariff scheme, we do have a new export tariff. It's called Power for Good. And as I said in the presentation, if you're on standard variable tariff supply with us, it will pay you 10p a kilowatt hour for its launch. We will review the rates we are paying on a quarterly basis, and our ambition is definitely to be paying one of the, if not the highest, export rates in the market for this category. So we have been slow to do this, and I'll go into the reasons for that shortly.

35:36 But nonetheless, we're now out in market with a new export product.

35:42 So that's the first question. The second question concerns off peak tariff, which is the questioner points out to us is something that would would be obviously beneficial to the core mission of the company, which is around helping people take control of, their role in combating climate change. And I can see, obviously, that the questioner has asked, us a couple of times about this. It is a source of regret to me that we've not been able to offer any sort of time of use tariff during the energy crisis, but it's important we are clear as to why, and there are two reasons for that. Firstly, in the early phases of the crisis where we saw huge volatility in wholesale energy costs, it was not financially prudent to do so. And I don't mean by that that we would make less profit. I mean that the additional cash we might have been risking spending looked too high. And that's really because we didn't fully understand quite how much consumption would shift into, say, the nighttime. And if we hadn't hedged particularly for those parts of the day, we might have been exposed to quite considerable short term energy costs, which would have been a strain on the company. So we took the decision to, remove those from sale early in the energy crisis. We were not, I should add, alone in doing that. It was very difficult to find a time of use tariff for lots of points during the energy crisis. More recently, the government's support schemes have also got in the way of offering a large number of time of use tariffs, and that was because quite often, those tariffs were not eligible for the energy

37:12 price guarantee scheme, which is really just a discount, on where the price cap is actually calculated to to get down to a level of charge to customers. So quite a lot of those tariffs weren't eligible for that. And we, again, chose not to launch them into that market. And also, frankly, the resources we would have needed to launch those tariffs would be taken up administering that government support, which is a prioritization I very much stand by given the, very high cost of energy through this winter. We now seem to be entering more stable waters, albeit waters that are, at higher levels than before. And provided we can get some assurance from Ofgem that, offering time of use tariffs fits with our price cap derogation for the the standard variable tariff.

37:57 This is something we aspire to offer from the half... The second half of the year onwards, initially focused on the markets I've just been talking about. So initially focused on electric vehicle drivers and heat pump operators. And certainly, by the time of next winter, I would hope that we would also be participating in the various demand reduction trials that are going on as we explore new ways to sort of take the stress points and the peak points out of the grid and therefore reduce our need to switch on gas and coal generation. So I apologize that the crisis has slowed us down in this area. It's not a strategic decision. It's an operational one, and we're looking to reverse it.

38:37 Third question, which is company's plans to reach net zeroes. When the annual report comes out, you will see quite comprehensive reporting on our progress against scientific targets in this area. As you'd imagine, given the business we're in, it is a clear focus for us. We have, green travel grants for employees. We operate a high... A fairly hybrid working situations that have reduced the amount of commuting the company does.

39:04 We, much as possible, work from an energy efficient business. So would hope that, those plans will be very clear when we publish the annual report. So pretty simple. The fourth question is again on the smart export guarantees scheme, and it's inconsistency with our encouragement of green energy. So, again, the only reason we have not launched a smart... Tariff under the official seg scheme is that we don't reach the qualifying hurdle. We've been slow to offer a new tariff, frankly, because we had to make some fixes to Kraken, our energy, customer management system to enable this tariff. And secondly, because quite a lot of the resources were tied up administering and implementing various government schemes over the course of last year, it wasn't my ambition to get this running from about q three last year. But as I've said, we're now in market with what I think is one of the best offers to exporters in the marketplace. I'm quite right too. That is GOOD ENERGY's roots, and it's certainly a direction we intend to carry on with. So one doesn't change people's minds on these questions immediately, but I hope the presentation and these answers show that this is not a company that's lost its way. Absolutely. It's very clear on what our priorities are. We just had to take various decisions to get us through the energy crisis.

40:26 Question from Brady. As a customer, as well as share of bond, I'd like to know what the difference is between the default tariff and the standard variable tariff. So that's a very easy question to answer at the moment. They are actually operating at the same... Precisely the same price point. The difference between the two is the standard variable tariff, is derogated from the price cap regime, which means that we are not bound by the same time windows in terms of moving that price up and down. And we need that flexibility

40:58 to back the 100% renewable stance because, unfortunately, the nature of renewable power is that... Is a bit more variable in its delivery. And at points of low generation, we may be forced into the wholesale market to cover the power position that we need to buy, and that brings additional expense from a standard way of operating an energy business. And that is what the SVT is designed to cover. You have to... Consumers have to opt in to the standard barrel tariff. That was part of the, agreement with Ofgem when it was, derogated from the price cap regime, which means that people who are on the default or deemed tariff are people who have either moved into a property, which we supply, so they've not chosen to opt into that tariff or have rolled off a fixed tariff and not opted to come onto the SVT. But we've been making the argument with our customers for the last few months that since the two tariffs are pretty much... Or in fact, entirely at the same price at the moment. There's never been a better time to support renewable generation than by coming onto the SVT at the moment. And we've seen a good amount of migration back onto that standard variable tariff product, which is our best level of service and our most flexible product.

42:05 John, how does the 795,000 customers quoted break down? Is the info... I mean, yes. It... I... When I present, I do tend to say, look. This... On one hand, it's quite a good rallying cry. On the second hand, it's not a very precise, measure, and it is ZapMap registered users plus supply customers plus generation customers plus services customers. That's an aggregation, the whole lot. I think the point I'm trying to get across in a simple way is that we see value in all of those business lines, and we see our growth coming less from adding supply customers and more from adding customers in those other areas.

42:44 Is the supply business growing? What is the plan for this side of business from John? So the... Do you wanna take this, Rupert? Yeah. Sure. So the supply business has been pretty static over the course of the last year in terms of in terms of volume. I touched on on gas volume, which is less about customers that we have and more about individual consumption trends during quite a warm period. On the business side, we have contracted the total number of business customer relationships that we have, but we are supplying more power to the customers that we still have. So we are tending to look towards slightly bigger portfolios, slightly larger consuming individual small businesses. We're not talking, as Nigel said, about big industrial users, but we have seen a shift towards those customers that use more power on average.

43:41 I think we will continue to see the trends that that describes. So in the business sector, I think we will probably still see a reduction in the total number of customers we have. I think it's gonna be quite a tough environment for small and medium sized businesses in particular, and I think we will look at that segment with care during the course of 2023. And then I think in... I I think as Nigel described in terms of what are the types of domestic customers that we would most like to have in the future, I don't think we necessarily want to have more domestic customers. I think we want to have a group of domestic customers that take a greater number of products from us, whether those be feed in tariff customers who also take a SVT supply with us, whether they be solar installation customers who are not in the feed in tariff scheme, but take power for good and a standard variable tariff from us. And those people that, as Nigel said, when we reintroduce some of the, products and services that link to the technologies you have within your home that we can provide specific tariffs to them. So I think that we will see

44:58 a bit of flux within that domestic customer base, but more towards the customers that have those multiproduct relationships and and and and business, I think I think just continuing the trend that we've seen over the course of the last year. Thank you. If that's something I'd add to that, it's a very full answer on that question. A technical question from Adrian on on newer heat pumps, and pointing out, obviously, that some of the issues with heat pump installation, which is it's it's not just about the heat source. It's about the plumbing through the house as well. So at the moment, we're not such a big operation that we kind of have the ability to command technologies. We we have an ongoing relationship with one of the major, manufacturers of, air sourced heat pumps, MEDEA, and they're... That's the technology we are installing.

45:49 We do seek... I mean, we have the capability and the surveys we do, obviously, also survey, you know, what other improvements to domestic plumbing are required to make a heat pump work effectively. So we are in the business, for example, of changing radiators. So on average, the team change about four radiators when they do an install as well as advising on installation. But there there may still be, at least in in this initial phase, some areas where we can't really help, unfortunately. But certainly, it's air source heat pump technology that we are, by and large, installing. Very quickly to Robert, ZapMap will have a presence at Fully Charged. And, you know, if if we've got plenty to say in terms of backing that with interesting tariff offers for electric vehicle drivers, I'm sure we'll manage to find a way of making our presence felt, but it'll be Zappac or the lead brand in the fully charged show.

46:40 A question from David, which, again, partly to spare my voice. Do wanna sort of Sorry. I can't read it. And read the highlights. The highlights are, well, a, thanking us, and indeed, a, yeah, a good year in challenging circumstances, which gives me a chance to thank, obviously, the GOOD ENERGY team through what has been a very difficult period for the energy market. But the question is about Octopus, do we think of them as a collaborator or as a competitor? How do you feel about Octopus Group? I feel pretty good about Octopus, actually. I think that we are a bit like David and Goliath in in some ways, but not in the not in the fighting way, don't I think, most of the time. So in terms of scale, I think that that they they they have a greater level of reach across a variety of opportunities, and they have a greater amount of capital. We we we have to choose where we place our investments and where we place our focus, I think, more rigorously. We collaborate with them very well around the core energy supply billing platform and the enhancements that we need to make to help us be able to sell, market, and operate the products and services that we choose to as well. And that's and that's something that... And that's something which we have a very sort of strong working relationship with. I think as well, they provide some

48:11 some noise in the same way as other big suppliers like the sort of Centrica's and the British Gas do to be able to bring customers to some of these technologies with marketing investments and expenditure, which we couldn't necessarily afford to do. So they are obviously a competitor. I see ourselves operating in in different spaces. So for the heat pump, they are very much looking at a sort of mass market one size fit all approach. I think we will be looking at at a very different type of market segment, but the the energy and the interest that some of those bigger suppliers bring, I think, is very helpful to us and to the customers that we look to introduce the service to.

49:04 Thank you, Rupert. Question from John, which I'd like to take here, which is around our interactions with the regulators of GEM over the course of the last year and its impact on the brand of the business and what we should expect in the future. So, John, first, just to clarify a couple of points there. We we did have a case against us from Ofgem on our administration of the feed in tariff scheme. So we particularly had levied a second charge against multisite generators through the feed in tariff scheme. That was something we've been doing since 2015. They've been audited annually by Ofgem. So our assumption was that they've been approved of by Ofgem. But then, we've... It came up during a...

49:50 From a customer complaint. We obviously complied fully with an investigation of it, and we ended up, paying a recompense to those customers who were affected. Those customers were overcharged, whether they were still with us or not, and making a recompense payment to Ofgem and to to then close down the matter. It wasn't particularly a fine. And I think we would say we, you know, had a different understanding of what were fairly opaque rules, which we thought Ofgem had approved for us. On the second point, we haven't been fined. Ofgem is conducting a series of market compliance reviews, MCRs, they're called, on various aspects of the supply business in response to the failure of 16 suppliers over the course of two thousand and one two, focusing on different areas of the business. And and one of them, we were... Which was our treatment of vulnerable customers, That process felt that we showed severe weaknesses.

50:43 And and, again, another one, again, in our processing of direct debits that they felt that our processes showed weaknesses. We've done... There were no fines or sanctions against us of any of any kind. We have responded in both cases to Ofgem and, put in place the policies and procedures that they were looking for that that were missing. I have been public in my criticism of this process. I want to reiterate that. What happens is that every two weeks or three weeks, we're sent a spreadsheet with a series of, answers to give, which focuses very heavily on process and procedure and flow diagrams and a lot of inputs, but does not focus on or analyze the outputs for our...

51:28 Or the end product for our customers. So for example, we were, dot points, if you like, for our failure to provide verbatim training scripts for our new joiners. We can absolutely show the training materials. We can show the testing we do at the end of the training process to check that, new members of the team have understood the job, but we don't actually train to scripts because it's a bad way of training people. Yet, in Ofgem's view, we needed to have those scripts that we've written the scripts.

51:56 Similarly, in the treatment of vulnerable customers, we were missing some sort of policy documents and process documents. Actually, at the same time, ENERGY UK and the Citizens Advice Bureau passed us with flying colors for their voluntary scheme on the treatment of vulnerable customers. And I would sort of question the veracity of that process when you note that British Gas were one of the highest rated providers in that particular MCR on vulnerable customers. And yet three weeks later, we're in the pages of the Times newspaper because their agents were forcing entry to vulnerable customers' homes to install smart meters on some sort of incentive scheme to get as many done as possible. So I'm... Whilst I understand the intent fully, I don't think the process they're following in those areas is a good one. I would say that our overall measure of customer service and our main yardstick is Trustpilot.

52:51 We have a Trustpilot score of 4.7 at the moment, which is getting us into the five star service category. We are therefore with Octopus deemed by the broadest possible cross section of consumers to offer the best customer service of any energy supplier in the market. And that is actually a target we set our team as part of the incentive scheme at GOOD ENERGY. So I think we're doing a good job there. We can improve in certain areas, and we will do. And mercifully, happily, there's no indication from any of our brand surveys that there's, there's been any long term damage done to the brand. I think we can expect more of this kind of, activity,

53:29 in the future as a regulator, rather like in financial services, looks to show that it's operating at tougher regulatory regime in the aftermath of a crisis. And so the other step we've taken is to increase our investment in compliance and other, roles which will support, avoiding these things in the future. Full answer, but important area for the team, I know, and for our customers and shareholders. Vivek has a question on debt from domestic and consumer... Domestic and business consumers in the energy supply business. Do wanna give us some commentary on debt? Yep. No. So I think that it is a focus area of all energy suppliers and one which, particularly with the very sharp rises in commodity prices, is one that I think would have concerned most energy companies in terms of the outcomes, both for the business and for their consumers, whether they be domestic or commercial enterprises.

54:31 Over the course of this winter, we haven't seen a deterioration in our debt collection or cash collection trends. As I said, there has been a proportion, a sort of top slice, really, of those very high bills has been paid by

54:49 the government over the course of the winter. And it has obviously taken the sort of sting out of what would have been a very serious situation, I think, for a substantial proportion of homes and businesses. Again, I highlighted in the presentation, the the government support schemes are being withdrawn pretty quickly, probably most notably in the business sector. It's it's really pretty much fallen off a cliff, whereas the the domestic scheme is on a little bit of a gentler trajectory in terms of support withdrawal. So, again, I was I was I was touching on those sort of SME customers in particular. I think we could see some challenges in 2023.

55:39 The overall quality of our customer base in terms of people making those choices to pay what has historically been a a small premium for our products has generally drawn people who are, therefore, slightly more affluent and businesses, which are very high quality businesses that are choosing to make that

56:01 supply chain chain... Green supply chain choice. So I think we will be affected relatively less than other suppliers, but I think it will have an impact. The thing which the thing which we... Which Nigel touched on again there around prepayment customers and prepayment meter installation and prepayment warrant processes. Although we have a very small proportion of customers who are actually on those smart prepay schemes, I think that the longer some of the uncertainty goes on in that space, then there is a risk that there is a sort of... There is less sanction for a large proportion of bill payers, and that may have a impact.

56:49 But I think that... I think we'll wait and see. Right. Thank you, Rupert. Question for John on Telecom Plus. So we don't have a relationship with Telecom Plus, but obviously, as we expand these services, we'll be looking for partnerships all around. You you are making... Pointing out in asking about geography and how do we cross sell, an interesting point. So I did put up a map of the whole of The UK just to show how much demand we have for solar panels. In fact, when we market the services, we will be marketing in a very sort of geographically contained way because there's a there's a limited radius within which we can install for now. So those those are geographically targeted marketing campaigns. As we look to expand that area, the interesting area... Idea is can you find businesses and services who are based in the next region almost so that you can begin to expand in a rational way so you're never too far away from your warehousing or the the amount of time that your installers have to spend on the road is reduced. And that's sort of... Is a guiding principle as we look to expand to those areas. It'll be a question of sort of finding contiguous areas and expanding like that as opposed to trying to run around the country for... To fulfill that demand.

58:03 In answer to Jack's question about our moat, and if you're not familiar with this kind of terminology, it's basically what is our sort of defensible competitive advantage as a company. I would say our moat consists of very long lasting and very sticky relationships with very committed customers. We see that in the feed in tariff and indeed in our domestic supply business. People stay with GOOD ENERGY for an awful lot longer than they do with the average energy supplier. I see a source of emote in our brand and renewable generation expertise. We are repeatedly considered one of the greenest energy companies in The UK, and that allows us to appeal to the demographic who... For whom this is an important consideration. And we've built up a considerable history of of high quality execution in that area.

58:52 And ZapMap adds to that, mate, I think, because it gives us a fantastic reach amongst electric vehicle drivers with very little to no cost of customer acquisition. So between the the... All of our interests, we're sitting on, as I said, nearly 800,000 homes and businesses

59:08 with an interest in green technologies and green generation, some sort of service from us, and we now have a products... A set of products and services that we can increasingly offer to them to sort of fill out their adoption of green technologies as the energy transition carries... Gathers pace. Question from Clive, which is around, smart metering and and matching supply and demand and reducing the need for fossil fuel generation. I think it's a very key point, Clive, and that's one of the reasons we've been keen to promote smart meters. And you can see some of... So, ideally, yes. So either because we know from data that the new technologies we're trying to get people to adopt will lead to different consumption patterns, and over time, energy generation will be planned differently. Or secondly, because we can incentivize people and hopefully increasingly automate sort of time of use behavior, so you're encouraging people not to switch the washing machine on when they get home first thing in the evening to try and reduce peak loads. And if we can reduce those peak loads, then, yes, there's every sense that we can reduce the need for so much gas and sometimes in the last month, coal generation capacity in The UK to meet that peak demand. And that's that's sort of demand alteration.

1:00:22 And I'm very carefully not using the word rationing. It's not about rationing. It's about nudges

1:00:27 and incentives to to smooth out demand can play a very important part in the greening of Britain's energy grid. And, you know, with our smart base and the interest of our consumers, I would hope that we're able to play more and more a part in that. And certainly, our ambition, not then in this winter, but for next winter is to play a part in the various demand side reduction trials that have been going on through this winter with National Grid. And I think bringing us up to the hour, apart from the else, John, thank you for the compliments on Rupert and my answers. And I think, Jake and Mark, that probably concludes what we've got time for. Nigel, Rupert, absolutely. And thank you very much indeed for being so generous of your time then addressing every single question that came in from investors this afternoon. Nigel, just before redirecting those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments to wrap up with, that would be great.

1:01:18 Thank you, Jake. I I would conclude by saying, certainly, to shareholders, also customers on this call, to... By thanking them for their support through what has been an extraordinarily difficult period for the energy industry. We certainly seek to minimize, the need to increase our prices. And in fact, the p and l we've released shows that, you know, our revenue went up at a very high rate because of price increases, but that was driven by even higher rates of cost increase. And over time, I hope we can campaign to change the nature of the energy market in The UK to to bring more cost advantage to you as consumers. But for now, thank you for your support for the business. I do think that 2022, despite the headwinds, has been an extraordinarily important year for GOOD ENERGY in terms of the transformation of the business towards the future as an energy services provider.

1:02:14 And, hopefully, in the course of the last hour, we've given you a lot of evidence as to why we have both the wherewithal and the plans to continue building on that position. Thank you for your support and indeed for your questions, this afternoon. Nigel, that's great. And Rupert as well, thank you once again for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can better understand your views and expectations? This won't take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of GOOD ENERGY GROUP PLC, we would like to thank you for attending today's presentation. That now concludes today's session, so good afternoon to you all.