Good Energy Group (GOOD) — Preliminary results - year ended 2023

0:01 Good afternoon, ladies and gentlemen. 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 can review all questions submitted today, we'll publish those responses where it's appropriate to do so on the investor meet company platform. And before we begin, I would just like

0:32 to submit the following poll. And if you'd give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from GOOD ENERGY GROUP PLC. Nigel, good afternoon, sir. Good afternoon, Jake. Thank you very much, and a very good afternoon to everybody who's joined the call today. As usual, I'm joined by Rupert Sanderson, GOOD ENERGY's chief financial officer. And to give you a sense for what we'll take you through and the length you should expect us to run for, after a few opening words from me, I'll hand over to Rupert to walk through our preliminary results for 2023, then I will update you on the progress in terms of our strategy, but in terms of what we saw last year and what we're expected to do this year, and that should leave some time for questions at the end of the meeting.

1:23 And I think if I wanted to get one message across today, it is that 2023 was a year of transformation, really, for GOOD ENERGY, and the business is now a very different one from the one it was, say, two or three years ago and really cemented by the last year. And I say that on three fronts, really. The first is that it is a year where we have posted a very strong

1:50 financial performance. So our profit is ahead of market expectations. Our balance sheet remains strong, and that is despite a significant amount of investment in the future of the business through the year. So we've had a strong year financially. Perhaps equally importantly or more importantly, we have also shown that we can really accelerate with our strategy of becoming an energy services provider, and we've seen that on two areas, really. First is, for the first time, we have seen a series of new tariffs services, particularly for our core microgenerator market, be launched and reached significant scale, and that is gratifying to see. And secondly, through the three acquisitions we've made over the last twelve months, we have developed a considerable now footprint for heat pump and particularly solar and storage installation across the South Of England, which we think gives us a fantastic opportunity both to deliver on GOOD ENERGY's founding vision, really, around decentralizing people's energy usage and putting an element of the fight against climate change into their own hands, but also in achieving significant returns for our shareholders in the future.

3:10 So each of these things we'll explore in a bit more detail as we go through today, but I'm gonna hand over Rupert... To Rupert now to take you through the financial performance. Thank you, Nigel. So let me just summarize the the key financial headlines of the year. So so starting with the P and L account, the key message here, as Nigel outlined, is very strong growth in operating profits year on year. And there are a couple of points at play here. The first the first starting at the top of p and l, the revenue line is actually substantially unchanged over the course of the year, reflects the very steep growth in commodity prices in the second half of twenty twenty two, and then an equally steep decline in commodity prices as we have gone through the year of 2023.

4:01 In 2024, we'll actually see the decline in revenue continue because commodity prices are now under half where they were probably twelve to eighteen months ago, and that reflects the falling commodity costs. So revenues will follow that in 2024. We're already seeing some of our business contracts repricing, and we've announced a very significant reduction in our standard variable tariff for domestic consumers effective the April 1. But the main driver of the performance in 2023 was the the impact of hedging a number of commodity costs in that very high price environment well ahead of time. So we had an... For those of you who are on the call in September, we talked about the benefits we got from hedging the q one power and gas much earlier in 2022.

4:54 So we had a benefit of that in the first half of the year, and that has followed through to the full year. So we see a very strong increase in gross profit year on year. We have, though, continued to invest, and we'll touch on some of the acquisitions we've made. So our operating costs have have gone up. Approximately half of that relates to the resources and the other costs we actually have within our installation services businesses now that we didn't have a year ago. And then half relates to some of the costs within the energy business around debt provisioning and around some of the regulatory costs that, again, we saw in the first half of twenty twenty three. But the the the the key driver here is that operating profit line, which has really bolstered the whole of the 2023 year in terms of year on year performance.

5:45 I click on, please, Nigel. We can just see that in this outline, and we go through this graph in most of these presentations because it tells a little bit of the story of some of the the major movements. Obviously, we report our profit before tax, and that included last year a very significant revaluation gain from the ZapMap fundraising that we completed in 2022. So our reported profits in 2022 were actually higher than our reported profits in 2023, although about 80 to 85% of that related to that one off accounting gain. So twenty twenty two's underlying profit performance was only a little over £1,000,000, and that's what we're really comparing in terms of the performance in 2023, which is much closer to £6,000,000 on a profit before tax basis.

6:41 And the two or three main drivers in that, and we've touched on some of those already. So volume reductions, this principally is a result of customers reducing their consumption in a high price environment and in a energy saving environment, and then some planned reductions in some of our commercial portfolio where we continue to focus on the sectors... Segments most closely aligned with our strategy going forward.

7:08 And then we see the very significant profit driver, which is the phasing from this extraordinary commodity and pricing cycle that we've seen over the course of the last eighteen to twenty four months, which is now unwound as we go into 2024. And as Nigel said, that £5,700,000 worth of profit that we have reported in 2023 is ahead of the guidance we issued in November 2023. And I just go on to cash. So the cash performance again has been very strong. We've had two or three years now where our collections experience on our customer debt has been very, very strong, and this has continued in 2023. Our operating cash flow is almost double our profit before tax. So... Which is which is quite unusual in itself. There's a couple of items within that. Obviously, we have converted our profitability into cash through those strong collections.

8:06 We also have a loss from the ZapMap business, which is a noncash item. And we've successfully released over £2,500,000 of cash that was tied up in security deposits lodged during the energy crisis, and so that is now available for us to use. So £5,700,000 worth of profit, but we've generated operating cash flows of £12,000,000. Very pleasing result. Working capital movement is a favorable £8,800,000, but I will call this out specifically. This almost wholly relates to an increase in customer credit balances during the course of the year. The industry as a whole has seen this characteristic.

8:51 It's a combination of the rapidly falling tariffs in 2023 and customers reducing their consumption. We're taking very active steps now. We've both released functionality on the app for customers to self serve and request that credit back, and we are taking a much more proactive stance of contacting customers and paying paying them back even when they haven't requested in order to get that into a more normal state because it has risen quite sharply over the course of the year, and we expect it to produce quite sharply during the first half of this year. We've continued to invest in growth. So we've now made three acquisitions over the course of the last sixteen to seventeen months.

9:42 And in 2023, we completed the acquisition of Wessex Eco, and that was an initial investment of £2,500,000. And we've continued to invest in resources and growth of both heat and solar businesses during the course of 2023. So just in summary, in terms of our overall cash position, we are... We... Our cash and cash equivalents on a reported basis have risen by over £16,000,000 over the course of the year to £41,000,000, notwithstanding that increase in credit balances I touched on. We, in addition, have just under £6,000,000 of security deposits, so we do still need to launch some funds with trading counterparties, some funds with industry participants, and we still hold a small amount of funds on behalf of the government support schemes, which either needs to be finally distributed to consumers or returned to the government's reconciliations over that usage over those periods concludes over the course of the next couple of months.

10:51 And then I've got one final summary, which I think is just in in terms of sort of overall financial standing of the company. The business remains very well capitalized. It's substantially debt free and available cash of more than £20,000,000 when you look at the credit balances and the remaining bond that we have. We have invested at the start of 2024, and we purchased JPS renewables. A number of you have seen that announcement expanding our energy services footprint across the South Of England. We funded that with mixture of cash and the vendor placing, which is really sort of combination of retaining cash for future growth. It's not all of that 20,000,000 is available to use. We need working capital and risk capital within the within the business, but also the vendor placing to increase the overall liquidity in our in our stock alongside an accretive transaction. So that was the that was the balance of cash and equity that we used for the JPS transaction.

12:05 As we go through some of these meetings in 2024, what was gonna start to talk about the business in a different way in terms of this financial segmentation. Having having bought the three installation services businesses, they're obviously increasing in scale. They have got growth potential in revenues and profits, and we're gonna change the way that we report our business externally, internally into investors. So we are going to split out the energy supply, import and export activities and report that as one segment. And then the second segment should be around the installation businesses and our feed and tariff administration business search. Should be much clearer in terms of the growth and the change of our business as we move increasingly towards a service led business.

12:57 Finally, on the back of the very strong performance in 2023, we have proposed a final dividend of 2.25p, which in addition to the interim dividend, which we paid of 1p back in the autumn, would make a full year dividend of 3.25p, so increase in return to shareholders over the course of the previous year in terms of dividend payments of a little under 20%. And with that, I will hand back to Nigel. Thank you, Rufus. So we're gonna now just look in the company's strategy and try and gauge our progress during the year. Just as a reminder, two years ago, we sold our generating assets. We sold them because we... They supplied a minority of the power that we supplied and because selling them would give us a much stronger balance sheet and give us capital to invest in the future growth of the company.

13:54 And we have begun to do that in anger over the last couple of years in trying to build an energy service proposition that sits alongside our commitment to renewable supply and working with renewable generators will enable us to help far more people into the future, decentralize their energy generation, use new green technologies, and we think helps us build a business that both delivers on our mission, but also helps build a strong and reliable return for our investors. So let's take the macro view first, if you like. A few slides... Three slides on this. The message I have here is less the data, which will come into a bit, but more actually just to reflect that the nature of energy supply and energy consumption in The UK is gonna change quite radically over the next five to ten years. And it is gonna change because both high energy costs, consumer demand, and either policy or consumer interest in greening our energy grid or consumption energy will be a strong driver of it. And we're moving towards a world where a lot more people will have solar and storage because it'd be easy for them to install and run their energy that way. And a lot more people will have air source heat pumps because that is the only credible replacement for gas boilers if we're gonna get anywhere near our net zero targets.

15:20 And you certainly see that reflected in the expectations of marketplace growth, which is one of the reasons why we have invested behind solar storage and heat. The solar market is more developed in The UK. It's worth about £1,900,000,000 in the year we're talking about. That marks considerable growth on 2022, and that is really because high energy costs and consumer interest in this has driven it to that place along, frankly, with the fact that it is a much better product now than it was, say, ten to fifteen years ago. It's controllable, easy to use.

15:53 We're anticipating that that growth continues. So if we are to get anywhere near our government climate goals, we need a significant increase on the approximately 8% of UK households... Eligible households. We have solar panels at the moment, and that's like... Is a fuel market growth at least 10% a year. It's taken to about a £4,600,000,000 market by the end of the decade. So substantial structural growth in terms of solar power and

16:19 storage. And heat pumps are also, we think, a growth market. There was a lot of press about this particular heating technology, perhaps surprisingly. First thing to stress is that there has been growth in heat pump installation the last year, growing by about 20%, about 35,000 installations. That is despite significant amounts of misinformation about the performance of heat pumps and a significant campaign from certain people with vested interest in boilers and heating and gas pipelines to persuade the country to stay on other technologies. But there is evidence of underlying consumer demand. I think the government's subsidy package is helping, so that moved up to £7,500 from £5,000 in the autumn. So we have seen some demand.

17:05 However, this has to move considerably if we are to get anywhere near national targets for SLC hub installations, which sits around the 600,000 level. So... And we're expecting more stimulus, hopefully, clearer planning regime, more promotion, drive growth there. So, again, it's another structural growth market that we are investing on.

17:28 So if that's an economist's view of it, sort of, you know, what is it like for the consumer? We we touched on this before, but it was worth reiterating. It was our home of the future, if you like, how we play with it. So electric vehicles are often the first force of call for people adopting green technologies, and there are about 1,400,000 electric vehicles and hybrids on the road in The UK now. We're obviously very significant players in the EV market either through ZapMap, touch on later, or through offering an increasing amount of specialist tariffs for EV drivers. The next quarter, we'll be launching further EV tariffs with ZapMap bundle in them, for example. We're also interested in the EV market because once people have EVs, they're much more likely to want to install solar panels. They obviously didn't... Their electricity consumption has increased significantly.

18:21 And and, in fact,

18:23 ZapMap's own survey data was just that they are seven times more likely to want to install solar. So ZapMap gives us a pool of people to market to. They're in the relevant area of the country where we can do that installation. We obviously have services to both install solar, but also to give you the wherewithal to run that installation. It's something to get paid for any exports we're doing, and we anticipate developing further on that. If people are making energy transition with their homes, then heating is the other category. That's why we've chosen to become... To acquire... To develop a heat pump installation business. Talk a bit later about how... Where in the market that is focused. We have a very capable heat pump installation business, which does full service jobs that will also make those reasons to a domestic heating system if that is required.

19:12 And we monitor those heat pumps up, but they've gone in, and we're very confident.

19:16 We actually have a university working with us on this. It's been showing that we have about a fourfold increase in energy efficiency over gas boilers from our heat pump customers. And then lastly, and this is where the supply business may well become relevant... More relevant again. Increasingly, we're going to want to consume electricity in a more flexible way, especially when our homes are entirely electrically driven. And that will mean being able to deliver flexibility, being able to

19:42 offer people cheaper electricity in off peak parts of the day, make intelligent choices around when you're generating power, when you're exporting power, when you're storing power. And we have some nice investments in this area, capabilities to do more, and we'll be doing more over the course of the next winter. GOOD ENERGY is well positioned for the emerging nature of the energy market in The UK. I want to stress that point, maybe having talked about the economic point of view and the customer's point of view from the businesses point of view, we are investing to deliver a GOOD ENERGY branded proposition really across the run of services here. So we can supply an absolutely very proud of our supply of genuinely renewable power with very high quality service behind it. We can increasingly install new technologies and give people the tools and the wherewithal to keep running.

20:37 And that is vital service, I think, for people who want to make the energy transition. There's also an important service thinking about our business and our ability not just to be paid for one off fees for those installation jobs, which is the bottom line there. But, actually, also because it enables us to tap into further and recurring streams of revenue as we, for example, buy export power from solar generators who can store panels, or we work with people with batteries to develop flexible solutions, or we offer maintenance factors for heat pumps once we've installed

21:12 So over time, you will see GOOD ENERGY having deeper and longer lasting relationships with its customers. They're already pretty sticky. They have many energy supply businesses, frankly, because of the suite of products we offer. And we've got some early data to suggest this is the case. So in the solar installation where we've been doing about 20% of the people we install for take supply and export services from us in about 40% of the heat pump. As soon as we service here, take it. So early indications that we can make. I'm gonna take you to those areas of the business in turn. Let's start with the supply business. It's worth reminding ourselves actually that The UK's energy supply market has reconsolidated.

22:00 So we had a big six, start of the last decade that was deemed to be problematic or deemed to be sleepy incumbents offering high prices and poor service, and so much reform was pushed through to further... So we've increased competition into that marketplace. As you all know, some of you may well have been customers of some of these suppliers. In the end, the energy crisis rather did for that approach, and we ended up with a big six again. We're not part of that, but it does mean that we have to maintain a very differentiated position if our business is going to flourish, and that, I think, is what we are achieving in the supply market. We are still one of only three suppliers derogated from Ofgem's price cap regime because of the level of commitment we have to The UK's renewable generators. In other words, obviously, in terms of working with smaller scale and decentralized generation of bringing them into the energy.

22:55 So how do we know it's been a reasonably successful year? Well, we remain recognized by bodies as one of the greenest, not the greenest energy supplier in the country, which the consumer association for three years running, for example, has placed us as a top eco provider in its league table. And our tariffs are regularly called out as the gold standard or green by the likes of you switch on the screen there. All good housekeeping. So our sourcing and our proposition remains strong. It is underpinned by high service standards, and we use Trustpilot as our main tool of measurement for that, and I'm happy to say and very grateful for the team working on this to say that only we and one other supplier to my knowledge are rated five star operators on Trustpilot by our customers.

23:47 And it's not an accident and is the result of significant investments in systems, adopting Kraken from Opsys Energy in Italy, and in training of our people. And I'm very grateful for the effort that goes in to serving our customers as well as we can. So we have a differentiated proposition. We have differentiated service standards, and we're extending that into the business market as well. So one of the bones of contention, and we've certainly raised it a few times, is the nature of green tariff labeling and whether buying certificates in the marketplace means somebody could call themselves green. We don't think that's a strong enough signal. We much prefer to suggest that people should be able to show over time how much they can match against renewables. And we are actually the first supplier in the business market to be able to offer business customers an hourly matching solution while they can measure what proportion of their energy supply in a given hour is coming from renewables.

24:43 It's a standard that got a lot of interest at the last COP, and people like Google are interested in adopting, and I'm very proud to say that GOOD ENERGY is the first supplier in The UK business market, enabling customers to look at us in this way. So we continue to maintain a direct... A strong and differentiated supply business.

25:03 We've added to this. And the first place we've added to this is in solar panel installation. Usually, these are solar and storage, about 80% of the jobs we do have a battery in them as well. And one of the questions I'm occasionally asked is, well, isn't this actually a very difficult market to compete in? Isn't it full of very low barriers to entry and one where a lot of single operators can, you know, buy equipment and and and start to do domestic jobs?

25:29 And that is the case, and it's also the case that some of the larger suppliers are trying to scale up their own propositions in this marketplace. And in keeping with our supply proposition, the two businesses we've worked... We've bought, which are shown on that scatter plot there, are working on a higher average system sizes, so bigger roofs are complex jobs, and therefore, more expensive jobs. And that is very deliberate positioning in our part. We are targeting a high service, high quality installation rates. We don't use

26:03 agency labor. For example, we try to even take control of our scaffolding, what we can do on these jobs, and that is reflected in the very strong trusted trader type ratings these businesses get, five stars with them, and reflects in fact we're running what we think is a differentiated proposition, much more in keeping with our supply heritage and one that can therefore maintain a margin of about 30% of the gross profit level when others may be below that because they're chasing high volume. We're not doing that. We are a specialist, and the firms that we bought and are beginning to come under the GOOD ENERGY umbrella are specialists, and we're very pleased with the work that they do. The same point applies in the heat pump market, albeit with slightly less data. So the panel installation market, as an aside, is very well served with market data since we're east to figure out where you are. But the heat business we have is similarly focused on larger and higher quality jobs. It's a full service offering.

27:02 So we change on average four radiators, for example. Each of the installs we do to make them bigger and work better with heat pumps. Our warranty levels are very high. Our monitoring is constant after the heat pump goes in, which is why we can stand behind the four times the efficiency, the gas boiler rating that we've got there, calls out there, and we're tending to do slightly larger systems, slightly larger jobs than the industry margin, which again means that we aspire to maintain a margin of the order of 30%, it's about 28% in the last year. And, again, we aspire to serve a target market, which is very similar in nature to good energy supply access. So those are the installation businesses and the...

27:48 And and where they're positioned and what they're doing. The other thing we do in the heritage, of course, is providing services to people who have this equipment installed. A feed in tariff scheme was something that GOOD ENERGY played a very large part in creating the first place for example. And last year was a very important year for innovating for those customers and launching new products. So for the fixed market, we launched what we call smart export that uses smart meter data to pay Google on their actually actual export volumes, not on an assumed amount, which for most fixed customers means an increase in their payments. It's also a unique proposition in that marketplace and one in which I would hope to take market share from here now that it has launched at scale.

28:34 For the nonfit customers, for the people who have come on to solar in more recent years, our solar savings products offer industry leading rates for exporters. We're paying moment 15p up to 20p a kilowatt hour if somebody installs with us for those customers as So we're making waves in the microgeneration market in that way. And we have, like, a number of suppliers, put a foot foot into the waters of demand flexibility. Our power course product was taken up by several thousand customers over the winter. We have been reducing their consumption at the points in which national grid offer an incentive to do so. That won't change the world economically this year, but it does give us a sense that for a sub... A segment of our audience, there is an interest in flexibility, which we will go on to develop further.

29:21 Smart meters are the enabling technology behind this, and our smart meter count is sitting at 46,000 meters. They were recently recently installed, so most of them are two. It's more performance meters, and we continue to try and build on that number. So where do we go this year? What should customers and shareholders expect to see us doing next? Well, partly over the last year, we have made considerable improvements to our digital products and services. So we now have much easier business to engage with on our app, for example. And one of the things Rupert referenced there, which is paying back customers whose credit balances got too high, you can now go onto the app and request credit balance and self serve in that area. So we've got some further improvements to our operational efficiency there. We certainly don't object to customers calling us. We have a very good service on the phone, but for many people, it's more convenient not to.

30:15 They prefer to deal by email or through an app, and we are developing further to make sure people can get the services they need.

30:23 I'd expect further innovation on the tariff side after a year... Couple of years, frankly, are being largely frozen. The supply market is seeing a bit more movement and development of new tariffs, I will be focusing on tariffs for electric vehicle drivers and micro generators as we go into this quarter, and we'll further be building out our propositions for heat pump owners offering maintenance and servicing plans for for those customers. And then in the background, this is unlikely to be very visible for some of this year. We are continuing to invest behind the flexible feature, and that means beginning to be able to adopt elective half hourly settlements to use the jargon, but, basically, that means allow domestic customers to work in the way that business customers have traditionally worked where... Because energy is priced, bought, sold on the market on a half hourly basis, you're aligning their cons... Billing and consumption with that.

31:16 They can begin to take advantage of periods of cheaper power more so when they've got their own battery or cars to store the power in or their own generation. That's an important part of our future. So we have, I think, shown ourselves to have a good track record, a good pipeline of innovation in terms of the services and tariffs we provide people who have installed green technologies.

31:42 Selling this is important. It's funny to talk about this really because for a couple of years, many energy companies haven't had much to say publicly, and most of their dialogue with their customers has been around the market crisis or government support schemes. We are making fast strides to make sure we can sell and market our new propositions, And part of that means bringing all of the businesses we have acquired recently under the GOOD ENERGY brand, something that the management team supports entirely, by the way. So over the course of the first half of this year, everything we do

32:12 will be branded clearly as GOOD ENERGY. And if you live in some parts of the country where we have teams who could do the installation work as well as we can reach with supply and export services, you will see an increasing amount of advertising, be it out of home, radio, direct mail, targeted digital advertising. See See some examples of it there. All of which are aimed at cementing the fact that we have both a deep green proposition, but also an energy services proposition to help people make the energy transition.

32:45 And the last side of that transition, one we have been investing in for a while is, of course, greening of transportation. And and for us, that predominantly comes to our investment in ZapMap where we are the 49 holder of the shares at the moment. I thought I'd bring a couple of thoughts on ZapMap to our investors here. First is actually how they think of themselves and how I think of the business, which is increasingly ZapMap is a data.

33:10 It takes data, some of which is public, most of which is hard to find and very difficult to build from either charge points or from drivers or from users themselves. And in the... ZapMap then cleans and verifies that data, then builds products on the back. And it builds builds three products... Three areas of products. It's built and improved its own app for ZapMap for electric vehicle drivers. We'll touch on the data on that in a minute, but it remains the best way to plan and pay for your charging in The UK market. ZapMath Spark is an API to feed all that data, so we can license other people to build their own digital products. It's a fleet call, the fuel company, use it to power their electric vehicle fleet services, and we have signed agreements or about to sign agreements with parking operators and other commercial fleet operators to do likewise.

34:07 And then finally, ZapMap Insights is actually the sale of data generated by the app back to the electric vehicle marketplace. Excuse me one second. And the reason we're investing, a reminder at bottom, the EV market is very much at its start as they replace the internal combustion engine cars, ICE cars, as they're called. We should expect significant numbers of electric vehicles, charge points. That is all a market for that matter to play. And so all the more so that say that it has, in the course of last year, launched its mapping internationally. So you can now drive from London to Leon as much as you could from London to Leeds using ZapMap to plan your journey. A bit of an insight into how that business is going.

34:54 Some of the numbers are on the right hand side there. So there are about 1,600,000. I think it's 1,400,000. Drivers of some form of battery powered car on the roads in The UK. ZapMap has been downloaded 1,400,000 times. And as you can see there, won't read them out. Very significant proportions of the particular battery electric vehicle park are registered users and monthly users of ZapMap. Couple of things I would call out. They've done a lot of work during the course of this year to improve the usability and functionality within their app. So I think as a search tool, it's working very well now. As a payment tool, We've got 25% of the public charge points in The UK. So they continue to develop ZapMap very well indeed.

35:41 And as we've said before, we're in the midst of a fundraising round for ZapMap series b, which I expect our updates on during the course of the next quarter.

35:52 By way of concluding, and those who've been following us for a while may remember, one of the ways in which we signaled our change of strategy and our change of direction a couple of years ago was to talk about a target we had in mind, which is say that we were helping... Hoping to help a million people, a million homes and businesses cut carbon from their energy and transport use by 2025. And, you know, we absolutely included ZapMat in that. We wanted to really talk about the fact that ZapMap is an important part of our story. I'm happy to say that both the stability in our supply business, additional customers for installation, and ZapMap's growth means that we've hit that target a year early. GOOD ENERGY is now touching more people than ever before in terms of delivering on its mission to combat climate change.

36:40 And with that, Jake, I'll hand back to you. Perfect. That's great. Nigel, Rupert, 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 right hand corner of your screen. But just while the company takes 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. Rupert and Nigel, as you can see, we obviously received a number of presubmitted questions ahead of today's event. And 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 Nigel, Rupert, if I may just hand back to you to read out those questions and give your responses where it's appropriate to do so, then and I'll pick up from you at the end. Thank you. Thank you, Jake. So I think what we'll do is I will act as question summarizer and read them out or at least summarize them if they're quite long. And then either I'll answer them myself, or I'll hand over to Lucas to answer them. I'm course, the people on the call maybe can't see the questions, so we will sort of give the details of quite clearly.

37:44 So the first one, which is pre submitted, is to ask for the reason the reason for the jump in return on capital employees over 20% for 2022 and forty seven percent TTM when it was the sing... In single digits prior to that. Is this the new normal? Or... And how will... And and if so, how will it remain sustainable? So really a question on our return on assets. Yep. So I'm trying to. Rupert, do want to take Yeah. So thank you for the question. And the the shape of the capital structure of the business has changed quite substantially over the course of the last couple of years, and that's really the fundamental reason for the change in the... With this returns profile. So having sold the generation assets in early twenty twenty two, we have become a substantially asset light business in terms of return profile we will get.

38:37 And we're increasingly investing into services businesses, services installation businesses, which don't require an awful lot of capital apart from the upfront investment that we are making into them or as they grow just in terms of development of the... And rollout of those services. So I think it is the new normal, and I think that it should be sustainable in terms of us being able to operate those services business on a profitable basis and without recourse to a substantial amount of incremental capital. Thank you. Yeah. I'm gonna emphasize the point here. I'm glad you've noticed the list because that is a sign that our strategy has been in to deliver, and that was the intention behind it.

39:21 So there are two questions now which are pretty close to you. So I shall summarize them both, and they're both about Ripple Energy, business we know well for the people who aren't aware of Ripple are effectively crowdsourcing for the construction of initially wind and solar assets, and then they have a proposition where with one or two suppliers, you can effectively see discounts off your bill for the productivity of your... The asset you've helped... You chipped in to build from it. And I... And and the questions basically are are we interested in incorporating Ripple into our own offering? And I think there's two answers. This is actually... First off, yes, we're very aware of Ripple, very supportive of what Sarah and her team are doing, and it's certainly something we are considering. I think, yes, since we also serve green minded consumers, there's a natural fit there. The one that is a caution I would have is this. We are actually, of course, doing slightly different things. Ripple are building new generation assets.

40:20 We are trying to help people decentralize their energy consumption entirely and do more of it themselves. So there's a slight competition, but there is a difference in proposition there. Ripple is in our product backlog. Other ideas which are particularly focused on micro generators have brought the chances so far, but we will continue to look at Ripple and when there's a space look at thing in life. So that deals with a couple of questions on Ripple here. We've then got a question from somebody which is... I'll read out a bit of it. Somebody who's a long term customer investor who invested took on supply understanding that there was a high unit charge for green energy to ensure our suppliers, who are often small, has a fair return over the long term.

41:06 But then I I think asking about both the impact of COVID and the energy crisis on these... On the on these renewable markets, the customer is saying that they expected not to pay a previous race, to pay the discounts and market rates as our suppliers were on long term contracts, which would have been set lower than markets. In fact, sometimes we've been a half a minute. Our rates are above the market. It's not clear on your supply chain... Who in the supply chain benefited from the windfall. So, Rupert, can we comment on Yep. Suppliers, the energy crisis, who... Who's really benefited, and and what are we doing in terms of price? Yeah. So, I mean, it's a good question. There's there's quite a lot of detail within it. As you say, the... We are contracting with roundabout 2,000 small independent generators across The UK in in ways that not many other participants would, and we are offering them a, typically, a twelve month fixed price contract for that renewable generation.

42:06 And that does come with an extra cost, and it comes with extra risk to us. And therefore, over the medium term, it has been the case that we are probably more expensive than other suppliers who will buy that power on the on the traded markets and not have to pass based on that level of complexity. But contracting at different times of the year also has advantages. So as Nigel says, there have been periods of time

42:35 where we're able to pass on the benefits associated with buying that power in a lower price environment through to our consumers' customers as well in terms of lower prices than they would otherwise get on the market. There have been quite significant swings over a decade long period in terms of market power prices, so there have been periods very low as well as periods very high. And I would say that over the course of the energy prices as a whole, the major beneficiaries of very high commodity price environment have been fossil fuel producers and some of the very largest electric...

43:20 Electricity generation companies or or or assets. And market prices are effectively linked to those assets, and therefore therefore, it's only in an environment where there's a wholesale market reform, where the... Where there's a complete decoupling between renewable generation and fossil fuel generation to help us that we would see the sort of position, which I think you are advocating. It's one that we've... And it's one that we've lobbied quite strongly for. It it isn't something which is looking likely, unfortunately, to happen in the very short term, but it's something we'll continue to press for. Yeah. Thank you.

44:04 The next question is on heat pumps, and it's more about heat pump market. I'm aware that The UK has a relatively low uptake heat pump. That's on the presentation compared with other European countries, partly due to The UK average electricity to gas price ratio being so unfavorable. And I'm quoting data which I recognize as well, but it being 4.4 electricity to gas, I would say Denmark at 2.6. Can I advise what the GOOD ENERGY average domestic customer electricity gas price ratio is currently? So this is an interesting industry anomaly, which is one of the barriers to wider heat pump option, which is really driven by two things. One, electricity in The UK is on the wholesale market expensive because we depend on gas to generate it. And secondly, electricity is where we tend to put a lot of industry levies and social levies because electricity provision is universal, whereas gas has a large number of households who aren't on the gas grid, and that produces this

45:05 comparative disparity. Two points in our business. First, actually, at the moment and certainly for a lot of last year, we are below the price cap level for electricity only. So our electricity is slightly cheaper. Our gas, because it's got a green gas element to it and an offset element to it, is slightly more expensive. So if you look at the performance of our heat pumps, which are four times more efficient than gas boilers, if you look at our price disparity, we are at least in the place where we can say to customers, adopting a heat pump and using good energy to your supplier will leave you better off all other things being equal. And that... And gaps there, we're doing our bit, and we generally, in pricing terms, want to reflect the fact that we think electricity is the cleaner fuel that more... And certainly, you know, fuel we sell a lot more of.

45:53 But there's more to do, I think, in terms of structural reforming. So we have another question here, which I'll answer at a very high level and then hand over to Rupert. So with such a strong cash balance, which you heard about there, why did you sell shares for your most recent acquisition? So the bit in a minute I'll ask Rupert to answer is just to point out that whilst we have high cash numbers, not all of that cash is usable for us future investments. The bit I would add on that is the other reason we did the vendor placing, which is on a huge transaction, about £2,100,000 worth of shares placed plus further shares to the people we bought the business from, was that one of the things that's held GOOD ENERGY back in share price terms over the last years is a real lack of liquidity in our shares. They're tightly held, and they're tightly held by relatively few institutions.

46:42 So diversifying the shareholder base a bit, introducing some more liquidity into the shares was the board felt a good thing for all investors, and I know that's been the case Basically, it's done. But we have a lot of cash with it. We can't use it. We do. And I think I touched on it in the earlier presentation in terms of the the cash balance we have.

47:05 As as I indicated, there is... At at the balance sheet day, there is a higher proportion of that is customer credit balances than we would expect that to be, and so that will have a natural reduction as we go through 2024. And then I think in previous presentations, we've we've talked about the need for working capital to cope with both seasonality within the supply business

47:31 and a rising and falling price environment and the difference in terms of the timing between paying for that commodity and receiving payment from customers, as well as the experience we've seen over the course of the last couple of years in terms of the volatility in the market and an element of risk capital that it would be prudent for any business to hold having seen that sort of market characteristic and be prepared for it in the future. So so as Nigel said, we we felt that we were able to invest cash behind that transaction and others, and Nigel's highlighted why there was a mix of both cash and equity in that case. Thank you, Rupert.

48:18 Next question on remuneration, which is to ask what our salaries are and do we receive bonuses. So I'll answer that in two parts. Our salaries and our... The details of all of our remuneration will be published in our annual report, which comes out at the time of our AGM in June, which will be the time which we can sort of Better than that. It's the end of April. End of April. Sorry. Yes. The agent is the latest. So you'll be able to read all of the detail there. We do receive bonuses. Our bonuses are judged on the same basis as everybody working in the supply and services side of the business. The installation services businesses have their own bonus targets. We are remunerated on a bonuses are based on a combination of the company's financial performance and performance on key strategic targets set by the board, which are usually around levels of customer service and this year adoption of new services propositions.

49:19 Have we completed all of the possible acquisitions in the Southeast Area, or are there more to come?

49:26 So a couple of thoughts here. You're certainly right that the geographic fit was an important consideration for us because as you try and grow these businesses, you can then get some growth by putting in new install teams. We can be served from the existing infrastructure. So having owned a board of business in Dorset, buying one in the Southeast made a lot of sense. There's a sort of a bit of a natural pause here whilst we did the work on branding I was talking about. But we have a template here for the types of businesses we want to bring in. Higher quality into working on sort of more complex, larger jobs, higher quality installations with GOOD ENERGY. We will continue to look at the market and see if there are more to come. There are no immediate plans. I just want to stress that, you know, I'm not... We're not going to announce announcement in next two months of another acquisition, but there there are some other good players in the marketplace, and we'll look at them. I think it's...

50:18 If we genuinely... If we succeed in really

50:22 serving most of the South Of England, that it's probably more likely that we begin to look further north for the next additions. I certainly think JPS in particular gives us a really strong footprint across Kent into London and East Sussex. Westsex can cover Dorset. JPS actually have a director who's moved to Cornwall, so we've got Cornwall moving eastwards covered as well. So plenty of other high solar installations.

50:53 Next question, which is very direct, but very clear. Did you overpay for the acquisition of JPS? And, Rick, how should we look at the transaction? What we know about So as we went through the research for a number of the solar acquisitions, we were we were very cognizant parables in terms of some of the acquisitions. Both JPS and Wessex, we've completed on a multiple of six times the current level of profitability, which we think is a fair price given those market comparables. There was actually one externally announced transaction in the last couple of weeks actually, which was Wix acquiring a very similar type of solar installation business, and they paid a slightly higher multiple of seven times. So we we believe we've bought a good quality asset, good quality team at a fair price.

51:47 Good. Thank you. Very clear. Question from Marco. Who do we think are our greatest competitors, and how are we distinguishing ourselves from them? Well, I think there's two or three categories of competition for us. In installation, we tend to measure ourselves against other sort of regional specialists, so people doing slightly more complicated and higher value jobs. They tend not to be that well known in in their local area, so there's competition there. It is actually quite a fragmented marketplace.

52:19 There are a lot of small single operators who we would think that we were offering, you know, a higher quality, more complete service than in the broader supply and services marketplace. Whilst the energy market has seen a lot of consolidation, there were still some formidable investors out there, particularly, who are very innovative on the technology side for the early adopter market. There are not a relationship with us because, obviously, we are using their technology Kraken to underpin our business as well. I I think where our differentiation from them

52:50 and other players getting into this market comes from two or three key accounts. One is one of the things that we have scale is in the feed and tariff market. So we're the only people who've really innovated in that market for a long time. So we have a genuinely better and distinct... More distinctive offer for feed in tariff customers. We are pretty clear that we're sourcing a very green power mix, so for business and domestic customers, but now is it for consideration. Things like the witch accreditation give us an important stamp to show that we are greener than them. And for many of our customers, both in installation and supply, a high level of service is important to them, and we've invested behind training and technology to enable the Trustpilot results that we got there. So, you know, it's clearly a competitive marketplace.

53:40 For a small player as us... Such as us, you have to be very clear that you've got a distinctive proposition and that you are delivering a high quality project, and that's always hard to do. So question from David. Correction. Does it make good energy work? A quick question. Would you also provide services to commercial clients? We've got an energy efficiency company, both in hospitality.

54:03 We're looking for a partnership. So I think the best thing to do is drop one of us a note through this, and we can absolutely look at that. We do work in the commercial sector. We don't particularly supply sort of heavy industrial commercial users of power. We we do electricity only in the commercial sector. It's more in keeping with the way we source power, but we we already supply, for example, PWCs office office network around The UK, several sort of high ethical retail and other brands. And so we'd be delighted to talk to you, David, so some contact details. If not, we'll chase that with you.

54:44 So pricing question, which is around standing charges, which are often contentious. And so why have our standing charges gone up? Well, if we're both gas and electricity on the April 1. If I give you a a higher... An overview, you want to get into the detail if we think there's an appetite for a roof of it. And I mean, I think two things here. You need... We need to look at pricing in the round. And while I am aware that standing charges are unpopular because I think they want to try and cut costs by cutting their consumption. Standing charges are stuck there, if you like. GOOD ENERGY's customer base tends to skew towards higher consuming larger properties for whom the unit rate is a more important consideration than the standing charge. And our most recent round of pricing changes have been to try and cut the unit rates as much as we could.

55:35 In fact, our standing charges were pretty cheap. Before that, we had the sort of opposite position. And so the the rise is on the back of a very low level of standing charge at some point in in the prior year. I'd expect this to begin to normalize from here as the market normalizes. Rupert, you want to I You add anything to that? I think that covers it. Yeah. I think that's the reason why they were they were very low. We're we're aiming to be more the best of our unit rates. I acknowledge there are... No... No one's ever happy on the charges. It goes both ways. So I shall scroll up. Question from David. Congrats on your team. You consider yourself as a future growth stock and stock? Do you consider a share buyback rather than dividend payout?

56:20 I'm sure you get every success. So we... Rupert touched on our... Thank you for the good wishes to start with. Rupert did touch on our capital allocation. I think we see ourselves as a growth stock. Growth. Yeah. We see ourselves as a growth stock primarily, and we do pay a dividend. And I think... I mean, there are different there are different shareholder groups within this company, and it's something that we have traditionally done is is maintaining a level of dividend payout. The yield on it is obviously at a level where it's suddenly classified as income stock, and therefore and therefore, I didn't think it's gonna be something we would be looking to increase. But, certainly, the way we position ourselves at the moment is a growth stock, paying a modest dividend is one that we will probably look at as our main route of continuing this. Oh, yes. I think that's the that's the distribution route we're gonna go for rather than buybacks.

57:17 So a question about ZapMap from Paul, which is when do you think ZapMap will become profitable, and how much more investment do we think will be be required? Well, this is actually quite a fluid topic at the moment, Paul, because we're in market with the fundraise. The fundraise argument is almost if we want to build a large international platform and really take advantage of those numbers that when the presentation EV rollout, it is going to take, you know, a meaningful amount of investment. Again, it's gonna save fundraise around about around 10,000,000 to do that. We wouldn't certainly wouldn't participate in in in the same scale as we have done before. So we've said to investors that we're looking to put, you know, a couple of million more into it because we... We're supportive investors. We like the return that we'll potentially get, and that has a good fit with our UK business. But if they go international, there'll be other people who are investing more heavily than us. If the fundraising environment isn't quite so much, then we will have to focus the business a bit more on The UK, but we will see where we get to in terms of the fundraiser under the next course.

58:20 So that was Paul on ZapMap. We've got Adam next on work for hourly matching and either four hour in line with the blocks or half hour in line with. So the hourly matching products I talked about for the business market is actually how our business customers wanted to sort of use it, I suppose. And they, I guess, making a trade off between the way the market works of hourly or four hourly and and what's the simplest for them to communicate. So they were looking for an hourly matching products, and that's the level What we've given them, we can obviously review that. And as the market, particularly domestic market, moves towards half hourly settlement, maybe there's different unit price. But for now, it was what the market demand was sports. That's what I worked for now. Jake, can I get a time check? Because we will be running over if we're not careful.

59:09 Hi. Yes. The... We are just coming up to fifty nine minutes. You have the room for as long as you need. And, of course, if if we do run out of time, we can give you back all of the questions immediately after the meeting for your review. Should we take... Wanna see what what... Maybe one more, and then we'll go from there. So some questions on Zapma.

59:35 Do we cover the Northeast Of England? Not yet so much. When we... We'll finish with... I mean, there is obviously a lot of shareholder and customer interest in the energy market test. Test the fire. So question from Chris Kay. The press has been commenting on increasing retail customer for not paying utility bills. Is this affecting your business and the concerns of the business about bad debt? So you're right, Chris. Across the industry, levels of bad debt after this very period of very high cost is a flagged for considerable concern. I think the industry overall has seen figuring the billions have increased in terms of bad debt provisioning from all suppliers in the last two years. In our case, partly because we're a specialist, we're focused on a consumer base who actively chosen to take a differentiated product.

1:00:25 Our bad debt position is actually same or or no worse, in fact, slightly better than it was even a year ago. So we don't have too much in the way it says. It's worth touching on what's in the account so you can verify that. Yeah. No. So the... I mean, we did talk about the fact that our bad debt charge had gone up year on year. That isn't just a result of any deterioration in collections. It's just the methodology associated with it. So we look at the collection rates during 2023 on debt that existed at the end of twenty twenty two, and that's in comparison to the similar period of collections during 2022. So although we said that revenue hadn't changed in terms of reported between '22 and 2023,

1:01:09 it's actually the difference in revenues between 2022 and 2021, which has driven the bad debt charge up. So I can understand the question about collections still being very strong, but bad debt charge going up. And that is a function of the twenty one year and against '22 as opposed to '22 against 2023. So I'm... I am comfortable that our performance in collections across all the segments of our business have maintained at the level that we have forecast to see and are performing well, and I think are performing considerably better than some of the industry in terms of some of the increases that they have seen in some of the segments and changes in in in customer payment behavior over the course of the last couple of years.

1:02:00 Good.

1:02:02 I mean, Jake, we will have to leave it there because time has run out. But can I conclude that by thanking all of the shareholders and customers who've joined the call? I hope you found this increased your understanding of GOOD ENERGY and its business, and we look forward to speaking to you again soon. So I can hand over to you to wrap up. Perfect. Nigel, Rupert, that's great. And thank you very much indeed for addressing all of those questions that came in from investors. And, of course, given the significant attendance on today's call, we will give you back all of the questions that were submitted today as well as any further ones that do come through back immediately after the presentation has ended just for you to review to then add any additional responses, of course, where it's appropriate to do so. And we'll publish all those responses out on the platform. But, Nigel Rupert, all that all that leaves is for me to thank you once again for updating investors this afternoon. 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 the management team can really better understand your views and expectations?

1:03:00 This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of 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.