GOOD saw revenue growth of 40% and impressive margin expansion
Companies: Good Energy Group
Good Energy (LSE: GOOD) announced strong interim results this morning with 40% revenue growth, impressive margin expansion and a swing to positive net operating cash flows. The performance was a combination of improved margins in the supply business, the sale of Wrotham Heath and a restructuring of the Development division.
Excellent growth and operational leverage
The Group achieved impressive growth in the period across the board. The top line growth of 40% was flattered by the Wrotham Heath sale, but leaving that aside, there was strong organic growth both in customers and generation as further sites came online. Gross profits rose 50% to £15m, with a 7% margin expansion, and operating profit increased 60% to £3.6m highlighting the operational leverage in the business.
Net debt remains high relative to EBITDA and cash flow at £50.7m, more or less flat year-on-year. For a business with long-term generation assets, providing greater earnings visibility over the medium term, higher levels of debt are more acceptable.
Looking at the market as a whole, the UK government targets renewable energy as a share of the country's generation to nearly double to 15% by 2020. It looks as though this target will be missed judging by recent announcements.
On the other hand, Good Energy reiterates its own ambitious target this morning to increase customer sales five-fold by the end of 2020.
"We have also made solid progress against our strategic pillars as we continue to focus on the delivery of our five-year strategy of a fivefold increase in customer sales by 31 December 2020 through sustainable, profitable growth."
Shares are relatively flat this morning in early trading, up 0.4% and are up c.20% since their low in March 2016.
In her outlook statement, Juliet Davenport, CEO, commented that "the outlook for the remainder of the year remains positive and we remain confident of achieving the market's full year expectations."