Good Energy Group PLC (GOOD) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the Good Energy PLC Interim Results Investor Presentation. [Operator Instructions] Before we begin, we'd like to submit the following poll. I'd now like to hand over to Juliet Davenport, CEO; and Rupert Sanderson, CFO of Good Energy PLC. Good afternoon.

Thank you. And good afternoon, everybody, and thank you for attending this presentation of Good Energy Group's results for the first 6 months to June 30, 2020. If you thought you were in a different meeting then possibly, now is a good time to leave. Anyway, today's agenda is I'm going to give just an over -- very short overview of the company and where we are. Rupert will then go into the detail on the financial performance. And there are some quite big moving parts, so that will take a little time. And then operational strategic update, I will give you the direction that we're going in, how we're getting on and how we're going to get there and then time for Q&A at the end. So I'm going to move straight into the overview, in terms of our business. So today, obviously, COVID is probably the biggest main external player, in terms of what we're doing. But we still have seen underlying business growth, which has been mitigating the downturn we've seen, as a result of the climate -- COVID impact. And Rupert and I will take you through a few more indicators of where that's actually happening. At the end of last year, we also announced -- made the decision that we're going to change our technology platform for residential customers. And that has been a really important step and actually stood us in really good stead during the COVID downturn because it's allowed us to significantly reduce our overhead costs, whilst transferring customers onto a platform that, longer term, should offer better flexibility, from a proposition point of view. We're now about 85% through that, and we've got the last 15%. We're nearing the completion on that. What we've also looked to do, during this period, is it's been a good time with a lot of people working from home. Actually, we've continued to see committed investment in new products and services for the business, and we'll talk through a few of those and where we've , later on in the strategic review. One of the key differentiators between us and a lot of other supply companies, has always been that we own our own renewable energy assets. And one of our challenges, sometimes, has been to really explain to investors in a simple way, how that looks on our balance sheet and where the debt is related to that. One of the key issues has always been that we've held back at cost value on our balance sheet. And what we decided was -- following sort of various conversations and feedback from investors, we decided, as a first step, to take a look at a revaluation of that asset, so that it's really transparent for investors, how much that asset we think is worth in the open market and what the debt looks alongside it. In addition to that, obviously, one of the first things we did, as the COVID step down, was to really look how can we conserve cash, how can we improve cash flow during this period. And one of those areas have been, really looking, the Kraken platform has really helped us look at our debt parts and looking after the debt processes for our customers. We also contacted all our business customers and did an initial survey to us than what was happening during this lockdown period and how could we help. I think, that has paid off relatively well. So we have a good, strong cash balance, and Rupert will take you through some of the numbers. And then overall, when we're looking at -- what we're seeing is, potentially, quite a big economic downturn in the U.K. Actually, to date, our financial indicators, our underlying indicators have held fairly well. And we've seen operational resilience, in terms of being able to look after our customers and collect debts for our customers, has also operated well. So in summary, despite COVID, we've got a core operational business that seems to have done well. And we've had some other activities that Rupert will take you through, from the P&L point of view. The next slide is just thinking about where we're going. So looking at the core business, one of the things that we've been working towards, is understanding what our role is in the marketplace for our customer. And really, that's been about how do we move to a more service-led proposition. So this isn't just about supplying electrons to people's homes. This is also about making sure that we can support individual customers and businesses on their zero-carbon journey, decarbonizing their electricity, their heat and their transport. And obviously, Kraken has been a really important part in that process, making sure that we've got a scalable customer services platform, so that as we grow, we can -- we don't have to increase cost. But in addition to that, how we can increase the number of propositions we put through that. So for example, there is a tariff called the time-of-use tariff, which allows people to charge customers different amounts of -- different costs during the day, depending on how tight the markets are. And what that means is that on our old system, that would have been really difficult to do. With this new system, we are hoping that that's going to be a core feature, going forward, of all our propositions. I've already touched on the fact that we're going to be looking to deliver zero-carbon footprint across electricity, transport and heat. And that's not just for domestic customers, but also for business. And part of the reason for investing the systems and reducing the overhead to serve customers, is being able to allow us to make sure that we can competitively price all these propositions for customers. In terms of the operational part through COVID, business continuity planning has been really effective. We got all our team home within about 3 days, working on laptops. Customer churn rate [indiscernible] relatively in line with seasonal norms. And that has been really encouraging because we know there's been a lot of churn in the overall market. And obviously, one of the nature of the expected credit loss positioning, is really looking at the external economic downturn and making sure that we're being prudent around what potential future bad debt might be. And with all of this, one of the key focuses, and right at the beginning, is to really look at cost control and good cash collection rates. And I think that has really paid off, so far. Obviously, we need to see what the next external situation is going into the winter and into 2021. But right now, we feel pretty confident of our cash position. Thank you. So I'm going to hand over to Rupert now to drive the slides. Rupert?

Thanks, Juliet. Good afternoon, everybody, and apologies that I'm unable to join this call by video. But I will take you through now -- there's a little bit -- there's quite a few moving parts, in terms of the half-year performance. So I'll take you through the P&L and then particularly around cash and the balance sheet, right? So the first half is really characterized by the impact of COVID, really, in Q2 and the warmer weather, which really went across, actually, all of the first half of the year. It was a warm winter and then a warm spring, masking an underlying increase in contracted business we had in late 2019. And this is our Half-Hourly business, and we probably had one of our most successful October tendering round at the back end of 2019 that has driven customers and volume into that Half-Hourly segment. Customer numbers, overall, across our segments, have increased a little over 4%. Our total domestic customers are up just 1%. Our FiT, our Feed in Tariff administration business offsetting a reduction in our domestic supply numbers. On the Business side, all of those segments are in growth and reflect a number of years of investment and focus in growing our Business customer base. In terms of volumes, we, broadly, only supply gas to domestic customers. And so the impact of that warmer weather is most substantially felt in the overall gas volumes, which are down 18% year-on-year, that warm weather. Our electricity volumes are mostly driven by the benefit we brought into Q1, in particular, of those Half-Hourly customers we signed up. The performance in our smaller businesses, the SME business and Domestic, are relatively small, compared to that Half-Hourly growth. So total supply volumes down by 6%, but the driver of that is gas. And when we see the overall revenue number, we'll see the impact of that. As we went through Q2, total Business supply demand decreased by about 35%, compared to the expectations we would have for that period of time, as the whole country went into lockdown and a number of businesses were -- a number of businesses would have shut completely and some would have run on a very minimal level. We're now starting to see recovery, and I think we expect that to continue over the course of the second half of the year. Then if I move on to the drivers within cost of sales. So again, the top box is the same one as on the revenue drivers. It's been warmer, but I would also say, substantially sunnier than seasonally normal. And that, coupled with the impact of COVID, reducing demand in Q2, is really the big story in cost of sales. So we contract power for both our Supply business, through third parties and our independent generators. And so we have contracted power prices that we will pay over that period of time. As the demand fell sharply during that period, and we also had generators producing more power from particularly their [ solar ] installations, we have needed to sell back that excess power to the market. And you can see, just from the graphic in the top right-hand corner, that if we had bought power ahead of time or contracted to buy power ahead of time, at a higher price, we've have been selling that, back in April, May and June, at some lower price. And so we have realized the loss on that power, and that's one of the impacts that we have in the first half of the year. The second main impact is, as a result of the overall reduction in power demand and power prices across the country, the contracted prices that big generators, the big nuclear power and offshore providers are paid for that power, under a mechanism called the CFD or contract a different scheme, the industry and suppliers have ended up picking up a larger bill, associated with that differential in power prices, again, between what they are contracted to be paid and the market price at the point in time. So if I move on to the graphic of profit bridge for Half 1 2020 against 2019, and this starts -- the blue bar starts with the performance for the first half of 2019. And the blue bar in the middle, the underlying performance in the first half of 2020. You'll see the two left-hand bars, the items I've just described. So a substantial reduction in gas volume drove a gross margin reduction of approximately GBP 1 million, and the impact of selling back power on those contracts are different, charges an additional GBP 800,000. We've mitigated that through cost savings that were partly planned. As a result of the Kraken implementation, we saw our cost base reduced at the start of Q2 2020 as we reduced headcount in that area, and we've made some other savings in response to the pandemic. There were two blue lines, in terms of underlying performance, although it's been delivered in a different way from how we have expected it to be done. We have substantially kept the underlying performance of the business in line with the previous year. Then there are a number of red bars, which I'll talk about a little bit later, which are separate from the sort of underlying business, they are things we would necessarily expect to repeat or a structural impact on our business, such as the generation asset revaluation. The first is expected credit loss provisioning, and I'll touch on that in a couple of slides' time, which has a negative P&L impact in the period. And the second is the revaluation of the generation fleet, which again has a negative P&L impact, principally, on account of higher depreciation. The final cost is the completion of our transformation program around the Kraken investment. And so by the end of 2020, that one-off cost associated with the implementation, will have come to an end. So that's really just a track and from the underlying performance to how we report it. The next slide is just a summary of that. I think we've talked through the drivers, so I won't spend time on the moving parts within that, but the [ pack ] is available, again, after this meeting, for people to continue to review. The balance sheet were -- two or three main drivers in the balance sheet, from Half 1 to pull-out, are, firstly, the strength of the cash balance. So we've increased that by GBP 4.5 million since the end of December 2019. Our current assets are relatively high in the middle of the year, compared to the end of the year, because we collect effectively the Renewable Obligation Certificate, as part of the Electricity business and submit those to OFGEM at the end of August. So we have a very high stock of Renewable Obligation Certificate at June. And the third item to note is the Good Energy bonds [ too ], which are due for a potential first redemption in June 2021, are now reported within current liabilities. On the generation portfolio, the revaluation, taking those assets from historical depreciated cost to revaluation, is an uplift of GBP 19 million. And that is the increase that would have gone through the asset level, and the impact on reserves is the same amount, net of deferred tax. So you see a substantial [ GBP 15.5 million ] increase in the total equity of the business, and I'll talk about the impact on gearing in a couple of slides' time. Cash flow, as Juliet said, one of the critical things that we looked at in the immediate aftermath of lockdown, on the COVID pandemic becoming a global emergency and the impact on our business and other businesses across the country, was to focus on cash collection. Our performance in the first half of the year -- had we started the year -- or at the start of the year, had we achieved that level of performance at the end of June, we would have been pleased. In the context of the pandemic, we are very pleased. We're extremely pleased, in terms of the performance we've had in the first half of the year. We focused very heavily on making sure that our largest business customers, who are the greatest providers of cash flow into our business, continue to pay effectively. And we've had very high levels of direct debits continuing. We've had very little deterioration, if at all, in the levels of collections we've had from the direct debit customers, and the majority of our domestic customers are on direct [ debit ]. So we have seen positive working capital movement in the period, both from that -- but also, it has been warmer and for those customers, who are on direct debit, mostly monthly tax direct [ debit ]. We will have more of those customers in credit at this time of year. compared to previous year. So that does provide us some working capital benefit, which is likely to unwind in the second half of the year. But overall, in the context of our -- of the challenges of the first half of the year, the cash position and our cash collection over the first half of the year, is something that we -- is probably one of our greatest successes. Just finishing off on net debt and funding and the impact of the cash improvement. It has been one of our objectives, over the last 2 or 3 years, to reduce the level of net debt within the business. And we have -- and that has continued in Half 1 2020, predominantly on account of the additional cash. In terms of how that net debt is allocated across our business, nearly GBP 34 million of that GBP 36.5 million is secured against the generation assets, which are now held on the balance sheet at a little over GBP 60 million, compared to at the end of 2019, when they were held at closer to GBP 45 million. So you can see the level of underlying gearing within that portfolio and the level of net debt outside of that generation portfolio, so supporting all of the Supply and Energy and the Service and [indiscernible] business, is actually a very modest level of net debt. So the good energy bonds and the cash, predominantly, net each other out. Just very quickly on the key accounting impacts in the first half of the year. So as Juliet said, expected credit loss provisioning is an accounting mechanism that helps us translate the external macroeconomic indicators, and model the expected impact of that on our ability of customers to pay, subject to certain sort of segmentation of our customer base. So that is something, which is predominantly based on external influence, and it's something which we will continue to monitor during the second half of the year, in terms of whether those indicators start to improve or whether they deteriorate. And alongside those indicators, whether or not our cash collection performance is maintained at a very high level to date or whether we experienced more challenges in certain segments of our customer base. Generation portfolio revaluation, again, as Julie said, this is a change in accounting policy, which we have been considering for a period of time, really to reiterate that point around transparency, in terms of reflecting a more reflective market value of those assets on the balance sheet and giving clarity, therefore, on assets and reserves and gearing within the business as a whole. We started that review, pre-COVID. And so over the course of the last 6 months, the downward impact on power prices has had an impact on that valuation, but the valuation is based on power prices as that Q2 reflects some of the deteriorating economic impacts that we expect, through the course of the recovery, from COVID. Finally, current trading. So we are -- so the underlying performance of the business continues in line with management expectations. As I said, we've delivered that in a slightly different way from how we expected to start the year. But we will expect energy demand to continue to recover, as lockdowns ease and without the second wave or other more substantive restrictions, we'd expect that to continue. But the uncertainty around economic recovery, unemployment, particularly if some of the government support schemes start to unwind, means that on things like expected credit loss provisioning, we're unable to give full-year guidance, really, because of those uncertainties. But at the same time, we have continued with our transformation program, really, pretty much unaffected by the pandemic. We have been continuing to deliver the migration as well as improvements within the business billing system as well. So with those foundations in place, then we are well positioned for growth, as we go towards the end of this year and the start of next. Finally, and it's important to recognize, and the Board recognizes the diverse nature of our shareholder base and the importance of dividends to many of our shareholders. We said at the time of our annual report being published in June that we would continue to look at the current liquidity position of the business as well as the impact of future economic indicators on our forecast. And so we've continued to -- we will continue with that policy. But the Board intends to resume the payment of dividends in 2021, if the economic conditions and the impact on our business allow it at that point in time. I think, that's quite a quick whiz through what's quite a complicated set of numbers. So happy to take questions on it towards the end, but I will now hand back to Juliet.

Thanks, Rupert. Hopefully, I managed to unmute my mic successfully. So as you can see, obviously, we've done quite a lot of work during lockdown: One, to kind of make sure we're keeping a hold of cash flow; two, to really implement some of the strategic pieces on the -- on reducing our overheads; and three, to kind of rebalance the balance sheet, where we've had these assets that haven't always been understood completely. From an operational strategic point of view, I guess, from our vision, going forward, the 2050 target on net zero is really, I guess, a guiding light for us. It's been part of what we've always been delivering over the last 20 years. But there are some key targets now set by government, creating a marketplace that this is an independent valuation by Imperial College, which talks about a marketplace of about GBP 21 billion worth of value. And we reckon the kind of decentralized low-carbon service provision part of that is worth at least, kind of, between $15 billion and $16 billion. So that is the kind of overall context that we're looking to deliver services into. From the key value drivers as a strategy, we have 4 key value drivers. The first one is to drive lower acquisition cost. And part of that is through having a better system so we can onboard simply, but also is to start to look at reducing the -- making our proposition more competitive to our customers, so it's easier for them to sign up to us. And we've done quite a lot of work on the price elasticity in this marketplace for this type of proposition. And there's a balance between brand and proposition and price. And what we see is, that's part of the reason for investing in the system, is to be able to improve our competitive and therefore, lower our customer acquisition cost. Then once you've got a customer, obviously, you want to keep them. And improving retention rate is, in part, again, about making sure that you are competitively priced but also, we have done a huge amount, over the last 2 years, on communicating to customer base. At all, it's different levels of diversity. So definitely, it's a [ SME ] from our small PPA customers through to our [indiscernible] customers, [ towards ] to our domestic retail customers. So actually, making sure people understand what our proposition is, understand who we are, what our brand stands for and what they're paying for, effectively. And that has been relatively successful, and we've held churn pretty steady, during this period. Despite the fact that actually the market, we've seen significant churn in the overall energy market, data that we're seeing coming in from some of the big switching hazards. And then the last part, that the increased lifetime customer value is really related to bringing customers, having a deeper relationship with customers, so over multiple [ proposition ] lines. So that's electricity, gas and then an EV charging tariff and maybe a Zap-Map proposition. So really being a kind of one-stop shop for our customers on their zero-carbon journey, across electricity, heat and transport. We think, by bringing those 3 together, that really allows us to have a business plan that really delivers in this marketplace and also delivers on the future purpose of zero-carbon for every month. In terms of the platforms that we're seeing, the customer services platform, as I suggested, includes customer retention rate and lower acquisition and allows us to have scale. So one of the things that we really struggled, previously, with our old platform, was taking in on a large number of customers in a short period of time. And that has meant that we haven't been able to participate in things like supplier of last resort or working with another customer base. This platform has proven in this sector. It's actually Octopus' platform. And we know that you can take on significant customers related to that. It also has allowed us to move more to a digital customer experience. That's what we've shifted a lot of this to. And we think that, that should -- won't reduce our cost but also improve the customer experience, going forward. Zap-Map is one of the main investments we've also made this year. So we took the original investment, just under 2 years ago, but in June, we decided to convert our convertible loan into a majority stake. And what that has allowed us to do, is to kind of really support the business and drive further, in terms of their strategic ambition. And Zap-Pay is one of the leading mapping services for EV chargers, across the U.K. So it's a go-to for most EV drivers, and it's the best -- it's the most used one in the U.K. What Zap-Pay does then, is allow people to pay using this app as well for their charging services. And we just rolled that out with our initial partner, [ NGE ], which will go across 200 sites. And then we'll start to roll -- we're already working with 3 other platforms, in terms of rolling Zap-Pay at the support mechanism for their platforms. And really, that's where we're looking to push for the rest of the year, will be about rolling Zap-Pay across as many charging platforms as possible. In terms of the management team, obviously, what we've done is, we brought in so myself and Tim Jones from the Good Energy Group Board, sits on the board, alongside Charlie. Tim brings some unique insight, in that he is currently the exiting CTO of MoneySuperMarket. But he also was the CTO of Auto Trader, when it went online. So we took paper Auto Trader and made it digital. So he has both that technology understanding, in terms of the platform, but also deep understanding of the automotive market. So that's really supportive, in terms of this. And in terms of -- there is actually a question, I think, in the Q&A that I picked up earlier. In terms of actually making sure this is going to have sufficient resources. One of the reasons why we converted -- went to a majority stake, is we wanted to give a very strong indication to the management team that we were prepared to back this. And if we didn't invest, then to find further investment elsewhere, but also to lean into the business, in support with some of the other parts of Good Energy, to make sure that they could accelerate their pace of strategic development and then support, in terms of looking at strengthening that senior team, going forward. In terms of the proposition roadmap for Good Energy, obviously, electricity, heat and transport, were 3 areas we're looking at. And something like Zap-Pay will move into that, and I'll go into a little bit more detail on that in the next slide. If you just look at our core base today, we have -- the business is really set up around domestic electricity supply of 100% renewable. What's happened over the years, is that we've added a green gas proposition to that, for domestic supply. And then we've moved into the Business sector and grow significantly the Business sector. Underlying that, we made some investment in generation assets, which we talked about in detail with Rupert. But alongside that, one of the core parts of our business has always been to support people generating power in their own homes and communities. And our Feed in Tariff position is, we have around 175,000 customers in Feed in Tariff administration. And I think, that represents probably just under 20% of that marketplace. So you can see that in terms of our overall balance, we are fairly resilient because we have a lot of different types of customer bases that are managing differently through this COVID transition. But also, what that allows us to do, is to build our assessed proposition that encompass feed into our domestic supply and business supply. And then in terms of achieving zero-carbon, we kind of thinking of it in, kind of, 4 tranches. One is electricity generation. And that is whether we supply that to people's homes or they generate power themselves, transportation to the electrification of motoring. So that is partially the investment in Zap-Map, but it also includes some of the other propositions we're rolling out, as Good Energy. Heating, which is probably one of the biggest challenges for the U.K. is to understand how to zero-carbon that. So we're not only doing some proposition development, but also research and development in that. And finally, data and energy efficiency. Understanding how you're using your energy and where you're wasting your energy, is a key element to actually help people use less and have a -- and reduce their costs, overall, which I think -- going into further as we go through COVID, I think it's going to be a really important part of our proposition. In terms of our proposition to domestic customers, that's going to include data through a customer access device, electric vehicle solutions, so that's home charging and supporting that through dedicated time-of-use transition and also, potentially, an application to Zap-Map, which I'll talk to, later. Looking at -- supporting people, who don't already generate power in their own homes, to consider generating power in their own homes and supporting that investment through any export being paid for by us. And then finally, obviously, making sure that people can interact with their data and their meters to look at time-of-use tariffs and how that can really effectively deliver low-cost zero-carbon solutions for households. In electricity business propositions, again, looking at making sure we've got Consumer Access Device to data, really empowering customers, particularly SMEs, who don't have a huge amount of time and probably never want to be on the phone, to be able to use -- conveniently check in and understand what's going on with their energy and simply managing their energy needs. We've also started offering energy health tech to particularly some of our SME customers, during lockdown. What that's really about is making sure they understand how much energy they're using and where they're wasting energy. And that means that we can be sure that they're getting reasonable cost bills and really supporting them during this time, where the economy is coming under a huge amount of pressure. And finally, so electricity was something we've developed about 5 years ago, which is a proposition, which allows people to select local generators, where they buy their power form. It's a kind of sleeving technology but for small and medium-sized businesses. And that really gives people visibility of what power they're buying and where it's coming from. In terms of transport, I think I've touched already, the concept for a domestic proposition would be bringing a Zap-Map benefit, plus electric vehicle tariff, plus EV charging in the home. So that's one solution. And then something similar but slightly enhanced the businesses -- so obviously, one point is our existing proposition for businesses, where we can put EV charging into business customers. The concept of fleet and business being able to use some kind of payment service through Zap-Pay, and therefore, being able to manage our fleet of electric vehicles, going forwards. Domestic propositions, boiler care, special heat pump tariffs. Green gas is the heat proposition for domestic. Business proposition, slightly lighter at the moment, but one of the areas we're looking at researching in. And we already have green gas for business, looking to launch green gas for large gas and then looking to see what else we can do in the Heating sector for large business. But finally, one of the key parts of the proposition that we're looking at, is that we're already a leading player in the decentralized market with our Feed in Tariff. We've been expanding into business customer and growth into the business customer area. We think that there are some upsides in the technologies we've invested in, particularly things like Zap-Map and Zap-Pay. And what I think we've demonstrated over this period with the strong cash flow, is that, operationally, we've managed to put the things in place that are really important, that have flowed through, through the financial outcomes. And this, we think, is in the context of the 2050 targets in the U.K., we're really beginning to see is, kind of, build back better narrative and a net zero requirement by 2050, go forward to address climate change.

[Operator Instructions] The first question we have is the benefits of Zap-Pay, is that -- is it meant to be a universal so users only need the Zap-Map? Why was Zap-Map launched with only 5 charges, all engine and all close, geographically? What percentage of EV chargers in the U.K. will support Zap-Map in 6 months and 1 year from now?

It's a great question. So if I start with the interruptible on Zap-Pay, I think the idea of Zap-Pay is that it should roll out across all charging points. So it's not just for a single charging point. And the challenge today is that if you are an EV driver, which I am, you tend to have to keep maybe 3 or 4, either you have to keep a subscription or you have to keep a card or you have to keep multiple cards, essentially in my front pocket, to be able to make sure that you can charge at the different charging points. And particularly, if you go on holiday, suddenly, you're in another region, which has got a different charging network system on it. So the concept of Zap-Pay is really to allow people to get rid of all of that and to be more confident that when they arrive at a charging point, not only they can charge, which is the data that comes off of Zap-Pay because it's live data for about 70% of the sites across the U.K., but also that they can then use the app to pay for that charging session. And I think, that is -- we're already seeing Renault come out with adverts, talking about mapping services and making sure that people don't have range anxiety. And then the concept that you turn up, you don't have the right card, I think that is also another anxiety that we can take away from EV driver and make it simpler for them to use. I did -- I should have written down the 3 because I got to one now, and I've forgotten the other two. I think, why do we only get rolled out in just a small area, to be honest, it was a -- so what we agreed with [indiscernible] was that -- [indiscernible] got 200 sites across the U.K. What we wanted to do was to absolutely make sure that the testing worked with -- that we could launch on two or three sites, where -- to be honest, we all went and used it personally, to make sure the customer experience is what we expected. The testers were all over it. We're now going to be rolling out across the 200 by the end of this month. So it's not just stuck in one area, but that was very purposeful. We wanted to get it announced. We wanted to get it out there. And we wanted to start to put some pressure on some of the other networks to start to fill up, which actually is exactly what happened.

Next question, please. Can we have an update on SEG. Do you believe SEG is the correct way forward for residential generation? If you do, what has caused the delay in bringing in a product to the market?

Lots of things. So SEG, for everybody, is guaranteed export -- smart guaranteed export. So this is where small generators export to the marketplace and get paid for that power. Right now, to be able to get a real value for that part, so there are offerings out there, but it's not based on actual real export to the marketplace. And that is in part because the SMART metering systems are not working properly yet. And so what you have to do is to make sure that you can send -- you can have a SMART meter that has enough channels that you can export on one of those SMART meters, and that data then gets registered within the central settlement system. So our first challenge is central settlement system, which I think we've now fixed. The second challenge is now getting it finalized through the Kraken system, which is what we're working on now. But we hope to have that ready fairly soon. All our internal systems are ready to go on and the pricing, and we want to launch that across all those Feed in Tariff customers.

Next one, what's the impact of the pandemic on customer relationships and cash generation?

Rup, I don't know whether you want to answer that one, from a cash generation point of view? From a relationships point of view, it seems to be working pretty well. A lot of people have gone digital, interestingly. So we've seen a lot more contact. That's partially, probably because of our transference over to a digital platform. So we've seen a much more contact via e-mail than previously. But from a cash point of view, Rupert?

Yes. No, from a cash perspective, in the first half of the year, I'll probably just reiterate what I said earlier, in terms of the sort of real resilience of that cash collection. I'll probably just add on the customer relationship piece, actually. The -- a lot of work focused on some of our smaller businesses, in the immediate aftermath of the lockdown, was to reach out to them to try and understand the situation they were in, to point in direction of government support that they would be able to access. Really with a view to make sure that we have a good relationship and good understanding of the situation they were in. So it sort of combined, I think, the -- I think, that, sort of, combined customer relationship and sort of proactivity, has supported cash generation, but also made sure that those -- whether we -- where there are problems that some of our customers will have, we're in a position to try and help them as early as possible and not let it just become something, which becomes a harsher cash collection, further down the line.

What mitigations are in place for a potential second wave stroke lockdown? What impact would that have on your overall resilience?

So we're obviously monitoring what's happening to energy demand, pretty much on a weekly basis. Obviously, looking at, externally, what's happening. And there's some very good starts, actually, that are beginning to be collected about activities in different sectors. So obviously, sectorally, we kind of understand our customer base reasonably well. And from our point of view, I think there are two things. One, we're now going into a winter period. So if we do see increased level of lockdown, we think we'll probably see an increased level of domestic demand. That was slightly overshadowed at the beginning of the year because we had such a warm April. If everybody remembers, we kind of had -- it was very sunny and May, particularly as well. So going into the winter period, it always starts to increase. So we think you might not see such recovery in Business growth -- Business revenues, but Domestic might start to increase. And then I think, in terms of the activities that we've done, a lot of the work, in terms of making sure we're looking after customers, as Rupert said, contacting them, looking after our debt paths, are already in place. So I think we continue that. I think the biggest challenge for us is understanding what -- how much energy we need to be buying, going forward, and monitoring the energy requirements. We've obviously seen, potentially, the aerospace industry still quite out of action, as a result of this. But we're beginning to see a lot of other areas continue to operate and continue to use energy. So we are really very exposed to the aerospace industry, but obviously, that has an overall impact on the economy.