Octopus swallows £150m loss from rising energy bills before Bulb buy-out customer boom
Octopus Energy Group (Octopus) has reported another year of losses after the supplier opted to swallow a £150m bill in rising wholesale costs rather than pass it on to customers.
The supplier opted to take on a chunk of rising wholesale costs as customers grappled with record energy bills – following an industry crisis and Russia’s invasion of Ukraine.
Overall, the energy firm made a £141m operating loss, despite a doubling in revenues from £1.9bn to £3.9bn in the 12 months of trading up to April 2022.
Net assets increased 130 per cent from £204m to £473m following investment from Generation Investment Management and CPPIB
It also boosted customer numbers 54 per cent from 2m to 3.2m.
The company’s technology arm, Kraken, pumped up its revenues from £69m to £115m, hiking its gross profit from £66m to £110m – a 68 per cent rise in earnings.
Octopus has not turned a full year profit since its foundation in 2015 – however, if the supplier had decided to pass on the £150m bill to customers, it would have been in the green for the first time.
It has calculated that more than seven million households – or 24 per cent of UK homes – are severely struggling to pay energy bills and are either in, or at risk of, fuel poverty.
Greg Jackson, chief executive and founder of Octopus, said: “The team at Octopus Energy Group has worked incredibly hard to support customers through the pandemic and now the energy crisis.
“We could have made a profit, but now’s not the time – instead we chose to absorb £150m of escalating costs on behalf of customers through prices and support funds, debt-forgiveness and increased service.”
Despite the economic downturn, Octopus managed to expand into multiple new regions with acquisitions in Spain, Italy and France and entry into Poland.
This means that Octopus’ tentacles have now expanded to 13 countries across four continents.
Octopus is set for a ramp up in customers, after acquiring Bulb Energy (Bulb) following a lengthy bidding process.
The decision is subject to a judicial review pushed for by British Gas owner Centrica concerned over transparency issues relating to the deal.
It is predicting the costs to the taxpayer of taking on Bulb could be as low as £260m, despite previous forecasts putting the takeover costs in the billions.