Utility Week

UTILITY WEEK | JUNE 2021 | 7 The Month in Review Push for growth sees Octopus' losses mount Octopus Energy chief executive Greg Jackson has said his company's £61 mil- lion loss for 2019/20 was driven by the supplier's "relentless investment" in new technologies, international expan- sion and customer growth. The retailer saw its revenue grow 160 per cent from £477 million to £1.24 bil- lion and estimates a revenue of £2 bil- lion as of year end April 2021. Octopus said its Kraken platform helped achieve efficiency gains which saw the company's gross margin rise from 0.8 per cent to 5.4 per cent and gross profit increase by £63.5 million to £67 million in the year to April 2020. However, significant investments in technology and scale led to a £61 mil- lion loss which, following a tax benefit of £8 million, stood at £53 million in total. In 2019 Jackson declared the com- pany was in its "global expansion phase" following the acquisition of Ger- man green energy supplier 4hundred, and Octopus has also since expanded into the Australian market. The company, which was valued at more than $2 billion (£1.4 billion) last year, told Utility Week it expects to remain loss-making in the next financial year due to its continued investments. Elsewhere during the period the company's UK customer base doubled to 2.3 million accounts (1.4 million households). As of April 2021 the com- pany served 3.9 million accounts (2.1 million households), or a 7.5 per cent market share. Furthermore Octopus has begun licensing its Kraken platform to fellow large supplier Eon/Npower, as well as disruptor brand Good Energy. Overall Kraken supplies 17 million accounts globally. In response to the results Jackson said: "The UK business operates at sustainable operating margins, with Kraken enabling lower operating costs than rivals. "Our net loss of £53 million is driven by our relentless investment in new technology for a low-carbon grid, expansion into more countries and mar- kets and investing in customer growth. Our mission to drive cheaper, greener energy globally is truly gathering pace." Progress continues on London's "super sewer" with a 700-tonne tunnelling machine completing its work in the capital. Tunnel boring machine Ursula needed a 1,800-tonne crane to remove it from the site in Bermondsey, after it completed 7.6km of tunnelling. As part of its drive, the machine excavated more than one million tonnes of spoil, which was removed from site by 240 barge trips. In a nod to the tradition in the tunnelling world, Tideway has named all of its machines after inspirational women from history with Ursula named after the British cryobiologist Dr Audrey 'Ursula' Smith. The Tideway project is set to complete in the first half of 2025. Investors feel Ofwat ignores them Water sector investors do not feel listened to by Ofwat, according to its annual survey of investors, which nevertheless showed overall support for the regulator's policies and methods. The poll found 48 per cent of respond- ents did not feel listened to by Ofwat, com- pared with 38 per cent who did and 15 per cent who were undecided. The survey, which was conducted in November last year, asked participants to agree or disagree with a number of statements. Views were divided on whether the reg- ulatory framework aligns the interests of companies, investors and customers, with 43 per cent agreeing, 34 per cent disagree- ing and 23 per cent being undecided. With regards to Ofwat's independence from government, 42 per cent agreed that it was, 30 per cent disagreed and 28 per cent were undecided. The survey found 64 per cent of inves- tors felt Ofwat engages with the investor and credit-rating communities in a trans- parent open way. The same proportion believed the regulator engages consistently and sufficiently with all types of invest- ment stakeholder. Qualitative feedback from the survey showed support for Ofwat's engagement through emails, briefings and one-to-ones, and in particular it's communications relating to PR19 and Covid-19. However, investors said they would also like better access to information, the Ofwat senior leadership team and those work- ing on resilience. They said the regulator should listen more to investors and have a more open mind when doing so. Ofwat said in response: "As well as seeking the views of the investor commu- nity on a number of key consultations and discussion documents, we want to ensure that we have open conversations with investors in both one-to-one and group set- tings going forward. "We are always open to hearing of new ways to engage with investors, and will build them into our engagement plans as we look to achieve the best outcomes pos- sible for customers and the environment."

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