𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

Octopus Energy Group has swung to a hefty annual loss as it revealed a hit of more than £100 million from lower energy demand due to warmer weather.

The firm, which runs Britain’s biggest gas and electricity supplier with 7.6 million customers, reported a £260.1 million pre-tax loss for the year to April 30 against profits of £77.6 million the previous year.

It said warmer weather knocked underlying earnings by around £103 million, blaming the UK’s hottest spring on record since 1885, which saw gas usage slump by 11% in March and 25% in April.

The group also said earnings were impacted by the lack of energy crisis allowance payments, with regulator Ofgem having previously allowed energy suppliers to recover costs that they had racked up during the crisis, which came to an end in 2024.

Bottom-line profits were further driven down by final one-off costs of its rescue takeover of Bulb when the supplier went bust in 2021.

But Octopus said it added another 800,000 UK energy customers from switching, taking its total in Britain to 7.6 million by the end of April, while overseas customers almost doubled to 2.4 million.

Octopus overtook British Gas to become the UK’s largest energy supplier earlier this year, with a market share of 24%.

Revenues across the group rose 10% to £13.7 billion, its figures showed.

The results came after Octopus Energy announced a deal to sell a minority stake in its Kraken Technologies division in a move valuing the software business at 8.65 billion dollars (£6.4 billion) and paving the way for its possible stock market flotation.

It sold about 1 billion dollars (£740 million) of equity in Kraken to a consortium of investors, including global investment firm D1 Capital Partners, Fidelity International and a unit of Ontario Teachers’ Pension Plan.

The investment round will see the cash used to fund both Octopus and Kraken, but it is understood the majority of the proceeds will go towards Octopus Energy.

Octopus said a further 320 million dollars (£237 million) would also be injected into Octopus by investors, led by Octopus Capital – one of Octopus Energy’s largest investors – to fund “innovation and growth”.

Octopus will retain a 13.7% stake in Kraken after the split.

Greg Jackson, founder of Octopus Energy Group, said: “With both our UK energy retail business and Kraken delivering growth and profit, and the backing of renowned investors, we’re able to continue investing in innovation and scale in other markets, whilst relentlessly focusing on customer service and value.”

The group said it spent £57 million on keeping its standard energy tariff lower for UK customers, adding that it has a “strong” balance sheet, with £1.5 billion in net assets.

But Octopus confirmed earlier this year it was one of three retail energy firms that had not yet met regulator Ofgem’s financial resilience targets.

It said it continues to “work constructively” with Ofgem on a plan to meet the rules on capital adequacy, although it added the requirements were “set at a level without precedent in any of the other deregulated markets in which we operate”.

“The group is financially resilient and the UK retail business exceeds the regulator’s minimum capitalisation requirements, with an agreed pathway to the target,” it said.

The group said the Kraken plans and further cash injection will almost double its current net assets.

Octopus announced plans in September to spin off Kraken, an artificial intelligence (AI) powered platform used by global energy retailers, connecting more than 70 million household and business energy accounts.

The demerger is set to help speed up the expansion of Kraken globally, with reports that the division could go public with a stock market listing, likely to be in London or New York, by next September.

Mr Jackson said: “Kraken is in a class of its own, in terms of technology, capability and scale.

“As an independent company with world-class backers and outstanding leadership, it will be free to grow even faster and is set to be a true UK-founded success story.”

Kraken was initially built for use by Octopus but has since picked up a raft of other utilities clients, including EDF, E.On Next, TalkTalk and National Grid US.