Octopus Energy Group has suffered a sizeable annual loss as it revealed a hit of more than £100m due to lower energy demand due to warmer weather.
The company, which runs Britain's largest gas and electricity supplier with 7.6 million customers, reported a pre-tax loss of £260.1 million for the year to April 30 against profits of £77.6 million the previous year.
It said warmer weather reduced underlying profits by around £103m, blaming the hottest spring on record in the UK since 1885, which saw gas usage fall by 11% in March and 25% in April.
The group also said profits were hit by a lack of energy crisis subsidy payments, as regulator Ofgem had previously allowed energy suppliers to recover costs they had accumulated during the crisis, which came to an end in 2024.
Final earnings were further reduced by the final one-time costs of its rescue acquisition of Bulb when the supplier went bankrupt in 2021.
But Octopus said it added another 800,000 UK energy customers thanks to the switch, taking its total in Britain to 7.6 million at 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 24% market share.
Groupwide revenue rose 10% to £13.7bn, 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 that values the software business at $8.65bn (£6.4bn) and paves the way for its potential flotation.
It sold around $1bn (£740m) 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.
In the investment round, the cash will be used to fund both Octopus and Kraken, but it is understood that the majority of the proceeds will go to Octopus Energy.
Octopus said investors, led by Octopus Capital, one of Octopus Energy's largest investors, would also inject a further $320m (£237m) 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 our UK retail energy business and Kraken generating growth and profits, and backed by renowned investors, we can continue to invest in innovation and scale in other markets, while relentlessly focusing on customer service and value.”
The group said it spent £57 million to keep 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 that it was one of three retail energy companies yet to meet regulator Ofgem's financial resilience targets.
It said it continues to “work constructively” with Ofgem on a plan to meet capital adequacy rules, although it added that the requirements were “set at a level unprecedented in any of the other liberalized markets in which we operate”.
“The group is financially resilient and the UK retail business exceeds the regulator's minimum capitalization requirements, with an agreed path to target,” he said.
The group said Kraken's plans and further cash injection will almost double its current net assets.
Octopus in September announced plans to spin off Kraken, an artificial intelligence (AI)-powered platform used by global energy retailers, which connects more than 70 million home and business energy accounts.
The spinoff will help accelerate Kraken's expansion globally, with reports that the division could go public with a stock market listing, likely in London or New York, by next September.
Jackson said: “Kraken is one of a kind, in terms of technology, capability and scale.
“As an independent company with world-class sponsors and outstanding leadership, it will be free to grow even faster and become a true UK-founded success story.”
Kraken was initially created for use by Octopus, but has since acquired a number of other utility clients, including EDF, E.On Next, TalkTalk, and National Grid US.
