OVO delivers strong underlying performance and welcomes new investors

• OVO reports resilient 2022 underlying full year performance, with an adjusted EBITDA of £20m despite the external challenge of the energy crisis.
• Broadening of investor base with Mayfair Equity Partners and Morgan Stanley Investment Management increasing their stake in OVO.
• £150m debt repayment strategy remains on track.
• OVO delivered £50m of support to customers during a year of record high energy prices.
• Continued investment in decarbonisation and technology, with the launch of Charge Anytime for EV drivers, OVO Solar for home solar and the national roll out of OVO Energy Experts.

Friday 21st July: OVO today announces 2022 full year results and a diversified shareholder base following new backing from Mayfair Equity Partners and Morgan Stanley Investment Management.

Financial performance

• Underlying performance: Resilient underlying performance – adjusted EBITDA of £20m.

• £40m of principal debt repayments to date, and on track for a total of £150m by the end of this year.
• Closed the year with a strong cash position of £209m, up from £145m in 2021.
• Integration of SSE Energy Services continues at pace, with Kaluza’s technology platform continuing to lower cost to serve. 
• Customer support: adjusted operating loss of £96m due to absorption of customer costs during a period of record high energy prices, including £50m Customer Support Package. 

On OVO’s 2022 performance, Raman Bhatia, CEO of OVO said:

“2022 was one of the most challenging years for the sector. We saw unprecedented volatility in energy prices that resulted in higher bills for customers. Despite these challenges, we continued to prioritise our customers who need us most with a £50m Customer Support Package. We have also made significant progress integrating SSE Energy Services customers onto our Kaluza technology platform, giving them a better online experience.” 

“We are in a solid position to create further value for customers, with a focus on continuing to invest in the technology and services that customers really need to decarbonise their homes.”

Backing from investors

Alongside today’s financial results, OVO is pleased to announce that funds advised by Mayfair Equity Partners as well as Morgan Stanley Investment Management have increased their shareholding in the company. The transaction has a total value of c.£200m.

Mayfair Equity Partners was OVO’s first external equity investment partner in 2015 and has continued to support OVO as it has invested in its proprietary technology platform, expanded into new markets, and completed strategic acquisitions. 

Morgan Stanley Investment Management is proud to have supported OVO’s growth since 2015 and has increased its shareholding, reinforcing its belief in OVO’s innovative solutions.

Daniel Sasaki, Managing Partner at Mayfair Equity Partners said:

”While OVO has become one of the UK’s largest independent energy suppliers, it maintains a challenger mindset, which is underpinned by the culture and capabilities of a world class technology business. We are happy to extend our partnership with OVO as it continues to innovate and redefine the energy market.” 

Vikram Raju, Head of Private Equity Climate Investing at Morgan Stanley Investment Management said:

“OVO has played a pivotal role in transforming the U.K. energy sector by bringing the green transition to the British consumer and meaningfully reducing CO2e emissions as we rapidly approach a 2050 Net Zero target. We look forward to continuing to contribute to the decarbonisation of the energy system by extending our partnership with OVO.”

Raman Bhatia added:

“Mayfair Equity Partners and Morgan Stanley Investment Management’s increased investment and ongoing support mark an important moment for OVO. Despite the challenges of the energy market, it highlights the potential for growth while we focus our efforts on delivering value to UK energy customers while helping them to decarbonise. We are delighted that Mayfair Equity Partners and Morgan Stanley Investment Management have chosen to support OVO’s strategy as we grow, innovate, and deliver best-in-class customer service.”

Following the event, OVO Group Ltd has been transferred to a newly incorporated entity, Energy Transitions Holdings Ltd. The Founder Stephen Fitzpatrick is a shareholder of Energy Transitions Holdings alongside Mayfair Equity Partners, Mitsubishi Corporation and Morgan Stanley Investment Management. 

ENDS

Notes to Editors 

• Adjusted EBITDA of £20m (depreciation and amortisation of £116m), during a period of high commodity price volatility.
• Significant increase in revenue and cost of sales year on year reflects increase in underlying commodity prices.
• OVO demerged from founding shareholder Imagination Industries and transferred to a newly incorporated entity, Energy Transitions Holdings Ltd.

The £1.4 bn re-measurement loss relates to commodity derivatives designated as held for trading. OVO hedges commodity costs by buying forward electricity and gas to meet customers’ future energy usage, under accounting standards (IFRS 9) a number of these positions are considered to be derivative financial instruments, which are required to be recognised at fair value with re-measurements recognised in the income statement (for further details please see Note 2).

These contracts will be used to fulfil customer contracts. Therefore, the derivative financial liabilities recognised as at 31 December 2022 will be reversed when these contracts unwind in future periods.

In other words, because we are well hedged, when prices fell during 2022 from the peaks in December 2021, so did the value of the energy we had bought in advance for our customers. For accounting purposes this results in a large loss in 2022 but this has no cash impact and will reverse in future periods when customers use this energy. The loss reflects the value at 31 December 2022 of the energy we prudently bought in advance.

For more information please contact:

[email protected]

About OVO

OVO was founded in 2009 and redesigned the energy experience to be fair, effortless, green and simple for all customers. OVO was awarded Company of the Decade at the BusinessGreen Leaders’ Awards and has won multiple awards, including Innovation Project of the Year, for investing in the market leading technology, customer service operations and digital products to help customers cut their carbon emissions. OVO is on a mission through its sustainability strategy Plan Zero to tackle the most important issue of our time; the climate crisis, by bringing our customers with us on the journey towards zero carbon living. OVO Energy has committed to being a net zero carbon business and achieve bold science-based carbon reduction targets, while helping customers reduce their household emissions at the same time.

About Mayfair Equity Partners

Mayfair Equity Partners is a dedicated technology and consumer investor, with assets under management of over £2 billion. Mayfair’s investment philosophy centres on backing people and their ideas, working with founders and management teams to help them realise their ambitions. Mayfair’s model of Active Partnership includes a senior team of dedicated functional Specialists who support portfolio companies with business process improvement initiatives that help unlock their full potential.

Mayfair has an established track record of supporting fast-growing, sector-defining companies, including Parcel2Go, the UK’s leading parcel delivery comparison website; LoopMe, a leading brand-focused mobile advertising platform; Tangle Teezer, the category defining British haircare brand; and Ultrahaptics, the world leader in interface technologies – hand tracking and mid-air haptics.

About Morgan Stanley Investment Management

Morgan Stanley Investment Management, together with its investment advisory affiliates, has more than 1,300 investment professionals around the world and $1.4 trillion in assets under management or supervision as of June  30, 2023. Morgan Stanley Investment Management strives to provide outstanding long-term investment performance, service, and a comprehensive suite of investment management solutions to a diverse client base, which includes governments, institutions, corporations and individuals worldwide. For further information about Morgan Stanley Investment Management, please visit www.morganstanley.com/im. 

Morgan Stanley has pledged to reach net-zero financed emissions by 2050 alongside mobilizing $1 trillion for sustainable solutions that support the UN Sustainable Development Goals. For more information on Sustainability at Morgan Stanley, please visit: https://www.morganstanley.com/about-us/sustainability-at-morgan-stanley