Nottingham City Council has written off £24 million of debt from its energy supplier Robin Hood Energy.
At an audit committee held on Friday (31 July), the council updated its 2018/19 annual report which had been delayed as the energy company had not finalised its accounts for the previous year.
Documents from the committee meeting show that since 31 March 2019, the council had provided loans, parent guarantees and equity that totalled £40.4 million to the struggling supplier. This investment is now estimated to be worth just £16 million, having been impaired by £24.4 million.
This includes acquiring £7.5 million of shares at a rate of £1 each, which are now valued at nil, as an alternative to a loan.
The audit raises concerns as to the material uncertainties of the company’s ability to continue, due to its dependency on the council via a £12.5 million facility as well as not seeking repayment of loans advanced to Robin Hood Energy.
“There is also the potential impact of Covid-19 as, whilst the company has relatively little exposure within the commercial sector and demand for domestic energy is expected to continue, there is a risk for all businesses, including RHE, on the operations and cash flows during this unprecedented time,” it continued.
Robin Hood Energy has struggled financially for some time, posting a £23.1 million loss for the year 2018/19. Following these results, the company appointed Deloitte to aid a strategic review of its operations.
A city council spokesperson confirmed: “These accounts, which relate to the period for 2018 to 2019, contain an impairment of £24 million in relation to Robin Hood Energy.
“It has been recognised for some time that the long-term financial outlook for Robin Hood Energy was not sustainable for the council. As such, the decision was taken last Christmas to bring in a new management team to stabilise Robin Hood Energy’s finances and to undertake a comprehensive strategic review to consider all options for the future of the company. This review will be completed shortly.”
The company underwent a management shakeup at the beginning of 2020, after Gail Scholes, the former chief executive, and Robert Bains, the former managing director, were both terminated on the 16 December. David Bird, the ex-managing director of E.On UK and ex-CEO of Co-op Energy, Jeff Whittingham, were brought in in an effort to save the energy supplier.
Robin Hood Energy has not commented on Nottingham City Council’s audit.