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OVO’s results ‘bear the fruit’ of SSE deal after accelerated integration

OVO founder Stephen Fitzpatrick. Image: OVO Energy

OVO founder Stephen Fitzpatrick. Image: OVO Energy

OVO Energy is hailing 2020 as a landmark year for the company, having completed the largest industry consolidation deal to date.

This was due to its acquisition of SSE Energy Services, which bumped its customer numbers significantly, helping it to move from a challenger brand to the third largest energy supplier. As such, it had 4,500,000 customers in 2020 compared to 1,377,000 in 2019.

OVO recorded adjusted EBITDA of £97 million in 2020, while its revenues increased from £1.4 billion to £4.5 billion.

Additionally, the company saw what it said were significant improvements in its underlying operating profit, which rose from a £103 million loss in 2019 to a £7 million loss in 2020. It is projected to continue on this trajectory in 2021, returning to operating profit.

OVO said its integration plans, which were expected to be phased over a number of years, were accelerated due to the impact of COVID-19. As such, the majority of the £110 million of exceptional integration costs were brought forward to 2020, resulting in a total loss for the year of £141 million.

These costs are split into £22 million of M&A and legal costs associated with the acquisition of SSE Energy Services, £15 million for integrating the two businesses onto shared systems and platforms, £18 million for the accelerated closure of offices and brought forward property costs and £55 million of voluntary redundancy costs.

OVO announced 2,600 redundancies in May 2020, with consumers turning to digital services due to the COVID-19 pandemic, reducing demand for some roles within the company.

In its 2020 financial results, OVO also detailed the progress made with its Kaluza platform in 2020, having continued to invest to support the migration of SSE customers and the global transition to zero carbon electricity grids.

Kaluza secured licensing deals with a variety of international businesses including European energy giant Eni in 2020 and Australia's largest energy retailer, AGL, in early 2021.

“It has been clear for a long time that the energy market is changing in radical ways and we are focused on building a business with a purpose, solving one of the greatest challenges of our times, and able to succeed in this new environment," said Stephen Fitzpatrick, founder of OVO.

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