Short-term cash injection to fuel further growth
Robin Hood Energy has this week agreed a short-term interest-bearing loan of £5.5m repayable over two years to continue its growth story. The decision to grant the funding was made by Nottingham City Council on Monday (17th December).
In the UK energy market customers pay in arrears for energy used but suppliers buy the commodity upfront and potentially far in advance to ensure they can offer customers the most competitive tariffs. Due to the outperformance in customer numbers, more energy than expected will need to be purchased and the majority of the loan will be used to forward purchase the extra energy commodities, in a market that is highly volatile.
The original Executive Board Report when Robin Hood Energy was set up outlined that funding would be provided by Nottingham City Council on a commercial loan basis for the first 4 years, whilst the business was in a start-up phase. The business has now been trading for 3 years and in its latest accounts returned a small profit, the first newly created energy supplier to post a return within its first three years.
During this period turnover has grown to nearly £100m, which was originally targeted within 10 years, and customer numbers have now exceeded the original business plan. The business now employs over 200 employees in its Nottingham City Centre offices and the not-for-profit business continues to recruit more employees to service its growing customer base.
In the last 12 months alone, inroads into the Business-to-Business market have been very successful with contract being secured way above the expected value and over 3,000 business meter points being supplied by Robin Hood Energy. The scale of Robin Hood Energy’s footprint has also expanded into 10 other local authorities and councils across the UK, through their White Label partner programme, which sees further revenue and jobs flowing back into Nottingham.
The loan, in addition to the £20m originally loaned when the business was formed, is on the same commercial terms that sees Robin Hood Energy pay 7.5% interest on the loan. To date, the investment by Nottingham City Council has seen over £2m of interest payments returned to the Council during its term. The specific terms of this additional short-term borrowing ensures it will be paid back within 2 years.
As well as the success in customer numbers, the publically owned “not-for-profit” business continues to disrupt the traditional energy market and stranglehold of the Big 6 in other ways.