Long term viability of the company — Bulb Community

Long term viability of the company

I saw recently that Bulb are burning through money at a fairly high rate currently - due largely to their work to expand the customer base (seeing a loss of ~£24 million reported recently). Various energy suppliers have gone under in recent months, but hopefully the same wont happen to Bulb.

Would be good to know that Bulb are being appropriately cautious during this expansion period. Sometimes in the rush to sign up new customers, spending can run ahead of revenue...

I am completely happy with the service from Bulb and often recommend them to others, (verbally, not via the referral scheme), and would hate to see them fold.

Comments

  • edited January 11
    Looking at their recently filed accounts on https://beta.companieshouse.gov.uk/company/08469555/filing-history , yes in the year ending 31st March 2018 (so although these accounts are newly filed, the data is nearly a year out of date), they did record a loss of £23.7 million, but during the time increased their customer base (properties) from 25,370 to 313,017 and turnover from £10 million to £182 million (losses in 2017 were £1.98m for the record).

    Looking at their financials, they had £12million gross profit (after they paid the suppliers), but the majority of the loss than came from administrative expenses (£35million) and then had another £0.5m on interest charges.

    The directors stated in the report that they are confident that they are "well positioned to achieve sales growth and profitability in future" and did not pay a dividend last year. They also repaid a £30 million loan in full (and early) in August 2018.

    Yes, a near £24million loss does sound a lot - but it does take companies a long take to achieve profitability (I company I was working for in the early 2000s in the tech industry still has not reported a profit and they were taken over last year).

    Bulb have covered this in their own statement on https://bulb.co.uk/blog/annual-update-for-members-2018 which covers these financials - and mentions a £60m investment.

    If we speculate (and I am just another customer with access to exactly the same public information here):
    2017-2018: 313,017 customers - turnover £182 million = £581.438 average turnover per customer. Profit £12 million = £38.34 per customer. Administration cost per customer: £111.82
    2018-now: 870,000 customers (from the blog post) * 581.438 = £505.8million estimated turnover. Estimated profit = £33.3million

    So, yes, they'll probably be running at loss 2018-2019 financial year (as the profit they would have made won't quite cover last years admin expenses), but 2020 onwards they could be profitable as their 'set up costs' (i.e. recruiting staff, training them up, getting office space, setting up computer systems, etc etc) will be reducing - the roll out of smart meters will probably also help reduce their costs (once they've paid for them to be installed). We'll probably get more insight this time next year, but I feel comfortable sticking with Bulb for now.

    [added]
    Extra Energy, one of the ones that went bust, reported for the year ending 2016 (last period accounts were filed). Had a loss of £13.6 million on 414,000 customers on a £359million turn over (with gross profit of £39.018m So their customers were paying £867 per year and had a profit of £94.24 per customer - their 'admin cost per customer' was £5.266mil was £127.21. But they also had a £58million loan from "ExtraEnergie GmbH' which was costing them £9.7million per year if I'm reading the accounts right: I suspect the German company decided to call the loan in and that caused them to go under.

    So on a per customer basis, Extra Energy were charging customers more, profiting more but their admin costs were higher as well. Bulb has already doubled Extra Energy's customer numbers and as far as I'm aware has no outstanding loans/debts/interest to pay.

    [added again]

    I've just tried to find another utility company to company Bulb against, but it's tricky. The 'big six' also tend to operate generators, provide 'services' (boiler repairs) and have very very long financial accounts - SSE's is 252 pages(!) - so trying to work out a good 'per customer costs' etc is tricky.

    I've found Co-operative Energy, which for 2017-201 had 333,000 customers (down actually from the previous year of 424,000 [when they got 160,000 customers from GB Energy]- even adding 130,000 customers from Flow Energy which they purchased). Because of that purchase, trying to work out their average per customer is screwy, but it does look like Co-op energy just can't hold onto the customers.
  • @mike470

    Thanks for posting your concerns on Community.

    The numbers can look alarming at first glance, but we're in a very stable financial position. So please don't be alarmed.

    We've also made no attempt to hide our current losses. In fact, we posted a blog post about this last month and made a press release to a number of journalists too.

    Losses don't tell the full story. We invested all that money in growth, something we're unashamed to have done. The more people that join Bulb, the greener the UK becomes and the more people save on their energy. That's why Bulb exists.

    Since January 2018, we've grown from 200,000 members to 870,000 members. We have to pay each time someone joins us through a referral or through a comparison site like MSEs Cheap Energy Club. It might seem like we're spending a lot of money on this but we do recoup this money over time.

    A useful number to think about is the life-time-value to the cost-of-acquisition ratio (LTV:CAC). In other words, the ratio of how much we spend on each member that joins bulb to how much money we make from each customer over the whole period of time that we're their supplier.

    The crucial thing to know is that this ratio is above 1.

    We fund growth by raising capital periodically. We raised £60million this summer, recognition of how solid our business plan is, and we'll use this to continue to grow and to build more technology to give our members an even better service.

    We also have plenty of cash to continue operations.

    The main takeaway is we're financially stable. But do let us know if you have any further questions.




  • Just saw the article on a news feed, came straight on to here and read this thread, glad to know bulb are in control.
  • Not sure that’s very reassuring, extra energy followed the same path, rapid growth, significant losses, capital injections from other holding companies belonging to the owner, then crash out and leave others picking up the tab. Where’s the £60M coming from and on what basis is it being invested? What assets does Bulb have?
  • northern1

    If you do a search on this forum this has been discussed in detail before, also loads of info on google.

  • Thanks Scudo
  • I was just about to post a thread. I'm glad that bulb are in control.

    I reckon it's the likes of daily mail and telegraph spreading or exaggerating lies. Both of these are right wing newspapers, most likely owned or donated to by oil oilgarchs who have an agenda against renewables.
  • It's good to know the folks at bulb have addressed the news report. The trouble is people tend to panic. I truly hope for all the people who want to continue with bulb that not too many customers leave. I am sure there will be customers who will switch companies now. I just hope for the rest of us who wish to remain it won't be enough to make the company fold.
  • Thanks RichyB and Eleanor has made for an interesting read!
  • Interesting point about right wing papers and oil oligarchs, I had a look at where bulbs money might be coming from as suggested by someone in this thread, turns out two of their shareholders seem to be bigwigs at major commodity trading firms trading in gas, not as green as I thought
  • edited January 14
    The only shareholder(s) of Bulb Energy Limited is 'Simple Energy Limited' whose shareholders are 'Mr Amit Vipool Shah Gudka' and 'Mr Hayden Wood' (the founders of Bulb) who both hold/control between 25% and 50% of shares.

    Amit USED to work at Barclays bank on the Gas and Electricity markets, but left there in July 2014 (source https://www.linkedin.com/in/amit-gudka-928180b1/ ) and Hayden used to work as an Consultant for Bain & Company ( source https://www.linkedin.com/in/haydenwood/ ) around the same time - but as https://bulb.co.uk/about/ states :
    We're Hayden and Amit, the founders of Bulb. We met five years ago when we were working in the old energy industry. We saw the same problems at all the big providers. Inefficiency. Poor service. Expensive tariffs. Dirty energy. It didn't have to be like this. The energy industry can change – and we set up Bulb to lead that change.
    So they aren't trying to hide their connections with the 'old' way of doing things, but do want to change things for the future and want Bulb to be pushing for renewables and green energy - in fact, their accounts say
    The principal activity of Bulb Energy Limited is that of supplying renewable electricity and gas. The Group's mission is to provide UK homes access to affordable renewable energy and great customer support
  • I know that’s how they present it, but I had a deeper look at the companies house filings for Simple and Bulb and they’ve had significant investment from a Phillip Sutterby, who’s also been a major shareholder at some point, he turns out to be the main European Gas trader at Mercuria. There’s a few others too from a similar background. Anyway I need to get out more, Bulbs price is ok to start with and their service is ok, I guess my point is that I don’t think there’s really any ‘good guys’ in this market, some are just better with the spin.
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