Ovo chief Stephen Fitzpatrick faces quiz over £27m loan

The parent company of Britain’s third-largest energy supply chain paid out £27 million in loans to its directors last year, new documents show.

Imagination Industries – owner of Ovo Group, which has 4.5 million energy customers – has only two directors. One is the founder and CEO of billionaire Stephen Fitzpatrick and the other is Chief Financial Officer Vincent Casey.

The loans were disclosed in Imagination’s latest accounts, where separately the auditors expressed concerns about the company’s loans.

Ovo represents most of Fitzpatrick’s eclectic business empire. His interests include a US-listed flying taxi company registered in the Cayman Islands. He also owns the Kensington Roof Gardens in London, formerly a party venue owned by Sir Richard Branson.

Fitzpatrick, a Belfast-born former trader in the city, launched Ovo as a challenger to the Big Six energy suppliers. Rising gas prices and tight household budgets have raised concerns about finances.

Earlier this year, Fitzpatrick was put to the test by MPs for more than £40 million in intercompany loans and payments, which he says he did not recognize. They called on him to “open the books” to provide more clarity.

Documents for the year ending December 2021 show that a £27 million loan has been made to the directors of Imagination and has been settled through a share buy-back. The terms of the loan have not been disclosed. Fitzpatrick owns 100 percent of Imagination’s share capital.

Ovo declined to comment when asked about the reason for the loan.

Separately, Imagination made a £3.75 million loan to Kensington Roof Gardens with an interest rate of 7 percent. Nearly £3 million in loans was also made to Vertical Aerospace, Fitzpatrick’s fledgling flying taxi company.

It is unusual to lend £27 million to directors, but there is no suggestion that the loans violated financial rules or were illegal. Since launching Ovo in 2009 with a £350,000 cat, Fitzpatrick has amassed staggering riches. This allowed him to buy a Formula 1 team in 2015, although the venture collapsed just two years later.

He came under scrutiny for taking £2million out of Ovo in 2013 – when the business was in its infancy and at a loss – to pay for a house in the Cotswolds.

A leading accountant, who will not be named, said the executive loans “were not what you would expect from a company that takes care of so many domestic customers”, adding that the balance sheet is “very weak”.

In the Imagination accounts signed at the end of September, renowned accounting firm PricewaterhouseCoopers expressed a “material uncertainty” about the group’s survival.

The auditor said: ‘The group predicts breaching the financial covenants with trade creditors under the base case and the severe but plausible downside scenarios that could allow counterparties to terminate such arrangements or request additional collateral.

“If this were to happen, the group may not be able to find an alternative counterparty to facilitate continued trading on a sustainable basis.”

High costs last year led the Imagination group to extend its credit facility to £30 million, repayable in March 2023.

Imagination, which derives its entire revenue from the Ovo Group, reported sales of £4.5 billion and profits of £337 million.

The Mail on Sunday revealed last month that Ovo has suffered £300m in losses in the three years to 2020. Imagination’s profit this time was due to a one-time gain of £422 million from cashing in on energy contracts.

The auditor’s warnings represent a more pessimistic view than Imagination’s previous annual report, which identified no concerns that could raise “significant doubt” in the group. They are also following a similar warning published in Ovo’s accounts in September.

Questions may also be raised about Fitzpatrick’s attendance at Ovo board meetings. He missed two of the four meetings, so he attended less than any other director. The reason for his absence is unknown.

Fitzpatrick was a vocal campaigner for state intervention as energy prices soared this year. He begged the ministers to prevent people from getting cold and hungry.

Ovo and Imagination declined to comment.