Energy Companies House of Cards - Avro Energy Bust - But Money for Directors

 With the price of gas rocketing over recent weeks it has exposed a large number of smaller energy companies that are now struggling to cover their costs and are expected to fail in the coming weeks and months. It has been suggested that the UK energy market could drop from having over 60 suppliers to as low as 10 after this winter.

One example exposed by a poster on the MSE forum is the company AVRO Energy. They have looked the public information that AVRO have posted to Companies House as they are legally required to do. It has highlighted some significant issues with their financial position and their ability to keep operating as a going concern. The regulator has questions about this too and has now filed a request for an immediate response to their financial queries or AVRO may lose their licence.

Update - in the time I've been writing this Avro have now stopped trading

Setup in 2014 by Jake Brown (owned 100% by him and presumably his father Philip Andrew Brown) at the time a 20 year old with no experience in the Energy industry started with a share capital of £100 - selling cheap energy by taking on the larger suppliers.

For the FY ended 2019 this was their financial position

So they made a loss of £27 MILLION in 2019. Their balance sheet shows the totals:

So still only £100 of share capital - the loss funded entirely by creditors of £98 MILLION,

In Avro's  Balance Sheet at June 2019, they have £18.5M in the bank and owe their customers (through advance payments) nearly £46M.Their next accounts to June 2020 are due to be filed in the next 7 days.

but who are those creditors? - note 11:

Customer Advance payments of almost £46 MILLION!! So the company makes losses of £27 Million and are being sustained only through the £46 Million of advance customer payments - CUSTOMER CREDIT BALANCES! No wonder they try to avoid paying back customers!

Because the company has no retained earnings, it cannot legally pay dividends, so what does it do? 

Dig a little deeper into Avro accounts and you'll see that in 2019 they paid £2.25m to Sentido Marketing Limited for Management Services (just another way of extracting cash) - Sentido is owned by Jake Brown et al - and if you then look at the Sentido Accounts - they have a very healthy positive balance sheet with cash in bank and positive shareholder's funds.

there's this little note about Directors Loans:

Avro pays management services fees to Sentido - because Avro doesn't make any money it can't pay dividends, so it pays this way instead.

Sentido makes a profit and the money can be paid as dividends to the shareholders.