{ "documentInfo": { "documentType": "https://xbrl.org/2021/xbrl-json", "features": { "xbrl:canonicalValues": true }, "namespaces": { "draxgroupplc": "http://draxgroupplc.com/xbrl/2024", "ifrs-full": "https://xbrl.ifrs.org/taxonomy/2022-03-24/ifrs-full", "iso4217": "http://www.xbrl.org/2003/iso4217", "scheme": "http://standards.iso.org/iso/17442", "xbrl": "https://xbrl.org/2021", "xbrli": "http://www.xbrl.org/2003/instance" }, "taxonomy": [ "http://draxgroupplc.com/xbrl/2024/549300YPSNTXR4ZHSR98-2024-12-31.xsd" ] }, "facts": { "fact-1": { "value": "Drax Group plc", "dimensions": { "concept": "ifrs-full:NameOfReportingEntityOrOtherMeansOfIdentification", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-636": { "value": "Introduction The Consolidated financial statements provide detailed information about the financial performance (Consolidated income statement and Consolidated statement of comprehensive income), financial position (Consolidated balance sheet), reserves (Consolidated statement of changes in equity), and cash flows (Consolidated cash flow statement) of Drax Group plc (the Company) together with all entities controlled by the Company (collectively, the Group). The notes to the Consolidated financial statements provide additional information on the items in the Consolidated income statement, Consolidated statement of comprehensive income, Consolidated balance sheet, Consolidated statement of changes in equity and Consolidated cash flow statement. The notes include explanations of the information presented. In general, the additional information in the notes to the Consolidated financial statements is required by law, International Financial Reporting Standards (IFRS) or other regulations to facilitate increased understanding of the primary statements set out on pages 167 to 171, as well as voluntary information which management believes users of the accounts may find useful, in line with the principles of IFRS. Basis of preparation The Consolidated financial statements have been prepared in accordance with the United Kingdom adopted International Accounting Standards (IAS) in conformity with the requirements of the Companies Act 2006. The Consolidated financial statements have been prepared on the historical cost basis, except for certain assets and liabilities that are measured at fair value (principally derivative financial instruments) and the assets and liabilities of the Group\u2019s defined benefit pension scheme (measured at fair value and using the projected unit credit method respectively). The Consolidated financial statements are presented in pounds sterling, the functional currency of the Company and the Group\u2019s presentational currency, rounded to the nearest million to one decimal place unless stated otherwise. Foreign currency transactions Each entity in the Group determines its own functional currency and items included in the results of each entity are measured using that functional currency. Transactions in currencies other than an entity\u2019s functional currency are initially recorded in the transaction currency and translated into the entity\u2019s functional currency at the average monthly exchange rate to the extent that this approximates the exchange rate prevailing at the date of the transaction. If the average monthly exchange rate is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, income and expenditure are translated at the rates prevailing at the date of the transaction. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are translated at the exchange rates prevailing at that date. Non-monetary items measured at historical cost are translated at the date of the transaction using the average monthly exchange rate to the extent that this approximates the exchange rate prevailing on the date the transaction occurred. Non-monetary items that are measured at fair value are translated at the exchange rate at the date when the fair value was determined. Foreign exchange gains and losses arising on such translations are recognised in the Consolidated income statement within foreign exchange gains or losses. Foreign exchange gains or losses on qualifying cash flow hedges are recognised in other comprehensive income (OCI) within the Consolidated statement of comprehensive income, and deferred within equity to the extent the hedges are effective, until the hedged item occurs. Foreign operations The assets and liabilities of foreign operations with a functional currency other than sterling are translated into sterling using the exchange rates prevailing at the reporting date. The income and expenditure of such operations are translated into sterling using the average monthly exchange rate to the extent that this approximates the exchange rates prevailing at the date of the transactions. If the average monthly exchange rate is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, income and expenditure are translated at the rates prevailing at the date of the transaction. Foreign exchange gains and losses resulting from the retranslation of the foreign operation\u2019s net assets, and its results for the year, are recognised in OCI within the Consolidated statement of comprehensive income. Climate change The impact of climate change has been considered throughout the preparation of the Annual report and accounts. In particular, and in compliance with the FCA Listing Rules 9.8.6(8), the Task Force on Climate-related Financial Disclosures (TCFD) section of the Strategic report contains information on the four recommendations and 11 recommended disclosures of the TCFD. Consideration in respect of the Consolidated financial statements focused on: \u2013 Critical accounting judgements and key sources of estimation uncertainty \u2013 Impairment of assets \u2013 Going concern and viability \u2013 Useful economic lives of fixed assets \u2013 Present value of decommissioning provisions \u2013 Fair value of contingent consideration \u2013 Defined benefit pension scheme \u2013 Renewable certificates \u2013 Sustainable financing \u2013 Deferred tax assets Further information on these considerations can be found in note 3.8 to the Consolidated financial statements. Going concern The Group\u2019s business activities, along with future developments that may affect its financial performance, financial position and cash flows, are discussed on pages 1 to 85 of this Annual report and accounts. The current market conditions and financial performance of the Group are considered in the Financial review starting on page 18. In assessing going concern the Directors have considered the period up to 31 March 2026, which reflects a period of at least 12 months from the date of signing the Consolidated financial statements, as this period extends beyond the Group\u2019s debt repayment of the remaining \u20ac143.8 million bond maturing in November 2025 and C$200.0 million and \u20ac70.0 million of loan facilities maturing in January 2026. There are no further debt maturities following these repayments until 2027. See note 4.2 for further details on the Group\u2019s borrowings. The Directors have also considered any significant events, including any committed outflows beyond this period, in forming their conclusion. The going concern assessment primarily focuses on cash flow forecasts, available liquidity and continued compliance with banking covenants over the period assessed. The cash flow forecasts used to assess going concern are modelled for the impact of severe but plausible scenarios, consistent with the viability assessment detailed on pages 84 and 85. The scenarios modelled included a decrease in power prices and an increase in biomass costs. At 31 December 2024, the Group had cash and committed facilities of \u00a3806.0 million (see note 2.7) and borrowings of \u00a31,176.7 million (see note 4.2). Under all scenarios modelled, the Group maintained sufficient liquidity and continued to remain in compliance with its covenants. The Directors have therefore concluded that they have a reasonable expectation that the Group will continue to meet its liabilities as they fall due for a period of at least 12 months from the date of signing these Consolidated financial statements and have adopted the going concern basis in preparing these Consolidated financial statements. See the Viability statement on pages 84 and 85 for details of the Directors\u2019 assessment that they have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the next five years based on forecasts and projections that take into account reasonably possible changes in trading performance and other key assumptions. Basis of consolidation These Consolidated financial statements incorporate the financial results of the Company and of all its subsidiaries made up to 31 December each year. Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which the Group obtains control to the date control ceases. Accounting policies of subsidiaries have been aligned where necessary to ensure consistency with the policies adopted by the Group. All intra-group assets and liabilities, equity, income, expenses, unrealised profits and cash flows relating to transactions between the members of the Group are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Non-controlling interests in subsidiaries are identified separately from the Group\u2019s equity. The interests of non-controlling shareholders that are current ownership interests, entitling their holders to a proportionate share of net assets upon liquidation, may initially be measured at fair value or at the non-controlling interests\u2019 proportionate share of the fair value of the acquiree\u2019s identifiable net assets. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non- controlling interests\u2019 share of subsequent changes in equity. Profit or loss and each component of OCI are attributed to the owners of the parent company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. See note 4.5 for the accounting policy and further details on the Group\u2019s accounting for non-controlling interests. Joint arrangements are contractual arrangements where two or more parties have joint control over the arrangement. Joint arrangements are classified as either a joint operation or a joint venture based upon an analysis of the rights and obligations of the parties in the normal course of business. If the parties to the joint arrangement have direct rights to the assets, and direct obligations for the liabilities, relating to the arrangement, then it is a joint operation. If the parties to the joint arrangement have rights to the net assets of the arrangement, then it is a joint venture. The Group currently has one joint operation and no joint ventures. The Group recognises its direct right to assets, liabilities, revenue and expenses of the joint operation, as well as its share of any jointly entitled assets, liabilities, income and expenditure. Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating policies. This is generally the case where the Group holds between 20% and 50% of the voting rights of an entity. Associates are accounted for using the equity method. Investments in associates are initially recognised at cost, which includes transaction costs. Goodwill is not separately recognised in relation to associates. Subsequent to initial recognition, the carrying amount of investments in associates is adjusted to recognise the Group\u2019s share of after-tax profit or loss and each component of OCI of equity-accounted associates that are recognised in the Consolidated income statement and Consolidated statement of comprehensive income respectively. Dividends received or receivable from associates are recognised as a reduction in the carrying amount of the investment. If the carrying amount of an associate reaches \u00a3nil, the Group only recognises its share of losses from the associate to the extent it has incurred obligations or made payments on behalf of the associate. Unrealised gains on transactions between the Group and its associates are eliminated against the investment to the extent of the Group\u2019s percentage ownership in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of impairment. Accounting policies of equity-accounted associates have been aligned where necessary to ensure consistency with the policies adopted by the Group. Associates are tested for impairment whenever there are any indicators of impairment. An impairment loss is recognised to the extent that the carrying amount of the investment exceeds its recoverable amount. Impairment losses on associates are recognised within impairment of non-current assets in the Consolidated income statement. 8.1 General information Drax Group plc (the Company) is a public company, limited by shares, incorporated in the United Kingdom under the Companies Act 2006, and registered in England and Wales. The Company and its subsidiaries (collectively, the Group) have four principal activities: \u2013 Production and subsequent sale of biomass pellets from the Group\u2019s processing facilities in North America \u2013 Generation and sale of electricity from biomass assets in the UK \u2013 Generation and sale of electricity from pumped storage, run-of-river hydro and OCGTs assets, and the processing and sale of waste- derived pellets, in the UK \u2013 Supply of electricity to non-domestic customers in the UK The Group\u2019s activities are principally based within the UK, US and Canada. The address of the Company\u2019s registered office and principal establishment is Drax Power Station, Selby, North Yorkshire, YO8 8PH, United Kingdom. A full list of the Company\u2019s direct and indirect related undertakings is disclosed in note 5 to the Company\u2019s separate financial statements, which follow these Consolidated financial statements.", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralInformationAboutFinancialStatementsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-563": { "value": "
Basis of preparation
The Consolidated financial statements
have been prepared in accordance with
the United Kingdom adopted International
Accounting Standards (IAS) in conformity
with the requirements of the Companies
Act 2006.
The Consolidated financial statements
have been prepared on the historical
cost basis, except for certain assets and
liabilities that are measured at fair value
(principally derivative financial
instruments) and the assets and liabilities
of the Group\u2019s defined benefit pension
scheme (measured at fair value and using
the projected unit credit method
respectively).
The Consolidated financial statements
are presented in pounds sterling, the
functional currency of the Company
and the Group\u2019s presentational currency,
rounded to the nearest million to one
decimal place unless stated otherwise.
Foreign currency transactions
Each entity in the Group determines its
own functional currency and items
included in the results of each entity are
measured using that functional currency.
Transactions in currencies other than an
entity\u2019s functional currency are initially
recorded in the transaction currency and
translated into the entity\u2019s functional
currency at the average monthly exchange rate to the extent that this approximates the exchange rate prevailing at the date of the transaction. If the average monthly exchange rate is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, income and expenditure are translated at the rates prevailing at the date of the transaction. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are translated at the exchange rates prevailing at that date. Non-monetary items measured at historical cost are translated at the date of the transaction using the average monthly exchange rate to the extent that this approximates the exchange rate prevailing on the date the transaction occurred. Non-monetary items that are measured at fair value are translated at the exchange rate at the date when the fair value was determined. Foreign exchange gains and losses arising on such translations are recognised in the Consolidated income statement within foreign exchange gains or losses. Foreign exchange gains or losses on qualifying cash flow hedges are recognised in other comprehensive income (OCI) within the Consolidated statement of comprehensive income, and deferred within equity to the extent the hedges are effective, until the hedged item occurs. Foreign operations The assets and liabilities of foreign operations with a functional currency other than sterling are translated into sterling using the exchange rates prevailing at the reporting date. The income and expenditure of such operations are translated into sterling using the average monthly exchange rate to the extent that this approximates the exchange rates prevailing at the date of the transactions. If the average monthly exchange rate is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, income and expenditure are translated at the rates prevailing at the date of the transaction. Foreign exchange gains and losses resulting from the retranslation of the foreign operation\u2019s net assets, and its results for the year, are recognised in OCI within the Consolidated statement of comprehensive income. Climate change The impact of climate change has been considered throughout the preparation of the Annual report and accounts. In particular, and in compliance with the FCA Listing Rules 9.8.6(8), the Task Force on Climate-related Financial Disclosures (TCFD) section of the Strategic report contains information on the four recommendations and 11 recommended disclosures of the TCFD. Consideration in respect of the Consolidated financial statements focused on: \u2013 Critical accounting judgements and key sources of estimation uncertainty \u2013 Impairment of assets \u2013 Going concern and viability \u2013 Useful economic lives of fixed assets \u2013 Present value of decommissioning provisions \u2013 Fair value of contingent consideration \u2013 Defined benefit pension scheme \u2013 Renewable certificates \u2013 Sustainable financing \u2013 Deferred tax assets Further information on these considerations can be found in note 3.8 to the Consolidated financial statements. Going concern The Group\u2019s business activities, along with future developments that may affect its financial performance, financial position and cash flows, are discussed on pages 1 to 85 of this Annual report and accounts. The current market conditions and financial performance of the Group are considered in the Financial review starting on page 18. In assessing going concern the Directors have considered the period up to 31 March 2026, which reflects a period of at least 12 months from the date of signing the Consolidated financial statements, as this period extends beyond the Group\u2019s debt repayment of the remaining \u20ac143.8 million bond maturing in November 2025 and C$200.0 million and \u20ac70.0 million of loan facilities maturing in January 2026. There are no further debt maturities following these repayments until 2027. See note 4.2 for further details on the Group\u2019s borrowings. The Directors have also considered any significant events, including any committed outflows beyond this period, in forming their conclusion. The going concern assessment primarily focuses on cash flow forecasts, available liquidity and continued compliance with banking covenants over the period assessed. The cash flow forecasts used to assess going concern are modelled for the impact of severe but plausible scenarios, consistent with the viability assessment detailed on pages 84 and 85. The scenarios modelled included a decrease in power prices and an increase in biomass costs. At 31 December 2024, the Group had cash and committed facilities of \u00a3806.0 million (see note 2.7) and borrowings of \u00a31,176.7 million (see note 4.2). Under all scenarios modelled, the Group maintained sufficient liquidity and continued to remain in compliance with its covenants. The Directors have therefore
concluded that they have a reasonable
expectation that the Group will continue
to meet its liabilities as they fall due for a
period of at least 12 months from the date
of signing these Consolidated financial
statements and have adopted the going
concern basis in preparing these
Consolidated financial statements.
See the Viability statement on pages 84
and 85 for details of the Directors\u2019
assessment that they have a reasonable
expectation that the Group will be able
to continue in operation and meet its
liabilities as they fall due over the next five
years based on forecasts and projections
that take into account reasonably possible
changes in trading performance and other
key assumptions.
Basis of consolidation
These Consolidated financial statements
incorporate the financial results of the
Company and of all its subsidiaries made
up to 31 December each year. Subsidiaries
are entities controlled by the Group.
The Group controls an entity when it is
exposed to, or has rights to, variable
returns from its involvement with the
entity and has the ability to affect those
returns through its power over the entity.
Subsidiaries are fully consolidated from
the date on which the Group obtains
control to the date control ceases.
Accounting policies of subsidiaries have
been aligned where necessary to ensure
consistency with the policies adopted by
the Group.
All intra-group assets and liabilities, equity,
income, expenses, unrealised profits and
cash flows relating to transactions
between the members of the Group are
eliminated on consolidation. Unrealised
losses are also eliminated unless the
transaction provides evidence of an
impairment of the transferred asset.
Non-controlling interests in subsidiaries
are identified separately from the Group\u2019s
equity. The interests of non-controlling
shareholders that are current ownership
interests, entitling their holders to a
proportionate share of net assets upon
liquidation, may initially be measured
at fair value or at the non-controlling
interests\u2019 proportionate share of the fair
value of the acquiree\u2019s identifiable net
assets. Subsequent to acquisition, the
carrying amount of non-controlling
interests is the amount of those interests
at initial recognition plus the non-
controlling interests\u2019 share of subsequent
changes in equity.
Profit or loss and each component of OCI
are attributed to the owners of the parent
company and to the non-controlling
interests even if this results in the
non-controlling interests having a deficit
balance.
See note 4.5 for the accounting policy and
further details on the Group\u2019s accounting
for non-controlling interests.
Joint arrangements are contractual
arrangements where two or more parties
have joint control over the arrangement.
Joint arrangements are classified as either a
joint operation or a joint venture based upon
an analysis of the rights and obligations of
the parties in the normal course of business.
If the parties to the joint arrangement have
direct rights to the assets, and direct
obligations for the liabilities, relating to the
arrangement, then it is a joint operation.
If the parties to the joint arrangement have
rights to the net assets of the arrangement,
then it is a joint venture.
The Group currently has one joint
operation and no joint ventures. The
Group recognises its direct right to assets,
liabilities, revenue and expenses of the
joint operation, as well as its share of any
jointly entitled assets, liabilities, income
and expenditure.
Associates are those entities in which the
Group has significant influence, but not
control or joint control, over the financial
and operating policies. This is generally the
case where the Group holds between 20%
and 50% of the voting rights of an entity.
Associates are accounted for using the
equity method. Investments in associates
are initially recognised at cost, which
includes transaction costs. Goodwill is
not separately recognised in relation
to associates. Subsequent to initial
recognition, the carrying amount of
investments in associates is adjusted to
recognise the Group\u2019s share of after-tax
profit or loss and each component of OCI
of equity-accounted associates that are
recognised in the Consolidated income
statement and Consolidated statement
of comprehensive income respectively.
Dividends received or receivable from
associates are recognised as a reduction
in the carrying amount of the investment.
If the carrying amount of an associate
reaches \u00a3nil, the Group only recognises
its share of losses from the associate to
the extent it has incurred obligations or
made payments on behalf of the associate.
Unrealised gains on transactions between
the Group and its associates are eliminated
against the investment to the extent
of the Group\u2019s percentage ownership in
these entities. Unrealised losses are also
eliminated unless the transaction provides
evidence of impairment. Accounting
policies of equity-accounted associates
have been aligned where necessary to
ensure consistency with the policies
adopted by the Group.
Associates are tested for impairment
whenever there are any indicators of
impairment. An impairment loss is
recognised to the extent that the carrying
amount of the investment exceeds its
recoverable amount. Impairment losses
on associates are recognised within
impairment of non-current assets in
the Consolidated income statement.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-608": { "value": "Foreign currency transactions Each entity in the Group determines its own functional currency and items included in the results of each entity are measured using that functional currency. Transactions in currencies other than an entity\u2019s functional currency are initially recorded in the transaction currency and translated into the entity\u2019s functional currency at the average monthly exchange rate to the extent that this approximates the exchange rate prevailing at the date of the transaction. If the average monthly exchange rate is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, income and expenditure are translated at the rates prevailing at the date of the transaction. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFunctionalCurrencyExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-574": { "value": "Foreign currency transactions Each entity in the Group determines its own functional currency and items included in the results of each entity are measured using that functional currency. Transactions in currencies other than an entity\u2019s functional currency are initially recorded in the transaction currency and translated into the entity\u2019s functional
currency at the average monthly
exchange rate to the extent that this
approximates the exchange rate prevailing
at the date of the transaction. If the
average monthly exchange rate is not
a reasonable approximation of the
cumulative effect of the rates prevailing
on the transaction dates, income and
expenditure are translated at the rates
prevailing at the date of the transaction.
At each reporting date, monetary assets
and liabilities that are denominated in
foreign currencies are translated at the
exchange rates prevailing at that date.
Non-monetary items measured at
historical cost are translated at the date of
the transaction using the average monthly
exchange rate to the extent that this
approximates the exchange rate prevailing
on the date the transaction occurred.
Non-monetary items that are measured
at fair value are translated at the exchange
rate at the date when the fair value was
determined. Foreign exchange gains and
losses arising on such translations are
recognised in the Consolidated income
statement within foreign exchange gains
or losses. Foreign exchange gains or
losses on qualifying cash flow hedges
are recognised in other comprehensive
income (OCI) within the Consolidated
statement of comprehensive income, and
deferred within equity to the extent the
hedges are effective, until the hedged
item occurs.
Foreign operations
The assets and liabilities of foreign
operations with a functional currency
other than sterling are translated into
sterling using the exchange rates
prevailing at the reporting date. The
income and expenditure of such
operations are translated into sterling
using the average monthly exchange rate
to the extent that this approximates the
exchange rates prevailing at the date of
the transactions. If the average monthly
exchange rate is not a reasonable
approximation of the cumulative effect
of the rates prevailing on the transaction
dates, income and expenditure are
translated at the rates prevailing at the
date of the transaction. Foreign exchange
gains and losses resulting from the
retranslation of the foreign operation\u2019s
net assets, and its results for the year, are
recognised in OCI within the Consolidated
statement of comprehensive income.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-575": { "value": "
Going concern
The Group\u2019s business activities, along
with future developments that may
affect its financial performance, financial
position and cash flows, are discussed
on pages 1 to 85 of this Annual report and
accounts. The current market conditions
and financial performance of the Group
are considered in the Financial review
starting on page 18.
In assessing going concern the Directors
have considered the period up to
31 March 2026, which reflects a period of
at least 12 months from the date of signing
the Consolidated financial statements, as
this period extends beyond the Group\u2019s
debt repayment of the remaining
\u20ac143.8 million bond maturing in November
2025 and C$200.0 million and
\u20ac70.0 million of loan facilities maturing in
January 2026. There are no further debt
maturities following these repayments
until 2027. See note 4.2 for further details
on the Group\u2019s borrowings. The Directors
have also considered any significant
events, including any committed outflows
beyond this period, in forming their
conclusion.
The going concern assessment primarily
focuses on cash flow forecasts, available
liquidity and continued compliance with
banking covenants over the period
assessed. The cash flow forecasts used to
assess going concern are modelled for the
impact of severe but plausible scenarios,
consistent with the viability assessment
detailed on pages 84 and 85. The
scenarios modelled included a decrease
in power prices and an increase in biomass
costs. At 31 December 2024, the Group
had cash and committed facilities of
\u00a3806.0 million (see note 2.7) and
borrowings of \u00a31,176.7 million (see note
4.2). Under all scenarios modelled, the
Group maintained sufficient liquidity and
continued to remain in compliance with its
covenants. The Directors have therefore
concluded that they have a reasonable expectation that the Group will continue to meet its liabilities as they fall due for a period of at least 12 months from the date of signing these Consolidated financial statements and have adopted the going concern basis in preparing these Consolidated financial statements. See the Viability statement on pages 84 and 85 for details of the Directors\u2019 assessment that they have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the next five years based on forecasts and projections that take into account reasonably possible changes in trading performance and other key assumptions. ", "dimensions": { "concept": "ifrs-full:DisclosureOfGoingConcernExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-576": { "value": "Basis of consolidation These Consolidated financial statements incorporate the financial results of the Company and of all its subsidiaries made up to 31 December each year. Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which the Group obtains control to the date control ceases. Accounting policies of subsidiaries have been aligned where necessary to ensure consistency with the policies adopted by the Group. All intra-group assets and liabilities, equity, income, expenses, unrealised profits and cash flows relating to transactions between the members of the Group are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Non-controlling interests in subsidiaries are identified separately from the Group\u2019s equity. The interests of non-controlling shareholders that are current ownership interests, entitling their holders to a proportionate share of net assets upon liquidation, may initially be measured at fair value or at the non-controlling interests\u2019 proportionate share of the fair value of the acquiree\u2019s identifiable net assets. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non- controlling interests\u2019 share of subsequent changes in equity. Profit or loss and each component of OCI are attributed to the owners of the parent company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. See note 4.5 for the accounting policy and further details on the Group\u2019s accounting for non-controlling interests. Joint arrangements are contractual arrangements where two or more parties have joint control over the arrangement. Joint arrangements are classified as either a joint operation or a joint venture based upon an analysis of the rights and obligations of the parties in the normal course of business. If the parties to the joint arrangement have direct rights to the assets, and direct obligations for the liabilities, relating to the arrangement, then it is a joint operation. If the parties to the joint arrangement have rights to the net assets of the arrangement, then it is a joint venture. The Group currently has one joint operation and no joint ventures. The Group recognises its direct right to assets, liabilities, revenue and expenses of the joint operation, as well as its share of any jointly entitled assets, liabilities, income and expenditure. Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating policies. This is generally the case where the Group holds between 20% and 50% of the voting rights of an entity. Associates are accounted for using the equity method. Investments in associates are initially recognised at cost, which includes transaction costs. Goodwill is not separately recognised in relation to associates. Subsequent to initial recognition, the carrying amount of investments in associates is adjusted to recognise the Group\u2019s share of after-tax profit or loss and each component of OCI of equity-accounted associates that are recognised in the Consolidated income statement and Consolidated statement of comprehensive income respectively. Dividends received or receivable from associates are recognised as a reduction in the carrying amount of the investment. If the carrying amount of an associate reaches \u00a3nil, the Group only recognises its share of losses from the associate to the extent it has incurred obligations or made payments on behalf of the associate. Unrealised gains on transactions between the Group and its associates are eliminated against the investment to the extent of the Group\u2019s percentage ownership in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of impairment. Accounting policies of equity-accounted associates have been aligned where necessary to ensure consistency with the policies adopted by the Group. Associates are tested for impairment whenever there are any indicators of impairment. An impairment loss is recognised to the extent that the carrying amount of the investment exceeds its recoverable amount. Impairment losses on associates are recognised within impairment of non-current assets in the Consolidated income statement. ", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-609": { "value": "These Consolidated financial statements incorporate the financial results of the Company and of all its subsidiaries made up to 31 December each year. Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which the Group obtains control to the date control ceases. Accounting policies of subsidiaries have been aligned where necessary to ensure consistency with the policies adopted by the Group. All intra-group assets and liabilities, equity, income, expenses, unrealised profits and cash flows relating to transactions between the members of the Group are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Non-controlling interests in subsidiaries are identified separately from the Group\u2019s equity. The interests of non-controlling shareholders that are current ownership interests, entitling their holders to a proportionate share of net assets upon liquidation, may initially be measured at fair value or at the non-controlling interests\u2019 proportionate share of the fair value of the acquiree\u2019s identifiable net assets. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non- controlling interests\u2019 share of subsequent changes in equity. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSubsidiariesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-654": { "value": "Joint arrangements are contractual arrangements where two or more parties have joint control over the arrangement. Joint arrangements are classified as either a joint operation or a joint venture based upon an analysis of the rights and obligations of the parties in the normal course of business. If the parties to the joint arrangement have direct rights to the assets, and direct obligations for the liabilities, relating to the arrangement, then it is a joint operation. If the parties to the joint arrangement have rights to the net assets of the arrangement, then it is a joint venture. The Group currently has one joint operation and no joint ventures. The Group recognises its direct right to assets, liabilities, revenue and expenses of the joint operation, as well as its share of any jointly entitled assets, liabilities, income and expenditure. Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating policies. This is generally the case where the Group holds between 20% and 50% of the voting rights of an entity. Associates are accounted for using the equity method. Investments in associates are initially recognised at cost, which includes transaction costs. Goodwill is not separately recognised in relation to associates. Subsequent to initial recognition, the carrying amount of investments in associates is adjusted to recognise the Group\u2019s share of after-tax profit or loss and each component of OCI of equity-accounted associates that are recognised in the Consolidated income statement and Consolidated statement of comprehensive income respectively. Dividends received or receivable from associates are recognised as a reduction in the carrying amount of the investment. If the carrying amount of an associate reaches \u00a3nil, the Group only recognises its share of losses from the associate to the extent it has incurred obligations or made payments on behalf of the associate. Unrealised gains on transactions between the Group and its associates are eliminated against the investment to the extent of the Group\u2019s percentage ownership in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of impairment. Accounting policies of equity-accounted associates have been aligned where necessary to ensure consistency with the policies adopted by the Group. Associates are tested for impairment whenever there are any indicators of impairment. An impairment loss is recognised to the extent that the carrying amount of the investment exceeds its recoverable amount. Impairment losses on associates are recognised within impairment of non-current assets in the Consolidated income statement. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociatesAndJointVenturesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-610": { "value": "Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and operating policies. This is generally the case where the Group holds between 20% and 50% of the voting rights of an entity. Associates are accounted for using the equity method. Investments in associates are initially recognised at cost, which includes transaction costs. Goodwill is not separately recognised in relation to associates. Subsequent to initial recognition, the carrying amount of investments in associates is adjusted to recognise the Group\u2019s share of after-tax profit or loss and each component of OCI of equity-accounted associates that are recognised in the Consolidated income statement and Consolidated statement of comprehensive income respectively. Dividends received or receivable from associates are recognised as a reduction in the carrying amount of the investment. If the carrying amount of an associate reaches \u00a3nil, the Group only recognises its share of losses from the associate to the extent it has incurred obligations or made payments on behalf of the associate. Unrealised gains on transactions between the Group and its associates are eliminated against the investment to the extent of the Group\u2019s percentage ownership in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of impairment. Accounting policies of equity-accounted associates have been aligned where necessary to ensure consistency with the policies adopted by the Group. Associates are tested for impairment whenever there are any indicators of impairment. An impairment loss is recognised to the extent that the carrying amount of the investment exceeds its recoverable amount. Impairment losses on associates are recognised within impairment of non-current assets in the Consolidated income statement. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociates", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-572": { "value": "
Accounting policies
The material accounting policies for the
measurement of an individual item in the
Consolidated financial statements are
described in the note to the Consolidated
financial statements relating to the item
concerned (see contents on page 150).
The accounting policies adopted in the
preparation of the Consolidated financial
statements are consistent with those
followed in the preparation of the Group\u2019s
Consolidated financial statements for the
year ended 31 December 2023, except
for the adoption of new standards and
amendments effective as of 1 January
2024. The Group has not early-adopted
any standard, interpretation or
amendment that has been issued but
is not yet effective.
A full listing of new standards,
interpretations and pronouncements
under IFRS applicable to these
Consolidated financial statements is
presented in note 8.2. The application
of these new requirements has not had
a material effect on the Consolidated
financial statements.
Accounting policy
Revenue represents amounts receivable for goods or services provided to customers in the normal course of business, net of trade
discounts, VAT and other sales-related taxes and excludes transactions between Group companies. Revenue is presented gross in
the Consolidated income statement when the Group controls the specified good or service prior to the transfer to the customer. When
the Group is acting primarily as an agent, revenue is recognised on a net basis. During the year, the Group reassessed the application
of the agent and principal requirements in IFRS 15 against sleeved electricity trades. See note 8.4 for further information.
A summary of the Group\u2019s principal revenue streams, along with the nature and timing of performance obligations, payment terms,
methods of recognising revenue, and any estimation uncertainties, is given in the table above.
Accounting policy
Goodwill is tested for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each of the Group\u2019s
cash-generating units (CGUs) or group of CGUs expected to benefit from the synergies of the business combination.
A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from
other assets or groups of assets. CGUs are identified consistently from period to period unless there is a change in the period that
would impact the Group\u2019s CGUs. The Group\u2019s CGUs are reassessed should any such changes occur.
The Group reviews its fixed assets (and, where appropriate, groups of assets combined into a CGU) whenever there is an indication
that an impairment loss may have been suffered. The Group assesses the existence of indicators of impairment at the end of each
reporting period.
If an indication of potential impairment exists, the recoverable amount of the asset or CGU in question is assessed with reference to
the present value of the future cash flows expected to be derived from the continuing use of the asset or CGU (value in use), or the
expected price that would be received if the asset or CGU were sold to a market participant (fair value less costs of disposal). The
recoverable amount of an asset or CGU is the higher of its fair value less costs of disposal (FVLCD) and its value in use (ViU). The initial
assessment of the recoverable amount is normally based on ViU.
The assessment of future cash flows is based on the approved long-term forecasts that support the Board\u2019s strategic planning
process and includes all expected costs necessary to generate the cash inflows from the CGU\u2019s assets in their current state and
condition, including an allocation of centrally managed costs. Future cash flows include, where relevant, contracted cash flows arising
from the Group\u2019s forward hedging activities and as a result the carrying amount of each CGU includes the fair value of those hedges.
Assessments of future cash flows consider relevant environmental and climate change factors. In particular, macro-economic,
commodity price and third-party cost assumptions reflect considerations in respect of the impact of climate change, growth in
renewable technologies, electrification and the impact of relevant policies on longer-term supply and demand profiles.
As required by IAS 36, the additional value that could be obtained from enhancing the Group\u2019s assets and the potential benefit of any
future restructuring or reorganisation that the Group is not yet committed to, is not reflected in the ViU calculation.
In determining ViU, the estimated future cash flows are discounted to present value using a pre-tax nominal discount rate reflecting
the specific risks attributable to the asset or CGU in question.
If the recoverable amount is less than the carrying amount in the Consolidated financial statements, an impairment charge is
recognised to reduce the carrying amount of the asset or CGU to the estimated recoverable amount. Any impairment loss is
recognised immediately in the Consolidated income statement.
Individual assets are considered for impairment where possible. If individual assets do not generate cash inflows that are largely
independent, the recoverable amount is determined for the CGU to which the asset belongs. Where possible, corporate assets are
allocated to an individual CGU on a reasonable and consistent basis. Where corporate assets cannot be allocated to an individual CGU
on a reasonable and consistent basis, they are included in the carrying amount of the smallest group of CGUs to which they can be
allocated on a reasonable and consistent basis.
An impairment loss relating to a CGU is allocated first to the carrying amount of any goodwill allocated to the CGU and then to the
other assets pro-rata on the basis of the carrying amount of each asset. When allocating an impairment loss to the other assets in the
CGU, if the recoverable amount of an individual asset within that CGU is determinable, the impairment loss allocated to the individual
asset is limited to reducing the asset\u2019s carrying value to its individual recoverable amount. If this results in the impairment loss
allocated to an asset being less than its pro-rata share, the excess is allocated on a pro-rata basis to the remaining assets in the CGU.
An impairment loss recognised for goodwill is not reversed in a subsequent period. Non-financial assets other than goodwill that
have an impairment loss recognised are reviewed in subsequent reporting periods for possible reversal of the impairment. Where
an impairment reversal is identified, this is reversed immediately in the Consolidated income statement.
The table below details the Group\u2019s reportable segments, the CGUs within those segments and the value of any goodwill allocated
to them. See note 5.2 for further details on goodwill.
Accounting policy
Current tax includes UK corporation tax, corporate income tax in Canada and US income tax. It is based on the taxable profit or loss
for the year in the relevant jurisdiction. Taxable profit or loss differs from profit or loss before tax as reported in the Consolidated
income statement because it excludes items of income or expenditure that are either taxable or deductible in other years or never
taxable or deductible. The Group\u2019s liability (or asset) for current tax is provided at amounts expected to be paid (or recovered) using
the tax rates and laws that have been enacted or substantively enacted by the reporting date.
A provision is made for those matters for which the tax determination is uncertain, but it is considered probable that there will be
a future outflow of funds to a tax authority. The provisions are measured at the best estimate of the amount expected to become
payable. The assessment is based on the judgement of tax professionals within the Group supported by previous experience in respect
of such activities and in certain cases is based on specialist third-party tax advice. No uncertain tax provisions have been recognised
in the current or prior year.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities
in the Consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax
liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that
it is probable that taxable profits will be available against which deductible temporary differences can be utilised.
Current and deferred taxes are credited or charged against profit or loss in the Consolidated income statement, except when they
relate to items that are recognised in other comprehensive income or directly in equity, in which case the current and deferred taxes
are recognised in the Consolidated statement of comprehensive income or directly in the Consolidated statement of changes in
equity respectively.
In accounting for tax, the Group makes assumptions regarding the treatment of items of income and expenditure for tax purposes.
The Group believes that these assumptions are reasonable, based on prior experience and consultation with third-party advisers
where deemed necessary. These assumptions are consistent with other assumptions used in these Consolidated financial
statements. Full provision is made for deferred tax at the rates of tax prevailing at the reporting date unless future rates have been
substantively enacted. Deferred tax assets are recognised where it is considered more likely than not that they will be recovered.
The recoverability of the deferred tax asset is considered an estimate as it relies on the future profitability of the Group\u2019s businesses.
See table on page 190 for a breakdown of the net deferred tax asset or liability position for each jurisdiction.
Earnings per share (EPS) represents the amount of earnings (post-tax profit or losses) attributable to the weighted average number
of ordinary shares outstanding in the year. Basic EPS is calculated by dividing the Group\u2019s earnings attributable to owners of the
parent company (profit or loss after tax, excluding amounts attributable to non-controlling interests) by the weighted average number
of ordinary shares that were outstanding during the year. Diluted EPS demonstrates the impact of all outstanding share options that
would vest on their future maturity dates if the conditions at the end of the reporting period were the same as those at the end of
the vesting period (such as those to be issued under employee share schemes \u2013 see note 6.2), and the options were exercised and
treated as ordinary shares as at the reporting date. The 57.8 million of repurchased shares (2023: 40.3 million) held in the treasury
shares reserve are not included in the weighted average calculation of shares. See note 2.11 for details of the shares repurchased in
the current year as part of the \u00a3300 million share buyback programme and note 4.4 for further details on the treasury shares reserve.
For the purpose of calculating diluted EPS, the weighted average calculation of shares excludes any share options that would have an
anti-dilutive impact.
Accounting policy
Property, plant and equipment is stated at net book value, which is its cost less any accumulated depreciation and any accumulated
impairment losses, if required, charged to date. Property, plant and equipment assets are initially measured at cost.
Cost comprises: the purchase price (after deducting trade discounts and rebates); any directly attributable costs of bringing the asset
to the location and condition necessary for it to be capable of operating in the manner intended by management; and an estimate of
the present value of the costs of dismantling and removing the item and restoring the site, where required. Depreciation reflects the
usage of the asset over time and is calculated by taking the cost of the asset, net of any expected residual value, and charging it to the
Consolidated income statement on a straight-line basis from the date that the asset is available for use and over its useful economic life
(UEL). Where relevant, this is limited to the estimated decommissioning date of the site where the asset is located.
The Group constructs many of its assets as part of long-term development projects. Assets that are under the course of construction
are not depreciated until they are ready for use in the manner intended by management.
Electricity generation assets are grouped according to the fuel type of the relevant plant. Pellet production plant includes the US and Canada based assets of the Group\u2019s Pellet Production business and the assets at the Daldowie fuel plant near Glasgow. Plant spare parts are depreciated over the remaining UEL of the relevant power station or plant, or shorter if a shorter UEL is more appropriate. Plant spare parts can be used within maintenance projects which are operating in nature (in addition to capital maintenance projects). In this instance the net book value of the part is transferred from the property, plant and equipment balance and recognised as an expense in the Consolidated income statement within operating and administrative expenses. These issues are reflected in the issues to maintenance projects line in the table below. Costs relating to major inspections, overhauls and upgrades to assets are included in the carrying amounts of existing assets or recognised as separate assets, as appropriate, if the recognition criteria are met; namely, when it is probable that future economic benefits associated with the expenditure will flow to the Group and the cost can be measured reliably. Assets that are replaced as part of any overhauls or upgrades are disposed of. All other repairs and maintenance costs are expensed as incurred. Estimated UELs and residual values are reviewed as a minimum at the end of each reporting period, taking into account regulatory changes, climate change (see note 3.8 for further details) and commercial and technological obsolescence, as well as normal wear and tear. Residual values are based on prices prevailing at the reporting date. Any changes to estimated UELs or residual values are applied prospectively. At each reporting date the Group reviews its property, plant and equipment to determine whether there is any indication that these assets may be impaired. The Group\u2019s accounting policy in respect of impairment, along with details of the impairment review conducted during the year are set out in note 2.4. An impairment charge is recognised immediately if the net book value of an asset exceeds its recoverable amount, which is the higher of an asset\u2019s value in use and its fair value less costs to sell. The Group\u2019s policy is to recognise an impairment charge through accumulated depreciation and impairment if the asset will continue to be used or retained by the Group. Cost and any accumulated depreciation and impairment are removed when an asset is disposed. Gains and losses on disposals are determined by comparing proceeds with the asset\u2019s carrying amount.
Accounting policy
IFRS 16 determines a control model to distinguish between lease agreements and service contracts on the basis of whether the
use of an identified asset is controlled by the Group for a period of time. If the Group is deemed to have control of an identified asset,
then a right-of-use asset and corresponding lease liability are recognised on the Consolidated balance sheet.
The lease liability is initially measured at the present value of the future lease payments discounted using the discount rate that is
implicit in the lease. If this discount rate cannot be determined from the agreement, the liability is discounted using an incremental
borrowing rate. Incremental borrowing rates are updated biannually. The borrowing rate for leased property is derived with reference
to property yields specific to the location of the leased property and property type. For non-property leases, the borrowing rate is
derived from a series of inputs including counterparty-specific proxies for risk-free rates, such as UK Gilt curves, and an adjustment
for credit risk based on the Group\u2019s credit rating. The liability is subsequently adjusted for interest, repayments, remeasurements and
other modifications. The right-of-use asset is initially measured at cost and is subsequently measured at cost less accumulated
depreciation and accumulated impairment losses. Cost comprises the initial calculation of the lease liability, estimated costs for
dismantling or restoring the asset, any initial direct costs, and lease payments made or incentives received prior to commencement
of the lease.
Lease modifications are accounted for as a separate lease where the scope of the lease increases through the right to use one or
more underlying assets, and where the consideration of the lease increases by an amount that is equivalent to the standalone price of
the increase in scope. Where a modification decreases the scope of the lease, the carrying amount of the right-of-use asset and lease
liability are adjusted, and a gain or loss is recognised in proportion to the decrease in the scope of the lease. All other modifications are
accounted for as a reassessment of the lease liability with a corresponding adjustment to the right-of-use asset.
Lease extension or termination options are included within the lease term when the Group, as the lessee, has the discretion to exercise
the option and where it is reasonably certain that the option will be exercised.
Leases with a term shorter than 12 months, or where the identified asset has a value below \u00a33,500, are expensed to the Consolidated
income statement on a straight-line basis over the term of the agreement.
Lease remeasurements, lease modifications, transfers between property, plant and equipment and right-of-use assets, and disposals
of leased assets are included within other movements in the table below.
Accounting policy
Renewable certificate assets are recognised at cost or deemed cost less any impairments. Renewable certificates, principally ROCs
and REGOs, are first recognised as current assets in the period they are generated or purchased. For generated renewable certificates
the Group uses their fair value at initial recognition, based on anticipated sales prices, as deemed cost. For renewable certificates
purchased from third parties the agreed purchase price is the cost.
Generating renewable power simultaneously creates joint products, being electricity and the renewable certificates. The cost of
generating renewable electricity is allocated between the cost of the electricity generation, which is recognised in the Consolidated
income statement at the point of generation, and the cost of generating the renewable certificate, which is initially recognised as an
asset in the Consolidated balance sheet. As such, the value of generated renewable certificates earned reduces the cost of electricity
generation.
Where the Energy Solutions business incurs an obligation to deliver renewable certificates, that obligation is accrued in the period
incurred and recognised within cost of sales.
Renewable certificate assets are derecognised when they are submitted to Ofgem or at the point of sale to a customer. The point of
sale is when the customer takes control of the renewable certificate, which is usually at the point of transfer of the certificate. At this
point any revenue expected to be received from the customer is recognised (see note 2.2) and the carrying amount of the renewable
certificate asset sold is recognised within cost of sales.
Generated ROC and REGO valuations are comprised of the expected value to be obtained in a sales transaction with a third-party
supplier at the point of generation. If the Group has already agreed sales contracts covering the renewable certificates generated in
a period, then they are recognised at the contracted price. Any renewable certificates generated above this, or to be utilised by the
Energy Solutions business, are recognised at an estimate of the expected market value, which is generally based on the amount to
be obtained in a sales transaction with a third-party supplier. These estimates are made using various sources of information including
recently achieved sales prices, ongoing sales negotiations, internal forecasts, and published third-party market price assessments
and data.
The Renewables Obligation (RO) scheme places an obligation on electricity suppliers to source an increasing proportion of their
electricity from renewable sources. Under the RO scheme, ROCs are issued to generators of renewable electricity which are then sold
bilaterally to counterparties, including suppliers, to demonstrate that they have fulfilled their obligations under the RO scheme. ROCs
are managed in compliance periods (CPs), running from April to March annually. CP1 commenced in April 2002. At 31 December 2024,
the Group is operating in CP23.
To meet its obligations a supplier can either submit ROCs or pay the buy-out price at the end of the CP. The buy-out price rises annually
in line with the UK Retail Price Index (RPI). The buy-out price for CP23 is \u00a364.73 (2023: CP22 \u00a359.01). ROCs are typically procured in
arm\u2019s-length transactions with renewable generators at a market price slightly lower than the buy-out price for that CP. At the end of
the CP, the amounts collected from suppliers paying the buy-out price form the recycle fund, which is distributed on a pro-rata basis
to the suppliers who presented ROCs during the CP.
Generated ROC valuations at initial recognition are comprised of two parts: the buy-out price element and an estimate of the future
benefit that may be obtained from the ROC recycle fund at the end of the CP. The recycle fund provides a benefit where supplier
buy-out charges (incurred by suppliers who do not procure sufficient ROCs to satisfy their obligations) are redistributed to the
suppliers who presented ROCs in a CP on a pro-rata basis. The estimate of the recycle value is based on assumptions about likely levels
of renewable generation, which is generally weather dependent, the demand for ROCs over the CP, and the number of ROCs banked
in a CP, and is thus subject to some uncertainty. The Group utilises external sources of information, such as energy demand and
generation forecasts, average historical weather data, and published information about ROC banking in previous CPs, in addition to its
own forecasts in making these estimates. Historical experience indicates that the assumptions used in the valuations are reasonable,
but the recycle value remains subject to possible variation and may subsequently differ from assumptions at 31 December.
REGOs are certificates that enable suppliers to prove that energy supplied to their customers came from a renewable source.
One REGO is issued to a generator for every MWh of renewable electricity they generate. The primary use of REGOs is for the Fuel Mix
Disclosure that requires licensed electricity suppliers to disclose to potential and existing customers the mix of fuels used to
generate the electricity supplied. REGOs are managed in CPs, running from April to March annually. CP1 commenced in April 2002.
At 31 December 2024, the Group is operating in CP23. Generated REGO valuations at initial recognition are usually based on published
third-party market price assessments.
At each reporting date, the Group reviews the carrying value of renewable certificate assets held against updated anticipated sales
prices or anticipated obligation requirements, and the estimated recycle value. Where relevant, this takes account of agreed forward
sales contracts, changes in published third-party market price assessments, the likely utilisation of renewable certificates generated
to settle the Group\u2019s own obligations, and any relevant information about the levels of wider renewable generation in the market.
Any impairment loss on these assets is recognised in the Consolidated income statement in the period incurred within cost of sales.
Accounting policy
The Group\u2019s inventories are valued at the lower of cost and net realisable value. The costs of items of inventory are determined using
weighted average costs.
The cost of purchased inventories includes all direct costs incurred in bringing the raw material, fuel or consumables to their present
location and condition, including the purchase price, import duties and other taxes, and transport and handling costs. The Group
uses forward foreign exchange contracts to hedge the costs of fuel denominated in foreign currencies. Where these contracts are
designated into hedge relationships in accordance with IFRS 9, the inventory cost is recognised at the hedged value, to the extent
these hedges are effective, and all such gains and losses are included in cost of sales as part of the inventory cost.
Biomass inventories are weighed when entering, moving within or exiting the Group\u2019s sites using technology regularly calibrated to
industry standards. Fuel burn in the electricity generation process is calculated using calibrated weighers to provide closing inventory
volumes. Calibrated weighers are subject to a range of tolerable error. All fuel inventories are subject to regular surveys to ensure
measurements are sufficiently accurate.
The characteristics of biomass require specialist handling and storage. Biomass at Drax Power Station is stored in sealed domes with
a carefully controlled atmosphere for fire prevention purposes and thus cannot be surveyed using traditional methods. Instead, this
inventory is surveyed using regularly calibrated radar scanning technology to validate the accuracy of the weights outlined above.
Recorded system volumes are also periodically verified through dome cycling (running a dome down until empty).
The cost of manufactured inventories includes all direct costs as well as conversion costs including labour, direct overheads and
an allocation of indirect overheads, including depreciation. The cost of inventories includes other costs incurred in bringing the
inventories to their existing condition and location.
Costs that do not contribute to bringing inventories to their present condition and location, such as storage and administration
overheads, are excluded from the cost of inventories and expensed as incurred. Abnormal amounts of wasted materials, labour
or other production costs are also excluded from the cost of inventories.
Accounting policy
Trade receivables and accrued income that do not contain a significant financing component are initially measured at the transaction
price. Other financial assets, principally other receivables, are initially measured at fair value plus transaction costs, other than financial
assets measured at fair value through profit or loss (FVTPL) where transaction costs are recognised immediately in the Consolidated
income statement.
The classification of financial assets subsequent to initial recognition depends on the business model used by the Group to manage
them and the characteristics of the contractual cash flows.
Financial assets are recognised at amortised cost if:
\u2013 it is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
\u2013 the contractual terms give rise to payments that are solely payments of principal and interest (SPPI).
Financial assets are recognised at fair value through other comprehensive income (FVOCI) if:
\u2013 it is held within a business model whose objective is achieved by both holding financial assets in order to collect contractual
cash flows and selling financial assets; and
\u2013 the contractual terms give rise to payments that are SPPI.
All financial assets not classified as measured at amortised cost or FVOCI are measured at FVTPL.
The Group has access to a receivables monetisation facility under which amounts receivable from a portfolio of receivables can be
sold to a third party on a non-recourse basis. This portfolio of receivables, that may be sold under this facility or held to collect the
contractual cash flows, are accounted for at fair value through other comprehensive income (FVOCI) in accordance with IFRS 9, due
to the objective of the business model being achieved by both collecting contractual cash flows and the selling of the financial assets.
For the receivables within this portfolio that are sold, the receivables are derecognised from the Consolidated balance sheet at the
point of sale, which is shortly after the initial recognition of the receivable balance, as the significant risks and rewards of ownership
are deemed to have been transferred. Fair value gains or losses on these receivables are recognised within other comprehensive
income and reclassified to interest payable and similar charges in the Consolidated income statement when derecognised. Impairment
gains or losses are recognised directly in the Consolidated income statement. At 31 December 2024, the receivables sold under this
facility were \u00a3386.3 million (2023: \u00a3400.0 million). See note 4.3 for further information about the facility.
As part of the sale of customer meter points to EDF by Opus Energy (see note 2.7 for further details), the receivables relating to the
meter points sold were transferred to EDF. The amount the Group receives for transferring these receivables is dependent on the
amounts collected by EDF. The receivables sold to EDF do not qualify for derecognition under IFRS 9 as Opus Energy has retained
substantially all the risks and rewards of ownership of the financial assets. These receivables are accounted for at FVTPL in
accordance with IFRS 9, due to the contractual terms of the financial assets giving rise to cash flows that are not SPPI. The cash flows
to be received by Opus Energy on collection of the receivables by EDF are calculated in accordance with the Asset Purchase
Agreement (APA) and are dependent on the amounts collected by EDF. The impairment requirements of IFRS 9 do not apply to these
receivables as the receivables are measured at fair value. Since the transfer, any fair value gains or losses on these receivables have
been recognised within the Consolidated income statement within operating and administrative expenses.
The UK Government introduced the Energy Bills Discount Scheme (EBDS) running from 1 April 2023 to 31 March 2024 which replaced
the Energy Bill Relief Scheme (EBRS). Under these schemes, energy supplied to eligible non-domestic customers had a discount
applied. The discount provided was then able to be claimed back from the UK Government by the supplier. The amount the Group is
entitled to claim from the Government is recognised in other receivables.
See note 2.2 for details of amounts relating to EBDS and EBRS within the Consolidated income statement. At 31 December 2024,
there are no amounts outstanding from these schemes (2023: \u00a34.8 million).
Contingent consideration receivable is a financial asset. As the cash flows are not SPPI, it does not meet the criteria for recognition
at either amortised cost or FVOCI, and is therefore recognised at FVTPL. The impairment requirements of IFRS 9 do not apply to these
receivables as the receivables are measured at FVTPL. Fair value gains and losses on this receivable are recognised in other gains and
losses in the Consolidated income statement.
Accounting policy
The Group applies the impairment model in IFRS 9 to provide for expected credit losses on the Group\u2019s financial assets not measured
at FVTPL, including trade receivables, accrued income, contract assets and other financial assets. The provision for impairment of
trade receivables and accrued income (including contract assets) is measured at an amount equal to the lifetime expected credit loss.
Contract assets relate to amounts for goods or services provided under customer contracts and, therefore, have substantially the
same risk characteristics as trade receivables for the same types of contracts.
For other financial assets, the Group recognises a lifetime expected credit loss provision when there has been a significant increase
in credit risk since initial recognition. If the credit risk of the financial instrument has not increased significantly since initial recognition,
the Group recognises a 12-month expected credit loss provision.
The greatest concentration of credit risk exists in the Energy Solutions business. For all receivables in the current year, across all
businesses, a provision matrix method has been adopted. For the small and medium-sized enterprise (SME) consumers within the
Energy Solutions business, the risk is higher due to the wide range of customer characteristics within the portfolio. In the prior year,
due to the loss provisioning for these customers being more complex a combined probability method that was more dynamic than the
provision matrix method was applied. Due to the sale of the majority of the Group\u2019s non-core SME customer meter points and transfer
of the related receivables balances to EDF (see note 2.7 for further details), the receivables balance and exposure to credit risk for
these customers has significantly reduced compared to the prior year. As such the use of the combined probability method was not
deemed appropriate and the provision matrix method has been applied to all customers.
Under the Group\u2019s debt recovery strategy, a breach in terms could lead to the customer being disconnected or pursued legally for
recovery of an outstanding balance. The Group considers a financial asset to be in default when the amount due from a debtor is
unlikely to be received in full, or when contractual payments are 90 days past due. The Group writes off a financial asset when there
is no realistic prospect of recovery and all attempts to recover the balance have been exhausted. An indication that all credit control
activities have been exhausted is where the debt on an account is exclusively greater than 365 days past due and active recovery
attempts have failed, or where there are known insolvency issues relating to the customer.
Accounting policy
Management expects that incremental broker fees paid to intermediaries as a result of obtaining electricity and gas contracts are
recoverable. The Group has therefore capitalised them as contract costs at the point the fee is paid. The fees are amortised over the
contract period in line with the recognition of revenue and are charged to cost of sales. The balance is included within prepayments
in note 3.5. This amount includes both current and non-current balances. The reconciliation from opening to closing contract costs
is as follows:
Accounting policy
Trade and other payables are financial liabilities that are initially measured at fair value. Trade and other payables are subsequently
measured at amortised cost using the effective interest method. Financial liabilities are derecognised when the contractual
obligations are discharged, cancelled or expire. If the terms of a financial liability are significantly modified, the existing financial
liability is derecognised and a new financial liability based on the modified terms is recognised at fair value. The difference between
the carrying value of the financial liability based on the terms pre-modification and post-modification is recognised in the Consolidated
income statement.
Trade payables are unsecured and are usually paid within 60 days of recognition. The carrying amounts of trade and other payables approximates their fair values, due to their short-term nature. The Group facilitates a supply chain finance scheme under which certain suppliers can obtain early access to payments from a bank and the Group pays the bank based on the original payment terms. The Group has assessed the supply chain finance arrangement, considering the nature and specific terms of the arrangement and has determined that it is appropriate for the amount to continue to be recognised within trade payables. This conclusion is based on the fact that there are no changes to the Group\u2019s payment terms under this arrangement, nor would there be if the arrangement was to cease. Trade payables includes \u00a338.4 million (2023: \u00a348.6 million) relating to supply chain finance. Cash flows relating to supply chain finance, being the Group\u2019s payment to the bank, are included within net cash from operating activities. See note 4.3 for further details. The Group also has access to deferred letter of credit payment facilities under which the Group benefits from an extension to invoice payment terms of less than 12 months for a fee. The original liability is derecognised from trade payables once the deferred letter of credit has been issued and drawn, this is normally at the point that the original liability is due for payment in accordance with invoice payment terms. The amount due to the facility provider is recognised in other payables. Fees are either recognised in the Consolidated income statement, or capitalised if they are directly attributable to the construction of a qualifying asset and meet the criteria for capitalisation, in the period incurred. Other payables includes \u00a3150.3 million (2023: \u00a3224.7 million) related to deferred letters of credit. Of the total deferred letters of credit, \u00a392.8 million (2 02 3: \u00a3155.1 million) were utilised for capital expenditure and \u00a357.5 million (2023: \u00a369.6 million) were utilised for trade payables. Cash flows relating to deferred letters of credit, being the Group\u2019s payment to the bank, are included within net cash from operating activities where utilised for biomass purchases or net cash used in investing activities for capital expenditure. See note 4.3 for further details.
Accounting policy
Cash and cash equivalents comprise cash at bank, short-term bank deposits with a maturity of three months or less, and money
market funds. Cash equivalents are highly liquid low-risk investments and are readily convertible into known amounts of cash with
a maturity of three months or less, as such there is an insignificant risk of a change in value. The carrying amount of these assets is
approximately equal to their fair value. It is the Group\u2019s policy to deposit available cash in low-risk bank accounts or short-term deposit
accounts.
Accounting policy
The Group measures all debt instruments initially at fair value, which equates to the principal value of the consideration received,
net of transaction costs that are directly attributable to the debt issuance. Subsequent to initial measurement, debt instruments
are measured at amortised cost using the effective interest method. Transaction costs (any such costs incremental and directly
attributable to the issue of the financial instrument) are included in the calculation of the effective interest rate and are amortised
over the expected life of the instrument.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that
some or all of the facility will be drawn down. Loan commitment fees may be payable to the lender to entitle the Group to draw down
at any time over a fixed period. Where there is a fixed repayment date, regardless of when the loan is drawn down, the commitment
fees are recognised on a systematic basis over the period the Group is able to draw down. Where the loan has the same fixed term,
regardless of when the loan is drawn down, if drawdown is probable, then the commitment fees are deferred until drawdown and are
recognised over the life of the instrument as part of the effective interest rate. If drawdown is not probable, then loan commitment
fees are recognised on a systematic basis over the period the Group is able to draw down.
Fees that are paid for the availability of a facility where the amount and timing of drawdown can vary at the Group\u2019s discretion,
such as under a revolving credit facility (RCF), are recognised on a systematic basis over the life of the facility.
Debt instruments denominated in foreign currencies are revalued using the period-end exchange rates, with any exchange gains
and losses being recognised as a component of foreign exchange gains or losses in the period they arise. The Group hedges foreign
currency risk and interest rate risk in accordance with the policies set out in note 7.2. Where hedging instruments are used to fix
cash flows associated with debt instruments, the debt instrument and the hedging instrument are measured and presented separately
on the Consolidated balance sheet. Where hedge accounting is applied to foreign exchange risk and interest rate risk on debt
instruments, gains and losses are recycled to the Consolidated income statement within either foreign exchange gains or losses or
interest payable and similar charges, to match the exposure they are hedging, where effective. The borrowings amounts disclosed
in the tables below exclude any impact of hedging instruments.
Debt instruments are derecognised when the contractual obligations are discharged, cancelled or expired. If the terms of a debt
instrument are significantly modified, the existing liability is derecognised and a new liability based on the modified terms is recognised
at fair value. The difference between the carrying value of the debt instrument based on the terms pre-modification and post-
modification is recognised in the Consolidated income statement.
Accounting policy
In accordance with IAS 7 the Group has elected to classify cash flows from interest paid and interest received as cash flows from
operations, dividends paid as cash flows from financing activities, and dividends received as cash flows from investing activities.
The interest repayment on lease liabilities is included within interest paid, and the lease principal repayment is presented within cash
flows from financing activities. Payments for short-term and low value leases are included within cash flows from operating activities.
Accounting policy
Ordinary shares are classified as equity as evidenced by their residual interest in the assets of the Company after deducting its
liabilities. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
Accounting policy
In accordance with IFRS 3, the Group elects on an acquisition-by-acquisition basis whether to measure non-controlling interests (NCIs)
at their proportionate share of the identifiable net assets of the acquiree at the acquisition date, or at fair value. The Group treats
transactions with NCIs that do not result in a loss of control as transactions with equity owners of the parent company. A change in
ownership interest results in an adjustment between the carrying amounts of the controlling interests and NCIs to reflect their relative
interests in the subsidiary. Any difference between the amount of the adjustment to NCIs and the fair value of any consideration paid
or received is recognised in equity, within retained profits.
At 31 December 2024, the Group has two (2023: two) subsidiary undertakings with NCIs. These subsidiaries were acquired during
2021 as part of the acquisition of Pinnacle.
Accounting policy
Business combinations are transactions or other events in which the Group obtains control of one or more businesses. Business
combinations are accounted for using the acquisition method. Acquisitions of businesses are recognised at the point the Group
obtains control of the acquiree (the acquisition date). The consideration transferred, the identifiable assets acquired, and the
liabilities assumed are measured at their fair value on the acquisition date. Amounts relating to the settlement of pre-existing
relationships are recognised in the Consolidated income statement with a corresponding adjustment to the consideration transferred
to reflect the fact that part of the consideration is deemed to relate to the settlement of the pre-existing relationship.
From the acquisition date, the assets and liabilities of acquired businesses are recognised in the Consolidated balance sheet, and the
revenues and profits or losses of the acquired businesses are recognised in the Consolidated income statement. Acquisition-related
costs are recognised as an expense in the Consolidated income statement in the period that they are incurred.
Goodwill is measured as the excess of the:
\u2013 consideration transferred; less
\u2013 amount of any non-controlling interest in the acquired entity; and
\u2013 acquisition date fair value of any previous equity interest in the acquired entity;
over the fair value of the identifiable net assets acquired.
Bonuses paid to employees of the acquired entity that are dependent upon the employee remaining in continuous employment
post acquisition are treated as post-acquisition remuneration.
Accounting policy
Goodwill is measured as the excess of the:
\u2013 consideration transferred; less
\u2013 amount of any non-controlling interest in the acquired entity; and
\u2013 acquisition date fair value of any previous equity interest in the acquired entity;
over the fair value of the identifiable net assets acquired.
Goodwill arising on the acquisition of a foreign operation is treated as an asset of that operation and therefore denominated in the
functional currency of the operation to which it is allocated. Goodwill denominated in a foreign currency is subsequently translated
at the rate prevailing at each reporting date. Foreign exchange differences arising on retranslation are recognised in the Consolidated
statement of comprehensive income.
Goodwill is allocated to the cash-generating units (CGUs), or groups of CGUs, that are expected to benefit from the synergies
of the acquisition. If one or more CGUs, or group of CGUs, to which goodwill is allocated are restructured, then the goodwill is
reallocated to the CGUs impacted by the restructure. Goodwill is considered to have an indefinite useful life, is not amortised, and
is assessed annually for impairment (see note 2.4 for further details). Any impairment charge is recognised against the carrying
amount of goodwill in accumulated amortisation and impairment.
Intangible assets acquired in business combinations are measured at fair value on the acquisition date. Other intangible assets
are measured initially at cost. Cost comprises the purchase price (net of any discount or rebate) and any directly attributable costs
of preparing the asset for use in the manner intended by management.
The carrying amounts of intangible assets are assessed for indicators of impairment at each reporting date. The Group\u2019s policy
is to recognise an impairment charge through accumulated amortisation and impairment .
Intangible assets are amortised over their anticipated useful economic lives (UELs), which are reviewed at least at each financial
year end. When reviewing UELs the assessment takes into account regulatory changes, climate change, and commercial and
technological changes. Any changes to estimated UELs are applied prospectively. During the prior year this review resulted in a
change to the UELs of the Opus Energy customer-related asset and brand asset to December 2024 to reflect the estimated period
over which the value from these assets was expected to be realised. During the current year these assets were fully impaired as
part of the Opus Energy transaction. See note 2.7 for further details.
Accounting policy
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that
the Group will be required to settle that obligation and a reliable estimate can be made of the amount required to settle the obligation.
Specifically, a provision is made for the estimated decommissioning costs at the end of the UELs of the Group\u2019s generation assets
and pellet plants, when a legal or constructive obligation arises, on a discounted basis. The amount provided is calculated on a
site-by-site basis and represents the present value of the expected future costs. An amount equivalent to the discounted
decommissioning provision is capitalised within property, plant and equipment (PPE), with the capitalisation shown in the movement
in reinstatement asset line in note 3.1. For leased assets, an amount equivalent to the discounted provision is capitalised within
right-of-use assets (ROU), with the capitalisation shown in the movement in reinstatement asset line in note 3.2. The amount
capitalised is depreciated over the UELs of the related assets. The unwinding of the discount is included in interest payable and
similar charges in the Consolidated income statement.
The Group recognises a restructuring provision when it has developed a detailed formal plan for the restructuring and has raised
a valid expectation that it will carry out the restructuring either by starting to implement the plan or announcing its main features
to those affected by it. The restructuring provision includes only the direct expenditures arising from the restructuring programme.
These are costs that would have been avoided if the restructuring programme did not go ahead. Any costs to be incurred relating to
the ongoing activities of the Group are excluded from the provision. A provision for termination benefits is recognised at the earlier
of when the Group can no longer withdraw the offer of the termination benefit and when the Group recognises any related
restructuring costs.
Provisions are recognised for onerous contracts as the amount of the unavoidable costs of meeting the obligations of the contract
exceed the economic benefit expected to flow from the contract. The unavoidable costs are the lower of fulfilling the contract or
paying any penalties to terminate the contract early.
Accounting policy
The LTIP, DSP, One Drax Awards, ESPP and SAYE share-based payment schemes are equity-settled. Equity-settled share-based
payments are measured at the fair value of the equity instrument at the date of grant. The corresponding expense is recognised in
the Consolidated income statement on a straight-line basis over the relevant vesting period, based on an estimate of the number of
shares that will ultimately vest as a result of the effect of non-market-based vesting conditions, which is revised at each reporting date.
Market-based vesting conditions are factored into the calculation of the fair value of options granted at the date of grant and are not
subsequently remeasured.
If share options are cancelled due to non-vesting conditions not being met, for example employees withdrawing (by choice) part way
through the vesting period or not exercising their options in the exercise period after they vest, the charge for such options is
accelerated at the point of cancellation.
If share options are forfeited due to employees failing to meet continuing service conditions of a grant, or failing to meet non-market
performance conditions, then these options do not attract a charge and any previously recognised charge is reversed.
Accounting policy
Payments to defined contribution schemes are recognised as an expense when employees have rendered services that entitle them to
the contributions. The Consolidated income statement charge for the defined contribution schemes represents the total contributions
to be paid by the Group in respect of the current period.
For the defined benefit pension scheme, the cost of providing benefits is determined using the projected unit credit method, with
actuarial valuations being carried out at the end of each reporting period. Remeasurement of the obligation, comprising actuarial
gains and losses and the return on plan assets (excluding interest), is recognised immediately in the Consolidated balance sheet with
a charge or credit to the Consolidated statement of comprehensive income in the period in which it occurs. Defined benefit costs,
including current service costs, past service costs, and gains and losses on curtailments and settlements, are recognised in the
Consolidated income statement as part of operating and administrative expenses in the period in which they occur. The net interest
expense or income is recognised in the Consolidated income statement within either interest payable and similar charges or interest
receivable and similar gains.
Accounting classifications and fair values
IFRS 13 requires categorisation of the Group\u2019s financial instruments in accordance with the following hierarchy in order to explain
the basis on which their fair values have been determined:
\u2013 Level 1 \u2013 Fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or
liabilities
\u2013 Level 2 \u2013 Fair value measurements are those derived from inputs, other than quoted prices, included within Level 1, that are
observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)
\u2013 Level 3 \u2013 Fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that
are not based on observable market data (unobservable inputs)
Categorisation within this fair value measurement hierarchy has been determined on the basis of the lowest level input that is
significant to the fair value measurement of the relevant asset or liability.
The table below shows the carrying amounts and fair values of financial assets and liabilities, including their levels in the fair value
hierarchy as defined by IFRS 13. It does not include fair value information for lease liabilities, or for financial assets and financial
liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value. Cash and cash equivalents (note
4.1), trade and other receivables (note 3.5), and trade and other payables (note 3.7) generally have a short time to maturity. For this
reason, their carrying values, on the historical cost basis, are approximate to their fair values. The Group\u2019s borrowings relate principally
to the publicly traded high-yield loan notes and amounts drawn against term loans (note 4.2). These financial liabilities are measured at
amortised cost.
Fair value measurement
\u2013 Commodity contracts \u2013 the fair value of open commodity contracts that do not qualify for the own-use exemption, or are otherwise
within the scope of IFRS 9, is calculated by reference to forward market prices at the reporting date
\u2013 Foreign currency exchange contracts \u2013 the fair value of foreign currency exchange contracts is determined using forward currency
exchange market rates at the reporting date
\u2013 Interest rate contracts \u2013 the fair value of interest rate swaps is calculated by reference to forward market curves at the reporting
date for the relevant interest index. The fair value of cross-currency interest rate swaps is calculated using the relevant forward
currency exchange market rates for fixed-to-fixed swaps and by using the relevant forward currency exchange market rates and
interest index for floating-to-fixed swaps
\u2013 Inflation rate contracts \u2013 the fair value of inflation rate swaps is calculated by reference to forward market curves at the reporting
date for the relevant inflation index
Given the maturity profile of all these contracts, liquid forward market price curves are available for the duration of the contracts.
Drax Group plc Annual report and accounts 2024
The fair values of all derivative financial instruments are discounted to reflect both the time value of money and credit risk inherent
within the instrument.
The assessment of fair value is derived in part by reference to a market price or rate for the instrument in question. The Group bases
its assessment of market prices or rates upon forward curves that are largely derived from readily obtainable prices or rates published
from third-party sources. However, any forward curve is based, at least in part, upon assumptions about future transactions and
market movements. Due to the nature of the derivative financial instruments the Group holds, minor differences in the inputs,
assumptions or methodologies used can result in appropriate, but different, estimates of fair values to those recognised by the Group.
There may be choices to be made regarding which methodology or data source to use in the calculation of fair value for each
derivative contract.
Assumptions may also need to be made where forward curves are not an exact match for the Group\u2019s derivative contracts (e.g. due
to quoted product types, maturity dates or time periods not exactly matching the terms of the Group\u2019s derivative contracts), or where
different forward curves are available. Where such instruments extend beyond the liquid portion of the forward curve, the level
of estimation increases as the number of observable transactions decreases. However, given the maturity profile of the Group\u2019s
contracts, liquid forward market price curves are usually available for the duration of the contracts. The fair value of derivatives is not,
however, considered a key source of estimation uncertainty as reasonably possible changes in assumptions are not expected to result
in a materially different value within the next financial year.
Also, whilst there is a significant risk that the carrying amount of derivative assets and liabilities will change materially within the
next financial year, as a result of movements in market prices or rates, the Group is not expecting to change its methodology or input
sources in the next financial year. Any such changes are not as a result of assumptions or other sources of estimation uncertainty
as at 31 December 2024 and therefore do not meet the definition of a key source of estimation uncertainty as defined by IAS 1.
Sensitivities are provided in note 7.2 for the impact of changes in inputs on the fair value.
The Group has reviewed all significant contracts for the presence of embedded derivatives. The EUR loan notes and the UK
infrastructure private placement facility (2020) (see note 4.2) all contain early repayment options that meet the definition of embedded
derivatives. However, in all cases, these do not require separate valuations as they are deemed to be closely related to the host
contract.
The fair value of commodity contracts, foreign currency exchange contracts, interest rate swaps, cross-currency interest rate swaps
and inflation swaps are largely determined by comparison between observable, liquid, forward market prices or rates, and the trade
price or rate; therefore, these contracts are categorised as Level 2. Credit risk is not a significant input to the fair value calculations.
There have been no transfers during the current or prior year between Level 1, 2 or 3 category inputs.
The Group is responsible for determining the policies and approach to valuations required for financial reporting purposes, including
Level 3 fair values. No external specialists have been utilised for the valuation of the current or prior year derivative financial
instruments. Valuation policies, approaches and the results are discussed with and approved by the CFO and the Audit Committee
as required, based on the size, complexity and judgement required with each valuation.
Level 3 fair values
The contingent consideration receivable by the Group relates to the sale of the CCGT generation portfolio in 2021. The gross nominal
value of \u00a329.0 million is contingent on certain triggers in respect of the option to develop the Damhead Creek 2 land disposed of as
part of the sale of these assets. The fair value measurement of the contingent consideration has been categorised as Level 3 based
on the inputs to the valuation techniques used.
Accounting for derivatives Derivatives (subject to certain exemptions described below) must be measured at fair value, which generally represents the difference between the price the Group has secured in the contract, and the price the Group could achieve in the market at the reporting date. Changes in fair value are recognised either within the Consolidated income statement or the hedge reserve and cost of hedging reserve within the Consolidated statement of changes in equity, dependent upon whether the contract in question qualifies as an effective hedge under IFRS 9 (see note 7.2). The own-use exemption applies to certain contracts for physical commodities entered into and held for the Group\u2019s own purchase, sale or usage requirements. The Group\u2019s own-use contracts, such as certain power purchase agreements (PPAs) and the Group\u2019s energy supply contracts, are excluded from fair value mark-to-market accounting. Contracts for non-financial assets which do not qualify for the own-use exemption (principally wholesale power, gas, financial oil and carbon emissions allowances) and financial contracts (principally foreign exchange, interest, inflation and freight) are accounted for as derivatives in accordance with IFRS 9 and are recorded in the Consolidated balance sheet at fair value. Changes in fair value are reflected through the hedge reserve (see note 7.3) to the extent that the contracts are designated as effective hedges in accordance with IFRS 9, or the Consolidated income statement where the hedge accounting requirements are not met, or the hedges are ineffective. Changes in fair value of the derivatives that do not meet the hedge accounting requirements are excluded from Adjusted results in the Consolidated income statement until the contract matures, as management believes this more clearly reflects the underlying performance of the Group as it ensures these derivatives are recognised in the period that they are intended to hedge at their contracted prices (see note 2.7 for further details). The Group\u2019s biomass risk management policy permits some flexibility in trading activity to optimise the overall portfolio position and potentially release value in certain, limited circumstances. The nature of these contracts means they cannot be readily net settled in cash or other financial instruments and, as a result, they remain outside of the scope of IFRS 9 and are excluded from fair value mark-to-market accounting. See the critical accounting judgements section on page 163 for further details on this. 7.2 Financial risk management The Group\u2019s activities expose it to a variety of financial risks, including commodity price risk, foreign currency risk, interest rate risk, inflation risk, liquidity risk, counterparty risk and credit risk. The Group\u2019s overall risk management programme focuses on the unpredictability of commodity and financial markets and seeks to manage potential adverse effects on the Group\u2019s financial performance. The Group uses derivative financial instruments to hedge certain risk exposures. Risk management is overseen by the risk management committees as explained in the Principal risks and uncertainties section (starting on page 70). The Financial Risk Management Committee identifies, evaluates and manages financial risks in close co-ordination with the Group\u2019s trading and treasury functions under policies approved by the Board of Directors.
Hedge accounting
The Group has cash flow hedges relating to commodity contracts, principally commitments to sell and purchase power. In the prior
year, cash flow hedge accounting was also applied to certain carbon purchases. Amounts are recognised in the hedge reserve as the
designated contracts are marked-to-market at each reporting date for the effective portion of the hedge, which is generally 100% of
the relevant contract. Amounts held within the hedge reserve are then recycled to the Consolidated income statement as the hedged
item impacts profit or loss. For power sales and purchase contracts, this is when the underlying power is delivered.
Included in amounts released from equity are current and prior period gains and losses on financial instruments for which the hedged
transaction has now occurred and these gains and losses have been released to the Consolidated income statement in the period.
No ineffectiveness was recognised in the Consolidated income statement on continuing commodity hedges in the current or prior
year. Due to the use of \u201call-in-one\u201d hedges, this results in the movement in fair value for the hedged items and hedging instruments
being identical. The only sources of ineffectiveness regarding the \u201call-in-one\u201d hedges would be if delivery of the commodities was
no longer expected to occur (which would result in hedge accounting being discontinued) and credit risk. The Group applies a hedge
ratio of 1:1 to its commodity risk cash flow hedges.
The reconciliation of the reserves and time period when the hedge will affect the Consolidated income statement are disclosed in
note 7.3.
The summary of the amounts relating to the hedging instruments and any related ineffectiveness in the period is presented in the
table below.
The average forward rates quoted below only reflect the rates applicable to the portion of the Group\u2019s commodity contracts that
qualify for hedge accounting in accordance with IFRS 9. The rates do not reflect the overall average rate of the Group\u2019s total portfolio
of commodity contracts that are used to protect the value of future cash flows.
Hedge accounting The Group has contracts for which the revenue is contractually linked to UK CPI inflation. The Group has designated this risk component as a hedged item. UK CPI and UK RPI inflation swaps are utilised as the hedging instruments for this inflation risk. Gains and losses on the inflation swaps are held in the hedge reserve and reclassified to revenue in the Consolidated income statement at the same time the revenue from the inflation-linked contracts impacts profit or loss or if the hedged item is no longer expected to occur. The Group applies a hedge ratio of 1:1 for its inflation swaps. The main sources of ineffectiveness relating to the inflation swaps are the basis point difference between the RPI swaps and the CPI-linked revenues they are hedging, calculation differences, and the hedged item no longer being expected to occur. Calculation differences occur due to differences between the reference months used to calculate the inflationary increase per the swaps and the reference months used to calculate the inflationary increase for the CPI-linked revenues. During the current year the Group recognised \u00a38.7 million (2023: \u00a310.7 million) of ineffectiveness due to the basis difference between the RPI hedging instruments and the CPI exposure. In the prior year as a result of a decrease in the forecast CfD generation, the Group recycled \u00a39.3 million of losses on hedge accounted inflation-linked derivative contracts to the Consolidated income statement, due to the hedged item no longer being expected to occur. There has been no decrease in forecast CfD generation in the current year and as such no amounts have been recycled due to the hedged item no longer being expected to occur. In the current year, as a result of the updated 2025 commissioning dates, the Group recycled \u00a31.2 million of losses on hedge accounted inflation-linked OCGT Capacity Market derivative contracts to the Consolidated income statement, due to the hedged item no longer being expected to occur. The Group designates certain hedging instruments that are used to address commodity price risk, foreign exchange risk, interest rate risk and inflation rate risk as cash flow hedges. At the inception of the hedge, the relationship between the hedging instrument and hedged item is documented, along with its risk management objectives. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging instruments used in hedging transactions are effective in offsetting changes in cash flows of the hedged items. Changes in the fair value of contracts designated into such hedging relationships are recognised within the hedge reserve to the extent they are effective. Amounts accumulated in the hedge reserve are reclassified in the periods when the hedged item affects profit or loss. If the hedged item results in the recognition of a non-financial asset then the amount accumulated in the hedge reserve is transferred and included within the initial cost of the asset. Where the Group has designated the spot foreign exchange risk as the hedged risk, the Group allocates unrealised gains and losses on the forward rate of hedge accounted foreign currency derivative contracts to a cost of hedging reserve in accordance with IFRS 9. A large proportion of the derivative contracts held relate to foreign currency exchange contracts, including forward contracts, options and swaps. Consistent with prior periods, for foreign currency exchange contracts hedging the purchase of inventory denominated in foreign currencies to which the Group has applied hedge accounting, the Group has continued to designate the change in the spot rate as the hedged risk in the Group\u2019s cash flow hedge relationships. The Group designates the cost of hedging \u2013 being the change in fair value associated with forward points including currency basis \u2013 to equity. All amounts within the cost of hedging reserve relate to foreign currency exchange risk. Financial assets and liabilities are offset and the net amount is reported in the Consolidated balance sheet where the Group has a legally enforceable right to offset the recognised amounts, and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The Group also has financial assets and liabilities with certain counterparties that are subject to master netting agreements. Some financial assets and liabilities do not meet the criteria for offsetting at the reporting date but are subject to an enforceable master netting agreement that in certain circumstances, such as a bankruptcy, would allow for the amounts to be offset and a single net amount payable or receivable. ", "dimensions": { "concept": "ifrs-full:DisclosureOfMaterialAccountingPolicyInformationExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-568": { "value": "
Judgements and estimates
The preparation of these Consolidated
financial statements requires judgement
to be made in selecting and applying
the Group\u2019s accounting policies. It also
requires the use of estimates and
assumptions that affect the reported
amounts of assets, liabilities, income
and expenditure. Actual results may
subsequently differ from these estimates.
Estimates and underlying assumptions
are reviewed on an ongoing basis, with
revisions recognised in the period in which
the estimates are revised and in any future
periods affected.
In accordance with IAS 1, the judgements
which have the most significant effect
on the amounts recognised in the
Consolidated financial statements, and
the key estimates and assumptions that
have a significant risk of causing a material
adjustment to the carrying amounts
of assets and liabilities within the next
financial year, are set out below. Further
detail, including sensitivity analyses
where appropriate for the key estimates
and assumptions, is included in the
related notes.
Capitalisation of development
project costs
As the Group executes its strategy,
significant investment is likely to be
required in large development projects,
including bioenergy with carbon capture
and storage in the UK (UK BECCS), the
Longview pellet plant development project
(Longview) and the expansion of
Cruachan. In accounting for this
expenditure, judgements are required to
determine whether these costs meet the
criteria to be capitalised, or whether they
should be expensed as incurred. The
capitalisation of costs under IAS 16 and
IAS 38 is based around the expectation
that it is probable that economic benefit
will flow to the Group as a result of the
costs incurred to bring the asset into
working condition. This judgement can
be complex as it is dependent on several
qualitative factors, including technological
feasibility, economic feasibility and
availability of finance. These factors can
change over time and so any judgements
are continually reassessed.
At 31 December 2024, the Group had
capitalised a total of \u00a347.2 million relating
to the UK BECCS development project,
including \u00a34.4 million in 2024. The
economic feasibility of the project is
dependent on the implementation of an
effective negative emissions policy and
investment framework. Technical
feasibility is dependent on infrastructure
development for transmission and storage
of CO
2
. Had it been judged that the criteria
for capitalisation had not yet been met,
these costs would have been expensed as
incurred. At 31 December 2024, the Group
had capitalised a total of \u00a3121.3 million
relating to Longview, including
\u00a363.6 million in 2024. Construction of
the project is currently paused due to
the requirement to apply for an updated
air discharge permit. Final completion of
the project is dependent upon receiving
the permit, whether the project is still
economically viable as a result of any
updated plant design requirements to
enable the site to operate within the
permit limits, and whether there is
appropriate demand and pricing for the
pellets it will produce. This is under
consideration, but management currently
expects to complete the project.
Should expectations around
the qualitative factors noted above
change in the future, then the amounts
capitalised may need to be impaired.
For further details on UK BECCS see the
\u201cDevelopment of BECCS at Drax Power
Station in the UK\u201d opportunity in the
Climate-related opportunities section
on page 65. The Group has not yet
capitalised any costs in relation to the
expansion of Cruachan or any BECCS
projects outside of the UK, as it has been judged that the recognition criteria have not yet been met. Offsetting of financial assets and financial liabilities IAS 32 requires financial assets and financial liabilities to be offset and the net amount presented in the Consolidated balance sheet when the Group currently has both the legally enforceable right to offset the recognised amounts, and the intention to settle on a net basis. The offsetting requirements and relevant guidance is based on the principle of reflecting the entity\u2019s expected future cash flows and there is judgement as to whether the offsetting criteria should be applied to derivative financial instruments that will be settled through physical delivery of a non-financial asset. Judgement is also required around the appropriate unit of account where there are a number of both physical deliveries and cash flows that collectively settle financial instruments, and how the offsetting requirements should be applied to each of these settlements, either individually or at a contract level. The Group has determined the offsetting criteria should be applied to physically settled derivatives and has applied the offsetting criteria at a contract level rather than a cash flow level. If the Group had not applied offsetting on physically settled derivative contracts in the current year then a number of derivative balances that are currently presented net in the Consolidated balance sheet would have been presented gross resulting in an additional \u00a371.2 million of derivative assets and liabilities. See note 7.5 for further details on the Group\u2019s offsetting of all financial assets and financial liabilities. Gross presentation of power purchase and sale contracts The Group enters contracts to sell power. The Group fulfils these sales contracts through the output of its generation assets, but the Group may also fulfil these sales contracts by purchasing power from third parties. The Group presents sales of power within the revenue line and purchases of power within the cost of sales line in the Consolidated income statement. This reflects the fact that the sale and purchase contracts are entered into at separate times, are independent contracts and are not entered into in contemplation of one another. The Group\u2019s Biomass Generation and Flexible Generation businesses enter sales contracts to sell their generation output. If the Group subsequently chooses to fulfil a sales contract through purchasing power from
Critical accounting judgements
The critical judgements made in the
process of applying the Group\u2019s
accounting policies during the year that
have the most significant effect on the
amounts recognised in the Consolidated
financial statements are set out below.
Accounting for biomass purchase
and sale contracts
The Group buys and sells biomass for
operational requirements in its Pellet
Production and Biomass Generation
segments. The Group\u2019s risk management
policies also permit some flexibility in
activity to optimise the overall portfolio
position and potentially release value in
certain circumstances. As such, at each
reporting date the Group undertakes an
assessment of whether contracts it holds
to buy and sell biomass are within the
scope of IFRS 9. If the contracts were
deemed to be within the scope of IFRS 9,
this could result in these contracts being
recognised at fair value as derivative
financial instruments from inception.
The Group assessed both biomass
purchase and sale contracts and
concluded that the nature of these
contracts means they cannot be readily
net settled in cash or other financial
instruments and, as a result, they remain
outside of the scope of IFRS 9. The Group
concluded this due to the contractual
terms having no net settlement provisions
and the highly illiquid nature of the
biomass market meaning biomass cannot
be readily converted into cash. The lack
of an active spot market means market
participants cannot readily seek to make
trading profits from short-term price
fluctuations as prices and contracts are
negotiated bilaterally with no active
market price and no guarantee there will
be a willing buyer or seller to trade with.
Accordingly, biomass contracts are not
recognised as derivative assets or liabilities
in the Consolidated balance sheet prior to
delivery, consistent with the accounting
in prior years.
The Group has 15.0 million tonnes of
contracted biomass purchases; therefore,
had the Group concluded biomass
purchase contracts were within the scope
of IFRS 9, for every \u00a31 per tonne that the
weighted average market price is higher
or lower than the weighted average
contracted price, there would be a
resulting \u00a315.0 million fair value gain
or loss respectively to be recognised
on these contracts. The Group continues
to assess developments in the biomass
market on an ongoing basis to identify
any impact on this assessment.
of approximately \u00a318.1 million. If the
assumed end of station life of 2039 were
to decrease by 12 years to 2027, in line
with the end of the current renewable
schemes, the impact on the annual
depreciation charge for the year would
be an increase of approximately
\u00a3183.8 million.
See note 3.1 on page 199
Pension liabilities
The Group records a net surplus or liability
in its Consolidated balance sheet for the
fair value of assets held by the defined
benefit pension scheme, less its obligation
to provide benefits under the scheme.
The actuarial valuations of the scheme\u2019s
liabilities are performed annually by a
third-party actuary and contain
assumptions regarding interest rates,
inflation, future salary and pension
increases, mortality, and other factors,
all of which are subject to future change.
Three of the key estimates within the
valuation are the discount rate, inflation
rate, and life expectancy. Sensitivities in
the valuation are presented in note 6.3.
The value of the pension surplus
recognised by the Group at 31 December
2024 is \u00a324.7 million.
a third party, that does not change the
substance of the original sales contract
or the Group\u2019s obligations under the sales
contract.
The Group believes gross presentation
of power sales and purchase contracts
reflects the substance of the Group\u2019s
operations as a generation business and
not a trading business. Had the Group
presented external purchases of power
net within external revenue this would
have reduced external revenue by
\u00a31,072.9 million with a corresponding
decrease in external cost of sales.
See note 2.2 on page 175
Key sources of estimation
uncertainty
The following are the key sources of
estimation uncertainty that carry a
significant risk of resulting in a material
adjustment to the carrying values of
assets and liabilities within the next
financial year. These are the items where
actual outcomes in the next 12 months
could vary materially from the estimates
made in determining the reported amount
of an asset or liability within the
Consolidated financial statements.
Impairment
An impairment review is conducted
annually on cash-generating units (CGUs)
or group of CGUs, with associated
goodwill or intangible assets with an
indefinite life, and as required for other
assets and CGUs where an indicator of
possible impairment exists.
In 2024, an impairment assessment has
been completed on six of the Group\u2019s
CGUs. Five of these CGUs have been
assessed as they have allocated goodwill
(Drax Energy Solutions, Pellet Operations,
Lanark, Galloway and Cruachan). No CGUs
have intangibles with an indefinite life. In
addition, the Drax Power Station CGU was
assessed due to indicators of potential
impairment being present.
The assessment of future cash flows
that underpin the impairment reviews are
based on management\u2019s best estimate and
include a number of assumptions (see note
2.4 for further details of these key
assumptions).
Drax Power Station was identified as the
only CGU where a reasonably possible
change in certain assumptions could lead
to a material adjustment to its carrying
value as at 31 December 2024.
The assessment for the Drax Power
Station CGU at 31 December 2024 is
sensitive to reasonably possible changes
to the key inputs to the valuation model.
The Drax Power Station CGU has a carrying value at 31 December 2024 of \u00a31,071.3 million. Reasonably possible assumptions include assuming operations cease at the end of the current renewables schemes in March 2027 as a result of not concluding a final low-carbon dispatchable Contracts for Difference (CfD) agreement (see note 2.12) combined with a \u00a315/MWh decrease in power prices on unhedged volumes, a 10% increase in the forced outage rate and an increase in the pre-tax discount rate from 16.8% to 48.5% (equivalent to an increase in the post-tax discount rate from 6.8% to 8.0%). These reasonably possible changes in the key inputs to the value in use model would lead to an impairment of \u00a3515.5 million. If reasonably possible assumptions were included to assume operations were to cease in March 2031 at the end of the proposed low-carbon dispatchable CfD agreement (see note 2.12), combined with a \u00a315/MWh decrease in power prices on unhedged volumes, a 10% increase in the forced outage rate and an increase in the pre-tax discount rate from 16.8% to 29.8% (equivalent to an increase in the post-tax discount rate from 6.8% to 8.0%), then these reasonably possible changes in the key inputs to the value in use model would lead to an impairment of \u00a3321.4 million. See note 2.4 on page 181 Property, plant and equipment Property, plant and equipment at Drax Power Station is depreciated on a straight-line basis over its useful economic life (UEL). UELs are estimated based on past experience, anticipated future replacement cycles, considering future expected developments in the energy market, and other available evidence and are reviewed at least annually. Given the continued focus on climate change, renewable sources of energy and transitioning to a net zero economy, the power generation industry is going through a period of transformation, which can impact on the UELs of assets. As the UK Government\u2019s net zero strategy continues to evolve and become clearer, particularly in relation to UK BECCS, the Group will continue to assess any potential impact of these developments on UELs in relation to Drax Power Station. The net book value of fixed assets being depreciated at Drax Power Station as at 31 December 2024 is \u00a31,018.5 million and depreciation on these assets in the year, based on the UELs disclosed in note 3.1, was \u00a389.4 million. If the UEL of assets that are limited to the current assumed end of station life of 2039 were to increase by 10 years, the impact on the depreciation charge for the year would be a reduction ", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-637": { "value": "Alternative performance measures (APMs) The Group uses APMs throughout the Annual report and accounts that are not defined within IFRS but provide additional information about the Group\u2019s financial performance and position that is used by the Board to evaluate the Group\u2019s performance. These measures have been defined internally and may therefore not be comparable to similar APMs presented by other companies. Additionally, certain information presented is derived from amounts calculated in accordance with IFRS but is not itself a measure defined by IFRS. Such measures should not be viewed in isolation or as an alternative to the equivalent IFRS measure. Each year management confirms the judgements made regarding the Group\u2019s definition of APMs, including exceptional items and certain remeasurements and Net debt. The assessment as to whether a transaction or group of transactions should or should not be classified as an exceptional item or a certain remeasurement can have a significant impact on the Adjusted results of the Group. Deciding which items to include or exclude from an APM\u2019s definition can have a significant impact on the APM presented. An internal policy governs the judgements made by management and in all instances,these judgements are approved by the Audit Committee as set out on page 117. Defined below are the key APMs used by the Board to assess financial performance. The APMs glossary table on page 277 provides details of all APMs used, including the APM\u2019s closest IFRS equivalent, the reason why the APM is used by the Group and a definition of how each APM is calculated. Adjusted results The Group\u2019s financial performance for the period, measured in accordance with IFRS, is shown in the Total results column on the face of the Consolidated income statement. Exceptional items and certain remeasurements are deducted from the Total results in arriving at the Adjusted results for the year. The Group\u2019s Adjusted results are consistent with the way the Board and executive management assess the performance of the Group. Adjusted results are intended to reflect the underlying trading performance of the Group\u2019s businesses and are presented to assist users of the Consolidated financial statements in evaluating the Group\u2019s trading performance and performance against strategic objectives. Exceptional items and certain remeasurements Exceptional items are those transactions that, by their nature, do not reflect the trading performance of the Group in the period. For a transaction to be considered exceptional, management considers the nature of the transaction, the frequency of similar events, any related precedent, and commercial context. The application guidance for this policy includes de minimis thresholds for classifying items as exceptional. Presentation of a transaction as exceptional is approved by the Audit Committee in accordance with an agreed policy. The policy is reviewed by the Audit Committee biennially, with the last review taking place in April 2023. This review did not result in any significant changes to the policy. Certain remeasurements comprise fair value gains and losses on derivative contracts to the extent those contracts do not qualify for hedge accounting (or hedge accounting is not effective) which, under IFRS, are recorded in revenue, cost of sales, interest payable and similar charges or foreign exchange gains or losses. Management believes adjusting for fair value gains and losses recognised on derivative contracts provides readers of the Consolidated financial statements with useful information, as this removes the volatility caused by movements in market prices over the life of the derivative. The Group regards all of its forward contracting activity to represent economic hedges and, therefore, the contracted price at delivery or maturity is relevant to the Group and its performance, rather than how the contracted price compares to the prevailing market price, as the Group is not seeking to make trading profits on these contracts through market price movements. The impact of excluding these fair value remeasurements is to reflect commodity sales and purchases at contracted prices (the price paid or received in respect of delivery of the commodity in question) in Adjusted results in the period the transaction takes place, and also to take into account the impact of associated financial derivative contracts (such as forward foreign currency purchases) in Adjusted results on maturity, being the period these contracts are intending to hedge. Further information on exceptional items and certain remeasurements in the current and comparative periods is included in note 2.7. Adjusted EBITDA Adjusted EBITDA is a primary measure used by the Board and executive management to assess the financial performance of the Group as it provides a more comparable assessment of the Group\u2019s trading performance period-on- period. It is also a key metric used by the investor community to assess the performance of the Group\u2019s operations. The Group defines Adjusted EBITDA as earnings before interest, tax, depreciation, amortisation, other gains or losses and impairment of non-current assets, excluding the impact of exceptional items and certain remeasurements (defined above). Adjusted EBITDA excludes any earnings from associates and Adjusted EBITDA directly attributable to non- controlling interests. Adjusted basic earnings per share Adjusted basic earnings per share (Adjusted basic EPS) is Adjusted profit attributable to the owners of the parent company divided by the weighted average number of ordinary shares outstanding during the period. Repurchased shares held in the treasury shares reserve are not included in the weighted average calculation of shares. This is the same denominator used when calculating Total basic earnings per share (Total basic EPS). This metric is used in discussions with the investor community. Net debt The Group defines Net debt as borrowings and lease liabilities less cash and cash equivalents. Borrowings denominated in foreign currencies to which the Group has entered into hedging arrangements associated with this currency exposure are translated at the hedged rate for the purposes of calculating Net debt. This is to take into account the effect of financial instruments entered into to hedge movements in, for example, foreign exchange rates in relation to debt principal repayments. Borrowings that have no hedging instruments attributed to them are translated at the closing rate. Borrowings includes external financial debt, such as loan notes, term loans and amounts drawn in cash under revolving credit facilities (RCFs) (see note 4.2). Borrowings does not include other financial liabilities such as pension obligations (see note 6.3), trade and other payables (see note 3.7), and working capital facilities linked directly to specific payables (such as credit cards and deferred letters of credit) that provide a short extension of payment terms of less than 12 months (see note 4.3). The Group does not include balances related to supply chain financing in borrowings and therefore Net debt, as there are no changes to the Group\u2019s payment terms under this arrangement, nor would there be if the arrangement was to cease (see note 3.7). Net debt excludes the proportion of cash, lease liabilities and borrowings in non-wholly owned entities that would be attributable to the non-controlling interests. Net debt includes the impact of any cash collateral receipts from counterparties or cash collateral posted to counterparties. Prior to 2024, the Group\u2019s definition of Net debt did not include lease liabilities. The exclusion of lease liabilities from the calculation of Net debt was consistent with the Group\u2019s covenant reporting requirements at the time. In 2024, the Group has drawn new borrowings that include lease liabilities in their covenant reporting requirements. The Group has updated its definition of Net debt to include lease liabilities, to be consistent with the covenant requirements of the newly drawn borrowings. This is deemed to provide more useful information to users of the Consolidated financial statements as the Group\u2019s definition of Net debt is consistent with the way debt is assessed by the Group\u2019s lenders of newly drawn borrowings and going forward on any future borrowings drawn. The table below shows Net debt calculated using both the current and prior year definition and a reconciliation between the two metrics: As at 31 December 2024 2023 \u00a3m \u00a3m Net debt excluding lease liabilities (previous definition) 875.7 1,083.9 Lease liabilities attributable to owners of the parent company 116.0 135.8 Net debt (including lease liabilities \u2013 current definition) 991.7 1,219.7 Net debt is a key metric used by debt rating agencies and the investor community as a measure of liquidity and the ability of the Group to manage its financial obligations. See note 2.7 on page 191 Net debt to Adjusted EBITDA This metric is the ratio of Net debt to Adjusted EBITDA, expressed as a multiple. The Group has a long-term target for Net debt to Adjusted EBITDA of around 2.0 times. The Net debt to Adjusted EBITDA ratio gives an indication of the size of the Group\u2019s Net debt in relation to its trading performance and is a key metric used by the investor community to assess the performance of the Group\u2019s operations. As explained above, the Group updated its definition of Net debt. The table below shows the ratio of Net debt to Adjusted EBITDA calculated using both the current and prior year definitions of Net debt. As at 31 December 2024 2023 Net debt excluding lease liabilities (previous definition) (\u00a3m) 875.7 1,083.9 Net debt (including lease liabilities \u2013 current definition) (\u00a3m) 991.7 1,219.7 Adjusted EBITDA (\u00a3m) 1,064.2 1,009.2 Net debt excluding lease liabilities (previous definition) to Adjusted EBITDA ratio 0.8 1.1 Net debt (including lease liabilities \u2013 current definition) to Adjusted EBITDA ratio 0.9 1.2 See note 2.7 on page 191", "dimensions": { "concept": "draxgroupplc:DisclosureOfAlternativePerformanceMeasures", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-666": { "value": "Key sources of estimation uncertainty The following are the key sources of estimation uncertainty that carry a significant risk of resulting in a material adjustment to the carrying values of assets and liabilities within the next financial year. These are the items where actual outcomes in the next 12 months could vary materially from the estimates made in determining the reported amount of an asset or liability within the Consolidated financial statements. Impairment An impairment review is conducted annually on cash-generating units (CGUs) or group of CGUs, with associated goodwill or intangible assets with an indefinite life, and as required for other assets and CGUs where an indicator of possible impairment exists. In 2024, an impairment assessment has been completed on six of the Group\u2019s CGUs. Five of these CGUs have been assessed as they have allocated goodwill (Drax Energy Solutions, Pellet Operations, Lanark, Galloway and Cruachan). No CGUs have intangibles with an indefinite life. In addition, the Drax Power Station CGU was assessed due to indicators of potential impairment being present. The assessment of future cash flows that underpin the impairment reviews are based on management\u2019s best estimate and include a number of assumptions (see note 2.4 for further details of these key assumptions). Drax Power Station was identified as the only CGU where a reasonably possible change in certain assumptions could lead to a material adjustment to its carrying value as at 31 December 2024. The assessment for the Drax Power Station CGU at 31 December 2024 is sensitive to reasonably possible changes to the key inputs to the valuation model. The Drax Power Station CGU has a carrying value at 31 December 2024 of \u00a31,071.3 million. Reasonably possible assumptions include assuming operations cease at the end of the current renewables schemes in March 2027 as a result of not concluding a final low-carbon dispatchable Contracts for Difference (CfD) agreement (see note 2.12) combined with a \u00a315/MWh decrease in power prices on unhedged volumes, a 10% increase in the forced outage rate and an increase in the pre-tax discount rate from 16.8% to 48.5% (equivalent to an increase in the post-tax discount rate from 6.8% to 8.0%). These reasonably possible changes in the key inputs to the value in use model would lead to an impairment of \u00a3515.5 million. If reasonably possible assumptions were included to assume operations were to cease in March 2031 at the end of the proposed low-carbon dispatchable CfD agreement (see note 2.12), combined with a \u00a315/MWh decrease in power prices on unhedged volumes, a 10% increase in the forced outage rate and an increase in the pre-tax discount rate from 16.8% to 29.8% (equivalent to an increase in the post-tax discount rate from 6.8% to 8.0%), then these reasonably possible changes in the key inputs to the value in use model would lead to an impairment of \u00a3321.4 million. See note 2.4 on page 181 Property, plant and equipment Property, plant and equipment at Drax Power Station is depreciated on a straight-line basis over its useful economic life (UEL). UELs are estimated based on past experience, anticipated future replacement cycles, considering future expected developments in the energy market, and other available evidence and are reviewed at least annually. Given the continued focus on climate change, renewable sources of energy and transitioning to a net zero economy, the power generation industry is going through a period of transformation, which can impact on the UELs of assets. As the UK Government\u2019s net zero strategy continues to evolve and become clearer, particularly in relation to UK BECCS, the Group will continue to assess any potential impact of these developments on UELs in relation to Drax Power Station. The net book value of fixed assets being depreciated at Drax Power Station as at 31 December 2024 is \u00a31,018.5 million and depreciation on these assets in the year, based on the UELs disclosed in note 3.1, was \u00a389.4 million. If the UEL of assets that are limited to the current assumed end of station life of 2039 were to increase by 10 years, the impact on the depreciation charge for the year would be a reduction of approximately \u00a318.1 million. If the assumed end of station life of 2039 were to decrease by 12 years to 2027, in line with the end of the current renewable schemes, the impact on the annual depreciation charge for the year would be an increase of approximately \u00a3183.8 million. See note 3.1 on page 199 Pension liabilities The Group records a net surplus or liability in its Consolidated balance sheet for the fair value of assets held by the defined benefit pension scheme, less its obligation to provide benefits under the scheme. The actuarial valuations of the scheme\u2019s liabilities are performed annually by a third-party actuary and contain assumptions regarding interest rates, inflation, future salary and pension increases, mortality, and other factors, all of which are subject to future change. Three of the key estimates within the valuation are the discount rate, inflation rate, and life expectancy. Sensitivities in the valuation are presented in note 6.3. The value of the pension surplus recognised by the Group at 31 December 2024 is \u00a324.7 million. See note 6.3 on page 234", "dimensions": { "concept": "ifrs-full:DisclosureOfAssetsAndLiabilitiesWithSignificantRiskOfMaterialAdjustmentExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-577": { "value": "Key sources of estimation uncertainty The following are the key sources of estimation uncertainty that carry a significant risk of resulting in a material adjustment to the carrying values of assets and liabilities within the next financial year. These are the items where actual outcomes in the next 12 months could vary materially from the estimates made in determining the reported amount of an asset or liability within the Consolidated financial statements. Impairment An impairment review is conducted annually on cash-generating units (CGUs) or group of CGUs, with associated goodwill or intangible assets with an indefinite life, and as required for other assets and CGUs where an indicator of possible impairment exists. In 2024, an impairment assessment has been completed on six of the Group\u2019s CGUs. Five of these CGUs have been assessed as they have allocated goodwill (Drax Energy Solutions, Pellet Operations, Lanark, Galloway and Cruachan). No CGUs have intangibles with an indefinite life. In addition, the Drax Power Station CGU was assessed due to indicators of potential impairment being present. The assessment of future cash flows that underpin the impairment reviews are based on management\u2019s best estimate and include a number of assumptions (see note 2.4 for further details of these key assumptions). Drax Power Station was identified as the only CGU where a reasonably possible change in certain assumptions could lead to a material adjustment to its carrying value as at 31 December 2024. The assessment for the Drax Power Station CGU at 31 December 2024 is sensitive to reasonably possible changes to the key inputs to the valuation model. The Drax Power Station CGU has a carrying value at 31 December 2024 of \u00a31,071.3 million. Reasonably possible assumptions include assuming operations cease at the end of the current renewables schemes in March 2027 as a result of not concluding a final low-carbon dispatchable Contracts for Difference (CfD) agreement (see note 2.12) combined with a \u00a315/MWh decrease in power prices on unhedged volumes, a 10% increase in the forced outage rate and an increase in the pre-tax discount rate from 16.8% to 48.5% (equivalent to an increase in the post-tax discount rate from 6.8% to 8.0%). These reasonably possible changes in the key inputs to the value in use model would lead to an impairment of \u00a3515.5 million. If reasonably possible assumptions were included to assume operations were to cease in March 2031 at the end of the proposed low-carbon dispatchable CfD agreement (see note 2.12), combined with a \u00a315/MWh decrease in power prices on unhedged volumes, a 10% increase in the forced outage rate and an increase in the pre-tax discount rate from 16.8% to 29.8% (equivalent to an increase in the post-tax discount rate from 6.8% to 8.0%), then these reasonably possible changes in the key inputs to the value in use model would lead to an impairment of \u00a3321.4 million. See note 2.4 on page 181 Property, plant and equipment Property, plant and equipment at Drax Power Station is depreciated on a straight-line basis over its useful economic life (UEL). UELs are estimated based on past experience, anticipated future replacement cycles, considering future expected developments in the energy market, and other available evidence and are reviewed at least annually. Given the continued focus on climate change, renewable sources of energy and transitioning to a net zero economy, the power generation industry is going through a period of transformation, which can impact on the UELs of assets. As the UK Government\u2019s net zero strategy continues to evolve and become clearer, particularly in relation to UK BECCS, the Group will continue to assess any potential impact of these developments on UELs in relation to Drax Power Station. The net book value of fixed assets being depreciated at Drax Power Station as at 31 December 2024 is \u00a31,018.5 million and depreciation on these assets in the year, based on the UELs disclosed in note 3.1, was \u00a389.4 million. If the UEL of assets that are limited to the current assumed end of station life of 2039 were to increase by 10 years, the impact on the depreciation charge for the year would be a reduction of approximately \u00a318.1 million. If the assumed end of station life of 2039 were to decrease by 12 years to 2027, in line with the end of the current renewable schemes, the impact on the annual depreciation charge for the year would be an increase of approximately \u00a3183.8 million. See note 3.1 on page 199 Pension liabilities The Group records a net surplus or liability in its Consolidated balance sheet for the fair value of assets held by the defined benefit pension scheme, less its obligation to provide benefits under the scheme. The actuarial valuations of the scheme\u2019s liabilities are performed annually by a third-party actuary and contain assumptions regarding interest rates, inflation, future salary and pension increases, mortality, and other factors, all of which are subject to future change. Three of the key estimates within the valuation are the discount rate, inflation rate, and life expectancy. Sensitivities in the valuation are presented in note 6.3. The value of the pension surplus recognised by the Group at 31 December 2024 is \u00a324.7 million. See note 6.3 on page 234", "dimensions": { "concept": "ifrs-full:ExplanationOfAssumptionAboutFutureWithSignificantRiskOfResultingInMaterialAdjustments", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-688": { "value": "Exceptional items are those transactions that, by their nature, do not reflect the trading performance of the Group in the period. For a transaction to be considered exceptional, management considers the nature of the transaction, the frequency of similar events, any related precedent, and commercial context. The application guidance for this policy includes de minimis thresholds for classifying items as exceptional. Presentation of a transaction as exceptional is approved by the Audit Committee in accordance with an agreed policy. The Group presents Adjusted results in the Consolidated income statement. Management believes that this approach is useful as it provides a clear and consistent view of underlying trading performance. Exceptional items and certain remeasurements are excluded from Adjusted results and are presented in a separate column in the Consolidated income statement. The Group believes that this presentation provides useful information about the financial performance of the business and is consistent with the way the Board and executive management assess the performance of the business. The Group has a policy and framework for the determination of transactions to be presented as exceptional. Exceptional items are excluded from Adjusted results as they are transactions that are deemed to be one-off or unlikely to reoccur in future years due to their nature, size, the expected frequency of similar events, or the commercial context. By excluding these amounts, this provides users of the Consolidated financial statements with a more representative view of the results of the Group and enables comparisons with other reporting periods as it excludes amounts from activities or transactions that are not likely to reoccur. All transactions presented as exceptional are approved by the Audit Committee. See the Audit Committee report on page 112 for further details. 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2.1 Segmental reporting
Reportable segments are presented in a manner consistent with internal reporting provided to the chief operating decision maker
which is considered to be the Board. In 2024, the way the Board reviews the performance of the Group has changed. The Generation
segment, that was previously presented as one segment, was separated into two segments, being Biomass Generation and Flexible
Generation. This was to enable the Board to be able to separately review the performance of Biomass Generation and Flexible
Generation and monitor their performance against individual strategic targets. Biomass Generation consists of generation from the
four biomass generation units at Drax Power Station. Flexible Generation includes the pumped storage generation at Cruachan, the
run-of-river hydro generation at Lanark and Galloway, open-cycle gas turbine (OCGT) generation at the three OCGT sites (Hirwaun,
Millbrook and Progress), and waste-derived pellet production at Daldowie. Also in 2024, the Customers segment was renamed Energy
Solutions.
Following these changes the Group is organised into four businesses. The Board reviews the performance of each of these businesses
separately, and each represents a reportable segment:
\u2013 Pellet Production: production and subsequent sale of biomass pellets from the Group\u2019s processing facilities in North America
\u2013 Biomass Generation: generation and sale of electricity from biomass assets in the UK
\u2013 Flexible Generation: generation and sale of electricity from pumped storage, run-of-river hydro and OCGTs assets, and the
processing and sale of waste-derived pellets, in the UK
\u2013 Energy Solutions (previously Customers): supply of electricity to non-domestic customers in the UK
Operating costs that can be reasonably allocated to the activities of a reportable segment are included within the results of that
reportable segment. Central corporate and commercial functions provide certain specialist and shared services, including optimisation
of the Group\u2019s positions. Central corporate and commercial function costs that cannot be reasonably allocated to the activities of a
reportable segment are included within Innovation, capital projects and other. Innovation, capital projects and other is not a reportable
segment as it does not earn revenues, however it is included in the information presented below to enable reconciliation of the
segmental amounts presented to the consolidated IFRS results recognised in these Consolidated financial statements.
Given the principal activity of the Group is a generator and seller of electricity, the Consolidated income statement includes all revenue
from sales of electricity during the period. Where electricity is purchased rather than generated to fulfil a sale, either due to
operational or other requirements, the cost of this purchase is recorded within cost of sales.
When defining gross profit within the Consolidated financial statements, the Group follows the principal trading considerations applied
by its Pellet Production, Biomass Generation, Flexible Generation and Energy Solutions businesses when making a sale. In respect of
the Pellet Production business, this reflects the direct costs of production, being fibre, fuel and drying costs, direct freight and port
costs, or third-party pellet purchases. In respect of the Biomass Generation and Flexible Generation businesses, this reflects the direct
costs of the commodities required to generate power or the direct cost of purchasing power, the relevant grid connection costs that
arise, and Electricity Generator Levy (EGL) arising on applicable renewable and low-carbon generation. In respect of the Energy
Solutions business, this reflects the direct costs of supply, being the costs of the power or gas supplied, together with costs levied
on suppliers such as network costs, broker costs and renewables incentive mechanisms.
Accordingly, cost of sales excludes indirect overheads and staff costs (presented within operating and administrative expenses), and
depreciation (presented separately on the face of the Consolidated income statement). See note 3.4 for details of the costs included
within inventories.
The accounting policies applied for the purpose of measuring the reportable segments\u2019 profits or losses, assets and liabilities are the
same as those used in measuring the corresponding amounts in the Consolidated financial statements.
EGL applies to the Group\u2019s three biomass units operating under the Renewables Obligation (RO) scheme and its run-of-river hydro
operations. It does not apply to the Group\u2019s Contract for Difference (CfD) biomass unit or its pumped storage hydro operations.
The EGL applies at a rate of 45% to receipts from in-scope forms of wholesale electricity generation that exceed a defined benchmark
level, after the deduction of certain allowable costs, from 1 January 2023 to 31 March 2028.
The Group has determined that it should be treated as a levy under IFRIC 21 \u2018Levies\u2019, rather than as a tax under IAS 12 \u2018Income taxes\u2019.
Therefore, the cost is recognised above gross profit. A liability for a levy is recognised once the obligating event, being the activity that
triggers the payment of the levy, has occurred. EGL is triggered based on average generation receipts for in-scope revenue schemes
over a reporting period being higher than the threshold set in the legislation. A liability is recognised if the average actual generation
receipts to date in a financial period are above the threshold. The threshold rises annually in April, in line with the UK Consumer Price
Index (CPI). The threshold at 31 December 2024 was \u00a377.94 (2023: \u00a375.00). The assessment is based on receipts above this threshold
after adjusting for allowable costs.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSegmentReportingExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-578": { "value": "2.1 Segmental reporting Reportable segments are presented in a manner consistent with internal reporting provided to the chief operating decision maker which is considered to be the Board. In 2024, the way the Board reviews the performance of the Group has changed. The Generation segment, that was previously presented as one segment, was separated into two segments, being Biomass Generation and Flexible Generation. This was to enable the Board to be able to separately review the performance of Biomass Generation and Flexible Generation and monitor their performance against individual strategic targets. Biomass Generation consists of generation from the four biomass generation units at Drax Power Station. Flexible Generation includes the pumped storage generation at Cruachan, the run-of-river hydro generation at Lanark and Galloway, open-cycle gas turbine (OCGT) generation at the three OCGT sites (Hirwaun, Millbrook and Progress), and waste-derived pellet production at Daldowie. Also in 2024, the Customers segment was renamed Energy Solutions. Following these changes the Group is organised into four businesses. The Board reviews the performance of each of these businesses separately, and each represents a reportable segment: \u2013 Pellet Production: production and subsequent sale of biomass pellets from the Group\u2019s processing facilities in North America \u2013 Biomass Generation: generation and sale of electricity from biomass assets in the UK \u2013 Flexible Generation: generation and sale of electricity from pumped storage, run-of-river hydro and OCGTs assets, and the processing and sale of waste-derived pellets, in the UK \u2013 Energy Solutions (previously Customers): supply of electricity to non-domestic customers in the UK Operating costs that can be reasonably allocated to the activities of a reportable segment are included within the results of that reportable segment. Central corporate and commercial functions provide certain specialist and shared services, including optimisation of the Group\u2019s positions. Central corporate and commercial function costs that cannot be reasonably allocated to the activities of a reportable segment are included within Innovation, capital projects and other. Innovation, capital projects and other is not a reportable segment as it does not earn revenues, however it is included in the information presented below to enable reconciliation of the segmental amounts presented to the consolidated IFRS results recognised in these Consolidated financial statements. Given the principal activity of the Group is a generator and seller of electricity, the Consolidated income statement includes all revenue from sales of electricity during the period. Where electricity is purchased rather than generated to fulfil a sale, either due to operational or other requirements, the cost of this purchase is recorded within cost of sales. When defining gross profit within the Consolidated financial statements, the Group follows the principal trading considerations applied by its Pellet Production, Biomass Generation, Flexible Generation and Energy Solutions businesses when making a sale. In respect of the Pellet Production business, this reflects the direct costs of production, being fibre, fuel and drying costs, direct freight and port costs, or third-party pellet purchases. In respect of the Biomass Generation and Flexible Generation businesses, this reflects the direct costs of the commodities required to generate power or the direct cost of purchasing power, the relevant grid connection costs that arise, and Electricity Generator Levy (EGL) arising on applicable renewable and low-carbon generation. In respect of the Energy Solutions business, this reflects the direct costs of supply, being the costs of the power or gas supplied, together with costs levied on suppliers such as network costs, broker costs and renewables incentive mechanisms. Accordingly, cost of sales excludes indirect overheads and staff costs (presented within operating and administrative expenses), and depreciation (presented separately on the face of the Consolidated income statement). See note 3.4 for details of the costs included within inventories. The accounting policies applied for the purpose of measuring the reportable segments\u2019 profits or losses, assets and liabilities are the same as those used in measuring the corresponding amounts in the Consolidated financial statements. EGL applies to the Group\u2019s three biomass units operating under the Renewables Obligation (RO) scheme and its run-of-river hydro operations. It does not apply to the Group\u2019s Contract for Difference (CfD) biomass unit or its pumped storage hydro operations. The EGL applies at a rate of 45% to receipts from in-scope forms of wholesale electricity generation that exceed a defined benchmark level, after the deduction of certain allowable costs, from 1 January 2023 to 31 March 2028. The Group has determined that it should be treated as a levy under IFRIC 21 \u2018Levies\u2019, rather than as a tax under IAS 12 \u2018Income taxes\u2019. Therefore, the cost is recognised above gross profit. A liability for a levy is recognised once the obligating event, being the activity that triggers the payment of the levy, has occurred. EGL is triggered based on average generation receipts for in-scope revenue schemes over a reporting period being higher than the threshold set in the legislation. A liability is recognised if the average actual generation receipts to date in a financial period are above the threshold. The threshold rises annually in April, in line with the UK Consumer Price Index (CPI). The threshold at 31 December 2024 was \u00a377.94 (2023: \u00a375.00). The assessment is based on receipts above this threshold after adjusting for allowable costs. Seasonality of trading The primary activities of the Group are affected by seasonality. Demand in the UK for electricity is typically higher in the winter period (October to March) when temperatures are lower, which drives higher prices and higher levels of generation. Conversely, demand is typically lower in the summer months (April to September) when temperatures are milder, and therefore prices and levels of generation are generally lower. This trend is experienced by all of the Group\u2019s UK-based businesses, as they operate within the UK electricity market. It is most notable within the Biomass Generation business due to its scale and the flexible operation of its thermal generation plant.
The Pellet Production business incurs certain costs that are higher in winter months due to the impact of weather conditions, such
as fibre drying costs and heating costs. Production volumes and margins are typically higher in the summer months. The business
is protected from demand fluctuations due to seasonality by regular production and dispatch schedules under its contracts with
customers, both intra-group and externally.
Segment revenues and results
The following is an analysis of the Group\u2019s performance by reportable segment and any other information necessary to enable
reconciliation to the Group\u2019s total IFRS results recognised for the year ended 31 December 2024. Revenue for each segment is split
between sales to external parties and inter-segment sales. Inter-segment sales are eliminated in the intra-group eliminations column
along with any adjustments required for unrealised profits (primarily inventory purchased by the Biomass Generation segment from
the Pellet Production segment that is still held as inventory at the reporting date).
Adjusted EBITDA by reportable segment is presented in note 2.7.
Year ended 31 December 2024
Innovation, Exceptional
capital items
Pellet Biomass Flexible Energy projects and Intra-group Adjusted and certain Total
Production Generation Generation Solutions other eliminations results remeasurements results
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Revenue
External sales
3 4 0.1
1,880.7
74.3
3,7 86.1
\u2013
\u2013
6,081.2
81.3
6 ,162.5
Inter-segment sales
602.0
3,040.0
148.5
\u2013
\u2013
(3,790.5)
\u2013
\u2013
\u2013
Total revenue
9 42.1
4,920.7
222.8
3,786 .1
\u2013
(3,790.5)
6,081.2
81.3
6 ,162.5
Cost of sales
(5 62 .1)
(3,685.5)
(46.2)
(3,625.0)
\u2013
3,788.7
(4,130.1)
4.9
(4,125.2)
Electricity Generator Levy
\u2013
(150.2)
(10.6)
\u2013
\u2013
\u2013
(160.8)
\u2013
(160.8)
Gross profit
380.0
1,085.0
166.0
161.1
\u2013
(1.8)
1,790.3
86.2
1,876.5
Operating and administrative
expenses
(236.7)
(268.6)
(28.4)
(85.5)
( 78.1)
(1.2)
(698.5)
(2 2.1)
(720.6)
Impairment losses on
financial assets
\u2013
(2.9)
\u2013
(24.4)
\u2013
\u2013
(27.3)
(12.7)
(40.0)
Depreciation
(102.7)
(97.7)
(17.1)
(0.7)
(5.8)
(0.8)
(224.8)
\u2013
(224.8)
Amortisation
(4.5)
(2.9)
\u2013
(7. 3)
(2.3)
\u2013
(17.0)
\u2013
(17.0)
Impairment of non-current assets
(3.3)
(0 .1)
\u2013
\u2013
(8.4)
\u2013
(11.8)
(2.6)
(14.4)
Other (losses)/gains
(4 .1)
(4.6)
0.2
\u2013
\u2013
\u2013
(8.5)
1.2
(7.3)
Share of losses from associates
(1.3)
\u2013
\u2013
\u2013
(0.9)
\u2013
(2.2)
\u2013
(2.2)
Operating profit/(loss)
27.4
708.2
120.7
43.2
(95.5)
(3.8)
800.2
50.0
850.2
Further information on the main revenue streams of each segment is presented in note 2.2.
The following is an analysis of the Group\u2019s performance by reportable segment for the year ended 31 December 2023:
Year ended 31 December 2023
Innovation, Exceptional
Restated
(1)(2)
Restated
(1)
capital
Restated
(1)
Restated
(2)
items
Restated
(2)
Pellet Biomass Flexible Energy projects and Intra-group Adjusted and certain Total
Production Generation Generation Solutions other eliminations results remeasurements results
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Revenue
External sales
397. 8
2,011.4
82.8
4,958.3
\u2013
\u2013
7,450.3
282.9
7,7 33. 2
Inter-segment sales
424.6
4,391.5
298.3
\u2013
\u2013
( 5,114. 4)
\u2013
\u2013
\u2013
Total revenue
822.4
6,402.9
381.1
4,958.3
\u2013
(5,114.4)
7,
45 0.3
282.9
7,7 33.2
Cost of sales
(511.8)
(5,216.9)
(100.8)
(4,763.3)
\u2013
5,100. 5
(5,492.3)
(82.7)
(5,575.0)
Electricity Generator Levy
\u2013
(181.4)
(23.2)
\u2013
\u2013
\u2013
(204.6)
\u2013
(204.6)
Gross profit
310.6
1,004.6
257.1
195.0
\u2013
(13.9)
1,753.4
200.2
1,953.6
Operating and administrative
expenses
(221.7)
(301.3)
(26.9)
(90.7)
( 78.1)
7.0
(711.7)
\u2013
(711.7)
Impairment losses on financial assets
\u2013
\u2013
\u2013
(32.5)
\u2013
\u2013
(32.5)
\u2013
(32.5)
Depreciation
(89.3)
(84.6)
(15.9)
(0.9)
(2.7)
(2.2)
(195.6)
\u2013
(195.6)
Amortisation
(4.7)
(2.5)
\u2013
(21.6)
(0.6)
\u2013
(29.4)
\u2013
(29.4)
Impairment of non-current assets
(2.8)
\u2013
1.1
\u2013
\u2013
\u2013
(1.7)
(6 9.1)
(70.8)
Other gains/(losses)
0.5
0.2
\u2013
\u2013
\u2013
\u2013
0.7
(4.5)
(3.8)
Share of (losses)/profits from
associates
(1.7)
\u2013
\u2013
\u2013
0.1
\u2013
(1.6)
\u2013
(1.6)
Operating (loss)/profit
(9.1)
616.4
215.4
49.3
(81.3)
(9.1)
781.6
126.6
908.2
(1) Comparative amounts have been restated to reflect the updated presentation of reporting Biomass Generation and Flexible Generation separately. See above for further
details of the change in reportable segments.
(2) Amounts have been restated to reflect the Group\u2019s revised application of the agent requirements of IFRS 15 to sleeved electricity trades. This restatement wholly relates
to the Biomass Generation segment. See the Net presentation of sleeved electricity trades section in note 8.4 for further details on this restatement.
Capital expenditure by reportable segment
Assets and working capital are monitored on a consolidated basis; however, capital expenditure is monitored by segment.
Additions to property, plant
Additions to intangible assets and equipment
Restated
(1)
Restated
(1)
2024 2023 2024 2023
At 31 December \u00a3m \u00a3m \u00a3m \u00a3m
Pellet Production
\u2013
\u2013
104.8
163.0
Biomass Generation
0.5
1.9
72.5
129.9
Flexible Generation
\u2013
\u2013
139.4
203.5
Energy Solutions
3.8
2.7
0.3
0.2
Innovation, capital projects and other
2.6
5.3
8.5
12.6
Total
6.9
9.9
325.5
509.2
(1) Comparative amounts have been restated to reflect the updated presentation of reporting Biomass Generation and Flexible Generation separately. See above for further
details of the change in reportable segments.
Total cash outflows in relation to capital expenditure during the year were \u00a3387.5 million (2023: \u00a3441.1 million). In the current year,
the cash outflow in relation to property, plant and equipment is higher than the cost capitalised (see note 3.1), predominantly as
a result of a decrease in creditors relating to capital expenditure compared to the prior year.
Intra-group trading
Intra-group transactions are carried out at management\u2019s best estimate of arm\u2019s-length, commercial terms that, where possible,
equate to market prices. During 2024, the Pellet Production segment sold biomass pellets and provided associated services with a total
value of \u00a3602.0 million (2023: \u00a3424.6 million) to the Biomass Generation segment and the Biomass Generation segment sold electricity,
gas and renewable certificate assets with a total value of \u00a32,928.7 million (2023: \u00a34,250.1 million) to the Energy Solutions segment.
The Biomass Generation segment sold electricity to the Flexible Generation segment with a total value of \u00a336.5 million (2023:
\u00a392.7 million). The Flexible Generation segment sold electricity and renewable certificate assets with a total value of \u00a3145.9 million
(2023: \u00a3296.4 million) to the Biomass Generation segment and electricity of \u00a32.6 million (2023: \u00a31.9 million) to the Energy Solutions
segment. During 2024, the Biomass Generation segment sold biomass pellets to the Pellet Production segment with a total value
of \u00a374.8 million (2023: \u00a348.7 million).
The impact of all intra-group transactions, including any unrealised profit arising, is eliminated on consolidation.
Major customers
There was no individual customer, in either the current or previous financial year, that represented 10% or more of total revenue.
Geographical analysis of revenue and non-current assets
The geographic information analyses the Group\u2019s revenue and non-current assets by the entity\u2019s country of domicile. In presenting
the geographic information, segment revenue has been based on the geographic location of customers and segment assets were
based on the geographic location of the assets.
The Group\u2019s external revenue and non-current assets for the Biomass Generation, Flexible Generation and Energy Solutions
segments are all UK-based. The Pellet Production segment has third-party pellet sales to both the UK and other locations around
the world. The Pellet Production segment\u2019s non-current assets are located in North America, in both Canada and the US.
Revenue
(based on location of customer)
Year ended 31 December
Restated
(1)
2024 2023
\u00a3m \u00a3m
North America (Canada and US)
7.9
8.5
Europe (excluding UK)
25.8
60.3
Asia
242.5
280.1
UK
5,886.3
7,
38 4 .3
Total
6,162. 5
7,7 33. 2
(1) Comparative amounts have been restated to reflect the Group\u2019s revised application of the agent requirements of IFRS 15 to sleeved electricity trades. This restatement
wholly relates to the Biomass Generation segment. See the Net presentation of sleeved electricity trades section in note 8.4 for further details on this restatement.
Non-current assets
(1)
(based on asset\u2019s location)
As at 31 December
2024 2023
\u00a3m \u00a3m
Canada
356.5
406.7
US
698.9
666.0
Asia
0.2
0.3
UK
2
,33 4.1
2,255.1
Total
3
3,389.7
,32 8 .1
(1) Non-current assets comprise goodwill, intangible assets, property, plant and equipment, right-of-use assets and investments.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEntitysReportableSegmentsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-612": { "value": "\u2013 Pellet Production: production and subsequent sale of biomass pellets from the Group\u2019s processing facilities in North America \u2013 Biomass Generation: generation and sale of electricity from biomass assets in the UK \u2013 Flexible Generation: generation and sale of electricity from pumped storage, run-of-river hydro and OCGTs assets, and the processing and sale of waste-derived pellets, in the UK \u2013 Energy Solutions (previously Customers): supply of electricity to non-domestic customers in the UK Geographical analysis of revenue and non-current assets The geographic information analyses the Group\u2019s revenue and non-current assets by the entity\u2019s country of domicile. In presenting the geographic information, segment revenue has been based on the geographic location of customers and segment assets were based on the geographic location of the assets. The Group\u2019s external revenue and non-current assets for the Biomass Generation, Flexible Generation and Energy Solutions segments are all UK-based. The Pellet Production segment has third-party pellet sales to both the UK and other locations around the world. The Pellet Production segment\u2019s non-current assets are located in North America, in both Canada and the US.
Revenue
(based on location of customer)
Year ended 31 December
Restated
(1)
2024 2023
\u00a3m \u00a3m
North America (Canada and US)
7.9
8.5
Europe (excluding UK)
25.8
60.3
Asia
242.5
280.1
UK
5,886.3
7,
38 4 .3
Total
6,162. 5
7,7 33. 2
(1) Comparative amounts have been restated to reflect the Group\u2019s revised application of the agent requirements of IFRS 15 to sleeved electricity trades. This restatement wholly relates to the Biomass Generation segment. See the Net presentation of sleeved electricity trades section in note 8.4 for further details on this restatement.
Non-current assets
(1)
(based on asset\u2019s location)
As at 31 December
2024 2023
\u00a3m \u00a3m
Canada
356.5
406.7
US
698.9
666.0
Asia
0.2
0.3
UK
2
,33 4.1
2,255.1
Total
3
3,389.7
,32 8 .1
(1) Non-current assets comprise goodwill, intangible assets, property, plant and equipment, right-of-use assets and investments. ", "dimensions": { "concept": "ifrs-full:DisclosureOfGeographicalAreasExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-611": { "value": "When defining gross profit within the Consolidated financial statements, the Group follows the principal trading considerations applied by its Pellet Production, Biomass Generation, Flexible Generation and Energy Solutions businesses when making a sale. In respect of the Pellet Production business, this reflects the direct costs of production, being fibre, fuel and drying costs, direct freight and port costs, or third-party pellet purchases. In respect of the Biomass Generation and Flexible Generation businesses, this reflects the direct costs of the commodities required to generate power or the direct cost of purchasing power, the relevant grid connection costs that arise, and Electricity Generator Levy (EGL) arising on applicable renewable and low-carbon generation. In respect of the Energy Solutions business, this reflects the direct costs of supply, being the costs of the power or gas supplied, together with costs levied on suppliers such as network costs, broker costs and renewables incentive mechanisms. Accordingly, cost of sales excludes indirect overheads and staff costs (presented within operating and administrative expenses), and depreciation (presented separately on the face of the Consolidated income statement). See note 3.4 for details of the costs included within inventories. ", "dimensions": { "concept": "ifrs-full:DisclosureOfCostOfSalesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-667": { "value": "Segment revenues and results The following is an analysis of the Group\u2019s performance by reportable segment and any other information necessary to enable reconciliation to the Group\u2019s total IFRS results recognised for the year ended 31 December 2024. Revenue for each segment is split between sales to external parties and inter-segment sales. Inter-segment sales are eliminated in the intra-group eliminations column along with any adjustments required for unrealised profits (primarily inventory purchased by the Biomass Generation segment from the Pellet Production segment that is still held as inventory at the reporting date). Adjusted EBITDA by reportable segment is presented in note 2.7.
Year ended 31 December 2024
Innovation, Exceptional
capital items
Pellet Biomass Flexible Energy projects and Intra-group Adjusted and certain Total
Production Generation Generation Solutions other eliminations results remeasurements results
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Revenue
External sales
3 4 0.1
1,880.7
74.3
3,7 86.1
\u2013
\u2013
6,081.2
81.3
6 ,162.5
Inter-segment sales
602.0
3,040.0
148.5
\u2013
\u2013
(3,790.5)
\u2013
\u2013
\u2013
Total revenue
9 42.1
4,920.7
222.8
3,786 .1
\u2013
(3,790.5)
6,081.2
81.3
6 ,162.5
Cost of sales
(5 62 .1)
(3,685.5)
(46.2)
(3,625.0)
\u2013
3,788.7
(4,130.1)
4.9
(4,125.2)
Electricity Generator Levy
\u2013
(150.2)
(10.6)
\u2013
\u2013
\u2013
(160.8)
\u2013
(160.8)
Gross profit
380.0
1,085.0
166.0
161.1
\u2013
(1.8)
1,790.3
86.2
1,876.5
Operating and administrative
expenses
(236.7)
(268.6)
(28.4)
(85.5)
( 78.1)
(1.2)
(698.5)
(2 2.1)
(720.6)
Impairment losses on
financial assets
\u2013
(2.9)
\u2013
(24.4)
\u2013
\u2013
(27.3)
(12.7)
(40.0)
Depreciation
(102.7)
(97.7)
(17.1)
(0.7)
(5.8)
(0.8)
(224.8)
\u2013
(224.8)
Amortisation
(4.5)
(2.9)
\u2013
(7. 3)
(2.3)
\u2013
(17.0)
\u2013
(17.0)
Impairment of non-current assets
(3.3)
(0 .1)
\u2013
\u2013
(8.4)
\u2013
(11.8)
(2.6)
(14.4)
Other (losses)/gains
(4 .1)
(4.6)
0.2
\u2013
\u2013
\u2013
(8.5)
1.2
(7.3)
Share of losses from associates
(1.3)
\u2013
\u2013
\u2013
(0.9)
\u2013
(2.2)
\u2013
(2.2)
Operating profit/(loss)
27.4
708.2
120.7
43.2
(95.5)
(3.8)
800.2
50.0
850.2
Further information on the main revenue streams of each segment is presented in note 2.2. The following is an analysis of the Group\u2019s performance by reportable segment for the year ended 31 December 2023:
Year ended 31 December 2023
Innovation, Exceptional
Restated
(1)(2)
Restated
(1)
capital
Restated
(1)
Restated
(2)
items
Restated
(2)
Pellet Biomass Flexible Energy projects and Intra-group Adjusted and certain Total
Production Generation Generation Solutions other eliminations results remeasurements results
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Revenue
External sales
397. 8
2,011.4
82.8
4,958.3
\u2013
\u2013
7,450.3
282.9
7,7 33. 2
Inter-segment sales
424.6
4,391.5
298.3
\u2013
\u2013
( 5,114. 4)
\u2013
\u2013
\u2013
Total revenue
822.4
6,402.9
381.1
4,958.3
\u2013
(5,114.4)
7,
45 0.3
282.9
7,7 33.2
Cost of sales
(511.8)
(5,216.9)
(100.8)
(4,763.3)
\u2013
5,100. 5
(5,492.3)
(82.7)
(5,575.0)
Electricity Generator Levy
\u2013
(181.4)
(23.2)
\u2013
\u2013
\u2013
(204.6)
\u2013
(204.6)
Gross profit
310.6
1,004.6
257.1
195.0
\u2013
(13.9)
1,753.4
200.2
1,953.6
Operating and administrative
expenses
(221.7)
(301.3)
(26.9)
(90.7)
( 78.1)
7.0
(711.7)
\u2013
(711.7)
Impairment losses on financial assets
\u2013
\u2013
\u2013
(32.5)
\u2013
\u2013
(32.5)
\u2013
(32.5)
Depreciation
(89.3)
(84.6)
(15.9)
(0.9)
(2.7)
(2.2)
(195.6)
\u2013
(195.6)
Amortisation
(4.7)
(2.5)
\u2013
(21.6)
(0.6)
\u2013
(29.4)
\u2013
(29.4)
Impairment of non-current assets
(2.8)
\u2013
1.1
\u2013
\u2013
\u2013
(1.7)
(6 9.1)
(70.8)
Other gains/(losses)
0.5
0.2
\u2013
\u2013
\u2013
\u2013
0.7
(4.5)
(3.8)
Share of (losses)/profits from
associates
(1.7)
\u2013
\u2013
\u2013
0.1
\u2013
(1.6)
\u2013
(1.6)
Operating (loss)/profit
(9.1)
616.4
215.4
49.3
(81.3)
(9.1)
781.6
126.6
908.2
(1) Comparative amounts have been restated to reflect the updated presentation of reporting Biomass Generation and Flexible Generation separately. See above for further details of the change in reportable segments. (2) Amounts have been restated to reflect the Group\u2019s revised application of the agent requirements of IFRS 15 to sleeved electricity trades. This restatement wholly relates to the Biomass Generation segment. See the Net presentation of sleeved electricity trades section in note 8.4 for further details on this restatement. Major customers There was no individual customer, in either the current or previous financial year, that represented 10% or more of total revenue. Geographical analysis of revenue and non-current assets The geographic information analyses the Group\u2019s revenue and non-current assets by the entity\u2019s country of domicile. In presenting the geographic information, segment revenue has been based on the geographic location of customers and segment assets were based on the geographic location of the assets. The Group\u2019s external revenue and non-current assets for the Biomass Generation, Flexible Generation and Energy Solutions segments are all UK-based. The Pellet Production segment has third-party pellet sales to both the UK and other locations around the world. The Pellet Production segment\u2019s non-current assets are located in North America, in both Canada and the US.
Revenue
(based on location of customer)
Year ended 31 December
Restated
(1)
2024 2023
\u00a3m \u00a3m
North America (Canada and US)
7.9
8.5
Europe (excluding UK)
25.8
60.3
Asia
242.5
280.1
UK
5,886.3
7,
38 4 .3
Total
6,162. 5
7,7 33. 2
(1) Comparative amounts have been restated to reflect the Group\u2019s revised application of the agent requirements of IFRS 15 to sleeved electricity trades. This restatement wholly relates to the Biomass Generation segment. See the Net presentation of sleeved electricity trades section in note 8.4 for further details on this restatement.
Non-current assets
(1)
(based on asset\u2019s location)
As at 31 December
2024 2023
\u00a3m \u00a3m
Canada
356.5
406.7
US
698.9
666.0
Asia
0.2
0.3
UK
2
,33 4.1
2,255.1
Total
3
3,389.7
,32 8 .1
(1) Non-current assets comprise goodwill, intangible assets, property, plant and equipment, right-of-use assets and investments.
2.2 Revenue
The majority of the Group\u2019s revenue is within the scope of IFRS 15. The other sources of the Group\u2019s revenue outside the scope
of IFRS 15 comprise gains and losses on non-hedge accounted derivatives, the ineffective portion of hedge accounted derivatives,
amounts reclassified to revenue for gains and losses on hedge accounted UK inflation swaps, Contract for Difference (CfD) income,
and income from the Government\u2019s Energy Bill Relief Scheme (EBRS) and Energy Bills Discount Scheme (EBDS). See note 2.7 for
further details on gains and losses on derivatives and note 7.2.3 for inflation risk management. Gains and losses recognised in the
Consolidated income statement on derivative contracts that are entered to hedge a revenue item are presented within the same
revenue stream line as the revenue item they are intending to hedge.
Restated
(1)
Year ended 31 December 2024 Year ended 31 December 2023
Exceptional Exceptional
items and items and
Adjusted certain Total Adjusted certain Total
results remeasurements results results remeasurements results
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Revenue from contracts with customers
5,918.2
(6.9)
5,911.3
7,14
8.3
\u2013
7,14
8 .3
Other revenue
163.0
88.2
251.2
302.0
282.9
584.9
Total revenue
6,081.2
81.3
6 ,16 2.5
7,45
0.3
282.9
7,7 33. 2
(1) Comparative amounts have been restated to reflect the Group\u2019s revised application of the agent requirements of IFRS 15 to sleeved electricity trades. This restatement
wholly relates to the Biomass Generation segment. See the Net presentation of sleeved electricity trades section in note 8.4 for further details on this restatement.
Nature and timing of performance obligations,
Revenue stream (Segment)
including significant payment terms
Method of recognising revenue, including any estimation uncertainties
Pellet sales (Pellet The Group\u2019s Pellet Production business produces Revenue is recognised at the point that the pellets
Production) biomass pellets which are sold to external are loaded onto the shipping vessel. The amount of
customers. Customers generally obtain control revenue recognised is based on the contracted price
of the pellets at the point the pellets are loaded and volume of the pellets.
onto the shipping vessel. For CIF sales, revenue for the freight portion is
Where freight is also arranged for the customer, recognised over the period the vessel sails.
these sales are known as Cost, insurance and
freight (CIF) sales. The freight component is
considered a separate performance obligation.
Invoices are raised in line with contractual terms
and are usually payable within 4\u201315 days.
Electricity and gas sales The Group\u2019s Biomass Generation and Flexible Revenues from sales contracts fulfilled through
(Biomass Generation and Generation businesses have contracts generation are recognised at a point in time based
Flexible Generation) for wholesale electricity sales. Performance upon metered output at rates specified under
obligations, being the supply of electricity, are met contractual terms. These are recognised under
either via generation or through the procurement the output method, whereby revenue is recognised
of electricity from counterparties. The based on the value transferred to the customer.
performance obligations for these contracts are Revenue from sales contracts fulfilled through
deemed to be a series of distinct goods that are procured electricity or gas is recognised at the point
substantially the same and transfer consecutively. at which this electricity or gas is supplied to the
Control is deemed to have transferred to the counterparty in accordance with the contractual
customer at the point that the electricity has been terms at rates specified under the contract.
supplied in accordance with the contractual terms.
The Group\u2019s Biomass Generation segment has gas
sales contracts as part of managing the Group\u2019s
overall gas requirements.
Invoices for electricity are typically raised on the
fifth banking day following the month of supply,
in line with the Grid Trade Master Agreement
(GTMA) contractual terms, and are payable on the
fifth banking day following the date of invoice.
Renewable certificate Renewables Obligation Certificates (ROCs) and External ROC and REGO sales are recognised at
sales (Biomass Renewable Energy Guarantees of Origin (REGOs) the point the relevant renewable certificates are
Generation, Flexible are sold to counterparties at a point in time. transferred to the counterparty.
Generation and Energy ROCs sold to optimise working capital are invoiced See note 3.3 for further details on how the renewable
Solutions) in line with contractual terms and are usually certificate schemes operate.
payable within two days.
Invoices for ROC sales to third parties are raised
when the ROCs are transferred, typically four to
five months following the end of the compliance
period in which they were generated. Invoices are
usually payable within seven days.
CfD income/payment The Group\u2019s Biomass Generation business is party The Group recognises the income or cost arising from
(Biomass Generation) to a CfD with the Low Carbon Contracts Company the CfD in the Consolidated income statement as a
(LCCC), a Government-owned entity responsible component of revenue at the point the Group meets
for delivering elements of the Government\u2019s its performance obligation under the CfD agreement.
Electricity Market Reform programme. Under the This is considered to be the point at which the
contract, the Group makes or receives payments relevant generation is delivered and the payment
in respect of electricity dispatched from a specific becomes contractually due.
biomass-fuelled generating unit. See CfD income/payment section below for further
Invoices are raised 7\u201310 days following the date details.
of supply and are settled within 28 days.
Ancillary services Ancillary services refer to the provision of a range Revenue is recognised by reference to the stage
(Biomass Generation of system support services to National Grid. Most of completion of the contractual performance
and Flexible Generation) contracts are for the delivery of a specific service obligations, which are calculated by reference to
either continually or on an ad-hoc basis over a the amount of the contract term that has elapsed.
period of time. Depending on contract terms, this approach may
Invoices are raised and subsequently settled in line require judgement in estimating probable future
with the National Grid company ancillary services outcomes.
settlement calendar, typically monthly.
Other income Other income is derived from the sale of goods. Revenue is recognised at the point the control of the
(All\ue01esegments) The customer obtains control typically at the point goods is transferred to the customer.
of delivery to their premises or upon collection.
Invoices are raised in line with contractual terms.
Electricity and gas sales The Group\u2019s Energy Solutions business sells Revenue is recognised on the supply of electricity or
(Energy Solutions) electricity and gas directly to non-domestic gas when a contract exists, supply has taken place,
customers. Energy supplied is measured based a quantifiable price has been established or can be
upon metered consumption and contractual rates. determined, and the amounts receivable are
The Energy Solutions business also has long-term expected to be recovered.
contracts for the sale of electricity and gas, which Where supply has taken place but has not yet been
are deemed as being satisfied over time in line measured or billed, revenue is estimated based on
with the progress of the contracts. consumption statistics and selling price estimates
Invoices are raised in line with contractual terms. and is recognised as accrued income. This estimate
For small and medium-sized enterprise (SME) is not considered to be a key source of estimation
customers, payment is generally due within uncertainty because historical experience has
10\u201314 days. For Industrial and Commercial (I&C) demonstrated that these estimates are materially
customers, payment is generally due between accurate based on the subsequent billings
28\u201390 days. and settlements.
Where contracts for the sale of electricity and gas are
held, revenue is recognised in line with the progress
of the contracts.
The revenue recognised for fixed price contracts is
based on the input method. Revenue is recognised
based on the costs incurred and the estimated
margin to be obtained over the life of the contract.
For variable price contracts revenue is recognised
based on the output method. Revenue is recognised
based on the volume supplied and the contracted
price. Assumptions are applied consistently but
third-party costs can vary, therefore actual outcomes
may vary from initial estimates.
EBRS and EBDS income The UK Government introduced the EBDS running The discounted price of electricity and gas supplied
(Energy Solutions) from 1 April 2023 to 31 March 2024. Under this under both the EBRS and EBDS is recognised in
scheme, energy supplied to eligible non-domestic revenue as it is supplied. The amount claimed back
customers will have a discount applied to each from the UK Government is recognised within
unit of electricity and gas. Certain customers may revenue over the same period as the underlying
be eligible for higher levels of support dependent discounted revenue it relates to is recognised.
on the sector in which they operate. The discount The revenue received from the UK Government is
provided can then be claimed back from the UK included in the EBRS and EBDS income line in the
Government by the supplier. table on page 178. The Group does not recognise
The EBDS replaced the EBRS which supported any additional revenue from the scheme than it
non-domestic customers between 1 October would have done had it not been introduced.
2022 and 31 March
2023.
Under the EBRS,
energy supplied to non-domestic customers in this
period had a discount applied for the customer
under the scheme to cap their energy tariff. The
discount provided can then be claimed back from
the UK Government by the supplier.
Payment is due 10 days post submission of
a claim, which typically occurs monthly.
Accounting policy Revenue represents amounts receivable for goods or services provided to customers in the normal course of business, net of trade discounts, VAT and other sales-related taxes and excludes transactions between Group companies. Revenue is presented gross in the Consolidated income statement when the Group controls the specified good or service prior to the transfer to the customer. When the Group is acting primarily as an agent, revenue is recognised on a net basis. During the year, the Group reassessed the application of the agent and principal requirements in IFRS 15 against sleeved electricity trades. See note 8.4 for further information. A summary of the Group\u2019s principal revenue streams, along with the nature and timing of performance obligations, payment terms, methods of recognising revenue, and any estimation uncertainties, is given in the table above. Renewable certificate sales The generation and sale of renewable certificates, primarily ROCs and REGOs, is a key driver of the Group\u2019s financial performance. During the year, the Group made sales and related purchases of ROCs to help optimise its working capital position. External sales of ROCs in the table below includes \u00a350.8 million of such sales (2023: \u00a3583.3 million), with a similar value reflected in cost of sales. The renewable certificate sales revenue in the Biomass Generation business of \u00a3739.3 million has decreased compared to prior year (2 02 3: \u00a3 1, 27 7.4 million) primarily as a result of the reduction in these ROC sales. See note 3.3 for further details of how the renewable certificate schemes operate, of the renewable certificates generated and sold by the Biomass Generation and Flexible Generation businesses, and of those utilised by the Energy Solutions business during the year. CfD income/payment The income/payment is calculated by reference to a strike price per MWh. The base year for the strike price was 2012 and it increases each year in line with the UK Consumer Price Index (CPI) and changes in system balancing costs. The strike price at 31 December 2024 was \u00a3138.16 per MWh (2023: \u00a3132.47 per MWh). When market prices (based on average traded prices in the preceding season) are above or below the strike price, the Group makes an additional payment to or receives additional income from LCCC equivalent to the difference between that market power price and the strike price, for each MWh produced from the relevant generating unit. Such payments or receipts are in addition to amounts received from the sale of the associated power in the wholesale market.
Further analysis of revenue for the year ended 31 December 2024 is provided in the table below:
Year ended 31 December 2024
External Inter-segment Total
\u00a3m \u00a3m \u00a3m
Pellet Production
Pellet sales
329.6
597. 5
927.1
Other income
10.5
4.5
15.0
Total Pellet Production
3 4 0.1
602.0
9 42.1
Biomass Generation
Electricity and gas sales
1,426.6
2,510.7
3,937. 3
Renewable certificate sales
284.8
454.5
739.3
CfD income
148.6
\u2013
148.6
Ancillary services
18.7
\u2013
18.7
Other income
2.0
74.8
76.8
Total Biomass Generation
1,880.7
3,040.0
4,920.7
Flexible Generation
Electricity sales
22 .1
141.2
163.3
Renewable certificate sales
\u2013
7.3
7.3
Ancillary services
24.2
\u2013
24.2
Other income
28.0
\u2013
28.0
Total Flexible Generation
74.3
148.5
222.8
Energy Solutions
Electricity and gas sales
3,734.0
\u2013
3,734.0
EBRS and EBDS income
14.4
\u2013
14.4
Renewable certificate sales
37.4
\u2013
37. 4
Other income
0.3
\u2013
0.3
Total Energy Solutions
3,7 86 .1
\u2013
3,786 .1
Elimination of inter-segment sales
\u2013
(3,790.5)
(3,790.5)
Total consolidated revenue in Adjusted results
6,081.2
\u2013
6,081.2
Certain remeasurements
81.3
\u2013
81.3
Total consolidated revenue in Total results
6,16
2. 5
\u2013
6 ,162. 5
Revenue recognised in Adjusted results of \u00a36,081.2 million (2023: \u00a37,450.3 million) differs from revenue recognised in Total results of
\u00a36 ,16 2. 5 million (2023: \u00a37,733.2 million) due to certain remeasurement gains of \u00a381.3 million (2023: \u00a3282.9 million), comprised of gains
and losses on derivative contracts that are used to manage risk exposures associated with the Group\u2019s revenue, not designated into
hedge accounting relationships under IFRS 9.
Revenue recognised in the period that was included within contract liabilities at the start of the year was \u00a316.8 million (2023:
\u00a328.5 million). See note 3.7 for further details on contract liabilities.
Revenue recognised in the period from performance obligations satisfied or partly satisfied in the previous period was \u00a3nil (2023: \u00a3nil).
The following is an analysis of the Group\u2019s revenues for the year ended 31 December 2023:
Restated
(1)(2)
Year ended 31 December 2023
External Inter-segment Total
\u00a3m \u00a3m \u00a3m
Pellet Production
Pellet sales
391.3
424.6
815.9
Other income
6.5
\u2013
6.5
Total Pellet Production
397. 8
424.6
822.4
Biomass Generation
Electricity and gas sales
1,183. 4
3,908.0
5,091.4
Renewable certificate sales
842.6
434.8
1, 27 7.4
CfD payment
(63.0)
\u2013
(63.0)
Ancillary services
25.0
\u2013
25.0
Other income
23.4
48.7
7 2.1
Total Biomass Generation
2,011.4
4,391.5
6,402.9
Flexible Generation
Electricity sales
24.8
289.6
314.4
Renewable certificate sales
\u2013
8.7
8.7
Ancillary services
30.4
\u2013
30.4
Other income
27.6
\u2013
27.6
Total Flexible Generation
82.8
298.3
3 81.1
Energy Solutions
Electricity and gas sales
4,554.4
\u2013
4,554.4
EBRS and EBDS income
365.8
\u2013
365.8
Renewable certificate sales
3 7.9
\u2013
37.9
Other income
0.2
\u2013
0.2
Total Energy Solutions
4,958.3
\u2013
4,958.3
Elimination of inter-segment sales
\u2013
(5,114. 4)
(5 ,114 .4)
Total consolidated revenue in Adjusted results
7,45
0.3
\u2013
7,45
0.3
Certain remeasurements
282.9
\u2013
282.9
Total consolidated revenue in Total results
7,7 33. 2
\u2013
7,7 33. 2
(1) Amounts have been restated to reflect the change in reportable segments. See note 2.1 for further details of the change in reportable segments.
(2) Amounts have been restated to reflect the Group\u2019s revised application of the agent requirements of IFRS 15 to sleeved electricity trades. This restatement wholly relates
to the Biomass Generation segment. See the Net presentation of sleeved electricity trades section in note 8.4 for further details on this restatement.
The Group\u2019s Biomass Generation and Flexible Generation segments have contracts for wholesale electricity sales. Performance
obligations, being the supply of electricity, are met either via electricity generation or through the procurement of electricity from
counterparties. Where electricity is procured from counterparties to meet this obligation, the electricity sale is presented on a gross
basis with the cost of buying the electricity presented in cost of sales and the sale of this electricity presented in revenue. If external
purchases of power were presented net within external revenue this would have reduced external revenue by \u00a31,072.9 million to
\u00a35,089.6 million (2023: by \u00a32,347.0 million to \u00a35,386.2 million) with a corresponding decrease in external cost of sales.
For most customer contracts the Group is eligible for, and applies, the practical expedient available under IFRS 15 and has not
disclosed information related to the transaction price allocated to remaining performance obligations. The right to receive
consideration from these customers is at an amount that corresponds directly with the value to the customer of the Group\u2019s
performance completed to date, or the contract\u2019s original expected duration is less than one year. For the Group\u2019s fixed price energy
supply contracts that have an original expected duration of more than one year, the aggregate amount of the transaction price
allocated to performance obligations that are unsatisfied at the end of the reporting period is \u00a3146.6 million (2023: \u00a3336.0 million).
Of this amount \u00a3127.0 million (2023: \u00a3284.0 million) is expected to be recognised as revenue in 2025, \u00a318.4 million (2023: \u00a346.4 million)
in 2026 and \u00a31.2 million (2023: \u00a35.6 million) in 2027.
For accounting policies and other disclosures related to contract assets and liabilities, see notes 3.5 and 3.7.
For accounting policies and other disclosures related to costs incurred to acquire customer contracts, see note 3.6.
", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-676": { "value": "
Year ended 31 December 2024
Innovation, Exceptional
capital items
Pellet Biomass Flexible Energy projects and Intra-group Adjusted and certain Total
Production Generation Generation Solutions other eliminations results remeasurements results
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Revenue
External sales
3 4 0.1
1,880.7
74.3
3,7 86.1
\u2013
\u2013
6,081.2
81.3
6 ,162.5
Inter-segment sales
602.0
3,040.0
148.5
\u2013
\u2013
(3,790.5)
\u2013
\u2013
\u2013
Total revenue
9 42.1
4,920.7
222.8
3,786 .1
\u2013
(3,790.5)
6,081.2
81.3
6 ,162.5
Cost of sales
(5 62 .1)
(3,685.5)
(46.2)
(3,625.0)
\u2013
3,788.7
(4,130.1)
4.9
(4,125.2)
Electricity Generator Levy
\u2013
(150.2)
(10.6)
\u2013
\u2013
\u2013
(160.8)
\u2013
(160.8)
Gross profit
380.0
1,085.0
166.0
161.1
\u2013
(1.8)
1,790.3
86.2
1,876.5
Operating and administrative
expenses
(236.7)
(268.6)
(28.4)
(85.5)
( 78.1)
(1.2)
(698.5)
(2 2.1)
(720.6)
Impairment losses on
financial assets
\u2013
(2.9)
\u2013
(24.4)
\u2013
\u2013
(27.3)
(12.7)
(40.0)
Depreciation
(102.7)
(97.7)
(17.1)
(0.7)
(5.8)
(0.8)
(224.8)
\u2013
(224.8)
Amortisation
(4.5)
(2.9)
\u2013
(7. 3)
(2.3)
\u2013
(17.0)
\u2013
(17.0)
Impairment of non-current assets
(3.3)
(0 .1)
\u2013
\u2013
(8.4)
\u2013
(11.8)
(2.6)
(14.4)
Other (losses)/gains
(4 .1)
(4.6)
0.2
\u2013
\u2013
\u2013
(8.5)
1.2
(7.3)
Share of losses from associates
(1.3)
\u2013
\u2013
\u2013
(0.9)
\u2013
(2.2)
\u2013
(2.2)
Operating profit/(loss)
27.4
708.2
120.7
43.2
(95.5)
(3.8)
800.2
50.0
850.2
Year ended 31 December 2023
Innovation, Exceptional
Restated
(1)(2)
Restated
(1)
capital
Restated
(1)
Restated
(2)
items
Restated
(2)
Pellet Biomass Flexible Energy projects and Intra-group Adjusted and certain Total
Production Generation Generation Solutions other eliminations results remeasurements results
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Revenue
External sales
397. 8
2,011.4
82.8
4,958.3
\u2013
\u2013
7,450.3
282.9
7,7 33. 2
Inter-segment sales
424.6
4,391.5
298.3
\u2013
\u2013
( 5,114. 4)
\u2013
\u2013
\u2013
Total revenue
822.4
6,402.9
381.1
4,958.3
\u2013
(5,114.4)
7,
45 0.3
282.9
7,7 33.2
Cost of sales
(511.8)
(5,216.9)
(100.8)
(4,763.3)
\u2013
5,100. 5
(5,492.3)
(82.7)
(5,575.0)
Electricity Generator Levy
\u2013
(181.4)
(23.2)
\u2013
\u2013
\u2013
(204.6)
\u2013
(204.6)
Gross profit
310.6
1,004.6
257.1
195.0
\u2013
(13.9)
1,753.4
200.2
1,953.6
Operating and administrative
expenses
(221.7)
(301.3)
(26.9)
(90.7)
( 78.1)
7.0
(711.7)
\u2013
(711.7)
Impairment losses on financial assets
\u2013
\u2013
\u2013
(32.5)
\u2013
\u2013
(32.5)
\u2013
(32.5)
Depreciation
(89.3)
(84.6)
(15.9)
(0.9)
(2.7)
(2.2)
(195.6)
\u2013
(195.6)
Amortisation
(4.7)
(2.5)
\u2013
(21.6)
(0.6)
\u2013
(29.4)
\u2013
(29.4)
Impairment of non-current assets
(2.8)
\u2013
1.1
\u2013
\u2013
\u2013
(1.7)
(6 9.1)
(70.8)
Other gains/(losses)
0.5
0.2
\u2013
\u2013
\u2013
\u2013
0.7
(4.5)
(3.8)
Share of (losses)/profits from
associates
(1.7)
\u2013
\u2013
\u2013
0.1
\u2013
(1.6)
\u2013
(1.6)
Operating (loss)/profit
(9.1)
616.4
215.4
49.3
(81.3)
(9.1)
781.6
126.6
908.2
", "dimensions": { "concept": "ifrs-full:DisclosureOfProfitLossFromOperatingActivitiesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-613": { "value": "Major customers There was no individual customer, in either the current or previous financial year, that represented 10% or more of total revenue. ", "dimensions": { "concept": "ifrs-full:DisclosureOfSegmentsMajorCustomersExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-638": { "value": "2.2 Revenue The majority of the Group\u2019s revenue is within the scope of IFRS 15. The other sources of the Group\u2019s revenue outside the scope of IFRS 15 comprise gains and losses on non-hedge accounted derivatives, the ineffective portion of hedge accounted derivatives, amounts reclassified to revenue for gains and losses on hedge accounted UK inflation swaps, Contract for Difference (CfD) income, and income from the Government\u2019s Energy Bill Relief Scheme (EBRS) and Energy Bills Discount Scheme (EBDS). See note 2.7 for further details on gains and losses on derivatives and note 7.2.3 for inflation risk management. Gains and losses recognised in the Consolidated income statement on derivative contracts that are entered to hedge a revenue item are presented within the same revenue stream line as the revenue item they are intending to hedge.
Restated
(1)
Year ended 31 December 2024 Year ended 31 December 2023
Exceptional Exceptional
items and items and
Adjusted certain Total Adjusted certain Total
results remeasurements results results remeasurements results
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Revenue from contracts with customers
5,918.2
(6.9)
5,911.3
7,14
8.3
\u2013
7,14
8 .3
Other revenue
163.0
88.2
251.2
302.0
282.9
584.9
Total revenue
6,081.2
81.3
6 ,16 2.5
7,45
0.3
282.9
7,7 33. 2
(1) Comparative amounts have been restated to reflect the Group\u2019s revised application of the agent requirements of IFRS 15 to sleeved electricity trades. This restatement wholly relates to the Biomass Generation segment. See the Net presentation of sleeved electricity trades section in note 8.4 for further details on this restatement.
Nature and timing of performance obligations,
Revenue stream (Segment)
including significant payment terms
Method of recognising revenue, including any estimation uncertainties
Pellet sales (Pellet The Group\u2019s Pellet Production business produces Revenue is recognised at the point that the pellets
Production) biomass pellets which are sold to external are loaded onto the shipping vessel. The amount of
customers. Customers generally obtain control revenue recognised is based on the contracted price
of the pellets at the point the pellets are loaded and volume of the pellets.
onto the shipping vessel. For CIF sales, revenue for the freight portion is
Where freight is also arranged for the customer, recognised over the period the vessel sails.
these sales are known as Cost, insurance and
freight (CIF) sales. The freight component is
considered a separate performance obligation.
Invoices are raised in line with contractual terms
and are usually payable within 4\u201315 days.
Electricity and gas sales The Group\u2019s Biomass Generation and Flexible Revenues from sales contracts fulfilled through
(Biomass Generation and Generation businesses have contracts generation are recognised at a point in time based
Flexible Generation) for wholesale electricity sales. Performance upon metered output at rates specified under
obligations, being the supply of electricity, are met contractual terms. These are recognised under
either via generation or through the procurement the output method, whereby revenue is recognised
of electricity from counterparties. The based on the value transferred to the customer.
performance obligations for these contracts are Revenue from sales contracts fulfilled through
deemed to be a series of distinct goods that are procured electricity or gas is recognised at the point
substantially the same and transfer consecutively. at which this electricity or gas is supplied to the
Control is deemed to have transferred to the counterparty in accordance with the contractual
customer at the point that the electricity has been terms at rates specified under the contract.
supplied in accordance with the contractual terms.
The Group\u2019s Biomass Generation segment has gas
sales contracts as part of managing the Group\u2019s
overall gas requirements.
Invoices for electricity are typically raised on the
fifth banking day following the month of supply,
in line with the Grid Trade Master Agreement
(GTMA) contractual terms, and are payable on the
fifth banking day following the date of invoice.
Renewable certificate Renewables Obligation Certificates (ROCs) and External ROC and REGO sales are recognised at
sales (Biomass Renewable Energy Guarantees of Origin (REGOs) the point the relevant renewable certificates are
Generation, Flexible are sold to counterparties at a point in time. transferred to the counterparty.
Generation and Energy ROCs sold to optimise working capital are invoiced See note 3.3 for further details on how the renewable
Solutions) in line with contractual terms and are usually certificate schemes operate.
payable within two days.
Invoices for ROC sales to third parties are raised
when the ROCs are transferred, typically four to
five months following the end of the compliance
period in which they were generated. Invoices are
usually payable within seven days.
CfD income/payment The Group\u2019s Biomass Generation business is party The Group recognises the income or cost arising from
(Biomass Generation) to a CfD with the Low Carbon Contracts Company the CfD in the Consolidated income statement as a
(LCCC), a Government-owned entity responsible component of revenue at the point the Group meets
for delivering elements of the Government\u2019s its performance obligation under the CfD agreement.
Electricity Market Reform programme. Under the This is considered to be the point at which the
contract, the Group makes or receives payments relevant generation is delivered and the payment
in respect of electricity dispatched from a specific becomes contractually due.
biomass-fuelled generating unit. See CfD income/payment section below for further
Invoices are raised 7\u201310 days following the date details.
of supply and are settled within 28 days.
Ancillary services Ancillary services refer to the provision of a range Revenue is recognised by reference to the stage
(Biomass Generation of system support services to National Grid. Most of completion of the contractual performance
and Flexible Generation) contracts are for the delivery of a specific service obligations, which are calculated by reference to
either continually or on an ad-hoc basis over a the amount of the contract term that has elapsed.
period of time. Depending on contract terms, this approach may
Invoices are raised and subsequently settled in line require judgement in estimating probable future
with the National Grid company ancillary services outcomes.
settlement calendar, typically monthly.
Other income Other income is derived from the sale of goods. Revenue is recognised at the point the control of the
(All\ue01esegments) The customer obtains control typically at the point goods is transferred to the customer.
of delivery to their premises or upon collection.
Invoices are raised in line with contractual terms.
Electricity and gas sales The Group\u2019s Energy Solutions business sells Revenue is recognised on the supply of electricity or
(Energy Solutions) electricity and gas directly to non-domestic gas when a contract exists, supply has taken place,
customers. Energy supplied is measured based a quantifiable price has been established or can be
upon metered consumption and contractual rates. determined, and the amounts receivable are
The Energy Solutions business also has long-term expected to be recovered.
contracts for the sale of electricity and gas, which Where supply has taken place but has not yet been
are deemed as being satisfied over time in line measured or billed, revenue is estimated based on
with the progress of the contracts. consumption statistics and selling price estimates
Invoices are raised in line with contractual terms. and is recognised as accrued income. This estimate
For small and medium-sized enterprise (SME) is not considered to be a key source of estimation
customers, payment is generally due within uncertainty because historical experience has
10\u201314 days. For Industrial and Commercial (I&C) demonstrated that these estimates are materially
customers, payment is generally due between accurate based on the subsequent billings
28\u201390 days. and settlements.
Where contracts for the sale of electricity and gas are
held, revenue is recognised in line with the progress
of the contracts.
The revenue recognised for fixed price contracts is
based on the input method. Revenue is recognised
based on the costs incurred and the estimated
margin to be obtained over the life of the contract.
For variable price contracts revenue is recognised
based on the output method. Revenue is recognised
based on the volume supplied and the contracted
price. Assumptions are applied consistently but
third-party costs can vary, therefore actual outcomes
may vary from initial estimates.
EBRS and EBDS income The UK Government introduced the EBDS running The discounted price of electricity and gas supplied
(Energy Solutions) from 1 April 2023 to 31 March 2024. Under this under both the EBRS and EBDS is recognised in
scheme, energy supplied to eligible non-domestic revenue as it is supplied. The amount claimed back
customers will have a discount applied to each from the UK Government is recognised within
unit of electricity and gas. Certain customers may revenue over the same period as the underlying
be eligible for higher levels of support dependent discounted revenue it relates to is recognised.
on the sector in which they operate. The discount The revenue received from the UK Government is
provided can then be claimed back from the UK included in the EBRS and EBDS income line in the
Government by the supplier. table on page 178. The Group does not recognise
The EBDS replaced the EBRS which supported any additional revenue from the scheme than it
non-domestic customers between 1 October would have done had it not been introduced.
2022 and 31 March
2023.
Under the EBRS,
energy supplied to non-domestic customers in this
period had a discount applied for the customer
under the scheme to cap their energy tariff. The
discount provided can then be claimed back from
the UK Government by the supplier.
Payment is due 10 days post submission of
a claim, which typically occurs monthly.
Accounting policy Revenue represents amounts receivable for goods or services provided to customers in the normal course of business, net of trade discounts, VAT and other sales-related taxes and excludes transactions between Group companies. Revenue is presented gross in the Consolidated income statement when the Group controls the specified good or service prior to the transfer to the customer. When the Group is acting primarily as an agent, revenue is recognised on a net basis. During the year, the Group reassessed the application of the agent and principal requirements in IFRS 15 against sleeved electricity trades. See note 8.4 for further information. A summary of the Group\u2019s principal revenue streams, along with the nature and timing of performance obligations, payment terms, methods of recognising revenue, and any estimation uncertainties, is given in the table above. Renewable certificate sales The generation and sale of renewable certificates, primarily ROCs and REGOs, is a key driver of the Group\u2019s financial performance. During the year, the Group made sales and related purchases of ROCs to help optimise its working capital position. External sales of ROCs in the table below includes \u00a350.8 million of such sales (2023: \u00a3583.3 million), with a similar value reflected in cost of sales. The renewable certificate sales revenue in the Biomass Generation business of \u00a3739.3 million has decreased compared to prior year (2 02 3: \u00a3 1, 27 7.4 million) primarily as a result of the reduction in these ROC sales. See note 3.3 for further details of how the renewable certificate schemes operate, of the renewable certificates generated and sold by the Biomass Generation and Flexible Generation businesses, and of those utilised by the Energy Solutions business during the year. CfD income/payment The income/payment is calculated by reference to a strike price per MWh. The base year for the strike price was 2012 and it increases each year in line with the UK Consumer Price Index (CPI) and changes in system balancing costs. The strike price at 31 December 2024 was \u00a3138.16 per MWh (2023: \u00a3132.47 per MWh). When market prices (based on average traded prices in the preceding season) are above or below the strike price, the Group makes an additional payment to or receives additional income from LCCC equivalent to the difference between that market power price and the strike price, for each MWh produced from the relevant generating unit. Such payments or receipts are in addition to amounts received from the sale of the associated power in the wholesale market. Further analysis of revenue for the year ended 31 December 2024 is provided in the table below:
Year ended 31 December 2024
External Inter-segment Total
\u00a3m \u00a3m \u00a3m
Pellet Production
Pellet sales
329.6
597. 5
927.1
Other income
10.5
4.5
15.0
Total Pellet Production
3 4 0.1
602.0
9 42.1
Biomass Generation
Electricity and gas sales
1,426.6
2,510.7
3,937. 3
Renewable certificate sales
284.8
454.5
739.3
CfD income
148.6
\u2013
148.6
Ancillary services
18.7
\u2013
18.7
Other income
2.0
74.8
76.8
Total Biomass Generation
1,880.7
3,040.0
4,920.7
Flexible Generation
Electricity sales
22 .1
141.2
163.3
Renewable certificate sales
\u2013
7.3
7.3
Ancillary services
24.2
\u2013
24.2
Other income
28.0
\u2013
28.0
Total Flexible Generation
74.3
148.5
222.8
Energy Solutions
Electricity and gas sales
3,734.0
\u2013
3,734.0
EBRS and EBDS income
14.4
\u2013
14.4
Renewable certificate sales
37.4
\u2013
37. 4
Other income
0.3
\u2013
0.3
Total Energy Solutions
3,7 86 .1
\u2013
3,786 .1
Elimination of inter-segment sales
\u2013
(3,790.5)
(3,790.5)
Total consolidated revenue in Adjusted results
6,081.2
\u2013
6,081.2
Certain remeasurements
81.3
\u2013
81.3
Total consolidated revenue in Total results
6,16
2. 5
\u2013
6 ,162. 5
Revenue recognised in Adjusted results of \u00a36,081.2 million (2023: \u00a37,450.3 million) differs from revenue recognised in Total results of \u00a36 ,16 2. 5 million (2023: \u00a37,733.2 million) due to certain remeasurement gains of \u00a381.3 million (2023: \u00a3282.9 million), comprised of gains and losses on derivative contracts that are used to manage risk exposures associated with the Group\u2019s revenue, not designated into hedge accounting relationships under IFRS 9. Revenue recognised in the period that was included within contract liabilities at the start of the year was \u00a316.8 million (2023: \u00a328.5 million). See note 3.7 for further details on contract liabilities. Revenue recognised in the period from performance obligations satisfied or partly satisfied in the previous period was \u00a3nil (2023: \u00a3nil). The following is an analysis of the Group\u2019s revenues for the year ended 31 December 2023:
Restated
(1)(2)
Year ended 31 December 2023
External Inter-segment Total
\u00a3m \u00a3m \u00a3m
Pellet Production
Pellet sales
391.3
424.6
815.9
Other income
6.5
\u2013
6.5
Total Pellet Production
397. 8
424.6
822.4
Biomass Generation
Electricity and gas sales
1,183. 4
3,908.0
5,091.4
Renewable certificate sales
842.6
434.8
1, 27 7.4
CfD payment
(63.0)
\u2013
(63.0)
Ancillary services
25.0
\u2013
25.0
Other income
23.4
48.7
7 2.1
Total Biomass Generation
2,011.4
4,391.5
6,402.9
Flexible Generation
Electricity sales
24.8
289.6
314.4
Renewable certificate sales
\u2013
8.7
8.7
Ancillary services
30.4
\u2013
30.4
Other income
27.6
\u2013
27.6
Total Flexible Generation
82.8
298.3
3 81.1
Energy Solutions
Electricity and gas sales
4,554.4
\u2013
4,554.4
EBRS and EBDS income
365.8
\u2013
365.8
Renewable certificate sales
3 7.9
\u2013
37.9
Other income
0.2
\u2013
0.2
Total Energy Solutions
4,958.3
\u2013
4,958.3
Elimination of inter-segment sales
\u2013
(5,114. 4)
(5 ,114 .4)
Total consolidated revenue in Adjusted results
7,45
0.3
\u2013
7,45
0.3
Certain remeasurements
282.9
\u2013
282.9
Total consolidated revenue in Total results
7,7 33. 2
\u2013
7,7 33. 2
(1) Amounts have been restated to reflect the change in reportable segments. See note 2.1 for further details of the change in reportable segments. (2) Amounts have been restated to reflect the Group\u2019s revised application of the agent requirements of IFRS 15 to sleeved electricity trades. This restatement wholly relates to the Biomass Generation segment. See the Net presentation of sleeved electricity trades section in note 8.4 for further details on this restatement. The Group\u2019s Biomass Generation and Flexible Generation segments have contracts for wholesale electricity sales. Performance obligations, being the supply of electricity, are met either via electricity generation or through the procurement of electricity from counterparties. Where electricity is procured from counterparties to meet this obligation, the electricity sale is presented on a gross basis with the cost of buying the electricity presented in cost of sales and the sale of this electricity presented in revenue. If external purchases of power were presented net within external revenue this would have reduced external revenue by \u00a31,072.9 million to \u00a35,089.6 million (2023: by \u00a32,347.0 million to \u00a35,386.2 million) with a corresponding decrease in external cost of sales. For most customer contracts the Group is eligible for, and applies, the practical expedient available under IFRS 15 and has not disclosed information related to the transaction price allocated to remaining performance obligations. The right to receive consideration from these customers is at an amount that corresponds directly with the value to the customer of the Group\u2019s performance completed to date, or the contract\u2019s original expected duration is less than one year. For the Group\u2019s fixed price energy supply contracts that have an original expected duration of more than one year, the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied at the end of the reporting period is \u00a3146.6 million (2023: \u00a3336.0 million). Of this amount \u00a3127.0 million (2023: \u00a3284.0 million) is expected to be recognised as revenue in 2025, \u00a318.4 million (2023: \u00a346.4 million) in 2026 and \u00a31.2 million (2023: \u00a35.6 million) in 2027. For accounting policies and other disclosures related to contract assets and liabilities, see notes 3.5 and 3.7. For accounting policies and other disclosures related to costs incurred to acquire customer contracts, see note 3.6.", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueFromContractsWithCustomersExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-614": { "value": "
EBRS and EBDS income The UK Government introduced the EBDS running The discounted price of electricity and gas supplied
(Energy Solutions) from 1 April 2023 to 31 March 2024. Under this under both the EBRS and EBDS is recognised in
scheme, energy supplied to eligible non-domestic revenue as it is supplied. The amount claimed back
customers will have a discount applied to each from the UK Government is recognised within
unit of electricity and gas. Certain customers may revenue over the same period as the underlying
be eligible for higher levels of support dependent discounted revenue it relates to is recognised.
on the sector in which they operate. The discount The revenue received from the UK Government is
provided can then be claimed back from the UK included in the EBRS and EBDS income line in the
Government by the supplier. table on page 178. The Group does not recognise
The EBDS replaced the EBRS which supported any additional revenue from the scheme than it
non-domestic customers between 1 October would have done had it not been introduced.
2022 and 31 March
2023.
Under the EBRS,
energy supplied to non-domestic customers in this
period had a discount applied for the customer
under the scheme to cap their energy tariff. The
discount provided can then be claimed back from
the UK Government by the supplier.
Payment is due 10 days post submission of
a claim, which typically occurs monthly.
The UK Government introduced the Energy Bills Discount Scheme (EBDS) running from 1 April 2023 to 31 March 2024 which replaced the Energy Bill Relief Scheme (EBRS). Under these schemes, energy supplied to eligible non-domestic customers had a discount applied. The discount provided was then able to be claimed back from the UK Government by the supplier. The amount the Group is entitled to claim from the Government is recognised in other receivables. See note 2.2 for details of amounts relating to EBDS and EBRS within the Consolidated income statement. At 31 December 2024, there are no amounts outstanding from these schemes (2023: \u00a34.8 million). ", "dimensions": { "concept": "ifrs-full:DisclosureOfGovernmentGrantsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-690": { "value": "Accounting policy Revenue represents amounts receivable for goods or services provided to customers in the normal course of business, net of trade discounts, VAT and other sales-related taxes and excludes transactions between Group companies. Revenue is presented gross in the Consolidated income statement when the Group controls the specified good or service prior to the transfer to the customer. When the Group is acting primarily as an agent, revenue is recognised on a net basis. During the year, the Group reassessed the application of the agent and principal requirements in IFRS 15 against sleeved electricity trades. See note 8.4 for further information. A summary of the Group\u2019s principal revenue streams, along with the nature and timing of performance obligations, payment terms, methods of recognising revenue, and any estimation uncertainties, is given in the table above. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-579": { "value": "
2.3 Operating and administrative expenses
This note sets out certain components of operating and administrative expenses in the Consolidated income statement and a detailed
breakdown of the fees paid to the Group\u2019s external auditor, PricewaterhouseCoopers LLP, in respect of services provided to the Group
during the year. The fees in the year ended 31 December 2023 relate to fees paid to the Group\u2019s previous external auditor, Deloitte LLP,
in respect of services provided to the Group during 2023.
The following expenditure has been charged in arriving at operating profit:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Staff costs (note 6.1)
322.8
294.0
Repairs and maintenance expenditure on property, plant and equipment
159.6
173.9
Other operating and administrative expenses
238.2
243.8
Total operating and administrative expenses
720.6
711.7
Auditor\u2019s remuneration
Year ended 31 December
2024 2023
\u00a3000 \u00a3000
Audit fees:
Fees payable for the audit of the Group\u2019s Consolidated financial statements
2,153.0
1,500.0
Fees payable for the audit of the Company\u2019s subsidiaries\u2019 statutory accounts
225.0
40.0
Total audit fees
2,378.0
1,540.0
Other fees:
Review of the Group\u2019s half-year Condensed consolidated financial statements
167.0
140.0
Assurance services provided to non-material affiliates
70.0
18.3
Other services
10.0
47.0
Other assurance services
205.0
130.0
Total non-audit fees
452.0
335.3
Total auditor\u2019s remuneration
2,830.0
1,875.3
Included in fees payable for the audit of the Group\u2019s Consolidated financial statements for 2024 is \u00a30.3 million relating to the transition
phase of the audit, which was undertaken and invoiced by PricewaterhouseCoopers LLP in 2023.
Other assurance services provided by PricewaterhouseCoopers LLP in the current year consist of ESG assurance fees. In the prior year
other assurance services provided by Deloitte LLP related to corporate refinancing fees.
In addition to the amounts presented in the table above, PricewaterhouseCoopers LLP provided ESG assurance services amounting
to \u00a30.4 million in 2023 prior to being appointed as auditor.
See the Audit Committee report on page 112 for further details.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralAndAdministrativeExpenseExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-682": { "value": "2.3 Operating and administrative expenses This note sets out certain components of operating and administrative expenses in the Consolidated income statement and a detailed breakdown of the fees paid to the Group\u2019s external auditor, PricewaterhouseCoopers LLP, in respect of services provided to the Group during the year. The fees in the year ended 31 December 2023 relate to fees paid to the Group\u2019s previous external auditor, Deloitte LLP, in respect of services provided to the Group during 2023. The following expenditure has been charged in arriving at operating profit:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Staff costs (note 6.1)
322.8
294.0
Repairs and maintenance expenditure on property, plant and equipment
159.6
173.9
Other operating and administrative expenses
238.2
243.8
Total operating and administrative expenses
720.6
711.7
Auditor\u2019s remuneration
Year ended 31 December
2024 2023
\u00a3000 \u00a3000
Audit fees:
Fees payable for the audit of the Group\u2019s Consolidated financial statements
2,153.0
1,500.0
Fees payable for the audit of the Company\u2019s subsidiaries\u2019 statutory accounts
225.0
40.0
Total audit fees
2,378.0
1,540.0
Other fees:
Review of the Group\u2019s half-year Condensed consolidated financial statements
167.0
140.0
Assurance services provided to non-material affiliates
70.0
18.3
Other services
10.0
47.0
Other assurance services
205.0
130.0
Total non-audit fees
452.0
335.3
Total auditor\u2019s remuneration
2,830.0
1,875.3
Included in fees payable for the audit of the Group\u2019s Consolidated financial statements for 2024 is \u00a30.3 million relating to the transition phase of the audit, which was undertaken and invoiced by PricewaterhouseCoopers LLP in 2023. Other assurance services provided by PricewaterhouseCoopers LLP in the current year consist of ESG assurance fees. In the prior year other assurance services provided by Deloitte LLP related to corporate refinancing fees. In addition to the amounts presented in the table above, PricewaterhouseCoopers LLP provided ESG assurance services amounting to \u00a30.4 million in 2023 prior to being appointed as auditor. See the Audit Committee report on page 112 for further details.", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-668": { "value": "2.3 Operating and administrative expenses This note sets out certain components of operating and administrative expenses in the Consolidated income statement and a detailed breakdown of the fees paid to the Group\u2019s external auditor, PricewaterhouseCoopers LLP, in respect of services provided to the Group during the year. The fees in the year ended 31 December 2023 relate to fees paid to the Group\u2019s previous external auditor, Deloitte LLP, in respect of services provided to the Group during 2023. The following expenditure has been charged in arriving at operating profit:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Staff costs (note 6.1)
322.8
294.0
Repairs and maintenance expenditure on property, plant and equipment
159.6
173.9
Other operating and administrative expenses
238.2
243.8
Total operating and administrative expenses
720.6
711.7
Auditor\u2019s remuneration
Year ended 31 December
2024 2023
\u00a3000 \u00a3000
Audit fees:
Fees payable for the audit of the Group\u2019s Consolidated financial statements
2,153.0
1,500.0
Fees payable for the audit of the Company\u2019s subsidiaries\u2019 statutory accounts
225.0
40.0
Total audit fees
2,378.0
1,540.0
Other fees:
Review of the Group\u2019s half-year Condensed consolidated financial statements
167.0
140.0
Assurance services provided to non-material affiliates
70.0
18.3
Other services
10.0
47.0
Other assurance services
205.0
130.0
Total non-audit fees
452.0
335.3
Total auditor\u2019s remuneration
2,830.0
1,875.3
Included in fees payable for the audit of the Group\u2019s Consolidated financial statements for 2024 is \u00a30.3 million relating to the transition phase of the audit, which was undertaken and invoiced by PricewaterhouseCoopers LLP in 2023. Other assurance services provided by PricewaterhouseCoopers LLP in the current year consist of ESG assurance fees. In the prior year other assurance services provided by Deloitte LLP related to corporate refinancing fees. In addition to the amounts presented in the table above, PricewaterhouseCoopers LLP provided ESG assurance services amounting to \u00a30.4 million in 2023 prior to being appointed as auditor. See the Audit Committee report on page 112 for further details.", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExpenseExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-639": { "value": "2.3 Operating and administrative expenses This note sets out certain components of operating and administrative expenses in the Consolidated income statement and a detailed breakdown of the fees paid to the Group\u2019s external auditor, PricewaterhouseCoopers LLP, in respect of services provided to the Group during the year. The fees in the year ended 31 December 2023 relate to fees paid to the Group\u2019s previous external auditor, Deloitte LLP, in respect of services provided to the Group during 2023. The following expenditure has been charged in arriving at operating profit:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Staff costs (note 6.1)
322.8
294.0
Repairs and maintenance expenditure on property, plant and equipment
159.6
173.9
Other operating and administrative expenses
238.2
243.8
Total operating and administrative expenses
720.6
711.7
Auditor\u2019s remuneration
Year ended 31 December
2024 2023
\u00a3000 \u00a3000
Audit fees:
Fees payable for the audit of the Group\u2019s Consolidated financial statements
2,153.0
1,500.0
Fees payable for the audit of the Company\u2019s subsidiaries\u2019 statutory accounts
225.0
40.0
Total audit fees
2,378.0
1,540.0
Other fees:
Review of the Group\u2019s half-year Condensed consolidated financial statements
167.0
140.0
Assurance services provided to non-material affiliates
70.0
18.3
Other services
10.0
47.0
Other assurance services
205.0
130.0
Total non-audit fees
452.0
335.3
Total auditor\u2019s remuneration
2,830.0
1,875.3
Included in fees payable for the audit of the Group\u2019s Consolidated financial statements for 2024 is \u00a30.3 million relating to the transition phase of the audit, which was undertaken and invoiced by PricewaterhouseCoopers LLP in 2023. Other assurance services provided by PricewaterhouseCoopers LLP in the current year consist of ESG assurance fees. In the prior year other assurance services provided by Deloitte LLP related to corporate refinancing fees. In addition to the amounts presented in the table above, PricewaterhouseCoopers LLP provided ESG assurance services amounting to \u00a30.4 million in 2023 prior to being appointed as auditor. See the Audit Committee report on page 112 for further details.", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingExpenseExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-615": { "value": "Auditor\u2019s remuneration
Year ended 31 December
2024 2023
\u00a3000 \u00a3000
Audit fees:
Fees payable for the audit of the Group\u2019s Consolidated financial statements
2,153.0
1,500.0
Fees payable for the audit of the Company\u2019s subsidiaries\u2019 statutory accounts
225.0
40.0
Total audit fees
2,378.0
1,540.0
Other fees:
Review of the Group\u2019s half-year Condensed consolidated financial statements
167.0
140.0
Assurance services provided to non-material affiliates
70.0
18.3
Other services
10.0
47.0
Other assurance services
205.0
130.0
Total non-audit fees
452.0
335.3
Total auditor\u2019s remuneration
2,830.0
1,875.3
Included in fees payable for the audit of the Group\u2019s Consolidated financial statements for 2024 is \u00a30.3 million relating to the transition phase of the audit, which was undertaken and invoiced by PricewaterhouseCoopers LLP in 2023. Other assurance services provided by PricewaterhouseCoopers LLP in the current year consist of ESG assurance fees. In the prior year other assurance services provided by Deloitte LLP related to corporate refinancing fees. In addition to the amounts presented in the table above, PricewaterhouseCoopers LLP provided ESG assurance services amounting to \u00a30.4 million in 2023 prior to being appointed as auditor. See the Audit Committee report on page 112 for further details.", "dimensions": { "concept": "ifrs-full:DisclosureOfAuditorsRemunerationExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-616": { "value": "2.4 Impairment review of fixed assets and goodwill Accounting policy Goodwill is tested for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each of the Group\u2019s cash-generating units (CGUs) or group of CGUs expected to benefit from the synergies of the business combination. A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. CGUs are identified consistently from period to period unless there is a change in the period that would impact the Group\u2019s CGUs. The Group\u2019s CGUs are reassessed should any such changes occur. The Group reviews its fixed assets (and, where appropriate, groups of assets combined into a CGU) whenever there is an indication that an impairment loss may have been suffered. The Group assesses the existence of indicators of impairment at the end of each reporting period. If an indication of potential impairment exists, the recoverable amount of the asset or CGU in question is assessed with reference to the present value of the future cash flows expected to be derived from the continuing use of the asset or CGU (value in use), or the expected price that would be received if the asset or CGU were sold to a market participant (fair value less costs of disposal). The recoverable amount of an asset or CGU is the higher of its fair value less costs of disposal (FVLCD) and its value in use (ViU). The initial assessment of the recoverable amount is normally based on ViU. The assessment of future cash flows is based on the approved long-term forecasts that support the Board\u2019s strategic planning process and includes all expected costs necessary to generate the cash inflows from the CGU\u2019s assets in their current state and condition, including an allocation of centrally managed costs. Future cash flows include, where relevant, contracted cash flows arising from the Group\u2019s forward hedging activities and as a result the carrying amount of each CGU includes the fair value of those hedges. Assessments of future cash flows consider relevant environmental and climate change factors. In particular, macro-economic, commodity price and third-party cost assumptions reflect considerations in respect of the impact of climate change, growth in renewable technologies, electrification and the impact of relevant policies on longer-term supply and demand profiles. As required by IAS 36, the additional value that could be obtained from enhancing the Group\u2019s assets and the potential benefit of any future restructuring or reorganisation that the Group is not yet committed to, is not reflected in the ViU calculation. In determining ViU, the estimated future cash flows are discounted to present value using a pre-tax nominal discount rate reflecting the specific risks attributable to the asset or CGU in question. If the recoverable amount is less than the carrying amount in the Consolidated financial statements, an impairment charge is recognised to reduce the carrying amount of the asset or CGU to the estimated recoverable amount. Any impairment loss is recognised immediately in the Consolidated income statement. Individual assets are considered for impairment where possible. If individual assets do not generate cash inflows that are largely independent, the recoverable amount is determined for the CGU to which the asset belongs. Where possible, corporate assets are allocated to an individual CGU on a reasonable and consistent basis. Where corporate assets cannot be allocated to an individual CGU on a reasonable and consistent basis, they are included in the carrying amount of the smallest group of CGUs to which they can be allocated on a reasonable and consistent basis. An impairment loss relating to a CGU is allocated first to the carrying amount of any goodwill allocated to the CGU and then to the other assets pro-rata on the basis of the carrying amount of each asset. When allocating an impairment loss to the other assets in the CGU, if the recoverable amount of an individual asset within that CGU is determinable, the impairment loss allocated to the individual asset is limited to reducing the asset\u2019s carrying value to its individual recoverable amount. If this results in the impairment loss allocated to an asset being less than its pro-rata share, the excess is allocated on a pro-rata basis to the remaining assets in the CGU. An impairment loss recognised for goodwill is not reversed in a subsequent period. Non-financial assets other than goodwill that have an impairment loss recognised are reviewed in subsequent reporting periods for possible reversal of the impairment. Where an impairment reversal is identified, this is reversed immediately in the Consolidated income statement. The table below details the Group\u2019s reportable segments, the CGUs within those segments and the value of any goodwill allocated to them. See note 5.2 for further details on goodwill. CGUs
As at 31 December 2024
Goodwill
Segment name
CGUs contained within segment
\u00a3m
Pellet Production
Pellet Operations
175.6
Biomass Generation
Drax Power Station
\u2013
Flexible Generation
Lanark
11.3
Galloway
4 0.1
Cruachan
26.9
Hirwaun
\u2013
Millbrook
\u2013
Progress
\u2013
Daldowie
\u2013
Energy Solutions
Drax Energy Solutions
161.2
Opus Energy
\u2013
415.1
In respect of the Pellet Production segment, the smallest group of assets that generate independent cash inflows is the Pellet Production business as a whole, known as the Pellet Operations CGU. This is due to the output of the individual pellet plants being combined and used interchangeably to fulfil customer contracts. In respect of the Biomass Generation and Flexible Generation segments, the Group generally considers the smallest groups of assets that generate independent cash inflows to be the individual sites that share common infrastructure and control functions. The Open Cycle Gas Turbine (OCGT) assets were previously considered as one CGU. Construction of the OCGT assets is expected to complete in 2025. With updated decisions being made about how the OCGT assets will operate once they commence commercial generation, the OCGT assets are now considered to be separate CGUs \u2013 Hirwaun, Progress and Millbrook \u2013 due to having significant independence around the decisions, activities and resulting cash inflows. There are no other changes to any of the Biomass Generation or Flexible Generation CGUs from the prior year. In respect of the Energy Solutions segment, the smallest groups of assets that generate independent cash inflows are the operating entities within the business, Drax Energy Solutions and Opus Energy. The Innovation, capital projects and other segment does not have any external cash inflows and therefore does not meet the definition of a CGU. However, as explained above, corporate assets are considered for impairment individually where possible or as part of a CGU, and relevant centrally managed costs are allocated to each CGU on a reasonable and consistent basis. Assessment of indicators of impairment for CGUs to which no goodwill is allocated Full impairment reviews were performed on all CGUs to which goodwill had been allocated (see Impairment review section below). For CGUs to which no goodwill is allocated, impairment reviews are only performed if impairment indicators are identified. In determining whether impairment indicators existed in respect of these CGUs, the Group considered changes in market prices for commodities, foreign currency exchange rates, changes in macro-economic conditions, potential impacts of climate change and regulatory requirements since the previous reporting date, and their potential impact on the Group\u2019s long-term planning models and future forecast cash flows. Given the relatively stable macro-economic conditions and exchange rates compared to the prior year end, as well as falling interest rates, these are not considered to be impairment indicators. The market price of certain commodities (e.g. power and gas) have fallen since the prior year but still remain above historical averages. This was not an impairment indicator for the Drax Power Station, Hirwaun, Millbrook and Progress CGUs as they are less sensitive to power price changes due to certain generation income being under a CfD, or generation activities being more dependent on the spread between gas and power prices. Further, a high proportion of their income is not linked to power prices, such as renewable certificates, system support and ancillary services. The Drax Power Station CGU also has a high hedged power position. Gas prices are a key input cost for Daldowie and therefore this CGU has benefited as these prices have reduced during 2024. Consideration was also given to assumptions regarding biomass generation and biomass prices post March 2027, when current subsidies for biomass generation at Drax Power Station are due to end, and whether that was an indicator of impairment (see the Principal risks and uncertainties section starting on page 70 for further details). Previously the carrying amount of the Drax Power Station CGU was supported by pre-2027 cash flows. As there is now one less year of pre-2027 cash flows compared to the prior year this was considered to be an impairment indicator. Heads of terms have been agreed with the UK Government for a proposed low- carbon dispatchable CfD agreement for the period April 2027 to March 2031 (see note 2.12 for further details). However these heads of terms are non-binding and therefore there remains some uncertainty over the cash flows post 2027. Accordingly a full impairment review of the Drax Power Station CGU has been performed. There were no impairment indicators present for the Hirwaun, Millbrook, Progress or Daldowie CGUs and accordingly no impairment review was performed for these CGUs in the current year. As part of the Opus Energy sale of meter points and restructuring, the non-current assets in the Opus Energy CGU were either disposed of or impaired to \u00a3nil, with the exception of Opus Energy House (see note 2.7 for further details). Opus Energy House is recognised at its recoverable amount. As a result, a full impairment review was not required for the Opus Energy CGU. Impairment review For the purpose of impairment reviews the recoverable amounts of the CGUs, or groups of CGUs, are measured based on ViU calculations using the Group\u2019s established planning models. These calculations depend on a broad range of assumptions, the most significant of which are outlined below for each CGU, or group of CGUs, to which an impairment test has been performed in the current year. The bases of these estimates are outlined below.
Significant assumptions for value
CGUs
in use calculation
Management\u2019s bases for determining estimates used in value in use calculation
Pellet Operations
\u2013 Production costs
 \u2013 Future production costs are estimated based on a combination of current and
\u2013 Production volumes historical costs, inflation expectations and maintenance/operating assumptions
\u2013 Sales prices \u2013 Production volumes are estimated based on a combination of the capacity of
\u2013 Discount rate the plant, current and historical volumes produced, planned and unplanned
downtime provisions, and fibre availability
\u2013 Sales prices are estimated based on contractual sales agreements and an
assumed market price after current contracts expire based on third-party
market forecasts and current contract negotiations
\u2013 See below for details of the basis used to estimate discount rates
Drax Power Station, \u2013 Power prices \u2013 Power revenue is derived from hedged power sales, future wholesale energy
Lanark, Galloway \u2013 Post-2027 biomass support price estimates and an assumption of additional value added through the
and Cruachan mechanism (Drax Power balancing market and optimisation
Station only) \u2013 Future wholesale energy price estimates are based on market traded power
\u2013 Fuel cost (Drax Power prices for around three years (the period they are liquid), gas market prices as a
Station only) proxy for power for another two years, then the Group\u2019s long-term power price
\u2013 Ancillary income forecast, which is prepared using externally provided gas price forecasts and
\u2013 Volume of generation demand inputs
(excluding Cruachan) \u2013 Post-2027 biomass generation value is based on the heads of terms agreed with
\u2013 Discount rate UK Government for a proposed low carbon dispatchable CfD agreement for the
period April 2027 to March 2031 and a similar level of value continuing to 2039
\u2013 Fuel costs are estimated based on contractual purchase agreements and an
assumed market price after current contracts expire based on third-party
market forecasts and current contract negotiations
\u2013 Ancillary income assumptions are based on past performance and current
agreed prices with National Grid
\u2013 Volume of generation for the run-of-river hydro assets is derived from historical
rainfall averages. Volume of generation for Drax Power Station is based on
biomass prices and availability, renewable support scheme terms and power
price forecasts
\u2013 See below for details of the basis used to estimate discount rates
Drax Energy \u2013 Customer margins \u2013 Customer margins are estimated based on current contracted prices and on
Solutions \u2013 Supply volumes current and previously achieved profitability
\u2013 Collection rates \u2013 The expectation of future organic supply volumes is based on past performance
\u2013 Third-party cost estimates and management\u2019s expectations of market developments
\u2013 Renewables services \u2013 Collection rates are estimated based on historical data and adjusted for
growth rates expected changes in future circumstances
\u2013 Discount rate \u2013 Third-party cost estimates are based on a combination of externally published
rates, management analysis of key market input assumptions, and forecasts
from external experts
\u2013 Renewables services growth is based on assumptions about the growth of
relevant markets, such as electric vehicles
\u2013 See below for details of the basis used to estimate discount rates
For the Drax Energy Solutions CGU, management has projected detailed cash flows based on a period of five years, with cash flows beyond the five-year period taken into perpetuity using a long-term growth rate of 2%. For all other CGUs, management has projected detailed cash flows based on a period of 15 years. Whilst this is longer than the five-year period specified by IAS 36, and the period the Group assesses viability over in the Viability statement, it aligns with the Group\u2019s long-term strategic planning and takes into account future structural changes forecast within the generation and pellet production industries, as well as expected growth in the biomass industry. These longer-term structural changes are mainly linked to climate change and the impact of changing weather patterns (including increased rain fall from storms and drier summer months for the run-of-river hydro CGUs and the impact on plant downtime and supply chains due to extreme weather events for the Pellet Operations and Drax Power Station CGUs), the impact of decarbonisation and the transition to more renewable forms of energy and net zero, the impact of subsidy and support regimes, and the impact of repairs and maintenance expenditure which is not uniform across the lives of assets. Using a period of only five years for detailed cash flow forecasts could materially overstate or understate the ViU of these CGUs as the impact of these factors in periods after five years can be significant. The Pellet Operations CGU also has long term contracts that can typically be in excess of 10 years which further supports using a period greater than five years. Where possible, for relevant commodities, forecasts are based on either contracted prices, particularly for the Pellet Operations CGU where the Group has a number of longer-term contracts to support the prices used, or observable market curves. Beyond the liquid portion of forward curves, internally constructed price curves are benchmarked against third-party market analysis to validate the reasonableness of the assumptions used. Management continually reassesses forecasting accuracy, taking into account changes in circumstances and events that could not reasonably be foreseen between the date of the forecast and the forecast period. These reviews support the accuracy of management\u2019s forecasts. This supports the use of detailed forecast periods of longer than five years. Where management has projected detailed cash flows based on a period of 15 years, other than for Drax Power Station, cash flows beyond the 15-year period are taken into perpetuity using a long-term growth rate of 2%. The Drax Power Station CGU assumes cash flows to the end of 2039 in line with the assumed end of station life. The long-term growth rate is based on prudent expectations of market share and profitability along with more general macro-economic factors which were obtained from the Group\u2019s established planning model along with external macro-economic forecasts. The long-term growth rate does not exceed the relevant long-term average growth rate for each of the industries in which the Group operates. The discount rates used for each CGU are calculated by third-party experts and reflect the weighted average cost of capital derived using the Capital Asset Pricing Model (CAPM). The estimations use a risk-free rate based on Government bonds, market participant capital structures and beta estimates adjusted for the specific circumstances and risk factors affecting the industry and markets in which the CGU operates (taking into account relevant peer data sets). This calculation uses the relevant tax rates to calculate a pre-tax discount rate. Further details on the assessments for each group of CGUs as well as sensitivities for reasonably possible changes in key assumptions at the date of the impairment test are given below. Where reasonably possible changes would result in a material adjustment to the carrying value, these are disclosed as a key source of estimation uncertainty. The carrying amount, length of detailed cash flows, pre-tax discount rate and the perpetuity growth rate used, where applicable, applied to each CGU are set out in the table below:
Carrying
amount
including Length of
allocated detailed Pre-tax
goodwill cash flows discount Perpetuity
CGU \u00a3m \u00a3m rate growth rate
Pellet Operations
1,072.4
15 years
8.9%
2.0%
Drax Power Station
1,071.3
15 years
16.8%
n/a
Drax Energy Solutions
175.5
5 years
9.8%
2.0%
Lanark
45.4
15 years
8.3%
2.0%
Galloway
168.8
15 years
8.3%
2.0%
Cruachan
278.9
15 years
8.3%
2.0%
Pellet Operations The Pellet Operations CGU is principally engaged in the production and sale of biomass pellets. The ViU for the Pellet Operations CGU was in excess of its carrying amount. For the Pellet Operations CGU, a reasonably possible increase in the discount rate to 9.7% combined with an increase in production costs of $7 per tonne and a 7% decrease in the production volumes in the ViU calculation, would result in a \u00a3973.0 million reduction in headroom, but would not result in an impairment. Whilst reasonably possible changes in assumptions would reduce the headroom, they would not result in the recoverable amount being lower than the carrying value. As such the Group does not believe that any reasonably possible changes in the key assumptions would result in an adjustment to the carrying value of the Pellet Operations CGU. Drax Power Station The Drax Power Station CGU is principally focused on renewable biomass electricity generation. Given an impairment indicator was identified (see above for further details) a full impairment assessment has been performed (an assessment was not required to be performed in the prior year due to no indicators of impairment being identified). The cash flows post March 2027 reflect management\u2019s best estimate of earnings based on the heads of terms of the low-carbon dispatchable CfD agreement with the UK Government (see note 2.12 for further details) to 2031 and the expected income beyond this date to the cessation of operations in line with the current end of station life of 2039. No value has currently been included in the ViU calculation for disposing of the site and assets in 2039 due to the uncertainty over the value that could be achieved as a result of a lack of comparable transactions for a large-scale generation site with a live grid connection. If a value was included this would further increase the headroom. The ViU of the Drax Power Station CGU was in excess of its carrying amount. A reasonably possible \u00a315/MWh decrease in power prices combined with a 10% increase in the forced outage rate, an increase in the pre-tax discount rate from 16.8% to 48.5% (equivalent to an increase in the post-tax discount rate from 6.8% to 8.0%), and operations to cease in March 2027 due to no low- carbon dispatchable CfD agreement being confirmed, would result in an impairment of \u00a3515.5 million. A reasonably possible \u00a315/MWh decrease in power prices combined with a 10% increase in the forced outage rate, an increase in the pre-tax discount rate from 16.8% to 29.8% (equivalent to an increase in the post-tax discount rate from 6.8% to 8.0%), and operations to cease in March 2031 at the end of the proposed low-carbon dispatchable CfD agreement, would result in an impairment of \u00a3321.4 million. Accordingly, reasonably possible changes in assumptions within the ViU calculation could result in a material adjustment to the carrying value of the Drax Power Station CGU. Therefore, the assumptions in the ViU calculation of the Drax Power Station CGU have been identified as a key source of estimation uncertainty. Whilst no impairment has been recognised in relation to the Drax Power Station CGU as at 31 December 2024, if any eventual CfD agreement was to be agreed at a lower value, or not agreed at all and the power station was to cease operations in 2027, it is expected there could be a significant impairment required to reduce the carrying value of the Drax Power Station CGU. Even if cash flows in the period April 2027 to March 2031 are consistent with the agreed heads of terms, the risk of an impairment needing to be recognised on the Drax Power Station CGU increases in future periods as the amount of higher value, pre-April 2027 cash flows become realised and will therefore not be included in future cash flow forecasts. The recoverable amount of a CGU is assessed based on the higher of ViU and FVLCD. The impairment assessment for the Drax Power Station CGU has been performed on a ViU basis. The ViU basis is required to be performed based on the current condition of an asset and as such cash flows related to improving or enhancing an asset\u2019s performance are required to be excluded. For the Drax Power Station CGU, cash flows relating to UK BECCS, or other alternative enhancements such as data centres, have been excluded as these cash flows are the result of significant capital expenditure to enhance the current Drax Power Station assets. Had the ViU basis indicated an impairment to the carrying value, a FVLCD calculation would have been performed. The FVLCD basis is calculated based on what a market participant would pay for an asset, less any disposal costs. If a market participant would attribute value to the anticipated cash flow impact of improving or enhancing an asset\u2019s performance (for example UK BECCS or other opportunities to create value from alternative uses for a large-scale generation site with a live grid connection, such as data centres) these are included in a FVLCD calculation. As such, for the Drax Power Station CGU, FVLCD may be higher than ViU. Drax Energy Solutions This segment is principally focused on renewable electricity sales to industrial and commercial (I&C) customers and providing other renewables services, and therefore consideration of climate and environmental impacts are already a key feature of the business model. The ViU of the Drax Energy Solutions CGU was in excess of its carrying amount. A reasonably possible increase in the pre-tax discount rate to 10.6% combined with factoring in a reduction in gross margin growth from 7.5% to 2.0% from 2027 to 2029, 0% perpetuity growth rate and a 10% increase in bad debt, would reduce the headroom by \u00a3227.5 million. This would not result in an impairment. Whilst reasonably possible changes in assumptions would reduce the headroom, they would not result in the recoverable amounts being lower than the carrying value. As such the Group does not believe that any reasonably possible changes in the key assumptions would result in an adjustment to the carrying value of the Drax Energy Solutions CGU. Lanark, Galloway and Cruachan These CGUs are engaged in run-of-river hydro and pumped storage power generation. The ViU for all three CGUs (Lanark, Galloway and Cruachan) were in excess of their carrying amounts. A reasonably possible 10% power price reduction combined with an increase in the pre-tax discount rate to 8.9%, a three-month historically low generation period and a two-month unit outage would reduce the headroom in the Lanark CGU by \u00a328.1 million. This would not result in an impairment. A reasonably possible 10% power price reduction in the Cruachan CGU combined with an increase in the pre-tax discount rate to 8.9%, a three-month historically low generation, a two-month unit outage and removal of value assumed from market volatility would reduce the headroom by \u00a3660.1 million. This would not result in an impairment. Whilst reasonably possible changes in assumptions for the Lanark and Cruachan CGUs would reduce the headroom, they would not result in the recoverable amount being lower than the carrying values. As such the Group does not believe that any reasonably possible changes in the key assumptions would result in an adjustment to the carrying values of either the Lanark or Cruachan CGUs. For the Galloway CGU, a reasonably possible 10% power price reduction combined with an increase in the pre-tax discount rate to 8.9%, a three-month historically low generation period and a two-month unit outage would result in an impairment of \u00a310.2 million. The Galloway CGU is sensitive to reasonably possible changes in the key assumptions. Whilst reasonably possible changes to assumptions would result in an adjustment to the carrying value of the Galloway CGU, they would not result in a material adjustment to its carrying value and so it is not considered a key source of estimation uncertainty as defined by IAS 1. Daldowie, Hirwaun, Millbrook and Progress For the Daldowie, Hirwaun, Millbrook and Progress CGUs, there were no impairment indicators identified and none of these CGUs have allocated goodwill. Therefore, ViU calculations to determine the recoverable amounts of these CGUs were not required. Impairment of non-current assets During the current year, the Group has sold a number of non-core small and medium-sized enterprise (SME) energy supply customer meter points to EDF Energy Customers Limited. The Group has also commenced a restructuring of the Opus Energy business to reflect its reduced customer base and the Group\u2019s focus on core I&C customers and renewables services. The transaction and the resulting strategic decision to restructure the Opus Energy business has resulted in a number of non-current asset impairments. The carrying value of the Opus Energy brand of \u00a30.2 million and the tangible and intangible assets of \u00a32.4 million (excluding the Opus Energy House) were impaired as a direct result of the transaction and strategic restructuring to focus on the core I&C customer and renewables services. These amounts were classified as exceptional. See note 2.7 for further details of this transaction. A \u00a32.8 million impairment was recognised in respect of the office building used by Opus Energy (Opus Energy House). This decrease in value predominantly reflects worsening market conditions for offices in the local area rather than being a consequence of the transaction and restructuring and as a result has not been classified as exceptional. The Group has recognised an impairment of \u00a34.6 million, being the full value of its equity accounted investment in C-Capture Limited. Other impairments of non-current assets in 2024 totalled \u00a34.4 million and were charged to the Consolidated income statement. In 2023, the recoverable amount of the Opus Energy House property was assessed and an impairment charge of \u00a38.9 million was recognised to reduce the carrying value to its recoverable amount of \u00a36.0 million. The ViU calculation of the Opus Energy CGU resulted in recognising a full impairment of the \u00a314.5 million allocated goodwill and a further \u00a345.7 million impairment charge across the remaining non-current assets. The total impairment charge, recognised as exceptional in the Consolidated income statement, in relation to the non-current assets in the Opus Energy CGU was \u00a369.1 million. See note 2.7.
Year ended 31 December 2024
Year ended 31 December 2023
Opus Energy
transaction and
related
restructuring Other assets Total Opus Energy Other assets Total
Impairment \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Investment in associate
\u2013
4.6
4.6
\u2013
\u2013
\u2013
Goodwill \u2013 accumulated amortisation and
impairment
\u2013
\u2013
\u2013
14.5
\u2013
14.5
Freehold land and buildings \u2013 accumulated
depreciation and impairment
\u2013
2.8
2.8
8.9
\u2013
8.9
Property, plant and equipment \u2013 accumulated
depreciation and impairment
\u2013
\u2013
\u2013
0 .1
\u2013
0 .1
Plant spares \u2013 accumulated depreciation
and impairment
\u2013
0 .1
0.1
\u2013
\u2013
\u2013
Assets under the course of construction \u2013
accumulated depreciation and impairment
\u2013
3.2
3.2
\u2013
1.7
1.7
Right of use assets \u2013 accumulated depreciation
and impairment
\u2013
0.1
0.1
\u2013
\u2013
\u2013
Intangible assets \u2013 accumulated amortisation
and impairment:
Customer-related assets
\u2013
\u2013
\u2013
31.5
\u2013
31.5
Brand assets
0.2
\u2013
0.2
3.0
\u2013
3.0
Software and licences
2.4
\u2013
2.4
11.1
\u2013
11.1
Other receivables
\u2013
1.0
1.0
\u2013
\u2013
\u2013
Total impairment of non-current assets
2.6
11.8
14.4
69.1
1.7
70.8
The total non-current asset impairment charge for the year of \u00a314.4 million (2023: \u00a370.8 million) is recognised in the impairment of non-current assets line in the Consolidated income statement. The \u00a32.6 million of impairment directly relating to the Opus Energy transaction and related restructuring was treated as an exceptional item (2023: the \u00a369.1 million relating to the impairment of Opus Energy was treated as an exceptional item). See note 2.7 for further details. 5.2 Goodwill and intangible assets Intangible assets are not physical in nature but are identifiable from other assets. Goodwill arises on the acquisition of a business when the consideration paid exceeds the fair value of the identifiable net assets acquired. Intangible assets other than goodwill can be acquired in business combinations, acquired separately or internally generated. Accounting policy Goodwill is measured as the excess of the: \u2013 consideration transferred; less \u2013 amount of any non-controlling interest in the acquired entity; and \u2013 acquisition date fair value of any previous equity interest in the acquired entity; over the fair value of the identifiable net assets acquired. Goodwill arising on the acquisition of a foreign operation is treated as an asset of that operation and therefore denominated in the functional currency of the operation to which it is allocated. Goodwill denominated in a foreign currency is subsequently translated at the rate prevailing at each reporting date. Foreign exchange differences arising on retranslation are recognised in the Consolidated statement of comprehensive income. Goodwill is allocated to the cash-generating units (CGUs), or groups of CGUs, that are expected to benefit from the synergies of the acquisition. If one or more CGUs, or group of CGUs, to which goodwill is allocated are restructured, then the goodwill is reallocated to the CGUs impacted by the restructure. Goodwill is considered to have an indefinite useful life, is not amortised, and is assessed annually for impairment (see note 2.4 for further details). Any impairment charge is recognised against the carrying amount of goodwill in accumulated amortisation and impairment. Intangible assets acquired in business combinations are measured at fair value on the acquisition date. Other intangible assets are measured initially at cost. Cost comprises the purchase price (net of any discount or rebate) and any directly attributable costs of preparing the asset for use in the manner intended by management. The carrying amounts of intangible assets are assessed for indicators of impairment at each reporting date. The Group\u2019s policy is to recognise an impairment charge through accumulated amortisation and impairment . Intangible assets are amortised over their anticipated useful economic lives (UELs), which are reviewed at least at each financial year end. When reviewing UELs the assessment takes into account regulatory changes, climate change, and commercial and technological changes. Any changes to estimated UELs are applied prospectively. During the prior year this review resulted in a change to the UELs of the Opus Energy customer-related asset and brand asset to December 2024 to reflect the estimated period over which the value from these assets was expected to be realised. During the current year these assets were fully impaired as part of the Opus Energy transaction. See note 2.7 for further details.
Average UEL
Method of amortisation (years)
At 31 December 2024
Customer-related assets:
Pinnacle
Straight line
6
BMM
Straight line
8
Other
Computer software and licences:
Straight line
9
Internally generated
Straight line
3
Acquired separately
Straight line
8
Other intangibles
Straight line
1
Carrying amounts are assessed for indicators of impairment at each reporting date. The customer-related assets are attributable to the Pellet Operations CGU following the acquisition of Pinnacle and the Drax Energy Solutions CGU following the acquisition of BMM. During the current year the Opus Energy CGU customer-related asset was disposed of and the brand asset impaired to \u00a3nil net book value (see below for further details). Details of the impairment assessments relating to these CGUs are included in note 2.4.
Software and Software and
Customer- licences licences
related \u2013 internally \u2013 acquired Other
assets Brand
generated
(1)
separately
(1)
intangibles Goodwill Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cost and carrying amount:
At 1 January 2023
(2)
25 7.6
11.3
130.2
18.5
2.0
424.2
843.8
Additions at cost
\u2013
\u2013
7.7
2.2
\u2013
\u2013
9.9
Acquired in business combinations
5.0
\u2013
\u2013
\u2013
\u2013
6.0
11.0
Transfers from property, plant and equipment
(see note 3.1)
\u2013
\u2013
0.6
\u2013
\u2013
\u2013
0.6
Effect of changes in foreign exchange rates
(1.5)
\u2013
\u2013
(0.2)
\u2013
1.0
(0.7)
At 1 January 2024
(2)
261.1
11.3
138.5
20.5
2.0
431.2
864.6
Additions at cost
\u2013
\u2013
6.9
\u2013
\u2013
\u2013
6.9
Adjustment related to business combinations
(see note 5.1)
\u2013
\u2013
\u2013
\u2013
\u2013
(0.2)
(0.2)
Disposals
(211.1)
\u2013
\u2013
\u2013
\u2013
\u2013
(211.1)
Transfers between categories
\u2013
\u2013
0.7
(0.9)
0.2
\u2013
\u2013
Transfers from property, plant and equipment
(see note 3.1)
\u2013
\u2013
2.9
0.3
\u2013
\u2013
3.2
Effect of changes in foreign exchange rates
(2.8)
\u2013
\u2013
0 .1
(0 .1)
(1.4)
(4.2)
At 31 December 2024
47. 2
11.3
149.0
20.0
2 .1
429.6
659.2
Accumulated amortisation and impairment:
At 1 January 2023
(2)
170.6
6.8
86.5
11.7
1.7
\u2013
27 7.3
Charge for the year
17. 2
1.1
10.2
0.8
0 .1
\u2013
29.4
Impairment
31.5
3.0
11.1
\u2013
\u2013
14.5
60.1
Effect of changes in foreign exchange rates
(0.3)
\u2013
\u2013
(0 .1)
\u2013
\u2013
(0.4)
At 1 January 2024
(2)
219.0
10.9
107. 8
12.4
1.8
14.5
366.4
Charge for the year
6.7
0.2
8.7
1.4
\u2013
\u2013
17. 0
Disposals
(209.2)
\u2013
\u2013
\u2013
\u2013
\u2013
(209.2)
Impairment
\u2013
0.2
2.4
\u2013
\u2013
\u2013
2.6
Transfers between categories
\u2013
\u2013
0.3
(0.3)
\u2013
\u2013
\u2013
Effect of changes in foreign exchange rates
(0.8)
\u2013
\u2013
\u2013
\u2013
\u2013
(0.8)
At 31 December 2024
15.7
11.3
119.2
13.5
1.8
14.5
176.0
Net book value:
At 31 December 2023
42.1
0.4
30.7
8 .1
0.2
416.7
498.2
At 31 December 2024
31.5
\u2013
29.8
6.5
0.3
415.1
483.2
(1) Comparative amounts have been re-presented to separate software and licences between those internally generated and those acquired separately. (2) Impairments previously presented through cost on non-amortising assets have been re-presented through accumulated amortisation and impairment. The Group has incurred research and development expenditure of \u00a326.2 million (2023: \u00a322.8 million), which is included within operating and administrative expenses in the Consolidated income statement. Customer-related assets Customer-related assets reflects the value of customer contracts acquired on the acquisition of Pinnacle in April 2021, the Pacific BioEnergy sales contracts purchased by the Pellet Operations CGU in December 2021, and the customer-related asset acquired on acquisition of BMM in August 2023. The Opus Energy customer-related asset was disposed of as part of the sale of non-core small and medium-sized enterprise (SME) meter points to EDF (see note 2.7 for further details). The Pinnacle customer-related asset recognised on the acquisition of Pinnacle relates to the fair value of contracted cash flows from Pinnacle\u2019s existing customer base. The Pinnacle customer-related asset is being amortised on a straight-line basis to reflect that the majority of the value from the contracted cash flows is expected to be realised evenly over the contract terms, as most contracts have similar end dates and contracts with earlier end dates are generally offset by increasing volumes on longer dated contracts. At 31 December 2024, the Pinnacle asset had a carrying amount of \u00a321.7 million (2023: \u00a326.8 million) and a remaining UEL of approximately six years (2023: seven years). On acquisition of BMM in August 2023 a customer-related asset with a fair value of \u00a35.0 million was recognised reflecting the estimated future cash flows from existing customer relationships that were not yet contracted. The fair value was estimated based upon a multi-period excess earnings method. At 31 December 2024, the BMM customer-related asset had a carrying amount of \u00a34.3 million (2023: \u00a34.8 million) and a remaining UEL of eight years (2023: nine years). The other customer-related asset relates to pellet sales contracts acquired from Pacific BioEnergy on 31 December 2021. At 31 December 2024 this asset had a carrying amount of \u00a35.5 million (2023: \u00a36.7 million) and a remaining UEL of nine years (2023: 10 years). Opus Energy brand The Opus Energy brand was acquired as part of the Opus Energy acquisition in February 2017. During the year the Opus Energy brand was fully impaired due to the sale of the majority of the non-core SME energy supply customer meter points to EDF Energy Customers Limited and the commencement of a restructuring of the Opus Energy business to reflect its reduced customer base and the Group\u2019s focus on core industrial and commercial (I&C) customers and renewables services. See note 2.7 for further details of this transaction. Computer software and licences Additions in the year include those in the ordinary course of business, which principally reflect ongoing investment in business systems to support the Energy Solutions segment. Software assets are amortised on a straight-line basis over their estimated UELs ranging from 2\u201310 years. As at 31 December 2024, computer software assets under the course of construction amounted to \u00a312.5 million (2023: \u00a319.7 million). A \u00a32.4 million impairment in respect of software specific to the Opus Energy business has been recognised in the current year as it is no longer considered to have future value following the Opus Energy transaction and the related restructuring of the Opus Energy business. See note 2.7 for further details. See note 2.4 for a summary of impairment charges recognised on non-current assets during the year. Goodwill The table below shows the carrying amount of goodwill by CGU:
Drax Energy Pellet
Solutions Lanark Galloway Cruachan Operations Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Goodwill
At 1 January 2024
161.4
11.3
4 0 .1
26.9
177.0
416.7
Acquisition adjustment (see note 5.1)
(0.2)
\u2013
\u2013
\u2013
\u2013
(0.2)
Effect of changes in foreign exchange rates
\u2013
\u2013
\u2013
\u2013
(1.4)
(1.4)
At 31 December 2024
161.2
11.3
4 0.1
26.9
175.6
415.1
", "dimensions": { "concept": "ifrs-full:DisclosureOfGoodwillExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-677": { "value": "2.4 Impairment review of fixed assets and goodwill Accounting policy Goodwill is tested for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each of the Group\u2019s cash-generating units (CGUs) or group of CGUs expected to benefit from the synergies of the business combination. A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. CGUs are identified consistently from period to period unless there is a change in the period that would impact the Group\u2019s CGUs. The Group\u2019s CGUs are reassessed should any such changes occur. The Group reviews its fixed assets (and, where appropriate, groups of assets combined into a CGU) whenever there is an indication that an impairment loss may have been suffered. The Group assesses the existence of indicators of impairment at the end of each reporting period. If an indication of potential impairment exists, the recoverable amount of the asset or CGU in question is assessed with reference to the present value of the future cash flows expected to be derived from the continuing use of the asset or CGU (value in use), or the expected price that would be received if the asset or CGU were sold to a market participant (fair value less costs of disposal). The recoverable amount of an asset or CGU is the higher of its fair value less costs of disposal (FVLCD) and its value in use (ViU). The initial assessment of the recoverable amount is normally based on ViU. The assessment of future cash flows is based on the approved long-term forecasts that support the Board\u2019s strategic planning process and includes all expected costs necessary to generate the cash inflows from the CGU\u2019s assets in their current state and condition, including an allocation of centrally managed costs. Future cash flows include, where relevant, contracted cash flows arising from the Group\u2019s forward hedging activities and as a result the carrying amount of each CGU includes the fair value of those hedges. Assessments of future cash flows consider relevant environmental and climate change factors. In particular, macro-economic, commodity price and third-party cost assumptions reflect considerations in respect of the impact of climate change, growth in renewable technologies, electrification and the impact of relevant policies on longer-term supply and demand profiles. As required by IAS 36, the additional value that could be obtained from enhancing the Group\u2019s assets and the potential benefit of any future restructuring or reorganisation that the Group is not yet committed to, is not reflected in the ViU calculation. In determining ViU, the estimated future cash flows are discounted to present value using a pre-tax nominal discount rate reflecting the specific risks attributable to the asset or CGU in question. If the recoverable amount is less than the carrying amount in the Consolidated financial statements, an impairment charge is recognised to reduce the carrying amount of the asset or CGU to the estimated recoverable amount. Any impairment loss is recognised immediately in the Consolidated income statement. Individual assets are considered for impairment where possible. If individual assets do not generate cash inflows that are largely independent, the recoverable amount is determined for the CGU to which the asset belongs. Where possible, corporate assets are allocated to an individual CGU on a reasonable and consistent basis. Where corporate assets cannot be allocated to an individual CGU on a reasonable and consistent basis, they are included in the carrying amount of the smallest group of CGUs to which they can be allocated on a reasonable and consistent basis. An impairment loss relating to a CGU is allocated first to the carrying amount of any goodwill allocated to the CGU and then to the other assets pro-rata on the basis of the carrying amount of each asset. When allocating an impairment loss to the other assets in the CGU, if the recoverable amount of an individual asset within that CGU is determinable, the impairment loss allocated to the individual asset is limited to reducing the asset\u2019s carrying value to its individual recoverable amount. If this results in the impairment loss allocated to an asset being less than its pro-rata share, the excess is allocated on a pro-rata basis to the remaining assets in the CGU. An impairment loss recognised for goodwill is not reversed in a subsequent period. Non-financial assets other than goodwill that have an impairment loss recognised are reviewed in subsequent reporting periods for possible reversal of the impairment. Where an impairment reversal is identified, this is reversed immediately in the Consolidated income statement. The table below details the Group\u2019s reportable segments, the CGUs within those segments and the value of any goodwill allocated to them. See note 5.2 for further details on goodwill.
At each reporting date the Group reviews its property, plant and equipment to determine whether there is any indication that these
assets may be impaired. The Group\u2019s accounting policy in respect of impairment, along with details of the impairment review
conducted during the year are set out in note 2.4.
An impairment charge is recognised immediately if the net book value of an asset exceeds its recoverable amount, which is the higher of an asset\u2019s value in use and its fair value less costs to sell. The Group\u2019s policy is to recognise an impairment charge through accumulated depreciation and impairment if the asset will continue to be used or retained by the Group. Cost and any accumulated depreciation and impairment are removed when an asset is disposed. Gains and losses on disposals are determined by comparing proceeds with the asset\u2019s carrying amount. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfNonfinancialAssetsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-640": { "value": "2.4 Impairment review of fixed assets and goodwill Accounting policy Goodwill is tested for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each of the Group\u2019s cash-generating units (CGUs) or group of CGUs expected to benefit from the synergies of the business combination. A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. CGUs are identified consistently from period to period unless there is a change in the period that would impact the Group\u2019s CGUs. The Group\u2019s CGUs are reassessed should any such changes occur. The Group reviews its fixed assets (and, where appropriate, groups of assets combined into a CGU) whenever there is an indication that an impairment loss may have been suffered. The Group assesses the existence of indicators of impairment at the end of each reporting period. If an indication of potential impairment exists, the recoverable amount of the asset or CGU in question is assessed with reference to the present value of the future cash flows expected to be derived from the continuing use of the asset or CGU (value in use), or the expected price that would be received if the asset or CGU were sold to a market participant (fair value less costs of disposal). The recoverable amount of an asset or CGU is the higher of its fair value less costs of disposal (FVLCD) and its value in use (ViU). The initial assessment of the recoverable amount is normally based on ViU. The assessment of future cash flows is based on the approved long-term forecasts that support the Board\u2019s strategic planning process and includes all expected costs necessary to generate the cash inflows from the CGU\u2019s assets in their current state and condition, including an allocation of centrally managed costs. Future cash flows include, where relevant, contracted cash flows arising from the Group\u2019s forward hedging activities and as a result the carrying amount of each CGU includes the fair value of those hedges. Assessments of future cash flows consider relevant environmental and climate change factors. In particular, macro-economic, commodity price and third-party cost assumptions reflect considerations in respect of the impact of climate change, growth in renewable technologies, electrification and the impact of relevant policies on longer-term supply and demand profiles. As required by IAS 36, the additional value that could be obtained from enhancing the Group\u2019s assets and the potential benefit of any future restructuring or reorganisation that the Group is not yet committed to, is not reflected in the ViU calculation. In determining ViU, the estimated future cash flows are discounted to present value using a pre-tax nominal discount rate reflecting the specific risks attributable to the asset or CGU in question. If the recoverable amount is less than the carrying amount in the Consolidated financial statements, an impairment charge is recognised to reduce the carrying amount of the asset or CGU to the estimated recoverable amount. Any impairment loss is recognised immediately in the Consolidated income statement. Individual assets are considered for impairment where possible. If individual assets do not generate cash inflows that are largely independent, the recoverable amount is determined for the CGU to which the asset belongs. Where possible, corporate assets are allocated to an individual CGU on a reasonable and consistent basis. Where corporate assets cannot be allocated to an individual CGU on a reasonable and consistent basis, they are included in the carrying amount of the smallest group of CGUs to which they can be allocated on a reasonable and consistent basis. An impairment loss relating to a CGU is allocated first to the carrying amount of any goodwill allocated to the CGU and then to the other assets pro-rata on the basis of the carrying amount of each asset. When allocating an impairment loss to the other assets in the CGU, if the recoverable amount of an individual asset within that CGU is determinable, the impairment loss allocated to the individual asset is limited to reducing the asset\u2019s carrying value to its individual recoverable amount. If this results in the impairment loss allocated to an asset being less than its pro-rata share, the excess is allocated on a pro-rata basis to the remaining assets in the CGU. An impairment loss recognised for goodwill is not reversed in a subsequent period. Non-financial assets other than goodwill that have an impairment loss recognised are reviewed in subsequent reporting periods for possible reversal of the impairment. Where an impairment reversal is identified, this is reversed immediately in the Consolidated income statement. The table below details the Group\u2019s reportable segments, the CGUs within those segments and the value of any goodwill allocated to them. See note 5.2 for further details on goodwill. CGUs
As at 31 December 2024
Goodwill
Segment name
CGUs contained within segment
\u00a3m
Pellet Production
Pellet Operations
175.6
Biomass Generation
Drax Power Station
\u2013
Flexible Generation
Lanark
11.3
Galloway
4 0.1
Cruachan
26.9
Hirwaun
\u2013
Millbrook
\u2013
Progress
\u2013
Daldowie
\u2013
Energy Solutions
Drax Energy Solutions
161.2
Opus Energy
\u2013
415.1
In respect of the Pellet Production segment, the smallest group of assets that generate independent cash inflows is the Pellet Production business as a whole, known as the Pellet Operations CGU. This is due to the output of the individual pellet plants being combined and used interchangeably to fulfil customer contracts. In respect of the Biomass Generation and Flexible Generation segments, the Group generally considers the smallest groups of assets that generate independent cash inflows to be the individual sites that share common infrastructure and control functions. The Open Cycle Gas Turbine (OCGT) assets were previously considered as one CGU. Construction of the OCGT assets is expected to complete in 2025. With updated decisions being made about how the OCGT assets will operate once they commence commercial generation, the OCGT assets are now considered to be separate CGUs \u2013 Hirwaun, Progress and Millbrook \u2013 due to having significant independence around the decisions, activities and resulting cash inflows. There are no other changes to any of the Biomass Generation or Flexible Generation CGUs from the prior year. In respect of the Energy Solutions segment, the smallest groups of assets that generate independent cash inflows are the operating entities within the business, Drax Energy Solutions and Opus Energy. The Innovation, capital projects and other segment does not have any external cash inflows and therefore does not meet the definition of a CGU. However, as explained above, corporate assets are considered for impairment individually where possible or as part of a CGU, and relevant centrally managed costs are allocated to each CGU on a reasonable and consistent basis. Assessment of indicators of impairment for CGUs to which no goodwill is allocated Full impairment reviews were performed on all CGUs to which goodwill had been allocated (see Impairment review section below). For CGUs to which no goodwill is allocated, impairment reviews are only performed if impairment indicators are identified. In determining whether impairment indicators existed in respect of these CGUs, the Group considered changes in market prices for commodities, foreign currency exchange rates, changes in macro-economic conditions, potential impacts of climate change and regulatory requirements since the previous reporting date, and their potential impact on the Group\u2019s long-term planning models and future forecast cash flows. Given the relatively stable macro-economic conditions and exchange rates compared to the prior year end, as well as falling interest rates, these are not considered to be impairment indicators. The market price of certain commodities (e.g. power and gas) have fallen since the prior year but still remain above historical averages. This was not an impairment indicator for the Drax Power Station, Hirwaun, Millbrook and Progress CGUs as they are less sensitive to power price changes due to certain generation income being under a CfD, or generation activities being more dependent on the spread between gas and power prices. Further, a high proportion of their income is not linked to power prices, such as renewable certificates, system support and ancillary services. The Drax Power Station CGU also has a high hedged power position. Gas prices are a key input cost for Daldowie and therefore this CGU has benefited as these prices have reduced during 2024. Consideration was also given to assumptions regarding biomass generation and biomass prices post March 2027, when current subsidies for biomass generation at Drax Power Station are due to end, and whether that was an indicator of impairment (see the Principal risks and uncertainties section starting on page 70 for further details). Previously the carrying amount of the Drax Power Station CGU was supported by pre-2027 cash flows. As there is now one less year of pre-2027 cash flows compared to the prior year this was considered to be an impairment indicator. Heads of terms have been agreed with the UK Government for a proposed low- carbon dispatchable CfD agreement for the period April 2027 to March 2031 (see note 2.12 for further details). However these heads of terms are non-binding and therefore there remains some uncertainty over the cash flows post 2027. Accordingly a full impairment review of the Drax Power Station CGU has been performed. There were no impairment indicators present for the Hirwaun, Millbrook, Progress or Daldowie CGUs and accordingly no impairment review was performed for these CGUs in the current year. As part of the Opus Energy sale of meter points and restructuring, the non-current assets in the Opus Energy CGU were either disposed of or impaired to \u00a3nil, with the exception of Opus Energy House (see note 2.7 for further details). Opus Energy House is recognised at its recoverable amount. As a result, a full impairment review was not required for the Opus Energy CGU. Impairment review For the purpose of impairment reviews the recoverable amounts of the CGUs, or groups of CGUs, are measured based on ViU calculations using the Group\u2019s established planning models. These calculations depend on a broad range of assumptions, the most significant of which are outlined below for each CGU, or group of CGUs, to which an impairment test has been performed in the current year. The bases of these estimates are outlined below.
Significant assumptions for value
CGUs
in use calculation
Management\u2019s bases for determining estimates used in value in use calculation
Pellet Operations
\u2013 Production costs
 \u2013 Future production costs are estimated based on a combination of current and
\u2013 Production volumes historical costs, inflation expectations and maintenance/operating assumptions
\u2013 Sales prices \u2013 Production volumes are estimated based on a combination of the capacity of
\u2013 Discount rate the plant, current and historical volumes produced, planned and unplanned
downtime provisions, and fibre availability
\u2013 Sales prices are estimated based on contractual sales agreements and an
assumed market price after current contracts expire based on third-party
market forecasts and current contract negotiations
\u2013 See below for details of the basis used to estimate discount rates
Drax Power Station, \u2013 Power prices \u2013 Power revenue is derived from hedged power sales, future wholesale energy
Lanark, Galloway \u2013 Post-2027 biomass support price estimates and an assumption of additional value added through the
and Cruachan mechanism (Drax Power balancing market and optimisation
Station only) \u2013 Future wholesale energy price estimates are based on market traded power
\u2013 Fuel cost (Drax Power prices for around three years (the period they are liquid), gas market prices as a
Station only) proxy for power for another two years, then the Group\u2019s long-term power price
\u2013 Ancillary income forecast, which is prepared using externally provided gas price forecasts and
\u2013 Volume of generation demand inputs
(excluding Cruachan) \u2013 Post-2027 biomass generation value is based on the heads of terms agreed with
\u2013 Discount rate UK Government for a proposed low carbon dispatchable CfD agreement for the
period April 2027 to March 2031 and a similar level of value continuing to 2039
\u2013 Fuel costs are estimated based on contractual purchase agreements and an
assumed market price after current contracts expire based on third-party
market forecasts and current contract negotiations
\u2013 Ancillary income assumptions are based on past performance and current
agreed prices with National Grid
\u2013 Volume of generation for the run-of-river hydro assets is derived from historical
rainfall averages. Volume of generation for Drax Power Station is based on
biomass prices and availability, renewable support scheme terms and power
price forecasts
\u2013 See below for details of the basis used to estimate discount rates
Drax Energy \u2013 Customer margins \u2013 Customer margins are estimated based on current contracted prices and on
Solutions \u2013 Supply volumes current and previously achieved profitability
\u2013 Collection rates \u2013 The expectation of future organic supply volumes is based on past performance
\u2013 Third-party cost estimates and management\u2019s expectations of market developments
\u2013 Renewables services \u2013 Collection rates are estimated based on historical data and adjusted for
growth rates expected changes in future circumstances
\u2013 Discount rate \u2013 Third-party cost estimates are based on a combination of externally published
rates, management analysis of key market input assumptions, and forecasts
from external experts
\u2013 Renewables services growth is based on assumptions about the growth of
relevant markets, such as electric vehicles
\u2013 See below for details of the basis used to estimate discount rates
For the Drax Energy Solutions CGU, management has projected detailed cash flows based on a period of five years, with cash flows beyond the five-year period taken into perpetuity using a long-term growth rate of 2%. For all other CGUs, management has projected detailed cash flows based on a period of 15 years. Whilst this is longer than the five-year period specified by IAS 36, and the period the Group assesses viability over in the Viability statement, it aligns with the Group\u2019s long-term strategic planning and takes into account future structural changes forecast within the generation and pellet production industries, as well as expected growth in the biomass industry. These longer-term structural changes are mainly linked to climate change and the impact of changing weather patterns (including increased rain fall from storms and drier summer months for the run-of-river hydro CGUs and the impact on plant downtime and supply chains due to extreme weather events for the Pellet Operations and Drax Power Station CGUs), the impact of decarbonisation and the transition to more renewable forms of energy and net zero, the impact of subsidy and support regimes, and the impact of repairs and maintenance expenditure which is not uniform across the lives of assets. Using a period of only five years for detailed cash flow forecasts could materially overstate or understate the ViU of these CGUs as the impact of these factors in periods after five years can be significant. The Pellet Operations CGU also has long term contracts that can typically be in excess of 10 years which further supports using a period greater than five years. Where possible, for relevant commodities, forecasts are based on either contracted prices, particularly for the Pellet Operations CGU where the Group has a number of longer-term contracts to support the prices used, or observable market curves. Beyond the liquid portion of forward curves, internally constructed price curves are benchmarked against third-party market analysis to validate the reasonableness of the assumptions used. Management continually reassesses forecasting accuracy, taking into account changes in circumstances and events that could not reasonably be foreseen between the date of the forecast and the forecast period. These reviews support the accuracy of management\u2019s forecasts. This supports the use of detailed forecast periods of longer than five years. Where management has projected detailed cash flows based on a period of 15 years, other than for Drax Power Station, cash flows beyond the 15-year period are taken into perpetuity using a long-term growth rate of 2%. The Drax Power Station CGU assumes cash flows to the end of 2039 in line with the assumed end of station life. The long-term growth rate is based on prudent expectations of market share and profitability along with more general macro-economic factors which were obtained from the Group\u2019s established planning model along with external macro-economic forecasts. The long-term growth rate does not exceed the relevant long-term average growth rate for each of the industries in which the Group operates. The discount rates used for each CGU are calculated by third-party experts and reflect the weighted average cost of capital derived using the Capital Asset Pricing Model (CAPM). The estimations use a risk-free rate based on Government bonds, market participant capital structures and beta estimates adjusted for the specific circumstances and risk factors affecting the industry and markets in which the CGU operates (taking into account relevant peer data sets). This calculation uses the relevant tax rates to calculate a pre-tax discount rate. Further details on the assessments for each group of CGUs as well as sensitivities for reasonably possible changes in key assumptions at the date of the impairment test are given below. Where reasonably possible changes would result in a material adjustment to the carrying value, these are disclosed as a key source of estimation uncertainty. The carrying amount, length of detailed cash flows, pre-tax discount rate and the perpetuity growth rate used, where applicable, applied to each CGU are set out in the table below:
Carrying
amount
including Length of
allocated detailed Pre-tax
goodwill cash flows discount Perpetuity
CGU \u00a3m \u00a3m rate growth rate
Pellet Operations
1,072.4
15 years
8.9%
2.0%
Drax Power Station
1,071.3
15 years
16.8%
n/a
Drax Energy Solutions
175.5
5 years
9.8%
2.0%
Lanark
45.4
15 years
8.3%
2.0%
Galloway
168.8
15 years
8.3%
2.0%
Cruachan
278.9
15 years
8.3%
2.0%
Pellet Operations The Pellet Operations CGU is principally engaged in the production and sale of biomass pellets. The ViU for the Pellet Operations CGU was in excess of its carrying amount. For the Pellet Operations CGU, a reasonably possible increase in the discount rate to 9.7% combined with an increase in production costs of $7 per tonne and a 7% decrease in the production volumes in the ViU calculation, would result in a \u00a3973.0 million reduction in headroom, but would not result in an impairment. Whilst reasonably possible changes in assumptions would reduce the headroom, they would not result in the recoverable amount being lower than the carrying value. As such the Group does not believe that any reasonably possible changes in the key assumptions would result in an adjustment to the carrying value of the Pellet Operations CGU. Drax Power Station The Drax Power Station CGU is principally focused on renewable biomass electricity generation. Given an impairment indicator was identified (see above for further details) a full impairment assessment has been performed (an assessment was not required to be performed in the prior year due to no indicators of impairment being identified). The cash flows post March 2027 reflect management\u2019s best estimate of earnings based on the heads of terms of the low-carbon dispatchable CfD agreement with the UK Government (see note 2.12 for further details) to 2031 and the expected income beyond this date to the cessation of operations in line with the current end of station life of 2039. No value has currently been included in the ViU calculation for disposing of the site and assets in 2039 due to the uncertainty over the value that could be achieved as a result of a lack of comparable transactions for a large-scale generation site with a live grid connection. If a value was included this would further increase the headroom. The ViU of the Drax Power Station CGU was in excess of its carrying amount. A reasonably possible \u00a315/MWh decrease in power prices combined with a 10% increase in the forced outage rate, an increase in the pre-tax discount rate from 16.8% to 48.5% (equivalent to an increase in the post-tax discount rate from 6.8% to 8.0%), and operations to cease in March 2027 due to no low- carbon dispatchable CfD agreement being confirmed, would result in an impairment of \u00a3515.5 million. A reasonably possible \u00a315/MWh decrease in power prices combined with a 10% increase in the forced outage rate, an increase in the pre-tax discount rate from 16.8% to 29.8% (equivalent to an increase in the post-tax discount rate from 6.8% to 8.0%), and operations to cease in March 2031 at the end of the proposed low-carbon dispatchable CfD agreement, would result in an impairment of \u00a3321.4 million. Accordingly, reasonably possible changes in assumptions within the ViU calculation could result in a material adjustment to the carrying value of the Drax Power Station CGU. Therefore, the assumptions in the ViU calculation of the Drax Power Station CGU have been identified as a key source of estimation uncertainty. Whilst no impairment has been recognised in relation to the Drax Power Station CGU as at 31 December 2024, if any eventual CfD agreement was to be agreed at a lower value, or not agreed at all and the power station was to cease operations in 2027, it is expected there could be a significant impairment required to reduce the carrying value of the Drax Power Station CGU. Even if cash flows in the period April 2027 to March 2031 are consistent with the agreed heads of terms, the risk of an impairment needing to be recognised on the Drax Power Station CGU increases in future periods as the amount of higher value, pre-April 2027 cash flows become realised and will therefore not be included in future cash flow forecasts. The recoverable amount of a CGU is assessed based on the higher of ViU and FVLCD. The impairment assessment for the Drax Power Station CGU has been performed on a ViU basis. The ViU basis is required to be performed based on the current condition of an asset and as such cash flows related to improving or enhancing an asset\u2019s performance are required to be excluded. For the Drax Power Station CGU, cash flows relating to UK BECCS, or other alternative enhancements such as data centres, have been excluded as these cash flows are the result of significant capital expenditure to enhance the current Drax Power Station assets. Had the ViU basis indicated an impairment to the carrying value, a FVLCD calculation would have been performed. The FVLCD basis is calculated based on what a market participant would pay for an asset, less any disposal costs. If a market participant would attribute value to the anticipated cash flow impact of improving or enhancing an asset\u2019s performance (for example UK BECCS or other opportunities to create value from alternative uses for a large-scale generation site with a live grid connection, such as data centres) these are included in a FVLCD calculation. As such, for the Drax Power Station CGU, FVLCD may be higher than ViU. Drax Energy Solutions This segment is principally focused on renewable electricity sales to industrial and commercial (I&C) customers and providing other renewables services, and therefore consideration of climate and environmental impacts are already a key feature of the business model. The ViU of the Drax Energy Solutions CGU was in excess of its carrying amount. A reasonably possible increase in the pre-tax discount rate to 10.6% combined with factoring in a reduction in gross margin growth from 7.5% to 2.0% from 2027 to 2029, 0% perpetuity growth rate and a 10% increase in bad debt, would reduce the headroom by \u00a3227.5 million. This would not result in an impairment. Whilst reasonably possible changes in assumptions would reduce the headroom, they would not result in the recoverable amounts being lower than the carrying value. As such the Group does not believe that any reasonably possible changes in the key assumptions would result in an adjustment to the carrying value of the Drax Energy Solutions CGU. Lanark, Galloway and Cruachan These CGUs are engaged in run-of-river hydro and pumped storage power generation. The ViU for all three CGUs (Lanark, Galloway and Cruachan) were in excess of their carrying amounts. A reasonably possible 10% power price reduction combined with an increase in the pre-tax discount rate to 8.9%, a three-month historically low generation period and a two-month unit outage would reduce the headroom in the Lanark CGU by \u00a328.1 million. This would not result in an impairment. A reasonably possible 10% power price reduction in the Cruachan CGU combined with an increase in the pre-tax discount rate to 8.9%, a three-month historically low generation, a two-month unit outage and removal of value assumed from market volatility would reduce the headroom by \u00a3660.1 million. This would not result in an impairment. Whilst reasonably possible changes in assumptions for the Lanark and Cruachan CGUs would reduce the headroom, they would not result in the recoverable amount being lower than the carrying values. As such the Group does not believe that any reasonably possible changes in the key assumptions would result in an adjustment to the carrying values of either the Lanark or Cruachan CGUs. For the Galloway CGU, a reasonably possible 10% power price reduction combined with an increase in the pre-tax discount rate to 8.9%, a three-month historically low generation period and a two-month unit outage would result in an impairment of \u00a310.2 million. The Galloway CGU is sensitive to reasonably possible changes in the key assumptions. Whilst reasonably possible changes to assumptions would result in an adjustment to the carrying value of the Galloway CGU, they would not result in a material adjustment to its carrying value and so it is not considered a key source of estimation uncertainty as defined by IAS 1. Daldowie, Hirwaun, Millbrook and Progress For the Daldowie, Hirwaun, Millbrook and Progress CGUs, there were no impairment indicators identified and none of these CGUs have allocated goodwill. Therefore, ViU calculations to determine the recoverable amounts of these CGUs were not required. Impairment of non-current assets During the current year, the Group has sold a number of non-core small and medium-sized enterprise (SME) energy supply customer meter points to EDF Energy Customers Limited. The Group has also commenced a restructuring of the Opus Energy business to reflect its reduced customer base and the Group\u2019s focus on core I&C customers and renewables services. The transaction and the resulting strategic decision to restructure the Opus Energy business has resulted in a number of non-current asset impairments. The carrying value of the Opus Energy brand of \u00a30.2 million and the tangible and intangible assets of \u00a32.4 million (excluding the Opus Energy House) were impaired as a direct result of the transaction and strategic restructuring to focus on the core I&C customer and renewables services. These amounts were classified as exceptional. See note 2.7 for further details of this transaction. A \u00a32.8 million impairment was recognised in respect of the office building used by Opus Energy (Opus Energy House). This decrease in value predominantly reflects worsening market conditions for offices in the local area rather than being a consequence of the transaction and restructuring and as a result has not been classified as exceptional. The Group has recognised an impairment of \u00a34.6 million, being the full value of its equity accounted investment in C-Capture Limited. Other impairments of non-current assets in 2024 totalled \u00a34.4 million and were charged to the Consolidated income statement. In 2023, the recoverable amount of the Opus Energy House property was assessed and an impairment charge of \u00a38.9 million was recognised to reduce the carrying value to its recoverable amount of \u00a36.0 million. The ViU calculation of the Opus Energy CGU resulted in recognising a full impairment of the \u00a314.5 million allocated goodwill and a further \u00a345.7 million impairment charge across the remaining non-current assets. The total impairment charge, recognised as exceptional in the Consolidated income statement, in relation to the non-current assets in the Opus Energy CGU was \u00a369.1 million. See note 2.7.
Year ended 31 December 2024
Year ended 31 December 2023
Opus Energy
transaction and
related
restructuring Other assets Total Opus Energy Other assets Total
Impairment \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Investment in associate
\u2013
4.6
4.6
\u2013
\u2013
\u2013
Goodwill \u2013 accumulated amortisation and
impairment
\u2013
\u2013
\u2013
14.5
\u2013
14.5
Freehold land and buildings \u2013 accumulated
depreciation and impairment
\u2013
2.8
2.8
8.9
\u2013
8.9
Property, plant and equipment \u2013 accumulated
depreciation and impairment
\u2013
\u2013
\u2013
0 .1
\u2013
0 .1
Plant spares \u2013 accumulated depreciation
and impairment
\u2013
0 .1
0.1
\u2013
\u2013
\u2013
Assets under the course of construction \u2013
accumulated depreciation and impairment
\u2013
3.2
3.2
\u2013
1.7
1.7
Right of use assets \u2013 accumulated depreciation
and impairment
\u2013
0.1
0.1
\u2013
\u2013
\u2013
Intangible assets \u2013 accumulated amortisation
and impairment:
Customer-related assets
\u2013
\u2013
\u2013
31.5
\u2013
31.5
Brand assets
0.2
\u2013
0.2
3.0
\u2013
3.0
Software and licences
2.4
\u2013
2.4
11.1
\u2013
11.1
Other receivables
\u2013
1.0
1.0
\u2013
\u2013
\u2013
Total impairment of non-current assets
2.6
11.8
14.4
69.1
1.7
70.8
The total non-current asset impairment charge for the year of \u00a314.4 million (2023: \u00a370.8 million) is recognised in the impairment of non-current assets line in the Consolidated income statement. The \u00a32.6 million of impairment directly relating to the Opus Energy transaction and related restructuring was treated as an exceptional item (2023: the \u00a369.1 million relating to the impairment of Opus Energy was treated as an exceptional item). See note 2.7 for further details. At each reporting date the Group reviews its property, plant and equipment to determine whether there is any indication that these assets may be impaired. The Group\u2019s accounting policy in respect of impairment, along with details of the impairment review conducted during the year are set out in note 2.4. An impairment charge is recognised immediately if the net book value of an asset exceeds its recoverable amount, which is the higher of an asset\u2019s value in use and its fair value less costs to sell. The Group\u2019s policy is to recognise an impairment charge through accumulated depreciation and impairment if the asset will continue to be used or retained by the Group. Cost and any accumulated depreciation and impairment are removed when an asset is disposed. Gains and losses on disposals are determined by comparing proceeds with the asset\u2019s carrying amount.
Assets under the
Freehold land Plant and Plant spare course of
and buildings equipment parts construction Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cost:
At 1 January 2023
503.5
3,376.7
81.0
329.0
4,290.2
Additions at cost
\u2013
0.4
8 .1
500.7
509.2
Acquired in business combinations
\u2013
0 .1
\u2013
\u2013
0 .1
Disposals
(0.3)
(27.8)
\u2013
\u2013
(28 .1)
Movement in reinstatement asset
\u2013
22.7
\u2013
\u2013
22.7
Issues to maintenance projects
\u2013
\u2013
(6.5)
\u2013
(6.5)
Transfers to intangibles (see note 5.2)
\u2013
(0 .1)
\u2013
(0.5)
(0.6)
Transfers between PPE categories
0.4
168.0
0.5
(168.9)
\u2013
Effect of changes in foreign exchange rates
(9.5)
(33.8)
\u2013
(4.2)
(47.5)
At 1 January 2024
49 4 .1
3,506.2
83.1
656.1
4,739.5
Additions at cost
\u2013
0.3
9.9
315.3
325.5
Disposals
(0.3)
(20.2)
\u2013
(4 .1)
(24.6)
Movement in reinstatement asset (see note 5.3)
\u2013
0.7
\u2013
\u2013
0.7
Issues to maintenance projects
\u2013
\u2013
(3.3)
\u2013
(3.3)
Transfers from/(to) intangibles (see note 5.2)
0.2
\u2013
\u2013
(3.4)
(3.2)
Transfers to right-of-use assets
\u2013
(1.5)
\u2013
\u2013
(1.5)
Transfers from inventories
\u2013
\u2013
3.3
\u2013
3.3
Transfers between PPE categories
20.4
231.7
2.2
(254.3)
\u2013
Effect of changes in foreign exchange rates
(0.3)
(4.2)
0.2
2.8
(1.5)
At 31 December 2024
514 .1
3,713.0
95.4
712.4
5,034.9
Accumulated depreciation and impairment:
At 1 January 2023
142.5
1,706.1
33.5
20.1
1,902.2
Depreciation charge for the year
19.3
145.2
2.6
\u2013
16 7.1
Impairment
8.9
0 .1
\u2013
1.7
10.7
Disposals
(0 .1)
(2 5.1)
\u2013
\u2013
(25.2)
Issues to maintenance projects
\u2013
\u2013
(0.7)
\u2013
(0.7)
Effect of changes in foreign exchange rates
(2.7)
(10.7)
\u2013
\u2013
(13.4)
At 1 January 2024
167.9
1,815.6
35.4
21.8
2,040.7
Depreciation charge for the year
23.8
168.2
5.5
\u2013
197.5
Impairment
2.8
\u2013
0.1
3.2
6 .1
Disposals
(0.1)
(12.8)
\u2013
\u2013
(12.9)
Issues to maintenance projects
\u2013
\u2013
(1.1)
\u2013
(1.1)
Transfers from right-of-use assets
\u2013
1.1
\u2013
\u2013
1.1
Effect of changes in foreign exchange rates
0.5
1.0
\u2013
\u2013
1.5
At 31 December 2024
194.9
1,973.1
39.9
25.0
2,232.9
Net book value:
At 31 December 2023
326.2
1,690.6
47.7
634.3
2,698.8
At 31 December 2024
319.2
1,739.9
55.5
687.4
2,802.0
Impairments previously presented through cost on non-depreciating assets have been re-presented in the table above. Impairments are presented through accumulated depreciation and impairment. Included within the cost of assets under the course of construction is capitalised interest of \u00a315.0 million (2023: \u00a313.3 million) relating to the construction of the three OCGT projects, Longview pellet plant and the Cruachan upgrade project. See note 2.5 for further details of borrowing costs capitalised during the year. Freehold land and buildings, and plant and equipment with a carrying amount of \u00a31,580.7 million (2023: \u00a31,609.7 million) have been pledged as security over the Group secured borrowings. See note 4.2 for details of the Group\u2019s secured borrowings. See note 2.4 for further details of the Group\u2019s accounting policy and presentation of impairments of non-current assets.
Pellet Total
Biomass Hydro production plant and
plant plant plant Other equipment
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cost:
At 1 January 2023
2,141. 3
479.4
738.8
17. 2
3,376.7
Additions at cost
\u2013
\u2013
\u2013
0.4
0.4
Acquired in business combinations
\u2013
\u2013
\u2013
0 .1
0 .1
Disposals
\u2013
\u2013
(27.6)
(0.2)
(27. 8)
Movement in reinstatement asset
20.1
\u2013
2.6
\u2013
22.7
Transfers to intangibles
\u2013
\u2013
(0 .1)
\u2013
(0 .1)
Transfers between PPE categories
117.1
\u2013
50.9
\u2013
168.0
Effect of changes in foreign exchange rates
\u2013
\u2013
(33.8)
\u2013
(33.8)
At 1 January 2024
2,278.5
479.4
730.8
17. 5
3,506.2
Additions at cost
\u2013
\u2013
\u2013
0.3
0.3
Disposals
(10.0)
\u2013
(10.2)
\u2013
(20.2)
Movement in reinstatement asset (see note 5.3)
(6.9)
\u2013
\u2013
7.6
0.7
Transfers between PPE categories
13 8.1
9.3
71.9
12.4
231.7
Transfers (to)/from right-of-use assets
\u2013
\u2013
(1.6)
0.1
(1.5)
Effect of changes in foreign exchange rates
\u2013
\u2013
(4.2)
\u2013
(4.2)
At 31 December 2024
2,399.7
488.7
786.7
37.9
3,713.0
Accumulated depreciation and impairment:
At 1 January 2023
1,417.3
53.3
221.8
13.7
1,7 0 6.1
Depreciation charge for the year
66.2
12.9
64.2
1.9
145.2
Impairment
\u2013
\u2013
\u2013
0.1
0.1
Disposals
\u2013
\u2013
(24.9)
(0.2)
(2 5.1)
Effect of changes in foreign exchange rates
\u2013
\u2013
(10.7)
\u2013
(10.7)
At 1 January 2024
1,483.5
66.2
250.4
15.5
1,815.6
Depreciation charge for the year
75.1
12.9
75.3
4.9
168.2
Disposals
(6 .1)
\u2013
(6.7)
\u2013
(12.8)
Transfers from right-of-use assets
\u2013
\u2013
1.1
\u2013
1.1
Effect of changes in foreign exchange rates
\u2013
\u2013
1.0
\u2013
1.0
At 31 December 2024
1,552.5
79.1
321.1
20.4
1, 973.1
Net book value:
At 31 December 2023
795.0
413.2
480.4
2.0
1,690.6
At 31 December 2024
8 47.2
409.6
465.6
17.5
1,739.9
The depreciation expense in the Consolidated income statement comprises the following:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Depreciation charged on property, plant and equipment
197. 5
167.1
Depreciation charged on right-of-use assets
28.1
26.9
Movement on depreciation included in closing inventories
(0.8)
1.6
Total depreciation expense
224.8
195.6
Depreciation charged on right-of-use assets in the table above is presented net of \u00a30.9 million (2023: \u00a3nil) depreciation related to salary sacrifice electric vehicles included within staff cost in operating and administrative expenses. Right-of-use asset depreciation totals \u00a329.0 million for the year ended 31 December 2024 (2023: \u00a326.9 million). Impairment of financial assets Accounting policy The Group applies the impairment model in IFRS 9 to provide for expected credit losses on the Group\u2019s financial assets not measured at FVTPL, including trade receivables, accrued income, contract assets and other financial assets. The provision for impairment of trade receivables and accrued income (including contract assets) is measured at an amount equal to the lifetime expected credit loss. Contract assets relate to amounts for goods or services provided under customer contracts and, therefore, have substantially the same risk characteristics as trade receivables for the same types of contracts. For other financial assets, the Group recognises a lifetime expected credit loss provision when there has been a significant increase in credit risk since initial recognition. If the credit risk of the financial instrument has not increased significantly since initial recognition, the Group recognises a 12-month expected credit loss provision. The greatest concentration of credit risk exists in the Energy Solutions business. For all receivables in the current year, across all businesses, a provision matrix method has been adopted. For the small and medium-sized enterprise (SME) consumers within the Energy Solutions business, the risk is higher due to the wide range of customer characteristics within the portfolio. In the prior year, due to the loss provisioning for these customers being more complex a combined probability method that was more dynamic than the provision matrix method was applied. Due to the sale of the majority of the Group\u2019s non-core SME customer meter points and transfer of the related receivables balances to EDF (see note 2.7 for further details), the receivables balance and exposure to credit risk for these customers has significantly reduced compared to the prior year. As such the use of the combined probability method was not deemed appropriate and the provision matrix method has been applied to all customers. Under the Group\u2019s debt recovery strategy, a breach in terms could lead to the customer being disconnected or pursued legally for recovery of an outstanding balance. The Group considers a financial asset to be in default when the amount due from a debtor is unlikely to be received in full, or when contractual payments are 90 days past due. The Group writes off a financial asset when there is no realistic prospect of recovery and all attempts to recover the balance have been exhausted. An indication that all credit control activities have been exhausted is where the debt on an account is exclusively greater than 365 days past due and active recovery attempts have failed, or where there are known insolvency issues relating to the customer. Provision matrix method Customers are grouped according to the age of the debt based on the number of days past due. The provision rates are based on historical collection rates and an expectation of future cash collection. The movement in the overall allowance for expected credit losses on trade receivables is presented in the following table. This excludes \u00a30.3 million (2023: \u00a3nil) of trade receivables measured at FVTPL:
2024
2023
Combined Provision Combined Provision
probability matrix probability matrix
method method Total method method Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
At 1 January
50.6
8.8
59.4
54.9
6.0
60.9
Amounts written off
(28.5)
(17.9)
(46.4)
(44.2)
(5.0)
(49.2)
Net additional amounts provided against
28.0
20.9
48.9
39.9
7.4
47.3
Amounts added on acquisition
\u2013
\u2013
\u2013
\u2013
0.4
0.4
Transfer of financial assets to FVTPL
category
(19.5)
\u2013
(19.5)
\u2013
\u2013
\u2013
Change in provisioning methodology
(30.6)
30.6
\u2013
\u2013
\u2013
\u2013
At 31 December
\u2013
42.4
42.4
50.6
8.8
59.4
Gross trade receivables
147. 5
147.5
155.8
239.6
395.4
Expected credit loss provision
(42.4)
(42.4)
(50.6)
(8.8)
(59.4)
Trade receivables subject to the IFRS 9
impairment model
105.1
105.1
105.2
230.8
336.0
Average expected credit loss %
29%
29%
32%
4%
15%
The provision in the table above relates primarily to trade receivables in the Energy Solutions business. The provision matrix method has resulted in a \u00a3nil provision applied to both the Flexible Generation and Pellet Production businesses in both the current and prior years and a \u00a32.9 million (2023: \u00a3nil) provision in the Biomass Generation business. The risk of default within the Biomass Generation, Flexible Generation and Pellet Production businesses is considered to be remote, supported by strong historical collection rates, high credit quality counterparties and short payment terms with timely receipts resulting in negligible aged debt. The net charge to the Consolidated income statement in 2024 for impairment losses on financial assets was \u00a340.0 million (2023: \u00a332.5 million). This is the net of the additional amounts provided against in relation to trade receivables of \u00a348.9 million (2023: \u00a347.3 million (excluding \u00a30.4 million added on acquisition)) less an \u00a38.9 million (2023: \u00a314.8 million) benefit in the period in respect of the resolution of legacy credit balances. Of the net charge in the current year, \u00a312.7 million has been recognised as exceptional as part of the Opus Energy transaction (see note 2.7 for further details). The value of provisions calculated using the combined probability method in the prior year is set out below for comparative purposes. This shows the trade receivables balances for SME customers within the Energy Solutions business grouped by the combined probability assigned by the model. As explained above, the Group stopped using the combined probability model in the current year. As such, the following table shows the comparative risk profile of amounts due based on the combined probability model at 31 December 2023 only:
As at 31 December 2023
Estimated gross Lifetime
carrying amount expected
at default credit losses
Probability of default range % \u00a3m \u00a3m
80\u201310 0
42 .1
36.7
50\u201379
14.3
8.0
26\u201349
17.9
5.8
0\u201325
81.5
0 .1
Total
155.8
50.6
The value of provisions calculated using the Group\u2019s provision matrix method is set out below. This shows the ageing profile in 30-day increments of the trade receivables and accrued income (including contract assets) of the Group at 31 December 2024 excluding \u00a30.3 million (2023: \u00a3nil) of trade receivables that are measured at FVTPL. The comparative amounts show the same, apart from not including the Group\u2019s SME customers within the Energy Solutions business, that were previously calculated using the combined probability method and are included in the table above.
As at 31 December 2024
As at 31 December 2023
Estimated Estimated
total gross Lifetime total gross Lifetime
carrying amount expected Expected carrying amount expected Expected
at default credit losses credit loss rate at default credit losses credit loss rate
\u00a3m \u00a3m % \u00a3m \u00a3m %
Accrued income balances not yet due
287.6
9.0
3%
43 0 .1
9.4
2%
Trade receivables days past due:
Balances not yet due
81.6
4.0
5%
183.6
2 .1
1%
Between 0\u201330 days
5.2
0.8
15%
32.6
0.9
3%
Between 31\u201360 days
2.5
0.7
28%
7.1
0.7
9%
Between 61\u201390 days
2.1
0.8
38%
2.7
0.5
19%
Over 90 days
56.1
36 .1
64%
13.6
4.6
34%
Trade receivables subject to the IFRS 9
impairment model total
147. 5
42.4
29%
239.6
8.8
4%
Total
435.1
51.4
12%
669.7
18.2
3%
The expected credit loss provision of \u00a351.4 million (2023: \u00a318.2 million) in the table above primarily relates to the Energy Solutions business. The expected credit loss rates above are expressed as a percentage of the gross carrying amount of all of the Group\u2019s trade receivables and accrued income balances that are subject to the provision matrix method. The expected credit loss provision calculated for other financial assets of the Group was negligible. Credit and counterparty risk are disclosed in further detail in note 7.2.
Software and Software and
Customer- licences licences
related \u2013 internally \u2013 acquired Other
assets Brand
generated
(1)
separately
(1)
intangibles Goodwill Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cost and carrying amount:
At 1 January 2023
(2)
25 7.6
11.3
130.2
18.5
2.0
424.2
843.8
Additions at cost
\u2013
\u2013
7.7
2.2
\u2013
\u2013
9.9
Acquired in business combinations
5.0
\u2013
\u2013
\u2013
\u2013
6.0
11.0
Transfers from property, plant and equipment
(see note 3.1)
\u2013
\u2013
0.6
\u2013
\u2013
\u2013
0.6
Effect of changes in foreign exchange rates
(1.5)
\u2013
\u2013
(0.2)
\u2013
1.0
(0.7)
At 1 January 2024
(2)
261.1
11.3
138.5
20.5
2.0
431.2
864.6
Additions at cost
\u2013
\u2013
6.9
\u2013
\u2013
\u2013
6.9
Adjustment related to business combinations
(see note 5.1)
\u2013
\u2013
\u2013
\u2013
\u2013
(0.2)
(0.2)
Disposals
(211.1)
\u2013
\u2013
\u2013
\u2013
\u2013
(211.1)
Transfers between categories
\u2013
\u2013
0.7
(0.9)
0.2
\u2013
\u2013
Transfers from property, plant and equipment
(see note 3.1)
\u2013
\u2013
2.9
0.3
\u2013
\u2013
3.2
Effect of changes in foreign exchange rates
(2.8)
\u2013
\u2013
0 .1
(0 .1)
(1.4)
(4.2)
At 31 December 2024
47. 2
11.3
149.0
20.0
2 .1
429.6
659.2
Accumulated amortisation and impairment:
At 1 January 2023
(2)
170.6
6.8
86.5
11.7
1.7
\u2013
27 7.3
Charge for the year
17. 2
1.1
10.2
0.8
0 .1
\u2013
29.4
Impairment
31.5
3.0
11.1
\u2013
\u2013
14.5
60.1
Effect of changes in foreign exchange rates
(0.3)
\u2013
\u2013
(0 .1)
\u2013
\u2013
(0.4)
At 1 January 2024
(2)
219.0
10.9
107. 8
12.4
1.8
14.5
366.4
Charge for the year
6.7
0.2
8.7
1.4
\u2013
\u2013
17. 0
Disposals
(209.2)
\u2013
\u2013
\u2013
\u2013
\u2013
(209.2)
Impairment
\u2013
0.2
2.4
\u2013
\u2013
\u2013
2.6
Transfers between categories
\u2013
\u2013
0.3
(0.3)
\u2013
\u2013
\u2013
Effect of changes in foreign exchange rates
(0.8)
\u2013
\u2013
\u2013
\u2013
\u2013
(0.8)
At 31 December 2024
15.7
11.3
119.2
13.5
1.8
14.5
176.0
Net book value:
At 31 December 2023
42.1
0.4
30.7
8 .1
0.2
416.7
498.2
At 31 December 2024
31.5
\u2013
29.8
6.5
0.3
415.1
483.2
(1) Comparative amounts have been re-presented to separate software and licences between those internally generated and those acquired separately.
(2) Impairments previously presented through cost on non-amortising assets have been re-presented through accumulated amortisation and impairment.
The Opus Energy brand was acquired as part of the Opus Energy acquisition in February 2017. During the year the Opus Energy brand was fully impaired due to the sale of the majority of the non-core SME energy supply customer meter points to EDF Energy Customers Limited and the commencement of a restructuring of the Opus Energy business to reflect its reduced customer base and the Group\u2019s focus on core industrial and commercial (I&C) customers and renewables services. See note 2.7 for further details of this transaction. A \u00a32.4 million impairment in respect of software specific to the Opus Energy business has been recognised in the current year as it is no longer considered to have future value following the Opus Energy transaction and the related restructuring of the Opus Energy business. See note 2.7 for further details. See note 2.4 for a summary of impairment charges recognised on non-current assets during the year. ", "dimensions": { "concept": "ifrs-full:DisclosureOfImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-580": { "value": "2.4 Impairment review of fixed assets and goodwill Accounting policy Goodwill is tested for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each of the Group\u2019s cash-generating units (CGUs) or group of CGUs expected to benefit from the synergies of the business combination. A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. CGUs are identified consistently from period to period unless there is a change in the period that would impact the Group\u2019s CGUs. The Group\u2019s CGUs are reassessed should any such changes occur. The Group reviews its fixed assets (and, where appropriate, groups of assets combined into a CGU) whenever there is an indication that an impairment loss may have been suffered. The Group assesses the existence of indicators of impairment at the end of each reporting period. If an indication of potential impairment exists, the recoverable amount of the asset or CGU in question is assessed with reference to the present value of the future cash flows expected to be derived from the continuing use of the asset or CGU (value in use), or the expected price that would be received if the asset or CGU were sold to a market participant (fair value less costs of disposal). The recoverable amount of an asset or CGU is the higher of its fair value less costs of disposal (FVLCD) and its value in use (ViU). The initial assessment of the recoverable amount is normally based on ViU. The assessment of future cash flows is based on the approved long-term forecasts that support the Board\u2019s strategic planning process and includes all expected costs necessary to generate the cash inflows from the CGU\u2019s assets in their current state and condition, including an allocation of centrally managed costs. Future cash flows include, where relevant, contracted cash flows arising from the Group\u2019s forward hedging activities and as a result the carrying amount of each CGU includes the fair value of those hedges. Assessments of future cash flows consider relevant environmental and climate change factors. In particular, macro-economic, commodity price and third-party cost assumptions reflect considerations in respect of the impact of climate change, growth in renewable technologies, electrification and the impact of relevant policies on longer-term supply and demand profiles. As required by IAS 36, the additional value that could be obtained from enhancing the Group\u2019s assets and the potential benefit of any future restructuring or reorganisation that the Group is not yet committed to, is not reflected in the ViU calculation. In determining ViU, the estimated future cash flows are discounted to present value using a pre-tax nominal discount rate reflecting the specific risks attributable to the asset or CGU in question. If the recoverable amount is less than the carrying amount in the Consolidated financial statements, an impairment charge is recognised to reduce the carrying amount of the asset or CGU to the estimated recoverable amount. Any impairment loss is recognised immediately in the Consolidated income statement. Individual assets are considered for impairment where possible. If individual assets do not generate cash inflows that are largely independent, the recoverable amount is determined for the CGU to which the asset belongs. Where possible, corporate assets are allocated to an individual CGU on a reasonable and consistent basis. Where corporate assets cannot be allocated to an individual CGU on a reasonable and consistent basis, they are included in the carrying amount of the smallest group of CGUs to which they can be allocated on a reasonable and consistent basis. An impairment loss relating to a CGU is allocated first to the carrying amount of any goodwill allocated to the CGU and then to the other assets pro-rata on the basis of the carrying amount of each asset. When allocating an impairment loss to the other assets in the CGU, if the recoverable amount of an individual asset within that CGU is determinable, the impairment loss allocated to the individual asset is limited to reducing the asset\u2019s carrying value to its individual recoverable amount. If this results in the impairment loss allocated to an asset being less than its pro-rata share, the excess is allocated on a pro-rata basis to the remaining assets in the CGU. An impairment loss recognised for goodwill is not reversed in a subsequent period. Non-financial assets other than goodwill that have an impairment loss recognised are reviewed in subsequent reporting periods for possible reversal of the impairment. Where an impairment reversal is identified, this is reversed immediately in the Consolidated income statement. The table below details the Group\u2019s reportable segments, the CGUs within those segments and the value of any goodwill allocated to them. See note 5.2 for further details on goodwill.
CGUs
As at 31 December 2024
Goodwill
Segment name
CGUs contained within segment
\u00a3m
Pellet Production
Pellet Operations
175.6
Biomass Generation
Drax Power Station
\u2013
Flexible Generation
Lanark
11.3
Galloway
4 0.1
Cruachan
26.9
Hirwaun
\u2013
Millbrook
\u2013
Progress
\u2013
Daldowie
\u2013
Energy Solutions
Drax Energy Solutions
161.2
Opus Energy
\u2013
415.1
In respect of the Pellet Production segment, the smallest group of assets that generate independent cash inflows is the Pellet
Production business as a whole, known as the Pellet Operations CGU. This is due to the output of the individual pellet plants being
combined and used interchangeably to fulfil customer contracts.
In respect of the Biomass Generation and Flexible Generation segments, the Group generally considers the smallest groups of assets
that generate independent cash inflows to be the individual sites that share common infrastructure and control functions. The Open
Cycle Gas Turbine (OCGT) assets were previously considered as one CGU. Construction of the OCGT assets is expected to complete in
2025. With updated decisions being made about how the OCGT assets will operate once they commence commercial generation, the
OCGT assets are now considered to be separate CGUs \u2013 Hirwaun, Progress and Millbrook \u2013 due to having significant independence
around the decisions, activities and resulting cash inflows. There are no other changes to any of the Biomass Generation or Flexible
Generation CGUs from the prior year.
In respect of the Energy Solutions segment, the smallest groups of assets that generate independent cash inflows are the operating
entities within the business, Drax Energy Solutions and Opus Energy.
The Innovation, capital projects and other segment does not have any external cash inflows and therefore does not meet the
definition of a CGU. However, as explained above, corporate assets are considered for impairment individually where possible or
as part of a CGU, and relevant centrally managed costs are allocated to each CGU on a reasonable and consistent basis.
Assessment of indicators of impairment for CGUs to which no goodwill is allocated
Full impairment reviews were performed on all CGUs to which goodwill had been allocated (see Impairment review section below).
For CGUs to which no goodwill is allocated, impairment reviews are only performed if impairment indicators are identified.
In determining whether impairment indicators existed in respect of these CGUs, the Group considered changes in market prices
for commodities, foreign currency exchange rates, changes in macro-economic conditions, potential impacts of climate change and
regulatory requirements since the previous reporting date, and their potential impact on the Group\u2019s long-term planning models and
future forecast cash flows. Given the relatively stable macro-economic conditions and exchange rates compared to the prior year end,
as well as falling interest rates, these are not considered to be impairment indicators.
The market price of certain commodities (e.g. power and gas) have fallen since the prior year but still remain above historical averages.
This was not an impairment indicator for the Drax Power Station, Hirwaun, Millbrook and Progress CGUs as they are less sensitive to
power price changes due to certain generation income being under a CfD, or generation activities being more dependent on the
spread between gas and power prices. Further, a high proportion of their income is not linked to power prices, such as renewable
certificates, system support and ancillary services. The Drax Power Station CGU also has a high hedged power position. Gas prices
are a key input cost for Daldowie and therefore this CGU has benefited as these prices have reduced during 2024.
Consideration was also given to assumptions regarding biomass generation and biomass prices post March 2027, when current
subsidies for biomass generation at Drax Power Station are due to end, and whether that was an indicator of impairment (see the
Principal risks and uncertainties section starting on page 70 for further details). Previously the carrying amount of the Drax Power
Station CGU was supported by pre-2027 cash flows. As there is now one less year of pre-2027 cash flows compared to the prior year
this was considered to be an impairment indicator. Heads of terms have been agreed with the UK Government for a proposed low-
carbon dispatchable CfD agreement for the period April 2027 to March 2031 (see note 2.12 for further details). However these heads
of terms are non-binding and therefore there remains some uncertainty over the cash flows post 2027. Accordingly a full impairment
review of the Drax Power Station CGU has been performed.
There were no impairment indicators present for the Hirwaun, Millbrook, Progress or Daldowie CGUs and accordingly no impairment
review was performed for these CGUs in the current year.
As part of the Opus Energy sale of meter points and restructuring, the non-current assets in the Opus Energy CGU were either
disposed of or impaired to \u00a3nil, with the exception of Opus Energy House (see note 2.7 for further details). Opus Energy House
is recognised at its recoverable amount. As a result, a full impairment review was not required for the Opus Energy CGU.
Impairment review
For the purpose of impairment reviews the recoverable amounts of the CGUs, or groups of CGUs, are measured based on ViU
calculations using the Group\u2019s established planning models. These calculations depend on a broad range of assumptions, the most
significant of which are outlined below for each CGU, or group of CGUs, to which an impairment test has been performed in the
current year. The bases of these estimates are outlined below.
Significant assumptions for value
CGUs
in use calculation
Management\u2019s bases for determining estimates used in value in use calculation
Pellet Operations
\u2013 Production costs
 \u2013 Future production costs are estimated based on a combination of current and
\u2013 Production volumes historical costs, inflation expectations and maintenance/operating assumptions
\u2013 Sales prices \u2013 Production volumes are estimated based on a combination of the capacity of
\u2013 Discount rate the plant, current and historical volumes produced, planned and unplanned
downtime provisions, and fibre availability
\u2013 Sales prices are estimated based on contractual sales agreements and an
assumed market price after current contracts expire based on third-party
market forecasts and current contract negotiations
\u2013 See below for details of the basis used to estimate discount rates
Drax Power Station, \u2013 Power prices \u2013 Power revenue is derived from hedged power sales, future wholesale energy
Lanark, Galloway \u2013 Post-2027 biomass support price estimates and an assumption of additional value added through the
and Cruachan mechanism (Drax Power balancing market and optimisation
Station only) \u2013 Future wholesale energy price estimates are based on market traded power
\u2013 Fuel cost (Drax Power prices for around three years (the period they are liquid), gas market prices as a
Station only) proxy for power for another two years, then the Group\u2019s long-term power price
\u2013 Ancillary income forecast, which is prepared using externally provided gas price forecasts and
\u2013 Volume of generation demand inputs
(excluding Cruachan) \u2013 Post-2027 biomass generation value is based on the heads of terms agreed with
\u2013 Discount rate UK Government for a proposed low carbon dispatchable CfD agreement for the
period April 2027 to March 2031 and a similar level of value continuing to 2039
\u2013 Fuel costs are estimated based on contractual purchase agreements and an
assumed market price after current contracts expire based on third-party
market forecasts and current contract negotiations
\u2013 Ancillary income assumptions are based on past performance and current
agreed prices with National Grid
\u2013 Volume of generation for the run-of-river hydro assets is derived from historical
rainfall averages. Volume of generation for Drax Power Station is based on
biomass prices and availability, renewable support scheme terms and power
price forecasts
\u2013 See below for details of the basis used to estimate discount rates
Drax Energy \u2013 Customer margins \u2013 Customer margins are estimated based on current contracted prices and on
Solutions \u2013 Supply volumes current and previously achieved profitability
\u2013 Collection rates \u2013 The expectation of future organic supply volumes is based on past performance
\u2013 Third-party cost estimates and management\u2019s expectations of market developments
\u2013 Renewables services \u2013 Collection rates are estimated based on historical data and adjusted for
growth rates expected changes in future circumstances
\u2013 Discount rate \u2013 Third-party cost estimates are based on a combination of externally published
rates, management analysis of key market input assumptions, and forecasts
from external experts
\u2013 Renewables services growth is based on assumptions about the growth of
relevant markets, such as electric vehicles
\u2013 See below for details of the basis used to estimate discount rates
For the Drax Energy Solutions CGU, management has projected detailed cash flows based on a period of five years, with cash flows
beyond the five-year period taken into perpetuity using a long-term growth rate of 2%. For all other CGUs, management has projected
detailed cash flows based on a period of 15 years. Whilst this is longer than the five-year period specified by IAS 36, and the period the
Group assesses viability over in the Viability statement, it aligns with the Group\u2019s long-term strategic planning and takes into account
future structural changes forecast within the generation and pellet production industries, as well as expected growth in the biomass
industry. These longer-term structural changes are mainly linked to climate change and the impact of changing weather patterns
(including increased rain fall from storms and drier summer months for the run-of-river hydro CGUs and the impact on plant downtime
and supply chains due to extreme weather events for the Pellet Operations and Drax Power Station CGUs), the impact of
decarbonisation and the transition to more renewable forms of energy and net zero, the impact of subsidy and support regimes, and
the impact of repairs and maintenance expenditure which is not uniform across the lives of assets. Using a period of only five years for
detailed cash flow forecasts could materially overstate or understate the ViU of these CGUs as the impact of these factors in periods
after five years can be significant. The Pellet Operations CGU also has long term contracts that can typically be in excess of 10 years
which further supports using a period greater than five years.
Where possible, for relevant commodities, forecasts are based on either contracted prices, particularly for the Pellet Operations CGU
where the Group has a number of longer-term contracts to support the prices used, or observable market curves. Beyond the liquid
portion of forward curves, internally constructed price curves are benchmarked against third-party market analysis to validate the
reasonableness of the assumptions used. Management continually reassesses forecasting accuracy, taking into account changes in
circumstances and events that could not reasonably be foreseen between the date of the forecast and the forecast period. These
reviews support the accuracy of management\u2019s forecasts. This supports the use of detailed forecast periods of longer than five years.
Where management has projected detailed cash flows based on a period of 15 years, other than for Drax Power Station, cash flows
beyond the 15-year period are taken into perpetuity using a long-term growth rate of 2%. The Drax Power Station CGU assumes cash
flows to the end of 2039 in line with the assumed end of station life. The long-term growth rate is based on prudent expectations of
market share and profitability along with more general macro-economic factors which were obtained from the Group\u2019s established
planning model along with external macro-economic forecasts. The long-term growth rate does not exceed the relevant long-term
average growth rate for each of the industries in which the Group operates.
The discount rates used for each CGU are calculated by third-party experts and reflect the weighted average cost of capital derived
using the Capital Asset Pricing Model (CAPM). The estimations use a risk-free rate based on Government bonds, market participant
capital structures and beta estimates adjusted for the specific circumstances and risk factors affecting the industry and markets in
which the CGU operates (taking into account relevant peer data sets). This calculation uses the relevant tax rates to calculate a pre-tax
discount rate.
Further details on the assessments for each group of CGUs as well as sensitivities for reasonably possible changes in key assumptions
at the date of the impairment test are given below. Where reasonably possible changes would result in a material adjustment to the
carrying value, these are disclosed as a key source of estimation uncertainty.
The carrying amount, length of detailed cash flows, pre-tax discount rate and the perpetuity growth rate used, where applicable,
applied to each CGU are set out in the table below:
Carrying
amount
including Length of
allocated detailed Pre-tax
goodwill cash flows discount Perpetuity
CGU \u00a3m \u00a3m rate growth rate
Pellet Operations
1,072.4
15 years
8.9%
2.0%
Drax Power Station
1,071.3
15 years
16.8%
n/a
Drax Energy Solutions
175.5
5 years
9.8%
2.0%
Lanark
45.4
15 years
8.3%
2.0%
Galloway
168.8
15 years
8.3%
2.0%
Cruachan
278.9
15 years
8.3%
2.0%
Pellet Operations
The Pellet Operations CGU is principally engaged in the production and sale of biomass pellets.
The ViU for the Pellet Operations CGU was in excess of its carrying amount. For the Pellet Operations CGU, a reasonably possible
increase in the discount rate to 9.7% combined with an increase in production costs of $7 per tonne and a 7% decrease in the
production volumes in the ViU calculation, would result in a \u00a3973.0 million reduction in headroom, but would not result in an
impairment. Whilst reasonably possible changes in assumptions would reduce the headroom, they would not result in the recoverable
amount being lower than the carrying value. As such the Group does not believe that any reasonably possible changes in the key
assumptions would result in an adjustment to the carrying value of the Pellet Operations CGU.
Drax Power Station
The Drax Power Station CGU is principally focused on renewable biomass electricity generation. Given an impairment indicator
was identified (see above for further details) a full impairment assessment has been performed (an assessment was not required
to be performed in the prior year due to no indicators of impairment being identified). The cash flows post March 2027 reflect
management\u2019s best estimate of earnings based on the heads of terms of the low-carbon dispatchable CfD agreement with the UK
Government (see note 2.12 for further details) to 2031 and the expected income beyond this date to the cessation of operations in line
with the current end of station life of 2039. No value has currently been included in the ViU calculation for disposing of the site
and assets in 2039 due to the uncertainty over the value that could be achieved as a result of a lack of comparable transactions for
a large-scale generation site with a live grid connection. If a value was included this would further increase the headroom.
The ViU of the Drax Power Station CGU was in excess of its carrying amount. A reasonably possible \u00a315/MWh decrease in power
prices combined with a 10% increase in the forced outage rate, an increase in the pre-tax discount rate from 16.8% to 48.5%
(equivalent to an increase in the post-tax discount rate from 6.8% to 8.0%), and operations to cease in March 2027 due to no low-
carbon dispatchable CfD agreement being confirmed, would result in an impairment of \u00a3515.5 million. A reasonably possible \u00a315/MWh
decrease in power prices combined with a 10% increase in the forced outage rate, an increase in the pre-tax discount rate from 16.8%
to 29.8% (equivalent to an increase in the post-tax discount rate from 6.8% to 8.0%), and operations to cease in March 2031 at the end
of the proposed low-carbon dispatchable CfD agreement, would result in an impairment of \u00a3321.4 million. Accordingly, reasonably
possible changes in assumptions within the ViU calculation could result in a material adjustment to the carrying value of the Drax
Power Station CGU. Therefore, the assumptions in the ViU calculation of the Drax Power Station CGU have been identified as a key
source of estimation uncertainty.
Whilst no impairment has been recognised in relation to the Drax Power Station CGU as at 31 December 2024, if any eventual CfD
agreement was to be agreed at a lower value, or not agreed at all and the power station was to cease operations in 2027, it is expected
there could be a significant impairment required to reduce the carrying value of the Drax Power Station CGU. Even if cash flows in the
period April 2027 to March 2031 are consistent with the agreed heads of terms, the risk of an impairment needing to be recognised on
the Drax Power Station CGU increases in future periods as the amount of higher value, pre-April 2027 cash flows become realised and
will therefore not be included in future cash flow forecasts.
The recoverable amount of a CGU is assessed based on the higher of ViU and FVLCD. The impairment assessment for the Drax Power
Station CGU has been performed on a ViU basis. The ViU basis is required to be performed based on the current condition of an asset
and as such cash flows related to improving or enhancing an asset\u2019s performance are required to be excluded. For the Drax Power
Station CGU, cash flows relating to UK BECCS, or other alternative enhancements such as data centres, have been excluded as these
cash flows are the result of significant capital expenditure to enhance the current Drax Power Station assets. Had the ViU basis
indicated an impairment to the carrying value, a FVLCD calculation would have been performed. The FVLCD basis is calculated based
on what a market participant would pay for an asset, less any disposal costs. If a market participant would attribute value to the
anticipated cash flow impact of improving or enhancing an asset\u2019s performance (for example UK BECCS or other opportunities to
create value from alternative uses for a large-scale generation site with a live grid connection, such as data centres) these are included
in a FVLCD calculation. As such, for the Drax Power Station CGU, FVLCD may be higher than ViU.
Drax Energy Solutions
This segment is principally focused on renewable electricity sales to industrial and commercial (I&C) customers and providing other
renewables services, and therefore consideration of climate and environmental impacts are already a key feature of the business model.
The ViU of the Drax Energy Solutions CGU was in excess of its carrying amount. A reasonably possible increase in the pre-tax discount
rate to 10.6% combined with factoring in a reduction in gross margin growth from 7.5% to 2.0% from 2027 to 2029, 0% perpetuity
growth rate and a 10% increase in bad debt, would reduce the headroom by \u00a3227.5 million. This would not result in an impairment.
Whilst reasonably possible changes in assumptions would reduce the headroom, they would not result in the recoverable amounts
being lower than the carrying value. As such the Group does not believe that any reasonably possible changes in the key assumptions
would result in an adjustment to the carrying value of the Drax Energy Solutions CGU.
Lanark, Galloway and Cruachan
These CGUs are engaged in run-of-river hydro and pumped storage power generation.
The ViU for all three CGUs (Lanark, Galloway and Cruachan) were in excess of their carrying amounts. A reasonably possible 10%
power price reduction combined with an increase in the pre-tax discount rate to 8.9%, a three-month historically low generation
period and a two-month unit outage would reduce the headroom in the Lanark CGU by \u00a328.1 million. This would not result in an
impairment. A reasonably possible 10% power price reduction in the Cruachan CGU combined with an increase in the pre-tax discount
rate to 8.9%, a three-month historically low generation, a two-month unit outage and removal of value assumed from market volatility
would reduce the headroom by \u00a3660.1 million. This would not result in an impairment. Whilst reasonably possible changes in
assumptions for the Lanark and Cruachan CGUs would reduce the headroom, they would not result in the recoverable amount being
lower than the carrying values. As such the Group does not believe that any reasonably possible changes in the key assumptions
would result in an adjustment to the carrying values of either the Lanark or Cruachan CGUs.
For the Galloway CGU, a reasonably possible 10% power price reduction combined with an increase in the pre-tax discount rate to
8.9%, a three-month historically low generation period and a two-month unit outage would result in an impairment of \u00a310.2 million.
The Galloway CGU is sensitive to reasonably possible changes in the key assumptions. Whilst reasonably possible changes to
assumptions would result in an adjustment to the carrying value of the Galloway CGU, they would not result in a material adjustment
to its carrying value and so it is not considered a key source of estimation uncertainty as defined by IAS 1.
Daldowie, Hirwaun, Millbrook and Progress
For the Daldowie, Hirwaun, Millbrook and Progress CGUs, there were no impairment indicators identified and none of these CGUs
have allocated goodwill. Therefore, ViU calculations to determine the recoverable amounts of these CGUs were not required.
Impairment of non-current assets
During the current year, the Group has sold a number of non-core small and medium-sized enterprise (SME) energy supply customer
meter points to EDF Energy Customers Limited. The Group has also commenced a restructuring of the Opus Energy business to
reflect its reduced customer base and the Group\u2019s focus on core I&C customers and renewables services. The transaction and the
resulting strategic decision to restructure the Opus Energy business has resulted in a number of non-current asset impairments.
The carrying value of the Opus Energy brand of \u00a30.2 million and the tangible and intangible assets of \u00a32.4 million (excluding the
Opus Energy House) were impaired as a direct result of the transaction and strategic restructuring to focus on the core I&C customer
and renewables services. These amounts were classified as exceptional. See note 2.7 for further details of this transaction.
A \u00a32.8 million impairment was recognised in respect of the office building used by Opus Energy (Opus Energy House). This decrease
in value predominantly reflects worsening market conditions for offices in the local area rather than being a consequence of the
transaction and restructuring and as a result has not been classified as exceptional.
The Group has recognised an impairment of \u00a34.6 million, being the full value of its equity accounted investment in C-Capture Limited.
Other impairments of non-current assets in 2024 totalled \u00a34.4 million and were charged to the Consolidated income statement.
In 2023, the recoverable amount of the Opus Energy House property was assessed and an impairment charge of \u00a38.9 million
was recognised to reduce the carrying value to its recoverable amount of \u00a36.0 million. The ViU calculation of the Opus Energy CGU
resulted in recognising a full impairment of the \u00a314.5 million allocated goodwill and a further \u00a345.7 million impairment charge across
the remaining non-current assets. The total impairment charge, recognised as exceptional in the Consolidated income statement,
in relation to the non-current assets in the Opus Energy CGU was \u00a369.1 million. See note 2.7.
Year ended 31 December 2024
Year ended 31 December 2023
Opus Energy
transaction and
related
restructuring Other assets Total Opus Energy Other assets Total
Impairment \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Investment in associate
\u2013
4.6
4.6
\u2013
\u2013
\u2013
Goodwill \u2013 accumulated amortisation and
impairment
\u2013
\u2013
\u2013
14.5
\u2013
14.5
Freehold land and buildings \u2013 accumulated
depreciation and impairment
\u2013
2.8
2.8
8.9
\u2013
8.9
Property, plant and equipment \u2013 accumulated
depreciation and impairment
\u2013
\u2013
\u2013
0 .1
\u2013
0 .1
Plant spares \u2013 accumulated depreciation
and impairment
\u2013
0 .1
0.1
\u2013
\u2013
\u2013
Assets under the course of construction \u2013
accumulated depreciation and impairment
\u2013
3.2
3.2
\u2013
1.7
1.7
Right of use assets \u2013 accumulated depreciation
and impairment
\u2013
0.1
0.1
\u2013
\u2013
\u2013
Intangible assets \u2013 accumulated amortisation
and impairment:
Customer-related assets
\u2013
\u2013
\u2013
31.5
\u2013
31.5
Brand assets
0.2
\u2013
0.2
3.0
\u2013
3.0
Software and licences
2.4
\u2013
2.4
11.1
\u2013
11.1
Other receivables
\u2013
1.0
1.0
\u2013
\u2013
\u2013
Total impairment of non-current assets
2.6
11.8
14.4
69.1
1.7
70.8
The total non-current asset impairment charge for the year of \u00a314.4 million (2023: \u00a370.8 million) is recognised in the impairment of
non-current assets line in the Consolidated income statement. The \u00a32.6 million of impairment directly relating to the Opus Energy
transaction and related restructuring was treated as an exceptional item (2023: the \u00a369.1 million relating to the impairment of Opus
Energy was treated as an exceptional item). See note 2.7 for further details.
5.1 Business combinations Accounting policy Business combinations are transactions or other events in which the Group obtains control of one or more businesses. Business combinations are accounted for using the acquisition method. Acquisitions of businesses are recognised at the point the Group obtains control of the acquiree (the acquisition date). The consideration transferred, the identifiable assets acquired, and the liabilities assumed are measured at their fair value on the acquisition date. Amounts relating to the settlement of pre-existing relationships are recognised in the Consolidated income statement with a corresponding adjustment to the consideration transferred to reflect the fact that part of the consideration is deemed to relate to the settlement of the pre-existing relationship. From the acquisition date, the assets and liabilities of acquired businesses are recognised in the Consolidated balance sheet, and the revenues and profits or losses of the acquired businesses are recognised in the Consolidated income statement. Acquisition-related costs are recognised as an expense in the Consolidated income statement in the period that they are incurred. Goodwill is measured as the excess of the: \u2013 consideration transferred; less \u2013 amount of any non-controlling interest in the acquired entity; and \u2013 acquisition date fair value of any previous equity interest in the acquired entity; over the fair value of the identifiable net assets acquired. Bonuses paid to employees of the acquired entity that are dependent upon the employee remaining in continuous employment post acquisition are treated as post-acquisition remuneration. Acquisition of BMM On 31 August 2023, Drax Energy Solutions Limited, a wholly-owned subsidiary of the Group, acquired 100% of the issued share capital of BMM Energy Solutions Limited (BMM). BMM specialises in the installation and maintenance of electric vehicle charge points and has been the Group\u2019s primary installation partner since 2018. The acquisition strengthened the Group\u2019s end-to-end electric vehicle charging proposition to UK businesses. The acquisition accounting has been finalised in the current financial year following the one-year measurement period from the acquisition date. Total consideration payable was \u00a38.8 million reflecting a \u00a30.2 million adjustment to the consideration recognised in the prior year. This resulted in the final goodwill reducing by \u00a30.2 million to \u00a35.8 million. There were no changes to the initial identifiable net assets of \u00a33.0 million. 5.2 Goodwill and intangible assets Intangible assets are not physical in nature but are identifiable from other assets. Goodwill arises on the acquisition of a business when the consideration paid exceeds the fair value of the identifiable net assets acquired. Intangible assets other than goodwill can be acquired in business combinations, acquired separately or internally generated. Accounting policy Goodwill is measured as the excess of the: \u2013 consideration transferred; less \u2013 amount of any non-controlling interest in the acquired entity; and \u2013 acquisition date fair value of any previous equity interest in the acquired entity; over the fair value of the identifiable net assets acquired. Goodwill arising on the acquisition of a foreign operation is treated as an asset of that operation and therefore denominated in the functional currency of the operation to which it is allocated. Goodwill denominated in a foreign currency is subsequently translated at the rate prevailing at each reporting date. Foreign exchange differences arising on retranslation are recognised in the Consolidated statement of comprehensive income. Goodwill is allocated to the cash-generating units (CGUs), or groups of CGUs, that are expected to benefit from the synergies of the acquisition. If one or more CGUs, or group of CGUs, to which goodwill is allocated are restructured, then the goodwill is reallocated to the CGUs impacted by the restructure. Goodwill is considered to have an indefinite useful life, is not amortised, and is assessed annually for impairment (see note 2.4 for further details). Any impairment charge is recognised against the carrying amount of goodwill in accumulated amortisation and impairment. Intangible assets acquired in business combinations are measured at fair value on the acquisition date. Other intangible assets are measured initially at cost. Cost comprises the purchase price (net of any discount or rebate) and any directly attributable costs of preparing the asset for use in the manner intended by management. The carrying amounts of intangible assets are assessed for indicators of impairment at each reporting date. The Group\u2019s policy is to recognise an impairment charge through accumulated amortisation and impairment . Intangible assets are amortised over their anticipated useful economic lives (UELs), which are reviewed at least at each financial year end. When reviewing UELs the assessment takes into account regulatory changes, climate change, and commercial and technological changes. Any changes to estimated UELs are applied prospectively. During the prior year this review resulted in a change to the UELs of the Opus Energy customer-related asset and brand asset to December 2024 to reflect the estimated period over which the value from these assets was expected to be realised. During the current year these assets were fully impaired as part of the Opus Energy transaction. See note 2.7 for further details.
Average UEL
Method of amortisation (years)
At 31 December 2024
Customer-related assets:
Pinnacle
Straight line
6
BMM
Straight line
8
Other
Computer software and licences:
Straight line
9
Internally generated
Straight line
3
Acquired separately
Straight line
8
Other intangibles
Straight line
1
Carrying amounts are assessed for indicators of impairment at each reporting date. The customer-related assets are attributable to the Pellet Operations CGU following the acquisition of Pinnacle and the Drax Energy Solutions CGU following the acquisition of BMM. During the current year the Opus Energy CGU customer-related asset was disposed of and the brand asset impaired to \u00a3nil net book value (see below for further details). Details of the impairment assessments relating to these CGUs are included in note 2.4.
Software and Software and
Customer- licences licences
related \u2013 internally \u2013 acquired Other
assets Brand
generated
(1)
separately
(1)
intangibles Goodwill Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cost and carrying amount:
At 1 January 2023
(2)
25 7.6
11.3
130.2
18.5
2.0
424.2
843.8
Additions at cost
\u2013
\u2013
7.7
2.2
\u2013
\u2013
9.9
Acquired in business combinations
5.0
\u2013
\u2013
\u2013
\u2013
6.0
11.0
Transfers from property, plant and equipment
(see note 3.1)
\u2013
\u2013
0.6
\u2013
\u2013
\u2013
0.6
Effect of changes in foreign exchange rates
(1.5)
\u2013
\u2013
(0.2)
\u2013
1.0
(0.7)
At 1 January 2024
(2)
261.1
11.3
138.5
20.5
2.0
431.2
864.6
Additions at cost
\u2013
\u2013
6.9
\u2013
\u2013
\u2013
6.9
Adjustment related to business combinations
(see note 5.1)
\u2013
\u2013
\u2013
\u2013
\u2013
(0.2)
(0.2)
Disposals
(211.1)
\u2013
\u2013
\u2013
\u2013
\u2013
(211.1)
Transfers between categories
\u2013
\u2013
0.7
(0.9)
0.2
\u2013
\u2013
Transfers from property, plant and equipment
(see note 3.1)
\u2013
\u2013
2.9
0.3
\u2013
\u2013
3.2
Effect of changes in foreign exchange rates
(2.8)
\u2013
\u2013
0 .1
(0 .1)
(1.4)
(4.2)
At 31 December 2024
47. 2
11.3
149.0
20.0
2 .1
429.6
659.2
Accumulated amortisation and impairment:
At 1 January 2023
(2)
170.6
6.8
86.5
11.7
1.7
\u2013
27 7.3
Charge for the year
17. 2
1.1
10.2
0.8
0 .1
\u2013
29.4
Impairment
31.5
3.0
11.1
\u2013
\u2013
14.5
60.1
Effect of changes in foreign exchange rates
(0.3)
\u2013
\u2013
(0 .1)
\u2013
\u2013
(0.4)
At 1 January 2024
(2)
219.0
10.9
107. 8
12.4
1.8
14.5
366.4
Charge for the year
6.7
0.2
8.7
1.4
\u2013
\u2013
17. 0
Disposals
(209.2)
\u2013
\u2013
\u2013
\u2013
\u2013
(209.2)
Impairment
\u2013
0.2
2.4
\u2013
\u2013
\u2013
2.6
Transfers between categories
\u2013
\u2013
0.3
(0.3)
\u2013
\u2013
\u2013
Effect of changes in foreign exchange rates
(0.8)
\u2013
\u2013
\u2013
\u2013
\u2013
(0.8)
At 31 December 2024
15.7
11.3
119.2
13.5
1.8
14.5
176.0
Net book value:
At 31 December 2023
42.1
0.4
30.7
8 .1
0.2
416.7
498.2
At 31 December 2024
31.5
\u2013
29.8
6.5
0.3
415.1
483.2
(1) Comparative amounts have been re-presented to separate software and licences between those internally generated and those acquired separately. (2) Impairments previously presented through cost on non-amortising assets have been re-presented through accumulated amortisation and impairment.
The Group has incurred research and development expenditure of \u00a326.2 million (2023: \u00a322.8 million), which is included within
operating and administrative expenses in the Consolidated income statement.
Customer-related assets
Customer-related assets reflects the value of customer contracts acquired on the acquisition of Pinnacle in April 2021, the Pacific
BioEnergy sales contracts purchased by the Pellet Operations CGU in December 2021, and the customer-related asset acquired
on acquisition of BMM in August 2023.
The Opus Energy customer-related asset was disposed of as part of the sale of non-core small and medium-sized enterprise (SME)
meter points to EDF (see note 2.7 for further details).
The Pinnacle customer-related asset recognised on the acquisition of Pinnacle relates to the fair value of contracted cash flows from
Pinnacle\u2019s existing customer base. The Pinnacle customer-related asset is being amortised on a straight-line basis to reflect that the
majority of the value from the contracted cash flows is expected to be realised evenly over the contract terms, as most contracts
have similar end dates and contracts with earlier end dates are generally offset by increasing volumes on longer dated contracts.
At 31 December 2024, the Pinnacle asset had a carrying amount of \u00a321.7 million (2023: \u00a326.8 million) and a remaining UEL of
approximately six years (2023: seven years).
On acquisition of BMM in August 2023 a customer-related asset with a fair value of \u00a35.0 million was recognised reflecting the
estimated future cash flows from existing customer relationships that were not yet contracted. The fair value was estimated based
upon a multi-period excess earnings method. At 31 December 2024, the BMM customer-related asset had a carrying amount of
\u00a34.3 million (2023: \u00a34.8 million) and a remaining UEL of eight years (2023: nine years).
The other customer-related asset relates to pellet sales contracts acquired from Pacific BioEnergy on 31 December 2021. At
31 December 2024 this asset had a carrying amount of \u00a35.5 million (2023: \u00a36.7 million) and a remaining UEL of nine years (2023:
10 years).
Opus Energy brand
The Opus Energy brand was acquired as part of the Opus Energy acquisition in February 2017. During the year the Opus Energy
brand was fully impaired due to the sale of the majority of the non-core SME energy supply customer meter points to EDF Energy
Customers Limited and the commencement of a restructuring of the Opus Energy business to reflect its reduced customer base
and the Group\u2019s focus on core industrial and commercial (I&C) customers and renewables services. See note 2.7 for further details
of this transaction.
Computer software and licences
Additions in the year include those in the ordinary course of business, which principally reflect ongoing investment in business
systems to support the Energy Solutions segment. Software assets are amortised on a straight-line basis over their estimated UELs
ranging from 2\u201310 years.
As at 31 December 2024, computer software assets under the course of construction amounted to \u00a312.5 million (2023: \u00a319.7 million).
A \u00a32.4 million impairment in respect of software specific to the Opus Energy business has been recognised in the current year as
it is no longer considered to have future value following the Opus Energy transaction and the related restructuring of the Opus Energy
business. See note 2.7 for further details. See note 2.4 for a summary of impairment charges recognised on non-current assets during
the year.
Goodwill
The table below shows the carrying amount of goodwill by CGU:
Drax Energy Pellet
Solutions Lanark Galloway Cruachan Operations Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Goodwill
At 1 January 2024
161.4
11.3
4 0 .1
26.9
177.0
416.7
Acquisition adjustment (see note 5.1)
(0.2)
\u2013
\u2013
\u2013
\u2013
(0.2)
Effect of changes in foreign exchange rates
\u2013
\u2013
\u2013
\u2013
(1.4)
(1.4)
At 31 December 2024
161.2
11.3
4 0.1
26.9
175.6
415.1
", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-711": { "value": "Accounting policy Goodwill is tested for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each of the Group\u2019s cash-generating units (CGUs) or group of CGUs expected to benefit from the synergies of the business combination. A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. CGUs are identified consistently from period to period unless there is a change in the period that would impact the Group\u2019s CGUs. The Group\u2019s CGUs are reassessed should any such changes occur. The Group reviews its fixed assets (and, where appropriate, groups of assets combined into a CGU) whenever there is an indication that an impairment loss may have been suffered. The Group assesses the existence of indicators of impairment at the end of each reporting period. If an indication of potential impairment exists, the recoverable amount of the asset or CGU in question is assessed with reference to the present value of the future cash flows expected to be derived from the continuing use of the asset or CGU (value in use), or the expected price that would be received if the asset or CGU were sold to a market participant (fair value less costs of disposal). The recoverable amount of an asset or CGU is the higher of its fair value less costs of disposal (FVLCD) and its value in use (ViU). The initial assessment of the recoverable amount is normally based on ViU. The assessment of future cash flows is based on the approved long-term forecasts that support the Board\u2019s strategic planning process and includes all expected costs necessary to generate the cash inflows from the CGU\u2019s assets in their current state and condition, including an allocation of centrally managed costs. Future cash flows include, where relevant, contracted cash flows arising from the Group\u2019s forward hedging activities and as a result the carrying amount of each CGU includes the fair value of those hedges. Assessments of future cash flows consider relevant environmental and climate change factors. In particular, macro-economic, commodity price and third-party cost assumptions reflect considerations in respect of the impact of climate change, growth in renewable technologies, electrification and the impact of relevant policies on longer-term supply and demand profiles. As required by IAS 36, the additional value that could be obtained from enhancing the Group\u2019s assets and the potential benefit of any future restructuring or reorganisation that the Group is not yet committed to, is not reflected in the ViU calculation. In determining ViU, the estimated future cash flows are discounted to present value using a pre-tax nominal discount rate reflecting the specific risks attributable to the asset or CGU in question. If the recoverable amount is less than the carrying amount in the Consolidated financial statements, an impairment charge is recognised to reduce the carrying amount of the asset or CGU to the estimated recoverable amount. Any impairment loss is recognised immediately in the Consolidated income statement. Individual assets are considered for impairment where possible. If individual assets do not generate cash inflows that are largely independent, the recoverable amount is determined for the CGU to which the asset belongs. Where possible, corporate assets are allocated to an individual CGU on a reasonable and consistent basis. Where corporate assets cannot be allocated to an individual CGU on a reasonable and consistent basis, they are included in the carrying amount of the smallest group of CGUs to which they can be allocated on a reasonable and consistent basis. An impairment loss relating to a CGU is allocated first to the carrying amount of any goodwill allocated to the CGU and then to the other assets pro-rata on the basis of the carrying amount of each asset. When allocating an impairment loss to the other assets in the CGU, if the recoverable amount of an individual asset within that CGU is determinable, the impairment loss allocated to the individual asset is limited to reducing the asset\u2019s carrying value to its individual recoverable amount. If this results in the impairment loss allocated to an asset being less than its pro-rata share, the excess is allocated on a pro-rata basis to the remaining assets in the CGU. An impairment loss recognised for goodwill is not reversed in a subsequent period. Non-financial assets other than goodwill that have an impairment loss recognised are reviewed in subsequent reporting periods for possible reversal of the impairment. Where an impairment reversal is identified, this is reversed immediately in the Consolidated income statement. The table below details the Group\u2019s reportable segments, the CGUs within those segments and the value of any goodwill allocated to them. See note 5.2 for further details on goodwill. At each reporting date the Group reviews its property, plant and equipment to determine whether there is any indication that these assets may be impaired. The Group\u2019s accounting policy in respect of impairment, along with details of the impairment review conducted during the year are set out in note 2.4.
An impairment charge is recognised immediately if the net book value of an asset exceeds its recoverable amount, which is the
higher of an asset\u2019s value in use and its fair value less costs to sell. The Group\u2019s policy is to recognise an impairment charge through
accumulated depreciation and impairment if the asset will continue to be used or retained by the Group. Cost and any accumulated
depreciation and impairment are removed when an asset is disposed. Gains and losses on disposals are determined by comparing
proceeds with the asset\u2019s carrying amount.
Accounting policy The Group applies the impairment model in IFRS 9 to provide for expected credit losses on the Group\u2019s financial assets not measured at FVTPL, including trade receivables, accrued income, contract assets and other financial assets. The provision for impairment of trade receivables and accrued income (including contract assets) is measured at an amount equal to the lifetime expected credit loss. Contract assets relate to amounts for goods or services provided under customer contracts and, therefore, have substantially the same risk characteristics as trade receivables for the same types of contracts. For other financial assets, the Group recognises a lifetime expected credit loss provision when there has been a significant increase in credit risk since initial recognition. If the credit risk of the financial instrument has not increased significantly since initial recognition, the Group recognises a 12-month expected credit loss provision. The greatest concentration of credit risk exists in the Energy Solutions business. For all receivables in the current year, across all businesses, a provision matrix method has been adopted. For the small and medium-sized enterprise (SME) consumers within the Energy Solutions business, the risk is higher due to the wide range of customer characteristics within the portfolio. In the prior year, due to the loss provisioning for these customers being more complex a combined probability method that was more dynamic than the provision matrix method was applied. Due to the sale of the majority of the Group\u2019s non-core SME customer meter points and transfer of the related receivables balances to EDF (see note 2.7 for further details), the receivables balance and exposure to credit risk for these customers has significantly reduced compared to the prior year. As such the use of the combined probability method was not deemed appropriate and the provision matrix method has been applied to all customers. Under the Group\u2019s debt recovery strategy, a breach in terms could lead to the customer being disconnected or pursued legally for recovery of an outstanding balance. The Group considers a financial asset to be in default when the amount due from a debtor is unlikely to be received in full, or when contractual payments are 90 days past due. The Group writes off a financial asset when there is no realistic prospect of recovery and all attempts to recover the balance have been exhausted. An indication that all credit control activities have been exhausted is where the debt on an account is exclusively greater than 365 days past due and active recovery attempts have failed, or where there are known insolvency issues relating to the customer. The carrying amounts of intangible assets are assessed for indicators of impairment at each reporting date. The Group\u2019s policy is to recognise an impairment charge through accumulated amortisation and impairment . ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-669": { "value": "2.5 Net finance costs Net finance costs reflect expenses incurred in managing the capital structure (such as interest payable on borrowings) as well as foreign exchange gains and losses, the unwinding of discounts on provisions for reinstatement of the Group\u2019s sites at the end of their useful economic lives (see note 5.3), and interest on lease liabilities (see note 3.2). These are offset by interest income that the Group generates through use of short-term cash surpluses, for example through investment in money market funds, and interest income on the Group\u2019s defined benefit pension scheme surplus (see note 6.3). A reconciliation of net finance costs is shown in the table below:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Interest payable and similar charges:
Interest payable
(104.2)
(113.2)
Unwinding of discount on provisions (note 5.3)
(2.7)
(1.9)
Other financing charges
\u2013
(0 .1)
Total interest payable and similar charges included in Adjusted results
(106.9)
(115.2)
Interest receivable and similar gains:
Interest income on bank deposits
17.1
11.0
Net interest income on defined benefit pension surplus (note 6.3)
0.9
2 .1
Other interest income
0.4
\u2013
Gain on repurchase of loan notes (note 4.2)
1.7
\u2013
Total interest receivable and similar gains included in Adjusted results
20 .1
13.1
Foreign exchange losses included in Adjusted results
(9.4)
(14.3)
Net finance costs included in Adjusted results
(96.2)
(116.4)
Certain remeasurements on financing derivatives
(0.6)
4.6
Net finance costs included in Total results
(96.8)
(111.8)
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-642": { "value": "2.5 Net finance costs Net finance costs reflect expenses incurred in managing the capital structure (such as interest payable on borrowings) as well as foreign exchange gains and losses, the unwinding of discounts on provisions for reinstatement of the Group\u2019s sites at the end of their useful economic lives (see note 5.3), and interest on lease liabilities (see note 3.2). These are offset by interest income that the Group generates through use of short-term cash surpluses, for example through investment in money market funds, and interest income on the Group\u2019s defined benefit pension scheme surplus (see note 6.3). A reconciliation of net finance costs is shown in the table below:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Interest payable and similar charges:
Interest payable
(104.2)
(113.2)
Unwinding of discount on provisions (note 5.3)
(2.7)
(1.9)
Other financing charges
\u2013
(0 .1)
Total interest payable and similar charges included in Adjusted results
(106.9)
(115.2)
Interest receivable and similar gains:
Interest income on bank deposits
17.1
11.0
Net interest income on defined benefit pension surplus (note 6.3)
0.9
2 .1
Other interest income
0.4
\u2013
Gain on repurchase of loan notes (note 4.2)
1.7
\u2013
Total interest receivable and similar gains included in Adjusted results
20 .1
13.1
Foreign exchange losses included in Adjusted results
(9.4)
(14.3)
Net finance costs included in Adjusted results
(96.2)
(116.4)
Certain remeasurements on financing derivatives
(0.6)
4.6
Net finance costs included in Total results
(96.8)
(111.8)
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-678": { "value": "2.5 Net finance costs Net finance costs reflect expenses incurred in managing the capital structure (such as interest payable on borrowings) as well as foreign exchange gains and losses, the unwinding of discounts on provisions for reinstatement of the Group\u2019s sites at the end of their useful economic lives (see note 5.3), and interest on lease liabilities (see note 3.2). These are offset by interest income that the Group generates through use of short-term cash surpluses, for example through investment in money market funds, and interest income on the Group\u2019s defined benefit pension scheme surplus (see note 6.3). A reconciliation of net finance costs is shown in the table below:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Interest payable and similar charges:
Interest payable
(104.2)
(113.2)
Unwinding of discount on provisions (note 5.3)
(2.7)
(1.9)
Other financing charges
\u2013
(0 .1)
Total interest payable and similar charges included in Adjusted results
(106.9)
(115.2)
Interest receivable and similar gains:
Interest income on bank deposits
17.1
11.0
Net interest income on defined benefit pension surplus (note 6.3)
0.9
2 .1
Other interest income
0.4
\u2013
Gain on repurchase of loan notes (note 4.2)
1.7
\u2013
Total interest receivable and similar gains included in Adjusted results
20 .1
13.1
Foreign exchange losses included in Adjusted results
(9.4)
(14.3)
Net finance costs included in Adjusted results
(96.2)
(116.4)
Certain remeasurements on financing derivatives
(0.6)
4.6
Net finance costs included in Total results
(96.8)
(111.8)
Interest payable and similar charges is stated net of \u00a31.7 million (2 023: \u00a3 8 .1 million) of interest capitalised as part of the cost of qualifying assets in property, plant and equipment during the year (see note 3.1). These charges represent fees payable on deferred letters of credit that have been used specifically to finance the construction of the qualifying assets. Changes in the Group\u2019s financing structure during 2024 are described in note 4.2. Foreign exchange gains and losses in net finance costs arise on the retranslation of non-derivative balances denominated in foreign currencies to prevailing rates at the reporting date and gains and losses on derivative contracts hedging foreign exchange risk on borrowings. The Group has a number of intercompany loans denominated in the functional currencies of certain foreign subsidiaries, that are owed to a sterling functional currency entity. Due to the weakening of sterling during the year, this has resulted in a foreign exchange gain of \u00a31.3 million (2023: loss of \u00a317.0 million) on the retranslation of intercompany loans in the sterling functional currency entity. This gain (2023: loss) is recognised within the Consolidated income statement and within the foreign exchange gains or losses included in Adjusted results line in the table above. Conversely, within the net gain or loss on translating the net assets of the foreign subsidiaries into the Group\u2019s sterling presentational currency there is a foreign exchange loss (2023: gain) relating to the translation of the foreign subsidiaries\u2019 intercompany loans. This impacts the translation reserve with the movement recognised in other comprehensive income. ", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExpenseExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-655": { "value": "2.5 Net finance costs Net finance costs reflect expenses incurred in managing the capital structure (such as interest payable on borrowings) as well as foreign exchange gains and losses, the unwinding of discounts on provisions for reinstatement of the Group\u2019s sites at the end of their useful economic lives (see note 5.3), and interest on lease liabilities (see note 3.2). These are offset by interest income that the Group generates through use of short-term cash surpluses, for example through investment in money market funds, and interest income on the Group\u2019s defined benefit pension scheme surplus (see note 6.3). A reconciliation of net finance costs is shown in the table below:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Interest payable and similar charges:
Interest payable
(104.2)
(113.2)
Unwinding of discount on provisions (note 5.3)
(2.7)
(1.9)
Other financing charges
\u2013
(0 .1)
Total interest payable and similar charges included in Adjusted results
(106.9)
(115.2)
Interest receivable and similar gains:
Interest income on bank deposits
17.1
11.0
Net interest income on defined benefit pension surplus (note 6.3)
0.9
2 .1
Other interest income
0.4
\u2013
Gain on repurchase of loan notes (note 4.2)
1.7
\u2013
Total interest receivable and similar gains included in Adjusted results
20 .1
13.1
Foreign exchange losses included in Adjusted results
(9.4)
(14.3)
Net finance costs included in Adjusted results
(96.2)
(116.4)
Certain remeasurements on financing derivatives
(0.6)
4.6
Net finance costs included in Total results
(96.8)
(111.8)
Interest payable and similar charges is stated net of \u00a31.7 million (2 023: \u00a3 8 .1 million) of interest capitalised as part of the cost of qualifying assets in property, plant and equipment during the year (see note 3.1). These charges represent fees payable on deferred letters of credit that have been used specifically to finance the construction of the qualifying assets. Changes in the Group\u2019s financing structure during 2024 are described in note 4.2. Foreign exchange gains and losses in net finance costs arise on the retranslation of non-derivative balances denominated in foreign currencies to prevailing rates at the reporting date and gains and losses on derivative contracts hedging foreign exchange risk on borrowings. The Group has a number of intercompany loans denominated in the functional currencies of certain foreign subsidiaries, that are owed to a sterling functional currency entity. Due to the weakening of sterling during the year, this has resulted in a foreign exchange gain of \u00a31.3 million (2023: loss of \u00a317.0 million) on the retranslation of intercompany loans in the sterling functional currency entity. This gain (2023: loss) is recognised within the Consolidated income statement and within the foreign exchange gains or losses included in Adjusted results line in the table above. Conversely, within the net gain or loss on translating the net assets of the foreign subsidiaries into the Group\u2019s sterling presentational currency there is a foreign exchange loss (2023: gain) relating to the translation of the foreign subsidiaries\u2019 intercompany loans. This impacts the translation reserve with the movement recognised in other comprehensive income. ", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestExpenseExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-617": { "value": "2.5 Net finance costs Net finance costs reflect expenses incurred in managing the capital structure (such as interest payable on borrowings) as well as foreign exchange gains and losses, the unwinding of discounts on provisions for reinstatement of the Group\u2019s sites at the end of their useful economic lives (see note 5.3), and interest on lease liabilities (see note 3.2). These are offset by interest income that the Group generates through use of short-term cash surpluses, for example through investment in money market funds, and interest income on the Group\u2019s defined benefit pension scheme surplus (see note 6.3). A reconciliation of net finance costs is shown in the table below:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Interest payable and similar charges:
Interest payable
(104.2)
(113.2)
Unwinding of discount on provisions (note 5.3)
(2.7)
(1.9)
Other financing charges
\u2013
(0 .1)
Total interest payable and similar charges included in Adjusted results
(106.9)
(115.2)
Interest receivable and similar gains:
Interest income on bank deposits
17.1
11.0
Net interest income on defined benefit pension surplus (note 6.3)
0.9
2 .1
Other interest income
0.4
\u2013
Gain on repurchase of loan notes (note 4.2)
1.7
\u2013
Total interest receivable and similar gains included in Adjusted results
20 .1
13.1
Foreign exchange losses included in Adjusted results
(9.4)
(14.3)
Net finance costs included in Adjusted results
(96.2)
(116.4)
Certain remeasurements on financing derivatives
(0.6)
4.6
Net finance costs included in Total results
(96.8)
(111.8)
Interest payable and similar charges is stated net of \u00a31.7 million (2 023: \u00a3 8 .1 million) of interest capitalised as part of the cost of qualifying assets in property, plant and equipment during the year (see note 3.1). These charges represent fees payable on deferred letters of credit that have been used specifically to finance the construction of the qualifying assets. Changes in the Group\u2019s financing structure during 2024 are described in note 4.2. Foreign exchange gains and losses in net finance costs arise on the retranslation of non-derivative balances denominated in foreign currencies to prevailing rates at the reporting date and gains and losses on derivative contracts hedging foreign exchange risk on borrowings. The Group has a number of intercompany loans denominated in the functional currencies of certain foreign subsidiaries, that are owed to a sterling functional currency entity. Due to the weakening of sterling during the year, this has resulted in a foreign exchange gain of \u00a31.3 million (2023: loss of \u00a317.0 million) on the retranslation of intercompany loans in the sterling functional currency entity. This gain (2023: loss) is recognised within the Consolidated income statement and within the foreign exchange gains or losses included in Adjusted results line in the table above. Conversely, within the net gain or loss on translating the net assets of the foreign subsidiaries into the Group\u2019s sterling presentational currency there is a foreign exchange loss (2023: gain) relating to the translation of the foreign subsidiaries\u2019 intercompany loans. This impacts the translation reserve with the movement recognised in other comprehensive income. ", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceCostExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-581": { "value": "2.5 Net finance costs Net finance costs reflect expenses incurred in managing the capital structure (such as interest payable on borrowings) as well as foreign exchange gains and losses, the unwinding of discounts on provisions for reinstatement of the Group\u2019s sites at the end of their useful economic lives (see note 5.3), and interest on lease liabilities (see note 3.2). These are offset by interest income that the Group generates through use of short-term cash surpluses, for example through investment in money market funds, and interest income on the Group\u2019s defined benefit pension scheme surplus (see note 6.3). A reconciliation of net finance costs is shown in the table below:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Interest payable and similar charges:
Interest payable
(104.2)
(113.2)
Unwinding of discount on provisions (note 5.3)
(2.7)
(1.9)
Other financing charges
\u2013
(0 .1)
Total interest payable and similar charges included in Adjusted results
(106.9)
(115.2)
Interest receivable and similar gains:
Interest income on bank deposits
17.1
11.0
Net interest income on defined benefit pension surplus (note 6.3)
0.9
2 .1
Other interest income
0.4
\u2013
Gain on repurchase of loan notes (note 4.2)
1.7
\u2013
Total interest receivable and similar gains included in Adjusted results
20 .1
13.1
Foreign exchange losses included in Adjusted results
(9.4)
(14.3)
Net finance costs included in Adjusted results
(96.2)
(116.4)
Certain remeasurements on financing derivatives
(0.6)
4.6
Net finance costs included in Total results
(96.8)
(111.8)
Interest payable and similar charges is stated net of \u00a31.7 million (2 023: \u00a3 8 .1 million) of interest capitalised as part of the cost of qualifying assets in property, plant and equipment during the year (see note 3.1). These charges represent fees payable on deferred letters of credit that have been used specifically to finance the construction of the qualifying assets. Changes in the Group\u2019s financing structure during 2024 are described in note 4.2. Foreign exchange gains and losses in net finance costs arise on the retranslation of non-derivative balances denominated in foreign currencies to prevailing rates at the reporting date and gains and losses on derivative contracts hedging foreign exchange risk on borrowings. The Group has a number of intercompany loans denominated in the functional currencies of certain foreign subsidiaries, that are owed to a sterling functional currency entity. Due to the weakening of sterling during the year, this has resulted in a foreign exchange gain of \u00a31.3 million (2023: loss of \u00a317.0 million) on the retranslation of intercompany loans in the sterling functional currency entity. This gain (2023: loss) is recognised within the Consolidated income statement and within the foreign exchange gains or losses included in Adjusted results line in the table above. Conversely, within the net gain or loss on translating the net assets of the foreign subsidiaries into the Group\u2019s sterling presentational currency there is a foreign exchange loss (2023: gain) relating to the translation of the foreign subsidiaries\u2019 intercompany loans. This impacts the translation reserve with the movement recognised in other comprehensive income. ", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExpenseExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-569": { "value": "
Net finance costs reflect expenses incurred in managing the capital structure (such as interest payable on borrowings) as well as
foreign exchange gains and losses, the unwinding of discounts on provisions for reinstatement of the Group\u2019s sites at the end of
their useful economic lives (see note 5.3), and interest on lease liabilities (see note 3.2). These are offset by interest income that
the Group generates through use of short-term cash surpluses, for example through investment in money market funds, and interest
income on the Group\u2019s defined benefit pension scheme surplus (see note 6.3).
Foreign exchange gains and losses in net finance costs arise on the retranslation of non-derivative balances denominated in foreign
currencies to prevailing rates at the reporting date and gains and losses on derivative contracts hedging foreign exchange risk on
borrowings.
The Group has a number of intercompany loans denominated in the functional currencies of certain foreign subsidiaries, that are owed
to a sterling functional currency entity. Due to the weakening of sterling during the year, this has resulted in a foreign exchange gain
of \u00a31.3 million (2023: loss of \u00a317.0 million) on the retranslation of intercompany loans in the sterling functional currency entity. This
gain (2023: loss) is recognised within the Consolidated income statement and within the foreign exchange gains or losses included in
Adjusted results line in the table above. Conversely, within the net gain or loss on translating the net assets of the foreign subsidiaries
into the Group\u2019s sterling presentational currency there is a foreign exchange loss (2023: gain) relating to the translation of the foreign
subsidiaries\u2019 intercompany loans. This impacts the translation reserve with the movement recognised in other comprehensive income.
As disclosed above, the Group has a number of cross-currency interest rate swaps that fix the sterling value of the principal repayment
of certain foreign currency denominated borrowings. Accordingly, the foreign exchange gains (2023: gains) on borrowings disclosed
above have been offset by \u00a332.5 million of foreign exchange losses (2023: \u00a329.5 million) on cross-currency interest rate swaps that
have been recycled to profit and loss as part of the hedging relationship. See note 2.7 for further details of the impact of the Group\u2019s
cash flow hedging relationships on Net debt. See note 7.2.2 for further details of the Group\u2019s cash flow hedging relationships on
borrowings.
7.2.2 Foreign currency and interest rate risk Foreign currency risk The Group is exposed to fluctuations in foreign currency rates as a result of committed and forecast transactions in foreign currencies, principally in relation to purchases of fuel for use in the Biomass Generation segment and principal and interest payments relating to foreign currency denominated debt. These fuel purchases are typically denominated in US dollars (USD), euros (EUR) or Canadian dollars (CAD), and the foreign currency debt is also denominated in USD, EUR and CAD (see note 4.2 for further details on the Group\u2019s borrowings). The Group also has an exposure to translation risk in relation to its net investment in its US and Canadian subsidiaries within the Pellet Production segment. Foreign currency sensitivity The analysis below shows the impact on profit after tax and other components of equity of reasonably possible strengthening or weakening of currencies against GBP. The sensitivity analysis below shows the impact of a change in foreign exchange rates as at 31 December on outstanding monetary items denominated in foreign currencies and the valuation of foreign currency derivative instruments. For foreign currency derivatives designated into hedge relationships the analysis includes the impact of recycling amounts from the hedge reserve if a change in foreign exchange rates would result in the recycling of gains and losses due to the item they are hedging impacting profit or loss. The analysis assumes all other variables were held constant.
Impact on other components
Impact on profit after tax of equity, net of tax
10% 10% 10% 10%
strengthening weakening strengthening weakening
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2024
USD
66.8
(57.4)
(75.9)
(75.9)
EUR
10.1
(8.9)
(19.1)
(27.4)
CAD
1.2
(1.0)
(6.6)
(6.9)
Impact on other components
Impact on profit after tax of equity, net of tax
10% 10% 10% 10%
strengthening weakening strengthening weakening
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2023
USD
84.5
(53.5)
125.3
(100.8)
EUR
15.9
(13.2)
3.9
(3.6)
CAD
0.3
\u2013
4.8
(4.0)
The Group designates certain foreign currency derivatives as hedging instruments under cash flow hedge accounting. As such, other components of equity are sensitive to the strengthening or weakening of other currencies in relation to the impact on the hedge reserve of these movements. Profit after tax is sensitive to the strengthening or weakening of other currencies as a result of the impact on the fair value of foreign currency derivatives not designated as hedging instruments under cash flow hedge accounting. Foreign currency risk management It is the Group\u2019s policy to hedge material transactional exposures using a variety of derivatives to protect the sterling values of foreign currency cash flows, except where there is an economic hedge inherent in the transaction. The Group enters into derivative contracts in line with the Group\u2019s currency risk management policy, including forwards and options, to manage the risks associated with its anticipated foreign currency requirements over a rolling five-year period, covering contracted exposures and a proportion of highly probable forecast transactions. In addition, in order to optimise the cost of funding, the Group has issued foreign currency denominated debt in USD, EUR and CAD (see note 4.2 for further details on borrowings). The Group utilises derivative contracts, including cross-currency interest rate swaps and foreign exchange forward contracts, to manage exchange risk on foreign currency debt. Foreign currency risk hedge accounting The Group designates certain foreign currency exchange contracts, predominantly forwards, as hedging instruments of the foreign currency risk of biomass purchases denominated in foreign currencies. Gains and losses on these foreign currency exchange contracts are transferred from equity to inventories for these hedges when the Group takes ownership of the biomass. The Group designates the spot element of these foreign currency exchange contracts and applies a hedge ratio of 1:1. The Group designates certain foreign currency exchange contracts, predominantly forwards and swaps, as hedging instruments of the foreign currency risk on the principal repayments of certain foreign currency denominated borrowings. Gains and losses that are effective at hedging the foreign exchange risk on the principal repayments are released to foreign exchange gains or losses to offset gains and losses on retranslating the hedged foreign currency denominated borrowings. The Group designates the spot element of these foreign currency exchange contracts and applies a hedge ratio of 1:1. The Group also designates certain cross-currency interest rate swaps as hedging instruments of the foreign currency risk on payments of both principal and interest on certain foreign currency denominated borrowings. Gains and losses that are effective at hedging the foreign exchange risk on the interest payments are released to interest payable and similar charges at the same time as the interest on the related hedged foreign currency denominated borrowings is expensed. Gains and losses that are effective at hedging the foreign exchange risk on the principal repayments are released to foreign exchange gains or losses to offset gains and losses on retranslating the hedged foreign currency denominated borrowings. The Group applies a hedge ratio of 1:1 for its cross-currency interest rate swaps. The main sources of ineffectiveness relating to foreign currency exchange contracts (forwards and swaps) that are designated as hedging spot foreign currency risk are timing differences and credit risk. The main sources of ineffectiveness relating to cross- currency interest rate swaps are differences in the critical terms, differences in repricing dates, foreign currency basis spread, and credit risk. Hedge accounting information The Group has Sterling Overnight Index Average (SONIA) floating-to-fixed interest rate swaps to fix the interest payments on the following facilities: \u00a350.0 million of the UK infrastructure private placement facility (2019), \u00a398.0 million of the UK infrastructure private placement facility (2020), two \u00a350.0 million tranches of the GBP and EUR term loan facility (2024), \u00a3125.0 million of the GBP term loan facility (2024) and the \u00a350.0 million GBP term loan facility (2024). The Group has Euro Interbank Offered Rate (EURIBOR) floating-to-fixed interest rate swaps to fix the principal and interest payments on \u20ac70.0 million of the UK infrastructure private placement facility (2020). The Group has EURIBOR floating-to-fixed interest rate swaps to fix the interest payments on \u20ac185.0 million of the GBP and EUR term loan facility (2024). The Group has separately taken out \u20ac185.0 million notional value of foreign exchange forwards in order to fix the sterling cash flows payable on the principal repayment. The Group has Canadian Overnight Repo Rate (CORRA) floating-to-fixed interest rate swaps to fix the interest payments on the C$200.0 million CAD term loan facility. The Group has separately taken out C$200.0 million notional value of foreign exchange forwards in order to fix the sterling cash flows payable on the principal repayment. The Group has taken out fixed-to-fixed cross-currency interest rate swaps to hedge the future cash flows associated with the following facilities: \u20ac350.0 million 2029 and \u20ac143.8 million 2025 fixed rate EUR loan notes and \u20ac31.5 million of the UK infrastructure private placement facility (2020). As at 31 December 2024, the Group has fixed in sterling all interest and principal payments on variable rate and foreign currency denominated borrowings through the use of interest rate swaps, cross-currency interest rate swaps, and foreign currency exchange forwards and swaps, as described above. See note 4.2 for further details on the Group\u2019s borrowings. A summary of amounts relating to the Group\u2019s hedge accounting of foreign currency risk and interest rate risk are presented in the table below. The information is disaggregated by risk type. Hedges of biomass purchases, principal repayments on borrowings hedged using foreign currency forwards or swaps, and fixed-to-fixed cross currency interest rate swaps are designated as hedges of foreign currency risk. Interest rate swaps are designated as hedges of interest rate risk. Floating-to-fixed cross-currency interest rate swaps are designated as hedges of both foreign currency and interest rate risk. The average forward rates quoted below only reflect the rates applicable to the portion of the Group\u2019s foreign currency hedging instruments that qualify for hedge accounting in accordance with IFRS 9. The rates do not reflect the overall average rate of the Group\u2019s total portfolio of derivatives that are used to fix the sterling value of future cash flows. A reconciliation of reserves and the time period when the hedge will affect profit or loss, or will be transferred from equity and included in the initial cost of the non-financial item, are disclosed in notes 7.3 and 7.4.
31 December 2024
Balance in the
hedge reserve
for hedging
Cumulative relationships for
change in fair which hedge
value of hedging Balance in the accounting is
instrument since hedge reserve no longer
inception used Fair value Fair value for continuing applied
Notional Weighted for measuring recognised in recognised in hedges net of net of deferred
value of average ineffectiveness balance sheet \u2013 balance sheet \u2013 deferred tax \u2013 tax \u2013 (debit)/
contracts fixed/variable \u2013 gains/(losses) assets liabilities (debit)/credit credit
Exposure ($m, \u20acm, C$m)
rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency risk on
biomass purchases
January
2025
Purchases in foreign \u2013 February
currency \u2013 USD
1,430.5
$1.27
2027
18.6
20.7
(2 .1)
10.7
\u2013
January
2025
Purchases in foreign \u2013 October
currency \u2013 EUR
270.0
\u20ac 1.15
2026
(6.3)
\u2013
(6.3)
(4.5)
\u2013
January
2025
Purchases in foreign \u2013 March
currency \u2013 CAD
166.0
C$1.67
2027
(5.1)
0.3
(5.4)
(5.8)
\u2013
Foreign currency risk on
borrowings
Interest and principal
payments \u2013 USD
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
November
2025
Interest and principal \u20ac1.14 / \u2013 April
payments \u2013 EUR
525.3
6.48% 2028
(10.4)
\u2013
(19.7)
4.4
\u2013
February
2027
\u2013 March
Principal payments \u2013 EUR
185.0
\u20ac 1.11
2028
(5.1)
\u2013
(5.1)
\u2013
\u2013
January
Principal payments \u2013 CAD
200.0
C$1.68
2026
(5.7)
\u2013
(5.7)
\u2013
\u2013
Foreign currency and
interest rate risk on
borrowings
January
2026
Interest and principal \u20ac1.09/ \u2013 March
payments \u2013 EUR
255.0
4.04% 2028
(8.6)
\u2013
(8.7)
(2.7)
\u2013
January
Interest payments \u2013 CAD
200.0
6.05%
2026
(1.5)
\u2013
(1.8)
(1.3)
\u2013
Interest rate risk on
borrowings
January
2026
\u2013 April
Variable rate GBP debt
423.0
2.89%
2028
6.1
7.1
(0.4)
4.3
\u2013
31 December 2024
Cumulative
change in fair Amount
value Hedge Amount Amount reclassified due
of hedged ineffectiveness transferred to reclassified to the hedged Line item in the
item since Hedging losses recognised in Line item in the the cost or due to the future cash income
inception used recognised in the income income carrying hedged flows being no statement/
for measuring OCI in the statement statement value item affecting longer expected balance sheet
ineffectiveness \u2013 period \u2013 in the period \u2013 that includes of a non- profit or loss \u2013 to occur \u2013 affected by the
gains/(losses) gains/(losses) gains/(losses) hedge financial asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Foreign currency risk
on biomass purchases
Purchases in foreign
currency \u2013 USD
18.6
19.7
\u2013
Cost of sales
4.3
\u2013
\u2013
Inventories
Purchases in foreign
currency \u2013 EUR
(6.3)
(7.1)
\u2013
Cost of sales
0.9
\u2013
\u2013
Inventories
Purchases in foreign
currency \u2013 CAD
(5.1)
(5.9)
\u2013
Cost of sales
(0.4)
\u2013
\u2013
Inventories
Foreign currency risk
on borrowings Interest Interest
payable payable
Interest and principal \u2013 and similar
\u2013
(0.7)
\u2013
and similar
payments \u2013 USD
\u2013
(5.6)
charges charges
Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
9.3
\u2013
(losses)/gains
Interest Interest
payable payable
Interest and principal \u2013 and similar
\u2013
7.4
\u2013
and similar
payments \u2013 EUR
(11.3)
( 7.5)
charges charges
Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
6.4
\u2013
(losses)/gains
Foreign Foreign
Principal payments \u2013 exchange exchange
EUR
(5.1)
(6.0)
\u2013
(losses)/gains
\u2013
6.0
\u2013
(losses)/gains
Foreign Foreign
Principal payments \u2013 exchange exchange
CAD
(5.7)
( 7.4)
\u2013
(losses)/gains
\u2013
7.4
\u2013
(losses)/gains
Foreign currency and
interest rate risk on
borrowings
Interest Interest
payable payable
Interest and principal \u2013 and similar
\u2013
(2.5)
\u2013
and similar
payments \u2013 EUR
(8.7)
(6.4)
 charges charges
Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
3.4
\u2013
(losses)/gains
Interest Interest
payable payable
Interest payments \u2013 and similar and similar
CAD
(1.6)
(1.3)
\u2013
 charges
\u2013
(0.4)
\u2013
 charges
Interest rate risk on
borrowings
Interest Interest
payable payable
and similar and similar
Variable rate GBP debt
10.8
(2.3)
\u2013
 charges
\u2013
(12.0)
\u2013
 charges
31 December 2023
Balance in the
hedge reserve
for hedging
Cumulative relationships for
change in fair which hedge
value of hedging Balance in the accounting is
instrument since hedge reserve no longer
inception used Fair value Fair value for continuing applied
Notional Weighted for measuring recognised in recognised in hedges net of net of deferred
value of average ineffectiveness balance sheet \u2013 balance sheet \u2013 deferred tax \u2013 tax \u2013 (debit)/
contracts fixed/variable \u2013 gains/(losses) assets liabilities (debit)/credit credit
Exposure ($m, \u20acm, C$m)
rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency risk on
biomass purchases
January
2024
Purchases in foreign \u2013 January
currency \u2013 USD
2 ,12 6.9
$1.29
2027
14 .1
35.6
(21.5)
( 7.3)
\u2013
January
2024
Purchases in foreign \u2013 April
currency \u2013 EUR
47. 0
\u20ac 1.15
2024
\u2013
\u2013
\u2013
0.2
\u2013
January
2024
Purchases in foreign \u2013 March
currency \u2013 CAD
116.6
C$1.68
2027
\u2013
2.1
(2 .1)
(1.3)
\u2013
Foreign currency risk on
borrowings
Interest and principal $1.36/ November
payments \u2013 USD
500.0
6 .13% 2024
22.1
2.7
(21.1)
(2.4)
\u2013
November
2024
Interest and principal \u20ac1.10/ \u2013 November
payments \u2013 EUR
281.5
4.57% 2026
(1.2)
\u2013
(12.7)
(0.2)
\u2013
January
Principal payments \u2013 CAD
200.0
C$1.68
2026
(0 .1)
\u2013
(0 .1)
0.2
\u2013
Foreign currency and
interest rate risk on
borrowings
January
2024
Interest and principal \u20ac1.09/ \u2013 January
payments \u2013 EUR
95.0
2.05% 2026
(1.6)
\u2013
(1.3)
1.4
\u2013
Interest rate risk on
borrowings
January
2024
\u2013 January
Variable rate GBP debt
473.0
0.88%
2026
20.2
22.7
\u2013
15.1
\u2013
31 December 2023
Amount
Cumulative reclassified due
change in fair Hedge Amount Amount to the hedged
value of hedged ineffectiveness transferred to reclassified future cash Line item in the
item since Hedging losses recognised in Line item in the the cost or due to the flows being income
inception used recognised in the income income carrying hedged no longer statement/
for measuring OCI in the statement statement value item affecting expected to balance sheet
ineffectiveness \u2013 period \u2013 in the period \u2013 that includes of a non- profit or loss \u2013 occur \u2013 affected by the
gains/(losses) gains/(losses) gains/(losses) hedge financial asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Foreign currency risk
on biomass purchases
Purchases in foreign
currency \u2013 USD
14 .1
(68.0)
\u2013
Cost of sales
(42.5)
\u2013
\u2013
Inventories
Purchases in foreign
currency \u2013 EUR
\u2013
(3.3)
\u2013
Cost of sales
(0.9)
\u2013
\u2013
Inventories
Purchases in foreign
currency \u2013 CAD
\u2013
(8.8)
\u2013
Cost of sales
\u2013
\u2013
\u2013
Inventories
Hedges of foreign
currency risk on
borrowings
Interest Interest
payable payable
and similar and similar
Interest and principal
35.9
(22.9)
\u2013 charges
\u2013
(3.3)
\u2013
 charges
payments \u2013 USD Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
822.0
\u2013
(losses)/gains
Interest Interest
payable payable
and similar and similar
Interest and principal
(1.2)
(9.7)
\u2013 charges
\u2013
4.9
\u2013
 charges
payments \u2013 EUR Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
5.6
\u2013
(losses)/gains
Foreign Foreign
Principal payments \u2013 exchange exchange
CAD
(0.1)
(0.2)
\u2013
(losses)/gains
\u2013
\u2013
\u2013
(losses)/gains
Foreign currency and
interest rate risk on
borrowings
Interest Interest
payable payable
and similar and similar
Interest and principal
(3.9)
(3.6)
\u2013 charges
\u2013
(1.9)
\u2013
 charges
payments \u2013 EUR Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
1.9
\u2013
(losses)/gains
Interest rate risk on
borrowings
Interest Interest
payable payable
and similar and similar
Variable rate GBP debt
23.4
(31.5)
\u2013
 charges
\u2013
16.0
\u2013
 charges
", "dimensions": { "concept": "ifrs-full:DisclosureOfEffectOfChangesInForeignExchangeRatesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-582": { "value": "2.6 Current and deferred tax The tax charge (2023: charge) includes both current and deferred tax. It reflects the estimated tax on the profit before tax for the Group for the year ended 31 December 2024 and the movement in the deferred tax balance in the year, so far as it relates to items recognised in the Consolidated income statement, in line with IAS 12. Accounting policy Current tax includes UK corporation tax, corporate income tax in Canada and US income tax. It is based on the taxable profit or loss for the year in the relevant jurisdiction. Taxable profit or loss differs from profit or loss before tax as reported in the Consolidated income statement because it excludes items of income or expenditure that are either taxable or deductible in other years or never taxable or deductible. The Group\u2019s liability (or asset) for current tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted by the reporting date. A provision is made for those matters for which the tax determination is uncertain, but it is considered probable that there will be a future outflow of funds to a tax authority. The provisions are measured at the best estimate of the amount expected to become payable. The assessment is based on the judgement of tax professionals within the Group supported by previous experience in respect of such activities and in certain cases is based on specialist third-party tax advice. No uncertain tax provisions have been recognised in the current or prior year. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the Consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Current and deferred taxes are credited or charged against profit or loss in the Consolidated income statement, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case the current and deferred taxes are recognised in the Consolidated statement of comprehensive income or directly in the Consolidated statement of changes in equity respectively. In accounting for tax, the Group makes assumptions regarding the treatment of items of income and expenditure for tax purposes. The Group believes that these assumptions are reasonable, based on prior experience and consultation with third-party advisers where deemed necessary. These assumptions are consistent with other assumptions used in these Consolidated financial statements. Full provision is made for deferred tax at the rates of tax prevailing at the reporting date unless future rates have been substantively enacted. Deferred tax assets are recognised where it is considered more likely than not that they will be recovered. The recoverability of the deferred tax asset is considered an estimate as it relies on the future profitability of the Group\u2019s businesses. See table on page 190 for a breakdown of the net deferred tax asset or liability position for each jurisdiction.
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Total tax charge comprises:
Current tax
\u2013 UK tax
(182.2)
(186.5)
\u2013 Overseas tax
\u2013
(1.6)
\u2013 Adjustments in respect of prior periods
(2.4)
2.0
Deferred tax
\u2013 Before impact of tax rate changes
(37.6)
(46.7)
\u2013 Adjustments in respect of prior periods
(5.7)
0.3
\u2013 Effect of changes in tax rate
\u2013
(3.0)
Total tax charge
(227.9)
(235.5)
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Tax (charged)/credited on items recognised in other comprehensive income:
Deferred tax on remeasurement of defined benefit pension surplus
(1.3)
7. 2
Deferred tax on cash flow hedges
73.0
(130.7)
Deferred tax on cost of hedging
(1.7)
(1.9)
Total tax credit/(charge)
70.0
(125.4)
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Tax (charged)/credited on items released directly from equity:
Deferred tax on cash flow hedges
(1.2)
10.9
Deferred tax on cost of hedging
5.7
9.0
Deferred tax on share-based payments
1.4
(2.4)
Current tax on share-based payments
\u2013
6.9
Total tax credit
5.9
24.4
UK corporation tax is the main income tax applicable on the Group\u2019s taxable profits and is calculated at 25.0% (2023: 23.5%) of
the assessable profit or loss for the year. This follows the rate increase to 25.0% from 1 April 2023 that was included within the
Finance Bill 2021.
Due to the Group\u2019s overseas operations, the US income tax rate of 21.0% (2023: 21.0%) and the Canadian corporate income tax rate
of 27.0% (2023: 27.0%) are also relevant to the Group\u2019s total tax charge.
The effective tax rate of 30.2% (2023: 29.6%) for the full year is higher than the standard corporation tax rate applicable in the UK,
principally due to the non-deductible Electricity Generator Levy. Following a number of tax rate changes in prior periods, an exercise
was undertaken in 2024 to validate the deferred tax balances held on consolidation. As a result of this exercise, the deferred tax
liability associated with the fair value accounting of the hydro assets was uplifted by \u00a316.4 million, increasing the effective tax rate.
A net deferred tax asset of \u00a39.6 million has also been recognised in relation to decommissioning provisions following a review of the
IAS 12 single transaction amendments. In addition, there was a release of a \u00a310.9 million deferred tax asset in respect of US unpaid
intercompany interest, required following US debt capitalisation. The primary current tax rate benefits arise from research and
development credits and UK Patent Box claims.
Drax Power Limited was granted a patent to protect certain intellectual property it owns and which attaches to the technology
developed to manage the combustion process in generating electricity from biomass. Under UK tax legislation, the company is
entitled to apply a lower tax rate of 10.0% to profits derived from utilisation of the patented technology.
The Group tax charge for the year can be reconciled to the profit before tax as follows:
Year ended 31 December 2024
Year ended 31 December 2023
Exceptional Exceptional
items items
Adjusted and certain Total Adjusted and certain Total
results remeasurements results results remeasurements results
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Profit before tax
704.0
49.4
753.4
665.2
131.2
796.4
Profit before tax multiplied by the rate of
corporation tax in the UK of 25.0% (2023: 23.5%)
176.0
12.4
188.4
156.3
30.8
18 7.1
Effects of:
Adjustments in respect of prior periods
5.6
2.5
8.1
(2.3)
\u2013
(2.3)
Expenses not deductible for tax purposes
5.4
\u2013
5.4
5.2
6.5
11.7
Electricity Generator Levy
40.2
\u2013
40.2
4 8 .1
\u2013
4 8 .1
Impact of tax rate change
\u2013
\u2013
\u2013
0.6
2.4
3.0
Share-based payments recognised in equity
\u2013
\u2013
\u2013
8 .1
\u2013
8 .1
Deferred tax asset unwind on US interest
10.9
\u2013
10.9
\u2013
\u2013
\u2013
Difference in overseas tax rates
(1.7)
\u2013
(1.7)
(0.7)
\u2013
(0.7)
UK Patent Box benefit
(23.4)
\u2013
(23.4)
(17.4)
\u2013
(17.4)
Tax effect of RDEC
\u2013
\u2013
\u2013
(0.9)
\u2013
(0.9)
UK super-deduction
\u2013
\u2013
\u2013
(1.2)
\u2013
(1.2)
Total tax charge
213.0
14.9
227.9
195.8
39.7
235.5
The movements in deferred tax assets and liabilities during each year are shown below.
Accelerated
Financial capital Non-trade Intangible Trade Other Other
instruments allowances losses assets losses liabilities assets Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
At 1 January 2023
124.7
(321.3)
0.5
(12.9)
8 0 .1
(33.3)
5 7.9
(104.3)
(Charged)/credited to the income
statement
(51.2)
9.0
(0.5)
12.3
(21.0)
(0.6)
2.6
(49.4)
Credited to other comprehensive
income in respect of actuarial gains
\u2013
\u2013
\u2013
\u2013
\u2013
7.2
\u2013
7. 2
Charged to other comprehensive
income in respect of cash flow
hedges
(130.7)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(130.7)
Charged to other comprehensive
income in respect of cost of hedging
(1.9)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(1.9)
Credited to equity in respect of cash
flow hedges
10.9
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
10.9
Credited to equity in respect of cost
of hedging
9.0
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
9.0
Charged to equity in respect of
share-based payments
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(2.4)
(2.4)
Impact of acquisition
\u2013
\u2013
\u2013
(1.3)
\u2013
\u2013
\u2013
(1.3)
Effect of changes in foreign
exchange rates
\u2013
1.8
\u2013
\u2013
(2.5)
(0.1)
(0.5)
(1.3)
At 1 January 2024
(39.2)
(310.5)
\u2013
(1.9)
56.6
(26.8)
57.6
(264.2)
(Charged)/credited to the income
statement
(29.7)
(38.4)
\u2013
1.1
( 7.0)
14.7
16.0
(43.3)
Charged to other comprehensive
income in respect of actuarial gains
\u2013
\u2013
\u2013
\u2013
\u2013
(1.3)
\u2013
(1.3)
Credited to other comprehensive
income in respect of cash flow
hedges
73.0
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
73.0
Charged to other comprehensive
income in respect of cost of hedging
(1.7)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(1.7)
Credited to equity in respect of cash
flow hedges
(1.2)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(1.2)
Credited to equity in respect of cost
of hedging
5.7
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
5.7
Credited to equity in respect of
share-based payments
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
1.4
1.4
Effect of changes in foreign
exchange rates
\u2013
(0.9)
\u2013
(0.1)
0.6
\u2013
0.2
(0.2)
At 31 December 2024
6.9
(349.8)
\u2013
(0.9)
50.2
(13.4)
75.2
(231.8)
Deferred tax balances (after offset)
for financial reporting purposes:
Net Canadian deferred tax asset at
31 December 2024
\u2013
(9.4)
\u2013
0.3
20.3
(0.3)
25.1
36.0
Net US deferred tax asset at
31 December 2024
\u2013
(22.3)
\u2013
\u2013
29.5
\u2013
5.4
12.6
Net UK deferred tax liability at
31 December 2024
6.9
( 318 .1)
\u2013
(1.2)
0.4
(13.1)
44.7
(280.4)
Net Canadian deferred tax asset
at 31 December 2023
\u2013
(18.8)
\u2013
0.4
16.8
(0.2)
28.2
26.4
Net US deferred tax asset at
31 December 2023
\u2013
(21.9)
\u2013
\u2013
39.8
\u2013
8.6
26.5
Net UK deferred tax liability at
31 December 2023
(39.2)
(269.8)
\u2013
(2.3)
\u2013
(26.6)
20.8
(317.1)
Deferred tax assets and liabilities are offset where they are levied by the same taxation authority and the Group has a legally
enforceable right to offset the current taxes, otherwise they are shown separately in the Consolidated balance sheet. Within the above
deferred tax asset on trade losses of \u00a350.2 million (2023: \u00a356.6 million) there is \u00a329.5 million (2023: \u00a339.8 million) in relation to losses
in the US Pellet Production business, \u00a320.3 million relating to losses of the Canadian Pellet Production business (2023: \u00a316.8 million),
and the remaining \u00a30.4 million relates to UK operations (2023: \u00a3nil).
The future expected reversal of accelerated capital allowances and other timing differences, coupled with the profitability (inclusive
of the impact of transfer pricing adjustments), stable output and forecast improvement in operational performance, mean that the US
and Canadian businesses expect to generate sufficient profits in the short to medium term against which to utilise the deferred tax
assets. The estimates used when assessing the future profitability of the US and Canadian businesses have been approved by the
Board, and are consistent with estimates used in the going concern assessment and the impairment assessments. The impairment
assessment factors in climate change risks in the forecasts. See note 2.4 for further details on how climate change has been
considered as part of the impairment assessments.
As at 31 December 2024, the Group held \u00a378.5 million (2023: \u00a378.8 million) of gross UK capital losses available for offset against future
chargeable gains. These losses are unrecognised for deferred tax purposes as the Group does not currently expect UK taxable gains to
arise that would be eligible to offset against these losses.
The Group is within scope of the Organisation for Economic Co-operation and Development\u2019s (OECD) Global Anti-Base Erosion Rules,
which provide for an internationally co-ordinated system of taxation to ensure that large multinational groups pay a minimum level
of corporate income tax in countries in which they operate, referred to as Pillar Two. The legislation implementing the rules in the
UK was substantively enacted on 20 June 2023 and applies to the 2024 financial year onwards.
The Group has applied the temporary exemption under IAS 12 in relation to the accounting for deferred taxes arising from the
implementation of the Pillar Two rules, so that the Group neither recognises nor discloses information about deferred tax assets and
liabilities related to Pillar Two. Supported by external advisers, a detailed review was undertaken during 2024 confirming that the
Group falls within the Transitional Country by Country Reporting Safe Harbour for all jurisdictions, such that the expected top-up tax
payable over the transitional period is expected to be \u00a3nil. This is based on these Consolidated financial statements along with the
latest medium-term forecasts up to and including the year ending 31 December 2026.
The Group continues to monitor developments in the UK and outside of the UK to ensure ongoing compliance with its administrative
obligations under these rules along with reassessments of the latest forecasts to confirm the Group\u2019s exposure to Pillar Two.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-641": { "value": "2.6 Current and deferred tax The tax charge (2023: charge) includes both current and deferred tax. It reflects the estimated tax on the profit before tax for the Group for the year ended 31 December 2024 and the movement in the deferred tax balance in the year, so far as it relates to items recognised in the Consolidated income statement, in line with IAS 12. Accounting policy Current tax includes UK corporation tax, corporate income tax in Canada and US income tax. It is based on the taxable profit or loss for the year in the relevant jurisdiction. Taxable profit or loss differs from profit or loss before tax as reported in the Consolidated income statement because it excludes items of income or expenditure that are either taxable or deductible in other years or never taxable or deductible. The Group\u2019s liability (or asset) for current tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted by the reporting date. A provision is made for those matters for which the tax determination is uncertain, but it is considered probable that there will be a future outflow of funds to a tax authority. The provisions are measured at the best estimate of the amount expected to become payable. The assessment is based on the judgement of tax professionals within the Group supported by previous experience in respect of such activities and in certain cases is based on specialist third-party tax advice. No uncertain tax provisions have been recognised in the current or prior year. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the Consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Current and deferred taxes are credited or charged against profit or loss in the Consolidated income statement, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case the current and deferred taxes are recognised in the Consolidated statement of comprehensive income or directly in the Consolidated statement of changes in equity respectively. In accounting for tax, the Group makes assumptions regarding the treatment of items of income and expenditure for tax purposes. The Group believes that these assumptions are reasonable, based on prior experience and consultation with third-party advisers where deemed necessary. These assumptions are consistent with other assumptions used in these Consolidated financial statements. Full provision is made for deferred tax at the rates of tax prevailing at the reporting date unless future rates have been substantively enacted. Deferred tax assets are recognised where it is considered more likely than not that they will be recovered. The recoverability of the deferred tax asset is considered an estimate as it relies on the future profitability of the Group\u2019s businesses. See table on page 190 for a breakdown of the net deferred tax asset or liability position for each jurisdiction.
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Total tax charge comprises:
Current tax
\u2013 UK tax
(182.2)
(186.5)
\u2013 Overseas tax
\u2013
(1.6)
\u2013 Adjustments in respect of prior periods
(2.4)
2.0
Deferred tax
\u2013 Before impact of tax rate changes
(37.6)
(46.7)
\u2013 Adjustments in respect of prior periods
(5.7)
0.3
\u2013 Effect of changes in tax rate
\u2013
(3.0)
Total tax charge
(227.9)
(235.5)
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Tax (charged)/credited on items recognised in other comprehensive income:
Deferred tax on remeasurement of defined benefit pension surplus
(1.3)
7. 2
Deferred tax on cash flow hedges
73.0
(130.7)
Deferred tax on cost of hedging
(1.7)
(1.9)
Total tax credit/(charge)
70.0
(125.4)
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Tax (charged)/credited on items released directly from equity:
Deferred tax on cash flow hedges
(1.2)
10.9
Deferred tax on cost of hedging
5.7
9.0
Deferred tax on share-based payments
1.4
(2.4)
Current tax on share-based payments
\u2013
6.9
Total tax credit
5.9
24.4
UK corporation tax is the main income tax applicable on the Group\u2019s taxable profits and is calculated at 25.0% (2023: 23.5%) of the assessable profit or loss for the year. This follows the rate increase to 25.0% from 1 April 2023 that was included within the Finance Bill 2021. Due to the Group\u2019s overseas operations, the US income tax rate of 21.0% (2023: 21.0%) and the Canadian corporate income tax rate of 27.0% (2023: 27.0%) are also relevant to the Group\u2019s total tax charge. The effective tax rate of 30.2% (2023: 29.6%) for the full year is higher than the standard corporation tax rate applicable in the UK, principally due to the non-deductible Electricity Generator Levy. Following a number of tax rate changes in prior periods, an exercise was undertaken in 2024 to validate the deferred tax balances held on consolidation. As a result of this exercise, the deferred tax liability associated with the fair value accounting of the hydro assets was uplifted by \u00a316.4 million, increasing the effective tax rate. A net deferred tax asset of \u00a39.6 million has also been recognised in relation to decommissioning provisions following a review of the IAS 12 single transaction amendments. In addition, there was a release of a \u00a310.9 million deferred tax asset in respect of US unpaid intercompany interest, required following US debt capitalisation. The primary current tax rate benefits arise from research and development credits and UK Patent Box claims. Drax Power Limited was granted a patent to protect certain intellectual property it owns and which attaches to the technology developed to manage the combustion process in generating electricity from biomass. Under UK tax legislation, the company is entitled to apply a lower tax rate of 10.0% to profits derived from utilisation of the patented technology. The Group tax charge for the year can be reconciled to the profit before tax as follows:
Year ended 31 December 2024
Year ended 31 December 2023
Exceptional Exceptional
items items
Adjusted and certain Total Adjusted and certain Total
results remeasurements results results remeasurements results
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Profit before tax
704.0
49.4
753.4
665.2
131.2
796.4
Profit before tax multiplied by the rate of
corporation tax in the UK of 25.0% (2023: 23.5%)
176.0
12.4
188.4
156.3
30.8
18 7.1
Effects of:
Adjustments in respect of prior periods
5.6
2.5
8.1
(2.3)
\u2013
(2.3)
Expenses not deductible for tax purposes
5.4
\u2013
5.4
5.2
6.5
11.7
Electricity Generator Levy
40.2
\u2013
40.2
4 8 .1
\u2013
4 8 .1
Impact of tax rate change
\u2013
\u2013
\u2013
0.6
2.4
3.0
Share-based payments recognised in equity
\u2013
\u2013
\u2013
8 .1
\u2013
8 .1
Deferred tax asset unwind on US interest
10.9
\u2013
10.9
\u2013
\u2013
\u2013
Difference in overseas tax rates
(1.7)
\u2013
(1.7)
(0.7)
\u2013
(0.7)
UK Patent Box benefit
(23.4)
\u2013
(23.4)
(17.4)
\u2013
(17.4)
Tax effect of RDEC
\u2013
\u2013
\u2013
(0.9)
\u2013
(0.9)
UK super-deduction
\u2013
\u2013
\u2013
(1.2)
\u2013
(1.2)
Total tax charge
213.0
14.9
227.9
195.8
39.7
235.5
The movements in deferred tax assets and liabilities during each year are shown below.
Accelerated
Financial capital Non-trade Intangible Trade Other Other
instruments allowances losses assets losses liabilities assets Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
At 1 January 2023
124.7
(321.3)
0.5
(12.9)
8 0 .1
(33.3)
5 7.9
(104.3)
(Charged)/credited to the income
statement
(51.2)
9.0
(0.5)
12.3
(21.0)
(0.6)
2.6
(49.4)
Credited to other comprehensive
income in respect of actuarial gains
\u2013
\u2013
\u2013
\u2013
\u2013
7.2
\u2013
7. 2
Charged to other comprehensive
income in respect of cash flow
hedges
(130.7)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(130.7)
Charged to other comprehensive
income in respect of cost of hedging
(1.9)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(1.9)
Credited to equity in respect of cash
flow hedges
10.9
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
10.9
Credited to equity in respect of cost
of hedging
9.0
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
9.0
Charged to equity in respect of
share-based payments
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(2.4)
(2.4)
Impact of acquisition
\u2013
\u2013
\u2013
(1.3)
\u2013
\u2013
\u2013
(1.3)
Effect of changes in foreign
exchange rates
\u2013
1.8
\u2013
\u2013
(2.5)
(0.1)
(0.5)
(1.3)
At 1 January 2024
(39.2)
(310.5)
\u2013
(1.9)
56.6
(26.8)
57.6
(264.2)
(Charged)/credited to the income
statement
(29.7)
(38.4)
\u2013
1.1
( 7.0)
14.7
16.0
(43.3)
Charged to other comprehensive
income in respect of actuarial gains
\u2013
\u2013
\u2013
\u2013
\u2013
(1.3)
\u2013
(1.3)
Credited to other comprehensive
income in respect of cash flow
hedges
73.0
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
73.0
Charged to other comprehensive
income in respect of cost of hedging
(1.7)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(1.7)
Credited to equity in respect of cash
flow hedges
(1.2)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(1.2)
Credited to equity in respect of cost
of hedging
5.7
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
5.7
Credited to equity in respect of
share-based payments
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
1.4
1.4
Effect of changes in foreign
exchange rates
\u2013
(0.9)
\u2013
(0.1)
0.6
\u2013
0.2
(0.2)
At 31 December 2024
6.9
(349.8)
\u2013
(0.9)
50.2
(13.4)
75.2
(231.8)
Deferred tax balances (after offset)
for financial reporting purposes:
Net Canadian deferred tax asset at
31 December 2024
\u2013
(9.4)
\u2013
0.3
20.3
(0.3)
25.1
36.0
Net US deferred tax asset at
31 December 2024
\u2013
(22.3)
\u2013
\u2013
29.5
\u2013
5.4
12.6
Net UK deferred tax liability at
31 December 2024
6.9
( 318 .1)
\u2013
(1.2)
0.4
(13.1)
44.7
(280.4)
Net Canadian deferred tax asset
at 31 December 2023
\u2013
(18.8)
\u2013
0.4
16.8
(0.2)
28.2
26.4
Net US deferred tax asset at
31 December 2023
\u2013
(21.9)
\u2013
\u2013
39.8
\u2013
8.6
26.5
Net UK deferred tax liability at
31 December 2023
(39.2)
(269.8)
\u2013
(2.3)
\u2013
(26.6)
20.8
(317.1)
Deferred tax assets and liabilities are offset where they are levied by the same taxation authority and the Group has a legally enforceable right to offset the current taxes, otherwise they are shown separately in the Consolidated balance sheet. Within the above deferred tax asset on trade losses of \u00a350.2 million (2023: \u00a356.6 million) there is \u00a329.5 million (2023: \u00a339.8 million) in relation to losses in the US Pellet Production business, \u00a320.3 million relating to losses of the Canadian Pellet Production business (2023: \u00a316.8 million), and the remaining \u00a30.4 million relates to UK operations (2023: \u00a3nil). The future expected reversal of accelerated capital allowances and other timing differences, coupled with the profitability (inclusive of the impact of transfer pricing adjustments), stable output and forecast improvement in operational performance, mean that the US and Canadian businesses expect to generate sufficient profits in the short to medium term against which to utilise the deferred tax assets. The estimates used when assessing the future profitability of the US and Canadian businesses have been approved by the Board, and are consistent with estimates used in the going concern assessment and the impairment assessments. The impairment assessment factors in climate change risks in the forecasts. See note 2.4 for further details on how climate change has been considered as part of the impairment assessments. As at 31 December 2024, the Group held \u00a378.5 million (2023: \u00a378.8 million) of gross UK capital losses available for offset against future chargeable gains. These losses are unrecognised for deferred tax purposes as the Group does not currently expect UK taxable gains to arise that would be eligible to offset against these losses. The Group is within scope of the Organisation for Economic Co-operation and Development\u2019s (OECD) Global Anti-Base Erosion Rules, which provide for an internationally co-ordinated system of taxation to ensure that large multinational groups pay a minimum level of corporate income tax in countries in which they operate, referred to as Pillar Two. The legislation implementing the rules in the UK was substantively enacted on 20 June 2023 and applies to the 2024 financial year onwards. The Group has applied the temporary exemption under IAS 12 in relation to the accounting for deferred taxes arising from the implementation of the Pillar Two rules, so that the Group neither recognises nor discloses information about deferred tax assets and liabilities related to Pillar Two. Supported by external advisers, a detailed review was undertaken during 2024 confirming that the Group falls within the Transitional Country by Country Reporting Safe Harbour for all jurisdictions, such that the expected top-up tax payable over the transitional period is expected to be \u00a3nil. This is based on these Consolidated financial statements along with the latest medium-term forecasts up to and including the year ending 31 December 2026. The Group continues to monitor developments in the UK and outside of the UK to ensure ongoing compliance with its administrative obligations under these rules along with reassessments of the latest forecasts to confirm the Group\u2019s exposure to Pillar Two. ", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-691": { "value": "Accounting policy Current tax includes UK corporation tax, corporate income tax in Canada and US income tax. It is based on the taxable profit or loss for the year in the relevant jurisdiction. Taxable profit or loss differs from profit or loss before tax as reported in the Consolidated income statement because it excludes items of income or expenditure that are either taxable or deductible in other years or never taxable or deductible. The Group\u2019s liability (or asset) for current tax is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted or substantively enacted by the reporting date. A provision is made for those matters for which the tax determination is uncertain, but it is considered probable that there will be a future outflow of funds to a tax authority. The provisions are measured at the best estimate of the amount expected to become payable. The assessment is based on the judgement of tax professionals within the Group supported by previous experience in respect of such activities and in certain cases is based on specialist third-party tax advice. No uncertain tax provisions have been recognised in the current or prior year. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the Consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Current and deferred taxes are credited or charged against profit or loss in the Consolidated income statement, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case the current and deferred taxes are recognised in the Consolidated statement of comprehensive income or directly in the Consolidated statement of changes in equity respectively. In accounting for tax, the Group makes assumptions regarding the treatment of items of income and expenditure for tax purposes. The Group believes that these assumptions are reasonable, based on prior experience and consultation with third-party advisers where deemed necessary. These assumptions are consistent with other assumptions used in these Consolidated financial statements. Full provision is made for deferred tax at the rates of tax prevailing at the reporting date unless future rates have been substantively enacted. Deferred tax assets are recognised where it is considered more likely than not that they will be recovered. The recoverability of the deferred tax asset is considered an estimate as it relies on the future profitability of the Group\u2019s businesses. See table on page 190 for a breakdown of the net deferred tax asset or liability position for each jurisdiction. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-721": { "value": "Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the Consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Current and deferred taxes are credited or charged against profit or loss in the Consolidated income statement, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case the current and deferred taxes are recognised in the Consolidated statement of comprehensive income or directly in the Consolidated statement of changes in equity respectively. In accounting for tax, the Group makes assumptions regarding the treatment of items of income and expenditure for tax purposes. The Group believes that these assumptions are reasonable, based on prior experience and consultation with third-party advisers where deemed necessary. These assumptions are consistent with other assumptions used in these Consolidated financial statements. Full provision is made for deferred tax at the rates of tax prevailing at the reporting date unless future rates have been substantively enacted. Deferred tax assets are recognised where it is considered more likely than not that they will be recovered. The recoverability of the deferred tax asset is considered an estimate as it relies on the future profitability of the Group\u2019s businesses. See table on page 190 for a breakdown of the net deferred tax asset or liability position for each jurisdiction. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTaxesOtherThanIncomeTaxExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-712": { "value": "Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the Consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Current and deferred taxes are credited or charged against profit or loss in the Consolidated income statement, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case the current and deferred taxes are recognised in the Consolidated statement of comprehensive income or directly in the Consolidated statement of changes in equity respectively. In accounting for tax, the Group makes assumptions regarding the treatment of items of income and expenditure for tax purposes. The Group believes that these assumptions are reasonable, based on prior experience and consultation with third-party advisers where deemed necessary. These assumptions are consistent with other assumptions used in these Consolidated financial statements. Full provision is made for deferred tax at the rates of tax prevailing at the reporting date unless future rates have been substantively enacted. Deferred tax assets are recognised where it is considered more likely than not that they will be recovered. The recoverability of the deferred tax asset is considered an estimate as it relies on the future profitability of the Group\u2019s businesses. See table on page 190 for a breakdown of the net deferred tax asset or liability position for each jurisdiction. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-656": { "value": "The movements in deferred tax assets and liabilities during each year are shown below.
Accelerated
Financial capital Non-trade Intangible Trade Other Other
instruments allowances losses assets losses liabilities assets Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
At 1 January 2023
124.7
(321.3)
0.5
(12.9)
8 0 .1
(33.3)
5 7.9
(104.3)
(Charged)/credited to the income
statement
(51.2)
9.0
(0.5)
12.3
(21.0)
(0.6)
2.6
(49.4)
Credited to other comprehensive
income in respect of actuarial gains
\u2013
\u2013
\u2013
\u2013
\u2013
7.2
\u2013
7. 2
Charged to other comprehensive
income in respect of cash flow
hedges
(130.7)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(130.7)
Charged to other comprehensive
income in respect of cost of hedging
(1.9)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(1.9)
Credited to equity in respect of cash
flow hedges
10.9
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
10.9
Credited to equity in respect of cost
of hedging
9.0
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
9.0
Charged to equity in respect of
share-based payments
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(2.4)
(2.4)
Impact of acquisition
\u2013
\u2013
\u2013
(1.3)
\u2013
\u2013
\u2013
(1.3)
Effect of changes in foreign
exchange rates
\u2013
1.8
\u2013
\u2013
(2.5)
(0.1)
(0.5)
(1.3)
At 1 January 2024
(39.2)
(310.5)
\u2013
(1.9)
56.6
(26.8)
57.6
(264.2)
(Charged)/credited to the income
statement
(29.7)
(38.4)
\u2013
1.1
( 7.0)
14.7
16.0
(43.3)
Charged to other comprehensive
income in respect of actuarial gains
\u2013
\u2013
\u2013
\u2013
\u2013
(1.3)
\u2013
(1.3)
Credited to other comprehensive
income in respect of cash flow
hedges
73.0
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
73.0
Charged to other comprehensive
income in respect of cost of hedging
(1.7)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(1.7)
Credited to equity in respect of cash
flow hedges
(1.2)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(1.2)
Credited to equity in respect of cost
of hedging
5.7
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
5.7
Credited to equity in respect of
share-based payments
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
1.4
1.4
Effect of changes in foreign
exchange rates
\u2013
(0.9)
\u2013
(0.1)
0.6
\u2013
0.2
(0.2)
At 31 December 2024
6.9
(349.8)
\u2013
(0.9)
50.2
(13.4)
75.2
(231.8)
Deferred tax balances (after offset)
for financial reporting purposes:
Net Canadian deferred tax asset at
31 December 2024
\u2013
(9.4)
\u2013
0.3
20.3
(0.3)
25.1
36.0
Net US deferred tax asset at
31 December 2024
\u2013
(22.3)
\u2013
\u2013
29.5
\u2013
5.4
12.6
Net UK deferred tax liability at
31 December 2024
6.9
( 318 .1)
\u2013
(1.2)
0.4
(13.1)
44.7
(280.4)
Net Canadian deferred tax asset
at 31 December 2023
\u2013
(18.8)
\u2013
0.4
16.8
(0.2)
28.2
26.4
Net US deferred tax asset at
31 December 2023
\u2013
(21.9)
\u2013
\u2013
39.8
\u2013
8.6
26.5
Net UK deferred tax liability at
31 December 2023
(39.2)
(269.8)
\u2013
(2.3)
\u2013
(26.6)
20.8
(317.1)
", "dimensions": { "concept": "ifrs-full:DisclosureOfTaxReceivablesAndPayablesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-643": { "value": "
2.7 Alternative performance measures
The alternative performance measures (APMs) glossary to these Consolidated financial statements on page 277 provides details of
all APMs used, each APM\u2019s closest IFRS equivalent, the reason why the APM is used by the Group and a definition of how each APM
is calculated.
The Group presents Adjusted results in the Consolidated income statement. Management believes that this approach is useful as it
provides a clear and consistent view of underlying trading performance. Exceptional items and certain remeasurements are excluded
from Adjusted results and are presented in a separate column in the Consolidated income statement. The Group believes that this
presentation provides useful information about the financial performance of the business and is consistent with the way the Board
and executive management assess the performance of the business.
The Group has a policy and framework for the determination of transactions to be presented as exceptional. Exceptional items are
excluded from Adjusted results as they are transactions that are deemed to be one-off or unlikely to reoccur in future years due to
their nature, size, the expected frequency of similar events, or the commercial context. By excluding these amounts, this provides
users of the Consolidated financial statements with a more representative view of the results of the Group and enables comparisons
with other reporting periods as it excludes amounts from activities or transactions that are not likely to reoccur. All transactions
presented as exceptional are approved by the Audit Committee. See the Audit Committee report on page 112 for further details.
In these Consolidated financial statements, the following transactions have been designated as exceptional items and presented
separately:
\u2013 Costs and credits arising as a result of the transaction to sell the majority of the non-core Opus Energy SME customer meter points
and related strategic restructuring to reflect the reduced size of the Opus Energy SME business and Energy Solutions\u2019 focus on core
I&C customers and renewables services (2024, Energy Solutions)
\u2013 Impairment charges related to the Opus Energy CGU (2023, Energy Solutions). See note 2.4 for further information
\u2013 Proceeds from a legal settlement relating to a supplier\u2019s failure to perform under their contract (2023, Energy Solutions)
\u2013 Change in the fair value of contingent consideration (2023, Generation). See note 7.1 for further information
\u2013 Impact of the UK tax rate change on deferred tax balances (2023, Generation and Energy Solutions). See note 2.6 for further
information
Certain remeasurements comprise gains and losses on derivative contracts to the extent that those contracts do not qualify for hedge
accounting, or hedge accounting is not effective, and those gains or losses are either i) unrealised and relate to derivative contracts
with a maturity in future periods, or ii) are realised in relation to the maturity of derivative contracts in the current period. Gains and
losses on derivative contracts prior to maturity generally reflect the difference between the contracted price and the current market
price, which management does not believe provides meaningful information as the Group is not entering contracts with the intention
of creating value from changes in market prices. The Group is entering forward contracts as economic hedges to secure prices and
rates, and lock in value for its future expected pellet production, generation or energy supply activities. The effect of excluding certain
remeasurements from Adjusted results is that commodity sales and purchases are recognised in the period they are intended to hedge
at their contracted prices i.e. at the all-in-hedged amount paid or received in respect of the delivery of the commodity in question. It
also results in the total impact of financial contracts being recognised in the period they are intended to hedge. Management believes
this better reflects the performance of the business as it more accurately represents the intention for entering derivative contracts.
Movements on derivative financial instruments which do not qualify for hedge accounting, or where hedge accounting is ineffective,
are shown in the table below. During 2024 the amounts recognised were predominantly due to fair value gains recognised on foreign
exchange contracts due to the weakening of sterling against the US dollar and the realisation of losses on maturity of inflation and
commodity hedges.
Further details on the Group\u2019s derivative financial instruments are provided in Section 7.
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Exceptional items:
Opus Energy sale of meter points and restructuring
(59.5)
\u2013
2023
Opus Energy impairment
\u2013
(69.1)
Net credit from legal claim
\u2013
13.7
Change in fair value of contingent consideration
\u2013
(18.2)
Exceptional items included within operating profit and profit before tax
(59.5)
(73.6)
Tax on exceptional items
14.8
10.8
Impact of tax rate change
\u2013
0.7
Exceptional items after tax
(44.7)
(62.1)
Certain remeasurements:
Net fair value remeasurements on derivative contracts included in revenue
11.9
70.7
Net remeasurements realised on maturity of derivative contracts included in revenue
7 7.6
228.6
Net hedge ineffectiveness reclassified to profit or loss included in revenue
(8.2)
(16.4)
Net fair value remeasurements on derivative contracts included in cost of sales
45.3
(127.0)
Net remeasurements realised on maturity of derivative contracts included in cost of sales
(17.1)
44.3
Certain remeasurements included within operating profit
109.5
200.2
Net remeasurements realised on maturity of derivative contracts included in interest payable and similar
charges
(0.6)
(0.3)
Net fair value remeasurements on derivative contracts included in foreign exchange (losses)/gains
\u2013
4.9
Certain remeasurements included in profit before tax
108.9
204.8
Tax on certain remeasurements
(29.7)
(4 8.1)
Impact of tax rate change
\u2013
( 3.1)
Certain remeasurements after tax
79.2
153.6
Reconciliation of profit for the period:
Adjusted profit for the period
491.0
469.4
Exceptional items after tax
(44.7)
(6 2.1)
Certain remeasurements after tax
79.2
153.6
Total profit for the period
525.5
560.9
Opus Energy sale of meter points and restructuring
On 26 June 2024, the Group agreed the sale (\u201cthe transaction\u201d) of the majority of its non-core small and medium-sized enterprise
(SME) customer meter points from Opus Energy to EDF Energy Customers Limited (EDF). The sale also included the transfer of
receivables balances related to these transferred customer meter points. The transaction was an asset sale under an Asset Purchase
Agreement (APA) and completed on 1 September 2024.
The Group received consideration of \u00a39.6 million from EDF on completion of the transaction relating to the meter points and related
customer contracts and \u00a34.3 million relating to the provision of REGOs to cover the energy supplied under the transferred customer
contracts. The consideration for the REGOs will be recognised in line with the transfer of the REGOs to EDF.
The amount the Group will receive for the transferred receivables is contingent on the amounts collected by EDF. The transfer did
not qualify for derecognition under IFRS 9 as the Group had neither transferred nor retained substantially all the risks and rewards
of ownership and has retained control of the asset. The receivables are recognised at fair value through profit or loss as they are no
longer solely payment of principal and interest. The fair value gains and losses recognised on these receivables reflect changes in
the fair value of the consideration expected to be received.
The Group has commenced a restructuring to reflect the reduced size of Opus Energy post sale and the focus on I&C customers and
renewables services within the Energy Solutions business. The Group incurred costs of redundancies in order to reduce the headcount
in the Opus Energy business and holds a redundancy provision at 31 December 2024 in respect of in scope colleagues who had not yet
left the Group. See note 5.3 for further details.
Certain assets, including prepaid commissions and software have been impaired due to the reduced future economic benefit expected
to be obtained from these assets following the transaction.
With a significantly reduced number of customers to cover the cost base of the remaining Opus Energy business, a number of sales
contracts are judged to be onerous and an onerous contracts provision has therefore been recognised. See note 5.3 for further details.
An additional impairment charge has been recognised as a result of lower expected recoveries on the retained receivables due from
loss customers (customers who are no longer supplied by Opus Energy) due to the transaction and restructuring.
The gains and losses described above that have been recognised in the period on the transaction and related restructuring have been
classified as exceptional. Further details of the amounts recognised as exceptional are detailed below:
Year ended
31 December 2024
\u00a3m
Consideration allocated to the customer meter points
9.6
Net assets disposed of directly related to the transferred customers
(8.4)
Profit on disposal of customer meter points \u2013 included in other gains and losses
1.2
Other losses incurred as a direct result of the transaction and restructuring
Onerous contracts provision, impairment of prepaid commissions and final commission settlement on retained
customers \u2013 included in cost of sales
(23.3)
Redundancy, transaction and migration costs \u2013 included in operating and administrative expenses
(9.2)
Fair value losses on receivables relating to transferred customers (see note 3.5) \u2013 included in operating and
administrative expenses
(12.9)
Additional impairment of receivables relating to retained customers (see note 3.5) \u2013 included in impairment losses on
financial assets
(12.7)
Impairment of non-current assets (see note 2.4) \u2013 included in impairment of non-current assets
(2.6)
Net loss recognised as a result of the transaction
(59.5)
As part of the transaction, the Opus Energy hedge book, to purchase power and gas to supply to its customers, was transferred to
EDF. Prior to the transaction these trades were all intercompany between the Biomass Generation business and Opus Energy and
were therefore eliminated on consolidation. As the hedge book was transferred at the original hedged rate to a party external to the
Group, the trades were off market and had a day one mark-to-market fair value of \u00a333.7 million. This gain has not been recognised
as part of the net loss as a result of the transaction, as whilst the counterparty has changed, there is no impact on the Biomass
Generation business which will continue to sell energy. This would have occurred irrespective of the transaction and as such the gain
has been presented within Certain remeasurements in the Consolidated income statement, consistent with the Group\u2019s treatment
of unrealised gains and losses on unhedged derivative contracts.
During the current year the Group had a net cash inflow of \u00a39.6 million in respect of the Opus Energy transaction. This comprised a
cash inflow of \u00a313.9 million of consideration received, a net \u00a32.0 million inflow in respect of debt and credits transferred to EDF, and
a cash outflow of \u00a36.3 million in respect of redundancy, transaction and migration costs paid out in the year. The cash flows relating
to the transaction have been recognised within operating cash flows in the Consolidated cash flow statement.
For each item designated as exceptional or as a certain remeasurement, the table below summarises the impact of the item on
Adjusted and Total profit after tax, Basic EPS and Net cash from operating activities.
Year ended 31 December 2024
Profit/(loss) Basic Net cash from
Operating Profit Tax (charge)/ for the earnings/(loss) operating
Revenue Gross profit profit before tax credit period per share activities
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Pence \u00a3m
Total results IFRS measure
6 ,162.5
1,876.5
850.2
753.4
(227.9)
525.5
137.5
859.5
Certain remeasurements:
Net fair value remeasurement on
derivative contracts
(81.3)
(109.5)
(109.5)
(108.9)
29.7
(79.2)
(20.7)
\u2013
Exceptional items:
Opus Energy sale of meter points
and restructuring
\u2013
23.3
59.5
59.5
(14.8)
44.7
11.6
(9.6)
Total
(81.3)
(86.2)
(50.0)
(49.4)
14.9
(34.5)
(9.1)
(9.6)
Adjusted results totals
6,081.2
1,790.3
800.2
704.0
(213.0)
491.0
128.4
849.9
Year ended 31 December 2023
Profit/(loss) Basic Net cash from
Restated
(1)
Operating Profit Tax (charge)/ for the earnings/(loss) operating
Revenue Gross profit profit before tax credit period per share activities
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Pence \u00a3m
Total results IFRS measure
7,7 33. 2
1,953.6
908.2
796.4
(235.5)
560.9
142.8
835.6
Certain remeasurements:
Net fair value remeasurement on
derivative contracts
(282.9)
(200.2)
(200.2)
(204.8)
4 8.1
(156.7)
(39.7)
\u2013
Impact of tax rate change
\u2013
\u2013
\u2013
\u2013
3.1
3 .1
0.8
\u2013
Exceptional items:
2023
Opus Energy impairment
\u2013
\u2013
69.1
69.1
(13.5)
55.6
14 .1
\u2013
Net credit from legal claim
\u2013
\u2013
(13.7)
(13.7)
2.7
(11.0)
(2.8)
(9.3)
Change in fair value of contingent
consideration
\u2013
\u2013
18.2
18.2
\u2013
18.2
4.6
\u2013
Impact of tax rate change
\u2013
\u2013
\u2013
\u2013
(0.7)
(0.7)
(0.2)
\u2013
Total
(282.9)
(200.2)
(126.6)
(131.2)
39.7
(91.5)
(23.2)
(9.3)
Adjusted results totals
7,
45 0.3
1,753.4
781.6
665.2
(195.8)
469.4
119.6
826.3
(1) The year ended 31 December 2023 amounts above have been restated to reflect the Group\u2019s revised application of the agent requirements of IFRS 15 to sleeved
electricity trades. See further details of this restatement in the Net presentation of sleeved electricity trades section on page 266.
Adjusted EBITDA is a key measure of financial performance for the Group. A reconciliation from Adjusted operating profit from the
Consolidated income statement is shown below:
Year ended 31 December 2024
Attributable to
Owners of the Non-controlling
parent company interests Total
\u00a3m \u00a3m \u00a3m
Adjusted operating profit/(loss)
801.3
(1.1)
800.2
Depreciation and amortisation
240.4
1.4
241.8
Other losses
8.5
\u2013
8.5
Share of losses from associates
2.2
\u2013
2.2
Impairment of non-current assets
11.8
\u2013
11.8
Adjusted EBITDA
1,064.2
0.3
1,064.5
Year ended 31 December 2023
Attributable to
Owners of the Non-controlling
parent company interests Total
\u00a3m \u00a3m \u00a3m
Adjusted operating profit/(loss)
782.9
(1.3)
781.6
Depreciation and amortisation
223.7
1.3
225.0
Other gains
(0.7)
\u2013
(0.7)
Share of losses from associates
1.6
\u2013
1.6
Impairment of non-current assets
1.7
\u2013
1.7
Adjusted EBITDA
1,009.2
\u2013
1,009.2
Year ended 31 December
Restated
(1)
2024 2023
\u00a3m \u00a3m
Segment Adjusted EBITDA:
Pellet Production
143.0
88.9
Biomass Generation
813.5
703.3
Flexible Generation
137.6
230.2
Energy Solutions
51.2
71.8
Innovation, capital projects and other
(78 .1)
( 78.1)
Intra-group eliminations
(3.0)
(6.9)
Total Adjusted EBITDA
1,064.2
1,009.2
(1) Comparative amounts have been restated to reflect the change in reportable segments. See note 2.1 for further details of the change in reportable segments.
Net debt
Net debt is calculated by taking the Group\u2019s borrowings (note 4.2), adjusting for the impact of associated hedging instruments, adding
lease liabilities (note 3.2), and subtracting cash and cash equivalents (note 4.1). Net debt excludes the share of borrowings, lease
liabilities, and cash and cash equivalents attributable to non-controlling interests.
Prior to 2024, the Group\u2019s definition of Net debt did not include lease liabilities. See page 165 for further details of this change.
Borrowings includes external financial debt, such as loan notes, term loans and amounts drawn in cash under revolving credit facilities
(RCFs) (see note 4.2). Borrowings does not include other financial liabilities such as pension obligations (see note 6.3), trade and other
payables (see note 3.7), lease liabilities calculated in accordance with IFRS 16 (see note 3.2), and working capital facilities (such as
credit cards and deferred letters of credit) linked directly to specific payables that provide short extension of payment terms of less
than 12 months (see note 4.3). The Group does not include balances related to supply chain financing in Net debt as there are no
changes to the Group\u2019s payment terms under this arrangement, nor would there be if the arrangement was to cease (see note 3.7).
Net debt includes the impact of any cash collateral receipts from counterparties or cash collateral posted to counterparties.
The Group has entered into cross-currency interest rate swaps, fixing the sterling value of the principal repayments and interest in
respect of the Group\u2019s euro (EUR) denominated debt. The Group has also entered fixed rate foreign exchange forwards to fix the
sterling value of the principal repayment of the Canadian dollar (CAD) denominated debt and certain EUR denominated debt (see note
4.2). For the purpose of calculating Net debt, USD, EUR and CAD balances are translated at the hedged rate, rather than the rate
prevailing at the reporting date, which impacts the carrying amount of the Group\u2019s borrowings. See the APMs glossary and the APMs
section within the Basis of preparation for further details on the calculation of Net debt.
As at 31 December
2024
2023
(1)
\u00a3m \u00a3m
Borrowings (note 4.2)
(1,176.7)
(1,425.3)
Lease liabilities (note 3.2)
(116.5)
(135.8)
Cash and cash equivalents
356.0
379.5
Net cash, borrowings and lease liabilities
(937. 2)
(1
,18 1. 6)
Non-controlling interests\u2019 share of cash and cash equivalents in non-wholly owned subsidiaries
(0.8)
(0.3)
Non-controlling interests\u2019 share of lease liabilities in non-wholly owned subsidiaries
0.5
\u2013
Impact of hedging instruments
(54.2)
( 37. 8)
Net debt
(991.7)
(1,219.7)
(1) The comparative amounts have been re-presented to reflect the change in definition of Net debt to include lease liabilities. See pages 165 and 166 for further
information.
The table below reconciles Net debt in terms of changes in these balances across the year:
Year ended 31 December
2024
2023
(1)
\u00a3m \u00a3m
Net debt at 1 January
(1,219.7)
(1,359.0)
(Decrease)/increase in cash and cash equivalents
(23.5)
141.5
(Increase)/decrease in non-controlling interests\u2019 share of cash and cash equivalents in non-wholly
owned subsidiaries
(0.5)
0.4
Decrease in borrowings
248.6
15.6
Decrease in lease liabilities
19.3
17. 3
Increase/(decrease) in non-controlling interests\u2019 share of lease liabilities in non-wholly owned
subsidiaries
0.5
(0 .1)
Movement in the impact of hedging instruments
(16.4)
(35.4)
Net debt at 31 December
(991.7)
(1,219.7)
(1) The comparative amounts have been re-presented to reflect the change in definition of Net debt to include lease liabilities. See pages 165 and 166 for further information.
A reconciliation of the change in borrowings during the year is set out in the table in note 4.2.
As explained in the Basis of preparation, the Group has a long-term target for Net debt to Adjusted EBITDA of around 2.0 times.
As at 31 December
2024
2023
(1)
Adjusted EBITDA (\u00a3m)
1,064.2
1,009.2
Net debt (\u00a3m)
(991.7)
(1,219.7)
Net debt to Adjusted EBITDA ratio
0.9
1.2
(1) The comparative amounts have been re-presented to reflect the change in definition of Net debt to include lease liabilities, See pages 165 and 166 for further information.
Cash and committed facilities
The below table reconciles the Group\u2019s available cash and committed facilities:
As at 31 December
2024 2023
\u00a3m \u00a3m
Cash and cash equivalents (note 4.1)
356.0
379.5
RCF available but not utilised
(1)
450.0
259.9
Total cash and committed facilities
806.0
639.4
(1) In August 2024, the Group secured a new \u00a3450.0 million RCF. The Group cancelled its previous \u00a3300.0 million RCF at this date. The Group\u2019s C$10 million RCF also
matured during 2024. See note 4.2 for further information on the Group\u2019s facilities. As at 31 December 2024, the Group had no cash or non-cash drawings under the
RCF (2023: \u00a346.1 million in letters of credit were drawn).
Further commentary on total cash and committed facilities is contained within the CFO\u2019s financial review starting on page 18.
", "dimensions": { "concept": "draxgroupplc:DisclosureOfAlternativePerformanceMeasures", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-583": { "value": "2.8 Earnings per share Earnings per share (EPS) represents the amount of earnings (post-tax profit or losses) attributable to the weighted average number of ordinary shares outstanding in the year. Basic EPS is calculated by dividing the Group\u2019s earnings attributable to owners of the parent company (profit or loss after tax, excluding amounts attributable to non-controlling interests) by the weighted average number of ordinary shares that were outstanding during the year. Diluted EPS demonstrates the impact of all outstanding share options that would vest on their future maturity dates if the conditions at the end of the reporting period were the same as those at the end of the vesting period (such as those to be issued under employee share schemes \u2013 see note 6.2), and the options were exercised and treated as ordinary shares as at the reporting date. The 57.8 million of repurchased shares (2023: 40.3 million) held in the treasury shares reserve are not included in the weighted average calculation of shares. See note 2.11 for details of the shares repurchased in the current year as part of the \u00a3300 million share buyback programme and note 4.4 for further details on the treasury shares reserve. For the purpose of calculating diluted EPS, the weighted average calculation of shares excludes any share options that would have an anti-dilutive impact.
Year ended 31 December
2024
2023
Number of shares (millions):
Weighted average number of ordinary shares for the purposes of calculating Basic earnings per share
383.2
393.8
Effect of dilutive potential ordinary shares under share plans
7. 6
9.3
Weighted average number of ordinary shares for the purposes of calculating Diluted earnings
per share
390.8
4 03.1
Year ended 31 December
2024
2023
Adjusted results
Total results
Adjusted results
Tot al results
Earnings per share attributable to owners of the parent company
Earnings \u2013 profit after tax (\u00a3m)
492.1
526.6
470.7
562.2
Earnings per share \u2013 Basic (pence)
128.4
137. 5
119.6
142.8
Earnings per share \u2013 Diluted (pence)
126.0
134.8
116.8
139.5
", "dimensions": { "concept": "ifrs-full:DisclosureOfEarningsPerShareExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-692": { "value": "Earnings per share (EPS) represents the amount of earnings (post-tax profit or losses) attributable to the weighted average number of ordinary shares outstanding in the year. Basic EPS is calculated by dividing the Group\u2019s earnings attributable to owners of the parent company (profit or loss after tax, excluding amounts attributable to non-controlling interests) by the weighted average number of ordinary shares that were outstanding during the year. Diluted EPS demonstrates the impact of all outstanding share options that would vest on their future maturity dates if the conditions at the end of the reporting period were the same as those at the end of the vesting period (such as those to be issued under employee share schemes \u2013 see note 6.2), and the options were exercised and treated as ordinary shares as at the reporting date. The 57.8 million of repurchased shares (2023: 40.3 million) held in the treasury shares reserve are not included in the weighted average calculation of shares. See note 2.11 for details of the shares repurchased in the current year as part of the \u00a3300 million share buyback programme and note 4.4 for further details on the treasury shares reserve. For the purpose of calculating diluted EPS, the weighted average calculation of shares excludes any share options that would have an anti-dilutive impact. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEarningsPerShareExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-679": { "value": "The 57.8 million of repurchased shares (2023: 40.3 million) held in the treasury shares reserve are not included in the weighted average calculation of shares. See note 2.11 for details of the shares repurchased in the current year as part of the \u00a3300 million share buyback programme and note 4.4 for further details on the treasury shares reserve. For the purpose of calculating diluted EPS, the weighted average calculation of shares excludes any share options that would have an anti-dilutive impact. 2.11 Share buyback programme On 26 July 2024, the Group announced a \u00a3300 million share buyback programme. A first tranche of \u00a375 million commenced on 7 August 2024. On 22 October 2024, it was announced that a further \u00a375 million tranche would commence immediately following the completion of the first tranche. The shares repurchased up to 31 December 2024 were acquired at an average price of 645.6 pence per share, with prices ranging from 618.8 pence to 673.9 pence. In total the Group repurchased 17.8 million ordinary shares during 2024 at a total net cost of \u00a3115.4 million. As at 26 February 2025, 23.2 million shares have been repurchased at a total net cost of \u00a3150.1 million. During 2023, the Group undertook a \u00a3150 million share buyback programme. The shares were acquired at an average price of 567.5 pence per share, with prices ranging from 521.6 pence to 637.7 pence. In total the Group repurchased 26.5 million ordinary shares at a total net cost of \u00a3149.2 million. Shares purchased under these share buyback programmes are held in a separate treasury shares reserve awaiting reissue or cancellation and have no voting rights attached to them. See note 4.4 for a reconciliation of the movement in the treasury shares reserve.
Capital
redemption Translation Merger Treasury shares Total other
reserve reserve reserve reserve reserves
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
At 1 January 2023
1.5
85.8
710.8
(50.4)
747.7
Exchange differences on translation of foreign operations
\u2013
(10.3)
\u2013
\u2013
(10.3)
Repurchase of own shares (see note 2.11)
\u2013
\u2013
\u2013
(149.2)
(149.2)
At 1 January 2024
1.5
75.5
710.8
(199.6)
588.2
Exchange differences on translation of foreign operations
\u2013
(6.6)
\u2013
\u2013
(6.6)
Movement in equity associated with share-based
payments
\u2013
\u2013
\u2013
0.8
0.8
Repurchase of own shares (see note 2.11)
\u2013
\u2013
\u2013
(115.4)
(115.4)
At 31 December 2024
1.5
68.9
710.8
(314.2)
467.0
The capital redemption and treasury shares reserves arose when the Group completed previous share buyback programmes. A further share buyback was ongoing during 2024 and has continued into 2025. The net cost of this share buyback up to 31 December 2024 was \u00a3115.4 million (see note 2.11 for further details). The 57.8 million (2023: 40.3 million) shares held in the treasury shares reserve have no voting rights attached to them. ", "dimensions": { "concept": "ifrs-full:DisclosureOfTreasurySharesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-584": { "value": "
2.9 Dividends
Year ended 31 December
2024 2023
Pence per share \u00a3m \u00a3m
Amounts recognised as distributions to equity holders in the year (based on the
number of ordinary shares outstanding at the record date):
Interim dividend for the year ended 31 December 2024 paid on 25 October 2024
10.4
39.8
\u2013
Final dividend for the year ended 31 December 2023 paid on 17 May 2024
13 .9
53.7
\u2013
Interim dividend for the year ended 31 December 2023 paid on 6 October 2023
9.2
\u2013
35.7
Final dividend for the year ended 31 December 2022 paid on 19 May 2023
12 . 6
\u2013
50.6
Total distributions
93.5
86.3
At the forthcoming Annual General Meeting, the Board will recommend to shareholders that a resolution is passed to approve
payment of a final dividend for the year ended 31 December 2024 of 15.6 pence per share (equivalent to approximately \u00a357 million)
payable on 16 May 2025. The final dividend has not been included as a liability as at 31 December 2024. This would bring total
dividends payable in respect of the 2024 financial year to approximately \u00a397 million.
The Group has a long-standing capital allocation policy. This policy is based on a commitment to robust financial metrics that underpin
the Group\u2019s strong credit rating: investment in the core business; paying a sustainable and growing dividend; and returning surplus
capital to shareholders. The Board is confident that the dividend is sustainable and expects it to grow as the implementation of the
Group\u2019s strategy generates an increasing proportion of stable earnings and cash flows. In determining the rate of growth in dividends,
the Board will take account of future investment opportunities and the less predictable cash flows from the Group\u2019s commodity-linked
revenue streams.
In future years, if there is a build-up of capital in excess of the Group\u2019s investment needs, the Board will consider the most appropriate
mechanism to return this to shareholders.
Consideration of sustainability, including a link to the Group\u2019s dividend, can be found in the Market context section on pages 6 and 7.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDividendsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-3": { "value": "0.139", "decimals": 4, "dimensions": { "concept": "ifrs-full:DividendsProposedOrDeclaredBeforeFinancialStatementsAuthorisedForIssueButNotRecognisedAsDistributionToOwnersPerShare", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00", "unit": "iso4217:GBP/xbrli:shares" } }, "fact-4": { "value": "0.126", "decimals": 4, "dimensions": { "concept": "ifrs-full:DividendsProposedOrDeclaredBeforeFinancialStatementsAuthorisedForIssueButNotRecognisedAsDistributionToOwnersPerShare", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:GBP/xbrli:shares" } }, "fact-670": { "value": "57000000.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:DividendsProposedOrDeclaredBeforeFinancialStatementsAuthorisedForIssueButNotRecognisedAsDistributionToOwners", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-585": { "value": "
2.10 Retained profits
Retained profits are a component of equity reserves. The overall balance reflects the total profits the Group has generated over
its lifetime that are attributable to the equity holders of the parent company, reduced by the amount of that profit distributed to
shareholders. The table below sets out the movements in retained profits during the year:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
At 1 January
666.4
193.8
Profit for the year attributable to the owners of the parent company
526.6
562.2
Remeasurement of defined benefit pension scheme (note 6.3)
5.5
(28.8)
Deferred tax on remeasurement of defined benefit pension scheme (note 2.6)
(1.3)
7.2
Equity dividends paid (note 2.9)
(93.5)
(86.3)
Movements in equity associated with share-based payments
13.0
13.4
Tax on share-based payments (note 2.6)
1.4
4.5
Gain on equity investments
\u2013
0.4
At 31 December
1,118 .1
666.4
Distributable reserves
The capacity of the Group to make dividend payments is primarily determined by the availability of retained distributable profits and
cash resources.
The parent company\u2019s financial statements, set out on pages 267 to 273 of these Annual report and accounts, disclose the basis of
the parent company\u2019s distributable reserves.
The majority of the Group\u2019s distributable reserves are held in holding and operating subsidiaries. Management actively monitors
the level of distributable reserves in each company in the Group, ensuring adequate reserves are available for upcoming dividend
payments and any share buyback transactions, and that the parent company has access to these reserves.
The immediate cash resources of the Group of \u00a3356.0 million are set out in note 4.1 and the recent history of cash generation
within note 4.3. The majority of these cash resources are held centrally within the Group by Drax Corporate Limited for treasury
management purposes and are available for funding the working capital and other requirements of the Group.
The Group\u2019s financing facilities (see note 4.2) place customary conditions on the amount of dividend payments that can be made
in any given year. The Group expects to be able to make dividend payments, in line with its policy, within these conditions for the
foreseeable future. See note 4.2 for further details on the covenants relating to the financing facilities.
2.11 Share buyback programme
On 26 July 2024, the Group announced a \u00a3300 million share buyback programme. A first tranche of \u00a375 million commenced on
7 August 2024. On 22 October 2024, it was announced that a further \u00a375 million tranche would commence immediately following
the completion of the first tranche.
The shares repurchased up to 31 December 2024 were acquired at an average price of 645.6 pence per share, with prices ranging
from 618.8 pence to 673.9 pence. In total the Group repurchased 17.8 million ordinary shares during 2024 at a total net cost of
\u00a3115.4 million. As at 26 February 2025, 23.2 million shares have been repurchased at a total net cost of \u00a3150.1 million.
During 2023, the Group undertook a \u00a3150 million share buyback programme. The shares were acquired at an average price of
567.5 pence per share, with prices ranging from 521.6 pence to 637.7 pence. In total the Group repurchased 26.5 million ordinary
shares at a total net cost of \u00a3149.2 million.
Shares purchased under these share buyback programmes are held in a separate treasury shares reserve awaiting reissue or
cancellation and have no voting rights attached to them. See note 4.4 for a reconciliation of the movement in the treasury
shares reserve.
4.4 Equity and reserves The Group\u2019s ordinary share capital reflects the total number of shares in issue, which are publicly traded on the London Stock Exchange. Accounting policy Ordinary shares are classified as equity as evidenced by their residual interest in the assets of the Company after deducting its liabilities. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Issued equity
As at 31 December
2024 2023
\u00a3m \u00a3m
Issued and fully paid:
427,770,766 ordinary shares of 11
16
\u204429 pence each (2023: 424,923,406)
49.4
49.1
The movement in allotted and fully paid share capital of the Company during the year was as follows:
Year ended 31 December
2024 2023
(number) (number)
At 1 January
424,923,406
414,872,491
Issued under employee share schemes
2,847,360
10,050,915
At 31 December
427,770,766
424,923,406
The Company has only one class of shares, which are ordinary shares of 11 16 \u204429 pence each, carrying no right to fixed income. No shareholders have waived their rights to dividends. Throughout the year, shares were issued in satisfaction of options vesting in accordance with the rules of the Group\u2019s employee share schemes (see note 6.2). During the year 794,782 shares were issued at a weighted average exercise price of 336 pence per share in respect of options vesting on employee share purchase schemes and 2,052,578 shares were issued in respect of share options vesting on share awards with no exercise price. Share buyback programme On 26 July 2024, the Group announced the commencement of a \u00a3300 million share buyback programme. The buyback programme is ongoing, with \u00a3115.4 million of shares having been repurchased as at 31 December 2024. The shares purchased by the Group have not been cancelled and so continue to be included in the issued shares in the above table. See note 2.11 for further details on the share buyback programme.
Share premium
The share premium account reflects amounts received in respect of issued share capital that exceeds the nominal value of the shares
issued, net of incremental transaction costs and tax, that are directly attributable to the issue of new shares. Movements in the share
premium reserve during the year reflect amounts received above the nominal value on the issue of shares under employee share schemes.
Year ended 31 December
2024 2023
\u00a3m \u00a3m
At 1 January
441.2
433.3
Issue of share capital
2.6
7.9
At 31 December
443.8
441.2
Other reserves
Capital
redemption Translation Merger Treasury shares Total other
reserve reserve reserve reserve reserves
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
At 1 January 2023
1.5
85.8
710.8
(50.4)
747.7
Exchange differences on translation of foreign operations
\u2013
(10.3)
\u2013
\u2013
(10.3)
Repurchase of own shares (see note 2.11)
\u2013
\u2013
\u2013
(149.2)
(149.2)
At 1 January 2024
1.5
75.5
710.8
(199.6)
588.2
Exchange differences on translation of foreign operations
\u2013
(6.6)
\u2013
\u2013
(6.6)
Movement in equity associated with share-based
payments
\u2013
\u2013
\u2013
0.8
0.8
Repurchase of own shares (see note 2.11)
\u2013
\u2013
\u2013
(115.4)
(115.4)
At 31 December 2024
1.5
68.9
710.8
(314.2)
467.0
The capital redemption and treasury shares reserves arose when the Group completed previous share buyback programmes. A further
share buyback was ongoing during 2024 and has continued into 2025. The net cost of this share buyback up to 31 December 2024
was \u00a3115.4 million (see note 2.11 for further details). The 57.8 million (2023: 40.3 million) shares held in the treasury shares reserve
have no voting rights attached to them.
Exchange differences relating to the translation of the net assets of the Group\u2019s US and Canadian subsidiaries from their functional
currencies (USD and CAD) into sterling for presentation in these Consolidated financial statements are recognised in the translation
reserve.
Hedge reserve and Cost of hedging reserve
Movements in the hedge reserve and the cost of hedging reserve, which reflect the change in fair value of derivative financial
instruments designated into hedge accounting relationships in accordance with IFRS 9 and related deferred tax, are set out in notes
7.3 and 7.4.
", "dimensions": { "concept": "ifrs-full:DisclosureOfShareCapitalReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-618": { "value": "2.10 Retained profits Retained profits are a component of equity reserves. The overall balance reflects the total profits the Group has generated over its lifetime that are attributable to the equity holders of the parent company, reduced by the amount of that profit distributed to shareholders. The table below sets out the movements in retained profits during the year:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
At 1 January
666.4
193.8
Profit for the year attributable to the owners of the parent company
526.6
562.2
Remeasurement of defined benefit pension scheme (note 6.3)
5.5
(28.8)
Deferred tax on remeasurement of defined benefit pension scheme (note 2.6)
(1.3)
7.2
Equity dividends paid (note 2.9)
(93.5)
(86.3)
Movements in equity associated with share-based payments
13.0
13.4
Tax on share-based payments (note 2.6)
1.4
4.5
Gain on equity investments
\u2013
0.4
At 31 December
1,118 .1
666.4
Distributable reserves The capacity of the Group to make dividend payments is primarily determined by the availability of retained distributable profits and cash resources. The parent company\u2019s financial statements, set out on pages 267 to 273 of these Annual report and accounts, disclose the basis of the parent company\u2019s distributable reserves. The majority of the Group\u2019s distributable reserves are held in holding and operating subsidiaries. Management actively monitors the level of distributable reserves in each company in the Group, ensuring adequate reserves are available for upcoming dividend payments and any share buyback transactions, and that the parent company has access to these reserves. The immediate cash resources of the Group of \u00a3356.0 million are set out in note 4.1 and the recent history of cash generation within note 4.3. The majority of these cash resources are held centrally within the Group by Drax Corporate Limited for treasury management purposes and are available for funding the working capital and other requirements of the Group. The Group\u2019s financing facilities (see note 4.2) place customary conditions on the amount of dividend payments that can be made in any given year. The Group expects to be able to make dividend payments, in line with its policy, within these conditions for the foreseeable future. See note 4.2 for further details on the covenants relating to the financing facilities. 2.11 Share buyback programme On 26 July 2024, the Group announced a \u00a3300 million share buyback programme. A first tranche of \u00a375 million commenced on 7 August 2024. On 22 October 2024, it was announced that a further \u00a375 million tranche would commence immediately following the completion of the first tranche. The shares repurchased up to 31 December 2024 were acquired at an average price of 645.6 pence per share, with prices ranging from 618.8 pence to 673.9 pence. In total the Group repurchased 17.8 million ordinary shares during 2024 at a total net cost of \u00a3115.4 million. As at 26 February 2025, 23.2 million shares have been repurchased at a total net cost of \u00a3150.1 million. During 2023, the Group undertook a \u00a3150 million share buyback programme. The shares were acquired at an average price of 567.5 pence per share, with prices ranging from 521.6 pence to 637.7 pence. In total the Group repurchased 26.5 million ordinary shares at a total net cost of \u00a3149.2 million. Shares purchased under these share buyback programmes are held in a separate treasury shares reserve awaiting reissue or cancellation and have no voting rights attached to them. See note 4.4 for a reconciliation of the movement in the treasury shares reserve. Other reserves
Capital
redemption Translation Merger Treasury shares Total other
reserve reserve reserve reserve reserves
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
At 1 January 2023
1.5
85.8
710.8
(50.4)
747.7
Exchange differences on translation of foreign operations
\u2013
(10.3)
\u2013
\u2013
(10.3)
Repurchase of own shares (see note 2.11)
\u2013
\u2013
\u2013
(149.2)
(149.2)
At 1 January 2024
1.5
75.5
710.8
(199.6)
588.2
Exchange differences on translation of foreign operations
\u2013
(6.6)
\u2013
\u2013
(6.6)
Movement in equity associated with share-based
payments
\u2013
\u2013
\u2013
0.8
0.8
Repurchase of own shares (see note 2.11)
\u2013
\u2013
\u2013
(115.4)
(115.4)
At 31 December 2024
1.5
68.9
710.8
(314.2)
467.0
The capital redemption and treasury shares reserves arose when the Group completed previous share buyback programmes. A further share buyback was ongoing during 2024 and has continued into 2025. The net cost of this share buyback up to 31 December 2024 was \u00a3115.4 million (see note 2.11 for further details). The 57.8 million (2023: 40.3 million) shares held in the treasury shares reserve have no voting rights attached to them. Exchange differences relating to the translation of the net assets of the Group\u2019s US and Canadian subsidiaries from their functional currencies (USD and CAD) into sterling for presentation in these Consolidated financial statements are recognised in the translation reserve. Hedge reserve and Cost of hedging reserve Movements in the hedge reserve and the cost of hedging reserve, which reflect the change in fair value of derivative financial instruments designated into hedge accounting relationships in accordance with IFRS 9 and related deferred tax, are set out in notes 7.3 and 7.4.", "dimensions": { "concept": "ifrs-full:DisclosureOfReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-586": { "value": "
2.12 Post balance sheet event
Low-carbon dispatchable Contract for Difference
On 10 February 2025 Drax Power Limited agreed a non-binding heads of terms with the UK Government on a low-carbon dispatchable
Contract for Difference (CfD) agreement for Drax Power Station.
The heads of terms propose a CfD mechanism with a strike price of \u00a3113/MWh (at 2012 values) indexed to UK CPI. The CfD applies
to all four biomass units at Drax Power Station, with an aggregate collar of approximately 6TWh per annum (and a minimum of
approximately 5TWh) and a four-year term from 1 April 2027 to 31 March 2031.
Under the proposed agreement Drax Power Station will sell approximately 6TWh of power annually against a season ahead reference
price (as per the current CfD scheme) and then seek to maximise generation from its four units at times of high demand and reduce
generation at times of low demand, using the power station\u2019s flexibility to support UK energy security. The proposed agreement also
allows for system support and ancillary services.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEventsAfterReportingPeriodExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-587": { "value": "3.1 Property, plant and equipment This note shows the cost, accumulated depreciation and impairment, and net book value of the physical assets controlled by the Group. Accounting policy Property, plant and equipment is stated at net book value, which is its cost less any accumulated depreciation and any accumulated impairment losses, if required, charged to date. Property, plant and equipment assets are initially measured at cost. Cost comprises: the purchase price (after deducting trade discounts and rebates); any directly attributable costs of bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management; and an estimate of the present value of the costs of dismantling and removing the item and restoring the site, where required. Depreciation reflects the usage of the asset over time and is calculated by taking the cost of the asset, net of any expected residual value, and charging it to the Consolidated income statement on a straight-line basis from the date that the asset is available for use and over its useful economic life (UEL). Where relevant, this is limited to the estimated decommissioning date of the site where the asset is located. The Group constructs many of its assets as part of long-term development projects. Assets that are under the course of construction are not depreciated until they are ready for use in the manner intended by management. The table below shows the weighted average remaining UELs of the main categories of assets held at the reporting date:
Average UEL
remaining
2024
(years)
Freehold buildings
21
Plant and equipment
Electricity generation assets:
Biomass plant
14
Hydro plants (including pumped storage)
36
Pellet production plant
8
Other plant, machinery and equipment
12
Reinstatement assets
18
Plant spare parts
15
Freehold land held at cost is considered to have an unlimited UEL and is not depreciated. The value of freehold land held at 31 December 2024 is \u00a335.5 million (2023: \u00a335.6 million). Electricity generation assets are grouped according to the fuel type of the relevant plant. Pellet production plant includes the US and Canada based assets of the Group\u2019s Pellet Production business and the assets at the Daldowie fuel plant near Glasgow. Plant spare parts are depreciated over the remaining UEL of the relevant power station or plant, or shorter if a shorter UEL is more appropriate. Plant spare parts can be used within maintenance projects which are operating in nature (in addition to capital maintenance projects). In this instance the net book value of the part is transferred from the property, plant and equipment balance and recognised as an expense in the Consolidated income statement within operating and administrative expenses. These issues are reflected in the issues to maintenance projects line in the table below. Costs relating to major inspections, overhauls and upgrades to assets are included in the carrying amounts of existing assets or recognised as separate assets, as appropriate, if the recognition criteria are met; namely, when it is probable that future economic benefits associated with the expenditure will flow to the Group and the cost can be measured reliably. Assets that are replaced as part of any overhauls or upgrades are disposed of. All other repairs and maintenance costs are expensed as incurred. Estimated UELs and residual values are reviewed as a minimum at the end of each reporting period, taking into account regulatory changes, climate change (see note 3.8 for further details) and commercial and technological obsolescence, as well as normal wear and tear. Residual values are based on prices prevailing at the reporting date. Any changes to estimated UELs or residual values are applied prospectively. At each reporting date the Group reviews its property, plant and equipment to determine whether there is any indication that these assets may be impaired. The Group\u2019s accounting policy in respect of impairment, along with details of the impairment review conducted during the year are set out in note 2.4. An impairment charge is recognised immediately if the net book value of an asset exceeds its recoverable amount, which is the higher of an asset\u2019s value in use and its fair value less costs to sell. The Group\u2019s policy is to recognise an impairment charge through accumulated depreciation and impairment if the asset will continue to be used or retained by the Group. Cost and any accumulated depreciation and impairment are removed when an asset is disposed. Gains and losses on disposals are determined by comparing proceeds with the asset\u2019s carrying amount. During the year, the Group has capitalised \u00a34.4 million (2023: \u00a318.3 million) of costs relating to the UK BECCS project at Drax Power Station resulting in a total amount of \u00a347.2 million capitalised in relation to this project as at 31 December 2024 (2023: \u00a342.8 million). During the year, the Group has also capitalised \u00a363.6 million (2023: \u00a345.4 million) of costs relating to the Longview pellet plant development project resulting in a total amount of \u00a3122.0 million capitalised in relation to this project as at 31 December 2024 (2023: \u00a355.9 million). The capitalisation of development project costs has been classified as a critical accounting judgement due to the judgements required in determining whether costs incurred meet the criteria to be capitalised or not, and should expectations around development projects change then the amounts capitalised may need to be impaired. The Group has also continued construction of the three OCGT projects that have obtained Capacity Market contracts. Construction of these projects is expected to complete during 2025. The amount capitalised up to the reporting date relating to these projects totals \u00a3420.7 million (2023: \u00a3323.5 million). Of this, \u00a397.2 million (2023: \u00a3188.6 million) was capitalised during the year. The Group\u2019s total commitment for future capital expenditure is disclosed in note 7.7. Significant estimation uncertainty As disclosed on page 164, the Group has made an estimate regarding the UEL of Drax Power Station. Given the continued focus on climate change, renewable sources of energy and transitioning to a net zero economy, the power generation industry is going through a period of transformation, which can impact on the UELs of assets. As the UK Government\u2019s net zero strategy becomes clearer, particularly in relation to biomass and BECCS, the Group will continue to assess any potential impact of these developments on the UEL of Drax Power Station. The rate of change in these areas increases the risk that the UEL of Drax Power Station will be updated in the future as new information becomes available. As such, a change in UELs in relation to Drax Power Station\u2019s assets has been disclosed as a key source of estimation uncertainty. If options, such as UK BECCS or data centres, are deployed at Drax Power Station this could result in an extension of the end of station life beyond the current assumed end date of 2039. If the UELs of Drax Power Station assets that are currently limited to 2039 were to increase by a further 10 years, the annual depreciation charge would decrease by approximately \u00a318.1 million. If a low-carbon dispatchable CfD agreement is not agreed with the UK Government for the period post March 2027 (see note 2.12 for further details on the heads of terms of the low-carbon dispatchable CfD agreement), when the current renewable schemes end, this could result in a reduction to the end of station life. If the assumed end of station life of 2039 were to decrease by 12 years to 2027, in line with the end of the current renewable schemes, the annual depreciation charge would be increased by approximately \u00a3183.8 million, excluding the impact of any potential impairment.
Assets under the
Freehold land Plant and Plant spare course of
and buildings equipment parts construction Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cost:
At 1 January 2023
503.5
3,376.7
81.0
329.0
4,290.2
Additions at cost
\u2013
0.4
8 .1
500.7
509.2
Acquired in business combinations
\u2013
0 .1
\u2013
\u2013
0 .1
Disposals
(0.3)
(27.8)
\u2013
\u2013
(28 .1)
Movement in reinstatement asset
\u2013
22.7
\u2013
\u2013
22.7
Issues to maintenance projects
\u2013
\u2013
(6.5)
\u2013
(6.5)
Transfers to intangibles (see note 5.2)
\u2013
(0 .1)
\u2013
(0.5)
(0.6)
Transfers between PPE categories
0.4
168.0
0.5
(168.9)
\u2013
Effect of changes in foreign exchange rates
(9.5)
(33.8)
\u2013
(4.2)
(47.5)
At 1 January 2024
49 4 .1
3,506.2
83.1
656.1
4,739.5
Additions at cost
\u2013
0.3
9.9
315.3
325.5
Disposals
(0.3)
(20.2)
\u2013
(4 .1)
(24.6)
Movement in reinstatement asset (see note 5.3)
\u2013
0.7
\u2013
\u2013
0.7
Issues to maintenance projects
\u2013
\u2013
(3.3)
\u2013
(3.3)
Transfers from/(to) intangibles (see note 5.2)
0.2
\u2013
\u2013
(3.4)
(3.2)
Transfers to right-of-use assets
\u2013
(1.5)
\u2013
\u2013
(1.5)
Transfers from inventories
\u2013
\u2013
3.3
\u2013
3.3
Transfers between PPE categories
20.4
231.7
2.2
(254.3)
\u2013
Effect of changes in foreign exchange rates
(0.3)
(4.2)
0.2
2.8
(1.5)
At 31 December 2024
514 .1
3,713.0
95.4
712.4
5,034.9
Accumulated depreciation and impairment:
At 1 January 2023
142.5
1,706.1
33.5
20.1
1,902.2
Depreciation charge for the year
19.3
145.2
2.6
\u2013
16 7.1
Impairment
8.9
0 .1
\u2013
1.7
10.7
Disposals
(0 .1)
(2 5.1)
\u2013
\u2013
(25.2)
Issues to maintenance projects
\u2013
\u2013
(0.7)
\u2013
(0.7)
Effect of changes in foreign exchange rates
(2.7)
(10.7)
\u2013
\u2013
(13.4)
At 1 January 2024
167.9
1,815.6
35.4
21.8
2,040.7
Depreciation charge for the year
23.8
168.2
5.5
\u2013
197.5
Impairment
2.8
\u2013
0.1
3.2
6 .1
Disposals
(0.1)
(12.8)
\u2013
\u2013
(12.9)
Issues to maintenance projects
\u2013
\u2013
(1.1)
\u2013
(1.1)
Transfers from right-of-use assets
\u2013
1.1
\u2013
\u2013
1.1
Effect of changes in foreign exchange rates
0.5
1.0
\u2013
\u2013
1.5
At 31 December 2024
194.9
1,973.1
39.9
25.0
2,232.9
Net book value:
At 31 December 2023
326.2
1,690.6
47.7
634.3
2,698.8
At 31 December 2024
319.2
1,739.9
55.5
687.4
2,802.0
Impairments previously presented through cost on non-depreciating assets have been re-presented in the table above. Impairments
are presented through accumulated depreciation and impairment.
Included within the cost of assets under the course of construction is capitalised interest of \u00a315.0 million (2023: \u00a313.3 million) relating
to the construction of the three OCGT projects, Longview pellet plant and the Cruachan upgrade project. See note 2.5 for further
details of borrowing costs capitalised during the year.
Freehold land and buildings, and plant and equipment with a carrying amount of \u00a31,580.7 million (2023: \u00a31,609.7 million) have been
pledged as security over the Group secured borrowings. See note 4.2 for details of the Group\u2019s secured borrowings.
See note 2.4 for further details of the Group\u2019s accounting policy and presentation of impairments of non-current assets.
Pellet Total
Biomass Hydro production plant and
plant plant plant Other equipment
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cost:
At 1 January 2023
2,141. 3
479.4
738.8
17. 2
3,376.7
Additions at cost
\u2013
\u2013
\u2013
0.4
0.4
Acquired in business combinations
\u2013
\u2013
\u2013
0 .1
0 .1
Disposals
\u2013
\u2013
(27.6)
(0.2)
(27. 8)
Movement in reinstatement asset
20.1
\u2013
2.6
\u2013
22.7
Transfers to intangibles
\u2013
\u2013
(0 .1)
\u2013
(0 .1)
Transfers between PPE categories
117.1
\u2013
50.9
\u2013
168.0
Effect of changes in foreign exchange rates
\u2013
\u2013
(33.8)
\u2013
(33.8)
At 1 January 2024
2,278.5
479.4
730.8
17. 5
3,506.2
Additions at cost
\u2013
\u2013
\u2013
0.3
0.3
Disposals
(10.0)
\u2013
(10.2)
\u2013
(20.2)
Movement in reinstatement asset (see note 5.3)
(6.9)
\u2013
\u2013
7.6
0.7
Transfers between PPE categories
13 8.1
9.3
71.9
12.4
231.7
Transfers (to)/from right-of-use assets
\u2013
\u2013
(1.6)
0.1
(1.5)
Effect of changes in foreign exchange rates
\u2013
\u2013
(4.2)
\u2013
(4.2)
At 31 December 2024
2,399.7
488.7
786.7
37.9
3,713.0
Accumulated depreciation and impairment:
At 1 January 2023
1,417.3
53.3
221.8
13.7
1,7 0 6.1
Depreciation charge for the year
66.2
12.9
64.2
1.9
145.2
Impairment
\u2013
\u2013
\u2013
0.1
0.1
Disposals
\u2013
\u2013
(24.9)
(0.2)
(2 5.1)
Effect of changes in foreign exchange rates
\u2013
\u2013
(10.7)
\u2013
(10.7)
At 1 January 2024
1,483.5
66.2
250.4
15.5
1,815.6
Depreciation charge for the year
75.1
12.9
75.3
4.9
168.2
Disposals
(6 .1)
\u2013
(6.7)
\u2013
(12.8)
Transfers from right-of-use assets
\u2013
\u2013
1.1
\u2013
1.1
Effect of changes in foreign exchange rates
\u2013
\u2013
1.0
\u2013
1.0
At 31 December 2024
1,552.5
79.1
321.1
20.4
1, 973.1
Net book value:
At 31 December 2023
795.0
413.2
480.4
2.0
1,690.6
At 31 December 2024
8 47.2
409.6
465.6
17.5
1,739.9
The depreciation expense in the Consolidated income statement comprises the following:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Depreciation charged on property, plant and equipment
197. 5
167.1
Depreciation charged on right-of-use assets
28.1
26.9
Movement on depreciation included in closing inventories
(0.8)
1.6
Total depreciation expense
224.8
195.6
Depreciation charged on right-of-use assets in the table above is presented net of \u00a30.9 million (2023: \u00a3nil) depreciation related to
salary sacrifice electric vehicles included within staff cost in operating and administrative expenses. Right-of-use asset depreciation
totals \u00a329.0 million for the year ended 31 December 2024 (2023: \u00a326.9 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-693": { "value": "Accounting policy Property, plant and equipment is stated at net book value, which is its cost less any accumulated depreciation and any accumulated impairment losses, if required, charged to date. Property, plant and equipment assets are initially measured at cost. Cost comprises: the purchase price (after deducting trade discounts and rebates); any directly attributable costs of bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management; and an estimate of the present value of the costs of dismantling and removing the item and restoring the site, where required. Depreciation reflects the usage of the asset over time and is calculated by taking the cost of the asset, net of any expected residual value, and charging it to the Consolidated income statement on a straight-line basis from the date that the asset is available for use and over its useful economic life (UEL). Where relevant, this is limited to the estimated decommissioning date of the site where the asset is located. The Group constructs many of its assets as part of long-term development projects. Assets that are under the course of construction are not depreciated until they are ready for use in the manner intended by management. The table below shows the weighted average remaining UELs of the main categories of assets held at the reporting date:
Average UEL
remaining
2024
(years)
Freehold buildings
21
Plant and equipment
Electricity generation assets:
Biomass plant
14
Hydro plants (including pumped storage)
36
Pellet production plant
8
Other plant, machinery and equipment
12
Reinstatement assets
18
Plant spare parts
15
Freehold land held at cost is considered to have an unlimited UEL and is not depreciated. The value of freehold land held at 31 December 2024 is \u00a335.5 million (2023: \u00a335.6 million). Electricity generation assets are grouped according to the fuel type of the relevant plant. Pellet production plant includes the US and Canada based assets of the Group\u2019s Pellet Production business and the assets at the Daldowie fuel plant near Glasgow. Plant spare parts are depreciated over the remaining UEL of the relevant power station or plant, or shorter if a shorter UEL is more appropriate. Plant spare parts can be used within maintenance projects which are operating in nature (in addition to capital maintenance projects). In this instance the net book value of the part is transferred from the property, plant and equipment balance and recognised as an expense in the Consolidated income statement within operating and administrative expenses. These issues are reflected in the issues to maintenance projects line in the table below. Costs relating to major inspections, overhauls and upgrades to assets are included in the carrying amounts of existing assets or recognised as separate assets, as appropriate, if the recognition criteria are met; namely, when it is probable that future economic benefits associated with the expenditure will flow to the Group and the cost can be measured reliably. Assets that are replaced as part of any overhauls or upgrades are disposed of. All other repairs and maintenance costs are expensed as incurred. Estimated UELs and residual values are reviewed as a minimum at the end of each reporting period, taking into account regulatory changes, climate change (see note 3.8 for further details) and commercial and technological obsolescence, as well as normal wear and tear. Residual values are based on prices prevailing at the reporting date. Any changes to estimated UELs or residual values are applied prospectively. At each reporting date the Group reviews its property, plant and equipment to determine whether there is any indication that these assets may be impaired. The Group\u2019s accounting policy in respect of impairment, along with details of the impairment review conducted during the year are set out in note 2.4. An impairment charge is recognised immediately if the net book value of an asset exceeds its recoverable amount, which is the higher of an asset\u2019s value in use and its fair value less costs to sell. The Group\u2019s policy is to recognise an impairment charge through accumulated depreciation and impairment if the asset will continue to be used or retained by the Group. Cost and any accumulated depreciation and impairment are removed when an asset is disposed. Gains and losses on disposals are determined by comparing proceeds with the asset\u2019s carrying amount. During the year, the Group has capitalised \u00a34.4 million (2023: \u00a318.3 million) of costs relating to the UK BECCS project at Drax Power Station resulting in a total amount of \u00a347.2 million capitalised in relation to this project as at 31 December 2024 (2023: \u00a342.8 million). During the year, the Group has also capitalised \u00a363.6 million (2023: \u00a345.4 million) of costs relating to the Longview pellet plant development project resulting in a total amount of \u00a3122.0 million capitalised in relation to this project as at 31 December 2024 (2023: \u00a355.9 million). The capitalisation of development project costs has been classified as a critical accounting judgement due to the judgements required in determining whether costs incurred meet the criteria to be capitalised or not, and should expectations around development projects change then the amounts capitalised may need to be impaired. The Group has also continued construction of the three OCGT projects that have obtained Capacity Market contracts. Construction of these projects is expected to complete during 2025. The amount capitalised up to the reporting date relating to these projects totals \u00a3420.7 million (2023: \u00a3323.5 million). Of this, \u00a397.2 million (2023: \u00a3188.6 million) was capitalised during the year. The Group\u2019s total commitment for future capital expenditure is disclosed in note 7.7. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-671": { "value": "Depreciation reflects the usage of the asset over time and is calculated by taking the cost of the asset, net of any expected residual value, and charging it to the Consolidated income statement on a straight-line basis from the date that the asset is available for use and over its useful economic life (UEL). Plant spare parts are depreciated over the remaining UEL of the relevant power station or plant, or shorter if a shorter UEL is more appropriate.
Assets under the
Freehold land Plant and Plant spare course of
and buildings equipment parts construction Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cost:
At 1 January 2023
503.5
3,376.7
81.0
329.0
4,290.2
Additions at cost
\u2013
0.4
8 .1
500.7
509.2
Acquired in business combinations
\u2013
0 .1
\u2013
\u2013
0 .1
Disposals
(0.3)
(27.8)
\u2013
\u2013
(28 .1)
Movement in reinstatement asset
\u2013
22.7
\u2013
\u2013
22.7
Issues to maintenance projects
\u2013
\u2013
(6.5)
\u2013
(6.5)
Transfers to intangibles (see note 5.2)
\u2013
(0 .1)
\u2013
(0.5)
(0.6)
Transfers between PPE categories
0.4
168.0
0.5
(168.9)
\u2013
Effect of changes in foreign exchange rates
(9.5)
(33.8)
\u2013
(4.2)
(47.5)
At 1 January 2024
49 4 .1
3,506.2
83.1
656.1
4,739.5
Additions at cost
\u2013
0.3
9.9
315.3
325.5
Disposals
(0.3)
(20.2)
\u2013
(4 .1)
(24.6)
Movement in reinstatement asset (see note 5.3)
\u2013
0.7
\u2013
\u2013
0.7
Issues to maintenance projects
\u2013
\u2013
(3.3)
\u2013
(3.3)
Transfers from/(to) intangibles (see note 5.2)
0.2
\u2013
\u2013
(3.4)
(3.2)
Transfers to right-of-use assets
\u2013
(1.5)
\u2013
\u2013
(1.5)
Transfers from inventories
\u2013
\u2013
3.3
\u2013
3.3
Transfers between PPE categories
20.4
231.7
2.2
(254.3)
\u2013
Effect of changes in foreign exchange rates
(0.3)
(4.2)
0.2
2.8
(1.5)
At 31 December 2024
514 .1
3,713.0
95.4
712.4
5,034.9
Accumulated depreciation and impairment:
At 1 January 2023
142.5
1,706.1
33.5
20.1
1,902.2
Depreciation charge for the year
19.3
145.2
2.6
\u2013
16 7.1
Impairment
8.9
0 .1
\u2013
1.7
10.7
Disposals
(0 .1)
(2 5.1)
\u2013
\u2013
(25.2)
Issues to maintenance projects
\u2013
\u2013
(0.7)
\u2013
(0.7)
Effect of changes in foreign exchange rates
(2.7)
(10.7)
\u2013
\u2013
(13.4)
At 1 January 2024
167.9
1,815.6
35.4
21.8
2,040.7
Depreciation charge for the year
23.8
168.2
5.5
\u2013
197.5
Impairment
2.8
\u2013
0.1
3.2
6 .1
Disposals
(0.1)
(12.8)
\u2013
\u2013
(12.9)
Issues to maintenance projects
\u2013
\u2013
(1.1)
\u2013
(1.1)
Transfers from right-of-use assets
\u2013
1.1
\u2013
\u2013
1.1
Effect of changes in foreign exchange rates
0.5
1.0
\u2013
\u2013
1.5
At 31 December 2024
194.9
1,973.1
39.9
25.0
2,232.9
Net book value:
At 31 December 2023
326.2
1,690.6
47.7
634.3
2,698.8
At 31 December 2024
319.2
1,739.9
55.5
687.4
2,802.0
Impairments previously presented through cost on non-depreciating assets have been re-presented in the table above. Impairments are presented through accumulated depreciation and impairment. Included within the cost of assets under the course of construction is capitalised interest of \u00a315.0 million (2023: \u00a313.3 million) relating to the construction of the three OCGT projects, Longview pellet plant and the Cruachan upgrade project. See note 2.5 for further details of borrowing costs capitalised during the year. Freehold land and buildings, and plant and equipment with a carrying amount of \u00a31,580.7 million (2023: \u00a31,609.7 million) have been pledged as security over the Group secured borrowings. See note 4.2 for details of the Group\u2019s secured borrowings. See note 2.4 for further details of the Group\u2019s accounting policy and presentation of impairments of non-current assets.
Pellet Total
Biomass Hydro production plant and
plant plant plant Other equipment
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cost:
At 1 January 2023
2,141. 3
479.4
738.8
17. 2
3,376.7
Additions at cost
\u2013
\u2013
\u2013
0.4
0.4
Acquired in business combinations
\u2013
\u2013
\u2013
0 .1
0 .1
Disposals
\u2013
\u2013
(27.6)
(0.2)
(27. 8)
Movement in reinstatement asset
20.1
\u2013
2.6
\u2013
22.7
Transfers to intangibles
\u2013
\u2013
(0 .1)
\u2013
(0 .1)
Transfers between PPE categories
117.1
\u2013
50.9
\u2013
168.0
Effect of changes in foreign exchange rates
\u2013
\u2013
(33.8)
\u2013
(33.8)
At 1 January 2024
2,278.5
479.4
730.8
17. 5
3,506.2
Additions at cost
\u2013
\u2013
\u2013
0.3
0.3
Disposals
(10.0)
\u2013
(10.2)
\u2013
(20.2)
Movement in reinstatement asset (see note 5.3)
(6.9)
\u2013
\u2013
7.6
0.7
Transfers between PPE categories
13 8.1
9.3
71.9
12.4
231.7
Transfers (to)/from right-of-use assets
\u2013
\u2013
(1.6)
0.1
(1.5)
Effect of changes in foreign exchange rates
\u2013
\u2013
(4.2)
\u2013
(4.2)
At 31 December 2024
2,399.7
488.7
786.7
37.9
3,713.0
Accumulated depreciation and impairment:
At 1 January 2023
1,417.3
53.3
221.8
13.7
1,7 0 6.1
Depreciation charge for the year
66.2
12.9
64.2
1.9
145.2
Impairment
\u2013
\u2013
\u2013
0.1
0.1
Disposals
\u2013
\u2013
(24.9)
(0.2)
(2 5.1)
Effect of changes in foreign exchange rates
\u2013
\u2013
(10.7)
\u2013
(10.7)
At 1 January 2024
1,483.5
66.2
250.4
15.5
1,815.6
Depreciation charge for the year
75.1
12.9
75.3
4.9
168.2
Disposals
(6 .1)
\u2013
(6.7)
\u2013
(12.8)
Transfers from right-of-use assets
\u2013
\u2013
1.1
\u2013
1.1
Effect of changes in foreign exchange rates
\u2013
\u2013
1.0
\u2013
1.0
At 31 December 2024
1,552.5
79.1
321.1
20.4
1, 973.1
Net book value:
At 31 December 2023
795.0
413.2
480.4
2.0
1,690.6
At 31 December 2024
8 47.2
409.6
465.6
17.5
1,739.9
The depreciation expense in the Consolidated income statement comprises the following:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Depreciation charged on property, plant and equipment
197. 5
167.1
Depreciation charged on right-of-use assets
28.1
26.9
Movement on depreciation included in closing inventories
(0.8)
1.6
Total depreciation expense
224.8
195.6
Depreciation charged on right-of-use assets in the table above is presented net of \u00a30.9 million (2023: \u00a3nil) depreciation related to salary sacrifice electric vehicles included within staff cost in operating and administrative expenses. Right-of-use asset depreciation totals \u00a329.0 million for the year ended 31 December 2024 (2023: \u00a326.9 million). Right-of-use assets
Land and Plant and
buildings equipment Rail cars Vessels Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cost:
At 1 January 2023
30.4
24.8
33.7
90.8
179.7
Additions at cost
9.9
5.6
0.6
\u2013
16 .1
Acquired in business combinations
\u2013
0 .1
\u2013
\u2013
0 .1
Other movements
(1.1)
(3.2)
(4.6)
(0.4)
(9.3)
Effect of changes in foreign exchange rates
(0.5)
(0.5)
(1.3)
(2.9)
(5.2)
At 1 January 2024
38.7
26.8
28.4
87. 5
181.4
Additions at cost
2.3
6.0
\u2013
\u2013
8.3
Movement in reinstatement asset (see note 5.3)
2.3
\u2013
\u2013
\u2013
2.3
Other movements
5.1
(3.2)
(0.4)
(5.2)
(3.7)
Effect of changes in foreign exchange rates
(0.3)
0 .1
(1.0)
(5.3)
(6.5)
At 31 December 2024
4 8.1
29.7
27. 0
77.0
181.8
Accumulated depreciation and impairment:
At 1 January 2023
11.5
10.6
10.6
8.7
41.4
Depreciation charge for the year
6.7
6.6
5.0
8.6
26.9
Other movements
(0.3)
(3.3)
(4.3)
0.3
(7.6)
Effect of changes in foreign exchange rates
(0.2)
(0.3)
(0.5)
(0.5)
(1.5)
At 1 January 2024
17.7
13.6
10.8
17.1
59.2
Depreciation charge for the year
8.2
7.7
5.0
8.1
29.0
Impairment
0.1
\u2013
\u2013
\u2013
0.1
Other movements
(0.1)
(3.3)
(2.3)
0.1
(5.6)
Effect of changes in foreign exchange rates
(0.2)
0 .1
(0.3)
(1.4)
(1.8)
At 31 December 2024
25.7
18 .1
13.2
23.9
80.9
Net book value:
At 31 December 2023
21.0
13.2
17.6
70.4
122.2
At 31 December 2024
22.4
11.6
13.8
53.1
100.9
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Expense relating to short-term leases
5.9
0.3
Expense relating to low value leases
0 .1
\u2013
Interest charge for the year
6.6
7. 2
Depreciation charge for the year
29.0
26.9
Variable lease payments
0.6
\u2013
Right-of-use asset depreciation in the table above includes \u00a30.9 million (2023: \u00a3nil) depreciation related to salary sacrifice electric vehicles included within staff costs in operating and administrative expenses. The carrying amounts of intangible assets are assessed for indicators of impairment at each reporting date. The Group\u2019s policy is to recognise an impairment charge through accumulated amortisation and impairment . Intangible assets are amortised over their anticipated useful economic lives (UELs), which are reviewed at least at each financial year end. When reviewing UELs the assessment takes into account regulatory changes, climate change, and commercial and technological changes. Any changes to estimated UELs are applied prospectively. During the prior year this review resulted in a change to the UELs of the Opus Energy customer-related asset and brand asset to December 2024 to reflect the estimated period over which the value from these assets was expected to be realised. During the current year these assets were fully impaired as part of the Opus Energy transaction. See note 2.7 for further details.
Average UEL
Method of amortisation (years)
At 31 December 2024
Customer-related assets:
Pinnacle
Straight line
6
BMM
Straight line
8
Other
Computer software and licences:
Straight line
9
Internally generated
Straight line
3
Acquired separately
Straight line
8
Other intangibles
Straight line
1
Carrying amounts are assessed for indicators of impairment at each reporting date. The customer-related assets are attributable to the Pellet Operations CGU following the acquisition of Pinnacle and the Drax Energy Solutions CGU following the acquisition of BMM. During the current year the Opus Energy CGU customer-related asset was disposed of and the brand asset impaired to \u00a3nil net book value (see below for further details). Details of the impairment assessments relating to these CGUs are included in note 2.4.
Software and Software and
Customer- licences licences
related \u2013 internally \u2013 acquired Other
assets Brand
generated
(1)
separately
(1)
intangibles Goodwill Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cost and carrying amount:
At 1 January 2023
(2)
25 7.6
11.3
130.2
18.5
2.0
424.2
843.8
Additions at cost
\u2013
\u2013
7.7
2.2
\u2013
\u2013
9.9
Acquired in business combinations
5.0
\u2013
\u2013
\u2013
\u2013
6.0
11.0
Transfers from property, plant and equipment
(see note 3.1)
\u2013
\u2013
0.6
\u2013
\u2013
\u2013
0.6
Effect of changes in foreign exchange rates
(1.5)
\u2013
\u2013
(0.2)
\u2013
1.0
(0.7)
At 1 January 2024
(2)
261.1
11.3
138.5
20.5
2.0
431.2
864.6
Additions at cost
\u2013
\u2013
6.9
\u2013
\u2013
\u2013
6.9
Adjustment related to business combinations
(see note 5.1)
\u2013
\u2013
\u2013
\u2013
\u2013
(0.2)
(0.2)
Disposals
(211.1)
\u2013
\u2013
\u2013
\u2013
\u2013
(211.1)
Transfers between categories
\u2013
\u2013
0.7
(0.9)
0.2
\u2013
\u2013
Transfers from property, plant and equipment
(see note 3.1)
\u2013
\u2013
2.9
0.3
\u2013
\u2013
3.2
Effect of changes in foreign exchange rates
(2.8)
\u2013
\u2013
0 .1
(0 .1)
(1.4)
(4.2)
At 31 December 2024
47. 2
11.3
149.0
20.0
2 .1
429.6
659.2
Accumulated amortisation and impairment:
At 1 January 2023
(2)
170.6
6.8
86.5
11.7
1.7
\u2013
27 7.3
Charge for the year
17. 2
1.1
10.2
0.8
0 .1
\u2013
29.4
Impairment
31.5
3.0
11.1
\u2013
\u2013
14.5
60.1
Effect of changes in foreign exchange rates
(0.3)
\u2013
\u2013
(0 .1)
\u2013
\u2013
(0.4)
At 1 January 2024
(2)
219.0
10.9
107. 8
12.4
1.8
14.5
366.4
Charge for the year
6.7
0.2
8.7
1.4
\u2013
\u2013
17. 0
Disposals
(209.2)
\u2013
\u2013
\u2013
\u2013
\u2013
(209.2)
Impairment
\u2013
0.2
2.4
\u2013
\u2013
\u2013
2.6
Transfers between categories
\u2013
\u2013
0.3
(0.3)
\u2013
\u2013
\u2013
Effect of changes in foreign exchange rates
(0.8)
\u2013
\u2013
\u2013
\u2013
\u2013
(0.8)
At 31 December 2024
15.7
11.3
119.2
13.5
1.8
14.5
176.0
Net book value:
At 31 December 2023
42.1
0.4
30.7
8 .1
0.2
416.7
498.2
At 31 December 2024
31.5
\u2013
29.8
6.5
0.3
415.1
483.2
(1) Comparative amounts have been re-presented to separate software and licences between those internally generated and those acquired separately. (2) Impairments previously presented through cost on non-amortising assets have been re-presented through accumulated amortisation and impairment. ", "dimensions": { "concept": "ifrs-full:DisclosureOfDepreciationAndAmortisationExpenseExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-713": { "value": "Depreciation reflects the usage of the asset over time and is calculated by taking the cost of the asset, net of any expected residual value, and charging it to the Consolidated income statement on a straight-line basis from the date that the asset is available for use and over its useful economic life (UEL). Where relevant, this is limited to the estimated decommissioning date of the site where the asset is located. Assets that are under the course of construction are not depreciated until they are ready for use in the manner intended by management.
Plant spare parts are depreciated over the remaining UEL of the relevant power station or plant, or shorter if a shorter UEL is more
appropriate.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDepreciationExpenseExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-722": { "value": "The Group constructs many of its assets as part of long-term development projects. Assets that are under the course of construction are not depreciated until they are ready for use in the manner intended by management. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForConstructionInProgressExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-714": { "value": "
Costs relating to major inspections, overhauls and upgrades to assets are included in the carrying amounts of existing assets or
recognised as separate assets, as appropriate, if the recognition criteria are met; namely, when it is probable that future economic
benefits associated with the expenditure will flow to the Group and the cost can be measured reliably. Assets that are replaced as
part of any overhauls or upgrades are disposed of. All other repairs and maintenance costs are expensed as incurred.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRepairsAndMaintenanceExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-657": { "value": "Included within the cost of assets under the course of construction is capitalised interest of \u00a315.0 million (2023: \u00a313.3 million) relating to the construction of the three OCGT projects, Longview pellet plant and the Cruachan upgrade project. See note 2.5 for further details of borrowing costs capitalised during the year. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. Loan commitment fees may be payable to the lender to entitle the Group to draw down at any time over a fixed period. Where there is a fixed repayment date, regardless of when the loan is drawn down, the commitment fees are recognised on a systematic basis over the period the Group is able to draw down. Where the loan has the same fixed term, regardless of when the loan is drawn down, if drawdown is probable, then the commitment fees are deferred until drawdown and are recognised over the life of the instrument as part of the effective interest rate. If drawdown is not probable, then loan commitment fees are recognised on a systematic basis over the period the Group is able to draw down. Fees that are paid for the availability of a facility where the amount and timing of drawdown can vary at the Group\u2019s discretion, such as under a revolving credit facility (RCF), are recognised on a systematic basis over the life of the facility. Reconciliation of borrowings The table below shows the movement in borrowings during the current and prior year:
Year ended 31 December 2024
Opening Amounts Transaction Amounts Cash interest Non-cash Closing
amortised cost drawn costs repaid payments movements amortised cost
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
2.625% EUR loan notes 2025
215.7
\u2013
\u2013
(88.7)
(4.4)
(3.6)
119.0
6.625% USD loan notes 2025
391.5
\u2013
\u2013
(393.9)
(13.0)
15.4
\u2013
5.875% EUR loan notes 2029
\u2013
298.8
(4.4)
\u2013
( 7.8)
2.9
289.5
UK infrastructure private placement
facility (2019)
(1)
373.9
\u2013
\u2013
(325.0)
(10.9)
11.5
49.5
UK infrastructure private placement
facility (2020)
(1)
206.4
\u2013
(0.8)
(21.6)
(11.5)
8.5
181.0
CAD term loan facility
117. 8
\u2013
(0.1)
\u2013
(6.6)
(0.1)
111.0
GBP and EUR term loan facility (2024)
\u2013
258.0
(2.0)
\u2013
(9.9)
5.8
251.9
\u00a3125m GBP term loan facility (2024)
\u2013
125.0
(1.3)
\u2013
(3.7)
4.9
124.9
\u00a350m GBP term loan facility (2024)
\u2013
50.0
(0.4)
\u2013
(0.6)
0.9
49.9
Collateral facility
120.0
\u2013
\u2013
(120.0)
(6.4)
6.4
\u2013
Total borrowings
1,425.3
731.8
(9.0)
(949.2)
(74.8)
52.6
1,176.7
(1) The repricing of \u00a350.0 million and \u00a353.0 million tranches of these facilities constituted an extinguishment of previous borrowings and the recognition of new borrowings. No gains or losses on extinguishment were recognised. No cash payments were made between the Group and the lenders and therefore all movements in respect of the repricings have been presented in the non-cash movements column. Non-cash movements in borrowings comprises foreign exchange gains of \u00a330.7 million, interest costs of \u00a385.0 million and gains on extinguishment of \u00a31.7 million.
Year ended 31 December 2023
Opening Amounts Transaction Amounts Cash interest Non-cash Closing
amortised cost drawn costs repaid payments movements amortised cost
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
2.625% EUR loan notes 2025
219.8
\u2013
\u2013
\u2013
(5.8)
1.7
215.7
6.625% USD loan notes 2025
412.8
\u2013
\u2013
\u2013
(26.1)
4.8
391.5
UK infrastructure private placement
facility (2019)
372.5
\u2013
\u2013
\u2013
(25.5)
26.9
373.9
UK infrastructure private placement
facility (2020)
207.9
\u2013
\u2013
\u2013
(11.3)
9.8
206.4
CAD term loan facility
183.6
\u2013
(0.2)
(6 0.1)
(13.6)
8 .1
117. 8
Uncommitted short-term loan facility
\u20ac50m
44.3
\u2013
\u2013
(43.4)
(0.2)
(0.7)
\u2013
Borrowings acquired in business
combinations
\u2013
1.8
\u2013
(1.8)
\u2013
\u2013
\u2013
Collateral facility
\u2013
140.0
\u2013
(20.0)
(0.3)
0.3
120.0
Total borrowings
1,440.9
141.8
(0.2)
(125.3)
(82.8)
50.9
1,425.3
Non-cash movements in borrowings comprises foreign exchange gains of \u00a335.4 million and interest costs of \u00a386.3 million. As disclosed above, the Group has a number of cross-currency interest rate swaps that fix the sterling value of the principal repayment of certain foreign currency denominated borrowings. Accordingly, the foreign exchange gains (2023: gains) on borrowings disclosed above have been offset by \u00a332.5 million of foreign exchange losses (2023: \u00a329.5 million) on cross-currency interest rate swaps that have been recycled to profit and loss as part of the hedging relationship. See note 2.7 for further details of the impact of the Group\u2019s cash flow hedging relationships on Net debt. See note 7.2.2 for further details of the Group\u2019s cash flow hedging relationships on borrowings. ", "dimensions": { "concept": "ifrs-full:DisclosureOfBorrowingCostsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-588": { "value": "3.2 Leases Accounting policy IFRS 16 determines a control model to distinguish between lease agreements and service contracts on the basis of whether the use of an identified asset is controlled by the Group for a period of time. If the Group is deemed to have control of an identified asset, then a right-of-use asset and corresponding lease liability are recognised on the Consolidated balance sheet. The lease liability is initially measured at the present value of the future lease payments discounted using the discount rate that is implicit in the lease. If this discount rate cannot be determined from the agreement, the liability is discounted using an incremental borrowing rate. Incremental borrowing rates are updated biannually. The borrowing rate for leased property is derived with reference to property yields specific to the location of the leased property and property type. For non-property leases, the borrowing rate is derived from a series of inputs including counterparty-specific proxies for risk-free rates, such as UK Gilt curves, and an adjustment for credit risk based on the Group\u2019s credit rating. The liability is subsequently adjusted for interest, repayments, remeasurements and other modifications. The right-of-use asset is initially measured at cost and is subsequently measured at cost less accumulated depreciation and accumulated impairment losses. Cost comprises the initial calculation of the lease liability, estimated costs for dismantling or restoring the asset, any initial direct costs, and lease payments made or incentives received prior to commencement of the lease. Lease modifications are accounted for as a separate lease where the scope of the lease increases through the right to use one or more underlying assets, and where the consideration of the lease increases by an amount that is equivalent to the standalone price of the increase in scope. Where a modification decreases the scope of the lease, the carrying amount of the right-of-use asset and lease liability are adjusted, and a gain or loss is recognised in proportion to the decrease in the scope of the lease. All other modifications are accounted for as a reassessment of the lease liability with a corresponding adjustment to the right-of-use asset. Lease extension or termination options are included within the lease term when the Group, as the lessee, has the discretion to exercise the option and where it is reasonably certain that the option will be exercised. Leases with a term shorter than 12 months, or where the identified asset has a value below \u00a33,500, are expensed to the Consolidated income statement on a straight-line basis over the term of the agreement. Lease remeasurements, lease modifications, transfers between property, plant and equipment and right-of-use assets, and disposals of leased assets are included within other movements in the table below. Right-of-use assets
Land and Plant and
buildings equipment Rail cars Vessels Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cost:
At 1 January 2023
30.4
24.8
33.7
90.8
179.7
Additions at cost
9.9
5.6
0.6
\u2013
16 .1
Acquired in business combinations
\u2013
0 .1
\u2013
\u2013
0 .1
Other movements
(1.1)
(3.2)
(4.6)
(0.4)
(9.3)
Effect of changes in foreign exchange rates
(0.5)
(0.5)
(1.3)
(2.9)
(5.2)
At 1 January 2024
38.7
26.8
28.4
87. 5
181.4
Additions at cost
2.3
6.0
\u2013
\u2013
8.3
Movement in reinstatement asset (see note 5.3)
2.3
\u2013
\u2013
\u2013
2.3
Other movements
5.1
(3.2)
(0.4)
(5.2)
(3.7)
Effect of changes in foreign exchange rates
(0.3)
0 .1
(1.0)
(5.3)
(6.5)
At 31 December 2024
4 8.1
29.7
27. 0
77.0
181.8
Accumulated depreciation and impairment:
At 1 January 2023
11.5
10.6
10.6
8.7
41.4
Depreciation charge for the year
6.7
6.6
5.0
8.6
26.9
Other movements
(0.3)
(3.3)
(4.3)
0.3
(7.6)
Effect of changes in foreign exchange rates
(0.2)
(0.3)
(0.5)
(0.5)
(1.5)
At 1 January 2024
17.7
13.6
10.8
17.1
59.2
Depreciation charge for the year
8.2
7.7
5.0
8.1
29.0
Impairment
0.1
\u2013
\u2013
\u2013
0.1
Other movements
(0.1)
(3.3)
(2.3)
0.1
(5.6)
Effect of changes in foreign exchange rates
(0.2)
0 .1
(0.3)
(1.4)
(1.8)
At 31 December 2024
25.7
18 .1
13.2
23.9
80.9
Net book value:
At 31 December 2023
21.0
13.2
17.6
70.4
122.2
At 31 December 2024
22.4
11.6
13.8
53.1
100.9
Lease liabilities
Year ended 31 December
2024 2023
Carrying amount: \u00a3m \u00a3m
At 1 January
135.8
153.1
Additions
9.8
16 .1
Acquired in business combinations
\u2013
0.1
Interest charge for the year
6.6
7. 2
Payments
(34.0)
(33.0)
Other movements
(2.8)
(1.0)
Effect of changes in foreign exchange rates
1.1
(6.7)
At 31 December
116.5
135.8
The existence of termination, extension and purchase options has not had a material impact on the determination of the lease liabilities.
In addition to the payments disclosed above, the Group made payments of \u00a36.0 million during the year (2023: \u00a30.3 million) in relation
to short-term and low value leases.
The maturity of the gross undiscounted lease liabilities at 31 December is as follows:
As at 31 December
2024 2023
\u00a3m \u00a3m
Within one year
31.6
33.4
Within one to two years
24.6
28.6
Within two to five years
39.0
52.5
After five years
47.2
5 7.0
Total gross lease liabilities
142.4
171.5
Effect of discounting
(25.9)
(35.7)
Lease liabilities recognised in the Consolidated balance sheet
116.5
135.8
Current
26.0
25.1
Non-current
90.5
110.7
The Group recognised the following charges relating to leases in the Consolidated income statement:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Expense relating to short-term leases
5.9
0.3
Expense relating to low value leases
0 .1
\u2013
Interest charge for the year
6.6
7. 2
Depreciation charge for the year
29.0
26.9
Variable lease payments
0.6
\u2013
Right-of-use asset depreciation in the table above includes \u00a30.9 million (2023: \u00a3nil) depreciation related to salary sacrifice electric
vehicles included within staff costs in operating and administrative expenses.
", "dimensions": { "concept": "ifrs-full:DisclosureOfLeasesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-694": { "value": "Accounting policy IFRS 16 determines a control model to distinguish between lease agreements and service contracts on the basis of whether the use of an identified asset is controlled by the Group for a period of time. If the Group is deemed to have control of an identified asset, then a right-of-use asset and corresponding lease liability are recognised on the Consolidated balance sheet. The lease liability is initially measured at the present value of the future lease payments discounted using the discount rate that is implicit in the lease. If this discount rate cannot be determined from the agreement, the liability is discounted using an incremental borrowing rate. Incremental borrowing rates are updated biannually. The borrowing rate for leased property is derived with reference to property yields specific to the location of the leased property and property type. For non-property leases, the borrowing rate is derived from a series of inputs including counterparty-specific proxies for risk-free rates, such as UK Gilt curves, and an adjustment for credit risk based on the Group\u2019s credit rating. The liability is subsequently adjusted for interest, repayments, remeasurements and other modifications. The right-of-use asset is initially measured at cost and is subsequently measured at cost less accumulated depreciation and accumulated impairment losses. Cost comprises the initial calculation of the lease liability, estimated costs for dismantling or restoring the asset, any initial direct costs, and lease payments made or incentives received prior to commencement of the lease. Lease modifications are accounted for as a separate lease where the scope of the lease increases through the right to use one or more underlying assets, and where the consideration of the lease increases by an amount that is equivalent to the standalone price of the increase in scope. Where a modification decreases the scope of the lease, the carrying amount of the right-of-use asset and lease liability are adjusted, and a gain or loss is recognised in proportion to the decrease in the scope of the lease. All other modifications are accounted for as a reassessment of the lease liability with a corresponding adjustment to the right-of-use asset. Lease extension or termination options are included within the lease term when the Group, as the lessee, has the discretion to exercise the option and where it is reasonably certain that the option will be exercised. Leases with a term shorter than 12 months, or where the identified asset has a value below \u00a33,500, are expensed to the Consolidated income statement on a straight-line basis over the term of the agreement. Lease remeasurements, lease modifications, transfers between property, plant and equipment and right-of-use assets, and disposals of leased assets are included within other movements in the table below. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-619": { "value": "
Right-of-use assets
Land and Plant and
buildings equipment Rail cars Vessels Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cost:
At 1 January 2023
30.4
24.8
33.7
90.8
179.7
Additions at cost
9.9
5.6
0.6
\u2013
16 .1
Acquired in business combinations
\u2013
0 .1
\u2013
\u2013
0 .1
Other movements
(1.1)
(3.2)
(4.6)
(0.4)
(9.3)
Effect of changes in foreign exchange rates
(0.5)
(0.5)
(1.3)
(2.9)
(5.2)
At 1 January 2024
38.7
26.8
28.4
87. 5
181.4
Additions at cost
2.3
6.0
\u2013
\u2013
8.3
Movement in reinstatement asset (see note 5.3)
2.3
\u2013
\u2013
\u2013
2.3
Other movements
5.1
(3.2)
(0.4)
(5.2)
(3.7)
Effect of changes in foreign exchange rates
(0.3)
0 .1
(1.0)
(5.3)
(6.5)
At 31 December 2024
4 8.1
29.7
27. 0
77.0
181.8
Accumulated depreciation and impairment:
At 1 January 2023
11.5
10.6
10.6
8.7
41.4
Depreciation charge for the year
6.7
6.6
5.0
8.6
26.9
Other movements
(0.3)
(3.3)
(4.3)
0.3
(7.6)
Effect of changes in foreign exchange rates
(0.2)
(0.3)
(0.5)
(0.5)
(1.5)
At 1 January 2024
17.7
13.6
10.8
17.1
59.2
Depreciation charge for the year
8.2
7.7
5.0
8.1
29.0
Impairment
0.1
\u2013
\u2013
\u2013
0.1
Other movements
(0.1)
(3.3)
(2.3)
0.1
(5.6)
Effect of changes in foreign exchange rates
(0.2)
0 .1
(0.3)
(1.4)
(1.8)
At 31 December 2024
25.7
18 .1
13.2
23.9
80.9
Net book value:
At 31 December 2023
21.0
13.2
17.6
70.4
122.2
At 31 December 2024
22.4
11.6
13.8
53.1
100.9
", "dimensions": { "concept": "ifrs-full:DisclosureOfQuantitativeInformationAboutRightofuseAssetsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-620": { "value": "3.3 Renewable certificate assets The Group generates renewable certificate assets, including Renewables Obligation Certificates (ROCs) and Renewable Energy Guarantees of Origin (REGOs), which are accredited by the Office for Gas and Electricity Markets (Ofgem), as a result of generating renewable electricity using biomass at Drax Power Station and generating renewable electricity at the Group\u2019s run-of-river hydro plants. The Group also purchases renewable certificates from third parties. The Group\u2019s ROCs and REGOs are sold bilaterally to counterparties, including external suppliers, and also internally for utilisation by the Energy Solutions business. This note sets out the value of renewable certificate assets that the Group held at the reporting date. Accounting policy Renewable certificate assets are recognised at cost or deemed cost less any impairments. Renewable certificates, principally ROCs and REGOs, are first recognised as current assets in the period they are generated or purchased. For generated renewable certificates the Group uses their fair value at initial recognition, based on anticipated sales prices, as deemed cost. For renewable certificates purchased from third parties the agreed purchase price is the cost. Generating renewable power simultaneously creates joint products, being electricity and the renewable certificates. The cost of generating renewable electricity is allocated between the cost of the electricity generation, which is recognised in the Consolidated income statement at the point of generation, and the cost of generating the renewable certificate, which is initially recognised as an asset in the Consolidated balance sheet. As such, the value of generated renewable certificates earned reduces the cost of electricity generation. Where the Energy Solutions business incurs an obligation to deliver renewable certificates, that obligation is accrued in the period incurred and recognised within cost of sales. Renewable certificate assets are derecognised when they are submitted to Ofgem or at the point of sale to a customer. The point of sale is when the customer takes control of the renewable certificate, which is usually at the point of transfer of the certificate. At this point any revenue expected to be received from the customer is recognised (see note 2.2) and the carrying amount of the renewable certificate asset sold is recognised within cost of sales. Generated ROC and REGO valuations are comprised of the expected value to be obtained in a sales transaction with a third-party supplier at the point of generation. If the Group has already agreed sales contracts covering the renewable certificates generated in a period, then they are recognised at the contracted price. Any renewable certificates generated above this, or to be utilised by the Energy Solutions business, are recognised at an estimate of the expected market value, which is generally based on the amount to be obtained in a sales transaction with a third-party supplier. These estimates are made using various sources of information including recently achieved sales prices, ongoing sales negotiations, internal forecasts, and published third-party market price assessments and data. The Renewables Obligation (RO) scheme places an obligation on electricity suppliers to source an increasing proportion of their electricity from renewable sources. Under the RO scheme, ROCs are issued to generators of renewable electricity which are then sold bilaterally to counterparties, including suppliers, to demonstrate that they have fulfilled their obligations under the RO scheme. ROCs are managed in compliance periods (CPs), running from April to March annually. CP1 commenced in April 2002. At 31 December 2024, the Group is operating in CP23. To meet its obligations a supplier can either submit ROCs or pay the buy-out price at the end of the CP. The buy-out price rises annually in line with the UK Retail Price Index (RPI). The buy-out price for CP23 is \u00a364.73 (2023: CP22 \u00a359.01). ROCs are typically procured in arm\u2019s-length transactions with renewable generators at a market price slightly lower than the buy-out price for that CP. At the end of the CP, the amounts collected from suppliers paying the buy-out price form the recycle fund, which is distributed on a pro-rata basis to the suppliers who presented ROCs during the CP. Generated ROC valuations at initial recognition are comprised of two parts: the buy-out price element and an estimate of the future benefit that may be obtained from the ROC recycle fund at the end of the CP. The recycle fund provides a benefit where supplier buy-out charges (incurred by suppliers who do not procure sufficient ROCs to satisfy their obligations) are redistributed to the suppliers who presented ROCs in a CP on a pro-rata basis. The estimate of the recycle value is based on assumptions about likely levels of renewable generation, which is generally weather dependent, the demand for ROCs over the CP, and the number of ROCs banked in a CP, and is thus subject to some uncertainty. The Group utilises external sources of information, such as energy demand and generation forecasts, average historical weather data, and published information about ROC banking in previous CPs, in addition to its own forecasts in making these estimates. Historical experience indicates that the assumptions used in the valuations are reasonable, but the recycle value remains subject to possible variation and may subsequently differ from assumptions at 31 December. REGOs are certificates that enable suppliers to prove that energy supplied to their customers came from a renewable source. One REGO is issued to a generator for every MWh of renewable electricity they generate. The primary use of REGOs is for the Fuel Mix Disclosure that requires licensed electricity suppliers to disclose to potential and existing customers the mix of fuels used to generate the electricity supplied. REGOs are managed in CPs, running from April to March annually. CP1 commenced in April 2002. At 31 December 2024, the Group is operating in CP23. Generated REGO valuations at initial recognition are usually based on published third-party market price assessments. At each reporting date, the Group reviews the carrying value of renewable certificate assets held against updated anticipated sales prices or anticipated obligation requirements, and the estimated recycle value. Where relevant, this takes account of agreed forward sales contracts, changes in published third-party market price assessments, the likely utilisation of renewable certificates generated to settle the Group\u2019s own obligations, and any relevant information about the levels of wider renewable generation in the market. Any impairment loss on these assets is recognised in the Consolidated income statement in the period incurred within cost of sales.
Year ended 31 December
2024 2023
Carrying amount: \u00a3m \u00a3m
At 1 January
292.2
187.8
Earned from generation
752.6
749.7
Purchased from third parties
464.6
673.8
Utilised by the Energy Solutions business
(654.7)
(435.7)
Sold to third parties
(314.7)
(883.4)
At 31 December
540.0
292.2
Of the \u00a3540.0 million of renewable certificates recognised at 31 December 2024 (2023: \u00a3292.2 million), \u00a34 86.1 million (2023: \u00a3172.9 million) relates to ROCs and \u00a353.9 million (2023: \u00a3119.3 million) relates to REGOs. Of the \u00a3752.6 million (2023: \u00a3749.7 million) of renewable certificates earned from generation, \u00a3652.6 million (2023: \u00a3601.8 million) was attributable to ROCs and \u00a3100.0 million (2 02 3: \u00a3 147.9 million) to REGOs. Recognition of revenue from the sale of renewable certificates is described in further detail in note 2.2. Climate change considerations for renewable certificate assets are discussed in more detail in note 3.8.", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherCurrentAssetsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-589": { "value": "3.3 Renewable certificate assets The Group generates renewable certificate assets, including Renewables Obligation Certificates (ROCs) and Renewable Energy Guarantees of Origin (REGOs), which are accredited by the Office for Gas and Electricity Markets (Ofgem), as a result of generating renewable electricity using biomass at Drax Power Station and generating renewable electricity at the Group\u2019s run-of-river hydro plants. The Group also purchases renewable certificates from third parties. The Group\u2019s ROCs and REGOs are sold bilaterally to counterparties, including external suppliers, and also internally for utilisation by the Energy Solutions business. This note sets out the value of renewable certificate assets that the Group held at the reporting date. Accounting policy Renewable certificate assets are recognised at cost or deemed cost less any impairments. Renewable certificates, principally ROCs and REGOs, are first recognised as current assets in the period they are generated or purchased. For generated renewable certificates the Group uses their fair value at initial recognition, based on anticipated sales prices, as deemed cost. For renewable certificates purchased from third parties the agreed purchase price is the cost. Generating renewable power simultaneously creates joint products, being electricity and the renewable certificates. The cost of generating renewable electricity is allocated between the cost of the electricity generation, which is recognised in the Consolidated income statement at the point of generation, and the cost of generating the renewable certificate, which is initially recognised as an asset in the Consolidated balance sheet. As such, the value of generated renewable certificates earned reduces the cost of electricity generation. Where the Energy Solutions business incurs an obligation to deliver renewable certificates, that obligation is accrued in the period incurred and recognised within cost of sales. Renewable certificate assets are derecognised when they are submitted to Ofgem or at the point of sale to a customer. The point of sale is when the customer takes control of the renewable certificate, which is usually at the point of transfer of the certificate. At this point any revenue expected to be received from the customer is recognised (see note 2.2) and the carrying amount of the renewable certificate asset sold is recognised within cost of sales. Generated ROC and REGO valuations are comprised of the expected value to be obtained in a sales transaction with a third-party supplier at the point of generation. If the Group has already agreed sales contracts covering the renewable certificates generated in a period, then they are recognised at the contracted price. Any renewable certificates generated above this, or to be utilised by the Energy Solutions business, are recognised at an estimate of the expected market value, which is generally based on the amount to be obtained in a sales transaction with a third-party supplier. These estimates are made using various sources of information including recently achieved sales prices, ongoing sales negotiations, internal forecasts, and published third-party market price assessments and data. The Renewables Obligation (RO) scheme places an obligation on electricity suppliers to source an increasing proportion of their electricity from renewable sources. Under the RO scheme, ROCs are issued to generators of renewable electricity which are then sold bilaterally to counterparties, including suppliers, to demonstrate that they have fulfilled their obligations under the RO scheme. ROCs are managed in compliance periods (CPs), running from April to March annually. CP1 commenced in April 2002. At 31 December 2024, the Group is operating in CP23. To meet its obligations a supplier can either submit ROCs or pay the buy-out price at the end of the CP. The buy-out price rises annually in line with the UK Retail Price Index (RPI). The buy-out price for CP23 is \u00a364.73 (2023: CP22 \u00a359.01). ROCs are typically procured in arm\u2019s-length transactions with renewable generators at a market price slightly lower than the buy-out price for that CP. At the end of the CP, the amounts collected from suppliers paying the buy-out price form the recycle fund, which is distributed on a pro-rata basis to the suppliers who presented ROCs during the CP. Generated ROC valuations at initial recognition are comprised of two parts: the buy-out price element and an estimate of the future benefit that may be obtained from the ROC recycle fund at the end of the CP. The recycle fund provides a benefit where supplier buy-out charges (incurred by suppliers who do not procure sufficient ROCs to satisfy their obligations) are redistributed to the suppliers who presented ROCs in a CP on a pro-rata basis. The estimate of the recycle value is based on assumptions about likely levels of renewable generation, which is generally weather dependent, the demand for ROCs over the CP, and the number of ROCs banked in a CP, and is thus subject to some uncertainty. The Group utilises external sources of information, such as energy demand and generation forecasts, average historical weather data, and published information about ROC banking in previous CPs, in addition to its own forecasts in making these estimates. Historical experience indicates that the assumptions used in the valuations are reasonable, but the recycle value remains subject to possible variation and may subsequently differ from assumptions at 31 December. REGOs are certificates that enable suppliers to prove that energy supplied to their customers came from a renewable source. One REGO is issued to a generator for every MWh of renewable electricity they generate. The primary use of REGOs is for the Fuel Mix Disclosure that requires licensed electricity suppliers to disclose to potential and existing customers the mix of fuels used to generate the electricity supplied. REGOs are managed in CPs, running from April to March annually. CP1 commenced in April 2002. At 31 December 2024, the Group is operating in CP23. Generated REGO valuations at initial recognition are usually based on published third-party market price assessments. At each reporting date, the Group reviews the carrying value of renewable certificate assets held against updated anticipated sales prices or anticipated obligation requirements, and the estimated recycle value. Where relevant, this takes account of agreed forward sales contracts, changes in published third-party market price assessments, the likely utilisation of renewable certificates generated to settle the Group\u2019s own obligations, and any relevant information about the levels of wider renewable generation in the market. Any impairment loss on these assets is recognised in the Consolidated income statement in the period incurred within cost of sales. Year ended 31 December 2024 2023 Carrying amount: \u00a3m \u00a3m At 1 January 292.2 187.8 Earned from generation 752.6 749.7 Purchased from third parties 464.6 673.8 Utilised by the Energy Solutions business (654.7) (435.7) Sold to third parties (314.7) (883.4) At 31 December 540.0 292.2 Of the \u00a3540.0 million of renewable certificates recognised at 31 December 2024 (2023: \u00a3292.2 million), \u00a34 86.1 million (2023: \u00a3172.9 million) relates to ROCs and \u00a353.9 million (2023: \u00a3119.3 million) relates to REGOs. Of the \u00a3752.6 million (2023: \u00a3749.7 million) of renewable certificates earned from generation, \u00a3652.6 million (2023: \u00a3601.8 million) was attributable to ROCs and \u00a3100.0 million (2 02 3: \u00a3 147.9 million) to REGOs. Recognition of revenue from the sale of renewable certificates is described in further detail in note 2.2. Climate change considerations for renewable certificate assets are discussed in more detail in note 3.8.", "dimensions": { "concept": "draxgroupplc:DisclosureOfRenewableCertificateAssets", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-590": { "value": "3.4 Inventories The Group holds inventories of fuels and other consumable items that are used in the process of generating electricity and raw materials used in the production of biomass pellets. This note shows the cost of biomass, other fuels and consumables held at the reporting date. Accounting policy The Group\u2019s inventories are valued at the lower of cost and net realisable value. The costs of items of inventory are determined using weighted average costs. The cost of purchased inventories includes all direct costs incurred in bringing the raw material, fuel or consumables to their present location and condition, including the purchase price, import duties and other taxes, and transport and handling costs. The Group uses forward foreign exchange contracts to hedge the costs of fuel denominated in foreign currencies. Where these contracts are designated into hedge relationships in accordance with IFRS 9, the inventory cost is recognised at the hedged value, to the extent these hedges are effective, and all such gains and losses are included in cost of sales as part of the inventory cost. Biomass inventories are weighed when entering, moving within or exiting the Group\u2019s sites using technology regularly calibrated to industry standards. Fuel burn in the electricity generation process is calculated using calibrated weighers to provide closing inventory volumes. Calibrated weighers are subject to a range of tolerable error. All fuel inventories are subject to regular surveys to ensure measurements are sufficiently accurate. The characteristics of biomass require specialist handling and storage. Biomass at Drax Power Station is stored in sealed domes with a carefully controlled atmosphere for fire prevention purposes and thus cannot be surveyed using traditional methods. Instead, this inventory is surveyed using regularly calibrated radar scanning technology to validate the accuracy of the weights outlined above. Recorded system volumes are also periodically verified through dome cycling (running a dome down until empty). The cost of manufactured inventories includes all direct costs as well as conversion costs including labour, direct overheads and an allocation of indirect overheads, including depreciation. The cost of inventories includes other costs incurred in bringing the inventories to their existing condition and location. Costs that do not contribute to bringing inventories to their present condition and location, such as storage and administration overheads, are excluded from the cost of inventories and expensed as incurred. Abnormal amounts of wasted materials, labour or other production costs are also excluded from the cost of inventories. The valuation of fibre inventory involves estimations of conversion rates to determine the volume of residual fibre stockpiles and log inventory. Third-party surveys are performed regularly to assess the volume of inventory and appropriate adjustments are made, if required, using conversion factors estimated by management. Internal inventory counts are performed periodically at all locations.
As at 31 December
2024 2023
\u00a3m \u00a3m
Biomass \u2013 finished goods
244.7
266.0
Biomass \u2013 fibre and other raw materials
15.8
20.0
Other fuels and consumables
41.5
42.4
Total inventories
302.0
328.4
Total inventories of \u00a3302.0 million (2023: \u00a3328.4 million) are stated net of provisions of \u00a35.3 million (2023: \u00a33.4 million). The cost of inventories recognised as an expense in the Consolidated income statement in the year ended 31 December 2024 was \u00a31,708.5 million (2023: \u00a31,505.7 (1) million). This includes the value of provisions recognised against inventory in the year. (1) The 2023 amount for the cost of inventories recognised as an expense has been restated from \u00a31,745.4 million to \u00a31,505.7 million due to a correction of the rate used to translate the cost of inventories of certain foreign operations.", "dimensions": { "concept": "ifrs-full:DisclosureOfInventoriesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-695": { "value": "Accounting policy The Group\u2019s inventories are valued at the lower of cost and net realisable value. The costs of items of inventory are determined using weighted average costs. The cost of purchased inventories includes all direct costs incurred in bringing the raw material, fuel or consumables to their present location and condition, including the purchase price, import duties and other taxes, and transport and handling costs. The Group uses forward foreign exchange contracts to hedge the costs of fuel denominated in foreign currencies. Where these contracts are designated into hedge relationships in accordance with IFRS 9, the inventory cost is recognised at the hedged value, to the extent these hedges are effective, and all such gains and losses are included in cost of sales as part of the inventory cost. Biomass inventories are weighed when entering, moving within or exiting the Group\u2019s sites using technology regularly calibrated to industry standards. Fuel burn in the electricity generation process is calculated using calibrated weighers to provide closing inventory volumes. Calibrated weighers are subject to a range of tolerable error. All fuel inventories are subject to regular surveys to ensure measurements are sufficiently accurate. The characteristics of biomass require specialist handling and storage. Biomass at Drax Power Station is stored in sealed domes with a carefully controlled atmosphere for fire prevention purposes and thus cannot be surveyed using traditional methods. Instead, this inventory is surveyed using regularly calibrated radar scanning technology to validate the accuracy of the weights outlined above. Recorded system volumes are also periodically verified through dome cycling (running a dome down until empty). The cost of manufactured inventories includes all direct costs as well as conversion costs including labour, direct overheads and an allocation of indirect overheads, including depreciation. The cost of inventories includes other costs incurred in bringing the inventories to their existing condition and location. Costs that do not contribute to bringing inventories to their present condition and location, such as storage and administration overheads, are excluded from the cost of inventories and expensed as incurred. Abnormal amounts of wasted materials, labour or other production costs are also excluded from the cost of inventories.
The valuation of fibre inventory involves estimations of conversion rates to determine the volume of residual fibre stockpiles and log
inventory. Third-party surveys are performed regularly to assess the volume of inventory and appropriate adjustments are made, if
required, using conversion factors estimated by management. Internal inventory counts are performed periodically at all locations.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForMeasuringInventories", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-591": { "value": "3.5 Trade and other receivables and contract assets Trade receivables represents amounts owed by customers for goods or services provided in the ordinary course of business that they have been invoiced for, but have not yet been paid. Accrued income represents income earned on goods or services provided in the ordinary course of business in the period, but not yet invoiced, largely in respect of energy supplied to customers that will be invoiced the following month. Prepayments represent amounts paid in respect of goods or services not yet received. Other receivables include collateral posted in relation to the Group\u2019s commodity and treasury trading activities, and other amounts for goods or services provided that have been invoiced for but not yet paid that do not fall under trade receivables. Contingent consideration relates to amounts receivable dependent on certain triggers in respect of the option to develop the Damhead Creek 2 land disposed of as part of the sale of the Combined Cycle Gas Turbines (CCGT) generation portfolio in 2021. Accounting policy Trade receivables and accrued income that do not contain a significant financing component are initially measured at the transaction price. Other financial assets, principally other receivables, are initially measured at fair value plus transaction costs, other than financial assets measured at fair value through profit or loss (FVTPL) where transaction costs are recognised immediately in the Consolidated income statement. The classification of financial assets subsequent to initial recognition depends on the business model used by the Group to manage them and the characteristics of the contractual cash flows. Financial assets are recognised at amortised cost if: \u2013 it is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and \u2013 the contractual terms give rise to payments that are solely payments of principal and interest (SPPI). Financial assets are recognised at fair value through other comprehensive income (FVOCI) if: \u2013 it is held within a business model whose objective is achieved by both holding financial assets in order to collect contractual cash flows and selling financial assets; and \u2013 the contractual terms give rise to payments that are SPPI. All financial assets not classified as measured at amortised cost or FVOCI are measured at FVTPL. The Group has access to a receivables monetisation facility under which amounts receivable from a portfolio of receivables can be sold to a third party on a non-recourse basis. This portfolio of receivables, that may be sold under this facility or held to collect the contractual cash flows, are accounted for at fair value through other comprehensive income (FVOCI) in accordance with IFRS 9, due to the objective of the business model being achieved by both collecting contractual cash flows and the selling of the financial assets. For the receivables within this portfolio that are sold, the receivables are derecognised from the Consolidated balance sheet at the point of sale, which is shortly after the initial recognition of the receivable balance, as the significant risks and rewards of ownership are deemed to have been transferred. Fair value gains or losses on these receivables are recognised within other comprehensive income and reclassified to interest payable and similar charges in the Consolidated income statement when derecognised. Impairment gains or losses are recognised directly in the Consolidated income statement. At 31 December 2024, the receivables sold under this facility were \u00a3386.3 million (2023: \u00a3400.0 million). See note 4.3 for further information about the facility. As part of the sale of customer meter points to EDF by Opus Energy (see note 2.7 for further details), the receivables relating to the meter points sold were transferred to EDF. The amount the Group receives for transferring these receivables is dependent on the amounts collected by EDF. The receivables sold to EDF do not qualify for derecognition under IFRS 9 as Opus Energy has retained substantially all the risks and rewards of ownership of the financial assets. These receivables are accounted for at FVTPL in accordance with IFRS 9, due to the contractual terms of the financial assets giving rise to cash flows that are not SPPI. The cash flows to be received by Opus Energy on collection of the receivables by EDF are calculated in accordance with the Asset Purchase Agreement (APA) and are dependent on the amounts collected by EDF. The impairment requirements of IFRS 9 do not apply to these receivables as the receivables are measured at fair value. Since the transfer, any fair value gains or losses on these receivables have been recognised within the Consolidated income statement within operating and administrative expenses. The UK Government introduced the Energy Bills Discount Scheme (EBDS) running from 1 April 2023 to 31 March 2024 which replaced the Energy Bill Relief Scheme (EBRS). Under these schemes, energy supplied to eligible non-domestic customers had a discount applied. The discount provided was then able to be claimed back from the UK Government by the supplier. The amount the Group is entitled to claim from the Government is recognised in other receivables. See note 2.2 for details of amounts relating to EBDS and EBRS within the Consolidated income statement. At 31 December 2024, there are no amounts outstanding from these schemes (2023: \u00a34.8 million). Contingent consideration receivable is a financial asset. As the cash flows are not SPPI, it does not meet the criteria for recognition at either amortised cost or FVOCI, and is therefore recognised at FVTPL. The impairment requirements of IFRS 9 do not apply to these receivables as the receivables are measured at FVTPL. Fair value gains and losses on this receivable are recognised in other gains and losses in the Consolidated income statement.
As at 31 December
2024 2023
\u00a3m \u00a3m
Amounts falling due:
Trade receivables
105.4
336.0
Accrued income
278.6
420.7
Prepayments
24.9
77.2
Other receivables
52.0
133.8
Contingent consideration
9.4
9.2
Total trade and other receivables and contract assets
470.3
976.9
At 31 December 2024, the Group had no amounts receivable from significant counterparties which represented 10% or more of total trade receivables and accrued income (2023: no significant counterparty). Of total trade receivables and accrued income at 31 December 2024, \u00a3192.8 million (2023: \u00a3558.9 million) relates to the Energy Solutions business, \u00a3145.1 million (2023: \u00a3164.8 million) relates to the Biomass Generation business, \u00a319.9 million (20 23: \u00a37.5 million) relates to the Flexible Generation business, and \u00a326.2 million (2023: \u00a325.5 million) relates to the Pellet Production business. Accrued income includes contract assets which relate to amounts for goods or services provided under customer contracts, where the entitlement to consideration is contingent on something other than the passage of time. The Group has recognised a contract asset for any services provided where the Group does not yet have the unconditional right to receive payment and the condition is not solely the passage of time. Any amount previously recognised as a contract asset is reclassified to trade receivables at the point at which the Group\u2019s right to payment becomes unconditional. This is usually when an invoice is issued. Contract assets included in accrued income at 31 December 2024 were \u00a343.4 million (2 023: \u00a3 8 9.1 million). Included in the prepayments balance is an amount of \u00a31.5 million (2023: \u00a31.9 million) relating to the prepayment of a service contract for services due to be received after more than one year. Prepayments also includes \u00a32.7 million (2 023: \u00a3 21.1 million) relating to broker fees paid which have been capitalised as contract costs, of which \u00a3nil (2023: \u00a38.6 million) are due to be recognised after more than one year, in line with the recognition of the revenue to which the contract costs relate. See note 3.6 for further details. The contingent consideration relates to the Group\u2019s disposal of the CCGT generation portfolio in January 2021. Should the acquirer satisfy certain triggers in respect of the option to develop the land at the Damhead Creek 2 site, which was disposed of as part of this sale, \u00a329.0 million of contingent consideration would become payable to the Group from the acquirer. The estimated fair value of this contingent consideration is \u00a39.4 million (2023: \u00a39.2 million). Contingent consideration is disclosed within current assets; however, the timing of receipt would be dependent on when a trigger was to occur, which may be in a period greater than 12 months from the end of the reporting period. Changes in the fair value of the contingent consideration are recognised within the other gains and losses line within the Consolidated income statement. See note 7.1 for further details on the contingent consideration. The following table shows the movement in fair value of the Group\u2019s trade and other receivables measured at FVTPL:
As at 31 December
2024 2023
Receivables measured at FVTPL: \u00a3m \u00a3m
At 1 January
9.2
27.4
Fair value of transferred receivables at the date of transfer to EDF
21.6
\u2013
Fair value losses recognised in operating and administrative expenses
(12.9)
\u2013
Fair value gains/(losses) recognised in other gains and losses
0.2
(18.2)
Amounts received from EDF
(2.0)
\u2013
Offset for credit balances transferred to EDF
(6.4)
\u2013
At 31 December
9.7
9.2
Of which relates to:
Receivables sold to EDF
0.3
\u2013
Contingent consideration
9.4
9.2
Impairment of financial assets Accounting policy The Group applies the impairment model in IFRS 9 to provide for expected credit losses on the Group\u2019s financial assets not measured at FVTPL, including trade receivables, accrued income, contract assets and other financial assets. The provision for impairment of trade receivables and accrued income (including contract assets) is measured at an amount equal to the lifetime expected credit loss. Contract assets relate to amounts for goods or services provided under customer contracts and, therefore, have substantially the same risk characteristics as trade receivables for the same types of contracts. For other financial assets, the Group recognises a lifetime expected credit loss provision when there has been a significant increase in credit risk since initial recognition. If the credit risk of the financial instrument has not increased significantly since initial recognition, the Group recognises a 12-month expected credit loss provision. The greatest concentration of credit risk exists in the Energy Solutions business. For all receivables in the current year, across all businesses, a provision matrix method has been adopted. For the small and medium-sized enterprise (SME) consumers within the Energy Solutions business, the risk is higher due to the wide range of customer characteristics within the portfolio. In the prior year, due to the loss provisioning for these customers being more complex a combined probability method that was more dynamic than the provision matrix method was applied. Due to the sale of the majority of the Group\u2019s non-core SME customer meter points and transfer of the related receivables balances to EDF (see note 2.7 for further details), the receivables balance and exposure to credit risk for these customers has significantly reduced compared to the prior year. As such the use of the combined probability method was not deemed appropriate and the provision matrix method has been applied to all customers. Under the Group\u2019s debt recovery strategy, a breach in terms could lead to the customer being disconnected or pursued legally for recovery of an outstanding balance. The Group considers a financial asset to be in default when the amount due from a debtor is unlikely to be received in full, or when contractual payments are 90 days past due. The Group writes off a financial asset when there is no realistic prospect of recovery and all attempts to recover the balance have been exhausted. An indication that all credit control activities have been exhausted is where the debt on an account is exclusively greater than 365 days past due and active recovery attempts have failed, or where there are known insolvency issues relating to the customer. Provision matrix method Customers are grouped according to the age of the debt based on the number of days past due. The provision rates are based on historical collection rates and an expectation of future cash collection. The movement in the overall allowance for expected credit losses on trade receivables is presented in the following table. This excludes \u00a30.3 million (2023: \u00a3nil) of trade receivables measured at FVTPL:
2024
2023
Combined Provision Combined Provision
probability matrix probability matrix
method method Total method method Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
At 1 January
50.6
8.8
59.4
54.9
6.0
60.9
Amounts written off
(28.5)
(17.9)
(46.4)
(44.2)
(5.0)
(49.2)
Net additional amounts provided against
28.0
20.9
48.9
39.9
7.4
47.3
Amounts added on acquisition
\u2013
\u2013
\u2013
\u2013
0.4
0.4
Transfer of financial assets to FVTPL
category
(19.5)
\u2013
(19.5)
\u2013
\u2013
\u2013
Change in provisioning methodology
(30.6)
30.6
\u2013
\u2013
\u2013
\u2013
At 31 December
\u2013
42.4
42.4
50.6
8.8
59.4
Gross trade receivables
147. 5
147.5
155.8
239.6
395.4
Expected credit loss provision
(42.4)
(42.4)
(50.6)
(8.8)
(59.4)
Trade receivables subject to the IFRS 9
impairment model
105.1
105.1
105.2
230.8
336.0
Average expected credit loss %
29%
29%
32%
4%
15%
The provision in the table above relates primarily to trade receivables in the Energy Solutions business. The provision matrix method has resulted in a \u00a3nil provision applied to both the Flexible Generation and Pellet Production businesses in both the current and prior years and a \u00a32.9 million (2023: \u00a3nil) provision in the Biomass Generation business. The risk of default within the Biomass Generation, Flexible Generation and Pellet Production businesses is considered to be remote, supported by strong historical collection rates, high credit quality counterparties and short payment terms with timely receipts resulting in negligible aged debt. The net charge to the Consolidated income statement in 2024 for impairment losses on financial assets was \u00a340.0 million (2023: \u00a332.5 million). This is the net of the additional amounts provided against in relation to trade receivables of \u00a348.9 million (2023: \u00a347.3 million (excluding \u00a30.4 million added on acquisition)) less an \u00a38.9 million (2023: \u00a314.8 million) benefit in the period in respect of the resolution of legacy credit balances. Of the net charge in the current year, \u00a312.7 million has been recognised as exceptional as part of the Opus Energy transaction (see note 2.7 for further details). The value of provisions calculated using the combined probability method in the prior year is set out below for comparative purposes. This shows the trade receivables balances for SME customers within the Energy Solutions business grouped by the combined probability assigned by the model. As explained above, the Group stopped using the combined probability model in the current year. As such, the following table shows the comparative risk profile of amounts due based on the combined probability model at 31 December 2023 only:
As at 31 December 2023
Estimated gross Lifetime
carrying amount expected
at default credit losses
Probability of default range % \u00a3m \u00a3m
80\u201310 0
42 .1
36.7
50\u201379
14.3
8.0
26\u201349
17.9
5.8
0\u201325
81.5
0 .1
Total
155.8
50.6
The value of provisions calculated using the Group\u2019s provision matrix method is set out below. This shows the ageing profile in 30-day increments of the trade receivables and accrued income (including contract assets) of the Group at 31 December 2024 excluding \u00a30.3 million (2023: \u00a3nil) of trade receivables that are measured at FVTPL. The comparative amounts show the same, apart from not including the Group\u2019s SME customers within the Energy Solutions business, that were previously calculated using the combined probability method and are included in the table above.
As at 31 December 2024
As at 31 December 2023
Estimated Estimated
total gross Lifetime total gross Lifetime
carrying amount expected Expected carrying amount expected Expected
at default credit losses credit loss rate at default credit losses credit loss rate
\u00a3m \u00a3m % \u00a3m \u00a3m %
Accrued income balances not yet due
287.6
9.0
3%
43 0 .1
9.4
2%
Trade receivables days past due:
Balances not yet due
81.6
4.0
5%
183.6
2 .1
1%
Between 0\u201330 days
5.2
0.8
15%
32.6
0.9
3%
Between 31\u201360 days
2.5
0.7
28%
7.1
0.7
9%
Between 61\u201390 days
2.1
0.8
38%
2.7
0.5
19%
Over 90 days
56.1
36 .1
64%
13.6
4.6
34%
Trade receivables subject to the IFRS 9
impairment model total
147. 5
42.4
29%
239.6
8.8
4%
Total
435.1
51.4
12%
669.7
18.2
3%
The expected credit loss provision of \u00a351.4 million (2023: \u00a318.2 million) in the table above primarily relates to the Energy Solutions business. The expected credit loss rates above are expressed as a percentage of the gross carrying amount of all of the Group\u2019s trade receivables and accrued income balances that are subject to the provision matrix method. The expected credit loss provision calculated for other financial assets of the Group was negligible. Credit and counterparty risk are disclosed in further detail in note 7.2.", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-696": { "value": "Accounting policy Trade receivables and accrued income that do not contain a significant financing component are initially measured at the transaction price. Other financial assets, principally other receivables, are initially measured at fair value plus transaction costs, other than financial assets measured at fair value through profit or loss (FVTPL) where transaction costs are recognised immediately in the Consolidated income statement. The classification of financial assets subsequent to initial recognition depends on the business model used by the Group to manage them and the characteristics of the contractual cash flows. Financial assets are recognised at amortised cost if: \u2013 it is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and \u2013 the contractual terms give rise to payments that are solely payments of principal and interest (SPPI). Financial assets are recognised at fair value through other comprehensive income (FVOCI) if: \u2013 it is held within a business model whose objective is achieved by both holding financial assets in order to collect contractual cash flows and selling financial assets; and \u2013 the contractual terms give rise to payments that are SPPI. All financial assets not classified as measured at amortised cost or FVOCI are measured at FVTPL. The Group has access to a receivables monetisation facility under which amounts receivable from a portfolio of receivables can be sold to a third party on a non-recourse basis. This portfolio of receivables, that may be sold under this facility or held to collect the contractual cash flows, are accounted for at fair value through other comprehensive income (FVOCI) in accordance with IFRS 9, due to the objective of the business model being achieved by both collecting contractual cash flows and the selling of the financial assets. For the receivables within this portfolio that are sold, the receivables are derecognised from the Consolidated balance sheet at the point of sale, which is shortly after the initial recognition of the receivable balance, as the significant risks and rewards of ownership are deemed to have been transferred. Fair value gains or losses on these receivables are recognised within other comprehensive income and reclassified to interest payable and similar charges in the Consolidated income statement when derecognised. Impairment gains or losses are recognised directly in the Consolidated income statement. At 31 December 2024, the receivables sold under this facility were \u00a3386.3 million (2023: \u00a3400.0 million). See note 4.3 for further information about the facility. As part of the sale of customer meter points to EDF by Opus Energy (see note 2.7 for further details), the receivables relating to the meter points sold were transferred to EDF. The amount the Group receives for transferring these receivables is dependent on the amounts collected by EDF. The receivables sold to EDF do not qualify for derecognition under IFRS 9 as Opus Energy has retained substantially all the risks and rewards of ownership of the financial assets. These receivables are accounted for at FVTPL in accordance with IFRS 9, due to the contractual terms of the financial assets giving rise to cash flows that are not SPPI. The cash flows to be received by Opus Energy on collection of the receivables by EDF are calculated in accordance with the Asset Purchase Agreement (APA) and are dependent on the amounts collected by EDF. The impairment requirements of IFRS 9 do not apply to these receivables as the receivables are measured at fair value. Since the transfer, any fair value gains or losses on these receivables have been recognised within the Consolidated income statement within operating and administrative expenses. The UK Government introduced the Energy Bills Discount Scheme (EBDS) running from 1 April 2023 to 31 March 2024 which replaced the Energy Bill Relief Scheme (EBRS). Under these schemes, energy supplied to eligible non-domestic customers had a discount applied. The discount provided was then able to be claimed back from the UK Government by the supplier. The amount the Group is entitled to claim from the Government is recognised in other receivables. See note 2.2 for details of amounts relating to EBDS and EBRS within the Consolidated income statement. At 31 December 2024, there are no amounts outstanding from these schemes (2023: \u00a34.8 million). Contingent consideration receivable is a financial asset. As the cash flows are not SPPI, it does not meet the criteria for recognition at either amortised cost or FVOCI, and is therefore recognised at FVTPL. The impairment requirements of IFRS 9 do not apply to these receivables as the receivables are measured at FVTPL. Fair value gains and losses on this receivable are recognised in other gains and losses in the Consolidated income statement. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-621": { "value": "
As at 31 December
2024 2023
\u00a3m \u00a3m
Amounts falling due:
Trade receivables
105.4
336.0
Accrued income
278.6
420.7
Prepayments
24.9
77.2
Other receivables
52.0
133.8
Contingent consideration
9.4
9.2
Total trade and other receivables and contract assets
470.3
976.9
Included in the prepayments balance is an amount of \u00a31.5 million (2023: \u00a31.9 million) relating to the prepayment of a service contract
for services due to be received after more than one year. Prepayments also includes \u00a32.7 million (2 023: \u00a3 21.1 million) relating to broker
fees paid which have been capitalised as contract costs, of which \u00a3nil (2023: \u00a38.6 million) are due to be recognised after more than
one year, in line with the recognition of the revenue to which the contract costs relate. See note 3.6 for further details.
", "dimensions": { "concept": "ifrs-full:DisclosureOfPrepaymentsAndOtherAssetsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-622": { "value": "Impairment of financial assets Accounting policy The Group applies the impairment model in IFRS 9 to provide for expected credit losses on the Group\u2019s financial assets not measured at FVTPL, including trade receivables, accrued income, contract assets and other financial assets. The provision for impairment of trade receivables and accrued income (including contract assets) is measured at an amount equal to the lifetime expected credit loss. Contract assets relate to amounts for goods or services provided under customer contracts and, therefore, have substantially the same risk characteristics as trade receivables for the same types of contracts. For other financial assets, the Group recognises a lifetime expected credit loss provision when there has been a significant increase in credit risk since initial recognition. If the credit risk of the financial instrument has not increased significantly since initial recognition, the Group recognises a 12-month expected credit loss provision. The greatest concentration of credit risk exists in the Energy Solutions business. For all receivables in the current year, across all businesses, a provision matrix method has been adopted. For the small and medium-sized enterprise (SME) consumers within the Energy Solutions business, the risk is higher due to the wide range of customer characteristics within the portfolio. In the prior year, due to the loss provisioning for these customers being more complex a combined probability method that was more dynamic than the provision matrix method was applied. Due to the sale of the majority of the Group\u2019s non-core SME customer meter points and transfer of the related receivables balances to EDF (see note 2.7 for further details), the receivables balance and exposure to credit risk for these customers has significantly reduced compared to the prior year. As such the use of the combined probability method was not deemed appropriate and the provision matrix method has been applied to all customers. Under the Group\u2019s debt recovery strategy, a breach in terms could lead to the customer being disconnected or pursued legally for recovery of an outstanding balance. The Group considers a financial asset to be in default when the amount due from a debtor is unlikely to be received in full, or when contractual payments are 90 days past due. The Group writes off a financial asset when there is no realistic prospect of recovery and all attempts to recover the balance have been exhausted. An indication that all credit control activities have been exhausted is where the debt on an account is exclusively greater than 365 days past due and active recovery attempts have failed, or where there are known insolvency issues relating to the customer. Provision matrix method Customers are grouped according to the age of the debt based on the number of days past due. The provision rates are based on historical collection rates and an expectation of future cash collection. The movement in the overall allowance for expected credit losses on trade receivables is presented in the following table. This excludes \u00a30.3 million (2023: \u00a3nil) of trade receivables measured at FVTPL:
2024
2023
Combined Provision Combined Provision
probability matrix probability matrix
method method Total method method Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
At 1 January
50.6
8.8
59.4
54.9
6.0
60.9
Amounts written off
(28.5)
(17.9)
(46.4)
(44.2)
(5.0)
(49.2)
Net additional amounts provided against
28.0
20.9
48.9
39.9
7.4
47.3
Amounts added on acquisition
\u2013
\u2013
\u2013
\u2013
0.4
0.4
Transfer of financial assets to FVTPL
category
(19.5)
\u2013
(19.5)
\u2013
\u2013
\u2013
Change in provisioning methodology
(30.6)
30.6
\u2013
\u2013
\u2013
\u2013
At 31 December
\u2013
42.4
42.4
50.6
8.8
59.4
Gross trade receivables
147. 5
147.5
155.8
239.6
395.4
Expected credit loss provision
(42.4)
(42.4)
(50.6)
(8.8)
(59.4)
Trade receivables subject to the IFRS 9
impairment model
105.1
105.1
105.2
230.8
336.0
Average expected credit loss %
29%
29%
32%
4%
15%
The provision in the table above relates primarily to trade receivables in the Energy Solutions business. The provision matrix method has resulted in a \u00a3nil provision applied to both the Flexible Generation and Pellet Production businesses in both the current and prior years and a \u00a32.9 million (2023: \u00a3nil) provision in the Biomass Generation business. The risk of default within the Biomass Generation, Flexible Generation and Pellet Production businesses is considered to be remote, supported by strong historical collection rates, high credit quality counterparties and short payment terms with timely receipts resulting in negligible aged debt. The net charge to the Consolidated income statement in 2024 for impairment losses on financial assets was \u00a340.0 million (2023: \u00a332.5 million). This is the net of the additional amounts provided against in relation to trade receivables of \u00a348.9 million (2023: \u00a347.3 million (excluding \u00a30.4 million added on acquisition)) less an \u00a38.9 million (2023: \u00a314.8 million) benefit in the period in respect of the resolution of legacy credit balances. Of the net charge in the current year, \u00a312.7 million has been recognised as exceptional as part of the Opus Energy transaction (see note 2.7 for further details).
The value of provisions calculated using the combined probability method in the prior year is set out below for comparative purposes.
This shows the trade receivables balances for SME customers within the Energy Solutions business grouped by the combined
probability assigned by the model.
As explained above, the Group stopped using the combined probability model in the current year. As such, the following table shows
the comparative risk profile of amounts due based on the combined probability model at 31 December 2023 only:
As at 31 December 2023
Estimated gross Lifetime
carrying amount expected
at default credit losses
Probability of default range % \u00a3m \u00a3m
80\u201310 0
42 .1
36.7
50\u201379
14.3
8.0
26\u201349
17.9
5.8
0\u201325
81.5
0 .1
Total
155.8
50.6
The value of provisions calculated using the Group\u2019s provision matrix method is set out below. This shows the ageing profile in 30-day
increments of the trade receivables and accrued income (including contract assets) of the Group at 31 December 2024 excluding
\u00a30.3 million (2023: \u00a3nil) of trade receivables that are measured at FVTPL.
The comparative amounts show the same, apart from not including the Group\u2019s SME customers within the Energy Solutions business,
that were previously calculated using the combined probability method and are included in the table above.
As at 31 December 2024
As at 31 December 2023
Estimated Estimated
total gross Lifetime total gross Lifetime
carrying amount expected Expected carrying amount expected Expected
at default credit losses credit loss rate at default credit losses credit loss rate
\u00a3m \u00a3m % \u00a3m \u00a3m %
Accrued income balances not yet due
287.6
9.0
3%
43 0 .1
9.4
2%
Trade receivables days past due:
Balances not yet due
81.6
4.0
5%
183.6
2 .1
1%
Between 0\u201330 days
5.2
0.8
15%
32.6
0.9
3%
Between 31\u201360 days
2.5
0.7
28%
7.1
0.7
9%
Between 61\u201390 days
2.1
0.8
38%
2.7
0.5
19%
Over 90 days
56.1
36 .1
64%
13.6
4.6
34%
Trade receivables subject to the IFRS 9
impairment model total
147. 5
42.4
29%
239.6
8.8
4%
Total
435.1
51.4
12%
669.7
18.2
3%
The expected credit loss provision of \u00a351.4 million (2023: \u00a318.2 million) in the table above primarily relates to the Energy Solutions
business. The expected credit loss rates above are expressed as a percentage of the gross carrying amount of all of the Group\u2019s trade
receivables and accrued income balances that are subject to the provision matrix method.
The expected credit loss provision calculated for other financial assets of the Group was negligible.
Credit and counterparty risk are disclosed in further detail in note 7.2.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAllowanceForCreditLossesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-697": { "value": "Accounting policy The Group applies the impairment model in IFRS 9 to provide for expected credit losses on the Group\u2019s financial assets not measured at FVTPL, including trade receivables, accrued income, contract assets and other financial assets. The provision for impairment of trade receivables and accrued income (including contract assets) is measured at an amount equal to the lifetime expected credit loss. Contract assets relate to amounts for goods or services provided under customer contracts and, therefore, have substantially the same risk characteristics as trade receivables for the same types of contracts. For other financial assets, the Group recognises a lifetime expected credit loss provision when there has been a significant increase in credit risk since initial recognition. If the credit risk of the financial instrument has not increased significantly since initial recognition, the Group recognises a 12-month expected credit loss provision. The greatest concentration of credit risk exists in the Energy Solutions business. For all receivables in the current year, across all businesses, a provision matrix method has been adopted. For the small and medium-sized enterprise (SME) consumers within the Energy Solutions business, the risk is higher due to the wide range of customer characteristics within the portfolio. In the prior year, due to the loss provisioning for these customers being more complex a combined probability method that was more dynamic than the provision matrix method was applied. Due to the sale of the majority of the Group\u2019s non-core SME customer meter points and transfer of the related receivables balances to EDF (see note 2.7 for further details), the receivables balance and exposure to credit risk for these customers has significantly reduced compared to the prior year. As such the use of the combined probability method was not deemed appropriate and the provision matrix method has been applied to all customers. Under the Group\u2019s debt recovery strategy, a breach in terms could lead to the customer being disconnected or pursued legally for recovery of an outstanding balance. The Group considers a financial asset to be in default when the amount due from a debtor is unlikely to be received in full, or when contractual payments are 90 days past due. The Group writes off a financial asset when there is no realistic prospect of recovery and all attempts to recover the balance have been exhausted. An indication that all credit control activities have been exhausted is where the debt on an account is exclusively greater than 365 days past due and active recovery attempts have failed, or where there are known insolvency issues relating to the customer. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-623": { "value": "3.6 Contract costs The Group incurs costs of obtaining contracts in the Energy Solutions business. Accounting policy Management expects that incremental broker fees paid to intermediaries as a result of obtaining electricity and gas contracts are recoverable. The Group has therefore capitalised them as contract costs at the point the fee is paid. The fees are amortised over the contract period in line with the recognition of revenue and are charged to cost of sales. The balance is included within prepayments in note 3.5. This amount includes both current and non-current balances. The reconciliation from opening to closing contract costs is as follows:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
At 1 January
21.1
29.8
Additions
19.2
17.6
Amortisation
(21.5)
(26.3)
Accelerated amortisation \u2013 customers sold
(10.6)
\u2013
Impairment \u2013 customers retained
(5.5)
\u2013
At 31 December
2.7
21.1
During the year the Group sold the majority of its non-core SME customers in Opus Energy to EDF (see note 2.7 for further details). The amortisation of the commissions relating to the customers sold was accelerated due to the future cash flows from those customers\u2019 contracts being received as part of the consideration for the sale of the customer meters. This accelerated charge was recognised as exceptional within the Consolidated income statement. The remaining commissions relating to the customers retained by Opus Energy were impaired due to those customer contracts being onerous following the sale (see note 5.3). ", "dimensions": { "concept": "ifrs-full:DisclosureOfFeeAndCommissionIncomeExpenseExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-592": { "value": "3.6 Contract costs The Group incurs costs of obtaining contracts in the Energy Solutions business. Accounting policy Management expects that incremental broker fees paid to intermediaries as a result of obtaining electricity and gas contracts are recoverable. The Group has therefore capitalised them as contract costs at the point the fee is paid. The fees are amortised over the contract period in line with the recognition of revenue and are charged to cost of sales. The balance is included within prepayments in note 3.5. This amount includes both current and non-current balances. The reconciliation from opening to closing contract costs is as follows: Year ended 31 December 2024 2023 \u00a3m \u00a3m At 1 January 21.1 29.8 Additions 19.2 17.6 Amortisation (21.5) (26.3) Accelerated amortisation \u2013 customers sold (10.6) \u2013 Impairment \u2013 customers retained (5.5) \u2013 At 31 December 2.7 21.1 During the year the Group sold the majority of its non-core SME customers in Opus Energy to EDF (see note 2.7 for further details). The amortisation of the commissions relating to the customers sold was accelerated due to the future cash flows from those customers\u2019 contracts being received as part of the consideration for the sale of the customer meters. This accelerated charge was recognised as exceptional within the Consolidated income statement. The remaining commissions relating to the customers retained by Opus Energy were impaired due to those customer contracts being onerous following the sale (see note 5.3). ", "dimensions": { "concept": "draxgroupplc:DisclosureOfContractCosts", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-715": { "value": "Accounting policy Management expects that incremental broker fees paid to intermediaries as a result of obtaining electricity and gas contracts are recoverable. The Group has therefore capitalised them as contract costs at the point the fee is paid. The fees are amortised over the contract period in line with the recognition of revenue and are charged to cost of sales. The balance is included within prepayments in note 3.5. This amount includes both current and non-current balances. The reconciliation from opening to closing contract costs is as follows: ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForCustomerAcquisitionCostsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-698": { "value": "Accounting policy Management expects that incremental broker fees paid to intermediaries as a result of obtaining electricity and gas contracts are recoverable. The Group has therefore capitalised them as contract costs at the point the fee is paid. The fees are amortised over the contract period in line with the recognition of revenue and are charged to cost of sales. The balance is included within prepayments in note 3.5. This amount includes both current and non-current balances. The reconciliation from opening to closing contract costs is as follows: ", "dimensions": { "concept": "draxgroupplc:DescriptionOfAccountingPolicyForContractCosts", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-593": { "value": "3.7 Trade and other payables and contract liabilities Trade and other payables represents amounts the Group owes to its suppliers for trade purchases and ongoing costs, taxes and social security amounts due in relation to the Group\u2019s role as an employer, and other creditors that are due to be paid in the ordinary course of business. The Group makes accruals for amounts that will fall due for payment in the future as a result of the Group\u2019s activities in the current period (e.g. fuel received but for which the Group has not yet been invoiced). Contract liabilities represents the Group\u2019s obligation to transfer goods and services to its customers whereby the Group has already received the consideration in advance or where the amount is due from the customer at the reporting date. Accounting policy Trade and other payables are financial liabilities that are initially measured at fair value. Trade and other payables are subsequently measured at amortised cost using the effective interest method. Financial liabilities are derecognised when the contractual obligations are discharged, cancelled or expire. If the terms of a financial liability are significantly modified, the existing financial liability is derecognised and a new financial liability based on the modified terms is recognised at fair value. The difference between the carrying value of the financial liability based on the terms pre-modification and post-modification is recognised in the Consolidated income statement.
As at 31 December
2024 2023
\u00a3m \u00a3m
Trade payables
134.8
145.2
Fuel accruals
67.9
71.4
Energy supply accruals
473.2
587.4
Other accruals
319.5
306.6
Other payables
264.4
389.6
Contract liabilities
29.3
39.4
Total trade and other payables and contract liabilities
1, 289.1
1,539.6
Trade payables are unsecured and are usually paid within 60 days of recognition. The carrying amounts of trade and other payables approximates their fair values, due to their short-term nature. The Group facilitates a supply chain finance scheme under which certain suppliers can obtain early access to payments from a bank and the Group pays the bank based on the original payment terms. The Group has assessed the supply chain finance arrangement, considering the nature and specific terms of the arrangement and has determined that it is appropriate for the amount to continue to be recognised within trade payables. This conclusion is based on the fact that there are no changes to the Group\u2019s payment terms under this arrangement, nor would there be if the arrangement was to cease. Trade payables includes \u00a338.4 million (2023: \u00a348.6 million) relating to supply chain finance. Cash flows relating to supply chain finance, being the Group\u2019s payment to the bank, are included within net cash from operating activities. See note 4.3 for further details. The Group also has access to deferred letter of credit payment facilities under which the Group benefits from an extension to invoice payment terms of less than 12 months for a fee. The original liability is derecognised from trade payables once the deferred letter of credit has been issued and drawn, this is normally at the point that the original liability is due for payment in accordance with invoice payment terms. The amount due to the facility provider is recognised in other payables. Fees are either recognised in the Consolidated income statement, or capitalised if they are directly attributable to the construction of a qualifying asset and meet the criteria for capitalisation, in the period incurred. Other payables includes \u00a3150.3 million (2023: \u00a3224.7 million) related to deferred letters of credit. Of the total deferred letters of credit, \u00a392.8 million (2 02 3: \u00a3155.1 million) were utilised for capital expenditure and \u00a357.5 million (2023: \u00a369.6 million) were utilised for trade payables. Cash flows relating to deferred letters of credit, being the Group\u2019s payment to the bank, are included within net cash from operating activities where utilised for biomass purchases or net cash used in investing activities for capital expenditure. See note 4.3 for further details.
The tables below detail the amount of trade and other payables and contract liabilities that relate to financial liabilities that are part
of supplier finance arrangements, such as supply chain finance and deferred letters of credit, and how much of these amounts have
already been paid out by the finance providers at the reporting date.
As at 31 December
2024 2023
\u00a3m \u00a3m
Supply chain finance scheme
Carrying amount of financial liabilities that are part of the arrangement:
Presented within trade payables
38.4
48.6
\u2013 Of which represents the value of accelerated payments to suppliers
11.8
47.6
Range of payment due dates: 45 to 65 days 45 to 65 days
after invoice after invoice
Liabilities that are part of the arrangement date date
3 to 60 days 3 to 60 days
after invoice after invoice
Comparable trade payables that are not part of the arrangement date date
Deferred letters of credit \u2013 biomass purchases
Carrying amount of financial liabilities that are part of the arrangement:
Presented within other payables
57. 5
69.6
\u2013 Of which represents the value of accelerated payments to suppliers
56.6
68.5
Range of payment due dates: 80 to 117 days 80 to 117 days
after invoice after invoice
Liabilities that are part of the arrangement date date
3 to 25 days 3 to 25 days
after invoice after invoice
Comparable trade payables that are not part of the arrangement date date
Deferred letters of credit \u2013 capital expenditure
Carrying amount of financial liabilities that are part of the arrangement:
Presented within other payables
92.8
155.1
\u2013 Of which represents the value of accelerated payments to suppliers
90.3
146.8
Range of payment due dates: Extension of Extension of
invoice invoice
payment terms payment terms
by 329-36 0 by 329-364
Liabilities that are part of the arrangement days days
30 to 42 days 30 to 42 days
after invoice after invoice
Comparable trade payables that are not part of the arrangement date date
Non-cash movements in the period:
Derecognition of amounts owed to the supplier and recognition of amounts owed to the facility
provider \u2013 supply chain finance scheme
219.5
213.1
Derecognition of amounts owed to the supplier and recognition of amounts owed to the facility
provider \u2013 deferred letters of credit
316.9
411.7
Effect of changes in foreign exchange rates \u2013 supply chain finance scheme
1.9
1.0
Effect of changes in foreign exchange rates \u2013 deferred letters of credit
5.7
2.2
In the supply chain finance scheme, the payable to the original supplier and the payable owed to the facility provider (once the payable
owed to the original supplier has been derecognised) are both presented within trade payables as the payable remains operating in
nature and there is no extension to the Group\u2019s payment terms under this arrangement.
The Group does not include trade and other payables and contract liabilities in its definition of borrowings or Net debt where they
are linked to a specific payable and give an extension in payment terms of less than 12 months (see note 2.7).
Energy supply accruals includes \u00a3347.7 million (2023: \u00a3444.4 million) in relation to the Group\u2019s obligation to deliver renewable
certificates arising from activities in the Energy Solutions business. The decrease is due to the lower value of REGOs compared
to the prior year. The remaining balance principally comprises third-party grid charge accruals of \u00a365.5 million (2023: \u00a375.1 million)
and Feed-in-Tariff accruals of \u00a325.3 million (2023: \u00a319.4 million).
Contract liabilities primarily relate to the advance consideration received from customers for fixed price electricity and gas contracts,
for which revenue is recognised based on the stage of completion of the contract. The balance reduces as revenue is subsequently
recognised in the following periods, offset by further advanced consideration received. Contract liabilities at 31 December were
\u00a329.3 million (2023: \u00a339.4 million). The movement in the period includes a release of \u00a34.2 million as a result of the Opus Energy
transaction. See note 2.7 for further details.
", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-699": { "value": "Accounting policy Trade and other payables are financial liabilities that are initially measured at fair value. Trade and other payables are subsequently measured at amortised cost using the effective interest method. Financial liabilities are derecognised when the contractual obligations are discharged, cancelled or expire. If the terms of a financial liability are significantly modified, the existing financial liability is derecognised and a new financial liability based on the modified terms is recognised at fair value. The difference between the carrying value of the financial liability based on the terms pre-modification and post-modification is recognised in the Consolidated income statement. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-644": { "value": "
As at 31 December
2024 2023
\u00a3m \u00a3m
Trade payables
134.8
145.2
Fuel accruals
67.9
71.4
Energy supply accruals
473.2
587.4
Other accruals
319.5
306.6
Other payables
264.4
389.6
Contract liabilities
29.3
39.4
Total trade and other payables and contract liabilities
1, 289.1
1,539.6
The Group also has access to deferred letter of credit payment facilities under which the Group benefits from an extension to invoice
payment terms of less than 12 months for a fee. The original liability is derecognised from trade payables once the deferred letter of
credit has been issued and drawn, this is normally at the point that the original liability is due for payment in accordance with invoice
payment terms. The amount due to the facility provider is recognised in other payables. Fees are either recognised in the Consolidated
income statement, or capitalised if they are directly attributable to the construction of a qualifying asset and meet the criteria for
capitalisation, in the period incurred. Other payables includes \u00a3150.3 million (2023: \u00a3224.7 million) related to deferred letters of credit.
Of the total deferred letters of credit, \u00a392.8 million (2 02 3: \u00a3155.1 million) were utilised for capital expenditure and \u00a357.5 million (2023:
\u00a369.6 million) were utilised for trade payables. Cash flows relating to deferred letters of credit, being the Group\u2019s payment to the bank,
are included within net cash from operating activities where utilised for biomass purchases or net cash used in investing activities for
capital expenditure. See note 4.3 for further details.
Energy supply accruals includes \u00a3347.7 million (2023: \u00a3444.4 million) in relation to the Group\u2019s obligation to deliver renewable certificates arising from activities in the Energy Solutions business. The decrease is due to the lower value of REGOs compared to the prior year. The remaining balance principally comprises third-party grid charge accruals of \u00a365.5 million (2023: \u00a375.1 million) and Feed-in-Tariff accruals of \u00a325.3 million (2023: \u00a319.4 million). ", "dimensions": { "concept": "ifrs-full:DisclosureOfAccruedExpensesAndOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-658": { "value": "
As at 31 December
2024 2023
\u00a3m \u00a3m
Trade payables
134.8
145.2
Fuel accruals
67.9
71.4
Energy supply accruals
473.2
587.4
Other accruals
319.5
306.6
Other payables
264.4
389.6
Contract liabilities
29.3
39.4
Total trade and other payables and contract liabilities
1, 289.1
1,539.6
Contract liabilities primarily relate to the advance consideration received from customers for fixed price electricity and gas contracts, for which revenue is recognised based on the stage of completion of the contract. The balance reduces as revenue is subsequently recognised in the following periods, offset by further advanced consideration received. Contract liabilities at 31 December were \u00a329.3 million (2023: \u00a339.4 million). The movement in the period includes a release of \u00a34.2 million as a result of the Opus Energy transaction. See note 2.7 for further details.", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredIncomeExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-594": { "value": "
3.8 Climate change
Climate change, and tackling it, is closely linked to the Group\u2019s purpose, as set out in the Strategic report on pages 1 to 85.
The Sustainable development report, starting on page 30, sets out how the Group\u2019s ambition is to be climate positive and the
TCFD disclosures, starting on page 56, set out the Group\u2019s approach to managing climate risks and opportunities, including scenario
analysis. The Group aims to be a leader in the UK\u2019s transition to net zero and its strategy is aligned to this purpose. Climate change
is factored into short, medium and long-term forecasts and estimates used by the Group. In the Viability statement on page 84
and the TCFD report on page 56, quantitative risk analysis on the Group\u2019s operational Biomass Generation, Flexible Generation and
Pellet Production assets indicates that asset exposure to impacts arising from transitional and physical climate-related risks currently
remains low.
Climate change and the transition to net zero have been considered in the preparation of these Consolidated financial statements.
The impact of future climate change regulation could have a material impact on the currently reported amounts of the Group\u2019s assets
and liabilities. In preparing these Consolidated financial statements, the following climate change-related risks have been considered:
Area
Description
Page reference
Critical accounting Impairment of assets, UELs of property, plant and equipment and capitalisation of 163 and 164
judgements and key development project costs are all sensitive to climate change. For capitalisation of
sources of estimation development project costs these costs may not be recoverable if there is a change in the
uncertainty UK Government\u2019s approach to combatting climate change which means that the
development of UK BECCS does not progress. However, the Group considers that the
only way to achieve current UK Government targets for greenhouse gas removals is
through having at least one BECCS unit at Drax Power Station by 2030. This is consistent
with the National Energy System Operator for Great Britain (NESO) Clean Power 2030
report published in November 2024, which assumes one biomass unit is converted to
BECCS in their pathways.
Impairment of assets and UELs of property, plant and equipment are detailed separately
below.
Impairment of assets
The Group\u2019s expectations around the impacts of climate change, and in particular the
requirements of the UK Government\u2019s commitment to reach net zero by 2050, are
integral to the forecasts used in the Group\u2019s impairment analysis. For example, the
forward power price curves used take into account expectations regarding the impact of
climate change and the changing mix of generating assets on the UK power system. This
could lead to lower average power prices as the proportion of intermittent renewables
increases, but this would be tempered by increased structural volatility, meaning a need
for biomass and other dispatchable generation.
Government and societal responses to climate change are still developing, and therefore
financial forecasts cannot capture all potential future scenarios. This presents
uncertainty around future cash flows from an IAS 36 perspective. Sensitivities modelled,
including those around biomass acceptability and changes in regulation, seek to capture
and assess some of these potential scenarios. Consideration was given to assumptions
around biomass generation and biomass prices when current renewable schemes for
biomass generation at Drax Power Station are due to end from March 2027, along with
the potential extension to 2031 through the agreed heads of terms for a low-carbon
dispatchable CfD agreement signed in February 2025. See note 2.4 for further details.
Sensitivities modelled in the impairment testing also included operational outages at
both the generation and pellet production facilities, which could be caused by extreme
weather conditions as a result of climate change or other factors.
164 and 181
Section 3: Operating assets and working capital cont inued
Impairment of assets Following the announcement in 2023 to exit the gas supply market, to support the
(continued) Group\u2019s ambition to decarbonise, in the current year the Group sold the majority of its
non-core small and medium-sized enterprise (SME) customer meter points from Opus
Energy to EDF. As explained in note 2.7 a subsequent restructuring commenced to
reflect the reduced size of the Opus Energy business and the focus on industrial and
commercial (I&C) customers and renewables services within the Energy Solutions
business. This has resulted in a number of non-current asset impairments. See note 2.4
for further details.
The impact of climate change on the OCGT assets has also been considered. Whilst there
is a risk of legislative change relating to unabated gas, the assets\u2019 carrying values are
underpinned by long-term, Government-backed contracts. When they are operational
these assets will be amongst the newest on the system. The NESO Clean Power 2030
pathways report states gas generation will remain critical for security of supply. The
Group continues to consider options for these assets.
Climate change could have an impact on weather patterns and the supply of renewable
energy generation, affecting energy prices. Sensitivities for these scenarios were run
on the run-of-river hydro and pumped storage assets and did not indicate any potential
impairments.
Going concern and As above, forecast power prices and potential operational outages are also incorporated 21 and 161 for
viability into the going concern and viability assessments. going concern
and 84 for
viability
Useful economic lives of The potential impact of climate change is one of the factors assessed in determining
164
and 200
fixed assets how long the Group anticipates both new and existing assets will operate for. For
example, the OCGT assets under development will be given a UEL in line with the Group\u2019s
expectations around the UK\u2019s transition to a net zero position by 2050.
As outlined in the key sources of estimation uncertainty section, UELs at Drax Power
Station may be lengthened or shortened as a result of future decisions, that may be
directly or indirectly linked to climate change. Were UELs to be shortened by 12 years
to 2027
, in line with the end of the current renewables schemes, and if a decision was
taken not to develop UK BECCS or other opportunities (such as data centres), at the site, the impact on the annual depreciation charge would be an increase of approximately
\u00a3183.8 million. See further details in note 3.1.
Present value of As described in note 5.3, the decommissioning provision in relation to Drax Power 228
decommissioning Station, the OCGTs and certain pellet plants has been assessed with the support of a
provisions third-party expert.
The third-party analyses specifically considered potential impacts of climate change,
both physical and transitional, extending over the medium term, and concluded that
direct effects were unlikely to have a significant impact over this time horizon.
If Drax Power Station or the OCGT sites closed sooner than indicated by their current
UELs, for reasons explained above, then the decommissioning provision would increase
as the cash outflows would occur earlier; however, this would not have a material impact
on the provision.
Legislation and regulatory requirements could have an impact on the UELs of the OCGTs.
If a law was enacted that could result in early closure of unabated gas generation this
would result in an earlier utilisation of the provision.
Fair value of contingent Future regulatory changes in relation to the type of assets that can be built in the UK, 241
consideration in response to climate change, could lead to the project at Damhead Creek 2 not
progressing as currently assumed. This could lead to an adverse impact on the fair value
of the contingent consideration which the Group has recognised. This would not lead to
a material reduction in the fair value.
Defined benefit pension The Group operates one defined benefit pension scheme. The trustees of the scheme 234
scheme have an investment strategy that seeks to diversify its risk exposures. The investment
policy requires investment managers to take climate risk into account. The impact
of climate change is relatively low due to the risk profile of the assets held under
the scheme.
Renewable certificates
As demand for renewable electricity is growing, the long term trend in the value of
205
Renewable Energy Guarantees of Origin (REGO) certificates has increased due to the
higher demand. This is in part due to the need for organisations to decarbonise and
promote their corporate social responsibility and environmental social governance.
The run-of-river hydro assets and biomass assets are eligible to claim REGOs on the
electricity they produce. Certificates are utilised by the Energy Solutions segment,
who submit them to Ofgem on behalf of their customers.
Further stabilisation and correction of REGO prices in the future could impact the value
of renewable certificates held, in turn impacting future revenues.
ROC valuations are comprised of two parts: the buy-out price element and an estimate
of the future benefit that may be obtained from the ROC recycle fund. The recycle fund
provides a benefit where supplier buy-out charges are redistributed to the suppliers who
presented ROCs in a compliance period on a pro-rata basis. One of the key estimates of
the recycle value are assumptions about the expected levels of renewable generation,
which is largely dependent on weather. Climate change could have an impact on weather
patterns and therefore the supply of ROCs, which would impact the recycle value.
Sustainable financing
During the year, the Group has entered into various new facilities (see note 4.2), some
216
of which have embedded aspects of the Group\u2019s climate targets and commitments.
These new facilities and new sustainability-linked \u00a3450 million RCF have a customary
margin grid referenced over SONIA or EURIBOR with adjustments linked to certain Scope
1, 2 and 3 carbon emissions which are based on the Group\u2019s 2030 Science Based Targets
initiative (SBTi) targets. The CAD term loan has an ESG adjustment based on carbon
emissions from generation.
Should the Group not meet the targets the Group would be liable to increased finance
costs prospectively.
Deferred tax assets
Deferred tax assets are recognised to the extent that it is probable that future taxable
181
profits will be available against which deductible temporary differences can be utilised.
The Group currently has deferred tax assets related to its US and Canadian businesses.
The estimates used when assessing the future profitability of the US and Canadian
businesses have been approved by the Board and are consistent with estimates used
in the going concern and impairment assessments. As discussed above, the impairment
assessment factors in climate change risks in the forecasts. See note 2.4 for further
details on how climate change has been factored into the forecasts.
", "dimensions": { "concept": "draxgroupplc:DisclosureOfClimateChange", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-595": { "value": "4.1 Cash and cash equivalents Accounting policy Cash and cash equivalents comprise cash at bank, short-term bank deposits with a maturity of three months or less, and money market funds. Cash equivalents are highly liquid low-risk investments and are readily convertible into known amounts of cash with a maturity of three months or less, as such there is an insignificant risk of a change in value. The carrying amount of these assets is approximately equal to their fair value. It is the Group\u2019s policy to deposit available cash in low-risk bank accounts or short-term deposit accounts.
As at 31 December
2024 2023
\u00a3m \u00a3m
Cash at bank
73.5
7 7.5
Short-term deposits
179.4
130.9
Money market funds
103.1
171.1
Total cash and cash equivalents
356.0
379.5
", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-624": { "value": "Accounting policy Cash and cash equivalents comprise cash at bank, short-term bank deposits with a maturity of three months or less, and money market funds. Cash equivalents are highly liquid low-risk investments and are readily convertible into known amounts of cash with a maturity of three months or less, as such there is an insignificant risk of a change in value. The carrying amount of these assets is approximately equal to their fair value. It is the Group\u2019s policy to deposit available cash in low-risk bank accounts or short-term deposit accounts. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyToDetermineComponentsOfCashAndCashEquivalents", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-645": { "value": "4.2 Borrowings Accounting policy The Group measures all debt instruments initially at fair value, which equates to the principal value of the consideration received, net of transaction costs that are directly attributable to the debt issuance. Subsequent to initial measurement, debt instruments are measured at amortised cost using the effective interest method. Transaction costs (any such costs incremental and directly attributable to the issue of the financial instrument) are included in the calculation of the effective interest rate and are amortised over the expected life of the instrument. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. Loan commitment fees may be payable to the lender to entitle the Group to draw down at any time over a fixed period. Where there is a fixed repayment date, regardless of when the loan is drawn down, the commitment fees are recognised on a systematic basis over the period the Group is able to draw down. Where the loan has the same fixed term, regardless of when the loan is drawn down, if drawdown is probable, then the commitment fees are deferred until drawdown and are recognised over the life of the instrument as part of the effective interest rate. If drawdown is not probable, then loan commitment fees are recognised on a systematic basis over the period the Group is able to draw down. Fees that are paid for the availability of a facility where the amount and timing of drawdown can vary at the Group\u2019s discretion, such as under a revolving credit facility (RCF), are recognised on a systematic basis over the life of the facility. Debt instruments denominated in foreign currencies are revalued using the period-end exchange rates, with any exchange gains and losses being recognised as a component of foreign exchange gains or losses in the period they arise. The Group hedges foreign currency risk and interest rate risk in accordance with the policies set out in note 7.2. Where hedging instruments are used to fix cash flows associated with debt instruments, the debt instrument and the hedging instrument are measured and presented separately on the Consolidated balance sheet. Where hedge accounting is applied to foreign exchange risk and interest rate risk on debt instruments, gains and losses are recycled to the Consolidated income statement within either foreign exchange gains or losses or interest payable and similar charges, to match the exposure they are hedging, where effective. The borrowings amounts disclosed in the tables below exclude any impact of hedging instruments. Debt instruments are derecognised when the contractual obligations are discharged, cancelled or expired. If the terms of a debt instrument are significantly modified, the existing liability is derecognised and a new liability based on the modified terms is recognised at fair value. The difference between the carrying value of the debt instrument based on the terms pre-modification and post- modification is recognised in the Consolidated income statement. The Group\u2019s borrowings at each reporting date were as follows:
As at 31 December 2024
As at 31 December 2023
Effective Effective
sterling Amortised sterling Amortised
interest rate
(1)
Principal Year of cost
interest rate
(1)
Principal Year of cost
% m maturity \u00a3m % m maturity \u00a3m
Non-current secured borrowings:
2.625% EUR loan notes 2025
(2)
\u2013
\u2013
n/a
\u2013
4.6%
\u20ac250.0
2025
215.7
6.625% USD loan notes 2025
(3)
\u2013
\u2013
n/a
\u2013
6 .1%
$500.0
2025
391.5
5.875% EUR loan notes 2029
7.5%
\u20ac350.0
2029
289.5
\u2013
\u2013
n/a
\u2013
UK infrastructure private 2025 \u2013
placement facility (2019)
3.0%
\u00a350.0
2029
49.5
3.3%
\u00a3252.5
2029
251.4
UK infrastructure private \u20ac101.5 + 2026 \u2013 \u20ac101.5 + 2026 \u2013
placement facility (2020)
2.5%
\u00a398.0
2030
181.0
2.6%
\u00a398.0
2030
184.7
CAD term loan facility
6 .1%
C$200.0
2026
111.0
7.1%
C$200.0
2026
117. 8
GBP and EUR term loan facility \u20ac185.0 + 2027 \u2013
(2024)
5.5%
\u00a3100.0
2029
251.9
\u2013
\u2013
n/a
\u2013
2027 \u2013
\u00a3125m GBP term loan facility (2024)
6.2%
\u00a3125.0
2029
124.9
\u2013
\u2013
n/a
\u2013
\u00a350m GBP term loan facility (2024)
5.5%
\u00a350.0
2028
49.9
\u2013
\u2013
n/a
\u2013
Current secured borrowings:
2.625% EUR loan notes 2025
(2)
4.6%
\u20ac143.8
2025
119.0
\u2013
\u2013
n/a
\u2013
UK infrastructure private
placement facility (2019)
\u2013
\u2013
n/a
\u2013
3.3%
\u00a3122.5
2024
122.5
UK infrastructure private
placement facility (2020)
\u2013
\u2013
n/a
\u2013
2.6%
\u20ac25.0
2024
21.7
Current unsecured borrowings:
Collateral facility
\u2013
\u2013
n/a
\u2013
7.1%
\u00a3120.0
2024
120.0
Total borrowings
1,176.7
1,425.3
Current
119.0
264.2
Non-current
1,057.7
1,161.1
(1) The effective sterling interest rate includes the impact of any interest rate and cross-currency interest rate swaps. (2) In May 2024, the Group completed a tender offer on \u20ac106.2 million of the principal. (3) These loan notes were due to mature in 2025 but were fully redeemed in May 2024. The effective sterling interest rate gives the rate that the Group has fixed to pay on each of the facilities, using a combination of interest rate swaps and cross-currency interest rate swaps. These instruments as well as foreign currency forward contracts are used to fix the sterling repayment of the principal. See note 7.2.2 for further details on the Group\u2019s hedging of borrowings. During the year, the Group has refinanced a number of existing facilities to extend the Group\u2019s average debt maturity profile. Further details of this refinancing activity is provided below and in the Financial review starting on page 18. In January 2024, \u00a3122.5 million of the UK infrastructure private placement facility (2019) was repaid, as well as \u20ac25.0 million of the UK infrastructure private placement facility (2020). In February 2024, the Group signed a new secured committed sustainability-linked GBP and EUR term loan facility (2024) for \u00a3258.0 million (sterling equivalent). This comprised \u20ac135.0 million and \u00a350.0 million due to mature in 2027 and a further \u20ac50.0 million and \u00a350.0 million due to mature in 2029. The \u20ac135.0 million due to mature in 2027 contains options to extend for up to a further two years, subject to lender approval. These amounts were fully drawn in April 2024. Interest on the term loans is set at a margin over the Euro Interbank Offered Rate (EURIBOR) or the Sterling Overnight Index Average (SONIA) with adjustments linked to certain Scope 1, 2 and 3 carbon emissions which are based on the Group\u2019s 2030 Science Based Targets initiative (SBTi) targets. In April 2024, the Group signed a new secured committed \u00a3125.0 million term loan facility (2024) comprising of \u00a395.0 million due to mature in 2027 and \u00a330.0 million due to mature in 2029. These amounts were fully drawn in May 2024. Interest on the term loans is set at a margin over SONIA. The agreement includes an option to establish an incremental facility for up to \u00a325.0 million, if agreed between the Group and its lenders. In April 2024, the Group completed a \u20ac350.0 million offering of senior secured loan notes. The loan notes mature in 2029 and have a coupon rate of 5.875%. These loan notes were fully drawn in May 2024. On the same date, the Group elected to redeem in full the $500.0 million 6.625% loan notes due to mature in 2025 at 100% of the principal value. In May 2024, the Group completed a tender offer on \u20ac106.2 million of the principal of the 2.625% EUR loan notes due to mature in 2025 at 97.875% of the principal value (\u20ac103.9 million). Following completion of this offer in May 2024, the remaining principal of these notes outstanding is \u20ac143.8 million. A gain on extinguishment of \u00a31.7 million was recognised within interest receivable and similar gains in relation to this partial repayment (see note 2.5). In May 2024, the Group chose to make early repayments of \u00a3122.5 million and \u00a380.0 million of the UK infrastructure private placement facility (2019), with maturities in 2025 and 2026 respectively. In July 2024, the \u00a3120.0 million outstanding on the short-term collateral facility was repaid. In August 2024, the Group signed a new secured committed \u00a350.0 million GBP term loan facility (2024) due to mature in 2028 with a margin over SONIA. The term loan was fully drawn in September 2024. In August 2024, the Group secured a new sustainability-linked \u00a3450.0 million RCF which matures in 2027, with options to extend by two years, subject to lender approval. The facility, which provides additional liquidity, replaced the \u00a3300.0 million RCF which was due to mature in 2026. The facility has a customary margin grid referenced over SONIA with adjustments linked to certain Scope 1, 2 and 3 carbon emissions which are based on the Group\u2019s 2030 SBTi targets. No cash has been drawn since its inception and it remained undrawn as at 31 December 2024. See note 2.7 for further details on the Group\u2019s cash and committed facilities. See note 3.8 for further details on climate change considerations related to borrowings. In December 2024, the Group agreed with the lenders of a \u00a350.0 million tranche of the UK infrastructure private placement facility (2019) and a \u00a353.0 million tranche of the UK infrastructure private placement facility (2020) to reprice the interest rates at no cost to reflect current market rates available to the Group. This was assessed to be a substantial modification to the terms of the borrowings in accordance with IFRS 9 and therefore the previous borrowings have been derecognised and new borrowings have been recognised. No gains or losses have been recognised in respect of the transaction. The Group\u2019s secured borrowings are secured by a charge over a number of the Group\u2019s assets. See note 3.1 for details of the assets pledged as security. The weighted average interest rate payable, at the reporting date, on the Group\u2019s borrowings was 5.39% (2023: 4.79%). Reconciliation of borrowings The table below shows the movement in borrowings during the current and prior year:
Year ended 31 December 2024
Opening Amounts Transaction Amounts Cash interest Non-cash Closing
amortised cost drawn costs repaid payments movements amortised cost
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
2.625% EUR loan notes 2025
215.7
\u2013
\u2013
(88.7)
(4.4)
(3.6)
119.0
6.625% USD loan notes 2025
391.5
\u2013
\u2013
(393.9)
(13.0)
15.4
\u2013
5.875% EUR loan notes 2029
\u2013
298.8
(4.4)
\u2013
( 7.8)
2.9
289.5
UK infrastructure private placement
facility (2019)
(1)
373.9
\u2013
\u2013
(325.0)
(10.9)
11.5
49.5
UK infrastructure private placement
facility (2020)
(1)
206.4
\u2013
(0.8)
(21.6)
(11.5)
8.5
181.0
CAD term loan facility
117. 8
\u2013
(0.1)
\u2013
(6.6)
(0.1)
111.0
GBP and EUR term loan facility (2024)
\u2013
258.0
(2.0)
\u2013
(9.9)
5.8
251.9
\u00a3125m GBP term loan facility (2024)
\u2013
125.0
(1.3)
\u2013
(3.7)
4.9
124.9
\u00a350m GBP term loan facility (2024)
\u2013
50.0
(0.4)
\u2013
(0.6)
0.9
49.9
Collateral facility
120.0
\u2013
\u2013
(120.0)
(6.4)
6.4
\u2013
Total borrowings
1,425.3
731.8
(9.0)
(949.2)
(74.8)
52.6
1,176.7
(1) The repricing of \u00a350.0 million and \u00a353.0 million tranches of these facilities constituted an extinguishment of previous borrowings and the recognition of new borrowings. No gains or losses on extinguishment were recognised. No cash payments were made between the Group and the lenders and therefore all movements in respect of the repricings have been presented in the non-cash movements column. Non-cash movements in borrowings comprises foreign exchange gains of \u00a330.7 million, interest costs of \u00a385.0 million and gains on extinguishment of \u00a31.7 million.
Year ended 31 December 2023
Opening Amounts Transaction Amounts Cash interest Non-cash Closing
amortised cost drawn costs repaid payments movements amortised cost
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
2.625% EUR loan notes 2025
219.8
\u2013
\u2013
\u2013
(5.8)
1.7
215.7
6.625% USD loan notes 2025
412.8
\u2013
\u2013
\u2013
(26.1)
4.8
391.5
UK infrastructure private placement
facility (2019)
372.5
\u2013
\u2013
\u2013
(25.5)
26.9
373.9
UK infrastructure private placement
facility (2020)
207.9
\u2013
\u2013
\u2013
(11.3)
9.8
206.4
CAD term loan facility
183.6
\u2013
(0.2)
(6 0.1)
(13.6)
8 .1
117. 8
Uncommitted short-term loan facility
\u20ac50m
44.3
\u2013
\u2013
(43.4)
(0.2)
(0.7)
\u2013
Borrowings acquired in business
combinations
\u2013
1.8
\u2013
(1.8)
\u2013
\u2013
\u2013
Collateral facility
\u2013
140.0
\u2013
(20.0)
(0.3)
0.3
120.0
Total borrowings
1,440.9
141.8
(0.2)
(125.3)
(82.8)
50.9
1,425.3
Non-cash movements in borrowings comprises foreign exchange gains of \u00a335.4 million and interest costs of \u00a386.3 million. As disclosed above, the Group has a number of cross-currency interest rate swaps that fix the sterling value of the principal repayment of certain foreign currency denominated borrowings. Accordingly, the foreign exchange gains (2023: gains) on borrowings disclosed above have been offset by \u00a332.5 million of foreign exchange losses (2023: \u00a329.5 million) on cross-currency interest rate swaps that have been recycled to profit and loss as part of the hedging relationship. See note 2.7 for further details of the impact of the Group\u2019s cash flow hedging relationships on Net debt. See note 7.2.2 for further details of the Group\u2019s cash flow hedging relationships on borrowings. Compliance with loan covenants The Group has customary financial covenants, principally in relation to consolidated Adjusted EBITDA and the consolidated net leverage ratio. The consolidated net leverage ratio broadly equates to a Net debt to Adjusted EBITDA ratio calculation (see note 2.7), and is calculated in line with the Group\u2019s financial covenant requirements in the loan facility agreements (1) . The Group also has conditions placed on its dividend payments as a result of the financing facilities. The Group is required to test its financial covenants every six months at financial full-year and half-year reporting periods, and has complied with all financial covenants during the current and prior year. The Group has significant headroom and expects to continue to comply with these financial covenants for the foreseeable future, including the five-year viability period. See the Viability statement on page 84 for further details on the scenarios considered. (1) The net debt calculation for financial covenants is based on Net debt including cash, borrowings and lease liabilities attributable to non-controlling interests, but excludes the impact of hedging. Letters of credit and surety bonds As at 31 December 2024, the Group had issued letters of credit totalling \u00a356.8 million (2023: \u00a3180.3 million), of which \u00a314.5 million (2023: \u00a314.5 million) were utilised to cover commodity trading collateral requirements and \u00a3nil (2023: \u00a3120.0 million) were utilised to cover the collateral facility described above. As at 31 December 2024, the Group had surety bonds with a number of insurers totalling \u00a389.0 million (2023: \u00a3119.0 million), of which \u00a330.0 million (2023: \u00a370.0 million) were utilised to cover commodity trading collateral requirements. ", "dimensions": { "concept": "ifrs-full:DisclosureOfDebtSecuritiesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-596": { "value": "4.2 Borrowings Accounting policy The Group measures all debt instruments initially at fair value, which equates to the principal value of the consideration received, net of transaction costs that are directly attributable to the debt issuance. Subsequent to initial measurement, debt instruments are measured at amortised cost using the effective interest method. Transaction costs (any such costs incremental and directly attributable to the issue of the financial instrument) are included in the calculation of the effective interest rate and are amortised over the expected life of the instrument. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. Loan commitment fees may be payable to the lender to entitle the Group to draw down at any time over a fixed period. Where there is a fixed repayment date, regardless of when the loan is drawn down, the commitment fees are recognised on a systematic basis over the period the Group is able to draw down. Where the loan has the same fixed term, regardless of when the loan is drawn down, if drawdown is probable, then the commitment fees are deferred until drawdown and are recognised over the life of the instrument as part of the effective interest rate. If drawdown is not probable, then loan commitment fees are recognised on a systematic basis over the period the Group is able to draw down. Fees that are paid for the availability of a facility where the amount and timing of drawdown can vary at the Group\u2019s discretion, such as under a revolving credit facility (RCF), are recognised on a systematic basis over the life of the facility. Debt instruments denominated in foreign currencies are revalued using the period-end exchange rates, with any exchange gains and losses being recognised as a component of foreign exchange gains or losses in the period they arise. The Group hedges foreign currency risk and interest rate risk in accordance with the policies set out in note 7.2. Where hedging instruments are used to fix cash flows associated with debt instruments, the debt instrument and the hedging instrument are measured and presented separately on the Consolidated balance sheet. Where hedge accounting is applied to foreign exchange risk and interest rate risk on debt instruments, gains and losses are recycled to the Consolidated income statement within either foreign exchange gains or losses or interest payable and similar charges, to match the exposure they are hedging, where effective. The borrowings amounts disclosed in the tables below exclude any impact of hedging instruments. Debt instruments are derecognised when the contractual obligations are discharged, cancelled or expired. If the terms of a debt instrument are significantly modified, the existing liability is derecognised and a new liability based on the modified terms is recognised at fair value. The difference between the carrying value of the debt instrument based on the terms pre-modification and post- modification is recognised in the Consolidated income statement.
The Group\u2019s borrowings at each reporting date were as follows:
As at 31 December 2024
As at 31 December 2023
Effective Effective
sterling Amortised sterling Amortised
interest rate
(1)
Principal Year of cost
interest rate
(1)
Principal Year of cost
% m maturity \u00a3m % m maturity \u00a3m
Non-current secured borrowings:
2.625% EUR loan notes 2025
(2)
\u2013
\u2013
n/a
\u2013
4.6%
\u20ac250.0
2025
215.7
6.625% USD loan notes 2025
(3)
\u2013
\u2013
n/a
\u2013
6 .1%
$500.0
2025
391.5
5.875% EUR loan notes 2029
7.5%
\u20ac350.0
2029
289.5
\u2013
\u2013
n/a
\u2013
UK infrastructure private 2025 \u2013
placement facility (2019)
3.0%
\u00a350.0
2029
49.5
3.3%
\u00a3252.5
2029
251.4
UK infrastructure private \u20ac101.5 + 2026 \u2013 \u20ac101.5 + 2026 \u2013
placement facility (2020)
2.5%
\u00a398.0
2030
181.0
2.6%
\u00a398.0
2030
184.7
CAD term loan facility
6 .1%
C$200.0
2026
111.0
7.1%
C$200.0
2026
117. 8
GBP and EUR term loan facility \u20ac185.0 + 2027 \u2013
(2024)
5.5%
\u00a3100.0
2029
251.9
\u2013
\u2013
n/a
\u2013
2027 \u2013
\u00a3125m GBP term loan facility (2024)
6.2%
\u00a3125.0
2029
124.9
\u2013
\u2013
n/a
\u2013
\u00a350m GBP term loan facility (2024)
5.5%
\u00a350.0
2028
49.9
\u2013
\u2013
n/a
\u2013
Current secured borrowings:
2.625% EUR loan notes 2025
(2)
4.6%
\u20ac143.8
2025
119.0
\u2013
\u2013
n/a
\u2013
UK infrastructure private
placement facility (2019)
\u2013
\u2013
n/a
\u2013
3.3%
\u00a3122.5
2024
122.5
UK infrastructure private
placement facility (2020)
\u2013
\u2013
n/a
\u2013
2.6%
\u20ac25.0
2024
21.7
Current unsecured borrowings:
Collateral facility
\u2013
\u2013
n/a
\u2013
7.1%
\u00a3120.0
2024
120.0
Total borrowings
1,176.7
1,425.3
Current
119.0
264.2
Non-current
1,057.7
1,161.1
(1) The effective sterling interest rate includes the impact of any interest rate and cross-currency interest rate swaps.
(2) In May 2024, the Group completed a tender offer on \u20ac106.2 million of the principal.
(3) These loan notes were due to mature in 2025 but were fully redeemed in May 2024.
The effective sterling interest rate gives the rate that the Group has fixed to pay on each of the facilities, using a combination of
interest rate swaps and cross-currency interest rate swaps. These instruments as well as foreign currency forward contracts are
used to fix the sterling repayment of the principal. See note 7.2.2 for further details on the Group\u2019s hedging of borrowings.
During the year, the Group has refinanced a number of existing facilities to extend the Group\u2019s average debt maturity profile.
Further details of this refinancing activity is provided below and in the Financial review starting on page 18.
In January 2024, \u00a3122.5 million of the UK infrastructure private placement facility (2019) was repaid, as well as \u20ac25.0 million of the
UK infrastructure private placement facility (2020).
In February 2024, the Group signed a new secured committed sustainability-linked GBP and EUR term loan facility (2024) for
\u00a3258.0 million (sterling equivalent). This comprised \u20ac135.0 million and \u00a350.0 million due to mature in 2027 and a further \u20ac50.0 million
and \u00a350.0 million due to mature in 2029. The \u20ac135.0 million due to mature in 2027 contains options to extend for up to a further two
years, subject to lender approval. These amounts were fully drawn in April 2024. Interest on the term loans is set at a margin over the
Euro Interbank Offered Rate (EURIBOR) or the Sterling Overnight Index Average (SONIA) with adjustments linked to certain Scope 1, 2
and 3 carbon emissions which are based on the Group\u2019s 2030 Science Based Targets initiative (SBTi) targets.
In April 2024, the Group signed a new secured committed \u00a3125.0 million term loan facility (2024) comprising of \u00a395.0 million due to
mature in 2027 and \u00a330.0 million due to mature in 2029. These amounts were fully drawn in May 2024. Interest on the term loans
is set at a margin over SONIA. The agreement includes an option to establish an incremental facility for up to \u00a325.0 million, if agreed
between the Group and its lenders.
In April 2024, the Group completed a \u20ac350.0 million offering of senior secured loan notes. The loan notes mature in 2029 and have
a coupon rate of 5.875%. These loan notes were fully drawn in May 2024. On the same date, the Group elected to redeem in full the
$500.0 million 6.625% loan notes due to mature in 2025 at 100% of the principal value.
In May 2024, the Group completed a tender offer on \u20ac106.2 million of the principal of the 2.625% EUR loan notes due to mature in
2025 at 97.875% of the principal value (\u20ac103.9 million). Following completion of this offer in May 2024, the remaining principal of
these notes outstanding is \u20ac143.8 million. A gain on extinguishment of \u00a31.7 million was recognised within interest receivable and
similar gains in relation to this partial repayment (see note 2.5).
In May 2024, the Group chose to make early repayments of \u00a3122.5 million and \u00a380.0 million of the UK infrastructure private placement
facility (2019), with maturities in 2025 and 2026 respectively.
In July 2024, the \u00a3120.0 million outstanding on the short-term collateral facility was repaid.
In August 2024, the Group signed a new secured committed \u00a350.0 million GBP term loan facility (2024) due to mature in 2028 with
a margin over SONIA. The term loan was fully drawn in September 2024.
In August 2024, the Group secured a new sustainability-linked \u00a3450.0 million RCF which matures in 2027, with options to extend by
two years, subject to lender approval. The facility, which provides additional liquidity, replaced the \u00a3300.0 million RCF which was due
to mature in 2026. The facility has a customary margin grid referenced over SONIA with adjustments linked to certain Scope 1, 2 and 3
carbon emissions which are based on the Group\u2019s 2030 SBTi targets. No cash has been drawn since its inception and it remained
undrawn as at 31 December 2024. See note 2.7 for further details on the Group\u2019s cash and committed facilities. See note 3.8 for
further details on climate change considerations related to borrowings.
In December 2024, the Group agreed with the lenders of a \u00a350.0 million tranche of the UK infrastructure private placement facility
(2019) and a \u00a353.0 million tranche of the UK infrastructure private placement facility (2020) to reprice the interest rates at no cost to
reflect current market rates available to the Group. This was assessed to be a substantial modification to the terms of the borrowings
in accordance with IFRS 9 and therefore the previous borrowings have been derecognised and new borrowings have been recognised.
No gains or losses have been recognised in respect of the transaction.
The Group\u2019s secured borrowings are secured by a charge over a number of the Group\u2019s assets. See note 3.1 for details of the assets
pledged as security.
The weighted average interest rate payable, at the reporting date, on the Group\u2019s borrowings was 5.39% (2023: 4.79%).
Reconciliation of borrowings
The table below shows the movement in borrowings during the current and prior year:
Year ended 31 December 2024
Opening Amounts Transaction Amounts Cash interest Non-cash Closing
amortised cost drawn costs repaid payments movements amortised cost
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
2.625% EUR loan notes 2025
215.7
\u2013
\u2013
(88.7)
(4.4)
(3.6)
119.0
6.625% USD loan notes 2025
391.5
\u2013
\u2013
(393.9)
(13.0)
15.4
\u2013
5.875% EUR loan notes 2029
\u2013
298.8
(4.4)
\u2013
( 7.8)
2.9
289.5
UK infrastructure private placement
facility (2019)
(1)
373.9
\u2013
\u2013
(325.0)
(10.9)
11.5
49.5
UK infrastructure private placement
facility (2020)
(1)
206.4
\u2013
(0.8)
(21.6)
(11.5)
8.5
181.0
CAD term loan facility
117. 8
\u2013
(0.1)
\u2013
(6.6)
(0.1)
111.0
GBP and EUR term loan facility (2024)
\u2013
258.0
(2.0)
\u2013
(9.9)
5.8
251.9
\u00a3125m GBP term loan facility (2024)
\u2013
125.0
(1.3)
\u2013
(3.7)
4.9
124.9
\u00a350m GBP term loan facility (2024)
\u2013
50.0
(0.4)
\u2013
(0.6)
0.9
49.9
Collateral facility
120.0
\u2013
\u2013
(120.0)
(6.4)
6.4
\u2013
Total borrowings
1,425.3
731.8
(9.0)
(949.2)
(74.8)
52.6
1,176.7
(1) The repricing of \u00a350.0 million and \u00a353.0 million tranches of these facilities constituted an extinguishment of previous borrowings and the recognition of new borrowings.
No gains or losses on extinguishment were recognised. No cash payments were made between the Group and the lenders and therefore all movements in respect of the
repricings have been presented in the non-cash movements column.
Non-cash movements in borrowings comprises foreign exchange gains of \u00a330.7 million, interest costs of \u00a385.0 million and gains on
extinguishment of \u00a31.7 million.
Year ended 31 December 2023
Opening Amounts Transaction Amounts Cash interest Non-cash Closing
amortised cost drawn costs repaid payments movements amortised cost
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
2.625% EUR loan notes 2025
219.8
\u2013
\u2013
\u2013
(5.8)
1.7
215.7
6.625% USD loan notes 2025
412.8
\u2013
\u2013
\u2013
(26.1)
4.8
391.5
UK infrastructure private placement
facility (2019)
372.5
\u2013
\u2013
\u2013
(25.5)
26.9
373.9
UK infrastructure private placement
facility (2020)
207.9
\u2013
\u2013
\u2013
(11.3)
9.8
206.4
CAD term loan facility
183.6
\u2013
(0.2)
(6 0.1)
(13.6)
8 .1
117. 8
Uncommitted short-term loan facility
\u20ac50m
44.3
\u2013
\u2013
(43.4)
(0.2)
(0.7)
\u2013
Borrowings acquired in business
combinations
\u2013
1.8
\u2013
(1.8)
\u2013
\u2013
\u2013
Collateral facility
\u2013
140.0
\u2013
(20.0)
(0.3)
0.3
120.0
Total borrowings
1,440.9
141.8
(0.2)
(125.3)
(82.8)
50.9
1,425.3
Non-cash movements in borrowings comprises foreign exchange gains of \u00a335.4 million and interest costs of \u00a386.3 million. As disclosed above, the Group has a number of cross-currency interest rate swaps that fix the sterling value of the principal repayment of certain foreign currency denominated borrowings. Accordingly, the foreign exchange gains (2023: gains) on borrowings disclosed above have been offset by \u00a332.5 million of foreign exchange losses (2023: \u00a329.5 million) on cross-currency interest rate swaps that have been recycled to profit and loss as part of the hedging relationship. See note 2.7 for further details of the impact of the Group\u2019s cash flow hedging relationships on Net debt. See note 7.2.2 for further details of the Group\u2019s cash flow hedging relationships on borrowings. Compliance with loan covenants The Group has customary financial covenants, principally in relation to consolidated Adjusted EBITDA and the consolidated net leverage ratio. The consolidated net leverage ratio broadly equates to a Net debt to Adjusted EBITDA ratio calculation (see note 2.7), and is calculated in line with the Group\u2019s financial covenant requirements in the loan facility agreements (1) . The Group also has conditions placed on its dividend payments as a result of the financing facilities. The Group is required to test its financial covenants every six months at financial full-year and half-year reporting periods, and has complied with all financial covenants during the current and prior year. The Group has significant headroom and expects to continue to comply with these financial covenants for the foreseeable future, including the five-year viability period. See the Viability statement on page 84 for further details on the scenarios considered. (1) The net debt calculation for financial covenants is based on Net debt including cash, borrowings and lease liabilities attributable to non-controlling interests, but excludes the impact of hedging. Letters of credit and surety bonds As at 31 December 2024, the Group had issued letters of credit totalling \u00a356.8 million (2023: \u00a3180.3 million), of which \u00a314.5 million (2023: \u00a314.5 million) were utilised to cover commodity trading collateral requirements and \u00a3nil (2023: \u00a3120.0 million) were utilised to cover the collateral facility described above. As at 31 December 2024, the Group had surety bonds with a number of insurers totalling \u00a389.0 million (2023: \u00a3119.0 million), of which \u00a330.0 million (2023: \u00a370.0 million) were utilised to cover commodity trading collateral requirements. ", "dimensions": { "concept": "ifrs-full:DisclosureOfBorrowingsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-727": { "value": "4.2 Borrowings Accounting policy The Group measures all debt instruments initially at fair value, which equates to the principal value of the consideration received, net of transaction costs that are directly attributable to the debt issuance. Subsequent to initial measurement, debt instruments are measured at amortised cost using the effective interest method. Transaction costs (any such costs incremental and directly attributable to the issue of the financial instrument) are included in the calculation of the effective interest rate and are amortised over the expected life of the instrument. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. Loan commitment fees may be payable to the lender to entitle the Group to draw down at any time over a fixed period. Where there is a fixed repayment date, regardless of when the loan is drawn down, the commitment fees are recognised on a systematic basis over the period the Group is able to draw down. Where the loan has the same fixed term, regardless of when the loan is drawn down, if drawdown is probable, then the commitment fees are deferred until drawdown and are recognised over the life of the instrument as part of the effective interest rate. If drawdown is not probable, then loan commitment fees are recognised on a systematic basis over the period the Group is able to draw down. Fees that are paid for the availability of a facility where the amount and timing of drawdown can vary at the Group\u2019s discretion, such as under a revolving credit facility (RCF), are recognised on a systematic basis over the life of the facility. Debt instruments denominated in foreign currencies are revalued using the period-end exchange rates, with any exchange gains and losses being recognised as a component of foreign exchange gains or losses in the period they arise. The Group hedges foreign currency risk and interest rate risk in accordance with the policies set out in note 7.2. Where hedging instruments are used to fix cash flows associated with debt instruments, the debt instrument and the hedging instrument are measured and presented separately on the Consolidated balance sheet. Where hedge accounting is applied to foreign exchange risk and interest rate risk on debt instruments, gains and losses are recycled to the Consolidated income statement within either foreign exchange gains or losses or interest payable and similar charges, to match the exposure they are hedging, where effective. The borrowings amounts disclosed in the tables below exclude any impact of hedging instruments. Debt instruments are derecognised when the contractual obligations are discharged, cancelled or expired. If the terms of a debt instrument are significantly modified, the existing liability is derecognised and a new liability based on the modified terms is recognised at fair value. The difference between the carrying value of the debt instrument based on the terms pre-modification and post- modification is recognised in the Consolidated income statement. The Group\u2019s borrowings at each reporting date were as follows:
As at 31 December 2024
As at 31 December 2023
Effective Effective
sterling Amortised sterling Amortised
interest rate
(1)
Principal Year of cost
interest rate
(1)
Principal Year of cost
% m maturity \u00a3m % m maturity \u00a3m
Non-current secured borrowings:
2.625% EUR loan notes 2025
(2)
\u2013
\u2013
n/a
\u2013
4.6%
\u20ac250.0
2025
215.7
6.625% USD loan notes 2025
(3)
\u2013
\u2013
n/a
\u2013
6 .1%
$500.0
2025
391.5
5.875% EUR loan notes 2029
7.5%
\u20ac350.0
2029
289.5
\u2013
\u2013
n/a
\u2013
UK infrastructure private 2025 \u2013
placement facility (2019)
3.0%
\u00a350.0
2029
49.5
3.3%
\u00a3252.5
2029
251.4
UK infrastructure private \u20ac101.5 + 2026 \u2013 \u20ac101.5 + 2026 \u2013
placement facility (2020)
2.5%
\u00a398.0
2030
181.0
2.6%
\u00a398.0
2030
184.7
CAD term loan facility
6 .1%
C$200.0
2026
111.0
7.1%
C$200.0
2026
117. 8
GBP and EUR term loan facility \u20ac185.0 + 2027 \u2013
(2024)
5.5%
\u00a3100.0
2029
251.9
\u2013
\u2013
n/a
\u2013
2027 \u2013
\u00a3125m GBP term loan facility (2024)
6.2%
\u00a3125.0
2029
124.9
\u2013
\u2013
n/a
\u2013
\u00a350m GBP term loan facility (2024)
5.5%
\u00a350.0
2028
49.9
\u2013
\u2013
n/a
\u2013
Current secured borrowings:
2.625% EUR loan notes 2025
(2)
4.6%
\u20ac143.8
2025
119.0
\u2013
\u2013
n/a
\u2013
UK infrastructure private
placement facility (2019)
\u2013
\u2013
n/a
\u2013
3.3%
\u00a3122.5
2024
122.5
UK infrastructure private
placement facility (2020)
\u2013
\u2013
n/a
\u2013
2.6%
\u20ac25.0
2024
21.7
Current unsecured borrowings:
Collateral facility
\u2013
\u2013
n/a
\u2013
7.1%
\u00a3120.0
2024
120.0
Total borrowings
1,176.7
1,425.3
Current
119.0
264.2
Non-current
1,057.7
1,161.1
(1) The effective sterling interest rate includes the impact of any interest rate and cross-currency interest rate swaps. (2) In May 2024, the Group completed a tender offer on \u20ac106.2 million of the principal. (3) These loan notes were due to mature in 2025 but were fully redeemed in May 2024. The effective sterling interest rate gives the rate that the Group has fixed to pay on each of the facilities, using a combination of interest rate swaps and cross-currency interest rate swaps. These instruments as well as foreign currency forward contracts are used to fix the sterling repayment of the principal. See note 7.2.2 for further details on the Group\u2019s hedging of borrowings. During the year, the Group has refinanced a number of existing facilities to extend the Group\u2019s average debt maturity profile. Further details of this refinancing activity is provided below and in the Financial review starting on page 18. In January 2024, \u00a3122.5 million of the UK infrastructure private placement facility (2019) was repaid, as well as \u20ac25.0 million of the UK infrastructure private placement facility (2020). In February 2024, the Group signed a new secured committed sustainability-linked GBP and EUR term loan facility (2024) for \u00a3258.0 million (sterling equivalent). This comprised \u20ac135.0 million and \u00a350.0 million due to mature in 2027 and a further \u20ac50.0 million and \u00a350.0 million due to mature in 2029. The \u20ac135.0 million due to mature in 2027 contains options to extend for up to a further two years, subject to lender approval. These amounts were fully drawn in April 2024. Interest on the term loans is set at a margin over the Euro Interbank Offered Rate (EURIBOR) or the Sterling Overnight Index Average (SONIA) with adjustments linked to certain Scope 1, 2 and 3 carbon emissions which are based on the Group\u2019s 2030 Science Based Targets initiative (SBTi) targets. In April 2024, the Group signed a new secured committed \u00a3125.0 million term loan facility (2024) comprising of \u00a395.0 million due to mature in 2027 and \u00a330.0 million due to mature in 2029. These amounts were fully drawn in May 2024. Interest on the term loans is set at a margin over SONIA. The agreement includes an option to establish an incremental facility for up to \u00a325.0 million, if agreed between the Group and its lenders. In April 2024, the Group completed a \u20ac350.0 million offering of senior secured loan notes. The loan notes mature in 2029 and have a coupon rate of 5.875%. These loan notes were fully drawn in May 2024. On the same date, the Group elected to redeem in full the $500.0 million 6.625% loan notes due to mature in 2025 at 100% of the principal value. In May 2024, the Group completed a tender offer on \u20ac106.2 million of the principal of the 2.625% EUR loan notes due to mature in 2025 at 97.875% of the principal value (\u20ac103.9 million). Following completion of this offer in May 2024, the remaining principal of these notes outstanding is \u20ac143.8 million. A gain on extinguishment of \u00a31.7 million was recognised within interest receivable and similar gains in relation to this partial repayment (see note 2.5). In May 2024, the Group chose to make early repayments of \u00a3122.5 million and \u00a380.0 million of the UK infrastructure private placement facility (2019), with maturities in 2025 and 2026 respectively. In July 2024, the \u00a3120.0 million outstanding on the short-term collateral facility was repaid. In August 2024, the Group signed a new secured committed \u00a350.0 million GBP term loan facility (2024) due to mature in 2028 with a margin over SONIA. The term loan was fully drawn in September 2024. In August 2024, the Group secured a new sustainability-linked \u00a3450.0 million RCF which matures in 2027, with options to extend by two years, subject to lender approval. The facility, which provides additional liquidity, replaced the \u00a3300.0 million RCF which was due to mature in 2026. The facility has a customary margin grid referenced over SONIA with adjustments linked to certain Scope 1, 2 and 3 carbon emissions which are based on the Group\u2019s 2030 SBTi targets. No cash has been drawn since its inception and it remained undrawn as at 31 December 2024. See note 2.7 for further details on the Group\u2019s cash and committed facilities. See note 3.8 for further details on climate change considerations related to borrowings. In December 2024, the Group agreed with the lenders of a \u00a350.0 million tranche of the UK infrastructure private placement facility (2019) and a \u00a353.0 million tranche of the UK infrastructure private placement facility (2020) to reprice the interest rates at no cost to reflect current market rates available to the Group. This was assessed to be a substantial modification to the terms of the borrowings in accordance with IFRS 9 and therefore the previous borrowings have been derecognised and new borrowings have been recognised. No gains or losses have been recognised in respect of the transaction. The Group\u2019s secured borrowings are secured by a charge over a number of the Group\u2019s assets. See note 3.1 for details of the assets pledged as security. The weighted average interest rate payable, at the reporting date, on the Group\u2019s borrowings was 5.39% (2023: 4.79%). Reconciliation of borrowings The table below shows the movement in borrowings during the current and prior year:
Year ended 31 December 2024
Opening Amounts Transaction Amounts Cash interest Non-cash Closing
amortised cost drawn costs repaid payments movements amortised cost
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
2.625% EUR loan notes 2025
215.7
\u2013
\u2013
(88.7)
(4.4)
(3.6)
119.0
6.625% USD loan notes 2025
391.5
\u2013
\u2013
(393.9)
(13.0)
15.4
\u2013
5.875% EUR loan notes 2029
\u2013
298.8
(4.4)
\u2013
( 7.8)
2.9
289.5
UK infrastructure private placement
facility (2019)
(1)
373.9
\u2013
\u2013
(325.0)
(10.9)
11.5
49.5
UK infrastructure private placement
facility (2020)
(1)
206.4
\u2013
(0.8)
(21.6)
(11.5)
8.5
181.0
CAD term loan facility
117. 8
\u2013
(0.1)
\u2013
(6.6)
(0.1)
111.0
GBP and EUR term loan facility (2024)
\u2013
258.0
(2.0)
\u2013
(9.9)
5.8
251.9
\u00a3125m GBP term loan facility (2024)
\u2013
125.0
(1.3)
\u2013
(3.7)
4.9
124.9
\u00a350m GBP term loan facility (2024)
\u2013
50.0
(0.4)
\u2013
(0.6)
0.9
49.9
Collateral facility
120.0
\u2013
\u2013
(120.0)
(6.4)
6.4
\u2013
Total borrowings
1,425.3
731.8
(9.0)
(949.2)
(74.8)
52.6
1,176.7
(1) The repricing of \u00a350.0 million and \u00a353.0 million tranches of these facilities constituted an extinguishment of previous borrowings and the recognition of new borrowings. No gains or losses on extinguishment were recognised. No cash payments were made between the Group and the lenders and therefore all movements in respect of the repricings have been presented in the non-cash movements column. Non-cash movements in borrowings comprises foreign exchange gains of \u00a330.7 million, interest costs of \u00a385.0 million and gains on extinguishment of \u00a31.7 million.
Year ended 31 December 2023
Opening Amounts Transaction Amounts Cash interest Non-cash Closing
amortised cost drawn costs repaid payments movements amortised cost
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
2.625% EUR loan notes 2025
219.8
\u2013
\u2013
\u2013
(5.8)
1.7
215.7
6.625% USD loan notes 2025
412.8
\u2013
\u2013
\u2013
(26.1)
4.8
391.5
UK infrastructure private placement
facility (2019)
372.5
\u2013
\u2013
\u2013
(25.5)
26.9
373.9
UK infrastructure private placement
facility (2020)
207.9
\u2013
\u2013
\u2013
(11.3)
9.8
206.4
CAD term loan facility
183.6
\u2013
(0.2)
(6 0.1)
(13.6)
8 .1
117. 8
Uncommitted short-term loan facility
\u20ac50m
44.3
\u2013
\u2013
(43.4)
(0.2)
(0.7)
\u2013
Borrowings acquired in business
combinations
\u2013
1.8
\u2013
(1.8)
\u2013
\u2013
\u2013
Collateral facility
\u2013
140.0
\u2013
(20.0)
(0.3)
0.3
120.0
Total borrowings
1,440.9
141.8
(0.2)
(125.3)
(82.8)
50.9
1,425.3
Non-cash movements in borrowings comprises foreign exchange gains of \u00a335.4 million and interest costs of \u00a386.3 million. As disclosed above, the Group has a number of cross-currency interest rate swaps that fix the sterling value of the principal repayment of certain foreign currency denominated borrowings. Accordingly, the foreign exchange gains (2023: gains) on borrowings disclosed above have been offset by \u00a332.5 million of foreign exchange losses (2023: \u00a329.5 million) on cross-currency interest rate swaps that have been recycled to profit and loss as part of the hedging relationship. See note 2.7 for further details of the impact of the Group\u2019s cash flow hedging relationships on Net debt. See note 7.2.2 for further details of the Group\u2019s cash flow hedging relationships on borrowings. Compliance with loan covenants The Group has customary financial covenants, principally in relation to consolidated Adjusted EBITDA and the consolidated net leverage ratio. The consolidated net leverage ratio broadly equates to a Net debt to Adjusted EBITDA ratio calculation (see note 2.7), and is calculated in line with the Group\u2019s financial covenant requirements in the loan facility agreements (1) . The Group also has conditions placed on its dividend payments as a result of the financing facilities. The Group is required to test its financial covenants every six months at financial full-year and half-year reporting periods, and has complied with all financial covenants during the current and prior year. The Group has significant headroom and expects to continue to comply with these financial covenants for the foreseeable future, including the five-year viability period. See the Viability statement on page 84 for further details on the scenarios considered. (1) The net debt calculation for financial covenants is based on Net debt including cash, borrowings and lease liabilities attributable to non-controlling interests, but excludes the impact of hedging. Letters of credit and surety bonds As at 31 December 2024, the Group had issued letters of credit totalling \u00a356.8 million (2023: \u00a3180.3 million), of which \u00a314.5 million (2023: \u00a314.5 million) were utilised to cover commodity trading collateral requirements and \u00a3nil (2023: \u00a3120.0 million) were utilised to cover the collateral facility described above. As at 31 December 2024, the Group had surety bonds with a number of insurers totalling \u00a389.0 million (2023: \u00a3119.0 million), of which \u00a330.0 million (2023: \u00a370.0 million) were utilised to cover commodity trading collateral requirements. Section 7: Risk management This section provides disclosures around financial risk management, including the financial instruments the Group uses to mitigate such risks. 7.1 Financial instruments and their fair values The Group holds a variety of derivative and non-derivative financial instruments, including cash and cash equivalents, borrowings, payables and receivables arising from operations. Accounting classifications and fair values IFRS 13 requires categorisation of the Group\u2019s financial instruments in accordance with the following hierarchy in order to explain the basis on which their fair values have been determined: \u2013 Level 1 \u2013 Fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities \u2013 Level 2 \u2013 Fair value measurements are those derived from inputs, other than quoted prices, included within Level 1, that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) \u2013 Level 3 \u2013 Fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs) Categorisation within this fair value measurement hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset or liability. The table below shows the carrying amounts and fair values of financial assets and liabilities, including their levels in the fair value hierarchy as defined by IFRS 13. It does not include fair value information for lease liabilities, or for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value. Cash and cash equivalents (note 4.1), trade and other receivables (note 3.5), and trade and other payables (note 3.7) generally have a short time to maturity. For this reason, their carrying values, on the historical cost basis, are approximate to their fair values. The Group\u2019s borrowings relate principally to the publicly traded high-yield loan notes and amounts drawn against term loans (note 4.2). These financial liabilities are measured at amortised cost.
Carrying amount
Fair value
Financial Financial
Fair value- Mandatorily assets at liabilities at
At 31 December 2024 hedging at FV TPL- amortised amortised
\u00a3m instruments
others
FVOCI
cost
cost
Total
Level 1
Level 2
Level 3
Tot al
Financial assets measured at fair value
Commodity contracts
101.9
51.6
\u2013
\u2013
\u2013
153.5
\u2013
153.5
\u2013
153.5
Foreign currency
exchange contracts
21.0
75.7
\u2013
\u2013
\u2013
96.7
\u2013
96.7
\u2013
96.7
Interest rate and cross-
currency contracts
7.1
\u2013
\u2013
\u2013
\u2013
7.1
\u2013
7.1
\u2013
7.1
Contingent consideration
\u2013
9.4
\u2013
\u2013
\u2013
9.4
\u2013
\u2013
9.4
9.4
Trade and other
receivables
\u2013
0.3
38.9
\u2013
\u2013
39.2
\u2013
39.2
\u2013
39.2
Cash and cash equivalents
\u2013
103.1
\u2013
\u2013
\u2013
103.1
\u2013
103.1
\u2013
103.1
Financial assets not measured at fair value
Trade and other
receivables
\u2013
\u2013
\u2013
353.4
\u2013
353.4
Cash and cash equivalents
\u2013
\u2013
\u2013
252.9
\u2013
252.9
Financial liabilities measured at fair value
Commodity contracts
(50.9)
(30.9)
\u2013
\u2013
\u2013
(81.8)
\u2013
(81.8)
\u2013
(81.8)
Foreign currency
exchange contracts
(24.6)
(12.3)
\u2013
\u2013
\u2013
(36.9)
\u2013
(36.9)
\u2013
(36.9)
Interest rate and cross-
currency contracts
(30.6)
\u2013
\u2013
\u2013
\u2013
(30.6)
\u2013
(30.6)
\u2013
(30.6)
Inflation rate contracts
(184.0)
\u2013
\u2013
\u2013
\u2013
(184.0)
\u2013
(184.0)
\u2013
(184.0)
Financial liabilities not measured at fair value
Secured bank loans
\u2013
\u2013
\u2013
\u2013
(768.2)
(768.2)
\u2013
(771.2)
\u2013
(771.2)
Secured loan notes
\u2013
\u2013
\u2013
\u2013
(408.5)
(408.5)
(422.3)
\u2013
\u2013
(422.3)
Lease liabilities
\u2013
\u2013
\u2013
\u2013
(116.5)
(116.5)
Trade and other payables
\u2013
\u2013
\u2013
\u2013
(793.0)
(793.0)
Carrying amount
Fair value
Financial Financial
Fair value- Mandatorily assets at liabilities at
At 31 December 2023 hedging a t F V T P L- amortised amortised
\u00a3m instruments
others
FVOCI
cost
cost
Total
Level 1
Level 2
Level 3
Total
Financial assets measured at fair value
Commodity contracts
402.7
125.4
\u2013
\u2013
\u2013
528 .1
\u2013
528.1
\u2013
528.1
Foreign currency
exchange contracts
37.7
70.8
\u2013
\u2013
\u2013
108.5
\u2013
108.5
\u2013
108.5
Interest rate and cross-
currency contracts
25.4
\u2013
\u2013
\u2013
\u2013
25.4
\u2013
25.4
\u2013
25.4
Contingent consideration
\u2013
9.2
\u2013
\u2013
\u2013
9.2
\u2013
\u2013
9.2
9.2
Trade and other
receivables
\u2013
\u2013
242.2
\u2013
\u2013
242.2
\u2013
242.2
\u2013
242.2
Cash and cash equivalents
\u2013
171.1
\u2013
\u2013
\u2013
171.1
\u2013
171.1
\u2013
171.1
Financial assets not measured at fair value
Trade and other
receivables
\u2013
\u2013
\u2013
644.2
\u2013
644.2
Cash and cash equivalents
\u2013
\u2013
\u2013
208.4
\u2013
208.4
Financial liabilities measured at fair value
Commodity contracts
(58.8)
(134.4)
\u2013
\u2013
\u2013
(193.2)
\u2013
(193.2)
\u2013
(193.2)
Foreign currency
exchange contracts
(23.7)
(35.8)
\u2013
\u2013
\u2013
(59.5)
\u2013
(59.5)
\u2013
(59.5)
Interest rate and cross-
currency contracts
( 35.1)
\u2013
\u2013
\u2013
\u2013
( 35.1)
\u2013
( 35.1)
\u2013
( 35.1)
Inflation rate contracts
(250.4)
\u2013
\u2013
\u2013
\u2013
(250.4)
\u2013
(250.4)
\u2013
(250.4)
Financial liabilities not measured at fair value
Secured bank loans
\u2013
\u2013
\u2013
\u2013
(698 .1)
(6 98.1)
\u2013
(704.8)
\u2013
(704.8)
Unsecured bank loans
\u2013
\u2013
\u2013
\u2013
(120.0)
(120.0)
\u2013
(120.0)
\u2013
(120.0)
Secured loan notes
\u2013
\u2013
\u2013
\u2013
(607.2)
(6 07. 2)
(596.4)
\u2013
\u2013
(596.4)
Lease liabilities
\u2013
\u2013
\u2013
\u2013
(135.8)
(135.8)
Trade and other payables
\u2013
\u2013
\u2013
\u2013
(919.2)
(919.2)
The derivative financial instruments used by the Group and not subject to the own-use exemption have been categorised as follows: \u2013 Commodity contracts \u2013 forward contracts for the sale or purchase of a commodity which may or may not be settled through physical delivery of the commodity, as well as weather-related contracts \u2013 Foreign currency exchange contracts \u2013 currency-related contracts including forwards, swaps, vanilla options and structured option products \u2013 Interest rate and cross-currency contracts \u2013 contracts which swap one interest rate for another in a single currency, including floating-to-fixed interest rate swaps, and contracts which swap interest and principal cash flows in one currency for another currency, including fixed-to-fixed and floating-to-fixed cross-currency interest rate swaps \u2013 Inflation rate contracts \u2013 swap contracts, such as floating-to-fixed, which are linked to an inflation index such as the UK Retail Price Index (RPI) or the UK Consumer Price Index (CPI) Fair value measurement \u2013 Commodity contracts \u2013 the fair value of open commodity contracts that do not qualify for the own-use exemption, or are otherwise within the scope of IFRS 9, is calculated by reference to forward market prices at the reporting date \u2013 Foreign currency exchange contracts \u2013 the fair value of foreign currency exchange contracts is determined using forward currency exchange market rates at the reporting date \u2013 Interest rate contracts \u2013 the fair value of interest rate swaps is calculated by reference to forward market curves at the reporting date for the relevant interest index. The fair value of cross-currency interest rate swaps is calculated using the relevant forward currency exchange market rates for fixed-to-fixed swaps and by using the relevant forward currency exchange market rates and interest index for floating-to-fixed swaps \u2013 Inflation rate contracts \u2013 the fair value of inflation rate swaps is calculated by reference to forward market curves at the reporting date for the relevant inflation index Given the maturity profile of all these contracts, liquid forward market price curves are available for the duration of the contracts. The fair values of all derivative financial instruments are discounted to reflect both the time value of money and credit risk inherent within the instrument. The assessment of fair value is derived in part by reference to a market price or rate for the instrument in question. The Group bases its assessment of market prices or rates upon forward curves that are largely derived from readily obtainable prices or rates published from third-party sources. However, any forward curve is based, at least in part, upon assumptions about future transactions and market movements. Due to the nature of the derivative financial instruments the Group holds, minor differences in the inputs, assumptions or methodologies used can result in appropriate, but different, estimates of fair values to those recognised by the Group. There may be choices to be made regarding which methodology or data source to use in the calculation of fair value for each derivative contract. Assumptions may also need to be made where forward curves are not an exact match for the Group\u2019s derivative contracts (e.g. due to quoted product types, maturity dates or time periods not exactly matching the terms of the Group\u2019s derivative contracts), or where different forward curves are available. Where such instruments extend beyond the liquid portion of the forward curve, the level of estimation increases as the number of observable transactions decreases. However, given the maturity profile of the Group\u2019s contracts, liquid forward market price curves are usually available for the duration of the contracts. The fair value of derivatives is not, however, considered a key source of estimation uncertainty as reasonably possible changes in assumptions are not expected to result in a materially different value within the next financial year. Also, whilst there is a significant risk that the carrying amount of derivative assets and liabilities will change materially within the next financial year, as a result of movements in market prices or rates, the Group is not expecting to change its methodology or input sources in the next financial year. Any such changes are not as a result of assumptions or other sources of estimation uncertainty as at 31 December 2024 and therefore do not meet the definition of a key source of estimation uncertainty as defined by IAS 1. Sensitivities are provided in note 7.2 for the impact of changes in inputs on the fair value. The Group has reviewed all significant contracts for the presence of embedded derivatives. The EUR loan notes and the UK infrastructure private placement facility (2020) (see note 4.2) all contain early repayment options that meet the definition of embedded derivatives. However, in all cases, these do not require separate valuations as they are deemed to be closely related to the host contract. The fair value of commodity contracts, foreign currency exchange contracts, interest rate swaps, cross-currency interest rate swaps and inflation swaps are largely determined by comparison between observable, liquid, forward market prices or rates, and the trade price or rate; therefore, these contracts are categorised as Level 2. Credit risk is not a significant input to the fair value calculations. There have been no transfers during the current or prior year between Level 1, 2 or 3 category inputs. The Group is responsible for determining the policies and approach to valuations required for financial reporting purposes, including Level 3 fair values. No external specialists have been utilised for the valuation of the current or prior year derivative financial instruments. Valuation policies, approaches and the results are discussed with and approved by the CFO and the Audit Committee as required, based on the size, complexity and judgement required with each valuation. Level 3 fair values The contingent consideration receivable by the Group relates to the sale of the CCGT generation portfolio in 2021. The gross nominal value of \u00a329.0 million is contingent on certain triggers in respect of the option to develop the Damhead Creek 2 land disposed of as part of the sale of these assets. The fair value measurement of the contingent consideration has been categorised as Level 3 based on the inputs to the valuation techniques used.
Significant unobservable inputs and range of inputs Relationship between significant unobservable
Valuation approach (probability weighted) input and fair value measurement
Contingent The fair value of the contingent Forecasted future Capacity Market The fair value measurement would
consideration consideration is determined using a clearing prices: increase/(decrease) with:
discounted cash flow model. The \u00a32.54/kW \u2013 \u00a3101.00/kW \u2013 Higher/(lower) forecasted Capacity
valuation approach is based on a (Average \u2013 \u00a348.07/kW) Market clearing prices causing a
calculation of the probability of the higher/(lower) probability of the
option to develop the Damhead (2023: \u00a32.47/kW \u2013 \u00a377.20/kW) option over the Damhead Creek 2
Creek 2 land being exercised. This (2023: (Average \u2013 \u00a342.66/kW)) land being exercised
probability is calculated using a Estimated bid price at which \u2013 Lower/(higher) estimated bid price
range of forecasts for future Damhead Creek 2 is to be entered required for the Damhead Creek 2
Capacity Market auctions and the into the Capacity Market auction: development to proceed causing a
assumption that the option to higher/(lower) probability of the
develop the land would be exercised \u00a371.75/kW option over the Damhead Creek 2
if the Capacity Market price were to (2 02 3: \u00a367. 50 /kW ) land being exercised
clear above a certain level, providing
sufficient certainty on the
economics of the development.
During the year, inputs to the fair value calculation have been updated to reflect updates in both forecasted future Capacity Market clearing prices and the estimated bid price at which Damhead Creek 2 would require to provide sufficient certainty on the economics of the development. The estimated bid price of \u00a371.75/kW (2023: \u00a367.50/kW) has increased with inflation during the year. The net impact of updating the estimated bid price, recent Capacity Market clearing price forecasts, and the impact of unwinding the discount has resulted in a \u00a30.2 million increase to the fair value of the contingent consideration (2023: \u00a318.2 million decrease). During the prior year, due to significantly increased expectations relating to the cost to develop the project, the estimated bid price increased from \u00a340.00/kW to \u00a367.50/kW. This, alongside the impact of updating the calculation with forecasts of future Capacity Market clearing prices, resulted in an \u00a318.2 million decrease to the fair value of the contingent consideration. As the change in fair value reflected the reversal of a previous credit recorded within exceptional items, and the decrease in fair value was above the Group\u2019s threshold to be considered exceptional, the \u00a318.2 million decrease was excluded from Adjusted results and presented as an exceptional item included within other gains or losses in the Consolidated income statement (see note 2.7). The current year increase has not been excluded from Adjusted results as it does not meet the threshold for being considered exceptional and is included within other gains and losses in the Consolidated income statement. A reconciliation of the contingent consideration is detailed below:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Balance at 1 January
9.2
27.4
Net change in fair value
0.2
(18.2)
Balance at 31 December
9.4
9.2
There are no reasonably possible changes to unobservable inputs to the fair value calculation that would have a material impact on the fair value measurement of the contingent consideration. Accounting for derivatives Derivatives (subject to certain exemptions described below) must be measured at fair value, which generally represents the difference between the price the Group has secured in the contract, and the price the Group could achieve in the market at the reporting date. Changes in fair value are recognised either within the Consolidated income statement or the hedge reserve and cost of hedging reserve within the Consolidated statement of changes in equity, dependent upon whether the contract in question qualifies as an effective hedge under IFRS 9 (see note 7.2). The own-use exemption applies to certain contracts for physical commodities entered into and held for the Group\u2019s own purchase, sale or usage requirements. The Group\u2019s own-use contracts, such as certain power purchase agreements (PPAs) and the Group\u2019s energy supply contracts, are excluded from fair value mark-to-market accounting. Contracts for non-financial assets which do not qualify for the own-use exemption (principally wholesale power, gas, financial oil and carbon emissions allowances) and financial contracts (principally foreign exchange, interest, inflation and freight) are accounted for as derivatives in accordance with IFRS 9 and are recorded in the Consolidated balance sheet at fair value. Changes in fair value are reflected through the hedge reserve (see note 7.3) to the extent that the contracts are designated as effective hedges in accordance with IFRS 9, or the Consolidated income statement where the hedge accounting requirements are not met, or the hedges are ineffective. Changes in fair value of the derivatives that do not meet the hedge accounting requirements are excluded from Adjusted results in the Consolidated income statement until the contract matures, as management believes this more clearly reflects the underlying performance of the Group as it ensures these derivatives are recognised in the period that they are intended to hedge at their contracted prices (see note 2.7 for further details). The Group\u2019s biomass risk management policy permits some flexibility in trading activity to optimise the overall portfolio position and potentially release value in certain, limited circumstances. The nature of these contracts means they cannot be readily net settled in cash or other financial instruments and, as a result, they remain outside of the scope of IFRS 9 and are excluded from fair value mark-to-market accounting. See the critical accounting judgements section on page 163 for further details on this. Derivative balances are classified in the Consolidated balance sheet as current or non-current based on the final maturity date of the contracts. The derivative financial instruments recognised in the Consolidated balance sheet at the reporting date are:
As at 31 December
2024 2023
\u00a3m \u00a3m
Non-current derivative financial instrument assets
81.7
293.6
Current derivative financial instrument assets
175.6
368.4
Total derivative financial instrument assets
257.3
662.0
Non-current derivative financial instrument liabilities
(262.2)
(306.6)
Current derivative financial instrument liabilities
(71.1)
(231.6)
Total derivative financial instrument liabilities
(333.3)
(538.2)
Total net derivative financial instruments
(76.0)
123.8
The gains and losses recognised in the period relating to derivative financial instruments mandatorily measured at fair value through profit or loss (FVTPL) are detailed below. The Group had no financial assets or financial liabilities voluntarily designated at FVTPL. In addition to the amounts disclosed below, gains and losses relating to derivative financial instruments qualifying for hedge accounting are disclosed in notes 7.2 to 7.4.
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Gains on derivative financial instruments not qualifying for hedge accounting \u2013 recognised in revenue
11.9
70.7
Gains/(losses) on derivative financial instruments not qualifying for hedge accounting \u2013 recognised in
cost of sales
45.3
(127.0)
Gains on derivative financial instruments not qualifying for hedge accounting \u2013 recognised in foreign
exchange (losses)/gains
\u2013
4.9
Losses on derivative financial instruments not qualifying for hedge accounting \u2013 recognised in interest
payable and similar charges
(0.6)
(0.3)
Total gains/(losses) on derivative financial instruments not qualifying for hedge accounting
56.6
(51.7)
7.2 Financial risk management The Group\u2019s activities expose it to a variety of financial risks, including commodity price risk, foreign currency risk, interest rate risk, inflation risk, liquidity risk, counterparty risk and credit risk. The Group\u2019s overall risk management programme focuses on the unpredictability of commodity and financial markets and seeks to manage potential adverse effects on the Group\u2019s financial performance. The Group uses derivative financial instruments to hedge certain risk exposures. Risk management is overseen by the risk management committees as explained in the Principal risks and uncertainties section (starting on page 70). The Financial Risk Management Committee identifies, evaluates and manages financial risks in close co-ordination with the Group\u2019s trading and treasury functions under policies approved by the Board of Directors. 7.2.1 Commodity price risk The Group is exposed to the effect of fluctuations in commodity prices, particularly the price of power, gas, other fuels and the price of carbon emissions allowances. Price variations and market cycles have historically influenced the financial results of the Group and are expected to continue to do so. Commodity price sensitivity The sensitivity analysis below has been determined based on the exposure to commodity prices and the impact on profit after tax and other components of equity of reasonably possible increases or decreases in commodity prices as at 31 December. The analysis assumes all other variables were held constant. Financial and commodity markets saw significant volatility and high prices in 2022. During 2023, the high prices seen in 2022 generally reversed and these price reductions have continued into 2024, but in the most part prices are still above historical averages. See the Principal risks and uncertainties section on page 73 for further details on UK energy market conditions. As a result of these fluctuating market conditions, the valuation of the Group\u2019s commodity derivative financial instruments, in particular power, gas and oil, have seen large reversals of the amounts previously recognised as market prices have continued to reduce, whilst older trades with higher prices have also matured. Sensitivities for a 10% change in prices have been included in the current and prior year. The impact of smaller and larger price changes can be extrapolated from the below table as changes in prices have a relatively linear relationship with the impact on profit after tax and on the hedge reserve.
Impact on other components
Impact on profit after tax of equity, net of tax
10% decrease 10% increase 10% decrease 10% increase
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2024
Power
\u2013
\u2013
43.0
(43.0)
Carbon
1.6
(1.6)
\u2013
\u2013
Gas
10.8
(10.8)
\u2013
\u2013
Oil
(4.8)
4.8
\u2013
\u2013
Freight
(0.2)
0.2
\u2013
\u2013
Impact on other components
Impact on profit after tax of equity, net of tax
10% decrease 10% increase 10% decrease 10% increase
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2023
Power
\u2013
\u2013
34.9
(34.9)
Carbon
2.8
(2.8)
(0.2)
0.2
Gas
11.1
(11.1)
\u2013
\u2013
Oil
( 7.9)
7.9
\u2013
\u2013
The Group designates certain derivatives as hedging instruments under cash flow hedge accounting. As such, other components of equity are sensitive to increases or decreases in commodity price risk and the impact on the hedge reserve resulting from these movements. Profit after tax is sensitive to increases or decreases in commodity prices as a result of the impact on the fair value of derivative financial instruments not designated as hedging instruments under cash flow hedge accounting. Commodity risk management The Group has a policy of securing forward power sales and purchases, and purchases of fuel when it is profitable to do so and is in line with specified limits under approved policies. Forward power sales can be secured up to 100% of forecast availability two years ahead, after taking account of the volume held back for operational risk management purposes. All commitments to sell and purchase power under fixed price contracts are designated as cash flow hedges as they reduce the Group\u2019s cash flow exposure resulting from fluctuations in the price of power. The Group purchases biomass pellets and other fuels under either a fixed or variable priced contract with different maturities, principally from a number of international sources. The Group considers all such commodity contracts to be economic hedges. If either the contracts cannot be readily net settled, or if the Group is able to demonstrate that these contracts were entered into and continue to be held for the purpose of receipt or delivery of the non-financial item in accordance with the Group\u2019s expected purchase, sale or usage requirements and the own-use exemption applies, then these contracts are not within the scope of IFRS 9. For other contracts that are within the scope of IFRS 9 the Group applies hedge accounting where possible. If the contracts are within the scope of IFRS 9 and hedge accounting is not applied then the contracts are recognised at fair value through profit or loss (FVTPL). Where forward power curves are less liquid, the Group uses financially settled gas sales as a proxy for power to mitigate the risk of power price fluctuations. The Group also purchases gas under fixed-price contracts to meet the requirements of the Energy Solutions segment and for its Daldowie fuel plant. The Group\u2019s gas supply business is reducing in size due to the decision made in January 2023 to phase out the Group\u2019s gas supply contracts and due to the sale of the majority of the Group\u2019s non-core SME customer meter points to EDF in September 2024 (see note 2.7 for further details). The Group purchases carbon emissions allowances under fixed-price contracts to cover the Group\u2019s purchase requirements under the UK Emissions Trading Scheme (UK ETS) in relation to the Group\u2019s carbon emissions. Carbon emissions allowances are also sold as part of the proxy power hedges in the same way as financial gas described above. Sales and purchases of carbon are not designated as cash flow hedges. The Group purchases financial oil contracts to hedge freight costs as oil is a significant input into the overall cost of freight. Financial oil contracts are not designated as cash flow hedges. Hedge accounting The Group has cash flow hedges relating to commodity contracts, principally commitments to sell and purchase power. In the prior year, cash flow hedge accounting was also applied to certain carbon purchases. Amounts are recognised in the hedge reserve as the designated contracts are marked-to-market at each reporting date for the effective portion of the hedge, which is generally 100% of the relevant contract. Amounts held within the hedge reserve are then recycled to the Consolidated income statement as the hedged item impacts profit or loss. For power sales and purchase contracts, this is when the underlying power is delivered. Included in amounts released from equity are current and prior period gains and losses on financial instruments for which the hedged transaction has now occurred and these gains and losses have been released to the Consolidated income statement in the period. No ineffectiveness was recognised in the Consolidated income statement on continuing commodity hedges in the current or prior year. Due to the use of \u201call-in-one\u201d hedges, this results in the movement in fair value for the hedged items and hedging instruments being identical. The only sources of ineffectiveness regarding the \u201call-in-one\u201d hedges would be if delivery of the commodities was no longer expected to occur (which would result in hedge accounting being discontinued) and credit risk. The Group applies a hedge ratio of 1:1 to its commodity risk cash flow hedges. The reconciliation of the reserves and time period when the hedge will affect the Consolidated income statement are disclosed in note 7.3. The summary of the amounts relating to the hedging instruments and any related ineffectiveness in the period is presented in the table below. The average forward rates quoted below only reflect the rates applicable to the portion of the Group\u2019s commodity contracts that qualify for hedge accounting in accordance with IFRS 9. The rates do not reflect the overall average rate of the Group\u2019s total portfolio of commodity contracts that are used to protect the value of future cash flows.
31 December 2024
Balance in the
hedge reserve
for hedging
Cumulative relationships for
change in fair Balance in the which hedge
value of hedging hedge reserve accounting is
instrument since for continuing no longer
Notional inception used Fair value Fair value hedges applied
value of Weighted for measuring recognised in recognised in net of deferred net of deferred
contracts average ineffectiveness balance sheet \u2013 balance sheet \u2013 tax \u2013 (debit)/ tax \u2013 (debit)/
(MWh, fixed price Maturity \u2013 gains/(losses) assets liabilities credit credit
Exposure allowances) \u00a3 date \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts January
2025
Sale and purchases of \u2013 September
power
7,013,76
6
87.3
2028
34.5
101.9
(50.9)
25.9
\u2013
Purchase of carbon
emissions allowances
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
31 December 2024
Cumulative
change in fair Amount
value Hedge Amount reclassified due
of hedged ineffectiveness Amount reclassified to the hedged Line item
item since recognised in Line item transferred to due to the future cash in the income
inception used Hedging gains the income in the income the cost or hedged flows statement/
for measuring recognised in OCI statement statement carrying value of item affecting being no longer balance sheet
ineffectiveness in the period \u2013 in the period \u2013 that includes a non-financial profit or loss \u2013 expected to affected by the
\u2013 gains/(losses) gains/(losses) gains/(losses) hedge asset (gains)/losses occur \u2013 transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m (gains)/losses reclassification
Commodity contracts
Sale and purchase of
34.5
(15.2)
\u2013
Revenue
\u2013
( 397.5)
\u2013
Revenue
power
\u2013
Cost of sales
\u2013
103.9
\u2013
Cost of sales
Purchase of carbon
emissions allowances
\u2013
(0.6)
\u2013
Cost of sales
\u2013
1.2
\u2013
Cost of sales
31 December 2023
Balance in the
hedge reserve
Cumulative for hedging
change in fair Balance in the relationships for
value of hedging hedge reserve which hedge
instrument since for continuing accounting is
Notional inception used Fair value Fair value hedges net no longer applied
value of Weighted for measuring recognised in recognised in of deferred net of deferred
contracts average ineffectiveness balance sheet \u2013 balance sheet \u2013 tax \u2013 (debit)/ tax \u2013 (debit)/
(MWh, fixed price \u2013 gains/(losses) assets liabilities credit credit
Exposure allowances)
\u00a3
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts January
2024
Sale and purchases of \u2013 September
power
5,580,931
129.4
2026
343.5
402.3
(58.8)
257.4
\u2013
March
2024
Purchase of carbon \u2013 December
emissions allowances
62,000
37. 4
2024
0.4
0.4
\u2013
0.3
(0.7)
31 December 2023
Cumulative Amount
change in fair reclassified due
value Hedge Amount to the hedged
of hedged ineffectiveness Amount reclassified future cash Line item
item since recognised in Line item transferred to due to the flows being in the income
inception used Hedging gains the income in the income the cost or hedged no longer statement/
for measuring recognised in statement statement carrying value of item affecting expected to balance sheet
ineffectiveness \u2013 OCI in the period in the period \u2013 that includes a non-financial profit or loss \u2013 occur \u2013 affected by the
gains/(losses) \u2013 gains/(losses) gains/(losses) hedge asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Commodity contracts
Sale and purchase of
power
343.5
413.3
\u2013
Revenue
\u2013
(415.9)
\u2013
Revenue
\u2013
Cost of sales
\u2013
599.3
\u2013
Cost of sales
Purchase of carbon
emissions allowances
0.4
1.4
\u2013
Cost of sales
\u2013
1.6
\u2013
Cost of sales
7.2.2 Foreign currency and interest rate risk Foreign currency risk The Group is exposed to fluctuations in foreign currency rates as a result of committed and forecast transactions in foreign currencies, principally in relation to purchases of fuel for use in the Biomass Generation segment and principal and interest payments relating to foreign currency denominated debt. These fuel purchases are typically denominated in US dollars (USD), euros (EUR) or Canadian dollars (CAD), and the foreign currency debt is also denominated in USD, EUR and CAD (see note 4.2 for further details on the Group\u2019s borrowings). The Group also has an exposure to translation risk in relation to its net investment in its US and Canadian subsidiaries within the Pellet Production segment. Foreign currency sensitivity The analysis below shows the impact on profit after tax and other components of equity of reasonably possible strengthening or weakening of currencies against GBP. The sensitivity analysis below shows the impact of a change in foreign exchange rates as at 31 December on outstanding monetary items denominated in foreign currencies and the valuation of foreign currency derivative instruments. For foreign currency derivatives designated into hedge relationships the analysis includes the impact of recycling amounts from the hedge reserve if a change in foreign exchange rates would result in the recycling of gains and losses due to the item they are hedging impacting profit or loss. The analysis assumes all other variables were held constant.
Impact on other components
Impact on profit after tax of equity, net of tax
10% 10% 10% 10%
strengthening weakening strengthening weakening
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2024
USD
66.8
(57.4)
(75.9)
(75.9)
EUR
10.1
(8.9)
(19.1)
(27.4)
CAD
1.2
(1.0)
(6.6)
(6.9)
Impact on other components
Impact on profit after tax of equity, net of tax
10% 10% 10% 10%
strengthening weakening strengthening weakening
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2023
USD
84.5
(53.5)
125.3
(100.8)
EUR
15.9
(13.2)
3.9
(3.6)
CAD
0.3
\u2013
4.8
(4.0)
The Group designates certain foreign currency derivatives as hedging instruments under cash flow hedge accounting. As such, other components of equity are sensitive to the strengthening or weakening of other currencies in relation to the impact on the hedge reserve of these movements. Profit after tax is sensitive to the strengthening or weakening of other currencies as a result of the impact on the fair value of foreign currency derivatives not designated as hedging instruments under cash flow hedge accounting. Foreign currency risk management It is the Group\u2019s policy to hedge material transactional exposures using a variety of derivatives to protect the sterling values of foreign currency cash flows, except where there is an economic hedge inherent in the transaction. The Group enters into derivative contracts in line with the Group\u2019s currency risk management policy, including forwards and options, to manage the risks associated with its anticipated foreign currency requirements over a rolling five-year period, covering contracted exposures and a proportion of highly probable forecast transactions. In addition, in order to optimise the cost of funding, the Group has issued foreign currency denominated debt in USD, EUR and CAD (see note 4.2 for further details on borrowings). The Group utilises derivative contracts, including cross-currency interest rate swaps and foreign exchange forward contracts, to manage exchange risk on foreign currency debt. Foreign currency risk hedge accounting The Group designates certain foreign currency exchange contracts, predominantly forwards, as hedging instruments of the foreign currency risk of biomass purchases denominated in foreign currencies. Gains and losses on these foreign currency exchange contracts are transferred from equity to inventories for these hedges when the Group takes ownership of the biomass. The Group designates the spot element of these foreign currency exchange contracts and applies a hedge ratio of 1:1. The Group designates certain foreign currency exchange contracts, predominantly forwards and swaps, as hedging instruments of the foreign currency risk on the principal repayments of certain foreign currency denominated borrowings. Gains and losses that are effective at hedging the foreign exchange risk on the principal repayments are released to foreign exchange gains or losses to offset gains and losses on retranslating the hedged foreign currency denominated borrowings. The Group designates the spot element of these foreign currency exchange contracts and applies a hedge ratio of 1:1. The Group also designates certain cross-currency interest rate swaps as hedging instruments of the foreign currency risk on payments of both principal and interest on certain foreign currency denominated borrowings. Gains and losses that are effective at hedging the foreign exchange risk on the interest payments are released to interest payable and similar charges at the same time as the interest on the related hedged foreign currency denominated borrowings is expensed. Gains and losses that are effective at hedging the foreign exchange risk on the principal repayments are released to foreign exchange gains or losses to offset gains and losses on retranslating the hedged foreign currency denominated borrowings. The Group applies a hedge ratio of 1:1 for its cross-currency interest rate swaps. The main sources of ineffectiveness relating to foreign currency exchange contracts (forwards and swaps) that are designated as hedging spot foreign currency risk are timing differences and credit risk. The main sources of ineffectiveness relating to cross- currency interest rate swaps are differences in the critical terms, differences in repricing dates, foreign currency basis spread, and credit risk. Interest rate risk The Group has exposure to interest rate risk, principally in relation to variable rate debt, cash and cash equivalents and the revolving credit facility (RCF), should it be drawn. The returns generated on the Group\u2019s cash balance, or payable on amounts drawn on the RCF, are exposed to movements in short-term interest rates. The Group actively manages cash balances to protect against adverse changes in interest rates whilst retaining liquidity. Further information about the Group\u2019s variable rate debt instruments (including the RCF) and their repayment schedules is provided in note 4.2. Interest rate sensitivity The sensitivity analysis below has been determined based on the exposure to interest rates for both derivative and non-derivative financial instruments at the reporting date. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the reporting date was outstanding for the whole year. The analysis below shows what the impact on the current and previous year\u2019s profit after tax and other components of equity would have been for a reasonably possible increase or decrease in interest rates. For interest rate derivatives designated into hedge relationships the analysis includes the impact of recycling amounts from the hedge reserve. The analysis assumes all other variables are held constant.
Impact on other components
Impact on profit after tax of equity, net of tax
100 basis points 100 basis points 100 basis points 100 basis points
increase decrease increase decrease
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2024
Variable rate debt \u2013 hedged
(5.6)
5.6
\u2013
\u2013
Interest rate swaps
5.6
(5.6)
9.8
(9.8)
Net impact
\u2013
\u2013
9.8
(9.8)
At 31 December 2023
Variable rate debt \u2013 unhedged
(1.2)
1.2
\u2013
\u2013
Variable rate debt \u2013 hedged
(4.2)
4.2
\u2013
\u2013
Interest rate swaps
4.2
(4.2)
8 .1
(8 .1)
Net impact
(1.2)
1.2
8 .1
(8 .1)
An increase or decrease in interest rates would affect profit after tax as a result of the impact on the interest payable in the period on any variable rate debt. The Group has reduced its exposure to interest rate risk on variable rate debt through the use of floating-to- fixed interest rate and cross-currency swaps. These swaps are designated as hedging instruments under cash flow hedge accounting and therefore a change in interest rates would not have a significant impact on profit after tax as the recycling of gains and losses on these swaps would generally offset the impact of changes in interest rates on the Group\u2019s variable rate debt. Other components of equity are sensitive to an increase or decrease in interest rates due to the impact changes in interest rates has on the valuation of these floating-to-fixed interest rate and cross-currency swaps. These fair value changes impact the hedge reserve. Other components of equity are sensitive to an increase or decrease in interest rates due to the impact changes in interest rates has on the valuation of these floating-to-fixed interest rate swaps. These fair value changes impact the hedge reserve. Certain amounts of the Group\u2019s variable rate debt and interest rate swaps have a floor of 0% for the benchmark interest rate. In the prior year the Group had CAD denominated debt that had a variable rate based on Canadian Dollar Offered Rate (CDOR). At 31 December 2023, no swaps were in place to hedge the interest risk on the CAD denominated debt. Therefore, in relation to this debt in the prior year, a change in interest rate would have had an impact on profit after tax but not on other components of equity. During the prior year the Group extended the maturity of the CAD term loan facility to January 2026. As part of the extension the Group agreed with the lenders to transition the floating-rate to Canadian Overnight Repo Rate Average (CORRA) plus a credit adjustment spread. At 31 December 2024, the Group had entered into a CORRA floating-to-fixed cross-currency interest rate swap hedging the CAD denominated debt. As such, in the current year a change in interest rate would have no impact on profit after tax as the movement in debt would be offset by the recycling of the cash flow hedge, but would have an impact on other components of equity due to fair value changes in the value of the derivative impacting the hedge reserve. Interest rate risk management The Group has a risk management policy in place relating to interest rate risk. The Group policy permits the use of hedging instruments in order to hedge up to 100% of the Group\u2019s current and forecast interest rate exposure. Interest rate risk hedge accounting The Group designates certain interest rate swaps as hedging instruments of the interest rate risk of variable rate borrowings. Gains and losses on the interest payments on interest rate swaps are released to interest payable and similar charges at the same time as the interest is expensed on the related hedged borrowings. The Group applies a hedge ratio of 1:1 to its interest rate swaps. The main sources of ineffectiveness relating to interest rate hedges are differences in the critical terms, differences in repricing dates, and credit risk. Hedge accounting information The Group has Sterling Overnight Index Average (SONIA) floating-to-fixed interest rate swaps to fix the interest payments on the following facilities: \u00a350.0 million of the UK infrastructure private placement facility (2019), \u00a398.0 million of the UK infrastructure private placement facility (2020), two \u00a350.0 million tranches of the GBP and EUR term loan facility (2024), \u00a3125.0 million of the GBP term loan facility (2024) and the \u00a350.0 million GBP term loan facility (2024). The Group has Euro Interbank Offered Rate (EURIBOR) floating-to-fixed interest rate swaps to fix the principal and interest payments on \u20ac70.0 million of the UK infrastructure private placement facility (2020). The Group has EURIBOR floating-to-fixed interest rate swaps to fix the interest payments on \u20ac185.0 million of the GBP and EUR term loan facility (2024). The Group has separately taken out \u20ac185.0 million notional value of foreign exchange forwards in order to fix the sterling cash flows payable on the principal repayment. The Group has Canadian Overnight Repo Rate (CORRA) floating-to-fixed interest rate swaps to fix the interest payments on the C$200.0 million CAD term loan facility. The Group has separately taken out C$200.0 million notional value of foreign exchange forwards in order to fix the sterling cash flows payable on the principal repayment. The Group has taken out fixed-to-fixed cross-currency interest rate swaps to hedge the future cash flows associated with the following facilities: \u20ac350.0 million 2029 and \u20ac143.8 million 2025 fixed rate EUR loan notes and \u20ac31.5 million of the UK infrastructure private placement facility (2020). As at 31 December 2024, the Group has fixed in sterling all interest and principal payments on variable rate and foreign currency denominated borrowings through the use of interest rate swaps, cross-currency interest rate swaps, and foreign currency exchange forwards and swaps, as described above. See note 4.2 for further details on the Group\u2019s borrowings. A summary of amounts relating to the Group\u2019s hedge accounting of foreign currency risk and interest rate risk are presented in the table below. The information is disaggregated by risk type. Hedges of biomass purchases, principal repayments on borrowings hedged using foreign currency forwards or swaps, and fixed-to-fixed cross currency interest rate swaps are designated as hedges of foreign currency risk. Interest rate swaps are designated as hedges of interest rate risk. Floating-to-fixed cross-currency interest rate swaps are designated as hedges of both foreign currency and interest rate risk. The average forward rates quoted below only reflect the rates applicable to the portion of the Group\u2019s foreign currency hedging instruments that qualify for hedge accounting in accordance with IFRS 9. The rates do not reflect the overall average rate of the Group\u2019s total portfolio of derivatives that are used to fix the sterling value of future cash flows. A reconciliation of reserves and the time period when the hedge will affect profit or loss, or will be transferred from equity and included in the initial cost of the non-financial item, are disclosed in notes 7.3 and 7.4.
31 December 2024
Balance in the
hedge reserve
for hedging
Cumulative relationships for
change in fair which hedge
value of hedging Balance in the accounting is
instrument since hedge reserve no longer
inception used Fair value Fair value for continuing applied
Notional Weighted for measuring recognised in recognised in hedges net of net of deferred
value of average ineffectiveness balance sheet \u2013 balance sheet \u2013 deferred tax \u2013 tax \u2013 (debit)/
contracts fixed/variable \u2013 gains/(losses) assets liabilities (debit)/credit credit
Exposure ($m, \u20acm, C$m)
rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency risk on
biomass purchases
January
2025
Purchases in foreign \u2013 February
currency \u2013 USD
1,430.5
$1.27
2027
18.6
20.7
(2 .1)
10.7
\u2013
January
2025
Purchases in foreign \u2013 October
currency \u2013 EUR
270.0
\u20ac 1.15
2026
(6.3)
\u2013
(6.3)
(4.5)
\u2013
January
2025
Purchases in foreign \u2013 March
currency \u2013 CAD
166.0
C$1.67
2027
(5.1)
0.3
(5.4)
(5.8)
\u2013
Foreign currency risk on
borrowings
Interest and principal
payments \u2013 USD
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
November
2025
Interest and principal \u20ac1.14 / \u2013 April
payments \u2013 EUR
525.3
6.48% 2028
(10.4)
\u2013
(19.7)
4.4
\u2013
February
2027
\u2013 March
Principal payments \u2013 EUR
185.0
\u20ac 1.11
2028
(5.1)
\u2013
(5.1)
\u2013
\u2013
January
Principal payments \u2013 CAD
200.0
C$1.68
2026
(5.7)
\u2013
(5.7)
\u2013
\u2013
Foreign currency and
interest rate risk on
borrowings
January
2026
Interest and principal \u20ac1.09/ \u2013 March
payments \u2013 EUR
255.0
4.04% 2028
(8.6)
\u2013
(8.7)
(2.7)
\u2013
January
Interest payments \u2013 CAD
200.0
6.05%
2026
(1.5)
\u2013
(1.8)
(1.3)
\u2013
Interest rate risk on
borrowings
January
2026
\u2013 April
Variable rate GBP debt
423.0
2.89%
2028
6.1
7.1
(0.4)
4.3
\u2013
31 December 2024
Cumulative
change in fair Amount
value Hedge Amount Amount reclassified due
of hedged ineffectiveness transferred to reclassified to the hedged Line item in the
item since Hedging losses recognised in Line item in the the cost or due to the future cash income
inception used recognised in the income income carrying hedged flows being no statement/
for measuring OCI in the statement statement value item affecting longer expected balance sheet
ineffectiveness \u2013 period \u2013 in the period \u2013 that includes of a non- profit or loss \u2013 to occur \u2013 affected by the
gains/(losses) gains/(losses) gains/(losses) hedge financial asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Foreign currency risk
on biomass purchases
Purchases in foreign
currency \u2013 USD
18.6
19.7
\u2013
Cost of sales
4.3
\u2013
\u2013
Inventories
Purchases in foreign
currency \u2013 EUR
(6.3)
(7.1)
\u2013
Cost of sales
0.9
\u2013
\u2013
Inventories
Purchases in foreign
currency \u2013 CAD
(5.1)
(5.9)
\u2013
Cost of sales
(0.4)
\u2013
\u2013
Inventories
Foreign currency risk
on borrowings Interest Interest
payable payable
Interest and principal \u2013 and similar
\u2013
(0.7)
\u2013
and similar
payments \u2013 USD
\u2013
(5.6)
charges charges
Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
9.3
\u2013
(losses)/gains
Interest Interest
payable payable
Interest and principal \u2013 and similar
\u2013
7.4
\u2013
and similar
payments \u2013 EUR
(11.3)
( 7.5)
charges charges
Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
6.4
\u2013
(losses)/gains
Foreign Foreign
Principal payments \u2013 exchange exchange
EUR
(5.1)
(6.0)
\u2013
(losses)/gains
\u2013
6.0
\u2013
(losses)/gains
Foreign Foreign
Principal payments \u2013 exchange exchange
CAD
(5.7)
( 7.4)
\u2013
(losses)/gains
\u2013
7.4
\u2013
(losses)/gains
Foreign currency and
interest rate risk on
borrowings
Interest Interest
payable payable
Interest and principal \u2013 and similar
\u2013
(2.5)
\u2013
and similar
payments \u2013 EUR
(8.7)
(6.4)
 charges charges
Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
3.4
\u2013
(losses)/gains
Interest Interest
payable payable
Interest payments \u2013 and similar and similar
CAD
(1.6)
(1.3)
\u2013
 charges
\u2013
(0.4)
\u2013
 charges
Interest rate risk on
borrowings
Interest Interest
payable payable
and similar and similar
Variable rate GBP debt
10.8
(2.3)
\u2013
 charges
\u2013
(12.0)
\u2013
 charges
31 December 2023
Balance in the
hedge reserve
for hedging
Cumulative relationships for
change in fair which hedge
value of hedging Balance in the accounting is
instrument since hedge reserve no longer
inception used Fair value Fair value for continuing applied
Notional Weighted for measuring recognised in recognised in hedges net of net of deferred
value of average ineffectiveness balance sheet \u2013 balance sheet \u2013 deferred tax \u2013 tax \u2013 (debit)/
contracts fixed/variable \u2013 gains/(losses) assets liabilities (debit)/credit credit
Exposure ($m, \u20acm, C$m)
rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency risk on
biomass purchases
January
2024
Purchases in foreign \u2013 January
currency \u2013 USD
2 ,12 6.9
$1.29
2027
14 .1
35.6
(21.5)
( 7.3)
\u2013
January
2024
Purchases in foreign \u2013 April
currency \u2013 EUR
47. 0
\u20ac 1.15
2024
\u2013
\u2013
\u2013
0.2
\u2013
January
2024
Purchases in foreign \u2013 March
currency \u2013 CAD
116.6
C$1.68
2027
\u2013
2.1
(2 .1)
(1.3)
\u2013
Foreign currency risk on
borrowings
Interest and principal $1.36/ November
payments \u2013 USD
500.0
6 .13% 2024
22.1
2.7
(21.1)
(2.4)
\u2013
November
2024
Interest and principal \u20ac1.10/ \u2013 November
payments \u2013 EUR
281.5
4.57% 2026
(1.2)
\u2013
(12.7)
(0.2)
\u2013
January
Principal payments \u2013 CAD
200.0
C$1.68
2026
(0 .1)
\u2013
(0 .1)
0.2
\u2013
Foreign currency and
interest rate risk on
borrowings
January
2024
Interest and principal \u20ac1.09/ \u2013 January
payments \u2013 EUR
95.0
2.05% 2026
(1.6)
\u2013
(1.3)
1.4
\u2013
Interest rate risk on
borrowings
January
2024
\u2013 January
Variable rate GBP debt
473.0
0.88%
2026
20.2
22.7
\u2013
15.1
\u2013
31 December 2023
Amount
Cumulative reclassified due
change in fair Hedge Amount Amount to the hedged
value of hedged ineffectiveness transferred to reclassified future cash Line item in the
item since Hedging losses recognised in Line item in the the cost or due to the flows being income
inception used recognised in the income income carrying hedged no longer statement/
for measuring OCI in the statement statement value item affecting expected to balance sheet
ineffectiveness \u2013 period \u2013 in the period \u2013 that includes of a non- profit or loss \u2013 occur \u2013 affected by the
gains/(losses) gains/(losses) gains/(losses) hedge financial asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Foreign currency risk
on biomass purchases
Purchases in foreign
currency \u2013 USD
14 .1
(68.0)
\u2013
Cost of sales
(42.5)
\u2013
\u2013
Inventories
Purchases in foreign
currency \u2013 EUR
\u2013
(3.3)
\u2013
Cost of sales
(0.9)
\u2013
\u2013
Inventories
Purchases in foreign
currency \u2013 CAD
\u2013
(8.8)
\u2013
Cost of sales
\u2013
\u2013
\u2013
Inventories
Hedges of foreign
currency risk on
borrowings
Interest Interest
payable payable
and similar and similar
Interest and principal
35.9
(22.9)
\u2013 charges
\u2013
(3.3)
\u2013
 charges
payments \u2013 USD Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
822.0
\u2013
(losses)/gains
Interest Interest
payable payable
and similar and similar
Interest and principal
(1.2)
(9.7)
\u2013 charges
\u2013
4.9
\u2013
 charges
payments \u2013 EUR Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
5.6
\u2013
(losses)/gains
Foreign Foreign
Principal payments \u2013 exchange exchange
CAD
(0.1)
(0.2)
\u2013
(losses)/gains
\u2013
\u2013
\u2013
(losses)/gains
Foreign currency and
interest rate risk on
borrowings
Interest Interest
payable payable
and similar and similar
Interest and principal
(3.9)
(3.6)
\u2013 charges
\u2013
(1.9)
\u2013
 charges
payments \u2013 EUR Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
1.9
\u2013
(losses)/gains
Interest rate risk on
borrowings
Interest Interest
payable payable
and similar and similar
Variable rate GBP debt
23.4
(31.5)
\u2013
 charges
\u2013
16.0
\u2013
 charges
7.2.3 Inflation risk The Group is exposed to inflation risk on elements of its revenues and cost base. The Group\u2019s ROC revenue is linked to UK RPI and its CfD and Capacity Market income are linked to UK CPI (see note 2.2 for further information on ROC and CfD income). In addition, a proportion of the Group\u2019s fuel costs are linked to either US or Canadian CPI. The Group has UK CPI and RPI swaps to hedge certain revenues linked to inflation. Inflation risk sensitivity The sensitivity analysis below has been determined based on the exposure to inflation rates on inflation-linked derivatives at the reporting date. The analysis below shows the impact on profit after tax and other components of equity of a reasonably possible increase or decrease in inflation rates as at 31 December. The analysis assumes all other variables are held constant.
Impact on other components
Impact on profit after tax of equity, net of tax
200 basis points 200 basis points 200 basis points 200 basis points
increase decrease increase decrease
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2024
UK CPI inflation swaps
\u2013
\u2013
(25.7)
22 .1
UK RPI inflation swaps
(1.0)
1.0
(10.9)
10.9
Impact on other components
Impact on profit after tax of equity, net of tax
200 basis points 200 basis points 200 basis points 200 basis points
increase decrease increase decrease
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2023
UK CPI inflation swaps
\u2013
\u2013
(31.3)
26.6
UK RPI inflation swaps
(5.6)
5.5
(24.3)
23.9
The Group designates the UK CPI and RPI inflation swaps as hedging instruments under cash flow hedge accounting. As such, other components of equity are sensitive to the impact on inflation linked derivatives recognised in the hedge reserve of an increase or decrease in UK inflation rates. Profit after tax is sensitive to an increase or decrease in UK inflation rates due to the impact these rate changes would have on the over-hedged portion of the inflation swaps, with this impact being recognised directly in the Consolidated income statement. Inflation risk management The Group has a risk management policy in place relating to inflation risk. The Group policy permits the use of hedging instruments in order to hedge up to 100% of the Group\u2019s current and forecast inflation exposure. Hedge accounting The Group has contracts for which the revenue is contractually linked to UK CPI inflation. The Group has designated this risk component as a hedged item. UK CPI and UK RPI inflation swaps are utilised as the hedging instruments for this inflation risk. Gains and losses on the inflation swaps are held in the hedge reserve and reclassified to revenue in the Consolidated income statement at the same time the revenue from the inflation-linked contracts impacts profit or loss or if the hedged item is no longer expected to occur. The Group applies a hedge ratio of 1:1 for its inflation swaps. The main sources of ineffectiveness relating to the inflation swaps are the basis point difference between the RPI swaps and the CPI-linked revenues they are hedging, calculation differences, and the hedged item no longer being expected to occur. Calculation differences occur due to differences between the reference months used to calculate the inflationary increase per the swaps and the reference months used to calculate the inflationary increase for the CPI-linked revenues. During the current year the Group recognised \u00a38.7 million (2023: \u00a310.7 million) of ineffectiveness due to the basis difference between the RPI hedging instruments and the CPI exposure. In the prior year as a result of a decrease in the forecast CfD generation, the Group recycled \u00a39.3 million of losses on hedge accounted inflation-linked derivative contracts to the Consolidated income statement, due to the hedged item no longer being expected to occur. There has been no decrease in forecast CfD generation in the current year and as such no amounts have been recycled due to the hedged item no longer being expected to occur. In the current year, as a result of the updated 2025 commissioning dates, the Group recycled \u00a31.2 million of losses on hedge accounted inflation-linked OCGT Capacity Market derivative contracts to the Consolidated income statement, due to the hedged item no longer being expected to occur. The summary of the amounts relating to the hedging instruments and any related ineffectiveness in the period is presented in the table below.
31 December 2024
Balance in the
hedge reserve
for hedging
Cumulative relationships for
change in fair which hedge
value of hedging Balance in the accounting is
instrument since hedge reserve no longer
inception used Fair value Fair value for continuing applied
Notional for measuring recognised in recognised in hedges net of net of deferred
value of Weighted ineffectiveness \u2013 balance sheet \u2013 balance sheet \u2013 deferred tax \u2013 tax \u2013 (debit)/
contracts average gains/(losses) assets liabilities (debit)/credit credit
Exposure \u00a3m
fixed rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Inflation April
2026
\u2013 July
30.4
CPI \u2013 2.70%
2038
(18.6)
\u2013
(18.6)
(14.5)
10.5
Inflation-linked sales April
contracts \u2013 CPI
440.0
RPI \u2013 3.65%
2026
(75.4)
\u2013
(165.4)
(34.9)
\u2013
31 December 2024
Cumulative
change in fair
value Hedge Amount Amount
of hedged Hedging ineffectiveness Amount reclassified reclassified due Line item in
item since gains recognised in transferred to due to the to the hedged the income
inception used recognised in the income Line item in the the cost or hedged future cash flows statement/
for measuring OCI in the statement income statement carrying value item affecting being no longer balance sheet
ineffectiveness \u2013 period \u2013 in the period \u2013 that includes of a non- profit or loss \u2013 expected to occur affected by the
gains/(losses) gains/(losses) gains/(losses) hedge financial asset (gains)/losses \u2013 (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Inflation
Inflation-linked sales
(18.6)
(1.3)
\u2013
Revenue
\u2013
(3.1)
1.2
Revenue
contracts \u2013 CPI
(47.9)
(2 .1)
(8.7)
Revenue
\u2013
27.1
\u2013
Revenue
31 December 2023
Balance in the
hedge reserve
Cumulative change for hedging
in fair relationships for
value of hedging Balance in the which hedge
instrument since hedge reserve accounting is
inception used Fair value Fair value for continuing no longer applied
Notional for measuring recognised in recognised in hedges net of net of deferred
value of Weighted ineffectiveness \u2013 balance sheet \u2013 balance sheet \u2013 deferred tax \u2013 tax \u2013 (debit)/
contracts average gains/(losses) assets liabilities (debit)/credit credit
Exposure \u00a3m
fixed rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Inflation April
2026
\u2013 July
30.4
CPI \u2013 2.72%
2038
(19.7)
\u2013
(19.7)
(15.3)
13.6
Inflation-linked sales April
contracts \u2013 CPI
440.0
RPI \u2013 3.46%
2026
(100.7)
\u2013
(230.7)
(53.6)
\u2013
31 December 2023
Cumulative
change in fair
value Hedge Amount Amount
of hedged ineffectiveness Amount reclassified reclassified due Line item in
item since Hedging losses recognised in transferred to due to the to the hedged the income
inception used recognised the income Line item in the the cost or hedged future cash flows statement/
for measuring in OCI statement income statement carrying value item affecting being no longer balance sheet
ineffectiveness \u2013 in the period \u2013 in the period \u2013 that includes of a non- profit or loss \u2013 expected to occur affected by the
gains/(losses) gains/(losses) gains/(losses) hedge financial asset (gains)/losses \u2013 (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Inflation
Inflation-linked sales
(19.7)
3.3
\u2013
Revenue
\u2013
(0.9)
\u2013
Revenue
contracts \u2013 CPI
(75.2)
(3.5)
(10.7)
Revenue
\u2013
17.5
9.3
Revenue
7.2.4 Liquidity risk The treasury function is responsible for liquidity, funding and settlement management under policies approved by the Board. Liquidity needs are monitored using regular forecasting of operational cash flows and financing commitments. The Group maintains a mixture of cash and cash equivalents, committed facilities and uncommitted facilities in order to ensure sufficient funding for business requirements. In managing liquidity risk, the Group has the ability to accelerate the cash flows associated with certain working capital items, principally those related to ROC sales and Energy Solutions energy supply sales. In each case this is undertaken on a non-recourse basis and, accordingly, the ROC assets and Energy Solutions receivables are derecognised from the Consolidated balance sheet at the point of sale. The Group also utilises standard purchasing facilities to extend the working capital cycle, whilst still paying suppliers on time. The impact on the Group\u2019s cash flows is described in note 4.3. Such facilities are not included within the Group\u2019s definition of Net debt, as outlined in note 2.7. The following tables set out details of the expected maturity profile of the undiscounted, contractual payments of non-derivative financial liabilities. The tables include both interest and principal cash flows. To the extent that interest payments or receipts are floating rate, the undiscounted amount is derived from interest rate curves at the reporting date.
As at 31 December 2024
Within 3 months \u2013
3 months 1 year 1\u20132 years 2\u20135 years >5 years Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Term loans, gross value
11.2
30.5
202.8
613.3
27.0
884.8
Loan notes, gross value
\u2013
139.1
17.0
332.2
\u2013
488.3
Borrowings, contractual maturity
11.2
169.6
219.8
945.5
27. 0
1,37
3.1
Trade and other payables
763.5
28.2
1.1
0.2
\u2013
793.0
Lease liabilities
8.9
22.7
24.6
39.0
47. 2
142.4
783.6
220.5
245.5
984.7
74.2
2,308.5
As at 31 December 2023
Within 3 months \u2013
3 months 1 year 1\u20132 years 2\u20135 years >5 years Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Term loans, gross value
153.9
154.9
271.6
278.8
87. 0
946.2
Loan notes, gross value
\u2013
31.7
635.3
\u2013
\u2013
6 67.0
Borrowings, contractual maturity
153.9
186.6
906.9
278.8
8 7.0
1,613.2
Trade and other payables
763.8
150.7
3.2
1.5
\u2013
919.2
Lease liabilities
8.6
24.8
28.6
52.5
5 7.0
171.5
926.3
3 62 .1
938.7
332.8
144.0
2,703.9
The weighted average interest rate payable at the reporting date on the Group\u2019s borrowings was 5.39% (2023: 4.79%). Trade and other payables of \u00a3793.0 million (2023: \u00a3919.2 million) excludes non-financial liabilities such as contract liabilities, the Group\u2019s obligation to deliver ROCs and employee benefit-related accruals. The following tables set out details of the expected maturity profile of contractual payments and receipts of derivative financial instruments. Where the amount payable is not fixed, the amount disclosed has been determined by reference to projected commodity prices, foreign currency exchange rates, inflation rates or interest rates, as illustrated by the yield or other forward curves existing at the reporting date. Certain commodity contracts are expected to be gross settled through delivery or receipt of the commodity and a subsequent cash settlement of the trade value. Vanilla foreign currency exchange contracts are expected to be gross settled through simultaneous delivery of one currency and receipt of another. Gross settlement of both the interest and principal on cross-currency interest rate swaps is expected. Financial contracts and other foreign exchange contracts (excluding forwards and swaps) are expected to be net settled. Interest rate contracts and inflation rate contracts are expected to include the net settlement of the interest rate and inflation rate differentials. Where derivatives are expected to be gross settled based on the trade value rather than the mark-to-market value, the gross cash flows have been presented in the table below. Where derivatives are expected to be net settled, the undiscounted net cash flows expected to occur based on the current fair value have been presented in the table below. Where derivative balances are subject to offsetting, the net expected contractual payments and receipts of the offset asset and liability have been presented. The amounts included within difference to carrying amount column include the effect of discounting for the time value of money and credit risk on all trade types. Additionally, for all physically settled commodity trades, the difference to carrying amount includes the market value of these trades, as the traded price is included as the cash payment or receipt in the table below, but the carrying amount is based on the mark-to-market of the trade, being the difference between the market value and traded value. For foreign currency exchange contracts the amounts included within the difference to carrying amount column also includes the time value of options that have no intrinsic value, for example out-of-the-money options. As these trades are not expected to exercise no cash flows have been included in the below table. The below tables have been re-presented in the current period to include the expected cash flows from all derivative contracts (both assets and liabilities), including both cash inflows and outflows. The Group believe the additional information provided more accurately reflects the expected cash flows and liquidity profile of the Group\u2019s derivative contracts.
As at 31 December 2024
Within Difference to Carrying
1 year 1\u20132 years >2 years Total carrying amount amount
Derivative liabilities \u2013 cash inflow/(outflow) \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts \u2013 inflow
303.0
259.3
37.8
6 0 0.1
(673.5)
(73.4)
Commodity contracts \u2013 outflow
(33.8)
(1.4)
(4.1)
(39.3)
30.9
(8.4)
Foreign exchange contracts \u2013 inflow
6 41.1
468.4
328.0
1,437.5
15.2
(36.9)
Foreign exchange contracts \u2013 outflow
(637. 4)
(494.6)
(357.6)
(1,489.6)
Cross-currency contracts \u2013 inflow
215.7
53.9
341.0
610.6
1.2
(30.2)
Cross-currency contracts \u2013 outflow
(241.3)
(63.4)
( 337.3)
(642.0)
Interest rate contracts \u2013 inflow
0.3
\u2013
\u2013
0.3
0.1
(0.4)
Interest rate contracts \u2013 outflow
\u2013
(0.5)
(0.3)
(0.8)
Inflation contracts \u2013 outflow
(84.3)
(91.5)
(20.0)
(195.8)
11.8
(184.0)
163.3
130.2
(12.5)
281.0
(614.3)
(333.3)
As at 31 December 2024
Within Difference to Carrying
1 year 1\u20132 years >2 years Total carrying amount amount
Derivative assets \u2013 cash inflow/(outflow) \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts \u2013 inflow
363.7
50.6
16.8
431.1
(306.5)
124.6
Commodity contracts \u2013 outflow
(117.5)
(4.5)
(24.9)
(146.9)
175.8
28.9
Foreign exchange contracts \u2013 inflow
874.6
1,030.0
245.1
2,149.7
(9.7)
96.7
Foreign exchange contracts \u2013 outflow
(839.9)
(977.1)
(226.3)
(2,043.3)
Cross-currency contracts \u2013 inflow
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Cross-currency contracts \u2013 outflow
\u2013
\u2013
\u2013
\u2013
Interest rate contracts \u2013 inflow
6.3
1.1
\u2013
7. 4
(0.2)
7.1
Interest rate contracts \u2013 outflow
\u2013
\u2013
(0 .1)
(0 .1)
Inflation contracts \u2013 outflow
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
287.2
100.1
10.6
397.9
(140.6)
257.3
As at 31 December 2023
Within Difference to Carrying
1 year 1\u20132 years >2 years Total carrying amount amount
Derivative liabilities \u2013 cash inflow/(outflow) \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts \u2013 inflow
28.2
5.5
4.3
38.0
(40.7)
(2.7)
Commodity contracts \u2013 outflow
(403.5)
(43 .1)
(0 .1)
(446.7)
256.2
(190.5)
Foreign exchange contracts \u2013 inflow
9 07.4
486.6
38 7.4
1,781.4
(13.5)
(59.5)
Foreign exchange contracts \u2013 outflow
(936.2)
(497.1)
( 39 4 .1)
(1, 827. 4)
Cross-currency contracts \u2013 inflow
5 62 .1
25.0
29.8
616.9
1.7
( 35.1)
Cross-currency contracts \u2013 outflow
(620.1)
(2.5)
(31.1)
(653.7)
Interest rate contracts \u2013 inflow
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Interest rate contracts \u2013 outflow
\u2013
\u2013
\u2013
\u2013
Inflation contracts \u2013 outflow
(81.6)
(85.2)
(107.5)
(274.3)
23.9
(250.4)
(543.7)
(110.8)
(111.3)
(765.8)
227.6
(538.2)
As at 31 December 2023
Within Difference to Carrying
1 year 1\u20132 years >2 years Total carrying amount amount
Derivative assets \u2013 cash inflow/(outflow) \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts \u2013 inflow
880.4
515.7
57. 5
1,453.6
(927.9)
525.7
Commodity contracts \u2013 outflow
(6.5)
\u2013
\u2013
(6.5)
8.9
2.4
Foreign exchange contracts \u2013 inflow
768.6
543.6
669.9
1,
98 2.1
40.3
108.5
Foreign exchange contracts \u2013 outflow
(756.9)
(522.4)
(634.6)
(1,913.9)
Cross-currency contracts \u2013 inflow
146.4
\u2013
\u2013
146.4
(0 .1)
2.7
Cross-currency contracts \u2013 outflow
(143.6)
\u2013
\u2013
(143.6)
Interest rate contracts \u2013 inflow
16.0
7.4
1.4
24.8
(2.1)
22.7
Interest rate contracts \u2013 outflow
\u2013
\u2013
\u2013
\u2013
Inflation contracts \u2013 outflow
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
904.4
544.3
94.2
1,542.9
(880.9)
662.0
7.2.5 Credit risk
The Group\u2019s gross exposure to credit risk for financial instruments is limited to the carrying amount of financial assets recognised at
the reporting date. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets
disclosed in note 7.1.
Trade and other receivables are stated gross of the provision for expected credit losses on trade receivables of \u00a342.4 million (2023:
\u00a359.4 million) and expected credit losses on accrued income of \u00a39.0 million (2023: \u00a39.4 million). The balance excludes non-financial
receivables such as prepayments.
The Group\u2018s four reportable segments (Pellet Production, Biomass Generation, Flexible Generation and Energy Solutions) are exposed
to different levels and concentrations of credit risk, largely reflecting the number, size and nature of their respective customers.
The Pellet Production segment sells biomass pellets both intra-group and to external parties. Credit risk for the Group relates to the
sales made to external parties. The majority of the Pellet Production segment\u2019s external sales are with large utility customers in Europe
and Asia. The Pellet Production segment manages its credit risk by reviewing individual sales contracts, considering the length of the
contract, payment terms, and assessing the credit quality of counterparties prior to signing contracts and throughout the duration of
contracts.
For the Biomass Generation and Flexible Generation segments, the risk arises from treasury, trading and energy procurement
activities. Wholesale counterparty credit exposures are monitored by individual counterparty and by category of credit rating.
Counterparty credit exposures are subject to approved limits. The Group uses master netting agreements to reduce credit risk and net
settles payments with counterparties where net settlement provisions exist. In addition, the Group employs a variety of other methods
to mitigate credit risk: margining; various forms of parent company guarantee; deeds of charge; cash collateral; letters of credit; and
surety bonds. The majority of the Biomass Generation and Flexible Generation segments\u2019 credit risk is with counterparties in related
energy industries or with financial institutions. In addition, where deemed appropriate, the Group has historically purchased credit
default swaps.
The highest credit risk exposure is in the Energy Solutions segment, with a large number of customers of varying sizes operating in a
variety of markets. In particular, its small and medium-sized enterprise (SME) customers carry lower concentrations but higher levels
of credit risk, owing to a customer base comprised of smaller retail and commercial entities. Credit risk is managed by checking a
company\u2019s creditworthiness and financial strength both before commencing trade and during the business relationship. Credit risk is
monitored and managed by industry sector. Due to the sale of the majority of the Opus Energy non-core SME meter points the Group
has reduced its credit risk exposure for the Energy Solutions segment.
Further details on the impact of credit risk on trade and other receivables is disclosed in note 3.5.
The investment of surplus cash is undertaken with the objective of ensuring that there is sufficient liquidity at all times, so that funds
are available to meet liabilities as they fall due, whilst securing a return from invested funds and preserving the capital value of those
funds within Board-approved policies. These policies manage credit risk exposure by setting out minimum rating requirements and
maximum investments with any one counterparty based on their rating and the maturity profile.
The Group had cash and cash equivalents of \u00a3356.0 million at 31 December 2024 (2023: \u00a3379.5 million). The Group\u2019s cash and cash
equivalents excluding money market funds (held at FVTPL) are subject to the impairment requirements of IFRS 9. The Group had
cash and cash equivalents excluding money market funds of \u00a3252.9 million at 31 December 2024 (2023: \u00a3208.4 million). The identified
impairment loss, based on the 12-month expected credit loss basis, was immaterial. Cash and cash equivalents are held with banks
with external credit ratings between AAA and A.
The Group is exposed to credit risk on derivative contracts, to which the impairment requirements of IFRS 9 are not applied as the
fair value requirements of IFRS 13 are applicable. Credit risk is a factor in the determination of fair value. The carrying amount of these
financial assets, disclosed in note 7.1, represents the Group\u2019s maximum credit risk exposure. Some derivative contracts are fully cash
collateralised, thereby minimising credit risk. At 31 December 2024, the Group held \u00a39.8 million in cash collateral receipts (2023:
\u00a320.3 million) covering certain derivative assets and had posted \u00a34.7 million (2023: \u00a398.9 million) of cash collateral payments covering
certain derivative liabilities. The credit rating of counterparties to which the \u00a34.7 million of cash collateral had been posted was A+.
Counterparty risk As the Group relies on third-party suppliers and counterparties for the delivery of financial and non-financial items, as is therefore exposed to the risk of non-performance by these third-party suppliers. For financial instruments, such as foreign currency forwards, this risk is limited to the credit risk, as discussed above. The Group is also exposed to counterparty risk on non-financial items, such as the purchases of biomass and capital expenditure. If a large supplier were to fall into financial difficulty and/or fail to deliver against its contract with the Group, there would be additional costs associated with securing the lost goods or services from other suppliers. The Group enters into purchase and sale contracts for a wide variety of goods and services, for example the sale of power to a number of counterparties. The failure of one or more of these counterparties to perform under their contractual obligations may cause the Group financial distress or increase the risk profile of the Group. The Group has acceptance procedures in place to ensure the counterparties the Group contracts with are appropriate. The Group also has limits in place, and actively monitors its exposures to individual counterparties to minimise this risk. Capital management The Group is disciplined in its management of capital to ensure it is able to continue as a going concern; maintain a strong credit rating underpinned by robust financial metrics; invest in its core business; and pay a sustainable and growing dividend whilst maximising the return to shareholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of shareholders\u2019 equity (excluding the hedge and cost of hedging reserves), plus Net debt. Net debt is comprised of borrowings, lease liabilities, cash and cash equivalents attributable to owners of the parent company and is inclusive of the impact of associated hedging instruments as disclosed in note 2.7. See note 4.2 for details of loan covenants, and the Viability statement starting on page 84 for details of scenario analysis performed on covenant restrictions within the Group\u2019s financing facilities.
As at 31 December
2024 2023
\u00a3m \u00a3m
Net debt (note 2.7)
991.7
1,219.7
Total shareholders\u2019 equity attributable to owners of the parent company, excluding hedge and cost of
hedging reserves
2,078.3
1,74
4.9
7.3 Hedge reserve The Group designates certain hedging instruments that are used to address commodity price risk, foreign exchange risk, interest rate risk and inflation rate risk as cash flow hedges. At the inception of the hedge, the relationship between the hedging instrument and hedged item is documented, along with its risk management objectives. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging instruments used in hedging transactions are effective in offsetting changes in cash flows of the hedged items. Changes in the fair value of contracts designated into such hedging relationships are recognised within the hedge reserve to the extent they are effective. Amounts accumulated in the hedge reserve are reclassified in the periods when the hedged item affects profit or loss. If the hedged item results in the recognition of a non-financial asset then the amount accumulated in the hedge reserve is transferred and included within the initial cost of the asset. The table below details the gains and losses recognised in the current and prior year on hedging instruments, the amounts reclassified from equity due to the hedged item affecting the Consolidated income statement, and the amounts reclassified due to the hedged future cash flows no longer being expected to occur. See section 7.2 for further details on these amounts.
Hedge reserve
Foreign Foreign
currency exchange
Commodity exchange Interest and Interest Inflation
price risk
(1)
risk
(2)
rate risk
(2)
rate risk
(2)
rate risk Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
At 1 January 2023
(192.8)
84.5
26.8
4 .1
(74.6)
(152.0)
Gains/(losses) recognised:
\u2013 Change in fair value of hedging instrument recognised in OCI
414.7
(112.9)
(31.5)
(3.6)
(0.2)
266.5
Reclassified from equity as the hedged item has affected
profit or loss:
\u2013 Reclassified to the Consolidated income statement
\u2013 included in cost of sales
600.9
\u2013
\u2013
\u2013
\u2013
600.9
\u2013 Reclassified to the Consolidated income statement
\u2013 included in revenue
(415.9)
\u2013
\u2013
\u2013
16.6
(399.3)
\u2013 Reclassified to the Consolidated income statement
\u2013 included in interest payable and similar charges
\u2013
1.6
16.0
(1.9)
\u2013
15.7
\u2013 Reclassified to the Consolidated income statement
\u2013 included in foreign exchange (losses)/gains
\u2013
27.6
\u2013
1.9
\u2013
29.5
Reclassified from equity as the hedged item is no longer
expected to occur:
\u2013 Reclassified from equity \u2013 included in revenue
\u2013
\u2013
\u2013
\u2013
9.3
9.3
Transferred from equity and included within the initial cost
of a non-financial asset:
\u2013 Transferred to cost of inventories
\u2013
(43.4)
\u2013
\u2013
\u2013
(43.4)
Related deferred tax, net (note 2.6)
(149.9)
31.8
3.8
0.9
(6.4)
(119.8)
At 1 January 2024
257. 0
(10.8)
15.1
1.4
(55.3)
207.4
Gains/(losses) recognised:
\u2013 Change in fair value of hedging instrument recognised
in OCI
(15.8)
(19.8)
(2.3)
(7.7)
(3.4)
(49.0)
Reclassified from equity as the hedged item has affected profit
or loss:
\u2013 Reclassified to the Consolidated income statement
\u2013 included in cost of sales
105.1
\u2013
\u2013
\u2013
\u2013
105.1
\u2013 Reclassified to the Consolidated income statement
\u2013 included in revenue
(397.5)
\u2013
\u2013
\u2013
24.0
(373.5)
\u2013 Reclassified to the Consolidated income statement
\u2013 included in interest payable and similar charges
\u2013
6.7
(12.0)
(2.9)
\u2013
(8.2)
\u2013 Reclassified to the Consolidated income statement
\u2013 included in foreign exchange (losses)/gains
\u2013
2 9.1
\u2013
3.4
\u2013
32.5
Reclassified from equity as the hedged item is no longer
expected to occur:
\u2013 Reclassified from equity \u2013 included in revenue
\u2013
\u2013
\u2013
\u2013
1.2
1.2
Transferred from equity and included within the initial cost
of a non-financial asset:
\u2013 Transferred to cost of inventories
\u2013
4.8
\u2013
\u2013
\u2013
4.8
Related deferred tax, net (note 2.6)
77.1
(5.2)
3.5
1.8
(5.4)
71.8
At 31 December 2024
25.9
4.8
4.3
(4.0)
(38.9)
( 7.9)
(1) The table above has been re-presented to split the prior year reclassified amounts in commodity price risk column between amounts included in revenue and amounts included within cost of sales. (2) The above table has been re-presented to include a foreign exchange and interest rate risk column. The amounts included within foreign exchange and interest rate risk relate to the Group\u2019s floating-to-fixed cross-currency interest rate swaps that were previously disclosed partially within foreign currency exchange risk and partially within interest rate risk. The expected release profile from equity of post-tax hedging gains and losses is as follows:
As at 31 December 2024
Within 1 year 1\u20132 years >2 years Total
\u00a3m \u00a3m \u00a3m \u00a3m
Commodity risk
34.7
(9.2)
0.4
25.9
Foreign currency exchange risk
(1.3)
(3.0)
9.1
4.8
Interest rate risk
4.2
0.4
(0.3)
4.3
Foreign currency and interest rate risk
(2.4)
(1.3)
(0.3)
(4.0)
Inflation risk
(15.1)
(10 .1)
(13.7)
(38.9)
20 .1
(23.2)
(4.8)
(7.9)
As at 31 December 2023
Within 1 year 1\u20132 years >2 years Total
\u00a3m \u00a3m \u00a3m \u00a3m
Commodity risk
199.4
56.0
1.6
2 57.0
Foreign currency exchange risk
(3.3)
(5.4)
(2.1)
(10.8)
Interest rate risk
9.2
5.0
0.9
15.1
Foreign currency and interest rate risk
0.7
0.6
0.1
1.4
Inflation risk
(19.4)
(15.2)
(20.7)
(55.3)
186.6
41.0
(20.2)
2 07.4
7.4 Cost of hedging reserve Where the Group has designated the spot foreign exchange risk as the hedged risk, the Group allocates unrealised gains and losses on the forward rate of hedge accounted foreign currency derivative contracts to a cost of hedging reserve in accordance with IFRS 9. A large proportion of the derivative contracts held relate to foreign currency exchange contracts, including forward contracts, options and swaps. Consistent with prior periods, for foreign currency exchange contracts hedging the purchase of inventory denominated in foreign currencies to which the Group has applied hedge accounting, the Group has continued to designate the change in the spot rate as the hedged risk in the Group\u2019s cash flow hedge relationships. The Group designates the cost of hedging \u2013 being the change in fair value associated with forward points including currency basis \u2013 to equity. All amounts within the cost of hedging reserve relate to foreign currency exchange risk. The table below details the cost of hedging gains or losses recognised in the year on hedging instruments and the amounts transferred from equity and included within the initial cost of a non-financial asset:
Cost of hedging
2024 2023
\u00a3m \u00a3m
At 1 January
18.7
4 0.1
Gains/(losses) recognised:
\u2013 Change in fair value of hedging instruments recognised in the Consolidated statement of
comprehensive income
6.8
7.5
Transferred from equity and included within the initial cost of a non-financial asset:
\u2013 Transferred to cost of inventories
(22.6)
(36.0)
Related deferred tax, net (note 2.6)
4.0
7.1
At 31 December
6.9
18.7
The expected release profile from equity of post-tax cost of hedging gains and losses is as follows:
As at 31 December 2024
Within 1 year 1\u20132 years >2 years Total
\u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency exchange risk
5.1
0.7
1.1
6.9
As at 31 December 2023
Within 1 year 1\u20132 years >2 years Total
\u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency exchange risk
16.6
4.3
(2.2)
18.7
7.5 Offsetting financial assets and financial liabilities Financial assets and liabilities are offset and the net amount is reported in the Consolidated balance sheet where the Group has a legally enforceable right to offset the recognised amounts, and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The Group also has financial assets and liabilities with certain counterparties that are subject to master netting agreements. Some financial assets and liabilities do not meet the criteria for offsetting at the reporting date but are subject to an enforceable master netting agreement that in certain circumstances, such as a bankruptcy, would allow for the amounts to be offset and a single net amount payable or receivable. The table below shows the impact of financial assets and liabilities that are offset in the Consolidated balance sheet, and it also shows the impact if the carrying amounts that are subject to these master netting agreements were also to be offset in certain circumstances, such as a bankruptcy:
As at 31 December 2024
Net amounts of
Gross amounts financial Related
of financial instruments financial Related cash
Gross amounts instruments offset presented instruments collateral assets/
of financial in the balance in the that are (liabilities) that are
instruments sheet balance sheet not offset not offset Net amount
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial assets
Derivative financial instruments
328.5
(71.2)
257.3
(166.4)
(1.5)
89.4
Trade and other receivables and contract
assets
523.0
(52.7)
470.3
(2.5)
\u2013
467.8
Financial liabilities
Derivative financial instruments
(404.5)
71.2
(333.3)
15 6.1
\u2013
(177.2)
Trade and other payables and
contract liabilities
(1,341.8)
52.7
(1, 28 9.1)
12.8
1.5
(1,274.8)
As at 31 December 2023
Net amounts of
Gross amounts financial Related
of financial instruments financial Related cash
Gross amounts instruments offset presented instruments collateral assets/
of financial in the balance in the that are (liabilities) that are
instruments sheet balance sheet not offset not offset Net amount
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial assets
Derivative financial instruments
888.5
(226.5)
662.0
(220.9)
(20.3)
420.8
Trade and other receivables and contract
assets
1,088.5
(111.6)
976.9
(4.9)
(95.9)
876 .1
Financial liabilities
Derivative financial instruments
(764.7)
226.5
(538.2)
215.3
95.9
(227. 0)
Trade and other payables and
contract liabilities
(1,651.2)
111.6
(1,539.6)
10.5
20.3
(1,508.8)
The above collateral assets and liabilities are recorded in other receivables and other payables respectively. See note 4.3. 7.6 Contingencies Contingent assets are potential assets that arise from past events whose existence will be confirmed by a future event that is outside of the control of the Group. The amount or timing of any potential receipt is uncertain. Contingent liabilities are potential obligations that arise from past events whose existence will be confirmed by a future event that is outside of the control of the Group. The amount or timing of any potential outflow is uncertain. As at 31 December 2024, the Group had no contingent assets or liabilities to be disclosed. ", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-716": { "value": "Accounting policy The Group measures all debt instruments initially at fair value, which equates to the principal value of the consideration received, net of transaction costs that are directly attributable to the debt issuance. Subsequent to initial measurement, debt instruments are measured at amortised cost using the effective interest method. Transaction costs (any such costs incremental and directly attributable to the issue of the financial instrument) are included in the calculation of the effective interest rate and are amortised over the expected life of the instrument. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. Loan commitment fees may be payable to the lender to entitle the Group to draw down at any time over a fixed period. Where there is a fixed repayment date, regardless of when the loan is drawn down, the commitment fees are recognised on a systematic basis over the period the Group is able to draw down. Where the loan has the same fixed term, regardless of when the loan is drawn down, if drawdown is probable, then the commitment fees are deferred until drawdown and are recognised over the life of the instrument as part of the effective interest rate. If drawdown is not probable, then loan commitment fees are recognised on a systematic basis over the period the Group is able to draw down. Fees that are paid for the availability of a facility where the amount and timing of drawdown can vary at the Group\u2019s discretion, such as under a revolving credit facility (RCF), are recognised on a systematic basis over the life of the facility. Debt instruments denominated in foreign currencies are revalued using the period-end exchange rates, with any exchange gains and losses being recognised as a component of foreign exchange gains or losses in the period they arise. The Group hedges foreign currency risk and interest rate risk in accordance with the policies set out in note 7.2. Where hedging instruments are used to fix cash flows associated with debt instruments, the debt instrument and the hedging instrument are measured and presented separately on the Consolidated balance sheet. Where hedge accounting is applied to foreign exchange risk and interest rate risk on debt instruments, gains and losses are recycled to the Consolidated income statement within either foreign exchange gains or losses or interest payable and similar charges, to match the exposure they are hedging, where effective. The borrowings amounts disclosed in the tables below exclude any impact of hedging instruments. Debt instruments are derecognised when the contractual obligations are discharged, cancelled or expired. If the terms of a debt instrument are significantly modified, the existing liability is derecognised and a new liability based on the modified terms is recognised at fair value. The difference between the carrying value of the debt instrument based on the terms pre-modification and post- modification is recognised in the Consolidated income statement. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-700": { "value": "Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. Loan commitment fees may be payable to the lender to entitle the Group to draw down at any time over a fixed period. Where there is a fixed repayment date, regardless of when the loan is drawn down, the commitment fees are recognised on a systematic basis over the period the Group is able to draw down. Where the loan has the same fixed term, regardless of when the loan is drawn down, if drawdown is probable, then the commitment fees are deferred until drawdown and are recognised over the life of the instrument as part of the effective interest rate. If drawdown is not probable, then loan commitment fees are recognised on a systematic basis over the period the Group is able to draw down. Fees that are paid for the availability of a facility where the amount and timing of drawdown can vary at the Group\u2019s discretion, such as under a revolving credit facility (RCF), are recognised on a systematic basis over the life of the facility. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingCostsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-597": { "value": "4.3 Notes to the Consolidated cash flow statement Accounting policy In accordance with IAS 7 the Group has elected to classify cash flows from interest paid and interest received as cash flows from operations, dividends paid as cash flows from financing activities, and dividends received as cash flows from investing activities. The interest repayment on lease liabilities is included within interest paid, and the lease principal repayment is presented within cash flows from financing activities. Payments for short-term and low value leases are included within cash flows from operating activities. Cash generated from operations Cash generated from operations is the starting point of the Group\u2019s Consolidated cash flow statement on page 171. The table below makes adjustments for any non-cash accounting items to reconcile the Group\u2019s net profit for the year to the amount of cash generated from the Group\u2019s operations.
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Profit for the year
525.5
560.9
Adjustments for:
Interest payable and similar charges
107.5
115.2
Interest receivable and similar gains
(2 0.1)
(13 .1)
Tax charge
227.9
235.5
Research and development tax credits
(2.0)
(2.0)
Share of losses from associates
2.2
1.6
Depreciation of property, plant and equipment
196.7
168.7
Amortisation of intangible assets
17. 0
29.4
Depreciation of right-of-use assets
28 .1
26.9
Impairment of non-current assets
14.4
70.8
Losses on disposal of fixed assets
11.2
2.6
Other losses
1.7
18.2
Certain remeasurements of derivative contracts
(1)
(89.3)
(222.0)
Non-cash charge for share-based payments
14.0
13.9
Effect of changes in foreign exchange rates
(21.9)
6.2
Operating cash flows before movement in working capital
1,012.9
1,012.8
Changes in working capital:
Decrease in inventories
25.2
20.6
Decrease in receivables
392.2
71.4
Decrease in payables
(142.7)
(30.8)
Net movement in derivative-related collateral
83.7
155.4
Increase/(decrease) in provisions
11.5
(4.4)
Increase in renewable certificate assets
(247. 8)
(104.4)
Total cash released from working capital
122 .1
107.8
Net movement in defined benefit pension obligations
0.1
(9.6)
Cash generated from operations
1,135.1
1,111.0
(1) Certain remeasurements of derivative contracts includes the effect of non-cash unrealised gains and losses recognised in the Consolidated income statement and their subsequent cash realisation. It also includes the cash and non-cash impact of deferring and recycling gains and losses on derivative contracts designated into hedge relationships under IFRS 9, where the gain or loss is held in the hedge reserve and then released to the Consolidated income statement in the period the hedged transaction occurs. The Group has generated cash from operations of \u00a31,135.1 million during the year (2023: \u00a31,111.0 million). This resulted from a cash inflow from operating activities before working capital of \u00a31,012.9 million (2023: \u00a31,012.8 million), a net working capital cash inflow of \u00a3122.1 million (2023: \u00a3107. 8 million) and a cash inflow of \u00a30.1 million (2023: \u00a39.6 million cash outflow) in respect of defined benefit pension obligations. The most significant factors making up these cash movements are explained in further detail below. The \u00a389.3 million outflow due to the adjustment for certain remeasurements of derivative contracts in the current year (2023: \u00a3222.0 million) mainly relates to cash payments on maturing trades where the derivative losses had been recognised in a previous period, as well as unrealised fair value gains on open derivative contracts. Cash collateral is sometimes paid or received in relation to the Group\u2019s commodity and treasury trading activities. When derivative positions are out of the money for the Group, collateral may be required to be paid to the counterparty. When derivative positions are in the money, collateral may be received from counterparties. These positions reverse when mark-to-market positions reduce, or contracts are settled, and the collateral is returned. The Group actively manages its liquidity requirements. This includes managing collateral associated with the hedging of power and other commodities, as well as other contractual arrangements. Under certain arrangements the Group is able to use non-cash collateral, such as letters of credit and surety bonds, that may otherwise have required cash collateral.
The Group has had a net cash inflow of \u00a383.7 million from derivative-related collateral during the year, as trades have matured and
mark-to-market positions have reduced (2023: \u00a3155.4 million). As at 31 December 2024, the Group held \u00a39.8 million in cash collateral
receipts (2023: \u00a320.3 million) recognised in payables, and had posted \u00a34.7 million (2023: \u00a398.9 million) of cash collateral payments
recognised in receivables. The Group had also utilised \u00a314.5 million (2023: \u00a314.5 million) of letters of credit and \u00a330.0 million (2023:
\u00a370.0 million) of surety bonds to cover commodity trading collateral requirements. Letters of credit and surety bonds utilised at the
reporting date have reduced the requirement for cash collateral payments, which has increased the amount by which receivables
have decreased .
The Group has a strong focus on cash flow discipline and managing liquidity. The Group enhances its working capital position by
managing payables, receivables, inventories and renewable certificate assets to make sure the working capital committed is closely
aligned with operational requirements. The impact of these actions on the cash flows of the Group is included within the further detail
explained below.
The table below sets out the key arrangements utilised by the Group to manage elements of its working capital:
As at As at
31 December 31 December Inflow/
2024 2023 (outflow)
\u00a3m \u00a3m \u00a3m
Receivables monetisation
400.0
(1)
400.0
\u2013
ROC monetisation sales
\u2013
298.4
(298.4)
Supply chain finance scheme
(38.4)
(48.6)
(10.2)
Deferred letters of credit
(150.3)
(224.7)
(74.4)
(1) As at 31 December 2024 the Group had sold \u00a3386.3 million of receivables under this facility (see note 3.5). At 31 December 2024 the Group had recognised an amount
payable to the facility provider of \u00a313.7 million, being the movement in the receivables sold compared to the prior month. This amount was paid to the facility provider in
January 2025, so as at 31 December 2024 the utilisation of the facility was still \u00a3400.0 million.
None of the balances in the table above are included within the Group\u2019s definition of Net debt or borrowings (see note 2.7 for further
details on Net debt and note 4.2 for further details on borrowings). The receivables monetisation facility is non-recourse in nature
and therefore there is no future liability associated with these amounts. Through standard ROC sales and ROC purchase arrangements
the Group is able to manage the working capital cycle of inflows and outflows of these assets. The supply chain finance and deferred
letters of credit facilities are linked directly to specific payables. The deferred letters of credit facilities provide a short extension of
payment terms of less than 12 months. See note 3.7 for further disclosures relating to supplier finance arrangements. The impact
of these facilities on the cash flows of the Group is explained further below.
The overall cash inflow of \u00a3392.2 million (2023: \u00a371.4 million) due to lower receivables in the current year is primarily a result of a
reduction in energy prices compared to the prior year.
The Energy Solutions segment has access to a receivables monetisation facility which enables it to accelerate cash flows associated
with amounts receivable from energy supply customers on a non-recourse basis. The facility was previously refinanced to increase
the size of the facility to \u00a3400.0 million from \u00a3200.0 million for the period to March 2025, and then reducing to \u00a3300.0 million until
the facility matures in January 2027. Utilisation of the facility was \u00a3400.0 million at 31 December 2024 (2023: \u00a3400.0 million). As the
facility was fully utilised at 31 December 2024 and 31 December 2023 there has been no cash flow impact in the period.
Payables have decreased from the prior year, with a cash outflow of \u00a3142.7 million (2023: \u00a330.8 million). This is due to a reduction in
other payables as the deferred letters of credit have reduced in relation to OCGT capital expenditure now that the assets are nearing
completion. The decrease in payables is also due to the reduction in energy supply accruals compared to the prior year as the value of
REGOs has reduced year-on-year. Certain of the Group\u2019s suppliers are able to access a supply chain finance facility provided by a bank,
for which funds can be accelerated in advance of normal payment terms. At 31 December 2024, the Group had trade payables of
\u00a338.4 million (2023: \u00a348.6 million) related to this reverse factoring. The facility does not directly impact the Group\u2019s working capital,
as payment terms remain unaltered with the Group and would remain the same should the facility fall away.
The Group also has access to deferred letters of credit facilities under which the Group benefits from an extension to payment terms
of less than 12 months for a fee. The amount outstanding under these facilities at 31 December 2024 was \u00a3150.3 million (2023:
\u00a3224.7 million). Of the total deferred letters of credit, \u00a392.8 million (2 023: \u00a3 155.1 million) were utilised for capital expenditure and
\u00a357.5 million (2023: \u00a369.6 million) were utilised for trade payables. Utilisation of these payment facilities impacted the purchases
of property, plant and equipment line in the Consolidated cash flow statement and the movement in payables line above.
The movement in renewable certificate assets during the year includes a combination of generation, utilisation, purchases and sales,
as described in note 3.3. The \u00a3247.8 million cash outflow (2023: \u00a3104.4 million) is predominantly due to an increase in the value
of renewable certificates generated and still held by the Group compared to the prior year, due to a reduced level of ROC monetisation
sales. Cash from renewable certificates, and in particular ROCs, is typically realised several months after they are earned; however,
through standard ROC sales and ROC purchase arrangements the Group is able to manage the working capital cycle of inflows and
outflows of these assets. At 31 December 2024, the Group had cash inflows of \u00a3nil from using these standard renewable certificate
sales (2023: \u00a3298.4 million).
Changes in liabilities arising from financing cash flows
A reconciliation of the movements in liabilities arising from financing activities for both cash and non-cash movements is provided
below:
Hedging
Borrowings Lease liabilities instruments Total
\u00a3m \u00a3m \u00a3m \u00a3m
At 1 January 2024
1,425.3
135.8
32.5
1,593.6
Cash flows from financing activities
(226.4)
(27.4)
(31.5)
(285.3)
Effect of changes in foreign exchange rates
(30.7)
1.1
18.3
(11.3)
Other movements
8.5
7.0
21.7
37. 2
At 31 December 2024
1,176.7
116.5
41.0
1,334.2
Hedging
Borrowings Lease liabilities instruments Total
\u00a3m \u00a3m \u00a3m \u00a3m
At 1 January 2023
1,440.9
153 .1
(2.2)
1,591.8
Cash flows from financing activities
14.5
(25.8)
\u2013
(11.3)
Effect of changes in foreign exchange rates
(35.4)
(6.7)
29.8
(12.3)
Other movements
5.3
15.2
4.9
25.4
At 31 December 2023
1,425.3
135.8
32.5
1,593.6
Other movements on borrowings principally relate to interest. Other movements on lease liabilities principally relate to discounting
and additions in the year. Other movements on hedging instruments include cross-currency interest rate swaps that are hedging both
principal and interest payments on borrowings. Interest payments are classified as operating cash flows in the Consolidated cash flow
statement, as such fair value movements and cash settlements relating to the interest payments on these hedges are recognised
within the other movements line above.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCashFlowStatementExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-701": { "value": "Accounting policy In accordance with IAS 7 the Group has elected to classify cash flows from interest paid and interest received as cash flows from operations, dividends paid as cash flows from financing activities, and dividends received as cash flows from investing activities. The interest repayment on lease liabilities is included within interest paid, and the lease principal repayment is presented within cash flows from financing activities. Payments for short-term and low value leases are included within cash flows from operating activities. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForCashFlowsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-646": { "value": "
The Group has generated cash from operations of \u00a31,135.1 million during the year (2023: \u00a31,111.0 million). This resulted from a cash
inflow from operating activities before working capital of \u00a31,012.9 million (2023: \u00a31,012.8 million), a net working capital cash inflow
of \u00a3122.1 million (2023: \u00a3107. 8 million) and a cash inflow of \u00a30.1 million (2023: \u00a39.6 million cash outflow) in respect of defined benefit
pension obligations. The most significant factors making up these cash movements are explained in further detail below.
The \u00a389.3 million outflow due to the adjustment for certain remeasurements of derivative contracts in the current year (2023:
\u00a3222.0 million) mainly relates to cash payments on maturing trades where the derivative losses had been recognised in a previous
period, as well as unrealised fair value gains on open derivative contracts.
Cash collateral is sometimes paid or received in relation to the Group\u2019s commodity and treasury trading activities. When derivative
positions are out of the money for the Group, collateral may be required to be paid to the counterparty. When derivative positions
are in the money, collateral may be received from counterparties. These positions reverse when mark-to-market positions reduce,
or contracts are settled, and the collateral is returned.
The Group actively manages its liquidity requirements. This includes managing collateral associated with the hedging of power
and other commodities, as well as other contractual arrangements. Under certain arrangements the Group is able to use non-cash
collateral, such as letters of credit and surety bonds, that may otherwise have required cash collateral.
The Group has had a net cash inflow of \u00a383.7 million from derivative-related collateral during the year, as trades have matured and mark-to-market positions have reduced (2023: \u00a3155.4 million). As at 31 December 2024, the Group held \u00a39.8 million in cash collateral receipts (2023: \u00a320.3 million) recognised in payables, and had posted \u00a34.7 million (2023: \u00a398.9 million) of cash collateral payments recognised in receivables. The Group had also utilised \u00a314.5 million (2023: \u00a314.5 million) of letters of credit and \u00a330.0 million (2023: \u00a370.0 million) of surety bonds to cover commodity trading collateral requirements. Letters of credit and surety bonds utilised at the reporting date have reduced the requirement for cash collateral payments, which has increased the amount by which receivables have decreased . The Group has a strong focus on cash flow discipline and managing liquidity. The Group enhances its working capital position by managing payables, receivables, inventories and renewable certificate assets to make sure the working capital committed is closely aligned with operational requirements. The impact of these actions on the cash flows of the Group is included within the further detail explained below. The table below sets out the key arrangements utilised by the Group to manage elements of its working capital:
As at As at
31 December 31 December Inflow/
2024 2023 (outflow)
\u00a3m \u00a3m \u00a3m
Receivables monetisation
400.0
(1)
400.0
\u2013
ROC monetisation sales
\u2013
298.4
(298.4)
Supply chain finance scheme
(38.4)
(48.6)
(10.2)
Deferred letters of credit
(150.3)
(224.7)
(74.4)
(1) As at 31 December 2024 the Group had sold \u00a3386.3 million of receivables under this facility (see note 3.5). At 31 December 2024 the Group had recognised an amount payable to the facility provider of \u00a313.7 million, being the movement in the receivables sold compared to the prior month. This amount was paid to the facility provider in January 2025, so as at 31 December 2024 the utilisation of the facility was still \u00a3400.0 million. None of the balances in the table above are included within the Group\u2019s definition of Net debt or borrowings (see note 2.7 for further details on Net debt and note 4.2 for further details on borrowings). The receivables monetisation facility is non-recourse in nature and therefore there is no future liability associated with these amounts. Through standard ROC sales and ROC purchase arrangements the Group is able to manage the working capital cycle of inflows and outflows of these assets. The supply chain finance and deferred letters of credit facilities are linked directly to specific payables. The deferred letters of credit facilities provide a short extension of payment terms of less than 12 months. See note 3.7 for further disclosures relating to supplier finance arrangements. The impact of these facilities on the cash flows of the Group is explained further below. The overall cash inflow of \u00a3392.2 million (2023: \u00a371.4 million) due to lower receivables in the current year is primarily a result of a reduction in energy prices compared to the prior year. The Energy Solutions segment has access to a receivables monetisation facility which enables it to accelerate cash flows associated with amounts receivable from energy supply customers on a non-recourse basis. The facility was previously refinanced to increase the size of the facility to \u00a3400.0 million from \u00a3200.0 million for the period to March 2025, and then reducing to \u00a3300.0 million until the facility matures in January 2027. Utilisation of the facility was \u00a3400.0 million at 31 December 2024 (2023: \u00a3400.0 million). As the facility was fully utilised at 31 December 2024 and 31 December 2023 there has been no cash flow impact in the period. Payables have decreased from the prior year, with a cash outflow of \u00a3142.7 million (2023: \u00a330.8 million). This is due to a reduction in other payables as the deferred letters of credit have reduced in relation to OCGT capital expenditure now that the assets are nearing completion. The decrease in payables is also due to the reduction in energy supply accruals compared to the prior year as the value of REGOs has reduced year-on-year. Certain of the Group\u2019s suppliers are able to access a supply chain finance facility provided by a bank, for which funds can be accelerated in advance of normal payment terms. At 31 December 2024, the Group had trade payables of \u00a338.4 million (2023: \u00a348.6 million) related to this reverse factoring. The facility does not directly impact the Group\u2019s working capital, as payment terms remain unaltered with the Group and would remain the same should the facility fall away. The Group also has access to deferred letters of credit facilities under which the Group benefits from an extension to payment terms of less than 12 months for a fee. The amount outstanding under these facilities at 31 December 2024 was \u00a3150.3 million (2023: \u00a3224.7 million). Of the total deferred letters of credit, \u00a392.8 million (2 023: \u00a3 155.1 million) were utilised for capital expenditure and \u00a357.5 million (2023: \u00a369.6 million) were utilised for trade payables. Utilisation of these payment facilities impacted the purchases of property, plant and equipment line in the Consolidated cash flow statement and the movement in payables line above. The movement in renewable certificate assets during the year includes a combination of generation, utilisation, purchases and sales, as described in note 3.3. The \u00a3247.8 million cash outflow (2023: \u00a3104.4 million) is predominantly due to an increase in the value of renewable certificates generated and still held by the Group compared to the prior year, due to a reduced level of ROC monetisation sales. Cash from renewable certificates, and in particular ROCs, is typically realised several months after they are earned; however, through standard ROC sales and ROC purchase arrangements the Group is able to manage the working capital cycle of inflows and outflows of these assets. At 31 December 2024, the Group had cash inflows of \u00a3nil from using these standard renewable certificate sales (2023: \u00a3298.4 million). Changes in liabilities arising from financing cash flows A reconciliation of the movements in liabilities arising from financing activities for both cash and non-cash movements is provided below:
Hedging
Borrowings Lease liabilities instruments Total
\u00a3m \u00a3m \u00a3m \u00a3m
At 1 January 2024
1,425.3
135.8
32.5
1,593.6
Cash flows from financing activities
(226.4)
(27.4)
(31.5)
(285.3)
Effect of changes in foreign exchange rates
(30.7)
1.1
18.3
(11.3)
Other movements
8.5
7.0
21.7
37. 2
At 31 December 2024
1,176.7
116.5
41.0
1,334.2
Hedging
Borrowings Lease liabilities instruments Total
\u00a3m \u00a3m \u00a3m \u00a3m
At 1 January 2023
1,440.9
153 .1
(2.2)
1,591.8
Cash flows from financing activities
14.5
(25.8)
\u2013
(11.3)
Effect of changes in foreign exchange rates
(35.4)
(6.7)
29.8
(12.3)
Other movements
5.3
15.2
4.9
25.4
At 31 December 2023
1,425.3
135.8
32.5
1,593.6
Other movements on borrowings principally relate to interest. Other movements on lease liabilities principally relate to discounting and additions in the year. Other movements on hedging instruments include cross-currency interest rate swaps that are hedging both principal and interest payments on borrowings. Interest payments are classified as operating cash flows in the Consolidated cash flow statement, as such fair value movements and cash settlements relating to the interest payments on these hedges are recognised within the other movements line above.
7.2.4 Liquidity risk
The treasury function is responsible for liquidity, funding and settlement management under policies approved by the Board. Liquidity
needs are monitored using regular forecasting of operational cash flows and financing commitments. The Group maintains a mixture
of cash and cash equivalents, committed facilities and uncommitted facilities in order to ensure sufficient funding for business
requirements.
In managing liquidity risk, the Group has the ability to accelerate the cash flows associated with certain working capital items,
principally those related to ROC sales and Energy Solutions energy supply sales. In each case this is undertaken on a non-recourse
basis and, accordingly, the ROC assets and Energy Solutions receivables are derecognised from the Consolidated balance sheet at
the point of sale. The Group also utilises standard purchasing facilities to extend the working capital cycle, whilst still paying suppliers
on time. The impact on the Group\u2019s cash flows is described in note 4.3. Such facilities are not included within the Group\u2019s definition
of Net debt, as outlined in note 2.7.
Capital management The Group is disciplined in its management of capital to ensure it is able to continue as a going concern; maintain a strong credit rating underpinned by robust financial metrics; invest in its core business; and pay a sustainable and growing dividend whilst maximising the return to shareholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of shareholders\u2019 equity (excluding the hedge and cost of hedging reserves), plus Net debt. Net debt is comprised of borrowings, lease liabilities, cash and cash equivalents attributable to owners of the parent company and is inclusive of the impact of associated hedging instruments as disclosed in note 2.7. ", "dimensions": { "concept": "ifrs-full:DisclosureOfObjectivesPoliciesAndProcessesForManagingCapitalExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-625": { "value": "Cash collateral is sometimes paid or received in relation to the Group\u2019s commodity and treasury trading activities. When derivative positions are out of the money for the Group, collateral may be required to be paid to the counterparty. When derivative positions are in the money, collateral may be received from counterparties. These positions reverse when mark-to-market positions reduce, or contracts are settled, and the collateral is returned. The Group actively manages its liquidity requirements. This includes managing collateral associated with the hedging of power and other commodities, as well as other contractual arrangements. Under certain arrangements the Group is able to use non-cash collateral, such as letters of credit and surety bonds, that may otherwise have required cash collateral. The Group has had a net cash inflow of \u00a383.7 million from derivative-related collateral during the year, as trades have matured and mark-to-market positions have reduced (2023: \u00a3155.4 million). As at 31 December 2024, the Group held \u00a39.8 million in cash collateral receipts (2023: \u00a320.3 million) recognised in payables, and had posted \u00a34.7 million (2023: \u00a398.9 million) of cash collateral payments recognised in receivables. The Group had also utilised \u00a314.5 million (2023: \u00a314.5 million) of letters of credit and \u00a330.0 million (2023: \u00a370.0 million) of surety bonds to cover commodity trading collateral requirements. Letters of credit and surety bonds utilised at the reporting date have reduced the requirement for cash collateral payments, which has increased the amount by which receivables have decreased ", "dimensions": { "concept": "ifrs-full:DisclosureOfCollateralExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-647": { "value": "4.4 Equity and reserves The Group\u2019s ordinary share capital reflects the total number of shares in issue, which are publicly traded on the London Stock Exchange. Accounting policy Ordinary shares are classified as equity as evidenced by their residual interest in the assets of the Company after deducting its liabilities. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Issued equity
As at 31 December
2024 2023
\u00a3m \u00a3m
Issued and fully paid:
427,770,766 ordinary shares of 11
16
\u204429 pence each (2023: 424,923,406)
49.4
49.1
The movement in allotted and fully paid share capital of the Company during the year was as follows:
Year ended 31 December
2024 2023
(number) (number)
At 1 January
424,923,406
414,872,491
Issued under employee share schemes
2,847,360
10,050,915
At 31 December
427,770,766
424,923,406
The Company has only one class of shares, which are ordinary shares of 11 16 \u204429 pence each, carrying no right to fixed income. No shareholders have waived their rights to dividends. Throughout the year, shares were issued in satisfaction of options vesting in accordance with the rules of the Group\u2019s employee share schemes (see note 6.2). During the year 794,782 shares were issued at a weighted average exercise price of 336 pence per share in respect of options vesting on employee share purchase schemes and 2,052,578 shares were issued in respect of share options vesting on share awards with no exercise price. Share buyback programme On 26 July 2024, the Group announced the commencement of a \u00a3300 million share buyback programme. The buyback programme is ongoing, with \u00a3115.4 million of shares having been repurchased as at 31 December 2024. The shares purchased by the Group have not been cancelled and so continue to be included in the issued shares in the above table. See note 2.11 for further details on the share buyback programme. Share premium The share premium account reflects amounts received in respect of issued share capital that exceeds the nominal value of the shares issued, net of incremental transaction costs and tax, that are directly attributable to the issue of new shares. Movements in the share premium reserve during the year reflect amounts received above the nominal value on the issue of shares under employee share schemes.
Year ended 31 December
2024 2023
\u00a3m \u00a3m
At 1 January
441.2
433.3
Issue of share capital
2.6
7.9
At 31 December
443.8
441.2
Other reserves
Capital
redemption Translation Merger Treasury shares Total other
reserve reserve reserve reserve reserves
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
At 1 January 2023
1.5
85.8
710.8
(50.4)
747.7
Exchange differences on translation of foreign operations
\u2013
(10.3)
\u2013
\u2013
(10.3)
Repurchase of own shares (see note 2.11)
\u2013
\u2013
\u2013
(149.2)
(149.2)
At 1 January 2024
1.5
75.5
710.8
(199.6)
588.2
Exchange differences on translation of foreign operations
\u2013
(6.6)
\u2013
\u2013
(6.6)
Movement in equity associated with share-based
payments
\u2013
\u2013
\u2013
0.8
0.8
Repurchase of own shares (see note 2.11)
\u2013
\u2013
\u2013
(115.4)
(115.4)
At 31 December 2024
1.5
68.9
710.8
(314.2)
467.0
The capital redemption and treasury shares reserves arose when the Group completed previous share buyback programmes. A further share buyback was ongoing during 2024 and has continued into 2025. The net cost of this share buyback up to 31 December 2024 was \u00a3115.4 million (see note 2.11 for further details). The 57.8 million (2023: 40.3 million) shares held in the treasury shares reserve have no voting rights attached to them. Exchange differences relating to the translation of the net assets of the Group\u2019s US and Canadian subsidiaries from their functional currencies (USD and CAD) into sterling for presentation in these Consolidated financial statements are recognised in the translation reserve. Hedge reserve and Cost of hedging reserve Movements in the hedge reserve and the cost of hedging reserve, which reflect the change in fair value of derivative financial instruments designated into hedge accounting relationships in accordance with IFRS 9 and related deferred tax, are set out in notes 7.3 and 7.4.", "dimensions": { "concept": "ifrs-full:DisclosureOfIssuedCapitalExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-702": { "value": "Accounting policy Ordinary shares are classified as equity as evidenced by their residual interest in the assets of the Company after deducting its liabilities. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIssuedCapitalExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-683": { "value": "4.5 Non-controlling interests Accounting policy In accordance with IFRS 3, the Group elects on an acquisition-by-acquisition basis whether to measure non-controlling interests (NCIs) at their proportionate share of the identifiable net assets of the acquiree at the acquisition date, or at fair value. The Group treats transactions with NCIs that do not result in a loss of control as transactions with equity owners of the parent company. A change in ownership interest results in an adjustment between the carrying amounts of the controlling interests and NCIs to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to NCIs and the fair value of any consideration paid or received is recognised in equity, within retained profits. At 31 December 2024, the Group has two (2023: two) subsidiary undertakings with NCIs. These subsidiaries were acquired during 2021 as part of the acquisition of Pinnacle. Summarised financial information The summarised financial information disclosed is shown on a 100% basis. It represents the results of each entity below that would be shown in the subsidiaries\u2019 own financial statements prepared in accordance with IFRS, modified for Group-level fair value adjustments at acquisition, and gains or losses on translation of the entities\u2019 financial statements into the Group\u2019s presentational currency, which are recognised through the Consolidated statement of comprehensive income. All amounts are presented before intercompany eliminations.
As at 31 December 2024
As at 31 December 2023
Non-controlling Non-controlling Non-controlling Non-controlling
Principal place interest interests interest interests
of business % \u00a3m % \u00a3m
Lavington Pellet Limited Partnership
North America
25%
5.9
25%
6.5
Smithers Pellet Limited Partnership
North America
30%
3.9
30%
5.5
Total
9.8
12.0
Distributions of \u00a30.4 million (2023: \u00a3nil) were paid to non-controlling interests during the year. Summarised statement of total comprehensive income
Year ended 31 December 2024
Year ended 31 December 2023
Total Total
Loss comprehensive
Loss
comprehensive
attributable loss
attributable
loss
to the
attributable
to the
attributable
non- Total
to the
non- Total to the
controlling comprehensive
non-controlling
controlling comprehensive non-controlling
Revenue Loss interests loss
interests
Revenue
Loss
interests loss interests
\u00a3m \u00a3m \u00a3m \u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m \u00a3m \u00a3m
Lavington Pellet
Limited Partnership
27.6
(0.1)
\u2013
(1.8)
(0.6)
31.6
(1.7)
(0.4)
(2.5)
(0.5)
Smithers Pellet Limited
Partnership
12.3
(3.6)
(1.1)
(4.5)
(1.3)
14.5
(2.8)
(0.9)
(3.3)
(1.2)
Total
39.9
(3.7)
(1.1)
(6.3)
(1.9)
4 6 .1
(4.5)
(1.3)
(5.8)
(1.7)
Summarised balance sheet
As at 31 December 2024
As at 31 December 2023
Non-current Current Current Non-current Non-current Current Current Non-current
assets assets liabilities liabilities Net assets assets assets liabilities liabilities Net assets
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Lavington Pellet
Limited Partnership
22.0
7.6
(2.8)
( 3.1)
23.7
24.9
4.5
(2.0)
(1.4)
26.0
Smithers Pellet Limited
Partnership
13.9
3.3
(4.3)
\u2013
12.9
15.8
3.1
(1.5)
\u2013
17.4
Total
35.9
10.9
(7.1)
(3.1)
36.6
40.7
7.6
(3.5)
(1.4)
43.4
Summarised cash flows
Year ended 31 December 2024
Year ended 31 December 2023
Net cash Net cash
Net cash inflow Net cash Net cash inflow/(outflow) Net cash (outflow)/inflow
from outflow from inflow from from outflow from from
operating investing financing Net operating investing financing Net cash
activities activities activities cash inflow activities activities activities outflow
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Lavington Pellet
Limited Partnership
2.2
(0.7)
0.3
1.8
2.2
(1.3)
(2.3)
(1.4)
Smithers Pellet Limited
Partnership
1.4
(1.1)
\u2013
0.3
(2.2)
(0.7)
2.7
(0.2)
Total
3.6
(1.8)
0.3
2 .1
\u2013
(2.0)
0.4
(1.6)
Houston Pellet Limited Partnership (HPLP) HPLP is owned 30% by the Group and 70% by non-related third parties. The Group purchases biomass pellets from HPLP. The Group manages and administers the business affairs of HPLP and charges a management fee. These transactions are at negotiated amounts between the Group and the non-related third parties. The transactions in the period and the balances at the reporting date with the related party are summarised below:
Transactions in the year ended 31 December 2024
Balances as at 31 December 2024
(1)
Drax Revenue Other income Purchases Payable Receivable
Ownership \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Houston Pellet Limited Partnership
HPLP
30%
2.1
0.5
18.7
1.9
2.9
Transactions in the year ended 31 December 2023 Balances as at 31 December 2023 (1) Drax Ownership Revenue \u00a3m Other income \u00a3m Purchases \u00a3m Payable \u00a3m Receivable \u00a3m Houston Pellet Limited Partnership HPLP 30% 1.8 1.2 14.6 1.1 1.2 (1) The amounts payable to and receivable from HPLP are unsecured and non-interest bearing. ", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestsInOtherEntitiesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-598": { "value": "4.5 Non-controlling interests Accounting policy In accordance with IFRS 3, the Group elects on an acquisition-by-acquisition basis whether to measure non-controlling interests (NCIs) at their proportionate share of the identifiable net assets of the acquiree at the acquisition date, or at fair value. The Group treats transactions with NCIs that do not result in a loss of control as transactions with equity owners of the parent company. A change in ownership interest results in an adjustment between the carrying amounts of the controlling interests and NCIs to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to NCIs and the fair value of any consideration paid or received is recognised in equity, within retained profits. At 31 December 2024, the Group has two (2023: two) subsidiary undertakings with NCIs. These subsidiaries were acquired during 2021 as part of the acquisition of Pinnacle. Summarised financial information The summarised financial information disclosed is shown on a 100% basis. It represents the results of each entity below that would be shown in the subsidiaries\u2019 own financial statements prepared in accordance with IFRS, modified for Group-level fair value adjustments at acquisition, and gains or losses on translation of the entities\u2019 financial statements into the Group\u2019s presentational currency, which are recognised through the Consolidated statement of comprehensive income. All amounts are presented before intercompany eliminations.
As at 31 December 2024
As at 31 December 2023
Non-controlling Non-controlling Non-controlling Non-controlling
Principal place interest interests interest interests
of business % \u00a3m % \u00a3m
Lavington Pellet Limited Partnership
North America
25%
5.9
25%
6.5
Smithers Pellet Limited Partnership
North America
30%
3.9
30%
5.5
Total
9.8
12.0
Distributions of \u00a30.4 million (2023: \u00a3nil) were paid to non-controlling interests during the year.
Summarised statement of total comprehensive income
Year ended 31 December 2024
Year ended 31 December 2023
Total Total
Loss comprehensive
Loss
comprehensive
attributable loss
attributable
loss
to the
attributable
to the
attributable
non- Total
to the
non- Total to the
controlling comprehensive
non-controlling
controlling comprehensive non-controlling
Revenue Loss interests loss
interests
Revenue
Loss
interests loss interests
\u00a3m \u00a3m \u00a3m \u00a3m
\u00a3m
\u00a3m
\u00a3m
\u00a3m \u00a3m \u00a3m
Lavington Pellet
Limited Partnership
27.6
(0.1)
\u2013
(1.8)
(0.6)
31.6
(1.7)
(0.4)
(2.5)
(0.5)
Smithers Pellet Limited
Partnership
12.3
(3.6)
(1.1)
(4.5)
(1.3)
14.5
(2.8)
(0.9)
(3.3)
(1.2)
Total
39.9
(3.7)
(1.1)
(6.3)
(1.9)
4 6 .1
(4.5)
(1.3)
(5.8)
(1.7)
Summarised balance sheet
As at 31 December 2024
As at 31 December 2023
Non-current Current Current Non-current Non-current Current Current Non-current
assets assets liabilities liabilities Net assets assets assets liabilities liabilities Net assets
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Lavington Pellet
Limited Partnership
22.0
7.6
(2.8)
( 3.1)
23.7
24.9
4.5
(2.0)
(1.4)
26.0
Smithers Pellet Limited
Partnership
13.9
3.3
(4.3)
\u2013
12.9
15.8
3.1
(1.5)
\u2013
17.4
Total
35.9
10.9
(7.1)
(3.1)
36.6
40.7
7.6
(3.5)
(1.4)
43.4
Summarised cash flows
Year ended 31 December 2024
Year ended 31 December 2023
Net cash Net cash
Net cash inflow Net cash Net cash inflow/(outflow) Net cash (outflow)/inflow
from outflow from inflow from from outflow from from
operating investing financing Net operating investing financing Net cash
activities activities activities cash inflow activities activities activities outflow
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Lavington Pellet
Limited Partnership
2.2
(0.7)
0.3
1.8
2.2
(1.3)
(2.3)
(1.4)
Smithers Pellet Limited
Partnership
1.4
(1.1)
\u2013
0.3
(2.2)
(0.7)
2.7
(0.2)
Total
3.6
(1.8)
0.3
2 .1
\u2013
(2.0)
0.4
(1.6)
", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncontrollingInterestsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-703": { "value": "Accounting policy In accordance with IFRS 3, the Group elects on an acquisition-by-acquisition basis whether to measure non-controlling interests (NCIs) at their proportionate share of the identifiable net assets of the acquiree at the acquisition date, or at fair value. The Group treats transactions with NCIs that do not result in a loss of control as transactions with equity owners of the parent company. A change in ownership interest results in an adjustment between the carrying amounts of the controlling interests and NCIs to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to NCIs and the fair value of any consideration paid or received is recognised in equity, within retained profits. At 31 December 2024, the Group has two (2023: two) subsidiary undertakings with NCIs. These subsidiaries were acquired during 2021 as part of the acquisition of Pinnacle. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTransactionsWithNoncontrollingInterestsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-626": { "value": "5.1 Business combinations Accounting policy Business combinations are transactions or other events in which the Group obtains control of one or more businesses. Business combinations are accounted for using the acquisition method. Acquisitions of businesses are recognised at the point the Group obtains control of the acquiree (the acquisition date). The consideration transferred, the identifiable assets acquired, and the liabilities assumed are measured at their fair value on the acquisition date. Amounts relating to the settlement of pre-existing relationships are recognised in the Consolidated income statement with a corresponding adjustment to the consideration transferred to reflect the fact that part of the consideration is deemed to relate to the settlement of the pre-existing relationship. From the acquisition date, the assets and liabilities of acquired businesses are recognised in the Consolidated balance sheet, and the revenues and profits or losses of the acquired businesses are recognised in the Consolidated income statement. Acquisition-related costs are recognised as an expense in the Consolidated income statement in the period that they are incurred. Goodwill is measured as the excess of the: \u2013 consideration transferred; less \u2013 amount of any non-controlling interest in the acquired entity; and \u2013 acquisition date fair value of any previous equity interest in the acquired entity; over the fair value of the identifiable net assets acquired. Bonuses paid to employees of the acquired entity that are dependent upon the employee remaining in continuous employment post acquisition are treated as post-acquisition remuneration. Acquisition of BMM On 31 August 2023, Drax Energy Solutions Limited, a wholly-owned subsidiary of the Group, acquired 100% of the issued share capital of BMM Energy Solutions Limited (BMM). BMM specialises in the installation and maintenance of electric vehicle charge points and has been the Group\u2019s primary installation partner since 2018. The acquisition strengthened the Group\u2019s end-to-end electric vehicle charging proposition to UK businesses. The acquisition accounting has been finalised in the current financial year following the one-year measurement period from the acquisition date. Total consideration payable was \u00a38.8 million reflecting a \u00a30.2 million adjustment to the consideration recognised in the prior year. This resulted in the final goodwill reducing by \u00a30.2 million to \u00a35.8 million. There were no changes to the initial identifiable net assets of \u00a33.0 million. ", "dimensions": { "concept": "ifrs-full:DisclosureOfBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-685": { "value": "Accounting policy Business combinations are transactions or other events in which the Group obtains control of one or more businesses. Business combinations are accounted for using the acquisition method. Acquisitions of businesses are recognised at the point the Group obtains control of the acquiree (the acquisition date). The consideration transferred, the identifiable assets acquired, and the liabilities assumed are measured at their fair value on the acquisition date. Amounts relating to the settlement of pre-existing relationships are recognised in the Consolidated income statement with a corresponding adjustment to the consideration transferred to reflect the fact that part of the consideration is deemed to relate to the settlement of the pre-existing relationship. From the acquisition date, the assets and liabilities of acquired businesses are recognised in the Consolidated balance sheet, and the revenues and profits or losses of the acquired businesses are recognised in the Consolidated income statement. Acquisition-related costs are recognised as an expense in the Consolidated income statement in the period that they are incurred. Goodwill is measured as the excess of the: \u2013 consideration transferred; less \u2013 amount of any non-controlling interest in the acquired entity; and \u2013 acquisition date fair value of any previous equity interest in the acquired entity; over the fair value of the identifiable net assets acquired. Bonuses paid to employees of the acquired entity that are dependent upon the employee remaining in continuous employment post acquisition are treated as post-acquisition remuneration. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsAndGoodwillExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-717": { "value": "Accounting policy Business combinations are transactions or other events in which the Group obtains control of one or more businesses. Business combinations are accounted for using the acquisition method. Acquisitions of businesses are recognised at the point the Group obtains control of the acquiree (the acquisition date). The consideration transferred, the identifiable assets acquired, and the liabilities assumed are measured at their fair value on the acquisition date. Accounting policy The LTIP, DSP, One Drax Awards, ESPP and SAYE share-based payment schemes are equity-settled. Equity-settled share-based payments are measured at the fair value of the equity instrument at the date of grant. The corresponding expense is recognised in the Consolidated income statement on a straight-line basis over the relevant vesting period, based on an estimate of the number of shares that will ultimately vest as a result of the effect of non-market-based vesting conditions, which is revised at each reporting date. Market-based vesting conditions are factored into the calculation of the fair value of options granted at the date of grant and are not subsequently remeasured. If share options are cancelled due to non-vesting conditions not being met, for example employees withdrawing (by choice) part way through the vesting period or not exercising their options in the exercise period after they vest, the charge for such options is accelerated at the point of cancellation. If share options are forfeited due to employees failing to meet continuing service conditions of a grant, or failing to meet non-market performance conditions, then these options do not attract a charge and any previously recognised charge is reversed. Accounting classifications and fair values IFRS 13 requires categorisation of the Group\u2019s financial instruments in accordance with the following hierarchy in order to explain the basis on which their fair values have been determined: \u2013 Level 1 \u2013 Fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities \u2013 Level 2 \u2013 Fair value measurements are those derived from inputs, other than quoted prices, included within Level 1, that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) \u2013 Level 3 \u2013 Fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs) Categorisation within this fair value measurement hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset or liability. Fair value measurement \u2013 Commodity contracts \u2013 the fair value of open commodity contracts that do not qualify for the own-use exemption, or are otherwise within the scope of IFRS 9, is calculated by reference to forward market prices at the reporting date \u2013 Foreign currency exchange contracts \u2013 the fair value of foreign currency exchange contracts is determined using forward currency exchange market rates at the reporting date \u2013 Interest rate contracts \u2013 the fair value of interest rate swaps is calculated by reference to forward market curves at the reporting date for the relevant interest index. The fair value of cross-currency interest rate swaps is calculated using the relevant forward currency exchange market rates for fixed-to-fixed swaps and by using the relevant forward currency exchange market rates and interest index for floating-to-fixed swaps \u2013 Inflation rate contracts \u2013 the fair value of inflation rate swaps is calculated by reference to forward market curves at the reporting date for the relevant inflation index Given the maturity profile of all these contracts, liquid forward market price curves are available for the duration of the contracts. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-704": { "value": "Accounting policy Business combinations are transactions or other events in which the Group obtains control of one or more businesses. Business combinations are accounted for using the acquisition method. Acquisitions of businesses are recognised at the point the Group obtains control of the acquiree (the acquisition date). The consideration transferred, the identifiable assets acquired, and the liabilities assumed are measured at their fair value on the acquisition date. Amounts relating to the settlement of pre-existing relationships are recognised in the Consolidated income statement with a corresponding adjustment to the consideration transferred to reflect the fact that part of the consideration is deemed to relate to the settlement of the pre-existing relationship. From the acquisition date, the assets and liabilities of acquired businesses are recognised in the Consolidated balance sheet, and the revenues and profits or losses of the acquired businesses are recognised in the Consolidated income statement. Acquisition-related costs are recognised as an expense in the Consolidated income statement in the period that they are incurred. Goodwill is measured as the excess of the: \u2013 consideration transferred; less \u2013 amount of any non-controlling interest in the acquired entity; and \u2013 acquisition date fair value of any previous equity interest in the acquired entity; over the fair value of the identifiable net assets acquired. Bonuses paid to employees of the acquired entity that are dependent upon the employee remaining in continuous employment post acquisition are treated as post-acquisition remuneration. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-648": { "value": "
Acquisition of BMM
On 31 August 2023, Drax Energy Solutions Limited, a wholly-owned subsidiary of the Group, acquired 100% of the issued share
capital of BMM Energy Solutions Limited (BMM). BMM specialises in the installation and maintenance of electric vehicle charge
points and has been the Group\u2019s primary installation partner since 2018. The acquisition strengthened the Group\u2019s end-to-end
electric vehicle charging proposition to UK businesses.
The acquisition accounting has been finalised in the current financial year following the one-year measurement period from the
acquisition date. Total consideration payable was \u00a38.8 million reflecting a \u00a30.2 million adjustment to the consideration recognised
in the prior year. This resulted in the final goodwill reducing by \u00a30.2 million to \u00a35.8 million. There were no changes to the initial
identifiable net assets of \u00a33.0 million.
Changes in the fair value of plan assets are as follows:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Fair value of plan assets at 1 January
220.3
219.6
Interest on plan assets
9.9
10 .1
Remeasurement losses on fair value of plan assets
(18.8)
(7.0)
Employer contributions
2.0
8.9
Benefits paid
(10.0)
(11.3)
Fair value of plan assets at 31 December
203.4
220.3
The fair values of the major categories of plan assets were as follows (all assets are quoted, except for cash and cash equivalents or otherwise stated):
As at 31 December
2024 2023
\u00a3m \u00a3m
Gilts
85.5
110.3
Equities
(1)
31.3
24 .1
Bonds
(2)
22.7
5.0
Property
21.7
15 .1
Infrastructure
9.6
\u2013
Investment funds
\u2013
4.5
Cash and cash equivalents
5.3
10.5
Other assets
(3)
27.3
50.8
Fair value of total plan assets
203.4
220.3
(1) As at 31 December 2024, the Scheme\u2019s target long-term asset strategy was: diversified growth funds (39%), private credit (10%), secure income alternatives (7.5%) and liability driven investing/cash (43.5%). As at 31 December 2023, the Scheme\u2019s target long-term asset strategy was: diversified growth funds (34%), private credit (12%), hedge funds (3%), secure income alternatives (7%) and liability driven investing/cash (44%). (2) Bonds include a mixture of corporate, high yield, emerging market, UK Government and absolute return bonds. (3) Other assets include \u00a316.6 million (2023: \u00a325.8 million) of investments in private credit, a type of private equity vehicle which is not quoted in an active market. The fair value of these investments is derived in accordance with International Private Equity and Venture Capital Valuation (IPEV) Guidelines. All other assets are quoted in an active market, including \u00a34.7 million (2023: \u00a3nil) in respect of downside risk management and \u00a34.0 million (2023: \u00a3nil) relating to asset-backed securities (ABS). The pension plan assets do not include any ordinary shares issued by Drax Group plc or any property occupied by the Group. 7.1 Financial instruments and their fair values The Group holds a variety of derivative and non-derivative financial instruments, including cash and cash equivalents, borrowings, payables and receivables arising from operations. Accounting classifications and fair values IFRS 13 requires categorisation of the Group\u2019s financial instruments in accordance with the following hierarchy in order to explain the basis on which their fair values have been determined: \u2013 Level 1 \u2013 Fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities \u2013 Level 2 \u2013 Fair value measurements are those derived from inputs, other than quoted prices, included within Level 1, that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) \u2013 Level 3 \u2013 Fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs) Categorisation within this fair value measurement hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset or liability. The table below shows the carrying amounts and fair values of financial assets and liabilities, including their levels in the fair value hierarchy as defined by IFRS 13. It does not include fair value information for lease liabilities, or for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value. Cash and cash equivalents (note 4.1), trade and other receivables (note 3.5), and trade and other payables (note 3.7) generally have a short time to maturity. For this reason, their carrying values, on the historical cost basis, are approximate to their fair values. The Group\u2019s borrowings relate principally to the publicly traded high-yield loan notes and amounts drawn against term loans (note 4.2). These financial liabilities are measured at amortised cost.
Carrying amount
Fair value
Financial Financial
Fair value- Mandatorily assets at liabilities at
At 31 December 2024 hedging at FV TPL- amortised amortised
\u00a3m instruments
others
FVOCI
cost
cost
Total
Level 1
Level 2
Level 3
Tot al
Financial assets measured at fair value
Commodity contracts
101.9
51.6
\u2013
\u2013
\u2013
153.5
\u2013
153.5
\u2013
153.5
Foreign currency
exchange contracts
21.0
75.7
\u2013
\u2013
\u2013
96.7
\u2013
96.7
\u2013
96.7
Interest rate and cross-
currency contracts
7.1
\u2013
\u2013
\u2013
\u2013
7.1
\u2013
7.1
\u2013
7.1
Contingent consideration
\u2013
9.4
\u2013
\u2013
\u2013
9.4
\u2013
\u2013
9.4
9.4
Trade and other
receivables
\u2013
0.3
38.9
\u2013
\u2013
39.2
\u2013
39.2
\u2013
39.2
Cash and cash equivalents
\u2013
103.1
\u2013
\u2013
\u2013
103.1
\u2013
103.1
\u2013
103.1
Financial assets not measured at fair value
Trade and other
receivables
\u2013
\u2013
\u2013
353.4
\u2013
353.4
Cash and cash equivalents
\u2013
\u2013
\u2013
252.9
\u2013
252.9
Financial liabilities measured at fair value
Commodity contracts
(50.9)
(30.9)
\u2013
\u2013
\u2013
(81.8)
\u2013
(81.8)
\u2013
(81.8)
Foreign currency
exchange contracts
(24.6)
(12.3)
\u2013
\u2013
\u2013
(36.9)
\u2013
(36.9)
\u2013
(36.9)
Interest rate and cross-
currency contracts
(30.6)
\u2013
\u2013
\u2013
\u2013
(30.6)
\u2013
(30.6)
\u2013
(30.6)
Inflation rate contracts
(184.0)
\u2013
\u2013
\u2013
\u2013
(184.0)
\u2013
(184.0)
\u2013
(184.0)
Financial liabilities not measured at fair value
Secured bank loans
\u2013
\u2013
\u2013
\u2013
(768.2)
(768.2)
\u2013
(771.2)
\u2013
(771.2)
Secured loan notes
\u2013
\u2013
\u2013
\u2013
(408.5)
(408.5)
(422.3)
\u2013
\u2013
(422.3)
Lease liabilities
\u2013
\u2013
\u2013
\u2013
(116.5)
(116.5)
Trade and other payables
\u2013
\u2013
\u2013
\u2013
(793.0)
(793.0)
Carrying amount
Fair value
Financial Financial
Fair value- Mandatorily assets at liabilities at
At 31 December 2023 hedging a t F V T P L- amortised amortised
\u00a3m instruments
others
FVOCI
cost
cost
Total
Level 1
Level 2
Level 3
Total
Financial assets measured at fair value
Commodity contracts
402.7
125.4
\u2013
\u2013
\u2013
528 .1
\u2013
528.1
\u2013
528.1
Foreign currency
exchange contracts
37.7
70.8
\u2013
\u2013
\u2013
108.5
\u2013
108.5
\u2013
108.5
Interest rate and cross-
currency contracts
25.4
\u2013
\u2013
\u2013
\u2013
25.4
\u2013
25.4
\u2013
25.4
Contingent consideration
\u2013
9.2
\u2013
\u2013
\u2013
9.2
\u2013
\u2013
9.2
9.2
Trade and other
receivables
\u2013
\u2013
242.2
\u2013
\u2013
242.2
\u2013
242.2
\u2013
242.2
Cash and cash equivalents
\u2013
171.1
\u2013
\u2013
\u2013
171.1
\u2013
171.1
\u2013
171.1
Financial assets not measured at fair value
Trade and other
receivables
\u2013
\u2013
\u2013
644.2
\u2013
644.2
Cash and cash equivalents
\u2013
\u2013
\u2013
208.4
\u2013
208.4
Financial liabilities measured at fair value
Commodity contracts
(58.8)
(134.4)
\u2013
\u2013
\u2013
(193.2)
\u2013
(193.2)
\u2013
(193.2)
Foreign currency
exchange contracts
(23.7)
(35.8)
\u2013
\u2013
\u2013
(59.5)
\u2013
(59.5)
\u2013
(59.5)
Interest rate and cross-
currency contracts
( 35.1)
\u2013
\u2013
\u2013
\u2013
( 35.1)
\u2013
( 35.1)
\u2013
( 35.1)
Inflation rate contracts
(250.4)
\u2013
\u2013
\u2013
\u2013
(250.4)
\u2013
(250.4)
\u2013
(250.4)
Financial liabilities not measured at fair value
Secured bank loans
\u2013
\u2013
\u2013
\u2013
(698 .1)
(6 98.1)
\u2013
(704.8)
\u2013
(704.8)
Unsecured bank loans
\u2013
\u2013
\u2013
\u2013
(120.0)
(120.0)
\u2013
(120.0)
\u2013
(120.0)
Secured loan notes
\u2013
\u2013
\u2013
\u2013
(607.2)
(6 07. 2)
(596.4)
\u2013
\u2013
(596.4)
Lease liabilities
\u2013
\u2013
\u2013
\u2013
(135.8)
(135.8)
Trade and other payables
\u2013
\u2013
\u2013
\u2013
(919.2)
(919.2)
The derivative financial instruments used by the Group and not subject to the own-use exemption have been categorised as follows: \u2013 Commodity contracts \u2013 forward contracts for the sale or purchase of a commodity which may or may not be settled through physical delivery of the commodity, as well as weather-related contracts \u2013 Foreign currency exchange contracts \u2013 currency-related contracts including forwards, swaps, vanilla options and structured option products \u2013 Interest rate and cross-currency contracts \u2013 contracts which swap one interest rate for another in a single currency, including floating-to-fixed interest rate swaps, and contracts which swap interest and principal cash flows in one currency for another currency, including fixed-to-fixed and floating-to-fixed cross-currency interest rate swaps \u2013 Inflation rate contracts \u2013 swap contracts, such as floating-to-fixed, which are linked to an inflation index such as the UK Retail Price Index (RPI) or the UK Consumer Price Index (CPI) Fair value measurement \u2013 Commodity contracts \u2013 the fair value of open commodity contracts that do not qualify for the own-use exemption, or are otherwise within the scope of IFRS 9, is calculated by reference to forward market prices at the reporting date \u2013 Foreign currency exchange contracts \u2013 the fair value of foreign currency exchange contracts is determined using forward currency exchange market rates at the reporting date \u2013 Interest rate contracts \u2013 the fair value of interest rate swaps is calculated by reference to forward market curves at the reporting date for the relevant interest index. The fair value of cross-currency interest rate swaps is calculated using the relevant forward currency exchange market rates for fixed-to-fixed swaps and by using the relevant forward currency exchange market rates and interest index for floating-to-fixed swaps \u2013 Inflation rate contracts \u2013 the fair value of inflation rate swaps is calculated by reference to forward market curves at the reporting date for the relevant inflation index Given the maturity profile of all these contracts, liquid forward market price curves are available for the duration of the contracts. The fair values of all derivative financial instruments are discounted to reflect both the time value of money and credit risk inherent within the instrument. The assessment of fair value is derived in part by reference to a market price or rate for the instrument in question. The Group bases its assessment of market prices or rates upon forward curves that are largely derived from readily obtainable prices or rates published from third-party sources. However, any forward curve is based, at least in part, upon assumptions about future transactions and market movements. Due to the nature of the derivative financial instruments the Group holds, minor differences in the inputs, assumptions or methodologies used can result in appropriate, but different, estimates of fair values to those recognised by the Group. There may be choices to be made regarding which methodology or data source to use in the calculation of fair value for each derivative contract. Assumptions may also need to be made where forward curves are not an exact match for the Group\u2019s derivative contracts (e.g. due to quoted product types, maturity dates or time periods not exactly matching the terms of the Group\u2019s derivative contracts), or where different forward curves are available. Where such instruments extend beyond the liquid portion of the forward curve, the level of estimation increases as the number of observable transactions decreases. However, given the maturity profile of the Group\u2019s contracts, liquid forward market price curves are usually available for the duration of the contracts. The fair value of derivatives is not, however, considered a key source of estimation uncertainty as reasonably possible changes in assumptions are not expected to result in a materially different value within the next financial year. Also, whilst there is a significant risk that the carrying amount of derivative assets and liabilities will change materially within the next financial year, as a result of movements in market prices or rates, the Group is not expecting to change its methodology or input sources in the next financial year. Any such changes are not as a result of assumptions or other sources of estimation uncertainty as at 31 December 2024 and therefore do not meet the definition of a key source of estimation uncertainty as defined by IAS 1. Sensitivities are provided in note 7.2 for the impact of changes in inputs on the fair value. The Group has reviewed all significant contracts for the presence of embedded derivatives. The EUR loan notes and the UK infrastructure private placement facility (2020) (see note 4.2) all contain early repayment options that meet the definition of embedded derivatives. However, in all cases, these do not require separate valuations as they are deemed to be closely related to the host contract. The fair value of commodity contracts, foreign currency exchange contracts, interest rate swaps, cross-currency interest rate swaps and inflation swaps are largely determined by comparison between observable, liquid, forward market prices or rates, and the trade price or rate; therefore, these contracts are categorised as Level 2. Credit risk is not a significant input to the fair value calculations. There have been no transfers during the current or prior year between Level 1, 2 or 3 category inputs. The Group is responsible for determining the policies and approach to valuations required for financial reporting purposes, including Level 3 fair values. No external specialists have been utilised for the valuation of the current or prior year derivative financial instruments. Valuation policies, approaches and the results are discussed with and approved by the CFO and the Audit Committee as required, based on the size, complexity and judgement required with each valuation. Level 3 fair values The contingent consideration receivable by the Group relates to the sale of the CCGT generation portfolio in 2021. The gross nominal value of \u00a329.0 million is contingent on certain triggers in respect of the option to develop the Damhead Creek 2 land disposed of as part of the sale of these assets. The fair value measurement of the contingent consideration has been categorised as Level 3 based on the inputs to the valuation techniques used.
Significant unobservable inputs and range of inputs Relationship between significant unobservable
Valuation approach (probability weighted) input and fair value measurement
Contingent The fair value of the contingent Forecasted future Capacity Market The fair value measurement would
consideration consideration is determined using a clearing prices: increase/(decrease) with:
discounted cash flow model. The \u00a32.54/kW \u2013 \u00a3101.00/kW \u2013 Higher/(lower) forecasted Capacity
valuation approach is based on a (Average \u2013 \u00a348.07/kW) Market clearing prices causing a
calculation of the probability of the higher/(lower) probability of the
option to develop the Damhead (2023: \u00a32.47/kW \u2013 \u00a377.20/kW) option over the Damhead Creek 2
Creek 2 land being exercised. This (2023: (Average \u2013 \u00a342.66/kW)) land being exercised
probability is calculated using a Estimated bid price at which \u2013 Lower/(higher) estimated bid price
range of forecasts for future Damhead Creek 2 is to be entered required for the Damhead Creek 2
Capacity Market auctions and the into the Capacity Market auction: development to proceed causing a
assumption that the option to higher/(lower) probability of the
develop the land would be exercised \u00a371.75/kW option over the Damhead Creek 2
if the Capacity Market price were to (2 02 3: \u00a367. 50 /kW ) land being exercised
clear above a certain level, providing
sufficient certainty on the
economics of the development.
During the year, inputs to the fair value calculation have been updated to reflect updates in both forecasted future Capacity Market clearing prices and the estimated bid price at which Damhead Creek 2 would require to provide sufficient certainty on the economics of the development. The estimated bid price of \u00a371.75/kW (2023: \u00a367.50/kW) has increased with inflation during the year. The net impact of updating the estimated bid price, recent Capacity Market clearing price forecasts, and the impact of unwinding the discount has resulted in a \u00a30.2 million increase to the fair value of the contingent consideration (2023: \u00a318.2 million decrease). During the prior year, due to significantly increased expectations relating to the cost to develop the project, the estimated bid price increased from \u00a340.00/kW to \u00a367.50/kW. This, alongside the impact of updating the calculation with forecasts of future Capacity Market clearing prices, resulted in an \u00a318.2 million decrease to the fair value of the contingent consideration. As the change in fair value reflected the reversal of a previous credit recorded within exceptional items, and the decrease in fair value was above the Group\u2019s threshold to be considered exceptional, the \u00a318.2 million decrease was excluded from Adjusted results and presented as an exceptional item included within other gains or losses in the Consolidated income statement (see note 2.7). The current year increase has not been excluded from Adjusted results as it does not meet the threshold for being considered exceptional and is included within other gains and losses in the Consolidated income statement. A reconciliation of the contingent consideration is detailed below:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Balance at 1 January
9.2
27.4
Net change in fair value
0.2
(18.2)
Balance at 31 December
9.4
9.2
There are no reasonably possible changes to unobservable inputs to the fair value calculation that would have a material impact on the fair value measurement of the contingent consideration. Accounting for derivatives Derivatives (subject to certain exemptions described below) must be measured at fair value, which generally represents the difference between the price the Group has secured in the contract, and the price the Group could achieve in the market at the reporting date. Changes in fair value are recognised either within the Consolidated income statement or the hedge reserve and cost of hedging reserve within the Consolidated statement of changes in equity, dependent upon whether the contract in question qualifies as an effective hedge under IFRS 9 (see note 7.2). The own-use exemption applies to certain contracts for physical commodities entered into and held for the Group\u2019s own purchase, sale or usage requirements. The Group\u2019s own-use contracts, such as certain power purchase agreements (PPAs) and the Group\u2019s energy supply contracts, are excluded from fair value mark-to-market accounting. Contracts for non-financial assets which do not qualify for the own-use exemption (principally wholesale power, gas, financial oil and carbon emissions allowances) and financial contracts (principally foreign exchange, interest, inflation and freight) are accounted for as derivatives in accordance with IFRS 9 and are recorded in the Consolidated balance sheet at fair value. Changes in fair value are reflected through the hedge reserve (see note 7.3) to the extent that the contracts are designated as effective hedges in accordance with IFRS 9, or the Consolidated income statement where the hedge accounting requirements are not met, or the hedges are ineffective. Changes in fair value of the derivatives that do not meet the hedge accounting requirements are excluded from Adjusted results in the Consolidated income statement until the contract matures, as management believes this more clearly reflects the underlying performance of the Group as it ensures these derivatives are recognised in the period that they are intended to hedge at their contracted prices (see note 2.7 for further details). The Group\u2019s biomass risk management policy permits some flexibility in trading activity to optimise the overall portfolio position and potentially release value in certain, limited circumstances. The nature of these contracts means they cannot be readily net settled in cash or other financial instruments and, as a result, they remain outside of the scope of IFRS 9 and are excluded from fair value mark-to-market accounting. See the critical accounting judgements section on page 163 for further details on this. Derivative balances are classified in the Consolidated balance sheet as current or non-current based on the final maturity date of the contracts. The derivative financial instruments recognised in the Consolidated balance sheet at the reporting date are:
As at 31 December
2024 2023
\u00a3m \u00a3m
Non-current derivative financial instrument assets
81.7
293.6
Current derivative financial instrument assets
175.6
368.4
Total derivative financial instrument assets
257.3
662.0
Non-current derivative financial instrument liabilities
(262.2)
(306.6)
Current derivative financial instrument liabilities
(71.1)
(231.6)
Total derivative financial instrument liabilities
(333.3)
(538.2)
Total net derivative financial instruments
(76.0)
123.8
The gains and losses recognised in the period relating to derivative financial instruments mandatorily measured at fair value through profit or loss (FVTPL) are detailed below. The Group had no financial assets or financial liabilities voluntarily designated at FVTPL. In addition to the amounts disclosed below, gains and losses relating to derivative financial instruments qualifying for hedge accounting are disclosed in notes 7.2 to 7.4.
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Gains on derivative financial instruments not qualifying for hedge accounting \u2013 recognised in revenue
11.9
70.7
Gains/(losses) on derivative financial instruments not qualifying for hedge accounting \u2013 recognised in
cost of sales
45.3
(127.0)
Gains on derivative financial instruments not qualifying for hedge accounting \u2013 recognised in foreign
exchange (losses)/gains
\u2013
4.9
Losses on derivative financial instruments not qualifying for hedge accounting \u2013 recognised in interest
payable and similar charges
(0.6)
(0.3)
Total gains/(losses) on derivative financial instruments not qualifying for hedge accounting
56.6
(51.7)
", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-659": { "value": "5.2 Goodwill and intangible assets Intangible assets are not physical in nature but are identifiable from other assets. Goodwill arises on the acquisition of a business when the consideration paid exceeds the fair value of the identifiable net assets acquired. Intangible assets other than goodwill can be acquired in business combinations, acquired separately or internally generated. Accounting policy Goodwill is measured as the excess of the: \u2013 consideration transferred; less \u2013 amount of any non-controlling interest in the acquired entity; and \u2013 acquisition date fair value of any previous equity interest in the acquired entity; over the fair value of the identifiable net assets acquired. Goodwill arising on the acquisition of a foreign operation is treated as an asset of that operation and therefore denominated in the functional currency of the operation to which it is allocated. Goodwill denominated in a foreign currency is subsequently translated at the rate prevailing at each reporting date. Foreign exchange differences arising on retranslation are recognised in the Consolidated statement of comprehensive income. Goodwill is allocated to the cash-generating units (CGUs), or groups of CGUs, that are expected to benefit from the synergies of the acquisition. If one or more CGUs, or group of CGUs, to which goodwill is allocated are restructured, then the goodwill is reallocated to the CGUs impacted by the restructure. Goodwill is considered to have an indefinite useful life, is not amortised, and is assessed annually for impairment (see note 2.4 for further details). Any impairment charge is recognised against the carrying amount of goodwill in accumulated amortisation and impairment. Intangible assets acquired in business combinations are measured at fair value on the acquisition date. Other intangible assets are measured initially at cost. Cost comprises the purchase price (net of any discount or rebate) and any directly attributable costs of preparing the asset for use in the manner intended by management. The carrying amounts of intangible assets are assessed for indicators of impairment at each reporting date. The Group\u2019s policy is to recognise an impairment charge through accumulated amortisation and impairment . Intangible assets are amortised over their anticipated useful economic lives (UELs), which are reviewed at least at each financial year end. When reviewing UELs the assessment takes into account regulatory changes, climate change, and commercial and technological changes. Any changes to estimated UELs are applied prospectively. During the prior year this review resulted in a change to the UELs of the Opus Energy customer-related asset and brand asset to December 2024 to reflect the estimated period over which the value from these assets was expected to be realised. During the current year these assets were fully impaired as part of the Opus Energy transaction. See note 2.7 for further details.
Average UEL
Method of amortisation (years)
At 31 December 2024
Customer-related assets:
Pinnacle
Straight line
6
BMM
Straight line
8
Other
Computer software and licences:
Straight line
9
Internally generated
Straight line
3
Acquired separately
Straight line
8
Other intangibles
Straight line
1
Carrying amounts are assessed for indicators of impairment at each reporting date. The customer-related assets are attributable to the Pellet Operations CGU following the acquisition of Pinnacle and the Drax Energy Solutions CGU following the acquisition of BMM. During the current year the Opus Energy CGU customer-related asset was disposed of and the brand asset impaired to \u00a3nil net book value (see below for further details). Details of the impairment assessments relating to these CGUs are included in note 2.4.
Software and Software and
Customer- licences licences
related \u2013 internally \u2013 acquired Other
assets Brand
generated
(1)
separately
(1)
intangibles Goodwill Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cost and carrying amount:
At 1 January 2023
(2)
25 7.6
11.3
130.2
18.5
2.0
424.2
843.8
Additions at cost
\u2013
\u2013
7.7
2.2
\u2013
\u2013
9.9
Acquired in business combinations
5.0
\u2013
\u2013
\u2013
\u2013
6.0
11.0
Transfers from property, plant and equipment
(see note 3.1)
\u2013
\u2013
0.6
\u2013
\u2013
\u2013
0.6
Effect of changes in foreign exchange rates
(1.5)
\u2013
\u2013
(0.2)
\u2013
1.0
(0.7)
At 1 January 2024
(2)
261.1
11.3
138.5
20.5
2.0
431.2
864.6
Additions at cost
\u2013
\u2013
6.9
\u2013
\u2013
\u2013
6.9
Adjustment related to business combinations
(see note 5.1)
\u2013
\u2013
\u2013
\u2013
\u2013
(0.2)
(0.2)
Disposals
(211.1)
\u2013
\u2013
\u2013
\u2013
\u2013
(211.1)
Transfers between categories
\u2013
\u2013
0.7
(0.9)
0.2
\u2013
\u2013
Transfers from property, plant and equipment
(see note 3.1)
\u2013
\u2013
2.9
0.3
\u2013
\u2013
3.2
Effect of changes in foreign exchange rates
(2.8)
\u2013
\u2013
0 .1
(0 .1)
(1.4)
(4.2)
At 31 December 2024
47. 2
11.3
149.0
20.0
2 .1
429.6
659.2
Accumulated amortisation and impairment:
At 1 January 2023
(2)
170.6
6.8
86.5
11.7
1.7
\u2013
27 7.3
Charge for the year
17. 2
1.1
10.2
0.8
0 .1
\u2013
29.4
Impairment
31.5
3.0
11.1
\u2013
\u2013
14.5
60.1
Effect of changes in foreign exchange rates
(0.3)
\u2013
\u2013
(0 .1)
\u2013
\u2013
(0.4)
At 1 January 2024
(2)
219.0
10.9
107. 8
12.4
1.8
14.5
366.4
Charge for the year
6.7
0.2
8.7
1.4
\u2013
\u2013
17. 0
Disposals
(209.2)
\u2013
\u2013
\u2013
\u2013
\u2013
(209.2)
Impairment
\u2013
0.2
2.4
\u2013
\u2013
\u2013
2.6
Transfers between categories
\u2013
\u2013
0.3
(0.3)
\u2013
\u2013
\u2013
Effect of changes in foreign exchange rates
(0.8)
\u2013
\u2013
\u2013
\u2013
\u2013
(0.8)
At 31 December 2024
15.7
11.3
119.2
13.5
1.8
14.5
176.0
Net book value:
At 31 December 2023
42.1
0.4
30.7
8 .1
0.2
416.7
498.2
At 31 December 2024
31.5
\u2013
29.8
6.5
0.3
415.1
483.2
(1) Comparative amounts have been re-presented to separate software and licences between those internally generated and those acquired separately. (2) Impairments previously presented through cost on non-amortising assets have been re-presented through accumulated amortisation and impairment. The Group has incurred research and development expenditure of \u00a326.2 million (2023: \u00a322.8 million), which is included within operating and administrative expenses in the Consolidated income statement. Customer-related assets Customer-related assets reflects the value of customer contracts acquired on the acquisition of Pinnacle in April 2021, the Pacific BioEnergy sales contracts purchased by the Pellet Operations CGU in December 2021, and the customer-related asset acquired on acquisition of BMM in August 2023. The Opus Energy customer-related asset was disposed of as part of the sale of non-core small and medium-sized enterprise (SME) meter points to EDF (see note 2.7 for further details). The Pinnacle customer-related asset recognised on the acquisition of Pinnacle relates to the fair value of contracted cash flows from Pinnacle\u2019s existing customer base. The Pinnacle customer-related asset is being amortised on a straight-line basis to reflect that the majority of the value from the contracted cash flows is expected to be realised evenly over the contract terms, as most contracts have similar end dates and contracts with earlier end dates are generally offset by increasing volumes on longer dated contracts. At 31 December 2024, the Pinnacle asset had a carrying amount of \u00a321.7 million (2023: \u00a326.8 million) and a remaining UEL of approximately six years (2023: seven years). On acquisition of BMM in August 2023 a customer-related asset with a fair value of \u00a35.0 million was recognised reflecting the estimated future cash flows from existing customer relationships that were not yet contracted. The fair value was estimated based upon a multi-period excess earnings method. At 31 December 2024, the BMM customer-related asset had a carrying amount of \u00a34.3 million (2023: \u00a34.8 million) and a remaining UEL of eight years (2023: nine years). The other customer-related asset relates to pellet sales contracts acquired from Pacific BioEnergy on 31 December 2021. At 31 December 2024 this asset had a carrying amount of \u00a35.5 million (2023: \u00a36.7 million) and a remaining UEL of nine years (2023: 10 years). Opus Energy brand The Opus Energy brand was acquired as part of the Opus Energy acquisition in February 2017. During the year the Opus Energy brand was fully impaired due to the sale of the majority of the non-core SME energy supply customer meter points to EDF Energy Customers Limited and the commencement of a restructuring of the Opus Energy business to reflect its reduced customer base and the Group\u2019s focus on core industrial and commercial (I&C) customers and renewables services. See note 2.7 for further details of this transaction. Computer software and licences Additions in the year include those in the ordinary course of business, which principally reflect ongoing investment in business systems to support the Energy Solutions segment. Software assets are amortised on a straight-line basis over their estimated UELs ranging from 2\u201310 years. As at 31 December 2024, computer software assets under the course of construction amounted to \u00a312.5 million (2023: \u00a319.7 million). A \u00a32.4 million impairment in respect of software specific to the Opus Energy business has been recognised in the current year as it is no longer considered to have future value following the Opus Energy transaction and the related restructuring of the Opus Energy business. See note 2.7 for further details. See note 2.4 for a summary of impairment charges recognised on non-current assets during the year. Goodwill The table below shows the carrying amount of goodwill by CGU:
Drax Energy Pellet
Solutions Lanark Galloway Cruachan Operations Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Goodwill
At 1 January 2024
161.4
11.3
4 0 .1
26.9
177.0
416.7
Acquisition adjustment (see note 5.1)
(0.2)
\u2013
\u2013
\u2013
\u2013
(0.2)
Effect of changes in foreign exchange rates
\u2013
\u2013
\u2013
\u2013
(1.4)
(1.4)
At 31 December 2024
161.2
11.3
4 0.1
26.9
175.6
415.1
", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-686": { "value": "Accounting policy Goodwill is measured as the excess of the: \u2013 consideration transferred; less \u2013 amount of any non-controlling interest in the acquired entity; and \u2013 acquisition date fair value of any previous equity interest in the acquired entity; over the fair value of the identifiable net assets acquired. Goodwill arising on the acquisition of a foreign operation is treated as an asset of that operation and therefore denominated in the functional currency of the operation to which it is allocated. Goodwill denominated in a foreign currency is subsequently translated at the rate prevailing at each reporting date. Foreign exchange differences arising on retranslation are recognised in the Consolidated statement of comprehensive income. Goodwill is allocated to the cash-generating units (CGUs), or groups of CGUs, that are expected to benefit from the synergies of the acquisition. If one or more CGUs, or group of CGUs, to which goodwill is allocated are restructured, then the goodwill is reallocated to the CGUs impacted by the restructure. Goodwill is considered to have an indefinite useful life, is not amortised, and is assessed annually for impairment (see note 2.4 for further details). Any impairment charge is recognised against the carrying amount of goodwill in accumulated amortisation and impairment. Intangible assets acquired in business combinations are measured at fair value on the acquisition date. Other intangible assets are measured initially at cost. Cost comprises the purchase price (net of any discount or rebate) and any directly attributable costs of preparing the asset for use in the manner intended by management. The carrying amounts of intangible assets are assessed for indicators of impairment at each reporting date. The Group\u2019s policy is to recognise an impairment charge through accumulated amortisation and impairment . Intangible assets are amortised over their anticipated useful economic lives (UELs), which are reviewed at least at each financial year end. When reviewing UELs the assessment takes into account regulatory changes, climate change, and commercial and technological changes. Any changes to estimated UELs are applied prospectively. During the prior year this review resulted in a change to the UELs of the Opus Energy customer-related asset and brand asset to December 2024 to reflect the estimated period over which the value from these assets was expected to be realised. During the current year these assets were fully impaired as part of the Opus Energy transaction. See note 2.7 for further details. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsOtherThanGoodwillExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-705": { "value": "Accounting policy Goodwill is measured as the excess of the: \u2013 consideration transferred; less \u2013 amount of any non-controlling interest in the acquired entity; and \u2013 acquisition date fair value of any previous equity interest in the acquired entity; over the fair value of the identifiable net assets acquired. Goodwill arising on the acquisition of a foreign operation is treated as an asset of that operation and therefore denominated in the functional currency of the operation to which it is allocated. Goodwill denominated in a foreign currency is subsequently translated at the rate prevailing at each reporting date. Foreign exchange differences arising on retranslation are recognised in the Consolidated statement of comprehensive income. Goodwill is allocated to the cash-generating units (CGUs), or groups of CGUs, that are expected to benefit from the synergies of the acquisition. If one or more CGUs, or group of CGUs, to which goodwill is allocated are restructured, then the goodwill is reallocated to the CGUs impacted by the restructure. Goodwill is considered to have an indefinite useful life, is not amortised, and is assessed annually for impairment (see note 2.4 for further details). Any impairment charge is recognised against the carrying amount of goodwill in accumulated amortisation and impairment. Intangible assets acquired in business combinations are measured at fair value on the acquisition date. Other intangible assets are measured initially at cost. Cost comprises the purchase price (net of any discount or rebate) and any directly attributable costs of preparing the asset for use in the manner intended by management. The carrying amounts of intangible assets are assessed for indicators of impairment at each reporting date. The Group\u2019s policy is to recognise an impairment charge through accumulated amortisation and impairment . Intangible assets are amortised over their anticipated useful economic lives (UELs), which are reviewed at least at each financial year end. When reviewing UELs the assessment takes into account regulatory changes, climate change, and commercial and technological changes. Any changes to estimated UELs are applied prospectively. During the prior year this review resulted in a change to the UELs of the Opus Energy customer-related asset and brand asset to December 2024 to reflect the estimated period over which the value from these assets was expected to be realised. During the current year these assets were fully impaired as part of the Opus Energy transaction. See note 2.7 for further details. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-723": { "value": "Goodwill is measured as the excess of the: \u2013 consideration transferred; less \u2013 amount of any non-controlling interest in the acquired entity; and \u2013 acquisition date fair value of any previous equity interest in the acquired entity; over the fair value of the identifiable net assets acquired. Goodwill arising on the acquisition of a foreign operation is treated as an asset of that operation and therefore denominated in the functional currency of the operation to which it is allocated. Goodwill denominated in a foreign currency is subsequently translated at the rate prevailing at each reporting date. Foreign exchange differences arising on retranslation are recognised in the Consolidated statement of comprehensive income. Goodwill is allocated to the cash-generating units (CGUs), or groups of CGUs, that are expected to benefit from the synergies of the acquisition. If one or more CGUs, or group of CGUs, to which goodwill is allocated are restructured, then the goodwill is reallocated to the CGUs impacted by the restructure. Goodwill is considered to have an indefinite useful life, is not amortised, and is assessed annually for impairment (see note 2.4 for further details). Any impairment charge is recognised against the carrying amount of goodwill in accumulated amortisation and impairment. Intangible assets acquired in business combinations are measured at fair value on the acquisition date. Other intangible assets are measured initially at cost. Cost comprises the purchase price (net of any discount or rebate) and any directly attributable costs of preparing the asset for use in the manner intended by management. The carrying amounts of intangible assets are assessed for indicators of impairment at each reporting date. The Group\u2019s policy is to recognise an impairment charge through accumulated amortisation and impairment ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-672": { "value": "The Group has incurred research and development expenditure of \u00a326.2 million (2023: \u00a322.8 million), which is included within operating and administrative expenses in the Consolidated income statement. ", "dimensions": { "concept": "ifrs-full:DisclosureOfResearchAndDevelopmentExpenseExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-680": { "value": "5.3 Provisions The Group makes provisions for reinstatement to cover the estimated costs of decommissioning and demolishing or remediating the sites of its Biomass Generation, Flexible Generation and Pellet Production assets at the end of their UELs. The Group has recognised a restructuring provision in respect of the coal closure at Drax Power Station and the Opus Energy restructuring. An onerous contract provision has also been recognised as a result of the Opus Energy restructuring. Accounting policy Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount required to settle the obligation. Specifically, a provision is made for the estimated decommissioning costs at the end of the UELs of the Group\u2019s generation assets and pellet plants, when a legal or constructive obligation arises, on a discounted basis. The amount provided is calculated on a site-by-site basis and represents the present value of the expected future costs. An amount equivalent to the discounted decommissioning provision is capitalised within property, plant and equipment (PPE), with the capitalisation shown in the movement in reinstatement asset line in note 3.1. For leased assets, an amount equivalent to the discounted provision is capitalised within right-of-use assets (ROU), with the capitalisation shown in the movement in reinstatement asset line in note 3.2. The amount capitalised is depreciated over the UELs of the related assets. The unwinding of the discount is included in interest payable and similar charges in the Consolidated income statement. The Group recognises a restructuring provision when it has developed a detailed formal plan for the restructuring and has raised a valid expectation that it will carry out the restructuring either by starting to implement the plan or announcing its main features to those affected by it. The restructuring provision includes only the direct expenditures arising from the restructuring programme. These are costs that would have been avoided if the restructuring programme did not go ahead. Any costs to be incurred relating to the ongoing activities of the Group are excluded from the provision. A provision for termination benefits is recognised at the earlier of when the Group can no longer withdraw the offer of the termination benefit and when the Group recognises any related restructuring costs. Provisions are recognised for onerous contracts as the amount of the unavoidable costs of meeting the obligations of the contract exceed the economic benefit expected to flow from the contract. The unavoidable costs are the lower of fulfilling the contract or paying any penalties to terminate the contract early.
Decommissioning Restructuring Onerous contract Other
provisions provisions provision provisions Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Carrying amount:
At 1 January 2024
68.4
9.9
\u2013
0.5
78.8
Additional provision charged to PPE (see note 3.1)
0.7
\u2013
\u2013
\u2013
0.7
Additional provision charged to ROU (see note 3.2)
2.3
\u2013
\u2013
\u2013
2.3
Transfer between provision categories
0.5
\u2013
\u2013
(0.5)
\u2013
Charged/(credited) to profit or loss:
Additional provision recognised
\u2013
7.7
15.3
\u2013
23.0
Utilised
(2.6)
(4.9)
(2.2)
\u2013
(9.7)
Released
\u2013
(1.9)
\u2013
\u2013
(1.9)
Unwinding of discount (see note 2.5)
2.7
\u2013
\u2013
\u2013
2.7
At 31 December 2024
72.0
10.8
13.1
\u2013
95.9
Current
6.5
4.9
8.8
\u2013
20.2
Non-current
65.5
5.9
4.3
\u2013
75.7
Decommissioning provisions Decommissioning provisions are made in respect of Drax Power Station (\u00a358.0 million), the OCGTs (\u00a37.6 million), certain pellet plants (\u00a35.9 million) and rail cars (\u00a30.5 million). Decommissioning work relating to coal operations at Drax Power Station began in 2024 and is expected to be completed by the end of 2026. The remainder of the decommissioning work will begin at the end of station life, which is currently estimated to be 2039. The decommissioning provision relating to certain pellet plants is based on the assumption that the decommissioning and reinstatement will take place at the end of the expected UEL of each site, which are estimated to be between 2037 and 2044. A legal obligation exists to decommission and demolish the OCGT sites at the end of station life, which is assumed to be 2049. Of the \u00a30.7 million movement in the decommissioning provision charged to PPE, \u00a38.5 million relates to additions for the three OCGT sites, offset by a \u00a37.8 million adjustment for changes in assumptions. The provisions have been estimated using existing technology at current prices based upon specialist, third-party advice, updated on a triennial basis as a minimum, but more regularly when deemed appropriate due to changes that might significantly impact the estimated cost, such as changes in prices, or changes in expected decommissioning plans. The most recent valuation for the Drax Power Station and pellet plant decommissioning provisions took place in December 2023. The exercise to assess the decommissioning provision relating to the three OCGT sites was performed July 2024. An inflation curve is used to inflate the separate elements of the decommissioning cost estimates (which are based on current prices) to the dates that they are expected to occur. These values are then discounted to calculate the present value of the provision to be recognised. The discount rates used are nominal risk-free rates that reflect the duration of the liabilities. These discount rates are estimated using forward UK Gilt curves for Drax Power Station and the OCGTs and Canadian Government bonds for the pellet plants, as a proxy for risk-free rates. The use of a risk-free rate reflects the fact that the estimated future cash flows have built-in risks specific to the liability. The average discount rates used for the Group\u2019s decommissioning provisions range from 3.33%\u20135.78% (2023: 3.02%\u20135.03%). The cost of decommissioning Drax Power Station is estimated, based on the midpoint of the range calculated by third-party experts, to be \u00a393.6 million at current prices with a range of \u00a365.5 million to \u00a3121.6 million. The cost of decommissioning each of the three OCGT sites is estimated to be between \u00a35.5 million and \u00a35.8 million at current prices. If inflation and discounting assumptions, consistent with those applied to the recognised Drax Power Station decommissioning provision, were applied to the range calculated by the third-party experts this would result in an estimated provision range of \u00a342.4 million to \u00a378.7 million. An increase of 100 basis points in the inflation and discount rates used would result in an increase of \u00a38.5 million (2023: \u00a39.6 million) and a decrease of \u00a36.4 million (2023: \u00a37.9 million) respectively in the amount recognised. The relationship between the change in basis points and change in the amount recognised is relatively linear, therefore the impact of similar sensitivities may be extrapolated from these amounts. The cost of decommissioning a site the size of Drax Power Station will be impacted by things such as the exact composition and volumes of materials used in the structures to be decommissioned, and the presence of contaminants. Full site surveys and investigations will need to be performed once the site ceases operation to ascertain further information necessary to decommission the site which could impact the potential costs. The costs being estimated are also going to be incurred several years in the future. All of these factors increase the estimation uncertainty of the decommissioning provision. The impact of climate change, both physical and transitional, extending over the medium term, was also considered by the third party when determining the provision. The Group has concluded that climate change is unlikely to have a significant impact on the future decommissioning costs, however this risk will continue to be reassessed and the impact of any changes will be reflected in the valuation. The decommissioning provisions are not considered a key source of estimation uncertainty as there is not a significant risk of a material adjustment to the carrying amounts within the next financial year. Decommissioning provisions are based on costs sufficiently far in the future that, given the length of time, it is not anticipated that any new, more reliable, or accurate information will be available within the next financial year to update this estimate that would result in a material adjustment. Restructuring provisions The restructuring provision includes redundancy costs relating to the formal closure of the coal units at Drax Power Station which was initially planned for September 2022. It also includes costs for engineering works required to make the coal units and related assets safe following cessation of operations. At the request of the UK Government, the Group entered into an agreement with National Grid to keep the two coal units available to provide a \u201cwinter contingency\u201d service to the UK power network from October 2022 until the end of March 2023, which delayed the formal closure of the coal units and resulted in the utilisation of certain amounts of the restructuring provision also being delayed. This has not materially impacted the expected costs. The formal closure of the coal units commenced at the end of the winter contingency service in March 2023. The additions to the restructuring provision in the current year are due to the sale of the majority of the non-core SME customer meter points in Opus Energy, resulting in a restructuring to reduce the headcount. This was to reflect the significantly smaller SME customer base and the Energy Solutions segment\u2019s focus on core industrial and commercial (I&C) customer and renewables services. See note 2.7 for further details of this transaction. The amount of the restructuring provision utilised in the year predominantly relates to engineering and redundancy costs. Of the \u00a310.8 million remaining at 31 December 2024, \u00a37.1 million relates to engineering works associated with the coal closure, of which \u00a31.2 million is expected to be utilised in 2025, with the remaining amounts expected to be utilised in the period from 2026 to 2028. A further \u00a33.7 million relates to redundancy costs, the majority of which relate to the Opus Energy restructuring. All of the redundancy costs are expected to be utilised in 2025. Onerous contract provision As a result of the Opus Energy restructuring, an onerous contract provision has also been recognised. Of the \u00a313.1 million onerous contract provision at 31 December 2024, \u00a38.8 million is expected to be utilised in 2025 with the remaining amounts expected to be utilised in the period from 2026 to 2028. See note 2.7 for further details. 7.6 Contingencies Contingent assets are potential assets that arise from past events whose existence will be confirmed by a future event that is outside of the control of the Group. The amount or timing of any potential receipt is uncertain. Contingent liabilities are potential obligations that arise from past events whose existence will be confirmed by a future event that is outside of the control of the Group. The amount or timing of any potential outflow is uncertain. As at 31 December 2024, the Group had no contingent assets or liabilities to be disclosed. ", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherProvisionsContingentLiabilitiesAndContingentAssetsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-564": { "value": "5.3 Provisions The Group makes provisions for reinstatement to cover the estimated costs of decommissioning and demolishing or remediating the sites of its Biomass Generation, Flexible Generation and Pellet Production assets at the end of their UELs. The Group has recognised a restructuring provision in respect of the coal closure at Drax Power Station and the Opus Energy restructuring. An onerous contract provision has also been recognised as a result of the Opus Energy restructuring. Accounting policy Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount required to settle the obligation. Specifically, a provision is made for the estimated decommissioning costs at the end of the UELs of the Group\u2019s generation assets and pellet plants, when a legal or constructive obligation arises, on a discounted basis. The amount provided is calculated on a site-by-site basis and represents the present value of the expected future costs. An amount equivalent to the discounted decommissioning provision is capitalised within property, plant and equipment (PPE), with the capitalisation shown in the movement in reinstatement asset line in note 3.1. For leased assets, an amount equivalent to the discounted provision is capitalised within right-of-use assets (ROU), with the capitalisation shown in the movement in reinstatement asset line in note 3.2. The amount capitalised is depreciated over the UELs of the related assets. The unwinding of the discount is included in interest payable and similar charges in the Consolidated income statement. The Group recognises a restructuring provision when it has developed a detailed formal plan for the restructuring and has raised a valid expectation that it will carry out the restructuring either by starting to implement the plan or announcing its main features to those affected by it. The restructuring provision includes only the direct expenditures arising from the restructuring programme. These are costs that would have been avoided if the restructuring programme did not go ahead. Any costs to be incurred relating to the ongoing activities of the Group are excluded from the provision. A provision for termination benefits is recognised at the earlier of when the Group can no longer withdraw the offer of the termination benefit and when the Group recognises any related restructuring costs. Provisions are recognised for onerous contracts as the amount of the unavoidable costs of meeting the obligations of the contract exceed the economic benefit expected to flow from the contract. The unavoidable costs are the lower of fulfilling the contract or paying any penalties to terminate the contract early.
Decommissioning Restructuring Onerous contract Other
provisions provisions provision provisions Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Carrying amount:
At 1 January 2024
68.4
9.9
\u2013
0.5
78.8
Additional provision charged to PPE (see note 3.1)
0.7
\u2013
\u2013
\u2013
0.7
Additional provision charged to ROU (see note 3.2)
2.3
\u2013
\u2013
\u2013
2.3
Transfer between provision categories
0.5
\u2013
\u2013
(0.5)
\u2013
Charged/(credited) to profit or loss:
Additional provision recognised
\u2013
7.7
15.3
\u2013
23.0
Utilised
(2.6)
(4.9)
(2.2)
\u2013
(9.7)
Released
\u2013
(1.9)
\u2013
\u2013
(1.9)
Unwinding of discount (see note 2.5)
2.7
\u2013
\u2013
\u2013
2.7
At 31 December 2024
72.0
10.8
13.1
\u2013
95.9
Current
6.5
4.9
8.8
\u2013
20.2
Non-current
65.5
5.9
4.3
\u2013
75.7
Decommissioning provisions Decommissioning provisions are made in respect of Drax Power Station (\u00a358.0 million), the OCGTs (\u00a37.6 million), certain pellet plants (\u00a35.9 million) and rail cars (\u00a30.5 million). Decommissioning work relating to coal operations at Drax Power Station began in 2024 and is expected to be completed by the end of 2026. The remainder of the decommissioning work will begin at the end of station life, which is currently estimated to be 2039. The decommissioning provision relating to certain pellet plants is based on the assumption that the decommissioning and reinstatement will take place at the end of the expected UEL of each site, which are estimated to be between 2037 and 2044. A legal obligation exists to decommission and demolish the OCGT sites at the end of station life, which is assumed to be 2049. Of the \u00a30.7 million movement in the decommissioning provision charged to PPE, \u00a38.5 million relates to additions for the three OCGT sites, offset by a \u00a37.8 million adjustment for changes in assumptions. The provisions have been estimated using existing technology at current prices based upon specialist, third-party advice, updated on a triennial basis as a minimum, but more regularly when deemed appropriate due to changes that might significantly impact the estimated cost, such as changes in prices, or changes in expected decommissioning plans. The most recent valuation for the Drax Power Station and pellet plant decommissioning provisions took place in December 2023. The exercise to assess the decommissioning provision relating to the three OCGT sites was performed July 2024. Drax Group plc Annual report and accounts 2024
An inflation curve is used to inflate the separate elements of the decommissioning cost estimates (which are based on current prices)
to the dates that they are expected to occur. These values are then discounted to calculate the present value of the provision to be
recognised. The discount rates used are nominal risk-free rates that reflect the duration of the liabilities. These discount rates are
estimated using forward UK Gilt curves for Drax Power Station and the OCGTs and Canadian Government bonds for the pellet
plants, as a proxy for risk-free rates. The use of a risk-free rate reflects the fact that the estimated future cash flows have built-in
risks specific to the liability. The average discount rates used for the Group\u2019s decommissioning provisions range from 3.33%\u20135.78%
(2023: 3.02%\u20135.03%).
The cost of decommissioning Drax Power Station is estimated, based on the midpoint of the range calculated by third-party experts,
to be \u00a393.6 million at current prices with a range of \u00a365.5 million to \u00a3121.6 million. The cost of decommissioning each of the three
OCGT sites is estimated to be between \u00a35.5 million and \u00a35.8 million at current prices.
If inflation and discounting assumptions, consistent with those applied to the recognised Drax Power Station decommissioning
provision, were applied to the range calculated by the third-party experts this would result in an estimated provision range of
\u00a342.4 million to \u00a378.7 million. An increase of 100 basis points in the inflation and discount rates used would result in an increase
of \u00a38.5 million (2023: \u00a39.6 million) and a decrease of \u00a36.4 million (2023: \u00a37.9 million) respectively in the amount recognised.
The relationship between the change in basis points and change in the amount recognised is relatively linear, therefore the impact
of similar sensitivities may be extrapolated from these amounts.
The cost of decommissioning a site the size of Drax Power Station will be impacted by things such as the exact composition and
volumes of materials used in the structures to be decommissioned, and the presence of contaminants. Full site surveys and
investigations will need to be performed once the site ceases operation to ascertain further information necessary to decommission
the site which could impact the potential costs. The costs being estimated are also going to be incurred several years in the future.
All of these factors increase the estimation uncertainty of the decommissioning provision. The impact of climate change, both
physical and transitional, extending over the medium term, was also considered by the third party when determining the provision.
The Group has concluded that climate change is unlikely to have a significant impact on the future decommissioning costs, however
this risk will continue to be reassessed and the impact of any changes will be reflected in the valuation.
The decommissioning provisions are not considered a key source of estimation uncertainty as there is not a significant risk of
a material adjustment to the carrying amounts within the next financial year. Decommissioning provisions are based on costs
sufficiently far in the future that, given the length of time, it is not anticipated that any new, more reliable, or accurate information
will be available within the next financial year to update this estimate that would result in a material adjustment.
Restructuring provisions
The restructuring provision includes redundancy costs relating to the formal closure of the coal units at Drax Power Station which
was initially planned for September 2022. It also includes costs for engineering works required to make the coal units and related
assets safe following cessation of operations. At the request of the UK Government, the Group entered into an agreement with
National Grid to keep the two coal units available to provide a \u201cwinter contingency\u201d service to the UK power network from October
2022 until the end of March 2023, which delayed the formal closure of the coal units and resulted in the utilisation of certain
amounts of the restructuring provision also being delayed. This has not materially impacted the expected costs. The formal closure
of the coal units commenced at the end of the winter contingency service in March 2023.
The additions to the restructuring provision in the current year are due to the sale of the majority of the non-core SME customer
meter points in Opus Energy, resulting in a restructuring to reduce the headcount. This was to reflect the significantly smaller SME
customer base and the Energy Solutions segment\u2019s focus on core industrial and commercial (I&C) customer and renewables services.
See note 2.7 for further details of this transaction.
The amount of the restructuring provision utilised in the year predominantly relates to engineering and redundancy costs. Of the
\u00a310.8 million remaining at 31 December 2024, \u00a37.1 million relates to engineering works associated with the coal closure, of which
\u00a31.2 million is expected to be utilised in 2025, with the remaining amounts expected to be utilised in the period from 2026 to 2028.
A further \u00a33.7 million relates to redundancy costs, the majority of which relate to the Opus Energy restructuring. All of the
redundancy costs are expected to be utilised in 2025.
Onerous contract provision
As a result of the Opus Energy restructuring, an onerous contract provision has also been recognised. Of the \u00a313.1 million onerous
contract provision at 31 December 2024, \u00a38.8 million is expected to be utilised in 2025 with the remaining amounts expected to be
utilised in the period from 2026 to 2028. See note 2.7 for further details.
", "dimensions": { "concept": "ifrs-full:DisclosureOfProvisionsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-718": { "value": "Accounting policy Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount required to settle the obligation. Specifically, a provision is made for the estimated decommissioning costs at the end of the UELs of the Group\u2019s generation assets and pellet plants, when a legal or constructive obligation arises, on a discounted basis. The amount provided is calculated on a site-by-site basis and represents the present value of the expected future costs. An amount equivalent to the discounted decommissioning provision is capitalised within property, plant and equipment (PPE), with the capitalisation shown in the movement in reinstatement asset line in note 3.1. For leased assets, an amount equivalent to the discounted provision is capitalised within right-of-use assets (ROU), with the capitalisation shown in the movement in reinstatement asset line in note 3.2. The amount capitalised is depreciated over the UELs of the related assets. The unwinding of the discount is included in interest payable and similar charges in the Consolidated income statement. The Group recognises a restructuring provision when it has developed a detailed formal plan for the restructuring and has raised a valid expectation that it will carry out the restructuring either by starting to implement the plan or announcing its main features to those affected by it. The restructuring provision includes only the direct expenditures arising from the restructuring programme. These are costs that would have been avoided if the restructuring programme did not go ahead. Any costs to be incurred relating to the ongoing activities of the Group are excluded from the provision. A provision for termination benefits is recognised at the earlier of when the Group can no longer withdraw the offer of the termination benefit and when the Group recognises any related restructuring costs. Provisions are recognised for onerous contracts as the amount of the unavoidable costs of meeting the obligations of the contract exceed the economic benefit expected to flow from the contract. The unavoidable costs are the lower of fulfilling the contract or paying any penalties to terminate the contract early. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDecommissioningRestorationAndRehabilitationProvisionsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-706": { "value": "Accounting policy Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount required to settle the obligation. Specifically, a provision is made for the estimated decommissioning costs at the end of the UELs of the Group\u2019s generation assets and pellet plants, when a legal or constructive obligation arises, on a discounted basis. The amount provided is calculated on a site-by-site basis and represents the present value of the expected future costs. An amount equivalent to the discounted decommissioning provision is capitalised within property, plant and equipment (PPE), with the capitalisation shown in the movement in reinstatement asset line in note 3.1. For leased assets, an amount equivalent to the discounted provision is capitalised within right-of-use assets (ROU), with the capitalisation shown in the movement in reinstatement asset line in note 3.2. The amount capitalised is depreciated over the UELs of the related assets. The unwinding of the discount is included in interest payable and similar charges in the Consolidated income statement. The Group recognises a restructuring provision when it has developed a detailed formal plan for the restructuring and has raised a valid expectation that it will carry out the restructuring either by starting to implement the plan or announcing its main features to those affected by it. The restructuring provision includes only the direct expenditures arising from the restructuring programme. These are costs that would have been avoided if the restructuring programme did not go ahead. Any costs to be incurred relating to the ongoing activities of the Group are excluded from the provision. A provision for termination benefits is recognised at the earlier of when the Group can no longer withdraw the offer of the termination benefit and when the Group recognises any related restructuring costs. Provisions are recognised for onerous contracts as the amount of the unavoidable costs of meeting the obligations of the contract exceed the economic benefit expected to flow from the contract. The unavoidable costs are the lower of fulfilling the contract or paying any penalties to terminate the contract early. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-724": { "value": "The Group recognises a restructuring provision when it has developed a detailed formal plan for the restructuring and has raised a valid expectation that it will carry out the restructuring either by starting to implement the plan or announcing its main features to those affected by it. The restructuring provision includes only the direct expenditures arising from the restructuring programme. These are costs that would have been avoided if the restructuring programme did not go ahead. Any costs to be incurred relating to the ongoing activities of the Group are excluded from the provision. A provision for termination benefits is recognised at the earlier of when the Group can no longer withdraw the offer of the termination benefit and when the Group recognises any related restructuring costs. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTerminationBenefits", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-681": { "value": "The notes in this section relate to the remuneration of the Directors and employees of the Group, including the Group\u2019s obligations under retirement benefit schemes. 6.1 Colleagues including Executive Directors and employees This note provides a detailed breakdown of the cost of employees, including Executive Directors of the Group. The average monthly number of employees in Operations (staff based at Pellet Production, Biomass Generation and Flexible Generation sites), Energy Solutions (employees in the Group\u2019s Energy Solutions segment), and Central corporate and commercial functions are also provided. Further information in relation to pay and remuneration of the Executive Directors can be found in the Remuneration Committee report, starting on page 126. Staff costs (including Executive Directors)
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Wages and salaries
262.0
240.4
Social security costs
26.5
22.3
Defined benefit pension service cost (note 6.3)
2 .1
2.3
Defined contribution pension cost (note 6.3)
24 .1
21.4
Share-based payments (note 6.2)
14.1
13.8
Termination benefits
8.7
1.5
Total staff costs
337. 5
301.7
Staff costs capitalised
(14.7)
( 7.7 )
Staff costs included in operating and administrative expenses (note 2.3)
322.8
294.0
Average monthly number of people employed (including Executive Directors)
Year ended 31 December
Restated (1)
2024 2023
(number) (number)
Operations (Pellet Production)
815
781
Operations (Biomass Generation)
526
522
Operations (Flexible Generation)
163
153
Energy Solutions
802
892
Central corporate and commercial functions
1,151
1,072
Total average monthly number of people employed
3,457
3,420
(1) Comparative amounts have been restated to reflect the change in reportable segments. See note 2.1 for further details on the change in reportable segments. 6.2 Share-based payments The Group operates five share option schemes for employees: the Long-Term Incentive Plan (LTIP) for Executive Directors and senior employees, the Deferred Share Plan (DSP) for Executive Directors, One Drax Awards which are recognition and retention awards granted to certain employees below senior management, the Employee Stock Purchase Plan (ESPP) for all qualifying US and Canada- based employees, and the Save As You Earn (SAYE) scheme for all qualifying UK employees. The Group incurs a non-cash charge in respect of these schemes in the Consolidated income statement, which is set out below along with a description of each scheme and the number of options outstanding at the reporting date. Accounting policy The LTIP, DSP, One Drax Awards, ESPP and SAYE share-based payment schemes are equity-settled. Equity-settled share-based payments are measured at the fair value of the equity instrument at the date of grant. The corresponding expense is recognised in the Consolidated income statement on a straight-line basis over the relevant vesting period, based on an estimate of the number of shares that will ultimately vest as a result of the effect of non-market-based vesting conditions, which is revised at each reporting date. Market-based vesting conditions are factored into the calculation of the fair value of options granted at the date of grant and are not subsequently remeasured. If share options are cancelled due to non-vesting conditions not being met, for example employees withdrawing (by choice) part way through the vesting period or not exercising their options in the exercise period after they vest, the charge for such options is accelerated at the point of cancellation. If share options are forfeited due to employees failing to meet continuing service conditions of a grant, or failing to meet non-market performance conditions, then these options do not attract a charge and any previously recognised charge is reversed. Section 6: People costs Costs recognised in the Consolidated income statement in relation to share-based payments during the year were as follows:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
LTIP
7.1
8.7
DSP
0.6
0.5
One Drax Awards
1.6
1.4
ESPP
0.2
0.1
SAYE
4.6
3.1
Total share-based payment expense included within staff costs (note 6.1)
14 .1
13.8
Movements in the number of share options outstanding at the reporting date for each scheme is shown below. The following schemes are discretionary award schemes and have no exercise price.
LTIP DSP One Drax Awards
(number) (number) (number)
At 1 January 2023
5,699,371
367,745
136,747
Granted
2,282,798
101,657
262,526
Dividend shares granted
292,009
24,999
3,922
Forfeited
(13 8 ,14 6)
\u2013
(2,738)
Exercised
(2,750,860)
(208,627)
(140,669)
At 1 January 2024
5,385,172
285,774
259,788
Granted
3,065,741
106,341
360,448
Dividend shares granted
171,367
10,460
9,053
Forfeited
(228,490)
\u2013
(31,443)
Exercised
(1,846,285)
(109,827)
(260,439)
At 31 December 2024
6,547,505
292,748
337,407
The following schemes are share purchase schemes and therefore weighted average exercise prices are presented.
ESPP
SAYE
Three-year Five-year
weighted weighted
Weighted average average average
exercise price ESPP exercise price SAYE three-year exercise price SAYE five-year
(pence) (number) (pence) (number) (pence) (number)
At 1 January 2023
\u2013
\u2013
178
8,163, 668
155
2,464,862
Granted
469
64,497
498
1,9 9
6 ,117
498
197, 82 5
Forfeited
\u2013
\u2013
327
(46,063)
432
(8,228)
Exercised
\u2013
\u2013
127
(6,831,232)
219
(15,727)
Cancelled
\u2013
\u2013
509
(395,588)
496
(52,923)
At 1 January 2024
469
64,497
470
2,886,902
173
2,585,809
Granted
468
126,303
378
3,334,272
378
470,417
Forfeited
469
(3,801)
455
(111,452)
461
(4,521)
Exercised
398
(126,938)
327
(634,525)
290
(33,319)
Cancelled
\u2013
\u2013
496
(1,570,144)
492
(205,988)
Expired
\u2013
\u2013
331
(4,572)
298
(1,008)
At 31 December 2024
544
60,061
405
3,900,481
182
2,811,390
Key information about each active scheme for options granted and exercised in the current and prior year is presented below.
Year ended 31 December 2024
Scheme
LTIP
DSP
One Drax Awards
ESPP
SAYE three-year
SAYE five-year
Weighted average share price of options
exercised during the year at the date of
exercise (pence)
484
484
484
565
538
538
Number of options exercisable at reporting
date
120,705
13,351
\u2013
\u2013
149,486
120,418
Weighted average exercise price of options
exercisable at reporting date (pence)
\u2013
\u2013
\u2013
\u2013
427
142
Range of exercise price of options Between 378 Between 127
outstanding at reporting date (pence)
\u2013
\u2013
\u2013
544
and 563 and 563
Weighted average remaining contractual
life (months)
51
22
2
2
32
20
Year ended 31 December 2023
Scheme
LTIP
DSP
One Drax Awards
ESPP
SAYE three-year
SAYE five-year
Weighted average share price of options
exercised during the year at the date of
exercise (pence)
621
621
621
\u2013
554
604
Number of options exercisable at reporting
date
119
,10 2
13,351
\u2013
\u2013
25,207
712
Weighted average exercise price of options
exercisable at reporting date (pence)
\u2013
\u2013
\u2013
\u2013
462
498
Range of exercise price of options Between Between
outstanding at reporting date (pence)
\u2013
\u2013
\u2013
469
127 and 563 127 and 563
Weighted average remaining contractual
life (months)
17
14
3
2
22
20
The fair value of share options is calculated using a Monte Carlo simulation if the scheme vests subject to market conditions, or the Black-Scholes model otherwise. The Monte Carlo simulation takes into account the estimated probability of different levels of vesting for share options with market-based vesting conditions and produces a probability-based fair value calculation. The key inputs to both the Monte Carlo and Black-Scholes valuation models are the share price at the date of grant, exercise price where applicable, dividend yield on the underlying share, time to expiry of the option, expected volatility and risk-free interest rate. Expected volatility for each scheme is determined by calculating the historical volatility of the Group\u2019s share price over the same length of time as the vesting period for that scheme. The expected life used in the valuations is based on the length of the vesting period. This is based on management\u2019s best estimate for the effects of non-transferability, exercise restrictions and behavioural considerations. The risk-free interest rate is determined using the rate for the equivalent length zero-coupon UK Government bond for each scheme. Information about the valuation models used for options granted during the current and prior year, and relevant inputs to those models, is set out in the tables below. Year ended 31 December 2024 One Drax SAYE SAYE Scheme LTIP LTIP DSP Awards ESPP ESPPthree-year five-year 15 March 3 September 15 March 15 March 1 March 1 September 10 April 10 April Grant date 2024 2024 2024 2024 2024 2024 2024 2024 Monte Monte Black- Black- Black- Black- Black- Black- Valuation model used Carlo Carlo Scholes Scholes Scholes Scholes Scholes Scholes Share price at grant date (pence) 473 641 473 473 466 639 483 483 Exercise price (pence) \u2013 \u2013 \u2013 \u2013 396 543 378 378 Dividend yield \u2013 \u2013 \u2013 \u2013 5.97% 3.17% 5.80% 6.42% Vesting period of options granted 3 years 3 years 3 years 1 year 6 months 6 months 3 years 5 years Expected volatility 37. 48% 38.20% 37.4 8% 35.35% 42.23% 37.39% 36.94% 4 0.15% Annual risk-free interest rate 4.28% 3.88% 4.28% 4.98% 5.24% 4.80% 4.13% 4.03% Weighted average fair value of options granted at measurement date (pence) 363 447 473 473 109 147 132 132
Year ended 31 December 2023
One Drax
Scheme
LTIP
LTIP
DSP
Awards
ESPP
SAYE three-year
SAYE five-year
31 March 5 September 31 March 31 March 1 September 12 April 12 April
Grant date 2023 2023 2023 2023 2023 2023 2023
Monte Monte Black- Black- Black- Black- Black-
Valuation model used Carlo Carlo Scholes Scholes Scholes Scholes Scholes
Share price at grant date (pence)
608
545
608
608
547
641
641
Exercise price (pence)
\u2013
\u2013
\u2013
\u2013
469
498
498
Dividend yield
\u2013
\u2013
\u2013
\u2013
3.57%
4 .10%
4.54%
Vesting period of options granted
3 years
3 years
3 years
1 year
6 months
3 years
5 years
Expected volatility
39.92%
39.92%
36.35%
37. 25%
26.95%
36.35%
38.95%
Annual risk-free interest rate
3.56%
3.56%
4.94%
5.17%
4.97%
4.94%
4.62%
Weighted average fair value of options
granted at measurement date (pence)
481
481
608
585
110
205
220
Each of the Group\u2019s share-based payment schemes vest subject to continued employment, or \u201cgood leaver\u201d termination provisions.
For the LTIP, DSP and One Drax Awards, each time a dividend is paid out during the vesting period of the scheme, participants are
entitled to receive further share options of equivalent value to the dividends, determined using the market value of shares on the
ex-dividend date, and which are formally granted on the vesting date for each scheme. As such, a dividend yield of 0% is input into
the fair value calculations for each of these schemes to reflect that the fair value of each share option is not reduced by dividends
paid out over the vesting period.
LTIP
The LTIP was introduced in 2020 for Executive Directors and senior employees. Under the LTIP, annual awards of performance and
service-related shares are made for no consideration to Executive Directors and other senior employees up to a maximum of 200%
of their annual base salary. Vesting of 50% of the shares is conditional upon whether the Group\u2019s Total Shareholder Return (TSR)
matches or outperforms an index (determined in accordance with the scheme rules) over three years, and vesting of the remaining
50% of shares is conditional upon performance of cumulative Adjusted basic EPS over three years. The fair value of LTIP options with
the TSR vesting condition is calculated with the support of external specialists due to the TSR vesting condition being market-based
and therefore requiring a valuation to be performed using a Monte Carlo simulation.
DSP
The Group operates the DSP, under which Executive Directors receive 40% of their annual bonus in share options. DSP awards are
granted at nil cost and vest after three years.
One Drax Awards
One Drax Awards are granted to certain employees below senior management and vest after one year. The number of shares awarded
to the employee is equivalent to 10% of their base salary based on the Group\u2019s share price at the grant date.
ESPP
The ESPP scheme is offered to all US and Canada-based qualifying employees biannually. Under the ESPP, employees are granted the
option to purchase shares at a 15% discount to the market price of Drax Group plc shares, based on the lower of the market price at
the grant date and the market price at the vesting date. The options are exercisable at the end of six-month savings contracts, under
which an employee selects a fixed percentage of their salary to be put towards the scheme.
SAYE
Participation in the SAYE scheme (Sharesave) is offered to all UK qualifying employees every April. Options are granted for employees
to acquire shares at a discount of 20% to the market price of Drax Group plc shares, based on the average closing price for the five
days immediately preceding the grant date, determined in accordance with the scheme rules. The options are exercisable at the end
of three or five-year savings contracts.
Additional information in relation to the Group\u2019s share-based incentive plans is included in the Remuneration Committee report on
pages 135 and 136.
6.3 Retirement benefit obligations The Group operates one defined benefit and three defined contribution pension schemes as set out in the table below.
Name of scheme
Type of benefit
Status
Country
Closed to new members on
Drax 2019
Scheme
Defined benefit final salary
transfer in 2019
UK
My Drax Retirement Savings Section
of the Aon MasterTrust
Defined contribution
Open to new members
UK
Drax Biomass Inc. 401(K) Plan
Defined contribution
Open to new members
US
Pinnacle Registered Retirement
Savings Plan
Defined contribution
Open to new members
Canada
Up until 31 January 2023, the Group also operated an additional defined benefit pension scheme, the Drax Power Group section of the Electricity Supply Pension Scheme (DPG ESPS). As at 1 February 2023, the Group replaced its three UK Group Personal Pension Plans with the My Drax Retirement Savings Section of the Aon MasterTrust. On 31 January 2023, the DPG ESPS\u2019s assets and liabilities were transferred to the Drax 2019 Scheme, and the DPG ESPS was wound up on 17 April 2023. The Drax 2019 Scheme continues to provide the same level of pension benefits to current and former employees as they were previously entitled to, with the combination allowing the resulting scheme to operate in a more efficient and focused manner, with a reduced administrative burden and associated cost. Trustee governance (defined benefit pension schemes) The Drax 2019 Scheme is administered by a sole trustee (PAN Trustees UK LLP, \u201cthe Trustee\u201d), which is legally separate from the Group. The Trustee is required by law to act in the interest of all relevant beneficiaries and is responsible for the investment policy for the assets and the day-to-day administration of the defined benefit scheme. Accounting policy Payments to defined contribution schemes are recognised as an expense when employees have rendered services that entitle them to the contributions. The Consolidated income statement charge for the defined contribution schemes represents the total contributions to be paid by the Group in respect of the current period. For the defined benefit pension scheme, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each reporting period. Remeasurement of the obligation, comprising actuarial gains and losses and the return on plan assets (excluding interest), is recognised immediately in the Consolidated balance sheet with a charge or credit to the Consolidated statement of comprehensive income in the period in which it occurs. Defined benefit costs, including current service costs, past service costs, and gains and losses on curtailments and settlements, are recognised in the Consolidated income statement as part of operating and administrative expenses in the period in which they occur. The net interest expense or income is recognised in the Consolidated income statement within either interest payable and similar charges or interest receivable and similar gains. Significant estimation uncertainty Measurement of the defined benefit pension obligation using the projected unit credit method involves the use of key assumptions, including discount rates, inflation rates, salary and pension increases and mortality rates. These actuarial assumptions are reviewed annually and modified as appropriate. The Group believes that the assumptions utilised in measuring obligations under the schemes are reasonable based on prior experience, market conditions and the advice of pension scheme actuaries. However, actual results may differ from such assumptions. The assumptions applied in 2024 have been prepared in accordance with third-party actuarial advice received and are consistent with those applied in the prior period. Defined contribution schemes The Group operates three defined contribution schemes for all qualifying employees. Pension costs for the defined contribution schemes are as follows:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Total included in staff costs (note 6.1)
24.1
21.4
As at 31 December 2024, contributions of \u00a33.1 million (2023: \u00a30.4 million) due in respect of the current reporting period had not been paid over to the schemes. This has been recognised within trade and other payables and contract liabilities within the Consolidated balance sheet. The Group has no further outstanding payment obligations in respect of the current reporting period once these contributions have been paid.
Defined benefit scheme
The Group currently operates one defined benefit scheme. The net pension surplus is as follows:
As at 31 December
2024 2023
\u00a3m \u00a3m
Total net surplus recognised in the Consolidated balance sheet
24.7
18.4
At 31 December 2024, application of the accounting assumptions used in relation to the defined benefit scheme, which are described
in further detail below, continued to result in a net position of surplus assets over liabilities.
The Drax 2019 Scheme (the Scheme) is a defined benefit final salary plan, where employees are entitled to retirement benefits based
on their final salary on attainment of retirement age (or earlier withdrawal or death). Pensions are payable for life and updated in line
with inflationary increases. No other post-retirement benefits are provided. The Scheme is open to future accrual of benefits but
closed to new members.
The Group and Trustee have agreed a long-term strategy for reducing investment risk as and when appropriate. This includes an
asset-liability matching policy which aims to reduce the volatility of the funding level of the Scheme by investing in assets that perform
in line with the liabilities to protect against interest rates being lower or inflation being higher than expected.
The Scheme exposes the Group to actuarial and other risks, the most significant of which are considered to be:
Investment risk
The Scheme\u2019s liabilities are calculated using a discount rate set with reference to corporate bond yields;
if assets underperform against this yield, this creates a deficit. The Scheme holds a significant proportion
of growth assets (diversified growth funds, direct lending, credit and property) which, though expected
to outperform corporate bonds in the long term, create volatility and risk in the short term. The allocation
to growth assets is monitored to ensure it remains appropriate given this scheme\u2019s long-term objectives.
Discount rate risk
A decrease in corporate bond yields will increase the value placed upon the Scheme\u2019s liabilities, although
this will be partially offset by an increase in the value of the Scheme\u2019s bond holdings.
Longevity risk
The majority of the Scheme\u2019s obligations are to provide benefits for the life of the member, so increases in
life expectancy will result in an increase in the liabilities of the Scheme.
Inflation risk
The majority of the Scheme\u2019s obligations to pay benefits are linked to RPI inflation and, as such, higher
inflation leads to higher liabilities. In most cases, caps on inflationary increases are in place to protect against
extreme inflation. The Scheme has a significant holding in liability-driven investments to protect against
inflation risk.
Credit risk
Around 95% of the Scheme\u2019s overall funded liabilities are currently hedged against interest rates and inflation
using liability-driven investments. The Scheme hedges interest rate risks on a statutory and long-term funding
basis (gilts driven) whereas AA corporate bonds are implicit in the discount rate and so there is a degree of
mismatching risk to the Group should yields on gilts and corporate bonds diverge. The Scheme\u2019s holding in
corporate bonds mitigates this risk to some extent.
Other risks include operational risks (such as paying out the wrong benefits), legislative risks (such as the UK Government increasing
the burden on pension schemes through new regulation), and other demographic risks (such as making a higher proportion of
members with dependents eligible to receive pensions from the Group). The Trustee ensures certain benefits are payable on death
before retirement. The Scheme\u2019s liabilities shown below reflects management\u2019s understanding of the benefits due at the date of
the report and make no allowance for any potential impact on benefits of recent case law (such as the recent High Court judgment
in the case of Virgin Media Limited vs NTL Pension Trustees II Limited).
A qualified third-party actuary, Aon, carried out the most recent funding valuation of the Scheme as at 31 March 2022. The actuarial
review at 31 December 2024 is based on the same membership and other data as this funding valuation. The Scheme\u2019s Board
accepted the advice of the actuary and approved the use of these assumptions for the purpose of assessing the Scheme\u2019s costs.
The result of the latest funding valuation has been adjusted to 31 December 2024, taking into account experience over the period
since 31 March 2022, changes in market conditions and differences in financial and demographic assumptions. The present value
of the defined benefit obligation and the related current service costs were measured using the projected unit credit method.
The principal assumptions for the Scheme across the current and prior year are set out below.
As at 31 December
2024 2023
% p.a. % p.a.
Discount rate
5.5
4.6
Inflation (RPI)
3.0
2.8
Rate of increase in pensions in payment and deferred pensions
2.8
2.7
Rate of increase in pensionable salaries
3.4
3.2
The defined benefit obligation for the Scheme as at 31 December 2024 allows for expected benefit increases that will be awarded
in 2025, based on known 2024 indices.
Mortality assumptions are based on recent actual mortality experience of the Scheme\u2019s members and allow for expected future
changes in mortality rates. The assumptions are that a member aged 60 in 2024 will live, on average, for a further 25 years if they are
male (2023: 25 years) and for a further 27 years if they are female (2023: 27 years). Life expectancy at age 60 for male and female
non-pensioners currently aged 45 is assumed to be 26 and 28 years respectively (2023: 26 and 28 years respectively).
The weighted average duration of the Scheme at 31 December 2024 based on the IAS 19 position was 15 years
(2023: 16 years).
The defined benefit obligation in respect of the Scheme includes benefits for current employees of the Group (28%), former employees
of the Group who are yet to retire (10%) and retired pensioners (62%).
The net surplus recognised in the Consolidated balance sheet in respect of the Scheme is the excess of the fair value of the plan assets
over the present value of the defined benefit obligation, determined as follows:
As at 31 December
2024 2023
\u00a3m \u00a3m
Fair value of plan assets
203.4
220.3
Defined benefit obligation
(178.7)
(201.9)
Net surplus recognised in the Consolidated balance sheet
24.7
18.4
The total charges and credits recognised in the Consolidated income statement, within operating and administrative expenses and
interest receivable and similar gains, are as follows:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Included in staff costs (note 6.1):
Current service cost
2.1
2.3
Included in interest receivable (note 2.5):
Interest income on net defined benefit surplus
(0.9)
(2 .1)
Total amount recognised in the Consolidated income statement
1.2
0.2
Changes in the present value of the defined benefit obligation of the Scheme are as follows:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Defined benefit obligation at 1 January
201.9
181.1
Current service cost
2.1
2.3
Interest cost
9.0
8.0
Actuarial (gains)/losses
(24.3)
21.8
Benefits paid
(10.0)
(11.3)
Defined benefit obligation at 31 December
178.7
201.9
The actuarial gains of \u00a324.3 million (2023: losses of \u00a321.8 million) reflect gains of \u00a323.5 million (2023: losses of \u00a30.3 million) arising
from changes in financial assumptions, losses of \u00a31.0 million (2023: \u00a322.4 million) arising from scheme experience, and gains of
\u00a31.8 million (2023: \u00a30.9 million) arising from changes in demographic assumptions.
The gains in the current year are due to changes in financial assumptions and principally reflect the reduction in the present value
of the Scheme\u2019s liabilities arising as a result of the movement in discount rate assumption to 5.5% p.a. (2023: 4.6% p.a.) following an
increase in corporate bond yields. This was partly offset by a slight increase in overall long-term inflationary assumptions, reflecting
market pricing.
Changes in the fair value of plan assets are as follows:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Fair value of plan assets at 1 January
220.3
219.6
Interest on plan assets
9.9
10 .1
Remeasurement losses on fair value of plan assets
(18.8)
(7.0)
Employer contributions
2.0
8.9
Benefits paid
(10.0)
(11.3)
Fair value of plan assets at 31 December
203.4
220.3
Employer contributions included payments totalling \u00a3nil (2023: \u00a34.3 million) to reduce the actuarial deficit related to the legacy DPG
ESPS. There were contributions of \u00a30.2 million outstanding at the end of the year (2023: \u00a30.2 million).
The actual return on plan assets in the period was a loss of \u00a38.9 million (2023: gain of \u00a33.1 million).
Remeasurement gains on the defined benefit pension scheme of \u00a35.5 million (2023: losses of \u00a328.8 million) were recognised in the
Consolidated statement of comprehensive income. These are made up as follows:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Actuarial gains/(losses) on defined benefit obligation
24.3
(21.8)
Remeasurement losses on fair value of plan assets
(18.8)
(7.0)
Total remeasurement gains/(losses) recognised in other comprehensive income
5.5
(28.8)
The fair values of the major categories of plan assets were as follows (all assets are quoted, except for cash and cash equivalents or
otherwise stated):
As at 31 December
2024 2023
\u00a3m \u00a3m
Gilts
85.5
110.3
Equities
(1)
31.3
24 .1
Bonds
(2)
22.7
5.0
Property
21.7
15 .1
Infrastructure
9.6
\u2013
Investment funds
\u2013
4.5
Cash and cash equivalents
5.3
10.5
Other assets
(3)
27.3
50.8
Fair value of total plan assets
203.4
220.3
(1) As at 31 December 2024, the Scheme\u2019s target long-term asset strategy was: diversified growth funds (39%), private credit (10%), secure income alternatives (7.5%) and
liability driven investing/cash (43.5%). As at 31 December 2023, the Scheme\u2019s target long-term asset strategy was: diversified growth funds (34%), private credit (12%),
hedge funds (3%), secure income alternatives (7%) and liability driven investing/cash (44%).
(2) Bonds include a mixture of corporate, high yield, emerging market, UK Government and absolute return bonds.
(3) Other assets include \u00a316.6 million (2023: \u00a325.8 million) of investments in private credit, a type of private equity vehicle which is not quoted in an active market. The fair
value of these investments is derived in accordance with International Private Equity and Venture Capital Valuation (IPEV) Guidelines. All other assets are quoted in an
active market, including \u00a34.7 million (2023: \u00a3nil) in respect of downside risk management and \u00a34.0 million (2023: \u00a3nil) relating to asset-backed securities (ABS).
The pension plan assets do not include any ordinary shares issued by Drax Group plc or any property occupied by the Group. The valuation of the pension liabilities has been disclosed as a key source of estimation uncertainty due to the assumptions used in the valuation. The assumptions for discount rate, inflation rate (and related inflation-linked benefits), and life expectancy have a potentially significant effect on the measurement of the Scheme\u2019s surplus. The following table provides an indication of the sensitivity of the net pension surplus at 31 December to changes in these assumptions, considering the impact on the defined benefit obligation only. If a combination of the below reasonably possible changes to key assumptions were used in the valuation of the pension obligations, this could result in a material change to the amount recognised.
Increase/(decrease) in net surplus
2024 2023
As at 31 December \u00a3m \u00a3m
Discount rate
\u2013 Increase
0.25%
6.3
7.9
\u2013 Decrease
0.25%
(6.5)
(8.2)
Inflation rate
(1)
\u2013 Increase
0.25%
(5.2)
(6.5)
\u2013 Decrease
0.25%
5.1
6.3
Life expectancy
\u2013 Increase
1 year
(4.8)
(7.2)
\u2013 Decrease
1 year
5.1
7.4
(1) The sensitivity of the Scheme\u2019s liabilities to salary and pension increases is closely correlated with inflation, therefore separate sensitivities have not been performed on salary and pension increases and the inflationary sensitivity incorporates these. The Group is exposed to investment and other risks. However, these risks are mitigated by the Scheme being around 95% hedged against movements in UK Government bonds and inflation of appropriate duration. This means from a discount rate perspective that the Scheme is broadly only exposed to changes in credit spreads plus around 5% of changes in underlying gilt yields and, for inflation, the Scheme\u2019s exposure is around 5% of any actual changes. Future contributions UK legislation requires that pension schemes are funded prudently (i.e. to a level in excess of the current expected cost of providing benefits). This funding is carried out with reference to actuarial valuations which are required by law to take place at intervals of no more than three years. Following each valuation, the Trustee and the Group must agree the contributions required (if any) such that the Scheme is fully funded over time on the basis of suitably prudent assumptions. The Group expects to make total contributions of \u00a31.9 million to the Scheme during the 12 months ending 31 December 2025. The latest actuarial valuation of the Drax 2019 Scheme which was carried out as at 31 March 2022 resulted in a funding surplus of \u00a313.9 million and so no deficit recovery plan was required. The Group agreed to make additional contributions to the Drax 2019 Scheme from February 2023 to June 2023 and an additional payment in 2026 to fully fund the Scheme on a low-risk basis, as agreed between the Group and Trustee at the time, through the provision of a surety bond. At this point, the Scheme is expected to be self-sufficient, unless material adverse changes in economic conditions arise compared to those assumed in the valuation. The Group is satisfied that the additional contributions are manageable within the Group\u2019s business plan. The Trust Deeds of the Scheme provide the sponsors of the Scheme with an unconditional right to a refund of surplus assets assuming the gradual settlement of plan liabilities over time. Based on these rights, any net surplus in the Scheme is recognised in full in the Consolidated balance sheet. Update on the Virgin Media Limited v NTL Pension Trustees II Limited case In June 2023, the High Court issued a ruling in the case of Virgin Media Limited v NTL Pension Trustees II Limited and others relating to the validity of certain historical pension changes. The ruling confirmed the need for actuarial confirmation where schemes made changes to benefits between 6 April 1997 and 5 April 2016, and any relevant amendments were void without the appropriate confirmation. During 2024, Virgin Media Limited appealed the High Court\u2019s decision through the Court of Appeal, but this was upheld on 25 July 2024. The Trustee has taken legal advice and concluded that it is reasonable to believe that previous rule amendments were carried out in accordance with the relevant requirements and that no further action is needed as this stage. Notwithstanding this initial risk assessment there remain areas of uncertainty that could potentially require legal clarification. Management has performed an assessment to understand the potential impact of the ruling in the case and based on this are satisfied that there is no material liability or probable outflow, and as such, no adjustment has been reflected within the defined benefit obligation at this time. Remuneration of key management personnel The remuneration of the Directors and executive management, who are considered to be the key management personnel of the Group, is set out below in aggregate for each of the categories specified in IAS 24. Further information about the remuneration of individual Directors, together with the Directors\u2019 interests in the share capital of the Company, is provided in the audited section of the Remuneration Committee report on pages 133 to 137.
Year ended 31 December
2024 2023
\u00a3000 \u00a3000
Short-term employee benefits
7, 274
7,104
Termination benefits
388
566
Share-based payments
4,107
4,047
Post-employment benefits
411
414
Total remuneration
12
,18 0
12,131
Compensation of the Group\u2019s key management personnel includes short-term employee benefits, which includes salaries and other short-term benefits. The compensation also includes contributions to post-employment money purchase pension schemes. Share-based payments compensation represents the amounts receivable under share-based incentive schemes as disclosed in note 6.2. The average number of members of the Board and executive management during the year was 16 (2023: 18) and the amounts included in the table above reflect their remuneration. There were no other transactions with Directors for the periods covered by these Consolidated financial statements.", "dimensions": { "concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-649": { "value": "6.1 Colleagues including Executive Directors and employees This note provides a detailed breakdown of the cost of employees, including Executive Directors of the Group. The average monthly number of employees in Operations (staff based at Pellet Production, Biomass Generation and Flexible Generation sites), Energy Solutions (employees in the Group\u2019s Energy Solutions segment), and Central corporate and commercial functions are also provided. Further information in relation to pay and remuneration of the Executive Directors can be found in the Remuneration Committee report, starting on page 126. Staff costs (including Executive Directors)
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Wages and salaries
262.0
240.4
Social security costs
26.5
22.3
Defined benefit pension service cost (note 6.3)
2 .1
2.3
Defined contribution pension cost (note 6.3)
24 .1
21.4
Share-based payments (note 6.2)
14.1
13.8
Termination benefits
8.7
1.5
Total staff costs
337. 5
301.7
Staff costs capitalised
(14.7)
( 7.7 )
Staff costs included in operating and administrative expenses (note 2.3)
322.8
294.0
Average monthly number of people employed (including Executive Directors)
Year ended 31 December
Restated (1)
2024 2023
(number) (number)
Operations (Pellet Production)
815
781
Operations (Biomass Generation)
526
522
Operations (Flexible Generation)
163
153
Energy Solutions
802
892
Central corporate and commercial functions
1,151
1,072
Total average monthly number of people employed
3,457
3,420
(1) Comparative amounts have been restated to reflect the change in reportable segments. See note 2.1 for further details on the change in reportable segments. ", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutEmployeesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-599": { "value": "6.2 Share-based payments The Group operates five share option schemes for employees: the Long-Term Incentive Plan (LTIP) for Executive Directors and senior employees, the Deferred Share Plan (DSP) for Executive Directors, One Drax Awards which are recognition and retention awards granted to certain employees below senior management, the Employee Stock Purchase Plan (ESPP) for all qualifying US and Canada- based employees, and the Save As You Earn (SAYE) scheme for all qualifying UK employees. The Group incurs a non-cash charge in respect of these schemes in the Consolidated income statement, which is set out below along with a description of each scheme and the number of options outstanding at the reporting date. Accounting policy The LTIP, DSP, One Drax Awards, ESPP and SAYE share-based payment schemes are equity-settled. Equity-settled share-based payments are measured at the fair value of the equity instrument at the date of grant. The corresponding expense is recognised in the Consolidated income statement on a straight-line basis over the relevant vesting period, based on an estimate of the number of shares that will ultimately vest as a result of the effect of non-market-based vesting conditions, which is revised at each reporting date. Market-based vesting conditions are factored into the calculation of the fair value of options granted at the date of grant and are not subsequently remeasured. If share options are cancelled due to non-vesting conditions not being met, for example employees withdrawing (by choice) part way through the vesting period or not exercising their options in the exercise period after they vest, the charge for such options is accelerated at the point of cancellation. If share options are forfeited due to employees failing to meet continuing service conditions of a grant, or failing to meet non-market performance conditions, then these options do not attract a charge and any previously recognised charge is reversed. Costs recognised in the Consolidated income statement in relation to share-based payments during the year were as follows:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
LTIP
7.1
8.7
DSP
0.6
0.5
One Drax Awards
1.6
1.4
ESPP
0.2
0.1
SAYE
4.6
3.1
Total share-based payment expense included within staff costs (note 6.1)
14 .1
13.8
Movements in the number of share options outstanding at the reporting date for each scheme is shown below. The following schemes are discretionary award schemes and have no exercise price.
LTIP DSP One Drax Awards
(number) (number) (number)
At 1 January 2023
5,699,371
367,745
136,747
Granted
2,282,798
101,657
262,526
Dividend shares granted
292,009
24,999
3,922
Forfeited
(13 8 ,14 6)
\u2013
(2,738)
Exercised
(2,750,860)
(208,627)
(140,669)
At 1 January 2024
5,385,172
285,774
259,788
Granted
3,065,741
106,341
360,448
Dividend shares granted
171,367
10,460
9,053
Forfeited
(228,490)
\u2013
(31,443)
Exercised
(1,846,285)
(109,827)
(260,439)
At 31 December 2024
6,547,505
292,748
337,407
The following schemes are share purchase schemes and therefore weighted average exercise prices are presented.
ESPP
SAYE
Three-year Five-year
weighted weighted
Weighted average average average
exercise price ESPP exercise price SAYE three-year exercise price SAYE five-year
(pence) (number) (pence) (number) (pence) (number)
At 1 January 2023
\u2013
\u2013
178
8,163, 668
155
2,464,862
Granted
469
64,497
498
1,9 9
6 ,117
498
197, 82 5
Forfeited
\u2013
\u2013
327
(46,063)
432
(8,228)
Exercised
\u2013
\u2013
127
(6,831,232)
219
(15,727)
Cancelled
\u2013
\u2013
509
(395,588)
496
(52,923)
At 1 January 2024
469
64,497
470
2,886,902
173
2,585,809
Granted
468
126,303
378
3,334,272
378
470,417
Forfeited
469
(3,801)
455
(111,452)
461
(4,521)
Exercised
398
(126,938)
327
(634,525)
290
(33,319)
Cancelled
\u2013
\u2013
496
(1,570,144)
492
(205,988)
Expired
\u2013
\u2013
331
(4,572)
298
(1,008)
At 31 December 2024
544
60,061
405
3,900,481
182
2,811,390
Key information about each active scheme for options granted and exercised in the current and prior year is presented below.
Year ended 31 December 2024
Scheme
LTIP
DSP
One Drax Awards
ESPP
SAYE three-year
SAYE five-year
Weighted average share price of options
exercised during the year at the date of
exercise (pence)
484
484
484
565
538
538
Number of options exercisable at reporting
date
120,705
13,351
\u2013
\u2013
149,486
120,418
Weighted average exercise price of options
exercisable at reporting date (pence)
\u2013
\u2013
\u2013
\u2013
427
142
Range of exercise price of options Between 378 Between 127
outstanding at reporting date (pence)
\u2013
\u2013
\u2013
544
and 563 and 563
Weighted average remaining contractual
life (months)
51
22
2
2
32
20
Year ended 31 December 2023
Scheme
LTIP
DSP
One Drax Awards
ESPP
SAYE three-year
SAYE five-year
Weighted average share price of options
exercised during the year at the date of
exercise (pence)
621
621
621
\u2013
554
604
Number of options exercisable at reporting
date
119
,10 2
13,351
\u2013
\u2013
25,207
712
Weighted average exercise price of options
exercisable at reporting date (pence)
\u2013
\u2013
\u2013
\u2013
462
498
Range of exercise price of options Between Between
outstanding at reporting date (pence)
\u2013
\u2013
\u2013
469
127 and 563 127 and 563
Weighted average remaining contractual
life (months)
17
14
3
2
22
20
The fair value of share options is calculated using a Monte Carlo simulation if the scheme vests subject to market conditions, or the Black-Scholes model otherwise. The Monte Carlo simulation takes into account the estimated probability of different levels of vesting for share options with market-based vesting conditions and produces a probability-based fair value calculation. The key inputs to both the Monte Carlo and Black-Scholes valuation models are the share price at the date of grant, exercise price where applicable, dividend yield on the underlying share, time to expiry of the option, expected volatility and risk-free interest rate. Expected volatility for each scheme is determined by calculating the historical volatility of the Group\u2019s share price over the same length of time as the vesting period for that scheme. The expected life used in the valuations is based on the length of the vesting period. This is based on management\u2019s best estimate for the effects of non-transferability, exercise restrictions and behavioural considerations. The risk-free interest rate is determined using the rate for the equivalent length zero-coupon UK Government bond for each scheme. Information about the valuation models used for options granted during the current and prior year, and relevant inputs to those models, is set out in the tables below. Year ended 31 December 2024 One Drax SAYE SAYE Scheme LTIP LTIP DSP Awards ESPP ESPPthree-year five-year 15 March 3 September 15 March 15 March 1 March 1 September 10 April 10 April Grant date 2024 2024 2024 2024 2024 2024 2024 2024 Monte Monte Black- Black- Black- Black- Black- Black- Valuation model used Carlo Carlo Scholes Scholes Scholes Scholes Scholes Scholes Share price at grant date (pence) 473 641 473 473 466 639 483 483 Exercise price (pence) \u2013 \u2013 \u2013 \u2013 396 543 378 378 Dividend yield \u2013 \u2013 \u2013 \u2013 5.97% 3.17% 5.80% 6.42% Vesting period of options granted 3 years 3 years 3 years 1 year 6 months 6 months 3 years 5 years Expected volatility 37. 48% 38.20% 37.4 8% 35.35% 42.23% 37.39% 36.94% 4 0.15% Annual risk-free interest rate 4.28% 3.88% 4.28% 4.98% 5.24% 4.80% 4.13% 4.03% Weighted average fair value of options granted at measurement date (pence) 363 447 473 473 109 147 132 132
Year ended 31 December 2023
One Drax
Scheme
LTIP
LTIP
DSP
Awards
ESPP
SAYE three-year
SAYE five-year
31 March 5 September 31 March 31 March 1 September 12 April 12 April
Grant date 2023 2023 2023 2023 2023 2023 2023
Monte Monte Black- Black- Black- Black- Black-
Valuation model used Carlo Carlo Scholes Scholes Scholes Scholes Scholes
Share price at grant date (pence)
608
545
608
608
547
641
641
Exercise price (pence)
\u2013
\u2013
\u2013
\u2013
469
498
498
Dividend yield
\u2013
\u2013
\u2013
\u2013
3.57%
4 .10%
4.54%
Vesting period of options granted
3 years
3 years
3 years
1 year
6 months
3 years
5 years
Expected volatility
39.92%
39.92%
36.35%
37. 25%
26.95%
36.35%
38.95%
Annual risk-free interest rate
3.56%
3.56%
4.94%
5.17%
4.97%
4.94%
4.62%
Weighted average fair value of options
granted at measurement date (pence)
481
481
608
585
110
205
220
Each of the Group\u2019s share-based payment schemes vest subject to continued employment, or \u201cgood leaver\u201d termination provisions. For the LTIP, DSP and One Drax Awards, each time a dividend is paid out during the vesting period of the scheme, participants are entitled to receive further share options of equivalent value to the dividends, determined using the market value of shares on the ex-dividend date, and which are formally granted on the vesting date for each scheme. As such, a dividend yield of 0% is input into the fair value calculations for each of these schemes to reflect that the fair value of each share option is not reduced by dividends paid out over the vesting period. LTIP The LTIP was introduced in 2020 for Executive Directors and senior employees. Under the LTIP, annual awards of performance and service-related shares are made for no consideration to Executive Directors and other senior employees up to a maximum of 200% of their annual base salary. Vesting of 50% of the shares is conditional upon whether the Group\u2019s Total Shareholder Return (TSR) matches or outperforms an index (determined in accordance with the scheme rules) over three years, and vesting of the remaining 50% of shares is conditional upon performance of cumulative Adjusted basic EPS over three years. The fair value of LTIP options with the TSR vesting condition is calculated with the support of external specialists due to the TSR vesting condition being market-based and therefore requiring a valuation to be performed using a Monte Carlo simulation. DSP The Group operates the DSP, under which Executive Directors receive 40% of their annual bonus in share options. DSP awards are granted at nil cost and vest after three years. One Drax Awards One Drax Awards are granted to certain employees below senior management and vest after one year. The number of shares awarded to the employee is equivalent to 10% of their base salary based on the Group\u2019s share price at the grant date. ESPP The ESPP scheme is offered to all US and Canada-based qualifying employees biannually. Under the ESPP, employees are granted the option to purchase shares at a 15% discount to the market price of Drax Group plc shares, based on the lower of the market price at the grant date and the market price at the vesting date. The options are exercisable at the end of six-month savings contracts, under which an employee selects a fixed percentage of their salary to be put towards the scheme. SAYE Participation in the SAYE scheme (Sharesave) is offered to all UK qualifying employees every April. Options are granted for employees to acquire shares at a discount of 20% to the market price of Drax Group plc shares, based on the average closing price for the five days immediately preceding the grant date, determined in accordance with the scheme rules. The options are exercisable at the end of three or five-year savings contracts. Additional information in relation to the Group\u2019s share-based incentive plans is included in the Remuneration Committee report on pages 135 and 136. ", "dimensions": { "concept": "ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-707": { "value": "Accounting policy The LTIP, DSP, One Drax Awards, ESPP and SAYE share-based payment schemes are equity-settled. Equity-settled share-based payments are measured at the fair value of the equity instrument at the date of grant. The corresponding expense is recognised in the Consolidated income statement on a straight-line basis over the relevant vesting period, based on an estimate of the number of shares that will ultimately vest as a result of the effect of non-market-based vesting conditions, which is revised at each reporting date. Market-based vesting conditions are factored into the calculation of the fair value of options granted at the date of grant and are not subsequently remeasured. If share options are cancelled due to non-vesting conditions not being met, for example employees withdrawing (by choice) part way through the vesting period or not exercising their options in the exercise period after they vest, the charge for such options is accelerated at the point of cancellation. If share options are forfeited due to employees failing to meet continuing service conditions of a grant, or failing to meet non-market performance conditions, then these options do not attract a charge and any previously recognised charge is reversed. Accounting policy Payments to defined contribution schemes are recognised as an expense when employees have rendered services that entitle them to the contributions. The Consolidated income statement charge for the defined contribution schemes represents the total contributions to be paid by the Group in respect of the current period. For the defined benefit pension scheme, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each reporting period. Remeasurement of the obligation, comprising actuarial gains and losses and the return on plan assets (excluding interest), is recognised immediately in the Consolidated balance sheet with a charge or credit to the Consolidated statement of comprehensive income in the period in which it occurs. Defined benefit costs, including current service costs, past service costs, and gains and losses on curtailments and settlements, are recognised in the Consolidated income statement as part of operating and administrative expenses in the period in which they occur. The net interest expense or income is recognised in the Consolidated income statement within either interest payable and similar charges or interest receivable and similar gains. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-726": { "value": "Accounting policy The LTIP, DSP, One Drax Awards, ESPP and SAYE share-based payment schemes are equity-settled. Equity-settled share-based payments are measured at the fair value of the equity instrument at the date of grant. The corresponding expense is recognised in the Consolidated income statement on a straight-line basis over the relevant vesting period, based on an estimate of the number of shares that will ultimately vest as a result of the effect of non-market-based vesting conditions, which is revised at each reporting date. Market-based vesting conditions are factored into the calculation of the fair value of options granted at the date of grant and are not subsequently remeasured. If share options are cancelled due to non-vesting conditions not being met, for example employees withdrawing (by choice) part way through the vesting period or not exercising their options in the exercise period after they vest, the charge for such options is accelerated at the point of cancellation. If share options are forfeited due to employees failing to meet continuing service conditions of a grant, or failing to meet non-market performance conditions, then these options do not attract a charge and any previously recognised charge is reversed. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSharebasedPaymentTransactionsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-627": { "value": "
LTIP DSP One Drax Awards
(number) (number) (number)
At 1 January 2023
5,699,371
367,745
136,747
Granted
2,282,798
101,657
262,526
Dividend shares granted
292,009
24,999
3,922
Forfeited
(13 8 ,14 6)
\u2013
(2,738)
Exercised
(2,750,860)
(208,627)
(140,669)
At 1 January 2024
5,385,172
285,774
259,788
Granted
3,065,741
106,341
360,448
Dividend shares granted
171,367
10,460
9,053
Forfeited
(228,490)
\u2013
(31,443)
Exercised
(1,846,285)
(109,827)
(260,439)
At 31 December 2024
6,547,505
292,748
337,407
The following schemes are share purchase schemes and therefore weighted average exercise prices are presented.
ESPP
SAYE
Three-year Five-year
weighted weighted
Weighted average average average
exercise price ESPP exercise price SAYE three-year exercise price SAYE five-year
(pence) (number) (pence) (number) (pence) (number)
At 1 January 2023
\u2013
\u2013
178
8,163, 668
155
2,464,862
Granted
469
64,497
498
1,9 9
6 ,117
498
197, 82 5
Forfeited
\u2013
\u2013
327
(46,063)
432
(8,228)
Exercised
\u2013
\u2013
127
(6,831,232)
219
(15,727)
Cancelled
\u2013
\u2013
509
(395,588)
496
(52,923)
At 1 January 2024
469
64,497
470
2,886,902
173
2,585,809
Granted
468
126,303
378
3,334,272
378
470,417
Forfeited
469
(3,801)
455
(111,452)
461
(4,521)
Exercised
398
(126,938)
327
(634,525)
290
(33,319)
Cancelled
\u2013
\u2013
496
(1,570,144)
492
(205,988)
Expired
\u2013
\u2013
331
(4,572)
298
(1,008)
At 31 December 2024
544
60,061
405
3,900,481
182
2,811,390
", "dimensions": { "concept": "ifrs-full:DisclosureOfNumberAndWeightedAverageExercisePricesOfShareOptionsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-628": { "value": "Defined contribution schemes The Group operates three defined contribution schemes for all qualifying employees. Pension costs for the defined contribution schemes are as follows:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Total included in staff costs (note 6.1)
24.1
21.4
As at 31 December 2024, contributions of \u00a33.1 million (2023: \u00a30.4 million) due in respect of the current reporting period had not been paid over to the schemes. This has been recognised within trade and other payables and contract liabilities within the Consolidated balance sheet. The Group has no further outstanding payment obligations in respect of the current reporting period once these contributions have been paid. ", "dimensions": { "concept": "ifrs-full:DisclosureOfDefinedContributionPlansExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-629": { "value": "Defined benefit scheme The Group currently operates one defined benefit scheme. The net pension surplus is as follows:
As at 31 December
2024 2023
\u00a3m \u00a3m
Total net surplus recognised in the Consolidated balance sheet
24.7
18.4
At 31 December 2024, application of the accounting assumptions used in relation to the defined benefit scheme, which are described in further detail below, continued to result in a net position of surplus assets over liabilities. The Drax 2019 Scheme (the Scheme) is a defined benefit final salary plan, where employees are entitled to retirement benefits based on their final salary on attainment of retirement age (or earlier withdrawal or death). Pensions are payable for life and updated in line with inflationary increases. No other post-retirement benefits are provided. The Scheme is open to future accrual of benefits but closed to new members. The Group and Trustee have agreed a long-term strategy for reducing investment risk as and when appropriate. This includes an asset-liability matching policy which aims to reduce the volatility of the funding level of the Scheme by investing in assets that perform in line with the liabilities to protect against interest rates being lower or inflation being higher than expected. The Scheme exposes the Group to actuarial and other risks, the most significant of which are considered to be:
Investment risk
The Scheme\u2019s liabilities are calculated using a discount rate set with reference to corporate bond yields;
if assets underperform against this yield, this creates a deficit. The Scheme holds a significant proportion
of growth assets (diversified growth funds, direct lending, credit and property) which, though expected
to outperform corporate bonds in the long term, create volatility and risk in the short term. The allocation
to growth assets is monitored to ensure it remains appropriate given this scheme\u2019s long-term objectives.
Discount rate risk
A decrease in corporate bond yields will increase the value placed upon the Scheme\u2019s liabilities, although
this will be partially offset by an increase in the value of the Scheme\u2019s bond holdings.
Longevity risk
The majority of the Scheme\u2019s obligations are to provide benefits for the life of the member, so increases in
life expectancy will result in an increase in the liabilities of the Scheme.
Inflation risk
The majority of the Scheme\u2019s obligations to pay benefits are linked to RPI inflation and, as such, higher
inflation leads to higher liabilities. In most cases, caps on inflationary increases are in place to protect against
extreme inflation. The Scheme has a significant holding in liability-driven investments to protect against
inflation risk.
Credit risk
Around 95% of the Scheme\u2019s overall funded liabilities are currently hedged against interest rates and inflation
using liability-driven investments. The Scheme hedges interest rate risks on a statutory and long-term funding
basis (gilts driven) whereas AA corporate bonds are implicit in the discount rate and so there is a degree of
mismatching risk to the Group should yields on gilts and corporate bonds diverge. The Scheme\u2019s holding in
corporate bonds mitigates this risk to some extent.
Other risks include operational risks (such as paying out the wrong benefits), legislative risks (such as the UK Government increasing the burden on pension schemes through new regulation), and other demographic risks (such as making a higher proportion of members with dependents eligible to receive pensions from the Group). The Trustee ensures certain benefits are payable on death before retirement. The Scheme\u2019s liabilities shown below reflects management\u2019s understanding of the benefits due at the date of the report and make no allowance for any potential impact on benefits of recent case law (such as the recent High Court judgment in the case of Virgin Media Limited vs NTL Pension Trustees II Limited). A qualified third-party actuary, Aon, carried out the most recent funding valuation of the Scheme as at 31 March 2022. The actuarial review at 31 December 2024 is based on the same membership and other data as this funding valuation. The Scheme\u2019s Board accepted the advice of the actuary and approved the use of these assumptions for the purpose of assessing the Scheme\u2019s costs. The result of the latest funding valuation has been adjusted to 31 December 2024, taking into account experience over the period since 31 March 2022, changes in market conditions and differences in financial and demographic assumptions. The present value of the defined benefit obligation and the related current service costs were measured using the projected unit credit method. The principal assumptions for the Scheme across the current and prior year are set out below.
As at 31 December
2024 2023
% p.a. % p.a.
Discount rate
5.5
4.6
Inflation (RPI)
3.0
2.8
Rate of increase in pensions in payment and deferred pensions
2.8
2.7
Rate of increase in pensionable salaries
3.4
3.2
The defined benefit obligation for the Scheme as at 31 December 2024 allows for expected benefit increases that will be awarded in 2025, based on known 2024 indices. Mortality assumptions are based on recent actual mortality experience of the Scheme\u2019s members and allow for expected future changes in mortality rates. The assumptions are that a member aged 60 in 2024 will live, on average, for a further 25 years if they are male (2023: 25 years) and for a further 27 years if they are female (2023: 27 years). Life expectancy at age 60 for male and female non-pensioners currently aged 45 is assumed to be 26 and 28 years respectively (2023: 26 and 28 years respectively). The weighted average duration of the Scheme at 31 December 2024 based on the IAS 19 position was 15 years (2023: 16 years). The defined benefit obligation in respect of the Scheme includes benefits for current employees of the Group (28%), former employees of the Group who are yet to retire (10%) and retired pensioners (62%). The net surplus recognised in the Consolidated balance sheet in respect of the Scheme is the excess of the fair value of the plan assets over the present value of the defined benefit obligation, determined as follows:
As at 31 December
2024 2023
\u00a3m \u00a3m
Fair value of plan assets
203.4
220.3
Defined benefit obligation
(178.7)
(201.9)
Net surplus recognised in the Consolidated balance sheet
24.7
18.4
The total charges and credits recognised in the Consolidated income statement, within operating and administrative expenses and interest receivable and similar gains, are as follows:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Included in staff costs (note 6.1):
Current service cost
2.1
2.3
Included in interest receivable (note 2.5):
Interest income on net defined benefit surplus
(0.9)
(2 .1)
Total amount recognised in the Consolidated income statement
1.2
0.2
Changes in the present value of the defined benefit obligation of the Scheme are as follows:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Defined benefit obligation at 1 January
201.9
181.1
Current service cost
2.1
2.3
Interest cost
9.0
8.0
Actuarial (gains)/losses
(24.3)
21.8
Benefits paid
(10.0)
(11.3)
Defined benefit obligation at 31 December
178.7
201.9
The actuarial gains of \u00a324.3 million (2023: losses of \u00a321.8 million) reflect gains of \u00a323.5 million (2023: losses of \u00a30.3 million) arising from changes in financial assumptions, losses of \u00a31.0 million (2023: \u00a322.4 million) arising from scheme experience, and gains of \u00a31.8 million (2023: \u00a30.9 million) arising from changes in demographic assumptions. The gains in the current year are due to changes in financial assumptions and principally reflect the reduction in the present value of the Scheme\u2019s liabilities arising as a result of the movement in discount rate assumption to 5.5% p.a. (2023: 4.6% p.a.) following an increase in corporate bond yields. This was partly offset by a slight increase in overall long-term inflationary assumptions, reflecting market pricing. Changes in the fair value of plan assets are as follows:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Fair value of plan assets at 1 January
220.3
219.6
Interest on plan assets
9.9
10 .1
Remeasurement losses on fair value of plan assets
(18.8)
(7.0)
Employer contributions
2.0
8.9
Benefits paid
(10.0)
(11.3)
Fair value of plan assets at 31 December
203.4
220.3
Employer contributions included payments totalling \u00a3nil (2023: \u00a34.3 million) to reduce the actuarial deficit related to the legacy DPG ESPS. There were contributions of \u00a30.2 million outstanding at the end of the year (2023: \u00a30.2 million). The actual return on plan assets in the period was a loss of \u00a38.9 million (2023: gain of \u00a33.1 million). Remeasurement gains on the defined benefit pension scheme of \u00a35.5 million (2023: losses of \u00a328.8 million) were recognised in the Consolidated statement of comprehensive income. These are made up as follows:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Actuarial gains/(losses) on defined benefit obligation
24.3
(21.8)
Remeasurement losses on fair value of plan assets
(18.8)
(7.0)
Total remeasurement gains/(losses) recognised in other comprehensive income
5.5
(28.8)
The fair values of the major categories of plan assets were as follows (all assets are quoted, except for cash and cash equivalents or otherwise stated):
As at 31 December
2024 2023
\u00a3m \u00a3m
Gilts
85.5
110.3
Equities
(1)
31.3
24 .1
Bonds
(2)
22.7
5.0
Property
21.7
15 .1
Infrastructure
9.6
\u2013
Investment funds
\u2013
4.5
Cash and cash equivalents
5.3
10.5
Other assets
(3)
27.3
50.8
Fair value of total plan assets
203.4
220.3
(1) As at 31 December 2024, the Scheme\u2019s target long-term asset strategy was: diversified growth funds (39%), private credit (10%), secure income alternatives (7.5%) and liability driven investing/cash (43.5%). As at 31 December 2023, the Scheme\u2019s target long-term asset strategy was: diversified growth funds (34%), private credit (12%), hedge funds (3%), secure income alternatives (7%) and liability driven investing/cash (44%). (2) Bonds include a mixture of corporate, high yield, emerging market, UK Government and absolute return bonds. (3) Other assets include \u00a316.6 million (2023: \u00a325.8 million) of investments in private credit, a type of private equity vehicle which is not quoted in an active market. The fair value of these investments is derived in accordance with International Private Equity and Venture Capital Valuation (IPEV) Guidelines. All other assets are quoted in an active market, including \u00a34.7 million (2023: \u00a3nil) in respect of downside risk management and \u00a34.0 million (2023: \u00a3nil) relating to asset-backed securities (ABS).
The pension plan assets do not include any ordinary shares issued by Drax Group plc or any property occupied by the Group.
The valuation of the pension liabilities has been disclosed as a key source of estimation uncertainty due to the assumptions used in
the valuation. The assumptions for discount rate, inflation rate (and related inflation-linked benefits), and life expectancy have a
potentially significant effect on the measurement of the Scheme\u2019s surplus. The following table provides an indication of the sensitivity
of the net pension surplus at 31 December to changes in these assumptions, considering the impact on the defined benefit obligation
only. If a combination of the below reasonably possible changes to key assumptions were used in the valuation of the pension
obligations, this could result in a material change to the amount recognised.
Increase/(decrease) in net surplus
2024 2023
As at 31 December \u00a3m \u00a3m
Discount rate
\u2013 Increase
0.25%
6.3
7.9
\u2013 Decrease
0.25%
(6.5)
(8.2)
Inflation rate
(1)
\u2013 Increase
0.25%
(5.2)
(6.5)
\u2013 Decrease
0.25%
5.1
6.3
Life expectancy
\u2013 Increase
1 year
(4.8)
(7.2)
\u2013 Decrease
1 year
5.1
7.4
(1) The sensitivity of the Scheme\u2019s liabilities to salary and pension increases is closely correlated with inflation, therefore separate sensitivities have not been performed on
salary and pension increases and the inflationary sensitivity incorporates these.
The Group is exposed to investment and other risks. However, these risks are mitigated by the Scheme being around 95% hedged
against movements in UK Government bonds and inflation of appropriate duration. This means from a discount rate perspective that
the Scheme is broadly only exposed to changes in credit spreads plus around 5% of changes in underlying gilt yields and, for inflation,
the Scheme\u2019s exposure is around 5% of any actual changes.
Future contributions
UK legislation requires that pension schemes are funded prudently (i.e. to a level in excess of the current expected cost of providing
benefits). This funding is carried out with reference to actuarial valuations which are required by law to take place at intervals of no
more than three years. Following each valuation, the Trustee and the Group must agree the contributions required (if any) such that
the Scheme is fully funded over time on the basis of suitably prudent assumptions.
The Group expects to make total contributions of \u00a31.9 million to the Scheme during the 12 months ending 31 December 2025.
The latest actuarial valuation of the Drax 2019 Scheme which was carried out as at 31 March 2022 resulted in a funding surplus
of \u00a313.9 million and so no deficit recovery plan was required.
The Group agreed to make additional contributions to the Drax 2019 Scheme from February 2023 to June 2023 and an additional
payment in 2026 to fully fund the Scheme on a low-risk basis, as agreed between the Group and Trustee at the time, through the
provision of a surety bond. At this point, the Scheme is expected to be self-sufficient, unless material adverse changes in economic
conditions arise compared to those assumed in the valuation. The Group is satisfied that the additional contributions are manageable
within the Group\u2019s business plan.
The Trust Deeds of the Scheme provide the sponsors of the Scheme with an unconditional right to a refund of surplus assets assuming
the gradual settlement of plan liabilities over time. Based on these rights, any net surplus in the Scheme is recognised in full in the
Consolidated balance sheet.
Update on the Virgin Media Limited v NTL Pension Trustees II Limited case
In June 2023, the High Court issued a ruling in the case of Virgin Media Limited v NTL Pension Trustees II Limited and others relating
to the validity of certain historical pension changes. The ruling confirmed the need for actuarial confirmation where schemes made
changes to benefits between 6 April 1997 and 5 April 2016, and any relevant amendments were void without the appropriate
confirmation. During 2024, Virgin Media Limited appealed the High Court\u2019s decision through the Court of Appeal, but this was upheld
on 25 July 2024.
The Trustee has taken legal advice and concluded that it is reasonable to believe that previous rule amendments were carried out
in accordance with the relevant requirements and that no further action is needed as this stage.
Notwithstanding this initial risk assessment there remain areas of uncertainty that could potentially require legal clarification.
Management has performed an assessment to understand the potential impact of the ruling in the case and based on this are satisfied
that there is no material liability or probable outflow, and as such, no adjustment has been reflected within the defined benefit
obligation at this time.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDefinedBenefitPlansExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-660": { "value": "Changes in the present value of the defined benefit obligation of the Scheme are as follows:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Defined benefit obligation at 1 January
201.9
181.1
Current service cost
2.1
2.3
Interest cost
9.0
8.0
Actuarial (gains)/losses
(24.3)
21.8
Benefits paid
(10.0)
(11.3)
Defined benefit obligation at 31 December
178.7
201.9
The actuarial gains of \u00a324.3 million (2023: losses of \u00a321.8 million) reflect gains of \u00a323.5 million (2023: losses of \u00a30.3 million) arising from changes in financial assumptions, losses of \u00a31.0 million (2023: \u00a322.4 million) arising from scheme experience, and gains of \u00a31.8 million (2023: \u00a30.9 million) arising from changes in demographic assumptions. The gains in the current year are due to changes in financial assumptions and principally reflect the reduction in the present value of the Scheme\u2019s liabilities arising as a result of the movement in discount rate assumption to 5.5% p.a. (2023: 4.6% p.a.) following an increase in corporate bond yields. This was partly offset by a slight increase in overall long-term inflationary assumptions, reflecting market pricing. Changes in the fair value of plan assets are as follows:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Fair value of plan assets at 1 January
220.3
219.6
Interest on plan assets
9.9
10 .1
Remeasurement losses on fair value of plan assets
(18.8)
(7.0)
Employer contributions
2.0
8.9
Benefits paid
(10.0)
(11.3)
Fair value of plan assets at 31 December
203.4
220.3
Employer contributions included payments totalling \u00a3nil (2023: \u00a34.3 million) to reduce the actuarial deficit related to the legacy DPG ESPS. There were contributions of \u00a30.2 million outstanding at the end of the year (2023: \u00a30.2 million). The actual return on plan assets in the period was a loss of \u00a38.9 million (2023: gain of \u00a33.1 million). Remeasurement gains on the defined benefit pension scheme of \u00a35.5 million (2023: losses of \u00a328.8 million) were recognised in the Consolidated statement of comprehensive income. These are made up as follows:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Actuarial gains/(losses) on defined benefit obligation
24.3
(21.8)
Remeasurement losses on fair value of plan assets
(18.8)
(7.0)
Total remeasurement gains/(losses) recognised in other comprehensive income
5.5
(28.8)
The fair values of the major categories of plan assets were as follows (all assets are quoted, except for cash and cash equivalents or otherwise stated):
As at 31 December
2024 2023
\u00a3m \u00a3m
Gilts
85.5
110.3
Equities
(1)
31.3
24 .1
Bonds
(2)
22.7
5.0
Property
21.7
15 .1
Infrastructure
9.6
\u2013
Investment funds
\u2013
4.5
Cash and cash equivalents
5.3
10.5
Other assets
(3)
27.3
50.8
Fair value of total plan assets
203.4
220.3
(1) As at 31 December 2024, the Scheme\u2019s target long-term asset strategy was: diversified growth funds (39%), private credit (10%), secure income alternatives (7.5%) and liability driven investing/cash (43.5%). As at 31 December 2023, the Scheme\u2019s target long-term asset strategy was: diversified growth funds (34%), private credit (12%), hedge funds (3%), secure income alternatives (7%) and liability driven investing/cash (44%). (2) Bonds include a mixture of corporate, high yield, emerging market, UK Government and absolute return bonds. (3) Other assets include \u00a316.6 million (2023: \u00a325.8 million) of investments in private credit, a type of private equity vehicle which is not quoted in an active market. The fair value of these investments is derived in accordance with International Private Equity and Venture Capital Valuation (IPEV) Guidelines. All other assets are quoted in an active market, including \u00a34.7 million (2023: \u00a3nil) in respect of downside risk management and \u00a34.0 million (2023: \u00a3nil) relating to asset-backed securities (ABS). The pension plan assets do not include any ordinary shares issued by Drax Group plc or any property occupied by the Group. The valuation of the pension liabilities has been disclosed as a key source of estimation uncertainty due to the assumptions used in the valuation. The assumptions for discount rate, inflation rate (and related inflation-linked benefits), and life expectancy have a potentially significant effect on the measurement of the Scheme\u2019s surplus. The following table provides an indication of the sensitivity of the net pension surplus at 31 December to changes in these assumptions, considering the impact on the defined benefit obligation only. If a combination of the below reasonably possible changes to key assumptions were used in the valuation of the pension obligations, this could result in a material change to the amount recognised. ", "dimensions": { "concept": "ifrs-full:DisclosureOfNetDefinedBenefitLiabilityAssetExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-650": { "value": "The following table provides an indication of the sensitivity of the net pension surplus at 31 December to changes in these assumptions, considering the impact on the defined benefit obligation only. If a combination of the below reasonably possible changes to key assumptions were used in the valuation of the pension obligations, this could result in a material change to the amount recognised.
Increase/(decrease) in net surplus
2024 2023
As at 31 December \u00a3m \u00a3m
Discount rate
\u2013 Increase
0.25%
6.3
7.9
\u2013 Decrease
0.25%
(6.5)
(8.2)
Inflation rate
(1)
\u2013 Increase
0.25%
(5.2)
(6.5)
\u2013 Decrease
0.25%
5.1
6.3
Life expectancy
\u2013 Increase
1 year
(4.8)
(7.2)
\u2013 Decrease
1 year
5.1
7.4
(1) The sensitivity of the Scheme\u2019s liabilities to salary and pension increases is closely correlated with inflation, therefore separate sensitivities have not been performed on salary and pension increases and the inflationary sensitivity incorporates these. The Group is exposed to investment and other risks. However, these risks are mitigated by the Scheme being around 95% hedged against movements in UK Government bonds and inflation of appropriate duration. This means from a discount rate perspective that the Scheme is broadly only exposed to changes in credit spreads plus around 5% of changes in underlying gilt yields and, for inflation, the Scheme\u2019s exposure is around 5% of any actual changes. ", "dimensions": { "concept": "ifrs-full:DisclosureOfSensitivityAnalysisForActuarialAssumptionsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-600": { "value": "7.1 Financial instruments and their fair values The Group holds a variety of derivative and non-derivative financial instruments, including cash and cash equivalents, borrowings, payables and receivables arising from operations. Accounting classifications and fair values IFRS 13 requires categorisation of the Group\u2019s financial instruments in accordance with the following hierarchy in order to explain the basis on which their fair values have been determined: \u2013 Level 1 \u2013 Fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities \u2013 Level 2 \u2013 Fair value measurements are those derived from inputs, other than quoted prices, included within Level 1, that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) \u2013 Level 3 \u2013 Fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs) Categorisation within this fair value measurement hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset or liability. The table below shows the carrying amounts and fair values of financial assets and liabilities, including their levels in the fair value hierarchy as defined by IFRS 13. It does not include fair value information for lease liabilities, or for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value. Cash and cash equivalents (note 4.1), trade and other receivables (note 3.5), and trade and other payables (note 3.7) generally have a short time to maturity. For this reason, their carrying values, on the historical cost basis, are approximate to their fair values. The Group\u2019s borrowings relate principally to the publicly traded high-yield loan notes and amounts drawn against term loans (note 4.2). These financial liabilities are measured at amortised cost.
Carrying amount
Fair value
Financial Financial
Fair value- Mandatorily assets at liabilities at
At 31 December 2024 hedging at FV TPL- amortised amortised
\u00a3m instruments
others
FVOCI
cost
cost
Total
Level 1
Level 2
Level 3
Tot al
Financial assets measured at fair value
Commodity contracts
101.9
51.6
\u2013
\u2013
\u2013
153.5
\u2013
153.5
\u2013
153.5
Foreign currency
exchange contracts
21.0
75.7
\u2013
\u2013
\u2013
96.7
\u2013
96.7
\u2013
96.7
Interest rate and cross-
currency contracts
7.1
\u2013
\u2013
\u2013
\u2013
7.1
\u2013
7.1
\u2013
7.1
Contingent consideration
\u2013
9.4
\u2013
\u2013
\u2013
9.4
\u2013
\u2013
9.4
9.4
Trade and other
receivables
\u2013
0.3
38.9
\u2013
\u2013
39.2
\u2013
39.2
\u2013
39.2
Cash and cash equivalents
\u2013
103.1
\u2013
\u2013
\u2013
103.1
\u2013
103.1
\u2013
103.1
Financial assets not measured at fair value
Trade and other
receivables
\u2013
\u2013
\u2013
353.4
\u2013
353.4
Cash and cash equivalents
\u2013
\u2013
\u2013
252.9
\u2013
252.9
Financial liabilities measured at fair value
Commodity contracts
(50.9)
(30.9)
\u2013
\u2013
\u2013
(81.8)
\u2013
(81.8)
\u2013
(81.8)
Foreign currency
exchange contracts
(24.6)
(12.3)
\u2013
\u2013
\u2013
(36.9)
\u2013
(36.9)
\u2013
(36.9)
Interest rate and cross-
currency contracts
(30.6)
\u2013
\u2013
\u2013
\u2013
(30.6)
\u2013
(30.6)
\u2013
(30.6)
Inflation rate contracts
(184.0)
\u2013
\u2013
\u2013
\u2013
(184.0)
\u2013
(184.0)
\u2013
(184.0)
Financial liabilities not measured at fair value
Secured bank loans
\u2013
\u2013
\u2013
\u2013
(768.2)
(768.2)
\u2013
(771.2)
\u2013
(771.2)
Secured loan notes
\u2013
\u2013
\u2013
\u2013
(408.5)
(408.5)
(422.3)
\u2013
\u2013
(422.3)
Lease liabilities
\u2013
\u2013
\u2013
\u2013
(116.5)
(116.5)
Trade and other payables
\u2013
\u2013
\u2013
\u2013
(793.0)
(793.0)
Carrying amount
Fair value
Financial Financial
Fair value- Mandatorily assets at liabilities at
At 31 December 2023 hedging a t F V T P L- amortised amortised
\u00a3m instruments
others
FVOCI
cost
cost
Total
Level 1
Level 2
Level 3
Total
Financial assets measured at fair value
Commodity contracts
402.7
125.4
\u2013
\u2013
\u2013
528 .1
\u2013
528.1
\u2013
528.1
Foreign currency
exchange contracts
37.7
70.8
\u2013
\u2013
\u2013
108.5
\u2013
108.5
\u2013
108.5
Interest rate and cross-
currency contracts
25.4
\u2013
\u2013
\u2013
\u2013
25.4
\u2013
25.4
\u2013
25.4
Contingent consideration
\u2013
9.2
\u2013
\u2013
\u2013
9.2
\u2013
\u2013
9.2
9.2
Trade and other
receivables
\u2013
\u2013
242.2
\u2013
\u2013
242.2
\u2013
242.2
\u2013
242.2
Cash and cash equivalents
\u2013
171.1
\u2013
\u2013
\u2013
171.1
\u2013
171.1
\u2013
171.1
Financial assets not measured at fair value
Trade and other
receivables
\u2013
\u2013
\u2013
644.2
\u2013
644.2
Cash and cash equivalents
\u2013
\u2013
\u2013
208.4
\u2013
208.4
Financial liabilities measured at fair value
Commodity contracts
(58.8)
(134.4)
\u2013
\u2013
\u2013
(193.2)
\u2013
(193.2)
\u2013
(193.2)
Foreign currency
exchange contracts
(23.7)
(35.8)
\u2013
\u2013
\u2013
(59.5)
\u2013
(59.5)
\u2013
(59.5)
Interest rate and cross-
currency contracts
( 35.1)
\u2013
\u2013
\u2013
\u2013
( 35.1)
\u2013
( 35.1)
\u2013
( 35.1)
Inflation rate contracts
(250.4)
\u2013
\u2013
\u2013
\u2013
(250.4)
\u2013
(250.4)
\u2013
(250.4)
Financial liabilities not measured at fair value
Secured bank loans
\u2013
\u2013
\u2013
\u2013
(698 .1)
(6 98.1)
\u2013
(704.8)
\u2013
(704.8)
Unsecured bank loans
\u2013
\u2013
\u2013
\u2013
(120.0)
(120.0)
\u2013
(120.0)
\u2013
(120.0)
Secured loan notes
\u2013
\u2013
\u2013
\u2013
(607.2)
(6 07. 2)
(596.4)
\u2013
\u2013
(596.4)
Lease liabilities
\u2013
\u2013
\u2013
\u2013
(135.8)
(135.8)
Trade and other payables
\u2013
\u2013
\u2013
\u2013
(919.2)
(919.2)
The derivative financial instruments used by the Group and not subject to the own-use exemption have been categorised as follows: \u2013 Commodity contracts \u2013 forward contracts for the sale or purchase of a commodity which may or may not be settled through physical delivery of the commodity, as well as weather-related contracts \u2013 Foreign currency exchange contracts \u2013 currency-related contracts including forwards, swaps, vanilla options and structured option products \u2013 Interest rate and cross-currency contracts \u2013 contracts which swap one interest rate for another in a single currency, including floating-to-fixed interest rate swaps, and contracts which swap interest and principal cash flows in one currency for another currency, including fixed-to-fixed and floating-to-fixed cross-currency interest rate swaps \u2013 Inflation rate contracts \u2013 swap contracts, such as floating-to-fixed, which are linked to an inflation index such as the UK Retail Price Index (RPI) or the UK Consumer Price Index (CPI) Fair value measurement \u2013 Commodity contracts \u2013 the fair value of open commodity contracts that do not qualify for the own-use exemption, or are otherwise within the scope of IFRS 9, is calculated by reference to forward market prices at the reporting date \u2013 Foreign currency exchange contracts \u2013 the fair value of foreign currency exchange contracts is determined using forward currency exchange market rates at the reporting date \u2013 Interest rate contracts \u2013 the fair value of interest rate swaps is calculated by reference to forward market curves at the reporting date for the relevant interest index. The fair value of cross-currency interest rate swaps is calculated using the relevant forward currency exchange market rates for fixed-to-fixed swaps and by using the relevant forward currency exchange market rates and interest index for floating-to-fixed swaps \u2013 Inflation rate contracts \u2013 the fair value of inflation rate swaps is calculated by reference to forward market curves at the reporting date for the relevant inflation index Given the maturity profile of all these contracts, liquid forward market price curves are available for the duration of the contracts. The fair values of all derivative financial instruments are discounted to reflect both the time value of money and credit risk inherent within the instrument. The assessment of fair value is derived in part by reference to a market price or rate for the instrument in question. The Group bases its assessment of market prices or rates upon forward curves that are largely derived from readily obtainable prices or rates published from third-party sources. However, any forward curve is based, at least in part, upon assumptions about future transactions and market movements. Due to the nature of the derivative financial instruments the Group holds, minor differences in the inputs, assumptions or methodologies used can result in appropriate, but different, estimates of fair values to those recognised by the Group. There may be choices to be made regarding which methodology or data source to use in the calculation of fair value for each derivative contract. Assumptions may also need to be made where forward curves are not an exact match for the Group\u2019s derivative contracts (e.g. due to quoted product types, maturity dates or time periods not exactly matching the terms of the Group\u2019s derivative contracts), or where different forward curves are available. Where such instruments extend beyond the liquid portion of the forward curve, the level of estimation increases as the number of observable transactions decreases. However, given the maturity profile of the Group\u2019s contracts, liquid forward market price curves are usually available for the duration of the contracts. The fair value of derivatives is not, however, considered a key source of estimation uncertainty as reasonably possible changes in assumptions are not expected to result in a materially different value within the next financial year. Also, whilst there is a significant risk that the carrying amount of derivative assets and liabilities will change materially within the next financial year, as a result of movements in market prices or rates, the Group is not expecting to change its methodology or input sources in the next financial year. Any such changes are not as a result of assumptions or other sources of estimation uncertainty as at 31 December 2024 and therefore do not meet the definition of a key source of estimation uncertainty as defined by IAS 1. Sensitivities are provided in note 7.2 for the impact of changes in inputs on the fair value. The Group has reviewed all significant contracts for the presence of embedded derivatives. The EUR loan notes and the UK infrastructure private placement facility (2020) (see note 4.2) all contain early repayment options that meet the definition of embedded derivatives. However, in all cases, these do not require separate valuations as they are deemed to be closely related to the host contract. The fair value of commodity contracts, foreign currency exchange contracts, interest rate swaps, cross-currency interest rate swaps and inflation swaps are largely determined by comparison between observable, liquid, forward market prices or rates, and the trade price or rate; therefore, these contracts are categorised as Level 2. Credit risk is not a significant input to the fair value calculations. There have been no transfers during the current or prior year between Level 1, 2 or 3 category inputs. The Group is responsible for determining the policies and approach to valuations required for financial reporting purposes, including Level 3 fair values. No external specialists have been utilised for the valuation of the current or prior year derivative financial instruments. Valuation policies, approaches and the results are discussed with and approved by the CFO and the Audit Committee as required, based on the size, complexity and judgement required with each valuation. Level 3 fair values The contingent consideration receivable by the Group relates to the sale of the CCGT generation portfolio in 2021. The gross nominal value of \u00a329.0 million is contingent on certain triggers in respect of the option to develop the Damhead Creek 2 land disposed of as part of the sale of these assets. The fair value measurement of the contingent consideration has been categorised as Level 3 based on the inputs to the valuation techniques used.
Significant unobservable inputs and range of inputs Relationship between significant unobservable
Valuation approach (probability weighted) input and fair value measurement
Contingent The fair value of the contingent Forecasted future Capacity Market The fair value measurement would
consideration consideration is determined using a clearing prices: increase/(decrease) with:
discounted cash flow model. The \u00a32.54/kW \u2013 \u00a3101.00/kW \u2013 Higher/(lower) forecasted Capacity
valuation approach is based on a (Average \u2013 \u00a348.07/kW) Market clearing prices causing a
calculation of the probability of the higher/(lower) probability of the
option to develop the Damhead (2023: \u00a32.47/kW \u2013 \u00a377.20/kW) option over the Damhead Creek 2
Creek 2 land being exercised. This (2023: (Average \u2013 \u00a342.66/kW)) land being exercised
probability is calculated using a Estimated bid price at which \u2013 Lower/(higher) estimated bid price
range of forecasts for future Damhead Creek 2 is to be entered required for the Damhead Creek 2
Capacity Market auctions and the into the Capacity Market auction: development to proceed causing a
assumption that the option to higher/(lower) probability of the
develop the land would be exercised \u00a371.75/kW option over the Damhead Creek 2
if the Capacity Market price were to (2 02 3: \u00a367. 50 /kW ) land being exercised
clear above a certain level, providing
sufficient certainty on the
economics of the development.
During the year, inputs to the fair value calculation have been updated to reflect updates in both forecasted future Capacity Market
clearing prices and the estimated bid price at which Damhead Creek 2 would require to provide sufficient certainty on the economics
of the development.
The estimated bid price of \u00a371.75/kW (2023: \u00a367.50/kW) has increased with inflation during the year. The net impact of updating
the estimated bid price, recent Capacity Market clearing price forecasts, and the impact of unwinding the discount has resulted in
a \u00a30.2 million increase to the fair value of the contingent consideration (2023: \u00a318.2 million decrease).
During the prior year, due to significantly increased expectations relating to the cost to develop the project, the estimated bid price
increased from \u00a340.00/kW to \u00a367.50/kW. This, alongside the impact of updating the calculation with forecasts of future Capacity
Market clearing prices, resulted in an \u00a318.2 million decrease to the fair value of the contingent consideration. As the change in fair
value reflected the reversal of a previous credit recorded within exceptional items, and the decrease in fair value was above the
Group\u2019s threshold to be considered exceptional, the \u00a318.2 million decrease was excluded from Adjusted results and presented as an
exceptional item included within other gains or losses in the Consolidated income statement (see note 2.7). The current year increase
has not been excluded from Adjusted results as it does not meet the threshold for being considered exceptional and is included within
other gains and losses in the Consolidated income statement.
A reconciliation of the contingent consideration is detailed below:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Balance at 1 January
9.2
27.4
Net change in fair value
0.2
(18.2)
Balance at 31 December
9.4
9.2
There are no reasonably possible changes to unobservable inputs to the fair value calculation that would have a material impact on the
fair value measurement of the contingent consideration.
Accounting for derivatives
Derivatives (subject to certain exemptions described below) must be measured at fair value, which generally represents the difference
between the price the Group has secured in the contract, and the price the Group could achieve in the market at the reporting date.
Changes in fair value are recognised either within the Consolidated income statement or the hedge reserve and cost of hedging
reserve within the Consolidated statement of changes in equity, dependent upon whether the contract in question qualifies as an
effective hedge under IFRS 9 (see note 7.2).
The own-use exemption applies to certain contracts for physical commodities entered into and held for the Group\u2019s own purchase,
sale or usage requirements. The Group\u2019s own-use contracts, such as certain power purchase agreements (PPAs) and the Group\u2019s
energy supply contracts, are excluded from fair value mark-to-market accounting.
Contracts for non-financial assets which do not qualify for the own-use exemption (principally wholesale power, gas, financial oil and
carbon emissions allowances) and financial contracts (principally foreign exchange, interest, inflation and freight) are accounted for
as derivatives in accordance with IFRS 9 and are recorded in the Consolidated balance sheet at fair value. Changes in fair value are
reflected through the hedge reserve (see note 7.3) to the extent that the contracts are designated as effective hedges in accordance
with IFRS 9, or the Consolidated income statement where the hedge accounting requirements are not met, or the hedges are
ineffective. Changes in fair value of the derivatives that do not meet the hedge accounting requirements are excluded from Adjusted
results in the Consolidated income statement until the contract matures, as management believes this more clearly reflects the
underlying performance of the Group as it ensures these derivatives are recognised in the period that they are intended to hedge
at their contracted prices (see note 2.7 for further details).
The Group\u2019s biomass risk management policy permits some flexibility in trading activity to optimise the overall portfolio position and
potentially release value in certain, limited circumstances. The nature of these contracts means they cannot be readily net settled
in cash or other financial instruments and, as a result, they remain outside of the scope of IFRS 9 and are excluded from fair value
mark-to-market accounting. See the critical accounting judgements section on page 163 for further details on this.
Derivative balances are classified in the Consolidated balance sheet as current or non-current based on the final maturity date of the contracts. The derivative financial instruments recognised in the Consolidated balance sheet at the reporting date are:
As at 31 December
2024 2023
\u00a3m \u00a3m
Non-current derivative financial instrument assets
81.7
293.6
Current derivative financial instrument assets
175.6
368.4
Total derivative financial instrument assets
257.3
662.0
Non-current derivative financial instrument liabilities
(262.2)
(306.6)
Current derivative financial instrument liabilities
(71.1)
(231.6)
Total derivative financial instrument liabilities
(333.3)
(538.2)
Total net derivative financial instruments
(76.0)
123.8
The gains and losses recognised in the period relating to derivative financial instruments mandatorily measured at fair value through profit or loss (FVTPL) are detailed below. The Group had no financial assets or financial liabilities voluntarily designated at FVTPL. In addition to the amounts disclosed below, gains and losses relating to derivative financial instruments qualifying for hedge accounting are disclosed in notes 7.2 to 7.4.
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Gains on derivative financial instruments not qualifying for hedge accounting \u2013 recognised in revenue
11.9
70.7
Gains/(losses) on derivative financial instruments not qualifying for hedge accounting \u2013 recognised in
cost of sales
45.3
(127.0)
Gains on derivative financial instruments not qualifying for hedge accounting \u2013 recognised in foreign
exchange (losses)/gains
\u2013
4.9
Losses on derivative financial instruments not qualifying for hedge accounting \u2013 recognised in interest
payable and similar charges
(0.6)
(0.3)
Total gains/(losses) on derivative financial instruments not qualifying for hedge accounting
56.6
(51.7)
", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-565": { "value": "7.1 Financial instruments and their fair values The Group holds a variety of derivative and non-derivative financial instruments, including cash and cash equivalents, borrowings, payables and receivables arising from operations. Accounting classifications and fair values IFRS 13 requires categorisation of the Group\u2019s financial instruments in accordance with the following hierarchy in order to explain the basis on which their fair values have been determined: \u2013 Level 1 \u2013 Fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities \u2013 Level 2 \u2013 Fair value measurements are those derived from inputs, other than quoted prices, included within Level 1, that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) \u2013 Level 3 \u2013 Fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs) Categorisation within this fair value measurement hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset or liability. The table below shows the carrying amounts and fair values of financial assets and liabilities, including their levels in the fair value hierarchy as defined by IFRS 13. It does not include fair value information for lease liabilities, or for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value. Cash and cash equivalents (note 4.1), trade and other receivables (note 3.5), and trade and other payables (note 3.7) generally have a short time to maturity. For this reason, their carrying values, on the historical cost basis, are approximate to their fair values. The Group\u2019s borrowings relate principally to the publicly traded high-yield loan notes and amounts drawn against term loans (note 4.2). These financial liabilities are measured at amortised cost.
Carrying amount
Fair value
Financial Financial
Fair value- Mandatorily assets at liabilities at
At 31 December 2024 hedging at FV TPL- amortised amortised
\u00a3m instruments
others
FVOCI
cost
cost
Total
Level 1
Level 2
Level 3
Tot al
Financial assets measured at fair value
Commodity contracts
101.9
51.6
\u2013
\u2013
\u2013
153.5
\u2013
153.5
\u2013
153.5
Foreign currency
exchange contracts
21.0
75.7
\u2013
\u2013
\u2013
96.7
\u2013
96.7
\u2013
96.7
Interest rate and cross-
currency contracts
7.1
\u2013
\u2013
\u2013
\u2013
7.1
\u2013
7.1
\u2013
7.1
Contingent consideration
\u2013
9.4
\u2013
\u2013
\u2013
9.4
\u2013
\u2013
9.4
9.4
Trade and other
receivables
\u2013
0.3
38.9
\u2013
\u2013
39.2
\u2013
39.2
\u2013
39.2
Cash and cash equivalents
\u2013
103.1
\u2013
\u2013
\u2013
103.1
\u2013
103.1
\u2013
103.1
Financial assets not measured at fair value
Trade and other
receivables
\u2013
\u2013
\u2013
353.4
\u2013
353.4
Cash and cash equivalents
\u2013
\u2013
\u2013
252.9
\u2013
252.9
Financial liabilities measured at fair value
Commodity contracts
(50.9)
(30.9)
\u2013
\u2013
\u2013
(81.8)
\u2013
(81.8)
\u2013
(81.8)
Foreign currency
exchange contracts
(24.6)
(12.3)
\u2013
\u2013
\u2013
(36.9)
\u2013
(36.9)
\u2013
(36.9)
Interest rate and cross-
currency contracts
(30.6)
\u2013
\u2013
\u2013
\u2013
(30.6)
\u2013
(30.6)
\u2013
(30.6)
Inflation rate contracts
(184.0)
\u2013
\u2013
\u2013
\u2013
(184.0)
\u2013
(184.0)
\u2013
(184.0)
Financial liabilities not measured at fair value
Secured bank loans
\u2013
\u2013
\u2013
\u2013
(768.2)
(768.2)
\u2013
(771.2)
\u2013
(771.2)
Secured loan notes
\u2013
\u2013
\u2013
\u2013
(408.5)
(408.5)
(422.3)
\u2013
\u2013
(422.3)
Lease liabilities
\u2013
\u2013
\u2013
\u2013
(116.5)
(116.5)
Trade and other payables
\u2013
\u2013
\u2013
\u2013
(793.0)
(793.0)
Carrying amount
Fair value
Financial Financial
Fair value- Mandatorily assets at liabilities at
At 31 December 2023 hedging a t F V T P L- amortised amortised
\u00a3m instruments
others
FVOCI
cost
cost
Total
Level 1
Level 2
Level 3
Total
Financial assets measured at fair value
Commodity contracts
402.7
125.4
\u2013
\u2013
\u2013
528 .1
\u2013
528.1
\u2013
528.1
Foreign currency
exchange contracts
37.7
70.8
\u2013
\u2013
\u2013
108.5
\u2013
108.5
\u2013
108.5
Interest rate and cross-
currency contracts
25.4
\u2013
\u2013
\u2013
\u2013
25.4
\u2013
25.4
\u2013
25.4
Contingent consideration
\u2013
9.2
\u2013
\u2013
\u2013
9.2
\u2013
\u2013
9.2
9.2
Trade and other
receivables
\u2013
\u2013
242.2
\u2013
\u2013
242.2
\u2013
242.2
\u2013
242.2
Cash and cash equivalents
\u2013
171.1
\u2013
\u2013
\u2013
171.1
\u2013
171.1
\u2013
171.1
Financial assets not measured at fair value
Trade and other
receivables
\u2013
\u2013
\u2013
644.2
\u2013
644.2
Cash and cash equivalents
\u2013
\u2013
\u2013
208.4
\u2013
208.4
Financial liabilities measured at fair value
Commodity contracts
(58.8)
(134.4)
\u2013
\u2013
\u2013
(193.2)
\u2013
(193.2)
\u2013
(193.2)
Foreign currency
exchange contracts
(23.7)
(35.8)
\u2013
\u2013
\u2013
(59.5)
\u2013
(59.5)
\u2013
(59.5)
Interest rate and cross-
currency contracts
( 35.1)
\u2013
\u2013
\u2013
\u2013
( 35.1)
\u2013
( 35.1)
\u2013
( 35.1)
Inflation rate contracts
(250.4)
\u2013
\u2013
\u2013
\u2013
(250.4)
\u2013
(250.4)
\u2013
(250.4)
Financial liabilities not measured at fair value
Secured bank loans
\u2013
\u2013
\u2013
\u2013
(698 .1)
(6 98.1)
\u2013
(704.8)
\u2013
(704.8)
Unsecured bank loans
\u2013
\u2013
\u2013
\u2013
(120.0)
(120.0)
\u2013
(120.0)
\u2013
(120.0)
Secured loan notes
\u2013
\u2013
\u2013
\u2013
(607.2)
(6 07. 2)
(596.4)
\u2013
\u2013
(596.4)
Lease liabilities
\u2013
\u2013
\u2013
\u2013
(135.8)
(135.8)
Trade and other payables
\u2013
\u2013
\u2013
\u2013
(919.2)
(919.2)
The derivative financial instruments used by the Group and not subject to the own-use exemption have been categorised as follows: \u2013 Commodity contracts \u2013 forward contracts for the sale or purchase of a commodity which may or may not be settled through physical delivery of the commodity, as well as weather-related contracts \u2013 Foreign currency exchange contracts \u2013 currency-related contracts including forwards, swaps, vanilla options and structured option products \u2013 Interest rate and cross-currency contracts \u2013 contracts which swap one interest rate for another in a single currency, including floating-to-fixed interest rate swaps, and contracts which swap interest and principal cash flows in one currency for another currency, including fixed-to-fixed and floating-to-fixed cross-currency interest rate swaps \u2013 Inflation rate contracts \u2013 swap contracts, such as floating-to-fixed, which are linked to an inflation index such as the UK Retail Price Index (RPI) or the UK Consumer Price Index (CPI) Fair value measurement \u2013 Commodity contracts \u2013 the fair value of open commodity contracts that do not qualify for the own-use exemption, or are otherwise within the scope of IFRS 9, is calculated by reference to forward market prices at the reporting date \u2013 Foreign currency exchange contracts \u2013 the fair value of foreign currency exchange contracts is determined using forward currency exchange market rates at the reporting date \u2013 Interest rate contracts \u2013 the fair value of interest rate swaps is calculated by reference to forward market curves at the reporting date for the relevant interest index. The fair value of cross-currency interest rate swaps is calculated using the relevant forward currency exchange market rates for fixed-to-fixed swaps and by using the relevant forward currency exchange market rates and interest index for floating-to-fixed swaps \u2013 Inflation rate contracts \u2013 the fair value of inflation rate swaps is calculated by reference to forward market curves at the reporting date for the relevant inflation index Given the maturity profile of all these contracts, liquid forward market price curves are available for the duration of the contracts. Drax Group plc Annual report and accounts 2024 The fair values of all derivative financial instruments are discounted to reflect both the time value of money and credit risk inherent within the instrument. The assessment of fair value is derived in part by reference to a market price or rate for the instrument in question. The Group bases its assessment of market prices or rates upon forward curves that are largely derived from readily obtainable prices or rates published from third-party sources. However, any forward curve is based, at least in part, upon assumptions about future transactions and market movements. Due to the nature of the derivative financial instruments the Group holds, minor differences in the inputs, assumptions or methodologies used can result in appropriate, but different, estimates of fair values to those recognised by the Group. There may be choices to be made regarding which methodology or data source to use in the calculation of fair value for each derivative contract. Assumptions may also need to be made where forward curves are not an exact match for the Group\u2019s derivative contracts (e.g. due to quoted product types, maturity dates or time periods not exactly matching the terms of the Group\u2019s derivative contracts), or where different forward curves are available. Where such instruments extend beyond the liquid portion of the forward curve, the level of estimation increases as the number of observable transactions decreases. However, given the maturity profile of the Group\u2019s contracts, liquid forward market price curves are usually available for the duration of the contracts. The fair value of derivatives is not, however, considered a key source of estimation uncertainty as reasonably possible changes in assumptions are not expected to result in a materially different value within the next financial year. Also, whilst there is a significant risk that the carrying amount of derivative assets and liabilities will change materially within the next financial year, as a result of movements in market prices or rates, the Group is not expecting to change its methodology or input sources in the next financial year. Any such changes are not as a result of assumptions or other sources of estimation uncertainty as at 31 December 2024 and therefore do not meet the definition of a key source of estimation uncertainty as defined by IAS 1. Sensitivities are provided in note 7.2 for the impact of changes in inputs on the fair value. The Group has reviewed all significant contracts for the presence of embedded derivatives. The EUR loan notes and the UK infrastructure private placement facility (2020) (see note 4.2) all contain early repayment options that meet the definition of embedded derivatives. However, in all cases, these do not require separate valuations as they are deemed to be closely related to the host contract. The fair value of commodity contracts, foreign currency exchange contracts, interest rate swaps, cross-currency interest rate swaps and inflation swaps are largely determined by comparison between observable, liquid, forward market prices or rates, and the trade price or rate; therefore, these contracts are categorised as Level 2. Credit risk is not a significant input to the fair value calculations. There have been no transfers during the current or prior year between Level 1, 2 or 3 category inputs. The Group is responsible for determining the policies and approach to valuations required for financial reporting purposes, including Level 3 fair values. No external specialists have been utilised for the valuation of the current or prior year derivative financial instruments. Valuation policies, approaches and the results are discussed with and approved by the CFO and the Audit Committee as required, based on the size, complexity and judgement required with each valuation. Level 3 fair values The contingent consideration receivable by the Group relates to the sale of the CCGT generation portfolio in 2021. The gross nominal value of \u00a329.0 million is contingent on certain triggers in respect of the option to develop the Damhead Creek 2 land disposed of as part of the sale of these assets. The fair value measurement of the contingent consideration has been categorised as Level 3 based on the inputs to the valuation techniques used.
Significant unobservable inputs and range of inputs Relationship between significant unobservable
Valuation approach (probability weighted) input and fair value measurement
Contingent The fair value of the contingent Forecasted future Capacity Market The fair value measurement would
consideration consideration is determined using a clearing prices: increase/(decrease) with:
discounted cash flow model. The \u00a32.54/kW \u2013 \u00a3101.00/kW \u2013 Higher/(lower) forecasted Capacity
valuation approach is based on a (Average \u2013 \u00a348.07/kW) Market clearing prices causing a
calculation of the probability of the higher/(lower) probability of the
option to develop the Damhead (2023: \u00a32.47/kW \u2013 \u00a377.20/kW) option over the Damhead Creek 2
Creek 2 land being exercised. This (2023: (Average \u2013 \u00a342.66/kW)) land being exercised
probability is calculated using a Estimated bid price at which \u2013 Lower/(higher) estimated bid price
range of forecasts for future Damhead Creek 2 is to be entered required for the Damhead Creek 2
Capacity Market auctions and the into the Capacity Market auction: development to proceed causing a
assumption that the option to higher/(lower) probability of the
develop the land would be exercised \u00a371.75/kW option over the Damhead Creek 2
if the Capacity Market price were to (2 02 3: \u00a367. 50 /kW ) land being exercised
clear above a certain level, providing
sufficient certainty on the
economics of the development.
During the year, inputs to the fair value calculation have been updated to reflect updates in both forecasted future Capacity Market clearing prices and the estimated bid price at which Damhead Creek 2 would require to provide sufficient certainty on the economics of the development. The estimated bid price of \u00a371.75/kW (2023: \u00a367.50/kW) has increased with inflation during the year. The net impact of updating the estimated bid price, recent Capacity Market clearing price forecasts, and the impact of unwinding the discount has resulted in a \u00a30.2 million increase to the fair value of the contingent consideration (2023: \u00a318.2 million decrease). During the prior year, due to significantly increased expectations relating to the cost to develop the project, the estimated bid price increased from \u00a340.00/kW to \u00a367.50/kW. This, alongside the impact of updating the calculation with forecasts of future Capacity Market clearing prices, resulted in an \u00a318.2 million decrease to the fair value of the contingent consideration. As the change in fair value reflected the reversal of a previous credit recorded within exceptional items, and the decrease in fair value was above the Group\u2019s threshold to be considered exceptional, the \u00a318.2 million decrease was excluded from Adjusted results and presented as an exceptional item included within other gains or losses in the Consolidated income statement (see note 2.7). The current year increase has not been excluded from Adjusted results as it does not meet the threshold for being considered exceptional and is included within other gains and losses in the Consolidated income statement. A reconciliation of the contingent consideration is detailed below:
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Balance at 1 January
9.2
27.4
Net change in fair value
0.2
(18.2)
Balance at 31 December
9.4
9.2
There are no reasonably possible changes to unobservable inputs to the fair value calculation that would have a material impact on the fair value measurement of the contingent consideration. Accounting for derivatives Derivatives (subject to certain exemptions described below) must be measured at fair value, which generally represents the difference between the price the Group has secured in the contract, and the price the Group could achieve in the market at the reporting date. Changes in fair value are recognised either within the Consolidated income statement or the hedge reserve and cost of hedging reserve within the Consolidated statement of changes in equity, dependent upon whether the contract in question qualifies as an effective hedge under IFRS 9 (see note 7.2). The own-use exemption applies to certain contracts for physical commodities entered into and held for the Group\u2019s own purchase, sale or usage requirements. The Group\u2019s own-use contracts, such as certain power purchase agreements (PPAs) and the Group\u2019s energy supply contracts, are excluded from fair value mark-to-market accounting. Contracts for non-financial assets which do not qualify for the own-use exemption (principally wholesale power, gas, financial oil and carbon emissions allowances) and financial contracts (principally foreign exchange, interest, inflation and freight) are accounted for as derivatives in accordance with IFRS 9 and are recorded in the Consolidated balance sheet at fair value. Changes in fair value are reflected through the hedge reserve (see note 7.3) to the extent that the contracts are designated as effective hedges in accordance with IFRS 9, or the Consolidated income statement where the hedge accounting requirements are not met, or the hedges are ineffective. Changes in fair value of the derivatives that do not meet the hedge accounting requirements are excluded from Adjusted results in the Consolidated income statement until the contract matures, as management believes this more clearly reflects the underlying performance of the Group as it ensures these derivatives are recognised in the period that they are intended to hedge at their contracted prices (see note 2.7 for further details). The Group\u2019s biomass risk management policy permits some flexibility in trading activity to optimise the overall portfolio position and potentially release value in certain, limited circumstances. The nature of these contracts means they cannot be readily net settled in cash or other financial instruments and, as a result, they remain outside of the scope of IFRS 9 and are excluded from fair value mark-to-market accounting. See the critical accounting judgements section on page 163 for further details on this.
Derivative balances are classified in the Consolidated balance sheet as current or non-current based on the final maturity date of the
contracts. The derivative financial instruments recognised in the Consolidated balance sheet at the reporting date are:
As at 31 December
2024 2023
\u00a3m \u00a3m
Non-current derivative financial instrument assets
81.7
293.6
Current derivative financial instrument assets
175.6
368.4
Total derivative financial instrument assets
257.3
662.0
Non-current derivative financial instrument liabilities
(262.2)
(306.6)
Current derivative financial instrument liabilities
(71.1)
(231.6)
Total derivative financial instrument liabilities
(333.3)
(538.2)
Total net derivative financial instruments
(76.0)
123.8
The gains and losses recognised in the period relating to derivative financial instruments mandatorily measured at fair value through
profit or loss (FVTPL) are detailed below. The Group had no financial assets or financial liabilities voluntarily designated at FVTPL.
In addition to the amounts disclosed below, gains and losses relating to derivative financial instruments qualifying for hedge
accounting are disclosed in notes 7.2 to 7.4.
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Gains on derivative financial instruments not qualifying for hedge accounting \u2013 recognised in revenue
11.9
70.7
Gains/(losses) on derivative financial instruments not qualifying for hedge accounting \u2013 recognised in
cost of sales
45.3
(127.0)
Gains on derivative financial instruments not qualifying for hedge accounting \u2013 recognised in foreign
exchange (losses)/gains
\u2013
4.9
Losses on derivative financial instruments not qualifying for hedge accounting \u2013 recognised in interest
payable and similar charges
(0.6)
(0.3)
Total gains/(losses) on derivative financial instruments not qualifying for hedge accounting
56.6
(51.7)
7.2 Financial risk management
The Group\u2019s activities expose it to a variety of financial risks, including commodity price risk, foreign currency risk, interest rate risk,
inflation risk, liquidity risk, counterparty risk and credit risk. The Group\u2019s overall risk management programme focuses on the
unpredictability of commodity and financial markets and seeks to manage potential adverse effects on the Group\u2019s financial
performance.
The Group uses derivative financial instruments to hedge certain risk exposures. Risk management is overseen by the risk
management committees as explained in the Principal risks and uncertainties section (starting on page 70). The Financial Risk
Management Committee identifies, evaluates and manages financial risks in close co-ordination with the Group\u2019s trading and treasury
functions under policies approved by the Board of Directors.
7.2.1 Commodity price risk
The Group is exposed to the effect of fluctuations in commodity prices, particularly the price of power, gas, other fuels and the price
of carbon emissions allowances. Price variations and market cycles have historically influenced the financial results of the Group and
are expected to continue to do so.
Commodity price sensitivity
The sensitivity analysis below has been determined based on the exposure to commodity prices and the impact on profit after tax
and other components of equity of reasonably possible increases or decreases in commodity prices as at 31 December. The analysis
assumes all other variables were held constant.
Financial and commodity markets saw significant volatility and high prices in 2022. During 2023, the high prices seen in 2022
generally reversed and these price reductions have continued into 2024, but in the most part prices are still above historical averages.
See the Principal risks and uncertainties section on page 73 for further details on UK energy market conditions. As a result of these
fluctuating market conditions, the valuation of the Group\u2019s commodity derivative financial instruments, in particular power, gas and oil,
have seen large reversals of the amounts previously recognised as market prices have continued to reduce, whilst older trades with
higher prices have also matured.
Sensitivities for a 10% change in prices have been included in the current and prior year. The impact of smaller and larger price
changes can be extrapolated from the below table as changes in prices have a relatively linear relationship with the impact on profit
after tax and on the hedge reserve.
Impact on other components
Impact on profit after tax of equity, net of tax
10% decrease 10% increase 10% decrease 10% increase
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2024
Power
\u2013
\u2013
43.0
(43.0)
Carbon
1.6
(1.6)
\u2013
\u2013
Gas
10.8
(10.8)
\u2013
\u2013
Oil
(4.8)
4.8
\u2013
\u2013
Freight
(0.2)
0.2
\u2013
\u2013
Impact on other components
Impact on profit after tax of equity, net of tax
10% decrease 10% increase 10% decrease 10% increase
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2023
Power
\u2013
\u2013
34.9
(34.9)
Carbon
2.8
(2.8)
(0.2)
0.2
Gas
11.1
(11.1)
\u2013
\u2013
Oil
( 7.9)
7.9
\u2013
\u2013
The Group designates certain derivatives as hedging instruments under cash flow hedge accounting. As such, other components
of equity are sensitive to increases or decreases in commodity price risk and the impact on the hedge reserve resulting from these
movements. Profit after tax is sensitive to increases or decreases in commodity prices as a result of the impact on the fair value of
derivative financial instruments not designated as hedging instruments under cash flow hedge accounting.
Commodity risk management
The Group has a policy of securing forward power sales and purchases, and purchases of fuel when it is profitable to do so and is in line
with specified limits under approved policies. Forward power sales can be secured up to 100% of forecast availability two years ahead,
after taking account of the volume held back for operational risk management purposes. All commitments to sell and purchase power
under fixed price contracts are designated as cash flow hedges as they reduce the Group\u2019s cash flow exposure resulting from
fluctuations in the price of power. The Group purchases biomass pellets and other fuels under either a fixed or variable priced contract
with different maturities, principally from a number of international sources.
The Group considers all such commodity contracts to be economic hedges. If either the contracts cannot be readily net settled, or if
the Group is able to demonstrate that these contracts were entered into and continue to be held for the purpose of receipt or delivery
of the non-financial item in accordance with the Group\u2019s expected purchase, sale or usage requirements and the own-use exemption
applies, then these contracts are not within the scope of IFRS 9. For other contracts that are within the scope of IFRS 9 the Group
applies hedge accounting where possible. If the contracts are within the scope of IFRS 9 and hedge accounting is not applied then
the contracts are recognised at fair value through profit or loss (FVTPL).
Where forward power curves are less liquid, the Group uses financially settled gas sales as a proxy for power to mitigate the risk of
power price fluctuations. The Group also purchases gas under fixed-price contracts to meet the requirements of the Energy Solutions
segment and for its Daldowie fuel plant. The Group\u2019s gas supply business is reducing in size due to the decision made in January 2023
to phase out the Group\u2019s gas supply contracts and due to the sale of the majority of the Group\u2019s non-core SME customer meter points
to EDF in September 2024 (see note 2.7 for further details).
The Group purchases carbon emissions allowances under fixed-price contracts to cover the Group\u2019s purchase requirements under
the UK Emissions Trading Scheme (UK ETS) in relation to the Group\u2019s carbon emissions. Carbon emissions allowances are also sold as
part of the proxy power hedges in the same way as financial gas described above. Sales and purchases of carbon are not designated
as cash flow hedges.
The Group purchases financial oil contracts to hedge freight costs as oil is a significant input into the overall cost of freight. Financial
oil contracts are not designated as cash flow hedges.
Hedge accounting The Group has cash flow hedges relating to commodity contracts, principally commitments to sell and purchase power. In the prior year, cash flow hedge accounting was also applied to certain carbon purchases. Amounts are recognised in the hedge reserve as the designated contracts are marked-to-market at each reporting date for the effective portion of the hedge, which is generally 100% of the relevant contract. Amounts held within the hedge reserve are then recycled to the Consolidated income statement as the hedged item impacts profit or loss. For power sales and purchase contracts, this is when the underlying power is delivered. Included in amounts released from equity are current and prior period gains and losses on financial instruments for which the hedged transaction has now occurred and these gains and losses have been released to the Consolidated income statement in the period. No ineffectiveness was recognised in the Consolidated income statement on continuing commodity hedges in the current or prior year. Due to the use of \u201call-in-one\u201d hedges, this results in the movement in fair value for the hedged items and hedging instruments being identical. The only sources of ineffectiveness regarding the \u201call-in-one\u201d hedges would be if delivery of the commodities was no longer expected to occur (which would result in hedge accounting being discontinued) and credit risk. The Group applies a hedge ratio of 1:1 to its commodity risk cash flow hedges. The reconciliation of the reserves and time period when the hedge will affect the Consolidated income statement are disclosed in note 7.3. The summary of the amounts relating to the hedging instruments and any related ineffectiveness in the period is presented in the table below. The average forward rates quoted below only reflect the rates applicable to the portion of the Group\u2019s commodity contracts that qualify for hedge accounting in accordance with IFRS 9. The rates do not reflect the overall average rate of the Group\u2019s total portfolio of commodity contracts that are used to protect the value of future cash flows.
31 December 2024
Balance in the
hedge reserve
for hedging
Cumulative relationships for
change in fair Balance in the which hedge
value of hedging hedge reserve accounting is
instrument since for continuing no longer
Notional inception used Fair value Fair value hedges applied
value of Weighted for measuring recognised in recognised in net of deferred net of deferred
contracts average ineffectiveness balance sheet \u2013 balance sheet \u2013 tax \u2013 (debit)/ tax \u2013 (debit)/
(MWh, fixed price Maturity \u2013 gains/(losses) assets liabilities credit credit
Exposure allowances) \u00a3 date \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts January
2025
Sale and purchases of \u2013 September
power
7,013,76
6
87.3
2028
34.5
101.9
(50.9)
25.9
\u2013
Purchase of carbon
emissions allowances
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
31 December 2024
Cumulative
change in fair Amount
value Hedge Amount reclassified due
of hedged ineffectiveness Amount reclassified to the hedged Line item
item since recognised in Line item transferred to due to the future cash in the income
inception used Hedging gains the income in the income the cost or hedged flows statement/
for measuring recognised in OCI statement statement carrying value of item affecting being no longer balance sheet
ineffectiveness in the period \u2013 in the period \u2013 that includes a non-financial profit or loss \u2013 expected to affected by the
\u2013 gains/(losses) gains/(losses) gains/(losses) hedge asset (gains)/losses occur \u2013 transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m (gains)/losses reclassification
Commodity contracts
Sale and purchase of
34.5
(15.2)
\u2013
Revenue
\u2013
( 397.5)
\u2013
Revenue
power
\u2013
Cost of sales
\u2013
103.9
\u2013
Cost of sales
Purchase of carbon
emissions allowances
\u2013
(0.6)
\u2013
Cost of sales
\u2013
1.2
\u2013
Cost of sales
31 December 2023
Balance in the
hedge reserve
Cumulative for hedging
change in fair Balance in the relationships for
value of hedging hedge reserve which hedge
instrument since for continuing accounting is
Notional inception used Fair value Fair value hedges net no longer applied
value of Weighted for measuring recognised in recognised in of deferred net of deferred
contracts average ineffectiveness balance sheet \u2013 balance sheet \u2013 tax \u2013 (debit)/ tax \u2013 (debit)/
(MWh, fixed price \u2013 gains/(losses) assets liabilities credit credit
Exposure allowances)
\u00a3
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts January
2024
Sale and purchases of \u2013 September
power
5,580,931
129.4
2026
343.5
402.3
(58.8)
257.4
\u2013
March
2024
Purchase of carbon \u2013 December
emissions allowances
62,000
37. 4
2024
0.4
0.4
\u2013
0.3
(0.7)
31 December 2023
Cumulative Amount
change in fair reclassified due
value Hedge Amount to the hedged
of hedged ineffectiveness Amount reclassified future cash Line item
item since recognised in Line item transferred to due to the flows being in the income
inception used Hedging gains the income in the income the cost or hedged no longer statement/
for measuring recognised in statement statement carrying value of item affecting expected to balance sheet
ineffectiveness \u2013 OCI in the period in the period \u2013 that includes a non-financial profit or loss \u2013 occur \u2013 affected by the
gains/(losses) \u2013 gains/(losses) gains/(losses) hedge asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Commodity contracts
Sale and purchase of
power
343.5
413.3
\u2013
Revenue
\u2013
(415.9)
\u2013
Revenue
\u2013
Cost of sales
\u2013
599.3
\u2013
Cost of sales
Purchase of carbon
emissions allowances
0.4
1.4
\u2013
Cost of sales
\u2013
1.6
\u2013
Cost of sales
7.2.2 Foreign currency and interest rate risk Foreign currency risk The Group is exposed to fluctuations in foreign currency rates as a result of committed and forecast transactions in foreign currencies, principally in relation to purchases of fuel for use in the Biomass Generation segment and principal and interest payments relating to foreign currency denominated debt. These fuel purchases are typically denominated in US dollars (USD), euros (EUR) or Canadian dollars (CAD), and the foreign currency debt is also denominated in USD, EUR and CAD (see note 4.2 for further details on the Group\u2019s borrowings). The Group also has an exposure to translation risk in relation to its net investment in its US and Canadian subsidiaries within the Pellet Production segment. Foreign currency sensitivity The analysis below shows the impact on profit after tax and other components of equity of reasonably possible strengthening or weakening of currencies against GBP. The sensitivity analysis below shows the impact of a change in foreign exchange rates as at 31 December on outstanding monetary items denominated in foreign currencies and the valuation of foreign currency derivative instruments. For foreign currency derivatives designated into hedge relationships the analysis includes the impact of recycling amounts from the hedge reserve if a change in foreign exchange rates would result in the recycling of gains and losses due to the item they are hedging impacting profit or loss. The analysis assumes all other variables were held constant.
Impact on other components
Impact on profit after tax of equity, net of tax
10% 10% 10% 10%
strengthening weakening strengthening weakening
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2024
USD
66.8
(57.4)
(75.9)
(75.9)
EUR
10.1
(8.9)
(19.1)
(27.4)
CAD
1.2
(1.0)
(6.6)
(6.9)
Impact on other components
Impact on profit after tax of equity, net of tax
10% 10% 10% 10%
strengthening weakening strengthening weakening
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2023
USD
84.5
(53.5)
125.3
(100.8)
EUR
15.9
(13.2)
3.9
(3.6)
CAD
0.3
\u2013
4.8
(4.0)
The Group designates certain foreign currency derivatives as hedging instruments under cash flow hedge accounting. As such,
other components of equity are sensitive to the strengthening or weakening of other currencies in relation to the impact on the
hedge reserve of these movements. Profit after tax is sensitive to the strengthening or weakening of other currencies as a result of
the impact on the fair value of foreign currency derivatives not designated as hedging instruments under cash flow hedge accounting.
Foreign currency risk management
It is the Group\u2019s policy to hedge material transactional exposures using a variety of derivatives to protect the sterling values of foreign
currency cash flows, except where there is an economic hedge inherent in the transaction. The Group enters into derivative contracts
in line with the Group\u2019s currency risk management policy, including forwards and options, to manage the risks associated with its
anticipated foreign currency requirements over a rolling five-year period, covering contracted exposures and a proportion of highly
probable forecast transactions.
In addition, in order to optimise the cost of funding, the Group has issued foreign currency denominated debt in USD, EUR and CAD
(see note 4.2 for further details on borrowings). The Group utilises derivative contracts, including cross-currency interest rate swaps
and foreign exchange forward contracts, to manage exchange risk on foreign currency debt.
Foreign currency risk hedge accounting
The Group designates certain foreign currency exchange contracts, predominantly forwards, as hedging instruments of the foreign
currency risk of biomass purchases denominated in foreign currencies. Gains and losses on these foreign currency exchange contracts
are transferred from equity to inventories for these hedges when the Group takes ownership of the biomass. The Group designates the
spot element of these foreign currency exchange contracts and applies a hedge ratio of 1:1.
The Group designates certain foreign currency exchange contracts, predominantly forwards and swaps, as hedging instruments of
the foreign currency risk on the principal repayments of certain foreign currency denominated borrowings. Gains and losses that are
effective at hedging the foreign exchange risk on the principal repayments are released to foreign exchange gains or losses to offset
gains and losses on retranslating the hedged foreign currency denominated borrowings. The Group designates the spot element of
these foreign currency exchange contracts and applies a hedge ratio of 1:1.
The Group also designates certain cross-currency interest rate swaps as hedging instruments of the foreign currency risk on payments
of both principal and interest on certain foreign currency denominated borrowings. Gains and losses that are effective at hedging the
foreign exchange risk on the interest payments are released to interest payable and similar charges at the same time as the interest on
the related hedged foreign currency denominated borrowings is expensed. Gains and losses that are effective at hedging the foreign
exchange risk on the principal repayments are released to foreign exchange gains or losses to offset gains and losses on retranslating
the hedged foreign currency denominated borrowings. The Group applies a hedge ratio of 1:1 for its cross-currency interest rate
swaps.
The main sources of ineffectiveness relating to foreign currency exchange contracts (forwards and swaps) that are designated
as hedging spot foreign currency risk are timing differences and credit risk. The main sources of ineffectiveness relating to cross-
currency interest rate swaps are differences in the critical terms, differences in repricing dates, foreign currency basis spread,
and credit risk.
Interest rate risk
The Group has exposure to interest rate risk, principally in relation to variable rate debt, cash and cash equivalents and the revolving
credit facility (RCF), should it be drawn. The returns generated on the Group\u2019s cash balance, or payable on amounts drawn on the RCF,
are exposed to movements in short-term interest rates. The Group actively manages cash balances to protect against adverse changes
in interest rates whilst retaining liquidity. Further information about the Group\u2019s variable rate debt instruments (including the RCF)
and their repayment schedules is provided in note 4.2.
Interest rate sensitivity
The sensitivity analysis below has been determined based on the exposure to interest rates for both derivative and non-derivative
financial instruments at the reporting date. For floating rate liabilities, the analysis is prepared assuming the amount of the liability
outstanding at the reporting date was outstanding for the whole year.
The analysis below shows what the impact on the current and previous year\u2019s profit after tax and other components of equity would
have been for a reasonably possible increase or decrease in interest rates. For interest rate derivatives designated into hedge
relationships the analysis includes the impact of recycling amounts from the hedge reserve. The analysis assumes all other variables
are held constant.
Impact on other components
Impact on profit after tax of equity, net of tax
100 basis points 100 basis points 100 basis points 100 basis points
increase decrease increase decrease
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2024
Variable rate debt \u2013 hedged
(5.6)
5.6
\u2013
\u2013
Interest rate swaps
5.6
(5.6)
9.8
(9.8)
Net impact
\u2013
\u2013
9.8
(9.8)
At 31 December 2023
Variable rate debt \u2013 unhedged
(1.2)
1.2
\u2013
\u2013
Variable rate debt \u2013 hedged
(4.2)
4.2
\u2013
\u2013
Interest rate swaps
4.2
(4.2)
8 .1
(8 .1)
Net impact
(1.2)
1.2
8 .1
(8 .1)
An increase or decrease in interest rates would affect profit after tax as a result of the impact on the interest payable in the period on
any variable rate debt. The Group has reduced its exposure to interest rate risk on variable rate debt through the use of floating-to-
fixed interest rate and cross-currency swaps. These swaps are designated as hedging instruments under cash flow hedge accounting
and therefore a change in interest rates would not have a significant impact on profit after tax as the recycling of gains and losses
on these swaps would generally offset the impact of changes in interest rates on the Group\u2019s variable rate debt. Other components
of equity are sensitive to an increase or decrease in interest rates due to the impact changes in interest rates has on the valuation
of these floating-to-fixed interest rate and cross-currency swaps. These fair value changes impact the hedge reserve.
Other components of equity are sensitive to an increase or decrease in interest rates due to the impact changes in interest rates has
on the valuation of these floating-to-fixed interest rate swaps. These fair value changes impact the hedge reserve.
Certain amounts of the Group\u2019s variable rate debt and interest rate swaps have a floor of 0% for the benchmark interest rate. In the
prior year the Group had CAD denominated debt that had a variable rate based on Canadian Dollar Offered Rate (CDOR). At 31 December
2023, no swaps were in place to hedge the interest risk on the CAD denominated debt. Therefore, in relation to this debt in the prior
year, a change in interest rate would have had an impact on profit after tax but not on other components of equity. During the prior
year the Group extended the maturity of the CAD term loan facility to January 2026. As part of the extension the Group agreed
with the lenders to transition the floating-rate to Canadian Overnight Repo Rate Average (CORRA) plus a credit adjustment spread.
At 31 December 2024, the Group had entered into a CORRA floating-to-fixed cross-currency interest rate swap hedging the CAD
denominated debt. As such, in the current year a change in interest rate would have no impact on profit after tax as the movement
in debt would be offset by the recycling of the cash flow hedge, but would have an impact on other components of equity due to
fair value changes in the value of the derivative impacting the hedge reserve.
Interest rate risk management
The Group has a risk management policy in place relating to interest rate risk. The Group policy permits the use of hedging instruments
in order to hedge up to 100% of the Group\u2019s current and forecast interest rate exposure.
Interest rate risk hedge accounting
The Group designates certain interest rate swaps as hedging instruments of the interest rate risk of variable rate borrowings. Gains
and losses on the interest payments on interest rate swaps are released to interest payable and similar charges at the same time as
the interest is expensed on the related hedged borrowings. The Group applies a hedge ratio of 1:1 to its interest rate swaps.
The main sources of ineffectiveness relating to interest rate hedges are differences in the critical terms, differences in repricing dates,
and credit risk.
Hedge accounting information The Group has Sterling Overnight Index Average (SONIA) floating-to-fixed interest rate swaps to fix the interest payments on the following facilities: \u00a350.0 million of the UK infrastructure private placement facility (2019), \u00a398.0 million of the UK infrastructure private placement facility (2020), two \u00a350.0 million tranches of the GBP and EUR term loan facility (2024), \u00a3125.0 million of the GBP term loan facility (2024) and the \u00a350.0 million GBP term loan facility (2024). The Group has Euro Interbank Offered Rate (EURIBOR) floating-to-fixed interest rate swaps to fix the principal and interest payments on \u20ac70.0 million of the UK infrastructure private placement facility (2020). The Group has EURIBOR floating-to-fixed interest rate swaps to fix the interest payments on \u20ac185.0 million of the GBP and EUR term loan facility (2024). The Group has separately taken out \u20ac185.0 million notional value of foreign exchange forwards in order to fix the sterling cash flows payable on the principal repayment. The Group has Canadian Overnight Repo Rate (CORRA) floating-to-fixed interest rate swaps to fix the interest payments on the C$200.0 million CAD term loan facility. The Group has separately taken out C$200.0 million notional value of foreign exchange forwards in order to fix the sterling cash flows payable on the principal repayment. The Group has taken out fixed-to-fixed cross-currency interest rate swaps to hedge the future cash flows associated with the following facilities: \u20ac350.0 million 2029 and \u20ac143.8 million 2025 fixed rate EUR loan notes and \u20ac31.5 million of the UK infrastructure private placement facility (2020). As at 31 December 2024, the Group has fixed in sterling all interest and principal payments on variable rate and foreign currency denominated borrowings through the use of interest rate swaps, cross-currency interest rate swaps, and foreign currency exchange forwards and swaps, as described above. See note 4.2 for further details on the Group\u2019s borrowings. A summary of amounts relating to the Group\u2019s hedge accounting of foreign currency risk and interest rate risk are presented in the table below. The information is disaggregated by risk type. Hedges of biomass purchases, principal repayments on borrowings hedged using foreign currency forwards or swaps, and fixed-to-fixed cross currency interest rate swaps are designated as hedges of foreign currency risk. Interest rate swaps are designated as hedges of interest rate risk. Floating-to-fixed cross-currency interest rate swaps are designated as hedges of both foreign currency and interest rate risk. The average forward rates quoted below only reflect the rates applicable to the portion of the Group\u2019s foreign currency hedging instruments that qualify for hedge accounting in accordance with IFRS 9. The rates do not reflect the overall average rate of the Group\u2019s total portfolio of derivatives that are used to fix the sterling value of future cash flows. A reconciliation of reserves and the time period when the hedge will affect profit or loss, or will be transferred from equity and included in the initial cost of the non-financial item, are disclosed in notes 7.3 and 7.4.
31 December 2024
Balance in the
hedge reserve
for hedging
Cumulative relationships for
change in fair which hedge
value of hedging Balance in the accounting is
instrument since hedge reserve no longer
inception used Fair value Fair value for continuing applied
Notional Weighted for measuring recognised in recognised in hedges net of net of deferred
value of average ineffectiveness balance sheet \u2013 balance sheet \u2013 deferred tax \u2013 tax \u2013 (debit)/
contracts fixed/variable \u2013 gains/(losses) assets liabilities (debit)/credit credit
Exposure ($m, \u20acm, C$m)
rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency risk on
biomass purchases
January
2025
Purchases in foreign \u2013 February
currency \u2013 USD
1,430.5
$1.27
2027
18.6
20.7
(2 .1)
10.7
\u2013
January
2025
Purchases in foreign \u2013 October
currency \u2013 EUR
270.0
\u20ac 1.15
2026
(6.3)
\u2013
(6.3)
(4.5)
\u2013
January
2025
Purchases in foreign \u2013 March
currency \u2013 CAD
166.0
C$1.67
2027
(5.1)
0.3
(5.4)
(5.8)
\u2013
Foreign currency risk on
borrowings
Interest and principal
payments \u2013 USD
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
November
2025
Interest and principal \u20ac1.14 / \u2013 April
payments \u2013 EUR
525.3
6.48% 2028
(10.4)
\u2013
(19.7)
4.4
\u2013
February
2027
\u2013 March
Principal payments \u2013 EUR
185.0
\u20ac 1.11
2028
(5.1)
\u2013
(5.1)
\u2013
\u2013
January
Principal payments \u2013 CAD
200.0
C$1.68
2026
(5.7)
\u2013
(5.7)
\u2013
\u2013
Foreign currency and
interest rate risk on
borrowings
January
2026
Interest and principal \u20ac1.09/ \u2013 March
payments \u2013 EUR
255.0
4.04% 2028
(8.6)
\u2013
(8.7)
(2.7)
\u2013
January
Interest payments \u2013 CAD
200.0
6.05%
2026
(1.5)
\u2013
(1.8)
(1.3)
\u2013
Interest rate risk on
borrowings
January
2026
\u2013 April
Variable rate GBP debt
423.0
2.89%
2028
6.1
7.1
(0.4)
4.3
\u2013
31 December 2024
Cumulative
change in fair Amount
value Hedge Amount Amount reclassified due
of hedged ineffectiveness transferred to reclassified to the hedged Line item in the
item since Hedging losses recognised in Line item in the the cost or due to the future cash income
inception used recognised in the income income carrying hedged flows being no statement/
for measuring OCI in the statement statement value item affecting longer expected balance sheet
ineffectiveness \u2013 period \u2013 in the period \u2013 that includes of a non- profit or loss \u2013 to occur \u2013 affected by the
gains/(losses) gains/(losses) gains/(losses) hedge financial asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Foreign currency risk
on biomass purchases
Purchases in foreign
currency \u2013 USD
18.6
19.7
\u2013
Cost of sales
4.3
\u2013
\u2013
Inventories
Purchases in foreign
currency \u2013 EUR
(6.3)
(7.1)
\u2013
Cost of sales
0.9
\u2013
\u2013
Inventories
Purchases in foreign
currency \u2013 CAD
(5.1)
(5.9)
\u2013
Cost of sales
(0.4)
\u2013
\u2013
Inventories
Foreign currency risk
on borrowings Interest Interest
payable payable
Interest and principal \u2013 and similar
\u2013
(0.7)
\u2013
and similar
payments \u2013 USD
\u2013
(5.6)
charges charges
Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
9.3
\u2013
(losses)/gains
Interest Interest
payable payable
Interest and principal \u2013 and similar
\u2013
7.4
\u2013
and similar
payments \u2013 EUR
(11.3)
( 7.5)
charges charges
Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
6.4
\u2013
(losses)/gains
Foreign Foreign
Principal payments \u2013 exchange exchange
EUR
(5.1)
(6.0)
\u2013
(losses)/gains
\u2013
6.0
\u2013
(losses)/gains
Foreign Foreign
Principal payments \u2013 exchange exchange
CAD
(5.7)
( 7.4)
\u2013
(losses)/gains
\u2013
7.4
\u2013
(losses)/gains
Foreign currency and
interest rate risk on
borrowings
Interest Interest
payable payable
Interest and principal \u2013 and similar
\u2013
(2.5)
\u2013
and similar
payments \u2013 EUR
(8.7)
(6.4)
 charges charges
Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
3.4
\u2013
(losses)/gains
Interest Interest
payable payable
Interest payments \u2013 and similar and similar
CAD
(1.6)
(1.3)
\u2013
 charges
\u2013
(0.4)
\u2013
 charges
Interest rate risk on
borrowings
Interest Interest
payable payable
and similar and similar
Variable rate GBP debt
10.8
(2.3)
\u2013
 charges
\u2013
(12.0)
\u2013
 charges
31 December 2023
Balance in the
hedge reserve
for hedging
Cumulative relationships for
change in fair which hedge
value of hedging Balance in the accounting is
instrument since hedge reserve no longer
inception used Fair value Fair value for continuing applied
Notional Weighted for measuring recognised in recognised in hedges net of net of deferred
value of average ineffectiveness balance sheet \u2013 balance sheet \u2013 deferred tax \u2013 tax \u2013 (debit)/
contracts fixed/variable \u2013 gains/(losses) assets liabilities (debit)/credit credit
Exposure ($m, \u20acm, C$m)
rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency risk on
biomass purchases
January
2024
Purchases in foreign \u2013 January
currency \u2013 USD
2 ,12 6.9
$1.29
2027
14 .1
35.6
(21.5)
( 7.3)
\u2013
January
2024
Purchases in foreign \u2013 April
currency \u2013 EUR
47. 0
\u20ac 1.15
2024
\u2013
\u2013
\u2013
0.2
\u2013
January
2024
Purchases in foreign \u2013 March
currency \u2013 CAD
116.6
C$1.68
2027
\u2013
2.1
(2 .1)
(1.3)
\u2013
Foreign currency risk on
borrowings
Interest and principal $1.36/ November
payments \u2013 USD
500.0
6 .13% 2024
22.1
2.7
(21.1)
(2.4)
\u2013
November
2024
Interest and principal \u20ac1.10/ \u2013 November
payments \u2013 EUR
281.5
4.57% 2026
(1.2)
\u2013
(12.7)
(0.2)
\u2013
January
Principal payments \u2013 CAD
200.0
C$1.68
2026
(0 .1)
\u2013
(0 .1)
0.2
\u2013
Foreign currency and
interest rate risk on
borrowings
January
2024
Interest and principal \u20ac1.09/ \u2013 January
payments \u2013 EUR
95.0
2.05% 2026
(1.6)
\u2013
(1.3)
1.4
\u2013
Interest rate risk on
borrowings
January
2024
\u2013 January
Variable rate GBP debt
473.0
0.88%
2026
20.2
22.7
\u2013
15.1
\u2013
31 December 2023
Amount
Cumulative reclassified due
change in fair Hedge Amount Amount to the hedged
value of hedged ineffectiveness transferred to reclassified future cash Line item in the
item since Hedging losses recognised in Line item in the the cost or due to the flows being income
inception used recognised in the income income carrying hedged no longer statement/
for measuring OCI in the statement statement value item affecting expected to balance sheet
ineffectiveness \u2013 period \u2013 in the period \u2013 that includes of a non- profit or loss \u2013 occur \u2013 affected by the
gains/(losses) gains/(losses) gains/(losses) hedge financial asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Foreign currency risk
on biomass purchases
Purchases in foreign
currency \u2013 USD
14 .1
(68.0)
\u2013
Cost of sales
(42.5)
\u2013
\u2013
Inventories
Purchases in foreign
currency \u2013 EUR
\u2013
(3.3)
\u2013
Cost of sales
(0.9)
\u2013
\u2013
Inventories
Purchases in foreign
currency \u2013 CAD
\u2013
(8.8)
\u2013
Cost of sales
\u2013
\u2013
\u2013
Inventories
Hedges of foreign
currency risk on
borrowings
Interest Interest
payable payable
and similar and similar
Interest and principal
35.9
(22.9)
\u2013 charges
\u2013
(3.3)
\u2013
 charges
payments \u2013 USD Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
822.0
\u2013
(losses)/gains
Interest Interest
payable payable
and similar and similar
Interest and principal
(1.2)
(9.7)
\u2013 charges
\u2013
4.9
\u2013
 charges
payments \u2013 EUR Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
5.6
\u2013
(losses)/gains
Foreign Foreign
Principal payments \u2013 exchange exchange
CAD
(0.1)
(0.2)
\u2013
(losses)/gains
\u2013
\u2013
\u2013
(losses)/gains
Foreign currency and
interest rate risk on
borrowings
Interest Interest
payable payable
and similar and similar
Interest and principal
(3.9)
(3.6)
\u2013 charges
\u2013
(1.9)
\u2013
 charges
payments \u2013 EUR Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
1.9
\u2013
(losses)/gains
Interest rate risk on
borrowings
Interest Interest
payable payable
and similar and similar
Variable rate GBP debt
23.4
(31.5)
\u2013
 charges
\u2013
16.0
\u2013
 charges
7.2.3 Inflation risk The Group is exposed to inflation risk on elements of its revenues and cost base. The Group\u2019s ROC revenue is linked to UK RPI and its CfD and Capacity Market income are linked to UK CPI (see note 2.2 for further information on ROC and CfD income). In addition, a proportion of the Group\u2019s fuel costs are linked to either US or Canadian CPI. The Group has UK CPI and RPI swaps to hedge certain revenues linked to inflation. Inflation risk sensitivity The sensitivity analysis below has been determined based on the exposure to inflation rates on inflation-linked derivatives at the reporting date. The analysis below shows the impact on profit after tax and other components of equity of a reasonably possible increase or decrease in inflation rates as at 31 December. The analysis assumes all other variables are held constant.
Impact on other components
Impact on profit after tax of equity, net of tax
200 basis points 200 basis points 200 basis points 200 basis points
increase decrease increase decrease
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2024
UK CPI inflation swaps
\u2013
\u2013
(25.7)
22 .1
UK RPI inflation swaps
(1.0)
1.0
(10.9)
10.9
Impact on other components
Impact on profit after tax of equity, net of tax
200 basis points 200 basis points 200 basis points 200 basis points
increase decrease increase decrease
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2023
UK CPI inflation swaps
\u2013
\u2013
(31.3)
26.6
UK RPI inflation swaps
(5.6)
5.5
(24.3)
23.9
The Group designates the UK CPI and RPI inflation swaps as hedging instruments under cash flow hedge accounting. As such, other components of equity are sensitive to the impact on inflation linked derivatives recognised in the hedge reserve of an increase or decrease in UK inflation rates. Profit after tax is sensitive to an increase or decrease in UK inflation rates due to the impact these rate changes would have on the over-hedged portion of the inflation swaps, with this impact being recognised directly in the Consolidated income statement. Inflation risk management The Group has a risk management policy in place relating to inflation risk. The Group policy permits the use of hedging instruments in order to hedge up to 100% of the Group\u2019s current and forecast inflation exposure. Hedge accounting The Group has contracts for which the revenue is contractually linked to UK CPI inflation. The Group has designated this risk component as a hedged item. UK CPI and UK RPI inflation swaps are utilised as the hedging instruments for this inflation risk. Gains and losses on the inflation swaps are held in the hedge reserve and reclassified to revenue in the Consolidated income statement at the same time the revenue from the inflation-linked contracts impacts profit or loss or if the hedged item is no longer expected to occur. The Group applies a hedge ratio of 1:1 for its inflation swaps. The main sources of ineffectiveness relating to the inflation swaps are the basis point difference between the RPI swaps and the CPI-linked revenues they are hedging, calculation differences, and the hedged item no longer being expected to occur. Calculation differences occur due to differences between the reference months used to calculate the inflationary increase per the swaps and the reference months used to calculate the inflationary increase for the CPI-linked revenues. During the current year the Group recognised \u00a38.7 million (2023: \u00a310.7 million) of ineffectiveness due to the basis difference between the RPI hedging instruments and the CPI exposure. In the prior year as a result of a decrease in the forecast CfD generation, the Group recycled \u00a39.3 million of losses on hedge accounted inflation-linked derivative contracts to the Consolidated income statement, due to the hedged item no longer being expected to occur. There has been no decrease in forecast CfD generation in the current year and as such no amounts have been recycled due to the hedged item no longer being expected to occur. In the current year, as a result of the updated 2025 commissioning dates, the Group recycled \u00a31.2 million of losses on hedge accounted inflation-linked OCGT Capacity Market derivative contracts to the Consolidated income statement, due to the hedged item no longer being expected to occur.
The summary of the amounts relating to the hedging instruments and any related ineffectiveness in the period is presented in the
table below.
31 December 2024
Balance in the
hedge reserve
for hedging
Cumulative relationships for
change in fair which hedge
value of hedging Balance in the accounting is
instrument since hedge reserve no longer
inception used Fair value Fair value for continuing applied
Notional for measuring recognised in recognised in hedges net of net of deferred
value of Weighted ineffectiveness \u2013 balance sheet \u2013 balance sheet \u2013 deferred tax \u2013 tax \u2013 (debit)/
contracts average gains/(losses) assets liabilities (debit)/credit credit
Exposure \u00a3m
fixed rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Inflation April
2026
\u2013 July
30.4
CPI \u2013 2.70%
2038
(18.6)
\u2013
(18.6)
(14.5)
10.5
Inflation-linked sales April
contracts \u2013 CPI
440.0
RPI \u2013 3.65%
2026
(75.4)
\u2013
(165.4)
(34.9)
\u2013
31 December 2024
Cumulative
change in fair
value Hedge Amount Amount
of hedged Hedging ineffectiveness Amount reclassified reclassified due Line item in
item since gains recognised in transferred to due to the to the hedged the income
inception used recognised in the income Line item in the the cost or hedged future cash flows statement/
for measuring OCI in the statement income statement carrying value item affecting being no longer balance sheet
ineffectiveness \u2013 period \u2013 in the period \u2013 that includes of a non- profit or loss \u2013 expected to occur affected by the
gains/(losses) gains/(losses) gains/(losses) hedge financial asset (gains)/losses \u2013 (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Inflation
Inflation-linked sales
(18.6)
(1.3)
\u2013
Revenue
\u2013
(3.1)
1.2
Revenue
contracts \u2013 CPI
(47.9)
(2 .1)
(8.7)
Revenue
\u2013
27.1
\u2013
Revenue
31 December 2023
Balance in the
hedge reserve
Cumulative change for hedging
in fair relationships for
value of hedging Balance in the which hedge
instrument since hedge reserve accounting is
inception used Fair value Fair value for continuing no longer applied
Notional for measuring recognised in recognised in hedges net of net of deferred
value of Weighted ineffectiveness \u2013 balance sheet \u2013 balance sheet \u2013 deferred tax \u2013 tax \u2013 (debit)/
contracts average gains/(losses) assets liabilities (debit)/credit credit
Exposure \u00a3m
fixed rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Inflation April
2026
\u2013 July
30.4
CPI \u2013 2.72%
2038
(19.7)
\u2013
(19.7)
(15.3)
13.6
Inflation-linked sales April
contracts \u2013 CPI
440.0
RPI \u2013 3.46%
2026
(100.7)
\u2013
(230.7)
(53.6)
\u2013
31 December 2023
Cumulative
change in fair
value Hedge Amount Amount
of hedged ineffectiveness Amount reclassified reclassified due Line item in
item since Hedging losses recognised in transferred to due to the to the hedged the income
inception used recognised the income Line item in the the cost or hedged future cash flows statement/
for measuring in OCI statement income statement carrying value item affecting being no longer balance sheet
ineffectiveness \u2013 in the period \u2013 in the period \u2013 that includes of a non- profit or loss \u2013 expected to occur affected by the
gains/(losses) gains/(losses) gains/(losses) hedge financial asset (gains)/losses \u2013 (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Inflation
Inflation-linked sales
(19.7)
3.3
\u2013
Revenue
\u2013
(0.9)
\u2013
Revenue
contracts \u2013 CPI
(75.2)
(3.5)
(10.7)
Revenue
\u2013
17.5
9.3
Revenue
7.2.4 Liquidity risk The treasury function is responsible for liquidity, funding and settlement management under policies approved by the Board. Liquidity needs are monitored using regular forecasting of operational cash flows and financing commitments. The Group maintains a mixture of cash and cash equivalents, committed facilities and uncommitted facilities in order to ensure sufficient funding for business requirements. In managing liquidity risk, the Group has the ability to accelerate the cash flows associated with certain working capital items, principally those related to ROC sales and Energy Solutions energy supply sales. In each case this is undertaken on a non-recourse basis and, accordingly, the ROC assets and Energy Solutions receivables are derecognised from the Consolidated balance sheet at the point of sale. The Group also utilises standard purchasing facilities to extend the working capital cycle, whilst still paying suppliers on time. The impact on the Group\u2019s cash flows is described in note 4.3. Such facilities are not included within the Group\u2019s definition of Net debt, as outlined in note 2.7. The following tables set out details of the expected maturity profile of the undiscounted, contractual payments of non-derivative financial liabilities. The tables include both interest and principal cash flows. To the extent that interest payments or receipts are floating rate, the undiscounted amount is derived from interest rate curves at the reporting date.
As at 31 December 2024
Within 3 months \u2013
3 months 1 year 1\u20132 years 2\u20135 years >5 years Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Term loans, gross value
11.2
30.5
202.8
613.3
27.0
884.8
Loan notes, gross value
\u2013
139.1
17.0
332.2
\u2013
488.3
Borrowings, contractual maturity
11.2
169.6
219.8
945.5
27. 0
1,37
3.1
Trade and other payables
763.5
28.2
1.1
0.2
\u2013
793.0
Lease liabilities
8.9
22.7
24.6
39.0
47. 2
142.4
783.6
220.5
245.5
984.7
74.2
2,308.5
As at 31 December 2023
Within 3 months \u2013
3 months 1 year 1\u20132 years 2\u20135 years >5 years Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Term loans, gross value
153.9
154.9
271.6
278.8
87. 0
946.2
Loan notes, gross value
\u2013
31.7
635.3
\u2013
\u2013
6 67.0
Borrowings, contractual maturity
153.9
186.6
906.9
278.8
8 7.0
1,613.2
Trade and other payables
763.8
150.7
3.2
1.5
\u2013
919.2
Lease liabilities
8.6
24.8
28.6
52.5
5 7.0
171.5
926.3
3 62 .1
938.7
332.8
144.0
2,703.9
The weighted average interest rate payable at the reporting date on the Group\u2019s borrowings was 5.39% (2023: 4.79%). Trade and other payables of \u00a3793.0 million (2023: \u00a3919.2 million) excludes non-financial liabilities such as contract liabilities, the Group\u2019s obligation to deliver ROCs and employee benefit-related accruals. The following tables set out details of the expected maturity profile of contractual payments and receipts of derivative financial instruments. Where the amount payable is not fixed, the amount disclosed has been determined by reference to projected commodity prices, foreign currency exchange rates, inflation rates or interest rates, as illustrated by the yield or other forward curves existing at the reporting date. Certain commodity contracts are expected to be gross settled through delivery or receipt of the commodity and a subsequent cash settlement of the trade value. Vanilla foreign currency exchange contracts are expected to be gross settled through simultaneous delivery of one currency and receipt of another. Gross settlement of both the interest and principal on cross-currency interest rate swaps is expected. Financial contracts and other foreign exchange contracts (excluding forwards and swaps) are expected to be net settled. Interest rate contracts and inflation rate contracts are expected to include the net settlement of the interest rate and inflation rate differentials. Where derivatives are expected to be gross settled based on the trade value rather than the mark-to-market value, the gross cash flows have been presented in the table below. Where derivatives are expected to be net settled, the undiscounted net cash flows expected to occur based on the current fair value have been presented in the table below. Where derivative balances are subject to offsetting, the net expected contractual payments and receipts of the offset asset and liability have been presented. The amounts included within difference to carrying amount column include the effect of discounting for the time value of money and credit risk on all trade types. Additionally, for all physically settled commodity trades, the difference to carrying amount includes the market value of these trades, as the traded price is included as the cash payment or receipt in the table below, but the carrying amount is based on the mark-to-market of the trade, being the difference between the market value and traded value. For foreign currency exchange contracts the amounts included within the difference to carrying amount column also includes the time value of options that have no intrinsic value, for example out-of-the-money options. As these trades are not expected to exercise no cash flows have been included in the below table. The below tables have been re-presented in the current period to include the expected cash flows from all derivative contracts (both assets and liabilities), including both cash inflows and outflows. The Group believe the additional information provided more accurately reflects the expected cash flows and liquidity profile of the Group\u2019s derivative contracts.
As at 31 December 2024
Within Difference to Carrying
1 year 1\u20132 years >2 years Total carrying amount amount
Derivative liabilities \u2013 cash inflow/(outflow) \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts \u2013 inflow
303.0
259.3
37.8
6 0 0.1
(673.5)
(73.4)
Commodity contracts \u2013 outflow
(33.8)
(1.4)
(4.1)
(39.3)
30.9
(8.4)
Foreign exchange contracts \u2013 inflow
6 41.1
468.4
328.0
1,437.5
15.2
(36.9)
Foreign exchange contracts \u2013 outflow
(637. 4)
(494.6)
(357.6)
(1,489.6)
Cross-currency contracts \u2013 inflow
215.7
53.9
341.0
610.6
1.2
(30.2)
Cross-currency contracts \u2013 outflow
(241.3)
(63.4)
( 337.3)
(642.0)
Interest rate contracts \u2013 inflow
0.3
\u2013
\u2013
0.3
0.1
(0.4)
Interest rate contracts \u2013 outflow
\u2013
(0.5)
(0.3)
(0.8)
Inflation contracts \u2013 outflow
(84.3)
(91.5)
(20.0)
(195.8)
11.8
(184.0)
163.3
130.2
(12.5)
281.0
(614.3)
(333.3)
As at 31 December 2024
Within Difference to Carrying
1 year 1\u20132 years >2 years Total carrying amount amount
Derivative assets \u2013 cash inflow/(outflow) \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts \u2013 inflow
363.7
50.6
16.8
431.1
(306.5)
124.6
Commodity contracts \u2013 outflow
(117.5)
(4.5)
(24.9)
(146.9)
175.8
28.9
Foreign exchange contracts \u2013 inflow
874.6
1,030.0
245.1
2,149.7
(9.7)
96.7
Foreign exchange contracts \u2013 outflow
(839.9)
(977.1)
(226.3)
(2,043.3)
Cross-currency contracts \u2013 inflow
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Cross-currency contracts \u2013 outflow
\u2013
\u2013
\u2013
\u2013
Interest rate contracts \u2013 inflow
6.3
1.1
\u2013
7. 4
(0.2)
7.1
Interest rate contracts \u2013 outflow
\u2013
\u2013
(0 .1)
(0 .1)
Inflation contracts \u2013 outflow
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
287.2
100.1
10.6
397.9
(140.6)
257.3
As at 31 December 2023
Within Difference to Carrying
1 year 1\u20132 years >2 years Total carrying amount amount
Derivative liabilities \u2013 cash inflow/(outflow) \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts \u2013 inflow
28.2
5.5
4.3
38.0
(40.7)
(2.7)
Commodity contracts \u2013 outflow
(403.5)
(43 .1)
(0 .1)
(446.7)
256.2
(190.5)
Foreign exchange contracts \u2013 inflow
9 07.4
486.6
38 7.4
1,781.4
(13.5)
(59.5)
Foreign exchange contracts \u2013 outflow
(936.2)
(497.1)
( 39 4 .1)
(1, 827. 4)
Cross-currency contracts \u2013 inflow
5 62 .1
25.0
29.8
616.9
1.7
( 35.1)
Cross-currency contracts \u2013 outflow
(620.1)
(2.5)
(31.1)
(653.7)
Interest rate contracts \u2013 inflow
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Interest rate contracts \u2013 outflow
\u2013
\u2013
\u2013
\u2013
Inflation contracts \u2013 outflow
(81.6)
(85.2)
(107.5)
(274.3)
23.9
(250.4)
(543.7)
(110.8)
(111.3)
(765.8)
227.6
(538.2)
As at 31 December 2023
Within Difference to Carrying
1 year 1\u20132 years >2 years Total carrying amount amount
Derivative assets \u2013 cash inflow/(outflow) \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts \u2013 inflow
880.4
515.7
57. 5
1,453.6
(927.9)
525.7
Commodity contracts \u2013 outflow
(6.5)
\u2013
\u2013
(6.5)
8.9
2.4
Foreign exchange contracts \u2013 inflow
768.6
543.6
669.9
1,
98 2.1
40.3
108.5
Foreign exchange contracts \u2013 outflow
(756.9)
(522.4)
(634.6)
(1,913.9)
Cross-currency contracts \u2013 inflow
146.4
\u2013
\u2013
146.4
(0 .1)
2.7
Cross-currency contracts \u2013 outflow
(143.6)
\u2013
\u2013
(143.6)
Interest rate contracts \u2013 inflow
16.0
7.4
1.4
24.8
(2.1)
22.7
Interest rate contracts \u2013 outflow
\u2013
\u2013
\u2013
\u2013
Inflation contracts \u2013 outflow
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
904.4
544.3
94.2
1,542.9
(880.9)
662.0
7.2.5 Credit risk The Group\u2019s gross exposure to credit risk for financial instruments is limited to the carrying amount of financial assets recognised at the reporting date. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in note 7.1. Trade and other receivables are stated gross of the provision for expected credit losses on trade receivables of \u00a342.4 million (2023: \u00a359.4 million) and expected credit losses on accrued income of \u00a39.0 million (2023: \u00a39.4 million). The balance excludes non-financial receivables such as prepayments. The Group\u2018s four reportable segments (Pellet Production, Biomass Generation, Flexible Generation and Energy Solutions) are exposed to different levels and concentrations of credit risk, largely reflecting the number, size and nature of their respective customers. The Pellet Production segment sells biomass pellets both intra-group and to external parties. Credit risk for the Group relates to the sales made to external parties. The majority of the Pellet Production segment\u2019s external sales are with large utility customers in Europe and Asia. The Pellet Production segment manages its credit risk by reviewing individual sales contracts, considering the length of the contract, payment terms, and assessing the credit quality of counterparties prior to signing contracts and throughout the duration of contracts. For the Biomass Generation and Flexible Generation segments, the risk arises from treasury, trading and energy procurement activities. Wholesale counterparty credit exposures are monitored by individual counterparty and by category of credit rating. Counterparty credit exposures are subject to approved limits. The Group uses master netting agreements to reduce credit risk and net settles payments with counterparties where net settlement provisions exist. In addition, the Group employs a variety of other methods to mitigate credit risk: margining; various forms of parent company guarantee; deeds of charge; cash collateral; letters of credit; and surety bonds. The majority of the Biomass Generation and Flexible Generation segments\u2019 credit risk is with counterparties in related energy industries or with financial institutions. In addition, where deemed appropriate, the Group has historically purchased credit default swaps. The highest credit risk exposure is in the Energy Solutions segment, with a large number of customers of varying sizes operating in a variety of markets. In particular, its small and medium-sized enterprise (SME) customers carry lower concentrations but higher levels of credit risk, owing to a customer base comprised of smaller retail and commercial entities. Credit risk is managed by checking a company\u2019s creditworthiness and financial strength both before commencing trade and during the business relationship. Credit risk is monitored and managed by industry sector. Due to the sale of the majority of the Opus Energy non-core SME meter points the Group has reduced its credit risk exposure for the Energy Solutions segment. Further details on the impact of credit risk on trade and other receivables is disclosed in note 3.5. The investment of surplus cash is undertaken with the objective of ensuring that there is sufficient liquidity at all times, so that funds are available to meet liabilities as they fall due, whilst securing a return from invested funds and preserving the capital value of those funds within Board-approved policies. These policies manage credit risk exposure by setting out minimum rating requirements and maximum investments with any one counterparty based on their rating and the maturity profile. The Group had cash and cash equivalents of \u00a3356.0 million at 31 December 2024 (2023: \u00a3379.5 million). The Group\u2019s cash and cash equivalents excluding money market funds (held at FVTPL) are subject to the impairment requirements of IFRS 9. The Group had cash and cash equivalents excluding money market funds of \u00a3252.9 million at 31 December 2024 (2023: \u00a3208.4 million). The identified impairment loss, based on the 12-month expected credit loss basis, was immaterial. Cash and cash equivalents are held with banks with external credit ratings between AAA and A. The Group is exposed to credit risk on derivative contracts, to which the impairment requirements of IFRS 9 are not applied as the fair value requirements of IFRS 13 are applicable. Credit risk is a factor in the determination of fair value. The carrying amount of these financial assets, disclosed in note 7.1, represents the Group\u2019s maximum credit risk exposure. Some derivative contracts are fully cash collateralised, thereby minimising credit risk. At 31 December 2024, the Group held \u00a39.8 million in cash collateral receipts (2023: \u00a320.3 million) covering certain derivative assets and had posted \u00a34.7 million (2023: \u00a398.9 million) of cash collateral payments covering certain derivative liabilities. The credit rating of counterparties to which the \u00a34.7 million of cash collateral had been posted was A+.
Counterparty risk
As the Group relies on third-party suppliers and counterparties for the delivery of financial and non-financial items, as is therefore
exposed to the risk of non-performance by these third-party suppliers. For financial instruments, such as foreign currency forwards,
this risk is limited to the credit risk, as discussed above. The Group is also exposed to counterparty risk on non-financial items, such
as the purchases of biomass and capital expenditure. If a large supplier were to fall into financial difficulty and/or fail to deliver against
its contract with the Group, there would be additional costs associated with securing the lost goods or services from other suppliers.
The Group enters into purchase and sale contracts for a wide variety of goods and services, for example the sale of power to a
number of counterparties. The failure of one or more of these counterparties to perform under their contractual obligations may
cause the Group financial distress or increase the risk profile of the Group. The Group has acceptance procedures in place to ensure
the counterparties the Group contracts with are appropriate. The Group also has limits in place, and actively monitors its exposures
to individual counterparties to minimise this risk.
Capital management
The Group is disciplined in its management of capital to ensure it is able to continue as a going concern; maintain a strong credit rating
underpinned by robust financial metrics; invest in its core business; and pay a sustainable and growing dividend whilst maximising the
return to shareholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of
shareholders\u2019 equity (excluding the hedge and cost of hedging reserves), plus Net debt. Net debt is comprised of borrowings, lease
liabilities, cash and cash equivalents attributable to owners of the parent company and is inclusive of the impact of associated hedging
instruments as disclosed in note 2.7.
See note 4.2 for details of loan covenants, and the Viability statement starting on page 84 for details of scenario analysis performed on
covenant restrictions within the Group\u2019s financing facilities.
As at 31 December
2024 2023
\u00a3m \u00a3m
Net debt (note 2.7)
991.7
1,219.7
Total shareholders\u2019 equity attributable to owners of the parent company, excluding hedge and cost of
hedging reserves
2,078.3
1,74
4.9
7.3 Hedge reserve
The Group designates certain hedging instruments that are used to address commodity price risk, foreign exchange risk, interest rate
risk and inflation rate risk as cash flow hedges. At the inception of the hedge, the relationship between the hedging instrument and
hedged item is documented, along with its risk management objectives. Furthermore, at the inception of the hedge and on an ongoing
basis, the Group documents whether the hedging instruments used in hedging transactions are effective in offsetting changes in cash
flows of the hedged items. Changes in the fair value of contracts designated into such hedging relationships are recognised within the
hedge reserve to the extent they are effective. Amounts accumulated in the hedge reserve are reclassified in the periods when the
hedged item affects profit or loss. If the hedged item results in the recognition of a non-financial asset then the amount accumulated
in the hedge reserve is transferred and included within the initial cost of the asset.
The table below details the gains and losses recognised in the current and prior year on hedging instruments, the amounts reclassified
from equity due to the hedged item affecting the Consolidated income statement, and the amounts reclassified due to the hedged
future cash flows no longer being expected to occur. See section 7.2 for further details on these amounts.
Hedge reserve
Foreign Foreign
currency exchange
Commodity exchange Interest and Interest Inflation
price risk
(1)
risk
(2)
rate risk
(2)
rate risk
(2)
rate risk Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
At 1 January 2023
(192.8)
84.5
26.8
4 .1
(74.6)
(152.0)
Gains/(losses) recognised:
\u2013 Change in fair value of hedging instrument recognised in OCI
414.7
(112.9)
(31.5)
(3.6)
(0.2)
266.5
Reclassified from equity as the hedged item has affected
profit or loss:
\u2013 Reclassified to the Consolidated income statement
\u2013 included in cost of sales
600.9
\u2013
\u2013
\u2013
\u2013
600.9
\u2013 Reclassified to the Consolidated income statement
\u2013 included in revenue
(415.9)
\u2013
\u2013
\u2013
16.6
(399.3)
\u2013 Reclassified to the Consolidated income statement
\u2013 included in interest payable and similar charges
\u2013
1.6
16.0
(1.9)
\u2013
15.7
\u2013 Reclassified to the Consolidated income statement
\u2013 included in foreign exchange (losses)/gains
\u2013
27.6
\u2013
1.9
\u2013
29.5
Reclassified from equity as the hedged item is no longer
expected to occur:
\u2013 Reclassified from equity \u2013 included in revenue
\u2013
\u2013
\u2013
\u2013
9.3
9.3
Transferred from equity and included within the initial cost
of a non-financial asset:
\u2013 Transferred to cost of inventories
\u2013
(43.4)
\u2013
\u2013
\u2013
(43.4)
Related deferred tax, net (note 2.6)
(149.9)
31.8
3.8
0.9
(6.4)
(119.8)
At 1 January 2024
257. 0
(10.8)
15.1
1.4
(55.3)
207.4
Gains/(losses) recognised:
\u2013 Change in fair value of hedging instrument recognised
in OCI
(15.8)
(19.8)
(2.3)
(7.7)
(3.4)
(49.0)
Reclassified from equity as the hedged item has affected profit
or loss:
\u2013 Reclassified to the Consolidated income statement
\u2013 included in cost of sales
105.1
\u2013
\u2013
\u2013
\u2013
105.1
\u2013 Reclassified to the Consolidated income statement
\u2013 included in revenue
(397.5)
\u2013
\u2013
\u2013
24.0
(373.5)
\u2013 Reclassified to the Consolidated income statement
\u2013 included in interest payable and similar charges
\u2013
6.7
(12.0)
(2.9)
\u2013
(8.2)
\u2013 Reclassified to the Consolidated income statement
\u2013 included in foreign exchange (losses)/gains
\u2013
2 9.1
\u2013
3.4
\u2013
32.5
Reclassified from equity as the hedged item is no longer
expected to occur:
\u2013 Reclassified from equity \u2013 included in revenue
\u2013
\u2013
\u2013
\u2013
1.2
1.2
Transferred from equity and included within the initial cost
of a non-financial asset:
\u2013 Transferred to cost of inventories
\u2013
4.8
\u2013
\u2013
\u2013
4.8
Related deferred tax, net (note 2.6)
77.1
(5.2)
3.5
1.8
(5.4)
71.8
At 31 December 2024
25.9
4.8
4.3
(4.0)
(38.9)
( 7.9)
(1) The table above has been re-presented to split the prior year reclassified amounts in commodity price risk column between amounts included in revenue and amounts
included within cost of sales.
(2) The above table has been re-presented to include a foreign exchange and interest rate risk column. The amounts included within foreign exchange and interest rate risk
relate to the Group\u2019s floating-to-fixed cross-currency interest rate swaps that were previously disclosed partially within foreign currency exchange risk and partially
within interest rate risk.
The expected release profile from equity of post-tax hedging gains and losses is as follows:
As at 31 December 2024
Within 1 year 1\u20132 years >2 years Total
\u00a3m \u00a3m \u00a3m \u00a3m
Commodity risk
34.7
(9.2)
0.4
25.9
Foreign currency exchange risk
(1.3)
(3.0)
9.1
4.8
Interest rate risk
4.2
0.4
(0.3)
4.3
Foreign currency and interest rate risk
(2.4)
(1.3)
(0.3)
(4.0)
Inflation risk
(15.1)
(10 .1)
(13.7)
(38.9)
20 .1
(23.2)
(4.8)
(7.9)
As at 31 December 2023
Within 1 year 1\u20132 years >2 years Total
\u00a3m \u00a3m \u00a3m \u00a3m
Commodity risk
199.4
56.0
1.6
2 57.0
Foreign currency exchange risk
(3.3)
(5.4)
(2.1)
(10.8)
Interest rate risk
9.2
5.0
0.9
15.1
Foreign currency and interest rate risk
0.7
0.6
0.1
1.4
Inflation risk
(19.4)
(15.2)
(20.7)
(55.3)
186.6
41.0
(20.2)
2 07.4
7.4 Cost of hedging reserve
Where the Group has designated the spot foreign exchange risk as the hedged risk, the Group allocates unrealised gains and losses
on the forward rate of hedge accounted foreign currency derivative contracts to a cost of hedging reserve in accordance with IFRS 9.
A large proportion of the derivative contracts held relate to foreign currency exchange contracts, including forward contracts, options
and swaps. Consistent with prior periods, for foreign currency exchange contracts hedging the purchase of inventory denominated
in foreign currencies to which the Group has applied hedge accounting, the Group has continued to designate the change in the spot
rate as the hedged risk in the Group\u2019s cash flow hedge relationships. The Group designates the cost of hedging \u2013 being the change
in fair value associated with forward points including currency basis \u2013 to equity. All amounts within the cost of hedging reserve relate
to foreign currency exchange risk.
The table below details the cost of hedging gains or losses recognised in the year on hedging instruments and the amounts transferred
from equity and included within the initial cost of a non-financial asset:
Cost of hedging
2024 2023
\u00a3m \u00a3m
At 1 January
18.7
4 0.1
Gains/(losses) recognised:
\u2013 Change in fair value of hedging instruments recognised in the Consolidated statement of
comprehensive income
6.8
7.5
Transferred from equity and included within the initial cost of a non-financial asset:
\u2013 Transferred to cost of inventories
(22.6)
(36.0)
Related deferred tax, net (note 2.6)
4.0
7.1
At 31 December
6.9
18.7
The expected release profile from equity of post-tax cost of hedging gains and losses is as follows:
As at 31 December 2024
Within 1 year 1\u20132 years >2 years Total
\u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency exchange risk
5.1
0.7
1.1
6.9
As at 31 December 2023
Within 1 year 1\u20132 years >2 years Total
\u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency exchange risk
16.6
4.3
(2.2)
18.7
7.5 Offsetting financial assets and financial liabilities
Financial assets and liabilities are offset and the net amount is reported in the Consolidated balance sheet where the Group has a
legally enforceable right to offset the recognised amounts, and there is an intention to settle on a net basis or realise the asset and
settle the liability simultaneously. The Group also has financial assets and liabilities with certain counterparties that are subject to
master netting agreements. Some financial assets and liabilities do not meet the criteria for offsetting at the reporting date but are
subject to an enforceable master netting agreement that in certain circumstances, such as a bankruptcy, would allow for the amounts
to be offset and a single net amount payable or receivable.
The table below shows the impact of financial assets and liabilities that are offset in the Consolidated balance sheet, and it also shows
the impact if the carrying amounts that are subject to these master netting agreements were also to be offset in certain
circumstances, such as a bankruptcy:
As at 31 December 2024
Net amounts of
Gross amounts financial Related
of financial instruments financial Related cash
Gross amounts instruments offset presented instruments collateral assets/
of financial in the balance in the that are (liabilities) that are
instruments sheet balance sheet not offset not offset Net amount
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial assets
Derivative financial instruments
328.5
(71.2)
257.3
(166.4)
(1.5)
89.4
Trade and other receivables and contract
assets
523.0
(52.7)
470.3
(2.5)
\u2013
467.8
Financial liabilities
Derivative financial instruments
(404.5)
71.2
(333.3)
15 6.1
\u2013
(177.2)
Trade and other payables and
contract liabilities
(1,341.8)
52.7
(1, 28 9.1)
12.8
1.5
(1,274.8)
As at 31 December 2023
Net amounts of
Gross amounts financial Related
of financial instruments financial Related cash
Gross amounts instruments offset presented instruments collateral assets/
of financial in the balance in the that are (liabilities) that are
instruments sheet balance sheet not offset not offset Net amount
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial assets
Derivative financial instruments
888.5
(226.5)
662.0
(220.9)
(20.3)
420.8
Trade and other receivables and contract
assets
1,088.5
(111.6)
976.9
(4.9)
(95.9)
876 .1
Financial liabilities
Derivative financial instruments
(764.7)
226.5
(538.2)
215.3
95.9
(227. 0)
Trade and other payables and
contract liabilities
(1,651.2)
111.6
(1,539.6)
10.5
20.3
(1,508.8)
The above collateral assets and liabilities are recorded in other receivables and other payables respectively. See note 4.3.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-570": { "value": "
Carrying amount
Fair value
Financial Financial
Fair value- Mandatorily assets at liabilities at
At 31 December 2024 hedging at FV TPL- amortised amortised
\u00a3m instruments
others
FVOCI
cost
cost
Total
Level 1
Level 2
Level 3
Tot al
Financial assets measured at fair value
Commodity contracts
101.9
51.6
\u2013
\u2013
\u2013
153.5
\u2013
153.5
\u2013
153.5
Foreign currency
exchange contracts
21.0
75.7
\u2013
\u2013
\u2013
96.7
\u2013
96.7
\u2013
96.7
Interest rate and cross-
currency contracts
7.1
\u2013
\u2013
\u2013
\u2013
7.1
\u2013
7.1
\u2013
7.1
Contingent consideration
\u2013
9.4
\u2013
\u2013
\u2013
9.4
\u2013
\u2013
9.4
9.4
Trade and other
receivables
\u2013
0.3
38.9
\u2013
\u2013
39.2
\u2013
39.2
\u2013
39.2
Cash and cash equivalents
\u2013
103.1
\u2013
\u2013
\u2013
103.1
\u2013
103.1
\u2013
103.1
Financial assets not measured at fair value
Trade and other
receivables
\u2013
\u2013
\u2013
353.4
\u2013
353.4
Cash and cash equivalents
\u2013
\u2013
\u2013
252.9
\u2013
252.9
Financial liabilities measured at fair value
Commodity contracts
(50.9)
(30.9)
\u2013
\u2013
\u2013
(81.8)
\u2013
(81.8)
\u2013
(81.8)
Foreign currency
exchange contracts
(24.6)
(12.3)
\u2013
\u2013
\u2013
(36.9)
\u2013
(36.9)
\u2013
(36.9)
Interest rate and cross-
currency contracts
(30.6)
\u2013
\u2013
\u2013
\u2013
(30.6)
\u2013
(30.6)
\u2013
(30.6)
Inflation rate contracts
(184.0)
\u2013
\u2013
\u2013
\u2013
(184.0)
\u2013
(184.0)
\u2013
(184.0)
Financial liabilities not measured at fair value
Secured bank loans
\u2013
\u2013
\u2013
\u2013
(768.2)
(768.2)
\u2013
(771.2)
\u2013
(771.2)
Secured loan notes
\u2013
\u2013
\u2013
\u2013
(408.5)
(408.5)
(422.3)
\u2013
\u2013
(422.3)
Lease liabilities
\u2013
\u2013
\u2013
\u2013
(116.5)
(116.5)
Trade and other payables
\u2013
\u2013
\u2013
\u2013
(793.0)
(793.0)
Carrying amount
Fair value
Financial Financial
Fair value- Mandatorily assets at liabilities at
At 31 December 2023 hedging a t F V T P L- amortised amortised
\u00a3m instruments
others
FVOCI
cost
cost
Total
Level 1
Level 2
Level 3
Total
Financial assets measured at fair value
Commodity contracts
402.7
125.4
\u2013
\u2013
\u2013
528 .1
\u2013
528.1
\u2013
528.1
Foreign currency
exchange contracts
37.7
70.8
\u2013
\u2013
\u2013
108.5
\u2013
108.5
\u2013
108.5
Interest rate and cross-
currency contracts
25.4
\u2013
\u2013
\u2013
\u2013
25.4
\u2013
25.4
\u2013
25.4
Contingent consideration
\u2013
9.2
\u2013
\u2013
\u2013
9.2
\u2013
\u2013
9.2
9.2
Trade and other
receivables
\u2013
\u2013
242.2
\u2013
\u2013
242.2
\u2013
242.2
\u2013
242.2
Cash and cash equivalents
\u2013
171.1
\u2013
\u2013
\u2013
171.1
\u2013
171.1
\u2013
171.1
Financial assets not measured at fair value
Trade and other
receivables
\u2013
\u2013
\u2013
644.2
\u2013
644.2
Cash and cash equivalents
\u2013
\u2013
\u2013
208.4
\u2013
208.4
Financial liabilities measured at fair value
Commodity contracts
(58.8)
(134.4)
\u2013
\u2013
\u2013
(193.2)
\u2013
(193.2)
\u2013
(193.2)
Foreign currency
exchange contracts
(23.7)
(35.8)
\u2013
\u2013
\u2013
(59.5)
\u2013
(59.5)
\u2013
(59.5)
Interest rate and cross-
currency contracts
( 35.1)
\u2013
\u2013
\u2013
\u2013
( 35.1)
\u2013
( 35.1)
\u2013
( 35.1)
Inflation rate contracts
(250.4)
\u2013
\u2013
\u2013
\u2013
(250.4)
\u2013
(250.4)
\u2013
(250.4)
Financial liabilities not measured at fair value
Secured bank loans
\u2013
\u2013
\u2013
\u2013
(698 .1)
(6 98.1)
\u2013
(704.8)
\u2013
(704.8)
Unsecured bank loans
\u2013
\u2013
\u2013
\u2013
(120.0)
(120.0)
\u2013
(120.0)
\u2013
(120.0)
Secured loan notes
\u2013
\u2013
\u2013
\u2013
(607.2)
(6 07. 2)
(596.4)
\u2013
\u2013
(596.4)
Lease liabilities
\u2013
\u2013
\u2013
\u2013
(135.8)
(135.8)
Trade and other payables
\u2013
\u2013
\u2013
\u2013
(919.2)
(919.2)
The gains and losses recognised in the period relating to derivative financial instruments mandatorily measured at fair value through profit or loss (FVTPL) are detailed below. The Group had no financial assets or financial liabilities voluntarily designated at FVTPL. In addition to the amounts disclosed below, gains and losses relating to derivative financial instruments qualifying for hedge accounting are disclosed in notes 7.2 to 7.4.
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Gains on derivative financial instruments not qualifying for hedge accounting \u2013 recognised in revenue
11.9
70.7
Gains/(losses) on derivative financial instruments not qualifying for hedge accounting \u2013 recognised in
cost of sales
45.3
(127.0)
Gains on derivative financial instruments not qualifying for hedge accounting \u2013 recognised in foreign
exchange (losses)/gains
\u2013
4.9
Losses on derivative financial instruments not qualifying for hedge accounting \u2013 recognised in interest
payable and similar charges
(0.6)
(0.3)
Total gains/(losses) on derivative financial instruments not qualifying for hedge accounting
56.6
(51.7)
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-661": { "value": "
Carrying amount
Fair value
Financial Financial
Fair value- Mandatorily assets at liabilities at
At 31 December 2024 hedging at FV TPL- amortised amortised
\u00a3m instruments
others
FVOCI
cost
cost
Total
Level 1
Level 2
Level 3
Tot al
Financial assets measured at fair value
Commodity contracts
101.9
51.6
\u2013
\u2013
\u2013
153.5
\u2013
153.5
\u2013
153.5
Foreign currency
exchange contracts
21.0
75.7
\u2013
\u2013
\u2013
96.7
\u2013
96.7
\u2013
96.7
Interest rate and cross-
currency contracts
7.1
\u2013
\u2013
\u2013
\u2013
7.1
\u2013
7.1
\u2013
7.1
Contingent consideration
\u2013
9.4
\u2013
\u2013
\u2013
9.4
\u2013
\u2013
9.4
9.4
Trade and other
receivables
\u2013
0.3
38.9
\u2013
\u2013
39.2
\u2013
39.2
\u2013
39.2
Cash and cash equivalents
\u2013
103.1
\u2013
\u2013
\u2013
103.1
\u2013
103.1
\u2013
103.1
Financial assets not measured at fair value
Trade and other
receivables
\u2013
\u2013
\u2013
353.4
\u2013
353.4
Cash and cash equivalents
\u2013
\u2013
\u2013
252.9
\u2013
252.9
Financial liabilities measured at fair value
Commodity contracts
(50.9)
(30.9)
\u2013
\u2013
\u2013
(81.8)
\u2013
(81.8)
\u2013
(81.8)
Foreign currency
exchange contracts
(24.6)
(12.3)
\u2013
\u2013
\u2013
(36.9)
\u2013
(36.9)
\u2013
(36.9)
Interest rate and cross-
currency contracts
(30.6)
\u2013
\u2013
\u2013
\u2013
(30.6)
\u2013
(30.6)
\u2013
(30.6)
Inflation rate contracts
(184.0)
\u2013
\u2013
\u2013
\u2013
(184.0)
\u2013
(184.0)
\u2013
(184.0)
Financial liabilities not measured at fair value
Secured bank loans
\u2013
\u2013
\u2013
\u2013
(768.2)
(768.2)
\u2013
(771.2)
\u2013
(771.2)
Secured loan notes
\u2013
\u2013
\u2013
\u2013
(408.5)
(408.5)
(422.3)
\u2013
\u2013
(422.3)
Lease liabilities
\u2013
\u2013
\u2013
\u2013
(116.5)
(116.5)
Trade and other payables
\u2013
\u2013
\u2013
\u2013
(793.0)
(793.0)
Carrying amount
Fair value
Financial Financial
Fair value- Mandatorily assets at liabilities at
At 31 December 2023 hedging a t F V T P L- amortised amortised
\u00a3m instruments
others
FVOCI
cost
cost
Total
Level 1
Level 2
Level 3
Total
Financial assets measured at fair value
Commodity contracts
402.7
125.4
\u2013
\u2013
\u2013
528 .1
\u2013
528.1
\u2013
528.1
Foreign currency
exchange contracts
37.7
70.8
\u2013
\u2013
\u2013
108.5
\u2013
108.5
\u2013
108.5
Interest rate and cross-
currency contracts
25.4
\u2013
\u2013
\u2013
\u2013
25.4
\u2013
25.4
\u2013
25.4
Contingent consideration
\u2013
9.2
\u2013
\u2013
\u2013
9.2
\u2013
\u2013
9.2
9.2
Trade and other
receivables
\u2013
\u2013
242.2
\u2013
\u2013
242.2
\u2013
242.2
\u2013
242.2
Cash and cash equivalents
\u2013
171.1
\u2013
\u2013
\u2013
171.1
\u2013
171.1
\u2013
171.1
Financial assets not measured at fair value
Trade and other
receivables
\u2013
\u2013
\u2013
644.2
\u2013
644.2
Cash and cash equivalents
\u2013
\u2013
\u2013
208.4
\u2013
208.4
Financial liabilities measured at fair value
Commodity contracts
(58.8)
(134.4)
\u2013
\u2013
\u2013
(193.2)
\u2013
(193.2)
\u2013
(193.2)
Foreign currency
exchange contracts
(23.7)
(35.8)
\u2013
\u2013
\u2013
(59.5)
\u2013
(59.5)
\u2013
(59.5)
Interest rate and cross-
currency contracts
( 35.1)
\u2013
\u2013
\u2013
\u2013
( 35.1)
\u2013
( 35.1)
\u2013
( 35.1)
Inflation rate contracts
(250.4)
\u2013
\u2013
\u2013
\u2013
(250.4)
\u2013
(250.4)
\u2013
(250.4)
Financial liabilities not measured at fair value
Secured bank loans
\u2013
\u2013
\u2013
\u2013
(698 .1)
(6 98.1)
\u2013
(704.8)
\u2013
(704.8)
Unsecured bank loans
\u2013
\u2013
\u2013
\u2013
(120.0)
(120.0)
\u2013
(120.0)
\u2013
(120.0)
Secured loan notes
\u2013
\u2013
\u2013
\u2013
(607.2)
(6 07. 2)
(596.4)
\u2013
\u2013
(596.4)
Lease liabilities
\u2013
\u2013
\u2013
\u2013
(135.8)
(135.8)
Trade and other payables
\u2013
\u2013
\u2013
\u2013
(919.2)
(919.2)
The derivative financial instruments recognised in the Consolidated balance sheet at the reporting date are:
As at 31 December
2024 2023
\u00a3m \u00a3m
Non-current derivative financial instrument assets
81.7
293.6
Current derivative financial instrument assets
175.6
368.4
Total derivative financial instrument assets
257.3
662.0
Non-current derivative financial instrument liabilities
(262.2)
(306.6)
Current derivative financial instrument liabilities
(71.1)
(231.6)
Total derivative financial instrument liabilities
(333.3)
(538.2)
Total net derivative financial instruments
(76.0)
123.8
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-673": { "value": "
Carrying amount
Fair value
Financial Financial
Fair value- Mandatorily assets at liabilities at
At 31 December 2024 hedging at FV TPL- amortised amortised
\u00a3m instruments
others
FVOCI
cost
cost
Total
Level 1
Level 2
Level 3
Tot al
Financial assets measured at fair value
Commodity contracts
101.9
51.6
\u2013
\u2013
\u2013
153.5
\u2013
153.5
\u2013
153.5
Foreign currency
exchange contracts
21.0
75.7
\u2013
\u2013
\u2013
96.7
\u2013
96.7
\u2013
96.7
Interest rate and cross-
currency contracts
7.1
\u2013
\u2013
\u2013
\u2013
7.1
\u2013
7.1
\u2013
7.1
Contingent consideration
\u2013
9.4
\u2013
\u2013
\u2013
9.4
\u2013
\u2013
9.4
9.4
Trade and other
receivables
\u2013
0.3
38.9
\u2013
\u2013
39.2
\u2013
39.2
\u2013
39.2
Cash and cash equivalents
\u2013
103.1
\u2013
\u2013
\u2013
103.1
\u2013
103.1
\u2013
103.1
Financial assets not measured at fair value
Trade and other
receivables
\u2013
\u2013
\u2013
353.4
\u2013
353.4
Cash and cash equivalents
\u2013
\u2013
\u2013
252.9
\u2013
252.9
Financial liabilities measured at fair value
Commodity contracts
(50.9)
(30.9)
\u2013
\u2013
\u2013
(81.8)
\u2013
(81.8)
\u2013
(81.8)
Foreign currency
exchange contracts
(24.6)
(12.3)
\u2013
\u2013
\u2013
(36.9)
\u2013
(36.9)
\u2013
(36.9)
Interest rate and cross-
currency contracts
(30.6)
\u2013
\u2013
\u2013
\u2013
(30.6)
\u2013
(30.6)
\u2013
(30.6)
Inflation rate contracts
(184.0)
\u2013
\u2013
\u2013
\u2013
(184.0)
\u2013
(184.0)
\u2013
(184.0)
Financial liabilities not measured at fair value
Secured bank loans
\u2013
\u2013
\u2013
\u2013
(768.2)
(768.2)
\u2013
(771.2)
\u2013
(771.2)
Secured loan notes
\u2013
\u2013
\u2013
\u2013
(408.5)
(408.5)
(422.3)
\u2013
\u2013
(422.3)
Lease liabilities
\u2013
\u2013
\u2013
\u2013
(116.5)
(116.5)
Trade and other payables
\u2013
\u2013
\u2013
\u2013
(793.0)
(793.0)
Carrying amount
Fair value
Financial Financial
Fair value- Mandatorily assets at liabilities at
At 31 December 2023 hedging a t F V T P L- amortised amortised
\u00a3m instruments
others
FVOCI
cost
cost
Total
Level 1
Level 2
Level 3
Total
Financial assets measured at fair value
Commodity contracts
402.7
125.4
\u2013
\u2013
\u2013
528 .1
\u2013
528.1
\u2013
528.1
Foreign currency
exchange contracts
37.7
70.8
\u2013
\u2013
\u2013
108.5
\u2013
108.5
\u2013
108.5
Interest rate and cross-
currency contracts
25.4
\u2013
\u2013
\u2013
\u2013
25.4
\u2013
25.4
\u2013
25.4
Contingent consideration
\u2013
9.2
\u2013
\u2013
\u2013
9.2
\u2013
\u2013
9.2
9.2
Trade and other
receivables
\u2013
\u2013
242.2
\u2013
\u2013
242.2
\u2013
242.2
\u2013
242.2
Cash and cash equivalents
\u2013
171.1
\u2013
\u2013
\u2013
171.1
\u2013
171.1
\u2013
171.1
Financial assets not measured at fair value
Trade and other
receivables
\u2013
\u2013
\u2013
644.2
\u2013
644.2
Cash and cash equivalents
\u2013
\u2013
\u2013
208.4
\u2013
208.4
Financial liabilities measured at fair value
Commodity contracts
(58.8)
(134.4)
\u2013
\u2013
\u2013
(193.2)
\u2013
(193.2)
\u2013
(193.2)
Foreign currency
exchange contracts
(23.7)
(35.8)
\u2013
\u2013
\u2013
(59.5)
\u2013
(59.5)
\u2013
(59.5)
Interest rate and cross-
currency contracts
( 35.1)
\u2013
\u2013
\u2013
\u2013
( 35.1)
\u2013
( 35.1)
\u2013
( 35.1)
Inflation rate contracts
(250.4)
\u2013
\u2013
\u2013
\u2013
(250.4)
\u2013
(250.4)
\u2013
(250.4)
Financial liabilities not measured at fair value
Secured bank loans
\u2013
\u2013
\u2013
\u2013
(698 .1)
(6 98.1)
\u2013
(704.8)
\u2013
(704.8)
Unsecured bank loans
\u2013
\u2013
\u2013
\u2013
(120.0)
(120.0)
\u2013
(120.0)
\u2013
(120.0)
Secured loan notes
\u2013
\u2013
\u2013
\u2013
(607.2)
(6 07. 2)
(596.4)
\u2013
\u2013
(596.4)
Lease liabilities
\u2013
\u2013
\u2013
\u2013
(135.8)
(135.8)
Trade and other payables
\u2013
\u2013
\u2013
\u2013
(919.2)
(919.2)
The derivative financial instruments recognised in the Consolidated balance sheet at the reporting date are:
As at 31 December
2024 2023
\u00a3m \u00a3m
Non-current derivative financial instrument assets
81.7
293.6
Current derivative financial instrument assets
175.6
368.4
Total derivative financial instrument assets
257.3
662.0
Non-current derivative financial instrument liabilities
(262.2)
(306.6)
Current derivative financial instrument liabilities
(71.1)
(231.6)
Total derivative financial instrument liabilities
(333.3)
(538.2)
Total net derivative financial instruments
(76.0)
123.8
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-684": { "value": "Accounting for derivatives Derivatives (subject to certain exemptions described below) must be measured at fair value, which generally represents the difference between the price the Group has secured in the contract, and the price the Group could achieve in the market at the reporting date. Changes in fair value are recognised either within the Consolidated income statement or the hedge reserve and cost of hedging reserve within the Consolidated statement of changes in equity, dependent upon whether the contract in question qualifies as an effective hedge under IFRS 9 (see note 7.2). The own-use exemption applies to certain contracts for physical commodities entered into and held for the Group\u2019s own purchase, sale or usage requirements. The Group\u2019s own-use contracts, such as certain power purchase agreements (PPAs) and the Group\u2019s energy supply contracts, are excluded from fair value mark-to-market accounting. Contracts for non-financial assets which do not qualify for the own-use exemption (principally wholesale power, gas, financial oil and carbon emissions allowances) and financial contracts (principally foreign exchange, interest, inflation and freight) are accounted for as derivatives in accordance with IFRS 9 and are recorded in the Consolidated balance sheet at fair value. Changes in fair value are reflected through the hedge reserve (see note 7.3) to the extent that the contracts are designated as effective hedges in accordance with IFRS 9, or the Consolidated income statement where the hedge accounting requirements are not met, or the hedges are ineffective. Changes in fair value of the derivatives that do not meet the hedge accounting requirements are excluded from Adjusted results in the Consolidated income statement until the contract matures, as management believes this more clearly reflects the underlying performance of the Group as it ensures these derivatives are recognised in the period that they are intended to hedge at their contracted prices (see note 2.7 for further details). The Group\u2019s biomass risk management policy permits some flexibility in trading activity to optimise the overall portfolio position and potentially release value in certain, limited circumstances. The nature of these contracts means they cannot be readily net settled in cash or other financial instruments and, as a result, they remain outside of the scope of IFRS 9 and are excluded from fair value mark-to-market accounting. See the critical accounting judgements section on page 163 for further details on this. Derivative balances are classified in the Consolidated balance sheet as current or non-current based on the final maturity date of the contracts. The derivative financial instruments recognised in the Consolidated balance sheet at the reporting date are:
As at 31 December
2024 2023
\u00a3m \u00a3m
Non-current derivative financial instrument assets
81.7
293.6
Current derivative financial instrument assets
175.6
368.4
Total derivative financial instrument assets
257.3
662.0
Non-current derivative financial instrument liabilities
(262.2)
(306.6)
Current derivative financial instrument liabilities
(71.1)
(231.6)
Total derivative financial instrument liabilities
(333.3)
(538.2)
Total net derivative financial instruments
(76.0)
123.8
The gains and losses recognised in the period relating to derivative financial instruments mandatorily measured at fair value through profit or loss (FVTPL) are detailed below. The Group had no financial assets or financial liabilities voluntarily designated at FVTPL. In addition to the amounts disclosed below, gains and losses relating to derivative financial instruments qualifying for hedge accounting are disclosed in notes 7.2 to 7.4.
Year ended 31 December
2024 2023
\u00a3m \u00a3m
Gains on derivative financial instruments not qualifying for hedge accounting \u2013 recognised in revenue
11.9
70.7
Gains/(losses) on derivative financial instruments not qualifying for hedge accounting \u2013 recognised in
cost of sales
45.3
(127.0)
Gains on derivative financial instruments not qualifying for hedge accounting \u2013 recognised in foreign
exchange (losses)/gains
\u2013
4.9
Losses on derivative financial instruments not qualifying for hedge accounting \u2013 recognised in interest
payable and similar charges
(0.6)
(0.3)
Total gains/(losses) on derivative financial instruments not qualifying for hedge accounting
56.6
(51.7)
7.2 Financial risk management The Group\u2019s activities expose it to a variety of financial risks, including commodity price risk, foreign currency risk, interest rate risk, inflation risk, liquidity risk, counterparty risk and credit risk. The Group\u2019s overall risk management programme focuses on the unpredictability of commodity and financial markets and seeks to manage potential adverse effects on the Group\u2019s financial performance. The Group uses derivative financial instruments to hedge certain risk exposures. Risk management is overseen by the risk management committees as explained in the Principal risks and uncertainties section (starting on page 70). The Financial Risk Management Committee identifies, evaluates and manages financial risks in close co-ordination with the Group\u2019s trading and treasury functions under policies approved by the Board of Directors. Hedge accounting The Group has cash flow hedges relating to commodity contracts, principally commitments to sell and purchase power. In the prior year, cash flow hedge accounting was also applied to certain carbon purchases. Amounts are recognised in the hedge reserve as the designated contracts are marked-to-market at each reporting date for the effective portion of the hedge, which is generally 100% of the relevant contract. Amounts held within the hedge reserve are then recycled to the Consolidated income statement as the hedged item impacts profit or loss. For power sales and purchase contracts, this is when the underlying power is delivered. Included in amounts released from equity are current and prior period gains and losses on financial instruments for which the hedged transaction has now occurred and these gains and losses have been released to the Consolidated income statement in the period. No ineffectiveness was recognised in the Consolidated income statement on continuing commodity hedges in the current or prior year. Due to the use of \u201call-in-one\u201d hedges, this results in the movement in fair value for the hedged items and hedging instruments being identical. The only sources of ineffectiveness regarding the \u201call-in-one\u201d hedges would be if delivery of the commodities was no longer expected to occur (which would result in hedge accounting being discontinued) and credit risk. The Group applies a hedge ratio of 1:1 to its commodity risk cash flow hedges. The reconciliation of the reserves and time period when the hedge will affect the Consolidated income statement are disclosed in note 7.3. The summary of the amounts relating to the hedging instruments and any related ineffectiveness in the period is presented in the table below. The average forward rates quoted below only reflect the rates applicable to the portion of the Group\u2019s commodity contracts that qualify for hedge accounting in accordance with IFRS 9. The rates do not reflect the overall average rate of the Group\u2019s total portfolio of commodity contracts that are used to protect the value of future cash flows.
31 December 2024
Balance in the
hedge reserve
for hedging
Cumulative relationships for
change in fair Balance in the which hedge
value of hedging hedge reserve accounting is
instrument since for continuing no longer
Notional inception used Fair value Fair value hedges applied
value of Weighted for measuring recognised in recognised in net of deferred net of deferred
contracts average ineffectiveness balance sheet \u2013 balance sheet \u2013 tax \u2013 (debit)/ tax \u2013 (debit)/
(MWh, fixed price Maturity \u2013 gains/(losses) assets liabilities credit credit
Exposure allowances) \u00a3 date \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts January
2025
Sale and purchases of \u2013 September
power
7,013,76
6
87.3
2028
34.5
101.9
(50.9)
25.9
\u2013
Purchase of carbon
emissions allowances
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
31 December 2024
Cumulative
change in fair Amount
value Hedge Amount reclassified due
of hedged ineffectiveness Amount reclassified to the hedged Line item
item since recognised in Line item transferred to due to the future cash in the income
inception used Hedging gains the income in the income the cost or hedged flows statement/
for measuring recognised in OCI statement statement carrying value of item affecting being no longer balance sheet
ineffectiveness in the period \u2013 in the period \u2013 that includes a non-financial profit or loss \u2013 expected to affected by the
\u2013 gains/(losses) gains/(losses) gains/(losses) hedge asset (gains)/losses occur \u2013 transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m (gains)/losses reclassification
Commodity contracts
Sale and purchase of
34.5
(15.2)
\u2013
Revenue
\u2013
( 397.5)
\u2013
Revenue
power
\u2013
Cost of sales
\u2013
103.9
\u2013
Cost of sales
Purchase of carbon
emissions allowances
\u2013
(0.6)
\u2013
Cost of sales
\u2013
1.2
\u2013
Cost of sales
31 December 2023
Balance in the
hedge reserve
Cumulative for hedging
change in fair Balance in the relationships for
value of hedging hedge reserve which hedge
instrument since for continuing accounting is
Notional inception used Fair value Fair value hedges net no longer applied
value of Weighted for measuring recognised in recognised in of deferred net of deferred
contracts average ineffectiveness balance sheet \u2013 balance sheet \u2013 tax \u2013 (debit)/ tax \u2013 (debit)/
(MWh, fixed price \u2013 gains/(losses) assets liabilities credit credit
Exposure allowances)
\u00a3
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts January
2024
Sale and purchases of \u2013 September
power
5,580,931
129.4
2026
343.5
402.3
(58.8)
257.4
\u2013
March
2024
Purchase of carbon \u2013 December
emissions allowances
62,000
37. 4
2024
0.4
0.4
\u2013
0.3
(0.7)
31 December 2023
Cumulative Amount
change in fair reclassified due
value Hedge Amount to the hedged
of hedged ineffectiveness Amount reclassified future cash Line item
item since recognised in Line item transferred to due to the flows being in the income
inception used Hedging gains the income in the income the cost or hedged no longer statement/
for measuring recognised in statement statement carrying value of item affecting expected to balance sheet
ineffectiveness \u2013 OCI in the period in the period \u2013 that includes a non-financial profit or loss \u2013 occur \u2013 affected by the
gains/(losses) \u2013 gains/(losses) gains/(losses) hedge asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Commodity contracts
Sale and purchase of
power
343.5
413.3
\u2013
Revenue
\u2013
(415.9)
\u2013
Revenue
\u2013
Cost of sales
\u2013
599.3
\u2013
Cost of sales
Purchase of carbon
emissions allowances
0.4
1.4
\u2013
Cost of sales
\u2013
1.6
\u2013
Cost of sales
Foreign currency risk hedge accounting The Group designates certain foreign currency exchange contracts, predominantly forwards, as hedging instruments of the foreign currency risk of biomass purchases denominated in foreign currencies. Gains and losses on these foreign currency exchange contracts are transferred from equity to inventories for these hedges when the Group takes ownership of the biomass. The Group designates the spot element of these foreign currency exchange contracts and applies a hedge ratio of 1:1. The Group designates certain foreign currency exchange contracts, predominantly forwards and swaps, as hedging instruments of the foreign currency risk on the principal repayments of certain foreign currency denominated borrowings. Gains and losses that are effective at hedging the foreign exchange risk on the principal repayments are released to foreign exchange gains or losses to offset gains and losses on retranslating the hedged foreign currency denominated borrowings. The Group designates the spot element of these foreign currency exchange contracts and applies a hedge ratio of 1:1. The Group also designates certain cross-currency interest rate swaps as hedging instruments of the foreign currency risk on payments of both principal and interest on certain foreign currency denominated borrowings. Gains and losses that are effective at hedging the foreign exchange risk on the interest payments are released to interest payable and similar charges at the same time as the interest on the related hedged foreign currency denominated borrowings is expensed. Gains and losses that are effective at hedging the foreign exchange risk on the principal repayments are released to foreign exchange gains or losses to offset gains and losses on retranslating the hedged foreign currency denominated borrowings. The Group applies a hedge ratio of 1:1 for its cross-currency interest rate swaps. The main sources of ineffectiveness relating to foreign currency exchange contracts (forwards and swaps) that are designated as hedging spot foreign currency risk are timing differences and credit risk. The main sources of ineffectiveness relating to cross- currency interest rate swaps are differences in the critical terms, differences in repricing dates, foreign currency basis spread, and credit risk. Interest rate risk hedge accounting The Group designates certain interest rate swaps as hedging instruments of the interest rate risk of variable rate borrowings. Gains and losses on the interest payments on interest rate swaps are released to interest payable and similar charges at the same time as the interest is expensed on the related hedged borrowings. The Group applies a hedge ratio of 1:1 to its interest rate swaps. The main sources of ineffectiveness relating to interest rate hedges are differences in the critical terms, differences in repricing dates, and credit risk. Hedge accounting information The Group has Sterling Overnight Index Average (SONIA) floating-to-fixed interest rate swaps to fix the interest payments on the following facilities: \u00a350.0 million of the UK infrastructure private placement facility (2019), \u00a398.0 million of the UK infrastructure private placement facility (2020), two \u00a350.0 million tranches of the GBP and EUR term loan facility (2024), \u00a3125.0 million of the GBP term loan facility (2024) and the \u00a350.0 million GBP term loan facility (2024). The Group has Euro Interbank Offered Rate (EURIBOR) floating-to-fixed interest rate swaps to fix the principal and interest payments on \u20ac70.0 million of the UK infrastructure private placement facility (2020). The Group has EURIBOR floating-to-fixed interest rate swaps to fix the interest payments on \u20ac185.0 million of the GBP and EUR term loan facility (2024). The Group has separately taken out \u20ac185.0 million notional value of foreign exchange forwards in order to fix the sterling cash flows payable on the principal repayment. The Group has Canadian Overnight Repo Rate (CORRA) floating-to-fixed interest rate swaps to fix the interest payments on the C$200.0 million CAD term loan facility. The Group has separately taken out C$200.0 million notional value of foreign exchange forwards in order to fix the sterling cash flows payable on the principal repayment. The Group has taken out fixed-to-fixed cross-currency interest rate swaps to hedge the future cash flows associated with the following facilities: \u20ac350.0 million 2029 and \u20ac143.8 million 2025 fixed rate EUR loan notes and \u20ac31.5 million of the UK infrastructure private placement facility (2020). As at 31 December 2024, the Group has fixed in sterling all interest and principal payments on variable rate and foreign currency denominated borrowings through the use of interest rate swaps, cross-currency interest rate swaps, and foreign currency exchange forwards and swaps, as described above. See note 4.2 for further details on the Group\u2019s borrowings. A summary of amounts relating to the Group\u2019s hedge accounting of foreign currency risk and interest rate risk are presented in the table below. The information is disaggregated by risk type. Hedges of biomass purchases, principal repayments on borrowings hedged using foreign currency forwards or swaps, and fixed-to-fixed cross currency interest rate swaps are designated as hedges of foreign currency risk. Interest rate swaps are designated as hedges of interest rate risk. Floating-to-fixed cross-currency interest rate swaps are designated as hedges of both foreign currency and interest rate risk. The average forward rates quoted below only reflect the rates applicable to the portion of the Group\u2019s foreign currency hedging instruments that qualify for hedge accounting in accordance with IFRS 9. The rates do not reflect the overall average rate of the Group\u2019s total portfolio of derivatives that are used to fix the sterling value of future cash flows. A reconciliation of reserves and the time period when the hedge will affect profit or loss, or will be transferred from equity and included in the initial cost of the non-financial item, are disclosed in notes 7.3 and 7.4.
31 December 2024
Balance in the
hedge reserve
for hedging
Cumulative relationships for
change in fair which hedge
value of hedging Balance in the accounting is
instrument since hedge reserve no longer
inception used Fair value Fair value for continuing applied
Notional Weighted for measuring recognised in recognised in hedges net of net of deferred
value of average ineffectiveness balance sheet \u2013 balance sheet \u2013 deferred tax \u2013 tax \u2013 (debit)/
contracts fixed/variable \u2013 gains/(losses) assets liabilities (debit)/credit credit
Exposure ($m, \u20acm, C$m)
rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency risk on
biomass purchases
January
2025
Purchases in foreign \u2013 February
currency \u2013 USD
1,430.5
$1.27
2027
18.6
20.7
(2 .1)
10.7
\u2013
January
2025
Purchases in foreign \u2013 October
currency \u2013 EUR
270.0
\u20ac 1.15
2026
(6.3)
\u2013
(6.3)
(4.5)
\u2013
January
2025
Purchases in foreign \u2013 March
currency \u2013 CAD
166.0
C$1.67
2027
(5.1)
0.3
(5.4)
(5.8)
\u2013
Foreign currency risk on
borrowings
Interest and principal
payments \u2013 USD
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
November
2025
Interest and principal \u20ac1.14 / \u2013 April
payments \u2013 EUR
525.3
6.48% 2028
(10.4)
\u2013
(19.7)
4.4
\u2013
February
2027
\u2013 March
Principal payments \u2013 EUR
185.0
\u20ac 1.11
2028
(5.1)
\u2013
(5.1)
\u2013
\u2013
January
Principal payments \u2013 CAD
200.0
C$1.68
2026
(5.7)
\u2013
(5.7)
\u2013
\u2013
Foreign currency and
interest rate risk on
borrowings
January
2026
Interest and principal \u20ac1.09/ \u2013 March
payments \u2013 EUR
255.0
4.04% 2028
(8.6)
\u2013
(8.7)
(2.7)
\u2013
January
Interest payments \u2013 CAD
200.0
6.05%
2026
(1.5)
\u2013
(1.8)
(1.3)
\u2013
Interest rate risk on
borrowings
January
2026
\u2013 April
Variable rate GBP debt
423.0
2.89%
2028
6.1
7.1
(0.4)
4.3
\u2013
31 December 2024
Cumulative
change in fair Amount
value Hedge Amount Amount reclassified due
of hedged ineffectiveness transferred to reclassified to the hedged Line item in the
item since Hedging losses recognised in Line item in the the cost or due to the future cash income
inception used recognised in the income income carrying hedged flows being no statement/
for measuring OCI in the statement statement value item affecting longer expected balance sheet
ineffectiveness \u2013 period \u2013 in the period \u2013 that includes of a non- profit or loss \u2013 to occur \u2013 affected by the
gains/(losses) gains/(losses) gains/(losses) hedge financial asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Foreign currency risk
on biomass purchases
Purchases in foreign
currency \u2013 USD
18.6
19.7
\u2013
Cost of sales
4.3
\u2013
\u2013
Inventories
Purchases in foreign
currency \u2013 EUR
(6.3)
(7.1)
\u2013
Cost of sales
0.9
\u2013
\u2013
Inventories
Purchases in foreign
currency \u2013 CAD
(5.1)
(5.9)
\u2013
Cost of sales
(0.4)
\u2013
\u2013
Inventories
Foreign currency risk
on borrowings Interest Interest
payable payable
Interest and principal \u2013 and similar
\u2013
(0.7)
\u2013
and similar
payments \u2013 USD
\u2013
(5.6)
charges charges
Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
9.3
\u2013
(losses)/gains
Interest Interest
payable payable
Interest and principal \u2013 and similar
\u2013
7.4
\u2013
and similar
payments \u2013 EUR
(11.3)
( 7.5)
charges charges
Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
6.4
\u2013
(losses)/gains
Foreign Foreign
Principal payments \u2013 exchange exchange
EUR
(5.1)
(6.0)
\u2013
(losses)/gains
\u2013
6.0
\u2013
(losses)/gains
Foreign Foreign
Principal payments \u2013 exchange exchange
CAD
(5.7)
( 7.4)
\u2013
(losses)/gains
\u2013
7.4
\u2013
(losses)/gains
Foreign currency and
interest rate risk on
borrowings
Interest Interest
payable payable
Interest and principal \u2013 and similar
\u2013
(2.5)
\u2013
and similar
payments \u2013 EUR
(8.7)
(6.4)
 charges charges
Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
3.4
\u2013
(losses)/gains
Interest Interest
payable payable
Interest payments \u2013 and similar and similar
CAD
(1.6)
(1.3)
\u2013
 charges
\u2013
(0.4)
\u2013
 charges
Interest rate risk on
borrowings
Interest Interest
payable payable
and similar and similar
Variable rate GBP debt
10.8
(2.3)
\u2013
 charges
\u2013
(12.0)
\u2013
 charges
31 December 2023
Balance in the
hedge reserve
for hedging
Cumulative relationships for
change in fair which hedge
value of hedging Balance in the accounting is
instrument since hedge reserve no longer
inception used Fair value Fair value for continuing applied
Notional Weighted for measuring recognised in recognised in hedges net of net of deferred
value of average ineffectiveness balance sheet \u2013 balance sheet \u2013 deferred tax \u2013 tax \u2013 (debit)/
contracts fixed/variable \u2013 gains/(losses) assets liabilities (debit)/credit credit
Exposure ($m, \u20acm, C$m)
rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency risk on
biomass purchases
January
2024
Purchases in foreign \u2013 January
currency \u2013 USD
2 ,12 6.9
$1.29
2027
14 .1
35.6
(21.5)
( 7.3)
\u2013
January
2024
Purchases in foreign \u2013 April
currency \u2013 EUR
47. 0
\u20ac 1.15
2024
\u2013
\u2013
\u2013
0.2
\u2013
January
2024
Purchases in foreign \u2013 March
currency \u2013 CAD
116.6
C$1.68
2027
\u2013
2.1
(2 .1)
(1.3)
\u2013
Foreign currency risk on
borrowings
Interest and principal $1.36/ November
payments \u2013 USD
500.0
6 .13% 2024
22.1
2.7
(21.1)
(2.4)
\u2013
November
2024
Interest and principal \u20ac1.10/ \u2013 November
payments \u2013 EUR
281.5
4.57% 2026
(1.2)
\u2013
(12.7)
(0.2)
\u2013
January
Principal payments \u2013 CAD
200.0
C$1.68
2026
(0 .1)
\u2013
(0 .1)
0.2
\u2013
Foreign currency and
interest rate risk on
borrowings
January
2024
Interest and principal \u20ac1.09/ \u2013 January
payments \u2013 EUR
95.0
2.05% 2026
(1.6)
\u2013
(1.3)
1.4
\u2013
Interest rate risk on
borrowings
January
2024
\u2013 January
Variable rate GBP debt
473.0
0.88%
2026
20.2
22.7
\u2013
15.1
\u2013
31 December 2023
Amount
Cumulative reclassified due
change in fair Hedge Amount Amount to the hedged
value of hedged ineffectiveness transferred to reclassified future cash Line item in the
item since Hedging losses recognised in Line item in the the cost or due to the flows being income
inception used recognised in the income income carrying hedged no longer statement/
for measuring OCI in the statement statement value item affecting expected to balance sheet
ineffectiveness \u2013 period \u2013 in the period \u2013 that includes of a non- profit or loss \u2013 occur \u2013 affected by the
gains/(losses) gains/(losses) gains/(losses) hedge financial asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Foreign currency risk
on biomass purchases
Purchases in foreign
currency \u2013 USD
14 .1
(68.0)
\u2013
Cost of sales
(42.5)
\u2013
\u2013
Inventories
Purchases in foreign
currency \u2013 EUR
\u2013
(3.3)
\u2013
Cost of sales
(0.9)
\u2013
\u2013
Inventories
Purchases in foreign
currency \u2013 CAD
\u2013
(8.8)
\u2013
Cost of sales
\u2013
\u2013
\u2013
Inventories
Hedges of foreign
currency risk on
borrowings
Interest Interest
payable payable
and similar and similar
Interest and principal
35.9
(22.9)
\u2013 charges
\u2013
(3.3)
\u2013
 charges
payments \u2013 USD Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
822.0
\u2013
(losses)/gains
Interest Interest
payable payable
and similar and similar
Interest and principal
(1.2)
(9.7)
\u2013 charges
\u2013
4.9
\u2013
 charges
payments \u2013 EUR Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
5.6
\u2013
(losses)/gains
Foreign Foreign
Principal payments \u2013 exchange exchange
CAD
(0.1)
(0.2)
\u2013
(losses)/gains
\u2013
\u2013
\u2013
(losses)/gains
Foreign currency and
interest rate risk on
borrowings
Interest Interest
payable payable
and similar and similar
Interest and principal
(3.9)
(3.6)
\u2013 charges
\u2013
(1.9)
\u2013
 charges
payments \u2013 EUR Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
1.9
\u2013
(losses)/gains
Interest rate risk on
borrowings
Interest Interest
payable payable
and similar and similar
Variable rate GBP debt
23.4
(31.5)
\u2013
 charges
\u2013
16.0
\u2013
 charges
Hedge accounting
The Group has contracts for which the revenue is contractually linked to UK CPI inflation. The Group has designated this risk
component as a hedged item. UK CPI and UK RPI inflation swaps are utilised as the hedging instruments for this inflation risk.
Gains and losses on the inflation swaps are held in the hedge reserve and reclassified to revenue in the Consolidated income
statement at the same time the revenue from the inflation-linked contracts impacts profit or loss or if the hedged item is no longer
expected to occur. The Group applies a hedge ratio of 1:1 for its inflation swaps.
The main sources of ineffectiveness relating to the inflation swaps are the basis point difference between the RPI swaps and the
CPI-linked revenues they are hedging, calculation differences, and the hedged item no longer being expected to occur. Calculation
differences occur due to differences between the reference months used to calculate the inflationary increase per the swaps and
the reference months used to calculate the inflationary increase for the CPI-linked revenues.
During the current year the Group recognised \u00a38.7 million (2023: \u00a310.7 million) of ineffectiveness due to the basis difference between
the RPI hedging instruments and the CPI exposure. In the prior year as a result of a decrease in the forecast CfD generation, the Group
recycled \u00a39.3 million of losses on hedge accounted inflation-linked derivative contracts to the Consolidated income statement, due to
the hedged item no longer being expected to occur. There has been no decrease in forecast CfD generation in the current year and as
such no amounts have been recycled due to the hedged item no longer being expected to occur.
In the current year, as a result of the updated 2025 commissioning dates, the Group recycled \u00a31.2 million of losses on hedge accounted
inflation-linked OCGT Capacity Market derivative contracts to the Consolidated income statement, due to the hedged item no longer
being expected to occur.
The summary of the amounts relating to the hedging instruments and any related ineffectiveness in the period is presented in the table below.
31 December 2024
Balance in the
hedge reserve
for hedging
Cumulative relationships for
change in fair which hedge
value of hedging Balance in the accounting is
instrument since hedge reserve no longer
inception used Fair value Fair value for continuing applied
Notional for measuring recognised in recognised in hedges net of net of deferred
value of Weighted ineffectiveness \u2013 balance sheet \u2013 balance sheet \u2013 deferred tax \u2013 tax \u2013 (debit)/
contracts average gains/(losses) assets liabilities (debit)/credit credit
Exposure \u00a3m
fixed rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Inflation April
2026
\u2013 July
30.4
CPI \u2013 2.70%
2038
(18.6)
\u2013
(18.6)
(14.5)
10.5
Inflation-linked sales April
contracts \u2013 CPI
440.0
RPI \u2013 3.65%
2026
(75.4)
\u2013
(165.4)
(34.9)
\u2013
31 December 2024
Cumulative
change in fair
value Hedge Amount Amount
of hedged Hedging ineffectiveness Amount reclassified reclassified due Line item in
item since gains recognised in transferred to due to the to the hedged the income
inception used recognised in the income Line item in the the cost or hedged future cash flows statement/
for measuring OCI in the statement income statement carrying value item affecting being no longer balance sheet
ineffectiveness \u2013 period \u2013 in the period \u2013 that includes of a non- profit or loss \u2013 expected to occur affected by the
gains/(losses) gains/(losses) gains/(losses) hedge financial asset (gains)/losses \u2013 (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Inflation
Inflation-linked sales
(18.6)
(1.3)
\u2013
Revenue
\u2013
(3.1)
1.2
Revenue
contracts \u2013 CPI
(47.9)
(2 .1)
(8.7)
Revenue
\u2013
27.1
\u2013
Revenue
31 December 2023
Balance in the
hedge reserve
Cumulative change for hedging
in fair relationships for
value of hedging Balance in the which hedge
instrument since hedge reserve accounting is
inception used Fair value Fair value for continuing no longer applied
Notional for measuring recognised in recognised in hedges net of net of deferred
value of Weighted ineffectiveness \u2013 balance sheet \u2013 balance sheet \u2013 deferred tax \u2013 tax \u2013 (debit)/
contracts average gains/(losses) assets liabilities (debit)/credit credit
Exposure \u00a3m
fixed rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Inflation April
2026
\u2013 July
30.4
CPI \u2013 2.72%
2038
(19.7)
\u2013
(19.7)
(15.3)
13.6
Inflation-linked sales April
contracts \u2013 CPI
440.0
RPI \u2013 3.46%
2026
(100.7)
\u2013
(230.7)
(53.6)
\u2013
31 December 2023
Cumulative
change in fair
value Hedge Amount Amount
of hedged ineffectiveness Amount reclassified reclassified due Line item in
item since Hedging losses recognised in transferred to due to the to the hedged the income
inception used recognised the income Line item in the the cost or hedged future cash flows statement/
for measuring in OCI statement income statement carrying value item affecting being no longer balance sheet
ineffectiveness \u2013 in the period \u2013 in the period \u2013 that includes of a non- profit or loss \u2013 expected to occur affected by the
gains/(losses) gains/(losses) gains/(losses) hedge financial asset (gains)/losses \u2013 (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Inflation
Inflation-linked sales
(19.7)
3.3
\u2013
Revenue
\u2013
(0.9)
\u2013
Revenue
contracts \u2013 CPI
(75.2)
(3.5)
(10.7)
Revenue
\u2013
17.5
9.3
Revenue
", "dimensions": { "concept": "ifrs-full:DisclosureOfHedgeAccountingExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-708": { "value": "Accounting for derivatives Derivatives (subject to certain exemptions described below) must be measured at fair value, which generally represents the difference between the price the Group has secured in the contract, and the price the Group could achieve in the market at the reporting date. Changes in fair value are recognised either within the Consolidated income statement or the hedge reserve and cost of hedging reserve within the Consolidated statement of changes in equity, dependent upon whether the contract in question qualifies as an effective hedge under IFRS 9 (see note 7.2). The own-use exemption applies to certain contracts for physical commodities entered into and held for the Group\u2019s own purchase, sale or usage requirements. The Group\u2019s own-use contracts, such as certain power purchase agreements (PPAs) and the Group\u2019s energy supply contracts, are excluded from fair value mark-to-market accounting. Contracts for non-financial assets which do not qualify for the own-use exemption (principally wholesale power, gas, financial oil and carbon emissions allowances) and financial contracts (principally foreign exchange, interest, inflation and freight) are accounted for as derivatives in accordance with IFRS 9 and are recorded in the Consolidated balance sheet at fair value. Changes in fair value are reflected through the hedge reserve (see note 7.3) to the extent that the contracts are designated as effective hedges in accordance with IFRS 9, or the Consolidated income statement where the hedge accounting requirements are not met, or the hedges are ineffective. Changes in fair value of the derivatives that do not meet the hedge accounting requirements are excluded from Adjusted results in the Consolidated income statement until the contract matures, as management believes this more clearly reflects the underlying performance of the Group as it ensures these derivatives are recognised in the period that they are intended to hedge at their contracted prices (see note 2.7 for further details). The Group\u2019s biomass risk management policy permits some flexibility in trading activity to optimise the overall portfolio position and potentially release value in certain, limited circumstances. The nature of these contracts means they cannot be readily net settled in cash or other financial instruments and, as a result, they remain outside of the scope of IFRS 9 and are excluded from fair value mark-to-market accounting. See the critical accounting judgements section on page 163 for further details on this. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-719": { "value": "Accounting for derivatives Derivatives (subject to certain exemptions described below) must be measured at fair value, which generally represents the difference between the price the Group has secured in the contract, and the price the Group could achieve in the market at the reporting date. Changes in fair value are recognised either within the Consolidated income statement or the hedge reserve and cost of hedging reserve within the Consolidated statement of changes in equity, dependent upon whether the contract in question qualifies as an effective hedge under IFRS 9 (see note 7.2). The own-use exemption applies to certain contracts for physical commodities entered into and held for the Group\u2019s own purchase, sale or usage requirements. The Group\u2019s own-use contracts, such as certain power purchase agreements (PPAs) and the Group\u2019s energy supply contracts, are excluded from fair value mark-to-market accounting. Contracts for non-financial assets which do not qualify for the own-use exemption (principally wholesale power, gas, financial oil and carbon emissions allowances) and financial contracts (principally foreign exchange, interest, inflation and freight) are accounted for as derivatives in accordance with IFRS 9 and are recorded in the Consolidated balance sheet at fair value. Changes in fair value are reflected through the hedge reserve (see note 7.3) to the extent that the contracts are designated as effective hedges in accordance with IFRS 9, or the Consolidated income statement where the hedge accounting requirements are not met, or the hedges are ineffective. Changes in fair value of the derivatives that do not meet the hedge accounting requirements are excluded from Adjusted results in the Consolidated income statement until the contract matures, as management believes this more clearly reflects the underlying performance of the Group as it ensures these derivatives are recognised in the period that they are intended to hedge at their contracted prices (see note 2.7 for further details). The Group\u2019s biomass risk management policy permits some flexibility in trading activity to optimise the overall portfolio position and potentially release value in certain, limited circumstances. The nature of these contracts means they cannot be readily net settled in cash or other financial instruments and, as a result, they remain outside of the scope of IFRS 9 and are excluded from fair value mark-to-market accounting. See the critical accounting judgements section on page 163 for further details on this. Hedge accounting The Group has cash flow hedges relating to commodity contracts, principally commitments to sell and purchase power. In the prior year, cash flow hedge accounting was also applied to certain carbon purchases. Amounts are recognised in the hedge reserve as the designated contracts are marked-to-market at each reporting date for the effective portion of the hedge, which is generally 100% of the relevant contract. Amounts held within the hedge reserve are then recycled to the Consolidated income statement as the hedged item impacts profit or loss. For power sales and purchase contracts, this is when the underlying power is delivered. Included in amounts released from equity are current and prior period gains and losses on financial instruments for which the hedged transaction has now occurred and these gains and losses have been released to the Consolidated income statement in the period. No ineffectiveness was recognised in the Consolidated income statement on continuing commodity hedges in the current or prior year. Due to the use of \u201call-in-one\u201d hedges, this results in the movement in fair value for the hedged items and hedging instruments being identical. The only sources of ineffectiveness regarding the \u201call-in-one\u201d hedges would be if delivery of the commodities was no longer expected to occur (which would result in hedge accounting being discontinued) and credit risk. The Group applies a hedge ratio of 1:1 to its commodity risk cash flow hedges. Foreign currency risk management It is the Group\u2019s policy to hedge material transactional exposures using a variety of derivatives to protect the sterling values of foreign currency cash flows, except where there is an economic hedge inherent in the transaction. The Group enters into derivative contracts in line with the Group\u2019s currency risk management policy, including forwards and options, to manage the risks associated with its anticipated foreign currency requirements over a rolling five-year period, covering contracted exposures and a proportion of highly probable forecast transactions. In addition, in order to optimise the cost of funding, the Group has issued foreign currency denominated debt in USD, EUR and CAD (see note 4.2 for further details on borrowings). The Group utilises derivative contracts, including cross-currency interest rate swaps and foreign exchange forward contracts, to manage exchange risk on foreign currency debt. Foreign currency risk hedge accounting The Group designates certain foreign currency exchange contracts, predominantly forwards, as hedging instruments of the foreign currency risk of biomass purchases denominated in foreign currencies. Gains and losses on these foreign currency exchange contracts are transferred from equity to inventories for these hedges when the Group takes ownership of the biomass. The Group designates the spot element of these foreign currency exchange contracts and applies a hedge ratio of 1:1. The Group designates certain foreign currency exchange contracts, predominantly forwards and swaps, as hedging instruments of the foreign currency risk on the principal repayments of certain foreign currency denominated borrowings. Gains and losses that are effective at hedging the foreign exchange risk on the principal repayments are released to foreign exchange gains or losses to offset gains and losses on retranslating the hedged foreign currency denominated borrowings. The Group designates the spot element of these foreign currency exchange contracts and applies a hedge ratio of 1:1. The Group also designates certain cross-currency interest rate swaps as hedging instruments of the foreign currency risk on payments of both principal and interest on certain foreign currency denominated borrowings. Gains and losses that are effective at hedging the foreign exchange risk on the interest payments are released to interest payable and similar charges at the same time as the interest on the related hedged foreign currency denominated borrowings is expensed. Gains and losses that are effective at hedging the foreign exchange risk on the principal repayments are released to foreign exchange gains or losses to offset gains and losses on retranslating the hedged foreign currency denominated borrowings. The Group applies a hedge ratio of 1:1 for its cross-currency interest rate swaps. The main sources of ineffectiveness relating to foreign currency exchange contracts (forwards and swaps) that are designated as hedging spot foreign currency risk are timing differences and credit risk. The main sources of ineffectiveness relating to cross- currency interest rate swaps are differences in the critical terms, differences in repricing dates, foreign currency basis spread, and credit risk. Interest rate risk hedge accounting The Group designates certain interest rate swaps as hedging instruments of the interest rate risk of variable rate borrowings. Gains and losses on the interest payments on interest rate swaps are released to interest payable and similar charges at the same time as the interest is expensed on the related hedged borrowings. The Group applies a hedge ratio of 1:1 to its interest rate swaps. The main sources of ineffectiveness relating to interest rate hedges are differences in the critical terms, differences in repricing dates, and credit risk.
Hedge accounting information
The Group has Sterling Overnight Index Average (SONIA) floating-to-fixed interest rate swaps to fix the interest payments on the
following facilities: \u00a350.0 million of the UK infrastructure private placement facility (2019), \u00a398.0 million of the UK infrastructure
private placement facility (2020), two \u00a350.0 million tranches of the GBP and EUR term loan facility (2024), \u00a3125.0 million of the GBP
term loan facility (2024) and the \u00a350.0 million GBP term loan facility (2024).
The Group has Euro Interbank Offered Rate (EURIBOR) floating-to-fixed interest rate swaps to fix the principal and interest payments
on \u20ac70.0 million of the UK infrastructure private placement facility (2020). The Group has EURIBOR floating-to-fixed interest rate
swaps to fix the interest payments on \u20ac185.0 million of the GBP and EUR term loan facility (2024). The Group has separately taken out
\u20ac185.0 million notional value of foreign exchange forwards in order to fix the sterling cash flows payable on the principal repayment.
The Group has Canadian Overnight Repo Rate (CORRA) floating-to-fixed interest rate swaps to fix the interest payments on the
C$200.0 million CAD term loan facility. The Group has separately taken out C$200.0 million notional value of foreign exchange
forwards in order to fix the sterling cash flows payable on the principal repayment.
The Group has taken out fixed-to-fixed cross-currency interest rate swaps to hedge the future cash flows associated with the
following facilities: \u20ac350.0 million 2029 and \u20ac143.8 million 2025 fixed rate EUR loan notes and \u20ac31.5 million of the UK infrastructure
private placement facility (2020).
As at 31 December 2024, the Group has fixed in sterling all interest and principal payments on variable rate and foreign currency
denominated borrowings through the use of interest rate swaps, cross-currency interest rate swaps, and foreign currency exchange
forwards and swaps, as described above. See note 4.2 for further details on the Group\u2019s borrowings.
A summary of amounts relating to the Group\u2019s hedge accounting of foreign currency risk and interest rate risk are presented in the
table below.
The information is disaggregated by risk type. Hedges of biomass purchases, principal repayments on borrowings hedged using foreign
currency forwards or swaps, and fixed-to-fixed cross currency interest rate swaps are designated as hedges of foreign currency risk.
Interest rate swaps are designated as hedges of interest rate risk. Floating-to-fixed cross-currency interest rate swaps are designated
as hedges of both foreign currency and interest rate risk.
The average forward rates quoted below only reflect the rates applicable to the portion of the Group\u2019s foreign currency hedging
instruments that qualify for hedge accounting in accordance with IFRS 9. The rates do not reflect the overall average rate of the
Group\u2019s total portfolio of derivatives that are used to fix the sterling value of future cash flows.
A reconciliation of reserves and the time period when the hedge will affect profit or loss, or will be transferred from equity and
included in the initial cost of the non-financial item, are disclosed in notes 7.3 and 7.4.
Hedge accounting The Group has contracts for which the revenue is contractually linked to UK CPI inflation. The Group has designated this risk component as a hedged item. UK CPI and UK RPI inflation swaps are utilised as the hedging instruments for this inflation risk. Gains and losses on the inflation swaps are held in the hedge reserve and reclassified to revenue in the Consolidated income statement at the same time the revenue from the inflation-linked contracts impacts profit or loss or if the hedged item is no longer expected to occur. The Group applies a hedge ratio of 1:1 for its inflation swaps. The main sources of ineffectiveness relating to the inflation swaps are the basis point difference between the RPI swaps and the CPI-linked revenues they are hedging, calculation differences, and the hedged item no longer being expected to occur. Calculation differences occur due to differences between the reference months used to calculate the inflationary increase per the swaps and the reference months used to calculate the inflationary increase for the CPI-linked revenues. During the current year the Group recognised \u00a38.7 million (2023: \u00a310.7 million) of ineffectiveness due to the basis difference between the RPI hedging instruments and the CPI exposure. In the prior year as a result of a decrease in the forecast CfD generation, the Group recycled \u00a39.3 million of losses on hedge accounted inflation-linked derivative contracts to the Consolidated income statement, due to the hedged item no longer being expected to occur. There has been no decrease in forecast CfD generation in the current year and as such no amounts have been recycled due to the hedged item no longer being expected to occur. In the current year, as a result of the updated 2025 commissioning dates, the Group recycled \u00a31.2 million of losses on hedge accounted inflation-linked OCGT Capacity Market derivative contracts to the Consolidated income statement, due to the hedged item no longer being expected to occur. The Group designates certain hedging instruments that are used to address commodity price risk, foreign exchange risk, interest rate risk and inflation rate risk as cash flow hedges. At the inception of the hedge, the relationship between the hedging instrument and hedged item is documented, along with its risk management objectives. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging instruments used in hedging transactions are effective in offsetting changes in cash flows of the hedged items. Changes in the fair value of contracts designated into such hedging relationships are recognised within the hedge reserve to the extent they are effective. Amounts accumulated in the hedge reserve are reclassified in the periods when the hedged item affects profit or loss. If the hedged item results in the recognition of a non-financial asset then the amount accumulated in the hedge reserve is transferred and included within the initial cost of the asset. Where the Group has designated the spot foreign exchange risk as the hedged risk, the Group allocates unrealised gains and losses on the forward rate of hedge accounted foreign currency derivative contracts to a cost of hedging reserve in accordance with IFRS 9. A large proportion of the derivative contracts held relate to foreign currency exchange contracts, including forward contracts, options and swaps. Consistent with prior periods, for foreign currency exchange contracts hedging the purchase of inventory denominated in foreign currencies to which the Group has applied hedge accounting, the Group has continued to designate the change in the spot rate as the hedged risk in the Group\u2019s cash flow hedge relationships. The Group designates the cost of hedging \u2013 being the change in fair value associated with forward points including currency basis \u2013 to equity. All amounts within the cost of hedging reserve relate to foreign currency exchange risk. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-687": { "value": "7.2 Financial risk management The Group\u2019s activities expose it to a variety of financial risks, including commodity price risk, foreign currency risk, interest rate risk, inflation risk, liquidity risk, counterparty risk and credit risk. The Group\u2019s overall risk management programme focuses on the unpredictability of commodity and financial markets and seeks to manage potential adverse effects on the Group\u2019s financial performance. The Group uses derivative financial instruments to hedge certain risk exposures. Risk management is overseen by the risk management committees as explained in the Principal risks and uncertainties section (starting on page 70). The Financial Risk Management Committee identifies, evaluates and manages financial risks in close co-ordination with the Group\u2019s trading and treasury functions under policies approved by the Board of Directors. 7.2.1 Commodity price risk The Group is exposed to the effect of fluctuations in commodity prices, particularly the price of power, gas, other fuels and the price of carbon emissions allowances. Price variations and market cycles have historically influenced the financial results of the Group and are expected to continue to do so. Commodity price sensitivity The sensitivity analysis below has been determined based on the exposure to commodity prices and the impact on profit after tax and other components of equity of reasonably possible increases or decreases in commodity prices as at 31 December. The analysis assumes all other variables were held constant. Financial and commodity markets saw significant volatility and high prices in 2022. During 2023, the high prices seen in 2022 generally reversed and these price reductions have continued into 2024, but in the most part prices are still above historical averages. See the Principal risks and uncertainties section on page 73 for further details on UK energy market conditions. As a result of these fluctuating market conditions, the valuation of the Group\u2019s commodity derivative financial instruments, in particular power, gas and oil, have seen large reversals of the amounts previously recognised as market prices have continued to reduce, whilst older trades with higher prices have also matured. Sensitivities for a 10% change in prices have been included in the current and prior year. The impact of smaller and larger price changes can be extrapolated from the below table as changes in prices have a relatively linear relationship with the impact on profit after tax and on the hedge reserve.
Impact on other components
Impact on profit after tax of equity, net of tax
10% decrease 10% increase 10% decrease 10% increase
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2024
Power
\u2013
\u2013
43.0
(43.0)
Carbon
1.6
(1.6)
\u2013
\u2013
Gas
10.8
(10.8)
\u2013
\u2013
Oil
(4.8)
4.8
\u2013
\u2013
Freight
(0.2)
0.2
\u2013
\u2013
Impact on other components
Impact on profit after tax of equity, net of tax
10% decrease 10% increase 10% decrease 10% increase
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2023
Power
\u2013
\u2013
34.9
(34.9)
Carbon
2.8
(2.8)
(0.2)
0.2
Gas
11.1
(11.1)
\u2013
\u2013
Oil
( 7.9)
7.9
\u2013
\u2013
The Group designates certain derivatives as hedging instruments under cash flow hedge accounting. As such, other components of equity are sensitive to increases or decreases in commodity price risk and the impact on the hedge reserve resulting from these movements. Profit after tax is sensitive to increases or decreases in commodity prices as a result of the impact on the fair value of derivative financial instruments not designated as hedging instruments under cash flow hedge accounting. Commodity risk management The Group has a policy of securing forward power sales and purchases, and purchases of fuel when it is profitable to do so and is in line with specified limits under approved policies. Forward power sales can be secured up to 100% of forecast availability two years ahead, after taking account of the volume held back for operational risk management purposes. All commitments to sell and purchase power under fixed price contracts are designated as cash flow hedges as they reduce the Group\u2019s cash flow exposure resulting from fluctuations in the price of power. The Group purchases biomass pellets and other fuels under either a fixed or variable priced contract with different maturities, principally from a number of international sources. The Group considers all such commodity contracts to be economic hedges. If either the contracts cannot be readily net settled, or if the Group is able to demonstrate that these contracts were entered into and continue to be held for the purpose of receipt or delivery of the non-financial item in accordance with the Group\u2019s expected purchase, sale or usage requirements and the own-use exemption applies, then these contracts are not within the scope of IFRS 9. For other contracts that are within the scope of IFRS 9 the Group applies hedge accounting where possible. If the contracts are within the scope of IFRS 9 and hedge accounting is not applied then the contracts are recognised at fair value through profit or loss (FVTPL). Where forward power curves are less liquid, the Group uses financially settled gas sales as a proxy for power to mitigate the risk of power price fluctuations. The Group also purchases gas under fixed-price contracts to meet the requirements of the Energy Solutions segment and for its Daldowie fuel plant. The Group\u2019s gas supply business is reducing in size due to the decision made in January 2023 to phase out the Group\u2019s gas supply contracts and due to the sale of the majority of the Group\u2019s non-core SME customer meter points to EDF in September 2024 (see note 2.7 for further details). The Group purchases carbon emissions allowances under fixed-price contracts to cover the Group\u2019s purchase requirements under the UK Emissions Trading Scheme (UK ETS) in relation to the Group\u2019s carbon emissions. Carbon emissions allowances are also sold as part of the proxy power hedges in the same way as financial gas described above. Sales and purchases of carbon are not designated as cash flow hedges. The Group purchases financial oil contracts to hedge freight costs as oil is a significant input into the overall cost of freight. Financial oil contracts are not designated as cash flow hedges. Hedge accounting The Group has cash flow hedges relating to commodity contracts, principally commitments to sell and purchase power. In the prior year, cash flow hedge accounting was also applied to certain carbon purchases. Amounts are recognised in the hedge reserve as the designated contracts are marked-to-market at each reporting date for the effective portion of the hedge, which is generally 100% of the relevant contract. Amounts held within the hedge reserve are then recycled to the Consolidated income statement as the hedged item impacts profit or loss. For power sales and purchase contracts, this is when the underlying power is delivered. Included in amounts released from equity are current and prior period gains and losses on financial instruments for which the hedged transaction has now occurred and these gains and losses have been released to the Consolidated income statement in the period. No ineffectiveness was recognised in the Consolidated income statement on continuing commodity hedges in the current or prior year. Due to the use of \u201call-in-one\u201d hedges, this results in the movement in fair value for the hedged items and hedging instruments being identical. The only sources of ineffectiveness regarding the \u201call-in-one\u201d hedges would be if delivery of the commodities was no longer expected to occur (which would result in hedge accounting being discontinued) and credit risk. The Group applies a hedge ratio of 1:1 to its commodity risk cash flow hedges. The reconciliation of the reserves and time period when the hedge will affect the Consolidated income statement are disclosed in note 7.3. The summary of the amounts relating to the hedging instruments and any related ineffectiveness in the period is presented in the table below. The average forward rates quoted below only reflect the rates applicable to the portion of the Group\u2019s commodity contracts that qualify for hedge accounting in accordance with IFRS 9. The rates do not reflect the overall average rate of the Group\u2019s total portfolio of commodity contracts that are used to protect the value of future cash flows.
31 December 2024
Balance in the
hedge reserve
for hedging
Cumulative relationships for
change in fair Balance in the which hedge
value of hedging hedge reserve accounting is
instrument since for continuing no longer
Notional inception used Fair value Fair value hedges applied
value of Weighted for measuring recognised in recognised in net of deferred net of deferred
contracts average ineffectiveness balance sheet \u2013 balance sheet \u2013 tax \u2013 (debit)/ tax \u2013 (debit)/
(MWh, fixed price Maturity \u2013 gains/(losses) assets liabilities credit credit
Exposure allowances) \u00a3 date \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts January
2025
Sale and purchases of \u2013 September
power
7,013,76
6
87.3
2028
34.5
101.9
(50.9)
25.9
\u2013
Purchase of carbon
emissions allowances
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
31 December 2024
Cumulative
change in fair Amount
value Hedge Amount reclassified due
of hedged ineffectiveness Amount reclassified to the hedged Line item
item since recognised in Line item transferred to due to the future cash in the income
inception used Hedging gains the income in the income the cost or hedged flows statement/
for measuring recognised in OCI statement statement carrying value of item affecting being no longer balance sheet
ineffectiveness in the period \u2013 in the period \u2013 that includes a non-financial profit or loss \u2013 expected to affected by the
\u2013 gains/(losses) gains/(losses) gains/(losses) hedge asset (gains)/losses occur \u2013 transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m (gains)/losses reclassification
Commodity contracts
Sale and purchase of
34.5
(15.2)
\u2013
Revenue
\u2013
( 397.5)
\u2013
Revenue
power
\u2013
Cost of sales
\u2013
103.9
\u2013
Cost of sales
Purchase of carbon
emissions allowances
\u2013
(0.6)
\u2013
Cost of sales
\u2013
1.2
\u2013
Cost of sales
31 December 2023
Balance in the
hedge reserve
Cumulative for hedging
change in fair Balance in the relationships for
value of hedging hedge reserve which hedge
instrument since for continuing accounting is
Notional inception used Fair value Fair value hedges net no longer applied
value of Weighted for measuring recognised in recognised in of deferred net of deferred
contracts average ineffectiveness balance sheet \u2013 balance sheet \u2013 tax \u2013 (debit)/ tax \u2013 (debit)/
(MWh, fixed price \u2013 gains/(losses) assets liabilities credit credit
Exposure allowances)
\u00a3
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts January
2024
Sale and purchases of \u2013 September
power
5,580,931
129.4
2026
343.5
402.3
(58.8)
257.4
\u2013
March
2024
Purchase of carbon \u2013 December
emissions allowances
62,000
37. 4
2024
0.4
0.4
\u2013
0.3
(0.7)
31 December 2023
Cumulative Amount
change in fair reclassified due
value Hedge Amount to the hedged
of hedged ineffectiveness Amount reclassified future cash Line item
item since recognised in Line item transferred to due to the flows being in the income
inception used Hedging gains the income in the income the cost or hedged no longer statement/
for measuring recognised in statement statement carrying value of item affecting expected to balance sheet
ineffectiveness \u2013 OCI in the period in the period \u2013 that includes a non-financial profit or loss \u2013 occur \u2013 affected by the
gains/(losses) \u2013 gains/(losses) gains/(losses) hedge asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Commodity contracts
Sale and purchase of
power
343.5
413.3
\u2013
Revenue
\u2013
(415.9)
\u2013
Revenue
\u2013
Cost of sales
\u2013
599.3
\u2013
Cost of sales
Purchase of carbon
emissions allowances
0.4
1.4
\u2013
Cost of sales
\u2013
1.6
\u2013
Cost of sales
7.2.2 Foreign currency and interest rate risk Foreign currency risk The Group is exposed to fluctuations in foreign currency rates as a result of committed and forecast transactions in foreign currencies, principally in relation to purchases of fuel for use in the Biomass Generation segment and principal and interest payments relating to foreign currency denominated debt. These fuel purchases are typically denominated in US dollars (USD), euros (EUR) or Canadian dollars (CAD), and the foreign currency debt is also denominated in USD, EUR and CAD (see note 4.2 for further details on the Group\u2019s borrowings). The Group also has an exposure to translation risk in relation to its net investment in its US and Canadian subsidiaries within the Pellet Production segment. Foreign currency sensitivity The analysis below shows the impact on profit after tax and other components of equity of reasonably possible strengthening or weakening of currencies against GBP. The sensitivity analysis below shows the impact of a change in foreign exchange rates as at 31 December on outstanding monetary items denominated in foreign currencies and the valuation of foreign currency derivative instruments. For foreign currency derivatives designated into hedge relationships the analysis includes the impact of recycling amounts from the hedge reserve if a change in foreign exchange rates would result in the recycling of gains and losses due to the item they are hedging impacting profit or loss. The analysis assumes all other variables were held constant.
Impact on other components
Impact on profit after tax of equity, net of tax
10% 10% 10% 10%
strengthening weakening strengthening weakening
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2024
USD
66.8
(57.4)
(75.9)
(75.9)
EUR
10.1
(8.9)
(19.1)
(27.4)
CAD
1.2
(1.0)
(6.6)
(6.9)
Impact on other components
Impact on profit after tax of equity, net of tax
10% 10% 10% 10%
strengthening weakening strengthening weakening
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2023
USD
84.5
(53.5)
125.3
(100.8)
EUR
15.9
(13.2)
3.9
(3.6)
CAD
0.3
\u2013
4.8
(4.0)
The Group designates certain foreign currency derivatives as hedging instruments under cash flow hedge accounting. As such, other components of equity are sensitive to the strengthening or weakening of other currencies in relation to the impact on the hedge reserve of these movements. Profit after tax is sensitive to the strengthening or weakening of other currencies as a result of the impact on the fair value of foreign currency derivatives not designated as hedging instruments under cash flow hedge accounting. Foreign currency risk management It is the Group\u2019s policy to hedge material transactional exposures using a variety of derivatives to protect the sterling values of foreign currency cash flows, except where there is an economic hedge inherent in the transaction. The Group enters into derivative contracts in line with the Group\u2019s currency risk management policy, including forwards and options, to manage the risks associated with its anticipated foreign currency requirements over a rolling five-year period, covering contracted exposures and a proportion of highly probable forecast transactions. In addition, in order to optimise the cost of funding, the Group has issued foreign currency denominated debt in USD, EUR and CAD (see note 4.2 for further details on borrowings). The Group utilises derivative contracts, including cross-currency interest rate swaps and foreign exchange forward contracts, to manage exchange risk on foreign currency debt. Foreign currency risk hedge accounting The Group designates certain foreign currency exchange contracts, predominantly forwards, as hedging instruments of the foreign currency risk of biomass purchases denominated in foreign currencies. Gains and losses on these foreign currency exchange contracts are transferred from equity to inventories for these hedges when the Group takes ownership of the biomass. The Group designates the spot element of these foreign currency exchange contracts and applies a hedge ratio of 1:1. The Group designates certain foreign currency exchange contracts, predominantly forwards and swaps, as hedging instruments of the foreign currency risk on the principal repayments of certain foreign currency denominated borrowings. Gains and losses that are effective at hedging the foreign exchange risk on the principal repayments are released to foreign exchange gains or losses to offset gains and losses on retranslating the hedged foreign currency denominated borrowings. The Group designates the spot element of these foreign currency exchange contracts and applies a hedge ratio of 1:1. The Group also designates certain cross-currency interest rate swaps as hedging instruments of the foreign currency risk on payments of both principal and interest on certain foreign currency denominated borrowings. Gains and losses that are effective at hedging the foreign exchange risk on the interest payments are released to interest payable and similar charges at the same time as the interest on the related hedged foreign currency denominated borrowings is expensed. Gains and losses that are effective at hedging the foreign exchange risk on the principal repayments are released to foreign exchange gains or losses to offset gains and losses on retranslating the hedged foreign currency denominated borrowings. The Group applies a hedge ratio of 1:1 for its cross-currency interest rate swaps. The main sources of ineffectiveness relating to foreign currency exchange contracts (forwards and swaps) that are designated as hedging spot foreign currency risk are timing differences and credit risk. The main sources of ineffectiveness relating to cross- currency interest rate swaps are differences in the critical terms, differences in repricing dates, foreign currency basis spread, and credit risk. Interest rate risk The Group has exposure to interest rate risk, principally in relation to variable rate debt, cash and cash equivalents and the revolving credit facility (RCF), should it be drawn. The returns generated on the Group\u2019s cash balance, or payable on amounts drawn on the RCF, are exposed to movements in short-term interest rates. The Group actively manages cash balances to protect against adverse changes in interest rates whilst retaining liquidity. Further information about the Group\u2019s variable rate debt instruments (including the RCF) and their repayment schedules is provided in note 4.2. Interest rate sensitivity The sensitivity analysis below has been determined based on the exposure to interest rates for both derivative and non-derivative financial instruments at the reporting date. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the reporting date was outstanding for the whole year. The analysis below shows what the impact on the current and previous year\u2019s profit after tax and other components of equity would have been for a reasonably possible increase or decrease in interest rates. For interest rate derivatives designated into hedge relationships the analysis includes the impact of recycling amounts from the hedge reserve. The analysis assumes all other variables are held constant.
Impact on other components
Impact on profit after tax of equity, net of tax
100 basis points 100 basis points 100 basis points 100 basis points
increase decrease increase decrease
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2024
Variable rate debt \u2013 hedged
(5.6)
5.6
\u2013
\u2013
Interest rate swaps
5.6
(5.6)
9.8
(9.8)
Net impact
\u2013
\u2013
9.8
(9.8)
At 31 December 2023
Variable rate debt \u2013 unhedged
(1.2)
1.2
\u2013
\u2013
Variable rate debt \u2013 hedged
(4.2)
4.2
\u2013
\u2013
Interest rate swaps
4.2
(4.2)
8 .1
(8 .1)
Net impact
(1.2)
1.2
8 .1
(8 .1)
An increase or decrease in interest rates would affect profit after tax as a result of the impact on the interest payable in the period on any variable rate debt. The Group has reduced its exposure to interest rate risk on variable rate debt through the use of floating-to- fixed interest rate and cross-currency swaps. These swaps are designated as hedging instruments under cash flow hedge accounting and therefore a change in interest rates would not have a significant impact on profit after tax as the recycling of gains and losses on these swaps would generally offset the impact of changes in interest rates on the Group\u2019s variable rate debt. Other components of equity are sensitive to an increase or decrease in interest rates due to the impact changes in interest rates has on the valuation of these floating-to-fixed interest rate and cross-currency swaps. These fair value changes impact the hedge reserve. Other components of equity are sensitive to an increase or decrease in interest rates due to the impact changes in interest rates has on the valuation of these floating-to-fixed interest rate swaps. These fair value changes impact the hedge reserve. Certain amounts of the Group\u2019s variable rate debt and interest rate swaps have a floor of 0% for the benchmark interest rate. In the prior year the Group had CAD denominated debt that had a variable rate based on Canadian Dollar Offered Rate (CDOR). At 31 December 2023, no swaps were in place to hedge the interest risk on the CAD denominated debt. Therefore, in relation to this debt in the prior year, a change in interest rate would have had an impact on profit after tax but not on other components of equity. During the prior year the Group extended the maturity of the CAD term loan facility to January 2026. As part of the extension the Group agreed with the lenders to transition the floating-rate to Canadian Overnight Repo Rate Average (CORRA) plus a credit adjustment spread. At 31 December 2024, the Group had entered into a CORRA floating-to-fixed cross-currency interest rate swap hedging the CAD denominated debt. As such, in the current year a change in interest rate would have no impact on profit after tax as the movement in debt would be offset by the recycling of the cash flow hedge, but would have an impact on other components of equity due to fair value changes in the value of the derivative impacting the hedge reserve. Interest rate risk management The Group has a risk management policy in place relating to interest rate risk. The Group policy permits the use of hedging instruments in order to hedge up to 100% of the Group\u2019s current and forecast interest rate exposure. Interest rate risk hedge accounting The Group designates certain interest rate swaps as hedging instruments of the interest rate risk of variable rate borrowings. Gains and losses on the interest payments on interest rate swaps are released to interest payable and similar charges at the same time as the interest is expensed on the related hedged borrowings. The Group applies a hedge ratio of 1:1 to its interest rate swaps. The main sources of ineffectiveness relating to interest rate hedges are differences in the critical terms, differences in repricing dates, and credit risk. Hedge accounting information The Group has Sterling Overnight Index Average (SONIA) floating-to-fixed interest rate swaps to fix the interest payments on the following facilities: \u00a350.0 million of the UK infrastructure private placement facility (2019), \u00a398.0 million of the UK infrastructure private placement facility (2020), two \u00a350.0 million tranches of the GBP and EUR term loan facility (2024), \u00a3125.0 million of the GBP term loan facility (2024) and the \u00a350.0 million GBP term loan facility (2024). The Group has Euro Interbank Offered Rate (EURIBOR) floating-to-fixed interest rate swaps to fix the principal and interest payments on \u20ac70.0 million of the UK infrastructure private placement facility (2020). The Group has EURIBOR floating-to-fixed interest rate swaps to fix the interest payments on \u20ac185.0 million of the GBP and EUR term loan facility (2024). The Group has separately taken out \u20ac185.0 million notional value of foreign exchange forwards in order to fix the sterling cash flows payable on the principal repayment. The Group has Canadian Overnight Repo Rate (CORRA) floating-to-fixed interest rate swaps to fix the interest payments on the C$200.0 million CAD term loan facility. The Group has separately taken out C$200.0 million notional value of foreign exchange forwards in order to fix the sterling cash flows payable on the principal repayment. The Group has taken out fixed-to-fixed cross-currency interest rate swaps to hedge the future cash flows associated with the following facilities: \u20ac350.0 million 2029 and \u20ac143.8 million 2025 fixed rate EUR loan notes and \u20ac31.5 million of the UK infrastructure private placement facility (2020). As at 31 December 2024, the Group has fixed in sterling all interest and principal payments on variable rate and foreign currency denominated borrowings through the use of interest rate swaps, cross-currency interest rate swaps, and foreign currency exchange forwards and swaps, as described above. See note 4.2 for further details on the Group\u2019s borrowings. A summary of amounts relating to the Group\u2019s hedge accounting of foreign currency risk and interest rate risk are presented in the table below. The information is disaggregated by risk type. Hedges of biomass purchases, principal repayments on borrowings hedged using foreign currency forwards or swaps, and fixed-to-fixed cross currency interest rate swaps are designated as hedges of foreign currency risk. Interest rate swaps are designated as hedges of interest rate risk. Floating-to-fixed cross-currency interest rate swaps are designated as hedges of both foreign currency and interest rate risk. The average forward rates quoted below only reflect the rates applicable to the portion of the Group\u2019s foreign currency hedging instruments that qualify for hedge accounting in accordance with IFRS 9. The rates do not reflect the overall average rate of the Group\u2019s total portfolio of derivatives that are used to fix the sterling value of future cash flows. A reconciliation of reserves and the time period when the hedge will affect profit or loss, or will be transferred from equity and included in the initial cost of the non-financial item, are disclosed in notes 7.3 and 7.4.
31 December 2024
Balance in the
hedge reserve
for hedging
Cumulative relationships for
change in fair which hedge
value of hedging Balance in the accounting is
instrument since hedge reserve no longer
inception used Fair value Fair value for continuing applied
Notional Weighted for measuring recognised in recognised in hedges net of net of deferred
value of average ineffectiveness balance sheet \u2013 balance sheet \u2013 deferred tax \u2013 tax \u2013 (debit)/
contracts fixed/variable \u2013 gains/(losses) assets liabilities (debit)/credit credit
Exposure ($m, \u20acm, C$m)
rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency risk on
biomass purchases
January
2025
Purchases in foreign \u2013 February
currency \u2013 USD
1,430.5
$1.27
2027
18.6
20.7
(2 .1)
10.7
\u2013
January
2025
Purchases in foreign \u2013 October
currency \u2013 EUR
270.0
\u20ac 1.15
2026
(6.3)
\u2013
(6.3)
(4.5)
\u2013
January
2025
Purchases in foreign \u2013 March
currency \u2013 CAD
166.0
C$1.67
2027
(5.1)
0.3
(5.4)
(5.8)
\u2013
Foreign currency risk on
borrowings
Interest and principal
payments \u2013 USD
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
November
2025
Interest and principal \u20ac1.14 / \u2013 April
payments \u2013 EUR
525.3
6.48% 2028
(10.4)
\u2013
(19.7)
4.4
\u2013
February
2027
\u2013 March
Principal payments \u2013 EUR
185.0
\u20ac 1.11
2028
(5.1)
\u2013
(5.1)
\u2013
\u2013
January
Principal payments \u2013 CAD
200.0
C$1.68
2026
(5.7)
\u2013
(5.7)
\u2013
\u2013
Foreign currency and
interest rate risk on
borrowings
January
2026
Interest and principal \u20ac1.09/ \u2013 March
payments \u2013 EUR
255.0
4.04% 2028
(8.6)
\u2013
(8.7)
(2.7)
\u2013
January
Interest payments \u2013 CAD
200.0
6.05%
2026
(1.5)
\u2013
(1.8)
(1.3)
\u2013
Interest rate risk on
borrowings
January
2026
\u2013 April
Variable rate GBP debt
423.0
2.89%
2028
6.1
7.1
(0.4)
4.3
\u2013
31 December 2024
Cumulative
change in fair Amount
value Hedge Amount Amount reclassified due
of hedged ineffectiveness transferred to reclassified to the hedged Line item in the
item since Hedging losses recognised in Line item in the the cost or due to the future cash income
inception used recognised in the income income carrying hedged flows being no statement/
for measuring OCI in the statement statement value item affecting longer expected balance sheet
ineffectiveness \u2013 period \u2013 in the period \u2013 that includes of a non- profit or loss \u2013 to occur \u2013 affected by the
gains/(losses) gains/(losses) gains/(losses) hedge financial asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Foreign currency risk
on biomass purchases
Purchases in foreign
currency \u2013 USD
18.6
19.7
\u2013
Cost of sales
4.3
\u2013
\u2013
Inventories
Purchases in foreign
currency \u2013 EUR
(6.3)
(7.1)
\u2013
Cost of sales
0.9
\u2013
\u2013
Inventories
Purchases in foreign
currency \u2013 CAD
(5.1)
(5.9)
\u2013
Cost of sales
(0.4)
\u2013
\u2013
Inventories
Foreign currency risk
on borrowings Interest Interest
payable payable
Interest and principal \u2013 and similar
\u2013
(0.7)
\u2013
and similar
payments \u2013 USD
\u2013
(5.6)
charges charges
Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
9.3
\u2013
(losses)/gains
Interest Interest
payable payable
Interest and principal \u2013 and similar
\u2013
7.4
\u2013
and similar
payments \u2013 EUR
(11.3)
( 7.5)
charges charges
Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
6.4
\u2013
(losses)/gains
Foreign Foreign
Principal payments \u2013 exchange exchange
EUR
(5.1)
(6.0)
\u2013
(losses)/gains
\u2013
6.0
\u2013
(losses)/gains
Foreign Foreign
Principal payments \u2013 exchange exchange
CAD
(5.7)
( 7.4)
\u2013
(losses)/gains
\u2013
7.4
\u2013
(losses)/gains
Foreign currency and
interest rate risk on
borrowings
Interest Interest
payable payable
Interest and principal \u2013 and similar
\u2013
(2.5)
\u2013
and similar
payments \u2013 EUR
(8.7)
(6.4)
 charges charges
Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
3.4
\u2013
(losses)/gains
Interest Interest
payable payable
Interest payments \u2013 and similar and similar
CAD
(1.6)
(1.3)
\u2013
 charges
\u2013
(0.4)
\u2013
 charges
Interest rate risk on
borrowings
Interest Interest
payable payable
and similar and similar
Variable rate GBP debt
10.8
(2.3)
\u2013
 charges
\u2013
(12.0)
\u2013
 charges
31 December 2023
Balance in the
hedge reserve
for hedging
Cumulative relationships for
change in fair which hedge
value of hedging Balance in the accounting is
instrument since hedge reserve no longer
inception used Fair value Fair value for continuing applied
Notional Weighted for measuring recognised in recognised in hedges net of net of deferred
value of average ineffectiveness balance sheet \u2013 balance sheet \u2013 deferred tax \u2013 tax \u2013 (debit)/
contracts fixed/variable \u2013 gains/(losses) assets liabilities (debit)/credit credit
Exposure ($m, \u20acm, C$m)
rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency risk on
biomass purchases
January
2024
Purchases in foreign \u2013 January
currency \u2013 USD
2 ,12 6.9
$1.29
2027
14 .1
35.6
(21.5)
( 7.3)
\u2013
January
2024
Purchases in foreign \u2013 April
currency \u2013 EUR
47. 0
\u20ac 1.15
2024
\u2013
\u2013
\u2013
0.2
\u2013
January
2024
Purchases in foreign \u2013 March
currency \u2013 CAD
116.6
C$1.68
2027
\u2013
2.1
(2 .1)
(1.3)
\u2013
Foreign currency risk on
borrowings
Interest and principal $1.36/ November
payments \u2013 USD
500.0
6 .13% 2024
22.1
2.7
(21.1)
(2.4)
\u2013
November
2024
Interest and principal \u20ac1.10/ \u2013 November
payments \u2013 EUR
281.5
4.57% 2026
(1.2)
\u2013
(12.7)
(0.2)
\u2013
January
Principal payments \u2013 CAD
200.0
C$1.68
2026
(0 .1)
\u2013
(0 .1)
0.2
\u2013
Foreign currency and
interest rate risk on
borrowings
January
2024
Interest and principal \u20ac1.09/ \u2013 January
payments \u2013 EUR
95.0
2.05% 2026
(1.6)
\u2013
(1.3)
1.4
\u2013
Interest rate risk on
borrowings
January
2024
\u2013 January
Variable rate GBP debt
473.0
0.88%
2026
20.2
22.7
\u2013
15.1
\u2013
31 December 2023
Amount
Cumulative reclassified due
change in fair Hedge Amount Amount to the hedged
value of hedged ineffectiveness transferred to reclassified future cash Line item in the
item since Hedging losses recognised in Line item in the the cost or due to the flows being income
inception used recognised in the income income carrying hedged no longer statement/
for measuring OCI in the statement statement value item affecting expected to balance sheet
ineffectiveness \u2013 period \u2013 in the period \u2013 that includes of a non- profit or loss \u2013 occur \u2013 affected by the
gains/(losses) gains/(losses) gains/(losses) hedge financial asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Foreign currency risk
on biomass purchases
Purchases in foreign
currency \u2013 USD
14 .1
(68.0)
\u2013
Cost of sales
(42.5)
\u2013
\u2013
Inventories
Purchases in foreign
currency \u2013 EUR
\u2013
(3.3)
\u2013
Cost of sales
(0.9)
\u2013
\u2013
Inventories
Purchases in foreign
currency \u2013 CAD
\u2013
(8.8)
\u2013
Cost of sales
\u2013
\u2013
\u2013
Inventories
Hedges of foreign
currency risk on
borrowings
Interest Interest
payable payable
and similar and similar
Interest and principal
35.9
(22.9)
\u2013 charges
\u2013
(3.3)
\u2013
 charges
payments \u2013 USD Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
822.0
\u2013
(losses)/gains
Interest Interest
payable payable
and similar and similar
Interest and principal
(1.2)
(9.7)
\u2013 charges
\u2013
4.9
\u2013
 charges
payments \u2013 EUR Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
5.6
\u2013
(losses)/gains
Foreign Foreign
Principal payments \u2013 exchange exchange
CAD
(0.1)
(0.2)
\u2013
(losses)/gains
\u2013
\u2013
\u2013
(losses)/gains
Foreign currency and
interest rate risk on
borrowings
Interest Interest
payable payable
and similar and similar
Interest and principal
(3.9)
(3.6)
\u2013 charges
\u2013
(1.9)
\u2013
 charges
payments \u2013 EUR Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
1.9
\u2013
(losses)/gains
Interest rate risk on
borrowings
Interest Interest
payable payable
and similar and similar
Variable rate GBP debt
23.4
(31.5)
\u2013
 charges
\u2013
16.0
\u2013
 charges
7.2.3 Inflation risk The Group is exposed to inflation risk on elements of its revenues and cost base. The Group\u2019s ROC revenue is linked to UK RPI and its CfD and Capacity Market income are linked to UK CPI (see note 2.2 for further information on ROC and CfD income). In addition, a proportion of the Group\u2019s fuel costs are linked to either US or Canadian CPI. The Group has UK CPI and RPI swaps to hedge certain revenues linked to inflation. Inflation risk sensitivity The sensitivity analysis below has been determined based on the exposure to inflation rates on inflation-linked derivatives at the reporting date. The analysis below shows the impact on profit after tax and other components of equity of a reasonably possible increase or decrease in inflation rates as at 31 December. The analysis assumes all other variables are held constant.
Impact on other components
Impact on profit after tax of equity, net of tax
200 basis points 200 basis points 200 basis points 200 basis points
increase decrease increase decrease
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2024
UK CPI inflation swaps
\u2013
\u2013
(25.7)
22 .1
UK RPI inflation swaps
(1.0)
1.0
(10.9)
10.9
Impact on other components
Impact on profit after tax of equity, net of tax
200 basis points 200 basis points 200 basis points 200 basis points
increase decrease increase decrease
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2023
UK CPI inflation swaps
\u2013
\u2013
(31.3)
26.6
UK RPI inflation swaps
(5.6)
5.5
(24.3)
23.9
The Group designates the UK CPI and RPI inflation swaps as hedging instruments under cash flow hedge accounting. As such, other components of equity are sensitive to the impact on inflation linked derivatives recognised in the hedge reserve of an increase or decrease in UK inflation rates. Profit after tax is sensitive to an increase or decrease in UK inflation rates due to the impact these rate changes would have on the over-hedged portion of the inflation swaps, with this impact being recognised directly in the Consolidated income statement. Inflation risk management The Group has a risk management policy in place relating to inflation risk. The Group policy permits the use of hedging instruments in order to hedge up to 100% of the Group\u2019s current and forecast inflation exposure. Hedge accounting The Group has contracts for which the revenue is contractually linked to UK CPI inflation. The Group has designated this risk component as a hedged item. UK CPI and UK RPI inflation swaps are utilised as the hedging instruments for this inflation risk. Gains and losses on the inflation swaps are held in the hedge reserve and reclassified to revenue in the Consolidated income statement at the same time the revenue from the inflation-linked contracts impacts profit or loss or if the hedged item is no longer expected to occur. The Group applies a hedge ratio of 1:1 for its inflation swaps. The main sources of ineffectiveness relating to the inflation swaps are the basis point difference between the RPI swaps and the CPI-linked revenues they are hedging, calculation differences, and the hedged item no longer being expected to occur. Calculation differences occur due to differences between the reference months used to calculate the inflationary increase per the swaps and the reference months used to calculate the inflationary increase for the CPI-linked revenues. During the current year the Group recognised \u00a38.7 million (2023: \u00a310.7 million) of ineffectiveness due to the basis difference between the RPI hedging instruments and the CPI exposure. In the prior year as a result of a decrease in the forecast CfD generation, the Group recycled \u00a39.3 million of losses on hedge accounted inflation-linked derivative contracts to the Consolidated income statement, due to the hedged item no longer being expected to occur. There has been no decrease in forecast CfD generation in the current year and as such no amounts have been recycled due to the hedged item no longer being expected to occur. In the current year, as a result of the updated 2025 commissioning dates, the Group recycled \u00a31.2 million of losses on hedge accounted inflation-linked OCGT Capacity Market derivative contracts to the Consolidated income statement, due to the hedged item no longer being expected to occur. The summary of the amounts relating to the hedging instruments and any related ineffectiveness in the period is presented in the table below.
31 December 2024
Balance in the
hedge reserve
for hedging
Cumulative relationships for
change in fair which hedge
value of hedging Balance in the accounting is
instrument since hedge reserve no longer
inception used Fair value Fair value for continuing applied
Notional for measuring recognised in recognised in hedges net of net of deferred
value of Weighted ineffectiveness \u2013 balance sheet \u2013 balance sheet \u2013 deferred tax \u2013 tax \u2013 (debit)/
contracts average gains/(losses) assets liabilities (debit)/credit credit
Exposure \u00a3m
fixed rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Inflation April
2026
\u2013 July
30.4
CPI \u2013 2.70%
2038
(18.6)
\u2013
(18.6)
(14.5)
10.5
Inflation-linked sales April
contracts \u2013 CPI
440.0
RPI \u2013 3.65%
2026
(75.4)
\u2013
(165.4)
(34.9)
\u2013
31 December 2024
Cumulative
change in fair
value Hedge Amount Amount
of hedged Hedging ineffectiveness Amount reclassified reclassified due Line item in
item since gains recognised in transferred to due to the to the hedged the income
inception used recognised in the income Line item in the the cost or hedged future cash flows statement/
for measuring OCI in the statement income statement carrying value item affecting being no longer balance sheet
ineffectiveness \u2013 period \u2013 in the period \u2013 that includes of a non- profit or loss \u2013 expected to occur affected by the
gains/(losses) gains/(losses) gains/(losses) hedge financial asset (gains)/losses \u2013 (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Inflation
Inflation-linked sales
(18.6)
(1.3)
\u2013
Revenue
\u2013
(3.1)
1.2
Revenue
contracts \u2013 CPI
(47.9)
(2 .1)
(8.7)
Revenue
\u2013
27.1
\u2013
Revenue
31 December 2023
Balance in the
hedge reserve
Cumulative change for hedging
in fair relationships for
value of hedging Balance in the which hedge
instrument since hedge reserve accounting is
inception used Fair value Fair value for continuing no longer applied
Notional for measuring recognised in recognised in hedges net of net of deferred
value of Weighted ineffectiveness \u2013 balance sheet \u2013 balance sheet \u2013 deferred tax \u2013 tax \u2013 (debit)/
contracts average gains/(losses) assets liabilities (debit)/credit credit
Exposure \u00a3m
fixed rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Inflation April
2026
\u2013 July
30.4
CPI \u2013 2.72%
2038
(19.7)
\u2013
(19.7)
(15.3)
13.6
Inflation-linked sales April
contracts \u2013 CPI
440.0
RPI \u2013 3.46%
2026
(100.7)
\u2013
(230.7)
(53.6)
\u2013
31 December 2023
Cumulative
change in fair
value Hedge Amount Amount
of hedged ineffectiveness Amount reclassified reclassified due Line item in
item since Hedging losses recognised in transferred to due to the to the hedged the income
inception used recognised the income Line item in the the cost or hedged future cash flows statement/
for measuring in OCI statement income statement carrying value item affecting being no longer balance sheet
ineffectiveness \u2013 in the period \u2013 in the period \u2013 that includes of a non- profit or loss \u2013 expected to occur affected by the
gains/(losses) gains/(losses) gains/(losses) hedge financial asset (gains)/losses \u2013 (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Inflation
Inflation-linked sales
(19.7)
3.3
\u2013
Revenue
\u2013
(0.9)
\u2013
Revenue
contracts \u2013 CPI
(75.2)
(3.5)
(10.7)
Revenue
\u2013
17.5
9.3
Revenue
7.2.4 Liquidity risk The treasury function is responsible for liquidity, funding and settlement management under policies approved by the Board. Liquidity needs are monitored using regular forecasting of operational cash flows and financing commitments. The Group maintains a mixture of cash and cash equivalents, committed facilities and uncommitted facilities in order to ensure sufficient funding for business requirements. In managing liquidity risk, the Group has the ability to accelerate the cash flows associated with certain working capital items, principally those related to ROC sales and Energy Solutions energy supply sales. In each case this is undertaken on a non-recourse basis and, accordingly, the ROC assets and Energy Solutions receivables are derecognised from the Consolidated balance sheet at the point of sale. The Group also utilises standard purchasing facilities to extend the working capital cycle, whilst still paying suppliers on time. The impact on the Group\u2019s cash flows is described in note 4.3. Such facilities are not included within the Group\u2019s definition of Net debt, as outlined in note 2.7. The following tables set out details of the expected maturity profile of the undiscounted, contractual payments of non-derivative financial liabilities. The tables include both interest and principal cash flows. To the extent that interest payments or receipts are floating rate, the undiscounted amount is derived from interest rate curves at the reporting date.
As at 31 December 2024
Within 3 months \u2013
3 months 1 year 1\u20132 years 2\u20135 years >5 years Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Term loans, gross value
11.2
30.5
202.8
613.3
27.0
884.8
Loan notes, gross value
\u2013
139.1
17.0
332.2
\u2013
488.3
Borrowings, contractual maturity
11.2
169.6
219.8
945.5
27. 0
1,37
3.1
Trade and other payables
763.5
28.2
1.1
0.2
\u2013
793.0
Lease liabilities
8.9
22.7
24.6
39.0
47. 2
142.4
783.6
220.5
245.5
984.7
74.2
2,308.5
As at 31 December 2023
Within 3 months \u2013
3 months 1 year 1\u20132 years 2\u20135 years >5 years Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Term loans, gross value
153.9
154.9
271.6
278.8
87. 0
946.2
Loan notes, gross value
\u2013
31.7
635.3
\u2013
\u2013
6 67.0
Borrowings, contractual maturity
153.9
186.6
906.9
278.8
8 7.0
1,613.2
Trade and other payables
763.8
150.7
3.2
1.5
\u2013
919.2
Lease liabilities
8.6
24.8
28.6
52.5
5 7.0
171.5
926.3
3 62 .1
938.7
332.8
144.0
2,703.9
The weighted average interest rate payable at the reporting date on the Group\u2019s borrowings was 5.39% (2023: 4.79%). Trade and other payables of \u00a3793.0 million (2023: \u00a3919.2 million) excludes non-financial liabilities such as contract liabilities, the Group\u2019s obligation to deliver ROCs and employee benefit-related accruals. The following tables set out details of the expected maturity profile of contractual payments and receipts of derivative financial instruments. Where the amount payable is not fixed, the amount disclosed has been determined by reference to projected commodity prices, foreign currency exchange rates, inflation rates or interest rates, as illustrated by the yield or other forward curves existing at the reporting date. Certain commodity contracts are expected to be gross settled through delivery or receipt of the commodity and a subsequent cash settlement of the trade value. Vanilla foreign currency exchange contracts are expected to be gross settled through simultaneous delivery of one currency and receipt of another. Gross settlement of both the interest and principal on cross-currency interest rate swaps is expected. Financial contracts and other foreign exchange contracts (excluding forwards and swaps) are expected to be net settled. Interest rate contracts and inflation rate contracts are expected to include the net settlement of the interest rate and inflation rate differentials. Where derivatives are expected to be gross settled based on the trade value rather than the mark-to-market value, the gross cash flows have been presented in the table below. Where derivatives are expected to be net settled, the undiscounted net cash flows expected to occur based on the current fair value have been presented in the table below. Where derivative balances are subject to offsetting, the net expected contractual payments and receipts of the offset asset and liability have been presented. The amounts included within difference to carrying amount column include the effect of discounting for the time value of money and credit risk on all trade types. Additionally, for all physically settled commodity trades, the difference to carrying amount includes the market value of these trades, as the traded price is included as the cash payment or receipt in the table below, but the carrying amount is based on the mark-to-market of the trade, being the difference between the market value and traded value. For foreign currency exchange contracts the amounts included within the difference to carrying amount column also includes the time value of options that have no intrinsic value, for example out-of-the-money options. As these trades are not expected to exercise no cash flows have been included in the below table. The below tables have been re-presented in the current period to include the expected cash flows from all derivative contracts (both assets and liabilities), including both cash inflows and outflows. The Group believe the additional information provided more accurately reflects the expected cash flows and liquidity profile of the Group\u2019s derivative contracts.
As at 31 December 2024
Within Difference to Carrying
1 year 1\u20132 years >2 years Total carrying amount amount
Derivative liabilities \u2013 cash inflow/(outflow) \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts \u2013 inflow
303.0
259.3
37.8
6 0 0.1
(673.5)
(73.4)
Commodity contracts \u2013 outflow
(33.8)
(1.4)
(4.1)
(39.3)
30.9
(8.4)
Foreign exchange contracts \u2013 inflow
6 41.1
468.4
328.0
1,437.5
15.2
(36.9)
Foreign exchange contracts \u2013 outflow
(637. 4)
(494.6)
(357.6)
(1,489.6)
Cross-currency contracts \u2013 inflow
215.7
53.9
341.0
610.6
1.2
(30.2)
Cross-currency contracts \u2013 outflow
(241.3)
(63.4)
( 337.3)
(642.0)
Interest rate contracts \u2013 inflow
0.3
\u2013
\u2013
0.3
0.1
(0.4)
Interest rate contracts \u2013 outflow
\u2013
(0.5)
(0.3)
(0.8)
Inflation contracts \u2013 outflow
(84.3)
(91.5)
(20.0)
(195.8)
11.8
(184.0)
163.3
130.2
(12.5)
281.0
(614.3)
(333.3)
As at 31 December 2024
Within Difference to Carrying
1 year 1\u20132 years >2 years Total carrying amount amount
Derivative assets \u2013 cash inflow/(outflow) \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts \u2013 inflow
363.7
50.6
16.8
431.1
(306.5)
124.6
Commodity contracts \u2013 outflow
(117.5)
(4.5)
(24.9)
(146.9)
175.8
28.9
Foreign exchange contracts \u2013 inflow
874.6
1,030.0
245.1
2,149.7
(9.7)
96.7
Foreign exchange contracts \u2013 outflow
(839.9)
(977.1)
(226.3)
(2,043.3)
Cross-currency contracts \u2013 inflow
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Cross-currency contracts \u2013 outflow
\u2013
\u2013
\u2013
\u2013
Interest rate contracts \u2013 inflow
6.3
1.1
\u2013
7. 4
(0.2)
7.1
Interest rate contracts \u2013 outflow
\u2013
\u2013
(0 .1)
(0 .1)
Inflation contracts \u2013 outflow
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
287.2
100.1
10.6
397.9
(140.6)
257.3
As at 31 December 2023
Within Difference to Carrying
1 year 1\u20132 years >2 years Total carrying amount amount
Derivative liabilities \u2013 cash inflow/(outflow) \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts \u2013 inflow
28.2
5.5
4.3
38.0
(40.7)
(2.7)
Commodity contracts \u2013 outflow
(403.5)
(43 .1)
(0 .1)
(446.7)
256.2
(190.5)
Foreign exchange contracts \u2013 inflow
9 07.4
486.6
38 7.4
1,781.4
(13.5)
(59.5)
Foreign exchange contracts \u2013 outflow
(936.2)
(497.1)
( 39 4 .1)
(1, 827. 4)
Cross-currency contracts \u2013 inflow
5 62 .1
25.0
29.8
616.9
1.7
( 35.1)
Cross-currency contracts \u2013 outflow
(620.1)
(2.5)
(31.1)
(653.7)
Interest rate contracts \u2013 inflow
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Interest rate contracts \u2013 outflow
\u2013
\u2013
\u2013
\u2013
Inflation contracts \u2013 outflow
(81.6)
(85.2)
(107.5)
(274.3)
23.9
(250.4)
(543.7)
(110.8)
(111.3)
(765.8)
227.6
(538.2)
As at 31 December 2023
Within Difference to Carrying
1 year 1\u20132 years >2 years Total carrying amount amount
Derivative assets \u2013 cash inflow/(outflow) \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts \u2013 inflow
880.4
515.7
57. 5
1,453.6
(927.9)
525.7
Commodity contracts \u2013 outflow
(6.5)
\u2013
\u2013
(6.5)
8.9
2.4
Foreign exchange contracts \u2013 inflow
768.6
543.6
669.9
1,
98 2.1
40.3
108.5
Foreign exchange contracts \u2013 outflow
(756.9)
(522.4)
(634.6)
(1,913.9)
Cross-currency contracts \u2013 inflow
146.4
\u2013
\u2013
146.4
(0 .1)
2.7
Cross-currency contracts \u2013 outflow
(143.6)
\u2013
\u2013
(143.6)
Interest rate contracts \u2013 inflow
16.0
7.4
1.4
24.8
(2.1)
22.7
Interest rate contracts \u2013 outflow
\u2013
\u2013
\u2013
\u2013
Inflation contracts \u2013 outflow
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
904.4
544.3
94.2
1,542.9
(880.9)
662.0
7.2.5 Credit risk The Group\u2019s gross exposure to credit risk for financial instruments is limited to the carrying amount of financial assets recognised at the reporting date. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in note 7.1. Trade and other receivables are stated gross of the provision for expected credit losses on trade receivables of \u00a342.4 million (2023: \u00a359.4 million) and expected credit losses on accrued income of \u00a39.0 million (2023: \u00a39.4 million). The balance excludes non-financial receivables such as prepayments. The Group\u2018s four reportable segments (Pellet Production, Biomass Generation, Flexible Generation and Energy Solutions) are exposed to different levels and concentrations of credit risk, largely reflecting the number, size and nature of their respective customers. The Pellet Production segment sells biomass pellets both intra-group and to external parties. Credit risk for the Group relates to the sales made to external parties. The majority of the Pellet Production segment\u2019s external sales are with large utility customers in Europe and Asia. The Pellet Production segment manages its credit risk by reviewing individual sales contracts, considering the length of the contract, payment terms, and assessing the credit quality of counterparties prior to signing contracts and throughout the duration of contracts. For the Biomass Generation and Flexible Generation segments, the risk arises from treasury, trading and energy procurement activities. Wholesale counterparty credit exposures are monitored by individual counterparty and by category of credit rating. Counterparty credit exposures are subject to approved limits. The Group uses master netting agreements to reduce credit risk and net settles payments with counterparties where net settlement provisions exist. In addition, the Group employs a variety of other methods to mitigate credit risk: margining; various forms of parent company guarantee; deeds of charge; cash collateral; letters of credit; and surety bonds. The majority of the Biomass Generation and Flexible Generation segments\u2019 credit risk is with counterparties in related energy industries or with financial institutions. In addition, where deemed appropriate, the Group has historically purchased credit default swaps. The highest credit risk exposure is in the Energy Solutions segment, with a large number of customers of varying sizes operating in a variety of markets. In particular, its small and medium-sized enterprise (SME) customers carry lower concentrations but higher levels of credit risk, owing to a customer base comprised of smaller retail and commercial entities. Credit risk is managed by checking a company\u2019s creditworthiness and financial strength both before commencing trade and during the business relationship. Credit risk is monitored and managed by industry sector. Due to the sale of the majority of the Opus Energy non-core SME meter points the Group has reduced its credit risk exposure for the Energy Solutions segment. Further details on the impact of credit risk on trade and other receivables is disclosed in note 3.5. The investment of surplus cash is undertaken with the objective of ensuring that there is sufficient liquidity at all times, so that funds are available to meet liabilities as they fall due, whilst securing a return from invested funds and preserving the capital value of those funds within Board-approved policies. These policies manage credit risk exposure by setting out minimum rating requirements and maximum investments with any one counterparty based on their rating and the maturity profile. The Group had cash and cash equivalents of \u00a3356.0 million at 31 December 2024 (2023: \u00a3379.5 million). The Group\u2019s cash and cash equivalents excluding money market funds (held at FVTPL) are subject to the impairment requirements of IFRS 9. The Group had cash and cash equivalents excluding money market funds of \u00a3252.9 million at 31 December 2024 (2023: \u00a3208.4 million). The identified impairment loss, based on the 12-month expected credit loss basis, was immaterial. Cash and cash equivalents are held with banks with external credit ratings between AAA and A. The Group is exposed to credit risk on derivative contracts, to which the impairment requirements of IFRS 9 are not applied as the fair value requirements of IFRS 13 are applicable. Credit risk is a factor in the determination of fair value. The carrying amount of these financial assets, disclosed in note 7.1, represents the Group\u2019s maximum credit risk exposure. Some derivative contracts are fully cash collateralised, thereby minimising credit risk. At 31 December 2024, the Group held \u00a39.8 million in cash collateral receipts (2023: \u00a320.3 million) covering certain derivative assets and had posted \u00a34.7 million (2023: \u00a398.9 million) of cash collateral payments covering certain derivative liabilities. The credit rating of counterparties to which the \u00a34.7 million of cash collateral had been posted was A+. Counterparty risk As the Group relies on third-party suppliers and counterparties for the delivery of financial and non-financial items, as is therefore exposed to the risk of non-performance by these third-party suppliers. For financial instruments, such as foreign currency forwards, this risk is limited to the credit risk, as discussed above. The Group is also exposed to counterparty risk on non-financial items, such as the purchases of biomass and capital expenditure. If a large supplier were to fall into financial difficulty and/or fail to deliver against its contract with the Group, there would be additional costs associated with securing the lost goods or services from other suppliers. The Group enters into purchase and sale contracts for a wide variety of goods and services, for example the sale of power to a number of counterparties. The failure of one or more of these counterparties to perform under their contractual obligations may cause the Group financial distress or increase the risk profile of the Group. The Group has acceptance procedures in place to ensure the counterparties the Group contracts with are appropriate. The Group also has limits in place, and actively monitors its exposures to individual counterparties to minimise this risk. Capital management The Group is disciplined in its management of capital to ensure it is able to continue as a going concern; maintain a strong credit rating underpinned by robust financial metrics; invest in its core business; and pay a sustainable and growing dividend whilst maximising the return to shareholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of shareholders\u2019 equity (excluding the hedge and cost of hedging reserves), plus Net debt. Net debt is comprised of borrowings, lease liabilities, cash and cash equivalents attributable to owners of the parent company and is inclusive of the impact of associated hedging instruments as disclosed in note 2.7. See note 4.2 for details of loan covenants, and the Viability statement starting on page 84 for details of scenario analysis performed on covenant restrictions within the Group\u2019s financing facilities.
As at 31 December
2024 2023
\u00a3m \u00a3m
Net debt (note 2.7)
991.7
1,219.7
Total shareholders\u2019 equity attributable to owners of the parent company, excluding hedge and cost of
hedging reserves
2,078.3
1,74
4.9
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-674": { "value": "7.2 Financial risk management The Group\u2019s activities expose it to a variety of financial risks, including commodity price risk, foreign currency risk, interest rate risk, inflation risk, liquidity risk, counterparty risk and credit risk. The Group\u2019s overall risk management programme focuses on the unpredictability of commodity and financial markets and seeks to manage potential adverse effects on the Group\u2019s financial performance. The Group uses derivative financial instruments to hedge certain risk exposures. Risk management is overseen by the risk management committees as explained in the Principal risks and uncertainties section (starting on page 70). The Financial Risk Management Committee identifies, evaluates and manages financial risks in close co-ordination with the Group\u2019s trading and treasury functions under policies approved by the Board of Directors. 7.2.1 Commodity price risk The Group is exposed to the effect of fluctuations in commodity prices, particularly the price of power, gas, other fuels and the price of carbon emissions allowances. Price variations and market cycles have historically influenced the financial results of the Group and are expected to continue to do so. Commodity price sensitivity The sensitivity analysis below has been determined based on the exposure to commodity prices and the impact on profit after tax and other components of equity of reasonably possible increases or decreases in commodity prices as at 31 December. The analysis assumes all other variables were held constant. Financial and commodity markets saw significant volatility and high prices in 2022. During 2023, the high prices seen in 2022 generally reversed and these price reductions have continued into 2024, but in the most part prices are still above historical averages. See the Principal risks and uncertainties section on page 73 for further details on UK energy market conditions. As a result of these fluctuating market conditions, the valuation of the Group\u2019s commodity derivative financial instruments, in particular power, gas and oil, have seen large reversals of the amounts previously recognised as market prices have continued to reduce, whilst older trades with higher prices have also matured. Sensitivities for a 10% change in prices have been included in the current and prior year. The impact of smaller and larger price changes can be extrapolated from the below table as changes in prices have a relatively linear relationship with the impact on profit after tax and on the hedge reserve.
Impact on other components
Impact on profit after tax of equity, net of tax
10% decrease 10% increase 10% decrease 10% increase
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2024
Power
\u2013
\u2013
43.0
(43.0)
Carbon
1.6
(1.6)
\u2013
\u2013
Gas
10.8
(10.8)
\u2013
\u2013
Oil
(4.8)
4.8
\u2013
\u2013
Freight
(0.2)
0.2
\u2013
\u2013
Impact on other components
Impact on profit after tax of equity, net of tax
10% decrease 10% increase 10% decrease 10% increase
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2023
Power
\u2013
\u2013
34.9
(34.9)
Carbon
2.8
(2.8)
(0.2)
0.2
Gas
11.1
(11.1)
\u2013
\u2013
Oil
( 7.9)
7.9
\u2013
\u2013
The Group designates certain derivatives as hedging instruments under cash flow hedge accounting. As such, other components of equity are sensitive to increases or decreases in commodity price risk and the impact on the hedge reserve resulting from these movements. Profit after tax is sensitive to increases or decreases in commodity prices as a result of the impact on the fair value of derivative financial instruments not designated as hedging instruments under cash flow hedge accounting. Commodity risk management The Group has a policy of securing forward power sales and purchases, and purchases of fuel when it is profitable to do so and is in line with specified limits under approved policies. Forward power sales can be secured up to 100% of forecast availability two years ahead, after taking account of the volume held back for operational risk management purposes. All commitments to sell and purchase power under fixed price contracts are designated as cash flow hedges as they reduce the Group\u2019s cash flow exposure resulting from fluctuations in the price of power. The Group purchases biomass pellets and other fuels under either a fixed or variable priced contract with different maturities, principally from a number of international sources. The Group considers all such commodity contracts to be economic hedges. If either the contracts cannot be readily net settled, or if the Group is able to demonstrate that these contracts were entered into and continue to be held for the purpose of receipt or delivery of the non-financial item in accordance with the Group\u2019s expected purchase, sale or usage requirements and the own-use exemption applies, then these contracts are not within the scope of IFRS 9. For other contracts that are within the scope of IFRS 9 the Group applies hedge accounting where possible. If the contracts are within the scope of IFRS 9 and hedge accounting is not applied then the contracts are recognised at fair value through profit or loss (FVTPL). Where forward power curves are less liquid, the Group uses financially settled gas sales as a proxy for power to mitigate the risk of power price fluctuations. The Group also purchases gas under fixed-price contracts to meet the requirements of the Energy Solutions segment and for its Daldowie fuel plant. The Group\u2019s gas supply business is reducing in size due to the decision made in January 2023 to phase out the Group\u2019s gas supply contracts and due to the sale of the majority of the Group\u2019s non-core SME customer meter points to EDF in September 2024 (see note 2.7 for further details). The Group purchases carbon emissions allowances under fixed-price contracts to cover the Group\u2019s purchase requirements under the UK Emissions Trading Scheme (UK ETS) in relation to the Group\u2019s carbon emissions. Carbon emissions allowances are also sold as part of the proxy power hedges in the same way as financial gas described above. Sales and purchases of carbon are not designated as cash flow hedges. The Group purchases financial oil contracts to hedge freight costs as oil is a significant input into the overall cost of freight. Financial oil contracts are not designated as cash flow hedges. Hedge accounting The Group has cash flow hedges relating to commodity contracts, principally commitments to sell and purchase power. In the prior year, cash flow hedge accounting was also applied to certain carbon purchases. Amounts are recognised in the hedge reserve as the designated contracts are marked-to-market at each reporting date for the effective portion of the hedge, which is generally 100% of the relevant contract. Amounts held within the hedge reserve are then recycled to the Consolidated income statement as the hedged item impacts profit or loss. For power sales and purchase contracts, this is when the underlying power is delivered. Included in amounts released from equity are current and prior period gains and losses on financial instruments for which the hedged transaction has now occurred and these gains and losses have been released to the Consolidated income statement in the period. No ineffectiveness was recognised in the Consolidated income statement on continuing commodity hedges in the current or prior year. Due to the use of \u201call-in-one\u201d hedges, this results in the movement in fair value for the hedged items and hedging instruments being identical. The only sources of ineffectiveness regarding the \u201call-in-one\u201d hedges would be if delivery of the commodities was no longer expected to occur (which would result in hedge accounting being discontinued) and credit risk. The Group applies a hedge ratio of 1:1 to its commodity risk cash flow hedges. The reconciliation of the reserves and time period when the hedge will affect the Consolidated income statement are disclosed in note 7.3. The summary of the amounts relating to the hedging instruments and any related ineffectiveness in the period is presented in the table below. The average forward rates quoted below only reflect the rates applicable to the portion of the Group\u2019s commodity contracts that qualify for hedge accounting in accordance with IFRS 9. The rates do not reflect the overall average rate of the Group\u2019s total portfolio of commodity contracts that are used to protect the value of future cash flows.
31 December 2024
Balance in the
hedge reserve
for hedging
Cumulative relationships for
change in fair Balance in the which hedge
value of hedging hedge reserve accounting is
instrument since for continuing no longer
Notional inception used Fair value Fair value hedges applied
value of Weighted for measuring recognised in recognised in net of deferred net of deferred
contracts average ineffectiveness balance sheet \u2013 balance sheet \u2013 tax \u2013 (debit)/ tax \u2013 (debit)/
(MWh, fixed price Maturity \u2013 gains/(losses) assets liabilities credit credit
Exposure allowances) \u00a3 date \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts January
2025
Sale and purchases of \u2013 September
power
7,013,76
6
87.3
2028
34.5
101.9
(50.9)
25.9
\u2013
Purchase of carbon
emissions allowances
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
31 December 2024
Cumulative
change in fair Amount
value Hedge Amount reclassified due
of hedged ineffectiveness Amount reclassified to the hedged Line item
item since recognised in Line item transferred to due to the future cash in the income
inception used Hedging gains the income in the income the cost or hedged flows statement/
for measuring recognised in OCI statement statement carrying value of item affecting being no longer balance sheet
ineffectiveness in the period \u2013 in the period \u2013 that includes a non-financial profit or loss \u2013 expected to affected by the
\u2013 gains/(losses) gains/(losses) gains/(losses) hedge asset (gains)/losses occur \u2013 transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m (gains)/losses reclassification
Commodity contracts
Sale and purchase of
34.5
(15.2)
\u2013
Revenue
\u2013
( 397.5)
\u2013
Revenue
power
\u2013
Cost of sales
\u2013
103.9
\u2013
Cost of sales
Purchase of carbon
emissions allowances
\u2013
(0.6)
\u2013
Cost of sales
\u2013
1.2
\u2013
Cost of sales
31 December 2023
Balance in the
hedge reserve
Cumulative for hedging
change in fair Balance in the relationships for
value of hedging hedge reserve which hedge
instrument since for continuing accounting is
Notional inception used Fair value Fair value hedges net no longer applied
value of Weighted for measuring recognised in recognised in of deferred net of deferred
contracts average ineffectiveness balance sheet \u2013 balance sheet \u2013 tax \u2013 (debit)/ tax \u2013 (debit)/
(MWh, fixed price \u2013 gains/(losses) assets liabilities credit credit
Exposure allowances)
\u00a3
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts January
2024
Sale and purchases of \u2013 September
power
5,580,931
129.4
2026
343.5
402.3
(58.8)
257.4
\u2013
March
2024
Purchase of carbon \u2013 December
emissions allowances
62,000
37. 4
2024
0.4
0.4
\u2013
0.3
(0.7)
31 December 2023
Cumulative Amount
change in fair reclassified due
value Hedge Amount to the hedged
of hedged ineffectiveness Amount reclassified future cash Line item
item since recognised in Line item transferred to due to the flows being in the income
inception used Hedging gains the income in the income the cost or hedged no longer statement/
for measuring recognised in statement statement carrying value of item affecting expected to balance sheet
ineffectiveness \u2013 OCI in the period in the period \u2013 that includes a non-financial profit or loss \u2013 occur \u2013 affected by the
gains/(losses) \u2013 gains/(losses) gains/(losses) hedge asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Commodity contracts
Sale and purchase of
power
343.5
413.3
\u2013
Revenue
\u2013
(415.9)
\u2013
Revenue
\u2013
Cost of sales
\u2013
599.3
\u2013
Cost of sales
Purchase of carbon
emissions allowances
0.4
1.4
\u2013
Cost of sales
\u2013
1.6
\u2013
Cost of sales
7.2.2 Foreign currency and interest rate risk Foreign currency risk The Group is exposed to fluctuations in foreign currency rates as a result of committed and forecast transactions in foreign currencies, principally in relation to purchases of fuel for use in the Biomass Generation segment and principal and interest payments relating to foreign currency denominated debt. These fuel purchases are typically denominated in US dollars (USD), euros (EUR) or Canadian dollars (CAD), and the foreign currency debt is also denominated in USD, EUR and CAD (see note 4.2 for further details on the Group\u2019s borrowings). The Group also has an exposure to translation risk in relation to its net investment in its US and Canadian subsidiaries within the Pellet Production segment. Foreign currency sensitivity The analysis below shows the impact on profit after tax and other components of equity of reasonably possible strengthening or weakening of currencies against GBP. The sensitivity analysis below shows the impact of a change in foreign exchange rates as at 31 December on outstanding monetary items denominated in foreign currencies and the valuation of foreign currency derivative instruments. For foreign currency derivatives designated into hedge relationships the analysis includes the impact of recycling amounts from the hedge reserve if a change in foreign exchange rates would result in the recycling of gains and losses due to the item they are hedging impacting profit or loss. The analysis assumes all other variables were held constant.
Impact on other components
Impact on profit after tax of equity, net of tax
10% 10% 10% 10%
strengthening weakening strengthening weakening
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2024
USD
66.8
(57.4)
(75.9)
(75.9)
EUR
10.1
(8.9)
(19.1)
(27.4)
CAD
1.2
(1.0)
(6.6)
(6.9)
Impact on other components
Impact on profit after tax of equity, net of tax
10% 10% 10% 10%
strengthening weakening strengthening weakening
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2023
USD
84.5
(53.5)
125.3
(100.8)
EUR
15.9
(13.2)
3.9
(3.6)
CAD
0.3
\u2013
4.8
(4.0)
The Group designates certain foreign currency derivatives as hedging instruments under cash flow hedge accounting. As such, other components of equity are sensitive to the strengthening or weakening of other currencies in relation to the impact on the hedge reserve of these movements. Profit after tax is sensitive to the strengthening or weakening of other currencies as a result of the impact on the fair value of foreign currency derivatives not designated as hedging instruments under cash flow hedge accounting. Foreign currency risk management It is the Group\u2019s policy to hedge material transactional exposures using a variety of derivatives to protect the sterling values of foreign currency cash flows, except where there is an economic hedge inherent in the transaction. The Group enters into derivative contracts in line with the Group\u2019s currency risk management policy, including forwards and options, to manage the risks associated with its anticipated foreign currency requirements over a rolling five-year period, covering contracted exposures and a proportion of highly probable forecast transactions. In addition, in order to optimise the cost of funding, the Group has issued foreign currency denominated debt in USD, EUR and CAD (see note 4.2 for further details on borrowings). The Group utilises derivative contracts, including cross-currency interest rate swaps and foreign exchange forward contracts, to manage exchange risk on foreign currency debt. Foreign currency risk hedge accounting The Group designates certain foreign currency exchange contracts, predominantly forwards, as hedging instruments of the foreign currency risk of biomass purchases denominated in foreign currencies. Gains and losses on these foreign currency exchange contracts are transferred from equity to inventories for these hedges when the Group takes ownership of the biomass. The Group designates the spot element of these foreign currency exchange contracts and applies a hedge ratio of 1:1. The Group designates certain foreign currency exchange contracts, predominantly forwards and swaps, as hedging instruments of the foreign currency risk on the principal repayments of certain foreign currency denominated borrowings. Gains and losses that are effective at hedging the foreign exchange risk on the principal repayments are released to foreign exchange gains or losses to offset gains and losses on retranslating the hedged foreign currency denominated borrowings. The Group designates the spot element of these foreign currency exchange contracts and applies a hedge ratio of 1:1. The Group also designates certain cross-currency interest rate swaps as hedging instruments of the foreign currency risk on payments of both principal and interest on certain foreign currency denominated borrowings. Gains and losses that are effective at hedging the foreign exchange risk on the interest payments are released to interest payable and similar charges at the same time as the interest on the related hedged foreign currency denominated borrowings is expensed. Gains and losses that are effective at hedging the foreign exchange risk on the principal repayments are released to foreign exchange gains or losses to offset gains and losses on retranslating the hedged foreign currency denominated borrowings. The Group applies a hedge ratio of 1:1 for its cross-currency interest rate swaps. The main sources of ineffectiveness relating to foreign currency exchange contracts (forwards and swaps) that are designated as hedging spot foreign currency risk are timing differences and credit risk. The main sources of ineffectiveness relating to cross- currency interest rate swaps are differences in the critical terms, differences in repricing dates, foreign currency basis spread, and credit risk. Interest rate risk The Group has exposure to interest rate risk, principally in relation to variable rate debt, cash and cash equivalents and the revolving credit facility (RCF), should it be drawn. The returns generated on the Group\u2019s cash balance, or payable on amounts drawn on the RCF, are exposed to movements in short-term interest rates. The Group actively manages cash balances to protect against adverse changes in interest rates whilst retaining liquidity. Further information about the Group\u2019s variable rate debt instruments (including the RCF) and their repayment schedules is provided in note 4.2. Interest rate sensitivity The sensitivity analysis below has been determined based on the exposure to interest rates for both derivative and non-derivative financial instruments at the reporting date. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the reporting date was outstanding for the whole year. The analysis below shows what the impact on the current and previous year\u2019s profit after tax and other components of equity would have been for a reasonably possible increase or decrease in interest rates. For interest rate derivatives designated into hedge relationships the analysis includes the impact of recycling amounts from the hedge reserve. The analysis assumes all other variables are held constant.
Impact on other components
Impact on profit after tax of equity, net of tax
100 basis points 100 basis points 100 basis points 100 basis points
increase decrease increase decrease
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2024
Variable rate debt \u2013 hedged
(5.6)
5.6
\u2013
\u2013
Interest rate swaps
5.6
(5.6)
9.8
(9.8)
Net impact
\u2013
\u2013
9.8
(9.8)
At 31 December 2023
Variable rate debt \u2013 unhedged
(1.2)
1.2
\u2013
\u2013
Variable rate debt \u2013 hedged
(4.2)
4.2
\u2013
\u2013
Interest rate swaps
4.2
(4.2)
8 .1
(8 .1)
Net impact
(1.2)
1.2
8 .1
(8 .1)
An increase or decrease in interest rates would affect profit after tax as a result of the impact on the interest payable in the period on any variable rate debt. The Group has reduced its exposure to interest rate risk on variable rate debt through the use of floating-to- fixed interest rate and cross-currency swaps. These swaps are designated as hedging instruments under cash flow hedge accounting and therefore a change in interest rates would not have a significant impact on profit after tax as the recycling of gains and losses on these swaps would generally offset the impact of changes in interest rates on the Group\u2019s variable rate debt. Other components of equity are sensitive to an increase or decrease in interest rates due to the impact changes in interest rates has on the valuation of these floating-to-fixed interest rate and cross-currency swaps. These fair value changes impact the hedge reserve. Other components of equity are sensitive to an increase or decrease in interest rates due to the impact changes in interest rates has on the valuation of these floating-to-fixed interest rate swaps. These fair value changes impact the hedge reserve. Certain amounts of the Group\u2019s variable rate debt and interest rate swaps have a floor of 0% for the benchmark interest rate. In the prior year the Group had CAD denominated debt that had a variable rate based on Canadian Dollar Offered Rate (CDOR). At 31 December 2023, no swaps were in place to hedge the interest risk on the CAD denominated debt. Therefore, in relation to this debt in the prior year, a change in interest rate would have had an impact on profit after tax but not on other components of equity. During the prior year the Group extended the maturity of the CAD term loan facility to January 2026. As part of the extension the Group agreed with the lenders to transition the floating-rate to Canadian Overnight Repo Rate Average (CORRA) plus a credit adjustment spread. At 31 December 2024, the Group had entered into a CORRA floating-to-fixed cross-currency interest rate swap hedging the CAD denominated debt. As such, in the current year a change in interest rate would have no impact on profit after tax as the movement in debt would be offset by the recycling of the cash flow hedge, but would have an impact on other components of equity due to fair value changes in the value of the derivative impacting the hedge reserve. Interest rate risk management The Group has a risk management policy in place relating to interest rate risk. The Group policy permits the use of hedging instruments in order to hedge up to 100% of the Group\u2019s current and forecast interest rate exposure. Interest rate risk hedge accounting The Group designates certain interest rate swaps as hedging instruments of the interest rate risk of variable rate borrowings. Gains and losses on the interest payments on interest rate swaps are released to interest payable and similar charges at the same time as the interest is expensed on the related hedged borrowings. The Group applies a hedge ratio of 1:1 to its interest rate swaps. The main sources of ineffectiveness relating to interest rate hedges are differences in the critical terms, differences in repricing dates, and credit risk. Hedge accounting information The Group has Sterling Overnight Index Average (SONIA) floating-to-fixed interest rate swaps to fix the interest payments on the following facilities: \u00a350.0 million of the UK infrastructure private placement facility (2019), \u00a398.0 million of the UK infrastructure private placement facility (2020), two \u00a350.0 million tranches of the GBP and EUR term loan facility (2024), \u00a3125.0 million of the GBP term loan facility (2024) and the \u00a350.0 million GBP term loan facility (2024). The Group has Euro Interbank Offered Rate (EURIBOR) floating-to-fixed interest rate swaps to fix the principal and interest payments on \u20ac70.0 million of the UK infrastructure private placement facility (2020). The Group has EURIBOR floating-to-fixed interest rate swaps to fix the interest payments on \u20ac185.0 million of the GBP and EUR term loan facility (2024). The Group has separately taken out \u20ac185.0 million notional value of foreign exchange forwards in order to fix the sterling cash flows payable on the principal repayment. The Group has Canadian Overnight Repo Rate (CORRA) floating-to-fixed interest rate swaps to fix the interest payments on the C$200.0 million CAD term loan facility. The Group has separately taken out C$200.0 million notional value of foreign exchange forwards in order to fix the sterling cash flows payable on the principal repayment. The Group has taken out fixed-to-fixed cross-currency interest rate swaps to hedge the future cash flows associated with the following facilities: \u20ac350.0 million 2029 and \u20ac143.8 million 2025 fixed rate EUR loan notes and \u20ac31.5 million of the UK infrastructure private placement facility (2020). As at 31 December 2024, the Group has fixed in sterling all interest and principal payments on variable rate and foreign currency denominated borrowings through the use of interest rate swaps, cross-currency interest rate swaps, and foreign currency exchange forwards and swaps, as described above. See note 4.2 for further details on the Group\u2019s borrowings. A summary of amounts relating to the Group\u2019s hedge accounting of foreign currency risk and interest rate risk are presented in the table below. The information is disaggregated by risk type. Hedges of biomass purchases, principal repayments on borrowings hedged using foreign currency forwards or swaps, and fixed-to-fixed cross currency interest rate swaps are designated as hedges of foreign currency risk. Interest rate swaps are designated as hedges of interest rate risk. Floating-to-fixed cross-currency interest rate swaps are designated as hedges of both foreign currency and interest rate risk. The average forward rates quoted below only reflect the rates applicable to the portion of the Group\u2019s foreign currency hedging instruments that qualify for hedge accounting in accordance with IFRS 9. The rates do not reflect the overall average rate of the Group\u2019s total portfolio of derivatives that are used to fix the sterling value of future cash flows. A reconciliation of reserves and the time period when the hedge will affect profit or loss, or will be transferred from equity and included in the initial cost of the non-financial item, are disclosed in notes 7.3 and 7.4.
31 December 2024
Balance in the
hedge reserve
for hedging
Cumulative relationships for
change in fair which hedge
value of hedging Balance in the accounting is
instrument since hedge reserve no longer
inception used Fair value Fair value for continuing applied
Notional Weighted for measuring recognised in recognised in hedges net of net of deferred
value of average ineffectiveness balance sheet \u2013 balance sheet \u2013 deferred tax \u2013 tax \u2013 (debit)/
contracts fixed/variable \u2013 gains/(losses) assets liabilities (debit)/credit credit
Exposure ($m, \u20acm, C$m)
rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency risk on
biomass purchases
January
2025
Purchases in foreign \u2013 February
currency \u2013 USD
1,430.5
$1.27
2027
18.6
20.7
(2 .1)
10.7
\u2013
January
2025
Purchases in foreign \u2013 October
currency \u2013 EUR
270.0
\u20ac 1.15
2026
(6.3)
\u2013
(6.3)
(4.5)
\u2013
January
2025
Purchases in foreign \u2013 March
currency \u2013 CAD
166.0
C$1.67
2027
(5.1)
0.3
(5.4)
(5.8)
\u2013
Foreign currency risk on
borrowings
Interest and principal
payments \u2013 USD
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
November
2025
Interest and principal \u20ac1.14 / \u2013 April
payments \u2013 EUR
525.3
6.48% 2028
(10.4)
\u2013
(19.7)
4.4
\u2013
February
2027
\u2013 March
Principal payments \u2013 EUR
185.0
\u20ac 1.11
2028
(5.1)
\u2013
(5.1)
\u2013
\u2013
January
Principal payments \u2013 CAD
200.0
C$1.68
2026
(5.7)
\u2013
(5.7)
\u2013
\u2013
Foreign currency and
interest rate risk on
borrowings
January
2026
Interest and principal \u20ac1.09/ \u2013 March
payments \u2013 EUR
255.0
4.04% 2028
(8.6)
\u2013
(8.7)
(2.7)
\u2013
January
Interest payments \u2013 CAD
200.0
6.05%
2026
(1.5)
\u2013
(1.8)
(1.3)
\u2013
Interest rate risk on
borrowings
January
2026
\u2013 April
Variable rate GBP debt
423.0
2.89%
2028
6.1
7.1
(0.4)
4.3
\u2013
31 December 2024
Cumulative
change in fair Amount
value Hedge Amount Amount reclassified due
of hedged ineffectiveness transferred to reclassified to the hedged Line item in the
item since Hedging losses recognised in Line item in the the cost or due to the future cash income
inception used recognised in the income income carrying hedged flows being no statement/
for measuring OCI in the statement statement value item affecting longer expected balance sheet
ineffectiveness \u2013 period \u2013 in the period \u2013 that includes of a non- profit or loss \u2013 to occur \u2013 affected by the
gains/(losses) gains/(losses) gains/(losses) hedge financial asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Foreign currency risk
on biomass purchases
Purchases in foreign
currency \u2013 USD
18.6
19.7
\u2013
Cost of sales
4.3
\u2013
\u2013
Inventories
Purchases in foreign
currency \u2013 EUR
(6.3)
(7.1)
\u2013
Cost of sales
0.9
\u2013
\u2013
Inventories
Purchases in foreign
currency \u2013 CAD
(5.1)
(5.9)
\u2013
Cost of sales
(0.4)
\u2013
\u2013
Inventories
Foreign currency risk
on borrowings Interest Interest
payable payable
Interest and principal \u2013 and similar
\u2013
(0.7)
\u2013
and similar
payments \u2013 USD
\u2013
(5.6)
charges charges
Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
9.3
\u2013
(losses)/gains
Interest Interest
payable payable
Interest and principal \u2013 and similar
\u2013
7.4
\u2013
and similar
payments \u2013 EUR
(11.3)
( 7.5)
charges charges
Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
6.4
\u2013
(losses)/gains
Foreign Foreign
Principal payments \u2013 exchange exchange
EUR
(5.1)
(6.0)
\u2013
(losses)/gains
\u2013
6.0
\u2013
(losses)/gains
Foreign Foreign
Principal payments \u2013 exchange exchange
CAD
(5.7)
( 7.4)
\u2013
(losses)/gains
\u2013
7.4
\u2013
(losses)/gains
Foreign currency and
interest rate risk on
borrowings
Interest Interest
payable payable
Interest and principal \u2013 and similar
\u2013
(2.5)
\u2013
and similar
payments \u2013 EUR
(8.7)
(6.4)
 charges charges
Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
3.4
\u2013
(losses)/gains
Interest Interest
payable payable
Interest payments \u2013 and similar and similar
CAD
(1.6)
(1.3)
\u2013
 charges
\u2013
(0.4)
\u2013
 charges
Interest rate risk on
borrowings
Interest Interest
payable payable
and similar and similar
Variable rate GBP debt
10.8
(2.3)
\u2013
 charges
\u2013
(12.0)
\u2013
 charges
31 December 2023
Balance in the
hedge reserve
for hedging
Cumulative relationships for
change in fair which hedge
value of hedging Balance in the accounting is
instrument since hedge reserve no longer
inception used Fair value Fair value for continuing applied
Notional Weighted for measuring recognised in recognised in hedges net of net of deferred
value of average ineffectiveness balance sheet \u2013 balance sheet \u2013 deferred tax \u2013 tax \u2013 (debit)/
contracts fixed/variable \u2013 gains/(losses) assets liabilities (debit)/credit credit
Exposure ($m, \u20acm, C$m)
rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency risk on
biomass purchases
January
2024
Purchases in foreign \u2013 January
currency \u2013 USD
2 ,12 6.9
$1.29
2027
14 .1
35.6
(21.5)
( 7.3)
\u2013
January
2024
Purchases in foreign \u2013 April
currency \u2013 EUR
47. 0
\u20ac 1.15
2024
\u2013
\u2013
\u2013
0.2
\u2013
January
2024
Purchases in foreign \u2013 March
currency \u2013 CAD
116.6
C$1.68
2027
\u2013
2.1
(2 .1)
(1.3)
\u2013
Foreign currency risk on
borrowings
Interest and principal $1.36/ November
payments \u2013 USD
500.0
6 .13% 2024
22.1
2.7
(21.1)
(2.4)
\u2013
November
2024
Interest and principal \u20ac1.10/ \u2013 November
payments \u2013 EUR
281.5
4.57% 2026
(1.2)
\u2013
(12.7)
(0.2)
\u2013
January
Principal payments \u2013 CAD
200.0
C$1.68
2026
(0 .1)
\u2013
(0 .1)
0.2
\u2013
Foreign currency and
interest rate risk on
borrowings
January
2024
Interest and principal \u20ac1.09/ \u2013 January
payments \u2013 EUR
95.0
2.05% 2026
(1.6)
\u2013
(1.3)
1.4
\u2013
Interest rate risk on
borrowings
January
2024
\u2013 January
Variable rate GBP debt
473.0
0.88%
2026
20.2
22.7
\u2013
15.1
\u2013
31 December 2023
Amount
Cumulative reclassified due
change in fair Hedge Amount Amount to the hedged
value of hedged ineffectiveness transferred to reclassified future cash Line item in the
item since Hedging losses recognised in Line item in the the cost or due to the flows being income
inception used recognised in the income income carrying hedged no longer statement/
for measuring OCI in the statement statement value item affecting expected to balance sheet
ineffectiveness \u2013 period \u2013 in the period \u2013 that includes of a non- profit or loss \u2013 occur \u2013 affected by the
gains/(losses) gains/(losses) gains/(losses) hedge financial asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Foreign currency risk
on biomass purchases
Purchases in foreign
currency \u2013 USD
14 .1
(68.0)
\u2013
Cost of sales
(42.5)
\u2013
\u2013
Inventories
Purchases in foreign
currency \u2013 EUR
\u2013
(3.3)
\u2013
Cost of sales
(0.9)
\u2013
\u2013
Inventories
Purchases in foreign
currency \u2013 CAD
\u2013
(8.8)
\u2013
Cost of sales
\u2013
\u2013
\u2013
Inventories
Hedges of foreign
currency risk on
borrowings
Interest Interest
payable payable
and similar and similar
Interest and principal
35.9
(22.9)
\u2013 charges
\u2013
(3.3)
\u2013
 charges
payments \u2013 USD Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
822.0
\u2013
(losses)/gains
Interest Interest
payable payable
and similar and similar
Interest and principal
(1.2)
(9.7)
\u2013 charges
\u2013
4.9
\u2013
 charges
payments \u2013 EUR Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
5.6
\u2013
(losses)/gains
Foreign Foreign
Principal payments \u2013 exchange exchange
CAD
(0.1)
(0.2)
\u2013
(losses)/gains
\u2013
\u2013
\u2013
(losses)/gains
Foreign currency and
interest rate risk on
borrowings
Interest Interest
payable payable
and similar and similar
Interest and principal
(3.9)
(3.6)
\u2013 charges
\u2013
(1.9)
\u2013
 charges
payments \u2013 EUR Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
1.9
\u2013
(losses)/gains
Interest rate risk on
borrowings
Interest Interest
payable payable
and similar and similar
Variable rate GBP debt
23.4
(31.5)
\u2013
 charges
\u2013
16.0
\u2013
 charges
7.2.3 Inflation risk The Group is exposed to inflation risk on elements of its revenues and cost base. The Group\u2019s ROC revenue is linked to UK RPI and its CfD and Capacity Market income are linked to UK CPI (see note 2.2 for further information on ROC and CfD income). In addition, a proportion of the Group\u2019s fuel costs are linked to either US or Canadian CPI. The Group has UK CPI and RPI swaps to hedge certain revenues linked to inflation. Inflation risk sensitivity The sensitivity analysis below has been determined based on the exposure to inflation rates on inflation-linked derivatives at the reporting date. The analysis below shows the impact on profit after tax and other components of equity of a reasonably possible increase or decrease in inflation rates as at 31 December. The analysis assumes all other variables are held constant.
Impact on other components
Impact on profit after tax of equity, net of tax
200 basis points 200 basis points 200 basis points 200 basis points
increase decrease increase decrease
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2024
UK CPI inflation swaps
\u2013
\u2013
(25.7)
22 .1
UK RPI inflation swaps
(1.0)
1.0
(10.9)
10.9
Impact on other components
Impact on profit after tax of equity, net of tax
200 basis points 200 basis points 200 basis points 200 basis points
increase decrease increase decrease
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2023
UK CPI inflation swaps
\u2013
\u2013
(31.3)
26.6
UK RPI inflation swaps
(5.6)
5.5
(24.3)
23.9
The Group designates the UK CPI and RPI inflation swaps as hedging instruments under cash flow hedge accounting. As such, other components of equity are sensitive to the impact on inflation linked derivatives recognised in the hedge reserve of an increase or decrease in UK inflation rates. Profit after tax is sensitive to an increase or decrease in UK inflation rates due to the impact these rate changes would have on the over-hedged portion of the inflation swaps, with this impact being recognised directly in the Consolidated income statement. Inflation risk management The Group has a risk management policy in place relating to inflation risk. The Group policy permits the use of hedging instruments in order to hedge up to 100% of the Group\u2019s current and forecast inflation exposure. Hedge accounting The Group has contracts for which the revenue is contractually linked to UK CPI inflation. The Group has designated this risk component as a hedged item. UK CPI and UK RPI inflation swaps are utilised as the hedging instruments for this inflation risk. Gains and losses on the inflation swaps are held in the hedge reserve and reclassified to revenue in the Consolidated income statement at the same time the revenue from the inflation-linked contracts impacts profit or loss or if the hedged item is no longer expected to occur. The Group applies a hedge ratio of 1:1 for its inflation swaps. The main sources of ineffectiveness relating to the inflation swaps are the basis point difference between the RPI swaps and the CPI-linked revenues they are hedging, calculation differences, and the hedged item no longer being expected to occur. Calculation differences occur due to differences between the reference months used to calculate the inflationary increase per the swaps and the reference months used to calculate the inflationary increase for the CPI-linked revenues. During the current year the Group recognised \u00a38.7 million (2023: \u00a310.7 million) of ineffectiveness due to the basis difference between the RPI hedging instruments and the CPI exposure. In the prior year as a result of a decrease in the forecast CfD generation, the Group recycled \u00a39.3 million of losses on hedge accounted inflation-linked derivative contracts to the Consolidated income statement, due to the hedged item no longer being expected to occur. There has been no decrease in forecast CfD generation in the current year and as such no amounts have been recycled due to the hedged item no longer being expected to occur. In the current year, as a result of the updated 2025 commissioning dates, the Group recycled \u00a31.2 million of losses on hedge accounted inflation-linked OCGT Capacity Market derivative contracts to the Consolidated income statement, due to the hedged item no longer being expected to occur. The summary of the amounts relating to the hedging instruments and any related ineffectiveness in the period is presented in the table below.
31 December 2024
Balance in the
hedge reserve
for hedging
Cumulative relationships for
change in fair which hedge
value of hedging Balance in the accounting is
instrument since hedge reserve no longer
inception used Fair value Fair value for continuing applied
Notional for measuring recognised in recognised in hedges net of net of deferred
value of Weighted ineffectiveness \u2013 balance sheet \u2013 balance sheet \u2013 deferred tax \u2013 tax \u2013 (debit)/
contracts average gains/(losses) assets liabilities (debit)/credit credit
Exposure \u00a3m
fixed rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Inflation April
2026
\u2013 July
30.4
CPI \u2013 2.70%
2038
(18.6)
\u2013
(18.6)
(14.5)
10.5
Inflation-linked sales April
contracts \u2013 CPI
440.0
RPI \u2013 3.65%
2026
(75.4)
\u2013
(165.4)
(34.9)
\u2013
31 December 2024
Cumulative
change in fair
value Hedge Amount Amount
of hedged Hedging ineffectiveness Amount reclassified reclassified due Line item in
item since gains recognised in transferred to due to the to the hedged the income
inception used recognised in the income Line item in the the cost or hedged future cash flows statement/
for measuring OCI in the statement income statement carrying value item affecting being no longer balance sheet
ineffectiveness \u2013 period \u2013 in the period \u2013 that includes of a non- profit or loss \u2013 expected to occur affected by the
gains/(losses) gains/(losses) gains/(losses) hedge financial asset (gains)/losses \u2013 (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Inflation
Inflation-linked sales
(18.6)
(1.3)
\u2013
Revenue
\u2013
(3.1)
1.2
Revenue
contracts \u2013 CPI
(47.9)
(2 .1)
(8.7)
Revenue
\u2013
27.1
\u2013
Revenue
31 December 2023
Balance in the
hedge reserve
Cumulative change for hedging
in fair relationships for
value of hedging Balance in the which hedge
instrument since hedge reserve accounting is
inception used Fair value Fair value for continuing no longer applied
Notional for measuring recognised in recognised in hedges net of net of deferred
value of Weighted ineffectiveness \u2013 balance sheet \u2013 balance sheet \u2013 deferred tax \u2013 tax \u2013 (debit)/
contracts average gains/(losses) assets liabilities (debit)/credit credit
Exposure \u00a3m
fixed rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Inflation April
2026
\u2013 July
30.4
CPI \u2013 2.72%
2038
(19.7)
\u2013
(19.7)
(15.3)
13.6
Inflation-linked sales April
contracts \u2013 CPI
440.0
RPI \u2013 3.46%
2026
(100.7)
\u2013
(230.7)
(53.6)
\u2013
31 December 2023
Cumulative
change in fair
value Hedge Amount Amount
of hedged ineffectiveness Amount reclassified reclassified due Line item in
item since Hedging losses recognised in transferred to due to the to the hedged the income
inception used recognised the income Line item in the the cost or hedged future cash flows statement/
for measuring in OCI statement income statement carrying value item affecting being no longer balance sheet
ineffectiveness \u2013 in the period \u2013 in the period \u2013 that includes of a non- profit or loss \u2013 expected to occur affected by the
gains/(losses) gains/(losses) gains/(losses) hedge financial asset (gains)/losses \u2013 (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Inflation
Inflation-linked sales
(19.7)
3.3
\u2013
Revenue
\u2013
(0.9)
\u2013
Revenue
contracts \u2013 CPI
(75.2)
(3.5)
(10.7)
Revenue
\u2013
17.5
9.3
Revenue
7.2.4 Liquidity risk The treasury function is responsible for liquidity, funding and settlement management under policies approved by the Board. Liquidity needs are monitored using regular forecasting of operational cash flows and financing commitments. The Group maintains a mixture of cash and cash equivalents, committed facilities and uncommitted facilities in order to ensure sufficient funding for business requirements. In managing liquidity risk, the Group has the ability to accelerate the cash flows associated with certain working capital items, principally those related to ROC sales and Energy Solutions energy supply sales. In each case this is undertaken on a non-recourse basis and, accordingly, the ROC assets and Energy Solutions receivables are derecognised from the Consolidated balance sheet at the point of sale. The Group also utilises standard purchasing facilities to extend the working capital cycle, whilst still paying suppliers on time. The impact on the Group\u2019s cash flows is described in note 4.3. Such facilities are not included within the Group\u2019s definition of Net debt, as outlined in note 2.7. The following tables set out details of the expected maturity profile of the undiscounted, contractual payments of non-derivative financial liabilities. The tables include both interest and principal cash flows. To the extent that interest payments or receipts are floating rate, the undiscounted amount is derived from interest rate curves at the reporting date.
As at 31 December 2024
Within 3 months \u2013
3 months 1 year 1\u20132 years 2\u20135 years >5 years Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Term loans, gross value
11.2
30.5
202.8
613.3
27.0
884.8
Loan notes, gross value
\u2013
139.1
17.0
332.2
\u2013
488.3
Borrowings, contractual maturity
11.2
169.6
219.8
945.5
27. 0
1,37
3.1
Trade and other payables
763.5
28.2
1.1
0.2
\u2013
793.0
Lease liabilities
8.9
22.7
24.6
39.0
47. 2
142.4
783.6
220.5
245.5
984.7
74.2
2,308.5
As at 31 December 2023
Within 3 months \u2013
3 months 1 year 1\u20132 years 2\u20135 years >5 years Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Term loans, gross value
153.9
154.9
271.6
278.8
87. 0
946.2
Loan notes, gross value
\u2013
31.7
635.3
\u2013
\u2013
6 67.0
Borrowings, contractual maturity
153.9
186.6
906.9
278.8
8 7.0
1,613.2
Trade and other payables
763.8
150.7
3.2
1.5
\u2013
919.2
Lease liabilities
8.6
24.8
28.6
52.5
5 7.0
171.5
926.3
3 62 .1
938.7
332.8
144.0
2,703.9
The weighted average interest rate payable at the reporting date on the Group\u2019s borrowings was 5.39% (2023: 4.79%). Trade and other payables of \u00a3793.0 million (2023: \u00a3919.2 million) excludes non-financial liabilities such as contract liabilities, the Group\u2019s obligation to deliver ROCs and employee benefit-related accruals. The following tables set out details of the expected maturity profile of contractual payments and receipts of derivative financial instruments. Where the amount payable is not fixed, the amount disclosed has been determined by reference to projected commodity prices, foreign currency exchange rates, inflation rates or interest rates, as illustrated by the yield or other forward curves existing at the reporting date. Certain commodity contracts are expected to be gross settled through delivery or receipt of the commodity and a subsequent cash settlement of the trade value. Vanilla foreign currency exchange contracts are expected to be gross settled through simultaneous delivery of one currency and receipt of another. Gross settlement of both the interest and principal on cross-currency interest rate swaps is expected. Financial contracts and other foreign exchange contracts (excluding forwards and swaps) are expected to be net settled. Interest rate contracts and inflation rate contracts are expected to include the net settlement of the interest rate and inflation rate differentials. Where derivatives are expected to be gross settled based on the trade value rather than the mark-to-market value, the gross cash flows have been presented in the table below. Where derivatives are expected to be net settled, the undiscounted net cash flows expected to occur based on the current fair value have been presented in the table below. Where derivative balances are subject to offsetting, the net expected contractual payments and receipts of the offset asset and liability have been presented. The amounts included within difference to carrying amount column include the effect of discounting for the time value of money and credit risk on all trade types. Additionally, for all physically settled commodity trades, the difference to carrying amount includes the market value of these trades, as the traded price is included as the cash payment or receipt in the table below, but the carrying amount is based on the mark-to-market of the trade, being the difference between the market value and traded value. For foreign currency exchange contracts the amounts included within the difference to carrying amount column also includes the time value of options that have no intrinsic value, for example out-of-the-money options. As these trades are not expected to exercise no cash flows have been included in the below table. The below tables have been re-presented in the current period to include the expected cash flows from all derivative contracts (both assets and liabilities), including both cash inflows and outflows. The Group believe the additional information provided more accurately reflects the expected cash flows and liquidity profile of the Group\u2019s derivative contracts.
As at 31 December 2024
Within Difference to Carrying
1 year 1\u20132 years >2 years Total carrying amount amount
Derivative liabilities \u2013 cash inflow/(outflow) \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts \u2013 inflow
303.0
259.3
37.8
6 0 0.1
(673.5)
(73.4)
Commodity contracts \u2013 outflow
(33.8)
(1.4)
(4.1)
(39.3)
30.9
(8.4)
Foreign exchange contracts \u2013 inflow
6 41.1
468.4
328.0
1,437.5
15.2
(36.9)
Foreign exchange contracts \u2013 outflow
(637. 4)
(494.6)
(357.6)
(1,489.6)
Cross-currency contracts \u2013 inflow
215.7
53.9
341.0
610.6
1.2
(30.2)
Cross-currency contracts \u2013 outflow
(241.3)
(63.4)
( 337.3)
(642.0)
Interest rate contracts \u2013 inflow
0.3
\u2013
\u2013
0.3
0.1
(0.4)
Interest rate contracts \u2013 outflow
\u2013
(0.5)
(0.3)
(0.8)
Inflation contracts \u2013 outflow
(84.3)
(91.5)
(20.0)
(195.8)
11.8
(184.0)
163.3
130.2
(12.5)
281.0
(614.3)
(333.3)
As at 31 December 2024
Within Difference to Carrying
1 year 1\u20132 years >2 years Total carrying amount amount
Derivative assets \u2013 cash inflow/(outflow) \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts \u2013 inflow
363.7
50.6
16.8
431.1
(306.5)
124.6
Commodity contracts \u2013 outflow
(117.5)
(4.5)
(24.9)
(146.9)
175.8
28.9
Foreign exchange contracts \u2013 inflow
874.6
1,030.0
245.1
2,149.7
(9.7)
96.7
Foreign exchange contracts \u2013 outflow
(839.9)
(977.1)
(226.3)
(2,043.3)
Cross-currency contracts \u2013 inflow
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Cross-currency contracts \u2013 outflow
\u2013
\u2013
\u2013
\u2013
Interest rate contracts \u2013 inflow
6.3
1.1
\u2013
7. 4
(0.2)
7.1
Interest rate contracts \u2013 outflow
\u2013
\u2013
(0 .1)
(0 .1)
Inflation contracts \u2013 outflow
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
287.2
100.1
10.6
397.9
(140.6)
257.3
As at 31 December 2023
Within Difference to Carrying
1 year 1\u20132 years >2 years Total carrying amount amount
Derivative liabilities \u2013 cash inflow/(outflow) \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts \u2013 inflow
28.2
5.5
4.3
38.0
(40.7)
(2.7)
Commodity contracts \u2013 outflow
(403.5)
(43 .1)
(0 .1)
(446.7)
256.2
(190.5)
Foreign exchange contracts \u2013 inflow
9 07.4
486.6
38 7.4
1,781.4
(13.5)
(59.5)
Foreign exchange contracts \u2013 outflow
(936.2)
(497.1)
( 39 4 .1)
(1, 827. 4)
Cross-currency contracts \u2013 inflow
5 62 .1
25.0
29.8
616.9
1.7
( 35.1)
Cross-currency contracts \u2013 outflow
(620.1)
(2.5)
(31.1)
(653.7)
Interest rate contracts \u2013 inflow
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Interest rate contracts \u2013 outflow
\u2013
\u2013
\u2013
\u2013
Inflation contracts \u2013 outflow
(81.6)
(85.2)
(107.5)
(274.3)
23.9
(250.4)
(543.7)
(110.8)
(111.3)
(765.8)
227.6
(538.2)
As at 31 December 2023
Within Difference to Carrying
1 year 1\u20132 years >2 years Total carrying amount amount
Derivative assets \u2013 cash inflow/(outflow) \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts \u2013 inflow
880.4
515.7
57. 5
1,453.6
(927.9)
525.7
Commodity contracts \u2013 outflow
(6.5)
\u2013
\u2013
(6.5)
8.9
2.4
Foreign exchange contracts \u2013 inflow
768.6
543.6
669.9
1,
98 2.1
40.3
108.5
Foreign exchange contracts \u2013 outflow
(756.9)
(522.4)
(634.6)
(1,913.9)
Cross-currency contracts \u2013 inflow
146.4
\u2013
\u2013
146.4
(0 .1)
2.7
Cross-currency contracts \u2013 outflow
(143.6)
\u2013
\u2013
(143.6)
Interest rate contracts \u2013 inflow
16.0
7.4
1.4
24.8
(2.1)
22.7
Interest rate contracts \u2013 outflow
\u2013
\u2013
\u2013
\u2013
Inflation contracts \u2013 outflow
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
904.4
544.3
94.2
1,542.9
(880.9)
662.0
7.2.5 Credit risk The Group\u2019s gross exposure to credit risk for financial instruments is limited to the carrying amount of financial assets recognised at the reporting date. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in note 7.1. Trade and other receivables are stated gross of the provision for expected credit losses on trade receivables of \u00a342.4 million (2023: \u00a359.4 million) and expected credit losses on accrued income of \u00a39.0 million (2023: \u00a39.4 million). The balance excludes non-financial receivables such as prepayments. The Group\u2018s four reportable segments (Pellet Production, Biomass Generation, Flexible Generation and Energy Solutions) are exposed to different levels and concentrations of credit risk, largely reflecting the number, size and nature of their respective customers. The Pellet Production segment sells biomass pellets both intra-group and to external parties. Credit risk for the Group relates to the sales made to external parties. The majority of the Pellet Production segment\u2019s external sales are with large utility customers in Europe and Asia. The Pellet Production segment manages its credit risk by reviewing individual sales contracts, considering the length of the contract, payment terms, and assessing the credit quality of counterparties prior to signing contracts and throughout the duration of contracts. For the Biomass Generation and Flexible Generation segments, the risk arises from treasury, trading and energy procurement activities. Wholesale counterparty credit exposures are monitored by individual counterparty and by category of credit rating. Counterparty credit exposures are subject to approved limits. The Group uses master netting agreements to reduce credit risk and net settles payments with counterparties where net settlement provisions exist. In addition, the Group employs a variety of other methods to mitigate credit risk: margining; various forms of parent company guarantee; deeds of charge; cash collateral; letters of credit; and surety bonds. The majority of the Biomass Generation and Flexible Generation segments\u2019 credit risk is with counterparties in related energy industries or with financial institutions. In addition, where deemed appropriate, the Group has historically purchased credit default swaps. The highest credit risk exposure is in the Energy Solutions segment, with a large number of customers of varying sizes operating in a variety of markets. In particular, its small and medium-sized enterprise (SME) customers carry lower concentrations but higher levels of credit risk, owing to a customer base comprised of smaller retail and commercial entities. Credit risk is managed by checking a company\u2019s creditworthiness and financial strength both before commencing trade and during the business relationship. Credit risk is monitored and managed by industry sector. Due to the sale of the majority of the Opus Energy non-core SME meter points the Group has reduced its credit risk exposure for the Energy Solutions segment. Further details on the impact of credit risk on trade and other receivables is disclosed in note 3.5. The investment of surplus cash is undertaken with the objective of ensuring that there is sufficient liquidity at all times, so that funds are available to meet liabilities as they fall due, whilst securing a return from invested funds and preserving the capital value of those funds within Board-approved policies. These policies manage credit risk exposure by setting out minimum rating requirements and maximum investments with any one counterparty based on their rating and the maturity profile. The Group had cash and cash equivalents of \u00a3356.0 million at 31 December 2024 (2023: \u00a3379.5 million). The Group\u2019s cash and cash equivalents excluding money market funds (held at FVTPL) are subject to the impairment requirements of IFRS 9. The Group had cash and cash equivalents excluding money market funds of \u00a3252.9 million at 31 December 2024 (2023: \u00a3208.4 million). The identified impairment loss, based on the 12-month expected credit loss basis, was immaterial. Cash and cash equivalents are held with banks with external credit ratings between AAA and A. The Group is exposed to credit risk on derivative contracts, to which the impairment requirements of IFRS 9 are not applied as the fair value requirements of IFRS 13 are applicable. Credit risk is a factor in the determination of fair value. The carrying amount of these financial assets, disclosed in note 7.1, represents the Group\u2019s maximum credit risk exposure. Some derivative contracts are fully cash collateralised, thereby minimising credit risk. At 31 December 2024, the Group held \u00a39.8 million in cash collateral receipts (2023: \u00a320.3 million) covering certain derivative assets and had posted \u00a34.7 million (2023: \u00a398.9 million) of cash collateral payments covering certain derivative liabilities. The credit rating of counterparties to which the \u00a34.7 million of cash collateral had been posted was A+. Counterparty risk As the Group relies on third-party suppliers and counterparties for the delivery of financial and non-financial items, as is therefore exposed to the risk of non-performance by these third-party suppliers. For financial instruments, such as foreign currency forwards, this risk is limited to the credit risk, as discussed above. The Group is also exposed to counterparty risk on non-financial items, such as the purchases of biomass and capital expenditure. If a large supplier were to fall into financial difficulty and/or fail to deliver against its contract with the Group, there would be additional costs associated with securing the lost goods or services from other suppliers. The Group enters into purchase and sale contracts for a wide variety of goods and services, for example the sale of power to a number of counterparties. The failure of one or more of these counterparties to perform under their contractual obligations may cause the Group financial distress or increase the risk profile of the Group. The Group has acceptance procedures in place to ensure the counterparties the Group contracts with are appropriate. The Group also has limits in place, and actively monitors its exposures to individual counterparties to minimise this risk. Capital management The Group is disciplined in its management of capital to ensure it is able to continue as a going concern; maintain a strong credit rating underpinned by robust financial metrics; invest in its core business; and pay a sustainable and growing dividend whilst maximising the return to shareholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of shareholders\u2019 equity (excluding the hedge and cost of hedging reserves), plus Net debt. Net debt is comprised of borrowings, lease liabilities, cash and cash equivalents attributable to owners of the parent company and is inclusive of the impact of associated hedging instruments as disclosed in note 2.7. See note 4.2 for details of loan covenants, and the Viability statement starting on page 84 for details of scenario analysis performed on covenant restrictions within the Group\u2019s financing facilities.
As at 31 December
2024 2023
\u00a3m \u00a3m
Net debt (note 2.7)
991.7
1,219.7
Total shareholders\u2019 equity attributable to owners of the parent company, excluding hedge and cost of
hedging reserves
2,078.3
1,74
4.9
7.3 Hedge reserve The Group designates certain hedging instruments that are used to address commodity price risk, foreign exchange risk, interest rate risk and inflation rate risk as cash flow hedges. At the inception of the hedge, the relationship between the hedging instrument and hedged item is documented, along with its risk management objectives. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging instruments used in hedging transactions are effective in offsetting changes in cash flows of the hedged items. Changes in the fair value of contracts designated into such hedging relationships are recognised within the hedge reserve to the extent they are effective. Amounts accumulated in the hedge reserve are reclassified in the periods when the hedged item affects profit or loss. If the hedged item results in the recognition of a non-financial asset then the amount accumulated in the hedge reserve is transferred and included within the initial cost of the asset. The table below details the gains and losses recognised in the current and prior year on hedging instruments, the amounts reclassified from equity due to the hedged item affecting the Consolidated income statement, and the amounts reclassified due to the hedged future cash flows no longer being expected to occur. See section 7.2 for further details on these amounts.
Hedge reserve
Foreign Foreign
currency exchange
Commodity exchange Interest and Interest Inflation
price risk
(1)
risk
(2)
rate risk
(2)
rate risk
(2)
rate risk Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
At 1 January 2023
(192.8)
84.5
26.8
4 .1
(74.6)
(152.0)
Gains/(losses) recognised:
\u2013 Change in fair value of hedging instrument recognised in OCI
414.7
(112.9)
(31.5)
(3.6)
(0.2)
266.5
Reclassified from equity as the hedged item has affected
profit or loss:
\u2013 Reclassified to the Consolidated income statement
\u2013 included in cost of sales
600.9
\u2013
\u2013
\u2013
\u2013
600.9
\u2013 Reclassified to the Consolidated income statement
\u2013 included in revenue
(415.9)
\u2013
\u2013
\u2013
16.6
(399.3)
\u2013 Reclassified to the Consolidated income statement
\u2013 included in interest payable and similar charges
\u2013
1.6
16.0
(1.9)
\u2013
15.7
\u2013 Reclassified to the Consolidated income statement
\u2013 included in foreign exchange (losses)/gains
\u2013
27.6
\u2013
1.9
\u2013
29.5
Reclassified from equity as the hedged item is no longer
expected to occur:
\u2013 Reclassified from equity \u2013 included in revenue
\u2013
\u2013
\u2013
\u2013
9.3
9.3
Transferred from equity and included within the initial cost
of a non-financial asset:
\u2013 Transferred to cost of inventories
\u2013
(43.4)
\u2013
\u2013
\u2013
(43.4)
Related deferred tax, net (note 2.6)
(149.9)
31.8
3.8
0.9
(6.4)
(119.8)
At 1 January 2024
257. 0
(10.8)
15.1
1.4
(55.3)
207.4
Gains/(losses) recognised:
\u2013 Change in fair value of hedging instrument recognised
in OCI
(15.8)
(19.8)
(2.3)
(7.7)
(3.4)
(49.0)
Reclassified from equity as the hedged item has affected profit
or loss:
\u2013 Reclassified to the Consolidated income statement
\u2013 included in cost of sales
105.1
\u2013
\u2013
\u2013
\u2013
105.1
\u2013 Reclassified to the Consolidated income statement
\u2013 included in revenue
(397.5)
\u2013
\u2013
\u2013
24.0
(373.5)
\u2013 Reclassified to the Consolidated income statement
\u2013 included in interest payable and similar charges
\u2013
6.7
(12.0)
(2.9)
\u2013
(8.2)
\u2013 Reclassified to the Consolidated income statement
\u2013 included in foreign exchange (losses)/gains
\u2013
2 9.1
\u2013
3.4
\u2013
32.5
Reclassified from equity as the hedged item is no longer
expected to occur:
\u2013 Reclassified from equity \u2013 included in revenue
\u2013
\u2013
\u2013
\u2013
1.2
1.2
Transferred from equity and included within the initial cost
of a non-financial asset:
\u2013 Transferred to cost of inventories
\u2013
4.8
\u2013
\u2013
\u2013
4.8
Related deferred tax, net (note 2.6)
77.1
(5.2)
3.5
1.8
(5.4)
71.8
At 31 December 2024
25.9
4.8
4.3
(4.0)
(38.9)
( 7.9)
(1) The table above has been re-presented to split the prior year reclassified amounts in commodity price risk column between amounts included in revenue and amounts included within cost of sales. (2) The above table has been re-presented to include a foreign exchange and interest rate risk column. The amounts included within foreign exchange and interest rate risk relate to the Group\u2019s floating-to-fixed cross-currency interest rate swaps that were previously disclosed partially within foreign currency exchange risk and partially within interest rate risk. The expected release profile from equity of post-tax hedging gains and losses is as follows:
As at 31 December 2024
Within 1 year 1\u20132 years >2 years Total
\u00a3m \u00a3m \u00a3m \u00a3m
Commodity risk
34.7
(9.2)
0.4
25.9
Foreign currency exchange risk
(1.3)
(3.0)
9.1
4.8
Interest rate risk
4.2
0.4
(0.3)
4.3
Foreign currency and interest rate risk
(2.4)
(1.3)
(0.3)
(4.0)
Inflation risk
(15.1)
(10 .1)
(13.7)
(38.9)
20 .1
(23.2)
(4.8)
(7.9)
As at 31 December 2023
Within 1 year 1\u20132 years >2 years Total
\u00a3m \u00a3m \u00a3m \u00a3m
Commodity risk
199.4
56.0
1.6
2 57.0
Foreign currency exchange risk
(3.3)
(5.4)
(2.1)
(10.8)
Interest rate risk
9.2
5.0
0.9
15.1
Foreign currency and interest rate risk
0.7
0.6
0.1
1.4
Inflation risk
(19.4)
(15.2)
(20.7)
(55.3)
186.6
41.0
(20.2)
2 07.4
7.4 Cost of hedging reserve Where the Group has designated the spot foreign exchange risk as the hedged risk, the Group allocates unrealised gains and losses on the forward rate of hedge accounted foreign currency derivative contracts to a cost of hedging reserve in accordance with IFRS 9. A large proportion of the derivative contracts held relate to foreign currency exchange contracts, including forward contracts, options and swaps. Consistent with prior periods, for foreign currency exchange contracts hedging the purchase of inventory denominated in foreign currencies to which the Group has applied hedge accounting, the Group has continued to designate the change in the spot rate as the hedged risk in the Group\u2019s cash flow hedge relationships. The Group designates the cost of hedging \u2013 being the change in fair value associated with forward points including currency basis \u2013 to equity. All amounts within the cost of hedging reserve relate to foreign currency exchange risk. The table below details the cost of hedging gains or losses recognised in the year on hedging instruments and the amounts transferred from equity and included within the initial cost of a non-financial asset:
Cost of hedging
2024 2023
\u00a3m \u00a3m
At 1 January
18.7
4 0.1
Gains/(losses) recognised:
\u2013 Change in fair value of hedging instruments recognised in the Consolidated statement of
comprehensive income
6.8
7.5
Transferred from equity and included within the initial cost of a non-financial asset:
\u2013 Transferred to cost of inventories
(22.6)
(36.0)
Related deferred tax, net (note 2.6)
4.0
7.1
At 31 December
6.9
18.7
The expected release profile from equity of post-tax cost of hedging gains and losses is as follows:
As at 31 December 2024
Within 1 year 1\u20132 years >2 years Total
\u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency exchange risk
5.1
0.7
1.1
6.9
As at 31 December 2023
Within 1 year 1\u20132 years >2 years Total
\u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency exchange risk
16.6
4.3
(2.2)
18.7
", "dimensions": { "concept": "ifrs-full:DisclosureOfReclassificationOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-601": { "value": "7.2.1 Commodity price risk The Group is exposed to the effect of fluctuations in commodity prices, particularly the price of power, gas, other fuels and the price of carbon emissions allowances. Price variations and market cycles have historically influenced the financial results of the Group and are expected to continue to do so. Commodity price sensitivity The sensitivity analysis below has been determined based on the exposure to commodity prices and the impact on profit after tax and other components of equity of reasonably possible increases or decreases in commodity prices as at 31 December. The analysis assumes all other variables were held constant. Financial and commodity markets saw significant volatility and high prices in 2022. During 2023, the high prices seen in 2022 generally reversed and these price reductions have continued into 2024, but in the most part prices are still above historical averages. See the Principal risks and uncertainties section on page 73 for further details on UK energy market conditions. As a result of these fluctuating market conditions, the valuation of the Group\u2019s commodity derivative financial instruments, in particular power, gas and oil, have seen large reversals of the amounts previously recognised as market prices have continued to reduce, whilst older trades with higher prices have also matured. Sensitivities for a 10% change in prices have been included in the current and prior year. The impact of smaller and larger price changes can be extrapolated from the below table as changes in prices have a relatively linear relationship with the impact on profit after tax and on the hedge reserve.
Impact on other components
Impact on profit after tax of equity, net of tax
10% decrease 10% increase 10% decrease 10% increase
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2024
Power
\u2013
\u2013
43.0
(43.0)
Carbon
1.6
(1.6)
\u2013
\u2013
Gas
10.8
(10.8)
\u2013
\u2013
Oil
(4.8)
4.8
\u2013
\u2013
Freight
(0.2)
0.2
\u2013
\u2013
Impact on other components
Impact on profit after tax of equity, net of tax
10% decrease 10% increase 10% decrease 10% increase
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2023
Power
\u2013
\u2013
34.9
(34.9)
Carbon
2.8
(2.8)
(0.2)
0.2
Gas
11.1
(11.1)
\u2013
\u2013
Oil
( 7.9)
7.9
\u2013
\u2013
The Group designates certain derivatives as hedging instruments under cash flow hedge accounting. As such, other components of equity are sensitive to increases or decreases in commodity price risk and the impact on the hedge reserve resulting from these movements. Profit after tax is sensitive to increases or decreases in commodity prices as a result of the impact on the fair value of derivative financial instruments not designated as hedging instruments under cash flow hedge accounting. Commodity risk management The Group has a policy of securing forward power sales and purchases, and purchases of fuel when it is profitable to do so and is in line with specified limits under approved policies. Forward power sales can be secured up to 100% of forecast availability two years ahead, after taking account of the volume held back for operational risk management purposes. All commitments to sell and purchase power under fixed price contracts are designated as cash flow hedges as they reduce the Group\u2019s cash flow exposure resulting from fluctuations in the price of power. The Group purchases biomass pellets and other fuels under either a fixed or variable priced contract with different maturities, principally from a number of international sources. The Group considers all such commodity contracts to be economic hedges. If either the contracts cannot be readily net settled, or if the Group is able to demonstrate that these contracts were entered into and continue to be held for the purpose of receipt or delivery of the non-financial item in accordance with the Group\u2019s expected purchase, sale or usage requirements and the own-use exemption applies, then these contracts are not within the scope of IFRS 9. For other contracts that are within the scope of IFRS 9 the Group applies hedge accounting where possible. If the contracts are within the scope of IFRS 9 and hedge accounting is not applied then the contracts are recognised at fair value through profit or loss (FVTPL). Where forward power curves are less liquid, the Group uses financially settled gas sales as a proxy for power to mitigate the risk of power price fluctuations. The Group also purchases gas under fixed-price contracts to meet the requirements of the Energy Solutions segment and for its Daldowie fuel plant. The Group\u2019s gas supply business is reducing in size due to the decision made in January 2023 to phase out the Group\u2019s gas supply contracts and due to the sale of the majority of the Group\u2019s non-core SME customer meter points to EDF in September 2024 (see note 2.7 for further details). The Group purchases carbon emissions allowances under fixed-price contracts to cover the Group\u2019s purchase requirements under the UK Emissions Trading Scheme (UK ETS) in relation to the Group\u2019s carbon emissions. Carbon emissions allowances are also sold as part of the proxy power hedges in the same way as financial gas described above. Sales and purchases of carbon are not designated as cash flow hedges. The Group purchases financial oil contracts to hedge freight costs as oil is a significant input into the overall cost of freight. Financial oil contracts are not designated as cash flow hedges. Hedge accounting The Group has cash flow hedges relating to commodity contracts, principally commitments to sell and purchase power. In the prior year, cash flow hedge accounting was also applied to certain carbon purchases. Amounts are recognised in the hedge reserve as the designated contracts are marked-to-market at each reporting date for the effective portion of the hedge, which is generally 100% of the relevant contract. Amounts held within the hedge reserve are then recycled to the Consolidated income statement as the hedged item impacts profit or loss. For power sales and purchase contracts, this is when the underlying power is delivered. Included in amounts released from equity are current and prior period gains and losses on financial instruments for which the hedged transaction has now occurred and these gains and losses have been released to the Consolidated income statement in the period. No ineffectiveness was recognised in the Consolidated income statement on continuing commodity hedges in the current or prior year. Due to the use of \u201call-in-one\u201d hedges, this results in the movement in fair value for the hedged items and hedging instruments being identical. The only sources of ineffectiveness regarding the \u201call-in-one\u201d hedges would be if delivery of the commodities was no longer expected to occur (which would result in hedge accounting being discontinued) and credit risk. The Group applies a hedge ratio of 1:1 to its commodity risk cash flow hedges. The reconciliation of the reserves and time period when the hedge will affect the Consolidated income statement are disclosed in note 7.3. The summary of the amounts relating to the hedging instruments and any related ineffectiveness in the period is presented in the table below. The average forward rates quoted below only reflect the rates applicable to the portion of the Group\u2019s commodity contracts that qualify for hedge accounting in accordance with IFRS 9. The rates do not reflect the overall average rate of the Group\u2019s total portfolio of commodity contracts that are used to protect the value of future cash flows.
31 December 2024
Balance in the
hedge reserve
for hedging
Cumulative relationships for
change in fair Balance in the which hedge
value of hedging hedge reserve accounting is
instrument since for continuing no longer
Notional inception used Fair value Fair value hedges applied
value of Weighted for measuring recognised in recognised in net of deferred net of deferred
contracts average ineffectiveness balance sheet \u2013 balance sheet \u2013 tax \u2013 (debit)/ tax \u2013 (debit)/
(MWh, fixed price Maturity \u2013 gains/(losses) assets liabilities credit credit
Exposure allowances) \u00a3 date \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts January
2025
Sale and purchases of \u2013 September
power
7,013,76
6
87.3
2028
34.5
101.9
(50.9)
25.9
\u2013
Purchase of carbon
emissions allowances
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
31 December 2024
Cumulative
change in fair Amount
value Hedge Amount reclassified due
of hedged ineffectiveness Amount reclassified to the hedged Line item
item since recognised in Line item transferred to due to the future cash in the income
inception used Hedging gains the income in the income the cost or hedged flows statement/
for measuring recognised in OCI statement statement carrying value of item affecting being no longer balance sheet
ineffectiveness in the period \u2013 in the period \u2013 that includes a non-financial profit or loss \u2013 expected to affected by the
\u2013 gains/(losses) gains/(losses) gains/(losses) hedge asset (gains)/losses occur \u2013 transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m (gains)/losses reclassification
Commodity contracts
Sale and purchase of
34.5
(15.2)
\u2013
Revenue
\u2013
( 397.5)
\u2013
Revenue
power
\u2013
Cost of sales
\u2013
103.9
\u2013
Cost of sales
Purchase of carbon
emissions allowances
\u2013
(0.6)
\u2013
Cost of sales
\u2013
1.2
\u2013
Cost of sales
31 December 2023
Balance in the
hedge reserve
Cumulative for hedging
change in fair Balance in the relationships for
value of hedging hedge reserve which hedge
instrument since for continuing accounting is
Notional inception used Fair value Fair value hedges net no longer applied
value of Weighted for measuring recognised in recognised in of deferred net of deferred
contracts average ineffectiveness balance sheet \u2013 balance sheet \u2013 tax \u2013 (debit)/ tax \u2013 (debit)/
(MWh, fixed price \u2013 gains/(losses) assets liabilities credit credit
Exposure allowances)
\u00a3
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts January
2024
Sale and purchases of \u2013 September
power
5,580,931
129.4
2026
343.5
402.3
(58.8)
257.4
\u2013
March
2024
Purchase of carbon \u2013 December
emissions allowances
62,000
37. 4
2024
0.4
0.4
\u2013
0.3
(0.7)
31 December 2023
Cumulative Amount
change in fair reclassified due
value Hedge Amount to the hedged
of hedged ineffectiveness Amount reclassified future cash Line item
item since recognised in Line item transferred to due to the flows being in the income
inception used Hedging gains the income in the income the cost or hedged no longer statement/
for measuring recognised in statement statement carrying value of item affecting expected to balance sheet
ineffectiveness \u2013 OCI in the period in the period \u2013 that includes a non-financial profit or loss \u2013 occur \u2013 affected by the
gains/(losses) \u2013 gains/(losses) gains/(losses) hedge asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Commodity contracts
Sale and purchase of
power
343.5
413.3
\u2013
Revenue
\u2013
(415.9)
\u2013
Revenue
\u2013
Cost of sales
\u2013
599.3
\u2013
Cost of sales
Purchase of carbon
emissions allowances
0.4
1.4
\u2013
Cost of sales
\u2013
1.6
\u2013
Cost of sales
7.2.2 Foreign currency and interest rate risk Foreign currency risk The Group is exposed to fluctuations in foreign currency rates as a result of committed and forecast transactions in foreign currencies, principally in relation to purchases of fuel for use in the Biomass Generation segment and principal and interest payments relating to foreign currency denominated debt. These fuel purchases are typically denominated in US dollars (USD), euros (EUR) or Canadian dollars (CAD), and the foreign currency debt is also denominated in USD, EUR and CAD (see note 4.2 for further details on the Group\u2019s borrowings). The Group also has an exposure to translation risk in relation to its net investment in its US and Canadian subsidiaries within the Pellet Production segment. Foreign currency sensitivity The analysis below shows the impact on profit after tax and other components of equity of reasonably possible strengthening or weakening of currencies against GBP. The sensitivity analysis below shows the impact of a change in foreign exchange rates as at 31 December on outstanding monetary items denominated in foreign currencies and the valuation of foreign currency derivative instruments. For foreign currency derivatives designated into hedge relationships the analysis includes the impact of recycling amounts from the hedge reserve if a change in foreign exchange rates would result in the recycling of gains and losses due to the item they are hedging impacting profit or loss. The analysis assumes all other variables were held constant.
Impact on other components
Impact on profit after tax of equity, net of tax
10% 10% 10% 10%
strengthening weakening strengthening weakening
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2024
USD
66.8
(57.4)
(75.9)
(75.9)
EUR
10.1
(8.9)
(19.1)
(27.4)
CAD
1.2
(1.0)
(6.6)
(6.9)
Impact on other components
Impact on profit after tax of equity, net of tax
10% 10% 10% 10%
strengthening weakening strengthening weakening
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2023
USD
84.5
(53.5)
125.3
(100.8)
EUR
15.9
(13.2)
3.9
(3.6)
CAD
0.3
\u2013
4.8
(4.0)
The Group designates certain foreign currency derivatives as hedging instruments under cash flow hedge accounting. As such, other components of equity are sensitive to the strengthening or weakening of other currencies in relation to the impact on the hedge reserve of these movements. Profit after tax is sensitive to the strengthening or weakening of other currencies as a result of the impact on the fair value of foreign currency derivatives not designated as hedging instruments under cash flow hedge accounting. Foreign currency risk management It is the Group\u2019s policy to hedge material transactional exposures using a variety of derivatives to protect the sterling values of foreign currency cash flows, except where there is an economic hedge inherent in the transaction. The Group enters into derivative contracts in line with the Group\u2019s currency risk management policy, including forwards and options, to manage the risks associated with its anticipated foreign currency requirements over a rolling five-year period, covering contracted exposures and a proportion of highly probable forecast transactions. In addition, in order to optimise the cost of funding, the Group has issued foreign currency denominated debt in USD, EUR and CAD (see note 4.2 for further details on borrowings). The Group utilises derivative contracts, including cross-currency interest rate swaps and foreign exchange forward contracts, to manage exchange risk on foreign currency debt. Foreign currency risk hedge accounting The Group designates certain foreign currency exchange contracts, predominantly forwards, as hedging instruments of the foreign currency risk of biomass purchases denominated in foreign currencies. Gains and losses on these foreign currency exchange contracts are transferred from equity to inventories for these hedges when the Group takes ownership of the biomass. The Group designates the spot element of these foreign currency exchange contracts and applies a hedge ratio of 1:1. The Group designates certain foreign currency exchange contracts, predominantly forwards and swaps, as hedging instruments of the foreign currency risk on the principal repayments of certain foreign currency denominated borrowings. Gains and losses that are effective at hedging the foreign exchange risk on the principal repayments are released to foreign exchange gains or losses to offset gains and losses on retranslating the hedged foreign currency denominated borrowings. The Group designates the spot element of these foreign currency exchange contracts and applies a hedge ratio of 1:1. The Group also designates certain cross-currency interest rate swaps as hedging instruments of the foreign currency risk on payments of both principal and interest on certain foreign currency denominated borrowings. Gains and losses that are effective at hedging the foreign exchange risk on the interest payments are released to interest payable and similar charges at the same time as the interest on the related hedged foreign currency denominated borrowings is expensed. Gains and losses that are effective at hedging the foreign exchange risk on the principal repayments are released to foreign exchange gains or losses to offset gains and losses on retranslating the hedged foreign currency denominated borrowings. The Group applies a hedge ratio of 1:1 for its cross-currency interest rate swaps. The main sources of ineffectiveness relating to foreign currency exchange contracts (forwards and swaps) that are designated as hedging spot foreign currency risk are timing differences and credit risk. The main sources of ineffectiveness relating to cross- currency interest rate swaps are differences in the critical terms, differences in repricing dates, foreign currency basis spread, and credit risk. Interest rate risk The Group has exposure to interest rate risk, principally in relation to variable rate debt, cash and cash equivalents and the revolving credit facility (RCF), should it be drawn. The returns generated on the Group\u2019s cash balance, or payable on amounts drawn on the RCF, are exposed to movements in short-term interest rates. The Group actively manages cash balances to protect against adverse changes in interest rates whilst retaining liquidity. Further information about the Group\u2019s variable rate debt instruments (including the RCF) and their repayment schedules is provided in note 4.2. Interest rate sensitivity The sensitivity analysis below has been determined based on the exposure to interest rates for both derivative and non-derivative financial instruments at the reporting date. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the reporting date was outstanding for the whole year. The analysis below shows what the impact on the current and previous year\u2019s profit after tax and other components of equity would have been for a reasonably possible increase or decrease in interest rates. For interest rate derivatives designated into hedge relationships the analysis includes the impact of recycling amounts from the hedge reserve. The analysis assumes all other variables are held constant.
Impact on other components
Impact on profit after tax of equity, net of tax
100 basis points 100 basis points 100 basis points 100 basis points
increase decrease increase decrease
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2024
Variable rate debt \u2013 hedged
(5.6)
5.6
\u2013
\u2013
Interest rate swaps
5.6
(5.6)
9.8
(9.8)
Net impact
\u2013
\u2013
9.8
(9.8)
At 31 December 2023
Variable rate debt \u2013 unhedged
(1.2)
1.2
\u2013
\u2013
Variable rate debt \u2013 hedged
(4.2)
4.2
\u2013
\u2013
Interest rate swaps
4.2
(4.2)
8 .1
(8 .1)
Net impact
(1.2)
1.2
8 .1
(8 .1)
An increase or decrease in interest rates would affect profit after tax as a result of the impact on the interest payable in the period on any variable rate debt. The Group has reduced its exposure to interest rate risk on variable rate debt through the use of floating-to- fixed interest rate and cross-currency swaps. These swaps are designated as hedging instruments under cash flow hedge accounting and therefore a change in interest rates would not have a significant impact on profit after tax as the recycling of gains and losses on these swaps would generally offset the impact of changes in interest rates on the Group\u2019s variable rate debt. Other components of equity are sensitive to an increase or decrease in interest rates due to the impact changes in interest rates has on the valuation of these floating-to-fixed interest rate and cross-currency swaps. These fair value changes impact the hedge reserve. Other components of equity are sensitive to an increase or decrease in interest rates due to the impact changes in interest rates has on the valuation of these floating-to-fixed interest rate swaps. These fair value changes impact the hedge reserve. Certain amounts of the Group\u2019s variable rate debt and interest rate swaps have a floor of 0% for the benchmark interest rate. In the prior year the Group had CAD denominated debt that had a variable rate based on Canadian Dollar Offered Rate (CDOR). At 31 December 2023, no swaps were in place to hedge the interest risk on the CAD denominated debt. Therefore, in relation to this debt in the prior year, a change in interest rate would have had an impact on profit after tax but not on other components of equity. During the prior year the Group extended the maturity of the CAD term loan facility to January 2026. As part of the extension the Group agreed with the lenders to transition the floating-rate to Canadian Overnight Repo Rate Average (CORRA) plus a credit adjustment spread. At 31 December 2024, the Group had entered into a CORRA floating-to-fixed cross-currency interest rate swap hedging the CAD denominated debt. As such, in the current year a change in interest rate would have no impact on profit after tax as the movement in debt would be offset by the recycling of the cash flow hedge, but would have an impact on other components of equity due to fair value changes in the value of the derivative impacting the hedge reserve. Interest rate risk management The Group has a risk management policy in place relating to interest rate risk. The Group policy permits the use of hedging instruments in order to hedge up to 100% of the Group\u2019s current and forecast interest rate exposure. Interest rate risk hedge accounting The Group designates certain interest rate swaps as hedging instruments of the interest rate risk of variable rate borrowings. Gains and losses on the interest payments on interest rate swaps are released to interest payable and similar charges at the same time as the interest is expensed on the related hedged borrowings. The Group applies a hedge ratio of 1:1 to its interest rate swaps. The main sources of ineffectiveness relating to interest rate hedges are differences in the critical terms, differences in repricing dates, and credit risk. Hedge accounting information The Group has Sterling Overnight Index Average (SONIA) floating-to-fixed interest rate swaps to fix the interest payments on the following facilities: \u00a350.0 million of the UK infrastructure private placement facility (2019), \u00a398.0 million of the UK infrastructure private placement facility (2020), two \u00a350.0 million tranches of the GBP and EUR term loan facility (2024), \u00a3125.0 million of the GBP term loan facility (2024) and the \u00a350.0 million GBP term loan facility (2024). The Group has Euro Interbank Offered Rate (EURIBOR) floating-to-fixed interest rate swaps to fix the principal and interest payments on \u20ac70.0 million of the UK infrastructure private placement facility (2020). The Group has EURIBOR floating-to-fixed interest rate swaps to fix the interest payments on \u20ac185.0 million of the GBP and EUR term loan facility (2024). The Group has separately taken out \u20ac185.0 million notional value of foreign exchange forwards in order to fix the sterling cash flows payable on the principal repayment. The Group has Canadian Overnight Repo Rate (CORRA) floating-to-fixed interest rate swaps to fix the interest payments on the C$200.0 million CAD term loan facility. The Group has separately taken out C$200.0 million notional value of foreign exchange forwards in order to fix the sterling cash flows payable on the principal repayment. The Group has taken out fixed-to-fixed cross-currency interest rate swaps to hedge the future cash flows associated with the following facilities: \u20ac350.0 million 2029 and \u20ac143.8 million 2025 fixed rate EUR loan notes and \u20ac31.5 million of the UK infrastructure private placement facility (2020). As at 31 December 2024, the Group has fixed in sterling all interest and principal payments on variable rate and foreign currency denominated borrowings through the use of interest rate swaps, cross-currency interest rate swaps, and foreign currency exchange forwards and swaps, as described above. See note 4.2 for further details on the Group\u2019s borrowings. A summary of amounts relating to the Group\u2019s hedge accounting of foreign currency risk and interest rate risk are presented in the table below. The information is disaggregated by risk type. Hedges of biomass purchases, principal repayments on borrowings hedged using foreign currency forwards or swaps, and fixed-to-fixed cross currency interest rate swaps are designated as hedges of foreign currency risk. Interest rate swaps are designated as hedges of interest rate risk. Floating-to-fixed cross-currency interest rate swaps are designated as hedges of both foreign currency and interest rate risk. The average forward rates quoted below only reflect the rates applicable to the portion of the Group\u2019s foreign currency hedging instruments that qualify for hedge accounting in accordance with IFRS 9. The rates do not reflect the overall average rate of the Group\u2019s total portfolio of derivatives that are used to fix the sterling value of future cash flows. A reconciliation of reserves and the time period when the hedge will affect profit or loss, or will be transferred from equity and included in the initial cost of the non-financial item, are disclosed in notes 7.3 and 7.4.
31 December 2024
Balance in the
hedge reserve
for hedging
Cumulative relationships for
change in fair which hedge
value of hedging Balance in the accounting is
instrument since hedge reserve no longer
inception used Fair value Fair value for continuing applied
Notional Weighted for measuring recognised in recognised in hedges net of net of deferred
value of average ineffectiveness balance sheet \u2013 balance sheet \u2013 deferred tax \u2013 tax \u2013 (debit)/
contracts fixed/variable \u2013 gains/(losses) assets liabilities (debit)/credit credit
Exposure ($m, \u20acm, C$m)
rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency risk on
biomass purchases
January
2025
Purchases in foreign \u2013 February
currency \u2013 USD
1,430.5
$1.27
2027
18.6
20.7
(2 .1)
10.7
\u2013
January
2025
Purchases in foreign \u2013 October
currency \u2013 EUR
270.0
\u20ac 1.15
2026
(6.3)
\u2013
(6.3)
(4.5)
\u2013
January
2025
Purchases in foreign \u2013 March
currency \u2013 CAD
166.0
C$1.67
2027
(5.1)
0.3
(5.4)
(5.8)
\u2013
Foreign currency risk on
borrowings
Interest and principal
payments \u2013 USD
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
November
2025
Interest and principal \u20ac1.14 / \u2013 April
payments \u2013 EUR
525.3
6.48% 2028
(10.4)
\u2013
(19.7)
4.4
\u2013
February
2027
\u2013 March
Principal payments \u2013 EUR
185.0
\u20ac 1.11
2028
(5.1)
\u2013
(5.1)
\u2013
\u2013
January
Principal payments \u2013 CAD
200.0
C$1.68
2026
(5.7)
\u2013
(5.7)
\u2013
\u2013
Foreign currency and
interest rate risk on
borrowings
January
2026
Interest and principal \u20ac1.09/ \u2013 March
payments \u2013 EUR
255.0
4.04% 2028
(8.6)
\u2013
(8.7)
(2.7)
\u2013
January
Interest payments \u2013 CAD
200.0
6.05%
2026
(1.5)
\u2013
(1.8)
(1.3)
\u2013
Interest rate risk on
borrowings
January
2026
\u2013 April
Variable rate GBP debt
423.0
2.89%
2028
6.1
7.1
(0.4)
4.3
\u2013
31 December 2024
Cumulative
change in fair Amount
value Hedge Amount Amount reclassified due
of hedged ineffectiveness transferred to reclassified to the hedged Line item in the
item since Hedging losses recognised in Line item in the the cost or due to the future cash income
inception used recognised in the income income carrying hedged flows being no statement/
for measuring OCI in the statement statement value item affecting longer expected balance sheet
ineffectiveness \u2013 period \u2013 in the period \u2013 that includes of a non- profit or loss \u2013 to occur \u2013 affected by the
gains/(losses) gains/(losses) gains/(losses) hedge financial asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Foreign currency risk
on biomass purchases
Purchases in foreign
currency \u2013 USD
18.6
19.7
\u2013
Cost of sales
4.3
\u2013
\u2013
Inventories
Purchases in foreign
currency \u2013 EUR
(6.3)
(7.1)
\u2013
Cost of sales
0.9
\u2013
\u2013
Inventories
Purchases in foreign
currency \u2013 CAD
(5.1)
(5.9)
\u2013
Cost of sales
(0.4)
\u2013
\u2013
Inventories
Foreign currency risk
on borrowings Interest Interest
payable payable
Interest and principal \u2013 and similar
\u2013
(0.7)
\u2013
and similar
payments \u2013 USD
\u2013
(5.6)
charges charges
Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
9.3
\u2013
(losses)/gains
Interest Interest
payable payable
Interest and principal \u2013 and similar
\u2013
7.4
\u2013
and similar
payments \u2013 EUR
(11.3)
( 7.5)
charges charges
Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
6.4
\u2013
(losses)/gains
Foreign Foreign
Principal payments \u2013 exchange exchange
EUR
(5.1)
(6.0)
\u2013
(losses)/gains
\u2013
6.0
\u2013
(losses)/gains
Foreign Foreign
Principal payments \u2013 exchange exchange
CAD
(5.7)
( 7.4)
\u2013
(losses)/gains
\u2013
7.4
\u2013
(losses)/gains
Foreign currency and
interest rate risk on
borrowings
Interest Interest
payable payable
Interest and principal \u2013 and similar
\u2013
(2.5)
\u2013
and similar
payments \u2013 EUR
(8.7)
(6.4)
 charges charges
Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
3.4
\u2013
(losses)/gains
Interest Interest
payable payable
Interest payments \u2013 and similar and similar
CAD
(1.6)
(1.3)
\u2013
 charges
\u2013
(0.4)
\u2013
 charges
Interest rate risk on
borrowings
Interest Interest
payable payable
and similar and similar
Variable rate GBP debt
10.8
(2.3)
\u2013
 charges
\u2013
(12.0)
\u2013
 charges
31 December 2023
Balance in the
hedge reserve
for hedging
Cumulative relationships for
change in fair which hedge
value of hedging Balance in the accounting is
instrument since hedge reserve no longer
inception used Fair value Fair value for continuing applied
Notional Weighted for measuring recognised in recognised in hedges net of net of deferred
value of average ineffectiveness balance sheet \u2013 balance sheet \u2013 deferred tax \u2013 tax \u2013 (debit)/
contracts fixed/variable \u2013 gains/(losses) assets liabilities (debit)/credit credit
Exposure ($m, \u20acm, C$m)
rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency risk on
biomass purchases
January
2024
Purchases in foreign \u2013 January
currency \u2013 USD
2 ,12 6.9
$1.29
2027
14 .1
35.6
(21.5)
( 7.3)
\u2013
January
2024
Purchases in foreign \u2013 April
currency \u2013 EUR
47. 0
\u20ac 1.15
2024
\u2013
\u2013
\u2013
0.2
\u2013
January
2024
Purchases in foreign \u2013 March
currency \u2013 CAD
116.6
C$1.68
2027
\u2013
2.1
(2 .1)
(1.3)
\u2013
Foreign currency risk on
borrowings
Interest and principal $1.36/ November
payments \u2013 USD
500.0
6 .13% 2024
22.1
2.7
(21.1)
(2.4)
\u2013
November
2024
Interest and principal \u20ac1.10/ \u2013 November
payments \u2013 EUR
281.5
4.57% 2026
(1.2)
\u2013
(12.7)
(0.2)
\u2013
January
Principal payments \u2013 CAD
200.0
C$1.68
2026
(0 .1)
\u2013
(0 .1)
0.2
\u2013
Foreign currency and
interest rate risk on
borrowings
January
2024
Interest and principal \u20ac1.09/ \u2013 January
payments \u2013 EUR
95.0
2.05% 2026
(1.6)
\u2013
(1.3)
1.4
\u2013
Interest rate risk on
borrowings
January
2024
\u2013 January
Variable rate GBP debt
473.0
0.88%
2026
20.2
22.7
\u2013
15.1
\u2013
31 December 2023
Amount
Cumulative reclassified due
change in fair Hedge Amount Amount to the hedged
value of hedged ineffectiveness transferred to reclassified future cash Line item in the
item since Hedging losses recognised in Line item in the the cost or due to the flows being income
inception used recognised in the income income carrying hedged no longer statement/
for measuring OCI in the statement statement value item affecting expected to balance sheet
ineffectiveness \u2013 period \u2013 in the period \u2013 that includes of a non- profit or loss \u2013 occur \u2013 affected by the
gains/(losses) gains/(losses) gains/(losses) hedge financial asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Foreign currency risk
on biomass purchases
Purchases in foreign
currency \u2013 USD
14 .1
(68.0)
\u2013
Cost of sales
(42.5)
\u2013
\u2013
Inventories
Purchases in foreign
currency \u2013 EUR
\u2013
(3.3)
\u2013
Cost of sales
(0.9)
\u2013
\u2013
Inventories
Purchases in foreign
currency \u2013 CAD
\u2013
(8.8)
\u2013
Cost of sales
\u2013
\u2013
\u2013
Inventories
Hedges of foreign
currency risk on
borrowings
Interest Interest
payable payable
and similar and similar
Interest and principal
35.9
(22.9)
\u2013 charges
\u2013
(3.3)
\u2013
 charges
payments \u2013 USD Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
822.0
\u2013
(losses)/gains
Interest Interest
payable payable
and similar and similar
Interest and principal
(1.2)
(9.7)
\u2013 charges
\u2013
4.9
\u2013
 charges
payments \u2013 EUR Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
5.6
\u2013
(losses)/gains
Foreign Foreign
Principal payments \u2013 exchange exchange
CAD
(0.1)
(0.2)
\u2013
(losses)/gains
\u2013
\u2013
\u2013
(losses)/gains
Foreign currency and
interest rate risk on
borrowings
Interest Interest
payable payable
and similar and similar
Interest and principal
(3.9)
(3.6)
\u2013 charges
\u2013
(1.9)
\u2013
 charges
payments \u2013 EUR Foreign Foreign
exchange exchange
\u2013 (losses)/gains
\u2013
1.9
\u2013
(losses)/gains
Interest rate risk on
borrowings
Interest Interest
payable payable
and similar and similar
Variable rate GBP debt
23.4
(31.5)
\u2013
 charges
\u2013
16.0
\u2013
 charges
7.2.3 Inflation risk The Group is exposed to inflation risk on elements of its revenues and cost base. The Group\u2019s ROC revenue is linked to UK RPI and its CfD and Capacity Market income are linked to UK CPI (see note 2.2 for further information on ROC and CfD income). In addition, a proportion of the Group\u2019s fuel costs are linked to either US or Canadian CPI. The Group has UK CPI and RPI swaps to hedge certain revenues linked to inflation. Inflation risk sensitivity The sensitivity analysis below has been determined based on the exposure to inflation rates on inflation-linked derivatives at the reporting date. The analysis below shows the impact on profit after tax and other components of equity of a reasonably possible increase or decrease in inflation rates as at 31 December. The analysis assumes all other variables are held constant.
Impact on other components
Impact on profit after tax of equity, net of tax
200 basis points 200 basis points 200 basis points 200 basis points
increase decrease increase decrease
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2024
UK CPI inflation swaps
\u2013
\u2013
(25.7)
22 .1
UK RPI inflation swaps
(1.0)
1.0
(10.9)
10.9
Impact on other components
Impact on profit after tax of equity, net of tax
200 basis points 200 basis points 200 basis points 200 basis points
increase decrease increase decrease
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2023
UK CPI inflation swaps
\u2013
\u2013
(31.3)
26.6
UK RPI inflation swaps
(5.6)
5.5
(24.3)
23.9
The Group designates the UK CPI and RPI inflation swaps as hedging instruments under cash flow hedge accounting. As such, other components of equity are sensitive to the impact on inflation linked derivatives recognised in the hedge reserve of an increase or decrease in UK inflation rates. Profit after tax is sensitive to an increase or decrease in UK inflation rates due to the impact these rate changes would have on the over-hedged portion of the inflation swaps, with this impact being recognised directly in the Consolidated income statement. Inflation risk management The Group has a risk management policy in place relating to inflation risk. The Group policy permits the use of hedging instruments in order to hedge up to 100% of the Group\u2019s current and forecast inflation exposure. Hedge accounting The Group has contracts for which the revenue is contractually linked to UK CPI inflation. The Group has designated this risk component as a hedged item. UK CPI and UK RPI inflation swaps are utilised as the hedging instruments for this inflation risk. Gains and losses on the inflation swaps are held in the hedge reserve and reclassified to revenue in the Consolidated income statement at the same time the revenue from the inflation-linked contracts impacts profit or loss or if the hedged item is no longer expected to occur. The Group applies a hedge ratio of 1:1 for its inflation swaps. The main sources of ineffectiveness relating to the inflation swaps are the basis point difference between the RPI swaps and the CPI-linked revenues they are hedging, calculation differences, and the hedged item no longer being expected to occur. Calculation differences occur due to differences between the reference months used to calculate the inflationary increase per the swaps and the reference months used to calculate the inflationary increase for the CPI-linked revenues. During the current year the Group recognised \u00a38.7 million (2023: \u00a310.7 million) of ineffectiveness due to the basis difference between the RPI hedging instruments and the CPI exposure. In the prior year as a result of a decrease in the forecast CfD generation, the Group recycled \u00a39.3 million of losses on hedge accounted inflation-linked derivative contracts to the Consolidated income statement, due to the hedged item no longer being expected to occur. There has been no decrease in forecast CfD generation in the current year and as such no amounts have been recycled due to the hedged item no longer being expected to occur. In the current year, as a result of the updated 2025 commissioning dates, the Group recycled \u00a31.2 million of losses on hedge accounted inflation-linked OCGT Capacity Market derivative contracts to the Consolidated income statement, due to the hedged item no longer being expected to occur. The summary of the amounts relating to the hedging instruments and any related ineffectiveness in the period is presented in the table below.
31 December 2024
Balance in the
hedge reserve
for hedging
Cumulative relationships for
change in fair which hedge
value of hedging Balance in the accounting is
instrument since hedge reserve no longer
inception used Fair value Fair value for continuing applied
Notional for measuring recognised in recognised in hedges net of net of deferred
value of Weighted ineffectiveness \u2013 balance sheet \u2013 balance sheet \u2013 deferred tax \u2013 tax \u2013 (debit)/
contracts average gains/(losses) assets liabilities (debit)/credit credit
Exposure \u00a3m
fixed rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Inflation April
2026
\u2013 July
30.4
CPI \u2013 2.70%
2038
(18.6)
\u2013
(18.6)
(14.5)
10.5
Inflation-linked sales April
contracts \u2013 CPI
440.0
RPI \u2013 3.65%
2026
(75.4)
\u2013
(165.4)
(34.9)
\u2013
31 December 2024
Cumulative
change in fair
value Hedge Amount Amount
of hedged Hedging ineffectiveness Amount reclassified reclassified due Line item in
item since gains recognised in transferred to due to the to the hedged the income
inception used recognised in the income Line item in the the cost or hedged future cash flows statement/
for measuring OCI in the statement income statement carrying value item affecting being no longer balance sheet
ineffectiveness \u2013 period \u2013 in the period \u2013 that includes of a non- profit or loss \u2013 expected to occur affected by the
gains/(losses) gains/(losses) gains/(losses) hedge financial asset (gains)/losses \u2013 (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Inflation
Inflation-linked sales
(18.6)
(1.3)
\u2013
Revenue
\u2013
(3.1)
1.2
Revenue
contracts \u2013 CPI
(47.9)
(2 .1)
(8.7)
Revenue
\u2013
27.1
\u2013
Revenue
31 December 2023
Balance in the
hedge reserve
Cumulative change for hedging
in fair relationships for
value of hedging Balance in the which hedge
instrument since hedge reserve accounting is
inception used Fair value Fair value for continuing no longer applied
Notional for measuring recognised in recognised in hedges net of net of deferred
value of Weighted ineffectiveness \u2013 balance sheet \u2013 balance sheet \u2013 deferred tax \u2013 tax \u2013 (debit)/
contracts average gains/(losses) assets liabilities (debit)/credit credit
Exposure \u00a3m
fixed rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Inflation April
2026
\u2013 July
30.4
CPI \u2013 2.72%
2038
(19.7)
\u2013
(19.7)
(15.3)
13.6
Inflation-linked sales April
contracts \u2013 CPI
440.0
RPI \u2013 3.46%
2026
(100.7)
\u2013
(230.7)
(53.6)
\u2013
31 December 2023
Cumulative
change in fair
value Hedge Amount Amount
of hedged ineffectiveness Amount reclassified reclassified due Line item in
item since Hedging losses recognised in transferred to due to the to the hedged the income
inception used recognised the income Line item in the the cost or hedged future cash flows statement/
for measuring in OCI statement income statement carrying value item affecting being no longer balance sheet
ineffectiveness \u2013 in the period \u2013 in the period \u2013 that includes of a non- profit or loss \u2013 expected to occur affected by the
gains/(losses) gains/(losses) gains/(losses) hedge financial asset (gains)/losses \u2013 (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Inflation
Inflation-linked sales
(19.7)
3.3
\u2013
Revenue
\u2013
(0.9)
\u2013
Revenue
contracts \u2013 CPI
(75.2)
(3.5)
(10.7)
Revenue
\u2013
17.5
9.3
Revenue
", "dimensions": { "concept": "ifrs-full:DisclosureOfMarketRiskExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-662": { "value": "Commodity price sensitivity The sensitivity analysis below has been determined based on the exposure to commodity prices and the impact on profit after tax and other components of equity of reasonably possible increases or decreases in commodity prices as at 31 December. The analysis assumes all other variables were held constant. Financial and commodity markets saw significant volatility and high prices in 2022. During 2023, the high prices seen in 2022 generally reversed and these price reductions have continued into 2024, but in the most part prices are still above historical averages. See the Principal risks and uncertainties section on page 73 for further details on UK energy market conditions. As a result of these fluctuating market conditions, the valuation of the Group\u2019s commodity derivative financial instruments, in particular power, gas and oil, have seen large reversals of the amounts previously recognised as market prices have continued to reduce, whilst older trades with higher prices have also matured. Sensitivities for a 10% change in prices have been included in the current and prior year. The impact of smaller and larger price changes can be extrapolated from the below table as changes in prices have a relatively linear relationship with the impact on profit after tax and on the hedge reserve.
Impact on other components
Impact on profit after tax of equity, net of tax
10% decrease 10% increase 10% decrease 10% increase
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2024
Power
\u2013
\u2013
43.0
(43.0)
Carbon
1.6
(1.6)
\u2013
\u2013
Gas
10.8
(10.8)
\u2013
\u2013
Oil
(4.8)
4.8
\u2013
\u2013
Freight
(0.2)
0.2
\u2013
\u2013
Impact on other components
Impact on profit after tax of equity, net of tax
10% decrease 10% increase 10% decrease 10% increase
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2023
Power
\u2013
\u2013
34.9
(34.9)
Carbon
2.8
(2.8)
(0.2)
0.2
Gas
11.1
(11.1)
\u2013
\u2013
Oil
( 7.9)
7.9
\u2013
\u2013
The Group designates certain derivatives as hedging instruments under cash flow hedge accounting. As such, other components of equity are sensitive to increases or decreases in commodity price risk and the impact on the hedge reserve resulting from these movements. Profit after tax is sensitive to increases or decreases in commodity prices as a result of the impact on the fair value of derivative financial instruments not designated as hedging instruments under cash flow hedge accounting. Foreign currency sensitivity The analysis below shows the impact on profit after tax and other components of equity of reasonably possible strengthening or weakening of currencies against GBP. The sensitivity analysis below shows the impact of a change in foreign exchange rates as at 31 December on outstanding monetary items denominated in foreign currencies and the valuation of foreign currency derivative instruments. For foreign currency derivatives designated into hedge relationships the analysis includes the impact of recycling amounts from the hedge reserve if a change in foreign exchange rates would result in the recycling of gains and losses due to the item they are hedging impacting profit or loss. The analysis assumes all other variables were held constant.
Impact on other components
Impact on profit after tax of equity, net of tax
10% 10% 10% 10%
strengthening weakening strengthening weakening
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2024
USD
66.8
(57.4)
(75.9)
(75.9)
EUR
10.1
(8.9)
(19.1)
(27.4)
CAD
1.2
(1.0)
(6.6)
(6.9)
Impact on other components
Impact on profit after tax of equity, net of tax
10% 10% 10% 10%
strengthening weakening strengthening weakening
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2023
USD
84.5
(53.5)
125.3
(100.8)
EUR
15.9
(13.2)
3.9
(3.6)
CAD
0.3
\u2013
4.8
(4.0)
The Group designates certain foreign currency derivatives as hedging instruments under cash flow hedge accounting. As such, other components of equity are sensitive to the strengthening or weakening of other currencies in relation to the impact on the hedge reserve of these movements. Profit after tax is sensitive to the strengthening or weakening of other currencies as a result of the impact on the fair value of foreign currency derivatives not designated as hedging instruments under cash flow hedge accounting. Interest rate sensitivity The sensitivity analysis below has been determined based on the exposure to interest rates for both derivative and non-derivative financial instruments at the reporting date. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the reporting date was outstanding for the whole year. The analysis below shows what the impact on the current and previous year\u2019s profit after tax and other components of equity would have been for a reasonably possible increase or decrease in interest rates. For interest rate derivatives designated into hedge relationships the analysis includes the impact of recycling amounts from the hedge reserve. The analysis assumes all other variables are held constant.
Impact on other components
Impact on profit after tax of equity, net of tax
100 basis points 100 basis points 100 basis points 100 basis points
increase decrease increase decrease
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2024
Variable rate debt \u2013 hedged
(5.6)
5.6
\u2013
\u2013
Interest rate swaps
5.6
(5.6)
9.8
(9.8)
Net impact
\u2013
\u2013
9.8
(9.8)
At 31 December 2023
Variable rate debt \u2013 unhedged
(1.2)
1.2
\u2013
\u2013
Variable rate debt \u2013 hedged
(4.2)
4.2
\u2013
\u2013
Interest rate swaps
4.2
(4.2)
8 .1
(8 .1)
Net impact
(1.2)
1.2
8 .1
(8 .1)
An increase or decrease in interest rates would affect profit after tax as a result of the impact on the interest payable in the period on any variable rate debt. The Group has reduced its exposure to interest rate risk on variable rate debt through the use of floating-to- fixed interest rate and cross-currency swaps. These swaps are designated as hedging instruments under cash flow hedge accounting and therefore a change in interest rates would not have a significant impact on profit after tax as the recycling of gains and losses on these swaps would generally offset the impact of changes in interest rates on the Group\u2019s variable rate debt. Other components of equity are sensitive to an increase or decrease in interest rates due to the impact changes in interest rates has on the valuation of these floating-to-fixed interest rate and cross-currency swaps. These fair value changes impact the hedge reserve. Other components of equity are sensitive to an increase or decrease in interest rates due to the impact changes in interest rates has on the valuation of these floating-to-fixed interest rate swaps. These fair value changes impact the hedge reserve. Certain amounts of the Group\u2019s variable rate debt and interest rate swaps have a floor of 0% for the benchmark interest rate. In the prior year the Group had CAD denominated debt that had a variable rate based on Canadian Dollar Offered Rate (CDOR). At 31 December 2023, no swaps were in place to hedge the interest risk on the CAD denominated debt. Therefore, in relation to this debt in the prior year, a change in interest rate would have had an impact on profit after tax but not on other components of equity. During the prior year the Group extended the maturity of the CAD term loan facility to January 2026. As part of the extension the Group agreed with the lenders to transition the floating-rate to Canadian Overnight Repo Rate Average (CORRA) plus a credit adjustment spread. At 31 December 2024, the Group had entered into a CORRA floating-to-fixed cross-currency interest rate swap hedging the CAD denominated debt. As such, in the current year a change in interest rate would have no impact on profit after tax as the movement in debt would be offset by the recycling of the cash flow hedge, but would have an impact on other components of equity due to fair value changes in the value of the derivative impacting the hedge reserve.
Inflation risk sensitivity
The sensitivity analysis below has been determined based on the exposure to inflation rates on inflation-linked derivatives at the
reporting date.
The analysis below shows the impact on profit after tax and other components of equity of a reasonably possible increase or decrease
in inflation rates as at 31 December. The analysis assumes all other variables are held constant.
Impact on other components
Impact on profit after tax of equity, net of tax
200 basis points 200 basis points 200 basis points 200 basis points
increase decrease increase decrease
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2024
UK CPI inflation swaps
\u2013
\u2013
(25.7)
22 .1
UK RPI inflation swaps
(1.0)
1.0
(10.9)
10.9
Impact on other components
Impact on profit after tax of equity, net of tax
200 basis points 200 basis points 200 basis points 200 basis points
increase decrease increase decrease
\u00a3m \u00a3m \u00a3m \u00a3m
At 31 December 2023
UK CPI inflation swaps
\u2013
\u2013
(31.3)
26.6
UK RPI inflation swaps
(5.6)
5.5
(24.3)
23.9
The Group designates the UK CPI and RPI inflation swaps as hedging instruments under cash flow hedge accounting. As such, other
components of equity are sensitive to the impact on inflation linked derivatives recognised in the hedge reserve of an increase or
decrease in UK inflation rates. Profit after tax is sensitive to an increase or decrease in UK inflation rates due to the impact these rate
changes would have on the over-hedged portion of the inflation swaps, with this impact being recognised directly in the Consolidated
income statement.
", "dimensions": { "concept": "ifrs-full:SensitivityAnalysisForEachTypeOfMarketRisk", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-725": { "value": "Hedge accounting The Group has cash flow hedges relating to commodity contracts, principally commitments to sell and purchase power. In the prior year, cash flow hedge accounting was also applied to certain carbon purchases. Amounts are recognised in the hedge reserve as the designated contracts are marked-to-market at each reporting date for the effective portion of the hedge, which is generally 100% of the relevant contract. Amounts held within the hedge reserve are then recycled to the Consolidated income statement as the hedged item impacts profit or loss. For power sales and purchase contracts, this is when the underlying power is delivered. Included in amounts released from equity are current and prior period gains and losses on financial instruments for which the hedged transaction has now occurred and these gains and losses have been released to the Consolidated income statement in the period. No ineffectiveness was recognised in the Consolidated income statement on continuing commodity hedges in the current or prior year. Due to the use of \u201call-in-one\u201d hedges, this results in the movement in fair value for the hedged items and hedging instruments being identical. The only sources of ineffectiveness regarding the \u201call-in-one\u201d hedges would be if delivery of the commodities was no longer expected to occur (which would result in hedge accounting being discontinued) and credit risk. The Group applies a hedge ratio of 1:1 to its commodity risk cash flow hedges. Hedge accounting information The Group has Sterling Overnight Index Average (SONIA) floating-to-fixed interest rate swaps to fix the interest payments on the following facilities: \u00a350.0 million of the UK infrastructure private placement facility (2019), \u00a398.0 million of the UK infrastructure private placement facility (2020), two \u00a350.0 million tranches of the GBP and EUR term loan facility (2024), \u00a3125.0 million of the GBP term loan facility (2024) and the \u00a350.0 million GBP term loan facility (2024). The Group has Euro Interbank Offered Rate (EURIBOR) floating-to-fixed interest rate swaps to fix the principal and interest payments on \u20ac70.0 million of the UK infrastructure private placement facility (2020). The Group has EURIBOR floating-to-fixed interest rate swaps to fix the interest payments on \u20ac185.0 million of the GBP and EUR term loan facility (2024). The Group has separately taken out \u20ac185.0 million notional value of foreign exchange forwards in order to fix the sterling cash flows payable on the principal repayment. The Group has Canadian Overnight Repo Rate (CORRA) floating-to-fixed interest rate swaps to fix the interest payments on the C$200.0 million CAD term loan facility. The Group has separately taken out C$200.0 million notional value of foreign exchange forwards in order to fix the sterling cash flows payable on the principal repayment. The Group has taken out fixed-to-fixed cross-currency interest rate swaps to hedge the future cash flows associated with the following facilities: \u20ac350.0 million 2029 and \u20ac143.8 million 2025 fixed rate EUR loan notes and \u20ac31.5 million of the UK infrastructure private placement facility (2020). As at 31 December 2024, the Group has fixed in sterling all interest and principal payments on variable rate and foreign currency denominated borrowings through the use of interest rate swaps, cross-currency interest rate swaps, and foreign currency exchange forwards and swaps, as described above. See note 4.2 for further details on the Group\u2019s borrowings. A summary of amounts relating to the Group\u2019s hedge accounting of foreign currency risk and interest rate risk are presented in the table below. The information is disaggregated by risk type. Hedges of biomass purchases, principal repayments on borrowings hedged using foreign currency forwards or swaps, and fixed-to-fixed cross currency interest rate swaps are designated as hedges of foreign currency risk. Interest rate swaps are designated as hedges of interest rate risk. Floating-to-fixed cross-currency interest rate swaps are designated as hedges of both foreign currency and interest rate risk. The average forward rates quoted below only reflect the rates applicable to the portion of the Group\u2019s foreign currency hedging instruments that qualify for hedge accounting in accordance with IFRS 9. The rates do not reflect the overall average rate of the Group\u2019s total portfolio of derivatives that are used to fix the sterling value of future cash flows. A reconciliation of reserves and the time period when the hedge will affect profit or loss, or will be transferred from equity and included in the initial cost of the non-financial item, are disclosed in notes 7.3 and 7.4. Hedge accounting The Group has contracts for which the revenue is contractually linked to UK CPI inflation. The Group has designated this risk component as a hedged item. UK CPI and UK RPI inflation swaps are utilised as the hedging instruments for this inflation risk. Gains and losses on the inflation swaps are held in the hedge reserve and reclassified to revenue in the Consolidated income statement at the same time the revenue from the inflation-linked contracts impacts profit or loss or if the hedged item is no longer expected to occur. The Group applies a hedge ratio of 1:1 for its inflation swaps. The main sources of ineffectiveness relating to the inflation swaps are the basis point difference between the RPI swaps and the CPI-linked revenues they are hedging, calculation differences, and the hedged item no longer being expected to occur. Calculation differences occur due to differences between the reference months used to calculate the inflationary increase per the swaps and the reference months used to calculate the inflationary increase for the CPI-linked revenues. During the current year the Group recognised \u00a38.7 million (2023: \u00a310.7 million) of ineffectiveness due to the basis difference between the RPI hedging instruments and the CPI exposure. In the prior year as a result of a decrease in the forecast CfD generation, the Group recycled \u00a39.3 million of losses on hedge accounted inflation-linked derivative contracts to the Consolidated income statement, due to the hedged item no longer being expected to occur. There has been no decrease in forecast CfD generation in the current year and as such no amounts have been recycled due to the hedged item no longer being expected to occur. In the current year, as a result of the updated 2025 commissioning dates, the Group recycled \u00a31.2 million of losses on hedge accounted inflation-linked OCGT Capacity Market derivative contracts to the Consolidated income statement, due to the hedged item no longer being expected to occur. The Group designates certain hedging instruments that are used to address commodity price risk, foreign exchange risk, interest rate risk and inflation rate risk as cash flow hedges. At the inception of the hedge, the relationship between the hedging instrument and hedged item is documented, along with its risk management objectives. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging instruments used in hedging transactions are effective in offsetting changes in cash flows of the hedged items. Changes in the fair value of contracts designated into such hedging relationships are recognised within the hedge reserve to the extent they are effective. Amounts accumulated in the hedge reserve are reclassified in the periods when the hedged item affects profit or loss. If the hedged item results in the recognition of a non-financial asset then the amount accumulated in the hedge reserve is transferred and included within the initial cost of the asset. Where the Group has designated the spot foreign exchange risk as the hedged risk, the Group allocates unrealised gains and losses on the forward rate of hedge accounted foreign currency derivative contracts to a cost of hedging reserve in accordance with IFRS 9. A large proportion of the derivative contracts held relate to foreign currency exchange contracts, including forward contracts, options and swaps. Consistent with prior periods, for foreign currency exchange contracts hedging the purchase of inventory denominated in foreign currencies to which the Group has applied hedge accounting, the Group has continued to designate the change in the spot rate as the hedged risk in the Group\u2019s cash flow hedge relationships. The Group designates the cost of hedging \u2013 being the change in fair value associated with forward points including currency basis \u2013 to equity. All amounts within the cost of hedging reserve relate to foreign currency exchange risk. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForHedgingExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-630": { "value": "7.2.3 Inflation risk The Group is exposed to inflation risk on elements of its revenues and cost base. The Group\u2019s ROC revenue is linked to UK RPI and its CfD and Capacity Market income are linked to UK CPI (see note 2.2 for further information on ROC and CfD income). In addition, a proportion of the Group\u2019s fuel costs are linked to either US or Canadian CPI. The Group has UK CPI and RPI swaps to hedge certain revenues linked to inflation. Inflation risk sensitivity The sensitivity analysis below has been determined based on the exposure to inflation rates on inflation-linked derivatives at the reporting date. The analysis below shows the impact on profit after tax and other components of equity of a reasonably possible increase or decrease in inflation rates as at 31 December. The analysis assumes all other variables are held constant. Impact on other components Impact on profit after tax of equity, net of tax 200 basis points 200 basis points 200 basis points 200 basis points increase decrease increase decrease \u00a3m \u00a3m \u00a3m \u00a3m At 31 December 2024 UK CPI inflation swaps \u2013 \u2013 (25.7) 22 .1 UK RPI inflation swaps (1.0) 1.0 (10.9) 10.9 Impact on other components Impact on profit after tax of equity, net of tax 200 basis points 200 basis points 200 basis points 200 basis points increase decrease increase decrease \u00a3m \u00a3m \u00a3m \u00a3m At 31 December 2023 UK CPI inflation swaps \u2013 \u2013 (31.3) 26.6 UK RPI inflation swaps (5.6) 5.5 (24.3) 23.9 The Group designates the UK CPI and RPI inflation swaps as hedging instruments under cash flow hedge accounting. As such, other components of equity are sensitive to the impact on inflation linked derivatives recognised in the hedge reserve of an increase or decrease in UK inflation rates. Profit after tax is sensitive to an increase or decrease in UK inflation rates due to the impact these rate changes would have on the over-hedged portion of the inflation swaps, with this impact being recognised directly in the Consolidated income statement. Inflation risk management The Group has a risk management policy in place relating to inflation risk. The Group policy permits the use of hedging instruments in order to hedge up to 100% of the Group\u2019s current and forecast inflation exposure. Hedge accounting The Group has contracts for which the revenue is contractually linked to UK CPI inflation. The Group has designated this risk component as a hedged item. UK CPI and UK RPI inflation swaps are utilised as the hedging instruments for this inflation risk. Gains and losses on the inflation swaps are held in the hedge reserve and reclassified to revenue in the Consolidated income statement at the same time the revenue from the inflation-linked contracts impacts profit or loss or if the hedged item is no longer expected to occur. The Group applies a hedge ratio of 1:1 for its inflation swaps. The main sources of ineffectiveness relating to the inflation swaps are the basis point difference between the RPI swaps and the CPI-linked revenues they are hedging, calculation differences, and the hedged item no longer being expected to occur. Calculation differences occur due to differences between the reference months used to calculate the inflationary increase per the swaps and the reference months used to calculate the inflationary increase for the CPI-linked revenues. During the current year the Group recognised \u00a38.7 million (2023: \u00a310.7 million) of ineffectiveness due to the basis difference between the RPI hedging instruments and the CPI exposure. In the prior year as a result of a decrease in the forecast CfD generation, the Group recycled \u00a39.3 million of losses on hedge accounted inflation-linked derivative contracts to the Consolidated income statement, due to the hedged item no longer being expected to occur. There has been no decrease in forecast CfD generation in the current year and as such no amounts have been recycled due to the hedged item no longer being expected to occur. In the current year, as a result of the updated 2025 commissioning dates, the Group recycled \u00a31.2 million of losses on hedge accounted inflation-linked OCGT Capacity Market derivative contracts to the Consolidated income statement, due to the hedged item no longer being expected to occur. The summary of the amounts relating to the hedging instruments and any related ineffectiveness in the period is presented in the table below. 31 December 2024 Balance in the hedge reserve for hedging Cumulative relationships for change in fair which hedge value of hedging Balance in the accounting is instrument since hedge reserve no longer inception used Fair value Fair value for continuing applied Notional for measuring recognised in recognised in hedges net of net of deferred value of Weighted ineffectiveness \u2013 balance sheet \u2013 balance sheet \u2013 deferred tax \u2013 tax \u2013 (debit)/ contracts average gains/(losses) assets liabilities (debit)/credit credit Exposure \u00a3m fixed rate Maturity date \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Inflation April 2026 \u2013 July 30.4 CPI \u2013 2.70% 2038 (18.6) \u2013 (18.6) (14.5) 10.5 Inflation-linked sales April contracts \u2013 CPI 440.0 RPI \u2013 3.65% 2026 (75.4) \u2013 (165.4) (34.9) \u2013 31 December 2024 Cumulative change in fair value Hedge Amount Amount of hedged Hedging ineffectiveness Amount reclassified reclassified due Line item in item since gains recognised in transferred to due to the to the hedged the income inception used recognised in the income Line item in the the cost or hedged future cash flows statement/ for measuring OCI in the statement income statement carrying value item affecting being no longer balance sheet ineffectiveness \u2013 period \u2013 in the period \u2013 that includes of a non- profit or loss \u2013 expected to occur affected by the gains/(losses) gains/(losses) gains/(losses) hedge financial asset (gains)/losses \u2013 (gains)/losses transfer/ Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification Inflation Inflation-linked sales (18.6) (1.3) \u2013 Revenue \u2013 (3.1) 1.2Revenue contracts \u2013 CPI (47.9) (2 .1) (8.7) Revenue \u2013 27.1 \u2013 Revenue 31 December 2023 Balance in the hedge reserve Cumulative change for hedging in fair relationships for value of hedging Balance in the which hedge instrument since hedge reserve accounting is inception used Fair value Fair value for continuing no longer applied Notional for measuring recognised in recognised in hedges net of net of deferred value of Weighted ineffectiveness \u2013 balance sheet \u2013 balance sheet \u2013 deferred tax \u2013 tax \u2013 (debit)/ contracts average gains/(losses) assets liabilities (debit)/credit credit Exposure \u00a3m fixed rate Maturity date \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Inflation April 2026 \u2013 July 30.4 CPI \u2013 2.72% 2038 (19.7) \u2013 (19.7) (15.3) 13.6 Inflation-linked sales April contracts \u2013 CPI 440.0 RPI \u2013 3.46% 2026 (100.7) \u2013 (230.7) (53.6) \u2013 31 December 2023 Cumulative change in fair value Hedge Amount Amount of hedged ineffectiveness Amount reclassified reclassified due Line item in item since Hedging losses recognised in transferred to due to the to the hedged the income inception used recognised the income Line item in the the cost or hedged future cash flows statement/ for measuring in OCI statement income statement carrying value item affecting being no longer balance sheet ineffectiveness \u2013 in the period \u2013 in the period \u2013 that includes of a non- profit or loss \u2013 expected to occur affected by the gains/(losses) gains/(losses) gains/(losses) hedge financial asset (gains)/losses \u2013 (gains)/losses transfer/ Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification Inflation Inflation-linked sales (19.7) 3.3 \u2013 Revenue \u2013 (0.9) \u2013Revenue contracts \u2013 CPI (75.2) (3.5) (10.7) Revenue \u2013 17.5 9.3Revenue ", "dimensions": { "concept": "draxgroupplc:DisclosureOfInflationRisk", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-602": { "value": "7.2.4 Liquidity risk The treasury function is responsible for liquidity, funding and settlement management under policies approved by the Board. Liquidity needs are monitored using regular forecasting of operational cash flows and financing commitments. The Group maintains a mixture of cash and cash equivalents, committed facilities and uncommitted facilities in order to ensure sufficient funding for business requirements. In managing liquidity risk, the Group has the ability to accelerate the cash flows associated with certain working capital items, principally those related to ROC sales and Energy Solutions energy supply sales. In each case this is undertaken on a non-recourse basis and, accordingly, the ROC assets and Energy Solutions receivables are derecognised from the Consolidated balance sheet at the point of sale. The Group also utilises standard purchasing facilities to extend the working capital cycle, whilst still paying suppliers on time. The impact on the Group\u2019s cash flows is described in note 4.3. Such facilities are not included within the Group\u2019s definition of Net debt, as outlined in note 2.7. The following tables set out details of the expected maturity profile of the undiscounted, contractual payments of non-derivative financial liabilities. The tables include both interest and principal cash flows. To the extent that interest payments or receipts are floating rate, the undiscounted amount is derived from interest rate curves at the reporting date.
As at 31 December 2024
Within 3 months \u2013
3 months 1 year 1\u20132 years 2\u20135 years >5 years Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Term loans, gross value
11.2
30.5
202.8
613.3
27.0
884.8
Loan notes, gross value
\u2013
139.1
17.0
332.2
\u2013
488.3
Borrowings, contractual maturity
11.2
169.6
219.8
945.5
27. 0
1,37
3.1
Trade and other payables
763.5
28.2
1.1
0.2
\u2013
793.0
Lease liabilities
8.9
22.7
24.6
39.0
47. 2
142.4
783.6
220.5
245.5
984.7
74.2
2,308.5
As at 31 December 2023
Within 3 months \u2013
3 months 1 year 1\u20132 years 2\u20135 years >5 years Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Term loans, gross value
153.9
154.9
271.6
278.8
87. 0
946.2
Loan notes, gross value
\u2013
31.7
635.3
\u2013
\u2013
6 67.0
Borrowings, contractual maturity
153.9
186.6
906.9
278.8
8 7.0
1,613.2
Trade and other payables
763.8
150.7
3.2
1.5
\u2013
919.2
Lease liabilities
8.6
24.8
28.6
52.5
5 7.0
171.5
926.3
3 62 .1
938.7
332.8
144.0
2,703.9
The weighted average interest rate payable at the reporting date on the Group\u2019s borrowings was 5.39% (2023: 4.79%). Trade and other payables of \u00a3793.0 million (2023: \u00a3919.2 million) excludes non-financial liabilities such as contract liabilities, the Group\u2019s obligation to deliver ROCs and employee benefit-related accruals. The following tables set out details of the expected maturity profile of contractual payments and receipts of derivative financial instruments. Where the amount payable is not fixed, the amount disclosed has been determined by reference to projected commodity prices, foreign currency exchange rates, inflation rates or interest rates, as illustrated by the yield or other forward curves existing at the reporting date. Certain commodity contracts are expected to be gross settled through delivery or receipt of the commodity and a subsequent cash settlement of the trade value. Vanilla foreign currency exchange contracts are expected to be gross settled through simultaneous delivery of one currency and receipt of another. Gross settlement of both the interest and principal on cross-currency interest rate swaps is expected. Financial contracts and other foreign exchange contracts (excluding forwards and swaps) are expected to be net settled. Interest rate contracts and inflation rate contracts are expected to include the net settlement of the interest rate and inflation rate differentials. Where derivatives are expected to be gross settled based on the trade value rather than the mark-to-market value, the gross cash flows have been presented in the table below. Where derivatives are expected to be net settled, the undiscounted net cash flows expected to occur based on the current fair value have been presented in the table below. Where derivative balances are subject to offsetting, the net expected contractual payments and receipts of the offset asset and liability have been presented. The amounts included within difference to carrying amount column include the effect of discounting for the time value of money and credit risk on all trade types. Additionally, for all physically settled commodity trades, the difference to carrying amount includes the market value of these trades, as the traded price is included as the cash payment or receipt in the table below, but the carrying amount is based on the mark-to-market of the trade, being the difference between the market value and traded value. For foreign currency exchange contracts the amounts included within the difference to carrying amount column also includes the time value of options that have no intrinsic value, for example out-of-the-money options. As these trades are not expected to exercise no cash flows have been included in the below table. The below tables have been re-presented in the current period to include the expected cash flows from all derivative contracts (both assets and liabilities), including both cash inflows and outflows. The Group believe the additional information provided more accurately reflects the expected cash flows and liquidity profile of the Group\u2019s derivative contracts.
As at 31 December 2024
Within Difference to Carrying
1 year 1\u20132 years >2 years Total carrying amount amount
Derivative liabilities \u2013 cash inflow/(outflow) \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts \u2013 inflow
303.0
259.3
37.8
6 0 0.1
(673.5)
(73.4)
Commodity contracts \u2013 outflow
(33.8)
(1.4)
(4.1)
(39.3)
30.9
(8.4)
Foreign exchange contracts \u2013 inflow
6 41.1
468.4
328.0
1,437.5
15.2
(36.9)
Foreign exchange contracts \u2013 outflow
(637. 4)
(494.6)
(357.6)
(1,489.6)
Cross-currency contracts \u2013 inflow
215.7
53.9
341.0
610.6
1.2
(30.2)
Cross-currency contracts \u2013 outflow
(241.3)
(63.4)
( 337.3)
(642.0)
Interest rate contracts \u2013 inflow
0.3
\u2013
\u2013
0.3
0.1
(0.4)
Interest rate contracts \u2013 outflow
\u2013
(0.5)
(0.3)
(0.8)
Inflation contracts \u2013 outflow
(84.3)
(91.5)
(20.0)
(195.8)
11.8
(184.0)
163.3
130.2
(12.5)
281.0
(614.3)
(333.3)
As at 31 December 2024
Within Difference to Carrying
1 year 1\u20132 years >2 years Total carrying amount amount
Derivative assets \u2013 cash inflow/(outflow) \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts \u2013 inflow
363.7
50.6
16.8
431.1
(306.5)
124.6
Commodity contracts \u2013 outflow
(117.5)
(4.5)
(24.9)
(146.9)
175.8
28.9
Foreign exchange contracts \u2013 inflow
874.6
1,030.0
245.1
2,149.7
(9.7)
96.7
Foreign exchange contracts \u2013 outflow
(839.9)
(977.1)
(226.3)
(2,043.3)
Cross-currency contracts \u2013 inflow
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Cross-currency contracts \u2013 outflow
\u2013
\u2013
\u2013
\u2013
Interest rate contracts \u2013 inflow
6.3
1.1
\u2013
7. 4
(0.2)
7.1
Interest rate contracts \u2013 outflow
\u2013
\u2013
(0 .1)
(0 .1)
Inflation contracts \u2013 outflow
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
287.2
100.1
10.6
397.9
(140.6)
257.3
As at 31 December 2023
Within Difference to Carrying
1 year 1\u20132 years >2 years Total carrying amount amount
Derivative liabilities \u2013 cash inflow/(outflow) \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts \u2013 inflow
28.2
5.5
4.3
38.0
(40.7)
(2.7)
Commodity contracts \u2013 outflow
(403.5)
(43 .1)
(0 .1)
(446.7)
256.2
(190.5)
Foreign exchange contracts \u2013 inflow
9 07.4
486.6
38 7.4
1,781.4
(13.5)
(59.5)
Foreign exchange contracts \u2013 outflow
(936.2)
(497.1)
( 39 4 .1)
(1, 827. 4)
Cross-currency contracts \u2013 inflow
5 62 .1
25.0
29.8
616.9
1.7
( 35.1)
Cross-currency contracts \u2013 outflow
(620.1)
(2.5)
(31.1)
(653.7)
Interest rate contracts \u2013 inflow
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Interest rate contracts \u2013 outflow
\u2013
\u2013
\u2013
\u2013
Inflation contracts \u2013 outflow
(81.6)
(85.2)
(107.5)
(274.3)
23.9
(250.4)
(543.7)
(110.8)
(111.3)
(765.8)
227.6
(538.2)
As at 31 December 2023
Within Difference to Carrying
1 year 1\u20132 years >2 years Total carrying amount amount
Derivative assets \u2013 cash inflow/(outflow) \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts \u2013 inflow
880.4
515.7
57. 5
1,453.6
(927.9)
525.7
Commodity contracts \u2013 outflow
(6.5)
\u2013
\u2013
(6.5)
8.9
2.4
Foreign exchange contracts \u2013 inflow
768.6
543.6
669.9
1,
98 2.1
40.3
108.5
Foreign exchange contracts \u2013 outflow
(756.9)
(522.4)
(634.6)
(1,913.9)
Cross-currency contracts \u2013 inflow
146.4
\u2013
\u2013
146.4
(0 .1)
2.7
Cross-currency contracts \u2013 outflow
(143.6)
\u2013
\u2013
(143.6)
Interest rate contracts \u2013 inflow
16.0
7.4
1.4
24.8
(2.1)
22.7
Interest rate contracts \u2013 outflow
\u2013
\u2013
\u2013
\u2013
Inflation contracts \u2013 outflow
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
904.4
544.3
94.2
1,542.9
(880.9)
662.0
", "dimensions": { "concept": "ifrs-full:DisclosureOfLiquidityRiskExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-603": { "value": "7.2.5 Credit risk The Group\u2019s gross exposure to credit risk for financial instruments is limited to the carrying amount of financial assets recognised at the reporting date. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in note 7.1. Trade and other receivables are stated gross of the provision for expected credit losses on trade receivables of \u00a342.4 million (2023: \u00a359.4 million) and expected credit losses on accrued income of \u00a39.0 million (2023: \u00a39.4 million). The balance excludes non-financial receivables such as prepayments. The Group\u2018s four reportable segments (Pellet Production, Biomass Generation, Flexible Generation and Energy Solutions) are exposed to different levels and concentrations of credit risk, largely reflecting the number, size and nature of their respective customers. The Pellet Production segment sells biomass pellets both intra-group and to external parties. Credit risk for the Group relates to the sales made to external parties. The majority of the Pellet Production segment\u2019s external sales are with large utility customers in Europe and Asia. The Pellet Production segment manages its credit risk by reviewing individual sales contracts, considering the length of the contract, payment terms, and assessing the credit quality of counterparties prior to signing contracts and throughout the duration of contracts. For the Biomass Generation and Flexible Generation segments, the risk arises from treasury, trading and energy procurement activities. Wholesale counterparty credit exposures are monitored by individual counterparty and by category of credit rating. Counterparty credit exposures are subject to approved limits. The Group uses master netting agreements to reduce credit risk and net settles payments with counterparties where net settlement provisions exist. In addition, the Group employs a variety of other methods to mitigate credit risk: margining; various forms of parent company guarantee; deeds of charge; cash collateral; letters of credit; and surety bonds. The majority of the Biomass Generation and Flexible Generation segments\u2019 credit risk is with counterparties in related energy industries or with financial institutions. In addition, where deemed appropriate, the Group has historically purchased credit default swaps. The highest credit risk exposure is in the Energy Solutions segment, with a large number of customers of varying sizes operating in a variety of markets. In particular, its small and medium-sized enterprise (SME) customers carry lower concentrations but higher levels of credit risk, owing to a customer base comprised of smaller retail and commercial entities. Credit risk is managed by checking a company\u2019s creditworthiness and financial strength both before commencing trade and during the business relationship. Credit risk is monitored and managed by industry sector. Due to the sale of the majority of the Opus Energy non-core SME meter points the Group has reduced its credit risk exposure for the Energy Solutions segment. Further details on the impact of credit risk on trade and other receivables is disclosed in note 3.5. The investment of surplus cash is undertaken with the objective of ensuring that there is sufficient liquidity at all times, so that funds are available to meet liabilities as they fall due, whilst securing a return from invested funds and preserving the capital value of those funds within Board-approved policies. These policies manage credit risk exposure by setting out minimum rating requirements and maximum investments with any one counterparty based on their rating and the maturity profile. The Group had cash and cash equivalents of \u00a3356.0 million at 31 December 2024 (2023: \u00a3379.5 million). The Group\u2019s cash and cash equivalents excluding money market funds (held at FVTPL) are subject to the impairment requirements of IFRS 9. The Group had cash and cash equivalents excluding money market funds of \u00a3252.9 million at 31 December 2024 (2023: \u00a3208.4 million). The identified impairment loss, based on the 12-month expected credit loss basis, was immaterial. Cash and cash equivalents are held with banks with external credit ratings between AAA and A. The Group is exposed to credit risk on derivative contracts, to which the impairment requirements of IFRS 9 are not applied as the fair value requirements of IFRS 13 are applicable. Credit risk is a factor in the determination of fair value. The carrying amount of these financial assets, disclosed in note 7.1, represents the Group\u2019s maximum credit risk exposure. Some derivative contracts are fully cash collateralised, thereby minimising credit risk. At 31 December 2024, the Group held \u00a39.8 million in cash collateral receipts (2023: \u00a320.3 million) covering certain derivative assets and had posted \u00a34.7 million (2023: \u00a398.9 million) of cash collateral payments covering certain derivative liabilities. The credit rating of counterparties to which the \u00a34.7 million of cash collateral had been posted was A+. ", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-631": { "value": "Counterparty risk As the Group relies on third-party suppliers and counterparties for the delivery of financial and non-financial items, as is therefore exposed to the risk of non-performance by these third-party suppliers. For financial instruments, such as foreign currency forwards, this risk is limited to the credit risk, as discussed above. The Group is also exposed to counterparty risk on non-financial items, such as the purchases of biomass and capital expenditure. If a large supplier were to fall into financial difficulty and/or fail to deliver against its contract with the Group, there would be additional costs associated with securing the lost goods or services from other suppliers. The Group enters into purchase and sale contracts for a wide variety of goods and services, for example the sale of power to a number of counterparties. The failure of one or more of these counterparties to perform under their contractual obligations may cause the Group financial distress or increase the risk profile of the Group. The Group has acceptance procedures in place to ensure the counterparties the Group contracts with are appropriate. The Group also has limits in place, and actively monitors its exposures to individual counterparties to minimise this risk. ", "dimensions": { "concept": "draxgroupplc:DisclosureOfCounterpartyRisk", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-651": { "value": "7.3 Hedge reserve The Group designates certain hedging instruments that are used to address commodity price risk, foreign exchange risk, interest rate risk and inflation rate risk as cash flow hedges. At the inception of the hedge, the relationship between the hedging instrument and hedged item is documented, along with its risk management objectives. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging instruments used in hedging transactions are effective in offsetting changes in cash flows of the hedged items. Changes in the fair value of contracts designated into such hedging relationships are recognised within the hedge reserve to the extent they are effective. Amounts accumulated in the hedge reserve are reclassified in the periods when the hedged item affects profit or loss. If the hedged item results in the recognition of a non-financial asset then the amount accumulated in the hedge reserve is transferred and included within the initial cost of the asset. The table below details the gains and losses recognised in the current and prior year on hedging instruments, the amounts reclassified from equity due to the hedged item affecting the Consolidated income statement, and the amounts reclassified due to the hedged future cash flows no longer being expected to occur. See section 7.2 for further details on these amounts.
Hedge reserve
Foreign Foreign
currency exchange
Commodity exchange Interest and Interest Inflation
price risk
(1)
risk
(2)
rate risk
(2)
rate risk
(2)
rate risk Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
At 1 January 2023
(192.8)
84.5
26.8
4 .1
(74.6)
(152.0)
Gains/(losses) recognised:
\u2013 Change in fair value of hedging instrument recognised in OCI
414.7
(112.9)
(31.5)
(3.6)
(0.2)
266.5
Reclassified from equity as the hedged item has affected
profit or loss:
\u2013 Reclassified to the Consolidated income statement
\u2013 included in cost of sales
600.9
\u2013
\u2013
\u2013
\u2013
600.9
\u2013 Reclassified to the Consolidated income statement
\u2013 included in revenue
(415.9)
\u2013
\u2013
\u2013
16.6
(399.3)
\u2013 Reclassified to the Consolidated income statement
\u2013 included in interest payable and similar charges
\u2013
1.6
16.0
(1.9)
\u2013
15.7
\u2013 Reclassified to the Consolidated income statement
\u2013 included in foreign exchange (losses)/gains
\u2013
27.6
\u2013
1.9
\u2013
29.5
Reclassified from equity as the hedged item is no longer
expected to occur:
\u2013 Reclassified from equity \u2013 included in revenue
\u2013
\u2013
\u2013
\u2013
9.3
9.3
Transferred from equity and included within the initial cost
of a non-financial asset:
\u2013 Transferred to cost of inventories
\u2013
(43.4)
\u2013
\u2013
\u2013
(43.4)
Related deferred tax, net (note 2.6)
(149.9)
31.8
3.8
0.9
(6.4)
(119.8)
At 1 January 2024
257. 0
(10.8)
15.1
1.4
(55.3)
207.4
Gains/(losses) recognised:
\u2013 Change in fair value of hedging instrument recognised
in OCI
(15.8)
(19.8)
(2.3)
(7.7)
(3.4)
(49.0)
Reclassified from equity as the hedged item has affected profit
or loss:
\u2013 Reclassified to the Consolidated income statement
\u2013 included in cost of sales
105.1
\u2013
\u2013
\u2013
\u2013
105.1
\u2013 Reclassified to the Consolidated income statement
\u2013 included in revenue
(397.5)
\u2013
\u2013
\u2013
24.0
(373.5)
\u2013 Reclassified to the Consolidated income statement
\u2013 included in interest payable and similar charges
\u2013
6.7
(12.0)
(2.9)
\u2013
(8.2)
\u2013 Reclassified to the Consolidated income statement
\u2013 included in foreign exchange (losses)/gains
\u2013
2 9.1
\u2013
3.4
\u2013
32.5
Reclassified from equity as the hedged item is no longer
expected to occur:
\u2013 Reclassified from equity \u2013 included in revenue
\u2013
\u2013
\u2013
\u2013
1.2
1.2
Transferred from equity and included within the initial cost
of a non-financial asset:
\u2013 Transferred to cost of inventories
\u2013
4.8
\u2013
\u2013
\u2013
4.8
Related deferred tax, net (note 2.6)
77.1
(5.2)
3.5
1.8
(5.4)
71.8
At 31 December 2024
25.9
4.8
4.3
(4.0)
(38.9)
( 7.9)
(1) The table above has been re-presented to split the prior year reclassified amounts in commodity price risk column between amounts included in revenue and amounts included within cost of sales. (2) The above table has been re-presented to include a foreign exchange and interest rate risk column. The amounts included within foreign exchange and interest rate risk relate to the Group\u2019s floating-to-fixed cross-currency interest rate swaps that were previously disclosed partially within foreign currency exchange risk and partially within interest rate risk. The expected release profile from equity of post-tax hedging gains and losses is as follows:
As at 31 December 2024
Within 1 year 1\u20132 years >2 years Total
\u00a3m \u00a3m \u00a3m \u00a3m
Commodity risk
34.7
(9.2)
0.4
25.9
Foreign currency exchange risk
(1.3)
(3.0)
9.1
4.8
Interest rate risk
4.2
0.4
(0.3)
4.3
Foreign currency and interest rate risk
(2.4)
(1.3)
(0.3)
(4.0)
Inflation risk
(15.1)
(10 .1)
(13.7)
(38.9)
20 .1
(23.2)
(4.8)
(7.9)
As at 31 December 2023
Within 1 year 1\u20132 years >2 years Total
\u00a3m \u00a3m \u00a3m \u00a3m
Commodity risk
199.4
56.0
1.6
2 57.0
Foreign currency exchange risk
(3.3)
(5.4)
(2.1)
(10.8)
Interest rate risk
9.2
5.0
0.9
15.1
Foreign currency and interest rate risk
0.7
0.6
0.1
1.4
Inflation risk
(19.4)
(15.2)
(20.7)
(55.3)
186.6
41.0
(20.2)
2 07.4
7.4 Cost of hedging reserve Where the Group has designated the spot foreign exchange risk as the hedged risk, the Group allocates unrealised gains and losses on the forward rate of hedge accounted foreign currency derivative contracts to a cost of hedging reserve in accordance with IFRS 9. A large proportion of the derivative contracts held relate to foreign currency exchange contracts, including forward contracts, options and swaps. Consistent with prior periods, for foreign currency exchange contracts hedging the purchase of inventory denominated in foreign currencies to which the Group has applied hedge accounting, the Group has continued to designate the change in the spot rate as the hedged risk in the Group\u2019s cash flow hedge relationships. The Group designates the cost of hedging \u2013 being the change in fair value associated with forward points including currency basis \u2013 to equity. All amounts within the cost of hedging reserve relate to foreign currency exchange risk. The table below details the cost of hedging gains or losses recognised in the year on hedging instruments and the amounts transferred from equity and included within the initial cost of a non-financial asset:
Cost of hedging
2024 2023
\u00a3m \u00a3m
At 1 January
18.7
4 0.1
Gains/(losses) recognised:
\u2013 Change in fair value of hedging instruments recognised in the Consolidated statement of
comprehensive income
6.8
7.5
Transferred from equity and included within the initial cost of a non-financial asset:
\u2013 Transferred to cost of inventories
(22.6)
(36.0)
Related deferred tax, net (note 2.6)
4.0
7.1
At 31 December
6.9
18.7
The expected release profile from equity of post-tax cost of hedging gains and losses is as follows:
As at 31 December 2024
Within 1 year 1\u20132 years >2 years Total
\u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency exchange risk
5.1
0.7
1.1
6.9
As at 31 December 2023
Within 1 year 1\u20132 years >2 years Total
\u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency exchange risk
16.6
4.3
(2.2)
18.7
", "dimensions": { "concept": "ifrs-full:DisclosureOfDetailedInformationAboutHedgesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-604": { "value": "7.5 Offsetting financial assets and financial liabilities Financial assets and liabilities are offset and the net amount is reported in the Consolidated balance sheet where the Group has a legally enforceable right to offset the recognised amounts, and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The Group also has financial assets and liabilities with certain counterparties that are subject to master netting agreements. Some financial assets and liabilities do not meet the criteria for offsetting at the reporting date but are subject to an enforceable master netting agreement that in certain circumstances, such as a bankruptcy, would allow for the amounts to be offset and a single net amount payable or receivable. The table below shows the impact of financial assets and liabilities that are offset in the Consolidated balance sheet, and it also shows the impact if the carrying amounts that are subject to these master netting agreements were also to be offset in certain circumstances, such as a bankruptcy:
As at 31 December 2024
Net amounts of
Gross amounts financial Related
of financial instruments financial Related cash
Gross amounts instruments offset presented instruments collateral assets/
of financial in the balance in the that are (liabilities) that are
instruments sheet balance sheet not offset not offset Net amount
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial assets
Derivative financial instruments
328.5
(71.2)
257.3
(166.4)
(1.5)
89.4
Trade and other receivables and contract
assets
523.0
(52.7)
470.3
(2.5)
\u2013
467.8
Financial liabilities
Derivative financial instruments
(404.5)
71.2
(333.3)
15 6.1
\u2013
(177.2)
Trade and other payables and
contract liabilities
(1,341.8)
52.7
(1, 28 9.1)
12.8
1.5
(1,274.8)
As at 31 December 2023
Net amounts of
Gross amounts financial Related
of financial instruments financial Related cash
Gross amounts instruments offset presented instruments collateral assets/
of financial in the balance in the that are (liabilities) that are
instruments sheet balance sheet not offset not offset Net amount
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial assets
Derivative financial instruments
888.5
(226.5)
662.0
(220.9)
(20.3)
420.8
Trade and other receivables and contract
assets
1,088.5
(111.6)
976.9
(4.9)
(95.9)
876 .1
Financial liabilities
Derivative financial instruments
(764.7)
226.5
(538.2)
215.3
95.9
(227. 0)
Trade and other payables and
contract liabilities
(1,651.2)
111.6
(1,539.6)
10.5
20.3
(1,508.8)
The above collateral assets and liabilities are recorded in other receivables and other payables respectively. See note 4.3. ", "dimensions": { "concept": "ifrs-full:DisclosureOfOffsettingOfFinancialAssetsAndFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-663": { "value": "7.5 Offsetting financial assets and financial liabilities Financial assets and liabilities are offset and the net amount is reported in the Consolidated balance sheet where the Group has a legally enforceable right to offset the recognised amounts, and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The Group also has financial assets and liabilities with certain counterparties that are subject to master netting agreements. Some financial assets and liabilities do not meet the criteria for offsetting at the reporting date but are subject to an enforceable master netting agreement that in certain circumstances, such as a bankruptcy, would allow for the amounts to be offset and a single net amount payable or receivable. The table below shows the impact of financial assets and liabilities that are offset in the Consolidated balance sheet, and it also shows the impact if the carrying amounts that are subject to these master netting agreements were also to be offset in certain circumstances, such as a bankruptcy:
As at 31 December 2024
Net amounts of
Gross amounts financial Related
of financial instruments financial Related cash
Gross amounts instruments offset presented instruments collateral assets/
of financial in the balance in the that are (liabilities) that are
instruments sheet balance sheet not offset not offset Net amount
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial assets
Derivative financial instruments
328.5
(71.2)
257.3
(166.4)
(1.5)
89.4
Trade and other receivables and contract
assets
523.0
(52.7)
470.3
(2.5)
\u2013
467.8
Financial liabilities
Derivative financial instruments
(404.5)
71.2
(333.3)
15 6.1
\u2013
(177.2)
Trade and other payables and
contract liabilities
(1,341.8)
52.7
(1, 28 9.1)
12.8
1.5
(1,274.8)
As at 31 December 2023
Net amounts of
Gross amounts financial Related
of financial instruments financial Related cash
Gross amounts instruments offset presented instruments collateral assets/
of financial in the balance in the that are (liabilities) that are
instruments sheet balance sheet not offset not offset Net amount
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial assets
Derivative financial instruments
888.5
(226.5)
662.0
(220.9)
(20.3)
420.8
Trade and other receivables and contract
assets
1,088.5
(111.6)
976.9
(4.9)
(95.9)
876 .1
Financial liabilities
Derivative financial instruments
(764.7)
226.5
(538.2)
215.3
95.9
(227. 0)
Trade and other payables and
contract liabilities
(1,651.2)
111.6
(1,539.6)
10.5
20.3
(1,508.8)
The above collateral assets and liabilities are recorded in other receivables and other payables respectively. See note 4.3. ", "dimensions": { "concept": "ifrs-full:DisclosureOfOffsettingOfFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-632": { "value": "7.5 Offsetting financial assets and financial liabilities Financial assets and liabilities are offset and the net amount is reported in the Consolidated balance sheet where the Group has a legally enforceable right to offset the recognised amounts, and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The Group also has financial assets and liabilities with certain counterparties that are subject to master netting agreements. Some financial assets and liabilities do not meet the criteria for offsetting at the reporting date but are subject to an enforceable master netting agreement that in certain circumstances, such as a bankruptcy, would allow for the amounts to be offset and a single net amount payable or receivable. The table below shows the impact of financial assets and liabilities that are offset in the Consolidated balance sheet, and it also shows the impact if the carrying amounts that are subject to these master netting agreements were also to be offset in certain circumstances, such as a bankruptcy:
As at 31 December 2024
Net amounts of
Gross amounts financial Related
of financial instruments financial Related cash
Gross amounts instruments offset presented instruments collateral assets/
of financial in the balance in the that are (liabilities) that are
instruments sheet balance sheet not offset not offset Net amount
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial assets
Derivative financial instruments
328.5
(71.2)
257.3
(166.4)
(1.5)
89.4
Trade and other receivables and contract
assets
523.0
(52.7)
470.3
(2.5)
\u2013
467.8
Financial liabilities
Derivative financial instruments
(404.5)
71.2
(333.3)
15 6.1
\u2013
(177.2)
Trade and other payables and
contract liabilities
(1,341.8)
52.7
(1, 28 9.1)
12.8
1.5
(1,274.8)
As at 31 December 2023
Net amounts of
Gross amounts financial Related
of financial instruments financial Related cash
Gross amounts instruments offset presented instruments collateral assets/
of financial in the balance in the that are (liabilities) that are
instruments sheet balance sheet not offset not offset Net amount
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial assets
Derivative financial instruments
888.5
(226.5)
662.0
(220.9)
(20.3)
420.8
Trade and other receivables and contract
assets
1,088.5
(111.6)
976.9
(4.9)
(95.9)
876 .1
Financial liabilities
Derivative financial instruments
(764.7)
226.5
(538.2)
215.3
95.9
(227. 0)
Trade and other payables and
contract liabilities
(1,651.2)
111.6
(1,539.6)
10.5
20.3
(1,508.8)
The above collateral assets and liabilities are recorded in other receivables and other payables respectively. See note 4.3. ", "dimensions": { "concept": "ifrs-full:DisclosureOfOffsettingOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-709": { "value": "Financial assets and liabilities are offset and the net amount is reported in the Consolidated balance sheet where the Group has a legally enforceable right to offset the recognised amounts, and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The Group also has financial assets and liabilities with certain counterparties that are subject to master netting agreements. Some financial assets and liabilities do not meet the criteria for offsetting at the reporting date but are subject to an enforceable master netting agreement that in certain circumstances, such as a bankruptcy, would allow for the amounts to be offset and a single net amount payable or receivable. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForOffsettingOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-664": { "value": "
7.6 Contingencies
Contingent assets are potential assets that arise from past events whose existence will be confirmed by a future event that is outside
of the control of the Group. The amount or timing of any potential receipt is uncertain.
Contingent liabilities are potential obligations that arise from past events whose existence will be confirmed by a future event that is
outside of the control of the Group. The amount or timing of any potential outflow is uncertain.
As at 31 December 2024, the Group had no contingent assets or liabilities to be disclosed.
", "dimensions": { "concept": "ifrs-full:DisclosureOfContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-605": { "value": "7.6 Contingencies Contingent assets are potential assets that arise from past events whose existence will be confirmed by a future event that is outside of the control of the Group. The amount or timing of any potential receipt is uncertain. Contingent liabilities are potential obligations that arise from past events whose existence will be confirmed by a future event that is outside of the control of the Group. The amount or timing of any potential outflow is uncertain. As at 31 December 2024, the Group had no contingent assets or liabilities to be disclosed.
7.7 Commitments
The Group has a number of financial commitments (i.e. a contractual requirement to make a cash payment in the future) that are not
recorded in the Consolidated balance sheet as the contract is not yet due for delivery. Such commitments include contracts for the
future purchase of biomass and contracts for the construction of assets.
As at 31 December
2024 2023
\u00a3m \u00a3m
Contracts placed for future capital expenditure not provided in the Consolidated financial statements \u2013
property, plant and equipment
142.8
221.6
Future commitments to purchase ROCs
\u2013
303.2
Future commitments to purchase biomass under fixed and variable priced contracts
2,353.3
3,092.5
Future commitments to purchase fibre under fixed and variable priced contracts
424.4
439.7
Commitments for future capital expenditure have decreased due to significant progression in the construction of the OCGTs during
2024. Future commitments to purchase biomass have reduced compared to the prior year as they include long-term contracts, a
majority of which match the period out to the end of the existing renewable schemes in March 2027.
The contractual maturities of the future commitments to purchase biomass and fibre are as follows:
As at 31 December
2024 2023
\u00a3m \u00a3m
Within one year
995.2
916.5
Within one to five years
1,442.7
2 ,13 4 .5
After five years
339.8
481.2
2,777.7
3,532.2
Commitments to purchase biomass reflect long-term forward purchase contracts with a variety of international suppliers, primarily for
the delivery of biomass pellets for use in electricity generation at Drax Power Station. To the extent that these contracts relate to the
purchase of biomass pellets, they are not reflected elsewhere in the financial statements as they are not within the scope of IFRS 9,
and are not, therefore, required to be measured at fair value. See the Critical accounting judgements section in the Basis of preparation
for further details on this judgement.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsAndContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-720": { "value": "Contingent assets are potential assets that arise from past events whose existence will be confirmed by a future event that is outside of the control of the Group. The amount or timing of any potential receipt is uncertain. Contingent liabilities are potential obligations that arise from past events whose existence will be confirmed by a future event that is outside of the control of the Group. The amount or timing of any potential outflow is uncertain. As at 31 December 2024, the Group had no contingent assets or liabilities to be disclosed. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForContingentLiabilitiesAndContingentAssetsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-633": { "value": "7.7 Commitments The Group has a number of financial commitments (i.e. a contractual requirement to make a cash payment in the future) that are not recorded in the Consolidated balance sheet as the contract is not yet due for delivery. Such commitments include contracts for the future purchase of biomass and contracts for the construction of assets.
As at 31 December
2024 2023
\u00a3m \u00a3m
Contracts placed for future capital expenditure not provided in the Consolidated financial statements \u2013
property, plant and equipment
142.8
221.6
Future commitments to purchase ROCs
\u2013
303.2
Future commitments to purchase biomass under fixed and variable priced contracts
2,353.3
3,092.5
Future commitments to purchase fibre under fixed and variable priced contracts
424.4
439.7
Commitments for future capital expenditure have decreased due to significant progression in the construction of the OCGTs during 2024. Future commitments to purchase biomass have reduced compared to the prior year as they include long-term contracts, a majority of which match the period out to the end of the existing renewable schemes in March 2027. The contractual maturities of the future commitments to purchase biomass and fibre are as follows:
As at 31 December
2024 2023
\u00a3m \u00a3m
Within one year
995.2
916.5
Within one to five years
1,442.7
2 ,13 4 .5
After five years
339.8
481.2
2,777.7
3,532.2
Commitments to purchase biomass reflect long-term forward purchase contracts with a variety of international suppliers, primarily for the delivery of biomass pellets for use in electricity generation at Drax Power Station. To the extent that these contracts relate to the purchase of biomass pellets, they are not reflected elsewhere in the financial statements as they are not within the scope of IFRS 9, and are not, therefore, required to be measured at fair value. See the Critical accounting judgements section in the Basis of preparation for further details on this judgement.", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-566": { "value": "Drax Group plc (the Company) is a public company, limited by shares, incorporated in the United Kingdom under the Companies Act 2006, and registered in England and Wales. The Company and its subsidiaries (collectively, the Group) have four principal activities: \u2013 Production and subsequent sale of biomass pellets from the Group\u2019s processing facilities in North America \u2013 Generation and sale of electricity from biomass assets in the UK \u2013 Generation and sale of electricity from pumped storage, run-of-river hydro and OCGTs assets, and the processing and sale of waste- derived pellets, in the UK \u2013 Supply of electricity to non-domestic customers in the UK The Group\u2019s activities are principally based within the UK, US and Canada. ", "dimensions": { "concept": "ifrs-full:DescriptionOfNatureOfEntitysOperationsAndPrincipalActivities", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-5": { "value": "Drax Group plc (the Company) is a public company, limited by shares", "dimensions": { "concept": "ifrs-full:LegalFormOfEntity", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-571": { "value": "Drax Group plc", "dimensions": { "concept": "ifrs-full:NameOfParentEntity", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-573": { "value": "Drax Group plc", "dimensions": { "concept": "ifrs-full:NameOfUltimateParentOfGroup", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-6": { "value": "United Kingdom", "dimensions": { "concept": "ifrs-full:CountryOfIncorporation", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-7": { "value": "UK, US and Canada", "dimensions": { "concept": "ifrs-full:PrincipalPlaceOfBusiness", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-8": { "value": "Drax Power Station, Selby, North Yorkshire, YO8 8PH, United Kingdom", "dimensions": { "concept": "ifrs-full:AddressOfRegisteredOfficeOfEntity", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-567": { "value": "United Kingdom", "dimensions": { "concept": "ifrs-full:DomicileOfEntity", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-634": { "value": "
8.2 Adoption of new and revised accounting standards
The following amendments became effective for the first time in 2024. The Group adopted the following from 1 January 2024:
\u2013 IFRS 16 (amended) \u2013 Lease Liability in a Sale and Leaseback \u2013 effective from 1 January 2024
\u2013 IAS 1 (amended) \u2013 Classification of Liabilities as Current or Non-current \u2013 effective from 1 January 2024
\u2013 IAS 1 (amended) \u2013 Non-current Liabilities with Covenants \u2013 effective from 1 January 2024
\u2013 IAS 7 (amended) and IFRS 7 (amended) \u2013 Supplier Finance Arrangements \u2013 effective from 1 January 2024
The adoption of the amendments to IFRS 16 and IAS 1 in the current period has not had a material impact on these Consolidated
financial statements. The Group has supplier finance arrangements (as outlined in note 4.3) and so the adoption of the amendment
to IAS 7 and IFRS 7 has resulted in additional disclosures in these Consolidated financial statements. See note 3.7.
At the date of approval of this report, the following new or amended standards and relevant interpretations, which have not been
applied in these Consolidated financial statements, were in issue but not yet effective:
\u2013 IFRS 10 (amended) \u2013 Consolidated Financial Statements \u2013 effective date deferred indefinitely
(1)
\u2013 IAS 28 (amended) \u2013 Investments in Associates and Joint Ventures (2011) \u2013 effective date deferred indefinitely
(1)
\u2013 IAS 21 (amended) \u2013 Lack of Exchangeability \u2013 effective from 1 January 2025
\u2013 IFRS 9 (amended) and IFRS 7 (amended) \u2013 Amendments to the Classification and Measurement of Financial Instruments \u2013 effective
from 1 January 2026
(1)
\u2013 IFRS Accounting Standards \u2013 Annual Improvements to IFRS Accounting Standards \u2013 Volume 11 \u2013 effective from 1 January 2026
\u2013 IFRS 9 (amended) and IFRS 7 (amended) \u2013 Contracts Referencing Nature-dependent Electricity \u2013 effective from 1 January 2026
(1)
\u2013 IFRS 18 \u2013 Presentation and Disclosure in Financial Statements \u2013 effective from 1 January 2027
(1)
\u2013 IFRS 19 \u2013 Subsidiaries without Public Accountability: Disclosures \u2013 effective from 1 January 2027
(1)
(1) Pending endorsement by the UK Endorsement Board (UKEB).
", "dimensions": { "concept": "ifrs-full:DescriptionOfExpectedImpactOfInitialApplicationOfNewStandardsOrInterpretations", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-652": { "value": "The following amendments became effective for the first time in 2024. The Group adopted the following from 1 January 2024: \u2013 IFRS 16 (amended) \u2013 Lease Liability in a Sale and Leaseback \u2013 effective from 1 January 2024 \u2013 IAS 1 (amended) \u2013 Classification of Liabilities as Current or Non-current \u2013 effective from 1 January 2024 \u2013 IAS 1 (amended) \u2013 Non-current Liabilities with Covenants \u2013 effective from 1 January 2024 \u2013 IAS 7 (amended) and IFRS 7 (amended) \u2013 Supplier Finance Arrangements \u2013 effective from 1 January 2024 The adoption of the amendments to IFRS 16 and IAS 1 in the current period has not had a material impact on these Consolidated financial statements. The Group has supplier finance arrangements (as outlined in note 4.3) and so the adoption of the amendment to IAS 7 and IFRS 7 has resulted in additional disclosures in these Consolidated financial statements. See note 3.7. ", "dimensions": { "concept": "ifrs-full:DescriptionOfInitialApplicationOfStandardsOrInterpretations", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-665": { "value": "
8.3 Related party transactions
A related party is either an individual or entity with control or significant influence over the Group, or a company that is linked to the
Group by investment (such as an associated company or joint venture), that the Group has significant influence over. The Group\u2019s
related parties are primarily its associate and its key management personnel. The amounts below are the total amount of transactions
that have been entered into with any related parties in the year.
Houston Pellet Limited Partnership (HPLP)
HPLP is owned 30% by the Group and 70% by non-related third parties. The Group purchases biomass pellets from HPLP. The Group
manages and administers the business affairs of HPLP and charges a management fee. These transactions are at negotiated amounts
between the Group and the non-related third parties.
The transactions in the period and the balances at the reporting date with the related party are summarised below:
Transactions in the year ended 31 December 2024
Balances as at 31 December 2024
(1)
Drax Revenue Other income Purchases Payable Receivable
Ownership \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Houston Pellet Limited Partnership
HPLP
30%
2.1
0.5
18.7
1.9
2.9
Transactions in the year ended 31 December 2023 Balances as at 31 December 2023
(1)
Drax
Ownership
Revenue
\u00a3m
Other income
\u00a3m
Purchases
\u00a3m
Payable
\u00a3m
Receivable
\u00a3m
Houston Pellet Limited Partnership HPLP 30% 1.8 1.2 14.6 1.1 1.2
(1) The amounts payable to and receivable from HPLP are unsecured and non-interest bearing.
Remuneration of key management personnel
The remuneration of the Directors and executive management, who are considered to be the key management personnel of the
Group, is set out below in aggregate for each of the categories specified in IAS 24. Further information about the remuneration of
individual Directors, together with the Directors\u2019 interests in the share capital of the Company, is provided in the audited section
of the Remuneration Committee report on pages 133 to 137.
Year ended 31 December
2024 2023
\u00a3000 \u00a3000
Short-term employee benefits
7, 274
7,104
Termination benefits
388
566
Share-based payments
4,107
4,047
Post-employment benefits
411
414
Total remuneration
12
,18 0
12,131
Compensation of the Group\u2019s key management personnel includes short-term employee benefits, which includes salaries and other
short-term benefits. The compensation also includes contributions to post-employment money purchase pension schemes.
Share-based payments compensation represents the amounts receivable under share-based incentive schemes as disclosed in note 6.2.
The average number of members of the Board and executive management during the year was 16 (2023: 18) and the amounts
included in the table above reflect their remuneration.
There were no other transactions with Directors for the periods covered by these Consolidated financial statements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-710": { "value": "A related party is either an individual or entity with control or significant influence over the Group, or a company that is linked to the Group by investment (such as an associated company or joint venture), that the Group has significant influence over. The Group\u2019s related parties are primarily its associate and its key management personnel. The amounts below are the total amount of transactions that have been entered into with any related parties in the year. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTransactionsWithRelatedPartiesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-606": { "value": "Houston Pellet Limited Partnership (HPLP) HPLP is owned 30% by the Group and 70% by non-related third parties. The Group purchases biomass pellets from HPLP. The Group manages and administers the business affairs of HPLP and charges a management fee. These transactions are at negotiated amounts between the Group and the non-related third parties. The transactions in the period and the balances at the reporting date with the related party are summarised below:
Transactions in the year ended 31 December 2024
Balances as at 31 December 2024
(1)
Drax Revenue Other income Purchases Payable Receivable
Ownership \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Houston Pellet Limited Partnership
HPLP
30%
2.1
0.5
18.7
1.9
2.9
Transactions in the year ended 31 December 2023 Balances as at 31 December 2023 (1) Drax Ownership Revenue \u00a3m Other income \u00a3m Purchases \u00a3m Payable \u00a3m Receivable \u00a3m Houston Pellet Limited Partnership HPLP 30% 1.8 1.2 14.6 1.1 1.2 (1) The amounts payable to and receivable from HPLP are unsecured and non-interest bearing. ", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInAssociatesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-675": { "value": "Remuneration of key management personnel The remuneration of the Directors and executive management, who are considered to be the key management personnel of the Group, is set out below in aggregate for each of the categories specified in IAS 24. Further information about the remuneration of individual Directors, together with the Directors\u2019 interests in the share capital of the Company, is provided in the audited section of the Remuneration Committee report on pages 133 to 137.
Year ended 31 December
2024 2023
\u00a3000 \u00a3000
Short-term employee benefits
7, 274
7,104
Termination benefits
388
566
Share-based payments
4,107
4,047
Post-employment benefits
411
414
Total remuneration
12
,18 0
12,131
Compensation of the Group\u2019s key management personnel includes short-term employee benefits, which includes salaries and other short-term benefits. The compensation also includes contributions to post-employment money purchase pension schemes. Share-based payments compensation represents the amounts receivable under share-based incentive schemes as disclosed in note 6.2. The average number of members of the Board and executive management during the year was 16 (2023: 18) and the amounts included in the table above reflect their remuneration. There were no other transactions with Directors for the periods covered by these Consolidated financial statements.", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutKeyManagementPersonnelExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-607": { "value": "
8.4 Restatements
Net presentation of sleeved electricity trades
The Group enters into electricity sale and purchase contracts for a number of reasons, in the course of its principal activity as a
generator and seller of electricity. The majority of these electricity trades are shown on a gross basis, meaning that electricity sales are
recognised in revenue and any electricity purchases are recognised in cost of sales. The Group enters certain sleeved electricity trades
in order to increase overall market liquidity and increase access to trading counterparties. In such trades the Group acts as an
intermediary to enable two other counterparties to trade. The buy and sell trades the Group enters into in these cases are equal and
opposite in volume terms.
During the year, the Group has reassessed these trades against the agent and principal requirements of IFRS 15 and concluded that
the Group is acting primarily as an agent. As such, these transactions are now presented net within revenue. Previously, these
electricity sales were presented within revenue and the electricity purchases were presented within cost of sales.
The Consolidated income statement comparatives for the year ended 31 December 2023 have been restated to reflect this revised
application. This restatement is purely a presentational change impacting the revenue and cost of sales lines in the Consolidated
income statement, as summarised in the table below. This restatement relates to the Biomass Generation segment. There is no impact
from this change on the Group\u2019s profit for the period, net assets, shareholders\u2019 equity, nor on gross profit or any other Consolidated
income statement subtotals. There is no impact on the Consolidated balance sheet, Consolidated statement of comprehensive
income, Consolidated statement of changes in equity or the Consolidated cash flow statement.
Year ended 31 December 2023
Adjusted results
Total results
Previously Previously
reported Restatement Restated reported Restatement Restated
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Revenue
7, 8 42 .4
( 392.1)
7,45
0. 3
8 ,125.3
( 392.1)
7,7 33.2
Cost of sales
(5,884.4)
392.1
(5,492.3)
(5,9 67.1)
392.1
(5,575.0)
Other comprehensive income presentation
The Group has restated comparatives for the year ended 31 December 2023 in the Consolidated statement of comprehensive income
to recognise fair value movements on cash flow hedges, cost of hedging, and the related deferred tax that were previously classified
as \u201citems that will not subsequently be reclassified to profit or loss\u201d, to \u201citems that may subsequently be reclassified to profit or loss\u201d.
This is to reflect the fact that, whilst considered unlikely, there are some potential future scenarios that may lead these items to be
reclassified to profit or loss. Comparative amounts have also been restated to present the fair value movements on financial assets
at fair value through other comprehensive income and the reclassification of these accumulated fair value gains or losses to the
Consolidated income statement on derecognition gross. These amounts were previously presented net. These restatements are
presentational changes. There is no impact on the Group\u2019s Other comprehensive income for the period or Total comprehensive income
for the period from this change. There is no impact from this change on the net assets or shareholders\u2019 equity, nor any impact on the
Consolidated income statement, Consolidated statement of changes in equity or the Consolidated cash flow statement.
Drax Group plc Annual report and accounts 2024
", "dimensions": { "concept": "ifrs-full:DisclosureOfReclassificationsOrChangesInPresentationExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-635": { "value": "8.4 Restatements Net presentation of sleeved electricity trades The Group enters into electricity sale and purchase contracts for a number of reasons, in the course of its principal activity as a generator and seller of electricity. The majority of these electricity trades are shown on a gross basis, meaning that electricity sales are recognised in revenue and any electricity purchases are recognised in cost of sales. The Group enters certain sleeved electricity trades in order to increase overall market liquidity and increase access to trading counterparties. In such trades the Group acts as an intermediary to enable two other counterparties to trade. The buy and sell trades the Group enters into in these cases are equal and opposite in volume terms. During the year, the Group has reassessed these trades against the agent and principal requirements of IFRS 15 and concluded that the Group is acting primarily as an agent. As such, these transactions are now presented net within revenue. Previously, these electricity sales were presented within revenue and the electricity purchases were presented within cost of sales. The Consolidated income statement comparatives for the year ended 31 December 2023 have been restated to reflect this revised application. This restatement is purely a presentational change impacting the revenue and cost of sales lines in the Consolidated income statement, as summarised in the table below. This restatement relates to the Biomass Generation segment. There is no impact from this change on the Group\u2019s profit for the period, net assets, shareholders\u2019 equity, nor on gross profit or any other Consolidated income statement subtotals. There is no impact on the Consolidated balance sheet, Consolidated statement of comprehensive income, Consolidated statement of changes in equity or the Consolidated cash flow statement.
Year ended 31 December 2023
Adjusted results
Total results
Previously Previously
reported Restatement Restated reported Restatement Restated
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Revenue
7, 8 42 .4
( 392.1)
7,45
0. 3
8 ,125.3
( 392.1)
7,7 33.2
Cost of sales
(5,884.4)
392.1
(5,492.3)
(5,9 67.1)
392.1
(5,575.0)
Other comprehensive income presentation The Group has restated comparatives for the year ended 31 December 2023 in the Consolidated statement of comprehensive income to recognise fair value movements on cash flow hedges, cost of hedging, and the related deferred tax that were previously classified as \u201citems that will not subsequently be reclassified to profit or loss\u201d, to \u201citems that may subsequently be reclassified to profit or loss\u201d. This is to reflect the fact that, whilst considered unlikely, there are some potential future scenarios that may lead these items to be reclassified to profit or loss. Comparative amounts have also been restated to present the fair value movements on financial assets at fair value through other comprehensive income and the reclassification of these accumulated fair value gains or losses to the Consolidated income statement on derecognition gross. These amounts were previously presented net. These restatements are presentational changes. There is no impact on the Group\u2019s Other comprehensive income for the period or Total comprehensive income for the period from this change. There is no impact from this change on the net assets or shareholders\u2019 equity, nor any impact on the Consolidated income statement, Consolidated statement of changes in equity or the Consolidated cash flow statement.", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesAccountingEstimatesAndErrorsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } }, "fact-653": { "value": "8.4 Restatements Net presentation of sleeved electricity trades The Group enters into electricity sale and purchase contracts for a number of reasons, in the course of its principal activity as a generator and seller of electricity. The majority of these electricity trades are shown on a gross basis, meaning that electricity sales are recognised in revenue and any electricity purchases are recognised in cost of sales. The Group enters certain sleeved electricity trades in order to increase overall market liquidity and increase access to trading counterparties. In such trades the Group acts as an intermediary to enable two other counterparties to trade. The buy and sell trades the Group enters into in these cases are equal and opposite in volume terms. During the year, the Group has reassessed these trades against the agent and principal requirements of IFRS 15 and concluded that the Group is acting primarily as an agent. As such, these transactions are now presented net within revenue. Previously, these electricity sales were presented within revenue and the electricity purchases were presented within cost of sales. The Consolidated income statement comparatives for the year ended 31 December 2023 have been restated to reflect this revised application. This restatement is purely a presentational change impacting the revenue and cost of sales lines in the Consolidated income statement, as summarised in the table below. This restatement relates to the Biomass Generation segment. There is no impact from this change on the Group\u2019s profit for the period, net assets, shareholders\u2019 equity, nor on gross profit or any other Consolidated income statement subtotals. There is no impact on the Consolidated balance sheet, Consolidated statement of comprehensive income, Consolidated statement of changes in equity or the Consolidated cash flow statement.
Year ended 31 December 2023
Adjusted results
Total results
Previously Previously
reported Restatement Restated reported Restatement Restated
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Revenue
7, 8 42 .4
( 392.1)
7,45
0. 3
8 ,125.3
( 392.1)
7,7 33.2
Cost of sales
(5,884.4)
392.1
(5,492.3)
(5,9 67.1)
392.1
(5,575.0)
Other comprehensive income presentation The Group has restated comparatives for the year ended 31 December 2023 in the Consolidated statement of comprehensive income to recognise fair value movements on cash flow hedges, cost of hedging, and the related deferred tax that were previously classified as \u201citems that will not subsequently be reclassified to profit or loss\u201d, to \u201citems that may subsequently be reclassified to profit or loss\u201d. This is to reflect the fact that, whilst considered unlikely, there are some potential future scenarios that may lead these items to be reclassified to profit or loss. Comparative amounts have also been restated to present the fair value movements on financial assets at fair value through other comprehensive income and the reclassification of these accumulated fair value gains or losses to the Consolidated income statement on derecognition gross. These amounts were previously presented net. These restatements are presentational changes. There is no impact on the Group\u2019s Other comprehensive income for the period or Total comprehensive income for the period from this change. There is no impact from this change on the net assets or shareholders\u2019 equity, nor any impact on the Consolidated income statement, Consolidated statement of changes in equity or the Consolidated cash flow statement.", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00" } } } }