{ "documentInfo": { "documentType": "https://xbrl.org/2021/xbrl-json", "features": { "xbrl:canonicalValues": true }, "namespaces": { "draxgroupplc": "http://draxgroupplc.com/xbrl/2025", "ifrs-full": "https://xbrl.ifrs.org/taxonomy/2024-03-27/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/2025/549300YPSNTXR4ZHSR98-2025-12-31.xsd" ] }, "facts": { "fact-1": { "value": "Drax Group plc", "dimensions": { "concept": "ifrs-full:NameOfReportingEntityOrOtherMeansOfIdentification", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-642": { "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 135 to 139 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 non-current assets \u2013 Going concern and viability \u2013 Useful economic lives of non-current 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 50 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 13. In assessing going concern the Directors have considered the period up to April 2027, which reflects a period of 14 months from the date of authorising the Consolidated financial statements for issue, as this extends beyond the Group\u2019s scheduled debt repayments in January and April 2027 totalling \u00a3140.0 million. There are no further debt maturities following these repayments until December 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 considers 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 49 and 50. The scenarios modelled included a decrease in power prices and an increase in biomass costs. At 31 December 2025, the Group had cash and committed facilities of \u00a3942.1 million (see note 2.7) and borrowings of \u00a3979.0 million (see note 4.2). Under all scenarios modelled, the Group maintained sufficient liquidity and continued to remain in compliance with its banking 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 49 and 50 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. The Group has an Employee Benefit Trust (EBT), primarily for the purpose of satisfying employee share plan awards. The Group is deemed to control the EBT in accordance with IFRS 10 and therefore the EBT is consolidated within the results of the Group. The assets and liabilities of the EBT are included in the Consolidated balance sheet. See note 4.4 for the accounting policy and further details on the Group\u2019s accounting for shares purchased by the EBT, note 4.5 for the accounting policy and further details on the Group\u2019s accounting for non-controlling interests and note 6.2 for further details on employee share plan awards. 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 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 the Group\u2019s biomass assets in the UK \u2013 Flexible Generation: generation and sale of electricity from pumped storage, run-of-river hydro and OCGT assets, and the processing and sale of waste-derived pellets, in the UK \u2013 Energy Solutions: 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 financial statements, which follow these Consolidated financial statements.", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralInformationAboutFinancialStatementsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-657": { "value": "
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 135 to 139 as well as voluntary
information which management believes users of the accounts may find useful, in line with the
principles of IFRS.
", "dimensions": { "concept": "ifrs-full:StatementOfIFRSCompliance", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-572": { "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 non-current assets
\u2013 Going concern and viability
\u2013 Useful economic lives of non-current 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 50 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 13.
In assessing going concern the Directors have considered the period up to April 2027, which
reflects a period of 14 months from the date of authorising the Consolidated financial statements
for issue, as this extends beyond the Group\u2019s scheduled debt repayments in January and April 2027
totalling \u00a3140.0 million. There are no further debt maturities following these repayments until
December 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 considers 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 49 and 50. The scenarios modelled included a
decrease in power prices and an increase in biomass costs. At 31 December 2025, the Group had
cash and committed facilities of \u00a3942.1 million (see note 2.7) and borrowings of \u00a3979.0 million (see
note 4.2). Under all scenarios modelled, the Group maintained sufficient liquidity and continued to
remain in compliance with its banking 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 49 and 50 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.
The Group has an Employee Benefit Trust (EBT), primarily for the purpose of satisfying employee
share plan awards. The Group is deemed to control the EBT in accordance with IFRS 10 and
therefore the EBT is consolidated within the results of the Group. The assets and liabilities of the
EBT are included in the Consolidated balance sheet.
See note 4.4 for the accounting policy and further details on the Group\u2019s accounting for shares
purchased by the EBT, note 4.5 for the accounting policy and further details on the Group\u2019s accounting
for non-controlling interests and note 6.2 for further details on employee share plan awards.
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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-617": { "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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-582": { "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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-583": { "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 50 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 13. In assessing going concern the Directors have considered the period up to April 2027, which reflects a period of 14 months from the date of authorising the Consolidated financial statements for issue, as this extends beyond the Group\u2019s scheduled debt repayments in January and April 2027 totalling \u00a3140.0 million. There are no further debt maturities following these repayments until December 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 considers 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 49 and 50. The scenarios modelled included a decrease in power prices and an increase in biomass costs. At 31 December 2025, the Group had cash and committed facilities of \u00a3942.1 million (see note 2.7) and borrowings of \u00a3979.0 million (see note 4.2). Under all scenarios modelled, the Group maintained sufficient liquidity and continued to remain in compliance with its banking 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 49 and 50 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-672": { "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. The Group has an Employee Benefit Trust (EBT), primarily for the purpose of satisfying employee share plan awards. The Group is deemed to control the EBT in accordance with IFRS 10 and therefore the EBT is consolidated within the results of the Group. The assets and liabilities of the EBT are included in the Consolidated balance sheet. See note 4.4 for the accounting policy and further details on the Group\u2019s accounting for shares purchased by the EBT, note 4.5 for the accounting policy and further details on the Group\u2019s accounting for non-controlling interests and note 6.2 for further details on employee share plan awards. 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. 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. The impact of all intra-group transactions, including any unrealised profit arising, is eliminated on consolidation. ", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-618": { "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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-658": { "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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-619": { "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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-580": { "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 121).
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 2024, except for the adoption of new standards and amendments
effective as of 1 January 2025. 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.
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 Executive Committee. The Group
is organised into four businesses. The Executive Committee 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 the Group\u2019s biomass assets in the
UK Flexible Generation: generation and sale of electricity from pumped storage, run-of-river
hydro and OCGT assets, and the processing and sale of waste-derived pellets, in the UK
\u2013 Energy Solutions: 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 provides central support
function activities to the Group, 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 the Group
is acting as the principal in a sales transaction and electricity is purchased rather than generated to
fulfil that 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 the 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.
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.
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 below.
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 certain non-hedge
accounted derivatives, the ineffective portion of certain 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 UK Government\u2019s 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.
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 non-current 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 unless FVLCD is considered more appropriate.
The future cash flows used in ViU calculations are based on the approved long-term forecasts
that support the Board and executive management\u2019s strategic planning process and include 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.
When calculating FVLCD, the method most appropriate for an individual asset or CGU is
considered. This is generally either based on available market information on prices or comparable
transactions, or a discounted cash flow method, similar to ViU, but including the impact of all
relevant factors a market participant would consider.
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 5.1 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 162 for a breakdown of the net deferred tax asset or liability position
for each jurisdiction.
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 77 for further details.
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.
Earnings per share (EPS) represents the amount of earnings (post-tax profits 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 91.8 million of repurchased shares
(2024: 57.8 million) held in treasury are shown in the own shares reserve and are not included in
the weighted average calculation of shares. See note 4.4 for details of the shares repurchased
in the current year as part of the \u00a3300 million and \u00a3450 million share buyback programmes and for
further details on the own 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.
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, and
capital projects. Where plant spares are used for capital projects they are included within the cost
of the asset and movements are presented in the transfer between PPE categories in the table
below. Where plant spares are used for maintenance projects 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 movements
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.
General and specific borrowing costs are capitalised as part of the cost of an asset if they are
directly attributable to the acquisition, construction or production of a qualifying asset. A qualifying
asset is one that takes a substantial period to get ready for intended use. The Group defines this
period to mean 12 months or more. Capitalisation of borrowing costs ceases once substantially all
the activities necessary to prepare the asset for its intended use or sale are complete. See note 2.5
for details of the borrowing costs capitalised during the year.
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.
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 .
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 cost
of disposal. The Group\u2019s policy is to recognise an impairment charge through accumulated
depreciation and impairment in the Consolidated income statement 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
net proceeds with the asset\u2019s carrying amount.
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 \u00a35,000,
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
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. 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 less incentives received prior to commencement of the lease.
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.
Valuations of generated ROCs and REGOs are comprised of the expected value to be obtained in
a sales transaction with a third-party supplier at the point of generation. These estimates are made
using various sources of information including future contracted and 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 2025, the Group is operating in CP24.
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). From April 2026, the
UK Government intends to change to Consumer Price Index (CPI)-based indexation, subject to the
publication of statutory instruments. The buy-out price for CP24 is \u00a367.06 (2024: CP23 \u00a364.73). 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.
At initial recognition, valuations of generated ROCs 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 the reporting date.
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 2025, the Group is operating in CP24.
At initial recognition, valuations of generated REGOs are usually based on published third-party
market price assessments.
Accounting policy
Renewable certificate assets are recognised at cost or deemed cost less any impairments.
Renewable certificates, principally ROCs and REGOs, are 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 the estimated price that would be achieved in a market sale
transaction, 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.
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 means that it requires 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.
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.
Financial assets are recognised at amortised cost if:
\u2013 they are 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 they are 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 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 2025, the receivables sold under this facility
were \u00a3275.6 million (2024: \u00a3386.3 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 in the prior year (see note 2.7
for further details), the receivables relating to the meter points sold were transferred to EDF. The
amount the Group received for transferring these receivables was dependent on the amounts
collected by EDF. The receivables sold to EDF did not qualify for derecognition under IFRS 9 as
Opus Energy had retained substantially all the risks and rewards of ownership of the financial
assets. These receivables were accounted for at FVTPL in accordance with IFRS 9, due to the
contractual terms of the financial assets giving rise to cash flows that were not SPPI. The cash
flows received by Opus Energy on collection of the receivables by EDF were calculated in
accordance with the Asset Purchase Agreement (APA) and were dependent on the amounts
collected by EDF, with the majority of these cash flows being settled in the prior year. The
impairment requirements of IFRS 9 did not apply to these receivables as the receivables were
measured at FVTPL. Subsequent to the transfer, any fair value gains or losses on these receivables
were recognised within the Consolidated income statement within operating and administrative
expenses. These receivables were fully settled during the year.
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.
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.
Contingent consideration receivable is classified as 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. At the reporting
date the fair value of the contingent consideration was assessed as \u00a3nil (2024: \u00a39.4 million)
resulting in a \u00a39.4 million fair value loss (2024: \u00a30.2 million fair value gain) recognised in the
Consolidated income statement.
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 and when an invoice is issued. Contract assets included in accrued income at 31 December 2025 were \u00a311.1 million (2024: \u00a343.4 million)
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 was adopted. The prior year
includes the change from the combined probability method which was used for the small and
medium-sized enterprise (SME) consumers within the Energy Solutions business. As a result of the
sale of the majority of the SME portfolio to EDF, the receivables balance and exposure to credit risk
for these customers significantly reduced in 2024. As such, the use of the combined probability
method was not deemed appropriate subsequent to this sale and the provision matrix method was
applied to all trade receivables.
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.
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.
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 arrangement 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 supported by 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. 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. Trade payables includes \u00a362.6 million
(2024: \u00a338.4 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 in
the Consolidated cash flow statement. 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
original 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 \u00a373.2 million (2024: \u00a3150.3 million)
related to deferred letters of credit. Of the total deferred letters of credit, \u00a342.4 million
(2024: \u00a392.8 million) were utilised for capital expenditure and \u00a330.8 million (2024: \u00a357.5 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 in the Consolidated
cash flow statement where utilised for biomass purchases or net cash used in investing activities
for capital expenditure. See note 4.3 for further details.
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 (see 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.
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 recognised 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.
If the terms of the debt instrument are not significantly modified, the modification is accounted for as
an adjustment to the carrying value of the existing liability. The revised cashflows are discounted at
the original effective interest rate and the difference between the new present value and the current
carrying value of the liability is recognised immediately 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 operating activities, dividends paid as cash flows from
financing activities, and dividends received as cash flows from investing activities. The interest
repayments on lease liabilities are included within interest paid, and the lease principal repayments
are 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.
Own shares reserve
The own shares reserve represents shares of Drax Group plc purchased under share buyback
programmes and held by the Company as Treasury shares, or shares of Drax Group plc held by the
EBT for the purpose of satisfying employee share plan awards. The EBT is treated as an extension
of the Company and therefore the Group, in accordance with IFRS 10.
The cost of the shares held by the EBT or the Company are recognised as a deduction from equity
until the shares are issued to employees under share awards, cancelled, reissued or disposed of.
The amount deducted from equity includes any incremental directly attributable costs. No gain or
loss is recognised in the Consolidated income statement on the purchase, sale, issue or cancellation
of the Company\u2019s own equity instruments. Where the Company has entered into a forward
contract and has an obligation to purchase a fixed amount of its own shares for a fixed price, the
present value of this obligation is recognised as a deduction to equity, within retained earnings, and
a corresponding liability is recognised. The unwinding of the discount is included in interest payable
and similar charges in the Consolidated income statement. Once the shares have been received
under this forward contract, the deduction to equity within retained earnings is transferred to the
own shares reserve.
Shares purchased under these share buyback programmes are held in treasury within the own shares reserve awaiting reissue or cancellation and have no voting rights attached to them. The shares purchased by the Group have not been cancelled and so continue to be included in the issued shares in the above table. 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.
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 2025, the Group has one (2024: two) subsidiary undertaking with NCIs.
During the year, the Group acquired the remaining 30% of NCI in Smithers Pellet Limited
Partnership increasing the Group\u2019s interest to 100%. See the transactions with NCI section below
for further information.
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).
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. Intangible assets with an indefinite useful life are assessed for impairment annually
at each reporting date, regardless of the presence of impairment indicators. The Group\u2019s policy is
to recognise any 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. Amortisation of intangible assets
is presented through the amortisation line of the Consolidated income statement.
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 occur. 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 at the amount of the unavoidable costs of meeting the obligations of the contract that 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. Other provisions relate to a provision in respect of dilapidation costs for rail cars. 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. Where share options have an exercise price, the proceeds received are credited to equity. Employer\u2019s social security obligations payable by the Group in respect of share-based payment awards are charged to the Consolidated income statement in line with IAS 19. Costs recognised in the Consolidated income statement in relation to share-based payments during the year were as follows:
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 from the Group
earned by employees for services rendered during 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.
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 changes. Due to the nature of the derivative financial instruments the
Group holds, minor differences in the inputs, assumptions or methodologies used can result in
different, but appropriate, 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 and any impact of
assumptions that are made when forward curves are not an exact match for the Group\u2019s derivative
contracts is not significant. As such, the fair value of derivatives is not considered a key source of
estimation uncertainty, as defined by IAS 1, as reasonably possible changes in inputs,
methodologies or assumptions would not result in a materially different value being recognised at
the reporting date.
Whilst the carrying amount of derivative assets and liabilities will likely change materially within
the next financial year, this is as a result of movements in market prices or rates. Movements in
market prices or rates are as a result of changes that occur subsequent to the reporting date and
are not indicative of an alternative valuation that could reasonably have been recognised at the
reporting date.
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. Certain
of the Group\u2019s borrowings (see note 4.2) 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 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 loan notes and amounts drawn against term loans (note 4.2). These financial liabilities are measured at amortised cost.
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 level of 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. The valuation technique in the prior year
was based on the assumption that the option to develop the land would be exercised if the
Capacity Market price were to clear above a certain level, providing sufficient certainty on the
economics of the development. This was calculated using a range of forecasts for future Capacity
Market auctions. During the current year, the probability of this trigger occurring is estimated to
have reduced to virtually zero. The probability of any of the other triggers occurring that would
result in the contingent consideration becoming due are also estimated to be virtually zero.
Therefore, a fair value loss of \u00a39.4 million has been recognised in the current year to reduce the
carrying value of the contingent consideration to \u00a3nil.
As the change in fair value reflects the reversal of a previous credit recorded within exceptional
items, the \u00a39.4 million has been excluded from Adjusted results and presented as an exceptional
item included within other gains and losses in the Consolidated income statement (see note 2.7).
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 that do not qualify for the own-use exemption (principally wholesale power, gas and carbon emissions allowances) and financial contracts (principally foreign exchange, interest, inflation, financial oil and financial 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 commodity and financial contracts 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 the biomass market means these contracts 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. 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 41). The Financial Risk Management Committee identifies, evaluates and manages financial risks in close coordination 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 for part of the year. 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 hedging instrument 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 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. The Group recognised \u00a33.5 million of gains (2024: \u00a38.7 million of losses) as ineffective primarily due to the basis difference between the RPI hedging instruments and the CPI exposure. In the current year, as a result of the updated estimates of the OCGT commissioning dates, the Group recycled \u00a30.8 million (2024: \u00a31.2 million) of losses to the Consolidated income statement on CPI inflation swaps designated as hedging instruments for the OCGT Capacity Market revenues, 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 currency exchange risk, interest rate risk, foreign currency exchange and interest 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 Group designates the change in the spot rate as the hedged risk in the Group\u2019s cash flow hedge relationships hedging the purchase of inventory denominated in foreign currencies. The Group designates the cost of hedging, being the change in fair value associated with forward points including currency basis, to equity. For foreign currency options designated as cash flow hedges for the purchase of inventory denominated in foreign currencies the Group designates only the change in intrinsic value as the hedged risk. The change in fair value associated with the time value of options is recognised in the cost of hedging reserve. The purchase of inventory denominated in a foreign currency is a transaction related hedged item that results in the recognition of a non-financial asset. As such, amounts accumulated in the cost of hedging reserve are removed from the cost of hedging reserve and included within the initial cost of the non-financial asset, being the inventory, on initial recognition of the non-financial asset. 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-576": { "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.
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.
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 that 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 \u00a335.1 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 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 \u00a31,044.8 million with a corresponding decrease in external cost of sales.
See note 2.2 on page 144
Biomass not being an active market 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, the Group has undertaken an assessment of whether the biomass market is an active market as defined by IFRS 13. If the biomass market was considered to be an active market this could result in the contracts it holds to buy and sell biomass being within the scope of IFRS 9 and potentially being recognised at fair value as derivative financial instruments from inception. In addition, this may result in Southern Pellets being classified as a separate cash-generating unit (CGU) under IAS 36. The Group assessed the biomass market, including both 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. Contractual terms do not include net settlement provisions and the biomass market is highly illiquid 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, and Southern Pellets is not designated as a separate CGU and is instead included within the Biomass CGU as explained in note 2.4. The Group continues to assess developments in the biomass market on an ongoing basis to identify any impact on this assessment. 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 of non-current assets An impairment assessment is conducted annually on cash-generating units (CGUs) or groups of CGUs, with associated goodwill or intangible assets with an indefinite life. In 2025, an impairment assessment has been completed on six of the Group\u2019s CGUs. All six of these CGUs have been assessed as they had allocated goodwill (Northern Pellets, Biomass, Drax Energy Solutions, Lanark, Galloway and Cruachan). No CGUs have intangibles with an indefinite life. The 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). Biomass CGU The Biomass CGU has a carrying value at 31 December 2025 of \u00a31,412.3 million. Reasonably possible changes in certain assumptions used in the value in use model could lead to a material adjustment to this carrying value. These include: an average 27% decrease in power prices over the period of the low carbon dispatchable CfD agreement from April 2027 to March 2031, combined with a 90-day outage of one of the units under the Renewables Obligation scheme in 2026, an increase in biomass production costs of US$7 per tonne, an increase in the pre-tax discount rate from 11.5% to 23.7% (equivalent to an increase in the post-tax discount rate from 7.5% to 8.3%), and operations to cease in March 2031 at the end of the low carbon dispatchable CfD agreement. This combination of reasonably possible changes in the key inputs to the value in use model would lead to an impairment of \u00a3650.1 million. Northern Pellets CGU During 2025, impairment losses of \u00a3194.1 million have been recognised relating to the Northern Pellets CGU, reducing the carrying value to its recoverable amount of \u00a384.2 million, based on its fair value less costs of disposal (FVLCD). Reasonably possible changes in certain assumptions could lead to a material adjustment to the carrying value of the Northern Pellets CGU as at 31 December 2025. The assessment of FVLCD for the Northern Pellets CGU is sensitive to reasonably possible changes to the key inputs to the valuation model and assumptions relating to the fair value of individual assets. Reasonably possible downside changes in assumptions from those used in the FVLCD calculation include a 50% reduction in assumed central cost savings, combined with a 7% decrease in pellet sales contract renewal prices, an increase in the pre-tax discount rate from 19.3% to 30.8% (equivalent to an increase in the post-tax discount rate from 15.0% to 18.0%), and a reasonably possible 30% decrease in the fair value determined for the individual assets that were not allocated an impairment loss. This combination of reasonably possible changes would result in an increase in the impairment recognised of \u00a327.1 million and a corresponding reduction in the carrying value of the Northern Pellets CGU. Reasonably possible upside changes in assumptions from those used in the FVLCD calculation include a 7% increase in pellet sales contract renewal prices, combined with a decrease in the pre-tax discount rate from 19.3% to 15.0% (equivalent to a decrease in the post-tax discount rate from 15.0% to 12.0%). This combination of reasonably possible changes would result in a reduction in the impairment recognised of \u00a372.6 million and a corresponding increase in the carrying value of the Northern Pellets CGU. Impairment assessments are performed as required for other assets and CGUs where an indicator of possible impairment exists. Longview During 2025, an impairment loss of \u00a3108.8 million has been recognised relating to the Group\u2019s Longview pellet plant development project (Longview). Due to reduced expectations around global pellet demand in the short to medium term, in part as a result of the reduced volumes of biomass generation agreed under the low carbon dispatchable CfD contract, the decision has been taken to pause this development and no development of the site is expected in the near term. The capitalised Longview assets have been impaired to their recoverable amount of \u00a313.7 million (principally the value of the land at the site). This recoverable amount has been estimated after considering the level of customisation and general market conditions. If the Group is able to return assets to suppliers; or achieve third-party sales; or find internal use for parts and spares at the Group\u2019s other pellet plants; or if any scrap value achieved exceeds the costs of disposal, then the recovery value could be higher. If an average recovery value of 40% on plant and equipment had been assumed, this would result in a decrease in the impairment recognised of \u00a329.5 million and a corresponding increase in the carrying value of the Longview assets. See note 2.4 on page 150 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 total value of the pension liabilities at 31 December 2025 amount to \u00a3184.8 million and the net pension surplus recognised by the Group at this date is \u00a323.8 million. See note 6.3 on page 210
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.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-584": { "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 of non-current assets An impairment assessment is conducted annually on cash-generating units (CGUs) or groups of CGUs, with associated goodwill or intangible assets with an indefinite life. In 2025, an impairment assessment has been completed on six of the Group\u2019s CGUs. All six of these CGUs have been assessed as they had allocated goodwill (Northern Pellets, Biomass, Drax Energy Solutions, Lanark, Galloway and Cruachan). No CGUs have intangibles with an indefinite life. The 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). Biomass CGU The Biomass CGU has a carrying value at 31 December 2025 of \u00a31,412.3 million. Reasonably possible changes in certain assumptions used in the value in use model could lead to a material adjustment to this carrying value. These include: an average 27% decrease in power prices over the period of the low carbon dispatchable CfD agreement from April 2027 to March 2031, combined with a 90-day outage of one of the units under the Renewables Obligation scheme in 2026, an increase in biomass production costs of US$7 per tonne, an increase in the pre-tax discount rate from 11.5% to 23.7% (equivalent to an increase in the post-tax discount rate from 7.5% to 8.3%), and operations to cease in March 2031 at the end of the low carbon dispatchable CfD agreement. This combination of reasonably possible changes in the key inputs to the value in use model would lead to an impairment of \u00a3650.1 million. Northern Pellets CGU During 2025, impairment losses of \u00a3194.1 million have been recognised relating to the Northern Pellets CGU, reducing the carrying value to its recoverable amount of \u00a384.2 million, based on its fair value less costs of disposal (FVLCD). Reasonably possible changes in certain assumptions could lead to a material adjustment to the carrying value of the Northern Pellets CGU as at 31 December 2025. The assessment of FVLCD for the Northern Pellets CGU is sensitive to reasonably possible changes to the key inputs to the valuation model and assumptions relating to the fair value of individual assets. Reasonably possible downside changes in assumptions from those used in the FVLCD calculation include a 50% reduction in assumed central cost savings, combined with a 7% decrease in pellet sales contract renewal prices, an increase in the pre-tax discount rate from 19.3% to 30.8% (equivalent to an increase in the post-tax discount rate from 15.0% to 18.0%), and a reasonably possible 30% decrease in the fair value determined for the individual assets that were not allocated an impairment loss. This combination of reasonably possible changes would result in an increase in the impairment recognised of \u00a327.1 million and a corresponding reduction in the carrying value of the Northern Pellets CGU. Reasonably possible upside changes in assumptions from those used in the FVLCD calculation include a 7% increase in pellet sales contract renewal prices, combined with a decrease in the pre-tax discount rate from 19.3% to 15.0% (equivalent to a decrease in the post-tax discount rate from 15.0% to 12.0%). This combination of reasonably possible changes would result in a reduction in the impairment recognised of \u00a372.6 million and a corresponding increase in the carrying value of the Northern Pellets CGU. Impairment assessments are performed as required for other assets and CGUs where an indicator of possible impairment exists. Longview During 2025, an impairment loss of \u00a3108.8 million has been recognised relating to the Group\u2019s Longview pellet plant development project (Longview). Due to reduced expectations around global pellet demand in the short to medium term, in part as a result of the reduced volumes of biomass generation agreed under the low carbon dispatchable CfD contract, the decision has been taken to pause this development and no development of the site is expected in the near term. The capitalised Longview assets have been impaired to their recoverable amount of \u00a313.7 million (principally the value of the land at the site). This recoverable amount has been estimated after considering the level of customisation and general market conditions. If the Group is able to return assets to suppliers; or achieve third-party sales; or find internal use for parts and spares at the Group\u2019s other pellet plants; or if any scrap value achieved exceeds the costs of disposal, then the recovery value could be higher. If an average recovery value of 40% on plant and equipment had been assumed, this would result in a decrease in the impairment recognised of \u00a329.5 million and a corresponding increase in the carrying value of the Longview assets. See note 2.4 on page 150 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 total value of the pension liabilities at 31 December 2025 amount to \u00a3184.8 million and the net pension surplus recognised by the Group at this date is \u00a323.8 million. See note 6.3 on page 210 ", "dimensions": { "concept": "ifrs-full:ExplanationOfAssumptionAboutFutureWithSignificantRiskOfResultingInMaterialAdjustments", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-673": { "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 of non-current assets An impairment assessment is conducted annually on cash-generating units (CGUs) or groups of CGUs, with associated goodwill or intangible assets with an indefinite life. In 2025, an impairment assessment has been completed on six of the Group\u2019s CGUs. All six of these CGUs have been assessed as they had allocated goodwill (Northern Pellets, Biomass, Drax Energy Solutions, Lanark, Galloway and Cruachan). No CGUs have intangibles with an indefinite life. The 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). Biomass CGU The Biomass CGU has a carrying value at 31 December 2025 of \u00a31,412.3 million. Reasonably possible changes in certain assumptions used in the value in use model could lead to a material adjustment to this carrying value. These include: an average 27% decrease in power prices over the period of the low carbon dispatchable CfD agreement from April 2027 to March 2031, combined with a 90-day outage of one of the units under the Renewables Obligation scheme in 2026, an increase in biomass production costs of US$7 per tonne, an increase in the pre-tax discount rate from 11.5% to 23.7% (equivalent to an increase in the post-tax discount rate from 7.5% to 8.3%), and operations to cease in March 2031 at the end of the low carbon dispatchable CfD agreement. This combination of reasonably possible changes in the key inputs to the value in use model would lead to an impairment of \u00a3650.1 million. Northern Pellets CGU During 2025, impairment losses of \u00a3194.1 million have been recognised relating to the Northern Pellets CGU, reducing the carrying value to its recoverable amount of \u00a384.2 million, based on its fair value less costs of disposal (FVLCD). Reasonably possible changes in certain assumptions could lead to a material adjustment to the carrying value of the Northern Pellets CGU as at 31 December 2025. The assessment of FVLCD for the Northern Pellets CGU is sensitive to reasonably possible changes to the key inputs to the valuation model and assumptions relating to the fair value of individual assets. Reasonably possible downside changes in assumptions from those used in the FVLCD calculation include a 50% reduction in assumed central cost savings, combined with a 7% decrease in pellet sales contract renewal prices, an increase in the pre-tax discount rate from 19.3% to 30.8% (equivalent to an increase in the post-tax discount rate from 15.0% to 18.0%), and a reasonably possible 30% decrease in the fair value determined for the individual assets that were not allocated an impairment loss. This combination of reasonably possible changes would result in an increase in the impairment recognised of \u00a327.1 million and a corresponding reduction in the carrying value of the Northern Pellets CGU. Reasonably possible upside changes in assumptions from those used in the FVLCD calculation include a 7% increase in pellet sales contract renewal prices, combined with a decrease in the pre-tax discount rate from 19.3% to 15.0% (equivalent to a decrease in the post-tax discount rate from 15.0% to 12.0%). This combination of reasonably possible changes would result in a reduction in the impairment recognised of \u00a372.6 million and a corresponding increase in the carrying value of the Northern Pellets CGU. Impairment assessments are performed as required for other assets and CGUs where an indicator of possible impairment exists. Longview During 2025, an impairment loss of \u00a3108.8 million has been recognised relating to the Group\u2019s Longview pellet plant development project (Longview). Due to reduced expectations around global pellet demand in the short to medium term, in part as a result of the reduced volumes of biomass generation agreed under the low carbon dispatchable CfD contract, the decision has been taken to pause this development and no development of the site is expected in the near term. The capitalised Longview assets have been impaired to their recoverable amount of \u00a313.7 million (principally the value of the land at the site). This recoverable amount has been estimated after considering the level of customisation and general market conditions. If the Group is able to return assets to suppliers; or achieve third-party sales; or find internal use for parts and spares at the Group\u2019s other pellet plants; or if any scrap value achieved exceeds the costs of disposal, then the recovery value could be higher. If an average recovery value of 40% on plant and equipment had been assumed, this would result in a decrease in the impairment recognised of \u00a329.5 million and a corresponding increase in the carrying value of the Longview assets. See note 2.4 on page 150 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 total value of the pension liabilities at 31 December 2025 amount to \u00a3184.8 million and the net pension surplus recognised by the Group at this date is \u00a323.8 million. See note 6.3 on page 210 ", "dimensions": { "concept": "ifrs-full:DisclosureOfAssetsAndLiabilitiesWithSignificantRiskOfMaterialAdjustmentExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-585": { "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 and executive management 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 reviews the list of APMs and confirms the judgements made regarding the Group\u2019s definitions of its APMs, including exceptional items, 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 77.
See note 2.7 for details of the APMs used by the Board and executive management to assess
financial performance, including 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.
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 2025. 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.
See note 2.7 on page 163
2.7 Alternative performance measures This note 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 (see pages 169 to 170). 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 77 for further details. In these Consolidated financial statements, the following transactions have been designated as exceptional items and presented separately: \u2013 Opus Energy sale of meter points and restructuring: 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 (Energy Solutions, 2024 and 2025). See below for further details. \u2013 Impairment of Longview and related costs: Asset impairment charges of \u00a3108.8 million (see note 2.4), the recognition of provisions for onerous fibre contracts of \u00a322.0 million (see note 5.2) and \u00a38 .1 million of other costs relating to the Group\u2019s decision to pause the Longview development project (Pellet Production, 2025). \u2013 Impairment of UK BECCS: Impairment of capitalised development costs relating to the Group\u2019s UK BECCS development project (Biomass Generation, 2025). See note 2.4 for further details. \u2013 Impairment of Northern Pellets CGU and related costs: Asset impairment charges of \u00a319 4.1 million (see note 2.4) and related costs of \u00a33.7 million within the Group\u2019s Northern Pellets business (Pellet Production, 2025). See note 2.4 for further details on the impairment of the Northern Pellets CGU. \u2013 Change in the fair value of contingent consideration (Flexible Generation, 2025). See note 7.1 for details. \u2013 Transformation and restructuring (all segments, 2025). See below for further details. Certain remeasurements comprise fair value 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. Management believes adjusting for fair value gains and losses recognised on derivative contracts provides users of the Consolidated financial statements with useful information, as this removes volatility caused by movements in market prices over the life of the derivative contracts. 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 regards all of its forward contracting activity to represent economic hedges to secure
prices and rates, and lock in value for its future expected pellet production, generation or energy
supply activities. The contracted price is therefore deemed relevant and representative of the
Group and its performance, rather than how the contracted price compares to prevailing market
prices, as the Group is not seeking to make trading profits on these derivative contracts through
market price movements. The effect of excluding certain remeasurements from Adjusted results
is that commodity sales and purchases are recognised in Adjusted results 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 Adjusted results on maturity, being 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 2025 the amounts
recognised were predominantly due to fair value gains recognised on foreign exchange contracts
on matured trades, due to GBP weakening against USD when compared to the original trade dates,
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.
The effective tax rate on exceptional items of 2.2% during the current year is lower than the
standard corporation tax rate applicable in the relevant jurisdictions as a result of the non-
deductibility of the impairment of non-current assets within the Northern Pellets CGU, and the
related derecognition of deferred tax assets in Canada as a result of this. The Group does not
believe tax deductions will be recognised for these items in the future.
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Exceptional items:
Opus Energy sale of meter points and restructuring
(1.1)
(59.5)
Impairment of Longview and related costs
(138.0)
\u2013
Impairment of UK BECCS
(47.6)
\u2013
Impairment of Northern Pellets CGU and related costs
(197. 8)
\u2013
Change in fair value of contingent consideration
(9.4)
\u2013
Transformation and restructuring
(9.4)
\u2013
Exceptional items included within operating profit
(403.3)
(59.5)
Interest expense relating to Longview
(0.9)
\u2013
Exceptional items included within profit before tax
(404.2)
(59.5)
Tax on exceptional items
8.9
14.8
Exceptional items after tax
(395.3)
(44.7)
Certain remeasurements:
Net derivative fair value remeasurements included in revenue
24.9
11.9
Net derivative remeasurements realised on maturity included in revenue
8.4
7 7.6
Net hedge ineffectiveness recognised in revenue
2.0
(8.2)
Net derivative fair value remeasurements included in cost of sales
(55.4)
45.3
Net derivative remeasurements realised on maturity included in cost of sales
(6.5)
(17.1)
Certain remeasurements included within operating profit
(26.6)
109.5
Net derivative remeasurements realised on maturity included in interest payable
and similar charges
0.3
(0.6)
Net amounts reclassified due to the hedged cash flows no longer expected to
occur included in interest payable and similar charges
(0.9)
\u2013
Net derivative fair value remeasurements included in foreign exchange gains
1.2
\u2013
Net hedge ineffectiveness recognised in foreign exchange losses
(3.6)
\u2013
Certain remeasurements included in profit before tax
(29.6)
108.9
Tax on certain remeasurements
7. 4
(29.7)
Certain remeasurements after tax
(22.2)
79.2
Reconciliation of profit for the period:
Adjusted profit for the period
485.7
491.0
Exceptional items after tax
(395.3)
(44.7)
Certain remeasurements after tax
(22.2)
79.2
Total profit for the period
68.2
525.5
Opus Energy sale of meter points and restructuring
In May 2025 the Group completed the sale of its non-core SME customer meter points, a process
which commenced in 2024 with the sale of the majority of its SME customer meter points to EDF
Energy Customers Limited and concluded with the sale of the residual SME customer supply meter
points and related receivables to Pozitive Energy Limited. All SME supply meter points have now
been disposed of. An employee consultation process has also been completed resulting in a
reduction in headcount to reflect a focus on core industrial and commercial (I&C) and renewables
services. 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 2025 in respect of in scope
colleagues who had not yet left the Group. See note 5.2 for further details.
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
2025 2024
\u00a3m \u00a3m
Consideration received for customer meter points
3.6
9.6
Net liabilities/(assets) disposed of directly related to the transferred
customers
2.2
(8.4)
Profit on disposal of customer meter points \u2013 included in other
gains and losses
5.8
1.2
Other losses incurred as a direct result of the transaction and
restructuring
Redundancy, transaction and migration costs \u2013 included in
operating and administrative expenses
(2.6)
(9.2)
Onerous contracts provision, impairment of prepaid commissions
and final commission settlement on retained customers \u2013 included
in cost of sales
\u2013
(23.3)
Fair value movements on receivables relating to customers
transferred to EDF (note 3.5) \u2013 included in operating and
administrative expenses
(0.5)
(12.9)
Impairment of trade receivables \u2013 included in impairment losses on
financial assets
(3.8)
(12.7)
Impairment of non-current assets (note 2.4) \u2013 included in
impairment of non-current assets
\u2013
(2.6)
Net loss recognised as a result of the transaction
(1.1)
(59.5)
During the current year the Group had a net cash outflow of \u00a31.1 million in respect of the Opus
Energy transaction. This comprised a cash inflow of \u00a33.6 million of consideration received and a
cash outflow of \u00a34.7 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.
Transformation and restructuring
The Group has commenced a significant transformation programme (\u201cFuture Focus\u201d) centred
around growth, efficiency and performance culture. As part of this programme, the organisational
structure has been redesigned in order to deliver an appropriate cost base under the low carbon
dispatchable CfD agreement from April 2027. This transformation programme commenced in 2025
and is expected to run through to the end of 2026. The costs incurred in the year primarily relate
to employee severance costs and related consultancy costs.
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 2025
Profit/(loss) Basic Net cash from
Operating Profit for the earnings operating
Revenue Gross profit profit before tax Tax (charge)/credit period per share activities
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Pence \u00a3m
Total results IFRS measure
5,390.7
1,512.9
241.3
189.5
(121.3)
68.2
20.7
810.0
Certain remeasurements:
Net fair value remeasurement on derivative contracts
(35.3)
26.6
26.6
29.6
(7.4)
22.2
6.3
\u2013
Exceptional items:
Opus Energy sale of meter points and restructuring
\u2013
\u2013
1.1
1.1
\u2013
1.1
0.3
1.1
Impairment of Longview and related costs
\u2013
22.0
138.0
138.9
(34.7)
104.2
29.5
0.9
Impairment of UK BECCS
\u2013
\u2013
47.6
47.6
(11.9)
35.7
10 .1
\u2013
Impairment of Northern Pellets CGU and related costs
\u2013
0 .1
197. 8
197. 8
42.5
240.3
66.8
0.5
Change in fair value of contingent consideration
\u2013
\u2013
9.4
9.4
(2.4)
7.0
2.0
\u2013
Transformation and restructuring
\u2013
\u2013
9.4
9.4
(2.4)
7. 0
2.0
5.8
Total
(35.3)
48.7
429.9
433.8
(16.3)
417.5
117.0
8.3
Adjusted results totals
5,355.4
1,561.6
671.2
623.3
(137. 6)
485.7
137.7
818.3
Year ended 31 December 2024
Profit/(loss) Basic Net cash from
Operating Profit for the earnings/(loss) operating
Revenue Gross profit profit before tax Tax (charge)/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
(2 27.9)
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
Adjusted EBITDA
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 2025
Attributable to
Owners of the Non-controlling
parent company interests Total
\u00a3m \u00a3m \u00a3m
Adjusted operating profit/(loss)
671.3
(0 .1)
671.2
Depreciation and amortisation
24 2.1
1.0
243.1
Other losses
4.4
\u2013
4.4
Share of losses from associates
1.6
\u2013
1.6
Impairment of non-current assets
27.2
\u2013
27. 2
Adjusted EBITDA
946.6
0.9
947.5
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
2025 2024
\u00a3m \u00a3m
Segment Adjusted EBITDA:
Pellet Production
129.4
143.0
Biomass Generation
725.4
813.5
Flexible Generation
110.9
137.6
Energy Solutions
48.7
51.2
Innovation, capital projects and other
(74.3)
(78 .1)
Intra-group eliminations
6.5
(3.0)
Total Adjusted EBITDA
946.6
1,064.2
Net debt
The below table reconciles the Group\u2019s Net debt:
As at 31 December
2025 2024
\u00a3m \u00a3m
Borrowings (note 4.2)
(979.0)
(1,176.7)
Lease liabilities (note 3.2)
(98.6)
(116.5)
Cash and cash equivalents
302 .1
356.0
Net cash, borrowings and lease liabilities
(775.5)
(937.2)
Non-controlling interests\u2019 share of cash and cash equivalents in
non-wholly owned subsidiaries
(0.6)
(0.8)
Non-controlling interests\u2019 share of lease liabilities in non-wholly
owned subsidiaries
0.4
0.5
Impact of hedging instruments
( 7.9)
(54.2)
Net debt
(783.6)
(991.7)
The table below reconciles Net debt in terms of changes in these balances across the year:
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Net debt at 1 January
(991.7)
(1,219.7)
Decrease in cash and cash equivalents
(53.9)
(23.5)
Decrease/(increase) in non-controlling interests\u2019 share of cash and
cash equivalents in non-wholly owned subsidiaries
0.2
(0.5)
Decrease in borrowings
197.7
248.6
Decrease in lease liabilities
17.9
19.3
(Decrease)/increase in non-controlling interests\u2019 share of lease
liabilities in non-wholly owned subsidiaries
(0.1)
0.5
Movement in the impact of hedging instruments
46.3
(16.4)
Net debt at 31 December
(783.6)
(991.7)
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
2025
2024
Adjusted EBITDA (\u00a3m)
946.6
1,064.2
Net debt (\u00a3m)
(783.6)
(991.7)
Net debt to Adjusted EBITDA ratio
0.8
0.9
Cash and committed facilities
The below table reconciles the Group\u2019s available cash and committed facilities:
As at 31 December
2025 2024
\u00a3m \u00a3m
Cash and cash equivalents (note 4.1)
302 .1
356.0
RCF available but not utilised
(1)
450.0
450.0
Term loan agreed but not drawn
190.0
\u2013
Total cash and committed facilities
94 2.1
806.0
(1) The Group holds a \u00a3450.0 million RCF facility. As at 31 December 2025, the Group had no cash or non-cash drawings under
the RCF (31 December 2024: no cash or non-cash drawings). See note 4.2 for further information on the Group\u2019s facilities.
Capital expenditure
The Group\u2019s definition of capital expenditure was updated in the year to exclude capitalised
borrowing costs and capital plant spares (see note 2.1 for further details of this change). The table
below shows the reconciliation between capital expenditure in note 2.1 and the additions shown
in notes 3.1 and 5.1:
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Capital additions (notes 3.1 and 5.1)
232.5
332.4
Capitalised borrowing costs in period (note 2.5)
(26.0)
(1.7)
Capital plant spares additions (note 3.1)
(4.7)
(9.9)
Total capital expenditure (note 2.1)
201.8
320.8
APM
Closest IFRS equivalent measure
Purpose
Definition
Adjusted results
Total result s
The Group\u2019s Adjusted results are consistent with the way the Board and
Total results measured in accordance with IFRS excluding the impact
executive management assess the performance of the Group. Adjusted of exceptional items and certain remeasurements.
results are intended to reflect the underlying trading performance of Exceptional items and certain remeasurements are defined above.
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 on a
consistent basis.
Adjusted results excludes 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.
Certain remeasurements comprise fair value gains and losses that do
not qualify for hedge accounting (or hedge accounting is not effective).
The Group regards all of its forward contracting activity to represent
economic hedges and therefore by excluding the volatility caused by
recognising fair value gains and losses prior to maturity of the
contracts, the Group can reflect these contracts at the contracted
prices on maturity, reflecting the intended purpose of entering these
contracts and the Group\u2019s underlying performance.
Adjusted results are the metrics used in the calculation of Adjusted
basic EPS and Adjusted diluted EPS.
Adjusted EBITDA
Operating profit
(1)
Adjusted EBITDA is the primary measure used by the Board and Earnings before interest, tax, depreciation, amortisation, other gains
executive management to assess the financial performance of the and losses and impairment of non-current assets, excluding the impact
Group as it provides a more comparable assessment of the Group\u2019s of exceptional items and certain remeasurements.
year-on-year trading performance. It is also a key metric used by Adjusted EBITDA excludes any earnings from associates or attributable
the investor community to assess the performance of the Group\u2019s to non-controlling interests.
operations.
Adjusted basic EPS
Basic EPS
Adjusted basic EPS represents the amount of Adjusted earnings
Adjusted basic EPS is calculated by dividing the Group\u2019s Adjusted
(Adjusted profit after tax) attributable to each ordinary share earnings attributable to owners of the parent company (Adjusted profit
outstanding. after tax) by the weighted average number of ordinary shares
outstanding during the period.
Adjusted diluted EPS
Diluted EPS
Adjusted diluted EPS demonstrates the impact upon the Adjusted basic
Adjusted diluted EPS is calculated by dividing the Group\u2019s Adjusted
EPS if all outstanding share options, that are expected to vest on their earnings (Adjusted profit after tax) attributable to owners of the parent
future maturity dates and where the shares are considered to be company by the weighted average number of ordinary shares
dilutive, were exercised and treated as ordinary shares as at the outstanding during the period and dilutive potential ordinary shares
reporting date. outstanding under share plans during the period.
(1) Operating profit is presented in the Group\u2019s Consolidated income statement; however, it is not defined per IFRS. It is a generally accepted measure of profit.
APM
Closest IFRS equivalent measure
Purpose
Definition
Borrowings
n/a
(2)
Borrowings provides information relating to the Group\u2019s use of debt. Borrowings includes external financial debt, such as loan notes, term
It is a key measure of leverage and provides information on the sources loans and amounts drawn in cash under revolving credit facilities (RCFs)
of liquidity for the Group. (see note 4.2). Borrowings does not include other financial liabilities
such as pension obligations (see note 6.3), trade and other payables
including supply chain finance (see note 3.7), lease liabilities calculated
in accordance with IFRS 16 (see note 3.2), 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).
Net debt
Borrowings and lease
Net debt is a key measure of the Group\u2019s liquidity and its ability to Borrowings (as defined above) including the impact of hedging
liabilities less cash and manage its financial obligations. instruments, and lease liabilities calculated in accordance with IFRS 16
cash equivalents Net debt is used as a basis by debt rating agencies to assess credit risk, less cash and cash equivalents.
and in the calculation of the Group\u2019s financial covenant requirements. Net debt excludes the proportion of cash, lease liabilities and
The impact of hedging instruments included within Net debt shows borrowings in non-wholly owned entities that would be attributable to
the economic substance of the Net debt position, in terms of actual the non-controlling interests.
expected future cash flows to settle that debt. Net debt includes the impact of foreign currency hedging instruments,
meaning that any borrowings that have associated hedging instruments
in place are adjusted to reflect those borrowings at the hedged rate.
Net debt includes the impact of any cash collateral receipts from
counterparties or cash collateral posted to counterparties.
Net debt to Adjusted Borrowings and lease The Net debt to Adjusted EBITDA ratio is a debt ratio that gives an Net debt divided by Adjusted EBITDA for the last twelve months
EBITDA ratio liabilities less cash and indication of how many years it would take the Group to pay back its expressed as a multiple.
cash equivalents debt if Net debt and Adjusted EBITDA are held constant.
divided by operating
(1) The Group has a long-term target for Net debt to Adjusted EBITDA
profit
of around 2.0 times.
Cash and committed Cash and cash This is a key measure of the Group\u2019s available liquidity and the Group\u2019s Total cash and cash equivalents plus the value of the Group\u2019s
facilities equivalents ability to manage its current obligations. committed but undrawn facilities (including the Group\u2019s RCF, loan
It shows the value of cash available to the Group in a short period facilities and the Energy Solutions non-recourse trade receivables
of time. monetisation facility, to the extent that there are eligible receivables
available to utilise undrawn amounts).
Capital expenditure
(3)
Property, plant and Used to show the Group\u2019s total spend on PPE and intangible assets PPE additions plus intangible asset additions, excluding capitalised
equipment (PPE) in a year. borrowing costs and capital plant spare additions.
additions and
intangible asset
additions
(1) Operating profit is presented in the Group\u2019s Consolidated income statement; however, it is not defined per IFRS. It is a generally accepted measure of profit.
(2) Borrowings are presented in the Group\u2019s Consolidated balance sheet; they are a commonly used balance sheet line item heading; however, borrowings are not defined by IFRS, therefore the Group\u2019s borrowings may not be comparable to borrowings
presented by other companies.
(3) During 2025, the definition of Capital expenditure has been updated to align with the way the information is currently presented to the Board and executive management. The definition now excludes capitalised borrowing costs and capital plant spare
additions. See the capital expenditure by segment table in note 2.1 for further details of this change.
", "dimensions": { "concept": "draxgroupplc:DisclosureOfAlternativePerformanceMeasures", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-696": { "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 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 77 for further details. 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. 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"iso4217:GBP" } }, "fact-571": { "value": "356000000.0", "decimals": -5, "dimensions": { "concept": "ifrs-full:CashAndCashEquivalents", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-586": { "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 Executive Committee. The Group is organised into four businesses. The Executive Committee 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 the Group\u2019s biomass assets in the UK Flexible Generation: generation and sale of electricity from pumped storage, run-of-river hydro and OCGT assets, and the processing and sale of waste-derived pellets, in the UK \u2013 Energy Solutions: 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 provides central support function activities to the Group, 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 the Group is acting as the principal in a sales transaction and electricity is purchased rather than generated to fulfil that 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 the 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 determined that EGL 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 2025 was \u00a379.95 per MWh (2024: \u00a377.94 per MWh). The assessment is based on receipts above this threshold after adjusting for allowable costs. No expense for EGL has been recognised in the current period due to the average actual generation receipts in the period being below the threshold. 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 2025. 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 2025
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
329.3
2,314.7
78 .1
2,633.3
\u2013
\u2013
5,355.4
35.3
5,390.7
Inter-segment sales
574.1
2,090.4
93.4
\u2013
\u2013
(2,757.9)
\u2013
\u2013
\u2013
Total revenue
903.4
4 ,4 05.1
171.5
2,633.3
\u2013
(2,757.9)
5,355.4
35.3
5,390.7
Cost of sales
(550.9)
(3,453.6)
(24.5)
(2,524.6)
(6.9)
2,766.7
(3,793.8)
(84.0)
( 3, 877.8)
Gross profit/(loss)
352.5
951.5
147.0
108.7
(6.9)
8.8
1,561.6
(48.7)
1,512.9
Operating and administrative expenses
(222.2)
(225.8)
(3 6 .1)
(60.8)
(67.4)
(2.3)
(614.6)
(23.3)
(637.9)
Impairment of financial assets
\u2013
(0.3)
\u2013
0.8
\u2013
\u2013
0.5
(3.8)
(3.3)
Depreciation
(95.7)
(105.3)
(19.2)
(0.9)
( 7.0)
(0.8)
(228.9)
\u2013
(228.9)
Amortisation
(4.3)
(3.9)
\u2013
(4.2)
(1.8)
\u2013
(14.2)
\u2013
(14.2)
Impairment of non-current assets
(25.6)
\u2013
\u2013
\u2013
(1.6)
\u2013
(27. 2)
(350.5)
( 377.7 )
Other (losses)/gains
(7.0)
(0.2)
(0.8)
\u2013
3.6
\u2013
(4.4)
(3.6)
(8.0)
Share of losses from associates
(1.6)
\u2013
\u2013
\u2013
\u2013
\u2013
(1.6)
\u2013
(1.6)
Operating (loss)/profit
(3.9)
616.0
90.9
43.6
(81.1)
5.7
671.2
(429.9)
241.3
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 2024:
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
3,786 .1
\u2013
\u2013
6,081.2
81.3
6 ,16 2 . 5
Inter-segment sales
602.0
3,040.0
148.5
\u2013
\u2013
(3,790.5)
\u2013
\u2013
\u2013
Total revenue
9 4 2 .1
4,920.7
222.8
3,7 8 6 .1
\u2013
(3,790.5)
6,081.2
81.3
6 ,16 2 .5
Cost of sales
(562 .1)
(3,685.5)
(46.2)
(3,625.0)
\u2013
3,788.7
(4,13 0.1)
4.9
(4 ,125. 2)
Electricity Generator Levy
\u2013
(150.2)
(10.6)
\u2013
\u2013
\u2013
(160.8)
\u2013
(160.8)
Gross profit/(loss)
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)
( 7 8 .1)
(1.2)
(698.5)
(2 2.1)
(720.6)
Impairment of 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
Assets and working capital are monitored on a consolidated basis; however, capital expenditure is
monitored by segment.
Capital expenditure on intangible Capital expenditure on property,
assets plant and equipment
Restated
(1)
2025 2024 2025 2024
As at 31 December \u00a3m \u00a3m \u00a3m \u00a3m
Pellet Production
\u2013
\u2013
54.5
100.2
Biomass Generation
\u2013
0.5
38.3
67.9
Flexible Generation
\u2013
\u2013
84.8
137. 0
Energy Solutions
3.3
3.8
1.0
0.3
Innovation, capital projects and other
9.6
2.6
10.3
8.5
Total
12.9
6.9
188.9
313.9
(1) The definition of capital expenditure has been updated in the current period to align with the way the information is
presented to the Executive Committee. Capitalised interest and plant spares are now excluded from the definition of capital
expenditure. In the year ended 31 December 2024 there was \u00a31.7 million of capitalised interest (Pellet Production
\u00a30 .1 million and Flexible Generation \u00a31.6 million) and \u00a39.9 million of capitalised plant spares (Pellet Production \u00a34.5 million,
Biomass Generation \u00a34.6 million and Flexible Generation \u00a30.8 million) that were included in the amounts presented in the
2024 Consolidated financial statements. Comparative amounts in the table above have been restated to exclude capitalised
interest and capitalised plant spares.
Total cash outflows in relation to capital expenditure during the year were \u00a3294.2 million
(2024: \u00a3387.5 million). In the current year, the cash outflow in relation to property, plant and
equipment is higher than the cost capitalised, predominantly as a result of a decrease in creditors
relating to capital expenditure within the 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. The impact of all intra-group
transactions, including any unrealised profit arising, is eliminated on consolidation.
Analysis of revenue from intra-group trading is provided in the table below:
Intra-group trading revenue
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Pellet Production segment sale of biomass pellets and provided
associated services to the Biomass Generation segment
574.1
602.0
Biomass Generation segment sale of electricity, gas and renewable
certificate assets to the Energy Solutions segment
2,0 07. 0
2,928.7
Biomass Generation segment sale of electricity to the Flexible
Generation segment
16.2
36.5
Biomass Generation segment sale of biomass pellets to the Pellet
Production segment
67. 2
74.8
Flexible Generation segment sale of electricity and renewable
certificate assets to the Biomass Generation segment
90.1
145.9
Flexible Generation segment sale of electricity to the Energy
Solutions segment
3.3
2.6
Total inter-segment sales (note 2.2)
2,757.9
3,790.5
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
2025 2024
\u00a3m \u00a3m
North America (Canada and US)
8.4
7.9
Europe (excluding UK)
7.5
25.8
Asia
251.2
242.5
UK
5,123.6
5,886.3
Total
5,390.7
6,162 . 5
Non-current assets
(1)
(based on asset\u2019s location)
As at 31 December
2025 2024
\u00a3m \u00a3m
Canada
84.2
356.5
US
541.6
698.9
Asia
0.2
0.2
UK
2,309.7
2,33 4.1
Total
2,935.7
3,389.7
(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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-697": { "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 Executive Committee. The Group is organised into four businesses. The Executive Committee 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 the Group\u2019s biomass assets in the UK Flexible Generation: generation and sale of electricity from pumped storage, run-of-river hydro and OCGT assets, and the processing and sale of waste-derived pellets, in the UK \u2013 Energy Solutions: 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 provides central support function activities to the Group, 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 the Group is acting as the principal in a sales transaction and electricity is purchased rather than generated to fulfil that 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 the 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 determined that EGL 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 2025 was \u00a379.95 per MWh (2024: \u00a377.94 per MWh). The assessment is based on receipts above this threshold after adjusting for allowable costs. No expense for EGL has been recognised in the current period due to the average actual generation receipts in the period being below the threshold. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSegmentReportingExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-620": { "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 the Group\u2019s biomass assets in the UK Flexible Generation: generation and sale of electricity from pumped storage, run-of-river hydro and OCGT assets, and the processing and sale of waste-derived pellets, in the UK \u2013 Energy Solutions: 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
2025 2024
\u00a3m \u00a3m
North America (Canada and US)
8.4
7.9
Europe (excluding UK)
7.5
25.8
Asia
251.2
242.5
UK
5,123.6
5,886.3
Total
5,390.7
6,162 . 5
Non-current assets
(1)
(based on asset\u2019s location)
As at 31 December
2025 2024
\u00a3m \u00a3m
Canada
84.2
356.5
US
541.6
698.9
Asia
0.2
0.2
UK
2,309.7
2,33 4.1
Total
2,935.7
3,389.7
(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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-621": { "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 the 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.
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 determined that EGL 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 2025 was \u00a379.95 per MWh (2024: \u00a377.94 per MWh). The assessment is based on receipts above this threshold after adjusting for allowable costs. No expense for EGL has been recognised in the current period due to the average actual generation receipts in the period being below the threshold. ", "dimensions": { "concept": "ifrs-full:DisclosureOfCostOfSalesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-674": { "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 2025. 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 2025
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
329.3
2,314.7
78 .1
2,633.3
\u2013
\u2013
5,355.4
35.3
5,390.7
Inter-segment sales
574.1
2,090.4
93.4
\u2013
\u2013
(2,757.9)
\u2013
\u2013
\u2013
Total revenue
903.4
4 ,4 05.1
171.5
2,633.3
\u2013
(2,757.9)
5,355.4
35.3
5,390.7
Cost of sales
(550.9)
(3,453.6)
(24.5)
(2,524.6)
(6.9)
2,766.7
(3,793.8)
(84.0)
( 3, 877.8)
Gross profit/(loss)
352.5
951.5
147.0
108.7
(6.9)
8.8
1,561.6
(48.7)
1,512.9
Operating and administrative expenses
(222.2)
(225.8)
(3 6 .1)
(60.8)
(67.4)
(2.3)
(614.6)
(23.3)
(637.9)
Impairment of financial assets
\u2013
(0.3)
\u2013
0.8
\u2013
\u2013
0.5
(3.8)
(3.3)
Depreciation
(95.7)
(105.3)
(19.2)
(0.9)
( 7.0)
(0.8)
(228.9)
\u2013
(228.9)
Amortisation
(4.3)
(3.9)
\u2013
(4.2)
(1.8)
\u2013
(14.2)
\u2013
(14.2)
Impairment of non-current assets
(25.6)
\u2013
\u2013
\u2013
(1.6)
\u2013
(27. 2)
(350.5)
( 377.7 )
Other (losses)/gains
(7.0)
(0.2)
(0.8)
\u2013
3.6
\u2013
(4.4)
(3.6)
(8.0)
Share of losses from associates
(1.6)
\u2013
\u2013
\u2013
\u2013
\u2013
(1.6)
\u2013
(1.6)
Operating (loss)/profit
(3.9)
616.0
90.9
43.6
(81.1)
5.7
671.2
(429.9)
241.3
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 2024:
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
3,786 .1
\u2013
\u2013
6,081.2
81.3
6 ,16 2 . 5
Inter-segment sales
602.0
3,040.0
148.5
\u2013
\u2013
(3,790.5)
\u2013
\u2013
\u2013
Total revenue
9 4 2 .1
4,920.7
222.8
3,7 8 6 .1
\u2013
(3,790.5)
6,081.2
81.3
6 ,16 2 .5
Cost of sales
(562 .1)
(3,685.5)
(46.2)
(3,625.0)
\u2013
3,788.7
(4,13 0.1)
4.9
(4 ,125. 2)
Electricity Generator Levy
\u2013
(150.2)
(10.6)
\u2013
\u2013
\u2013
(160.8)
\u2013
(160.8)
Gross profit/(loss)
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)
( 7 8 .1)
(1.2)
(698.5)
(2 2.1)
(720.6)
Impairment of 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
Analysis of revenue from intra-group trading is provided in the table below:
Intra-group trading revenue
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Pellet Production segment sale of biomass pellets and provided
associated services to the Biomass Generation segment
574.1
602.0
Biomass Generation segment sale of electricity, gas and renewable
certificate assets to the Energy Solutions segment
2,0 07. 0
2,928.7
Biomass Generation segment sale of electricity to the Flexible
Generation segment
16.2
36.5
Biomass Generation segment sale of biomass pellets to the Pellet
Production segment
67. 2
74.8
Flexible Generation segment sale of electricity and renewable
certificate assets to the Biomass Generation segment
90.1
145.9
Flexible Generation segment sale of electricity to the Energy
Solutions segment
3.3
2.6
Total inter-segment sales (note 2.2)
2,757.9
3,790.5
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
2025 2024
\u00a3m \u00a3m
North America (Canada and US)
8.4
7.9
Europe (excluding UK)
7.5
25.8
Asia
251.2
242.5
UK
5,123.6
5,886.3
Total
5,390.7
6,162 . 5
Non-current assets
(1)
(based on asset\u2019s location)
As at 31 December
2025 2024
\u00a3m \u00a3m
Canada
84.2
356.5
US
541.6
698.9
Asia
0.2
0.2
UK
2,309.7
2,33 4.1
Total
2,935.7
3,389.7
(1) Non-current assets comprise goodwill, intangible assets, property, plant and equipment, right-of-use assets and investments. 2.2 Revenue 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. 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 below. 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 certain non-hedge accounted derivatives, the ineffective portion of certain 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 UK Government\u2019s 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.
Year ended 31 December 2025
Year ended 31 December 2024
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
5,163. 0
(25.9)
5,137.1
5,918.2
(6.9)
5,911.3
Other revenue
192.4
61.2
253.6
163.0
88.2
251.2
Total revenue
5,355.4
35.3
5,390.7
6,081.2
81.3
6 ,16 2 .5
Revenue stream (Segment)
Nature and timing of performance obligations, including significant payment terms
Method of recognising revenue, including any estimation uncertainties
Pellet sales (Pellet Production)
The Group\u2019s Pellet Production business produces biomass pellets which are sold
Revenue is recognised at the point that the pellets are loaded onto the shipping
to external customers. Customers generally obtain control of the pellets at the vessel. The amount of revenue recognised is based on the contracted price and
point the pellets are loaded onto the shipping vessel. volume of the pellets.
Where freight is also arranged for the customer, these sales are known as cost, For CIF sales, revenue for the freight portion is recognised over the period the
insurance and freight (CIF) sales. The freight component is considered a separate vessel sails.
performance obligation.
Invoices are raised in line with contractual terms and are usually payable within
4\u201310 days.
Electricity sales (Biomass The Group\u2019s Biomass Generation and Flexible Generation businesses have Revenues from sales contracts fulfilled through generation are recognised at
Generation and Flexible contracts for wholesale electricity sales. Performance obligations, being the a point in time based upon metered output at rates specified under contractual
Generation) supply of electricity, are met either via generation or through the procurement of terms.
electricity from counterparties. The performance obligations for these contracts Revenue from sales contracts fulfilled through procured electricity is recognised
are deemed to be a series of distinct goods that are substantially the same at the point at which this electricity or gas is supplied to the counterparty in
and transfer consecutively. Control is deemed to have transferred to the customer accordance with the contractual terms at rates specified under the contract.
at the point that the electricity has been supplied in accordance with the
contractual terms. These are recognised under the output method, whereby revenue is recognised
Invoices for electricity are typically raised on the fifth banking day following the based on the value transferred to the customer.
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 sales Renewables Obligation Certificates (ROCs) and Renewable Energy Guarantees External ROC and REGO sales are recognised at the point the relevant renewable
(Biomass Generation, Flexible of Origin (REGOs) are sold to counterparties at a point in time. certificates are transferred to the counterparty.
Generation and Energy ROCs sold are invoiced in line with contractual terms and are usually payable See note 3.3 for further details on how the renewable certificate schemes
Solutions) within two to five days. operate.
Invoices for REGOs are raised in line with contractual terms and are usually
payable within 7\u201330 days.
CfD income (Biomass The Group\u2019s Biomass Generation business is party to a CfD with the Low Carbon The Group recognises the income arising from the CfD in the Consolidated income
Generation) Contracts Company (LCCC), a UK Government-owned entity responsible for statement as a component of revenue at the point the Group meets its
delivering elements of the UK Government\u2019s Electricity Market Reform performance obligation under the CfD agreement. This is considered to be the
programme. Under the contract, the Group receives income in respect of point at which the relevant generation is delivered.
electricity dispatched from a specific biomass-fuelled generating unit. See CfD income section below for further details.
Invoices are raised 7\u201310 days following the date of supply and are settled within
28 days.
Revenue stream (Segment)
Nature and timing of performance obligations, including significant payment terms
Method of recognising revenue, including any estimation uncertainties
Ancillary services (Biomass Ancillary services refer to the provision of a range of system support services Revenue is recognised over time for ancillary services as the Group provides the
Generation and Flexible to National Grid. Most contracts are for the delivery of a specific service either service of either being available and ready to support the UK Electricity Grid or
Generation) continually or on an ad-hoc basis over a period of time. providing a service when called upon to support the UK Electricity Grid.
Invoices are raised and subsequently settled in line with the National Grid Revenue is recognised over time by reference to the stage of completion of
company ancillary services settlement calendar, typically monthly. the contractual performance obligations, which for stand ready performance
obligations are calculated by reference to the amount of the contract term that
has elapsed.
Revenue recognised for providing services when called upon are recognised over
the time the service is being provided to support the UK Electricity Grid.
Depending on contract terms, this approach may require judgement in estimating
probable future outcomes when the amount of consideration the Group is entitled
to is variable based on its performance over a period of time.
Electricity and gas sales The Group\u2019s Energy Solutions business sells electricity and gas directly to Revenue is recognised on the supply of electricity or gas when a contract exists,
(Energy Solutions) non-domestic customers. Energy supplied is measured based upon metered supply has taken place, a quantifiable price has been established or can be
consumption and contractual rates. determined, and the amounts receivable are expected to be recovered.
The Energy Solutions business also has long-term contracts for the sale of Where supply has taken place but has not yet been measured or billed, revenue
electricity and gas, which are a series of distinct goods or services that are is estimated based on consumption statistics and selling price estimates and is
substantially the same and have the same pattern of transfer and are a recognised as accrued income. This estimate is not considered to be a key source
performance obligation that is deemed as being satisfied over time in line with of estimation uncertainty because historical experience has demonstrated that
the progress of the contracts. these estimates are materially accurate based on the subsequent billings
Invoices are raised in line with contractual terms which for most customers is and settlements.
monthly. Payment is generally due between 28\u201390 days. Where contracts for the sale of electricity and gas are held, revenue is recognised
in line with the progress of the contracts.
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.
Revenue stream (Segment)
Nature and timing of performance obligations, including significant payment terms
Method of recognising revenue, including any estimation uncertainties
EBDS income (Energy The UK Government introduced the EBDS running from 1 April 2023 to 31 March The discounted price of electricity and gas supplied under EBDS was recognised
Solutions)
202
4. Under this scheme, energy supplied to eligible non-domestic customers
in revenue as it was supplied. The amount claimed back from the UK Government
had a discount applied to each unit of electricity and gas. Certain customers was recognised within revenue over the same period as the underlying discounted
were eligible for higher levels of support dependent on the sector in which they revenue it related to was recognised.
operated. The discount provided was then able to be claimed back from the The revenue received from the UK Government is included in the EBDS income
UK Government by the supplier. line in the table on page 148. The Group did not recognise any additional revenue
Payment was due 10 days post submission of a claim, which typically occurred from the scheme than it would have done had it not been introduced.
monthly.
Other income (All segments)
Other income is derived from the sale of goods. The customer obtains control
Revenue is recognised at the point the control of the goods is transferred to
typically at the point of delivery to their premises or upon collection. the customer.
Invoices are raised in line with contractual terms. The majority of invoices
are raised quarterly and are payable within 30 days.
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 \u00a3237.5 million of such sales
(2024: \u00a350.8 million), with a similar value reflected in cost of sales. The renewable certificate sales revenue in the Biomass Generation business of \u00a3931.0 million has increased compared to the prior year
(2024: \u00a3739.3 million) primarily as a result of the increase in these ROC sales.
See note 3.3 for further details of how the renewable certificate schemes operate, the renewable certificates generated and sold by the Biomass Generation and Flexible Generation businesses,
and those utilised by the Energy Solutions business during the year.
CfD income
The income 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 2025 was \u00a3142.24 per MWh (2024: \u00a3138.16 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 current and prior year is provided in the table below:
Year ended 31 December 2025
Year ended 31 December 2024
External Inter-segment Total External Inter-segment Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Pellet Production
Pellet sales
320.1
574.1
894.2
329.6
597.5
927.1
Other income
9.2
\u2013
9.2
10.5
4.5
15.0
Total Pellet Production
329.3
574.1
903.4
3 4 0 .1
602.0
9 42 .1
Biomass Generation
Electricity and gas sales
1,582.8
1,599.6
3,182.4
1,426.6
2,510.7
3,937.3
Renewable certificate sales
507.4
423.6
931.0
284.8
454.5
739.3
CfD income
192.4
\u2013
192.4
148.6
\u2013
148.6
Ancillary services
18.0
\u2013
18.0
18.7
\u2013
18.7
Other income
14.1
67. 2
81.3
2.0
74.8
76.8
Total Biomass Generation
2,314.7
2,090.4
4 ,405.1
1,880.7
3,040.0
4,920.7
Flexible Generation
Electricity sales
28.8
83.8
112.6
2 2.1
141.2
163.3
Renewable certificate sales
\u2013
9.6
9.6
\u2013
7.3
7.3
Ancillary services
21.2
\u2013
21.2
24.2
\u2013
24.2
Other income
28 .1
\u2013
28 .1
28.0
\u2013
28.0
Total Flexible Generation
78 .1
93.4
171.5
74.3
148.5
222.8
Energy Solutions
Electricity and gas sales
2,619.5
\u2013
2,619.5
3,734.0
\u2013
3,734.0
EBDS income
\u2013
\u2013
\u2013
14.4
\u2013
14.4
Renewable certificate sales
13.8
\u2013
13.8
37.4
\u2013
37.4
Other income
\u2013
\u2013
\u2013
0.3
\u2013
0.3
Total Energy Solutions
2,633.3
\u2013
2,633.3
3,786.1
\u2013
3,78 6 .1
Elimination of inter-segment sales
\u2013
(2,757.9)
(2 ,757.9)
\u2013
(3,790.5)
(3,790.5)
Total consolidated revenue in Adjusted results
5,355.4
\u2013
5,355.4
6,081.2
\u2013
6,081.2
Certain remeasurements
35.3
\u2013
35.3
81.3
\u2013
81.3
Total consolidated revenue in Total results
5,390.7
\u2013
5,390.7
6 ,16 2.5
\u2013
6,162.5
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Amounts expected to be recognised as revenue:
Within one year
105.8
127.0
Within one to two years
28.5
18.4
Within two to three years
4.9
1.2
Transaction price allocated to performance obligations that are
unsatisfied at the end of the reporting period
139.2
146.6
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.
Revenue recognised in Adjusted results of \u00a35,355.4 million (2024: \u00a36,081.2 million) differs from
revenue recognised in Total results of \u00a35,390.7 million (2024: \u00a36,162.5 million) due to certain
remeasurement gains of \u00a335.3 million (2024: \u00a381.3 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, and hedge ineffectiveness on
hedge accounting relationships reclassified to profit or loss. See note 2.7 for further details on
certain remeasurements included within revenue.
Revenue recognised in the period that was included within contract liabilities at the start of the
year was \u00a323.1 million (2024: \u00a316.8 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 (2024: \u00a3nil).
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 \u00a31,044.8 million to \u00a34,345.9 million
(2024: by \u00a31,072.9 million to \u00a35,089.6 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. This applies to revenue where either the right to receive
consideration from the customers is at an amount that corresponds directly with the value
transferred to the customer for 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 shown in the table below.
", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-683": { "value": "
Year ended 31 December 2025
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
329.3
2,314.7
78 .1
2,633.3
\u2013
\u2013
5,355.4
35.3
5,390.7
Inter-segment sales
574.1
2,090.4
93.4
\u2013
\u2013
(2,757.9)
\u2013
\u2013
\u2013
Total revenue
903.4
4 ,4 05.1
171.5
2,633.3
\u2013
(2,757.9)
5,355.4
35.3
5,390.7
Cost of sales
(550.9)
(3,453.6)
(24.5)
(2,524.6)
(6.9)
2,766.7
(3,793.8)
(84.0)
( 3, 877.8)
Gross profit/(loss)
352.5
951.5
147.0
108.7
(6.9)
8.8
1,561.6
(48.7)
1,512.9
Operating and administrative expenses
(222.2)
(225.8)
(3 6 .1)
(60.8)
(67.4)
(2.3)
(614.6)
(23.3)
(637.9)
Impairment of financial assets
\u2013
(0.3)
\u2013
0.8
\u2013
\u2013
0.5
(3.8)
(3.3)
Depreciation
(95.7)
(105.3)
(19.2)
(0.9)
( 7.0)
(0.8)
(228.9)
\u2013
(228.9)
Amortisation
(4.3)
(3.9)
\u2013
(4.2)
(1.8)
\u2013
(14.2)
\u2013
(14.2)
Impairment of non-current assets
(25.6)
\u2013
\u2013
\u2013
(1.6)
\u2013
(27. 2)
(350.5)
( 377.7 )
Other (losses)/gains
(7.0)
(0.2)
(0.8)
\u2013
3.6
\u2013
(4.4)
(3.6)
(8.0)
Share of losses from associates
(1.6)
\u2013
\u2013
\u2013
\u2013
\u2013
(1.6)
\u2013
(1.6)
Operating (loss)/profit
(3.9)
616.0
90.9
43.6
(81.1)
5.7
671.2
(429.9)
241.3
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
3,786 .1
\u2013
\u2013
6,081.2
81.3
6 ,16 2 . 5
Inter-segment sales
602.0
3,040.0
148.5
\u2013
\u2013
(3,790.5)
\u2013
\u2013
\u2013
Total revenue
9 4 2 .1
4,920.7
222.8
3,7 8 6 .1
\u2013
(3,790.5)
6,081.2
81.3
6 ,16 2 .5
Cost of sales
(562 .1)
(3,685.5)
(46.2)
(3,625.0)
\u2013
3,788.7
(4,13 0.1)
4.9
(4 ,125. 2)
Electricity Generator Levy
\u2013
(150.2)
(10.6)
\u2013
\u2013
\u2013
(160.8)
\u2013
(160.8)
Gross profit/(loss)
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)
( 7 8 .1)
(1.2)
(698.5)
(2 2.1)
(720.6)
Impairment of 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
", "dimensions": { "concept": "ifrs-full:DisclosureOfProfitLossFromOperatingActivitiesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-622": { "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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-587": { "value": "2.2 Revenue 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. 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 below. 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 certain non-hedge accounted derivatives, the ineffective portion of certain 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 UK Government\u2019s 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.
Year ended 31 December 2025
Year ended 31 December 2024
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
5,163. 0
(25.9)
5,137.1
5,918.2
(6.9)
5,911.3
Other revenue
192.4
61.2
253.6
163.0
88.2
251.2
Total revenue
5,355.4
35.3
5,390.7
6,081.2
81.3
6 ,16 2 .5
Revenue stream (Segment)
Nature and timing of performance obligations, including significant payment terms
Method of recognising revenue, including any estimation uncertainties
Pellet sales (Pellet Production)
The Group\u2019s Pellet Production business produces biomass pellets which are sold
Revenue is recognised at the point that the pellets are loaded onto the shipping
to external customers. Customers generally obtain control of the pellets at the vessel. The amount of revenue recognised is based on the contracted price and
point the pellets are loaded onto the shipping vessel. volume of the pellets.
Where freight is also arranged for the customer, these sales are known as cost, For CIF sales, revenue for the freight portion is recognised over the period the
insurance and freight (CIF) sales. The freight component is considered a separate vessel sails.
performance obligation.
Invoices are raised in line with contractual terms and are usually payable within
4\u201310 days.
Electricity sales (Biomass The Group\u2019s Biomass Generation and Flexible Generation businesses have Revenues from sales contracts fulfilled through generation are recognised at
Generation and Flexible contracts for wholesale electricity sales. Performance obligations, being the a point in time based upon metered output at rates specified under contractual
Generation) supply of electricity, are met either via generation or through the procurement of terms.
electricity from counterparties. The performance obligations for these contracts Revenue from sales contracts fulfilled through procured electricity is recognised
are deemed to be a series of distinct goods that are substantially the same at the point at which this electricity or gas is supplied to the counterparty in
and transfer consecutively. Control is deemed to have transferred to the customer accordance with the contractual terms at rates specified under the contract.
at the point that the electricity has been supplied in accordance with the
contractual terms. These are recognised under the output method, whereby revenue is recognised
Invoices for electricity are typically raised on the fifth banking day following the based on the value transferred to the customer.
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 sales Renewables Obligation Certificates (ROCs) and Renewable Energy Guarantees External ROC and REGO sales are recognised at the point the relevant renewable
(Biomass Generation, Flexible of Origin (REGOs) are sold to counterparties at a point in time. certificates are transferred to the counterparty.
Generation and Energy ROCs sold are invoiced in line with contractual terms and are usually payable See note 3.3 for further details on how the renewable certificate schemes
Solutions) within two to five days. operate.
Invoices for REGOs are raised in line with contractual terms and are usually
payable within 7\u201330 days.
CfD income (Biomass The Group\u2019s Biomass Generation business is party to a CfD with the Low Carbon The Group recognises the income arising from the CfD in the Consolidated income
Generation) Contracts Company (LCCC), a UK Government-owned entity responsible for statement as a component of revenue at the point the Group meets its
delivering elements of the UK Government\u2019s Electricity Market Reform performance obligation under the CfD agreement. This is considered to be the
programme. Under the contract, the Group receives income in respect of point at which the relevant generation is delivered.
electricity dispatched from a specific biomass-fuelled generating unit. See CfD income section below for further details.
Invoices are raised 7\u201310 days following the date of supply and are settled within
28 days.
Revenue stream (Segment)
Nature and timing of performance obligations, including significant payment terms
Method of recognising revenue, including any estimation uncertainties
Ancillary services (Biomass Ancillary services refer to the provision of a range of system support services Revenue is recognised over time for ancillary services as the Group provides the
Generation and Flexible to National Grid. Most contracts are for the delivery of a specific service either service of either being available and ready to support the UK Electricity Grid or
Generation) continually or on an ad-hoc basis over a period of time. providing a service when called upon to support the UK Electricity Grid.
Invoices are raised and subsequently settled in line with the National Grid Revenue is recognised over time by reference to the stage of completion of
company ancillary services settlement calendar, typically monthly. the contractual performance obligations, which for stand ready performance
obligations are calculated by reference to the amount of the contract term that
has elapsed.
Revenue recognised for providing services when called upon are recognised over
the time the service is being provided to support the UK Electricity Grid.
Depending on contract terms, this approach may require judgement in estimating
probable future outcomes when the amount of consideration the Group is entitled
to is variable based on its performance over a period of time.
Electricity and gas sales The Group\u2019s Energy Solutions business sells electricity and gas directly to Revenue is recognised on the supply of electricity or gas when a contract exists,
(Energy Solutions) non-domestic customers. Energy supplied is measured based upon metered supply has taken place, a quantifiable price has been established or can be
consumption and contractual rates. determined, and the amounts receivable are expected to be recovered.
The Energy Solutions business also has long-term contracts for the sale of Where supply has taken place but has not yet been measured or billed, revenue
electricity and gas, which are a series of distinct goods or services that are is estimated based on consumption statistics and selling price estimates and is
substantially the same and have the same pattern of transfer and are a recognised as accrued income. This estimate is not considered to be a key source
performance obligation that is deemed as being satisfied over time in line with of estimation uncertainty because historical experience has demonstrated that
the progress of the contracts. these estimates are materially accurate based on the subsequent billings
Invoices are raised in line with contractual terms which for most customers is and settlements.
monthly. Payment is generally due between 28\u201390 days. Where contracts for the sale of electricity and gas are held, revenue is recognised
in line with the progress of the contracts.
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.
Revenue stream (Segment)
Nature and timing of performance obligations, including significant payment terms
Method of recognising revenue, including any estimation uncertainties
EBDS income (Energy The UK Government introduced the EBDS running from 1 April 2023 to 31 March The discounted price of electricity and gas supplied under EBDS was recognised
Solutions)
202
4. Under this scheme, energy supplied to eligible non-domestic customers
in revenue as it was supplied. The amount claimed back from the UK Government
had a discount applied to each unit of electricity and gas. Certain customers was recognised within revenue over the same period as the underlying discounted
were eligible for higher levels of support dependent on the sector in which they revenue it related to was recognised.
operated. The discount provided was then able to be claimed back from the The revenue received from the UK Government is included in the EBDS income
UK Government by the supplier. line in the table on page 148. The Group did not recognise any additional revenue
Payment was due 10 days post submission of a claim, which typically occurred from the scheme than it would have done had it not been introduced.
monthly.
Other income (All segments)
Other income is derived from the sale of goods. The customer obtains control
Revenue is recognised at the point the control of the goods is transferred to
typically at the point of delivery to their premises or upon collection. the customer.
Invoices are raised in line with contractual terms. The majority of invoices
are raised quarterly and are payable within 30 days.
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 \u00a3237.5 million of such sales (2024: \u00a350.8 million), with a similar value reflected in cost of sales. The renewable certificate sales revenue in the Biomass Generation business of \u00a3931.0 million has increased compared to the prior year (2024: \u00a3739.3 million) primarily as a result of the increase in these ROC sales. See note 3.3 for further details of how the renewable certificate schemes operate, the renewable certificates generated and sold by the Biomass Generation and Flexible Generation businesses, and those utilised by the Energy Solutions business during the year. CfD income The income 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 2025 was \u00a3142.24 per MWh (2024: \u00a3138.16 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 current and prior year is provided in the table below:
Year ended 31 December 2025
Year ended 31 December 2024
External Inter-segment Total External Inter-segment Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Pellet Production
Pellet sales
320.1
574.1
894.2
329.6
597.5
927.1
Other income
9.2
\u2013
9.2
10.5
4.5
15.0
Total Pellet Production
329.3
574.1
903.4
3 4 0 .1
602.0
9 42 .1
Biomass Generation
Electricity and gas sales
1,582.8
1,599.6
3,182.4
1,426.6
2,510.7
3,937.3
Renewable certificate sales
507.4
423.6
931.0
284.8
454.5
739.3
CfD income
192.4
\u2013
192.4
148.6
\u2013
148.6
Ancillary services
18.0
\u2013
18.0
18.7
\u2013
18.7
Other income
14.1
67. 2
81.3
2.0
74.8
76.8
Total Biomass Generation
2,314.7
2,090.4
4 ,405.1
1,880.7
3,040.0
4,920.7
Flexible Generation
Electricity sales
28.8
83.8
112.6
2 2.1
141.2
163.3
Renewable certificate sales
\u2013
9.6
9.6
\u2013
7.3
7.3
Ancillary services
21.2
\u2013
21.2
24.2
\u2013
24.2
Other income
28 .1
\u2013
28 .1
28.0
\u2013
28.0
Total Flexible Generation
78 .1
93.4
171.5
74.3
148.5
222.8
Energy Solutions
Electricity and gas sales
2,619.5
\u2013
2,619.5
3,734.0
\u2013
3,734.0
EBDS income
\u2013
\u2013
\u2013
14.4
\u2013
14.4
Renewable certificate sales
13.8
\u2013
13.8
37.4
\u2013
37.4
Other income
\u2013
\u2013
\u2013
0.3
\u2013
0.3
Total Energy Solutions
2,633.3
\u2013
2,633.3
3,786.1
\u2013
3,78 6 .1
Elimination of inter-segment sales
\u2013
(2,757.9)
(2 ,757.9)
\u2013
(3,790.5)
(3,790.5)
Total consolidated revenue in Adjusted results
5,355.4
\u2013
5,355.4
6,081.2
\u2013
6,081.2
Certain remeasurements
35.3
\u2013
35.3
81.3
\u2013
81.3
Total consolidated revenue in Total results
5,390.7
\u2013
5,390.7
6 ,16 2.5
\u2013
6,162.5
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Amounts expected to be recognised as revenue:
Within one year
105.8
127.0
Within one to two years
28.5
18.4
Within two to three years
4.9
1.2
Transaction price allocated to performance obligations that are
unsatisfied at the end of the reporting period
139.2
146.6
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.
Revenue recognised in Adjusted results of \u00a35,355.4 million (2024: \u00a36,081.2 million) differs from revenue recognised in Total results of \u00a35,390.7 million (2024: \u00a36,162.5 million) due to certain remeasurement gains of \u00a335.3 million (2024: \u00a381.3 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, and hedge ineffectiveness on hedge accounting relationships reclassified to profit or loss. See note 2.7 for further details on certain remeasurements included within revenue. Revenue recognised in the period that was included within contract liabilities at the start of the year was \u00a323.1 million (2024: \u00a316.8 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 (2024: \u00a3nil). 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 \u00a31,044.8 million to \u00a34,345.9 million (2024: by \u00a31,072.9 million to \u00a35,089.6 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. This applies to revenue where either the right to receive consideration from the customers is at an amount that corresponds directly with the value transferred to the customer for 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 shown in the table below.", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueFromContractsWithCustomersExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-698": { "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. 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 below. 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 certain non-hedge accounted derivatives, the ineffective portion of certain 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 UK Government\u2019s 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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-588": { "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 following expenditure has been charged in arriving at operating profit:
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Staff costs (note 6.1)
316.9
322.8
Repairs and maintenance expenditure on property, plant and
equipment
141.9
159.6
Other operating and administrative expenses
17 9.1
238.2
Total operating and administrative expenses
637.9
720.6
Auditor\u2019s remuneration
Year ended 31 December
2025 2024
\u00a3000 \u00a3000
Audit fees:
Fees payable for the audit of the Group\u2019s Consolidated financial
statements
1,874.0
2 ,153. 0
Fees payable for the audit of the Company\u2019s subsidiaries\u2019 statutory
accounts
144.0
225.0
Total audit fees
2,018.0
2,378.0
Other fees:
Review of the Group\u2019s half-year Condensed consolidated financial
statements
174.0
167. 0
Assurance services provided to non-material affiliates
45.8
70.0
Other assurance services
132.0
205.0
Other services
9.0
10.0
Total non-audit fees
360.8
452.0
Total auditor\u2019s remuneration
2,378.8
2,830.0
Included in the fees payable for the audit of the Group\u2019s Consolidated financial statements for 2025
is \u00a3 0 .1 million relating to additional fees in relation to the 2024 Group audit that were agreed and
billed in 2025. In the prior year fees payable included \u00a30.3 million relating to the transition phase
of the 2024 audit, which was undertaken and invoiced in 2023.
Other assurance services provided in the current and prior years consist of ESG assurance fees.
See the Audit Committee report on page 85 for further details.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralAndAdministrativeExpenseExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-689": { "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 following expenditure has been charged in arriving at operating profit:
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Staff costs (note 6.1)
316.9
322.8
Repairs and maintenance expenditure on property, plant and
equipment
141.9
159.6
Other operating and administrative expenses
17 9.1
238.2
Total operating and administrative expenses
637.9
720.6
Auditor\u2019s remuneration
Year ended 31 December
2025 2024
\u00a3000 \u00a3000
Audit fees:
Fees payable for the audit of the Group\u2019s Consolidated financial
statements
1,874.0
2 ,153. 0
Fees payable for the audit of the Company\u2019s subsidiaries\u2019 statutory
accounts
144.0
225.0
Total audit fees
2,018.0
2,378.0
Other fees:
Review of the Group\u2019s half-year Condensed consolidated financial
statements
174.0
167. 0
Assurance services provided to non-material affiliates
45.8
70.0
Other assurance services
132.0
205.0
Other services
9.0
10.0
Total non-audit fees
360.8
452.0
Total auditor\u2019s remuneration
2,378.8
2,830.0
Included in the fees payable for the audit of the Group\u2019s Consolidated financial statements for 2025 is \u00a3 0 .1 million relating to additional fees in relation to the 2024 Group audit that were agreed and billed in 2025. In the prior year fees payable included \u00a30.3 million relating to the transition phase of the 2024 audit, which was undertaken and invoiced in 2023. Other assurance services provided in the current and prior years consist of ESG assurance fees. See the Audit Committee report on page 85 for further details.", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-659": { "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 following expenditure has been charged in arriving at operating profit:
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Staff costs (note 6.1)
316.9
322.8
Repairs and maintenance expenditure on property, plant and
equipment
141.9
159.6
Other operating and administrative expenses
17 9.1
238.2
Total operating and administrative expenses
637.9
720.6
Auditor\u2019s remuneration
Year ended 31 December
2025 2024
\u00a3000 \u00a3000
Audit fees:
Fees payable for the audit of the Group\u2019s Consolidated financial
statements
1,874.0
2 ,153. 0
Fees payable for the audit of the Company\u2019s subsidiaries\u2019 statutory
accounts
144.0
225.0
Total audit fees
2,018.0
2,378.0
Other fees:
Review of the Group\u2019s half-year Condensed consolidated financial
statements
174.0
167. 0
Assurance services provided to non-material affiliates
45.8
70.0
Other assurance services
132.0
205.0
Other services
9.0
10.0
Total non-audit fees
360.8
452.0
Total auditor\u2019s remuneration
2,378.8
2,830.0
Included in the fees payable for the audit of the Group\u2019s Consolidated financial statements for 2025 is \u00a3 0 .1 million relating to additional fees in relation to the 2024 Group audit that were agreed and billed in 2025. In the prior year fees payable included \u00a30.3 million relating to the transition phase of the 2024 audit, which was undertaken and invoiced in 2023. Other assurance services provided in the current and prior years consist of ESG assurance fees. See the Audit Committee report on page 85 for further details.", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExpenseExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-643": { "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 following expenditure has been charged in arriving at operating profit:
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Staff costs (note 6.1)
316.9
322.8
Repairs and maintenance expenditure on property, plant and
equipment
141.9
159.6
Other operating and administrative expenses
17 9.1
238.2
Total operating and administrative expenses
637.9
720.6
Auditor\u2019s remuneration
Year ended 31 December
2025 2024
\u00a3000 \u00a3000
Audit fees:
Fees payable for the audit of the Group\u2019s Consolidated financial
statements
1,874.0
2 ,153. 0
Fees payable for the audit of the Company\u2019s subsidiaries\u2019 statutory
accounts
144.0
225.0
Total audit fees
2,018.0
2,378.0
Other fees:
Review of the Group\u2019s half-year Condensed consolidated financial
statements
174.0
167. 0
Assurance services provided to non-material affiliates
45.8
70.0
Other assurance services
132.0
205.0
Other services
9.0
10.0
Total non-audit fees
360.8
452.0
Total auditor\u2019s remuneration
2,378.8
2,830.0
Included in the fees payable for the audit of the Group\u2019s Consolidated financial statements for 2025 is \u00a3 0 .1 million relating to additional fees in relation to the 2024 Group audit that were agreed and billed in 2025. In the prior year fees payable included \u00a30.3 million relating to the transition phase of the 2024 audit, which was undertaken and invoiced in 2023. Other assurance services provided in the current and prior years consist of ESG assurance fees. See the Audit Committee report on page 85 for further details.", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingExpenseExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-675": { "value": "
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Staff costs (note 6.1)
316.9
322.8
Repairs and maintenance expenditure on property, plant and
equipment
141.9
159.6
Other operating and administrative expenses
17 9.1
238.2
Total operating and administrative expenses
637.9
720.6
Section 6: People costs
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 Employee costs
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 87.
Staff costs (including Executive Directors)
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Wages and salaries
249.9
262.0
Social security costs
29.2
26.5
Defined benefit pension service cost (note 6.3)
1.6
2 .1
Defined contribution pension cost (note 6.3)
24.3
24 .1
Share-based payments (note 6.2)
15.7
14 .1
Termination benefits
10.4
8.7
Total staff costs
331.1
337.5
Staff costs capitalised
(14.2)
(14.7)
Staff costs included in operating and administrative expenses
(note 2.3)
316.9
322.8
Average monthly number of people employed (including Executive Directors)
Year ended 31 December
2025 2024
(number) (number)
Operations (Pellet Production)
818
815
Operations (Biomass Generation)
469
526
Operations (Flexible Generation)
175
163
Energy Solutions
449
802
Central corporate and commercial functions
1,217
1,151
Total average monthly number of people employed
3 ,1 2 8
3,457
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. Where share options have an exercise price, the proceeds received are credited to equity. Employer\u2019s social security obligations payable by the Group in respect of share-based payment awards are charged to the Consolidated income statement in line with IAS 19. Costs recognised in the Consolidated income statement in relation to share-based payments during the year were as follows:
Year ended 31 December
2025 2024
\u00a3m \u00a3m
LTIP
11.0
7.1
DSP
0.8
0.6
One Drax Awards
1.6
1.6
ESPP
0.1
0.2
SAYE
2.2
4.6
Total share-based payment expense included within staff costs
(note 6.1)
15.7
14 .1
Movements in the number of share options outstanding at the reporting date for each scheme is shown below. Discretionary awards are issued at nil cost and so have no exercise price.
Discretionary awards
ESPP
SAYE
Three-year Five-year
weighted weighted
Weighted average average average
LTIP DSP One Drax Awards exercise price ESPP exercise price SAYE three-year exercise price SAYE five-year
(number) (number) (number) (pence) (number) (pence) (number) (pence) (number)
At 1 January 2024
5,385,172
285,774
259,788
469
64,497
470
2,886,902
173
2,585,809
Granted
3,065,741
106,341
360,448
468
126,303
378
3,334,272
378
470,417
Dividend shares granted
171,367
10,460
9,053
\u2013
\u2013
\u2013
Forfeited
(228,490)
\u2013
(31,443)
469
(3,801)
455
(111,452)
461
(4,521)
Exercised
(1,846,285)
(109,827)
(260,439)
398
(126,938)
327
(634,525)
290
(33,319)
Cancelled
\u2013
\u2013
\u2013
\u2013
496
(1, 570,14 4)
492
(205,988)
Expired
\u2013
\u2013
\u2013
\u2013
331
(4,572)
298
(1,008)
At 1 January 2025
6,547,505
292,748
337, 4 07
544
60,061
405
3,900,481
182
2,811,390
Granted
2,922,838
90,073
295,702
527
91,918
453
708,527
453
207,49 8
Dividend shares granted
137,719
7,70 6
15,053
\u2013
\u2013
\u2013
Forfeited
(1, 037,7 3 4)
\u2013
(16,096)
544
(1,842)
413
(232,975)
367
(45,810)
Exercised
(1,505,654)
(84,808)
(348,446)
516
(112,841)
523
(2 9 6,161)
129
(2,202,057)
Cancelled
\u2013
\u2013
\u2013
\u2013
404
(238,679)
430
(20,628)
Expired
\u2013
\u2013
\u2013
\u2013
563
(4,345)
\u2013
At 31 December 2025
7, 0 6 4 ,674
305,719
283,620
548
37,29 6
404
3,836,848
395
750,393
Key information about each active scheme for options granted and exercised in the current and prior year is presented below.
Year ended 31 December 2025
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)
599
586
570
612
665
665
Number of options exercisable at reporting date
102,942
7,6 48
\u2013
37, 296
75,233
2,058
Weighted average exercise price of options exercisable at reporting date (pence)
\u2013
\u2013
\u2013
548
423
420
Between Between
Range of exercise price of options outstanding at reporting date (pence)
\u2013
\u2013
\u2013
548
378 and 563 127 and 563
Weighted average remaining contractual life (months)
50
15
3
\u2013
24
42
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
Between Between
Range of exercise price of options outstanding at reporting date (pence)
\u2013
\u2013
\u2013
544
378 and 563 127 and 563
Weighted average remaining contractual life (months)
51
22
2
2
32
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 2025
Scheme
LTIP
LTIP
DSP
One Drax Awards
ESPP
ESPP
SAYE three-year
SAYE five-year
20 March 2 September 20 March 20 March 1 March 1 September 10 April 10 April
Grant date 2025 2025 2025 2025 2025 2025 2025 2025
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)
581
627
581
581
610
645
546
546
Exercise price (pence)
\u2013
\u2013
\u2013
\u2013
519
548
453
453
Dividend yield
\u2013
\u2013
\u2013
\u2013
5.11%
3.60%
6.42%
6.77%
Vesting period of options granted
3 years
3 years
3 years
1 year
6 months
4 months
3 years
5 years
Expected volatility
35.75%
32.61%
35.75%
28.51%
21.52%
24.24%
36.24%
39.10%
Annual risk-free interest rate
4.18%
3.99%
4 .18%
4 .13%
4.38%
4.01%
3.96%
4.03%
Weighted average fair value of options granted at measurement date (pence)
449
484
581
581
112
123
128
132
Year ended 31 December 2024
Scheme
LTIP
LTIP
DSP
One Drax Awards
ESPP
ESPP
SAYE three-year
SAYE 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
37.4 8%
38.20%
37.4 8%
35.35%
42.23%
3 7.39%
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
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 starting on page 87.
6.3 Retirement benefit obligations The retirement benefit schemes operated by the Group are detailed in the table below:
Name of scheme
Type of benefit
Status
Country
Closed to new
Defined benefit members on
Drax 2019
Scheme
final salary
transfer in 2019
UK
My Drax Retirement Savings Open to new
Section of the Aon MasterTrust
Defined contribution
members
UK
Open to new
Drax Biomass Inc. 401(K) Plan
Defined contribution
members
US
Pinnacle Registered Retirement Open to new
Savings Plan
Defined contribution
members
Canada
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 from the Group earned by employees for services rendered during 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 2025 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
2025 2024
\u00a3m \u00a3m
Total included in staff costs (note 6.1)
24.3
24 .1
As at 31 December 2025, contributions of \u00a31.7 million (2024: \u00a33.1 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
2025 2024
\u00a3m \u00a3m
Total net surplus recognised in the Consolidated balance sheet
23.8
24.7
At 31 December 2025, 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 Scheme\u2019s liabilities shown below reflect management\u2019s
understanding of the benefits due at the reporting date 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 2025. The actuarial review at 31 December 2025 is based on the same underlying
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 2025, taking into
account experience over the period since 31 March 2025, 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
2025 2024
% p.a. % p.a.
Discount rate
5.6
5.5
Inflation (RPI)
2.8
3.0
Rate of increase in pensions in payment and deferred pensions
2.7
2.8
Rate of increase in pensionable salaries
3.2
3.4
The defined benefit obligation for the Scheme as at 31 December 2025 allows for expected benefit
increases that will be awarded in 2026, based on known 2025 indices.
Mortality assumptions are based on recent actual mortality experience of the Scheme\u2019s members
and allow for expected future changes in mortality rates. See table below for further details of
mortality assumptions.
As at 31 December
2025 2024
(years) (years)
Male
Female
Male
Female
Life expectancy for pensioner
members aged 60 at the reporting
date
26
28
25
27
Life expectancy at 60 for non-
pensioners aged 45 at the reporting
date
27
28
26
28
The weighted average duration of the Scheme at 31 December 2025 based on the IAS 19 position
was 14 years (2024: 15 years).
The defined benefit obligation in respect of the Scheme includes benefits for current employees of
the Group (23%), former employees of the Group who are yet to retire (10%) and retired pensioners
(67%).
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
2025 2024
\u00a3m \u00a3m
Fair value of plan assets
208.6
203.4
Defined benefit obligation
(184.8)
(178.7)
Net surplus recognised in the Consolidated balance sheet
23.8
24.7
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
2025 2024
\u00a3m \u00a3m
Current service cost included in staff costs (note 6.1)
1.6
2 .1
Interest income on net defined benefit surplus included in interest
receivable and similar gains (note 2.5)
(1.4)
(0.9)
Total amount recognised in the Consolidated income statement
0.2
1.2
Changes in the present value of the defined benefit obligation of the Scheme are as follows:
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Defined benefit obligation at 1 January
178.7
201.9
Current service cost
1.6
2.1
Interest cost
9.6
9.0
Actuarial losses/(gains) on defined benefit obligation
4.9
(24.3)
Benefits paid
(10.0)
(10.0)
Defined benefit obligation at 31 December
184.8
178.7
The actuarial losses of \u00a34.9 million (2024: gains of \u00a324.3 million) reflect gains of \u00a35.9 million
(2024: \u00a323.5 million) arising from changes in financial assumptions, losses of \u00a39.3 million
(2024: \u00a31.0 million) arising from scheme experience (including reflecting updated census data
provided for the latest triennial actuarial valuation), and losses of \u00a31.5 million (2024: gains of
\u00a31.8 million) arising from changes in demographic assumptions.
The gains in the current year due to changes in financial assumptions 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 5.6% p.a. (2024: 5.5% p.a.) following an increase in corporate bond
yields, along with a reduction in overall long-term inflationary assumptions, reflecting market
pricing.
Changes in the fair value of plan assets are as follows:
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Fair value of plan assets at 1 January
203.4
220.3
Interest on plan assets
11.0
9.9
Remeasurement gains/(losses) on fair value of plan assets
2.1
(18.8)
Employer contributions
2.1
2.0
Benefits paid
(10.0)
(10.0)
Fair value of plan assets at 31 December
208.6
203.4
There were contributions of \u00a3nil (2024: \u00a30.2 million) outstanding at the reporting date.
The actual return on plan assets in the period was a gain of \u00a313.1 million (2024: loss of \u00a38.9 million).
Remeasurement losses on the defined benefit pension scheme of \u00a32.8 million (2024: gains of \u00a35.5 million) were recognised in the Consolidated statement of comprehensive income. These are made up as follows:
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Actuarial (losses)/gains on defined benefit obligation
(4.9)
24.3
Remeasurement gains/(losses) on fair value of plan assets
2.1
(18.8)
Total remeasurement (losses)/gains recognised in other
comprehensive income
(2.8)
5.5
The fair values of the major categories of plan assets were as follows:
As at 31 December
2025
2024
Quoted Unquoted Total Quoted Unquoted Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Gilts
83.1
\u2013
83.1
85.5
\u2013
85.5
Equities
40.9
\u2013
40.9
31.3
\u2013
31.3
Bonds:
Emerging market
8.1
\u2013
8 .1
5.3
\u2013
5.3
High yield
14 .1
\u2013
14 .1
14.0
\u2013
14.0
Corporate
\u2013
\u2013
\u2013
3.4
\u2013
3.4
Property
4.7
15.1
19.8
6.7
15.0
21.7
Infrastructure
11.2
\u2013
11.2
9.6
\u2013
9.6
Cash and cash equivalents
2.1
\u2013
2.1
5.3
\u2013
5.3
Other assets:
Private credit
\u2013
15.8
15.8
\u2013
16.6
16.6
Downside risk management
(1)
4.7
\u2013
4.7
4.7
\u2013
4.7
Dynamic asset allocation
(1)
3.8
\u2013
3.8
\u2013
\u2013
\u2013
Asset backed securities
5.0
\u2013
5.0
4.0
\u2013
4.0
Credit
\u2013
\u2013
\u2013
\u2013
2.0
2.0
Fair value of total plan assets
17 7.7
30.9
208.6
169.8
33.6
203.4
(1) Downside risk management relates to assets that are expected to reduce sensitivity to markets and protect in times of market falls. Typically, these strategies achieve this through the use of derivatives. Dynamic asset allocation relates to strategies that aim to generate returns by exploiting market inefficiencies and the Scheme\u2019s investment advisers short and medium term economic and market views. 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
2025 2024
As at 31 December \u00a3m \u00a3m
Discount rate
\u2013 Increase
0.25%
5.7
6.3
\u2013 Decrease
0.25%
(6 .1)
(6.5)
Inflation rate
(1)
\u2013 Increase
0.25%
(4.5)
(5.2)
\u2013 Decrease
0.25%
4.4
5.1
Life expectancy
\u2013 Increase
1 year
(5.2)
(4.8)
\u2013 Decrease
1 year
5.3
5.1
(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 as 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 does not expect to make any contributions to the Scheme during the 12 months ending 31 December 2026. The latest actuarial valuation of the Scheme which was carried out as at 31 March 2025 resulted in a funding surplus of \u00a37.1 million and so no deficit recovery plan was required.
It was agreed that the Group will cease paying contributions in respect of future accrual of benefits,
with the cost being met from surplus assets, subject to annual reviews. The Group agreed to make
an additional payment in 2029 if at that point the Scheme is not fully funded on a low-risk basis, as
agreed between the Group and Trustee at the time. At this point, the Scheme is expected to be fully
funded on the agreed low-risk basis, unless material adverse changes in economic conditions arise
compared to those assumed in the valuation. The Group is satisfied that the additional payment
is manageable within the Group\u2019s business plan. As part of the funding agreement between the
Group and the Trustee, a surety bond has been provided by the Group.
The Trust Deed of the Scheme provides 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. The Department for Work and Pensions has recently announced that
it will introduce legislation and guidance that will allow and support retrospective confirmation of
historical benefit changes. This announcement should significantly reduce the impact on pension
schemes and mean that for most schemes the existence of confirmations is no longer the relevant
issue, but rather whether confirmation was obtained or can be provided now.
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 at 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 is 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 105\u2013111.
Year ended 31 December
2025 2024
\u00a3000 \u00a3000
Short-term employee benefits
7,6 0 4
7,274
Termination benefits
2,591
388
Share-based payments
5,203
4 ,107
Post-employment benefits
406
411
Total remuneration
15,804
12,18 0
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 15 (2024: 16) 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-644": { "value": "2.4 Impairment review of non-current assets 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 non-current 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 unless FVLCD is considered more appropriate. The future cash flows used in ViU calculations are based on the approved long-term forecasts that support the Board and executive management\u2019s strategic planning process and include 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. CGUs
As at 31 December 2025
Goodwill
Segment name
CGUs contained within segment
\u00a3m
Pellet Production
Northern Pellets
\u2013
Biomass (Southern Pellets)
156.7
Biomass Generation
Biomass (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
396.2
Previously, the Group\u2019s pellet production activities in Canada and the US formed a single CGU (Pellet Operations), reflecting management's integration of the Group's Canadian and US pellet plants into one combined business following the Pinnacle acquisition in 2021, with pellets from the Canadian pellet plants (Northern Pellets) and the US pellet plants (Southern Pellets) being used interchangeably to fulfil third-party customer contracts and internally at Drax Power Station, with biomass generation forming a separate CGU (Drax Power Station). During 2025, market conditions changed significantly. Expected future demand for biomass pellets declined following changes to the UK support schemes, with reduced volumes under the low carbon dispatchable CfD agreed in November 2025, despite this agreement providing greater certainty over the future of Drax Power Station. At the same time, global pellet supply increased, particularly from Southeast Asia, and Canadian fibre availability was affected by tariffs. In the second half of 2025, the Group restructured its pellet operations, with its US pellet plants now dedicated to supplying Drax Power Station and its Canadian pellet plants focused on third-party customers. This operational change required a reassessment of the Groups CGUs and resulted in Northern Pellets and Southern Pellets being assessed separately, as their cash flows are now independent. 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. When calculating FVLCD, the method most appropriate for an individual asset or CGU is considered. This is generally either based on available market information on prices or comparable transactions, or a discounted cash flow method, similar to ViU, but including the impact of all relevant factors a market participant would consider. 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 5.1 for further details on goodwill. 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 consistent macro-economic conditions compared to the prior year end, as well as falling interest rates, these are not considered to be impairment indicators. Commodity prices have been relatively stable (e.g. power and gas) since the prior year end. The Group\u2019s generation activities in CGUs to which no goodwill is allocated are less sensitive to power price changes due to generation activities being more dependent on the spread between gas and power prices. Further, a high proportion of the Group\u2019s income is not linked to power prices, such as income from renewable certificates, system support and ancillary services. From the factors considered above, no impairment indicators were noted. Whilst the commissioning date for the assets in the Hirwaun, Millbrook and Progress CGUs have been delayed, this was not considered an impairment indicator as the cash flow impact of these delays is not significant. There were no impairment indicators present for the Opus Energy, Hirwaun, Millbrook, Progress or Daldowie CGUs and accordingly no impairment review was performed for these CGUs in the current year. The Group\u2019s US pellet plants now operate solely to supply Drax Power Station, and therefore do not generate cash inflows independently from Drax Power Station. Due to their whole output being used internally, and the absence of an active external market for their output, from 2025, the US pellet plants and the biomass generation activities at Drax Power Station are assessed together as a single Biomass CGU. Goodwill arising from the 2021 Pinnacle acquisition was previously allocated to the Pellet Operations CGU. Following the change in CGU structure, this goodwill has been reallocated between Northern Pellets and Southern Pellets using a relative fair value approach, in accordance with IAS 36. This resulted in C$15.7 million (\u00a38.4 million based on exchange rates at the time of reallocation) being allocated to Northern Pellets and US$210.8 million (\u00a3156.7 million based on exchange rates at the time of reallocation) being allocated to Southern Pellets. As Southern Pellets is within the Pellet Production segment but forms part of the Biomass CGU, goodwill allocated to Southern Pellets is also tested at the Southern Pellets level to ensure allocation and testing of goodwill does not take place at a level higher than an operating segment. There are no changes to any other CGUs from the prior year. In respect of the Flexible Generation segment, 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. 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 Group\u2019s Innovation, capital projects and other operations provides central support functions to the Group\u2019s main business activities and does not earn revenues 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. Impairment review For the purpose of impairment reviews, the recoverable amounts of the CGUs, or groups of CGUs, are measured using ViU or FVLCD. ViU is calculated based on a discounted cash flow method using the Group\u2019s established planning models. FVLCD uses a market price or comparable recent market transaction where possible. Where this information is not available FVLCD is also based on a discounted cash flow method using the Group\u2019s established planning models as a base, but adjusting for impacts or changes that a market participant would factor in. 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.
Calculation
method used to
determine
recoverable Significant assumptions for ViU or FVLCD
CGU amount
calculation
Management\u2019s bases for determining estimates used in ViU or FVLCD calculation
Northern
FVLCD
\u2013 Production costs
 \u2013 Future production costs are estimated based on a combination of current and historical costs, inflation expectations and
Pellets \u2013 Production volumes maintenance/operating assumptions
\u2013 Sales volumes \u2013 Production volumes are estimated based on the sales volumes agreed under contractual pellet supply arrangements entered into
\u2013 Sales prices with third parties as well as forecast sales volumes, taking into account planned and unplanned downtime provisions, and fibre
\u2013 Central costs availability
\u2013 Discount rate \u2013 Sales volumes are estimated based on contractual pellet supply arrangements entered into with third parties and assumed further
contracted volumes after current contracts expire based on third-party market demand forecasts and current contract
negotiations
\u2013 Sales prices are forecast 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 Central costs are estimated based on historical costs and adjustments that a third-party market participant could reasonably
expect to implement
\u2013 See below for details of the basis used to estimate discount rates
Biomass
ViU
\u2013 Power prices
 \u2013 Power revenue is derived from hedged power sales, future wholesale energy price estimates and an assumption of additional value
\u2013 Biomass support mechanisms added through the balancing market and optimisation
\u2013 Post-March 2031 income \u2013 Future wholesale energy price estimates are based on market traded power prices for around three years (the period they are
\u2013 Pellet costs (self-supply and liquid), gas market prices as a proxy for power for another two years, then the Group\u2019s long-term power price forecast, which is
third-party) prepared using externally provided gas price forecasts and demand inputs
\u2013 Pellet production volumes \u2013 Biomass support mechanism income is based on the terms of existing biomass support schemes applicable to Drax Power Station
\u2013 Ancillary income for the period up to March 2027 and for the period April 2027 to March 2031 are based on the agreed terms of the low carbon
\u2013 Volume of generation dispatchable CfD agreement with the UK Government
\u2013 Discount rate \u2013 Post-March 2031 biomass generation income is based on the assumption that the levels of income forecast under the low carbon
dispatchable CfD agreement for the period April 2027 to March 2031 will continue at a similar level of value up to 2039
\u2013 Self-supply pellet production costs are estimated based on a combination of current and historical costs, inflation expectations
and maintenance/operating assumptions
\u2013 Third-party pellet costs are based on historical third-party pellet supply contracts, current pricing and offers, and ongoing
negotiations
\u2013 Pellet production volumes are estimated based on a combination of the capacity of the plant, current and historical volumes
produced, planned and unplanned downtime provisions, and fibre availability
\u2013 Ancillary income assumptions are based on past performance and current agreed prices with National Grid
\u2013 Volume of generation is based on renewable support scheme terms and power price forecasts
\u2013 See below for details of the basis used to estimate discount rates
Lanark,
ViU
\u2013 Power prices
 \u2013 Power revenue is derived from hedged power sales, future wholesale energy price estimates and an assumption of additional value
Galloway and \u2013 Ancillary income added through the balancing market and optimisation
Cruachan \u2013 Volume of generation \u2013 Future wholesale energy price estimates are based on market traded power prices for around three years (the period they are
\u2013 Discount rate liquid), gas market prices as a proxy for power for another two years, then the Group\u2019s long-term power price forecast, which is
prepared using externally provided gas price forecasts and demand inputs
\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
\u2013 Volume of generation for Cruachan is based on forecast volatility in power prices and assumed weather patterns
\u2013 See below for details of the basis used to estimate discount rates
Drax Energy
ViU
\u2013 Customer margins
 \u2013 Customer margins are estimated based on current contracted prices and on current and previously achieved profitability
Solutions \u2013 Supply volumes \u2013 The expectation of future organic supply volumes is based on past performance and management\u2019s expectations of market
\u2013 Third-party cost estimates developments
\u2013 Renewables services growth \u2013 Third-party cost estimates are based on a combination of externally published rates, management analysis of key market input
rates assumptions, and forecasts from external experts
\u2013 Discount rate \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
The discount rates used for each CGU are calculated with input from 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). The CAPM calculates a post-tax discount rate which is applied to post-tax cash flows. An iterative computation using pre-tax cash flows is then performed to derive an equivalent pre-tax discount rate. Further details on the assessments for each group of CGU 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 in key assumptions would result in a material adjustment to the carrying value of a CGU, 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, where applicable, used in the calculation of each CGU\u2019s recoverable amount 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
Northern Pellets
84.2
15 years
19.3%
2.0%
Biomass
1,412.3
14 years
11.5%
n/a
Drax Energy Solutions
178.2
5 years
9.2%
2.0%
Lanark
44.3
15 years
8.0%
2.0%
Galloway
174.2
15 years
8.0%
2.0%
Cruachan
298.6
15 years
8.0%
2.0%
For the Northern Pellets CGU, FVLCD was higher than ViU. FVLCD was determined by discounting the post-tax cash flows that a third-party market participant would be expected to be able to generate from the CGU, less any costs of disposal. The cash flows used in calculating the FVLCD were based on management\u2019s detailed cash flows in the Group\u2019s established planning models, but adjusted for changes, primarily to reduce central costs, that a market participant with a different structure and requirements would be able to achieve. 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, except for the Biomass CGU whose cash flows are forecast for 14 years in line with the useful economic life of Drax Power Station, which is to 2039. Whilst these periods are longer than the five-year period specified by IAS 36, and the period the Group assesses viability over in the Viability statement, they align 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 developments in the pellet production 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 Northern Pellets and Biomass 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 recoverable amounts of these CGUs as the impact of these factors in periods after five years can be significant. The Northern Pellets CGU also has long term contracts that can 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 Northern Pellets and Biomass CGUs 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, considering changes in circumstances and whether forecasting differences were as a result of events that could not reasonably be foreseen at the date of the forecast. 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 (Northern Pellets, Lanark, Galloway and Cruachan), cash flows beyond the 15-year period are taken into perpetuity using a long-term growth rate of 2%. 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. Biomass The Biomass CGU is principally focused on renewable biomass electricity generation, including its integrated pellet supply chain. Given the allocated goodwill, a full impairment assessment has been performed. The cash flows between April 2027 and March 2031 reflect management\u2019s best estimate of earnings based on the terms of the low carbon dispatchable CfD agreement signed in November 2025. The expected income beyond March 2031 to the cessation of operations in 2039, in line with the current end of station life of Drax Power Station, is based on the assumption that earnings will continue at a similar level to those under the low carbon dispatchable CfD. 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 Biomass CGU was in excess of its carrying amount. The ViU of Southern Pellets was also in excess of its carrying amount when testing the goodwill allocated to Southern Pellets at a segment level or below. The Biomass CGU has a carrying value at 31 December 2025 of \u00a31,412.3 million. A combination of reasonably possible changes in certain assumptions used in the value in use model could lead to a material adjustment to this carrying value. These include: an average 27% decrease in power prices over the period of the low carbon dispatchable CfD agreement from April 2027 to March 2031, combined with a 90-day outage of one of the units under the Renewables Obligation scheme in 2026, an increase in biomass production costs of US$7 per tonne, an increase in the pre-tax discount rate from 11.5% to 23.7% (equivalent to an increase in the post-tax discount rate from 7.5% to 8.3%), and operations to cease in March 2031 at the end of the low carbon dispatchable CfD agreement. This combination of reasonably possible changes in the key inputs to the value in use model would lead to an impairment of \u00a3650.1 million. Therefore, reasonably possible assumptions in the ViU calculation of the Biomass CGU have been identified as a key source of estimation uncertainty. Drax Energy Solutions This segment is principally focused on renewable electricity sales to industrial and commercial (I&C) customers and providing other renewables services. 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 12.5% combined with factoring in a reduction in forecast gross margin by 10%, 0% perpetuity growth rate and a reduction in growth of forecast income from the electric vehicles business, equivalent to a 50% reduction in future forecast earnings, would reduce the headroom by \u00a3331.0 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 amount being lower than the carrying value. As such management 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. Northern Pellets The Northern Pellets CGU produces and sells biomass pellets to third-party customers. Market conditions during 2025 significantly reduced expected future demand, driven by changes and expiries in UK and Dutch support schemes, including lower contracted volumes under the low carbon dispatchable CfD effective from April 2027. Global supply has also increased, particularly from Southeast Asia, and fibre availability in Canada has been affected by tariffs. As a result, Northern Pellets has refocused on third-party sales, and expectations for its future growth have reduced. The recoverable amount of the CGU, based on FVLCD, was less than its carrying value of \u00a3278.3 million, resulting in an impairment charge of \u00a3194.1 million. Assets for which ViU is determinable or FVLCD is measurable have not been impaired below these values. Goodwill was written down to \u00a3nil, with the remaining impairment allocated across other assets on a pro-rata basis. This resulted in an impairment of \u00a38.5 million being allocated to goodwill and \u00a3185.6 million to other assets. Following the impairment, the CGU\u2019s carrying value equals its recoverable amount. Assets with determinable fair values above their carrying value were not impaired, while assets without a measurable recoverable amount were written down to \u00a3nil. The carrying value remains sensitive to key assumptions in the FVLCD model. Reasonably possible downside changes in assumptions from those used in the FVLCD calculation include a 50% reduction in assumed central cost savings, combined with a 7% decrease in pellet sales contract renewal prices, an increase in the pre-tax discount rate from 19.3% to 30.8% (equivalent to an increase in the post-tax discount rate from 15.0% to 18.0%), and a reasonably possible 30% decrease in the fair value determined for the individual assets that were not allocated an impairment loss. This combination of reasonably possible changes would result in an increase in the impairment recognised of \u00a327.1 million and a corresponding reduction in the carrying value of the Northern Pellets CGU. Reasonably possible upside changes in assumptions from those used in the FVLCD calculation include a 7% increase in pellet sales contract renewal prices, combined with a decrease in the pre-tax discount rate from 19.3% to 15.0% (equivalent to a decrease in the post-tax discount rate from 15.0% to 12.0%). This combination of reasonably possible changes would result in a reduction in the impairment recognised of \u00a372.6 million and a corresponding increase in the carrying value of the Northern Pellets CGU. Accordingly, the FVLCD assumptions for this CGU have been identified as a key source of estimation uncertainty. 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. For the Cruachan CGU, a reasonably possible 25% average power price reduction combined with an increase in the pre-tax discount rate to 8.7%, and less favourable weather patterns, resulting in a reduction in value from market volatility, would reduce the headroom by \u00a3758.2 million. This would not result in an impairment. For the Lanark CGU, a reasonably possible 25% average power price reduction combined with an increase in the pre-tax discount rate to 8.7% and a low rainfall year, based on historical lows, every one in three years, would reduce the headroom by \u00a326.3 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 amounts 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 25% average power price reduction combined with an increase in the pre-tax discount rate to 8.7% and a low rainfall year, based on historical lows, every one in three years, would result in an impairment of \u00a35.9 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. Impairment of non-current assets Longview During 2025, an impairment loss of \u00a3108.8 million has been recognised relating to the Group\u2019s Longview pellet plant development project (Longview). Due to reduced expectations around global pellet demand in the short to medium term, in part as a result of the reduced volumes of biomass generation agreed under the low carbon dispatchable CfD contract, the decision has been taken to pause this development and no development of the site is expected in the near term. The capitalised Longview assets have been impaired to their recoverable amount of \u00a313.7 million (principally the value of the land at the site). This recoverable amount has been estimated after considering the level of customisation and general market conditions. If the Group is able to return assets to suppliers; or achieve third-party sales; or find internal use for parts and spares at the Group\u2019s other pellet plants; or if any scrap value achieved exceeds the costs of disposal, then the recovery value could be higher. If an average recovery value of 40% on plant and equipment had been assumed, this would result in a decrease in the impairment recognised of \u00a329.5 million and a corresponding increase in the carrying value of the Longview assets. As such the assumptions regarding the recoverable amount of Longview plant and equipment have been identified as a key source of estimation uncertainty. A separate onerous contract provision for the Longview fibre purchase contracts has been recognised. See note 5.2 for further details. UK BECCS Given the current political environment and the lack of development of an appropriate regulatory framework to support the investment required for UK BECCS, the Group has refocused its investment priorities on nearer term opportunities with more balanced risk-return profiles and therefore has rationalised its level of investment in carbon capture opportunities. Whilst UK BECCS is still an attractive option for the Group long term and management still believes that the development of BECCS at Drax Power Station is important to the UK\u2019s Net Zero strategy, the full carrying amount of the development project of \u00a347.6 million has been impaired due to the reduced likelihood of the project proceeding in the short to medium term. Although not expected in the near term, if an appropriate regulatory framework were to be developed and the political environment was to become more supportive of large-scale capital investment in UK BECCS, increasing the likelihood of the project progressing, a reversal of the impairment of certain UK BECCS costs may be required.
Year ended 31 December 2025
Year ended 31 December 2024
Longview UK BECCS Northern Pellets Other assets Total Opus Energy Other assets Total
Impairment \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Investment in associate
\u2013
\u2013
3.6
\u2013
3.6
\u2013
4.6
4.6
Goodwill \u2013 cost (note 5.1)
\u2013
\u2013
8.5
\u2013
8.5
\u2013
\u2013
\u2013
Property, plant and equipment \u2013 accumulated depreciation and impairment (note
3.1)
108.8
47.6
139.3
26 .1
321.8
\u2013
6.1
6 .1
Right-of-use assets \u2013 accumulated depreciation and impairment (note 3.2)
\u2013
\u2013
20.1
\u2013
20 .1
\u2013
0 .1
0.1
Intangible assets excluding goodwill \u2013 accumulated amortisation and impairment
(note 5.1)
\u2013
\u2013
22.6
1.1
23.7
2.6
\u2013
2.6
Other receivables
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
1.0
1.0
Total impairment of non-current assets
108.8
47. 6
194.1
27.2
37 7.7
2.6
11.8
14.4
The total non-current asset impairment charge for the year of \u00a3377.7 million (2024: \u00a314.4 million) is recognised in the impairment of non-current assets line in the Consolidated income statement. \u00a3350.5 million (2024: \u00a32.6 million) of impairment directly relating to Longview, UK BECCS and Northern Pellets (2024: Opus Energy transaction and related restructuring) was treated as exceptional. 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 cost of disposal. The Group\u2019s policy is to recognise an impairment charge through accumulated depreciation and impairment in the Consolidated income statement 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 net 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 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
\u2013
0.7
\u2013
\u2013
0.7
Issues to maintenance projects
\u2013
\u2013
(3.3)
\u2013
(3.3)
Transfers from/(to) intangibles (note 5.1)
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 1 January 2025
514.1
3,713.0
95.4
712.4
5,034.9
Additions at cost
0.1
1.1
4.7
213.7
219.6
Disposals
(16.7)
(44.9)
(2 .1)
(5.6)
(69.3)
Movement in reinstatement asset (note 5.2)
\u2013
(9.6)
\u2013
\u2013
(9.6)
Issues to maintenance projects
\u2013
\u2013
(3.3)
\u2013
(3.3)
Transfers to intangibles (note 5.1)
\u2013
\u2013
\u2013
(0.3)
(0.3)
Transfers from right-of-use assets
\u2013
1.9
\u2013
\u2013
1.9
Transfers to inventories
\u2013
\u2013
(1.2)
\u2013
(1.2)
Transfers between PPE categories
3.9
84.0
\u2013
(87.9)
\u2013
Effect of changes in foreign exchange rates
(11.7)
(45.0)
(0.6)
(10.4)
(67.7)
At 31 December 2025
489.7
3,700.5
92.9
821.9
5,105.0
Assets under the
Freehold land Plant and Plant spare course of
and buildings equipment parts construction Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Accumulated depreciation and impairment:
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 (note 2.4)
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 to 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 1 January 2025
194.9
1,973 .1
39.9
25.0
2,232.9
Depreciation charge for the year
24.3
173.8
2.4
\u2013
200.5
Impairment (note 2.4)
13.6
138.9
4.9
164.4
321.8
Disposals
(12.3)
(37.6)
(2.0)
(2.8)
(54.7)
Issues to maintenance projects
\u2013
\u2013
(0.5)
\u2013
(0.5)
Transfers to inventories
\u2013
\u2013
(0.2)
\u2013
(0.2)
Transfers from right-of-use assets
\u2013
1.9
\u2013
\u2013
1.9
Effect of changes in foreign exchange rates
(4.3)
(19.3)
(0.1)
(0.2)
(23.9)
At 31 December 2025
216.2
2,230.8
44.4
186.4
2,67 7.8
Net book value:
At 31 December 2024
319.2
1,739.9
55.5
6 87.4
2,802.0
At 31 December 2025
273.5
1,469.7
48.5
635.5
2 ,427.2
Freehold land and buildings and plant and equipment, with a carrying amount of \u00a31,429.6 million (2024: \u00a31,580.7 million), have been pledged as security over the Group's 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 Biomass Hydro OCGT Total plant
production plant plant plant
plant
(1)
Other
(1)
and equipment
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cost:
At 1 January 2024
730.8
2,278.5
479.4
\u2013
17. 5
3,506.2
Additions at cost
\u2013
\u2013
\u2013
\u2013
0.3
0.3
Disposals
(10.2)
(10.0)
\u2013
\u2013
\u2013
(20.2)
Movement in reinstatement asset
\u2013
(6.9)
\u2013
7.6
\u2013
0.7
Transfers between PPE categories
71.9
13 8 .1
9.3
\u2013
12.4
231.7
Transfers (to)/from right-of-use assets
(1.6)
\u2013
\u2013
\u2013
0 .1
(1.5)
Effect of changes in foreign exchange rates
(4.2)
\u2013
\u2013
\u2013
\u2013
(4.2)
At 1 January 2025
786.7
2,399.7
488.7
7. 6
30.3
3,713.0
Additions at cost
\u2013
\u2013
\u2013
\u2013
1.1
1.1
Disposals
(35.0)
(7.9)
(0.9)
\u2013
(1.1)
(44.9)
Movement in reinstatement asset (note 5.2)
\u2013
(9.3)
\u2013
(0.3)
\u2013
(9.6)
Transfers between PPE categories
68.8
4.2
4.9
\u2013
6 .1
84.0
Transfers from right-of-use assets
1.9
\u2013
\u2013
\u2013
\u2013
1.9
Effect of changes in foreign exchange rates
(45.0)
\u2013
\u2013
\u2013
\u2013
(45.0)
At 31 December 2025
777.4
2,386.7
492.7
7.3
36.4
3,700.5
Accumulated depreciation and impairment:
At 1 January 2024
250.4
1,483.5
66.2
\u2013
15.5
1,815.6
Depreciation charge for the year
75.3
7 5.1
12.9
\u2013
4.9
168.2
Disposals
(6.7)
(6 .1)
\u2013
\u2013
\u2013
(12.8)
Transfers from right-of-use assets
1.1
\u2013
\u2013
\u2013
\u2013
1.1
Effect of changes in foreign exchange rates
1.0
\u2013
\u2013
\u2013
\u2013
1.0
At 1 January 2025
321.1
1,552.5
7 9.1
\u2013
20.4
1,973.1
Depreciation charge for the year
71.3
83.4
13.0
\u2013
6 .1
173.8
Impairment
138.9
\u2013
\u2013
\u2013
\u2013
138.9
Disposals
(27.6)
(8.8)
(0 .1)
\u2013
(1.1)
( 37.6)
Transfers from right-of-use assets
1.9
\u2013
\u2013
\u2013
\u2013
1.9
Effect of changes in foreign exchange rates
(19.3)
\u2013
\u2013
\u2013
\u2013
(19.3)
At 31 December 2025
486.3
1,627.1
92.0
\u2013
25.4
2,230.8
Net book value:
At 31 December 2024
465.6
8 47.2
409.6
7.6
9.9
1,739.9
At 31 December 2025
291.1
759.6
400.7
7.3
11.0
1,469.7
(1) Comparative amounts have been re-presented to show the OCGT plant in a separate category. The depreciation expense in the Consolidated income statement comprises the following:
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Depreciation charged on property, plant and equipment
200.5
197.5
Depreciation charged on right-of-use assets (note 3.2)
26.9
2 8 .1
Movement on depreciation included in closing inventories
1.5
(0.8)
Total depreciation expense
228.9
224.8
Depreciation charged on right-of-use assets in the table above is presented net of \u00a31.7 million (2024: \u00a30.9 million) depreciation related to salary sacrifice electric vehicles included within staff costs in operating and administrative expenses. Right-of-use asset depreciation totals \u00a328.6 million for the year ended 31 December 2025 (2024: \u00a329.0 million). The Group\u2019s definition of capital expenditure has been updated in the year, see note 2.7 for a reconciliation between Capital expenditure presented in note 2.1 and capital additions presented in note 3.1. Right-of-use assets
Land and Plant and
buildings equipment Rail cars Vessels Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cost:
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
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 1 January 2025
4 8 .1
29.7
27.0
77.0
181.8
Additions at cost
1.0
7. 0
1.9
\u2013
9.9
Movement in reinstatement
asset (note 5.2)
(0.8)
\u2013
4.1
\u2013
3.3
Other movements
3.3
(6.2)
(2.0)
(0 .1)
(5.0)
Effect of changes in foreign
exchange rates
(0.5)
(0.6)
(1.1)
(2.0)
(4.2)
At 31 December 2025
51.1
29.9
29.9
74.9
185.8
Accumulated depreciation and
impairment:
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 1 January 2025
25.7
18 .1
13.2
23.9
80.9
Depreciation charge for the year
8.7
7.7
4.7
7. 5
28.6
Impairment
9.3
0.4
9.6
0.8
20 .1
Other movements
(3.1)
(5.8)
(2.4)
\u2013
(11.3)
Effect of changes in foreign
exchange rates
(0.3)
(0.4)
(0.8)
(0.6)
(2 .1)
At 31 December 2025
40.3
20.0
24.3
31.6
116.2
Net book value:
At 31 December 2024
22.4
11.6
13.8
5 3.1
100.9
At 31 December 2025
10.8
9.9
5.6
43.3
69.6
The carrying amounts of intangible assets are assessed for indicators of impairment at each reporting date. Intangible assets with an indefinite useful life are assessed for impairment annually at each reporting date, regardless of the presence of impairment indicators. The Group\u2019s policy is to recognise any impairment charge through accumulated amortisation and impairment. Carrying amounts are assessed for indicators of impairment at each reporting date. The customer- related asset is attributable to the Drax Energy Solutions CGU following the acquisition of BMM. During the year the Pinnacle customer-related asset and goodwill were impaired. During the prior year the Opus Energy CGU customer-related asset was disposed of and the brand asset impaired to \u00a3nil (see below for further details)
Software and Software and
Customer-related licences \u2013 internally licences \u2013 acquired Other
assets Brand generated separately intangibles Goodwill Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cost and carrying amount:
At 1 January 2024
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
\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 (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 1 January 2025
47.2
11.3
149.0
20.0
2.1
429.6
659.2
Additions at cost
\u2013
\u2013
12.3
0.6
\u2013
\u2013
12.9
Impairment
\u2013
\u2013
\u2013
\u2013
\u2013
(8.5)
(8.5)
Disposals
\u2013
(11.3)
(34.2)
(1.3)
\u2013
(14.5)
(61.3)
Transfers between categories
\u2013
\u2013
0.1
(0.1)
\u2013
\u2013
\u2013
Transfers from property, plant and equipment (note 3.1)
\u2013
\u2013
0.3
\u2013
\u2013
\u2013
0.3
Effect of changes in foreign exchange rates
(1.1)
\u2013
\u2013
(0.1)
\u2013
(10.4)
(11.6)
At 31 December 2025
46.1
\u2013
127.5
19.1
2 .1
396.2
591.0
Accumulated amortisation and impairment:
At 1 January 2024
219.0
10.9
107. 8
12.4
1.8
14.5
366.4
Amortisation 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 1 January 2025
15.7
11.3
119.2
13.5
1.8
14.5
176.0
Amortisation charge for the year
4.6
\u2013
8.9
0.6
0.1
\u2013
14.2
Disposals
\u2013
(11.3)
(34.2)
(1.3)
\u2013
(14.5)
(61.3)
Impairment
22.5
\u2013
1.1
\u2013
0 .1
\u2013
23.7
Effect of changes in foreign exchange rates
(0.4)
\u2013
\u2013
(0 .1)
\u2013
\u2013
(0.5)
At 31 December 2025
42.4
\u2013
95.0
12.7
2.0
\u2013
152 .1
Net book value:
At 31 December 2024
31.5
\u2013
29.8
6.5
0.3
415 .1
483.2
At 31 December 2025
3.7
\u2013
32.5
6.4
0.1
396.2
438.9
The Opus Energy customer-related asset was disposed of in 2024 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 and Pacific BioEnergy customer-related assets were fully impaired during the year (see note 2.4 for further details). Opus Energy brand The Opus Energy brand was acquired as part of the Opus Energy acquisition in February 2017. During 2024 the Opus Energy brand was fully impaired, and the asset has been disposed of during the year following the sale of the remaining meter points in the year. See note 2.7 for further details. A \u00a32.4 million impairment in respect of software specific to the Opus Energy business was recognised in the prior year as it was 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. Goodwill The table below shows the carrying amount of goodwill by CGU:
Drax Energy Pellet Northern
Solutions Lanark Galloway Cruachan Operations Biomass Pellets Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Goodwill
At 1 January 2025
161.2
11.3
4 0 .1
26.9
175.6
\u2013
\u2013
415.1
Reallocations
\u2013
\u2013
\u2013
\u2013
(165.1)
156.7
8.4
\u2013
Impairment (note 2.4)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(8.5)
(8.5)
Effect of changes in
foreign exchange rates
\u2013
\u2013
\u2013
\u2013
(10.5)
\u2013
0 .1
(10.4)
At 31 December 2025
161.2
11.3
40 .1
26.9
\u2013
156.7
\u2013
396.2
", "dimensions": { "concept": "ifrs-full:DisclosureOfImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-690": { "value": "2.4 Impairment review of non-current assets 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 non-current 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 unless FVLCD is considered more appropriate. The future cash flows used in ViU calculations are based on the approved long-term forecasts that support the Board and executive management\u2019s strategic planning process and include 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. CGUs
As at 31 December 2025
Goodwill
Segment name
CGUs contained within segment
\u00a3m
Pellet Production
Northern Pellets
\u2013
Biomass (Southern Pellets)
156.7
Biomass Generation
Biomass (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
396.2
Previously, the Group\u2019s pellet production activities in Canada and the US formed a single CGU (Pellet Operations), reflecting management's integration of the Group's Canadian and US pellet plants into one combined business following the Pinnacle acquisition in 2021, with pellets from the Canadian pellet plants (Northern Pellets) and the US pellet plants (Southern Pellets) being used interchangeably to fulfil third-party customer contracts and internally at Drax Power Station, with biomass generation forming a separate CGU (Drax Power Station). During 2025, market conditions changed significantly. Expected future demand for biomass pellets declined following changes to the UK support schemes, with reduced volumes under the low carbon dispatchable CfD agreed in November 2025, despite this agreement providing greater certainty over the future of Drax Power Station. At the same time, global pellet supply increased, particularly from Southeast Asia, and Canadian fibre availability was affected by tariffs. In the second half of 2025, the Group restructured its pellet operations, with its US pellet plants now dedicated to supplying Drax Power Station and its Canadian pellet plants focused on third-party customers. This operational change required a reassessment of the Groups CGUs and resulted in Northern Pellets and Southern Pellets being assessed separately, as their cash flows are now independent. 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. When calculating FVLCD, the method most appropriate for an individual asset or CGU is considered. This is generally either based on available market information on prices or comparable transactions, or a discounted cash flow method, similar to ViU, but including the impact of all relevant factors a market participant would consider. 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 5.1 for further details on goodwill. 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 consistent macro-economic conditions compared to the prior year end, as well as falling interest rates, these are not considered to be impairment indicators. Commodity prices have been relatively stable (e.g. power and gas) since the prior year end. The Group\u2019s generation activities in CGUs to which no goodwill is allocated are less sensitive to power price changes due to generation activities being more dependent on the spread between gas and power prices. Further, a high proportion of the Group\u2019s income is not linked to power prices, such as income from renewable certificates, system support and ancillary services. From the factors considered above, no impairment indicators were noted. Whilst the commissioning date for the assets in the Hirwaun, Millbrook and Progress CGUs have been delayed, this was not considered an impairment indicator as the cash flow impact of these delays is not significant. There were no impairment indicators present for the Opus Energy, Hirwaun, Millbrook, Progress or Daldowie CGUs and accordingly no impairment review was performed for these CGUs in the current year. The Group\u2019s US pellet plants now operate solely to supply Drax Power Station, and therefore do not generate cash inflows independently from Drax Power Station. Due to their whole output being used internally, and the absence of an active external market for their output, from 2025, the US pellet plants and the biomass generation activities at Drax Power Station are assessed together as a single Biomass CGU. Goodwill arising from the 2021 Pinnacle acquisition was previously allocated to the Pellet Operations CGU. Following the change in CGU structure, this goodwill has been reallocated between Northern Pellets and Southern Pellets using a relative fair value approach, in accordance with IAS 36. This resulted in C$15.7 million (\u00a38.4 million based on exchange rates at the time of reallocation) being allocated to Northern Pellets and US$210.8 million (\u00a3156.7 million based on exchange rates at the time of reallocation) being allocated to Southern Pellets. As Southern Pellets is within the Pellet Production segment but forms part of the Biomass CGU, goodwill allocated to Southern Pellets is also tested at the Southern Pellets level to ensure allocation and testing of goodwill does not take place at a level higher than an operating segment. There are no changes to any other CGUs from the prior year. In respect of the Flexible Generation segment, 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. 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 Group\u2019s Innovation, capital projects and other operations provides central support functions to the Group\u2019s main business activities and does not earn revenues 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. Impairment review For the purpose of impairment reviews, the recoverable amounts of the CGUs, or groups of CGUs, are measured using ViU or FVLCD. ViU is calculated based on a discounted cash flow method using the Group\u2019s established planning models. FVLCD uses a market price or comparable recent market transaction where possible. Where this information is not available FVLCD is also based on a discounted cash flow method using the Group\u2019s established planning models as a base, but adjusting for impacts or changes that a market participant would factor in. 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.
Calculation
method used to
determine
recoverable Significant assumptions for ViU or FVLCD
CGU amount
calculation
Management\u2019s bases for determining estimates used in ViU or FVLCD calculation
Northern
FVLCD
\u2013 Production costs
 \u2013 Future production costs are estimated based on a combination of current and historical costs, inflation expectations and
Pellets \u2013 Production volumes maintenance/operating assumptions
\u2013 Sales volumes \u2013 Production volumes are estimated based on the sales volumes agreed under contractual pellet supply arrangements entered into
\u2013 Sales prices with third parties as well as forecast sales volumes, taking into account planned and unplanned downtime provisions, and fibre
\u2013 Central costs availability
\u2013 Discount rate \u2013 Sales volumes are estimated based on contractual pellet supply arrangements entered into with third parties and assumed further
contracted volumes after current contracts expire based on third-party market demand forecasts and current contract
negotiations
\u2013 Sales prices are forecast 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 Central costs are estimated based on historical costs and adjustments that a third-party market participant could reasonably
expect to implement
\u2013 See below for details of the basis used to estimate discount rates
Biomass
ViU
\u2013 Power prices
 \u2013 Power revenue is derived from hedged power sales, future wholesale energy price estimates and an assumption of additional value
\u2013 Biomass support mechanisms added through the balancing market and optimisation
\u2013 Post-March 2031 income \u2013 Future wholesale energy price estimates are based on market traded power prices for around three years (the period they are
\u2013 Pellet costs (self-supply and liquid), gas market prices as a proxy for power for another two years, then the Group\u2019s long-term power price forecast, which is
third-party) prepared using externally provided gas price forecasts and demand inputs
\u2013 Pellet production volumes \u2013 Biomass support mechanism income is based on the terms of existing biomass support schemes applicable to Drax Power Station
\u2013 Ancillary income for the period up to March 2027 and for the period April 2027 to March 2031 are based on the agreed terms of the low carbon
\u2013 Volume of generation dispatchable CfD agreement with the UK Government
\u2013 Discount rate \u2013 Post-March 2031 biomass generation income is based on the assumption that the levels of income forecast under the low carbon
dispatchable CfD agreement for the period April 2027 to March 2031 will continue at a similar level of value up to 2039
\u2013 Self-supply pellet production costs are estimated based on a combination of current and historical costs, inflation expectations
and maintenance/operating assumptions
\u2013 Third-party pellet costs are based on historical third-party pellet supply contracts, current pricing and offers, and ongoing
negotiations
\u2013 Pellet production volumes are estimated based on a combination of the capacity of the plant, current and historical volumes
produced, planned and unplanned downtime provisions, and fibre availability
\u2013 Ancillary income assumptions are based on past performance and current agreed prices with National Grid
\u2013 Volume of generation is based on renewable support scheme terms and power price forecasts
\u2013 See below for details of the basis used to estimate discount rates
Lanark,
ViU
\u2013 Power prices
 \u2013 Power revenue is derived from hedged power sales, future wholesale energy price estimates and an assumption of additional value
Galloway and \u2013 Ancillary income added through the balancing market and optimisation
Cruachan \u2013 Volume of generation \u2013 Future wholesale energy price estimates are based on market traded power prices for around three years (the period they are
\u2013 Discount rate liquid), gas market prices as a proxy for power for another two years, then the Group\u2019s long-term power price forecast, which is
prepared using externally provided gas price forecasts and demand inputs
\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
\u2013 Volume of generation for Cruachan is based on forecast volatility in power prices and assumed weather patterns
\u2013 See below for details of the basis used to estimate discount rates
Drax Energy
ViU
\u2013 Customer margins
 \u2013 Customer margins are estimated based on current contracted prices and on current and previously achieved profitability
Solutions \u2013 Supply volumes \u2013 The expectation of future organic supply volumes is based on past performance and management\u2019s expectations of market
\u2013 Third-party cost estimates developments
\u2013 Renewables services growth \u2013 Third-party cost estimates are based on a combination of externally published rates, management analysis of key market input
rates assumptions, and forecasts from external experts
\u2013 Discount rate \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
The discount rates used for each CGU are calculated with input from 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). The CAPM calculates a post-tax discount rate which is applied to post-tax cash flows. An iterative computation using pre-tax cash flows is then performed to derive an equivalent pre-tax discount rate. Further details on the assessments for each group of CGU 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 in key assumptions would result in a material adjustment to the carrying value of a CGU, 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, where applicable, used in the calculation of each CGU\u2019s recoverable amount 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
Northern Pellets
84.2
15 years
19.3%
2.0%
Biomass
1,412.3
14 years
11.5%
n/a
Drax Energy Solutions
178.2
5 years
9.2%
2.0%
Lanark
44.3
15 years
8.0%
2.0%
Galloway
174.2
15 years
8.0%
2.0%
Cruachan
298.6
15 years
8.0%
2.0%
For the Northern Pellets CGU, FVLCD was higher than ViU. FVLCD was determined by discounting the post-tax cash flows that a third-party market participant would be expected to be able to generate from the CGU, less any costs of disposal. The cash flows used in calculating the FVLCD were based on management\u2019s detailed cash flows in the Group\u2019s established planning models, but adjusted for changes, primarily to reduce central costs, that a market participant with a different structure and requirements would be able to achieve. 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, except for the Biomass CGU whose cash flows are forecast for 14 years in line with the useful economic life of Drax Power Station, which is to 2039. Whilst these periods are longer than the five-year period specified by IAS 36, and the period the Group assesses viability over in the Viability statement, they align 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 developments in the pellet production 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 Northern Pellets and Biomass 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 recoverable amounts of these CGUs as the impact of these factors in periods after five years can be significant. The Northern Pellets CGU also has long term contracts that can 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 Northern Pellets and Biomass CGUs 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, considering changes in circumstances and whether forecasting differences were as a result of events that could not reasonably be foreseen at the date of the forecast. 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 (Northern Pellets, Lanark, Galloway and Cruachan), cash flows beyond the 15-year period are taken into perpetuity using a long-term growth rate of 2%. 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. Biomass The Biomass CGU is principally focused on renewable biomass electricity generation, including its integrated pellet supply chain. Given the allocated goodwill, a full impairment assessment has been performed. The cash flows between April 2027 and March 2031 reflect management\u2019s best estimate of earnings based on the terms of the low carbon dispatchable CfD agreement signed in November 2025. The expected income beyond March 2031 to the cessation of operations in 2039, in line with the current end of station life of Drax Power Station, is based on the assumption that earnings will continue at a similar level to those under the low carbon dispatchable CfD. 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 Biomass CGU was in excess of its carrying amount. The ViU of Southern Pellets was also in excess of its carrying amount when testing the goodwill allocated to Southern Pellets at a segment level or below. The Biomass CGU has a carrying value at 31 December 2025 of \u00a31,412.3 million. A combination of reasonably possible changes in certain assumptions used in the value in use model could lead to a material adjustment to this carrying value. These include: an average 27% decrease in power prices over the period of the low carbon dispatchable CfD agreement from April 2027 to March 2031, combined with a 90-day outage of one of the units under the Renewables Obligation scheme in 2026, an increase in biomass production costs of US$7 per tonne, an increase in the pre-tax discount rate from 11.5% to 23.7% (equivalent to an increase in the post-tax discount rate from 7.5% to 8.3%), and operations to cease in March 2031 at the end of the low carbon dispatchable CfD agreement. This combination of reasonably possible changes in the key inputs to the value in use model would lead to an impairment of \u00a3650.1 million. Therefore, reasonably possible assumptions in the ViU calculation of the Biomass CGU have been identified as a key source of estimation uncertainty. Drax Energy Solutions This segment is principally focused on renewable electricity sales to industrial and commercial (I&C) customers and providing other renewables services. 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 12.5% combined with factoring in a reduction in forecast gross margin by 10%, 0% perpetuity growth rate and a reduction in growth of forecast income from the electric vehicles business, equivalent to a 50% reduction in future forecast earnings, would reduce the headroom by \u00a3331.0 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 amount being lower than the carrying value. As such management 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. Northern Pellets The Northern Pellets CGU produces and sells biomass pellets to third-party customers. Market conditions during 2025 significantly reduced expected future demand, driven by changes and expiries in UK and Dutch support schemes, including lower contracted volumes under the low carbon dispatchable CfD effective from April 2027. Global supply has also increased, particularly from Southeast Asia, and fibre availability in Canada has been affected by tariffs. As a result, Northern Pellets has refocused on third-party sales, and expectations for its future growth have reduced. The recoverable amount of the CGU, based on FVLCD, was less than its carrying value of \u00a3278.3 million, resulting in an impairment charge of \u00a3194.1 million. Assets for which ViU is determinable or FVLCD is measurable have not been impaired below these values. Goodwill was written down to \u00a3nil, with the remaining impairment allocated across other assets on a pro-rata basis. This resulted in an impairment of \u00a38.5 million being allocated to goodwill and \u00a3185.6 million to other assets. Following the impairment, the CGU\u2019s carrying value equals its recoverable amount. Assets with determinable fair values above their carrying value were not impaired, while assets without a measurable recoverable amount were written down to \u00a3nil. The carrying value remains sensitive to key assumptions in the FVLCD model. Reasonably possible downside changes in assumptions from those used in the FVLCD calculation include a 50% reduction in assumed central cost savings, combined with a 7% decrease in pellet sales contract renewal prices, an increase in the pre-tax discount rate from 19.3% to 30.8% (equivalent to an increase in the post-tax discount rate from 15.0% to 18.0%), and a reasonably possible 30% decrease in the fair value determined for the individual assets that were not allocated an impairment loss. This combination of reasonably possible changes would result in an increase in the impairment recognised of \u00a327.1 million and a corresponding reduction in the carrying value of the Northern Pellets CGU. Reasonably possible upside changes in assumptions from those used in the FVLCD calculation include a 7% increase in pellet sales contract renewal prices, combined with a decrease in the pre-tax discount rate from 19.3% to 15.0% (equivalent to a decrease in the post-tax discount rate from 15.0% to 12.0%). This combination of reasonably possible changes would result in a reduction in the impairment recognised of \u00a372.6 million and a corresponding increase in the carrying value of the Northern Pellets CGU. Accordingly, the FVLCD assumptions for this CGU have been identified as a key source of estimation uncertainty. 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. For the Cruachan CGU, a reasonably possible 25% average power price reduction combined with an increase in the pre-tax discount rate to 8.7%, and less favourable weather patterns, resulting in a reduction in value from market volatility, would reduce the headroom by \u00a3758.2 million. This would not result in an impairment. For the Lanark CGU, a reasonably possible 25% average power price reduction combined with an increase in the pre-tax discount rate to 8.7% and a low rainfall year, based on historical lows, every one in three years, would reduce the headroom by \u00a326.3 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 amounts 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 25% average power price reduction combined with an increase in the pre-tax discount rate to 8.7% and a low rainfall year, based on historical lows, every one in three years, would result in an impairment of \u00a35.9 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. Impairment of non-current assets Longview During 2025, an impairment loss of \u00a3108.8 million has been recognised relating to the Group\u2019s Longview pellet plant development project (Longview). Due to reduced expectations around global pellet demand in the short to medium term, in part as a result of the reduced volumes of biomass generation agreed under the low carbon dispatchable CfD contract, the decision has been taken to pause this development and no development of the site is expected in the near term. The capitalised Longview assets have been impaired to their recoverable amount of \u00a313.7 million (principally the value of the land at the site). This recoverable amount has been estimated after considering the level of customisation and general market conditions. If the Group is able to return assets to suppliers; or achieve third-party sales; or find internal use for parts and spares at the Group\u2019s other pellet plants; or if any scrap value achieved exceeds the costs of disposal, then the recovery value could be higher. If an average recovery value of 40% on plant and equipment had been assumed, this would result in a decrease in the impairment recognised of \u00a329.5 million and a corresponding increase in the carrying value of the Longview assets. As such the assumptions regarding the recoverable amount of Longview plant and equipment have been identified as a key source of estimation uncertainty. A separate onerous contract provision for the Longview fibre purchase contracts has been recognised. See note 5.2 for further details. UK BECCS Given the current political environment and the lack of development of an appropriate regulatory framework to support the investment required for UK BECCS, the Group has refocused its investment priorities on nearer term opportunities with more balanced risk-return profiles and therefore has rationalised its level of investment in carbon capture opportunities. Whilst UK BECCS is still an attractive option for the Group long term and management still believes that the development of BECCS at Drax Power Station is important to the UK\u2019s Net Zero strategy, the full carrying amount of the development project of \u00a347.6 million has been impaired due to the reduced likelihood of the project proceeding in the short to medium term. Although not expected in the near term, if an appropriate regulatory framework were to be developed and the political environment was to become more supportive of large-scale capital investment in UK BECCS, increasing the likelihood of the project progressing, a reversal of the impairment of certain UK BECCS costs may be required.
Year ended 31 December 2025
Year ended 31 December 2024
Longview UK BECCS Northern Pellets Other assets Total Opus Energy Other assets Total
Impairment \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Investment in associate
\u2013
\u2013
3.6
\u2013
3.6
\u2013
4.6
4.6
Goodwill \u2013 cost (note 5.1)
\u2013
\u2013
8.5
\u2013
8.5
\u2013
\u2013
\u2013
Property, plant and equipment \u2013 accumulated depreciation and impairment (note
3.1)
108.8
47.6
139.3
26 .1
321.8
\u2013
6.1
6 .1
Right-of-use assets \u2013 accumulated depreciation and impairment (note 3.2)
\u2013
\u2013
20.1
\u2013
20 .1
\u2013
0 .1
0.1
Intangible assets excluding goodwill \u2013 accumulated amortisation and impairment
(note 5.1)
\u2013
\u2013
22.6
1.1
23.7
2.6
\u2013
2.6
Other receivables
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
1.0
1.0
Total impairment of non-current assets
108.8
47. 6
194.1
27.2
37 7.7
2.6
11.8
14.4
The total non-current asset impairment charge for the year of \u00a3377.7 million (2024: \u00a314.4 million) is recognised in the impairment of non-current assets line in the Consolidated income statement. \u00a3350.5 million (2024: \u00a32.6 million) of impairment directly relating to Longview, UK BECCS and Northern Pellets (2024: Opus Energy transaction and related restructuring) was treated as exceptional. See note 2.7 for further details. 5.1 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). 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. Intangible assets with an indefinite useful life are assessed for impairment annually at each reporting date, regardless of the presence of impairment indicators. The Group\u2019s policy is to recognise any 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. Amortisation of intangible assets is presented through the amortisation line of the Consolidated income statement.
Method of Average UEL
amortisation (years)
At 31 December 2025
Customer-related assets:
BMM
Straight line
7
Computer software and licences:
Internally generated
Straight line
3
Acquired separately
Straight line
5
Carrying amounts are assessed for indicators of impairment at each reporting date. The customer- related asset is attributable to the Drax Energy Solutions CGU following the acquisition of BMM. During the year the Pinnacle customer-related asset and goodwill were impaired. During the prior year the Opus Energy CGU customer-related asset was disposed of and the brand asset impaired to \u00a3nil (see below for further details) .
Software and Software and
Customer-related licences \u2013 internally licences \u2013 acquired Other
assets Brand generated separately intangibles Goodwill Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cost and carrying amount:
At 1 January 2024
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
\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 (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 1 January 2025
47.2
11.3
149.0
20.0
2.1
429.6
659.2
Additions at cost
\u2013
\u2013
12.3
0.6
\u2013
\u2013
12.9
Impairment
\u2013
\u2013
\u2013
\u2013
\u2013
(8.5)
(8.5)
Disposals
\u2013
(11.3)
(34.2)
(1.3)
\u2013
(14.5)
(61.3)
Transfers between categories
\u2013
\u2013
0.1
(0.1)
\u2013
\u2013
\u2013
Transfers from property, plant and equipment (note 3.1)
\u2013
\u2013
0.3
\u2013
\u2013
\u2013
0.3
Effect of changes in foreign exchange rates
(1.1)
\u2013
\u2013
(0.1)
\u2013
(10.4)
(11.6)
At 31 December 2025
46.1
\u2013
127.5
19.1
2 .1
396.2
591.0
Accumulated amortisation and impairment:
At 1 January 2024
219.0
10.9
107. 8
12.4
1.8
14.5
366.4
Amortisation 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 1 January 2025
15.7
11.3
119.2
13.5
1.8
14.5
176.0
Amortisation charge for the year
4.6
\u2013
8.9
0.6
0.1
\u2013
14.2
Disposals
\u2013
(11.3)
(34.2)
(1.3)
\u2013
(14.5)
(61.3)
Impairment
22.5
\u2013
1.1
\u2013
0 .1
\u2013
23.7
Effect of changes in foreign exchange rates
(0.4)
\u2013
\u2013
(0 .1)
\u2013
\u2013
(0.5)
At 31 December 2025
42.4
\u2013
95.0
12.7
2.0
\u2013
152 .1
Net book value:
At 31 December 2024
31.5
\u2013
29.8
6.5
0.3
415 .1
483.2
At 31 December 2025
3.7
\u2013
32.5
6.4
0.1
396.2
438.9
The Group has incurred research and development expenditure of \u00a323.2 million (2024: \u00a326.2 million), which is included within operating and administrative expenses in the Consolidated income statement. Customer-related assets Customer-related assets reflect the value of customer contracts acquired as part of business combinations, or purchased customer contracts. The assets included customer contracts from the acquisitions of Opus Energy, Pinnacle and BMM, and customer contracts acquired from Pacific BioEnergy. The Opus Energy customer-related asset was disposed of in 2024 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 and Pacific BioEnergy customer-related assets were fully impaired during the year (see note 2.4 for further details). Opus Energy brand The Opus Energy brand was acquired as part of the Opus Energy acquisition in February 2017. During 2024 the Opus Energy brand was fully impaired, and the asset has been disposed of during the year following the sale of the remaining meter points in the year. See note 2.7 for further details. 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 1\u201323 years. As at 31 December 2025, computer software assets under the course of construction amounted to \u00a321.1 million (2024: \u00a312.5 million). A \u00a32.4 million impairment in respect of software specific to the Opus Energy business was recognised in the prior year as it was 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. Goodwill The table below shows the carrying amount of goodwill by CGU:
Drax Energy Pellet Northern
Solutions Lanark Galloway Cruachan Operations Biomass Pellets Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Goodwill
At 1 January 2025
161.2
11.3
4 0 .1
26.9
175.6
\u2013
\u2013
415.1
Reallocations
\u2013
\u2013
\u2013
\u2013
(165.1)
156.7
8.4
\u2013
Impairment (note 2.4)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(8.5)
(8.5)
Effect of changes in
foreign exchange rates
\u2013
\u2013
\u2013
\u2013
(10.5)
\u2013
0 .1
(10.4)
At 31 December 2025
161.2
11.3
40 .1
26.9
\u2013
156.7
\u2013
396.2
Goodwill arising from the 2021 Pinnacle acquisition was previously allocated to the Pellet Operations CGU. Following the change in CGU structure (see note 2.4 for further details), this goodwill has been reallocated between Northern Pellets and Southern Pellets using a relative fair value approach, in accordance with IAS 36. This resulted in C$15.7 million (\u00a38.4 million based on exchange rates at the time of reallocation) being allocated to Northern Pellets and US$210.8 million (\u00a3156.7 million based on exchange rates at the time of reallocation) being allocated to Southern Pellets.", "dimensions": { "concept": "ifrs-full:DisclosureOfGoodwillExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-589": { "value": "2.4 Impairment review of non-current assets 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 non-current 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 unless FVLCD is considered more appropriate. The future cash flows used in ViU calculations are based on the approved long-term forecasts that support the Board and executive management\u2019s strategic planning process and include 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.
CGUs
As at 31 December 2025
Goodwill
Segment name
CGUs contained within segment
\u00a3m
Pellet Production
Northern Pellets
\u2013
Biomass (Southern Pellets)
156.7
Biomass Generation
Biomass (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
396.2
Previously, the Group\u2019s pellet production activities in Canada and the US formed a single CGU
(Pellet Operations), reflecting management's integration of the Group's Canadian and US pellet
plants into one combined business following the Pinnacle acquisition in 2021, with pellets from the
Canadian pellet plants (Northern Pellets) and the US pellet plants (Southern Pellets) being used
interchangeably to fulfil third-party customer contracts and internally at Drax Power Station, with
biomass generation forming a separate CGU (Drax Power Station). During 2025, market conditions
changed significantly. Expected future demand for biomass pellets declined following changes to
the UK support schemes, with reduced volumes under the low carbon dispatchable CfD agreed in
November 2025, despite this agreement providing greater certainty over the future of Drax Power
Station. At the same time, global pellet supply increased, particularly from Southeast Asia, and
Canadian fibre availability was affected by tariffs. In the second half of 2025, the Group
restructured its pellet operations, with its US pellet plants now dedicated to supplying Drax Power
Station and its Canadian pellet plants focused on third-party customers. This operational change
required a reassessment of the Groups CGUs and resulted in Northern Pellets and Southern Pellets
being assessed separately, as their cash flows are now independent.
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. When calculating FVLCD, the method most appropriate for an individual asset or CGU is considered. This is generally either based on available market information on prices or comparable transactions, or a discounted cash flow method, similar to ViU, but including the impact of all relevant factors a market participant would consider. 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 5.1 for further details on goodwill.
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 consistent macro-economic conditions
compared to the prior year end, as well as falling interest rates, these are not considered to be
impairment indicators. Commodity prices have been relatively stable (e.g. power and gas) since the
prior year end. The Group\u2019s generation activities in CGUs to which no goodwill is allocated are less
sensitive to power price changes due to generation activities being more dependent on the spread
between gas and power prices. Further, a high proportion of the Group\u2019s income is not linked to
power prices, such as income from renewable certificates, system support and ancillary services.
From the factors considered above, no impairment indicators were noted.
Whilst the commissioning date for the assets in the Hirwaun, Millbrook and Progress CGUs have
been delayed, this was not considered an impairment indicator as the cash flow impact of these
delays is not significant.
There were no impairment indicators present for the Opus Energy, Hirwaun, Millbrook, Progress
or Daldowie CGUs and accordingly no impairment review was performed for these CGUs in the
current year.
The Group\u2019s US pellet plants now operate solely to supply Drax Power Station, and therefore do
not generate cash inflows independently from Drax Power Station. Due to their whole output being
used internally, and the absence of an active external market for their output, from 2025, the US
pellet plants and the biomass generation activities at Drax Power Station are assessed together
as a single Biomass CGU.
Goodwill arising from the 2021 Pinnacle acquisition was previously allocated to the Pellet
Operations CGU. Following the change in CGU structure, this goodwill has been reallocated
between Northern Pellets and Southern Pellets using a relative fair value approach, in accordance
with IAS 36. This resulted in C$15.7 million (\u00a38.4 million based on exchange rates at the time of
reallocation) being allocated to Northern Pellets and US$210.8 million (\u00a3156.7 million based on
exchange rates at the time of reallocation) being allocated to Southern Pellets. As Southern Pellets
is within the Pellet Production segment but forms part of the Biomass CGU, goodwill allocated to
Southern Pellets is also tested at the Southern Pellets level to ensure allocation and testing of
goodwill does not take place at a level higher than an operating segment.
There are no changes to any other CGUs from the prior year.
In respect of the Flexible Generation segment, 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.
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 Group\u2019s Innovation, capital projects and other operations provides central support functions
to the Group\u2019s main business activities and does not earn revenues 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.
Impairment review
For the purpose of impairment reviews, the recoverable amounts of the CGUs, or groups of CGUs, are measured using ViU or FVLCD. ViU is calculated based on a discounted cash flow method
using the Group\u2019s established planning models. FVLCD uses a market price or comparable recent market transaction where possible. Where this information is not available FVLCD is also based on
a discounted cash flow method using the Group\u2019s established planning models as a base, but adjusting for impacts or changes that a market participant would factor in. 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.
Calculation
method used to
determine
recoverable Significant assumptions for ViU or FVLCD
CGU amount
calculation
Management\u2019s bases for determining estimates used in ViU or FVLCD calculation
Northern
FVLCD
\u2013 Production costs
 \u2013 Future production costs are estimated based on a combination of current and historical costs, inflation expectations and
Pellets \u2013 Production volumes maintenance/operating assumptions
\u2013 Sales volumes \u2013 Production volumes are estimated based on the sales volumes agreed under contractual pellet supply arrangements entered into
\u2013 Sales prices with third parties as well as forecast sales volumes, taking into account planned and unplanned downtime provisions, and fibre
\u2013 Central costs availability
\u2013 Discount rate \u2013 Sales volumes are estimated based on contractual pellet supply arrangements entered into with third parties and assumed further
contracted volumes after current contracts expire based on third-party market demand forecasts and current contract
negotiations
\u2013 Sales prices are forecast 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 Central costs are estimated based on historical costs and adjustments that a third-party market participant could reasonably
expect to implement
\u2013 See below for details of the basis used to estimate discount rates
Biomass
ViU
\u2013 Power prices
 \u2013 Power revenue is derived from hedged power sales, future wholesale energy price estimates and an assumption of additional value
\u2013 Biomass support mechanisms added through the balancing market and optimisation
\u2013 Post-March 2031 income \u2013 Future wholesale energy price estimates are based on market traded power prices for around three years (the period they are
\u2013 Pellet costs (self-supply and liquid), gas market prices as a proxy for power for another two years, then the Group\u2019s long-term power price forecast, which is
third-party) prepared using externally provided gas price forecasts and demand inputs
\u2013 Pellet production volumes \u2013 Biomass support mechanism income is based on the terms of existing biomass support schemes applicable to Drax Power Station
\u2013 Ancillary income for the period up to March 2027 and for the period April 2027 to March 2031 are based on the agreed terms of the low carbon
\u2013 Volume of generation dispatchable CfD agreement with the UK Government
\u2013 Discount rate \u2013 Post-March 2031 biomass generation income is based on the assumption that the levels of income forecast under the low carbon
dispatchable CfD agreement for the period April 2027 to March 2031 will continue at a similar level of value up to 2039
\u2013 Self-supply pellet production costs are estimated based on a combination of current and historical costs, inflation expectations
and maintenance/operating assumptions
\u2013 Third-party pellet costs are based on historical third-party pellet supply contracts, current pricing and offers, and ongoing
negotiations
\u2013 Pellet production volumes are estimated based on a combination of the capacity of the plant, current and historical volumes
produced, planned and unplanned downtime provisions, and fibre availability
\u2013 Ancillary income assumptions are based on past performance and current agreed prices with National Grid
\u2013 Volume of generation is based on renewable support scheme terms and power price forecasts
\u2013 See below for details of the basis used to estimate discount rates
Lanark,
ViU
\u2013 Power prices
 \u2013 Power revenue is derived from hedged power sales, future wholesale energy price estimates and an assumption of additional value
Galloway and \u2013 Ancillary income added through the balancing market and optimisation
Cruachan \u2013 Volume of generation \u2013 Future wholesale energy price estimates are based on market traded power prices for around three years (the period they are
\u2013 Discount rate liquid), gas market prices as a proxy for power for another two years, then the Group\u2019s long-term power price forecast, which is
prepared using externally provided gas price forecasts and demand inputs
\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
\u2013 Volume of generation for Cruachan is based on forecast volatility in power prices and assumed weather patterns
\u2013 See below for details of the basis used to estimate discount rates
Drax Energy
ViU
\u2013 Customer margins
 \u2013 Customer margins are estimated based on current contracted prices and on current and previously achieved profitability
Solutions \u2013 Supply volumes \u2013 The expectation of future organic supply volumes is based on past performance and management\u2019s expectations of market
\u2013 Third-party cost estimates developments
\u2013 Renewables services growth \u2013 Third-party cost estimates are based on a combination of externally published rates, management analysis of key market input
rates assumptions, and forecasts from external experts
\u2013 Discount rate \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
The discount rates used for each CGU are calculated with input from 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). The CAPM
calculates a post-tax discount rate which is applied to post-tax cash flows. An iterative computation
using pre-tax cash flows is then performed to derive an equivalent pre-tax discount rate.
Further details on the assessments for each group of CGU 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 in key assumptions would result in a material adjustment to the
carrying value of a CGU, 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, where applicable, used in the calculation of each CGU\u2019s recoverable amount 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
Northern Pellets
84.2
15 years
19.3%
2.0%
Biomass
1,412.3
14 years
11.5%
n/a
Drax Energy Solutions
178.2
5 years
9.2%
2.0%
Lanark
44.3
15 years
8.0%
2.0%
Galloway
174.2
15 years
8.0%
2.0%
Cruachan
298.6
15 years
8.0%
2.0%
For the Northern Pellets CGU, FVLCD was higher than ViU. FVLCD was determined by discounting
the post-tax cash flows that a third-party market participant would be expected to be able to
generate from the CGU, less any costs of disposal. The cash flows used in calculating the FVLCD
were based on management\u2019s detailed cash flows in the Group\u2019s established planning models, but
adjusted for changes, primarily to reduce central costs, that a market participant with a different
structure and requirements would be able to achieve.
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, except for the Biomass CGU whose cash flows are forecast for
14 years in line with the useful economic life of Drax Power Station, which is to 2039. Whilst these
periods are longer than the five-year period specified by IAS 36, and the period the Group assesses
viability over in the Viability statement, they align 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 developments in the pellet production 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 Northern Pellets and Biomass 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 recoverable amounts of these CGUs as the impact of these factors in periods after
five years can be significant. The Northern Pellets CGU also has long term contracts that can 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 Northern Pellets and Biomass CGUs 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, considering changes in circumstances and whether forecasting
differences were as a result of events that could not reasonably be foreseen at the date of the
forecast. 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 (Northern
Pellets, Lanark, Galloway and Cruachan), cash flows beyond the 15-year period are taken into
perpetuity using a long-term growth rate of 2%. 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.
Biomass
The Biomass CGU is principally focused on renewable biomass electricity generation, including
its integrated pellet supply chain. Given the allocated goodwill, a full impairment assessment has
been performed. The cash flows between April 2027 and March 2031 reflect management\u2019s best
estimate of earnings based on the terms of the low carbon dispatchable CfD agreement signed in
November 2025. The expected income beyond March 2031 to the cessation of operations in 2039,
in line with the current end of station life of Drax Power Station, is based on the assumption that
earnings will continue at a similar level to those under the low carbon dispatchable CfD. 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 Biomass CGU was in excess of its carrying amount. The ViU of Southern Pellets was
also in excess of its carrying amount when testing the goodwill allocated to Southern Pellets at a
segment level or below.
The Biomass CGU has a carrying value at 31 December 2025 of \u00a31,412.3 million. A combination
of reasonably possible changes in certain assumptions used in the value in use model could lead
to a material adjustment to this carrying value.
These include: an average 27% decrease in power prices over the period of the low carbon
dispatchable CfD agreement from April 2027 to March 2031, combined with a 90-day outage
of one of the units under the Renewables Obligation scheme in 2026, an increase in biomass
production costs of US$7 per tonne, an increase in the pre-tax discount rate from 11.5% to 23.7%
(equivalent to an increase in the post-tax discount rate from 7.5% to 8.3%), and operations to cease
in March 2031 at the end of the low carbon dispatchable CfD agreement. This combination of
reasonably possible changes in the key inputs to the value in use model would lead to an
impairment of \u00a3650.1 million. Therefore, reasonably possible assumptions in the ViU calculation
of the Biomass CGU have been identified as a key source of estimation uncertainty.
Drax Energy Solutions
This segment is principally focused on renewable electricity sales to industrial and commercial (I&C)
customers and providing other renewables services.
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 12.5% combined with factoring in a reduction
in forecast gross margin by 10%, 0% perpetuity growth rate and a reduction in growth of forecast
income from the electric vehicles business, equivalent to a 50% reduction in future forecast
earnings, would reduce the headroom by \u00a3331.0 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 amount being lower than the carrying value. As such management 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.
Northern Pellets
The Northern Pellets CGU produces and sells biomass pellets to third-party customers. Market
conditions during 2025 significantly reduced expected future demand, driven by changes and
expiries in UK and Dutch support schemes, including lower contracted volumes under the low
carbon dispatchable CfD effective from April 2027. Global supply has also increased, particularly
from Southeast Asia, and fibre availability in Canada has been affected by tariffs. As a result,
Northern Pellets has refocused on third-party sales, and expectations for its future growth have
reduced.
The recoverable amount of the CGU, based on FVLCD, was less than its carrying value of
\u00a3278.3 million, resulting in an impairment charge of \u00a3194.1 million. Assets for which ViU
is determinable or FVLCD is measurable have not been impaired below these values. Goodwill was
written down to \u00a3nil, with the remaining impairment allocated across other assets on a pro-rata
basis. This resulted in an impairment of \u00a38.5 million being allocated to goodwill and \u00a3185.6 million
to other assets.
Following the impairment, the CGU\u2019s carrying value equals its recoverable amount. Assets with
determinable fair values above their carrying value were not impaired, while assets without a
measurable recoverable amount were written down to \u00a3nil. The carrying value remains sensitive
to key assumptions in the FVLCD model.
Reasonably possible downside changes in assumptions from those used in the FVLCD calculation
include a 50% reduction in assumed central cost savings, combined with a 7% decrease in pellet
sales contract renewal prices, an increase in the pre-tax discount rate from 19.3% to 30.8%
(equivalent to an increase in the post-tax discount rate from 15.0% to 18.0%), and a reasonably
possible 30% decrease in the fair value determined for the individual assets that were not allocated
an impairment loss. This combination of reasonably possible changes would result in an increase
in the impairment recognised of \u00a327.1 million and a corresponding reduction in the carrying value
of the Northern Pellets CGU.
Reasonably possible upside changes in assumptions from those used in the FVLCD calculation
include a 7% increase in pellet sales contract renewal prices, combined with a decrease in the
pre-tax discount rate from 19.3% to 15.0% (equivalent to a decrease in the post-tax discount rate
from 15.0% to 12.0%). This combination of reasonably possible changes would result in a reduction
in the impairment recognised of \u00a372.6 million and a corresponding increase in the carrying value
of the Northern Pellets CGU.
Accordingly, the FVLCD assumptions for this CGU have been identified as a key source of
estimation uncertainty.
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.
For the Cruachan CGU, a reasonably possible 25% average power price reduction combined with
an increase in the pre-tax discount rate to 8.7%, and less favourable weather patterns, resulting in a
reduction in value from market volatility, would reduce the headroom by \u00a3758.2 million. This would
not result in an impairment. For the Lanark CGU, a reasonably possible 25% average power price
reduction combined with an increase in the pre-tax discount rate to 8.7% and a low rainfall year,
based on historical lows, every one in three years, would reduce the headroom by \u00a326.3 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
amounts 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 25% average power price reduction combined with an
increase in the pre-tax discount rate to 8.7% and a low rainfall year, based on historical lows, every
one in three years, would result in an impairment of \u00a35.9 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.
Impairment of non-current assets
Longview
During 2025, an impairment loss of \u00a3108.8 million has been recognised relating to the Group\u2019s
Longview pellet plant development project (Longview). Due to reduced expectations around global
pellet demand in the short to medium term, in part as a result of the reduced volumes of biomass
generation agreed under the low carbon dispatchable CfD contract, the decision has been taken
to pause this development and no development of the site is expected in the near term.
The capitalised Longview assets have been impaired to their recoverable amount of \u00a313.7 million
(principally the value of the land at the site). This recoverable amount has been estimated after
considering the level of customisation and general market conditions. If the Group is able to return
assets to suppliers; or achieve third-party sales; or find internal use for parts and spares at the
Group\u2019s other pellet plants; or if any scrap value achieved exceeds the costs of disposal, then the
recovery value could be higher. If an average recovery value of 40% on plant and equipment had
been assumed, this would result in a decrease in the impairment recognised of \u00a329.5 million and
a corresponding increase in the carrying value of the Longview assets.
As such the assumptions regarding the recoverable amount of Longview plant and equipment have
been identified as a key source of estimation uncertainty.
A separate onerous contract provision for the Longview fibre purchase contracts has been
recognised. See note 5.2 for further details.
UK BECCS
Given the current political environment and the lack of development of an appropriate regulatory
framework to support the investment required for UK BECCS, the Group has refocused its
investment priorities on nearer term opportunities with more balanced risk-return profiles and
therefore has rationalised its level of investment in carbon capture opportunities. Whilst UK BECCS
is still an attractive option for the Group long term and management still believes that the
development of BECCS at Drax Power Station is important to the UK\u2019s Net Zero strategy, the full
carrying amount of the development project of \u00a347.6 million has been impaired due to the reduced
likelihood of the project proceeding in the short to medium term. Although not expected in the near
term, if an appropriate regulatory framework were to be developed and the political environment
was to become more supportive of large-scale capital investment in UK BECCS, increasing the
likelihood of the project progressing, a reversal of the impairment of certain UK BECCS costs may
be required.
Year ended 31 December 2025
Year ended 31 December 2024
Longview UK BECCS Northern Pellets Other assets Total Opus Energy Other assets Total
Impairment \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Investment in associate
\u2013
\u2013
3.6
\u2013
3.6
\u2013
4.6
4.6
Goodwill \u2013 cost (note 5.1)
\u2013
\u2013
8.5
\u2013
8.5
\u2013
\u2013
\u2013
Property, plant and equipment \u2013 accumulated depreciation and impairment (note
3.1)
108.8
47.6
139.3
26 .1
321.8
\u2013
6.1
6 .1
Right-of-use assets \u2013 accumulated depreciation and impairment (note 3.2)
\u2013
\u2013
20.1
\u2013
20 .1
\u2013
0 .1
0.1
Intangible assets excluding goodwill \u2013 accumulated amortisation and impairment
(note 5.1)
\u2013
\u2013
22.6
1.1
23.7
2.6
\u2013
2.6
Other receivables
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
1.0
1.0
Total impairment of non-current assets
108.8
47. 6
194.1
27.2
37 7.7
2.6
11.8
14.4
The total non-current asset impairment charge for the year of \u00a3377.7 million (2024: \u00a314.4 million) is recognised in the impairment of non-current assets line in the Consolidated income statement.
\u00a3350.5 million (2024: \u00a32.6 million) of impairment directly relating to Longview, UK BECCS and Northern Pellets (2024: Opus Energy transaction and related restructuring) was treated as exceptional.
See note 2.7 for further details.
5.1 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). 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. Intangible assets with an indefinite useful life are assessed for impairment annually at each reporting date, regardless of the presence of impairment indicators. The Group\u2019s policy is to recognise any 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. Amortisation of intangible assets is presented through the amortisation line of the Consolidated income statement.
Method of Average UEL
amortisation (years)
At 31 December 2025
Customer-related assets:
BMM
Straight line
7
Computer software and licences:
Internally generated
Straight line
3
Acquired separately
Straight line
5
Carrying amounts are assessed for indicators of impairment at each reporting date. The customer-
related asset is attributable to the Drax Energy Solutions CGU following the acquisition of BMM.
During the year the Pinnacle customer-related asset and goodwill were impaired. During the prior
year the Opus Energy CGU customer-related asset was disposed of and the brand asset impaired
to \u00a3nil (see below for further details) .
Software and Software and
Customer-related licences \u2013 internally licences \u2013 acquired Other
assets Brand generated separately intangibles Goodwill Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cost and carrying amount:
At 1 January 2024
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
\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 (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 1 January 2025
47.2
11.3
149.0
20.0
2.1
429.6
659.2
Additions at cost
\u2013
\u2013
12.3
0.6
\u2013
\u2013
12.9
Impairment
\u2013
\u2013
\u2013
\u2013
\u2013
(8.5)
(8.5)
Disposals
\u2013
(11.3)
(34.2)
(1.3)
\u2013
(14.5)
(61.3)
Transfers between categories
\u2013
\u2013
0.1
(0.1)
\u2013
\u2013
\u2013
Transfers from property, plant and equipment (note 3.1)
\u2013
\u2013
0.3
\u2013
\u2013
\u2013
0.3
Effect of changes in foreign exchange rates
(1.1)
\u2013
\u2013
(0.1)
\u2013
(10.4)
(11.6)
At 31 December 2025
46.1
\u2013
127.5
19.1
2 .1
396.2
591.0
Accumulated amortisation and impairment:
At 1 January 2024
219.0
10.9
107. 8
12.4
1.8
14.5
366.4
Amortisation 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 1 January 2025
15.7
11.3
119.2
13.5
1.8
14.5
176.0
Amortisation charge for the year
4.6
\u2013
8.9
0.6
0.1
\u2013
14.2
Disposals
\u2013
(11.3)
(34.2)
(1.3)
\u2013
(14.5)
(61.3)
Impairment
22.5
\u2013
1.1
\u2013
0 .1
\u2013
23.7
Effect of changes in foreign exchange rates
(0.4)
\u2013
\u2013
(0 .1)
\u2013
\u2013
(0.5)
At 31 December 2025
42.4
\u2013
95.0
12.7
2.0
\u2013
152 .1
Net book value:
At 31 December 2024
31.5
\u2013
29.8
6.5
0.3
415 .1
483.2
At 31 December 2025
3.7
\u2013
32.5
6.4
0.1
396.2
438.9
The Group has incurred research and development expenditure of \u00a323.2 million (2024: \u00a326.2 million),
which is included within operating and administrative expenses in the Consolidated income
statement.
Customer-related assets
Customer-related assets reflect the value of customer contracts acquired as part of business
combinations, or purchased customer contracts. The assets included customer contracts from
the acquisitions of Opus Energy, Pinnacle and BMM, and customer contracts acquired from
Pacific BioEnergy.
The Opus Energy customer-related asset was disposed of in 2024 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 and Pacific BioEnergy customer-related assets were fully impaired during the year
(see note 2.4 for further details).
Opus Energy brand
The Opus Energy brand was acquired as part of the Opus Energy acquisition in February 2017.
During 2024 the Opus Energy brand was fully impaired, and the asset has been disposed of during
the year following the sale of the remaining meter points in the year. See note 2.7 for further
details.
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 1\u201323 years.
As at 31 December 2025, computer software assets under the course of construction amounted
to \u00a321.1 million (2024: \u00a312.5 million).
A \u00a32.4 million impairment in respect of software specific to the Opus Energy business was
recognised in the prior year as it was 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.
Goodwill
The table below shows the carrying amount of goodwill by CGU:
Drax Energy Pellet Northern
Solutions Lanark Galloway Cruachan Operations Biomass Pellets Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Goodwill
At 1 January 2025
161.2
11.3
4 0 .1
26.9
175.6
\u2013
\u2013
415.1
Reallocations
\u2013
\u2013
\u2013
\u2013
(165.1)
156.7
8.4
\u2013
Impairment (note 2.4)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(8.5)
(8.5)
Effect of changes in
foreign exchange rates
\u2013
\u2013
\u2013
\u2013
(10.5)
\u2013
0 .1
(10.4)
At 31 December 2025
161.2
11.3
40 .1
26.9
\u2013
156.7
\u2013
396.2
Goodwill arising from the 2021 Pinnacle acquisition was previously allocated to the Pellet
Operations CGU. Following the change in CGU structure (see note 2.4 for further details), this
goodwill has been reallocated between Northern Pellets and Southern Pellets using a relative fair
value approach, in accordance with IAS 36. This resulted in C$15.7 million (\u00a38.4 million based on
exchange rates at the time of reallocation) being allocated to Northern Pellets and US$210.8 million
(\u00a3156.7 million based on exchange rates at the time of reallocation) being allocated to Southern
Pellets.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-684": { "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 non-current 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 unless FVLCD is considered more appropriate. The future cash flows used in ViU calculations are based on the approved long-term forecasts that support the Board and executive management\u2019s strategic planning process and include 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. When calculating FVLCD, the method most appropriate for an individual asset or CGU is considered. This is generally either based on available market information on prices or comparable transactions, or a discounted cash flow method, similar to ViU, but including the impact of all relevant factors a market participant would consider. 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 5.1 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 cost of disposal. The Group\u2019s policy is to recognise an impairment charge through accumulated depreciation and impairment in the Consolidated income statement 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 net proceeds with the asset\u2019s carrying amount. The carrying amounts of intangible assets are assessed for indicators of impairment at each reporting date. Intangible assets with an indefinite useful life are assessed for impairment annually at each reporting date, regardless of the presence of impairment indicators. The Group\u2019s policy is to recognise any impairment charge through accumulated amortisation and impairment. Carrying amounts are assessed for indicators of impairment at each reporting date. The customer- related asset is attributable to the Drax Energy Solutions CGU following the acquisition of BMM. During the year the Pinnacle customer-related asset and goodwill were impaired. During the prior year the Opus Energy CGU customer-related asset was disposed of and the brand asset impaired to \u00a3nil (see below for further details) . ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfNonfinancialAssetsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-719": { "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 non-current 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 unless FVLCD is considered more appropriate. The future cash flows used in ViU calculations are based on the approved long-term forecasts that support the Board and executive management\u2019s strategic planning process and include 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. When calculating FVLCD, the method most appropriate for an individual asset or CGU is considered. This is generally either based on available market information on prices or comparable transactions, or a discounted cash flow method, similar to ViU, but including the impact of all relevant factors a market participant would consider. 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 5.1 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 cost of disposal. The Group\u2019s policy is to recognise an impairment charge through accumulated depreciation and impairment in the Consolidated income statement 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 net proceeds with the asset\u2019s carrying amount. The carrying amounts of intangible assets are assessed for indicators of impairment at each reporting date. Intangible assets with an indefinite useful life are assessed for impairment annually at each reporting date, regardless of the presence of impairment indicators. The Group\u2019s policy is to recognise any impairment charge through accumulated amortisation and impairment. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-623": { "value": "Auditor\u2019s remuneration
Year ended 31 December
2025 2024
\u00a3000 \u00a3000
Audit fees:
Fees payable for the audit of the Group\u2019s Consolidated financial
statements
1,874.0
2 ,153. 0
Fees payable for the audit of the Company\u2019s subsidiaries\u2019 statutory
accounts
144.0
225.0
Total audit fees
2,018.0
2,378.0
Other fees:
Review of the Group\u2019s half-year Condensed consolidated financial
statements
174.0
167. 0
Assurance services provided to non-material affiliates
45.8
70.0
Other assurance services
132.0
205.0
Other services
9.0
10.0
Total non-audit fees
360.8
452.0
Total auditor\u2019s remuneration
2,378.8
2,830.0
Included in the fees payable for the audit of the Group\u2019s Consolidated financial statements for 2025 is \u00a3 0 .1 million relating to additional fees in relation to the 2024 Group audit that were agreed and billed in 2025. In the prior year fees payable included \u00a30.3 million relating to the transition phase of the 2024 audit, which was undertaken and invoiced in 2023. Other assurance services provided in the current and prior years consist of ESG assurance fees. See the Audit Committee report on page 85 for further details.", "dimensions": { "concept": "ifrs-full:DisclosureOfAuditorsRemunerationExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-646": { "value": "2.6 Current and deferred tax The tax charge of \u00a3121.3 million (2024: \u00a3227.9 million) 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 2025 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 162 for a breakdown of the net deferred tax asset or liability position for each jurisdiction.
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Total tax charge comprises:
Current tax
\u2013 UK tax
(9 9.1)
(182.2)
\u2013 Overseas tax
(0.8)
\u2013
\u2013 Adjustments in respect of prior periods
2.3
(2.4)
Deferred tax
\u2013 Before impact of tax rate changes
(14.3)
( 37.6)
\u2013 Adjustments in respect of prior periods
(9.4)
(5.7)
Total tax charge
(121.3)
(2 27.9)
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Tax credited/(charged) on items recognised in other comprehensive income:
Deferred tax on remeasurement of defined benefit pension surplus
0.7
(1.3)
Deferred tax on cash flow hedges
26.4
73.0
Deferred tax on cost of hedging
5.4
(1.7)
Total tax credit
32.5
70.0
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Tax credited/(charged) on items released directly from equity:
Deferred tax on cash flow hedges
(7.9)
(1.2)
Deferred tax on cost of hedging
1.1
5.7
Deferred tax on share-based payments
7.1
1.4
Total tax credit
0.3
5.9
UK corporation tax is the main income tax applicable on the Group\u2019s taxable profits and is calculated at 25.0% (2024: 25.0%) of the assessable profit or loss for the year. Due to the Group\u2019s overseas operations, the US income tax rate of 25.1% (2024: 21.0%), including provision for State income tax, and the Canadian corporate income tax rate of 27.0% (2024: 27.0%) are also relevant to the Group\u2019s total tax charge. The effective tax rate of 64.0% (2024: 30.2%) for the full year is higher (2024: higher) than the standard corporation tax rate applicable in the UK, principally due to the effects of non-deductible impairment of non-current assets in Canada (see note 2.4) and the resulting write off of deferred tax assets (2024: due to the non-deductible Electricity Generator Levy). 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 2025
Year ended 31 December 2024
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
623.3
(433.8)
189.5
704.0
49.4
753.4
Profit before tax multiplied by the rate of corporation tax in the UK of 25.0% (2024: 25.0%)
155.9
(108.5)
47.4
176.0
12.4
188.4
Effects of:
Adjustments in respect of prior periods
7.1
\u2013
7.1
5.6
2.5
8 .1
Expenses not deductible for tax purposes
7.3
8 9.1
96.4
5.4
\u2013
5.4
Electricity Generator Levy
\u2013
\u2013
\u2013
40.2
\u2013
40.2
Deferred tax asset unwind on US interest
\u2013
\u2013
\u2013
10.9
\u2013
10.9
Difference in overseas tax rates
(7.7)
3.1
(4.6)
(1.7)
\u2013
(1.7)
UK Patent Box benefit
(24.4)
\u2013
(24.4)
(23.4)
\u2013
(23.4)
Partnership income allocation
(0.6)
\u2013
(0.6)
\u2013
\u2013
\u2013
Total tax charge
137.6
(16.3)
121.3
213.0
14.9
2 27.9
The movements in deferred tax assets and liabilities during each year are shown below.
Accelerated
Financial capital Intangible Trade Other Other
instruments allowances assets losses liabilities assets Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
At 1 January 2024
(39.2)
(310.5)
(1.9)
56.6
(26.8)
57.6
(264.2)
(Charged)/credited to the income statement
(29.7)
(38.4)
1.1
( 7. 0)
14.7
16.0
(43.3)
Charged to other comprehensive income in respect of actuarial gains
\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
73.0
Charged to other comprehensive income in respect of cost of hedging
(1.7)
\u2013
\u2013
\u2013
\u2013
\u2013
(1.7)
Charged to equity in respect of cash flow hedges
(1.2)
\u2013
\u2013
\u2013
\u2013
\u2013
(1.2)
Credited to equity in respect of cost of hedging
5.7
\u2013
\u2013
\u2013
\u2013
\u2013
5.7
Credited to equity in respect of share-based payments
\u2013
\u2013
\u2013
\u2013
\u2013
1.4
1.4
Effect of changes in foreign exchange rates
\u2013
(0.9)
(0.1)
0.6
\u2013
0.2
(0.2)
At 1 January 2025
6.9
(349.8)
(0.9)
50.2
(13.4)
75.2
(231.8)
Credited/(charged) to the income statement
7.4
(33.2)
(0.2)
6 .1
24.3
(28 .1)
(23.7)
Credited to other comprehensive income in respect of actuarial gains
\u2013
\u2013
\u2013
\u2013
0.7
\u2013
0.7
Credited to other comprehensive income in respect of cash flow hedges
26.4
\u2013
\u2013
\u2013
\u2013
\u2013
26.4
Credited to other comprehensive income in respect of cost of hedging
5.4
\u2013
\u2013
\u2013
\u2013
\u2013
5.4
Charged to equity in respect of cash flow hedges
(7.9)
\u2013
\u2013
\u2013
\u2013
\u2013
(7.9)
Credited to equity in respect of cost of hedging
1.1
\u2013
\u2013
\u2013
\u2013
\u2013
1.1
Credited to equity in respect of share-based payments
\u2013
\u2013
\u2013
\u2013
\u2013
7.1
7.1
Effect of changes in foreign exchange rates
\u2013
0.7
0 .1
(2.3)
0.1
(0.2)
(1.6)
At 31 December 2025
39.3
(382.3)
(1.0)
54.0
11.7
54.0
(224.3)
Deferred tax balances (after offset) for financial reporting purposes:
Net Canadian deferred tax asset at 31 December 2025
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Net US deferred tax asset at 31 December 2025
\u2013
(22.6)
\u2013
53.5
\u2013
6 .1
37.0
Net UK deferred tax liability at 31 December 2025
39.3
(359.7)
(1.0)
0.5
11.7
47.9
(261.3)
Net Canadian deferred tax asset at 31 December 2024
\u2013
(9.4)
0.3
20.3
(0.3)
25.1
36.0
Net US deferred tax asset at 31 December 2024
\u2013
(22.3)
\u2013
29.5
\u2013
5.4
12.6
Net UK deferred tax liability at 31 December 2024
6.9
( 318 .1)
(1.2)
0.4
(13.1)
44.7
(280.4)
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 \u00a354.0 million (2024: \u00a350.2 million) there is \u00a353.5 million (2024: \u00a329.5 million) in relation to losses in the US Pellet Production business, and the remaining \u00a30.5 million relates to UK operations (2024: \u00a30.4 million). Losses relating to the Canadian Pellet Production business were derecognised in 2025, following the impairment of that business, resulting in a balance of \u00a3nil (2024: \u00a320.3 million). 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 business expects to generate sufficient profits in the short to medium term against which to utilise the deferred tax asset. The estimates used when assessing the future profitability of the US business have been approved by the Board and executive management, 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 2025, the Group held \u00a378.5 million (2024: \u00a378.5 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 Pillar 2 in all of the jurisdictions in which it operates. The Group is expected to be within the safe harbour provisions for 2025 and there is no exposure to any top up taxes. The Group continues to monitor developments, particularly in the US, and the transitional safe harbour provisions. The Group continues to assess the position and the latest forecasts confirm that there is no exposure to Pillar 2. 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 2 rules, so that the Group neither recognises nor discloses information about deferred tax assets and liabilities related to Pillar 2.", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-591": { "value": "2.6 Current and deferred tax The tax charge of \u00a3121.3 million (2024: \u00a3227.9 million) 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 2025 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 162 for a breakdown of the net deferred tax asset or liability position for each jurisdiction.
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Total tax charge comprises:
Current tax
\u2013 UK tax
(9 9.1)
(182.2)
\u2013 Overseas tax
(0.8)
\u2013
\u2013 Adjustments in respect of prior periods
2.3
(2.4)
Deferred tax
\u2013 Before impact of tax rate changes
(14.3)
( 37.6)
\u2013 Adjustments in respect of prior periods
(9.4)
(5.7)
Total tax charge
(121.3)
(2 27.9)
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Tax credited/(charged) on items recognised in other comprehensive income:
Deferred tax on remeasurement of defined benefit pension surplus
0.7
(1.3)
Deferred tax on cash flow hedges
26.4
73.0
Deferred tax on cost of hedging
5.4
(1.7)
Total tax credit
32.5
70.0
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Tax credited/(charged) on items released directly from equity:
Deferred tax on cash flow hedges
(7.9)
(1.2)
Deferred tax on cost of hedging
1.1
5.7
Deferred tax on share-based payments
7.1
1.4
Total tax credit
0.3
5.9
UK corporation tax is the main income tax applicable on the Group\u2019s taxable profits and is
calculated at 25.0% (2024: 25.0%) of the assessable profit or loss for the year. Due to the Group\u2019s
overseas operations, the US income tax rate of 25.1% (2024: 21.0%), including provision for State
income tax, and the Canadian corporate income tax rate of 27.0% (2024: 27.0%) are also relevant
to the Group\u2019s total tax charge.
The effective tax rate of 64.0% (2024: 30.2%) for the full year is higher (2024: higher) than the
standard corporation tax rate applicable in the UK, principally due to the effects of non-deductible
impairment of non-current assets in Canada (see note 2.4) and the resulting write off of deferred
tax assets (2024: due to the non-deductible Electricity Generator Levy).
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 2025
Year ended 31 December 2024
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
623.3
(433.8)
189.5
704.0
49.4
753.4
Profit before tax multiplied by the rate of corporation tax in the UK of 25.0% (2024: 25.0%)
155.9
(108.5)
47.4
176.0
12.4
188.4
Effects of:
Adjustments in respect of prior periods
7.1
\u2013
7.1
5.6
2.5
8 .1
Expenses not deductible for tax purposes
7.3
8 9.1
96.4
5.4
\u2013
5.4
Electricity Generator Levy
\u2013
\u2013
\u2013
40.2
\u2013
40.2
Deferred tax asset unwind on US interest
\u2013
\u2013
\u2013
10.9
\u2013
10.9
Difference in overseas tax rates
(7.7)
3.1
(4.6)
(1.7)
\u2013
(1.7)
UK Patent Box benefit
(24.4)
\u2013
(24.4)
(23.4)
\u2013
(23.4)
Partnership income allocation
(0.6)
\u2013
(0.6)
\u2013
\u2013
\u2013
Total tax charge
137.6
(16.3)
121.3
213.0
14.9
2 27.9
The movements in deferred tax assets and liabilities during each year are shown below.
Accelerated
Financial capital Intangible Trade Other Other
instruments allowances assets losses liabilities assets Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
At 1 January 2024
(39.2)
(310.5)
(1.9)
56.6
(26.8)
57.6
(264.2)
(Charged)/credited to the income statement
(29.7)
(38.4)
1.1
( 7. 0)
14.7
16.0
(43.3)
Charged to other comprehensive income in respect of actuarial gains
\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
73.0
Charged to other comprehensive income in respect of cost of hedging
(1.7)
\u2013
\u2013
\u2013
\u2013
\u2013
(1.7)
Charged to equity in respect of cash flow hedges
(1.2)
\u2013
\u2013
\u2013
\u2013
\u2013
(1.2)
Credited to equity in respect of cost of hedging
5.7
\u2013
\u2013
\u2013
\u2013
\u2013
5.7
Credited to equity in respect of share-based payments
\u2013
\u2013
\u2013
\u2013
\u2013
1.4
1.4
Effect of changes in foreign exchange rates
\u2013
(0.9)
(0.1)
0.6
\u2013
0.2
(0.2)
At 1 January 2025
6.9
(349.8)
(0.9)
50.2
(13.4)
75.2
(231.8)
Credited/(charged) to the income statement
7.4
(33.2)
(0.2)
6 .1
24.3
(28 .1)
(23.7)
Credited to other comprehensive income in respect of actuarial gains
\u2013
\u2013
\u2013
\u2013
0.7
\u2013
0.7
Credited to other comprehensive income in respect of cash flow hedges
26.4
\u2013
\u2013
\u2013
\u2013
\u2013
26.4
Credited to other comprehensive income in respect of cost of hedging
5.4
\u2013
\u2013
\u2013
\u2013
\u2013
5.4
Charged to equity in respect of cash flow hedges
(7.9)
\u2013
\u2013
\u2013
\u2013
\u2013
(7.9)
Credited to equity in respect of cost of hedging
1.1
\u2013
\u2013
\u2013
\u2013
\u2013
1.1
Credited to equity in respect of share-based payments
\u2013
\u2013
\u2013
\u2013
\u2013
7.1
7.1
Effect of changes in foreign exchange rates
\u2013
0.7
0 .1
(2.3)
0.1
(0.2)
(1.6)
At 31 December 2025
39.3
(382.3)
(1.0)
54.0
11.7
54.0
(224.3)
Deferred tax balances (after offset) for financial reporting purposes:
Net Canadian deferred tax asset at 31 December 2025
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Net US deferred tax asset at 31 December 2025
\u2013
(22.6)
\u2013
53.5
\u2013
6 .1
37.0
Net UK deferred tax liability at 31 December 2025
39.3
(359.7)
(1.0)
0.5
11.7
47.9
(261.3)
Net Canadian deferred tax asset at 31 December 2024
\u2013
(9.4)
0.3
20.3
(0.3)
25.1
36.0
Net US deferred tax asset at 31 December 2024
\u2013
(22.3)
\u2013
29.5
\u2013
5.4
12.6
Net UK deferred tax liability at 31 December 2024
6.9
( 318 .1)
(1.2)
0.4
(13.1)
44.7
(280.4)
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 \u00a354.0 million (2024: \u00a350.2 million) there is \u00a353.5 million (2024: \u00a329.5 million) in relation to losses
in the US Pellet Production business, and the remaining \u00a30.5 million relates to UK operations
(2024: \u00a30.4 million). Losses relating to the Canadian Pellet Production business were derecognised
in 2025, following the impairment of that business, resulting in a balance of \u00a3nil
(2024: \u00a320.3 million).
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 business expects to
generate sufficient profits in the short to medium term against which to utilise the deferred tax
asset. The estimates used when assessing the future profitability of the US business have been
approved by the Board and executive management, 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 2025, the Group held \u00a378.5 million (2024: \u00a378.5 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 Pillar 2 in all of the jurisdictions in which it operates. The Group is expected to
be within the safe harbour provisions for 2025 and there is no exposure to any top up taxes. The
Group continues to monitor developments, particularly in the US, and the transitional safe harbour
provisions. The Group continues to assess the position and the latest forecasts confirm that there
is no exposure to Pillar 2.
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 2 rules, so that the Group neither
recognises nor discloses information about deferred tax assets and liabilities related to Pillar 2.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-699": { "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 162 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-685": { "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 5.2), 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
2025 2024
\u00a3m \u00a3m
Interest payable and similar charges:
Interest payable
(97.0)
(105.9)
Unwinding of discount on provisions (note 5.2)
(2.9)
(2.7)
Capitalised interest
26.0
1.7
Total interest payable and similar charges included in
Adjusted results
(73.9)
(106.9)
Interest receivable and similar gains:
Interest income on bank deposits
16 .1
17.1
Net interest income on defined benefit pension surplus (note 6.3)
1.4
0.9
Other interest income
0.3
0.4
Gain on repurchase of loan notes (note 4.2)
\u2013
1.7
Total interest receivable and similar gains included in
Adjusted results
17. 8
20.1
Foreign exchange gains/(losses) included in Adjusted results
8.2
(9.4)
Net finance costs included in Adjusted results
(47.9)
(96.2)
Certain remeasurements on financing derivatives
(3.0)
(0.6)
Interest expense included within exceptional items (note (2.7)
(0.9)
\u2013
Net finance costs included in Total results
(51.8)
(96.8)
In the year the Group capitalised interest of \u00a326.0 million relating to the construction of the OCGTs, the Cruachan upgrade and the acquisition of the BESS assets at a weighted average rate of 5.43%, which is included within the cost of qualifying assets during the year. Changes in the Group\u2019s financing structure during 2025 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 receivable from a sterling functional currency entity. Due to the strengthening of GBP against USD during the year, the Group has recognised a foreign exchange gain of \u00a38.1 million (2024: \u00a31.3 million) on the retranslation of intercompany loans in the sterling functional currency entity. This gain is recognised within the Consolidated income statement and within the foreign exchange gains or losses included in the 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 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-676": { "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 5.2), 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
2025 2024
\u00a3m \u00a3m
Interest payable and similar charges:
Interest payable
(97.0)
(105.9)
Unwinding of discount on provisions (note 5.2)
(2.9)
(2.7)
Capitalised interest
26.0
1.7
Total interest payable and similar charges included in
Adjusted results
(73.9)
(106.9)
Interest receivable and similar gains:
Interest income on bank deposits
16 .1
17.1
Net interest income on defined benefit pension surplus (note 6.3)
1.4
0.9
Other interest income
0.3
0.4
Gain on repurchase of loan notes (note 4.2)
\u2013
1.7
Total interest receivable and similar gains included in
Adjusted results
17. 8
20.1
Foreign exchange gains/(losses) included in Adjusted results
8.2
(9.4)
Net finance costs included in Adjusted results
(47.9)
(96.2)
Certain remeasurements on financing derivatives
(3.0)
(0.6)
Interest expense included within exceptional items (note (2.7)
(0.9)
\u2013
Net finance costs included in Total results
(51.8)
(96.8)
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-660": { "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 5.2), 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
2025 2024
\u00a3m \u00a3m
Interest payable and similar charges:
Interest payable
(97.0)
(105.9)
Unwinding of discount on provisions (note 5.2)
(2.9)
(2.7)
Capitalised interest
26.0
1.7
Total interest payable and similar charges included in
Adjusted results
(73.9)
(106.9)
Interest receivable and similar gains:
Interest income on bank deposits
16 .1
17.1
Net interest income on defined benefit pension surplus (note 6.3)
1.4
0.9
Other interest income
0.3
0.4
Gain on repurchase of loan notes (note 4.2)
\u2013
1.7
Total interest receivable and similar gains included in
Adjusted results
17. 8
20.1
Foreign exchange gains/(losses) included in Adjusted results
8.2
(9.4)
Net finance costs included in Adjusted results
(47.9)
(96.2)
Certain remeasurements on financing derivatives
(3.0)
(0.6)
Interest expense included within exceptional items (note (2.7)
(0.9)
\u2013
Net finance costs included in Total results
(51.8)
(96.8)
In the year the Group capitalised interest of \u00a326.0 million relating to the construction of the OCGTs, the Cruachan upgrade and the acquisition of the BESS assets at a weighted average rate of 5.43%, which is included within the cost of qualifying assets during the year. Changes in the Group\u2019s financing structure during 2025 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 receivable from a sterling functional currency entity. Due to the strengthening of GBP against USD during the year, the Group has recognised a foreign exchange gain of \u00a38.1 million (2024: \u00a31.3 million) on the retranslation of intercompany loans in the sterling functional currency entity. This gain is recognised within the Consolidated income statement and within the foreign exchange gains or losses included in the 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 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-645": { "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 5.2), 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
2025 2024
\u00a3m \u00a3m
Interest payable and similar charges:
Interest payable
(97.0)
(105.9)
Unwinding of discount on provisions (note 5.2)
(2.9)
(2.7)
Capitalised interest
26.0
1.7
Total interest payable and similar charges included in
Adjusted results
(73.9)
(106.9)
Interest receivable and similar gains:
Interest income on bank deposits
16 .1
17.1
Net interest income on defined benefit pension surplus (note 6.3)
1.4
0.9
Other interest income
0.3
0.4
Gain on repurchase of loan notes (note 4.2)
\u2013
1.7
Total interest receivable and similar gains included in
Adjusted results
17. 8
20.1
Foreign exchange gains/(losses) included in Adjusted results
8.2
(9.4)
Net finance costs included in Adjusted results
(47.9)
(96.2)
Certain remeasurements on financing derivatives
(3.0)
(0.6)
Interest expense included within exceptional items (note (2.7)
(0.9)
\u2013
Net finance costs included in Total results
(51.8)
(96.8)
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-624": { "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 5.2), 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
2025 2024
\u00a3m \u00a3m
Interest payable and similar charges:
Interest payable
(97.0)
(105.9)
Unwinding of discount on provisions (note 5.2)
(2.9)
(2.7)
Capitalised interest
26.0
1.7
Total interest payable and similar charges included in
Adjusted results
(73.9)
(106.9)
Interest receivable and similar gains:
Interest income on bank deposits
16 .1
17.1
Net interest income on defined benefit pension surplus (note 6.3)
1.4
0.9
Other interest income
0.3
0.4
Gain on repurchase of loan notes (note 4.2)
\u2013
1.7
Total interest receivable and similar gains included in
Adjusted results
17. 8
20.1
Foreign exchange gains/(losses) included in Adjusted results
8.2
(9.4)
Net finance costs included in Adjusted results
(47.9)
(96.2)
Certain remeasurements on financing derivatives
(3.0)
(0.6)
Interest expense included within exceptional items (note (2.7)
(0.9)
\u2013
Net finance costs included in Total results
(51.8)
(96.8)
In the year the Group capitalised interest of \u00a326.0 million relating to the construction of the OCGTs, the Cruachan upgrade and the acquisition of the BESS assets at a weighted average rate of 5.43%, which is included within the cost of qualifying assets during the year. Changes in the Group\u2019s financing structure during 2025 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 receivable from a sterling functional currency entity. Due to the strengthening of GBP against USD during the year, the Group has recognised a foreign exchange gain of \u00a38.1 million (2024: \u00a31.3 million) on the retranslation of intercompany loans in the sterling functional currency entity. This gain is recognised within the Consolidated income statement and within the foreign exchange gains or losses included in the 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 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-590": { "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 5.2), 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
2025 2024
\u00a3m \u00a3m
Interest payable and similar charges:
Interest payable
(97.0)
(105.9)
Unwinding of discount on provisions (note 5.2)
(2.9)
(2.7)
Capitalised interest
26.0
1.7
Total interest payable and similar charges included in
Adjusted results
(73.9)
(106.9)
Interest receivable and similar gains:
Interest income on bank deposits
16 .1
17.1
Net interest income on defined benefit pension surplus (note 6.3)
1.4
0.9
Other interest income
0.3
0.4
Gain on repurchase of loan notes (note 4.2)
\u2013
1.7
Total interest receivable and similar gains included in
Adjusted results
17. 8
20.1
Foreign exchange gains/(losses) included in Adjusted results
8.2
(9.4)
Net finance costs included in Adjusted results
(47.9)
(96.2)
Certain remeasurements on financing derivatives
(3.0)
(0.6)
Interest expense included within exceptional items (note (2.7)
(0.9)
\u2013
Net finance costs included in Total results
(51.8)
(96.8)
In the year the Group capitalised interest of \u00a326.0 million relating to the construction of the OCGTs, the Cruachan upgrade and the acquisition of the BESS assets at a weighted average rate of 5.43%, which is included within the cost of qualifying assets during the year. Changes in the Group\u2019s financing structure during 2025 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 receivable from a sterling functional currency entity. Due to the strengthening of GBP against USD during the year, the Group has recognised a foreign exchange gain of \u00a38.1 million (2024: \u00a31.3 million) on the retranslation of intercompany loans in the sterling functional currency entity. This gain is recognised within the Consolidated income statement and within the foreign exchange gains or losses included in the 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 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-577": { "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 5.2), 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 receivable from a sterling functional currency entity. Due to the
strengthening of GBP against USD during the year, the Group has recognised a foreign exchange
gain of \u00a38.1 million (2024: \u00a31.3 million) on the retranslation of intercompany loans in the sterling
functional currency entity. This gain is recognised within the Consolidated income statement and
within the foreign exchange gains or losses included in the 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 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 and foreign
currency forward contracts that fix the sterling value of the principal repayment of certain foreign
currency denominated borrowings. Accordingly, the foreign exchange losses (2024: gains) on
borrowings disclosed above have been offset by \u00a333.5 million of foreign exchange gains
(2024: \u00a332.5 million losses) on cross-currency interest rate swaps and foreign currency forward
contracts 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
borrowings. These fuel purchases are typically denominated in US dollars (USD), euros (EUR) or
Canadian dollars (CAD), and the foreign currency borrowings are denominated in EUR (see note 4.2
for further details on the Group\u2019s borrowings). The Group also had CAD denominated borrowings at
the prior year end.
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, net of tax,
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 the reporting date
on outstanding monetary items denominated in foreign currencies and the valuation of foreign
currency derivative instruments. The analysis excludes the impact of the translation of the net
assets of foreign operations. 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 are 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 2025
USD
41.6
(41.5)
150.8
(121.6)
EUR
17.8
(17. 5)
33.1
(26.9)
CAD
1.7
(1.7)
15.1
(12.3)
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)
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 six-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 borrowings (see note 4.2 for further details on borrowings). The Group currently has issued foreign currency denominated borrowings in EUR (2024: EUR and CAD). The Group utilises derivative contracts, including cross-currency interest rate swaps and foreign exchange forward contracts, to manage exchange risk on foreign currency borrowings. Foreign currency risk hedge accounting The Group designates certain forward and option foreign currency exchange contracts 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, such as 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 foreign exchange forwards in order to fix the sterling cash flows payable on the principal repayment. The Group had 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 had separately taken out C$200.0 million notional value foreign exchange forwards in order to fix the sterling cash flows payable on the principal repayment. During the year the Group chose to make an early repayment of this term loan facility. Due to the repayment of the underlying hedged item, hedge accounting ceased at the date the facility was repaid. The Group has taken out fixed-to-fixed cross-currency interest rate swaps to hedge the future cash flows associated with the \u20ac350.0 million fixed rate EUR loan notes 2029 and the \u20ac31.5 million fixed rate element of the UK infrastructure private placement facility (2020). The Group had a fixed-to-fixed cross-currency interest rate swap that was entered into to hedge the future cash flows associated with the \u20ac143.8 million 2.625% EUR loan notes 2025. During the year this swap and the underlying loan notes matured and were settled. As at 31 December 2025, 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.
At 31 December 2025
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging relationships for
instrument since Balance in the which hedge
inception used Fair value Fair value hedge reserve for accounting is
Weighted for measuring recognised in recognised in continuing hedges no longer applied
Notional value of average ineffectiveness \u2013 balance sheet \u2013 balance sheet \u2013 net of deferred net of deferred
contracts fixed/variable gains/(losses) assets liabilities tax \u2013 (debit)/credit tax \u2013 (debit)/credit
US$m, \u20acm, C$m
rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency risk on biomass purchases January 2026
Purchases in foreign currency \u2013 USD
2,731.5
US$1.29
\u2013 December 2030
(92.0)
1.1
(66.0)
(47.3)
\u2013
January 2026
Purchases in foreign currency \u2013 EUR
4 87.0
\u20ac1.10
\u2013 September 2030
(3.0)
0.8
(5.3)
0.4
\u2013
January 2026
Purchases in foreign currency \u2013 CAD
343.5
C$1.75
\u2013 October 2030
(11.8)
\u2013
(5.6)
(4.8)
\u2013
Foreign currency risk on borrowings January 2026
Interest and principal payments \u2013 EUR
381.5
\u20ac1.16 / 7.22%
\u2013 November 2026
4.5
4.9
(1.9)
(0.8)
\u2013
February 2027
Principal payments \u2013 EUR
185.0
\u20ac1.11
\u2013 March 2028
6.5
\u2013
(1.8)
\u2013
\u2013
Principal payments \u2013 CAD
\u2013
\u2013
\u2013
(4.0)
\u2013
\u2013
\u2013
\u2013
Foreign currency and interest rate risk on borrowings January 2026
Interest and principal payments \u2013 EUR
255.0
\u20ac1.11 / 4.04%
\u2013 March 2026
(6.8)
\u2013
( 7.0)
(1.0)
\u2013
Interest payments \u2013 CAD
\u2013
\u2013
\u2013
(2 .1)
\u2013
\u2013
\u2013
\u2013
Interest rate risk on borrowings January 2026
Variable rate GBP debt
423.0
2.89%
\u2013 July 2029
(2 .1)
1.0
(3.0)
(1.8)
\u2013
Exposure
At 31 December 2025
Cumulative change in Hedge Amount reclassified
fair value of hedged ineffectiveness Amount reclassified due to the hedged Line item in the
item since inception Hedging losses recognised in the Amount transferred due to the hedged future cash flows income statement/
used for measuring recognised in OCI income statement Line item in the to the cost or item affecting being no longer balance sheet
ineffectiveness \u2013 in the period \u2013 in the period \u2013 income statement carrying value of a profit or loss \u2013 expected to occur \u2013 affected by
losses/(gains) gains/(losses) gains/(losses) that includes hedge non-financial asset (gains)/losses (gains)/losses the transfer/
\u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Foreign currency risk on biomass purchases
Purchases in foreign currency \u2013 USD
(92.0)
(104.5)
\u2013
Cost of sales
27.1
\u2013
\u2013
Inventories
Purchases in foreign currency \u2013 EUR
(3.0)
8.0
\u2013
Cost of sales
(1.5)
\u2013
\u2013
Inventories
Purchases in foreign currency \u2013 CAD
(11.8)
(4.8)
\u2013
Cost of sales
6.2
\u2013
\u2013
Inventories
Foreign currency risk on borrowings Interest payable Interest payable
\u2013
and similar charges
\u2013
7.1
\u2013
and similar charges
4.5
10.4
Foreign exchange Foreign exchange
Interest and principal payments \u2013 EUR \u2013
gains/(losses)
\u2013
(24.4)
\u2013
gains/(losses)
Foreign exchange Foreign exchange
Principal payments \u2013 EUR
6.5
8.3
\u2013
gains/(losses)
\u2013
(8.3)
\u2013
gains/(losses)
Foreign exchange Foreign exchange
Principal payments \u2013 CAD
(4.0)
(2.3)
\u2013
gains/(losses)
\u2013
2.3
\u2013
gains/(losses)
Foreign currency and interest rate risk on borrowings Interest payable Interest payable
(3.2)
5.4
\u2013
and similar charges
\u2013
\u2013
\u2013
and similar charges
Foreign exchange Foreign exchange
Interest and principal payments \u2013 EUR (3.6)
gains/(losses)
\u2013
( 3.1)
\u2013
gains/(losses)
Interest payable Interest payable
Interest payments \u2013 CAD
(2 .1)
(0.3)
\u2013
and similar charges
\u2013
1.0
0.9
and similar charges
Interest rate risk on borrowings Interest payable Interest payable
Variable rate GBP debt
(2.3)
(2.3)
\u2013
and similar charges
\u2013
(5.9)
\u2013
and similar charges
Exposure
At 31 December 2024
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging relationships for
instrument since Balance in the which hedge
inception used Fair value Fair value hedge reserve for accounting is
for measuring recognised in recognised in continuing hedges no longer applied
Notional value Weighted average ineffectiveness \u2013 balance sheet \u2013 balance sheet \u2013 net of deferred tax \u2013 net of deferred
of contracts fixed/variable gains/(losses) assets liabilities (debit)/credit tax \u2013 (debit)/credit
US$m, \u20acm, C$m
rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency risk on biomass purchases January 2025
Purchases in foreign currency \u2013 USD
1,430.5
US$1.27
\u2013 February 2027
18.6
20.7
(2.1)
10.7
\u2013
January 2025
Purchases in foreign currency \u2013 EUR
270.0
\u20ac 1.15
\u2013 October 2026
(6.3)
\u2013
(6.3)
(4.5)
\u2013
January 2025
Purchases in foreign currency \u2013 CAD
166.0
C$1.67
\u2013 March 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 payments \u2013 EUR
525.3
\u20ac1.14 / 6.48%
\u2013 April 2028
(10.4)
\u2013
(19.7)
4.4
\u2013
February 2027
Principal payments \u2013 EUR
185.0
\u20ac 1.11
\u2013 March 2028
(5 .1)
\u2013
(5 .1)
\u2013
\u2013
Principal payments \u2013 CAD
200.0
C$1.68
January 2026
(5.7)
\u2013
(5.7)
\u2013
\u2013
Foreign currency and interest rate risk on borrowings January 2026
Interest and principal payments \u2013 EUR
255.0
\u20ac1.09 / 4.04%
\u2013 March 2028
(8.6)
\u2013
(8.7)
(2.7)
\u2013
Interest payments \u2013 CAD
200.0
6.05%
January 2026
(1.5)
\u2013
(1.8)
(1.3)
\u2013
Interest rate risk on borrowings January 2026
Variable rate GBP debt
423.0
2.89%
\u2013 April 2028
6.1
7.1
(0.4)
4.3
\u2013
Exposure
At 31 December 2024
Cumulative change in Hedge Amount reclassified
fair value of hedged ineffectiveness Amount reclassified due to the hedged Line item in the
item since inception Hedging losses recognised in the Amount transferred due to the hedged future cash flows income statement/
used for measuring recognised in OCI in income statement Line item in the to the cost or item affecting being no longer balance sheet
ineffectiveness \u2013 the period \u2013 in the period \u2013 income statement carrying value of a profit or loss \u2013 expected to occur \u2013 affected by the
losses/(gains) gains/(losses) gains/(losses) that includes hedge non-financial asset (gains)/losses (gains)/losses transfer/
\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 payable Interest payable
Interest and principal payments \u2013 USD
\u2013
(5.6)
\u2013
and similar charges
\u2013
(0.7)
\u2013
and similar charges
Foreign exchange Foreign exchange
\u2013
gains/(losses)
\u2013
9.3
\u2013
gains/(losses)
Interest payable Interest payable
Interest and principal payments \u2013 EUR
(11.3)
(7.5)
\u2013
and similar charges
\u2013
7.4
\u2013
and similar charges
Foreign exchange Foreign exchange
\u2013
gains/(losses)
\u2013
6.4
\u2013
gains/(losses)
Foreign exchange Foreign exchange
Principal payments \u2013 EUR
(5.1)
(6.0)
\u2013
gains/(losses)
\u2013
6
\u2013
gains/(losses)
Foreign exchange Foreign exchange
Principal payments \u2013 CAD
(5.7)
(7.4)
\u2013
gains/(losses)
\u2013
7.4
\u2013
gains/(losses)
Foreign currency and interest rate risk on borrowings Interest payable Interest payable
Interest and principal payments \u2013 EUR
(8.7)
(6.4)
\u2013
and similar charges
\u2013
(2.5)
\u2013
and similar charges
Foreign exchange Foreign exchange
\u2013
gains/(losses)
\u2013
3.4
\u2013
gains/(losses)
Interest payable Interest payable
Interest payments \u2013 CAD
(1.6)
(1.3)
\u2013
and similar charges
\u2013
(0.4)
\u2013
and similar charges
Interest rate risk on borrowings Interest payable Interest payable
Variable rate GBP debt
10.8
(2.3)
\u2013
and similar charges
\u2013
(12.0)
\u2013
and similar charges
", "dimensions": { "concept": "ifrs-full:DisclosureOfEffectOfChangesInForeignExchangeRatesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-733": { "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 5.2), 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). 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:DescriptionOfAccountingPolicyForInterestIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-729": { "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 5.2), 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). 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:DescriptionOfAccountingPolicyForFinanceIncomeAndCostsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-720": { "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 5.2), 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). 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:DescriptionOfAccountingPolicyForFinanceCostsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "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 162 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-661": { "value": "The movements in deferred tax assets and liabilities during each year are shown below.
Accelerated
Financial capital Intangible Trade Other Other
instruments allowances assets losses liabilities assets Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
At 1 January 2024
(39.2)
(310.5)
(1.9)
56.6
(26.8)
57.6
(264.2)
(Charged)/credited to the income statement
(29.7)
(38.4)
1.1
( 7. 0)
14.7
16.0
(43.3)
Charged to other comprehensive income in respect of actuarial gains
\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
73.0
Charged to other comprehensive income in respect of cost of hedging
(1.7)
\u2013
\u2013
\u2013
\u2013
\u2013
(1.7)
Charged to equity in respect of cash flow hedges
(1.2)
\u2013
\u2013
\u2013
\u2013
\u2013
(1.2)
Credited to equity in respect of cost of hedging
5.7
\u2013
\u2013
\u2013
\u2013
\u2013
5.7
Credited to equity in respect of share-based payments
\u2013
\u2013
\u2013
\u2013
\u2013
1.4
1.4
Effect of changes in foreign exchange rates
\u2013
(0.9)
(0.1)
0.6
\u2013
0.2
(0.2)
At 1 January 2025
6.9
(349.8)
(0.9)
50.2
(13.4)
75.2
(231.8)
Credited/(charged) to the income statement
7.4
(33.2)
(0.2)
6 .1
24.3
(28 .1)
(23.7)
Credited to other comprehensive income in respect of actuarial gains
\u2013
\u2013
\u2013
\u2013
0.7
\u2013
0.7
Credited to other comprehensive income in respect of cash flow hedges
26.4
\u2013
\u2013
\u2013
\u2013
\u2013
26.4
Credited to other comprehensive income in respect of cost of hedging
5.4
\u2013
\u2013
\u2013
\u2013
\u2013
5.4
Charged to equity in respect of cash flow hedges
(7.9)
\u2013
\u2013
\u2013
\u2013
\u2013
(7.9)
Credited to equity in respect of cost of hedging
1.1
\u2013
\u2013
\u2013
\u2013
\u2013
1.1
Credited to equity in respect of share-based payments
\u2013
\u2013
\u2013
\u2013
\u2013
7.1
7.1
Effect of changes in foreign exchange rates
\u2013
0.7
0 .1
(2.3)
0.1
(0.2)
(1.6)
At 31 December 2025
39.3
(382.3)
(1.0)
54.0
11.7
54.0
(224.3)
Deferred tax balances (after offset) for financial reporting purposes:
Net Canadian deferred tax asset at 31 December 2025
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Net US deferred tax asset at 31 December 2025
\u2013
(22.6)
\u2013
53.5
\u2013
6 .1
37.0
Net UK deferred tax liability at 31 December 2025
39.3
(359.7)
(1.0)
0.5
11.7
47.9
(261.3)
Net Canadian deferred tax asset at 31 December 2024
\u2013
(9.4)
0.3
20.3
(0.3)
25.1
36.0
Net US deferred tax asset at 31 December 2024
\u2013
(22.3)
\u2013
29.5
\u2013
5.4
12.6
Net UK deferred tax liability at 31 December 2024
6.9
( 318 .1)
(1.2)
0.4
(13.1)
44.7
(280.4)
", "dimensions": { "concept": "ifrs-full:DisclosureOfTaxReceivablesAndPayablesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-700": { "value": "The Group is within Pillar 2 in all of the jurisdictions in which it operates. The Group is expected to be within the safe harbour provisions for 2025 and there is no exposure to any top up taxes. The Group continues to monitor developments, particularly in the US, and the transitional safe harbour provisions. The Group continues to assess the position and the latest forecasts confirm that there is no exposure to Pillar 2. 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 2 rules, so that the Group neither recognises nor discloses information about deferred tax assets and liabilities related to Pillar 2.", "dimensions": { "concept": "ifrs-full:DisclosureOfKnownOrReasonablyEstimableInformationAboutExposureToPillarTwoIncomeTaxesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-593": { "value": "
2.9 Dividends
Year ended 31 December
2025 2024
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
2025 paid on 24 October 2025
11.6
40.0
Final dividend for the year ended 31 December 2024
paid on 16 May 2025
15. 6
55.7
Interim dividend for the year ended 31 December
2024 paid on 25 October 2024
10.4
39.8
Final dividend for the year ended 31 December 2023
paid on 17 May 2024
13 .9
53.7
Total distributions
95.7
93.5
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 2025
of 1 7. 4 pence per share (equivalent to approximately \u00a35 9 million) payable on 15 May 2026. The final
dividend has not been included as a liability as at 31 December 2025. This would bring total
dividends payable in respect of the 2025 financial year to approximately \u00a399 million.
The Trustee of the Employee Benefit Trust (EBT) waived dividends paid in the year on shares held
by the EBT. The counterparty that holds shares as part of the Group\u2019s forward contracts to
purchase its own shares (see note 4.4) has waived dividends paid in the year on shares they hold.
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 4 and 5.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDividendsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-4": { "value": "0.156", "decimals": 4, "dimensions": { "concept": "ifrs-full:DividendsRecognisedAsDistributionsToOwnersPerShare", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2024-01-01T00:00:00/2025-01-01T00:00:00", "unit": "iso4217:GBP/xbrli:shares" } }, "fact-5": { "value": "0.139", "decimals": 4, "dimensions": { "concept": "ifrs-full:DividendsRecognisedAsDistributionsToOwnersPerShare", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:GBP/xbrli:shares" } }, "fact-3": { "value": "0.174", "decimals": 4, "dimensions": { "concept": "ifrs-full:DividendsProposedOrDeclaredBeforeFinancialStatementsAuthorisedForIssueButNotRecognisedAsDistributionToOwnersPerShare", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00", "unit": "iso4217:GBP/xbrli:shares" } }, "fact-677": { "value": "59000000.0", "decimals": -6, "dimensions": { "concept": "ifrs-full:DividendsProposedOrDeclaredBeforeFinancialStatementsAuthorisedForIssueButNotRecognisedAsDistributionToOwners", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00", "unit": "iso4217:GBP" } }, "fact-592": { "value": "2.8 Earnings per share Earnings per share (EPS) represents the amount of earnings (post-tax profits 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 91.8 million of repurchased shares (2024: 57.8 million) held in treasury are shown in the own shares reserve and are not included in the weighted average calculation of shares. See note 4.4 for details of the shares repurchased in the current year as part of the \u00a3300 million and \u00a3450 million share buyback programmes and for further details on the own 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
2025
2024
Number of shares (millions):
Weighted average number of ordinary shares for the purposes of
calculating Basic earnings per share
352.8
383.2
Effect of dilutive potential ordinary shares under share plans
8.5
7.6
Weighted average number of ordinary shares for the purposes of
calculating Diluted earnings per share
361.3
390.8
Year ended 31 December
2025
2024
Adjusted results
Total results
Adjusted results
Total results
Earnings per share attributable to
owners of the parent company
Earnings \u2013 profit after tax (\u00a3m)
485.8
73.0
4 92.1
526.6
Earnings per share \u2013 Basic (pence)
137.7
20.7
128.4
137.5
Earnings per share \u2013 Diluted (pence)
134.5
20.2
126.0
134.8
", "dimensions": { "concept": "ifrs-full:DisclosureOfEarningsPerShareExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-701": { "value": "Earnings per share (EPS) represents the amount of earnings (post-tax profits 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 91.8 million of repurchased shares (2024: 57.8 million) held in treasury are shown in the own shares reserve and are not included in the weighted average calculation of shares. See note 4.4 for details of the shares repurchased in the current year as part of the \u00a3300 million and \u00a3450 million share buyback programmes and for further details on the own 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-686": { "value": "The 91.8 million of repurchased shares (2024: 57.8 million) held in treasury are shown in the own shares reserve and are not included in the weighted average calculation of shares. See note 4.4 for details of the shares repurchased in the current year as part of the \u00a3300 million and \u00a3450 million share buyback programmes and for further details on the own 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. Own shares reserve The own shares reserve represents shares of Drax Group plc purchased under share buyback programmes and held by the Company as Treasury shares, or shares of Drax Group plc held by the EBT for the purpose of satisfying employee share plan awards. The EBT is treated as an extension of the Company and therefore the Group, in accordance with IFRS 10. The cost of the shares held by the EBT or the Company are recognised as a deduction from equity until the shares are issued to employees under share awards, cancelled, reissued or disposed of. The amount deducted from equity includes any incremental directly attributable costs. No gain or loss is recognised in the Consolidated income statement on the purchase, sale, issue or cancellation of the Company\u2019s own equity instruments. Where the Company has entered into a forward contract and has an obligation to purchase a fixed amount of its own shares for a fixed price, the present value of this obligation is recognised as a deduction to equity, within retained earnings, and a corresponding liability is recognised. The unwinding of the discount is included in interest payable and similar charges in the Consolidated income statement. Once the shares have been received under this forward contract, the deduction to equity within retained earnings is transferred to the own shares reserve. As at 31 December 2025, the own shares reserve comprises 91.8 million (2024: 57.8 million) shares at a value of \u00a3534.6 million (2024: \u00a3314.2 million) held in treasury, and nil (2024: nil) shares held by the EBT. During the year, the EBT subscribed for 1.8 million of new shares at nominal value for a total of \u00a30.2 million, which were subsequently issued to employees to satisfy share plan awards during the year. Share buyback programme On 31 July 2025, the Group announced a \u00a3450 million share buyback programme, to commence immediately following the completion of the \u00a3300 million share buyback programme that took place between 2024 and 2025.
Year ended 31 December 2025
Year ended 31 December 2024
Number of shares Total net cost Number of shares Total net cost
(million) \u00a3m (million) \u00a3m
Shares repurchased:
\u00a3300 million buyback programme
29.4
185.7
17.8
115.4
\u00a3450 million buyback programme
4.7
35.4
\u2013
\u2013
Total
34 .1
2 21.1
17. 8
115.4
Price paid per share:
Pence
Pence
Average
644.7
645.6
Range
Between 544.3 and 833.3
Between 618.8 and 673.9
The \u00a3300 million share buyback programme completed on 8 October 2025. The \u00a3450 million programme is ongoing. During 2026, to 24 February 2026, under the \u00a3450 million share buyback programme, 2.5 million shares have been repurchased at a total net cost of \u00a321.9 million. Shares purchased under these share buyback programmes are held in treasury within the own shares reserve awaiting reissue or cancellation and have no voting rights attached to them. The shares purchased by the Group have not been cancelled and so continue to be included in the issued shares in the above table.
Capital
redemption Translation Merger Own shares Total other
reserve reserve reserve reserve reserves
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
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)
Own shares utilised to satisfy
share-based payment
arrangements
\u2013
\u2013
\u2013
0.8
0.8
Repurchase of own shares
through share buyback
programmes
\u2013
\u2013
\u2013
(115.4)
(115.4)
At 1 January 2025
1.5
68.9
710.8
(314.2)
467.0
Exchange differences on
translation of foreign
operations
\u2013
(66.8)
\u2013
\u2013
(66.8)
Issue of share capital
\u2013
\u2013
\u2013
(0.2)
(0.2)
Own shares utilised to satisfy
share-based payment
arrangements
\u2013
\u2013
\u2013
0.9
0.9
Repurchase of own shares
through share buyback
programmes
\u2013
\u2013
\u2013
(221.1)
(221.1)
At 31 December 2025
1.5
2 .1
710.8
(534.6)
179.8
The capital redemption and own shares reserves initially arose when the Group completed previous share buyback programmes. The own shares reserve comprises 91.8 million shares at a value of \u00a3534.6 million held in treasury. The 91.8 million (2024: 57.8 million) shares held within the own shares reserve have no voting rights attached to them ", "dimensions": { "concept": "ifrs-full:DisclosureOfTreasurySharesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-594": { "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
2025 2024
\u00a3m \u00a3m
At 1 January
1,118 .1
666.4
Profit for the year attributable to the owners of the parent company
73.0
526.6
Remeasurement of defined benefit pension surplus (note 6.3)
(2.8)
5.5
Deferred tax on remeasurement of defined benefit pension surplus
(note 2.6)
0.7
(1.3)
Equity dividends paid (note 2.9)
(95.7)
(93.5)
Movement in equity associated with forward contracts to purchase
own shares to satisfy share-based payment arrangements
( 7. 2)
\u2013
Own shares utilised to satisfy share-based payment arrangements
(note 4.4)
(0.9)
\u2013
Movement in equity associated with share-based payments
15.7
13.0
Deferred tax on share-based payments (note 2.6)
7.1
1.4
Acquisition of non-controlling interests without a change in control
2.9
\u2013
At 31 December
1,110.9
1,118.1
The movement in equity associated with forward contracts to purchase own shares to satisfy
share-based payment arrangements is described under the own shares reserve section in note 4.4.
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 243 to 249 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 \u00a3302.1 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.
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
2025 2024
\u00a3m \u00a3m
Issued and fully paid:
432,171,763 ordinary shares of 11
16
\u204429 pence each (2024: 427,770,766)
49.9
49.4
The movement in allotted and fully paid share capital of the Company during the year was as follows:
Year ended 31 December
2025 2024
(number) (number)
At 1 January
427,770,766
424,923,406
Issued in respect of employee share schemes
4,400,997
2 , 8 47,360
At 31 December
432,171,763
427,770,766
The Company has only one class of shares, which are ordinary shares of 11 16 \u204429 pence each, carrying no right to fixed income. 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 2,611,059 shares were issued at a weighted average exercise price of 190.2 pence per share in respect of options vesting on employee share purchase schemes and 1,789,938 shares were issued in respect of share options vesting on share awards with no exercise price. Own shares reserve The own shares reserve represents shares of Drax Group plc purchased under share buyback programmes and held by the Company as Treasury shares, or shares of Drax Group plc held by the EBT for the purpose of satisfying employee share plan awards. The EBT is treated as an extension of the Company and therefore the Group, in accordance with IFRS 10. The cost of the shares held by the EBT or the Company are recognised as a deduction from equity until the shares are issued to employees under share awards, cancelled, reissued or disposed of. The amount deducted from equity includes any incremental directly attributable costs. No gain or loss is recognised in the Consolidated income statement on the purchase, sale, issue or cancellation of the Company\u2019s own equity instruments. Where the Company has entered into a forward contract and has an obligation to purchase a fixed amount of its own shares for a fixed price, the present value of this obligation is recognised as a deduction to equity, within retained earnings, and a corresponding liability is recognised. The unwinding of the discount is included in interest payable and similar charges in the Consolidated income statement. Once the shares have been received under this forward contract, the deduction to equity within retained earnings is transferred to the own shares reserve. As at 31 December 2025, the own shares reserve comprises 91.8 million (2024: 57.8 million) shares at a value of \u00a3534.6 million (2024: \u00a3314.2 million) held in treasury, and nil (2024: nil) shares held by the EBT. During the year, the EBT subscribed for 1.8 million of new shares at nominal value for a total of \u00a30.2 million, which were subsequently issued to employees to satisfy share plan awards during the year. Share buyback programme On 31 July 2025, the Group announced a \u00a3450 million share buyback programme, to commence immediately following the completion of the \u00a3300 million share buyback programme that took place between 2024 and 2025.
Year ended 31 December 2025
Year ended 31 December 2024
Number of shares Total net cost Number of shares Total net cost
(million) \u00a3m (million) \u00a3m
Shares repurchased:
\u00a3300 million buyback programme
29.4
185.7
17.8
115.4
\u00a3450 million buyback programme
4.7
35.4
\u2013
\u2013
Total
34 .1
2 21.1
17. 8
115.4
Price paid per share:
Pence
Pence
Average
644.7
645.6
Range
Between 544.3 and 833.3
Between 618.8 and 673.9
The \u00a3300 million share buyback programme completed on 8 October 2025. The \u00a3450 million programme is ongoing. During 2026, to 24 February 2026, under the \u00a3450 million share buyback programme, 2.5 million shares have been repurchased at a total net cost of \u00a321.9 million. Shares purchased under these share buyback programmes are held in treasury within the own shares reserve awaiting reissue or cancellation and have no voting rights attached to them. The shares purchased by the Group have not been cancelled and so continue to be included in the issued shares in the above table.
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
2025 2024
\u00a3m \u00a3m
At 1 January
443.8
441.2
Issue of share capital
4.7
2.6
At 31 December
448.5
443.8
Other reserves
Capital
redemption Translation Merger Own shares Total other
reserve reserve reserve reserve reserves
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
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)
Own shares utilised to satisfy
share-based payment
arrangements
\u2013
\u2013
\u2013
0.8
0.8
Repurchase of own shares
through share buyback
programmes
\u2013
\u2013
\u2013
(115.4)
(115.4)
At 1 January 2025
1.5
68.9
710.8
(314.2)
467.0
Exchange differences on
translation of foreign
operations
\u2013
(66.8)
\u2013
\u2013
(66.8)
Issue of share capital
\u2013
\u2013
\u2013
(0.2)
(0.2)
Own shares utilised to satisfy
share-based payment
arrangements
\u2013
\u2013
\u2013
0.9
0.9
Repurchase of own shares
through share buyback
programmes
\u2013
\u2013
\u2013
(221.1)
(221.1)
At 31 December 2025
1.5
2 .1
710.8
(534.6)
179.8
The capital redemption and own shares reserves initially arose when the Group completed previous
share buyback programmes. The own shares reserve comprises 91.8 million shares at a value of
\u00a3534.6 million held in treasury. The 91.8 million (2024: 57.8 million) shares held within the own
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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-625": { "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
2025 2024
\u00a3m \u00a3m
At 1 January
1,118 .1
666.4
Profit for the year attributable to the owners of the parent company
73.0
526.6
Remeasurement of defined benefit pension surplus (note 6.3)
(2.8)
5.5
Deferred tax on remeasurement of defined benefit pension surplus
(note 2.6)
0.7
(1.3)
Equity dividends paid (note 2.9)
(95.7)
(93.5)
Movement in equity associated with forward contracts to purchase
own shares to satisfy share-based payment arrangements
( 7. 2)
\u2013
Own shares utilised to satisfy share-based payment arrangements
(note 4.4)
(0.9)
\u2013
Movement in equity associated with share-based payments
15.7
13.0
Deferred tax on share-based payments (note 2.6)
7.1
1.4
Acquisition of non-controlling interests without a change in control
2.9
\u2013
At 31 December
1,110.9
1,118.1
The movement in equity associated with forward contracts to purchase own shares to satisfy share-based payment arrangements is described under the own shares reserve section in note 4.4. 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 243 to 249 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 \u00a3302.1 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. Other reserves
Capital
redemption Translation Merger Own shares Total other
reserve reserve reserve reserve reserves
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
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)
Own shares utilised to satisfy
share-based payment
arrangements
\u2013
\u2013
\u2013
0.8
0.8
Repurchase of own shares
through share buyback
programmes
\u2013
\u2013
\u2013
(115.4)
(115.4)
At 1 January 2025
1.5
68.9
710.8
(314.2)
467.0
Exchange differences on
translation of foreign
operations
\u2013
(66.8)
\u2013
\u2013
(66.8)
Issue of share capital
\u2013
\u2013
\u2013
(0.2)
(0.2)
Own shares utilised to satisfy
share-based payment
arrangements
\u2013
\u2013
\u2013
0.9
0.9
Repurchase of own shares
through share buyback
programmes
\u2013
\u2013
\u2013
(221.1)
(221.1)
At 31 December 2025
1.5
2 .1
710.8
(534.6)
179.8
The capital redemption and own shares reserves initially arose when the Group completed previous share buyback programmes. The own shares reserve comprises 91.8 million shares at a value of \u00a3534.6 million held in treasury. The 91.8 million (2024: 57.8 million) shares held within the own 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-723": { "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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-595": { "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 2025
(years)
Freehold buildings
18
Plant and equipment:
Pellet production plant
8
Electricity generation assets:
Biomass plant
12
Hydro plant (including pumped storage)
34
Other plant, machinery and equipment
11
Reinstatement assets
18
Plant spare parts
15
Freehold land held at cost is considered to have an indefinite UEL and is not depreciated. The value of freehold land held at 31 December 2025 is \u00a332.5 million (2024: \u00a335.5 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, and capital projects. Where plant spares are used for capital projects they are included within the cost of the asset and movements are presented in the transfer between PPE categories in the table below. Where plant spares are used for maintenance projects 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 movements 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. General and specific borrowing costs are capitalised as part of the cost of an asset if they are directly attributable to the acquisition, construction or production of a qualifying asset. A qualifying asset is one that takes a substantial period to get ready for intended use. The Group defines this period to mean 12 months or more. Capitalisation of borrowing costs ceases once substantially all the activities necessary to prepare the asset for its intended use or sale are complete. See note 2.5 for details of the borrowing costs capitalised during the year. 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.
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. 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 \u00a318.0 million. If the assumed end of station life of 2039 were to
decrease by 8 years to 2031, in line with the end of the low carbon dispatchable CfD, the annual
depreciation charge would be increased by approximately \u00a359.4 million, excluding the impact of
any potential impairment.
The UEL of Drax Power Station is not considered a key source of estimation uncertainty as there is
not a significant risk of a material adjustment to the carrying amounts and the annual depreciation
charge within the next financial year, as it is not anticipated that any new information will be
available within the next financial year that would result in a change to this UEL and lead to a
material adjustment to the depreciation charge.
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 cost of disposal. The Group\u2019s policy is to recognise an impairment charge through accumulated depreciation and impairment in the Consolidated income statement 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 net proceeds with the asset\u2019s carrying amount. During the year, the Group has impaired costs capitalised relating to its UK BECCS project, Longview pellet plant development project and non-current assets within the Northern Pellets CGU. See note 2.4 for further details of these impairments. The Group has continued construction of the three OCGT projects that have obtained Capacity Market contracts. The amount capitalised up to the reporting date relating to these projects totals \u00a3466.6 million (2024: \u00a3420.7 million). Of this, \u00a345.9 million (20 24: \u00a3 97. 2 million) was capitalised during the year. On 29 October 2025, the Group signed an agreement with Apatura Limited (Apatura) to acquire three battery energy storage system (BESS) projects across three sites in England and Scotland. Completion of these acquisitions is contingent on certain conditions precedent relating to all relevant planning permissions, construction and purchase contracts, and any other necessary contracts or agreements, being in place for the construction of these BESS assets. Completion of two of the sites occurred in 2025 with the remaining site expected to complete in 2026. For the two sites that completed in 2025, the total consideration was \u00a322.8 million, however this amount is contingent based on the total construction costs. Apatura will manage the construction of the sites, with the amount of consideration due reducing (or increasing) if total construction costs exceed (or are less than) the agreed construction budget. The amount capitalised up to the reporting date relating to these projects totals \u00a326.6 million which is presented in the assets under the course of construction category in the table below. The Group\u2019s total commitment for future capital expenditure is disclosed in note 7.7. 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.
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 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
\u2013
0.7
\u2013
\u2013
0.7
Issues to maintenance projects
\u2013
\u2013
(3.3)
\u2013
(3.3)
Transfers from/(to) intangibles (note 5.1)
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 1 January 2025
514.1
3,713.0
95.4
712.4
5,034.9
Additions at cost
0.1
1.1
4.7
213.7
219.6
Disposals
(16.7)
(44.9)
(2 .1)
(5.6)
(69.3)
Movement in reinstatement asset (note 5.2)
\u2013
(9.6)
\u2013
\u2013
(9.6)
Issues to maintenance projects
\u2013
\u2013
(3.3)
\u2013
(3.3)
Transfers to intangibles (note 5.1)
\u2013
\u2013
\u2013
(0.3)
(0.3)
Transfers from right-of-use assets
\u2013
1.9
\u2013
\u2013
1.9
Transfers to inventories
\u2013
\u2013
(1.2)
\u2013
(1.2)
Transfers between PPE categories
3.9
84.0
\u2013
(87.9)
\u2013
Effect of changes in foreign exchange rates
(11.7)
(45.0)
(0.6)
(10.4)
(67.7)
At 31 December 2025
489.7
3,700.5
92.9
821.9
5,105.0
Assets under the
Freehold land Plant and Plant spare course of
and buildings equipment parts construction Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Accumulated depreciation and impairment:
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 (note 2.4)
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 to 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 1 January 2025
194.9
1,973 .1
39.9
25.0
2,232.9
Depreciation charge for the year
24.3
173.8
2.4
\u2013
200.5
Impairment (note 2.4)
13.6
138.9
4.9
164.4
321.8
Disposals
(12.3)
(37.6)
(2.0)
(2.8)
(54.7)
Issues to maintenance projects
\u2013
\u2013
(0.5)
\u2013
(0.5)
Transfers to inventories
\u2013
\u2013
(0.2)
\u2013
(0.2)
Transfers from right-of-use assets
\u2013
1.9
\u2013
\u2013
1.9
Effect of changes in foreign exchange rates
(4.3)
(19.3)
(0.1)
(0.2)
(23.9)
At 31 December 2025
216.2
2,230.8
44.4
186.4
2,67 7.8
Net book value:
At 31 December 2024
319.2
1,739.9
55.5
6 87.4
2,802.0
At 31 December 2025
273.5
1,469.7
48.5
635.5
2 ,427.2
Freehold land and buildings and plant and equipment, with a carrying amount of \u00a31,429.6 million (2024: \u00a31,580.7 million), have been pledged as security over the Group's 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 Biomass Hydro OCGT Total plant
production plant plant plant
plant
(1)
Other
(1)
and equipment
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cost:
At 1 January 2024
730.8
2,278.5
479.4
\u2013
17. 5
3,506.2
Additions at cost
\u2013
\u2013
\u2013
\u2013
0.3
0.3
Disposals
(10.2)
(10.0)
\u2013
\u2013
\u2013
(20.2)
Movement in reinstatement asset
\u2013
(6.9)
\u2013
7.6
\u2013
0.7
Transfers between PPE categories
71.9
13 8 .1
9.3
\u2013
12.4
231.7
Transfers (to)/from right-of-use assets
(1.6)
\u2013
\u2013
\u2013
0 .1
(1.5)
Effect of changes in foreign exchange rates
(4.2)
\u2013
\u2013
\u2013
\u2013
(4.2)
At 1 January 2025
786.7
2,399.7
488.7
7. 6
30.3
3,713.0
Additions at cost
\u2013
\u2013
\u2013
\u2013
1.1
1.1
Disposals
(35.0)
(7.9)
(0.9)
\u2013
(1.1)
(44.9)
Movement in reinstatement asset (note 5.2)
\u2013
(9.3)
\u2013
(0.3)
\u2013
(9.6)
Transfers between PPE categories
68.8
4.2
4.9
\u2013
6 .1
84.0
Transfers from right-of-use assets
1.9
\u2013
\u2013
\u2013
\u2013
1.9
Effect of changes in foreign exchange rates
(45.0)
\u2013
\u2013
\u2013
\u2013
(45.0)
At 31 December 2025
777.4
2,386.7
492.7
7.3
36.4
3,700.5
Accumulated depreciation and impairment:
At 1 January 2024
250.4
1,483.5
66.2
\u2013
15.5
1,815.6
Depreciation charge for the year
75.3
7 5.1
12.9
\u2013
4.9
168.2
Disposals
(6.7)
(6 .1)
\u2013
\u2013
\u2013
(12.8)
Transfers from right-of-use assets
1.1
\u2013
\u2013
\u2013
\u2013
1.1
Effect of changes in foreign exchange rates
1.0
\u2013
\u2013
\u2013
\u2013
1.0
At 1 January 2025
321.1
1,552.5
7 9.1
\u2013
20.4
1,973.1
Depreciation charge for the year
71.3
83.4
13.0
\u2013
6 .1
173.8
Impairment
138.9
\u2013
\u2013
\u2013
\u2013
138.9
Disposals
(27.6)
(8.8)
(0 .1)
\u2013
(1.1)
( 37.6)
Transfers from right-of-use assets
1.9
\u2013
\u2013
\u2013
\u2013
1.9
Effect of changes in foreign exchange rates
(19.3)
\u2013
\u2013
\u2013
\u2013
(19.3)
At 31 December 2025
486.3
1,627.1
92.0
\u2013
25.4
2,230.8
Net book value:
At 31 December 2024
465.6
8 47.2
409.6
7.6
9.9
1,739.9
At 31 December 2025
291.1
759.6
400.7
7.3
11.0
1,469.7
(1) Comparative amounts have been re-presented to show the OCGT plant in a separate category.
The depreciation expense in the Consolidated income statement comprises the following:
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Depreciation charged on property, plant and equipment
200.5
197.5
Depreciation charged on right-of-use assets (note 3.2)
26.9
2 8 .1
Movement on depreciation included in closing inventories
1.5
(0.8)
Total depreciation expense
228.9
224.8
Depreciation charged on right-of-use assets in the table above is presented net of \u00a31.7 million
(2024: \u00a30.9 million) depreciation related to salary sacrifice electric vehicles included within staff
costs in operating and administrative expenses. Right-of-use asset depreciation totals \u00a328.6 million
for the year ended 31 December 2025 (2024: \u00a329.0 million).
The Group\u2019s definition of capital expenditure has been updated in the year, see note 2.7 for a
reconciliation between Capital expenditure presented in note 2.1 and capital additions presented
in note 3.1.
", "dimensions": { "concept": "ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-702": { "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 2025
(years)
Freehold buildings
18
Plant and equipment:
Pellet production plant
8
Electricity generation assets:
Biomass plant
12
Hydro plant (including pumped storage)
34
Other plant, machinery and equipment
11
Reinstatement assets
18
Plant spare parts
15
Freehold land held at cost is considered to have an indefinite UEL and is not depreciated. The value of freehold land held at 31 December 2025 is \u00a332.5 million (2024: \u00a335.5 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, and capital projects. Where plant spares are used for capital projects they are included within the cost of the asset and movements are presented in the transfer between PPE categories in the table below. Where plant spares are used for maintenance projects 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 movements 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. General and specific borrowing costs are capitalised as part of the cost of an asset if they are directly attributable to the acquisition, construction or production of a qualifying asset. A qualifying asset is one that takes a substantial period to get ready for intended use. The Group defines this period to mean 12 months or more. Capitalisation of borrowing costs ceases once substantially all the activities necessary to prepare the asset for its intended use or sale are complete. See note 2.5 for details of the borrowing costs capitalised during the year. 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 cost of disposal. The Group\u2019s policy is to recognise an impairment charge through accumulated depreciation and impairment in the Consolidated income statement 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 net proceeds with the asset\u2019s carrying amount. During the year, the Group has impaired costs capitalised relating to its UK BECCS project, Longview pellet plant development project and non-current assets within the Northern Pellets CGU. See note 2.4 for further details of these impairments. The Group has continued construction of the three OCGT projects that have obtained Capacity Market contracts. The amount capitalised up to the reporting date relating to these projects totals \u00a3466.6 million (2024: \u00a3420.7 million). Of this, \u00a345.9 million (20 24: \u00a3 97. 2 million) was capitalised during the year. On 29 October 2025, the Group signed an agreement with Apatura Limited (Apatura) to acquire three battery energy storage system (BESS) projects across three sites in England and Scotland. Completion of these acquisitions is contingent on certain conditions precedent relating to all relevant planning permissions, construction and purchase contracts, and any other necessary contracts or agreements, being in place for the construction of these BESS assets. Completion of two of the sites occurred in 2025 with the remaining site expected to complete in 2026. For the two sites that completed in 2025, the total consideration was \u00a322.8 million, however this amount is contingent based on the total construction costs. Apatura will manage the construction of the sites, with the amount of consideration due reducing (or increasing) if total construction costs exceed (or are less than) the agreed construction budget. The amount capitalised up to the reporting date relating to these projects totals \u00a326.6 million which is presented in the assets under the course of construction category in the table below. 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-678": { "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. 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 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 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
\u2013
0.7
\u2013
\u2013
0.7
Issues to maintenance projects
\u2013
\u2013
(3.3)
\u2013
(3.3)
Transfers from/(to) intangibles (note 5.1)
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 1 January 2025
514.1
3,713.0
95.4
712.4
5,034.9
Additions at cost
0.1
1.1
4.7
213.7
219.6
Disposals
(16.7)
(44.9)
(2 .1)
(5.6)
(69.3)
Movement in reinstatement asset (note 5.2)
\u2013
(9.6)
\u2013
\u2013
(9.6)
Issues to maintenance projects
\u2013
\u2013
(3.3)
\u2013
(3.3)
Transfers to intangibles (note 5.1)
\u2013
\u2013
\u2013
(0.3)
(0.3)
Transfers from right-of-use assets
\u2013
1.9
\u2013
\u2013
1.9
Transfers to inventories
\u2013
\u2013
(1.2)
\u2013
(1.2)
Transfers between PPE categories
3.9
84.0
\u2013
(87.9)
\u2013
Effect of changes in foreign exchange rates
(11.7)
(45.0)
(0.6)
(10.4)
(67.7)
At 31 December 2025
489.7
3,700.5
92.9
821.9
5,105.0
Assets under the
Freehold land Plant and Plant spare course of
and buildings equipment parts construction Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Accumulated depreciation and impairment:
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 (note 2.4)
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 to 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 1 January 2025
194.9
1,973 .1
39.9
25.0
2,232.9
Depreciation charge for the year
24.3
173.8
2.4
\u2013
200.5
Impairment (note 2.4)
13.6
138.9
4.9
164.4
321.8
Disposals
(12.3)
(37.6)
(2.0)
(2.8)
(54.7)
Issues to maintenance projects
\u2013
\u2013
(0.5)
\u2013
(0.5)
Transfers to inventories
\u2013
\u2013
(0.2)
\u2013
(0.2)
Transfers from right-of-use assets
\u2013
1.9
\u2013
\u2013
1.9
Effect of changes in foreign exchange rates
(4.3)
(19.3)
(0.1)
(0.2)
(23.9)
At 31 December 2025
216.2
2,230.8
44.4
186.4
2,67 7.8
Net book value:
At 31 December 2024
319.2
1,739.9
55.5
6 87.4
2,802.0
At 31 December 2025
273.5
1,469.7
48.5
635.5
2 ,427.2
Freehold land and buildings and plant and equipment, with a carrying amount of \u00a31,429.6 million (2024: \u00a31,580.7 million), have been pledged as security over the Group's 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 Biomass Hydro OCGT Total plant
production plant plant plant
plant
(1)
Other
(1)
and equipment
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cost:
At 1 January 2024
730.8
2,278.5
479.4
\u2013
17. 5
3,506.2
Additions at cost
\u2013
\u2013
\u2013
\u2013
0.3
0.3
Disposals
(10.2)
(10.0)
\u2013
\u2013
\u2013
(20.2)
Movement in reinstatement asset
\u2013
(6.9)
\u2013
7.6
\u2013
0.7
Transfers between PPE categories
71.9
13 8 .1
9.3
\u2013
12.4
231.7
Transfers (to)/from right-of-use assets
(1.6)
\u2013
\u2013
\u2013
0 .1
(1.5)
Effect of changes in foreign exchange rates
(4.2)
\u2013
\u2013
\u2013
\u2013
(4.2)
At 1 January 2025
786.7
2,399.7
488.7
7. 6
30.3
3,713.0
Additions at cost
\u2013
\u2013
\u2013
\u2013
1.1
1.1
Disposals
(35.0)
(7.9)
(0.9)
\u2013
(1.1)
(44.9)
Movement in reinstatement asset (note 5.2)
\u2013
(9.3)
\u2013
(0.3)
\u2013
(9.6)
Transfers between PPE categories
68.8
4.2
4.9
\u2013
6 .1
84.0
Transfers from right-of-use assets
1.9
\u2013
\u2013
\u2013
\u2013
1.9
Effect of changes in foreign exchange rates
(45.0)
\u2013
\u2013
\u2013
\u2013
(45.0)
At 31 December 2025
777.4
2,386.7
492.7
7.3
36.4
3,700.5
Accumulated depreciation and impairment:
At 1 January 2024
250.4
1,483.5
66.2
\u2013
15.5
1,815.6
Depreciation charge for the year
75.3
7 5.1
12.9
\u2013
4.9
168.2
Disposals
(6.7)
(6 .1)
\u2013
\u2013
\u2013
(12.8)
Transfers from right-of-use assets
1.1
\u2013
\u2013
\u2013
\u2013
1.1
Effect of changes in foreign exchange rates
1.0
\u2013
\u2013
\u2013
\u2013
1.0
At 1 January 2025
321.1
1,552.5
7 9.1
\u2013
20.4
1,973.1
Depreciation charge for the year
71.3
83.4
13.0
\u2013
6 .1
173.8
Impairment
138.9
\u2013
\u2013
\u2013
\u2013
138.9
Disposals
(27.6)
(8.8)
(0 .1)
\u2013
(1.1)
( 37.6)
Transfers from right-of-use assets
1.9
\u2013
\u2013
\u2013
\u2013
1.9
Effect of changes in foreign exchange rates
(19.3)
\u2013
\u2013
\u2013
\u2013
(19.3)
At 31 December 2025
486.3
1,627.1
92.0
\u2013
25.4
2,230.8
Net book value:
At 31 December 2024
465.6
8 47.2
409.6
7.6
9.9
1,739.9
At 31 December 2025
291.1
759.6
400.7
7.3
11.0
1,469.7
(1) Comparative amounts have been re-presented to show the OCGT plant in a separate category. The depreciation expense in the Consolidated income statement comprises the following:
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Depreciation charged on property, plant and equipment
200.5
197.5
Depreciation charged on right-of-use assets (note 3.2)
26.9
2 8 .1
Movement on depreciation included in closing inventories
1.5
(0.8)
Total depreciation expense
228.9
224.8
Depreciation charged on right-of-use assets in the table above is presented net of \u00a31.7 million (2024: \u00a30.9 million) depreciation related to salary sacrifice electric vehicles included within staff costs in operating and administrative expenses. Right-of-use asset depreciation totals \u00a328.6 million for the year ended 31 December 2025 (2024: \u00a329.0 million). The Group\u2019s definition of capital expenditure has been updated in the year, see note 2.7 for a reconciliation between Capital expenditure presented in note 2.1 and capital additions presented in note 3.1. Right-of-use assets
Land and Plant and
buildings equipment Rail cars Vessels Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cost:
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
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 1 January 2025
4 8 .1
29.7
27.0
77.0
181.8
Additions at cost
1.0
7. 0
1.9
\u2013
9.9
Movement in reinstatement
asset (note 5.2)
(0.8)
\u2013
4.1
\u2013
3.3
Other movements
3.3
(6.2)
(2.0)
(0 .1)
(5.0)
Effect of changes in foreign
exchange rates
(0.5)
(0.6)
(1.1)
(2.0)
(4.2)
At 31 December 2025
51.1
29.9
29.9
74.9
185.8
Accumulated depreciation and
impairment:
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 1 January 2025
25.7
18 .1
13.2
23.9
80.9
Depreciation charge for the year
8.7
7.7
4.7
7. 5
28.6
Impairment
9.3
0.4
9.6
0.8
20 .1
Other movements
(3.1)
(5.8)
(2.4)
\u2013
(11.3)
Effect of changes in foreign
exchange rates
(0.3)
(0.4)
(0.8)
(0.6)
(2 .1)
At 31 December 2025
40.3
20.0
24.3
31.6
116.2
Net book value:
At 31 December 2024
22.4
11.6
13.8
5 3.1
100.9
At 31 December 2025
10.8
9.9
5.6
43.3
69.6
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Expense relating to short-term leases
1.4
5.9
Expense relating to low value leases
\u2013
0 .1
Interest charge for the year
6.5
6.6
Depreciation charge for the year
28.6
29.0
Variable lease payments
0.7
0.6
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. Amortisation of intangible assets is presented through the amortisation line of the Consolidated income statement.
Method of Average UEL
amortisation (years)
At 31 December 2025
Customer-related assets:
BMM
Straight line
7
Computer software and licences:
Internally generated
Straight line
3
Acquired separately
Straight line
5
Carrying amounts are assessed for indicators of impairment at each reporting date. The customer- related asset is attributable to the Drax Energy Solutions CGU following the acquisition of BMM. During the year the Pinnacle customer-related asset and goodwill were impaired. During the prior year the Opus Energy CGU customer-related asset was disposed of and the brand asset impaired to \u00a3nil (see below for further details) .
Software and Software and
Customer-related licences \u2013 internally licences \u2013 acquired Other
assets Brand generated separately intangibles Goodwill Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cost and carrying amount:
At 1 January 2024
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
\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 (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 1 January 2025
47.2
11.3
149.0
20.0
2.1
429.6
659.2
Additions at cost
\u2013
\u2013
12.3
0.6
\u2013
\u2013
12.9
Impairment
\u2013
\u2013
\u2013
\u2013
\u2013
(8.5)
(8.5)
Disposals
\u2013
(11.3)
(34.2)
(1.3)
\u2013
(14.5)
(61.3)
Transfers between categories
\u2013
\u2013
0.1
(0.1)
\u2013
\u2013
\u2013
Transfers from property, plant and equipment (note 3.1)
\u2013
\u2013
0.3
\u2013
\u2013
\u2013
0.3
Effect of changes in foreign exchange rates
(1.1)
\u2013
\u2013
(0.1)
\u2013
(10.4)
(11.6)
At 31 December 2025
46.1
\u2013
127.5
19.1
2 .1
396.2
591.0
Accumulated amortisation and impairment:
At 1 January 2024
219.0
10.9
107. 8
12.4
1.8
14.5
366.4
Amortisation 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 1 January 2025
15.7
11.3
119.2
13.5
1.8
14.5
176.0
Amortisation charge for the year
4.6
\u2013
8.9
0.6
0.1
\u2013
14.2
Disposals
\u2013
(11.3)
(34.2)
(1.3)
\u2013
(14.5)
(61.3)
Impairment
22.5
\u2013
1.1
\u2013
0 .1
\u2013
23.7
Effect of changes in foreign exchange rates
(0.4)
\u2013
\u2013
(0 .1)
\u2013
\u2013
(0.5)
At 31 December 2025
42.4
\u2013
95.0
12.7
2.0
\u2013
152 .1
Net book value:
At 31 December 2024
31.5
\u2013
29.8
6.5
0.3
415 .1
483.2
At 31 December 2025
3.7
\u2013
32.5
6.4
0.1
396.2
438.9
", "dimensions": { "concept": "ifrs-full:DisclosureOfDepreciationAndAmortisationExpenseExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-722": { "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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-730": { "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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-596": { "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. 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 less 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 \u00a35,000, 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.
Lease liabilities
Year ended 31 December
2025 2024
Carrying amount: \u00a3m \u00a3m
At 1 January
116.5
135.8
Additions
9.9
9.8
Interest charge for the year
6.5
6.6
Payments
(34.6)
(34.0)
Other movements
6.2
(2.8)
Effect of changes in foreign exchange rates
(5.9)
1.1
At 31 December
98.6
116.5
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 \u00a31.4 million during the
year (2024: \u00a36.0 million) in relation to short-term and low value leases.
The maturity of the gross undiscounted lease liabilities at the reporting date is as follows:
As at 31 December
2025 2024
\u00a3m \u00a3m
Within one year
31.2
31.6
Within one to two years
21.2
24.6
Within two to five years
30.4
39.0
After five years
38.3
47. 2
Total gross lease liabilities
121.1
142.4
Effect of discounting
(22.5)
(25.9)
Lease liabilities recognised in the Consolidated balance sheet
98.6
116.5
Current
28.2
26.0
Non-current
70.4
90.5
Right-of-use assets
Land and Plant and
buildings equipment Rail cars Vessels Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cost:
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
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 1 January 2025
4 8 .1
29.7
27.0
77.0
181.8
Additions at cost
1.0
7. 0
1.9
\u2013
9.9
Movement in reinstatement
asset (note 5.2)
(0.8)
\u2013
4.1
\u2013
3.3
Other movements
3.3
(6.2)
(2.0)
(0 .1)
(5.0)
Effect of changes in foreign
exchange rates
(0.5)
(0.6)
(1.1)
(2.0)
(4.2)
At 31 December 2025
51.1
29.9
29.9
74.9
185.8
Accumulated depreciation and
impairment:
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 1 January 2025
25.7
18 .1
13.2
23.9
80.9
Depreciation charge for the year
8.7
7.7
4.7
7. 5
28.6
Impairment
9.3
0.4
9.6
0.8
20 .1
Other movements
(3.1)
(5.8)
(2.4)
\u2013
(11.3)
Effect of changes in foreign
exchange rates
(0.3)
(0.4)
(0.8)
(0.6)
(2 .1)
At 31 December 2025
40.3
20.0
24.3
31.6
116.2
Net book value:
At 31 December 2024
22.4
11.6
13.8
5 3.1
100.9
At 31 December 2025
10.8
9.9
5.6
43.3
69.6
The Group recognised the following charges relating to leases in the Consolidated income
statement:
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Expense relating to short-term leases
1.4
5.9
Expense relating to low value leases
\u2013
0 .1
Interest charge for the year
6.5
6.6
Depreciation charge for the year
28.6
29.0
Variable lease payments
0.7
0.6
Right-of-use asset depreciation in the table above includes \u00a31.7 million (2024: \u00a30.9 million)
depreciation related to salary sacrifice electric vehicles. The interest charge for the year on lease
liabilities includes \u00a30.3 million (2024: \u00a30.1 million) related to salary sacrifice electric vehicles. These
costs are included within staff costs in operating and administrative expenses.
", "dimensions": { "concept": "ifrs-full:DisclosureOfLeasesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-703": { "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. 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 less 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 \u00a35,000, 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-626": { "value": "Right-of-use assets
Land and Plant and
buildings equipment Rail cars Vessels Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cost:
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
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 1 January 2025
4 8 .1
29.7
27.0
77.0
181.8
Additions at cost
1.0
7. 0
1.9
\u2013
9.9
Movement in reinstatement
asset (note 5.2)
(0.8)
\u2013
4.1
\u2013
3.3
Other movements
3.3
(6.2)
(2.0)
(0 .1)
(5.0)
Effect of changes in foreign
exchange rates
(0.5)
(0.6)
(1.1)
(2.0)
(4.2)
At 31 December 2025
51.1
29.9
29.9
74.9
185.8
Accumulated depreciation and
impairment:
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 1 January 2025
25.7
18 .1
13.2
23.9
80.9
Depreciation charge for the year
8.7
7.7
4.7
7. 5
28.6
Impairment
9.3
0.4
9.6
0.8
20 .1
Other movements
(3.1)
(5.8)
(2.4)
\u2013
(11.3)
Effect of changes in foreign
exchange rates
(0.3)
(0.4)
(0.8)
(0.6)
(2 .1)
At 31 December 2025
40.3
20.0
24.3
31.6
116.2
Net book value:
At 31 December 2024
22.4
11.6
13.8
5 3.1
100.9
At 31 December 2025
10.8
9.9
5.6
43.3
69.6
", "dimensions": { "concept": "ifrs-full:DisclosureOfQuantitativeInformationAboutRightofuseAssetsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-647": { "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 certain generating units 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 are also utilised 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 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 the estimated price that would be achieved in a market sale transaction, 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. Valuations of generated ROCs and REGOs are comprised of the expected value to be obtained in a sales transaction with a third-party supplier at the point of generation. These estimates are made using various sources of information including future contracted and 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 2025, the Group is operating in CP24. 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). From April 2026, the UK Government intends to change to Consumer Price Index (CPI)-based indexation, subject to the publication of statutory instruments. The buy-out price for CP24 is \u00a367.06 (2024: CP23 \u00a364.73). 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. At initial recognition, valuations of generated ROCs 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 the reporting date. 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 2025, the Group is operating in CP24. At initial recognition, valuations of generated REGOs 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
2025 2024
Carrying amount: \u00a3m \u00a3m
At 1 January
540.0
292.2
Earned from generation
768.9
752.6
Purchased from third parties
271.0
464.6
Utilised by the Energy Solutions business
(514.6)
(654.7)
Sold to third parties
(510.8)
(314.7)
Impairment
(12.4)
\u2013
At 31 December
54 2.1
540.0
Of the \u00a3542.1 million of renewable certificates recognised at 31 December 2025 (2024: \u00a3540.0 million), \u00a3534.0 million (2 0 24 : \u00a34 86.1 million) relates to ROCs and \u00a38.1 million (2024: \u00a353.9 million) relates to REGOs. Of the \u00a3768.9 million (2024: \u00a3752.6 million) of renewable certificates earned from generation, \u00a3758.2 million (2024: \u00a3652.6 million) was attributable to ROCs and \u00a310.7 million (2024: \u00a3100.0 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:DisclosureOfOtherAssetsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-627": { "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 certain generating units 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 are also utilised 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 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 the estimated price that would be achieved in a market sale transaction, 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. Valuations of generated ROCs and REGOs are comprised of the expected value to be obtained in a sales transaction with a third-party supplier at the point of generation. These estimates are made using various sources of information including future contracted and 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 2025, the Group is operating in CP24. 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). From April 2026, the UK Government intends to change to Consumer Price Index (CPI)-based indexation, subject to the publication of statutory instruments. The buy-out price for CP24 is \u00a367.06 (2024: CP23 \u00a364.73). 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. At initial recognition, valuations of generated ROCs 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 the reporting date. 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 2025, the Group is operating in CP24. At initial recognition, valuations of generated REGOs 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
2025 2024
Carrying amount: \u00a3m \u00a3m
At 1 January
540.0
292.2
Earned from generation
768.9
752.6
Purchased from third parties
271.0
464.6
Utilised by the Energy Solutions business
(514.6)
(654.7)
Sold to third parties
(510.8)
(314.7)
Impairment
(12.4)
\u2013
At 31 December
54 2.1
540.0
Of the \u00a3542.1 million of renewable certificates recognised at 31 December 2025 (2024: \u00a3540.0 million), \u00a3534.0 million (2 0 24 : \u00a34 86.1 million) relates to ROCs and \u00a38.1 million (2024: \u00a353.9 million) relates to REGOs. Of the \u00a3768.9 million (2024: \u00a3752.6 million) of renewable certificates earned from generation, \u00a3758.2 million (2024: \u00a3652.6 million) was attributable to ROCs and \u00a310.7 million (2024: \u00a3100.0 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-597": { "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 certain generating units 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 are also utilised 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 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 the estimated price that would be achieved in a market sale transaction, 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. Valuations of generated ROCs and REGOs are comprised of the expected value to be obtained in a sales transaction with a third-party supplier at the point of generation. These estimates are made using various sources of information including future contracted and 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 2025, the Group is operating in CP24. 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). From April 2026, the UK Government intends to change to Consumer Price Index (CPI)-based indexation, subject to the publication of statutory instruments. The buy-out price for CP24 is \u00a367.06 (2024: CP23 \u00a364.73). 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. At initial recognition, valuations of generated ROCs 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 the reporting date. 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 2025, the Group is operating in CP24. At initial recognition, valuations of generated REGOs 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
2025 2024
Carrying amount: \u00a3m \u00a3m
At 1 January
540.0
292.2
Earned from generation
768.9
752.6
Purchased from third parties
271.0
464.6
Utilised by the Energy Solutions business
(514.6)
(654.7)
Sold to third parties
(510.8)
(314.7)
Impairment
(12.4)
\u2013
At 31 December
54 2.1
540.0
Of the \u00a3542.1 million of renewable certificates recognised at 31 December 2025 (2024: \u00a3540.0 million), \u00a3534.0 million (2 0 24 : \u00a34 86.1 million) relates to ROCs and \u00a38.1 million (2024: \u00a353.9 million) relates to REGOs. Of the \u00a3768.9 million (2024: \u00a3752.6 million) of renewable certificates earned from generation, \u00a3758.2 million (2024: \u00a3652.6 million) was attributable to ROCs and \u00a310.7 million (2024: \u00a3100.0 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-598": { "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 means that it requires 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
2025 2024
\u00a3m \u00a3m
Biomass \u2013 finished goods
167.1
244.7
Biomass \u2013 fibre and other raw materials
11.3
15.8
Other fuels and consumables
45.4
41.5
Total inventories
223.8
302.0
Total inventories of \u00a3223.8 million (2024: \u00a3302.0 million) are stated net of provisions of \u00a36.2 million
(2024: \u00a35.3 million).
The cost of inventories recognised as an expense in the Consolidated income statement in the year
ended 31 December 2025 was \u00a31,712.8 million (2024: \u00a31,627.3
(1)
million). This includes the value of
write downs of inventory in the year.
(1) The 2024 amount for the cost of inventories recognised as an expense has been restated from \u00a31,708.5 million to
\u00a31,627.3 million to exclude costs that are not directly attributable to the purchase or conversion of inventory on the
Consolidated balance sheet.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInventoriesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-704": { "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 means that it requires 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-599": { "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 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 related 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 they are 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 they are 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 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 2025, the receivables sold under this facility were \u00a3275.6 million (2024: \u00a3386.3 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 in the prior year (see note 2.7 for further details), the receivables relating to the meter points sold were transferred to EDF. The amount the Group received for transferring these receivables was dependent on the amounts collected by EDF. The receivables sold to EDF did not qualify for derecognition under IFRS 9 as Opus Energy had retained substantially all the risks and rewards of ownership of the financial assets. These receivables were accounted for at FVTPL in accordance with IFRS 9, due to the contractual terms of the financial assets giving rise to cash flows that were not SPPI. The cash flows received by Opus Energy on collection of the receivables by EDF were calculated in accordance with the Asset Purchase Agreement (APA) and were dependent on the amounts collected by EDF, with the majority of these cash flows being settled in the prior year. The impairment requirements of IFRS 9 did not apply to these receivables as the receivables were measured at FVTPL. Subsequent to the transfer, any fair value gains or losses on these receivables were recognised within the Consolidated income statement within operating and administrative expenses. These receivables were fully settled during the year. 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 \u00a3nil (2024: \u00a39.4 million). 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
2025 2024
Receivables measured at FVTPL: \u00a3m \u00a3m
At 1 January
9.7
9.2
Fair value of transferred receivables at the date of transfer to EDF
\u2013
21.6
Fair value losses recognised in operating and administrative
expenses
(0.5)
(12.9)
Fair value (losses)/gains recognised in other gains and losses
(9.4)
0.2
Amounts paid to/(received from) EDF
2.7
(2.0)
Offset for credit balances transferred to EDF
(2.5)
(6.4)
At 31 December
\u2013
9.7
Of which relates to:
Receivables sold to EDF
\u2013
0.3
Contingent consideration
\u2013
9.4
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. Contingent consideration receivable is classified as 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. At the reporting date the fair value of the contingent consideration was assessed as \u00a3nil (2024: \u00a39.4 million) resulting in a \u00a39.4 million fair value loss (2024: \u00a30.2 million fair value gain) recognised in the Consolidated income statement.
As at 31 December
2025 2024
\u00a3m \u00a3m
Trade receivables
26.9
105.4
Accrued income
214.6
278.6
Prepayments
22.6
24.9
Other receivables
73.7
52.0
Contingent consideration
\u2013
9.4
Total trade and other receivables and contract assets
337.8
470.3
At 31 December 2025, the Group had no amounts receivable from significant counterparties which represented 10% or more of total trade receivables and accrued income (2024: no significant counterparty). Of total trade receivables and accrued income at 31 December 2025, \u00a390.9 million (2024: \u00a3192.8 million) relates to the Energy Solutions business, \u00a3118.0 million (2 024: \u00a3145.1 million) relates to the Biomass Generation business, \u00a314.6 million (2024: \u00a319.9 million) relates to the Flexible Generation business, and \u00a318.0 million (2024: \u00a326.2 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 and when an invoice is issued. Contract assets included in accrued income at 31 December 2025 were \u00a311.1 million (2024: \u00a343.4 million) .
Expected credit loss
The movement in the overall allowance for expected credit losses on trade receivables is presented
in the following table. This excludes \u00a3nil (2024: \u00a30.3 million) of trade receivables measured at
FVTPL:
As at 31 December
2025
2024
Provision Combined Provision
matrix probability matrix
method method method Total
\u00a3m \u00a3m \u00a3m \u00a3m
At 1 January
42.4
50.6
8.8
59.4
Amounts written off
Net additional amounts provided
(12.0)
(28.5)
(17.9)
(46.4)
against
Transfer of financial assets to FVTPL
7. 8
28.0
20.9
48.9
category
\u2013
(19.5)
\u2013
(19.5)
Change in provisioning methodology
\u2013
(30.6)
30.6
\u2013
Receivables sold
( 7.6)
\u2013
\u2013
\u2013
At 31 December
30.6
\u2013
42.4
42.4
Gross trade receivables
57.5
147.5
147.5
Expected credit loss provision
(30.6)
(42.4)
(42.4)
Trade receivables subject to the
IFRS 9 impairment model
26.9
10 5.1
10 5.1
Average expected credit loss
53%
29%
29%
The provision in the table above relates primarily to trade receivables in the Energy Solutions
business (2024: \u00a32.9 million of the total provision related to 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 2025 for impairment of financial assets
was \u00a33.3 million (2024: \u00a340.0 million). This is the net of the additional amounts provided against
in relation to trade receivables of \u00a37.8 million (2024: \u00a348.9 million) less a \u00a34.5 million (2024:
\u00a38.9 million) benefit in the period in respect of the resolution of legacy credit balances. Of the net
charge, \u00a33.8 million (2024: \u00a312.7 million) was recognised as exceptional as part of the Opus Energy
sale of meter points and restructuring (see note 2.7 for further details).
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 was adopted. The prior year includes the change from the combined probability method which was used for the small and medium-sized enterprise (SME) consumers within the Energy Solutions business. As a result of the sale of the majority of the SME portfolio to EDF, the receivables balance and exposure to credit risk for these customers significantly reduced in 2024. As such, the use of the combined probability method was not deemed appropriate subsequent to this sale and the provision matrix method was applied to all trade receivables. 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. 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 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 2025 excluding \u00a3nil (2024: \u00a30.3 million) of trade receivables that are measured at FVTPL.
As at 31 December 2025
As at 31 December 2024
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
219.6
5.0
2%
2 87. 6
9.0
3%
Trade receivables days past due:
Balances not yet due
4.0
1.5
38%
81.6
4.0
5%
Between 0\u201330 days
17. 5
0.6
3%
5.2
0.8
15%
Between 31\u201360 days
1.1
0.7
64%
2.5
0.7
28%
Between 61\u201390 days
1.2
0.3
25%
2 .1
0.8
38%
Over 90 days
33.7
27.5
82%
5 6 .1
36 .1
64%
Trade receivables subject to the IFRS 9 impairment model total
57. 5
30.6
53%
147.5
42.4
29%
Total
27 7.1
35.6
13%
435.1
51.4
12%
The expected credit loss provision of \u00a335.6 million (2024: \u00a351.4 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 provision for expected credit losses expressed as a percentage of gross trade receivables has increased to 53% compared to 29% as at 31 December 2024. The main cause of this is due to providing 100% for the remaining trade receivables in the Opus Energy business following the Opus Energy transaction. 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-705": { "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 they are 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 they are 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 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 2025, the receivables sold under this facility were \u00a3275.6 million (2024: \u00a3386.3 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 in the prior year (see note 2.7 for further details), the receivables relating to the meter points sold were transferred to EDF. The amount the Group received for transferring these receivables was dependent on the amounts collected by EDF. The receivables sold to EDF did not qualify for derecognition under IFRS 9 as Opus Energy had retained substantially all the risks and rewards of ownership of the financial assets. These receivables were accounted for at FVTPL in accordance with IFRS 9, due to the contractual terms of the financial assets giving rise to cash flows that were not SPPI. The cash flows received by Opus Energy on collection of the receivables by EDF were calculated in accordance with the Asset Purchase Agreement (APA) and were dependent on the amounts collected by EDF, with the majority of these cash flows being settled in the prior year. The impairment requirements of IFRS 9 did not apply to these receivables as the receivables were measured at FVTPL. Subsequent to the transfer, any fair value gains or losses on these receivables were recognised within the Consolidated income statement within operating and administrative expenses. These receivables were fully settled during the year. Contingent consideration receivable is classified as 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. At the reporting date the fair value of the contingent consideration was assessed as \u00a3nil (2024: \u00a39.4 million) resulting in a \u00a39.4 million fair value loss (2024: \u00a30.2 million fair value gain) recognised in the Consolidated income statement. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-629": { "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. Expected credit loss The movement in the overall allowance for expected credit losses on trade receivables is presented in the following table. This excludes \u00a3nil (2024: \u00a30.3 million) of trade receivables measured at FVTPL:
As at 31 December
2025
2024
Provision Combined Provision
matrix probability matrix
method method method Total
\u00a3m \u00a3m \u00a3m \u00a3m
At 1 January
42.4
50.6
8.8
59.4
Amounts written off
Net additional amounts provided
(12.0)
(28.5)
(17.9)
(46.4)
against
Transfer of financial assets to FVTPL
7. 8
28.0
20.9
48.9
category
\u2013
(19.5)
\u2013
(19.5)
Change in provisioning methodology
\u2013
(30.6)
30.6
\u2013
Receivables sold
( 7.6)
\u2013
\u2013
\u2013
At 31 December
30.6
\u2013
42.4
42.4
Gross trade receivables
57.5
147.5
147.5
Expected credit loss provision
(30.6)
(42.4)
(42.4)
Trade receivables subject to the
IFRS 9 impairment model
26.9
10 5.1
10 5.1
Average expected credit loss
53%
29%
29%
The provision in the table above relates primarily to trade receivables in the Energy Solutions business (2024: \u00a32.9 million of the total provision related to 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 2025 for impairment of financial assets was \u00a33.3 million (2024: \u00a340.0 million). This is the net of the additional amounts provided against in relation to trade receivables of \u00a37.8 million (2024: \u00a348.9 million) less a \u00a34.5 million (2024: \u00a38.9 million) benefit in the period in respect of the resolution of legacy credit balances. Of the net charge, \u00a33.8 million (2024: \u00a312.7 million) was recognised as exceptional as part of the Opus Energy sale of meter points and restructuring (see note 2.7 for further details). 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 was adopted. The prior year includes the change from the combined probability method which was used for the small and medium-sized enterprise (SME) consumers within the Energy Solutions business. As a result of the sale of the majority of the SME portfolio to EDF, the receivables balance and exposure to credit risk for these customers significantly reduced in 2024. As such, the use of the combined probability method was not deemed appropriate subsequent to this sale and the provision matrix method was applied to all trade receivables. 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. 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 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 2025 excluding \u00a3nil (2024: \u00a30.3 million) of trade receivables that are measured at FVTPL.
As at 31 December 2025
As at 31 December 2024
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
219.6
5.0
2%
2 87. 6
9.0
3%
Trade receivables days past due:
Balances not yet due
4.0
1.5
38%
81.6
4.0
5%
Between 0\u201330 days
17. 5
0.6
3%
5.2
0.8
15%
Between 31\u201360 days
1.1
0.7
64%
2.5
0.7
28%
Between 61\u201390 days
1.2
0.3
25%
2 .1
0.8
38%
Over 90 days
33.7
27.5
82%
5 6 .1
36 .1
64%
Trade receivables subject to the IFRS 9 impairment model total
57. 5
30.6
53%
147.5
42.4
29%
Total
27 7.1
35.6
13%
435.1
51.4
12%
The expected credit loss provision of \u00a335.6 million (2024: \u00a351.4 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 provision for expected credit losses
expressed as a percentage of gross trade receivables has increased to 53% compared to 29% as at 31 December 2024. The main cause of this is due to providing 100% for the remaining trade
receivables in the Opus Energy business following the Opus Energy transaction.
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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-706": { "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 was adopted. The prior year includes the change from the combined probability method which was used for the small and medium-sized enterprise (SME) consumers within the Energy Solutions business. As a result of the sale of the majority of the SME portfolio to EDF, the receivables balance and exposure to credit risk for these customers significantly reduced in 2024. As such, the use of the combined probability method was not deemed appropriate subsequent to this sale and the provision matrix method was applied to all trade receivables. 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. 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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-628": { "value": "
As at 31 December
2025 2024
\u00a3m \u00a3m
Trade receivables
26.9
105.4
Accrued income
214.6
278.6
Prepayments
22.6
24.9
Other receivables
73.7
52.0
Contingent consideration
\u2013
9.4
Total trade and other receivables and contract assets
337.8
470.3
", "dimensions": { "concept": "ifrs-full:DisclosureOfPrepaymentsAndOtherAssetsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-648": { "value": "
As at 31 December
2025 2024
\u00a3m \u00a3m
Trade payables
150.7
134.8
Fuel accruals
34.2
67.9
Energy supply accruals
403.2
473.2
Other accruals
289.5
319.5
Other payables
189.9
264.4
Contract liabilities
23.4
29.3
Total trade and other payables and contract liabilities
1,090.9
1, 2 8 9.1
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 original 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 \u00a373.2 million (2024: \u00a3150.3 million) related to deferred letters of credit. Of the total deferred letters of credit, \u00a342.4 million (2024: \u00a392.8 million) were utilised for capital expenditure and \u00a330.8 million (2024: \u00a357.5 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 in the Consolidated cash flow statement 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 \u00a3296.4 million (20 24: \u00a3 3 47.7 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 \u00a357.7 million (2024: \u00a365.5 million) and Feed-in-Tariff accruals of \u00a316.2 million (2024: \u00a325.3 million). ", "dimensions": { "concept": "ifrs-full:DisclosureOfAccruedExpensesAndOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-662": { "value": "
As at 31 December
2025 2024
\u00a3m \u00a3m
Trade payables
150.7
134.8
Fuel accruals
34.2
67.9
Energy supply accruals
403.2
473.2
Other accruals
289.5
319.5
Other payables
189.9
264.4
Contract liabilities
23.4
29.3
Total trade and other payables and contract liabilities
1,090.9
1, 2 8 9.1
Contract liabilities primarily relate to the advanced 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 the reporting date were \u00a323.4 million (2024: \u00a329.3 million). The movement in the current year includes a release of \u00a32.2 million (2024: \u00a34.2 million) as a result of the Opus Energy transaction.", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredIncomeExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-630": { "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 (see 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
2025 2024
\u00a3m \u00a3m
At 1 January
2.7
21.1
Additions
1.5
19.2
Amortisation
(2.7)
(21.5)
Accelerated amortisation \u2013 customers sold
\u2013
(10.6)
Impairment \u2013 customers retained
\u2013
(5.5)
At 31 December
1.5
2.7
During 2024, 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 in the prior year due to those customer contracts being onerous following the sale (see note 5.2). ", "dimensions": { "concept": "ifrs-full:DisclosureOfFeeAndCommissionIncomeExpenseExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-600": { "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 (see 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
2025 2024
\u00a3m \u00a3m
At 1 January
2.7
21.1
Additions
1.5
19.2
Amortisation
(2.7)
(21.5)
Accelerated amortisation \u2013 customers sold
\u2013
(10.6)
Impairment \u2013 customers retained
\u2013
(5.5)
At 31 December
1.5
2.7
During 2024, 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 in the prior year due to those customer contracts being onerous following the sale (see note 5.2). ", "dimensions": { "concept": "draxgroupplc:DisclosureOfContractCosts", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-724": { "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 (see 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-707": { "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 (see 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-601": { "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. 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 recognised as a receivable 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
2025 2024
\u00a3m \u00a3m
Trade payables
150.7
134.8
Fuel accruals
34.2
67.9
Energy supply accruals
403.2
473.2
Other accruals
289.5
319.5
Other payables
189.9
264.4
Contract liabilities
23.4
29.3
Total trade and other payables and contract liabilities
1,090.9
1, 2 8 9.1
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 arrangement 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 supported by 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. 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. Trade payables includes \u00a362.6 million (2024: \u00a338.4 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 in the Consolidated cash flow statement. 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 original 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 \u00a373.2 million (2024: \u00a3150.3 million) related to deferred letters of credit. Of the total deferred letters of credit, \u00a342.4 million (2024: \u00a392.8 million) were utilised for capital expenditure and \u00a330.8 million (2024: \u00a357.5 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 in the Consolidated cash flow statement where utilised for biomass purchases or net cash used in investing activities for capital expenditure. See note 4.3 for further details.
The table below details 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
2025
2024
Deferred letters Deferred letters Deferred letters Deferred letters of
Supply chain of credit \u2013 biomass of credit \u2013 capital Supply chain of credit \u2013 biomass credit \u2013 capital
finance purchases expenditure finance purchases expenditure
Carrying amount of financial liabilities:
Financial liabilities that are part of the arrangement \u00a3m
62.6
30.8
42.4
38.4
57.5
92.8
\u2013 Of which represents the value of accelerated payments to suppliers \u00a3m
36.0
30.3
41.5
11.8
56.6
90.3
Trade Other Other Trade Other Other
Presented within payables payables payables payables payables payables
Range of payment due dates:
Extension Extension
of invoice of invoice
45 to 65 84 to 94 payment 45 to 65 80 to 117 payment
days after days after terms by days after days after terms by
Liabilities that are part of the arrangement invoice date invoice date 313-364 days invoice date invoice date 329-364 days
5 to 60 5 to 10 30 to 42 5 to 60 5 to 10 30 to 42
days after days after days after days after days after days after
Comparable trade payables that are not part of the arrangement invoice date invoice date invoice date
invoice date
(1)
invoice date
(1)
invoice date
Non-cash movements in the period:
Derecognition of amounts owed to the supplier and recognition of amounts owed to the facility provider \u00a3m
198.0
212.4
41.4
219.5
219.1
97.8
Effect of changes in foreign exchange rates \u00a3m
(1.9)
4.0
1.9
1.9
0.7
1.5
(1) The payment terms for comparable trade payables in the prior period has been updated to reflect payment terms from invoice date.
The Group does not include working capital facilities that are linked directly to a specific payable
and give an extension in payment terms of less than 12 months (see note 2.7) in its definition
of borrowings or Net debt. These amounts are recognised within trade and other payables and
contract liabilities.
Energy supply accruals includes \u00a3296.4 million (20 24: \u00a3 3 47.7 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 \u00a357.7 million (2024: \u00a365.5 million) and
Feed-in-Tariff accruals of \u00a316.2 million (2024: \u00a325.3 million).
Contract liabilities primarily relate to the advanced 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 the
reporting date were \u00a323.4 million (2024: \u00a329.3 million). The movement in the current year includes
a release of \u00a32.2 million (2024: \u00a34.2 million) as a result of the Opus Energy transaction.
", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-687": { "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. 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. 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 recognised 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. If the terms of the debt instrument are not significantly modified, the modification is accounted for as an adjustment to the carrying value of the existing liability. The revised cashflows are discounted at the original effective interest rate and the difference between the new present value and the current carrying value of the liability is recognised immediately in the Consolidated income statement. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-708": { "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.
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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-679": { "value": "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. 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:DescriptionOfAccountingPolicyForDerecognitionOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-602": { "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 50. The Sustainability Report, starting on page 18, sets out how the Group\u2019s
ambition is not just to reduce emissions, but to have a net positive impact on the climate. The TCFD
disclosures, starting on page 31, along with the Principal Risks section, starting on page 41, set out
the Group\u2019s approach to managing climate risks and opportunities, including scenario analysis.
Climate change is factored into short, medium and long-term forecasts and estimates used by the
Group. In the Viability statement on page 49 and the TCFD report, 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 judgements Impairment of assets and capitalisation of development project costs are sensitive to climate change. As detailed in note 2.4, the Group has impaired 132\u2013134
and key sources of estimation the carrying value of the UK BECCS project to \u00a3nil in the current year due to the reduced likelihood of the project proceeding in the short to medium
uncertainty term. However if an appropriate regulatory framework were to be developed and the political environment was to become more supportive of
large-scale capital investment in UK BECCS, increasing the likelihood of the project progressing, a reversal of the impairment of certain UK BECCS
costs may be required. In the Clean Power 2030 report issued in November 2024 by the National Energy System Operator (NESO) it is assumed that
one biomass unit is converted to BECCS in their pathways. This is consistent with management\u2019s view that development of BECCS at Drax Power
Station is important to the UK\u2019s Net Zero strategy.
Impairment of non-current The Group\u2019s expectations around the impacts of climate change, and in particular the requirements of the UK Government\u2019s commitment to reach 133\u2013134 and
assets 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 150\u2013158
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 seek to capture and assess some
of these potential scenarios, including those around reductions in power prices and volatility, which could be caused by climate change and its
impact on the energy transition, and biomass acceptability and changes in regulation. Consideration was given to and sensitivities modelled around
biomass generation and biomass prices after the low carbon dispatchable CfD is due to end in March 2031. 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.
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.
See note 2.4 for further details on the impairment assessments performed.
Going concern and viability
As above, forecast power prices and potential operational outages are also incorporated into the going concern and viability assessments.
Pages 15 and
Additionally, the impact of climate change on the OCGT assets has been considered as part of the going concern and viability assessments, by 131 for going
modelling the impact of low market volatility on the revenues of the OCGTs on the Group. Climate change could cause low market volatility by concern and
causing higher levels of wind and hydro generation. Whilst there is a risk of legislative change relating to unabated gas, the sites are underpinned 15 and 49\u201350
by long-term, Government-backed Capacity Market contracts. When they are operational these assets will be amongst the newest on the system. for viability
The NESO Clean Power 2030 report states gas generation will remain critical for security of supply.
Useful economic lives of The potential impact of climate change is one of the factors assessed in determining how long the Group anticipates both new and existing assets 173
non-current assets will operate for. For example, the UELs of the OCGT assets due to be commissioned in 2026 will be in line with the Group\u2019s expectations around the
UK\u2019s transition to a Net Zero position by 2050.
As outlined in note 3.1, UELs at Drax Power Station may decrease or increase as a result of future decisions, that may be directly or indirectly linked
to climate change. Were UELs to be shortened by 8 years to 2031, in line with the end of the low carbon dispatchable CfD, 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 \u00a359.4 million. 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 \u00a318.0 million.
Area
Description
Page reference
Present value of As described in note 5.2, the decommissioning provisions in relation to Drax Power Station, the OCGTs and certain pellet plants have been assessed 203
decommissioning provisions with the support of third-party experts.
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
provisions would increase as the cash outflows would occur earlier; however, this would not have a material impact on the provisions.
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 and support mechanisms in place, in response to climate 218
consideration change, could lead to the project at Damhead Creek 2 becoming more or less likely to progress than is currently assumed. The Group has assessed
the fair value of the contingent consideration at the reporting date to be \u00a3nil (2024: \u00a39.4 million), but changes in the electricity industry and its
regulatory environment could lead to a change increasing the likelihood of the project proceeding. This could increase the fair value of the contingent
consideration. Currently, no reasonably possible changes would be expected to lead to a material increase in the fair value.
Defined benefit pension scheme
The Group operates one defined benefit pension scheme. The trustees of the scheme have an investment strategy that seeks to diversify its risk
210
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
The Renewable Energy Guarantees of Origin (REGO) market continues to be volatile. There was an increase in the demand for REGOs over the past
180
five years that was in part due to the need for organisations to decarbonise and promote their corporate social responsibility and environmental
social governance. This demand has reduced in the current year as high REGO prices resulted in customers looking for alternative options for
renewable energy. 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 volatility in 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 recognised.
Sustainable financing
A number of the Group\u2019s facilities have embedded aspects of the Group\u2019s climate targets and commitments.
191
The GBP and EUR term loan (2024) and the 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.
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 profits will be available against which deductible temporary
159
differences can be utilised.
The Group currently has deferred tax assets related to its US business. The estimates used when assessing the future profitability of the US business
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 used in the impairment assessments.
", "dimensions": { "concept": "draxgroupplc:DisclosureOfClimateChange", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-603": { "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
2025 2024
\u00a3m \u00a3m
Cash at bank
95.5
73.5
Short-term deposits
204.7
179.4
Money market funds
1.9
103.1
Total cash and cash equivalents
302 .1
356.0
", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-631": { "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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-735": { "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 recognised 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. If the terms of the debt instrument are not significantly modified, the modification is accounted for as an adjustment to the carrying value of the existing liability. The revised cashflows are discounted at the original effective interest rate and the difference between the new present value and the current carrying value of the liability is recognised immediately in the Consolidated income statement. The Group\u2019s borrowings at each reporting date were as follows:
As at 31 December 2025
As at 31 December 2024
Effective Effective
sterling Principal Amortised sterling Principal Amortised
interest rate
(1)
value Year of cost
interest rate
(1)
value Year of cost
% m maturity \u00a3m % m maturity \u00a3m
Non-current secured borrowings:
5.875% EUR loan notes 2029
7.5%
\u20ac350.0
2029
306.5
7.5%
\u20ac350.0
2029
289.5
UK infrastructure private placement facility (2019)
3.0%
\u00a350.0
2029
49.7
3.0%
\u00a350.0
2029
49.5
\u20ac31.5 + 2027 \u2013 \u20ac101.5 + 2026 \u2013
UK infrastructure private placement facility (2020)
2.6%
\u00a398.0
2030
125.2
2.5%
\u00a398.0
2030
181.0
CAD term loan facility
\u2013
\u2013
n/a
\u2013
6.1%
C$200.0
2026
111.0
\u20ac185.0 + 2028 \u2013 \u20ac185.0 + 2027 \u2013
GBP and EUR term loan facility (2024)
5.5%
\u00a3100.0
2029
260.6
5.5%
\u00a3100.0
2029
251.9
2027 \u2013 2027 \u2013
\u00a3125m GBP term loan facility (2024)
6.2%
\u00a3125.0
2029
125.6
6.2%
\u00a3125.0
2029
124.9
\u00a350m GBP term loan facility (2024)
5.5%
\u00a350.0
2028
50 .1
5.5%
\u00a350.0
2028
49.9
Current secured borrowings:
2.625% EUR loan notes 2025
\u2013
\u2013
n/a
\u2013
4.6%
\u20ac143.8
2025
119.0
UK infrastructure private placement facility (2020)
2.1%
\u20ac70.0
2026
61.3
\u2013
\u2013
n/a
\u2013
Total borrowings
979.0
1,176.7
Current
61.3
119.0
Non-current
917.7
1,057.7
(1) The effective sterling interest rate includes the impact of any interest rate and cross-currency interest rate swaps. 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 2024, the Group refinanced a number of existing facilities to extend the Group\u2019s average debt maturity profile. Further details of this refinancing activity is provided in the Group\u2019s 2024 Annual report and accounts on pages 217\u2013218. During July 2025, the Group agreed with the lenders of the GBP and EUR term loan facility (2024) to extend the maturity of the \u20ac135.0 million and \u00a350.0 million tranches that were due to mature in 2027, by one year, to 2028. This facility is sustainability-linked and has 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. In August 2025, the Group chose to make an early repayment of the C$200.0 million CAD term loan facility that had an original maturity of January 2026. In October 2025, the remaining \u20ac143.8 million outstanding principal of the 2.625% EUR loan notes was repaid. In December 2025, the Group agreed a new \u00a3190.0 million term loan facility which remained undrawn at the reporting date (see note 2.7 for details on the Group\u2019s committed facilities). This was subsequently drawn during January 2026. Also during January 2026, the Group repaid \u20ac70.0 million of the UK infrastructure private placement facility (2020) at maturity. The Group has a committed \u00a3450.0 million sustainability-linked revolving credit facility (RCF). During the period, the maturity of the facility was extended from August 2027 to August 2028. 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 under this facility since its inception in August 2024 and it remained undrawn as at 31 December 2025. 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. 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 5.40% (2024: 5.39%). Reconciliation of borrowings The table below shows the movement in borrowings during the current and prior year:
Year ended 31 December 2025
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
119.0
\u2013
\u2013
(124.8)
(3.2)
9.0
\u2013
5.875% EUR loan notes 2029
289.5
\u2013
\u2013
\u2013
(17.6)
34.6
306.5
UK infrastructure private placement facility (2019)
49.5
\u2013
\u2013
\u2013
( 3.1)
3.3
49.7
UK infrastructure private placement facility (2020)
181.0
\u2013
\u2013
\u2013
(9.2)
14.7
186.5
CAD term loan facility
111.0
\u2013
\u2013
(108.8)
(4.7)
2.5
\u2013
GBP and EUR term loan facility (2024)
251.9
\u2013
(0.2)
\u2013
(13.0)
21.9
260.6
\u00a3125m GBP term loan facility (2024)
124.9
\u2013
\u2013
\u2013
(7.9)
8.6
125.6
\u00a350m GBP term loan facility (2024)
49.9
\u2013
\u2013
\u2013
(3.0)
3.2
5 0.1
Total borrowings
1,176.7
\u2013
(0.2)
(233.6)
(61.7)
97.8
979.0
Non-cash movements in borrowings during 2025 comprises foreign exchange losses of \u00a332.1 million and interest costs of \u00a365.7 million.
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)
373.9
\u2013
\u2013
(325.0)
(10.9)
11.5
49.5
UK infrastructure private placement facility (2020)
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
Non-cash movements in borrowings during 2024 comprises foreign exchange gains of \u00a330.7 million, interest costs of \u00a385.0 million and gains on extinguishment of \u00a31.7 million. As disclosed above, the Group has a number of cross-currency interest rate swaps and foreign currency forward contracts that fix the sterling value of the principal repayment of certain foreign currency denominated borrowings. Accordingly, the foreign exchange losses (2024: gains) on borrowings disclosed above have been offset by \u00a333.5 million of foreign exchange gains (2024: \u00a332.5 million losses) on cross-currency interest rate swaps and foreign currency forward contracts 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 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 49 for further details on the scenarios considered. (1) The net debt calculation for financial covenants is based on Net debt as defined in note 2.7 but also includes the cash, borrowings and lease liabilities attributable to non-controlling interests, and excludes the impact of hedging. Letters of credit and surety bonds As at 31 December 2025, the Group had issued letters of credit totalling \u00a352.7 million (2024: \u00a356.8 million), of which \u00a314.5 million (2024: \u00a314.5 million) were utilised to cover commodity trading collateral requirements. As at 31 December 2025, the Group had surety bonds with a number of insurers totalling \u00a376.5 million (2024: \u00a389.0 million), of which \u00a320.0 million (2024: \u00a330.0 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 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 that swap one interest rate for another in a single currency, including floating-to-fixed interest rate swaps, and contracts that 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, that 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 changes. Due to the nature of the derivative financial instruments the Group holds, minor differences in the inputs, assumptions or methodologies used can result in different, but appropriate, 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 and any impact of assumptions that are made when forward curves are not an exact match for the Group\u2019s derivative contracts is not significant. As such, the fair value of derivatives is not considered a key source of estimation uncertainty, as defined by IAS 1, as reasonably possible changes in inputs, methodologies or assumptions would not result in a materially different value being recognised at the reporting date. Whilst the carrying amount of derivative assets and liabilities will likely change materially within the next financial year, this is as a result of movements in market prices or rates. Movements in market prices or rates are as a result of changes that occur subsequent to the reporting date and are not indicative of an alternative valuation that could reasonably have been recognised at the reporting date. 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. Certain of the Group\u2019s borrowings (see note 4.2) 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 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 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 \u2013 Mandatorily assets at liabilities at
hedging at FVTPL \u2013 amortised amortised
instruments others FVOCI cost cost Total Level 1 Level 2 Level 3 Total
At 31 December 2025 \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial assets measured at fair value
Commodity contracts
41.4
18.0
\u2013
\u2013
\u2013
59.4
\u2013
59.4
\u2013
59.4
Foreign currency exchange contracts
1.9
25.8
\u2013
\u2013
\u2013
27.7
\u2013
27.7
\u2013
27.7
Interest rate and cross-currency contracts
5.9
\u2013
\u2013
\u2013
\u2013
5.9
\u2013
5.9
\u2013
5.9
Trade and other receivables
\u2013
\u2013
13.8
\u2013
\u2013
13.8
\u2013
13.8
\u2013
13.8
Cash and cash equivalents
\u2013
1.9
\u2013
\u2013
\u2013
1.9
\u2013
1.9
\u2013
1.9
Financial assets not measured at fair value
Trade and other receivables
\u2013
\u2013
\u2013
290.3
\u2013
290.3
Cash and cash equivalents
\u2013
\u2013
\u2013
300.2
\u2013
300.2
Financial liabilities measured at fair value
Commodity contracts
(10.3)
(29.7)
\u2013
\u2013
\u2013
(40.0)
\u2013
(40.0)
\u2013
(40.0)
Foreign currency exchange contracts
(78.7)
(20.7)
\u2013
\u2013
\u2013
(99.4)
\u2013
(99.4)
\u2013
(99.4)
Interest rate and cross-currency contracts
(11.9)
(0.7)
\u2013
\u2013
\u2013
(12.6)
\u2013
(12.6)
\u2013
(12.6)
Inflation rate contracts
(97. 8)
\u2013
\u2013
\u2013
\u2013
(97.8)
\u2013
(97.8)
\u2013
(97. 8)
Financial liabilities not measured at fair value
Secured bank loans
\u2013
\u2013
\u2013
\u2013
(672.5)
(672.5)
\u2013
(67 7.5)
\u2013
(67 7.5)
Secured loan notes
\u2013
\u2013
\u2013
\u2013
(306.5)
(306.5)
(316 .1)
\u2013
\u2013
(316 .1)
Lease liabilities
\u2013
\u2013
\u2013
\u2013
(98.6)
(98.6)
Trade and other payables
\u2013
\u2013
\u2013
\u2013
(673.8)
(673.8)
Carrying amount
Fair value
Financial Financial
Fair value \u2013 Mandatorily assets at liabilities at
hedging at FVTPL \u2013 amortised amortised
instruments others FVOCI cost cost Total Level 1 Level 2 Level 3 Total
At 31 December 2024 \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
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)
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 level of 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. The valuation technique in the prior year was based on the assumption that the option to develop the land would be exercised if the Capacity Market price were to clear above a certain level, providing sufficient certainty on the economics of the development. This was calculated using a range of forecasts for future Capacity Market auctions. During the current year, the probability of this trigger occurring is estimated to have reduced to virtually zero. The probability of any of the other triggers occurring that would result in the contingent consideration becoming due are also estimated to be virtually zero. Therefore, a fair value loss of \u00a39.4 million has been recognised in the current year to reduce the carrying value of the contingent consideration to \u00a3nil. As the change in fair value reflects the reversal of a previous credit recorded within exceptional items, the \u00a39.4 million has been excluded from Adjusted results and presented as an exceptional item included within other gains and losses in the Consolidated income statement (see note 2.7). A reconciliation of the contingent consideration is detailed below:
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Balance at 1 January
9.4
9.2
Net change in fair value
(9.4)
0.2
Balance at 31 December
\u2013
9.4
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 that do not qualify for the own-use exemption (principally wholesale power, gas and carbon emissions allowances) and financial contracts (principally foreign exchange, interest, inflation, financial oil and financial 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 commodity and financial contracts 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 the biomass market means these contracts 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. 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
2025 2024
\u00a3m \u00a3m
Non-current derivative financial instrument assets
24.4
81.7
Current derivative financial instrument assets
68.6
175.6
Total derivative financial instrument assets
93.0
257.3
Non-current derivative financial instrument liabilities
(75.6)
(262.2)
Current derivative financial instrument liabilities
(174.2)
( 71.1)
Total derivative financial instrument liabilities
(249.8)
(333.3)
Total net derivative financial instruments
(156.8)
(76.0)
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
2025 2024
\u00a3m \u00a3m
Net gains on derivative financial instruments not qualifying for hedge
accounting \u2013 recognised in revenue
24.9
11.9
Net (losses)/gains on derivative financial instruments not qualifying for
hedge accounting \u2013 recognised in cost of sales
(55.4)
45.3
Net gains on derivative financial instruments not qualifying for hedge
accounting \u2013 recognised in foreign exchange gains/(losses)
1.2
\u2013
Total (losses)/gains on derivative financial instruments not qualifying
for hedge accounting
(29.3)
57. 2
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 41). The Financial Risk Management Committee identifies, evaluates and manages financial risks in close coordination 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 Group\u2019s 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 are held constant. 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 interpolated or extrapolated from the table below 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 2025
Power
\u2013
\u2013
28.0
(27.7)
Carbon
(0.8)
0.8
\u2013
\u2013
Gas
(1.0)
1.0
\u2013
\u2013
Oil
(5.6)
5.2
\u2013
\u2013
Freight
(1.6)
1.6
\u2013
\u2013
Impact on other components of equity,
Impact on profit after tax 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
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 prices 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, after taking account of the volume held back for operational risk management purposes. Where the power generation has contract indexation, forward power sales are generally entered once the indexation window has begun. 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 FVTPL. Where forward power curves are less liquid, the Group uses 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 Group\u2019s non-core SME customer meter points (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 in relation to the Group\u2019s carbon emissions. Carbon emissions allowances are also sold as part of the proxy power hedges that utilise gas sales as a proxy for power, as described above. Sales and purchases of carbon are not designated as cash flow hedges. The Group purchases financial oil contracts to hedge freight costs for the delivery of biomass. Oil is a significant input into the overall cost of freight. Financial oil contracts are not designated as cash flow hedges. The Group purchases financial freight contracts to hedge freight costs for the delivery of biomass. Financial freight 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 for part of the year. 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 hedging instrument 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.
At 31 December 2025
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging relationships for
instrument since Balance in the which hedge
inception used Fair value hedge reserve for accounting is
for measuring recognised in Fair value recognised continuing hedges no longer applied
Notional value Weighted average ineffectiveness \u2013 balance sheet \u2013 in balance sheet \u2013 net of deferred tax \u2013 net of deferred
of contracts fixed price gains/(losses) assets liabilities (debit)/credit tax \u2013 (debit)/credit
Exposure (MWh, allowances)
\u00a3
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts January 2026
Sale and purchase of power
4,835,705
77.08
\u2013 March 2030
156.8
41.4
(10.3)
15.6
\u2013
31 December 2025
Cumulative change in Hedge Amount Amount reclassified Line item
fair value of hedged ineffectiveness transferred to Amount reclassified due to the hedged in the income
item since inception Hedging gains recognised in Line item in the the cost or carrying due to the hedged future cash flows statement/
used for measuring recognised in OCI the income statement income statement value of a item affecting being no longer balance sheet
ineffectiveness \u2013 in the period \u2013 in the period \u2013 that includes non-financial profit or loss \u2013 expected to occur \u2013 affected by the
losses/(gains) gains/(losses) gains/(losses) hedge asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Commodity contracts
156.8
122.3
\u2013
Revenue
\u2013
(114.7)
\u2013
Revenue
Sale and purchase of power
\u2013
Cost of sales
\u2013
(21.3)
\u2013
Cost of sales
At 31 December 2024
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging relationships for
instrument since Balance in the which hedge
inception used Fair value hedge reserve for accounting is
for measuring recognised in Fair value recognised continuing hedges no longer applied
Notional value Weighted average ineffectiveness \u2013 balance sheet \u2013 in balance sheet \u2013 net of deferred tax \u2013 net of deferred
of contracts fixed price gains/(losses) assets liabilities (debit)/credit tax \u2013 (debit)/credit
Exposure (MWh, allowances)
\u00a3
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts January 2025
Sale and purchase of power
7,013,76 6
87.3
\u2013 September 2028
34.5
101.9
(50.9)
25.9
\u2013
Purchase of carbon emissions allowances
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
At 31 December 2024
Cumulative change in Hedge Amount Amount reclassified Line item
fair value of hedged ineffectiveness Line item transferred to Amount reclassified due to the hedged in the income
item since inception Hedging gains recognised in in the income the cost or due to the hedged future cash flows statement/
used for measuring recognised in OCI in the income statement statement carrying value of item affecting being no longer balance sheet
ineffectiveness \u2013 the period \u2013 gains/ in the period \u2013 that includes a non-financial profit or loss \u2013 expected to occur \u2013 affected by the
losses/(gains) (losses) gains/(losses) hedge asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Commodity contracts
34.5
(15.2)
\u2013
Revenue
\u2013
(397.5)
\u2013
Revenue
Sale and purchase of 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
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 borrowings. These fuel purchases are typically denominated in US dollars (USD), euros (EUR) or Canadian dollars (CAD), and the foreign currency borrowings are denominated in EUR (see note 4.2 for further details on the Group\u2019s borrowings). The Group also had CAD denominated borrowings at the prior year end. 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, net of tax, 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 the reporting date on outstanding monetary items denominated in foreign currencies and the valuation of foreign currency derivative instruments. The analysis excludes the impact of the translation of the net assets of foreign operations. 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 are 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 2025
USD
41.6
(41.5)
150.8
(121.6)
EUR
17.8
(17. 5)
33.1
(26.9)
CAD
1.7
(1.7)
15.1
(12.3)
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)
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 six-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 borrowings (see note 4.2 for further details on borrowings). The Group currently has issued foreign currency denominated borrowings in EUR (2024: EUR and CAD). The Group utilises derivative contracts, including cross-currency interest rate swaps and foreign exchange forward contracts, to manage exchange risk on foreign currency borrowings. Foreign currency risk hedge accounting The Group designates certain forward and option foreign currency exchange contracts 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, such as 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) and the Energy Solutions receivables monetisation facility, should they be utilised. The returns generated on the Group\u2019s cash balance, or payable on amounts drawn on the RCF or amounts utilised under the Energy Solutions receivables monetisation facility, 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 borrowings (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 2025
Variable rate debt \u2013 hedged
(4.8)
4.8
\u2013
\u2013
Interest rate swaps
4.9
(4.9)
(0.1)
0.1
Net impact
0.1
(0 .1)
(0 .1)
0 .1
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)
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 borrowings. The Group has reduced its exposure to interest rate risk on variable rate borrowings 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 borrowings. 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, however this impact is reduced by the amounts recycled to profit or loss to offset the interest payable. These fair value changes impact 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 foreign exchange forwards in order to fix the sterling cash flows payable on the principal repayment. The Group had 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 had separately taken out C$200.0 million notional value foreign exchange forwards in order to fix the sterling cash flows payable on the principal repayment. During the year the Group chose to make an early repayment of this term loan facility. Due to the repayment of the underlying hedged item, hedge accounting ceased at the date the facility was repaid. The Group has taken out fixed-to-fixed cross-currency interest rate swaps to hedge the future cash flows associated with the \u20ac350.0 million fixed rate EUR loan notes 2029 and the \u20ac31.5 million fixed rate element of the UK infrastructure private placement facility (2020). The Group had a fixed-to-fixed cross-currency interest rate swap that was entered into to hedge the future cash flows associated with the \u20ac143.8 million 2.625% EUR loan notes 2025. During the year this swap and the underlying loan notes matured and were settled. As at 31 December 2025, 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.
At 31 December 2025
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging relationships for
instrument since Balance in the which hedge
inception used Fair value Fair value hedge reserve for accounting is
Weighted for measuring recognised in recognised in continuing hedges no longer applied
Notional value of average ineffectiveness \u2013 balance sheet \u2013 balance sheet \u2013 net of deferred net of deferred
contracts fixed/variable gains/(losses) assets liabilities tax \u2013 (debit)/credit tax \u2013 (debit)/credit
US$m, \u20acm, C$m
rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency risk on biomass purchases January 2026
Purchases in foreign currency \u2013 USD
2,731.5
US$1.29
\u2013 December 2030
(92.0)
1.1
(66.0)
(47.3)
\u2013
January 2026
Purchases in foreign currency \u2013 EUR
4 87.0
\u20ac1.10
\u2013 September 2030
(3.0)
0.8
(5.3)
0.4
\u2013
January 2026
Purchases in foreign currency \u2013 CAD
343.5
C$1.75
\u2013 October 2030
(11.8)
\u2013
(5.6)
(4.8)
\u2013
Foreign currency risk on borrowings January 2026
Interest and principal payments \u2013 EUR
381.5
\u20ac1.16 / 7.22%
\u2013 November 2026
4.5
4.9
(1.9)
(0.8)
\u2013
February 2027
Principal payments \u2013 EUR
185.0
\u20ac1.11
\u2013 March 2028
6.5
\u2013
(1.8)
\u2013
\u2013
Principal payments \u2013 CAD
\u2013
\u2013
\u2013
(4.0)
\u2013
\u2013
\u2013
\u2013
Foreign currency and interest rate risk on borrowings January 2026
Interest and principal payments \u2013 EUR
255.0
\u20ac1.11 / 4.04%
\u2013 March 2026
(6.8)
\u2013
( 7.0)
(1.0)
\u2013
Interest payments \u2013 CAD
\u2013
\u2013
\u2013
(2 .1)
\u2013
\u2013
\u2013
\u2013
Interest rate risk on borrowings January 2026
Variable rate GBP debt
423.0
2.89%
\u2013 July 2029
(2 .1)
1.0
(3.0)
(1.8)
\u2013
Exposure
At 31 December 2025
Cumulative change in Hedge Amount reclassified
fair value of hedged ineffectiveness Amount reclassified due to the hedged Line item in the
item since inception Hedging losses recognised in the Amount transferred due to the hedged future cash flows income statement/
used for measuring recognised in OCI income statement Line item in the to the cost or item affecting being no longer balance sheet
ineffectiveness \u2013 in the period \u2013 in the period \u2013 income statement carrying value of a profit or loss \u2013 expected to occur \u2013 affected by
losses/(gains) gains/(losses) gains/(losses) that includes hedge non-financial asset (gains)/losses (gains)/losses the transfer/
\u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Foreign currency risk on biomass purchases
Purchases in foreign currency \u2013 USD
(92.0)
(104.5)
\u2013
Cost of sales
27.1
\u2013
\u2013
Inventories
Purchases in foreign currency \u2013 EUR
(3.0)
8.0
\u2013
Cost of sales
(1.5)
\u2013
\u2013
Inventories
Purchases in foreign currency \u2013 CAD
(11.8)
(4.8)
\u2013
Cost of sales
6.2
\u2013
\u2013
Inventories
Foreign currency risk on borrowings Interest payable Interest payable
\u2013
and similar charges
\u2013
7.1
\u2013
and similar charges
4.5
10.4
Foreign exchange Foreign exchange
Interest and principal payments \u2013 EUR \u2013
gains/(losses)
\u2013
(24.4)
\u2013
gains/(losses)
Foreign exchange Foreign exchange
Principal payments \u2013 EUR
6.5
8.3
\u2013
gains/(losses)
\u2013
(8.3)
\u2013
gains/(losses)
Foreign exchange Foreign exchange
Principal payments \u2013 CAD
(4.0)
(2.3)
\u2013
gains/(losses)
\u2013
2.3
\u2013
gains/(losses)
Foreign currency and interest rate risk on borrowings Interest payable Interest payable
(3.2)
5.4
\u2013
and similar charges
\u2013
\u2013
\u2013
and similar charges
Foreign exchange Foreign exchange
Interest and principal payments \u2013 EUR (3.6)
gains/(losses)
\u2013
( 3.1)
\u2013
gains/(losses)
Interest payable Interest payable
Interest payments \u2013 CAD
(2 .1)
(0.3)
\u2013
and similar charges
\u2013
1.0
0.9
and similar charges
Interest rate risk on borrowings Interest payable Interest payable
Variable rate GBP debt
(2.3)
(2.3)
\u2013
and similar charges
\u2013
(5.9)
\u2013
and similar charges
Exposure
At 31 December 2024
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging relationships for
instrument since Balance in the which hedge
inception used Fair value Fair value hedge reserve for accounting is
for measuring recognised in recognised in continuing hedges no longer applied
Notional value Weighted average ineffectiveness \u2013 balance sheet \u2013 balance sheet \u2013 net of deferred tax \u2013 net of deferred
of contracts fixed/variable gains/(losses) assets liabilities (debit)/credit tax \u2013 (debit)/credit
US$m, \u20acm, C$m
rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency risk on biomass purchases January 2025
Purchases in foreign currency \u2013 USD
1,430.5
US$1.27
\u2013 February 2027
18.6
20.7
(2.1)
10.7
\u2013
January 2025
Purchases in foreign currency \u2013 EUR
270.0
\u20ac 1.15
\u2013 October 2026
(6.3)
\u2013
(6.3)
(4.5)
\u2013
January 2025
Purchases in foreign currency \u2013 CAD
166.0
C$1.67
\u2013 March 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 payments \u2013 EUR
525.3
\u20ac1.14 / 6.48%
\u2013 April 2028
(10.4)
\u2013
(19.7)
4.4
\u2013
February 2027
Principal payments \u2013 EUR
185.0
\u20ac 1.11
\u2013 March 2028
(5 .1)
\u2013
(5 .1)
\u2013
\u2013
Principal payments \u2013 CAD
200.0
C$1.68
January 2026
(5.7)
\u2013
(5.7)
\u2013
\u2013
Foreign currency and interest rate risk on borrowings January 2026
Interest and principal payments \u2013 EUR
255.0
\u20ac1.09 / 4.04%
\u2013 March 2028
(8.6)
\u2013
(8.7)
(2.7)
\u2013
Interest payments \u2013 CAD
200.0
6.05%
January 2026
(1.5)
\u2013
(1.8)
(1.3)
\u2013
Interest rate risk on borrowings January 2026
Variable rate GBP debt
423.0
2.89%
\u2013 April 2028
6.1
7.1
(0.4)
4.3
\u2013
Exposure
At 31 December 2024
Cumulative change in Hedge Amount reclassified
fair value of hedged ineffectiveness Amount reclassified due to the hedged Line item in the
item since inception Hedging losses recognised in the Amount transferred due to the hedged future cash flows income statement/
used for measuring recognised in OCI in income statement Line item in the to the cost or item affecting being no longer balance sheet
ineffectiveness \u2013 the period \u2013 in the period \u2013 income statement carrying value of a profit or loss \u2013 expected to occur \u2013 affected by the
losses/(gains) gains/(losses) gains/(losses) that includes hedge non-financial asset (gains)/losses (gains)/losses transfer/
\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 payable Interest payable
Interest and principal payments \u2013 USD
\u2013
(5.6)
\u2013
and similar charges
\u2013
(0.7)
\u2013
and similar charges
Foreign exchange Foreign exchange
\u2013
gains/(losses)
\u2013
9.3
\u2013
gains/(losses)
Interest payable Interest payable
Interest and principal payments \u2013 EUR
(11.3)
(7.5)
\u2013
and similar charges
\u2013
7.4
\u2013
and similar charges
Foreign exchange Foreign exchange
\u2013
gains/(losses)
\u2013
6.4
\u2013
gains/(losses)
Foreign exchange Foreign exchange
Principal payments \u2013 EUR
(5.1)
(6.0)
\u2013
gains/(losses)
\u2013
6
\u2013
gains/(losses)
Foreign exchange Foreign exchange
Principal payments \u2013 CAD
(5.7)
(7.4)
\u2013
gains/(losses)
\u2013
7.4
\u2013
gains/(losses)
Foreign currency and interest rate risk on borrowings Interest payable Interest payable
Interest and principal payments \u2013 EUR
(8.7)
(6.4)
\u2013
and similar charges
\u2013
(2.5)
\u2013
and similar charges
Foreign exchange Foreign exchange
\u2013
gains/(losses)
\u2013
3.4
\u2013
gains/(losses)
Interest payable Interest payable
Interest payments \u2013 CAD
(1.6)
(1.3)
\u2013
and similar charges
\u2013
(0.4)
\u2013
and similar charges
Interest rate risk on borrowings Interest payable Interest payable
Variable rate GBP debt
10.8
(2.3)
\u2013
and similar charges
\u2013
(12.0)
\u2013
and similar 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). It is the intention of the UK Government to change to CPI-based indexation for ROC revenue from April 2026, subject to the publication of statutory instruments. 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 of equity,
Impact on profit after tax 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 2025
UK CPI inflation swaps
\u2013
\u2013
(22.3)
19.3
UK RPI inflation swaps
\u2013
\u2013
(1.6)
1.6
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
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 in the prior year was 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 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. The Group recognised \u00a33.5 million of gains (2024: \u00a38.7 million of losses) as ineffective primarily due to the basis difference between the RPI hedging instruments and the CPI exposure. In the current year, as a result of the updated estimates of the OCGT commissioning dates, the Group recycled \u00a30.8 million (2024: \u00a31.2 million) of losses to the Consolidated income statement on CPI inflation swaps designated as hedging instruments for the OCGT Capacity Market revenues, 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.
At 31 December 2025
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging relationships for
instrument since Balance in the which hedge
inception used hedge reserve for accounting is
for measuring Fair value recognised Fair value recognised continuing hedges no longer applied
Notional value ineffectiveness \u2013 in balance sheet \u2013 in balance sheet \u2013 net of deferred net of deferred tax \u2013
of contracts Weighted average gains/(losses) assets liabilities tax \u2013 (debit)/credit (debit)/credit
Exposure \u00a3m
fixed rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Inflation April 2026
Inflation-linked sales contracts \u2013 CPI
30.4
CPI \u2013 2.70%
\u2013 July 2038
(8.5)
\u2013
(13.1)
(6.3)
1.9
Inflation-linked sales contracts \u2013 RPI
440.0
RPI \u2013 3.46%
April 2026
(133.5)
\u2013
(84.7)
(19.0)
\u2013
At 31 December 2025
Hedge
ineffectiveness/
Cumulative change in reversal of Amount reclassified
fair value of hedged ineffectiveness Amount reclassified due to the hedged Line item in the
item since inception Hedging gains recognised in the Amount transferred due to the hedged future cash flows income statement/
used for measuring recognised in OCI income statement Line item in the to the cost or item affecting being no longer balance sheet
ineffectiveness \u2013 in the period \u2013 in the period \u2013 income statement carrying value of a profit or loss \u2013 expected to occur affected by
losses/(gains) gains/(losses) gains/(losses) that includes hedge non- financial asset (gains)/losses \u2013 (gains)/losses the transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Inflation
Inflation-linked sales contracts \u2013 CPI
(8.5)
3.3
\u2013
Revenue
\u2013
(4.6)
0.8
Revenue
Inflation-linked sales contracts \u2013 RPI
(109.8)
(3.9)
3.5
Revenue
\u2013
2 5.1
\u2013
Revenue
At 31 December 2024
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging Balance in the relationships for
instrument since hedge reserve which hedge
inception used for for continuing accounting is
measuring Fair value recognised Fair value recognised hedges net of no longer applied
Notional value ineffectiveness in balance sheet \u2013 in balance sheet \u2013 deferred tax \u2013 net of deferred tax \u2013
of contracts Weighted average \u2013 gains/(losses) assets liabilities (debit)/credit (debit)/credit
Exposure \u00a3m
fixed rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Inflation April 2026
Inflation-linked sales contracts \u2013 CPI
30.4
CPI \u2013 2.70%
\u2013 July 2038
(18.6)
\u2013
(18.6)
(14.5)
10.5
Inflation-linked sales contracts \u2013 RPI
440.0
RPI \u2013 3.65%
April 2026
(75.4)
\u2013
(165.4)
(34.9)
\u2013
At 31 December 2024
Cumulative change Hedge Amount reclassified
in fair value of hedged ineffectiveness Amount reclassified due to the hedged Line item in the
item since inception Hedging gains recognised in the Amount transferred due to the hedged future cash flows income statement/
used for measuring recognised in OCI in income statement Line item in the to the cost or item affecting being no longer balance sheet
ineffectiveness \u2013 the period \u2013 in the period \u2013 gains/ income statement carrying value of a profit or loss \u2013 expected to occur \u2013 affected by the
gains/(losses) gains/(losses) (losses) that includes hedge non-financial asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Inflation
Inflation-linked sales contracts \u2013 CPI
(18.6)
(1.3)
\u2013
Revenue
\u2013
(3.1)
1.2
Revenue
Inflation-linked sales contracts \u2013 RPI
(47.9)
(2 .1)
(8.7)
Revenue
\u2013
27.1
\u2013
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.
At 31 December 2025
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
69.1
22.8
165.3
489.5
\u2013
746.7
Loan notes, gross value
\u2013
17.9
17.9
332.3
\u2013
368.1
Borrowings, contractual
maturity
69.1
40.7
183.2
821.8
\u2013
1,114.8
Trade and other payables
594.7
77.5
1.6
\u2013
\u2013
673.8
Lease liabilities
9.0
22.2
21.2
30.4
38.3
121.1
672.8
140.4
206.0
852.2
38.3
1,909.7
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
1,3 7 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
The weighted average interest rate payable at the reporting date on the Group\u2019s borrowings was 5.40% (2024: 5.39%). Trade and other payables of \u00a3673.8 million (2024: \u00a3793.0 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 traded value. Vanilla foreign currency exchange contracts are expected to be gross settled through delivery of one currency and receipt of another. Gross settlement of both the interest and principal on cross-currency interest rate swaps is expected through delivery of one currency and receipt of another. 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. For option derivative contracts, such as foreign currency options, the expected cash flows are only included if the option has intrinsic value at the reporting date and therefore would exercise based on the market curves existing at the reporting date. Where derivatives are expected to be gross settled based on the traded value rather than the mark-to-market value, the gross undiscounted cash flows based on the contracted traded values 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 the 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. Derivative liabilities \u2013 cash inflow/(outflow)
At 31 December 2025
At 31 December 2024
Difference to Difference to
Within carrying Carrying Within carrying Carrying
1 year 1\u20132 years >2 years Total amount amount 1 year 1\u20132 years >2 years Total amount amount
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts \u2013 inflow
209.8
8.3
\u2013
218 .1
(224.0)
(5.9)
303.0
259.3
3 7. 8
6 0 0.1
(673.5)
(73.4)
Commodity contracts \u2013 outflow
(137.7 )
(52.5)
(15.6)
(205.8)
171.7
(34.1)
(33.8)
(1.4)
(4.1)
(39.3)
30.9
(8.4)
Foreign exchange contracts \u2013 inflow
1,075.4
688.7
1,497.0
3,261.1
26.4
(99.4)
6 41.1
468.4
328.0
1,43 7.5
15.2
(36.9)
Foreign exchange contracts \u2013 outflow
(1,118.0)
(711.9)
(1,557.0)
(3,386.9)
(637.4)
(494.6)
(357.6)
(1,489.6)
Cross-currency contracts \u2013 inflow
97.3
2.7
0.5
100.5
0.8
(9.6)
215.7
53.9
341.0
610.6
1.2
(30.2)
Cross-currency contracts \u2013 outflow
(107.3)
(3.1)
(0.5)
(110.9)
(241.3)
(63.4)
(337.3)
(642.0)
Interest rate contracts \u2013 inflow
\u2013
\u2013
\u2013
\u2013
0.1
(3.0)
0.3
\u2013
\u2013
0.3
0.1
(0.4)
Interest rate contracts \u2013 outflow
(1.6)
(1.3)
(0.2)
(3.1)
\u2013
(0.5)
(0.3)
(0.8)
Inflation contracts \u2013 outflow
(86.9)
(1.5)
(12 .1)
(100.5)
2.7
(97.8)
(84.3)
(91.5)
(20.0)
(195.8)
11.8
(184.0)
(69.0)
(70.6)
(87.9)
(227.5)
(22.3)
(249.8)
163.3
130.2
(12.5)
281.0
(614.3)
(333.3)
Derivative assets \u2013 cash inflow/(outflow)
At 31 December 2025
At 31 December 2024
Difference to Difference to
Within carrying Carrying Within carrying Carrying
1 year 1\u20132 years >2 years Total amount amount 1 year 1\u20132 years >2 years Total amount amount
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts \u2013 inflow
425.3
8 4.1
0 .1
509.5
(458.0)
51.5
363.7
50.6
16.8
431.1
(306.5)
124.6
Commodity contracts \u2013 outflow
(36.6)
( 7 7. 3)
(45.1)
(159.0)
166.9
7.9
(117.5)
(4.5)
(24.9)
(146.9)
175.8
28.9
Foreign exchange contracts \u2013 inflow
172.4
2.4
\u2013
174.8
1.2
27.7
874.6
1,030.0
245.1
2,149.7
(9.7)
96.7
Foreign exchange contracts \u2013 outflow
(148.3)
\u2013
\u2013
(148.3)
(839.9)
(97 7.1)
(226.3)
(2,043.3)
Cross-currency contracts \u2013 inflow
18.6
18.2
314.6
351.4
10.1
4.9
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Cross-currency contracts \u2013 outflow
(22.8)
(22.6)
(311.2)
(356.6)
\u2013
\u2013
\u2013
\u2013
Interest rate contracts \u2013 inflow
1.0
\u2013
\u2013
1.0
\u2013
1.0
6.3
1.1
\u2013
7.4
(0.2)
7.1
Interest rate contracts \u2013 outflow
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(0.1)
(0 .1)
409.6
4.8
(41.6)
372.8
(279.8)
93.0
287. 2
10 0 .1
10.6
397.9
(140.6)
257.3
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 \u00a330.6 million (2024: \u00a342.4 million) and expected credit losses on accrued income of \u00a35.0 million (2024: \u00a39.0 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. 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 Opus Energy non-core SME meter points (see note 2.7) 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 \u00a3302.1 million at 31 December 2025 (2024: \u00a3356.0 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 \u00a3300.2 million at 31 December 2025 (2024: \u00a3252.9 million). The identified impairment loss, based on the 12-month expected credit loss basis, was immaterial. Cash and cash equivalents at the reporting date were 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 2025, the Group held \u00a3nil in cash collateral receipts (2024: \u00a39.8 million) covering certain derivative assets and had posted \u00a319.4 million (2024: \u00a34.7 million) of cash collateral payments covering certain derivative liabilities. The credit rating of counterparties to which the \u00a319.4 million of cash collateral had been posted ranged from A to A+. Counterparty risk As the Group relies on third-party suppliers and counterparties for the delivery of financial and non-financial items, it 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 49 for details of scenario analysis performed on covenant restrictions within the Group\u2019s financing facilities.
At 31 December
2025 2024
\u00a3m \u00a3m
Net debt (note 2.7)
783.6
991.7
Total shareholders\u2019 equity attributable to owners of the parent
company, excluding hedge and cost of hedging reserves
1,789.1
2,078.3
7.3 Hedge reserve The Group designates certain hedging instruments that are used to address commodity price risk, foreign currency exchange risk, interest rate risk, foreign currency exchange and interest 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 profit or loss, 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
Commodity currency Interest Foreign currency Inflation
price risk exchange risk rate risk and Interest rate risk Total
\u00a3m \u00a3m \u00a3m rate risk \u00a3m \u00a3m
At 1 January 2024
25 7.0
(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 revenue
( 397.5)
\u2013
\u2013
\u2013
24.0
(373.5)
\u2013 Reclassified to the Consolidated income statement \u2013 included in cost of sales
105.1
\u2013
\u2013
\u2013
\u2013
10 5.1
\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 gains/(losses)
\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 1 January 2025
25.9
4.8
4.3
(4.0)
(38.9)
(7.9)
Gains/(losses) recognised:
\u2013 Change in fair value of hedging instrument recognised in OCI
122.3
(84.9)
(2.3)
5.1
(0.6)
39.6
Reclassified from equity as the hedged item has affected profit or loss:
\u2013 Reclassified to the Consolidated income statement \u2013 included in revenue
(114.7)
\u2013
\u2013
\u2013
20.5
(94.2)
\u2013 Reclassified to the Consolidated income statement \u2013 included in cost of sales
(21.3)
\u2013
\u2013
\u2013
\u2013
(21.3)
\u2013 Reclassified to the Consolidated income statement \u2013 included in interest payable and similar charges
\u2013
7.1
(5.9)
1.9
\u2013
3.1
\u2013 Reclassified to the Consolidated income statement \u2013 included in foreign exchange gains/(losses)
\u2013
(30.4)
\u2013
(3.1)
\u2013
(33.5)
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
0.8
0.8
Transferred from equity and included within the initial cost of a non-financial asset:
\u2013 Transferred to cost of inventories
\u2013
31.8
\u2013
\u2013
\u2013
31.8
Related deferred tax, net (note 2.6)
3.4
19.1
2.1
(0.9)
(5.2)
18.5
At 31 December 2025
15.6
(52.5)
(1.8)
(1.0)
(23.4)
(63.1)
The expected release profile from equity of post-tax hedging gains and losses is as follows:
At 31 December 2025
Within 1 year 1\u20132 years >2 years Total
\u00a3m \u00a3m \u00a3m \u00a3m
Commodity risk
12.7
2.1
0.8
15.6
Foreign currency exchange risk
(19.9)
(9.0)
(23.6)
(52.5)
Interest rate risk
(1.0)
(0.7)
(0 .1)
(1.8)
Foreign currency and interest rate risk
(0.8)
(0.2)
\u2013
(1.0)
Inflation risk
(11.9)
(3.7)
(7.8)
(23.4)
(20.9)
(11.5)
(30.7)
(63.1)
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)
7.4 Cost of hedging reserve The Group designates the change in the spot rate as the hedged risk in the Group\u2019s cash flow hedge relationships hedging the purchase of inventory denominated in foreign currencies. The Group designates the cost of hedging, being the change in fair value associated with forward points including currency basis, to equity. For foreign currency options designated as cash flow hedges for the purchase of inventory denominated in foreign currencies the Group designates only the change in intrinsic value as the hedged risk. The change in fair value associated with the time value of options is recognised in the cost of hedging reserve. The purchase of inventory denominated in a foreign currency is a transaction related hedged item that results in the recognition of a non-financial asset. As such, amounts accumulated in the cost of hedging reserve are removed from the cost of hedging reserve and included within the initial cost of the non-financial asset, being the inventory, on initial recognition of the non-financial asset. 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
2025 2024
\u00a3m \u00a3m
At 1 January
6.9
18.7
(Losses)/gains recognised:
\u2013 Change in fair value of hedging instruments recognised in the
Consolidated statement of comprehensive income
(21.9)
6.8
Transferred from equity and included within the initial cost of a
non-financial asset:
\u2013 Transferred to cost of inventories
(4.3)
(22.6)
Related deferred tax, net (note 2.6)
6.5
4.0
At 31 December
(12.8)
6.9
The expected release profile from equity of post-tax cost of hedging gains and losses is as follows:
At 31 December 2025
Within 1 year 1\u20132 years >2 years Total
\u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency exchange risk
(3.6)
(4.1)
(5.1)
(12.8)
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
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:
At 31 December 2025
At 31 December 2024
Net amounts
Gross Net amounts Related cash of financial
amounts of financial Related collateral Gross amounts instruments Related Related cash
Gross of financial instruments financial assets/ of financial presented financial collateral
amounts instruments presented instruments (liabilities) Gross amounts instruments in the instruments assets/
of financial offset in the in the that are that are not of financial offset in the balance that are (liabilities) that
instruments balance sheet balance sheet not offset offset Net amount
instruments
(1)
balance sheet
sheet
(1)
not offset are not offset Net amount
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial assets
Derivative financial instruments
129.3
(36.3)
93.0
(46.5)
\u2013
46.5
328.5
(71.2)
2 57.3
(166.4)
(1.5)
89.4
Trade and other receivables and contract assets
369.6
(65.5)
30 4.1
(2.7)
(10.9)
290.5
445.3
(52.7)
392.6
(2.5)
\u2013
39 0.1
Financial liabilities
Derivative financial instruments
(286.1)
36.3
(249.8)
47. 8
10.9
(191.1)
(404.5)
71.2
(333.3)
156.1
\u2013
(17 7.2)
Trade and other payables and contract liabilities
(739.3)
65.5
(673.8)
1.4
\u2013
(672.4)
(845.7)
52.7
(793.0)
12.8
1.5
(778.7)
(1) The amounts in the table above have been represented to present only the financial assets and financial liabilities included within the balance sheet line item. Collateral assets and liabilities are recorded in other receivables and other payables respectively.", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-649": { "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 recognised 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. If the terms of the debt instrument are not significantly modified, the modification is accounted for as an adjustment to the carrying value of the existing liability. The revised cashflows are discounted at the original effective interest rate and the difference between the new present value and the current carrying value of the liability is recognised immediately in the Consolidated income statement. The Group\u2019s borrowings at each reporting date were as follows:
As at 31 December 2025
As at 31 December 2024
Effective Effective
sterling Principal Amortised sterling Principal Amortised
interest rate
(1)
value Year of cost
interest rate
(1)
value Year of cost
% m maturity \u00a3m % m maturity \u00a3m
Non-current secured borrowings:
5.875% EUR loan notes 2029
7.5%
\u20ac350.0
2029
306.5
7.5%
\u20ac350.0
2029
289.5
UK infrastructure private placement facility (2019)
3.0%
\u00a350.0
2029
49.7
3.0%
\u00a350.0
2029
49.5
\u20ac31.5 + 2027 \u2013 \u20ac101.5 + 2026 \u2013
UK infrastructure private placement facility (2020)
2.6%
\u00a398.0
2030
125.2
2.5%
\u00a398.0
2030
181.0
CAD term loan facility
\u2013
\u2013
n/a
\u2013
6.1%
C$200.0
2026
111.0
\u20ac185.0 + 2028 \u2013 \u20ac185.0 + 2027 \u2013
GBP and EUR term loan facility (2024)
5.5%
\u00a3100.0
2029
260.6
5.5%
\u00a3100.0
2029
251.9
2027 \u2013 2027 \u2013
\u00a3125m GBP term loan facility (2024)
6.2%
\u00a3125.0
2029
125.6
6.2%
\u00a3125.0
2029
124.9
\u00a350m GBP term loan facility (2024)
5.5%
\u00a350.0
2028
50 .1
5.5%
\u00a350.0
2028
49.9
Current secured borrowings:
2.625% EUR loan notes 2025
\u2013
\u2013
n/a
\u2013
4.6%
\u20ac143.8
2025
119.0
UK infrastructure private placement facility (2020)
2.1%
\u20ac70.0
2026
61.3
\u2013
\u2013
n/a
\u2013
Total borrowings
979.0
1,176.7
Current
61.3
119.0
Non-current
917.7
1,057.7
(1) The effective sterling interest rate includes the impact of any interest rate and cross-currency interest rate swaps. 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 2024, the Group refinanced a number of existing facilities to extend the Group\u2019s average debt maturity profile. Further details of this refinancing activity is provided in the Group\u2019s 2024 Annual report and accounts on pages 217\u2013218. During July 2025, the Group agreed with the lenders of the GBP and EUR term loan facility (2024) to extend the maturity of the \u20ac135.0 million and \u00a350.0 million tranches that were due to mature in 2027, by one year, to 2028. This facility is sustainability-linked and has 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. In August 2025, the Group chose to make an early repayment of the C$200.0 million CAD term loan facility that had an original maturity of January 2026. In October 2025, the remaining \u20ac143.8 million outstanding principal of the 2.625% EUR loan notes was repaid. In December 2025, the Group agreed a new \u00a3190.0 million term loan facility which remained undrawn at the reporting date (see note 2.7 for details on the Group\u2019s committed facilities). This was subsequently drawn during January 2026. Also during January 2026, the Group repaid \u20ac70.0 million of the UK infrastructure private placement facility (2020) at maturity. The Group has a committed \u00a3450.0 million sustainability-linked revolving credit facility (RCF). During the period, the maturity of the facility was extended from August 2027 to August 2028. 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 under this facility since its inception in August 2024 and it remained undrawn as at 31 December 2025. 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. 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 5.40% (2024: 5.39%). Reconciliation of borrowings The table below shows the movement in borrowings during the current and prior year:
Year ended 31 December 2025
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
119.0
\u2013
\u2013
(124.8)
(3.2)
9.0
\u2013
5.875% EUR loan notes 2029
289.5
\u2013
\u2013
\u2013
(17.6)
34.6
306.5
UK infrastructure private placement facility (2019)
49.5
\u2013
\u2013
\u2013
( 3.1)
3.3
49.7
UK infrastructure private placement facility (2020)
181.0
\u2013
\u2013
\u2013
(9.2)
14.7
186.5
CAD term loan facility
111.0
\u2013
\u2013
(108.8)
(4.7)
2.5
\u2013
GBP and EUR term loan facility (2024)
251.9
\u2013
(0.2)
\u2013
(13.0)
21.9
260.6
\u00a3125m GBP term loan facility (2024)
124.9
\u2013
\u2013
\u2013
(7.9)
8.6
125.6
\u00a350m GBP term loan facility (2024)
49.9
\u2013
\u2013
\u2013
(3.0)
3.2
5 0.1
Total borrowings
1,176.7
\u2013
(0.2)
(233.6)
(61.7)
97.8
979.0
Non-cash movements in borrowings during 2025 comprises foreign exchange losses of \u00a332.1 million and interest costs of \u00a365.7 million.
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)
373.9
\u2013
\u2013
(325.0)
(10.9)
11.5
49.5
UK infrastructure private placement facility (2020)
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
Non-cash movements in borrowings during 2024 comprises foreign exchange gains of \u00a330.7 million, interest costs of \u00a385.0 million and gains on extinguishment of \u00a31.7 million. As disclosed above, the Group has a number of cross-currency interest rate swaps and foreign currency forward contracts that fix the sterling value of the principal repayment of certain foreign currency denominated borrowings. Accordingly, the foreign exchange losses (2024: gains) on borrowings disclosed above have been offset by \u00a333.5 million of foreign exchange gains (2024: \u00a332.5 million losses) on cross-currency interest rate swaps and foreign currency forward contracts 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 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 49 for further details on the scenarios considered. (1) The net debt calculation for financial covenants is based on Net debt as defined in note 2.7 but also includes the cash, borrowings and lease liabilities attributable to non-controlling interests, and excludes the impact of hedging. Letters of credit and surety bonds As at 31 December 2025, the Group had issued letters of credit totalling \u00a352.7 million (2024: \u00a356.8 million), of which \u00a314.5 million (2024: \u00a314.5 million) were utilised to cover commodity trading collateral requirements. As at 31 December 2025, the Group had surety bonds with a number of insurers totalling \u00a376.5 million (2024: \u00a389.0 million), of which \u00a320.0 million (2024: \u00a330.0 million) were utilised to cover commodity trading collateral requirements. ", "dimensions": { "concept": "ifrs-full:DisclosureOfDebtSecuritiesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-604": { "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 recognised 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. If the terms of the debt instrument are not significantly modified, the modification is accounted for as an adjustment to the carrying value of the existing liability. The revised cashflows are discounted at the original effective interest rate and the difference between the new present value and the current carrying value of the liability is recognised immediately in the Consolidated income statement.
The Group\u2019s borrowings at each reporting date were as follows:
As at 31 December 2025
As at 31 December 2024
Effective Effective
sterling Principal Amortised sterling Principal Amortised
interest rate
(1)
value Year of cost
interest rate
(1)
value Year of cost
% m maturity \u00a3m % m maturity \u00a3m
Non-current secured borrowings:
5.875% EUR loan notes 2029
7.5%
\u20ac350.0
2029
306.5
7.5%
\u20ac350.0
2029
289.5
UK infrastructure private placement facility (2019)
3.0%
\u00a350.0
2029
49.7
3.0%
\u00a350.0
2029
49.5
\u20ac31.5 + 2027 \u2013 \u20ac101.5 + 2026 \u2013
UK infrastructure private placement facility (2020)
2.6%
\u00a398.0
2030
125.2
2.5%
\u00a398.0
2030
181.0
CAD term loan facility
\u2013
\u2013
n/a
\u2013
6.1%
C$200.0
2026
111.0
\u20ac185.0 + 2028 \u2013 \u20ac185.0 + 2027 \u2013
GBP and EUR term loan facility (2024)
5.5%
\u00a3100.0
2029
260.6
5.5%
\u00a3100.0
2029
251.9
2027 \u2013 2027 \u2013
\u00a3125m GBP term loan facility (2024)
6.2%
\u00a3125.0
2029
125.6
6.2%
\u00a3125.0
2029
124.9
\u00a350m GBP term loan facility (2024)
5.5%
\u00a350.0
2028
50 .1
5.5%
\u00a350.0
2028
49.9
Current secured borrowings:
2.625% EUR loan notes 2025
\u2013
\u2013
n/a
\u2013
4.6%
\u20ac143.8
2025
119.0
UK infrastructure private placement facility (2020)
2.1%
\u20ac70.0
2026
61.3
\u2013
\u2013
n/a
\u2013
Total borrowings
979.0
1,176.7
Current
61.3
119.0
Non-current
917.7
1,057.7
(1) The effective sterling interest rate includes the impact of any interest rate and cross-currency interest rate swaps.
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 2024, the Group refinanced a number of existing facilities to extend the Group\u2019s average debt maturity profile. Further details of this refinancing activity is provided in the Group\u2019s 2024 Annual
report and accounts on pages 217\u2013218.
During July 2025, the Group agreed with the lenders of the GBP and EUR term loan facility (2024) to extend the maturity of the \u20ac135.0 million and \u00a350.0 million tranches that were due to mature in 2027,
by one year, to 2028. This facility is sustainability-linked and has 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. In August 2025, the Group chose to make an early repayment of the C$200.0 million CAD term loan facility that had an
original maturity of January 2026. In October 2025, the remaining \u20ac143.8 million outstanding principal of the 2.625% EUR loan notes was repaid.
In December 2025, the Group agreed a new \u00a3190.0 million term loan facility which remained undrawn at the reporting date (see note 2.7 for details on the Group\u2019s committed facilities). This was
subsequently drawn during January 2026. Also during January 2026, the Group repaid \u20ac70.0 million of the UK infrastructure private placement facility (2020) at maturity.
The Group has a committed \u00a3450.0 million sustainability-linked revolving credit facility (RCF). During the period, the maturity of the facility was extended from August 2027 to August 2028. 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
under this facility since its inception in August 2024 and it remained undrawn as at 31 December 2025. 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.
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 5.40% (2024: 5.39%).
Reconciliation of borrowings
The table below shows the movement in borrowings during the current and prior year:
Year ended 31 December 2025
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
119.0
\u2013
\u2013
(124.8)
(3.2)
9.0
\u2013
5.875% EUR loan notes 2029
289.5
\u2013
\u2013
\u2013
(17.6)
34.6
306.5
UK infrastructure private placement facility (2019)
49.5
\u2013
\u2013
\u2013
( 3.1)
3.3
49.7
UK infrastructure private placement facility (2020)
181.0
\u2013
\u2013
\u2013
(9.2)
14.7
186.5
CAD term loan facility
111.0
\u2013
\u2013
(108.8)
(4.7)
2.5
\u2013
GBP and EUR term loan facility (2024)
251.9
\u2013
(0.2)
\u2013
(13.0)
21.9
260.6
\u00a3125m GBP term loan facility (2024)
124.9
\u2013
\u2013
\u2013
(7.9)
8.6
125.6
\u00a350m GBP term loan facility (2024)
49.9
\u2013
\u2013
\u2013
(3.0)
3.2
5 0.1
Total borrowings
1,176.7
\u2013
(0.2)
(233.6)
(61.7)
97.8
979.0
Non-cash movements in borrowings during 2025 comprises foreign exchange losses of \u00a332.1 million and interest costs of \u00a365.7 million.
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)
373.9
\u2013
\u2013
(325.0)
(10.9)
11.5
49.5
UK infrastructure private placement facility (2020)
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
Non-cash movements in borrowings during 2024 comprises foreign exchange gains of \u00a330.7 million, interest costs of \u00a385.0 million and gains on extinguishment of \u00a31.7 million.
As disclosed above, the Group has a number of cross-currency interest rate swaps and foreign currency forward contracts that fix the sterling value of the principal repayment of certain foreign currency denominated borrowings. Accordingly, the foreign exchange losses (2024: gains) on borrowings disclosed above have been offset by \u00a333.5 million of foreign exchange gains (2024: \u00a332.5 million losses) on cross-currency interest rate swaps and foreign currency forward contracts 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 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 49 for further details on the scenarios considered. (1) The net debt calculation for financial covenants is based on Net debt as defined in note 2.7 but also includes the cash, borrowings and lease liabilities attributable to non-controlling interests, and excludes the impact of hedging. Letters of credit and surety bonds As at 31 December 2025, the Group had issued letters of credit totalling \u00a352.7 million (2024: \u00a356.8 million), of which \u00a314.5 million (2024: \u00a314.5 million) were utilised to cover commodity trading collateral requirements. As at 31 December 2025, the Group had surety bonds with a number of insurers totalling \u00a376.5 million (2024: \u00a389.0 million), of which \u00a320.0 million (2024: \u00a330.0 million) were utilised to cover commodity trading collateral requirements. ", "dimensions": { "concept": "ifrs-full:DisclosureOfBorrowingsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-693": { "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 recognised 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. If the terms of the debt instrument are not significantly modified, the modification is accounted for as an adjustment to the carrying value of the existing liability. The revised cashflows are discounted at the original effective interest rate and the difference between the new present value and the current carrying value of the liability is recognised immediately in the Consolidated income statement. 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 that do not qualify for the own-use exemption (principally wholesale power, gas and carbon emissions allowances) and financial contracts (principally foreign exchange, interest, inflation, financial oil and financial 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 commodity and financial contracts 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 the biomass market means these contracts 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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-691": { "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 recognised 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. If the terms of the debt instrument are not significantly modified, the modification is accounted for as an adjustment to the carrying value of the existing liability. The revised cashflows are discounted at the original effective interest rate and the difference between the new present value and the current carrying value of the liability is recognised immediately in the Consolidated income statement. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-709": { "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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-663": { "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. Reconciliation of borrowings The table below shows the movement in borrowings during the current and prior year:
Year ended 31 December 2025
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
119.0
\u2013
\u2013
(124.8)
(3.2)
9.0
\u2013
5.875% EUR loan notes 2029
289.5
\u2013
\u2013
\u2013
(17.6)
34.6
306.5
UK infrastructure private placement facility (2019)
49.5
\u2013
\u2013
\u2013
( 3.1)
3.3
49.7
UK infrastructure private placement facility (2020)
181.0
\u2013
\u2013
\u2013
(9.2)
14.7
186.5
CAD term loan facility
111.0
\u2013
\u2013
(108.8)
(4.7)
2.5
\u2013
GBP and EUR term loan facility (2024)
251.9
\u2013
(0.2)
\u2013
(13.0)
21.9
260.6
\u00a3125m GBP term loan facility (2024)
124.9
\u2013
\u2013
\u2013
(7.9)
8.6
125.6
\u00a350m GBP term loan facility (2024)
49.9
\u2013
\u2013
\u2013
(3.0)
3.2
5 0.1
Total borrowings
1,176.7
\u2013
(0.2)
(233.6)
(61.7)
97.8
979.0
Non-cash movements in borrowings during 2025 comprises foreign exchange losses of \u00a332.1 million and interest costs of \u00a365.7 million.
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)
373.9
\u2013
\u2013
(325.0)
(10.9)
11.5
49.5
UK infrastructure private placement facility (2020)
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
Non-cash movements in borrowings during 2024 comprises foreign exchange gains of \u00a330.7 million, interest costs of \u00a385.0 million and gains on extinguishment of \u00a31.7 million. ", "dimensions": { "concept": "ifrs-full:DisclosureOfBorrowingCostsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-605": { "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 operating activities, dividends paid as cash flows from financing activities, and dividends received as cash flows from investing activities. The interest repayments on lease liabilities are included within interest paid, and the lease principal repayments are 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 139. 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
2025 2024
\u00a3m \u00a3m
Profit for the period
68.2
525.5
Adjustments for:
Interest payable and similar charges
(1)
75.7
107.5
Interest receivable and similar gains
(17.8)
(20.1)
Tax charge
227.9
121.3
Movement in provision for 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
202.0
Depreciation of right-of-use assets
(1)
2 8 .1
28.6
Amortisation of intangible assets
17.0
14.2
Impairment of non-current assets
14.4
37 7.7
Losses on disposal of non-current assets
11.2
5.4
Other losses
1.7
9.4
Certain remeasurements of derivative contracts
(2)
(89.3)
23.4
Non-cash charge for share-based payments
14.0
15.7
Effect of changes in foreign exchange rates
(21.9)
(13.6)
Operating cash flows before movement in working capital
1,012.9
913.8
Changes in working capital:
Decrease in inventories
25.2
76.5
Decrease in receivables
392.2
136.2
Decrease in payables
(142.7)
(110.2)
Net movement in derivative-related collateral
83.7
(24.5)
Increase in provisions
11.5
10.4
Increase in renewable certificate assets
(247. 8)
(2.1)
Total cash released from working capital
12 2.1
86.3
Pension service charge less contributions paid
0 .1
(0.6)
Cash generated from operations
1,135.1
999.5
(1) Included within the adjustments above are interest charged on lease liabilities of \u00a30.3 million and depreciation charged
on right-of-use assets of \u00a31.7 million in relation to the Group\u2019s salary sacrifice EV scheme. These costs are presented within
staff costs within operating and administrative expenses in the Consolidated income statement.
(2) 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 most significant factors contributing to cash generated from operations are explained in
further detail below.
The \u00a323.4 million inflow due to the adjustment for certain remeasurements for derivative
contracts in the current year (2024: \u00a389.3 million outflow) mainly relates to unrealised fair value
losses (2024: unrealised fair value gains) on open derivative contracts offset by cash payments
on maturing trades.
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 has had a net cash outflow of \u00a324.5 million from derivative-related collateral during
the year, as trades have matured and mark-to-market positions have reduced (2024: \u00a383.7 million
inflow). As at 31 December 2025, the Group held \u00a3nil (2024: \u00a39.8 million) in cash collateral receipts
recognised in payables, and had posted \u00a319.4 million (2024: \u00a34.7 million) of cash collateral
payments recognised in receivables.
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 utilised
\u00a314.5 million (2024: \u00a314.5 million) of letters of credit and \u00a320.0 million (2024: \u00a330.0 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/
2025 2024 (outflow)
\u00a3m \u00a3m \u00a3m
Receivables monetisation
348.4
(1)
400.0
(51.6)
ROC monetisation sales
50.0
\u2013
50.0
Deferred letters of credit
(73.2)
(150.3)
( 7 7.1)
(1) As at 31 December 2025 the Group had sold \u00a3275.6 million (2024: \u00a3386.3 million) of receivables under this facility
(see note 3.5). At 31 December 2025 the Group had recognised an amount payable to the facility provider of \u00a372.8 million
(2024: \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 2026, so as at 31 December 2025 the utilisation of the facility was \u00a3348.4 million
(2024: \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 cash inflow of \u00a376.5 million (2024: \u00a325.2 million) as a result of the decrease in inventories
primarily results from higher generation in December at Drax Power Station and the timing of
shipments.
The overall cash inflow of \u00a3136.2 million (2024: \u00a3392.2 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. During the year the maturity of the facility was extended to March 2030,
from March 2027. The Group now has the option to set the facility limit between \u00a3300.0 million
and \u00a3400.0 million. Upon the Group\u2019s request, the lender agreed to reduce the facility limit to
\u00a3350.0 million from August 2025 in line with the lower receivables balances in the Energy Solutions
business. The limit was \u00a3350.0 million as at 31 December 2025 (31 December 2024: \u00a3400.0 million).
Payables have decreased from the prior year, with a cash outflow of \u00a3110.2 million
(2024: \u00a3142.7 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 2025, the Group had trade payables of
\u00a362.6 million (2024: \u00a338.4 million) related to this. 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 2025 was \u00a373.2 million (2024: \u00a3150.3 million). Of the total
deferred letters of credit, \u00a342.4 million (2024: \u00a392.8 million) were utilised for capital expenditure
and \u00a330.8 million (2024: \u00a357.5 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. 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 2025,
the Group had cash inflows of \u00a350.0 million (2024: \u00a3nil) from using these standard renewable
certificate sales.
Changes in liabilities arising from financing cash flows
A reconciliation of the movements in liabilities arising from financing activities as a result of both
cash and non-cash movements is provided below:
Obligation to
Lease Hedging purchase own
Borrowings liabilities
instruments
(1)
shares Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
At 1 January 2025
1,176.7
116.5
41.0
\u2013
1,334.2
Cash flows from financing
activities
(233.8)
(28 .1)
(4.0)
\u2013
(265.9)
Effect of changes in foreign
exchange rates
32.1
(5.9)
(33.5)
\u2013
( 7. 3)
Other movements
4.0
16 .1
2.3
7. 3
29.7
At 31 December 2025
979.0
98.6
5.8
7.3
1,090.7
Lease Hedging
Borrowings liabilities
instruments
(1)
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
(1) Hedging instruments include both financial assets and financial liabilities used to hedge liabilities arising from financing
activities. At 31 December 2025 hedging instruments include \u00a34.9 million (2024: \u00a3nil) of financial assets and \u00a310.7 million
(2024: \u00a341.0 million) of financial liabilities.
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.
Other movements on obligation to purchase own shares represent an initial liability of \u00a37.2 million
a n d \u00a30.1 million of interest charged in relation to this liability.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCashFlowStatementExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-710": { "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 operating activities, dividends paid as cash flows from financing activities, and dividends received as cash flows from investing activities. The interest repayments on lease liabilities are included within interest paid, and the lease principal repayments are 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-650": { "value": "The \u00a323.4 million inflow due to the adjustment for certain remeasurements for derivative contracts in the current year (2024: \u00a389.3 million outflow) mainly relates to unrealised fair value losses (2024: unrealised fair value gains) on open derivative contracts offset by cash payments on maturing trades. 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 has had a net cash outflow of \u00a324.5 million from derivative-related collateral during the year, as trades have matured and mark-to-market positions have reduced (2024: \u00a383.7 million inflow). As at 31 December 2025, the Group held \u00a3nil (2024: \u00a39.8 million) in cash collateral receipts recognised in payables, and had posted \u00a319.4 million (2024: \u00a34.7 million) of cash collateral payments recognised in receivables. 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 utilised \u00a314.5 million (2024: \u00a314.5 million) of letters of credit and \u00a320.0 million (2024: \u00a330.0 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/
2025 2024 (outflow)
\u00a3m \u00a3m \u00a3m
Receivables monetisation
348.4
(1)
400.0
(51.6)
ROC monetisation sales
50.0
\u2013
50.0
Deferred letters of credit
(73.2)
(150.3)
( 7 7.1)
(1) As at 31 December 2025 the Group had sold \u00a3275.6 million (2024: \u00a3386.3 million) of receivables under this facility (see note 3.5). At 31 December 2025 the Group had recognised an amount payable to the facility provider of \u00a372.8 million (2024: \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 2026, so as at 31 December 2025 the utilisation of the facility was \u00a3348.4 million (2024: \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 cash inflow of \u00a376.5 million (2024: \u00a325.2 million) as a result of the decrease in inventories primarily results from higher generation in December at Drax Power Station and the timing of shipments. The overall cash inflow of \u00a3136.2 million (2024: \u00a3392.2 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. During the year the maturity of the facility was extended to March 2030, from March 2027. The Group now has the option to set the facility limit between \u00a3300.0 million and \u00a3400.0 million. Upon the Group\u2019s request, the lender agreed to reduce the facility limit to \u00a3350.0 million from August 2025 in line with the lower receivables balances in the Energy Solutions business. The limit was \u00a3350.0 million as at 31 December 2025 (31 December 2024: \u00a3400.0 million). Payables have decreased from the prior year, with a cash outflow of \u00a3110.2 million (2024: \u00a3142.7 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 2025, the Group had trade payables of \u00a362.6 million (2024: \u00a338.4 million) related to this. 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 2025 was \u00a373.2 million (2024: \u00a3150.3 million). Of the total deferred letters of credit, \u00a342.4 million (2024: \u00a392.8 million) were utilised for capital expenditure and \u00a330.8 million (2024: \u00a357.5 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. 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 2025, the Group had cash inflows of \u00a350.0 million (2024: \u00a3nil) from using these standard renewable certificate sales. Changes in liabilities arising from financing cash flows A reconciliation of the movements in liabilities arising from financing activities as a result of both cash and non-cash movements is provided below:
Obligation to
Lease Hedging purchase own
Borrowings liabilities
instruments
(1)
shares Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
At 1 January 2025
1,176.7
116.5
41.0
\u2013
1,334.2
Cash flows from financing
activities
(233.8)
(28 .1)
(4.0)
\u2013
(265.9)
Effect of changes in foreign
exchange rates
32.1
(5.9)
(33.5)
\u2013
( 7. 3)
Other movements
4.0
16 .1
2.3
7. 3
29.7
At 31 December 2025
979.0
98.6
5.8
7.3
1,090.7
Lease Hedging
Borrowings liabilities
instruments
(1)
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
(1) Hedging instruments include both financial assets and financial liabilities used to hedge liabilities arising from financing activities. At 31 December 2025 hedging instruments include \u00a34.9 million (2024: \u00a3nil) of financial assets and \u00a310.7 million (2024: \u00a341.0 million) of financial liabilities. 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. Other movements on obligation to purchase own shares represent an initial liability of \u00a37.2 million a n d \u00a30.1 million of interest charged in relation to this liability. 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. 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-664": { "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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForCollateralExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-632": { "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 has had a net cash outflow of \u00a324.5 million from derivative-related collateral during the year, as trades have matured and mark-to-market positions have reduced (2024: \u00a383.7 million inflow). As at 31 December 2025, the Group held \u00a3nil (2024: \u00a39.8 million) in cash collateral receipts recognised in payables, and had posted \u00a319.4 million (2024: \u00a34.7 million) of cash collateral payments recognised in receivables. 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 utilised \u00a314.5 million (2024: \u00a314.5 million) of letters of credit and \u00a320.0 million (2024: \u00a330.0 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-651": { "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
2025 2024
\u00a3m \u00a3m
Issued and fully paid:
432,171,763 ordinary shares of 11
16
\u204429 pence each (2024: 427,770,766)
49.9
49.4
The movement in allotted and fully paid share capital of the Company during the year was as follows:
Year ended 31 December
2025 2024
(number) (number)
At 1 January
427,770,766
424,923,406
Issued in respect of employee share schemes
4,400,997
2 , 8 47,360
At 31 December
432,171,763
427,770,766
The Company has only one class of shares, which are ordinary shares of 11 16 \u204429 pence each, carrying no right to fixed income. 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 2,611,059 shares were issued at a weighted average exercise price of 190.2 pence per share in respect of options vesting on employee share purchase schemes and 1,789,938 shares were issued in respect of share options vesting on share awards with no exercise price. Own shares reserve The own shares reserve represents shares of Drax Group plc purchased under share buyback programmes and held by the Company as Treasury shares, or shares of Drax Group plc held by the EBT for the purpose of satisfying employee share plan awards. The EBT is treated as an extension of the Company and therefore the Group, in accordance with IFRS 10. The cost of the shares held by the EBT or the Company are recognised as a deduction from equity until the shares are issued to employees under share awards, cancelled, reissued or disposed of. The amount deducted from equity includes any incremental directly attributable costs. No gain or loss is recognised in the Consolidated income statement on the purchase, sale, issue or cancellation of the Company\u2019s own equity instruments. Where the Company has entered into a forward contract and has an obligation to purchase a fixed amount of its own shares for a fixed price, the present value of this obligation is recognised as a deduction to equity, within retained earnings, and a corresponding liability is recognised. The unwinding of the discount is included in interest payable and similar charges in the Consolidated income statement. Once the shares have been received under this forward contract, the deduction to equity within retained earnings is transferred to the own shares reserve. As at 31 December 2025, the own shares reserve comprises 91.8 million (2024: 57.8 million) shares at a value of \u00a3534.6 million (2024: \u00a3314.2 million) held in treasury, and nil (2024: nil) shares held by the EBT. During the year, the EBT subscribed for 1.8 million of new shares at nominal value for a total of \u00a30.2 million, which were subsequently issued to employees to satisfy share plan awards during the year. Share buyback programme On 31 July 2025, the Group announced a \u00a3450 million share buyback programme, to commence immediately following the completion of the \u00a3300 million share buyback programme that took place between 2024 and 2025.
Year ended 31 December 2025
Year ended 31 December 2024
Number of shares Total net cost Number of shares Total net cost
(million) \u00a3m (million) \u00a3m
Shares repurchased:
\u00a3300 million buyback programme
29.4
185.7
17.8
115.4
\u00a3450 million buyback programme
4.7
35.4
\u2013
\u2013
Total
34 .1
2 21.1
17. 8
115.4
Price paid per share:
Pence
Pence
Average
644.7
645.6
Range
Between 544.3 and 833.3
Between 618.8 and 673.9
The \u00a3300 million share buyback programme completed on 8 October 2025. The \u00a3450 million programme is ongoing. During 2026, to 24 February 2026, under the \u00a3450 million share buyback programme, 2.5 million shares have been repurchased at a total net cost of \u00a321.9 million. Shares purchased under these share buyback programmes are held in treasury within the own shares reserve awaiting reissue or cancellation and have no voting rights attached to them. The shares purchased by the Group have not been cancelled and so continue to be included in the issued shares in the above table. 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
2025 2024
\u00a3m \u00a3m
At 1 January
443.8
441.2
Issue of share capital
4.7
2.6
At 31 December
448.5
443.8
Other reserves
Capital
redemption Translation Merger Own shares Total other
reserve reserve reserve reserve reserves
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
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)
Own shares utilised to satisfy
share-based payment
arrangements
\u2013
\u2013
\u2013
0.8
0.8
Repurchase of own shares
through share buyback
programmes
\u2013
\u2013
\u2013
(115.4)
(115.4)
At 1 January 2025
1.5
68.9
710.8
(314.2)
467.0
Exchange differences on
translation of foreign
operations
\u2013
(66.8)
\u2013
\u2013
(66.8)
Issue of share capital
\u2013
\u2013
\u2013
(0.2)
(0.2)
Own shares utilised to satisfy
share-based payment
arrangements
\u2013
\u2013
\u2013
0.9
0.9
Repurchase of own shares
through share buyback
programmes
\u2013
\u2013
\u2013
(221.1)
(221.1)
At 31 December 2025
1.5
2 .1
710.8
(534.6)
179.8
The capital redemption and own shares reserves initially arose when the Group completed previous share buyback programmes. The own shares reserve comprises 91.8 million shares at a value of \u00a3534.6 million held in treasury. The 91.8 million (2024: 57.8 million) shares held within the own 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-711": { "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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-652": { "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 2025, the Group has one (2024: two) subsidiary undertaking with NCIs. During the year, the Group acquired the remaining 30% of NCI in Smithers Pellet Limited Partnership increasing the Group\u2019s interest to 100%. See the transactions with NCI section below for further information. 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 2025
As at 31 December 2024
Principal Non-controlling Non-controlling Non-controlling Non-controlling
place of\ue01f interest interests interest interests
business % \u00a3m % \u00a3m
Lavington Pellet Limited Partnership
North America
25%
\u2013
25%
5.9
Smithers Pellet Limited Partnership
North America
0%
\u2013
30%
3.9
Total
\u2013
9.8
Distributions of \u00a31.2 million (2024: \u00a30.4 million) were paid to non-controlling interests during the year. Summarised statement of total comprehensive income
Year ended 31 December 2025
Year ended 31 December 2024
Total Total
comprehensive comprehensive
loss loss
Loss attributable Loss attributable
attributable to the Total to the attributable to the Total to the
non-controlling comprehensive non-controlling non-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
30.7
(18.4)
(4.6)
(18.9)
(4.7)
27.6
(0 .1)
\u2013
(1.8)
(0.6)
Smithers Pellet Limited Partnership
(1)
3.6
(0.7)
(0.2)
(0.7)
(0.3)
12.3
(3.6)
(1.1)
(4.5)
(1.3)
Total
34.3
(19.1)
(4.8)
(19.6)
(5.0)
39.9
(3.7)
(1.1)
(6.3)
(1.9)
(1) The 2025 Summarised statement of total comprehensive income for Smithers Pellet Limited Partnership is for the period up to acquisition of the remaining NCI on 30 April 2025. Summarised balance sheet
As at 31 December 2025
As at 31 December 2024
Current Non-current Current Non-current
Non-current assets Current assets liabilities liabilities Net assets Non-current assets Current assets liabilities liabilities Net assets
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Lavington Pellet Limited Partnership
\u2013
3.4
(0.5)
(2.9)
\u2013
22.0
7.6
(2.8)
( 3 .1)
23.7
Smithers Pellet Limited Partnership
13.9
3.3
(4.3)
\u2013
12.9
Total
\u2013
3.4
(0.5)
(2.9)
\u2013
35.9
10.9
( 7.1)
( 3 .1)
36.6
Summarised cash flows
Year ended 31 December 2025
Year ended 31 December 2024
Net cash inflow/ Net cash
(outflow) Net cash outflow Net cash inflow Net cash Net cash
from from outflow from from outflow from inflow from
operating investing financing Net cash operating investing financing Net cash
activities activities activities outflow activities activities activities inflow
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Lavington Pellet Limited Partnership
5.1
(0.5)
(4.9)
(0.3)
2.2
(0.7)
0.3
1.8
Smithers Pellet Limited Partnership
(1)
(0.2)
\u2013
\u2013
(0.2)
1.4
(1.1)
\u2013
0.3
Total
4.9
(0.5)
(4.9)
(0.5)
3.6
(1.8)
0.3
2 .1
(1) The 2025 Summarised cash flow for Smithers Pellet Limited Partnership is for the period up to acquisition of the remaining NCI on 30 April 2025. Transactions with NCI When the Group acquired Pinnacle during 2021, the NCI in Smithers Pellet Limited Partnership was 30%. In April 2025, the Group acquired the remaining 30% of NCI in Smithers Pellet Limited Partnership, resulting in the Group now owning 100% of Smithers Pellet Limited Partnership. This resulted in a \u00a32.9 million credit recognised in equity, within retained profits, for the difference between the adjustment to NCI and the fair value of the consideration paid. The following table summarises the impact of changes in the Group\u2019s ownership of Smithers Pellet Limited Partnership.
Year ended
31 December 2025
Carrying amount of non-controlling interest acquired
3.6
Consideration paid to non-controlling interest
(0.7)
Increase in equity attributable to owners of the parent company
2.9
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:
Balances as at
Transactions in the year ended 31 December 2025
31 December 2025
(1)
Drax Revenue Other income Purchases Payable Receivable
Ownership \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Houston Pellet
Limited Partnership
HPLP
30%
2.0
0.6
18.4
1.2
0.7
Balances as at
Transactions in the year ended 31 December 2024
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
(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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-606": { "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 2025, the Group has one (2024: two) subsidiary undertaking with NCIs. During the year, the Group acquired the remaining 30% of NCI in Smithers Pellet Limited Partnership increasing the Group\u2019s interest to 100%. See the transactions with NCI section below for further information. 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 2025
As at 31 December 2024
Principal Non-controlling Non-controlling Non-controlling Non-controlling
place of\ue01f interest interests interest interests
business % \u00a3m % \u00a3m
Lavington Pellet Limited Partnership
North America
25%
\u2013
25%
5.9
Smithers Pellet Limited Partnership
North America
0%
\u2013
30%
3.9
Total
\u2013
9.8
Distributions of \u00a31.2 million (2024: \u00a30.4 million) were paid to non-controlling interests during the year.
Summarised statement of total comprehensive income
Year ended 31 December 2025
Year ended 31 December 2024
Total Total
comprehensive comprehensive
loss loss
Loss attributable Loss attributable
attributable to the Total to the attributable to the Total to the
non-controlling comprehensive non-controlling non-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
30.7
(18.4)
(4.6)
(18.9)
(4.7)
27.6
(0 .1)
\u2013
(1.8)
(0.6)
Smithers Pellet Limited Partnership
(1)
3.6
(0.7)
(0.2)
(0.7)
(0.3)
12.3
(3.6)
(1.1)
(4.5)
(1.3)
Total
34.3
(19.1)
(4.8)
(19.6)
(5.0)
39.9
(3.7)
(1.1)
(6.3)
(1.9)
(1) The 2025 Summarised statement of total comprehensive income for Smithers Pellet Limited Partnership is for the period up to acquisition of the remaining NCI on 30 April 2025.
Summarised balance sheet
As at 31 December 2025
As at 31 December 2024
Current Non-current Current Non-current
Non-current assets Current assets liabilities liabilities Net assets Non-current assets Current assets liabilities liabilities Net assets
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Lavington Pellet Limited Partnership
\u2013
3.4
(0.5)
(2.9)
\u2013
22.0
7.6
(2.8)
( 3 .1)
23.7
Smithers Pellet Limited Partnership
13.9
3.3
(4.3)
\u2013
12.9
Total
\u2013
3.4
(0.5)
(2.9)
\u2013
35.9
10.9
( 7.1)
( 3 .1)
36.6
Summarised cash flows
Year ended 31 December 2025
Year ended 31 December 2024
Net cash inflow/ Net cash
(outflow) Net cash outflow Net cash inflow Net cash Net cash
from from outflow from from outflow from inflow from
operating investing financing Net cash operating investing financing Net cash
activities activities activities outflow activities activities activities inflow
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Lavington Pellet Limited Partnership
5.1
(0.5)
(4.9)
(0.3)
2.2
(0.7)
0.3
1.8
Smithers Pellet Limited Partnership
(1)
(0.2)
\u2013
\u2013
(0.2)
1.4
(1.1)
\u2013
0.3
Total
4.9
(0.5)
(4.9)
(0.5)
3.6
(1.8)
0.3
2 .1
(1) The 2025 Summarised cash flow for Smithers Pellet Limited Partnership is for the period up to acquisition of the remaining NCI on 30 April 2025.
Transactions with NCI
When the Group acquired Pinnacle during 2021, the NCI in Smithers Pellet Limited Partnership was 30%. In April 2025, the Group acquired the remaining 30% of NCI in Smithers Pellet Limited
Partnership, resulting in the Group now owning 100% of Smithers Pellet Limited Partnership. This resulted in a \u00a32.9 million credit recognised in equity, within retained profits, for the difference between
the adjustment to NCI and the fair value of the consideration paid. The following table summarises the impact of changes in the Group\u2019s ownership of Smithers Pellet Limited Partnership.
Year ended
31 December 2025
Carrying amount of non-controlling interest acquired
3.6
Consideration paid to non-controlling interest
(0.7)
Increase in equity attributable to owners of the parent company
2.9
", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncontrollingInterestsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-712": { "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 2025, the Group has one (2024: two) subsidiary undertaking with NCIs. During the year, the Group acquired the remaining 30% of NCI in Smithers Pellet Limited Partnership increasing the Group\u2019s interest to 100%. See the transactions with NCI section below for further information.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTransactionsWithNoncontrollingInterestsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-665": { "value": "5.1 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). 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. Intangible assets with an indefinite useful life are assessed for impairment annually at each reporting date, regardless of the presence of impairment indicators. The Group\u2019s policy is to recognise any 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. Amortisation of intangible assets is presented through the amortisation line of the Consolidated income statement.
Method of Average UEL
amortisation (years)
At 31 December 2025
Customer-related assets:
BMM
Straight line
7
Computer software and licences:
Internally generated
Straight line
3
Acquired separately
Straight line
5
Carrying amounts are assessed for indicators of impairment at each reporting date. The customer- related asset is attributable to the Drax Energy Solutions CGU following the acquisition of BMM. During the year the Pinnacle customer-related asset and goodwill were impaired. During the prior year the Opus Energy CGU customer-related asset was disposed of and the brand asset impaired to \u00a3nil (see below for further details) .
Software and Software and
Customer-related licences \u2013 internally licences \u2013 acquired Other
assets Brand generated separately intangibles Goodwill Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cost and carrying amount:
At 1 January 2024
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
\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 (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 1 January 2025
47.2
11.3
149.0
20.0
2.1
429.6
659.2
Additions at cost
\u2013
\u2013
12.3
0.6
\u2013
\u2013
12.9
Impairment
\u2013
\u2013
\u2013
\u2013
\u2013
(8.5)
(8.5)
Disposals
\u2013
(11.3)
(34.2)
(1.3)
\u2013
(14.5)
(61.3)
Transfers between categories
\u2013
\u2013
0.1
(0.1)
\u2013
\u2013
\u2013
Transfers from property, plant and equipment (note 3.1)
\u2013
\u2013
0.3
\u2013
\u2013
\u2013
0.3
Effect of changes in foreign exchange rates
(1.1)
\u2013
\u2013
(0.1)
\u2013
(10.4)
(11.6)
At 31 December 2025
46.1
\u2013
127.5
19.1
2 .1
396.2
591.0
Accumulated amortisation and impairment:
At 1 January 2024
219.0
10.9
107. 8
12.4
1.8
14.5
366.4
Amortisation 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 1 January 2025
15.7
11.3
119.2
13.5
1.8
14.5
176.0
Amortisation charge for the year
4.6
\u2013
8.9
0.6
0.1
\u2013
14.2
Disposals
\u2013
(11.3)
(34.2)
(1.3)
\u2013
(14.5)
(61.3)
Impairment
22.5
\u2013
1.1
\u2013
0 .1
\u2013
23.7
Effect of changes in foreign exchange rates
(0.4)
\u2013
\u2013
(0 .1)
\u2013
\u2013
(0.5)
At 31 December 2025
42.4
\u2013
95.0
12.7
2.0
\u2013
152 .1
Net book value:
At 31 December 2024
31.5
\u2013
29.8
6.5
0.3
415 .1
483.2
At 31 December 2025
3.7
\u2013
32.5
6.4
0.1
396.2
438.9
The Group has incurred research and development expenditure of \u00a323.2 million (2024: \u00a326.2 million), which is included within operating and administrative expenses in the Consolidated income statement. Customer-related assets Customer-related assets reflect the value of customer contracts acquired as part of business combinations, or purchased customer contracts. The assets included customer contracts from the acquisitions of Opus Energy, Pinnacle and BMM, and customer contracts acquired from Pacific BioEnergy. The Opus Energy customer-related asset was disposed of in 2024 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 and Pacific BioEnergy customer-related assets were fully impaired during the year (see note 2.4 for further details). Opus Energy brand The Opus Energy brand was acquired as part of the Opus Energy acquisition in February 2017. During 2024 the Opus Energy brand was fully impaired, and the asset has been disposed of during the year following the sale of the remaining meter points in the year. See note 2.7 for further details. 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 1\u201323 years. As at 31 December 2025, computer software assets under the course of construction amounted to \u00a321.1 million (2024: \u00a312.5 million). A \u00a32.4 million impairment in respect of software specific to the Opus Energy business was recognised in the prior year as it was 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. Goodwill The table below shows the carrying amount of goodwill by CGU:
Drax Energy Pellet Northern
Solutions Lanark Galloway Cruachan Operations Biomass Pellets Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Goodwill
At 1 January 2025
161.2
11.3
4 0 .1
26.9
175.6
\u2013
\u2013
415.1
Reallocations
\u2013
\u2013
\u2013
\u2013
(165.1)
156.7
8.4
\u2013
Impairment (note 2.4)
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(8.5)
(8.5)
Effect of changes in
foreign exchange rates
\u2013
\u2013
\u2013
\u2013
(10.5)
\u2013
0 .1
(10.4)
At 31 December 2025
161.2
11.3
40 .1
26.9
\u2013
156.7
\u2013
396.2
Goodwill arising from the 2021 Pinnacle acquisition was previously allocated to the Pellet Operations CGU. Following the change in CGU structure (see note 2.4 for further details), this goodwill has been reallocated between Northern Pellets and Southern Pellets using a relative fair value approach, in accordance with IAS 36. This resulted in C$15.7 million (\u00a38.4 million based on exchange rates at the time of reallocation) being allocated to Northern Pellets and US$210.8 million (\u00a3156.7 million based on exchange rates at the time of reallocation) being allocated to Southern Pellets.", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-694": { "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). 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. Intangible assets with an indefinite useful life are assessed for impairment annually at each reporting date, regardless of the presence of impairment indicators. The Group\u2019s policy is to recognise any 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. Amortisation of intangible assets is presented through the amortisation line of the Consolidated income statement. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsOtherThanGoodwillExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-713": { "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). 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. Intangible assets with an indefinite useful life are assessed for impairment annually at each reporting date, regardless of the presence of impairment indicators. The Group\u2019s policy is to recognise any 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. Amortisation of intangible assets is presented through the amortisation line of the Consolidated income statement. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-731": { "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). 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. Intangible assets with an indefinite useful life are assessed for impairment annually at each reporting date, regardless of the presence of impairment indicators. The Group\u2019s policy is to recognise any impairment charge through accumulated amortisation and impairment. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-680": { "value": "The Group has incurred research and development expenditure of \u00a323.2 million (2024: \u00a326.2 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-688": { "value": "5.2 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 restructuring provisions in respect of the coal closure at Drax Power Station, the Opus Energy restructuring, and the Future Focus transformation and restructuring (see note 2.7). The Group has also recognised onerous contract provisions as a result of the Opus Energy restructuring, and fibre purchase contracts for the Longview site that are no longer expected to be utilised. 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 occur. 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 at the amount of the unavoidable costs of meeting the obligations of the contract that 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. Other provisions relate to a provision in respect of dilapidation costs for rail cars.
Onerous
Decommissioning Restructuring contract Other
provisions provisions provisions provisions Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Carrying amount:
At 1 January 2025
72.0
10.8
13.1
\u2013
95.9
Movement in provision charged to
PPE (note 3.1)
(9.6)
\u2013
\u2013
\u2013
(9.6)
Movement in provision charged to
ROU (note 3.2)
(0.8)
\u2013
\u2013
4 .1
3.3
Transfer between provision
categories
(0.5)
\u2013
\u2013
0.5
\u2013
Provisions utilised
(2.4)
(4.6)
(9.9)
(0 .1)
(17.0)
Charged/(credited) to profit or loss:
Additional provision recognised
\u2013
5.0
22.0
\u2013
27.0
Provisions released
\u2013
(0.1)
\u2013
\u2013
(0 .1)
Unwinding of discount (note 2.5)
2.9
\u2013
\u2013
\u2013
2.9
Effect of changes in foreign
exchange rates
0.2
\u2013
\u2013
\u2013
0.2
At 31 December 2025
61.8
11.1
25.2
4.5
102.6
Current
2.9
7.3
7. 0
0.4
17. 6
Non-current
58.9
3.8
18.2
4.1
85.0
Decommissioning provisions Decommissioning provisions are made in respect of Drax Power Station (\u00a349.4 million), the OCGTs (\u00a3 7.3 million), and certain pellet plants (\u00a35.1 million). Decommissioning work relating to certain elements of the coal operations at Drax Power Station began in 2024 and is expected to be completed by the end of 2026. All other decommissioning work relating to the Drax Power Station site is assumed to take place 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 UELs of each site, which are estimated to be between 2033 and 2044. A legal obligation exists to decommission and demolish the OCGT sites at the end of station lives, which are assumed to be 2050. Of the \u00a39.6 million movement in the decommissioning provision charged to PPE, \u00a32.3 million relates to additions offset by an \u00a311.9 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 decommissioning provision took place in December 2023. For the majority of the pellet plant decommissioning provisions, the most recent valuations took place in December 2023. One plant received an updated valuation in December 2025. The exercise to assess the decommissioning provision relating to the three OCGT sites was performed in July 2024. There have been no significant changes to the scope, expected timing or prices since the most recent valuations that would indicate an updated valuation should be performed earlier than the planned triennial basis. 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 discount rates used for the Group\u2019s decommissioning provisions range from 3.68%\u20136.00% (2024: 3.33%\u20135.78%). 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 average cost of decommissioning each of the three OCGT sites is estimated to be \u00a35.6 million at current prices with a range of between \u00a35.5 million and \u00a35.8 million. For Drax Power Station decommissioning provision 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 \u00a335.3 million to \u00a363.1 million. An increase of 100 basis points in the inflation and discount rates used in the calculation of the Drax Power Station decommissioning provision would result in an increase of \u00a39.3 million (2024: \u00a38.5 million) and a decrease of \u00a37.6 million (2024: \u00a36.4 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 at 31 December 2025 includes coal closure provision costs for engineering works that are required to make the coal units and related assets safe following the cessation of operations. The formal closure of the coal units commenced at the end of the winter contingency service in March 2023. The restructuring provision also includes redundancy costs in relation to the Opus Energy restructuring. The sale of the non-core SME customer meter points resulted in a reduction in the required headcount to reflect the fact that Energy Solutions no longer has an SME customer base and its focus on core industrial and commercial (I&C) customer and renewables services. The Group has commenced a transformation and restructuring programme (\u201cFuture Focus\u201d) described in note 2.7. A provision has been made for expected redundancy costs where consultations are already in progress and numbers of headcount reduction are known at the reporting date. Of the \u00a311.1 million balance at 31 December 2025, \u00a36.1 million relates to engineering works associated with the coal closure, of which \u00a32.3 million is expected to be utilised in 2026, with the remaining amounts expected to be utilised in the period from 2027 to 2029. A further \u00a35.0 million relates to Future Focus employee severance costs, all of which are expected to be utilised in 2026. Onerous contract provisions As a result of the Opus Energy restructuring in the prior year, an onerous contract provision was recognised. Of the \u00a325.2 million onerous contract provision at 31 December 2025, \u00a33.2 million relates to Opus Energy with \u00a32.2 million expected to be utilised in 2026 with the remaining amounts expected to be utilised in the period from 2027 to 2029. Due to the decision to pause the Longview pellet plant development (see note 2.4 for further details), the Group has certain fibre purchase contracts where the fibre can no longer be utilised. An onerous contract provision of \u00a322.0 million has been recognised in relation to these contracts, with \u00a34.8 million expected to be utilised in 2026 and the remaining amounts expected to be utilised in the period from 2027 to 2029. 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 2025, the Group had the following contingent liabilities. Environmental The Group\u2019s subsidiaries operate facilities in the United States that are subject to federal and state environmental regulation. In this context, certain of the Group\u2019s subsidiaries have been named as defendants in two U.S. civil proceedings in Federal Court in the Southern District of Mississippi. One complaint is filed as a putative class action, which alleges property damage, personal injury, and other harms alleged to arise from environmental emissions or other aspects of local site operations. The other complaint is a mass action with similar health and property harm allegations but additionally asserting Clean Air Act violations. The Group intends to defend the complaints vigorously; however, the ultimate outcome and potential financial or operational impact cannot be predicted with certainty. The Group continues to assess these matters and will update disclosures as required. At this stage management cannot estimate the potential economic impact of the complaints with any reliable precision and therefore these have been treated as contingent liabilities. At this stage, they are not considered to be material to the Consolidated financial statements. Litigation of this nature in the United States can be complex, protracted, and costly to defend. With litigation of this nature in the United States, there is risk of complaints expanding to more sites where the Group\u2019s subsidiaries operate facilities. Third Party Intermediary commissions Recent judicial developments relating to commission disclosure obligations of Third Party Intermediaries (\u201cTPIs\u201d), particularly in the non domestic energy sector, have increased the potential for claims by commercial customers alleging hidden or undisclosed broker commissions. A series of recent judgments have provided additional guidance on how such claims will be considered by the English courts. We are in the process of reassessing the potential exposure from existing and threatened commercial customer claims in light of such legal developments. At this stage, it is not considered to be material to the Consolidated financial statements. ", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherProvisionsContingentLiabilitiesAndContingentAssetsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-607": { "value": "5.2 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 restructuring provisions in respect of the coal closure at Drax Power Station, the Opus Energy restructuring, and the Future Focus transformation and restructuring (see note 2.7). The Group has also recognised onerous contract provisions as a result of the Opus Energy restructuring, and fibre purchase contracts for the Longview site that are no longer expected to be utilised. 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 occur. 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 at the amount of the unavoidable costs of meeting the obligations of the contract that 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. Other provisions relate to a provision in respect of dilapidation costs for rail cars.
Onerous
Decommissioning Restructuring contract Other
provisions provisions provisions provisions Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Carrying amount:
At 1 January 2025
72.0
10.8
13.1
\u2013
95.9
Movement in provision charged to
PPE (note 3.1)
(9.6)
\u2013
\u2013
\u2013
(9.6)
Movement in provision charged to
ROU (note 3.2)
(0.8)
\u2013
\u2013
4 .1
3.3
Transfer between provision
categories
(0.5)
\u2013
\u2013
0.5
\u2013
Provisions utilised
(2.4)
(4.6)
(9.9)
(0 .1)
(17.0)
Charged/(credited) to profit or loss:
Additional provision recognised
\u2013
5.0
22.0
\u2013
27.0
Provisions released
\u2013
(0.1)
\u2013
\u2013
(0 .1)
Unwinding of discount (note 2.5)
2.9
\u2013
\u2013
\u2013
2.9
Effect of changes in foreign
exchange rates
0.2
\u2013
\u2013
\u2013
0.2
At 31 December 2025
61.8
11.1
25.2
4.5
102.6
Current
2.9
7.3
7. 0
0.4
17. 6
Non-current
58.9
3.8
18.2
4.1
85.0
Decommissioning provisions
Decommissioning provisions are made in respect of Drax Power Station (\u00a349.4 million), the OCGTs
(\u00a3 7.3 million), and certain pellet plants (\u00a35.1 million).
Decommissioning work relating to certain elements of the coal operations at Drax Power Station
began in 2024 and is expected to be completed by the end of 2026. All other decommissioning
work relating to the Drax Power Station site is assumed to take place 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 UELs of each site, which are estimated to be between 2033 and 2044.
A legal obligation exists to decommission and demolish the OCGT sites at the end of station lives,
which are assumed to be 2050.
Of the \u00a39.6 million movement in the decommissioning provision charged to PPE, \u00a32.3 million relates
to additions offset by an \u00a311.9 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 decommissioning provision took place in December 2023. For the majority
of the pellet plant decommissioning provisions, the most recent valuations took place in December
2023. One plant received an updated valuation in December 2025. The exercise to assess the
decommissioning provision relating to the three OCGT sites was performed in July 2024. There
have been no significant changes to the scope, expected timing or prices since the most recent
valuations that would indicate an updated valuation should be performed earlier than the planned
triennial basis.
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 discount rates used for the Group\u2019s decommissioning provisions range from 3.68%\u20136.00%
(2024: 3.33%\u20135.78%).
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 average cost of decommissioning each of the three OCGT sites is estimated
to be \u00a35.6 million at current prices with a range of between \u00a35.5 million and \u00a35.8 million.
For Drax Power Station decommissioning provision 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 \u00a335.3 million to \u00a363.1 million. An increase of 100 basis points in the inflation and
discount rates used in the calculation of the Drax Power Station decommissioning provision
would result in an increase of \u00a39.3 million (2024: \u00a38.5 million) and a decrease of \u00a37.6 million
(2024: \u00a36.4 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 at 31 December 2025 includes coal closure provision costs for
engineering works that are required to make the coal units and related assets safe following the
cessation of operations. The formal closure of the coal units commenced at the end of the winter
contingency service in March 2023.
The restructuring provision also includes redundancy costs in relation to the Opus Energy
restructuring. The sale of the non-core SME customer meter points resulted in a reduction in the
required headcount to reflect the fact that Energy Solutions no longer has an SME customer base
and its focus on core industrial and commercial (I&C) customer and renewables services.
The Group has commenced a transformation and restructuring programme (\u201cFuture Focus\u201d)
described in note 2.7. A provision has been made for expected redundancy costs where
consultations are already in progress and numbers of headcount reduction are known at the
reporting date.
Of the \u00a311.1 million balance at 31 December 2025, \u00a36.1 million relates to engineering works
associated with the coal closure, of which \u00a32.3 million is expected to be utilised in 2026, with the
remaining amounts expected to be utilised in the period from 2027 to 2029. A further \u00a35.0 million
relates to Future Focus employee severance costs, all of which are expected to be utilised in 2026.
Onerous contract provisions
As a result of the Opus Energy restructuring in the prior year, an onerous contract provision was
recognised. Of the \u00a325.2 million onerous contract provision at 31 December 2025, \u00a33.2 million
relates to Opus Energy with \u00a32.2 million expected to be utilised in 2026 with the remaining
amounts expected to be utilised in the period from 2027 to 2029.
Due to the decision to pause the Longview pellet plant development (see note 2.4 for further
details), the Group has certain fibre purchase contracts where the fibre can no longer be utilised.
An onerous contract provision of \u00a322.0 million has been recognised in relation to these contracts,
with \u00a34.8 million expected to be utilised in 2026 and the remaining amounts expected to be utilised
in the period from 2027 to 2029.
", "dimensions": { "concept": "ifrs-full:DisclosureOfProvisionsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-725": { "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 occur. 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 at the amount of the unavoidable costs of meeting the obligations of the contract that 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. Other provisions relate to a provision in respect of dilapidation costs for rail cars. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDecommissioningRestorationAndRehabilitationProvisionsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-714": { "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
occur. 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 at the amount of the unavoidable costs of meeting
the obligations of the contract that 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.
Other provisions relate to a provision in respect of dilapidation costs for rail cars.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-732": { "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 occur. 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-653": { "value": "6.1 Employee costs 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 87. Staff costs (including Executive Directors)
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Wages and salaries
249.9
262.0
Social security costs
29.2
26.5
Defined benefit pension service cost (note 6.3)
1.6
2 .1
Defined contribution pension cost (note 6.3)
24.3
24 .1
Share-based payments (note 6.2)
15.7
14 .1
Termination benefits
10.4
8.7
Total staff costs
331.1
337.5
Staff costs capitalised
(14.2)
(14.7)
Staff costs included in operating and administrative expenses
(note 2.3)
316.9
322.8
Average monthly number of people employed (including Executive Directors)
Year ended 31 December
2025 2024
(number) (number)
Operations (Pellet Production)
818
815
Operations (Biomass Generation)
469
526
Operations (Flexible Generation)
175
163
Energy Solutions
449
802
Central corporate and commercial functions
1,217
1,151
Total average monthly number of people employed
3 ,1 2 8
3,457
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 105\u2013111.
Year ended 31 December
2025 2024
\u00a3000 \u00a3000
Short-term employee benefits
7,6 0 4
7,274
Termination benefits
2,591
388
Share-based payments
5,203
4 ,107
Post-employment benefits
406
411
Total remuneration
15,804
12,18 0
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 15 (2024: 16) 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:DisclosureOfInformationAboutEmployeesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-608": { "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. Where share options have an exercise price, the proceeds received are credited to equity. Employer\u2019s social security obligations payable by the Group in respect of share-based payment awards are charged to the Consolidated income statement in line with IAS 19. Costs recognised in the Consolidated income statement in relation to share-based payments during the year were as follows:
Year ended 31 December
2025 2024
\u00a3m \u00a3m
LTIP
11.0
7.1
DSP
0.8
0.6
One Drax Awards
1.6
1.6
ESPP
0.1
0.2
SAYE
2.2
4.6
Total share-based payment expense included within staff costs
(note 6.1)
15.7
14 .1
Movements in the number of share options outstanding at the reporting date for each scheme is shown below. Discretionary awards are issued at nil cost and so have no exercise price.
Discretionary awards
ESPP
SAYE
Three-year Five-year
weighted weighted
Weighted average average average
LTIP DSP One Drax Awards exercise price ESPP exercise price SAYE three-year exercise price SAYE five-year
(number) (number) (number) (pence) (number) (pence) (number) (pence) (number)
At 1 January 2024
5,385,172
285,774
259,788
469
64,497
470
2,886,902
173
2,585,809
Granted
3,065,741
106,341
360,448
468
126,303
378
3,334,272
378
470,417
Dividend shares granted
171,367
10,460
9,053
\u2013
\u2013
\u2013
Forfeited
(228,490)
\u2013
(31,443)
469
(3,801)
455
(111,452)
461
(4,521)
Exercised
(1,846,285)
(109,827)
(260,439)
398
(126,938)
327
(634,525)
290
(33,319)
Cancelled
\u2013
\u2013
\u2013
\u2013
496
(1, 570,14 4)
492
(205,988)
Expired
\u2013
\u2013
\u2013
\u2013
331
(4,572)
298
(1,008)
At 1 January 2025
6,547,505
292,748
337, 4 07
544
60,061
405
3,900,481
182
2,811,390
Granted
2,922,838
90,073
295,702
527
91,918
453
708,527
453
207,49 8
Dividend shares granted
137,719
7,70 6
15,053
\u2013
\u2013
\u2013
Forfeited
(1, 037,7 3 4)
\u2013
(16,096)
544
(1,842)
413
(232,975)
367
(45,810)
Exercised
(1,505,654)
(84,808)
(348,446)
516
(112,841)
523
(2 9 6,161)
129
(2,202,057)
Cancelled
\u2013
\u2013
\u2013
\u2013
404
(238,679)
430
(20,628)
Expired
\u2013
\u2013
\u2013
\u2013
563
(4,345)
\u2013
At 31 December 2025
7, 0 6 4 ,674
305,719
283,620
548
37,29 6
404
3,836,848
395
750,393
Key information about each active scheme for options granted and exercised in the current and prior year is presented below.
Year ended 31 December 2025
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)
599
586
570
612
665
665
Number of options exercisable at reporting date
102,942
7,6 48
\u2013
37, 296
75,233
2,058
Weighted average exercise price of options exercisable at reporting date (pence)
\u2013
\u2013
\u2013
548
423
420
Between Between
Range of exercise price of options outstanding at reporting date (pence)
\u2013
\u2013
\u2013
548
378 and 563 127 and 563
Weighted average remaining contractual life (months)
50
15
3
\u2013
24
42
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
Between Between
Range of exercise price of options outstanding at reporting date (pence)
\u2013
\u2013
\u2013
544
378 and 563 127 and 563
Weighted average remaining contractual life (months)
51
22
2
2
32
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 2025
Scheme
LTIP
LTIP
DSP
One Drax Awards
ESPP
ESPP
SAYE three-year
SAYE five-year
20 March 2 September 20 March 20 March 1 March 1 September 10 April 10 April
Grant date 2025 2025 2025 2025 2025 2025 2025 2025
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)
581
627
581
581
610
645
546
546
Exercise price (pence)
\u2013
\u2013
\u2013
\u2013
519
548
453
453
Dividend yield
\u2013
\u2013
\u2013
\u2013
5.11%
3.60%
6.42%
6.77%
Vesting period of options granted
3 years
3 years
3 years
1 year
6 months
4 months
3 years
5 years
Expected volatility
35.75%
32.61%
35.75%
28.51%
21.52%
24.24%
36.24%
39.10%
Annual risk-free interest rate
4.18%
3.99%
4 .18%
4 .13%
4.38%
4.01%
3.96%
4.03%
Weighted average fair value of options granted at measurement date (pence)
449
484
581
581
112
123
128
132
Year ended 31 December 2024
Scheme
LTIP
LTIP
DSP
One Drax Awards
ESPP
ESPP
SAYE three-year
SAYE 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
37.4 8%
38.20%
37.4 8%
35.35%
42.23%
3 7.39%
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
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 starting on page 87. ", "dimensions": { "concept": "ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "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.
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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-734": { "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. Where share options have an exercise price, the proceeds received are credited to equity. Employer\u2019s social security obligations payable by the Group in respect of share-based payment awards are charged to the Consolidated income statement in line with IAS 19. Costs recognised in the Consolidated income statement in relation to share-based payments during the year were as follows: ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSharebasedPaymentTransactionsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-715": { "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. Where share options have an exercise price, the proceeds received are credited to equity. Employer\u2019s social security obligations payable by the Group in respect of share-based payment awards are charged to the Consolidated income statement in line with IAS 19. Costs recognised in the Consolidated income statement in relation to share-based payments during the year were as follows: 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 from the Group earned by employees for services rendered during 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-633": { "value": "
Discretionary awards
ESPP
SAYE
Three-year Five-year
weighted weighted
Weighted average average average
LTIP DSP One Drax Awards exercise price ESPP exercise price SAYE three-year exercise price SAYE five-year
(number) (number) (number) (pence) (number) (pence) (number) (pence) (number)
At 1 January 2024
5,385,172
285,774
259,788
469
64,497
470
2,886,902
173
2,585,809
Granted
3,065,741
106,341
360,448
468
126,303
378
3,334,272
378
470,417
Dividend shares granted
171,367
10,460
9,053
\u2013
\u2013
\u2013
Forfeited
(228,490)
\u2013
(31,443)
469
(3,801)
455
(111,452)
461
(4,521)
Exercised
(1,846,285)
(109,827)
(260,439)
398
(126,938)
327
(634,525)
290
(33,319)
Cancelled
\u2013
\u2013
\u2013
\u2013
496
(1, 570,14 4)
492
(205,988)
Expired
\u2013
\u2013
\u2013
\u2013
331
(4,572)
298
(1,008)
At 1 January 2025
6,547,505
292,748
337, 4 07
544
60,061
405
3,900,481
182
2,811,390
Granted
2,922,838
90,073
295,702
527
91,918
453
708,527
453
207,49 8
Dividend shares granted
137,719
7,70 6
15,053
\u2013
\u2013
\u2013
Forfeited
(1, 037,7 3 4)
\u2013
(16,096)
544
(1,842)
413
(232,975)
367
(45,810)
Exercised
(1,505,654)
(84,808)
(348,446)
516
(112,841)
523
(2 9 6,161)
129
(2,202,057)
Cancelled
\u2013
\u2013
\u2013
\u2013
404
(238,679)
430
(20,628)
Expired
\u2013
\u2013
\u2013
\u2013
563
(4,345)
\u2013
At 31 December 2025
7, 0 6 4 ,674
305,719
283,620
548
37,29 6
404
3,836,848
395
750,393
Key information about each active scheme for options granted and exercised in the current and prior year is presented below.
Year ended 31 December 2025
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)
599
586
570
612
665
665
Number of options exercisable at reporting date
102,942
7,6 48
\u2013
37, 296
75,233
2,058
Weighted average exercise price of options exercisable at reporting date (pence)
\u2013
\u2013
\u2013
548
423
420
Between Between
Range of exercise price of options outstanding at reporting date (pence)
\u2013
\u2013
\u2013
548
378 and 563 127 and 563
Weighted average remaining contractual life (months)
50
15
3
\u2013
24
42
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
Between Between
Range of exercise price of options outstanding at reporting date (pence)
\u2013
\u2013
\u2013
544
378 and 563 127 and 563
Weighted average remaining contractual life (months)
51
22
2
2
32
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. ", "dimensions": { "concept": "ifrs-full:DisclosureOfNumberAndWeightedAverageExercisePricesOfShareOptionsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-634": { "value": "The retirement benefit schemes operated by the Group are detailed in the table below:
Name of scheme
Type of benefit
Status
Country
Closed to new
Defined benefit members on
Drax 2019
Scheme
final salary
transfer in 2019
UK
My Drax Retirement Savings Open to new
Section of the Aon MasterTrust
Defined contribution
members
UK
Open to new
Drax Biomass Inc. 401(K) Plan
Defined contribution
members
US
Pinnacle Registered Retirement Open to new
Savings Plan
Defined contribution
members
Canada
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. 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 2025 have been prepared in accordance with third-party actuarial advice received and are consistent with those applied in the prior period. Defined benefit scheme The Group currently operates one defined benefit scheme. The net pension surplus is as follows:
As at 31 December
2025 2024
\u00a3m \u00a3m
Total net surplus recognised in the Consolidated balance sheet
23.8
24.7
At 31 December 2025, 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 Scheme\u2019s liabilities shown below reflect management\u2019s understanding of the benefits due at the reporting date 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 2025. The actuarial review at 31 December 2025 is based on the same underlying 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 2025, taking into account experience over the period since 31 March 2025, 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
2025 2024
% p.a. % p.a.
Discount rate
5.6
5.5
Inflation (RPI)
2.8
3.0
Rate of increase in pensions in payment and deferred pensions
2.7
2.8
Rate of increase in pensionable salaries
3.2
3.4
The defined benefit obligation for the Scheme as at 31 December 2025 allows for expected benefit increases that will be awarded in 2026, based on known 2025 indices. Mortality assumptions are based on recent actual mortality experience of the Scheme\u2019s members and allow for expected future changes in mortality rates. See table below for further details of mortality assumptions.
As at 31 December
2025 2024
(years) (years)
Male
Female
Male
Female
Life expectancy for pensioner
members aged 60 at the reporting
date
26
28
25
27
Life expectancy at 60 for non-
pensioners aged 45 at the reporting
date
27
28
26
28
The weighted average duration of the Scheme at 31 December 2025 based on the IAS 19 position was 14 years (2024: 15 years). The defined benefit obligation in respect of the Scheme includes benefits for current employees of the Group (23%), former employees of the Group who are yet to retire (10%) and retired pensioners (67%). 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
2025 2024
\u00a3m \u00a3m
Fair value of plan assets
208.6
203.4
Defined benefit obligation
(184.8)
(178.7)
Net surplus recognised in the Consolidated balance sheet
23.8
24.7
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
2025 2024
\u00a3m \u00a3m
Current service cost included in staff costs (note 6.1)
1.6
2 .1
Interest income on net defined benefit surplus included in interest
receivable and similar gains (note 2.5)
(1.4)
(0.9)
Total amount recognised in the Consolidated income statement
0.2
1.2
Changes in the present value of the defined benefit obligation of the Scheme are as follows:
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Defined benefit obligation at 1 January
178.7
201.9
Current service cost
1.6
2.1
Interest cost
9.6
9.0
Actuarial losses/(gains) on defined benefit obligation
4.9
(24.3)
Benefits paid
(10.0)
(10.0)
Defined benefit obligation at 31 December
184.8
178.7
The actuarial losses of \u00a34.9 million (2024: gains of \u00a324.3 million) reflect gains of \u00a35.9 million (2024: \u00a323.5 million) arising from changes in financial assumptions, losses of \u00a39.3 million (2024: \u00a31.0 million) arising from scheme experience (including reflecting updated census data provided for the latest triennial actuarial valuation), and losses of \u00a31.5 million (2024: gains of \u00a31.8 million) arising from changes in demographic assumptions. The gains in the current year due to changes in financial assumptions 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 5.6% p.a. (2024: 5.5% p.a.) following an increase in corporate bond yields, along with a reduction in overall long-term inflationary assumptions, reflecting market pricing. Changes in the fair value of plan assets are as follows:
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Fair value of plan assets at 1 January
203.4
220.3
Interest on plan assets
11.0
9.9
Remeasurement gains/(losses) on fair value of plan assets
2.1
(18.8)
Employer contributions
2.1
2.0
Benefits paid
(10.0)
(10.0)
Fair value of plan assets at 31 December
208.6
203.4
There were contributions of \u00a3nil (2024: \u00a30.2 million) outstanding at the reporting date. The actual return on plan assets in the period was a gain of \u00a313.1 million (2024: loss of \u00a38.9 million).
Remeasurement losses on the defined benefit pension scheme of \u00a32.8 million (2024: gains of
\u00a35.5 million) were recognised in the Consolidated statement of comprehensive income. These are
made up as follows:
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Actuarial (losses)/gains on defined benefit obligation
(4.9)
24.3
Remeasurement gains/(losses) on fair value of plan assets
2.1
(18.8)
Total remeasurement (losses)/gains recognised in other
comprehensive income
(2.8)
5.5
The fair values of the major categories of plan assets were as follows:
As at 31 December
2025
2024
Quoted Unquoted Total Quoted Unquoted Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Gilts
83.1
\u2013
83.1
85.5
\u2013
85.5
Equities
40.9
\u2013
40.9
31.3
\u2013
31.3
Bonds:
Emerging market
8.1
\u2013
8 .1
5.3
\u2013
5.3
High yield
14 .1
\u2013
14 .1
14.0
\u2013
14.0
Corporate
\u2013
\u2013
\u2013
3.4
\u2013
3.4
Property
4.7
15.1
19.8
6.7
15.0
21.7
Infrastructure
11.2
\u2013
11.2
9.6
\u2013
9.6
Cash and cash equivalents
2.1
\u2013
2.1
5.3
\u2013
5.3
Other assets:
Private credit
\u2013
15.8
15.8
\u2013
16.6
16.6
Downside risk management
(1)
4.7
\u2013
4.7
4.7
\u2013
4.7
Dynamic asset allocation
(1)
3.8
\u2013
3.8
\u2013
\u2013
\u2013
Asset backed securities
5.0
\u2013
5.0
4.0
\u2013
4.0
Credit
\u2013
\u2013
\u2013
\u2013
2.0
2.0
Fair value of total plan assets
17 7.7
30.9
208.6
169.8
33.6
203.4
(1) Downside risk management relates to assets that are expected to reduce sensitivity to markets and protect in times of
market falls. Typically, these strategies achieve this through the use of derivatives. Dynamic asset allocation relates to
strategies that aim to generate returns by exploiting market inefficiencies and the Scheme\u2019s investment advisers short and
medium term economic and market views.
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
2025 2024
As at 31 December \u00a3m \u00a3m
Discount rate
\u2013 Increase
0.25%
5.7
6.3
\u2013 Decrease
0.25%
(6 .1)
(6.5)
Inflation rate
(1)
\u2013 Increase
0.25%
(4.5)
(5.2)
\u2013 Decrease
0.25%
4.4
5.1
Life expectancy
\u2013 Increase
1 year
(5.2)
(4.8)
\u2013 Decrease
1 year
5.3
5.1
(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 as 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 does not expect to make any contributions to the Scheme during the 12 months ending 31 December 2026. The latest actuarial valuation of the Scheme which was carried out as at 31 March 2025 resulted in a funding surplus of \u00a37.1 million and so no deficit recovery plan was required. It was agreed that the Group will cease paying contributions in respect of future accrual of benefits, with the cost being met from surplus assets, subject to annual reviews. The Group agreed to make an additional payment in 2029 if at that point the Scheme is not fully funded on a low-risk basis, as agreed between the Group and Trustee at the time. At this point, the Scheme is expected to be fully funded on the agreed low-risk basis, unless material adverse changes in economic conditions arise compared to those assumed in the valuation. The Group is satisfied that the additional payment is manageable within the Group\u2019s business plan. As part of the funding agreement between the Group and the Trustee, a surety bond has been provided by the Group. The Trust Deed of the Scheme provides 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. The Department for Work and Pensions has recently announced that it will introduce legislation and guidance that will allow and support retrospective confirmation of historical benefit changes. This announcement should significantly reduce the impact on pension schemes and mean that for most schemes the existence of confirmations is no longer the relevant issue, but rather whether confirmation was obtained or can be provided now. 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 at 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 is 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-635": { "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
2025 2024
\u00a3m \u00a3m
Total included in staff costs (note 6.1)
24.3
24 .1
As at 31 December 2025, contributions of \u00a31.7 million (2024: \u00a33.1 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-666": { "value": "Changes in the present value of the defined benefit obligation of the Scheme are as follows:
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Defined benefit obligation at 1 January
178.7
201.9
Current service cost
1.6
2.1
Interest cost
9.6
9.0
Actuarial losses/(gains) on defined benefit obligation
4.9
(24.3)
Benefits paid
(10.0)
(10.0)
Defined benefit obligation at 31 December
184.8
178.7
The actuarial losses of \u00a34.9 million (2024: gains of \u00a324.3 million) reflect gains of \u00a35.9 million (2024: \u00a323.5 million) arising from changes in financial assumptions, losses of \u00a39.3 million (2024: \u00a31.0 million) arising from scheme experience (including reflecting updated census data provided for the latest triennial actuarial valuation), and losses of \u00a31.5 million (2024: gains of \u00a31.8 million) arising from changes in demographic assumptions. The gains in the current year due to changes in financial assumptions 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 5.6% p.a. (2024: 5.5% p.a.) following an increase in corporate bond yields, along with a reduction in overall long-term inflationary assumptions, reflecting market pricing. Changes in the fair value of plan assets are as follows:
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Fair value of plan assets at 1 January
203.4
220.3
Interest on plan assets
11.0
9.9
Remeasurement gains/(losses) on fair value of plan assets
2.1
(18.8)
Employer contributions
2.1
2.0
Benefits paid
(10.0)
(10.0)
Fair value of plan assets at 31 December
208.6
203.4
There were contributions of \u00a3nil (2024: \u00a30.2 million) outstanding at the reporting date. The actual return on plan assets in the period was a gain of \u00a313.1 million (2024: loss of \u00a38.9 million). Remeasurement losses on the defined benefit pension scheme of \u00a32.8 million (2024: gains of \u00a35.5 million) were recognised in the Consolidated statement of comprehensive income. These are made up as follows:
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Actuarial (losses)/gains on defined benefit obligation
(4.9)
24.3
Remeasurement gains/(losses) on fair value of plan assets
2.1
(18.8)
Total remeasurement (losses)/gains recognised in other
comprehensive income
(2.8)
5.5
The fair values of the major categories of plan assets were as follows:
As at 31 December
2025
2024
Quoted Unquoted Total Quoted Unquoted Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Gilts
83.1
\u2013
83.1
85.5
\u2013
85.5
Equities
40.9
\u2013
40.9
31.3
\u2013
31.3
Bonds:
Emerging market
8.1
\u2013
8 .1
5.3
\u2013
5.3
High yield
14 .1
\u2013
14 .1
14.0
\u2013
14.0
Corporate
\u2013
\u2013
\u2013
3.4
\u2013
3.4
Property
4.7
15.1
19.8
6.7
15.0
21.7
Infrastructure
11.2
\u2013
11.2
9.6
\u2013
9.6
Cash and cash equivalents
2.1
\u2013
2.1
5.3
\u2013
5.3
Other assets:
Private credit
\u2013
15.8
15.8
\u2013
16.6
16.6
Downside risk management
(1)
4.7
\u2013
4.7
4.7
\u2013
4.7
Dynamic asset allocation
(1)
3.8
\u2013
3.8
\u2013
\u2013
\u2013
Asset backed securities
5.0
\u2013
5.0
4.0
\u2013
4.0
Credit
\u2013
\u2013
\u2013
\u2013
2.0
2.0
Fair value of total plan assets
17 7.7
30.9
208.6
169.8
33.6
203.4
(1) Downside risk management relates to assets that are expected to reduce sensitivity to markets and protect in times of market falls. Typically, these strategies achieve this through the use of derivatives. Dynamic asset allocation relates to strategies that aim to generate returns by exploiting market inefficiencies and the Scheme\u2019s investment advisers short and medium term economic and market views. 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-654": { "value": "Changes in the fair value of plan assets are as follows:
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Fair value of plan assets at 1 January
203.4
220.3
Interest on plan assets
11.0
9.9
Remeasurement gains/(losses) on fair value of plan assets
2.1
(18.8)
Employer contributions
2.1
2.0
Benefits paid
(10.0)
(10.0)
Fair value of plan assets at 31 December
208.6
203.4
There were contributions of \u00a3nil (2024: \u00a30.2 million) outstanding at the reporting date. The actual return on plan assets in the period was a gain of \u00a313.1 million (2024: loss of \u00a38.9 million). The fair values of the major categories of plan assets were as follows:
As at 31 December
2025
2024
Quoted Unquoted Total Quoted Unquoted Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Gilts
83.1
\u2013
83.1
85.5
\u2013
85.5
Equities
40.9
\u2013
40.9
31.3
\u2013
31.3
Bonds:
Emerging market
8.1
\u2013
8 .1
5.3
\u2013
5.3
High yield
14 .1
\u2013
14 .1
14.0
\u2013
14.0
Corporate
\u2013
\u2013
\u2013
3.4
\u2013
3.4
Property
4.7
15.1
19.8
6.7
15.0
21.7
Infrastructure
11.2
\u2013
11.2
9.6
\u2013
9.6
Cash and cash equivalents
2.1
\u2013
2.1
5.3
\u2013
5.3
Other assets:
Private credit
\u2013
15.8
15.8
\u2013
16.6
16.6
Downside risk management
(1)
4.7
\u2013
4.7
4.7
\u2013
4.7
Dynamic asset allocation
(1)
3.8
\u2013
3.8
\u2013
\u2013
\u2013
Asset backed securities
5.0
\u2013
5.0
4.0
\u2013
4.0
Credit
\u2013
\u2013
\u2013
\u2013
2.0
2.0
Fair value of total plan assets
17 7.7
30.9
208.6
169.8
33.6
203.4
(1) Downside risk management relates to assets that are expected to reduce sensitivity to markets and protect in times of market falls. Typically, these strategies achieve this through the use of derivatives. Dynamic asset allocation relates to strategies that aim to generate returns by exploiting market inefficiencies and the Scheme\u2019s investment advisers short and medium term economic and market views.
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 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 that swap one interest rate for another in a single currency, including floating-to-fixed interest rate swaps, and contracts that 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, that 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 changes. Due to the nature of the derivative financial instruments the Group holds, minor differences in the inputs, assumptions or methodologies used can result in different, but appropriate, 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 and any impact of assumptions that are made when forward curves are not an exact match for the Group\u2019s derivative contracts is not significant. As such, the fair value of derivatives is not considered a key source of estimation uncertainty, as defined by IAS 1, as reasonably possible changes in inputs, methodologies or assumptions would not result in a materially different value being recognised at the reporting date. Whilst the carrying amount of derivative assets and liabilities will likely change materially within the next financial year, this is as a result of movements in market prices or rates. Movements in market prices or rates are as a result of changes that occur subsequent to the reporting date and are not indicative of an alternative valuation that could reasonably have been recognised at the reporting date. 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. Certain of the Group\u2019s borrowings (see note 4.2) 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 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 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 \u2013 Mandatorily assets at liabilities at
hedging at FVTPL \u2013 amortised amortised
instruments others FVOCI cost cost Total Level 1 Level 2 Level 3 Total
At 31 December 2025 \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial assets measured at fair value
Commodity contracts
41.4
18.0
\u2013
\u2013
\u2013
59.4
\u2013
59.4
\u2013
59.4
Foreign currency exchange contracts
1.9
25.8
\u2013
\u2013
\u2013
27.7
\u2013
27.7
\u2013
27.7
Interest rate and cross-currency contracts
5.9
\u2013
\u2013
\u2013
\u2013
5.9
\u2013
5.9
\u2013
5.9
Trade and other receivables
\u2013
\u2013
13.8
\u2013
\u2013
13.8
\u2013
13.8
\u2013
13.8
Cash and cash equivalents
\u2013
1.9
\u2013
\u2013
\u2013
1.9
\u2013
1.9
\u2013
1.9
Financial assets not measured at fair value
Trade and other receivables
\u2013
\u2013
\u2013
290.3
\u2013
290.3
Cash and cash equivalents
\u2013
\u2013
\u2013
300.2
\u2013
300.2
Financial liabilities measured at fair value
Commodity contracts
(10.3)
(29.7)
\u2013
\u2013
\u2013
(40.0)
\u2013
(40.0)
\u2013
(40.0)
Foreign currency exchange contracts
(78.7)
(20.7)
\u2013
\u2013
\u2013
(99.4)
\u2013
(99.4)
\u2013
(99.4)
Interest rate and cross-currency contracts
(11.9)
(0.7)
\u2013
\u2013
\u2013
(12.6)
\u2013
(12.6)
\u2013
(12.6)
Inflation rate contracts
(97. 8)
\u2013
\u2013
\u2013
\u2013
(97.8)
\u2013
(97.8)
\u2013
(97. 8)
Financial liabilities not measured at fair value
Secured bank loans
\u2013
\u2013
\u2013
\u2013
(672.5)
(672.5)
\u2013
(67 7.5)
\u2013
(67 7.5)
Secured loan notes
\u2013
\u2013
\u2013
\u2013
(306.5)
(306.5)
(316 .1)
\u2013
\u2013
(316 .1)
Lease liabilities
\u2013
\u2013
\u2013
\u2013
(98.6)
(98.6)
Trade and other payables
\u2013
\u2013
\u2013
\u2013
(673.8)
(673.8)
Carrying amount
Fair value
Financial Financial
Fair value \u2013 Mandatorily assets at liabilities at
hedging at FVTPL \u2013 amortised amortised
instruments others FVOCI cost cost Total Level 1 Level 2 Level 3 Total
At 31 December 2024 \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
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)
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 level of 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. The valuation technique in the prior year was based on the assumption that the option to develop the land would be exercised if the Capacity Market price were to clear above a certain level, providing sufficient certainty on the economics of the development. This was calculated using a range of forecasts for future Capacity Market auctions. During the current year, the probability of this trigger occurring is estimated to have reduced to virtually zero. The probability of any of the other triggers occurring that would result in the contingent consideration becoming due are also estimated to be virtually zero. Therefore, a fair value loss of \u00a39.4 million has been recognised in the current year to reduce the carrying value of the contingent consideration to \u00a3nil. As the change in fair value reflects the reversal of a previous credit recorded within exceptional items, the \u00a39.4 million has been excluded from Adjusted results and presented as an exceptional item included within other gains and losses in the Consolidated income statement (see note 2.7). A reconciliation of the contingent consideration is detailed below:
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Balance at 1 January
9.4
9.2
Net change in fair value
(9.4)
0.2
Balance at 31 December
\u2013
9.4
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 that do not qualify for the own-use exemption (principally wholesale power, gas and carbon emissions allowances) and financial contracts (principally foreign exchange, interest, inflation, financial oil and financial 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 commodity and financial contracts 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 the biomass market means these contracts 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. 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
2025 2024
\u00a3m \u00a3m
Non-current derivative financial instrument assets
24.4
81.7
Current derivative financial instrument assets
68.6
175.6
Total derivative financial instrument assets
93.0
257.3
Non-current derivative financial instrument liabilities
(75.6)
(262.2)
Current derivative financial instrument liabilities
(174.2)
( 71.1)
Total derivative financial instrument liabilities
(249.8)
(333.3)
Total net derivative financial instruments
(156.8)
(76.0)
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
2025 2024
\u00a3m \u00a3m
Net gains on derivative financial instruments not qualifying for hedge
accounting \u2013 recognised in revenue
24.9
11.9
Net (losses)/gains on derivative financial instruments not qualifying for
hedge accounting \u2013 recognised in cost of sales
(55.4)
45.3
Net gains on derivative financial instruments not qualifying for hedge
accounting \u2013 recognised in foreign exchange gains/(losses)
1.2
\u2013
Total (losses)/gains on derivative financial instruments not qualifying
for hedge accounting
(29.3)
57. 2
", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-655": { "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
2025 2024
As at 31 December \u00a3m \u00a3m
Discount rate
\u2013 Increase
0.25%
5.7
6.3
\u2013 Decrease
0.25%
(6 .1)
(6.5)
Inflation rate
(1)
\u2013 Increase
0.25%
(4.5)
(5.2)
\u2013 Decrease
0.25%
4.4
5.1
Life expectancy
\u2013 Increase
1 year
(5.2)
(4.8)
\u2013 Decrease
1 year
5.3
5.1
(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 as 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-609": { "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 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 that swap one interest rate for another in a single currency, including floating-to-fixed interest rate swaps, and contracts that 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, that 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 changes. Due to the nature of the derivative financial instruments the Group holds, minor differences in the inputs, assumptions or methodologies used can result in different, but appropriate, 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 and any impact of assumptions that are made when forward curves are not an exact match for the Group\u2019s derivative contracts is not significant. As such, the fair value of derivatives is not considered a key source of estimation uncertainty, as defined by IAS 1, as reasonably possible changes in inputs, methodologies or assumptions would not result in a materially different value being recognised at the reporting date. Whilst the carrying amount of derivative assets and liabilities will likely change materially within the next financial year, this is as a result of movements in market prices or rates. Movements in market prices or rates are as a result of changes that occur subsequent to the reporting date and are not indicative of an alternative valuation that could reasonably have been recognised at the reporting date. 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. Certain of the Group\u2019s borrowings (see note 4.2) 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 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 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 \u2013 Mandatorily assets at liabilities at
hedging at FVTPL \u2013 amortised amortised
instruments others FVOCI cost cost Total Level 1 Level 2 Level 3 Total
At 31 December 2025 \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial assets measured at fair value
Commodity contracts
41.4
18.0
\u2013
\u2013
\u2013
59.4
\u2013
59.4
\u2013
59.4
Foreign currency exchange contracts
1.9
25.8
\u2013
\u2013
\u2013
27.7
\u2013
27.7
\u2013
27.7
Interest rate and cross-currency contracts
5.9
\u2013
\u2013
\u2013
\u2013
5.9
\u2013
5.9
\u2013
5.9
Trade and other receivables
\u2013
\u2013
13.8
\u2013
\u2013
13.8
\u2013
13.8
\u2013
13.8
Cash and cash equivalents
\u2013
1.9
\u2013
\u2013
\u2013
1.9
\u2013
1.9
\u2013
1.9
Financial assets not measured at fair value
Trade and other receivables
\u2013
\u2013
\u2013
290.3
\u2013
290.3
Cash and cash equivalents
\u2013
\u2013
\u2013
300.2
\u2013
300.2
Financial liabilities measured at fair value
Commodity contracts
(10.3)
(29.7)
\u2013
\u2013
\u2013
(40.0)
\u2013
(40.0)
\u2013
(40.0)
Foreign currency exchange contracts
(78.7)
(20.7)
\u2013
\u2013
\u2013
(99.4)
\u2013
(99.4)
\u2013
(99.4)
Interest rate and cross-currency contracts
(11.9)
(0.7)
\u2013
\u2013
\u2013
(12.6)
\u2013
(12.6)
\u2013
(12.6)
Inflation rate contracts
(97. 8)
\u2013
\u2013
\u2013
\u2013
(97.8)
\u2013
(97.8)
\u2013
(97. 8)
Financial liabilities not measured at fair value
Secured bank loans
\u2013
\u2013
\u2013
\u2013
(672.5)
(672.5)
\u2013
(67 7.5)
\u2013
(67 7.5)
Secured loan notes
\u2013
\u2013
\u2013
\u2013
(306.5)
(306.5)
(316 .1)
\u2013
\u2013
(316 .1)
Lease liabilities
\u2013
\u2013
\u2013
\u2013
(98.6)
(98.6)
Trade and other payables
\u2013
\u2013
\u2013
\u2013
(673.8)
(673.8)
Carrying amount
Fair value
Financial Financial
Fair value \u2013 Mandatorily assets at liabilities at
hedging at FVTPL \u2013 amortised amortised
instruments others FVOCI cost cost Total Level 1 Level 2 Level 3 Total
At 31 December 2024 \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
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)
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 level of 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. The valuation technique in the prior year was based on the assumption that the option to develop the land would be exercised if the Capacity Market price were to clear above a certain level, providing sufficient certainty on the economics of the development. This was calculated using a range of forecasts for future Capacity Market auctions. During the current year, the probability of this trigger occurring is estimated to have reduced to virtually zero. The probability of any of the other triggers occurring that would result in the contingent consideration becoming due are also estimated to be virtually zero. Therefore, a fair value loss of \u00a39.4 million has been recognised in the current year to reduce the carrying value of the contingent consideration to \u00a3nil. As the change in fair value reflects the reversal of a previous credit recorded within exceptional items, the \u00a39.4 million has been excluded from Adjusted results and presented as an exceptional item included within other gains and losses in the Consolidated income statement (see note 2.7). A reconciliation of the contingent consideration is detailed below:
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Balance at 1 January
9.4
9.2
Net change in fair value
(9.4)
0.2
Balance at 31 December
\u2013
9.4
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 that do not qualify for the own-use exemption (principally wholesale power, gas and carbon emissions allowances) and financial contracts (principally foreign exchange, interest, inflation, financial oil and financial 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 commodity and financial contracts 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 the biomass market means these contracts 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. 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
2025 2024
\u00a3m \u00a3m
Non-current derivative financial instrument assets
24.4
81.7
Current derivative financial instrument assets
68.6
175.6
Total derivative financial instrument assets
93.0
257.3
Non-current derivative financial instrument liabilities
(75.6)
(262.2)
Current derivative financial instrument liabilities
(174.2)
( 71.1)
Total derivative financial instrument liabilities
(249.8)
(333.3)
Total net derivative financial instruments
(156.8)
(76.0)
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
2025 2024
\u00a3m \u00a3m
Net gains on derivative financial instruments not qualifying for hedge
accounting \u2013 recognised in revenue
24.9
11.9
Net (losses)/gains on derivative financial instruments not qualifying for
hedge accounting \u2013 recognised in cost of sales
(55.4)
45.3
Net gains on derivative financial instruments not qualifying for hedge
accounting \u2013 recognised in foreign exchange gains/(losses)
1.2
\u2013
Total (losses)/gains on derivative financial instruments not qualifying
for hedge accounting
(29.3)
57. 2
", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-573": { "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 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 that swap one interest rate for another in a single currency, including floating-to-fixed interest rate swaps, and contracts that 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, that 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 changes. Due to the nature of the derivative financial instruments the Group holds, minor differences in the inputs, assumptions or methodologies used can result in different, but appropriate, 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 and any impact of assumptions that are made when forward curves are not an exact match for the Group\u2019s derivative contracts is not significant. As such, the fair value of derivatives is not considered a key source of estimation uncertainty, as defined by IAS 1, as reasonably possible changes in inputs, methodologies or assumptions would not result in a materially different value being recognised at the reporting date. Whilst the carrying amount of derivative assets and liabilities will likely change materially within the next financial year, this is as a result of movements in market prices or rates. Movements in market prices or rates are as a result of changes that occur subsequent to the reporting date and are not indicative of an alternative valuation that could reasonably have been recognised at the reporting date. 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. Certain of the Group\u2019s borrowings (see note 4.2) 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 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 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 \u2013 Mandatorily assets at liabilities at
hedging at FVTPL \u2013 amortised amortised
instruments others FVOCI cost cost Total Level 1 Level 2 Level 3 Total
At 31 December 2025 \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial assets measured at fair value
Commodity contracts
41.4
18.0
\u2013
\u2013
\u2013
59.4
\u2013
59.4
\u2013
59.4
Foreign currency exchange contracts
1.9
25.8
\u2013
\u2013
\u2013
27.7
\u2013
27.7
\u2013
27.7
Interest rate and cross-currency contracts
5.9
\u2013
\u2013
\u2013
\u2013
5.9
\u2013
5.9
\u2013
5.9
Trade and other receivables
\u2013
\u2013
13.8
\u2013
\u2013
13.8
\u2013
13.8
\u2013
13.8
Cash and cash equivalents
\u2013
1.9
\u2013
\u2013
\u2013
1.9
\u2013
1.9
\u2013
1.9
Financial assets not measured at fair value
Trade and other receivables
\u2013
\u2013
\u2013
290.3
\u2013
290.3
Cash and cash equivalents
\u2013
\u2013
\u2013
300.2
\u2013
300.2
Financial liabilities measured at fair value
Commodity contracts
(10.3)
(29.7)
\u2013
\u2013
\u2013
(40.0)
\u2013
(40.0)
\u2013
(40.0)
Foreign currency exchange contracts
(78.7)
(20.7)
\u2013
\u2013
\u2013
(99.4)
\u2013
(99.4)
\u2013
(99.4)
Interest rate and cross-currency contracts
(11.9)
(0.7)
\u2013
\u2013
\u2013
(12.6)
\u2013
(12.6)
\u2013
(12.6)
Inflation rate contracts
(97. 8)
\u2013
\u2013
\u2013
\u2013
(97.8)
\u2013
(97.8)
\u2013
(97. 8)
Financial liabilities not measured at fair value
Secured bank loans
\u2013
\u2013
\u2013
\u2013
(672.5)
(672.5)
\u2013
(67 7.5)
\u2013
(67 7.5)
Secured loan notes
\u2013
\u2013
\u2013
\u2013
(306.5)
(306.5)
(316 .1)
\u2013
\u2013
(316 .1)
Lease liabilities
\u2013
\u2013
\u2013
\u2013
(98.6)
(98.6)
Trade and other payables
\u2013
\u2013
\u2013
\u2013
(673.8)
(673.8)
Carrying amount
Fair value
Financial Financial
Fair value \u2013 Mandatorily assets at liabilities at
hedging at FVTPL \u2013 amortised amortised
instruments others FVOCI cost cost Total Level 1 Level 2 Level 3 Total
At 31 December 2024 \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
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)
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 level of 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. The valuation technique in the prior year was based on the assumption that the option to develop the land would be exercised if the Capacity Market price were to clear above a certain level, providing sufficient certainty on the economics of the development. This was calculated using a range of forecasts for future Capacity Market auctions. During the current year, the probability of this trigger occurring is estimated to have reduced to virtually zero. The probability of any of the other triggers occurring that would result in the contingent consideration becoming due are also estimated to be virtually zero. Therefore, a fair value loss of \u00a39.4 million has been recognised in the current year to reduce the carrying value of the contingent consideration to \u00a3nil. As the change in fair value reflects the reversal of a previous credit recorded within exceptional items, the \u00a39.4 million has been excluded from Adjusted results and presented as an exceptional item included within other gains and losses in the Consolidated income statement (see note 2.7). A reconciliation of the contingent consideration is detailed below:
Year ended 31 December
2025 2024
\u00a3m \u00a3m
Balance at 1 January
9.4
9.2
Net change in fair value
(9.4)
0.2
Balance at 31 December
\u2013
9.4
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 that do not qualify for the own-use exemption (principally
wholesale power, gas and carbon emissions allowances) and financial contracts (principally foreign
exchange, interest, inflation, financial oil and financial 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 commodity and financial contracts 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 the biomass market means these contracts 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.
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
2025 2024
\u00a3m \u00a3m
Non-current derivative financial instrument assets
24.4
81.7
Current derivative financial instrument assets
68.6
175.6
Total derivative financial instrument assets
93.0
257.3
Non-current derivative financial instrument liabilities
(75.6)
(262.2)
Current derivative financial instrument liabilities
(174.2)
( 71.1)
Total derivative financial instrument liabilities
(249.8)
(333.3)
Total net derivative financial instruments
(156.8)
(76.0)
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
2025 2024
\u00a3m \u00a3m
Net gains on derivative financial instruments not qualifying for hedge
accounting \u2013 recognised in revenue
24.9
11.9
Net (losses)/gains on derivative financial instruments not qualifying for
hedge accounting \u2013 recognised in cost of sales
(55.4)
45.3
Net gains on derivative financial instruments not qualifying for hedge
accounting \u2013 recognised in foreign exchange gains/(losses)
1.2
\u2013
Total (losses)/gains on derivative financial instruments not qualifying
for hedge accounting
(29.3)
57. 2
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 41). The Financial Risk Management Committee identifies,
evaluates and manages financial risks in close coordination 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 Group\u2019s 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 are held constant.
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 interpolated or extrapolated from the table below
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 2025
Power
\u2013
\u2013
28.0
(27.7)
Carbon
(0.8)
0.8
\u2013
\u2013
Gas
(1.0)
1.0
\u2013
\u2013
Oil
(5.6)
5.2
\u2013
\u2013
Freight
(1.6)
1.6
\u2013
\u2013
Impact on other components of equity,
Impact on profit after tax 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
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 prices 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, after taking account of the volume held
back for operational risk management purposes. Where the power generation has contract
indexation, forward power sales are generally entered once the indexation window has begun. 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 FVTPL.
Where forward power curves are less liquid, the Group uses 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 Group\u2019s non-core SME
customer meter points (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 in relation to the Group\u2019s
carbon emissions. Carbon emissions allowances are also sold as part of the proxy power hedges
that utilise gas sales as a proxy for power, as described above. Sales and purchases of carbon are
not designated as cash flow hedges.
The Group purchases financial oil contracts to hedge freight costs for the delivery of biomass. Oil is
a significant input into the overall cost of freight. Financial oil contracts are not designated as cash
flow hedges.
The Group purchases financial freight contracts to hedge freight costs for the delivery of biomass.
Financial freight 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 for part of the year. 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 hedging instrument 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.
At 31 December 2025
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging relationships for
instrument since Balance in the which hedge
inception used Fair value hedge reserve for accounting is
for measuring recognised in Fair value recognised continuing hedges no longer applied
Notional value Weighted average ineffectiveness \u2013 balance sheet \u2013 in balance sheet \u2013 net of deferred tax \u2013 net of deferred
of contracts fixed price gains/(losses) assets liabilities (debit)/credit tax \u2013 (debit)/credit
Exposure (MWh, allowances)
\u00a3
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts January 2026
Sale and purchase of power
4,835,705
77.08
\u2013 March 2030
156.8
41.4
(10.3)
15.6
\u2013
31 December 2025
Cumulative change in Hedge Amount Amount reclassified Line item
fair value of hedged ineffectiveness transferred to Amount reclassified due to the hedged in the income
item since inception Hedging gains recognised in Line item in the the cost or carrying due to the hedged future cash flows statement/
used for measuring recognised in OCI the income statement income statement value of a item affecting being no longer balance sheet
ineffectiveness \u2013 in the period \u2013 in the period \u2013 that includes non-financial profit or loss \u2013 expected to occur \u2013 affected by the
losses/(gains) gains/(losses) gains/(losses) hedge asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Commodity contracts
156.8
122.3
\u2013
Revenue
\u2013
(114.7)
\u2013
Revenue
Sale and purchase of power
\u2013
Cost of sales
\u2013
(21.3)
\u2013
Cost of sales
At 31 December 2024
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging relationships for
instrument since Balance in the which hedge
inception used Fair value hedge reserve for accounting is
for measuring recognised in Fair value recognised continuing hedges no longer applied
Notional value Weighted average ineffectiveness \u2013 balance sheet \u2013 in balance sheet \u2013 net of deferred tax \u2013 net of deferred
of contracts fixed price gains/(losses) assets liabilities (debit)/credit tax \u2013 (debit)/credit
Exposure (MWh, allowances)
\u00a3
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts January 2025
Sale and purchase of power
7,013,76 6
87.3
\u2013 September 2028
34.5
101.9
(50.9)
25.9
\u2013
Purchase of carbon emissions allowances
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
At 31 December 2024
Cumulative change in Hedge Amount Amount reclassified Line item
fair value of hedged ineffectiveness Line item transferred to Amount reclassified due to the hedged in the income
item since inception Hedging gains recognised in in the income the cost or due to the hedged future cash flows statement/
used for measuring recognised in OCI in the income statement statement carrying value of item affecting being no longer balance sheet
ineffectiveness \u2013 the period \u2013 gains/ in the period \u2013 that includes a non-financial profit or loss \u2013 expected to occur \u2013 affected by the
losses/(gains) (losses) gains/(losses) hedge asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Commodity contracts
34.5
(15.2)
\u2013
Revenue
\u2013
(397.5)
\u2013
Revenue
Sale and purchase of 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
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 borrowings. These fuel purchases are typically denominated in US dollars (USD), euros (EUR) or Canadian dollars (CAD), and the foreign currency borrowings are denominated in EUR (see note 4.2 for further details on the Group\u2019s borrowings). The Group also had CAD denominated borrowings at the prior year end. 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, net of tax, 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 the reporting date on outstanding monetary items denominated in foreign currencies and the valuation of foreign currency derivative instruments. The analysis excludes the impact of the translation of the net assets of foreign operations. 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 are 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 2025
USD
41.6
(41.5)
150.8
(121.6)
EUR
17.8
(17. 5)
33.1
(26.9)
CAD
1.7
(1.7)
15.1
(12.3)
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)
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 six-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 borrowings (see note 4.2 for further details on borrowings). The Group currently has
issued foreign currency denominated borrowings in EUR (2024: EUR and CAD). The Group utilises
derivative contracts, including cross-currency interest rate swaps and foreign exchange forward
contracts, to manage exchange risk on foreign currency borrowings.
Foreign currency risk hedge accounting
The Group designates certain forward and option foreign currency exchange contracts 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, such as 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) and the Energy Solutions receivables
monetisation facility, should they be utilised. The returns generated on the Group\u2019s cash balance, or
payable on amounts drawn on the RCF or amounts utilised under the Energy Solutions receivables
monetisation facility, 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 borrowings (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 2025
Variable rate debt \u2013 hedged
(4.8)
4.8
\u2013
\u2013
Interest rate swaps
4.9
(4.9)
(0.1)
0.1
Net impact
0.1
(0 .1)
(0 .1)
0 .1
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)
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 borrowings. The Group has reduced its
exposure to interest rate risk on variable rate borrowings 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 borrowings. 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, however this impact is reduced by the amounts recycled to profit or loss to offset
the interest payable. These fair value changes impact 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 foreign exchange forwards in order to fix the sterling cash
flows payable on the principal repayment.
The Group had 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 had separately
taken out C$200.0 million notional value foreign exchange forwards in order to fix the sterling cash
flows payable on the principal repayment. During the year the Group chose to make an early
repayment of this term loan facility. Due to the repayment of the underlying hedged item, hedge
accounting ceased at the date the facility was repaid.
The Group has taken out fixed-to-fixed cross-currency interest rate swaps to hedge the future cash
flows associated with the \u20ac350.0 million fixed rate EUR loan notes 2029 and the \u20ac31.5 million fixed
rate element of the UK infrastructure private placement facility (2020).
The Group had a fixed-to-fixed cross-currency interest rate swap that was entered into to hedge
the future cash flows associated with the \u20ac143.8 million 2.625% EUR loan notes 2025. During the
year this swap and the underlying loan notes matured and were settled.
As at 31 December 2025, 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.
At 31 December 2025
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging relationships for
instrument since Balance in the which hedge
inception used Fair value Fair value hedge reserve for accounting is
Weighted for measuring recognised in recognised in continuing hedges no longer applied
Notional value of average ineffectiveness \u2013 balance sheet \u2013 balance sheet \u2013 net of deferred net of deferred
contracts fixed/variable gains/(losses) assets liabilities tax \u2013 (debit)/credit tax \u2013 (debit)/credit
US$m, \u20acm, C$m
rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency risk on biomass purchases January 2026
Purchases in foreign currency \u2013 USD
2,731.5
US$1.29
\u2013 December 2030
(92.0)
1.1
(66.0)
(47.3)
\u2013
January 2026
Purchases in foreign currency \u2013 EUR
4 87.0
\u20ac1.10
\u2013 September 2030
(3.0)
0.8
(5.3)
0.4
\u2013
January 2026
Purchases in foreign currency \u2013 CAD
343.5
C$1.75
\u2013 October 2030
(11.8)
\u2013
(5.6)
(4.8)
\u2013
Foreign currency risk on borrowings January 2026
Interest and principal payments \u2013 EUR
381.5
\u20ac1.16 / 7.22%
\u2013 November 2026
4.5
4.9
(1.9)
(0.8)
\u2013
February 2027
Principal payments \u2013 EUR
185.0
\u20ac1.11
\u2013 March 2028
6.5
\u2013
(1.8)
\u2013
\u2013
Principal payments \u2013 CAD
\u2013
\u2013
\u2013
(4.0)
\u2013
\u2013
\u2013
\u2013
Foreign currency and interest rate risk on borrowings January 2026
Interest and principal payments \u2013 EUR
255.0
\u20ac1.11 / 4.04%
\u2013 March 2026
(6.8)
\u2013
( 7.0)
(1.0)
\u2013
Interest payments \u2013 CAD
\u2013
\u2013
\u2013
(2 .1)
\u2013
\u2013
\u2013
\u2013
Interest rate risk on borrowings January 2026
Variable rate GBP debt
423.0
2.89%
\u2013 July 2029
(2 .1)
1.0
(3.0)
(1.8)
\u2013
Exposure
At 31 December 2025
Cumulative change in Hedge Amount reclassified
fair value of hedged ineffectiveness Amount reclassified due to the hedged Line item in the
item since inception Hedging losses recognised in the Amount transferred due to the hedged future cash flows income statement/
used for measuring recognised in OCI income statement Line item in the to the cost or item affecting being no longer balance sheet
ineffectiveness \u2013 in the period \u2013 in the period \u2013 income statement carrying value of a profit or loss \u2013 expected to occur \u2013 affected by
losses/(gains) gains/(losses) gains/(losses) that includes hedge non-financial asset (gains)/losses (gains)/losses the transfer/
\u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Foreign currency risk on biomass purchases
Purchases in foreign currency \u2013 USD
(92.0)
(104.5)
\u2013
Cost of sales
27.1
\u2013
\u2013
Inventories
Purchases in foreign currency \u2013 EUR
(3.0)
8.0
\u2013
Cost of sales
(1.5)
\u2013
\u2013
Inventories
Purchases in foreign currency \u2013 CAD
(11.8)
(4.8)
\u2013
Cost of sales
6.2
\u2013
\u2013
Inventories
Foreign currency risk on borrowings Interest payable Interest payable
\u2013
and similar charges
\u2013
7.1
\u2013
and similar charges
4.5
10.4
Foreign exchange Foreign exchange
Interest and principal payments \u2013 EUR \u2013
gains/(losses)
\u2013
(24.4)
\u2013
gains/(losses)
Foreign exchange Foreign exchange
Principal payments \u2013 EUR
6.5
8.3
\u2013
gains/(losses)
\u2013
(8.3)
\u2013
gains/(losses)
Foreign exchange Foreign exchange
Principal payments \u2013 CAD
(4.0)
(2.3)
\u2013
gains/(losses)
\u2013
2.3
\u2013
gains/(losses)
Foreign currency and interest rate risk on borrowings Interest payable Interest payable
(3.2)
5.4
\u2013
and similar charges
\u2013
\u2013
\u2013
and similar charges
Foreign exchange Foreign exchange
Interest and principal payments \u2013 EUR (3.6)
gains/(losses)
\u2013
( 3.1)
\u2013
gains/(losses)
Interest payable Interest payable
Interest payments \u2013 CAD
(2 .1)
(0.3)
\u2013
and similar charges
\u2013
1.0
0.9
and similar charges
Interest rate risk on borrowings Interest payable Interest payable
Variable rate GBP debt
(2.3)
(2.3)
\u2013
and similar charges
\u2013
(5.9)
\u2013
and similar charges
Exposure
At 31 December 2024
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging relationships for
instrument since Balance in the which hedge
inception used Fair value Fair value hedge reserve for accounting is
for measuring recognised in recognised in continuing hedges no longer applied
Notional value Weighted average ineffectiveness \u2013 balance sheet \u2013 balance sheet \u2013 net of deferred tax \u2013 net of deferred
of contracts fixed/variable gains/(losses) assets liabilities (debit)/credit tax \u2013 (debit)/credit
US$m, \u20acm, C$m
rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency risk on biomass purchases January 2025
Purchases in foreign currency \u2013 USD
1,430.5
US$1.27
\u2013 February 2027
18.6
20.7
(2.1)
10.7
\u2013
January 2025
Purchases in foreign currency \u2013 EUR
270.0
\u20ac 1.15
\u2013 October 2026
(6.3)
\u2013
(6.3)
(4.5)
\u2013
January 2025
Purchases in foreign currency \u2013 CAD
166.0
C$1.67
\u2013 March 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 payments \u2013 EUR
525.3
\u20ac1.14 / 6.48%
\u2013 April 2028
(10.4)
\u2013
(19.7)
4.4
\u2013
February 2027
Principal payments \u2013 EUR
185.0
\u20ac 1.11
\u2013 March 2028
(5 .1)
\u2013
(5 .1)
\u2013
\u2013
Principal payments \u2013 CAD
200.0
C$1.68
January 2026
(5.7)
\u2013
(5.7)
\u2013
\u2013
Foreign currency and interest rate risk on borrowings January 2026
Interest and principal payments \u2013 EUR
255.0
\u20ac1.09 / 4.04%
\u2013 March 2028
(8.6)
\u2013
(8.7)
(2.7)
\u2013
Interest payments \u2013 CAD
200.0
6.05%
January 2026
(1.5)
\u2013
(1.8)
(1.3)
\u2013
Interest rate risk on borrowings January 2026
Variable rate GBP debt
423.0
2.89%
\u2013 April 2028
6.1
7.1
(0.4)
4.3
\u2013
Exposure
At 31 December 2024
Cumulative change in Hedge Amount reclassified
fair value of hedged ineffectiveness Amount reclassified due to the hedged Line item in the
item since inception Hedging losses recognised in the Amount transferred due to the hedged future cash flows income statement/
used for measuring recognised in OCI in income statement Line item in the to the cost or item affecting being no longer balance sheet
ineffectiveness \u2013 the period \u2013 in the period \u2013 income statement carrying value of a profit or loss \u2013 expected to occur \u2013 affected by the
losses/(gains) gains/(losses) gains/(losses) that includes hedge non-financial asset (gains)/losses (gains)/losses transfer/
\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 payable Interest payable
Interest and principal payments \u2013 USD
\u2013
(5.6)
\u2013
and similar charges
\u2013
(0.7)
\u2013
and similar charges
Foreign exchange Foreign exchange
\u2013
gains/(losses)
\u2013
9.3
\u2013
gains/(losses)
Interest payable Interest payable
Interest and principal payments \u2013 EUR
(11.3)
(7.5)
\u2013
and similar charges
\u2013
7.4
\u2013
and similar charges
Foreign exchange Foreign exchange
\u2013
gains/(losses)
\u2013
6.4
\u2013
gains/(losses)
Foreign exchange Foreign exchange
Principal payments \u2013 EUR
(5.1)
(6.0)
\u2013
gains/(losses)
\u2013
6
\u2013
gains/(losses)
Foreign exchange Foreign exchange
Principal payments \u2013 CAD
(5.7)
(7.4)
\u2013
gains/(losses)
\u2013
7.4
\u2013
gains/(losses)
Foreign currency and interest rate risk on borrowings Interest payable Interest payable
Interest and principal payments \u2013 EUR
(8.7)
(6.4)
\u2013
and similar charges
\u2013
(2.5)
\u2013
and similar charges
Foreign exchange Foreign exchange
\u2013
gains/(losses)
\u2013
3.4
\u2013
gains/(losses)
Interest payable Interest payable
Interest payments \u2013 CAD
(1.6)
(1.3)
\u2013
and similar charges
\u2013
(0.4)
\u2013
and similar charges
Interest rate risk on borrowings Interest payable Interest payable
Variable rate GBP debt
10.8
(2.3)
\u2013
and similar charges
\u2013
(12.0)
\u2013
and similar 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). It is the intention of the UK Government to
change to CPI-based indexation for ROC revenue from April 2026, subject to the publication of
statutory instruments. 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 of equity,
Impact on profit after tax 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 2025
UK CPI inflation swaps
\u2013
\u2013
(22.3)
19.3
UK RPI inflation swaps
\u2013
\u2013
(1.6)
1.6
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
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 in the prior year was 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 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.
The Group recognised \u00a33.5 million of gains (2024: \u00a38.7 million of losses) as ineffective primarily due
to the basis difference between the RPI hedging instruments and the CPI exposure. In the current
year, as a result of the updated estimates of the OCGT commissioning dates, the Group recycled
\u00a30.8 million (2024: \u00a31.2 million) of losses to the Consolidated income statement on CPI inflation
swaps designated as hedging instruments for the OCGT Capacity Market revenues, 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.
At 31 December 2025
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging relationships for
instrument since Balance in the which hedge
inception used hedge reserve for accounting is
for measuring Fair value recognised Fair value recognised continuing hedges no longer applied
Notional value ineffectiveness \u2013 in balance sheet \u2013 in balance sheet \u2013 net of deferred net of deferred tax \u2013
of contracts Weighted average gains/(losses) assets liabilities tax \u2013 (debit)/credit (debit)/credit
Exposure \u00a3m
fixed rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Inflation April 2026
Inflation-linked sales contracts \u2013 CPI
30.4
CPI \u2013 2.70%
\u2013 July 2038
(8.5)
\u2013
(13.1)
(6.3)
1.9
Inflation-linked sales contracts \u2013 RPI
440.0
RPI \u2013 3.46%
April 2026
(133.5)
\u2013
(84.7)
(19.0)
\u2013
At 31 December 2025
Hedge
ineffectiveness/
Cumulative change in reversal of Amount reclassified
fair value of hedged ineffectiveness Amount reclassified due to the hedged Line item in the
item since inception Hedging gains recognised in the Amount transferred due to the hedged future cash flows income statement/
used for measuring recognised in OCI income statement Line item in the to the cost or item affecting being no longer balance sheet
ineffectiveness \u2013 in the period \u2013 in the period \u2013 income statement carrying value of a profit or loss \u2013 expected to occur affected by
losses/(gains) gains/(losses) gains/(losses) that includes hedge non- financial asset (gains)/losses \u2013 (gains)/losses the transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Inflation
Inflation-linked sales contracts \u2013 CPI
(8.5)
3.3
\u2013
Revenue
\u2013
(4.6)
0.8
Revenue
Inflation-linked sales contracts \u2013 RPI
(109.8)
(3.9)
3.5
Revenue
\u2013
2 5.1
\u2013
Revenue
At 31 December 2024
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging Balance in the relationships for
instrument since hedge reserve which hedge
inception used for for continuing accounting is
measuring Fair value recognised Fair value recognised hedges net of no longer applied
Notional value ineffectiveness in balance sheet \u2013 in balance sheet \u2013 deferred tax \u2013 net of deferred tax \u2013
of contracts Weighted average \u2013 gains/(losses) assets liabilities (debit)/credit (debit)/credit
Exposure \u00a3m
fixed rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Inflation April 2026
Inflation-linked sales contracts \u2013 CPI
30.4
CPI \u2013 2.70%
\u2013 July 2038
(18.6)
\u2013
(18.6)
(14.5)
10.5
Inflation-linked sales contracts \u2013 RPI
440.0
RPI \u2013 3.65%
April 2026
(75.4)
\u2013
(165.4)
(34.9)
\u2013
At 31 December 2024
Cumulative change Hedge Amount reclassified
in fair value of hedged ineffectiveness Amount reclassified due to the hedged Line item in the
item since inception Hedging gains recognised in the Amount transferred due to the hedged future cash flows income statement/
used for measuring recognised in OCI in income statement Line item in the to the cost or item affecting being no longer balance sheet
ineffectiveness \u2013 the period \u2013 in the period \u2013 gains/ income statement carrying value of a profit or loss \u2013 expected to occur \u2013 affected by the
gains/(losses) gains/(losses) (losses) that includes hedge non-financial asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Inflation
Inflation-linked sales contracts \u2013 CPI
(18.6)
(1.3)
\u2013
Revenue
\u2013
(3.1)
1.2
Revenue
Inflation-linked sales contracts \u2013 RPI
(47.9)
(2 .1)
(8.7)
Revenue
\u2013
27.1
\u2013
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.
At 31 December 2025
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
69.1
22.8
165.3
489.5
\u2013
746.7
Loan notes, gross value
\u2013
17.9
17.9
332.3
\u2013
368.1
Borrowings, contractual
maturity
69.1
40.7
183.2
821.8
\u2013
1,114.8
Trade and other payables
594.7
77.5
1.6
\u2013
\u2013
673.8
Lease liabilities
9.0
22.2
21.2
30.4
38.3
121.1
672.8
140.4
206.0
852.2
38.3
1,909.7
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
1,3 7 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
The weighted average interest rate payable at the reporting date on the Group\u2019s borrowings was
5.40% (2024: 5.39%).
Trade and other payables of \u00a3673.8 million (2024: \u00a3793.0 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 traded
value. Vanilla foreign currency exchange contracts are expected to be gross settled through
delivery of one currency and receipt of another. Gross settlement of both the interest and principal
on cross-currency interest rate swaps is expected through delivery of one currency and receipt of
another. 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. For option derivative
contracts, such as foreign currency options, the expected cash flows are only included if the option
has intrinsic value at the reporting date and therefore would exercise based on the market curves
existing at the reporting date.
Where derivatives are expected to be gross settled based on the traded value rather than the
mark-to-market value, the gross undiscounted cash flows based on the contracted traded values
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 the 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.
Derivative liabilities \u2013 cash inflow/(outflow)
At 31 December 2025
At 31 December 2024
Difference to Difference to
Within carrying Carrying Within carrying Carrying
1 year 1\u20132 years >2 years Total amount amount 1 year 1\u20132 years >2 years Total amount amount
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts \u2013 inflow
209.8
8.3
\u2013
218 .1
(224.0)
(5.9)
303.0
259.3
3 7. 8
6 0 0.1
(673.5)
(73.4)
Commodity contracts \u2013 outflow
(137.7 )
(52.5)
(15.6)
(205.8)
171.7
(34.1)
(33.8)
(1.4)
(4.1)
(39.3)
30.9
(8.4)
Foreign exchange contracts \u2013 inflow
1,075.4
688.7
1,497.0
3,261.1
26.4
(99.4)
6 41.1
468.4
328.0
1,43 7.5
15.2
(36.9)
Foreign exchange contracts \u2013 outflow
(1,118.0)
(711.9)
(1,557.0)
(3,386.9)
(637.4)
(494.6)
(357.6)
(1,489.6)
Cross-currency contracts \u2013 inflow
97.3
2.7
0.5
100.5
0.8
(9.6)
215.7
53.9
341.0
610.6
1.2
(30.2)
Cross-currency contracts \u2013 outflow
(107.3)
(3.1)
(0.5)
(110.9)
(241.3)
(63.4)
(337.3)
(642.0)
Interest rate contracts \u2013 inflow
\u2013
\u2013
\u2013
\u2013
0.1
(3.0)
0.3
\u2013
\u2013
0.3
0.1
(0.4)
Interest rate contracts \u2013 outflow
(1.6)
(1.3)
(0.2)
(3.1)
\u2013
(0.5)
(0.3)
(0.8)
Inflation contracts \u2013 outflow
(86.9)
(1.5)
(12 .1)
(100.5)
2.7
(97.8)
(84.3)
(91.5)
(20.0)
(195.8)
11.8
(184.0)
(69.0)
(70.6)
(87.9)
(227.5)
(22.3)
(249.8)
163.3
130.2
(12.5)
281.0
(614.3)
(333.3)
Derivative assets \u2013 cash inflow/(outflow)
At 31 December 2025
At 31 December 2024
Difference to Difference to
Within carrying Carrying Within carrying Carrying
1 year 1\u20132 years >2 years Total amount amount 1 year 1\u20132 years >2 years Total amount amount
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts \u2013 inflow
425.3
8 4.1
0 .1
509.5
(458.0)
51.5
363.7
50.6
16.8
431.1
(306.5)
124.6
Commodity contracts \u2013 outflow
(36.6)
( 7 7. 3)
(45.1)
(159.0)
166.9
7.9
(117.5)
(4.5)
(24.9)
(146.9)
175.8
28.9
Foreign exchange contracts \u2013 inflow
172.4
2.4
\u2013
174.8
1.2
27.7
874.6
1,030.0
245.1
2,149.7
(9.7)
96.7
Foreign exchange contracts \u2013 outflow
(148.3)
\u2013
\u2013
(148.3)
(839.9)
(97 7.1)
(226.3)
(2,043.3)
Cross-currency contracts \u2013 inflow
18.6
18.2
314.6
351.4
10.1
4.9
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Cross-currency contracts \u2013 outflow
(22.8)
(22.6)
(311.2)
(356.6)
\u2013
\u2013
\u2013
\u2013
Interest rate contracts \u2013 inflow
1.0
\u2013
\u2013
1.0
\u2013
1.0
6.3
1.1
\u2013
7.4
(0.2)
7.1
Interest rate contracts \u2013 outflow
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(0.1)
(0 .1)
409.6
4.8
(41.6)
372.8
(279.8)
93.0
287. 2
10 0 .1
10.6
397.9
(140.6)
257.3
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 \u00a330.6 million (2024: \u00a342.4 million) and expected credit losses on accrued income
of \u00a35.0 million (2024: \u00a39.0 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. 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 Opus Energy non-core SME meter points (see note 2.7) 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 \u00a3302.1 million at 31 December 2025 (2024: \u00a3356.0 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 \u00a3300.2 million at 31 December 2025 (2024: \u00a3252.9 million). The identified impairment
loss, based on the 12-month expected credit loss basis, was immaterial. Cash and cash equivalents at
the reporting date were 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 2025, the Group held \u00a3nil in
cash collateral receipts (2024: \u00a39.8 million) covering certain derivative assets and had posted
\u00a319.4 million (2024: \u00a34.7 million) of cash collateral payments covering certain derivative liabilities.
The credit rating of counterparties to which the \u00a319.4 million of cash collateral had been posted
ranged from A to A+.
Counterparty risk
As the Group relies on third-party suppliers and counterparties for the delivery of financial and
non-financial items, it 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 49 for
details of scenario analysis performed on covenant restrictions within the Group\u2019s financing
facilities.
At 31 December
2025 2024
\u00a3m \u00a3m
Net debt (note 2.7)
783.6
991.7
Total shareholders\u2019 equity attributable to owners of the parent
company, excluding hedge and cost of hedging reserves
1,789.1
2,078.3
7.3 Hedge reserve
The Group designates certain hedging instruments that are used to address commodity price risk,
foreign currency exchange risk, interest rate risk, foreign currency exchange and interest 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 profit or loss,
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
Commodity currency Interest Foreign currency Inflation
price risk exchange risk rate risk and Interest rate risk Total
\u00a3m \u00a3m \u00a3m rate risk \u00a3m \u00a3m
At 1 January 2024
25 7.0
(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 revenue
( 397.5)
\u2013
\u2013
\u2013
24.0
(373.5)
\u2013 Reclassified to the Consolidated income statement \u2013 included in cost of sales
105.1
\u2013
\u2013
\u2013
\u2013
10 5.1
\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 gains/(losses)
\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 1 January 2025
25.9
4.8
4.3
(4.0)
(38.9)
(7.9)
Gains/(losses) recognised:
\u2013 Change in fair value of hedging instrument recognised in OCI
122.3
(84.9)
(2.3)
5.1
(0.6)
39.6
Reclassified from equity as the hedged item has affected profit or loss:
\u2013 Reclassified to the Consolidated income statement \u2013 included in revenue
(114.7)
\u2013
\u2013
\u2013
20.5
(94.2)
\u2013 Reclassified to the Consolidated income statement \u2013 included in cost of sales
(21.3)
\u2013
\u2013
\u2013
\u2013
(21.3)
\u2013 Reclassified to the Consolidated income statement \u2013 included in interest payable and similar charges
\u2013
7.1
(5.9)
1.9
\u2013
3.1
\u2013 Reclassified to the Consolidated income statement \u2013 included in foreign exchange gains/(losses)
\u2013
(30.4)
\u2013
(3.1)
\u2013
(33.5)
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
0.8
0.8
Transferred from equity and included within the initial cost of a non-financial asset:
\u2013 Transferred to cost of inventories
\u2013
31.8
\u2013
\u2013
\u2013
31.8
Related deferred tax, net (note 2.6)
3.4
19.1
2.1
(0.9)
(5.2)
18.5
At 31 December 2025
15.6
(52.5)
(1.8)
(1.0)
(23.4)
(63.1)
The expected release profile from equity of post-tax hedging gains and losses is as follows:
At 31 December 2025
Within 1 year 1\u20132 years >2 years Total
\u00a3m \u00a3m \u00a3m \u00a3m
Commodity risk
12.7
2.1
0.8
15.6
Foreign currency exchange risk
(19.9)
(9.0)
(23.6)
(52.5)
Interest rate risk
(1.0)
(0.7)
(0 .1)
(1.8)
Foreign currency and interest rate risk
(0.8)
(0.2)
\u2013
(1.0)
Inflation risk
(11.9)
(3.7)
(7.8)
(23.4)
(20.9)
(11.5)
(30.7)
(63.1)
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)
7.4 Cost of hedging reserve
The Group designates the change in the spot rate as the hedged risk in the Group\u2019s cash flow
hedge relationships hedging the purchase of inventory denominated in foreign currencies. The
Group designates the cost of hedging, being the change in fair value associated with forward points
including currency basis, to equity.
For foreign currency options designated as cash flow hedges for the purchase of inventory
denominated in foreign currencies the Group designates only the change in intrinsic value as the
hedged risk. The change in fair value associated with the time value of options is recognised in the
cost of hedging reserve.
The purchase of inventory denominated in a foreign currency is a transaction related hedged item
that results in the recognition of a non-financial asset. As such, amounts accumulated in the cost
of hedging reserve are removed from the cost of hedging reserve and included within the initial
cost of the non-financial asset, being the inventory, on initial recognition of the non-financial asset.
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
2025 2024
\u00a3m \u00a3m
At 1 January
6.9
18.7
(Losses)/gains recognised:
\u2013 Change in fair value of hedging instruments recognised in the
Consolidated statement of comprehensive income
(21.9)
6.8
Transferred from equity and included within the initial cost of a
non-financial asset:
\u2013 Transferred to cost of inventories
(4.3)
(22.6)
Related deferred tax, net (note 2.6)
6.5
4.0
At 31 December
(12.8)
6.9
The expected release profile from equity of post-tax cost of hedging gains and losses is as follows:
At 31 December 2025
Within 1 year 1\u20132 years >2 years Total
\u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency exchange risk
(3.6)
(4.1)
(5.1)
(12.8)
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
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:
At 31 December 2025
At 31 December 2024
Net amounts
Gross Net amounts Related cash of financial
amounts of financial Related collateral Gross amounts instruments Related Related cash
Gross of financial instruments financial assets/ of financial presented financial collateral
amounts instruments presented instruments (liabilities) Gross amounts instruments in the instruments assets/
of financial offset in the in the that are that are not of financial offset in the balance that are (liabilities) that
instruments balance sheet balance sheet not offset offset Net amount
instruments
(1)
balance sheet
sheet
(1)
not offset are not offset Net amount
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial assets
Derivative financial instruments
129.3
(36.3)
93.0
(46.5)
\u2013
46.5
328.5
(71.2)
2 57.3
(166.4)
(1.5)
89.4
Trade and other receivables and contract assets
369.6
(65.5)
30 4.1
(2.7)
(10.9)
290.5
445.3
(52.7)
392.6
(2.5)
\u2013
39 0.1
Financial liabilities
Derivative financial instruments
(286.1)
36.3
(249.8)
47. 8
10.9
(191.1)
(404.5)
71.2
(333.3)
156.1
\u2013
(17 7.2)
Trade and other payables and contract liabilities
(739.3)
65.5
(673.8)
1.4
\u2013
(672.4)
(845.7)
52.7
(793.0)
12.8
1.5
(778.7)
(1) The amounts in the table above have been represented to present only the financial assets and financial liabilities included within the balance sheet line item.
Collateral assets and liabilities are recorded in other receivables and other payables respectively.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-578": { "value": "
Carrying amount
Fair value
Financial Financial
Fair value \u2013 Mandatorily assets at liabilities at
hedging at FVTPL \u2013 amortised amortised
instruments others FVOCI cost cost Total Level 1 Level 2 Level 3 Total
At 31 December 2025 \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial assets measured at fair value
Commodity contracts
41.4
18.0
\u2013
\u2013
\u2013
59.4
\u2013
59.4
\u2013
59.4
Foreign currency exchange contracts
1.9
25.8
\u2013
\u2013
\u2013
27.7
\u2013
27.7
\u2013
27.7
Interest rate and cross-currency contracts
5.9
\u2013
\u2013
\u2013
\u2013
5.9
\u2013
5.9
\u2013
5.9
Trade and other receivables
\u2013
\u2013
13.8
\u2013
\u2013
13.8
\u2013
13.8
\u2013
13.8
Cash and cash equivalents
\u2013
1.9
\u2013
\u2013
\u2013
1.9
\u2013
1.9
\u2013
1.9
Financial assets not measured at fair value
Trade and other receivables
\u2013
\u2013
\u2013
290.3
\u2013
290.3
Cash and cash equivalents
\u2013
\u2013
\u2013
300.2
\u2013
300.2
Financial liabilities measured at fair value
Commodity contracts
(10.3)
(29.7)
\u2013
\u2013
\u2013
(40.0)
\u2013
(40.0)
\u2013
(40.0)
Foreign currency exchange contracts
(78.7)
(20.7)
\u2013
\u2013
\u2013
(99.4)
\u2013
(99.4)
\u2013
(99.4)
Interest rate and cross-currency contracts
(11.9)
(0.7)
\u2013
\u2013
\u2013
(12.6)
\u2013
(12.6)
\u2013
(12.6)
Inflation rate contracts
(97. 8)
\u2013
\u2013
\u2013
\u2013
(97.8)
\u2013
(97.8)
\u2013
(97. 8)
Financial liabilities not measured at fair value
Secured bank loans
\u2013
\u2013
\u2013
\u2013
(672.5)
(672.5)
\u2013
(67 7.5)
\u2013
(67 7.5)
Secured loan notes
\u2013
\u2013
\u2013
\u2013
(306.5)
(306.5)
(316 .1)
\u2013
\u2013
(316 .1)
Lease liabilities
\u2013
\u2013
\u2013
\u2013
(98.6)
(98.6)
Trade and other payables
\u2013
\u2013
\u2013
\u2013
(673.8)
(673.8)
Carrying amount
Fair value
Financial Financial
Fair value \u2013 Mandatorily assets at liabilities at
hedging at FVTPL \u2013 amortised amortised
instruments others FVOCI cost cost Total Level 1 Level 2 Level 3 Total
At 31 December 2024 \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
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)
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
2025 2024
\u00a3m \u00a3m
Net gains on derivative financial instruments not qualifying for hedge
accounting \u2013 recognised in revenue
24.9
11.9
Net (losses)/gains on derivative financial instruments not qualifying for
hedge accounting \u2013 recognised in cost of sales
(55.4)
45.3
Net gains on derivative financial instruments not qualifying for hedge
accounting \u2013 recognised in foreign exchange gains/(losses)
1.2
\u2013
Total (losses)/gains on derivative financial instruments not qualifying
for hedge accounting
(29.3)
57. 2
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-667": { "value": "
Carrying amount
Fair value
Financial Financial
Fair value \u2013 Mandatorily assets at liabilities at
hedging at FVTPL \u2013 amortised amortised
instruments others FVOCI cost cost Total Level 1 Level 2 Level 3 Total
At 31 December 2025 \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial assets measured at fair value
Commodity contracts
41.4
18.0
\u2013
\u2013
\u2013
59.4
\u2013
59.4
\u2013
59.4
Foreign currency exchange contracts
1.9
25.8
\u2013
\u2013
\u2013
27.7
\u2013
27.7
\u2013
27.7
Interest rate and cross-currency contracts
5.9
\u2013
\u2013
\u2013
\u2013
5.9
\u2013
5.9
\u2013
5.9
Trade and other receivables
\u2013
\u2013
13.8
\u2013
\u2013
13.8
\u2013
13.8
\u2013
13.8
Cash and cash equivalents
\u2013
1.9
\u2013
\u2013
\u2013
1.9
\u2013
1.9
\u2013
1.9
Financial assets not measured at fair value
Trade and other receivables
\u2013
\u2013
\u2013
290.3
\u2013
290.3
Cash and cash equivalents
\u2013
\u2013
\u2013
300.2
\u2013
300.2
Financial liabilities measured at fair value
Commodity contracts
(10.3)
(29.7)
\u2013
\u2013
\u2013
(40.0)
\u2013
(40.0)
\u2013
(40.0)
Foreign currency exchange contracts
(78.7)
(20.7)
\u2013
\u2013
\u2013
(99.4)
\u2013
(99.4)
\u2013
(99.4)
Interest rate and cross-currency contracts
(11.9)
(0.7)
\u2013
\u2013
\u2013
(12.6)
\u2013
(12.6)
\u2013
(12.6)
Inflation rate contracts
(97. 8)
\u2013
\u2013
\u2013
\u2013
(97.8)
\u2013
(97.8)
\u2013
(97. 8)
Financial liabilities not measured at fair value
Secured bank loans
\u2013
\u2013
\u2013
\u2013
(672.5)
(672.5)
\u2013
(67 7.5)
\u2013
(67 7.5)
Secured loan notes
\u2013
\u2013
\u2013
\u2013
(306.5)
(306.5)
(316 .1)
\u2013
\u2013
(316 .1)
Lease liabilities
\u2013
\u2013
\u2013
\u2013
(98.6)
(98.6)
Trade and other payables
\u2013
\u2013
\u2013
\u2013
(673.8)
(673.8)
Carrying amount
Fair value
Financial Financial
Fair value \u2013 Mandatorily assets at liabilities at
hedging at FVTPL \u2013 amortised amortised
instruments others FVOCI cost cost Total Level 1 Level 2 Level 3 Total
At 31 December 2024 \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
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)
The derivative financial instruments recognised in the Consolidated balance sheet at the reporting date are:
As at 31 December
2025 2024
\u00a3m \u00a3m
Non-current derivative financial instrument assets
24.4
81.7
Current derivative financial instrument assets
68.6
175.6
Total derivative financial instrument assets
93.0
257.3
Non-current derivative financial instrument liabilities
(75.6)
(262.2)
Current derivative financial instrument liabilities
(174.2)
( 71.1)
Total derivative financial instrument liabilities
(249.8)
(333.3)
Total net derivative financial instruments
(156.8)
(76.0)
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-681": { "value": "
Carrying amount
Fair value
Financial Financial
Fair value \u2013 Mandatorily assets at liabilities at
hedging at FVTPL \u2013 amortised amortised
instruments others FVOCI cost cost Total Level 1 Level 2 Level 3 Total
At 31 December 2025 \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial assets measured at fair value
Commodity contracts
41.4
18.0
\u2013
\u2013
\u2013
59.4
\u2013
59.4
\u2013
59.4
Foreign currency exchange contracts
1.9
25.8
\u2013
\u2013
\u2013
27.7
\u2013
27.7
\u2013
27.7
Interest rate and cross-currency contracts
5.9
\u2013
\u2013
\u2013
\u2013
5.9
\u2013
5.9
\u2013
5.9
Trade and other receivables
\u2013
\u2013
13.8
\u2013
\u2013
13.8
\u2013
13.8
\u2013
13.8
Cash and cash equivalents
\u2013
1.9
\u2013
\u2013
\u2013
1.9
\u2013
1.9
\u2013
1.9
Financial assets not measured at fair value
Trade and other receivables
\u2013
\u2013
\u2013
290.3
\u2013
290.3
Cash and cash equivalents
\u2013
\u2013
\u2013
300.2
\u2013
300.2
Financial liabilities measured at fair value
Commodity contracts
(10.3)
(29.7)
\u2013
\u2013
\u2013
(40.0)
\u2013
(40.0)
\u2013
(40.0)
Foreign currency exchange contracts
(78.7)
(20.7)
\u2013
\u2013
\u2013
(99.4)
\u2013
(99.4)
\u2013
(99.4)
Interest rate and cross-currency contracts
(11.9)
(0.7)
\u2013
\u2013
\u2013
(12.6)
\u2013
(12.6)
\u2013
(12.6)
Inflation rate contracts
(97. 8)
\u2013
\u2013
\u2013
\u2013
(97.8)
\u2013
(97.8)
\u2013
(97. 8)
Financial liabilities not measured at fair value
Secured bank loans
\u2013
\u2013
\u2013
\u2013
(672.5)
(672.5)
\u2013
(67 7.5)
\u2013
(67 7.5)
Secured loan notes
\u2013
\u2013
\u2013
\u2013
(306.5)
(306.5)
(316 .1)
\u2013
\u2013
(316 .1)
Lease liabilities
\u2013
\u2013
\u2013
\u2013
(98.6)
(98.6)
Trade and other payables
\u2013
\u2013
\u2013
\u2013
(673.8)
(673.8)
Carrying amount
Fair value
Financial Financial
Fair value \u2013 Mandatorily assets at liabilities at
hedging at FVTPL \u2013 amortised amortised
instruments others FVOCI cost cost Total Level 1 Level 2 Level 3 Total
At 31 December 2024 \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
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)
The derivative financial instruments recognised in the Consolidated balance sheet at the reporting date are:
As at 31 December
2025 2024
\u00a3m \u00a3m
Non-current derivative financial instrument assets
24.4
81.7
Current derivative financial instrument assets
68.6
175.6
Total derivative financial instrument assets
93.0
257.3
Non-current derivative financial instrument liabilities
(75.6)
(262.2)
Current derivative financial instrument liabilities
(174.2)
( 71.1)
Total derivative financial instrument liabilities
(249.8)
(333.3)
Total net derivative financial instruments
(156.8)
(76.0)
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-692": { "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 that do not qualify for the own-use exemption (principally wholesale power, gas and carbon emissions allowances) and financial contracts (principally foreign exchange, interest, inflation, financial oil and financial 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 commodity and financial contracts 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 the biomass market means these contracts 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. 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
2025 2024
\u00a3m \u00a3m
Non-current derivative financial instrument assets
24.4
81.7
Current derivative financial instrument assets
68.6
175.6
Total derivative financial instrument assets
93.0
257.3
Non-current derivative financial instrument liabilities
(75.6)
(262.2)
Current derivative financial instrument liabilities
(174.2)
( 71.1)
Total derivative financial instrument liabilities
(249.8)
(333.3)
Total net derivative financial instruments
(156.8)
(76.0)
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
2025 2024
\u00a3m \u00a3m
Net gains on derivative financial instruments not qualifying for hedge
accounting \u2013 recognised in revenue
24.9
11.9
Net (losses)/gains on derivative financial instruments not qualifying for
hedge accounting \u2013 recognised in cost of sales
(55.4)
45.3
Net gains on derivative financial instruments not qualifying for hedge
accounting \u2013 recognised in foreign exchange gains/(losses)
1.2
\u2013
Total (losses)/gains on derivative financial instruments not qualifying
for hedge accounting
(29.3)
57. 2
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 for part of the year. 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 hedging instrument 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.
At 31 December 2025
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging relationships for
instrument since Balance in the which hedge
inception used Fair value hedge reserve for accounting is
for measuring recognised in Fair value recognised continuing hedges no longer applied
Notional value Weighted average ineffectiveness \u2013 balance sheet \u2013 in balance sheet \u2013 net of deferred tax \u2013 net of deferred
of contracts fixed price gains/(losses) assets liabilities (debit)/credit tax \u2013 (debit)/credit
Exposure (MWh, allowances)
\u00a3
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts January 2026
Sale and purchase of power
4,835,705
77.08
\u2013 March 2030
156.8
41.4
(10.3)
15.6
\u2013
31 December 2025
Cumulative change in Hedge Amount Amount reclassified Line item
fair value of hedged ineffectiveness transferred to Amount reclassified due to the hedged in the income
item since inception Hedging gains recognised in Line item in the the cost or carrying due to the hedged future cash flows statement/
used for measuring recognised in OCI the income statement income statement value of a item affecting being no longer balance sheet
ineffectiveness \u2013 in the period \u2013 in the period \u2013 that includes non-financial profit or loss \u2013 expected to occur \u2013 affected by the
losses/(gains) gains/(losses) gains/(losses) hedge asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Commodity contracts
156.8
122.3
\u2013
Revenue
\u2013
(114.7)
\u2013
Revenue
Sale and purchase of power
\u2013
Cost of sales
\u2013
(21.3)
\u2013
Cost of sales
At 31 December 2024
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging relationships for
instrument since Balance in the which hedge
inception used Fair value hedge reserve for accounting is
for measuring recognised in Fair value recognised continuing hedges no longer applied
Notional value Weighted average ineffectiveness \u2013 balance sheet \u2013 in balance sheet \u2013 net of deferred tax \u2013 net of deferred
of contracts fixed price gains/(losses) assets liabilities (debit)/credit tax \u2013 (debit)/credit
Exposure (MWh, allowances)
\u00a3
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts January 2025
Sale and purchase of power
7,013,76 6
87.3
\u2013 September 2028
34.5
101.9
(50.9)
25.9
\u2013
Purchase of carbon emissions allowances
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
At 31 December 2024
Cumulative change in Hedge Amount Amount reclassified Line item
fair value of hedged ineffectiveness Line item transferred to Amount reclassified due to the hedged in the income
item since inception Hedging gains recognised in in the income the cost or due to the hedged future cash flows statement/
used for measuring recognised in OCI in the income statement statement carrying value of item affecting being no longer balance sheet
ineffectiveness \u2013 the period \u2013 gains/ in the period \u2013 that includes a non-financial profit or loss \u2013 expected to occur \u2013 affected by the
losses/(gains) (losses) gains/(losses) hedge asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Commodity contracts
34.5
(15.2)
\u2013
Revenue
\u2013
(397.5)
\u2013
Revenue
Sale and purchase of 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
Foreign currency risk hedge accounting The Group designates certain forward and option foreign currency exchange contracts 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, such as 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 foreign exchange forwards in order to fix the sterling cash flows payable on the principal repayment. The Group had 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 had separately taken out C$200.0 million notional value foreign exchange forwards in order to fix the sterling cash flows payable on the principal repayment. During the year the Group chose to make an early repayment of this term loan facility. Due to the repayment of the underlying hedged item, hedge accounting ceased at the date the facility was repaid. The Group has taken out fixed-to-fixed cross-currency interest rate swaps to hedge the future cash flows associated with the \u20ac350.0 million fixed rate EUR loan notes 2029 and the \u20ac31.5 million fixed rate element of the UK infrastructure private placement facility (2020). The Group had a fixed-to-fixed cross-currency interest rate swap that was entered into to hedge the future cash flows associated with the \u20ac143.8 million 2.625% EUR loan notes 2025. During the year this swap and the underlying loan notes matured and were settled. As at 31 December 2025, 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.
At 31 December 2025
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging relationships for
instrument since Balance in the which hedge
inception used Fair value Fair value hedge reserve for accounting is
Weighted for measuring recognised in recognised in continuing hedges no longer applied
Notional value of average ineffectiveness \u2013 balance sheet \u2013 balance sheet \u2013 net of deferred net of deferred
contracts fixed/variable gains/(losses) assets liabilities tax \u2013 (debit)/credit tax \u2013 (debit)/credit
US$m, \u20acm, C$m
rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency risk on biomass purchases January 2026
Purchases in foreign currency \u2013 USD
2,731.5
US$1.29
\u2013 December 2030
(92.0)
1.1
(66.0)
(47.3)
\u2013
January 2026
Purchases in foreign currency \u2013 EUR
4 87.0
\u20ac1.10
\u2013 September 2030
(3.0)
0.8
(5.3)
0.4
\u2013
January 2026
Purchases in foreign currency \u2013 CAD
343.5
C$1.75
\u2013 October 2030
(11.8)
\u2013
(5.6)
(4.8)
\u2013
Foreign currency risk on borrowings January 2026
Interest and principal payments \u2013 EUR
381.5
\u20ac1.16 / 7.22%
\u2013 November 2026
4.5
4.9
(1.9)
(0.8)
\u2013
February 2027
Principal payments \u2013 EUR
185.0
\u20ac1.11
\u2013 March 2028
6.5
\u2013
(1.8)
\u2013
\u2013
Principal payments \u2013 CAD
\u2013
\u2013
\u2013
(4.0)
\u2013
\u2013
\u2013
\u2013
Foreign currency and interest rate risk on borrowings January 2026
Interest and principal payments \u2013 EUR
255.0
\u20ac1.11 / 4.04%
\u2013 March 2026
(6.8)
\u2013
( 7.0)
(1.0)
\u2013
Interest payments \u2013 CAD
\u2013
\u2013
\u2013
(2 .1)
\u2013
\u2013
\u2013
\u2013
Interest rate risk on borrowings January 2026
Variable rate GBP debt
423.0
2.89%
\u2013 July 2029
(2 .1)
1.0
(3.0)
(1.8)
\u2013
Exposure
At 31 December 2025
Cumulative change in Hedge Amount reclassified
fair value of hedged ineffectiveness Amount reclassified due to the hedged Line item in the
item since inception Hedging losses recognised in the Amount transferred due to the hedged future cash flows income statement/
used for measuring recognised in OCI income statement Line item in the to the cost or item affecting being no longer balance sheet
ineffectiveness \u2013 in the period \u2013 in the period \u2013 income statement carrying value of a profit or loss \u2013 expected to occur \u2013 affected by
losses/(gains) gains/(losses) gains/(losses) that includes hedge non-financial asset (gains)/losses (gains)/losses the transfer/
\u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Foreign currency risk on biomass purchases
Purchases in foreign currency \u2013 USD
(92.0)
(104.5)
\u2013
Cost of sales
27.1
\u2013
\u2013
Inventories
Purchases in foreign currency \u2013 EUR
(3.0)
8.0
\u2013
Cost of sales
(1.5)
\u2013
\u2013
Inventories
Purchases in foreign currency \u2013 CAD
(11.8)
(4.8)
\u2013
Cost of sales
6.2
\u2013
\u2013
Inventories
Foreign currency risk on borrowings Interest payable Interest payable
\u2013
and similar charges
\u2013
7.1
\u2013
and similar charges
4.5
10.4
Foreign exchange Foreign exchange
Interest and principal payments \u2013 EUR \u2013
gains/(losses)
\u2013
(24.4)
\u2013
gains/(losses)
Foreign exchange Foreign exchange
Principal payments \u2013 EUR
6.5
8.3
\u2013
gains/(losses)
\u2013
(8.3)
\u2013
gains/(losses)
Foreign exchange Foreign exchange
Principal payments \u2013 CAD
(4.0)
(2.3)
\u2013
gains/(losses)
\u2013
2.3
\u2013
gains/(losses)
Foreign currency and interest rate risk on borrowings Interest payable Interest payable
(3.2)
5.4
\u2013
and similar charges
\u2013
\u2013
\u2013
and similar charges
Foreign exchange Foreign exchange
Interest and principal payments \u2013 EUR (3.6)
gains/(losses)
\u2013
( 3.1)
\u2013
gains/(losses)
Interest payable Interest payable
Interest payments \u2013 CAD
(2 .1)
(0.3)
\u2013
and similar charges
\u2013
1.0
0.9
and similar charges
Interest rate risk on borrowings Interest payable Interest payable
Variable rate GBP debt
(2.3)
(2.3)
\u2013
and similar charges
\u2013
(5.9)
\u2013
and similar charges
Exposure
At 31 December 2024
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging relationships for
instrument since Balance in the which hedge
inception used Fair value Fair value hedge reserve for accounting is
for measuring recognised in recognised in continuing hedges no longer applied
Notional value Weighted average ineffectiveness \u2013 balance sheet \u2013 balance sheet \u2013 net of deferred tax \u2013 net of deferred
of contracts fixed/variable gains/(losses) assets liabilities (debit)/credit tax \u2013 (debit)/credit
US$m, \u20acm, C$m
rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency risk on biomass purchases January 2025
Purchases in foreign currency \u2013 USD
1,430.5
US$1.27
\u2013 February 2027
18.6
20.7
(2.1)
10.7
\u2013
January 2025
Purchases in foreign currency \u2013 EUR
270.0
\u20ac 1.15
\u2013 October 2026
(6.3)
\u2013
(6.3)
(4.5)
\u2013
January 2025
Purchases in foreign currency \u2013 CAD
166.0
C$1.67
\u2013 March 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 payments \u2013 EUR
525.3
\u20ac1.14 / 6.48%
\u2013 April 2028
(10.4)
\u2013
(19.7)
4.4
\u2013
February 2027
Principal payments \u2013 EUR
185.0
\u20ac 1.11
\u2013 March 2028
(5 .1)
\u2013
(5 .1)
\u2013
\u2013
Principal payments \u2013 CAD
200.0
C$1.68
January 2026
(5.7)
\u2013
(5.7)
\u2013
\u2013
Foreign currency and interest rate risk on borrowings January 2026
Interest and principal payments \u2013 EUR
255.0
\u20ac1.09 / 4.04%
\u2013 March 2028
(8.6)
\u2013
(8.7)
(2.7)
\u2013
Interest payments \u2013 CAD
200.0
6.05%
January 2026
(1.5)
\u2013
(1.8)
(1.3)
\u2013
Interest rate risk on borrowings January 2026
Variable rate GBP debt
423.0
2.89%
\u2013 April 2028
6.1
7.1
(0.4)
4.3
\u2013
Exposure
At 31 December 2024
Cumulative change in Hedge Amount reclassified
fair value of hedged ineffectiveness Amount reclassified due to the hedged Line item in the
item since inception Hedging losses recognised in the Amount transferred due to the hedged future cash flows income statement/
used for measuring recognised in OCI in income statement Line item in the to the cost or item affecting being no longer balance sheet
ineffectiveness \u2013 the period \u2013 in the period \u2013 income statement carrying value of a profit or loss \u2013 expected to occur \u2013 affected by the
losses/(gains) gains/(losses) gains/(losses) that includes hedge non-financial asset (gains)/losses (gains)/losses transfer/
\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 payable Interest payable
Interest and principal payments \u2013 USD
\u2013
(5.6)
\u2013
and similar charges
\u2013
(0.7)
\u2013
and similar charges
Foreign exchange Foreign exchange
\u2013
gains/(losses)
\u2013
9.3
\u2013
gains/(losses)
Interest payable Interest payable
Interest and principal payments \u2013 EUR
(11.3)
(7.5)
\u2013
and similar charges
\u2013
7.4
\u2013
and similar charges
Foreign exchange Foreign exchange
\u2013
gains/(losses)
\u2013
6.4
\u2013
gains/(losses)
Foreign exchange Foreign exchange
Principal payments \u2013 EUR
(5.1)
(6.0)
\u2013
gains/(losses)
\u2013
6
\u2013
gains/(losses)
Foreign exchange Foreign exchange
Principal payments \u2013 CAD
(5.7)
(7.4)
\u2013
gains/(losses)
\u2013
7.4
\u2013
gains/(losses)
Foreign currency and interest rate risk on borrowings Interest payable Interest payable
Interest and principal payments \u2013 EUR
(8.7)
(6.4)
\u2013
and similar charges
\u2013
(2.5)
\u2013
and similar charges
Foreign exchange Foreign exchange
\u2013
gains/(losses)
\u2013
3.4
\u2013
gains/(losses)
Interest payable Interest payable
Interest payments \u2013 CAD
(1.6)
(1.3)
\u2013
and similar charges
\u2013
(0.4)
\u2013
and similar charges
Interest rate risk on borrowings Interest payable Interest payable
Variable rate GBP debt
10.8
(2.3)
\u2013
and similar charges
\u2013
(12.0)
\u2013
and similar 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 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. The Group recognised \u00a33.5 million of gains (2024: \u00a38.7 million of losses) as ineffective primarily due to the basis difference between the RPI hedging instruments and the CPI exposure. In the current year, as a result of the updated estimates of the OCGT commissioning dates, the Group recycled \u00a30.8 million (2024: \u00a31.2 million) of losses to the Consolidated income statement on CPI inflation swaps designated as hedging instruments for the OCGT Capacity Market revenues, 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.
At 31 December 2025
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging relationships for
instrument since Balance in the which hedge
inception used hedge reserve for accounting is
for measuring Fair value recognised Fair value recognised continuing hedges no longer applied
Notional value ineffectiveness \u2013 in balance sheet \u2013 in balance sheet \u2013 net of deferred net of deferred tax \u2013
of contracts Weighted average gains/(losses) assets liabilities tax \u2013 (debit)/credit (debit)/credit
Exposure \u00a3m
fixed rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Inflation April 2026
Inflation-linked sales contracts \u2013 CPI
30.4
CPI \u2013 2.70%
\u2013 July 2038
(8.5)
\u2013
(13.1)
(6.3)
1.9
Inflation-linked sales contracts \u2013 RPI
440.0
RPI \u2013 3.46%
April 2026
(133.5)
\u2013
(84.7)
(19.0)
\u2013
At 31 December 2025
Hedge
ineffectiveness/
Cumulative change in reversal of Amount reclassified
fair value of hedged ineffectiveness Amount reclassified due to the hedged Line item in the
item since inception Hedging gains recognised in the Amount transferred due to the hedged future cash flows income statement/
used for measuring recognised in OCI income statement Line item in the to the cost or item affecting being no longer balance sheet
ineffectiveness \u2013 in the period \u2013 in the period \u2013 income statement carrying value of a profit or loss \u2013 expected to occur affected by
losses/(gains) gains/(losses) gains/(losses) that includes hedge non- financial asset (gains)/losses \u2013 (gains)/losses the transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Inflation
Inflation-linked sales contracts \u2013 CPI
(8.5)
3.3
\u2013
Revenue
\u2013
(4.6)
0.8
Revenue
Inflation-linked sales contracts \u2013 RPI
(109.8)
(3.9)
3.5
Revenue
\u2013
2 5.1
\u2013
Revenue
", "dimensions": { "concept": "ifrs-full:DisclosureOfHedgeAccountingExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-716": { "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 that do not qualify for the own-use exemption (principally wholesale power, gas and carbon emissions allowances) and financial contracts (principally foreign exchange, interest, inflation, financial oil and financial 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 commodity and financial contracts 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 the biomass market means these contracts 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. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-727": { "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 that do not qualify for the own-use exemption (principally wholesale power, gas and carbon emissions allowances) and financial contracts (principally foreign exchange, interest, inflation, financial oil and financial 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 commodity and financial contracts 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 the biomass market means these contracts 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. 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 for part of the year. 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 six-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 borrowings (see note 4.2 for further details on borrowings). The Group currently has issued foreign currency denominated borrowings in EUR (2024: EUR and CAD). The Group utilises derivative contracts, including cross-currency interest rate swaps and foreign exchange forward contracts, to manage exchange risk on foreign currency borrowings. Foreign currency risk hedge accounting The Group designates certain forward and option foreign currency exchange contracts 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, such as 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 foreign exchange forwards in order to fix the sterling cash flows payable on the principal repayment. The Group had 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 had separately taken out C$200.0 million notional value foreign exchange forwards in order to fix the sterling cash flows payable on the principal repayment. During the year the Group chose to make an early repayment of this term loan facility. Due to the repayment of the underlying hedged item, hedge accounting ceased at the date the facility was repaid. The Group has taken out fixed-to-fixed cross-currency interest rate swaps to hedge the future cash flows associated with the \u20ac350.0 million fixed rate EUR loan notes 2029 and the \u20ac31.5 million fixed rate element of the UK infrastructure private placement facility (2020). The Group had a fixed-to-fixed cross-currency interest rate swap that was entered into to hedge the future cash flows associated with the \u20ac143.8 million 2.625% EUR loan notes 2025. During the year this swap and the underlying loan notes matured and were settled. As at 31 December 2025, 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 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. The Group recognised \u00a33.5 million of gains (2024: \u00a38.7 million of losses) as ineffective primarily due to the basis difference between the RPI hedging instruments and the CPI exposure. In the current year, as a result of the updated estimates of the OCGT commissioning dates, the Group recycled \u00a30.8 million (2024: \u00a31.2 million) of losses to the Consolidated income statement on CPI inflation swaps designated as hedging instruments for the OCGT Capacity Market revenues, 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 currency exchange risk, interest rate risk, foreign currency exchange and interest 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 Group designates the change in the spot rate as the hedged risk in the Group\u2019s cash flow hedge relationships hedging the purchase of inventory denominated in foreign currencies. The Group designates the cost of hedging, being the change in fair value associated with forward points including currency basis, to equity. For foreign currency options designated as cash flow hedges for the purchase of inventory denominated in foreign currencies the Group designates only the change in intrinsic value as the hedged risk. The change in fair value associated with the time value of options is recognised in the cost of hedging reserve. The purchase of inventory denominated in a foreign currency is a transaction related hedged item that results in the recognition of a non-financial asset. As such, amounts accumulated in the cost of hedging reserve are removed from the cost of hedging reserve and included within the initial cost of the non-financial asset, being the inventory, on initial recognition of the non-financial asset. 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-695": { "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 41). The Financial Risk Management Committee identifies, evaluates and manages financial risks in close coordination 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 Group\u2019s 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 are held constant. 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 interpolated or extrapolated from the table below 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 2025
Power
\u2013
\u2013
28.0
(27.7)
Carbon
(0.8)
0.8
\u2013
\u2013
Gas
(1.0)
1.0
\u2013
\u2013
Oil
(5.6)
5.2
\u2013
\u2013
Freight
(1.6)
1.6
\u2013
\u2013
Impact on other components of equity,
Impact on profit after tax 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
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 prices 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, after taking account of the volume held back for operational risk management purposes. Where the power generation has contract indexation, forward power sales are generally entered once the indexation window has begun. 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 FVTPL. Where forward power curves are less liquid, the Group uses 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 Group\u2019s non-core SME customer meter points (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 in relation to the Group\u2019s carbon emissions. Carbon emissions allowances are also sold as part of the proxy power hedges that utilise gas sales as a proxy for power, as described above. Sales and purchases of carbon are not designated as cash flow hedges. The Group purchases financial oil contracts to hedge freight costs for the delivery of biomass. Oil is a significant input into the overall cost of freight. Financial oil contracts are not designated as cash flow hedges. The Group purchases financial freight contracts to hedge freight costs for the delivery of biomass. Financial freight 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 for part of the year. 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 hedging instrument 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.
At 31 December 2025
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging relationships for
instrument since Balance in the which hedge
inception used Fair value hedge reserve for accounting is
for measuring recognised in Fair value recognised continuing hedges no longer applied
Notional value Weighted average ineffectiveness \u2013 balance sheet \u2013 in balance sheet \u2013 net of deferred tax \u2013 net of deferred
of contracts fixed price gains/(losses) assets liabilities (debit)/credit tax \u2013 (debit)/credit
Exposure (MWh, allowances)
\u00a3
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts January 2026
Sale and purchase of power
4,835,705
77.08
\u2013 March 2030
156.8
41.4
(10.3)
15.6
\u2013
31 December 2025
Cumulative change in Hedge Amount Amount reclassified Line item
fair value of hedged ineffectiveness transferred to Amount reclassified due to the hedged in the income
item since inception Hedging gains recognised in Line item in the the cost or carrying due to the hedged future cash flows statement/
used for measuring recognised in OCI the income statement income statement value of a item affecting being no longer balance sheet
ineffectiveness \u2013 in the period \u2013 in the period \u2013 that includes non-financial profit or loss \u2013 expected to occur \u2013 affected by the
losses/(gains) gains/(losses) gains/(losses) hedge asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Commodity contracts
156.8
122.3
\u2013
Revenue
\u2013
(114.7)
\u2013
Revenue
Sale and purchase of power
\u2013
Cost of sales
\u2013
(21.3)
\u2013
Cost of sales
At 31 December 2024
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging relationships for
instrument since Balance in the which hedge
inception used Fair value hedge reserve for accounting is
for measuring recognised in Fair value recognised continuing hedges no longer applied
Notional value Weighted average ineffectiveness \u2013 balance sheet \u2013 in balance sheet \u2013 net of deferred tax \u2013 net of deferred
of contracts fixed price gains/(losses) assets liabilities (debit)/credit tax \u2013 (debit)/credit
Exposure (MWh, allowances)
\u00a3
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts January 2025
Sale and purchase of power
7,013,76 6
87.3
\u2013 September 2028
34.5
101.9
(50.9)
25.9
\u2013
Purchase of carbon emissions allowances
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
At 31 December 2024
Cumulative change in Hedge Amount Amount reclassified Line item
fair value of hedged ineffectiveness Line item transferred to Amount reclassified due to the hedged in the income
item since inception Hedging gains recognised in in the income the cost or due to the hedged future cash flows statement/
used for measuring recognised in OCI in the income statement statement carrying value of item affecting being no longer balance sheet
ineffectiveness \u2013 the period \u2013 gains/ in the period \u2013 that includes a non-financial profit or loss \u2013 expected to occur \u2013 affected by the
losses/(gains) (losses) gains/(losses) hedge asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Commodity contracts
34.5
(15.2)
\u2013
Revenue
\u2013
(397.5)
\u2013
Revenue
Sale and purchase of 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
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 borrowings. These fuel purchases are typically denominated in US dollars (USD), euros (EUR) or Canadian dollars (CAD), and the foreign currency borrowings are denominated in EUR (see note 4.2 for further details on the Group\u2019s borrowings). The Group also had CAD denominated borrowings at the prior year end. 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, net of tax, 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 the reporting date on outstanding monetary items denominated in foreign currencies and the valuation of foreign currency derivative instruments. The analysis excludes the impact of the translation of the net assets of foreign operations. 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 are 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 2025
USD
41.6
(41.5)
150.8
(121.6)
EUR
17.8
(17. 5)
33.1
(26.9)
CAD
1.7
(1.7)
15.1
(12.3)
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)
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 six-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 borrowings (see note 4.2 for further details on borrowings). The Group currently has issued foreign currency denominated borrowings in EUR (2024: EUR and CAD). The Group utilises derivative contracts, including cross-currency interest rate swaps and foreign exchange forward contracts, to manage exchange risk on foreign currency borrowings. Foreign currency risk hedge accounting The Group designates certain forward and option foreign currency exchange contracts 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, such as 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) and the Energy Solutions receivables monetisation facility, should they be utilised. The returns generated on the Group\u2019s cash balance, or payable on amounts drawn on the RCF or amounts utilised under the Energy Solutions receivables monetisation facility, 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 borrowings (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 2025
Variable rate debt \u2013 hedged
(4.8)
4.8
\u2013
\u2013
Interest rate swaps
4.9
(4.9)
(0.1)
0.1
Net impact
0.1
(0 .1)
(0 .1)
0 .1
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)
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 borrowings. The Group has reduced its exposure to interest rate risk on variable rate borrowings 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 borrowings. 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, however this impact is reduced by the amounts recycled to profit or loss to offset the interest payable. These fair value changes impact 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 foreign exchange forwards in order to fix the sterling cash flows payable on the principal repayment. The Group had 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 had separately taken out C$200.0 million notional value foreign exchange forwards in order to fix the sterling cash flows payable on the principal repayment. During the year the Group chose to make an early repayment of this term loan facility. Due to the repayment of the underlying hedged item, hedge accounting ceased at the date the facility was repaid. The Group has taken out fixed-to-fixed cross-currency interest rate swaps to hedge the future cash flows associated with the \u20ac350.0 million fixed rate EUR loan notes 2029 and the \u20ac31.5 million fixed rate element of the UK infrastructure private placement facility (2020). The Group had a fixed-to-fixed cross-currency interest rate swap that was entered into to hedge the future cash flows associated with the \u20ac143.8 million 2.625% EUR loan notes 2025. During the year this swap and the underlying loan notes matured and were settled. As at 31 December 2025, 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.
At 31 December 2025
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging relationships for
instrument since Balance in the which hedge
inception used Fair value Fair value hedge reserve for accounting is
Weighted for measuring recognised in recognised in continuing hedges no longer applied
Notional value of average ineffectiveness \u2013 balance sheet \u2013 balance sheet \u2013 net of deferred net of deferred
contracts fixed/variable gains/(losses) assets liabilities tax \u2013 (debit)/credit tax \u2013 (debit)/credit
US$m, \u20acm, C$m
rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency risk on biomass purchases January 2026
Purchases in foreign currency \u2013 USD
2,731.5
US$1.29
\u2013 December 2030
(92.0)
1.1
(66.0)
(47.3)
\u2013
January 2026
Purchases in foreign currency \u2013 EUR
4 87.0
\u20ac1.10
\u2013 September 2030
(3.0)
0.8
(5.3)
0.4
\u2013
January 2026
Purchases in foreign currency \u2013 CAD
343.5
C$1.75
\u2013 October 2030
(11.8)
\u2013
(5.6)
(4.8)
\u2013
Foreign currency risk on borrowings January 2026
Interest and principal payments \u2013 EUR
381.5
\u20ac1.16 / 7.22%
\u2013 November 2026
4.5
4.9
(1.9)
(0.8)
\u2013
February 2027
Principal payments \u2013 EUR
185.0
\u20ac1.11
\u2013 March 2028
6.5
\u2013
(1.8)
\u2013
\u2013
Principal payments \u2013 CAD
\u2013
\u2013
\u2013
(4.0)
\u2013
\u2013
\u2013
\u2013
Foreign currency and interest rate risk on borrowings January 2026
Interest and principal payments \u2013 EUR
255.0
\u20ac1.11 / 4.04%
\u2013 March 2026
(6.8)
\u2013
( 7.0)
(1.0)
\u2013
Interest payments \u2013 CAD
\u2013
\u2013
\u2013
(2 .1)
\u2013
\u2013
\u2013
\u2013
Interest rate risk on borrowings January 2026
Variable rate GBP debt
423.0
2.89%
\u2013 July 2029
(2 .1)
1.0
(3.0)
(1.8)
\u2013
Exposure
At 31 December 2025
Cumulative change in Hedge Amount reclassified
fair value of hedged ineffectiveness Amount reclassified due to the hedged Line item in the
item since inception Hedging losses recognised in the Amount transferred due to the hedged future cash flows income statement/
used for measuring recognised in OCI income statement Line item in the to the cost or item affecting being no longer balance sheet
ineffectiveness \u2013 in the period \u2013 in the period \u2013 income statement carrying value of a profit or loss \u2013 expected to occur \u2013 affected by
losses/(gains) gains/(losses) gains/(losses) that includes hedge non-financial asset (gains)/losses (gains)/losses the transfer/
\u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Foreign currency risk on biomass purchases
Purchases in foreign currency \u2013 USD
(92.0)
(104.5)
\u2013
Cost of sales
27.1
\u2013
\u2013
Inventories
Purchases in foreign currency \u2013 EUR
(3.0)
8.0
\u2013
Cost of sales
(1.5)
\u2013
\u2013
Inventories
Purchases in foreign currency \u2013 CAD
(11.8)
(4.8)
\u2013
Cost of sales
6.2
\u2013
\u2013
Inventories
Foreign currency risk on borrowings Interest payable Interest payable
\u2013
and similar charges
\u2013
7.1
\u2013
and similar charges
4.5
10.4
Foreign exchange Foreign exchange
Interest and principal payments \u2013 EUR \u2013
gains/(losses)
\u2013
(24.4)
\u2013
gains/(losses)
Foreign exchange Foreign exchange
Principal payments \u2013 EUR
6.5
8.3
\u2013
gains/(losses)
\u2013
(8.3)
\u2013
gains/(losses)
Foreign exchange Foreign exchange
Principal payments \u2013 CAD
(4.0)
(2.3)
\u2013
gains/(losses)
\u2013
2.3
\u2013
gains/(losses)
Foreign currency and interest rate risk on borrowings Interest payable Interest payable
(3.2)
5.4
\u2013
and similar charges
\u2013
\u2013
\u2013
and similar charges
Foreign exchange Foreign exchange
Interest and principal payments \u2013 EUR (3.6)
gains/(losses)
\u2013
( 3.1)
\u2013
gains/(losses)
Interest payable Interest payable
Interest payments \u2013 CAD
(2 .1)
(0.3)
\u2013
and similar charges
\u2013
1.0
0.9
and similar charges
Interest rate risk on borrowings Interest payable Interest payable
Variable rate GBP debt
(2.3)
(2.3)
\u2013
and similar charges
\u2013
(5.9)
\u2013
and similar charges
Exposure
At 31 December 2024
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging relationships for
instrument since Balance in the which hedge
inception used Fair value Fair value hedge reserve for accounting is
for measuring recognised in recognised in continuing hedges no longer applied
Notional value Weighted average ineffectiveness \u2013 balance sheet \u2013 balance sheet \u2013 net of deferred tax \u2013 net of deferred
of contracts fixed/variable gains/(losses) assets liabilities (debit)/credit tax \u2013 (debit)/credit
US$m, \u20acm, C$m
rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency risk on biomass purchases January 2025
Purchases in foreign currency \u2013 USD
1,430.5
US$1.27
\u2013 February 2027
18.6
20.7
(2.1)
10.7
\u2013
January 2025
Purchases in foreign currency \u2013 EUR
270.0
\u20ac 1.15
\u2013 October 2026
(6.3)
\u2013
(6.3)
(4.5)
\u2013
January 2025
Purchases in foreign currency \u2013 CAD
166.0
C$1.67
\u2013 March 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 payments \u2013 EUR
525.3
\u20ac1.14 / 6.48%
\u2013 April 2028
(10.4)
\u2013
(19.7)
4.4
\u2013
February 2027
Principal payments \u2013 EUR
185.0
\u20ac 1.11
\u2013 March 2028
(5 .1)
\u2013
(5 .1)
\u2013
\u2013
Principal payments \u2013 CAD
200.0
C$1.68
January 2026
(5.7)
\u2013
(5.7)
\u2013
\u2013
Foreign currency and interest rate risk on borrowings January 2026
Interest and principal payments \u2013 EUR
255.0
\u20ac1.09 / 4.04%
\u2013 March 2028
(8.6)
\u2013
(8.7)
(2.7)
\u2013
Interest payments \u2013 CAD
200.0
6.05%
January 2026
(1.5)
\u2013
(1.8)
(1.3)
\u2013
Interest rate risk on borrowings January 2026
Variable rate GBP debt
423.0
2.89%
\u2013 April 2028
6.1
7.1
(0.4)
4.3
\u2013
Exposure
At 31 December 2024
Cumulative change in Hedge Amount reclassified
fair value of hedged ineffectiveness Amount reclassified due to the hedged Line item in the
item since inception Hedging losses recognised in the Amount transferred due to the hedged future cash flows income statement/
used for measuring recognised in OCI in income statement Line item in the to the cost or item affecting being no longer balance sheet
ineffectiveness \u2013 the period \u2013 in the period \u2013 income statement carrying value of a profit or loss \u2013 expected to occur \u2013 affected by the
losses/(gains) gains/(losses) gains/(losses) that includes hedge non-financial asset (gains)/losses (gains)/losses transfer/
\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 payable Interest payable
Interest and principal payments \u2013 USD
\u2013
(5.6)
\u2013
and similar charges
\u2013
(0.7)
\u2013
and similar charges
Foreign exchange Foreign exchange
\u2013
gains/(losses)
\u2013
9.3
\u2013
gains/(losses)
Interest payable Interest payable
Interest and principal payments \u2013 EUR
(11.3)
(7.5)
\u2013
and similar charges
\u2013
7.4
\u2013
and similar charges
Foreign exchange Foreign exchange
\u2013
gains/(losses)
\u2013
6.4
\u2013
gains/(losses)
Foreign exchange Foreign exchange
Principal payments \u2013 EUR
(5.1)
(6.0)
\u2013
gains/(losses)
\u2013
6
\u2013
gains/(losses)
Foreign exchange Foreign exchange
Principal payments \u2013 CAD
(5.7)
(7.4)
\u2013
gains/(losses)
\u2013
7.4
\u2013
gains/(losses)
Foreign currency and interest rate risk on borrowings Interest payable Interest payable
Interest and principal payments \u2013 EUR
(8.7)
(6.4)
\u2013
and similar charges
\u2013
(2.5)
\u2013
and similar charges
Foreign exchange Foreign exchange
\u2013
gains/(losses)
\u2013
3.4
\u2013
gains/(losses)
Interest payable Interest payable
Interest payments \u2013 CAD
(1.6)
(1.3)
\u2013
and similar charges
\u2013
(0.4)
\u2013
and similar charges
Interest rate risk on borrowings Interest payable Interest payable
Variable rate GBP debt
10.8
(2.3)
\u2013
and similar charges
\u2013
(12.0)
\u2013
and similar 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). It is the intention of the UK Government to change to CPI-based indexation for ROC revenue from April 2026, subject to the publication of statutory instruments. 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 of equity,
Impact on profit after tax 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 2025
UK CPI inflation swaps
\u2013
\u2013
(22.3)
19.3
UK RPI inflation swaps
\u2013
\u2013
(1.6)
1.6
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
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 in the prior year was 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 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. The Group recognised \u00a33.5 million of gains (2024: \u00a38.7 million of losses) as ineffective primarily due to the basis difference between the RPI hedging instruments and the CPI exposure. In the current year, as a result of the updated estimates of the OCGT commissioning dates, the Group recycled \u00a30.8 million (2024: \u00a31.2 million) of losses to the Consolidated income statement on CPI inflation swaps designated as hedging instruments for the OCGT Capacity Market revenues, 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.
At 31 December 2025
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging relationships for
instrument since Balance in the which hedge
inception used hedge reserve for accounting is
for measuring Fair value recognised Fair value recognised continuing hedges no longer applied
Notional value ineffectiveness \u2013 in balance sheet \u2013 in balance sheet \u2013 net of deferred net of deferred tax \u2013
of contracts Weighted average gains/(losses) assets liabilities tax \u2013 (debit)/credit (debit)/credit
Exposure \u00a3m
fixed rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Inflation April 2026
Inflation-linked sales contracts \u2013 CPI
30.4
CPI \u2013 2.70%
\u2013 July 2038
(8.5)
\u2013
(13.1)
(6.3)
1.9
Inflation-linked sales contracts \u2013 RPI
440.0
RPI \u2013 3.46%
April 2026
(133.5)
\u2013
(84.7)
(19.0)
\u2013
At 31 December 2025
Hedge
ineffectiveness/
Cumulative change in reversal of Amount reclassified
fair value of hedged ineffectiveness Amount reclassified due to the hedged Line item in the
item since inception Hedging gains recognised in the Amount transferred due to the hedged future cash flows income statement/
used for measuring recognised in OCI income statement Line item in the to the cost or item affecting being no longer balance sheet
ineffectiveness \u2013 in the period \u2013 in the period \u2013 income statement carrying value of a profit or loss \u2013 expected to occur affected by
losses/(gains) gains/(losses) gains/(losses) that includes hedge non- financial asset (gains)/losses \u2013 (gains)/losses the transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Inflation
Inflation-linked sales contracts \u2013 CPI
(8.5)
3.3
\u2013
Revenue
\u2013
(4.6)
0.8
Revenue
Inflation-linked sales contracts \u2013 RPI
(109.8)
(3.9)
3.5
Revenue
\u2013
2 5.1
\u2013
Revenue
At 31 December 2024
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging Balance in the relationships for
instrument since hedge reserve which hedge
inception used for for continuing accounting is
measuring Fair value recognised Fair value recognised hedges net of no longer applied
Notional value ineffectiveness in balance sheet \u2013 in balance sheet \u2013 deferred tax \u2013 net of deferred tax \u2013
of contracts Weighted average \u2013 gains/(losses) assets liabilities (debit)/credit (debit)/credit
Exposure \u00a3m
fixed rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Inflation April 2026
Inflation-linked sales contracts \u2013 CPI
30.4
CPI \u2013 2.70%
\u2013 July 2038
(18.6)
\u2013
(18.6)
(14.5)
10.5
Inflation-linked sales contracts \u2013 RPI
440.0
RPI \u2013 3.65%
April 2026
(75.4)
\u2013
(165.4)
(34.9)
\u2013
At 31 December 2024
Cumulative change Hedge Amount reclassified
in fair value of hedged ineffectiveness Amount reclassified due to the hedged Line item in the
item since inception Hedging gains recognised in the Amount transferred due to the hedged future cash flows income statement/
used for measuring recognised in OCI in income statement Line item in the to the cost or item affecting being no longer balance sheet
ineffectiveness \u2013 the period \u2013 in the period \u2013 gains/ income statement carrying value of a profit or loss \u2013 expected to occur \u2013 affected by the
gains/(losses) gains/(losses) (losses) that includes hedge non-financial asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Inflation
Inflation-linked sales contracts \u2013 CPI
(18.6)
(1.3)
\u2013
Revenue
\u2013
(3.1)
1.2
Revenue
Inflation-linked sales contracts \u2013 RPI
(47.9)
(2 .1)
(8.7)
Revenue
\u2013
27.1
\u2013
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.
At 31 December 2025
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
69.1
22.8
165.3
489.5
\u2013
746.7
Loan notes, gross value
\u2013
17.9
17.9
332.3
\u2013
368.1
Borrowings, contractual
maturity
69.1
40.7
183.2
821.8
\u2013
1,114.8
Trade and other payables
594.7
77.5
1.6
\u2013
\u2013
673.8
Lease liabilities
9.0
22.2
21.2
30.4
38.3
121.1
672.8
140.4
206.0
852.2
38.3
1,909.7
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
1,3 7 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
The weighted average interest rate payable at the reporting date on the Group\u2019s borrowings was 5.40% (2024: 5.39%). Trade and other payables of \u00a3673.8 million (2024: \u00a3793.0 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 traded value. Vanilla foreign currency exchange contracts are expected to be gross settled through delivery of one currency and receipt of another. Gross settlement of both the interest and principal on cross-currency interest rate swaps is expected through delivery of one currency and receipt of another. 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. For option derivative contracts, such as foreign currency options, the expected cash flows are only included if the option has intrinsic value at the reporting date and therefore would exercise based on the market curves existing at the reporting date. Where derivatives are expected to be gross settled based on the traded value rather than the mark-to-market value, the gross undiscounted cash flows based on the contracted traded values 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 the 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. Derivative liabilities \u2013 cash inflow/(outflow)
At 31 December 2025
At 31 December 2024
Difference to Difference to
Within carrying Carrying Within carrying Carrying
1 year 1\u20132 years >2 years Total amount amount 1 year 1\u20132 years >2 years Total amount amount
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts \u2013 inflow
209.8
8.3
\u2013
218 .1
(224.0)
(5.9)
303.0
259.3
3 7. 8
6 0 0.1
(673.5)
(73.4)
Commodity contracts \u2013 outflow
(137.7 )
(52.5)
(15.6)
(205.8)
171.7
(34.1)
(33.8)
(1.4)
(4.1)
(39.3)
30.9
(8.4)
Foreign exchange contracts \u2013 inflow
1,075.4
688.7
1,497.0
3,261.1
26.4
(99.4)
6 41.1
468.4
328.0
1,43 7.5
15.2
(36.9)
Foreign exchange contracts \u2013 outflow
(1,118.0)
(711.9)
(1,557.0)
(3,386.9)
(637.4)
(494.6)
(357.6)
(1,489.6)
Cross-currency contracts \u2013 inflow
97.3
2.7
0.5
100.5
0.8
(9.6)
215.7
53.9
341.0
610.6
1.2
(30.2)
Cross-currency contracts \u2013 outflow
(107.3)
(3.1)
(0.5)
(110.9)
(241.3)
(63.4)
(337.3)
(642.0)
Interest rate contracts \u2013 inflow
\u2013
\u2013
\u2013
\u2013
0.1
(3.0)
0.3
\u2013
\u2013
0.3
0.1
(0.4)
Interest rate contracts \u2013 outflow
(1.6)
(1.3)
(0.2)
(3.1)
\u2013
(0.5)
(0.3)
(0.8)
Inflation contracts \u2013 outflow
(86.9)
(1.5)
(12 .1)
(100.5)
2.7
(97.8)
(84.3)
(91.5)
(20.0)
(195.8)
11.8
(184.0)
(69.0)
(70.6)
(87.9)
(227.5)
(22.3)
(249.8)
163.3
130.2
(12.5)
281.0
(614.3)
(333.3)
Derivative assets \u2013 cash inflow/(outflow)
At 31 December 2025
At 31 December 2024
Difference to Difference to
Within carrying Carrying Within carrying Carrying
1 year 1\u20132 years >2 years Total amount amount 1 year 1\u20132 years >2 years Total amount amount
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts \u2013 inflow
425.3
8 4.1
0 .1
509.5
(458.0)
51.5
363.7
50.6
16.8
431.1
(306.5)
124.6
Commodity contracts \u2013 outflow
(36.6)
( 7 7. 3)
(45.1)
(159.0)
166.9
7.9
(117.5)
(4.5)
(24.9)
(146.9)
175.8
28.9
Foreign exchange contracts \u2013 inflow
172.4
2.4
\u2013
174.8
1.2
27.7
874.6
1,030.0
245.1
2,149.7
(9.7)
96.7
Foreign exchange contracts \u2013 outflow
(148.3)
\u2013
\u2013
(148.3)
(839.9)
(97 7.1)
(226.3)
(2,043.3)
Cross-currency contracts \u2013 inflow
18.6
18.2
314.6
351.4
10.1
4.9
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Cross-currency contracts \u2013 outflow
(22.8)
(22.6)
(311.2)
(356.6)
\u2013
\u2013
\u2013
\u2013
Interest rate contracts \u2013 inflow
1.0
\u2013
\u2013
1.0
\u2013
1.0
6.3
1.1
\u2013
7.4
(0.2)
7.1
Interest rate contracts \u2013 outflow
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(0.1)
(0 .1)
409.6
4.8
(41.6)
372.8
(279.8)
93.0
287. 2
10 0 .1
10.6
397.9
(140.6)
257.3
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 \u00a330.6 million (2024: \u00a342.4 million) and expected credit losses on accrued income of \u00a35.0 million (2024: \u00a39.0 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. 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 Opus Energy non-core SME meter points (see note 2.7) 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 \u00a3302.1 million at 31 December 2025 (2024: \u00a3356.0 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 \u00a3300.2 million at 31 December 2025 (2024: \u00a3252.9 million). The identified impairment loss, based on the 12-month expected credit loss basis, was immaterial. Cash and cash equivalents at the reporting date were 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 2025, the Group held \u00a3nil in cash collateral receipts (2024: \u00a39.8 million) covering certain derivative assets and had posted \u00a319.4 million (2024: \u00a34.7 million) of cash collateral payments covering certain derivative liabilities. The credit rating of counterparties to which the \u00a319.4 million of cash collateral had been posted ranged from A to A+. Counterparty risk As the Group relies on third-party suppliers and counterparties for the delivery of financial and non-financial items, it 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 49 for details of scenario analysis performed on covenant restrictions within the Group\u2019s financing facilities.
At 31 December
2025 2024
\u00a3m \u00a3m
Net debt (note 2.7)
783.6
991.7
Total shareholders\u2019 equity attributable to owners of the parent
company, excluding hedge and cost of hedging reserves
1,789.1
2,078.3
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-682": { "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 41). The Financial Risk Management Committee identifies, evaluates and manages financial risks in close coordination 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 Group\u2019s 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 are held constant. 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 interpolated or extrapolated from the table below 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 2025
Power
\u2013
\u2013
28.0
(27.7)
Carbon
(0.8)
0.8
\u2013
\u2013
Gas
(1.0)
1.0
\u2013
\u2013
Oil
(5.6)
5.2
\u2013
\u2013
Freight
(1.6)
1.6
\u2013
\u2013
Impact on other components of equity,
Impact on profit after tax 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
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 prices 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, after taking account of the volume held back for operational risk management purposes. Where the power generation has contract indexation, forward power sales are generally entered once the indexation window has begun. 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 FVTPL. Where forward power curves are less liquid, the Group uses 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 Group\u2019s non-core SME customer meter points (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 in relation to the Group\u2019s carbon emissions. Carbon emissions allowances are also sold as part of the proxy power hedges that utilise gas sales as a proxy for power, as described above. Sales and purchases of carbon are not designated as cash flow hedges. The Group purchases financial oil contracts to hedge freight costs for the delivery of biomass. Oil is a significant input into the overall cost of freight. Financial oil contracts are not designated as cash flow hedges. The Group purchases financial freight contracts to hedge freight costs for the delivery of biomass. Financial freight 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 for part of the year. 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 hedging instrument 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.
At 31 December 2025
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging relationships for
instrument since Balance in the which hedge
inception used Fair value hedge reserve for accounting is
for measuring recognised in Fair value recognised continuing hedges no longer applied
Notional value Weighted average ineffectiveness \u2013 balance sheet \u2013 in balance sheet \u2013 net of deferred tax \u2013 net of deferred
of contracts fixed price gains/(losses) assets liabilities (debit)/credit tax \u2013 (debit)/credit
Exposure (MWh, allowances)
\u00a3
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts January 2026
Sale and purchase of power
4,835,705
77.08
\u2013 March 2030
156.8
41.4
(10.3)
15.6
\u2013
31 December 2025
Cumulative change in Hedge Amount Amount reclassified Line item
fair value of hedged ineffectiveness transferred to Amount reclassified due to the hedged in the income
item since inception Hedging gains recognised in Line item in the the cost or carrying due to the hedged future cash flows statement/
used for measuring recognised in OCI the income statement income statement value of a item affecting being no longer balance sheet
ineffectiveness \u2013 in the period \u2013 in the period \u2013 that includes non-financial profit or loss \u2013 expected to occur \u2013 affected by the
losses/(gains) gains/(losses) gains/(losses) hedge asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Commodity contracts
156.8
122.3
\u2013
Revenue
\u2013
(114.7)
\u2013
Revenue
Sale and purchase of power
\u2013
Cost of sales
\u2013
(21.3)
\u2013
Cost of sales
At 31 December 2024
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging relationships for
instrument since Balance in the which hedge
inception used Fair value hedge reserve for accounting is
for measuring recognised in Fair value recognised continuing hedges no longer applied
Notional value Weighted average ineffectiveness \u2013 balance sheet \u2013 in balance sheet \u2013 net of deferred tax \u2013 net of deferred
of contracts fixed price gains/(losses) assets liabilities (debit)/credit tax \u2013 (debit)/credit
Exposure (MWh, allowances)
\u00a3
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts January 2025
Sale and purchase of power
7,013,76 6
87.3
\u2013 September 2028
34.5
101.9
(50.9)
25.9
\u2013
Purchase of carbon emissions allowances
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
At 31 December 2024
Cumulative change in Hedge Amount Amount reclassified Line item
fair value of hedged ineffectiveness Line item transferred to Amount reclassified due to the hedged in the income
item since inception Hedging gains recognised in in the income the cost or due to the hedged future cash flows statement/
used for measuring recognised in OCI in the income statement statement carrying value of item affecting being no longer balance sheet
ineffectiveness \u2013 the period \u2013 gains/ in the period \u2013 that includes a non-financial profit or loss \u2013 expected to occur \u2013 affected by the
losses/(gains) (losses) gains/(losses) hedge asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Commodity contracts
34.5
(15.2)
\u2013
Revenue
\u2013
(397.5)
\u2013
Revenue
Sale and purchase of 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
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 borrowings. These fuel purchases are typically denominated in US dollars (USD), euros (EUR) or Canadian dollars (CAD), and the foreign currency borrowings are denominated in EUR (see note 4.2 for further details on the Group\u2019s borrowings). The Group also had CAD denominated borrowings at the prior year end. 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, net of tax, 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 the reporting date on outstanding monetary items denominated in foreign currencies and the valuation of foreign currency derivative instruments. The analysis excludes the impact of the translation of the net assets of foreign operations. 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 are 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 2025
USD
41.6
(41.5)
150.8
(121.6)
EUR
17.8
(17. 5)
33.1
(26.9)
CAD
1.7
(1.7)
15.1
(12.3)
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)
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 six-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 borrowings (see note 4.2 for further details on borrowings). The Group currently has issued foreign currency denominated borrowings in EUR (2024: EUR and CAD). The Group utilises derivative contracts, including cross-currency interest rate swaps and foreign exchange forward contracts, to manage exchange risk on foreign currency borrowings. Foreign currency risk hedge accounting The Group designates certain forward and option foreign currency exchange contracts 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, such as 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) and the Energy Solutions receivables monetisation facility, should they be utilised. The returns generated on the Group\u2019s cash balance, or payable on amounts drawn on the RCF or amounts utilised under the Energy Solutions receivables monetisation facility, 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 borrowings (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 2025
Variable rate debt \u2013 hedged
(4.8)
4.8
\u2013
\u2013
Interest rate swaps
4.9
(4.9)
(0.1)
0.1
Net impact
0.1
(0 .1)
(0 .1)
0 .1
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)
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 borrowings. The Group has reduced its exposure to interest rate risk on variable rate borrowings 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 borrowings. 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, however this impact is reduced by the amounts recycled to profit or loss to offset the interest payable. These fair value changes impact 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 foreign exchange forwards in order to fix the sterling cash flows payable on the principal repayment. The Group had 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 had separately taken out C$200.0 million notional value foreign exchange forwards in order to fix the sterling cash flows payable on the principal repayment. During the year the Group chose to make an early repayment of this term loan facility. Due to the repayment of the underlying hedged item, hedge accounting ceased at the date the facility was repaid. The Group has taken out fixed-to-fixed cross-currency interest rate swaps to hedge the future cash flows associated with the \u20ac350.0 million fixed rate EUR loan notes 2029 and the \u20ac31.5 million fixed rate element of the UK infrastructure private placement facility (2020). The Group had a fixed-to-fixed cross-currency interest rate swap that was entered into to hedge the future cash flows associated with the \u20ac143.8 million 2.625% EUR loan notes 2025. During the year this swap and the underlying loan notes matured and were settled. As at 31 December 2025, 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.
At 31 December 2025
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging relationships for
instrument since Balance in the which hedge
inception used Fair value Fair value hedge reserve for accounting is
Weighted for measuring recognised in recognised in continuing hedges no longer applied
Notional value of average ineffectiveness \u2013 balance sheet \u2013 balance sheet \u2013 net of deferred net of deferred
contracts fixed/variable gains/(losses) assets liabilities tax \u2013 (debit)/credit tax \u2013 (debit)/credit
US$m, \u20acm, C$m
rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency risk on biomass purchases January 2026
Purchases in foreign currency \u2013 USD
2,731.5
US$1.29
\u2013 December 2030
(92.0)
1.1
(66.0)
(47.3)
\u2013
January 2026
Purchases in foreign currency \u2013 EUR
4 87.0
\u20ac1.10
\u2013 September 2030
(3.0)
0.8
(5.3)
0.4
\u2013
January 2026
Purchases in foreign currency \u2013 CAD
343.5
C$1.75
\u2013 October 2030
(11.8)
\u2013
(5.6)
(4.8)
\u2013
Foreign currency risk on borrowings January 2026
Interest and principal payments \u2013 EUR
381.5
\u20ac1.16 / 7.22%
\u2013 November 2026
4.5
4.9
(1.9)
(0.8)
\u2013
February 2027
Principal payments \u2013 EUR
185.0
\u20ac1.11
\u2013 March 2028
6.5
\u2013
(1.8)
\u2013
\u2013
Principal payments \u2013 CAD
\u2013
\u2013
\u2013
(4.0)
\u2013
\u2013
\u2013
\u2013
Foreign currency and interest rate risk on borrowings January 2026
Interest and principal payments \u2013 EUR
255.0
\u20ac1.11 / 4.04%
\u2013 March 2026
(6.8)
\u2013
( 7.0)
(1.0)
\u2013
Interest payments \u2013 CAD
\u2013
\u2013
\u2013
(2 .1)
\u2013
\u2013
\u2013
\u2013
Interest rate risk on borrowings January 2026
Variable rate GBP debt
423.0
2.89%
\u2013 July 2029
(2 .1)
1.0
(3.0)
(1.8)
\u2013
Exposure
At 31 December 2025
Cumulative change in Hedge Amount reclassified
fair value of hedged ineffectiveness Amount reclassified due to the hedged Line item in the
item since inception Hedging losses recognised in the Amount transferred due to the hedged future cash flows income statement/
used for measuring recognised in OCI income statement Line item in the to the cost or item affecting being no longer balance sheet
ineffectiveness \u2013 in the period \u2013 in the period \u2013 income statement carrying value of a profit or loss \u2013 expected to occur \u2013 affected by
losses/(gains) gains/(losses) gains/(losses) that includes hedge non-financial asset (gains)/losses (gains)/losses the transfer/
\u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Foreign currency risk on biomass purchases
Purchases in foreign currency \u2013 USD
(92.0)
(104.5)
\u2013
Cost of sales
27.1
\u2013
\u2013
Inventories
Purchases in foreign currency \u2013 EUR
(3.0)
8.0
\u2013
Cost of sales
(1.5)
\u2013
\u2013
Inventories
Purchases in foreign currency \u2013 CAD
(11.8)
(4.8)
\u2013
Cost of sales
6.2
\u2013
\u2013
Inventories
Foreign currency risk on borrowings Interest payable Interest payable
\u2013
and similar charges
\u2013
7.1
\u2013
and similar charges
4.5
10.4
Foreign exchange Foreign exchange
Interest and principal payments \u2013 EUR \u2013
gains/(losses)
\u2013
(24.4)
\u2013
gains/(losses)
Foreign exchange Foreign exchange
Principal payments \u2013 EUR
6.5
8.3
\u2013
gains/(losses)
\u2013
(8.3)
\u2013
gains/(losses)
Foreign exchange Foreign exchange
Principal payments \u2013 CAD
(4.0)
(2.3)
\u2013
gains/(losses)
\u2013
2.3
\u2013
gains/(losses)
Foreign currency and interest rate risk on borrowings Interest payable Interest payable
(3.2)
5.4
\u2013
and similar charges
\u2013
\u2013
\u2013
and similar charges
Foreign exchange Foreign exchange
Interest and principal payments \u2013 EUR (3.6)
gains/(losses)
\u2013
( 3.1)
\u2013
gains/(losses)
Interest payable Interest payable
Interest payments \u2013 CAD
(2 .1)
(0.3)
\u2013
and similar charges
\u2013
1.0
0.9
and similar charges
Interest rate risk on borrowings Interest payable Interest payable
Variable rate GBP debt
(2.3)
(2.3)
\u2013
and similar charges
\u2013
(5.9)
\u2013
and similar charges
Exposure
At 31 December 2024
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging relationships for
instrument since Balance in the which hedge
inception used Fair value Fair value hedge reserve for accounting is
for measuring recognised in recognised in continuing hedges no longer applied
Notional value Weighted average ineffectiveness \u2013 balance sheet \u2013 balance sheet \u2013 net of deferred tax \u2013 net of deferred
of contracts fixed/variable gains/(losses) assets liabilities (debit)/credit tax \u2013 (debit)/credit
US$m, \u20acm, C$m
rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency risk on biomass purchases January 2025
Purchases in foreign currency \u2013 USD
1,430.5
US$1.27
\u2013 February 2027
18.6
20.7
(2.1)
10.7
\u2013
January 2025
Purchases in foreign currency \u2013 EUR
270.0
\u20ac 1.15
\u2013 October 2026
(6.3)
\u2013
(6.3)
(4.5)
\u2013
January 2025
Purchases in foreign currency \u2013 CAD
166.0
C$1.67
\u2013 March 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 payments \u2013 EUR
525.3
\u20ac1.14 / 6.48%
\u2013 April 2028
(10.4)
\u2013
(19.7)
4.4
\u2013
February 2027
Principal payments \u2013 EUR
185.0
\u20ac 1.11
\u2013 March 2028
(5 .1)
\u2013
(5 .1)
\u2013
\u2013
Principal payments \u2013 CAD
200.0
C$1.68
January 2026
(5.7)
\u2013
(5.7)
\u2013
\u2013
Foreign currency and interest rate risk on borrowings January 2026
Interest and principal payments \u2013 EUR
255.0
\u20ac1.09 / 4.04%
\u2013 March 2028
(8.6)
\u2013
(8.7)
(2.7)
\u2013
Interest payments \u2013 CAD
200.0
6.05%
January 2026
(1.5)
\u2013
(1.8)
(1.3)
\u2013
Interest rate risk on borrowings January 2026
Variable rate GBP debt
423.0
2.89%
\u2013 April 2028
6.1
7.1
(0.4)
4.3
\u2013
Exposure
At 31 December 2024
Cumulative change in Hedge Amount reclassified
fair value of hedged ineffectiveness Amount reclassified due to the hedged Line item in the
item since inception Hedging losses recognised in the Amount transferred due to the hedged future cash flows income statement/
used for measuring recognised in OCI in income statement Line item in the to the cost or item affecting being no longer balance sheet
ineffectiveness \u2013 the period \u2013 in the period \u2013 income statement carrying value of a profit or loss \u2013 expected to occur \u2013 affected by the
losses/(gains) gains/(losses) gains/(losses) that includes hedge non-financial asset (gains)/losses (gains)/losses transfer/
\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 payable Interest payable
Interest and principal payments \u2013 USD
\u2013
(5.6)
\u2013
and similar charges
\u2013
(0.7)
\u2013
and similar charges
Foreign exchange Foreign exchange
\u2013
gains/(losses)
\u2013
9.3
\u2013
gains/(losses)
Interest payable Interest payable
Interest and principal payments \u2013 EUR
(11.3)
(7.5)
\u2013
and similar charges
\u2013
7.4
\u2013
and similar charges
Foreign exchange Foreign exchange
\u2013
gains/(losses)
\u2013
6.4
\u2013
gains/(losses)
Foreign exchange Foreign exchange
Principal payments \u2013 EUR
(5.1)
(6.0)
\u2013
gains/(losses)
\u2013
6
\u2013
gains/(losses)
Foreign exchange Foreign exchange
Principal payments \u2013 CAD
(5.7)
(7.4)
\u2013
gains/(losses)
\u2013
7.4
\u2013
gains/(losses)
Foreign currency and interest rate risk on borrowings Interest payable Interest payable
Interest and principal payments \u2013 EUR
(8.7)
(6.4)
\u2013
and similar charges
\u2013
(2.5)
\u2013
and similar charges
Foreign exchange Foreign exchange
\u2013
gains/(losses)
\u2013
3.4
\u2013
gains/(losses)
Interest payable Interest payable
Interest payments \u2013 CAD
(1.6)
(1.3)
\u2013
and similar charges
\u2013
(0.4)
\u2013
and similar charges
Interest rate risk on borrowings Interest payable Interest payable
Variable rate GBP debt
10.8
(2.3)
\u2013
and similar charges
\u2013
(12.0)
\u2013
and similar 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). It is the intention of the UK Government to change to CPI-based indexation for ROC revenue from April 2026, subject to the publication of statutory instruments. 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 of equity,
Impact on profit after tax 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 2025
UK CPI inflation swaps
\u2013
\u2013
(22.3)
19.3
UK RPI inflation swaps
\u2013
\u2013
(1.6)
1.6
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
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 in the prior year was 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 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. The Group recognised \u00a33.5 million of gains (2024: \u00a38.7 million of losses) as ineffective primarily due to the basis difference between the RPI hedging instruments and the CPI exposure. In the current year, as a result of the updated estimates of the OCGT commissioning dates, the Group recycled \u00a30.8 million (2024: \u00a31.2 million) of losses to the Consolidated income statement on CPI inflation swaps designated as hedging instruments for the OCGT Capacity Market revenues, 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.
At 31 December 2025
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging relationships for
instrument since Balance in the which hedge
inception used hedge reserve for accounting is
for measuring Fair value recognised Fair value recognised continuing hedges no longer applied
Notional value ineffectiveness \u2013 in balance sheet \u2013 in balance sheet \u2013 net of deferred net of deferred tax \u2013
of contracts Weighted average gains/(losses) assets liabilities tax \u2013 (debit)/credit (debit)/credit
Exposure \u00a3m
fixed rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Inflation April 2026
Inflation-linked sales contracts \u2013 CPI
30.4
CPI \u2013 2.70%
\u2013 July 2038
(8.5)
\u2013
(13.1)
(6.3)
1.9
Inflation-linked sales contracts \u2013 RPI
440.0
RPI \u2013 3.46%
April 2026
(133.5)
\u2013
(84.7)
(19.0)
\u2013
At 31 December 2025
Hedge
ineffectiveness/
Cumulative change in reversal of Amount reclassified
fair value of hedged ineffectiveness Amount reclassified due to the hedged Line item in the
item since inception Hedging gains recognised in the Amount transferred due to the hedged future cash flows income statement/
used for measuring recognised in OCI income statement Line item in the to the cost or item affecting being no longer balance sheet
ineffectiveness \u2013 in the period \u2013 in the period \u2013 income statement carrying value of a profit or loss \u2013 expected to occur affected by
losses/(gains) gains/(losses) gains/(losses) that includes hedge non- financial asset (gains)/losses \u2013 (gains)/losses the transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Inflation
Inflation-linked sales contracts \u2013 CPI
(8.5)
3.3
\u2013
Revenue
\u2013
(4.6)
0.8
Revenue
Inflation-linked sales contracts \u2013 RPI
(109.8)
(3.9)
3.5
Revenue
\u2013
2 5.1
\u2013
Revenue
At 31 December 2024
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging Balance in the relationships for
instrument since hedge reserve which hedge
inception used for for continuing accounting is
measuring Fair value recognised Fair value recognised hedges net of no longer applied
Notional value ineffectiveness in balance sheet \u2013 in balance sheet \u2013 deferred tax \u2013 net of deferred tax \u2013
of contracts Weighted average \u2013 gains/(losses) assets liabilities (debit)/credit (debit)/credit
Exposure \u00a3m
fixed rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Inflation April 2026
Inflation-linked sales contracts \u2013 CPI
30.4
CPI \u2013 2.70%
\u2013 July 2038
(18.6)
\u2013
(18.6)
(14.5)
10.5
Inflation-linked sales contracts \u2013 RPI
440.0
RPI \u2013 3.65%
April 2026
(75.4)
\u2013
(165.4)
(34.9)
\u2013
At 31 December 2024
Cumulative change Hedge Amount reclassified
in fair value of hedged ineffectiveness Amount reclassified due to the hedged Line item in the
item since inception Hedging gains recognised in the Amount transferred due to the hedged future cash flows income statement/
used for measuring recognised in OCI in income statement Line item in the to the cost or item affecting being no longer balance sheet
ineffectiveness \u2013 the period \u2013 in the period \u2013 gains/ income statement carrying value of a profit or loss \u2013 expected to occur \u2013 affected by the
gains/(losses) gains/(losses) (losses) that includes hedge non-financial asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Inflation
Inflation-linked sales contracts \u2013 CPI
(18.6)
(1.3)
\u2013
Revenue
\u2013
(3.1)
1.2
Revenue
Inflation-linked sales contracts \u2013 RPI
(47.9)
(2 .1)
(8.7)
Revenue
\u2013
27.1
\u2013
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.
At 31 December 2025
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
69.1
22.8
165.3
489.5
\u2013
746.7
Loan notes, gross value
\u2013
17.9
17.9
332.3
\u2013
368.1
Borrowings, contractual
maturity
69.1
40.7
183.2
821.8
\u2013
1,114.8
Trade and other payables
594.7
77.5
1.6
\u2013
\u2013
673.8
Lease liabilities
9.0
22.2
21.2
30.4
38.3
121.1
672.8
140.4
206.0
852.2
38.3
1,909.7
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
1,3 7 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
The weighted average interest rate payable at the reporting date on the Group\u2019s borrowings was 5.40% (2024: 5.39%). Trade and other payables of \u00a3673.8 million (2024: \u00a3793.0 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 traded value. Vanilla foreign currency exchange contracts are expected to be gross settled through delivery of one currency and receipt of another. Gross settlement of both the interest and principal on cross-currency interest rate swaps is expected through delivery of one currency and receipt of another. 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. For option derivative contracts, such as foreign currency options, the expected cash flows are only included if the option has intrinsic value at the reporting date and therefore would exercise based on the market curves existing at the reporting date. Where derivatives are expected to be gross settled based on the traded value rather than the mark-to-market value, the gross undiscounted cash flows based on the contracted traded values 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 the 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. Derivative liabilities \u2013 cash inflow/(outflow)
At 31 December 2025
At 31 December 2024
Difference to Difference to
Within carrying Carrying Within carrying Carrying
1 year 1\u20132 years >2 years Total amount amount 1 year 1\u20132 years >2 years Total amount amount
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts \u2013 inflow
209.8
8.3
\u2013
218 .1
(224.0)
(5.9)
303.0
259.3
3 7. 8
6 0 0.1
(673.5)
(73.4)
Commodity contracts \u2013 outflow
(137.7 )
(52.5)
(15.6)
(205.8)
171.7
(34.1)
(33.8)
(1.4)
(4.1)
(39.3)
30.9
(8.4)
Foreign exchange contracts \u2013 inflow
1,075.4
688.7
1,497.0
3,261.1
26.4
(99.4)
6 41.1
468.4
328.0
1,43 7.5
15.2
(36.9)
Foreign exchange contracts \u2013 outflow
(1,118.0)
(711.9)
(1,557.0)
(3,386.9)
(637.4)
(494.6)
(357.6)
(1,489.6)
Cross-currency contracts \u2013 inflow
97.3
2.7
0.5
100.5
0.8
(9.6)
215.7
53.9
341.0
610.6
1.2
(30.2)
Cross-currency contracts \u2013 outflow
(107.3)
(3.1)
(0.5)
(110.9)
(241.3)
(63.4)
(337.3)
(642.0)
Interest rate contracts \u2013 inflow
\u2013
\u2013
\u2013
\u2013
0.1
(3.0)
0.3
\u2013
\u2013
0.3
0.1
(0.4)
Interest rate contracts \u2013 outflow
(1.6)
(1.3)
(0.2)
(3.1)
\u2013
(0.5)
(0.3)
(0.8)
Inflation contracts \u2013 outflow
(86.9)
(1.5)
(12 .1)
(100.5)
2.7
(97.8)
(84.3)
(91.5)
(20.0)
(195.8)
11.8
(184.0)
(69.0)
(70.6)
(87.9)
(227.5)
(22.3)
(249.8)
163.3
130.2
(12.5)
281.0
(614.3)
(333.3)
Derivative assets \u2013 cash inflow/(outflow)
At 31 December 2025
At 31 December 2024
Difference to Difference to
Within carrying Carrying Within carrying Carrying
1 year 1\u20132 years >2 years Total amount amount 1 year 1\u20132 years >2 years Total amount amount
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts \u2013 inflow
425.3
8 4.1
0 .1
509.5
(458.0)
51.5
363.7
50.6
16.8
431.1
(306.5)
124.6
Commodity contracts \u2013 outflow
(36.6)
( 7 7. 3)
(45.1)
(159.0)
166.9
7.9
(117.5)
(4.5)
(24.9)
(146.9)
175.8
28.9
Foreign exchange contracts \u2013 inflow
172.4
2.4
\u2013
174.8
1.2
27.7
874.6
1,030.0
245.1
2,149.7
(9.7)
96.7
Foreign exchange contracts \u2013 outflow
(148.3)
\u2013
\u2013
(148.3)
(839.9)
(97 7.1)
(226.3)
(2,043.3)
Cross-currency contracts \u2013 inflow
18.6
18.2
314.6
351.4
10.1
4.9
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Cross-currency contracts \u2013 outflow
(22.8)
(22.6)
(311.2)
(356.6)
\u2013
\u2013
\u2013
\u2013
Interest rate contracts \u2013 inflow
1.0
\u2013
\u2013
1.0
\u2013
1.0
6.3
1.1
\u2013
7.4
(0.2)
7.1
Interest rate contracts \u2013 outflow
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(0.1)
(0 .1)
409.6
4.8
(41.6)
372.8
(279.8)
93.0
287. 2
10 0 .1
10.6
397.9
(140.6)
257.3
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 \u00a330.6 million (2024: \u00a342.4 million) and expected credit losses on accrued income of \u00a35.0 million (2024: \u00a39.0 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. 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 Opus Energy non-core SME meter points (see note 2.7) 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 \u00a3302.1 million at 31 December 2025 (2024: \u00a3356.0 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 \u00a3300.2 million at 31 December 2025 (2024: \u00a3252.9 million). The identified impairment loss, based on the 12-month expected credit loss basis, was immaterial. Cash and cash equivalents at the reporting date were 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 2025, the Group held \u00a3nil in cash collateral receipts (2024: \u00a39.8 million) covering certain derivative assets and had posted \u00a319.4 million (2024: \u00a34.7 million) of cash collateral payments covering certain derivative liabilities. The credit rating of counterparties to which the \u00a319.4 million of cash collateral had been posted ranged from A to A+. Counterparty risk As the Group relies on third-party suppliers and counterparties for the delivery of financial and non-financial items, it 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 49 for details of scenario analysis performed on covenant restrictions within the Group\u2019s financing facilities.
At 31 December
2025 2024
\u00a3m \u00a3m
Net debt (note 2.7)
783.6
991.7
Total shareholders\u2019 equity attributable to owners of the parent
company, excluding hedge and cost of hedging reserves
1,789.1
2,078.3
7.3 Hedge reserve The Group designates certain hedging instruments that are used to address commodity price risk, foreign currency exchange risk, interest rate risk, foreign currency exchange and interest 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 profit or loss, 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
Commodity currency Interest Foreign currency Inflation
price risk exchange risk rate risk and Interest rate risk Total
\u00a3m \u00a3m \u00a3m rate risk \u00a3m \u00a3m
At 1 January 2024
25 7.0
(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 revenue
( 397.5)
\u2013
\u2013
\u2013
24.0
(373.5)
\u2013 Reclassified to the Consolidated income statement \u2013 included in cost of sales
105.1
\u2013
\u2013
\u2013
\u2013
10 5.1
\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 gains/(losses)
\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 1 January 2025
25.9
4.8
4.3
(4.0)
(38.9)
(7.9)
Gains/(losses) recognised:
\u2013 Change in fair value of hedging instrument recognised in OCI
122.3
(84.9)
(2.3)
5.1
(0.6)
39.6
Reclassified from equity as the hedged item has affected profit or loss:
\u2013 Reclassified to the Consolidated income statement \u2013 included in revenue
(114.7)
\u2013
\u2013
\u2013
20.5
(94.2)
\u2013 Reclassified to the Consolidated income statement \u2013 included in cost of sales
(21.3)
\u2013
\u2013
\u2013
\u2013
(21.3)
\u2013 Reclassified to the Consolidated income statement \u2013 included in interest payable and similar charges
\u2013
7.1
(5.9)
1.9
\u2013
3.1
\u2013 Reclassified to the Consolidated income statement \u2013 included in foreign exchange gains/(losses)
\u2013
(30.4)
\u2013
(3.1)
\u2013
(33.5)
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
0.8
0.8
Transferred from equity and included within the initial cost of a non-financial asset:
\u2013 Transferred to cost of inventories
\u2013
31.8
\u2013
\u2013
\u2013
31.8
Related deferred tax, net (note 2.6)
3.4
19.1
2.1
(0.9)
(5.2)
18.5
At 31 December 2025
15.6
(52.5)
(1.8)
(1.0)
(23.4)
(63.1)
The expected release profile from equity of post-tax hedging gains and losses is as follows:
At 31 December 2025
Within 1 year 1\u20132 years >2 years Total
\u00a3m \u00a3m \u00a3m \u00a3m
Commodity risk
12.7
2.1
0.8
15.6
Foreign currency exchange risk
(19.9)
(9.0)
(23.6)
(52.5)
Interest rate risk
(1.0)
(0.7)
(0 .1)
(1.8)
Foreign currency and interest rate risk
(0.8)
(0.2)
\u2013
(1.0)
Inflation risk
(11.9)
(3.7)
(7.8)
(23.4)
(20.9)
(11.5)
(30.7)
(63.1)
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)
7.4 Cost of hedging reserve The Group designates the change in the spot rate as the hedged risk in the Group\u2019s cash flow hedge relationships hedging the purchase of inventory denominated in foreign currencies. The Group designates the cost of hedging, being the change in fair value associated with forward points including currency basis, to equity. For foreign currency options designated as cash flow hedges for the purchase of inventory denominated in foreign currencies the Group designates only the change in intrinsic value as the hedged risk. The change in fair value associated with the time value of options is recognised in the cost of hedging reserve. The purchase of inventory denominated in a foreign currency is a transaction related hedged item that results in the recognition of a non-financial asset. As such, amounts accumulated in the cost of hedging reserve are removed from the cost of hedging reserve and included within the initial cost of the non-financial asset, being the inventory, on initial recognition of the non-financial asset. 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
2025 2024
\u00a3m \u00a3m
At 1 January
6.9
18.7
(Losses)/gains recognised:
\u2013 Change in fair value of hedging instruments recognised in the
Consolidated statement of comprehensive income
(21.9)
6.8
Transferred from equity and included within the initial cost of a
non-financial asset:
\u2013 Transferred to cost of inventories
(4.3)
(22.6)
Related deferred tax, net (note 2.6)
6.5
4.0
At 31 December
(12.8)
6.9
The expected release profile from equity of post-tax cost of hedging gains and losses is as follows:
At 31 December 2025
Within 1 year 1\u20132 years >2 years Total
\u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency exchange risk
(3.6)
(4.1)
(5.1)
(12.8)
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
", "dimensions": { "concept": "ifrs-full:DisclosureOfReclassificationOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-610": { "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 Group\u2019s 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 are held constant. 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 interpolated or extrapolated from the table below 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 2025
Power
\u2013
\u2013
28.0
(27.7)
Carbon
(0.8)
0.8
\u2013
\u2013
Gas
(1.0)
1.0
\u2013
\u2013
Oil
(5.6)
5.2
\u2013
\u2013
Freight
(1.6)
1.6
\u2013
\u2013
Impact on other components of equity,
Impact on profit after tax 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
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 prices 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, after taking account of the volume held back for operational risk management purposes. Where the power generation has contract indexation, forward power sales are generally entered once the indexation window has begun. 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 FVTPL. Where forward power curves are less liquid, the Group uses 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 Group\u2019s non-core SME customer meter points (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 in relation to the Group\u2019s carbon emissions. Carbon emissions allowances are also sold as part of the proxy power hedges that utilise gas sales as a proxy for power, as described above. Sales and purchases of carbon are not designated as cash flow hedges. The Group purchases financial oil contracts to hedge freight costs for the delivery of biomass. Oil is a significant input into the overall cost of freight. Financial oil contracts are not designated as cash flow hedges. The Group purchases financial freight contracts to hedge freight costs for the delivery of biomass. Financial freight 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 for part of the year. 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 hedging instrument 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.
At 31 December 2025
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging relationships for
instrument since Balance in the which hedge
inception used Fair value hedge reserve for accounting is
for measuring recognised in Fair value recognised continuing hedges no longer applied
Notional value Weighted average ineffectiveness \u2013 balance sheet \u2013 in balance sheet \u2013 net of deferred tax \u2013 net of deferred
of contracts fixed price gains/(losses) assets liabilities (debit)/credit tax \u2013 (debit)/credit
Exposure (MWh, allowances)
\u00a3
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts January 2026
Sale and purchase of power
4,835,705
77.08
\u2013 March 2030
156.8
41.4
(10.3)
15.6
\u2013
31 December 2025
Cumulative change in Hedge Amount Amount reclassified Line item
fair value of hedged ineffectiveness transferred to Amount reclassified due to the hedged in the income
item since inception Hedging gains recognised in Line item in the the cost or carrying due to the hedged future cash flows statement/
used for measuring recognised in OCI the income statement income statement value of a item affecting being no longer balance sheet
ineffectiveness \u2013 in the period \u2013 in the period \u2013 that includes non-financial profit or loss \u2013 expected to occur \u2013 affected by the
losses/(gains) gains/(losses) gains/(losses) hedge asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Commodity contracts
156.8
122.3
\u2013
Revenue
\u2013
(114.7)
\u2013
Revenue
Sale and purchase of power
\u2013
Cost of sales
\u2013
(21.3)
\u2013
Cost of sales
At 31 December 2024
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging relationships for
instrument since Balance in the which hedge
inception used Fair value hedge reserve for accounting is
for measuring recognised in Fair value recognised continuing hedges no longer applied
Notional value Weighted average ineffectiveness \u2013 balance sheet \u2013 in balance sheet \u2013 net of deferred tax \u2013 net of deferred
of contracts fixed price gains/(losses) assets liabilities (debit)/credit tax \u2013 (debit)/credit
Exposure (MWh, allowances)
\u00a3
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts January 2025
Sale and purchase of power
7,013,76 6
87.3
\u2013 September 2028
34.5
101.9
(50.9)
25.9
\u2013
Purchase of carbon emissions allowances
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
At 31 December 2024
Cumulative change in Hedge Amount Amount reclassified Line item
fair value of hedged ineffectiveness Line item transferred to Amount reclassified due to the hedged in the income
item since inception Hedging gains recognised in in the income the cost or due to the hedged future cash flows statement/
used for measuring recognised in OCI in the income statement statement carrying value of item affecting being no longer balance sheet
ineffectiveness \u2013 the period \u2013 gains/ in the period \u2013 that includes a non-financial profit or loss \u2013 expected to occur \u2013 affected by the
losses/(gains) (losses) gains/(losses) hedge asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Commodity contracts
34.5
(15.2)
\u2013
Revenue
\u2013
(397.5)
\u2013
Revenue
Sale and purchase of 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
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 borrowings. These fuel purchases are typically denominated in US dollars (USD), euros (EUR) or Canadian dollars (CAD), and the foreign currency borrowings are denominated in EUR (see note 4.2 for further details on the Group\u2019s borrowings). The Group also had CAD denominated borrowings at the prior year end. 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, net of tax, 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 the reporting date on outstanding monetary items denominated in foreign currencies and the valuation of foreign currency derivative instruments. The analysis excludes the impact of the translation of the net assets of foreign operations. 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 are 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 2025
USD
41.6
(41.5)
150.8
(121.6)
EUR
17.8
(17. 5)
33.1
(26.9)
CAD
1.7
(1.7)
15.1
(12.3)
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)
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 six-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 borrowings (see note 4.2 for further details on borrowings). The Group currently has issued foreign currency denominated borrowings in EUR (2024: EUR and CAD). The Group utilises derivative contracts, including cross-currency interest rate swaps and foreign exchange forward contracts, to manage exchange risk on foreign currency borrowings. Foreign currency risk hedge accounting The Group designates certain forward and option foreign currency exchange contracts 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, such as 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) and the Energy Solutions receivables monetisation facility, should they be utilised. The returns generated on the Group\u2019s cash balance, or payable on amounts drawn on the RCF or amounts utilised under the Energy Solutions receivables monetisation facility, 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 borrowings (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 2025
Variable rate debt \u2013 hedged
(4.8)
4.8
\u2013
\u2013
Interest rate swaps
4.9
(4.9)
(0.1)
0.1
Net impact
0.1
(0 .1)
(0 .1)
0 .1
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)
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 borrowings. The Group has reduced its exposure to interest rate risk on variable rate borrowings 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 borrowings. 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, however this impact is reduced by the amounts recycled to profit or loss to offset the interest payable. These fair value changes impact 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 foreign exchange forwards in order to fix the sterling cash flows payable on the principal repayment. The Group had 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 had separately taken out C$200.0 million notional value foreign exchange forwards in order to fix the sterling cash flows payable on the principal repayment. During the year the Group chose to make an early repayment of this term loan facility. Due to the repayment of the underlying hedged item, hedge accounting ceased at the date the facility was repaid. The Group has taken out fixed-to-fixed cross-currency interest rate swaps to hedge the future cash flows associated with the \u20ac350.0 million fixed rate EUR loan notes 2029 and the \u20ac31.5 million fixed rate element of the UK infrastructure private placement facility (2020). The Group had a fixed-to-fixed cross-currency interest rate swap that was entered into to hedge the future cash flows associated with the \u20ac143.8 million 2.625% EUR loan notes 2025. During the year this swap and the underlying loan notes matured and were settled. As at 31 December 2025, 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.
At 31 December 2025
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging relationships for
instrument since Balance in the which hedge
inception used Fair value Fair value hedge reserve for accounting is
Weighted for measuring recognised in recognised in continuing hedges no longer applied
Notional value of average ineffectiveness \u2013 balance sheet \u2013 balance sheet \u2013 net of deferred net of deferred
contracts fixed/variable gains/(losses) assets liabilities tax \u2013 (debit)/credit tax \u2013 (debit)/credit
US$m, \u20acm, C$m
rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency risk on biomass purchases January 2026
Purchases in foreign currency \u2013 USD
2,731.5
US$1.29
\u2013 December 2030
(92.0)
1.1
(66.0)
(47.3)
\u2013
January 2026
Purchases in foreign currency \u2013 EUR
4 87.0
\u20ac1.10
\u2013 September 2030
(3.0)
0.8
(5.3)
0.4
\u2013
January 2026
Purchases in foreign currency \u2013 CAD
343.5
C$1.75
\u2013 October 2030
(11.8)
\u2013
(5.6)
(4.8)
\u2013
Foreign currency risk on borrowings January 2026
Interest and principal payments \u2013 EUR
381.5
\u20ac1.16 / 7.22%
\u2013 November 2026
4.5
4.9
(1.9)
(0.8)
\u2013
February 2027
Principal payments \u2013 EUR
185.0
\u20ac1.11
\u2013 March 2028
6.5
\u2013
(1.8)
\u2013
\u2013
Principal payments \u2013 CAD
\u2013
\u2013
\u2013
(4.0)
\u2013
\u2013
\u2013
\u2013
Foreign currency and interest rate risk on borrowings January 2026
Interest and principal payments \u2013 EUR
255.0
\u20ac1.11 / 4.04%
\u2013 March 2026
(6.8)
\u2013
( 7.0)
(1.0)
\u2013
Interest payments \u2013 CAD
\u2013
\u2013
\u2013
(2 .1)
\u2013
\u2013
\u2013
\u2013
Interest rate risk on borrowings January 2026
Variable rate GBP debt
423.0
2.89%
\u2013 July 2029
(2 .1)
1.0
(3.0)
(1.8)
\u2013
Exposure
At 31 December 2025
Cumulative change in Hedge Amount reclassified
fair value of hedged ineffectiveness Amount reclassified due to the hedged Line item in the
item since inception Hedging losses recognised in the Amount transferred due to the hedged future cash flows income statement/
used for measuring recognised in OCI income statement Line item in the to the cost or item affecting being no longer balance sheet
ineffectiveness \u2013 in the period \u2013 in the period \u2013 income statement carrying value of a profit or loss \u2013 expected to occur \u2013 affected by
losses/(gains) gains/(losses) gains/(losses) that includes hedge non-financial asset (gains)/losses (gains)/losses the transfer/
\u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Foreign currency risk on biomass purchases
Purchases in foreign currency \u2013 USD
(92.0)
(104.5)
\u2013
Cost of sales
27.1
\u2013
\u2013
Inventories
Purchases in foreign currency \u2013 EUR
(3.0)
8.0
\u2013
Cost of sales
(1.5)
\u2013
\u2013
Inventories
Purchases in foreign currency \u2013 CAD
(11.8)
(4.8)
\u2013
Cost of sales
6.2
\u2013
\u2013
Inventories
Foreign currency risk on borrowings Interest payable Interest payable
\u2013
and similar charges
\u2013
7.1
\u2013
and similar charges
4.5
10.4
Foreign exchange Foreign exchange
Interest and principal payments \u2013 EUR \u2013
gains/(losses)
\u2013
(24.4)
\u2013
gains/(losses)
Foreign exchange Foreign exchange
Principal payments \u2013 EUR
6.5
8.3
\u2013
gains/(losses)
\u2013
(8.3)
\u2013
gains/(losses)
Foreign exchange Foreign exchange
Principal payments \u2013 CAD
(4.0)
(2.3)
\u2013
gains/(losses)
\u2013
2.3
\u2013
gains/(losses)
Foreign currency and interest rate risk on borrowings Interest payable Interest payable
(3.2)
5.4
\u2013
and similar charges
\u2013
\u2013
\u2013
and similar charges
Foreign exchange Foreign exchange
Interest and principal payments \u2013 EUR (3.6)
gains/(losses)
\u2013
( 3.1)
\u2013
gains/(losses)
Interest payable Interest payable
Interest payments \u2013 CAD
(2 .1)
(0.3)
\u2013
and similar charges
\u2013
1.0
0.9
and similar charges
Interest rate risk on borrowings Interest payable Interest payable
Variable rate GBP debt
(2.3)
(2.3)
\u2013
and similar charges
\u2013
(5.9)
\u2013
and similar charges
Exposure
At 31 December 2024
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging relationships for
instrument since Balance in the which hedge
inception used Fair value Fair value hedge reserve for accounting is
for measuring recognised in recognised in continuing hedges no longer applied
Notional value Weighted average ineffectiveness \u2013 balance sheet \u2013 balance sheet \u2013 net of deferred tax \u2013 net of deferred
of contracts fixed/variable gains/(losses) assets liabilities (debit)/credit tax \u2013 (debit)/credit
US$m, \u20acm, C$m
rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency risk on biomass purchases January 2025
Purchases in foreign currency \u2013 USD
1,430.5
US$1.27
\u2013 February 2027
18.6
20.7
(2.1)
10.7
\u2013
January 2025
Purchases in foreign currency \u2013 EUR
270.0
\u20ac 1.15
\u2013 October 2026
(6.3)
\u2013
(6.3)
(4.5)
\u2013
January 2025
Purchases in foreign currency \u2013 CAD
166.0
C$1.67
\u2013 March 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 payments \u2013 EUR
525.3
\u20ac1.14 / 6.48%
\u2013 April 2028
(10.4)
\u2013
(19.7)
4.4
\u2013
February 2027
Principal payments \u2013 EUR
185.0
\u20ac 1.11
\u2013 March 2028
(5 .1)
\u2013
(5 .1)
\u2013
\u2013
Principal payments \u2013 CAD
200.0
C$1.68
January 2026
(5.7)
\u2013
(5.7)
\u2013
\u2013
Foreign currency and interest rate risk on borrowings January 2026
Interest and principal payments \u2013 EUR
255.0
\u20ac1.09 / 4.04%
\u2013 March 2028
(8.6)
\u2013
(8.7)
(2.7)
\u2013
Interest payments \u2013 CAD
200.0
6.05%
January 2026
(1.5)
\u2013
(1.8)
(1.3)
\u2013
Interest rate risk on borrowings January 2026
Variable rate GBP debt
423.0
2.89%
\u2013 April 2028
6.1
7.1
(0.4)
4.3
\u2013
Exposure
At 31 December 2024
Cumulative change in Hedge Amount reclassified
fair value of hedged ineffectiveness Amount reclassified due to the hedged Line item in the
item since inception Hedging losses recognised in the Amount transferred due to the hedged future cash flows income statement/
used for measuring recognised in OCI in income statement Line item in the to the cost or item affecting being no longer balance sheet
ineffectiveness \u2013 the period \u2013 in the period \u2013 income statement carrying value of a profit or loss \u2013 expected to occur \u2013 affected by the
losses/(gains) gains/(losses) gains/(losses) that includes hedge non-financial asset (gains)/losses (gains)/losses transfer/
\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 payable Interest payable
Interest and principal payments \u2013 USD
\u2013
(5.6)
\u2013
and similar charges
\u2013
(0.7)
\u2013
and similar charges
Foreign exchange Foreign exchange
\u2013
gains/(losses)
\u2013
9.3
\u2013
gains/(losses)
Interest payable Interest payable
Interest and principal payments \u2013 EUR
(11.3)
(7.5)
\u2013
and similar charges
\u2013
7.4
\u2013
and similar charges
Foreign exchange Foreign exchange
\u2013
gains/(losses)
\u2013
6.4
\u2013
gains/(losses)
Foreign exchange Foreign exchange
Principal payments \u2013 EUR
(5.1)
(6.0)
\u2013
gains/(losses)
\u2013
6
\u2013
gains/(losses)
Foreign exchange Foreign exchange
Principal payments \u2013 CAD
(5.7)
(7.4)
\u2013
gains/(losses)
\u2013
7.4
\u2013
gains/(losses)
Foreign currency and interest rate risk on borrowings Interest payable Interest payable
Interest and principal payments \u2013 EUR
(8.7)
(6.4)
\u2013
and similar charges
\u2013
(2.5)
\u2013
and similar charges
Foreign exchange Foreign exchange
\u2013
gains/(losses)
\u2013
3.4
\u2013
gains/(losses)
Interest payable Interest payable
Interest payments \u2013 CAD
(1.6)
(1.3)
\u2013
and similar charges
\u2013
(0.4)
\u2013
and similar charges
Interest rate risk on borrowings Interest payable Interest payable
Variable rate GBP debt
10.8
(2.3)
\u2013
and similar charges
\u2013
(12.0)
\u2013
and similar 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). It is the intention of the UK Government to change to CPI-based indexation for ROC revenue from April 2026, subject to the publication of statutory instruments. 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 of equity,
Impact on profit after tax 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 2025
UK CPI inflation swaps
\u2013
\u2013
(22.3)
19.3
UK RPI inflation swaps
\u2013
\u2013
(1.6)
1.6
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
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 in the prior year was 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 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. The Group recognised \u00a33.5 million of gains (2024: \u00a38.7 million of losses) as ineffective primarily due to the basis difference between the RPI hedging instruments and the CPI exposure. In the current year, as a result of the updated estimates of the OCGT commissioning dates, the Group recycled \u00a30.8 million (2024: \u00a31.2 million) of losses to the Consolidated income statement on CPI inflation swaps designated as hedging instruments for the OCGT Capacity Market revenues, 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.
At 31 December 2025
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging relationships for
instrument since Balance in the which hedge
inception used hedge reserve for accounting is
for measuring Fair value recognised Fair value recognised continuing hedges no longer applied
Notional value ineffectiveness \u2013 in balance sheet \u2013 in balance sheet \u2013 net of deferred net of deferred tax \u2013
of contracts Weighted average gains/(losses) assets liabilities tax \u2013 (debit)/credit (debit)/credit
Exposure \u00a3m
fixed rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Inflation April 2026
Inflation-linked sales contracts \u2013 CPI
30.4
CPI \u2013 2.70%
\u2013 July 2038
(8.5)
\u2013
(13.1)
(6.3)
1.9
Inflation-linked sales contracts \u2013 RPI
440.0
RPI \u2013 3.46%
April 2026
(133.5)
\u2013
(84.7)
(19.0)
\u2013
At 31 December 2025
Hedge
ineffectiveness/
Cumulative change in reversal of Amount reclassified
fair value of hedged ineffectiveness Amount reclassified due to the hedged Line item in the
item since inception Hedging gains recognised in the Amount transferred due to the hedged future cash flows income statement/
used for measuring recognised in OCI income statement Line item in the to the cost or item affecting being no longer balance sheet
ineffectiveness \u2013 in the period \u2013 in the period \u2013 income statement carrying value of a profit or loss \u2013 expected to occur affected by
losses/(gains) gains/(losses) gains/(losses) that includes hedge non- financial asset (gains)/losses \u2013 (gains)/losses the transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Inflation
Inflation-linked sales contracts \u2013 CPI
(8.5)
3.3
\u2013
Revenue
\u2013
(4.6)
0.8
Revenue
Inflation-linked sales contracts \u2013 RPI
(109.8)
(3.9)
3.5
Revenue
\u2013
2 5.1
\u2013
Revenue
At 31 December 2024
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging Balance in the relationships for
instrument since hedge reserve which hedge
inception used for for continuing accounting is
measuring Fair value recognised Fair value recognised hedges net of no longer applied
Notional value ineffectiveness in balance sheet \u2013 in balance sheet \u2013 deferred tax \u2013 net of deferred tax \u2013
of contracts Weighted average \u2013 gains/(losses) assets liabilities (debit)/credit (debit)/credit
Exposure \u00a3m
fixed rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Inflation April 2026
Inflation-linked sales contracts \u2013 CPI
30.4
CPI \u2013 2.70%
\u2013 July 2038
(18.6)
\u2013
(18.6)
(14.5)
10.5
Inflation-linked sales contracts \u2013 RPI
440.0
RPI \u2013 3.65%
April 2026
(75.4)
\u2013
(165.4)
(34.9)
\u2013
At 31 December 2024
Cumulative change Hedge Amount reclassified
in fair value of hedged ineffectiveness Amount reclassified due to the hedged Line item in the
item since inception Hedging gains recognised in the Amount transferred due to the hedged future cash flows income statement/
used for measuring recognised in OCI in income statement Line item in the to the cost or item affecting being no longer balance sheet
ineffectiveness \u2013 the period \u2013 in the period \u2013 gains/ income statement carrying value of a profit or loss \u2013 expected to occur \u2013 affected by the
gains/(losses) gains/(losses) (losses) that includes hedge non-financial asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Inflation
Inflation-linked sales contracts \u2013 CPI
(18.6)
(1.3)
\u2013
Revenue
\u2013
(3.1)
1.2
Revenue
Inflation-linked sales contracts \u2013 RPI
(47.9)
(2 .1)
(8.7)
Revenue
\u2013
27.1
\u2013
Revenue
", "dimensions": { "concept": "ifrs-full:DisclosureOfMarketRiskExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-668": { "value": "Commodity price sensitivity The sensitivity analysis below has been determined based on the Group\u2019s 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 are held constant. 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 interpolated or extrapolated from the table below 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 2025
Power
\u2013
\u2013
28.0
(27.7)
Carbon
(0.8)
0.8
\u2013
\u2013
Gas
(1.0)
1.0
\u2013
\u2013
Oil
(5.6)
5.2
\u2013
\u2013
Freight
(1.6)
1.6
\u2013
\u2013
Impact on other components of equity,
Impact on profit after tax 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
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 prices 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, net of tax, 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 the reporting date on outstanding monetary items denominated in foreign currencies and the valuation of foreign currency derivative instruments. The analysis excludes the impact of the translation of the net assets of foreign operations. 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 are 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 2025
USD
41.6
(41.5)
150.8
(121.6)
EUR
17.8
(17. 5)
33.1
(26.9)
CAD
1.7
(1.7)
15.1
(12.3)
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)
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 2025
Variable rate debt \u2013 hedged
(4.8)
4.8
\u2013
\u2013
Interest rate swaps
4.9
(4.9)
(0.1)
0.1
Net impact
0.1
(0 .1)
(0 .1)
0 .1
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)
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 borrowings. The Group has reduced its exposure to interest rate risk on variable rate borrowings 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 borrowings. 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, however this impact is reduced by the amounts recycled to profit or loss to offset the interest payable. These fair value changes impact 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 of equity,
Impact on profit after tax 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 2025
UK CPI inflation swaps
\u2013
\u2013
(22.3)
19.3
UK RPI inflation swaps
\u2013
\u2013
(1.6)
1.6
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
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 in the prior year was 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-717": { "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 for part of the year. 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 foreign exchange forwards in order to fix the sterling cash flows payable on the principal repayment. The Group had 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 had separately taken out C$200.0 million notional value foreign exchange forwards in order to fix the sterling cash flows payable on the principal repayment. During the year the Group chose to make an early repayment of this term loan facility. Due to the repayment of the underlying hedged item, hedge accounting ceased at the date the facility was repaid. The Group has taken out fixed-to-fixed cross-currency interest rate swaps to hedge the future cash flows associated with the \u20ac350.0 million fixed rate EUR loan notes 2029 and the \u20ac31.5 million fixed rate element of the UK infrastructure private placement facility (2020). The Group had a fixed-to-fixed cross-currency interest rate swap that was entered into to hedge the future cash flows associated with the \u20ac143.8 million 2.625% EUR loan notes 2025. During the year this swap and the underlying loan notes matured and were settled. As at 31 December 2025, 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 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. The Group recognised \u00a33.5 million of gains (2024: \u00a38.7 million of losses) as ineffective primarily due to the basis difference between the RPI hedging instruments and the CPI exposure. In the current year, as a result of the updated estimates of the OCGT commissioning dates, the Group recycled \u00a30.8 million (2024: \u00a31.2 million) of losses to the Consolidated income statement on CPI inflation swaps designated as hedging instruments for the OCGT Capacity Market revenues, 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 currency exchange risk, interest rate risk, foreign currency exchange and interest 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 Group designates the change in the spot rate as the hedged risk in the Group\u2019s cash flow hedge relationships hedging the purchase of inventory denominated in foreign currencies. The Group designates the cost of hedging, being the change in fair value associated with forward points including currency basis, to equity. For foreign currency options designated as cash flow hedges for the purchase of inventory denominated in foreign currencies the Group designates only the change in intrinsic value as the hedged risk. The change in fair value associated with the time value of options is recognised in the cost of hedging reserve. The purchase of inventory denominated in a foreign currency is a transaction related hedged item that results in the recognition of a non-financial asset. As such, amounts accumulated in the cost of hedging reserve are removed from the cost of hedging reserve and included within the initial cost of the non-financial asset, being the inventory, on initial recognition of the non-financial asset. 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-636": { "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). It is the intention of the UK Government to change to CPI-based indexation for ROC revenue from April 2026, subject to the publication of statutory instruments. 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 of equity,
Impact on profit after tax 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 2025
UK CPI inflation swaps
\u2013
\u2013
(22.3)
19.3
UK RPI inflation swaps
\u2013
\u2013
(1.6)
1.6
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
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 in the prior year was 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 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. The Group recognised \u00a33.5 million of gains (2024: \u00a38.7 million of losses) as ineffective primarily due to the basis difference between the RPI hedging instruments and the CPI exposure. In the current year, as a result of the updated estimates of the OCGT commissioning dates, the Group recycled \u00a30.8 million (2024: \u00a31.2 million) of losses to the Consolidated income statement on CPI inflation swaps designated as hedging instruments for the OCGT Capacity Market revenues, 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.
At 31 December 2025
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging relationships for
instrument since Balance in the which hedge
inception used hedge reserve for accounting is
for measuring Fair value recognised Fair value recognised continuing hedges no longer applied
Notional value ineffectiveness \u2013 in balance sheet \u2013 in balance sheet \u2013 net of deferred net of deferred tax \u2013
of contracts Weighted average gains/(losses) assets liabilities tax \u2013 (debit)/credit (debit)/credit
Exposure \u00a3m
fixed rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Inflation April 2026
Inflation-linked sales contracts \u2013 CPI
30.4
CPI \u2013 2.70%
\u2013 July 2038
(8.5)
\u2013
(13.1)
(6.3)
1.9
Inflation-linked sales contracts \u2013 RPI
440.0
RPI \u2013 3.46%
April 2026
(133.5)
\u2013
(84.7)
(19.0)
\u2013
At 31 December 2025
Hedge
ineffectiveness/
Cumulative change in reversal of Amount reclassified
fair value of hedged ineffectiveness Amount reclassified due to the hedged Line item in the
item since inception Hedging gains recognised in the Amount transferred due to the hedged future cash flows income statement/
used for measuring recognised in OCI income statement Line item in the to the cost or item affecting being no longer balance sheet
ineffectiveness \u2013 in the period \u2013 in the period \u2013 income statement carrying value of a profit or loss \u2013 expected to occur affected by
losses/(gains) gains/(losses) gains/(losses) that includes hedge non- financial asset (gains)/losses \u2013 (gains)/losses the transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Inflation
Inflation-linked sales contracts \u2013 CPI
(8.5)
3.3
\u2013
Revenue
\u2013
(4.6)
0.8
Revenue
Inflation-linked sales contracts \u2013 RPI
(109.8)
(3.9)
3.5
Revenue
\u2013
2 5.1
\u2013
Revenue
At 31 December 2024
Balance in the hedge
Cumulative change in reserve for hedging
fair value of hedging Balance in the relationships for
instrument since hedge reserve which hedge
inception used for for continuing accounting is
measuring Fair value recognised Fair value recognised hedges net of no longer applied
Notional value ineffectiveness in balance sheet \u2013 in balance sheet \u2013 deferred tax \u2013 net of deferred tax \u2013
of contracts Weighted average \u2013 gains/(losses) assets liabilities (debit)/credit (debit)/credit
Exposure \u00a3m
fixed rate
Maturity date
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Inflation April 2026
Inflation-linked sales contracts \u2013 CPI
30.4
CPI \u2013 2.70%
\u2013 July 2038
(18.6)
\u2013
(18.6)
(14.5)
10.5
Inflation-linked sales contracts \u2013 RPI
440.0
RPI \u2013 3.65%
April 2026
(75.4)
\u2013
(165.4)
(34.9)
\u2013
At 31 December 2024
Cumulative change Hedge Amount reclassified
in fair value of hedged ineffectiveness Amount reclassified due to the hedged Line item in the
item since inception Hedging gains recognised in the Amount transferred due to the hedged future cash flows income statement/
used for measuring recognised in OCI in income statement Line item in the to the cost or item affecting being no longer balance sheet
ineffectiveness \u2013 the period \u2013 in the period \u2013 gains/ income statement carrying value of a profit or loss \u2013 expected to occur \u2013 affected by the
gains/(losses) gains/(losses) (losses) that includes hedge non-financial asset (gains)/losses (gains)/losses transfer/
Exposure \u00a3m \u00a3m \u00a3m ineffectiveness \u00a3m \u00a3m \u00a3m reclassification
Inflation
Inflation-linked sales contracts \u2013 CPI
(18.6)
(1.3)
\u2013
Revenue
\u2013
(3.1)
1.2
Revenue
Inflation-linked sales contracts \u2013 RPI
(47.9)
(2 .1)
(8.7)
Revenue
\u2013
27.1
\u2013
Revenue
", "dimensions": { "concept": "draxgroupplc:DisclosureOfInflationRisk", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-611": { "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.
At 31 December 2025
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
69.1
22.8
165.3
489.5
\u2013
746.7
Loan notes, gross value
\u2013
17.9
17.9
332.3
\u2013
368.1
Borrowings, contractual
maturity
69.1
40.7
183.2
821.8
\u2013
1,114.8
Trade and other payables
594.7
77.5
1.6
\u2013
\u2013
673.8
Lease liabilities
9.0
22.2
21.2
30.4
38.3
121.1
672.8
140.4
206.0
852.2
38.3
1,909.7
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
1,3 7 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
The weighted average interest rate payable at the reporting date on the Group\u2019s borrowings was 5.40% (2024: 5.39%). Trade and other payables of \u00a3673.8 million (2024: \u00a3793.0 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 traded value. Vanilla foreign currency exchange contracts are expected to be gross settled through delivery of one currency and receipt of another. Gross settlement of both the interest and principal on cross-currency interest rate swaps is expected through delivery of one currency and receipt of another. 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. For option derivative contracts, such as foreign currency options, the expected cash flows are only included if the option has intrinsic value at the reporting date and therefore would exercise based on the market curves existing at the reporting date. Where derivatives are expected to be gross settled based on the traded value rather than the mark-to-market value, the gross undiscounted cash flows based on the contracted traded values 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 the 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. Derivative liabilities \u2013 cash inflow/(outflow)
At 31 December 2025
At 31 December 2024
Difference to Difference to
Within carrying Carrying Within carrying Carrying
1 year 1\u20132 years >2 years Total amount amount 1 year 1\u20132 years >2 years Total amount amount
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts \u2013 inflow
209.8
8.3
\u2013
218 .1
(224.0)
(5.9)
303.0
259.3
3 7. 8
6 0 0.1
(673.5)
(73.4)
Commodity contracts \u2013 outflow
(137.7 )
(52.5)
(15.6)
(205.8)
171.7
(34.1)
(33.8)
(1.4)
(4.1)
(39.3)
30.9
(8.4)
Foreign exchange contracts \u2013 inflow
1,075.4
688.7
1,497.0
3,261.1
26.4
(99.4)
6 41.1
468.4
328.0
1,43 7.5
15.2
(36.9)
Foreign exchange contracts \u2013 outflow
(1,118.0)
(711.9)
(1,557.0)
(3,386.9)
(637.4)
(494.6)
(357.6)
(1,489.6)
Cross-currency contracts \u2013 inflow
97.3
2.7
0.5
100.5
0.8
(9.6)
215.7
53.9
341.0
610.6
1.2
(30.2)
Cross-currency contracts \u2013 outflow
(107.3)
(3.1)
(0.5)
(110.9)
(241.3)
(63.4)
(337.3)
(642.0)
Interest rate contracts \u2013 inflow
\u2013
\u2013
\u2013
\u2013
0.1
(3.0)
0.3
\u2013
\u2013
0.3
0.1
(0.4)
Interest rate contracts \u2013 outflow
(1.6)
(1.3)
(0.2)
(3.1)
\u2013
(0.5)
(0.3)
(0.8)
Inflation contracts \u2013 outflow
(86.9)
(1.5)
(12 .1)
(100.5)
2.7
(97.8)
(84.3)
(91.5)
(20.0)
(195.8)
11.8
(184.0)
(69.0)
(70.6)
(87.9)
(227.5)
(22.3)
(249.8)
163.3
130.2
(12.5)
281.0
(614.3)
(333.3)
Derivative assets \u2013 cash inflow/(outflow)
At 31 December 2025
At 31 December 2024
Difference to Difference to
Within carrying Carrying Within carrying Carrying
1 year 1\u20132 years >2 years Total amount amount 1 year 1\u20132 years >2 years Total amount amount
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Commodity contracts \u2013 inflow
425.3
8 4.1
0 .1
509.5
(458.0)
51.5
363.7
50.6
16.8
431.1
(306.5)
124.6
Commodity contracts \u2013 outflow
(36.6)
( 7 7. 3)
(45.1)
(159.0)
166.9
7.9
(117.5)
(4.5)
(24.9)
(146.9)
175.8
28.9
Foreign exchange contracts \u2013 inflow
172.4
2.4
\u2013
174.8
1.2
27.7
874.6
1,030.0
245.1
2,149.7
(9.7)
96.7
Foreign exchange contracts \u2013 outflow
(148.3)
\u2013
\u2013
(148.3)
(839.9)
(97 7.1)
(226.3)
(2,043.3)
Cross-currency contracts \u2013 inflow
18.6
18.2
314.6
351.4
10.1
4.9
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
Cross-currency contracts \u2013 outflow
(22.8)
(22.6)
(311.2)
(356.6)
\u2013
\u2013
\u2013
\u2013
Interest rate contracts \u2013 inflow
1.0
\u2013
\u2013
1.0
\u2013
1.0
6.3
1.1
\u2013
7.4
(0.2)
7.1
Interest rate contracts \u2013 outflow
\u2013
\u2013
\u2013
\u2013
\u2013
\u2013
(0.1)
(0 .1)
409.6
4.8
(41.6)
372.8
(279.8)
93.0
287. 2
10 0 .1
10.6
397.9
(140.6)
257.3
", "dimensions": { "concept": "ifrs-full:DisclosureOfLiquidityRiskExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-612": { "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 \u00a330.6 million (2024: \u00a342.4 million) and expected credit losses on accrued income of \u00a35.0 million (2024: \u00a39.0 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. 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 Opus Energy non-core SME meter points (see note 2.7) 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 \u00a3302.1 million at 31 December 2025 (2024: \u00a3356.0 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 \u00a3300.2 million at 31 December 2025 (2024: \u00a3252.9 million). The identified impairment loss, based on the 12-month expected credit loss basis, was immaterial. Cash and cash equivalents at the reporting date were 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 2025, the Group held \u00a3nil in cash collateral receipts (2024: \u00a39.8 million) covering certain derivative assets and had posted \u00a319.4 million (2024: \u00a34.7 million) of cash collateral payments covering certain derivative liabilities. The credit rating of counterparties to which the \u00a319.4 million of cash collateral had been posted ranged from A to A+. ", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-637": { "value": "Counterparty risk As the Group relies on third-party suppliers and counterparties for the delivery of financial and non-financial items, it 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-656": { "value": "7.3 Hedge reserve The Group designates certain hedging instruments that are used to address commodity price risk, foreign currency exchange risk, interest rate risk, foreign currency exchange and interest 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 profit or loss, 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
Commodity currency Interest Foreign currency Inflation
price risk exchange risk rate risk and Interest rate risk Total
\u00a3m \u00a3m \u00a3m rate risk \u00a3m \u00a3m
At 1 January 2024
25 7.0
(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 revenue
( 397.5)
\u2013
\u2013
\u2013
24.0
(373.5)
\u2013 Reclassified to the Consolidated income statement \u2013 included in cost of sales
105.1
\u2013
\u2013
\u2013
\u2013
10 5.1
\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 gains/(losses)
\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 1 January 2025
25.9
4.8
4.3
(4.0)
(38.9)
(7.9)
Gains/(losses) recognised:
\u2013 Change in fair value of hedging instrument recognised in OCI
122.3
(84.9)
(2.3)
5.1
(0.6)
39.6
Reclassified from equity as the hedged item has affected profit or loss:
\u2013 Reclassified to the Consolidated income statement \u2013 included in revenue
(114.7)
\u2013
\u2013
\u2013
20.5
(94.2)
\u2013 Reclassified to the Consolidated income statement \u2013 included in cost of sales
(21.3)
\u2013
\u2013
\u2013
\u2013
(21.3)
\u2013 Reclassified to the Consolidated income statement \u2013 included in interest payable and similar charges
\u2013
7.1
(5.9)
1.9
\u2013
3.1
\u2013 Reclassified to the Consolidated income statement \u2013 included in foreign exchange gains/(losses)
\u2013
(30.4)
\u2013
(3.1)
\u2013
(33.5)
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
0.8
0.8
Transferred from equity and included within the initial cost of a non-financial asset:
\u2013 Transferred to cost of inventories
\u2013
31.8
\u2013
\u2013
\u2013
31.8
Related deferred tax, net (note 2.6)
3.4
19.1
2.1
(0.9)
(5.2)
18.5
At 31 December 2025
15.6
(52.5)
(1.8)
(1.0)
(23.4)
(63.1)
The expected release profile from equity of post-tax hedging gains and losses is as follows:
At 31 December 2025
Within 1 year 1\u20132 years >2 years Total
\u00a3m \u00a3m \u00a3m \u00a3m
Commodity risk
12.7
2.1
0.8
15.6
Foreign currency exchange risk
(19.9)
(9.0)
(23.6)
(52.5)
Interest rate risk
(1.0)
(0.7)
(0 .1)
(1.8)
Foreign currency and interest rate risk
(0.8)
(0.2)
\u2013
(1.0)
Inflation risk
(11.9)
(3.7)
(7.8)
(23.4)
(20.9)
(11.5)
(30.7)
(63.1)
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)
7.4 Cost of hedging reserve The Group designates the change in the spot rate as the hedged risk in the Group\u2019s cash flow hedge relationships hedging the purchase of inventory denominated in foreign currencies. The Group designates the cost of hedging, being the change in fair value associated with forward points including currency basis, to equity. For foreign currency options designated as cash flow hedges for the purchase of inventory denominated in foreign currencies the Group designates only the change in intrinsic value as the hedged risk. The change in fair value associated with the time value of options is recognised in the cost of hedging reserve. The purchase of inventory denominated in a foreign currency is a transaction related hedged item that results in the recognition of a non-financial asset. As such, amounts accumulated in the cost of hedging reserve are removed from the cost of hedging reserve and included within the initial cost of the non-financial asset, being the inventory, on initial recognition of the non-financial asset. 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
2025 2024
\u00a3m \u00a3m
At 1 January
6.9
18.7
(Losses)/gains recognised:
\u2013 Change in fair value of hedging instruments recognised in the
Consolidated statement of comprehensive income
(21.9)
6.8
Transferred from equity and included within the initial cost of a
non-financial asset:
\u2013 Transferred to cost of inventories
(4.3)
(22.6)
Related deferred tax, net (note 2.6)
6.5
4.0
At 31 December
(12.8)
6.9
The expected release profile from equity of post-tax cost of hedging gains and losses is as follows:
At 31 December 2025
Within 1 year 1\u20132 years >2 years Total
\u00a3m \u00a3m \u00a3m \u00a3m
Foreign currency exchange risk
(3.6)
(4.1)
(5.1)
(12.8)
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
", "dimensions": { "concept": "ifrs-full:DisclosureOfDetailedInformationAboutHedgesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-669": { "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:
At 31 December 2025
At 31 December 2024
Net amounts
Gross Net amounts Related cash of financial
amounts of financial Related collateral Gross amounts instruments Related Related cash
Gross of financial instruments financial assets/ of financial presented financial collateral
amounts instruments presented instruments (liabilities) Gross amounts instruments in the instruments assets/
of financial offset in the in the that are that are not of financial offset in the balance that are (liabilities) that
instruments balance sheet balance sheet not offset offset Net amount
instruments
(1)
balance sheet
sheet
(1)
not offset are not offset Net amount
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial assets
Derivative financial instruments
129.3
(36.3)
93.0
(46.5)
\u2013
46.5
328.5
(71.2)
2 57.3
(166.4)
(1.5)
89.4
Trade and other receivables and contract assets
369.6
(65.5)
30 4.1
(2.7)
(10.9)
290.5
445.3
(52.7)
392.6
(2.5)
\u2013
39 0.1
Financial liabilities
Derivative financial instruments
(286.1)
36.3
(249.8)
47. 8
10.9
(191.1)
(404.5)
71.2
(333.3)
156.1
\u2013
(17 7.2)
Trade and other payables and contract liabilities
(739.3)
65.5
(673.8)
1.4
\u2013
(672.4)
(845.7)
52.7
(793.0)
12.8
1.5
(778.7)
(1) The amounts in the table above have been represented to present only the financial assets and financial liabilities included within the balance sheet line item. Collateral assets and liabilities are recorded in other receivables and other payables respectively.", "dimensions": { "concept": "ifrs-full:DisclosureOfOffsettingOfFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-638": { "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:
At 31 December 2025
At 31 December 2024
Net amounts
Gross Net amounts Related cash of financial
amounts of financial Related collateral Gross amounts instruments Related Related cash
Gross of financial instruments financial assets/ of financial presented financial collateral
amounts instruments presented instruments (liabilities) Gross amounts instruments in the instruments assets/
of financial offset in the in the that are that are not of financial offset in the balance that are (liabilities) that
instruments balance sheet balance sheet not offset offset Net amount
instruments
(1)
balance sheet
sheet
(1)
not offset are not offset Net amount
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial assets
Derivative financial instruments
129.3
(36.3)
93.0
(46.5)
\u2013
46.5
328.5
(71.2)
2 57.3
(166.4)
(1.5)
89.4
Trade and other receivables and contract assets
369.6
(65.5)
30 4.1
(2.7)
(10.9)
290.5
445.3
(52.7)
392.6
(2.5)
\u2013
39 0.1
Financial liabilities
Derivative financial instruments
(286.1)
36.3
(249.8)
47. 8
10.9
(191.1)
(404.5)
71.2
(333.3)
156.1
\u2013
(17 7.2)
Trade and other payables and contract liabilities
(739.3)
65.5
(673.8)
1.4
\u2013
(672.4)
(845.7)
52.7
(793.0)
12.8
1.5
(778.7)
(1) The amounts in the table above have been represented to present only the financial assets and financial liabilities included within the balance sheet line item. Collateral assets and liabilities are recorded in other receivables and other payables respectively.", "dimensions": { "concept": "ifrs-full:DisclosureOfOffsettingOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-613": { "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:
At 31 December 2025
At 31 December 2024
Net amounts
Gross Net amounts Related cash of financial
amounts of financial Related collateral Gross amounts instruments Related Related cash
Gross of financial instruments financial assets/ of financial presented financial collateral
amounts instruments presented instruments (liabilities) Gross amounts instruments in the instruments assets/
of financial offset in the in the that are that are not of financial offset in the balance that are (liabilities) that
instruments balance sheet balance sheet not offset offset Net amount
instruments
(1)
balance sheet
sheet
(1)
not offset are not offset Net amount
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Financial assets
Derivative financial instruments
129.3
(36.3)
93.0
(46.5)
\u2013
46.5
328.5
(71.2)
2 57.3
(166.4)
(1.5)
89.4
Trade and other receivables and contract assets
369.6
(65.5)
30 4.1
(2.7)
(10.9)
290.5
445.3
(52.7)
392.6
(2.5)
\u2013
39 0.1
Financial liabilities
Derivative financial instruments
(286.1)
36.3
(249.8)
47. 8
10.9
(191.1)
(404.5)
71.2
(333.3)
156.1
\u2013
(17 7.2)
Trade and other payables and contract liabilities
(739.3)
65.5
(673.8)
1.4
\u2013
(672.4)
(845.7)
52.7
(793.0)
12.8
1.5
(778.7)
(1) The amounts in the table above have been represented to present only the financial assets and financial liabilities included within the balance sheet line item. Collateral assets and liabilities are recorded in other receivables and other payables respectively.", "dimensions": { "concept": "ifrs-full:DisclosureOfOffsettingOfFinancialAssetsAndFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-718": { "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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-614": { "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 2025, the Group had the following contingent liabilities.
Environmental
The Group\u2019s subsidiaries operate facilities in the United States that are subject to federal and state
environmental regulation. In this context, certain of the Group\u2019s subsidiaries have been named as
defendants in two U.S. civil proceedings in Federal Court in the Southern District of Mississippi.
One complaint is filed as a putative class action, which alleges property damage, personal injury,
and other harms alleged to arise from environmental emissions or other aspects of local site
operations. The other complaint is a mass action with similar health and property harm allegations
but additionally asserting Clean Air Act violations.
The Group intends to defend the complaints vigorously; however, the ultimate outcome and
potential financial or operational impact cannot be predicted with certainty. The Group continues
to assess these matters and will update disclosures as required. At this stage management cannot
estimate the potential economic impact of the complaints with any reliable precision and therefore
these have been treated as contingent liabilities. At this stage, they are not considered to be
material to the Consolidated financial statements. Litigation of this nature in the United States can
be complex, protracted, and costly to defend.
With litigation of this nature in the United States, there is risk of complaints expanding to more sites
where the Group\u2019s subsidiaries operate facilities.
Third Party Intermediary commissions
Recent judicial developments relating to commission disclosure obligations of Third Party
Intermediaries (\u201cTPIs\u201d), particularly in the non domestic energy sector, have increased the potential
for claims by commercial customers alleging hidden or undisclosed broker commissions. A series
of recent judgments have provided additional guidance on how such claims will be considered by
the English courts. We are in the process of reassessing the potential exposure from existing and
threatened commercial customer claims in light of such legal developments. At this stage, it is not
considered to be material to the Consolidated financial statements.
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.
At 31 December
2025 2024
\u00a3m \u00a3m
Contracts placed for future capital expenditure not provided in the
Consolidated financial statements \u2013 property, plant and equipment
153.1
142.8
Contracts placed for future capital expenditure not provided in the
Consolidated financial statements \u2013 intangible assets
2.5
\u2013
Future commitments to purchase ROCs
51.7
\u2013
Future commitments to purchase biomass under fixed and variable
priced contracts
1,094.7
2,353.3
Future commitments to purchase fibre under fixed and variable
priced contracts
275.8
424.4
Future commitments to purchase biomass have reduced compared to the prior year, as the majority
of committed purchases 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:
At 31 December
2025 2024
\u00a3m \u00a3m
Within one year
1,053.2
995.2
Within one to five years
270.5
1,442.7
After five years
46.8
339.8
1,370.5
2,777.7
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 as they are for the purchase of a non-financial item that due to the nature of the biomass
market cannot be settled net in cash, and are not, therefore, required to be measured at fair value.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsAndContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-670": { "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 2025, the Group had the following contingent liabilities. Environmental The Group\u2019s subsidiaries operate facilities in the United States that are subject to federal and state environmental regulation. In this context, certain of the Group\u2019s subsidiaries have been named as defendants in two U.S. civil proceedings in Federal Court in the Southern District of Mississippi. One complaint is filed as a putative class action, which alleges property damage, personal injury, and other harms alleged to arise from environmental emissions or other aspects of local site operations. The other complaint is a mass action with similar health and property harm allegations but additionally asserting Clean Air Act violations. The Group intends to defend the complaints vigorously; however, the ultimate outcome and potential financial or operational impact cannot be predicted with certainty. The Group continues to assess these matters and will update disclosures as required. At this stage management cannot estimate the potential economic impact of the complaints with any reliable precision and therefore these have been treated as contingent liabilities. At this stage, they are not considered to be material to the Consolidated financial statements. Litigation of this nature in the United States can be complex, protracted, and costly to defend. With litigation of this nature in the United States, there is risk of complaints expanding to more sites where the Group\u2019s subsidiaries operate facilities. Third Party Intermediary commissions Recent judicial developments relating to commission disclosure obligations of Third Party Intermediaries (\u201cTPIs\u201d), particularly in the non domestic energy sector, have increased the potential for claims by commercial customers alleging hidden or undisclosed broker commissions. A series of recent judgments have provided additional guidance on how such claims will be considered by the English courts. We are in the process of reassessing the potential exposure from existing and threatened commercial customer claims in light of such legal developments. At this stage, it is not considered to be material to the Consolidated financial statements. ", "dimensions": { "concept": "ifrs-full:DisclosureOfContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-728": { "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 2025, the Group had the following contingent liabilities. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForContingentLiabilitiesAndContingentAssetsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-639": { "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.
At 31 December
2025 2024
\u00a3m \u00a3m
Contracts placed for future capital expenditure not provided in the
Consolidated financial statements \u2013 property, plant and equipment
153.1
142.8
Contracts placed for future capital expenditure not provided in the
Consolidated financial statements \u2013 intangible assets
2.5
\u2013
Future commitments to purchase ROCs
51.7
\u2013
Future commitments to purchase biomass under fixed and variable
priced contracts
1,094.7
2,353.3
Future commitments to purchase fibre under fixed and variable
priced contracts
275.8
424.4
Future commitments to purchase biomass have reduced compared to the prior year, as the majority of committed purchases 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:
At 31 December
2025 2024
\u00a3m \u00a3m
Within one year
1,053.2
995.2
Within one to five years
270.5
1,442.7
After five years
46.8
339.8
1,370.5
2,777.7
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 as they are for the purchase of a non-financial item that due to the nature of the biomass market cannot be settled net in cash, and are not, therefore, required to be measured at fair value.", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsExplanatory", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-574": { "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 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 the Group\u2019s biomass assets in the UK \u2013 Flexible Generation: generation and sale of electricity from pumped storage, run-of-river hydro and OCGT assets, and the processing and sale of waste-derived pellets, in the UK \u2013 Energy Solutions: 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-6": { "value": "Drax Group plc (the Company) is a public company, limited by shares", "dimensions": { "concept": "ifrs-full:LegalFormOfEntity", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-579": { "value": "Drax Group plc", "dimensions": { "concept": "ifrs-full:NameOfParentEntity", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-581": { "value": "Drax Group plc", "dimensions": { "concept": "ifrs-full:NameOfUltimateParentOfGroup", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-7": { "value": "United Kingdom", "dimensions": { "concept": "ifrs-full:CountryOfIncorporation", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-8": { "value": "UK, US and Canada", "dimensions": { "concept": "ifrs-full:PrincipalPlaceOfBusiness", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-9": { "value": "Drax Power Station, Selby, North Yorkshire, YO8 8PH, United Kingdom ", "dimensions": { "concept": "ifrs-full:AddressOfRegisteredOfficeOfEntity", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-575": { "value": "United Kingdom ", "dimensions": { "concept": "ifrs-full:DomicileOfEntity", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-671": { "value": "8.2 Adoption of new and revised accounting standards The following amendments became effective for the first time in 2025. The Group adopted the following from 1 January 2025: \u2013 IAS 21 (amended) \u2013 Lack of Exchangeability \u2013 effective from 1 January 2025 The adoption of this amendment in the current period has not had a material impact on these Consolidated financial statements. 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 IFRS 9 (amended) and IFRS 7 (amended) \u2013 Amendments to the Classification and Measurement of Financial Instruments \u2013 effective from 1 January 2026 \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 \u2013 IFRS 18 \u2013 Presentation and Disclosure in Financial Statements \u2013 effective from 1 January 2027 \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). On 9 April 2024, the International Accounting Standards Board (IASB) issued IFRS 18 Presentation and Disclosure in Financial Statements, which is expected to be effective for periods commencing on or after 1 January 2027. This was endorsed by the UK Endorsement Board on 12 December 2025. The standard will replace IAS 1 Presentation of Financial Statements. Whilst IFRS 18 will not directly impact recognition or measurement, it will impact how amounts are presented, with the principal changes being: \u2013 Categorisation of all income and expenditure into three newly defined categories: Operating, Investing and Financing \u2013 Introduction of two newly defined subtotals to be presented within the income statement: Operating profit and Profit before financing and income taxes \u2013 New disclosure requirement for Management Performance Measures (MPMs) \u2013 New requirements regarding the aggregation and disaggregation of information to be presented in the financial statements The Group is currently considering the impact of applying IFRS 18, prior to adoption. From the transition work completed so far, the Group expects the main impact to be in relation to the presentation of the Group\u2019s Consolidated income statement, as the Group determines the most appropriate categorisations and breakdowns of income and expense items to present. This will likely result in new consolidated income statement categories, different disaggregation of certain types of income and expenses, and will result in different subtotals being presented to those used currently. The Group does not expect a significant impact on either the APMs currently disclosed by the Group, or the level of disclosure provided, as many of the MPM disclosure requirements of IFRS 18 are already provided by the Group. However, the Group\u2019s current APMs will be clearly distinguished between those that meet the IFRS 18 definition of an MPM to which the requirements of IFRS 18 apply, and other performance measures provided. The Group\u2019s Consolidated cash flow statement under IFRS 18 will start at operating profit, rather than profit after tax, and interest paid and interest received will be presented in financing and investing activities respectively, rather than within operating activities as they are currently. Apart from the impacts described above, the new requirements are not expected to significantly impact any other primary statements or related disclosures. Adoption of other new or amended standards and relevant interpretations in future periods is not expected to have a material impact on the Consolidated financial statements of the Group. The Group will continue to monitor the developments of these new or amended standards as and when they are endorsed for use in the UK.", "dimensions": { "concept": "ifrs-full:DescriptionOfExpectedImpactOfInitialApplicationOfNewStandardsOrInterpretations", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-640": { "value": "
The following amendments became effective for the first time in 2025. The Group adopted the
following from 1 January 2025:
\u2013 IAS 21 (amended) \u2013 Lack of Exchangeability \u2013 effective from 1 January 2025
The adoption of this amendment in the current period has not had a material impact on these
Consolidated financial statements.
", "dimensions": { "concept": "ifrs-full:DescriptionOfInitialApplicationOfStandardsOrInterpretations", "language": "en", "entity": "scheme:549300YPSNTXR4ZHSR98", "period": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-641": { "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:
Balances as at
Transactions in the year ended 31 December 2025
31 December 2025
(1)
Drax Revenue Other income Purchases Payable Receivable
Ownership \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Houston Pellet
Limited Partnership
HPLP
30%
2.0
0.6
18.4
1.2
0.7
Balances as at
Transactions in the year ended 31 December 2024
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
(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 105\u2013111.
Year ended 31 December
2025 2024
\u00a3000 \u00a3000
Short-term employee benefits
7,6 0 4
7,274
Termination benefits
2,591
388
Share-based payments
5,203
4 ,107
Post-employment benefits
406
411
Total remuneration
15,804
12,18 0
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 15 (2024: 16) 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-615": { "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:
Balances as at
Transactions in the year ended 31 December 2025
31 December 2025
(1)
Drax Revenue Other income Purchases Payable Receivable
Ownership \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Houston Pellet
Limited Partnership
HPLP
30%
2.0
0.6
18.4
1.2
0.7
Balances as at
Transactions in the year ended 31 December 2024
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
(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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } }, "fact-616": { "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 105\u2013111.
Year ended 31 December
2025 2024
\u00a3000 \u00a3000
Short-term employee benefits
7,6 0 4
7,274
Termination benefits
2,591
388
Share-based payments
5,203
4 ,107
Post-employment benefits
406
411
Total remuneration
15,804
12,18 0
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 15
(2024: 16) 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": "2025-01-01T00:00:00/2026-01-01T00:00:00" } } } }