DESNZ annual report 2025 to 2026: Financial statements (HTML)

Question 1

Consolidated Statement of Comprehensive Net Expenditure

Accepted Answer

for the year ended 31 March 2026

	Note	31 March 2026 Core department £m	31 March 2026 Departmental group £m	31 March 2025 Restated Core department £m	31 March 2025 Restated Departmental group £m
Revenue from contracts with customers	5.1	(104)	(6,164)	(70)	(4,863)
Other operating income	-	-	-	(1)	(29)
Total operating income	-	(104)	(6,164)	(71)	(4,892)
Staff costs	2	420	852	377	756
Purchase of goods and services	3.1	444	2,836	602	2,652
Depreciation and impairment charges	3.2	40	253	59	204
Provision and other liabilities expenses	3.3	195	6,480	(34)	6,474
Grants expenditure	3.4	8,433	3,859	8,055	3,287
Other operating expenditure	-	-	19	-	(7)
Total operating expenditure	-	9,532	14,299	9,059	13,366
Net operating expenditure	-	9,428	8,135	8,988	8,474
Finance income	5.2	(135)	(121)	(129)	(73)
Finance expense	4	63	2,922	46	2,596
Remeasurement of derivatives, including Contracts for Differences	9	-	24,394	-	4,610
Share of post-tax loss/(profits) of associates and joint ventures	13	-	(58)	-	(77)
Total net expenditure for the year from operations	9,356	35,272	8,905	15,530
Of which: Net (income)/expenditure for the year attributable to non-controlling interests	SoCTE	-	27	-	85
Of which: Net (income)/expenditure for the year attributable to taxpayers	-	9,356	35,299	8,905	15,615

Other comprehensive income and expenditure:

	Note	31 March 2026 Core department £m	31 March 2026 Departmental group £m	31 March 2025 Restated Core department £m	31 March 2025 Restated Departmental group £m
Net (gain)/loss on:
Revaluation of property, plant and equipment	SoCTE, 6	-	(16)	-	(7)
Items that may be reclassified subsequently to net operating costs:
Revaluation of investments	SoCTE, 10, 11	87	26	(67)	(95)
Actuarial (gains)/losses	SoCTE, 19	-	87	-	(278)
Total other comprehensive net income and expenditure attributable to taxpayers	-	87	97	(67)	(380)
Comprehensive net (income)/expenditure for the year attributable to taxpayers	-	9,443	35,396	8,838	15,235

All operations are continuing.

The notes on pages 193 to 292 form part of these accounts. Note 25 describes why the 2024-25 values have been restated and the impact of the change.

Question 2

Consolidated Statement of Financial Position

Accepted Answer

as at 31 March 2026

	Note	31 March 2026 Core department £m	31 March 2026 Departmental group £m	31 March 2025 Restated Core department £m	31 March 2025 Restated Departmental group £m
Revenue from contracts with customers	5.1	(104)	(6,164)	(70)	(4,863)
Other operating income	-	-	-	(1)	(29)
Total operating income	-	(104)	(6,164)	(71)	(4,892)
Staff costs	2	420	852	377	756
Purchase of goods and services	3.1	444	2,836	602	2,652
Depreciation and impairment charges	3.2	40	253	59	204
Provision and other liabilities expenses	3.3	195	6,480	(34)	6,474
Grants expenditure	3.4	8,433	3,859	8,055	3,287
Other operating expenditure	-	-	19	-	(7)
Total operating expenditure	-	9,532	14,299	9,059	13,366
Net operating expenditure	-	9,428	8,135	8,988	8,474
Finance income	5.2	(135)	(121)	(129)	(73)
Finance expense	4	63	2,922	46	2,596
Remeasurement of derivatives, including Contracts for Differences	9	-	24,394	-	4,610
Share of post-tax loss/(profits) of associates and joint ventures	13	-	(58)	-	(77)
Total net expenditure for the year from operations	9,356	35,272	8,905	15,530
Of which: Net (income)/expenditure for the year attributable to non-controlling interests	SoCTE	-	27	-	85
Of which: Net (income)/expenditure for the year attributable to taxpayers	-	9,356	35,299	8,905	15,615

The notes on pages 193 to 292 form part of these accounts. Note 25 describes why the 2024-25 values have been restated and the impact of the change.

Jonathan Brearley
Permanent Secretary and Principal Accounting Officer

13 July 2026

Question 3

Consolidated Statement of Cash Flows

Accepted Answer

for the year ended 31 March 2026

The Statement of Cash Flows shows the change in cash and cash equivalents of the department during the reporting period. The statement shows how the department generates and uses cash and cash equivalents by classifying cash flows as operating, investing and financing activities. The amount of net cash flows arising from operating activities is a key indicator of service costs and the extent to which these operations are funded by way of income from the recipients of services provided by the department. Investing activities represent the extent to which cash inflows and outflows have been made for resources which are intended to contribute to the department’s future public service delivery. The 2024-25 comparative figures shown below have been both restated and re-presented in the current year. Note 25 describes the reason for the restatement of 2024-25 values and the impact of the change. The re-presentation does not include any changes to the underlying figures beyond the restatement.

	Note	31 March 2026 Core department £m	31 March 2026 Departmental group £m	31 March 2025 Restated Core department £m	31 March 2025 Restated Departmental group £m	1 April 2024 Restated Core department £m	1 April 2024 Restated Departmental group £m
Cash flows from operating activities
Net operating cost	SoCNE	(9,356)	(35,299)	(8,905)	(15,615)
Adjustments for non-cash expenditure	SoCNE	259	33,975	(62)	13,830
Reclassification of finance cash flows	4, 5.2	(96)	(52)	-	(53)
Increase)/decrease in inventories	-	-	4	-	2
(Increase)/decrease in trade and other receivables	14	(83)	(62)	183	(343)
Increase/(decrease) in trade payables and other liabilities	16	(22)	400	(349)	301
Less movements in payables relating to items not passing through the Consolidated Statement of Comprehensive Net Expenditure	16	18	(392)	38	(134)
Use of provisions	18	(139)	(4,009)	(258)	(4,320)
Interest on lease liabilities	17	-	2	-	10
Payments to retirement benefit obligations	19	-	(96)	-	(116)
Movement attributable to non-controlling interests	SoCTE	-	(375)	-	79
Other cash flow adjustments	-	-	(4)	-	(15)
Net cash outflow from operating activities	-	(9,419)	(5,908)	(9,352)	(6,376)
Cash flows from investing activities
Purchase of property, plant and equipment	6	(6)	(5,723)	(3)	(1,980)
Purchase of investment property	-	-	-	-	(25)
Purchase of intangible assets	8	(21)	(73)	(10)	(65)
Additions to right of use assets	7	-	(262)	(12)	(109)
Disposal of property, plant and equipment	6	-	(1)	-	1
Disposal of right-of-use assets	7	-	100	-	12
Investment in public sector shares	10	(1,862)	(98)	(2,679)	(692)
Disposal of public sector shares	10	5,133	-	-	-
Investment in other financial assets	11	(37)	(51)	(33)	(34)
Disposal of other financial assets	11	20	20	2	2
Investment in public sector loans	10	(1,478)	(325)	(50)	(5)
Public sector loans redemptions	10	228	228	2,907	2,907
Venture capital fund investments	11	(2)	-	(2)	-
Dividends from joint ventures and associates	13	90	87	84	84
Income from financial assets	5.2	6	122	27	55
Payments to the Contracts for Difference generators	9	-	(2,924)	-	(2,198)
Net cash outflow from investing activities	-	2,071	(8,901)	231	(2,048)
Cash flows from financing activities
From Consolidated Fund (supply) – current year	SoCTE	7,675	7,675	8,840	8,840
Interest paid and bank charges	4	-	(67)	-	(1)
Payment of lease liabilities	17	(14)	(12)	(14)	(33)
New leases in the year	17	-	132	14	119
Capital contributions from non-controlling interests	SoCTE	-	205	-	17
Private sector borrowings	SoFP	-	7,865	-	-
Movement on other reserves	SoCTE	-	(14)	-	-
Net cash flow from financing activities	-	7,661	15,783	8,840	8,942
Net increase/(decrease) in cash and cash equivalents in the period before adjustment for receipts and payments to the Consolidated Fund	-	313	974	(282)	518
Receipts due to the Consolidated Fund which are outside the scope of the department’s activities	-	229	500	(720)	584
Payments of amounts due to the Consolidated Fund	-	(256)	(913)	682	(1,245)
Net increase/(decrease) in cash and cash equivalents in the period after adjustment for receipts and payments to the Consolidated Fund	-	286	561	(320)	(143)
Cash and cash equivalents at the beginning of the period	15	705	2,594	1,025	2,737
Cash and cash equivalents opening balance	-	705	2,594	1,025	2,737
Cash and cash equivalents at the end of the period	15	991	3,155	705	2,594

Question 4

Statement of Changes in Taxpayers’ Equity (core department)

Accepted Answer

for the year ended 31 March 2026

	Note	31 March 2026 Core department £m	31 March 2026 Departmental group £m	31 March 2025 Restated Core department £m	31 March 2025 Restated Departmental group £m
Revenue from contracts with customers	5.1	(104)	(6,164)	(70)	(4,863)
Other operating income	-	-	-	(1)	(29)
Total operating income	-	(104)	(6,164)	(71)	(4,892)
Staff costs	2	420	852	377	756
Purchase of goods and services	3.1	444	2,836	602	2,652
Depreciation and impairment charges	3.2	40	253	59	204
Provision and other liabilities expenses	3.3	195	6,480	(34)	6,474
Grants expenditure	3.4	8,433	3,859	8,055	3,287
Other operating expenditure	-	-	19	-	(7)
Total operating expenditure	-	9,532	14,299	9,059	13,366
Net operating expenditure	-	9,428	8,135	8,988	8,474
Finance income	5.2	(135)	(121)	(129)	(73)
Finance expense	4	63	2,922	46	2,596
Remeasurement of derivatives, including Contracts for Differences	9	-	24,394	-	4,610
Share of post-tax loss/(profits) of associates and joint ventures	13	-	(58)	-	(77)
Total net expenditure for the year from operations	9,356	35,272	8,905	15,530
Of which: Net (income)/expenditure for the year attributable to non-controlling interests	SoCTE	-	27	-	85
Of which: Net (income)/expenditure for the year attributable to taxpayers	-	9,356	35,299	8,905	15,615

Question 5

Consolidated Statement of Changes in Taxpayers’ Equity (departmental group)

Accepted Answer

for the year ended 31 March 2026

	Note	31 March 2026 Core department £m	31 March 2026 Departmental group £m	31 March 2025 Restated Core department £m	31 March 2025 Restated Departmental group £m
Revenue from contracts with customers	5.1	(104)	(6,164)	(70)	(4,863)
Other operating income	-	-	-	(1)	(29)
Total operating income	-	(104)	(6,164)	(71)	(4,892)
Staff costs	2	420	852	377	756
Purchase of goods and services	3.1	444	2,836	602	2,652
Depreciation and impairment charges	3.2	40	253	59	204
Provision and other liabilities expenses	3.3	195	6,480	(34)	6,474
Grants expenditure	3.4	8,433	3,859	8,055	3,287
Other operating expenditure	-	-	19	-	(7)
Total operating expenditure	-	9,532	14,299	9,059	13,366
Net operating expenditure	-	9,428	8,135	8,988	8,474
Finance income	5.2	(135)	(121)	(129)	(73)
Finance expense	4	63	2,922	46	2,596
Remeasurement of derivatives, including Contracts for Differences	9	-	24,394	-	4,610
Share of post-tax loss/(profits) of associates and joint ventures	13	-	(58)	-	(77)
Total net expenditure for the year from operations	9,356	35,272	8,905	15,530
Of which: Net (income)/expenditure for the year attributable to non-controlling interests	SoCTE	-	27	-	85
Of which: Net (income)/expenditure for the year attributable to taxpayers	-	9,356	35,299	8,905	15,615

The notes on pages 193 to 292 form part of these accounts. Note 25 describes why the 2024-25 values have been restated and the impact of the change.

Question 6

Notes to the accounts

Accepted Answer

1. Accounting policies, judgements, and estimates

1.1. Basis of accounting

These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adapted and interpreted by the HM Treasury 2025-26 Government Financial Reporting Manual (FReM), and as set out in the Accounts Direction to the department pursuant to section 5(2) of the Government Resources and Accounts Act 2000 (GRAA) except as described in section 1.2 below. Where the FReM permits a choice of accounting policy, the policy selected is that judged to be most appropriate to the circumstances of the core department and its consolidated entities (the departmental group) for the purpose of giving a true and fair view. The policies adopted by the departmental group as described below, have been applied consistently to items considered material to the accounts.

The Consolidated Statement of Financial Position (SoFP) shows significant net liabilities, primarily relating to Nuclear Decommissioning provision and Contracts for Difference derivatives which will be settled over many years. Any liabilities exceeding departmental group funding are expected to be met by future funding voted for by Parliament under Supply and Appropriation Acts (Main Estimates). There is no reason to believe the resources required to settle these liabilities will not be forthcoming. It has accordingly been considered appropriate to adopt a going concern basis for the preparation of these financial statements.

1.2. Accounting convention

These financial statements have been prepared on an accruals basis under the historical cost convention, modified by the revaluation of property, plant and equipment (except specific waste management assets), intangible assets, investment properties and some financial instruments, such as Contracts for Difference, to fair value to the extent required or permitted under IFRS as set out in these accounting policies.

Shares in consolidated bodies held by the core department are carried at historical cost less any impairment in accordance with the FReM.

The department has agreed with HM Treasury that specific nuclear waste management assets should be measured at historical cost less any impairment losses where there is no reliable and cost-effective valuation methodology. This is a departure from the FReM requirement to report property, plant, and equipment at fair value.

1.3. Presentational currency

The financial statements are presented in pounds sterling, the functional currency of the departmental group. Transactions denominated in a foreign currency are translated into sterling at the rate of exchange on the date of each transaction. In preparing the financial statements, monetary assets and liabilities denominated in foreign currencies are translated at the rates prevailing at the reporting date. All translation differences of monetary assets and liabilities are included in net expenditure for the year. Values are rounded to the nearest million pounds (£m) unless the FReM requires a lower threshold.

1.4. Basis of consolidation

The departmental group accounts consolidate the balances of the core department, designated bodies and entities consolidated voluntarily in line with HM Treasury’s accounts direction, as listed in note 26, which fall within the departmental boundary as defined in the FReM and make up the departmental group, excluding transactions and balances between them. Where HM Treasury classifies an entity retrospectively such that the entity should have been designated for consolidation in a prior period, the accounts are voluntarily restated to reflect the position from the effective date of classification. The consolidated entities prepare accounts in accordance with either the FReM, or the Companies Act 2006 (for limited companies such as LCCC). For those entities that do not prepare accounts in accordance with the FReM, adjustments are made upon consolidation, if necessary, where differences could have a significant effect on the accounts. The core department and its designated bodies are all domiciled in the UK.

1.5. Changes in accounting policies

The department has adopted IFRS 17 (Insurance Contracts) during the 2025-26 financial year in line with wider public sector adoption of the standard this financial year. See note 1.22 for further details.

The 2025-26 FReM was updated to change the valuation and accounting of non-investment assets and intangible assets. See notes 1.11 and 1.13 for further details.

All other accounting policies are unchanged compared to those in the 2024-25 departmental group financial statements.

1.6. Applicable accounting standards issued but not yet adopted

The department will apply the new and any revised accounting standards once they have been adopted by the public sector as set out in the FReM.

IFRS 18 Presentation and Disclosure in Financial Statements:

IFRS 18 Presentation and Disclosure of Financial Statements was issued in April 2024 and applies to reporting periods beginning on or after 1 January 2027 (subject to Financial Reporting Advisory Board (FRAB) endorsement). The impact of IFRS 18 on the Public Sector is still being assessed, and a decision has not yet been taken on an implementation date.

IFRS 19 Subsidiaries without Public Accountability: Disclosures:

IFRS 19 Subsidiaries without Public Accountability: Disclosures was issued in May 2024 and applies to annual reporting periods beginning on or after 1 January 2027 (subject to Financial Reporting Advisory Board (FRAB) endorsement). The impact of IFRS 18 on the Public Sector is still being assessed, and a decision has not yet been taken on an implementation date.

1.7. Operating income

Operating income relates directly to the operating activities of the departmental group and includes income from contracts with customers, levies and grants and income from coal pension schemes.

The departmental group is required to identify receipts which it collects on behalf of the Consolidated Fund; these are not recognised as income but instead are disclosed in a separate Trust statement published alongside these accounts and in note 4 in the Statement of Outturn against Parliamentary Supply (SOPS) in the accountability report.

Operating income from contracts with customers:

Income from contracts with customers is allocated to individual promises, or performance obligations, on a stand-alone selling price basis, and is recognised when the related performance obligation is satisfied, either over time or at a point in time.

The performance obligations are typically satisfied upon delivery of goods and services in accordance with the contractually defined timescales. The payment terms for the invoices are typically 30 days. Where the departmental group receives consideration prior to the transfer of goods and services, the amounts are recorded as contract liabilities. Where the departmental group has transferred goods and services to a customer and the right to consideration is conditioned on something other than the passage of time, the amounts are recorded as contract assets.

The measurement of income takes account of significant financing components, variable consideration, and any discounts or rebates.

Levies:

Under statute or HM Treasury consent, an entity is permitted to retain the revenue collected from taxation, fines, and penalties. This revenue is treated as arising from a contract and accounted for under IFRS 15.

Levy income is recognised in the departmental group accounts when an event has occurred that creates an obligation on a counterparty to pay the levy, the amount can be reliably measured, and it is probable that economic benefits from the taxable event will flow to the departmental group. Levies are typically set on an annual basis, invoiced monthly, quarterly, or bi-annually, and accounted for in the period to which the invoices are related and performance obligations are satisfied.

The Low Carbon Contracts Company Ltd (LCCC) and Electricity Supply Company Ltd (ESC) are permitted to retain levies collected under statute and classified as taxes in the national accounts. This income is recognised by LCCC and ESC in the same period as the related expenditure. LCCC and ESC do not prepare their individual accounts under FReM and have judged that IFRS 15 ‘Revenue from Contracts with Customers’ does not apply to income from electricity suppliers. IFRS 15 is applicable to the departmental group’s remaining levy income under FReM guidance.

As LCCC does not apply the FReM they are able to recognise levy income relating to future years. The departmental group is unable to do this as the FReM does not permit recognition of tax income unless a taxable event has occurred. Adjustments are made on consolidation to ensure compliance with the departmental group accounting policy.

Grant income:

Grant income can only be recognised by the department when there is reasonable assurance that there are no conditions attached, or that any such conditions have been complied with and there is reasonable assurance the grant will be received.

Grants and grants-in-aid should be accounted for in accordance with IAS 20 ‘Accounting for Government Grants and Disclosure of Government Assistance’ as interpreted by the FReM.

1.8. Staff costs

Staff costs are recognised as expenses when the departmental group becomes obligated to pay them, including the cost of any untaken leave entitlement.

1.9. Grants payable

Grants payable are recognised when the grant recipient has performed the activity that creates an entitlement to the grant under the terms of the scheme and include estimates for claims not yet received. Where an intermediary acts as agent in distributing grant on behalf of the department, grants payable are recognised when the grant recipient becomes entitled to the grant.

A promissory note is a legally binding undertaking by the government to provide to the named beneficiary any amount up to the specified limit that the beneficiary may demand, at any time. The department holds promissory notes under various programmes. They have been classified as financial liabilities measured at amortised cost and have been shown as due within 1 year, as they are legally payable on demand, so the maturity profile in the Consolidated Statement of Financial Position, and in note 16, shows the earliest date at which they could be payable.

Grant contributions to international organisations in the form of promissory notes are recognised as expenses when they become payable on demand with the department exercising no further control over disbursement. The only exception to this treatment is where promissory notes are used for investing in a fund. In this scenario, a financial asset is created at the point of a note being encashed.

Grant in aid:

Financing to the department’s arm’s length bodies (ALBs) and other entities through grant in aid payments is reported on a cash basis in the period in which payments are made. All grant in aid transactions between the department and its ALBs are fully eliminated within the departmental group accounts.

1.10. Taxation

The core department is exempt from corporation tax by way of Crown exemption. Some consolidated bodies are subject to corporation tax on taxable profits. Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to HM Revenue and Customs, based on tax rates and laws that are enacted or substantively enacted by the reporting date.

Value-added tax (VAT) is accounted for in the accounts, in that the amounts are shown net of VAT except for irrecoverable VAT, which is aggregated with the cost of purchased items.

Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax assets are recognised for all tax-deductible temporary differences, carry forward of unused tax credits and unused tax losses to the extent that it is probable that taxable profit will be available in future years against which they can be utilised.

1.11. Property, plant, and equipment (PPE)

Assets are capitalised as PPE if they are intended for use on a continuous basis and their original carrying value, on an individual or asset pool basis, exceeds the relevant capitalisation threshold which ranges from £1,000 to £10,000 across the departmental group. Exceptions are:
1. a. assets held by the NDA on designated nuclear sites are only recognised where the economic element of their value at the reporting date exceeds £100,000 and the proportion of asset value relating to commercial activity exceeds 10%. ‘Commercial activity’ refers to work performed for third party customers, not activities related to fulfilling decommissioning obligations.
2. b. operational mine water schemes and subsidence pumping stations are held by the Mining Remediation Authority (formerly Coal Authority) at £nil value because they are used to address pollution caused by past mining activities where the economic benefits have already been received.
The estimated cost of decommissioning facilities is recognised as part of the carrying value of the asset at initial recognition and depreciated over its useful life to the extent that it has been recognised as a provision under IAS 37.

Valuation of PPE:

PPE is carried at fair value except for nuclear waste management assets held at historical cost (see note 6) and assets under construction which are held at cost. In accordance with the FReM, assets that have short useful lives or are of low value are carried at depreciated historical cost less impairment as a proxy for fair value.

Non-specialist land and buildings are measured at current value in existing use using professional valuations. Specialist land and buildings are measured at depreciated replacement cost which represents the fair value of a replacement asset in a similar condition.

From 1 April 2025 HM Treasury changed the requirements in the FReM in respect of revaluations of PPE. Where group entities do not have a rolling programme of revaluations in place and/or the assets are not non-property assets subject to indexation, entities revalue their assets every 5 years with annual indexation applied to assets during the 4 intervening years. In rare circumstances where an index is not available, entities revalue those assets using a quinquennial revaluation with a desktop revaluation in year 3.

Throughout the transition period (the first full revaluation cycle), entities are not required to follow the requirements of IAS 8 following a change in accounting policy. Changes to the valuation of non-investment assets will be applied prospectively, with no restatement of prior year figures. Revaluations carried out prior to 2025-26, remain valid throughout the transition period (the transition period being 1 April 2025 to the date the next revaluation is due for a given asset). During the transition period, the maximum period between revaluations must not exceed 5 years.

Revaluation of PPE:

Any accumulated depreciation at the date of revaluation is eliminated and the resulting net book value restated to equal the revalued amount. Any revaluation increase arising is credited to the revaluation reserve, except to the extent that it reverses a revaluation decrease for the same asset previously recognised as an expense, in which case the increase is credited to net expenditure for the year to the extent of the decrease previously charged. A decrease in carrying amount arising on revaluation is charged as an expense to the extent that it exceeds the balance, if any, held in the revaluation reserve relating to a previous revaluation of that asset. On de‑recognition, any revaluation surplus remaining in the revaluation reserve attributable to the asset is transferred directly to the general fund.

Depreciation of PPE:

PPE assets are depreciated to estimated residual values. This is done on a straight-line basis over their estimated useful lives, given in the table below. Residual values and useful lives are reviewed and adjusted if appropriate at each reporting date. Freehold and long leasehold land are not depreciated.

PPE	Estimated Useful Economic Life in years
Freehold buildings	10 – 60
Leasehold improvements	Shorter of remaining useful life or outstanding term of lease
Computer equipment	2 – 10
Office machinery (included in plant and machinery), furniture, fixtures, and fittings	2 – 11
Agricultural buildings	Up to 60
Dwellings	Up to 60
Transport equipment	2 – 14
Plant and machinery	3 – 50

Assets under construction:

Assets under construction are capitalised during the period of construction and valued at historical cost. Assets under construction are not depreciated or amortised until completion. On completion, balances are transferred to the appropriate asset category.

Expenditure is capitalised where it is directly attributable to bringing an asset into working condition such as cost of materials, external consultants and relevant employee costs and an appropriate portion of relevant overheads. Costs may also include costs associated with the preparation of sites.

1.12. Investment property

The departmental group holds properties which have been classified as investment properties and are measured using the fair value model specified in IAS 40. Fair value is determined annually by external independent valuers. Gains and losses arising from changes in fair value are recognised in net expenditure for the year.

1.13. Intangible non-current assets

Intangible non-current assets are capitalised if they are intended for use on a continuing basis and their original carrying value, on an individual or asset pool basis, exceeds the relevant capitalisation threshold which ranges from £1,000 to £10,000 across the departmental group.

From 1 April 2025 HM Treasury has withdrawn the option to measure intangible assets using the revaluation model. After initial recognition, intangible assets are carried at their cost less any accumulated amortisation and any accumulated impairment losses.

The intangible non-current assets are amortised on a straight-line basis over the following periods:

Intangible assets	Period
Software licences	3 – 10 years
Internally developed software	Up to 10 years
Website development costs	2 – 5 years
Patents, licences, and royalties	7 – 15 years

1.14. Impairment of PPE and intangible non-current assets

The departmental group reviews carrying amounts at each reporting date. If an indicator for impairment occurs, then the recoverable amount of the asset (the higher of fair value less costs to sell and value in use) is estimated and an impairment loss recognised to the extent that it is lower than the carrying amount.

Losses arising from a clear consumption of economic benefit are charged to net expenditure for the year. Losses that do not result from a loss of economic value or service potential are taken to the revaluation reserve to the extent that a revaluation reserve exists for the impaired asset, otherwise to net expenditure for the year.

During construction, assets under construction will be tested for impairment if any indicators of impairment are identified.

1.15. Cash and cash equivalents

Cash and cash equivalents include cash in hand and short-term investments with a maturity of 3 months or less, which are easily convertible to cash with minimal risk of value changes. Bank overdrafts are listed under trade payables and other liabilities.

1.16. Leases

Assumptions:

The definition of a contract includes intra-UK government agreements where non-performance may not be enforceable by law, such as Memorandum of Understanding (MoU) agreements.

The group’s definition of a lease includes arrangements with £nil or significantly below market value consideration, for example peppercorn leases, in line with HM Treasury guidance. These assets are fair valued at initial recognition. On transition, any difference between the discounted lease liability and the right of use asset is included in equity; for new leases, any differences are recognised in income.

In accordance with the FReM, the group does not recognise right of use assets and lease liabilities for:

Low-value assets (aligned with the departmental group’s £10,000 capitalisation threshold)
Leases with terms of 12 months or less

Measurement of right-of-use assets:

Initial measurement: At the commencement date, the departmental group measures the right-of-use asset at cost, comprising:

The initial measurement of the lease liability
Lease payments made at or before the commencement date less any lease incentives received
Any initial direct costs incurred
Estimate costs for dismantling, removing, or restoring the underlying asset or site required by the lease terms

Subsequent measurement: The cost model for IFRS 16 is used as a proxy for valuation except where:

A longer-term contract that has no provisions to assess lease payments for market conditions
There is a significant period between these assessments
The underlying asset’s value is likely to fluctuate significantly with market prices

Depreciation of right-of-use assets: Right-of-use assets are depreciated on a straight-line basis from commencement date to the earlier of the end of:

Useful life of the right-of-use asset, assessed consistently with the related PPE class; or
Lease term

Impairment of right-of-use assets: The departmental group applies IAS 36 ‘Impairment of Assets’ to determine whether a right-of-use asset is impaired and to recognise any impairment loss identified.

Measurement of lease liabilities:

Initial measurement: Lease liabilities are initially measured at the present value of future lease payments not paid at the commencement date. Lease payments are discounted using:

The interest rate implicit in the lease
HM Treasury discount rate where interest rates implicit in the lease cannot be readily determined
Another discount rate where the departmental group considers it a more accurate representation of the interest rate

The weighted average discount rate applied to the lease liabilities is 3.57%. Most of the departmental group entities have applied the HM Treasury discount rate prevailing at the time of adoption as shown in the table below:

Period	HM Treasury discount rate
1 January 2024 to 31 December 2024	4.72%
1 January 2025 to 31 December 2025	4.81%
1 January 2026 to 31 December 2026	5.32%

Lease payments included in the initial measurement comprise the following payments for the right to use the underlying asset during the term not paid at the commencement date:

Fixed payments, including in-substance fixed payments less any lease incentives receivable
Variable lease payments that depend on an index or a rate, measured using amounts at the commencement date
Amounts expected to be payable under residual value guarantees
The exercise price of a purchase option if the departmental group is reasonably certain to exercise it
Penalties for termination where the lease term assumes exercising that option and the departmental group is reasonably certain to do so

Subsequent measurement: Lease liabilities are remeasured when future lease payments change. A revised discount rate is applied where the change relates to:

Lease term
Assessment of a purchase option
Amounts expected under a residual value guarantee
For changes in payments arising from a change in an index or rate used the liability is remeasured when revised cash flows take effect

Remeasurements are recognised as adjustments to the right-of-use asset, where there it has a carrying value. If the right-of-use asset has a £nil value and the liability decreases further, the remaining amount of the remeasurement is recognised in the Statement of Comprehensive Net Expenditure.

Lessor Accounting:

The departmental group classifies leases where it is lessor, as either an operating lease or a finance lease. A lease is classified as a finance lease where substantially all risks and rewards of ownership are transferred; otherwise, it is classified as an operating lease.

Finance leases: At the commencement date, assets held as finance leases are recognised as receivables at an amount equal to the net investment in the lease, measured using the interest rate implicit in the lease. Initial direct costs are included in the net investment. Finance lease income is allocated over the lease term to reflect a constant periodic rate of return on the group’s net investment.

Operating leases: Operating lease income is recognised on a straight-line basis. Costs incurred in earning, including depreciation, are recognised as expenses. Initial direct costs are added to the carrying amount of the underlying asset and expensed on a straight-line basis over the lease term in line with the lease income.

1.17. Subsidiaries, associates, and joint ventures

Subsidiaries and public sector joint ventures are consolidated where designated within the departmental group boundary (note 26); those subsidiaries, joint ventures and associates that are outside of the departmental group boundary are measured in accordance with IFRS 9 ‘Financial Instruments’ or IAS 28 ‘Investments in Associates and Joint Ventures’ as relevant. The financial asset is recognised when the departmental group becomes party to the contractual provisions of the instrument. Equity investments in associates or joint ventures outside the public sector are initially recorded at cost and subsequently adjusted to reflect the departmental group’s share of net profit or loss of the associate or joint venture.

1.18. Financial instruments

Financial assets and liabilities are measured initially at fair value plus transaction costs unless measured at fair value through profit or loss in which case transaction costs are charged to net expenditure for the year. Fair value is determined by reference to quoted prices where an active market exists for the instrument; otherwise, it is determined using generally accepted valuation techniques including discounted estimated cash flows. A regular purchase or sale of financial assets shall be recognised and derecognised, as applicable, using settlement date accounting.

Financial instruments are classified and subsequently measured in line with requirements of IFRS 9 as interpreted and adapted for public sector by FReM.

Under IAS 27, investments in subsidiaries are accounted for in the parent’s own financial statements at historic cost less any provision for impairment. This applies to the department’s treatment of investments in equity instruments of entities within the departmental boundary.

Financial assets are derecognised when the rights to receive future cash flows have expired or are transferred and the risks and rewards of ownership have been substantially transferred, or when there is considered to be no reasonable expectation of recovering the contractual cash flows in accordance with the Group’s credit risk policies. Gains and losses on derecognition of financial assets are recognised in the SOCNE.

Financial liabilities are derecognised when the obligation is discharged, cancelled, or expires.

Financial assets:

Classification and measurement of financial assets:The classification of financial assets under IFRS 9 is based on the business model in which a financial asset is managed and its contractual cash flow characteristics. Derivatives embedded in contracts where the host is a financial asset in scope of the standard are never separated. Instead, the hybrid financial instrument is assessed for classification.

Under IFRS 9, the requirement for classifying and measuring financial assets is that:

Loans and other debt instruments are classified as either amortised cost, FVTOCI (fair value through other comprehensive income) or FVTPL (fair value through profit or loss), depending on the business model and cash flow characteristics of the financial assets
Investments in equity instruments of entities outside of the departmental boundary are classified as FVTPL, unless an irrevocable election is made on initial recognition to recognise subsequent changes in fair value in Other Comprehensive Income (OCI) – the election is only available to equity instruments that are not held for trading
Derivatives are classified as FVTPL
Under IAS 27, investments in subsidiaries are accounted for in the parent’s own financial statements at historic cost less any provision for impairment. This applies to the department’s treatment of investments in equity instruments of entities within the departmental boundary

Categories of financial assets: Financial assets are categorised as one of the following:

Amortised cost are financial assets whose contractual cash flows are solely payments of principal and interest, and the objective of the business model is to hold financial assets to collect contractual cash flows only. They are initially recognised at fair value and thereafter at amortised cost using the effective interest method less any impairment – the effective interest rate method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period.
Fair Value Through Other Comprehensive Income (FVTOCI) are either:
- Debt instruments whose cash flows are solely payments of principal and interest and the business model of which is to hold for both collecting contractual cash flows and selling
- Equity instruments that are neither held for trading nor contingent consideration recognised in a business combination, as the departmental group has made an irrevocable election at initial recognition

After initial recognition, these assets are subsequently measured at fair value. Gains and losses in fair value are recognised directly in equity. On de-recognition, the cumulative gain or loss previously recognised in equity is recognised in net expenditure for the year for debt instruments and transferred to general fund for equity instruments.

All financial assets which do not meet the criteria for classification to be recognised and measured at amortised cost and FVTOCI are recognised and measured at fair value through profit or loss (FVTPL). Transaction costs and any subsequent movements in the valuation of the asset are recognised in net expenditure for the year

In line with the IAS 27 treatment of subsidiaries, investments in equity instruments of entities within the departmental boundary are recognised at historic cost less any provision for impairment. These investments are eliminated on consolidation.

Impairment of financial assets: Financial assets other than equity instruments and those at FVTPL are assessed for impairment at each reporting date using the expected credit loss (ECL) model. The 3-stage model based on the level of credit risk is applied to any financial assets other than long-term trade receivables, contract assets which do contain a significant financing component and lease receivables within the scope of IFRS 16 ‘Leases’ as follows:

For financial assets with low credit risk or assets that have not had a significant increase in credit risk since initial recognition, 12-month ECL are recognised, and interest revenue is calculated on the gross carrying amount of the asset without the reduction of credit allowance
For financial assets that have had a significant increase in credit risk since initial recognition, lifetime ECL is recognised, and interest revenue is calculated on the net carrying amount net of credit allowance

For impairment gains or losses, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognised in accordance with the standard, is recognised in profit or loss.

For long-term trade receivables, contract assets which do not contain a significant financing component and lease receivables within the scope of IFRS 16 ‘Leases’, the simplified approach is applied and lifetime ECL are recognised as dictated by the FReM.

The impairment methodology is detailed in the financial instruments note 21.

Derecognition of financial assets: Financial assets are derecognised when the rights to receive future cash flows have expired or are transferred and the risks and rewards of ownership have been substantially transferred.

Financial liabilities:

Classification and measurement of financial liabilities: The departmental group’s financial liabilities excluding derivatives and some financial guarantees are initially recognised at fair value including directly attributable transaction costs; they are subsequently measured at amortised cost using the effective interest rate method, except for:

Financial liabilities at FVTPL, which is applied to derivatives and other financial liabilities designated as such at initial recognition
Financial liabilities arising from the transfer of financial assets which did not qualify for derecognition, whereby a financial liability is recognised for the consideration received for the transfer
Financial guarantee contracts and loan commitments

Derivative financial instruments:
1) instruments intended to hedge against currency or interest rate risk, such as forward contracts and interest rate swaps, to which hedge accounting is applied. Gains and losses in fair value are recognised in other comprehensive income.

2) other derivative instruments to which hedge accounting is not applied. Gains and losses in fair value are recognised in net expenditure for the year. Contracts for Difference (CfDs) and Low Carbon Hydrogen Agreement (LCHA) contracts are the most significant derivative financial instruments in the departmental group and fall under this class.

1.19. Pensions

The accounting for each of the departmental group’s pension plans is dependent on its nature.

Funded defined-benefit pension schemes:

The departmental group has 8 funded defined-benefit pension schemes, 2 schemes through the Nuclear Decommissioning Authority (NDA) and 6 schemes through the nuclear site licence companies.

The net assets/liabilities recognised in the SoFP for funded defined benefit schemes are calculated by independent actuaries by deducting the fair value of scheme assets (at market prices based on available market comparables) from the present value of defined benefit obligations (estimated using the projected unit credit method, less any amounts receivable from third parties). Where the scheme is in surplus the department first assesses, in accordance with IFRIC 14, whether it has an unconditional right to benefit from that surplus. The asset recognised in these statements is then limited to the present value of benefits available from future refunds from the plan, reductions in future contributions to the plan or on settlement of the plan and considers the adverse effect of any minimum funding requirements. Actuarial gains and losses are recognised as other comprehensive net income and expenditure.

Unfunded defined benefit pension schemes:

The departmental group contributes towards several unfunded defined benefit pension schemes of which employees are members: these include the Principal Civil Service Pension Scheme (PCSPS), the Civil Servant and Other Pension Scheme (CSOPS) and the United Kingdom Atomic Energy Authority (UKAEA) combined pension scheme. The participating employers in these schemes are unable to identify their share of the underlying net liability; as such these schemes are accounted for as defined contribution pension schemes, with employers’ contributions charged to the SoCNE in the period to which they relate. Further information regarding PCSPS and CSOPS is presented in the staff report.

Defined contribution pension schemes:

Contributions are charged to the SoCNE when they become payable. The departmental group has no further liabilities in respect of benefits to be paid to members.

More information about the departmental group’s pension schemes can be found in the accounts of the consolidated entities, including in note 2 for the core department, and of the pension schemes themselves.

1.20. Provisions

A provision is recognised when it is probable that an outflow of economic benefits will be required to settle a present obligation (legal or constructive) that can be reliably measured, and which results from a past event. Where the time value of money is material, the provision is measured at present value using discount rates prescribed by HM Treasury. HM Treasury issues nominal rates that do not take inflation into account, unlike real rates. Using these nominal rates, the cash flows are inflated using the inflation rates provided by HM Treasury except where a more appropriate forecast has been identified for specific provisions. These exceptions are outlined in note 18. Please refer to note 18 ‘Provisions for liabilities and charges’ for a table of discount rates used for 2025-26 and 2024-25.

Nuclear decommissioning provisions:

Where expenditure in settlement of a provision is expected to be recovered from a third party, the recoverable amount is treated as a separate asset (note 18.1). Provision charges in the SoCNE are shown net of changes in these recoverable amounts.

1.21. Contingent assets and liabilities

Contingent liabilities:

Where an outflow of economic benefits from a past event is possible but not probable, the departmental group discloses a contingent liability. In addition to contingent liabilities disclosed in these financial statements in accordance with IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’, certain statutory and non-statutory contingent liabilities where the likelihood of a transfer of economic benefit is remote are disclosed in the accountability report for parliamentary reporting and accountability purposes. Remote contingent liabilities reported in the accountability report are stated at the amounts reported to Parliament.

Contingent assets:

Where an inflow of economic benefits from a past event is probable, the departmental group discloses a contingent asset.

Estimates of the financial effects are disclosed where practicable; where the time value of money is material, contingent liabilities and assets are stated at discounted amounts and the amount reported to Parliament separately noted.

1.22. IFRS 17 (Insurance Contracts)

IFRS 17: Insurance Contracts replaces IFRS 4: Insurance Contracts and is included in the FREM for mandatory implementation from 1 April 2025. It establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts within the scope of this Standard.

The Department has assessed whether IFRS 17 will impact the financial statements in 2025-26 and concluded that there will be no impact.

1.23. Judgements, estimates and assumptions

Preparation of financial statements requires management to make judgements, estimates and assumptions based on experience and expected events that affect the reported amounts of assets and liabilities, income and expenditure. In accordance with IAS 8 ‘Accounting Policies, Changes in Accounting Estimates and Errors’, revisions to accounting estimates are recognised prospectively. Revisions of the estimates and assumptions below could cause material adjustment to the carrying amounts of assets and liabilities within the next financial year.

Key accounting judgements in these statements are described below:

Dispatchable Power Agreement (DPA), Industrial Carbon Capture and Waste Industrial Carbon Capture (ICC and ICCW) contracts (note 20.2): The contractual payments under DPA, ICC and ICCW contracts that do not meet the definition of a derivative are accounted for as unrecognised contractual commitment under IAS 1. Expenditure and liabilities for the payments are recognised to the extent that the contractual performance conditions have been fulfilled by the projects. The estimated whole contractual commitment for the future periods is disclosed in the note 20.2.

Income recognition (note 5): Several significant accounting judgements have been performed to apply IFRS 15 to the recognition of revenue and costs from contracts with customers held by the NDA, including the determination of transaction price of each contract, the allocation of transaction price to each performance obligation, the timing of satisfaction of performance obligations, and the accounting treatment of contract costs. Details are included in the NDA’s financial statements.

Contracts for Difference (CfDs) and Low Carbon Hydrogen Agreements (LCHA) (note 9): CfDs and LCHAs are recognised as derivatives and valued at FVTPL in accordance with IFRS 9 requirements as adapted by the FReM guidelines. The changes in fair value (as measured by a valuation model) are recognised in net expenditure for the year.

Fair value measurement of Hinkley Point C CfD (note 9): Significant judgements in relation to the fair value measurement of Hinkley Point C CfD are set out in note 9.

Provisions (note 3.3): Provision discount rates set by HM Treasury are updated annually and have a material effect on liabilities. There are other significant uncertainties in relation to measurement of the liabilities reported in note 3.3, in relation to future decommissioning costs to be incurred by the NDA, UKAEA and Mining Remediation Authority (formerly Coal Authority), which are described in that note.

Renewable Heat Incentive Scheme: The Renewable Heat Incentive (RHI) is a demand-led renewable heat subsidy scheme administered by Ofgem on behalf of the department. Expenditure is recognised on an accruals basis reflecting the renewable heat produced in the period using deemed heat profiles (Domestic RHI) and meter readings (Non-Domestic RHI). The department have developed a model that estimates the value of heat-generation payments that relate to the period but have not yet been claimed. It combines payments to date with modelled accruals for unsubmitted meter readings to provide an estimate of RHI spend for the month and future periods. There is a risk that the reality diverges from modelled estimates due to the model not accurately reflecting reality. This risk is considered to be low as most of the known uncertainties have been identified and assessed using statistical or scenario analysis. However, there may be some unknown factors that mean our model systematically over or underestimates spend. Modelling specification uncertainty is mitigated by periodically reviewing performance of past estimates against actual outcomes.

Grant accruals & receivables: The core department operates several Capital Grant schemes that require estimations for accrued expenditure in each reporting period. The department relies on third party delivery partners of these schemes to provide the information that underpins each of these estimates.

Any amounts that are paid out by the department to a third party delivery partner on a grant scheme, but the delivery partner has not yet paid the grant to the recipient by the end of the reporting period, are recognised as receivables.

Financial assets – equity investments in public corporations: The core department holds equity investments in 2 public corporations outside of the departmental boundary. Under IFRS 9, the department has elected FVOCI treatment of both assets, where changes in fair value are taking to a fair value reserve. Net Asset Value has been used as a proxy for fair value in both instances, as the underlying assets of each entity are held at fair value.

2. Staff costs

	Permanently employed staff £m	Others £m	2025‑26 Total £m	2024‑25 Total £m
Wages and salaries	580	65	645	575
Social security costs	78	-	78	68
Other pension costs	130	-	130	115
Sub total	788	65	853	758
Less recoveries in respect of outward secondments	(1)	-	(1)	(2)
Total net costs	787	65	852	756
Of which:
Core department	404	16	420	377
NDPBs and other designated bodies	383	49	432	379
Total net costs	787	65	852	756

Further detailed information on staff costs can be found in the staff and remuneration reports. The staff report also includes staff numbers for nuclear site licence companies (SLCs). SLCs staff costs are not included here as they are included in the amount shown for utilisation in the NDA’s nuclear decommissioning provision in note 18.

3. Operating expenditure

3.1. Purchase of Goods and Services

	2025‑26: Core department £m	2025‑26: Departmental group £m	2024‑25 Restated: Core department £m	2024‑25 Restated: Departmental group £m
Accommodation and office equipment costs	47	183	44	153
Legal, professional and consultancy costs	154	244	198	237
Finance, HR, IT and support costs	55	108	39	94
Training and other staff costs	8	29	6	17
Travel and subsistence costs	8	26	8	23
Advertising and publicity	13	16	5	7
Programme management and administration of grants and awards	91	294	93	271
Capacity Market payments	-	1,612	-	1,246
Professional and international subscriptions	28	31	27	29
Purchase of geographical and scientific equipment	-	49	-	59
Payment of taxes and levies	2	34	1	5
Other purchase of goods and services cost	18	189	37	365
Research and development	20	21	144	146
Total	444	2,836	602	2,652

Core department

Research and Development: Research and Development expenditure totalled £20m in 2025-26 (2024-25: £144m). The reduction in spend is a result of the scheduled closure of the Net Zero Innovation Programme.

Departmental group

Capacity Market (CM) payments of £1,612m were recognised as at 31 March 2026 (31 March 2025: £1,246m). These CM payments ensure there is enough electricity generation capacity to meet demand in Great Britain. As a result, the capacity providers commit to making their capacity available during times of peak demand.

Restatement of the Purchase of Goods and Services as a result of prior period adjustments: Prior year comparatives have been restated to reflect the prior period adjustment as detailed in note 25. Site Licence Companies (SLC) pensions movements are now accounted in line with IAS 19 Employee Benefits, with the pension service cost and net interest recognised within the Net Expenditure from operations. The table above shows restated balance including the omitted balances from the financial years 2023-24 and 2024-25.

Audit fees

Audit fees are included under the heading ‘Legal, professional and consultancy costs’.

	2025‑26: Core department £m	2025‑26: Consolidated ALBs £m	2024‑25: Core department £m	2024‑25: Consolidated ALBs £m
Core department	700,000	2,153,116	805,000	2,226,567
UKAEA pension scheme accounts	54,886	-	52,371	-
Trust statement	25,000	-	21,000	-
Nuclear Decommissioning funding accounts	5,000	-	5,000	-
Total NAO audit services	784,886	2,153,116	883,371	2,226,567
Non-NAO audit services	-	789,094	-	518,250
Non-NAO non-audit services	-	202,000	-	1,000
Total	784,886	3,144,210	883,371	2,745,817

The table above does not include Site Licence Companies (SLC) audit fees as all expenditure incurred by the SLC is already consolidated into the NDA Nuclear Provision Utilisation cost. In 2024-25, SLC audit fee was included in the table. For transparency, SLC audit fees reported for the year are: £540,000.

3.2. Depreciation and impairment charges

	2025‑26: Core department £m	2025‑26: Departmental group £m	2024‑25: Core department £m	2024‑25: Departmental group £m
Amortisation of recoverable contract costs	-	127	-	118
Depreciation	13	84	15	64
Amortisation	5	9	5	8
Impairment of property, plant and equipment	1	34	-	14
Impairment of investments and remeasurement of expected credit losses	21	(1)	38	1
Total	40	253	59	204

3.3. Provisions and Other Liability Expenses

	2025‑26: Core department £m	2025‑26: Departmental group £m	2024‑25: Core department £m	2024‑25: Departmental group £m
Increase/(decrease) in nuclear provisions due to changes in discount rate	(28)	(7,108)	(2)	1,317
Increase/(decrease) in other provisions due to changes in discount rate	(7)	(189)	(2)	(39)
Increase/(decrease) in nuclear provisions due to other movements	267	13,837	77	5,319
Increase/(decrease) in other provisions due to other movements	(37)	(60)	(107)	(123)
Total increase/(decrease) in provisions	195	6,480	(34)	6,474

The change in the provision expenses was driven both by the increase in nuclear provisions (£13.8bn) as well as the change in provision discount rates. The real discount rate for cash outflows expected after 10 years, prescribed by HM Treasury, increased from 2.40% at 31 March 2025 to 2.95% at 31 March 2026. The change in discount rate has the impact of decreasing the expected future costs of settling the department’s nuclear liabilities; the actual costs of settling the liabilities could be different.

In addition, during the reporting period Nuclear Decommissioning Authority (NDA) management performed a comprehensive review of all the decommissioning plans and other estimates maintained on its behalf by the operating companies. This review incorporates the outcomes of the most recent Spending Review by HM government, as well as changes in strategic assumptions (for example final site clearance dates). The resulting changes in the discounted value of the plans produce a significant increase in the nuclear provision.

Further detail of the movements in the nuclear decommissioning provision can be found in note 18.1.

The increase/(decrease) in other provisions due to changes in discount rate is also primarily driven by changes in the discount rate for the Mining Remediation Authority’s (formerly Coal Authority’s) provisions.

Further detail of movements in other provisions can be found in note 18.2.

3.4. Grants expenditure

	2025‑26: Core department £m	2025‑26: Departmental group £m	2024‑25: Core department £m	2024‑25: Departmental group £m
Grant in Aid	4,582	-	4,774	-
Boiler Upgrade Scheme	233	233	190	190
Carbon Capture, Usage & Storage	96	96	-	-
Energy Affordability Schemes	(2)	(2)	(12)	(12)
Energy Company Obligation	219	219	-	-
Future Nuclear Enabling Fund	15	15	49	49
Grant support provided to Official Receiver	170	170	-	-
Great British Energy Community Fund	19	19	-	-
Green Homes Grant	(1)	(1)	(9)	(9)
Heat Decarbonisation Technologies	220	220	158	158
Home Upgrade Grant scheme	(17)	(17)	155	155
Industrial Decarbonisation	44	44	60	60
International Climate Finance	742	742	367	367
Local Net Zero Hubs	12	12	16	16
Net Zero Hydrogen	12	12	20	20
Net Zero Innovation	23	23	155	155
Other Grants	50	58	70	77
Public Sector Decarbonisation Scheme	414	414	362	362
Renewable Heat Incentive	1,218	1,218	1,209	1,209
Social Housing Decarbonisation Fund	(14)	(14)	453	453
UK National Nuclear Laboratory Facilities	(2)	(2)	38	38
Warm Homes: Local Grant	105	105	-	-
Warm Homes: Social Housing Fund	295	295	-	-
Total	8,433	3,859	8,055	3,287

Core department

Renewable Heat Incentive: The Renewable Heat Incentive scheme (RHI) spend totalled £1,218m in 2025-26 (2024-25: £1,209m). RHI is a government environmental programme designed to increase the uptake of renewable heat to help reduce carbon emissions and meet the UK’s renewable energy targets. The department closed the RHI scheme to new applicants. Accredited installations are eligible to receive payments over 20 years for the non-domestic and over 7 years for domestic based on the amount of eligible heat generated. The scheme operates within England, Scotland, and Wales.

International Climate Finance: International Climate Finance (ICF) spend totalled £742m in 2025-26 (2024-25: £367m). The increase in spend was driven by the re-profiling of activity.

Energy Company Obligation: Energy Company Obligation (ECO) spend totalled £219m in 2025-26. This represents a one-off capital payment at the close of the ECO programme to cover unrecovered costs from delivery of the scheme, preventing a £12 rise in the energy price cap.

Warm Homes: Local Grant: The Green Homes Grant (GHG) and Home Upgrade Grant (HUG) schemes have now closed, and credit expenditure recognised in 2025-26 (£1m and £17m respectively) relates to clawbacks, where unspent funds have been returned to the department. These schemes have been succeeded by the Warm Homes: Local Grant (WH:LG), which incurred expenditure of £105m in 2025-26 (2024-25: £nil). WH:LG is a capital grant scheme delivered via local authorities to fund energy efficiency improvements for low income households.

Warm Homes: Social Housing Fund: The Social Housing Decarbonisation Fund (SHDF) has closed and credit expenditure of £14m in 2025-26 reflects an adjustment to align previously estimated spend with final delivery data reported by grant recipients. SHDF has been succeeded by the Warm Homes: Social Housing Fund (WH:SHF), which incurred expenditure of £295m in 2025-26 (2024-25: £nil). WH:SHF is a capital grant scheme delivered through social housing providers to fund energy efficiency improvements to social housing stock.

4. Finance expense

	2025‑26: Core department £m	2025‑26: Departmental group £m	2024‑25 Restated: Core department £m	2024‑25 Restated: Departmental group £m
Net loss/(gain) on foreign exchange	-	-	-	1
Borrowing costs (unwinding of discount) on provisions	28	2,876	30	2,608
Bank charges and interest payable	-	67	-	-
Interest charges under finance leases	5	9	5	6
Unrealised foreign exchange rate losses/(gains)	-	1	-	-
Interest on pension liabilities	-	(61)	-	(30)
Change in fair value – Financial assets and liabilities	30	30	11	11
Total	63	2,922	46	2,596

The increase in borrowing costs on provisions was predominantly due to the unwinding of discount of provisions costs for nuclear decommissioning of £2,771m as at 31 March 2026 (31 March 2025 £2,507m). Further detail on the movements in provisions can be found in notes 3.3 and 18.

Restatement of the Finance Expense as a result of prior period adjustments

Prior year comparatives have been restated to reflect the prior period adjustment as detailed in note 25. Site Licence Companies (SLC) pensions movements are now accounted in line with IAS 19 Employee Benefits, with the pension service cost and net interest recognised within the Net Expenditure from operations. The table above shows restated balance including the omitted balances from the financial years 2023-24 and 2024-25.

5. Income

5.1. Operating income

	2025‑26: Core department £m	2025‑26: Departmental group £m	2024‑25: Core department £m	2024‑25: Departmental group £m
Fees, charges and recharges to/ from external customers and central government organisations	88	203	61	78
Levy income	-	4,961	-	3,509
Sales of goods and services	10	986	8	1,260
Miscellaneous income	6	12	-	13
Current grants and capital grants	-	2	1	2
Other operating income	-	-	1	29
Total	104	6,164	71	4,892

Core department

‘Fees, charges and recharges to/from external customers and central government organisations’ for the core department were £88m (2024–25: £61m).

This is mainly driven by Integrated Corporate Services (ICS) recharges to other government departments. ICS is hosted by the Department for Energy Security and Net Zero (DESNZ) but provides services to both DESNZ and the Department for Science, Innovation & Technology (DSIT), as well as some services to the Department for Business and Trade (DBT).

All costs incurred by ICS are charged at cost only to participating departments, using a recharging methodology signed off by the Oversight Board which is co-chaired by the Second Permanent Secretary (DESNZ) and the Chief Operating Officer (DSIT).

Departmental group

Within levy income was Electric Settlements Company’s (ESC) income from capacity market suppliers of £1,620m (2024–25: £1,254m), LCCC’s supplier obligation levy (SOL) income of £2,924 (2024–25: £2,198m) and LCCC’s regulated asset base (RAB) income of £361m (2024‑25: £nil).

Within ‘sales of goods and services’, NDA’s revenue was £924m (2024–25: £1,193m). NDA has 2 contracts with EDF Energy for managing their spent fuel. These are:

The ‘historic’ contract which is a combination of spent fuel reprocessing and the subsequent treatment and management of the waste and products which arise from the reprocessing process
The ‘future’ contract which relates to post 2005 spent fuel, in which the commercial arrangement is for NDA to take ownership of (and therefore the liability for) further arisings of spent fuel, recognising revenue upon the receipt of fuel from EDF, a process which will continue until c. 2032

Further details can be found in the NDA’s annual report and accounts.

5.2. Finance income

	2025‑26: Core department £m	2025‑26: Departmental group £m	2024‑25: Core department £m	2024‑25: Departmental group £m
Effective Interest from amortised cost assets	2	2	18	18
Interest income from FVTPL assets	5	6	24	24
Interest income from amortised cost assets	38	113	2	30
Dividend income from investments in joint ventures, associates and public dividend capital	90	-	84	-
Total	135	121	129	73

Core department

In 2025–26 the core department recognised finance income of £135m (2024–25: £129m). This includes £86m (2024-25: £84m) of dividends received from Urenco through Enrichment Holdings Limited shown in note 13.

Departmental Group

Interest from amortised cost assets amounted to £113m (2024-25: 30m) is reflective of Sizewell C interest income of £112.7m.

6. Property, plant and equipment

Departmental group 2025–26

	Land £m	Buildings £m	Leasehold improvements £m	Information technology £m	Plant and machinery £m	Furniture, fixtures and fittings £m	Transport equipment £m	Assets under construction £m	Infrastructure assets £m	Total £m
Cost or valuation
Balance at 1 April 2025	502	451	39	57	4,409	9	11	4,053	1	9,532
Additions	17	191	-	1	8	1	3	5,823	-	6,044
Disposals	-	(63)	(13)	(14)	(566)	(2)	(1)	-	-	(659)
Impairments	-	-	-	-	-	-	-	(26)	-	(26)
Reclassifications	30	27	1	4	11	5	-	(78)	-	-
Revaluations	9	(3)	-	-	5	-	-	-	-	11
At 31 March 2026	558	603	27	48	3,867	13	13	9,772	1	14,902
Depreciation
Balance at 1 April 2025	-	(249)	(34)	(35)	(4,261)	(7)	(9)	(1)	-	(4,596)
Charged in year	-	(7)	-	(8)	(44)	(1)	(2)	-	-	(62)
Disposals	-	63	13	14	566	2	1	-	-	659
Impairments	-	-	-	-	(7)	-	-	-	-	(7)
At 31 March 2026	-	(193)	(21)	(29)	(3,746)	(6)	(10)	(1)	-	(4,006)
Carrying amount at 31 March 2026	558	410	6	19	121	7	3	9,771	1	10,896
Carrying amount at 1 April 2025	502	202	5	22	148	2	2	4,052	1	4,936
Asset financing
Owned	558	410	6	19	121	7	3	9,771	1	10,896
Carrying amount at 31 March 2026	558	410	6	19	121	7	3	9,771	1	10,896
Of the total
Core department	-	-	1	3	-	2	-	9	-	15
NDPBs and other designated bodies	558	410	5	16	121	5	3	9,762	1	10,881
Carrying amount at 31 March 2026	558	410	6	19	121	7	3	9,771	1	10,896

Departmental group 2024–25

	Land £m	Buildings £m	Leasehold improvements £m	Information technology £m	Plant and machinery £m	Furniture, fixtures and fittings £m	Transport equipment £m	Assets under construction £m	Infrastructure assets £m	Total £m
Cost or valuation
Balance at 1 April 2024	507	402	44	47	4,386	8	10	1,909	1	7,314
Additions	(1)	-	-	3	16	-	1	2,203	-	2,222
Disposals	-	-	(5)	(1)	-	-	-	(1)	-	(7)
Transfers	-	(2)	-	-	-	-	-	(1)	-	(3)
Reclassifications	-	41	-	8	6	1	-	(57)	-	(1)
Revaluations	(4)	10	-	-	1	-	-	-	-	7
At 31 March 2025	502	451	39	57	4,409	9	11	4,053	1	9,532
Depreciation
Balance at 1 April 2024	-	(243)	(39)	(30)	(4,219)	(6)	(7)	(1)	-	(4,545)
Charged in year	-	(6)	-	(6)	(28)	(1)	(2)	-	-	(43)
Disposals	-	-	5	1	-	-	-	-	-	6
Impairments	-	-	-	-	(14)	-	-	-	-	(14)
At 31 March 2025	-	(249)	(34)	(35)	(4,261)	(7)	(9)	(1)	-	(4,596)
Carrying amount at 31 March 2025	502	202	5	22	148	2	2	4,052	1	4,936
Carrying amount at 1 April 2024	507	159	5	17	167	2	3	1,908	1	2,769
Asset financing
Owned	502	202	5	22	148	2	2	4,052	1	4,936
Carrying amount at 31 March 2025	502	202	5	22	148	2	2	4,052	1	4,936
Of the total
Core department	-	-	-	4	-	-	-	7	-	11
NDPBs and other designated bodies	502	202	5	18	148	2	2	4,045	1	4,925
Carrying amount at 31 March 2025	502	202	5	22	148	2	2	4,052	1	4,936

Departmental Group

The professional valuations of land and buildings undertaken within the departmental group were prepared in accordance with the Royal Institute of Chartered Surveyors (RICS) Valuation – Global Standards, the ‘Red Book’. Unless otherwise stated, land and buildings are professionally revalued every 5 years and where appropriate in the intervening period, relevant indices are used. The most significant land and buildings at 31 March 2026 were held by Nuclear Decommissioning Authority (NDA), UKAEA and Sizewell C.

Assets under construction (AUC) additions as at 31 March 2026 include £4,457.9m (31 March 2025 £1,736.3m) relating to the construction of the Sizewell C nuclear power station. This includes expenditure directly attributable to bringing the Sizewell C asset into working condition for its intended use such as planning, site preparation, associated development, safety compliance and the cost of developing supply chain contracts.

AUC additions of £534.9m as at 31 March 2026 (31 March 2025 £394.9m) relate to Net Zero North Sea Storage and the construction of onshore and offshore CO₂ pipelines, injection wells, subsea infrastructure, control rooms, and compression facilities.

AUC additions of £637.4m as at 31 March 2026 (31 March 2025 £nil) relate to Liverpool Bay CCS Limited and the construction of assets related to the HyNet Carbon Capture and Storage Network.

AUC additions of £110.0m as at 31 March 2026 (31 March 2025 £60.8m) relate to UKAEA driven by the new LIBRTI fusion project and the continued tritium loop facility.

In accordance with the FReM, the majority of leasehold improvements, information technology, furniture, fixtures and fittings and plant and machinery are held at depreciated historic cost as a proxy for fair value as the assets have short useful lives or low values. Land, freehold buildings, dwellings, transport equipment and the remainder of plant and machinery are held at fair value based on professional valuations.

Within the departmental group, a variety of valuation techniques are used depending upon whether the PPE asset is a specialised asset or a non-specialised asset. Where the PPE asset is a specialised asset, a depreciated replacement cost valuation is used, for example for research facilities. Where the PPE asset is a non-specialised asset, an existing-use valuation is used, for example for land and office buildings. Depreciated replacement cost (DRC) valuations are based on a number of unobservable inputs; these would be classified as level 3 in accordance with IFRS 13. Existing-use value (EUV) valuations are based on a number of market-corroborated but unobservable inputs for example. land valuations, are based on similar prices per hectare adjusted for the specific location of the land, whilst other EUV valuations use specific unobservable inputs, such as rental yields. The EUV valuations inputs are classified as level 2 and level 3 in accordance with IFRS 13.

Further information can be found in the financial statements of the individual bodies’ accounts.

7. Right of use assets

Departmental group 2025–26

	Land £m	Buildings £m	Plant and machinery £m	Transport equipment £m	Total £m
Cost or valuation
Balance at 1 April 2025	27	288	9	19	343
Additions	(9)	83	167	13	254
Disposals	(1)	(115)	-	(11)	(127)
Remeasurements	1	-	-	-	1
Transfers	2	24	1	3	30
Revaluations	-	(16)	-	-	(16)
At 31 March 2026	20	264	177	24	485
Depreciation
Balance at 1 April 2025	(2)	(34)	(7)	(13)	(56)
Charged in year	-	(28)	1	(6)	(33)
Disposals	-	16	-	10	26
Transfers	(1)	2	-	(1)	-
At 31 March 2026	(3)	(44)	(6)	(10)	(63)
Carrying amount at 31 March 2026	17	220	171	14	422
Carrying amount at 31 March 2025	25	254	2	6	287
Of the total
Core department	-	121	-	9	130
NDPBs and other designated bodies	17	99	171	5	292
Carrying amount at 31 March 2026	17	220	171	14	422

Departmental group 2024–25

	Land £m	Buildings £m	Plant and machinery £m	Transport equipment £m	Total £m
Cost or valuation
Balance at 1 April 2024	16	198	9	20	243
Additions	10	98	-	1	109
Disposals	1	(10)	-	(2)	(11)
Remeasurements	-	2	-	-	2
Capitalised Provisions (Leased Non-PFI)	-	1	-	-	1
Revaluations	-	(1)	-	-	(1)
At 31 March 2025	27	288	9	19	343
Depreciation
Balance at 1 April 2024	(2)	(23)	(8)	(9)	(42)
Charged in year	-	(16)	1	(5)	(20)
Disposals	-	(2)	-	1	(1)
Revaluations	-	7	-	-	7
At 31 March 2025	(2)	(34)	(7)	(13)	(56)
Carrying amount at 31 March 2025	25	254	2	6	287
Carrying amount at 31 March 2024	14	175	1	11	201
Of the total
Core department	-	125	-	3	128
NDPBs and other designated bodies	25	129	2	3	159
Carrying amount at 31 March 2025	25	254	2	6	287

Total additions to right-of-use assets during the year were £253.8m (2024-25: £109m). This mainly relates to acquisitions of leased buildings, which amounts to £71.8m (2024-25: £98m) and leased plant and machinery which amounts to £175.3m (2024-25 £nil).

8. Intangible Assets

Departmental group 2025–26

	Information technology £m	Software licences £m	Websites £m	Assets under construction £m	Total £m
Cost or valuation
Balance at 1 April 2025	68	9	-	67	144
Additions	7	-	-	67	74
Disposals	(1)	-	-	-	(1)
Impairments	-	-	-	(1)	(1)
Reclassifications	11	-	1	(12)	-
Transfers	1	-	-	(1)	-
At 31 March 2026	86	9	1	120	216
Amortisation
Balance at 1 April 2025	(44)	(5)	-	-	(49)
Charged in year	(7)	(1)	(1)	-	(9)
Disposals	1	-	-	-	1
At 31 March 2026	(50)	(6)	(1)	-	(57)
Carrying amount at 31 March 2026	36	3	-	120	159
Carrying amount at 1 April 2025	24	4	-	67	96
Asset financing
Owned	36	3	-	120	159
Carrying amount at 31 March 2026	36	3	-	120	159
Of the total
Core department	30	-	-	18	48
NDPBs and other designated bodies	6	3	-	102	111
Carrying amount at 31 March 2026	36	3	-	120	159

Departmental group 2024–25

	Information technology £m	Software licences £m	Assets under construction £m	Total £m
Cost or valuation
At 1 April 2024	64	7	9	80
Additions	6	1	58	65
Disposals	(1)	-	-	(1)
Reclassifications	1	1	(2)	-
Transfers in/(out)	(2)	-	2	-
At 31 March 2025	68	9	67	144
Amortisation
At 1 April 2024	(37)	(5)	-	(42)
Charged in year	(7)	-	-	(7)
Disposals	1	-	-	1
At 31 March 2025	(43)	(5)	-	(48)
Carrying amount at 31 March 2025	25	4	67	96
Carrying amount at 1 April 2024	27	2	9	38
Asset financing
Owned	25	4	67	96
Carrying amount at 31 March 2025	25	4	67	96
Of the total
Core department	19	-	14	33
NDPBs and other designated bodies	6	4	53	63
Carrying amount at 31 March 2025	25	4	67	96

Departmental Group

There are presentational differences in the 2024-25 intangibles table compared to the prior year. In 2024-25, rows within the amortisation section were incorrectly labelled. Figures disclosed were correct but attributed to incorrect line items. This affected Note 8 Intangible assets only and was not replicated elsewhere in the financial statements.

Increases in AUC additions of £44m at 31 March 2026 (31 March 2025: £45m) relate to Net Zero North Sea Storage. The increase relates to setting up the Carbon Capture, Usage and Storage network.

9. Derivative financial instruments

The most significant items included within derivatives on the Consolidated Statement of Financial Position (SoFP) are the Contracts for Difference (CfD) and the Low Carbon Hydrogen Agreements (LCHA).

In addition, Net Zero North Sea Storage Limited (NZNSS) and Liverpool Bay CCS Limited (Liverpool Bay) are required by their project funding arrangements to implement interest rate derivative financial instruments to hedge interest rate exposure on borrowings. NZNSS has opted not to apply hedge accounting to their interest rate swaps, which are measured at fair value through profit and loss (FVTPL) and have a fair value of £136m at 31 March 2026 (31 March 2025: £86m).

Liverpool Bay has elected to apply hedge accounting to their interest rate swaps, which are measured at fair value with the effective portion of fair value movements recognised in OCI. They have a fair value of £18m at 31 March 2026.

Sizewell C have also executed EUR/GBP forward contracts to hedge exposure to foreign currency risk, applying hedge accounting. These are measured at fair value with the effective portion of fair value movements recognised in OCI. The fair value is immaterial at 31 March 2026.

9.1. Contracts for Difference

9.1.1. Accounting policies

CfDs are a mechanism introduced to support investment in low carbon generation projects. CfDs have been established as a private law contract between the ‘Generator’ and the Low Carbon Contracts Company Ltd (LCCC), a company wholly owned by the government and consolidated within the DESNZ departmental group accounts.

CfDs have been classified as derivatives in accordance with IFRS 9 ‘Financial Instruments’, designated as Fair Value Through Profit and Loss (FVTPL) and are stated at their ‘fair value’, which is equal to lifetime expected credit losses (ECL) in accordance with the requirements of IFRS 9. Any resultant gain or loss in fair value is recognised in the Consolidated Statement of Comprehensive Net Expenditure (SoCNE).

The fair value of any derivative is assessed by reference to IFRS 13 ‘Fair Value Measurement’, which provides 3 options for assessment. Fundamentally, the value should always reference an open marketplace but where no marketplace exists, an option is available for internally generated fair value. The different options are hierarchical and classed as level 1, 2, or 3 inputs, where level 1 is based on market prices, level 2 is based on observable data other than market prices and level 3 is used where level 1 or 2 data is unavailable.

The fair value of the CfDs has been calculated using the income approach based on level 3 inputs, which reflects the present value of future cash flows that are expected to occur over the contract term of the CfD. To calculate future cash flows, LCCC makes its best estimate of the payments which it will be committed to make, if and when the generators supply low carbon electricity in accordance with the contractual terms of the CfD. LCCC does this by selecting the discounted cash flow model, and also applying inputs and assumptions, to obtain a reliable estimate of future electricity prices which LCCC concludes results in the fair value measurement.

The fair value measurement reflects what a market participant would take into account when establishing the price, and assumes an orderly transaction between market participants, at the measurement date.

The contract payment period is typically either 15 or 20 years, although contracts relating to biomass conversion have an expiration date in 2027 and the bespoke Hinkley Point C (HPC) contract has a contract payment period of 35 years. CfDs may be signed many years in advance of actual generation. The main benefit to generators is the fact that they can derive economic value from these contracts over the payment period life of the contract.

Typically, if generators start generating within their Target Commissioning Window (TCW) which is specified in the contract, then the generation period starts from the date of generation and, subject to all conditions being met, the generator can extract benefit for the full term of the contract. If generators miss the end of their TCW (and it is not extended under the terms of the contract) then the payment life period commences at the end of their TCW even if the generator is not in a position to generate. If the generator does not achieve the required minimum generation capacity by the contractual Longstop Date, LCCC has a right to terminate the CfD.

The difference between the fair value of the liability at initial recognition (day one) and the transaction price (nil), is no longer deferred at departmental group level due to IFRS 9 FReM adaptation. See Note 1 Accounting policies, judgements, and estimates.

Changes in fair value arising after day one are recognised in the reporting period that they occur and are accounted for in the Consolidated Statement of Comprehensive Net Expenditure and in the Consolidated Statement of Financial Position as they arise.

During the year, the Clean Industry Bonus (CIB) was introduced as part of Allocation Round 7 (AR7) of the CfD scheme to incentivise investment in UK supply chains and manufacturing associated with offshore wind projects. CIB eligibility applies to AR7 contracts only. Approximately £204 million of public funding under the CIB is expected to leverage significant private sector investment in domestic manufacturing, infrastructure and supply chains. The detailed mechanism and timing of CIB payments remain under development.

9.1.2. Estimates – valuation of CfD liabilities and assets

As at 31 March 2026 LCCC was counterparty to 562 contracts, including Hinkley Point C and Low Carbon Dispatchable (LCD) contracts which are bespoke CfDs. Further details relating to these bespoke contracts may be found in the LCCC Annual Report and Accounts. Under the legislation there is an obligation placed on licensed electricity suppliers to fund the CfD liabilities as they crystallise through the Supplier Obligation Levy. The future levy amounts which will be received from the licensed suppliers will be accounted for within LCCC and will be triggered by the generation and supply of low carbon electricity.

The fair value of the unquoted CfD contracts is calculated using the income approach (discounted cash flow model) and represents LCCC’s best estimate of the payments which LCCC will be committed to make or payments receivable from generators, if and when the generators supply low carbon electricity in accordance with their contractual terms.

Annual cash flow is estimated as strike price minus forecast reference price, multiplied by estimated eligible generation volume. The series of periodic net operating expense is then discounted using a nominal discount rate based on the HM Treasury nominal rate of 2.45% adjusted by the latest OBR CPI inflation forecasts for each modelled year.

The valuation requires management to make certain assumptions about the model inputs, including cash flows, the discount rate, credit risk and volatility.

One of the key inputs into the cash flow model is the estimate of future electricity prices, which is derived by applying certain inputs and assumptions such as overall electricity demand, commodity prices, carbon prices, government policy, technology, and deployment of new generating capacity. Most commercial and public sector modelling of the electricity system for long-term forecasting takes a very similar approach, but the detailed assumptions and methodology may differ.

Given the complexity, range of possible inputs, and long-term nature of the modelling, and also to some extent the iterative relationship between the expectations of overall system cost and long-term demand (especially industrial demand), long-term system forecasts are not generally seen as a single ‘most likely’ outcome with degrees of uncertainty either side. In fact, there are multiple sets of inputs that are internally consistent, and credible.

Often a set of these inputs will be used as a ‘scenario,’ and multiple deliberately different scenarios are used to illustrate different possible futures when undertaking long-term forecasting. The range of uncertainty can be significant when forecasting but does not necessarily mean that an individual scenario is not reasonable. The departmental group has used an independent industry recognised price series for the CfD valuation at 31 March 2026. The independent industry recognised price series applied was not an outlier of other industry recognised price series.

The valuation model uses observable historical load factor data and excludes forward-looking adjustments where evidence is insufficient. Residual curtailment risk and broader system dynamics, including increasing renewable penetration and potential network congestion, are expected to continue. Incorporating such adjustments into the valuation would significantly increase complexity with limited benefit. In addition, without a consistent and evidence-based framework the robustness of the model could reduce.

These adjustments are built into scenarios prepared by the independent price series providers. The range of low to high scenarios is illustrated in the sensitives below and gives a range of £90.1bn for generic CfDs (excluding HPC and LCD). The spread of just the base scenario between the 3 providers has a range of £31.3bn.

Load factors are an estimate used in the model, and the sensitivity analysis (note 9.1.4) provides 2 scenarios impacting generic CfDs should the load factor increase/decrease by 2% and 4%. Wind generators are expected to suffer the most curtailment which has a negative impact on load factor. For this reason, this technology is separated out in the sensitives which provides an indication of the impact which is unpredictable and outside of the departmental group’s control. It is noted that a reduction in load factor for wind technology can impact the valuation in both directions, as it adjusts the future amounts paid and received by the departmental group, determined by the strike prices in the respective contracts.

The valuation therefore combines historical evidence and forward-looking inputs, with the departmental group applying judgment to balance the two. As more data becomes available, the gap between historical and forward-looking assumptions, such as curtailment is expected to narrow.

Fair value of CfDs (fair value through profit and loss): The following table provides an analysis of CfD assets and liabilities grouped into input levels 1 to 3 within the fair value hierarchy based on the degree to which the fair value is observable:

	Level 1 £m	Level 2 £m	Level 3 £m	Total £m
Liabilities	-	-	(93,427)	(93,427)
Assets	-	-	3,022	3,022
As at 31 March 2025	-	-	(90,405)	(90,405)
Liabilities	-	-	(113,928)	(113,928)
Assets	-	-	3,005	3,005
As at 31 March 2026	-	-	(110,923)	(110,923)

9.1.3. Key inputs and underlying assumptions for CfDs

Estimated future forecast wholesale electricity prices: Forecast wholesale electricity prices used to estimate the fair value of CfDs are derived from an independent price series. Energy price series estimates the wholesale price by:

calculating the short run marginal cost (SRMC) of each plant (including a representation of plants in interconnected markets), taking account of start-up and shut-down costs;
calculating the available output of intermittent renewables;
calculating the half hourly demand for electricity by taking into account demand side response; and
determining the marginal plant required to meet demand

Economic, climate, policy, generation, and demand assumptions are external inputs to the model including demand load curves for both business and non-business days and seasonal impacts. Specific assumptions can also be modelled for domestic and non-domestic sectors and smart meter usage.

The forecast trajectory of electricity prices is uncertain. In the valuation, management has used an industry recognised independent price series which is not an outlier. The internal model used to calculate the fair value has been updated for short-term prices, installed capacities, TLM, and load factors.

In the valuation, the wholesale price has been reduced to reflect the price the wind generator is likely to receive. Additionally, wholesale electricity forward prices have been used for the liquid trading horizon (covering the nearest 2 years period). On windy days, the price that wind generators receive is likely to be reduced.

Estimated future electricity generation:
1. a. Transmission Loss Multiplier (TLM)
2. TLM reflects the fact that electricity is lost as it passes through the transmission system from generators to suppliers. If the TLM is incorrect, this will have implications for the volume of electricity subject to CfD payments. Any change in TLM will be corrected through adjustments in strike prices although the change in TLM is expected to be immaterial.
3. b. Start date
4. Generators nominate a Target Commissioning Date (TCD) in their binding application form for a CfD, and this date is specified in their CfD, following contract award. However, the generator is free to commission at any time within their Target Commissioning Window (TCW), a period of one year from the start of the TCW for most technologies, with no penalty, or after the end of the TCW and up to their ‘Longstop Date’ (1 to 2 years after the end of the TCW depending on technology and 7 years for HPC) with a penalty in the form of reduction of contract length for each day they are late in commissioning after the end of the TCW. The contract can be terminated if the generator has not commissioned 95% (or 85% for Investment Contracts and offshore wind) of their revised installed capacity estimate by the Longstop Date. The valuation uses the latest estimate from generators on the start date.
5. The estimated start dates for reactor one and reactor 2 of the Hinkley Point C project are 1 June 2030 and 1 June 2031, respectively. The TCW for reactor one is 1 May 2025 to 30 April 2029. The TCW for reactor 2 is 1 November 2025 to 31 October 2029. Therefore, the model is assuming contract erosion as the contract life (35yrs) will commence at the end of the TCW.
6. Given the length of time until the estimated start date there remains a degree of uncertainty and significant change to the start date will change the timing of future cash flows and have a material impact on the discounted fair value.
7. c. Installed capacity
8. The figure for the maximum installed capacity was provided by the generator in its application for a CfD and specified in its CfD contract following allocation. Thereafter the installed capacity figure can only be reduced by the generator for a permitted contractual construction event (which is a narrowly defined concept) or by the difference by which the relevant project has an installed capacity of 95% (or 85% in the case of Investment Contracts and offshore wind) of its current contractual installed capacity figure and 100%. The actual output of the generator will depend on the load factor.
9. The Hinkley Point C CfD does not have an installed capacity cap and is only entitled to CfD payment support up to a generation cap of 910,000,000 MWh.
10. d. Load factor
11. Load Factor is defined as the actual power output of a project as a proportion of its rated installed capacity. It is a percentage figure which is used to transform installed capacity into actual power output (generation). Load factor assumptions are based on reference factors published by DESNZ for given technology types; however, actual power outputs are sensitive to technological and environmental factors which may impact actual cash flows. Plant specific load factors (where a minimum of 6 months of generation data is available) is also available for consideration when valuing the CfDs.
12. For Hinkley Point C CfD, in previous years the generator (NNB Generation Company (HPC) Limited) provided the company with a generation profile, which forecasts the generation over the life of the contract. In 2024-25 work was commissioned to gain an independent view which resulted in reasonable range where the midpoint has been chosen to value HPC and a ramp up period.

Strike price: The strike price is an agreed price which determines the payments made to the generator under the contract with reference to its low carbon output and the market reference price.

The relevant strike price is specified in each CfD and is not intended to change for the duration of the project, other than through indexation to CPI and certain network charges, or in the event of certain qualifying changes in law. The strike price used in the valuation of the CfDs is the 2024/25 strike price and reflects the CPI rate for April 2026, in line with the requirements of the CfD contract.

In this financial year, HPC saw the impact of a reduction in strike price, triggered by the signing of the Nuclear RAB agreement in relation to Sizewell C before the reactor one start date. The applicable strike price was reduced with effect from the date of satisfaction of the Sizewell C condition by £3/MWh.

Fair value measurement of Hinkley Point C CfD: LCCC entered into the Hinkley Point C CfD on 29 September 2016. This project has a maximum lifetime generation cap of 910,000,000MWh. The contract will expire at the earlier of 35 years after the start date of the second reactor or when the total CfD payments made have reached the generation cap.

The Hinkley Point C CfD duration is more than double (35 years) the length of other CfDs (15 years) entered into by LCCC. This has made it considerably more challenging for management to provide a reliable single point fair value estimate for Hinkley Point C CfD and therefore represents a significant area of judgement. However, since 2019/20, the availability of third party price forecasts has improved to the extent that the departmental group has been able to recognise Hinkley Point C in a similar manner to other CfDs.

Equity gain share for Hinkley Point C The equity gain share mechanism consists of 2 separate components: (i) a mechanism to capture gains above specified levels where the Hinkley Point C project outperforms relative to the original base case assumptions; and (ii) a mechanism to capture gains above specified levels arising from the sale of equity and economic interests (direct or indirect) in the Hinkley Point C project.

In each case, as and when the Internal Rate of Return (IRR) thresholds are reached:

If the relevant IRR is more than 11.4%, LCCC will receive 30% of any gain above this level
If the relevant IRR is more than 13.5%, LCCC will receive 60% of any gain above this level

No adjustment to the valuation has been made for equity gain share on the grounds that none of the conditions outlined above have been met and it is currently not possible to reasonably estimate if they will be met in the future.

Construction gain share for Hinkley Point C: If the construction costs of Hinkley Point C come in under budget, the strike price will be adjusted downwards so that the gain (or saving) is shared with LCCC. The gain share is 50/50 for the first billion pounds, with savings in excess of this figure being shared 75% to LCCC and 25% to NNB Generation Company.

Reducing the strike price will reduce the amounts paid out to NNB Generation Company under the CfD, hence the benefit of the lower construction costs is shared between NNB Generation Company and ultimately the consumers. There is, however, no similar upward adjustment if the construction cost of Hinkley Point C is over budget.

No adjustment to the valuation has been made for construction gain share on the grounds that there has not been any construction gain share during the year, and none is forecasted to occur in the future.

OPEX reopener for Hinkley Point C: The strike price may be adjusted upwards if the operational expenditure costs are more than assumed and downwards if they are less. There are 2 operational expenditure reopener dates, at 15 years and 25 years after the first reactor start date. The rationale behind the reopener is that the strike price is based on long-term assumptions on operational expenditure costs. The reopener provides a way of mitigating long-term cost risks for both parties.

No adjustment to the valuation has been made for OPEX reopener on the grounds that the OPEX reopener dates have not been reached yet and there is no evidence that original assumptions are invalid.

9.1.4. Sensitivity analysis

Long-term system forecasts are not generally seen as a single most likely outcome with degrees of uncertainty either side. Rather there are multiple sets of inputs that are internally consistent and credible. A set of these inputs is usually used as a ‘scenario’ and multiple deliberately different scenarios are used to illustrate different possible futures when undertaking long-term forecasting. Therefore, individual forecasts may use a very different set of assumptions such as generation mix, carbon and fuel costs, electricity demand and interconnector capacity, but still be within what we would describe as the ‘universe of reasonableness’.

Management has decided to use the reference case scenario of an industry recognised independent forecast that is not an outlier.

An additional element in the calculation of the CfD liability is the discount rate that is applied. Uncertainty increases with time and so the choice of discount rate plays a significant part in determining how much uncertainty is weighted into a present value calculation, a higher discount rate places less weight on increasingly more uncertain years of a present value calculation.

CfDs are valued on a nominal basis, using HMT’s 2.45% discount rate adjusted by the latest CPI inflation forecasts for each modelled year.

For future year-on-year comparability, the table below shows the undiscounted valuation of the CfD liability.

	Other CfDs (undiscounted) £m	LCD CfD (undiscounted) £m	HPC CfD (undiscounted) £m	Total (undiscounted) £m
As at 31 March 2022	34,844	-	58,381	93,225
As at 31 March 2023	25,627	-	60,424	86,051
As at 31 March 2024	33,003	-	57,716	90,719
As at 31 March 2025	47,918	-	80,311	128,229
As at 31 March 2026	77,078	2,108	86,875	166,061

The following table shows the impact on the fair value of CfDs, classified under level 3, by applying reasonably possible alternative assumptions. Due to the significance and uniqueness of Hinkley Point C CfD, the impact (and certain assumptions) has been shown separately. Prior to 2025 the model was prepared in real terms. As part of the updated model this has changed to nominal rates, causing a larger increase in the undiscounted values.

Change in fair value of CfDs of:	Favourable/ (unfavourable) HPC CfD £m	Favourable/ (unfavourable) LCD CfD £m	Favourable/ (unfavourable) Other CfDs £m	Favourable/ (unfavourable) Total impact £m
Highest price third party series	20,027	713	45,255	65,995
Lowest price third party series	(16,335)	(593)	(44,895)	(61,823)
Discount rate of 3.5%	9,750	61	5,835	15,646
2024-25 Discount rate	(3,317)	(18)	(1,844)	(5,179)
Undiscounted	(37,044)	(154)	(17,950)	(55,148)

Specific to LCD & Other CfDs:	Favourable/ (unfavourable) HPC CfD £m	Favourable/ (unfavourable) LCD CfD £m	Favourable/ (unfavourable) Other CfDs £m	Favourable/ (unfavourable) Total impact £m
2% more load factor	-	(39)	(1,183)	(1,222)
4% more load factor	-	(78)	(2,365)	(2,443)
4% more load factor - Wind	-	-	(1,833)	(1,833)
2% less load factor	-	39	1,183	1,222
4% less load factor	-	78	2,365	2,443
4% less load factor - Wind	-	1,833	1,833
Estimated Commissioning Date moves back-ward by one year	-	4	140	144
Generation starts at the earliest possible date*	-	-	1,124	1,124

Specific to HPC CfD:	Favourable/ (unfavourable) HPC CfD £m	Favourable/ (unfavourable) LCD CfD £m	Favourable/ (unfavourable) Other CfDs £m	Favourable/ (unfavourable) Total impact £m
10% less load factor	4,983	-	-	4,983
2% increased load factor	(997)	-	-	(997)
Generation cap	(1,795)	-	-	(1,795)
Generation delayed one year from estimated start date	1,436	-	-	1,436
Generation start date delayed 2 years from estimated start date	2,968	-	-	2,968

*Generation start at the earliest possible date is not applicable to LCD and is due to commence on the 1 April 2027.

The fair value is virtually certain upon the actual capacity generated once the plant is built and the electricity prices which will prevail at the time of generation. The favourable and unfavourable changes show how the impact of changes in capacity and prevailing electricity prices will affect the fair value of CfDs due to the change in the level of cash flows.

The impact of the load factor for wind generators has been included above in the sensitivities as this technology type is expected to suffer the most curtailment.

The estimated valuation of generic CfDs (excluding HPC and LCD) is £59.1bn using the base scenario. The base case scenarios for the other 2 price series providers were valued at £47.1bn and £78.5bn.

Significant unobservable inputs: The following table discloses the valuation techniques and significant unobservable inputs for CfDs recognised at fair value and classified as level 3 along with the range of actual values used in the preparation of the financial statements.

	Fair value of CfDs £m	Valuation technique	Significant unobservable input	Range min‑max	Units
2022	97,591	DCF	Electricity prices	37.84-244.00	£/MWh
2023	84,506	DCF	Electricity prices	39.07-141.35	£/MWh
2024	89,151	DCF	Electricity prices	25.54 – 78.94	£/MWh
2025	90,405	DCF	Electricity prices	41.51-295.13	£/MWh
2026	110,923	DCF	Electricity prices	16.00-170.60	£/MWh

From 2024-25 nominal rates have been used in the CfD model whereas prior years are in real terms.

The table below represents the movement in CfD valuation at 31 March 2026.

	LCCC CfDs assets £m	LCCC CfDs liabilities £m	Departmental group total £m
CfD liability as at 1 April 2024 recognised on the Consolidated Statement of Financial Position	2,900	(92,051)	(89,151)
Gain / Loss reclassification	(8)	8	-
Change in fair value during the year	130	(3,847)	(3,717)
Payments to the CfD generators	-	2,198	2,198
CfDs terminated in prior year	-	265	265
CfD liability as at 31 March 2025 recognised on the Consolidated Statement of Financial Position	3,022	(93,427)	(90,405)
Gain / Loss reclassification	(1)	1	-
Change in fair value during the year	(16)	2,249	2,233
Change in fair value during the year – AR7 & AR7a	-	(27,836)	(27,836)
Change in fair value during the year – LCD	-	(1,972)	(1,972)
Payments to the CfD generators	-	2,924	2,924
CfDs terminated during the year	-	4,134	4,134
CfD liability as at 31 March 2026 recognised on the Consolidated Statement of Financial Position	3,005	(113,928)	(110,923)
CfDs movement recognised in SoCNE, comprising:	-	-	20,517
CfD levy income recognised under other income	-	(2,924)	(2,924)
Remeasurement of CfD derivatives	17	23,424	23,441

Movement in CfDs valuation includes both expenditure relating to CfDs and income from supplier levy.

The table below represents the split of all CfD assets and liabilities between current and non‑current. The entire Hinkley Point C liability is included in non-current liabilities.

LCCC CfD assets	CfDs as at 31 March 2026 £m	CfDs as at 31 March 2025 £m
Current	189	148
Non-current	2,816	2,874
Total LCCC CfD assets	3,005	3,022

LCCC CfD liabilities	CfDs as at 31 March 2026 £m	CfDs as at 31 March 2025 £m
Current	(2,330)	(2,656)
Non-current	(111,598)	(90,771)
Total LCCC CfD liabilities	(113,928)	(93,427)

9.2. Low Carbon Hydrogen Agreement

9.2.1. Accounting policies

The LCHA is a private law contract between the ‘Producer’ and LCCC. LCHA underpins the hydrogen production business model (HPBM), which provides revenue support to hydrogen producers to overcome the operating cost gap between low carbon hydrogen and high carbon fuels. Initially the scheme will be funded by DESNZ until legislation is in place and there is an obligation placed on licensed gas shippers to fund the LCHA through the Gas Shipper Obligation (GSO).

The HPBM will support hydrogen producers awarded a LCHA by paying them a subsidy. This subsidy will be calculated as a difference between a strike price and a reference price, like the current CfD scheme. Generally, LCHA shares similarities with the CfD contract, both lasting 15 years with the requirement placed on producers to meet initial and operational conditions, to achieve minimum installed capacity by the contractual Longstop Date, with the payment period starting at the end of the Target Commissioning Window (TCW). To qualify, hydrogen production will need to meet the Low Carbon Hydrogen Standard (LCHS) requirements and be sold for qualifying purposes. The LCHS sets a maximum threshold of greenhouse gas emissions allowed in the production process for hydrogen to be considered ‘low carbon hydrogen’ and be eligible for support.

Under the LCHA no payment is made at the time of contract signing; instead, the LCCC payments are triggered once the producers begin hydrogen production and meet their obligations under the contract. LCCC is then contractually obligated to make 3 types of payments to hydrogen producers:

the Difference Amount (DA) payment to compensate the high cost of producing low-carbon hydrogen compared with counterfactuals such as natural gas
Price Discovery Incentive (PDI) payment which is intended to incentivise the sale of hydrogen above the natural gas price
Sliding scale top up (SSTU) payment which provides a higher subsidy when hydrogen sales fall below a threshold

Each of the LCHA payments has distinct accounting implications under IFRS. The DA and PDI are considered derivatives under IFRS 9, they are classified as FVTPL and recognised in the Consolidated Statement of Financial Position at inception, with any resultant gain or loss recognised in the Consolidated Statement of Comprehensive Net Expenditure. Changes in fair value arising after day one are accounted for in the reporting period that they occur. The SSTU is not considered a derivative, a liability to make SSTU payments arises when the volume of hydrogen sold fall below 50% of the reference volume.

9.2.2. Estimates – valuation of LCHA liabilities and assets

The fair value of the LCHA has been calculated using the income approach based on level 3 inputs, which reflects the present value of future cash flows that are expected to occur over the contract term. The valuation requires management to make certain assumptions about the model inputs, including cash flows, the discount rate, credit risk and volatility (note 9.2.3).

The DA is calculated by deducting the Reference Price from the Strike Price and multiplying the result by the aggregate value of the relevant hydrogen volumes sold by the producers. The Strike Price represents the unit price required by the producer to enable it to recover the costs of producing low carbon hydrogen and make an allowed return on its investment. The level and specific components of the Strike Price are negotiated on a project-by-project basis and include agreed eligible costs. The Reference Price is intended to represent the market value of the hydrogen sold by the producer, with the floor price set as the natural gas market price. The series of periodic net cash flows is then discounted using a real discount rate based on the HM Treasury nominal rate of 2.45% adjusted by the latest OBR CPI inflation forecasts for each modelled year.

The PDI calculation in linked to the increment by which the achieved sales price for hydrogen exceeds the natural gas market price. Without a live UK tradeable hydrogen market, the hydrogen prices are forecasted to mirror natural gas prices, resulting in the liability for PDI estimated to be £Nil. Future movements in the PDI valuation will be recognised in the Consolidated Statement of Comprehensive Net Expenditure in the periods when the trigger events occur.

The sensitivity analysis (note 9.2.4) looks at scenarios that include PDI should it be triggered. The SSTU payments are calculated as an additional amount for each unit of hydrogen sold when the sales of the producers fall below the 50% threshold, The current assumption is that SSTU will not be triggered, therefore no liability for SSTU is recognised in the reporting period.

As at 31 March 2026 LCCC was counterparty to 10 LCHA contracts from the first Hydrogen Allocation Round (HAR1).

The following table provides the valuation of LCHA liabilities and assets grouped into input levels 1 to 3 within the fair value hierarchy based on the degree to which the fair value is observable:

	Level 1 £m	Level 2 £m	Level 3 £m	Total £m
Liabilities	-	-	(1,243)	(1,243)
Assets	-	-	-	-
As at 31 March 2025	-	-	(1,243)	(1,243)
Liabilities	-	-	(2,244)	(2,244)
Assets	-	-	-	-
As at 31 March 2026	-	-	(2,244)	(2,244)

9.2.3. Key inputs and underlying assumptions for LCHA

Estimated future forecast wholesale hydrogen prices: There is currently no well-defined hydrogen market therefore predicting sales prices is challenging. The model currently assumes that the natural gas price is the hydrogen price as this represents the minimum threshold at which Producers can viably sell hydrogen. Forecasted wholesale gas prices used to estimate the fair value of the LCHA are derived from an independent price series. Energy price series estimates the wholesale price by:

calculating the short run marginal cost (SRMC) of each plant (including a representation of plants in interconnected markets), taking account of start-up and shut-down costs;
calculating the available output of intermittent renewables;
calculating the half hourly demand for electricity by taking into account demand side response; and
determining the marginal plant required to meet demand

Economic, climate, policy, generation, and demand assumptions are external inputs to the model including demand load curves for both business and non-business days and seasonal impacts. Specific assumptions can also be modelled for domestic and non-domestic sectors and smart meter usage.

The forecast trajectory of gas prices is uncertain. In the valuation, management has used an industry recognised independent price series consistent with the price series used in the CfD valuation, which is not an outlier.

Estimated future wholesale hydrogen production:
1. a. Start date
2. The commencement date is specified in the LCHA following contract award where the producer nominates a Target Commissioning Date (TCD). However, the producer is free to commission at any time within their Target Commissioning Window (TCW), a period of one year from the start of the TCW to the end of the TCW and up to their ‘Longstop Date’. The Longstop date is defined as one year after the end of the TCW with no penalty incurred as long as the producer reaches 80% of their installed capacity estimate by the end of their TCW and 90% by their Longstop Date.
3. A penalty in the form of reduction of contract length for each day they are late in commissioning is applied after the end of the TCW. The contract can be terminated if the producers has not commissioned 80% of their revised installed capacity estimate by the TCW end date and 90% by their Longstop Date. The valuation uses the latest estimate from producers on the start date.
4. b. Sales volume
5. The total invoiced volume from the producer, eligible for inclusion in the LCHA. The model currently assumes that all volumes qualify as there is no historical data. Therefore 100% of the producer’s reference volume is used. The reference volume is based on the initial installed capacity and the assumed load factor. If the volume factor falls below 50% it would activate the SSTU payment which is designed to protect producers in the early stages of developing a UK hydrogen market.
6. The model assumes that the sales volume is equivalent to between 88-100% of the reference volume. The reference volume is assumed load factor multiplied by Installed Capacity multiplied by total number of billing days and hours in a day. The represents the maximum quantity producers can sell to an offtaker over the contract duration, ensuring compliance with the contractual terms and assuming that producers will optimise revenue potential.
7. c. Strike price
8. The strike price is an agreed price which determines the payments made to the producer under the contract with reference to its hydrogen output and the market reference price. The relevant strike price is specified in each LCHA and is not intended to change for the duration of the project, other than through indexation to CPI and certain network charges, or in the event of certain qualifying changes in law. The strike price used reflect the CPI rate for April 2026, in line with the requirements of the LCHA contract.
9. d. Reference price
10. The DA is calculated as the strike price less the reference price where the reference price is the greater of the floor price and the achieved sales price. If the difference between the strike price and the reference price is positive LCCC shall pay the producer on a monthly basis. However, if the difference is negative, indicating that the reference price exceeds the strike price, the producer shall pay the DA to LCCC.
11. Based on initial forecast data received, achieved sales price is likely to equal gas prices which will result in the reference price also matching the gas price meaning that a DA is payable from LCCC to the producer for the length of the LCHA.

9.2.4. Sensitivity Analysis

Long-term system forecasts are not generally seen as a single most likely outcome with degrees of uncertainty either side. Rather there are multiple sets of inputs that are internally consistent and credible. A set of these inputs is usually used as a ‘scenario’ and multiple deliberately different scenarios are used to illustrate different possible futures when undertaking long-term forecasting. Therefore, individual forecasts may use a very different set of assumptions such as achieved sales price, hydrogen sales volume, installed capacity estimate, carbon and fuel costs and gas demand, but still be within what we would describe as the ‘universe of reasonableness’. Management has decided to use the reference case scenario of an industry recognised independent forecast that is not an outlier.

An additional element in the calculation of the LCHA liability is the discount rate that is applied. Uncertainty increases with time and so the choice of discount rate plays a significant part in determining how much uncertainty is weighted into a present value calculation, a higher discount rate places less weight on increasingly more uncertain years of a present value calculation.

LCCC has used the HM Treasury nominal discount rate of 2.45% adjusted by the latest CPI inflation forecasts for each modelled year.

For comparability an undiscounted valuation of the LCHA has been included below:

	LCHA £m
As at 31 March 2025	1,255
As at 31 March 2026	2,796

The following table shows the impact on the fair value of LCHA, classified under level 3, by applying reasonably possible alternative assumptions. The changes in the table below include the DA and PDI if triggered. SSTU payments are excluded from the fair value calculation as they do not meet the criteria for classification as a derivative. A favourable result is a decrease to the liability and unfavourable is an increase to the liability.

Change in fair value of LCHA if:	Favourable/ (unfavourable) LCHA £m
Decrease volume factor 80%	449
Decrease volume factor 40%	1,347
Increase price factor 2.0	234
Increase price factor 1.5	117
Start date delay 1 year	155
Start date delay 2 years	312
Highest price third party series	145
Lowest price third party series	(87)
Discount rate of 3.5%	192
2024-25 Discount rate 2.15%	(59)
Undiscounted	(552)

The favourable and unfavourable changes show the impact of capacity (volume factor) and hydrogen prices (price factor) as these will affect the fair value of LCHA due to the change in the level of cash flows.

Sales volumes relate to the volume of hydrogen that producers are able to trade to qualifying offtakers. The model assumes that 100% of volumes qualify resulting in the largest DA payable. Should the volume factor fall below 50% this would trigger the SSTU payment mechanism. If SSTU is triggered and the volume factor fell to 40% as per the sensitivity analysis above SSTU payments have been forecasted to total £132.5m.

The price factor in the model has been set to 1.0 which means that the gas price has been achieved. Anything above this indicates that producers have been able to sell hydrogen above the gas price and so PDI is triggered for establishing growth in the UK hydrogen market. The price factor sensitivity of 2.0 in the table above includes a PDI payment of £26m, and the price factor of 1.5 includes a PDI payment of £13m. A PDI payment is less than a DA payment hence the LCHA portfolio would reduce if this was triggered.

The table below represents the movement in LCHA valuation at 31 March 2026.

	LCCC LCHA Assets £m	LCCC LCHA Liabilities £m	Departmental group total £m
LCHA liability as at 1 April 2024 recognised on the Consolidated Statement of Financial Position	-	-	-
Gain / Loss reclassification	-	-	-
Change in fair value during the year	-	(1,243)	(1,243)
Payments to hydrogen producers	-	-	-
LCHAs terminated in prior year	-	-	-
LCHA liability as at 31 March 2025 recognised on the Consolidated Statement of Financial Position	-	(1,243)	(1,243)
Gain / Loss reclassification	-	-	-
Change in fair value during the year	9	(1,163)	(1,154)
Payments to hydrogen producers	-	-	-
LCHAs terminated during the year	-	153	153
LCHA liability as at 31 March 2026 recognised on the Consolidated Statement of Financial Position	9	(2,253)	(2,244)
LCHA movement recognised in SoCNE, comprising:			1,001
Remeasurement of LCHA derivatives	(9)	1,010	1,001

The table below represents the split of all LCHA assets and liabilities between current and noncurrent.

LCCC LCHA assets	LCHA as at 31 March 2026 £m	LCHA as at 31 March 2025 £m
Current	-	-
Non-current	9	-
Total LCCC LCHA assets	9	-

LCCC LCHA liabilities	LCHA as at 31 March 2026 £m	LCHA as at 31 March 2025 £m
Current	(16)	-
Non-current	(2,237)	(1,243)
Total LCCC LCHA liabilities	(2,253)	(1,243)

10. Financial assets in other public sector bodies

	Equity investments in public sector companies £m	Other investments and loans £m	Core department £m	Elimination of shares and other investments and loans held in NDPBs £m	NDPBs ordinary shares £m	Departmental group total £m
Balance at 1 April 2024	1,892	3,028	4,920	(1,796)	696	3,820
Additions	2,722	10	2,732	(2,728)	697	701
Redemptions	-	(2,907)	(2,907)	-	-	(2,907)
(Impairments)/Impairment Reversal	(38)	-	(38)	38	-	-
Revaluations	64	-	64	-	27	91
Unwinding of discount	-	5	5	-	-	5
Balance at 31 March 2025	4,640	135	4,775	(4,485)	1,420	1,709
Additions	1,887	1,459	3,346	(3,021)	98	423
Disposals	(5,133)	-	(5,133)	5,133	-	-
Redemptions	-	(228)	(228)	1	-	(227)
(Impairments)/Impairment Reversal	(25)	(4)	(29)	29	(7)	(7)
Revaluations	(84)	(30)	(114)	-	47	(67)
Unwinding of Discount	-	40	40	(37)	-	3
Balance at 31 March 2026	1,285	1,373	2,658	(2,380)	1,558	1,835
Non-current	1,285	1,243	2,528	(2,383)	1,558	1,703
Current	-	130	130	2	-	132

10.1. Equity investments in other public sector bodies

	31 March 2026 Core department £m	31 March 2026 Departmental group £m	31 March 2025 Core department £m	31 March 2025 Departmental group £m
Balance at 1 April	4,640	1,581	1,892	793
Transfers in/(out)	-	-	-	-
Additions	1,887	98	2,722	697
Disposals	(5,133)	-	-	-
(Impairments)/impairment reversal	(25)	(7)	(38)	-
Revaluations	(84)	(36)	64	91
Balance at 31 March	1,285	1,636	4,640	1,581
Comprising
Ordinary shares held within the departmental boundary – held at cost	413	-	3,783	-
Ordinary shares held outside the departmental boundary - held at fair value	872	1,636	857	1,581
Balance at 31 March	1,285	1,636	4,640	1,581

Core department: Equity investments in other public sector bodies held within the departmental boundary

In accordance with the FReM, ordinary shares and equity instruments held within the departmental boundary are carried at historical cost less any provision for impairment. They are eliminated on consolidation.

Sizewell C (Holding) Limited:

The Final Investment Decision for Sizewell C was taken on 22 July 2025 which represents the point at which the UK government and investors formally committed to proceed with construction. Financial Close was reached on 4 November 2025 which locked in the financing structure, risk-sharing arrangements and project delivery model
The value and class of the core department’s shareholding changed at Financial Close. The core department, through the Secretary of State (SoS), now holds 449,000 Class A shares and 125,390,870 Class B shares (2024–25: 89,281,532 ordinary shares), each with a nominal value of £1. This represents a decrease in ownership from 90.5% to 44.9% in the year but DESNZ continues to have control as it retains power over the investee, exposure to variable returns, and the ability to use that power to affect those returns
Class B Shareholder Loans were also purchased by DESNZ in a subsidiary of Sizewell C (Holding) Limited
The principal objective of the company is the development of the Sizewell C nuclear power station in Suffolk
The material asset held by the subsidiary company, Sizewell C Ltd, is the asset under construction of £7,784m (2024–25: £3,483m) included in note 6 Plant, Property and Equipment. Non-controlling interest of £165m (2024–25: £541m) is recognised in relation to the investment and is included in Consolidated Statement of Changes in Taxpayers’ Equity (departmental group)

Low Carbon Contracts Company Limited (LCCC):

The core department through the SoS holds one ordinary share in LCCC with a nominal value of £1
The principal objective of the company is to be the counterparty to and manage Contracts for Difference (CfDs) throughout their lifetime

Electricity Settlements Company Limited (ESC):

The core department through the SoS holds one ordinary share in ESC with a nominal value of £1
The principal objective of the company is to oversee settlement of the Capacity Market agreements Enrichment Holdings Limited (EHL)
The core department through the SoS holds 2 shares of £1 each in EHL with a nominal value of £2
EHL has been set up as a holding company, along with a subsidiary company, Enrichment Investments Limited (EIL), solely to hold the government’s one third share in Urenco Limited, an entity operating in the civil uranium enrichment sector

Great British Energy – Nuclear (GBE-N) Limited, previously British Nuclear Fuels Limited (BNFL):

The core department holds 50,000 ordinary shares in GBE-N at a nominal value of £1 each. 49,999 of these shares are held through the SoS and the Treasury Solicitor holds one ordinary share. The core department’s holding had a carrying value of £287m at 31 March 2026 (2024‑25: £305m)
GBE‑N is an arm’s length body of the department, established to drive the delivery of the government’s civil nuclear programme, including co‑funding and facilitating new nuclear projects

Great British Energy Group (GBE) Limited:

GBE was incorporated on 10 October 2024, with the core department, through the SoS, holding all of the 100 ordinary shares at a nominal value of £1 each. The core department’s holding had a carrying value of £nil at 31 March 2026
GBE is an arm’s length body of the department, established to invest in and develop clean energy projects across the UK in support of the government’s energy security and clean power objectives

Oil and Gas Authority Limited (trading as the North Sea Transition Authority):

Oil and Gas Authority Limited was incorporated on 1 July 2015, with the core department, through the SoS, holding the single issued ordinary share at a nominal value of £1
The Oil and Gas Authority is an independent regulator established under the Energy Act 2016 to regulate the UK oil and gas sector, with a statutory objective to maximise the economic recovery of UK petroleum while supporting the delivery of net zero and the security of energy supply

Core department: Equity investments held outside of the departmental boundary: Shares held outside of the departmental boundary are carried at fair value through other comprehensive income.

National Energy Systems Operator Limited (NESO):

NESO was acquired by the department from National Grid Plc on 1 October 2024 and established as the public corporation responsible for the strategic overview and coordination of Great Britain’s energy system
During 2025-26, DESNZ’s shareholding in NESO decreased from 330,000,100 to 100,000,000 ordinary shares following a capital reduction approved in January 2026. Each share has a nominal value of £0.01
The shareholding is held at fair value, but because there is no active market for these shares the net asset value is considered to be a reasonable approximation for fair value. The fair value as at 31 March 2026 was £649m (2024–25: £751m)

NNL Holdings Limited (NNLH):

NNLH has been set up as a holding company, to hold all the shares in the National Nuclear Laboratory Limited
In 2025-26, the department made a £98m equity investment into NNHL. At 31 March 2026, the core department through the SoS held 108,300,002 shares in NNLH with a nominal value of £1 each
The shareholding is held at fair value, but because there is no active market for these shares the net asset value of NNLH is considered to be a reasonable approximation for fair value. The fair value as at 31 March 2026 was £222m (2024–25: £106m)

Departmental group

NDA subsidiaries: The NDA controls the following subsidiaries, all of which are outside the departmental group boundary and not consolidated into these accounts. The holdings are valued at fair value. As there is no active market, the net assets of the entities are considered the most appropriate approximation for fair value and amounted to £771m as at 31 March 2026 (31 March 2025: £721m).

Name	Nature of business	Country of incorporation	Holding entity	Proportion of ordinary shares held
Direct Rail Services Limited	Rail transport services within UK	UK	NDA	100%
International Nuclear Services France SAS ⁽ⁱ⁾	Transportation of spent fuel	France	NDA	100%
International Nuclear Services Limited Japan KK ⁽ⁱ⁾	Transportation of spent fuel	Japan	NDA	72%
International Nuclear Services Limited	Contract Management and transportation of spent fuel	UK	NDA	100%
Pacific Nuclear Transport Limited ⁽ⁱ⁾	Transportation of spent fuel, reprocessing products and waste	UK	NDA	100%
NDA Properties Limited	Property Management	UK	NDA	100%
Rutherford Indemnity Limited	Nuclear Insurance	Guernsey	NDA	100%
NDA Archives Limited ⁽ⁱ⁾	Operation of Nucleus – The Nuclear and Caithness Archive	UK	NDA	100%

Notes:

(i) Ownership through International Nuclear Services Limited.
(ii) Included in the departmental boundary but excluded from consolidation on materiality grounds.

10.2. Investments and loans in public sector bodies

	31 March 2026 Core department £m	31 March 2026 Departmental group £m	31 March 2025 Core department £m	31 March 2025 Departmental group £m
Balance at 1 April	4,640	1,581	1,892	793
Transfers in/(out)	-	-	-	-
Additions	1,887	98	2,722	697
Disposals	(5,133)	-	-	-
(Impairments)/impairment reversal	(25)	(7)	(38)	-
Revaluations	(84)	(36)	64	91
Balance at 31 March	1,285	1,636	4,640	1,581
Comprising
Ordinary shares held within the departmental boundary – held at cost	413	-	3,783	-
Ordinary shares held outside the departmental boundary - held at fair value	872	1,636	857	1,581
Balance at 31 March	1,285	1,636	4,640	1,581

Core department: Equity investments in other public sector bodies held within the departmental boundary

In accordance with the FReM, ordinary shares and equity instruments held within the departmental boundary are carried at historical cost less any provision for impairment. They are eliminated on consolidation.

Sizewell C (Holding) Limited:

The Final Investment Decision for Sizewell C was taken on 22 July 2025 which represents the point at which the UK government and investors formally committed to proceed with construction. Financial Close was reached on 4 November 2025 which locked in the financing structure, risk-sharing arrangements and project delivery model
The value and class of the core department’s shareholding changed at Financial Close. The core department, through the Secretary of State (SoS), now holds 449,000 Class A shares and 125,390,870 Class B shares (2024–25: 89,281,532 ordinary shares), each with a nominal value of £1. This represents a decrease in ownership from 90.5% to 44.9% in the year but DESNZ continues to have control as it retains power over the investee, exposure to variable returns, and the ability to use that power to affect those returns
Class B Shareholder Loans were also purchased by DESNZ in a subsidiary of Sizewell C (Holding) Limited
The principal objective of the company is the development of the Sizewell C nuclear power station in Suffolk
The material asset held by the subsidiary company, Sizewell C Ltd, is the asset under construction of £7,784m (2024–25: £3,483m) included in note 6 Plant, Property and Equipment. Non-controlling interest of £165m (2024–25: £541m) is recognised in relation to the investment and is included in Consolidated Statement of Changes in Taxpayers’ Equity (departmental group)

Low Carbon Contracts Company Limited (LCCC):

The core department through the SoS holds one ordinary share in LCCC with a nominal value of £1
The principal objective of the company is to be the counterparty to and manage Contracts for Difference (CfDs) throughout their lifetime

Electricity Settlements Company Limited (ESC):

The core department through the SoS holds one ordinary share in ESC with a nominal value of £1
The principal objective of the company is to oversee settlement of the Capacity Market agreements

Enrichment Holdings Limited (EHL):

The core department through the SoS holds 2 shares of £1 each in EHL with a nominal value of £2
EHL has been set up as a holding company, along with a subsidiary company, Enrichment Investments Limited (EIL), solely to hold the government’s one third share in Urenco Limited, an entity operating in the civil uranium enrichment sector

Great British Energy – Nuclear (GBE-N) Limited, previously British Nuclear Fuels Limited (BNFL):

The core department holds 50,000 ordinary shares in GBE-N at a nominal value of £1 each. 49,999 of these shares are held through the SoS and the Treasury Solicitor holds one ordinary share. The core department’s holding had a carrying value of £287m at 31 March 2026 (2024‑25: £305m)
GBE‑N is an arm’s length body of the department, established to drive the delivery of the government’s civil nuclear programme, including co‑funding and facilitating new nuclear projects

Great British Energy Group (GBE) Limited:

GBE was incorporated on 10 October 2024, with the core department, through the SoS, holding all of the 100 ordinary shares at a nominal value of £1 each. The core department’s holding had a carrying value of £nil at 31 March 2026
GBE is an arm’s length body of the department, established to invest in and develop clean energy projects across the UK in support of the government’s energy security and clean power objectives

Oil and Gas Authority Limited (trading as the North Sea Transition Authority):

Oil and Gas Authority Limited was incorporated on 1 July 2015, with the core department, through the SoS, holding the single issued ordinary share at a nominal value of £1
The Oil and Gas Authority is an independent regulator established under the Energy Act 2016 to regulate the UK oil and gas sector, with a statutory objective to maximise the economic recovery of UK petroleum while supporting the delivery of net zero and the security of energy supply

Core department: Equity investments held outside of the departmental boundary: Shares held outside of the departmental boundary are carried at fair value through other comprehensive income.

National Energy Systems Operator Limited (NESO):

NESO was acquired by the department from National Grid Plc on 1 October 2024 and established as the public corporation responsible for the strategic overview and coordination of Great Britain’s energy system
During 2025-26, DESNZ’s shareholding in NESO decreased from 330,000,100 to 100,000,000 ordinary shares following a capital reduction approved in January 2026. Each share has a nominal value of £0.01
The shareholding is held at fair value, but because there is no active market for these shares the net asset value is considered to be a reasonable approximation for fair value. The fair value as at 31 March 2026 was £649m (2024–25: £751m)

NNL Holdings Limited (NNLH):

NNLH has been set up as a holding company, to hold all the shares in the National Nuclear Laboratory Limited
In 2025-26, the department made a £98m equity investment into NNHL. At 31 March 2026, the core department through the SoS held 108,300,002 shares in NNLH with a nominal value of £1 each
The shareholding is held at fair value, but because there is no active market for these shares the net asset value of NNLH is considered to be a reasonable approximation for fair value. The fair value as at 31 March 2026 was £222m (2024–25: £106m)

Departmental group

NDA subsidiaries: The NDA controls the following subsidiaries, all of which are outside the departmental group boundary and not consolidated into these accounts. The holdings are valued at fair value. As there is no active market, the net assets of the entities are considered the most appropriate approximation for fair value and amounted to £771m as at 31 March 2026 (31 March 2025: £721m).

Name	Nature of business	Country of incorporation	Holding entity	Proportion of ordinary shares held
Direct Rail Services Limited	Rail transport services within UK	UK	NDA	100%
International Nuclear Services France SAS ⁽ⁱ⁾	Transportation of spent fuel	France	NDA	100%
International Nuclear Services Limited Japan KK ⁽ⁱ⁾	Transportation of spent fuel	Japan	NDA	72%
International Nuclear Services Limited	Contract Management and transportation of spent fuel	UK	NDA	100%
Pacific Nuclear Transport Limited ⁽ⁱ⁾	Transportation of spent fuel, reprocessing products and waste	UK	NDA	100%
NDA Properties Limited	Property Management	UK	NDA	100%
Rutherford Indemnity Limited	Nuclear Insurance	Guernsey	NDA	100%
NDA Archives Limited ⁽ⁱ⁾	Operation of Nucleus – The Nuclear and Caithness Archive	UK	NDA	100%

Notes:

(i) Ownership through International Nuclear Services Limited.
(ii) Included in the departmental boundary but excluded from consolidation on materiality grounds.

10.2. Investments and loans in public sector bodies

	31 March 2026 Core department £m	31 March 2026 Departmental group £m	31 March 2025 Core department £m	31 March 2025 Departmental group £m
Balance at 1 April	135	128	3,027	3,026
Additions	1,459	325	10	5
Repayments	(228)	(227)	(2,907)	(2,907)
Unwinding of Discount	40	3	5	5
Impairments	(4)	-	-	-
Revaluations	(30)	(31)	-	-
Balance at 31 March	1,372	198	135	128
Of which:
Due within 12 months	129	132	49	48
Due after 12 months	1,243	66	86	80

Core department

The most significant loans are detailed below.

Sizewell C (PledgeCo) Limited Shareholder Loans:

As explained in note 10.1, Financial Close was reached during 2025-26, which substantially changed the financing structure for Sizewell C. Class A and Class B shares were purchased in the parent company Sizewell C (Holding) Limited, alongside Class B Shareholder Loans being provided to the subsidiary Sizewell C (PledgeCo) Limited
At Financial Close Class B Shareholder loans for £1,013m (31 March 2025: £0) were issued, followed by a further £116m issued later in March 2026
The total carrying amount of the Class B Shareholder Loans at 31 March 2026 is £1,162m. This is comprised of £1,129m of loan funding, interest accrued of £37m and Stage 1 12-month Expected Credit Loss of £4m
It should be noted that the 2024-25 comparatives are nil because shareholder loans issued before Financial Close were treated as quasi-equity loans under IAS 32. These were settled as part of Financial Close
The Class B Shareholder Loans have a maturity date of 31 March 2075 and accrue interest at 9% per annum. Interest payments can be made either in cash or in kind, the latter being added to the principal. The loans are measured at amortised cost in accordance with IFRS 9

10.3. Special shares

The Secretary of State holds one special share in each of the entities listed below. The list includes a summary of the significant terms of shareholding, and not a comprehensive record. Further details can be obtained from the annual report and financial statements of each body or their Articles of Association. The core department does not recognise the special or ‘golden’ shares on its SoFP.

EDF Energy Nuclear Generation Group Limited (formerly British Energy Group plc) – £1 Special Share:

British Energy Group plc Special Share was created on 13 January 2005 and held jointly by the Secretary of State for Energy Security and Net Zero and the Secretary of State for Scotland
The consent of the Special Shareholder, which can only be refused on grounds of national security (except in relation to an amendment to the company’s Articles of Association), is required in respect of:
- various amendments to the company’s Articles of Association
- any purchase of more than 15% of the company’s shares
- the issue of shares carrying voting rights of 15% or more in the company
- variations to the voting rights attaching to the company’s shares
- the giving of consent in respect of the issue of shares by, the sale of shares in or amendments to the Articles of Association of various subsidiaries in certain cases

EDF Energy Nuclear Generation Limited (formerly British Energy Generation Ltd) – £1 Special Share:

British Energy Generation Ltd Special Share created in 1996 is held solely by the Secretary of State for Energy Security and Net Zero
The consent of the Special Shareholder, which can only be refused on grounds of national security (except in relation to an amendment to the company’s Articles of Association), is required in respect of:
- various amendments to the company’s Articles of Association
- the disposal of any of the nuclear power stations owned by the company
- prior to the permanent closure of such a station, the disposal of any asset which is necessary for the station to generate electricity

Nuclear Liabilities Fund Ltd – £1 Special Rights Redeemable Preference Share:

Created in 1996
The Secretary of State for Energy Security and Net Zero has a Special ‘A’ Share (there is also a ‘B’ Share held by British Energy)
The consent of the Special Shareholder is required for any of the following:
- to change any of the provisions in the Memorandum of Association or Articles of Association
- to alter the share capital or the rights attached thereto
- the company to create or issue share options
- the ‘B’ Special Shareholder or any of the Ordinary shareholders to dispose or transfer any of their rights in their shares
- the company to pass a members voluntary winding-up resolution
- the company to recommend, declare or pay a dividend
- the company to create, issue or commit to give any loan capital
- the company to issue a debenture
- the company to change its accounting reference date

Sizewell C Group – £1 Special Shares:

Sizewell C (Holding) Limited – £1 Special Share
Sizewell C (PledgeCo) Limited – £1 Special Share
Sizewell C Limited – £1 Special Share
One Special Share in each company was created under the relevant company’s Articles of Association in connection with the Sizewell C investment arrangements entered into in November 2025
The Special Share in each company is held solely by the Secretary of State for Energy Security and Net Zero
The Special Shares protect the Special Shareholder’s interest in the project and give the Special Shareholder the ability to intervene in limited specific scenarios to protect national security interest and to limit the involvement of sanctioned persons in the project

11. Other financial assets

	31 March 2026 Core department £m	31 March 2026 Departmental group £m	31 March 2025 Core department £m	31 March 2025 Departmental group £m
Balance at 1 April	285	285	258	258
Additions	33	51	34	34
Repayments	(20)	(20)	(2)	(2)
Unwinding of Discount	6	6	2	2
Revaluations	(4)	(4)	(7)	(7)
Impairments	6	6	-	-
Balance at 31 March	307	325	285	285

11.1. Other loans and investments

	Term deposit £m	Private sector loans £m	Private sector shares £m	Investment funds £m	Other investments £m	Total £m
Balance at 1 April 2024	-	70	39	149	258
Additions	-	-	-	34	34
Redemptions	-	(2)	-	-	(2)
Revaluations	-	-	4	(11)	(7)
Unwinding of discount	-	2	-	-	2
Balance at 1 April 2025	-	70	43	172	-	285
Additions	-	-	6	33	12	51
Redemptions	-	(20)	-	-	-	(20)
Revaluations	-	-	(3)	(1)	-	(4)
Unwinding of discount	-	6	-	-	-	6
Impairments	-	6	-	-	-	6
Balance at 31 March 2026	-	62	46	204	12	325
Of the total
Core department	-	62	41	204	-	307
NDPBs and other designated bodies	-	-	5	-	12	18
Balance at 31 March 2025	-	62	46	204	12	325

12. Recoverable contract costs

The departmental group has commercial agreements in place under which some or all of the expenditure required to settle nuclear provisions will be recovered from third parties. Recoverable contract costs comprise costs which were incurred before the revenue recognition period of each contract and which are amortised each year in line with revenue (‘Historic costs’ below) and costs which typically form part of the nuclear provision, which are restated each year for unwinding of discount and other changes in estimate, and released as they occur in each year (‘Future costs’ below). Net recoverable costs at 31 March 2026 were £694m (31 March 2025: £635m). Further details can be found in NDA’s annual report and accounts.

Departmental group:

Recoverable contract costs relating to nuclear provisions	31 March 2026 £m	31 March 2025 £m
Gross recoverable contract costs	3,400	3,414
Less applicable payments received on account	(2,696)	(2,758)
Less associated contract loss provisions	(10)	(21)
Balance at 31 March	694	635

The balances above relate to the NDA. The table below shows the movements in gross recoverable contract costs during the year.

Movements in gross recoverable contract costs

Departmental group:

	31 March 2026 £m	31 March 2025 £m
Gross recoverable contract costs at 1 April	3,414	3,911
Increase/(decrease) in year	333	(136)
Unwinding of discount	53	58
Amortisation of recoverable contract costs	(127)	(118)
Release in year – continuing operations	(273)	(301)
Balance at 31 March	3,400	3,414

The gross balance of recoverable contract costs of £3,400m (31 March 2025: £3,414m) comprises £803m (31 March 2025: £930m) of past costs which were incurred before the revenue recognition period of the related contracts and will be amortised in future years in line with revenue and £2,597m (31 March 2025: £2,484m) of probable future costs which form part of the nuclear decommissioning provision (note 18.1) and will be released as they are incurred.

The movement in the gross recoverable contract costs during the year broken down by the type of costs are detailed in the table below.

Departmental group:

	31 March 2026 Historic costs £m	31 March 2026 Future costs £m	31 March 2026 Total costs £m	31 March 2025 Historic costs £m	31 March 2025 Future costs £m	31 March 2025 Total costs £m
Balance at 1 April	930	2,484	3,414	1,048	2,863	3,911
Increase/(decrease) in the year	-	333	333	-	(136)	(136)
Unwinding of discount	-	53	53	-	58	58
Amortisation	(127)	-	(127)	(118)	-	(118)
Release in year	-	(273)	(273)	-	(301)	(301)
Balance at 31 March	803	2,597	3,400	930	2,484	3,414

£70m (2025: £74m) of the future costs balance relates to costs which do not form part of the nuclear provisions and are offset by payments on account. The historic costs within the above are deemed contract assets under IFRS 15 ‘Revenue from Contracts with Customers’. The opening balances, amortisation in period and closing balances for each main contract type are shown below.

Departmental group:

	31 March 2026 Spent fuel reprocessing and associated waste management £m	31 March 2026 Spent fuel receipt and management £m	31 March 2026 Total £m	31 March 2025 Spent fuel reprocessing and associated waste management £m	31 March 2025 Spent fuel receipt and management £m	31 March 2025 Total £m
Balance at 1 April	621	309	930	672	376	1,048
Amortisation	(84)	(43)	(127)	(51)	(67)	(118)
Balance at 31 March	537	266	803	621	309	930

Contract assets under IFRS 15 are deemed financial instruments for the purposes of IFRS 9 ‘Financial Instruments’ and, therefore, are ordinarily required to be reviewed for expected credit loss impairment. The above contract asset balances comprise costs which have been previously incurred and are now being amortised in each reporting period. They are not related to or dependent on the future payments still to be made under each contract and therefore a credit loss impairment is not required.

13. Investments in joint ventures and associates

	31 March 2026 Core department £m	31 March 2026 Departmental group £m	31 March 2025 Core department £m	31 March 2025 Departmental group £m
Balance at 1 April	-	915	-	921
Dividends	-	(86)	-	(84)
Profit/(loss)	-	58	-	77
Revaluations	-	(18)	-	1
Balance at 31 December	-	869	-	915

Urenco

Urenco is an international supplier of enrichment services. The department holds 33% (31 March 2025: 33%) of the ordinary share capital through Enrichment Holdings Limited. The department accounts for its investment in Urenco as an associate using the equity method. At 31 March 2026, the departmental group’s holding is valued at £748m (31 March 2025: £776m).

Urenco’s group financial statements are prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and IFRS as issued by the IASB. The financial statements are prepared to 31 December and are presented in euros.

The principal place of business is Bells Hill, Stoke Poges, Buckinghamshire.

Summarised financial information	2025‑26 £m	2024‑25 £m
Non-current assets	5,650	5,349
Current assets	2,355	2,121
Current liabilities	(569)	(585)
Non-current liabilities	(5,192)	(4,431)
Revenue	(1,796)	(1,590)
(Profit)/loss from continuing activities	(213)	(153)

Other financial information	2025‑26 £m	2024‑25 £m
Cash and cash equivalents	600	795
Current financial liabilities (excluding trade and other payables and provisions)	(40)	(129)
Non-current liabilities (excluding trade and other payables, provisions and deferred tax liabilities)	(1,351)	(834)
Depreciation and amortisation	380	372
Interest income	(131)	(144)
Interest expense	210	189

Other

There are other joint ventures and associates which are not material and further information can be found in the financial statements of UKAEA.

14. Trade and other receivables

	2025‑26 Core department £m	2025‑26 Departmental group £m	2024‑25 Core department £m	2024‑25 Departmental group £m
Amounts falling due within 1 year
Trade receivables	19	138	46	219
Deposits and Advances	-	1	-	-
Other receivables:
VAT and other taxation	13	222	13	321
Staff receivables	1	1	1	1
Other	19	225	77	206
Contract assets	-	78	-	84
Prepayments and accrued income	224	486	52	173
	276	1,151	188	1,005
Amounts falling due after more than 1 year
Trade receivables	-	51	-	49
Other receivables	327	363	335	372
Prepayments and accrued income	2	248	6	329
	329	662	341	750
Total receivables at 31 March	605	1,813	529	1,755

Core department

Within other receivables due after more than one year was £327m (2024–25: £334m) relating to the surplus sharing arrangement of the Mine Workers’ Pension Scheme (MPS).

The Mineworkers’ Pension Scheme was guaranteed by the government after privatisation of the British Coal Corporation in 1994. The agreement relating to the guarantee entitles the government to a portion of any periodic valuation surpluses as determined by the Government Actuary’s Department.

In October 2024 the government announced a review of the MPS surplus sharing arrangement. The review is on-going and until concluded, the department will not seek to collect any of the reported receivable.

15. Cash and cash equivalents

	31 March 2026 Core department £m	31 March 2026 Departmental group £m	31 March 2025 Core department £m	31 March 2025 Departmental group £m
Balance at 1 April	705	2,594	1,025	2,737
Net change in cash and cash equivalent balances	286	561	(320)	(143)
Balance at 31 March	991	3,155	705	2,594
The following balances were held at
The Government Banking Service (GBS)	935	2,236	471	1,600
Commercial banks and cash in hand	56	919	234	994
Balance at 31 March	991	3,155	705	2,594

16. Trade payables and other liabilities

	31 March 2026 Core department £m	31 March 2026 Departmental group £m	31 March 2025 Core department £m	31 March 2025 Departmental group £m
Amounts falling due within 1 year
VAT, social security and other taxation	6	112	10	119
Trade payables	55	361	28	237
Other payables	58	936	89	1,037
Contract liabilities (see note 16.1)	-	365	-	658
Other accruals and deferred income	3,096	4,928	3,137	4,438
Amounts issued from the Consolidated Fund for supply but not spent at year end	926	926	667	667
Consolidated Fund extra receipts due to be paid to the Consolidated Fund: Received	65	98	38	24
	4,206	7,726	3,969	7,180
Amounts falling due after more than 1 year
Trade payables	-	3	-	16
Contract liabilities (see note 16.1)	-	1,449	-	1,444
Other payables, accruals and deferred income	-	176	1	54
	-	1,628	1	1,514
Total payables at 31 March	4,206	9,354	3,970	8,694

Core department

The above table includes promissory note liabilities of £1,900m at 31 March 2026 (31 March 2025: £1,919m), presented within other accruals and deferred income. These relate to various ODA (Official Development Assistance) programmes to which the department has contributed.

Other accruals and deferred income amounts falling due within 1 year include £641m (31 March 2025: £598m) for Renewable Heat Incentive schemes.

Departmental group

For 2025-26 the presentation of borrowings was changed to be presented separately from trade payables and other liabilities. Therefore, the prior year comparative for the departmental group is reduced by £493m compared to the published 2024-25 DESNZ Annual Report and Accounts.

16.1. Contract liabilities

	31 March 2026 Core department £m	31 March 2026 Departmental group £m	31 March 2025 Core department £m	31 March 2025 Departmental group £m
Balance at 1 April	-	2,103	-	2,019
Additions	-	218	-	250
Change in measurement	-	567	-	786
Release to SoCNE	-	(1,074)	-	(952)
Balance at 31 March	-	1,814	-	2,103
Of the total
Due within 1 year	-	365	-	658
Due in over 1 year	-	1,449	-	1,445
Balance at 31 March	-	1,814	-	2,103

Departmental group

The majority of contract liabilities are the sums received on account by the Nuclear Decommissioning Authority relating to income from long term contracts to be recognised within one year of £365m (31 March 2025: £658m) and after one year of £1,449m (31 March 2025: £1,445m).

These are payments received on account which relate to amounts which customers have paid NDA for the provision of services under long-term contracts. These payments will be recognised as income when the services are provided. Payments received on account are shown net after deduction of any applicable recoverable contract costs. Payments on account not yet recognised as revenue are adjusted for inflation each year (known as revalorisation).

17. Lease liabilities

	31 March 2026 Core department £m	31 March 2026 Departmental group £m	31 March 2025 Core department £m	31 March 2025 Departmental group £m
Land
Not later than one year	-	2	-	4
Later than one year and not later than 5 years	-	24	-	19
Later than 5 years	-	243	-	66
Total	-	269	-	89
Less interest element	-	(146)	-	(16)
Present value of obligations	-	123	-	73
Buildings
Not later than one year	9	20	9	18
Later than one year and not later than 5 years	37	96	35	60
Later than 5 years	143	231	151	197
Total	189	347	195	275
Less interest element	(60)	(108)	(64)	(89)
Present value of obligations	129	239	131	186
Other
Not later than one year	5	49	3	6
Later than one year and not later than 5 years	6	30	1	4
Total	11	79	4	10
Less interest element	(1)	(4)	-	-
Present value of obligations	10	75	4	10
Total present value of obligations	139	437	135	269
Of the total
Current	14	71	12	28
Non-current	125	366	123	241

Lease liability – additional analysis

	31 March 2026 Core department £m	31 March 2026 Departmental group £m	31 March 2025 Core department £m	31 March 2025 Departmental group £m
Interest on lease liabilities	5	9	5	9
Income of sub-leasing right-of-use assets	-	2	-	3
Expenses relating to short-term liabilities	-	7	-	6
Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets	-	2	-	1

18. Provisions for liabilities and charges

	Note	31 March 2026 Core department £m	31 March 2026 Departmental group £m	31 March 2025 Core department £m	31 March 2025 Departmental group £m
Current liabilities
Not later than 1 year	-	208	4,274	215	4,591
Total current liabilities	-	208	4,274	215	4,591
Non-current liabilities
Later than 1 year and not later than 5 years	-	509	16,166	664	16,710
Later than 5 years	-	853	98,515	606	92,105
Total non-current liabilities	-	1,362	114,681	1,271	108,815
Total at 31 March	-	1,570	118,955	1,485	113,406
Total provisions
Nuclear	18.1	1,189	116,847	1,061	111,080
Other	18.2	381	2,108	424	2,326
Total at 31 March	-	1,570	118,955	1,485	113,406

The provision liabilities have been discounted to present value using discount rates as provided by HM Treasury.

Discounting as at 31 March 2026 and 31 March 2025 has been applied to nominal cash flows which include allowance for future inflation using a forecast of consumer price inflation provided by HM Treasury except where a more appropriate forecast has been identified for specific provisions.

The impact of the change in the discounting approach is included in the ‘change in discount rate’ movement of provisions.

	31 March 2026 Nominal discount rate	31 March 2026 Inflation rate	31 March 2026 Equivalent real discount rate	31 March 2025 Nominal discount rate	31 March 2025 Inflation rate	31 March 2025 Equivalent real discount rate
Cash outflows expected within 2 years	3.64%	2.50%	1.11%	4.03%	2.60%	1.39%
Cash outflows expected between 2-5 years	4.22%	2.00%	2.18%	4.07%	2.30%	1.73%
Cash outflows expected between 5-10 years	5.32%	2.00%	3.25%	4.81%	2.30%	2.45%
Cash outflows expected after 10 years	5.07%	2.00%	3.01%	4.55%	2.50%	2.50%

Allowances for future inflation and discounting can impact on reported liabilities significantly; uninflated, undiscounted equivalent values are provided in the descriptions of the provisions below to illustrate the effect.

18.1. Nuclear provisions

	British Energy £m	UK Atomic Energy Authority Decommissioning £m	Core department Total £m	NDA Decommissioning £m	Contract loss £m	Departmental group Total
Balance at 1 April 2024 - Restated	356	748	1,104	105,155	(26)	106,233
Net amount deducted from recoverable contract costs	-	-	-	-	(7)	(7)
Unwinding of discount	4	16	20	2,565	-	2,585
Change in discount rate	3	(5)	(2)	1,361	-	1,359
Provided in the year	14	57	71	4,917	57	5,045
Provisions not required written back	-	-	-	(302)	-	(302)
Provisions utilised in the year	(85)	(47)	(132)	(3,697)	(4)	(3,833)
Balance at 31 March 2025 – Restated	292	769	1,061	109,999	20	111,080
Net amount deducted from recoverable contract costs	-	-	-	-	10	10
Unwinding of discount	2	17	19	2,826	1	2,846
Change in discount rate	-	(28)	(28)	(7,211)	1	(7,238)
Provided in the year	11	219	230	14,099	6	14,335
Provisions not required written back	(3)	-	(3)	(273)	-	(276)
Provisions utilised in the year	(90)	-	(90)	(3,815)	(5)	(3,910)
Balance at 31 March 2026	212	977	1,189	115,625	33	116,847

Core department:

British Energy: As a result of the restructuring of British Energy (BE) in January 2005, the UK government assists BE (now EDF Energy Nuclear Generation Limited) in meeting its contractual historic fuel liabilities. The provision is based on the forecast payment schedule up to 2029 which is set out in the waste processing contracts agreed between BE, BNFL and the core department. The discounted liability at 31 March 2026 is £212m (31 March 2025: £292m). Payments are adjusted in line with the Retail Prices Index and the liability includes allowance for future inflation based on a forecast for the Index published by the Office for Budget Responsibility. The undiscounted liability at 31 March 2026, at prices as at the reporting date excluding the impact of future inflation, is £213m (31 March 2025: £292m).

UK Atomic Energy Authority (UKAEA) Decommissioning: The provision represents the estimated costs of decommissioning the Joint European Torus facility at UKAEA’s Culham site, including the storage, processing and eventual disposal of radioactive wastes. The core department retains the liability for these costs. Cost estimates in the detailed Life Time Plan for decommissioning are reviewed annually and include an element of uncertainty given that much of the work will not be undertaken until well into the future. The discounted liability at 31 March 2026 is £978m (31 March 2025: £769m); the undiscounted liability at 31 March 2026, at prices as at the reporting date so excluding the impact of future inflation, is £1,228m (31 March 2025: £887m).

Departmental group:

NDA Decommissioning: The NDA’s nuclear decommissioning liability represents NDA’s best estimate of the costs of decommissioning plant and equipment on each of the designated nuclear licensed sites in accordance with the published strategy. This programme of work is estimated to take until 2145.

In preparing the estimate of the cost of decommissioning the designated sites, the NDA has greater certainty of the activities, capabilities and technologies to be applied within the first 20 years of the decommissioning plan. The estimates are based on assumptions about the processes and methods likely to be used to discharge the obligations and reflect the latest technical knowledge, existing regulatory requirements, UK government policy and commercial agreements. Given the very long timescale and the complexity of the plants and material being handled, considerable uncertainty remains in the cost estimate, particularly in the later years. Discounting of the forward cash flow estimates to present value also has a significant impact on the liability reported in the Statement of Financial Position of £116bn at 31 March 2026 (31 March 2025: £110bn). The undiscounted equivalent of this reported liability is £276bn at 31 March 2026 (31 March 2025: £216bn).

As part of the preparation of the financial statements, the principal assumptions and sensitivities for the cost estimates have been updated and reviewed by the NDA executive and, where appropriate, updates to the estimates have been made to reflect changed circumstances and more recent knowledge. The key aspects of the basis of estimate are set out below:

The nuclear provision estimate for each reporting segment is based initially on the lifetime plan for each site or programme of work managed within the segment, with specific adjustments as required by the nature of each site or programme to ensure that the estimate is kept up to date and compliant with accounting requirements
The site lifetime plans and equivalent figures are based on P50 estimates, meaning there is a 50% probability of the outcome being either under or over the estimate. While alternative bases of estimate could be used, the P50 basis is believed by management to produce a representative single point estimate for disclosure in the financial statements. Alternative calculation techniques may produce materially different results
The nuclear provision estimate is stated in money values at the reporting date. The site lifetime plans are stated in mid-year money values (namely the September preceding the reporting date). The Authority applies an inflationary adjustment to produce the estimate as at the reporting date. The adjustment is based on the change in price levels specific to each component of the estimate where this is known or can be reasonably estimated
The nuclear provision estimate is discounted using discount rates published by HM Treasury each year. The Authority applies discounting on a mid-year basis to reflect the nature of its expenditure, namely that it occurs throughout each reporting period rather than at the end of each reporting period

The valuation of long-term provisions, particularly within the NDA, involves significant estimation uncertainty and the application of management judgement. Assumptions include the expected cost and duration of decommissioning activity, discount and inflation rates, regulatory developments, and technological change. Estimates are prepared using updated site lifetime plans and reflect the best available knowledge, including actuarial and engineering input where appropriate. The NDA uses a P50 basis to derive its provision estimates, meaning there is an equal likelihood that actual outcomes may be higher or lower than the reported figures. These uncertainties are inherent in provisions of this nature, especially those with durations extending to 2145.

The value of the NDA’s nuclear decommissioning provision is inherently sensitive to a number of key assumptions, including discount rates, inflation, cost escalation factors, and the expected timing and scope of decommissioning activities. These assumptions are reviewed regularly and reflect the best available information, including long-term economic forecasts and site-specific planning data. The long duration and complexity of the programme mean that the liability may vary over time as assumptions are updated or revised in response to external or operational changes.

The NDA has commercial agreements in place under which a portion of the expenditure required to settle certain elements of the decommissioning provision are recoverable from third parties. Changes in future cost estimates of discharging these particular elements are therefore matched by a change in recoverable contract costs. In accordance with IAS 37, these recoverable amounts are not offset against the decommissioning provision but are treated as a separate asset (note 12).

Amounts recognised as recoverable contract costs are presented separately from provision balances and are not netted off against the related expenses in the Statement of Financial Performance. This accounting treatment reflects the separate recognition of obligations and rights under IAS 37 and ensures a transparent view of gross liabilities and related recoveries. The presentation is applied consistently across reporting periods.

Critical accounting judgements: The nuclear provision estimate for Sellafield is based on the site decommissioning plan which is updated annually for changes in price levels, other changes in cost estimates and strategic or operational changes. The estimate also reflects cost estimate changes which have not yet been applied to the site decommissioning plan but are expected to be applied in future (for example plutonium management costs) and accounting changes (for example the exclusion of costs which are not NDA’s direct liabilities).

The nuclear provision estimate for Nuclear Restoration Services is based on management’s preferred strategy for decommissioning the former Magnox sites, in which a rolling decommissioning approach is used to clear each site in sequence, with the last site reaching final site clearance in 2130. In accordance with the Scottish Waste policy the 2 former Magnox sites in Scotland will continue to manage waste locally after this date. For the purposes of the nuclear provision, the liability estimate for the former Magnox sites is capped at 2130.

The Nuclear Restoration Services segment includes the Dounreay site.

The activities of the Nuclear Waste Services division include the planning, construction and operation of the Geological Disposal Facility (GDF), the operation of the Low Level Waste Repository (LLWR) and the management of residual liabilities at the former NDA sites of Springfields and Capenhurst. The GDF will be the permanent disposal facility for wastes which are currently held at nuclear licensed sites in England and Wales.

The nuclear provision estimate for Nuclear Waste Services is based on the decommissioning cost estimate for the GDF, using assumptions of the location, size, and favourable geological conditions of the site (the location of which is not yet determined). Management have considered the implications of the decision by Lincolnshire County Council to withdraw from the GDF siting process in June 2025. Therefore, they have concluded that as the process to agree a suitable site is ongoing, the use of generic location, size and favourable geological assumptions remains appropriate.

Sensitivity analysis: The NDA also considers credible risks and opportunities which may increase or decrease the cost estimate, but which are deemed less probable than the best estimate. These are the basis of the sensitivities identified below, which are illustrative estimates of potential upper and lower outcomes, but which do not measure the probability associated with those outcomes.

Component and key sensitivities	Lower end of range	Upper end of range
Sellafield: Principal sensitivities relate to the cost of delivering the plan, particularly the costs of new construction, decommissioning and post operational clean out (POCO) work in the long‑term (beyond the next 20 years).	£8,327m reduction (50% reduction in the costs of the most uncertain elements of expenditure beyond the first 20 years)	£49,962m increase (300% increase in the costs of the most uncertain elements of expenditure beyond the first 20 years)
Nuclear Restoration Services: Principal sensitivities relate to the required duration and cost of decommissioning, and the consequential impact on the costs of long-term management of the sites.	£2,219m reduction (10% variance in costs)	£2,219m increase (10% variance in costs)
Nuclear Waste Services (costs of GDF): Key sensitivities are in the timing and costs of constructing and operating the GDF, dependent on the location and construction requirements of the facility.	£1,107m reduction (50% reduction in the costs of the most uncertain elements of expenditure beyond the first 20 years)	£6,640m increase (300% increase in the costs of the most uncertain elements of expenditure beyond the first 20 years)
Nuclear Waste Services (Low Level Waste Repository): Key sensitivities are in the timing and costs of completing waste management operations and decommissioning work at the LLW Repository.	£274m reduction (10% variance in costs)	£137m increase (5% variance in costs)
Nuclear Transport Solutions: Key sensitivities are in the and cost estimates for the decommissioning of transport assets.	£7m reduction (10% variance in costs)	£4m increase (10% variance in costs)
Total	£11,934m reduction	£58,962m increase

Undiscounted movements – NDA nuclear provision:

	Sellafield £m	NRS £m	NWS £m	NTS £m	2026 Total £m
Opening balance	151,161	48,572	16,134	87	215,954
Net movements	40,130	5,849	13,456	3	59,438
Closing Balance	191,291	54,421	29,590	90	275,392

Cost estimates are reviewed annually to reflect changes in the site decommissioning plans and other assumptions on which they are based. During 2025/26 these reviews incorporated the revised cash flow expectations of the Spending Review settlement as well as other cost updates.

Whilst some movements in the provision are formulaic in nature and calculated by reference to external benchmarks, changes in cost estimates are inherently uncertain and require a significant amount of management review and judgement.

The precise cause and magnitude of cost estimate changes differ between operating companies, however the key drivers of these changes are:

Prolongation costs: The decommissioning programme is inherently long-term and complex, and delivery timelines are influenced by both operational performance and funding constraints. The group reassessed the plans in the light of the recent Spending Review and operational performance and has assumed that some activities will start later in the decommissioning mission or take longer than originally assumed. The NDA continues to manage these impacts through active prioritisation, optimisation of delivery strategies and integration into long-term planning assumptions. The group recognises that extending site operations requires the annual support costs (such as site security, safety, and other support costs) to be incurred for a longer period, increasing the total costs of decommissioning over the life of the plan and therefore considers this within the context of balancing risk and hazard reduction, affordability and delivery of the overall mission.
Asset condition: The NDA manages a complex estate of ageing assets, where condition and obsolescence present ongoing risks to safety, compliance and delivery of the decommissioning mission. As part of the recent Spending Review submissions, some planned activity has been deferred due to the constrained funding, extending asset lifecycles and increasing the importance of active asset management. The extended operation and maintenance of ageing facilities increases the lifetime costs, and therefore the nuclear provision.
Repricing and cost changes: The NDA continues to operate in a complex and evolving cost environment, where inflationary pressures, supply chain constraints and market capacity have contributed to repricing across a range of activities. These factors have increased the cost of delivering the decommissioning mission and introduced additional uncertainty into both near‑term plans and long-term estimates. The reprioritisation and, in some cases, deferral of activity extends delivery timelines, which can further increase costs over the lifecycle of programmes. Coupled with a reassessment of the site operational and support costs, while these pressures remain, they are actively managed through disciplined cost control, prioritisation of risk and hazard reduction, and integration into long-term planning and the nuclear provision.

Further details are reported in the NDA’s annual report and accounts. Further details are reported in the NDA’s annual report and accounts.

Restatement of the Nuclear Decommissioning as a result of prior period adjustments: Prior year comparatives have been restated to reflect the prior period adjustment as detailed in note 25. Effect of the prior period restatements resulted in the NDA nuclear decommissioning provision liability to reduce by £961m, reflecting the removal of Site Licence Companies (SLCs) net pension balances incorrectly included within it.

18.2. Other provisions

	Concessionary fuel £m	Energy schemes £m	Legacy ailments £m	Other £m	Core department total £m	Mining Remediation Authority (formerly Coal Authority) £m	Other £m	Departmental group total £m
Balance at 1 April 2024	300	107	164	73	643	1,608	140	2,391
Change in discount rate	(2)	-	(1)	-	(3)	(60)	(11)	(74)
Provided in the year	2	-	-	4	6	143	88	237
Provisions not required written back	-	(61)	(46)	-	(107)	-	1	(106)
Provisions utilised in the year	(36)	(45)	(10)	(34)	(125)	(54)	(26)	(205)
Unwinding of discount	6	-	3	1	10	72	1	83
Balance at 31 March 2025	270	1	110	44	424	1,709	193	2,326
Balance at 1 April 2025 270	1	110	44	424	1,709	193	2,326
Change in discount rate	(4)	-	(1)	(1)	(6)	(134)	1	(139)
Provided in the year	25	-	1	6	32	46	(29)	49
Provisions not required written back	(18)	(1)	(5)	(5)	(29)	(10)	(1)	(40)
Provisions utilised in the year	(33)	-	(10)	(6)	(49)	(60)	(9)	(118)
Unwinding of discount	5	-	2	2	9	20	1	30
Balance at 31 March 2026	245	-	97	40	381	1,571	156	2,108

Core department

Concessionary fuel:

The provision covers the cost of the core department’s responsibility, arising from government announced guarantees, to provide either solid fuel or a cash alternative to ex-miners formerly employed by British Coal and their dependants and to certain former employees who lost their entitlement as a consequence of the restructuring and run down of UK Coal in 2013 and 2015; it includes administration costs.

Of the total of 20,476 beneficiaries at 31 March 2026, 18,208 have opted for the cash alternative at an average cost per beneficiary of £1,331 per annum; the average annual cost of solid fuel for the remainder is £2,121 per beneficiary excluding delivery costs and VAT.

The provision is based on standard female mortality rates and assumes beneficiaries will continue to switch their entitlement from solid fuel to cash in line with rates observed in the recent past. Costs are expected to be incurred up to 2082. The discounted liability as at 31 March 2026 is £244m (31 March 2025: £270m); the undiscounted liability as at 31 March 2026, at prices as at the reporting date so excluding the impact of future inflation, is £289m (31 March 2025: £308m).

Legacy ailments:

The provision is an estimate of the cost to the core department of future personal injury compensation claims relating to:

Former British Coal mineworkers who suffered personal injuries between 1947 and 1994. Responsibility for payment of compensation transferred to the department on 1 January 1998 by a restructuring scheme under the Coal Industry Act 1994. The discounted liability as at 31 March 2026 is £97m (31 March 2025: £110m). The undiscounted liability, at prices as at the reporting date so excluding the impact of future inflation, is £113m (31 March 2025: £130m). The estimate is based on forecasts of settlement of claims, taking account of discussion with the department’s legal advisors and claim handlers and recent actuarial estimates. The current estimate is that liabilities will extend up to 2050.

The estimates include legal and administrative costs and are subject to some uncertainty.

Departmental group

Mining Remediation Authority (formerly Coal Authority)

The provision for liabilities and charges at 31 March 2025 is £1,571m (2024: £1,709m). Forecasted cash flows, which reflect our latest assumptions, included within this provision before inflation and discounting are forecast at £4,150m (2025: £4,060.4m), an increase of £89.6m. This increase is predominantly driven by mine water scheme costs.

As at 31 March 2026, the provision consists of:

Responsibilities for mine water treatment: £1,121m (2025 £1,238m)
Public safety and subsidence: £328m (2025 £324m)
Subsidence pumping stations: £74m (2025 £93m)
Other property related provisions also exist amounting to £48m (2025 £55m)

19. Retirement benefit obligations

The departmental group consolidates 8 defined benefit pension arrangements from its designated bodies including:

Nuclear Decommissioning Authority (NDA)
Nuclear site licence companies (SLCs)

All schemes are accounted for in accordance with IAS 19 ‘Employee Benefits’. They are subject to the UK regulatory framework and under the scope of the scheme specific funding requirement. The schemes’ trustees are responsible for operating these defined benefit plans and have a statutory responsibility for ensuring the schemes are sufficiently funded to meet current and future benefit payments.

Defined benefit scheme liabilities expose the departmental group to material financial uncertainty, arising from factors such as changes in life expectancy and in the amount of pensions payable. Some scheme investments, such as equities, should offer long-term growth in excess of inflation, but can be more volatile in the shorter term than government bonds.

The details of each scheme are below.

Nuclear Decommissioning Authority (NDA)

Two defined benefit pension schemes relate to the NDA – the Closed and Nirex sections of the Combined Nuclear Pension Plan (CNPP). Both are closed to new entrants. The actuaries rolled forward the results to determine approximate positions as at 31 March 2026.

As at 31 March 2026, the weighted average duration of the combined schemes is 11.8 years.

Further details regarding the nature of the benefits provided, regulatory framework, actuarial assumptions, sensitivity analysis, key risks and risk management policy including asset-liability matching strategies, and any funding arrangements or funding policy that may affect future contributions can be found in the accounts of NDA.

Nuclear site licence companies (SLCs)

There are 5 defined benefit final salary pension schemes relating to the SLCs comprising:
1. a. The NWS Ltd section of the CNPP
2. b. The NRS section of the Electricity Supply Pension Scheme (ESPS) and CNPP
3. c. The Group Pension Scheme section of the CNPP and the Sellafield section of the GPS

All are closed to new entrants. The actuaries rolled forward the results to determine approximate positions as at 31 March 2026.

Further details regarding the nature of the benefits provided, regulatory framework, key risks and risk management policy including asset-liability matching strategies, and any funding arrangements or funding policy that may affect future contributions can be found in the CNPP Statement of Investment Principles at www.cnpp.org.uk/document-library/, and in the Electricity Supply Pension Scheme’s Annual Reports at www.espspensions.co.uk/#useful-documentation.

	31 March 2026 Funded pension schemes £m	31 March 2025 Funded pension schemes £m
Present value of defined benefit obligation at 1 April	4,186	4,698
Interest cost	236	215
Current service cost	68	95
Benefits paid, transfers in and expenses	(222)	(214)
Actuarial (gains)/losses in financial assumption	(138)	(6)
Actuarial (gains)/losses on defined benefit obligation due to demographic assumptions	23	(632)
Actuarial (gains)/losses arising from experience adjustments	182	10
Employee contributions	22	20
Present value of defined benefit obligation at 31 March	4,357	4,186
Fair value of assets at 1 April	5,172	5,361
Expected return on plan assets	296	246
Employer contributions	95	116
Benefits paid, transfers in and expenses	(222)	(214)
Actuarial gains/(losses)	(18)	(357)
Employee contributions	22	20
Fair value of assets at 31 March	5,345	5,172
Net (asset)/liability at 31 March	(988)	(986)

The combined net asset value has increased to £988m as 31 March 2026 (£986m 31 March 2025).

This is primarily due to significant movements in actuarial gains and changes in the discount rate applied to all defined benefit obligations between 31 March 2025 and 31 March 2026.

Net (asset)/liability by scheme

	31 March 2026 Present value of defined benefit obligation £m	31 March 2026 Fair value of assets £m	31 March 2026 Net (asset)/liability £m	31 March 2025 Present value of defined benefit obligation £m	31 March 2025 Fair value of assets £m	31 March 2025 Net (asset)/liability £m
NWS CNPP^(a)	32	45	(13)	31	40	(9)
NRS ESPS^(b)	1,929	2,001	(72)	1,863	2,083	(220)
NRS CNPP^(a)	265	345	(80)	255	315	(60)
Sellafield GPS	424	582	(158)	412	567	(155)
Sellafield CNPP	1,620	2,263	(643)	1,524	2,051	(527)
NDA^(a)	87	109	(22)	101	116	(15)
Total net (asset)/ liability at 31 March	4,357	5,345	(988)	4,186	5,172	(986)

Pension scheme assets are recognised to the extent that they are recoverable and pension scheme liabilities are recognised to the extent that they reflect a constructive or legal obligation. The accounting judgements applied in recognising net assets for each pension scheme are summarised below:
1. (a) Accounting surpluses in respect of NDA and NDA group businesses’ participation in the CNPP and ESPS can be recognised as an asset because the employers have an unconditional right to a refund of surplus
2. (b) The principal employer (with any other participating employer in respect of the relevant section) has an unconditional right to a refund of surplus

Asset allocation

	31 March 2026 £m	31 March 2025 £m
Equities	1,031	1,077
Property	553	596
Government bonds	1,216	985
Corporate bonds	369	359
Other growth assets	681	743
Other	1,495	1,412
Balance at reporting date	5,345	5,172

As at 31 March 2026, the NRS schemes had a total asset balance of £2,346m (31 March 2025: £2,237m), of which £103m (31 March 2025: £76m) are government bond assets, £232m (31 March 2025: £323m) are other growth assets which are not quoted in an active market, £349m (31 March 2025: £371m) are property assets and £156m (31 March 2025: £171m) are corporate bonds.

The Sellafield schemes had £2,845m at 31 March 2026 (31 March 2025: £2,618m) of total assets, the majority of which, excluding the amount held in the Trustees’ bank account and some private equity investments due to their illiquid nature, had a quoted market value in an active market.

Expected contribution over the next accounting period

It is possible that the actual amount paid might be different to the estimated amount. This may be due to contributions, benefits payments or pensionable payroll differing from expected amounts, changes to scheme benefits or settlement/curtailment events that are currently unknown.

Major actuarial assumptions for SLC schemes

	NWS 25‑26	NWS 24‑25	NRS (ESPS) 25‑26	NRS (ESPS) 24‑25	NRS (CNPP) 25‑26	NRS (CNPP) 24‑25	Sellafield (CNPP) 25‑26	Sellafield (CNPP) 24‑25	Sellafield (GPS) 25‑26	Sellafield (GPS) 24‑25
Discount rate	6.1%	5.7%	6.0%	5.7%	6.1%	5.7%	6.1%	5.7%	6.1%	5.7%
Inflation (Retail Price Index)	3.3%	3.1%	3.4%	3.2%	3.3%	3.2%	3.3%	3.1%	3.3%	3.2%
Life expectancy at 65, currently aged 65 (male)	21.1	20.7	22.5	21.8	21.1	20.7	21.1	20.7	21.1	20.7
Life expectancy at 65, currently aged 45 (male)	22.3	22.0	23.1	22.4	22.3	22.0	22.3	22.0	22.3	22.0
Life expectancy at 65, currently aged 65 (female)	23.3	23.3	24.3	23.8	23.3	23.3	23.3	23.3	23.3	23.3
Life expectancy at 65, currently aged 45 (female)	24.8	24.7	25.1	24.6	24.8	24.7	24.8	24.7	24.8	24.7
Life expectancy at 60, currently aged 60 (male)	25.6	25.2	27.0	26.3	25.6	25.2	25.6	25.2	25.6	25.2
Life expectancy at 60, currently aged 40 (male)	27.1	26.8	27.8	27.2	27.1	26.8	27.1	26.8	27.1	26.8
Life expectancy at 60, currently aged 60 (female)	28.2	28.1	29.1	28.5	28.2	28.1	28.2	28.1	28.2	28.1
Life expectancy at 60, currently aged 40 (female)	29.7	29.6	30.0	29.4	29.7	29.6	29.7	29.6	29.7	29.6

Major actuarial assumptions for NDA

	NDA (Closed) 2025‑26	NDA (Closed) 2024‑25	NDA (Nirex) 2025‑26	NDA (Nirex) 2024‑25
Discount rate	6.05%	5.65%	5.95%	5.65%
Inflation (Retail Price Index)	3.30%	3.15%	3.35%	3.20%
Life expectancy at 65, currently aged 65 (male)	21.1	20.71	21.10	20.70
Life expectancy at 65, currently aged 45 (male)	22.3	21.99	22.30	22.00
Life expectancy at 65, currently aged 65 (female)	23.3	23.3	23.30	23.30
Life expectancy at 65, currently aged 45 (female)	24.8	24.7	24.80	24.70
Life expectancy at 60, currently aged 60 (male)	25.6	25.21	25.60	25.20
Life expectancy at 60, currently aged 40 (male)	27.1	26.81	27.10	26.80
Life expectancy at 60, currently aged 60 (female)	28.2	28.14	28.20	28.10
Life expectancy at 60, currently aged 40 (female)	29.7	29.63	29.70	29.60

Sensitivity analysis

The table shows the increase in liability that would result from changes in these actuarial assumptions:

	NWS £m	NRS £m	Sellafield £m	NDA £m
0.5 percentage point decrease in annual discount rate	3	126	165	5
0.5 percentage point increase in inflation assumption	3	101	168	5
1 year increase in life expectancy	1	77	40	3

20. Capital and other commitments

Total minimum payments for capital and other commitments.

	Note	31 March 2026 Core department £m	31 March 2026 Departmental group £m	31 March 2025 Core department £m	31 March 2025 Departmental group £m
Contracted capital commitments	20.1	2	6,993	7	1,029
Other financial commitments	20.2	397	18,046	446	8,308
Total	399	25,039	453	9,337

20.1. Capital commitments

Departmental Group:

Contracted capital commitments not otherwise included in these financial statements:	31 March 2026 Departmental group £m	31 March 2025 Departmental group £m
Property, plant and equipment	6,972	1,017
Intangible assets	21	12
Total	6,993	1,029

Departmental group:

Sizewell C: Capital commitments as at 31 March 2026 include purchase commitments of £6,056m, letters of credit issued via BNP Paribas and HSBC of £239.8m, all in respect of construction activities related to the development of the Sizewell C nuclear plant.

Carbon Capture, Transport & Storage Companies (T&SCo): Capital commitments as at 31 March 2026 is £579m in relation to construction of carbon capture, transport, usage and storage infrastructure.

20.2. Other financial commitments

The financial commitments payable in future years include payments due under non-cancellable contracts to the organisations below.

	Within one year £m	Later than one year and not later than 5 years £m	Later than 5 years £m	Total 31 March 2026 £m	Total 31 March 2025 £m
Organisation
Various suppliers	10	13	-	23	47
Other	45	37	8	90	118
International subscription - IAEA	15	61	83	159	168
International subscription - Other	16	44	65	125	113
Total core department	86	155	156	397	446
East Suffolk and Suffolk County Councils	-	-	145	145	142
Dispatchable Power Agreement (DPA)	-	-	12,300	12,300	7,720
Clean Industry Bonus (CIB)	-	-	204	204	-
Industrial Carbon Capture (ICC)	-	-	3,400	3,400	-
Industrial Carbon Capture Waste (ICCW)	-	-	1,600	1,600	-
Total departmental group	86	155	17,805	18,046	8,308

Core department:

The core department has entered into contractual commitments with various suppliers in relation to the Net Zero Innovation Programme and Energy Innovation Programme, which provide funding for low-carbon technologies and systems to tackle climate change.

The core department is responsible for paying in the UK’s annual subscriptions to the International Atomic Energy Agency (IAEA). The IAEA is the UN-affiliated organisation responsible for ensuring the safe, secure and peaceful use of civil nuclear technologies, through monitoring nuclear safeguards, setting international standards and guidance for nuclear safety and security promoting nuclear applications for development.

Departmental group:

The departmental group has entered into non-cancellable contracts (which are not leases, PFI contracts or other service concession arrangements) arising from Sizewell C Limited’s commitments of £145m under the Deed of Obligation.

On the 8 October 2021, East Suffolk Council, Suffolk County Council and NNB Generation Company Limited (now Sizewell C Limited) entered into a Deed of Obligation (DoO) pursuant to section 1 of the Localism Act 2011 and section 111 of the Local Government Act 1972. The DoO related to all aspects of the Sizewell C project and outlines a number of payments that Sizewell C is required, or could be required, to make to the Councils/ funding for Suffolk communities throughout the construction phase of the project, to mitigate the impacts of construction.

The departmental group entered into a Dispatchable Power Agreement (DPA) with Net Zero Teesside Power Limited (East Coast Cluster) on November 19, 2024. DPA includes an Availability Payment mechanism, which compensates the generator for maintaining the availability of its facility to generate electricity and capture CO₂, regardless of whether the facility is actively dispatching power. No liability has been recognised in the financial statements as at the reporting date, but the DPA represents a contractual commitment by the departmental group to provide the Availability Payment once the generator has performed their obligations. The estimated future exposure is £12.3bn. The reason for this change from prior year is due to new information becoming available in 2025-26 as the T&S charges for the East Coast Cluster can now be incorporated into the forecast.

The departmental group entered into an Industrial Carbon Capture Agreement (ICC) with Castle Cement Limited (relating to Padeswood Cement Works) on 9 September 2025. ICC includes Capex, Opex, Transport and Storage (T&S) fees and Free Allowance (FA) payment mechanisms, which compensate the emitter for the capture of CO2. No liability has been recognised in the financial statements as at the reporting date, but the ICC represents a contractual commitment by the departmental group to provide the Capex, Opex, T&S fees and FA payments once the emitter has performed their obligations. The estimated future exposure is £3.4bn.

The departmental group entered into a Waste Industrial Carbon Capture Agreement (ICCW) with Encyclis Limited (relating to Protos Energy Recovery Facility Project) on 11 September 2025. ICC includes Capex, Opex and Transport and Storage (T&S) fees payment mechanisms, which compensate the emitter for the capture of CO2. No liability has been recognised in the financial statements as at the reporting date, but the ICC represents a contractual commitment by the departmental group to provide the Capex, Opex and T&S fees payments once the emitter has performed their obligations. The estimated future exposure is £1.6bn.

During the year, the Clean Industry Bonus (CIB) was introduced as part of Allocation Round 7 (AR7) of the CfD scheme to incentivise investment in UK supply chains and manufacturing associated with offshore wind projects. CIB statements are issued by the department. Government announcements indicate that approximately £204m of public funding under the CIB is expected to leverage significant private sector investment in domestic manufacturing, infrastructure and supply chains.

21. Financial instruments

The carrying amounts of financial instruments in each of the IFRS 9 categories are shown below.

Financial assets at amortised cost:

	Note	31 March 2026 Core department £m	31 March 2026 Departmental group £m	31 March 2025 Core department £m	31 March 2025 Departmental group £m
Cash and cash equivalents	15	991	3,155	705	2,594
Receivables(i)	14	367	777	459	847
Loans to public sector bodies(ii) & (iii)	10.2	1,361	199	128	126
Other financial assets and private sector loans	11.1	62	62	70	70
Total financial assets at amortised cost	2,781	4,193	1,362	3,637

Elected at fair value through other comprehensive income (FVTOCI):

	Note	31 March 2026 Core department £m	31 March 2026 Departmental group £m	31 March 2025 Core department £m	31 March 2025 Departmental group £m
Ordinary shares in public sector companies(iv)	10.1	872	1,636	857	1,581
Other financial assets	11.1	40	46	43	43
Total financial assets elected at FVTOCI	912	1,682	900	1,624

Mandatory at fair value through profit or loss (FVTPL):

	Note	31 March 2026 Core department £m	31 March 2026 Departmental group £m	31 March 2025 Core department £m	31 March 2025 Departmental group £m
Derivatives - forward contracts(iv)	9	-	11	-	-
Derivatives - CfD(iv)	9.1	-	3,005	-	3,022
Derivatives - LCHA(iv)	9.2	-	9	-	-
Derivatives - interest rate swaps(iv)	9	-	154	-	85
Other financial assets and private sector loans	11.1	205	217	172	172
Total financial assets mandatory at FVTPL	205	3,396	172	3,279

Financial liabilities at amortised cost:

	Note	31 March 2026 Core department £m	31 March 2026 Departmental group £m	31 March 2025 Core department £m	31 March 2025 Departmental group £m
Payables(i)	16	(114)	(1,299)	(117)	(797)
Borrowings(vi)	-	(8,357)	-	(493)
Total financial liabilities at amortised cost	(114)	(9,656)	(117)	(1,290)

Mandatory at fair value through profit or loss (FVTPL):

	Note	31 March 2026 Core department £m	31 March 2026 Departmental group £m	31 March 2025 Core department £m	31 March 2025 Departmental group £m
Derivatives - forward contracts(iv)	9	-	(11)	-	-
Derivatives - CfD(iv)	9.1	-	(113,928)	-	(93,427)
Derivatives - LCHA(iv)	9.2	-	(2,253)	-	(1,243)
Total financial liabilities mandatory at FVTPL	-	(116,192)	-	(94,670)

Notes:

(i) The amounts disclosed above as payables and receivables exclude any assets or liabilities which do not arise from a contractual arrangement.

(ii) Loans to public sector bodies comprises the loans detailed in note 10.

(iii) Ordinary shares in public sector companies excludes bodies that are consolidated in the departmental group, as these are held at cost, see note 10.1.

(iv) Specific valuation techniques used to value financial instruments include:

forward contracts are classified as level 1
the fair value of public sector shares is based upon net assets and classified as level 2
the fair value of interest rate swaps is based on observable market inputs with adjustments for unobservable inputs and classified as level 2
the fair value of the CfD and LCHA contracts has been calculated using the income approach based on level 3 inputs, which reflects the present value of future cash flows that are expected to occur over the contract term
other techniques, such as discounted cash flow analysis or for non-quoted ordinary shares and investment funds that are not actively traded, the net assets of the company/ underlying fund are used – these are classified as level 3

The different levels are defined as:

Level 1 – uses quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 – uses inputs for the assets or liabilities other than quoted prices, that are observable either directly or indirectly;
Level 3 – uses inputs for the assets or liabilities that are not based on observable market data, such as internal models or other valuation method

(v) Transfers between levels of the fair value hierarchy are deemed to occur at the end of the reporting period. There were no transfers between levels during the year.

(vi) Borrowings include loan facilities entered into for the purpose of construction of infrastructure assets in relation to Sizewell C totalling £7,034m (31 March 2025: £nil), Net Zero North Sea Storage Limited totalling £890m (31 March 2025: £493m) and Liverpool Bay CCS Limited £353m (31 March 2025: £nil).

Financial risk management

IFRS 7 ‘Financial Instruments: Disclosure’ requires the disclosure of information which will allow users of financial statements to evaluate the significance of financial instruments on the departmental group’s financial performance and position and the nature and extent of its exposure to risks arising from these instruments.

As the cash requirements of the departmental group are largely met through the estimates process, financial instruments play a more limited role in creating risk than would apply to a private sector body of a similar size.

Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Significant credit risks can be summarised below.

Core department:

Investment funds and Loan portfolios: Investee companies may not perform as expected and the departmental group may not recover its initial investment. The core department minimises the risk by monitoring the overall performance of the funds and loan portfolios to secure value for the core department as an investor. This includes a full evaluation of each business case submitted prior to committing funds.

NDPBs and other designated bodies:

Cash and cash equivalents: The departmental group held cash and cash equivalents of £3,155m as at 31 March 2026 (31 March 2025: £2,594m). The cash and cash equivalents are held with banks and financial institutions. The departmental group considers that cash and cash equivalents have a low credit risk based on the external credit ratings of the holding parties.

Credit risk rating and loss allowance

The departmental group has the following financial assets subject to the expected credit loss model:

trade receivables, contract assets, and lease receivables
loans, bonds, and term deposits
cash and cash equivalents

The credit risk and loss allowances have been insignificant for loans, bonds, term deposits, cash and cash equivalents.

Trade receivable, contract assets and lease receivables:

The core department applies the IFRS 9 simplified approach using an allowance matrix to measure the lifetime expected loss allowance for trade receivables in accordance with the FReM guidance.

Trade receivables are grouped based on credit risk characteristics and the number of past due days. Default is defined as 90 days past due date. The loss rates are estimated using the historic data for each aging group. Forward-looking information such as macroeconomic factors and entity specific situations are considered for entities with significant outstanding balances. Balances with other core central government departments are excluded from recognising stage-1 and stage-2 impairments following the FReM adaptions.

There were no material expected credit losses during the financial year.

Market risk

This is the risk that fair values and future cash flows will fluctuate due to changes in market prices. Market risk generally comprises of foreign currency risk, interest rate risk and other market risk.

The departmental group undertakes very few foreign currency transactions and is not exposed to significant foreign currency risk.

The impact of interest rates affects the discount rate used to arrive at the fair value of the CfD and LCHA liabilities held by LCCC. Changes in interest rates which affect the discount rate would therefore affect the Statement of Financial Position valuation. However, the departmental group is not financially exposed to this risk because the liability is funded through a levy on suppliers.

The interest rate swaps held by NZNSS and Liverpool Bay CCS are assumed to be highly sensitive to changes in future interest rates, which could result in either asset or liability position on the Statement of Financial Position. Given that the equity of these entities is 100% owned by external parties, this will be offset by corresponding movement in the non-controlling interest balance and the share of profit or loss attributable to the non-controlling interest recorded on the Statement of Comprehensive Net Expenditure.

Forward contracts are held by Sizewell C as cash flow hedges to mitigate significant and sustained foreign currency exposure driven by the need to purchase many assets, materials and services from key European suppliers.

The departmental group is exposed to wider risks relating to the performance of the economy as a whole. The main risks resulting from a downward movement in the economy including failures of investee companies of investment funds, and loan defaults.

Inflation risk

The amounts payable under the CfD and LCHA contracts will be affected by the indexation of strike prices to reflect inflation and changes to wholesale electricity prices resulting from inflation. While inflation rates have seen an increase during the year, the group is not financially exposed to this risk because the liability is funded through a levy on suppliers.

Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities.

In common with other government departments, the financing of the departmental future liabilities is met by future grants of supply, annually voted for by Parliament. There is no reason to believe that future approvals will not be forthcoming, therefore, on this basis the liquidity risk to the core department is minimal.

The core department holds 382,592,900 deferred Class B Shares and £3,443,336,100 in deferred Class B Shareholder loans in relation to Sizewell C. These represent undrawn amounts at the reporting date. The departmental group’s potential exposure to liquidity risk in relation to Sizewell C is considered low. This assessment reflects the availability of committed funding through debt facilities and equity investors, together with the Government Support Package and funding provided through the Regulated Asset Base levy. Sizewell C prepares an annual budget, supported by a 3-year financing plan, as at the reporting date this period and the analysis performed extends to 31 March 2029 which has determined that the company is able to meet its obligations as they become due and comply with the debt covenants.

The departmental group’s potential exposure to liquidity risk in relation to CfDs is mitigated by the funding arrangements under the legislation, LCCC has no obligation to pay the generators until it receives adequate funds from suppliers to perform its obligations. No payment is due under the LCHA unless and until producers start hydrogen production in line with the terms of the contract.

Commodity price risk

Commodity price risk is the risk or uncertainty arising from possible price movements. The amounts payable under the CfD and LCHA contracts are exposed to price risk through the fluctuations in future actual wholesale electricity prices, specifically, on how they will differ from the current forecast of future prices in the central scenario. However, the departmental group is not financially exposed to this risk because the liability is funded through a levy on suppliers.

22. Contingent liabilities

Core department – unquantifiable contingent liabilities

Deeds relating to the Mineworkers’ Pension Scheme and British Coal Staff Superannuation Scheme under Paragraph 2(9) of Schedule 5 to the Coal Industry Act 1994

Government guarantees were put in place on 31 October 1994, the day the schemes were changed, to reflect the impact of privatisation of the coal industry. They are legally binding contracts between the scheme Trustees and the Secretary of State for Energy Security and Net Zero. The guarantees ensure that benefits earned by scheme members during their employment with British Coal, and any benefit improvements from surpluses which were awarded prior to 31 October 1994, will always be paid and will be increased each year in line with the Retail Prices Index. If, at any periodic valuation, the assets of the Guaranteed Fund of either scheme were to be insufficient to meet its liabilities, the assets must be increased to bring the Fund back into balance. This is a long-term contingent liability dependent on the performance of the schemes’ investments and their mortality experience. Further details regarding the schemes can be found in note 14.

Indemnity to Public Appointment Assessors

The Cabinet Secretary has provided a government-wide indemnity to Public Appointments Assessors (PAAs) against personal civil liabilities incurred in the execution of their PAA functions.

Nuclear Liabilities Fund Shortfall

The Nuclear Liabilities Fund was established in 1996 to meet certain costs of decommissioning 8 nuclear power plants in the UK that have been owned and operated by EDF Energy Nuclear Generation Limited since 2009. A constructive obligation was created in 2002 when the government undertook to underwrite the fund in respect of these liabilities to the extent that the assets of the fund might fall short; any surplus generated by the Fund would be paid over to the government once the liabilities have been met. The total undiscounted estimated liability as at 31 March 2026 of £35bn (31 March 2025: £27.2bn) has a present value of £15.9bn (31 March 2025: £13.6bn). The value of the fund as at 31 March 2026 is £20.7bn (31 March 2025: £20.5bn). It is not possible to quantify the extent to which the government may be obliged to contribute to the fund, nor any surplus that may arise, given the high level of uncertainty relating to estimation of decommissioning costs and investment returns on fund assets over a future period exceeding 100 years.

Bill Discounts Scheme for Electricity Transmission Network Infrastructure

The Department has entered into an agreement to fund certain set‑up costs incurred by Ofgem in relation to the Bills Discount Scheme, which supports electricity network infrastructure build across the country, should Ofgem be unable to recover those costs in‑year due to delays. The Department’s potential exposure under this agreement is capped at £3.2m and delivery progress is being closely monitored to limit the likelihood that this liability will crystallise.

Departmental group – unquantifiable contingent liabilities

The departmental group has the following unquantifiable contingent liabilities. Other liabilities are disclosed in our arms length bodies’ accounts.

Mining Remediation Authority – Legal claims

The Mining Remediation Authority is subject to various claims and legal actions in the ordinary course of its activities. Where appropriate, provisions are made in the accounts on the basis of information available and in accordance with guidance provided under the FReM and IFRS. The Mining Remediation Authority does not expect that the outcome of the above issues will materially affect its financial position.

Mining Remediation Authority – Restructuring scheme

Where liabilities transferred under the various Coal Authority Restructuring Schemes (CARS) have crystallised due to planning conditions, agreements, claims etc, provision has been made in these financial statements. It has not, however, been possible to quantify contingent liabilities that may arise in the future. It is expected that any costs will be covered by future allocations of grant in aid.

Mining Remediation Authority – Subsidence damage and public safety liabilities

Licensees of mining operations are required to provide security to the Mining Remediation Authority to cover the anticipated future costs of settling subsidence damage liabilities within their areas of responsibility. Outside the areas of responsibility of the holders of licences under Part II of the 1994 Act, the Mining Remediation Authority is responsible for making good subsidence damage. Where an area of responsibility is extinguished, this would transfer to the Mining Remediation Authority who would become responsible for the discharge of outstanding subsidence liabilities. The Mining Remediation Authority also has an ongoing liability to secure and keep secured the majority of abandoned coal mines. In all cases the liability for operating collieries is the responsibility of the licensees/ lessees and security is held to address those liabilities. The above liabilities have been provided for within the Public Safety and Subsidence provision based on analysis of trends and claims experience. However, it is possible that significant, unexpected events outside of this provision may materialise. It is expected that any deficit will be covered by future allocations of grant in aid.

Mining Remediation Authority – Mine water flooding incident, Skewen South Wales, January 2021

The Mining Remediation Authority is aware of potential legal proceedings in respect of damage caused by the flooding event at Skewen. If the Mining Remediation Authority receive formal notification to commence legal proceedings, they will strongly defend their position.

Mining Remediation Authority – Treatment of inland saline water on the UK coalfields

Recent analysis of the Mining Remediation Authority’s extensive monitoring of the Great Britain coalfields demonstrates that the chemistry of the mine water is extremely challenging and will require additional treatment to that normally undertaken.

At present, the levels of inland saline water in mine workings do not require extensive intervention, which is allowing time for detailed work to generate and evaluate the most cost effective and sustainable options for future treatment. Potential solutions may require significant additional costs to implement over the next decade and beyond at which point mitigating treatments will likely need to be in place. These could cost several hundreds of millions of pounds.

At the present time it is not possible to provide a sufficiently reliable estimate of the timing and quantum of the obligation for inclusion within the Mining Remediation Authority provisions balances. Work continues to better understand the nature and scale of the issue across the mine water blocks identified to be at risk and better understand when treatment will become necessary. This work will inform an outline business case which is currently expected by 2027.

CNPA – Site Closures

CNPA monitors future service delivery through its medium-term financial planning, assessing the impact of site decommissioning on policing requirements. Services cease only once the Office for Nuclear Regulation (ONR) approves changes to site security, with cessation activities beginning following formal 18‑month notice, at which point potential liabilities are considered.

ONR confirmed that CNPA policing service will no longer be required from July 2025 for the Hunterston site as it is being decommissioned. Uncertainties remain, including potential Public Interest Transfer costs that maybe incurred over the 2-year period following policing ceasing onsite. Regarding the other nuclear sites, no confirmed cessation dates or notices exist and therefore no quantifiable obligations arise.

The CNPA undertakes a detailed review of potential legal claims and where appropriate, a provision is made. However, there could be potential liabilities in respect of claims from employees that are yet unknown or unlikely to succeed. These liabilities have not been provided for as the CNPA believes that any potential claims are unlikely to be successful and unlikely to lead to a transfer of economic benefits.

NDA – Pension Schemes

Whilst not the lead employer, the NDA is the lead organisation and has ultimate responsibility for certain nuclear industry pension schemes, including the Combined Nuclear Pension Plan and the Magnox section of the ESPS. Provisions for known deficits are included within Nuclear Provisions. However, movements in financial markets may adversely impact the actuarial valuations of the schemes, resulting in an increase in scheme deficits and consequent increase in nuclear provision.

NDA – Uranic Material

At 31 March 2026, the NDA held inventories of reprocessed uranic material. These are potentially saleable materials, although there is currently no commercial demand and are held at nil value. Due to uncertainty over their future use, it is possible that the material will be declared as waste by the government, requiring treatment and disposal, which may result in as-yet-unquantified liabilities for the NDA.

NDA – Health Claims

In previous reporting periods the Authority maintained a provision for the settlement of health claims payable to former employees in the civil nuclear industry. Claims have reduced to a non-material level in recent years and the future level of remaining claims is expected to be non-material and not able to be accurately forecast. The Authority has therefore discontinued accounting for the provision but recognises the resulting contingent liability.

NDA – Legislative Changes

NDA management has identified a potential financial obligation to pay landfill tax arising in connection with certain aspects of the Group’s current and historic waste disposal operations. Whether an obligation exists and, if so, the extent of any such obligation, is contingent on the interpretation and application of changes to relevant legislation. There is significant uncertainty as to whether an obligation was intended to be created or in practice exists.

Based on the information currently available, management consider that the likelihood of an outflow of economic resources is higher than remote, but not probable. Accordingly, the criteria for recognition of a provision under IAS 37 have not been met and the matter has been classified as a contingent liability.

Due to the inherent uncertainties and the current stage of assessment, it is not currently possible to reliably estimate the potential financial effect, given the uncertainty regarding the applicability and scope of the relevant regulations. The matter is subject to ongoing review as further information becomes available.

LCCC – RSA with Net Zero North Sea Storage and Liverpool Bay CCS

As of the reporting date, LCCC has entered into a Revenue Support Agreement (RSA) with Net Zero North Sea Storage Limited and Liverpool Bay CCS Limited (T&SCo) to support the Carbon Capture, Usage & Storage (CCUS) project under the Energy Act 2023. The RSA provides financial support in the event of revenue shortfalls during the Event of First User Delay and the Operational Period. No liability is currently recognised, as no triggering event that is linked to the T&SCo Commercial Operations Date (COD) has occurred. However, in the event of a delay beyond the Scheduled COD, the departmental group may be required to make payments under the RSA, including First User Delay Payments, Interim Difference Payments, and Reconciliation Payments.

LCCC and both T&SCos are entities consolidated into DESNZ departmental group, and any payments made under RSA will be eliminated on consolidation. The resulting financial impact on the DESNZ departmental group position will be the unavoidable operational and finance cost of T&SCo operations during the period when CCUS T&S network user projects are delayed commissioning and connecting their capture facilities to the network.

Departmental group – quantifiable contingent liabilities

The departmental group has the following quantifiable contingent liabilities of more than £1m in either this financial year or prior financial year. Other liabilities are disclosed in our arm’s length bodies’ accounts. The departmental group has the following quantifiable contingent liabilities of more than £1m in either this financial year or prior financial year. Other liabilities are disclosed in our arm’s length bodies’ accounts.

NDA – AGR Transfer (£17,780m)

On 23 June 2021 the NDA, government and EDF Energy entered into new decommissioning arrangements for 7 Advanced Gas-cooled Reactor (AGR) stations in which government has directed NDA to take on the future ownership of the stations for decommissioning. The work will be undertaken by the NDA subsidiary Nuclear Restoration Services (NRS). The NDA will recognise the estimated future liability in its financial statements for each of the stations at the respective points at which NDA takes ownership. The NDA therefore recognises a contingent liability for the future decommissioning costs of the stations. This has been estimated by the current owner of the stations at £17,780m (undiscounted) in its most recently published financial statements.

UKAEA – indemnities provided on land access licences at adjoining farmland to the West Burton site

UK Fusion Energy Ltd (UKFE) has remote contingent liabilities with respect to 6x indemnities provided to farmers. This is in relation to 3x land access licences to perform a non-intrusive topographic and tree surveys. The indemnity cap is £5m for 5 and £1m for the remaining licence, each expiring 3 months after the last access to the land. These indemnities are as at 31 March 2026 and all are set to have expired by June 2026.

Sizewell C – Deed of Obligation

Contingent liabilities of £55.8m (2024: £60.3m) depending on the Company’s future activities in assessing and determining amount of contributions. The contingent liabilities are subject to approval and clawback if not allocated appropriately – therefore have been accounted for under the cost accumulation approach and will be capitalised as incurred.

23. Contingent assets

Core department – quantifiable contingent assets

Deed relating to the British Coal Staff Superannuation Scheme (BCSSS) under Paragraph 2(9) of Schedule 5 to the Coal Industry Act 1994 (£1.9bn)

In 2024-25, a contingent asset was disclosed in relation to potential receipts from any surplus remaining on the BCSSS net of any amount retained for the obligation, which was due back to the Guarantor (the DESNZ Secretary of State). In the 2025 Budget announcement, the government confirmed that the Investment Reserve Fund within the BCSSS will be transferred to the Scheme’s Trustees and paid out to members as an additional pension. The Department therefore no longer assesses this to be a contingent asset.

Departmental group – unquantifiable contingent assets

Mining Remediation Authority – restructuring schemes

By virtue of the seventh and ninth Coal Authority Restructuring Schemes (CARS 7 and 9) the Coal Authority is the beneficiary of restrictive covenants and clawback provisions relating to land and properties sold by the British Coal Corporation. In the event that the purchasers are able to retrospectively secure added value by obtaining planning consent for alternative uses the Authority will receive a share of the added value. Quantification of this asset is not possible.

Sizewell C purchase price reduction

As part of the main site land purchase, a potential purchase price reduction was agreed contingent upon the conclusion of the Unexploded Ordnance programme and the actual costs incurred. The potential price reduction remains uncertain as of year-end.

United Kingdom Atomic Energy Authority – West Burton Site

There exist material pulverised coal ash deposits on the West Burton site. An ash disposal permit currently exists, to the end of March 2027, which the previous operators of the site hold. These deposits may generate future economic benefits if extraction is permitted upon UKAEA seeking a licence application from the Environment Agency. The permit application activity is expected to be undertaken, with the outcome of granting an ash disposal permit considered probable, but not virtually certain. Therefore, no asset has been recognised.

The core department is the parent of the bodies listed in note 26 ‘List of bodies within the departmental group’ – these bodies are regarded as related parties and various material transactions have taken place during the reporting period between members of the departmental group. The related parties of the consolidating bodies are disclosed in their respective accounts. The core department is also the sponsor of NNL Holdings Limited.

The core department has engaged in material transactions with other consolidated bodies, other government bodies, and devolved administrations (the Northern Ireland Executive, Scottish Government and Welsh Government). The most significant of these transactions have been with the Exchequer Consolidated Fund and Contingencies Fund, Nuclear Decommissioning Authority, Office of Gas and Electricity Market, National Energy System Operator, Bank of England, United Kingdom Atomic Energy Authority and Department for Business and Trade.

Ministers, board members, key managers of the departmental group or other related party who have undertaken any material transactions with the core department during the year are listed below. Details of the department’s ministers and senior managers are shown in the Remuneration Report. As a matter of course, senior departmental managers are on the boards of ALBs.

As declared in the ministerial register of interests, the brother of the Secretary of State (Ed Miliband) is a Non-Executive Director of Verian Group UK Ltd. The department incurred £2m worth of transactions with Verian, mainly in the form of R&D and professional services, in this financial year. Contracts were awarded under both the previous government and this government. The Secretary of State was not involved in the decision to award any of these contracts and will continue to recuse himself from any future decisions pertaining to Verian Group UK Ltd.

The Second Permanent Secretary of the core department, Clive Maxwell, is a director of Sizewell C Holding Company. The core department’s investments in Sizewell C are detailed in note 10.

The former Chief Financial Officer (to 1 Feb 2026) of the core department, David Thomas, was a director of UK Shared Business Services Ltd which is an arm’s length body of Department for Science Innovation and Technology, until resignation in October 2025. The core department transacted £16m via Integrated Corporate Services (ICS) which provides a range of corporate and support functions during 2025-26.

Conflicts of interest information for ministers and executive and non-executive board members can be found in Directors’ report section of the corporate governance report on page 93.

25. Restatement as a result of prior period adjustments

The prior period accounts have been restated to reflect the correct accounting for the Site License Companies (SLCs) pensions and NDA nuclear decommissioning provision.

During the year, the Department identified that in DESNZ Group account SLCs pensions net balances had been incorrectly recognised within the NDA nuclear decommissioning provision liability, and that SLCs pensions in-year movements were omitted from SoCNE.

The effect of prior period restatements on the primary statements has been detailed below:

The NDA nuclear decommissioning provision liability was reduced by £961m, reflecting the removal of SLCs net pension balances incorrectly included within it in prior periods
SLCs pensions movements now accounted in line with IAS 19 Employee Benefits, with the pension service cost and net interest recognised within the Net Expenditure from operations, with actuarial remeasurements recognised within Other Comprehensive Income (OCI)

Impact of restatements on opening balances for the Departmental Group at 31 March 2025

Consolidated Statement of Comprehensive Net Expenditure:

	Balance at 31 March 2025 per 2024-25 published accounts £m	Prior period adjustments £m	Restated balance at 31 March 2025 £m
Total operating income	(4,892)	-	(4,892)
Total operating expenditure	13,387	(21)	13,366
Other income and expenditure	7,171	(30)	7,141
Other comprehensive income and expenditure	(102)	(278)	(380)
Comprehensive net (income)/expenditure for the year attributable to taxpayers	15,564	(329)	15,235

Consolidated Statement of Financial Position:

	Balance at 31 March 2025 per 2024-25 published accounts £m	Prior period adjustments £m	Restated balance at 31 March 2025 £m
Non-current assets	13,604	-	13,604
Current assets	3,810	-	3,810
Current liabilities	(14,455)	-	(14,455)
Non-current liabilities	(204,038)	961	(203,077)
General fund	202,435	(961)	201,474
Revaluation reserve	(712)	-	(712)
Non-controlling interests	(644)	-	(644)

Consolidated Statement of Cash Flows:

	Balance at 31 March 2025 per 2024-25 published accounts £m	Prior period adjustments £m	Restated balance at 31 March 2025 £m
Net operating cost	(15,666)	51	(15,615)
Adjustments for non-cash expenditure (presented on multiple lines in the published 2024-25 accounts)	13,881	(51)	13,830

Consolidated Statement of Changes in Taxpayers’ Equity (departmental group):

	Balance at 31 March 2025 per 2024-25 published accounts £m	Prior period adjustments £m	Restated balance at 31 March 2025 £m
Balance at 1 April 2024	(195,557)	632	(194,925)
Net expenditure for the year	(15,666)	51	(15,615)
Other comprehensive net (expenditure)/income for the year	-	278	278
Balance at 31 March 2025	(202,435)	961	(201,474)

Impact of restatements on opening balances for the Departmental Group at 1 April 2024

Consolidated Statement of Financial Position	Balance at 31 March 2024 per 2024-25 published accounts £m	Prior period adjustments £m	Restated balance at 31 March 2024 £m
Non-current assets	9,551	-	9,551
Current assets	6,834	-	6,834
Current liabilities	(15,422)	-	(15,422)
Non-current liabilities	(195,362)	632	(194,730)
General fund	195,557	(632)	194,925
Revaluation reserve	(612)	-	(612)
Non-controlling interests	(546)	-	(546)

26. List of bodies within the departmental group

The table below shows the list of DESNZ organisations included in the Government Resources and Accounts Act 2000 (Estimates and Accounts) Order 2025 – known as the Designation Order, and amendments from the Government Resources and Accounts Act 2000 (Estimate and Accounts) (Amendment) Order 2025 – known as the Amendment Order.

Section (a) includes bodies consolidated within the departmental group accounts. Section (b) includes bodies within the departmental group but not consolidated – such as where net assets are not considered material to the departmental group accounts.

As a result of changes made in the 2025–26 Designation Order and Amendment Order some additional bodies are now included in the departmental group accounts boundary.

(a) Bodies consolidated in departmental group accounts for 2025–26

Designated body	Status	Notes
AEA Insurance Limited	-	Consolidated by United Kingdom Atomic Energy Authority
Bulb Energy Ltd	Other public body	Assets and liabilities are included in the core department’s figures
Civil Nuclear Police Authority	NDPB	-
Committee on Fuel Poverty	NDPB	Costs are included in the core department’s expenditure
Committee on Radioactive Waste Management	NDPB	Costs are included in the core department’s expenditure
Electricity Settlements Company Ltd	Other public body	-
Enrichment Holdings Ltd	Other public body	-
Enrichment Investments Limited	-	Consolidated by Enrichment Holdings Limited
Great British Energy Group Limited	Other public body	-
Great British Energy – Nuclear	Other public body	-
Liverpool Bay CCS Limited	-	-
Low Carbon Contracts Company Ltd	Other public body	-
Mining Remediation Authority (formerly Coal Authority)	NDPB	-
Net Zero North Sea Storage Limited	Other public body	-
North Sea Transition Authority (formerly Oil and Gas Authority)	NDPB	-
Nuclear Decommissioning Authority	NDPB	-
Nuclear Liabilities Financing Assurance Board	Expert committee	Costs are included in the core department’s expenditure
Nuclear Restoration Services Limited (formerly Magnox)	-	Consolidated by Nuclear Decommissioning Authority
Nuclear Waste Services Limited (formerly LLW Repository Limited)	-	Consolidated by Nuclear Decommissioning Authority
Radioactive Waste Management Limited	-	Consolidated by Nuclear Decommissioning Authority
Salix Finance Ltd	NDPB	-
Sellafield Limited	-	Consolidated by Nuclear Decommissioning Authority
Sizewell C Limited	Other public body	-
Sizewell C (Holding) Limited	Other public body	-
Sizewell C (PledgeCo) Limited	Other public body	-
United Kingdom Atomic Energy Authority	NDPB	-
UKAEA Ltd	-	Consolidated by United Kingdom Atomic Energy Authority
UK Fusion Solutions Ltd	-	Consolidated by United Kingdom Atomic Energy Authority
UK Fusion Energy LTD (formerly UK Industrial Fusion Solutions Ltd)	-	Consolidated by United Kingdom Atomic Energy Authority

(b) Bodies not consolidated in departmental group accounts for 2025–26

Designated body	Status	Notes and website
BNFL (Investments US) Limited	Other public body	Turnover and net assets are not material to departmental group accounts
British Nuclear Group Limited	Other public body	Turnover and net assets are not material to departmental group accounts
Climate Change Committee (formerly the Committee on Climate Change)	NDPB	Turnover and net assets are not material to departmental group accounts
Departmental Nuclear Company Limited	Other public body	Dissolved 30 December 2025
Dounreay Site Restoration Limited	-	Turnover and net assets are not material to departmental group accounts
LLWR Limited	Other public body	Dissolved 12 May 2026
Magnox Limited	Other public body	Dissolved on 17 March 2026
NDA Archives Limited	Other public body	Subsidiary of NDA. Turnover and net assets are not material to departmental group accounts
Research Sites Restoration Limited	Other public body	Turnover and net assets are not material to departmental group accounts

27. Events after the reporting period

Non-adjusting events

Non-adjusting events are indicative of a condition that arose after the end of the reporting period and do not result in adjustment to the financial statements. They should be disclosed if of such importance that non-disclosure would affect the ability of the users to make proper evaluations and decisions.

Rolls-Royce SMR Contract Signed

On 10 April 2026, Great British Energy – Nuclear (GBE-N) entered into a contract with Rolls‑Royce SMR Limited, formally commencing the technology design activities required to support the delivery of the UK’s first Small Modular Reactors (SMRs). This contract demonstrates a significant commitment to the programme and supports the government’s clean energy mission. The forecast Stage 1 contract value, covering the period up to a Final Investment Decision is approximately £359m.

Transfer of Hunterston B nuclear power station to NDA

On 23 June 2021, the NDA, UK government and EDF Energy entered into new decommissioning arrangements for 7 Advanced Gas‑cooled Reactor (AGR) stations in which the UK government has directed NDA to take on the future ownership of the stations for decommissioning. The work will be undertaken by the NDA subsidiary, Nuclear Restoration Services Limited. The costs of decommissioning are to be met by the Nuclear Liabilities Fund (NLF), which has been set up to secure funding for decommissioning of the AGR stations.

On 1 April 2026, the NDA took ownership of the first AGR station, Hunterston B. From this date, the NDA Group will assume the decommissioning liabilities associated with the station. Funding for qualifying decommissioning costs is to be provided through the NLF in accordance with the AGR Funding Agreement. Based on the current funding framework and the expectation that sufficient NLF assets exist to meet the qualifying Hunterston B liability, the NDA expects to recognise a corresponding asset in respect of reimbursable qualifying costs, subject to the relevant recognition criteria and the scope of the agreement. Based on the audited financial statements of EDF Energy Nuclear Generation Ltd, the most recent estimated decommissioning cost of Hunterston B is £2.5 billion (undiscounted).

The funding agreement between NDA Group and the NLF includes commitments for the NDA to prepare a detailed decommissioning plan and cost estimate for Hunterston B by March 2028. As NDA’s own site-specific estimate is further developed and validated, revisions to current assumptions and cost estimates could be material and will have a direct impact on the nuclear provision and the amounts receivable from the NLF.

Prax Lindsey Oil Refinery

On 28 April 2026, the sale of the Prax Lindsey Oil Refinery to Phillips 66 completed. The government continues to indemnify the Official Receiver whilst the remaining liquidation matters are finalised.

27.1. Date accounts authorised for issue

DESNZ’s Accounting Officer has authorised these accounts to be issued on the same day as they were certified.

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	Note	General fund £m	Revaluation reserve £m	Taxpayers’ equity £m	Total reserves £m
Balance at 1 April 2024	-	415	89	504	504
Net parliamentary funding – drawn down	SoCF	8,840	-	8,840	8,840
Net parliamentary funding – deemed	-	1,025	-	1,025	1,025
Supply (payable)/receivable adjustment	16	(667)	-	(667)	(667)
Income payable to the Consolidated Fund	-	-	-	-	-
Net expenditure for the year	SoCNE	(8,905)	-	(8,905)	(8,905)
Auditors’ remuneration	3.1	1	-	1	1
Other Comprehensive Net Expenditure/Income for the year	SoCNE	-	67	67	67
Transfers between reserves	-	1	-	1	1
Other movements	-	8	-	8	8
Balance at 31 March 2025	-	719	157	876	876
Balance at 1 April 2025	-	719	157	876	876
Net parliamentary funding – drawn down	SoCF	7,675	-	7,675	7,675
Net parliamentary funding – deemed	16	667	-	667	667
Supply (payable)/receivable adjustment	16	(926)	-	(926)	(926)
Income payable to the Consolidated Fund	-	-	-	-	-
Net expenditure for the year	SoCNE	(9,356)	-	(9,356)	(9,356)
Auditors’ remuneration	3.1	1	-	1	1
Other Comprehensive Net Expenditure/Income for the year	SoCNE	-	(87)	(87)	(87)
Other movements	-	(9)	-	(9)	(9)
Balance at 31 March 2026	-	(1,230)	69	(1,161)	(1,161)

	Note	General fund	Revaluation reserve	Taxpayers’ equity	Non controlling interest	Total reserves
Balance at 1 April 2024 Restated	-	(194,925)	612	(194,313)	546	(193,767)
Net parliamentary funding – drawn down	SoCF	8,840	-	8,840	-	8,840
Net parliamentary funding – deemed	-	1,025	-	1,025	-	1,025
Supply (payable)/receivable adjustment	16	(667)	-	(667)	-	(667)
Income payable to the Consolidated Fund	SOPS 4	(549)	-	(549)	-	(549)
Net expenditure for the year	SoCNE	(15,615)	-	(15,615)	85	(15,530)
Auditors’ remuneration	3.1	1	-	1	-	1
Other comprehensive net (expenditure)/ income for the year	SoCNE	278	102	380	-	380
Transfers between reserves	-	8	(2)	6	(2)	4
Non-controlling interest	-	-	-	-	16	16
Other movements	-	133	-	133	-	133
Balance at 31 March 2025 Restated	-	(201,474)	712	(200,762)	644	(200,118)
Balance at 1 April 2025 Restated	-	(201,474)	712	(200,762)	644	(200,118)
Net parliamentary funding – drawn down	SoCF	7,675	-	7,675	-	7,675
Net parliamentary funding – deemed	16	667	-	667	-	667
Supply (payable)/receivable adjustment	16	(926)	-	(926)	-	(926)
Income payable to the Consolidated Fund	SOPS 4	(487)	-	(487)	-	(487)
Net expenditure for the year	SoCNE	(35,299)	-	(35,299)	27	(35,272)
Auditors’ remuneration	3.1	1	-	1	-	1
Other comprehensive net (expenditure)/income for the year	SoCNE	(87)	(9)	(96)	-	(96)
Transfers between reserves	-	(12)	12	-	-	-
Non-controlling interest	-	-	-	-	(171)	(171)
Other movements	-	(155)	(2)	(157)	-	(157)
Balance at 31 March 2026	-	(230,097)	713	(229,384)	500	(228,884)

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Consolidated Statement of Comprehensive Net Expenditure

Consolidated Statement of Financial Position

Consolidated Statement of Cash Flows

Statement of Changes in Taxpayers’ Equity (core department)

Consolidated Statement of Changes in Taxpayers’ Equity (departmental group)

Notes to the accounts

1. Accounting policies, judgements, and estimates

1.1. Basis of accounting

1.2. Accounting convention

1.3. Presentational currency

1.4. Basis of consolidation

1.5. Changes in accounting policies

1.6. Applicable accounting standards issued but not yet adopted

IFRS 18 Presentation and Disclosure in Financial Statements:

IFRS 19 Subsidiaries without Public Accountability: Disclosures:

1.7. Operating income

Operating income from contracts with customers:

Levies:

Grant income:

1.8. Staff costs

1.9. Grants payable

Grant in aid:

1.10. Taxation

1.11. Property, plant, and equipment (PPE)

Valuation of PPE:

Revaluation of PPE:

Depreciation of PPE:

Assets under construction:

1.12. Investment property

1.13. Intangible non-current assets

1.14. Impairment of PPE and intangible non-current assets

1.15. Cash and cash equivalents

1.16. Leases

Assumptions:

Measurement of right-of-use assets:

Measurement of lease liabilities:

Lessor Accounting:

1.17. Subsidiaries, associates, and joint ventures

1.18. Financial instruments

Financial assets:

Financial liabilities:

1.19. Pensions

Funded defined-benefit pension schemes:

Unfunded defined benefit pension schemes:

Defined contribution pension schemes:

1.20. Provisions

Nuclear decommissioning provisions:

1.21. Contingent assets and liabilities

Contingent liabilities:

Contingent assets:

1.22. IFRS 17 (Insurance Contracts)

1.23. Judgements, estimates and assumptions

Key accounting judgements in these statements are described below:

2. Staff costs

3. Operating expenditure

3.1. Purchase of Goods and Services

Core department

Departmental group

Audit fees

3.2. Depreciation and impairment charges

3.3. Provisions and Other Liability Expenses

3.4. Grants expenditure

Core department

4. Finance expense

Restatement of the Finance Expense as a result of prior period adjustments

5. Income

5.1. Operating income

Core department

Departmental group

5.2. Finance income

Core department

Departmental Group

6. Property, plant and equipment

Departmental group 2025–26

Departmental group 2024–25

Departmental Group

7. Right of use assets

Departmental group 2025–26

Departmental group 2024–25