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Registered number: 09780052
VITAL ENERGI (DRAKELOW) LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2026
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VITAL ENERGI (DRAKELOW) LIMITED
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COMPANY INFORMATION
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Chartered Accountants & Statutory Auditor
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VITAL ENERGI (DRAKELOW) LIMITED
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CONTENTS
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Independent Auditor's Report
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Statement of Income and Retained Earnings
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Statement of Financial Position
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Notes to the Financial Statements
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VITAL ENERGI (DRAKELOW) LIMITED
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STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2026
The directors present their Strategic Report together with the audited financial statements of Vital Energi (Drakelow) Limited ("the company") for the year ended 30 June 2026.
FY26 represented the first full year of live operations for Vital Energi (Drakelow) Limited. During the year, the company continued to process Refuse Derived Fuel ("RDF") and generate renewable electricity while progressing improvements designed to enhance the long-term reliability, durability and operational performance of the facility.
The company forms an important part of the wider Vital Energi group's strategy of long-term energy asset ownership and operation. As the facility moved through its first full year of operations, management continued to optimise plant performance and identify opportunities to improve availability and throughput. During the year, a programme of technical enhancements was developed to support the long-term processing of RDF, including modifications to grate bars and fuel feed systems.
The directors remain committed to delivering long-term environmental benefits through the recovery of energy from residual waste that would otherwise be disposed of through alternative waste management routes.
Principal risks and uncertainties
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The company's principal risks and uncertainties arise from the operation of its Energy from Waste ("EfW") facility and its ability to maintain performance levels consistent with operational and financial forecasts.
The company's financial performance is dependent upon the continued reliability and availability of the EfW facility. Unplanned outages, equipment failures or lower-than-anticipated throughput levels may adversely affect operational performance and profitability. To mitigate this risk, the company operates a planned maintenance programme and continues to invest in technical improvements designed to enhance plant reliability and long-term performance.
The company operates in a highly regulated environment and is subject to environmental, health and safety and other regulatory requirements. Failure to comply with these requirements could result in financial penalties, operational restrictions or reputational damage. Appropriate governance, monitoring and compliance procedures are maintained to manage these risks.
The company is also exposed to liquidity, financing and commercial risks, including changes in operating costs, energy markets, customer demand and the group's wider funding arrangements. Certain group undertakings, including the company, act as guarantors of the £150m Nordic ABM bond. Any deterioration in the company’s financial performance or liquidity could increase the risk associated with these obligations. Management regularly monitors cash flow forecasts and operational performance to ensure sufficient resources remain available to support the company's ongoing activities and strategic objectives.
Turnover increased to £20.5 million during FY26, an increase of £4.5 million, or 28.1%, compared with £16.0 million in FY25. Revenue growth reflected the facility's first full year of live operations and its increasing contribution to the wider group's asset ownership activities.
While revenue increased significantly year-on-year, operating performance was affected by lower-than-anticipated throughput levels together with the operational and maintenance costs associated with the first full year of operations. Management also incurred costs associated with technical improvements designed to improve plant durability and long-term performance. As a result, gross profit margin reduced to 38.8% (FY25: 55.0%) and operating profit before exceptional items decreased to a loss of £0.2 million (FY25: profit of £6.2 million).
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VITAL ENERGI (DRAKELOW) LIMITED
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2026
Financial performance (continued)
Administrative expenses increased to £8.2 million (FY25: £2.6 million), reflecting continued investment in technology, workforce capability and site development activities. During the year, the company's indebtedness to Aviva, the previous owner of the facility, was extinguished as part of the wider group reorganisation and refinancing activities. This resulted in the recognition of an exceptional gain of £29.7 million.
Stocks increased to £1.9 million (FY25: £Nil) as maintenance and critical spare parts were accumulated to support plant operations and future planned shutdown activities. Trade debtors decreased by £2.9 million to £2 million, while overall creditors decreased by £7.8 million, principally due to the extinguishment of the debenture and other working capital movements.
Cash balances increased to £5.9 million (FY25: £4.7 million), supporting a strong liquidity position. Net liabilities reduced to £18.9 million from £28.4 million in FY25, primarily reflecting the net gain on extinguishment of the Aviva debenture. The directors remain confident that the business will continue to generate positive cash flows and maintain sufficient liquidity to support its long-term objectives.
The company's long-term outlook is supported by forecast improvements in operational performance following completion of the planned upgrade programme and by long-term customer contracts ranging from 15 to 30 years in duration, which provide a significant proportion of recurring revenue.
The directors recognise their duty under Section 172(1) of the Companies Act 2006 to promote the success of the company for the benefit of its members as a whole, while having regard to the interests of employees, customers, suppliers, communities and the environment, together with the long-term consequences of decisions and the need to maintain high standards of business conduct.
The board considered stakeholder interests as part of its decision-making processes throughout the year.
Employees
The safe and reliable operation of the facility depends upon a skilled and competent workforce. Throughout the year, the board received updates on health and safety performance, employee wellbeing, recruitment, training and workforce development. These matters informed ongoing investment in operational capability and technical expertise to support the company's long-term objectives.
Customers
The board monitored operational performance, throughput levels, facility availability and customer service. Customer engagement informed operational planning and plant improvement activities, ensuring the company continued to meet its contractual obligations whilst developing longer-term improvements to operational performance.
Suppliers and business partners
The board considered the importance of resilient supply chains in supporting the safe and reliable operation of the facility. Oversight during the year included fuel supply arrangements, maintenance services, specialist engineering support and procurement activities associated with the planned summer 2026 shutdown programme.
Communities and the environment
The company operates infrastructure that delivers environmental benefits through the recovery of energy from residual waste. The board considered the environmental and community impacts of the facility, including operational performance, regulatory compliance and opportunities to improve long-term environmental outcomes through enhanced plant performance and reliability.
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VITAL ENERGI (DRAKELOW) LIMITED
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STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2026
Section 172(1) statement (continued)
Investors and lenders
During the year, the board maintained engagement with shareholders, lenders and the wider group regarding funding requirements, liquidity and long-term investment. Particular consideration was given to the refinancing activities that facilitated the extinguishment of historical debt obligations and supported the group's wider asset ownership strategy.
Long-term decision making
When considering significant decisions, the board evaluates the likely long-term consequences, including impacts on employees, customers, suppliers, communities, the environment and the company's financial position.
The most significant decisions during the year related to the optimisation of the facility's long-term operational performance and the associated programme of technical improvements. In reaching these decisions, the board considered operational reliability, expected long-term returns, environmental performance, health and safety requirements, workforce capability and the capital investment required to support future throughput growth. These considerations informed the timing and scope of the planned improvement programme.
Maintaining high standards of business conduct
The board considered governance, ethics and compliance matters throughout the year. Oversight included health and safety governance, environmental compliance, anti-bribery, whistleblowing and wider sustainability initiatives. The board recognises that strong governance and operational discipline are essential to the successful long-term operation of critical energy infrastructure.
Acting fairly between members
The board recognises its responsibility to act fairly between the company's members when making decisions. Throughout the year, the board considered the interests of all shareholders alongside the company's long-term strategic objectives, financial position and wider stakeholder impacts. Decisions relating to funding, refinancing activities, capital allocation and long-term investment were assessed with regard to their effect on shareholder value and the equitable treatment of members. The board remains committed to maintaining appropriate governance arrangements and transparent communication to support balanced and informed decision-making.
Conclusion
The directors believe that the decisions taken during FY26 have been consistent with their duties under Section 172(1) and have supported the long-term success of the company while balancing the interests of stakeholders, responsible business conduct and sustainable growth.
This report was approved by the board and signed on its behalf.
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VITAL ENERGI (DRAKELOW) LIMITED
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DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2026
The directors present their annual report and the financial statements for the year ended 30 June 2026.
The principal activity of the company during the year was that of operation of a waste to energy plant.
The profit for the year, after taxation, amounted to £9,473,000 (2025: loss £1,699,000).
The directors did not recommend the payment of dividends in the year (2025: £Nil).
The directors who served during the year, and up to the date of signing this report, were:
Directors' Responsibilities Statement
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The directors are responsible for preparing the Strategic Report, the Directors' Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law, including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss of the company for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent; and
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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VITAL ENERGI (DRAKELOW) LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2026
Due to the net current liabilities position and the deficit on the Statement of Financial Position at the year end, the directors have obtained written support from Vital Energi Utilities Limited (VEUL), another group company, which commits to providing financial support to the company for the foreseeable future to enable the company to meet its liabilities as they fall due. The directors have satisfied themselves that Vital Energi Utilities Limited is in a position to provide this support and further details of the assessment of going concern for Vital Energi Utilities Limited can be seen in its financial statements, which are available from Century House, Roman Road, Blackburn, Lancashire, BB1 2LD.
The company's primary focus is the operation and ongoing optimisation of its waste-to-energy plant. Despite the site being fully operational and producing electricity, it has been identified that several technical modifications are required to support the long-term processing of Refuse Derived Fuel (RDF) and improve operating performance. Additional investment into the facility and works are expected to improve the plant durability and availability via a gradual ramp-up to full operational capacity. The investment into the site and the steady power generation from the plant, contributes to a robust and stable financial foundation for the company.
While the company continues to navigate the complexities of the energy sector, and the full operational capacity has not yet been achieved, the directors believe that the strong operational performance and the ongoing support from VEUL provide a solid basis for continued growth and success.
On this basis, the directors consider it appropriate to prepare the financial statements on a going concern basis.
Qualifying third party indemnity provisions
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The company has made qualifying third party indemnity provisions for the benefit of its directors during the year. These provisions remain in force at the reporting date.
The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's Strategic Report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the Directors' Report. This applies to future developments.
Financial risk management objective and policies
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The company finances its operations through borrowings from group entities where necessary to fund expansion or capital programmes.
The management objectives are to:
∙Match the repayment schedule of any group borrowings with the expected future cash flows expected to arise from the company and its group's cash flows.
Where appropriate, funds are invested in sterling bank deposit accounts and borrowings are all obtained from standard bank loan accounts. As such, there is little price risk exposure. Where appropriate, funds are held primarily in short-term variable rate deposit accounts. The directors believe that this gives them flexibility to release cash resources at short notice and also allows them to take advantage of changing conditions in the finance markets as they arise. All deposits are with reputable UK banks and the directors believe their choice of bank minimises any credit risk associated with not placing funds on deposit with a UK clearing bank.
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VITAL ENERGI (DRAKELOW) LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2026
Disclosure of information to auditor
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The directors confirm that:
∙so far as each director is aware, there is no relevant audit information of which the company's auditor is unaware; and
∙the directors have taken all the steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that the company's auditor is aware of that information.
The auditor, RSM UK Audit LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF VITAL ENERGI (DRAKELOW) LIMITED
Opinion
We have audited the financial statements of Vital Energi (Drakelow) Limited (the 'company') for the year ended 30 June 2026 which comprise of the statement of income and retained earnings, the statement of financial position and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" (United Kingdom Generally Accepted Accounting Practice).
In our opinion, the financial statements:
∙give a true and fair view of the state of the company's affairs as at 30 June 2026 and of its profit for the year then ended;
∙have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice;
∙have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The other information comprises the information included in the annual report, other than the financial statements and our Auditor's Report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF VITAL ENERGI (DRAKELOW) LIMITED (CONTINUED)
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
∙adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
∙the financial statements are not in agreement with the accounting records and returns; or
∙certain disclosures of directors' remuneration specified by law are not made; or
∙we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement set out on page 4, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditor's Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF VITAL ENERGI (DRAKELOW) LIMITED (CONTINUED)
The extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities are instances of non-compliance with laws and regulations. The objectives of our audit are to obtain sufficient appropriate audit evidence regarding compliance with laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements, to perform audit procedures to help identify instances of non-compliance with other laws and regulations that may have a material effect on the financial statements, and to respond appropriately to identified or suspected non-compliance with laws and regulations identified during the audit.
In relation to fraud, the objectives of our audit are to identify and assess the risk of material misstatement of the financial statements due to fraud, to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud through designing and implementing appropriate responses and to respond appropriately to fraud or suspected fraud identified during the audit.
However, it is the primary responsibility of management, with the oversight of those charged with governance, to ensure that the entity's operations are conducted in accordance with the provisions of laws and regulations and for the prevention and detection of fraud.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud, the audit engagement team:
∙obtained an understanding of the nature of the industry and sector, including the legal and regulatory framework that the company operates in and how the company is complying with the legal and regulatory framework;
∙inquired of management, and those charged with governance, about their own identification and assessment of the risks of irregularities, including any known actual, suspected or alleged instances of fraud;
∙discussed matters about non-compliance with laws and regulations and how fraud might occur including assessment of how and where the financial statements may be susceptible to fraud.
As a result of these procedures we consider the most significant laws and regulations that have a direct impact on the financial statements are FRS 102, the Companies Act 2006 and tax compliance regulations. We performed audit procedures to detect non-compliances which may have a material impact on the financial statements which included reviewing financial statement disclosures, inspecting correspondence with local tax authorities and evaluating advice received from external tax advisors.
The audit engagement team identified the risk of management override of controls as the area where the financial statements were most susceptible to material misstatement due to fraud. Audit procedures performed included but were not limited to testing manual journal entries and other adjustments and evaluating the business rationale in relation to significant, unusual transactions and transactions entered into outside the normal course of business.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: https://www.frc.org.uk /auditorsresponsibilities. This description forms part of our Auditor's Report.
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF VITAL ENERGI (DRAKELOW) LIMITED (CONTINUED)
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an Auditor's Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Andrew Monteith
Senior Statutory Auditor
for and on behalf of RSM UK Audit LLP
Statutory Auditor, Chartered Accountants
Bluebell House
Brian Johnson Way
Preston
Lancashire
PR2 5PE
29 October 2026
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VITAL ENERGI (DRAKELOW) LIMITED
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STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED 30 JUNE 2026
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Interest receivable and similar income
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Interest payable and similar expenses
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Retained earnings at the beginning of the year
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Profit/(loss) for the year
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Retained earnings at the end of the year
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There were no recognised gains and losses for 2026 or 2025 other than those included in the Statement of Income and Retained Earnings.
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The notes on pages 13 to 28 form part of these financial statements.
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VITAL ENERGI (DRAKELOW) LIMITED
REGISTERED NUMBER:09780052
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STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2026
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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Provisions for liabilities
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The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 13 to 28 form part of these financial statements.
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VITAL ENERGI (DRAKELOW) LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2026
Vital Energi (Drakelow) Limited is a private company limited by shares, incorporated in England and Wales. Its registered number is 09780052, and its registered office is located at Century House, Roman Road, Blackburn, Lancashire, BB1 2LD.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with FRS 102 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland' and the requirements of the Companies Act 2006.
The company’s functional and presentation currency is Sterling and all values are rounded to the nearest thousand (£'000) except when otherwise stated.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the company's accounting policies (see note 3).
The following principal accounting policies have been applied:
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Financial Reporting Standard 102 - reduced disclosure exemptions
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The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
∙the requirements of Section 7 Statement of Cash Flows;
∙the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
∙the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
∙the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A; and
∙the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the consolidated financial statements of Vital Holdings Limited as at 30 June 2026 and these financial statements may be obtained from Century House, Roman Road, Blackburn, Lancashire, BB1 2LD.
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VITAL ENERGI (DRAKELOW) LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2026
2.Accounting policies (continued)
Due to the net current liabilities position and the deficit on the Statement of Financial Position at the year end, the directors have obtained written support from Vital Energi Utilities Limited (VEUL), another group company, which commits to providing financial support to the company for the foreseeable future to enable the company to meet its liabilities as they fall due. The directors have satisfied themselves that Vital Energi Utilities Limited is in a position to provide this support and further details of the assessment of going concern for Vital Energi Utilities Limited can be seen in its financial statements, which are available from Century House, Roman Road, Blackburn, Lancashire, BB1 2LD.
The company's primary focus is the operation and ongoing optimisation of its waste-to-energy plant. Despite the site being fully operational and producing electricity, it has been identified that several technical modifications are required to support the long-term processing of Refuse Derived Fuel (RDF) and improve operating performance. Additional investment into the facility and works are expected to improve the plant durability and availability via a gradual ramp-up to full operational capacity. The investment into the site and the steady power generation from the plant, contributes to a robust and stable financial foundation for the company.
While the company continues to navigate the complexities of the energy sector, and the full operational capacity has not yet been achieved, the directors believe that the strong operational performance and the ongoing support from VEUL provide a solid basis for continued growth and success.
On this basis, the directors consider it appropriate to prepare the financial statements on a going concern basis.
The turnover shown in the profit and loss account represents the value of all goods and services provided during the year, at selling price exclusive of Value Added Tax. Turnover is recognised to the extent that the company obtains the right to consideration in exchange for its performance.
Waste Acceptance Fees: Revenue from waste acceptance fees is recognised upon receipt of the waste at the plant, provided the terms of the contract are met and the customer has an unconditional right to receive the services.
Energy Production: Revenue from energy production is recognised as the electricity is generated and sold to the grid. The fair value of the electricity sold is determined based on market prices and contractual terms.
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Operating leases: the company as lessee
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Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.
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VITAL ENERGI (DRAKELOW) LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2026
2.Accounting policies (continued)
Defined contribution pension plan
The company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the company pays fixed contributions into a separate entity. Once the contributions have been paid the company has no further payment obligations.
The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the company in independently administered funds.
Interest income is recognised in profit or loss using the effective interest method.
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
All borrowing costs are recognised in profit or loss in the year in which they are incurred.
Exceptional items are transactions that fall within the ordinary activities of the company but are presented separately due to their size or incidence.
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Current and deferred taxation
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The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the company operates and generates income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the reporting date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.
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VITAL ENERGI (DRAKELOW) LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2026
2.Accounting policies (continued)
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Current and deferred taxation (continued)
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Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
The estimated useful lives range as follows:
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives.
Depreciation is provided on the following basis:
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Assets under construction
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No depreciation is charged - depreciation will be charged once construction is complete and asset is in use
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The company owns an energy generating plant, which has a useful economic life in line with its expected operational life and is depreciated over that period (expected to be operational until December 2052).
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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VITAL ENERGI (DRAKELOW) LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2026
2.Accounting policies (continued)
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. Work in progress and finished goods include labour and attributable overheads.
At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
The company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's Statement of Financial Position when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include trade and other debtors, cash and bank balances, are initially measured at their transaction price (adjusted for transaction costs except in the initial measurement of financial assets that are subsequently measured at fair value through profit and loss) and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Impairment of financial assets
At the end of each reporting period financial assets measured at amortised cost are assessed for objective evidence of impairment. If an asset is impaired the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.
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VITAL ENERGI (DRAKELOW) LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2026
2.Accounting policies (continued)
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Financial instruments (continued)
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If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
Basic financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after the deduction of all its liabilities.
Basic financial liabilities, which include trade creditors, and loans are initially measured at their transaction price (adjusting for transaction costs except in the initial measurement of financial liabilities that are subsequently measured at fair value through profit and loss). When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future payments discounted at a market rate of interest, discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade creditors are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade creditors are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade creditors are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the company transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the company will continue to recognise the value of the portion of the risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company's contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the company are recorded at the fair value of proceeds received, net of transaction costs.
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VITAL ENERGI (DRAKELOW) LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2026
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Judgements in applying accounting policies and key sources of estimation uncertainty
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The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Estimates are based on historical experience and other assumptions that are considered reasonable in the circumstances. The actual amount or values may vary in certain instances from the assumptions and estimates made. Changes will be recorded, with corresponding effect in the financial statements, when, and if, better information is obtained.
Critical judgements and sources of estimation uncertainty that management have made in the process of applying accounting policies disclosed herein and that have a significant effect on the amounts recognised in the financial statements relate to the following:
Estimates
The following estimates have had the most significant effect on amounts recognised in the financial statements:
Impairment of non-financial assets
Fixed assets and other non-financial assets are reviewed for impairment at each reporting date. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount, which is the higher of an assets' net selling price and value in use. For the purposes of assessing impairments, assets are grouped at the lowest levels for which there are separately identifiable cash flows.
Judgements
In the process of preparing the financial statements, no significant judgements were applied.
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An analysis of turnover by class of business is as follows:
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Analysis of turnover by country of destination:
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VITAL ENERGI (DRAKELOW) LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2026
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Included within exceptional gains is a net gain of £29,656,000 (2025: £Nil) arising on the extinguishment of the Aviva debenture. The gain reflects the early settlement of lease rental obligations that would otherwise have been payable through to 2053.
Exceptional costs recognised during the year comprise of £57,000 (2025: £Nil) of one-off salary costs, £1,705,000 (2025: £Nil) incurred in relation to the settlement of a consultancy supply agreement arrangement with previous owners of the company, £6,000 of professional fees associated with the parent company's bond raise, and £399,000 (2025: £Nil) of legal fees incurred in connection with the prepayment of rent as part of the extinguishment of the Aviva debenture.
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The operating profit is stated after charging:
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Depreciation of tangible fixed assets
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Amortisation of intangible assets
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Loss on disposal of tangible fixed assets
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During the year, the company obtained the following services from the company's auditor:
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Fees payable to the company's auditor for the audit of the company's financial statements
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Fees payable to the company's auditor in respect of:
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Taxation compliance services
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All other non-audit services
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VITAL ENERGI (DRAKELOW) LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2026
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Staff costs were as follows:
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Cost of defined contribution scheme
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The average monthly number of employees during the year was as follows:
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Other interest receivable
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Interest payable and similar expenses
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Interest payable to group companies
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VITAL ENERGI (DRAKELOW) LIMITED
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2026
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Adjustments in respect of prior periods
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Origination and reversal of timing differences
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Adjustment in respect of prior periods
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Factors affecting tax charge/(credit) for the year
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The tax assessed for the year is higher than (2025: lower than) the standard rate of corporation tax in the UK of25% (2025:25%). The differences are explained below:
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Profit/(loss) on ordinary activities before tax
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Profit/(loss) on ordinary activities multiplied by standard rate of corporation tax in the UK of 25% (2025: 25%)
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Expenses not deductible for tax purposes
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Adjustments to tax charge in respect of prior periods
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Adjustments to tax charge in respect of prior periods - deferred tax
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Total tax charge/(credit) for the year
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Factors that may affect future tax charges
There were no factors that may affect future tax charges.
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VITAL ENERGI (DRAKELOW) LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2026
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VITAL ENERGI (DRAKELOW) LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2026
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Assets under construction
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VITAL ENERGI (DRAKELOW) LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2026
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Debtors: amounts falling due within one year
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Amounts owed by group undertakings
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Prepayments and accrued income
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Within amounts owed by group undertakings, £8,840,000 (2025: £Nil) attracts an interest rate of 3.25% per annum, is unsecured and repayable on demand. All remaining amounts are non-interest bearing, unsecured and repayable on demand.
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Creditors: amounts falling due within one year
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Amounts owed to group undertakings
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Other taxation and social security
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Accruals and deferred income
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Within amounts owed to group undertakings, £33,202,000 (2025: £Nil) attracts an interest rate of 3.25%, is unsecured and repayable on demand. Also within amounts owed to group undertakings, £62,287,000 (2025: £Nil) attracts an interest rate of 10.50% per annum, is unsecured and repayable on demand. Whilst there is no formal agreement in place, and the amounts are legally repayable on demand, the directors do not expect these amounts to be repaid within 12 months.
All remaining amounts owed to group undertakings are non-interest bearing, unsecured and repayable on demand.
See note 17 for details of debenture loans.
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VITAL ENERGI (DRAKELOW) LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2026
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Creditors: amounts falling due after more than one year
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The debenture was extinguished in full during the year. The rent owed until the original expiry was prepaid with bond raise funds. Please see note 5.
Loan notes relate to 12.00% secured loan notes issued to a fellow group undertaking. They are repayable on 27 January 2053, being the thirty third anniversary of the date of the instrument, or such date as may be determined by a resolution of the directors. Total interest of £22,989,000 (2025: £17,552,000) has been accrued on the loan notes.
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The aggregate amount of liabilities repayable wholly or in part more than five years after the reporting date is:
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Charged to profit or loss
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The deferred tax liability set out above is expected to reverse after 12 months and relates to accelerated capital allowances. The capital allowances are expected to mature after 12 months also.
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VITAL ENERGI (DRAKELOW) LIMITED
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2026
18.Deferred taxation (continued)
|
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The provision for deferred taxation is made up as follows:
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Fixed asset timing differences
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Losses and other deductions
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Allotted, called up and fully paid
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100 (2025: 100) Ordinary shares of £1.00 each
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The shares rank pari passu and have full voting rights attached to them.
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The company's capital and reserves is as follows:
Profit and loss account
Cumulative profit and loss net of distributions to owners.
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Financial commitments, guarantees and contingent liabilities
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During the year, the company entered a consultancy services agreement. At the year end the potential liability was £150,000 (2025: £Nil).
The company has two charges dated 11 August 2025 and 25 September 2025, in favour of Nordic Trustee AS. The charges contain a fixed charge, and a negative pledge over property or undertaking of the company and over an escrow account held with DNB Bank ASA. The escrow account is formally held by Pareto Securities AS as account manager, with the company as beneficial owner.
The company operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the company in an independently administered fund. The pension cost charge represents contributions payable by the company to the fund and amounted to £119,000 (2025: £Nil).
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VITAL ENERGI (DRAKELOW) LIMITED
|
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2026
|
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Commitments under operating leases
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At the reporting date, the company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
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Between one and five years
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After more than five years
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Related party transactions
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At 30 June 2026, the company owed £800,000 (2025: £Nil) to companies which are not wholly owned by the ultimate controlling party, included in amounts owed to group undertakings. The amounts are interest free and repayable on demand. The company also owed £32,656,000 (2025: £10,616,000) to a company which is not wholly owned by the ultimate controlling party, included in amounts owed to group undertakings. These amounts attract interest at 3.25% and are repayable on demand.
The company was owed £1,335,000 (2025: £76,000) by companies which are not wholly owned by the ultimate controlling party, included in amounts owed by group undertakings. The amounts are interest free and repayable on demand. The company was also owed £8,840,000 (2025: £3,588,000). These amounts attract interest at 3.25% and are repayable on demand.
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There have been no significant events affecting the company since the reporting date.
The immediate parent undertaking is Vital Energi Generation Limited and the ultimate parent company is Vital Holdings Limited, both companies are incorporated in the United Kingdom.
The smallest group at which the results of the company are consolidated is that headed by Vital Energi Midco Plc. The largest group at which the results of the company are consolidated is that headed by Vital Holdings Limited. The consolidated financial statements of Vital Energi Midco Plc and Vital Holdings Limited can be obtained from Companies House and the registered office. The registered office of both entities is Century House, Roman Road, Blackburn, Lancashire, BB1 2LD.
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