Annual Report • Aug 22, 2025
Annual Report
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Company Registration Number: 10619488
Annual Report and Financial Statements
For the year ended 31 March 2025
For the year ended 31 March 2025
The Directors present their Strategic Report for Quadgas Finance Plc ("the company") for the year ended 31 March 2025.
The principal activity of the company is the provision of long term finance, through access to capital markets, for its immediate parent, Quadgas MidCo Limited. Quadgas MidCo Limited is the holding company for the Group comprising Quadgas MidCo Limited, Quadgas Finance Plc, Cadent Services Limited, Cadent Finance Plc, Cadent Gas Limited, Cadent Gas Pension Trustee Limited, Cadent Gas Pension Property Company 1 Limited, Cadent Gas Pension Property Company 2 Limited and Cadent Gas Pension Services Limited. The Directors are not aware at the date of this report, of any likely major changes in the company's activities or prospects in the next year.
On 31 October 2024 the company repaid \$50m USD private fixed rate notes (£37.6m GBP equivalent) which had reached maturity.
On 23 October 2024 the company priced £148.8 million GBP equivalent of private fixed rate notes:
• £40 million settling 15 January 2025 and maturing 15 January 2032 with a coupon rate of 6.43% which settled on 15 January 2025,
• \$26.5 million settling 11 December 2024 and maturing 11 June 2029 with a coupon rate of 6.14%, which is swapped to GBP £20.4 million and settled on 11 December 2024,
• \$50 million settling 11 December 2024 and maturing 11 December 2031 with a coupon rate of 6.39%, which is swapped to GBP £38.6 million and settled on 11 December 2024,
• \$15 million settling 15 January 2025 and maturing 15 January 2035 with a coupon rate of 6.59%, which is swapped to GBP £11.6 million, and settled on 15 January 2025, and
• \$49.5 million settling 15 January 2025 and maturing 15 January 2037 with a coupon rate of 6.69%, which is swapped to GBP £38.2 million and settled on 15 January 2025.
These notes are guaranteed by and proceeds were lent to Quadgas MidCo Limited on matching terms.
The company acts as a conduit for finance raised and any related derivative transactions between the market and its immediate parent company, and amounts raised or entered into are usually passed on to its immediate parent on identical terms. The company's exposures are limited to the credit risk on the intercompany loans (note 9). The net gain on external financial instruments consists of gains on derivatives not designated in a hedge relationship of £2,539,000 (2024: £164,000 loss) and exchange loss on the revaluation of foreign currency denominated loans of £6,929,000 (2024: £2,191,000 gain). The net gain on external financial derivatives, not designated in a hedge relationship, include loss of £668,727 (2024: £1,647,000 gain) arising from RPI/CPI basis swaps which were impacted by volatility seen in inflation rates.
The company paid £61,981,000 (2024: £49,111,000) of interest on its external debt and interest received and similiar income of £61,990,000 (2024: £49,118,000) from Quadgas MidCo Limited. The increase over prior year was due principally to a full year of interest on the external debt that was raised in December 2023, January 2024 and new debt rasied in April 2024. The key terms are set out in note 13.
As of 31 March 2025, the latest published credit ratings assigned to Quadgas Finance Plc's debt was BBB (2024: BBB) by S&P.
For the year ended 31 March 2025
The company's loss for the financial year was £329,000 (2024: profit of £222,000), which was primarily driven by an impairment in the inter company loans in the year. This is a non-cash movement and due to a deterioration of credit spreads for Quadgas MidCo Limited since March 2024.
The financial position of the company is presented in the statement of financial position. Total shareholders' deficit at 31 March 2025 was £2,749,000 (2024: £2,420,000) comprising non-current assets of £1,740,234,000 (2024: £1,591,306,000), net current assets of £94,000 (2024: £86,000) less non-current liabilities of £1,743,077,000 (2024: £1,593,812,000). Liquidity risk has been considered in detail in the Directors' Report.
As the company is part of a larger group, the management of the company does not involve the use of key performance indicators, other than the profit or loss for the financial year and the constituent line items, in measuring the development, performance or the position of the company. The principal risks and uncertainties are integrated with the principal risks of Quadgas MidCo Limited.
For information on the development, performance, risks, uncertainties and position of Quadgas MidCo Limited and its subsidiaries and of the key performance indicators used, refer to the Strategic Report included in Quadgas MidCo Limited's Annual Report and Accounts 2024/2025, which does not form part of this report.
By nature of its operating business, the company has not been significantly directly impacted by geopolitical volatility. Macroeconomic factors in the form of inflation and interest rate rises have impacted the company; however, the Directors believe the current level of operating activity as reported in the income statement will continue in the foreseeable future, as the company will continue to provide long term finance for its immediate parent.
Climate change is a global challenge and an established risk to business, people and the environment across the world. As a financing company, Quadgas Finance Plc's operations are not directly or significantly impacted however, those of Cadent Gas Limited, the Group's operating company, are and there remains uncertainty over what those impacts will be. Cadent Gas has a role to play in limiting warming by improving energy management, reducing carbon emissions and by helping its customers do the same. Investor awareness and interest in climate change matters continues to grow when making investment decisions and Cadent continues to engage with its investors in this area. For information on how climate change will impact the Group's operating company, Cadent Gas Limited, refer to the Strategic Report included in Cadent Gas Limited's Annual Report and Accounts 2024/25.
For the year ended 31 March 2025
The following statement describes how the Directors have had regard to the matters set out in section 172(1) (a) to (f) when performing their duty under section 172 of the Companies Act 2006.
The company has no operational activities and no employees, it is a financing company for listed debt. The company's main purpose is to provide long-term finance to Quadgas MidCo Limited, its direct parent company. As a wholly owned subsidiary company within the Cadent Gas Group ("the Group"), the Directors consider the impact of the company's activities on its shareholder, its debt holders and other stakeholders.
The company's stakeholders are consulted routinely on a wide range of matters including funding decisions, investment strategy, delivery of the Group's strategy, governance and compliance with Group policies and financing matters, with the aim of raising and servicing financing for the Group and ensuring that the company maintains high standards of business conduct and governance.
As a financing vehicle for the Group, the company obtains and provides finance to Quadgas MidCo Limited. The Board considers the company's financing in light of the Group's environmental, corporate and social responsibility strategy, as such the Board receives information on these topics from management to make better informed Board decisions.
Whilst not directly regulated itself, the company maintains a close relationship with Ofgem (The Office of Gas and Electricity Markets), via Cadent Gas Limited.
For further information on the Group activities and disclosure please refer to the Cadent Gas Annual Report and Accounts 2024/25
This statement is also available at: https://cadentgas.com/
The Strategic Report was approved by the Board and signed on its behalf by:
G L Baron Director 19th June 2025
For the year ended 31 March 2025
The Directors present their Report and the audited financial statements of the company for the year ended 31 March 2025.
Details of future developments have been included within the Strategic Report on page 2.
There are no post balance sheet events.
During the year the company did not pay any interim ordinary dividends (2024: £Nil). The Directors do not recommend the payment of a final ordinary dividend (2024: £Nil).
Charitable donations made by the Group during the year totalled £0.5 million (2023/24: £4.8 million).
The Group made no political donations during the year (2023/24: £Nil).
The management of the company and the execution of the company's strategy are subject to a number of financial risks. The Directors have identified the need to manage the company's material financial risks, including liquidity, credit, exchange rate risk and interest rate risks. These risks are managed by Cadent Gas Limited's (a fellow subsidiary of Quadgas MidCo Limited) Treasury function ("Treasury") which invests surplus funds, mitigates foreign exchange exposure and manages borrowings for Quadgas MidCo Limited and fellow group subsidiaries.
Treasury also seeks to limit third party counterparty risk which arises from the investment of surplus funds and the use of derivative financial instruments. Treasury monitors the exposure that Quadgas Finance Plc and its fellow group subsidiaries have with each of their counterparties against agreed limits and these limits are monitored regularly and updated for changes in credit ratings.
The company acts as a conduit for finance raised and any related derivative transactions between the market and its immediate parent company, and amounts raised or entered into are passed on to its immediate parent on identical terms. The company's exposures are limited to the credit risk on the intercompany loans (as disclosed below and in note 9).
The company has limited direct exposure to the impacts of recent geopolitical volatility, however we recognise the potential macroeconomic impacts on interest rates and foreign exchange rates on the underlying debt portfolio. These impacts are addressed through the financial risk management.
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has established an appropriate liquidity risk management framework for the management of the short, medium and long-term funding and liquidity management requirements. The company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of external borrowings and intercompany receivables.
For the year ended 31 March 2025
The company raises debt finance for its immediate parent company, Quadgas MidCo Limited. Amounts raised are passed on to Quadgas MidCo Limited on identical terms. Quadgas MidCo Limited provides guarantees for the company's obligations under these arrangements. The principal risk of these arrangements is that Quadgas MidCo Limited is unable to meet its obligations to the company. The company is exposed to the expected credit losses on its intercompany loan with Quadgas MidCo Limited. The expected credit loss has been calculated by considering the probability of default and the loss given default on the balance outstanding on the intercompany loan.
To the extent that the company enters into intercompany loan agreements, the company's exposure to interest rate cash flow risk arises on such loans on which interest is charged based upon a floating index. This risk is managed through the use of fixed rate loan agreements and there were no loans with interest charged based on a floating index at 31 March 2025 (2024: £Nil).
To the extent that the company enters into loan and derivative agreements in currencies different to that of the company's functional currency, there is an exposure to movements in exchange rates. Due to the back to back nature of transactions by the company this exposure nets to nil. At the reporting date, the remeasurement of the USD bonds (aggregate notional: \$260,000,000) was a gain of £6,544,000 (2024: aggregate notional: \$169,000,000. Gain of £1,658,000) and the amortised cost of the debt in Sterling functional currency was £203,540,000 (2024: £135,390,000). The remeasurement of the EURO bond (notional: €22,000,000) was a gain of £385,000 (2024: gain of £532,000) and the amortised cost of the debt in Sterling functional currency was £18,481,000 (2024: £18,863,000).
Derivative financial instruments in the form of cross-currency interest rate swaps are entered into for the purposes of hedging foreign exchange risk. In addition, derivatives have been entered into for the purposes of hedging inflation and in particular the wedge between RPI and CPI. These derivative financial instruments are recorded at fair value in the financial statements. Fair value is the amount at which a financial instrument could be exchanged in an arm's length transaction between informed and willing parties. Where available, market values have been used to determine fair values. In other cases, fair values have been calculated using quotations from independent financial institutions, or by discounting expected cash flows at prevailing market rates.
As at 31 March 2025, the net fair value of these derivative financial instruments resulted in an external asset of £5,333,000 (2024: £4,589,000) and an external liability of £1,806,000 (2024: £2,083,000) which is matched by amounts owed by the company to its immediate parent company of £3,527,000 (2024: £2,506,000). The gross notional amounts of the external and intercompany derivative contracts was £472,864,000 (2024: £401,674,000). The net future cashflows from these external and internal derivatives are not affected by changes in exchange and inflation rates. The contracts have fixed settlement dates.
For the year ended 31 March 2025
Quadgas HoldCo Limited, a group company which indirectly holds 100% of the shares in Quadgas Finance Plc, has arranged, in accordance with the Companies Act 2006 and the Articles of Association, qualifying third party indemnities against financial exposure that Directors may incur in the course of their professional duties. Alongside these indemnities, Quadgas HoldCo Limited places Directors' and Officers' liability insurance for each Director.
The statement of financial position shows net liabilities of £2,749,000 (2024: £2,420,000). It is appropriate to prepare the accounts on a going concern basis despite the net liability position of the company as the company raises debt from external sources and lends on a back-to-back basis to Quadgas MidCo Limited who will repay amounts in full, and relies on Quadgas MidCo Limited as its only income source. Management analysis concluded that sufficient headroom exists in the forecast and against the requirements of key banking covenants.
The income statement shows interest receivable and similar income for the year ended 31 March 2025 of £61,990,000 (2024: £49,118,000). The loss for the financial year of £329,000 (2024: profit of £222,000) is driven by the impairment of an intercompany loan in the year, which is a non-cash movement. The company continues to receive income from Quadgas MidCo Limited which continues to trade and operate as a going concern and the debt of Quadgas Finance Plc is guaranteed by Quadgas PledgeCo Limited and Quadgas MidCo Limited. At 31 March 2025 Quadgas MidCo Limited had a company credit rating of BBB (S&P), was in a consolidated net asset position of £3,190,000,000 (2024: £3,390,000,000), reported consolidated profit before tax for the financial year of £209,000,000 (2024: £481,000,000 profit before tax) and had access to a consolidated £700,000,000 liquidity facility, none of which was drawn at 31 March 2025. See Quadgas MidCo Limited Annual report and accounts for further details.
The Directors are satisfied that the company has adequate resources to remain in operation, and that the Directors intend it to do so, for at least one year from the date the financial statements are signed. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.
The Directors of the company during the period and up to the date of signing of the financial statements were:
M W Braithwaite E B Fidler (Appointed 25 September 2024) G L Baron (Appointed 1 April 2025) A O Bickerstaff (Resigned 30 September 2024)
Having made the requisite enquiries, so far as the Directors in office at the date of the approval of this report are aware, there is no relevant audit information of which the auditor is unaware, and each Director has taken all reasonable steps to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information. This confirmation is given and should be interpreted in accordance with the provisions of s418 of the Companies Act 2006.
The auditor has indicated their willingness to continue in office, and a resolution that they be re-appointed will be proposed at the annual general meeting.
For the year ended 31 March 2025
As the company is part of a larger group, the internal control and risk management procedures are integrated with the internal control and risk management procedures in Quadgas MidCo Limited. Quadgas MidCo Limited has established internal control and risk management systems in relation to the process for preparing its financial statements.
The key features of these internal control and risk management systems are:
Quadgas Finance Plc is subject to the requirements of Rule 7.1 of the Disclosure Guidance and Transparency Rules ("DTRs") in relation to audit committees and their functions. For the purposes of DTR 7.1.5 R, the Audit and Risk Committee of Quadgas Finance Plc is responsible for fulfilling functions required by DTR 7.1.3R and the committee is composed as follows:
The share capital of the company consists of 50,000 ordinary shares of £1 each. There have been no changes in the capital structure during the year.
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.
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 101 'Reduced Disclosure Framework' ('FRS 101'). 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 of the company and of the profit or loss of the company for that year.
For the year ended 31 March 2025
In preparing these financial statements, the Directors are required to:
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
The Directors are also 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.
In addition, the Directors 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.
The Directors' Report was approved by the Board and signed on its behalf by:
G L Baron Director 19th June 2025
Registered office: Pilot Way Ansty Park Coventry CV7 9JU
Registered in England and Wales
Company registration number: 10619488
In our opinion the financial statements of Quadgas Finance Plc (the 'company'):
We have audited the financial statements which comprise:
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 "Reduced Disclosure Framework"(United Kingdom Generally Accepted Accounting Practice).
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 Financial Reporting Council's (the 'FRC's') Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services provided to the company for the year are disclosed in note 3 to the financial statements. We confirm that we have not provided any non-audit services prohibited by the FRC's Ethical Standard to the company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
| Key audit matter | The key audit matter that we identified in the current year was: • The recoverability of amounts owed by the immediate parent company |
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|---|---|---|---|
| Within this report, the key audit matter identified has a similar level of risk compared to prior year. |
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| Materiality | The materiality that we used in the current year was £17.5m which was determined on the basis of total borrowings. |
| Scoping | Audit work to respond to the risks of material misstatement was performed directly by the audit engagement team. |
|---|---|
| Significant changes in our approach |
There have been no significant changes to our approach from the prior year. |
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.
The company is a member of the Quadgas Holdings TopCo Limited and its subsidiaries (the "group") and the going concern of the company is closely linked to the group. Our evaluation of the directors' assessment of the company's ability to continue to adopt the going concern basis of accounting has therefore been performed at the group level, supplemented with procedures specific to the company, and included:
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.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
5.1. The recoverability of amounts owed by the immediate parent company
| Key audit matter description |
Amounts owed by the immediate parent company, Quadgas MidCo Limited ("immediate parent company") are stated in the balance sheet at £1,757m (2024: £1,647m), comprised of short-term amounts of £21m (2024: £58m) and long-term amounts of £1,736m (2024: £1,589m). Quadgas Finance plc loans borrowed funds toQuadgas Midco Limited on back-to-back terms. |
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| There is judgement involved in determining the recoverability of these receivable amounts from the immediate parent company based on its financial position and future prospects and recognition of an expected credit loss amount. This expected loss is calculated by determining the probability of default of the counterparty and the amount of loan deemed likely to be recoverable in the event of default and takes into consideration a range of factors including the historical trading performance of Quadgas MidCo Limited group undertaking, Cadent Gas Limited (a gas distribution business regulated by Ofgem). Cadent Gas Limited is a directly owned subsidiary of Quadgas MidCo Limited. |
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| The company applies IFRS 9 Financial Instruments and as detailed further in Note 1, an impairment loss was recognised on amounts owed by the immediate parent company using the twelve months expected credit loss method. The accumulated impairment as of 31 March 2025 is £2.8m (2024: £2.5m). |
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| Further details are included within debtors note 9 to the financial statements. | |
| How the scope of our audit responded to the key audit matter |
We evaluated the directors' judgements regarding the appropriateness of the expected credit loss model and reasonability of key judgements used in the estimation of the probability weighted expected credit loss. With the involvement of our financial instruments specialists we assessed these key judgements and also re- performed the calculation of expected credit loss. In addition, we have assessed the appropriateness of the method adopted to calculate the expected credit loss againstthe requirements of IFRS 9. |
| We also evaluated the appropriateness of the carrying value of amounts owed by the immediate parent company obtaining a copy of the latest audited financial information and our understanding of the future trading performance of the immediate parent company Cadent Gas Limited. We assessed Cadent Gas Limited's future cash flow forecasts and the key assumptions. We also reviewed the historical accuracy of Cadent Gas Limited's forecasts by comparing the actual results to forecasts. |
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| Key observations | Based on the work performed, we concluded that amounts owed by the immediate parent company are appropriately stated. |
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We usemateriality both in planning the scope of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
| Materiality | £17.5m (2024: £14.4m) |
|---|---|
| Basis for determining materiality |
Approximately 1.0% of total borrowings (2024: Approximately 1.0% of total borrowings). |
| Rationale for the benchmark applied |
The primary purpose of the company is to raise funding from external sources and provide funding to the immediate parent company. We have therefore used total borrowings as the benchmark. |
| Total Borrowings Materiality £17.5m £1,757m |
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| Total Borrowings Materiality |
Audit & Risk Committee reporting threshold £0.9m |
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected misstatements exceed the materiality for the financial statements as a whole. Performance materiality was set at 70% of materiality for the 2025 audit (2024: 70%). In determining performance materiality, we considered the following factors:
We agreed with the Audit & Risk Committee that we would report to the Committee all audit differences in excess of £0.9m (2024: £0.7m), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit & Risk Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements.
The primary purpose of the company is the provision of long-term finance for its immediate parent, Quadgas MidCo Limited.
Our audit was scoped by obtaining an understanding of the entity and its environment, including internal control, and assessing the risks of material misstatement, covering 100% (2024: 100%) of net liabilities and 100% (2024: 100%) of loss before tax.
All audit work to respond to the risks of material misstatement was performed directly by the audit engagement team.
The company's accounting records are held within the group's financial accounting and reporting software platform, SAP. We have worked with our IT specialists to test key General Information Technology Controls (GITC) within the platform, including testing over controls for access, change management and segregation ofduties.
We also gained an understanding over the relevant controls and business processes for complex areas of estimation including treasury, alongside the financial closing and reporting process. We had not relied on IT controls or any other controls associated with these systems or processes for the purposes of our audit.
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.
As explained more fully in the directors' responsibilities statement, 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.
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.
A further description of our responsibilities for the audit of the financial statements is located on the FRC's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and noncompliance with laws and regulations, we considered the following:
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the company operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included the UK Companies Act and tax legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be fundamental to the company's ability to operate or to avoid a material penalty. These include the license conditions imposed by the office of Gas and Electricity Markets (Ofgem).
As a result of performing the above, we did not identify any key audit matters related to the potential risk of fraud or non-compliance with laws and regulations.
Our procedures to respond to risks identified included the following:
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members including internal specialists, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
In our opinion, based on the work undertaken in the course of the audit:
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 any material misstatements in the strategic report or the directors' report.
13.1. Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• the financial statements are not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors' remuneration have not been made.
We have nothing to report in respect of this matter.
Following the recommendation of the Audit & Risk Committee, we were appointed by the Directors on 22 November 2017 to audit the financial statements for the year ending 31 March 2018 and subsequent financial periods. The period of total uninterrupted engagement including previous renewals and reappointments of the firm is 7 years, covering the years ending 31 March 2018 to 31 March 2025.
14.2. Consistency of the audit report with the additional report to the audit & risk committee
Our audit opinion is consistent with the additional report to the Audit & Risk Committee we are required to provide in accordance with ISAs (UK).
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.
Jane Whitlock ACA (Senior statutoryDXGLWRU
For and on behalf of Deloitte LLP
Statutory Auditor
Birmingham, United Kingdom
19th June 2025
For the year ended 31 March 2025
| Notes | 2025 £'000 |
2024 £'000 |
|
|---|---|---|---|
| Interest receivable and similar income | 5 | 61,990 | 49,118 |
| Interest payable and similar charges | 6 | (61,981) | (49,111) |
| External net (losses) on derivatives | 7 | (2,539) | (164) |
| External exchange gains on loans | 7 | 6,929 | 2,191 |
| Internal net gains on derivatives | 7 | 2,539 | 164 |
| Internal exchange losses on loans | 7 | (6,929) | (2,191) |
| (Impairment)/impairment reversal of intercompany loans | 3 | (337) | 217 |
| (Loss)/profit before taxation | (328) | 224 | |
| Tax charge | 8 | (1) | (2) |
| (Loss)/profit for the financial year | (329) | 222 |
The results reported above relate to continuing activities. There were no other gains and losses for the year other than those reported above, therefore no separate statement of comprehensive income was presented.
See note 1 for basis of presentation.
The notes on pages 20 to 35 form an integral part of the financial statements.
As at 31 March 2025
| Notes | 2025 £'000 |
2024 £'000 |
|
|---|---|---|---|
| Non-current assets Debtors: amounts falling due after more than one year |
9 | 1,586,812 | |
| Derivative financial instruments: amounts falling due after more | 1,733,095 | ||
| than one year | 10 | 7,139 | 4,494 |
| 1,740,234 | 1,591,306 | ||
| Current assets | |||
| Debtors: amounts falling due less than one year Derivative financial instruments: amounts falling due within one |
9 | 20,609 | 58,257 |
| year | 10 | - | 2,178 |
| Cash and cash equivalents | 89 | 82 | |
| 20,698 | 60,517 | ||
| Current liabilities | |||
| Creditors: amounts falling due within one year | 11 | (20,603) | (58,250) |
| Derivative financial instruments: amounts owing within one year Taxation |
10 8 |
- (1) |
(2,178) (3) |
| (20,604) | (60,431) | ||
| Net current assets | 94 | 86 | |
| Total assets less current liabilities | 1,740,328 | 1,591,392 | |
| Non-current liabilities | |||
| Creditors: amounts falling due after more than one year | 12 | (1,735,938) | (1,589,318) |
| Derivative financial instruments: amounts owing after more than one year |
10 | (7,139) | (4,494) |
| (1,743,077) | (1,593,812) | ||
| Total net liabilities | (2,749) | (2,420) | |
| Equity | |||
| Share capital | 14 | 50 | 50 |
| Retained losses Total shareholders' deficit |
(2,799) (2,749) |
(2,470) (2,420) |
|
The notes on pages 20 to 35 are an integral part of these financial statements.
The financial statements on pages 17 to 35 were approved by the Board of Directors on 19 June 2025 and were signed on its behalf by:
G L Baron Director Quadgas Finance Plc Company registration number: 10619488
For the year ended 31 March 2025
| Share capital £'000 |
Retained losses £'000 |
Total £'000 |
|
|---|---|---|---|
| At 1 April 2024 | 50 | (2,470) | (2,420) |
| Loss for the financial year | - | (329) | (329) |
| As at 31 March 2025 | 50 | (2,799) | (2,749) |
| Share capital £'000 |
Retained losses £'000 |
Total £'000 |
|
|---|---|---|---|
| At 1 April 2023 | 50 | (2,692) | (2,642) |
| Profit for the financial year | - | 222 | 222 |
| At 31 March 2024 | 50 | (2,470) | (2,420) |
The notes on pages 20 to 35 are an integral part of these financial statements.
For the year ended 31 March 2025
Quadgas Finance Plc (the "company") is a public limited company and is incorporated and registered in England and Wales, with its registered office at Pilot Way, Ansty Park, Coventry, CV7 9JU.
The principal activity of the company is the provision of long term finance, through access to capital markets, for its immediate parent, Quadgas MidCo Limited.
Quadgas MidCo Limited is the holding company for the Group comprising Quadgas MidCo Limited, Quadgas Finance Plc, Cadent Services Limited, Cadent Finance Plc, Cadent Gas Limited, Cadent Gas Pension Trustee Limited, Cadent Gas Pension Property Company 1 Limited, Cadent Gas Pension Property Company 2 Limited and Cadent Gas Pension Services Limited.
The principal accounting policies applied in the preparation of these financial statements are set out as below. These policies have been consistently applied to all the years presented, unless otherwise stated.
The financial statements of Quadgas Finance Plc have been prepared on the going concern basis in accordance with applicable UK accounting and financial reporting standards (FRS 101) and the Companies Act 2006. The statement of financial position shows net liabilities of £2,749,000 (2024: £2,420,000). It is appropriate to prepare the accounts on a going concern basis despite the net liability position of the company as the company raises debt from external sources and lends on a back to back basis to Quadgas MidCo Limited who will repay amounts in full, and relies on Quadgas MidCo Limited as its only income source. Management analysis concluded that sufficient headroom exists in the forecast and against the requirements of key banking covenants.
The income statement shows interest receivable and similar income for the year ended 31 March 2025 of £61,990,000 (2024: £49,118,000). The loss for the financial year of £329,000 (2024: £222,000 profit) is driven by the inter company loans impairment in the year, which is a non-cash movement. The company continues to receive income from Quadgas MidCo Limited which continues to trade and operate as a going concern and the debt of Quadgas Finance Plc is guaranteed by Quadgas PledgeCo Limited and Quadgas MidCo Limited. At 31 March 2025 Quadgas MidCo Limited was in a consolidated net asset position of £3,190,000,000 (2024: £3,390,000,000), reported consolidated profit before tax for the financial year of £209,000,000 (2024: £481,000,000 profit before tax), had access to a consolidated £700,000,000 liquidity facility, none of which was drawn at 31 March 2025, and had a company credit rating of BBB (S&P).
Despite recent macro-economic volatility impacting inflation, energy prices, US Government and retaliatory tariffs and the ongoing conflicts in the Middle East and Ukraine, the company has not been significantly impacted as a result of protections in place through the regulatory price control. The company continues to closely monitor and manage the impacts of changes in the macro-economic environment. Having made enquiries and reassessed the principal risks, the Directors consider that the company and its subsidiary undertakings have adequate resources to continue in business.
The financial statements have been prepared on an historical cost basis except for the derivative financial instruments that are measured at fair value at the end of each reporting period, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for the goods and services. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.
For the year ended 31 March 2025
Items included in the financial statements are measured using the currency of the primary economic environment in which the company operates (the 'functional currency'). The financial statements are presented in pounds sterling which is also the company's functional currency.
The company meets the definition of a qualifying entity under FRS 100 (Financial Reporting Standard 100) issued by the Financial Reporting Council, as it is a member of a Quadgas MidCo Limited Group where the parent of the Group prepares publicly available consolidated financial statements which include the company's results.
The financial statements have therefore been prepared in accordance with United Kingdom Generally Accepted Accounting Practice, including Financial Reporting Standard 101 "Reduced Disclosure Framework", in accordance with the requirements of the Companies Act 2006 and the Disclosure and Transparency Rules of the Financial Conduct Authority.
As permitted by FRS 101, the company has taken advantage of the disclosure exemptions available under that standard in relation to business combinations, share-based payment, non-current assets held for sale, financial instruments, capital management, presentation of comparative information in respect of certain assets, presentation of a cash-flow statement, standards not yet effective, and related party transactions.
Where relevant, equivalent disclosures have been presented in the group financial statements of Quadgas MidCo Limited.
The preparation of financial statements may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities and the reported amounts of turnover and expenses during the reporting period. Actual results could differ from these estimates.
The key accounting estimates are in respect of
• the fair value of derivative financial instruments which are calculated by discounting future cash flows
Derivatives values are calculated by discounting future cash flows using discount rates which are derived from yield curves based on quoted interest rates and are adjusted for credit risk, which is estimated based on market observations.
The impairment of intercompany loans is determined by estimating the probability of default of the counterparty and the amount of the loan deemed likely to be recoverable in the event of default. The expected loss calculation is discussed further in note 1(f) Financial instruments and note 9 Debtors.
There are no new or amended standards or interpretations during the year that have a significant impact on the company's financial statements.
For the year ended 31 March 2025
Interest income and interest costs are accrued on a timely basis by reference to the principal outstanding and at the effective interest rate applicable. Interest income is included in interest receivable and similar income and interest cost is included in the interest payable and similar charges.
The tax charge for the period is recognised in the income statement or directly in equity according to the accounting treatment of the related transaction.
Current tax assets and liabilities are measured at the amounts expected to be recovered from or paid to the tax authorities. The tax rates and tax laws used to compute the amounts are those that have been enacted or substantively enacted by the reporting date.
The calculation of the total tax charge involves a degree of estimation and judgement, and management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and establishes positions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Foreign currency transactions are re-measured into the functional currency of the company using the exchange rates prevailing on the dates of the transactions or valuation where items are re-measured. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Nonmonetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at yearend exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.
For the year ended 31 March 2025
(f) Financial instruments
Financial assets have been classified in accordance with business model assessment under IFRS 9. Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.
If the transaction price differs from fair value at initial recognition, the company will account for such difference as follows:
After initial recognition, the deferred gain or loss will be released to profit or loss such that it reaches a value of zero at the time when the entire contract can be valued using active market quotes or verifiable objective market information. Depending on the type of financial instrument, the company can adopt one of the following policies for the amortisation of day 1 gain or loss:
Financial instruments are classified at inception into one of the following categories which then determines the subsequent measurement methodology:
Financial assets are classified into one of the following three categories:
For the year ended 31 March 2025
Financial liabilities are classified into one of the following two categories:
Loans receivable are carried at amortised cost using the effective interest method less any allowance for estimated impairments. Impairments are calculated using the expected credit loss approach by calculating the probability of default and the estimated recoverable amount given default. A loss allowance is established for impairments using the expected credit loss approach by calculating the probability of default and the estimated recoverable amount given default.
Borrowings, which include interest-bearing loans, are recorded at their initial fair value which normally reflects the proceeds received, net of direct issue costs less any repayments. Subsequently these are stated at amortised cost, using the effective interest method. Any difference between proceeds and the redemption value is recognised over the term of the borrowing in the income statement using the effective interest method.
Assets and liabilities on different transactions are only netted if the transactions are with the same counterparty, a legal right of set off exists and the cash flows are intended to be settled on a net basis. Gains and losses arising from changes in fair value are included in the income statement in the period they arise.
Derivative financial instruments ('derivatives') are recorded at fair value. Where the fair value of a derivative is positive, it is carried as a derivative asset and where negative, as a liability. Balance sheet presentation of derivatives have been determined based on the final maturity date. A derivative that matures within one year has been classified as current and a derivative that matures after one year has been classified as non-current.
The fair value of financial derivatives is calculated by discounting all future cash flows by the market yield curve at the reporting date, and adjusting for own and counterparty credit. The market yield curve for each currency is obtained from external sources for interest and foreign exchange rates.
For financial assets carried at amortised cost, the amount of the impairment is the differences between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.
For the year ended 31 March 2025
The company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the company retains substantially all the risks and rewards of ownership of a transferred financial asset, the company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset's carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss.
Financial assets are impaired by calculating the probability of default and the estimated recoverable amount given default, which is used to calculate the expected credit loss. The company has taken default to be defined as a counterparty that has entered administration.
The company recognises loss allowances for expected credit losses (ECL) on financial instruments that are not measured at FVTPL, namely:
The company measures the loss allowances for amounts owed by immediate parent company at an amount equal to the 12-month expected credit loss (representing a stage 1 financial model). The way this is calculated is based on the applied impairment methodology, as described below:
Stage 1: For financial assets where there has not been a significant increase in credit risk since initial recognition, and were not credit impaired on recognition, the company recognises a loss allowance based on the 12-month expected credit loss.
Stage 2: For financial assets where there has been a significant increase in credit risk since initial recognition, and were not credit impaired, the company recognises a loss allowance for lifetime expected credit loss.
For the year ended 31 March 2025
Stage 3: For financial assets which are credit impaired, the company recognises the lifetime expected credit loss.
A significant increase in credit risk would be as a result of any change in circumstances specific to the counterparty or to the wider economic environment whereby the risk of default could be said to have been significantly increased within reasonable thresholds.
Evidence that the financial asset is credit impaired includes the following:
In the application of the company's accounting policies, which are described in note 1, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
There are no areas of judgement which have a significant effect on the amounts recognised in the financial statements.
Key sources of estimation uncertainty that have significant risk of causing material adjustment to the carrying amounts of assets and liabilities in the next financial year are as follows:
• The fair value of derivative financial instruments relating to index-linked swaps (RPI/CPI basis swaps) are obtained from a third party source. The future cash flows are discounted based on expectations of inflation rates (RPI cashflows based on market forecasts and CPI cashflows based on the currently unobservable spreads to the liquid RPI inflation markets) and interest rates both of which are subjective and fluctuate on a daily basis. Projected cash flows are then discounted back using discount factors that are derived from the applicable interest rate curves adjusted credit risk and management's estimate of funding risk and Cadent's credit spread (which are unobservable and provided by Cadent to the third party), where appropriate. These estimations could have a material adjustment to the gross carrying amounts, however, no sensitivities relating to derivative financial instruments have been provided due to the back to back nature of the derivative arrangements resulting in a net nil impact for the results of the company. Note 10 Derivative financial instruments.
For the year ended 31 March 2025
(Loss)/profit is stated after (charging)/crediting the following:
| 2025 | 2024 | |
|---|---|---|
| £'000 | £'000 | |
| Net gains on external financial instruments (note 7) | 4,390 | 2,027 |
| Net losses on intercompany financial instruments (note 7) | (4,390) | (2,027) |
| (Impairment)/impairment reversal of intercompany loans | (337) | 217 |
| Net interest receivable (notes 5/6) | 9 | 7 |
| (328) | 224 |
Movement in the loss allowance in the year is driven by the deterioration of credit spreads for Quadgas MidCo Limited since March 2024.
Fees payable to the company's auditors for the audit of the company's annual financial statements of £49,188 (2024: £48,279) and non-audit services amounting to £76,534 (2024: £69,460) have been borne by its parent company, Quadgas MidCo Limited. No other fees were payable to the auditors (2024: £Nil).
There were no employees of the company during the year (2024: Nil).
Directors emoluments are paid by Cadent Gas Limited. It is not practicable to split the directors services or remuneration between Group entities.
The emoluments of the Directors are not paid to them in their capacity as Directors of the company and are payable for services wholly attributable to other subsidiary undertakings. Amounts paid to the Directors for services rendered to all relevant group entities in the current year are disclosed within the Cadent Gas Limited financial statements.
| 2025 £'000 |
2024 £'000 |
|
|---|---|---|
| Interest receivable and similar income from immediate parent company | 61,990 | 49,118 |
| 61,990 | 49,118 | |
| 6 Interest payable and similar charges | ||
| 2025 £'000 |
2024 £'000 |
|
| Interest payable and similar charges on other borrowings | (61,981) | (49,111) |
| (61,981) | (49,111) |
For the year ended 31 March 2025
| 7 Net gains/(losses) on financial instruments | 2025 | 2024 |
|---|---|---|
| External | £'000 | £'000 |
| Net losses on derivatives not designated in a hedge relationship1 | (2,539) | (164) |
| Exchange gains on revaluation of foreign currency denominated loans | 6,929 | 2,191 |
| 4,390 | 2,027 | |
| Internal | ||
| Net gains on derivatives not designated in a hedge relationship | 2,539 | 164 |
| Exchange losses on revaluation of foreign currency denominated loans | (6,929) | (2,191) |
| (4,390) | (2,027) | |
| 1 Includes a £669,000 loss (2024: £1,647,000 gain) relating to RPI/CPI basis swaps. |
||
| Tax charged to the income statement | 2025 £'000 |
2024 £'000 |
|---|---|---|
| Current Tax | ||
| UK Corporation tax | 1 | 2 |
| Total tax charge | 1 | 2 |
The tax charge for the period is lower (2024: lower) than the standard rate of corporation tax in the UK of 25% (2024: 25%). The differences are explained below.
| (Loss)/profit before tax | (328) | 224 |
|---|---|---|
| (Loss)/profit before tax multiplied by the UK corporation tax rate of 25% (2024: 25%) |
(82) | 56 |
| Effect of : Non-taxable charge/(income) Total tax charge |
83 1 |
(54) 2 |
For the year ended 31 March 2025
| 2025 | 2024 | |
|---|---|---|
| Amounts falling due within one year: | £'000 | £'000 |
| Amounts owed by immediate parent company | 20,609 | 58,257 |
| 20,609 | 58,257 | |
| Amounts falling due after more than one year: | ||
| Amounts owed by immediate parent company | 1,735,938 | 1,589,318 |
| Loss allowance | (2,843) | (2,506) |
| 1,733,095 | 1,586,812 |
The company raises debt finance for its immediate parent company, Quadgas MidCo Limited. Amounts raised are passed on to Quadgas MidCo Limited on identical terms, these terms are set out in note 13. Quadgas MidCo Limited provides guarantees for the company's obligations under these arrangements.
The company measures the loss allowance for amounts owed by immediate parent company at an amount equal to 12 month expected credit loss, representing a stage 1 financial asset.
Financial assets are impaired by calculating the probability of default and the estimated recoverable amount given default, which is used to calculate the expected credit loss. The company has taken default to be defined as a counterparty that has entered administration.
The fair values of derivative financial instruments are as follows:
| 2025 | |||
|---|---|---|---|
| Assets | Liabilities | Total | |
| £'000 | £'000 | £'000 | |
| Amounts falling due within one year - external (note 11) | - | - | - |
| Amounts falling due within one year - internal (note 11) | - | - | - |
| Amounts falling due after more than one year -external (note 12) | 5,333 | (1,806) | 3,527 |
| Amounts falling due after more than one year - internal (note 12) | 1,806 | (5,333) | (3,527) |
| 7,139 | (7,139) | - | |
| 2024 | |||
| Assets | Liabilities | Total | |
| £'000 | £'000 | £'000 | |
| Amounts falling due within one year (external) | 2,178 | - | 2,178 |
| Amounts falling due within one year (internal) | - | (2,178) | (2,178) |
| Amounts falling due after more than one year -external (note 12) | 2,411 | (2,083) | 328 |
| Amounts falling due after more than one year - internal (note 12) | 2,083 | (2,411) | (328) |
| 6,672 | (6,672) | - |
For the year ended 31 March 2025
The derivative financial instruments included on the statement of financial position are measured at fair value. These fair values can be categorised into hierarchy levels that are representative of the inputs used in measuring the fair value. The best evidence of fair value is a quoted price in an actively traded market. In the event that the market for a financial instrument is not active, a valuation technique is used.
The hierarchy levels are explained below:
Level 1: Financial instruments with quoted prices for identical instruments in active markets.
Level 2: Financial instruments with quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in inactive markets and financial instruments valued using models where all significant inputs are based directly or indirectly on observable market data.
Level 3: Financial instruments valued using valuation techniques where one or more significant inputs are based on unobservable market data.
| As at 31 March 2025 | Level 1 £'000 |
Level 2 £'000 |
Level 3 £'000 |
Total £'000 |
|---|---|---|---|---|
| Assets | ||||
| Derivative financial instruments (external) | - | 5,095 | 238 | 5,333 |
| Derivative financial instruments (internal) | - | 1,806 | - | 1,806 |
| - | 6,901 | 238 | 7,139 | |
| Liabilities | ||||
| Derivative financial instruments (external) | - | (1,806) | - | (1,806) |
| Derivative financial instruments (internal) | - | (5,095) | (238) | (5,333) |
| - | (6,901) | (238) | (7,139) | |
| - | - | - | - | |
| As at 31 March 2024 | Level 1 £'000 |
Level 2 £'000 |
Level 3 £'000 |
Total £'000 |
| Assets | ||||
| Derivative financial instruments (external) | - | 3,682 | 907 | 4,589 |
| Derivative financial instruments (internal) | - | 2,083 | - | 2,083 |
| - | 5,765 | 907 | 6,672 | |
| Liabilities | ||||
| Derivative financial instruments (external) | - | (2,083) | - | (2,083) |
| Derivative financial instruments (internal) | - | (3,682) | (907) | (4,589) |
| - | (5,765) | (907) | (6,672) | |
| - | - | - | - |
For the year ended 31 March 2025
The Level 3 derivative financial instruments comprise £250 million of RPI-CPI basis inflation swaps maturing in 2032 and 2033 which are traded based on a spread to liquid RPI inflation markets. The market for CPI swaps is still maturing with the spreads not currently observable in their own liquid market. The fair values for these instruments are calculated by using market forecasts of inflation indices obtained from third party valuation data to produce a series of future cashflows. These are then discounted back to a net present value, using quoted interest rates, to which model-derived counterparty and Cadent credit and funding valuation adjustments are applied. As the RPI and CPI spreads, the funding adjustments and Cadent spread are not observable, these swaps have been classified as Level 3 instruments. As these instruments are linked to CPI, higher inflation forecasts across the life of the instruments will result in a larger liability at maturity, negatively impacting the fair value. Conversely, a reduction in inflation forecasts across the life of the instruments will reduce the liability at maturity and positively impact the fair value. Indicatively, a 1% change in the first twelve months of the inflation indices used to calculate the fair values of the Level 3 derivative financial instruments would change the fair values by £183,000, with an increase in the inflation indices reducing the fair values and vice versa. Fair values will also be impacted by movements in interest rate curves which are used to derive the discount rates used in calculating the net present values of the instruments.
Movements in the year to 31 March 2025, for external assets and liabilities measured at fair value using Level 3 valuations inputs are as follows:
| 2025 £'000 |
2024 £'000 |
|
|---|---|---|
| At 1 April | 907 | (740) |
| Net (loss)/gain for the year | (669) | 1,647 |
| At 31 March | 238 | 907 |
The external (loss)/gain is offset by an equal and opposite internal gain/(loss) due to the back to back nature of transactions resulting in nil net impact.
USD 44 million, USD 75 million and EUR 22 million of fixed to fixed cross-currency interest rate swaps were transacted to convert principal and interest cash flows on the USD 44 million, USD 75 million and EUR 22 million debt maturing in 2031, 2030 and 2033 respectively, to sterling. During the year, USD 50 million fixed to fixed cross currency interest rate swaps matured.
In October 2024, USD 26.5 million, USD 50 million, USD 15 million and USD 49.5 million of fixed to fixed cross currency interest rate swaps were transacted to convert principle and cash interest on the USD 26.5 million, USD 50 million, USD 15 million and USD 49.5 million debt maturing in 2029, 2031, 2035 and 2037 respectively to sterling.
Quadgas Finance Plc has transacted equal and opposite internal fixed to fixed cross-currency interest rate swaps and internal RPI/CPI basis swaps with its immediate parent company Quadgas MidCo Limited, and its net exposure is therefore £Nil and so hedge accounting is not applied.
For the year ended 31 March 2025
For each class of derivative the notional contract amounts* are as follows:
| 2025 £'000 |
2024 £'000 |
|
|---|---|---|
| Cross-currency interest rate swaps (external) | 222,864 | 151,674 |
| Cross-currency interest rate swaps (internal) | (222,864) | (151,674) |
| Inflation-linked swaps (external) | 250,000 | 250,000 |
| Inflation-linked swaps (internal) | (250,000) | (250,000) |
| - | - |
*The notional contract amounts of derivatives indicate the gross nominal value of transactions outstanding at the reporting date.
The fair values of financial assets and financial liabilities are determined as follows:
For the year ended 31 March 2025
The following table details the notional principal amounts and remaining terms of external interest rate and basis swap contracts outstanding as at the reporting date:
| Average | ||||||
|---|---|---|---|---|---|---|
| contractual exchange |
Notional principal value |
Fair value | ||||
| 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | |
| rate | rate | £'000 | £'000 | £'000 | £'000 | |
| External under 5 years - USD 50m 2024 | - | 1.313 | - | 37,651 | - | 2,178 |
| External 5 years or more - USD 75m 2030 | 1.242 | 1.242 | 60,361 | 60,361 | (1,044) | (1,175) |
| External 5 years or more - USD 44m 2031 | 1.313 | 1.313 | 33,701 | 33,701 | 1,641 | 1,504 |
| External 5 years or more - EUR 22m 2033 | 1.176 | 1.176 | 19,961 | 19,961 | (762) | (908) |
| External 5 years or more - RPI/CPI 50m 2032 | n/a | n/a | 50,000 | 50,000 | 110 | 161 |
| External 5 years or more - RPI/CPI 100m 2033 | n/a | n/a | 100,000 | 100,000 | 86 | 343 |
| External 5 years or more - RPI/CPI 100m 2033 | n/a | n/a | 100,000 | 100,000 | 43 | 403 |
| External under 5 years - USPP USD 26.5m 2029 | 1.296 | - | 20,455 | - | 315 | - |
| External 5 years or more - USPP USD 50m 2031 | 1.296 | - | 38,595 | - | 1,000 | - |
| External 5 years or more - USPP USD 15m 2035 | 1.295 | - | 11,579 | - | 449 | - |
| External 5 years or more - USPP USD 49.5m 2037 | 1.295 | - | 38,212 | - | 1,689 | - |
| 472,864 | 401,674 | 3,527 | 2,506 | |||
| Internal under 5 years - USD 50m 2024 | - | 1.313 | - | 37,651 | - | (2,178) |
| Internal 5 years or more - USD 75m 2030 | 1.242 | 1.242 | 60,361 | 60,361 | 1,044 | 1,175 |
| Internal 5 years or more - USD 44m 2031 | 1.313 | 1.313 | 33,701 | 33,701 (1,641) | (1,504) | |
| Internal 5 years or more - EUR 22m 2033 | 1.176 | 1.176 | 19,961 | 19,961 | 762 | 908 |
| Internal 5 years or more - RPI/CPI 50m 2032 | n/a | n/a | 50,000 | 50,000 | (110) | (161) |
| Internal 5 years or more - RPI/CPI 100m 2033 | n/a | n/a | 100,000 | 100,000 | (86) | (343) |
| Internal 5 years or more - RPI/CPI 100m 2033 | n/a | n/a | 100,000 | 100,000 | (43) | (403) |
| Internal under 5 years - USPP USD 26.5m 2029 | 1.296 | - | 20,455 | - | (315) | - |
| Internal 5 years or more - USPP USD 50m 2031 | 1.296 | - | 38,595 | - | (1,000) | - |
| Internal 5 years or more - USPP USD 15m 2035 | 1.295 | - | 11,579 | - | (449) | - |
| Internal 5 years or more - USPP USD 49.5m 2037 | 1.295 | - | 38,212 | - | (1,689) | - |
| 472,864 | 401,674 (3,527) | (2,506) |
The cross-currency interest rate swaps settle semi-annually with the basis swaps settling on maturity.
| 11 Creditors: amounts falling due within one year | 2025 £'000 |
2024 £'000 |
|---|---|---|
| Borrowings (note 13) | 20,603 20,603 |
58,250 58,250 |
| 12 Creditors: amounts falling due after more than one year | 2025 £'000 |
2024 £'000 |
| Borrowings (note 13) | 1,735,938 1,735,938 |
1,589,318 1,589,318 |
For the year ended 31 March 2025
| 2025 | 2024 | |||||
|---|---|---|---|---|---|---|
| £'000 | £'000 | |||||
| Amounts falling due within one year | ||||||
| Bonds (note 11) | 20,603 | 58,250 | ||||
| 20,603 | 58,250 | |||||
| Amounts falling due after more than one year | ||||||
| Bonds (note 12) | 1,735,938 | 1,589,318 | ||||
| 1,735,938 | 1,589,318 | |||||
| 2,025 | 2024 | |||||
| £'000 | £'000 | |||||
| Total borrowings are repayable as follows: | ||||||
| Less than 1 year | 20,603 | 58,250 | ||||
| In 1-2 years | - | - | ||||
| In 2-3 years | 148,760 | - | ||||
| In 3-4 years | - | 148,667 | ||||
| In 4-5 years | 471,172 | - | ||||
| More than 5 years | 1,116,006 | 1,440,651 | ||||
| 1,756,541 | 1,647,568 | |||||
| Summary of Borrowings | ||||||
| Fixed Rate | ||||||
| GBP | Listed | 149 | Fixed | 31-Oct-27 | 150 | 146 |
| USD1 GBP |
Listed Listed |
21 350 |
Fixed Fixed |
11-Jun-29 17-Sep-29 |
21 355 |
22 317 |
| GBP | Listed | 103 | Fixed | 31-Oct-29 | 104 | 100 |
| GBP | Listed | 30 | Fixed | 16-Jul-30 | 30 | 35 |
| USD2 | Listed | 59 | Fixed | 16-Jul-30 | 59 | 65 |
| GBP | Listed | 70 | Fixed | 30-Aug-30 | 71 | 68 |
| GBP | Listed | 100 | Fixed | 10-Mar-31 | 101 | 95 |
| USD3 | Listed | 32 | Fixed | 10-Mar-31 | 34 | 31 |
| USD4 | Listed | 39 | Fixed | 11-Dec-31 | 39 | 42 |
| GBP | Listed | 40 | Fixed | 15-Jan-32 | 40 | 46 |
| GBP | Listed | 54 | Fixed | 16-Jan-32 | 55 | 64 |
| GBP | Listed | 40 | Fixed | 31-Oct-32 | 40 | 38 |
| GBP | Listed | 206 | Fixed | 10-Mar-33 | 207 | 192 |
| EUR5 | Listed | 19 | Fixed | 10-Mar-33 | 18 | 18 |
| GBP | Listed | 225 | Fixed | 30-Aug-33 | 227 | 217 |
| GBP | Listed | 35 | Fixed | 16-Jan-34 | 35 | 43 |
| USD6 | Listed | 12 | Fixed | 15-Jan-35 | 12 | 13 |
| GBP | Listed | 100 | Fixed | 21-Jan-36 | 100 | 90 |
| USD7 | Listed | 40 | Fixed | 15-Jan-37 | 39 | 43 |
| GBP | Listed | 20 | Fixed | 17-Jan-39 | 20 | 26 |
2Dollar amount is 75m 6 3
Euro amount is 22m Dollar amount is 15m
Dollar amount is 44m 7
4 Dollar amount is 50m Dollar amount is 49.5m
1,744 1,757 1,711
For the year ended 31 March 2025
The fair value of borrowings at 31 March 2025 was £1,711,000,000 (2024: £1,433,000,000). Where market values were available, fair value of borrowings (Level 1) was £317,000,000 (2024: £318,000,000). Where market values were not available, the fair value of borrowings (Level 2) was £1,394,000,000 (2024: £1,115,000,000), calculated by discounting cash flows at prevailing interest rates. The notional amount outstanding of the debt portfolio at 31 March 2025 was £1,744,000,000 (2024: £1,630,000,000).
The interest rates range from 1.95% - 7.08%.
As at 31 March 2025 the company had no collateral placed or received from counterparties and no committed facilities.
| 2025 | 2024 | |
|---|---|---|
| £'000 | £'000 | |
| Allotted, called up and fully paid | ||
| 50,000 ordinary shares of £1 each | 50 | 50 |
Each share carries the right to one vote on a poll. The right to vote is determined by reference to the register of members. All dividends shall be declared and paid according to the amounts paid up on the shares. The shares do not carry any rights with respect to capital to participate in a distribution (including on a winding-up) other than those that exist as a matter of law. The shares are not redeemable.
The company is exempt under FRS 101.8(k) from disclosing transactions with Quadgas MidCo Limited and its subsidiary undertakings where all of the voting rights are held within the Group. There were no related party transactions with other companies.
There are no post balance sheet events.
The ultimate parent and controlling company is Quadgas Holdings TopCo Limited and the immediate parent company is Quadgas MidCo Limited. The largest and smallest groups which include the company and for which consolidated financial statements are prepared are headed by Quadgas Holdings TopCo Limited and Quadgas MidCo Limited respectively. Quadgas Holdings TopCo Limited is registered in Jersey and Quadgas MidCo Limited is registered in England and Wales.
Copies of Quadgas MidCo Limited's consolidated financial statements can be obtained from the Company Secretary, Quadgas MidCo Limited, Pilot Way, Ansty Park, Coventry, CV7 9JU.
Copies of Quadgas Holdings TopCo Limited's consolidated financial statements can be obtained from the Registered office, Quadgas Holdings TopCo Limited, Third Floor, 37 Esplanade, St. Helier, JE1 1AD, Jersey.
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