IAS 7 additional information, disclosure of factoring and reverse factoring effects on operating cash flows

Drax Group plc – Annual report – 31 December 2018

Industry: utility


4.4 CASH GENERATED FROM OPERATIONS
Cash generated from operations is the starting point of our cash flow statement on page 122. The table below makes adjustments for any non-cash accounting items to reconcile our net profit for the year to the amount of cash we have generated from our operations.

drax2

 

Note:
(1) During 2016 we closed out a number of in-the-money forward foreign currency purchase contracts with a total value of £14 million. As these contracts were designated into hedge accounting relationships under IFRS 9, the benefit is being recognised in the income statement when the hedged transaction occurs.
(2) The prior year has been restated due to the initial application of IFRS 9 (see note 8.3).

The B2B Energy Supply business has access to a facility which enables it to accelerate cash flows associated with trade receivables on a non-recourse basis, which generated a net cash inflow of £24 million in the year ended 31 December 2018, reflected as a reduction in receivables in the table above (2017: inflow of £34 million). The facility terms were amended during the year, increasing the facility size to £150 million and bringing more of the receivables balance into its scope, further improving the Group’s overall liquidity and risk profile.

Cash from ROCs is typically realised several months after the ROC is earned; however, through standard ROC sales and purchase arrangements we are able to accelerate cash flows over a proportion of these assets. The net impact of ROC purchases and sales on operating cash flows was a £10.5 million outflow (2017: £161.0 million inflow). We also have access to facilities enabling us to sell ROC trade receivables on a non-recourse basis. These facilities were unused at the period end (2017: £Nil).

The Group entered into a number of payment facilities in 2018 to leverage scale and efficiencies in transaction processing, whilst providing a working capital benefit for the Group, for which £87.0 million was outstanding at 31 December 2018 (2017: £Nil). The amounts fall due between 4 and 60 days from the end of the year.

The Group has sought to normalise payment across its supplier base resulting in certain suppliers extending payment terms and some reducing terms. Suppliers are able to access a supply chain finance facility provided by a bank, for which funds can be accelerated in advance of the normal payment terms. The facility does not affect our working capital, as payment terms remain unaltered with the Group. At 31 December 2018, amounts utilised were not material.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advertisements