32816-Lucy-Group-AR-2025 web ready spreads_FINAL

Notes to the Accounts continued

FINANCIAL STATEMENTS

27. Financial instruments and risk management continued b) Derivative financial instruments The Group uses derivative financial instruments to hedge its exposure to foreign exchange, commodity and interest rate risks arising from the Group’s operating and financing activities. In accordance with the Group treasury policy, derivative financial instruments are not held for trading purposes and policy sets out the range of instruments that can be used. Derivative financial instruments can be designated as hedges in line with the Group’s risk management policies. In the current year, no derivative financial instruments have been formally designated as hedges and hedge accounting has not been applied. Derivatives are included in the statement of financial position at fair value with movements being taken to the income statement. The carrying value of financial assets and liabilities disclosed in the notes is considered to be a reasonable approximation of the fair value. c) Hierarchical classification of financial assets and liabilities measured at fair value IFRS 13 requires that the classification of financial instruments at fair value be determined by reference to the source of inputs used to derive the fair value. The classification uses the following three-level hierarchy: Level 1 Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 Other techniques for which all inputs, which have a significant effect on the recorded fair value, are observable, either directly or indirectly. Level 3 Techniques that use inputs, which have a significant effect on the recorded fair value, that are not based on observable market data. The valuation techniques used for instruments categorised in Levels 1 and 2 are described below: Quoted equities and securities (Level 1) The fair value of the Group’s quoted securities is derived from observable quoted market prices for the assets. Investment property (Level 2) The fair value of the Group’s investment properties is estimated based on appraisals performed by independent and professionally qualified valuers. The valuation processes are reviewed by the Board of Directors at each reporting date. The significant assumptions used in the valuation relate to current rental yields. Forward contracts and swaps (Level 2) The fair value of forward contracts and swaps are determined by market values available from the markets on which they are traded.

27. Financial instruments and risk management continued d) Categories of financial instruments A summary of the classifications of the financial assets and liabilities held by the Group is set out in the following table:

2025

2024

Non-current £000

Current £000

Total £000

Non-current £000

Current £000

Total £000

Financial assets at fair value through OCI Listed equity investments Total financial assets at fair value through OCI (i)

3,187 3,187

– –

3,187 3,187

2,981 2,981

– –

2,981 2,981

– – –

53,666 53,666 2,068

53,666 53,666 2,068 88,482 15,000

Trade receivables

– – – – –

53,656 53,656

53,656 53,656

Total financial assets at amortised cost (ii) Derivative financial instruments (iii)

–

–

Cash and cash equivalents (iv)

– 88,482

81,473 30,453

81,473 30,453

Cash on deposit (v)

–

15,000

Financial liabilities Derivative financial instruments Interest-bearing loans and borrowings

–

90

90

–

592

592

7,588

–

7,588 37,179 44,857

12,029

–

12,029 37,589 50,210

–

37,179 37,269

Trade and other payables Total financial liabilities

–

37,589 38,181

7,588

12,029

The Group's financial instruments resulted in the following income, expenses, gains and losses recognised in the income statement:

Financial assets Dividends from equity investments held at FVOCI

35

–

35

42

– – –

42

–

2,739 2,739

2,739 2,774

Commodity contracts - copper

–

–

Total

35

42

42

Financial liabilities Finance cost of interest-bearing loans and borrowings

– – – –

873 297

873 297

–

1,069

1,069

Foreign exchange contracts Commodity contracts – copper

30

30

–

–

– –

178

178

Total

1,170

1,170

1,277

1,277

i) Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading. The Company has made an irrevocable election at initial recognition to recognise changes in fair value through other comprehensive income rather than the consolidated income statement. ii) Trade and other receivables Amounts due from customers for goods and services provided by the Group in the course of ordinary business are classified as trade receivables. Settlement terms are generally 30–60 days and as such are all classified as current assets. The fair value of receivables is considered to be the same as their carrying amount, given the short-term nature of the asset. The Group’s policy for the impairment is shown under principal accounting policies.

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Lucy Group Ltd Annual Report & Accounts 2025

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