diff --git a/grade/report/grader/lib.php b/grade/report/grader/lib.php
index 09c6d7cedf3e4..6e39853c35976 100644
--- a/grade/report/grader/lib.php
+++ b/grade/report/grader/lib.php
@@ -1167,7 +1167,7 @@ public function get_right_rows(bool $displayaverages): array {
 
                         $context->extraclasses = 'gradevalue ' . $hidden . $gradepass;
                         $context->text = grade_format_gradevalue($gradeval, $item, true,
-                            $gradedisplaytype, null);
+                            $gradedisplaytype, null, 20);
                     }
                 }
 
diff --git a/lib/gradelib.php b/lib/gradelib.php
index 8af5c4f3516bd..b678235a5f54a 100644
--- a/lib/gradelib.php
+++ b/lib/gradelib.php
@@ -787,7 +787,9 @@ function grade_set_setting($courseid, $name, $value) {
  * @param int $decimals The number of decimal places when displaying float values
  * @return string
  */
-function grade_format_gradevalue(?float $value, &$grade_item, $localized=true, $displaytype=null, $decimals=null) {
+function grade_format_gradevalue(?float $value, &$grade_item, $localized=true, $displaytype=null, $decimals=null, $penalty = 0.0) {
+    global $PAGE;
+
     if ($grade_item->gradetype == GRADE_TYPE_NONE or $grade_item->gradetype == GRADE_TYPE_TEXT) {
         return '';
     }
@@ -812,40 +814,59 @@ function grade_format_gradevalue(?float $value, &$grade_item, $localized=true, $
 
     switch ($displaytype) {
         case GRADE_DISPLAY_TYPE_REAL:
-            return grade_format_gradevalue_real($value, $grade_item, $decimals, $localized);
+            $gradetext = grade_format_gradevalue_real($value, $grade_item, $decimals, $localized);
+            break;
 
         case GRADE_DISPLAY_TYPE_PERCENTAGE:
-            return grade_format_gradevalue_percentage($value, $grade_item, $decimals, $localized);
+            $gradetext = grade_format_gradevalue_percentage($value, $grade_item, $decimals, $localized);
+            break;
 
         case GRADE_DISPLAY_TYPE_LETTER:
-            return grade_format_gradevalue_letter($value, $grade_item);
+            $gradetext = grade_format_gradevalue_letter($value, $grade_item);
+            break;
 
         case GRADE_DISPLAY_TYPE_REAL_PERCENTAGE:
-            return grade_format_gradevalue_real($value, $grade_item, $decimals, $localized) . ' (' .
+            $gradetext = grade_format_gradevalue_real($value, $grade_item, $decimals, $localized) . ' (' .
                     grade_format_gradevalue_percentage($value, $grade_item, $decimals, $localized) . ')';
+            break;
 
         case GRADE_DISPLAY_TYPE_REAL_LETTER:
-            return grade_format_gradevalue_real($value, $grade_item, $decimals, $localized) . ' (' .
+            $gradetext = grade_format_gradevalue_real($value, $grade_item, $decimals, $localized) . ' (' .
                     grade_format_gradevalue_letter($value, $grade_item) . ')';
+            break;
 
         case GRADE_DISPLAY_TYPE_PERCENTAGE_REAL:
-            return grade_format_gradevalue_percentage($value, $grade_item, $decimals, $localized) . ' (' .
+            $gradetext = grade_format_gradevalue_percentage($value, $grade_item, $decimals, $localized) . ' (' .
                     grade_format_gradevalue_real($value, $grade_item, $decimals, $localized) . ')';
+            break;
 
         case GRADE_DISPLAY_TYPE_LETTER_REAL:
-            return grade_format_gradevalue_letter($value, $grade_item) . ' (' .
+            $gradetext = grade_format_gradevalue_letter($value, $grade_item) . ' (' .
                     grade_format_gradevalue_real($value, $grade_item, $decimals, $localized) . ')';
+            break;
 
         case GRADE_DISPLAY_TYPE_LETTER_PERCENTAGE:
-            return grade_format_gradevalue_letter($value, $grade_item) . ' (' .
+            $gradetext = grade_format_gradevalue_letter($value, $grade_item) . ' (' .
                     grade_format_gradevalue_percentage($value, $grade_item, $decimals, $localized) . ')';
+            break;
 
         case GRADE_DISPLAY_TYPE_PERCENTAGE_LETTER:
-            return grade_format_gradevalue_percentage($value, $grade_item, $decimals, $localized) . ' (' .
+            $gradetext = grade_format_gradevalue_percentage($value, $grade_item, $decimals, $localized) . ' (' .
                     grade_format_gradevalue_letter($value, $grade_item) . ')';
+            break;
+
         default:
-            return '';
+            $gradetext = '';
     }
+
+    // Show penalty indicator if penalty is greater than 0.0.
+    if ($penalty > 0.0) {
+        $indicator = new \core_grades\output\penalty_indicator(2, $penalty);
+        $renderer = $PAGE->get_renderer('core_grades');
+        $gradetext = $renderer->render_penalty_indicator($indicator) . $gradetext;
+    }
+
+    return $gradetext;
 }
 
 /**