Company registration number 13137617 (England and Wales)
TRAMROAD RECYCLING LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
TRAMROAD RECYCLING LIMITED
COMPANY INFORMATION
Directors
J P Samworth
(Appointed 25 February 2022)
H A Unwin
(Appointed 25 February 2022)
Company number
13137617
Registered office
5 The Peak
Wilton Road
London
Greater London
England
SW1V 1AN
Independent auditors
PricewaterhouseCoopers LLP
Level 5 and 6, Central Square South
Orchard Street
Newcastle Upon Tyne
NE1 3AZ
TRAMROAD RECYCLING LIMITED
CONTENTS
Page
Directors' report
1 - 3
Independent auditor's report
4 - 7
Statement of comprehensive income
8
Statement of financial position
9
Statement of changes in equity
10
Notes to the financial statements
11 - 20
TRAMROAD RECYCLING LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 1 -

The directors present their annual report and audited financial statements for the year ended 31 December 2022.

Principal activities

The principal activity of the Company during the year under review continued to be that of an investment entity.

 

The manager of the Company is Schroders Greencoat LLP (the “Manager”), a Financial Conduct Authority regulated entity.

Directors

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

J P Samworth
(Appointed 25 February 2022)
H A Unwin
(Appointed 25 February 2022)
H M Downie
(Resigned 25 February 2022)
S W Hughes
(Resigned 25 February 2022)
Qualifying third party indemnity provisions

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.

Independent Auditors

In accordance with the Company's articles, a resolution proposing that PricewaterhouseCoopers LLP be reappointed as auditors of the Company will be put at a General Meeting.

Statement of directors' responsibilities in respect of the financial statements

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 prepared the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” Section 1A, and applicable law).

 

Under company law, 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 period. In preparing the financial statements, the directors are required to:

 

 

The directors are 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 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.

TRAMROAD RECYCLING LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 2 -
Directors' confirmations

In the case of each director in office at the date the directors’ report is approved:

 

Risk and Risk Management

The Company is exposed to financial risks such as price risk, foreign currency risk, market risk, credit risk and liquidity risk, and the monitoring of these risks is detailed in note 12 to the financial statements.

 

Financial support for renewable energy

There is a risk that changes could be applied to renewable energy policy which could impact subsidies available to renewable energy operations. If applied retrospectively to current operating projects, this could adversely impact the market price for renewable energy or the green benefits earned from generating renewable energy. Specifically: The Renewable Obligation scheme or other embedded benefits.

 

The Manager mitigates this through keeping itself abreast of developments in international support for renewable energy and will assess the impact of any changes and, where possible, respond to these changes when and if they happen. The UK has committed to the concept of grandfathering existing projects with subsidy support i.e., it cannot change support.

 

Physical risks

There are a number of physical risks which could impact the Company’s investments, including flooding and extreme weather events such as droughts.

 

To mitigate this risk, flood and weather patterns are assessed on a site-specific basis through competent consultants and equipment providers at the development stage.

Going concern

The Company has net assets amounting to £7,165,715 (2021: £8,430,737) and incurred a loss for the year amounting to £1,265,022 (2021: £2,069,263). The Company continues to meet its liquidity requirements through its resources which are managed via the distributions received from its investments. The directors have reviewed investee company forecasts and trading performance, as well as considered adverse scenarios, which have shown that the company has sufficient financial resources to meet its current obligations as they fall due for a period of at least 12 months from the date of approval of this report.

 

The parent company has indicated their willingness to support the company as required by providing the company with a letter of support. The letter of support also confirms the Parent has no intent to recall the loans due for at least 12 months from the date of the approval of these financial statements, unless adequate alternative financing has been secured by the borrower.

 

On this basis, the board have reasonable expectation that the company has adequate resources to continue in operational existence for at least 12 months from the date of approval of this report. Accordingly, they continue to adopt the going concern basis in preparing these financial statements.

Small companies exemption

In preparing the report, the Directors have taken advantage of the small companies exemptions provided by section 415A of the Companies Act 2006. The directors have also taken advantage of small company exemptions provided by section 414B of the Companies Act 2006 and have not prepared a Strategic Report.

 

In preparing the financial statements, the directors chose to apply paragraph 1B(1) of Schedule 1 to the Small Companies Regulations 19 and 20 and adapted the FRS 102 balance sheet formats disclosing the assets and liabilities as current and non-current.

TRAMROAD RECYCLING LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 3 -
The financial statements on pages 8  to 20 were approved by the Board of Directors and signed on its behalf by
H A Unwin
Director
23 November 2023
TRAMROAD RECYCLING LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF TRAMROAD RECYCLING LIMITED
- 4 -
Report on the audit of the financial statements
Opinion

In our opinion, Tramroad Recycling Limited's financial statements:

 

We have audited the financial statements, included within the Annual report and financial statements (the “Annual Report”), which comprise: the Statement of financial position as at 31 December 2022; the Statement of comprehensive income and Statement of changes in equity for the year then ended; and the notes to the financial statements, which include a description of the significant accounting policies.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

 

Independence

We remained independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, which includes the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

Conclusions relating to going concern

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.

 

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.

 

However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the company's ability to continue as a going concern.

 

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

TRAMROAD RECYCLING LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF TRAMROAD RECYCLING LIMITED
- 5 -

Reporting on other information

The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.

 

In connection with our audit of the financial statements, 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 audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. 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 based on these responsibilities.

 

With respect to the Directors' Report, we also considered whether the disclosures required by the UK Companies Act 2006 have been included.

 

Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as described below.

 

Directors' Report

In our opinion, based on the work undertaken in the course of the audit, the information given in the Directors' Report for the year ended 31 December 2022 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements.

 

In light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we did not identify any material misstatements in the Directors' Report.

Responsibilities for the financial statements and the audit

Responsibilities of the directors for the financial statements

As explained more fully in the Statement of directors' responsibilities in respect of the financial statements, the directors are responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors are also responsible for such internal control as they 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 auditors’ 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.

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.

TRAMROAD RECYCLING LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF TRAMROAD RECYCLING LIMITED
- 6 -

Based on our understanding of the company and industry, we identified that the principal risks of non-compliance with laws and regulations related to data protection, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the financial statements such as the Companies Act 2006 and tax legislation. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to the Statement of comprehensive income, or through management bias in manipulation of accounting estimates with the aim of improving performance. Audit procedures performed by the engagement team included:

 

 

There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

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 auditors’ report.

TRAMROAD RECYCLING LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF TRAMROAD RECYCLING LIMITED
- 7 -

Use of this report

This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

 

Other required reporting

Companies Act 2006 exception reporting

Under the Companies Act 2006 we are required to report to you if, in our opinion:

 

 

We have no exceptions to report arising from this responsibility.

 

Entitlement to exemptions

Under the Companies Act 2006 we are required to report to you if, in our opinion, the directors were not entitled to: prepare financial statements in accordance with the small companies regime; take advantage of the small companies exemption in preparing the Directors' Report; and take advantage of the small companies exemption from preparing a strategic report. We have no exceptions to report arising from this responsibility.

Mark Dawson (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Newcastle upon Tyne
23 November 2023
TRAMROAD RECYCLING LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
- 8 -
Year
Period
ended
ended
31 December
31 December
2022
2021
Note
£
£
Investment income
5
2,549,225
1,157,906
Total income
2,549,225
1,157,906
Operating expenses
(82,892)
(15,000)
Unrealised loss on investments held at fair
value through profit or loss
6
(507,397)
(1,308,634)
Operating profit/(loss)
1,958,936
(165,728)
Finance costs
9
(3,223,958)
(1,903,535)
Loss before taxation
(1,265,022)
(2,069,263)
Tax on loss
-
0
-
0
Loss for the financial year/period and total comprehensive expense
(1,265,022)
(2,069,263)

The income statement has been prepared on the basis that all operations are continuing operations.

The notes on pages 11 to 20 form part of these financial statements.

TRAMROAD RECYCLING LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2022
31 December 2022
- 9 -
2022
2021
Note
£
£
£
£
Non-current assets
Investments
6
49,462,942
48,303,223
Current assets
Cash and cash equivalents
574,301
8,451,204
Current liabilities
8
(427,513)
(8,466,204)
Net current assets/(liabilities)
146,788
(15,000)
Total assets less current liabilities
49,609,730
48,288,223
Non-current liabilities
9
(42,444,015)
(39,857,486)
Net assets
7,165,715
8,430,737
Equity
Called up share capital
10
1
1
Other reserves
11
10,499,999
10,499,999
Accumulated losses
(3,334,285)
(2,069,263)
Total equity
7,165,715
8,430,737

The notes on pages 11 to 20 form part of these financial statements.

These financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.

The financial statements were approved by the board of directors and authorised for issue on 23 November 2023 and are signed on its behalf by:
H A Unwin
Director
Company Registration No. 13137617
TRAMROAD RECYCLING LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
- 10 -
Share capital
Other reserves
Accumulated losses
Total
Note
£
£
£
£
Balance at 15 January 2021
-
0
-
0
-
0
-
Period ended 31 December 2021:
Issue of share capital
10
1
-
-
1
Capital contribution
11
-
10,499,999
-
0
10,499,999
Loss and total comprehensive expense for the period
-
-
(2,069,263)
(2,069,263)
Balance at 31 December 2021
1
10,499,999
(2,069,263)
8,430,737
Year ended 31 December 2022:
Loss and total comprehensive expense for the year
-
-
(1,265,022)
(1,265,022)
Balance at 31 December 2022
1
10,499,999
(3,334,285)
7,165,715

The notes on pages 11 to 20 form part of these financial statements.

TRAMROAD RECYCLING LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 11 -
1
Accounting policies
Company information

Tramroad Recycling Limited is a private company limited by shares incorporated in England and Wales. The registered office is 5 The Peak, Wilton Road, London, Greater London, England, SW1V 1AN.

1.1
Reporting period

The Company was incorporated on 15 January 2021 and the comparative period presented within these financial statements is from this date to 31 December 2021. The current year to 31 December 2022 represents a longer period and as such may not be entirely comparable.

1.2
Accounting convention

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006 as applicable to companies subject to the small companies regime. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention, modified to include the revaluation of certain financial instruments at fair value. The principal accounting policies adopted are set out below.

The Directors have concluded that the Company’s subsidiaries should be excluded from consolidation as the interests in subsidiaries are held as part of an investment portfolio as defined in paragraph 9.9 (b) of FRS 102 and are measured at fair value with movements in fair value recognised in the Statement of Comprehensive Income in the year in which they arise.

1.3
Going concern

The Company has net assets amounting to £7,165,715 (2021: £8,430,737) and incurred a loss for the year amounting to £1,265,022 (2021: £2,069,263). The Company continues to meet its liquidity requirements through its resources which are managed via the distributions received from its investments. The directors have reviewed investee company forecasts and trading performance, as well as considered adverse scenarios, which have shown that the company has sufficient financial resources to meet its current obligations as they fall due for a period of at least 12 months from the date of approval of this report.

 

The parent company has indicated their willingness to support the company as required by providing the company with a letter of support. The letter of support also confirms the Parent has no intent to recall the loans due for at least 12 months from the date of the approval of these financial statements, unless adequate alternative financing has been secured by the borrower.

 

On this basis, the board have reasonable expectation that the company has adequate resources to continue in operational existence for at least 12 months from the date of approval of this report. Accordingly, they continue to adopt the going concern basis in preparing these financial statements.

1.4
Non-current investments

Interests in subsidiaries, including shareholder loans, are initially measured at cost and subsequently measured at fair value through profit or loss. Gains or losses resulting from the movement in fair value are recognised in the Statement of Comprehensive Income in the year in which they arise. Fair value is defined as the amount for which an asset could be exchanged between knowledgeable willing parties in an arm’s length transaction. Fair value is calculated on an unlevered, discounted cashflow basis.

A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

TRAMROAD RECYCLING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 12 -
1.5
Cash and cash equivalents

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

1.6
Financial instruments

Financial assets and financial liabilities are recognised in the Company’s Statement of Financial Position when the Company becomes a party to the contractual provisions of the instrument.

 

At 31 December 2022, the carrying amounts of cash and cash equivalents, receivables, payables, accrued expenses and short term borrowings reflected in the financial statements are reasonable estimates of fair value in view of the nature of these instruments or the relatively short period of time between the original instruments and their expected realisation. The fair value of advances and other balances with related parties which are short term or repayable on demand is equivalent to their carrying amount.

 

Financial assets

Financial assets are recognised in the Company’s Statement of Financial Position when the Company becomes a party to the contractual provisions of the instrument. Financial assets are held at amortised cost or, in the case of investments in associates, at fair value through profit or loss.

 

Amortised cost

Non-derivative financial assets with fixed or determinable repayments that are not quoted in an active market are classified as financial assets held at amortised cost. Debtors that are due within one year of the year end are recognised at the undiscounted amount receivable. All debtor balances are held at the undiscounted amount at 31 December 2022.

 

Fair value through profit or loss

At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.

 

De-recognition of financial assets

A financial asset (in whole or in part) is derecognised either:

Classification of financial liabilities

Financial liabilities are classified according to the substance of contractual agreements entered into and are recorded on the date on which the Company becomes party to such contractual requirements of the financial liability.

 

All loans and borrowings are initially recognised at cost, being fair value of consideration received, net of any incurred transaction costs where applicable. After initial recognition, all interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Loan balances as at the year-end have not been discounted to reflect amortised cost, as the amounts are not materially different from the outstanding balances. The Company’s other financial liabilities measured at amortised cost include trade and other payables and other short-term monetary liabilities which are initially recognised at fair value and subsequently measured at amortised cost using the effective interest rate method.

TRAMROAD RECYCLING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 13 -
Derecognition of financial liabilities

A financial liability (in whole or in part) is derecognised when the Company has extinguished its contractual obligations, it expires, or it is cancelled. Any gain or loss on derecognition is taken to the Statement of Comprehensive Income.

1.7
Equity instruments

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

1.8

Investment income

Interest income on shareholder loan investments are accounted for on an accruals basis using the effective interest rate method. Income in respect of the provision of management services to the SPVs is recognised on an accruals basis. Provisions are made against income where recovery is considered doubtful.

1.9

Interest payable and expenses

Interest payable and expenses are accounted for on an accruals basis.

TRAMROAD RECYCLING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 14 -
2
Judgements and key sources of estimation uncertainty

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount 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 where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods. The estimates and judgements which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

Fair value of investments (estimate)

The estimates and assumptions that may have a significant impact on the carrying value of assets and liabilities are those used to determine the fair value of the investments. The fair value of investments is based on the discounted values of expected future cash flows, which are subject to certain key assumptions including the useful life of assets, the discount factors, the rate of inflation, the recycling rates and market demand.

 

Assumptions about useful lives of assets are based on the Manager’s estimates of the period over which the assets will generate revenue. These assumptions are periodically reviewed for continued appropriateness. The actual useful life of any specified asset may be shorter or longer depending on the actual operating conditions experienced by this asset.

 

Management also considers the capital expenditure required to maintain the life cycle of the assets as subjective due to the actual timing and quantum of the spend. At each reporting date this is being monitored to ensure the spend is in line with managements best estimates and forecasts.

 

The discount factors are subjective. It is feasible that a reasonable alternative assumption could be used that would result in a different value. Discount rates are periodically reviewed taking into account any recent market transactions of a similar nature.

 

The revenues and expenditure of investee company are frequently, partly or wholly subject to indexation, typically with reference to the Consumer Price Index (CPI) or Retail Price Index (RPI). From a financial modelling perspective, an assumption is usually made that the inflation index will increase at a long-term rate.

 

Management estimate the expected volume of materials that will be processed by the investment SPVs on a daily, monthly, and annual basis. Taking into account factors such as offtake demand and operational efficiency.

 

The pricing for the (solid recovered fuel ("SRF") materials that will be processed by the SPVs is typically contracted with key offtake suppliers and are contracted in the medium term.

 

The pricing of other recycled materials (e.g., paper, plastic, metal) are based on market rates and vary based on location. Management analyse market trends and demand for recycled materials, factors such as changes in commodity prices, government policies, and environmental regulations may impact the demand and pricing of recycled materials. There is inherent uncertainty in future recyclate price forecasts.

TRAMROAD RECYCLING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
2
Judgements and key sources of estimation uncertainty
(Continued)
- 15 -

Estimates and judgements are continually evaluated and are based on historical experience of the Manager and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

 

Best judgement is used in estimating the fair value of investments, there are inherent limitations in any estimation techniques. Future events could also affect the estimates of fair value. The effect of such events on the estimates of fair value, including the ultimate liquidation of investments, could be material to the financial statements.

 

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.

Classification of investments (judgement)

The directors determined based on the criteria in FRS 102 para. 9.9 (b), that the investee companies outlined in note 7 shall be excluded from consolidation and thus recognised at fair value. The classification of investee companies as being held exclusively with a view to subsequent resale is a key judgement.

 

In preparing the financial statements, the directors assessed that the Company intends to realise its investments beyond 12 months of the balance sheet date and so all investments have been classified as noncurrent assets.

TRAMROAD RECYCLING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 16 -
3
Auditors' remuneration
2022
2021
Fees payable to the Company's auditors and associates:
£
£
For audit services
Audit of the financial statements of the company
16,300
12,000
4
Employees

The average monthly number of persons (including directors) employed by the Company during the year was nil (2021: nil).

 

The directors do not receive emoluments in relation to services to this entity.

5
Investment income
2022
2021
£
£
Investment income includes the following:
Interest receivable from group companies
2,549,225
1,157,906
6
Investments
2022
2021
£
£
Equity investments
15,184,051
15,691,448
Loans
34,278,891
32,611,775
Investment in subsidiaries
49,462,942
48,303,223
TRAMROAD RECYCLING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
6
Investments
(Continued)
- 17 -
Movements in non-current investments
Equity Investments
Loans
Total
£
£
£
Cost or valuation
At 1 January 2022
15,691,448
32,611,775
48,303,223
Unrealised movement in fair value of investments
(507,397)
-
(507,397)
Capitalised interest
-
1,667,116
1,667,116
At 31 December 2022
15,184,051
34,278,891
49,462,942
Carrying amount
At 31 December 2022
15,184,051
34,278,891
49,462,942
At 31 December 2021
15,691,448
32,611,775
48,303,223

Fair value measurements

FRS 102 requires disclosure of fair value measurement by level. The level of fair value hierarchy within the financial assets or financial liabilities is determined on the basis of the lowest level input that is significant to the fair value measurement. Financial assets and financial liabilities are classified in their entirety into only one of the following three levels:

 

The determination of what constitutes ‘observable’ requires judgement by the Company. The Company considers observable data to be market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

 

The only financial instruments held at fair value are the instruments held by the Company in the SPVs, which are fair valued at each reporting date. The Company’s investments have been classified within level 3 as the investments are not traded and contain unobservable inputs. Due to the nature of the investments, they are always expected to be classified as level 3. There have been no transfers between levels during the year ended 31 December 2022 or period ended 31 December 2021.

7
Subsidiaries

Details of the Company's subsidiaries at both 31 December 2022 and 31 December 2021 were as follows:

Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Oakleaf Recycling Limited
Oakleaf Farm Horton Road, Stanwell Moor, Staines-Upon-Thames, England, TW19 6AF
A Ordinary
82.00
Hywel NMP Limited
4th Floor The Peak, 5 Wilton Road, London, SW1V 1AN
A Ordinary
82.00
TRAMROAD RECYCLING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 18 -
8
Current liabilities
2022
2021
£
£
Amounts owed to group undertakings
388,808
8,451,204
Other payables
38,705
15,000
427,513
8,466,204

Amounts owed to group undertakings are interest free, unsecured and repayable on demand.

9
Non-current liabilities
2022
2021
£
£
Loans from NatWest Group Pension Fund
42,444,015
39,857,486

The loan relates to a number of loan notes issued by the parent company NatWest Pension Fund Limited. The loans attract interest rates ranging between 6% and 9% per annum and are repayable in 2041 and 2051. Interest is payable quarterly, on 31 March, 30 June, 30 September and 31 December. Any unpaid interest is capitalised on those dates.

 

During the year ended 31 December 2022, £3,223,959 (2021: £1,903,535) of interest was accrued cumulatively across all loans, of which £637,430 (2021: £563,619) was paid. As at 31 December 2022, the loan balance was £42,444,015 (2021: £39,857,486), there was no loan interest loan interest outstanding at the year end (2021: nil).

Creditors which fall due after five years are as follows:
2022
2021
£
£
Payable other than by instalments
42,444,015
39,857,486
2022
2021
£
£
Opening balance as at 1 January 2022 and 15 January 2021
39,857,486
-
Additions
-
38,517,570
Capitalised interest
2,586,529
1,339,916
Closing balance as at 31 December 2022 and 2021
42,444,015
39,857,486
10
Called up share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary of £1 each
1
1
1
1
TRAMROAD RECYCLING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 19 -
11
Other reserves
Other reserves
£
Balance as of 31 December 2022 and 2021
10,499,999

The Company received capital contributions from its shareholder during the period ended 31 December 2021. These contributions are classified as equity within other reserves.

12
Financial risk management

The Company’s activities expose it to a variety of financial risks: market risk (including, interest rate risk and foreign currency risk), credit risk and liquidity risk. An explanation of those risks is set out below.

Price risk

Price risk is defined as the risk that the fair value of a financial instrument held by the Company will fluctuate. Investments are measured at fair value through profit or loss and are valued on an unlevered, discounted cashflow basis. Therefore, the value of the investments will be (amongst other risk factors, as per note 2) a function of the discounted value of their expected cashflows and, as such, will vary with movements in interest rates and competition for such assets.

The discount factors are subjective and therefore it is feasible that a reasonable alternative assumption may be used resulting in a different valuation for these investments.

Interest rate risk

Interest rate risk is the risk that the fair value or future cashflows of a financial instrument will fluctuate because of changes in market interest rates. The Board considers that the shareholder loan investments and shareholder loan payable do not carry any interest rate risk as they bear interest at a fixed rate, thereby mitigating the risks associated with the variability of cash flows arising from interest rate fluctuations.

Foreign currency risk

Foreign currency risk is defined as the risk that the fair values of future cashflows will fluctuate because of changes in foreign exchange rates. The Company’s financial assets and liabilities are denominated in GBP and substantially all of its revenues and expenses are in GBP. The Company is not considered to be materially exposed to foreign currency risk.

Credit risk
Credit risk is the risk of loss due to the failure of a borrower or counterparty to fulfil its contractual obligations. The Company is exposed to credit risk in respect of shareholder loan investments, accrued shareholder loan interest, cash at bank and other receivables. The Company's credit risk exposure is minimised by dealing with financial institutions with investment grade credit ratings.
The Company has advanced loans to its investee companies. The Board regularly reviews the future cashflows and valuations of the investee companies to gain comfort as to the recoverability of the loans. These loans are intra-group. No balances are past due or impaired. The maximum exposure as at 31 December 2022 was £34,278,891 (2021: £32,611,775).
TRAMROAD RECYCLING LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
12
Financial risk management
(Continued)
- 20 -
Liquidity risk
Liquidity risk is the risk that the Company may not be able to meet a demand for cash or fund an obligation when due. The Manager and Board continuously monitor forecast and actual cash flows from operating, financing and investing activities. The Company has loan liabilities owing to the parent that are repayable in 2051. The Company meets its quarterly interest liability using distributions received from its underlying investments.
13
Ultimate controlling party

The Company is 100% owned by NatWest Pension Trustee Limited (“the trustee”). The ultimate controlling party is the NatWest Group Pension Fund ("the Fund"). The Pension Trustee (NatWest Pension Trustee Limited) holds the shares on behalf of the fund.

14
Events after the reporting date

There were no material subsequent events.

15
Related party transactions

As at 31 December 2022, the Company had shareholder loans owing from its subsidiary, Oakleaf Recycling Limited, totalling £14,701,827 (2021: £14,701,827). Interest of £882,110 (2021: £565,447) was charged in the year, at 6% per annum (2021: 6%).

 

As at 31 December 2022, the Company had shareholder loans owing from its subsidiary, Hywel NMP Limited, totalling £19,577,064 (2021: £17,909,948). Interest of £1,667,116 (2021: £592,460) was charged in the year, at 9% per annum (2021: 9%).

 

As at 31 December 2022, the Company had loans owing to its ultimate controlling party, NatWest Group Pension Fund, totalling £42,444,015 (2021: £39,857,486). Interest of £3,223,959 (2021: £1,903,535) was charged to the Company in the year. The loans attract interest rates of 6% and 9% and are collectively repayable in 2051.

 

As at 31 December 2022, the Company owed £382,790 (2021: £8,445,210) to Hywel NMP Limited and £6,018 (2021: £5,994) to Oakleaf Recycling Limited. These balances relate to loan drawdowns held by the Company on Hwyel NMP's behalf which has been reduced by making project construction costs on Hywel NMP's behalf. These balances bear no interest, are unsecured and are repayable on demand, as detailed in note 8.

2022-12-312022-01-01falseCCH SoftwareCCH Accounts Production 2023.300J P SamworthH A UnwinH M DownieS W Hughesfalse0131376172022-01-012022-12-3113137617bus:Director12022-01-012022-12-3113137617bus:Director22022-01-012022-12-3113137617bus:Director32022-01-012022-12-3113137617bus:Director42022-01-012022-12-3113137617bus:RegisteredOffice2022-01-012022-12-31131376172022-12-31131376172021-01-152021-12-3113137617core:RetainedEarningsAccumulatedLosses2021-01-152021-12-3113137617core:RetainedEarningsAccumulatedLosses2022-01-012022-12-31131376172021-12-3113137617core:CurrentFinancialInstrumentscore:WithinOneYear2022-12-3113137617core:CurrentFinancialInstrumentscore:WithinOneYear2021-12-3113137617core:Non-currentFinancialInstrumentscore:AfterOneYear2022-12-3113137617core:Non-currentFinancialInstrumentscore:AfterOneYear2021-12-3113137617core:CurrentFinancialInstruments2022-12-3113137617core:CurrentFinancialInstruments2021-12-3113137617core:ShareCapital2022-12-3113137617core:ShareCapital2021-12-3113137617core:OtherMiscellaneousReserve2022-12-3113137617core:OtherMiscellaneousReserve2021-12-3113137617core:RetainedEarningsAccumulatedLosses2022-12-3113137617core:RetainedEarningsAccumulatedLosses2021-12-3113137617core:ShareCapital2021-01-1413137617core:OtherMiscellaneousReserve2021-01-1413137617core:RetainedEarningsAccumulatedLosses2021-01-1413137617core:ShareCapital2021-01-152021-12-3113137617core:Non-currentFinancialInstruments2022-12-3113137617core:Non-currentFinancialInstruments2021-12-3113137617core:Subsidiary12022-01-012022-12-3113137617core:Subsidiary22022-01-012022-12-3113137617bus:PrivateLimitedCompanyLtd2022-01-012022-12-3113137617bus:FRS1022022-01-012022-12-3113137617bus:Audited2022-01-012022-12-3113137617bus:FullAccounts2022-01-012022-12-31xbrli:purexbrli:sharesiso4217:GBP