Company registration number 07168754 (England and Wales)
NRC WWS LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
NRC WWS LTD
COMPANY INFORMATION
Directors
G P McDermott
A E McDermott
(Appointed 25 February 2023)
D Kearns
(Appointed 25 February 2023)
Secretary
S McDermott
Company number
07168754
Registered office
Unit D
Russell Road
Rock Ferry
Birkenhead
Wirral
CH42 1LU
Auditor
Sumer Auditco Limited
The Beehive
City Place
Gatwick
RH6 0PA
NRC WWS LTD
CONTENTS
Page
Strategic report
1 - 3
Directors' report
4 - 5
Independent auditor's report
6 - 8
Statement of comprehensive income
9
Balance sheet
10
Statement of changes in equity
11
Statement of cash flows
12
Notes to the financial statements
13 - 25
NRC WWS LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 1 -

The directors present the strategic report for the year ended 31 December 2022.

Review of the business

The company was acquired by NRC Group Limited (formally McClean’s Waste Water Solutions Ltd) on 9 December 2022. As such the loss incurred in the year ended 31st December 2022, fundamentally related to the company’s performance under the previous ownership structure.

Since the 9 December 2022, significant changes have been implemented in terms of the management team, systems and controls. The strategic aim is to expand into new markets and seek opportunities, in addition to investment in both the fixed asset fleet from an infrastructure perspective, and develop and recruit additional in-house staff in order to improve service. The intention is to expand the current sales team in order to facilitate the trading growth strategies. Furthermore, increased and improved monitoring of costs and procurement arrangements will be made to reduce costs, with the ultimate aim to improve profitability. It is expected that profits will be reported for 2024/25, strengthening the financial performance and position of the company.

A new corporate group was formed on 9 December 2022, and plans are in place to develop fellow trading subsidiaries which benefit the group as a whole, expanding the wider groups service offerings into industrial cleaning and establishing a gas division. The wider group will benefit from efficiencies of shared head office and management services.

On 9 December 2022, the company secured asset-based funding facilities including a sale and purchase facility of £2,000,000 in respect of fixed asset funding and a £1,000,000 invoice discounting facility. Furthermore, a Director introduced a 5 year loan facility of £500,000. This funding ensures that sufficient finance is available to allow the company and its wider group to operate and grow as planned.

The acquisition of the company by its parent NRC Group Limited (formerly known as McClean’s Waste Water Solutions Ltd) was funded out of working capital, which created a intra-group debt owed by the parent company of £2,944,000. On 9 December 2022, an intra-group dividend of £1,700,000 was voted as partial settlement of this intra-group debt. This dividend has depleted the net assets of this company, however it should be understood, remains intact in the wider group and is merely a strategic decision to manage the level of group debt, rather than an extraction of funds from the group.

Further details in respect of future developments are disclosed in the directors report.

At the year end, the company has significant net current assets of £1,781,972 and net assets of £1,345,249, which the directors’ believes evidences both the liquidity of the company and the strong financial position. Once the company returns to profitability, the financial position will further strengthen.

NRC WWS LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 2 -
Principal risks and uncertainties

The company, uses various financial instruments including a directors loan, an asset finance facility and various other mainstream items, such as debtors and creditors that arise directly from its operations. The main purpose of these financial instruments is to raise finance for the company’s operations.

 

The existence of these financial instruments exposes the company to a number of financial risks which are described in more detail below. The directors review and agree policies for managing these risks. These policies have remained unchanged from previous years.

 

Liquidity Risk

 

The company, seeks to manage financial risk by ensuring liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. Short term flexibility is achieved by an invoice discounting facility.

 

Interest Rate Risk

 

The company, finances its operations through a combination of retained profits, asset finance and loans. The group exposure to interest rate fluctuations on its borrowings is managed by the use of both fixed and floating facilities.

 

Credit Risk

 

The principal credit risk arises from the company’s trade debtors.

 

All customers who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on an on-going basis and provision is made for doubtful debts where necessary. Credit insurance is in place via the invoice discount facility.

 

Economic risk

 

As a result of global economic factors, including both the recovery post Covid-19 and the Ukraine war, costs generally have increased impacting on purchases and overhead costs, including energy. These inflation related price increases are expected to remain for some time to come. Close monitoring of costs by the directors to budget are in place to mitigate the financial impact on on-going profitability.

Key performance indicators

The company reviews and monitors its performance against a number of key performance indicators both financial and non-financial. The principal measures include revenue growth, maintaining service levels, improvement of gross margins and EBITDA. These are reviewed by the management team and reported to the Board on a monthly basis.

The Directors have and will continue to monitor all of the KPI’s and daily operating controls and maintain a strong focus on increasing performance in all aspects of the business.

 

The main KPI’s and corresponding results are as follows:

 

 

 

2022

 

2021

Turnover growth %

 

8.5%

 

58.7%

Gross profit margin

 

27.8%

 

15.4%

EBITDA

 

(£86k)

 

(£151k)

NBV of tangible fixed assets

 

£1.8m

 

£2.4m

Net assets

 

£1.3m

 

£3.7m

Average number of employees

 

55

 

54

NRC WWS LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 3 -

On behalf of the board

G P McDermott
Director
16 February 2024
NRC WWS LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 4 -

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

Principal activities
The principal activity of the company continued to be that of maintaining and repairing drains.
Results and dividends

The results for the year are set out on page 9.

Ordinary dividends were paid amounting to £1,700,000. The directors do not recommend payment of a further dividend.

Directors

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

G P McDermott
A E McDermott
(Appointed 25 February 2023)
D Kearns
(Appointed 25 February 2023)
T A Brinkel
(Resigned 9 December 2022)
M Reese
(Resigned 9 December 2022)
Future developments

The new management team (including directors) in place following the acquisition of the company on 9 December 2022, will implement improved cost controls, monitoring and implement strategic growth plans. All changes are with the aim to improve the company’s trading performance and to return the company back to historic profitability levels and beyond. The directors expect the financial performance of the company will significantly improve in 2023 and furthermore in 2024 as measures are implemented.

The UK roadways projects continue to be prioritised by the government which provides opportunities for the company in securing contracts of work. In addition, the business will continue to grow new service lines that were added in 2021, including HADDMS GPS and virtual modeling for customer projects, which will also contribute to improved profitability plans. Looking forward, significant investment by Highways England in UK infrastructure will drive a large portion of drainage, UV lining and HADDMS/ GPS opportunities in 2023 and beyond. Further investment in the new HADDMS electronic modelling and GPS surveying department will continue to improve margins throughout the entire operation while expanding base business opportunities throughout the UK.

The company is also to invest significantly in its tangible fixed assets fleet as part of the modernisation plans and improved maintenance objectives, in addition to continuing to develop and seek new technologies to support the drainage market. Investment in staff is also a key objective in order to retain and incentivise members of staff and to attract new members of staff, particularly investing in increasing the current sales team.

There are plans to secure new clients within the wastewater market, in addition to exploring new markets.

Auditor

Sumer Auditco Limited were appointed as auditor to the company and is deemed to be reappointed under section 487(2) of the Companies Act 2006.

NRC WWS LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 5 -
Statement of directors' responsibilities

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

 

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). 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 period. In preparing these financial statements, the directors are required to:

 

 

The directors are 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. They 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.

Statement of disclosure to auditor

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

Medium-sized companies exemption

This report has been prepared in accordance with the provisions applicable to companies entitled to the medium-sized companies exemption.

On behalf of the board
G P McDermott
Director
16 February 2024
NRC WWS LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF NRC WWS LTD
- 6 -
Disclaimer of Opinion

We were engaged to audit the financial statements of NRC WWS Ltd (the 'company') for the year ended 31 December 2022 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

 

We do not express an opinion on the accompanying financial statements of the company. Because of the significance of the matter described in the Basis for Disclaimer of Opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements.

Basis for Disclaimer of Opinion

We were not appointed as auditors of the company until after 31 December 2022.

 

On 9 December 2022, the company was acquired by NRC Group Limited (Formerly Mcclean's Waste Water Solutions Ltd). The accounting records provided by the previous owners are both incomplete and have been inadequately maintained throughout the year ended 31 December 2022. This includes bank statements, payroll records, purchase invoices, sales invoices, supplier statements and various historic agreements. As a direct result, there is incomplete and insufficient supporting documents and underlying accounting records to enable the prescribed audit work to be undertaken on both the profit and loss and the balance sheet, and as such no opinion can be provided on these accompanying financial statements. We have also been unable to verify by alternative means. Since 9 December 2022, the new management team are ensuring accounting records in respect of all company transactions are correctly maintained.

Opinions on other matters prescribed by the Companies Act 2006

Because of the significance of the matter described in the basis for disclaimer of opinion section of our report, we have been unable to form an opinion, whether based on the work undertaken in the course of the audit:

 

Matters on which we are required to report by exception

Notwithstanding our disclaimer of an opinion on the financial statements, in the light of the knowledge and understanding of the company and its environment obtained in the course of the audit performed subject to the pervasive limitation described above, we have not identified material misstatements in the strategic report and the directors' report.

 

Arising from the limitation of our work referred to above:

 

 

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

 

 

NRC WWS LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF NRC WWS LTD
- 7 -
Responsibilities of directors

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.

Auditor's responsibilities for the audit of the financial statements

Our responsibility is to conduct an audit of the company’s financial statements in accordance with International Standards on Auditing (UK) and to issue an auditor’s report. However, because of the matter described in the basis for disclaimer of opinion section of our report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on 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.

We identified areas of laws and regulations that could reasonably be expected to have a material effect on the financial statements from our general commercial and sector experience, and through discussions with the directors (as required by auditing standards) and discussed with the directors the policies and procedures regarding compliance with laws and regulations. We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit. The potential effect of these laws and regulations on the financial statements varies considerably.

Firstly, the company is subject to laws and regulations that directly affect the financial statements including financial reporting legislation and taxation legislation. We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.

 

Secondly, the company is subject to many other laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation. We identified the following areas as those most likely to have such an effect: laws related to health and safety, employment and data protection.

Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the directors and inspection of regulatory and legal correspondence, if any. Through these procedures we did not become aware of any actual or suspected non-compliance.

 

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.

We design procedures in line with our responsibilities, outlined below to detect material misstatement due to fraud:

 

NRC WWS LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF NRC WWS LTD
- 8 -

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

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.

Caroline Snape
Senior Statutory Auditor
For and on behalf of Sumer Auditco Limited
16 February 2024
Statutory Auditor
The Beehive
City Place
Gatwick
RH6 0PA
NRC WWS LTD
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
- 9 -
2022
2021
Notes
£
£
Turnover
3
4,887,340
4,505,089
Cost of sales
(3,530,559)
(3,812,467)
Gross profit
1,356,781
692,622
Administrative expenses
(2,117,749)
(1,547,916)
Other operating income
-
0
38,156
Operating loss
4
(760,968)
(817,138)
Interest payable and similar expenses
7
(23,134)
(12,903)
Loss before taxation
(784,102)
(830,041)
Tax on loss
8
99,293
143,653
Loss for the financial year
(684,809)
(686,388)

The profit and loss account has been prepared on the basis that all operations are continuing operations.

NRC WWS LTD
BALANCE SHEET
AS AT
31 DECEMBER 2022
31 December 2022
- 10 -
2022
2021
Notes
£
£
£
£
Fixed assets
Tangible assets
10
1,758,500
2,360,116
Current assets
Debtors
11
2,261,024
3,074,781
Cash at bank and in hand
323,228
241,407
2,584,252
3,316,188
Creditors: amounts falling due within one year
12
(802,280)
(1,651,828)
Net current assets
1,781,972
1,664,360
Total assets less current liabilities
3,540,472
4,024,476
Creditors: amounts falling due after more than one year
13
(2,195,223)
(195,125)
Provisions for liabilities
Deferred tax liability
15
-
0
99,293
-
(99,293)
Net assets
1,345,249
3,730,058
Capital and reserves
Called up share capital
17
112
112
Share premium account
18
199,991
199,991
Revaluation reserve
19
98,971
166,947
Profit and loss reserves
1,046,175
3,363,008
Total equity
1,345,249
3,730,058

These financial statements have been prepared in accordance with the provisions relating to medium-sized companies.true

The financial statements were approved by the board of directors and authorised for issue on 16 February 2024 and are signed on its behalf by:
G P McDermott
Director
Company registration number 07168754 (England and Wales)
NRC WWS LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
- 11 -
Share capital
Share premium account
Revaluation reserve
Profit and loss reserves
Total
Notes
£
£
£
£
£
Balance at 1 January 2021
103
-
0
278,363
3,937,980
4,216,446
Year ended 31 December 2021:
Loss and total comprehensive income
-
-
-
(686,388)
(686,388)
Issue of share capital
17
9
199,991
-
-
200,000
Transfers
-
-
(111,416)
111,416
-
Balance at 31 December 2021
112
199,991
166,947
3,363,008
3,730,058
Year ended 31 December 2022:
Loss and total comprehensive income
-
-
-
(684,809)
(684,809)
Dividends
9
-
-
-
(1,700,000)
(1,700,000)
Transfers
-
-
(67,976)
67,976
-
Balance at 31 December 2022
112
199,991
98,971
1,046,175
1,345,249
NRC WWS LTD
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 12 -
2022
2021
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
23
40,403
223,601
Interest paid
(23,134)
(12,903)
Income taxes refunded
179,317
-
0
Net cash inflow from operating activities
196,586
210,698
Investing activities
Purchase of tangible fixed assets
(98,294)
(211,040)
Proceeds from disposal of tangible fixed assets
25,326
-
0
Net cash used in investing activities
(72,968)
(211,040)
Financing activities
Proceeds from issue of shares
-
0
200,000
Proceeds from borrowings
2,000,000
-
0
Payment of finance leases obligations
(341,797)
(142,636)
Dividends paid
(1,700,000)
-
0
Net cash (used in)/generated from financing activities
(41,797)
57,364
Net increase in cash and cash equivalents
81,821
57,022
Cash and cash equivalents at beginning of year
241,407
184,385
Cash and cash equivalents at end of year
323,228
241,407
NRC WWS LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 13 -
1
Accounting policies
Company information

NRC WWS Ltd is a private company limited by shares incorporated in England and Wales. The registered office is Unit D, Russell Road, Rock Ferry, Birkenhead, Wirral, CH42 1LU.

1.1
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.

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 certain financial instruments at fair value. The principal accounting policies adopted are set out below.

1.2
Going concern

Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. In making this assessment. the directors have prepared detailed budgets and forecasts to 31 December 2025, which take into account the possible trading activities over that period and the mitigating actions that can be taken to control costs as required.

 

Despite trading losses reported for the year ended 31st December 2022, the company has significant net current assets and bank funds. On 9 December 2022, the company was acquired by NRC Group Limited (Formerly Mcclean's Waste Water Solutions Ltd) which is under the control of an historic management team. On 9 December 2022, an asset based funding facility was secured, consisting of a sale and purchase facility of £2,000,000 relating to fixed assets, and an invoice discounting facility of up to £1,000,000. Furthermore, a director advanced a loan of £500,000 for a 5 year term. This ensures the company has adequate funding in place to achieve its strategic aims and return to profitability. The expectation is that improved management controls will be implemented to return the company back to historic profitability performance by 2024/ 25.

 

Based on all the above, the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

1.3
Turnover

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

Revenue is recognised in respect of specialised cleaning, lining and other drainage services provided to customers at the point at which the service is provided and the following conditions are satisfied:

 

1.4
Tangible fixed assets

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

NRC WWS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 14 -

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Land and buildings Leasehold
8% - 13% p.a. straight line
Plant and machinery
10% - 33% p.a. straight line
Fixtures, fittings & equipment
20% - 33% p.a. straight line
Motor vehicles
10% - 21% p.a. straight line

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

1.5
Impairment of fixed assets

At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

1.6
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.

1.7
Financial instruments

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

 

Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.

 

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

NRC WWS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 15 -
Basic financial assets

Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Impairment of financial assets

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

 

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

 

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Derecognition of financial assets

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Classification of financial liabilities

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

 

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

 

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

NRC WWS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 16 -
Derecognition of financial liabilities

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

1.8
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.

1.9
Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax

Deferred tax is recognised in respect of all timing differences which have originated but not reversed at the balance sheet date. Timing differences are differences between taxable profits and the results as stated in the financial statements which arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are recognised in the financial statements.

 

Deferred tax is measured at the average tax rates which are expected to apply in the periods in which the timing differences are expected to reverse, based on tax rates and laws which have been enacted or substantively enacted by the balance sheet date. Deferred tax is measured on a non - discounted basis.

1.10
Employee benefits

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

 

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

 

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

1.11
Retirement benefits

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

1.12
Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

 

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the balance sheet as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

NRC WWS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 17 -

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

1.13
Government grants

Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.

 

A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant received before the recognition criteria are satisfied is recognised as a liability.

1.14
Foreign exchange

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

NRC WWS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 18 -
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.

Key sources of estimation uncertainty

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

Fixed asset fair values

Plant and machinery and commercial vehicles are held at fair values. Each year the directors assess fair value which represents a key area of estimation.

 

The historic revaluation uplift recognised in the year ended 31 December 2020 amounted to £247,426, which is being released to the profit and loss account by way of excess depreciation is charged on the revaluation. No further revaluations have been processed since 2020.

 

At the year end the balance on the revaluation reserve amounts to £98,971 (2021: £166,947).

Depreciation of tangible fixed assets

Tangible fixed assets are depreciated over their useful lives taking into account residual value, where appropriate. The actual lives of the assets and residual values are assessed annually for impairment and a number of factors are taken into account. In re-assessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes are considered. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values.

 

During the year ended 31 December 2022, the depreciation charge amounted to £674,584 (2021: £665,998).

Provision for doubtful debts

Trade debtors are reviewed for any potential irrecoverable amounts and, where applicable, a specific provision for doubtful debts is raised.

 

As at 31 December 2022, the bad and doubtful debt provision amounted to £30,000.

 

3
Turnover and other revenue
2022
2021
£
£
Other revenue
Grants received
-
38,156

All turnover arose within the United Kingdom.

NRC WWS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 19 -
4
Operating loss
2022
2021
Operating loss for the year is stated after charging/(crediting):
£
£
Exchange losses
3,326
-
0
Government grants
-
(38,156)
Fees payable to the company's auditor for the audit of the company's financial statements
13,500
15,000
Depreciation of owned tangible fixed assets
527,649
520,933
Depreciation of tangible fixed assets held under finance leases
146,935
145,065
Operating lease charges
70,746
49,000
Government grants

In the prior year, government grant income related to claims made for the Coronavirus Job Retention Scheme.

5
Employees

The average monthly number of persons (including directors) employed by the company during the year was:

2022
2021
Number
Number
Administration
13
13
Operations
42
41
Total
55
54

Their aggregate remuneration comprised:

2022
2021
£
£
Wages and salaries
2,377,714
2,649,109
Social security costs
258,913
246,657
Pension costs
41,540
46,229
2,678,167
2,941,995
6
Directors' remuneration
2022
2021
£
£
Remuneration for qualifying services
130,000
77,988
Company pension contributions to defined contribution schemes
2,500
2,535
132,500
80,523
NRC WWS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 20 -
7
Interest payable and similar expenses
2022
2021
£
£
Other finance costs:
Interest on finance leases and hire purchase contracts
23,134
12,903
8
Taxation
2022
2021
£
£
Current tax
Adjustments in respect of prior periods
-
0
14,502
Deferred tax
Origination and reversal of timing differences
(50,861)
(158,155)
Changes in tax rates
(48,432)
-
0
Total deferred tax
(99,293)
(158,155)
Total tax credit
(99,293)
(143,653)

The actual credit for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:

2022
2021
£
£
Loss before taxation
(784,102)
(830,041)
Expected tax credit based on the standard rate of corporation tax in the UK of 19.00% (2021: 19.00%)
(148,979)
(157,708)
Tax effect of expenses that are not deductible in determining taxable profit
276
475
Change in unrecognised deferred tax assets
102,507
-
0
Adjustments in respect of prior years
-
0
14,502
Effect of change in corporation tax rate
(48,432)
23,831
Permanent capital allowances in excess of depreciation
(4,976)
-
0
Depreciation on assets not qualifying for tax allowances
311
-
0
Deferred tax adjustments in respect of prior years
-
0
(13,821)
Fixed asset differences
-
0
(10,932)
Taxation credit for the year
(99,293)
(143,653)
9
Dividends
2022
2021
£
£
Final paid
1,700,000
-
0
NRC WWS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 21 -
10
Tangible fixed assets
Land and buildings Leasehold
Plant and machinery
Fixtures, fittings & equipment
Motor vehicles
Total
£
£
£
£
£
Cost or valuation
At 1 January 2022
59,243
1,412,796
84,881
3,988,775
5,545,695
Additions
-
0
85,321
1,973
11,000
98,294
Disposals
-
0
-
0
-
0
(446,801)
(446,801)
At 31 December 2022
59,243
1,498,117
86,854
3,552,974
5,197,188
Depreciation and impairment
At 1 January 2022
43,153
894,735
77,057
2,170,634
3,185,579
Depreciation charged in the year
1,637
234,898
4,280
433,769
674,584
Eliminated in respect of disposals
-
0
-
0
-
0
(421,475)
(421,475)
At 31 December 2022
44,790
1,129,633
81,337
2,182,928
3,438,688
Carrying amount
At 31 December 2022
14,453
368,484
5,517
1,370,046
1,758,500
At 31 December 2021
16,090
518,061
7,824
1,818,141
2,360,116

On 9 December 2022, the company entered into an asset based funding arrangement which included a £2,000,000 sale and hire purchase facility. As a result the entire net book value of the company's fixed assets of £1,758,500 are held as security.

 

As at 31 December 2021, the net carrying value of tangible fixed assets which relate to assets held under finance leases or hire purchase contracts, totals £411,019.

 

During the year ended 31 December 2020, Houlihan Lokey Financial Advisors, Inc. were retained by US Ecology, Inc (the ultimate parent company at that time) to express their opinion on the fair value of certain identifiable tangible fixed assets. This resulted in a revaluation uplift in the year ended 31 December 2020 of £247,426.

The directors have considered fair value of fixed assets held at 31 December 2022 and considered the depreciation charged to be at a fair value at that date.

2022
2021
£
£
Cost
4,879,534
5,230,014
Accumulated depreciation
(3,239,975)
(3,060,759)
Carrying value
1,639,559
2,169,255
NRC WWS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 22 -
11
Debtors
2022
2021
Amounts falling due within one year:
£
£
Trade debtors
891,760
1,201,436
Corporation tax recoverable
-
0
178,999
Amounts owed by group undertakings
1,244,000
1,570,841
Other debtors
14,394
1,000
Prepayments and accrued income
110,870
122,505
2,261,024
3,074,781
12
Creditors: amounts falling due within one year
2022
2021
Notes
£
£
Obligations under finance leases
14
304,777
146,672
Trade creditors
145,580
124,014
Amounts owed to group undertakings
-
0
1,123,496
Corporation tax
318
-
0
Other taxation and social security
16,670
66,869
Other creditors
255,876
5,962
Accruals and deferred income
79,059
184,815
802,280
1,651,828

Obligations under finance leases are secured by a fixed and floating charge over the assets of the company.

 

Other creditors includes £225,773 (2021: £Nil) in respect of an invoice discounting facility, which is secured by a fixed and floating charge over the assets of the company.

13
Creditors: amounts falling due after more than one year
2022
2021
Notes
£
£
Obligations under finance leases
14
1,695,223
195,125
Other creditors
500,000
-
0
2,195,223
195,125

Obligations under finance leases are secured by a fixed and floating charge over the assets of the company.

 

Other creditors of £500,000 (2021: £Nil) relate to a loan advanced by a company director, which is secured by a fixed and floating charge over the company's assets. This balance is repayable in full on the 5th anniversary, being 9 December 2027. The loan is subject to interest at a rate of 10% p.a., however this has been formally waived for the year ended 31 December 2022.

NRC WWS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 23 -
14
Finance lease obligations
2022
2021
Future minimum lease payments due under finance leases:
£
£
Within one year
304,777
146,672
In two to five years
1,695,223
195,125
2,000,000
341,797
15
Deferred taxation

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:

Liabilities
Liabilities
2022
2021
Balances:
£
£
Accelerated capital allowances
(376,431)
507,260
Tax losses
374,714
(407,361)
Retirement benefit obligations
1,717
(606)
-
99,293
2022
Movements in the year:
£
Liability at 1 January 2022
99,293
Credit to profit or loss
(99,293)
Liability at 31 December 2022
-

 

16
Retirement benefit schemes
2022
2021
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
41,540
46,229

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

NRC WWS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 24 -
17
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£
£
Issued and fully paid
A Ordinary shares of 10p each
1,000
1,000
100
100
B Ordinary shares of 10p each
34
34
3
3
C Ordinary shares of 10p each
60
60
6
6
D Ordinary shares of 10p each
10
10
1
1
E Ordinary shares of 10p each
10
10
1
1
F Ordinary shares of 10p each
10
10
1
1
1,124
1,124
112
112

Ordinary share classes A and B carry full rights to votes, dividends and return of capital.

 

Ordinary share classes C to F carry no voting rights, no dividends rights and are non-redeemable. On a liquidation or other return of capital, the surplus assets of the company will be paid first to each C, D, E and F Ordinary shareholder, in priority to other classes of shares, an amount equal to the management preference amount pro rata to the number of shares held by them as if they constituted one class of shares.

 

All Ordinary share classes A to F are non-redeemable.

18
Share premium account

Share premium is the excess money received for issued shares above par value.

 

Profit and loss account

 

The profit and loss account represents accumulated trading profit and losses less dividends.

19
Revaluation reserve

The revaluation reserve represents the difference in fair value of plant and machinery and commercial vehicles and their net book value under historic cost.

20
Operating lease commitments
Lessee

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

2022
2021
£
£
Within one year
153,642
49,000
Between two and five years
22,204
20,417
175,846
69,417
NRC WWS LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 25 -
21
Directors' transactions

During the year, a Director advanced funds of £500,000 (2021: £Nil) to the company. This balance is repayable in full on the 5th anniversary, being 9 December 2027. The loan is subject to interest at a rate of 10% p.a., however this has been formally waived for the year ended 31 December 2022. Security is held by a fixed and floating charge over the company's assets.

22
Ultimate controlling party

The ultimate parent company is NRC Group Limited (formally known as McClean's Waste Water Solutions Ltd), a company incorporated in England and Wales.

 

The ultimate controlling party is G P McDermott by virtue of his majority shareholding in NRC Group Limited (formally known as McClean's Waste Water Solutions Ltd).

23
Cash generated from operations
2022
2021
£
£
Loss for the year after tax
(684,809)
(686,388)
Adjustments for:
Taxation credited
(99,293)
(143,653)
Finance costs
23,134
12,903
Depreciation and impairment of tangible fixed assets
674,584
665,998
Movements in working capital:
Decrease/(increase) in debtors
634,758
(45,907)
(Decrease)/increase in creditors
(507,971)
420,648
Cash generated from operations
40,403
223,601
24
Analysis of changes in net debt
1 January 2022
Cash flows
31 December 2022
£
£
£
Cash at bank and in hand
241,407
81,821
323,228
Obligations under finance leases
(341,797)
(1,658,203)
(2,000,000)
(100,390)
(1,576,382)
(1,676,772)
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