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COMPANY REGISTRATION No: 05663734
RE3 LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
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RE3 LIMITED
COMPANY INFORMATION
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RE3 LIMITED
CONTENTS
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Independent auditors' report
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Statement of comprehensive income
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Statement of changes in equity
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Notes to the financial statements
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RE3 LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2025
The Directors present their strategic report on the affairs of RE3 Limited ("the Company") for the year ended 31 December 2025.
The Company is an indirect subsidiary of FCC Environment (UK) Limited (“FCC E UK”), and Fomento de Construcciones y Contratas, S.A. (“FCC”). FCC is a significant multi-national business listed on the Madrid stock exchange with operations in Europe, America, Africa, and the Middle East. FCC is among the top global players that deliver Environmental Services (including water and waste management), and has implemented a balanced business model, combining other activities such as Construction, Cement and Real Estate.
FCC’s financial capacity and depth of experience in the European waste infrastructure sector is backed by over 100 years of experience in operating municipal services contracts. This complements both the position of the Company and FCC E UK’s other subsidiaries (together the “Group” or “FCC E UK group”) as a leading waste management, recycling and energy business, and the Group’s ambition to maintain its position as a significant player in establishing the next generation of waste treatment infrastructure in the UK. The core services provided by the Group are fully aligned with FCC’s strategic growth plans. The Group is ideally placed to take advantage of local opportunities to provide the services and infrastructure required by the UK, to meet existing legislative framework and emerging proposals to promote circular economy infrastructure, by recognising the true value of the materials we handle. The Board continues to look forward to the opportunities that are presented to the Group and its employees by virtue of FCC’s plans to expand and embed its operations in the UK.
We help local authorities and businesses minimise the amount of waste that goes to landfill by transforming it into valuable resources. We focus on retrieving the full value of the resources we collect and process, so that they can be used again as materials. Waste that cannot be recycled is transformed into energy.
The principal activity of the Company is the provision of waste management services under a Private Finance Initiative (“PFI”) contract for Reading Borough Council, Bracknell Forest Borough Council and Wokingham District Council (the “Councils”), known as the RE3 Waste partnership (the “RE3 Waste Partnership”).
The RE3 Waste Partnership is a 25 year, £600million joint waste contract between the Company and the Councils (the “RE3 Contract”) aimed at further reducing reliance on landfill whilst boosting recycling rates and seeking to deliver a long-term sustainable solution for the Councils’ waste.
The activities, strategies and risks affecting the Company are inextricably similar to, and dependent on, those of the Group,
and consequently it is appropriate that the following narrative applies to the Group in its entirety.
The Group is one of the UK’s leading waste management, recycling, and renewable energy service businesses. It is a key player within the municipal waste management sector, with over 60 Local Authority clients across England, Wales, and Scotland.
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RE3 LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
The Directors consider that the Company’s business performance was in line with expectations during the period.
Commentary on the Company’s results is set out in the Results, dividends, and key performance indicators on page 2.
During the year, the Group successfully completed the integration of the UK operations of Urbaser, which were acquired during 2024, and in October 2025, FCC Environment (UK) Limited completed the acquisition of Cumbria Waste Group (“CWG”). CWG operates multiple sites covering materials recovery, composting, hazardous and liquid waste treatment, HWRCs and collections. The acquisition complements our existing offering, strengthening and expanding our core operations and enhancing the services we provide to customers.
The ongoing military conflicts in Ukraine and the Middle East continued to contribute to increased political instability and uncertainty across the world, but during the year, there were signs that fuel prices were becoming more stable and inflation was expected to return to lower, pre-conflict levels. Since the year end, conflict involving Iran, the United States and Israeli forces has increased tensions across the Gulf states and pushed fuel prices higher, exacerbating inflationary pressures and further continuing uncertainty.
Results, dividends and key performance indicators
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The results for the year ended 31 December 2025 are set out on page 11. The profit for the financial year ended 31 December 2025 amounted to £1.9million (2024: £1.2million). The Company paid interim dividends during the year of £2.5million (2024: £2.0million). The Directors do not recommend the payment of a final dividend (2024: £nil).
The profit before tax for the year ended 31 December 2025 was £2.8million (2024: £1.8million). Revenue increased by 4.1% to £30.9million (2024: £29.7million), primarily through inflationary contract price increases.
For the year ended 31 December 2025, operating profit increased by 39.6% to £3.6million (2024: £2.6million). Cash at 31 December 2025 was £10.5million (2024: £11.0million).
FCC manages its operations on a divisional basis and information regarding financial and non-financial key performance indicators is included within the FCC annual report. In addition, the Company’s Directors monitor the development, performance and position of the business using Company-specific financial and operational key performance indicators relevant to the Company’s activities. These measures are set out below. Copies of the FCC annual report can be obtained from the address in note 23.
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RE3 LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
Financial and non-financial KPIs
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To help deliver the contract and to assist in managing operational performance of the business, the following KPIs have been identified to monitor performance in certain key areas:
∙Debt Cover Ratios – The Credit Facility Agreement, between the Company and NIBC Bank NV, requires that the Company manage various Debt Cover Ratios within certain given limits. The Company is obliged to forecast, monitor, and report against these ratios on a bi-annual basis following completion of construction of the project in 2009. The Company has comfortably met all Debt Cover Ratios to date and is currently forecasting compliance with the Credit Facility requirements in all future periods.
∙Site Availability – Site availability is a key element of the RE3 Contract service provision and is of paramount importance to the Councils. As a result, the availability of key sites to both members of the public and customer authorised vehicles is subject to significant financial and performance penalties and is a key performance standard to monitor and report on. Penalties remain at a relatively low level on the project, the total financial penalties against site availability standards during 2025/26 being £16,801 (2024/25: £8,514), this consisting of mainly turnaround failures for council vehicles remaining on site for longer than twenty minutes. The increase year on year being due to an increase in the number of caged vehicles requiring multiple tips per vehicle. There were no financial penalties for the sites being totally unavailable.
∙Waste Management Performance – The Company is required to meet targets for the effective processing of compostable, EfW and recyclable materials. Performance against these targets is measured with and linked to the payment mechanism of the RE3 Contract with the RE3 Waste Partnership and therefore represents a key indicator of both the operational and financial performance of the business. In contract year 2025/26 the Company exceeded the relevant EfW targets, despite a slight decline year on year in overall Municipal Solid Waste (“MSW”). Tonnage sent to EfW for 2025/26 was 74.2k tonnes (2024/25: 68.7k tonnes). The increase year on year was due to increased availability at the contracted EfW facility. The overall tonnage level of recycling in 2025/26 was down year on year, primarily due to a fall in composting waste as a result of varying weather patterns year on year. The overall level of Recovery / Landfill Diversion continued to be good at 94.4%.
The Directors expect the Company to continue to operate in line with its principal activities in future years.
The Directors consider that the climate agenda has become the climate crisis: public concern for the environment has never been greater, and government focus at all levels – internationally, nationally and locally – has shifted significantly. In particular, the UK has committed to Net Zero carbon emissions by 2050 (2045 in Scotland), and new regulations are taking shape under the Labour government elected in 2024, including the Great British Energy Act, which received Royal Assent in 2025 and the introduction of Simpler Recycling for households in 2026.
The waste sector works collaboratively to ensure it is making a positive contribution to national and legally binding Net Zero obligations. Within this, the Directors believe that EfW, alongside the drive towards reduction, reuse and recycling is currently an important part of today’s waste hierarchy.
At FCC Environment, we wholeheartedly support the drive to more and better resource efficiency by reducing waste at source wherever possible – including the prevalence of single use plastics, reusing what we can and recycling valuable commodities. For waste that cannot be recycled or reused, EfW is currently the best available and best proven technology to recover maximum value from end-of-life waste as an alternative to landfill. In doing so, EfW is contributing to reductions in landfill emissions, while also producing electricity – with the potential for heating local communities. The Group will also continue to pursue its stated four prong strategy of owning the waste, maximising the value of resource and investment in alternative waste treatment infrastructure and energy recovery technology. We will continue our push towards the objectives set out in the FCC Net Zero Strategy and Carbon Reduction Plan, including decarbonising the vehicle fleet, investing in Carbon Capture and Storage for EfW plants, rolling out clean energy generation and developing district heating networks.
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RE3 LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
Principal risks and uncertainties
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Operating in the UK’s highly regulated waste management market provides a clear legal framework as well as presenting numerous risks and uncertainties to the Group. The Directors regard the following to be the principal risks and uncertainties affecting the Group and their approach to managing these risks and uncertainties is considered below:
∙Environmental risks: The Group’s environmental risks are tightly controlled under environmental legislation enforced principally by the Environment Agency (“EA”), Scottish Environment Protection Agency (“SEPA”) and Natural Resources Wales (“NRW”). Compliance with all environmental legislation pertinent to the Group’s activities is a minimum requirement. A dedicated in-house team prepare regular reports on environmental compliance at the Group’s sites for the Board’s review. Environmental objectives are reviewed annually and highlighted within the Group’s Safety Health Environment and Quality (SHEQ) Policy Statement. In addition to this, there are detailed environmental procedures to enable compliance with environmental legislation.
∙Health and safety: Health and safety is a key issue for the Group due to the nature of its operations, including the use of heavy plant equipment and difficult working conditions. The Group is continually improving in this area as a result of ongoing consultation with the relevant authorities and the monitoring of best practice initiatives. Whenever an area is highlighted for improvement, the Group seeks to implement such improvement expeditiously; through bulletins, online training courses and tool-box briefings. The Group’s Incident Review Panel meets as required, at which senior management review significant health and safety incidents that have occurred at Group sites to identify improvements and lessons for the business. All employees undertake a rigorous health and safety training programme, which is underpinned by the latest UK legislation, detailed policies and procedures. The Group’s executive management receive regular, detailed reports on health and safety performance affecting the Group’s operations and it employs a dedicated team, led by the Group Safety, Health, Environment and Quality Manager, to monitor and promote high standards. All employees are expected to recognise their role in achieving acceptable standards of health and safety and to exhibit such understanding through their approach and attitude to work.
∙Business continuity: The Group, as part of its risk management programme, has developed business continuity planning for its operations. As part of this planning, the Group has developed a bespoke emergency plan for each operational facility (including the diversion of waste from single or multiple sites in the event of major disruption or disaster affecting a site or region). The Group’s IT systems are covered by an IT disaster recovery plan, to ensure business continuity.
∙Legislation: The Group monitors forthcoming and current legislation to ensure full compliance and to anticipate and assess the impact upon its operations, including the significant opportunities it can present. The waste management industry is subject to extensive government regulation which has a substantial impact on the Group’s business.
∙Economic: The Group has exposure to reduced economic activity. We recognise shorter term uncertainty as a result of the Ukraine and Middle Eastern conflicts, which created inflationary pressures. This could result in higher borrowing costs generally. We have reviewed the potential impacts and consider that we have sufficient mitigations in place. The Group’s strategy is focused on growing through further investment in EfW infrastructure projects.
∙Litigation: The Group could be subject to litigation from time to time. The outcome of legal action is always uncertain and there is a risk that it may prove more costly and time consuming than expected. There is also a risk that litigation could be instigated in the future that could materially impact the Group. In some liability cases legal expenses are covered by the Group’s liability insurance. This risk is mitigated through continued monitoring and employing an experienced and dedicated in-house legal team.
∙Competitive risk: The Group operates in highly competitive markets in which competitors’ service offerings may react faster to legislative and market dynamics than those of the Group. To mitigate this risk, the Group ensures that its asset, cost and capital base is regularly reviewed and flexed to meet changes in customers’ demands and to maximise cash generation.
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RE3 LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
Principal risks and uncertainties (continued)
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∙Employees: The loss of key employees or the inability to hire experienced management personnel could have a materially adverse effect on the business. To manage this risk, succession planning for senior positions within the Group is undertaken. In addition, the Group has the benefit of being able to draw on resources from within the wider FCC Group.
∙Technology: The Group relies on a variety of information technology platforms for the efficient delivery of its services and has therefore employed a structured IT support team, using internal and external resources. In addition, as there are a wide variety of technologies available to the waste management industry, there is a risk that the technologies employed by the Group might fail to deliver expected performance levels or end products for its customers and so the Group has made a significant investment into establishing a dedicated technical and development team. This team review and assess the available technologies before any are adopted to ensure they will meet the needs of the business and those of its customers.
Financial risk management objectives and policies
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The Company is exposed to financial risk through its financial assets and liabilities. The most important components of financial risk are interest rate risk, credit risk and liquidity risk, all of which the Directors consider relevant due to the nature of the Company’s activities and the assets contained within the Company’s balance sheet.
Liquidity and credit risk
The Company’s exposure to credit and liquidity risk is reduced as it is a subsidiary of FCC. Credit risk arises from the risk of having credit exposures to third parties, including outstanding receivables. The Company reviews the credit ratings of all significant customers regularly and continues to monitor the quality of debtor balances on an ongoing basis. Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its commitments. The Company prepares and reviews cash flow forecasts frequently to ensure that it has sufficient resources to meet its cash flow commitments.
Interest rate risk
The Group’s exposure to interest rate risk is managed by using a mix of fixed and variable rate debt. To manage this mix in a cost effective manner, the Group uses interest rate swaps. Full details of the accounting policy in respect of financial instruments are given in note 2 to the financial statements.
The directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Therefore, they continue to adopt the going concern basis in preparing the annual financial statements.
Further details regarding the adoption of the going concern basis can be found in Note 2 to the financial statements.
This report was approved by the board and signed on its behalf.
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RE3 LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2025
The Directors present their report and the financial statements for the year ended 31 December 2025.
Matters covered in the Strategic Report
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Information on the Company's going concern status, financial risk management policies, future developments and dividends are disclosed in the Strategic report.
The Directors who served during the year were:
During the financial year, qualifying third party indemnities for the benefit of all Directors of the Company were in force and continue to be in force at the date of this report. Such provisions were made by FCC.
Disclosure of information to auditors
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Each of the persons who are Directors at the time when this Directors' Report is approved has confirmed that:
∙so far as the Director is aware, there is no relevant audit information of which the Company's auditors are unaware, and
∙the Director has taken all the steps that ought to have been taken as a Director in order to be aware of any relevant audit information and to establish that the Company's auditors are aware of that information.
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RE3 LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
Directors' responsibilities statement
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The Directors are responsible for preparing the Strategic Report, the Directors' 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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:
∙select suitable accounting policies for the Company's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
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 to 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.
This report was approved by the board and signed on its behalf.
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RE3 LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF RE3 LIMITED
Opinion
We have audited the financial statements of RE3 Limited for the year ended 31 December 2025 which comprise the Statement of comprehensive income, the Balance Sheet, the Statement of changes in equity and the related notes 1 to 23, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (United Kingdom Generally Accepted Accounting Practice).
In our opinion, the financial statements:
∙give a true and fair view of the company’s affairs as at 31 December 2025 and of its profit for the year then ended;
∙have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
∙have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
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.
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 the period ending 30 June 2027 from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the company’s ability to continue as a going concern.
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon.
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 course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact.
We have nothing to report in this regard.
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RE3 LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF RE3 LIMITED
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the strategic report and directors’ report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or directors’ report.
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:
∙adequate accounting records have not been kept or returns adequate for our audit have not been received from branches not visited by us; or
∙the financial statements are not in agreement with the accounting records and returns; or
∙certain disclosures of directors’ remuneration specified by law are not made; or
∙we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 7, 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 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 auditor’s 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.
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RE3 LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF RE3 LIMITED
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect irregularities, including fraud. 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. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management.
∙We obtained an understanding of the legal and regulatory frameworks that are applicable to the company and determined that the most significant are those that relate to the reporting framework including FRS 102 and the relevant direct and indirect tax compliance regulations in the UK. In addition, the Company has to comply with laws and regulations relating to its operations, including health and safety and General Data Protection Regulations (‘GDPR’).
∙We understood how RE3 Limited is complying with those frameworks by making enquiries of management to understand how the company maintains and communicates its policies and procedures in these areas. We corroborated this by reviewing supporting documentation to validate that the company has a process for monitoring legal requirements and has a process for reporting matters of non-compliance and taking appropriate action.
∙We assessed the susceptibility of the company’s financial statements to material misstatement, including how fraud might occur by considering the risk of management override and by assuming revenue to be a fraud risk. We tested manual journals on areas involving significant estimation and judgement, which were identified through our data analytics techniques based on risk criteria tailored to identify journals most susceptible to fraud. We also tested a sample of revenue transactions back to supporting documentation.
∙Based on this understanding we designed our audit procedures to identify noncompliance with such laws and regulations. Our procedures involved making enquiries of management, review of Board minutes and journal entry testing as set out above. We also considered the results of our substantive procedures on other areas of the audit that may indicate non-compliance with such laws and regulations.
A further description of our responsibilities for the audit of the financial statements is located 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.
Richard Lingwood, (Senior statutory auditor)
For and on behalf of Ernst & Young LLP, Statutory Auditor
Leeds
13 May 2026
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RE3 LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2025
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Depreciation and amortisation
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Profit for the financial year
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Change in fair value of hedging interest rate swap
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Tax relating to items that may be reclassified
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Other comprehensive income net of tax
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Total comprehensive income for the year
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The notes on pages 14 to 26 form part of these financial statements.
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RE3 LIMITED
REGISTERED NUMBER: 05663734
BALANCE SHEET
AS AT 31 DECEMBER 2025
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Debtors: amounts due after more than one year
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Debtors: amounts falling due within one year
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Cash and cash equivalents
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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Provisions for liabilities
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Total shareholder's funds
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The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 14 to 26 form part of these financial statements.
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RE3 LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2025
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Tax related to gains recognised in equity
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Change in fair value of hedging interest rate swap
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Total comprehensive income for the year
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Comprehensive income for the year
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Tax related to gains recognised in equity
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Change in fair value of hedging interest rate swap
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Total comprehensive income for the year
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The notes on pages 14 to 26 form part of these financial statements.
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RE3 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
RE3 Limited is a private company limited by shares incorporated in the United Kingdom under the Companies Act 2006, registered in England and Wales. The address of the registered office is given on the company information page before the contents. The nature of the Company’s operations and its principal activities are set out in the Strategic report.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 3).
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Exemption from preparing consolidated financial statements
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RE3 Limited meets the definition of a qualifying entity under FRS 102 and has therefore taken advantage of the disclosure exemptions available to it in respect of its financial statements. Exemptions have been taken in relation to presentation of a cash-flow statement, related party transactions, financial instruments, remuneration of key management personnel and the reconciliation of shares outstanding at the beginning and end of the year. The equivalent disclosures can be found in the consolidated financial statements of Fomento de Construcciones y Contratas, S.A., copies of which can be obtained from the address in note 23.
At 31 December 2025 the Company had net assets of £5million and net current assets of £8million.
The Directors have reviewed the Company’s supply chain and do not believe that any specific risk has been identified. The Directors also considered the ability of the RE3 Waste Partnership to continue to make payments due under the RE3 Contract to the Company and do not consider this to be a material risk.
The directors have reviewed projected cash flows and carefully considered the risks to the Company’s performance and cash flows for the forthcoming period ending 30 June 2027 following the date of signing of the financial statements. They have identified no reason to believe that a material uncertainty exists that may cast significant doubt about the ability of the Company to continue as a going concern.
For these reasons, they continue to adopt the going concern basis in preparing the annual report and financial statements.
Revenue is stated net of value added tax and trade discounts. Revenue from the supply of services represents the value of services provided under contracts to the extent that there is a right to consideration and is recorded at the value of the consideration due. Revenue is recognised in respect of waste disposal services at the point that costs are incurred in receiving and treating the waste. Where payments are received from customers in advance of services provided, the amounts are recorded as deferred income and included as part of creditors.
All borrowing costs are recognised in profit or loss in the year in which they are incurred.
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RE3 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
2.Accounting policies (continued)
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Current and deferred taxation
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The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company operates and generates income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
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Waste treatment assets (including bid development costs)
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The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
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RE3 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
2.Accounting policies (continued)
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument.
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.
Financial assets and liabilities
All financial assets and liabilities are initially measured at transaction price (including transaction costs), except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value (which is normally the transaction price excluding transaction costs), unless the arrangement constitutes a financing transaction. If an arrangement constitutes a finance transaction, the financial asset or financial liability is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.
Non-current debt instruments which meet the following conditions, are subsequently measured at amortised cost using the effective interest method:
(a) Returns to the holder are (i) a fixed amount; or (ii) a fixed rate of return over the life of the instrument; or (iii) a variable return that, throughout the life of the instrument, is equal to a single referenced quoted or observable interest rate; or (iv) some combination of such fixed rate and variable rates, providing that both rates are positive.
(b) There is no contractual provision that could, by its terms, result in the holder losing the principal amount or any interest attributable to the current period or prior periods.
(c) Contractual provisions that permit the issuer to prepay a debt instrument or permit the holder to put it back to the issuer before maturity are not contingent on future events, other than to protect the holder against the credit deterioration of the issuer or a change in control of the issuer, or to protect the holder or issuer against changes in relevant taxation or law.
(d) There are no conditional returns or repayment provisions except for the variable rate return described in (a) and prepayment provisions described in (c).
Debt instruments that are classified as payable or receivable within one year and which meet the above conditions are measured at the undiscounted amount of the cash or other consideration expected to be paid or received, net of impairment.
Other debt instruments not meeting these conditions are measured at fair value through profit or loss.
Commitments to make and receive loans which meet the conditions mentioned above are measured at cost (which may be nil) less impairment.
Financial assets are derecognised when and only when a) the contractual rights to the cash flows from the financial asset expire or are settled, b) the Group transfers to another party substantially all of the risks and rewards of ownership of the financial asset, or c) the Group, despite having retained some significant risks and rewards of ownership, has transferred control of the asset to another party and the other party has the practical ability to sell the asset in its entirety to an unrelated third party and is able to exercise that ability unilaterally and without needing to impose additional restrictions on the transfer.
Financial liabilities are derecognised only when the obligation specified in the contract is discharged, cancelled, or expires.
The Company uses derivative financial instruments, including interest rate swaps, to hedge specific risks associated with interest rate fluctuations. Such derivative financial instruments are recognised initially at fair value.
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RE3 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
2.Accounting policies (continued)
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Financial instruments (continued)
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Derivative financial instruments
The fair value of interest rate swaps is the estimated amount that the Company would receive or pay to terminate the instrument at the balance sheet date. The gain or loss on re-measurement is recognised in profit or loss other than where hedge accounting can be applied.
For the purpose of hedge accounting, hedges are classified as either fair value hedges when they hedge the exposure to changes in the fair value of a recognised asset or liability; or cash flow hedges where they hedge exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability or a forecast transaction that is highly probable.
The Company does not have any fair value hedges.
For derivatives that do not qualify for hedge accounting, any gains or losses arising from changes in fair value are taken directly to net profit or loss for the year.
The Company uses variable to fixed interest rate swaps to manage its exposure to cash flow risk on its floating rate bank borrowings. These derivatives are initially recognised at fair value and are subsequently remeasured to fair value at each balance sheet date.
Where the interest rate swap is designated as a cash flow hedge and the hedge is effective, movements in fair value are recognised in other comprehensive income and held in the cash flow hedging reserve. Any ineffective portion of the movement in fair value is recognised immediately in profit or loss.
Amounts recognised in the cash flow hedging reserve are reclassified to profit or loss in the same period or periods during which the hedged cash flows affect profit or loss.
If the hedging relationship ceases to meet the conditions for hedge accounting, expires or is terminated, the cumulative gain or loss recognised in the cash flow hedging reserve is retained in equity until the forecast transaction occurs. If the forecast transaction is no longer expected to occur, the cumulative gain or loss previously recognised in equity is reclassified to profit or loss.
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Judgements in applying accounting policies and key sources of estimation uncertainty
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In the application of the Company’s accounting policies, which are described in note 2, the Directors are required to make judgements, estimates and assumptions about the carrying amounts 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 if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
∙Derivative financial instruments – The Company uses hedging instruments to reduce exposure to interest rate movements. These instruments are remeasured to their fair value at each reporting date. There is uncertainty in estimates of future interest rates, which can be affected by global events. The full policy can be found within the financial instruments accounting policy in note 2.
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RE3 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
All revenue was generated in the United Kingdom principally from the handling, recycling, and disposal of waste materials.
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The operating profit is stated after charging:
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Depreciation of tangible assets
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Auditor’s remuneration in respect of audit fees totalling £11,000 (2024: £11,000) has been met by FCC Recycling (UK) Limited, a subsidiary undertaking of FCC.
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RE3 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
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Staff costs were as follows:
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The average monthly number of employees, including the Directors, during the year was as follows:
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None of the Directors received any remuneration or other benefits through the Company during the year ended 31 December 2025 or the previous financial year.
The Directors are remunerated as directors or employees of FCC Environment (UK) Limited, a fellow FCC UK subsidiary, for services to FCC's UK Environment division as a whole and it is not therefore possible to directly attribute any element of their remuneration to the Company.
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Interest payable and similar expenses
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Bank charges and similar costs
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Loans from group undertakings
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RE3 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
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Current tax on profits for the year
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Origination and reversal of timing differences
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Factors affecting tax charge for the year
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The tax charge for the year is higher than the standard rate of corporation tax in the UK of 25% (2024: 25%) for the reasons set out below:
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Profit on ordinary activities before tax
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Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 25% (2024: 25%)
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Total tax charge for the year
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There were no factors that may affect future tax charges.
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RE3 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
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RE3 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
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Due after more than one year
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Amounts due from group undertaking
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Amounts due from group undertakings after more than one year are unsecured, interest free and are repayable on 31 March 2031.
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Amounts due from group undertaking
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Prepayments and accrued income
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Amounts due from group undertakings within one year are unsecured, interest free, have no fixed date of repayment and are repayable on demand.
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Creditors: Amounts falling due within one year
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Less prepaid bank arrangement fees
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Other taxation and social security
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Amounts owed to group undertakings
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Amounts owed to group undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand.
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RE3 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
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Creditors: Amounts falling due after more than one year
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Less prepaid bank arrangement fees
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Amounts owed to group undertakings
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Unsecured subordinated loan notes issued to RE3 Holding Limited
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Amounts owed to group undertakings after more than one year are unsecured, interest free and are repayable on 31 March 2031.
Further details regarding the interest rates payable and maturity profile of the bank loan, amounts due to parent undertaking and derivative financial instruments are included below in note 16.
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Credited to statement of comprehensive income
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The deferred tax asset/(liability) comprises:
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Accelerated capital allowances
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Hedging interest rate swap
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RE3 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
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Unsecured subordinated loan notes issued to RE3 Holding Limited
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Less prepaid bank arrangement fees
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Between one and two years
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Between two and five years
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Due after more than five years
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Less prepaid bank arrangement fees
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Interest on the unsecured bank loan is payable at LIBOR plus 1.25% fixed by means of an interest rate swap.
The amounts due on the unsecured bank loan after more than five years are payable in six-monthly instalments of varying amounts with the final amount payable due on 30 September 2029.
The subordinated loan notes issued to the immediate parent company RE3 Holding Limited are repayable in full on 31 March 2031 and bear interest at a fixed rate of 12% per annum.
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Allotted, called up and fully paid
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10,000 (2024: 10,000) Ordinary shares of £1.00 each
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Cashflow hedging reserve
The cashflow hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to hedged transactions that have not yet occurred, net of any related deferred tax.
Profit and loss account
The profit and loss account comprises cumulative profits or losses, including unrealised profits or losses recognised in the statement of comprehensive income, net of dividends.
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RE3 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
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The Company paid an interim dividend of £250 per share (2024: £200)
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The carrying values of the Company's financial assets and liabilities are summarised by category below:
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Measured at undiscounted amount receivable
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- Trade and other receivables
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- Amounts due from related undertakings
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Measured at fair value and designated in an effective hedging relationship
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- Derivative financial liabilities
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Measured at amortised cost
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Measured at undiscounted amount payable
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- Trade and other creditors
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- Amounts owed to related undertakings
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The Company participates in the defined contribution scheme operated by FCC E UK on behalf of its eligible employees. The assets of this scheme are held separately from those of the Company in independently administered funds. There were no outstanding or prepaid contributions at the end of the year in respect of defined contribution schemes. Contributions under defined contribution schemes amounted to £17,000 during the year (2024: £16,000).
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Related party transactions
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The Directors regard all subsidiaries of FCC as related parties. In the ordinary course of business, the Company has traded with fellow subsidiaries of FCC.
Under FRS 102, the Company is exempt from disclosing related party transactions with other wholly owned subsidiaries of FCC.
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RE3 LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
The immediate parent of the Company is RE3 Holding Limited, a company registered in England and Wales.
The Directors regard Control Empresarial de Capitales S.A. de C.V., a company registered in Mexico, as the ultimate parent and ultimate controlling party.
Fomento de Construcciones y Contratas, S.A. is the parent company of the largest group of which the Company is a member and for which group financial statements are drawn up. FCC Environment (UK) Limited is the parent company of the smallest group of which the Company is a member and for which group financial statements are drawn up. Copies of the financial statements of both FCC Environment (UK) Limited and Fomento de Construcciones y Contratas, S.A. are available from the Company Secretary, 3 Sidings Court, White Rose Way, Doncaster, DN4 5NU.
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