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COMPANY REGISTRATION No: 10327359
FCC (E&M) LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
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FCC (E&M) LIMITED
COMPANY INFORMATION
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FCC (E&M) 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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FCC (E&M) LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2025
The Directors present their strategic report on the affairs of FCC (E&M) Limited (“the Company”) for the year ended 31 December 2025.
Overview of Group
The Company operates within a joint venture structure involving Fomento de Construcciones y Contratas, S.A. (“FCC”), a company incorporated in Spain and listed on the Madrid Stock Exchange, and investment vehicles advised by iCON Infrastructure LLP (“iCON”).
The Company is a member of a sub-group (“GRP”, "the Group") comprising five UK-based EfW plants (Allington, Eastcroft, Lincoln, Millerhill at Edinburgh & Midlothian and Greatmoor in Buckinghamshire) and their related SPV and holding companies. GRP’s immediate parent, FCC Medio Ambiente Reino Unido SLU (“FCC MARU”), holds a 51% stake in GRP. GRP EFW Investments Limited, a company controlled by investment vehicles advised by iCON Infrastructure LLP (collectively, “iCON”), holds the remaining 49%. FCC and iCON have combined their expertise and resources to support the provision of low carbon energy infrastructure and contribute to the UK’s net zero ambitions.
The Board sees the development of major EfW waste infrastructure projects to support sustainable waste management and strategic long-term partnerships as key to the Group’s future business growth. Coupled with a greater focus on reduction, reuse and recycling, EfW is an important part of today’s waste hierarchy.
Principal activities
The principal activity of the Company during the year ended 31 December 2025, was the treatment of residual waste on behalf of Zero Waste: Edinburgh and Midlothian, a joint venture between the City of Edinburgh and Midlothian councils, through the development of a Recycling and Energy Recovery Centre (“RERC”) treatment facility at Millerhill, Midlothian. The 25 year Private Finance Initiative (“PFI”) contract was formally signed on 6 October 2016.
The activities, strategies and risks affecting the Company are inextricably similar to those of the Group and consequently it is appropriate that the following narrative applies to the Group in its entirety.
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 section on page 2.
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.
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FCC (E&M) LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
Results, dividends, and key performance indicators
The results for the year ended 31 December 2025 are set out on page 10. The profit for the financial year ended 31 December 2025 amounted to £3.7million (2024: £5.0million). The Company paid an interim dividend of £2.9million during the year (2024: £3.5million). The Directors do not recommend the payment of a final dividend (2024: £nil).
For the year ended 31 December 2025, revenue decreased by 11.0% to £20.4million (2024: £22.9million), primarily as a result of lower energy prices.
Operating profit in 2025 was £5.5million (2024: £6.3million), the decrease due primarily to movements in energy prices.
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. For this reason, the Company’s Directors believe that the disclosure of further key performance indicators for the Company is not appropriate for an understanding of the development, performance, or position of the business. Copies of the FCC annual report can be obtained from the address in note 23.
Future developments
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.
At GRP, we wholeheartedly support the drive to more and better resource efficiency by reducing waste at source wherever possible, 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.
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FCC (E&M) 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”) and Scottish Environment Protection Agency (“SEPA”). 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, on-line 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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FCC (E&M) LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2025
Principal risks and uncertainties (continued)
∙Employees: The Group does not directly employ any staff. Services are provided by wider FCC Group companies through operations and maintenance (“O&M”) contracts. There is a risk of losing experienced management personnel in those O&M contracts which could have a materially adverse effect on the business. To manage this risk, the Group engages with the wider FCC Group in respect of succession planning for senior positions within the 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.
Going concern
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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FCC (E&M) LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2025
The Directors present their annual report and the audited financial statements of the Company 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, results and dividends and future developments are disclosed in the Strategic report.
The Directors who served during the year were:
During the financial period, qualifying third party indemnity provisions 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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FCC (E&M) 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 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), including Financial Reporting Standard 101 ‘Reduced Disclosure Framework’ (“FRS 101”).
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 in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙provide additional disclosures when compliance with the specific requirements in FRS 101 is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the company financial position and financial performance;
∙state whether applicable UK Accounting Standards, including FRS 101, have been followed, subject to any material departures disclosed and explained in the financial statements; and
∙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 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.
Under applicable law and regulations, the directors are also responsible for preparing a strategic report and directors’ report that comply with that law and those regulations.
This report was approved by the board and signed on its behalf.
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FCC (E&M) LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FCC (E&M) LIMITED
Opinion
We have audited the financial statements of FCC (E&M) 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 material accounting policy information. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards including FRS 101 “Reduced Disclosure Framework’’ (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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FCC (E&M) LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FCC (E&M) 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 6, 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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FCC (E&M) LIMITED
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF FCC (E&M) 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 101 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 FCC (E&M) 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 assessing 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 enquiry 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
30 June 2026
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FCC (E&M) 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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Other comprehensive income:
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Other comprehensive (expense)/income for the year
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Total comprehensive income for the year
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The notes on pages 14 to 25 form part of these financial statements.
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FCC (E&M) LIMITED
REGISTERED NUMBER: 10327359
BALANCE SHEET
AS AT 31 DECEMBER 2025
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Derivative financial instruments
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Trade and other receivables
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Cash and cash equivalents
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Total non-current liabilities
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Total current liabilities
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Total equity and liabilities
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FCC (E&M) LIMITED
REGISTERED NUMBER: 10327359
BALANCE SHEET (CONTINUED)
AS AT 31 DECEMBER 2025
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 25 form part of these financial statements.
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FCC (E&M) LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2025
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Tax related to losses recognised in equity
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Change in fair value of interest rate swap
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Total comprehensive income for the year
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Tax related to losses recognised in equity
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Change in fair value of interest rate swap
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Total comprehensive income for the year
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The notes on pages 14 to 25 form part of these financial statements.
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FCC (E&M) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
FCC (E&M) 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 principal accounting policies are summarised below. They have all been applied consistently throughout the year ended 31 December 2025.
General information and basis of accounting
The financial statements have been prepared under the historical cost convention and in accordance with Financial Reporting Standard 101 ‘Reduced Disclosure Framework’ (“FRS 101”) issued by the Financial Reporting Council.
The functional and presentational currency of FCC (E&M) Limited is considered to be pounds sterling because that is the currency of the primary economic environment in which the Company operates.
The Company has taken advantage of the following disclosure exemptions under FRS 101:
(a) The requirements of paragraphs 45(b) and 46 to 52 of IFRS 2 Share-based Payment;
(b) The requirements of paragraphs 62, B64(d), B64(e), B64(g), B64(h), B64(j) to B64(m), B64(n)(ii), B64(o)(ii), B64(p), B64(q)(ii), B66 and B67 of IFRS 3 Business Combinations;
(c) The requirements of IFRS 7 Financial Instruments: Disclosures;
(d) The requirements of paragraphs 91 to 99 of IFRS 13 Fair Value Measurement;
(e) The requirement in paragraph 38 of IAS 1 Presentation of Financial Statements to present comparative information in respect of:
i. paragraph 79(a)(iv) of IAS 1;
ii. paragraph 73(e) of IAS 16 Property, Plant and Equipment;
iii. paragraph 118(e) of IAS 38 Intangible Assets;
(f) The requirements of paragraphs 10(d), 10(f), 16, 38A, 38B, 38C, 38D, 40A, 40B, 40C, 40D, 111 and 134 to 136 of IAS 1 Presentation of Financial Statements;
(g) The requirements of IAS 7 Statement of Cash Flows;
(h) The requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors;
(i) The requirements of paragraph 17 of IAS 24 Related Party Disclosures;
(j) The requirements in IAS 24 Related Party Disclosures to disclose related party transactions entered into between two or more members of a group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member;
(k) The requirements of paragraphs 134(d) to 134(f) and 135(c) to 135(e) of IAS 36 Impairment of Assets.
Where relevant, equivalent disclosures have been given in the consolidated FCC group financial statements, copies of which are available from its registered office at 3 Sidings Court, White Rose Way, Doncaster, DN4 5NU.
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FCC (E&M) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
2.Accounting policies (continued)
At 31 December 2025, the Company had net assets of £21.3million and net current assets of £10.4million. Net assets include a non-current interest rate swap asset of £12.7million.
The directors have reviewed projected cash flows and carefully considered the risks to the Company’s performance and cash flows for the forthcoming period to 30 June 2027. 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.
Accordingly, the Directors consider it appropriate to continue to prepare the financial statements on the going concern basis.
Revenue, including landfill tax, is stated net of VAT and trade discounts, and is recognised when the significant risks and rewards are considered to have been transferred to the buyer. 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 fair value of the consideration received or receivable. Revenue is recognised in respect of waste disposal services when the waste has been received and in respect of sale of electricity, when the electricity has been transferred to the national grid. Where payments are received from customers in advance of services provided, the amounts are recorded as deferred income and included as part of creditors due within one year.
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Current and deferred taxation
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Revenue, expenses, and assets are recognised net of the amount of sales tax except:
∙where the sales tax incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
∙debtors and creditors are stated with the amount of sales tax included.
The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of debtors or creditors in the balance sheet. Tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected tax payable on the taxable surplus for the year using average tax rates in place during the financial year, and any adjustments in respect of previous periods. Income tax relating to items recognised directly in equity is recognised in equity and not in the income statement.
Deferred income tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax is recognised for all temporary differences:
∙except where the deferred income tax liability arises from the initial recognition of goodwill, non-tax deductible goodwill amortisation or the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit or loss nor taxable profit or loss; and
∙in respect of taxable temporary differences associated with investments in subsidiaries except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised.
15
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FCC (E&M) 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 (continued)
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The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.
An intangible asset is recognised for service concession agreements as future amounts receivable are not certain. Such intangible assets are amortised on a straight-line basis over the length of the contracted service concession agreement.
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Cash and cash equivalents
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Cash and cash equivalents include cash-in-hand, deposits held at call with banks and other short term investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Cash and cash equivalents are carried in the balance sheet at cost. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet.
Trade and other payables, excluding derivative liabilities, are recognised initially at fair value. Subsequent to initial recognition, they are measured at amortised cost less any impairment losses.
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.
16
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FCC (E&M) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
2.Accounting policies (continued)
2.8 Financial instruments (continued)
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
Derivative financial instruments
The Company uses derivative financial instruments to reduce exposure to interest rate movements and foreign exchange rate movements. The Company does not hold or issue derivative financial instruments for speculative purposes.
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.
Hedge accounting
The Company designates certain derivatives as hedging instruments in respect of variable interest rate risk of the cash flows associated with recognised debt instruments measured at amortised cost. The Company also designates certain derivatives as hedging instruments in respect of foreign exchange rate risk of the cash flows associated with future transactions in foreign currency.
17
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FCC (E&M) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
2.Accounting policies (continued)
2.8 Financial instruments (continued)
At the inception of the hedge relationship, the entity documents the relationship between the hedging instrument and the hedged item, along with the clear identification of the risk in the hedged item that is being hedged by the hedging instrument. Furthermore, at the inception of the hedge and on an ongoing basis, the Company assesses whether the hedging instrument is highly effective in offsetting the designated hedged risk.
The effective portion of changes in the fair value of the designated hedging instrument is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss. Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods in which the hedged item affects profit or loss or when the hedging relationship ends.
Hedge accounting is discontinued when the Group revokes the hedging relationship, the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. Any gain or loss accumulated in equity at that time is reclassified to profit or loss when the hedged item is recognised in profit or loss. When a forecast transaction is no longer expected to occur, any gain or loss that was recognised in other comprehensive income is reclassified immediately to profit or loss.
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Judgments 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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All revenue was generated in the United Kingdom principally from the construction and operation of the RERC facility at Millerhill, Midlothian.
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The profit before tax is stated after charging:
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Amortisation of intangible assets
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18
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FCC (E&M) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
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Auditor’s remuneration in respect of audit fees totalling £17,000 (2024: £17,000) has been met by the Company.
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Directors’ remuneration and transactions
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None of the Directors received any remuneration or other benefits through the Company during the period ended 31 December 2025.
All directors are remunerated through companies outside the GRP Group.
The Company had no employees during the financial period.
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Interest earned on financial assets
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Other interest receivable
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Intercompany interest payable
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Bank interest and similar expenses
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Foreign exchange differences
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19
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FCC (E&M) 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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Adjustments in respect of previous periods
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Electricity Generator Levy
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Origination and reversal of timing differences
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Adjustments in respect of prior years
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Factors affecting tax charge for the year
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The tax assessed for the year differs from the standard rate of corporation tax in the UK of 25% (2024: 25%). The differences are explained below:
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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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Expenses not deductible for tax purposes, other than goodwill amortisation and impairment
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Adjustments to tax charge in respect of prior periods
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Electricity Generator Levy
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There were no factors that may affect future tax charges.
20
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FCC (E&M) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
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Total non-current financial assets
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The amounts above relate to amounts recoverable on PFI contracts.
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Charge for the year on owned assets
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Intangible fixed assets relate to amounts recoverable on the Edinburgh and Midlothian PFI contract. The assets are being amortised on a straight-line basis over the 25 year PFI contract length.
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21
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FCC (E&M) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
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Trade and other receivables
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Trade and other receivables
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Amount owed by fellow subsidiary undertakings
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Prepayments and accrued income
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Amounts owed by fellow subsidiary undertakings are unsecured, interest-free and repayable on demand.
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Prepaid loan arrangement fees
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Unsecured subordinated loan notes issued to the immediate parent undertaking
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Interest is payable on the Senior Debt at a fixed (hedged) rate of 1.54% plus a margin, which was 3.25% per annum (2024: 3.00% until 06 October 2024 then 3.25%). The final repayment date is 5 May 2042, and the debt is secured by a debenture over certain of the Company’s assets. The unsecured loan notes issued to the immediate parent undertaking FCC (E&M) Holdings Limited bear interest at 6% per annum and are repayable in instalments of varying amounts by September 2042.
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Prepaid loan arrangement fees
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Accrued interest - Senior debt
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Accrued interest on the loan notes issued to the immediate parent undertaking
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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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22
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FCC (E&M) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
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Amounts owed to fellow subsidiary undertakings
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Accruals and deferred income
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Amounts owed to fellow subsidiary undertakings are unsecured, interest-free and repayable on demand.
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Opening at 1 January 2025
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Closing at 31 December 2025
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Derivative financial instruments
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Other taxable temporary differences
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Opening at 1 January 2024
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Closing at 31 December 2024
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Derivative financial instruments
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Other taxable temporary differences
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Derivative financial instruments
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Derivative financial instruments
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23
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FCC (E&M) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
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Allotted, called up and fully paid
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100 (2024: 100) Ordinary shares of £1.00 each
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100 ordinary shares of £1 were issued at par on incorporation. The Company has one class of ordinary shares which carry no right to fixed income.
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Other reserves
The cash flow 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.
Retained earnings
The retained earnings 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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Interim dividend of £29,000 per share (2024: £35,000 per share)
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At 31 December 2025, the Company was party to performance bonds totalling £8.7million (2024: £8.7million) in favour of various municipal authorities and others.
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Related party transactions
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The Directors regard all subsidiaries of FCC, together with the GRP Group’s 49% shareholder GRP EfW Investments Limited, as related parties.
Under FRS 101, the company is exempt from disclosing related party transactions with other wholly owned subsidiaries of the Green Recovery Projects Limited Group.
Transactions and balances with other FCC subsidiaries outside of the Green Recovery Projects Limited Group have been disclosed below:
24
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FCC (E&M) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2025
22.Related party transactions (continued)
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Year Ended 31 December 2025
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FCC Recycling (UK) Limited
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FCC Waste Services (UK) Limited
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FCC Recycling (UK) Limited
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Year ended 31 December 2024
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FCC Recycling (UK) Limited
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FCC Waste Services (UK) Limited
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FCC Recycling (UK) Limited
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The immediate parent of the Company is FCC (E&M) Holdings 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 company 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.
25
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