slr consulting annual report 2010
DESCRIPTION
SLR Consulting Annual Report 2010TRANSCRIPT
global environmental solutions
SLR Management Limited
Report and Financial Statements Year Ended 29 October 2010
02
SLR Management Limited
SLR is an international environmental consultancy with a network of offices in Australia, Canada, Ireland, New Zealand, South
Africa, UK and USA. It provides advice and support on a wide range of strategic and site specific environmental issues to a
diverse and growing base of business, regulatory and governmental clients. SLR specialises in the energy, waste management,
planning & development, industrial, mining & minerals, acoustics & air quality and infrastructure sectors.
03 Highlights
04 Chairman’s Statement
08 Chief Executive’s Review
12 Acquisitions
14 Energy - Oil & Gas
16 Energy - Renewable & Low Carbon
18 Mining & Minerals
20 Waste Management
22 Planning & Development
24 Industry
26 Infrastructure
28 Sustainability
32 Directors’ Biographies
34 Report of the Directors
39 Report of the Independent Auditors
40 Financial Statements
44 Notes to the Financial Statements
PAGE
Energy WasteManagement
Planning &Development
Industry Mining& Minerals
Infrastructure
Annual report and financial statements for the year ended 29 October 2010
Highlights
03
SLR Management Limited
During the year, SLR has:
• Achieved EBITA growth of 67% to the highest level
recorded in the group’s financial statements;
• Achieved a 24% increase in revenues;
• Sustained a consistent, high level of repeat
revenue; 58% of 2010 revenues came from clients
of more than five years standing;
• Continued the globalisation of the business; more
than 50% of group revenues were earned outside
the UK;
• Successfully completed the acquisitions of
Heggies (Pty) Limited in Australia, HCG Inc.
in Alaska and Andrew McCarthy Associates
Limited in the UK;
• Maintained its investment in people, geographic
expansion and service extensions;
• Consolidated its position as a leading consultant
in the energy, natural resource and waste
management sectors which continue to
experience strong growth.
Revenue Summary 2001 - 2010
Revenue by Length of Client Relationship
Revenue by Country of Operation
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
£000’s
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
14.2%
28.6%
12.9%
13.5%
16.0%
14.8%
5 to 7 years
more than 10 years
7 to 10 years
1 to 3 years
3 to 5 years
new for 2010
15.3%
13.0%
28.6%
39.4%
3.7%
Ireland
Australia
USA
Canada
UK
Chairman’s Statement for the year ended 29 October 2010
04
SLR Management Limited
05
Our analysis of the UK market demonstrated that a flat operating performance
compared to 2009 was an excellent outturn relative to most of our peer
competitors, who saw a significant deterioration in profitability in the same
period. The group’s exposure to those business streams that are most affected by
public spending cuts is not material and we continue to develop our niche
technical capabilities. In January 2010, the group completed the acquisition of
Andrew McCarthy Associates Ltd (AMA), a 20 person ecology business based in
Exeter, with offices in Sheffield and the Hemel Hempstead area. The acquisition
has considerably strengthened and complemented the group’s team in the field
of wind technology and climate change, both areas where we expect to see
increases in demand in 2011.
The group acquired Heggies Pty Limited (Heggies) in February 2010. Heggies was a
130 person Sydney-based acoustics and air quality business with locations across
Australia and in Singapore. Since acquisition an office has also been opened in
Auckland, New Zealand. Heggies provides a strategic platform for further bolt-on
acquisitions in Australasia and introduces strength in depth in two disciplines with
worldwide strong demand. At the same time, incorporating Heggies into the group
allows the cross-selling of technical disciplines, such as waste management, into
both Heggies current client base for the first time and to approach new clients as
part of a global group with multi-faceted skill sets. Set against a background of a
booming economy with strong demand for new ports and infrastructure to deal
with Asian demand for the country’s natural resources gives us confidence about
the future development of our business in this part of the world.
In July 2010 the group completed the acquisition of HCG Inc. (HCG), based in
Anchorage and Fairbanks, Alaska. HCG was a 57 person air quality consultancy,
incorporating permitting, compliance and land quality management, principally to
the extractable resource industry. The integration of this business has been
achieved particularly smoothly, resulting in a significantly expanded presence in
both cities and confirming the group’s position as one of the largest
environmental consultants in the state, bringing enhanced technical capabilities
to both heritage SLR and HCG client bases. The cross-selling of the HCG skill sets
into Alberta, Canada has also quickly opened new business streams for our
Canadian business and means the group is gaining a reputation as a cold climate
specialist in North America.
Since year-end, the group has completed the acquisition of Metago International
Holdings (Pty) Limited (Metago), a 63 person specialist mine waste, water
management and environmental impact/permitting consultancy business based in
Johannesburg, South Africa and Perth, Western Australia. Metago’s main clients are
the major mining corporations and work is undertaken across the countries of sub-
Saharan Africa that are rich in natural resources, as well as Australia. This is a
business area that the group expects to see grow rapidly, with Metago’s expertise
being sold into SLR’s client base in Australia whilst facilitating growth in mining
consultancy work internationally. In the immature South African market the group
anticipates introducing new key technical skills in waste management, air quality
and acoustics.
2010 was an exciting and challenging year as the group
expanded into new geographies and successfully completed
the acquisition and rapid integration of three companies. As a
result, clients now have access to SLR expertise around the
world on a 24/7 basis. The strategy of focussing on
opportunities in booming resource based economies
combined with sectors that are exhibiting growth related to
energy, natural resources, waste management and
sustainability has been thoroughly vindicated. Furthermore,
the group is able to cross-sell strong technical expertise.
Accordingly, I am very pleased to report that the Group
delivered strong growth in profits in 2010, with operating
profits before goodwill amortisation reaching the highest level
we have recorded in our Financial Statements. We expect
further improvements in performance in 2011 with a full year of
operating performance to incorporate from those businesses
acquired during 2010.
Chairman’s Statement
SLR Management Limited
06
Group Results
The statutory results for the Group are reported for the 52 weeks to
29 October 2010.
Group turnover in 2010 amounted to £67.3 million, which was 24% above the
year to 30 October 2009 of £54.4 million. Profit before interest, tax, goodwill
amortisation and exceptional items amounted to £8.5 million in 2010,
compared to £6.3 million in 2009. Exceptional costs related to redundancy
costs (£480,000) and office closures (£378,000). They have been separately
disclosed so as not to distort the underlying profitability of the business
because of their one-off material nature.
Dividends
SLR Management Limited has not paid or declared any dividends during
the year.
Balance Sheet and Cash Flow
Consolidated net assets at 29 October 2010 stood at £45.0 million,
compared to £44.9 million in 2009.
With strong cash conversion from operating profit, the net cash inflow
from operating activities was £9.8 million for the year ended 29 October
2010 compared to an £8.1 million inflow in 2009.
The year end consolidated balance sheet includes, within intangible fixed
assets, “goodwill” with a carrying value of £70.6 million, which arose from
the acquisition of the group on 27 May 2008 and subsequent acquisitions.
The goodwill is being amortised over the Directors’ estimate of its useful
economic life, being between five and twenty years dependent on the
acquisition made.
Our People
During the year Faramarz Bogzaran stepped down from the Board and
left the Canadian business. Kevin Rattue has assumed overall
responsibility for the entire North American operations, ably supported
by high calibre local senior management. In addition, Robin Pinchbeck
resigned from the Board as non-executive director due to his executive
commitments elsewhere. I would like to thank Robin for his input during
his one year tenure.
The group’s key asset will always be the staff and I would like to take the
opportunity to thank all employees for the commitment, flexibility and
enthusiasm with which the many and varied challenges in the year have
been embraced. Symptomatic of this attitude has been the
commendable willingness of senior staff to re-locate from the UK to
assist with the development of embryonic waste management business
streams in Canada and Australia. Integration into the group of newly
acquired companies from around the world with different operating
cultures and working in different time zones places particular stresses on
all those involved, but I’m delighted to report that those businesses
coming into the group in 2010 have all been happily absorbed to mutual
benefit. These businesses are expected to add significant shareholder
value in the years ahead and we welcome the skills that they bring.
Summary
2010 proved to be an exciting year of return to strong growth and has
provided the group with the springboard for expected further progress in
2011. The group is well positioned both geographically and in terms of core
skills to continue to deliver the strategic goal of significantly enhanced
profitability from a combination of organic growth in vibrant and
recovering economies complemented by further acquisitions.
Shareholders signalled their support for the group’s strategy by funding
£5.0 million of additional finance for acquisitions through unsecured loan
notes in SLR Management Limited in December 2009 and a further £1.7
million in March 2011. 3i remain committed and fully supportive as the
group’s equity investment partner, as do Lloyds Banking Group as providers
of medium-term debt finance.
John Crabtree
Chairman
7 March 2011
07
Chief Executive’s Review for the year ended 29 October 2010
08
SLR Management Limited
09
Strategy
SLR is one of a very small number of specialist environmental consultancies that are
truly international. Combined with an existing client base of multinational corporations
who face significant and growing environmental challenges, this provides an excellent
platform for global growth.
The group’s strategy is to provide high quality consultancy and advisory services to
those clients, developing and retaining long term relationships and extending the
services offered both in terms of geography and scope.
The success of this approach is demonstrated both by very high levels of client
retention and by the very significant long term growth in work derived from those
clients. As part of the comprehensive due diligence undertaken on acquisitions, we
have ensured that those target companies also have similar levels of client retention
and longevity.
Business development is focused on sectors that have high growth potential and are
also sufficiently specialised to allow SLR to establish market leading positions
internationally either in terms of market share or technical expertise. These sectors
include energy, waste management, mining and minerals, infrastructure, industry and
planning & development.
The GFC has also highlighted the very significant contrast between resource based
economies such as Alaska, Australia and Canada, and service and manufacturing
based economies such as Europe and parts of the US. As a result, SLR has had a
significant focus on the high growth economies in 2010, both organically and through
the acquisition of Heggies Pty Ltd in Australia and HCG Inc. in Alaska. In the absence
of readily available additional bank funding during the GFC, the acquisitions were
largely funded by direct shareholder investment to ensure that growth could be
maintained. The focus on international development will continue in 2011 and 2012.
It is important to recognise, however, that while parts of SLR’s client base in the core
development and industry markets have been largely dormant through the GFC,
those clients have not been lost and will drive significant growth when the markets
recover. This is already happening in the M&A sector and others should follow in
2011/2012.
The 2010 Financial Statements represent the best recorded year
for SLR in terms of revenue and operating profit before goodwill
amortisation. Given the economic background, particularly in
Europe and North America, this is a very strong performance.
The numbers alone, however, do not convey the underlying complexity of market
conditions. Certain parts of the market, notably energy and mining, grew very
strongly, while other areas such as residential development remained extremely
depressed. Over the last two years of the Global Financial Crisis (GFC), SLR has
sought to ensure that its core business is based primarily on natural resources and
waste management. Considerable and successful efforts have also been made
further to expand our offering to those sectors both geographically and in terms of
the services offered to clients.
The following review looks at that underlying strategy in the context of the
market and assesses the 2010 performance and the 2011 outlook for each of SLR’s
business sectors.
Chief Executive’s Review
10
SLR Management Limited
Chief Executive’s Review
SLR Management Limited
11
Market Overview
Current estimates suggest that the global environmental consultancy market is
valued at approximately £24 billion. The US is the biggest market, estimated at
£9 billion, followed by the European market at £7.5 billion. The UK market
makes up about £2 billion of the European figure when planning consultancy is
included. The Australian market is estimated at about £1.7 billion.
In the 10 years between 1998 and 2008, the North American and European
markets grew by 8 - 10% per annum while parts of the UK market increased by
20% per annum and the Australian market expanded at 16% per annum.
The impact of the GFC in 2009 and 2010 significantly affected the market,
with the US, UK and Ireland being hit the hardest. Growth in the US stopped
in 2009 and was only 3% in 2010. The market in the UK and Ireland
experienced negative growth in 2009, with average revenues down by about
30%. Based on the first half figures, average revenues in the UK are likely to
be down by a further 8-10% in 2010. The Australian market grew by 17% in
2009, falling to a 4% increase in 2010.
Forecasts for 2011 suggest 5% growth in North America, 7% growth in Australia,
and no growth (at best) in the UK and Ireland.
What is clear is that growth will be much more sector dependent than in the
past. Energy, waste management and mining will continue to be resilient, whilst
both the development sector almost everywhere and the government sector in
Europe are likely to be flat. Nonetheless, the key drivers in the environmental
market remain:
• a high volume of new legislation and regulations;
• the high cost of natural resources which drives development spending on
new assets and environmental remediation of existing assets;
• new technologies allowing the exploitation of shale gas and coal bed
methane;
• the Stern Review, Kyoto Protocol and security of energy supply issues
stimulating the move to more local and sustainable energy sources;
• the introduction of financial penalties for non-compliance;
• an increased awareness of the reputational issues, responsibilities and
liabilities facing both private and public sector institutions; and
• the lack of experienced staff resources within those public and private
sector institutions to address this complex and highly specialist area.
All of these factors are widely anticipated to be present for the foreseeable
future, providing a continued platform for the growth of both the overall
environmental market and SLR. In the medium term, the issues will be
exacerbated by delayed spending during the GFC, which should lead to even
stronger growth as the global economy recovers.
Operating Review
Following difficult market conditions in 2009, a combination of UK stability
and international growth characterised 2010. With the backing of 3i, SLR’s
management identified and delivered a series of key strategic acquisitions in
high growth areas during the year.
Entry into the buoyant Australian market was achieved by the acquisition of
Heggies, the market leader in environmental acoustics, with additional
capability in air quality and land quality. Heggies’ key market areas were mining
and infrastructure.
In Alaska, we acquired HCG who had world-class skills in cold region air quality,
together with very significant permitting and land quality skills. HCG primarily
served the oil & gas and mining sectors. In the UK, the acquisition of AMA
cemented SLR’s position as one of the country’s leading ecology consultants
with AMA’s largest business area being renewable energy. Both HCG and AMA
were fully integrated into existing SLR operating companies at the end of 2010
with Heggies being rebranded as SLR Consulting Australia Pty Ltd.
The strategy of reducing the group’s dependency on the uncertain UK market
continued to bear fruit with revenues in the UK falling to 39% of total group
revenues from 48% in 2009. The balance of the revenues came from Canada
28%, US 16%, Australia 13% and Europe 4%. Taking into account a full year of
contribution from the acquisitions, the UK represents less than one third of
the turnover.
Overall, revenues increased by 24% to £67.3 million, with EBITA before
exceptional items up by 36% to £8.5 million and EBITA after exceptional items
has increased by 67% to £7.7 million.
13.6%
19.8% 23.9%
8.3%9.1%
25.3%
SectorSales Analysis
2010
mining & minerals
planning & development
waste management
industry
energy
infrastructure
Chief Executive’s Review
acquisitions
12
SLR Management Limited
13
acquisitions
Andrew McCarthy Associates Limited (AMA)
At the acquisition date of 31 January 2010, AMA was a 22-person national ecological consultancy with offices
in Exeter, Sheffield and near Hemel Hempstead. AMA specialised in protected species surveys and mitigation
associated with obtaining planning permission for development projects, primarily in wind farms, transport
infrastructure and residential developments. Increased public demand for protection of many species
associated with continued development, together with increased enforcement and regulatory complexity of
the planning processes are all market drivers for such specialist ecological consultants.
By the end of the financial year AMA staff were fully integrated and the business and assets of AMA were
hived across into SLR Consulting Limited at 29 October 2010.
Heggies Pty Limited (Heggies)
At the acquisition date of 11 February 2010, Heggies was a 130-person acoustics and environmental
management consultancy, headquartered in Sydney, Australia with another seven offices in Australia and a
branch office in Singapore. Heggies were market leaders in all aspects of acoustics consultancy, principally
to the main extractable resources industry and state-run infrastructure sectors. Heggies provided support for
planning applications, environmental statements and they performed construction and operational noise
and vibration monitoring. They also undertook specialist wind engineering and structural dynamics, air
quality, hazardous materials, energy rating and land quality consultancy work. By the end of the financial year,
Heggies was fully integrated and operating on the same accounting platform as the rest of the group.
HCG Inc. (HCG)
At the date of acquisition on 1 July 2010, HCG was a 57-person permitting, compliance and land quality
management consultancy headquartered in Anchorage, Alaska, with another office in Fairbanks, Alaska. In
Alaska, HCG was market leader in air quality consulting, principally to the main extractable resource
industries, power utilities and federal military. HCG provided support for permit applications and
environmental statements and undertook construction and operational air quality monitoring and
meteorological measurement. By the end of the financial year, HCG was fully integrated into SLR
International Corporation and staff merged between SLR heritage offices and HCG premises in both
Anchorage and Fairbanks.
Chief Executive’s Review
14
SLR Management Limited
With kind permission of Bergen Group ASA
Following the price volatility in 2008 and 2009, oil prices
were relatively stable in the $65 to $85/barrel range during
2010, and rising to above $100/barrel in early 2011. This has
stimulated investment in both conventional resources and
new technologies.energy - oil & gas
15
energy - oil &
gas
Confidential Client (Major Oil Sands Company)Central Processing FacilityFort McMurray, Alberta
One of Canada’s largest integrated energy companies retained
SLR to provide environmental consulting services at the site
of their Central Processing Facility (CPF), which is under
construction 60 km northeast of Fort McMurray, AB. The CPF
will process bitumen from a field of Steam Assisted Gravity
Drainage (SAGD) wells and prepare it for shipment to the US
for refining. The oil sands field lease has a bitumen deposit
with estimated total reserves of 3.7 billion barrels of oil and is
expected to peak at 200,000 barrels per day. It is expected to
provide a 40 year supply of stable crude oil to North
American markets with commissioning of oil production
occurring in 2014.
The footprint of the CPF encompasses an area historically
occupied by a previous oil sands operator during the 1970’s and
1980’s where a SAGD Pilot Plant operated. Environmental due
diligence work was undertaken in a phased approach to identify
the potential areas of environmental concern. Supplemental
Phase II work was undertaken and areas of impact were
identified in conjunction with decommissioning activities.
SLR’s scope of work has evolved in assisting the client with the
following activities to date:
• Surface water assessment
• Electromagnetic Surveys (EM31, EM38 and EM61)
• Soil and groundwater testing
• Waste characterisation and waste disposal minimisation
• Remediation planning
The boggy muskeg environment at the site has provided its
challenges for access. Some remediation and site assessment
activities had to be completed in extreme winter temperatures
of -20°C to -40°C in order for heavy equipment to access very
soft areas of the site. Ongoing construction of the new facility
requires close co-operation between SLR site personnel, the
client’s construction managers and general contractors.
SLR’s responsiveness, commitment to the project schedule and
adaptability to emerging needs and changing conditions has
helped the client maintain their regulatory obligations at the
site and continue with construction of major process areas in
a timely manner while addressing the historic environmental
impacts. Work programmes were coordinated so that soil
volumes requiring waste disposal and logistical costs for soil
management were minimised.
The increased confidence in the energy price was reflected by significant growth in all
areas of SLR’s oil and gas business. Permitting work for both onshore and offshore
assets continued to grow strongly, with the acquisition of HCG in July 2010
significantly enhancing our capability in both permitting and air quality. The demand
for high quality permitting and spill contingency planning will inevitably increase as a
result of concerns raised by the Deep Water Horizon incident in the Gulf of Mexico.
Equally interesting has been our involvement in new technology areas including shale
gas, oil sands and coal bed methane. During 2010, we have worked closely with major
US corporations assisting with environmental aspects of their development of natural
gas reserves in the shale deposits of eastern and central US. In Canada, as well as
working for the major players in conventional oil and gas, we continue to expand the
scale and range of services offered to the oil sands sector. With the Canadian oil sands
representing the second largest oil reserves in the world after Saudi Arabia, and the
recognition of the true potential of shale gas, recent assessments indicate that North
America will become a net exporter of energy in the foreseeable future. Given the
stringent nature of environmental regulation, the development of these deposits will
require a very significant amount of environmental consulting support. With our
existing term contracts and long term client relationships, SLR is very well placed to
benefit from such growth.
In Ireland, SLR’s client VP Power acquired a licence to explore for coal in the Kish Basin
(offshore from Dublin) in 2009. Acting as Technical Manager of drilling operations, SLR
assisted VP Power in obtaining permission to drill a number of exploration wells using
the newly commissioned Fugro Synergy drillship. The scope included setting up
emergency response procedures and oil spill contingency planning in advance of the
drilling operation.
A five month drilling programme commenced in December 2009, with SLR providing a
six man team to manage the drilling and log the boreholes. SLR was also responsible for
ensuring regulatory compliance and liaising with the regulatory authorities.
Following the successful completion of the programme, which confirmed a continuous
correlatable succession of carboniferous coals at suitable depth and thickness for
underground coal gasification, SLR interpreted and reported on the results to the client
and the government authorities in Dublin. Since completing the drilling programme, VP
Power has secured a hydrocarbon option licence over its licensed area in the Kish Basin.
While the projects mentioned represent only a fraction of SLR’s activity in the oil and
gas sector, they provide an excellent illustration of the strength and diversity of our
offering. Given SLR’s international reach, we are in a very strong position to exploit the
rapidly growing energy sector across the globe.
Chief Executive’s Review
energy - renewable & low carbon
16
SLR Management Limited
For a number of years SLR has had a significant and rapidly growing presence in the wind
energy market. That trend continued in 2010, with 50% growth in SLR’s wind energy
consultancy business. This included major new onshore and offshore schemes in Europe
and Australia. We expect significant further growth in 2011 and beyond.
17
energy - renewable &
low carbo
n
Renewable Energy Opportunities StudyNova Scotia Department of Energy
In early 2010, SLR was contracted by the Nova Scotia
Department of Energy to evaluate the opportunities for Nova
Scotia companies to become involved in the renewable energy
industry. Focusing on wind and tidal power generation, SLR
examined opportunities for the Nova Scotia business
community to participate in manufacturing, development,
operation, servicing and maintenance of renewable energy
projects locally, regionally and internationally.
This major study included an extensive international review of the
renewable energy industry and the creation of a database of Nova
Scotia companies’ capabilities. Together with Halifax-based
subconsultants Maxis Energy Solutions, SLR applied its knowledge
of energy strategy and the capabilities and capacity of Nova
Scotia’s energy service community to assist the Department in
their work to pursue renewable energy opportunities locally,
nationally and worldwide both as part of Nova Scotia’s Renewable
Electricity Plan and through exports of goods and services to
other jurisdictions.
Senior personnel from renewable energy companies, government
departments and academia were interviewed to identify Nova
Scotia’s capabilities as well as the state of the renewable energy
market in the province and in other maritime provinces of
Canada. Employment and financial projections examined
potential benefits from planned wind and tidal energy
investments. Recommendations provided guidance for strategy
development to encourage Nova Scotia companies in the market.
For this assignment, SLR assembled a multi-disciplined team of
seasoned professionals from Nova Scotia, the United States, the
United Kingdom and Ireland. The team used a collaborative
approach to gather pertinent market information and create a
practical capabilities and matching assessment, and a pragmatic
and multi-perspective report.
Nowhere in the Nova Scotia province is more than 67km from the
sea so it is an ideal location for onshore and offshore wind power
generation and tidal energy projects. The programme also
examined specific solar and bio-energy technologies that are
manufactured in the province.
Senior Project Manager Craig Chandler, who works in SLR’s office
in Halifax, Nova Scotia said: “Nova Scotia aims to produce 40 per
cent of its electricity needs from renewable sources by 2020 and
we hope that this study will help companies capitalize on the
opportunities this goal represents.”
Equally striking has been the growth and diversity of other renewable and low carbon
technologies. SLR has provided consultancy advice on most of these technologies
including biomass, cogeneration/trigeneration, energy from waste (EfW), geothermal,
nuclear, solar photovoltaics (PV) and tidal. The interest is universal and varies in scale
from single developments to nationally important strategic assets. SLR provides the
services to take projects from feasibility to delivery including all the stages in between.
One broad-ranging study was undertaken for the Nova Scotia Department of Energy,
which is featured in the case study below.
Looking at specific technologies, 2010 has seen a very significant increase in interest in
solar PV. In the UK this is a direct result of the introduction of the Feed Tariff Mechanism
in April 2010, which makes PV installations financially viable. There is particular interest in
the southwest of England where radiation levels are highest.
SLR, as a leading consultant in the energy field, has been at the forefront of advising
clients (both new and existing) of the potential of solar farms in terms of both financial
and technical viability. An example is a project for a major regional waste management
company where we have been appointed to prepare a planning application for a solar
farm at their existing waste management facility in the South West of England. This
scheme has a developable area of approximately 16 hectares which could generate in the
region of 5MW of renewable energy a year over a 25 year life. The scheme is expected to
be granted permission in 2011.
At the other end of the scale we are assisting the voluntary committee that manages
North Sydney Community Centre to minimise its energy bills. Over the past few years, the
Centre has seen its electricity costs escalating and in an attempt to minimise the impact
of these cost increases on its services, it has sought assistance to convert to a renewable
power source. The chosen solution was a PV system, the design of which had to take into
account the varying orientation of the Centre’s buildings and roof design complexities, as
well as the overshadowing of existing large trees. SLR was commissioned to provide an
initial screening assessment that involved the assessment of the potential for the
installation of an optimal PV Solar Power System for the site, the provision of a concept
design for the proposed system, the estimation of the annual solar power available in kWh
for the proposed site as well as a cost estimate for the proposed system and payback
period analysis and greenhouse gas CO2 emission saving. Small, combined heat and power
(CHP) and cogeneration schemes are also becoming common in Australia, and are
particularly appropriate to sports and swimming centres.
In the appropriate geological setting, geothermal energy can also be financially viable.
During 2010, SLR successfully obtained planning permission for the development and
operation of a geothermal electricity generation plant on behalf of Newcastle Energy Ltd.
at Rathcoole, County Dublin in Ireland.
The development will be the first of its type in Ireland and it will consist of the initial
drilling of two deep wells to an approximate depth of 4000 metres beneath Greenogue
Business Park. These wells will be used for the extraction and re-injection of natural hot
geothermal water with the water’s heat being used to operate a geothermal electricity
generation plant that will generate up to 4.5MW of electricity.
With the price of energy again escalating, the demand for renewable and low carbon
energy will undoubtedly grow as more technologies become financially viable.
Chief Executive’s Review
mining & minerals
18
SLR Management Limited
Following the rapid decline in commodity prices during
the GFC, 2010 saw them recover strongly across the
board. Prices for precious metals such as gold, platinum
and palladium reached record or near record levels and
are expected to increase further. The iron ore price also
reached record levels, while coal prices recovered
strongly, albeit not to the 2008 levels which were driven
by the spike in oil prices.
mining &
minerals
19
SLR continues to offer broadening services to our mining clients seeking to explore,
develop and produce around the globe. Buoyant commodity prices continue to
support the capital investment for existing and new projects and SLR is pleased to
offer technical capabilities that allow our mining clients to accomplish their
business interests. SLR is presently working at mine sites in Alaska (for example the
Pebble Partnership Limited), throughout North America and in Africa, Australia,
Ireland and the UK.
In Australia, SLR was commissioned by Fortescue Metals Group (FMG) to undertake Air
Quality and Noise & Vibration Impact Assessments of their new Solomon Project in
the Pilbara, Western Australia. The Solomon Project is in a remote region 60km north
of the town of Tom Price and includes two new iron ore deposits and a 120km rail spur.
The first stage of the project included baseline air quality and noise monitoring and
involved travelling to remote locations to undertake measurements and to set up
unattended monitoring stations. The second stage of the project involved the
creation of detailed air quality and noise models using state-of-the-art software and
the creation of vibration site laws that were used in the permitting process.
In Ireland, working closely with our client, Irish Salt Mining & Exploration Co Ltd,
planning permission was gained to extend the Kilroot Salt Mine, providing an
additional 30 year life (see case study). In the UK, SLR has been providing a range of
services to the surface coal mining industry for a number of years, and in 2010
successfully secured planning permission for ATH Resources Limited to extract up to
4 million tonnes of coal from a new 413 hectare site at Netherton in Scotland. SLR was
responsible for both the planning application and all aspects of the EIA.
On 4 March 2011, SLR successfully completed the acquisition of Metago, a leading
environmental mining consultancy based in Johannesburg in South Africa and Perth in
Western Australia. The addition of Metago to the group significantly enhances SLR’s
client base and technical capabilities.
Metago’s key market is metal mining in Southern Africa and Western Australia. There
are significant opportunities to provide SLR’s much broader environmental offering to
many of the world’s leading mining companies, who are Metago’s long standing clients.
Irish Salt Mining & Exploration CompanyKilroot Salt Mine Extension
Irish Salt Mining & Exploration Co. Ltd. (ISME) own and operate
the underground salt mine at Kilroot, 3 kilometres northeast of
Carrickfergus, Co. Antrim. The company commenced salt
extraction at the mine in 1965, and it has been in continuous
operation to the present day.
At present the mine produces approximately 400,000 to
500,000 tonnes of processed rock salt annually for de-icing of
roads and motorways during the winter period. Kilroot Mine is
the only salt mine in Ireland, and one of only three salt
producers in Ireland and the United Kingdom. The mine is of
strategic importance and it is critical to the long term secure
supply of de-icing salt.
SLR acts as a technical advisors to ISME on planning,
environmental, geological, mine design, mineral prospecting
licence and mining lease matters. Recently SLR has assisted ISME
in successfully obtaining planning permission to extend the
existing underground mine by 280 hectares.
The planning application (with accompanying environmental
statement), both prepared by SLR, was one of the largest
applications ever submitted to the Planning Service in Northern
Ireland. The proactive scoping and consultation carried out by
ISME/SLR with the statutory agencies and the local community,
and the quality of the SLR environmental statement
accompanying the planning application, were critical to ensuring
there were no objections to this major development, and
assisted the Planning Service in processing the application
efficiently in a short six month timeframe.
This recent planning permission will extend the mine working
life by approximately 30 years. The workings in the mine
extension area will be located 300 to 500 metres below the
existing ground surface. All of the proposed development will
be located underground and ISME will continue to use the
existing surface facilities, mine access and jetty on Belfast Lough.
Chief Executive’s Review
waste management
20
SLR Management Limited
SLR consolidated its position as one of the world’s
leading waste management consultancies during 2010,
with further development in North America and entry
into the Australian market. As the rest of the world
follows Europe’s lead on recycling and energy from
waste, there are significant new international
opportunities developing.
waste m
anagement
21
Viridor
Trident Park EfW Facility
Working closely with Viridor, SLR undertook a four year
programme of site identification, planning and environmental
permitting for the largest EfW treatment facility in Wales. The
process was successfully completed in October 2010 with the
issue of the Environmental Permit.
An initial site appraisal process, undertaken by SLR in late 2006, led
directly to Viridor purchasing a site at Trident Park, just 1.5 km from
the Welsh parliament building, the Senedd, in Cardiff Bay. SLR was
then appointed to prepare the planning application, with
accompanying Environmental Statement, and also submit an
Environmental Permit for the 350,000 tonne per annum facility.
Planning permission was granted in June 2010 following the
submission of a comprehensive Environmental Impact Assessment
(EIA) undertaken entirely by SLR, and featured assessments on the key
issues including landscape, highways, ecology, noise, air quality,
socio-economics and land quality. SLR’s design of a landmark building
was assisted by the production of a virtual reality model, using aerial
photography, to show what the proposed site and surrounding area
would look like.
The Environmental Permit application was submitted in April 2009
and again, was prepared entirely by SLR’s multi-disciplinary team. The
regulatory body undertook an 18 month programme of technical
assessment and public consultation before issuing the Permit in
October 2010.
One of the most exciting aspects of the site is that it now enables
SLR and Viridor to work actively together to develop a district
heating scheme. SLR prepared a comprehensive heat plan to consider
the potential of supplying renewable energy to over 120 businesses
and organisations in Cardiff.
The construction phase of the project is expected to create some
300 temporary jobs during the construction period and 50 full time
jobs, and will secure over £150 million of investment.
The drivers for the waste market are in many ways similar to those of natural
resources. Population growth and economic development both increase the volume
of goods consumed and hence the waste produced inevitably increases. In addition,
rapid urbanisation, increasing regulation and the growing realisation that waste can be
a resource in itself have all increased pressures on business and government to manage
waste in a manner that maximises its potential value as well as minimising any possible
environmental impact.
In the UK, SLR was successful in assisting Viridor to obtaining planning permissions for
two major EfW plants, one in Cardiff and one in Oxfordshire. An Environmental Permit
was also issued for the Cardiff Facility. These developments, which manage several
hundred thousand tons of waste per annum, are inevitably both complex and high
profile. In both cases, SLR was appointed to manage the architectural aspects, the
planning application and the environmental statement which, in spite of significant
local opposition to the projects, were not successfully challenged on process or
technical grounds.
A number of other applications are also in the planning system and SLR’s architects and
landscape architects have been commended on a number of occasions for the visual
quality of the buildings and their surroundings. As an example, the South West Design
Review Panel commented on one development: “We quickly warmed to the clear and
elegant building form. It has the potential to be a landmark for the area, and a pleasing
incident for those journeying on the A38. To gather most of the various processes into
one simple structure works well visually and seems to be efficient operationally too.”
In North America and Australia, SLR is becoming increasingly recognised and is working
on a range of new and existing waste facilities for both government and private clients.
Chief Executive’s Review
planning & development
22
SLR Management Limited
Through most of 2009 and 2010, the private development sector in Australia, North America
and Europe was depressed, with many projects on hold and few new developments
commencing. The last quarter of 2010, however, saw significant recovery in Canada and parts
of Australia and the first signs of recovery in the UK.
Inevitably, the high value projects, often associated with waterfront locations, are leading the
way. SLR is involved in a number of these, including the White Pines development in
Vancouver, British Columbia. This is a mixed use residential and commercial development
beside the Fraser River on a former industrial site and is presented as the case study below.
planning & develo
pment
23
Parklane White Pines Development
Vancouver, British Columbia
The property is in the southeast corner of Vancouver, on the
North Arm of the Fraser River. The entire site is 30 ha and has
been acquired by Parklane from the City of Vancouver
(northern portions - 2006) and Weyerhaeuser (southern
portion - 2004), formerly MacMillan Bloedel, for a major
redevelopment to residential and commercial land use.
Remediation of the upland and sediments in the foreshore has
been carried out by SLR through the removal of over 110,000 m3 of
contaminated soil. The effectiveness of remediation and risk
management measures have been demonstrated to the regulator
and all certificates of compliance have been issued by the regulator
for the site. In addition, a wide area site designation (the second in
BC) has been obtained to protect future owners of the lands
currently being risk managed for the effects of creosote.
The redevelopment plan is for a mixed-use development, creating
a new community and neighbourhood in Vancouver. It will include
residential and commercial areas, including restaurants,
community centre, parks and shopping. The plan is based on the
principles of new urbanism and features a well-planned mix of
town homes, low and mid-rise apartments and high-rise towers.
There will also be retail shops and services, large anchor retail
stores and a community plaza, all situated in the heart of the
community just a few minutes’ walk for residents. With these
exceptional new community amenities along with significant
green space, riparian and aquatic habitat enhancement along the
Fraser River, shoreline access and walkway, a new community
centre, and school and sports fields, this redevelopment will be a
landmark community and one of the premiere places to live in
Vancouver. Recognition of Parklane’s efforts has already been
received by being awarded the CUI Brownie Award 2007 for
Communications and Public Engagement.
The combination of soil removal, risk-management and liability
protection, with state-of-the-art groundwater extraction and
treatment used for deep (up to 25 metres below ground surface)
groundwater contamination, has allowed the full redevelopment
of this former industrial property into a new and desirable
southeast Vancouver community. The Wide Area Site designation
under the BC Contaminated Sites Regulation has significantly
enhanced site redevelopment.
SLR has assisted numerous clients in optimizing the value of waterfront assets through
the complex cleanup of historical environmental issues and preparing properties for
redevelopment. Environmental cleanup typically involves work on the land and in the
waterway sediment, requiring an understanding of the complex permitting
requirements and working with many governmental agencies. As an example, SLR is
completing Remedial Investigation, Feasibility Study and Cleanup Action Plan work at
an approximately 41 acre former sawmill, log processing and lumber storage site. The
site is located on the shoreline of Port Gardner Bay, a high-priority cleanup area under
the State of Washington’s Puget Sound Initiative, which is the state’s effort to cleanup
and restore the health of Puget Sound. Work at this site is being completed under an
Agree Order with the Washington State Department of Ecology. Assessment work
includes upland sampling of soil and groundwater as well as sediment sampling by
vessel with sampling occurring for metals, polychlorinated biphenyls (PCBs), dioxins &
furans, petroleum fuels and oils and pentachlorophenol (PCP).
In contrast to the private sector, the public sector has been unaffected by the GFC, and while
this is set to change in the UK and Ireland, public spending in North America and Australia are
likely to be maintained. SLR has a strong and varied track record in this sector. In Canada, the
City of Toronto operates a regional destination/local park that includes significant sand and
cobble beach as well as unique creek, wetland and forest environments. Marie Curtis Park is
an important ecological reserve for local plant and wildlife species as well as a prime
community resource for outdoor leisurely activities. The project goal is to create a unified
waterfront that will enhance the existing beach/waterfront, focus on the natural site features
and improve park amenities. SLR’s role is to create a functional ecosystem model for the site
that includes an important forest node on a critical migratory pathway, wetlands and
watercourses, including the historic Etobicoke Creek and the dynamic Lake Ontario coast. SLR
was also asked to identify a trail system that would provide a high quality urban wilderness
experience compatible with endangered species, ancient oaks and important wildlife.
In Australia, the government is investing A$ 2.3 billion through the National Secondary
School Computer Fund (NSSCF), to provide new or upgraded information and
communications technology (ICT) for secondary schools. The aim of NSSCF is to achieve a
1:1 computer to student ratio by 31 December 2011.
In order for this initiative to be implemented in Queensland, full asbestos surveys of most
of the 293 State Schools with Years 9-12 is required prior to any cabling and installation of
wireless access points being conducted in each school. SLR was one of two companies
awarded a contract for the conduct of these surveys in 204 of the 293 eligible State Schools.
Prior to 1990, many buildings in Queensland were built using asbestos containing materials
(ACM) with one of these materials being a Low Density Board (LDB). This product consists
of both Amosite and Chrysotile and is such low density in the compaction of the asbestos
fibres, that when it is broken or drilled, the fibres are liberated and therefore is considered
friable and dangerous.
Logistically, this project is very challenging. The schools extend from Brisbane metropolitan
area, all the way north into the Torres Strait to Boigu Island, just 5km from the Papua New
Guinea coast. Some of the remotest Aboriginal and islander communities are also only
accessible by helicopter. The more culturally sensitive communities require an application
process of 6 weeks in order to visit. Another limiting factor is the inability to conduct these
surveys during school hours, meaning the consultants are surveying from 3pm until around
midnight, each night.
SLR’s broad offering to the development sector, including site finding, due diligence, site
assessment, remediation, planning & EIA means that we are well placed to take advantage of
the market resurgence in 2011 and 2012.
Chief Executive’s Review
industry
24
SLR Management Limited
Much of SLR’s work over the past two years has been helping clients with environmental
and health & safety compliance. In the Pacific North West, this is centred on the pulp and
paper industry for companies such as Cascade Pacific Pulp, for whom SLR provides
ongoing environmental compliance support for a 185,000 ton per year bleached kraft
pulp mill in Oregon, USA. SLR personnel have maintained an ongoing relationship with
the facility for the past decade.
industry
25
SAICA PaperRecycled Paper Mill, Partington UK
SAICA Paper, based in Zaragoza, Spain, are a leading
manufacturer of corrugating paper with existing paper mills in
Spain and France and a current production capacity of over 2
million tonnes per annum. As part of their expansion plans the
company are building one of the world’s most advanced
recycled paper mills in the UK, at Partington near Manchester.
SLR played a key role in the development of the new paper mill
by securing planning consent allowing construction to
commence and subsequently by obtaining environmental
permits necessary to allow the new mill to operate. The £290
million investment will have a capacity to produce 400,000
tonnes per annum of 100% recycled paper utilising state-of-
the-art technologies, including a dedicated Combined Heat and
Power (CHP) plant and advanced effluent treatment plant
incorporating anaerobic digestion technology.
A major development such as this requires an Environmental
Impact Assessment (EIA) to support the planning application.
The EIA was undertaken in house, using SLR specialists in areas
such as air quality, noise, archaeology, ecology, hydrology,
transport and landscape architecture. The planning application
itself was managed by SLR’s experienced planning team who
provided overall project management and co-ordination of
each stage of the application.
To operate such a facility various permits are required from the
environmental regulator. The environmental permit application
includes both an assessment of the environmental impact of
emissions from the facility and also a demonstration that the
techniques proposed to minimise emissions and the use of
resources are Best Available Techniques (BAT). Other permits
required for the facility included an Emissions Trading Permit
(relating to carbon dioxide emissions) and a water abstraction
licence. All the various permit applications were managed by
SLR’s experienced permitting team with the final permit being
issued in December 2010 and operations expected to start
towards the end of 2011.
During 2010, SLR has assisted the facility on many regulatory fronts. Compliance tasks
have included the preparation of a Spill Prevention Control and Countermeasure plan
(SPCC) following newly issued EPA regulations for facilities that store oil, the
preparation of a Greenhouse Gas Monitoring plan following the Mandatory
Greenhouse Gas Reporting Rule issued by the US EPA, the completion of a Process
Safety Management and Risk Management Programme audit as required by the EPA and
OSHA regulations for the storage of two hazardous chemicals, completion of
Department of Transportation training for hazmat employees and the preparation of
air permit applications for facility modifications.
SLR has also carved out a niche in advising on environmental aspects of transactions
in the forestry sector. The deals often involve huge areas of land, making them
extremely complex in environmental terms. SLR provided pre-sale environmental due
diligence of over two million acres of timberland in seven states in the Northwest,
Midwest, and Southeast US for Forest Capital Partners, a Timberland Investment
Management Organization (TIMO). Utilizing staff from both the U.S. and Canada, five
separate teams of environmental scientists performed the research and site
reconnaissance for the project.
Evaluation of environmental risk was complicated by the presence of mining and oil &
gas activity in several areas, and one former sawmill town that had been shut down and
completely demolished in the 1950s. SLR’s reports were uploaded to an electronic data
room to facilitate due diligence by the various bidders for the upcoming property sale.
The recovery of the manufacturing sector during 2010 also saw applications being made
for new industrial facilities and plant extensions. This included permitting of one of the
world’s most advanced recycled paper mills (see case study) and a new distillery.
SLR has provided services to the Scotch whisky industry for a number of years and
picked up a major commission for long term client, Glen Turner Company in 2010.
Glen Turner operates a whisky maturation and bottling facility in West Lothian,
Scotland. New developments at the site include the construction of a 25 million litres
per annum grain distillery. This is a £40 million investment and is the first new green
field grain distillery to be built in Scotland for over 40 years. The site is classified as a
top-tier major accident hazard site under the Control of Major Accident Hazard
(COMAH) Regulations given the large volume of flammable spirit stored.
This new commission was to provide a Safety Case for the proposed grain distillery to
demonstrate to safety and environmental regulators that the risk to people and the
environment were as low a reasonably practicable. The Safety Case formed a vital part
of the planning application and permitting process.
The strong recovery of manufacturing in Europe and North America is likely to see
more new developments in 2011 as plans shelved during the GFC are commissioned.
Chief Executive’s Review
infrastructure
26
SLR Management Limited
Infrastructure currently represents about a quarter of
SLR’s business worldwide. Predominantly centred in
Australia and Canada, very little of the work is
dependent on the vagaries of UK or Irish public spending.
The work includes road, rail and harbour developments,
together with major power distribution networks.
infrastructure
27
In Australia, SLR is considered to be the leading acoustics consultancy in road and
rail, having an extensive track record in the development and upgrade of highway
systems and development of both surface and underground railways. A recent
project was the Bruce Highway Upgrade, a 61km stretch of road between Cooroy and
Curra in Queensland. SLR undertook a detailed Road Traffic Noise Assessment for a
section of the upgrade programme, including identification of sensitive receptors,
noise monitoring, noise modelling and prediction as well as the design of noise
mitigation measures.
Across the group, another area of speciality is ports and harbours. We are currently
undertaking major projects in Australia, Canada and the US. SLR’s input ranges from
the site assessment and remediation of major naval facilities to monitoring for the
presence of sea life during construction operations adjacent to the Great Barrier Reef.
Our involvement in port facilities often stretches back over many years, allowing us
to develop a deep understanding of the client’s needs and help them achieve long
term development objectives. One such client is Port Waratah Coal Services, which is
featured as the case study below.
The assessment of the environmental impact of major linear structures such as
pipelines and electricity distribution networks presents a unique set of challenges as
they often cross a huge diversity of environmental settings and habitats. SLR has
developed a significant expertise in this niche sector. In 2010 we were appointed by
National Grid to undertake routeing and siting studies for electricity transmission
equipment to connect the proposed new nuclear power generation and offshore
wind farms on the coast of Cumbria and Lancashire to the existing high voltage
transmission system. This is one of the largest transmission projects that has been
undertaken since the inception of the national grid in the 1950s. The appointment
follows on from many similar commissions on similar projects (albeit smaller in scale)
over recent years.
A number of options exist for the points of connection to the existing transmission
system in Cumbria and in Lancashire. The main options under consideration require over
200km of new overhead transmission lines and a number of new and expanded
substations. In addition, some of the options may require sealing end compounds, grid
supply points and underground and submarine cable routes. The study area encompasses
a large part of Cumbria and much of Lancashire. The options under consideration are
likely to include routes through/around the Lake District National Park, across designated
Areas of Outstanding Natural Beauty (AONB’s) and across/around Morecambe Bay. SLR’s
project work includes landscape, ecology, archaeology, planning, flood risk, transport, GIS
and virtual reality and is thus well suited to SLR’s multidisciplinary capabilities. The project
team has worked closely with key stakeholder groups though a series of facilitated
workshops. In undertaking and presenting this work, SLR has introduced innovative
methodology and technical solutions which National Grid is now considering for use on
other routeing corridor studies.
It is anticipated that SLR will continue to be involved at future stages of the project
including public consultation, detailed design and Environmental Impact Assessment
leading to an application to the Major Infrastructure Planning Unit in 2014.
Port Waratah Coal Services LtdCarrington and Kooragang Coal Export Terminals
Port Waratah Coal Services Ltd (PWCS) owns and operates the
Carrington (CCT) and Kooragang (KCT) coal export terminals
located at Port Waratah, in the eastern state of NSW, Australia.
The terminal facilities are generally located within an industrial
precinct. On-going industrial development in the area, changes in
community expectations together with tightened noise
regulations have meant that off-site noise from terminal
operations is a key environmental risk factor for the existing
facilities and future expansions.
During the past fifteen years, SLR has worked closely with PWCS
enabling operations to continue with minimal noise disturbance
to residential and industrial neighbours. SLR has assisted PWCS in
achieving an increased throughput capacity while actually
decreasing the terminal facilities’ environmental noise envelope.
This has been accomplished through the development by PWCS
of a Continuous Noise Improvement Programme. The
programme involves plant and equipment acoustical design,
procurement, construction and commissioning together with
monitoring and reporting, so as to ensure that the approved
environmental noise limits are achieved.
In many cases, the programme has gone well beyond the use of
Best Available Technology by promoting research and
development into practical acoustical solutions not previously
commercially available or considered economically achievable.
In particular, the development of low noise technology for fixed
plant, including conveyor assemblies (i.e. open-steel, metal-pan,
concrete-pan, prefabricated enclosed gantries), conveyor drive
assemblies, alarms, as well as mobile equipment (including
stackers, reclaimers and ship loaders), has demonstrated source
noise reductions and incremental improvement with each
successive phase of installed infrastructure.
More recently, SLR has also provided occupational hygiene
services to PWCS consisting of occupational dust and noise
monitoring. The aim of this on-going monitoring is to provide a
database to assist PWCS with employee health management at
the terminal facilities.
Chief Executive’s Review
sustainability
28
SLR Management Limited
sustainability
29
This is reflected in the views of the world’s leading
environmental consultancies, many of whom are based in
the US. Five years ago it wasn’t recognized as a viable
market and was largely the preserve of academia or not
for profit organizations. In a recent survey undertaken in
late 2010, however, it was considered to be one of the
fastest growing areas of environmental consultancy and
second only to energy in desirability as a service offering.
SLR has an extremely strong track record in sustainability
ranging from carbon capture and sequestration, all forms
of renewable energy, low carbon and zero carbon
developments, sustainable buildings and reporting on
sustainability aspects of CSR. With work spanning
Australia, Canada, Europe and the US, we are well placed
to work with governments and corporations worldwide to
develop a sustainable approach that meets and exceeds
their needs.
In the last five years, the need for
sustainable development has gone from
being an essentially European concept to
a point where it is now accepted globally.
It has already become an integral part of
the planning and permitting regime in
the UK and Europe and it is also
recognised by both major corporations
and institutional investors that operating
to sustainable principles is a critical
element in corporate and social
responsibility (CSR).
30
Chief Executive’s Review
SLR Management Limited
summary
As a direct result of the strategy of international development adopted in the early part of the GFC, we were able to deliver a strong performance
in 2010. The business is extremely well diversified both in terms of business area and geography, and numbers among its clients many of the world’s
largest corporations. Less than one third of current revenues are exposed to the low-growth European economies.
The outlook for growth in 2011 is excellent, with double digit growth forecast in all operating regions except the UK and Ireland, which we
expect to be flat. The recent acquisitions in Australia, South Africa, the UK and the US, funded largely by direct shareholder investments,
have provided both development platforms in high growth areas and access to world-class capabilities that can be used around the group.
David Richards
Chief Executive
7 March 2011
summary
31
Directors’ Biographies for the year ended 29 October 2010
32
SLR Management Limited
The SLR Management Limited Board is made up of six directors, comprising four executive
directors and two non-executive directors. One of the non-executive directors is
independent, with the other nominated by 3i Investments plc.
John joined SLR in 2004, and is Non Executive Chairman of SLR ManagementLimited. He was formerly the senior partner at Birmingham-based corporate lawfirm Wragge & Co, where he led the growth of the practice from a turnover of£15.7 million to a £77.8 million turnover, international business with 110 partners.
John is also non-executive Chairman of Real Estate Investors Plc, Sense and theBirmingham Hippodrome Theatre Trust. He is also a Director of Advantage WestMidlands and a non-executive Director of Staffline Recruitment Group plc.
David is the Chief Executive of SLR Management Limited and a director of anumber of its subsidiaries with overall responsibility for the management of thegroup. Having established SLR in 1994, he has led the management teamresponsible for developing SLR into one of the fastest growing and mostprofitable environmental consultancies in the UK.
Prior to joining SLR, David was a Senior Manager with Golder Associates, a majorinternational environmental consultant, where he was responsible for themanagement of the environmental group in the UK and played a key role in itsEuropean operations. David is a Chartered Engineer by profession.
John Crabtree OBE (61)Non Executive Chairman
David Richards (52)Chief Executive
33
Neil has been Managing Director of the UK operations since 2001 and is also anExecutive Director of SLR Management Limited. In addition to his directresponsibility for the operations and growth of the UK consulting business, Neil hasbeen responsible for supporting the strategic growth and diversification of theinternational business. In this role, he has had an active role in identifying, integratingand developing the Australasian and South African businesses within the group. Neilis a director of a number of the subsidiary companies.
Prior to joining SLR in 1995, Neil held consultancy roles with major internationalconsultancies such as Rust Environmental (now Parsons Brinckerhoff) and Damesand Moore (now URS). During his 25 years in the environmental consulting sector,Neil has experience of both UK and international project direction, businessdevelopment and management.
Kevin is responsible for all North American operations and is the President of SLRInternational Corporation as well as being an Executive Director of SLR ManagementLimited. Prior to joining SLR in 2000, Kevin was the Chief Operating Officer ofSECOR International, a $100m turnover international environmental consultancywith its head office in Seattle.
Kevin has 25 years of experience with environmental consultancies and oil companiesand holds an MBA (International Business) from the University of Birmingham. He is aRegistered Hydrogeologist and also serves as a Director of the British-AmericanBusiness Council (Pacific Northwest).
Neil Penhall (46)Executive Director
Kevin Rattue (51)Executive Director
Jonathan joined SLR in June 2009 in the newly created role of Finance Director ofSLR Management Limited and has overall responsibility for all finance and I.T.functions within the group.
He has 20 years of experience as a finance director in a number of public-quotedand private-equity backed businesses. His transactional background includes IPOand trade sales.
Jonathan is a Chartered Accountant and holds an MA in economics fromCambridge University.
Richard joined the Board of SLR Management Limited in May 2008 at the time ofthe investment by 3i. He is a partner in 3i’s Growth Capital business which is aleading investor into high growth business in Europe, USA and Asia. He isresponsible for the Global Growth Capital portfolio and is also a Director ofMKM Building Supplies and AES Seals.
Richard joined 3i in 1989, after graduating from Birmingham University andpreviously ran 3i’s business in Birmingham before moving to London.
Jonathan Cook (52)Finance Director
Richard Bishop (42)Non Executive Director
Report of the directors for the year ended 29 October 2010
34
SLR Management Limited
The directors present their report together with the financial statements for theperiod ended 29 October 2010.
Results and dividends
The profit and loss account is set out on page 40 and shows the loss on ordinary
activities for the year.
No dividends were paid or declared in the period on the company’s A or B
ordinary shares.
Principal activities
The principal activity of the company is that of a holding company for the SLR group
of companies, which provide environmental consultancy and related services from
offices in Australia, Canada, Ireland, New Zealand, South Africa, the UK and US.
Trading review
The period covered by the consolidated financial statements is from 31 October
2009 to 29 October 2010.
The results of the group for the year are set out on page 40 and the financial position of
the group is set out on page 41. Further information on the review of the business and
the directors’ expectation of the development of the Group’s activities for the coming
year are given in the Chairman’s statement and Chief Executive’s review on pages 4 to 31.
Analysis of key performance indicators (KPIs) confirms the strong growth of the
business and vindicates the group’s strategy of developing business streams in
booming economies backed up by successful integration of three acquisitions during
the year. Group revenue increased by 24% to £67.3 million (2009: £54.4 million) and as
a result of the group’s strategy, the share of group revenues derived from the
uncertain UK economy fell from 48% to 39%. Profit before interest, tax, goodwill
amortisation and exceptional items amounted to £8.5 million in 2010, compared to
£6.3 million in 2009. Client retention remained excellent with 58% of the revenue
derived from clients with whom SLR has worked for 5 years or more, the same
percentage as last year.
During the year the SLR Holdings Employee Benefit Trust (“EBT”) acquired 3,429,130
shares (for a consideration of £1,384,054) by virtue of purchase from employees
leaving the group or reducing their working hours. The EBT held 738,038 shares at 29
October 2010, representing 1.27% of the issued share capital at that date.
Shareholder Structure
The shareholder structure at 30 October 2010 was as follows:
3i 31.99%
Directors and senior management 51.10%
Other employees & EBT 16.91%
Directors
The directors of the company during the year were as follows:
D G Richards
K G Rattue
N C Penhall
J Crabtree
R M Bishop
J C Cook
R Pinchbeck (resigned 3 September 2010)
F Bogzaran (resigned 4 February 2010)
At 29 October 2010, third party indemnity insurance for the benefit of the company’s
directors was in force.
Charitable donations
During the period the group had no reportable charitable donations.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial
statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial
year. Under that law the directors have elected to prepare the group and company
financial statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and applicable law).
Under company law the directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state of affairs of the group
and company and of the profit or loss of the group for that period.
In preparing these financial statements, the directors are required to:
• select suitable accounting policies 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 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.
35
Financial Instruments
The Group's operations expose it to a variety of financial risks including the effects
of changes in interest rates on debt, foreign currency exchange rates, credit risk and
liquidity risk. These are monitored by the board of directors and were not considered
to be significant at the balance sheet date.
Credit risk
The Group's policy in respect of credit risk, is to require appropriate credit checks on
potential customers before sales are made.
Cash flow and interest rate risk
Interest bearing assets comprise cash and bank deposits, all of which earn interest at
a market rate. The interest rate on bank borrowings is at market rate and the Group's
policy is to keep the bank borrowings within defined limits such that the risk that
could arise from a significant change in interest rates would not have a material
impact on cash flows. Where appropriate, the Group will enter into appropriate
interest rate hedging agreements to further mitigate the effects of interest rate
fluctuations. The directors monitor the overall level of borrowings and interest costs
to limit any adverse effects on the performance of the Group.
Liquidity risk
The Group's policy has been to ensure continuity of funding through acquiring an
element of the Group's fixed assets under hire purchase contracts and finance leases
and arranging funding for operations via medium and long term loans.
Foreign currency risk
The group is exposed in its trading operations to the risk of changes in foreign
currency exchange rates. The main foreign currencies in which the group operates are
the Australian Dollar, US and Canadian Dollar and the Euro. The group has trading
entities within Australia, the USA, Canada and Ireland to mitigate the exposure to
foreign currency risk in these markets. The group does not use derivative financial
instruments to mitigate foreign currency risk.
Corporate Governance
SLR has had a strong system of governance in place throughout its existence.
The Board continues to review corporate governance issues in the light of current
best practice and seeks continual improvement.
Board Composition and Operation
The board is made up of four executive directors and two non-executive directors.
The executive directors are:
David Richards (Chief Executive)
Neil Penhall (Managing Director of SLR Consulting Limited)
Kevin Rattue (President of SLR International Corp.)
Jonathan Cook (Finance Director)
The non-executive directors are:
John Crabtree (Independent Chairman)
Richard Bishop (3i Investments plc nominated Director)
The board meets regularly and where appropriate operates in a manner consistent
with the recommendations of the Combined Code on Corporate Governance.
The Audit, Remuneration and Nomination committees are formed, in each case, of
two non-executive directors and meet regularly to undertake their responsibilities in
a manner consistent with the recommendations of the Combined Code.
Operating Structure
A key element of the group’s success is the clarity and efficiency of its management
structure and the quality of its management and accounting systems. The group has
five principal operating companies; SLR Consulting Limited, SLR Consulting (Canada)
Limited, SLR International Corp., SLR Consulting Australia Pty Ltd and SLR
Environmental Consulting (Ireland) Limited which operate from a network of offices
in the UK, Canada, the US, Australia, New Zealand, Singapore and Ireland. In addition,
on 1 March 2011, the group completed the acquisition of Metago International
Holdings (Pty) Limited which had operating subsidiary companies in Johannesburg,
South Africa and Perth, Western Australia. The group operates central accounting and
HR functions in each country, all of which report to the group board.
Employment Policies
The Group’s business is based on attracting, retaining and motivating staff of the
highest technical quality, who are also commercial in their approach and committed
to the strategy and growth of the Group. The Board recognises that the retention and
motivation of existing employees and the attraction of new high calibre employees
is critical in a professional services company. As such, the Group uses a range of
dedicated and sophisticated methods to achieve this, including professional training
and development, a flexible approach to working hours and practices, and a wide
range of staff incentives incorporating government approved ownership schemes.
Report of the directors for the year ended 29 October 2010
36
SLR Management Limited
Employment of disabled persons
On the basis of information provided by applicants, and interviews conducted, SLR
did not receive any applications for employment by disabled persons during the
period. Had it done so they would have been assessed in accordance with our equal
opportunities policy, which confirms the Group’s commitment to apply employment
criteria which are fair, equitable and consistent regardless of an applicant’s race,
creed, colour, nationality, sex or disability.
With respect to existing disabled staff, they are treated in accordance with our equal
opportunities policy and are actively encouraged to partake in the career
development and training programmes which are available to all staff.
Employee involvement
As a professional services firm with wide employee ownership, SLR is committed to
providing all its employees with regular briefings on the development of the
company and key issues affecting its staff. This is achieved in a number of ways, using
both the IT systems and direct meetings and discussions.
SLR has an intranet site, SLR Net which provides a wide range of information to all
staff including all employment policies, detailed financial information, news on
fellow employees, company development etc. In addition, the management and
senior technical staff convene regular staff meetings to update staff on the
strategic and local development of the Group, including the potential acquisitions
of other companies. An essential part of these meetings is an open question and
answer session where all employees are encouraged to raise any issues they may
have for discussion.
Career development and professional training
The Group is committed to strong organic growth which provides clear
opportunities for staff to develop their careers within the Group. The Group also
supports professional development and has programmes in place to help employees
achieve Chartered status (or equivalent) in their chosen profession.
Employee incentivisation
As well as providing staff with industry standard employment packages in terms of
salary and other benefits, the Group runs a discretionary bonus scheme to which all
staff are eligible. The Group also has a share option scheme and Employee Benefit
Trust to provide ownership to key employees. The employee ownership scheme is
considered by the Board to have been very successful in retaining key employees
who are delivering significant shareholder value.
Risk Management
The Group has always sought to minimise risk in all aspects of its operation. Primary
risks and risk mitigation measures are briefly considered below.
Strategic risks are limited in the Group’s business. It has a focussed strategy, closely
aligned with its capabilities and is operating in a rapidly growing market sector. The
Board is mindful of the risk of a failed or aborted acquisition and is not
contemplating any major changes which could damage the business. The
environmental sector is largely regulatory driven, which helps mitigate the potential
exposure to political or general economic risk. The most significant risk is one of
reputation and the Group works hard to mitigate this risk by hiring high quality staff,
and applying appropriate quality management procedures. The nature of the
environmental sector tends to attract staff with high ethical standards. This is
reinforced by the Group ethos and procedures. The overall strategic risk and
associated ethical risk are considered low.
The management has a track record of successful leadership and has considerable
strength and depth. The Group has a fast growing and highly motivated professional
staff, many of whom have significant shareholdings in the Group. Risks associated
with both management and key staff are considered low.
The Group has a broadly spread business in terms of sector, geography and client
base. The rapidly growing marketplace provides good opportunities to expand brand
recognition. In terms of suppliers, the Group makes limited use of subcontractors, all
of whom are subject to a strict approval process. Overall market risk, from either
clients or suppliers, is considered low.
The Group normally undertakes work under its Standard Conditions of Engagement.
Where this is not the case, all non-standard contracts are reviewed by a Director and
referred to the Group’s legal advisors where appropriate.
The Group has a professional HR team who work with the Group’s legal advisors to
minimise risks associated with employment law. Notwithstanding the above, certain
sectors of the Group’s business, such as development clients, can be litigious, and
there is always some risk with employees. The overall legal and compliance risk is
considered low to moderate.
Financial risks mainly centre around the leveraged nature of the business, although
the level of operating profitability and the strong cash flow are considered to make
this a moderate to low risk. The Group has a robust accounting function which
minimises systemic risk. The Australian, US, Canadian and Irish accounting groups are
small and, therefore, there is some risk as it is difficult to fully separate functions and
avoid self checking. The Board is aware of this and appropriate steps will be taken as
the group grows. Overall the financial risks are considered low to moderate.
Overall the Board considers that risk management within the business is well
managed, although the Board continues to monitor the risk profile as the
Group develops.
37
Corporate Social Responsibility
The Board is committed to operating the Group in a socially and environmentally
responsible manner and ensures that appropriate policies are in place to achieve that.
The responsibility for ensuring compliance is delegated to the Board’s Executive
Directors, and by their nature to every employee in their dealings with their
colleagues, clients and the public at large.
The Group has existing policies covering Business Ethics, Environmental Standards,
Equal Opportunities, Family Support, Charitable Contributions, and Health and
Safety. These are subject to regular review, are amended and updated as appropriate
and are as follows:
Business ethics
SLR expects all staff to behave in a professional manner at all times, maintaining the
highest standards of integrity, honesty and conduct, as well as obeying all applicable
laws. The Group works for many clients in the same business areas and encourages
employees to assess and report conflicts of interest, either personal or corporate, so
these can be avoided or resolved to the satisfaction of all parties.
Environmental standards
As a leading international environmental consultancy, SLR is committed to improving
its environmental performance. Although, by its nature, it is not a business with
substantial direct environmental impact, the Group and its employees continually
seek to minimise that environmental impact in a manner consistent with a growing
Group with its main activities focussed on reducing the environmental impact of its
clients. Examples of the practical aspects of the environmental policy are the
consistent review of the Group’s vehicles to drive a sustained reduction in CO2
emissions (whilst also encouraging the use of public transport where possible), re-use
and recycling of the waste stream where possible, and minimising heat and power
usage in offices.
Equal opportunities
SLR is a people business and is committed to supporting all of its employees. We
afford equal opportunities to all employees and potential employees regardless of
race, creed, colour, nationality, sex or disability. We apply employment policies
which are fair, equitable and consistent with the skills and abilities of our employees
and the needs of the business. SLR will not perpetuate or condone any
discriminatory act or attitude in the conduct of our business with the public or our
employees and any acts of racial or sexual discrimination are regarded as
disciplinary offences.
Family support
The Group also recognises the importance of work/life balance in the wellbeing of
its employees. It has developed a series of “family friendly” policies, and has
encouraged part time working and job share, where these are consistent with the
needs of the individual and the Group.
Charitable policy
The Group and its employees support charities at local and national level, and
employees are encouraged to support local communities.
Health and safety
The Group is committed to achieving and maintaining high standards of health and
safety within the organisation. The Group board is responsible for health and safety
within the Group and for ensuring that safety remains a priority and an integral part
of its activities. The companies within the Group have appropriate general Health
and Safety policies, with specific Health and Safety plans and risk assessments being
developed for particular activities or sites. In certain instances, particularly in the oil
industry, the Group’s employees are inducted into our clients’ policies and
procedures. Where this is the case, and the policies are deemed reasonable and
appropriate, the Group requires its employees to conform to those procedures.
Acquisitions
On 31 January 2010, the company acquired the entire share capital of Andrew
McCarthy Associates Limited for a total consideration up to £1.26 million in cash plus
260,000 B ordinary shares in the share capital of SLR Management Limited.
On 11 February 2010, the company acquired the entire share capital of Heggies Pty
Limited for a total consideration up to £5.6 million in cash plus up to 2,215,186
B ordinary shares in the share capital of SLR Management Limited.
On 1 July 2010, the company acquired the entire share capital of HCG Inc. for a total
consideration up to £4.3 million in cash plus 847,000 B ordinary shares in the share
capital of SLR Management Limited.
In all three acquisitions the total cash consideration includes an amount of deferred
consideration that is dependent upon the performance of the acquired entity
subsequent to acquisition.
Report of the directors for the year ended 29 October 2010
38
SLR Management Limited
Post balance sheet events
On 4 March 2011 the company issued Loan note instruments constituting up to
£1,700,060 10% Fixed Rate Unsecured Loan Notes 31 May 2015 and Payment In
Kind Notes.
On 4 March 2011, the company acquired the entire share capital of Metago
International Holdings (Pty) Limited for a total consideration of approximately £4.8
million in cash plus 2,294,250 B ordinary shares in the share capital of SLR
Management Limited.
Auditors
All of the current directors have taken all the steps that they ought to have taken to
make themselves aware of any information needed by the company's auditors for the
purposes of their audit and to establish that the auditors are aware of that
information. The directors are not aware of any relevant audit information of which
the auditors are unaware.
On behalf of the Board
J C Cook
Director
7 March 2011
Report of the independent auditors
39
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the directors’ report for the financial year for
which the financial statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act
2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns
adequate for our audit have not been received from branches not visited by us; or
• the parent company 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.
Christopher Pooles, senior statutory auditor
For and on behalf of BDO LLP, statutory auditor
London
United Kingdom
7 March 2011
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127)
To the members of SLR Management Limited
We have audited the financial statements of SLR Management Limited for the year
ended 29 October 2010 which comprise the consolidated profit and loss account, the
consolidated statement of total recognised gains and losses, the consolidated and
company balance sheets, the consolidated cash flow statement and the related notes.
The financial reporting framework that has been applied in their preparation is
applicable law and United Kingdom Accounting Standards (United Kingdom Generally
Accepted Accounting Practice).
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.
Respective responsibilities of directors and auditors
As explained more fully in the statement of directors’ responsibilities, the directors are
responsible for the preparation of the financial statements and for being satisfied that
they give a true and fair view. Our responsibility is to audit the financial statements in
accordance with applicable law and International Standards on Auditing (UK and Ireland).
Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical
Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial
statements sufficient to give reasonable assurance that the financial statements are free
from material misstatement, whether caused by fraud or error. This includes an
assessment of: whether the accounting policies are appropriate to the group’s and the
parent company’s circumstances and have been consistently applied and adequately
disclosed; the reasonableness of significant accounting estimates made by the directors;
and the overall presentation of the financial statements.
Opinion on financial statements
In our opinion the financial statements:
• give a true and fair view of the state of the group’s and the parent company’s affairs
as at 29 October 2010 and of the group’s loss 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.
Consolidated profit and loss account for the year ended 29 October 2010
40
SLR Management Limited
Consolidated statement of total recognised gains and losses for the year ended 29 October 2010
The notes on pages 44 to 65 form part of these financial statements
-103,874 19
Note 2010£
2009£
376 , 2 4 8410,075 19
Revaluation of listed investment
(2,669,104)(865,857)19Loss for the financial year
Exchange differences
(2 ,292,856)(351,908)Total recognised gains and losses for the year
54,441,39757,388,592 -57,388,592
Note 2010£
Beforeexceptional
items
2010£
Exceptionalitems
2010£
Total
2009£
Total
Turnover
-9,923,782 -9,923,782
Continuing operations
54,441,39767,312,374 -67,312,374 2
Acquisitions
(25,049,640)(31,421,479)-(31,421,479)3Cost of sales
29,391,75735,890,895 -35,890,895 Gross profit
(28,514,366)(32,393,632)(858,161)(31,535,471)3,6Administrative expenses
4,578,234 7,683,241 (858,161)8,541,402 Operating profit before goodwill amortisation
(3,700,843)(4 ,185,978)-(4 ,185,978)Goodwill amortisation
Operating profit/(loss)
877,3912,857,864 (858,161)3,716,025 Continuing operations
-639,399 -639,399 Acquisitions
877,3913,497,263 (858,161)4,355,424 6
37,32925,721 -25,721 Interest receivable
40,723---Amounts written on investments
(2 ,721,326)(2 ,829,481)-(2 ,829,481)7Interest payable and similar charges
(1,765,883)693,503 Profit/(loss) on ordinary activities before taxation
(903,221)(1 ,559,360)8Taxation on profit/(loss) from ordinary activities
(2 ,669,104)(865,857)19Loss on ordinary activities after taxation
All amounts shown relate to continuing activities.
Consolidated balance sheet at 29 October 2010
41
The financial statements were approved by the Board of Directors and authorised for issue on 7 March 2011.
The notes on pages 44 to 65 form part of these financial statements
D G Richards
Director
Company Number 6538090
64,037,86770,643,904 10
Note 2010£
2010£
2009£
2009£
Fixed assets
1,071,2262,725,528 11
Intangible assets
Tangible assets
101,374215,120 12Investments
65,210,46773,584,552
Current assets
16,022,52121,273,690 13Debtors
2,170,5815,098,741 Cash at bank and in hand
18,193,10226,372,431
(11,696,196)(16,374,861)15Creditors: amounts falling due within one year
6,496,906 9,997,570 Net current assets
71,707,373 83,582,122 Total assets less current liabilities
(26,813,409)(38,569,572)16Creditors: amounts falling due after more than one year
44,893,96445,012,550
Capital and reserves
55,11556,705 18Called up share capital
31,527,56131,895,692 19Share premium account
14,519,01914,642,709 19Merger reserve
-103,874 19Revaluation reserve
(1,207,731)(1 ,686,430)19Profit and loss account
44,893,96445,012,550 20Shareholders' funds
Company balance sheet at 29 October 2010
42
SLR Management Limited
The financial statements were approved by the Board of Directors and authorised for issue on 7 March 2011.
The notes on pages 44 to 65 form part of these financial statements
D G Richards
Director
Company Number 6538090Note 2010
£2010
£2009
£2009
£
Fixed assets
51,584,64663,257,677 12Investments
Current assets
14,598,88417,413,192 13Debtors
1,050,501 2,347,371 Cash at bank and in hand
15,649,38519,760,563
(11,587,746)(18,227,377)15Creditors: amounts falling due within one year
4,061,639 1,533,186 Net current assets
55,646,285 64,790,863 Total assets less current liabilities
(26,797,460)(37,197,669)16Creditors: amounts falling due after more than one year
28,848,825 27,593,194
Capital and reserves
55,11556,705 18Called up share capital
31,527,56131,895,692 19Share premium account
(2,733,851)(4 ,359,203)19Profit and loss account
28,848,825 27,593,194 20Shareholders' funds
Consolidated cash flow statement for the year ended 29 October 2010
43
The notes on pages 44 to 65 form part of these financial statements
Note 2010£
2010£
2009£
2009£
Net cash inflow from operating activities 8,123,5819,841,485 23
Returns on investments and servicing of finance
37,32925,721 Interest received
(2,222,678)(2 ,129,382)Interest and similar charges paid
(4,790)(30,087)Interest element of finance lease rental payments
(261,045)-Loan arrangement fees
(2 ,451,184)(2 ,133,748)Net cash outflow from returns on investments and servicing of finance
(1 ,952,765)(1 ,214,741)Taxation
Capital expenditure and financial investment
(558,649)(910,046)Purchase of tangible fixed assets
-7,590 Sale of tangible fixed assets
(558,649)(902,456)
Acquisitions and disposals
(1 ,479,820)(1 ,320,195)Deferred purchase consideration
(218,743)(7 ,064,532)Purchase of subsidiary undertakings
75,650 594,836 Bank balances acquired with subsidiary undertakings
(1,622,913)(7 ,789,891)
1,538,070 (2 ,199,351)Cash (outflow)/inflow before use of liquid resources and financing
Financing
11,138 30,611 Share capital issued
- 8,854,148 Loans advanced in the year
(1 ,850,000)(2 ,838,979)Loan repayments in the year
(77,895)(186,247)Capital element of finance lease rental payments
(84,570)(44,389)Employee benefit trust transactions
(2,001,327)5,815,144
(463,257)3,615,793 24,25Increase/(decrease) in cash
Notes forming part of the financial statements for the year ended 29 October 2010
44
SLR Management Limited
1 Accounting policies
The financial statements have been prepared under the historical cost convention as
modified by the revaluation of fixed asset listed investments and are in accordance
with applicable accounting standards. The following principal accounting policies
have been applied:
Basis of consolidation
The consolidated financial statements incorporate the results of SLR Management
Limited and all of its subsidiary undertakings as at 29 October 2010 using the
acquisition method of accounting. The results of subsidiary undertakings are included
from the date of acquisition.
Goodwill
Goodwill arising on an acquisition of a subsidiary undertaking is the difference between
the fair value of the consideration paid and the fair value of the assets and liabilities
acquired. It is capitalised and amortised through the profit and loss account over the
directors' estimate of its useful economic life. Impairment tests on the carrying value of
goodwill are undertaken:
• at the end of the first full year following acquisition;
• in other periods if events or changes in circumstances indicate that the carrying value
may not be recoverable.
Goodwill arising on the acquisition of a company's trade and assets is the difference
between the fair value of the consideration paid and the fair value of the assets and
liabilities acquired. It is capitalised and amortised through the profit and loss account over
the directors' estimate of its useful economic life, being between 5 and 20 years
dependent on the acquisition made.
Impairment of fixed assets and goodwill
The need for any fixed asset impairment write down is assessed by comparison of the
carrying value of the asset against the higher of realisable value and value in use.
Turnover
Turnover represents the amounts (excluding VAT or local taxes) derived from the
provision of work for clients during the year.
Services provided to clients during the year which at the balance sheet date have not
been billed, have been recognised as turnover in accordance with Financial Reporting
Standard 5 'Reporting the substance of transactions': Application Note G 'Revenue
Recognition'. Turnover recognised in this manner is based on an assessment of the fair
value of the services provided at the balance sheet date as a proportion of the total
value of the engagement. Provision is made against unbilled amounts on those
engagements where the right to receive payment is contingent on factors outside the
control of the company. Unbilled revenue is included in accrued income.
Stocks
Long term contracts are assessed on a contract by contract basis and are reflected in the
profit and loss account by recording turnover and related costs as contract activity
progresses. Where the outcome of each long term contract can be assessed with
reasonable certainty before its conclusion, the attributable profit is recognised in the
profit and loss account as the difference between the reported turnover and related costs
for that contract.
Depreciation
Depreciation is provided to write off the cost less estimated residual values, of all fixed
assets, evenly over their expected useful lives. It is calculated at the following rates:
Plant and machinery - 20% - 33% per annum
Fixtures and fittings - 15% - 33% per annum
Motor vehicles - 33% per annum
Computer equipment - 33% per annum
Investments
Listed investments held as fixed assets are stated at market value under the
alternative accounting rules permitted by United Kingdom Generally Accepted
Accounting Practice. All other investments held as fixed assets are stated at cost less
any provision for impairment.
Taxation
The charge for taxation is based on the profit for the year and takes into account
taxation deferred.
Current tax is measured at amounts expected to be paid using the tax rates and laws
that have been enacted or substantively enacted by the balance sheet date.
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 the company anticipates making
sufficient taxable profits in the future to absorb the reversal of the underlying timing
differences. Deferred tax balances are not discounted.
Leased assets
Where assets are financed by leasing agreements that give rights approximating to
ownership ('finance leases'), the assets are treated as if they had been purchased outright.
The amount capitalised is the present value of the minimum lease payments payable during
the lease term. The corresponding leasing commitments are shown as amounts payable to
the lessor. Depreciation on the relevant assets is charged to the profit and loss account.
Lease payments are analysed between capital and interest components so that the
interest element of the payment is charged to the profit and loss account over the period
of the lease and represents a constant proportion of the balance of capital repayments
outstanding. The capital part reduces the amounts payable to the lessor.
All other leases are treated as operating leases. Their annual rentals are charged to the
profit and loss account on a straight-line basis over the term of the lease.
45
Foreign currency
Foreign currency transactions of individual companies are translated at the rates ruling
when they occurred. Foreign currency monetary assets and liabilities are translated at the
rates ruling at the balance sheet dates. Any differences are taken to the profit and loss
account of the companies concerned except for foreign equity investments financed
through foreign currency borrowings which are translated at the rates ruling at the balance
sheet dates with any differences arising taken to reserves of the companies concerned.
The results of overseas operations are translated at the average rates of exchange during
the year and their balance sheets translated into sterling at the rates of exchange ruling
on the balance sheet date. Exchange differences which arise from translation of the
opening net assets and results of foreign subsidiary undertakings and from translating the
profit and loss account at average rate are taken to consolidated reserves.
All other exchange differences in the consolidated financial statements are taken to the
consolidated profit and loss account with the exception of differences on foreign
currency borrowings used to finance or provide a hedge against foreign equity
investments. These are taken directly to consolidated reserves to the extent of the
exchange difference arising on the related investment.
Pension costs
Contributions to the Group's defined contribution pension schemes are charged to the
profit and loss account in the period in which they become payable.
Government grants and assistance
Grants (and similar assistance) of a revenue nature are credited to the profit and loss
account in the period to which they relate.
Financial liabilities and equity
Financial liabilities and equity are classified according to the substance of the financial
instrument's contractual obligations, rather than the financial instrument's legal form.
Finance costs
Finance costs are charged to the profit and loss account over the term of the debt so
that the amount charged is at a constant rate on the carrying amount. Finance costs
include issue costs, which are initially recognised as a reduction in the proceeds of the
associated capital instrument.
Employee benefit trust
The cost of the company’s shares held by an employee benefit trust (“EBT”) is deducted
from shareholders’ funds in the group balance sheet. Any cash received by the EBT on
disposal of the shares it holds is also recognised directly in shareholders’ funds. Other
assets and liabilities of the EBT (including borrowings) are recognised as assets and
liabilities of the group.
FRS 20 'Share based payment'
The fair value of employee share option plans is measured at the date of grant of the
option using an appropriate valuation model. The resulting cost, as adjusted for the
expected and actual level of vesting of the options, is charged to income over the
period in which the options vest. At each balance sheet date before vesting, the
cumulative expense is calculated, representing the extent to which the vesting period
has expired and management’s best estimate of the achievement or otherwise of non-
market conditions, of the number of equity instruments that will ultimately vest. The
movement in cumulative expense since the previous balance sheet date is recognised
in the income statement with a corresponding entry in equity.
2 Turnover
Turnover is wholly attributable to the principal activity of the group and arises in the
following geographic markets:
United Kingdom
United States
2010£
2009£
Canada
Europe
Australia
Rest of the World
26,250,81626,184,257
7,439,37410,525,601
17,363,15018,835,869
3,273,3532,834,824
-8,839,873
114,70491,950
54,441,39767,312,374
Notes forming part of the financial statements for the year ended 29 October 2010
46
SLR Management Limited
There were 5 (2009: 6) directors in the Group's defined contribution pension schemes
during the year.
During the year no director exercised share options. One director exercised share options
in 2009.
5 Directors4 Employees
The average number of employees, including directors, during the year analysed by
category was as follows:
The company has no employees.
3 Acquired operations
The analysis of continuing and acquired operations in respect of cost of sales and administration expenses is shown below.
HCG Inc. was acquired on 1 July 2010 and its operations were merged into SLR International Corporation following acquisition. Separate information for this acquired operation is not
available and as such its income, cost of sales and administrative expenses since acquisition have been included as part of continuing operations in the year ended 29 October 2010.
Details of HCG Inc.’s trading in the periods prior to its acquisition is given in note 27.
2010Continuing
£
2010Acquired
£
2010Total
continuing£
2009Total
continuing£
Cost of sales 25,049,64031,421,479 4 ,922,423 26,499,056
28,514,36632,393,632 4 ,361,960 28,031,672 Administrative expenses
Wages and salaries
Staff costs consist of:
Social security costs
2010£
2009£
Other pension costs
Share based payments
23,155,34428,445,337
2,109,3932,358,925
1,007,7861,365,609
125,34296,280
26,397,86532,266,151
Technical
Management and administration
2010No.
2009No.
549683
110150
659833
Fees and remuneration for
management services
Directors' emoluments consist of:
Group2010
£
Group2009
£
557,021544,289
Payments to defined contribution
pension schemes 87,084
644,105
26,376
Payments to defined contribution
pension schemes 7,34910,500
151,935159,164
570,665
144,586148,664 Emoluments
Emoluments of the highest paid director:
47
7 Interest payable and similar charges
6 Operating profit
A total charge of £858,161 (2009: £1,720,336) has been recognised in respect of exceptional
administrative costs and relates to:
The redundancy costs relate to restructuring of group activities, primarily in the UK, US and
Canada. The office closure costs relate to the expense incurred in respect of the closure of
offices in the US and Canada during the year.
The bad debt expense in the prior year referred to above represents the total amount
charged for that year. The current year bad debt expense has been included within
administration expenses.
The bonus paid to staff following the acquisition of CSA, resulted from the decision by CSA
shareholders to waive their rights to an element of the contracted consideration for the
acquisition and instead to pay that amount to staff as a bonus.
Depreciation - owned assets
This has been arrived at after charging:
Group2010
£
Group2009
£
898,917946,153
- leased assets 49,144159,125
Amortisation of goodwill 3 ,700,8434,185,978
Hire of plant and machinery
- operating leases 45,20456,471
Hire of other assets
- operating leases 2,390,6012,030,254
Fees payable to the company’s auditor for
the audit of the company’s annual accounts 23,25049,500
Fees payable to the company’s auditor
and its associates for other services:
118,349154,604
56,59779,972 - tax services
8,506- - IT services
51,00020,950 - all other services
183,31318,200 Exchange differences
- 19,848 Loss on disposal of fixed assets
- 38,983 - services relating to corporate finance transactions
- the audit of the company’s subsidiaries
pursuant to legislation
Bad debts
Redundancy costs
Group2010
£
Group2009
£
642,145-
577,958479,967
CSA acquisition – staff bonus 350,208-
Office closure costs - 378,194
Other costs 150,025-
1 ,720,336858,161
Bank loans and overdrafts
Hire purchase and finance leases
Group2010
£
Group2009
£
1,995,3172,422,742
4,79030,087
Unwinding of discount on
deferred consideration 213,683122,533
497,274248,183 Debt issue and related costs
10,2625,936 Other interest costs
2,721,3262,829,481
Notes forming part of the financial statements for the year ended 29 October 2010
48
SLR Management Limited
9 Loss for the financial period
The company has taken advantage of the exemption allowed under section 408 of
the Companies Act 2006 and has not presented its own profit and loss account in
these financial statements. The group loss for the year includes a loss after tax of
£2,133,832 (2009: loss of £2,105,722) dealt with in the financial statements of the
parent company.
10 Intangible assets
The tax assessed for the year is different to the standard rate of corporation tax in the UK.
The differences are explained below:
Goodwill on consolidation is being amortised over the directors’ best estimate of its
useful economic life, being between 5 and 20 years dependent on the acquisition made.
Profit/(loss) on ordinary activities before tax
Group2010
£
Group2009
£
(1 ,765,883)693,503
Profit/(loss) on ordinary activities at the
standard rate of corporation tax in the UK
of 28.00% (2009: 28.00%) (494,447)194,181
Effects of:
141,921179,429 Expenses not deductible for tax purposes
930,0621,073,234 Goodwill on consolidation
78,63741,158
57,30129,588 Movement in short term timing differences
(17,103)-Non-taxable income
138,18878,041 Tax rate differences
205,648(31,913)
64,80766,415 Overseas provincial and capital taxes
(100,403)-Tax credit
21,00613,286 Other items
1,025,6171,643,419 Current tax charge for period
Adjustments to tax charge in respect of
previous periods
Depreciation for the year in excess of
capital allowances
Cost
Group
Goodwill onconsolidation
£
At 31 October 2009 69,218,627
Additions 10,514,512
Adjustments to deferred consideration 2,776
Adjustment to cost of acquisition 274,727
At 29 October 2010 80,010,642
Amortisation
At 31 October 2009 5,180,760
Provided for the year 4,185,978
At 29 October 2010 9,366,738
Net book value
At 29 October 2010 70,643,904
At 30 October 2009 64,037,867
8 Taxation on profit/(loss) from ordinary activities
Current tax
Group2010
£
Group2009
£
UK corporation tax on profit/(loss)
of the period 489,531665,475
Adjustments to UK corporation tax in
respect of previous periods (10,435)2,097
330,4401,009,857 Overseas tax
216,081 (34,010)
1,025,617 1,643,419 Total current tax
Deferred tax
(122,396)(84,059)
903,221 1,559,360
Origination and reversal of timing
differences
Adjustments to overseas tax in respect
of previous periods
49
11 Tangible assets
Fixtures& fittings
£
Motorvehicles
£
Computerequipment
£
Total
£
Cost
Group
Plant &machinery
£
At 31 October 2009 5,968,833 3 ,746,007 101,283 1 ,359,692 761,851
Additions 1,163,128808,508 72,407 91,028 191,185
Acquired with subsidiary 2,691,864581,583 203,724 899,058 1,007,499
Disposals (465,096)(284,094) (46,619) (77,327) (57,056)
Exchange differences 289,501109,596 19,114 98,541 62,250
At 29 October 2010 9,648,230 4 ,961,600 349,909 2 ,370,992 1 ,965,729
Depreciation
At 31 October 2009 4,897,607 3 ,050,441 77,779 1 ,142,720 626,667
Charge for the year 1,105,278628,408 38,755 274,826 163,289
Acquired with subsidiary 1,125,617390,711 90,154 279,686 365,066
Disposals (437,658)(264,208) (46,619) (69,775) (57,056)
Exchange differences 231,85882,718 9,854 84,607 54,679
At 29 October 2010 6,922,702 3 ,888,070 169,923 1 ,712,064 1 ,152,645
Net book value
At 29 October 2010 2,725,528 1 ,073,530 179,986 658,928 813,084
At 30 October 2009 1,071,226695,56623,504216,972135,184
Assets held under finance leases and hire purchase contracts:
Net book value
At 29 October 2010 640,195 144,395 156,658 -339,142
At 30 October 2009 26,501 13,700 -11,348 1 ,453
Notes forming part of the financial statements for the year ended 29 October 2010
50
SLR Management Limited
* investment held by SLR Holdings Limited
** investment held by SLR Environmental Holdings Limited
*** investment held by SLR Group Limited
† investment held by SLR Environmental Consulting (Ireland) Limited
^ investment held by SLR Consulting Australia Pty Limited
(formerly Heggies Pty Limited)
^^ investment held by SLR International Corporation
12 Fixed asset investments
Subsidiary undertakings
The principal subsidiary undertakings in which the company's interest at the year end was 20% or more are as follows:
Country ofincorporation orregistration
Class of share capital held
Proportionof share capitalheld
Nature of business
SLR Holdings Limited
Name
Holding company100%OrdinaryEngland
SLR Group Limited* Holding company100%OrdinaryEngland
John Barnett Associates Limited† Environmental consultants100%OrdinaryIreland
SLR Intermediate Holding Company Limited*** Holding company100%OrdinaryEngland
Andrew McCarthy Associates Limited Environmental consultants100%OrdinaryEngland
SLR Consulting Australia Pty Limited (formerly Heggies Pty Limited) Environmental consultants100%OrdinaryAustralia
New Environment Pty Limited^ Environmental consultants100%OrdinaryAustralia
SLR Consulting NZ Limited Environmental consultants100%OrdinaryNew Zealand
HCG, Inc.^^ Environmental consultants100%OrdinaryUSA
SLR Consulting Limited* Environmental consultants100%OrdinaryEngland
SLR International Corporation* Environmental consultants100%OrdinaryUSA
SLR Environmental Holdings Limited Holding company100%OrdinaryIreland
SLR Consulting (Canada) Limited* Environmental consultants100%
100%
Ordinary
PreferredCanada
SLR Environmental Consulting (Ireland) Limited** Environmental consultants100%
100%
A Ordinary
B OrdinaryIreland
The consolidated financial statements include amounts relating to SLR of North Carolina
Corporation, a company established in the state of North Carolina, USA. Although the group
does not legally own the share capital of this entity, the directors and officers comprise only
of management from SLR International Corporation who have the ability to adopt, amend
and repeal its byelaws and therefore control the operating and financial policies of the entity.
Local regulations prevent the group holding the shares and the share capital is therefore held
on behalf of the group. Accordingly, the entity has been treated as a wholly owned subsidiary
in these financial statements.
Valuation
Group
At 31 October 2009
Listedinvestments
£
101,374
Revaluation 103,874
Exchange differences 9,872
At 29 October 2010 215,120
Net book value
At 29 October 2010 215,120
At 30 October 2009 101,374
Historical cost 101,374
Cost and net book value
Company
At 31 October 2009
Groupundertakings
£
51,584,646
Additions 10,753,212
Adjustment to cost of acquisition 274,727
Foreign exchange movements 645,092
At 29 October 2010 63,257,677
The additions to the Company’s fixed asset investments represent the purchase of 100% of
the share capital of Andrew McCarthy Associates Limited, Heggies Pty Limited and
consideration given on behalf of SLR International Corporation’s acquisition of HCG, Inc.
together with the fair value of share based payment awards made to employees of subsidiary
undertakings. Further details of the acquisitions during the year are contained in note 27.
51
13 Debtors
Group2010
£
Company2010
£
Group2009
£
Company2009
£
Trade debtors -12,455,766 -17,571,973
Amounts owed by group undertakings 14,586,714-17,378,683 -
Other debtors 1,67370,98719,043 71,865
Prepayments and accrued income 10,4973,179,84215,466 2 ,829,897
Deferred tax -315,926-799,955
14,598,88416,022,521 17,413,192 21,273,690
14 Deferred taxationThe movement in the deferred tax asset is as follows:
The deferred tax asset at the balance sheet date is analysed as follows:
Group
At 31 October 2009
£
315,926
Credited to profit and loss account 84,059
Acquired with subsidiaries 360,100
Exchange differences 39,870
At 29 October 2010 799,955
Decelerated capital allowances
2009£
2010£
174,581 184,092
Short term timing differences 132,400608,351
Unrelieved tax losses 8,9457,512
315,926799,955
Notes forming part of the financial statements for the year ended 29 October 2010
52
SLR Management Limited
16 Creditors: amounts falling due after more than one year
Group2010
£
Company2010
£
Group2009
£
Company2009
£
Bank loans (secured) 26,256,62026,256,620 27,858,911 27,858,911
10% Fixed rate unsecured loan notes --5,103,561 5 ,103,561
Obligations under finance leases and hire purchase contracts -15,949- 247,262
Other creditors 540,840540,8404,235,197 5 ,359,838
26,797,46026,813,40937,197,669 38,569,572
15 Creditors: amounts falling due within one year
The bank overdraft facility is held by SLR Consulting (Canada) Limited and is secured by a fixed and floating charge on the assets of SLR Consulting (Canada) Limited.
The bank loans are secured by a fixed and floating charge over the assets of the company and certain subsidiaries, the company’s shares in SLR Consulting (Canada) Limited
and an assignment of certain Keyman policies.
Included within short and long term other creditors are amounts totalling £5,536,637 (2009: £1,759,181) for the group and £3,925,461 (2009: £1,016,959) for the company, which
represent the directors best estimate of deferred consideration payable in connection with the acquisition of subsidiary undertakings. Also included within long term other
creditors are amounts totalling £1,205,780 (2009: £Nil) for the group and company, which represent issued SLR Management Limited shares disclosed as a liability in accordance
with FRS 25 as the company has a potential liability to convert these shares into cash at a specified future date.
Group2010
£
Company2010
£
Group2009
£
Company2009
£
Bank overdraft (secured) -687,633 --
Bank loans (secured) 2,030,7492,030,7492,326,749 2 ,326,749
Trade creditors 22,1803,690,82854,523 5 ,446,117
Amounts owed to group undertakings 8,755,200-14,050,060 -
Taxation and social security -1 ,168,736-1,719,113
Corporation tax -56,343-519,473
Obligations under finance leases and hire purchase contracts -28,398-269,610
Other creditors 476,1191,218,341896,044 1 ,663,149
Accruals and deferred income 303,4982,815,168900,001 4 ,430,650
11,587,74611,696,19618,227,377 16,374,861
53
2010Unsecuredloan notes
£
2010 Bankloans
£
2010Deferred
consideration£
2010Financeleases
£
Maturity of debt
Within one year
Group
269,610 1 ,663,149 2 ,326,749 -
In more than one year but not more than two years 121,546 1 ,727,571 4 ,228,068 -
In more than two years but not more than five years 125,716 3 ,351,697 23,630,843 5 ,103,561
516,872 6 ,742,417 30,185,660 5 ,103,561
2009Unsecuredloan notes
£
2009 Bankloans
£
2009Deferred
consideration£
2009Financeleases
£
Within one year
Group
28,3981,218,3412,030,749 -
In more than one year but not more than two years 15,949444,9862,326,749-
In more than two years but not more than five years -95,85416,529,871-
After five years --7 ,400,000-
44,3471,759,18128,287,369-
2009Unsecuredloan notes
£
2009 Bankloans
£
2009Deferred
consideration£
Within one year
Company
476,1192,030,749 -
In more than one year but not more than two years 444,9862,326,749-
In more than two years but not more than five years 95,85416,529,871-
After five years -7 ,400,000-
1,016,95928,287,369-
2010Unsecuredloan notes
£
2010 Bankloans
£
2010Deferred
consideration£
Within one year
Company
896,044 2 ,326,749 -
In more than one year but not more than two years 1,295,745 4 ,228,068 -
In more than two years but not more than five years 2,939,452 23,630,843 5 ,103,561
5 ,131,241 30,185,660 5 ,103,561
Notes forming part of the financial statements for the year ended 29 October 2010
54
SLR Management Limited
17 Financial instruments
Interest rate and currency of financial assets and liabilities
The group holds or issues financial instruments to finance its operations and enters into derivative contracts to manage the interest rate risks arising from its sources of finance.
In addition, various financial instruments such as trade debtors and trade creditors, arise directly from the group’s operations.
Operations are financed by a mixture of retained profits, bank borrowings, finance lease and hire purchase contracts and long term loans. Bank borrowings, finance lease and hire
purchase contracts and long term loans are primarily used to finance capital investment. Working capital requirements are met principally out of floating rate bank borrowings,
overdrafts and retained profits. Further details on the group’s approach to financial risks faced are provided in the directors’ report.
Comparative information has been excluded from the following financial instrument disclosures on the basis that reliable information was not readily available.
At 29 October 2010 cash of £5,098,741 was held in current accounts and was earning a weighted average rate of interest of 0.95%. No dividends were received and there is no maturity
date on the listed fixed asset investment held by the group.
After taking into account the various interest rate swaps entered into by the group, the currency and interest rate profile of the group’s borrowings is shown below:
Sterling, US dollar and Australian dollar floating rate financial liabilities primarily
comprise bank borrowings, bearing an interest rate of LIBOR plus a margin between 1.75%
and 4%, which is dependent on the ratio of total net debt to EBITDA. The remaining
Sterling, US dollar, Australian dollar and Euro floating rate financial liabilities comprise
deferred consideration on acquisitions which is discounted at the borrowing rate
available to the group.
The weighted average interest rate of fixed rate financial liabilities and the weighted
average period for which they are fixed is as follows:
Floating rate financialliabilities
£
Fixed rate financialliabilities
£
Total
£
Sterling
Currency
31,879,603 5 ,118,345 26,761,258
US Dollar 2,654,219 -2,654,219
Australian Dollar 7,644,847 443,478 7 ,201,369
Canadian Dollar 57,407 57,407 -
Euro 312,434 -312,434
42,548,510 5 ,619,230 36,929,280
Weighted averageInterest rate
%
Weighted averagePeriod for whichinterest is fixed
Years
Sterling
Currency
4.6 10.0%
Australian Dollar 2.5 8 .5%
Canadian Dollar 0.5 0 .0%
55
Currency exposures
Borrowing facilities
The monetary assets and liabilities of the group at 29 October 2010 that are not denominated in the functional currency of the operating unit concerned are shown below. The
amounts shown below exclude foreign currency borrowings obtained to finance foreign currency investments.
The group had the following undrawn committed borrowing facilities at 29 October 2010:
These facilities are for the purposes of providing flexibility in the management of liquidity.
US Dollar£
Euro£
Total£
Sterling
Functional currency of group operations Net foreign currency monetary assets/(liabilities)
51,911 51,911 -
Canadian Dollar (13,166)-(13,166)
38,745 51,911 (13,166)
£
Expiring in one year or less 1,940,415
Expiring in more than one year but not more than two years -
Expiring in more than two years
Total
1,311,555
3 ,251,970
Fair values of financial assets and financial liabilities
Set out below is a comparison, by category, of the book values and fair values of the group’s financial assets and liabilities at 29 October 2010. Where available, market rates
have been used to determine current values. Where market rates are not available, current values have been calculated by discounting cash flows at prevailing interest rates
and exchange rates.
Fair value£
Listed investments 215,120
Cash 5,098,741
Book value£
215,120
5 ,098,741
Bank borrowings (30,185,660)(30,185,660)
Interest hedge (463,548)-
Unsecured loan notes (5 ,103,561)(5,103,561)
Deferred consideration (6 ,742,417)(6,742,417)
Finance lease and hire purchase contracts (516,872)(516,872)
The group is mainly exposed to credit risk from credit sales. It is group policy, implemented locally, to assess the credit risk of new customers before entering contracts. Such credit
ratings are taken into account when determining whether to grant credit terms and, if so, credit limits.
The group does not enter into complex derivatives to manage credit risk, although in certain isolated cases may take steps to mitigate such risks if it is sufficiently concentrated.
Credit risk
Notes forming part of the financial statements for the year ended 29 October 2010
56
SLR Management Limited
The following events took place during the year in respect of the company’s share capital:
- On 29 January 2010, the company issued 260,000 B ordinary shares of £0.001 each totalling £260.00 as part of the consideration for the acquisition of the entire share capital of
Andrew McCarthy Associates Limited.
- On 11 February 2010, the company issued 1,252,062 B ordinary shares of £0.001 each totalling £1,252.06 as part of the consideration for the acquisition of the entire share capital of
Heggies Pty Limited. The shares issued have been included within creditors, amounts falling due after one year in accordance with FRS 25. They are disclosed within deferred
consideration in note 16.
- On 1 July 2010, the company issued 847,000 B ordinary shares of £0.001 each totalling £847.00 as part of the consideration for the acquisition of the entire share capital of HCG,
Inc., by its subsidiary SLR International Corporation.
- The Company allotted 432,822 B ordinary shares of £0.001 each totalling £432.82 following the exercise of share options by employees. The Company received a total consideration
of £30,611 in respect of these shares.
- The Company allotted 50,000 B ordinary shares of £0.001 each in respect of the earn out consideration relating to acquisition of Architecture and Planning Solutions Limited.
During the year ended 30 October 2009, the following events took place in respect of the company’s share capital:
- On 3 November 2008, the company issued 30,000 B ordinary shares of £0.001 each totalling £30.00 as part of the consideration for the acquisition of the entire share capital of
Bowman Planton Limited.
- The Company allotted 177,814 B ordinary shares of £0.001 each totalling £177.81 following the exercise of share options by employees. The Company received a total consideration
of £11,138 in respect of these shares.
The A ordinary and B ordinary shares rank pari-passu, except that the company’s Articles of Association provide for a specific formula to be applied in the apportionment of the
remaining assets of the company after payment of its liabilities in the event of a return of assets on liquidation.
18 Share capital
2009Number
2010£
2009 £
Equity
Allotted, called up and fully paid
A ordinary shares of £0.001 each 18,539 18,539 18,538,710
B ordinary shares of £0.001 each 36,576 38,166 36,576,334
2010Number
18,538,710
38,166,156
55,115 56,705 55,115,044 56,704,866
Non equity
B ordinary shares of £0.001 each - 1 ,252 - 1 ,252,062
57
Exerciseperiod
Exerciseprice
(Pence)
Optionsoutstanding
at 29 October2010
Number
Lapsed/adjusted during
the year
Number
Exercisedduring the
year
Number
Granted during the
year
Number
Optionsoutstanding
at 31 October2009
Number
Dateof grant
Nov 2008 - Nov 20092.68 460,370 - (23,014)- 483,384 18 July 2008
Nov 2008 - Nov 20103.13 1 ,266,709 (9 ,005)(42,018)- 1 ,317,732 18 July 2008
Nov 2008 - Nov 20116.60 699,647 (4 ,001)(4 ,002)- 707,650 18 July 2008
Jul 2008 - Nov 201140.00 230,000 (40,000)- - 270,000 18 July 2008
Nov 2008 - Nov 201240.00 836,000 (45,000)(4 ,000)- 885,000 18 July 2008
Nov 2009 - Nov 201340.00 872,500 (5 ,000)- - 877,500 18 July 2008
Feb 2009 - Nov 201340.00 20,000 - - - 20,000 1 February 2009
4,385,226 (103,006)(73,034)- 4,561,266
EMI share option
scheme
Nov 2008 - Nov 20092.68 111,015 - (126,025)- 237,040 18 July 2008
Unapproved share
option scheme
Nov 2008 - Nov 20103.13 155,594 - (29,036)- 184,630 18 July 2008
Nov 2008 - Nov 20116.60 166,054 (26,021)(56,020)- 248,095 18 July 2008
Sep 2008 - Sep 20106.60 520,458 (61,722)(121,707)- 703,887 18 July 2008
Nov 2008 - Nov 201240.00 117,000 (2 ,485)(19,000)- 138,485 18 July 2008
Nov 2009 - Nov 201340.00 120,000 5 ,000 - - 115,000 18 July 2008
Nov 2008 - Nov 201040.00 357,500 (42,500)- - 400,000 18 July 2008
Nov 2009 - Nov 201340.00 389,500 (170,000)(8 ,000)- 567,500 1 February 2009
Feb 2011 - Feb 201340.00 441,992 (8 ,008)- 450,000- 12 February 2010
Nov 2010 - Nov 201440.00 496,400 (31,100)- 527,500- 1 June 2010
Jul 2011 - Jul 201340.00 749,289 - - 749,289-
3,624,802 (336,836)(359,788)1,726,789 2 ,594,637
30 June 2010
Share options
Notes forming part of the financial statements for the year ended 29 October 2010
58
SLR Management Limited
The merger reserve, which arises on consolidation, represents the difference between the fair value and nominal value of shares issued on the acquisition of subsidiary companies
where the company has elected to take advantage of merger relief.
19 Reserves
Sharepremiumaccount
£
Mergerreserve
£
Revaluationreserve
£
Profitand lossaccount
£
At 31 October 2009
Group
(1 ,207,731)-14,519,01931,527,561
Share capital issued in the year --123,690368,131
Loss for the year (865,857)---
Exchange differences 410,075---
Shares acquired by employee benefit trust (1 ,384,054)---
Shares sold by employee benefit trust 1,264,857---
Share based payments 96,280---
Revaluation of listed Investment -103,874--
At 29 October 2010 (1,686,430)103,874 14,642,709 31,895,692
Sharepremiumaccount
£
Profitand lossaccount
£
At 31 October 2009
Company
(2 ,733,851)31,527,561
Share capital issued in the year -368,131
Loss for the year (2 ,133,832)-
Exchange differences 412,200-
Share based payments 96,280-
At 29 October 2010 (4,359,203)31,895,692
59
As at 29 October 2010, the group had annual commitments under non-cancellable operating leases as set out below:
20 Reconciliation of movements in shareholders' funds
21 Commitments under operating leases
The group operates defined contribution pension schemes. The assets of the schemes are held in independently administered funds. The pension cost charge represents contributions
payable by the group to the funds.
22 Pensions
Group2009
£
Company2009
£
Loss for the year (2 ,105,722)(2 ,669,104)
Company2010
£
(2,133,832)
Group2010
£
(865,857)
Share capital issued in the year 11,16823,138369,721 493,411
Exchange differences -376,248412,200 410,075
Shares acquired by employee benefit trust -(124,590)-(1 ,384,054)
Shares sold by employee benefit ---1,264,857
Revaluation reserve ---103,874
Share based payments 125,342125,34296,280 96,280
Net movement in shareholders’ funds (1 ,969,212)(2 ,268,966)(1 ,255,631)118,586
Opening shareholders’ funds 30,818,03747,162,93028,848,825 44,893,964
Closing shareholders' funds 28,848,82544,893,96427,593,194 45,012,550
2009Land andbuildings
£
2009
Other£
Operating leases which expire:
Group
2010
Other£
2010Land andbuildings
£
Within one year 69,864171,39197,676 91,156
In two to five years 242,4321,055,827143,486 2 ,386,752
Over five years 1,120571,259-568,995
313,4161,798,477241,162 3 ,046,903
60
SLR Management Limited
Notes forming part of the financial statements for the year ended 29 October 2010
23 Reconciliation of operating profit to net cash inflow from operating activities
25 Analysis of net debt
24 Reconciliation of net cash inflow/(outflow) to movementin net debt
Operating profit before exceptional items
2009£
2010£
2,597,727 4,355,424
Exceptional items (1,720,336)(858,161)
Operating profit 877,3913,497,263
Amortisation 3,700,8434,185,978
Depreciation 948,0611,105,278
Share based payments 125,34296,280
Loss on the sale of fixed assets -19,848
Exchange differences 527,229416,980
(Increase)/decrease in debtors 2,689,888(729,411)
Increase/(decrease) in creditors (745,173)1,249,269
Net cash inflow from operating activities 8 ,123,5819,841,485
Increase/(decrease) in cash in the year
2009£
2010£
(463,257)3,615,793
Cash (inflow)/outflow from change
in debt and lease financing 3,407,715(4 ,508,727)
Change in net debt resulting from
cash flows 2,944,458(892,934)
Debt acquired with subsidiary
undertakings -(1 ,098,668)
(410,053)(6 ,850,218)Other non cash movements
2,534,405(8 ,841,820)Movement in net debt in the year
(31,142,354)(28,607,949)Opening net debt
(28,607,949)(37,449,769)Closing net debt
Non-cashchanges
£
At29 October
2010£
Cash in hand and at bank 5,098,741 -
Cashflows
£
2,928,160
Acquisitions(excluding cashand overdrafts)
£
-
Bank overdraft - - (687,633)-
At30 October
2009£
2,170,581
(687,633)
5,098,741 - 3 ,615,793 - 1 ,482,948
Debt due within one year (3 ,989,898)(4 ,899,982)4,159,174 - (3 ,249,090)
Debt due after one year (38,041,740)(1 ,697,154)(8 ,854,148)(692,978)(26,797,460)
Obligations under finance leases and hire purchase contracts (516,872)(253,082)186,247 (405,690)(44,347)
(42,548,510)(6 ,850,218)(4 ,508,727)(1 ,098,668)(30,090,897)
Total (37,449,769)(6 ,850,218)(892,934)(1 ,098,668)(28,607,949)
Non-cash changes of £6,850,218 (2009: £410,053) comprise: deferred consideration arising on acquisitions in the year of £6,167,480 (2009: £108,086); new finance lease and hire purchase
contracts of £253,082 (2009: £Nil); exchange differences of £88,310 (2009: £218,165); and other items including loan arrangement fees and the unwinding of the discount on deferred
consideration totalling £341,346 (2009: £83,802).
61
26 Contingent liabilities and guarantees
The company has guaranteed certain bank borrowings of its subsidiary undertakings, SLR Holdings Limited, SLR Group Limited, SLR International Corporation, SLR Consulting Limited
and SLR Consulting (Canada) Limited. At 29 October 2010, total bank borrowings subject to the guarantee amounted to £14,784 (2009 - £31,256).
At 29 October 2010 a subsidiary company, SLR Consulting Australia Pty Limited, had provided bank guarantees on leasehold premises amounting to £192,769 (2009 - £Nil).
27 AcquisitionsOn 29 January 2010, the company acquired the entire share capital of Andrew McCarthy
Associates Limited. The book value of the assets and liabilities acquired (which was
equivalent to their fair value), together with details of the purchase consideration and
goodwill arising on acquisition is shown below:The results of Andrew McCarthy Associates Limited prior to its acquisition were
as follows:
The net cash outflow arising from the acquisition of Andrew McCarthy Associates Limited
was as follows:
Fixed assets
Book andfair value
£
Tangible fixed assets 57,935
Current assets
Debtors 83,645
Cash at bank and in hand 531,417
Total assets 672,997
Creditors (150,759)
Net assets 522,238
Consideration
104,000 Settled by shares at fair value
957,487 Settled by cash (including expenses of £47,771)
300,182
1 ,361,669
Deferred consideration
522,238 Net assets acquired
839,431 Goodwill arising on consolidation
Turnover
Year ended31 December
2009£
Period ended29 January
2010£
1,364,54215,937
Operating (loss)/profit 405,105(50,394)
Net interest 35117
(Loss)/profit on ordinary activities
before taxation 405,456(50,377)
Taxation on (loss)/profit from ordinary
activities (96,980)10,417
308,476(39,960)(Loss)/profit for the period
Cash consideration (as above)
£
957,487
Bank balances acquired (531,417)
Net outflow of cash 426,070
62
SLR Management Limited
Notes forming part of the financial statements for the year ended 29 October 2010
27 Acquisitions (continued)
On 12 February 2010, the company acquired the entire share capital of Heggies Pty
Limited. The book value of the assets and liabilities acquired (which was equivalent to
their fair value), together with details of the purchase consideration and goodwill arising
on acquisition is shown below: The results of Heggies Pty Limited prior to its acquisition were as follows:
Turnover
Year ended30 June2009
Australian $
Period ended12 February
2010Australian $
19,350,23211,793,637
Operating profit 1 ,571,290526,612
Net interest 191,65882,488
Profit on ordinary activities before
taxation 1,379,632444,124
Taxation on profit from ordinary
activities (472,409)(162,945)
907,223281,179 Profit for the period
The net cash outflow arising from the acquisition of Heggies Pty Limited was as follows:
Cash consideration (as above)
£
3,732,643
Net bank overdraft acquired 212,347
Net outflow of cash 3,944,990
The deferred consideration for the acquisition above includes amounts that are
dependent on the performance of the acquired entity subsequent to acquisition.
Fixed assets
Tangible fixed assets 850,301
Current assets
Debtors 3,341,484
Cash at bank and in hand 21,849
Total assets 4,213,634
Creditors (2 ,870,954)
Total liabilities (3,105,150)
Consideration
3,732,643 Settled by cash (including expenses of £347,465)
4,151,601 Deferred consideration
7,884,244
1 ,108,484 Net assets acquired
6,775,760 Goodwill arising on consolidation
Bank overdraft (234,196)
Net assets 1,108,484
Book andfair value
£
63
On 1 July 2010, SLR International Corporation acquired the entire share capital of HCG, Inc.
The book value of the assets and liabilities acquired (which was equivalent to their fair
value), together with details of the purchase consideration and goodwill arising on
acquisition is shown below:
Fixed assets
Book andfair value
£
Tangible fixed assets 658,011
Current assets
Debtors 1,030,660
Cash at bank and in hand 275,766
Total assets 1,964,437
Creditors (202,016)
Consideration
2,365,651 Settled by cash (including expenses of £144,235)
1,957,291 Deferred consideration
4,661,742
1 ,762,421 Net assets acquired
2,899,321 Goodwill arising on consolidation
Net assets 1,762,421
338,800 Settled by shares at fair value
The deferred consideration for the acquisition above includes amounts that are
dependent on the performance of the acquired entity subsequent to acquisition.
The results of HCG, Inc prior to its acquisition were as follows:
Turnover
Year ended31 December
2009US $
Period ended30 June 2010US $
11,222,0844,869,849
Operating profit 1 ,209,516298,918
Net interest income 2,6053,800
Loss on disposal of business -(349,230)
(Loss)/profit on ordinary activities
before taxation 1,212,121(46,512)
Taxation on (loss)/profit from ordinary
activities --
1 ,212,121(46,512)(Loss)/profit for the period
The net cash outflow arising from the acquisition of HCG, Inc. was as follows:
Cash consideration (as above)
£
2,365,651
Bank balances acquired (275,766)
Net outflow of cash 2,089,885
64
SLR Management Limited
Notes forming part of the financial statements for the year ended 29 October 2010
28 Share based paymentsSLR Management Limited operates equity-settled share based remuneration schemes for employees, an EMI share scheme for UK employees and unapproved schemes for
overseas employees. Options vest over a period of years and there are no performance criteria that must be satisfied. Options will lapse if the employee leaves.
Details of movements in options, (by grant date), during the year, together with information on the exercise price and period of the options is contained in note 18 to the
financial statements.
2009Weighted average
exercise price(Pence)
2009
Number
Outstanding at the beginning of the year 7,164,734 19.04
2010
Number
7,155,903
2010Weighted average
exercise price(Pence)
20.76
Granted during the year 587,500 40.00 1,726,789 40.00
Exercised during the year (177,814) 6 .26 (432,822)7.07
Lapsed/adjusted during the year (418,517) 24.60 (439,842)32.28
Outstanding at the end of the year 7,155,903 20.76 8,010,028 25.01
The exercise price of options outstanding at the end of the year ranged between 2.68p
and 40p and their weighted average contractual life was 4.38 years (2009 – 5.76 years).
Of the total number of options outstanding at the end of the year, 3,393,426 (2009 -
1,552,094) had vested but had not been exercised.
The weighted average fair value of each option granted during the year was 10.71p
(2009 – 10.00p).
The following information is relevant in the determination of the fair value of options
granted during the year under the equity share based remuneration schemes operated by
SLR Management Limited:
Equity-settled
2010 2009
Option pricing model used BinomialBinomial
Weighted average share price at grant
date (pence) 40.0040.00
Exercise price (pence) 40.0040.00
Option life (years) 7 .007.00
Expected volatility 14.02%35.00%
Expected dividend NilNil
Risk-free interest rate 5.07%0.85%
The volatility assumption, is based on an analysis of share price volatility for quoted
companies operating in the same sector as the Group.
The share-based remuneration expense for the Group comprises:
Equity-settled schemes
2010£
2009£
125,34296,280
The Group did not enter into any share-based payment transactions with parties other
than employees during the current year or previous periods.
65
29 Employee Benefit TrustThe SLR Holdings Employee Benefit Trust (“EBT”) was established on 6 March 2006 to
provide benefits to employees, former employees and their dependants (“the
Beneficiaries”). Under the scheme, the trustee, SLR Trustee Limited, purchases the
company’s shares from time to time. These shares are held until the vesting day for the
benefit of the Beneficiaries, in such numbers or proportions that the Trustees deem
reasonable. Shares held by the EBT which had not vested unconditionally in the
Beneficiaries at the year end were as follows:
Market value of shares held
£ £
193,081 295,215
Number of shares held
2010No.
2009No.
482,704 738,038
Group
30 Post balance sheet events
a) On 4 March 2011 the company issued Loan note instruments constituting up
to £1,700,060 10% Fixed Rate Unsecured Loan Notes 31 May 2015 and Payment
In Kind Notes.
b) On 4 March 2011, the company acquired the entire share capital of Metago
International Holdings (Pty) Limited for a total consideration of approximately
£4.8 million in cash plus 2,294,250 B ordinary shares in the share capital of SLR
Management Limited.
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