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SLR annual report 2008
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PAGE : 02
SLR is an international environmental consultancy with a network of offices in Canada, Ireland, 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 and financial & professional sectors.
The period covered by this report is from the date of incorporation of the company on 18 March 2008 to 31 October 2008.
The majority of the income and expenses for the period relate to the period from 27 May 2008 to 31 October 2008,
following the acquisition by the company of the group headed by SLR Holdings Limited on 27 May 2008. The report also
compares the management accounts of the Group from 27 October 2007 to 31 October 2008, with the audited figures for
SLR Holdings Limited for the year to 26 October 2007, to allow an assessment of the ongoing development of SLR.
SLR Management Limited
Annual Report for the period ended 31 October 2008
PAGE : 03 Highlights
PAGE : 04 Chairman’s Statement
PAGE : 06 Chief Executive’s Review
PAGE : 08 Acquisitions
PAGE : 10 Energy
PAGE : 12 Waste Management
PAGE : 14 Planning & Development
PAGE : 16 Industry
PAGE : 18 Mining & Minerals
PAGE : 20 Financial & Professional
PAGE : 22 Sustainability
PAGE : 24 Board of Directors
PAGE : 26 Report of the Directors
PAGE : 31 Report of the Independent Auditors
PAGE : 32 Financial Statements
PAGE : 36 Notes to the Financial Statements
More than 10 years
7 to 10 years
5 to 7 years
3 to 5 years
1 - 3 years
New for 2008
23%
7%
39%
15%
PAGE : 03
During the year, SLR has:
• achieved a 73% increase in revenue; the largest increase
in the Group’s history;
• delivered EBITA growth of 59% and maintained profit
margins amongst the best in the sector;
• sustained a high level of repeat revenue;
55% of 2008 revenues came from clients of more than
five years standing;
• achieved strong growth across all the sectors
in which it specialises;
• successfully completed the acquisition and integration
of CSA Group in Ireland, and FMH Consulting and
Architecture and Planning Solutions in the UK;
• maintained its substantial investment in people,
geographic expansion and service extensions; and
• consolidated its position as a leading consultant in the
energy, natural resource and waste management sectors
which continue to experience strong growth.
Revenue Growth 1999 - 2008
Revenue by Length of Client Relationship
7% 9%
60,000
50,000
40,000
30,000
20,000
10,000
0
£000s
£000s
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
EBITA Growth 1999 - 2008
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
01999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Highlights
SLR’s core markets are energy, natural resources, waste
management and sustainability, all of which show continued
resilience, notwithstanding the difficult global economic
conditions. As a result, I am pleased to report that the Group
delivered another strong performance in 2008.
The operations in Canada, UK and US all produced significant organic growth, which
was augmented by the acquisitions of CSA Group in Dublin, Architecture and Planning
Solutions (APS) in Bromley and FMH Consulting in Bath. A fourth acquisition, Bowman
Planton, was completed soon after the year end. CSA is our first European acquisition
outside the UK, and as well as providing a presence in Ireland, significantly strengthens
our capability in carbon management, renewable energy and mining. APS marks SLR’s
entry into architecture, with a particular specialisation in Energy-from-Waste (EfW)
facilities and other major structures for waste recycling, and is an excellent fit with
FMH’s high end structural engineering skills.
During the period, the acquisitions from 2007 were successfully integrated, and
it is particularly pleasing that SLR was voted Environmental Employer of the Year
in Canada in 2008.
As well as excellent financial performance, the Group continued to strengthen areas
such as corporate governance and corporate social responsibility, including existing
SLR operations becoming carbon neutral.
This report represents the first results since, on 27 May 2008, 3i Investments plc invested
£32.5 million as part of a transaction which, including senior debt facilities from Lloyds
TSB, provided the Group with up to £69.5 million in new funding. As part of the
transaction, SLR Management Limited acquired SLR Holdings Limited and its subsidiary
undertakings (the acquisition).
Chairman’s Statement
PAGE : 04
SLR Management Limited
Group Results
The statutory results for the Group are reported from the date of the acquisition
on 27 May 2008 to the Group’s year end, 31 October 2008. To allow comparison
with previous years, we have used unaudited management information for the year
to 31 October 2008 compared with the audited accounts of SLR Holdings Limited
for the year to 26 October 2007.
On the basis of the management accounts, group turnover in 2008 increased by 73%
to £54.6 million from £31.6 million in 2007. Profit before interest, tax and goodwill
amortisation increased by 59% to £8.9 million in 2008 from £5.6 million in 2007,
representing a margin of 16%. This strong performance from the Group builds upon
its long term track record of consistent growth; average compound annual growth in
turnover over the last three years has been 44% and in profit before interest, tax and
goodwill amortisation has been 41%.
Dividends
SLR Management Limited has not paid any dividends during the period.
Balance Sheet and Cash Flow
Consolidated net assets at 31 October 2008 stood at £47.1 million.
With strong cash conversion from operating profit, the net cash inflow from
operating activities was £2.35 million for the 7 month period ended 31 October 2008.
The year end consolidated balance sheet includes, within intangible fixed assets,
“goodwill” with a carrying value of £67.7 million, which arose on the acquisition on
27 May 2008 and subsequent acquisitions during the period. 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
SLR has a complete and well-balanced Board, representing a wealth of both
industry and corporate experience which will prove invaluable as we take the
business to its next stage of development.
Our staff will always be the Group’s most important asset and I would like to take
the opportunity to thank them for the tremendous efforts they have made during
the period to achieve such a strong performance and to afford us an industry
leading reputation.
Summary
2008 continued the excellent progress achieved by the Group, with a combination
of both organic growth and acquisitive growth. With the introduction of 3i as the new
equity investment partner, we are well positioned to capitalise on the international
growth opportunities notwithstanding the current economic climate.
John Crabtree
Chairman
Date : 18 March 2009
PAGE : 05
PAGE : 06
Chief Executive’s Review
SLR experienced another period of strong growth in 2008,
notwithstanding the worsening global economic conditions.
Energy, waste management and natural resources remain the
largest business areas and all of these sectors performed well
throughout the period.
As part of the Group’s continued evolution into a global provider of environmental
consultancy services, a new minority private equity investor was introduced during
the period. Having received unsolicited approaches from over 30 potential investors
from Europe and North America, 3i was selected as the preferred new partner. 3i’s
business model is to invest in well managed international businesses and support
their growth into leading players in the world market. This, combined with 3i’s
international network of contacts and the commitment to use them in supporting
SLR’s growth, made them the ideal choice for the next phase of SLR’s development.
Strategy
The Group has a clear strategy focused on providing high quality consultancy and
advisory services to clients with whom it develops and retains long term
relationships. The strategy is based on organic growth, augmented by the selective
acquisition of high calibre companies to strengthen and extend our technical and
geographic coverage.
Development is targeted towards sectors which have high growth potential and
which are also sufficiently specialised to allow SLR to establish leading market
positions either in terms of market share or technical expertise. These sectors
include energy, waste management, planning & development, industry, mining
& minerals, and financial & professional.
The success of the approach can be measured not only by the excellent growth
and profitability of SLR, but also by exceptionally high client satisfaction ratings
and client retention; more than 50% of the Group’s turnover in 2008 derived from
clients with whom we have worked for five years or more.
With the recent investment by 3i, the focus is on a 3 - 5 year growth cycle and
current economic conditions should assist in the acquisition of quality companies
at more realistic earnings multiples than in the recent past. As a result, the balance
of growth in 2009 and 2010 is likely to reflect a greater emphasis on acquisitive
growth than historically.
SLR Management Limited
Operating Review
We have continued to make significant investments to develop the Group, with
staff numbers increasing from 577 on 26 October 2007 to 691 on 31 October 2008.
In 2008, we opened offices in Chelmsford, Exeter, Houston and Indianapolis as well
as acquiring additional offices in Dublin and Bath as part of transactions. During 2009,
we plan to open new offices in Belfast and Stafford.
As in previous years, the waste market continued to experience strong growth, with
both the Landfill Directive and the Landfill Tax escalator driving new developments
in both the public and private sectors. The high energy price, with oil peaking at over
$130/barrel, continued to drive investments in the energy sector and ongoing
demand for natural resources supported growth in the mining and minerals sector.
While the private equity firms were badly hit, particularly in the second half of the
year, the increasing focus on stable markets saw a pickup in infrastructure investments
which supported continued SLR growth in the financial and professional sector. The
two areas which were impacted by the downturn in the economy were planning and
development and industry, but fortunately we were able to redeploy staff across the
Group which largely mitigated the effect.
The acquisitions from 2007 were fully integrated and rebranded during 2008, and
three further acquisitions were made; CSA Group in Dublin, FMH Consulting in Bath
and Architecture and Planning Solutions in Bromley. A fourth acquisition, Bowman
Planton, was completed immediately after the year end.
The UK has continued to be our largest market, representing approximately 51%
of Group turnover for the 2008 financial period, whilst we have significantly grown
revenues from both in Canada, which now represents approximately 31% of Group
turnover, and in the US which now represents approximately 13% of Group turnover.
Europe represents the balance with 5% of turnover.
PAGE : 07
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 £9bn,
followed by the European market at £7.5bn. The UK market makes up about £2bn of
the European figure when planning consultancy is included. Historically, growth has
been about 10% per annum, with the UK experiencing closer to 20% growth in recent
years. Growth in 2009 and beyond is much more difficult to predict in the current
economic climate. ENDS, the leading professional publication in the environmental
sector the UK, has indicated that 5% growth is a reasonable assumption, which is
consistent with analyst’s forecasts for the consulting sector which tend to vary
between 0% and 10%.
What is clear is that growth will be much more sector dependent than in the past.
Energy, waste management and mining continue to be resilient, whilst the
development and financial services sectors are in significant decline. Nonetheless,
the key drivers in the environmental market remain:
• a high volume of new legislation and regulations;
• the high cost of natural resources by historic standards which continues to drive
development spending on new assets and environmental remediation of
existing assets;
• the Stern Review, Kyoto Protocol and security of energy supply issues stimulating
the move to 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
• 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, even in the current economic conditions. In the medium and long
term, the issues will be exacerbated by delayed spending during the current economic
downturn, which should lead to even stronger growth as the global economy recovers.
Sector Sales Analysis 2008
waste management
energy
mining & minerals
planning & development - commercial
planning & development - public sector
industry
financial & professional
24%
27%
11%
9%
10% 9%
10%
Chief Executive’s Review Acquisitions
PAGE : 08
SLR Management Limited
CSA was a Dublin-based environmental consultancy focussing on energy, waste, mining and infrastructure projects. SLR was already working with
CSA on a number of projects and the acquisition represents an ideal platform to develop a significant waste management and energy consultancy
in Ireland. The Irish waste market faces the same challenges as that of the UK and if anything is further from meeting key European targets.
This will inevitably mean significant investment in major schemes over the next 10 years.
The opening of the Belfast office in 2009 will allow an “all Ireland” approach to the market, assisted by the rebranding of CSA as SLR Consulting
Ireland. As with the earlier acquisitions, the integration has gone well with no staff or clients being lost in the process.
CSA Group Limited
FMH was a specialist structural engineering consultancy based in Bath, working on some of the most iconic developments currently being undertaken
in the UK and Ireland. The acquisition was primarily aimed at strengthening SLR’s structural engineering capability to support the design of major
waste infrastructure.
FMH was fully integrated at the end of the year, with staff working closely with SLR colleagues particularly in Bristol and Bradford on Avon.
FMH Consulting Limited
APS was an architectural practice specialising in the design of EfW plants. A typical plant, capable of handling 300,000T – 500,000T of waste per annum,
is as large as St Paul’s Cathedral, and therefore getting a design which is both operationally efficient and sympathetic to the local environment is critical.
APS had developed a strong reputation in the design and permitting of such plants and indeed was already working alongside SLR on a number of schemes.
The acquisition allows SLR to support its clients in all aspects of the development of major waste facilities from site finding to completion.
Architecture and Planning Solutions Limited
Alaska Energy
SLR’s energy sector work in Alaska is robust despite a
weakening of oil prices in the latter part of 2008.
Permitting and compliance support for Exxon, Shell,
ConocoPhillips and other operators seeking to explore and
further develop oil and gas fields on the North Slope of
Alaska and offshore in the Beaufort and Chukchi Seas is
complex. SLR has expanded its Alaskan operations to provide
greater capacity and increasingly diverse services to meet the
existing and expected workload.
In addition to providing permitting services for new
developments, SLR’s support for BP Exploration (Alaska) is
related to the identification of area-wide, risk-based clean-up
levels for the mitigation of impact at former exploration,
development and production facilities and is a multi-year
contract. Risk assessment and toxicology work is ongoing to
establish clean-up levels based on permissible and acceptable
levels of exposure to sensitive receptors.
Consistent with our business model, SLR’s focus is continuing
to leverage the consulting opportunities that will arise
associated with the Alaska energy sector. We will further
expand our operations in Alaska and seek to provide similar
services to clients with operations in the Middle East,
Australia and elsewhere.
Oil prices peaked at $130/barrel in 2008, before falling back to near
$50/barrel by the end of the year. Natural gas prices have been much more
stable and whilst prices peaked in the summer of 2008, they remained within
the range of that experienced over the last 2 years through to the year end.
In the upstream oil market this has led to continued investment in oil and gas exploration and development,
which has benefited the group in both the US and Canada. Projections for 2009 remain strong.
Some investments in the most expensive deposits, notably the Canadian tar sands have been delayed,
but SLR does not have exposure to that market.
The other key development in 2008 was the election of Barak Obama as the new US President. Obama
indicated during his election campaign that he embraces the need to address climate change and will
move rapidly to implement a series of policies on renewable energy and CO2 emissions. Notwithstanding
that, he is a strong supporter of the Alaska Gas Pipeline, and is actively encouraging oil companies to
explore existing offshore leases.
As a significant international energy consultancy, with experience in renewable energy, carbon sequestration
and upstream oil and gas, SLR is in a remarkably strong position to exploit this enormous market which has
very solid long term growth prospects.
PAGE : 11
Chief Executive’s Review
PAGE : 12
Waste Management
All aspects of the waste management market grew strongly in 2008, with
further progress being made in penetrating the Canadian and US markets.
In Europe, the continued success in the EfW sector was particularly pleasing,
where we were involved in some capacity in over two thirds of the schemes
currently in the development process in the UK and Ireland. This was the
result of careful market development strategy over a number of years,
including the acquisition of Waste Management Engineering Limited in 2005.
SLR’s position in the EfW market was further consolidated in 2008 by the
acquisition Architecture and Planning Services Limited, a leading designer
of such facilities.
SLR Management Limited
One surprising aspect of 2008, given
the turmoil in the financial markets,
was SLR’s increased involvement in
major investments in the sector. With
many waste disposal contracts both
government backed and long term,
typically 10 to 30 years, waste is
increasingly seen as an infrastructure
investment. As a result, major
infrastructure funds have entered the
market alongside the private equity
firms. SLR is firmly established as the
leading European consultant providing
advisory services to investors in the
waste sector.
Cardiff Bay EfW Facility
In late 2006, Viridor, one of the UK’s leading waste
management operators, retained SLR to assist them
in developing the largest EfW plant in Wales.
A site finding and appraisal study by SLR led directly
to Viridor purchasing a site at Trident Park, just 2km from
Cardiff’s city centre. SLR was then appointed to prepare
the planning application, with accompanying Environmental
Statement, and also submit an Environmental Permit for the
facility which will treat up to 350,000T of waste per year.
The Environmental Impact Assessment was one of the
most comprehensive ever undertaken by SLR, and featured
assessments on the key issues including landscape, highways,
noise, air quality, socio-economics and land quality.
In addition, the application was accompanied by an array
of supplementary reports that dealt with subjects including
carbon footprint, flood risk, sustainability, human health and
alternative sites. SLR has also prepared a comprehensive heat
plan to consider the potential of supplying renewable energy
to over 120 businesses and organisations in Cardiff. This work
is on-going, and could ultimately result in the supply of up to
70 MW of heat.
Given the location of the site, which is within a stone’s throw
of the Welsh Assembly Government’s debating chamber
(The Senedd), it was critical that the building was both
striking and sympathetic to the surrounding visual environment.
The design, produced by SLR’s architects, has been embraced
by the Design Commission for Wales, and was effectively
demonstrated by SLR’s bespoke Virtual Reality model of
Cardiff that was created specifically for this project.
The planning application and permit are currently under
consideration, and if all goes well, construction will start
in early 2010.
PAGE : 13
With the increasing variety of waste treatment technologies being sold aggressively in the market,
from composting, AD and MBT, to mass burn incineration, pyrolysis and plasma, it is increasingly
difficult for regulators, operators and investors to determine the most appropriate option. SLR
has unparalleled knowledge of all the technologies currently available and their viability across
a range of geographies, waste types and scales. Clients are increasingly realising that such in depth
knowledge is critical in choosing the correct technical solution, and that SLR can offer truly
independent advice which is not always available from the technology suppliers themselves.
Market research and discussions with clients both in the UAE and Australia has confirmed a
shortage of quality consultants with waste management experience in both those areas. This
represents a major business opportunity for SLR to use waste management projects as a platform
for developing operations in those areas and indeed in the broader international market.
Brent Cross
Over the past two years SLR has been a key member of the team
planning the Brent Cross Cricklewood (BXC) urban regeneration
project in north London.
The BXC scheme is one of the largest redevelopment projects
in London and extends to over 150 hectares of mixed use
development. It will produce some 10,000 new residential units,
400,000m2 of commercial development and over 100,000m2 of
retail development. Sustainable design has been a critical element
of the scheme and, in part, will be achieved through an
imaginative and unique approach to the management of waste.
The BXC masterplan includes the relocation of an existing waste
transfer station, and provision of a new state-of-the-art waste
management facility which will produce a refuse derived fuel for
powering a combined heat and power (CHP) plant that in turn
will meet all of the energy requirements of the proposed
development scheme (including power, heating and cooling),
some 15MW, as well as exporting 25MW of electricity to the
national grid . Waste from the development itself will be
transferred to the waste facility through use of an innovative
underground vacuum waste collection system, thereby avoiding
conventional waste vehicles.
The combination of renewable energy production and innovative
waste handling systems will serve to significantly reduce the
carbon footprint of the development. The overall performance of
the waste management scheme will also be impressive, achieving
recycling rates well in excess of 55%, with over 85% diversion of
waste from landfill.
Overall, the BXC scheme provides a unique opportunity to
facilitate very efficient use of renewable energy within a major
regeneration scheme in terms of heat, power, and cooling, thereby
making a significant contribution to the aim of increasing
renewable energy generation and use within London.
The sustainable energy generation and waste management
aspects of the scheme have been brought together using SLR’s in
depth knowledge of the issues and its experience in the delivery
of sustainable and realistic solutions to the requirements for low
carbon developments.
PAGE : 15
The majority of SLR’s development work is for the public sector,
including education, health, transport and energy. Indeed, in the industry
survey published by Planning magazine, the leading industry publication
in the UK, SLR was ranked first in education, in the top five in energy and
in the top ten in transport.
In contrast to the private sector, the public sector was not affected significantly by the credit crisis in
2008, and all indications from central government are that they will continue to fund key areas such as
education and health to preserve and create employment. This supports a relatively optimistic outlook
for public sector development in 2009.
In residential and commercial development, 2008 started reasonably well but the problems in the
housing markets in the middle of the year hit residential developers hard, with the commercial market
softening more slowly. Fortunately, SLR had relatively little exposure to these markets and in the main
we were able to transfer staff to other business areas such as energy and waste. There is no doubt that
2009 will be a very tough year in the UK development sector, with little prospect of recovery in the
residential and commercial development market, and with the public sector becoming more
competitive as consultancies move into the space from residential and commercial clients.
One region where the development market is holding its own is the UAE, and in particular Abu Dhabi,
where there is a major focus on sustainable development. SLR has a full time presence in Abu Dhabi
and there is significant interest in the services we offer in sustainable energy, waste strategy and
management, waste and water recycling, sustainable buildings and carbon footprinting, for
developments associated with the 2030 Master Plan.
PAGE : 16
Industry
2008 was another difficult year for industry, with the
businesses associated with the construction sector and the
car industry particularly badly hit. Notwithstanding that,
the combined drivers of regulatory compliance and the
increasingly “green” agenda of our clients and their investors,
continued to generate consultancy work.
Chief Executive’s Review
SLR Management Limited
PAGE : 17
SLR has provided consultancy services to the US airline industry for a number of years, assisting with
the assessment and remediation of historic contamination, which is mainly associated with the storage
and transport of jet fuel. In 2008, drawing in part on sustainability experience gained in Europe, we
were able to extend our support to assist our clients in assessing their broader environmental impact
as part of CSR reporting, and as a basis for continued environmental improvement.
Another example of our underlying strategy to extend our service offerings geographically,
was the first major contract for the pulp and paper industry in the UK.
On behalf of SAICA, we managed the planning application, including undertaking a full environmental
assessment, for their proposed paper mill in Partington, near Manchester. The application was
approved in October 2008, and when commissioned the £250m plant will provide 200 jobs recycling
up to 450,000T of paper a year. It was very pleasing that the planning committee made specific
reference to the quality of the application during their deliberations.
With our existing strong track record in North America, the success of the SAICA application
demonstrated our ability to deliver projects to the wood products and paper industries under the
European permitting regime.
Alaska Airlines
SLR has provided environmental consulting services to Alaska
Airlines since 2003 in support of their operations throughout
the United States. Permitting, compliance and site restoration
services have been provided at airport locations in many
western states.
In 2008, Alaska Airlines selected SLR to assist them in broader
environmental programmes including carbon management and
the preparation of materials to be used for environmental
reporting. Since beginning the carbon management work, SLR
has been asked to provide similar services to Horizon Airlines
which operates a fleet of aircraft throughout the western U.S.
and Canada.
SLR’s broadening capabilities in environmental management
and reporting are becoming increasingly in demand as our North
America clients address new and developing regulations,
particularly at the state and local levels.
Pebble Deposit, Southwest Alaska
The Pebble Deposit in Alaska is a mineral discovery of significant international
importance, with current data suggesting that it is probably the largest copper-gold
porphyry deposit in the world.
The Pebble Limited Partnership, which brings together Northern Dynasty Partnership
and Anglo American, is currently managing one of the most extensive data-gathering
exercises ever undertaken in the history of resource development. This is part of the
Partnership’s commitment to responsible development, and to the protection of all
Alaska’s natural resources and in particular its fish and wildlife.
SLR has been involved with the Pebble development since 2005, providing a range
of environmental consultancy services including undertaking hydrogeological
investigations and trace element studies to provide background environmental data
for use in the preparation of an environmental impact assessment (EIS) and a state
permit application. Fieldwork has included the installation of over 150 groundwater
monitoring wells over the 260km2 site area which is so remote it is only accessible
by helicopter.
2009 will see an expansion of SLR’s role, with the assessment of surface water being
included along with collection of background data on groundwater, soil and flora.
As with the previous field season, staff from Canada and the UK will be supporting
their US colleagues.
PAGE : 19
During the course of 2008, SLR continued to consolidate
its position as a significant consultant to the international
mining and minerals market. The acquisition of CSA Group
in Ireland, and Bowman Planton in the UK, both
internationally recognised experts in the field, further
strengthened SLR’s team and added socio-economic
assessment capability to the existing service offerings.
Given the international nature of the market, it was pleasing to see the level
of co-operation between SLR’s operating companies. On a number of projects,
staff drawn from Canada, the UK/Ireland and the US were involved in executing
the work. What was striking, in contrast to the culture of many of SLR’s
competitors, was the willingness of project managers to pull together the best
and most appropriate team for their client, regardless where those staff were
located in the organisation.
While commodity prices had a rollercoaster ride in 2008, falling in the latter
part of the year, demand for our services has held up strongly and all indications
are that SLR’s market will grow in the sector in 2009.
With our strengthened team and growing international reputation, we are
positive about increasing market share by winning new projects and displacing
competitors on existing projects.
Financial & ProfessionalChief Executive’s Review
PAGE : 20
The financial and professional sector remained robust during 2008, driven by the
increasing interest in the waste management sector on the part of both private equity
and infrastructure funds.
SLR Management Limited
As well as advising Montagu Private Equity and Global Infrastructure Partners
on their £1.7bn investment in Biffa, by far the largest deal in the sector in
2008, SLR also advised a range of investors on acquisitions in Europe and
beyond. This included companies with significant assets in Germany, Austria,
the Czech Republic, the Netherlands and Australia.
It was also noticeable that investors recognised that improved environmental
performance post acquisition would be important and SLR was increasingly
retained to advise the new board after deals were completed.
Insight Equity
With the tightening of the credit markets, private equity firms
are placing greater emphasis than ever on adding value to
existing investments. Working with a select group of private
equity clients in North America, SLR has an established track
record of helping them to achieve that goal.
For example, Insight Equity (based in Dallas, Texas) is a firm that
SLR provided due diligence support upon entering many of their
investments and is now involved in post completion work to
drive value by making environmental improvements and
mitigating risks before exit.
Insight Equity is proactively implementing environmental
compliance programs and adopting best practices to enhance
value at exit. Such programs include the replacement of
infrastructure, more stringent environmental monitoring and
the voluntary clean-up and restoration of land.
Insight Equity and SLR staff routinely work together to identify
and adopt forward-looking measures that can create added value
at exit.
PAGE : 21
PAGE : 22
Chief Executive’s Review
In previous annual reports, it was felt there was a need to quote the learned studies which demonstrated that climate change
was a real issue with severe global consequences. By early 2008 it was clear that most Europeans had accepted the need for
change and were actively pressing government and the private sector to adopt a more sustainable approach in all aspects
of public life.
The same could not be said of the US, where both views and actions remained mixed, with many in government and the business community of the view that the man
in the street would never accept the constraints of sustainability principles. Another year on, a new President, and the position has changed almost beyond recognition.
New policies are rapidly being put in place to encourage energy efficiency and increase the use of renewable energy on the basis of cost, sustainability and self sufficiency.
As a result it was notable that several major renewable companies, including BP, announced that they were changing their investment focus from Europe to North America
towards the end of 2008.
Leading international corporations based in the US have been unilaterally adopting a sustainable business approach, consistent with their peers elsewhere in the world,
for some time. Increasingly, major investment funds, both in the US and elsewhere, are also asking national US firms to adopt a similar approach and similar environmental
reporting standards.
With an established track record in sustainability assessment and sustainable development, SLR is well placed to take advantage of the burgeoning US market.
This extends not only to individual developments but to strategic studies with respect to carbon capture and sequestration.
Sustainability
SLR Management Limited
PAGE : 23
Summary
The results from 2008 demonstrate that, on an annualised basis,
SLR increased revenues and EBITA by over 50% from the
previous financial year. Given the macroeconomic events during
the year this is considered to be very strong performance.
There is no doubt, however, that 2009 will be an even
tougher year. Notwithstanding that, because of the continued
strength of our core markets of waste management, energy,
natural resources and sustainability, we expect to see
continued organic growth. We are also actively working with
our investors to accelerate our acquisitive growth to take
advantage of the more realistic pricing in the M&A market.
David Richards
Chief Executive
Date : 18 March 2009
Carbon Capture and Storage
Carbon Capture and Storage (CCS) is seen by many (including the International Panel
on Climate Change, the EU and the UK Government) as an absolute necessity if there
is to be any hope of achieving international goals to stabilise greenhouse gas emissions
and hence prevent global warming rising to unsustainable levels. The CCS process
involves separating the CO2 at its combustion source, such as a power station,
transporting it and injecting it into geological structures found in depleted oil or gas
fields or saline aquifers for permanent storage. SLR consultants have been involved
in this fast growing area of consultancy for a number of years.
In 2007, we were commissioned by the governments of Ireland and Northern Ireland
to undertake an “Assessment of the Potential for Geological Storage of CO2 for the
island of Ireland”. This involved identifying all the current major point sources of CO2
(and projecting them forward to 2020 and beyond) and the geological structures on
and around the island where captured CO2 might be sequestered on a permanent basis.
The SLR led consortium acquired all the available geological data and compiled it into
a geographical information system (GIS) in order to provide a preliminary assessment
of potential storage both onshore and offshore the island of Ireland. This was followed
by an in-depth geological assessment of each identified structure/basin to quantify
its potential for the storage of CO2.
The identification of point source emissions and potential storage locations permitted
nine detailed scenarios to be developed between the major point sources and the most
promising geological storage sites. These scenarios were modelled and subjected
to rigorous economic assessment. This included consideration of different capture
technologies, the transport, engineering, safety and environmental issues, the all-island
energy policy environment, energy security of supply, including the power generation
mix and the possible price of CO2 in 2020.
The report was received positively by the governments, with the Director General
of the EPA referring to it as ‘an important part of the EPA’s programme of climate
change research’ and the Minister stating that ‘it is an important development in
informing future decisions regarding energy technologies’. SLR consultants have been
invited subsequently to brief government officials and address international
conferences on the subject.
SLR Management Limited
Board of Directors
John Crabtree OBE (59) – Non Executive Chairman
John joined SLR in 2004, and is Non Executive Chairman of SLR Management Limited. He was formerly the senior partner atBirmingham-based corporate law firm 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 retired as senior partner in 2003 but retains a non-executive role.
John is also non-executive Chairman of Metalrax Group plc, Claimar Care Group plc and Birmingham Hippodrome TheatreTrust. He is also a Director of Advantage West Midlands and a non-executive Director of Staffline Recruitment Group plc.
David Richards (50) - Chief Executive
David is the Chief Executive of SLR Management Limited and a director of a number of its subsidiaries with overall responsibilityfor the management of the group. Having established SLR in 1994, he has led the management team responsible for developingSLR into one of the fastest growing and most profitable environmental consultancies in the UK.
Prior to joining SLR, David was a Senior Manager with Golder Associates, a major international environmental consultant, wherehe was responsible for the management of the environmental group in the UK and played a key role in its European operations.David is a Chartered Engineer by profession.
Neil Penhall (44) - Executive Director
Neil has been Managing Director of SLR Consulting Limited since 2001 and is also an Executive Director of SLR Management Limited.Neil has direct responsibility for the day to day operations and management of the UK consulting business and the strategicdevelopment and growth of the company.
Prior to joining SLR in 1995, Neil was a Principal Consultant responsible for the waste management group of US owned RustEnvironmental. He previously worked for Dames and Moore International (which has now become URS, the largest globalengineering design firm). During his 20 years in the environmental consulting sector, Neil has experience of both UK andinternational projects and business development.
Kevin Rattue (49) - Executive Director
Kevin is the President of SLR International Corp, responsible for the U.S. operations, as well as an Executive Director of SLRManagement Limited. Prior to joining SLR in 2000, Kevin was the Chief Operating Officer of SECOR International, a $100m turnoverinternational environmental consultancy with its head office in Seattle.
Kevin has 25 years of experience with environmental consultancies and oil companies and holds an MBA (InternationalBusiness) from the University of Birmingham. He is a Registered Hydrogeologist and also serves as a Director of the British-American Business Council (Pacific Northwest).
PAGE : 24
The SLR Management Limited Board is made up of eight directors, comprising five executive directors and three non-executive
directors. Two of the non-executive directors are independent, with the third nominated by 3i Investments plc.
Alan Sheppard (45) - Executive Director
Alan is an Executive Director of SLR Management Limited. Having joined in 1994, he has overall responsibility for the Energy and the Financial & Professional business areas.
He has over 20 years of consulting experience, primarily in contaminated land and geotechnical engineering, in the UK andCanada having previously founded and managed SEACOR in Vancouver. Alan has extensive experience, including managing theassessment and remediation of over 1500 petroleum facilities; supporting property transactions, planning applications andregulator liaison throughout the UK and Canada; and acting as an expert witness on such matters.
Faramarz Bogzaran (57) - Executive Director
Faramarz is President of SLR Consulting (Canada) Limited where he manages the SLR Group's Canadian operations and is an ExecutiveDirector of SLR Management Limited, having joined the Group following the acquisition of SEACOR Environmental in 2007.
Faramarz has 28 years of technical experience, having joined SEACOR in 1998 as its President and CEO. Over a 10 year period, Faramarzgrew SEACOR's annual revenue from C$6 million to C$32 million, and expanded the company so that it now has over 200 employeesacross 18 offices.
Prior to joining SEACOR, Faramarz held a variety of executive management positions with environmental consultancy companies,waste management operators and remedial contracting organisations.
Faramarz serves the National Steering Committee on Contaminated Sites and the Canadian Centre for Environmental EducationNational Advisory Committee. He also serves the Board of ECO Canada, a federal government sector council board for environmentalemployment in Canada as well as serving ARCAS Group Board, a marketing, research and an advertising company.
Richard Bishop (40) - Non Executive Director
Richard joined the Board of SLR Management Limited in May 2008 at the time of the investment by 3i. He is a partner in 3i’s Growth Capital business which is a leading investor into high growth business in Europe, USA and Asia. He is responsible for the Global Growth Capital portfolio and is also a Director of MKM Building Supplies, AES Seals and LABCO in France.
Richard joined 3i in 1989, after graduating from Birmingham University and previously ran 3i’s business in Birmingham beforemoving to London.
Nish Malde (50) - Non Executive Director
Nish joined SLR in December 2002 to assist the Board with strategy and corporate governance, and is a Non-Executive Directorof SLR Management Limited
He was formerly Group Financial Director and Company Secretary of Country & Metropolitan plc (“C&M”), between 1998 and2005, where he was instrumental in the Group’s flotation on the main market of the London Stock Exchange in December 1999.During his time at C&M he was responsible for the Group’s finances, investor relations and provided close management supportto the CEO. The Group grew from a market capitalisation of £7m to £75m upon its disposal in April 2005. He is also on theboard of AIM listed companies Billam plc and Inland plc.
Prior to C&M, Nish qualified in 1985 as a chartered accountant with KPMG, specialising in advising owner managed businesses,before setting up a consultancy firm advising an extensive range of corporates.
PAGE : 25
Results and dividends
The profit and loss account is set out on page 32 and shows the profit for the period.
No dividends were paid 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 Canada, Ireland, the UK and US.
Trading review
The period covered by the consolidated financial statements is from the date of
incorporation of the company on 18 March 2008 to 31 October 2008. The majority
of the income and expenses for the period relate to the period from 27 May 2008
to 31 October 2008, following the acquisition by the company of the group headed
by SLR Holdings Limited on 27 May 2008.
The results of the group for the period are set out on page 32 and the financial
position of the group is set out on page 33. 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 23.
Analysis of key performance indicators (KPIs) confirms the strong performance of the
business. On an annualised basis Group revenue increased by 73%, with EBITA increasing
by 59%. Revenue per employee was £81,622 compared with the industry average of
£72,000. Client retention remained excellent with 55% of the revenue derived from
clients with whom SLR has worked for 5 years or more.
During the period the SLR Holdings Employee Benefit Trust (“EBT”) acquired 157,190
shares in the capital of the company as part of the acquisition by the company of the
SLR Holdings Limited group and a further 15,000 shares, (for a consideration of £6,000),
by virtue of purchases from employees leaving the group. The shares held by the EBT
at 31 October 2008 represent 0.3% of the issued share capital at that date.
The directors present their report together with the
financial statements for the period ended 31 October 2008.
The company was incorporated on 18 March 2008 as
De Facto 1619 Limited and changed its name to Green
Acquisitions Limited on 21 April 2008 and to SLR
Management Limited on 25 April 2008.
Shareholder Structure
The shareholder structure at 31 October 2008 was as follows:
3i 33.76%
Directors and senior management 53.64%
Other employees 12.60%
Directors
The directors of the company during the period, were as follows:
D G Richards (appointed 21 April 2008)
A J Sheppard (appointed 28 May 2008)
K G Rattue (appointed 28 May 2008)
N C Penhall (appointed 28 May 2008)
N Malde (appointed 28 May 2008)
J Crabtree (appointed 28 May 2008)
F Bogzaran (appointed 28 May 2008)
R M Bishop (appointed 28 May 2008)
Travers Smith Secretaries Limited (appointed 18 March 2008, resigned 21 April 2008)
Travers Smith Limited (appointed 18 March 2008, resigned 21 April 2008)
At 31 October 2008, third party indemnity insurance for the benefit of the company’s
directors was in force.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial
statements in accordance with applicable law and United Kingdom Generally Accepted
Accounting Practice.
Company law requires the directors to prepare financial statements for each financial
period which 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 those financial
statements, the directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable accounting standards have been followed, subject
to any material departures disclosed and explained in the financial statements; and
• prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the group will continue in business.
The directors are responsible for keeping proper accounting records which disclose with
reasonable accuracy at any time the financial position of the company and to enable
them to ensure that the financial statements comply with the Companies Act 1985.
They are also responsible for safeguarding the assets of the group and hence for taking
reasonable steps for the prevention and detection of fraud and other irregularities.
PAGE : 27
Charitable donations
During the period the group made charitable donations of £6,653.
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 US and
Canadian Dollar and the Euro. The group has trading entities within 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 believes that current standards are commensurate with the nature and size
of the company, and consistent with listed companies of a similar size. The Board
continues to review corporate governance issues in the light of current best practice
and seeks continual improvement.
SLR Management Limited
PAGE : 28
Report of the directors for the period ended 31 October 2008
Board Composition and Operation
The board is made up of five executive directors and three 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.)
Faramarz Bogzaran (President of SLR Consulting (Canada) Limited)
Alan Sheppard (Director)
The non-executive directors are:
John Crabtree (Independent Chairman)
Nish Malde (Independent Director)
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
four operating companies; SLR Consulting Limited, SLR Consulting (Canada) Limited,
SLR International Corp., and SLR Environmental Consulting (Ireland) Limited which
operate from a network of offices in the UK, Canada, the US and Ireland respectively.
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.
PAGE : 29
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.
Internal Control and 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, so the business has a low 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
which have recently been reviewed by its legal advisers. 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 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 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 company 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.
SLR Management Limited
PAGE : 30
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. The existing operations in
Canada, the UK and the US have been accredited as Carbon Neutral in 2008 and the
recent acquisitions will be included in that programme in 2009.
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.
Post balance sheet events
On 3 November 2008, the company acquired the entire share capital of Bowman
Planton Limited for a total consideration of approximately £245,000 in cash plus
30,000 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.
BDO Stoy Hayward LLP were appointed as auditors to the company during the
period and have expressed their willingness to continue in office. A resolution
to re-appoint them will be proposed at the annual general meeting.
By order of the Board
J M Green
Secretary
Date : 18 March 2009
Report of the directors for the period ended 31 October 2008
PAGE : 31
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing
(UK and Ireland) issued by the Auditing Practices Board. An audit includes examination,
on a test basis, of evidence relevant to the amounts and disclosures in the financial
statements. It also includes an assessment of the significant estimates and judgements
made by the directors in the preparation of the financial statements, and of whether
the accounting policies are appropriate to the group's and company's circumstances,
consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with sufficient
evidence to give reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or other irregularity or error.
In forming our opinion we also evaluated the overall adequacy of the presentation
of information in the financial statements.
Opinion
In our opinion:
• the group financial statements give a true and fair view, in accordance with United
Kingdom Generally Accepted Accounting Practice, of the state of the group's affairs
as at 31 October 2008 and of its profit for the period then ended;
• the parent company financial statements give a true and fair view, in accordance
with United Kingdom Generally Accepted Accounting Practice, of the state of the
parent company's affairs as at 31 October 2008;
• the financial statements have been properly prepared in accordance with the
Companies Act 1985; and
• the information given in the directors' report is consistent with the financial
statements.
BDO STOY HAYWARD LLPChartered Accountants and Registered Auditors
London
Date : 18 March 2009
To the shareholders of SLR Management Limited
We have audited the group and parent company financial
statements (the ''financial statements'') of SLR Management
Limited for the period ended 31 October 2008 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.
These financial statements have been prepared under the
accounting policies set out therein.
Respective responsibilities of directors and auditors
The directors' responsibilities for preparing the financial statements in accordance with
applicable law and United Kingdom Accounting Standards (United Kingdom Generally
Accepted Accounting Practice) are set out in the statement of directors' responsibilities.
Our responsibility is to audit the financial statements in accordance with relevant legal
and regulatory requirements and International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true and fair
view and have been properly prepared in accordance with the Companies Act 1985 and
whether the information given in the directors' report is consistent with those financial
statements. We also report to you if, in our opinion, the company has not kept proper
accounting records, if we have not received all the information and explanations we
require for our audit, or if information specified by law regarding directors' remuneration
and other transactions is not disclosed.
We read other information contained in the annual report and consider whether it is
consistent with the audited financial statements. The other information comprises only
the directors’ report, the highlights statement, the chairman’s statement and the chief
executive’s review. We consider the implications for our report if we become aware of
any apparent misstatements or material inconsistencies with the financial statements.
Our responsibilities do not extend to any other information.
Our report has been prepared pursuant to the requirements of the Companies Act 1985
and for no other purpose. No person is entitled to rely on this report unless such
a person is a person entitled to rely upon this report by virtue of and for the purpose
of the Companies Act 1985 or has been expressly authorised to do so by our prior
written consent. Save as above, we do not accept responsibility for this report to any
other person or for any other purpose and we hereby expressly disclaim any and
all such liability.
Report of the independent auditors
640, 3 2 1
247, 1 9 4
887,5 1 5
PAGE : 32
SLR Management Limited
Consolidated profit and loss account for the period ended 31 October 2008
Turnover
Cost of sales
Gross profit
Administrative expenses
Operating profit before goodwill amortisation
Goodwill amortisation
Operating profit
Interest receivable
Amounts written off investments
Interest payable and similar charges
Profit on ordinary activities before taxation
Taxation on profit from ordinary activities
Profit on ordinary activities after taxation
2
Note
5
6
7
17
25,5 24, 307
( 1 1 ,83 3 , 1 20)
1 3,69 1 , 1 87
( 10,945,584)
4,225,520
( 1,479,9 1 7)
2,7 45,603
50,425
(40,65 4)
(1 , 1 46,2 7 3)
1 ,609, 1 0 1
(968,780)
640, 3 2 1
2008£
Consolidated statement of total recognised gains and losses for the for the period ended 31 October 2008
The notes on pages 36 to 50 form part of these financial statements
All amounts shown relate to continuing activities, commenced or acquired in the period.
17
17
Note 2008£
Profit for the financial period
Currency translation differences on net investments
PAGE : 33
Consolidated balance sheet at 31 October 2008
Fixed assets
Intangible assets 9 67,7 44, 3 7 3
Investments
Current assets
Debtors
Cash at bank and in hand
Creditors: amounts falling duewithin one year
1 1 35,6 3 2
69, 1 89, 3 35
1 8,478,605
2,5 56,589
2 1 ,035 , 1 94
1 2
1 4 (1 3,3 29,0 1 9)
Net current assets 7,706, 1 75
Creditors: amounts falling dueafter more than one year 1 5 (29,7 32,580)
47, 1 62,930
Capital and reserves
Called up share capital 54,907
Share premium account 3 1 ,5 1 6,60 1
Merger reserve 1 4,507,049
1 6
1 7
1 7
1 7
1 8
Profit and loss account 1 ,084, 3 7 3
Shareholders’ funds 47, 1 62,930
Total assets less current liabilities 76,895,5 1 0
Tangible assets 10 1 ,409,3 30
The financial statements were approved by the Board of Directors and authorised for issue on 18 March 2009
The notes on pages 36 to 50 form part of these financial statements
D G Richards
Director
Note 2008£
2008£
Fixed assets
Note 2008£
2008£
PAGE : 34
SLR Management Limited
Company balance sheet at 31 October 2008
Investments 1 1 5 1 , 3 79,5 35
Debtors
Cash at bank and in hand
Creditors: amounts falling duewithin one year
1 2,786,75 7
444,789
1 3,2 3 1 ,5 46
1 2
1 4 (4,7 36,640)
Net current assets 8,494,906
Creditors: amounts falling dueafter more than one year 1 5 (29,056,404)
30,8 1 8,037
Capital and reserves
Called up share capital 54,907
Share premium account 3 1 ,5 1 6,60 1
1 6
1 7
1 7
1 8
Profit and loss account (7 5 3 ,47 1 )
Shareholders’ funds 30,8 1 8,037
Total assets less current liabilities 59,874,44 1
The financial statements were approved by the Board of Directors and authorised for issue on 18 March 2009
The notes on pages 36 to 50 form part of these financial statements
D G Richards
Director
Current assets
21
Note 2008£
2008£
PAGE : 35
Consolidated cash flow statement for the period ended 31 October 2008
The notes on pages 36 to 50 form part of these financial statements
Net cash inflow from operating activities 2,35 5,2 75
Returns on investments and servicing of finance
Interest received 50,425
Interest paid (7 24,3 1 1 )
Interest element of finance lease rental payments (3,694)
(69 1 ,508)
(459,8 1 6)
Capital expenditure and financial investment
Purchase of tangible fixed assets
Sale of tangible fixed assets
(290,7 79)
1 88
(290,59 1 )
Acquisitions and disposals
Purchase of subsidiary undertakings
Bank balances acquired with subsidiary undertakings
(50,90 1 ,077)
3,07 7,645
(47,82 3,43 2)
Cash outflow before use of liquid resources and financing (47,587,652)
Financing
Share capital issued 3 2,500,000
Share issue costs (97 5,000)
Loans advanced in the period 1 8,45 3,900
Capital element of finance lease rental payments (84,6 1 1 )
Employee benefit trust transactions 8 3,568
49,5 3 3,85 7
22, 23Increase in cash 1 ,946,205
(1 ,3 69,088)Net cash outflow from returns oninvestments and servicing of finance
Taxation
Loan stock repayments in the period (444,000)
Loan arrangement fees
PAGE : 36
1 Accounting policies
The financial statements have been prepared under the historical cost convention 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 31 October 2008 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.
Intangible assets
Intangible assets, other than goodwill, are stated at cost and are amortised through
the profit and loss account over the directors estimate of their useful economic life.
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 period.
Services provided to clients during the period 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.
Notes forming part of the financial statements for the period ended 31 October 2008
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
Investments held as fixed assets are stated at cost less any provision for impairment
in value.
Deferred taxation
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.
SLR Management Limited
PAGE : 37
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.
The results of overseas operations are translated at the average rates of exchange during
the period 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 reserves.
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.
Research and development
Expenditure on research and development is charged to the profit and loss account
in the period in which it is incurred.
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.
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.
2 Turnover
Turnover is wholly attributable to the principal activity of the group and arises in the
following geographic markets:
1 2,969,476
3, 1 96,7 38
39,948
25,5 24, 307
United Kingdom
United States
Rest of the World
7,929, 1 1 7Canada
1 ,389,028Europe
Group2008
£
9,5 25,8 35
884,645
1 0,928, 1 5 4
Wages and salaries
Social security costs
404, 384Other pension costs
1 1 3,290Shared based payments
Group2008
£
3 Employees
Staff costs consist of:
The average number of employees, including directors, during the period analysed
by category was as follows:
The company has no employees.
566
1 03
669
Technical
Management and administration
Group2008
No.
PAGE : 38
Notes forming part of the financial statements for the period ended 31 October 2008
SLR Management Limited
There were 4 directors in the Group's defined contribution pension schemes
during the period.
The tax assessed for the period is different to the standard rate of corporation tax in
the UK. The differences are explained below:
2 44,99 4
22,094
5 3,590
Fees and remuneration for management services
Payments to defined contribution pension schemes
267,088
Emoluments of the highest paid director:
Emoluments
Group2008
£
4 Directors
Directors' emoluments consist of:
304,05 2
1 ,479,9 1 7
3 5,978
904, 1 7 3
1 6,3 75
1 2 1 ,500
42,900
20,700
69,300
Depreciation - owned assets
Depreciation - leased assets 3 1 ,865
Amortisation
Hire of plant and machinery - operating leases
Hire of other assets - operating leases
Group2008
£
5 Operating profit
This has been arrived at after charging:
Fees payable to the company’s auditor for theaudit of the company’s annual accounts
Fees payable to the company’s auditor andits associates for other services:
- the audit of the company’s subsidiaries pursuant to legislation
- tax services
- IT services
- all other services
1 29,277
426,956
1 2,6 1 4
Profit on ordinary activities before tax
464,226
Effects of:
Expenses not deductible for tax purposes
Goodwill on consolidation
Depreciation for the period in excess of capital allowances
1 2,839Movement in short term timing differences
(2, 1 1 0)Non-taxable income
1 2,027Tax rate differences
(3 1 ,82 3)Other items
1 ,024,006Current tax charge for period
Group2008
£
1 ,06 1 ,935
3,694
1 , 1 46,2 7 3
Bank loans and overdrafts
Hire purchase and finance leases
80,644Unwinding of discount on deferred consideration
Group2008
£
6 Interest payable and similar charges
649,7 76
1 ,024,006
(55 ,226)
968, 780
Current tax
UK corporation tax on profits of the year
Overseas tax 3 74,2 30
Deferred tax
Origination and reversal of timing differences
Group2008
£
7 Taxation on profit from ordinary activities
1 ,609, 1 0 1
Profit on ordinary activities at the standard rateof corporation tax in the UK of 28.85%
8 Profit for the financial period
The company has taken advantage of the exemption allowed under section 230 of
the Companies Act 1985 and has not presented its own profit and loss account in
these financial statements. The Group profit for the period includes a loss after tax
of £866,761 dealt with in the financial statements of the parent company.
PAGE : 39
The goodwill arising on consolidation is being amortised over the directors’ best estimate of its useful economic life, being between 5 and 20 years dependent upon the acquisition made.
9 Intangible assets
Cost
Additions
At 31 October 2008
Amortisation
Provided for the period
At 31 October 2008
Net book value
At 31 October 2008
Group
Goodwill onconsolidation
£
Group Total
£
Computerequipment
£
Motorvehicles
£
Fixtures& fittings
£
Plant &machinery
£
69,2 24,290
69,2 24,290
1 ,479,9 1 7
1 ,479,9 1 7
67,7 44,3 7 3
Cost
4,07 3,03 1Acquired with subsidiaries
(6,825)Disposals
74, 1 69Exchange differences
4,488,694At 31 October 2008
Depreciation
3 35,9 1 7Provided for the period
(5, 390)Disposals
43, 1 38Exchange differences
3,079,36 4At 31 October 2008
Net book value
1 ,409,3 30At 31 October 2008
Assets held under finance leases and hire purchase contracts:
Net book value
72,3 36At 31 October 2008
3 48, 3 1 9Additions
2,705 ,699
2,62 1 ,7 50
(4,987)
4 1 , 1 3 7
2,887,78 1
2 22,862
(3 ,650)
24,2 35
2,0 1 1 , 1 46
876,635
3 7,240
229,88 1
1 ,767,699
6 3,664
-
1 ,640
87, 1 94
5,942
-
7 70
48,892
38, 302
5,702
2 1 ,890
42, 1 80
904,7 59
(1 ,8 38)
24,997
1 ,0 1 1 ,745
69,242
(1 ,7 40)
1 4,24 1
666,384
3 45,36 1
22, 35 2
8 3,827
584,64 1
482,858
-
6, 395
50 1 ,97 4
3 7,87 1
-
3,892
3 52,942
1 49,03 2
7,042
1 2,7 2 1
3 1 1 , 1 79Acquired with subsidiaries
10 Tangible assets
PAGE : 40
Notes forming part of the financial statements for the period ended 31 October 2008
SLR Management Limited
Subsidiary undertakings
The subsidiary undertakings in which the company's interest at the year end was 20% or more are as follows:
Country ofincorporationor registration
Class ofshare capital
held
Proportionof share
capital held
Natureof business
SLR Consulting Limited*
SLR Group Limited*
SLR International Corporation*
England
England
USA
Ordinary
Ordinary
Ordinary
100%
100%
100%
Environmentalconsultants
Environmentalconsultants
Environmentalconsultants
Holding company
SLR Holdings Limited England Ordinary 100% Holding company
Name
SLR Consulting (Canada) Limited* Canada
John Barnett Associates Limited† Ireland Ordinary 100% Environmentalconsultants
CSA Oil & Gas Services Limited† Ireland Ordinary 100% Environmentalconsultants
CSA Group (NI) Limited† N. Ireland Ordinary 100% Environmentalconsultants
Environmentalconsultants
CSA Computing Services Limited† Ireland Ordinary 100% Software development
Crowe Schaffalitzky & AssociatesLimited†
Ireland Ordinary 100% Environmentalconsultants
Architecture and Planning Solutions Limited
England Ordinary 100% Architects
SLR Environmental HoldingsLimited
Ireland Ordinary 100% Holding company
SLR Intermediate Holding Company Limited***
England Ordinary 100% Holding company
SLR Environmental Consulting(Ireland) Limited**
Ireland
Insite Environments Limited* England Ordinary 100%
SLR Contracting Limited†† England Ordinary 100% Dormant
SLR Trustee Limited†† England Ordinary 100% Dormant
SLR (Isle of Man) Limited†† Isle of Man Ordinary 100% Dormant
Recycled Land Limited†† England Ordinary 100% Dormant
Easywaste Limited†† England Ordinary 100% Dormant
Enviro Research 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 Intermediate Holding Company Limited
England Ordinary 100% Dormant
The additions to fixed asset investments represent the
purchase of 100% of the share capital of the SLR Holdings
Limited Group, the CSA Group Holdings Limited Group, FMH
Consulting Limited and Architecture and Planning Solutions
Limited together with the fair value of share based payment
awards made to employees of subsidiary undertakings.
Further details of the acquisitions during the period are
contained in note 25.
Group
Listedinvestments
£
Cost
Acquired with subsidiaries
At 31 October 2008
Exchange differences
76, 38 3
76, 355
(28)
Impairment
Charged in the period
At 31 October 2008
Exchange differences
40,65 4
40,72 3
69
Net book value
At 31 October 2008 3 5,6 3 2
At 31 October 2008 5 1 , 3 79,5 35
Company
Groupundertakings
£
Cost and net book value
Additions 5 1 , 3 79,5 35
OrdinaryPreferred
100%100%
Environmentalconsultants
A OrdinaryB Ordinary
100%100%
FMH Consulting Limited England Consulting engineers
OrdinaryA Ordinary
100%100%
11 Fixed asset investments
PAGE : 41
-
1 2,476,52 1
1 2,786,75 7
Trade debtors
Amounts owed by group undertakings
298,056Other debtors
-Deferred tax
1 2, 1 80Prepayments and accrued income
Company2008
£
1 4,7 7 1 ,703
-
1 8,478,605
1 9 1 , 1 65
1 87,44 1
3, 3 28,296
Group2008
£
12 Debtors
-
-Corporation tax
Obligations under finance leases and
hire purchase contracts
1 ,202,7 1 4Other creditors
-Accruals and deferred income
-Payments on account
Company2008
£
78,9 1 0
922,5 9 3
1 ,936,64 1
2,787,22 1
4,7 36,6401 3,3 29,0 1 9
28,5 1 5
-
1 ,7 34,749
Bank overdraft (secured)
Bank loans (secured)
1 28,6 1 0Trade creditors
-Taxation and social security
1 ,670,567Amounts owed to group undertakings
6 1 0, 38 4
1 ,7 34,749
3,94 1 ,95 1
1 ,288,055
-
Group2008
£
14 Creditors: amounts falling due within one year
-
Obligations under finance leases and
hire purchase contracts
769,035Other creditors
Company2008
£
43,3 3 2
1 ,40 1 ,879
29,056,40429,7 3 2,580
28,287,369Bank loans (secured) 28,287,369
Group2008
£
15 Creditors: amounts falling due after more than one year
13 Deferred taxation
The movement in the deferred tax asset is as follows:
The deferred tax asset at the balance sheet date is analysed as follows:
Group £
Acquired with subsidiary
Exchange differences
At 31 October 2008
Credited to profit and loss account
1 3 3, 1 67
(952)
1 87,44 1
5 5,226
2008
£
80,30 3Accelerated capital allowances
96,3 1 8Short term timing differences
1 0,820
1 87,44 1
Unrelieved tax losses
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.
The loans repayable after five years bear interest at rates of LIBOR plus 2.50% and
LIBOR plus 3.00%. One of these loans is repayable in quarterly instalments with the
remaining loan repayable in two annual instalments.
Included with short and long term other creditors are amounts totalling £2,944,199
for the group and £1,595,642 for the company, which represent the directors best
estimate of deferred consideration payable in connection with the acquisition of
subsidiary undertakings.
Notes forming part of the financial statements for the period ended 31 October 2008
PAGE : 42
SLR Management Limited
2008Finance leases
£
78,9 1 0Within one year 1 ,5 42,320
2008Deferred
consideration
£
1 ,7 34,749
2008Bank Loans
£
15 Creditors: amounts falling due after more than one year (continued)
16 Share capital
27,356In more than one year but not more than two years 1 ,066,6 1 82,030,749
1 5 ,976In more than two years but not more than five years 3 3 5,26 19,044,246
-After five years -1 7 ,2 1 2, 3 7 4
1 22,2 422,944, 1 9930,02 2, 1 1 8
Group
Maturity of debt:
2008Deferred
consideration
£
826,607Within one year 1 ,7 34,749
2008Bank Loans
£
43 3 ,7 7 4In more than one year but not more than two years 2,030,749
3 3 5,26 1In more than two years but not more than five years 9,044,246
-After five years 1 7 ,2 1 2, 3 7 4
1 ,5 95,64230,02 2, 1 1 8
Company
2008£
1 8,5 39A ordinary shares of £0.001 each
46,000B ordinary shares of £0.001 each
64,5 39
2008Number
1 8,5 38,7 1 0
46,000,000
64,5 38,7 1 0
Authorised
2008£
2008Number
Allotted, called up and fully paid
1 8,5 39A ordinary shares of £0.001 each 1 8,5 38,7 1 0
36,3 68B ordinary shares of £0.001 each 3 6, 368,5 20
5 4,9075 4,907,2 30
PAGE : 43
The following events took place during the period in respect of the company’s share capital:
- the company was incorporated with an authorised share capital of 1,000 ordinary shares of £1 each, of which two shares were issued and fully paid up;
- on 30 April 2008, a special resolution was passed converting each of the existing ordinary shares of £1 each into 100 B ordinary shares of £0.01 each. On the same date
the authorised share capital was increased to £64,539 through the creation of 1,835,871 new A ordinary shares of £0.01 each and 4,500,000 B ordinary shares of £0.01 each;
- on 27 May 2008 the company issued 3,595,852 B ordinary shares of £0.01 each as part of the consideration for the purchase of the entire share capital of SLR Holdings Limited
and its subsidiary undertakings. On the same date, the company issued 1,853,871 A ordinary shares of £0.01 for which a total consideration of £32,500,000 was received;
- on 5 June 2008, the company issued 1,000 B ordinary shares of £0.01 each as part of the consideration for the acquisition of the entire share capital of FMH Consulting Limited
at a premium of £10,140;
- on 13 June 2008, the company issued 30,000 B ordinary shares of £0.01 each as part of the consideration for the acquisition of the entire share capital of CSA Group
Holdings Limited;
- on 11 July 2008, a special resolution was passed to subdivide the company’s share capital of A ordinary shares of £0.01 each and B ordinary shares of £0.01 each into A ordinary
shares of £0.001 each and B ordinary shares of £0.001 each; and
- on 31 October 2008, the company issued 100,000 B ordinary shares of £0.001 each as part of the consideration for the acquisition of the entire share capital of Architecture
and Planning Solutions Limited.
The A Ordinary and B Ordinary shares rank pari-pasu, 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. No options were exercised or lapsed during the period.
18 July 2008
Date of grant
EMI share option scheme
Grantedduring the
periodNo.
489, 398
Optionscarried
forwardNo.
489, 398
305,067 305,067
2 45,388 2 45,388
2 58, 1 00 2 58, 1 00
7 92, 329 7 92, 329
1 62,500 1 62,500
1 20,000 1 20,000
400,000 400,000
2,28 3, 38 4 2,28 3, 38 4
Exerciseprice
(pence)
2 .68
ExercisePeriod
Nov 2008 - Nov 2009
18 July 2008 1 , 368,7 79 1 , 368,7 79 3 . 1 3 Nov 2008 - Nov 2010
18 July 2008 7 7 5,67 3 7 7 5,67 3 6 .60
2 .68
3 . 1 3
6 .60
6 .60
Nov 2008 - Nov 201 1
18 July 2008 280,000 280,000 40.00 Jul 2008 - Nov 201 1
18 July 2008 967,500 967,500 40.00 Nov 2008 - Nov 2012
18 July 2008 1 ,000,000 1 ,000,000 40.00 Nov 2009 - Nov 2013
18 July 2008 Nov 2008 - Nov 2009
18 July 2008 Nov 2008 - Nov 2010
18 July 2008 Nov 2008 - Nov 201 1
18 July 2008 Sept 2008 - Sept 2010
18 July 2008 Nov 2008 - Nov 2012
18 July 2008 Nov 2009 - Nov 2013
4,88 1 , 350 4,88 1 , 350
18 July 2008 40.00
40.00
40.00
Nov 2008 - Nov 2010
Share options
Unapproved share option scheme
Notes forming part of the financial statements for the period ended 31 October 2008
SLR Management Limited
PAGE : 44
Sharepremium account
£
Mergerreserve
£
Profit and lossaccount
£
3 1 ,5 1 6,60 1 1 4,507,049 -Share capital issued in the period
- - 640, 32 1Profit for the period
Group
Company
- - 247, 1 94Exchange differences
- - (6,030)Shares acquired by employee benefit trust
- - 89,598Sale of shares by employee benefit trust
- - 1 1 3 ,290Share based payment
3 1 ,5 1 6,60 1 1 4,507,049 1 ,084, 3 7 3At 31 October 2008
3 1 ,5 1 6,60 1 -Share capital issued in the period
- (866,76 1 )Loss for the period
- 1 1 3 ,290Share based payment
3 1 ,5 1 6,60 1 (7 5 3,47 1 )At 31 October 2008
Sharepremium account
£
Profit and lossaccount
£
17 Reserves
18 Reconciliation of movements in shareholders’ funds 19 Commitments under operating leases
-
Shares acquired by employee
benefit trust
-
Sale of shares by employee
benefit trust
1 1 3 ,290Share based payments
Company2008
£
(6,030)
89,598
--
30,8 1 8,03747, 1 62,930
1 1 3 ,290
(866,76 1 )
3 1 ,5 7 1 ,508
Profit/(loss) for the period
Share capital issued in the period
640, 32 1
46,078,5 57
-Exchange differences
Net movement in shareholders’ funds
Opening shareholders’ funds
30,8 1 8,03747, 1 62,930Closing shareholders' funds
247, 1 94
Group2008
£
As at 31 October 2008, the group had annual commitments under non-cancellable
operating leases as set out below:
20 Pensions
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.
Operating leases which expire:
Within one year 7 1 ,290302,586
In two to five years 320,3 1 7798,4 1 6
Over five years -59 1 ,082
39 1 ,6071 ,692,08 4
2008Land andBuildings
£
2008
Other
£Group
PAGE : 45
21 Reconciliation of operating profit to net cash inflowfrom operating activities
23 Analysis of net debt
Non-cash changes of £1,192,479 include deferred consideration arising on acquisitions in the year, exchange differences, loan arrangement fees and the unwinding of the discount
on deferred consideration.
2008
£
2,7 45,603Operating profit
1 ,479,9 1 7Amortisation
3 35 ,9 1 7
2,3 5 5,275
Depreciation
1 1 3,290Share based payments
5 7,626Loan arrangement fees
1 ,244Loss on the sale of fixed assets
308,09 1Exchange differences
(1 ,689, 1 77)Increase in debtors
(997,2 36)Decrease in creditors
Net cash inflow from operating activities
22 Reconciliation of net cash inflow to movementin net debt
2008
£
Increase in cash in the period
(3 1 , 1 42,3 5 4)
(1 , 1 34,940)Other non cash movements
Movement in net debt in the period
-Opening net debt
(3 1 , 1 42,3 5 4)Closing net debt
2008
£
1 ,946,205
(1 6,6 42,5 3 1 )
(1 4,696, 326)
(5 7,5 39)
(1 5,25 3,5 49)
Cash inflow from change in debt and lease financing
Change in net debt resultingfrom cash flows
New finance leases and hirepurchase agreements
Debt acquired with subsidiary undertakings
- 2,556,589Cash in hand and at bank
- (6 1 0, 384)Bank overdraft
2,556,589
(6 1 0, 384)
-
-
- 1 ,946,2051 ,946,205-
(5,003,82 7) (3,2 7 7,069)Debt due within one year 1 ,7 26,75 8-
3,868,887 (29,689, 248)Debt due after one year (1 8,45 3,900)(1 5 , 104,2 3 5)
(5 7,5 39) (1 22,2 42)Obligations under finance leases and hire purchase contracts 84,6 1 1(1 49,3 1 4)
(1 , 1 92,479) (3 3,088,5 59)(1 6,6 42,5 3 1 )(1 5,25 3,5 49)
(1 , 1 92,479) (3 1 , 1 42,3 5 4)Total (1 4,696, 3 26)(1 5,25 3,5 49)
Acquiredwith
subsidiaries
£
Cash flows
£
Non-cashchanges
£
At31 October
2008
£
24 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 31 October 2008, total bank borrowings subject to the guarantee amounted to £46,918.
Notes forming part of the financial statements for the period ended 31 October 2008
SLR Management Limited
PAGE : 46
25 Acquisitions
On 27 May 2008, the group acquired the entire share capital of SLR Holdings Limited
and its subsidiary undertakings. 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 the SLR Holdings Limited Group prior to its acquisition were as follows:
The net cash outflow arising from the acquisition of the SLR Holdings Limited Group
was as follows:
Book andfair value
£
Fixed assets
Tangible fixed assets
Investments
1 , 3 1 2,625
76,38 3
Current assets
Debtors
Total assets
Cash at bank and in hand
1 5,204, 3 1 5
1 8,922,508
2,3 29, 1 85
Creditors
Net liabilities (4,904,624)
(2 3,82 7 , 1 32)
Consideration:
Settled by shares at fair value 1 4,383,408
Settled by cash (including expenses of £2,046,445) 47,042,80 1
Net liabilities acquired 4,904,62 4
Goodwill arising on consolidation 66,3 30,83 3
6 1 ,426,209
Year ended26 October 2007
£
3 1 ,646,22 2Turnover
4,7 75,5 1 9Operating profit
(7 48,963)Net interest
(1 ,486,679)Taxation on profitfrom ordinary activities
2,5 39,87 7
7 months ended27 May 2008
£
2 7,882, 1 4 4
3,28 1 , 1 6 1
(806, 3 5 7)
(860,66 1)
4,026,5 56Profit on ordinary activitiesbefore taxation 2,399,5 79
1 ,5 38,9 1 8Profit for the period
£
47,042,80 1Cash consideration (as above)
(2,3 29, 1 85)Bank balances acquired
44,7 1 3,6 1 6Net outflow of cash
PAGE : 47
On 5 June 2008 the group acquired the entire share capital of FMH Consulting 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:
Book andfair value
£
Fixed assets
Tangible fixed assets 1 1 , 1 3 4
Current assets
Debtors
Total assets
Cash at bank and in hand
2 1 8,879
408, 1 99
1 78, 1 86
Creditors
Net assets 287,706
(1 20,49 3)
Consideration:
Settled by shares at fair value 1 0, 1 50
Settled by cash (including expenses of £23,670) 3 3 1 ,86 3
Deferred consideration 1 0 1 ,5 25
Net assets acquired (287,706)
Goodwill arising on consolidation 1 5 5,8 3 2
443,5 3 8
The results of FMH Consulting Limited prior to its acquisition were as follows:
The net cash outflow arising from the acquisition of the FMH Consulting Limited
was as follows:
Year ended29 February 2008
£
603,229Turnover
1 68,804Operating profit
5,086Net interest
(3 5, 1 67)Taxation on profitfrom ordinary activities
1 38,72 3
3 months ended31 May 2008
£
207,7 5 2
85,704
1 ,200
(1 9,460)
1 7 3,890Profit on ordinary activitiesbefore taxation
67,44 4Profit for the period
£
3 3 1 ,86 3Cash consideration (as above)
(1 78, 1 86)Bank balances acquired
1 5 3,677Net outflow of cash
86,904
Notes forming part of the financial statements for the period ended 31 October 2008
SLR Management Limited
PAGE : 48
On 13 June 2008 the company acquired the entire share capital of CSA Group Holdings
Limited and its subsidiary undertakings. 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:
Book andfair value
£
Fixed assets
Tangible fixed assets 43,5 7 3
Current assets
Debtors
Total assets
Cash at bank and in hand
1 ,2 1 7,698
1 ,7 27,8 1 3
466,542
Creditors
Net assets 1 ,05 4,8 1 7
(67 2,996)
Consideration:
Settled by shares at fair value 1 20,000
Settled by cash (including expenses of £150,390) 1 ,893,655
Deferred consideration 1 ,082,077
Net assets acquired (1 ,05 4,8 1 7)
Goodwill arising on consolidation 2,040,9 1 5
3,095,7 3 2
25 Acquisitions (continued)
The results the CSA Group Holdings Limited group prior to its acquisition were
as follows:
The net cash outflow arising from the acquisition of the CSA Group Holdings Limited
Group was as follows:
Year ended31 December 2007
€
4,07 7,242Turnover
3 8 1 ,669Operating profit
(10,697)Net interest
(70, 1 26)Taxation on profitfrom ordinary activities
300,846
5 months ended31 May 2008
€
1 ,765,47 2
3 5 1 ,997
6,47 1
(47,279)
3 70,97 2Profit on ordinary activitiesbefore taxation 3 58,468
3 1 1 , 1 89Profit for the period
£
1 ,893,655Cash consideration (as above)
(466,5 42)Bank balances acquired
1 ,427, 1 1 3Net outflow of cash
PAGE : 49
On 31 October 2008 the group acquired the entire share capital of Architecture and
Planning Solutions 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:
Book andfair value
£
Current assets
Debtors
Total assets
Cash at bank and in hand
99,83 1
203 ,56 3
1 03,7 3 2
Creditors
Net assets 1 1 1 , 1 04
(92,459)
Consideration:
Settled by shares at fair value 40,000
Settled by cash 3 50,000
Deferred consideration 4 1 7,8 1 4
Net assets acquired (1 1 1 , 1 04)
Goodwill arising on consolidation 696,7 1 0
807,8 1 4
The results of the Architecture and Planning Solutions Limited prior to its acquisition
were as follows:
The net cash outflow arising from the acquisition of the Architectural and Planning
Solutions Limited was as follows:
Year ended30 April 2008
£
208,9 1 8Turnover
1 66, 1 64Operating profit
9, 3 37Net interest
(3 5,2 1 7)Taxation on profitfrom ordinary activities
1 40,28 4
6 months ended31 October 2008
£
20 1 ,992
1 72,284
6,42 2
(3 7,900)
1 75,50 1Profit on ordinary activitiesbefore taxation 1 78,706
1 40,806Profit for the period
£
3 50,000Cash consideration (as above)
(103,7 3 2)Bank balances acquired
2 46,268Net outflow of cash
The deferred consideration for the acquisitions above includes amounts that are
dependent on the performance of the acquired entities subsequent to acquisition.
The acquisitions above contributed the following amounts to group cash flows in the
period from their acquisition to 31 October 2008.
£
2,325,489Net cash inflow from operating activities
459,8 1 6Net cash outflow from taxation
84,6 1 1Net cash outflow from financing
6,862Net cash inflow from returns on investments andservicing of finance
290,59 1Net cash outflow from capital expenditure andfinancial investment
Notes forming part of the financial statements for the period ended 31 October 2008
SLR Management Limited
PAGE : 50
26 Share based payments
SLR 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 period, together with
information on the exercise price and period of the options is contained in note 16
to the financial statements.
2008Weighted
averageexercise
price(pence)
2008
Number
The exercise price of options outstanding at the end of the period ranged between
2.68p and 40p and their weighted average contractual life was 3.74 years.
Of the total number of options outstanding at the end of the period, 124,402
had vested but had not been exercised.
The weighted average fair value of each option granted during the period
was 5.03p.
The following information is relevant in the determination of the fair value of
options granted during the period under the equity share based remuneration
schemes operated by SLR Management Limited:
1 9 .04 7, 1 64,7 3 4Granted during the period
- -Exercised during the period
- -Outstanding at the beginning of the period
- -Lapsed during the period
1 9 .04 7, 1 64,7 3 4Outstanding at the end of the period
2008
BinomialOption pricing model used
Equity-settled
1 9 .04Weighted average share price at grant date (pence)
2 .68 - 40.00Exercise price (pence)
3 .7 4Weighted average contractual life (years)
1 4.02%Expected volatility
NilExpected dividend
5.07%Risk-free interest rate
The volatility assumption, is based on an analysis of share price volatility for
quoted companies operating in the same sector as the Group.
27 Employee Benefit Trust
The 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:
28 Related party transactions
During the period, the group provided consultancy services to 3i Deutschland,
which is a related party by view of its relationship with 3i Investments plc, a
significant investor in the company. Sales in the period totalled £101,047 and at
31 October 2008 the outstanding balance due from 3i Deutschland was £101,047.
29 Post balance sheet events
On 3 November 2008, the company acquired the entire share capital of Bowman
Planton Limited for a total consideration of approximately £245,000 in cash plus
30,000 B ordinary shares in the share capital of SLR Management Limited.
Group2008
1 72, 1 90Number of shares held
Equity-settled schemes 1 1 3,290
2008
£
The share-based remuneration expense for the Group comprises:
The Group did not enter into any share-based payment transactions with parties
other than employees during the current period.
C Printed on Recycled Silk: 50% recycled British waste. Using 100% genuine printed waste in the recycling process, means that we are helping reduce the pressure on UK landfill sites. The wood from non-recycled pulps used, comes from PEFC and FSC certified forests.
PAGE : 51
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