Annual Report 2007

SLR Holdings Limited Annual Report and Accounts 2007

solutions for today’s environment

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

PAGE : 02

SLR is an international environmental consultancy with a network of offices in the UK, Canada 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 man-

agement, planning & development, industrial, mining & minerals and financial & professional sectors.

SLR Holdings Limited

Annual Report for the year ended 26 October 2007

More than 7 years

5 to 7 years

3 to 5 years

1 - 3 years

New for 2007

39%

9%

26%

12%

PAGE : 03

During the year, SLR has:

• achieved a 33% increase in revenue; the twelfth

consecutive year of double digit growth;

• delivered EBITA growth of 37% and maintained profit

margins amongst the best in the sector;

• sustained a high level of repeat revenue; almost 50% of

2007 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 Insite Environments Limited in the UK and SEACOR

Environmental Inc. in Canada;

• 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 1998 - 2007

Revenue by Length of Client Relationship

14%

35,000

30,000

25,000

20,000

15,000

10,000

5,000

01998 1999 2000 2001 2002 2003 2004 2005 2006 2007

EBITA Growth 1998 - 2007

6,000

5,500

5,000

4,500

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

01998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Highlights

I am very pleased to report that SLR delivered another strong

performance in 2007, with all areas of the business continuing

to develop significantly.

SLR is a leading environmental consultancy providing advice and supporting services for

the planning, design, permitting, impact assessment, management, auditing and

remediation of assets and environmental liabilities. It has a broadly spread business in

terms of both the geographies and sectors it addresses, including the energy, waste

management, planning & development, industry, mining & minerals and financial &

professional sectors.

During the year, the successful integration of Insite Environments Limited in the UK and

SEACOR Environmental Inc. in Canada, demonstrated the ability of the management to

expand the Group by acquisition as well as organically. Both acquisitions were strategic;

both in terms of geographic expansion and additional technical resources and expertise.

As well as excellent financial performance, the Group continued to strengthen areas such

as corporate governance and corporate social responsibility, including SLR’s UK operations

becoming carbon neutral, and committing to take the whole Group carbon neutral in the

coming year.

Chairman’s Statement

PAGE : 04


Group Results

Group turnover in 2007 increased by 33% to £31.6 million from £23.8 million in 2006.

Profit before interest, tax and goodwill amortisation increased by 37% to £5.6 million

in 2007 from £4.1 million in 2006, representing a margin of 18%. 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 28% and in profit before interest, tax and goodwill amortisation has been 33%

(based on management accounts in 2005).

Dividends

The Directors paid an interim dividend of 125p on each of the company’s shares in

November 2006. Total dividends of 13.22p per A1 ordinary share, and 2.49p per B

ordinary share were payable in the year ended 27 October 2006.

Balance Sheet and Cash Flow

Consolidated net assets at the year end stood at £6.9 million.

With strong cash conversion from operating profit, the net cash inflow from operating

activities was £5.2 million.

The year end consolidated balance sheet includes, within intangible fixed assets,

“goodwill” of £16.8 million. The goodwill is being amortised over the Directors’

estimate of its useful economic life.

Our People

SLR has a 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 year

to achieve such a strong performance and to afford us an industry leading reputation.

Summary

2007 was another year of excellent progress for the Group. With a clear strategy in

place, and a strong team to deliver it, we are very well positioned to take the

business to its next stage of development.

John Crabtree

Chairman

Date : 23 May 2008

PAGE : 05

PAGE : 06

Chief Executive’s Review

In many ways, 2007 was a landmark year for SLR. As well as

continuing to achieve organic revenue growth among the best

in the sector, two strategic acquisitions were completed; Insite

Environments Limited in the UK and SEACOR Environmental

Inc. in Canada. The critical mass resulting from the combination

of internal growth and acquisitions has resulted in SLR being

recognised by the market as a peer of the major publicly

quoted companies for the first time.

In line with our overall strategy on corporate governance, SLR Consulting became

carbon neutral in 2007, and the commitment was made to make the whole group

carbon neutral in 2008. This was timely, as it is considered that 2007 will also be

recognised as the year when climate change, and the urgent need to address it, was

accepted as a reality by both government and the majority of the population (at

least in the UK and Europe).

Sustainability and waste management are considered by the UK’s environmental

consultancies to be the areas with the largest growth potential, whilst in North

America energy and natural resources are considered to be growing at the highest

rates. These areas are relatively insensitive to the economic climate and SLR is

extremely well placed to capitalise on the predicted growth.

The continued success of the Group is a combination of our underlying strategy and

the strength of the sectors in which we operate.

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 the Group 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.


Whilst all of SLR’s business sectors performed well, UK waste management was

particularly strong as the effects of the EU Landfill Directive and the recent changes

to the tax regime impacted the industry. As the undoubted industry leader, SLR was

heavily involved in all aspects of waste related development, from advising major

investors entering the sector, to delivering new developments for the public and

private sector.

The integration of both Insite and SEACOR into SLR was undertaken in the latter part

of 2007. Insite was rebranded as SLR on 1 November 2007, and SEACOR on 1 January

2008. In both cases, the integration process went very smoothly, with no staff being

lost as a result the process, and indeed three months after its acquisition

SLR/SEACOR’s staff voted it to be the best environmental firm to work for in Canada.

The UK has continued to be our largest market, representing approximately 77% of

Group turnover for the 2007 financial year, whilst we have significantly grown

revenues from both the US, which now represents approximately 14% of Group

turnover, and from Europe, which now represents approximately 2% of Group

turnover. On an annualised basis including Canada, the turnover split would be UK

56%, Canada 32% and US 12%.

All of SLR’s business areas experienced growth at or above the overall level of the

environmental consultancy sector as a whole. Particularly strong growth was,

however, enjoyed in the financial and professional, energy, and waste management

business areas.

PAGE : 07

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; almost 50% of the Group’s turnover in 2007 derived from

clients with whom we have worked for five years or more.

Market Overview

Current estimates suggest that the global environmental consultancy market is valued

at approximately £24bn. 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. The overall market is projected to

experience underlying annual growth of about 10%, although in the UK this is

currently closer to 20%. The growth figures exclude exceptional opportunities such

as nuclear decommissioning and new nuclear power stations.

The market is driven by:

• a high volume of new legislation and regulations;

• the high and rising cost of natural resources which drives 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 an excellent platform for the sustained growth of both the overall

environmental market and SLR.

Operating Review

During the financial year, we continued to make significant investments to develop

the Group, with staff numbers increasing from 290 on 27 October 2006, to 577 on

26 October 2007.

In 2007, we opened offices in Bristol and Glasgow as well as acquiring additional

offices in Leeds and Newcastle upon Tyne as part of the Insite Environments

transaction. In North America, the acquisition of SEACOR Environmental Inc.

increased the number of offices to 24. During 2008, we plan to open new offices in

Chelmsford, Exeter and London in the UK, Dublin in Ireland, and in Indianapolis and

New York in the US.

Sector Sales Analysis 2007

waste management

energy

mining & minerals

planning & development

industry

financial & professional

35%

18%12%

14%

11%

10%

Insite had an established reputation for excellence in urban and landscape design, and

had implemented award winning landscape schemes which combined innovation, art

and practicality. With the addition of the 30 person Insite team, SLR now has one of

the leading urban design and landscape groups in the UK, allowing access to the largest

and most prestigious development schemes across the country and internationally.

Chief Executive’s Review Acquisitions

Insite Environments Limited

SEACOR had 17 offices across Canada, from Halifax in the east to Victoria in the west,

and is one of the few truly national environmental consultancies. Voted 2008

Environmental Employer of the Year in Canada, SEACOR’s core businesses of energy

and planning & development fit well with SLR’s established business in the US. Newly

rebranded SLR Consulting (Canada) Limited, the acquisition both consolidates SLR’s

position as a significant consultant in North America, and provides an ideal platform to

develop the sustainability and waste management markets where SLR is a major player

in the UK.

SEACOR Environmental Inc

PAGE : 08


PAGE : 09


With oil prices exceeding $100/barrel during 2007, and major oil companies

investing in tar sands assets which require an oil price in excess of $50/barrel

to be viable, it is clear that the energy market has powerful long term drivers.

Added to this, ongoing concerns over security of supply, particularly from

Russia, continue to drive exploration and permitting by the oil and gas

industry in politically more stable areas such as North America. The

development of new oil fields in Alaska is an example, for which SLR is

providing planning and permitting support.

The cost of energy is interconnected with concerns over climate change. The opening sentence of the Stern

review, published in 2006, stated “The scientific evidence is now overwhelming: climate change presents very

serious global risks, and it demands an urgent global response”. The report highlights risks including potential

water shortages for one-sixth of the world’s population, displacement of 200 million people as a result of

rising sea levels, and the extinction of up to 40% of the world’s species after just 2°C of warming.

In 2007, the Intergovernmental Panel on Climate Change published its Fourth Assessment Report (AR4),

which confirmed that climate change is no longer a matter of opinion but a measurable and

accelerating fact.

With the addition of the Canadian operations, energy represents about 30% of SLR’s business. This is made

up of upstream, midstream and downstream oil and gas, renewable energy including wind, biomass, biofuel,

hydroelectricity, energy from waste, and nuclear.

With the renewable energy market driven by sustainability and climate change issues and the fossil fuel

market driven by energy prices, as a significant international energy consultancy, SLR is in a remarkably strong

position to exploit this enormous market which has very solid long term growth prospects.

Energy

PAGE : 10


Supporting major oil exploration programmes in Alaska

SLR is providing consulting services to major oil companies in

support of their upstream oil and gas exploration programs

throughout Alaska.

A key service provided is oil spill contingency planning, one

of the most rigorous of the regulatory requirements imposed

on the oil industry. The production of robust plans, compliant

with state and federal environmental legislation, is critical in

enabling them to explore, develop and produce oil and gas in

the arctic environment.

SLR is involved in the preparation of multiple oil spill

contingency plans for all the major oil companies operating

in the region as they seek to accelerate the development of

Alaskan oil fields and deliver crude oil to refineries across

North America.

In addition to preparing oil spill contingency plans, SLR is

delivering a broad array of consulting services to the oil

industry including emergency response management, habitat

mapping, contaminated site restoration and coastal

protection. With over thirty staff based in Anchorage and

Fairbanks, SLR is well positioned to increasingly expand its

technical service offerings and to become a dominant

provider of technical services to the oil industry in the state

of Alaska.

PAGE : 11


PAGE : 12

Waste Management

SLR is recognised as the leading consultant to the waste management sector in the UK, and is undertaking an increasing

amount of work in this field in North America. As well as maintaining and expanding workload for public and private sector

waste clients, SLR’s services are increasingly in demand to support international financial institutions, particularly

infrastructure funds, who are increasingly attracted to the waste sector.


With SLR’s unparalleled knowledge of both

the commercial and technical aspects of the

market, it is advising clients on technologies,

the impact of national waste strategy and

taxation on waste volumes and price, and

assisting with delivery strategy.

As predicted in last year’s annual report, there was a

significant move during 2007 towards energy from waste

(EfW) as a key element in delivering the UK’s waste treatment

targets. Having positioned itself over the last three years to

respond to this change, SLR is involved in some capacity in

over three quarters of the EfW schemes currently in the

planning and permitting phase in the UK.

As the market leader in the waste management consulting

field, the Group is uniquely placed to exploit development in

all aspects of the waste sector both in the UK and

internationally.

At the forefront in developing waste treatment infrastructure

SLR has developed a leading reputation in the UK for being able to provide wide ranging

and multi-disciplinary support and advisory services in connection with development of

waste treatment facilities. Driven by the Landfill Directive and associated tax escalator,

both public and private sector clients have been increasingly turning to SLR to assist

them in the development of such facilities.

SLR’s role over the last 2 years has become increasingly diverse. With emerging

technologies being promoted by operators and manufacturers, SLR’s specialist

technology and process engineering team have worked alongside company waste

strategy professionals to critically review and appraise the opportunities and

commerciality of various developments or investment opportunities. This has drawn on

SLR’s expertise in such treatment processes as anaerobic digestion (AD), auto-claving,

pyrolysis, gasification and mass burn incineration.

Market sector or technology advice has led to SLR being recognised as being able to

lead and advise on all aspects of the planning and permitting of major treatment facility

applications. During the year, SLR has actively been involved in the appraisal, planning or

permitting of more than a dozen major energy from waste (EfW) facilities, for most of

the UK’s leading waste management operators and several local authorities. These are

major applications for developments that typically cost between £100 and £200 million

and take several years to consent.

SLR’s wide ranging expertise has also enabled the company to support clients following

granting of a consent for a treatment facility. As an example, SLR has been involved in

the contract to construct the UK’s first major anaerobic digestion facility. The plant

which is located in the Western Isles of Scotland will segregate recylate, produce

compost but also generate in the order of 250kW of renewable electricity. SLR has also

supported clients with commissioning and technology advice relating to new mass burn

EfW facilities.

PAGE : 13

Planning & Development

PAGE : 14



Northumbria University City Campus – Courtyard design

When Northumbria University, based in the heart of Newcastle

upon Tyne, wanted to deliver a high quality external environment

that complimented the modern design and quality of two new

teaching buildings they turned to SLR’s landscape team.

The task was focussed on the Ellison Courtyard, a space

between the School of Design and the Law and Business

School. It was the interaction between the contrasting

academic disciplines that adjoin the courtyard that led SLR’s

designers to take their design inspiration from the human brain.

The left side of the brain is associated with verbal, logical and

analytical thought functions, while the right side excels in

visual, spatial and perceptual processes, with the ultimate

fusion of both styles of thought providing the platform for

learning. This fusion has been translated into an acclaimed

design of the external environments using both linear and

more fluid forms.

The design features a number of representations of the brain. In

the central courtyard, bands of slate extend from the School of

Design culminating in elliptical podia representing the synapses

of the brain and the flow of creative information to the School

of Business and Law. The podia have a functional purpose and

are now used as display platforms as well as being adopted by

the students for sitting and sunbathing in fine weather.

The implementation of the design was also managed by SLR’s

landscape team and the finished scheme has won many

plaudits from both landscape professionals and the students

themselves. Commenting on the scheme, the client manager,

Trevor Thurlow, Director of Estates at Northumbria University

has commented that “it was good when we first saw the

design, but now it’s full of students it’s fantastic. Working with

people with such vision has been a rewarding experience”.

PAGE : 15

The planning and development sector saw very strong growth

in 2007. The acquisition of Insite added an additional dimension,

with its portfolio of public sector clients, particularly in

education. One example of the innovative approach to design

which Insite has brought to SLR is the new courtyard design for

Northumbria University.

The planning and development sector is increasingly bringing together all of SLR’s core

skills to assist clients in designing and permitting sustainable developments of all

types. To be truly sustainable, whether a development is industrial, recreational,

commercial or residential, there are a myriad of factors which must be considered

including its environmental setting, transport infrastructure, building materials and

structures, energy sources and uses, water management and waste management. SLR is

one of the few environmental consultants who can assist clients on all these aspects.

With the complexity of planning and permit applications for major developments

meaning that they take several years to determine, the downturn in the property

market experienced in the latter part of 2007 is unlikely to affect the type of

strategic project which SLR undertakes for the commercial sector in the

foreseeable future.

In the public sector, SLR’s increasing profile has resulted in projects such as preparing

the environmental impact assessment (EIA) for Sutton Harbour, the venue for the

Olympic yachting in 2012, and significant work on major schools development

projects in Merseyside, Yorkshire and the North East of England.

PAGE : 16

Industry Chief Executive’s Review


PAGE : 17

2007 was another challenging year for industry both in the UK

and North America, but for those clients who continued to run

successful operations, there were a number of significant

drivers which saw SLR’s workload in the sector continue to

expand at the rates experienced historically, with growth of

over 30% per annum for the last three years.

The most important factor is the increasing amount of environmental regulation

and enforcement, particularly in Europe. Following the explosion of oil storage

tanks at Buncefield in the UK, there has been particular focus on COMAH sites and

in particular bulk storage facilities. As a result, SLR has managed to develop a

particular niche in undertaking assessments for the whisky industry in Scotland (see

case study, right).

The increase in energy prices and the growing importance of sustainability is also a

significantly driver of consultancy work to industry. This plays to SLR’s strengths in

renewable and alternative energy and recycling, and assisting industry with corporate

social responsibility.

In North America, adding to a strong track record in the wood products sector with

JELD WEN and Columbia Forest Products, SLR Consulting (Canada) has a significant

industrial client base including Canadian Tire, Louisiana-Pacific and Volvo Trucks

The pressures associated with regulation, energy prices and CSR can only continue or

increase, so it is anticipated that the type of blue chip companies which form SLR’s

industrial client base will continue to require our advisory services

Helping the Scottish Whisky Industry

SLR’s services to the industrial sector have seen a significant

increase in their diversity and the size of projects undertaken.

The company’s process safety capability has grown as a

consequence of several projects in the waste, chemicals and oil

and gas sectors, leading to a major commission from Glen Turner

Distillery, a subsidiary of France’s second largest spirits group, La

Martiniquaise.

Glen Turner Distillery operates whisky maturation warehousing

and an 80 million bottle per annum bottling plant in West

Lothian, Scotland. New development includes a second tank

farm and six additional maturation warehouses. The site is

classified as a top tier major accident hazard site under the

Control of Major Accident Hazard (COMAH) Regulations given

the large volume (over 50,000 tonnes) of highly inflammable

liquid stored on site!

SLR was commissioned to provide process safety support and to

prepare the major accident hazard Safety Case as required by the

COMAH Regulations. This involved process safety support

comprising studies of engineering design standards and hazard

and operability (HAZOP) issues. The outcome was the

identification of a series of measures to reduce the risks to

operators and the environment.

SLR also prepared a Safety Case to demonstrate to safety and

environmental regulators that the risks from the process are as

low as reasonably practicable The risk assessment identified

major accident hazards and selected representative scenarios for

detailed assessment, reflecting those with the greatest severity

(e.g. catastrophic failure of a storage vessel) and a range of

hazards (e.g. flammable, toxic, ecotoxic). Fire and toxic hazard

ranges were calculated by SLR using specialist software.

Combined with frequency data for each scenario the safety

report presented an overall measure of the likelihood of a major

accident hazard at the site. A review of safety measures was then

undertaken to determine whether the risks were acceptable.

Where appropriate, risk reduction measures have been identified

for consideration prior to commencement of operations.

PAGE : 18

Chief Executive’s Review Mining & Minerals


Sturton le Steeple – A major new source of aggregates for the Midlands

Lafarge Aggregates is a major producer of aggregates within the UK and is the world’s

largest construction materials supplier. The company supplies over 10% of the UK’s

demand for aggregates as well as more than 50% of the cement produced in Britain.

SLR has recently played a key role in securing Lafarge’s long term business within the

East Midlands by securing a planning consent for aggregates extraction at Sturton le

Steeple in the north of Nottinghamshire. This is a major new greenfield site which

will provide 7.5 million tonnes of high quality sand and gravel over a working life of 15

years. The development includes a major new modern processing facility and

ancillary infrastructure including a wharf and barge loading facility to enable materials

to be transported utilising the adjacent River Trent.

The restoration scheme will incorporate a mixture of lakes, reed beds, peat and

heathland to provide habitats to promote biodiversity and nature conservation,

whilst also providing an amenity for quiet recreational activity.

SLR achieved this result through a pro-active approach in which it supported Lafarge

in extensive pre-application consultations and discussions with stakeholders and local

residents as well as through a series of exhibitions and displays.

Following its formulation of the proposed detailed phased development programme,

SLR managed a detailed environmental impact assessment (EIA) of the proposals

using the wide range of technical expertise within SLR. In addition, SLR’s experienced

planning team undertook the overall project management and coordination of each

stage of the application process.

Following several years of detailed preparatory works, a planning application and

supporting environmental statement was submitted by SLR to Nottinghamshire

County Council in November 2006.

During public consultation there were no technical objections received to the

application and following discussions and negotiations on draft planning conditions,

planning consent was granted in November 2007.

PAGE : 19

SLR continues to be the leading

environmental consultant to the UK minerals

sector, experiencing significant growth in 2007.

The workload was again dominated by existing

clients who include all of the major players in

the UK market, as well as a myriad of medium

and small operators.

We provide a wide range of services from site finding, reserve

evaluation, site valuation, design, planning, permitting and EIA.

Clients are increasingly looking for full service consultancy, as

they outsource much of the development work traditionally done

internally. With our planning and development group we are

increasingly being asked to assist mineral companies to release the

full value of their land assets.

The global nature of the modern minerals business is creating

international opportunities, with the major operators in the UK all

having interests in Europe, North America and beyond. With the

expansion of SLR’s business in the US, we expect increasing

opportunities with these clients in North America.

On the mining side, the contract for Northern Dynasty Mines Ltd, at

the Pebble Deposit in Southwest Alaska, continued to increase in

scale as additional deposits of gold, copper, molybdenum and silver

were identified. SLR is undertaking hydrogeological investigations

and background trace element studies for the EIS and permitting of

the proposed mine. Access to much of the 260km2 site is only

possible by helicopter, which has made the drilling of over 150

monitoring wells and the sampling of water, soil and vegetation

particularly challenging.

In addition to Pebble, we continued to provide mining consultancy

services in Africa, and South America

We believe mining offers good short to medium term growth

prospects for the Group and that there is plenty of opportunity for

us to continue to increase our workload in this sector

Financial & ProfessionalChief Executive’s Review

PAGE : 20

Historically, SLR’s main clients in the financial and professional

sector were the mid-market private equity firms such as

Dunedin, Englefield, Gridiron and Phoenix.


In 2007, whilst work for existing clients continued, as a result of SLR’s

growing reputation in the financial services sector, an increasing amount of

work was undertaken for both the larger private equity firms such as 3i and

Montagu, and for the major international infrastructure funds such as Global

Infrastructure Partners, Macquarie and UBS. As waste management is

increasingly dominated by major contacts involving capital expenditure of

hundreds of millions of pounds, it is becoming of significant interest to the

large infrastructure funds, and SLR is recognised as the leading European

advisor.

A number of strategic initiatives were implemented in 2007, or are planned for

the first half of 2008, to expand the level of local support in major financial

centres. This includes the opening offices in London and New York, and the

transfer of staff experienced in major M&A deals to our Toronto office. With

our established presence in California and Washington, SLR will have coverage

in all the major UK and US financial centres.

In addition to the financial market, we continue to provide specialist

environmental consultancy to professional services firms. The work normally

relates to niche areas such as ecology, flood risk, toxicology, and waste

management. As environmental consultancy becomes increasingly specialist

and complex, this workload is likely to increase, as unlike the large

multidisciplinary architectural and engineering firms, SLR is not perceived

as a competitor.

Montagu Private Equity and Global Infrastructure Partners

Environmental due diligence for £1.7 billion acquisitionof Biffa plc

SLR has become the leading environmental advisor to a range

of major financial institutions investing in the European waste

management sector. Having assisted Montagu Private Equity with

their highly successful investment in Cory Environmental, SLR

was retained by Montagu and Global Infrastructure Partners to

advise them on environmental aspects of their investment in

Biffa plc, one of the UK’s largest waste management companies.

As well as advising on potential environmental issues, SLR also

provided advice on strategic issues affecting the solid waste market

in the UK, particularly the impact of the Landfill Directive and

Landfill Tax on landfill and waste treatment.

SLR’s sector expertise and knowledge of the commercial aspects

of the waste sector helped Montagu and Global Infrastructure

Partners in their market due diligence of the UK’s leading waste

management companies, which is well placed to exploit the rapidly

changing waste market.

PAGE : 21

The climate change issues affecting SLR’s clients relate to both

what is already happening and what can be expected to happen in

the future, irrespective of efforts that are now being made to

stabilise and then reduce carbon emissions.

There are also many other sustainability issues, which often link

back to, or are affected by, climate change. These involve the

security of water and energy supplies, the maintenance of

biodiversity and of agricultural and fisheries systems and, ultimately,

the resilience of societies and organisations to respond to these

important issues.

The issues are so far reaching that they affect all of SLR's business

areas. Provision of advice on sustainability issues requires a holistic

view of the world and as such, a significant number of SLR's

technical disciplines provide advice, often as part of an integrated

team of sustainability specialists, on sustainability issues to clients

in the private and public sectors.

The Climate Change Bill in the UK has placed climate change issues

at the heart of all decision making and we expect all major planning

and regulatory decisions to have to take account of the effects of

these decisions on greenhouse gas emissions. SLR is well placed

through its existing planning and permitting teams to respond to

these changes to the regulatory regime and is already advising

clients on a wide range of carbon reduction strategies including the

development of renewable energy systems and better management

of waste. SLR’s ability to work in several business sectors is

identifying opportunities for SLR’s waste management industry

clients to work with its property development clients to provide

innovative solutions which reduce the amount of waste that is

being landfilled while providing significant amounts of energy

through combined heat and power (CHP) facilities.

While the UK is leading in terms of climate change legislation, it is

expected that other advanced economies will follow suit and SLR

expects its work in the sustainability field in these jurisdictions to

increase rapidly over the next 12 to 18 months.

PAGE : 22


In all of the business sectors in which SLR operates, 2007

was a defining year in terms of the sustainability agenda.

The Stern Report, issued by the British government in

October 2006, identified the need for action arising from

the potential effect of climate change on the world’s

economy and forecasted that spending of 1% of global

GDP per annum on climate change mitigation could be

sufficient to prevent an eventual reduction of 20% in global

GDP due to the effects of unmitigated climate change.

While there is, in some quarters, still some uncertainty

as to what courses of action to follow, there are few,

if any, of SLR clients that are unaware of the challenging

issues that lie ahead, both in business and physical terms.

Sustainability


PAGE : 23

Summary

Sustainability is increasingly becoming the key element in all types of development

across the globe. This is driven by regulation, public opinion and increasingly,

commercial imperative. In order to advise effectively on sustainability, consultants

must have a broad range of experts on issues as diverse as ecology, infrastructure,

energy, waste and water management and green buildings. Given the breadth of

expertise required, only a handful of major environmental consultancies, including

SLR, can provide clients with full service advice.

With the difficulties in recruiting quality staff, the barriers to entry are and will

remain high, giving the established consultants a major market advantage.

SLR’s strong management team and reputation, extensive range of expertise, and

our existing and developing international presence, mean that the Group is

extremely well placed to exploit the new opportunities presented by sustainability,

in addition to the existing areas of work which continue to develop significantly.

David Richards

Chief Executive

Date : 23 May 2008

Brent Cross Cricklewood - An example of state-of-the-artsustainable development

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,

400,000 m2 of commercial development and over 100,000 m2 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). 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 these issues and its experience in the delivery of

sustainable and realistic solutions to the requirements for low

carbon developments.


Board of Directors

John Crabtree (57) – Non Executive Chairman

John joined as Non Executive Chairman of SLR Holdings Limited in October 2004. 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 Theatre Trust.He is also a Director of Advantage West Midlands, Warwick Racecourse Company Ltd, a non-executive Director of StafflineRecruitment Group plc and President of the Birmingham Chamber of Commerce.

David Richards (49) - Chief Executive

David is the Chief Executive of SLR Holdings Limited and Chairman of SLR Consulting Limited, SLR International Corporation and SLR Consulting (Canada) Limited, with overall responsibility for the management of the group. Having established the company in1994, he has led the management team responsible for developing the Group into one of the fastest growing and most profitableenvironmental consultancies in the UK.

Prior to joining SLR, David was a Senior Manager with Golder Associates, a major international environmental consultant, where hewas responsible for the management of the environmental group in the UK and played a key role in the European operations ofGolder Associates. David is a Chartered Engineer by profession.

Neil Penhall (43) - Executive Director

Neil has been Managing Director of SLR Consulting Ltd since 2001 and is also an Executive Director of SLR Holdings 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 Rattue is the President of SLR International Corp, responsible for the U.S. operations, as well as an Executive Director ofSLR Holdings 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 from the University of Birmingham. He also serves as a Director of the British-American Business Council (Pacific Northwest).

PAGE : 24

The SLR Holdings 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 ISIS Equity Partners.

Alan Sheppard (44) - Executive Director

Alan is an Executive Director of SLR Holdings Limited. Having joined in 1994, he has overall responsibility for the Energy and theFinancial & Professional business areas.

He has over 20 years of consulting experience, primarily in contaminated land and geotechnical engineering, in the UK and Canadahaving previously founded and managed SEACOR in Vancouver. Alan has extensive experience, including managing the assessmentand remediation of over 1500 petroleum facilities; supporting property transactions, planning applications and regulator liaisonthroughout the UK and Canada; and acting as an expert witness on such matters.

Faramarz Bogzaran (56) - Executive Director

Faramarz is President of SLR Consulting (Canada) Limited where he manages the SLR Group's Canadian operations and wasappointed as a director of SLR Holdings Limited on 11 September 2007.

Faramarz has 27 years of technical and management experience and joined SEACOR Environmental in 1998 as its President and CEObefore completing a management buy out in 2003. Over a 10 year period, Faramarz grew SEACOR's annual revenue from CAN $6Mto CAN $32M, and expanded the company so that it now has 200 employees across 18 offices.

Prior to joining SEACOR, Faramarz held a variety of executive management positions with environmental consultancy companies,waste management and remedial contracting organisations.

Faramarz serves the National Steering Committee on Contaminated Sites and the Canadian Center for Environmental EducationNational Advisory Committee.

Liz Jones (33) - Non Executive Director

Liz joined as a Non-Executive Director of SLR Holdings Limited at the time of ISIS Equity Partners’ investment in SLR. She is aDirector within the London team of ISIS, which undertakes investments in growing businesses such as SLR.

Liz joined ISIS in 2001 from Barclays plc where she spent seven years, the latter four within Barclays Ventures, where she completedeight private equity investments across a number of industry sectors. In addition to SLR, Liz is a Non-Executive Director of CareManagement Group Limited and Pathway Care Group Limited.

Nish Malde (49) - Non Executive Director

Nish joined in December 2002 as a Non-Executive Director of SLR Holdings Limited to assist the Board with strategyand corporate governance.

He was formerly Group Financial Director and Company Secretary of Country & Metropolitan PLC (“C&M”), between 1998 and 2005,where he was instrumental in the Group’s flotation on the main market of the London Stock Exchange in December 1999. During histime at C&M he was responsible for the Group’s finances, investor relations and provided close management support to the CEO.The Group grew from a market capitalisation of £7m to £75m upon its disposal in April 2005. He is also on the board of AIM listedcompany, Billam PLC, and is a director of property development company 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

Report of the directors for the year ended 26 October 2007

The directors present their report together with the

financial statements for the year ended 26 October 2007.


PAGE : 26

Results and dividends

The profit and loss account is set out on page 32 and shows the profit for the year.

During the year an interim dividend of £1,347,300 (2006 - £71,250) was paid on the

company's A1 ordinary shares and an interim dividend of £276,296 (2006 - £Nil) was

paid on the company’s A2 ordinary shares. Interim dividends of £4,127,030 (2006 -

£Nil) were paid on the company’s B ordinary shares. In accordance with the

company's Articles of Association, final dividends of £Nil (2006 - £71,250) on the

company's A1 ordinary shares and £Nil (2006 - £76,558) on the company's B ordinary

shares are payable.

Principal activities

The principal activity of the company is that of a holding company for the SLR

group of companies, which provide environmental consultancy services from offices

in the UK and US.

Trading review

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 34. 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 the key performance indicators (KPI’s) confirms the strong

performance of the business. When compared to year ended 27 October 2006, Group

revenue increased by 33%, with revenue per employee down from £89k to £85k. EBITA

increased by 37% with earnings per employee remaining at £15k. Client retention

remained excellent with almost 50% of the revenue derived from clients with whom

SLR has worked for 5 years or more.

Shareholder Structure

The shareholder structure at 26 October 2007 was as follows:

ISIS 27.55%

Directors and senior management 61.68%

Other employees 10.77%

Directors and their interests

A list of the present directors of the Group is given on page 24.

The directors of the company during the year, were as follows:

D G Richards

A J Sheppard

K G Rattue

N C Penhall

N Malde

J Crabtree

E Jones

F Bogzaran (appointed 11 September 2007)

At 26 October 2007, third party indemnity insurance for the benefit of the company’s

directors was in force.

Charitable donations

During the year the group made charitable donations of £6,283 (2006 - £3,020).

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

year 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 year. 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

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.

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. The group has trading entities within the USA and Canada to mitigate the

exposure to foreign currency risk in these markets. The Group does not use derivative

financial instruments.

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.


PAGE : 28


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)

Liz Jones (ISIS Equity Partners 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

three operating companies; SLR Consulting Limited, SLR Consulting (Canada) Limited

and SLR International Corp., which operate from networks of offices in the UK, Canada

and the US 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 year. Had

we 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.

Similarly, the records show that we do not currently employ any disabled staff, but

should we do so they will be treated in accordance with our equal opportunities policy

and be actively encouraged to partake in the career development and professional

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.

In 2006, SLRNet, the Group’s intranet site, was launched which provides a wide range of

information to all staff including all employment policies, detailed financial information,

as well as news on 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 acquisition 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

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 takes health and safety issues extremely seriously and has all appropriate

procedures in place. The Group normally undertakes work under its Standard

Conditions of Engagement. Where this is not the case, all non-standard contracts are

reviewed by a Director and referred to the Group’s legal advisors where appropriate.

The Group has a professional HR team who work with the Group’s legal advisors to

minimise risks associated with employment law. Notwithstanding the above, certain

sectors of the Group’s business, such as development clients, can be litigious, and there

is always some risk with employees. The overall legal and compliance risk is considered

low to moderate.

Financial risks mainly centre around the leveraged nature of the business, although the

level of 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 and Canadian 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.


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.

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.

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 have expressed their willingness to continue in office and a

resolution to re-appoint them will be proposed at the annual general meeting.

By order of the Board

J M Green

Secretary

Date : 23 May 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 26 October 2007 and of its profit for the year 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 26 October 2007;

• 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 : 23 May 2008

To the shareholders of SLR Holdings Limited

We have audited the group and parent company financial

statements (the ''financial statements'') of SLR Holdings

Limited for the year ended 26 October 2007 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

PAGE : 32


Consolidated profit and loss account for the year ended 26 October 2007

Turnover

Cost of sales

Gross profit

Administrative expenses

Operating profit before goodwill amortisation

Goodwill amortisation

Operating profit

Interest receivable

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

18

3 1 ,646,22 2

(1 4,7 78,66 1 )

1 6,867,56 1

(1 2,092,042)

5,627,497

(85 1 ,978)

4,7 75,5 1 9

3 24,4 1 7

(1 ,07 3,380)

4,026,556

(1 ,486,679)

2,5 39,87 7

2,7 34,542

(1 ,450, 1 98)

1 ,284, 344

(1 ,096,856)

302,00 1

(1 1 4,5 1 3)

1 87,488

2 3,798,6 1 4

Acquisitions

2007£

28,9 1 1 ,680

(13, 3 28,46 3)

1 5,583,2 1 7

(10,995 , 1 86)

5, 3 25,496

(7 3 7,465)

4,588,03 1

ContinuingOperations

2007£

Total

2007£

Continuing Operations

Total

2006£

( 1 1 , 3 1 0,296)

12 ,488, 3 1 8

(9, 1 03 ,94 1 )

4, 1 2 1 ,840

(7 3 7,463)

3 ,384,3 7 7

122,640

(820,947)

2 ,686,070

(1 ,03 1 ,022)

1,65 5,048

Profit for the financial year

Currency translation differences on net investments

Note

18 1,65 5,048

(24,602)

1 ,6 30,446

2006

£

2,5 39,87 7

60, 700

2,600,5 77

2007

£

Consolidated statement of total recognised gains and losses for the for the year ended 26 October 2007

The notes on pages 36 to 51 form part of these financial statements

All amounts shown relate to continuing activities.

PAGE : 33

Consolidated balance sheet at 26 October 2007

Fixed assets

Note

2007

£

2007

£

2006

£

Tangible assets 10 1 , 1 48, 1 55 725 , 1 89

Intangible assets

Current assets

Debtors

Cash at bank and in hand

Creditors: amounts falling duewithin one year

1 1 1 6,7 94, 1 69 12,8 1 7, 3 4 3

1 7,942,32 4 13,542,5 3 2

1 4,0 1 4,497

3,365,659

6,847,080

3,589, 1 3 7

1 7, 380, 1 56 10,436,2 1 7

(1 2,6 74,75 1 )

1 3

1 5 (6,7 28, 3 36)

4,705,405Net current assets 3,707,88 1

Creditors: amounts falling dueafter more than one year (1 5,766,856)1 6 ( 7,592,822)

6,880,87 3 9,6 5 7,5 9 1

Capital and reserves

36,368Called up share capital 32 ,95 1

602,606Share premium account 450 ,1 89

6,695 ,677Merger reserve 6,5 1 5 ,6 4 3

(45 3,7 78)

1 7

1 8

1 8

1 8

1 9

Profit and loss account 2,658,808

6,880,87 3Shareholders’ funds 9,65 7,59 1

2 2,647,729Total assets less current liabilities 1 7,250,4 1 3

2006

£

The financial statements were approved by the Board and authorised for issue on 23 May 2008


D G Richards

Director

PAGE : 34


Company balance sheet at 26 October 2007

Fixed assets

Note

2007

£

2007

£

2006

£

Investments 1 2 1 7,97 7,677 10,888,8 1 8

Current assets

Debtors


Creditors: amounts falling duewithin one year

5,5 78,787

2,562,62 1

3,067, 1 50

3,2 34,690

8, 1 4 1 ,408 6,30 1 ,840

(9,68 3,7 1 0)

1 3

1 5 (9,202,8 26)

(1 ,542 ,302)Net current liabilities (2 ,900,986)

Creditors: amounts falling dueafter more than one year (1 5,72 2, 1 6 1 )1 6 (7,504,692)

7 1 3,2 1 4 483 , 1 40

Capital and reserves

36,368Called up share capital 32 ,95 1

602,606Share premium account 450 ,1 89

74,240

1 7

1 8

1 8

1 9

Profit and loss account -

7 1 3,2 1 4Shareholders’ funds 483 , 1 40

1 6,4 35,3 75Total assets less current liabilities 7,987,83 2

2006

£

The financial statements were approved by the Board and authorised for issue on 23 May 2008


D G Richards

Director

PAGE : 35

Consolidated cash flow statement for the year ended 26 October 2007


2007

£

2007

£

2006

£

2006

£

Net cash inflow from operating activities

Note

22 5,20 1 ,299 4, 1 84,96 3

Returns on investments and servicing of finance

Interest received 1 56,5 74 1 22,640

Interest paid (1 , 309,7 3 3) (46 1 ,78 1 )

Interest element of finance lease rental payments (9,749) (1 3,606)

Non equity dividends paid (7 1 ,250)

(265,4 1 1 )

(1 42,500)

-

(1 ,06 1 ,4 1 4) (904,89 1 )

(95 , 1 24)

UK corporation tax paid

Overseas tax paid (1 1 ,6 16)

(1 , 1 56,5 38) (9 1 6,507)

Capital expenditure and financial investment

Purchase of tangible fixed assets

Sale of tangible fixed assets

(550,493) (382,465)

3 ,260 24,295

(547,2 3 3) (358 ,1 70)

Acquisitions and disposals

Purchase of trade

Purchase of subsidiary undertakings

Bank balances acquired with subsidiary undertakings

(1 3,8 39) -

(4,64 3,65 5) -

670,878 -

(3,986,6 1 6) -

(5,827, 1 84) (62,7 1 3)

(7 ,8 1 5 ,84 1 )

Equity dividends paid

Cash (outflow)/inflow before use of liquid resources and financing 2,3 52,326

Financing

1 54,702Share capital issued 2 7,088

Loans advanced in the year -

(5,5 20,229)Loan repayments in the year (1 , 296,93 7)

(75,002)Capital element of finance lease rental payments (72,042)

(4,294)Shares acquired by employee benefit trust (703)

7 ,306,485 (1 , 342,594)

(509, 356)23, 24(Decrease)/Increase in cash 1 ,009,7 32

(1 ,499,569) (495 ,247)Net cash outflow from returns oninvestments and servicing of finance

Taxation

(2,498,692)Loan stock repayments in the year -

1 5,2 50,000

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 Holdings

Limited and all of its subsidiary undertakings as at 26 October 2007 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

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) derived from the provision of work

for clients during the year.

Services provided to clients during the year, which at the balance sheet date have

not been billed, have been recognised as turnover in accordance with Financial

Reporting Standard 5 'Reporting the substance of transactions': Application Note G

'Revenue Recognition'. Turnover recognised in this manner is based on an assessment

of the fair value of the services provided at the balance sheet date as a proportion

of the total value of the engagement. Provision is made against unbilled amounts on

those engagements where the right to receive payment is contingent on factors

outside the control of the company. Unbilled revenue is included in accrued income.

Notes forming part of the financial statements for the year ended 26 October 2007

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

Leasehold improvements - 5 years

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 to make

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 year

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.


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 year and their balance sheets translated into sterling at the rates of exchange ruling

on the balance sheet date. Exchange differences which arise from translation of the

opening net assets and results of foreign subsidiary undertakings and from translating

the profit and loss account at average rate are taken to reserves.

Pension costs

Contributions to the Group's defined contribution pension schemes are charged to the

profit and loss account in the year 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 year in which it is incurred.

FRS 20 'Share based payment'

The group has adopted FRS 20 'Share based payment' during the year ended 26

October 2007.

FRS 20 'Share based payment' requires the recognition of share-based payments at

fair value at the date of grant. Prior to the adoption of FRS 20, the group recognised

the financial effect of share based payments in the following way: when shares and

share options were awarded to employees a charge was made to the profit and loss

account based on the difference, if any, between the market value of the company's

shares at the date of grant and the option exercise price in accordance with UITF

Abstract 17 (revised 2003) 'Employee Share Schemes'. The credit entry for this charge

was taken to the profit and loss reserve and reported in the reconciliation of

movements in shareholders' funds.

In accordance with the transitional provisions of FRS 20, the standard has been

applied retrospectively to all grants of equity instruments after 7 November 2002

that were unvested as of 1 January 2006.

The impact of share based payments is a net charge to the profit and loss account

of £31,250 (share-based payment expense net of deferred tax of £10,507). The charge

in respect of prior years is immaterial. The share based payment charge is included

within administrative expenses.

Employee benefit trust

The cost of the company’s shares held by an employee benefit trust (“EBT”) is deducted

from shareholders’ funds in the company and 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 company.

PAGE : 38



3 Employees

4 Directors

8,954,2 1 2

979,0 1 9

-

10,296, 1 82

1 5,000

1 ,283

-

1 6,283

Wages and salaries

Staff costs consist of:

Social security costs

Shared based payments

362,95 1 -Other pension costs

Group2006

£

1 1 ,982, 1 68

1 ,382,008

4 1 ,75 7

1 3,966,025

560,092

Group2007

£

Company2006

£

2 5,000

1 ,26 1

-

26,26 1

-

Company2007

£

The average number of employees, including directors, during the year analysed by category was as follows:

236

3 3

269

-

1

1

Technical

Management and administration

Group2006

£

3 2 6

47

3 7 3

Group2007

£

Company2006

£

-

1

1

Company2007

£

3 36,258 42 3,46 3Fees and remuneration for management services

1 09,584 1 7,995

445 ,842 44 1 ,458

Emoluments of the highest paid director:

98,247 1 28, 1 65

6,506

Emoluments

Pension 1 ,22 7

Payments to defined contribution pension schemes

Directors' emoluments consist of:

2007

£

2006

£

24,443,424

4,478,064

84,940

3 1 ,646,2 22

1 9,862,6 1 6

3,4 32,00 1

-

2 3,7 98,6 1 4

United Kingdom

United States

Rest of the World

2,08 3,5 54 -Canada

5 56,240 503,997Europe

2007

£

2006

£

During the year, the highest paid director exercised 7,773 share options (2006 - 6,000 options).

There were 4 (2006 - 4) directors in the Group's defined contribution pension schemes during the year and two directors who exercised share options during the year (2006 - 1).

2 Turnover

Turnover is wholly attributable to

the principal activity of the group

and arises in the following

geographic markets:

PAGE : 39

5 Operating profit

6 Interest payable and similar charges

Depreciation

This has been arrived at after charging/(crediting):

4 3 1 ,082 308,9 1 4- owned assets

72,265 74, 3 5 7- leased assets

85 1 ,978 7 37,463Amortisation

Hire of plant and machinery

3 50,95 1 2 95 ,1 5 5- operating leases

Hire of other assets

676,276 508,7 5 4

9,7 50 8,500

- operating leases

Fees payable to the company’s auditor for theaudit of the company’s annual accounts

56,200 48,276- the audit of the company’s subsidiaries

pursuant to legislation

1 6,850 16,900- tax services

4 1 ,900 1 3,405- all other services

(3 ,260) (2 1 , 74 3)Profit on sale of fixed assets

Fees payable to the company’s auditor andits associates for other services:

2007

£

2006

£

7 Taxation on profit from ordinary activities

The tax assessed for the year is higher than the standard rate of corporation tax

in the UK. The differences are explained below:

2007

£

2006

£

1 ,3 1 5,5 5 2 1 ,020,298UK corporation tax on profits of the year

25 2,584 1 1 ,6 1 6Overseas tax

(360) (892)Adjustment in respect of previous years

1 ,567,7 76 1 ,03 1 ,022

2007

£

2006

£

4,026,5 56 2,686,070

1 ,207,967 805,82 1

Profit on ordinary activities before tax

Profit on ordinary activities at the standardrate of corporation tax in the UKof 30% (2006 - 30%)

Effects of:

5 9, 1 4 1 96,5 75Expenses not deductible for tax purposes

247,765 2 1 4,989Goodwill on consolidation

30,835 (3,64 1 )Depreciation for the yearin excess of capital allowance

(9,205) (83 ,586)Losses utilised

(360)

(7 ,93 1 )

(28,5 3 3)

1 1 ,29 1

26,959

22,589

(892)Adjustment in respect of previous years

7,258 1 ,75 6Other items

1 ,567,7 76 1 ,0 3 1 ,02 2Current tax charge for year

-Movement in short term timing differences

-Share option deductions

-Tax credits receivable

-US state taxes

-Tax rate differences

2007

£

2006

£

946,459 305, 3 78Bank loans and overdrafts

67,3 3 2 230,989Other loans

36, 1 7 3 5 1 ,9 1 6Foreign exchange differences

9,749 1 3,606Hire purchase and finance leases

1 3 ,667 -Other interest

- 142, 500Dividends on A1 ordinary shares (13.22p per share)

- 76,5 58

1 ,07 3,380 820,94 7

Dividends on B ordinary shares (2.49p per share)

Current tax

-

1 ,03 1 ,0221 ,486,679

(8 1 ,097)Origination and reversalof timing differences

Deferred tax

PAGE : 40



Fixturesand fittings

£

MotorVehicles

£

Computerequipment

£

Leaseholdimprovements

£

Total

£

Cost

266,67 3 10,928 1 ,654,980 - 2 , 1 5 2,5 7 3At 28 October 2006

64,958 - 4 1 3,2 1 7 - 5 50,493Additions

(1 3, 1 88) - (1 8,43 1 ) - (3 2,947)Disposals

27, 740 609 2 3,469 5,6 1 3 70,270Exchange differences

830,3 1 3 29,250 2,7 7 3,4 1 9 8 1 ,490 4,2 1 9,280At 26 October 2007

Depreciation

1 86,05 3 3,3 4 1 1 , 1 09, 1 2 1 - 1 ,427,384At 28 October 2006

46,488 2, 1 86 387,448 1 ,438 503 , 347Provided for the year

(1 3, 1 88) - (1 8,43 1 ) - (3 2,947)Disposals

2 3,286 3 27 2 3,8 1 4 4,268 60, 1 88Exchange differences

622,548 1 1 ,660 2,042,226 63 , 1 60 3,07 1 , 1 25At 26 October 2007

Net book value

207,765 1 7 ,590 7 3 1 , 1 93 1 8,3 30 1 , 1 48, 1 55At 26 October 2007

80,620 7,58 7 5 45,859 - 7 25, 1 89At 27 October 2006

Assets held under finance leases and hire purchase contracts:

Net book value

45, 1 55 - 42,324 - 1 06,046At 26 October 2007

1 4,784 - 1 0 1 , 390 - 1 4 3,097At 27 October 2006

Group

484, 1 30 1 7,7 1 3 700, 1 84 75 ,877 1 ,478,89 1Acquired with subsidiaries

3 79,909 5,806 5 40,274 5 7,454 1 , 1 1 3, 1 5 3Acquired with subsidiaries

Plantand machinery

£

2 1 9,992

72,3 1 8

(1 , 3 28)

1 2,839

504 ,808

1 28,869

65,787

(1 , 3 28)

8,49 3

3 3 1 ,5 3 1

1 7 3,277

9 1 , 1 2 3

1 8,567

26,92 3

200,987

1 29,7 1 0

8 Dividends

9 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 year includes a profit after tax of £5,787,403 (2006 - £709) dealt with in the financial statements of the parent company

2007

£

2006

£

4, 1 27,030 -B ordinary - (£1.25p per share)

Interim dividend

1 , 347,300 -A1 ordinary - (£1.25p per share)

276,296 -

5,7 50,626 -

A1 ordinary - (£1.25p per share)

10 Tangible assets

PAGE : 41

12 Fixed asset investments Subsidiary undertakings

The principal undertakings in which the company's interest at the year end is 20% or more are as follows:

Cost and net book value

At 28 October 2006

Additions

Company Country ofincorporationor registration

Class ofshare capital

held

Proportionof share

capital held

Natureof business

SLR Consulting Limited

SLR Group Limited

SLR International Corporation

England and Wales

England and Wales

USA

Ordinary

Ordinary

Ordinary

100%

100%

100%

Environmentalconsultants

Holding company


Name

SLR Consulting (Canada) Limited Canada OrdinaryPreferred

100%100%


Insite Environments Limited England and Wales Ordinary 100% Environmentalconsultants

SLR Intermediate HoldingCompany Limited

England and Wales Ordinary 100% Holding company

Shares in Groupundertakings

£

Details of investments in dormant subsidiary undertakings held by SLR Group Limited and SLR Intermediate

Holding Company Limited, are contained in those companies' financial statements.

The additions to fixed asset investments represent the purchase

of 100% of the share capital of Insite Environments Limited and

Seacor Environmental Inc. (now SLR Consulting (Canada) Limited

during the year. Further details of these acquisitions is contained

in note 26.

11 Intangible assets

The goodwill arising on consolidation is being amortised over the directors best estimate of its useful economic life, being between five and twenty years.

The purchased goodwill is being amortised over the directors best estimate of its useful economic life, being three years.

The addition to purchased goodwill during the year relates to the acquisition, in September 2007, of the trade of Udaloy Environmental by the company’s subsidiary, SLR

International Corporation. No assets or liabilities were acquired as part of this transaction.

Goodwill onconsolidation

£

Purchasedgoodwill

£

Total

£

Cost

1 4, 3 32,626 7 7,830 1 4,4 1 0,456At 28 October 2006

- (458) 7 ,629Exchange differences

1 9,097, 1 24 9 1 ,2 1 1 1 9,305 ,759At 26 October 2007

Amortisation

1 ,5 52,699-

4,642

40,4 1 4 1 ,5 93, 1 1 3At 28 October 2006

- - 4,642Exchange differences

2,3 78,5827 1 ,760 6 1 ,248 2,5 1 1 ,590At 26 October 2007

Net book value

1 6,7 1 8,5 4245,664 29,96 3 1 6,7 94, 1 69At 26 October 2007

1 2,7 79,927- 37,4 1 6 1 2,8 1 7, 3 4 3At 27 October 2006

Group

-6 1 ,85 7 - 6 1 ,85 7Acquired with subsidiaries

825,88 35,26 1 20,834 85 1 ,978Provided for the year

Otherintangibles

£

-

- - 1 09,3 3 7Acquired with subsidiaries 1 09,3 3 7

4,764,498 1 3,8 39 4,7 78,3 37Additions -

8,087

1 1 7,424

1 0,888,8 1 8

7,088,859

At 26 October 2007 1 7,977,677

15 Creditors: amounts falling due within one year

- -Bank overdraft (secured)

1 ,949,864 1 ,236,000Bank loans (secured)

1 56,55 7 1 4,2 5 1Trade creditors

6,2 5 3,7 34 7,3 95,298Amounts owed to Group undertakings

- -Taxation and social security

2 3,97 7

1 ,275,605

1 ,838,085

-

874,7 75

309,855

1 ,99 3,662

3,976,3 2 1

-

1 , 1 78,8 1 7

- -Corporation tax 402, 1 7 31 ,06 1 ,439

- -Obligations under finance leases and hire purchase contracts 74,50459,788

1 , 1 3 9,25 7 1 49, 1 98Other creditors 1 49, 1 981 , 1 3 9,25 7

- -Payments on account 692,5 40400,58 3

1 84,298 408,079Accruals 1 , 397,4792,5 55,029

9,683,7 1 0 9,202,8266,728,3 361 2,674,7 5 1

Company 2007

£

Company 2006

£

Group 2006

£

Group 2007

£


PAGE : 42


13 Debtors

14 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:

Company 2007

£

Company 2006

£

- -Trade debtors

5,5 5 3,562 2,86 3,464Amounts owed by Group undertakings

- 186,67 5Other debtors

25,225 1 7 ,0 1 1Prepayments and accrued income

- -Amounts recoverable on contracts

5,5 78,787 3,067, 1 50

Group 2006

£

5,948,56 5

-

222,469

6 76,046

-

6,847,080

Group 2007

£

1 0,666,878

-

1 62,420

3,052,384

1 32,8 1 5

1 4,0 1 4,497

Included within other debtors is an amount of £151,933 (2006 - £Nil) which falls due for payment after more than one year

Group £

At 28 October 2006

Transferred from profit and loss account

Exchange differences

At 26 October 2007

Acquired with subsidiary

-

8 1 ,097

4,525

1 3 2,8 1 5

47, 1 9 3

2007

£

2006

£

89,442 -Accelerated capital allowances

3 3 ,8 39 -Short term timing differences

9,5 34 -

1 3 2,8 1 5 -

Unrelieved tax losses

16 Creditors: amounts falling due after more than one year

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 fixed rate loan stock was secured by a fixed and floating charge over the assets of the company and certain of its subsidiary undertakings until its repayment during the year.

The 5% unsecured loan stock was repaid during the year.

Other creditors falling due after more than one year includes an amount of £2,365,000 representing A1 ordinary shares of £0.01 each and the related premium on issue, which

have been reclassified as liabilities under FRS 25.

Included within other creditors (both short and long term) are amounts totalling £2,554,930 which represent the estimated deferred consideration payable in connection with

the acquisition of Insite Environments Limited and Seacor Environmental Inc. (now SLR Consulting (Canada) Limited).

Company 2007

£

Company 2006

£

Group 2006

£

Group 2007

£

PAGE : 43

Within one year

Maturity of debt:

Group

In more than one year but not more than two years

In more than two years but not more than five years

After five years

Company

2007Bank Loans

£

1 ,99 3,662

2,2 34,947

8,4 78,602

1 ,2 36,7 38

1 3,943,949

2007Deferred

Consideration£

1 , 1 3 7 ,867

62 3,0 1 3

7 94,050

-

2,5 54,930

2007Finance Leases

£

5 9,788

32, 1 75

2,3 3 1

-

94,294

2006Bank Loans

£

1 ,2 75 ,605

1 ,2 5 3,290

1 ,405,000

-

3,9 3 3,895

2006Loan Stock

£

-

-

2,498,692

-

2,498,692

2006Finance Leases

£

74,504

49,3 32

2 1 ,508

-

1 45, 344

Within one year

In more than one year but not more than two years

In more than two years but not more than five years

After five years

1 ,949,864

2,2 28,865

8,4 74,495

1 ,2 36,7 38

1 3,889,962

1 , 1 3 7 ,867

62 3,0 1 3

7 94,050

-

2,5 54,930

-

-

-

-

-

1 ,2 36,000

1 ,2 36,000

1 ,405,000

-

3,87 7,000

-

-

2,498,692

-

2,498,692

-

-

-

-

-

1 1 ,940,098 2,64 1 ,000Bank loans (secured)

- 1 ,97 7,3 3 7Fixed rate loan stock 2010 (secured)

- 5 2 1 , 3555% unsecured loan stock

- -Obligations under finance leases and hire purchase contracts

3,782,06 3 2,365,000Other creditors

2,658,290

1 ,97 7,3 3 7

5 2 1 , 355

70,840

2,365,000

1 1 ,950,287

-

-

3 4,506

3,782,06 3

1 5,722, 1 6 1 7,504,6927,592,8221 5,766,856

In addition to the above amounts, other creditors amounting to £2,365,000 for both the company and group fall due for repayment after more than five years in respect of the A1

ordinary shares of £0.01 each.

Included within bank loans for the Group and Company are amounts totalling £13,889,962, of which £1,236,738 falls due for repayment after five years. These amounts are repayable

by quarterly instalments and bear interest at a rate of 2.25% above the Lloyds Bank plc base rate.



PAGE : 44

The following events took place during the year in respect of the company’s

share capital:

- on 27 March 2007, the company passed a resolution to increase the authorised share

capital by the creation of an additional 750,000 B ordinary shares of £0.01 each;

- on 4 June 2007, the company issued 30,000 B ordinary shares of £0.01 each as part of

the consideration for the acquisition of Insite Environments Limited. The fair value of

each share issued was £1.60 but the company has taken advantage of the merger relief

provisions of the Companies Act 1985 and recorded these shares at their nominal value

in its own balance sheet. The difference between the fair value and nominal value of

the shares issued has been included within the merger reserve in the consolidated

financial statements; and

- on 11 September 2007, the company issued 83,229 B ordinary shares of £0.01 each as

part of the consideration for the acquisition of SLR Consulting (Canada) Limited. The fair

value of each share issued was £1.60 but the company has taken advantage of the

merger relief provisions of the Companies Act 1985 and recorded these shares at their

nominal value in its own balance sheet. The difference between the fair value and

nominal value of the shares issued has been included within the merger reserve in the

consolidated financial statements.

In addition to the above, 228,463 (2006 – 41,600) B ordinary shares of £0.01 each were

issued for a total consideration of £154,702 (2006 - £27,040).

The holders of the A1 ordinary shares are entitled to a variable cumulative preferential

dividend, as specified in the company's Articles of Association, except that they are not

entitled to such dividend if and to the extent that the payment in respect of any

financial year exceeds 50% of the total amount of profit available for distribution for

that year.

The holders of the B ordinary shares are entitled to a cumulative dividend, for the

financial years of the company ending 31 October 2005 and 31 October 2006,

equivalent to 14% of the Net Profit (as defined in the company's Articles of Association),

up to a maximum in any one financial year of £140,000.

The holders of the B ordinary shares are also entitled to serve notice on the company

that they wish to convert these shares into an equal number of Deferred shares. The

holders of the Deferred shares are not entitled to attend or vote at any general meeting

of the company, or participate in any profits or assets of the company.

2007£

2006£

1 0,7 79 1 0,7 79A1 ordinary shares of £0.01 each

3,243 3,243A2 ordinary shares of £0.01 each

45,087 3 7,587B ordinary shares of £0.01 each

5 9, 1 09 5 1 ,609

2006Number

1 ,077,840

3 24,25 3

3,7 58,7 3 1

5, 1 60,824

2007Number

Authorised

2007£

2006£

2006Number

2007Number

Allotted, called up and fully paid

1 ,077,840

3 24,25 3

4,508,7 3 1

1 0,7 79 1 0,7 79A1 ordinary shares of £0.01 each 1 ,077,8401 ,077,840

2,2 1 0 2 ,2 1 0A2 ordinary shares of £0.01 each 2 2 1 ,03 72 2 1 ,03 7

34, 1 58 30,74 1B ordinary shares of £0.01 each 3,074,2 1 13,4 1 5 ,903

36,368 32,95 13,2 95,2483,6 36,940

5,9 1 0,824

17 Share capital

PAGE : 45

On a share sale, where the ordinary share value is less than the amount which results

from a value per ordinary share of £2.19 and, save as set out in the first proviso below,

on a return of assets on liquidation or capital reduction or otherwise, the ordinary share

value or assets of the company remaining after the payment of its liabilities shall be

applied as follows:

(i) first, in paying to the holders of the A1 ordinary shares of £0.01 each, the issue price

per A1 ordinary share, together with any arrears of the cumulative preferential dividend,

or return of capital plus a premium of 45p per A1 ordinary share;

(ii) second, in paying to the holders of the B ordinary shares the issue price per B

ordinary share together with any arrears of the cumulative dividend;

(iii) and the balance of such value or assets shall be distributed amongst the holders of

the A ordinary shares and B ordinary shares pari passu, provided that once the holders

of these shares have received the sum of £1,000,000 per share, the holders of Deferred

shares shall be entitled to a payment of £1 per Deferred share, with the balance being

distributed amongst the holders of the A ordinary and B ordinary shares pari passu.

In the event that on a return of assets on liquidation or capital reduction or otherwise

the amount payable to the holders of the A ordinary shares would result in a payment

of £2.19 or more per A ordinary share, the provisions of (i) and (ii) above will not apply.

Additionally, on a return of assets on liquidation or capital reduction or otherwise, the

amount payable to the holders of the A ordinary shares shall not exceed 50% of the

assets of the company available for distribution.

Warrants

The company has issued warrants to subscribe for up to 103,216 A2 ordinary shares at

a price of £0.01 per share. Any warrants not exercised by the time of the earlier of

(i) a share sale or listing and (ii) 1 May 2015 will lapse.

7 February 2005

Date of grant

EMI share option scheme

28 March 2007

27 January 2005

7 February 2005

8 August 2005

28 March 2007

11 September 2007

Grantedduring

the year

1 07,4 1 8

-

1 07,4 1 8

Exercisedduring

the year

(1 3 7,400)

-

(1 85,200)

Lapsed during

the year

(900)

(1 ,000)

(7 ,900)

Optionscarried

forward

86,300

1 06,4 1 8

3 7 7,9 1 8

ExercisePrice

£

0.65

1 .60

ExercisePeriod

November 2004 - November 2009

November 2007 - November 201 1

Optionsbroughtforward

2 24,600

-

6 March 2006 - (47,800) (6,000) 1 85,200 0.76 November 2006 - November 20102 39,000

46 3,600

Unapproved share option scheme

-42,520 (22,690) (200) 1 9,630 0.65 November 2004 - November 2009

-1 8,400 (4,600) - 1 3 ,800 0.65 November 2004 - November 2009

-1 4,000 (3,500) - 1 0,500 0.65 November 2005 - November 2009

28,000- - - 28,000 1 .60 November 2007 - September 201 1

1 1 8,000- - (2 ,000) 1 1 6,000 1 .60 September 2008 - September 2010

1 46,0001 3 7,285 (43,263) (3 ,800) 2 36,22 2

1 January 2006

6 March 2006

-1 9,500 (3,900) - 1 5 ,600 0.65 November 2006 - November 2010

-42,865 (8,5 7 3) (1 ,600) 3 2,692 0.76 November 2006 - November 2010

Share options



PAGE : 46

Sharepremium account

£

Mergerreserve

£

Profit and lossaccount

£

450, 1 89 6,5 1 5,6 4 3 2,658,808At 28 October 2006

1 5 2,4 1 7 1 80,034 -Share capital issued in the year

Group

Company

- - 2,5 39,87 7Profit for the year

- - (5 ,750,626)Dividends

- - 60,700Exchange differences

- - (4,294)Shares acquired by employee benefit trust

- - 4 1 ,7 57Share based payment

602,606 6,695,67 7 (45 3,7 78)At 26 October 2007

450, 1 89 -At 28 October 2006

1 5 2,4 1 7 -Share capital issued in the year

- 5,787,403Profit for the year

- (5 ,7 50,626)Dividends

- (4,294)Shares acquired by employee benefit trust

- 4 1 ,7 57Share based payment

602,606 74,240At 26 October 2007

Sharepremium account

£

Profit and lossaccount

£

5,787,403 709Profit for the year

(5 ,750,626) -Dividends

36,777 709

1,65 5,048

-

1,65 5,048

2,5 39,87 7

(5,750,626)

1 5 5 ,8 3 4 2 7,088Share capital issued in the year

- -Exchange differences

2 7,088

(24,602)

3 35 ,868

60,700

(4,294) (709)Shares acquired by employee benefit trust (709)(4,294)

4 1 ,7 57 -Share based payment -4 1 ,7 57

2 30,074 27,088Net movement in shareholders’ funds 1 ,656,825(2,7 76,7 1 8)

483, 1 40 456,05 2Opening shareholders’ funds 8,000,7669,65 7,59 1

7 1 3,2 1 4 483, 1 40Closing shareholders' funds 9,65 7,59 16,880,87 3

(3,2 1 0,7 49)

Group2007

£

Group2006

£

Company2007

£

Company2006

£

19 Reconciliation of movements in shareholders’ funds

18 Reserves

PAGE : 47

20 Commitments under operating leases

As at 26 October 2007, the group had annual commitments under non-cancellable operating leases as set out below:

21 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. At 26 October 2007 there were outstanding contributions payable to the funds totalling £61,222 (2006 - £nil).

Operating leases which expire:

79,3 1 8 20,266Within one year 98,46 31 04,7 49

2 25, 1 3 7 3 79,608In two to five years 34 3, 1 0 1924,829

1 3 7,750 -Over five years -1 1 5 ,880

442,205 399,87444 1 ,5641 , 1 45,458

2007Land andBuildings

£

2007

Other

£

2006Land andBuildings

£

2006

Other

£Group

Operating profit

Amortisation 7 37,46385 1 ,978

3,384,3 7 74,7 7 5,5 1 9

Depreciation 38 3,27 1503, 3 47

Share based payment -4 1 ,7 57

Loan arrangement fees 3 2,0041 2 1 ,636

Profit on the sale of fixed assets (2 1 , 74 3)(3 ,260)

Exchange differences (20,097)1 95,724

Decrease in stocks 1 1 ,802-

Increase in debtors (1 , 3 35,628)(1 ,936,5 1 8)

Increase in creditors

Net cash inflow from operating activities

1 ,0 1 3,5 1 465 1 , 1 1 6

4, 1 84,9635,20 1 ,299

2007

£

2006

£

22 Reconciliation of operating profit to net cash inflow from operating activities



PAGE : 48

24 Analysis of net debt

Other non-cash changes of £2,411,155 represent deferred consideration arising on acquisitions in the year, exchange differences, and

loan arrangement fees.

25 Contingent liabilities and guarantees

The company has guaranteed the bank borrowings of its subsidiary undertakings, SLR Group Limited, SLR Intermediate Holding Company

Limited SLR Consulting Limited and SLR Consulting (Canada) Limited. At 26 October 2007, total bank borrowings subject to the guarantee

amounted to £327,145 (2006 - £Nil).

- 3 , 365,659Cash in hand and at bank

- (309,855)Bank overdraft

(22 3,47 8)

(285,878)

-

-

- 3,055,804(509, 356)-

(9,87 4,845) (3, 1 3 1 ,529)Debt due within one year 8,0 1 8,92 1-

7,463,690 (1 5,7 32, 350)Debt due after one year (1 5,2 50,000)(424,058)

- (94,294)Obligations under finance leases and hire purchase contracts 75,002(2 3,95 2)

(2,4 1 1 , 1 55 ) (1 8,958, 1 7 3 )(7, 1 56,07 7)(448,0 1 0)

(2,4 1 1 , 1 55 ) (1 5,902,369)Total (7,665,43 3)(448,0 1 0)

Acuiredwith

subsidiaries

£

3,589, 1 37

(2 3,97 7)

3,5 65 , 1 60

(1 ,2 75,605)

(7,5 2 1 ,982)

(1 45, 3 44)

(8,942,93 1 )

(5,3 77,7 7 1 )

At27 October

2006

£

Cash flows

£

Non-cashchanges

£

At26 October

2007

£

23 Reconciliation of net cash inflow to movement in net debt

1 ,009,7 32(Decrease)/increase in cash in the year

1 , 368,979Cash (inflow)/outflow from change in debt and lease financing

(509, 356)

(7, 1 56,07 7)

2,3 78,7 1 1Change in net debt resulting from cash flows (7,665,4 3 3)

( 1 2 3,83 9)New finance leases and hire purchase agreements -

-Debt acquired with subsidiary undertakings (448,0 1 0)

(32,004)Loan arrangement fees 1 43,7 75

-Exchange differences (1 5 2,6 1 3)

-Other non cash movements (2,402, 3 1 7)

2,222,868Movement in net debt in the period (1 0,5 24,5 98)

(7 ,600,6 39)Opening net debt (5,3 77,77 1 )

(5, 3 7 7,77 1 )Closing net debt (1 5,902,369)

2007

£

2007

£

2006

£

2006

£

Book andfair value

£

PAGE : 49

Fixed assets

Year ended31 May 2006

£

7 7,298Tangible fixed assets

Consideration:

48,000Settled by shares at fair value

1 ,467,084Settled by cash (including expenses of £74,929)

3 39, 1 67

1 ,854,2 5 1

(926,93 5)

Deferred consideration

Net assets acquired

92 7,3 1 6Goodwill arising on consolidation

1 ,295, 1 75Turnover

3 97, 1 02Operating profit

1 2,546Net interest

(1 20,750)Taxation on profitfrom ordinary activities

288,898

Year ended31 May 2007

£

1 ,899,044

9 1 5 ,4 1 8

1 2,3 35

(1 92 ,75 4)

409,648Profit on ordinary activitiesbefore taxation 92 7,75 3

7 3 4,999Profit for the year

Current assets

Total assets

5 20,427Debtors

802, 1 64

1 , 399,889


26 Acquisitions

On 4 June 2007 the company acquired the entire share capital of Insite Environments

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:

On 11 September 2007, the group acquired the entire share capital of Seacor

Environmental Inc. The book value of the assets and liabilities acquired (which was

equivalent to their fair value), together with details of the purchase consideration and

goodwill arising on acquisition is shown below:

The results of Insite Environments Limited prior to its acquisition were as follows:

(46 3,970)Creditors due within one year

Net assets 926,93 5

(8,984)Provisions for liabilities and charges

£

1 ,467,084Cash consideration (as above)

(802, 1 64)Cash acquired

664,920Net outflow of cash

Cash flows

The net cash outflow arising from the acquisition of Insite Environments Limited

was as follows:

Book andfair value

£

Fixed assets

288,439Tangible fixed assets

47,480Intangible fixed assets

Consideration:

1 3 3 , 1 66Settled by shares at fair value

3, 1 76,5 7 1Settled by cash (including expenses of £351,620)

2,063, 1 50

5,3 72,887

(1 ,5 35 ,705)

Deferred consideration

Net assets acquired

3,83 7, 1 82Goodwill arising on consolidation

Current assets

Total assets

4,45 7,007Debtors

4,792,926

(2,767,095)Creditors due within one year

Net assets 1 ,5 35 ,705

(1 3 1 ,286)Bank overdraft

(3 58,840)Creditors due after one year



PAGE : 50

27 Share based payments

SLR Holdings Limited operates equity-settled share based remuneration schemes

for employees: an EMI share scheme for UK employees and unapproved schemes for

overseas employees. Options vest over a period of years and there are no performance

criteria that must be satisfied. Options will lapse if the employee leaves.

Details of movements in options, (by grant date), during the year, together with

information on the exercise price and period of the options is contained in note 17 to

the financial statements.

2006Weighted

averageexercise

price(pence)

2006

Number

65.00 3 54,220Outstanding at thebeginning of the year

2007

Number

600,885

2007Weighted

averageexercise

price(pence)

70. 1 6

Year ended31 December 2006

Canadian $

29,949,866Turnover

1 ,454,064Operating profit

2 2 1 ,298Net interest

(3 29,789)Taxation on profitfrom ordinary activities

898,706

Year ended11 September 2007

Canadian $

2 1 ,42 7,7 7 3

1 ,2 5 1 ,494

1 29,644

(38 1 ,766)

1 ,228,495Profit on ordinary activitiesbefore taxation 846,5 67

464,80 1Profit for the period

26 Acquisitions (continued)

The results of Seacor Environmental Inc. prior to its acquisition were as follows:

£

3, 1 76,5 7 1Cash consideration (as above)

1 3 1 ,286Bank overdraft acquired

3,307,857Net outflow of cash

£

3 38,58 1Net cash outflow from operating activities

88 1 , 1 78Net cash outflow from financing

86,858Net cash outflow from returns on investmentsand servicing of finance

1 9,020Net cash outflow from capital expenditure andfinancial investment

Cash flows

The net cash outflow arising from the acquisition of Seacor Environmental Inc.

was as follows:

The deferred consideration for both 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 26 October 2007:

The exercise price of options outstanding at the end of the year ranged between

65p and 160p (2006 – 65p and 76p) and their weighted average contractual life was

3.8 years (2006 – 4.5 years).

Of the total number of options outstanding at the end of the year, there were no

vested options. At 26 October 2007, all vested options had been exercised

(2006 – 10,460 options had vested and were exercisable)

The weighted average fair value of each option granted during the year was 42.31p

(2006 – 15.44p).

The following information is relevant in the determination of the fair value of

options granted during the year under the equity share based remuneration

schemes operated by SLR Holdings Limited:

75.30 307,365Granted during the year 2 5 3,4 1 8

65.00 (4 1 , 500)Exercised during the year (2 28,463)

68.44 (1 9,200)Lapsed during the year (1 1 , 700)

70.1 6 600,885Outstanding at the end of the year 6 1 4, 1 40

1 60.00

67.7 1

96.50

1 07.64

2007 2006

Binomial BinomialOption pricing model used

Equity-settled

1 60 76 Weighted average share price at grant date (pence)

1 60 76Exercise price (pence)

3.07 4.00Weighted average contractual life (years)

1 1.9% 1 1.9%Expected volatility

Nil NilExpected dividend

5.09% 4.27%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.

PAGE : 51

28 Employee Benefit Trust

The 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 (formally SLR

Management 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:

Company2007

£

Company2006

£

4,3 5 2 1 ,050Number of shares held

Group2006

£

1 ,050

Group2007

£

4,3 5 2

Equity-settled schemes -4 1 ,7 57

2007

£

2006

£

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 or previous 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.

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Documents

Annual Report 2007