SLR Consulting Annual Report 2010

global environmental solutions

SLR Management Limited

Report and Financial Statements Year Ended 29 October 2010

02


SLR is an international environmental consultancy with a network of offices in Australia, Canada, Ireland, New Zealand, South

Africa, UK and USA. It provides advice and support on a wide range of strategic and site specific environmental issues to a

diverse and growing base of business, regulatory and governmental clients. SLR specialises in the energy, waste management,

planning & development, industrial, mining & minerals, acoustics & air quality and infrastructure sectors.

03 Highlights

04 Chairman’s Statement

08 Chief Executive’s Review

12 Acquisitions

14 Energy - Oil & Gas

16 Energy - Renewable & Low Carbon

18 Mining & Minerals

20 Waste Management

22 Planning & Development

24 Industry

26 Infrastructure

28 Sustainability

32 Directors’ Biographies

34 Report of the Directors

39 Report of the Independent Auditors

40 Financial Statements

44 Notes to the Financial Statements

PAGE

Energy WasteManagement

Planning &Development

Industry Mining& Minerals

Infrastructure

Annual report and financial statements for the year ended 29 October 2010

Highlights

03


During the year, SLR has:

• Achieved EBITA growth of 67% to the highest level

recorded in the group’s financial statements;

• Achieved a 24% increase in revenues;

• Sustained a consistent, high level of repeat

revenue; 58% of 2010 revenues came from clients

of more than five years standing;

• Continued the globalisation of the business; more

than 50% of group revenues were earned outside

the UK;

• Successfully completed the acquisitions of

Heggies (Pty) Limited in Australia, HCG Inc.

in Alaska and Andrew McCarthy Associates

Limited in the UK;

• Maintained its investment in people, geographic

expansion and service extensions;

• Consolidated its position as a leading consultant

in the energy, natural resource and waste

management sectors which continue to

experience strong growth.

Revenue Summary 2001 - 2010

Revenue by Length of Client Relationship

Revenue by Country of Operation

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0

£000’s

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

14.2%

28.6%

12.9%

13.5%

16.0%

14.8%

5 to 7 years

more than 10 years

7 to 10 years

1 to 3 years

3 to 5 years

new for 2010

15.3%

13.0%

28.6%

39.4%

3.7%

Ireland

Australia

USA

Canada

UK

Chairman’s Statement for the year ended 29 October 2010

04


05

Our analysis of the UK market demonstrated that a flat operating performance

compared to 2009 was an excellent outturn relative to most of our peer

competitors, who saw a significant deterioration in profitability in the same

period. The group’s exposure to those business streams that are most affected by

public spending cuts is not material and we continue to develop our niche

technical capabilities. In January 2010, the group completed the acquisition of

Andrew McCarthy Associates Ltd (AMA), a 20 person ecology business based in

Exeter, with offices in Sheffield and the Hemel Hempstead area. The acquisition

has considerably strengthened and complemented the group’s team in the field

of wind technology and climate change, both areas where we expect to see

increases in demand in 2011.

The group acquired Heggies Pty Limited (Heggies) in February 2010. Heggies was a

130 person Sydney-based acoustics and air quality business with locations across

Australia and in Singapore. Since acquisition an office has also been opened in

Auckland, New Zealand. Heggies provides a strategic platform for further bolt-on

acquisitions in Australasia and introduces strength in depth in two disciplines with

worldwide strong demand. At the same time, incorporating Heggies into the group

allows the cross-selling of technical disciplines, such as waste management, into

both Heggies current client base for the first time and to approach new clients as

part of a global group with multi-faceted skill sets. Set against a background of a

booming economy with strong demand for new ports and infrastructure to deal

with Asian demand for the country’s natural resources gives us confidence about

the future development of our business in this part of the world.

In July 2010 the group completed the acquisition of HCG Inc. (HCG), based in

Anchorage and Fairbanks, Alaska. HCG was a 57 person air quality consultancy,

incorporating permitting, compliance and land quality management, principally to

the extractable resource industry. The integration of this business has been

achieved particularly smoothly, resulting in a significantly expanded presence in

both cities and confirming the group’s position as one of the largest

environmental consultants in the state, bringing enhanced technical capabilities

to both heritage SLR and HCG client bases. The cross-selling of the HCG skill sets

into Alberta, Canada has also quickly opened new business streams for our

Canadian business and means the group is gaining a reputation as a cold climate

specialist in North America.

Since year-end, the group has completed the acquisition of Metago International

Holdings (Pty) Limited (Metago), a 63 person specialist mine waste, water

management and environmental impact/permitting consultancy business based in

Johannesburg, South Africa and Perth, Western Australia. Metago’s main clients are

the major mining corporations and work is undertaken across the countries of sub-

Saharan Africa that are rich in natural resources, as well as Australia. This is a

business area that the group expects to see grow rapidly, with Metago’s expertise

being sold into SLR’s client base in Australia whilst facilitating growth in mining

consultancy work internationally. In the immature South African market the group

anticipates introducing new key technical skills in waste management, air quality

and acoustics.

2010 was an exciting and challenging year as the group

expanded into new geographies and successfully completed

the acquisition and rapid integration of three companies. As a

result, clients now have access to SLR expertise around the

world on a 24/7 basis. The strategy of focussing on

opportunities in booming resource based economies

combined with sectors that are exhibiting growth related to

energy, natural resources, waste management and

sustainability has been thoroughly vindicated. Furthermore,

the group is able to cross-sell strong technical expertise.

Accordingly, I am very pleased to report that the Group

delivered strong growth in profits in 2010, with operating

profits before goodwill amortisation reaching the highest level

we have recorded in our Financial Statements. We expect

further improvements in performance in 2011 with a full year of

operating performance to incorporate from those businesses

acquired during 2010.

Chairman’s Statement


06

Group Results

The statutory results for the Group are reported for the 52 weeks to

29 October 2010.

Group turnover in 2010 amounted to £67.3 million, which was 24% above the

year to 30 October 2009 of £54.4 million. Profit before interest, tax, goodwill

amortisation and exceptional items amounted to £8.5 million in 2010,

compared to £6.3 million in 2009. Exceptional costs related to redundancy

costs (£480,000) and office closures (£378,000). They have been separately

disclosed so as not to distort the underlying profitability of the business

because of their one-off material nature.

Dividends

SLR Management Limited has not paid or declared any dividends during

the year.

Balance Sheet and Cash Flow

Consolidated net assets at 29 October 2010 stood at £45.0 million,

compared to £44.9 million in 2009.

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

from operating activities was £9.8 million for the year ended 29 October

2010 compared to an £8.1 million inflow in 2009.

The year end consolidated balance sheet includes, within intangible fixed

assets, “goodwill” with a carrying value of £70.6 million, which arose from

the acquisition of the group on 27 May 2008 and subsequent acquisitions.

The goodwill is being amortised over the Directors’ estimate of its useful

economic life, being between five and twenty years dependent on the

acquisition made.

Our People

During the year Faramarz Bogzaran stepped down from the Board and

left the Canadian business. Kevin Rattue has assumed overall

responsibility for the entire North American operations, ably supported

by high calibre local senior management. In addition, Robin Pinchbeck

resigned from the Board as non-executive director due to his executive

commitments elsewhere. I would like to thank Robin for his input during

his one year tenure.

The group’s key asset will always be the staff and I would like to take the

opportunity to thank all employees for the commitment, flexibility and

enthusiasm with which the many and varied challenges in the year have

been embraced. Symptomatic of this attitude has been the

commendable willingness of senior staff to re-locate from the UK to

assist with the development of embryonic waste management business

streams in Canada and Australia. Integration into the group of newly

acquired companies from around the world with different operating

cultures and working in different time zones places particular stresses on

all those involved, but I’m delighted to report that those businesses

coming into the group in 2010 have all been happily absorbed to mutual

benefit. These businesses are expected to add significant shareholder

value in the years ahead and we welcome the skills that they bring.

Summary

2010 proved to be an exciting year of return to strong growth and has

provided the group with the springboard for expected further progress in

2011. The group is well positioned both geographically and in terms of core

skills to continue to deliver the strategic goal of significantly enhanced

profitability from a combination of organic growth in vibrant and

recovering economies complemented by further acquisitions.

Shareholders signalled their support for the group’s strategy by funding

£5.0 million of additional finance for acquisitions through unsecured loan

notes in SLR Management Limited in December 2009 and a further £1.7

million in March 2011. 3i remain committed and fully supportive as the

group’s equity investment partner, as do Lloyds Banking Group as providers

of medium-term debt finance.

John Crabtree

Chairman

7 March 2011

07

Chief Executive’s Review for the year ended 29 October 2010

08


09

Strategy

SLR is one of a very small number of specialist environmental consultancies that are

truly international. Combined with an existing client base of multinational corporations

who face significant and growing environmental challenges, this provides an excellent

platform for global growth.

The group’s strategy is to provide high quality consultancy and advisory services to

those clients, developing and retaining long term relationships and extending the

services offered both in terms of geography and scope.

The success of this approach is demonstrated both by very high levels of client

retention and by the very significant long term growth in work derived from those

clients. As part of the comprehensive due diligence undertaken on acquisitions, we

have ensured that those target companies also have similar levels of client retention

and longevity.

Business development is focused on sectors that have high growth potential and are

also sufficiently specialised to allow SLR to establish market leading positions

internationally either in terms of market share or technical expertise. These sectors

include energy, waste management, mining and minerals, infrastructure, industry and

planning & development.

The GFC has also highlighted the very significant contrast between resource based

economies such as Alaska, Australia and Canada, and service and manufacturing

based economies such as Europe and parts of the US. As a result, SLR has had a

significant focus on the high growth economies in 2010, both organically and through

the acquisition of Heggies Pty Ltd in Australia and HCG Inc. in Alaska. In the absence

of readily available additional bank funding during the GFC, the acquisitions were

largely funded by direct shareholder investment to ensure that growth could be

maintained. The focus on international development will continue in 2011 and 2012.

It is important to recognise, however, that while parts of SLR’s client base in the core

development and industry markets have been largely dormant through the GFC,

those clients have not been lost and will drive significant growth when the markets

recover. This is already happening in the M&A sector and others should follow in

2011/2012.

The 2010 Financial Statements represent the best recorded year

for SLR in terms of revenue and operating profit before goodwill

amortisation. Given the economic background, particularly in

Europe and North America, this is a very strong performance.

The numbers alone, however, do not convey the underlying complexity of market

conditions. Certain parts of the market, notably energy and mining, grew very

strongly, while other areas such as residential development remained extremely

depressed. Over the last two years of the Global Financial Crisis (GFC), SLR has

sought to ensure that its core business is based primarily on natural resources and

waste management. Considerable and successful efforts have also been made

further to expand our offering to those sectors both geographically and in terms of

the services offered to clients.

The following review looks at that underlying strategy in the context of the

market and assesses the 2010 performance and the 2011 outlook for each of SLR’s

business sectors.

Chief Executive’s Review

10




11

Market Overview

Current estimates suggest that the global environmental consultancy market is

valued at approximately £24 billion. The US is the biggest market, estimated at

£9 billion, followed by the European market at £7.5 billion. The UK market

makes up about £2 billion of the European figure when planning consultancy is

included. The Australian market is estimated at about £1.7 billion.

In the 10 years between 1998 and 2008, the North American and European

markets grew by 8 - 10% per annum while parts of the UK market increased by

20% per annum and the Australian market expanded at 16% per annum.

The impact of the GFC in 2009 and 2010 significantly affected the market,

with the US, UK and Ireland being hit the hardest. Growth in the US stopped

in 2009 and was only 3% in 2010. The market in the UK and Ireland

experienced negative growth in 2009, with average revenues down by about

30%. Based on the first half figures, average revenues in the UK are likely to

be down by a further 8-10% in 2010. The Australian market grew by 17% in

2009, falling to a 4% increase in 2010.

Forecasts for 2011 suggest 5% growth in North America, 7% growth in Australia,

and no growth (at best) in the UK and Ireland.

What is clear is that growth will be much more sector dependent than in the

past. Energy, waste management and mining will continue to be resilient, whilst

both the development sector almost everywhere and the government sector in

Europe are likely to be flat. Nonetheless, the key drivers in the environmental

market remain:

• a high volume of new legislation and regulations;

• the high cost of natural resources which drives development spending on

new assets and environmental remediation of existing assets;

• new technologies allowing the exploitation of shale gas and coal bed

methane;

• the Stern Review, Kyoto Protocol and security of energy supply issues

stimulating the move to more local and sustainable energy sources;

• the introduction of financial penalties for non-compliance;

• an increased awareness of the reputational issues, responsibilities and

liabilities facing both private and public sector institutions; and

• the lack of experienced staff resources within those public and private

sector institutions to address this complex and highly specialist area.

All of these factors are widely anticipated to be present for the foreseeable

future, providing a continued platform for the growth of both the overall

environmental market and SLR. In the medium term, the issues will be

exacerbated by delayed spending during the GFC, which should lead to even

stronger growth as the global economy recovers.

Operating Review

Following difficult market conditions in 2009, a combination of UK stability

and international growth characterised 2010. With the backing of 3i, SLR’s

management identified and delivered a series of key strategic acquisitions in

high growth areas during the year.

Entry into the buoyant Australian market was achieved by the acquisition of

Heggies, the market leader in environmental acoustics, with additional

capability in air quality and land quality. Heggies’ key market areas were mining

and infrastructure.

In Alaska, we acquired HCG who had world-class skills in cold region air quality,

together with very significant permitting and land quality skills. HCG primarily

served the oil & gas and mining sectors. In the UK, the acquisition of AMA

cemented SLR’s position as one of the country’s leading ecology consultants

with AMA’s largest business area being renewable energy. Both HCG and AMA

were fully integrated into existing SLR operating companies at the end of 2010

with Heggies being rebranded as SLR Consulting Australia Pty Ltd.

The strategy of reducing the group’s dependency on the uncertain UK market

continued to bear fruit with revenues in the UK falling to 39% of total group

revenues from 48% in 2009. The balance of the revenues came from Canada

28%, US 16%, Australia 13% and Europe 4%. Taking into account a full year of

contribution from the acquisitions, the UK represents less than one third of

the turnover.

Overall, revenues increased by 24% to £67.3 million, with EBITA before

exceptional items up by 36% to £8.5 million and EBITA after exceptional items

has increased by 67% to £7.7 million.

13.6%

19.8% 23.9%

8.3%9.1%

25.3%

SectorSales Analysis

2010

mining & minerals

planning & development

waste management

industry

energy

infrastructure


acquisitions

12


13

acquisitions

Andrew McCarthy Associates Limited (AMA)

At the acquisition date of 31 January 2010, AMA was a 22-person national ecological consultancy with offices

in Exeter, Sheffield and near Hemel Hempstead. AMA specialised in protected species surveys and mitigation

associated with obtaining planning permission for development projects, primarily in wind farms, transport

infrastructure and residential developments. Increased public demand for protection of many species

associated with continued development, together with increased enforcement and regulatory complexity of

the planning processes are all market drivers for such specialist ecological consultants.

By the end of the financial year AMA staff were fully integrated and the business and assets of AMA were

hived across into SLR Consulting Limited at 29 October 2010.

Heggies Pty Limited (Heggies)

At the acquisition date of 11 February 2010, Heggies was a 130-person acoustics and environmental

management consultancy, headquartered in Sydney, Australia with another seven offices in Australia and a

branch office in Singapore. Heggies were market leaders in all aspects of acoustics consultancy, principally

to the main extractable resources industry and state-run infrastructure sectors. Heggies provided support for

planning applications, environmental statements and they performed construction and operational noise

and vibration monitoring. They also undertook specialist wind engineering and structural dynamics, air

quality, hazardous materials, energy rating and land quality consultancy work. By the end of the financial year,

Heggies was fully integrated and operating on the same accounting platform as the rest of the group.

HCG Inc. (HCG)

At the date of acquisition on 1 July 2010, HCG was a 57-person permitting, compliance and land quality

management consultancy headquartered in Anchorage, Alaska, with another office in Fairbanks, Alaska. In

Alaska, HCG was market leader in air quality consulting, principally to the main extractable resource

industries, power utilities and federal military. HCG provided support for permit applications and

environmental statements and undertook construction and operational air quality monitoring and

meteorological measurement. By the end of the financial year, HCG was fully integrated into SLR

International Corporation and staff merged between SLR heritage offices and HCG premises in both

Anchorage and Fairbanks.


14


With kind permission of Bergen Group ASA

Following the price volatility in 2008 and 2009, oil prices

were relatively stable in the $65 to $85/barrel range during

2010, and rising to above $100/barrel in early 2011. This has

stimulated investment in both conventional resources and

new technologies.energy - oil & gas

15

energy - oil &

gas

Confidential Client (Major Oil Sands Company)Central Processing FacilityFort McMurray, Alberta

One of Canada’s largest integrated energy companies retained

SLR to provide environmental consulting services at the site

of their Central Processing Facility (CPF), which is under

construction 60 km northeast of Fort McMurray, AB. The CPF

will process bitumen from a field of Steam Assisted Gravity

Drainage (SAGD) wells and prepare it for shipment to the US

for refining. The oil sands field lease has a bitumen deposit

with estimated total reserves of 3.7 billion barrels of oil and is

expected to peak at 200,000 barrels per day. It is expected to

provide a 40 year supply of stable crude oil to North

American markets with commissioning of oil production

occurring in 2014.

The footprint of the CPF encompasses an area historically

occupied by a previous oil sands operator during the 1970’s and

1980’s where a SAGD Pilot Plant operated. Environmental due

diligence work was undertaken in a phased approach to identify

the potential areas of environmental concern. Supplemental

Phase II work was undertaken and areas of impact were

identified in conjunction with decommissioning activities.

SLR’s scope of work has evolved in assisting the client with the

following activities to date:

• Surface water assessment

• Electromagnetic Surveys (EM31, EM38 and EM61)

• Soil and groundwater testing

• Waste characterisation and waste disposal minimisation

• Remediation planning

The boggy muskeg environment at the site has provided its

challenges for access. Some remediation and site assessment

activities had to be completed in extreme winter temperatures

of -20°C to -40°C in order for heavy equipment to access very

soft areas of the site. Ongoing construction of the new facility

requires close co-operation between SLR site personnel, the

client’s construction managers and general contractors.

SLR’s responsiveness, commitment to the project schedule and

adaptability to emerging needs and changing conditions has

helped the client maintain their regulatory obligations at the

site and continue with construction of major process areas in

a timely manner while addressing the historic environmental

impacts. Work programmes were coordinated so that soil

volumes requiring waste disposal and logistical costs for soil

management were minimised.

The increased confidence in the energy price was reflected by significant growth in all

areas of SLR’s oil and gas business. Permitting work for both onshore and offshore

assets continued to grow strongly, with the acquisition of HCG in July 2010

significantly enhancing our capability in both permitting and air quality. The demand

for high quality permitting and spill contingency planning will inevitably increase as a

result of concerns raised by the Deep Water Horizon incident in the Gulf of Mexico.

Equally interesting has been our involvement in new technology areas including shale

gas, oil sands and coal bed methane. During 2010, we have worked closely with major

US corporations assisting with environmental aspects of their development of natural

gas reserves in the shale deposits of eastern and central US. In Canada, as well as

working for the major players in conventional oil and gas, we continue to expand the

scale and range of services offered to the oil sands sector. With the Canadian oil sands

representing the second largest oil reserves in the world after Saudi Arabia, and the

recognition of the true potential of shale gas, recent assessments indicate that North

America will become a net exporter of energy in the foreseeable future. Given the

stringent nature of environmental regulation, the development of these deposits will

require a very significant amount of environmental consulting support. With our

existing term contracts and long term client relationships, SLR is very well placed to

benefit from such growth.

In Ireland, SLR’s client VP Power acquired a licence to explore for coal in the Kish Basin

(offshore from Dublin) in 2009. Acting as Technical Manager of drilling operations, SLR

assisted VP Power in obtaining permission to drill a number of exploration wells using

the newly commissioned Fugro Synergy drillship. The scope included setting up

emergency response procedures and oil spill contingency planning in advance of the

drilling operation.

A five month drilling programme commenced in December 2009, with SLR providing a

six man team to manage the drilling and log the boreholes. SLR was also responsible for

ensuring regulatory compliance and liaising with the regulatory authorities.

Following the successful completion of the programme, which confirmed a continuous

correlatable succession of carboniferous coals at suitable depth and thickness for

underground coal gasification, SLR interpreted and reported on the results to the client

and the government authorities in Dublin. Since completing the drilling programme, VP

Power has secured a hydrocarbon option licence over its licensed area in the Kish Basin.

While the projects mentioned represent only a fraction of SLR’s activity in the oil and

gas sector, they provide an excellent illustration of the strength and diversity of our

offering. Given SLR’s international reach, we are in a very strong position to exploit the

rapidly growing energy sector across the globe.


energy - renewable & low carbon

16


For a number of years SLR has had a significant and rapidly growing presence in the wind

energy market. That trend continued in 2010, with 50% growth in SLR’s wind energy

consultancy business. This included major new onshore and offshore schemes in Europe

and Australia. We expect significant further growth in 2011 and beyond.

17

energy - renewable &

low carbo

n

Renewable Energy Opportunities StudyNova Scotia Department of Energy

In early 2010, SLR was contracted by the Nova Scotia

Department of Energy to evaluate the opportunities for Nova

Scotia companies to become involved in the renewable energy

industry. Focusing on wind and tidal power generation, SLR

examined opportunities for the Nova Scotia business

community to participate in manufacturing, development,

operation, servicing and maintenance of renewable energy

projects locally, regionally and internationally.

This major study included an extensive international review of the

renewable energy industry and the creation of a database of Nova

Scotia companies’ capabilities. Together with Halifax-based

subconsultants Maxis Energy Solutions, SLR applied its knowledge

of energy strategy and the capabilities and capacity of Nova

Scotia’s energy service community to assist the Department in

their work to pursue renewable energy opportunities locally,

nationally and worldwide both as part of Nova Scotia’s Renewable

Electricity Plan and through exports of goods and services to

other jurisdictions.

Senior personnel from renewable energy companies, government

departments and academia were interviewed to identify Nova

Scotia’s capabilities as well as the state of the renewable energy

market in the province and in other maritime provinces of

Canada. Employment and financial projections examined

potential benefits from planned wind and tidal energy

investments. Recommendations provided guidance for strategy

development to encourage Nova Scotia companies in the market.

For this assignment, SLR assembled a multi-disciplined team of

seasoned professionals from Nova Scotia, the United States, the

United Kingdom and Ireland. The team used a collaborative

approach to gather pertinent market information and create a

practical capabilities and matching assessment, and a pragmatic

and multi-perspective report.

Nowhere in the Nova Scotia province is more than 67km from the

sea so it is an ideal location for onshore and offshore wind power

generation and tidal energy projects. The programme also

examined specific solar and bio-energy technologies that are

manufactured in the province.

Senior Project Manager Craig Chandler, who works in SLR’s office

in Halifax, Nova Scotia said: “Nova Scotia aims to produce 40 per

cent of its electricity needs from renewable sources by 2020 and

we hope that this study will help companies capitalize on the

opportunities this goal represents.”

Equally striking has been the growth and diversity of other renewable and low carbon

technologies. SLR has provided consultancy advice on most of these technologies

including biomass, cogeneration/trigeneration, energy from waste (EfW), geothermal,

nuclear, solar photovoltaics (PV) and tidal. The interest is universal and varies in scale

from single developments to nationally important strategic assets. SLR provides the

services to take projects from feasibility to delivery including all the stages in between.

One broad-ranging study was undertaken for the Nova Scotia Department of Energy,

which is featured in the case study below.

Looking at specific technologies, 2010 has seen a very significant increase in interest in

solar PV. In the UK this is a direct result of the introduction of the Feed Tariff Mechanism

in April 2010, which makes PV installations financially viable. There is particular interest in

the southwest of England where radiation levels are highest.

SLR, as a leading consultant in the energy field, has been at the forefront of advising

clients (both new and existing) of the potential of solar farms in terms of both financial

and technical viability. An example is a project for a major regional waste management

company where we have been appointed to prepare a planning application for a solar

farm at their existing waste management facility in the South West of England. This

scheme has a developable area of approximately 16 hectares which could generate in the

region of 5MW of renewable energy a year over a 25 year life. The scheme is expected to

be granted permission in 2011.

At the other end of the scale we are assisting the voluntary committee that manages

North Sydney Community Centre to minimise its energy bills. Over the past few years, the

Centre has seen its electricity costs escalating and in an attempt to minimise the impact

of these cost increases on its services, it has sought assistance to convert to a renewable

power source. The chosen solution was a PV system, the design of which had to take into

account the varying orientation of the Centre’s buildings and roof design complexities, as

well as the overshadowing of existing large trees. SLR was commissioned to provide an

initial screening assessment that involved the assessment of the potential for the

installation of an optimal PV Solar Power System for the site, the provision of a concept

design for the proposed system, the estimation of the annual solar power available in kWh

for the proposed site as well as a cost estimate for the proposed system and payback

period analysis and greenhouse gas CO2 emission saving. Small, combined heat and power

(CHP) and cogeneration schemes are also becoming common in Australia, and are

particularly appropriate to sports and swimming centres.

In the appropriate geological setting, geothermal energy can also be financially viable.

During 2010, SLR successfully obtained planning permission for the development and

operation of a geothermal electricity generation plant on behalf of Newcastle Energy Ltd.

at Rathcoole, County Dublin in Ireland.

The development will be the first of its type in Ireland and it will consist of the initial

drilling of two deep wells to an approximate depth of 4000 metres beneath Greenogue

Business Park. These wells will be used for the extraction and re-injection of natural hot

geothermal water with the water’s heat being used to operate a geothermal electricity

generation plant that will generate up to 4.5MW of electricity.

With the price of energy again escalating, the demand for renewable and low carbon

energy will undoubtedly grow as more technologies become financially viable.


mining & minerals

18


Following the rapid decline in commodity prices during

the GFC, 2010 saw them recover strongly across the

board. Prices for precious metals such as gold, platinum

and palladium reached record or near record levels and

are expected to increase further. The iron ore price also

reached record levels, while coal prices recovered

strongly, albeit not to the 2008 levels which were driven

by the spike in oil prices.

mining &

minerals

19

SLR continues to offer broadening services to our mining clients seeking to explore,

develop and produce around the globe. Buoyant commodity prices continue to

support the capital investment for existing and new projects and SLR is pleased to

offer technical capabilities that allow our mining clients to accomplish their

business interests. SLR is presently working at mine sites in Alaska (for example the

Pebble Partnership Limited), throughout North America and in Africa, Australia,

Ireland and the UK.

In Australia, SLR was commissioned by Fortescue Metals Group (FMG) to undertake Air

Quality and Noise & Vibration Impact Assessments of their new Solomon Project in

the Pilbara, Western Australia. The Solomon Project is in a remote region 60km north

of the town of Tom Price and includes two new iron ore deposits and a 120km rail spur.

The first stage of the project included baseline air quality and noise monitoring and

involved travelling to remote locations to undertake measurements and to set up

unattended monitoring stations. The second stage of the project involved the

creation of detailed air quality and noise models using state-of-the-art software and

the creation of vibration site laws that were used in the permitting process.

In Ireland, working closely with our client, Irish Salt Mining & Exploration Co Ltd,

planning permission was gained to extend the Kilroot Salt Mine, providing an

additional 30 year life (see case study). In the UK, SLR has been providing a range of

services to the surface coal mining industry for a number of years, and in 2010

successfully secured planning permission for ATH Resources Limited to extract up to

4 million tonnes of coal from a new 413 hectare site at Netherton in Scotland. SLR was

responsible for both the planning application and all aspects of the EIA.

On 4 March 2011, SLR successfully completed the acquisition of Metago, a leading

environmental mining consultancy based in Johannesburg in South Africa and Perth in

Western Australia. The addition of Metago to the group significantly enhances SLR’s

client base and technical capabilities.

Metago’s key market is metal mining in Southern Africa and Western Australia. There

are significant opportunities to provide SLR’s much broader environmental offering to

many of the world’s leading mining companies, who are Metago’s long standing clients.

Irish Salt Mining & Exploration CompanyKilroot Salt Mine Extension

Irish Salt Mining & Exploration Co. Ltd. (ISME) own and operate

the underground salt mine at Kilroot, 3 kilometres northeast of

Carrickfergus, Co. Antrim. The company commenced salt

extraction at the mine in 1965, and it has been in continuous

operation to the present day.

At present the mine produces approximately 400,000 to

500,000 tonnes of processed rock salt annually for de-icing of

roads and motorways during the winter period. Kilroot Mine is

the only salt mine in Ireland, and one of only three salt

producers in Ireland and the United Kingdom. The mine is of

strategic importance and it is critical to the long term secure

supply of de-icing salt.

SLR acts as a technical advisors to ISME on planning,

environmental, geological, mine design, mineral prospecting

licence and mining lease matters. Recently SLR has assisted ISME

in successfully obtaining planning permission to extend the

existing underground mine by 280 hectares.

The planning application (with accompanying environmental

statement), both prepared by SLR, was one of the largest

applications ever submitted to the Planning Service in Northern

Ireland. The proactive scoping and consultation carried out by

ISME/SLR with the statutory agencies and the local community,

and the quality of the SLR environmental statement

accompanying the planning application, were critical to ensuring

there were no objections to this major development, and

assisted the Planning Service in processing the application

efficiently in a short six month timeframe.

This recent planning permission will extend the mine working

life by approximately 30 years. The workings in the mine

extension area will be located 300 to 500 metres below the

existing ground surface. All of the proposed development will

be located underground and ISME will continue to use the

existing surface facilities, mine access and jetty on Belfast Lough.


waste management

20


SLR consolidated its position as one of the world’s

leading waste management consultancies during 2010,

with further development in North America and entry

into the Australian market. As the rest of the world

follows Europe’s lead on recycling and energy from

waste, there are significant new international

opportunities developing.

waste m

anagement

21

Viridor

Trident Park EfW Facility

Working closely with Viridor, SLR undertook a four year

programme of site identification, planning and environmental

permitting for the largest EfW treatment facility in Wales. The

process was successfully completed in October 2010 with the

issue of the Environmental Permit.

An initial site appraisal process, undertaken by SLR in late 2006, led

directly to Viridor purchasing a site at Trident Park, just 1.5 km from

the Welsh parliament building, the Senedd, in Cardiff Bay. SLR was

then appointed to prepare the planning application, with

accompanying Environmental Statement, and also submit an

Environmental Permit for the 350,000 tonne per annum facility.

Planning permission was granted in June 2010 following the

submission of a comprehensive Environmental Impact Assessment

(EIA) undertaken entirely by SLR, and featured assessments on the key

issues including landscape, highways, ecology, noise, air quality,

socio-economics and land quality. SLR’s design of a landmark building

was assisted by the production of a virtual reality model, using aerial

photography, to show what the proposed site and surrounding area

would look like.

The Environmental Permit application was submitted in April 2009

and again, was prepared entirely by SLR’s multi-disciplinary team. The

regulatory body undertook an 18 month programme of technical

assessment and public consultation before issuing the Permit in

October 2010.

One of the most exciting aspects of the site is that it now enables

SLR and Viridor to work actively together to develop a district

heating scheme. SLR prepared a comprehensive heat plan to consider

the potential of supplying renewable energy to over 120 businesses

and organisations in Cardiff.

The construction phase of the project is expected to create some

300 temporary jobs during the construction period and 50 full time

jobs, and will secure over £150 million of investment.

The drivers for the waste market are in many ways similar to those of natural

resources. Population growth and economic development both increase the volume

of goods consumed and hence the waste produced inevitably increases. In addition,

rapid urbanisation, increasing regulation and the growing realisation that waste can be

a resource in itself have all increased pressures on business and government to manage

waste in a manner that maximises its potential value as well as minimising any possible

environmental impact.

In the UK, SLR was successful in assisting Viridor to obtaining planning permissions for

two major EfW plants, one in Cardiff and one in Oxfordshire. An Environmental Permit

was also issued for the Cardiff Facility. These developments, which manage several

hundred thousand tons of waste per annum, are inevitably both complex and high

profile. In both cases, SLR was appointed to manage the architectural aspects, the

planning application and the environmental statement which, in spite of significant

local opposition to the projects, were not successfully challenged on process or

technical grounds.

A number of other applications are also in the planning system and SLR’s architects and

landscape architects have been commended on a number of occasions for the visual

quality of the buildings and their surroundings. As an example, the South West Design

Review Panel commented on one development: “We quickly warmed to the clear and

elegant building form. It has the potential to be a landmark for the area, and a pleasing

incident for those journeying on the A38. To gather most of the various processes into

one simple structure works well visually and seems to be efficient operationally too.”

In North America and Australia, SLR is becoming increasingly recognised and is working

on a range of new and existing waste facilities for both government and private clients.


planning & development

22


Through most of 2009 and 2010, the private development sector in Australia, North America

and Europe was depressed, with many projects on hold and few new developments

commencing. The last quarter of 2010, however, saw significant recovery in Canada and parts

of Australia and the first signs of recovery in the UK.

Inevitably, the high value projects, often associated with waterfront locations, are leading the

way. SLR is involved in a number of these, including the White Pines development in

Vancouver, British Columbia. This is a mixed use residential and commercial development

beside the Fraser River on a former industrial site and is presented as the case study below.

planning & develo

pment

23

Parklane White Pines Development

Vancouver, British Columbia

The property is in the southeast corner of Vancouver, on the

North Arm of the Fraser River. The entire site is 30 ha and has

been acquired by Parklane from the City of Vancouver

(northern portions - 2006) and Weyerhaeuser (southern

portion - 2004), formerly MacMillan Bloedel, for a major

redevelopment to residential and commercial land use.

Remediation of the upland and sediments in the foreshore has

been carried out by SLR through the removal of over 110,000 m3 of

contaminated soil. The effectiveness of remediation and risk

management measures have been demonstrated to the regulator

and all certificates of compliance have been issued by the regulator

for the site. In addition, a wide area site designation (the second in

BC) has been obtained to protect future owners of the lands

currently being risk managed for the effects of creosote.

The redevelopment plan is for a mixed-use development, creating

a new community and neighbourhood in Vancouver. It will include

residential and commercial areas, including restaurants,

community centre, parks and shopping. The plan is based on the

principles of new urbanism and features a well-planned mix of

town homes, low and mid-rise apartments and high-rise towers.

There will also be retail shops and services, large anchor retail

stores and a community plaza, all situated in the heart of the

community just a few minutes’ walk for residents. With these

exceptional new community amenities along with significant

green space, riparian and aquatic habitat enhancement along the

Fraser River, shoreline access and walkway, a new community

centre, and school and sports fields, this redevelopment will be a

landmark community and one of the premiere places to live in

Vancouver. Recognition of Parklane’s efforts has already been

received by being awarded the CUI Brownie Award 2007 for

Communications and Public Engagement.

The combination of soil removal, risk-management and liability

protection, with state-of-the-art groundwater extraction and

treatment used for deep (up to 25 metres below ground surface)

groundwater contamination, has allowed the full redevelopment

of this former industrial property into a new and desirable

southeast Vancouver community. The Wide Area Site designation

under the BC Contaminated Sites Regulation has significantly

enhanced site redevelopment.

SLR has assisted numerous clients in optimizing the value of waterfront assets through

the complex cleanup of historical environmental issues and preparing properties for

redevelopment. Environmental cleanup typically involves work on the land and in the

waterway sediment, requiring an understanding of the complex permitting

requirements and working with many governmental agencies. As an example, SLR is

completing Remedial Investigation, Feasibility Study and Cleanup Action Plan work at

an approximately 41 acre former sawmill, log processing and lumber storage site. The

site is located on the shoreline of Port Gardner Bay, a high-priority cleanup area under

the State of Washington’s Puget Sound Initiative, which is the state’s effort to cleanup

and restore the health of Puget Sound. Work at this site is being completed under an

Agree Order with the Washington State Department of Ecology. Assessment work

includes upland sampling of soil and groundwater as well as sediment sampling by

vessel with sampling occurring for metals, polychlorinated biphenyls (PCBs), dioxins &

furans, petroleum fuels and oils and pentachlorophenol (PCP).

In contrast to the private sector, the public sector has been unaffected by the GFC, and while

this is set to change in the UK and Ireland, public spending in North America and Australia are

likely to be maintained. SLR has a strong and varied track record in this sector. In Canada, the

City of Toronto operates a regional destination/local park that includes significant sand and

cobble beach as well as unique creek, wetland and forest environments. Marie Curtis Park is

an important ecological reserve for local plant and wildlife species as well as a prime

community resource for outdoor leisurely activities. The project goal is to create a unified

waterfront that will enhance the existing beach/waterfront, focus on the natural site features

and improve park amenities. SLR’s role is to create a functional ecosystem model for the site

that includes an important forest node on a critical migratory pathway, wetlands and

watercourses, including the historic Etobicoke Creek and the dynamic Lake Ontario coast. SLR

was also asked to identify a trail system that would provide a high quality urban wilderness

experience compatible with endangered species, ancient oaks and important wildlife.

In Australia, the government is investing A$ 2.3 billion through the National Secondary

School Computer Fund (NSSCF), to provide new or upgraded information and

communications technology (ICT) for secondary schools. The aim of NSSCF is to achieve a

1:1 computer to student ratio by 31 December 2011.

In order for this initiative to be implemented in Queensland, full asbestos surveys of most

of the 293 State Schools with Years 9-12 is required prior to any cabling and installation of

wireless access points being conducted in each school. SLR was one of two companies

awarded a contract for the conduct of these surveys in 204 of the 293 eligible State Schools.

Prior to 1990, many buildings in Queensland were built using asbestos containing materials

(ACM) with one of these materials being a Low Density Board (LDB). This product consists

of both Amosite and Chrysotile and is such low density in the compaction of the asbestos

fibres, that when it is broken or drilled, the fibres are liberated and therefore is considered

friable and dangerous.

Logistically, this project is very challenging. The schools extend from Brisbane metropolitan

area, all the way north into the Torres Strait to Boigu Island, just 5km from the Papua New

Guinea coast. Some of the remotest Aboriginal and islander communities are also only

accessible by helicopter. The more culturally sensitive communities require an application

process of 6 weeks in order to visit. Another limiting factor is the inability to conduct these

surveys during school hours, meaning the consultants are surveying from 3pm until around

midnight, each night.

SLR’s broad offering to the development sector, including site finding, due diligence, site

assessment, remediation, planning & EIA means that we are well placed to take advantage of

the market resurgence in 2011 and 2012.


industry

24


Much of SLR’s work over the past two years has been helping clients with environmental

and health & safety compliance. In the Pacific North West, this is centred on the pulp and

paper industry for companies such as Cascade Pacific Pulp, for whom SLR provides

ongoing environmental compliance support for a 185,000 ton per year bleached kraft

pulp mill in Oregon, USA. SLR personnel have maintained an ongoing relationship with

the facility for the past decade.

industry

25

SAICA PaperRecycled Paper Mill, Partington UK

SAICA Paper, based in Zaragoza, Spain, are a leading

manufacturer of corrugating paper with existing paper mills in

Spain and France and a current production capacity of over 2

million tonnes per annum. As part of their expansion plans the

company are building one of the world’s most advanced

recycled paper mills in the UK, at Partington near Manchester.

SLR played a key role in the development of the new paper mill

by securing planning consent allowing construction to

commence and subsequently by obtaining environmental

permits necessary to allow the new mill to operate. The £290

million investment will have a capacity to produce 400,000

tonnes per annum of 100% recycled paper utilising state-of-

the-art technologies, including a dedicated Combined Heat and

Power (CHP) plant and advanced effluent treatment plant

incorporating anaerobic digestion technology.

A major development such as this requires an Environmental

Impact Assessment (EIA) to support the planning application.

The EIA was undertaken in house, using SLR specialists in areas

such as air quality, noise, archaeology, ecology, hydrology,

transport and landscape architecture. The planning application

itself was managed by SLR’s experienced planning team who

provided overall project management and co-ordination of

each stage of the application.

To operate such a facility various permits are required from the

environmental regulator. The environmental permit application

includes both an assessment of the environmental impact of

emissions from the facility and also a demonstration that the

techniques proposed to minimise emissions and the use of

resources are Best Available Techniques (BAT). Other permits

required for the facility included an Emissions Trading Permit

(relating to carbon dioxide emissions) and a water abstraction

licence. All the various permit applications were managed by

SLR’s experienced permitting team with the final permit being

issued in December 2010 and operations expected to start

towards the end of 2011.

During 2010, SLR has assisted the facility on many regulatory fronts. Compliance tasks

have included the preparation of a Spill Prevention Control and Countermeasure plan

(SPCC) following newly issued EPA regulations for facilities that store oil, the

preparation of a Greenhouse Gas Monitoring plan following the Mandatory

Greenhouse Gas Reporting Rule issued by the US EPA, the completion of a Process

Safety Management and Risk Management Programme audit as required by the EPA and

OSHA regulations for the storage of two hazardous chemicals, completion of

Department of Transportation training for hazmat employees and the preparation of

air permit applications for facility modifications.

SLR has also carved out a niche in advising on environmental aspects of transactions

in the forestry sector. The deals often involve huge areas of land, making them

extremely complex in environmental terms. SLR provided pre-sale environmental due

diligence of over two million acres of timberland in seven states in the Northwest,

Midwest, and Southeast US for Forest Capital Partners, a Timberland Investment

Management Organization (TIMO). Utilizing staff from both the U.S. and Canada, five

separate teams of environmental scientists performed the research and site

reconnaissance for the project.

Evaluation of environmental risk was complicated by the presence of mining and oil &

gas activity in several areas, and one former sawmill town that had been shut down and

completely demolished in the 1950s. SLR’s reports were uploaded to an electronic data

room to facilitate due diligence by the various bidders for the upcoming property sale.

The recovery of the manufacturing sector during 2010 also saw applications being made

for new industrial facilities and plant extensions. This included permitting of one of the

world’s most advanced recycled paper mills (see case study) and a new distillery.

SLR has provided services to the Scotch whisky industry for a number of years and

picked up a major commission for long term client, Glen Turner Company in 2010.

Glen Turner operates a whisky maturation and bottling facility in West Lothian,

Scotland. New developments at the site include the construction of a 25 million litres

per annum grain distillery. This is a £40 million investment and is the first new green

field grain distillery to be built in Scotland for over 40 years. The site is classified as a

top-tier major accident hazard site under the Control of Major Accident Hazard

(COMAH) Regulations given the large volume of flammable spirit stored.

This new commission was to provide a Safety Case for the proposed grain distillery to

demonstrate to safety and environmental regulators that the risk to people and the

environment were as low a reasonably practicable. The Safety Case formed a vital part

of the planning application and permitting process.

The strong recovery of manufacturing in Europe and North America is likely to see

more new developments in 2011 as plans shelved during the GFC are commissioned.


infrastructure

26


Infrastructure currently represents about a quarter of

SLR’s business worldwide. Predominantly centred in

Australia and Canada, very little of the work is

dependent on the vagaries of UK or Irish public spending.

The work includes road, rail and harbour developments,

together with major power distribution networks.

infrastructure

27

In Australia, SLR is considered to be the leading acoustics consultancy in road and

rail, having an extensive track record in the development and upgrade of highway

systems and development of both surface and underground railways. A recent

project was the Bruce Highway Upgrade, a 61km stretch of road between Cooroy and

Curra in Queensland. SLR undertook a detailed Road Traffic Noise Assessment for a

section of the upgrade programme, including identification of sensitive receptors,

noise monitoring, noise modelling and prediction as well as the design of noise

mitigation measures.

Across the group, another area of speciality is ports and harbours. We are currently

undertaking major projects in Australia, Canada and the US. SLR’s input ranges from

the site assessment and remediation of major naval facilities to monitoring for the

presence of sea life during construction operations adjacent to the Great Barrier Reef.

Our involvement in port facilities often stretches back over many years, allowing us

to develop a deep understanding of the client’s needs and help them achieve long

term development objectives. One such client is Port Waratah Coal Services, which is

featured as the case study below.

The assessment of the environmental impact of major linear structures such as

pipelines and electricity distribution networks presents a unique set of challenges as

they often cross a huge diversity of environmental settings and habitats. SLR has

developed a significant expertise in this niche sector. In 2010 we were appointed by

National Grid to undertake routeing and siting studies for electricity transmission

equipment to connect the proposed new nuclear power generation and offshore

wind farms on the coast of Cumbria and Lancashire to the existing high voltage

transmission system. This is one of the largest transmission projects that has been

undertaken since the inception of the national grid in the 1950s. The appointment

follows on from many similar commissions on similar projects (albeit smaller in scale)

over recent years.

A number of options exist for the points of connection to the existing transmission

system in Cumbria and in Lancashire. The main options under consideration require over

200km of new overhead transmission lines and a number of new and expanded

substations. In addition, some of the options may require sealing end compounds, grid

supply points and underground and submarine cable routes. The study area encompasses

a large part of Cumbria and much of Lancashire. The options under consideration are

likely to include routes through/around the Lake District National Park, across designated

Areas of Outstanding Natural Beauty (AONB’s) and across/around Morecambe Bay. SLR’s

project work includes landscape, ecology, archaeology, planning, flood risk, transport, GIS

and virtual reality and is thus well suited to SLR’s multidisciplinary capabilities. The project

team has worked closely with key stakeholder groups though a series of facilitated

workshops. In undertaking and presenting this work, SLR has introduced innovative

methodology and technical solutions which National Grid is now considering for use on

other routeing corridor studies.

It is anticipated that SLR will continue to be involved at future stages of the project

including public consultation, detailed design and Environmental Impact Assessment

leading to an application to the Major Infrastructure Planning Unit in 2014.

Port Waratah Coal Services LtdCarrington and Kooragang Coal Export Terminals

Port Waratah Coal Services Ltd (PWCS) owns and operates the

Carrington (CCT) and Kooragang (KCT) coal export terminals

located at Port Waratah, in the eastern state of NSW, Australia.

The terminal facilities are generally located within an industrial

precinct. On-going industrial development in the area, changes in

community expectations together with tightened noise

regulations have meant that off-site noise from terminal

operations is a key environmental risk factor for the existing

facilities and future expansions.

During the past fifteen years, SLR has worked closely with PWCS

enabling operations to continue with minimal noise disturbance

to residential and industrial neighbours. SLR has assisted PWCS in

achieving an increased throughput capacity while actually

decreasing the terminal facilities’ environmental noise envelope.

This has been accomplished through the development by PWCS

of a Continuous Noise Improvement Programme. The

programme involves plant and equipment acoustical design,

procurement, construction and commissioning together with

monitoring and reporting, so as to ensure that the approved

environmental noise limits are achieved.

In many cases, the programme has gone well beyond the use of

Best Available Technology by promoting research and

development into practical acoustical solutions not previously

commercially available or considered economically achievable.

In particular, the development of low noise technology for fixed

plant, including conveyor assemblies (i.e. open-steel, metal-pan,

concrete-pan, prefabricated enclosed gantries), conveyor drive

assemblies, alarms, as well as mobile equipment (including

stackers, reclaimers and ship loaders), has demonstrated source

noise reductions and incremental improvement with each

successive phase of installed infrastructure.

More recently, SLR has also provided occupational hygiene

services to PWCS consisting of occupational dust and noise

monitoring. The aim of this on-going monitoring is to provide a

database to assist PWCS with employee health management at

the terminal facilities.


sustainability

28


sustainability

29

This is reflected in the views of the world’s leading

environmental consultancies, many of whom are based in

the US. Five years ago it wasn’t recognized as a viable

market and was largely the preserve of academia or not

for profit organizations. In a recent survey undertaken in

late 2010, however, it was considered to be one of the

fastest growing areas of environmental consultancy and

second only to energy in desirability as a service offering.

SLR has an extremely strong track record in sustainability

ranging from carbon capture and sequestration, all forms

of renewable energy, low carbon and zero carbon

developments, sustainable buildings and reporting on

sustainability aspects of CSR. With work spanning

Australia, Canada, Europe and the US, we are well placed

to work with governments and corporations worldwide to

develop a sustainable approach that meets and exceeds

their needs.

In the last five years, the need for

sustainable development has gone from

being an essentially European concept to

a point where it is now accepted globally.

It has already become an integral part of

the planning and permitting regime in

the UK and Europe and it is also

recognised by both major corporations

and institutional investors that operating

to sustainable principles is a critical

element in corporate and social

responsibility (CSR).

30



summary

As a direct result of the strategy of international development adopted in the early part of the GFC, we were able to deliver a strong performance

in 2010. The business is extremely well diversified both in terms of business area and geography, and numbers among its clients many of the world’s

largest corporations. Less than one third of current revenues are exposed to the low-growth European economies.

The outlook for growth in 2011 is excellent, with double digit growth forecast in all operating regions except the UK and Ireland, which we

expect to be flat. The recent acquisitions in Australia, South Africa, the UK and the US, funded largely by direct shareholder investments,

have provided both development platforms in high growth areas and access to world-class capabilities that can be used around the group.

David Richards

Chief Executive

7 March 2011

summary

31

Directors’ Biographies for the year ended 29 October 2010

32


The SLR Management Limited Board is made up of six directors, comprising four executive

directors and two non-executive directors. One of the non-executive directors is

independent, with the other nominated by 3i Investments plc.

John joined SLR in 2004, and is Non Executive Chairman of SLR ManagementLimited. He was formerly the senior partner at Birmingham-based corporate lawfirm Wragge & Co, where he led the growth of the practice from a turnover of£15.7 million to a £77.8 million turnover, international business with 110 partners.

John is also non-executive Chairman of Real Estate Investors Plc, Sense and theBirmingham Hippodrome Theatre Trust. He is also a Director of Advantage WestMidlands and a non-executive Director of Staffline Recruitment Group plc.

David is the Chief Executive of SLR Management Limited and a director of anumber of its subsidiaries with overall responsibility for the management of thegroup. Having established SLR in 1994, he has led the management teamresponsible for developing SLR into one of the fastest growing and mostprofitable environmental consultancies in the UK.

Prior to joining SLR, David was a Senior Manager with Golder Associates, a majorinternational environmental consultant, where he was responsible for themanagement of the environmental group in the UK and played a key role in itsEuropean operations. David is a Chartered Engineer by profession.

John Crabtree OBE (61)Non Executive Chairman

David Richards (52)Chief Executive

33

Neil has been Managing Director of the UK operations since 2001 and is also anExecutive Director of SLR Management Limited. In addition to his directresponsibility for the operations and growth of the UK consulting business, Neil hasbeen responsible for supporting the strategic growth and diversification of theinternational business. In this role, he has had an active role in identifying, integratingand developing the Australasian and South African businesses within the group. Neilis a director of a number of the subsidiary companies.

Prior to joining SLR in 1995, Neil held consultancy roles with major internationalconsultancies such as Rust Environmental (now Parsons Brinckerhoff) and Damesand Moore (now URS). During his 25 years in the environmental consulting sector,Neil has experience of both UK and international project direction, businessdevelopment and management.

Kevin is responsible for all North American operations and is the President of SLRInternational Corporation as well as being an Executive Director of SLR ManagementLimited. Prior to joining SLR in 2000, Kevin was the Chief Operating Officer ofSECOR International, a $100m turnover international environmental consultancywith its head office in Seattle.

Kevin has 25 years of experience with environmental consultancies and oil companiesand holds an MBA (International Business) from the University of Birmingham. He is aRegistered Hydrogeologist and also serves as a Director of the British-AmericanBusiness Council (Pacific Northwest).

Neil Penhall (46)Executive Director

Kevin Rattue (51)Executive Director

Jonathan joined SLR in June 2009 in the newly created role of Finance Director ofSLR Management Limited and has overall responsibility for all finance and I.T.functions within the group.

He has 20 years of experience as a finance director in a number of public-quotedand private-equity backed businesses. His transactional background includes IPOand trade sales.

Jonathan is a Chartered Accountant and holds an MA in economics fromCambridge University.

Richard joined the Board of SLR Management Limited in May 2008 at the time ofthe investment by 3i. He is a partner in 3i’s Growth Capital business which is aleading investor into high growth business in Europe, USA and Asia. He isresponsible for the Global Growth Capital portfolio and is also a Director ofMKM Building Supplies and AES Seals.

Richard joined 3i in 1989, after graduating from Birmingham University andpreviously ran 3i’s business in Birmingham before moving to London.

Jonathan Cook (52)Finance Director

Richard Bishop (42)Non Executive Director

Report of the directors for the year ended 29 October 2010

34


The directors present their report together with the financial statements for theperiod ended 29 October 2010.

Results and dividends

The profit and loss account is set out on page 40 and shows the loss on ordinary

activities for the year.

No dividends were paid or declared in the period on the company’s A or B

ordinary shares.

Principal activities

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

of companies, which provide environmental consultancy and related services from

offices in Australia, Canada, Ireland, New Zealand, South Africa, the UK and US.

Trading review

The period covered by the consolidated financial statements is from 31 October

2009 to 29 October 2010.

The results of the group for the year are set out on page 40 and the financial position of

the group is set out on page 41. Further information on the review of the business and

the directors’ expectation of the development of the Group’s activities for the coming

year are given in the Chairman’s statement and Chief Executive’s review on pages 4 to 31.

Analysis of key performance indicators (KPIs) confirms the strong growth of the

business and vindicates the group’s strategy of developing business streams in

booming economies backed up by successful integration of three acquisitions during

the year. Group revenue increased by 24% to £67.3 million (2009: £54.4 million) and as

a result of the group’s strategy, the share of group revenues derived from the

uncertain UK economy fell from 48% to 39%. Profit before interest, tax, goodwill

amortisation and exceptional items amounted to £8.5 million in 2010, compared to

£6.3 million in 2009. Client retention remained excellent with 58% of the revenue

derived from clients with whom SLR has worked for 5 years or more, the same

percentage as last year.

During the year the SLR Holdings Employee Benefit Trust (“EBT”) acquired 3,429,130

shares (for a consideration of £1,384,054) by virtue of purchase from employees

leaving the group or reducing their working hours. The EBT held 738,038 shares at 29

October 2010, representing 1.27% of the issued share capital at that date.

Shareholder Structure

The shareholder structure at 30 October 2010 was as follows:

3i 31.99%

Directors and senior management 51.10%

Other employees & EBT 16.91%

Directors

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

D G Richards

K G Rattue

N C Penhall

J Crabtree

R M Bishop

J C Cook

R Pinchbeck (resigned 3 September 2010)

F Bogzaran (resigned 4 February 2010)

At 29 October 2010, third party indemnity insurance for the benefit of the company’s

directors was in force.

Charitable donations

During the period the group had no reportable charitable donations.

Statement of directors' responsibilities

The directors are responsible for preparing the annual report and the financial

statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial

year. Under that law the directors have elected to prepare the group and company

financial statements in accordance with United Kingdom Generally Accepted

Accounting Practice (United Kingdom Accounting Standards and applicable law).

Under company law the directors must not approve the financial statements unless

they are satisfied that they give a true and fair view of the state of affairs of the group

and company and of the profit or loss of the group for that period.

In preparing these financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and accounting estimates that are reasonable and prudent;

• state whether applicable UK Accounting Standards have been followed, subject

to any material departures disclosed and explained in the financial statements;

• prepare the financial statements on the going concern basis unless it is

inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are

sufficient to show and explain the company’s transactions and disclose with reasonable

accuracy at any time the financial position of the company and enable them to ensure

that the financial statements comply with the Companies Act 2006. They are also

responsible for safeguarding the assets of the company and hence for taking reasonable

steps for the prevention and detection of fraud and other irregularities.

35

Financial Instruments

The Group's operations expose it to a variety of financial risks including the effects

of changes in interest rates on debt, foreign currency exchange rates, credit risk and

liquidity risk. These are monitored by the board of directors and were not considered

to be significant at the balance sheet date.

Credit risk

The Group's policy in respect of credit risk, is to require appropriate credit checks on

potential customers before sales are made.

Cash flow and interest rate risk

Interest bearing assets comprise cash and bank deposits, all of which earn interest at

a market rate. The interest rate on bank borrowings is at market rate and the Group's

policy is to keep the bank borrowings within defined limits such that the risk that

could arise from a significant change in interest rates would not have a material

impact on cash flows. Where appropriate, the Group will enter into appropriate

interest rate hedging agreements to further mitigate the effects of interest rate

fluctuations. The directors monitor the overall level of borrowings and interest costs

to limit any adverse effects on the performance of the Group.

Liquidity risk

The Group's policy has been to ensure continuity of funding through acquiring an

element of the Group's fixed assets under hire purchase contracts and finance leases

and arranging funding for operations via medium and long term loans.

Foreign currency risk

The group is exposed in its trading operations to the risk of changes in foreign

currency exchange rates. The main foreign currencies in which the group operates are

the Australian Dollar, US and Canadian Dollar and the Euro. The group has trading

entities within Australia, the USA, Canada and Ireland to mitigate the exposure to

foreign currency risk in these markets. The group does not use derivative financial

instruments to mitigate foreign currency risk.

Corporate Governance

SLR has had a strong system of governance in place throughout its existence.

The Board continues to review corporate governance issues in the light of current

best practice and seeks continual improvement.

Board Composition and Operation

The board is made up of four executive directors and two non-executive directors.

The executive directors are:

David Richards (Chief Executive)

Neil Penhall (Managing Director of SLR Consulting Limited)

Kevin Rattue (President of SLR International Corp.)

Jonathan Cook (Finance Director)

The non-executive directors are:

John Crabtree (Independent Chairman)

Richard Bishop (3i Investments plc nominated Director)

The board meets regularly and where appropriate operates in a manner consistent

with the recommendations of the Combined Code on Corporate Governance.

The Audit, Remuneration and Nomination committees are formed, in each case, of

two non-executive directors and meet regularly to undertake their responsibilities in

a manner consistent with the recommendations of the Combined Code.

Operating Structure

A key element of the group’s success is the clarity and efficiency of its management

structure and the quality of its management and accounting systems. The group has

five principal operating companies; SLR Consulting Limited, SLR Consulting (Canada)

Limited, SLR International Corp., SLR Consulting Australia Pty Ltd and SLR

Environmental Consulting (Ireland) Limited which operate from a network of offices

in the UK, Canada, the US, Australia, New Zealand, Singapore and Ireland. In addition,

on 1 March 2011, the group completed the acquisition of Metago International

Holdings (Pty) Limited which had operating subsidiary companies in Johannesburg,

South Africa and Perth, Western Australia. The group operates central accounting and

HR functions in each country, all of which report to the group board.

Employment Policies

The Group’s business is based on attracting, retaining and motivating staff of the

highest technical quality, who are also commercial in their approach and committed

to the strategy and growth of the Group. The Board recognises that the retention and

motivation of existing employees and the attraction of new high calibre employees

is critical in a professional services company. As such, the Group uses a range of

dedicated and sophisticated methods to achieve this, including professional training

and development, a flexible approach to working hours and practices, and a wide

range of staff incentives incorporating government approved ownership schemes.


36


Employment of disabled persons

On the basis of information provided by applicants, and interviews conducted, SLR

did not receive any applications for employment by disabled persons during the

period. Had it done so they would have been assessed in accordance with our equal

opportunities policy, which confirms the Group’s commitment to apply employment

criteria which are fair, equitable and consistent regardless of an applicant’s race,

creed, colour, nationality, sex or disability.

With respect to existing disabled staff, they are treated in accordance with our equal

opportunities policy and are actively encouraged to partake in the career

development and training programmes which are available to all staff.

Employee involvement

As a professional services firm with wide employee ownership, SLR is committed to

providing all its employees with regular briefings on the development of the

company and key issues affecting its staff. This is achieved in a number of ways, using

both the IT systems and direct meetings and discussions.

SLR has an intranet site, SLR Net which provides a wide range of information to all

staff including all employment policies, detailed financial information, news on

fellow employees, company development etc. In addition, the management and

senior technical staff convene regular staff meetings to update staff on the

strategic and local development of the Group, including the potential acquisitions

of other companies. An essential part of these meetings is an open question and

answer session where all employees are encouraged to raise any issues they may

have for discussion.

Career development and professional training

The Group is committed to strong organic growth which provides clear

opportunities for staff to develop their careers within the Group. The Group also

supports professional development and has programmes in place to help employees

achieve Chartered status (or equivalent) in their chosen profession.

Employee incentivisation

As well as providing staff with industry standard employment packages in terms of

salary and other benefits, the Group runs a discretionary bonus scheme to which all

staff are eligible. The Group also has a share option scheme and Employee Benefit

Trust to provide ownership to key employees. The employee ownership scheme is

considered by the Board to have been very successful in retaining key employees

who are delivering significant shareholder value.

Risk Management

The Group has always sought to minimise risk in all aspects of its operation. Primary

risks and risk mitigation measures are briefly considered below.

Strategic risks are limited in the Group’s business. It has a focussed strategy, closely

aligned with its capabilities and is operating in a rapidly growing market sector. The

Board is mindful of the risk of a failed or aborted acquisition and is not

contemplating any major changes which could damage the business. The

environmental sector is largely regulatory driven, which helps mitigate the potential

exposure to political or general economic risk. The most significant risk is one of

reputation and the Group works hard to mitigate this risk by hiring high quality staff,

and applying appropriate quality management procedures. The nature of the

environmental sector tends to attract staff with high ethical standards. This is

reinforced by the Group ethos and procedures. The overall strategic risk and

associated ethical risk are considered low.

The management has a track record of successful leadership and has considerable

strength and depth. The Group has a fast growing and highly motivated professional

staff, many of whom have significant shareholdings in the Group. Risks associated

with both management and key staff are considered low.

The Group has a broadly spread business in terms of sector, geography and client

base. The rapidly growing marketplace provides good opportunities to expand brand

recognition. In terms of suppliers, the Group makes limited use of subcontractors, all

of whom are subject to a strict approval process. Overall market risk, from either

clients or suppliers, is considered low.

The Group normally undertakes work under its Standard Conditions of Engagement.

Where this is not the case, all non-standard contracts are reviewed by a Director and

referred to the Group’s legal advisors where appropriate.

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

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

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

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

considered low to moderate.

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

the level of operating profitability and the strong cash flow are considered to make

this a moderate to low risk. The Group has a robust accounting function which

minimises systemic risk. The Australian, US, Canadian and Irish accounting groups are

small and, therefore, there is some risk as it is difficult to fully separate functions and

avoid self checking. The Board is aware of this and appropriate steps will be taken as

the group grows. Overall the financial risks are considered low to moderate.

Overall the Board considers that risk management within the business is well

managed, although the Board continues to monitor the risk profile as the

Group develops.

37

Corporate Social Responsibility

The Board is committed to operating the Group in a socially and environmentally

responsible manner and ensures that appropriate policies are in place to achieve that.

The responsibility for ensuring compliance is delegated to the Board’s Executive

Directors, and by their nature to every employee in their dealings with their

colleagues, clients and the public at large.

The Group has existing policies covering Business Ethics, Environmental Standards,

Equal Opportunities, Family Support, Charitable Contributions, and Health and

Safety. These are subject to regular review, are amended and updated as appropriate

and are as follows:

Business ethics

SLR expects all staff to behave in a professional manner at all times, maintaining the

highest standards of integrity, honesty and conduct, as well as obeying all applicable

laws. The Group works for many clients in the same business areas and encourages

employees to assess and report conflicts of interest, either personal or corporate, so

these can be avoided or resolved to the satisfaction of all parties.

Environmental standards

As a leading international environmental consultancy, SLR is committed to improving

its environmental performance. Although, by its nature, it is not a business with

substantial direct environmental impact, the Group and its employees continually

seek to minimise that environmental impact in a manner consistent with a growing

Group with its main activities focussed on reducing the environmental impact of its

clients. Examples of the practical aspects of the environmental policy are the

consistent review of the Group’s vehicles to drive a sustained reduction in CO2

emissions (whilst also encouraging the use of public transport where possible), re-use

and recycling of the waste stream where possible, and minimising heat and power

usage in offices.

Equal opportunities

SLR is a people business and is committed to supporting all of its employees. We

afford equal opportunities to all employees and potential employees regardless of

race, creed, colour, nationality, sex or disability. We apply employment policies

which are fair, equitable and consistent with the skills and abilities of our employees

and the needs of the business. SLR will not perpetuate or condone any

discriminatory act or attitude in the conduct of our business with the public or our

employees and any acts of racial or sexual discrimination are regarded as

disciplinary offences.

Family support

The Group also recognises the importance of work/life balance in the wellbeing of

its employees. It has developed a series of “family friendly” policies, and has

encouraged part time working and job share, where these are consistent with the

needs of the individual and the Group.

Charitable policy

The Group and its employees support charities at local and national level, and

employees are encouraged to support local communities.

Health and safety

The Group is committed to achieving and maintaining high standards of health and

safety within the organisation. The Group board is responsible for health and safety

within the Group and for ensuring that safety remains a priority and an integral part

of its activities. The companies within the Group have appropriate general Health

and Safety policies, with specific Health and Safety plans and risk assessments being

developed for particular activities or sites. In certain instances, particularly in the oil

industry, the Group’s employees are inducted into our clients’ policies and

procedures. Where this is the case, and the policies are deemed reasonable and

appropriate, the Group requires its employees to conform to those procedures.

Acquisitions

On 31 January 2010, the company acquired the entire share capital of Andrew

McCarthy Associates Limited for a total consideration up to £1.26 million in cash plus

260,000 B ordinary shares in the share capital of SLR Management Limited.

On 11 February 2010, the company acquired the entire share capital of Heggies Pty

Limited for a total consideration up to £5.6 million in cash plus up to 2,215,186

B ordinary shares in the share capital of SLR Management Limited.

On 1 July 2010, the company acquired the entire share capital of HCG Inc. for a total

consideration up to £4.3 million in cash plus 847,000 B ordinary shares in the share

capital of SLR Management Limited.

In all three acquisitions the total cash consideration includes an amount of deferred

consideration that is dependent upon the performance of the acquired entity

subsequent to acquisition.


38


Post balance sheet events

On 4 March 2011 the company issued Loan note instruments constituting up to

£1,700,060 10% Fixed Rate Unsecured Loan Notes 31 May 2015 and Payment In

Kind Notes.

On 4 March 2011, the company acquired the entire share capital of Metago

International Holdings (Pty) Limited for a total consideration of approximately £4.8

million in cash plus 2,294,250 B ordinary shares in the share capital of SLR

Management Limited.

Auditors

All of the current directors have taken all the steps that they ought to have taken to

make themselves aware of any information needed by the company's auditors for the

purposes of their audit and to establish that the auditors are aware of that

information. The directors are not aware of any relevant audit information of which

the auditors are unaware.

On behalf of the Board

J C Cook

Director

7 March 2011

Report of the independent auditors

39

Opinion on other matters prescribed by the Companies Act 2006

In our opinion the information given in the directors’ report for the financial year for

which the financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act

2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept by the parent company, or returns

adequate for our audit have not been received from branches not visited by us; or

• the parent company financial statements are not in agreement with the accounting

records and returns; or

• certain disclosures of directors’ remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

Christopher Pooles, senior statutory auditor

For and on behalf of BDO LLP, statutory auditor

London

United Kingdom

7 March 2011

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127)

To the members of SLR Management Limited

We have audited the financial statements of SLR Management Limited for the year

ended 29 October 2010 which comprise the consolidated profit and loss account, the

consolidated statement of total recognised gains and losses, the consolidated and

company balance sheets, the consolidated cash flow statement and the related notes.

The financial reporting framework that has been applied in their preparation is

applicable law and United Kingdom Accounting Standards (United Kingdom Generally

Accepted Accounting Practice).

This report is made solely to the company’s members, as a body, in accordance with

Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken

so that we might state to the company’s members those matters we are required to

state to them in an auditor’s report and for no other purpose. To the fullest extent

permitted by law, we do not accept or assume responsibility to anyone other than the

company and the company’s members as a body, for our audit work, for this report, or

for the opinions we have formed.

Respective responsibilities of directors and auditors

As explained more fully in the statement of directors’ responsibilities, the directors are

responsible for the preparation of the financial statements and for being satisfied that

they give a true and fair view. Our responsibility is to audit the financial statements in

accordance with applicable law and International Standards on Auditing (UK and Ireland).

Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical

Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial

statements sufficient to give reasonable assurance that the financial statements are free

from material misstatement, whether caused by fraud or error. This includes an

assessment of: whether the accounting policies are appropriate to the group’s and the

parent company’s circumstances and have been consistently applied and adequately

disclosed; the reasonableness of significant accounting estimates made by the directors;

and the overall presentation of the financial statements.

Opinion on financial statements

In our opinion the financial statements:

• give a true and fair view of the state of the group’s and the parent company’s affairs

as at 29 October 2010 and of the group’s loss for the year then ended;

• have been properly prepared in accordance with United Kingdom Generally

Accepted Accounting Practice; and

• have been prepared in accordance with the requirements of the Companies

Act 2006.

Consolidated profit and loss account for the year ended 29 October 2010

40


Consolidated statement of total recognised gains and losses for the year ended 29 October 2010

The notes on pages 44 to 65 form part of these financial statements

-103,874 19

Note 2010£

2009£

376 , 2 4 8410,075 19

Revaluation of listed investment

(2,669,104)(865,857)19Loss for the financial year

Exchange differences

(2 ,292,856)(351,908)Total recognised gains and losses for the year

54,441,39757,388,592 -57,388,592

Note 2010£

Beforeexceptional

items

2010£

Exceptionalitems

2010£

Total

2009£

Total

Turnover

-9,923,782 -9,923,782

Continuing operations

54,441,39767,312,374 -67,312,374 2

Acquisitions

(25,049,640)(31,421,479)-(31,421,479)3Cost of sales

29,391,75735,890,895 -35,890,895 Gross profit

(28,514,366)(32,393,632)(858,161)(31,535,471)3,6Administrative expenses

4,578,234 7,683,241 (858,161)8,541,402 Operating profit before goodwill amortisation

(3,700,843)(4 ,185,978)-(4 ,185,978)Goodwill amortisation

Operating profit/(loss)

877,3912,857,864 (858,161)3,716,025 Continuing operations

-639,399 -639,399 Acquisitions

877,3913,497,263 (858,161)4,355,424 6

37,32925,721 -25,721 Interest receivable

40,723---Amounts written on investments

(2 ,721,326)(2 ,829,481)-(2 ,829,481)7Interest payable and similar charges

(1,765,883)693,503 Profit/(loss) on ordinary activities before taxation

(903,221)(1 ,559,360)8Taxation on profit/(loss) from ordinary activities

(2 ,669,104)(865,857)19Loss on ordinary activities after taxation

All amounts shown relate to continuing activities.

Consolidated balance sheet at 29 October 2010

41

The financial statements were approved by the Board of Directors and authorised for issue on 7 March 2011.


D G Richards

Director

Company Number 6538090

64,037,86770,643,904 10

Note 2010£

2010£

2009£

2009£

Fixed assets

1,071,2262,725,528 11

Intangible assets

Tangible assets

101,374215,120 12Investments

65,210,46773,584,552

Current assets

16,022,52121,273,690 13Debtors

2,170,5815,098,741 Cash at bank and in hand

18,193,10226,372,431

(11,696,196)(16,374,861)15Creditors: amounts falling due within one year

6,496,906 9,997,570 Net current assets

71,707,373 83,582,122 Total assets less current liabilities

(26,813,409)(38,569,572)16Creditors: amounts falling due after more than one year

44,893,96445,012,550

Capital and reserves

55,11556,705 18Called up share capital

31,527,56131,895,692 19Share premium account

14,519,01914,642,709 19Merger reserve

-103,874 19Revaluation reserve

(1,207,731)(1 ,686,430)19Profit and loss account

44,893,96445,012,550 20Shareholders' funds

Company balance sheet at 29 October 2010

42


The financial statements were approved by the Board of Directors and authorised for issue on 7 March 2011.


D G Richards

Director

Company Number 6538090Note 2010

£2010

£2009

£2009

£

Fixed assets

51,584,64663,257,677 12Investments

Current assets

14,598,88417,413,192 13Debtors

1,050,501 2,347,371 Cash at bank and in hand

15,649,38519,760,563

(11,587,746)(18,227,377)15Creditors: amounts falling due within one year

4,061,639 1,533,186 Net current assets

55,646,285 64,790,863 Total assets less current liabilities

(26,797,460)(37,197,669)16Creditors: amounts falling due after more than one year

28,848,825 27,593,194

Capital and reserves

55,11556,705 18Called up share capital

31,527,56131,895,692 19Share premium account

(2,733,851)(4 ,359,203)19Profit and loss account

28,848,825 27,593,194 20Shareholders' funds

Consolidated cash flow statement for the year ended 29 October 2010

43


Note 2010£

2010£

2009£

2009£

Net cash inflow from operating activities 8,123,5819,841,485 23

Returns on investments and servicing of finance

37,32925,721 Interest received

(2,222,678)(2 ,129,382)Interest and similar charges paid

(4,790)(30,087)Interest element of finance lease rental payments

(261,045)-Loan arrangement fees

(2 ,451,184)(2 ,133,748)Net cash outflow from returns on investments and servicing of finance

(1 ,952,765)(1 ,214,741)Taxation

Capital expenditure and financial investment

(558,649)(910,046)Purchase of tangible fixed assets

-7,590 Sale of tangible fixed assets

(558,649)(902,456)

Acquisitions and disposals

(1 ,479,820)(1 ,320,195)Deferred purchase consideration

(218,743)(7 ,064,532)Purchase of subsidiary undertakings

75,650 594,836 Bank balances acquired with subsidiary undertakings

(1,622,913)(7 ,789,891)

1,538,070 (2 ,199,351)Cash (outflow)/inflow before use of liquid resources and financing

Financing

11,138 30,611 Share capital issued

- 8,854,148 Loans advanced in the year

(1 ,850,000)(2 ,838,979)Loan repayments in the year

(77,895)(186,247)Capital element of finance lease rental payments

(84,570)(44,389)Employee benefit trust transactions

(2,001,327)5,815,144

(463,257)3,615,793 24,25Increase/(decrease) in cash

Notes forming part of the financial statements for the year ended 29 October 2010

44


1 Accounting policies

The financial statements have been prepared under the historical cost convention as

modified by the revaluation of fixed asset listed investments and are in accordance

with applicable accounting standards. The following principal accounting policies

have been applied:

Basis of consolidation

The consolidated financial statements incorporate the results of SLR Management

Limited and all of its subsidiary undertakings as at 29 October 2010 using the

acquisition method of accounting. The results of subsidiary undertakings are included

from the date of acquisition.

Goodwill

Goodwill arising on an acquisition of a subsidiary undertaking is the difference between

the fair value of the consideration paid and the fair value of the assets and liabilities

acquired. It is capitalised and amortised through the profit and loss account over the

directors' estimate of its useful economic life. Impairment tests on the carrying value of

goodwill are undertaken:

• at the end of the first full year following acquisition;

• in other periods if events or changes in circumstances indicate that the carrying value

may not be recoverable.

Goodwill arising on the acquisition of a company's trade and assets is the difference

between the fair value of the consideration paid and the fair value of the assets and

liabilities acquired. It is capitalised and amortised through the profit and loss account over

the directors' estimate of its useful economic life, being between 5 and 20 years

dependent on the acquisition made.

Impairment of fixed assets and goodwill

The need for any fixed asset impairment write down is assessed by comparison of the

carrying value of the asset against the higher of realisable value and value in use.

Turnover

Turnover represents the amounts (excluding VAT or local taxes) derived from the

provision of work for clients during the year.

Services provided to clients during the year which at the balance sheet date have not

been billed, have been recognised as turnover in accordance with Financial Reporting

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

Recognition'. Turnover recognised in this manner is based on an assessment of the fair

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

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

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

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

Stocks

Long term contracts are assessed on a contract by contract basis and are reflected in the

profit and loss account by recording turnover and related costs as contract activity

progresses. Where the outcome of each long term contract can be assessed with

reasonable certainty before its conclusion, the attributable profit is recognised in the

profit and loss account as the difference between the reported turnover and related costs

for that contract.

Depreciation

Depreciation is provided to write off the cost less estimated residual values, of all fixed

assets, evenly over their expected useful lives. It is calculated at the following rates:

Plant and machinery - 20% - 33% per annum

Fixtures and fittings - 15% - 33% per annum

Motor vehicles - 33% per annum

Computer equipment - 33% per annum

Investments

Listed investments held as fixed assets are stated at market value under the

alternative accounting rules permitted by United Kingdom Generally Accepted

Accounting Practice. All other investments held as fixed assets are stated at cost less

any provision for impairment.

Taxation

The charge for taxation is based on the profit for the year and takes into account

taxation deferred.

Current tax is measured at amounts expected to be paid using the tax rates and laws

that have been enacted or substantively enacted by the balance sheet date.

Deferred tax balances are recognised in respect of all timing differences that have

originated but not reversed by the balance sheet date except that the recognition of

deferred tax assets is limited to the extent that the company anticipates making

sufficient taxable profits in the future to absorb the reversal of the underlying timing

differences. Deferred tax balances are not discounted.

Leased assets

Where assets are financed by leasing agreements that give rights approximating to

ownership ('finance leases'), the assets are treated as if they had been purchased outright.

The amount capitalised is the present value of the minimum lease payments payable during

the lease term. The corresponding leasing commitments are shown as amounts payable to

the lessor. Depreciation on the relevant assets is charged to the profit and loss account.

Lease payments are analysed between capital and interest components so that the

interest element of the payment is charged to the profit and loss account over the period

of the lease and represents a constant proportion of the balance of capital repayments

outstanding. The capital part reduces the amounts payable to the lessor.

All other leases are treated as operating leases. Their annual rentals are charged to the

profit and loss account on a straight-line basis over the term of the lease.

45

Foreign currency

Foreign currency transactions of individual companies are translated at the rates ruling

when they occurred. Foreign currency monetary assets and liabilities are translated at the

rates ruling at the balance sheet dates. Any differences are taken to the profit and loss

account of the companies concerned except for foreign equity investments financed

through foreign currency borrowings which are translated at the rates ruling at the balance

sheet dates with any differences arising taken to reserves of the companies concerned.

The results of overseas operations are translated at the average rates of exchange during

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

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

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

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

All other exchange differences in the consolidated financial statements are taken to the

consolidated profit and loss account with the exception of differences on foreign

currency borrowings used to finance or provide a hedge against foreign equity

investments. These are taken directly to consolidated reserves to the extent of the

exchange difference arising on the related investment.

Pension costs

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

profit and loss account in the period in which they become payable.

Government grants and assistance

Grants (and similar assistance) of a revenue nature are credited to the profit and loss

account in the period to which they relate.

Financial liabilities and equity

Financial liabilities and equity are classified according to the substance of the financial

instrument's contractual obligations, rather than the financial instrument's legal form.

Finance costs

Finance costs are charged to the profit and loss account over the term of the debt so

that the amount charged is at a constant rate on the carrying amount. Finance costs

include issue costs, which are initially recognised as a reduction in the proceeds of the

associated capital instrument.

Employee benefit trust

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

from shareholders’ funds in the group balance sheet. Any cash received by the EBT on

disposal of the shares it holds is also recognised directly in shareholders’ funds. Other

assets and liabilities of the EBT (including borrowings) are recognised as assets and

liabilities of the group.

FRS 20 'Share based payment'

The fair value of employee share option plans is measured at the date of grant of the

option using an appropriate valuation model. The resulting cost, as adjusted for the

expected and actual level of vesting of the options, is charged to income over the

period in which the options vest. At each balance sheet date before vesting, the

cumulative expense is calculated, representing the extent to which the vesting period

has expired and management’s best estimate of the achievement or otherwise of non-

market conditions, of the number of equity instruments that will ultimately vest. The

movement in cumulative expense since the previous balance sheet date is recognised

in the income statement with a corresponding entry in equity.

2 Turnover

Turnover is wholly attributable to the principal activity of the group and arises in the

following geographic markets:

United Kingdom

United States

2010£

2009£

Canada

Europe

Australia

Rest of the World

26,250,81626,184,257

7,439,37410,525,601

17,363,15018,835,869

3,273,3532,834,824

-8,839,873

114,70491,950

54,441,39767,312,374


46


There were 5 (2009: 6) directors in the Group's defined contribution pension schemes

during the year.

During the year no director exercised share options. One director exercised share options

in 2009.

5 Directors4 Employees

The average number of employees, including directors, during the year analysed by

category was as follows:

The company has no employees.

3 Acquired operations

The analysis of continuing and acquired operations in respect of cost of sales and administration expenses is shown below.

HCG Inc. was acquired on 1 July 2010 and its operations were merged into SLR International Corporation following acquisition. Separate information for this acquired operation is not

available and as such its income, cost of sales and administrative expenses since acquisition have been included as part of continuing operations in the year ended 29 October 2010.

Details of HCG Inc.’s trading in the periods prior to its acquisition is given in note 27.

2010Continuing

£

2010Acquired

£

2010Total

continuing£

2009Total

continuing£

Cost of sales 25,049,64031,421,479 4 ,922,423 26,499,056

28,514,36632,393,632 4 ,361,960 28,031,672 Administrative expenses

Wages and salaries

Staff costs consist of:

Social security costs

2010£

2009£

Other pension costs

Share based payments

23,155,34428,445,337

2,109,3932,358,925

1,007,7861,365,609

125,34296,280

26,397,86532,266,151

Technical

Management and administration

2010No.

2009No.

549683

110150

659833

Fees and remuneration for

management services

Directors' emoluments consist of:

Group2010

£

Group2009

£

557,021544,289

Payments to defined contribution

pension schemes 87,084

644,105

26,376

Payments to defined contribution

pension schemes 7,34910,500

151,935159,164

570,665

144,586148,664 Emoluments

Emoluments of the highest paid director:

47

7 Interest payable and similar charges

6 Operating profit

A total charge of £858,161 (2009: £1,720,336) has been recognised in respect of exceptional

administrative costs and relates to:

The redundancy costs relate to restructuring of group activities, primarily in the UK, US and

Canada. The office closure costs relate to the expense incurred in respect of the closure of

offices in the US and Canada during the year.

The bad debt expense in the prior year referred to above represents the total amount

charged for that year. The current year bad debt expense has been included within

administration expenses.

The bonus paid to staff following the acquisition of CSA, resulted from the decision by CSA

shareholders to waive their rights to an element of the contracted consideration for the

acquisition and instead to pay that amount to staff as a bonus.

Depreciation - owned assets

This has been arrived at after charging:

Group2010

£

Group2009

£

898,917946,153

- leased assets 49,144159,125

Amortisation of goodwill 3 ,700,8434,185,978

Hire of plant and machinery

- operating leases 45,20456,471

Hire of other assets

- operating leases 2,390,6012,030,254

Fees payable to the company’s auditor for

the audit of the company’s annual accounts 23,25049,500

Fees payable to the company’s auditor

and its associates for other services:

118,349154,604

56,59779,972 - tax services

8,506- - IT services

51,00020,950 - all other services

183,31318,200 Exchange differences

- 19,848 Loss on disposal of fixed assets

- 38,983 - services relating to corporate finance transactions

- the audit of the company’s subsidiaries

pursuant to legislation

Bad debts

Redundancy costs

Group2010

£

Group2009

£

642,145-

577,958479,967

CSA acquisition – staff bonus 350,208-

Office closure costs - 378,194

Other costs 150,025-

1 ,720,336858,161

Bank loans and overdrafts

Hire purchase and finance leases

Group2010

£

Group2009

£

1,995,3172,422,742

4,79030,087

Unwinding of discount on

deferred consideration 213,683122,533

497,274248,183 Debt issue and related costs

10,2625,936 Other interest costs

2,721,3262,829,481


48


9 Loss for the financial period

The company has taken advantage of the exemption allowed under section 408 of

the Companies Act 2006 and has not presented its own profit and loss account in

these financial statements. The group loss for the year includes a loss after tax of

£2,133,832 (2009: loss of £2,105,722) dealt with in the financial statements of the

parent company.

10 Intangible assets

The tax assessed for the year is different to the standard rate of corporation tax in the UK.

The differences are explained below:

Goodwill on consolidation is being amortised over the directors’ best estimate of its

useful economic life, being between 5 and 20 years dependent on the acquisition made.

Profit/(loss) on ordinary activities before tax

Group2010

£

Group2009

£

(1 ,765,883)693,503

Profit/(loss) on ordinary activities at the

standard rate of corporation tax in the UK

of 28.00% (2009: 28.00%) (494,447)194,181

Effects of:

141,921179,429 Expenses not deductible for tax purposes

930,0621,073,234 Goodwill on consolidation

78,63741,158

57,30129,588 Movement in short term timing differences

(17,103)-Non-taxable income

138,18878,041 Tax rate differences

205,648(31,913)

64,80766,415 Overseas provincial and capital taxes

(100,403)-Tax credit

21,00613,286 Other items

1,025,6171,643,419 Current tax charge for period

Adjustments to tax charge in respect of

previous periods

Depreciation for the year in excess of

capital allowances

Cost

Group

Goodwill onconsolidation

£

At 31 October 2009 69,218,627

Additions 10,514,512

Adjustments to deferred consideration 2,776

Adjustment to cost of acquisition 274,727

At 29 October 2010 80,010,642

Amortisation

At 31 October 2009 5,180,760

Provided for the year 4,185,978

At 29 October 2010 9,366,738

Net book value

At 29 October 2010 70,643,904

At 30 October 2009 64,037,867

8 Taxation on profit/(loss) from ordinary activities

Current tax

Group2010

£

Group2009

£

UK corporation tax on profit/(loss)

of the period 489,531665,475

Adjustments to UK corporation tax in

respect of previous periods (10,435)2,097

330,4401,009,857 Overseas tax

216,081 (34,010)

1,025,617 1,643,419 Total current tax

Deferred tax

(122,396)(84,059)

903,221 1,559,360

Origination and reversal of timing

differences

Adjustments to overseas tax in respect

of previous periods

49

11 Tangible assets

Fixtures& fittings

£

Motorvehicles

£

Computerequipment

£

Total

£

Cost

Group

Plant &machinery

£

At 31 October 2009 5,968,833 3 ,746,007 101,283 1 ,359,692 761,851

Additions 1,163,128808,508 72,407 91,028 191,185

Acquired with subsidiary 2,691,864581,583 203,724 899,058 1,007,499

Disposals (465,096)(284,094) (46,619) (77,327) (57,056)

Exchange differences 289,501109,596 19,114 98,541 62,250

At 29 October 2010 9,648,230 4 ,961,600 349,909 2 ,370,992 1 ,965,729

Depreciation

At 31 October 2009 4,897,607 3 ,050,441 77,779 1 ,142,720 626,667

Charge for the year 1,105,278628,408 38,755 274,826 163,289

Acquired with subsidiary 1,125,617390,711 90,154 279,686 365,066

Disposals (437,658)(264,208) (46,619) (69,775) (57,056)

Exchange differences 231,85882,718 9,854 84,607 54,679

At 29 October 2010 6,922,702 3 ,888,070 169,923 1 ,712,064 1 ,152,645

Net book value

At 29 October 2010 2,725,528 1 ,073,530 179,986 658,928 813,084

At 30 October 2009 1,071,226695,56623,504216,972135,184

Assets held under finance leases and hire purchase contracts:

Net book value

At 29 October 2010 640,195 144,395 156,658 -339,142

At 30 October 2009 26,501 13,700 -11,348 1 ,453


50


* investment held by SLR Holdings Limited

** investment held by SLR Environmental Holdings Limited

*** investment held by SLR Group Limited

† investment held by SLR Environmental Consulting (Ireland) Limited

^ investment held by SLR Consulting Australia Pty Limited

(formerly Heggies Pty Limited)

^^ investment held by SLR International Corporation

12 Fixed asset investments

Subsidiary undertakings

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

Country ofincorporation orregistration

Class of share capital held

Proportionof share capitalheld

Nature of business

SLR Holdings Limited

Name

Holding company100%OrdinaryEngland

SLR Group Limited* Holding company100%OrdinaryEngland

John Barnett Associates Limited† Environmental consultants100%OrdinaryIreland

SLR Intermediate Holding Company Limited*** Holding company100%OrdinaryEngland

Andrew McCarthy Associates Limited Environmental consultants100%OrdinaryEngland

SLR Consulting Australia Pty Limited (formerly Heggies Pty Limited) Environmental consultants100%OrdinaryAustralia

New Environment Pty Limited^ Environmental consultants100%OrdinaryAustralia

SLR Consulting NZ Limited Environmental consultants100%OrdinaryNew Zealand

HCG, Inc.^^ Environmental consultants100%OrdinaryUSA

SLR Consulting Limited* Environmental consultants100%OrdinaryEngland

SLR International Corporation* Environmental consultants100%OrdinaryUSA

SLR Environmental Holdings Limited Holding company100%OrdinaryIreland

SLR Consulting (Canada) Limited* Environmental consultants100%

100%

Ordinary

PreferredCanada

SLR Environmental Consulting (Ireland) Limited** Environmental consultants100%

100%

A Ordinary

B OrdinaryIreland

The consolidated financial statements include amounts relating to SLR of North Carolina

Corporation, a company established in the state of North Carolina, USA. Although the group

does not legally own the share capital of this entity, the directors and officers comprise only

of management from SLR International Corporation who have the ability to adopt, amend

and repeal its byelaws and therefore control the operating and financial policies of the entity.

Local regulations prevent the group holding the shares and the share capital is therefore held

on behalf of the group. Accordingly, the entity has been treated as a wholly owned subsidiary

in these financial statements.

Valuation

Group

At 31 October 2009

Listedinvestments

£

101,374

Revaluation 103,874

Exchange differences 9,872

At 29 October 2010 215,120

Net book value

At 29 October 2010 215,120

At 30 October 2009 101,374

Historical cost 101,374

Cost and net book value

Company

At 31 October 2009

Groupundertakings

£

51,584,646

Additions 10,753,212

Adjustment to cost of acquisition 274,727

Foreign exchange movements 645,092

At 29 October 2010 63,257,677

The additions to the Company’s fixed asset investments represent the purchase of 100% of

the share capital of Andrew McCarthy Associates Limited, Heggies Pty Limited and

consideration given on behalf of SLR International Corporation’s acquisition of HCG, Inc.

together with the fair value of share based payment awards made to employees of subsidiary

undertakings. Further details of the acquisitions during the year are contained in note 27.

51

13 Debtors

Group2010

£

Company2010

£

Group2009

£

Company2009

£

Trade debtors -12,455,766 -17,571,973

Amounts owed by group undertakings 14,586,714-17,378,683 -

Other debtors 1,67370,98719,043 71,865

Prepayments and accrued income 10,4973,179,84215,466 2 ,829,897

Deferred tax -315,926-799,955

14,598,88416,022,521 17,413,192 21,273,690

14 Deferred taxationThe movement in the deferred tax asset is as follows:

The deferred tax asset at the balance sheet date is analysed as follows:

Group

At 31 October 2009

£

315,926

Credited to profit and loss account 84,059

Acquired with subsidiaries 360,100

Exchange differences 39,870

At 29 October 2010 799,955

Decelerated capital allowances

2009£

2010£

174,581 184,092

Short term timing differences 132,400608,351

Unrelieved tax losses 8,9457,512

315,926799,955


52


16 Creditors: amounts falling due after more than one year

Group2010

£

Company2010

£

Group2009

£

Company2009

£

Bank loans (secured) 26,256,62026,256,620 27,858,911 27,858,911

10% Fixed rate unsecured loan notes --5,103,561 5 ,103,561

Obligations under finance leases and hire purchase contracts -15,949- 247,262

Other creditors 540,840540,8404,235,197 5 ,359,838

26,797,46026,813,40937,197,669 38,569,572

15 Creditors: amounts falling due within one year

The bank overdraft facility is held by SLR Consulting (Canada) Limited and is secured by a fixed and floating charge on the assets of SLR Consulting (Canada) Limited.

The bank loans are secured by a fixed and floating charge over the assets of the company and certain subsidiaries, the company’s shares in SLR Consulting (Canada) Limited

and an assignment of certain Keyman policies.

Included within short and long term other creditors are amounts totalling £5,536,637 (2009: £1,759,181) for the group and £3,925,461 (2009: £1,016,959) for the company, which

represent the directors best estimate of deferred consideration payable in connection with the acquisition of subsidiary undertakings. Also included within long term other

creditors are amounts totalling £1,205,780 (2009: £Nil) for the group and company, which represent issued SLR Management Limited shares disclosed as a liability in accordance

with FRS 25 as the company has a potential liability to convert these shares into cash at a specified future date.

Group2010

£

Company2010

£

Group2009

£

Company2009

£

Bank overdraft (secured) -687,633 --

Bank loans (secured) 2,030,7492,030,7492,326,749 2 ,326,749

Trade creditors 22,1803,690,82854,523 5 ,446,117

Amounts owed to group undertakings 8,755,200-14,050,060 -

Taxation and social security -1 ,168,736-1,719,113

Corporation tax -56,343-519,473

Obligations under finance leases and hire purchase contracts -28,398-269,610

Other creditors 476,1191,218,341896,044 1 ,663,149

Accruals and deferred income 303,4982,815,168900,001 4 ,430,650

11,587,74611,696,19618,227,377 16,374,861

53

2010Unsecuredloan notes

£

2010 Bankloans

£

2010Deferred

consideration£

2010Financeleases

£

Maturity of debt

Within one year

Group

269,610 1 ,663,149 2 ,326,749 -

In more than one year but not more than two years 121,546 1 ,727,571 4 ,228,068 -

In more than two years but not more than five years 125,716 3 ,351,697 23,630,843 5 ,103,561

516,872 6 ,742,417 30,185,660 5 ,103,561


£

2009 Bankloans

£

2009Deferred

consideration£

2009Financeleases

£

Within one year

Group

28,3981,218,3412,030,749 -

In more than one year but not more than two years 15,949444,9862,326,749-

In more than two years but not more than five years -95,85416,529,871-

After five years --7 ,400,000-

44,3471,759,18128,287,369-


£

2009 Bankloans

£

2009Deferred

consideration£

Within one year

Company

476,1192,030,749 -

In more than one year but not more than two years 444,9862,326,749-

In more than two years but not more than five years 95,85416,529,871-

After five years -7 ,400,000-

1,016,95928,287,369-


£

2010 Bankloans

£

2010Deferred

consideration£

Within one year

Company

896,044 2 ,326,749 -

In more than one year but not more than two years 1,295,745 4 ,228,068 -

In more than two years but not more than five years 2,939,452 23,630,843 5 ,103,561

5 ,131,241 30,185,660 5 ,103,561


54


17 Financial instruments

Interest rate and currency of financial assets and liabilities

The group holds or issues financial instruments to finance its operations and enters into derivative contracts to manage the interest rate risks arising from its sources of finance.

In addition, various financial instruments such as trade debtors and trade creditors, arise directly from the group’s operations.

Operations are financed by a mixture of retained profits, bank borrowings, finance lease and hire purchase contracts and long term loans. Bank borrowings, finance lease and hire

purchase contracts and long term loans are primarily used to finance capital investment. Working capital requirements are met principally out of floating rate bank borrowings,

overdrafts and retained profits. Further details on the group’s approach to financial risks faced are provided in the directors’ report.

Comparative information has been excluded from the following financial instrument disclosures on the basis that reliable information was not readily available.

At 29 October 2010 cash of £5,098,741 was held in current accounts and was earning a weighted average rate of interest of 0.95%. No dividends were received and there is no maturity

date on the listed fixed asset investment held by the group.

After taking into account the various interest rate swaps entered into by the group, the currency and interest rate profile of the group’s borrowings is shown below:

Sterling, US dollar and Australian dollar floating rate financial liabilities primarily

comprise bank borrowings, bearing an interest rate of LIBOR plus a margin between 1.75%

and 4%, which is dependent on the ratio of total net debt to EBITDA. The remaining

Sterling, US dollar, Australian dollar and Euro floating rate financial liabilities comprise

deferred consideration on acquisitions which is discounted at the borrowing rate

available to the group.

The weighted average interest rate of fixed rate financial liabilities and the weighted

average period for which they are fixed is as follows:

Floating rate financialliabilities

£

Fixed rate financialliabilities

£

Total

£

Sterling

Currency

31,879,603 5 ,118,345 26,761,258

US Dollar 2,654,219 -2,654,219

Australian Dollar 7,644,847 443,478 7 ,201,369

Canadian Dollar 57,407 57,407 -

Euro 312,434 -312,434

42,548,510 5 ,619,230 36,929,280

Weighted averageInterest rate

%

Weighted averagePeriod for whichinterest is fixed

Years

Sterling

Currency

4.6 10.0%

Australian Dollar 2.5 8 .5%

Canadian Dollar 0.5 0 .0%

55

Currency exposures

Borrowing facilities

The monetary assets and liabilities of the group at 29 October 2010 that are not denominated in the functional currency of the operating unit concerned are shown below. The

amounts shown below exclude foreign currency borrowings obtained to finance foreign currency investments.

The group had the following undrawn committed borrowing facilities at 29 October 2010:

These facilities are for the purposes of providing flexibility in the management of liquidity.

US Dollar£

Euro£

Total£

Sterling

Functional currency of group operations Net foreign currency monetary assets/(liabilities)

51,911 51,911 -

Canadian Dollar (13,166)-(13,166)

38,745 51,911 (13,166)

£

Expiring in one year or less 1,940,415

Expiring in more than one year but not more than two years -

Expiring in more than two years

Total

1,311,555

3 ,251,970

Fair values of financial assets and financial liabilities

Set out below is a comparison, by category, of the book values and fair values of the group’s financial assets and liabilities at 29 October 2010. Where available, market rates

have been used to determine current values. Where market rates are not available, current values have been calculated by discounting cash flows at prevailing interest rates

and exchange rates.

Fair value£

Listed investments 215,120

Cash 5,098,741

Book value£

215,120

5 ,098,741

Bank borrowings (30,185,660)(30,185,660)

Interest hedge (463,548)-

Unsecured loan notes (5 ,103,561)(5,103,561)

Deferred consideration (6 ,742,417)(6,742,417)

Finance lease and hire purchase contracts (516,872)(516,872)

The group is mainly exposed to credit risk from credit sales. It is group policy, implemented locally, to assess the credit risk of new customers before entering contracts. Such credit

ratings are taken into account when determining whether to grant credit terms and, if so, credit limits.

The group does not enter into complex derivatives to manage credit risk, although in certain isolated cases may take steps to mitigate such risks if it is sufficiently concentrated.

Credit risk


56


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

- On 29 January 2010, the company issued 260,000 B ordinary shares of £0.001 each totalling £260.00 as part of the consideration for the acquisition of the entire share capital of

Andrew McCarthy Associates Limited.

- On 11 February 2010, the company issued 1,252,062 B ordinary shares of £0.001 each totalling £1,252.06 as part of the consideration for the acquisition of the entire share capital of

Heggies Pty Limited. The shares issued have been included within creditors, amounts falling due after one year in accordance with FRS 25. They are disclosed within deferred

consideration in note 16.

- On 1 July 2010, the company issued 847,000 B ordinary shares of £0.001 each totalling £847.00 as part of the consideration for the acquisition of the entire share capital of HCG,

Inc., by its subsidiary SLR International Corporation.

- The Company allotted 432,822 B ordinary shares of £0.001 each totalling £432.82 following the exercise of share options by employees. The Company received a total consideration

of £30,611 in respect of these shares.

- The Company allotted 50,000 B ordinary shares of £0.001 each in respect of the earn out consideration relating to acquisition of Architecture and Planning Solutions Limited.

During the year ended 30 October 2009, the following events took place in respect of the company’s share capital:

- On 3 November 2008, the company issued 30,000 B ordinary shares of £0.001 each totalling £30.00 as part of the consideration for the acquisition of the entire share capital of

Bowman Planton Limited.

- The Company allotted 177,814 B ordinary shares of £0.001 each totalling £177.81 following the exercise of share options by employees. The Company received a total consideration

of £11,138 in respect of these shares.

The A ordinary and B ordinary shares rank pari-passu, except that the company’s Articles of Association provide for a specific formula to be applied in the apportionment of the

remaining assets of the company after payment of its liabilities in the event of a return of assets on liquidation.

18 Share capital

2009Number

2010£

2009 £

Equity

Allotted, called up and fully paid

A ordinary shares of £0.001 each 18,539 18,539 18,538,710

B ordinary shares of £0.001 each 36,576 38,166 36,576,334

2010Number

18,538,710

38,166,156

55,115 56,705 55,115,044 56,704,866

Non equity

B ordinary shares of £0.001 each - 1 ,252 - 1 ,252,062

57

Exerciseperiod

Exerciseprice

(Pence)

Optionsoutstanding

at 29 October2010

Number

Lapsed/adjusted during

the year

Number

Exercisedduring the

year

Number

Granted during the

year

Number

Optionsoutstanding

at 31 October2009

Number

Dateof grant

Nov 2008 - Nov 20092.68 460,370 - (23,014)- 483,384 18 July 2008

Nov 2008 - Nov 20103.13 1 ,266,709 (9 ,005)(42,018)- 1 ,317,732 18 July 2008

Nov 2008 - Nov 20116.60 699,647 (4 ,001)(4 ,002)- 707,650 18 July 2008

Jul 2008 - Nov 201140.00 230,000 (40,000)- - 270,000 18 July 2008

Nov 2008 - Nov 201240.00 836,000 (45,000)(4 ,000)- 885,000 18 July 2008

Nov 2009 - Nov 201340.00 872,500 (5 ,000)- - 877,500 18 July 2008

Feb 2009 - Nov 201340.00 20,000 - - - 20,000 1 February 2009

4,385,226 (103,006)(73,034)- 4,561,266

EMI share option

scheme

Nov 2008 - Nov 20092.68 111,015 - (126,025)- 237,040 18 July 2008

Unapproved share

option scheme

Nov 2008 - Nov 20103.13 155,594 - (29,036)- 184,630 18 July 2008

Nov 2008 - Nov 20116.60 166,054 (26,021)(56,020)- 248,095 18 July 2008

Sep 2008 - Sep 20106.60 520,458 (61,722)(121,707)- 703,887 18 July 2008

Nov 2008 - Nov 201240.00 117,000 (2 ,485)(19,000)- 138,485 18 July 2008

Nov 2009 - Nov 201340.00 120,000 5 ,000 - - 115,000 18 July 2008

Nov 2008 - Nov 201040.00 357,500 (42,500)- - 400,000 18 July 2008

Nov 2009 - Nov 201340.00 389,500 (170,000)(8 ,000)- 567,500 1 February 2009

Feb 2011 - Feb 201340.00 441,992 (8 ,008)- 450,000- 12 February 2010

Nov 2010 - Nov 201440.00 496,400 (31,100)- 527,500- 1 June 2010

Jul 2011 - Jul 201340.00 749,289 - - 749,289-

3,624,802 (336,836)(359,788)1,726,789 2 ,594,637

30 June 2010

Share options


58


The merger reserve, which arises on consolidation, represents the difference between the fair value and nominal value of shares issued on the acquisition of subsidiary companies

where the company has elected to take advantage of merger relief.

19 Reserves

Sharepremiumaccount

£

Mergerreserve

£

Revaluationreserve

£

Profitand lossaccount

£

At 31 October 2009

Group

(1 ,207,731)-14,519,01931,527,561

Share capital issued in the year --123,690368,131

Loss for the year (865,857)---

Exchange differences 410,075---

Shares acquired by employee benefit trust (1 ,384,054)---

Shares sold by employee benefit trust 1,264,857---

Share based payments 96,280---

Revaluation of listed Investment -103,874--

At 29 October 2010 (1,686,430)103,874 14,642,709 31,895,692

Sharepremiumaccount

£

Profitand lossaccount

£

At 31 October 2009

Company

(2 ,733,851)31,527,561

Share capital issued in the year -368,131

Loss for the year (2 ,133,832)-

Exchange differences 412,200-

Share based payments 96,280-

At 29 October 2010 (4,359,203)31,895,692

59

As at 29 October 2010, the group had annual commitments under non-cancellable operating leases as set out below:

20 Reconciliation of movements in shareholders' funds

21 Commitments under operating leases

The group operates defined contribution pension schemes. The assets of the schemes are held in independently administered funds. The pension cost charge represents contributions

payable by the group to the funds.

22 Pensions

Group2009

£

Company2009

£

Loss for the year (2 ,105,722)(2 ,669,104)

Company2010

£

(2,133,832)

Group2010

£

(865,857)

Share capital issued in the year 11,16823,138369,721 493,411

Exchange differences -376,248412,200 410,075

Shares acquired by employee benefit trust -(124,590)-(1 ,384,054)

Shares sold by employee benefit ---1,264,857

Revaluation reserve ---103,874

Share based payments 125,342125,34296,280 96,280

Net movement in shareholders’ funds (1 ,969,212)(2 ,268,966)(1 ,255,631)118,586

Opening shareholders’ funds 30,818,03747,162,93028,848,825 44,893,964

Closing shareholders' funds 28,848,82544,893,96427,593,194 45,012,550

2009Land andbuildings

£

2009

Other£

Operating leases which expire:

Group

2010

Other£

2010Land andbuildings

£

Within one year 69,864171,39197,676 91,156

In two to five years 242,4321,055,827143,486 2 ,386,752

Over five years 1,120571,259-568,995

313,4161,798,477241,162 3 ,046,903

60



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

25 Analysis of net debt

24 Reconciliation of net cash inflow/(outflow) to movementin net debt

Operating profit before exceptional items

2009£

2010£

2,597,727 4,355,424

Exceptional items (1,720,336)(858,161)

Operating profit 877,3913,497,263

Amortisation 3,700,8434,185,978

Depreciation 948,0611,105,278

Share based payments 125,34296,280

Loss on the sale of fixed assets -19,848

Exchange differences 527,229416,980

(Increase)/decrease in debtors 2,689,888(729,411)

Increase/(decrease) in creditors (745,173)1,249,269

Net cash inflow from operating activities 8 ,123,5819,841,485

Increase/(decrease) in cash in the year

2009£

2010£

(463,257)3,615,793

Cash (inflow)/outflow from change

in debt and lease financing 3,407,715(4 ,508,727)

Change in net debt resulting from

cash flows 2,944,458(892,934)

Debt acquired with subsidiary

undertakings -(1 ,098,668)

(410,053)(6 ,850,218)Other non cash movements

2,534,405(8 ,841,820)Movement in net debt in the year

(31,142,354)(28,607,949)Opening net debt

(28,607,949)(37,449,769)Closing net debt

Non-cashchanges

£

At29 October

2010£

Cash in hand and at bank 5,098,741 -

Cashflows

£

2,928,160

Acquisitions(excluding cashand overdrafts)

£

-

Bank overdraft - - (687,633)-

At30 October

2009£

2,170,581

(687,633)

5,098,741 - 3 ,615,793 - 1 ,482,948

Debt due within one year (3 ,989,898)(4 ,899,982)4,159,174 - (3 ,249,090)

Debt due after one year (38,041,740)(1 ,697,154)(8 ,854,148)(692,978)(26,797,460)

Obligations under finance leases and hire purchase contracts (516,872)(253,082)186,247 (405,690)(44,347)

(42,548,510)(6 ,850,218)(4 ,508,727)(1 ,098,668)(30,090,897)

Total (37,449,769)(6 ,850,218)(892,934)(1 ,098,668)(28,607,949)

Non-cash changes of £6,850,218 (2009: £410,053) comprise: deferred consideration arising on acquisitions in the year of £6,167,480 (2009: £108,086); new finance lease and hire purchase

contracts of £253,082 (2009: £Nil); exchange differences of £88,310 (2009: £218,165); and other items including loan arrangement fees and the unwinding of the discount on deferred

consideration totalling £341,346 (2009: £83,802).

61

26 Contingent liabilities and guarantees

The company has guaranteed certain bank borrowings of its subsidiary undertakings, SLR Holdings Limited, SLR Group Limited, SLR International Corporation, SLR Consulting Limited

and SLR Consulting (Canada) Limited. At 29 October 2010, total bank borrowings subject to the guarantee amounted to £14,784 (2009 - £31,256).

At 29 October 2010 a subsidiary company, SLR Consulting Australia Pty Limited, had provided bank guarantees on leasehold premises amounting to £192,769 (2009 - £Nil).

27 AcquisitionsOn 29 January 2010, the company acquired the entire share capital of Andrew McCarthy

Associates Limited. The book value of the assets and liabilities acquired (which was

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

goodwill arising on acquisition is shown below:The results of Andrew McCarthy Associates Limited prior to its acquisition were

as follows:

The net cash outflow arising from the acquisition of Andrew McCarthy Associates Limited

was as follows:

Fixed assets

Book andfair value

£

Tangible fixed assets 57,935

Current assets

Debtors 83,645

Cash at bank and in hand 531,417

Total assets 672,997

Creditors (150,759)

Net assets 522,238

Consideration

104,000 Settled by shares at fair value

957,487 Settled by cash (including expenses of £47,771)

300,182

1 ,361,669

Deferred consideration

522,238 Net assets acquired

839,431 Goodwill arising on consolidation

Turnover

Year ended31 December

2009£

Period ended29 January

2010£

1,364,54215,937

Operating (loss)/profit 405,105(50,394)

Net interest 35117

(Loss)/profit on ordinary activities

before taxation 405,456(50,377)

Taxation on (loss)/profit from ordinary

activities (96,980)10,417

308,476(39,960)(Loss)/profit for the period

Cash consideration (as above)

£

957,487

Bank balances acquired (531,417)

Net outflow of cash 426,070

62



27 Acquisitions (continued)

On 12 February 2010, the company acquired the entire share capital of Heggies Pty

Limited. The book value of the assets and liabilities acquired (which was equivalent to

their fair value), together with details of the purchase consideration and goodwill arising

on acquisition is shown below: The results of Heggies Pty Limited prior to its acquisition were as follows:

Turnover

Year ended30 June2009

Australian $

Period ended12 February

2010Australian $

19,350,23211,793,637

Operating profit 1 ,571,290526,612

Net interest 191,65882,488

Profit on ordinary activities before

taxation 1,379,632444,124

Taxation on profit from ordinary

activities (472,409)(162,945)

907,223281,179 Profit for the period

The net cash outflow arising from the acquisition of Heggies Pty Limited was as follows:


£

3,732,643

Net bank overdraft acquired 212,347

Net outflow of cash 3,944,990

The deferred consideration for the acquisition above includes amounts that are

dependent on the performance of the acquired entity subsequent to acquisition.

Fixed assets


Current assets

Debtors 3,341,484


Total assets 4,213,634

Creditors (2 ,870,954)

Total liabilities (3,105,150)

Consideration

3,732,643 Settled by cash (including expenses of £347,465)

4,151,601 Deferred consideration

7,884,244

1 ,108,484 Net assets acquired

6,775,760 Goodwill arising on consolidation

Bank overdraft (234,196)

Net assets 1,108,484

Book andfair value

£

63

On 1 July 2010, SLR International Corporation acquired the entire share capital of HCG, Inc.

The book value of the assets and liabilities acquired (which was equivalent to their fair

value), together with details of the purchase consideration and goodwill arising on

acquisition is shown below:

Fixed assets

Book andfair value

£


Current assets

Debtors 1,030,660


Total assets 1,964,437

Creditors (202,016)

Consideration

2,365,651 Settled by cash (including expenses of £144,235)

1,957,291 Deferred consideration

4,661,742

1 ,762,421 Net assets acquired

2,899,321 Goodwill arising on consolidation

Net assets 1,762,421

338,800 Settled by shares at fair value

The deferred consideration for the acquisition above includes amounts that are

dependent on the performance of the acquired entity subsequent to acquisition.

The results of HCG, Inc prior to its acquisition were as follows:

Turnover

Year ended31 December

2009US $

Period ended30 June 2010US $

11,222,0844,869,849

Operating profit 1 ,209,516298,918

Net interest income 2,6053,800

Loss on disposal of business -(349,230)

(Loss)/profit on ordinary activities

before taxation 1,212,121(46,512)

Taxation on (loss)/profit from ordinary

activities --

1 ,212,121(46,512)(Loss)/profit for the period

The net cash outflow arising from the acquisition of HCG, Inc. was as follows:


£

2,365,651

Bank balances acquired (275,766)

Net outflow of cash 2,089,885

64



28 Share based paymentsSLR Management Limited operates equity-settled share based remuneration schemes for employees, an EMI share scheme for UK employees and unapproved schemes for

overseas employees. Options vest over a period of years and there are no performance criteria that must be satisfied. Options will lapse if the employee leaves.

Details of movements in options, (by grant date), during the year, together with information on the exercise price and period of the options is contained in note 18 to the

financial statements.

2009Weighted average

exercise price(Pence)

2009

Number

Outstanding at the beginning of the year 7,164,734 19.04

2010

Number

7,155,903

2010Weighted average

exercise price(Pence)

20.76

Granted during the year 587,500 40.00 1,726,789 40.00

Exercised during the year (177,814) 6 .26 (432,822)7.07

Lapsed/adjusted during the year (418,517) 24.60 (439,842)32.28

Outstanding at the end of the year 7,155,903 20.76 8,010,028 25.01

The exercise price of options outstanding at the end of the year ranged between 2.68p

and 40p and their weighted average contractual life was 4.38 years (2009 – 5.76 years).

Of the total number of options outstanding at the end of the year, 3,393,426 (2009 -

1,552,094) had vested but had not been exercised.

The weighted average fair value of each option granted during the year was 10.71p

(2009 – 10.00p).

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

granted during the year under the equity share based remuneration schemes operated by

SLR Management Limited:

Equity-settled

2010 2009

Option pricing model used BinomialBinomial

Weighted average share price at grant

date (pence) 40.0040.00

Exercise price (pence) 40.0040.00

Option life (years) 7 .007.00

Expected volatility 14.02%35.00%

Expected dividend NilNil

Risk-free interest rate 5.07%0.85%

The volatility assumption, is based on an analysis of share price volatility for quoted

companies operating in the same sector as the Group.

The share-based remuneration expense for the Group comprises:

Equity-settled schemes

2010£

2009£

125,34296,280

The Group did not enter into any share-based payment transactions with parties other

than employees during the current year or previous periods.

65

29 Employee Benefit TrustThe SLR Holdings Employee Benefit Trust (“EBT”) was established on 6 March 2006 to

provide benefits to employees, former employees and their dependants (“the

Beneficiaries”). Under the scheme, the trustee, SLR Trustee Limited, purchases the

company’s shares from time to time. These shares are held until the vesting day for the

benefit of the Beneficiaries, in such numbers or proportions that the Trustees deem

reasonable. Shares held by the EBT which had not vested unconditionally in the

Beneficiaries at the year end were as follows:

Market value of shares held

£ £

193,081 295,215

Number of shares held

2010No.

2009No.

482,704 738,038

Group

30 Post balance sheet events

a) On 4 March 2011 the company issued Loan note instruments constituting up

to £1,700,060 10% Fixed Rate Unsecured Loan Notes 31 May 2015 and Payment

In Kind Notes.

b) On 4 March 2011, the company acquired the entire share capital of Metago

International Holdings (Pty) Limited for a total consideration of approximately

£4.8 million in cash plus 2,294,250 B ordinary shares in the share capital of SLR

Management Limited.

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Documents

SLR Consulting Annual Report 2010