shanks group plc annual report and accounts 2008
shanks group plc annual report and accounts 2008 01 our vision
02 financial highlights
03 chairman’s statement
04 chief executive’s statement
07 business overview
12 operating review
16 financial review
21 corporate responsibility
25 board of directors
26 directors’ report
30 corporate governance
34 remuneration report
40 statement of directors’
responsibilities
41 auditors’ report
43 consolidated income statement
43 consolidated statement of
recognised income and expense
44 consolidated balance sheet
45 consolidated cash flow statement
46 company income statement
46 company statement of recognised
income and expense
47 company balance sheet
48 company cash flow statement
49 notes to the financial statements
84 subsidiary undertakings and joint
ventures
85 consolidated five year financial
summary
86 notice of annual general meeting
94 shareholder information
95 financial calendar
96 company information 
contents
shanks group is europe’s largest listed
independent waste management company
operating in the netherlands belgium
uk and canada
netherlands belgium uk canada group
employees at year end 2074 1016 943 7 4040
total operating centres 35 18 43 1 97
operating centres with recyclingrecovery 26 10 35 1 72
operational landfill sites 126 – 9
collection and transport lorries 940 350 270 – 1560
tonnes waste handled million tonnes 43 15 28 01 87
tonnes materials recovered million tonnes 355 076 062 002 495
overall recycling and recovery rate 83 51 22 50 58
energy generated megawatt hours 8789 58222 28873 – 95884
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shanks at a glance shanks annual report 2008 1
our strategy
1 invest to drive organic growth where returns are greatest
2 develop our infrastructure further to support sustainable waste
management and conversion of waste to renewable energy
3 share core capabilities and technologies across the group
4 maximise asset utilisation and minimise unit costs
5 continue to use acquisitions to improve asset utilisation and
reorient the portfolio to high growth markets 
shanks is a leading european waste processing and resource
management company providing its customers with sustainable solutions
to their waste and environmental obligations
our vision is to be europe’s leading
provider of sustainable waste
management solutions 2 shanks annual report 2008
financial highlights
1 before amortisation of acquisition intangibles exceptional items and tax
2 acquisition intangibles comprise intangible assets arising on acquisitions excluding landfill void and computer software
3 the group considers these items as exceptional for the purposes of determining headline profit
4 before amortisation of acquisition intangibles and exceptional items net of associated tax
5 earnings before interest tax depreciation and amortisation ebitda
6 nonrecourse net debt in the pfi companies excluding fair value of interest rate swaps
growth on 2007
2008 2007
revenue £564m £509m
headline profit
1
£448m £403m
amortisation of acquisition intangibles
2
£25m £11m
exceptional items
 profit on disposal of properties
3
£19m £00m
 change in fair value of pfi interest rate swaps
3
£29m £69m
profit before tax £413m £461m
adjusted basic earnings per share
4
129p 117p
basic earnings per share 120p 133p
dividend per share 62p 59p
ebitda
5
£927m £806m
core business net debt £212m £134m
pfi companies net debt
6
£111m £123m
total group net debt before fair value adjustment £323m £257m
fair value of pfi interest rate swaps £4m £0m
total group net debt £327m £257m
11 
revenue
11 
headline profit
15 
ebitda
5
dividend
  figures reported under uk gaap  using ifrs presentation
†  figures reported under ifrs
headline profit 
£m
04 05† 06† 07† 08†
revenue
£m
04 05† 06† 07† 08†
4096
4204
4425
5085
5637
186
307
340
403
448
profit before tax from
continuing operations
£m
04 05† 06† 07† 08†
86
197
303
461
413
10
adjusted eps shanks annual report 2008 3
chairman’s statement
we have a clear strategy for growing
the business to create long term value
for all our stakeholders
financial performance
i am pleased to be able to report upon
another good set of financial results for
the year to 31 march 2008 group
revenue increased by 11 to £564m and
headline profit rose 11 to £448m this
improvement reflects strong trading in the
majority of our businesses the principal
exception being landfill in belgium which
as expected reported a reduced
contribution as new legislative restrictions
came into effect adjusted basic earnings
per share improved by 10 to 129p after
a reduction in the headline tax rate of 1
to 32
recognising the improving long term
growth prospects of the group the board
in future intends to follow a progressive
dividend policy which balances earnings
growth and cash generation with the
future investment needs of the group
this year your board is recommending a
final dividend of 42p per share which
together with the interim dividend
produces a total dividend of 62p a 5
increase on last year
people
the good results for the year reflect the
efforts of all our employees across the
group shanks is a service business and
delivering consistently high levels of
customer service in such an environment
is only possible with a highly committed
workforce on behalf of the board i would
like to thank them for their hard work and
commitment
during the year tom drury took over from
michael averill as group chief executive
the board is very pleased with the smooth
transition and the fresh perspective that
he has brought to the group at the
board’s request tom undertook a thorough
review of the group’s activities and we
believe that this has provided us with
clarity of direction and focus for our
investment plans going forward this is
described in the chief executive’s
statement and the business overview
at the end of march 2008 the head of
our dutch business fred knitel retired
from the group after 14 years of
dedicated service to shanks and its
predecessor companies fred led the
development of our dutch business as
managing director from 2000 and was
successful in positioning shanks as one
of the leading waste management
companies in the netherlands with a clear
market focus and strong financial
performance we would like to thank fred
for his contribution to the group and wish
him well for the future 
i am delighted that we were able to
replace fred through an internal
appointment and on 1 april 2008 michael
van hulst was appointed managing
director of the netherlands michael was
previously general manager of icova one
of our largest companies in the
netherlands and has 17 years experience
in the waste industry
corporate responsibility
shanks operates in a highly regulated
industry which rightly requires high
standards of health and safety and
environmental compliance it is also an
industry that is undergoing considerable
change and is increasingly seen as an
important contributor to supporting
governments’ efforts to manage
resources and control climate change
shanks is committed to playing its fullest
part in this challenge and achieving the
highest professional standards in all its
operations whilst we have a proud record
in this area we will continue to examine
ways to improve further our performance
and measure our contribution to a society
based upon more sustainable waste
management techniques we will be
setting specific targets during 2008 
it was pleasing during the year to report a
21 reduction in reportable accident rate
with particular improvements in our
belgian business whilst there were some
enforcement actions by regulators relating
to our environmental permits these were
relatively minor and our performance
remains good in this area compared to
our peers finally last year we submitted
a response to the business in the
environment bie index of corporate
environmental engagement and i am
pleased that we improved our
assessment from a silver to a gold band
outlook
the board is confident concerning the
future prospects for the group the full
year effect of the recent decline in landfill
volumes in belgium should be more than
compensated by improved performances
in the rest of the group as a result the
board continues to expect a good overall
performance in 2009 with increasing
growth thereafter as the group benefits
from its more focused investment plans
adrian auer
chairman 4 shanks annual report 2008
i joined as group chief executive on 
1 october 2007 and since then have
managed to visit all of our major sites in
the netherlands belgium canada and
the uk and met many of the people upon
whom we rely for our success my overall
impression is that shanks is a great
company to be joining at an exciting time
for the industry governments across the
world are urging the waste industry to
support them in recovering more
resources and energy from the things that
society throws away they are providing
economic incentives to increase recycling
through taxation on landfill and in some
cases incineration alongside subsidies
for treatment processes that support the
production of renewable energy from
waste the new european directive on
waste currently moving through the
european parliament will provide further
legislative support for this trend
shanks is well placed to prosper in this
changing environment our group
operates in countries with the highest
recycling rates in europe and has
experience of a number of treatment
processes capable of producing
renewable energy from waste we have
set ourselves the aspiration to be
regarded as europe’s leading sustainable
waste management company and will be
working hard over the coming years to
achieve this goal 
strategy
having reviewed the business during my
first six months i believe there is an
exciting opportunity to generate attractive
returns for investors by focusing our
investment around sustainable waste
management in all of the countries in
which we operate there is sufficient
market opportunity for us to generate high
organic growth rates from such
investment with a lower risk profile than a
growth strategy based solely on
acquisitions 
our group strategy going forward is
therefore a simple one to deliver organic
growth by investing in assets that support
sustainable waste management and are
capable of delivering attractive returns on
capital alongside this we will actively
share expertise and technology across
the group whilst retaining a very strong
focus on keeping our unit costs amongst
the lowest in the industry finally we will
use acquisitions to improve capacity
utilisation our “tuckin” model or to
secure capabilities that reorient the
group to higher growth activities
the potential for this growth strategy was
shown in this year’s financial results with
all major business units growing well
ahead of inflation other than our belgian
landfill which as expected delivered a
reduced contribution
our investments in each of our country
operations during the year reflected the
strategic intent highlighted above
chief executive’s statement
our vision is to be europe’s leading
provider of sustainable waste
management solutions shanks annual report 2008 5
the netherlands
strategy
maintain our premium margins and grow
our solid and hazardous waste
businesses ahead of gdp with higher
growth coming from orgaworld and tuckin
acquisitions
our dutch business generated a trading
margin of 13 in 2008 a performance
which compares favourably with its peers
our goal is to maintain this premium
position whilst growing the business
the acquisition of orgaworld in april 2007
for €30m plus a five year earnout of up
to €20m provides the group with strong
capabilities to process source segregated
organic waste using advanced composting
or anaerobic digestion technologies
these are technologies that have very
attractive growth potential in a number of
international markets already a leading
player in the dutch organics market
serving both municipal and commercial
customers we have been able to achieve
a strong market position in the canadian
market through the application of
orgaworld’s composting product long
term contracts in toronto and ottawa with
a total contract value of approximately
can250m were secured during the year
we are also actively looking to introduce
its products into the uk and belgian
markets
we invested a further €18m including
€3m of deferred payments in 4 small
tuckin acquisitions in the netherlands
aimed at improving capacity utilisation
and increasing our local market share
our commitment to keeping at the
forefront of recycling in the dutch market
was demonstrated by the completion of
an investment of €3m in the latest
recycling technology at our vliko plant in
leiderdorp
belgium
strategy 
grow our industrial  commercial ic
solid waste business to replace declining
landfill profits by securing competitive
disposal outlets and through renewable
energy production
in 2008 landfill accounted for around a
third of the belgian profits already down
from nearly 50 in 2007 the
contribution from this activity is falling as
the government seeks to ban municipal
biodegradable waste from going to landfill
and we are therefore creating profitable
alternatives by focusing on processing
ic organic and wood waste in a way
that creates a fuel source or renewable
energy at a lower overall cost than
traditional alternatives
we invested in organic growth projects to
produce solid recovered fuel srf from
ic customers at our ghent plant and in
the provision of anaerobic digestion and
wastewater treatment at our roeselare
plant both of these will generate energy
from waste and support strong growth for
our nonlandfill ic business in belgium
shortly after the year end we announced
the acquisition of the foronex group for a
consideration of €23m foronex is a
leading player in the wood waste and by
products market in the benelux and a
significant provider of wood based
products to the rapidly growing energy
from biomass marketplace we see good
opportunities to support the continued
growth of this exciting business and to
access more profitable outlets for the
230000 tonnes of waste wood we
currently process each year in the
benelux
uk
strategy 
make shanks the preferred alternative to
landfill by establishing a network of
processing centres based on the shanks
benelux model
having sold its landfill assets in 2004
shanks is well positioned to take
advantage of rising landfill taxation to
divert waste we collect to processing
centres that we will create similar to
those in our benelux businesses we will
continue to grow our municipal treatment
business through participation in public
finance initiative pfi projects
in november 2007 we completed the
acquisition of wastecom for £11m to
provide us with advanced recycling
capability in the kettering area building
on the success of recent investments in
scotland this further supports our belief
that there is a profitable opportunity in the
uk to develop a strong recycling business
using our expertise from the benelux in
april 2008 landfill tax rose by the highest
amount ever £8 per tonne on its way to a
target of £48 per tonne by 2010 the
government has confirmed its commitment
to further increases beyond this point and
this provides the right incentive for
investment in recycling and reprocessing
centres we have targeted three regions in
the uk which in the short to medium term
will provide the geographic focus to build
our business these are the central belt
of scotland the east midlands and the
northern home counties we have
identified the sites that we would like to
develop and will be applying for planning
permission shortly these together with
continued tuckin acquisitions will support
the development of a profitable uk
recycling business 6 shanks annual report 2008
we continue to believe that the uk pfi
market offers attractive opportunities for
shanks over the next ten years the
government estimates £10bn of funding
will be required to upgrade the
infrastructure needed to divert the
biodegradable municipal solid waste away
from landfill shanks has taken a strong
position in the market through its
proposition based upon the innovative
ecodeco mechanical biological treatment
mbt technology we believe this remains
a very attractive solution to the needs of
local authorities and so creates a strong
pipeline of opportunities as authorities
move to meet their 2010 and 2013
reduction targets we continue our
negotiations with cumbria county council
where we are preferred bidder and expect
this opportunity to reach financial closure
during the current financial year
culture
shanks has a highly decentralised
structure that has allowed it to keep its
central overheads low and maintain an
entrepreneurial culture in its operating
units this in my view has been a
strength of shanks and one which i
intend to retain waste collection and
processing remains essentially a local
business and it is important that decision
making is as close to the customer as
possible it has also proved an important
factor in persuading entrepreneurial
managers who join the group through
acquisition to remain with us 
this said however our strategy going
forward will be to focus on building
recycling and energy recovery activities
across the group and it makes good
sense to share the technologies and
years of expertise that we have within the
group the executive committee which
consists of the managing directors of the
three countries together with myself and
the group finance director meets
regularly and part of its remit is to ensure
that such knowledge transfer takes place
we will focus on specific projects and
opportunities and will not seek to
centralise activities that are best done
locally thereby avoiding the buildup of
unnecessary overhead 
performance
we are committed to producing attractive
returns for the owners of the business
we have analysed our portfolio and have
identified where the best opportunities for
maximising returns on capital employed
roce are whilst our current overall
roce of 12 is ahead of our weighted
average cost of capital wacc we believe
that we can and should generate greater
returns from our capital base and will be
looking for our new investments to
contribute to this improvement alongside
improving the cash generation and
profitability of our underlying existing
businesses
tom drury
group chief executive 
chief executive’s statement continued shanks annual report 2008 7
as last year much of the background
information remains unchanged this is
repeated below updated where
appropriate
each year the group reviews its strategy
this year following the appointment of
tom drury as group chief executive in
october 2007 a more in depth exercise
was undertaken in order to give a clearer
understanding of the group’s strategy this
section has been expanded
the european waste market
waste management is an essential
service in societies where there is a high
level of regulation and enforcement it is a
sophisticated industry using advanced
technologies in societies with little or no
regulation or enforcement waste tends to
be treated indiscriminately 
in the european union eu the level of
environmental regulation is high however
unlike trade regulations there are no
common standards for waste
management eu legislation on waste
sets minimum standards which member
nations must meet however they are free
to exceed these standards in order to
follow their own political and
environmental agendas the result is that
within the eu national regulations differ
and there is no single market
the waste management market can be
subdivided into nonhazardous and
hazardous waste the former tends to be
a local business as the relatively low unit
cost of treatment makes transport a
significant part of the overall cost
hazardous waste treatment costs tend to
be higher making it a more regional
business
both the public and the private sector are
active in the waste market the degree of
privatisation varies across europe it is
high in the uk and france but lower in
germany the netherlands and belgium
advancing eu legislation is necessitating
substantial investment in new
infrastructure this investment combined
with budgetary constraints is driving
privatisation initiatives in many eu
countries within the private sector
consolidation of the industry has been a
feature for many years the new
infrastructure requirements and the long
term nature of the business have recently
attracted infrastructure funds
within the national markets a further
distinction may be made between
“collection transfer and recycling” and
“treatment and disposal” the former has
historically had low barriers to entry and
hence has been made up of many small
participants increasing recycling requires
greater investment in infrastructure which
is moving this market towards the larger
players treatment and disposal have high
barriers to entry as facilities tend to be
capital intensive and projects have long
gestation periods these activities are
therefore the domain of well capitalised
companies and are populated by a few
large players often multinationals 
the markets may also be split between
the industrial and commercial ic sector
and the municipal sector in most eu
countries the municipalities have a
statutory duty to deal with household
waste which they either do themselves or
use private sector contractors they have
no such duty in respect of ic waste the
municipal sector is therefore typified by
longterm contracts which tend to be 5 to
10 years for collection and often in
excess of 20 years for treatment and
disposal the ic sector tends to be a
much more short term market with
contracts in excess of a couple of years
being rare
market trends and drivers
in europe and indeed elsewhere in the
world the general market trend can be
summarised as
“less waste more materials recovery
energy from waste and much less
landfill”
the high level factors behind this are
climate change soaring fossil fuel prices
and increasing environmental awareness
specifically an increasing appreciation
within society of the need to develop
sustainable waste solutions these
factors are driving a convergence between
the waste energy intensive and power
industries
in terms of specific legislative and market
drivers these can be summarised as
follows
the european landfill directive –
biodegradable waste in landfill is a major
source of methane emissions to the
atmosphere methane is a potent
greenhouse gas with 25 times the impact
of a carbon dioxide emission of the same
mass a key objective of this directive is
to significantly reduce the landfilling of
biodegradable waste a major component
of municipal waste that is landfilled by
european member states the directive
also aims to reduce the polluting impact
of landfills by substantially restricting
other types of waste that may be
landfilled
business overview 8 shanks annual report 2008
landfill tax is a significant mechanism
being used by many european states to
drive waste out of landfill to more
environmentally acceptable options such
as recycling and energy recovery
soaring energy prices have increased the
pressure to find alternative fuels waste is
one of these
carbon emissions quotas have further
increased the cost of using fossil fuels
waste derived fuels can be exempt from
carbon emissions calculations increasing
interest in this source of fuel
renewable electricity – many waste
based electricity generation projects
qualify for renewable electricity subsidies
and credits available in various forms
across europe this is because a major
component of waste derived fuels
comprises renewable short carbon cycle
materials eg wood paper and other
vegetable matter
european waste directive – this is
currently being revised and the changes
should be endorsed by the european
parliament during the course of 2008 it
is likely this will impose even higher
targets on recycling and energy recovery
from waste on european member states
going forwards
the effects of these drivers vary from
country to country 
the netherlands
the netherlands has had some of the
most advanced environmental legislation
in europe in place for some time they
also have high levels of landfill tax
currently €88 per tonne these together
with the geological characteristics of the
country have resulted in a low reliance on
landfill incineration being the
predominant final disposal route the
higher cost and limited capacity of final
disposal outlets has made sorting and
recycling in the netherlands more viable
and it is not uncommon for recycling rates
to be 70 or above the dutch market is
therefore relatively stable and not subject
to major changes
belgium
in belgium environmental responsibility is
devolved to the three regions flanders
wallonia and brussels flemish
environmental legislation and landfill tax
levels are very similar to those in the
netherlands resulting in similar market
characteristics high levels of recycling a
reliance on incineration for final disposal
and very little landfill
in the walloon region landfill tax on ic
waste at an effective rate of €53 per
tonne is sufficient to drive reasonable
high levels of recycling this rate will rise
to €90 per tonne in 2010 which
combined with a lack of incineration
capacity will promote increased recycling
and other forms of energy recovery the
effective cost of landfill tax is 52 higher
than the actual tax because it is non
deductible for corporation tax purposes
in january 2008 new legislation was
introduced which has had a major impact
on the municipal waste treatment sector
prior to january 2008 a reasonable
proportion of municipal waste was still
landfilled as unlike ic waste it
attracted very little landfill tax in january
2008 the walloon region adopted a strict
interpretation of the landfill directive
requirement for pretreatment of non
hazardous waste which stopped residual
waste collected from households from
being landfilled without pretreatment at
the same time landfill tax was introduced
on other municipal waste streams at €20
per tonne this is scheduled to rise to
€60 per tonne in 2010
the brussels region has little landfill
capacity it has its own incinerator but
beyond that it is reliant on the other
regions for final disposal
uk
the uk’s historical heavy reliance on
landfill means that the imposition of the
european landfill directive is having a
major impact particularly on the
municipal sector implementation of the
directive implies that some 14 million
tonnes per annum of biodegradable
municipal waste needs to be diverted
from landfill between 2006 and 2020 in
november 2006 defra estimated that
the investment in new infrastructure
required to achieve this is between £9bn
and £11bn in an endeavour to secure
least cost compliance the government
has introduced the landfill allowance
trading scheme lats a tradeable
permit scheme between local authorities
here authorities who overachieve against
their landfill diversion requirements may
sell their overachievement to an
underachieving authority failure by an
authority either to meet its diversion
requirements or to secure the necessary
lats results in a £150 per tonne penalty
for the excess
in parallel the government has stated
that landfill tax will increase landfill tax
is one of the primary drivers for diverting
ic waste in the 2007 budget the
government increased the annual landfill
tax escalator from £3 per tonne per
annum to £8 starting in april 2008 and
committed to keeping it at this level until
april 2010 in the 2008 budget it was
indicated that landfill tax may continue to
rise post 2010 this means that uk
landfill tax which increased to £32 per
business overview continued shanks annual report 2008 9
tonne in april 2008 will rise to £48 per
tonne in 2010 a similar amount to the
tax on ic waste in the benelux
another driver for the ic waste market is
restriction of the type of waste that can
be landfilled a significant milestone of
the european landfill directive is the
restriction on landfilling of untreated non
hazardous waste the government has
introduced new legislation which required
pretreatment of nonhazardous waste
prior to landfilling from october 2007
whilst the authorities have taken a fairly
soft handed approach to the enforcement
of this legislation initially it is expected it
will become more assiduous in the future 
canada
as part of the orgaworld acquisition
completed in april 2007 the group
acquired a start up operation in canada
in canada there is strong public opinion
against landfill which in some areas has
led to a shortage of consented capacity
like in europe therefore there is a drive
to reduce waste going to landfill
orgaworld identified an opportunity in the
canadian market to offer biological
treatment of source segregated organic
municipal waste a market which has
significant potential in terms of volumes
and to date has few competitors
strategy
group vision
“to be europe’s leading provider of
sustainable waste management
solutions”
this will be achieved by firmly positioning
the group in the recycling and energy
recovery area of the waste hierarchy
see figure 1
corporate strategy
• invest to drive organic growth where
returns are greatest
• develop our infrastructure further to
support sustainable waste management
and conversion of waste to renewable
energy
• share core capabilities and
technologies across the group
• maximise asset utilisation and
minimise unit costs
• continue to use acquisitions to improve
asset utilisation and reorient the
portfolio to high growth markets
this provides a strong corporate
framework for clear individual country
strategies
dutch strategy
the strategic goal for the dutch
operations is to maintain the premium
operating margins we currently enjoy and
to grow both the solid and hazardous
waste businesses ahead of gross
domestic product this will be achieved
by 
• maintaining the current decentralised
structure and culture but seeking out
greater benefits from collaboration
between the business units
• upgrading existing recycling facilities to
improve their efficiency and thereby
maintain our market leadership in
processing costs
• focusing on new niche monostream
markets such as the depleted growth
media from the dutch greenhouse
industry we already process
• continue the successful track record of
tuckin acquisitions
• maintain the current strong cash
generation from the business
in addition the recent orgaworld
acquisition provides significant
opportunities for higher rates of growth in
the organic waste treatment sector not
only in the netherlands but also in the
uk belgium and canada
belgian strategy
in belgium the strategy is to grow the ic
solid waste business to replace the
declining contribution from landfill by
focusing on solid recovered fuel srf
production from ic waste we will be able
to create sustainable competitive
advantage by securing long term energy
from waste outlets at lower costs than
landfill or mass burn incineration €120
€130tonne
the recent acquisition of foronex builds
on this strategy by moving us into the
european waste wood processing market
which creates further opportunities in the
biomass and cogeneration areas with the
potential for shanks to both supply and
invest in energy from waste projects
there are also further opportunities to
invest in additional green energy
production at our landfill and hazardous
waste plants
uk strategy
in the uk the aim is to make shanks the
preferred alternative to landfill in the ic
waste area we will build a resource
management and reprocessing business
with improved margins by importing more
than ten years of dutch knowhow in this
area initially we will focus on building
density in the three regions where we
already have critical mass scotland the
east midlands and the northern home
counties 
we will continue to bid for pfi residual
waste contracts using those that we win
as a base from which to expand our ic
business at the same time we intend to
secure a share of the significant uk
demand for anaerobic digestion and
figure 1
waste hierarchy
shanks
prevention
reuse
recycling
energy recovery
disposal 10 shanks annual report 2008
composting both in the municipal and ic
sectors using the orgaworld and other
technologies as appropriate
having established an enabling platform
of a strong regional business with a
differentiated and profitable business
model we may then consider more
aggressive consolidation options
key objectives
the key objectives over the coming three
years are
• grow uk solid waste trading margins
post overheads to a high single digit
percentage
• launch orgaworld in the uk
• grow trading profit from nonlandfill
belgium business by an average of 15
per annum
• win pfi contracts in the uk increasing
residual municipal waste under
management to 15m tonnes per
annum currently 06m tonnes
by achieving the above the group will
maintain strong underlying organic growth
principal risks and their mitigation
the performance of our ic businesses is
linked to the economic activity in the
sectors we serve we are therefore
exposed to fluctuations in these sectors
across our national markets we mitigate
this risk by diversifying our customer base
where possible
in addition to this general economic risk
there are a number of waste industry
specific risks
environmental legislation and its
interpretation
as already mentioned regulation is a key
driver of the waste market the ability of
individual countries and indeed regions in
the case of belgium to set their own
legislation makes this a very complex field
this is further complicated by the rapid
rate of change in legislation resulting from
the increased profile of environmental
issues changes in the legislation or its
interpretation can have a significant and
far reaching impact on markets the group
endeavours to mitigate this risk by
employing high quality management in
each of our divisions to influence the
evolving legislative framework we
therefore actively lobby for our interests at
european national and regional levels
environmental compliance
all operating sites and activities are
regulated by environmental authorities in
line with the requirements set out within
licences and permits these licences and
permits are required to carry on the
business therefore the negotiation of
and compliance with their terms is of
paramount importance maintaining the
highest environmental standards is also
important to ensure continuing
acceptance of operations by host
communities and to satisfy customers
details of how the group monitors and
controls environmental compliance are
given in the corporate responsibility
section 
health and safety
the waste management industry is
recognised as one of the most hazardous
sectors in which to work shanks’
employees are the groups most
important and valuable asset and their
health and safety is paramount as a
result the group devotes considerable
management resources to ensuring the
highest health and safety practices are
imposed and maintained
details can be found in the corporate
responsibility section under health and
safety
the pace of the uk municipal waste
contracts tender process
significant resources are devoted to the
bidding process due to the size and
complexity of these contracts a
consequence is that there are often
unforeseen delays in and in extreme
cases cancellation of the process as the
investment in the bidding process is only
recouped in the event a contract is won
the group regularly reviews the risks and
rewards the group also tries to have its
advisors work on a contingency fee basis
wherever possible and restrict
expenditure in the early stage of a bid
when the certainty of success is less
activities and structure
the group is a major player in the
netherlands belgium and the uk there
are also some operations in france close
to the belgian border which are managed
from belgium due to their small size these
are combined with the belgian operations
in april 2007 the group acquired
orgaworld a dutch business specialising
in the treatment of source segregated
organic waste streams from both the
municipal and ic sectors the business
uses inhouse tunnel composting and
anaerobic digestion technologies some of
which are patented the acquisition also
included a start up operation in canada
which is currently small but has
significant growth potential this has
therefore expanded our geographical
presence to canada
the group’s organisational structure
reflects the national nature of the
markets in which it operates with
divisions in the netherlands belgium uk
and canada management of the group is
decentralised to ensure that the people
making the decisions are close to and
understand their markets this structure
is underpinned by strong central financial
business overview continued shanks annual report 2008 11
control throughout the organisation we
employ high calibre management who are
properly trained and motivated
table 1 summarises the group’s waste
activities in each country and table 2
shows how these activities are grouped in
the segmental reporting
in addition to the waste activities detailed
above we also operate a sand quarry
adjacent to our landfill site in wallonia and
have small infrastructure and groundworks
operations in ghent in belgium and
amersfoort in the netherlands due to
their small size the infrastructure and
groundworks activities are reported as
part of the solid waste activities
key performance indicators kpis
the group’s kpis can be divided into
three categories health and safety
environmental and operational 
health and safety
reporting of injuries diseases and
dangerous occurrences regulations
riddor is uk law which requires
companies to report specified more
serious accidents and incidents to the
health and safety executive while
riddor is uk law the group requires all
of its operations no matter which country
they are based in to report monthly to this
common format minor incidents are also
reported the minor and riddor kpis for
the current and prior years are given in the
health and safety section
environmental
the group closely monitors compliance
with environmental permits at locations
all issues are reviewed at monthly
divisional meetings and at least
quarterly at group board level details of
convictions during 2008 are given in the
environment section
operational
the number of waste activities undertaken
by the group is significant with each site
involved in differing ranges of activities
the performance indicators used to
monitor these activities are varied and
range from lifts per day lifts per kilometre
and tonnes per lift for collection activities
to input and output tonnages and final
elimination diversion rates for treatment
and recycling activities also even where
two sites perform similar activities the
type of customer or urban characteristics
of the area the site serves may be quite
different the result is that whilst non
financial measures are extremely important
at an activity or site level they are of very
limited value when aggregated across sites
or activities for this reason the kpis used
at a regional or country level are financial
in nature being those common to most
businesses namely revenue trading profit
cash flows and return on capital employed
details of these for the main business
units are included in the operating review
section
table 2
waste activities in segmental reporting
solid waste nonhazardous solid waste collections transfer and recycling
landfill and power landfill disposal including contaminated soils and power 
generation from landfill gas
hazardous waste industrial cleaning hazardous waste transport treatment
including contaminated soils and disposal and contaminated
land remediation
organic treatment anaerobic digestion and tunnel composting of source 
segregated organic waste streams
pfi contracts long term uk municipal waste treatment contracts
table 1 
group activities industrial  
commercial municipal
nonhazardous solid waste
collection nl be uk nl be
transfer  recycling nl be uk nl be uk
treatment nl be nl uk ca
landfill disposal  power uk nl be uk be
hazardous waste
industrial cleaning and transport nl be
treatment and disposal nl be
contaminated land remediation nl be uk table 4
operating cashflow and return on capital employed net of pfi project financing
operating cashflow
1
return on capital employed
2
2008 2007 variance 2008 2007 variance
£m £m £m  
netherlands 362 332 30 10 11 1
belgium 186 218 32 60 60  
united kingdom 150 143 07 11 10 1 
canada 19  19 3 na na
central services 46 56 10 na na na
total 333 351 18 12 13 1
12 shanks annual report 2008
in order to come into line with general
practice amongst listed companies we
have redefined our headline profit to
exclude amortisation of intangible assets
excluding landfill void and computer
software arising on acquisition this
charge is also excluded from operating
profit in the derivation of trading profit
the definitions of these two financial
measures therefore become
trading profit – operating profit before
amortisation of acquisition intangibles
and exceptional items
headline profit – profit before tax
amortisation of acquisition intangibles
and exceptional items where the latter
includes the ias 39 finance income or
charge relating to the mark to market of
interest rate swaps on pfi borrowings
in the years prior to 2007 the impact of
this reclassification is immaterial
due to the significant impact of
movements in foreign currency exchange
rates commentary on the operating
performance of the netherlands and
belgium businesses has been given in
euros to demonstrate the underlying
trading performance
thanks are once again due to the staff
who have responded superbly to the
industry’s rapidly changing conditions to
deliver a 18 improvement in trading
profit which increased £86m to £559m
2007 £473m tables 3 and 4 and
chart 1 give an overview of the group’s
operating returns by geographical region
operating review
table 3 
revenue and trading profit by geographical region
revenue trading profit
2008 2007 variance 2008 2007 variance
£m £m £m  £m £m £m 
netherlands 295 253 42 17 377 320 57 18
belgium 125 124 1 1 162 173 11 6
united kingdom 145 133 12 9 69 33 36 109
canada 1  1 na 01  01 na
central services 2 1 1 100 50 53 03 6
total 564 509 55 11 559 473 86 18
chart 1
trading profit split by region
netherlands 62
united kingdom 11
belgium 27
1 net cashflow after project financing before core financing tax and acquisitions
2 trading profit divided by average net assets excluding core debt tax and pension obligations shanks annual report 2008 13
the netherlands
trading profit in the netherlands improved
18 to £377m 2007 £320m of which
£14m 4 is attributable to exchange
tables 5 and 6 provide a breakdown by
activity of the key financial performance
indicators
in solid waste four tuckin acquisitions
were completed during the year for a total
gross consideration of €18m including
€3m of deferred payments these
combined with the full year effect of last
year’s acquisitions contributed some
€29m of additional trading profit the full
year effect of the acquisition of smink
beheer bv on 30 june 2006 was
relatively modest as last year’s result
benefited from a large job during the
months immediately following the
acquisition
profits from the existing solid waste
businesses have improved slightly by 1
there have been a number of factors
contributing to this performance in may
2007 the amsterdam municipal
incinerator commissioned an additional
06m tonnes per annum of capacity a
significant proportion of this capacity has
been taken by the major waste
companies including shanks on long
term agreements at a rate below current
market rates this has increased
competitive pressure for commercial
volumes in the market place the
construction industry a major source of
customers remains buoyant although
competition for volumes has also
increased here as operators from outside
the randstad area attracted by the new
lower incineration prices in amsterdam
backload construction and demolition
waste for recycling spiralling fuel costs
and increasing labour costs have also put
pressure on margins
our hazardous waste activities performed
extremely well during the year showing a
9 year on year improvement our
industrial cleaning business reym
continued to benefit from increased
activity in the petrochemical sector
stimulated by ever increasing oil prices
atm our one million tonne per annum
treatment facility in the south of the
netherlands benefited from buoyant
market conditions with increases in both
volumes and prices
in april 2007 the group acquired the
organic waste treatment business
orgaworld for a gross consideration of
€30m €5m of which is deferred with the
potential for further payments up to €20m
dependent on future profits growth the
bulk of the business is in the
netherlands however it also included a
start up operation in canada more detail
of which is given below the dutch
operations have performed slightly below
the acquisition plan following the
contamination of a batch of inputs at one
of its anaerobic digestion plants this
issue has now been resolved and
performance is back in line with our
acquisition plan 
table 5
netherlands revenue and trading profit by activity
revenue trading profit
2008 2007 variance 2008 2007 variance
€m €m €m  €m €m €m 
solid waste 269 249 20 8 426 393 33 8
hazardous waste 143 127 16 13 134 123 11 9
organic treatment 10  10 na 23  23 na
country central services 4 3 1 33 49 44 05 11
total €m 418 373 45 12 534 472 62 13
total £m at avge fx rate 295 253 42 17 377 320 57 18
table 6 
netherlands trading margins and return on capital employed by activity
after allocation of country central services
trading margin roce
2008 2007 variance 2008 2007 variance
   
solid waste 15 15  10 11 1
hazardous waste 8 8  13 12 1
organic treatment 21 na na 7 na na
total 13 13  10 11 1 14 shanks annual report 2008
belgium
trading profit reduced 6 on last year to
£162m 2007 £173m this reduction
is net of a £06m 3 increase due to
exchange  tables 7 and 8 provide a
breakdown by activity of the key financial
performance indicators
solid waste has performed extremely well
during the period aided by a significant
industrial disposal contract and progress
on prices during the year two small tuck
in acquisitions with a combined gross
consideration of €1m were completed
these together with the full year effect of
last year’s acquisition account for €05m
6 of the trading profit increase
as predicted in previous reports the
contribution from our landfill  power
business has declined sharply in the year
ended 31 march 2008 several factors
contributed to this bonus volumes
received in the prior year did not repeat
increased competition from other landfills
in the region resulted in lost inputs and
finally from january 2008 the walloon
region introduced new restrictions on the
landfilling of municipal waste further
reducing inputs in the last quarter
landfill volumes are now believed to have
stabilised however next year is likely to
show a further decline in profitability due
to the full year effect of the current
reduced inputs in the longer term we
expect a further decline in landfill profits
as landfill tax is increased and further
restrictions come into force from 2010
hazardous waste whilst still generating
reasonable returns on invested capital
had a difficult start to the year due to stiff
competition in the last quarter this has
eased and the outlook is now more
promising
at the sand quarry volumes were down
due to reduced construction activities in
the surrounding area 
operating review continued
table 7
belgium revenue and trading profit by activity
revenue trading profit
2008 2007 variance 2008 2007 variance
€m €m €m  €m €m €m 
solid waste 109 104 5 5 104 86 18 21
landfill  power 26 31 516 119 163 44 27
hazardous waste 58 64 6 9 47 50 03 6
sand quarry 3 4 125 10 12 02 17
country central services 19 21 2 10 50 57 07 12
total €m 177 182 5 3 230 254 24 9
total £m at avge fx rate 125 124 1 1 162 173 11 6
table 8 
belgium trading margins and return on capital employed by activity
after allocation of country central services
trading margin roce
2008 2007 variance 2008 2007 variance
   
solid waste 7 5 2 18 13 5 
landfill  power 44 50 6 na
1
na
1
na
hazardous waste 5 5  20 22 2
sand quarry 30 30  na
1
na
1
na
total 13 14 1 60 60 
1 due to provisions for environmental liabilities these activities have net liabilities so roce is not a valid measure shanks annual report 2008 15
uk
trading profit in the uk improved 109 to
£69m 2007 £33m £34m of this
increase is attributable to the operations
which increased 77 to £78m the
remaining £02m is due to lower pfi
bidding costs tables 9 and 10 provide a
breakdown by activity of the key financial
performance indicators
solid waste improved significantly on prior
year with £13m 28 of the increase
coming from organic growth mainly driven
by pricing acquisitions contributed a
further £05m 11 with a full year’s
contribution from the 2007 scottish
acquisitions and four months of
contribution from the current year
acquisition of wastecom ltd a recycling
business in the east midlands acquired
for a gross consideration of £11m
across the board recycling levels are
increasing as we move towards our
benelux model of collection fleets feeding
large regional recycling centres which
allow waste to be diverted from landfill to
more cost effective outlets we see this
as a significant competitive advantage as
the market shifts to accommodate the
escalation in the rate of landfill tax now
at £32 per tonne and scheduled to
increase by £8 per tonne per annum for
at least the next two years
landfill  power improved due to
increased waste inputs and additional
green electricity production at our
avondale joint venture in scotland
hazardous waste which comprises our
contaminated land services business
improved due to the contribution from our
“soil hospital” outside edinburgh which
opened in may 2007 the performance
fell short of expectations due to a delay
in work from the clean up of the sites for
the 2012 london olympics which has
started in the final quarter but only
contributed £01m of trading profit in the
year
the innovative mechanical biological
treatment mbt facilities used at two
sites on the east london waste authority
elwa pfi contract and one on the
dumfries and galloway dg contract are
now fully operational at elwa the
scheduled significant increase in gate fee
came into effect in july 2007 which
substantially increased the cash inflows
from the contract this only produced a
limited uplift on trading profit as under
ifrs accounting most of the increased
income is allocated to repayment of the
financial asset and the interest thereon
interest from the cement and other
energy intensive industries in the srf
produced by the mbt process continues
to increase and we have a secured long
term outlet contract for 50000 tonnes
per annum with negotiations at an
advanced stage for a further 150000
tonnes whilst profits on our elwa and
argyll and bute ab contracts are
improving these increases have been
offset by a set back at dg due to an
interruption of inputs to a cement kiln in
north wales following a problem at the
plant unrelated to the processing of srf
this has resulted in a temporary increase
table 9 
united kingdom revenue and trading profit by activity
revenue trading profit
2008 2007 variance 2008 2007 variance
£m £m £m  £m £m £m 
solid waste 75 70 5 7 64 46 18 39
landfill  power 16 13 3 23 50 38 12 32
hazardous waste 11 10 1 10 17 12 05 42
pfi contracts 43 40 3 8 04 02 02 100
country central services 57 54 03 6
uk operations 145 133 12 9 78 44 34 77
pfi bid team 09 11 02 18
total 145 133 12 9 69 33 36 109
table 10 
united kingdom trading margins and return on capital employed by activity
after allocation of country central services
trading margin roce
2008 2007 variance 2008 2007 variance
   
solid waste 3  3 5 1 4
landfill  power 33 28 5 48 37 11
hazardous waste 11 8 3 47 86 39
pfi contracts 2 2  1 5 4
total 5 3 2 11 10 1 16 shanks annual report 2008
in disposal costs for the contract the
operators of the facility in north wales
have made significant progress with
repairs and it is expected that the kiln will
be functioning again during the first
quarter of the 2009 financial year at the
same time we are also pursuing
alternative outlets for this srf stream
country central services costs of £57m
were net of disposal profits totalling
£06m relating to several small surplus
property sales a similar amount was
included in the 2007 cost of £54m
canada
as mentioned above the acquisition of
orgaworld in the netherlands included a
start up operation in canada at the time
of the acquisition in april 2007 orgaworld
had already secured a 10 year contract
with the city of york in ontario to treat
33000 tonnes per annum of source
segregated organic municipal waste using
tunnel composting since acquisition two
further contracts have been won a five
year contract for toronto for 70000
tonnes per annum and a 20 year contract
for ottawa for 100000 tonnes per
annum the construction of a facility in
london ontario to process york’s waste
was underway at the time of acquisition
and started accepting waste in june
2007 this facility is currently being
extended to handle the toronto waste
resulting in a combined facility capable of
processing 150000 tonnes per annum
the ottawa contract will be serviced from
a second can15m facility capable of
processing 100000 tonnes per annum in
the outskirts of ottawa this is scheduled
to be operational in summer 2009
group central services
group central services costs reduced by
£03m to £50m 2007 £53m due to
the non repeat of recruitment costs
experienced last year associated with the
appointment of new board directors
the major factors impacting revenue
trading and headline profit are
summarised in table 12 operating profit
which includes exceptional property
disposals in the uk of £19m and
amortisation of acquisition intangibles
has increased 20 to £553m 2007
£462m
details of the group’s trading
performance and acquisitions are given in
the operating review
financial review
table 11
summarised group income statement
2008 2007 variance
£m £m £m 
revenue 564 509 55 11
operating profit 553 462 91 20
exceptional profits on disposals 19  19 na
amortisation of acquisition intangibles 25 11 14 127
trading profit 559 473 86 18
net financial income from pfi 07 01 06 100
core finance charges 118 71 47 66
headline profit 448 403 45 11
tax  headline 32 2007 33 144 129 15 12
headline profit after tax 304 274 30 11
exceptional profits on disposals 19  19 
amortisation of acquisition intangibles net of tax 19 09 10
ias 39 adjustment net of tax 21 48 69
profit for the year 283 313 30
table 12
revenue trading and headline profit bridge
revenue trading profit headline profit
£m £m £m
2007 509 100 473 100 403 100
current year acquisitions 16 3 29 6 08 2
full year of prior year acquisitions 7 1 15 3 07 2
belgium landfill decline 4 1 30 6 30 7
organic growth excluding belgium landfill 21 4 52 11 44 11
exchange 15 3 20 4 16 4
2008 564 111 559 118 448 111 shanks annual report 2008 17
table 13 shows the average and year end
exchange rates used to translate our
foreign currency denominated results the
euro has strengthened significantly versus
sterling particularly in the latter part of
our financial year this has caused a
moderate 4 enhancement to euro
table 13 
exchange rates
2008 2007 change
euro
average 1419 1473 4
closing 1254 1474 17
canadian dollar
average 2044 na na
closing 2039 na na
table 14
net financial income from pfi
2008 2007 variance
£m £m £m 
interest income from financial assets 88 77 11 14
interest charge on pfi net debt
1
81 76 05 7
net financial income from pfi 07 01 06 100
1 pfi net debt is the external net debt in the special purpose vehicles set up to project finance the uk pfi contracts
table 15 
core finance charges
2008 2007 change
£m £m £m
finance charge on core borrowings 107 68 39
discount unwind on deferred consideration 09 01 08
loan fee amortisation 09 04 05
discount unwind on other long term provisions 07 06 01
finance income from defined benefit pension schemes 14 08 06 
core finance charges 118 71 47
denominated profits the impact on the
euro denominated year end balances is
much more substantial at 17 the
group only entered canada during the
current year so there has been no impact
year on year
net financial income from pfi increased
to £07m 2007 £01m as shown in
table 14 this comprises interest income
on financial assets arising on the uk pfi
contracts net of the interest charge on
the pfi net debt before taking into
account the international financial
reporting standard ias 39 change in
market value of financial instruments
the £11m increase in interest income
from financial assets results from the
increase in the financial asset value
driven by ongoing capital expenditure
principally on the elwa project the
£05m increase in interest charge on pfi
net debt reflects the higher average level
of debt during 2008 than during 2007
despite the balance being lower at the
year end than at the start of the year pfi
net debt rose during the first nine months
as it funded the ongoing pfi capital
expenditure then in december 2007 the
group injected £23m of subordinated
debt and equity into the elwa pfi
company which was used to repay project
funding causing the fall at the year end
core finance charges increased £47m to
£118m 2007 £71m the main
components of which are given in table 15
the major factors behind the increase in
the finance charge on core borrowings are
detailed in table 16
the factors behind the increase in the
level of core borrowing are covered in the
cash flow section below for reasons
explained in the treasury section a
significant proportion of the group’s
borrowings is in euros and therefore
attracts euro denominated interest the
sterling value of this has therefore
increased due to the strengthening of the
euro over the last two years the group
has opted to leave a significant
proportion of the debt on variable interest
rates due to the forward profile of interest
rate curves the variable rate borrowings 18 shanks annual report 2008
are at a margin over the london inter
bank offer rates libor the annual
averages of which have risen by nearly
30 over the last two years as
demonstrated in chart 2
under ifrs all long term liabilities and
provisions except for deferred tax have to
be stated at current value this involves
discounting the nominal value of a future
liability which then unwinds as time
progresses the group uses a 5 discount
rate this being an estimate of long term
interest rates the acquisition of orgaworld
in april 2007 included a €25m deferred
element €20m of which is dependent on
achieving future profitability targets the
conditional element has been recognised
in full at the acquisition date so is
generating a significant finance charge
even though the trading profits on which it
depends will only arise in the future
the average tax rate on headline profit fell
to 32 2007 33 this was attributable
to a full year of the reduction in the dutch
headline rate from 296 to 255 in
january 2007 the underlying rates of tax
in the uk and belgium remained
unchanged at 30 and 34 respectively
in belgium the effective rate on landfill
derived profits is higher as landfill tax is
nondeductible for corporation tax this is
mitigated via a deduction for notional
interest on belgian equity 
the exceptional disposal profits of £19m
relate to the disposal of two surplus
properties in the uk these have been
excluded from headline profit due to their
exceptional size there was no tax
payable on these disposals as the capital
gains arising were sheltered by significant
brought forward capital tax losses within
the group
financial review continued
table 16 
finance charge on core borrowings major factor analysis
2008 2007 change
£m £m £m
finance charge on core borrowings 107 68 39
major factors
increase in core borrowing levels 25
increase in bank interest rates 10
exchange 04
total 39
chart 2
one month € libor
1 month € libor
annual average
source
british banking
association shanks annual report 2008 19
the ias 39 change in market value of
financial instruments relates to interest
rate swaps which fix the interest rate on
pfi contract borrowing at the financial
close of a pfi contract the price of the
service is determined by inter alia the
long term interest rate available in the
market the group therefore protects
itself against future fluctuations in
interest rates by entering into interest
rate swaps to match its future cash
inflows and outflows under ias 39 these
swaps must be valued at current market
value irrespective of the commercial
reasons for entering into them
revaluation of these swaps can lead to
large accounting gains or losses but does
not affect the long term profitability of the
contract as the group has matched its
long term revenue and costs whilst ias
39 does allow these gains and losses to
be taken directly to reserves it is on the
proviso that onerous verification
requirements are fulfilled the group
believes it is not worth expending
significant resources fulfilling these
requirements in respect of an item that
does not reflect commercial reality these
changes in value are excluded from our
headline profit there was a £29m
adverse 2007 £69m favourable change
in the market value of these swaps during
the year
cash flow
details of the group’s cash flow
performance are summarised in table 17
below
the underlying cash generated by the
core business was £21m after net capital
expenditure of £42m the £22m cross
funding represents the net cash flow
between the core and pfi activities
including the pfi bid team the major
element of this was the injection of £23m
of subordinated debt and equity into the
elwa pfi company mentioned above the
£48m outflow on acquisitions is the
amount paid plus £21m of net debt in the
acquired entities there was a £32m
adverse movement on the translation of
group’s euro denominated debt into
sterling giving an overall increase in core
net debt of £79m
the nonrecourse aggregated net debt in
the pfi companies excluding fair value of
interest rate swaps reduced by £12m to
£111m 2007 £123m increases due to
funding of ongoing capital investment
principally at elwa being offset by a
repayment resulting from the £23m equity
and subordinated debt injection into the
elwa pfi company
capital expenditure
the group spent £51m net on capital
expenditure 2007 £66m of which £42m
was in the core business and £9m on pfi
contracts the core business
maintenance capital expenditure was
£32m net of disposal proceeds of £2m
from assets being replaced gross
expenditure on growth projects was £14m
and proceeds from sale of surplus assets
was £4m major projects in the core
business included the installation of srf
production facilities in belgium
construction of tunnel composting
facilities in canada the expansion of a
table 17
summarised group cashflow
2008 2007
core pfi total total difference
£m £m £m £m £m
trading profit 57 1 56 47 9
depreciation  landfill provisions 37  37 34 3
ebitda 94 1 93 81 12
working capital movement and other
1
3  3 3 
net capital expenditure 42 9 51 66 15
interest tax  dividends 34  34 30 4
underlying cashflow 21 10 11 12 23
cross funding 22 22   
acquisitions 48  48 65 17
discontinued  restructuring    3 3
issue of shares 2  2  2
net cashflow 47 12 35 80 45
exchange 32  32 4 36
debt movement 79 12 67 76 9
1 other comprises nonlandfill provision movements and add back of share based payments and nonexceptional 
disposal profits 20 shanks annual report 2008
recycling centre in the netherlands and
the installation of additional green energy
generation at our joint venture landfill in
scotland
the capital expenditure on pfi contracts
comprised £17m 2007 £31m of
financial asset advances net of £9m
2007 £1m of financial asset
repayments and £1m of capitalised bid
costs relating to the cumbria contract
where we are preferred bidder the
financial asset advances related
principally to the completion of the mbt
facilities at our elwa and dg contracts
the £8m increase in the repayments
reflected the step up in the elwa gate fee
in july 2007 mentioned in the operating
review above
treasury
the group’s treasury policy is to use
financial instruments with a spread of
maturity dates and sources in order to
reduce funding risk borrowings are drawn
in the same currencies as the underlying
investment to reduce cash and net
translation exposure on exchange rate
movements no other currency hedging
mechanisms are used the group
maintains a significant proportion of its
debt on fixed rates of interest in order to
protect interest cover
the group’s principal financing is a
£250m multicurrency revolving credit
facility with five major banks expiring in
april 2010 adjusting for cash on deposit
this facility was less than 65 utilised at
31 march 2008 the 2001 notes issued
under the group’s private placement of
£41m have maturity dates between 2009
and 2013 the group also has £27m of
working capital facilities with various
banks
each of the group’s pfi projects has
senior debt facilities which contribute
approximately 85 of the capital funding
required these facilities are secured on
the future cash flows of the pfi
companies with no recourse to the group
as a whole repayment of these facilities
and any equity bridge facility in respect of
the remaining capital funding commences
when construction is complete and
concludes one to two years prior to the
expiry of the pfi contract period as the
group currently holds 100 of the equity
in its pfi companies the net debt of
£111m is fully consolidated in the group
balance sheet the maximum which could
be drawn down under these facilities at
31 march 2008 is £18m
insurance
the group places all its insurance with
leading insurance companies with sound
financial credentials for obligatory
insurances the policy is to obtain the
necessary cover at competitive rates for
other areas regular risk assessments are
undertaken to identify and assess risks
where appropriate insurance is then used
to mitigate these risks the level of cover
put in place will depend on the nature of
the risks and the cost and extent of cover
available in the market the majority of
our insurances are renewed annually
the group uses renowned international
brokers to advise on risk management
appropriate insurers cover levels and
benchmarking
insurance requirements for our uk pfi
contracts are set out in the funding and
project agreements
pensions
the group uses ias 19 employee
benefits to account for pensions the
pension charge for the year has increased
to £77m 2007 £66m using
assumptions laid down in ias 19 there
was a net retirement benefit surplus of
£94m 2007 £84m deficit this relates
solely to the defined benefit section of
our uk schemes the defined benefit
section of the uk scheme was closed to
new members in september 2002 and
new employees are now offered a defined
contribution arrangement 
the pension arrangements within our
belgian and dutch operations are
considered to be defined contribution in
nature
financial review continued shanks annual report 2008 21
environmental legislation both european
and national plays a critical role in
determining how all companies operate
this is particularly so for waste
management companies and large
portions of environmental law are aimed
specifically at the industry such
legislation does not only pose a threat in
terms of penalties but also shapes the
commercial environment within which the
group operates few other industries can
see such a direct link between the law
and how they run their business
waste management whilst an essential
service is not always a popular industry
and companies which operate in the
sector have to be conscious of public and
political perception simply complying with
legislation is not sufficient and we
consider it a minimum requirement rather
than an ultimate goal
while the group is subject to the same
health and safety and employment law as
other companies the potential impacts
for those involved in waste management
are higher than for most other industry
sectors  waste management is
acknowledged to be one of the highest
risk industries a company can operate in
with fatal and serious accident rates at
least as high as those for construction
agriculture and other sectors with known
elevated risk profiles 
virtually all of shanks operations need to
hold local licences permits and other
permissions to operate these
permissions determine the basic criteria
under which a waste management site
can operate such as how much and what
types of waste a site is allowed to accept
its opening and closing times restrictions
on noise emissions and other key
parameters failure to abide by the
conditions of local permissions can result
in them being withdrawn and the site
being closed or restricted in its
operations
beyond the potential closure of existing
facilities each time the group wishes to
expand a site’s operations such as by
accepting greater volumes of waste or a
different waste type it must apply for a
variation to that facility’s local
permissions the same applies to new
sites which must obtain the appropriate
local permissions before being allowed to
operate
waste management companies with a
poor enforcement record or those which
have attracted public or political concern
will find it more difficult to obtain and
revise local permissions than businesses
which have a more positive image of
course new or expanded waste
management facilities will never be
popular at best they are often viewed as
a necessary evil however a waste
management concern with a positive
image is far more likely to be successful
in gaining the permissions it needs to
operate and expand
one of the greatest potential impacts on
image for a waste management company
is the attitudes displayed and approach
taken by its local employees a company
may have high quality management
systems and good intentions but if local
management and operational employees
do not reflect this corporate ethic the
outcome will be poor local image the
development training competence and
attitudes of local employees is therefore
of crucial importance to the group to
ensure we maintain highly motivated
corporate responsibility table 18 
environmental convictions in 2008
fine £k details
netherlands 23 four breaches of hazardous waste transport regulations
netherlands 10 breach of fire incident reporting deadlines
belgium none
united kingdom none
22 shanks annual report 2008
good local image is well appreciated by
the group
it is only by taking such a proactive
approach going beyond simple
compliance that the group will fulfil its
ambitions as a sustainable and
developing waste management company
the environment
waste management and the environment
are intrinsically linked not only in public
and political perception but in reality as
this is an industry whose actions can
have a direct and serious impact on the
environment the group aims to minimise
any detrimental impact its activities may
have on the environment the group’s
overarching environmental policy is
available on the group’s web site and
further details of individual environmental
management systems are available by
contacting the group
all of the group’s sites operate under
strict environmental management
systems many of which have been
accredited to the international iso14001
environmental management standard
reporting of key environmental
performance indicators is groupwide 
and communicated to all levels of
management and to the group board 
any failings are addressed through
countrybased specialist departments and
review and improvement of systems is a
key area of activity
the group benchmarks its environmental
performance against its peers using
techniques such as the annual business
in the environment bie index of
corporate environmental engagement in
2007 the group scored in excess of 92
per cent in this index compared to 83
per cent in 2006 a score well above the
sector average and one achieved by
targeted improvement in specific areas
identified by analysis of previous index
assessments
due to the group’s size and the highly
regulated environment in which it
operates it is almost inevitable that there
will be some level of enforcement action
by regulators table 18 shows
environmental convictions against the
group during the 2008 financial year
whilst any enforcement action is
disappointing the number of incidents is
low compared to our peers where these
incidents do arise they are thoroughly
investigated the issues addressed and
the lessons learnt incorporated into the
ongoing management systems
corporate responsibility continued
employees who understand clearly the
effect they can have on the environment
health and safety and the group’s public
image
the above gives an insight into the
complex and changing web of law
regulation and perception the group
operates within the group considers
legal compliance as an absolute minimum
requirement but understands that going
beyond simple compliance is critical to
the group’s continued development 
there is currently no requirement on
companies to calculate their carbon
footprint but the group has already done
so for its uk operations and is in the
process of extending this to cover its
other areas of activity the group
understands that it must be prepared 
for future developments in carbon trading
and charging and that being ahead of 
the pack is critical to the group’s
development notwithstanding any
financial impact managing our carbon
footprint responsibly makes good sense
and is supportive of our brand
positioning
equally there is no obligation on
companies to publicly declare accidents
and incidents suffered by its employees
but the group firmly believes that it must
make clear and unambiguous statements
to all stakeholders internal and external
of the standards it expects and the extent
to which they are attained
there is also no legislation which requires
companies to engage with local
populations around their sites and
operations but the group does so
through liaison groups education centres
and direct contact the importance of a shanks annual report 2008 23
enforcement actions are by their nature
a reactive measure of environmental
performance the group believes it has a
positive role to play in improving the
environmental performance of both itself
and its stakeholders such as its
customers  recycling rates are one
measure of this by encouraging
customers to recycle and by providing the
services and operations to allow recycling
rates to improve the group is making a
significant and beneficial impact on the
environment table 19 illustrates this
point and shows a synopsis of recycling
rates achieved by the group
recycling also has positive benefits in
reducing carbon emissions our
commitment to finding innovative and
significant ways of efficiently generating
energy from waste is another way in which
we can help society reduce its overall
carbon emissions 
carbon management is a key future area
for development and one which the group
is committed to being involved in for
2009 the group has set itself the
qualitative target of calculating its carbon
footprint a task which has already
commenced based on these
calculations quantitative targets will be
set to stimulate reductions in the group’s
carbon impact in the future this aspect
of the group’s activities will be reported
on in the 2009 annual report
health and safety
the health safety and wellbeing of its
employees is a prime consideration for
the group companies which have a poor
record in this area are unlikely to have the
highly motivated employees they need to
table 20 
accident numbers and rates
2008 2007
minor riddor minor riddor
minor rate riddor rate minor rate riddor rate
netherlands 51 2800 35 1900 48 2550 41 2350
belgium 113 11900 39 4100 89 9800 57 6300
united kingdom 101 9100 27 2400 109 10400 27 2500
group 265 6800 101 2600 246 6700 125 3300
reporting of injuries diseases and dangerous occurrences regulations riddor is uk law which requires companies to
report specified more serious accidents and incidents to the health and safety executive while riddor is uk law the 
group requires all of its operations no matter which country they are based in to report to this common format
 2007 figures have been adjusted since last year’s annual report following correction of incident numbers in belgium
due principally to reclassification of incidents between minor and riddor
ensure good risk management and to
allow the development of their facilities
for the past five years the group has set
itself the quantified target of improving its
riddor reporting of injuries diseases
and dangerous occurrences regulations
employee injury rate by 10 yearonyear
riddor is uk law but the group has
applied it across all of its operations no
matter which country they are in this is
just one example of the setting of
common and quantifiable targets for key
performance indicators across the group
during 2008 the group improved its
overall riddor rate by more than 21 
in addition each country of operation
showed improvement although this varied
across the group for 2009 the group will
maintain its 10 overall improvement
target and is also seeking to develop
additional quantifiable goals during the
coming year
employees and business ethics
all of the group’s employment and
training policies are compliant with
relevant employment legislation and
regulatory obligations the group is an
equal opportunities employer full and fair
consideration is given to applications
from and the continuing employment
career development and training of
disabled people a culture of two way
communications is actively promoted and
trade unions works councils and other
employee groups are involved wherever
appropriate
the group’s approach to its business is
clearly outlined in its statement of
business principles and corporate ethics
this is publicly available alongside other
corporate publications on the group’s web
site
table 19 
overall recycling and recovery rate
netherlands 83
belgium 51
united kingdom 22
canada 50
group 58 24 shanks annual report 2008
the commitment to achieve business
goals by acting with honesty integrity
openness and fairness is plainly stated
together with a clear and public definition
of acceptable business practice the
statement also includes the group’s
vision and guidance on dealings with
stakeholders such as shareholders
employees customers suppliers and
contractors as well as covering the
specific areas of environmental protection
and health and safety
this statement is communicated directly
to all managers within the group and
through documents such as employee
handbooks to other personnel the group
is committed to ensuring that this
statement of ethics is a living document
and monitors its application at
operational level and has an established
‘whistleblowing’ system
the wider community
because of the nature and extent of its
activities the group understands that it is
essential to keep good communication
lines open with its neighbours and other
stakeholders more than this the group
has a positive role to play in promoting
recycling and other more environmentally
sustainable waste management practices
to the public and its closer stakeholders
such as customers
the group has an open door policy and
encourages visits from local communities
and other interested persons and parties
open days are held at some sites while
at others education centres have been
established for the use of local schools
and other bodies formal liaison groups
are encouraged at highprofile sites and
engagement with local political systems is
a direct duty of operational management
the group cannot rely on its regulators
and internal monitoring systems
completely when assessing the potential
impacts of its operations it is essential
that local populace opinion and concerns
are accounted for the group has put in
place complaint and comment tracking
and response systems at all of its sites
trends in complaints are tracked centrally
with the aim of addressing any issues
before they either come to the regulator’s
attention or start to impact significantly
on the group’s image and reputation we
are more than aware that local perception
is a critical factor which can have a direct
effect on site development and success
corporate responsibility dataset
it is not practical to include here all the
environmental health and safety and
other corporate responsibility measures
the group uses to assess its
performance however we understand
that some stakeholders may wish access
to a more complete analysis and spread
of indicators to address this need we
have produced a corporate responsibility
dataset the dataset is available on the
group’s web site wwwshankscouk for
any interested party to view
in addition each of the group’s three
main countries of operation is producing
its own corporate responsibility report
within the country concerned these
reports will be available in september
2008 
corporate responsibility continued nonexecutive directors
adrian auer ba mba act age 59  
chairman
adrian joined the board in 2005 and was
appointed chairman in july 2006 he 
chairs the nomination committee and is 
also a member of the remuneration 
committee adrian is also chairman of
readymix plc and a nonexecutive director of filtrona plc
previously he has held the position of finance director in a
number of major companies notably in the building materials
and construction sectors as well as senior finance positions
with bp and ici in september 2007 he was appointed
chairman of addaction britain’s largest specialist drug and
alcohol treatment charity adrian will be standing for reelection
at the forthcoming agm and is considered by the board to be
independent
eric van amerongen age 54
senior independent director
eric was appointed to the board in 
february 2007 and sits on the audit
remuneration and nomination 
committees in july 2007 he was 
appointed chairman of the remuneration
committee and senior independent director he was until march
2008 a nonexecutive director of corus group plc a position he
held for seven years eric also has wide ranging european
business experience and holds a number of nonexecutive and
advisory positions
peter johnson ba aca age 54
peter joined the board in may 2005 and 
is the chairman of the audit committee 
and also sits on the remuneration and 
nomination committees peter is a 
chartered accountant and finance 
director of taylor wimpey plc and a non
executive director of oriel securities limited previously he has
held a number of senior positions in the financial services
sector including those of group finance director of henderson
plc chief financial officer for pearl assurance and finance
director of norwich union life
stephen riley b eng phd age 46
steve was appointed to the board in 
march 2007 and is a member of the 
audit remuneration and nomination 
committees he is currently an executive
director with international power plc 
having joined that business in 1985
steve has extensive operational experience in the power
industry having held senior positions in the uk and australia 
shanks annual report 2008 25
board of directors
executive directors
tom drury ma acma age 46
group chief executive
tom joined the company as group chief 
executive designate in september 2007 
and succeeded michael averill as group 
chief executive in october of that year 
following an early career with unilever
and pricewaterhousecoopers he went on to a distinguished
career with united utilities plc being appointed a main board
director in 2005 in 1996 he was appointed managing director
of a new commercial enterprise vertex which grew to become
the second largest firm in the uk’s business process
outsourcing sector until the sale of that business in march
2007 to us private equity tom will be standing for election at
the forthcoming agm
fraser welham bsc aca age 43
group finance director
fraser joined the board in may 2005 and
was appointed group finance director in 
june of that year he was previously 
finance director of shanks belgium for 
seven years and has held finance
positions with the group for over twelve years fraser is a
chartered accountant and prior to joining the company he held
finance positions with other leading waste management
companies  26 shanks annual report 2008
directors’ report
the directors present their annual report together with the audited financial statements for the year ended 31 march 2008
directors
the composition of the board of directors at the date of this report is shown on the previous page together with their biographical
details mr a auer mr e van amerongen mr p johnson dr s riley and mr f welham all served on the board throughout the financial
year under review while mr t drury joined the company on 3 september 2007 and was appointed to the board as group chief
executive on 1 october 2007 nonexecutive directors mr p delaunois and mr b pointon retired from the board at the conclusion of
the agm on 26 july 2007 mr m averill stepped down from his position as group chief executive on 30 september 2007 and was
retained to work for the company on an advisory basis until the end of may 2008 mr t drury will be standing for election at the
forthcoming agm and mr a auer who will be retiring by rotation will be offering himself for reelection mr t drury has a service
contract terminable on twelve months notice the board commends to shareholders the election of both mr a auer and mr t drury
both of whom they regard as possessing the requisite skills and attributes to continue making significant contributions in their
respective roles as chairman and group chief executive
details of the directors’ interests are shown in the remuneration report
principal activities and business review
the principal activities of the group continue to be waste processing and waste management in the netherlands belgium uk and
since april 2007 canada
the chairman’s statement chief executive’s statement business overview operating review financial review and corporate
responsibility on pages 3 to 24 refer to the objectives and strategy competition and the markets in which the group operates the
principal risks and uncertainties facing the group a review of the development and performance of the business for the year ended
31 march 2008 the financial position of the group as at the financial year end key performance indicators and likely future
developments of the business
the information referred to above fulfills the requirements of the business review provisions in section 234zzb of the companies
act 1985 and is incorporated by reference into and shall be deemed to form part of this report together with the other information
referred to in this directors’ report
acquisitions and disposals
acquisitions have been made during the year at a total cost of £475m 2007 £653m and are described in note 13 to the
financial statements there have been no disposals during the year 2007 £nil subsequent to the year end the group announced
in april 2008 that it had acquired the belgian foronex group for a cash consideration of £104m
research and development
the group spent £nil 2007 £nil on research and development during the year ended 31 march 2008
results and dividends
the group’s consolidated income statement appears on page 43 and note 2 to the financial statements shows the contribution to
revenue and profits made by the different segments of the group’s business the group’s profit for the year amounted to £283m
2007 £313m
the directors recommend a final dividend of 42p 2007 40p per share be paid on 1 august 2008 to ordinary shareholders
whose names appear on the register of members at close of business on 11 july 2008 this dividend together with the interim
dividend of 20p 2007 19p per share already paid on 9 january 2008 if approved by shareholders will make a total dividend for
the year of 62p per share 2007 59p shanks annual report 2008 27
statement of going concern
after making enquiries the directors have formed the view at the time of approving the financial statements that the company and
group have adequate resources to continue in operational existence for the foreseeable future for this reason the directors
continue to adopt the going concern basis in preparing the financial statements
notifiable interests
as at 27 may 2008 the company had been notified of the following direct and indirect interests in voting rights equal to or
exceeding 3 of the ordinary share capital of the company
number of shares percentage
legal  general group plc 41705994 1760 
schroder investment management limited 30983387 1308
aberforth partners llp 17202200 732
liontrust investment services limited 11682512 492
artemis investment management limited 10337324 438
credit suisse securities europe limited 9947564 422
share capital
during the year ended 31 march 2008 no ordinary shares were issued other than those issued in respect of exercises of options
under the company’s share option schemes and long term incentive plan details of which are given in note 5 to the financial
statements as at 31 march 2008 and as at the date of this report the authorised ordinary share capital was and is £35000000
represented by 350000000 ordinary shares of 10 pence each as at 31 march 2008 and as at the date of this report there were
236928379 ordinary shares in issue the rights and obligations attaching to the shares are
•
dividend rights – holders of the company’s ordinary shares may by ordinary resolution declare dividends but may not declare
dividends in excess of the amount recommended by the directors the directors may also pay interim dividends no dividend
may be paid other than out of profits available for distribution payment or satisfaction of a dividend may be made wholly or
partly by distribution of specific assets including fully paid shares or debentures of any other company such action must be
directed by the general meeting which declared the dividend and upon the recommendation of the directors
•
voting rights – voting at any general meeting is by a show of hands unless a poll is duly demanded on a show of hands every
shareholder who is present in person at a general meeting and every proxy appointed by a shareholder and present at a
general meeting has one vote regardless of the number of shares held by the shareholder or represented by the proxy on a
poll every shareholder who is present in person or by proxy has one vote for every share held by that shareholder the deadline
for exercising voting rights by proxy is set out in the form of proxy a poll may be demanded by any of the following a the
chairman of the meeting b at least 5 shareholders entitled to vote and present in person or by proxy at the meeting c any
shareholder or shareholders present in person or by proxy and representing in the aggregate not less than onetenth of the
total voting rights of all shareholders entitled to attend and vote at the meeting or d any shareholder or shareholders present
in person or by proxy and holding shares conferring a right to attend and vote at the meeting on which there have been paid up
sums in the aggregate equal to not less than onetenth of the total sum paid up on all the shares conferring that right in the
case of an equality of votes whether on a show of hands or on a poll the chairman of the meeting is entitled to cast the
deciding vote in addition to any other votes he may have
•
return of capital – in the event of the liquidation of the company after payment of all liabilities and deductions taking priority
in accordance with statute the balance of assets available for distribution will be distributed among the holders of ordinary
shares according to the amounts paid up on the shares held by them a liquidator may with the sanction of a special resolution
of the shareholders and any other sanction required by the companies acts divide among the shareholders the whole or any
part of the company’s assets alternatively a liquidator may upon the adoption of a special resolution of the shareholders
vest the assets in whole or in part in trustees upon such trusts for the benefit of shareholders but no shareholder is
compelled to accept any assets upon which there is a liability 28 shanks annual report 2008
directors’ report
continued
powers of directors
the memorandum and articles of association of the company provides that the business of the company shall be managed by the
board which may exercise all the powers of the company whether relating to the management of the business of the company or
not this power is subject to any limitations imposed on the company by legislation it is also limited by the provisions of the
memorandum and articles of association of the company and any directions given by special resolution of the members of the
company which are applicable on the date that any power is exercised specific provisions relevant to the exercise of power by the
directors include
•
preemptive rights and new issues of shares – while holders of ordinary shares have no preemptive rights under the articles of
association the ability of the directors to cause the company to issue shares securities convertible into shares or rights to
shares otherwise than pursuant to an employee share scheme is restricted under the companies acts the directors of a
company are with certain exceptions unable to allot any equity securities without express authorisation which may be
contained in a company’s articles of association or given by its shareholders in general meeting but which in either event
cannot last for more than five years under the companies acts the company may also not allot shares for cash otherwise
than pursuant to an employee share scheme without first making an offer to existing shareholders to allot such shares to
them on the same or more favourable terms in proportion to their respective shareholdings unless this requirement is waived
by a special resolution of the shareholders
•
repurchase of shares – subject to authorisation by shareholder resolution the company may purchase its own shares in
accordance with the companies acts any shares which have been bought back may be held as treasury shares or if not so
held must be cancelled immediately upon completion of the purchase thereby reducing the amount of the company’s issued
share capital
•
borrowing powers – the directors are empowered to exercise all the powers of the company to borrow money subject to the
limitation that the aggregate amount of all net external borrowings of the group outstanding at any time shall not exceed an
amount equal to three times the aggregate of the group’s adjusted capital and reserves calculated in the manner prescribed in
the articles of association unless sanctioned by an ordinary resolution of the company’s shareholders
amendment to company’s articles
the company may alter its articles of association by special resolution passed at a general meeting
corporate governance
the board is fully committed to high standards of corporate governance details relating to the company’s compliance with the
combined code on corporate governance for the financial year are given in the corporate governance and remuneration reports
on pages 30 to 39 these sections contain details of directors’ service contracts and further information on the appointment of
directors and the responsibilities of the board subject to the provisions of the companies acts the memorandum and articles of
association and directions given by special resolution the business of the company is managed by the board which may exercise
all the powers of the company
corporate responsibility
information on corporate responsibility matters including the environment employment policies health and safety and community
relations are set out on pages 21 to 24
charitable and political donations
during the period donations made by the group for charitable purposes amounted to £2430 2007 £2980 no donations were
made for political purposes during the year 2007 £nil payment of suppliers
it is the group’s payment policy to agree payment terms with all suppliers and to abide by them the amount owed to trade
creditors at the year end in proportion to the amounts invoiced by suppliers during the year expressed as a number of days was
65 days 2007 53 days for the group and was 25 days 2007 31 days for the company
significant agreements
the group’s principal financing instrument the multicurrency £250m revolving credit facility with five major banks contains an
option for those banks to declare that all sums outstanding under that agreement are repayable immediately in the event of a
change of control this notice takes effect no earlier than thirty days from change of control and if exercised at 31 march 2008
would have required the repayment of £2117m in principal and interest
the 2001 notes issued under the group’s private placement contain an option for the noteholders to enforce prepayment between
thirty days and sixty days from change of control of outstanding principal and interest which would have amounted in total at
31 march 2008 to £418m in addition an amount of makewhole amounting to £69m which is not provided for in these accounts
would be payable to private placement noteholders based on treasury yields at 31 march 2008
disclosure of information to the company’s auditors
in accordance with section 418 of the companies act 2006 each of the company’s directors in office as at the date of this report
confirms that so far as he is aware there is no relevant audit information in connection with preparing their report of which the
company’s auditors are unaware each director has taken all steps which he ought to have taken as a director in order to make
himself aware of any relevant audit information and to establish that the auditors are aware of that information
annual general meeting
the agm will be held on 24 july 2008 the notice for which is set out on pages 86 to 93 a form of proxy has also been included in
a separate document sent to shareholders with this report resolutions will be proposed to declare a final dividend receive the
2008 report and accounts approve the 2008 remuneration report elect directors reappoint pricewaterhousecoopers llp as
auditors of the company and authorise the directors to determine the auditors’ remuneration shareholders will also be asked to
renew the general authority of the directors to issue shares together with the authority to disapply preemption rights and authorise
the company to make purchase of its own shares in addition a resolution will be proposed to revise the articles of association to
reflect some of the new provisions of the companies act 2006 and to reflect a number of other legislative regulatory and best
practice developments which are explained further in the appendix to the notice of the agm
the directors consider that all the resolutions proposed at the agm to be held on 24 july 2008 are in the best interests of the
company and its shareholders as a whole and they unanimously recommend that all shareholders vote in favour of the resolutions
as they intend to do in respect of their own shareholdings
by order of the board
philip griffinsmith
company secretary 
29 may 2008
shanks annual report 2008 29 30 shanks annual report 2008
corporate governance
combined code
the group is committed to achieving high standards of corporate governance and integrity and exemplary ethical standards in all its
business dealings this statement together with the remuneration report on pages 34 to 39 explains how the group has applied
the provisions of the combined code on corporate governance published in 2003 by the financial reporting council and updated
subsequently in 2006 the board considers that it has complied with section 1 of the combined code in all material respects
throughout the year
the board of directors
the board currently comprises the chairman a further three independent nonexecutive directors the group chief executive and
group finance director the chairman has primary responsibility for running the board and the group chief executive is responsible
for the operations of the group and for the development of strategic plans and initiatives for consideration by the board the
division of responsibilities between the chairman and the group chief executive has been clearly established set out in writing and
agreed by the board
the nonexecutive directors bring a wide range of experience to the group and are considered by the board to be independent of
management and free from any business or other relationship which could materially interfere with the exercise of their independent
judgement during the year until his retirement in july 2007 mr p delaunois was not deemed to be independent in accordance with
the criteria set out in the combined code owing to his receiving fees for providing consultancy advice to the group’s belgian
subsidiaries in addition to the fees received for acting as a director the nonexecutive directors make a significant contribution to
the functioning of the board thereby ensuring that no one individual or group dominates the decision making process non
executive directors are not eligible to participate in any of the company’s share option or pension schemes the chairman also
meets as necessary with the other nonexecutive directors without the executives present
the combined code also recommends that the board appoints one of its independent nonexecutive directors to be the senior
independent director this director is available to shareholders should they have concerns which contact through the normal
channels of chairman group chief executive or group finance director has failed to resolve or for which such contact is
inappropriate during the year this role was fulfilled by mr b pointon until his retirement in july 2007 and thereafter by 
mr e van amerongen
the board meets regularly having met nine times during the year in addition separate strategic discussions take place several
meetings are held at subsidiary company sites in the uk and overseas where local operations are reviewed in line with the
requirement of sound corporate governance there is a formal schedule of matters reserved specifically for the board’s decision
these include approval of financial statements strategic policy acquisitions and disposals capital projects over defined limits
annual plans and new borrowing facilities
the board operates under agreed terms of reference which together with those of its committees are documented formally and
updated as necessary the board is provided with appropriate information in a timely manner to enable it to effectively discharge its
duties all directors have access to the company secretary whose role includes ensuring that board procedures and regulations are
followed in addition directors are entitled if necessary to seek independent professional advice in the furtherance of their duties
at the company’s expense
performance evaluation of the board its committees and individual directors during the year was undertaken through the
mechanism of formalised self assessment questionnaires key results all of which were positive and constructive continue to be
acted on by the chairman and the board the performance evaluation of the chairman was undertaken by the nonexecutive
directors led by the senior independent director
all directors submit themselves for reelection by shareholders in accordance with the company’s articles of association and all
nonexecutive directors are appointed initially for a three year term any new director appointed to the board will be subject to
election by shareholders at the first opportunity after their appointment it has been agreed that any nonexecutive directors who
have served for a period greater than nine years from initial appointment will submit themselves for annual reelection shanks annual report 2008 31
on appointment directors are given an introduction to the group’s operations including visits to principal sites and meetings with
operational management specific training requirements of directors are met either directly or by the company through
legalregulatory updates board succession planning is kept under review by the nomination committee
the table below details the number of formal board and committee meetings held in the year and the attendance of each director
in addition the board held a two day strategy meeting with senior management attending for part of the time there was also
regular communication between the nonexecutive directors without the presence of the executive directors
audit remuneration nomination
director group board committee committee committee
a auer 9 9 na 4 4 2 2
m averill retired 30 september 2007 5 5 na na na
p delaunois retired 26 july 2007 3 4 1 1 2 2 2 2
t drury appointed 1 october 2007 4 4 na na na
p johnson 9 9 3 3 4 4 2 2
b pointon retired 26 july 2007 4 4 1 1 2 2 2 2
s riley 9 9 3 3 4 4 2 2
e van amerongen 7 9 3 3 3 4 1 2
f welham 9 9 na na na
figures in brackets indicate maximum number of meetings during the period in which each individual was a boardcommittee
member
audit committee
the audit committee which met three times in the year is formally constituted with written terms of reference which are available
on the group’s website the committee is comprised solely of nonexecutive directors mr p johnson dr s riley and mr e van
amerongen mr p johnson who continues to have current and relevant financial experience under combined code requirements
chaired the committee throughout the year during the year both mr p delaunois and mr b pointon also served on the committee
until their retirement in july 2007 the external auditors the chairman and the executive directors are regularly invited to attend
meetings and the committee has access to the external auditors’ advice without the presence of the executive directors the audit
committee has the authority to examine any matters relating to the financial affairs of the group this includes the appointment
terms of engagement objectivity and independence of the external auditors the nature and scope of the audit reviews of the
interim and annual financial statements internal control procedures accounting policies adherence with accounting standards and
such other related functions as the board may require the committee also considers and reviews other risk management and
control documentation including the group’s policy on ‘whistleblowing’ and security reporting procedures
the policy on engagement of the external auditors for nonaudit services is that where the work is closely related to the audit or if
the work requires a detailed understanding of the group or when a significant benefit can be obtained from work previously
conducted the work may be awarded to the auditors without compromising their independence and objectivity
during the year the performance of the external auditors was formally reviewed a resolution proposing the reappointment of
pricewaterhousecoopers llp as group auditors will be put to shareholders at the forthcoming agm 32 shanks annual report 2008
corporate governance
continued
remuneration committee
the remuneration committee which met four times in the year is formally constituted with written terms of reference which are
available on the group’s website the committee is comprised solely of nonexecutive directors mr e van amerongen mr a auer
mr p johnson and dr s riley and has been chaired since july 2007 by mr e van amerongen during the year mr p delaunois served
on and mr b pointon chaired the committee until their retirement in july 2007 the committee determines the company’s policy on
remuneration and on a specific package for each of the executive directors it also determines the terms on which the long term
incentive plan ltip and the save as you earn saye share options are awarded to employees the committee also determines
the remuneration of the group’s senior management and that of the chairman it recommends the remuneration of the non
executive directors for determination by the board in exercising its responsibilities the committee has access to professional
advice both internally and externally and may consult the group chief executive about its proposals the remuneration report on
pages 34 to 39 contains particulars of directors’ remuneration and interests in the company’s shares
nomination committee
the nomination committee is chaired by mr a auer and is comprised solely of nonexecutive directors mr e van amerongen
mr p johnson and dr s riley during the year both mr p delaunois and mr b pointon also served on the committee until their
retirement in july 2007 the committee is formally constituted with written terms of reference which are available on the group’s
website it met twice during the year and is responsible for making recommendations to the board on the appointment of directors
and succession planning during the year the structure composition and balance of skills of the board were reviewed including
ensuring that all members of the board had devoted sufficient time and contributed adequately to the work of the board during the
year the committee implemented succession planning in respect of mr m averill’s retirement in september 2007 and the
appointment of mr t drury as successor to the position of group chief executive all appointments were made using the services of
an external executive search consultant
pensions
the assets of both the final salary and money purchase schemes in the uk are held separately from those of the group these are
invested by independent professional investment managers and cannot be invested directly in the company there are two member
nominated trustees and three trustees appointed by the company senior employees in belgium are provided with defined
contribution pension benefits in the netherlands employees participate in compulsory collective transport industry wide pension
schemes or equivalent schemes which provide benefits up to a certain level of pay senior employees in the netherlands earning
in excess of the maximum level of pay allowed for within the compulsory pension schemes also participate in a defined contribution
arrangement for the excess amount
investor relations
the company has an active investor relations programme with designated members of the board regularly meeting institutional
investors analysts press and other parties the board obtains feedback from its broker hoare govett on the views of institutional
shareholders and the chairman attends meetings with major shareholders whose views are communicated to the board as a whole
the group also communicates with private and institutional investors through its agm the group’s website wwwshankscouk
provides additional information for shareholders and the general public
risk management
the board confirms that processes for identifying evaluating and managing the material risks faced by the group have been in
place for the financial year 2008 and to the date of approval of the annual report and accounts these include a formal review by
each business unit to identify and evaluate material strategic operational commercial and financial risks affecting the achievement
of their objectives this review also identifies key procedures and controls used to mitigate the risks to an acceptable level and
where appropriate actions required to further manage and reduce them in addition the executive directors consider those risks to
the group’s strategic objectives that may not be identified and managed at the business unit level the risk summaries developed
out of this process are discussed with both the board and the audit committee in accordance with turnbull guidance
risk management also forms part of major decisionmaking processes such as acquisitions or major contract tenders it is also
embedded in the day to day management of operations including health safety and environmental compliance aspects shanks annual report 2008 33
internal control
the directors are responsible for and have reviewed the effectiveness of the group’s system of internal control during the period
covered by the annual report and accounts the system is designed to provide reasonable but not absolute assurance against
material avoidable loss or misstatement of financial information the key features of the control system are as follows
i monthly visits by executive directors to key operating locations to attend local board or management meetings
ii regular executive committee meetings of the group’s most senior managers and executive directors
iii formal written financial policies and procedures applicable to all business units
iv comprehensive annual budgets requiring board and business unit approval reviewed on a regular basis with performance
measured against budgets and explanations sought for significant variances
v a formal clearly defined framework for control and approval of capital expenditure and investment programmes with cash
authorisation limits and post investment appraisals along with contract authorisation levels
vi identification and evaluation of key risks applicable to each area of business assessed on a continuing basis at both operating
board and group board level
vii appointment of experienced and professional staff of the necessary calibre to meet their responsibilities
viii annual peer reviews where the adequacy of the procedures and controls in each business unit’s operations are reviewed by
senior staff from elsewhere in the group with the aid of extensive checklists summaries of findings from these reviews and
the status on followup actions are discussed by the group board
ix a programme of internal site audits performed by senior finance staff a selection of these audits is performed by individuals
from other business units or where language is an issue by a local firm of external auditors findings from these audits are
discussed at the monthly business unit board meetings summaries of audit findings and the status of followup actions are
discussed at the group board and audit committee meetings on a regular basis
x a range of quality assurance and environmental management systems are used at the group’s sites where appropriate these
are independently certified to internationally recognised standards including iso 9001 and iso 14001 and as such are subject
to regular external audits
xi an environmental advisory board which during the year provided an independent assessment of the group’s health safety
and environmental performance and
xii an audit committee comprising nonexecutive directors the responsibilities of which are set out on page 31
to strengthen the controls provided by the above the audit committee recommended and the board agreed to the establishment of
an independent internal audit function in february 2008 a group risk management and internal audit manager has been recruited
to head up this function he will join the group in june 2008 34 shanks annual report 2008
remuneration report
remuneration policy
the principal objectives of the remuneration committee which is chaired by mr e van amerongen and comprises the nonexecutive
directors are to attract retain and motivate high quality senior management with a competitive package of incentives and awards
linked to performance and the interests of shareholders the committee seeks to ensure that the executive directors are fairly
rewarded taking into account all elements of their remuneration package in the light of the group’s performance
the committee has appointed deloitte  touche llp to provide independent market information and advice relating to executive
remuneration and benefits deloitte  touche llp are considered to be independent as they provide only very limited other services
to the group the committee also engaged the services of an independent consultant b partridge consulting ltd to assist in the
review of executive remuneration for the year to 31 march 2008
as described below a significant proportion of potential total remuneration is performance related and is built around annual and
longer term incentives for directors achieving median performance performance related pay would represent approximately 40 of
total remuneration if performance were such that the maximum award available under each incentive scheme was paid
performance related pay would represent approximately 67 of total remuneration
basic salary
the basic salary element is determined primarily by reference to external data which takes into account the executive director’s
duties and responsibilities basic salary is generally reviewed on an annual basis or following a significant change in
responsibilities during the year mr f welham’s basic salary was increased from £220000 to £250000 per annum and from 
1 april 2008 to £257500 mr t drury’s basic salary of £375000 was increased from 1 april 2008 to £390000
annual cash bonuses
annual cash bonuses are payable at the discretion of the remuneration committee as a percentage of basic salary dependent on
corporate profit and operating cash flow performance compared to target for the year to 31 march 2008 the executive directors’
potential cash bonus ranged from 30 for achieving target performance to a maximum bonus of 100 for achieving a performance
of approximately 15 above target performance cash bonuses are not pensionable
for the year ending 31 march 2009 the component of the annual bonus relating to operating cash flow targets has been replaced
by individual personal objectives the maximum bonus for this component remains 25 of basic salary the maximum total bonus
for the group chief executive will be 125 and 100 for the group finance director
long term incentive plan
under the long term incentive plan ltip senior employees may be granted an award annually the vesting of which is subject to
the attainment of two predetermined performance conditions measured over a three year period awards are in the form of shanks
group plc shares the maximum value in any financial year cannot be more than 100 of basic salary as at the date of grant and
is calculated on the company’s share price at that time
the first performance condition is based on total shareholder return tsr where the company’s tsr achieved during the three
year performance period is measured against the tsr achieved by those companies that constituted the ftse support services
sector immediately before the date of grant of an award an award will only vest in full if the company’s tsr results in it being
ranked in the upper quartile of the companies in the comparator group where the company with the highest tsr is ranked first if
the tsr of the company results in a median position in the comparator group then 25 of the award will vest vesting above the
median position is on a sliding scale with 3 of the award vesting for each percentile increase in the company’s rank above the
median position up to the maximum award if the company’s tsr for the performance period results in a position below the median
then the award will lapse
the second performance condition is based on earnings per share eps and for an award to vest the average growth in the
company’s adjusted eps calculated on a consistent basis must exceed the growth in the retail price index over the same period by
at least nine percentage points having reviewed this performance condition and in light of market conditions the remuneration
committee has decided to increase this to at least 12 percentage points for any grants awarded during the financial year 20089
and thereafter this condition will be kept under review for future awards
no amendment may be made to the performance conditions which would be to the material advantage of participants without the
prior approval of shareholders in general meeting shanks annual report 2008 35
during the year the committee confirmed the performance conditions for the ltips granted in 2004 had been partially achieved and
were available for exercise at a meeting of the committee on 27 may 2008 the performance conditions for the financial year
ended 31 march 2008 were determined to have been achieved resulting in the vesting in full of the ltips granted in 2005
the shanks group plc employee share trust has been established for the purpose of granting awards under the ltip and to hold
shares in the company either purchased in the market or new shares subscribed for with funds provided by the company or its
subsidiaries as at 31 march 2008 the employee share trust did not hold any of the company’s shares
the graph shows the total shareholder return of the company and that of the ftse support services sector index over the five
year period to 31 march 2008 this index has been selected as it is a broad equity index of which shanks group plc is a
constituent member
share option schemes
the committee believes that share ownership by employees encourages the matching of long term interests between employees
and shareholders all uk employees including executive directors subject to certain service conditions may participate in hm
revenue  customs approved savings related share option scheme srsos senior executives were also able to participate in
an executive share option scheme esos at the discretion of the remuneration committee grants of options under the esos
were discontinued in august 2005 when this scheme was replaced by the ltip
under the terms of the srsos for uk employees options may be granted during the ten year period to july 2015 to acquire up to
10 of the issued equity share capital of the company including options granted under the esos and ltip options are granted at
the higher of the nominal value of an ordinary 10 pence share and an amount determined by the remuneration committee being
not less than 80 of the market value employees held options over nearly 07m shares under the srsos as at 31 march 2008
at the agm held on 26 july 2007 the shareholders approved an amendment to the srsos rules to extend the dates upon which
invitations to apply for share options could be made to employees to include the period forty two days commencing from the agm
under the terms of the discontinued esos options could be granted during the ten year period to august 2005 to acquire up to 5
of the issued equity share capital of the company the exercise of options granted under the esos is subject to a performance
condition achievement of which is a prerequisite for exercise of options the condition is tested once only after a period of three
years and if it is not achieved the relevant options will lapse options granted after 26 july 2001 will only be exercisable if the
group’s eps calculated on a consistent basis exceeds the growth in retail price index over the same period by at least nine
percentage points during the year the committee confirmed the performance conditions for the esos granted in 2004 had been
met and therefore was available for exercise at a meeting of the committee on 27 may 2008 the performance conditions for the
financial year ended 31 march 2008 were determined to have been achieved resulting in the vesting of the final tranche of
executive options granted in 2005
400
375
350
325
300
275
250
225
200
175
150
125
100
75
50
25
0 20034 20045 20056 20067 20078
shanks group plc
ftse support services sector
figure 1 shanks group plc total shareholder return versus ftse support services sector index 
for the period 1 april 2003 to 31 march 2008 
source datastream 36 shanks annual report 2008
remuneration report
continued
the remuneration committee applied a different performance condition for options granted under the esos prior to 26 july 2001
these options may not be exercised unless the growth in the group’s eps over the period of any three consecutive years after the
date of grant equals or exceeds the increase in the retail price index over the same period by at least six percentage points
during the year the committee retested the performance conditions for the esos granted in 2000 and 2001 and confirmed these
had been achieved and as a result these options were available for exercise
directors’ service contracts and notice periods
the remuneration committee has agreed that the policy with regard to the notice period for executive directors is one year
accordingly mr t drury and mr f welham have rolling service contracts dated 3 september 2007 and 21 july 2005 respectively
which require one year’s notice from the company in the case of notice from the director mr t drury is required to give one year’s
notice and mr f welham six months in the event of early termination the remuneration committee will consider carefully what
compensation should be paid taking into account the circumstances of the particular case
as has been detailed in the directors’ report mr averill stood down from his position as group chief executive and director with
effect from 30 september 2007 however in line with his notice period mr averill continued to be employed by the company on an
advisory basis until the end of may 2008 payments from that date were limited to the director’s contractual remuneration including
basic salary and benefits for the unexpired portion of the notice period being a salary of £187000 and car allowancemedical
insurance benefit of £14000 for the period 1 october 2007 to 31 march 2008 any entitlement to the exercise of ltips awarded
previously is governed by the rules of the relevant scheme pensionable service is accrued for the unexpired portion of the notice
period
the nonexecutive directors do not have service contracts as their terms of engagement are governed by letters of appointment 
mr p delaunois had and post his retirement from the board in july 2007 continues to have an agreement to provide consultancy
services to the group’s belgian subsidiary companies which can be terminated on giving three month’s notice by either party
date of date of
appointment as director initial letter of appointment term of appointment
a auer 16 may 2005 10 may 2005 renewable three year term
p johnson 16 may 2005 10 may 2005 renewable three year term
e van amerongen 9 february 2007 12 january 2007 renewable three year term
s riley 29 march 2007 12 january 2007 renewable three year term
external appointments
the remuneration committee acknowledges that executive directors may be invited to become nonexecutive directors of other
quoted companies which have no business relationship with the group and that these duties can broaden their experience and
knowledge to the benefit of the company executive directors are limited to hold one such position and the policy is that fees may
be retained by the director reflecting the personal risk assumed in such appointments mr m averill had board approval for two
nonexecutive positions during his last year in office the fees received from these appointments until his retirement from the
board were £35000
directors’ interests in ordinary shares
the directors’ interests in the ordinary shares of the company both during the year and at 27 may 2008 were as follows
as at 1 april 2007 as at 31 march 2008
or date of appointment and 27 may 2008 or
if later date of retirement if earlier
m averill 78206 229637
a auer 10000 10000
p delaunois 1500 –
t drury – 15000
p johnson 1585 1585
b pointon 3000 3000
s riley ––
e van amerongen ––
f welham –– shanks annual report 2008 37
the auditors are required to report on the information contained in the remaining section of the remuneration report
directors’ remuneration
performance other 2008 2007
basic salaryfees related bonus emoluments total total
£000 £000 £000 £000 £000
chairman
a auer 100 – – 100 78
i clubb retired 27 july 2006 –––– 33
executive directors
m averill retired 30 september 2007 187 – 14 201 536
t drury appointed 1 october 2007 187 136 86 409 –
f welham 235 146 37 418 273
nonexecutive directors
p delaunois retired 26 july 2007 12 – 14 26 70
p johnson 40 – – 40 33
b pointon retired 26 july 2007 13 – – 13 35
s riley appointed 9 february 2007 35 – – 35 3
e van amerongen appointed 29 march 2007 38 – – 38 6
total 84728215112801067
notes
i other emoluments for mr m averill and mr f welham include such items as car allowance and medical insurance which are not
pensionable in the case of mr f welham this also includes company contributions to the defined contribution section of the
shanks group pension scheme other emoluments for mr t drury include relocation assistance a car allowance medical
insurance and a cash element paid in lieu of pension scheme contributions equating to 25 of salary all of these items are
non pensionable
ii other emoluments for mr p delaunois are for fees relating to consultancy services provided to the group’s belgian subsidiaries
by sa cgo of which mr p delaunois is a shareholder and director as at the date of his retirement from the board these fees
amounted to £14000 although these fees continue to be paid for ongoing consultancy services at a rate of £42000 per
annum
iii the nonexecutive directors do not participate in the annual bonus plan and do not receive any pension contributions from the
group
directors’ pension benefits
mr m averill and mr f welham are both members of the final salary defined benefit section of the shanks group pension
scheme which is a funded scheme approved by hm revenue  customs in the case of mr welham pension benefits are capped
at the notional hm revenue  customs earnings cap which is reviewed annually for the year to 31 march 2008 the notional cap
was £112800 under the terms of this scheme the executive directors have
•
at retirement and subject to length of service a pension of up to two thirds of basic salary
•
an employee contribution of 7 of basic salary
•
a lump sum death in service benefit of four times basic salary and
•
a spouse’s pension on death 38 shanks annual report 2008
remuneration report
continued
the following table shows the movement in directors’ pension benefit during the year
directors’ final salary pension – benefits
transfer
value of
transfer value transfer value increase in
increase in at 310308 at 310307 accrued pension
increase in accrued of pension of pension increase in during the year
accrued pension accrued benefits benefits transfer value net of inflation
age at pension during the year pension at accrued at accrued at less directors’ less directors’
310308 during the year net of inflation 310308 310308 310307 contributions contributions
ii ii iii iv iv v v
£000 pa £000 pa £000 £000 £000 £000 £000
m averill 56 19 11 234 4830 4123 681 208
f welham 43 3 2 31 355 221 126 21
notes
i mr f welham was subject to the hm revenue  customs cap on approved pension benefits and was provided with additional
pension benefits for basic salary in excess of the cap via the defined contribution section of the shanks group pension
scheme the company contributed £21000 into this section of mr welham’s pension during the year and is included in the
‘other emoluments’ section of the directors’ remuneration table shown on page 37 the value of mr welham’s fund in the
defined contribution section as at 31 march 2008 including his own contributions was £40000
ii the increase in accrued pension during the year represents the difference between the total accrued pension at the end of the
year and the equivalent amount at the beginning of the year
iii the pension entitlement shown is that which would be paid annually on retirement based on service at the end of the year
iv the transfer value has been calculated on the basis of actuarial advice in accordance with actuarial guidance note gn11 
the calculation is based on the assumption that pensions will be paid from the earliest retirement age possible without the
application of actuarial reduction factors at age of 57 for mr m averill and 62 for mr f welham
mr averill resigned as a director on 30 september 2007 his transfer value has been calculated on his pensionable pay as at
30 september 2007 he remained a member of the scheme to the year end and the increase in accrued pension and transfer
value reflects accrual of benefits over the whole year
v the increase in transfer value has been calculated taking into account market conditions and the directors’ ages at 31 march
2007 and 31 march 2008
directors’ interests in share options
the following directors held options to subscribe for ordinary shares of the company
option number number
date of normal exercise dates price at 1 granted lapsed exercised at 31
share options  grant from to pence april 2007 in year in year in year march 2008
m averill e 050600 060603 050607 1800 150000 – – 150000 –
s 260902 011107 300408 1160 8495 – – 8495 –
s 250903 011108 300409 840 3773 – – – 3773
s 010906 011109 300410 1505 1255 – – – 1255
f welham e 050600 060603 050607 1800 20000 – – 20000 –
e 040601 050604 040608 1765 20000 – – 20000 –
e 020804 030807 020614 1150 25000 – – – 25000
s 250903 011108 300409 840 18869 – – – 18869
 e executive share option scheme and s savings related share option scheme
 or at date of retirement if earlier shanks annual report 2008 39
notes
i the option price is the price at which the option was granted the price is set by the remuneration committee but is not less
than 80 savings related scheme and 100 executive scheme of the average market price of the shares over the last
three dealing days immediately preceding the date of the invitation to subscribe savings related scheme or the date of grant
executive scheme the performance conditions relating to the exercise of executive share options are shown on 
pages 35 and 36
ii the market price of the shares on 1 june 2007 when mr m averill and mr f welham exercised their executive share options
was 27127 pence whilst the price on 16 november 2007 when mr m averill exercised his savings related share option was
20887 pence
directors’ interests in long term incentive plan
the following directors have been made notional allocations of shares under the company’s long term incentive plan
outstanding awards outstanding
awards at awards made awards lapsed exercised awards at share price on
31 march during during during 31 march date of date of award performance restricted
2007 the year the year the year 2008 award pence period end period end
m averill 290000 – 4350 285650 – 020804 1150 310307 020807
240000––– 240000 060605 14475 310308 060608
213000––– 213000 050606 1700 310309 050609
t drury – 150000 – – 150000 280907 2330 310310 280910
f welham 75000––– 75000 060605 14475 310308 060608
94000––– 94000 050606 1700 310309 050609
– 75000 – – 75000 050607 2735 310310 050610
 or at date of retirement if earlier
notes
i the performance conditions relating to the vesting of the long term incentive plan awards are shown on pages 34 and 35
ii the market price of the shares on 3 august 2007 on the vesting of mr m averill’s 2004 long term incentive plan was 
2324 pence
the highest closing midmarket price of the ordinary shares of the company during the year was 281 pence and the lowest closing
midmarket price during the year was 195 pence the midmarket price at the close of business on 31 march 2008 was 260 pence
other interests
none of the directors had an interest in the shares of any subsidiary undertaking of the company or in any significant contracts of
the group
by order of the board
eric van amerongen
chairman of the remuneration committee
29 may 2008 40 shanks annual report 2008
statement of directors’ responsibilities
in respect of the annual report the directors’ remuneration report and the financial statements
the directors are responsible for preparing the annual report the directors’ remuneration 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
prepared the group and parent company financial statements in accordance with international financial reporting standards
ifrss as adopted by the european union the financial statements are required by law to give a true and fair view of the state of
affairs of the company and the group and of the profit of the company and group for that period
in preparing those financial statements the directors are required to
•
select suitable accounting policies and then apply them consistently
•
make judgements and estimates that are reasonable and prudent
•
state whether the financial statements comply with ifrss as adopted by the european union
•
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group will continue
in business and
•
include a fair review of the development performance and position of the business together with a description of the principal
risks and uncertainties
the directors confirm that they have complied with the above requirements in preparing the financial statements
the directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial
position of the company and the group and to enable them to ensure that the financial statements and the remuneration report
comply with the requirements of the companies act 1985 and as regards the group financial statements article 4 of the ias
regulation they are also responsible for safeguarding the assets of the company and the group and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities
the directors are responsible for the maintenance and integrity of the corporate and financial information included on the
company’s website legislation in the united kingdom governing the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions shanks annual report 2008 41
independent auditors’ report to the members of
shanks group plc
we have audited the group and parent company financial statements the ‘financial statements’ of shanks group plc for the year
ended 31 march 2008 which comprise the consolidated group and parent company income statements the consolidated group
and parent company balance sheets the consolidated group and parent company cash flow statements the consolidated group
and parent company statements of recognised income and expense and the related notes these financial statements have been
prepared under the accounting policies set out therein we have also audited the information in the directors’ remuneration report
that is described as having been audited
respective responsibilities of directors and auditors
the directors’ responsibilities for preparing the annual report the directors’ remuneration report and the financial statements in
accordance with applicable law and international financial reporting standards ifrss as adopted by the european union are set
out in the statement of directors’ responsibilities
our responsibility is to audit the financial statements and the part of the directors’ remuneration report to be audited in
accordance with relevant legal and regulatory requirements and international standards on auditing uk and ireland this report
including the opinion has been prepared for and only for the company’s members as a body in accordance with section 235 of the
companies act 1985 and for no other purpose we do not in giving this opinion accept or assume responsibility for any other
purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our
prior consent in writing
we report to you our opinion as to whether the financial statements give a true and fair view and whether the financial statements
and the part of the directors’ remuneration report to be audited have been properly prepared in accordance with the companies
act 1985 and as regards the group financial statements article 4 of the ias regulation we also report to you whether in our
opinion the information given in the directors’ report is consistent with the financial statements the information given in the
directors’ report includes that specific information presented in the chairman’s statement chief executive’s statement business
overview operating review financial review and corporate responsibility that is cross referred from the business review section
of the directors’ report
in addition we report to you if in our opinion the company has not kept proper accounting records if we have not received all the
information and explanations we require for our audit or if information specified by law regarding directors’ remuneration and other
transactions is not disclosed
we review whether the corporate governance statement reflects the company’s compliance with the nine provisions of the
combined code 2006 specified for our review by the listing rules of the financial services authority and we report if it does not
we are not required to consider whether the board’s statements on internal control cover all risks and controls or form an opinion
on the effectiveness of the group’s corporate governance procedures or its risk and control procedures
we read other information contained in the annual report and consider whether it is consistent with the audited financial
statements the other information comprises only the directors’ report the unaudited part of the directors’ remuneration report
the financial highlights chairman’s statement chief executive’s statement the business overview operating review financial
review corporate responsibility corporate governance statement consolidated five year summary and all other information as
referenced by the contents page of the annual report we consider the implications for our report if we become aware of any
apparent misstatements or material inconsistencies with the financial statements our responsibilities do not extend to any other
information
basis of audit opinion
we conducted our audit in accordance with international standards on auditing uk and ireland issued by the auditing practices
board an audit includes examination on a test basis of evidence relevant to the amounts and disclosures in the financial
statements and the part of the directors’ remuneration report to be audited it also includes an assessment of the significant
estimates and judgments made by the directors in the preparation of the financial statements and of whether the accounting
policies are appropriate to the group’s and company’s circumstances consistently applied and adequately disclosed 42 shanks annual report 2008
independent auditors’ report to the members of
shanks group plc
continued
we planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order
to provide us with sufficient evidence to give reasonable assurance that the financial statements and the part of the directors’
remuneration report to be audited are free from material misstatement whether caused by fraud or other irregularity or error in
forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements and the
part of the directors’ remuneration report to be audited
opinion
in our opinion
•
the financial statements give a true and fair view in accordance with ifrss as adopted by the european union of the state of
the group’s and the parent company’s affairs as at 31 march 2008 and of the group’s and parent company’s profits and cash
flows for the year then ended
•
the financial statements and the part of the directors’ remuneration report to be audited have been properly prepared in
accordance with the companies act 1985 and as regards the group financial statements article 4 of the ias regulation and
•
the information given in the directors’ report is consistent with the financial statements
pricewaterhousecoopers llp
chartered accountants and registered auditors
london
29 may 2008 shanks annual report 2008 43
consolidated income statement
year ended 31 march 2008
2008 2007
note £m £m
continuing operations
revenue 2 5637 5085
cost of sales 4585 4129
gross profit 1052 956
administrative expenses before exceptional items 518 494
exceptional profit on disposal of properties 19 –
total administrative expenses 499 494
operating profit 23 553 462
finance charges
interest payable 238 182
interest receivable 127 112
change in fair value of interest rate swaps 29 69
total finance charges 6 140 01
profit before tax 2 413 461
tax 7 130 148
profit for the year 283 313
dividend per share 8 62p 59p
earnings per share
– basic 9 120p 133p
– diluted 9 120p 133p
consolidated statement of recognised income and expense
year ended 31 march 2008
2008 2007
note £m £m
exchange gain loss on translation of foreign operations 24 281 39
actuarial gain on defined benefit pension schemes 22 160 05
441 34
deferred tax in respect of defined benefit pension schemes 47 01
net income expense recognised directly in equity 394 35
profit for the year 283 313
total recognised income and expense for the year 24 677 278 44 shanks annual report 2008
consolidated balance sheet
at 31 march 2008
at at
31 march 31 march
2008 2007
note £m £m
noncurrent assets
intangible assets 10 2737 1983
property plant and equipment 11 2875 2090
other investments and loans to joint ventures 12 16 18
trade and other receivables 17 1507 1419
retirement benefit assets 22 94 –
deferred tax assets 14 37 108
7266 5618
current assets
inventories 15 77 54
trade and other receivables 17 1528 1194
current tax receivable 14 21
cash and cash equivalents 18 532 427
2151 1696
total assets 9417 7314
current liabilities
borrowings 19 81 289
trade and other payables 20 1755 1273
current tax payable 162 134
provisions 21 41 63
2039 1759
noncurrent liabilities
borrowings 19 3718 2712
other noncurrent liabilities 20 185 23
deferred tax liabilities 14 391 274
provisions 21 283 225
retirement benefit obligations 22 – 84
4577 3318
total liabilities 6616 5077
net assets 2801 2237
equity
share capital 23 237 235
share premium 24 974 940
exchange reserve 24 292 11
retained earnings 24 1298 1051
total equity 24 2801 2237
the financial statements on pages 43 to 84 were approved by the board of directors and authorised for issue on 29 may
2008
they were signed on its behalf by
a auer f a n welham
chairman group finance director shanks annual report 2008 45
consolidated cash flow statement
year ended 31 march 2008
2008 2007
note £m £m
net cash from operating activities 25 871 713
investing activities
purchases of intangible assets 05 11
purchases of property plant and equipment 477 393
disposals of property plant and equipment 53 27
financial asset capital advances 171 309
financial asset capital repayments 88 14
acquisitions of subsidiary and other businesses 475 653
income received from other investments 04 11
net cash used in investing activities 983 1314
financing activities
interest paid 211 171
interest received 106 112
proceeds from issue of shares 23 03
dividends paid 143 134
increase in borrowings 385 646
increase in obligations under finance leases 38 09
repayments of obligations under finance leases 27 30
net cash flow from financing activities 171 435
net increase decrease in cash and cash equivalents 59 166
effect of foreign exchange rate changes 46 01
cash and cash equivalents at beginning of year 427 594
cash and cash equivalents at end of year 532 427 46 shanks annual report 2008
company income statement
year ended 31 march 2008
2008 2007
note £m £m
continuing operations
administrative expenses 34 23
administrative expenses – exceptional 3 1370 –
total administrative expenses 1404 23
other operating expense – exchange 177 13
operating loss 23 1581 36
income from shares in subsidiary undertakings 1875 –
finance charges
interest payable 198 102
interest receivable 61 25
total finance charges 6 137 77
profit loss before tax 157 113
tax credit 7 69 46
profit loss for the year 226 67
company statement of recognised income and expense
year ended 31 march 2008
2008 2007
note £m £m
actuarial gain on defined benefit pension schemes 22 160 05
deferred tax in respect of the above 47 01
net income recognised directly in equity 113 04
profit loss for the year 226 67
total recognised income and expense for the year 24 339 63 shanks annual report 2008 47
company balance sheet
at 31 march 2008
at at
31 march 31 march
2008 2007
note £m £m
noncurrent assets
property plant and equipment 11 02 02
investments in subsidiary undertakings 12 4696 3798
retirement benefit assets 22 94 –
deferred tax assets 14 – 48
4792 3848
current assets
trade and other receivables 17 1840 248
current tax receivable 81 45
cash and cash equivalents 18 376 386
2297 679
total assets 7089 4527
current liabilities
borrowings 19 – 10
trade and other payables 20 35 48
provisions 21 31 39
66 97
noncurrent liabilities
borrowings 19 1285 803
other noncurrent liabilities 20 3763 1810
deferred tax liabilities 14 16 –
retirement benefit obligations 22 – 84
5064 2697
total liabilities 5130 2794
net assets 1959 1733
equity
share capital 23 237 235
share premium 24 1214 1180
retained earnings 24 508 318
total equity 24 1959 1733
the financial statements on pages 46 to 84 were approved by the board of directors and authorised for issue on 
29 may 2008
they were signed on its behalf by
a auer f a n welham
chairman group finance director 48 shanks annual report 2008
company cash flow statement
year ended 31 march 2008
2008 2007
£m £m
net cash from operating activities
operating loss 1581 36
net increase decrease in provisions 1308 27
exchange loss 177 13
sharebased payments 08 06
operating cash flows before movements in working capital 88 44
increase decrease in receivables 1592 34
increase in payables 1005 413
cash generated by operations 675 403
income taxes received 48 09
net cash from operating activities 627 412
investing activities
dividend received 578 –
net cash from investing activities 578 –
financing activities
interest paid 189 98
interest received 61 25
proceeds from issue of shares 23 03
dividends paid 143 134
increase repayment of borrowings 287 224
net cash flow from financing activities 39 428
net decrease in cash and cash equivalents 10 16
cash and cash equivalents at beginning of year 386 402
cash and cash equivalents at end of year 376 386 shanks annual report 2008 49
notes to the financial statements
1 accounting policies – group and company
general information
shanks group plc is a public limited company incorporated and domiciled in the united kingdom under the companies act
1985
basis of preparation
the financial statements are prepared in accordance with international financial reporting standards ifrs as required by
article 4 of the european union ias regulation and with those parts of the companies act 1985 applicable to companies
reporting under ifrs the financial statements are prepared on the historical cost basis except for derivative financial
instruments which are stated at fair value the policies set out below have been consistently applied the group has applied
all accounting standards and interpretations issued relevant to its operations and effective for accounting periods beginning on
1 april 2007
during the year the group has adopted ifrs 7 financial instruments disclosures and the related amendment to ias 1
presentation of financial statements which are required to be implemented from 1 april 2007 other than increased disclosure
concerning financial instruments and management of capital ifrs 7 has not had an impact on reported profits or net assets
during the year the group has early adopted ifrs 8 operating segments in order to facilitate a greater understanding and
improve the transparency of the group’s reported results accordingly the group has restated its segmental information in 
note 2 there has been no impact on reported profits or net assets
in july 2007 ifric 14 the limit on defined benefit asset minimum funding requirements and their interaction was issued it
limits the recognition of a defined benefit asset when minimum funding requirements exist within a retirement benefit plan
ifric 14 was implemented by the group from 1 april 2007 and this has had no impact on reported profits or net assets
other accounting standards and interpretations in issue at the date of approval of these financial statements but not yet
effective are not expected to have a material impact on the financial statements
the preparation of financial statements in accordance with ifrs requires management to make judgements estimates and
assumptions that affect the application of policies and reported amounts of assets and liabilities income and expenses
although these estimates are based on management’s best knowledge of the amount event or actions actual results
ultimately may differ from those estimates the most significant judgements made relate to assumptions concerning discount
rates future returns on assets and future contribution rates in connection with the group’s retirement benefit schemes see
note 22 in making these assumptions the group takes advice from qualified actuaries other significant judgements made
relate to provisions and pfi contracts see below
basis of consolidation
the consolidated financial statements incorporate the financial statements of shanks group plc and all its subsidiary
undertakings subsidiaries entities which are jointly controlled with another party or parties joint ventures are incorporated in
the financial statements by proportional consolidation the results of subsidiaries and joint ventures acquired or sold during
the year are included in the consolidated financial statements up to or from the date control passes wholly owned subsidiary
companies set up under pfi contracts are fully consolidated by the group
pfi contracts
the group’s pfi contracts are all integrated waste management contracts in these contracts the existing local authority
waste management services are operated by the group from inception of the contract the pfi contract requires the building of
new infrastructure to add to that inherited from the previous service provider and all rights to the infrastructure pass to the
local authority at the termination or expiry of the contract the payments made to contractors for the construction of the
infrastructure are accounted for as financial assets the group accounts for the service element as revenue and the repayment
element is deducted from the financial asset interest receivable is added to the financial asset based on the rate implied in
the contract payments reviews are undertaken regularly to ensure that the financial asset will be recovered over the contract
life
borrowing costs relating to contract specific external borrowings are expensed in the income statement 50 shanks annual report 2008
notes to the financial statements
continued
1 accounting policies continued
bid costs are expensed in the income statement until the group is appointed preferred bidder and there is a high probability
that a contract will be awarded bid costs incurred after this point are capitalised within trade and other receivables when the
contract is awarded the costs are included in the relevant financial asset
revenue
revenue represents the invoiced value of waste streams processed and other services provided including landfill tax but
excluding sales taxes revenue is recognised when processing occurs or when the service is provided
exceptional items
items are classified as exceptional and disclosed separately due to their size or incidence to enable a better understanding of
performance these include but are not limited to the change in fair value of financial instruments and the profit or loss on
disposals of properties
sharebased payments
ifrs 2 sharebased payments has been applied to grants of equity instruments after 7 november 2002 which had not vested
as of 1 april 2005 the fair value of options granted is expensed on a straightline basis over the vesting period based on the
group’s estimate of shares that will eventually vest adjustments to the amounts expensed are only made in respect of non
market related factors
discontinued operations
a discontinued operation is a component of the group’s business that represents a separate major line of business
classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as
held for sale if earlier
intangible assets
i goodwill
goodwill arises when the cost of acquiring subsidiaries and businesses exceeds the fair value attributed to the net assets
acquired capitalised goodwill is reviewed for impairment on an annual basis any impairment is charged immediately to
the income statement and is not subsequently reversed
goodwill arising on acquisitions prior to the date of transition to ifrs 31 march 2004 has been retained at the previous
uk gaap net book value following impairment tests goodwill written off to reserves under uk gaap prior to 1998 has not
been reinstated
the profit or loss on disposal or closure of a business is calculated after taking into account any goodwill excluding
amounts previously written off to reserves prior to 1998
ii landfill void
when landfill operations are acquired landfill void is capitalised based on the fair value of the void acquired and is
amortised over its estimated useful life on a void usage basis
iii other intangibles
other intangible assets are capitalised on the basis of the fair value of the assets acquired or on the basis of costs
incurred to purchase and bring the assets into use these are amortised over the estimated useful life on a straight line
basis as follows
computer software 1 to 5 years
waste permits 5 to 20 years
other 5 to 10 years shanks annual report 2008 51
1 accounting policies continued
property plant and equipment
property plant and equipment except for freehold land is stated at cost less depreciation and provision for any impairment
freehold land is not depreciated
i buildings plant and machinery
depreciation is provided on these assets to write off their cost by equal annual instalments over the expected useful
economic lives the expected useful life of buildings is 25 to 50 years plant and machinery lives are
computer equipment 1 to 5 years
mobile plant 5 years
generation equipment 8 to 15 years
heavy goods vehicles 5 to 10 years
other items 3 to 20 years
ii landfill sites
site development costs including engineering works and the discounted cost of final site restoration are capitalised these
costs are written off over the operational life of each site based on the amount of void space consumed
impairment of assets
assets other than goodwill are reviewed for impairment whenever events or circumstances indicate that the carrying amount
may not be recoverable if any such indication exists the recoverable amount is estimated in order to determine the extent of
any impairment loss the recoverable amount is the higher of fair value less costs to sell and value in use in assessing value
in use the estimated future cash flows are discounted to their present value if the recoverable amount is estimated to be
less than the carrying amount the asset is reduced to the recoverable amount an impairment loss is recognised immediately
as an operating expense
leased assets
i finance leases
where the group has substantially all the risks and rewards of ownership of a leased asset the lease is treated as a
finance lease leased assets are included in property plant and equipment at the total of the capital elements of the
payments during the lease term and the corresponding obligation is included in payables depreciation is provided to write
off the assets over the expected useful life
ii operating leases
all leases other than finance leases are treated as operating leases rentals paid under operating leases are charged to
the income statement in the year to which they relate the obligation to pay future rentals on operating leases is shown in
note 27 to the accounts
inventories
inventories are stated at the lower of cost and net realisable value and are measured on a first in first out basis
government grants and subsidies
capital related government grants are released to the income statement evenly over the expected useful lives of the assets to
which they relate revenue grants and subsidies are credited in the same period as the items to which they relate
unprocessed waste
the accrual or deferred income relating to unprocessed waste is calculated at the higher of sales value or processing cost
site restoration provision
full provision is made for the net present value npv of the group’s unavoidable costs in relation to restoration liabilities at its
landfill sites and this value is capitalised and amortised over the useful life of the site in addition the group continues to
provide for the npv of intermediate restoration costs over the life of its landfill sites and mineral extraction sites based on the
quantity of waste deposited or mineral extracted in the year 52 shanks annual report 2008
notes to the financial statements
continued
1 accounting policies continued
aftercare provision
provision is made for the npv of post closure costs at the group’s landfill sites based on the quantity of waste deposited in
the year similar costs incurred during the operating life of the sites are written off directly to the income statement and not
charged to the provision
discounting
all long term provisions for restoration aftercare and onerous leases are calculated based on the npv of estimated future
costs the effects of inflation and unwinding of the discount element on existing provisions are reflected within the financial
statements as a finance charge the real discount factor currently applied is 2
retirement benefits
the group accounts for pensions and similar benefits under the amended ias19 employee benefits for defined benefit plans
obligations are measured at discounted present value whilst plan assets are recorded at market value the operating and
financing costs of the plans are recognised separately in the income statement and actuarial gains and losses are recognised
in full through the statement of recognised income and expense surpluses on defined benefit plans are recognised only to the
extent that they are recoverable movements in irrecoverable surpluses are recognised immediately in the statement of
recognised income and expense
payments to defined contribution schemes are charged to the income statement as they become due the group participates
in several multiemployer schemes in the netherlands these are accounted for as defined contribution plans as it is not
possible to split the assets and liabilities of the schemes between participating companies and the group has been informed
by the schemes that it has no obligation to make additional contributions in the event that the schemes have an overall deficit
tax
i current tax
current tax payable is based on taxable profit for the year taxable profit differs from profit before tax in the income
statement because it excludes items of income or expense that are taxable or deductible in other years or that are never
taxable or deductible the liability for current tax is calculated using tax rates that have been enacted or substantially
enacted by the balance sheet date
ii deferred tax
deferred tax is recognised in full where the carrying value of assets and liabilities in the financial statements is different
to the corresponding tax bases used in the computation of taxable profits deferred tax liabilities are generally recognised
for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that the
taxable profits will be available against which deductible temporary differences can be utilised deferred tax is calculated
at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised deferred tax
is charged or credited in the income statement except where it relates to items charged or credited through the statement
of recognised income and expense or directly to reserves when it is charged or credited there
foreign currencies
foreign currency denominated monetary assets and liabilities are translated into sterling at the year end exchange rate
transactions and the results of overseas subsidiary undertakings and joint ventures in foreign currencies are translated at the
average rate of exchange for the year and the resulting exchange differences are recognised in the group’s exchange reserve
cumulative exchange differences are recognised in the income statement in the year in which an overseas subsidiary
undertaking is disposed of the group applies the hedge accounting principles of ias 39 financial instruments recognition
and measurement relating to net investment hedging to offset the exchange differences arising on foreign currency
denominated borrowings with the translation of foreign operations net investment hedges are accounted for by recognising
exchange rate movements in the exchange reserve with any hedge ineffectiveness being charged to the income statement in
the period the ineffectiveness arises shanks annual report 2008 53
1 accounting policies continued
financial instruments
i trade receivables
trade receivables do not carry interest and are stated at their nominal value reduced by appropriate allowances for
estimated irrecoverable amounts
ii financial assets relating to pfi contracts
financial assets relating to pfi contracts are classified as loans and receivables and are initially recognised at the fair
value of the consideration paid and subsequently amortised using the effective interest rate method
iii cash and cash equivalents
cash and cash equivalents comprise cash balances and call deposits with a maturity of three months or less
iv external borrowings
interest bearing bank loans are recorded at the proceeds received net of direct issue costs finance charges including
premiums payable on settlement or redemption and direct issue costs are accounted for on an accruals basis to the
income statement using the effective interest rate method and are added to the carrying amount of the borrowings to the
extent that they are not settled in the period in which they arise
v trade payables
trade payables on normal terms are not interest bearing and are stated at their nominal value
vi derivative financial instruments
as part of the group’s pfi contracts the group has a number of interest rate swaps these swaps are measured at fair
value at each reporting date with the gains or losses between period ends being taken to finance charges in the income
statement
vii other receivables and other payables
other receivables and other payables are measured at amortised cost using the effective interest rate method
dividends
dividends are accounted for on a cash basis and are not accrued in the balance sheet
segmental reporting
the group’s organisational structure reflects the national nature of markets in which it operates with divisions in the
netherlands belgium the united kingdom and canada 54 shanks annual report 2008
notes to the financial statements
continued
2 segmental reporting
the group operates in the netherlands belgium the united kingdom and canada as discussed in the business overview on
pages 7 to 11 the waste markets are different in each member state of the european union as a result the group is
organised and managed mainly by geographical location each geographical location can be analysed according to the following
types of activity
solid waste nonhazardous solid waste collections transfer and recycling
landfill and power landfill disposal including contaminated soils and power generation from landfill gas
hazardous waste industrial cleaning hazardous waste transport treatment including contaminated soils and disposal
and contaminated land remediation
organic treatment anaerobic digestion and tunnel composting of source segregated organic waste streams
pfi contracts long term united kingdom municipal waste treatment contracts
sand quarry mineral extraction
the accounting policies of the reportable segments are the same as those described in note 1 except that pension expense
for the united kingdom is recognised and measured on the basis of cash payments to the pension plan the profit measure
the group uses to evaluate performance is trading profit trading profit is operating profit before the amortisation of acquisition
intangibles excluding landfill void and computer software and exceptional items the group accounts for intersegment trading
on an arm’s length basis the information for the 2007 comparatives has been restated in the new format
2008 2007
revenue £m £m
netherlands solid waste 1895 1691
hazardous waste 1006 858
organic treatment 72 –
intrasegment revenue 26 19
2947 2530
belgium solid waste 772 709
landfill and power 180 209
hazardous waste 409 438
sand quarry 22 25
intrasegment revenue 132 145
1251 1236
united kingdom solid waste 751 696
landfill and power 152 135
hazardous waste 109 101
pfi contracts 432 400
intrasegment revenue – –
1444 1332
canada organic treatment 14 –
intersegment revenue 19 13
total revenue 5637 5085
group 5473 4940
share of joint ventures 164 145
total revenue 5637 5085 shanks annual report 2008 55
2 segmental reporting continued
2008 2007
profit before tax £m £m
trading profit
netherlands solid waste 300 266
hazardous waste 95 84
organic treatment 16 –
country central services 34 30
377 320
belgium solid waste 74 58
landfill and power 83 111
hazardous waste 33 34
sand quarry 07 08
country central services 35 38
162 173
united kingdom solid waste 64 46
landfill and power 50 38
hazardous waste 17 12
pfi contracts 04 02
pfi bid team 09 11
country central services 57 54
69 33
canada organic treatment 01 –
group central services 50 53
total trading profit 559 473
amortisation of acquisition intangibles 25 11
exceptional profit on disposal of properties 19 –
06 11
total operating profit 553 462
group 501 422
share of joint ventures 52 40
total operating profit 553 462
finance charges interest payable 238 182
interest receivable 127 112
change in fair value of interest rate swaps 29 69
total finance charges 140 01
profit before tax 413 461
 trading profit is operating profit before amortisation of acquisition intangibles excluding landfill void and computer software
and exceptional items
the company operates solely in the united kingdom providing central services 56 shanks annual report 2008
notes to the financial statements
continued
2 segmental reporting continued
2008 2007
net assets £m £m
netherlands gross noncurrent assets 4513 3291
gross current assets 788 549
gross liabilities 1176 673
4125 3167
belgium gross noncurrent assets 550 419
gross current assets 375 324
gross liabilities 626 477
299 266
united kingdom gross noncurrent assets 1998 1796
gross current assets 435 370
gross liabilities 370 345
2063 1821
canada gross noncurrent assets 72 –
gross current assets 04 –
gross liabilities 05 –
71 –
group central services gross noncurrent assets 96 04
gross current assets 03 05
gross liabilities 87 173
12 164
total gross noncurrent assets 7229 5510
gross current assets 1605 1248
gross liabilities 2264 1668
net operating assets 6570 5090
current tax 148 113
deferred tax 354 166
net debt 3267 2574
net assets 2801 2237 shanks annual report 2008 57
2 segmental reporting continued
2008 2007
other disclosures £m £m
netherlands capital expenditure 318 261
depreciation 232 203
amortisation of intangibles 35 23
belgium capital expenditure 118 71
depreciation 71 63
amortisation of intangibles – –
united kingdom capital expenditure 56 30
depreciation 38 34
amortisation of intangibles 04 –
canada capital expenditure 21 –
depreciation 02 –
amortisation of intangibles 01 –
total capital expenditure 513 362
depreciation 343 300
amortisation of intangibles 40 23
3 profit for the year
profit for the year is stated after charging crediting
group company
2008 2007 2008 2007
£m £m £m £m
staff costs see note 4 1316 1187 25 23
depreciation of property plant and equipment
– owned assets 321 279 – –
– held under finance leases 22 21 – –
amortisation of intangible assets charged to cost of sales 40 23 – –
repairs and maintenance expenditure on property plant and equipment 316 284 – –
net profit on disposal of property plant and equipment 31 10 – –
impairment of investment in subsidiary undertakings note 12 – – 1334 –
makewhole payment relating to amounts owed to subsidiary undertakings – – 36 –
trade receivables impairment 08 08 – –
government grants 01 01 – –
operating lease costs
– minimum lease payments 153 121 01 01
– less sublease rental income 02 02 – –
151 119 01 01
represented by
– operating lease rentals – land and buildings 49 32 01 01
– operating lease rentals – plant and machinery 102 87 – –
151 119 01 01
auditors’ remuneration
– audit of parent company and consolidated accounts 01 01 01 01
– audit of subsidiaries pursuant to legislation 04 03 01 01
– tax services 05 06 05 06
total payments to auditors 10 10 07 08
at 31 march 2008 the amount due to pricewaterhousecoopers llp for fees not yet invoiced was £01m 58 shanks annual report 2008
notes to the financial statements
continued
4 employees
2008 2007
number number
the average number of persons employed by the group during the year was as follows
netherlands 2161 1974
belgium 1031 1019
united kingdom 914 828
canada 5 –
group central services 14 15
4125 3836
2008 2007
£m £m
the total remuneration of all employees comprised
wages and salaries costs 1057 950
employer’s social security costs 182 171
employer’s pension costs see note 22 77 66
1316 1187
the disclosure above relates to the group the average number of persons employed by the company was 14 2007 15 with
the related wages and salaries costs employer’s social security costs and employer’s pension costs amounting to £18m
2007 £16m £03m 2007 £04m and £04m 2007 £03m respectively shanks annual report 2008 59
5 sharebased payments
group and company
as described in the remuneration report the group issues equitysettled sharebased payments under a savings related
share option scheme srsos an executive share option scheme esos and a long term incentive plan ltip for key
executives
outstanding options 
srsos esos ltip
weighted weighted
average average
exercise exercise
options price options price options
number pence number pence number
outstanding at 31 march 2006 929938 103p 3555000 154p 1716000
granted during the year 124507 151p – – 682500
forfeited during the year 42476 114p – – –
expired during the year 82742 104p 1423000 155p 666000
exercised during the year 188385 116p 117000 129p –
outstanding at 31 march 2007 740842 107p 2015000 155p 1732500
granted during the year 104630 186p – – 751400
forfeited during the year 43995 131p – – –
expired during the year 17493 130p 125000 141p 7725
exercised during the year 100523 111p 1390000 161p 507275
outstanding at 31 march 2008 683461 117p 500000 141p 1968900
exercisable at 31 march 2008 17557 116p 55000 115p
exercisable at 31 march 2007 9574 145p 1005000 178p
subject to performance conditions
at 31 march 2008
range of price per share 84p to 186p 113p to 144p
weighted average remaining contractual life 3 years 3 years 2 years 60 shanks annual report 2008
notes to the financial statements
continued
5 sharebased payments continued
fair value of options granted during the year
srsos ltip
2008 2007 2008 2007
black black
valuation model scholes scholes binomial binomial
weighted average fair value 66p 47p 147p 96p
weighted average share price 233p 177p 265p 170p
weighted average exercise price 186p 151p – –
expected volatility 31 33 33 33
expected life 3 years 3 years 3 years 3 years
riskfree interest rate 51 47 56 47
dividend yield 40 40 – –
expected dividends – – 20p40p 19p38p
correlation – – 21 14
expected volatility was determined by calculating the historical volatility of the company’s share price over 3 5 and 7 years
prior to the date of grant the riskfree interest rate is based on the term structure of uk government zero coupon bonds the
expected life used in the models has been adjusted based on management’s best estimate for the effects of non
transferability exercise restrictions and behavioural considerations
charge for the year
the group and the company recognised total expenses of £08m 2007 £06m relating to equitysettled sharebased
payments
6 finance charges
group company
2008 2007 2008 2007
£m £m £m £m
interest payable
interest payable on borrowings wholly repayable within five years 128 93 50 45
interest payable on other borrowings 81 76 139 53
share of interest of joint ventures 03 01 – –
unwinding of discount on long term landfill liabilities 08 07 – –
unwinding of discount on deferred consideration 09 01 – –
amortisation of bank fees 09 04 09 04
total interest payable 238 182 198 102
interest receivable
interest receivable 38 34 61 25
interest receivable on financial assets relating to pfi contracts 89 78 – –
total interest receivable 127 112 61 25
change in fair value of pfi interest rate swaps 29 69 – –
net finance charges 140 01 137 77 shanks annual report 2008 61
7tax
the tax charge credit based on the profit loss for the year is made up as follows
group company
2008 2007 2008 2007
£m £m £m £m
current tax uk corporation tax at 30 2007 30
– current year 55 52 70 45
– prior year 16 04 14 15
double tax relief 29 20 – –
overseas tax
– current year 108 80 – –
– prior year 21 10 – –
total current tax 97 118 84 60
deferred tax see note 14
– current year 27 21 15 14
– prior year 06 09 – –
total deferred tax 33 30 15 14
total tax charge credit for the year 130 148 69 46
the tax assessed for the year is higher than the united kingdom standard rate of tax of 30 2007 30 the differences are
explained below
group company
2008 2007 2008 2007
£m £m £m £m
total profit loss before tax 413 461 157 113
tax charge credit based on uk tax rate 124 138 47 34
effects of
adjustment to tax charge in respect of prior periods 31 15 14 15
profits taxed at overseas tax rates 01 05 – –
nontaxable items 15 01 121 01
unrecognised tax losses 29 04 19 04
other 22 15 – –
total tax charge credit for the year 130 148 69 46
for both the group and the company in addition to the amount charged to the income statement deferred tax relating to
retirement benefit obligations and sharebased payments amounting to £49m 2007 £03m has been credited directly to
equity
as a result of changes announced in the 2007 budget uk corporation tax will reduce from 30 to 28 effective from april
2008 and the deferred tax impact of this has been included above there will also be a phased withdrawal of industrial
buildings allowances over a period of 4 years and a reduction in general pool writing down allowances from 25 to 20 which
will be enacted in the finance act 2008 it is estimated that this will result in a £25m exceptional tax charge in the year
ending 31 march 2009 this principally relates to the non discounted value of tax relief that would have been available on the
pfi infrastructure towards the end of the 25 year pfi contracts 62 shanks annual report 2008
notes to the financial statements
continued
8 dividends
group and company
2008 2007
£m £m
amounts recognised as distributions to equity holders in the year
final dividend paid for the year ended 31 march 2007 of 40p per share 2006 38p 95 89
interim dividend paid for the year ended 31 march 2008 of 20p per share 2007 19p 48 45
143 134
proposed final dividend for the year ended 31 march 2008 of 42p per share 2007 40p 99 94
9 earnings per share
group
2008 2007
number of shares
weighted average number of ordinary shares for basic earnings per share 2362 2348
effect of share options in issue 05 08
weighted average number of ordinary shares for diluted earnings per share 2367 2356
calculation of basic and adjusted basic earnings per share
earnings for basic earnings per share being profit for the year £m 283 313
change in fair value of interest rate swaps net of tax £m 21 48
amortisation of acquisition intangibles net of tax £m 19 09
exceptional profit on disposal of properties net of tax £m 19 –
earnings for adjusted basic earnings per share £m 304 274
basic earnings per share pence 120p 133p
adjusted basic earnings per share pence see note below 129p 117p
calculation of diluted earnings per share
earnings for basic earnings per share being profit for the year £m 283 313
effect of dilutive potential ordinary shares £m – –
earnings for diluted earnings per share £m 283 313
diluted earnings per share pence 120p 133p
the directors believe that adjusting earnings per share for the effect of the amortisation of acquisition intangibles excluding
landfill void and computer software and exceptional items enables comparison with historical data calculated on the same
basis adjusting for amortisation of acquisition intangibles brings the group’s adjusted measure into line with general practice
exceptional items are those items that need to be disclosed separately on the face of the income statement because of their
size or incidence changes in fair values of interest rate swaps that the group is required to enter into in relation to its pfi
arrangements are considered to be exceptional items shanks annual report 2008 63
10 intangible assets
goodwill landfill void other total
group £m £m £m £m
cost
at 31 march 2006 1425 – 52 1477
on acquisition of businesses 316 203 73 592
additions – – 11 11
disposals – – 03 03
exchange 40 – 01 41
at 31 march 2007 1701 203 132 2036
on acquisition of businesses 249 – 174 423
additions – – 04 04
exchange 308 36 35 379
at 31 march 2008 2258 239 345 2842
accumulated impairmentamortisation
at 31 march 2006 – – 33 33
amortisation charge for the year – 12 11 23
disposals – – 03 03
at 31 march 2007 – 12 41 53
amortisation charge for the year – 11 29 40
exchange – 03 09 12
at 31 march 2008 – 26 79 105
net book value
at 31 march 2008 2258 213 266 2737
at 31 march 2007 1701 191 91 1983
at 31 march 2006 1425 – 19 1444
of the total goodwill of £2258m 2007 £1701m £2005m 2007 £1489m relates to the netherlands
goodwill impairment
impairment testing is carried out at segment level on an annual basis the group estimates the recoverable amount of goodwill
using projected cashflows for the next twenty years discounted at the group’s estimated average cost of capital 9 after tax
the cash flows are based on projections prepared by management covering a fiveyear period and include no growth
assumptions after the end of the current fiveyear plan the projections also assume that the current fiveyear plan is achieved
the calculations use effective tax rates specific to each separate segment
other intangible assets impairment
other intangible assets includes site or waste permits customer lists and other acquired intangible assets as well as
computer software during the year there has been no indication of any impairment accordingly no impairment review has
been carried out 64 shanks annual report 2008
notes to the financial statements
continued
11 property plant and equipment
land and landfill plant and
buildings sites machinery total
group £m £m £m £m
cost
at 31 march 2006 1044 429 2997 4470
on acquisition of businesses 168 25 66 259
additions 57 16 289 362
disposals 07 01 249 257
reclassification 48 23 07 18
exchange 27 08 73 108
at 31 march 2007 1187 484 3037 4708
on acquisition of businesses 209 – 70 279
additions 95 29 389 513
disposals 14 01 96 111
exchange 322 55 525 902
at 31 march 2008 1799 567 3925 6291
accumulated depreciation
at 31 march 2006 284 308 2042 2634
depreciation charge for the year 66 39 195 300
disposals 07 01 232 240
reclassification 42 23 07 12
exchange 08 08 48 64
at 31 march 2007 293 361 1964 2618
depreciation charge for the year 59 15 269 343
disposals 05 – 84 89
exchange 148 49 347 544
at 31 march 2008 495 425 2496 3416
net book value
at 31 march 2008 1304 142 1429 2875
at 31 march 2007 894 123 1073 2090
at 31 march 2006 760 121 955 1836
included in plant and machinery are assets held under finance leases with a net book value of £120m 2007 £103m
depreciation expense of £334m 2007 £291m has been charged in cost of sales and £09m 2007 £09m in
administrative expenses
land and plant and
buildings machinery total
company £m £m £m
cost
at 31 march 2008 31 march 2007 and 31 march 2006 01 05 06
accumulated depreciation
at 31 march 2008 31 march 2007 and 31 march 2006 – 04 04
net book value
at 31 march 2008 01 01 02
at 31 march 2007 01 01 02
at 31 march 2006 01 01 02 shanks annual report 2008 65
12 investments
group company
loans other investments
to joint unlisted in subsidiary
ventures investments total undertakings
£m £m £m £m
at 31 march 2006 06 23 29 3658
additions – – – 273
repayments or disposals 06 05 11 138
provision movement – – – 05
at 31 march 2007 – 18 18 3798
additions – – – 2232
repayments or disposals – 04 04 –
provision movement – 02 02 1334
at 31 march 2008 – 16 16 4696
details of subsidiary undertakings and joint ventures are shown on page 84 and form part of these financial statements
during the year the company acquired shanks investments from other group companies in exchange for intercompany loans
following the acquisition and subsequent dividend distribution an impairment provision of £1346m was considered necessary
in relation to the group’s interest in joint ventures the assets liabilities income and expenses are shown below
2008 2007
£m £m
noncurrent assets 137 121
current assets 48 43
current liabilities 51 38
noncurrent liabilities 42 43
net assets 92 83
income 164 145
expenses 115 106
profit before tax 49 39
tax 14 12
share of profit after tax for the year from joint ventures 35 27
the joint ventures have no significant contingent liabilities to which the group is exposed nor has the group any significant
contingent liabilities in relation to its interest in joint ventures
the share of capital commitments of the joint ventures are shown in note 26 66 shanks annual report 2008
notes to the financial statements
continued
13 business combinations
a on 13 april 2007 the group entered into a contract to acquire 100 of the share capital of orgaworld bv in the netherlands
for an initial consideration of £73m and with deferred consideration payable over the next five years orgaworld is involved in
the composting and anaerobic digestion of biodegradable waste the goodwill recognised is attributable to orgaworld’s strong
market position and technological knowhow from acquisition to 31 march 2008 orgaworld has contributed £72m to revenue
and £04m to profit after tax the aggregate book value of the assets and liabilities acquired and the provisional fair value to
the group pending completion of the evaluation of the business were as follows
fair provisional
book value fair
value adjustment value
£m £m £m
intangible assets – 67 67
property plant and equipment 139 10 149
trade receivables 08 – 08
current tax receivable 03 – 03
cash 07 – 07
trade payables 23 – 23
borrowings 126 – 126
deferred tax liabilities 10 19 29
provisions 01 – 01
net assets acquired 03 58 55
provisional goodwill 146
201
satisfied by
cash consideration 73
deferred consideration including £106m which is conditional 125
costs incurred 03
total consideration 201
b on 12 december 2007 the group acquired 100 of the share capital of tammer beheermaatschappij bv in the netherlands
for an initial consideration of £56m tammer is involved in industrial and commercial waste collection and recycling the
goodwill recognised is attributable to synergies expected to arise post acquisition from acquisition to 31 march 2008 tammer
has contributed £20m to revenue and £01m to profit after tax the aggregate book value of the assets and liabilities
acquired and the provisional fair value to the group pending completion of the evaluation of the business were as follows
fair provisional
book value fair
value adjustment value
£m £m £m
intangible assets – 19 19
property plant and equipment 39 18 57
trade receivables and other receivables 17 – 17
current tax receivable 01 – 01
cash 04 – 04
trade payables and other payables 12 – 12
borrowings 50 – 50
deferred tax liabilities 05 09 14
net assets acquired 06 28 22
provisional goodwill 54
76
satisfied by
cash consideration 56
deferred consideration 17
costs incurred 03
total consideration 76 shanks annual report 2008 67
13 business combinations – continued
c on 7 november 2007 the group acquired 100 of the share capital of wastecom limited in the united kingdom for a
consideration of £64m wastecom is a recycling and waste transfer business the goodwill recognised is attributable to
expected long term synergy benefits from the amalgamation of operations from acquisition to 31 march 2008 wastecom has
contributed £13m to revenue and reduced profit after tax by £01m the aggregate book value of the assets and liabilities
acquired and the provisional fair value to the group pending completion of the evaluation of the business were as follows
fair provisional
book value fair
value adjustment value
£m £m £m
intangible assets – 56 56
property plant and equipment 41 10 51
trade receivables and other receivables 06 01 05
trade payables and other payables 03 – 03
borrowings 36 11 47
deferred tax liabilities – 14 14
net assets acquired 08 40 48
provisional goodwill 16
64
satisfied by
cash consideration 64
total consideration 64
d during the period the group completed the acquisition of five other tuckin businesses the goodwill recognised is attributable
to synergy benefits through the amalgamation of the acquired businesses with existing businesses from acquisition to 
31 march 2008 the businesses contributed £59m to revenue and £04m to profit after tax the aggregate book value of the
assets and liabilities acquired and the provisional fair value to the group pending completion of the evaluation of the
businesses were as follows
fair provisional
book value fair
value adjustment value
£m £m £m
intangible assets – 32 32
property plant and equipment 12 01 13
trade receivables and other receivables 07 – 07
cash 02 – 02
trade payables and other payables 11 01 10
deferred tax liabilities – 06 06
net assets acquired 10 28 38
provisional goodwill 30
68
satisfied by
cash consideration 65
deferred consideration 03
total consideration 68
e if all of the acquisitions had been completed on 1 april 2007 instead of the dates above total group revenue and group profit
for the year would have been approximately £5753m and £284m respectively on a pro forma basis the pro forma amounts
include the results of the acquired companies from the date of acquisition together with preacquisition results from 1 april
2007 to the acquisition date as adjusted for the effect of significant fair value adjustments the pro forma information is
provided for comparative purposes only and does not necessarily reflect the actual results that would have occurred nor is it
necessarily indicative of future results of operations of the combined companies and businesses
f for acquisitions completed in the year ended 31 march 2007 there have been no amendments to the provisional fair values 68 shanks annual report 2008
notes to the financial statements
continued
14 deferred tax
deferred tax is provided in full on temporary differences under the liability method using applicable local tax rates deferred tax
assets and liabilities are only offset where there is a legally enforceable right of offset and there is an intention to settle the
balances net
retirement other
benefit tax interest capital timing
schemes losses rate swaps allowances differences total
group £m £m £m £m £m £m
at 31 march 2006 65 63 22 226 51 25
acquisitions – 07 – 89 31 113
charge credit to income statement 16 48 20 30 72 30
charge to equity 01 – – – 02 03
exchange – – – 03 02 05
at 31 march 2007 48 118 02 282 52 166
acquisitions – 01 – 61 04 64
charge credit to income statement 17 21 08 16 19 33
charge to equity 47 –––– 47
exchange – 05 – 31 18 44
at 31 march 2008 16 103 10 358 93 354
deferred tax assets 16 24 10 18 37 37
deferred tax liabilities – 79 – 340 130 391
at 31 march 2008 16 103 10 358 93 354
deferred tax assets 48 38 02 13 33 108
deferred tax liabilities – 80 – 269 85 274
at 31 march 2007 48 118 02 282 52 166
as at 31 march 2008 the group has unused trading losses tax effect of £179m 2007 £204m available for offset against
future profits a deferred tax asset has been recognised in respect of £103m 2007 £118m of such losses no deferred tax
asset has been recognised in respect of the remaining £76m 2007 £86m due to the unpredictability of future profit
streams tax losses may be carried forward indefinitely
no liability has been recognised on the aggregate amount of temporary differences associated with undistributed earnings of
subsidiaries because the group is in a position to control the timing and method of the reversal of these differences and it is
probable that such differences will not give rise to a tax liability in the foreseeable future
retirement other
benefit timing
schemes differences total
company £m £m £m
at 31 march 2006 65 – 65
charge credit to income statement 16 02 14
charge to equity 01 02 03
at 31 march 2007 48 – 48
charge credit to income statement 17 02 15
charge to equity 47 02 49
at 31 march 2008 16 – 16
as at 31 march 2008 the company has unused tax trading losses tax effect of £71m 2007 £62m available for offset
against future profits no deferred tax asset has been recognised in respect of the losses due to the unpredictability of future
profit streams tax losses may be carried forward indefinitely shanks annual report 2008 69
15 inventories
group 
2008 2007
£m £m
raw materials and consumables 66 52
work in progress 05 –
finished goods 06 02
77 54
16 financial instruments
carrying value and fair value of financial assets and financial liabilities
group company
carrying value carrying value
2008 2007 2008 2007
financial assets note £m £m £m £m
loans and receivables
financial assets relating to pfi contracts 17 1587 1499 – –
trade and other receivables 17 1448 1114 1840 248
cash and cash equivalents 18 532 427 376 386
3567 3040 2216 634
the group considers that the fair value of financial assets is not materially different to their carrying value
group company
carrying value fair value carrying value fair value
2008 2007 2008 2007 2008 2007 2008 2007
financial liabilities note £m £m £m £m £m £m £m £m
loans and payables
bank overdrafts and 
short term loans 19 – 22 – 22 – 10 – 10
bank loans 19 3252 2534 3252 2534 1160 697 1160 697
senior notes 19 411 350 420 359 125 106 126 108
finance lease obligations 19 101 90 101 90 – – – –
trade and other payables 20 1940 1296 1940 1296 3798 1858 3798 1858
derivative financial instruments
interest rate swaps 19 35 05 35 05 – – – –
5739 4297 5748 4306 5083 2671 5084 2673
the fair value of the senior notes is measured by discounting the future cash flows at the market interest rate set by swaps
with an equivalent interest pattern the fair value of interest swaps is measured by reference to the cost of foreclosing the
swap position at the year end none of the change in fair value of interest rate swaps is attributable to changes in the group’s
credit risk
risk management
the group is exposed to market risk interest rate risk and foreign exchange risk liquidity risk and credit risk group treasury
is charged with managing and controlling risk relating to the financing and liquidity of the group under policies approved by the
board of directors group treasury does not enter into speculative transactions 70 shanks annual report 2008
notes to the financial statements
continued
16 financial instruments continued
interest rate risk
a substantial part of the group’s borrowings are at floating rates which exposes the group to interest rate risk the group’s
core borrowings are mainly at floating rates except for the senior notes which are at fixed rates the debt relating to pfi non
recourse borrowings is at floating rates and the group has entered into interest rate swaps as a condition of the related debt
the interest rate swaps represent a hedge of the interest cash flows and although hedge accounting under ias 39 would allow
changes in the fair value of interest rate swaps to be recognised directly in reserves the group believes that it is not worth
expending significant resources fulfilling the onerous documentation requirements of ias 39 the interest rate swaps are
therefore classified as held for trading in accordance with ias 39 the swaps are presented in noncurrent liabilities together
with the related long term borrowings since the group believes this best reflects the commercial reality of the instruments
changes in interest rates could have a significant impact on banking covenants relating to interest cover and on the interest
charge in the income statement the group manages this risk by fixing the interest rates on a proportion of its total
borrowings the proportion of borrowings fixed at any one time is dependent on forecast interest rate cover
in order to measure the risk borrowings and the expected interest cost for the year are forecast on a quarterly basis and
scenarios run using management’s expectations of a reasonably possible change in interest rates
interest expense volatility remained within acceptable limits throughout the year the group’s exposure to and the way it
manages interest rate risk has not changed from the previous year
the weighted average effective interest rates at the balance sheet dates were as follows
2008 2007
weighted weighted
average average
floating fixed interest floating fixed interest
rate rate rate rate rate rate
group £m £m  £m £m 
financial assets
financial assets relating to pfi contracts – 1587 56 – 1499 56
cash and cash equivalents 343 – – 176 – –
short term deposits 189 – 54 251 – 53
financial liabilities
bank overdrafts and short term loans ––– 22 – 48
senior notes – 411 69 – 350 69
bank loans 3252 – 55 2534 – 51
interest rate swaps 1238 1238 53 1266 1266 53
excluded from the analysis above is £101m 2007 £90m of amounts payable under finance leases as set out in note 19
which are subject to fixed rates of interest in addition trade and other receivables and payables have been excluded as they
are not interest bearing
the average term for shortterm deposits is no more than seven days
for the company the effective interest rate on short term deposits was 54 2007 53 with an average term of 1 day
2007 30 days the effective interest rate on the company’s cash and cash equivalents was 50 2007 nil the weighted
average effective interest rates relating to the company were nil 2007 48 for euro bank overdrafts 69 2007 69 for
senior notes and 54 2007 47 for bank loans shanks annual report 2008 71
16 financial instruments continued
derivative financial instruments – interest rate swaps
the notional principal amount of the outstanding interest rate swap contracts at 31 march 2008 was £1238m 
2007 £1266m the expiry dates of the contracts range from 16 april 2023 earliest to 31 march 2025 latest
interest rate sensitivity assuming all other variables remain constant
2008 2007
income equity income equity
sensitivity sensitivity sensitivity sensitivity
£m £m £m £m
1 increase in interest rates
derivatives 13 100 14 105
non derivatives 25 25 19 19
12 75 05 86
1 decrease in interest rates
derivatives 13 112 14 117
non derivatives 25 25 19 19
12 87 05 98
foreign exchange risk
the group operates in europe and canada and is exposed to foreign exchange risk for movements between the euro canadian
dollar and sterling the majority of the group’s subsidiaries conduct their business in their respective functional currencies
therefore there is limited transaction risk foreign exchange risk arises mainly from net investments in foreign operations this
exposure is reduced by funding the investments as far as possible with borrowings in the same currency the group applies
hedge accounting principles to net investments in foreign operations and the related borrowings during the year the group
acquired orgaworld which has operations in canada exposing the group to movements in the canadian dollar this foreign
investment is hedged through borrowings in canadian dollars
the group has designated the carrying value of euro borrowings of £1135m 2007 £803m fair value of £1136m 
2007 £805m as a net investment hedge of the group’s investments denominated in euros the hedge was 100 effective
2007 100 for the year ended 31 march 2008 and as a result the related exchange loss of £171m 2007 £26m gain on
translation of the borrowings into sterling has been recognised in the exchange reserve
foreign exchange rate sensitivity assuming all other variables remain constant
the following table details how the group’s income and equity would increase if there were a 10 increase in the respective
currency against sterling a 10 decrease would have an equal and opposite effect
2008 2007
income equity income equity
sensitivity sensitivity sensitivity sensitivity
£m £m £m £m
10 increase in foreign exchange rates against sterling
euro 34 82 33 70
canadian dollar –– ––
34 82 33 70
liquidity risk
liquidity risk is the risk that the group does not have sufficient financial resources to meet its obligations as they fall due as
well as term borrowing under a syndicated loan facility the group maintains uncommitted lending facilities with a range of
banks for working capital purposes the group manages liquidity risk by monitoring forecast cash flows to ensure that facility
drawdowns are arranged as necessary and an adequate level of headroom is maintained the group’s exposure to and the
way it manages liquidity risk has not changed from the previous year 72 shanks annual report 2008
notes to the financial statements
continued
16 financial instruments continued
undrawn committed borrowing facilities
core pfi companies total group
2008 2007 2008 2007 2008 2007
group £m £m £m £m £m £m
expiring within one year – – – – – –
expiring between one and two years – – – – – –
expiring in more than two years 395 1001 181 321 579 1322
395 1001 181 321 579 1322
in addition the group had access to £273m 2007 £250m of undrawn uncommitted working capital facilities
as at 31 march 2008 the company had undrawn committed borrowing facilities at floating rates of £395m expiring in more
than two years 2007 £1001m
maturity profile of noncurrent borrowings
group company
2008 2007 2008 2007
£m £m £m £m
between one and two years 211 65 125 –
between two years and five years 2466 1664 1160 803
over five years 1041 983 – –
3718 2712 1285 803
security of borrowing facilities
the group’s principal bank loans are unsecured but are subject to cross guarantees within the group excluding the pfi
companies see note 28 each pfi company has loan facilities which are secured by fixed and floating charges on the future
cash flows of pfi contracts
credit risk
credit risk is the risk of financial loss where counterparties are not able to meet their obligations
surplus cash when not used to repay borrowings is placed on deposit with banks and money market funds in accordance with
a policy that specifies the minimum acceptable credit rating and the maximum exposure to each counterparty at 31 march
2008 the amount of credit risk totalled £532m 2007 £427m
credit risk on derivatives where the fair value is positive is closely monitored to ensure that it remains within the limits set for
each counterparty at 31 march 2008 the credit risk was £nil 2007 £04m
trade and other receivables comprise mainly amounts due from customers for services performed management consider that
the exposure to any single customer is not significant and that where credit quality is in doubt adequate provision has been
made for probable losses at 31 march 2008 the credit risk amounted to £1448m 2007 £1114m the group does not
hold any collateral as security
the financial assets relating to pfi contracts are recoverable from the future revenues relating to the pfi contracts
management consider that as the counterparties for the future revenues are uk local authorities or councils there is minimal
credit risk at 31 march 2008 the credit risk was £1587m 2007 £1499m
capital risk management
the group maintains a group funding strategy to ensure that the group maintains an appropriate debt to equity ratio as well as
an appropriate debt maturity profile the strategy is based on the requirements of the company’s articles of association which
state that debt should be limited to three times the level of capital and reserves
the group’s funding strategy has not changed from the previous year shanks annual report 2008 73
16 financial instruments continued
the group has to comply with a number of banking covenants which are set out in the agreements for bank loans and senior
notes there are financial covenants which are measured using the performance of the core group excluding pfi companies
and relate to interest cover the ratio of debt to ebitda and the net worth of the group there are other restrictions in the loan
documentation concerning acquisitions disposals security and other issues the group has complied with its banking
covenants
17 trade and other receivables
group company
2008 2007 2008 2007
£m £m £m £m
noncurrent assets
financial assets relating to pfi contracts 1488 1417 – –
other receivables 19 02 – –
1507 1419 – –
current assets
trade receivables 1291 1023 – –
provision for impairment of receivables 44 42 – –
trade receivables – net 1247 981 – –
amounts owed by subsidiary undertakings – – 1837 245
financial assets relating to pfi contracts 99 82 – –
other receivables 85 40 02 02
prepayments and accrued income 97 91 01 01
1528 1194 1840 248
movement in the provision for impairment of receivables
group
2008 2007
£m £m
at 1 april 2007 42 40
charged to income statement 08 08
utilised 06 06
at 31 march 2008 44 42
ageing of trade receivables that are past due but not impaired
group
2008 2007
£m £m
neither impaired nor past due 574 460
not impaired but overdue by less than 3 months 641 503
not impaired but overdue by between 3 and 6 months 28 16
not impaired but overdue by more than 6 months 04 02
impaired 44 42
impairment provision 44 42
1247 981 74 shanks annual report 2008
notes to the financial statements
continued
17 trade and other receivables continued
the carrying amounts of trade and other receivables are denominated in the following currencies
group company
2008 2007 2008 2007
£m £m £m £m
sterling 1917 1782 840 248
euro 1114 831 995 –
canadian dollar 04 – 05 –
3035 2613 1840 248
18 cash and cash equivalents
group company
2008 2007 2008 2007
£m £m £m £m
cash at bank and in hand 343 176 320 135
short term deposits 189 251 56 251
532 427 376 386
the carrying amounts of cash and of cash equivalents are denominated in the following currencies
group company
2008 2007 2008 2007
£m £m £m £m
sterling 124 307 179 382
euro 396 117 197 04
canadian dollar 10 – – –
us dollar 02 03 – –
532 427 376 386
19 borrowings
group company
2008 2007 2008 2007
£m £m £m £m
current borrowings
bank overdrafts and short term loans – 22 – 10
bank loans 45 240 – –
finance lease obligations 36 27 – –
81 289 – 10
noncurrent borrowings
senior notes 411 350 125 106
bank loans 3207 2294 1160 697
interest rate swaps 35 05 – –
finance lease obligations 65 63 – –
3718 2712 1285 803 shanks annual report 2008 75
19 borrowings continued
the carrying amounts of borrowings are denominated in the following currencies
group company
2008 2007 2008 2007
£m £m £m £m
sterling 1337 1250 150 –
euro 2393 1751 1135 813
canadian dollar 69 – – –
3799 3001 1285 813
the group’s finance lease liabilities are payable as follows
2008 2007
minimum minimum
lease lease
payments interest principal payments interest principal
group £m £m £m £m £m £m
less than one year 44 08 36 31 04 27
between one and five years 58 07 51 61 06 55
more than five years 17 03 14 09 01 08
119 18 101 101 11 90
the group has an option to purchase leased assets at the end of the lease term there are no restrictions imposed by lessors
to take out other debt or leases
20 trade and other payables and other noncurrent liabilities
group company
2008 2007 2008 2007
£m £m £m £m
current liabilities
trade payables 799 529 02 03
other tax and social security payable 141 123 01 01
other payables 104 58 07 05
accruals and deferred income 570 448 25 39
unprocessed waste 141 114 – –
government grants – 01 – –
1755 1273 35 48
noncurrent liabilities
amounts owed to group undertakings – – 3763 1810
deferred consideration 182 22 – –
government grants 03 01 – –
185 23 3763 1810
the carrying amounts of trade and other payables and other noncurrent liabilities are denominated in the following currencies
group company
2008 2007 2008 2007
£m £m £m £m
sterling 331 332 828 664
euro 1604 964 2970 1194
canadian dollar 05 – – –
1940 1296 3798 1858 76 shanks annual report 2008
notes to the financial statements
continued
21 provisions 
group company
site restoration
and aftercare other total other
£m £m £m £m
at 31 march 2007 210 78 288 39
provided – cost of sales 12 – 12 –
provided – finance charges 08 – 08 –
on acquisition of businesses – 01 01 –
utilised 04 15 19 08
exchange 30 04 34 –
at 31 march 2008 256 68 324 31
current 05 36 41 31
noncurrent 251 32 283 –
at 31 march 2008 256 68 324 31
current 08 55 63 39
noncurrent 202 23 225 –
at 31 march 2007 210 78 288 39
site restoration
site restoration provision as at 31 march 2008 relates to the cost of final capping and covering of the landfill sites the
group’s minimum unavoidable costs have been reassessed at the year end and the net present value fully provided for
an element of the closing provision relates to costs of £05m that are expected to be paid next year the remaining part of the
provision relates to restoration costs that are expected to be paid over a period of up to twenty five years from today these
costs may be impacted by a number of factors including changes in legislation and technology
aftercare
the total post closure costs of landfill sites including such items as monitoring gas and leachate management and licensing
have been estimated by management based on current best practice and technology available these costs may be impacted
by a number of factors including changes in legislation and technology the dates of payments of these aftercare costs are
uncertain but are anticipated to be over a period of approximately thirty years from closure of the relevant landfill site
other
other provisions principally cover onerous leases warranties and indemnities the net present value of the rental on vacant
leasehold properties has been provided in full these payments will be made over the next five years under the terms of the
agreements for the disposal of the united kingdom landfill and power and other united kingdom operations the company has
given a number of warranties and indemnities to the purchasers which may give rise to payments shanks annual report 2008 77
22 retirement benefit schemes
group
2008 2007
£m £m
uk defined contribution schemes 05 03
uk funded defined benefit schemes 15 14
overseas pension schemes 57 49
total pension cost 77 66
a united kingdom
the group and company’s principal pension scheme is the shanks group pension scheme which covers eligible united
kingdom employees and has both funded defined benefit and defined contribution sections the group also has two other
small funded defined benefit schemes which are included in the defined benefit disclosures below pension costs for the
defined benefit section are determined by an independent qualified actuary on the basis of triennial valuations using the
projected unit method
assumptions
the most recent actuarial valuation of the principal funded defined benefit pension scheme operated by the group dated 5
april 2006 have been updated by independent qualified actuaries to take account of the requirements of ias 19 employee
benefits in order to assess the liabilities of these schemes at 31 march 2008 the main assumptions were as follows
2008 2007
 pa  pa
discount rate 69 54
future salary growth 52 47
rate of increase in pensions payment fixed 3 30 30
rate of increase in pensions payment cap 5 36 32
rate of increase in pensions payment cap 25 24 24
rate of price inflation 37 32
the mortality assumptions are based on standard mortality tables which allow for future mortality improvements the
assumptions are that a member currently aged 65 will live on average for a further 22 years if they are male and for a further
24 years if they are female the assumptions used by the independent qualified actuaries are the best estimates chosen from
a range of possible actuarial assumptions
income statement
2008 2007
£m £m
operating profit current service cost 15 14
other finance items interest charge on scheme liabilities 58 51
expected return on scheme assets 72 59
14 08
net pension cost before tax 01 06 78 shanks annual report 2008
notes to the financial statements
continued
22 retirement benefit schemes continued
statement of recognised income and expense
2008 2007
£m £m
loss on actual return less expected return on scheme assets 76 08
experience gain arising on scheme liabilities 03 15
gain loss arising on changes in assumptions underlying the present value of the scheme liabilities 233 02
actuarial gain 160 05
cumulative actuarial gains and losses recognised in the statement of recognised income and expense since 1 april 2004 are
£160m 2007 £nil
history of experience gains and losses
2008 2007 2006 2005
market value of scheme assets £m 974 984 941 716
present value of scheme liabilities £m 880 1068 1044 885
surplus deficit in the schemes £m 94 84 103 169
experience adjustments arising on scheme assets £m 76 08 117 18
 of scheme assets 78 08 124 25
experience adjustments arising on scheme liabilities £m 03 15 – 08
 of scheme liabilities 03 14 – 09
balance sheet
the aggregate fair values of the assets in the group’s defined benefit schemes the aggregate net pension liabilities and their
expected weighted average long term rates of return are set out below
expected long term net pension plan assets as
rate of return fund  of total assets
2008 2007 2008 2007 2008 2007
 pa  pa £m £m  
equities 86 87 619 659 636 670
government bonds 46 47 348 307 357 312
corporate bonds 53 54 04 04 04 04
cash 60 55 03 14 03 14
total market value of assets 974 984 1000 1000
present value of scheme liabilities 880 1068
net surplus deficit in the schemes 94 84
related deferred tax liability asset 26 25
net pension asset liability 68 59
the overall expected rate of return on scheme assets is 71 2007 74 and is a weighted average of the expected rates of
return on each asset class the group employs a building block approach in determining the longterm rate of return on
pension plan assets historical markets are studied and assets with higher volatility are assumed to generate higher returns
consistent with widely accepted capital market principles the overall expected rate of return is then derived by aggregating the
expected return for each asset class over the actual asset allocation for the schemes as at 31 march 2008
at 31 march 2008 the ias 19 net retirement benefit surplus was £94m 2007 deficit £84m the change is due to a £19m
decrease in liabilities mainly as a result of the increase in discount rate used to calculate the liability at the year end in
accordance with the accounting standard the year end discount rate of 69 2007 54 reflects corporate bond rates at
the year end and has led to a significant movement in the ias 19 calculation for accounting purposes at 31 march 2008 the
amount of the surplus varies if the main financial assumptions change particularly the discount rate if the discount rate
increased or decreased by 01 the ias 19 asset would increase or decrease by circa £15m shanks annual report 2008 79
22 retirement benefit schemes continued
movement in scheme assets during the year
2008 2007
£m £m
at 1 april 2007 984 941
expected return on plan assets 72 59
actual return less expected return on plan assets 76 08
employer contributions 19 20
member contributions 04 04
benefits paid 29 32
at 31 march 2008 974 984
movement in scheme liabilities during the year
2008 2007
£m £m
at 1 april 2007 1068 1044
current service cost 15 14
interest cost on plan liabilities 58 51
experience gains 03 15
changes in assumptions 233 02
member contributions 04 04
benefits paid 29 32
at 31 march 2008 880 1068
the estimated contributions expected to be paid to the schemes in the year ending 31 march 2009 are £20m
b overseas
in the netherlands employees are members of either a multiemployer pension scheme or other similar externally funded
schemes these schemes are treated as defined contribution plans as it is not possible to separately identify the group’s
share of the assets and liabilities of those schemes the group has been informed by the schemes that it has no obligation to
make additional contributions in the event that the schemes have an overall deficit in belgium the group operates small
defined contribution schemes the total cost in the year for overseas pensions was £57m 2007 £49m
23 called up share capital
2008 2007
group and company £m £m
authorised 350 million 2007 350 million ordinary shares of 10p each 350 350
allotted called up and fully paid 237 million 2007 235 million ordinary shares of 10p each 237 235
during the year 1997798 2007 305385 ordinary shares were allotted following the exercise of options under the
company’s long term incentive plan and executive and savings related share option schemes for an aggregate consideration
of £2346545 2007 £371631 further disclosures relating to sharebased payments are set out in note 5 80 shanks annual report 2008
notes to the financial statements
continued
24 statement of changes in shareholders’ funds
share share exchange retained
capital premium reserve earnings total
group £m £m £m £m £m
at 31 march 2006 235 937 50 864 2086
recognised income and expense for the year – – 39 317 278
dividends paid – – – 134 134
sharebased payments – – – 06 06
tax on sharebased payments – – – 02 02
issue of share capital – 03 – – 03
at 31 march 2007 235 940 11 1051 2237
recognised income and expense for the year – – 281 396 677
dividends paid – – – 143 143
sharebased payments – – – 08 08
tax on sharebased payments – – – 02 02
other reserves movement – – – 12 12
issue of share capital 02 34 – – 36
at 31 march 2008 237 974 292 1298 2801
the exchange reserve comprises all foreign exchange differences arising since 1 april 2005 from the translation of the
financial statements of foreign operations as well as from the translation of liabilities that hedge the group’s net investment in
foreign operations
share share retained
capital premium earnings total
company £m £m £m £m
at 31 march 2006 235 1177 511 1923
recognised income and expense for the year – – 63 63
dividends paid – – 134 134
sharebased payments – – 06 06
tax on sharebased payments – – 02 02
issue of share capital – 03 – 03
at 31 march 2007 235 1180 318 1733
recognised income and expense for the year – – 339 339
dividends paid – – 143 143
sharebased payments – – 08 08
tax on sharebased payments – – 02 02
other reserves movement – – 12 12
issue of share capital 02 34 – 36
at 31 march 2008 237 1214 508 1959 shanks annual report 2008 81
25 notes to the cash flow statement
2008 2007
group £m £m
net cash from operating activities
operating profit 553 462
amortisation of intangible assets 40 23
depreciation of property plant and equipment 343 300
charge for long term landfill provisions 10 21
exceptional gain on disposal of property plant and equipment 19 –
earnings before interest tax depreciation and amortisation “ebitda” 927 806
nonexceptional gain on disposal of property plant and equipment 12 10
decrease in provisions 17 43
sharebased payments 08 06
operating cash flows before movements in working capital 906 759
increase decrease in inventories 13 37
decrease in receivables 140 73
increase in payables 202 89
cash generated by operations 955 812
income taxes paid 84 99
net cash from operating activities 871 713
consolidated movement in net debt
2008 2007
£m £m
net increase decrease in cash and cash equivalents 59 166
increase in borrowings and finance leases 396 625
amortisation of loan fees 09 04
exchange loss gain 318 40
change in fair value of interest rate swaps 29 69
movement in net debt 693 686
net debt at beginning of year 2574 1888
net debt at end of year 3267 2574
analysis of net debt
at at
31 march 31 march
2008 2007
£m £m
cash and cash equivalents 532 427
current borrowings 81 289
noncurrent borrowings 3718 2712
total group net debt 3267 2574
at at
31 march 31 march
2008 2007
£m £m
core business net debt 2117 1340
pfi companies net debt 1115 1229
total group net debt before fair value of interest rate swaps 3232 2569
fair value of pfi interest rate swaps 35 05
total group net debt 3267 2574 82 shanks annual report 2008
notes to the financial statements
continued
26 capital commitments
2008 2007
group £m £m
contracts placed for future capital expenditure on financial assets 110 236
contracts placed for future capital expenditure on property plant and equipment 155 49
share of joint venture future capital expenditure 06 24
the company had no capital commitments 2007 £nil
27 financial commitments
2008 2007
group £m £m
commitments under noncancellable operating leases expiring
within one year 68 50
later than one year and less than five years 330 179
after five years 489 449
887 678
future minimum lease payments expected to be received under noncancellable subleases 14 29
873 649
the company has commitments under noncancellable leases of £05m expiring after five years 2007 £06m
28 contingent liabilities
group and company
under the terms of the sale agreement with terra firma for the disposal of the group’s landfill and power operations the group
has given a number of indemnities and warranties relating to the disposed operations
the company and certain subsidiaries have in the normal course of business given guarantees and performance bonds
relating to the group’s contracts
the company has given guarantees in respect of the group’s and subsidiary undertakings’ bank borrowing facilities totalling
£286m 2007 £246m
joint ventures
the group’s joint ventures have no significant contingent liabilities shanks annual report 2008 83
29 related party transactions
a transactions between the company and its subsidiaries
a list of the company’s principal subsidiaries is set out on page 84 transactions with subsidiaries relate to interest on
intercompany loans and management charges net interest expense was £112m 2007 £49m and management charges
received were £20m 2007 £21m total outstanding balances are listed in notes 17 and 20
b remuneration of key management personnel
key management comprises the board of directors the disclosures required by the companies act 1985 and those specified
by the financial services authority relating to directors’ remuneration including pension benefits and incentive plans interests
in shares share options and other interests are set out within the remuneration report on pages 34 to 39 and form part of
these financial statements
during the year mr p delaunois a nonexecutive director of the group received £14000 2007 £40000 for consultancy
services provided to the belgian subsidiaries mr p delaunois is a shareholder and director of sa cgo and the fees were paid
to this company
30 post balance sheet events
on 1 april 2008 the group acquired 100 of the share capital of the foronex group for a cash consideration of £104m
foronex is a leading player in the wood waste and byproducts market in the benelux the purchase price allocation including
the fair value of the individual assets and liabilities has not been finalised 84 shanks annual report 2008
subsidiary undertakings and joint ventures
at 31 march 2008
subsidiary undertakings
the company held through wholly owned subsidiaries 100 of the issued share capital of the following principal trading
subsidiaries all of which have been consolidated in the group’s financial statements
country of incorporation
principal group subsidiary undertakings
shanks waste management limited uk
shanks sa belgium
shanks hainaut sa belgium
shanks liègeluxembourg sa belgium
shanks bruxelles sa belgium
shanks vlaanderen nv belgium
shanks transport nv belgium
shanks nederland bv netherlands
icova bv netherlands
bv van vliet groep milieudienstverleners netherlands
vliko bv netherlands
klok containers bv netherlands
transportbedrijf van vliet bv “contrans” netherlands
afvalstoffen terminal moerdijk bv “atm” netherlands
reym bv netherlands
smink beheer bv netherlands
orgaworld bv netherlands
subsidiary undertakings holding pfi contracts
shanks argyll  bute limited uk
elwa limited uk
shanks dumfries and galloway limited uk
joint ventures
the company held through wholly owned subsidiaries the following interests in material joint venture companies all of which
operate as waste management companies the group’s share of profits and gross assets and liabilities have been incorporated in
the group’s financial statements
 group most recent country of
holding year end incorporation
avondale environmental limited 50 31 march 2008 uk
caird bardon limited 50 31 december 2007 uk
geohess uk limited 50 31 december 2007 uk
silvamo nv 50 31 december 2007 belgium
marpos nv 45 31 december 2007 belgium shanks annual report 2008 85
consolidated five year financial summary
at 31 march 2008
2008 2007 2006 2005 2004
ifrs ifrs ifrs ifrs uk gaap
£m £m £m £m £m
consolidated income statement
revenue 5637 5085 4425 4204 4096
trading profit from continuing operations before exceptional items 559 473 389 360 318
finance charges – interest 85 58 42 47 122
finance charges – other 26 12 07 06 10
profit from continuing operations before exceptional 
items and tax headline profit 448 403 340 307 186
amortisation of acquisition intangibles 25 11 – – –
exceptional items 10 69 37 110 –
goodwill amortisation – – – – 100
profit before tax from continuing operations 413 461 303 197 86
tax 130 148 105 71 50
profit after tax from continuing operations 283 313 198 126 36
profit after tax from discontinued operations – – 106 650 56
profit for the year 283 313 304 776 92
consolidated balance sheet
noncurrent assets 7266 5618 4660 4337 5497
other assets less liabilities 1198 807 686 660 1033
net debt 3267 2574 1888 1787 3091
net assets 2801 2237 2086 1890 1373
share capital and share premium 1211 1175 1172 1166 1165
reserves 1590 1062 914 724 208
total equity 2801 2237 2086 1890 1373
financial ratios
adjusted basic earnings per share 129p 117p 96p 87p 89p
basic earnings per share 120p 133p 130p 331p 39p
dividends per share 62p 59p 57p 57p 57p
note comparative figures for 2004 are stated under uk gaap the consolidated income statement for this year has been 
represented in ifrs format but with underlying figures accounted for under uk gaap 86 shanks annual report 2008
notice of annual general meeting
notice is hereby given that the annual general meeting of shanks group plc will be held at the offices of royal bank of
scotlandabn amro 250 bishopsgate london ec2m 4aa on 24 july 2008 at 1100 am for the purpose of transacting the
following business
ordinary business
resolutions 1 to 6 will be proposed as ordinary resolutions
1 to receive the audited accounts for the year ended 31 march 2008 together with the directors’ and auditors’ reports thereon
2 to approve the directors’ remuneration report for the year ended 31 march 2008
3 to declare a final dividend of 42 pence per ordinary share of the company for the year ended 31 march 2008
4 to elect mr tom drury as a director of the company
5 to reelect mr adrian auer as a director of the company
6 to reappoint pricewaterhousecoopers llp as auditors of the company until the conclusion of the next general meeting at
which accounts are laid and to authorise the directors to determine the remuneration of the auditors
special business
resolutions 7 and 12 will be proposed as ordinary resolutions and resolutions 8 to 11 as special resolutions
7 to consider and if thought fit pass the following resolution as an ordinary resolution of the company
“that in substitution for any previous authority under section 80 of the companies act 1985 the “act” the directors be
generally and unconditionally authorised pursuant to section 80 of the act to exercise all the powers of the company to allot
relevant securities within the meaning of that section of the act up to an aggregate nominal amount of £7896000 for a
period expiring unless previously renewed varied or revoked by the company in general meeting on the date being fifteen
months from the passing of this resolution or if earlier at the conclusion of the annual general meeting of the company next
held following the passing of this resolution save that the company may make an offer or agreement before such expiry which
would or might require relevant securities to be allotted after the expiry of this authority and the directors may allot relevant
securities pursuant to such offer or agreement as if the authority conferred hereby had not expired”
8 to consider and if thought fit pass the following resolution as a special resolution of the company
“that subject to the passing of resolution 7 set out in the notice of the annual general meeting of the company convened for
24 july 2008 the directors be empowered pursuant to section 95 of the companies act 1985 the “act” to allot equity
securities within the meaning of section 94 of the act wholly for cash pursuant to the authority conferred on them by such
resolution 7 andor where such allotment constitutes an allotment of equity securities by virtue of section 943a of the act
as if section 891 of the act did not apply to any such allotment provided that this power is limited to
a the allotment of equity securities in connection with a rights issue open offer or other preemptive offer in favour of
holders of ordinary shares in the capital of the company excluding any holder holding shares as treasury shares on the
register on a date fixed by the directors where the equity securities respectively attributable to the interests of such
holders are proportionate as nearly as practicable to the respective numbers of ordinary shares held by them on that
date subject to such exclusions or other arrangements in connection with the rights issue or other offer as the directors
deem necessary or expedient
i to deal with equity securities representing fractional entitlements or
ii to deal with treasury shares or shanks annual report 2008 87
iii to deal with legal or practical problems arising in any overseas territory the requirements of any regulatory body or any
stock exchange or any other matter whatsoever and
b the allotment otherwise than pursuant to subparagraph a above of equity securities for cash up to an aggregate
nominal amount of £1184000
but so that this authority shall expire unless previously renewed varied or revoked by the company in general meeting on the
date being fifteen months from the passing of this resolution or if earlier at the conclusion of the annual general meeting of
the company next held following the passing of this resolution save that the company may before such expiry make an offer or
agreement which would or might require equity securities to be allotted after the expiry of this power and the directors may
allot equity securities pursuant to such offer or agreement as if the power conferred hereby had not expired”
9 to consider and if thought fit pass the following resolution as a special resolution of the company
“that the company be and is generally and unconditionally authorised for the purposes of section 166 of the companies act
1985 the “act” to make market purchases within the meaning of section 1633 of the act of ordinary shares in the capital
of the company provided that
a the maximum number of ordinary shares hereby authorised to be purchased shall be 23690000 being approximately
10 of the company’s issued ordinary share capital at the date of passing of this resolution
b the maximum price which may be paid for an ordinary share is an amount equal to 105 of the average of the middle
market quotations for an ordinary share as derived from the london stock exchange daily official list for the five business
days immediately preceding the day on which the ordinary share is purchased and the minimum price which may be paid
for an ordinary share is an amount equal to the nominal value of the share in each case exclusive of associated
expenses and
c unless previously renewed varied or revoked the authority hereby conferred shall expire at the conclusion of the next
annual general meeting of the company or on 23 january 2010 whichever is the earlier but a contract of purchase may
be made before such expiry which will or may be completed wholly or partly thereafter and a purchase of ordinary shares
may be made in pursuance of any such contract”
10 to consider and if thought fit pass the following resolution as a special resolution of the company
“that the articles of association produced to the meeting marked “a” and initialled by the chairman of the meeting for the
purpose of identification be adopted as the articles of association of the company in substitution for and to the exclusion of
the existing articles of association of the company”
11 to consider and if thought fit pass the following resolution as a special resolution of the company
“that subject to resolution 10 set out in the notice of annual general meeting of the company convened for 24 july 2008
being passed and with effect from 1201 am on 1 october 2008 or such later date as section 175 of the companies act
2006 shall be brought into force article 99 of the company’s articles of association adopted pursuant to such resolution 10
be deleted in its entirety and replaced by article 99 as set out in the document produced to the meeting marked “b” and for
the purposes of identification initialled by the chairman of the meeting” 88 shanks annual report 2008
notice of annual general meeting
continued
12 to consider and if thought fit pass the following resolution as an ordinary resolution of the company
“that in accordance with section 366 of the companies act 2006 the company and its subsidiaries be and are hereby
authorised
i to make political donations to political parties political organisations andor independent election candidates not
exceeding £25000 in total and
ii to incur political expenditure not exceeding £25000 in total
during the period beginning on the date of the passing of this resolution and ending on the earlier of eighteen months from the
date of this resolution and the conclusion of the company’s annual general meeting to be held in 2009”
for the purpose of this resolution the terms “political donation” “political parties” “independent election candidates” “political
organisation” and “ political expenditure” have the meanings given by sections 363 to 365 of the companies act 2006
by order of the board
registered office
shanks house
philip griffinsmith 211 blochairn road
company secretary blochairn
29 may 2008 glasgow
g21 2rl
appendix to the notice of annual general meeting
allotment of shares resolutions 7 and 8
the directors may not allot new shares in the company unless authorised by shareholders in general meeting resolution 7 seeks
authority to allot new shares up to the maximum nominal value of £7896000 representing approximately 3333 of the nominal
value of the company’s issued share capital excluding treasury shares as at the close of business on 27 may 2008 being the
latest practicable date prior to the publication of this document the company does not currently hold any shares in treasury and
there are no plans at present to issue new shares except as needed to satisfy the exercise of options under the company’s
employee share schemes if the directors wish to allot new shares for cash the companies act 1985 states that the new shares
must be offered first to existing shareholders in proportion to their existing shareholdings an offer of this type is called a ‘rights
issue’ or an ‘open offer’ and the shareholders’ entitlement to be offered the new shares is known as a ‘preemption right’ for
legal regulatory and practical reasons however it might not be possible or desirable for new shares allotted by means of a rights
issue or open offer to be offered to certain shareholders particularly those resident overseas furthermore it might in some
circumstances be in the company’s interests for the directors to be able to allot some shares for cash without having to offer them
first to existing shareholders to enable this to be done shareholders’ statutory preemption rights must be disapplied
accordingly resolution 8 seeks to empower the directors to allot equity securities as if shareholders’ statutory preemption rights
did not apply to such allotment
a subparagraph a of resolution 8 seeks authority for the directors to make any arrangements which may be necessary to deal
with any legal regulatory or practical problems arising from a rights issue open offer or other preemptive offer in favour of
ordinary shareholders for example by excluding certain overseas shareholders from such issue or offer and
b subparagraph b of resolution 8 seeks the disapplication of shareholders’ statutory preemption rights by empowering the
directors to allot shares for cash on a nonpreemptive basis but only for new shares with a maximum aggregate nominal value
of £1184000 which is equivalent to approximately 5 of the company’s issued share capital prior to the publication of this
document the authority under resolution 8 would also cover the sale of treasury shares for cash shanks annual report 2008 89
both resolutions 7 and 8 are in line with standard practice and the guidelines issued by the investment committees of the
association of british insurers and the national association of pension funds resolution 8 also has regard to the preemption
group’s 2006 statement of principles on disapplying preemption rights
the proposed authorities under resolutions 7 and 8 if granted will apply until the date being fifteen months from the passing of
this resolution or if earlier at the conclusion of the annual general meeting of the company next held following the passing of these
resolutions
purchase of own shares resolution 9
the companies act 1985 permits a company to purchase its own shares provided the purchase has been authorised by
shareholders in general meeting resolution 9 if passed would give the company the authority to purchase its own issued ordinary
shares at a price of not less than ten pence per share and not more than 5 above the average of the middle market quotations of
the company’s ordinary shares as shown on the london stock exchange daily official list for the five dealing days before the
purchase is made the authority would be to purchase a maximum of approximately 10 of the company’s ordinary share capital in
issue on 27 may 2008 being the latest practicable date prior to the publication of this document and would expire at the end of
the next annual general meeting or on 23 january 2010 whichever is the earlier the directors’ present intentions are that in
certain circumstances it may be advantageous for such purchases to be made if they believe that they are generally in the best
interests of the shareholders and except in the case of purchases intended to satisfy obligations under share schemes the
expected effect of any purchase would be to increase earnings per share of the remaining shares
the directors would only exercise the authority after careful consideration taking into account market conditions prevailing at the
time other investment opportunities appropriate gearing levels the expected effect on the return on embedded value and the
overall financial position of the group purchases would be financed out of distributable profits and shares purchased would either
be cancelled and the number of shares in issue reduced accordingly or held as treasury shares as at 27 may 2008 there were
options and ltip awards over 31m ordinary shares in the capital of the company which represent 13 of the company’s issued
ordinary share capital excluding treasury shares if the authority to purchase the company’s ordinary shares were exercised in full
those options would represent 15 of the company’s issued ordinary share capital excluding treasury shares as at 27 may
2008 being the latest practicable date prior to the publication of this document the company did not hold any treasury shares and
no warrants over ordinary shares in the capital of the company existed
adoption of new articles of association resolutions 10 and 11
the directors believe that the articles of association of the company should be updated to reflect and take full benefit of some of
the new provisions of the companies act 2006 act the “2006 act” which have been brought in to effect to date there have also
been a number of other legislative regulatory and best practice developments since the company’s articles of association were
adopted that the board believes should be reflected in the company’s articles of association accordingly the board considers it
prudent to replace the company’s existing articles of association with new articles which take account of those developments the
“new articles”
the 2006 act represents a major reform of uk companies’ legislation and is being brought into force in stages beginning in
january 2007 with full implementation scheduled by october 2009 over the course of the next year the company intends to
conduct a further review of the new articles in order to identify any additional amendments that might be necessary following the
full implementation of the 2006 act in october 2009 it is the board’s intention that any further amendments will be put to
shareholders at the annual general meeting in 2009 a copy of the new articles and a copy of article 99 identified in resolution 11
will be available for inspection from the date of this document until the conclusion of the annual general meeting during normal
business hours on any weekday at the registered office of the company and at the offices of dickson minto ws at royal london
house 2225 finsbury square london ec2a 1dx the new articles will also be available for inspection at any time until the
conclusion of the annual general meeting on the company’s website wwwshankscouk and shall be available at the venue of the
annual general meeting from 15 minutes prior to and until the conclusion of the meeting the principal changes arising from the
adoption of the new articles other than changes which are of a minor technical or clarifying nature and also some more minor
changes which merely reflect changes made by the 2006 act are set out below references to article numbers are references to a
particular article in the new articles 90 shanks annual report 2008
notice of annual general meeting
continued
articles that duplicate statutory provisions
certain provisions in the current articles which replicate provisions contained in companies legislation are in the main amended to
bring them into line with the 2006 act certain examples of such provisions including provisions as to convening general meetings
and proxies are detailed below
treasury shares
since 1 december 2003 listed companies that buy back shares out of distributable profits have been able to hold up to 10 of
the nominal value of their issued share capital in treasury rather than having to cancel them treasury shares can provide some
useful flexibility to companies as they may sell treasury shares in small amounts and without the need to incur the costs of a new
share issue in order to raise additional capital consequential amendments have been made in the new articles to reflect the
treasury shares regime
uncertificated shares
the existing articles do not contain detailed provisions dealing with the holding of shares in uncertificated form and the rules
governing the crest uncertificated securities system set out in the uncertificated securities regulations 2001 the “2001
regulations” various provisions are therefore included in the new articles to accommodate this matter in particular articles 14
and 34 however there is nothing in the new articles which obliges shareholders to hold their shares through crest and
shareholders may continue to hold their shares in certificated form should they so wish
electronic communications and crest
the new articles contain a number of provisions designed to maximise the company’s ability to use electronic systems for
communication with shareholders and for dealing in shares through crest companies have been able to communicate with
shareholders by electronic means ie email in respect of certain types of information for some years however the 2006 act
extends this to all shareholder information including company notices documents and other information and enables a company
to invite shareholders to agree that information may be supplied by means of a website the new articles allow the company to
take advantage of the changes in the 2006 act which may lead to administrative cost savings in the future the 2006 act enables
the company to use electronic communications with shareholders as the default position by placing documents on the company’s
website unless shareholders expressly elect to receive hard copy documents it is important to note that before implementing the
default position the company is required to write to all shareholders to give them the opportunity to decide whether they would
prefer to receive documentation in hard copy form various provisions are included in the new articles to allow the company to
communicate with shareholders via electronic means and to give the directors the discretion to use electronic communications to
distribute notices of meetings annual reports accounts and summary financial statements the new articles also reflect the 2001
regulations and the 2006 act by permitting members holding uncertificated shares to appoint instruct amend and revoke proxy
appointments using the crest system
in addition the new articles simplify procedures for transacting the business of the board by permitting the convening of meetings
serving of notice of resignation appointment of alternates and execution of directors’ resolutions by electronic means
form of resolutions
the existing articles contain provisions referring to “extraordinary” resolutions and “extraordinary” general meetings these
concepts have been abolished under the 2006 act meetings of shareholders other than annual general meetings are referred to
simply as “general meetings” any resolution requiring a 75 majority will be a “special” resolution where for any purpose an
ordinary resolution is required a special resolution shall also be effective
convening of general meetings and annual general meetings
the provisions of the existing articles dealing with the convening of general meetings and annual general meetings and the length
of notice required to convene such meetings are amended in the new articles to conform to the new provisions of the 2006 act in
particular general meetings to consider special resolutions can now be convened on 14 clear days’ notice whereas previously 21
clear days’ notice was required an annual general meeting still requires 21 clear days’ notice shanks annual report 2008 91
votes of members
under the 2006 act proxies are entitled to vote on a show of hands whereas under the existing articles proxies are only entitled to
vote on a poll the time limits for the appointment of proxies have also been altered by the 2006 act so that weekends and bank
holidays do not need to be counted in determining the time limits for lodging of proxies multiple proxies may be appointed provided
that each proxy is appointed to exercise the rights attached to a different share or class of shares held by the shareholder
corporate representatives
the 2006 act permits a corporate shareholder to appoint multiple corporate representatives who can attend speak vote and count
towards a quorum at any general meeting however where multiple corporate representatives exercise votes in different ways the
2006 act provides that no votes have been exercised the new articles reflect the provisions of the 2006 act
age restriction on directors
the existing articles provide that no person shall be appointed or reappointed to the board once they have attained the age of 65
years and any person attaining such age shall vacate his or her office at the next annual general meeting held after his or her 65th
birthday this has been deleted in the new articles as it may fall foul of age discrimination legislation
retirement of directors by rotation
the combined code on corporate governance recommends that all directors must submit themselves for election at every third
annual general meeting following the meeting at which they were elected or last reelected the new articles reflect this position
and delete reference to retirement by rotation
conflicts of interest
the new articles retain the provisions of the existing articles in relation to directors’ conflicts of interest however it is intended
that with effect from 1 october 2008 these provisions will be amended to reflect new provisions of the 2006 act in relation to
directors’ conflicts of interests which are expected to come into force on that date the 2006 act sets out directors’ general duties
which largely codify the existing law but with some changes under the 2006 act from 1 october 2008 a director must avoid a
situation where he has or can have a direct or indirect interest that conflicts or may conflict with the company’s interests the
requirement is very broad and could apply for example if a director becomes a director of another company or a trustee of another
organisation the 2006 act allows directors of public companies to authorise conflicts and potential conflicts where appropriate
insofar as the articles of association contain a provision to this effect the 2006 act also allows articles to contain other provisions
for dealing with directors’ conflicts of interest to avoid a breach of duty there are safeguards which will apply when directors
decide whether to authorise a conflict or potential conflict first only directors who have no interest in the matter being considered
will be able to take the relevant decision and secondly in taking the decision the directors must act in a way they consider in
good faith will be most likely to promote the company’s success the directors will be able to impose limits or conditions when
giving authorisation if they think this is appropriate it is also proposed that the new articles should contain provisions relating to
confidential information attendance at board meetings and the availability of board papers to protect a director being in breach of
duty if a conflict of interest or a potential conflict of interest arises resolution 11 proposes that the new articles will with effect
from 1 october 2008 contain provisions giving the directors authority to approve situations involving directors’ conflicts of interest
and to allow conflicts of interest to be dealt with by the board
borrowing powers
the new articles contain at article 101 a provision regulating the board’s authority to authorise the company to borrow money it
permits borrowing of up to 3 times the level of the company’s “adjusted capital and reserves” without further shareholder approval
a similar provision is set out in the current articles however the method of calculating the “adjusted capital and reserves” and the
definition of “borrowings” has been updated in the new articles to reflect current practice the updates are generally of a technical
nature although there are some commercial changes for example in calculating the reserves no account will be taken of any
retirement scheme surplus or deficit the calculation of the limit of borrowings is also adjusted so that items such as cash in hand
cash deposits short term assets and any security deposit in the nature of cash or short term assets lodged in security of the
obligations of a member of the group are credited against the amount of borrowings when determining whether the relevant limit
has been exceeded 92 shanks annual report 2008
notice of annual general meeting
continued
indemnity
the 2006 act allows companies to indemnify their directors and other officers and to provide to their directors funds to cover the
costs of defending legal proceedings brought against them on an “as incurred” basis in addition a company may indemnify the
directors of an associated company including directors of an associated company that is a trustee of an occupational pension
scheme in respect of any liability incurred by the director in connection with the company’s activities as trustee of the scheme
since directors are increasingly being added as defendants in actions against companies and litigation is often very lengthy and
expensive the board believes the risk of directors being placed under significant financial strain is increasing this may impact on
the ability of the company to recruit and retain members of the board of an appropriate calibre accordingly the new articles take
advantage of the new law the board believes that the power of the company to indemnify its directors in the manner described
above is fair and reasonable and introduces a more appropriate balance of risk and reward
political donations resolution 12
the majority of the companies act 2006 provisions on political donations sections 362379 came into force on 1 october 2007
as with the companies act 1985 a company may not make a political donation or incur political expenditure unless it has been
authorised by ordinary resolution or the political donation does not exceed £5000 when aggregated with all group political
donations in the past twelve months whilst it remains the company’s policy not to make political donations or to incur political
expenditure the terms “political donation” “political parties” “independent election candidates” “political organisation” and
“political expenditure” are widely defined in the companies act 2006 and it is possible that the definitions may include
activities which the company might carry on in the ordinary course of its business such as participation in functions attended by
politicians or participation in review of governmental policy or law reform therefore in common with other companies the company
is seeking shareholder approval on a precautionary basis and to avoid unwitting contravention of the companies act 2006 to incur
a level of expenditure to cover these activities any donations made or expenditure incurred under the authority will be disclosed in
the company’s next annual report
notes
1 members are entitled to appoint a proxy to exercise all or any of their rights to attend and to speak and vote on their behalf at
the meeting a shareholder may appoint more than one proxy provided that each proxy is appointed to exercise the rights
attached to a different share or shares held by that shareholder a proxy need not be a shareholder of the company a member
present in person or by proxy shall have one vote on a show of hands and on a poll every member present in person or by
proxy shall have one vote for every ordinary share of which heshe is the holder a form of proxy for use by shareholders in
connection with the meeting is enclosed with this document the form of proxy should be deposited with the company’s
registrar computershare investors services plc at po box 82 the pavilions bridgwater road bristol bs99 6zz no later than
1100 am on 22 july 2008
2 the return of a completed form of proxy will not prevent a member from attending and voting in person at the meeting should
heshe so wish
3 any person to whom this notice is sent who is a person nominated under section 146 of the companies act 2006 to enjoy
information rights a “nominated person” may under an agreement between himher and the shareholder by whom heshe
was nominated have a right to be appointed or to have someone else appointed as a proxy for the annual general meeting if
a nominated person has no such proxy appointment right or does not wish to exercise it heshe may under any such
agreement have a right to give instructions to the shareholder as to the exercise of voting rights
4 the statement of the rights of shareholders in relation to the appointment of proxies in note 1 above does not apply to
nominated persons
5 to be entitled to attend and vote at the annual general meeting and for the purpose of the determination by the company of
the votes they may cast shareholders must be registered in the register of members of the company by 600pm on 22 july
2008 or in the event of any adjournment 6pm on the date which is two days before the time of the adjourned meeting
changes to the register of members after the relevant deadline shall be disregarded in determining the rights of any person to
attend and vote at the meeting shanks annual report 2008 93
6 in order to facilitate voting by corporate representatives at the meeting arrangements will be put in place at the meeting so
that i if a corporate shareholder has appointed the chairman of the meeting as its corporate representative with instructions
to vote on a poll in accordance with the directions of all of the other corporate representatives for that corporate shareholder
present at the meeting then on a poll those corporate representatives will give voting directions to the chairman of the
meeting and the chairman will vote or withhold a vote as corporate representative in accordance with those directions and ii
if more than one corporate representative for the same corporate shareholder attends the meeting but the corporate
shareholder has not appointed the chairman of the meeting as its corporate representative a designated corporate
representative will be nominated from those corporate representatives who attend who will vote on a poll and the other
corporate representatives will give voting directions to that designated corporate representative corporate shareholders are
referred to the guidance issued by the institute of chartered secretaries and administrators on proxies and corporate
representatives wwwicsaorguk for further details of this procedure the guidance includes a sample form of representation
letter if the chairman is being appointed as described in i above
7 crest members who wish to appoint a proxy or proxies through the crest electronic proxy appointment service may do so for
the annual general meeting to be held on 24 july 2008 and any adjournments thereof by using the procedures described in
the crest manual crest personal members or other crest sponsored members and those crest members who have
appointed a voting service provides should refer to their crest sponsor or voting service providers who will be able to take
appropriate action on their behalf in order for a proxy appointment or instruction made using the crest service to be valid
the appropriate crest message a “crest proxy instruction” must be properly authenticated in accordance with crestco’s
specifications and must contain the information required for such instructions as described in the crest manual the
message regardless of whether it constitutes the appointment of a proxy or an amendment to the instruction given to a
previously appointed proxy must in order to be valid be transmitted so as to be received by the issuer’s agent id 3ra50 by
the latest times for receipt of proxy appointments specified in the notice of meeting for this purpose the time of receipt will
be taken to be the time as determined by the timestamp applied to the message by the crest applications host from which
the issuer’s agent is able to retrieve the message by enquiry to crest in the manner prescribed by crest after this time any
change of instructions to proxies appointed through crest should be communicated to the appointee through other means
crest members and where applicable their crest sponsors or voting service providers should note that crestco does not
make available special procedures in crest for any particular messages normal system timings and limitations will therefore
apply in relation to the input of crest proxy instructions it is the responsibility of the crest member concerned to take or if
the crest member is a crest personal member or sponsored member or has appointed a voting service providers to
procure that his crest sponsor or voting service providers takes such action as shall be necessary to ensure that a
message is transmitted by means of the crest system by any particular times in this connection crest members and
where applicable their crest sponsors or voting service providers are referred in particular to those sections of the crest
manual concerning practical limitations of the crest system and timings the company may treat as invalid a crest proxy
instruction in the circumstances set out in regulation 355a of the uncertificated securities regulations 2001
8 as at 27 may 2008 being the latest practicable date prior to the publication of this document the company’s issued capital
consisted of 236928379 ordinary shares carrying one vote each therefore the total number of voting rights in the company
as at 27 may 2008 was 236928379 votes
documents on display
copies of the following documents are available for inspection at the registered office of the company and at the offices of dickson
minto ws 2225 finsbury square london ec2a 1dx during normal business hours monday to friday public holidays excepted
up to and including the date of the annual general meeting and at the place of the annual general meeting from fifteen minutes
prior to and until the close of the meeting i executive directors’ contracts of service ii nonexecutive directors’ letters of
appointment iii current articles of association of the company iv a draft of the proposed new articles of association of the
company v a draft of proposed replacement article 99 94 shanks annual report 2008
shareholder information
at 31 march 2008
analysis of shareholders as at 31 march 2008
holders  shares held 
private shareholders 2012 621 10070467 43
corporate shareholders 1229 379 226857912 957
3241 1000 236928379 1000
size of shareholding holders  shares held 
250001 – 5000 2472 763 4284045 18
5001 – 25000 439 135 4600220 19
25001 – 50000 77 24 2879488 12
50001 – 100000 61 19 4324434 18
100001 – 250000 76 23 12684846 54
250001 – 500000 39 12 13749995 58
over 500000 77 24 194405351 821
3241 1000 236928379 1000
registrar services
administrative enquiries concerning shareholdings in the company should be made to the registrar computershare investor
services plc po box 82 the pavilions bridgwater road bristol bs99 6zz computershare can also be contacted by telephone on
0870 707 1290
shareholders can also manage their holding online by registering at wwwukcomputersharecominvestor
shareholders who do not currently have their dividends paid directly to a bank or building society account and who wish to do so
should complete a mandate form obtainable from computershare tax vouchers are sent to the shareholder’s registered address
under this arrangement unless requested otherwise shareholders are strongly encouraged to receive their cash dividends by direct
transfer as this ensures dividends are credited promptly and efficiently
if you receive more than one copy of our annual report it may be that your shares are registered under two or more names should
you wish to combine such holdings into a single account please contact computershare
low cost share dealing service
pershing securities limited offer an execution only low cost postal share dealing service for uk resident investors should they so
wish to buy or sell small certificated holdings of shanks group plc ordinary 10 pence shares further information may be obtained
from the pershing securities telephone helpline on 020 7661 6617
shareholder warning – unsolicited mail
in recent years many companies have become aware that their shareholders have received unsolicited telephone calls or
correspondence concerning investment matters these are typically from overseas based ‘brokers’ who target uk shareholders
offering to sell them what often turns out to be worthless or high risk shares in us or uk investments they can be very persistent
and extremely persuasive it is not just the novice investor that has been duped in this way many of the victims had been
successfully investing for several years shareholders are advised to be very wary of any unsolicited advice offers to buy shares at
a discount or offer of free company reports shanks annual report 2008 95
if you receive any unsolicited investment advice
•
make sure you get the correct name of the person and organisation and make a record of any information they give you
•
check that they are properly authorised by the fsa before getting involved you can check at wwwfsagovukregister
•
the fsa also maintains on its website a list of unauthorised overseas firms who are targeting or have targeted uk investors
any approach from such an organisation should be reported to the fsa so that this list can be kept up to date and any other
appropriate action can be considered if you deal with an unauthorised firm you would not be eligible to receive payment under
the financial services compensation scheme the fsa can be contacted by completing an online form at
wwwfsagovukpagesdoingregulatedlawalertsformshtml or if you do not have internet access on 0845 606 1234 and
•
inform our registrars on 0870 707 1290
details of any sharedealing facilities that the company endorses will be included in company mailings more detailed information on
this or similar activity can be found on the fsa website wwwfsagovukconsumer
share price information
on 31 march 2008 the middle market price of shanks group plc ordinary 10 pence shares was 260 pence per share having
varied during the year between a low of 195 pence and a high of 281 pence
the isin code for the company’s ordinary shares is gb0007995243 and the sedol stock exchange official daily list number is
0799524 share price information on shanks group plc is widely available in the financial press and on financial websites
sharegift
if shareholders have only a small number of shares whose value makes it uneconomic to sell they may wish to consider donating
them to the charity sharegift registered charity no 1052686 further information may be obtained from their website at
wwwsharegiftorg or by calling 020 7930 3737
company websites
the shanks group plc website containing company details financial information and current news can be found at
wwwshankscouk the website for shanks companies within belgium can be found at wwwshanksbe and that for the netherlands
at wwwshanksnl 
financial calendar
9 july 2008 exdividend date for final 2008 dividend
11 july 2008 record date for final 2008 dividend
24 july 2008 annual general meeting
1 august 2008 payment of final 2008 dividend
november 2008 announcement of interim results and dividends
january 2009 payment of interim dividend
31 march 2009 2009 financial year ends
june 2009 announcement of 2009 results and dividend recommendation 96 shanks annual report 2008
company information
corporate head office registered office group company secretary
shanks group plc shanks group plc philip griffinsmith fcis
astor house shanks house
station road 211 blochairn road
bourne end blochairn
buckinghamshire sl8 5yp glasgow g21 2rl
tel 00 44 0 1628 554920 registered in scotland no 77438
fax 00 44 0 1628 524114
website wwwshankscouk
email infoshankscouk
corporate head office relocating to dunedin house auckland park mount farm milton keynes buckinghamshire mk1 1bu in
summer 2008
principal offices
the netherlands belgium united kingdom
shanks nederland shanks belgium shanks waste management 
po box 171 rue edouard belin 31 dunedin house
3000 ad rotterdam be1435 auckland park
the netherlands mont saint guibert mount farm
tel 00 31 0 10 280 5300 belgium milton keynes
fax 00 31 0 10 280 5311 tel 00 32 0 1023 3660 buckinghamshire mk1 1bu
fax 00 32 0 1023 3661 tel 00 44 0 1908 650650
fax 00 44 0 1908 650699
corporate advisers
auditors financial advisers corporate brokers
pricewaterhousecoopers llp greenhill  co international llp hoare govett limited
principal bankers solicitors financial public relations advisers
abn amro bank nv ashurst llp citigate dewe rogerson
barclays bank plc dickson minto ws
fortis bank sa
hsbc bank plc
the royal bank of scotland plc 01 our vision
02 financial highlights
03 chairman’s statement
04 chief executive’s statement
07 business overview
12 operating review
16 financial review
21 corporate responsibility
25 board of directors
26 directors’ report
30 corporate governance
34 remuneration report
40 statement of directors’
responsibilities
41 auditors’ report
43 consolidated income statement
43 consolidated statement of
recognised income and expense
44 consolidated balance sheet
45 consolidated cash flow statement
46 company income statement
46 company statement of recognised
income and expense
47 company balance sheet
48 company cash flow statement
49 notes to the financial statements
84 subsidiary undertakings and joint
ventures
85 consolidated five year financial
summary
86 notice of annual general meeting
94 shareholder information
95 financial calendar
96 company information 
contents
shanks group is europe’s largest listed
independent waste management company
operating in the netherlands belgium
uk and canada
netherlands belgium uk canada group
employees at year end 2074 1016 943 7 4040
total operating centres 35 18 43 1 97
operating centres with recyclingrecovery 26 10 35 1 72
operational landfill sites 126 – 9
collection and transport lorries 940 350 270 – 1560
tonnes waste handled million tonnes 43 15 28 01 87
tonnes materials recovered million tonnes 355 076 062 002 495
overall recycling and recovery rate 83 51 22 50 58
energy generated megawatt hours 8789 58222 28873 – 95884
designed by cvco
printed by park communications on fsc certified paper
park is a carbonneutral®company and its environmental management system
is certified to iso140012004  
100 of the electricity used is generated from renewable sources 100 of the
inks used are vegetable oil based 95 of press chemicals are recycled for
further use and on average 99 of any waste associated with this production
will be recycled 
this document is printed on think
4
bright an fsc approved paper sourced 
from sustainable forests think
4
bright uses an elemental chlorine free ecf
process and is totally recyclable the outer cover is sealed with a matt
laminate which uses cellulose acetate biodegradable film made of wood pulp
from sustained managed forests the film can be disposed of by recycling
incineration for energy recovery or is compostable
shanks at a glance shanks group plc annual report and accounts 2008
shanks group plc annual report and accounts 2008


Summary:
 4 shanks annual report 2008
i joined as group chief executive on 
1 october 2007 and since then have
managed to visit all of our major sites in
the netherlands belgium canada and
the uk and met many of the people upon
whom we rely for our success my overall
impression is that shanks is a great
company to be joining at an exciting time
for the industry governments across the
world are urging the waste industry to
support them in recovering more
resources and energy from the things that
society throws away they are providing
economic incentives to increase recycling
through taxation on landfill and in some
cases incineration alongside subsidies
for treatment processes that support the
production of renewable energy from
waste the new european directive on
waste currently moving through the
european parliament will provide further
legislative support for this trend
shanks is well placed to prosper in this
changing environment our group
operates in countries with the highest
recycling rates in europe and has
experience of a number of treatment
processes capable of producing
renewable energy from waste we have
set ourselves the aspiration to be
regarded as europe’s leading sustainable
waste management company and will be
working hard over the coming years to
achieve this goal 
strategy
having reviewed the business during my
first six months i believe there is an
exciting opportunity to generate attractive
returns for investors by focusing our
investment around sustainable waste
management in all of the countries in
which we operate there is sufficient
market opportunity for us to generate high
organic growth rates from such
investment with a lower risk profile than a
growth strategy based solely on
acquisitions 
our group strategy going forward is
therefore a simple one to deliver organic
growth by investing in assets that support
sustainable waste management and are
capable of delivering attractive returns on
capital alongside this we will actively
share expertise and technology across
the group whilst retaining a very strong
focus on keeping our unit costs amongst
the lowest in the industry finally we will
use acquisitions to improve capacity
utilisation our “tuckin” model or to
secure capabilities that reorient the
group to higher growth activities
the potential for this growth strategy was
shown in this year’s financial results with
all major business units growing well
ahead of inflation other than our belgian
landfill which as expected delivered a
reduced contribution
our investments in each of our country
operations during the year reflected the
strategic intent highlighted above
chief executive’s statement
our vision is to be europe’s leading
provider of sustainable waste
management solutions shanks annual report 2008 5
the netherlands
strategy
maintain our premium margins and grow
our solid and hazardous waste
businesses ahead of gdp with higher
growth coming from orgaworld and tuckin
acquisitions
our dutch business generated a trading
margin of 13 in 2008 a performance
which compares favourably with its peers
our goal is to maintain this premium
position whilst growing the business
the acquisition of orgaworld in april 2007
for €30m plus a five year earnout of up
to €20m provides the group with strong
capabilities to process source segregated
organic waste using advanced composting
or anaerobic digestion technologies
these are technologies that have very
attractive growth potential in a number of
international markets already a leading
player in the dutch organics market
serving both municipal and commercial
customers we have been able to achieve
a strong market position in the canadian
market through the application of
orgaworld’s composting product long
term contracts in toronto and ottawa with
a total contract value of approximately
can250m were secured during the year
we are also actively looking to introduce
its products into the uk and belgian
markets
we invested a further €18m including
€3m of deferred payments in 4 small
tuckin acquisitions in the netherlands
aimed at improving capacity utilisation
and increasing our local market share
our commitment to keeping at the
forefront of recycling in the dutch market
was demonstrated by the completion of
an investment of €3m in the latest
recycling technology at our vliko plant in
leiderdorp
belgium
strategy 
grow our industrial  commercial ic
solid waste business to replace declining
landfill profits by securing competitive
disposal outlets and through renewable
energy production
in 2008 landfill accounted for around a
third of the belgian profits already down
from nearly 50 in 2007 the
contribution from this activity is falling as
the government seeks to ban municipal
biodegradable waste from going to landfill
and we are therefore creating profitable
alternatives by focusing on processing
ic organic and wood waste in a way
that creates a fuel source or renewable
energy at a lower overall cost than
traditional alternatives
we invested in organic growth projects to
produce solid recovered fuel srf from
ic customers at our ghent plant and in
the provision of anaerobic digestion and
wastewater treatment at our roeselare
plant both of these will generate energy
from waste and support strong growth for
our nonlandfill ic business in belgium
shortly after the year end we announced
the acquisition of the foronex group for a
consideration of €23m foronex is a
leading player in the wood waste and by
products market in the benelux and a
significant provider of wood based
products to the rapidly growing energy
from biomass marketplace we see good
opportunities to support the continued
growth of this exciting business and to
access more profitable outlets for the
230000 tonnes of waste wood we
currently process each year in the
benelux
uk
strategy 
make shanks the preferred alternative to
landfill by establishing a network of
processing centres based on the shanks
benelux model
having sold its landfill assets in 2004
shanks is well positioned to take
advantage of rising landfill taxation to
divert waste we collect to processing
centres that we will create similar to
those in our benelux businesses we will
continue to grow our municipal treatment
business through participation in public
finance initiative pfi projects
in november 2007 we completed the
acquisition of wastecom for £11m to
provide us with advanced recycling
capability in the kettering area building
on the success of recent investments in
scotland this further supports our belief
that there is a profitable opportunity in the
uk to develop a strong recycling business
using our expertise from the benelux in
april 2008 landfill tax rose by the highest
amount ever £8 per tonne on its way to a
target of £48 per tonne by 2010 the
government has confirmed its commitment
to further increases beyond this point and
this provides the right incentive for
investment in recycling and reprocessing
centres we have targeted three regions in
the uk which in the short to medium term
will provide the geographic focus to build
our business these are the central belt
of scotland the east midlands and the
northern home counties we have
identified the sites that we would like to
develop and will be applying for planning
permission shortly these together with
continued tuckin acquisitions will support
the development of a profitable uk
recycling business 6 shanks annual report 2008
we continue to believe that the uk pfi
market offers attractive opportunities for
shanks over the next ten years the
government estimates £10bn of funding
will be required to upgrade the
infrastructure needed to divert the
biodegradable municipal solid waste away
from landfill shanks has taken a strong
position in the market through its
proposition based upon the innovative
ecodeco mechanical biological treatment
mbt technology we believe this remains
a very attractive solution to the needs of
local authorities and so creates a strong
pipeline of opportunities as authorities
move to meet their 2010 and 2013
reduction targets we continue our
negotiations with cumbria county council
where we are preferred bidder and expect
this opportunity to reach financial closure
during the current financial year
culture
shanks has a highly decentralised
structure that has allowed it to keep its
central overheads low and maintain an
entrepreneurial culture in its operating
units this in my view has been a
strength of shanks and one which i
intend to retain waste collection and
processing remains essentially a local
business and it is important that decision
making is as close to the customer as
possible it has also proved an important
factor in persuading entrepreneurial
managers who join the group through
acquisition to remain with us 
this said however our strategy going
forward will be to focus on building
recycling and energy recovery activities
across the group and it makes good
sense to share the technologies and
years of expertise that we have within the
group the executive committee which
consists of the managing directors of the
three countries together with myself and
the group finance director meets
regularly and part of its remit is to ensure
that such knowledge transfer takes place
we will focus on specific projects and
opportunities and will not seek to
centralise activities that are best done
locally thereby avoiding the buildup of
unnecessary overhead 
performance
we are committed to producing attractive
returns for the owners of the business
we have analysed our portfolio and have
identified where the best opportunities for
maximising returns on capital employed
roce are whilst our current overall
roce of 12 is ahead of our weighted
average cost of capital wacc we believe
that we can and should generate greater
returns from our capital base and will be
looking for our new investments to
contribute to this improvement alongside
improving the cash generation and
profitability of our underlying existing
businesses
tom drury
group chief executive 
chief executive’s statement continued