annual report  accounts 2012
making more from
shanks  shanks group plc
annual report  accounts 2012

 – initial £100m strategic investment programme within target range – overall 
annualised post tax return of 122 for projects which are fully up and running
 – next phase £150m strategic investment programme on track
 – the uk business delivered 6 revenue growth and uk municipal pfippp 
contracts achieved 10 trading margins up from 64 last year
 – the organics business across all our markets delivered 28 revenue growth 
and trading margins increased from 13 to 18
 – another strong performance from our dutch hazardous waste business 
with trading proﬁt up 26 in the year

 – robust performance in challenging trading conditions
 – underlying proﬁt before tax up 8 at constant currency
 – management actions delivered £11m of cost savings to offset challenging market 
conditions in our solid waste businesses
 – strong cash generation with underlying free cash ﬂow conversion at 81
 – net debt to ebitda ratio of 17 times versus our target of below 25 times 
and covenant of 30 times 

 – reportable accident rate improved by 13
 – overall recycling and recovery rate up to 78 from 77 last year
 – 128 million tonnes of carbon avoided
 – local neighbourhood complaints fell by 32

more information on our operations on page 48 more information on our corporate responsibility activities on page 38
 kpi
kpi
kpi
750 1 m
 £m 2012 2011 2010 2009 2008
534m
2600
 £m per 100000 employees
2012 2011 2010 2009 2008
388m
 £m 2012 2011 2010 2009 2008
2012 2011 2010 2009 2008
s 13
3
6
8
 £m 1 netherlands 380 50
2 belgium 172 23
3 uk 186 25
4 canada 15 2
1
2
3
4
innovative

paper plastic metal

128m


79m

78

345p
more information on our ﬁnancial results on page 48
percentage shown at constant currency
percentage shown at constant currency
percentage shown at constant currency
51 51 51 519 9 9 9 51 51 51 519 9 9 9
61 61 61 617 7 7 7 61 61 61 617 7 7 7
51 51 51 511 1 1 1 51 51 51 511 1 1 1
49 49 49 49 497 7 7 7 7 49 49 49 49 497 7 7 7 7
534 534
553 553 553 553 553 553 553 553 553 553
685 685 685 685 685 685 685 685 684 684 684 684 684 684 684 684
717 717 717 717 717 717 717 717
750 750
41 41 41 410 0 0 0 41 41 41 410 0 0 0
3 43 43 43 439 9 9 9 9 43 43 43 43 439 9 9 9 9
33 33 33 332 2 2 2 33 33 33 332 2 2 2
35 35 35 352 2 2 2 35 35 35 352 2 2 2
388 388
27 27 27 2700 00 00 00 27 27 27 2700 00 00 00
33 33 33 3300 00 00 00 33 33 33 3300 00 00 00
31 31 31 3100 00 00 00 31 31 31 3100 00 00 00
0 0 0 0 3000 30 30 30 3000 00 00 00 30 30 30 3000 00 00 00
2600 2600 new westcott park ad plant under 
construction in the uk


this section introduces our vision how we 
aim to achieve it and where we operate 
within the waste management cycle
ifc group highlights
2 our vision and our strategy
4 our business at a glance
10 chairman’s statement


group chief executive peter dilnot 
provides an overview of shanks group’s 
vision and strategy we also describe 
the markets in which we operate 
and how we make money 
12 chief executive’s statement
18 measuring our performance – kpis
22 the market in which we operate
25 products and technology
29 external drivers
32 our business model –  
how we make money


in this section we discuss the cultural 
change programme how we nurture key 
talent and how we operate sustainably
34 our culture and people
38 delivering sustainable 
performance

we discuss how we manage and identify 
risk and the progress we have made over 
the year
42 risk management framework 
44 principal risks and uncertainties 
 t
 w

a review of our performance by region
48 group
52 netherlands
56 belgium
60 uk
64 canada

group chairman adrian auer 
introduces our governance report 
and how we have implemented the new 
corporate governance code
66 board of directors
68 the chairman’s introduction
69 corporate governance
75 remuneration report
81 directors’ report
86 independent auditors’ report

our fullyear performance can be 
reviewed in full
88 consolidated income statement
88 consolidated statement of 
comprehensive income
89 balance sheets
90 statements of changes in equity
91 statements of cash flows
92 notes to the financial statements
141 consolidated five year 
financial summary

further information required by our 
shareholders and other stakeholders
142 shareholder information
144 company information
144 corporate advisers
ibc
 a
 g
 o
 f
 shanks group plc
annual report  accounts 2012


the driving forces behind our industry are climate 
change fossil fuel dependency and society’s need 
to manage waste without damaging the environment 
shanks group uses sustainable and costeffective 
technologies to make valuable products from what 
is thrown away we produce green energy recovered 
fuel recycled commodities and organic fertiliser while 
generating favourable returns for our shareholders
with over 4000 employees and operations in the 
netherlands belgium uk and canada shanks is at 
the forefront in providing sustainable waste management 
solutions for both the private and public sector 
more information can be found at wwwshanksplccom shanks group plc
annual report  accounts 2012 shanks has a clear aspirational and achievable 
vision to be
 our vision and our strategy

























 shanks group plc
annual report  accounts 2012 is a simple one to create 
value by making products from material 
that is otherwise thrown away 
our four strategic priorities to deliver this are 
invest in  that build 
on our core capabilities and generate attractive returns
read more on page 15
deliver  
from existing businesses and investments
read more on page 15
develop worldclass  
in a cohesive group culture
read more on page 16
actively  to accelerate proﬁtable growth
read more on page 17
a f
 essential
services
shanks group plc
annual report  accounts 2012

collect and deliver to 
waste management 
facilities
shanks activity 
when required for 
nonrecyclable output









dispose of waste 
through incineration  
or landﬁll

shanks activity 
where needed to 
secure volume

our business at a glance shanks group plc
annual report  accounts 2012
we organise the business under the following segments

revenue £411m
sorting and reprocessing of  
mainly commercial industrial  
and construction related waste

revenue £206m
reprocessing and recycling of  
contaminated soil water and  
other contaminated materials

revenue £31m
reprocessing of organic waste from  
municipal and industrial sectors 

revenue £107m
sorting and reprocessing of municipal  
solid waste under longterm agreements
in addition we have landﬁll  power and sand quarry activities







 shanks group plc
annual report  accounts 2012

4


7

14


14
solid waste is the collection transfer recycling and treatment of 
nonhazardous waste the market can be divided into industrial 
and commercial ic construction and demolition cd and 
municipal ic represents general commercial waste where 
contracts are generally short term the cd market is more 
cyclical in nature and is also typiﬁed by shorter term contracts 
municipal represents short or mediumterm contracts for the 
collection and treatment of household waste many elements 
of the waste can be recycled and reused
the organics market includes source segregated streams 
from both the industrial and municipal sectors with both shorter 
term and longer term contracts through specialist processing 
biogas is produced from the natural biological activity 
the biogas is then used to produce electricity which is then 
transferred directly into the local grid we also use composting 
techniques to produce a quality pathogen free soil enhancer 
or fertiliser organic processing is one of the fastest growing 
segments within the waste sector
the hazardous waste market focuses on the processing 
and ﬁnal disposal of lightly contaminated materials 
including the thermal treatment of soils the biological 
and physiochemical treatment of waste water and the 
pyrolysis of paint waste we also supply industrial cleaning 
services to the oil and gas and petrochemical industries
the uk municipal market represents the provision of waste 
disposal services to local authorities in the uk we treat it 
separately from the rest of the municipal markets referred 
to in the solid waste section above because of the nature 
of the contracts they are 25 year private finance initiative pfi 
or public private partnership ppp arrangements where we 
have an operating contract to treat the municipal waste delivered 
to the recycling facilities this market is driven by the need to 
reduce substantially the amount of uk waste going to landﬁll 
as set out in the eu landﬁll directive





53


37

27


35
our business at a glance
each market has speciﬁc characteristics that allow us to maximise returns 
and increase market share
read more about our markets on pages 22 to 24
percentages based on revenue and proﬁts before intra segment revenue and central services
 edinburgh
glasgow
london
brussels
amsterda dam
rotterdam
onto toron on
m m montreal
vancouver
 shanks group plc
annual report  accounts 2012 –solid waste
 –hazardous waste
 –organics
 – uk municipal
 –solid waste
 –hazardous waste
 –organics 
 –organics
 –solid waste
 –hazardous waste





50

23

25

2

£380m

£1 72m

£186m

£15m
the group is a major player in the netherlands and belgium where the 
markets are mature with some of the highest recycling rates globally 
the uk and canada are key growth areas as legislation drives increases 
in recycling and landﬁll diversion

in addition we have landﬁll  power and sand quarry activities
read more about our performance by region on pages 48 to 65
p hainaut
bbrusselsbrabant
1viaanderen
liègeluxembourg
iforonex
•
london ontario
bottawa
1reym
•
vilko 
◊ icova
p smink groep
‡ van vliet contrans
 van vliet group
batm
iorgaworld
klok containers
1recycling centre
•
pfi
borganics cardboard 
paper plastic
organic
waste
margarine
waste fats



shanks group plc
annual report  accounts 2012 building on our benelux commercial success with unilever
m ma ak kin ng g gm m mo or re f f fr ro o om m unilever one of the world’s leading suppliers of foods and home and personal care products 
recognises recycling as a core part of their business strategy the contract commenced 
on 1 april 2011 awarding shanks our ﬁrst major european waste management contract 
we now manage waste for unilever across the netherlands and belgium
“this landmark contract demonstrates our ability to 
deliver a total waste solution to major international 
companies our strategy to provide sustainable 
solutions means we can bring real value to our 
customers across the waste management cycle” 
michaël van hulst  
managing director shanks netherlands
recyclable material is used to manufacture 
new products such as sustainable packaging
our amsterdam ad facility can produce enough 
sustainable energy to power 5000 homes


 paper plastic metal
biodiesel





biogas
waste liquid to 
amsterdam ad
turbine

 shanks group plc
annual report  accounts 2012 “shanks’ innovative approach and 
range of technologies makes them 
an ideal partner to help us achieve 
our commitments in this area”
rudi van der arend  
sustainability manager unilever
ad process generates biogas this is processed by 
turbines and the energy is used to power the facility 
with surplus energy going to the grid




another chance to extract recyclable material and where 
fuel pellets are manufactured from residual waste
margarine and waste 
fats are processed to 
produce biodiesel
organic waste is 
used to create 
sustainable energy 
and fertiliser

 shanks group plc
annual report  accounts 2012
the group’s strategy of providing 
sustainable waste management 
solutions has continued to gain 
traction this year 
our investment programme is generating good 
returns and we have delivered earnings growth 
despite continued tough economic conditions 
in particular activity levels in the benelux region 
have remained slow however our business 
centres on ‘making more from waste’ and 
we had another good year in this respect 
our recycling and recovery rate reached an 
alltime high for the group at 78 this is an 
industryleading level of recycling and reﬂects 
our strategic focus on sustainable alternatives 
to landﬁll and mass incineration
we have continued to make investments in new 
infrastructure during the year as we have 
throughout this recession this ongoing 
investment has been enabled by management’s 
continued actions on trading and operational 
gains together with tight cost and cash 
management the combination of new facilities 
coming on line and lean operations will put us in a 
strong position as underlying economies improve 
we were disappointed not to progress a number 
of uk municipal waste contracts however our pfi 
portfolio has performed very well we achieved 
ﬁnancial close on the £750m barnsley doncaster 
and rotherham contract in march 2012 and our 
existing pfi businesses have continued to perform 
strongly with signiﬁcant improvements in trading 
margins to the 9–10 range this represents a 
signiﬁcant turnaround from the loss making position 
just three years ago and we are conﬁdent the gains 
will be sustained our benelux business produced 
a robust performance in tough markets with 
hazardous waste delivering strong proﬁt gains from 
international contract growth this helped offset 
domestic price pressures in the solid waste business 
resulting from lower volumes and incineration 
overcapacity particularly in the netherlands
the industry in which we operate continues to 
evolve at pace the challenge of protecting the 
environment and developing new sources of 
energy while stimulating economic growth is 
intensifying at the same time society needs to 
deal with waste in a more responsible way than 
simply burying or burning it shanks is well placed 
to provide both costeffective and sustainable 
waste management solutions in our treatment 
processes we also produce valuable products 
including green energy recovered fuel and 
recyclates that minimise our reliance on ﬁnite raw 
materials we therefore continue to invest in 
sustainable facilities and technologies that will meet 
future needs and improve the world we live in as 
well as generate strong returns for shareholders 

at the yearend the ratio of core net debt to 
ebitda stood at 17 times well within our 
banking covenant test of 3 times and our target 
chairman’s statement

 group chairman shanks group plc
annual report  accounts 2012
of less than 25 times this has been achieved 
through operational delivery and robust cash 
management following the reﬁnancing last year 
which extended our debt proﬁle we now have 
funding in place with maturities in the three to six 
year range at an average cost of 5 this stable 
and ﬂexible funding structure is an essential 
platform upon which to build our future growth

underlying earnings per share for the year grew 
by 1 1 to 7 2 pence consistent with our stated 
policy of maintaining dividend cover between 
2 and 25 times the board will be recommending 
a ﬁnal dividend of 235 pence per share payable 
on 1 august 2012 to shareholders on the register 
on 6 july 2012 it remains the board’s intention to 
pursue a progressive dividend policy as earnings 
per share increases

the board was pleased to appoint peter dilnot as 
the group’s new chief executive who joined us 
from danaher corporation on 1 february 2012 
we would like to express our appreciation to tom 
drury peter’s predecessor for his leadership and 
contribution during his four years as chief executive 
we would also like to thank chris surch for his role 
as acting chief executive until peter’s arrival 
once again on behalf of the board i would like to 
thank all shanks’ employees for their tremendous 
efforts in providing excellent services to our 
customers during another challenging year 
our people are the key to our future success and 
under peter’s overall leadership we are increasing 
the focus on developing the group’s teams and 
capabilities to improve understanding of what 
shanks does for its people and their contribution 
to the group we have introduced a new section 
on ‘our culture and people’ in this report see 
pages 34 to 37
it is increasingly important for us to understand the 
full range of our people’s capabilities skills and 
perspectives we have many talented people in the 
group and embracing diversity further will help 
create a stronger team managing and building a 
diverse workforce is not only the right thing to do 
it is also valuable for our business by effectively 
harnessing all of our people’s talents we will be 
more innovative and serve our customers better 
on 14 may 2012 the board announced that chris 
surch group finance director will be leaving the 
company with effect from 31 august 2012 to join 
firstgroup plc as group finance director we will 
be sorry to see chris go but we can see that this 
is an exciting new challenge for him and we are 
grateful to chris for the signiﬁcant contribution he 
has made over the last three years a search for his 
successor has commenced

the board is committed to the highest standards 
of corporate governance details on our 
processes and approach including those relating 
to the role and effectiveness of the board and 
compliance with the governance code are set 
out in the governance section on pages 68 to 74 

i am pleased to report continued progress in 
delivering against our nine clear corporate 
responsibility commitments these include 
quantiﬁed targets for carbon avoidance employee 
wellbeing and recycling and recovery rates 
further details are given on pages 38 to 41 of this 
report our ongoing focus in these areas has once 
again been recognised by shanks’ inclusion in the 
independently assessed ftse4good index
shanks has one of the lowest reported accident 
ﬁgures in the waste industry however we will not 
be satisﬁed until we have zero accidents and this 
remains a key goal our groupwide ‘action on 
safety’ initiative has been led strongly by the 
group’s senior management and signiﬁcant time 
has been invested in conducting safety audits 
and improvements throughout our operations 
the initiative has raised the overall performance 
of health and safety across the group and has 
been instrumental in reducing our riddor rates 
by 13 this year we have made progress but 
will continue and intensify our efforts in this area 

we are pleased with the progress made on 
executing our strategy this year the underlying 
growth from our investment programme remains 
strong and the executive management are taking 
positive action to build a leaner and more focused 
business we will up the pace of our execution 
further in the year ahead this should deliver 
shortterm earnings growth with signiﬁcant 
acceleration once economic conditions improve 
shanks group uses sustainable and costeffective 
technologies to make valuable products from 
waste in doing so we can deliver solutions 
to society’s environmental challenges while 
generating good returns for our shareholders 
thank you for your continued support
 
group chairman





7 2 p shanks group plc
annual report  accounts 2012
chief executive’s statement


 group chief executive

this is my ﬁrst statement as chief executive 
having joined the group in february i came to 
shanks because i believe it is a strong and 
wellpositioned business in an increasingly 
important growth market my time in the 
business has reinforced this view 
clearly we are operating in a challenging 
macroeconomic environment at the moment 
however shanks has many compelling 
opportunities to deliver proﬁtable growth and 
shareholder value by ‘making more from waste’ 
i am conﬁdent that we will do just that 
shanks’ strategy is focused on delivering 
costeffective and sustainable alternatives to 
landﬁll and mass incineration the need for such 
solutions is increasing due to regulation and 
legislation together with society’s determination 
to protect our environment shanks is well 
placed to meet these growing demands with 
its strong portfolio of businesses capabilities 
and technologies 

during the year shanks continued to deliver 
proﬁtable growth despite softer market volumes 
and price pressure in some of our markets 
revenue grew by 3 at constant currency and 
underlying earnings per share increased by 9 
this was a direct result of strong returns from 
shanks’ strategic investment programme 
together with focused management action 
to streamline operations and reduce costs 
it was particularly encouraging to deliver 
improved results in our core growth areas 
of the uk and organics which grew revenue 
by 6 and 28 yearonyear respectively 
our benelux hazardous waste business also 
performed strongly with trading proﬁt up 26 
these operational gains coupled with returns 
from the investment programme and £11m 
cost savings achieved during the year more 
than offset the difﬁcult trading conditions in our 
solid waste markets 
shanks has many compelling 
opportunities to deliver proﬁtable 
growth and shareholder value  biodiesel
responsible
shanks group plc
annual report  accounts 2012
the groupwide ‘action on safety’ initiative led 
by senior management has been instrumental 
in achieving a reduction of 13 to our level 
of reportable accidents in the year the focus 
on safety continues and we will drive further 
improvements 

shanks’ overall vision remains consistent and 
has become more focused we retain a clear 
aim to be the leading provider of sustainable 
alternatives to landﬁll and mass incineration 
we plan to lead in selected target markets which 
have strong sustainable growth drivers and 
characteristics that enable shanks to gain 
competitive advantage this aspiration reﬂects 
opportunities in our current growth markets 
such as organics in canada and also our 
commitment to be highly selective about where 
we will operate in the future











the group executive committee 
visiting our roeselare site shanks group plc
annual report  accounts 2012
chief executive’s statement


more information on how we measure progress on pages 18 and 19
 measurements



underlying earnings per share growth   
organic growth in trading proﬁt   
growth in revenue from sustainable activities   
posttax return on investment programme 



overall recycling and recovery rate   
plant utilisation   
power generation mwhrs



lower riddor rate  
carbon avoidance tonnes



return on operating assets  
 shanks’ strategy to deliver growth from sustainable waste management is robust and 
supported by longterm growth drivers we create value from recycling recovering energy 
and making products from material that is otherwise thrown away we believe that our 
approach of ‘making more from waste’ delivers costeffective and environmentally 
sustainable solutions to dealing with a wide range of waste streams 
to focus and accelerate our execution four strategic priorities have been identiﬁed
the background and future outlook for each of these is described on the following pages 
 shanks group plc
annual report  accounts 2012


we have invested £140m in sustainable waste 
management infrastructure since 2008 the 
performance of these investments has improved 
over time and we are now consistently delivering 
our target posttax returns of 12–15 when 
plants are fully operational we have developed 
project management capabilities and 
operational metrics to ensure that we continue 
to generate superior returns on investment
a further £110m will be deployed as part of the 
second phase of the strategic investment 
programme we are already working on a 
signiﬁcant number of sustainable projects that 
leverage our existing core capabilities and the 
pipeline of such opportunities continues to grow 
at a promising rate our target projects are 
increasingly in organics where we have proven 
expertise and can deliver excellent operating 
margins in the uk municipal market we are 
detecting early signs of a more difﬁcult funding 
environment together with local authorities 
planning for shorter term contracts and less 
capital intensive facilities we believe that there 
will be ongoing opportunities for shanks in this 
market and we will continue to invest heavily in 
the uk given the strong need for further 
sustainable diversion from landﬁll


shanks group sustainably recycles and 
reprocesses waste into valuable products 
we get value from the products we make 
so our recycling and recovery rate is a critical 
operational metric in 201112 we achieved 
an industryleading recycling and recovery 
rate of 78 up from 70 three years ago 
more broadly in 201112 we improved our 
organics operating margins from 13 to 18 
additionally in our uk pfippp business we 
delivered excellent service to local authorities 
while driving operating margins from 64 to 
101 in the year
we are now refocusing the group to be more 
productoriented this includes signiﬁcant effort 
on delivering outstanding productivity the core 
principles of lean manufacturing can be applied 
to our industry and they will be implemented 
going forward by way of illustration we have 
started to develop an improved set of ‘daily 
management’ tools to measure and increase 
the operational performance of our facilities 
these will be rolled out across the group and 
will ensure that we really are ‘making more from 
waste’ our productivity focus is particularly 
important given that solid waste volumes are 
currently suppressed by the macroeconomic 
environment 





18 


our second ad facility in the uk is 
a 48000 tonnes per annum facility 
which will generate up to 2mw 
of renewable energy  shanks group plc
annual report  accounts 2012


we have a decentralised structure that enables 
local entrepreneurial management teams to 
deliver responsive and innovative services 
to our customers over recent years we have 
sought to foster this cultural advantage whilst 
developing a stronger central framework to 
deliver groupwide beneﬁts to drive this the 
group’s executive committee excom has 
driven a wider range of initiatives for example 
we have started a centrally coordinated 
procurement project and have increased 
crossborder trading activities in addition 
a new overall shanks brand was successfully 
rolled out across the group including in the 
netherlands where there have been only 
local brands in the past 
in addition to recent improvements we still have 
many opportunities to leverage further our 
group capabilities technologies and scale we 
are escalating our overall focus on people and 
capability development we are also developing 
the organisation to be more closely aligned with 
our core activities to this end henk kaskens 
the managing director of our organics business 
was recently appointed to the group excom 
and now reports directly to me in addition 
we are targeting further synergies from across 
the group and announcements will be made 
as our plans develop during the year 
chief executive’s statement










  the group executive committee meets monthly and the permanent 
members include the group chief executive the group finance 
director and the managing directors of the netherlands belgium 
the uk and since may 2012 the managing director of orgaworld 


100000 tonnes per annum ad and 
300000 tonnes per annum waste 
water treatment shanks group plc
annual report  accounts 2012



over the years shanks has delivered signiﬁcant 
value from bolton acquisitions in march 2012 
this continued with the acquisition of the 
dutch glass recycling business van tuijl 
this acquisition expands our capabilities in 
an important recyclate market and complements 
our existing operations we have clear plans to 
grow van tuijl and the business is off to a strong 
start under our ownership 
looking ahead we will continue to use 
acquisitions to strengthen our core businesses 
we believe buying and integrating bolton 
businesses in the current environment can 
accelerate the group’s proﬁtable growth 
our balance sheet provides us with this strategic 
ﬂexibility and we are actively looking for 
appropriate opportunities that meet our target 
returns on investment in parallel we are also 
assessing the group’s current portfolio to 
identify noncore businesses this process 
is ongoing but has already highlighted some 
small regional operations that might create 
more value under alternative ownership 

we have four core activities solid waste 
hazardous waste organics and uk municipal 
pfippp each of these activities has different 
demand drivers proﬁtability proﬁles and capital 
requirements we also have distinct ways in 
which we create competitive advantage in each 
of these activities at the same time all of them 
provide costeffective and sustainable solutions 
to reduce landﬁll and mass incineration they all 
‘make more from waste’ by creating products 
such as green energy recyclate commodities 
recovered fuel and organic fertilisers our 
activities are described in more detail throughout 
this report together with ‘how we win’
our portfolio of activities have the following 
key attributes 
• solid waste – productive lean business 
with leading recycling rates well positioned 
for recovery 
• hazardous waste – strong proﬁtable business 
with competitive advantage and international 
reach
• organics – growing international green 
business with proven capabilities and 
attractive economics 
• uk municipal longterm pfippp contracts – 
strong stable business with improving service 
and returns plus continued growth 
opportunities 
over the last three years the proportion of 
group proﬁt from hazardous organics and 
uk municipal has increased from 33 to around 
60 this more balanced business mix reduces 
the cyclical exposure of the group
we believe our combination of established 
sustainable businesses coupled with a renewed 
focus on growth operational excellence and 
group capability will generate signiﬁcant 
shareholder value in the years ahead 

going into 201213 we are building on shanks’ 
stable platform by accelerating and intensifying 
the execution of our strategy our markets look 
set to remain challenging in the year ahead 
to offset these macro headwinds we are taking 
action to deliver cost reductions and group 
synergies we will also continue to generate 
further returns from our ongoing investment 
programme and through a renewed focus 
on operational performance 
i believe that we are wellpositioned to deliver 
growth in line with the board’s expectations for 
201213 and that the future outlook for shanks 
group is very positive 
 
group chief executive


 • productive lean 
business with leading 
recycling rates
• well positioned 
for recovery


• strong proﬁtable 
business with 
technology advantages
• international 
experience and reach 
 • growing international 
green business with 
proven capabilities
• proﬁtable growth 
in new markets 
 • stable business with 
longterm contracts 
and improving margins 
• evolving growth 
opportunities






 innovative


2012 2011 2010 2012 2011 2010 2012 2011 2012 2011 2010




7 1


shanks group plc
annual report  accounts 2012
measuring our performance – kpis


earnings per share growth is 
considered the key indicator of the 
group’s success and is closely 
aligned to management incentives 
our measure is deﬁned as underlying 
posttax earnings for continuing 
operations only and excluding 
exceptional items ﬁnancing fair value 
remeasurement and amortisation 
of acquisition related intangibles

strong proﬁt growth and further 
reduction in the group tax rate 

as we continue to invest in sustainable 
projects our revenue from such 
activities should increase the way we 
measure this is the growth in revenue 
derived from recycling reuse diversion 
or energy recovery thereby avoiding 
landﬁll or contaminated materials

although a slight decline year on year 
revenue from sustainable activities is 
still strong at 69 of overall revenue 

to review the performance of our 
operations the key proﬁt measure is 
trading proﬁt before interest and tax 
the organic growth is deﬁned as the 
percentage excluding signiﬁcant 
acquisitions and discontinued activities 
at constant currency

strong growth coming from the uk 
and organics 
for measuring underlying business performance the group uses certain nongaap 
proﬁt measurements which are deﬁned in note 2 to the ﬁnancial statements

as we continue to invest in sustainable 
waste management infrastructure it is 
important to ensure that our target 
returns are being achieved our measure 
here is the posttax return as a 
percentage of the original invested 
capital on those projects fully operational 
and running at normal operating levels

our target is to achieve a posttax return 
of 12 to 15 once the assets are fully 
operational the initial £100m investment 
programme has been completed and for 
those projects operating at normal levels 
the return was 122 the more mature 
projects are at the top end of the range 
we measure our performance against our strategy through the use of quantitative and 
qualitative assessments the number of waste processes undertaken by the group is 
signiﬁcant with each site involved in a different range of activities resulting in a varied 
and broad range of measures there are however a number of key measures 
including recycling rates productivity and accident rates which are designated 
as key performance indicators kpis
it is a key principle to align the interests of the senior management with those of our 
shareholders and executive remuneration includes measures linked to some of the kpis 
below full details of the schemes in operation are given in the remuneration report 
a new long term incentive plan was introduced during the year post shareholder 
approval which links awards to growth in earnings per share and share price

   38 38 –38 38    38 38 –38 38   
11 11
23 23 –23 23    23 23 –23 23   
6 6
5 5 –5 5 5 5 –5 5
8  8 8 8 8 8 8 8 8 8 8 8
2 2 2 2 2 2 2 2 2 2 2
1 1 1 13    0 3 13 13 13 130 0 0 0 0 13 13 13 13 130 0 0 0 0
122 122 2012 2011 2010 2012 2011 2010 2012
113152
2011 2010



2012 2011 2010

2012 2011 2010

2012 2011 2010

shanks group plc
annual report  accounts 2012



we sustainably recycle and reprocess 
waste and get value from the products 
we make and as such the recycling and 
recovery rate is a key operational metric 
we have set the objective to have a rate 
of 80 by march 2015 the rate is 
deﬁned as tonnes of material recovered 
from processing expressed as a 
percentage of the tonnes of waste 
handled

an increase in the year to 78 and 
we remain conﬁdent that the new 
investment projects coming online will 
help us reach our longterm target 

the waste management industry is 
a known high risk sector with a high 
accident rate level health and safety is 
key with a requirement for continuous 
improvement and we have set a 
quantiﬁable longterm objective to 
reduce our more serious accident rate 
by 25 by march 2015 riddor is 
the more serious accident rate 
per 100000 employees 

the groupwide ‘action on safety’ 
initiative led by senior management 
has been instrumental in a further 
reduction of 13 in our riddor rates 
we have now achieved 16 of the 
march 2015 target of 25 

it is important to ensure that the 
portfolio is delivering appropriate 
returns and value for our shareholders 
this measurement is closely aligned 
with the performance related 
remuneration for senior management 
it is calculated as trading proﬁt 
over depreciated operating assets 
operating assets exclude core debt tax 
goodwill and acquisition intangibles

continued management of the asset 
base with improving proﬁts has led 
to a signiﬁcant increase 

conversion of waste to renewable 
energy is another key sustainability 
measure which we monitor based 
on the megawatt hours of energy 
generated

strong increase in the year as new 
organic facilities in the netherlands 
and uk are commissioned 

productivity focus is particularly 
important given that volumes in our 
solid waste businesses are currently 
suppressed by the macroeconomic 
environment the plant utilisation 
we monitor is for solid waste only 
and is deﬁned as tonnes of material 
processed as a percentage of the 
available sorting centre capacity

the decline in the year was due to 
weak economic conditions in the 
netherlands and the uk and the lower 
level of solid waste volumes available 
for processing 

sustainability and carbon issues are 
key in our industry and we are focused 
on the environmental impact of our 
operations our measure is expressed 
in tonnes and comprises both the 
beneﬁts shanks helps others achieve 
through the use of our waste derived 
fuel as well as the direct reductions 
in our own operations from initiatives 
such as energy efﬁciencies

another good performance as we 
move towards the march 2015 target 
of 13 million tonnes 
02 220 0 0 0 1 1 1 1 102 102 102 102 22 22 22 220 0 0 0 1 102 102 102 102 22 22 22 220 0 0 0
9 96 9 9 96 23 9 96 96 96 96523 523 523 523 96 96 96 96523 523 523 523
  2 2 2 2 2 2 2 2 2 2 2 2 113152 113 152 3 1 113 1 11 113 113 113 1 113 1 113 113 113 113 113 1 113 3 15 15 15 15 15 15 15 15 15 15 15 52 2 2 2 2 2 2 2 2 2 2 2 2 2 113152 3 1 113 1 11 113 113 113 113 1 113 13 113 113 113 1 113 15 15 15 15 15 15 15 15 15 15 15  2 2 2 2 2 2 2 2 2 2 2 2 2 2 113152
67 67 67 67 67 67 67 67
69 69 69 69 69 69 69 69 69 69 69
68 68 68
   74  74 74 74 74  74 74 74 74
77 77 77 77 77 77 77 77 77 77 77 77
78 78
3 00 0 0 31 31 31 31 3100 00 00 00 00 31 31 31 31 3100 00 00 00 00
30 30 3 3 3 00 00 0 0 0 30 30 30 3000 00 00 00 30 30 30 3000 00 00 00
2 2 2 2 2 2 2 2 2 2 2 26 0 0 0 0 0 0 0 0 0 0 0 0 2600 2600
3 1 1 1 13   1 13 13 13  7 7 7 3 1 13 13 13  7 7 7
3   3 14 14 14 143 3 3 3 3 14 14 14 143 3 3 3 3
152 15 1 1 1 1 1 1 1 1  152 152
0 0 07 07 07 07 74 4m 4m 4 mill ill ill illi ion ion ion 0 0 07 07 07 07 74 4m 4m 4 mill ill ill illi ion ion ion
1 1 11 1 18 illi n n o 1 1 11 1 1 1 1 1 1 18 8m 8m 8 mill ill ill illi ion ion ion 1 1 11 1 1 1 1 18 8m 8m 8 mill ill ill illi ion ion ion
1 1 1 1 1 128 million 128 million shanks group plc
annual report  accounts 2012
changing perceptions of waste in glasgow
m ma ak k king g g gm mo or r re e fr ro o om m m “glasgow mrf can process 150000 tonnes per year 
of material from both municipal and commercial 
customers whilst substantially increasing recycling 
and recovery rates”
gerry henderson  
glasgow mrf site manager
shanks new materials recycling facility mrf in glasgow is designed to achieve a 
95 recovery rate from nonsegregated general waste we sort comingled recyclate 
to extract cardboard paper aluminium glass wood and metals the remaining waste 
can then be converted into a fuel used to generate heat and power 

“we must reduce our impact on 
the local and global environment 
shanks’ glasgow facility clearly 
demonstrates that sending rubbish 
to landﬁll is increasingly becoming 
a thing of the past”
richard lochhead  
scottish environment secretary  shanks group plc
annual report  accounts 2012



metal plastic papercardboard
once sorted materials are sent to 
reprocessors where they are turned 
into new products reducing our 
dependency on virgin materials
shanks produces a range of waste derived fuels which 
are often manufactured to speciﬁc requirements and 
used by customers to offset fossil fuels
“baa are committed to reducing our carbon footprint and with 
shanks’ help we have increased our recycling and recovery 
rate to over 80 exceeding our target for landﬁll diversion”
anne maclachlan  
sustainability assurance manager glasgow airport
“saica natur uk are delighted to be working closely with 
shanks to establish a sustainable uk outlet for the cardboard 
and mixed paper generated from their mrf in glasgow”
forbes connor  
sales director saica natur uk
sorting cabin material being transported  
through the mrf

physicalautomated separation  
separating material by size  
weight and material type
eddy current separator 
separates nonferrous material 
sorting cabin 
final quality control on segregated 
processed materialﬁnal product
magnet 
separates ferrous material collect and deliver to 
waste management 
facilities
shanks activity 
when required for 
nonrecyclable output









dispose of waste 
through incineration  
or landﬁll

shanks activity 
where needed to 
secure volume
shanks group plc
annual report  accounts 2012

the primary markets in which shanks operates are set out on 
page 6 the demand dynamics our strengths in these markets 
the competitive environment and growth opportunities are 
explained below
across the world governments are urging the waste industry 
to support them in recovering more resources and energy 
from waste the driving factors behind this are climate change 
the price and security of fossil fuels and the need for society at 
large to develop sustainable waste solutions through legislation 
and ﬁscal incentives governments are forcing and encouraging 
everyone to think about recovering more resources from waste 

the chart below shows the waste management cycle and 
where we operate shanks has a distinct position in this industry 
structure and we have a reputation as a leading provider 
of sustainable alternatives to landﬁll and mass incineration 
we focus our activities on sustainable waste solutions 
and ‘making more from waste’

the market in which we operate
 paper
plastic
metal
responsible

shanks group plc
annual report  accounts 2012
in some industrial and 
commercial markets it is 
helpful to have a ﬂeet of 
collection vehicles available 
to ensure delivery of the 
base load of waste to our 
processing plants alongside 
waste from other third party 
collectors for the uk 
municipal markets a 
collection ﬂeet is less 
important as the contract 
with the municipality usually 
provides for the waste to be 
delivered to our plants we try 
to avoid highly competitive 
municipal collections unless 
backed by longterm 
contracts in organics our 
focus is on the treatment 
plants and we rely on others 
to bring the waste to us
we invest in highly automated 
sorting facilities including 
hightech separation 
processes such as automatic 
optical sorting to sort waste 
into speciﬁc recyclates and 
streams for further treatment 
examples of sorting 
processes 
• eddy current separation of 
nonferrous metals
• magnet separation of ferrous 
metals
• trommels and sieves
• depackaging
• manual sorting cabin
we process segregated waste 
streams into valuable recyclate 
products which are used by 
reprocessors to replace virgin 
raw materials we have a 
marketleading position in the 
conversion of waste to high 
caloriﬁc value fuels these fuels 
include srf solid recovered 
fuel and wood biomass both 
of which are used as a fossil 
fuel substitute by power 
generators and cement 
manufacturers our organics 
technology focuses on food 
waste and the generation of 
biogas for conversion into 
renewable energy in our 
hazardous waste sector we 
treat contaminated soils water 
and paint after treatment the 
products are either used as 
alternative sources of fuel for 
other activities such as land 
reclamation or discharged 
back into the water systems 
we have to pay to dispose 
of any nonrecycled incoming 
waste either through landﬁll or 
incineration given our strategy 
of providing sustainable 
solutions we avoid investment 
in the high capital requirements 
of mass incineration and have 
a limited investment in landﬁll
 shanks group plc
annual report  accounts 2012

the market environment

demand dynamics
this is a cyclical ‘local’ business 
linked to the macro economy and 
typically involves annual contracts 
how shanks wins
we have an entrepreneurial 
approach to customer facing 
activities and in depth knowledge 
of local markets which results in a 
strong regionalised market share 
this is complemented by a 
central framework for sharing 
technologies
competitive environment
there remains an excess capacity 
in the continental european 
incineration market although 
this does not directly impact our 
benelux businesses as we do 
not own mass incineration assets 
it does have a signiﬁcant indirect 
impact and is exerting downward 
pressure on overall gate prices 
we have taken action to mitigate 
this through management of costs 
and maximising the efﬁciency 
of our plants we expect that this 
over capacity will gradually be 
removed from the system as the 
economy recovers waste imports 
increase and less efﬁcient plant 
is retired 
growth opportunities
the markets in the benelux are 
well developed with regard to 
recycling rates and diversion 
from landﬁll this knowledge 
is shared with our uk business 
as the uk market implements 
eu legislation on recycling 
and diversion rates

demand dynamics
the market is characterised by 
international ‘clean up’ projects 
and longterm service contracts 
how shanks wins
we have worldclass treatment 
capability with bestinclass 
equipment and plant productivity 
and deliver outstanding service 
levels our principal hazardous 
waste subsidiary in the 
netherlands atm is the market 
leader in its ﬁeld for the treatment 
of contaminated soil and waste 
water recent investments in 
the waste water facilities have 
increased our storage capacity 
to match the increased demand 
the hazardous waste businesses 
work with the solid waste 
businesses under the banner of 
total care to provide customers 
with a combined solution for 
their waste needs
competitive environment
this is a specialised market with 
a small number of players given 
the level of investment required to 
establish competitive operations
growth opportunities
although the business is located 
only in our core countries we do 
seek to do business on a wider 
scale for example at our atm 
facility soil from many parts of the 
world is treated before being used 
for land reclamation in the 
netherlands

demand dynamics
the market covers longterm 
municipal contracts together with 
mediumterm industrial contracts 
typically linked to the food sector
how shanks wins
our organics business 
orgaworld has signiﬁcant 
experience in the design build 
optimisation and operation of 
organics installations we offer 
a wide scope of processing 
techniques for the total range 
of organic waste focusing on 
traceability and sustainability 
competitive environment
the number of players in the 
uk market offering organic 
processing has increased over 
the last few years there is limited 
competition in north america 
where our competitors are unable 
to achieve stringent technical 
requirements
growth opportunities
there is an increasing focus 
on organics as a technology 
the north american markets 
are evolving rapidly and enforcing 
an increasing level of regulation 
in the drive for sustainable 
solutions to reduce the level 
of waste going to landﬁll

demand dynamics
the market is based on contracted 
volumes secured as part of 20 
to 25 year contracts  
how shanks wins
a leading player in the uk private 
finance initiative pfipublic 
private partnership ppp market 
providing an outstanding 
operational service to the local 
authorities shanks had the ﬁrst 
mbt plant in the uk which has 
been operational since 2006 
and we are now running ﬁve 
operational contracts working 
on the delivery of the infrastructure 
for one contract and preferred 
bidder for another contract
competitive environment
the pfippp market remains 
active as a number of local 
authorities still need to enter 
the process the funding market 
is becoming more difﬁcult with 
selfﬁnancing becoming more 
advantageous
growth opportunities
we adopt a disciplined approach 
to contract bidding there is 
the opportunity for technology 
leverage in particular with 
organics

shanks has a distinct position amongst other 
large waste competitors due to its sustainable 
activities compared with landﬁll and mass 
incineration  shanks group plc
annual report  accounts 2012
products and technology

shanks’ operations sustainably recycle and 
reprocess waste into valuable products we get 
value from the products we make but also have 
to pay to dispose of any nonrecycled incoming 
waste our recycling rate is therefore the critical 
operational metric – both for our economics 
and our sustainable strategy going forwards 
we are reorienting the group to be more 
productfocused this includes signiﬁcant effort 
on driving productivity and on delivering 
outstanding operational performance
the key products we produce throughout 
the group are shown opposite 

shanks has proven capability and technological 
expertise and is a marketleader in implementing 
such technologies as anaerobic digestion ad 
mechanical biological treatment mbt and the 
production of high caloriﬁc value fuel from 
waste our enhanced central framework is 
leading to greater coordination in this area as 
expertise in technologies is shared throughout 
the group
the key types of technology we use throughout 
the group are shown on page 26

the programme of signiﬁcant strategic 
investments is key for the future development 
of the group our programme is broadly 
balanced with no single project over £20m 
but it is focused on the higher growth territories 
of the uk and canada and focused on recycling 
and organics facilities given our strong balance 
sheet and cash ﬂow we are conﬁdent that this 
programme can be funded and gearing kept 
within our target of 25 times ebitda our 
investment criteria is to achieve an overall post 
tax return of 12 to 15 once the assets have 
reached normal operating capacity which is 
usually achieved in less than three years
the ﬁrst phase of our investment programme 
has reached the end of its investment cycle 
the annualised posttax return for the year to 
march 2012 for those projects fully operational 
was 122 and 67 for those still ramping up 
we continue to make good progress with the 
second £150m phase of which circa £65m 
of projects are underway


 electricity for national 
grid or local industry 
plus heat for municipal 
services 
electricity price
green certiﬁcates


fossil fuel substitute 
for range of industrial 
applications 
eg cement kilns 
coal and oil price 
linkage


substitutes for virgin 
materials in papercard 
plastic metals and 
nonferrous production 
global recyclate 
prices



range of agricultural 
commercial and 
industrial applications 
local fertiliser 
demand
soil aggregate 
prices shanks group plc
annual report  accounts 2012




sorting centres use rudimentary techniques to separate ic and cd waste into different 
fractions for onward transfer to more specialised processing centres such as materials 
recycling facilities mrfs



mrfs use a combination of advanced optical mechanical and manual sorting to separate 
comingled waste streams by shape dimension colour and material type to separate 
iccdmunicipal recyclates into various materials to feed established recycling markets
shanks operate a large number of mrfs across the group




mbts use a combination of mechanical and biological treatment to dry stabilise and sort 
municipal solid waste msw into various materials to feed recycling markets and solid 
recovered fuel srf for energy generation as a replacement for fossil fuel shanks works 
in partnership with sistema ecodeco to deliver mbts in the uk the process uses naturally 
generated heat from the degradation of the organic fraction within the msw prior to mechanical 
sorting into various recyclates and srf shanks is the sole waste management provider 
able to use ecodeco technology in the uk




ad enhances the natural breakdown in the absence of air of organic material from ic and 
municipal sources to generate biogas for conversion into renewable energy and digestate 
for use as a nutrient rich soil conditioner
our organics business orgaworld has signiﬁcant experience in the design build and 
operation of installations and offers a wide scope of processing techniques for the total 
range of organic waste focusing on traceability and sustainability


composting enhances the natural breakdown in the presence of air of organic material 
from ic and municipal sources to generate a quality pathogen free soil enhancer
conditioner for use in landscaping andor agriculture
this is a key technology in the growing canadian market where there is limited competition




there are three principal processes at the atm plant in the netherlands
• thermal treatment of contaminated soils
• biological and physiochemical treatment of waste water
• pyrolysis of paint waste
atm is one of the world’s largest single site hazardous waste facilities in addition the 
group operates industrial cleaning services to the oil and gas petrochemical and other 
large industries together these businesses can offer the proposition of total care services 
for hazardous waste offering cleaning logistics handling management and waste 
treatment solutions

products and technology 49 23 11  1 0 7
shanks group plc
annual report  accounts 2012

commerical waste inputs are processed using a combination of optical mechanical and 
manual sorting to separate comingled waste streams the diagram shows the different 
types and percentages of products recovered from the processes input
compost bio 
stimulators 
bio 
fertilisers
biogas plastics heat
video online wwwyoutubecom
theshanksgroup
v
shanks group plc
annual report  accounts 2012

products and technology

ad is the process where through biological activity mixed organics and residual waste are 
converted into useful products the biogas generated is converted into clean renewable 
energy and the residual material is rich in nutrients and can be used as fertiliser






treatment output shanks group plc
annual report  accounts 2012
there are a number of external factors that inﬂuence the success 
of our business and future earnings growth these drivers are set 
out and discussed below

it is recognised that more sustainable forms of waste management 
have a role to play in accelerating the move to a low carbon 
economy in short we have to make more from the waste we create

the driving forces behind our industry are climate change 
greenhouse gas emissions fossil fuel dependency and society’s 
need to manage waste without damaging the environment 
biodegradable waste in landﬁll is a major source of methane 
emissions to the atmosphere methane is a potent greenhouse 
gas with 21 times the impact of a carbon dioxide emission of 
the same mass 
governments globally are responding with legislation and ﬁscal 
incentives to drive change 

waste management is an essential service in the countries 
where the group operates there is a high level of regulation 
and enforcement and increasingly it is becoming a sophisticated 
industry using advanced technologies 
the speciﬁc legislative drivers both regulation and environmental 
taxation are 

this is the key measure that is driving change in the industry 
this tax is used by many european states to divert waste from 
landﬁll to more environmentally acceptable options such as 
recycling and energy recovery the uk government has 
announced that landﬁll tax rates will increase by £8 per tonne 
per annum to £80 per tonne by 201415 and moving towards 
rates in the benelux of circa €90 per tonne the level in the uk 
from 1 april 2012 was £64 per tonne

the dynamics of the energy markets has led to increased 
pressure to ﬁnd alternative fuels and waste is one solution 
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 for example wood paper and other vegetable matter
external drivers








landﬁll tax


green electricity certiﬁcates
carbon credits
eu national and local incentives
reduce greenhouse 
gas emissions
preserve natural resources
limit fossil fuel dependency
protect local environments

 open
shanks group plc
annual report  accounts 2012










further to the increased cost of fossil fuels and 
the need to limit our dependency waste derived 
fuels can be exempt from carbon emissions 
calculations thereby increasing the level of 
interest in this alternative source


in the eu the level of environmental regulation is 
high however unlike trade regulations there are 
no common standards for waste management 
eu legislation sets minimum standards which 
member nations must meet each member state 
is however free to exceed these standards 
in order to follow their own political and 
environmental agendas
the revised european waste framework 
directive published in november 2008 sets 
minimum energy recovery criteria and 
introduces statutory recycling targets for 
member states to achieve by 2020 both 
for municipal waste 50 and construction 
and demolition waste 70
biodegradable waste a key component of 
municipal waste is a major source of methane 
emissions from landﬁll and a key objective of 
the european landﬁll directive is to signiﬁcantly 
reduce the landﬁlling of biodegradable waste 
based on 1995 levels the directive requires a 
25 reduction by 2010 50 by 2013 and 65 
by 2020 the directive also aims to substantially 
restrict other types of polluting waste that may 
be landﬁlled
the canadian market is evolving rapidly and 
enforcing an increasing level of regulation as in 
europe there is a drive for sustainable solutions 
and there is an increasing focus on organics as 
a technology
restrictions on the export of waste from canada 
to the united states and provincial legislation 
such as the waste diversion act and green 
energy act in ontario are providing a similar 
framework for stimulating the movement of 
biodegradable waste out of landﬁll to 
sustainable alternatives


underpinning these key legislative drivers is the 
level of industrial activity approximately 79 of 
the group’s activities are derived from industrial 
and commercial ic and construction and 
demolition cd activities there is a relationship 
between the level of industrial activity and the 
amount of waste generated
historically the drivers of waste volumes were 
well identiﬁed and volumes tracked industrial 
output and consumption or population growth 
more recently however there has been a 
decoupling of this linkage there are several 
reasons for this
• potential lag effect as certain sectors rebound 
at different rates
• acceleration in waste prevention in certain 
sectors for example in the uk
• cost cutting initiatives in many companies 
as a result of the economic crisis
consequently underlying waste volumes are 
becoming less directly linked to gdp growth 
and industrial activity despite this there are 
still strong growth opportunities for those 
companies that position themselves with 
sustainable technologies that process the 
waste that is very rapidly being diverted away 
from landﬁll
the cd market has a long cycle resulting 
in a time lag between movements in gdp 
and the amount of cd waste cd activity 
throughout the group mirrors the cyclical 
nature of these underlying markets the recent 
pronouncements from euroconstruct in 
november 2011 stated that the european 
construction market will continue to register 
negative growth in 2012 with a slow return to 
growth in 2013 and 2014

external drivers shanks group plc
annual report  accounts 2012
in addition to volumes of waste available 
macroeconomics also affects pricing of waste 
inputs and the market value of recovered 
materials recyclates income generated 
from the sale of recyclates represents circa 8 
to 10 of the group’s solid waste revenue 
the key recovered materials include paper 
metals wood glass and rubble when end 
market prices for these commodities are high 
the gate fees for receipt of waste from 
customers will be lower as the customer 
is aware of the value of the materials in the 
waste delivered and vice versa
limited capital resources means that 
governments and councils are currently looking 
for partners to work with them to provide 
solutions to their waste requirements 
in the uk municipal market we are detecting 
early signs of a more difﬁcult funding 
environment together with local authorities 
planning for shorter term contracts and less 
capital intensive facilities 
the inter relationship between these drivers is 
explained further in our business model on the 
following pages

separating material by size and weight shanks group plc
annual report  accounts 2012

our business model – how we make money


the fees which customers 
pay us for handling their 
waste 

the amount of waste handled 

management actions to 
reduce our operational costs 

the price shanks pays to dispose of residue 
waste after reprocessing 


income generated from the sale of products 
from the processing of waste including 
green electricity recovered fuel recycled 
commodities fertiliser soil and aggregates 

the external operational 
costs of running our 
business 


our investment programme 
in sustainable opportunities 
that build on our capabilities 
and generate superior returns

the market value of  
recovered materials  
including paper metals  
wood glass and rubble 

we are focused on running 
our plants as efﬁciently as 
possible 
as one of the leading providers of sustainable waste management solutions we 
generate revenue from the gate fees which customers pay us for handling their 
waste and the sale of outputs from processing this waste including recyclates and 
energy the success of our business model is driven by a combination of external 
and internal factors which are set out below


external drivers internal drivers shanks group plc
annual report  accounts 2012


we focus on producing higher value products including energy and 
optimising the outputs from our facilities by reducing disposal costs 
we call this optimising the mass balance 
our success in this area is driven by a combination of internal factors 
including our use of technology and external factors including 
macroeconomic conditions 
read more 
about our 
marketplace 
on page 22
read more on 
our strategy 
on page 3





we manage the business within the context of these external drivers to maximise proﬁtable growth 
in the areas we operate in we actively pursue a policy of maintaining customers and their volumes 


management actions which focus 
on support function efﬁciency are 
continually taken to lower the cost 
base of the business savings are 
targeted across a number of areas 
including procurement 


our investment criteria is to achieve 
an overall posttax return of 12 to 
15 once the assets are fully 
operational which is usually two to 
three years after commissioning the 
ﬁrst phase £100m of our investment 
programme has reached the end of 
its investment cycle and target rates 
are being achieved we have 
developed project management 
capabilities and operational metrics 
to ensure both operational and 
ﬁnancial delivery the second 
programme £150m is well underway 

the core principles of lean 
manufacturing can be applied 
to our industry we have started 
to develop an improved set of 
daily management tools to measure 
and increase the operational 
performance of our facilities 
we take action to review the efﬁciency and cost of all support functions and to deliver our growth 
strategy by investing in sustainable waste management infrastructure together with efﬁcient running 
of our existing uk pfippp projects
in normal times gate fee increases 
offset cost inﬂation this is not the 
case during a recession 
if recyclate prices increase there will 
be pressure on us to reduce the gate 
fee similarly if recyclate prices fall we 
have more opportunity to increase 
gate fees
our disposal costs are someone 
else’s gate fee so when gate fees 
are falling we expect to make 
savings on disposal costs 
as explained in the previous section gate fees cost inﬂation recyclate prices and volumes  
are largely driven by external factors including regulation and macroeconomic conditions
these external drivers are interrelated which means they cannot be considered in isolation  
the key relationships between these drivers are set out below shanks group plc
annual report  accounts 2012
our culture and people



the aim of the framework is to improve our 
execution ability and to ensure experience 
and good ideas are shared across the group 
operations are managed through the group 
executive committee comprising the group 
chief executive the group finance director 
and the country managing directors
the main elements of this are collaboration 
communication performance management 
project management ﬁnancial discipline 
risk management and talent development 
recent examples of these initiatives include
• in the netherlands a more centralised 
management of plant utilisation
• a groupwide procurement initiative 
which will deliver savings over time
• the refreshed and more consistent use of 
the shanks brand which has been launched 
across all of our operations this year
• the use of engineering experts from one 
country to assist in the development of new 
plants in another country
• the initial phase of the implementation of a 
groupwide management information system 
which is allowing more direct comparisons 
of ﬁnancial and operating metrics across 
the differing businesses

at shanks we are committed to maintaining 
the highest standards in everything we do 
one of the key strengths of shanks is the 
well developed entrepreneurial culture 
of the individual businesses which leads 
to responsiveness and innovation for all 
of our stakeholders 
underpinning this entrepreneurial culture is 
a programme to develop an enhanced central 
framework that delivers the beneﬁts of being a 
large group this central framework is leading 
to greater coordination which has and will 
continue to deliver ﬁnancial beneﬁts and 
improved risk management 
in both our belgian and dutch operations we 
have taken signiﬁcant steps to operate more 
as a single business rather than a federation of 
companies in belgium this has been facilitated 
by a management reorganisation that saw the 
appointment of regional directors and a national 
accounts team in the netherlands the 
management structure was rationalised to 
create a smaller strategic executive group 
steering the overall management of the country 
and coordinating activity 



• responsible – we recognise our obligations to our fellow employees 
the environment and the communities in which we operate and can be 
trusted to do the right thing
• innovative – we aim to create an environment which encourages and 
supports an entrepreneurial spirit
• straightforward – a ‘no nonsense’ approach means we do what we say 
we will do empower our people to make decisions and are easy to do 
business with
• open – a transparent approach means that we are able to maintain high 
professional and ethical standards and internally our open culture enables 
us to beneﬁt from shared knowledge and experience shanks group plc
annual report  accounts 2012

shanks is a service business and our employees 
are the foundation of our success our values 
are set out opposite and all of our employees 
are encouraged to live these values on a daily 
basis support and training is given to ensure 
these values are maintained
it is also a key focus that we ensure our people 
are safe there is signiﬁcant effort in ensuring 
not only that health and safety practices are 
complied with but our overall attitude to safety 
is second to none this is applied at all levels 
of the organisation including reviews of 
performance at our monthly country review 
meetings group executive committee and 
the board safety visits with formal follow 
up processes are conducted by senior 
management as well as the health and safety 
team we are pleased to report as set out on 
page 40 that as a result of our heightened focus 
in this area our accident rates have reduced 


our goal is to recruit individuals who will perform 
well and will ﬁt with shanks’ values we aim to 
ensure that all of our people are fully trained to 
perform their duties and in addition have in place 
development processes and structures to ensure 
they have progressive careers with shanks 
as the group develops and in particular as 
part of the central framework referred to 
we will enhance our leadership development 
programme
the group is an equal opportunities employer 
and full and fair consideration is given to 
applications from and the continuing 
employment career development and training 
of disabled people a culture of twoway 
communications is actively promoted and trade 
unions works councils and other employee 
groups are involved wherever appropriate 
to ensure continuing employee satisfaction 
and wellbeing shanks has undertaken 
employee opinion surveys in its three main 
countries of operation and from these surveys 
has produced action plans aimed at 
improving employee engagement and 
retaining its competitive advantage in the 
employment market






 4000 


also launched in the year was a new internal magazine 
‘shanks matters’ which is aimed at keeping staff informed 
of group as well as national initiatives interviews and 
stories of interest safety check list
shanks group plc
annual report  accounts 2012

marcel koen is a director of vliko one of the major 
recycling operations in the netherlands and has worked 
for the company since 1998 marcel believes that there 
are two reasons for vliko’s success in working with 
household names such as unilever and heineken 
“firstly we are extremely close to our customers and take time 
to understand their ambitions and processes increasingly we 
have to assess our customers’ processes so we can advise 
on how these may be adjusted to increase recycling rates 
for example in 2007 we established a joint client and shanks 
employee group for one of our major national accounts 
when we started this group the customer’s recycling rate 
for their waste was 80 – ﬁve years later it is now 98”
secondly marcel believes shanks’ unique position in the 
netherlands creates a competitive advantage
“customers stay with us and join us because shanks is the only 
major waste management company in the netherlands which 
has chosen to expand their recycling infrastructure rather than 
develop incineration capacity” 
on a more personal note marcel continued “i am convinced that 
recycling is the best option we must ensure future generations 
can live in a healthy environment and shanks’ goal to make more 
from waste supports this”
evidence of this partnership approach and unique strategy is the 
recent extension of a material sorting line with optical sorting 
technology this facility can automatically separate plastics 
and paper from general waste providing another opportunity 
to increase the amount of material that is recycled and diverted 
from disposal “this was done directly to serve the needs of 
our customers” commented marcel
shanks’ reputation is 
built on more than 
what we deliver to our 
customers the people 
who work at shanks are 
committed to changing 
the way people think 
about waste three of 
our people explain how 
they help the group 
achieve its goals on 
a daily basis

delivering our goals through our people responsible
open
innovative
straight forward
shanks group plc
annual report  accounts 2012
“ i am convinced that 
recycling is the best 
option we must ensure 
future generations can 
live in a healthy 
environment and shanks 
goal to make more from 
waste supports this 
objective”
  marcel koen 
director of vliko
“ shanks is all about 
sustainable waste 
management and the more 
information on what this 
means that we can provide 
to community stakeholders 
the better”
  abi cox 
waste education  
and minimisation ofﬁcer
“ good companies like 
shanks understand the 
positive effects safety 
can have on employee 
loyalty and productivity”
  martine pottier 
safety adviser

martine pottier is safety adviser at the roeselare facility 
in belgium and is also a member of the group health 
 safety committee she has worked for shanks 
for 12 years and believes that shanks is committed 
to improving its health and safety standards
“shanks understands the positive effects safety can have on 
employee loyalty and productivity if an organisation cares about 
its people then it must ensure their health and safety is a top 
priority” commented martine
“of course we are not perfect and must always try to improve 
the twelve key safety essentials we released last year are a good 
example of improvement – clear messages for everyone on 
common safety standards”
on the topic of what she brings personally to shanks safety effort 
martine noted “it is always difﬁcult to prove the beneﬁts of good 
safety standards but communicating with and gaining the 
involvement of employees is key – this is where i can make a 
difference as the link to ensure safety is embedded in the way 
we work”
a typical day for martine will see her arrive at work having given 
colleagues a lift as part of their carpool scheme “this is better for 
the environment and fuel costs” she highlights she will then meet 
with any contractors working on site to agree work plans before 
spending some time in the ofﬁce to plan activities including health 
assessments and training martine’s advice is not just limited to 
shanks’ sites and she also has to consider customers health 
and safety
martine commented “i often have meetings with customers 
such as those we will be doing industrial cleaning tasks for 
a typical issue may be fall protection while doing a job i need to 
ensure that our employees will be safe and that the customer is 
not at risk – safety is part of the service we provide to customers” 

abi cox is waste education and minimisation ofﬁcer 
for the derbyshire operations in the uk abi has worked 
for shanks for 18 months and is clear about her role 
“the work i do allows us to give understandable and accurate 
information to community stakeholders and dispel any myths 
about recycling and recovery this communication is twoway 
not only can i give information out i can also act as the conduit 
through which the community can make its feelings known to 
shanks” abi said when asked about the work she does
“a large part of my role is educational from giving talks at schools 
and training teachers to attending road shows and presenting to 
local groups the youngest age group i give talks to are ﬁve year 
olds and the oldest person who has attended one of my 
presentations was 102 years old”
commenting on the value she brings to shanks abi said 
“my entire job is about community relations and stakeholder 
engagement most people understand that landﬁll is not an option 
anymore but are unsure about what to replace it with shanks is 
all about sustainable waste management and the more effectively 
we can communicate what this means to community 
stakeholders the better
“there is no typical day for me but it might start with loading 
the car with educational resource equipment and packs before 
arriving at a school for a series of lessons focusing on composting 
or an introduction to reducing reusing and recycling wastes
“evening work is a given such as presentations to local 
community groups people are always interested in what 
happens to their waste one evening a person attending a 
presentation brought along a bag of waste and asked me to 
describe what the best waste management route for each of the 
items in their bag would be – an unusual but effective approach” shanks group plc
annual report  accounts 2012
the issue of carbon is probably the highest 
proﬁle environmental concern today for many 
organisations their response to carbon and 
climate change is in energy efﬁciency and this is 
a valid approach for shanks the issue is more 
complex a recycling or recovery plant because 
of the equipment required will consume more 
energy than a landﬁll site however recycling 
and recovery plants produce products which 
have a carbon beneﬁt which outweighs the 
additional energy consumption required 
a landﬁll site does not produce these beneﬁts 
and emits methane which is a greenhouse gas 


while responsibility for delivering sustainable 
performance rests at an operational level our 
corporate responsibility committee and 
dedicated group health  safety committee 
ensure we actively drive sustainable practices 
be these in the areas of the environment 
employee wellbeing or community relations 
reporting directly into the group’s executive 
committee these committees staffed by senior 
specialists from across the group provide the 
supportive environment within which sustainable 
practice can ﬂourish 

environmental sustainability is considered in 
terms of reducing the use of nonrenewable 
resources avoiding or offsetting environmental 
emissions in particular those relating to carbon 
and climate change and sustainable energy 
use these areas are all core to shanks we take 
waste and make more from it by turning it into 
products and energy our recycling facilities turn 
waste into recyclate products which are used 
to replace virgin raw materials and our recovery 
operations produce renewable fuels which 
replace fossil fuels through our activities 
we support society’s move to a more 
environmentally sustainable future
in the past year we have brought on line more 
than 300000 tonnes of entirely new waste 
recycling and recovery capacity aimed at fulﬁlling 
our strategy to ensure that we continue to 
implement our strategy we have set ourselves 
publicly available and quantiﬁed objectives in 
the areas of recycling and recovery rate and 
carbon avoidance details of these objectives 
and our progress towards them can be found 
in our corporate responsibility reports
sustainability is embedded in all that we do we measure our 
performance in three areas the environment employee health 
and safety and the wider community we have set ourselves 
key performance indicators for each of these areas









delivering sustainable performance
we have set ourselves three longterm 
key corporate responsibility objectives 
to achieve by the end of march 2015 
• increase the potential carbon avoidance 
facilitated by our activities to more than 
13 million tonnes per year
• increase our recycling and recovery rate 
to more than 80
• reduce our more serious accident rate 
by 25  shanks group plc
annual report  accounts 2012



kettering mrf is just one of our new 
facilities commissioned and brought 
on line over the past year the facility 
accepts commercial waste and uses 
hightech separation processes such 
as automatic optical sorting to produce 
quality recyclate products which are 
used by reprocessors to replace virgin 
raw materials 2012 2011 2010


2012 2011 2010

2012 2011 2010

shanks group plc
annual report  accounts 2012




our key performance measures for environmental sustainability are our 
recycling and recovery rate and the carbon avoidance our facilities provide 
through their activities we also measure our environmental sustainability 
performance across a much wider range of measures from full carbon 
footprints by country of operation and signiﬁcant emissions from our facilities 
full details of these wider environmental measures and other measures 
referred to below can be found in our annual corporate responsibility 
report and wider environmental indicators document both of which are 
available on our website



health and safety is our primary concern and we are actively managing and 
measuring our accident rate waste management is a highrisk sector with 
accident rates equivalent to those found in the construction and agricultural 
industries – so ongoing focus is required in this area
beyond these basic measures of health and safety performance we have 
a wider commitment to our people to their development and their right 
to work in an environment which is free from discrimination and where 
their talents are used to the full all of our people need to be competent 
in the tasks they perform to ensure that we both achieve our sustainability 
targets and comply with the varied and strict regulation in the waste 
management industry 

delivering sustainable performance
s
13 
74 74 74 74 74 74 74 74
 77 77 77 77  77 77 77 77
78 78
310 310 310 310 3 00 0 0 0 0 310 310 310 310 3 00 0 0 0 0
300 300 300 3000 0 0 0 300 300 300 3000 0 0 0
2600 2600
0 074 0 074 074 74 il mil mil milli lion lion lion 0 074 0 074 074 74 il mil mil milli lion lion lion
1 1 118 118 118 18 il mil mil milli lion lion lion 1 118 118 118 18 il mil mil milli lion lion lion
128 million 128 million responsible
open
innovative
straight forward
wwwshanksplccom

shanks group plc
annual report  accounts 2012



sustainable waste management operations provide a beneﬁt to society 
we are more than aware that for those people living in the communities 
near to our facilities these beneﬁts may be obscured if we fail to control the 
potential nuisance from our sites such communities are a key stakeholder 
group for us and it is for this reason that the number of complaints received 
is a key performance measure for shanks
we also have many more stakeholder groups including shareholders 
customers and environmental groups we take communication with these 
groups seriously and have a structured approach to engaging with them 

for more information about our commitment to sustainability details of our 
policies and approach to environmental people and community issues 
and on our corporate responsibility performance please read our annual 
corporate responsibility report and associated documents which can 
be found at 


s32
 in the year to march 2012 shanks group plc
annual report  accounts 2012
risk management framework

the main elements of the risk 
management process are as follows 
• the schedule of matters reserved 
for the board and its adherence 
ensures that all signiﬁcant factors 
affecting group strategy structure 
and ﬁnancing are properly managed 
by the directors
• the group risk management 
framework ensures that each business 
annually assesses the risks it faces 
and its monitoring and control of those 
risks the output of this process is a 
summary of all signiﬁcant strategic 
operational ﬁnancial and compliance 
risks mitigating controls and the action 
plans necessary to reduce risks to a 
level deemed appropriate by the board 
these are reviewed by both country 
management and the board to 
ensure the appropriateness of the 
risks identiﬁed and the controls 
and action plans reported 
embedding risk management 
processes into the daytoday running 
of the business is important if it is to be 
effective the following requirements 
help ensure the effectiveness of the risk 
management framework
• involvement of an increasing number 
of managers across the group in 
assessing risks and producing the 
risk register in each country 
during the year a risk committee was 
established reporting to the group 
executive committee to revitalise this 
process by ensuring more effective 
input by operational managers
• a requirement that an enhanced risk 
assessment is completed for all major 
capital requests the risk template 
covers ﬁnancial and commercial 
assumptions reputational risk plus 
additional businessspeciﬁc risks to 
ensure all threats to achieving the 
stated returns are fully considered 
before any investment is made
• the top risks in each country are 
discussed at the monthly country 
review meetings to help monitor risk 
mitigation actions
as well as being embedded in the major 
decisionmaking processes involved 
in delivering the group’s strategy 
speciﬁcally in relation to investment 
projects and infrastructure development 
and acquisitions risk management 
is also embedded in the daytoday 
management of operations including 
health safety and environmental 
compliance where there is regular 
monitoring auditing and reporting of 
procedures and controls more details 
regarding the kpis in these areas are 
set out on pages 38 to 41
  further information on the board’s 
assessment of the effectiveness of internal 
control can be found on page 73
shanks group’s approach to risk management is governed by its risk management framework
the board of directors has overall responsibility for the group’s system of internal control and 
risk management and has established a continuous process in relation to the identiﬁcation 
evaluation and management of the signiﬁcant risks faced by the group in compliance with 
the uk corporate governance code this process has been in place for the ﬁnancial year 
ended march 2012 and to the date of approval of this report and is in accordance with 
the turnbull guidance




• manage risk to a level acceptable 
to the group board
• maximise the achievement of our 
business objectives by managing 
our risks and opportunities across 
the group
• make sure that the fundamentals 
of good risk management are 
incorporated into decisionmaking 
at all levels ensuring better 
anticipation of opportunities to 
alleviate potential losses and 
maximise potential gains and early 
warning of signiﬁcant problems 
given to senior management impact on business
likelihood of risk occurring
low medium high

 low medium high
 shanks group plc
annual report  accounts 2012

the main focus during the year has been the 
continued quest to ensure that risk management 
is ﬁrmly embedded into the daytoday running 
of the business 
the establishment of a risk committee is aimed 
at providing a better link between group and the 
operating companies will afford a better risk focus 
at the local level and help ensure that more 
operational managers have an input to the risk 
identiﬁcation and mitigation process this process 
has been instrumental in the identiﬁcation of new 
risks facing the group as detailed below
ensuring that risk management is ﬁrmly 
embedded in the capital allocation process was 
the reason behind the introduction of a more 
rigorous investment authorisation process 

three new major risks have been identiﬁed this year 
• plant availability and insurance given 
inﬂationary risk and the increasing number 
of capitalintensive activities as a result of 
the ongoing investment programme plant 
availability and insurance is recognised 
as an emerging risk to the group 
• fuel pricing also treated as a growing risk 
is energy consumption which reﬂects the 
ongoing price inﬂation of all forms of energy 
used across the group 
• succession planning effective succession 
planning and the continued ability to retain 
and replace key senior managers is also 
recognised for the ﬁrst time 
there are controls and processes in place to 
adequately mitigate these new risks these are 
explained more fully on pages 46 and 47  
product quality listed last year is no longer 
included as a key risk due to management 
actions effectively mitigating this risk with 
product quality being consistently monitored
as the importance of longterm contracts to 
the group increases in the form of pfi and ppp 
initiatives so it is expected that the potential 
impact on the business in terms of risk naturally 
increases also the existing procedures 
effectively mitigate this increasing risk
with increasing amounts of capital investment 
scheduled it is to be expected that the risks 
associated with the management of these 
projects will also rise in monetary terms it is for 
this reason that the enhanced capital authorisation 
process has been implemented and an updated 
postinvestment review programme will be rolled 
out in the coming year 
financial risk has increased due to the instability 
of the euro 


1 waste volumes
2 financial risk
3 marketlegislative drivers
4 longterm contracts
5 price competition
longer term risks
shorter term risks
 6 project management
 7 succession planning
 8 plant availability and insurance
 9 fuel pricing
10 she safety health environmental

















 shanks group plc
annual report  accounts 2012



1 – waste volumes
the inability to attract sufﬁcient waste 
volumes due to external economic factors 
including over capacity of incineration in the 
netherlands limiting the availability of waste 
by commercial and municipal customers 
if facilities are working at below full capacity 
there is the likelihood of increased unit costs
• regular reporting and monitoring of 
volumes both at local and board level 
through the use of performance measures
• dedicated sales teams
• innovative action taken to increase volumes 
through the sourcing of new waste streams 
such as waste importation into the 
netherlands and increasing presence in 
household waste markets in belgium
• reorganising the processing and disposal 
of waste to optimise asset utilisation and 
reduce costs with a higher focus on energy 
production
no change due 
to the continuing 
macroeconomic 
environment

principal risks and uncertainties

  invest in new sustainable opportunities that build on 
our core capabilities and generate attractive returns
 macro market drivers 
  deliver outstanding operational performance 
from existing businesses and investments
 regulatory and legislative
  develop worldclass capabilities and technologies 
in a cohesive group culture
 economic pressures and limited capital
  actively manage shanks’ portfolio and use bolton 
acquisitions to accelerate proﬁtable growth shanks group plc
annual report  accounts 2012

4 – longterm contracts
the group enters into longterm contracts 
with municipalities in the uk including pfi 
contracts the benelux countries and 
canada entering into unfavourable contracts 
will potentially subject the group to low 
margins or contract losses for many years
• selective bidding process
• detailed risk assessments for 
all major contracts
• authorisation matrix requiring appropriate 
senior management signoff
• of total revenue circa 30 relates to 
contracts of over two years duration 
and this percentage has been improving 
over time 
increased risk and 
opportunity as the 
level of longterm 
contracts rise

3 – market legislative drivers
our business is driven by legislative and 
market drivers that signiﬁcantly affect our 
waste treatment activities as a business 
we have to understand and anticipate these 
changes or risk loss of market share as a 
consequence in the main these changes 
present an opportunity to drive the business 
forward through our positioning within the 
waste hierarchy however a failure to properly 
understand the likely changes or being unable 
to develop new technologies could also result 
in unanticipated cost increases or in extreme 
cases the writeoff of investments
• corporate strategy aligned with eu waste 
policy towards more sustainable waste 
management
• employment of waste professionals who 
understand the underlying legislative 
landscape and the effects on the business
• membership of trade associations in all 
geographic areas in which the business 
operates that lobby at regional and national 
level in the interest of the waste industry
• continuing search for new technologies 
and increasingly the sharing of that 
technology across the group
no change from 
last year


 2 – financial risks
the group is exposed to both interest rate 
risk and foreign exchange risk adverse 
movements in interest rates or foreign 
exchange will reduce proﬁtability andor 
asset values 
interest rate and foreign exchange sensitivity 
is set out in note 20 to the financial 
statements
• group treasury is charged with managing 
these risks in line with policies approved 
by the board interest rate risk is managed 
though the use of interest rate swaps 
senior notes taken out at ﬁxed rates 
and by the retail bond
• foreign exchange risk is mitigated by 
arranging borrowings to be drawn 
as far as possible in the same currencies 
as the underlying investment to reduce 
net translation exposure group strategy 
remains to leave income risk unhedged
increased risk due 
to the instability 
of the euro shanks group plc
annual report  accounts 2012

6 – project management
to meet our commitments relating to our 
vision and strategy we are making signiﬁcant 
capital investments in our infrastructure 
failure to bring in capital projects on time 
and on budget will lead to an inability to meet 
contract terms and deliver business plan 
returns in addition there is also the risk 
that capital investments will not provide the 
necessary returns if the underlying assets are 
not properly managed on a longterm basis
• the appointment of project management 
professionals to oversee key projects
• minimum hurdle rates set and monitored
• large developments such as wescott park 
kettering and east london in the uk and 
enhancements at atm in the netherlands 
are subject to rigorous monitoring by 
local management
• a central project management ofﬁce so 
that the progress of all signiﬁcant projects is 
reported back to group senior management 
and the board
• an enhanced capital authorisation process 
has been implemented during the year 
increasing risk 
as the level of 
investment 
increases

principal risks and uncertainties

7 – succession planning
the resignation of the previous chief executive 
and the successful search for his replacement 
have highlighted the continued need to be able 
to retain and replace key staff in the future
• appointment of an interim group 
hr director to oversee organisational 
design talent management hiring 
and remuneration
• permanent group hr director actively 
being sought
• succession plans in place where 
appropriate
new risk



5 – price competition
price competition both in terms of incoming 
waste streams and the sales of recyclate 
material this is largely affected by external 
factors such as macroeconomic conditions 
competition and commodity prices with the 
risk of a fall in margins if prices are not 
maintained or costs kept under control
• regular reporting and monitoring of price 
levels both at local and board level through 
the use of kpis
• use of longterm contracts where possible 
to minimise the effect of pricing pressures 
• seeking creative alternative lowcost outlets 
for waste such as srf to offset incoming 
waste price pressure both the uk and 
the netherlands export recycled material 
to the far east
• cost saving initiatives to offset pricing 
pressures such as optimising sorting 
efﬁciencies and other cost saving projects
• a commitment to good customer relations 
and service through ongoing staff training 
and the use of customer relationship 
professionals
continuing pricing 
pressure offset 
by longer term 
contracts shanks group plc
annual report  accounts 2012



8 – plant availability and insurance
the group operates an increasing number of 
capitalintensive sites fire or other disaster 
failure of a technical installation or severe 
weather could lead to the loss of availability 
of a site inadequate insurance cover due to 
inﬂation or new facilities could result in the 
inability to rebuild a plant without a fresh 
capital injection
• active monitoring and enforcement in relation 
to maintenance security health and safety 
and staff training standards
• use of experienced insurance brokers 
in addition a full review of locations 
equipment and stock has been conducted 
over the year in conjunction with the brokers 
to reduce insurance cover risk
• other developments during the year have 
included the upgrade of disaster recovery 
planning in the uk and the upgrading of 
business interruption insurance in terms of 
duration of loss at uk ad plants in belgium 
there has been investment in new ﬁre 
detection and suppression systems at 
montsaint guibert villerot and monceau 
while new procedures have been 
implemented to ensure that waste is 
adequately segregated
new risk

10 – she safety health environmental compliance
shanks’ employees are the group’s most 
important and valuable asset and their health 
and safety are paramount 
operating sites require local licences permits 
and other permissions to operate and 
compliance with these is monitored by 
various regulatory agencies
failure to comply with either health and safety 
or environmental legislation could result in 
prosecution loss of permits and site closure 
as well as reputational damage
• safety leadership scheme in place 
amongst other initiatives this requires senior 
executives to make regular health and safety 
visits to plants across the group
• health and safety is the top agenda item 
at all management meetings
• monthly she reporting across all levels 
of the organisation
• employment of health and safety 
professionals
• conduct of she audits
• environmental management systems and 
action programmes including regular site 
inspections
no change 

9 – fuel pricing
continued increases in diesel and other fuel 
prices have heightened awareness of energy 
consumption failure to control the effects 
of price inﬂation or reduce consumption 
will result in reduced operating margins 
• hedging of diesel costs initiated at 
group level 
• fuel surcharges in place in the netherlands 
and the uk where possible in belgium an 
indexation mechanism is in place to pass 
increased costs on to municipal customers
• in belgium driver training piloted in liege 
has reduced fuel consumption by 2 
and will be rolled out further during the 
coming year
• in the uk intelligent cabbased systems 
are being tested to reduce fuel costs as well 
as reduce the risk of accidents
new risk  group finance director group finance director
shanks group plc
annual report  accounts 2012
group



this year saw a robust performance in a tough 
economic climate with trading proﬁt up 7 
a strong performance in management actions 
efﬁciency cost savings and returns from the 
investment programme has continued to mitigate 
the adverse market conditions which increased 
during the second half of the year particularly 
in solid waste the euro strengthened against 
sterling during the year resulting in a 1 increase 
in euro denominated proﬁts excluding the effects 
of currency translation of £08m trading proﬁt 
was 6 up on the prior year 
during the year our business in the netherlands 
contributed 63 2011 69 of the group’s 
trading proﬁt before the allocation of group 
central services with belgium contributing 
18 2011 20 the uk 12 2011 9 and 
canada 7 2011 2 further details of the 
group’s trading performance and results by 
waste activity are given in the country reviews 
included on pages 52 to 65 group central 
services refers to the cost of the group’s head 
ofﬁce functions including ﬁnance treasury 
tax internal audit and company secretarial 
the increased costs in the year relate to 
employee and strategic business review costs
during the year there has been a negative gross 
market impact the net of cost inﬂation volumes 
price and recyclate prices which are all linked 
of £19m this impact has been reduced by 
further efﬁciency and cost savings of £11m 
achieved during the year overall net price has 
been positive year on year with strong pricing 
in uk solid waste and netherlands hazardous 
waste compensating for ongoing pricing 
pressure in netherlands solid waste where 
commercial pricing was down 7 in the year 
overall costs have increased by circa 2 
principally due to salary inﬂation together with 
some oneoff costs the selling price for our main 
recyclates of metal and paper continued at high 
levels for the majority of the period resulting in a 
beneﬁt of £7m in the year although the beneﬁt in 
the second half was lower due to the fall in paper 
prices in october 201 1 the volume declines 
are principally in solid waste in all territories 
efﬁciency and cost savings come from reductions 
in ﬁnal costs of disposal to landﬁll or incineration 
and other operational and support function 
savings as well as increased plant efﬁciency
a strong performance from our 
strategic investment programme 
and continued cost efﬁciencies 
has mitigated the adverse 
market effects  trading proﬁt
 201011
cost
inﬂation
net price
recyclates
volumes
cost savings
projects and
investments
bid costs
currency
trading proﬁt
 201112
£185m £25m
£68m
£99m £109m
£99m
£12m £08m
£497m £534m
market
management 
actions and strategy
50
122
50
67


cumulative annual posttax return
percentage of total investment spend
15
10
5
0
commissioned
and ramping up
fully operational and 
running at normal
operating levels
shanks group plc
annual report  accounts 2012
the projects and investments increase of 
£99m represents the year on year proﬁt impact 
of the £100m strategic investment programme 
the principal growth projects which contributed 
in the year were the ghent solid recovered 
fuel srf plant atm waste water treatment 
improvements the orgaworld amsterdam 
anaerobic digestion ad plant and the 
canadian plants the recycling and ad plants in 
scotland remained in commissioning for a large 
part of the year and consequently have had a 
minimal effect on the result for the year those 
projects in the initial £100m strategic investment 
programme which were fully up and running at 
normal operating levels have achieved a 122 
return and those commissioned and ramping up 
67 this rate of return remains in line with the 
posttax target of 12 to 15 once the assets 
are fully operational which is usually two to three 
years after commissioning the next phase of 
the investment programme totalling £150m 
has now started and approximately £65m 
of the projects are under construction


revenue from continuing operations increased 
by £33m to £750m excluding the positive effect 
of currency translation of £9m revenue was 3 
up on the prior year

certain items are excluded from trading proﬁt 
and underlying proﬁt due to their size nature 
or incidence to enable a better understanding 
of performance
total nontrading and exceptional items of 
£7 4m 201011 £140m are further explained 
in note 4 to the ﬁnancial statements on page 105 
and include
• amortisation of intangible assets acquired in a 
business combination of £37m 20101 1 £39m
• financing fair value remeasurement charge of 
£08m 201011 £58m
• impairment charge of £25m 201011 £119m 
– changes in market conditions in the volumes 
delivered to and prices achieved in our small 
uk joint venture landﬁll have resulted in a 
goodwill impairment the prior year charge 
related to impairments due to changes in 
market conditions in wood based and landﬁll 
markets in belgium and the netherlands

revenue trading proﬁt
2012 2011 variance 2012 2011 variance
£m £m £m  £m £m £m 
netherlands 380 362 18 5 382 37 2 10 3
belgium 172 172–– 110 108 02 1
uk 186 176 10 6 69 50 19 39
canada 15 10 5 43 39 13 26  100
group central services 3 3 – – 66 46 20 47
750 717 33 5 534 497 37 7

2012 2011
ebitda £102m £99m
trading margin 71 69
return on operating assets 152 143
return on capital employed 67 64
posttax return on fully operational projects 122 130

• a gain of £16m 201011 £nil following the 
reassessment and settlement of contingent 
consideration in relation to an acquisition made 
in the uk in the year ended 31 march 2011
• write off of investment in a joint venture 
arrangement £20m 20101 1 £nil – associated 
with difﬁculties in the construction of a biomass 
plant and changes in market conditions 
• the prior year included credits of £37m 
related to the proﬁt on sale of pfi equity share 
in september 2010 and of £39m to a 
pensions liabilities curtailment gain following 
the introduction of a 1 pensionable pay cap 
for active members of the uk deﬁned beneﬁt 
ﬁnal salary scheme
operating proﬁt on a statutory basis after taking 
account of all exceptional items and amortisation 
of acquisition intangibles has increased 13 
from £415m to £468m
proﬁt before tax on a statutory basis has 
increased 48 from £212m to £314m
£ £ £ £ £5 53 4
£ m £ £ £ £ £5 534m m £ £ £ £ £534m m
£ £ £ £ £5 534m m m £ £ £ £ £53 4m m £ £ £ £ £5 53 4m m m £ £ £ £ £53 4m m £ £ £ £ £ £49 7
£ £ £ £ £497m m £ £ £ £ £497m m
£ £ £ £ £ £497m m m £ £ £ £ £49 7m m £ £ £ £ £ £49 7m m m £ £ £ £ £49 7m m group
shanks group plc
annual report  accounts 2012

the strong focus on cash management has 
continued throughout the year resulting in a free 
cash ﬂow conversion ratio of 81 working 
capital levels have been tightly monitored during 
the year 
the ratio of replacement capital spend to 
depreciation was 78 for the year which was 
within our targeted range
growth capital spend of £38m included the uk 
recycling and organics facilities and a number 
of other growth projects in the netherlands 
in both solid waste and hazardous waste 
also included is £3m relating to the acquisition 
of the business and assets of a glass recycling 
business in the netherlands
the prior year acquisitions and disposals 
income of £17m included the proceeds from 
the pfi equity sale in september 2010 with the 
outﬂow this year including a number of deferred 
consideration payments
the current year pfi funding and others total 
included the receipt of £87m €105m following 
a court decision in respect of a claim for 
business interruption in the netherlands that 
occurred in 2002 the court’s decision has been 
appealed and the ultimate outcome of the case 
remains uncertain the amount has been 
recorded in provisions until the ﬁnal outcome 
of the case is known with greater certainty
the exchange rate on the euro has moved from 
113 at 31 march 2011 to 120 at 31 march 2012 
which has resulted in a £10m beneﬁt on the 
translation into sterling of the group’s euro 
and canadian dollar denominated debt 

finance charges excluding the change in fair 
value of derivatives have increased by £02m 
to £147m 201011 £145m core interest 
excluding the project ﬁnance relating to the 
pfi contracts reduced by £06m primarily 
due to a lower amortisation charge for loan 
fees incurred in the 2011 reﬁnancing

the underlying tax charge for the year of £101m 
equated to an effective rate of 26 down from 
264 last year the exceptional tax credit of 
£52m in the current year related to a favourable 
judgement issued with regard to certain tax 
liabilities in belgium

underlying earnings per share which excludes 
the effect of nontrading and exceptional items 
increased at constant currency by 9 to 
7 2 pence per share 2011 65 pence per share 
as a result of the increased proﬁts and a further 
reduction in the effective tax rate basic earnings 
per share from continuing operations increased 
from 55 pence per share to 67 pence per share

the group intends to pursue a progressive 
dividend policy within a range of 2 to 25 times 
cover in the medium term consistent with this 
policy the board has recommended a ﬁnal 
dividend of 235 pence making the full year 
dividend 345 pence an increase of 6 
on the total paid in respect of 2011 

2012 2011 difference
£m £m £m
ebitda 102 99 3
working capital movement and other 2 53
net replacement capital expenditure 40 32 8
interest and tax 20 10 10
loan fees paid 1 3 2
underlying free cash ﬂow 43 59 16
dividends paid 13 12 1
net growth capital expenditure 38 34 4
acquisitions and disposals 7 17 24
pfi funding and others 5 7 12
net core cash ﬂow 10 23 33
free cash ﬂow conversion 81 118
 free cash ﬂow conversion is deﬁned as underlying free cash ﬂow divided by trading proﬁt











 shanks group plc
annual report  accounts 2012

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 exposures on exchange rate 
movements the group maintains a signiﬁcant 
proportion of its debt on ﬁxed rates of interest in 
order to protect interest cover it is and has been 
throughout the period under review the group’s 
policy that no speculative trading in ﬁnancial 
instruments shall be undertaken

at 31 march 2012 the group’s core bank 
ﬁnancing was a €200m term loan and 
multicurrency revolving credit facility with six 
major banks entered into on 2 february 2011 
and expiring in june 2015 at 31 march 2012 
€67m equivalent of term loan was drawn in euro 
and canadian dollars on three month interest 
periods plus €33m of the revolving credit facility 
the remaining €100m represented committed 
funds available for drawing in sterling euro or 
canadian dollars by way of a revolving credit 
facility on a maximum of three days notice or 
for ancillary derivative facilities interest is based 
on libor or euribor plus the margin for the 
relevant period the group has entered into 
three year ﬁxed interest rate swaps with a 
principal of €30m and canadian 495m 
underwritten at effective interest rates of 282 
and 285 before margin the deﬁnitions of the 
covenants of this facility exclude the results of 
pfi and other project companies and the results 
of joint ventures except where received in cash 
the margin varies on a ratchet ﬁxed by the 
debtebitda ratio for the prior quarter on a 
rolling 12 month calculation the ﬁnancial 
covenants of this facility are principally the ratio 
of debtebitda of less than 3001 interest 
cover of not less than 3001 and a minimum net 
worth of £225m at the end of march the ratio 
of core net debt to ebitda was 17 times which 
is well within our banking covenant test of 30 
and our target of less than 25 times
the ﬁve year retail bonds of €100m issued to 
belgium and luxembourg investors in october 
2010 have an annual coupon of 50 and are 
quoted on the london stock exchange
the €18m of notes issued under the group’s 
pricoa private placement carry ﬁxed interest at 
69 and are due for repayment in september 
2013 an additional €40m of private placement 
with maturity in april 2018 and an interest rate 
of 5025 was secured on 11 april 2011 
the ﬁnancial covenants of this facility are 
identical to those of the group’s bank ﬁnancing 
outlined above
the group also has approximately £23m of 
working capital facilities with various banks 
cash ﬂows are pooled at a country level and 
each operation is tasked with operating within 
the limits of the locally available working 
capital facilities
each of the group’s pfippp projects has senior 
debt facilities which contribute approximately 
85 of the capital funding required these 
facilities are secured by a legal mortgage over 
land andor a ﬁxed and ﬂoating charge over 
the assets of the pfippp company 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 pfippp contract period for those 
contracts where the group currently holds 
100 of the equity in its pfippp companies 
the net debt of £45m and the fair value of the 
interest rate swaps used to ﬁx interest rates 
of £15m are fully consolidated in the group 
balance sheet the maximum which could be 
drawn down under these facilities at 31 march 
2012 was £103m the interest rates on these 
loans vary with one month libor during the 
construction period and three month or six 
month libor in the post construction period 
in order to provide a ﬁxed price to the client local 
authority varying only with inﬂation interest rates 
are ﬁxed by means of interest rate swaps at the 
time of contract inception 

the assets of both the ﬁnal salary and money 
purchase schemes in the uk are held separately 
from those of the group and are invested by 
independent professional investment managers 
at 31 march 2012 the net retirement beneﬁt 
deﬁcit relating to these uk schemes was £7 6m 
compared to an asset of £49m at 31 march 
2011 primarily as a result of the movement in 
discount rates in the year following discussions 
with the trustees the group agreed in 2010 
a funding plan over eight years the plan 
comprised an annual payment of £18m per 
annum to april 2012 and then increasing to 
£30m per annum this payment proﬁle will be 
reconsidered at the next actuarial valuation 
which is due as at 5 april 2012
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 
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 

the group manages its property and third party 
risks through insurance policies that mainly 
cover property business interruption public 
liability environmental pollution and employer’s 
liability the group covers its operating risks 
by self insurance whereby the operating 
businesses pay a moderate deductible on most 
claims together with cover provided by the 
external insurance market arranged by our 
brokers with insurance companies which have 
good credit ratings




 amsterdam
rotterdam
shanks group plc
annual report  accounts 2012

managing director 
shanks netherlands

revenue trading proﬁt
2012 2011 variance 2012 2011 variance
€m €m €m  €m €m €m 
solid waste 253 251 2 1 197 250 53 21
hazardous waste 173 16584 264 209 55 26
organics 18 15 3 24 25 22 03 14
country central services 5 6 1 19 45 46 0 1 3
total €m 439 425 14 3 441 435 06 1
total £m  
at average fx rates 380 362 18 5 382 37 2 10 3

2012 2011
trading margin 101 102
return on operating assets 17 17
recycling and recovery rate 88 88
riddor rate 1600 1700

 collection
 recycling
 fuel pellets
 soil treatment
 waste water treatment
 industrial cleaning
 anaerobic digestion
 composting 
1reym
•
vliko
◊ icova
psmink groep
van vliet contrans
‡ van vliet groep
b atm
iorgaworld 
klok containers
netherlands
 shanks group plc
annual report  accounts 2012

the dutch solid waste market is advanced 
with a high level of recycling of the overall 
waste volumes of circa 51m tonnes the state 
secretary of infrastructure and the environment 
has stated recently that the recycling rate for 
the netherlands should be at 83 by 2015 
volumes sent to landﬁll are very low at 
approximately 3 on 1 january 2012 tax 
on waste sent to landﬁll was reduced to nil 
however new strict guidelines on what can be 
sent to landﬁll have been issued overcapacity 
in the waste incineration market has continued 
and this has resulted in lower gate fees on 
the spot market and ongoing price pressures 
within these waste volumes the cd market 
is important and accounts for approximately 
one third of the whole market the other major 
sectors are general commercial and industrial 
and municipal 
the main competitors to shanks include van 
gansewinkel group and sita with a number of 
other strong regional players in the randstad 
area for both ic and cd shanks is the market 
leader whereas at a national level we are market 
leader for cd and number two for ic
hazardous waste is a more specialist market 
with annual revenues in excess of circa €570m 
and the number of players is smaller due to 
the investment required to establish efﬁcient 
competitive operations atm is the market 
leader in its ﬁeld and there is strong potential 
for growth in waterside activities as legislation 
becomes more stringent similarly reym has 
a strong market position and is market leader 
for industrial cleaning
the organics market is circa 35m tonnes and 
shanks is the third largest competitor with attero 
being the market leader expansion of the ad 
market sector is anticipated in the coming years 
due to the shift from composting to dry and wet 
digestion driven by green subsidies

there are three divisions in the netherlands 
solid waste hazardous waste and organics
the solid waste business comprises 23 recycling 
and transfer sites many of which are substantial 
in size together with supporting collection 
vehicle ﬂeets of 456 vehicles overall the 
businesses typically recycle and divert from 
landﬁll or incineration more than 85 of the 
waste they process in normal times the 
business derives approximately half its trading 
proﬁt from construction and demolition cd 
waste the other half being from more general 
industrial and commercial ic waste and other 
activities in the current recessionary climate the 
split is 45 for cd and 55 for ic the work 
from the municipal sector has increased 
in recent years with bulky waste municipal 
collection and electrical waste contracts the 
business is principally based in the populous 
randstad area to the west of the country
the hazardous waste business comprises two 
units afvalstoffen terminal moerdijk atm a 
treatment plant and reym which focuses on 
industrial cleaning atm is one of the world’s 
largest single site hazardous waste facilities 
processing more than 15m tonnes of low 
contamination hazardous waste per annum 
there are three principal processes thermal 
treatment of contaminated soils pyrolysis of 
paint waste and biological and physiochemical 
treatment of waste water reym supplies 
industrial cleaning services to the oil and gas 
petrochemical and other industries
organics comprises the orgaworld business 
which consists of a number of treatment facilities 
for organic wastes by wet or dry anaerobic 
digestion ad or tunnel composting these 
facilities include a ﬂagship industrial ad and 
waste water facility in amsterdam the waste 
streams originate from industry mainly from 
food processing companies and supermarkets 
and source segregated organic municipal 
collections

















operating in the province of zuidholland 
vliko collects sorts and recycles cd 
and commercial waste  shanks group plc
annual report  accounts 2012
netherlands


the strategic goal for the dutch operations 
continues to be further improvements in the mature 
solid waste market together with development 
in both hazardous waste and organics 
for the solid waste business this will be achieved 
by diversiﬁcation into municipal markets and 
broadening the product portfolio to offset falling 
volumes and lower prices in the traditional solid 
waste markets also there will be more focus 
on the production of high quality fuel substitutes 
and recyclates the key strategic drivers 
remain the availability of waste and the highly 
competitive pricing in the incineration market
for hazardous waste the availability of soil 
volumes is key and with less netherlands 
based activities it is important to win overseas 
contracts the lower activity in the industrial 
market for paint waste will be replaced with 
further waterside activities given our recent 
expansion of capacity in this area 
for organics the increased focus on processing 
organic waste will lead to opportunities in this 
market
we are also focused on using the attributes of all 
three businesses to provide combined solutions 
involving solid waste hazardous waste and 
organics to our customers we believe that 
increasingly customers will require a single supplier 
to deal with all of their waste requirements

despite the challenging market conditions in 
solid waste the netherlands has performed 
well with overall revenue and trading proﬁt 
excluding exchange rising by 3 and 1 
respectively and trading margins remained 
strong at 10
the solid waste business continued to be 
impacted by downward pricing pressure and 
lower volumes which have been compensated 
in part by recyclate pricing and strong 
management actions in the achievement of cost 
savings the excess capacity in the incineration 
market has continued throughout the year and 
prices for commercial and cd wastes have 
declined on average by 7 and 5 respectively 
compared with the prior year overall volumes 
were 1 down for commercial and 2 down 
for cd in early 2012 the economic institute 
for the building industry stated that volumes 
in the dutch construction market would be 
down 35 in 2012 with no recovery in the 
dutch housing market expected before 2014 
overall recyclate pricing has been strong 
throughout the year and has contributed €5m 
to the proﬁtability of the division year on year

atm is one of the world’s largest 
single site hazardous waste facilities 
processing more than 15m tonnes of 
low contamination hazardous waste 
per annum 

based in rotterdam klok containers 
provides waste collection and recycling 
services waste is sorted treated 
and processed for reuse and fuel for 
green energy  shanks group plc
annual report  accounts 2012
on 1 march 2012 we acquired the business 
and assets of van tuijl a key player in the dutch 
glass recycling market this acquisition has 
given us access to the glass recycling market 
and offers the opportunity to provide our larger 
customers such as unilever and heineken with 
a closed loop cycle for their waste streams 
in hazardous waste our atm waste water and 
soil treatment facility has had an exceptional 
performance for both activities volumes were 
up on the prior year boosted by a oneoff 
contract and this together with continued 
control of treatment costs and the recent 
investments have resulted in good proﬁt growth 
reym our industrial cleaning business has had 
a satisfactory year with strong revenues but has 
seen continued pressures on pricing which 
resulted in lower overall margins
the growth in the organics activity of orgaworld 
was principally attributable to the ﬁnal 
commissioning and ramping up of the ad and 
waste water facility in the port of amsterdam 
this project has performed well in the year with 
production of green electricity from the biogas 
and the capture of the heat from the plant 
processes which has been exported to the 
amsterdam ‘heat grid’ for access by other 
companies requiring heat overall margins 
have fallen slightly due to further business 
development expenditure as we continue 
to investigate opportunities to expand
continued focus on accident rates and safety 
has resulted in a 6 improvement to the 
riddor rate in the year

markets in the more mature solid waste 
business are expected to remain challenging 
in the short term due to pricing pressures and 
availability of waste volumes the continued 
investment in growth projects in hazardous 
waste and organics activities together with 
focus on cost control and margin improvement 
will position the business for future growth









a key player in the dutch glass 
recycling market brussels
shanks group plc
annual report  accounts 2012

belgium

managing director 
shanks belgium

revenue trading proﬁt
2012 2011 variance 2012 2011 variance
€m €m €m  €m €m €m 
solid waste 148 148–– 91 72 1 9 27
hazardous waste 55 59 4 7 33 41 08 21
landﬁll and power 12 12 – 2 63 57 06 11
sand quarry 3 3– 7 07 08 01 18
country central services 19 20 1 5 66 51 15 30
total €m 199 202 3 2 128 127 0 1 –
total £m  
at average fx rates 172 172–– 110 108 02 1

2012 2011
trading margin 64 63
return on operating assets 20 18
recycling and recovery rate 74 74
riddor rate 5100 6100

 collection
 sorting and reprocessing
 recovered fuel
  wood trading and 
biomass production
 industrial cleaning
 waste water treatment
 power generation
p hainaut
b brusselsbrabant
1vlaanderen
liègeluxembourg
iforonex shanks group plc
annual report  accounts 2012

in belgium environmental responsibility is 
devolved to the three regions namely flanders 
wallonia and brussels flemish environmental 
legislation and landﬁll tax levels are very similar 
to those in the netherlands resulting in similar 
market characteristics with high levels of 
recycling a reliance on incineration for ﬁnal 
disposal and very little landﬁll in wallonia landﬁll 
has historically been more prominent however 
landﬁll tax rose signiﬁcantly in 2010 to an effective 
rate of €90 per tonne as an incentive to promote 
increased recycling and other forms of energy 
recovery in addition the region adopted a 
strict interpretation of the landﬁll directive 
requirement for the pretreatment of organic 
waste and residual waste from household 
collection the brussels region has limited 
landﬁll capacity and has its own incinerator 
but beyond that depends on the two other 
regions for ﬁnal disposal
exports of waste from belgium are only allowed 
in accordance with strict pretreatment criteria 
which in practice limit the extent of such 
movements of waste and encourage the 
treatment of waste using local capacity
the belgian waste market is still highly 
fragmented with the largest ﬁve players 
accounting for circa 40 of the total market 
value overall shanks is the fourth largest player 
in the belgian market with sita being the market 
leader collection services remain increasingly 
important in view of eu recycling and sorting 
requirements and the market can be split 
between industrial and commercial ic which 
accounts for more than 60 of the total waste 
revenues and is based on shortterm contracts 
and municipal which is based on longer 
contracts as in the netherlands volumes of 
waste have started to decline with pricing 
pressure for ic contracts
power generation from waste biogas continues 
to beneﬁt from environmental subsidies 
although power prices are volatile from period 
to period

the activities in belgium are broken down into 
solid waste hazardous waste landﬁll and 
power and a sand quarry
the solid waste business is similar to that in the 
netherlands however the division is less reliant 
on the construction and demolition cd 
sector and also includes the operation of 
municipal waste collection contracts including 
the city of liege and an intermunicipality 
partnership in the hainaut region of wallonia 
solid waste also includes foronex this 
business which was acquired in 2008 is 
principally focused on the growing wood 
biomass market with a subsidiary wood 
trading activity
the hazardous waste division comprises 
industrial cleaning activities hazardous and 
medical waste collection the industrial cleaning 
businesses service the steel cement chemical 
and other large industries across belgium and 
also in northern france the main treatment 
facility at roeselare in west flanders specialises 
in the preparation of waste derived fuels and 
minerals for the cement industry like the atm 
facility in the netherlands the facility also treats 
contaminated waste water streams using 
physiochemical and biological processes 
green electricity certiﬁcates are received 
for the electricity and heat produced during 
the processes
the landﬁll and power operations are situated 
in the walloon region where we have one of the 
largest landﬁlls in the area landﬁll activity has 
now stabilised following changes to taxation 
rates and types of waste that can be landﬁlled 
in the last few years a major source of income 
remains the generation of renewable electricity 
from the methane produced as the 
biodegradable waste decays
in addition we operate a sand quarry which 
is adjacent to the landﬁll in wallonia this 
remains a small but proﬁtable activity











generation of renewable electricity 
provides a major source of income 
from our landﬁll operation  shanks group plc
annual report  accounts 2012

belgium

in belgium the strategy is to grow the solid waste 
businesses by ensuring competitive advantage 
through lower average processing and disposal 
costs and the production of high quality solid 
recovered fuel srf and biomass products
as in the netherlands the key drivers are the 
amount of waste available and the competitive 
pressure on prices the increase in landﬁll taxes 
has offset this impact to an extent with reduced 
levels of waste going into landﬁll and increased 
waste sent to incinerators and sustainable 
recycling facilities
our focus remains on treating waste in 
innovative ways and maximising the volume of 
products such as srf produced by our facilities 
as an alternative to sending the waste to landﬁll 
and incinerators

overall the result for the year shows a small 
decline in revenue with trading proﬁt remaining 
unchanged year on year
the core solid waste businesses have 
performed well with ic volumes at the sorting 
centres up 5 although levels declined in the 
latter months of the year overall price was 2 
down on the prior year the result has been 
adversely affected by a €07m year on year 
reduction in the return from our investment 
in an intermunicipality incinerator
the foronex business is included within 
solid waste and as communicated in earlier 
statements a number of changes were made to 
strengthen the management team this has had 
a beneﬁcial impact on trading with an overall 
€2m improvement to proﬁts year on year 
as reported at the half year there had been 
delays in the commissioning of the combined 
heat and power plant in our joint venture 
arrangement with enviva formerly known as 
intrinergy it became apparent that signiﬁcant 
further investment would be required to get the 
plant operational albeit at a lower level of 
proﬁtability as a consequence of the joint 
venture company being in breach of its banking 
covenants we no longer have control and 
accordingly have written off our investment 
in this venture this has resulted in an overall 
charge of £2m which has been treated as a 
nontrading exceptional item 

this facility specialises in the 
preparation of waste derived fuels 
green electricity certiﬁcates are 
received for the electricity and heat 
produced during the processes shanks group plc
annual report  accounts 2012






our principal sorting centre 
in wallonia 


100000 tonnes per annum facility 
producing wood biomass for the 
electricity industry 

like the netherlands market the belgian market 
is expected to remain challenging for the short 
to medium term however we plan to build on 
the improvements made in foronex and other 
cost savings to offset the impact of the market 
conditions
overall proﬁts from the hazardous waste 
businesses were down signiﬁcantly year on year 
biogas production at the green energy plant in 
flanders was down in the ﬁrst half but following 
efﬁciency improvements this has now been 
addressed and has returned to more normal 
levels proﬁts have been affected by lower power 
prices which are expected to increase in the 
medium term
pricing in the electricity market continues to be 
difﬁcult and this has resulted in lower power 
revenues year on year
as part of the groupwide ‘action on safety’ 
initiative signiﬁcant effort has been spent on 
safety audits and this has resulted in a 16 
reduction to the riddor rate in the year london
edinburgh
glasgow
shanks group plc
annual report  accounts 2012

uk

managing director 
shanks uk

revenue trading proﬁt
2012 2011 variance 2012 2011 variance
£m £m £m  £m £m £m 
solid waste 65 66 1 2 42 41 01 1
hazardous waste 8 15 7 42 19 29 10 33
organics 1 21 70 05 01 06 100
municipal pfi 107 87 20 23 108 56 52 92
landﬁll and power 5 61 5 03 03 06 100
country central services – ––– 77 54 23 40
uk operations 186 176 10 6 84 76 08 10
pfi bid team – ––– 15 26 11 44
total 186 176 10 6 69 50 19 39

2012 2011
trading margin before bid costs 45 43
return on operating assets 20 10
recycling and recovery rate 47 43
riddor rate 2100 2200

 collection
 sorting and reprocessing
 recycling
 recovered fuel
 mbt treatment
 anaerobic digestion
1recycling centre
•
pfi
borganics shanks group plc
annual report  accounts 2012

the uk’s historical heavy reliance on landﬁll 
means that the imposition of the european 
landﬁll directive is having a major impact 
implementation of the directive requires waste 
disposal authorities to develop new strategies 
to reduce the amount of biodegradable 
municipal waste bmw that they send to landﬁll 
based on 1995 levels the directive requires a 
25 reduction in bmw landﬁlled by 2010 50 
by 2013 and 65 by 2020 as part of this the 
uk government has strengthened the existing 
drivers for diverting ic waste from landﬁll and 
provided further ﬁnancial support for alternative 
ways to deal with waste including reuse 
recycling energy from waste and anaerobic 
digestion the key element of this was the 
agreement to increase the standard rate of 
landﬁll tax by £8 per tonne on 1 april each year 
to £80 per tonne by 1 april 2014
in our regional ic and cd markets we are 
strong with our main competitors being veolia 
biffa viridor and large regional and local players
the longterm municipal market is accelerating 
in an attempt to fulﬁl landﬁll diversion targets 
as set out in the european landﬁll directive 
and is currently at circa 17m tonnes per annum 
shanks remains a key player in this sector 
with veolia as the market leader we have 
detected early signs of a more difﬁcult funding 
environment together with local authorities 
planning for shorter term contracts and less 
capital intensive facilities 
the potential food waste market for ad and 
composting solutions is currently estimated at 
circa 59m tonnes per annum this market is still 
emerging in the uk with a number of ad plants 
having become operational in the last year 
shanks continues to invest in this sector 
where there is no clear market leader

the uk business principally comprises solid 
waste collection and recycling municipal  
pfippp contracts and organics processing 
businesses
the solid waste collection and recycling 
business which has both industrial and 
commercial ic and construction and 
demolition cd customers is focused in 
scotland east midlands and the northern 
home counties currently we process 47 
of the waste collected through our recycling 
facilities the plan is to increase this signiﬁcantly 
with the investment in new recycling and 
organics facilities as we strive to divert more 
waste away from ﬁnal disposal to landﬁll
the organics processing activity is principally 
in a joint partnership in a 60000 tonne per 
annum anaerobic digestion ad plant in 
glasgow which utilises orgaworld ad 
technology to process a range of organic 
materials including supermarket waste 
household and commercial kitchen waste 
food processing waste and organic materials 
resulting in the generation of biogas and high 
quality compost
the 25 year municipal pfippp contracts 
include providing waste disposal services 
for local authorities in east london dumfries 
and galloway argyll  bute and cumbria 
the barnsley doncaster and rotherham bdr 
contract has recently reached ﬁnancial close 
and the delivery of waste management services 
will only commence when the treatment facilities 
have been built in 2015 we have preferred 
bidder status for two other contracts derby 
and wakeﬁeld and remain active in bidding 
for further contracts where we have a clear 
market advantage it remains our intention 
where appropriate to limit our equity 
contribution into pfippp whilst retaining the 
longterm operating contracts 
in addition we have a share in landﬁll 
operations through a joint venture partnership 
the contaminated land services business 
which organised the treatment and disposal for 
cleanup projects is no longer a principal activity

new mrf designed to achieve a 95 
recovery rate from nonsegregated 
general waste



47 shanks group plc
annual report  accounts 2012

uk

in the uk the aim is to extract the maximum 
value from the products we produce with a 
geographically integrated infrastructure across 
municipal organic and recycling facilities and an 
expansion of our energy generation capability 
legislative and regulatory drivers remain key 
together with the availability of waste volumes 
as feedstock for our facilities

revenue and trading proﬁt before pfi bid team 
costs rose by 6 and 10 respectively
the structural decline in volumes in the uk solid 
waste market has continued with our overall 
volumes in the collections business down 9 
the proﬁt effect of these volume shortfalls has 
been compensated by a number of decisive 
management actions including improvements 
in processing leading to greater diversion 
from landﬁll and price increases of circa 2 
overall recyclate prices were still favourable year 
on year despite the decline in paper pricing in 
the last quarter
the commissioning of the glasgow recycling 
facility was extended as the plant was 
developed to handle a wider range of waste 
in response to increasing price competition in 
obtaining recyclate materials the edinburgh 
facility was redeveloped ahead of time 
facilitating the two plants to be run together with 
both seeing a signiﬁcant ramping up of output in 
the last couple of months of the year the new 
recycling facility at kettering was commissioned 
ahead of time in the last quarter and will be 
fully operational in the new ﬁnancial year 
the ﬁnal commissioning of the organics ad 
plant in glasgow a joint venture partnership 
in energen biogas was delayed and this 
together with operational issues resulted in 
losses in the year gate fees and availability 
of waste volumes have been under pressure 
as other infrastructures have come on stream 
electricity is being generated and delivered 
to the grid and outputs will increase in the new 
ﬁnancial year the development of the other ad 
plants in the uk remains on track
the proﬁtability of the existing pfippp portfolio 
has continued to improve in line with our plans 
with further operational enhancements being 
delivered and a full twelve months beneﬁt from 
the management of the derby waste collection 
service margins in the portfolio were 10 in the 
year up from 64 last year we expect these to 
be in the 8 to 10 range going forward the 
ﬁrst of the two mechanical biological treatment 
mbt facilities for the cumbria contract was 
delivered ahead of schedule and within budget 

final quality control on processed 
materials shanks group plc
annual report  accounts 2012
in december 2011 the second facility is also 
on track to be completed early 
we continue to invest in the pfi market albeit 
at a lower level of activity as indicated by the 
reduction in bid costs expensed of £15m in the 
year the barnsley doncaster and rotherham 
contract a majority owned joint venture with 
sse reached ﬁnancial close on 30 march 2012 
and work has commenced on the delivery of 
the infrastructure which is scheduled to be 
completed in 2015 the bolton road facility 
will be one of the ﬁrst where shanks delivers 
a mbt plant and an ad plant on the same site 
it will treat up to 265000 tonnes per year of 
leftover household waste and a small amount 
of commercial waste from the three councils 
as part of this contract we signed an agreement 
with sse for the supply of solid recovered fuel 
srf to a new multifuel plant for the generation 
of electricity at ferrybridge
we remain preferred bidder for the wakeﬁeld 
and the derby contracts it is anticipated that 
the wakeﬁeld contract will reach ﬁnancial close 
by september 2012 the derby contract is 
subject to a planning appeal which will 
determine the longterm location of the 
combined mbt and gasiﬁcation infrastructure 
this appeal is scheduled to be held in june 
2012 and the outcome will determine the timing 
of ﬁnancial close of this contract
we have once again prepared a directors’ 
valuation of our pfippp interests to assist the 
market in valuing these stakes using the cash 
ﬂows of the remaining ﬁnancing vehicles and 
the operating contracts discounted at circa 8 
the directors estimate the value of the existing 
pfippp contracts to be circa £80m which is 
unchanged from last year end
the decrease in hazardous waste proﬁts 
related to a major oneoff contract in the 
prior year
reduced volumes and pricing pressures 
have resulted in a lower performance at our 
landﬁll and power joint venture the goodwill 
associated with this asset has been written off 
during the year
as anticipated there has been an increase 
in central overhead costs as the organisation 
has been strengthened to support the growth 
and development of the business with a 
proportion of this resource redeployed from 
pfi bidding
the signiﬁcant increase in the return on 
operating assets from 10 to 20 came 
as a result of the increased proﬁts and lower 
operating assets following the full year effect 
of the september 2010 disposal of the equity 
interest in the elwa and dg pfi contracts 
which removed approximately £20m from the 
operating asset base
the recycling and recovery rate has continued 
to increase year on year as the new recycling 
facilities start to come on line

legislative support for landﬁll diversion 
strategy continues to strengthen in the uk 
the continued improvements from the recent 
investments in recycling and organics facilities 
should continue to compensate for any further 
decline in volumes










 10

the mbt plant at hespin wood in 
cumbria which opened in december 
2011 will reduce the volume of waste 
sent to landﬁll by circa 80 toronto
montreal
vancouver
shanks group plc
annual report  accounts 2012

canada

revenue trading proﬁt
2012 2011 variance 2012 2011 variance
cm cm cm  cm cm cm 
organics 24 17 7 43 61 20 41 100
total £m  
at average fx rates 15 10 5 43 39 13 26  100

2012 2011
trading margin 257 12 1 
return on operating assets 12 4
recycling and recovery rate 89 86

 aerobic tunnel composting
•
london ontario
bottawa


150000 tonnes 
per annum 
composting facility shanks group plc
annual report  accounts 2012

as in europe there is a drive to reduce waste 
going to landﬁll in canada and the orgaworld 
management in the netherlands identiﬁed an 
opportunity in the canadian market to offer 
biological treatment of source segregated 
organic municipal waste we currently have 
two aerobic tunnel composting sites in ontario 
– a 150000 tonne per annum facility in london 
and a 100000 tonne per annum facility in 
ottawa both sites are backed by longterm 
municipal contracts

in recent years there has been strong public 
opinion against landﬁll which in some areas 
has led to a shortage of consented capacity 
consequently the canadian provinces have 
targeted the diversion of waste from landﬁll 
the introduction of feed in tariffs and ‘green’ 
aspirations has led to stimulation of interest 
in anaerobic digestion circa 6m tonnes 
of organic waste is produced annually in 
ontario and currently less than 20 of 
source segregated organics is composted
the waste management industry is fragmented 
with competitors being principally local with a 
few european suppliers our main competitors 
are currently unable to meet the stringent 
regulations and technical requirements 
of the ministry of environment in canada 
orgaworld is the marketleader in its region 
and can offer a wide range of processing 
techniques for the total range of organic waste

the strategy in canada is to become market 
leader in the treatment of organic waste 
streams from municipalities through the 
development of further production plants 
to grow across the country
the key strategic drivers are regulatory 
developments and the security of input volumes 
investment will focus on regions where input 
volumes are secured through longterm 
municipal contracts

proﬁts in the year were signiﬁcantly up on the 
prior year which was affected by the temporary 
closure of the london ontario site for an 
upgrade to increase efﬁciency and to reduce 
odour levels the facility returned to normal 
operating levels in march the ottawa site 
continued to perform satisfactorily trading 
margins and the return on operating assets 
have returned to more acceptable levels

we expect further progress in growth and 
margins with both sites operating at more 
normal levels  we continue to pursue further 
opportunities for expansion in this territory 
which will lead to further shanks plants 
being built












100000 tonnes per annum 
composting facility
25 shanks group plc
annual report  accounts 2012
appointed may 2005 and appointed chairman in july 2006 
chairman of the nomination committee and member of the 
remuneration committee 
skills and experience adrian 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 
he is chairman of addaction britain’s largest specialist drug and alcohol 
treatment charity 
adrian is considered by the board to be independent
other appointments chairman of readymix plc a nonexecutive 
director of electrocomponents plc and az electronic materials sa and 
the senior independent director of umeco plc
 ba mba act group chairman
appointed february 2012
skills and experience peter was appointed to the board in february 
2012 having graduated from the royal military academy at sandhurst 
peter spent nine years as an ofﬁcer in the british armed forces 
he originally trained as an army helicopter pilot and subsequently saw 
active service with both nato and the un peter then spent seven years 
at the boston consulting group working in london and chicago across 
a range of industries where he was a leader in its global industrial and 
sales  marketing practices in 2005 he joined danaher corporation 
where he was appointed group president emerging markets of its 
gilbarco veederroot subsidiary and president of danaher middle east
 beng group chief executive
appointed may 2009
skills and experience chris was appointed to the board in 
may 2009 as group finance director following an early career with 
pricewaterhousecoopers he joined ti group plc in 1995 holding a 
number of audit and ﬁnance roles following the merger of ti group 
with smiths group plc in december 2000 he went on to hold further 
senior ﬁnance roles most recently as finance director of their 
specialty engineering division in the interregnum between tom drury’s 
departure and peter dilnot’s appointment chris performed the role of 
acting chief executive in addition to the duties of group finance director 
chris will be stepping down from the board and leaving the company 
with effect from 31 august 2012 to join firstgroup plc as group 
finance director 
 bcom acc aca group finance director
appointed february 2007 and as senior independent director in july 
2007  chairman of the remuneration committee and member of the 
audit and nomination committees
skills and experience until january 2008 eric was a nonexecutive 
director of corus group plc a position he held for seven years 
eric has wide ranging european business experience including 
the telecoms defence and publishing sectors he holds a number 
of nonexecutive and advisory positions 
eric is considered by the board to be independent
other appointments chairman of the supervisory boards of 
bt nederland bv and thales nederlands bv and also supervisory board 
member of anwb bv htt nv imtech nv royal wegener nv and 
essent nv
 senior independent director
board of directors

 shanks group plc
annual report  accounts 2012

 appointed may 2005 chairman of the audit committee and a member 
of the remuneration and nomination committees
skills and experience peter is a chartered accountant and was 
finance director of taylor wimpey plc from 2002 until october 2008 
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 he was until december 2010 a nonexecutive 
director of oriel securities limited 
peter is considered by the board to be independent
 ba aca nonexecutive director
appointed september 2010 a member of the audit remuneration 
and nomination committees
skills and experience jacques is currently chairman and ceo of 
energy provider séchilienne sidec he was chairman and chief executive 
of sita and its parent company suez environnement in 2005 he was 
appointed chief executive of sodexo continental europe and s america 
since 2007 he has advised corporate and ﬁnancial sponsors specialising 
in infrastructure and environmental services investments worldwide 
he has extensive international nonexecutive and executive experience 
jacques is considered by the board to be independent
other appointments in september 2011 jacques was appointed 
as shanks’ nominated director on the board of hygea scrl
 mba nonexecutive director
appointed march 2007  a member of the audit remuneration 
and nomination committees
skills and experience stephen is currently the ceo and president 
ukeurope with international power plc he has responsibility for 
european plant operations ﬁnance energy trading and business 
development he is a chartered engineer and joined international power 
in 1985 holding senior positions in two uk power stations before being 
appointed managing director of their australian operations in 2000 
from january 2004 to february 2011 he was a director of international 
power plc resigning from that board following the amalgamation 
of international power and gdf suez energy international 
stephen is considered by the board to be independent
 beng phd nonexecutive director the chairman’s introduction
shanks group plc
annual report  accounts 2012
financial savings and improved risk 
management consistent with the 
principles of good corporate governance
of a risk committee together with a new health 
 safety committee further strengthened our 
governance framework and reporting structure 
a clear priority for the board during the year was 
the recruitment of a new group chief executive 
charged with bringing the energy and leadership 
to maintain the momentum of the group’s 
progress and manage the next phase of growth 
following on from a comprehensive search 
and recruitment process led by the nomination 
committee and external recruitment consultants 
i was therefore delighted to announce the 
appointment of peter dilnot who was appointed 
to the board in february 2012 and whom 
shareholders now have an opportunity to elect 
for the ﬁrst time at the forthcoming agm 
this year we report against the new uk 
corporate governance code which has 
superseded the combined code having fully 
considered the new code the board are pleased 
to conﬁrm compliance in all material respects 
save for one as identiﬁed in last year’s 
governance report regarding the annual 
reelection of executive directors a more 
detailed explanation of this together with our 
wider corporate governance arrangements 
are set out on the following pages 
on behalf of the board i am pleased to present 
the corporate governance report for 2012 
the board fully supports the principles of good 
corporate governance and is committed to the 
improvement and development of appropriate 
structures processes and procedures 
throughout the group in support of these 
principles
underpinning our entrepreneurial culture is 
a central framework which enhances 
coordination throughout the group and which 
will continue to deliver ﬁnancial savings and 
improved risk management consistent with 
the principles of good corporate governance 
this framework is in turn built around our 
core values of responsibility innovation 
straightforwardness and openness the aim 
of the central framework is to improve our 
ability to execute right ﬁrst time and to ensure 
experience and good ideas are shared across 
the group 
the board also recognises its responsibility 
to ensure its governance is relevant and focused 
on improving the business strengthening 
our internal controls and its management 
processes the establishment during the year 
 group chairman












principal board committees
executive management
specialist committees
divisional management
additional reporting line to group board the board fully supports the principles of good corporate 
governance this statement together with the remuneration 
report on pages 75 to 80 explains how the group has applied 
the provisions of the uk corporate governance code in force 
for the year to 31 march 2012 and also with the provisions of 
the disclosure and transparency rules on audit committees 
and corporate governance statements dtr7 the board 
considers that it has complied with section 1 of the governance 
code and dtr7 throughout the year with the single exception 
of code provision b71 relating to the annual reelection of all 
directors the board’s rationale for this was set out in last year’s 
annual report and accounts and is explained again in the 
nomination committee section on page 71 

the board comprises the chairman a further four independent 
nonexecutive directors the group chief executive and group 
finance director the only change to the board during the year 
was the resignation of tom drury as group chief executive 
on 30 september 2011 and the subsequent appointment of 
peter dilnot to this position on 1 february 2012 the chairman 
who has been independent since his original appointment has 
primary responsibility for running the board 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 formal division of 
responsibilities between the chairman and the group chief 
executive has been agreed by the board and documented a 
copy of which is available on the group’s website during the 
period from 30 september 2011 to 1 february 2012 chris 
surch undertook the role of acting group chief executive in 
addition to his existing duties of group finance director 
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 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 nonexecutive directors are not eligible to 
participate in any of the company’s share option or pension 
schemes the chairman also meets and communicates 
regularly with the other nonexecutive directors without the 
presence of the executive directors  
eric van amerongen continues to hold the position of senior 
independent director being 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 
the table below details the number of formal board meetings 
held in the year and the attendance record of each director  
director  board meetings
adrian auer chairman 13 13
peter dilnot 4 4
tom drury 5 5
peter johnson 12 13
jacques petry 12 13
stephen riley 12 13
chris surch 13 13
eric van amerongen 13 13
bracketed figures indicate maximum potential attendance of each director 
three of these meetings were held by telephone conference 

on appointment directors are given an introduction to the 
group’s operations including visits to principal sites and 
meetings with operational management as part of a planned 
induction programme in february 2012 during the first month 
of his appointment peter dilnot visited some 25 sites across 
the group met with senior and operational managers and 
worked alongside staff on picking lines and on collections  
specific training requirements of directors are met either directly 
or by the company through legalregulatory updates non
executive directors also have access to pricewaterhousecoopers’ 
nonexecutive database and course programme there is a 
rolling programme of holding board meetings at various group 
locations in order to review local operations and make site visits 
in the year under review the board visited facilities in nieuwegen 
netherlands ghent belgium and elstow uk  
in september 2011 as part of their practical commitment to 
reinvigorating the safety culture throughout the group the board 
attended a safety leadership presentationtraining session 
given by the uk safety health and environment department 
the presentation was followed by a site visit of the elstow waste 
facility focusing on health and safety one of the purposes of 
the training which was also provided to senior managers 
throughout the group was that of confirming the key essential 
health and safety standards applicable across all of the group’s 
activities this is now being taken forward by the health  safety 
committee reporting into the group executive committee 
shanks group plc
annual report  accounts 2012
 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 
meets regularly having met ten times during 
the year with a further three meetings being 
held by telephone conference in addition 
the board held an annual strategy conference 
with senior management in attendance 
at each main meeting following a review of 
the minutes of the previous meeting and 
any actions arising the first standing item 
of business for consideration by the board 
is the safety health and environmental report 
other regular reports include those from the 
group chief executive covering business 
performance markets and competition 
investor and analyst updates as well as 
progress against strategic objectives and 
capital expenditure projects 
the group finance director presents a monthly 
report on trading results key metrics and 
performance indicators whilst one of the 
purposes of the regular company secretary’s 
report is to ensure that the board are kept up 
to date on governance matters generally  
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  
all directors are required to notify the company 
on an ongoing basis of any other commitments 
and through the company secretary there are 
procedures for ensuring that the board’s 
powers for authorising directors’ conflicts of 
interest are operated effectively  
the work of the board is further supported by 
three formal committees audit remuneration 
and nomination detailed on the following 
pages in addition whilst not a committee with 
specific powers of its own delegated by the 
board the group chief executive is assisted 
in the performance of his duties by a group 
executive committee which meets monthly 
and whose permanent members include the 
group finance director and the managing 
directors of the netherlands belgium the uk 
and since may 2012 the managing director of 
orgaworld in addition there are three specialist 
committees reporting through to the group 
executive committee risk corporate 
responsibility and health  safety 

performance evaluation of the board its 
committees and directors during the year 
was based upon formalised self assessment 
questionnaires supplemented by structured 
interviews conducted by the chairman with 
individual directors the performance evaluation 
of the chairman was undertaken by the non
executive directors led by the senior independent 
director following this year’s performance 
evaluation the board recommends to shareholders 
the election and reelection of those directors 
standing at the forthcoming agm all of whom 
continue to demonstrate commitment to their role 
and whose performance continues to be effective  
the board recognise that a continuous and 
constructively critical evaluation of their 
performance is an important factor in unlocking 
the full potential of the group a number of 
topics were also identified for the board to 
focus further attention on in 2012  
as a consequence of the change of group chief 
executive during the year and peter dilnot’s 
appointment date being just two months from 
the financial year end the board determined to 
defer the planned external evaluation to 201213 
to allow a sufficient passage of time in order 
to reflect a more informed assessment of the 
contribution of the new group chief executive 
and his interaction with other board members 
the calendar of meetings of the board and its committees for 201112 is shown below 
 april may june july aug sept oct nov dec jan feb march
board main meeting   
board conference call      
audit committee      remuneration committee      nomination committee      
strategy meeting      shareholder agm      
 


a nonexecutive 
 chairman 1
b executive 
 directors 2
c independent 
 nonexecutive 
 directors 4
a
b
c


a 0–2 years 1
b 3–6 years 2
c 7 years 2
a
b
c
b
c
d
e


a building 
 materials
 chemical 1
b construction
 ﬁnancial 
 services 1
c electricity 1
d waterwaste 1
e telecom
 defence
 publishing 1
a

shanks group plc
annual report  accounts 2012

corporate governance  
 

the nomination committee is chaired by adrian auer and is 
comprised solely of nonexecutive directors eric van amerongen 
peter johnson stephen riley and jacques petry the committee 
is formally constituted with written terms of reference which 
are available on the group’s website it met on three occasions 
during the year and is responsible for making recommendations 
to the board on the appointment of directors and succession 
planning it also reviews organisation and resourcing plans for 
the purpose of providing assurance that appropriate processes 
are in place to ensure a sufficient supply of competent executive 
and senior management  
during the year the committee were engaged primarily in the 
selection of a new group chief executive necessitated by the 
announcement in july 2011 of tom drury’s decision to resign 
in the autumn of 2011 facilitated by an external recruitment 
consultancy a two phase process was undertaken including 
a preliminary mapping exercise during which the candidate 
role was refined and developed this was followed by a 
comprehensive search for an individual with the requisite 
competencies and a proven track record of growth and 
value creation within a highly capital intensive business 
candidates at both the long and short list stages of the 
process were purposively drawn from a diverse population 
in terms of experience and nationality as well as gender 
any new director appointed to the board is subject to election 
by shareholders at the first opportunity after their appointment 
in accordance with the company’s articles of association 
nonexecutive directors are also required to stand for reelection 
on an annual basis nonexecutive directors have previously 
been appointed for renewable three year terms but for 
consistency with their annual reelection requirements letters 
of reappointment are now issued on the basis of renewable 
annual terms 
both the executive directors have contractual notice periods of 
one year and are required to stand for reelection every three 
years the board does not believe it is necessary to require 
executive directors to stand for annual reelection as the 
chairman and nonexecutives have an existing accountability 
to shareholders for ensuring executives perform effectively and 
a responsibility if necessary to remove them from their post if 
they fail to do so however in recognition of the uk corporate 
governance code requirement for annual reelections the 
board will review on an annual basis their position regarding 
applicability to the executive directors  
as previously reported following discussion of the 
recommendations of the lord davies report on board room 
diversity whilst the committee at the current time has not 
determined to set a specific female board member quota 
appointments to the board and throughout the group will 
continue to be based on the diversity of contribution and 
required competencies irrespective of gender statistical 
employment data for the group can be found in the shanks 
corporate responsibility report available on the group website 
director nomination committee meetings 
adrian auer chairman 3 3
peter johnson 3 3
jacques petry 3 3
stephen riley 2 3
eric van amerongen 3 3
bracketed figures indicate potential attendance of each director 

the remuneration committee which met five 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 eric van amerongen adrian 
auer peter johnson stephen riley and jacques petry the 
committee is chaired by eric van amerongen and 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 and the 
savings related 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 nonexecutive 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 75 to 80 contains 
particulars of directors’ remuneration and their interests in 
the company’s shares  
director remuneration committee meetings
eric van amerongen chairman 5 5
adrian auer 5 5
peter johnson 5 5
jacques petry 5 5
stephen riley 5 5
bracketed figures indicate potential attendance of each director 
shanks group plc
annual report  accounts 2012
  

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 peter johnson stephen riley 
jacques petry and eric van amerongen peter johnson who 
continues to have current and relevant financial experience 
under uk corporate governance code requirements chaired 
the committee throughout the year representatives from the 
external auditors pricewaterhousecoopers llp the risk 
management and internal audit manager the chairman and 
the executive directors are regularly invited to attend meetings 
the committee also has access to the external auditors’ advice 
without the presence of the executive directors in the course 
of the financial year peter johnson the audit committee 
chairman also met with each of the divisional finance directors 
to obtain first hand a clear understanding of some of the 
underlying details behind the financial information presented 
to and considered by the committee and the board 
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 regularly reviews other risk management 
and control documentation including the group’s policy 
on whistleblowing and security reporting procedures  
specifically at their may 2011 meeting the committee considered 
combined codecorporate governance compliance taxation 
and the 2011 financial statements the october 2011 meeting 
was concerned primarily with the interim results whilst the 
february 2012 meeting reviewed goodwill and other intangibles 
pricewaterhousecoopers’ audit plan and preparation of the 
2012 financial statements 
director audit committee meetings
peter johnson chairman 3 3
jacques petry 3 3
stephen riley 3 3
eric van amerongen 3 3
bracketed figures indicate potential attendance of each director 

pricewaterhousecoopers llp rotate their lead audit 
engagement partner as a minimum at least every five years 
as required by their own rules and by regulatory bodies 
rotation ensures a fresh look without sacrificing institutional 
knowledge rotation of key audit partners other partners 
including specialist partners and senior engagement personnel 
is reviewed on a regular basis by the lead audit engagement 
partner in consultation with the audit committee as well as 
the lead audit partner being required to rotate every five years 
key partners involved in the audit are required to do so every 
seven years and other partners and senior staff members every 
ten years 
specified nonaudit services may be provided by the external 
auditor subject to a competitive bid process other than in 
situations where it is determined by the group finance director 
that the work is closely related to the audit or when a significant 
benefit can be obtained from work previously conducted by 
the external auditor whilst the group finance director may 
approve any new engagement up to the value of £25000 
anything in excess requires audit committee approval up to an 
agreed annual aggregate limit of 75 of the prior year audit fee 
in exceptional circumstances this limit may be exceeded with 
the approval of the board in determining whether or not to 
engage the external auditor to provide any nonaudit services 
consideration will be given to whether this would create a threat 
to their independence similarly the external auditor will not be 
permitted to undertake any advocacy role for the group such 
that their objectivity may be compromised the external auditor 
may not provide services involving the preparation of accounting 
records or financial statements the design implementation 
and operation of financial information systems actuarial and 
internal control functions or the management of internal audits 
fees paid to the auditors are disclosed in note 5 of the 
financial statements 
tax and other professional services have also been provided to 
the group by audit firms kpmg and ernst  young during the 
year a resolution proposing pricewaterhousecoopers llp’s 
reappointment as group auditors will be put to shareholders 
at the forthcoming agm  

shanks group plc
annual report  accounts 2012

corporate governance  
 

the responsibilities of the directors and the auditors in relation 
to the financial statements are set out on pages 84 to 86 

the group risk management framework and the steps taken 
to manage risk are outlined on pages 42 to 47  

the system of internal control is based on a continuous process 
of identifying evaluating and managing risks including the risk 
management processes outlined on pages 42 and 43 the 
board of directors has overall responsibility for the group’s 
system of internal control and for reviewing its effectiveness 
the board recognises that internal control systems are designed 
to manage rather than eliminate the risk of failure to achieve 
business objectives and can therefore only provide reasonable 
and not absolute assurance against material misstatements 
losses and the breach of laws and regulations 
 in addition to the board’s ongoing internal control monitoring 
process it has also conducted an annual review of the 
effectiveness of the group’s system of internal control in 
compliance with provision c21 of the uk corporate 
governance code this review covered all material controls 
including financial operational and compliance controls and risk 
management systems specifically the board’s review 
consisted of the following elements 
• consideration of changes in the risk environment and the 
group’s ability to respond to these through its review of 
business risk registers controls and improvement action plans 
• review of the sixmonthly certification by country 
management that appropriate internal controls are in place 
following assessment by the risk management and internal 
audit function  
• review of reports by internal audit and external auditors 
during the year internal audits were conducted on purchases 
and payments systems weighbridge operations accrued 
income controls over cash transactions as well as financial 
controls audits at operational level 

 regular features of the group’s internal control system which 
contribute towards its continuous monitoring are as follows 
• a defined schedule of matters for decision by the board 
• a clear management structure including clear limits of 
authority over items such as capital expenditure pricing 
strategy and contract authorisation 
• a comprehensive planning and budgeting exercise 
performance is measured monthly against plan and prior year 
results and explanations sought for significant variances 
key performance indicators kpis are also extensively used 
to help management of the business and to provide early 
warning of potential additional risk factors see pages 18 
and 19 for additional information on the use of kpis 
• monthly meetings of the group’s most senior managers and 
executive directors to discuss performance and plans 
• monthly visits to key operating locations by the executive 
directors to attend local management meetings which include 
discussion of key risk areas 
• appointment and retention of appropriately experienced and 
qualified staff to help achieve business objectives 
• an annual riskbased internal audit plan approved by the audit 
committee audits are performed under the guidance of the 
risk management and internal audit manager with findings 
discussed at business unit meetings summaries of audit 
findings and the status of action plans to remedy significant 
failings are discussed at group board and audit committee 
meetings on a regular basis the risk management and 
internal audit manager attends all audit committee meetings 
• a range of quality assurance and environmental management 
systems in use across the group where appropriate these 
are independently certified to internationally recognised 
standards including iso 9001 and iso 14001 and subject 
to regular independent auditing 
• regular meetings of the audit committee comprising non
executive directors to consider all key aspects of the risk 
management and internal control systems  
where weaknesses in the internal control system have been 
identified through the monitoring processes outlined above 
plans for strengthening them are put in place and action plans 
regularly monitored until complete the board confirms that 
no material weaknesses were identified during the year and 
therefore no remedial action is required in relation to them 
shanks group plc
annual report  accounts 2012
  

in addition to the general risk management and internal control 
processes described above the group has also implemented 
internal controls specific to the financial reporting process and 
the preparation of the annual consolidated financial statements 
the main control aspects are as follows 
• formal written financial policies and procedures applicable 
to all business units 
• a detailed reporting calendar including the submission of 
detailed monthly accounts for each business unit in addition 
to the yearend and interim reporting process 
• detailed management review to board level of both monthly 
management accounts and yearend and interim accounts 
• biannual certification by country managing directors and 
finance directors and executive directors on compliance with 
appropriate policies and the accuracy of financial information  
information on the company’s share capital is set out in the 
directors’ report 

over the last year the group has considered its response to the 
uk bribery act which came into force in july 2011 the main 
steps taken to ensure compliance have been as follows 
• distribution of the new group antibribery policy to all 
business units 
• followup of the policy by an article in the group newsletter 
• manager briefing presentations given to all key staff  
• regular updates given to the audit committee on progress 
against the antibribery policy implementation plan 
internal audit will be reviewing compliance with various aspects 
of the policy across the group 
subsequent to the year end a 24 hour7 days a week 
confidential reporting ‘whistleblowing’ service has also been 
established for employees 

the company has an active investor relations programme 
regularly meeting with institutional investors analysts press and 
other parties the board obtains feedback from its joint brokers 
jefferies hoare govett formally rbs hoare govett and investec 
on the views of institutional shareholders and the chairman 
attends meetings with major shareholders whose views are 
communicated to the board as a whole detailed shareholder 
and market comment in particular is reported to the board 
after results announcements the group website contains 
useful information for shareholders and the general public 
the company also communicates with private and institutional 
investors through the agm 
the uk stewardship code introduced by the financial 
reporting council in 2010 encourages enhanced shareholder 
engagement particularly with a company’s institutional investors 
to improve longterm returns to shareholders which the board 
recognises and supports the board was therefore delighted 
that the 2011 report and accounts won two prestigious 
awards ‘best strategy disclosure’ of a ftse 250 company 
at the icsa hermes transparency in governance awards in 
november 2011 and ‘best investor communication’ at the 2011 
plc awards held in march 2012  
shanks group
winner
best investor
communication

shanks group plc
annual report  accounts 2012

corporate governance the principal objectives of the remuneration 
committee which is chaired by eric van 
amerongen and comprises the nonexecutive 
directors are to attract retain and motivate 
high quality senior management and to provide 
a competitive package of incentives 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 members and 
their attendance at meetings held during the 
year are set out in the corporate governance 
section on page 71 the committee’s duties 
are outlined in its terms of reference which 
are available on the group website 
kepler associates partnership llp kepler 
provided independent advice to the committee 
relating to executive remuneration and benefits 
during the year kepler were considered to be 
independent as they provided no other services 
to the group 
a significant proportion of executive directors’ 
potential total remuneration is performance 
related and therefore variable this comprises 
annual bonus and longer term ltip 
incentives the fixed proportion of their overall 
remuneration comprises base salary and a 
cash element in lieu of pension for directors 
achieving median performance performance 
related pay would represent almost 50 of 
total remuneration if performance were such 
that the maximum award available under each 
variable incentive was paid performance 
related pay would represent approximately 
70 of total remuneration as shown below  
 
 
 52 52  52 52
55 55 55 55
 48 48  48 48
45 45 45 45
 29 29  29 29
32 32 32 32
 71 71  71 71
68 68 68 68

fixed variable
 of total remuneration  of total remuneration
0 50 100 0 50 100
group
ceo
group
fd
group
ceo
group
fd
at median at maximum
shanks group plc
annual report  accounts 2012
 remuneration report
 
chairman of the 
remuneration committee
incentive arrangements include targets 
which are very stretching and are in 
alignment with the interests of shareholders  

the basic salary element is determined primarily by reference to 
external data which takes into account the executive directors’ 
duties and responsibilities basic salary is generally reviewed 
on an annual basis or following a significant change in 
responsibilities the committee also have regard specifically to 
the general level of pay awards around the group the group 
chief executive peter dilnot’s initial base salary of £432600 
is scheduled to be reviewed for the first time in april 2013 
in addition to his basic salary of £283250 as group finance 
director chris surch received an additional responsibility 
allowance of £150000 in respect of carrying out the duties 
of acting group chief executive in the interregnum between 
tom drury’s departure and peter dilnot’s appointment  

annual cash bonuses for executive directors are paid at the 
discretion of the remuneration committee and are determined 
as a percentage of base salary dependent upon corporate 
financial performance compared to target and the achievement 
of personal objectives set by the committee  
for the year to 31 march 2012 the maximum bonus potential 
for executive directors was 100 of base salary 75 of the 
bonus was measured against financial targets and 25 was 
based on the achievement of personal objectives for the 
financial component 25 of base salary was payable for 
achievement of 201112 budgeted profit before tax whilst 
a maximum of 70 of salary was payable for achievement 
of full potential plan fpp profit targets representing a 
stretch of approximately 13 outperformance of budget 
the remaining 5 of salary was based on underlying free 
cash flow performance in peter dilnot’s case the maximum 
was limited to twotwelfths of the maximum reflecting his 
joining date of 1 february 2012  
minimum threshold performance for the corporate financial 
component was exceeded for 201112 and the underlying 
free cash flow element target was partially met this led to a 
payout of 66 of salary prorated for period in employment 
for peter dilnot achievement of personal objectives relating 
to safety cost efficiencies project milestones and strategic 
planning resulted in a prorated payout of 21 resulting in 
a total bonus for 201112 of 87 pro rata of salary for peter 
dilnot further to the announcement that chris surch would be 
stepping down from the board with effect from 31 august 2012 
to take up a new appointment as group finance director of 
firstgroup plc and therefore being under notice at the time 
bonuses are paid he received no 201112 bonus 
the remuneration committee has reviewed the 201213 annual 
bonus plan to ensure this shortterm reward mechanism for 
senior executives continues to be aligned with the interests of 
shareholders and more specifically places additional emphasis 
on performance incentivisation being closely in line with the 
achievement of the shanks group strategy profit growth must be 
achieved for any financial performance reward with further linkage 
to profit improvement and shareholder return the annual bonus 
plan is intended to motivate senior executives to focus on both 
shortterm performance and drive initiatives which will support 
longterm value creation the committee acknowledge that a 
fundamental measure of effective management at shanks is 
the superior management of capital projects and as such it is 
appropriate to reflect this in the bonus plan structure  
whilst retaining a 75 bonus opportunity for achievement of 
financial targets the committee have therefore reweighted the 
components such that 50 will now be linked to a group profit 
before tax target and greater emphasis placed on group 
underlying free cash flow such that it represents a 13 
opportunity with the remaining 12 being linked to a new 
return on assets target  
the 25 bonus opportunity for personal objectives will also 
be retained though the number of targets has been reduced 
down to a maximum of five inclusive of a safety health  
environment target 

executive directors and senior employees may be granted awards 
annually as determined by the committee the vesting of these 
awards is subject to the attainment of performance conditions 
measured over a three year period awards are in the form of 
shanks group plc shares  
for outstanding awards originally granted in 2010 the 
company’s total shareholder return tsr performance will 
be compared to the tsr of the ftse support services sector 
with awards only vesting to the extent the committee is satisfied 
that the company’s tsr performance reflects underlying 
performance of the company none of the awards will vest 
if the company’s tsr is ranked below median whilst 25 
will vest for median performance  
at the 2011 agm shareholders approved a replacement ltip 
for awards granted in 2011 and 2012 vesting is linked to three 
years growth in earnings per share eps and share price 
the committee believes that eps growth is a key indicator of 
success for the company while share price growth will help 
ensure strong alignment with shareholders both measures are 
transparent and motivational to executives they are combined 
in a multiplicative manner with sliding scales for each measure 
so that share price growth without eps growth would not be 
rewarded it provides a progressive relationship between pay 
and performance and a highly motivational incentive  
annual grants of shares are up to a maximum of 200 of salary 
the initial target award is 50 of salary 200 maximum for the 
group chief executive and 375 150 maximum of salary 
for the group finance director shares vest on three year 
growth in eps and share price as shown in the charts opposite 
chris surch’s outstanding ltips will lapse upon his leaving the 
company on 31 august 2012 

shanks group plc
annual report  accounts 2012

remuneration report three year eps growth determines the ‘core award’ as follows 
• no award for eps growth of less than 7 pa 
• 20 of the target award for eps growth of 7 pa 
• 100 of the target award for eps growth of 15 pa 
maximum vesting for the majority of participants 
• for the most senior executives only including the two 
executive directors 200 of target award vesting for eps 
growth of 25 pa or more 
• straightline vesting inbetween these points 
the ‘core award’ is subject to a ‘share price multiplier’ as follows 
• 1 times for share price growth of up to and including 15 pa 
• 15 times for share price growth of 20 pa 
• for the most senior executives only including the two 
executive directors 2 times for share price growth of 
25 pa or more 
• straightline vesting inbetween these points 
share price growth is calculated using three month average 
share prices immediately prior to the start and end of the 
performance period  
in addition to meeting the eps and share price growth targets 
outlined above the committee must satisfy itself that the 
recorded outcome is a fair reflection of the underlying 
performance of the group 
the remuneration committee believes that these incentive 
arrangements include targets which are very stretching and are 
in alignment with the interests of shareholders as they help to 
motivate and retain executives and senior managers to deliver 
the group’s longterm strategy and goals  
it is the committee’s policy to periodically review executive 
remuneration arrangements including the ltip performance 
measures and targets which the committee will continue to do 
from time to time 
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 2012 the employee 
share trust did not hold any of the company’s shares  
 
the graph above shows the tsr of the company over the five 
year period to 31 march 2012 the two comparator indices for 
which tsr is also shown have been selected as they are broad 
equity indices of which the company is a constituent member  
 
 
eps growth determines a core award which is subject to a multiplier based on share price growth
2011 and 2012 ltip performance targets
all participants           senior executives      eps  earnings per share
award as  of target
3 year eps compound annualised growth rate
7 15 25
200
100
20
20x
15x
10x
share price multiplier
3 year share price compound annualised growth rate 
15 20 25


shanks group plc         ftse 250 excl investment trusts   
ftse support services sector
0607 0708 0809 0910 1011 1112
120
100
80
60
40
20
0
source datastream
shanks group plc
annual report  accounts 2012
  
 the remuneration committee believes that share ownership by employees encourages the matching of longterm interests 
between employees and shareholders uk employees including executive directors may participate in an hmrc approved srsos 
under the terms of this scheme 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 options are granted at the higher of the nominal value of an ordinary 10p share and an 
amount determined by the remuneration committee being not less than 80 of the market value employees held options over 
circa 13 million shares under the srsos as at 31 march 2012 

the remuneration committee has agreed that the policy with regard to the notice period for executive directors is one year 
accordingly peter dilnot and chris surch have rolling service contracts dated 1 february 2012 and 27 april 2009 respectively 
which require one year’s notice from the company  
the executive directors’ service contracts contain the ability for the company to terminate the employment of the executive 
directors by making a payment in lieu of salary and contractual benefits for the twelve month notice period the company has 
the ability to pay such sums in instalments requiring the director to mitigate his loss for example by gaining new employment 
over the relevant period 

the nonexecutive directors do not have service contracts as their terms of engagement are governed by letters of appointment 
these letters of appointment have previously included renewable three year terms but since 31 march 2011 reappointment letters 
have been issued with an annual renewable term linked for consistency to the end of july being the month of the company’s 
agm at which all nonexecutive directors must stand for annual reelection as such subject to reelection by shareholders both 
adrian auer’s and peter johnson’s letters of appointment will be renewed on 31 july 2012 
the chairman and nonexecutive directors do not participate in the company’s share or bonus plans and do not receive any 
pension contributions  
 
date of original 
appointment
date of current 
reappointment  expiry date 
unexpired term at date 
of this report
adrian auer
i
 16 may 2005 16 may 2011 31 july 2012  2 months
peter johnson
ii
 16 may 2005 16 may 2011 31 july 2012  2 months
jacques petry 30 sept 2010 – 30 sept 2013 16 months
stephen riley 29 march 2007 29 march 2010 29 march 2013 10 months 
eric van amerongen
iii
 9 feb 2007 9 feb 2010 9 feb 2013 8 months
notes 
i group chairman and nomination committee chairman 
ii audit committee chairman 
iii remuneration committee chairman and senior independent director 

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 holding one such position and the policy is that fees 
may be retained by the director reflecting the personal risk assumed in such appointments no external appointments were held by 
the executive directors during the year  
 
shanks group plc
annual report  accounts 2012

remuneration report  
 

the directors’ interests in the ordinary shares of the company both during the year and at 17 may 2012 were as follows   
as at 1 april 2011 or date of appointment if later as at 31 march 2012 and 17 may 2012
adrian auer 43333 43333
peter dilnot – 59500
peter johnson 24684 61007
jacques petry ––
stephen riley ––
chris surch  93333 93333
eric van amerongen – –
note  
i tom drury had an interest in 68333 ordinary shares as at 1 april 2011 and as at the date of his leaving the company on 30 september 2011 
the auditors are required to report on the information contained in the remaining section of the remuneration report  

basic salary
fees
£000
performance 
related bonus 
£000
other  
emoluments
i
 
£000 
2012 
total
£000
2011 
total
£000
chairman  
adrian auer 113 – – 113 110
executive directors  
peter dilnot appointed 1 february 2012 72 63 22 157 –
tom drury resigned 30 september 2011 216 – 68 284 840
chris surch  283 – 228 511 545
nonexecutive directors  
peter johnson 43 – – 43 42
jacques petry
ii
 40–3 43 21
stephen riley 38 – – 38 37
eric van amerongen
ii
 53–– 53 51
total 85863321 1242 1646
notes  
i other emoluments include a car allowance and medical insurance peter dilnot and chris surch also receive a cash element paid in lieu of pension scheme 
contributions equating to 25 and 20 of salary respectively tom drury similarly received a 25 equivalent chris surch also received a payment of £150000 in 
respect of carrying out the duties of acting group chief executive in the interregnum between tom drury’s departure and peter dilnot’s appointment all of these 
items are nonpensionable  
ii eric van amerongen’s and jacques petry’s fees are paid in euros but stated above in sterling at an exchange rate of £1 €11556 2011 £1 €11725 
jacques petry also received £3200 in respect of fees associated with his appointment as shanks group’s nominated director on the board of hygea scrl  
iii the nonexecutive directors do not participate in the annual bonus plan and do not receive any pension contributions from the group 
 shanks group plc
annual report  accounts 2012
  

the following directors held options to subscribe for ordinary shares under the shanks group plc savings related share 
option scheme 
  date of grant 
normal 
exercise dates 
from
normal 
exercise dates 
to 
option price 
pence
iii
number at 
1 april 2011
granted 
in year
lapsed  
in year 
exercised  
in year 
number at 
31 march 2012
tom drury
i
 250909 011112300413 710 12781 – 12781 – –
chris surch
ii
 250909 011112 300413 710 12781 – – – 12781 
notes 
i tom drury’s option lapsed upon his leaving the company on 30 september 2011 
ii chris surch’s option will lapse upon his leaving the company on 31 august 2012 
iii 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 of the average market price 
of the shares over the last three dealing days immediately preceding the date of the invitation to subscribe  

the executive directors have been made notional allocations of shares under the company’s long term incentive plans  
 
outstanding 
awards at  
31 march 
2011 
 awards made 
during the year
awards lapsed 
during the year 
awards 
exercised 
during the year
outstanding 
awards at 
31 march 2012 date of award
share price on 
date of award 
pence 
performance 
period end 
restricted 
period end
peter dilnot
i
 – 887000 – –887000010212 9985 310314 010215
tom drury
ii
 250000 – 250000 – – 100709 6850  310313 090613
 418000 – 418000 – – 090610 10030 310314 010814
chris surch
iii
 175000  – 175000   – – 100709 6850  310312  100712
 274000  –  – 274000 090610 10030 310313 090613
 – 334000– –33400001081112690 310314 010814
notes 
i peter dilnot’s award on 1 february 2012 was made on his appointment to the company primarily to compensate for longterm incentives forfeited upon leaving his 
former employer 
ii tom drury’s award lapsed upon his leaving the company on 30 september 2011 
iii chris surch’s outstanding awards will lapse upon his leaving the company on 31 august 2012 
iv the tsr performance condition relating to awards granted in 2009 under the long term incentive plan was not met at the end of the three year performance period 
and these awards lapsed on 31 march 2012  
v the performance conditions relating to the vesting of outstanding awards are shown on pages 76 and 77 
the highest closing midmarket price of the ordinary shares of the company during the year was 1315 pence and the lowest 
closing midmarket price during the year was 895 pence the midmarket price at the close of business on 31 march 2012 was 
9875 pence  
 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  
 
 
chairman of the remuneration committee  
17 may 2012 
 

shanks group plc
annual report  accounts 2012

remuneration report  
 the composition of the board of directors at the date of this 
report together with their biographical details is shown on 
pages 66 and 67 adrian auer eric van amerongen peter 
johnson stephen riley and chris surch all served on the board 
throughout the financial year under review peter dilnot was 
appointed as group chief executive with effect from 1 february 
2012 following tom drury’s resignation on 30 september 2011 
adrian auer eric van amerongen peter johnson stephen riley 
and jacques petry will be offering themselves for annual  
reelection at the company’s agm to be held on 19 july 2012 
in accordance with the company’s articles of association whilst 
peter dilnot will be seeking his first election by shareholders 
chris surch is also standing it being three years since his last 
reelection the board commends to shareholders the  
reelection and election of these directors all of whom continue 
to demonstrate commitment to their respective roles and all 
of whose individual performance continues to be effective  
subsequent to the yearend the company announced that 
chris surch would be stepping down from the board with 
effect from 31 august 2012 to take up a new appointment 
as0020group finance director of firstgroup plc 

as at the date of this report the company has granted 
indemnities in favour of its directors to the extent permitted by 
law in respect of certain liabilities incurred as a result of carrying 
out the role as a director of the company the indemnities are 
qualifying third party indemnity provisions for the purposes of 
the companies act 2006 in respect of those liabilities for which 
the directors may not be indemnified the company maintained 
a directors’ and officers’ liability insurance policy throughout 
the0020financial year and has renewed that policy  

shanks group plc is one of europe’s leading waste 
management businesses with operations in the netherlands 
belgium the uk and canada providing a range of recycling 
and energy recovery solutions and technologies to customers 
in the public and private sectors the group has more than 
a hundred facilities handling more than seven million tonnes 
of waste a year of which some 78 is recycled or recovered 
group activities range from mechanical biological treatment 
and anaerobic digestion to recycling and waste collection 
operations 
preceding sections of this annual report include 
about shanks understanding our strategy and markets 
managing a sustainable business risks and uncertainties and 
our performance these refer to the objectives and strategy of 
the group its competition and the markets in which it operates 
the principal risks and uncertainties it faces a review of the 
development and performance of the business for the year 
ended 31 march 2012 the group’s financial position key 
performance indicators and likely future developments of 
the business together with the governance section the 
information referred to above fulfils the requirements of the 
business review provisions in section 417 of the companies act 
2006 and is incorporated by reference into and is deemed to 
form part of this report together with the other information 
referred to in this directors’ report 

during the year acquisitions have been made for an initial cash 
consideration of £34m 2011 £69m on 1 march 2012 the 
group acquired the assets of van tuijl glasrecycling bv for a 
cash consideration of £34m with contingent consideration of 
£17m further details are set out in note 17 of the financial 
statements disposals amounted to nil 2011 £246m  

the group spent £55000 2011 £274000 on research 
and development during the year ended 31 march 2012 
this expenditure related to the group’s participation in a four 
year project by a consortium of universities research centres 
and commercial companies in belgium aimed at developing 
technologies for mapping landfill sites optimising waste 
decomposition processes and the recovery of energy 
and materials through excavation techniques and waste  
pretreatment 

the group’s consolidated income statement appears on page 
88 and note 3 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 £268m 2011 £219m  
the directors recommend a final dividend of 235p 2011 225p 
per share be paid on 1 august 2012 to ordinary shareholders 
on the register of members at close of business on 6 july 2012 
this dividend if approved by shareholders together with the 
interim dividend of 11p 2011 10p per share already paid on 
13 january 2012 will make a total dividend for the year of 345p 
per share 2011 325p  

after making enquiries the directors have formed the view 
at the time of approving the financial statements that the 
company and the group have adequate resources to continue 
in operational existence for the foreseeable future and that 
the group’s business is a going concern for this reason the 
directors continue to adopt the going concern basis in 
preparing the financial statements  
shanks group plc
annual report  accounts 2012
 directors’ report  

as at 31 march 2012 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 
there being no further notified changes up to 17 may 2012 
 number of shares percentage
schroders plc 59005397 1487
artemis investment 
management llp 29110210 734 
royal london asset 
management 19850423 500
norges bank 16312838 411
legal  general group plc 13377640  337 

the company’s share capital comprises ordinary shares of 
10 pence each par value as at 31 march 2012 and as at the 
date of this report there were 396857212 ordinary shares in 
issue during the year ended 31 march 2012 no ordinary shares 
were issued other than in respect of the exercise of options or 
awards under the company’s share schemes details of which 
are given in note 7 to the financial statements the principal 
rights and obligations attaching to the ordinary shares are 
as follows 
• 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 assets including 
fully paid shares or debentures of any other company 
the directors may deduct from any dividend payable to a 
member all sums of money if any payable by such member 
to the company in respect of their ordinary shares 
• voting rights – voting at any general meeting is by a show of 
hands unless a poll is duly demanded voting at this year’s 
agm will be by a poll only on a show of hands every 
shareholder who is present in person or by proxy or 
represented by a corporate representative has one vote 
regardless of the number of shares held by the shareholder 
on a poll every shareholder who is present in person or by 
proxy or represented by a corporate representative has one 
vote for every share held by that shareholder a poll may be 
demanded by any of the following a the chairman of the 
meeting b at least five shareholders entitled to vote and 
present in person or by proxy or represented by corporate 
representatives at the meeting c any shareholders present 
in person or by proxy or represented by corporate 
representatives 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 
shareholders present in person or by proxy or represented 
by corporate representatives 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 joint holders of an ordinary share 
the vote of the senior who tenders a vote shall be accepted 
to the exclusion of the votes of the other joint holders 
seniority is determined by the order in which the names of 
the joint holders appear in the company’s register of members 
in respect of the joint holding the deadline for appointing 
proxies to exercise voting rights at any general meeting is 
set out in the notice convening the relevant meeting the 
company is not aware of any agreements between holders 
of its shares that may result in restrictions on voting rights  
• return of capital – in the event of the liquidation of the 
company after payment of all liabilities and deductions taking 
priority 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 law 
divide among the shareholders in kind the whole or any part of 
the company’s assets or vest the company’s assets in whole 
or in part in trustees such trust for the benefit of shareholders 
but no shareholder may be compelled to accept any assets 
upon which there is any liability  

there are no restrictions under the company’s memorandum 
or articles of association that restrict the rights of members to 
hold or transfer the company’s shares certain restrictions may 
however from time to time be imposed by laws and regulations 
for example insider trading laws the company is not aware 
of any agreements between holders of its shares that may result 
in restrictions on the transfer of securities  

the company operates a number of employee share schemes 
under one of those schemes ordinary shares may be held by 
trustees on behalf of employees employees are not entitled 
to exercise directly any voting or other control rights in respect 
of any shares held by such trustees and the trustees have full 
discretion to vote or abstain from voting at general meetings 
of the company in respect of such shares  

as at 31 march 2012 and as at the date of this report the 
company had in issue a retail bond comprising €100 million 
5 guaranteed notes due 22 october 2015 there are no 
restrictions under the instrument governing the guaranteed 
notes that restrict the rights of investors to hold or transfer 
the guaranteed notes the company is not aware of any 
agreements between the holders of guaranteed notes that may 
result in restrictions on the transfer of guaranteed notes 
 
shanks group plc
annual report  accounts 2012

directors’ report  
 

the company shall appoint not less than two directors 
disregarding alternate directors the appointment and 
replacement of directors may be made as follows  
• the company’s members may by ordinary resolution 
appoint any person who is willing to act to be a director 
• the board may appoint any person who is willing to act to be 
a director any director so appointed shall hold office only until 
the next agm and shall then be eligible for election  
• each executive director shall retire from office no later than 
at the third agm after the agm at which he or she was last 
elected but he or she may be reappointed by ordinary 
resolution if eligible and willing  
• each nonexecutive director shall retire from office at every 
agm but he or she may be reappointed by ordinary 
resolution if eligible and willing  
• the company may by special resolution remove any 
director before the expiry of his or her period of office or may 
by ordinary resolution remove a director where special notice 
has been given and the necessary statutory procedures are 
complied with 
• a director must vacate his or her office if any of the 
circumstances in article 100 of the articles of association 
arise 

the articles of association of the company provide 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 articles of 
association and by 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 powers by the directors include the following  
• 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 
employees share scheme is restricted under the companies 
act 2006 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 act 2006 the 
company may also not allot shares for cash otherwise than 
pursuant to an employees 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 company’s shareholders 
the company received authority at the last agm to allot 
shares for cash on a non preemptive basis up to a maximum 
nominal amount of £1984230 this authority lasts until the 
earlier of the company’s agm in 2012 or 30 september 2012 
• repurchase of shares – subject to authorisation by 
shareholder resolution the company may purchase all or any 
of its own shares in accordance with the companies act 2006 
and the listing rules 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 the company received authority at the last agm to 
purchase up to 39684602 ordinary shares this authority 
lasts until the earlier of the company’s agm in 2012 or 
30 september 2012 
• borrowing powers – the directors are empowered to exercise 
all the powers of the company to borrow money and to 
mortgage or charge all or any part of the company’s assets 
provided that the aggregate amount of borrowings of the 
group outstanding at any time does not exceed the limit set 
out in the company’s articles of association unless 
sanctioned by an ordinary resolution of the company’s 
shareholders 

the company may alter its articles of association by special 
resolution passed at a general meeting 

the board is fully committed to high standards of corporate 
governance details relating to the company’s compliance with 
the uk corporate governance code for the financial year are 
given in the corporate governance and remuneration reports 
on pages 68 to 80  

information on corporate responsibility matters including the 
environment employment policies health and safety and 
community relations are set out on pages 34 to 41 the group 
corporate responsibility policy is available on the group 
website as is the 2012 group corporate responsibility report 

during the financial year donations made by the group for 
charitable purposes amounted to £17000 2011 £19000 
inclusive of £15000 to the uk youth charity the prince’s trust 
also in the uk through the landfill communities fund the 
group has applied £754000 2011 £546000 via notforprofit 
organisations to undertake projects such as disused land 
restoration public park maintenance and habitat conservation 
in addition staff at individual group businesses have organised 
various fund raising events to support local and national charities 
no donations were made by the group for political purposes 
during the financial year 2011 £nil  
  
shanks group plc
annual report  accounts 2012
  

the company does not currently subscribe to any code or 
standard on payment practice it is the company’s policy 
however to settle terms of payment with suppliers when 
agreeing the terms of each transaction to ensure that suppliers 
are made aware of the terms of payment and to abide by the 
terms of payment 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 58 days 
2011 67 days for the group and was 38 days 2011 35 days 
for the company  
 the group’s principal financing instrument at 31 march 2012 
a €200m term loan and multicurrency revolving credit facility 
with six major banks contains an option for those banks to 
declare by notice that all sums outstanding under that 
agreement are repayable immediately in the event of a change 
of control of the company any such notice may take effect no 
earlier than 30 days from the change of control and if exercised 
at 31 march 2012 would have required the repayment of 
£846m in principal and interest  
the group’s five year retail bond issued in october 2010 
requires notice to be given to bondholders within seven 
business days of a change of control following which the 
holders have an option to seek repayment at a 1 premium 
within 60 days of that notice such repayment must be made 
within 10 business days of the expiry of the option period 
if exercised at 31 march 2012 repayment of £860m 
in principal and interest would have been required  
the notes issued under the group’s 24 march 2011 private 
placement contain an option for the noteholders to enforce 
prepayment between 30 and 60 days from a change of control 
of outstanding principal and interest which would have 
amounted in total at 31 march 2012 to £492m in addition 
a makewhole payment amounting to £92m which is not 
provided for in these financial statements would be payable 
to private placement noteholders based on treasury yields 
at 31 march 2012 
in addition the rules of the company’s employee share plans 
provide that awards and options may vest and become 
exercisable on a change of control of the company 


the group’s largest customers for its products and services 
include local authorities and municipalities in the uk these 
include notably longterm integrated waste management 
contracts with the east london waste authority dumfries 
and galloway argyll  bute cumbria derbyshire barnsley 
doncaster and rotherham councils under these contracts 
the group is responsible for managing the municipal wastes 
and recyclables collected by the local authority or their 
subcontractors in the netherlands the group’s hazardous 
waste business has longterm contracts with the oil and gas 
industry and is a major supplier of cleaning services to the 
petrochemical industry the netherlands business also has 
a number of longterm source segregated organic contracts 
with municipalities and provinces in belgium there are a 
number of municipal waste collection contracts the largest 
being for the city of liege in canada there are longterm 
contracts with the london and ottawa municipalities 

notice of the agm of the company to be held at the offices 
of the royal bank of scotland 250 bishopsgate london 
ec2m 4aa on thursday 19 july 2012 at 1100am will be made 
available to shareholders together with a form of proxy and will 
also be available on the group website at wwwshanksplccom 
the directors consider that all the resolutions to be proposed 
at the agm are in the best interests of the company and its 
shareholders as a whole and they recommend unanimously 
that all shareholders vote in favour of the resolutions as they 
intend to do in respect of their own shareholdings  

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  
under company law the directors must not approve the financial 
statements unless they are satisfied that they give a true and fair 
view of the state of affairs of the group and the company and 
of the profit or loss of the group for that period in preparing 
these financial statements the directors are required to 
• select suitable accounting policies and then apply them 
consistently 
• make judgements and accounting estimates that are 
reasonable and prudent 
• state whether applicable ifrss as adopted by the european 
union have been followed subject to any material departures 
disclosed and explained in the financial statements 
• prepare the financial statements on the going concern basis 
unless it is inappropriate to presume that the company will 
continue in business 

shanks group plc
annual report  accounts 2012

directors’ report  
 
the directors are responsible for keeping adequate accounting 
records that are sufficient to show and explain the company’s 
transactions and disclose with reasonable accuracy at any time 
the financial position of the company and the group and enable 
them to ensure that the financial statements and the directors’ 
remuneration report comply with the companies act 2006 
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 company’s website legislation in the united kingdom 
governing the preparation and dissemination of financial 
statements may differ from legislation in other jurisdictions  
each of the directors whose names and functions are listed 
on pages 66 and 67 of the annual report confirm that to the 
best of their knowledge 
• the group financial statements which have been prepared 
in accordance with ifrss as adopted by the eu give a true 
and fair view of the assets liabilities financial position and 
profit of the group  
• the directors’ report contained on pages 81 to 85 of the 
annual report includes a fair review of the development and 
performance of the business and the position of the group 
together with a description of the principal risks and 
uncertainties that it faces 
• there is no relevant audit information of which the company’s 
auditors are unaware and 
• they have taken all the steps that they ought to have taken as 
directors in order to make themselves aware of any relevant 
audit information and to establish that the company’s auditors 
are aware of that information 
by order of the board  
 
  
company secretary  
17 may 2012 
 
shanks group plc  
registered in scotland no sc077438 
 
shanks group plc
annual report  accounts 2012
  
we have audited the financial statements of shanks group plc 
for the year ended 31 march 2012 which comprise the 
consolidated income statement the consolidated statement 
of comprehensive income the group and parent company 
balance sheets the group and parent company statements 
of changes in equity the group and parent company 
statements of cash flows and the related notes the financial 
reporting framework that has been applied in their preparation is 
applicable law and international financial reporting standards 
ifrss as adopted by the european union and as regards the 
parent company financial statements as applied in accordance 
with the provisions of the companies act 2006 

as explained more fully in the directors’ responsibilities 
statement set out on page 84 the directors are responsible for 
the preparation of the financial statements and for being satisfied 
that they give a true and fair view our responsibility is to audit and 
express an opinion on the financial statements in accordance with 
applicable law and international standards on auditing uk and 
ireland those standards require us to comply with the auditing 
practices board’s ethical standards for auditors  
this report including the opinions has been prepared for and 
only for the company’s members as a body in accordance with 
chapter 3 of part 16 of the companies act 2006 and for no other 
purpose we do not in giving these opinions 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 

an audit involves obtaining evidence about the amounts and 
disclosures in the financial statements sufficient to give 
reasonable assurance that the financial statements are free 
from material misstatement whether caused by fraud or error 
this includes an assessment of whether the accounting policies 
are appropriate to the group’s and the parent company’s 
circumstances and have been consistently applied and 
adequately disclosed the reasonableness of significant 
accounting estimates made by the directors and the overall 
presentation of the financial statements in addition we read all 
the financial and nonfinancial information in the annual report 
and accounts 2012 to identify material inconsistencies with 
the audited financial statements if we become aware of any 
apparent material misstatements or inconsistencies we consider 
the implications for our report 

in our opinion  
• the financial statements give a true and fair view of the state 
of the group’s and of the parent company’s affairs as at 
31 march 2012 and of the group’s profit and group’s and 
parent company’s cash flows for the year then ended 
• the group financial statements have been properly prepared in 
accordance with ifrss as adopted by the european union  
• the parent company financial statements have been properly 
prepared in accordance with ifrss as adopted by the 
european union and as applied in accordance with 
the provisions of the companies act 2006 and 
• the financial statements have been prepared in accordance 
with the requirements of the companies act 2006 and 
as regards the group financial statements article 4 
of the las regulation  


in our opinion  
• the part of the directors’ remuneration report to be audited 
has been properly prepared in accordance with the 
companies act 2006 and 
• the information given in the directors’ report for the financial 
year for which the financial statements are prepared is 
consistent with the financial statements 


we have nothing to report in respect of the following  
under the companies act 2006 we are required to report to you 
if in our opinion  
• adequate accounting records have not been kept by the 
parent company or returns adequate for our audit have not 
been received from branches not visited by us or  
• the parent company financial statements and the part of the 
directors’ remuneration report to be audited are not in 
agreement with the accounting records and returns or  
• certain disclosures of directors’ remuneration specified by law 
are not made or  
• we have not received all the information and explanations we 
require for our audit 
under the listing rules we are required to review  
• the directors’ statement set out on page 81 in relation to 
going concern 
• the parts of the corporate governance statement relating to 
the company’s compliance with the nine provisions of the uk 
corporate governance code specified for our review and 
• certain elements of the report to shareholders by the board 
on directors’ remuneration 
 
  
senior statutory auditor  
for and on behalf of pricewaterhousecoopers llp  
chartered accountants and statutory auditors  
london 17 may 2012

shanks group plc
annual report  accounts 2012

independent auditors’ report to the
members of shanks group plc wwwshanksplccom
shanks group plc
annual report  accounts 2012


88 consolidated income statement
88 consolidated statement of 
comprehensive income
89 balance sheets
90 statements of changes in equity
91 statements of cash flows
92 notes to the financial statements
141 consolidated five year 
financial summary for the year ended 31 march 2012 
2012 2011 restated 
 note
trading
£m
non 
trading  
exceptional
items
£m
total
£m
trading 
£m 
non  
trading  
exceptional 
items 
£m 
total
£m 
continuing operations   
revenue 3 7501 – 7501 7173 – 7173
cost of sales  1 6229 37 6266 6019 39 6058
gross profit 1272 37 1235 1154 39 1115
administrative expenses 1 738 29 767 657 43 700
operating profit loss 345 534 66 468 497 82 415
finance charges 211 08 219 243 58 301
finance income 64 – 64 98 – 98
net finance charges 8 147 08 155 145 58 203
income from associates 01 – 01 – – –
profit loss before taxation 3 388 74 314 352 140 212
taxation 9 101 55 46 93 100 07
profit for the year attributable to 
shareholders 287 19 268 259 40 219
earnings per share 
 
  –
– basic 11 72 05 67 65 10 55
– diluted 11 72 05 67 65 10 55
the comparative amounts have been restated to more appropriately reflect the allocation of certain items between cost of sales and administrative expenses  
 further explanation of the restatement is included in note 1 
 consolidated statement of comprehensive income 
for the year ended 31 march 2012 
note 
2012 
£m 
2011
£m
profit for the year  268 219
exchange loss on translation of foreign operations  196 22
change in fair value of cash flow hedging financial instruments 16 121 02
actuarial loss gain on defined benefit pension schemes 26 160 49
tax in respect of other comprehensive income items 9 67 14
other comprehensive loss income for the year net of tax  410 15
total comprehensive loss income for the year  142 234
the notes on pages 92 to 140 are an integral part of these consolidated financial statements

shanks group plc
annual report  accounts 2012

consolidated income statement as at 31 march 2012 
 group  company 
 note
as at
31 march
2012
£m
as at 
31 march 
2011 
£m  
as at
31 march
2012
£m
as at
31 march
2011
£m
noncurrent assets   
intangible assets 13 2714 2896  08 04
property plant and equipment 14 3909 3975  02 02
other investments and loans to joint ventures 15 67 71  4696 4696
trade and other receivables 21 667 534  – –
retirement benefit asset 26 – 49  – 49
derivative financial instruments 16 – 01  – 01
deferred tax assets 18 159 153  28 04
 7516 7679  4734 4756
current assets   
inventories 19 105 99  – –
trade and other receivables 21 1603 1795  2819 2840
derivative financial instruments 16 01 02  01 –
current tax receivable 29 –  40 40
cash and cash equivalents 22 598 545  256 118
 2336 2441  3116 2998
total assets 9852 10120  7850 7754
liabilities   
noncurrent liabilities   
borrowings 23 2538 2226  1062 871
derivative financial instruments 16 172 61  15 02
other noncurrent liabilities 24 54 187  4303 4349
deferred tax liabilities 18 421 514  – 13
provisions 25 498 394  – 03
retirement benefit obligations 26 76 –  76 –
 3759 3382  5456 5238
current liabilities   
borrowings 23 122 393  85 105
trade and other payables 24 2141 2254  40 117
current tax payable 80 47  – –
provisions 25 44 70  20 24
 2387 2764  145 246
total liabilities 6146 6146  5601 5484
net assets 3706 3974  2249 2270
equity    
ordinary shares 27 397 397  397 397
share premium 994 994  1234 1234
exchange reserve 360 556  – –
retained earnings 1955 2027  618 639
total equity 3706 3974  2249 2270
the notes on pages 92 to 140 are an integral part of these consolidated financial statements 
the financial statements on pages 88 to 140 were approved by the board of directors and authorised for issue on 17 may 2012 
they were signed on its behalf by  
   
a auer   c surch 
chairman  group finance director 
shanks group plc
annual report  accounts 2012
 balance sheets for the year ended 31 march 2012 
group 
share
capital
£m
share
premium
£m
exchange 
reserve 
£m 
retained 
earnings 
£m 
total
equity
£m
balance at 1 april 2011 397 994 556 2027 3974
profit for the year  – – – 268 268
other comprehensive income – – 196 214 410
total comprehensive income for the year – – 196 54 142
sharebased compensation – – – 07 07
dividends – – – 133 133
balance as at 31 march 2012 397 994 360 1955 3706
balance at 1 april 2010 397 993 578 1884 3852
profit for the year  – – – 219 219
other comprehensive income – – 22 37 15
total comprehensive income for the year – – 22 256 234
proceeds from shares issued – 01 – – 01
sharebased compensation – – – 06 06
dividends ––– 119 119
balance as at 31 march 2011 397 994 556 2027 3974
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 
company 
share
capital
£m
share 
premium 
£m 
retained 
earnings 
£m 
total
equity
£m
balance at 1 april 2011 397 1234 639 2270
profit for the year  – – 235 235
other comprehensive income – – 130 130
total comprehensive income for the year – – 105 105
sharebased compensation – – 07 07
dividends – – 133 133
balance at 31 march 2012 397 1234 618 2249
balance at 1 april 2010 397 1233 757 2387
profit for the year  – – 43 43
other comprehensive income – – 38 38
total comprehensive income for the year – – 05 05
proceeds from shares issued – 01 – 01
sharebased compensation – – 06 06
dividends – – 119 119
balance as at 31 march 2011 397 1234 639 2270
the notes on pages 92 to 140 are an integral part of these consolidated financial statements 

shanks group plc
annual report  accounts 2012

statements of changes in equity for the year ended 31 march 2012 
 group  company 
 note
2012
£m
2011 
£m  
2012
£m
2011
£m
net cash flow from used in operating activities 28 1028 953  165 100
investing activities   
– purchases of intangible assets 14 08  05 04
– purchases of property plant and equipment 788 709  – –
– disposals of property plant and equipment 54 44  – –
– financial asset capital advances 135 207  – –
– financial asset capital repayments 30 62  – –
– acquisition of subsidiary and other businesses 41 52  – –
– payment of deferred consideration 56 42  – –
– disposal of subsidiary and other businesses 10 269  – –
– increase in loans granted to joint ventures 04 05  – –
net cash used in investing activities 944 648  05 04
financing activities   
– finance charges and loan fees paid 174 177  178 189
– finance income 40 84  70 94
– deposit of restricted funds 56 –  – –
– net proceeds from issue of shares – 01  – 01
– dividends paid 133 119  133 119
– proceeds from the issuance of bonds – 838  – 838
– proceeds from the issuance of senior notes 355 –  – –
– repayment of senior notes 159 –  – –
– proceeds from bank borrowings – –  240 –
– repayment of bank borrowings – 1066  – 597
– other increase decrease in net borrowings 90 207  21 52
– repayments of obligations under finance leases 38 39  – –
net cash used in from financing activities 75 271  22 80
net increase decrease in cash and cash equivalents 09 34  138 24
effect of foreign exchange rate changes 12 02  – –
cash and cash equivalents at beginning of year 545 513  118 142
cash and cash equivalents at end of year 542 545  256 118
the notes on pages 92 to 140 are an integral part of these consolidated financial statements 
 
shanks group plc
annual report  accounts 2012
 statements of cash flows shanks group plc is a public limited company incorporated and domiciled in scotland under the companies act 2006 

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 2011 the set of 
financial statements included in this annual report have been prepared on a going concern basis as the directors consider that 
the group has adequate resources to continue in operational existence for the foreseeable future 

the financial statements are prepared in accordance with international financial reporting standards ifrs as adopted by the 
european union eu and therefore comply with article 4 of the eu ias regulation and with those parts of the companies act 
2006 applicable to companies reporting under ifrs 

the directors have made certain presentational and classification changes to the income statement in this annual report 
the group has opted to present its income statement for the year ended 31 march 2012 and 31 march 2011 in a threecolumn 
format such presentation allows nontrading and exceptional items to be presented separately in the middle column of the 
income statement the various line items of the income statement are therefore shown both before and after these items 
in the first and last columns respectively this allows shareholders to understand better the elements of financial performance 
in the current year so as to facilitate comparison with the prior year 
the group has made a classification change with regards to the allocation of items between cost of sales and administrative 
expenses this change has been undertaken in order to achieve a more appropriate presentation in accordance with ias 1 
presentation of financial statements the 31 march 2011 comparative figures have been restated to reflect this change 
the impact of this change was a reduction to cost of sales and an increase to administrative expenses of £49m there is no 
impact on the overall profitability or equity of the group and consequently a third balance sheet has not been presented 
the comparative figures in respect of certain income statement disclosure items have been restated as a result of the 
misstatements identified total remuneration of employees has reduced from £1824m to £1716m employee numbers have 
reduced from 4246 to 4020 operating lease costs have increased from £176m to £200m and repairs and maintenance 
expenditure has reduced from £445m to £409m these changes have no impact on the primary statements overall 
profitability or equity of the group 
 

shanks group plc
annual report  accounts 2012

notes to the financial statements  

the group has adopted in the year the following new standards amendments to standards and interpretations which 
are mandatory for the first time for the group’s financial year beginning 1 april 2011 
accounting standard  requirement impact on financial statements 
ias 24 related party disclosures the key amendments were 
provide a partial exemption from related 
party disclosure requirements for 
governmentrelated entities 
clarify the definition of a related party 
include an explicit requirement to disclose 
commitments involving related parties 
the adoption of the amendment by 
the group has had no material impact 
ifric 14 prepayments of a minimum 
funding requirement 
amendments apply when an entity is 
subject to minimum funding requirements 
and makes an early payment of 
contributions to cover those requirements 
permitting the benefit of such an early 
payment to be recognised as an asset 
the adoption of the amendment by 
the group has had no material impact 
ifric 19 extinguishing liabilities with 
equity instruments 
requires the extinguishment of a financial 
liability by the issue of equity instruments 
to be measured at fair value with the 
difference between the fair value of the 
instrument issued and the carrying value 
of the liability extinguished being 
recognised in profit or loss 
the adoption of the amendment by 
the group has had no material impact 
improvements to ifrss 2010 amends several pronouncements as a 
result of the iasb’s 2008–2010 cycle of 
annual improvements key amendments 
ifrs 1 – accounting policy changes 
in year of adoption and amendments 
to deemed cost 
ifrs 3ias 27 – clarification of transition 
requirements measurement of non
controlling interests unreplaced and 
voluntarily replaced sharebased 
payment awards 
ifric 13 – fair value of award credits 
financial statement disclosures 
clarification of content of statement 
of changes in equity ias 1 financial 
instrument disclosures ifrs 7 and 
significant events and transactions 
in interim reports ias 34 
the adoption of the amendment by 
the group has had no material impact 
 
 
  
shanks group plc
annual report  accounts 2012
 continued
standards and interpretations issued by the iasb are only applicable if endorsed by the european union  
the following revisions to ifrs will be applicable in future periods 
• ias 19 employee benefits was amended in june 2011 but the amendments are not applicable until 1 january 2013 subject 
to eu endorsement the impact on the group will be to replace interest cost and expected return on plan assets with a net 
interest amount that is calculated by applying the discount rate to the net defined benefit liability or asset the group is yet to 
assess the full impact of the amendment 
• ifrs 11 joint arrangements is effective for accounting periods beginning on or after 1 january 2013 which will impact the 
accounts for the year ended 31 march 2014 subject to eu endorsement given the group has a number of joint ventures 
which are currently proportionately consolidated it is possible that the standard will have a material impact on the group’s 
reporting as this will no longer be permitted the group is yet to assess the full impact of the amendment full details of the 
group’s interest in joint ventures are shown in note 15 
it is anticipated that the adoption of the following amendments to standards and interpretations in future periods will have no 
material impact on the group’s reported results or financial position 
• ifrs 9 financial instruments 2010 effective for annual periods beginning on or after 1 january 2015 
• ifrs 10 consolidated financial statements effective for annual periods beginning on or after 1 january 2013 
• ifrs 12 disclosure of interests in other entities effective for annual periods beginning on or after 1 january 2013 
• ifrs 13 fair value measurement effective for annual periods beginning on or after 1 january 2013  
• ias 27 separate financial statements 2011 effective for annual periods beginning on or after 1 january 2013 
• ias 28 investments in associates and joint ventures 2011 effective for annual periods beginning on or after 1 january 2013 
• amendments to ifrs 1 severe hyperinflation and removal of fixed dates for firsttime adopters effective for annual periods 
beginning on or after 1 july 2011 
• amendments to ifrs 7 financial instruments disclosures effective for annual periods beginning on or after 1 july 2011 
• amendments to ias 1 presentation of items of other comprehensive income effective for annual periods beginning on 
or after 1 july 2012 
• amendments to ias 12 deferred tax recovery of underlying assets effective for annual periods beginning on or after 
1 january 2012 
• ifric 20 stripping costs in the production phase of a surface mine effective for annual periods beginning on or after 
1 january 2013 
the group continues to monitor the potential impact of other new standards and interpretations which may be endorsed 
by the european union and require adoption by the group in future accounting periods 

the consolidated financial statements incorporate the financial statements of shanks group plc and all its subsidiary 
undertakings subsidiaries subsidiaries are entities that are directly or indirectly controlled by the group control exists where 
the group has the power to govern the financial and operating policies of the entity in order to obtain benefits from its activities 
in assessing control potential voting rights that are currently exercisable or convertible are taken into account 
entities which are jointly controlled with another party or parties joint ventures are incorporated in the financial statements 
by proportional consolidation a joint venture is an entity in which the group holds an interest under a contractual arrangement 
where the group and one or more other parties undertake an economic activity that is subject to joint control 
subsidiary companies set up under pfippp contracts are fully consolidated by the group 
investments in associates are accounted for using the equity method of accounting and are initially recognised at cost or in 
the case of a disposal of the majority shareholding fair value the cumulative postacquisition movements are adjusted against 
the carrying amount of the investment an associate is an entity other than a subsidiary or joint venture over which the group 

shanks group plc
annual report  accounts 2012

notes to the financial statements continued  
has significant influence significant influence is the power to participate in the financial and operating decisions of an entity 
but is not in control or joint control over those policies 
the results of subsidiaries joint ventures and associates acquired or sold during the year are included in the consolidated 
financial statements up to or from the date control passes all intragroup transactions balances income and expenses 
are eliminated on consolidation where a group company transacts with a joint venture or associate of the group profits 
and losses are eliminated to the extent of the group’s interest in the relevant joint venture or associate 

the acquisitions of subsidiaries are accounted for using the purchase method the cost of acquisition is measured as the fair 
value of assets given and liabilities incurred or assumed identifiable assets acquired and liabilities and contingent liabilities 
assumed meeting the conditions for recognition under ifrs 3 revised are recognised at their fair value at the acquisition 
date the fair value of businesses acquired may include customer lists these are recognised as intangible assets the value 
is calculated by discounting the future revenue stream attributable to these lists or relationships and they are amortised 
the excess of the cost of acquisition over the fair value of the group’s share of the identifiable net assets acquired is recorded 
as goodwill the costs of acquisition are charged to the income statement in the period in which they are incurred 

revenue 
revenue represents the fair value of consideration received or receivable including landfill tax but excluding sales taxes 
discounts and intercompany sales for goods and services provided in the normal course of business revenue is recognised 
when processing occurs or when the goods and services have been provided to the customer 
income from electricity generated from gas produced by waste processes at landfill sites and anaerobic digestion facilities 
includes an estimation of the amount to be received 
revenue from the sale of recyclate materials is recognised based on contractually agreed prices when the risks and rewards 
have passed to the buyer can be reliably measured and recovery of consideration is probable  
accrued income 
accrued income is recognised at the fair value based on contractually agreed prices it is subsequently invoiced and accounted 
for as a trade receivable 
pfippp contracts 
the group’s pfippp contracts are either integrated or residual waste management contracts the contracts require the 
building of new infrastructure 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 splits the local authority payment between a service element as revenue and a repayment element that 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 
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 
win fees are transferred to deferred income upon financial close and released to the income statement over the period 
of construction of the infrastructure 
unprocessed waste 
the deferred income relating to unprocessed waste is calculated at the higher of sales value and processing cost where there 
is a significant delay between the acceptance of waste and its final disposal then profit may be recognised in advance of final 
disposal over the period of delay provided the outcome of the waste treatment process is certain 
government grants and subsidies 
capital related government grants are released to the income statement evenly over the expected useful lives of the related 
assets revenue grants and subsidies are credited in the same period as the items to which they relate 
shanks group plc
annual report  accounts 2012
 continued 
interest 
interest is recognised on a time proportion basis taking account of the principal outstanding and the effective rate over the 
period to maturity when it is determined that such income will accrue to the group 

deferred consideration is provided for at the net present value npv of the group’s expected cost or receipt at the date of 
acquisition or disposal the likelihood of payment for deferred consideration conditional on meeting certain performance targets 
is considered on acquisition or disposal for acquisitions after 1 april 2010 any differences between consideration accrued 
and consideration paid or received are charged or released to the income statement before this date differences are adjusted 
through goodwill 

goodwill 
goodwill represents the excess of the cost of an acquisition over the fair value of the group’s share of the net identifiable assets 
of the acquired subsidiary at the date of acquisition goodwill on acquisitions of subsidiaries is included in intangible assets 
separately recognised goodwill is tested annually for impairment and carried at cost less accumulated impairment losses 
any impairment is charged immediately to the income statement and is not subsequently reversed 
goodwill is allocated to cash generating units cgus for the purpose of impairment testing the allocation is made to those 
cgus or groups of cgus that are expected to benefit from the business combination in which the goodwill arose 
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 
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 
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 straightline basis as follows 
computer software 1 to 5 years 
acquisition related intangibles  
waste permits and licences 5 to 20 years 
others including customer lists 5 to 10 years 
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 

property plant and equipment except for freehold land is stated at cost less depreciation and provision for impairment 
cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition 
for its intended use freehold land is not depreciated 

shanks group plc
annual report  accounts 2012

notes to the financial statements continued  
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 as follows 
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 
as required under ias 16 property plant and equipment the directors have undertaken a review of the residual value and the 
useful life of the group’s property plant and equipment as at 31 march 2012 as a result of this review the group has revised 
upwards the estimated useful life of elements of plant and machinery with effect from 1 april 2012 as this is a change in 
accounting estimate the impact will be accounted for prospectively 
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 

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 down the assets over 
the shorter of the expected useful life and the lease term 
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 30 
to the accounts 

investments in subsidiary undertakings are stated at cost in the company’s balance sheet less any provision for impairment 
in value 

inventories are stated at the lower of cost and net realisable value and are measured on a first in first out basis 

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 
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 
other provisions 
other provisions are recognised when a present legal or constructive obligation exists for a future liability in respect of a past 
event and it is probable that this will result in an outflow of resources the amount of which can be estimated reliably  
shanks group plc
annual report  accounts 2012
 continued discounting 
all longterm 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 ias 19 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 comprehensive income 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 comprehensive income 
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 
sharebased payments 
the group issues equitysettled sharebased awards to certain employees the fair value of sharebased awards is determined 
at the date of grant and expensed based on the group’s estimate of the shares that will eventually vest with a corresponding 
increase in equity on a straightline basis over the vesting period the amount expensed is adjusted over the vesting period for 
changes in the estimate of the number of shares that will eventually vest save for changes resulting from any marketrelated 
performance conditions 

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 substantively enacted by the 
balance sheet date 
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 
have been substantively enacted at the balance sheet date 
deferred tax is charged or credited in the income statement except where it relates to items charged or credited through 
the statement of comprehensive income or directly to reserves when it is charged or credited there 
deferred tax assets and liabilities are offset when there is a legally enforceable right to setoff current tax assets against 
current tax liabilities when they relate to income taxes levied by the same taxation authority and the group intends to settle 
its current tax assets and liabilities on a net basis 

shanks group plc
annual report  accounts 2012

notes to the financial statements continued  
 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 most significant currencies for the group were translated at the following exchange rates 
 closing rates average rates 
value of £1 
31 march
2012
31 march
2011 change
31 march 
2012 
31 march
2011 change
euro 120 113 62 116 117 15
canadian dollar 160 156 24 159 156 17
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 

trade receivables 
trade receivables do not carry interest and are stated initially at their fair value the carrying amount of trade receivables 
is reduced by appropriate allowances for estimated irrecoverable amounts 
financial assets in pfippp contracts 
financial assets in pfippp 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 
cash and cash equivalents 
cash and cash equivalents comprise cash balances and call deposits with a maturity of three months or less where the group 
has a legally enforceable right to offset with a financial institution then bank overdrafts are offset against the cash balances 
external borrowings 
interest bearing loans and bonds 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 
trade payables 
trade payables on normal terms are not interest bearing and are stated initially at fair value 
derivative financial instruments and hedge accounting 
in accordance with its treasury policy the group only holds or issues derivative financial instruments to manage the group’s 
exposure to financial risk not for trading or speculative purposes 
such financial risk includes 
• interest risk on the group’s variablerate borrowings 
• fair value risk on the group’s fixedrate borrowings 
• commodity risk in relation to diesel consumption and recyclate prices and 
• foreign exchange risk on transactions 
the group manages these risks through a range of derivative financial instruments including interest rate swaps fuel 
derivatives forward foreign exchange contracts and contingent forward foreign exchange contracts 
interest rate swaps entered into before 31 march 2009 are measured at fair value at each reporting date with gains or losses 
between period ends being taken to finance charges in the income statement interest rate swaps entered into after 31 march 
2009 are considered to be used for hedging purposes when it alters the risk profile of an underlying exposure of the group in 
line with the group’s risk management policies and is in accordance with established guidelines 
shanks group plc
annual report  accounts 2012
 continued at the inception of the hedge relationship the group documents the relationship between the hedging instrument and hedged 
item along with its risk management objectives and its strategy for undertaking various hedge transactions furthermore at the 
inception of the hedge and on an ongoing basis the group documents whether the hedging instrument that is used in a 
hedging relationship is highly effective in offsetting changes in fair values or cash flows of the hedged item 
the change in the fair value of the portion of the hedging instrument that is determined to be an effective hedge is recognised 
in equity and subsequently recycled to the income statement when the hedged cash flow impacts the income statement 
the ineffective portion of the fair value of the hedging instrument is recognised immediately in the income statement 
hedge accounting is discontinued when the hedging instrument expires or is sold terminated exercised or no longer qualifies 
for hedge accounting at that time any cumulative gain or loss on the hedging instrument recognised in equity is retained in 
equity until the forecast transaction occurs at which point it is recognised in the income statement if a hedged transaction 
is no longer expected to occur the net cumulative gain or loss recognised in equity is recognised in the income statement 
immediately 
details of the fair values of the derivative financial instruments used for hedging purposes are disclosed in note 16 
other receivables and other payables 
other receivables and other payables are measured at amortised cost using the effective interest rate method lease 
agreements in which the other party as lessee is regarded as the economic owner of the leased assets give rise to accounts 
receivable in the amount of the discounted future lease payments 

dividend distributions to the equity holders are recognised in the period in which they are approved by the shareholders in 
general meeting 

the group’s organisational structure reflects the national nature of markets in which it operates with divisions in the 
netherlands belgium the uk and canada 

shanks group plc
annual report  accounts 2012

notes to the financial statements continued  

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 relevant facts and circumstances actual results 
ultimately may differ from those estimates revisions to accounting estimates are recognised in the period in which the estimate 
is revised if the revision affects only that period or in the period of the revision and future periods if these are also affected 
the areas involving a higher degree of judgement or complexity are set out below and in more detail in the related notes 
 the group believes that trading profit underlying profit before tax underlying profit after tax underlying free cash flow 
underlying earnings per share and ebitda provide useful information on underlying trends to shareholders these measures 
are used by the group for internal performance analysis and incentive compensation arrangements for employees 
the terms ‘trading profit’ ‘exceptional items’ and ‘underlying’ are not defined terms under ifrs and may therefore not be 
comparable with similarly titled profit measures reported by other companies it is not intended to be a substitute for or superior 
to gaap measurements of profit 
the term ‘underlying’ refers to the relevant measure being reported for continuing operations excluding exceptional items 
financing fair value remeasurements and amortisation of acquisition intangibles excluding landfill void and computer software 
‘trading profit’ is defined as continuing operating profit before amortisation of acquisition intangibles and exceptional items 
reconciliations are set out in note 4 

items classified as nontrading and exceptional are disclosed separately due to their size or incidence to enable a better 
understanding of performance these include but are not limited to significant impairments and the profit or loss on disposal 
of properties 

financial assets are recognised in accordance with ifric 12 they represent the present value of the future cash flows of the 
contract these cash flows are dependent on amongst other things tonnages indexation recycling rates and labour costs 

in conducting the impairment review on goodwill and intangibles management is required to make estimates of discount rates 
future profitability growth rates and tax rates detailed descriptions of assumptions and values are given in note 13 

restoration and aftercare provisions are recognised in the financial statements at the net present value of the estimated future 
expenditure required to settle the group’s restoration and aftercare provisions a discount is applied to recognise the time value 
of money and is unwound over the life of the provision provisions also include the present value of the estimated operating 
losses on loss making contracts further information is set out in note 25 

the group operates defined benefit schemes for which actuarial valuations are carried out as determined by the trustees at 
intervals of not more than three years the pension cost under ias 19 is assessed in accordance with management’s best 
estimates using the advice of an independent qualified actuary and assumptions in the latest actuarial valuation the principal 
assumptions in connection with the group’s retirement benefit schemes are set out in note 26 

the group operates in the netherlands belgium the uk and canada all of which have their own tax legislation deferred tax 
assets and liabilities are recognised at the current tax rate which may not be the tax rate at which they unwind the group has 
available tax losses some of which have been recognised as a tax asset and some have not based on management’s best 
estimate of the ability of the group to utilise those losses further information is set out in note 18 
shanks group plc
annual report  accounts 2012
 operating segments are based on the reports provided to the board of directors the chief operating decisionmaker 
the group operates in the netherlands belgium the uk and canada each geographical location can be analysed according 
to the following types of activity 
solid waste nonhazardous solid waste collections transfer recycling and treatment 
hazardous waste principally contaminated waste including industrial cleaning transport 
treatment including contaminated soils and disposal and contaminated land 
remediation 
organics anaerobic digestion and tunnel composting of source segregated organic 
waste streams 
uk municipal  pfippp contracts longterm uk municipal waste treatment contracts 
landfill and power landfill disposal including contaminated soils and power generation from 
landfill gas 
sand quarry mineral extraction 
in addition to the waste activities detailed above the group has small infrastructure and groundworks operations in belgium 
and the netherlands which due to their small size are reported as part of the solid waste activities 
the accounting policies of the reportable segments are the same as those described in note 1 except that the pension 
expense for the uk 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 

 netherlands belgium uk canada  total 
 
2012 
£m 
2011 
£m 
2012
£m
2011
£m
2012
£m
2011
£m
2012 
£m 
2011 
£m  
2012
£m
2011
£m
solid waste  2188 2139 1275 1258 648 664 – –  4111 4061
hazardous waste  1496 1412 476 505 85 146 – –  2057 2063
organics  158 125 – – 05 16 151 105  314 246
uk municipalpfippp contracts  – – – – 1068 870 – –  1068 870
landfill and power  – – 102 99 58 61 – –  160 160
sand quarry  – – 29 31 – – – –  29 31
intrasegment revenue  45 54 162 170 03 – – –  210 224
  3797 3622 1720 1723 1861 1757 151 105  7529 7207
intersegment revenue 
      
    28 34
total revenue 
      
    7501 7173
group 
      
    7372 7048
share of joint ventures 
      
    129 125
total revenue 
      
    7501 7173

shanks group plc
annual report  accounts 2012

notes to the financial statements continued  

  netherlands belgium uk canada  total 
trading profit 
 
2012 
£m 
2011
£m
2012
£m
2011
£m
2012
£m
2011
£m
2012 
£m 
2011 
£m  
2012
£m
2011
£m
solid waste  171 213 79 61 42 41 – –  292 315
hazardous waste  228 179 28 35 19 29 – –  27 243
organics  22 19 – – 05 01 39 13  56 33
uk municipalpfippp contracts  – – – – 108 56 – –  108 56
landfill and power  – – 54 48 03 03 – –  51 51
sand quarry  – – 06 07 – – – –  06 07
pfi bid team  – – – – 15 26 – –  15 26
country central services  39 39 57 43 77 54 – –  173 136
  382 372 110 108 69 50 39 13  600 543
group central services       66 46
total trading profit before finance charges       534 497
amortisation of acquisition intangibles       37 39
nontrading and exceptional items        29 43
total operating profit       468 415
group       484 417
share of joint ventures       16 02
total operating profit       468 415
finance charges        
interest payable       211 239
interest receivable       64 94
change in fair value of interest rate swaps       08 58
net finance charges       155 203
income from associates       01 –
profit before tax       314 212
 
  
5
shanks group plc
annual report  accounts 2012
 continued
 operating assets   
31 march 2012 
netherlands
£m
belgium
£m
uk
£m
canada
£m
group 
central 
services 
£m 
tax net 
debt and 
derivatives 
£m 
total
£m
gross noncurrent assets 4798 807 1394 336 22 159 7516
gross current assets 740 472 432 45 19 628 2336
gross liabilities 1212 682 756 20 143 3333 6146
net assets 4326 597 1070 361 102 2546 3706
31 march 2011   
gross noncurrent assets 4916 1072 1137 345 55 154 7679
gross current assets 861 503 470 50 10 547 2441
gross liabilities 1278 783 764 22 58 3241 6146
net assets 4499 792 843 373 07 2540 3974
  netherlands  belgium uk canada 
group central 
services  
 
total 
 
 
2012 
£m 
2011 
£m  
2012
£m
2011
£m
2012
£m
2011
£m
2012
£m
2011
£m
2012 
£m 
2011 
£m  
2012
£m
2011
£m
capital expenditure        
property plant and equipment  495 399  102 128 186 104 19 44 – –  802 675
intangible assets  04 02  01 01 04 01 – – 05 04  14 08
depreciation charge  319 305  139 142 28 30 19 11 – –  505 488
amortisation of intangibles  33 39  02 02 11 11 01 01 01 –  48 53
impairment charge  – 79  – 40 25 – – – – –  25 119

shanks group plc
annual report  accounts 2012

notes to the financial statements continued  

 
2012
£m
2011
£m
amortisation of acquisition intangibles  37 39
write off of investment in a joint venture arrangement 20 –
reassessment of contingent consideration 16 –
impairment of goodwill 25 119
gain on disposal of subsidiaries – 37
curtailment of pension liabilities – 39
total nontrading and exceptional items in operating profit 66 82
change in fair value of derivatives 08 58
tax on nontrading and exceptional items 03 15
exceptional tax 52 85
total nontrading and exceptional items in profit after tax 19
40
the group has recognised a charge of £20m following the loss of control and subsequent impairment of the investment in a 
joint venture arrangement this was a result of difficulties in the construction of a biomass plant and changes in market 
conditions the charge was the net impact of an impairment of a loan of £18m and deconsolidation of net assets of £02m 
including land and buildings bank loans and derivatives 
a gain of £16m 2011 £nil has been recognised following the reassessment and settlement of contingent consideration in 
relation to an acquisition made in the uk in the year ended 31 march 2011 
changes in market conditions in the volumes delivered to and prices achieved in our small uk joint venture landfill have resulted 
in a goodwill impairment charge of £25m the prior year impairment charge of £119m arose from changes in market 
conditions in wood based and landfill markets in belgium and the netherlands 
in the prior year the group recognised an exceptional gain of £37m net of associated taxes arising from the £246m sale of all 
of the subordinated debt and 80 of the equity in the east london waste authority and dumfries and galloway pfi contracts 
an exceptional tax credit of £85m arose due to the partial release of provisions booked in march 2009 in respect of the 
abolition of industrial buildings allowances relating to these contracts  
with effect from 31 march 2011 the group introduced a pensionable pay increase cap of 1 per annum that applies to the 
benefit that active nonlocal government section members can accrue in the scheme this led to an exceptional credit of £39m 
in the prior year 
the exceptional tax credit of £52m in the current period related to a favourable judgement issued with regard to certain tax 
liabilities in belgium 
trading profit to ebitda  
2012
£m
2011
£m
trading profit before finance charges  534 497
depreciation of property plant and equipment  505 488
amortisation of intangible assets excluding acquisition intangibles  11 14
nonexceptional gains on property plant and equipment  25 14
non cash landfill related expense and provisioning  01 01
ebitda  1024 986
  
shanks group plc
annual report  accounts 2012
 profit for the year is stated after charging crediting 
 
2012 
£m 
restated
2011
£m
staff costs see note 6 1846 1716
depreciation of property plant and equipment 505 488
amortisation of intangible assets  48 53
repairs and maintenance expenditure on property plant and equipment 404 409
net profit on disposal of property plant and equipment 25 14
nontrading and exceptional items as described in note 4 66 82
trade receivables impairment 23 11
acquisition expenses – 02
government grants 02 01
operating lease costs  
– minimum lease payments 196 202
– less sublease rental income 03 02
 193 200
the comparative amounts have been restated further explanation of the restatement is included in note 1 
 
remuneration of the group’s auditor pricewaterhousecoopers llp and its associates  
– audit of parent company and consolidated accounts 02 01
– audit of subsidiaries pursuant to legislation 04 04
fees payable to the auditors pursuant to legislation 06 05
– tax services 01 01
– other 02 01
total nonaudit fees 03 02
total fees 09 07
included in the other nonaudit fees was £01m for due diligence and advice relating to a ppp contract in belgium 

 
2012 
number 
restated
2011
number
the average number of people including executive directors employed by the group during the year was 
 
netherlands  2072 2034
belgium  1135 1151
uk  841 792
canada  30 27
group central services  16 16
  4094 4020
the comparative amounts have been restated further explanation of the restatement is included in note 1 
 

shanks group plc
annual report  accounts 2012

notes to the financial statements continued  
 
2012
£m
restated
2011
£m
the total remuneration of all employees comprised  
wages and salaries costs  1448 1349
employer’s social security costs  275 258
sharebased benefits   07 06
employer’s retirement benefit costs see note 26  116 103
  1846 1716
the comparative amounts have been restated further explanation of the restatement is included in note 1 
the disclosure above relates to the group the average number of persons employed by the company was 16 2011 16 
with the related wages and salaries costs employer’s social security costs and employer’s retirement benefit costs amounting 
to £25m 2011 £23m £04m 2011 £03m and £01m 2011 £01m respectively 


as described in the remuneration report the group issues equitysettled sharebased payments under a savings related 
share option scheme srsos and a long term incentive plan ltip the executive share option scheme esos was 
discontinued in august 2005 
outstanding options 
 srsos  esos  ltip 
 
options
number
weighted
average
exercise
price
pence
options 
number 
weighted
average
exercise
price
pence
options
number
outstanding at 31 march 2010 1273753 82p 159827 110p 3305624
granted during the year 256515 79p – – 2322000
forfeited during the year 143882 79p – – –
expired during the year 117782 107p – – 1941832
exercised during the year 8458 71p – – 46292
outstanding at 31 march 2011 1260146 80p 159827 110p 3639500
granted during the year 271320 92p – – 3336000
forfeited during the year 123191 79p 62925 110p 998000
expired during the year 65858 127p – – 1057500
exercised during the year 11189 72p – – –
outstanding at 31 march 2012 1331228 80p 96902 110p 4920000
exercisable at 31 march 2012 71474 141p 96902 110p
exercisable at 31 march 2011 46858 148p 159827 110p
weighted average share price at date of exercise 99p
at 31 march 2012  
range of price per share 71p to 148p 91p to 114p
weighted average remaining contractual life 1–2 years 2–3 years 1–2 years
  
shanks group plc
annual report  accounts 2012
 continued
srsos  ltip 
valuation model 
2012
black
scholes
2011
black
scholes 
2012 
monte 
carlo 
2011
monte
carlo
weighted average fair value 32p 40p 41p 51p
weighted average share price 104p 109p 117p 99p
weighted average exercise price 92p 79p – –
expected volatility 45 48 457 48
expected life 3 years 3 years 3 years 3 years
riskfree interest rate 06 13 09 15
dividend yield 30 40 30 40
for the ltip awards granted during the year the fair value of the element subject to nonmarket conditions has been calculated 
using a discounted model based on the share price at the award date for the eps performance element of these ltip awards 
the expense recognised is based on expectations of these conditions being met and these are reassessed at each balance 
sheet date 
expected volatility has been calculated using average volatility historical data over a five year period from the grant date 
the riskfree interest rate is based on the implied yield of zerocoupon government bonds with a remaining term equal 
to the expected life the expected life used in the models equals the vesting period as employees are expected to receive 
their vested shares on vesting or soon after vesting 

the group recognised a total charge of £07m 2011 £06m relating to equitysettled sharebased payments 

 
2012 
£m 
2011
£m
finance charges   
interest payable on borrowings wholly repayable within five years  104 112
interest payable on other borrowings  55 61
share of interest of joint ventures  01 03
unwinding of discount on provisions  32 23
unwinding of discount on deferred consideration payable  05 07
amortisation of loan fees  14 37
total finance charges  211 243
finance income   
interest receivable on financial assets relating to pfippp contracts  34 63
unwinding of discount on deferred consideration receivable  03 04
other interest receivable  27 31
total finance income  64 98
change in fair value of interest rate swaps  08 58
net finance charges  155 203

shanks group plc
annual report  accounts 2012

notes to the financial statements continued  

the tax charge credit based on the profit for the year is made up as follows 
  
2012
£m
2011
£m
current tax uk corporation tax at 26 2011 28  
 – prior year  01 22
 overseas tax  
 – current year  41 80
 – prior year  08 06
 exceptional  52 –
total current tax   18 64
deferred tax see note 18   
– current year   60 11
– prior year   04 03
– exceptional   – 85
total deferred tax  64 71
total tax charge credit for the year  46 07
the exceptional current tax credit of £52m in the current period related to a favourable judgement issued with regard to certain 
historic tax issues in belgium 
the exceptional deferred tax credit of £85m in the prior year related to the partial release of provisions booked in march 2009 
in respect of the abolition of industrial buildings allowances a detailed review of historic capital allowances on pfi infrastructure 
was performed which has been agreed with the taxation authorities  
the tax assessed for the year is lower than the uk standard rate of tax of 26 2011 lower than 28 the differences are 
explained below 
 
2012
£m
2011
£m
total profit before tax  314 212
tax charge based on uk tax rate  82 59
effects of  
adjustment to tax charge in respect of prior periods  03 13
profits taxed at overseas tax rates  03 –
nontaxablenondeductible items  04 17
unrecognised tax losses  16 16
change in tax rate  04 01
exceptional  52 85
total tax charge credit for the year  46 07
 
  
shanks group plc
annual report  accounts 2012
 continued the following taxation charge credit has been recognised directly in equity within the consolidated statement of 
comprehensive income 
 
2012 
£m 
2011
£m
cash flow hedging financial instruments  28 01
defined benefit pension schemes  39 13
total tax charged credited to other comprehensive income  67 14
a reduction in the uk corporation tax rate from 26 to 25 effective from 1 april 2012 was substantively enacted on 5 july 
2011 and a further reduction to 24 effective from 1 april 2012 was substantively enacted on 26 march 2012 the uk budget 
on 21 march 2012 announced that the uk corporation tax rate will reduce to 22 by 2014 this will reduce the group’s future 
current tax charge accordingly the uk deferred tax at 31 march 2012 has been calculated based on the rate of 24 which 
was substantively enacted at the balance sheet date 

 
2012 
£m 
2011
£m
amounts recognised as distributions to equity holders in the year 
  
final dividend paid for the year ended 31 march 2011 of 225p per share 2010 20p 
 89 
79
interim dividend paid for the year ended 31 march 2012 of 11p per share 201110p 
 44 
40
  133 119
proposed final dividend for the year ended 31 march 2012 of 235p per share 2011 225p  93 89
total dividend per share  345p 325p

shanks group plc
annual report  accounts 2012

notes to the financial statements continued  

 
2012 2011
number of shares 
weighted average number of ordinary shares for basic earnings per share 3968m 3968m
effect of share options in issue 04m 05m
weighted average number of ordinary shares for diluted earnings per share 3972m 3973m
 
calculation of basic and underlying basic earnings per share 
earnings for basic earnings per share being profit for the year £m 268 219
change in fair value of interest rate swaps net of tax £m 06 43
amortisation of acquisition intangibles net of tax £m 28 29
exceptional items net of tax £m 37 53
exceptional tax charge £m 52 85
earnings for underlying basic earnings per share £m 287 259
basic earnings per share 67p 55p
underlying earnings per share see note below 72p 65p
 
calculation of diluted and underlying diluted earnings per share 
earnings for basic earnings per share being profit for the year £m 268 219
effect of dilutive potential ordinary shares £m – –
earnings for diluted earnings per share £m 268 219
diluted earnings per share 67p 55p
underlying diluted earnings per share see note below 72p 65p
the directors believe that adjusting basic earnings per share for the effect of the amortisation of acquisition intangibles 
excluding landfill void and computer software the change in value of interest rate swaps and exceptional items enables 
comparison with historical data calculated on the same basis exceptional items are those items that need to be disclosed 
separately on the face of the income statement because of their size or incidence to enable a better understanding 
of performance 

as permitted by section 408 of the companies act 2006 the company has elected not to present its own income 
statement for the year shanks group plc reported a profit for the year ended 31 march 2012 of £235m 2011 £43m loss 
the company operates solely in the uk providing central services the company is registered in scotland under company 
number sc077438 
  
shanks group plc
annual report  accounts 2012
 group 
goodwill
£m
landfill void
£m
computer 
software 
£m 
other 
acquisition 
related 
intangibles 
£m 
total
£m 
cost   
at 31 march 2010 2560 268 58 344 3230
on acquisition of businesses  58 – – 46 104
reassessment of contingent consideration 17 – – – 17
additions ––08 – 08
disposals ––05 – 05
exchange 2003– 02 25
at 31 march 2011 2581 265 61 388 3295
on acquisition of businesses note 17 28 – – 08 36
additions – – 11 03 14
reassessment of contingent consideration 08 – – – 08
reclassification –3804 42 –
exchange 13813–  18 169
at 31 march 2012 2463 214 68 423 3168
accumulated impairmentamortisation   
at 31 march 2010 – 59 52 122 233
amortisation charge for the year – 11 04 38 53
impairment charge 119 – – – 119
disposals ––04 – 04
exchange 02 – 01 03 02
at 31 march 2011 121 70 51 157 399
amortisation charge for the year – 07 04 37 48
impairment charge 25 – – – 25
reclassification –0903 12 –
exchange 0604–  08 18
at 31 march 2012 140 64 52 198 454
net book value   
at 31 march 2012 2323 150 16 225 2714
at 31 march 2011 2460 195 10 231 2896
at 31 march 2010 2560 209 06 222 2997
of the total £48m 2011 £53m amortisation charge for the year £37m 2011 £38m related to intangible assets arising 
on acquisition of the remaining amortisation expense of £11m 2011 £15m £10m 2011 £15m has been charged in cost 
of sales and £01 2011 £nil has been charged in administration expenses 
contingent consideration for the 2007 acquisition of orgaworld in the netherlands was reassessed in the current and prior year 
resulting in a decrease of £08m 2011 £17m to goodwill the outstanding contingent consideration is payable in may 2012 
 
  

shanks group plc
annual report  accounts 2012

notes to the financial statements continued  

impairment testing is carried out at cash generating unit cgu level on an annual basis a summary of goodwill by geographical 
area is presented below 
 
2012
£m
2011
£m
netherlands 2024 2128
belgium 136 144
uk 163 188
 2323 2460
a significant part of the goodwill £1359m 2011 £1443m relates to the acquisition of the original business in the netherlands 
in 2000 
the group estimates the recoverable amount of a cgu using a value in use model by projecting cash flows for the next five 
years from the annual strategy review together with a terminal value using a growth rate management determined the five year 
plan based on past performance and its expectation of market developments all pretax cash flows are discounted at a pretax 
rate of 1011 based on the group’s weighted average cost of capital wacc as most cgus have integrated operations 
across large parts of the group this is considered appropriate for all parts of the business the following rates are used 
• posttax discount rate 7 2011 8 group wacc is equivalent to a pretax discount rate of 10–11 
• growth rate used in the annuity is 2 2011 2 this does not exceed the longterm economic average growth of the 
countries that the group operates in 
the valuations indicated sufficient headroom such that a reasonably possible change to key assumptions would not result in an 
impairment of the related goodwill 
 during the year there have been changes in market conditions in the volumes delivered to and prices achieved in our small uk 
joint venture landfill site and as a result there has been an impairment to the associated goodwill of £25m no class of asset 
other than goodwill was impaired 
in the prior year the group recognised an impairment provision of £119m in relation to the netherlands and belgium solid 
waste businesses 
the net impairment losses recognised in the consolidated income statement within exceptional administrative expenses 
in respect of goodwill and intangibles were as follows 
 
2012
£m
2011
£m
netherlands – solid waste – 79
belgium – solid waste – 40
uk– landfill 25 –
 25 119
there is no residual goodwill of the uk cgu after impairing the goodwill there is residual goodwill of £142m 2011 £151m 
and £02m 2011 £02m in the netherlands and belgian cgus respectively after impairing the goodwill to its recoverable 
amount in the prior year 
  
shanks group plc
annual report  accounts 2012
 continued company 
software
£m
cost 
at 31 march 2011 04
additions 05
at 31 march 2012 09
accumulated impairmentamortisation 
at 31 march 2011 –
amortisation charge for the year 01
at 31 march 2012 01
net book value 
at 31 march 2012 08
at 31 march 2011 04
at 31 march 2010 –

shanks group plc
annual report  accounts 2012

notes to the financial statements continued  

group 
land and
buildings
£m
landfill 
sites 
£m 
plant and 
machinery
£m
total
£m 
cost  
at 31 march 2010 2710 531 4941 8182
acquired with acquisition of businesses – – 01 01
additions 12703 545675
transfers – 15 15 –
disposals 5302 399454
exchange 1203 3348
at 31 march 2011 2772 544 5040 8356
acquired with acquisition of businesses note 17 – – 12 12
additions 25002 550802
disposals 147– 229376
exchange 14524 283452
at 31 march 2012 2730 522 5090 8342
accumulated depreciation  
at 31 march 2010 689 433 3222 4344
depreciation charge for the year 91 14 383 488
disposals 48– 376424
exchange 0104 2227
at 31 march 2011 731 443 3207 4381
depreciation charge for the year 105 11 389 505
disposals – – 204 204
exchange 4122 186249
at 31 march 2012 795 432 3206 4433
net book value  
at 31 march 2012 1935 90 1884 3909
at 31 march 2011 2041 101 1833 3975
at 31 march 2010 2021 98 1719 3838
included in plant and machinery are assets held under finance leases with a net book value of £81m 2011 £92m and assets 
under construction of £355m 2011 £231m 
depreciation expense of £481m 2011 £469m has been charged in cost of sales and £24m 2011 £19m in administrative 
expenses 
included within additions is £01m 2011 £10m of capitalised interest relating to projects under construction at joint ventures 
  
shanks group plc
annual report  accounts 2012
 continued company 
land and 
buildings 
£m 
plant and 
machinery 
£m 
total
£m
cost   
at 31 march 2010 31 march 2011 and 31 march 2012 01 04 05
accumulated depreciation   
at 31 march 2010 31 march 2011 and 31 march 2012 – 03 03
net book value   
at 31 march 2010 31 march 2011 and 31 march 2012 01 01 02

group  company 
loans to joint 
ventures
£m
associates
£m
other unlisted 
investments
£m
total 
£m 
 investments in 
subsidiary 
undertakings
£m 
at 31 march 2010 45 – 16 61  4696
additions 1305–18  –
disposals and repayments 08 – – 08  –
at 31 march 2011 50 05 16 71  4696
additions 0409–13  –
associate share of profit and loss – 01 – 01  –
impairment charge 18 – – 18  –
at 31 march 2012 36 15 16 67  4696
details of principal subsidiary undertakings joint ventures and investments in associates are shown in note 33 and form part 
of these financial statements 
on 1 october 2011 the group reclassified its investment in valorbois sprl from a joint venture to that of a trade investment 
due to the loss of joint control following reclassification the fair value of the investment and the loan to the joint venture 
arrangement were revalued to nil as reflected in the table above 
on 15 december 2011 the group purchased 49 of the share capital of hygea scrl for a consideration of £06m 
the remaining 51 is held by idea scrl an entity controlled by the participating municipalities of the walloon region 
of belgium as at 31 march 2012 hygea scrl had only been trading for three months as the results for the period were 
immaterial no share of profit or loss has been included  

shanks group plc
annual report  accounts 2012

notes to the financial statements continued  

in relation to the group’s interest in joint ventures the assets liabilities income and expenses are shown below 
 
2012
£m
2011
£m
noncurrent assets 113 244
current assets 79 112
current liabilities 116 216
noncurrent liabilities 12 38
net assets 64 102
income 129 124
expenses 145 130
loss before tax 16 06
tax 02 –
share of loss after tax for the year from joint ventures 14 06
the share of capital commitments of the joint ventures is shown in note 29 

the gross amount of assets liabilities revenue and results of the subsidiaries of principal associates as presented in the latest 
publically available audited financial statements are as follows 
 
assets
£m
liabilities 
£m 
revenues
£m
 profit loss
£m
31 march 2010 local gaap  
elwa limited 979 1054 489 18
shanks dumfries and galloway limited 269 260 84 05
 1248 1314 573 23
31 march 2011 local gaap  
elwa limited 998 1083 495 10
shanks dumfries and galloway limited 295 280 87 05
 1293 1363 582 05
investments in associates at 31 march 2012 include goodwill of £16m 2011 £16m 
the associates prepare their statutory information to 31 march each year under local gaap but prepare management 
information in both local gaap and ifrs management information under ifrs has been used to calculate the contribution 
to profit in the year elwa holdings limited profit of £04m 2011 £nil and shanks dumfries and galloway holdings limited 
profit of £03m 2011 £nil  
the associates 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 associates a list of material associates and joint ventures is shown in note 33 
  
shanks group plc
annual report  accounts 2012
 2012  2011 
group 
assets
£m
liabilities
£m
 assets 
£m 
liabilities
£m
derivative financial instruments    
interest rate swaps – at fair value through profit and loss –08 – 16
interest rate swaps – effective hedges – 164 01 45
forward foreign exchange contracts – effective hedges –– 02 –
fuel derivatives – effective hedges 01 – – –
total 01 172 03 61
current 01 – 02 –
noncurrent – 172 01 61
total 01 172 03 61
cumulative losses recognised in equity on the derivative financial instruments as of 31 march 2012 were £163m 2011 £42m 
the notional principal amount of the outstanding interest rate swap contracts at 31 march 2012 was £1266m 2011 £1094m 
the expiry dates of the contracts range from 9 october 2014 earliest to 30 june 2037 latest 
the notional principal amount of the outstanding forward foreign exchange contracts at 31 march 2012 was £62m 
2011 £32m the liability is not shown above as the value was minimal due to these being transacted on 30 march 2012 
the hedged highly probable forecast transactions denominated in a foreign currency are expected to occur at various dates 
up to 27 february 2015 
the value of wholesale fuel covered by fuel derivatives at 31 march 2012 amounted to £06m 2011 £nil 
the company had effective interest rate swap assets of £nil 2011 £01m and liabilities of £15m 2011 £02m and an 
effective fuel derivative asset of £01m 2011 £nil the notional principal amount of the outstanding interest rate swap 
as at 31 march 2012 was £393m 2011 £487m 
  

shanks group plc
annual report  accounts 2012

notes to the financial statements continued  

on 1 march 2012 shanks acquired the business and assets of van tuijl glasrecycling bv a glass recycling business 
based in the netherlands the intangible assets acquired were permits the brand and a customer list totalling £08m 
the residual excess over the net assets acquired has been recognised as goodwill representing the opportunity to access 
the glass recycling market 
the provisional fair value to the group of the assets and liabilities acquired was as follows 
provisional
fair value
£m
intangible assets 08
plant property and equipment 12
inventory 04
accruals 01
net assets acquired 23
goodwill 28
total 51
 
 £m
satisfied by 
cash consideration paid 34
contingent consideration 17
total consideration 51
from acquisition to 31 march 2012 van tuijl has contributed £04m to revenue and £nil to profit after tax had the business 
been acquired on 1 april 2011 it would have contributed £29m to revenue and £01m to profit after tax the contingent 
consideration is payable in two instalments in 2014 and 2015 based upon achievement of projected cumulative ebitda 
during the three years ending march 2015 the amount accrued of £17m represents the maximum amount payable under 
the contract 
for acquisitions completed in the year ended 31 march 2011 there have been no amendments to the provisional values 
disclosed last year 
  
shanks group plc
annual report  accounts 2012
 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 
group 
retirement
benefit
schemes
£m
tax
losses
£m
derivative 
financial 
instruments
£m
capital 
allowances 
£m 
other timing 
differences 
£m 
total
£m
at 31 march 2010 19 188 53 582 184 506
exceptional deferred tax credit – – – 85 – 85
disposals –10749188 52 84
charge credit to income statement 19 18 13 17 07 14
charge to equity 13 – 01 – – 14
exchange –––01 03 04
at 31 march 2011 13 63 16 291 136 361
transfers –––– 70 70
charge credit to income statement 09 18 02 59 12 64
credit to equity 39 – 28 – – 67
exchange –01–20 07 26
at 31 march 2012 17 80 42 330 71 262
deferred tax assets 17 69 42 20 11 159
deferred tax liabilities – 11 – 350 82 421
at 31 march 2012 17 80 42 330 71 262
deferred tax assets – 56 16 41 40 153
deferred tax liabilities 13 07 – 332 176 514
at 31 march 2011 13 63 16 291 136 361
as at 31 march 2012 the group had unused trading losses tax effect of £195m 2011 £162m available for offset against 
future profits a deferred tax asset has been recognised in respect of £80m 2011 £63m of such losses no deferred tax 
asset has been recognised in respect of the remaining £115m 2011 £99m 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 this is 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 
as mentioned in note 9 there was an exceptional tax credit of £52m in the current period relating to a favourable judgement 
issued with regard to certain tax liabilities in belgium following this decision current and deferred tax balances have been 
reviewed and appropriately classified to reflect all remaining tax assets and liabilities 
  

shanks group plc
annual report  accounts 2012

notes to the financial statements continued  
company 
retirement
benefit
schemes
£m
derivative 
financial 
instruments 
£m 
other
timing
differences
£m
total
£m 
at 31 march 2010 19 01 02 22
charge credit to income statement 19 – 02 17
charge to equity 13 01 – 14
at 31 march 2011 13 – 04 09
charge credit to income statement 09 – 03 06
credit to equity 39 04 – 43
at 31 march 2012 17 04 07 28
as at 31 march 2012 the company has unused tax trading losses tax effect of £66m 2011 £44m 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 

 group 
 
2012
£m
2011
£m
raw materials and consumables 78 80
work in progress 02 05
finished goods 25 14
 105 99


group carrying value  company carrying value 
financial assets note
2012
£m
2011 
£m 
 2012
£m
2011
£m
loans and receivables   
financial assets 
21
690 518  – –
loans to joint ventures 
15
36 50  – –
trade and other receivables 
21
1452 1663  2815 2839
cash and cash equivalents 
22
598 545  256 118
derivative financial instruments   
interest rate swaps 
16
– 01  – 01
forward foreign exchange contracts 
16
– 02  – –
fuel derivatives 
16
01 –  01 –
 2777 2779  3072 2958
the group considers that the fair value of financial assets is not materially different to their carrying value 
  
shanks group plc
annual report  accounts 2012
 continued 
 group company 
 carrying value fair value carrying value  fair value 
financial liabilities notes 
2012 
£m 
2011
£m
2012
£m
2011
£m
2012
£m
2011 
£m 
 2012 
£m 
2011
£m
loans and payables 
 
    
bank overdrafts and shortterm loans
23 
– 82 – 82 85 105  85 105
bank loans 
23 
1280 1261 1280 1261 238 –  238 –
retail bond 
23 
824 871 849 842 824 871  849 842
senior notes 
23 
481 316 521 325 – –  – –
finance lease obligations 
23 
75 89 75 89 – –  – –
trade and other payables 
24 
2063 2247 2063 2247 4343 4466  4343 4466
derivative financial instruments 
 
    
interest rate swaps 
16 
172 61 172 61 15 02  15 02
 
 
4895 4927 4960 4907 5505 5444  5530 5415

the group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation 
technique 
• level 1 quoted unadjusted prices in active markets for identical assets or liabilities 
• level 2 other techniques for which all inputs which have a significant effect on the recorded fair value are observable 
either directly or indirectly and 
• level 3 techniques which use inputs which have a significant effect on the recorded fair value that are not based on 
observable market data 
the fair values of the retail bond and senior notes are measured by discounting the future cash flows using observable market 
interest rate information as no similar instrument is available due to the specific profiles of the instruments they are considered 
to be level 2 in the fair value hierarchy 
the fair value of interest rate swaps forward foreign exchange contracts and fuel derivatives are determined by discounting 
the future cash flows using the applicable periodend yield curve they are considered to be level 2 in the fair value hierarchy 
none of the change in fair value of interest rate swaps is attributable to changes in the group’s credit risk 
the group considers that the fair value of bank overdrafts and loans trade and other payables and finance lease obligations 
are not materially different to their carrying value 
the fair value of a hedging derivative is classified as a noncurrent asset or liability when the remaining maturity of the hedged 
item is more than one year and as a current asset or liability when the remaining maturity is less than one year 
during the year ended 31 march 2012 there were no transfers between level 1 and level 2 fair value measurements and no 
transfers into and out of level 3 
 the group is exposed to market risk interest rate risk foreign exchange risk and commodity price 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 
  

shanks group plc
annual report  accounts 2012

notes to the financial statements continued  
 the group has continued to limit its exposure to interest rate risk by entering into a fixed rate retail bond of €100m fixed rate 
senior notes and further interest rate swaps that fix a substantial part of the group’s core borrowings 
the debt relating to project finance nonrecourse borrowings is at floating rates and the group has entered into interest rate 
swaps the interest rate swaps represent a hedge of the interest cash flows the interest rate swaps entered into after 
31 march 2009 are accounted for under ias 39 hedge accounting with changes in the fair value of interest rate swaps being 
recognised directly in reserves as they are effective hedges any other outstanding interest rate swaps have not previously 
been allocated as hedges by the group and are therefore classified as held for trading in accordance with ias 39 
the interest rate swaps are presented in noncurrent liabilities or assets as they are related to longterm borrowings and 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 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 has not significantly changed 
the weighted average effective interest rates at the balance sheet dates were as follows 
 2012 2011 
group 
floating
rate
£m
fixed
rate
£m
weighted
average
interest
rate

floating 
rate 
£m 
fixed
rate
£m
weighted
average
interest
rate

financial assets  
financial assets relating to pfippp contracts – 690 57 – 518 58
cash and cash equivalents 191 – 05 405 – 04
shortterm deposits 407 – 06 140 – 07
financial liabilities  
bank overdrafts and shortterm loans –– – 82 – 42
senior notes – 481 56 – 316 69
retail bond – 824 50 – 871 50
bank loans 1280 – 24 1261 – 28
interest rate swaps 1266 1266 59 1094 1094 56
the interest rate swaps weighted average interest rate includes the fixed interest rate which ranges from 123 to 579 
2011 174 to 579 and the margin of the underlying lending which ranges from 11 to 32 2011 11 to 275 
excluded from the analysis above is £75m 2011 £89m of amounts payable under finance leases as set out in note 23 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 three months 
  
shanks group plc
annual report  accounts 2012
 continued 
interest rate sensitivity assuming all other variables remain constant 
2012  2011 
income
sensitivity
£m
equity
sensitivity
£m
 income 
sensitivity 
£m 
equity
sensitivity
£m
1 increase in interest rates   
derivatives 09 154 19 101
nonderivatives 09 09  19 19
 – 145 – 82
1 decrease in interest rates   
derivatives 09 177  19 112
nonderivatives 09 09 19 19
 – 168  – 93
a 1 movement has been applied to interest rates for the year ended 31 march 2012 representing management’s assessment 
of a reasonably possible change in interest rates 2011 1 the interest rate sensitivity is taken to occur from 31 march 2011 
and so the change in the fair value of the swaps is shown as an equity sensitivity which results in an increase of £145m 
2011 £82m for a 1 increase in interest rate and a decrease of £168m 2011 £93m for a 1 decrease in rates  
for the company there were £251m shortterm deposits 2011 £118m at an effective interest rate of 04 2011 06 
the effective interest rate on the company’s cash and cash equivalents was nil 2011 nil the weighted average effective 
interest rates relating to the company were 25 2011 41 for bank loans interest on intercompany loan balances 
are charged at rates of between 0 and 12 2011 0 and 12 

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 
the group has designated the carrying value of euro borrowings of £824m 2011 £871m fair value of £849m 2011 £842m 
as a net investment hedge of the group’s investments denominated in euros the hedge was 100 effective for the year ended 
31 march 2012 2011 100 and as a result the related exchange gain of £47m 2011 £03m loss on translation of the 
borrowings into sterling has been recognised in the exchange reserve 
the group mitigates some foreign exchange risk on financial assets arising in the uk through the use of forward exchange 
contracts 
foreign exchange rate sensitivity assuming all other variables remain constant 
2012  2011 
income
sensitivity
£m
equity
sensitivity
£m
 income 
sensitivity 
£m 
equity
sensitivity
£m
10 increase in foreign exchange rates against sterling   
euro 37 86 36 95
canadian dollar 02 02 – 01
 39 88 36 96
the 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 a 10 movement has been applied to each 
currency representing management’s assessment of a reasonably possible change in foreign exchange currency rates 
2011 10  

shanks group plc
annual report  accounts 2012

notes to the financial statements continued  

fuel price risk 
the group is exposed to fuel price risk therefore management’s risk strategy aims to provide protection against sudden and 
significant increases in oil prices whilst ensuring that the group is not competitively disadvantaged in a serious way in the event of a 
substantial fall in the price of fuel it is expected that part of this risk can be offset through customers paying fuel surcharges and 
recovery via escalation clauses linked to the price of fuel within contracts such as uk pfippp 
to meet these objectives the fuel risk management programme allows for the use of a number of derivatives available on the 
overthecounter otc markets with approved counterparties and within approved limits the value of wholesale fuel covered 
by derivatives at 31 march 2012 amounted to £06m 2011 £nil these fuel derivatives contracts have been designated as 
cash flow hedges against highly probable future fuel purchase forecasts to occur over the next six months 
the following table demonstrates the sensitivity of a reasonably possible change in fuel prices with all other variables held constant 
 2012 2011
 
income
sensitivity
£m
income
sensitivity
£m
30 increase in wholesale fuel price excluding duty  51 45
30 decrease in wholesale fuel price excluding duty  51 45
recyclate price risk 
the group is exposed to recyclate price risk in its normal operations the main commodities where the group has exposure 
are paper cardboard and ferrous metal the group derisks part of this exposure by passthrough pricing and fixed price 
contracts the group has not entered into any recyclate price derivatives however this remains under regular review 
the following table demonstrates the sensitivity of a reasonably possible change in recyclate prices with all other variables 
held constant 
 2012 2011
 
income
sensitivity
£m
income
sensitivity
£m
10 increase in recyclate prices  24 20
10 decrease in recyclate prices  24 20

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 borrowings 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 
for more details of the group’s bank overdrafts bank loans and loan notes see note 23 
undrawn committed borrowing facilities 
 core project finance  total group 
group 
2012
£m
2011
£m
2012
£m
2011 
£m 
 2012
£m
2011
£m
expiring within one year – – – –  – –
expiring between one and two years – – – –  – –
expiring in more than two years 751 880 1028 268  1779 1148
 751 880 1028 268  1779 1148
in addition the group had access to £234m 2011 £257m of undrawn uncommitted working capital facilities 
as at 31 march 2012 the company had undrawn committed borrowing facilities at floating rates of £751m 2011 £880m 
expiring in more than two years 
shanks group plc
annual report  accounts 2012
 continued 
maturity profile of noncurrent borrowings 
group  company 
2012
£m
2011
£m
 2012 
£m 
2011
£m
between one and two years 201 14 – –
between two years and five years 1694 1986 1062 871
over five years 643 226 – –
 2538 2226 1062 871
maturity profile of undiscounted cash flows of financial liabilities and net settled derivative financial instruments 
the following table analyses the group’s financial liabilities and net settled derivative financial instruments into relevant maturity 
groupings the maturities of the undiscounted cash flows including interest and principal at the balance sheet date are based 
on the earliest date on which the group is obliged to pay 
 
within  
one year 
£m 
between one 
and five years 
£m 
over 
five years
£m
at 31 march 2012   
senior notes 27 228 358
retail bond 37 944 –
bank borrowings excluding finance leases 139 1025 469
finance lease liabilities 32 52 –
net settled derivative financial instruments 37 98 181
trade and other payables 2046 17 –
2318 2364 1008
at 31 march 2011   
senior notes 164 177 –
retail bond 44 1062 –
bank borrowings excluding finance leases 149 945 430
finance lease liabilities 35 63 03
net settled derivative financial instruments 29 136 230
trade and other payables 2167 150 –
2588 2533 663

the group’s bank loans retail bond and senior notes are unsecured but are subject to cross guarantees within the group 
each pfippp company has loan facilities which are secured by a legal mortgage over land andor a fixed and floating charge 
over the assets of the pfippp company 

shanks group plc
annual report  accounts 2012

notes to the financial statements continued  
 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 
2012 the amount of credit risk totalled £598m 2011 £545m 
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 2012 the credit risk was £01m 2011 £03m 
trade and other receivables mainly comprise 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 2012 the credit risk amounted to £1580m 2011 £1811m the group does not hold 
any collateral as security 
the financial assets relating to pfippp contracts are recoverable from the future revenues relating to these 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 2012 the credit risk was £690m 2011 £518m 

the group has a 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 
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 joint ventures 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 during the year 

shanks group plc
annual report  accounts 2012
 group  company 
2012
£m
2011
£m
 2012 
£m 
2011
£m
noncurrent assets   
financial assets 625 476 – –
deferred consideration 30 36 – –
other receivables 12 22 – –
667 534 – –
current assets   
trade receivables 1080 1293 – –
provision for impairment of receivables 53 45  – –
trade receivables – net 1027 1248 – –
accrued income 212 243 – –
amounts owed by subsidiary undertakings – – 2800 2830
financial assets 65 42 – –
deferred consideration 08 09 – –
other receivables 163 105 15 09
prepayments 128 148 04 01
 1603 1795 2819 2840
movement in the provision for impairment of receivables 
 group 
 
2012 
£m 
2011
£m
at 1 april 45 46
charged to income statement 23 11
utilised 13 12
exchange 02 –
at 31 march 53 45
the allowance for bad and doubtful debts is equivalent to 49 2011 35 of gross trade receivables 
ageing of trade receivables that are past due but not impaired 
 group 
 
2012 
£m 
2011
£m
neither impaired nor past due 621 787
not impaired but overdue by less than three months 372 425
not impaired but overdue by between three and six months 23 32
not impaired but overdue by more than six months 11 04
impaired 53 45
impairment provision 53 45
 1027 1248
past due amounts are not impaired where collection is considered likely the group considers that the carrying amount of trade 
and other receivables approximates their fair value  

shanks group plc
annual report  accounts 2012

notes to the financial statements continued  
there is no other concentration of credit risk with respect to trade and other receivables as the group has a large number 
of customers internationally dispersed with no individual customer owing a significant amount 
the carrying amounts of trade and other receivables are denominated in the following currencies 
group  company 
2012
£m
2011 
£m 
 2012
£m
2011
£m
sterling 1076 961  973 1112
euro 1151 1319  1846 1671
canadian dollar 43 49  – 57
 2270 2329  2819 2840

group  company 
2012
£m
2011 
£m 
 2012
£m
2011
£m
cash at bank and in hand 191 405  05 –
shortterm deposits 407 140  251 118
 598 545  256 118
shortterm deposits include restricted funds of £56m 2011 £nil held in relation to a legal claim in the netherlands see note 
31 for further details 
the carrying amounts of cash and of cash equivalents are denominated in the following currencies 
group  company 
2012
£m
2011 
£m 
 2012
£m
2011
£m
sterling 119 230  89 118
euro 456 293  162 –
canadian dollar 23 22  05 –
 598 545  256 118
for the purposes of the cash flow statement cash and cash equivalents comprise 
group  company 
2012
£m
2011 
£m 
 2012
£m
2011
£m
cash and cash equivalents as above 598 545  256 118
less deposits with a maturity of three months or more restricted funds 56 –  – –
 542 545  256 118

shanks group plc
annual report  accounts 2012
 group  company 
2012
£m
2011
£m
 2012 
£m 
2011
£m
current borrowings   
bank overdraft and shortterm loans – 82 85 105
senior notes – 159 – –
bank loans 94 121 – –
finance lease obligations 28 31 – –
 122 393 85 105
noncurrent borrowings   
senior notes 481 157 – –
retail bond 824 871 824 871
bank loans 1186 1140 238 –
finance lease obligations 47 58 – –
2538 2226 1062 871
at 31 march 2012 the group’s bank financing was a €200m term loan and multicurrency revolving credit facility with six major 
banks entered into on 2 february 2011 and expiring in june 2015 at 31 march 2012 €67m 2011 €64m equivalent of term 
loan was drawn in euro and canadian dollars on a three month interest period plus €33m 2011 €36m of the revolving credit 
facility the remaining €100m represented committed funds available for drawing in sterling euro or canadian dollars by way 
of a revolving credit facility on a maximum of three days notice or for ancillary derivative facilities 
the senior notes issued under the group’s pricoa private placement include €18m at a fixed interest rate of 69 with 
repayment due in september 2013 and €40m of seven year senior notes issued in april 2011 at a fixed interest rate of 5025  
the five year retail bonds of €100m issued to belgium and luxembourg investors in october 2010 have an annual coupon of 
50 and are quoted on the london stock exchange  
the carrying amounts of borrowings are denominated in the following currencies 
 group 
 
company 
2012
£m
2011
£m
 2012 
£m 
2011
£m
sterling 693 444 259 40
euro 1625 1855 888 936
canadian dollar 342 320 – –
 2660 2619 1147 976
the group’s finance lease liabilities are payable as follows 
2012 2011 
group 
minimum 
lease 
payments
£m
interest
£m
principal
£m
minimum 
lease 
payments 
£m 
interest 
£m 
principal
£m
within one year 32 04 28 35 04 31
between one and five years 52 05 47 63 07 56
more than five years –– – 03 01 02
84 09 75 101 12 89
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 

shanks group plc
annual report  accounts 2012

notes to the financial statements continued  

 group 
 
company 
 
2012
£m
2011 
£m 
 2012
£m
2011
£m
current liabilities   
trade payables 940 1031  03 05
other tax and social security payable 159 163  03 01
other payables 103 135  02 03
accruals and deferred income 681 665  32 108
deferred consideration 130 68  – –
unprocessed waste 128 190  – –
government grants – 02  – –
 2141 2254  40 117
noncurrent liabilities   
amounts owed to group undertakings – –  4303 4349
deferred consideration 17 150  – –
government grants  04 02  – –
other payables 33 35  – –
 54 187  4303 4349
the carrying amounts of trade and other payables and other noncurrent liabilities are denominated in the following currencies 
 group  company 
 
2012
£m
2011 
£m 
 2012
£m
2011
£m
sterling 635 656  1556 1572
euro 1541 1763  2787 2894
canadian dollar 19 22  – –
 2195 2441  4343 4466

shanks group plc
annual report  accounts 2012
 group  company 
site
restoration 
and aftercare
£m
other
£m
total 
£m 
 
other
£m 
at 31 march 2011 288 176 464  27
provided – cost of sales 07 – 07  –
released – cost of sales – 05 05  –
provided – administrative costs – 15 15  –
finance charges – unwinding of discount 15 17 32  –
utilised 07 31 38  07
other – cash received see below – 87 87  –
exchange 1604 20  –
at 31 march 2012 287 255 542  20
current 014344  20
noncurrent 286212498  –
at 31 march 2012 287 255 542  20
current 066470  24
noncurrent 282112394  03
at 31 march 2011 288 176 464  27
 site restoration provision as at 31 march 2012 related 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 these costs are 
expected to be paid over a period of up to 25 years from the balance sheet date and may be impacted by a number of factors 
including changes in legislation and technology 
 postclosure 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 30 years from closure of the relevant landfill site 

other provisions principally cover onerous contracts leases warranties and indemnities onerous contracts are provided at the 
net present value of the operating losses of the onerous contracts the provision is to be utilised over the period of the contract 
to which they relate which is up to 2029 under the terms of the agreements for the disposal of the uk landfill and power and 
other uk operations the company has given a number of warranties and indemnities to the purchasers which may give rise to 
payments the timing of expected outflows is uncertain therefore an estimate has been made and the majority of the provision 
has been classified as noncurrent  
included within other provisions is £87m €105m received during the year following a court decision in respect of a claim 
for business interruption in the netherlands that occurred in 2002 the receipt of the amount was conditional on a parent 
company guarantee the court’s decision has been appealed and the ultimate outcome of the case remains uncertain 
accordingly the directors believe the amount should be recorded within provisions until the ultimate outcome of the case 
is known with greater certainty 
  

shanks group plc
annual report  accounts 2012

notes to the financial statements continued  

 
group 
retirement benefit costs 
2012
£m
restated
2011
£m
uk defined contribution schemes 09 08
uk funded defined benefit schemes 08 08
overseas pension schemes 99 87
retirement benefit costs before exceptional items 116 103
uk funded defined benefit schemes – curtailment of pension liabilities – 39
total retirement benefit costs 116 64
the comparative amounts have been restated further explanation of the restatement is included in note 1 

the group and company’s principal pension scheme is the shanks group pension scheme which covers eligible uk 
employees and has both funded defined benefit and defined contribution sections the group also has one other small funded 
defined benefit scheme which is 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 

the valuation has been based on a full assessment of the liabilities of the scheme as at 5 april 2009 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 2012 the main assumptions were as follows 
 
2012
 pa
2011
 pa
discount rate 48 56
future salary growth nonlocal government passport section members 10 10
future salary growth local government passport section members 44 46
rate of increase in pensions payment fixed 3 30 30
rate of increase in pensions payment cap 5 32 34
rate of increase in pensions payment cap 25 22 22
rate of price inflation 34 36
consumer price inflation 24 27
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 for a member who retires in 2027 at age 65 the assumptions are that they will live on 
average for around a further 24 years after retirement if they are male or for a further 26 years after retirement if they are female 
the assumptions used by the independent qualified actuaries are the best estimates chosen from a range of possible 
actuarial assumptions 

shanks group plc
annual report  accounts 2012
 continued 

 
2012 
£m 
2011
£m
operating profit current service cost 08 08
curtailment gain – 39
 08 31
other finance items interest charge on scheme liabilities 60 63
expected return on scheme assets 77 73
 17 10
net retirement benefit credit before tax  09 41

2012 
£m 
2011
£m
loss on actual return less expected return on scheme assets 20 02
experience losses arising on scheme liabilities – –
loss gain arising on changes in assumptions underlying the present value of the scheme liabilities 140 51
actuarial loss gain 160 49
cumulative actuarial gains and losses recognised in the statement of comprehensive income since 1 april 2004 are losses of 
£140m 2011 £20m gains 

2012
£m
2011
£m
2010 
£m 
2009 
£m 
2008
£m
market value of scheme assets  1179 1131 1069 863 974
present value of scheme liabilities  1255 1082 1137 873 880
deficit surplus in the schemes  76 49 68 10 94
experience adjustments arising on scheme assets £m 19 01 169 165 76
 of scheme assets 17 01 158 191 78
experience adjustments arising on scheme liabilities £m 01 – 09 01 03
 of scheme liabilities 00 00 08 01 03

shanks group plc
annual report  accounts 2012

notes to the financial statements continued  

the table below sets out the aggregate fair values of the assets in the group’s defined benefit schemes their expected 
weighted average longterm rates of return and the aggregate net pension liabilities 
 
expected longterm  
rate of return net pension fund 
 plan assets as  of  
total assets 
 
2012
 pa
2011
 pa
2012
£m
2011 
£m 
 2012
 
2011

equities 80 84 449 684  381 605
fixed interest gilts 31 44 77 117  65 103
index linked gilts 29 42 216 185  183 164
corporate bonds 41 52 208 113  176 100
newton diversified growth fund 71 – 222 –  189 –
cash 31 44 07 32  06 28
total market value of assets 1179 1131  1000 1000
present value of scheme liabilities 1255 1082  
net deficit surplus in the schemes 76 49  
related deferred tax asset liability 17 13  
net pension liability asset 59 36  
the overall expected rate of return on scheme assets is 59 2011 69 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 assumed longterm rate of return on each asset class is set 
out in the table above the overall expected rate of return is derived by aggregating the expected return for each asset class 
over the actual asset allocation for the schemes as at 31 march 2012 
at 31 march 2012 the ias 19 net retirement deficit was £76m 2011 £49m surplus the amount of the liability varies if the 
main financial assumptions change particularly the discount rate if the discount rate increased or decreased by 025 the  
ias 19 liability would increase or decrease by circa £19m 

 
2012
£m
2011
£m
at 1 april  1131 1069
expected return on plan assets 77 73
actual return less expected return on plan assets 20 01
employer contributions 26 26
member contributions 02 03
benefits paid 37 39
at 31 march 1179 1131
  
shanks group plc
annual report  accounts 2012
 continued 

 
2012 
£m 
2011
£m
at 1 april  1082 1137
current service cost 08 08
interest cost on plan liabilities 60 63
changes in assumptions 140 51
member contributions 02 03
benefits paid 37 39
curtailment gain – 39
at 31 march 1255 1082
the estimated contributions expected to be paid to the schemes in the year ending 31 march 2013 are £36m 
 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 £99m 2011 £87m 

group and company 
2012 
£m 
2011
£m
allotted called up and fully paid 397 million 2011 397 million ordinary shares of 10p each 397 397
during the year 11189 2011 54750 ordinary shares were allotted following the exercise of share based payments under the 
savings related share option schemes for an aggregate consideration of £8076 2011 £57991 further disclosures relating 
to sharebased payments are set out in note 7 

shanks group plc
annual report  accounts 2012

notes to the financial statements continued  

group  company 
2012
£m
2011 
£m 
 2012
£m
2011
£m
profit loss before tax from continuing operations 314 212  201 90
fair value losses on financial instruments 08 58  – –
finance costs net 147 145  94 113
amortisation and impairment of intangible assets 73 172  01 –
depreciation of property plant and equipment 505 488  – –
exceptional gain on disposal of subsidiary – 37  – –
exceptional gain on contingent consideration 16 –  – –
exceptional loss on write off of investment in a joint venture arrangement 20 –  – –
nonexceptional gain on disposal of property plant and equipment 25 14  – –
exchange gain – –  16 03
net decrease in provisions 40 101  25 72
income from associates 01 –  – –
sharebased payments 07 06  07 06
operating cash flows before movement in working capital 992 929  294 46
increase in inventories 08 01  – –
decrease increase in receivables 143 197  216 268
decrease increase in payables 115 263  46 129
cash generated by operations 1012 994  124 185
receipt from business interruption claim in the netherlands 87 –  – –
income taxes paid received 71 41  41 85
net cash from used in operating activities 1028 953  165 100

 
2012
£m
2011
£m
net increase in cash and cash equivalents 09 34
net increase decrease in borrowings and finance leases 139 68
deposit of restricted funds 56 –
amortisation of loan fees 13 36
capitalisation of loan fees – 41
disposal of subsidiaries and other businesses – 1000
exchange gain 99 16
movement in net debt 12 1123
net debt at beginning of year 2074 3197
net debt at end of year 2062 2074
 
  
shanks group plc
annual report  accounts 2012
 continued
as at 
31 march 
2012 
£m 
as at
31 march
2011
£m
cash and cash equivalents 598 545
current borrowings 122 393
noncurrent borrowings 2538 2226
total group net debt 2062 2074
core business net debt 1608 1595
pfippp companies and other project finance net debt 454 479
total group net debt 2062 2074

group 
2012 
£m 
2011
£m
contracts placed for future capital expenditure on financial assets 651 237
contracts placed for future capital expenditure on property plant and equipment 193 260
share of joint venture future capital expenditure – 25
the company had no capital commitments as at 31 march 2012 2011 £nil 

group 
2012 
£m 
2011
£m
the future aggregate minimum lease payments under noncancellable operating leases are as follows  
within one year 106 93
later than one year and less than five years 263 344
more than five years 724 757
 1093 1194
future minimum lease payments expected to be received under noncancellable subleases 05 05
1088 1189
the company had commitments under noncancellable leases of £nil 2011 £04m 

shanks group plc
annual report  accounts 2012

notes to the financial statements continued  


provision is made for the directors’ best estimate of all known claims and all legal actions in progress the group takes legal advice 
as to the likelihood of success of claims and actions and no provision is made where the directors consider based on that advice 
that the action is unlikely to succeed or a sufficiently reliable estimate of the potential obligation cannot be made 
under the terms of the sale agreement with terra firma for the disposal of the group’s landfill and power operations in 2004 the 
group gave a number of indemnities and warranties relating to the disposed operations for which appropriate provisions are held 
at the start of the year the group held a provision of £31m €35m relating to a claim from authorities for operating outside of 
permitted volumes in the period 1997 to 1999 at a location in the netherlands during the year the court issued a decision that 
£59m €71m was payable an appeal against the decision has been lodged the directors believe that no further amount should 
be provided at this stage as the outcome of the appeal process is uncertain and the provision of £29m €35m established 
remains appropriate the claim relates to the period prior to the acquisition of the netherlands group of companies in 2000 and 
accordingly any payment to the authorities may be recoverable from the previous owners under the sale and purchase agreement 
any such recovery represents a contingent asset at 31 march 2012 and no receivable for a potential payment from the previous 
owners will be recorded until its receipt is virtually certain 
the company and certain subsidiaries have in the normal course of business given guarantees and performance bonds relating to 
the group’s contracts totalling £526m 2011 £406m in addition the company has contingent liabilities in respect of both vat 
and hm revenue  customs group payment arrangements of £02m 2011 £02m 
the company has given guarantees in respect of the group’s subsidiary undertakings’ borrowing facilities totalling £888m 
2011 £908m 

the group’s joint ventures have no significant contingent liabilities or assets 


a list of the company’s principal subsidiaries is set out in note 33 transactions with subsidiaries relate to interest on 
intercompany loans and management charges net interest expense was £55m 2011 £75m and management charges 
received were £38m 2011 £38m total outstanding balances are listed in notes 21 and 24 
 key management comprises the board of directors and the managing directors of the country operations the disclosures required 
by the companies act 2006 and those specified by the financial services authority relating to directors’ remuneration including 
retirement benefits and incentive plans interests in shares share options and other interests are set out within the remuneration 
report on pages 75 to 80 and form part of these financial statements the emoluments paid to key management personnel were 
 
2012
£m
2011
£m
shortterm employee benefits 22 26
retirement benefits 01 03
sharebased benefits 03 02
 26 31

the group had the following transactions and outstanding balances with associates in the ordinary course of business 
 
2012
£m
2011
£m
sales 404 191
management fees 05 02
accounts receivable at 31 march 41 40
  
shanks group plc
annual report  accounts 2012
 the company held through whollyowned subsidiaries 100 of the issued share capital of the following principal trading 
subsidiaries unless otherwise stated all of which operate in the waste management sector and have been consolidated in the 
group’s financial statements 
 country of incorporation
principal group subsidiary undertakings 
shanks nederland bv netherlands
shanks 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
shanks sa belgium
shanks hainaut sa belgium
shanks liègeluxembourg sa belgium
shanks brusselsbrabant sa belgium
shanks vlaanderen nv belgium
foronex nv belgium
shanks waste management limited uk
shanks pfi investments limited uk
orgaworld canada limited canada
 
subsidiary undertakings holding pfippp contracts 
shanks argyll  bute limited uk
shanks cumbria limited uk
resource recovery solutions derbyshire limited uk
3se barnsley doncaster and rotherham limited 75 uk

the company held through whollyowned subsidiaries the following interests in material joint venture companies and 
associates all of which operate in the waste management sector  
 group
holding
most recent 
year end 
country of
incorporation
caird bardon limited 50 31 december 2011 uk
energen biogas limited 50 31 march 2012 uk
elwa holdings limited 20 31 march 2012 uk
shanks dumfries and galloway holdings limited 20 31 march 2012 uk

shanks group plc
annual report  accounts 2012

notes to the financial statements continued at 31 march 2012 
 
2012
£m
2011
£m
2010 
£m 
2009
£m
2008
£m
consolidated income statement  
revenue 7501 7173 6835 6851 5530
trading profit from continuing operations
1
534 497 511 617 519
finance charges – interest 99 82 121 149 83
finance charges – other 48 63 58 29 26
income from associates 01 –– ––
profit from continuing operations before exceptional items 
and tax underlying profit 388 352 332 439 410
amortisation of acquisition intangibles 37 39 39 38 25
nontrading and exceptional items 37 101 97 108 10
profit before tax from continuing operations 314 212 196 293 375
tax 101 93 67 78 119
exceptional tax 55 100 52 184 –
profit after tax from continuing operations 268 219 181 31 256
profit after tax from discontinued operations – – 195 33 27
profit for the year 268 219 376 64 283
  
consolidated balance sheet  
noncurrent assets 7516 7679 8787 8744 7266
other assets less liabilities 1748 1631 1738 1661 1233
net debt 2062 2074 3197 4087 3232
net assets 3706 3974 3852 2996 2801
share capital and share premium 1391 1391 1390 1230 1211
reserves 2315 2583 2462 1766 1590
total equity 3706 3974 3852 2996 2801
financial ratios  
underlying earnings per share 72p 65p 65p 104p 93p
basic earnings per share 67p 55p 48p 10p 86p
dividends per share 345p 325p 30p 17p 49p
1
 trading profit from continuing operations is stated before exceptional items and amortisation of acquisition intangibles 
shanks group plc
annual report  accounts 2012
 consolidated five year financial summary shanks group plc
annual report  accounts 2012


holders  shares held 
private shareholders 2405 652 16146739 41
corporate shareholders 1284 348 380710473 959
total 3689 1000 396857 212 1000
size of shareholding holders  shares held 
1 – 5000 2505 679 5073653 13
5001 – 25000 772 209 8243934 21
25001 – 50000 100 27 3585941 09
50001 – 100000 74 20 5388784 14
100001 – 250000 73 20 11856549 30
250001 – 500000 153 42 205334800 517
over 500000 12 03 157 373551 396
total 3689 1000 396857 212 1000

administrative enquiries concerning shareholdings in the company should be made to the registrar computershare investor 
services plc 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 wwwcomputersharecominvestor 

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 
overseas shareholders wishing to receive their dividend payment in local currency can now do so using the global payments 
service offered by our registrars the beneﬁts include automatic currency conversion into local currency over 100 countries 
worldwide faster receipt of funds by being credited directly to your bank account and no risk of lost cheques to action this 
service go to wwwinvestorcentrecoukpayments enter the company name and your shareholder reference number and add 
your payment instruction you will need your bank details

a low cost execution only sharedealing service for the purchase and sale of shanks group plc shares is available from 
natwest stockbrokers who are authorised and regulated by the financial services authority and are a member of the 
london stock exchange natwest stockbrokers suite 11 3 minster court mincing lane london ec3r 7dd 
telephone 0808 208 4433 

on 31 march 2012 the middle market price of shanks group plc ordinary 10 pence shares was 9875 pence per share having 
varied during the year between a low of 895 pence and a high of 1315 pence share price information on shanks group plc 
is widely available in the ﬁnancial press and on ﬁnancial websites the isin ‘international securities identiﬁcation number’ code 
for the company’s ordinary shares is gb0007995243 and the sedol ‘stock exchange daily ofﬁcial list’ number is 0799524 

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  

the shanks group plc website containing company details ﬁnancial information and current news can be found at  
wwwshanksplccom the website for shanks companies within belgium can be found at wwwshanksbe for the netherlands 
at wwwshanksnl for the united kingdom at wwwshankscouk and for canada at wwworgaworldca
shareholder information shanks group plc
annual report  accounts 2012


shareholders may elect to receive future shareholder documents and information by email or via the company’s website 
this is intended to help the environment by reducing paper and transport as well as enabling the company to save on 
administration printing and postage costs 
the shanks group plc website contains copies of our ﬁnancial reports corporate news and other shareholder information 
shareholder information will be made available by way of publication on the website shareholders have the following options 
option a receive email notiﬁcation that documents and information are available on the shanks group plc website 
you may choose this option by registering your email address at wwwetreeukcomshanksplc you will require your shareholder 
reference number which can be found on either your share certiﬁcate or recent dividend certiﬁcatetax voucher if you 
choose this option we will plant a tree under the woodland trust’s “tree for all” campaign 
option b receive all documents and information by post 
option c receive notiﬁcation by post that documents and information including the annual report are available on the 
shanks group plc website 
you may change your mind as to how you receive your shareholder information at any time by notifying computershare 
you may also request a hard copy of a particular document at any time from the company 

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 high risk or nonexistent shares 
they can be very persistent and extremely persuasive it is not just the novice investor who has been duped in this way 
shareholders are advised to be very wary of any unsolicited advice offers to buy shares at a discount or offers of free company 
reports while high proﬁts are promised those who buy and sell shares in this way usually lose their money

if you are offered unsolicited investment advice you should take these steps before handing over any money
• make sure you get the name of the person and organisation contacting you
• check the fsa register at wwwfsagovukfsaregister to ensure they are authorised
• use the details on the fsa register to contact the ﬁrm
• call the fsa consumer helpline on 0845 606 1234 if there are no contact details on the register or you are advised they are 
out of date or complete an online form at wwwfsagovukpagesdoingregulatedlawalertsformshtml
• the fsa also maintains on its website a list of unauthorised overseas ﬁrms who are targeting or have targeted uk investors and
• inform our registrars on 0870 707 1290 
if you use an unauthorised ﬁrm to buy or sell shares or other investments you will not have access to the financial ombudsman 
service or financial services compensation scheme fscs if things go wrong
remember if it sounds too good to be true it probably is

if you are approached about a share scam you should tell the fsa using the fraud reporting form at wwwfsagovukscams 
where you can also ﬁnd out about the latest investment scams or call the consumer helpline on 0845 606 1234
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 wwwmoneymadeclearorguk 

4 july 2012 exdividend date for ﬁnal 2012 dividend
6 july 2012 record date for ﬁnal 2012 dividend
19 july 2012 annual general meeting
1 august 2012 payment of ﬁnal 2012 dividend
8 november 2012 announcement of interim results and dividend
5 december 2012 exdividend date for interim dividend 
7 december 2012 record date for interim dividend
11 january 2013 payment of interim dividend
31 march 2013 2013 ﬁnancial yearends
may 2013 announcement of 2013 results and dividend recommendation
for updates to the calendar during the year please visit the shanks group website wwwshanksplccom shanks group plc
annual report  accounts 2012

shanks group plc
dunedin house
auckland park mount farm
milton keynes
buckinghamshire mk1 1bu
tel  00 44 0 1908 650580
fax 00 44 0 1908 650651
website wwwshanksplccom 
email infoshanksplccouk

shanks group plc
16 charlotte square
edinburgh
eh2 4df
registered in scotland
no sc077438

philip grifﬁnsmith fcis

the netherlands
shanks nederland
po box 141
2290 ac wateringen
the netherlands
tel 00 31 0 174 219 900
fax 00 31 0 174 219 911
website wwwshanksnl
email infoshanksnl
uk
shanks waste management
dunedin house
auckland park mount farm 
milton keynes
buckinghamshire mk1 1bu 
tel 00 44 0 1908 650650
fax 00 44 0 1908 650699
website wwwshankscouk 
email infoshankscouk 
belgium
shanks belgium
rue edouard belin 31
be1435 mont saint guibert
belgium
tel 00 32 0 1023 3660
fax 00 32 0 1023 3661
website wwwshanksbe
email infoshanksbe
canada
orgaworld canada
4675 wellington road south
london
on n6e 3w7
canada
tel 00 1 519 649 4446
fax 00 1 519 649 7757
website wwworgaworldca
email infoorgaworldca
company information

pricewaterhousecoopers llp

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fortis bank sa
hsbc bank plc 
ing bank nv 
rabobank international 
the royal bank of scotland plc 

greenhill  co international llp

ashurst llp
dickson minto ws

college hill

jefferies hoare govett
investec
corporate advisers
 wwwshanksplccom
design and production radley yeldar  wwwrycom
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park is an emas certiﬁed carbonneutral ® company and its 
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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 
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when you have ﬁnished with this report please recycle it
please see details on page 143 on how to receive electronic copies 
of future documentation from shanks group plc
 argyll  bute
 anaerobic digestion
 annual general meeting
 barnsley doncaster and rotherham 
 the economic union of belgium the netherlands 
and luxembourg
 biodegradable municipal waste
 construction  demolition
 cash generating unit
 dumfries  galloway
 earnings before interest tax depreciation and 
amortisation
 east london waste authority
 earnings per share
 euro interbank offer rate
 full potential plan
 cash ﬂow before dividends growth capex pfi 
funding acquisitions disposals exceptional items 
and discontinued operations


underlying free cash ﬂow divided by trading proﬁt
 gross domestic product
 industrial  commercial
 international financial reporting standards
 key performance indicator
 london interbank offer rate
 lost time accident
 long term incentive plan
 mechanical biological treatment
 material recycling facility
 municipal solid waste
 megawatt hours of energy generated
 proﬁt before tax
 private finance initiative
 public private partnership
 pricewaterhousecoopers llp
 research  development
 reporting of injuries diseases and dangerous 
occurrences regulations
 safety health  environmental
 solid recovered fuel
 savingsrelated share option scheme
 operating proﬁt before the amortisation of 
acquisition intangibles exceptional items and 
discontinued operations
 total shareholder return
 uk generally accepted accounting practice
 weighted average cost of capital
 dunedin house 
auckland park 
mount farm 
milton keynes 
buckinghamshire 
mk1 1bu
tel 00 44 0 1908 650580 
fax 00 44 0 1908 650651

email infoshanksplccouk
wwwtwittercomshankswaste
wwwyoutubecomtheshanksgroup


Summary:
 shanks group plc
annual report  accounts 2012
chief executive’s statement


 group chief executive

this is my ﬁrst statement as chief executive 
having joined the group in february i came to 
shanks because i believe it is a strong and 
wellpositioned business in an increasingly 
important growth market my time in the 
business has reinforced this view 
clearly we are operating in a challenging 
macroeconomic environment at the moment 
however shanks has many compelling 
opportunities to deliver proﬁtable growth and 
shareholder value by ‘making more from waste’ 
i am conﬁdent that we will do just that 
shanks’ strategy is focused on delivering 
costeffective and sustainable alternatives to 
landﬁll and mass incineration the need for such 
solutions is increasing due to regulation and 
legislation together with society’s determination 
to protect our environment shanks is well 
placed to meet these growing demands with 
its strong portfolio of businesses capabilities 
and technologies 

during the year shanks continued to deliver 
proﬁtable growth despite softer market volumes 
and price pressure in some of our markets 
revenue grew by 3 at constant currency and 
underlying earnings per share increased by 9 
this was a direct result of strong returns from 
shanks’ strategic investment programme 
together with focused management action 
to streamline operations and reduce costs 
it was particularly encouraging to deliver 
improved results in our core growth areas 
of the uk and organics which grew revenue 
by 6 and 28 yearonyear respectively 
our benelux hazardous waste business also 
performed strongly with trading proﬁt up 26 
these operational gains coupled with returns 
from the investment programme and £11m 
cost savings achieved during the year more 
than offset the difﬁcult trading conditions in our 
solid waste markets 
shanks has many compelling 
opportunities to deliver proﬁtable 
growth and shareholder value  biodiesel
responsible
shanks group plc
annual report  accounts 2012
the groupwide ‘action on safety’ initiative led 
by senior management has been instrumental 
in achieving a reduction of 13 to our level 
of reportable accidents in the year the focus 
on safety continues and we will drive further 
improvements 

shanks’ overall vision remains consistent and 
has become more focused we retain a clear 
aim to be the leading provider of sustainable 
alternatives to landﬁll and mass incineration 
we plan to lead in selected target markets which 
have strong sustainable growth drivers and 
characteristics that enable shanks to gain 
competitive advantage this aspiration reﬂects 
opportunities in our current growth markets 
such as organics in canada and also our 
commitment to be highly selective about where 
we will operate in the future











the group executive committee 
visiting our roeselare site shanks group plc
annual report  accounts 2012
chief executive’s statement


more information on how we measure progress on pages 18 and 19
 measurements



underlying earnings per share growth   
organic growth in trading proﬁt   
growth in revenue from sustainable activities   
posttax return on investment programme 



overall recycling and recovery rate   
plant utilisation   
power generation mwhrs



lower riddor rate  
carbon avoidance tonnes



return on operating assets  
 shanks’ strategy to deliver growth from sustainable waste management is robust and 
supported by longterm growth drivers we create value from recycling recovering energy 
and making products from material that is otherwise thrown away we believe that our 
approach of ‘making more from waste’ delivers costeffective and environmentally 
sustainable solutions to dealing with a wide range of waste streams 
to focus and accelerate our execution four strategic priorities have been identiﬁed
the background and future outlook for each of these is described on the following pages 
 shanks group plc
annual report  accounts 2012


we have invested £140m in sustainable waste 
management infrastructure since 2008 the 
performance of these investments has improved 
over time and we are now consistently delivering 
our target posttax returns of 12–15 when 
plants are fully operational we have developed 
project management capabilities and 
operational metrics to ensure that we continue 
to generate superior returns on investment
a further £110m will be deployed as part of the 
second phase of the strategic investment 
programme we are already working on a 
signiﬁcant number of sustainable projects that 
leverage our existing core capabilities and the 
pipeline of such opportunities continues to grow 
at a promising rate our target projects are 
increasingly in organics where we have proven 
expertise and can deliver excellent operating 
margins in the uk municipal market we are 
detecting early signs of a more difﬁcult funding 
environment together with local authorities 
planning for shorter term contracts and less 
capital intensive facilities we believe that there 
will be ongoing opportunities for shanks in this 
market and we will continue to invest heavily in 
the uk given the strong need for further 
sustainable diversion from landﬁll


shanks group sustainably recycles and 
reprocesses waste into valuable products 
we get value from the products we make 
so our recycling and recovery rate is a critical 
operational metric in 201112 we achieved 
an industryleading recycling and recovery 
rate of 78 up from 70 three years ago 
more broadly in 201112 we improved our 
organics operating margins from 13 to 18 
additionally in our uk pfippp business we 
delivered excellent service to local authorities 
while driving operating margins from 64 to 
101 in the year
we are now refocusing the group to be more 
productoriented this includes signiﬁcant effort 
on delivering outstanding productivity the core 
principles of lean manufacturing can be applied 
to our industry and they will be implemented 
going forward by way of illustration we have 
started to develop an improved set of ‘daily 
management’ tools to measure and increase 
the operational performance of our facilities 
these will be rolled out across the group and 
will ensure that we really are ‘making more from 
waste’ our productivity focus is particularly 
important given that solid waste volumes are 
currently suppressed by the macroeconomic 
environment 





18 


our second ad facility in the uk is 
a 48000 tonnes per annum facility 
which will generate up to 2mw 
of renewable energy  shanks group plc
annual report  accounts 2012


we have a decentralised structure that enables 
local entrepreneurial management teams to 
deliver responsive and innovative services 
to our customers over recent years we have 
sought to foster this cultural advantage whilst 
developing a stronger central framework to 
deliver groupwide beneﬁts to drive this the 
group’s executive committee excom has 
driven a wider range of initiatives for example 
we have started a centrally coordinated 
procurement project and have increased 
crossborder trading activities in addition 
a new overall shanks brand was successfully 
rolled out across the group including in the 
netherlands where there have been only 
local brands in the past 
in addition to recent improvements we still have 
many opportunities to leverage further our 
group capabilities technologies and scale we 
are escalating our overall focus on people and 
capability development we are also developing 
the organisation to be more closely aligned with 
our core activities to this end henk kaskens 
the managing director of our organics business 
was recently appointed to the group excom 
and now reports directly to me in addition 
we are targeting further synergies from across 
the group and announcements will be made 
as our plans develop during the year 
chief executive’s statement










  the group executive committee meets monthly and the permanent 
members include the group chief executive the group finance 
director and the managing directors of the netherlands belgium 
the uk and since may 2012 the managing director of orgaworld 


100000 tonnes per annum ad and 
300000 tonnes per annum waste 
water treatment shanks group plc
annual report  accounts 2012



over the years shanks has delivered signiﬁcant 
value from bolton acquisitions in march 2012 
this continued with the acquisition of the 
dutch glass recycling business van tuijl 
this acquisition expands our capabilities in 
an important recyclate market and complements 
our existing operations we have clear plans to 
grow van tuijl and the business is off to a strong 
start under our ownership 
looking ahead we will continue to use 
acquisitions to strengthen our core businesses 
we believe buying and integrating bolton 
businesses in the current environment can 
accelerate the group’s proﬁtable growth 
our balance sheet provides us with this strategic 
ﬂexibility and we are actively looking for 
appropriate opportunities that meet our target 
returns on investment in parallel we are also 
assessing the group’s current portfolio to 
identify noncore businesses this process 
is ongoing but has already highlighted some 
small regional operations that might create 
more value under alternative ownership 

we have four core activities solid waste 
hazardous waste organics and uk municipal 
pfippp each of these activities has different 
demand drivers proﬁtability proﬁles and capital 
requirements we also have distinct ways in 
which we create competitive advantage in each 
of these activities at the same time all of them 
provide costeffective and sustainable solutions 
to reduce landﬁll and mass incineration they all 
‘make more from waste’ by creating products 
such as green energy recyclate commodities 
recovered fuel and organic fertilisers our 
activities are described in more detail throughout 
this report together with ‘how we win’
our portfolio of activities have the following 
key attributes 
• solid waste – productive lean business 
with leading recycling rates well positioned 
for recovery 
• hazardous waste – strong proﬁtable business 
with competitive advantage and international 
reach
• organics – growing international green 
business with proven capabilities and 
attractive economics 
• uk municipal longterm pfippp contracts – 
strong stable business with improving service 
and returns plus continued growth 
opportunities 
over the last three years the proportion of 
group proﬁt from hazardous organics and 
uk municipal has increased from 33 to around 
60 this more balanced business mix reduces 
the cyclical exposure of the group
we believe our combination of established 
sustainable businesses coupled with a renewed 
focus on growth operational excellence and 
group capability will generate signiﬁcant 
shareholder value in the years ahead 

going into 201213 we are building on shanks’ 
stable platform by accelerating and intensifying 
the execution of our strategy our markets look 
set to remain challenging in the year ahead 
to offset these macro headwinds we are taking 
action to deliver cost reductions and group 
synergies we will also continue to generate 
further returns from our ongoing investment 
programme and through a renewed focus 
on operational performance 
i believe that we are wellpositioned to deliver 
growth in line with the board’s expectations for 
201213 and that the future outlook for shanks 
group is very positive 
 
group chief executive


 • productive lean 
business with leading 
recycling rates
• well positioned 
for recovery


• strong proﬁtable 
business with 
technology advantages
• international 
experience and reach 
 • growing international 
green business with 
proven capabilities
• proﬁtable growth 
in new markets 
 • stable business with 
longterm contracts 
and improving margins 
• evolving growth 
opportunities