shanks group plc annual report and accounts 2009 
 
 
contents 
 
 
 shanks group 
1 our vision our business and our strategy 
2 financial highlights 
3 chairman’s statement 
6 chief executive’s statement 
 our business 
9 market overview 
11 corporate strategy 
15 business review by country 
26 financial review 
33 corporate responsibility 
 governance 
38 board of directors 
39 directors’ report 
46 corporate governance 
52 remuneration report 
60 statement of directors’ responsibilities 
61 auditors’ report 
 financial statements 
63 consolidated income statement 
63 consolidated statement of recognised income and expense 
64 consolidated balance sheet 
65 consolidated cash flow statement 
66 company income statement 
66 company statement of recognised income and expense 
67 company balance sheet 
68 company cash flow statement 
69 notes to the financial statements 
108 subsidiary undertakings and joint ventures 
110 consolidated five year financial summary 
 shareholder and company information 
111 shareholder information 
113 financial calendar 
114 company information  shanks  annual report 2009      1  
 
 
shanks group 
 
we are europe’s largest listed independent waste processing and resource 
management company operating in the netherlands belgium uk and canada   
 
our vision 
 
our vision is to be europe’s leading provider of sustainable waste management 
solutions   
 
our business 
 
 netherlandsbelgium uk canada group 
average number of employees 2295 1245 992 12 4544 
active operating centres 39 20 44 1 104 
operating centres with recyclingrecovery 35 12 17 1 65 
operational landfill sites 1 2 6  9 
collection and transport lorries 845 500 221  1566 
tonnes waste handled million tonnes 47 13 18 01 79 
tonnes materials recovered million tonnes 412 080 059 006 557 
overall recycling and recovery rate 87 61 32 75 70 
energy generated megawatt hours 10214 53271 39074  102559 
 
our strategy 
 
1 invest to drive organic growth where returns are greatest 
2 develop our infrastructure further to support sustainable waste management 
and conversion of waste to renewable energy 
3 share our core capabilities and technologies within the group 
4 maximise asset utilisation and minimise unit costs 
5 continue to use acquisitions to improve asset utilisation and reorient the 
portfolio to high growth markets  shanks  annual report 2009      2  
financial highlights 
 
2009 2008 change
revenue £697m £564m 24
operating profit £639m £553m 16
amortisation of acquisition intangibles
1
£38m £25m
exceptional profit on disposals
2
£33m £19m
exceptional restructuring charge
2
£20m £00m
trading profit
3
£664m £559m 19
profit before tax £339m £413m 18
amortisation of acquisition intangibles
1
£38m £25m
exceptional profit on disposals
2
£33m £19m
exceptional restructuring charge
2
£20m £00m
change in fair value of interest rate swaps
2
£121m £29m
underlying profit before tax
4
£485m £448m 8
tax on underlying profit 29 2008 32 £141m £144m
underlying profit after tax
5
£344m £304m 13
amortisation of acquisition intangibles
1
 net of tax £28m £19m
exceptional profit on disposals
2
£33m £19m
exceptional restructuring charge
2 
net of tax £14m £00m
change in fair value of interest rate swaps
2
 net of tax £87m £21m
exceptional tax charge for loss of uk ibas
2
£184m £00m
profit after tax £64m £283m
underlying basic earnings per share
5
145p 129p 12
basic earnings per share 27p 120p
dividend per share 21p 62p
ebitda
6
£1131m £927m 22
march 09 march 08
core net debt £290m £212m
pfi companies and other project finance net debt
7
£118m £111m
total group net debt before fair value adjustment
7
£408m £323m
fair value of pfi interest rate swaps £16m £4m
total group net debt £424m £327m
 
1
 acquisition intangibles comprise intangible assets arising on acquisitions excluding landfill void and computer 
software 
2
 the group considers these items as exceptional for the purposes of determining underlying profit see note 1 of 
financial statements 
3
 before amortisation of acquisition intangibles exceptional items interest and tax 
4
 before amortisation of acquisition intangibles exceptional items and tax 
5
 before amortisation of acquisition intangibles and exceptional items net of associated tax 
6
 earnings before interest tax depreciation and amortisation ebitda 
7
 excluding fair value of interest rate swaps 
 
revenue £m
4204
4425
5085
5637
6965
05 06 07 08 09
underlying profit £m
307
34
403
448
485
05 06 07 08 09
profit before tax from 
continuing operations £m
197
303
461
413
339
05 06 07 08 09 shanks  annual report 2009      3  
trading performance remains resilient despite the economic 
slowdown  the approach to delivering our strategy has been 
adapted to increase the focus on maximising the short to medium 
term cash position 
 
 
chairman’s statement 
 
the economic environment in which the group operates changed dramatically during 
the second half of 2008 with all countries in the eurozone now experiencing sharp 
declines in gdp  this has led to reductions in the amount of consumer and industrial 
waste produced and a fall in the value of materials recovered from waste the speed 
and severity of this slowdown in economic activity impacted on all companies in the 
waste sector   
 
against this background the financial results for the year demonstrate the robust 
makeup of our business portfolio  underlying profit before tax rose 8 to £485m  
this reflected growth of 13 in the first half year slowing to 4 in the second half as 
a result of the progressively deteriorating economic conditions   
 
people 
the change in economic outlook during the year has required our people to adapt 
very rapidly we have strong operational management across the group and they 
have responded quickly and decisively to the challenges facing them  on behalf of 
the board i would like to thank all of our employees for their commitment and 
creativity  we have achieved some major milestones during the year and they 
should all feel proud of these achievements   
 
in april 2009 we announced the appointment of chris surch as group finance 
director on the departure of fraser welham  prior to joining shanks chris held a 
number of senior positions for smiths group plc most recently as finance director of 
the specialty engineering division  chris brings years of industry and operational 
expertise to shanks from his time at smiths group and previously ti group plc  on 
behalf of the board i would like to record our appreciation to fraser for everything he 
has done over the last thirteen years with the group   
 
strategic progress 
the tougher external environment will require us to be even more focused and 
disciplined in the pursuit of our long term strategy for the group   
 
in response to the quite exceptional prevailing economic conditions the stewardship 
of the group’s cash position has become a key strategic priority  we are taking 
action to realise value from noncore assets and have initiated a range of cost 
saving measures across the group in addition efforts to improve the efficient use of 
capital in the business have resulted in a marked reduction in expenditure on 
maintenance and a sharply improved working capital performance   
 
these actions confirm our determination to position the group to participate in the 
market’s transition to more sustainable waste management solutions  despite the 
present economic climate the environmental challenges facing society have not 
changed and to meet these challenges the pace of legislative change has 
accelerated  in this context it was pleasing to see the uk government’s recent  shanks  annual report 2009      4  
budget commitment to provide significant funding to support the pfi process and the 
decision to further increase landfill tax   
 
with a portfolio offering proven landfill diversion and waste to energy technologies 
ranging from anaerobic digestion biological treatment and incineration shanks is 
well positioned to selectively realise very attractive opportunities in our core markets   
 
financial position 
in april 2009 we announced the successful refinancing of the group’s £250m 
medium term bank facility  this was a significant achievement which secured an 
increase in funding from an expanded group of financial institutions in a very difficult 
funding market   
 
in this recessionary environment capacity to continue to invest will be critical to the 
long term market positioning and profitability of the group   
 
strengthening our capital structure 
the group has historically maintained what was considered to be an appropriate 
level of borrowings given the prevailing economic environment  given the prospect 
of a difficult trading environment in 200910 we intend to continue our actions to 
preserve cash and reduce net debt  in order to further strengthen the position of the 
group the board believes it is both appropriate and in the best interests of its 
shareholders to raise net proceeds of approximately £667 million equity via a rights 
issue which we announced on 21 may 2009 
 
we intend to use the net proceeds of this rights issue to reduce the level of 
indebtedness which in the short term will increase headroom and ensure balance 
sheet strength in case of any further unforeseen deterioration in market conditions  
we have a clear growth strategy in place based around three key areas recycling 
organic processing including orgaworld and uk pfi and funding for these will be 
provided by the proceeds of targeted noncore disposals and also strong cash flow 
generation once economic conditions start to improve 
 
dividend 
the company will not be recommending a final 2009 dividend  following the rights 
issue the board expects to pay an interim and final dividend for the year to 31 march 
2010 and then to implement a progressive dividend policy within a cover range of 
20 to 25 
 
the board 
the board has also had to adapt very quickly to the changing economic 
circumstances and i would like to thank my board colleagues for their unreserved 
commitment and professionalism in addressing the challenges facing the group   
 
for investors these are also difficult times and it is critically important that they have 
confidence in the qualification and decisions of the board and also that the board 
can be held accountable for its decisions  in recognition of the need to strengthen 
this accountability the board will present to the agm in july a resolution proposing 
the annual reelection of all nonexecutive directors   
 
remuneration 
the board is mindful of the understandable public and investor focus on the 
remuneration of senior executives in the current climate particularly in those 
companies where earnings are under pressure the remuneration report sets out 
the steps we have taken to demonstrate responsiveness to these concerns whilst  shanks  annual report 2009      5  
also ensuring the continued motivation of our senior management team in what are 
quite exceptional operating conditions 
 
corporate responsibility 
shanks operates in a sector which is increasingly seen to have an important role in 
managing the impact of climate change and improving the reuse of the world’s finite 
resources this year the group will publish its first corporate responsibility report 
which sets out some clear commitments and reports progress on a number of 
important indicators  this will include a calculation of the group’s carbon footprint 
together with the impact our activities can have on wider carbon emissions we have 
also established a group corporate responsibility committee which reports directly 
into the executive committee to ensure a consistent and committed focus across the 
group 
 
outlook 
the outlook for the near term is undoubtedly more challenging than twelve months 
ago in the netherlands our exposure to the construction sector has seen the 
profitability of our dutch solid waste business reduce over recent months and other 
parts of the business have also been impacted however we have taken decisive 
action to reduce costs and conserve cash and the benefits of recent investments will 
come through during the current financial year   
 
we expect the current year to remain challenging but the group is well positioned 
with strong market positions and proven technologies to deliver attractive earnings 
growth once the wider economic outlook improves   
 
 
 
 
adrian auer 
chairman 
  shanks  annual report 2009      6  
our priorities will remain in line with our vision of sustainable waste 
management focusing on the generation of energy from waste and 
recycling 
 
 
chief executive’s statement 
 
my second year as chief executive of the shanks group takes place within a very 
different macroeconomic environment to the first the credit crunch has led to 
negative gdp growth in all our markets reduced the availability of capital and 
changed attitudes to gearing 
 
we have reshaped our priorities and business model to the changed environment 
whilst continuing to deliver our long term strategy the fundamental regulatory and 
legislative drivers are undiminished and the opportunities available to the business 
remain it is important that we pursue them at the right time  
 
following strong trading in the first half of the year we have been active in the 
second half in both taking the short term measures necessary to mitigate the profit 
impact of a sharp economic downturn as well as reshaping our business model to 
continue developing our strategy through a recession   
 
this has necessitated a reassessment of how we generate adequate cash flow for 
investment whilst volumes in our core markets are declining our response outlined 
more fully below has been to be tough on reducing operating costs working capital 
and maintenance capital expenditure and to be more active in recycling capital from 
disposal of noncore assets  
 
progress during the year 
last year i set out the five key elements of our strategy for the group and i am 
pleased to report progress against them 
 
invest to drive organic growth where returns are greatest 
 
organic revenue growth in the first half year was 7  this fell during the second half 
year leaving annual growth of 3  this reflected principally the impact of a reduction 
in the level of waste arising in our industrial and commercial customer base and we 
expect the decline to continue during the coming year  our strategy of investing to 
drive growth does however mitigate the impact of this decline and we expect the full 
year benefits of the investments we have made in 20089 to contribute £7m to trading 
profit during 200910 
 
develop our infrastructure further to support sustainable waste management 
and conversion of waste to renewable energy 
 
we have commissioned a number of capital projects to improve our ability to deliver 
sustainable waste management solutions these include new sorting lines at two of 
our dutch recycling businesses the new recyclingsolid recovered fuel srf 
facilities and anaerobic digestion plant in belgium composting plants in canada and 
the netherlands and additional engines in our landfill power division  
 
assets under construction include a further composting plant in canada a 
wastewater and anaerobic digestion facility in amsterdam a steam turbine and  shanks  annual report 2009      7  
combined heat and power chp plant in belgium as well as a new recycling facility 
in glasgow   
 
the uk pfi market is an important opportunity for shanks to help the uk 
government develop sustainable alternatives to landfill we have sought to 
complement our powerful mechanical biological treatment mbt technology offering 
through our newly formed joint venture with wheelabrator a subsidiary of waste 
management inc  this allows shanks to offer an energyfromwaste proposition to 
those authorities who have chosen this as their preferred treatment technology we 
are very pleased with the positive market response to the relationship with 
wheelabrator and have been shortlisted on a number of authority tenders  our 
pipeline is as full as it has ever been reflecting our increased investment in bidding 
during the year   
 
share our core capabilities and technologies within the group 
 
this is an important cultural change for a group that is used to operating in a 
decentralised way and inevitably takes some time to implement however we have 
made progress in launching the orgaworld business in the uk which includes 
processing of food waste from marks and spencer’s stores 
 
we are also working with our benelux team in the design of our uk recycling facilities 
and have cross group teams looking at a number of projects 
 
maximise asset utilisation and minimise unit costs 
 
we have taken steps to reduce our cost base during the year in july 2008 we 
moved the group corporate office from bourne end to share the uk head office 
facility in milton keynes  during the year we announced approximately 100 
redundancies in our uk and belgian operations as a regrettable response to the 
downturn in trading in all of our core operations we have been reducing variable 
costs as volumes reduce and cutting back on overhead expenditure  our plans for 
200910 include approximately £10m of savings in our fixed cost base to mitigate the 
profit impact of declining volumes 
 
continue to use acquisitions to improve asset utilisation and reorient the 
portfolio to high growth markets 
 
in april 2008 we acquired the foronex business in belgium and despite difficult 
market conditions are pleased with trading in the final quarter as the benefits of our 
integration plan came through   
 
to generate growth capital for our strategy we have been disposing of non core 
assets in the uk we realised £5m from selling operations outside our strategic 
regions and have recently announced the sale of our interest in the avondale landfill 
joint venture for a total consideration of up to £275m  the group has also market 
tested a number of other smaller disposals but has avoided proceeding with 
transactions at depressed prices which it does not believe represent good value for 
shareholders we will continue to review opportunities to realise value from our non
core assets and investments as appropriate   
 
culture 
i retain my belief in the fundamentally decentralised structure within the group as this 
allows us to remain responsive to our changing customer needs in this fast moving 
environment however we will continue to promote the sharing of best practice  shanks  annual report 2009      8  
where it can deliver tangible benefits we will also look to implement a more 
structured performance management framework to allow us to benchmark 
performance actively share best practice improve our forecasting and provide the 
tools and information to allow our entrepreneurial managers to do what they do best 
– develop their business in their local markets 
 
performance 
given the difficult market conditions i believe the group delivered a creditable 
performance in 20089 our focus in 200910 will be to minimise the impact of the 
downturn on the business and maintain strong relationships with our customers so 
that our performance picks up strongly as economic conditions recover  
 
our priorities will remain in line with our vision of sustainable waste management 
focusing on the generation of energy from waste and recycling we expect growth 
within this strategy to come from three main areas 
 
• recycling  
• organic processing particularly through our orgaworld technology 
• uk pfi opportunities 
 
 
tom drury 
group chief executive  shanks  annual report 2009      9  
market overview 
 
waste management is an essential service  in societies where there is a high level 
of regulation and enforcement it is a sophisticated industry using advanced 
technologies  in societies with little or no regulation or enforcement waste tends to 
be treated indiscriminately   
 
in the european union eu where most of the group’s operations are situated the 
level of environmental regulation is high however unlike trade regulations there are 
no common standards for waste management  eu legislation on waste sets 
minimum standards which member nations must meet however they are free to 
exceed these standards in order to follow their own political and environmental 
agendas  the result is that within the eu national regulations differ and there is no 
single market 
 
the waste management market can be subdivided into nonhazardous and 
hazardous waste  the former tends to be a local business as the relatively low unit 
cost of treatment makes transport a significant part of the overall cost  hazardous 
waste treatment costs tend to be higher making it a more regional business 
 
both the public and the private sector are active in the waste market  the degree of 
privatisation varies across europe it is high in the uk and france but lower in 
germany the netherlands and belgium  advancing eu legislation is necessitating 
substantial investment in new infrastructure  this investment combined with 
budgetary constraints is driving privatisation initiatives in many eu countries  within 
the private sector consolidation of the industry has been a feature for many years  
the new infrastructure requirements and the long term nature of the business have 
recently attracted infrastructure funds 
 
within the national markets a further distinction may be made between “collection 
transfer and recycling” and “treatment and disposal”  the former has historically had 
low barriers to entry and hence has been made up of many small participants  
increasing recycling requires greater investment in infrastructure which is moving this 
market towards the larger players  treatment and disposal have high barriers to 
entry as facilities tend to be capital intensive and projects have long gestation 
periods  these activities are therefore the domain of well capitalised companies and 
are populated by a few large players often multinationals  
 
the markets may also be split between the industrial and commercial ic sector 
and the municipal sector  in most eu countries the municipalities have a statutory 
duty to deal with household waste which they either do themselves or use private 
sector contractors  they have no such duty in respect of ic waste  due to the 
larger volumes controlled by the municipalities and their longer term outlook the 
municipal sector is typified by large longterm contracts which tend to be five to ten 
years for collection and often in excess of twenty years for treatment and disposal  in 
the ic sector the volumes generated by individual entities tend to be relatively small 
and their outlooks are shorter  this market therefore tends to be more short term 
with contracts in excess of a couple of years being rare 
 
market trends and drivers 
across the world governments are urging the waste industry to support them in 
recovering more resources and energy from waste and are providing economic 
incentives to increase recycling through taxation on landfill and in some cases  shanks  annual report 2009      10  
incineration alongside subsidies for treatment processes that support the production 
of renewable energy from waste  the general market trend can be summarised as 
 
“less waste more materials recovery energy from waste and much less landfill” 
 
the high level factors behind this are climate change the price and security of supply 
of fossil fuels and an increasing appreciation within society of the need to develop 
sustainable waste solutions  these factors are driving a convergence between the 
waste energy intensive and power industries 
 
in terms of specific legislative and market drivers these can be summarised as 
follows 
 
the european landfill directive  biodegradable waste in landfill is a major source 
of methane emissions to the atmosphere  methane is a potent greenhouse gas with 
twenty five times the impact of a carbon dioxide emission of the same mass  a key 
objective of this directive is to significantly reduce the landfilling of biodegradable 
waste a major component of municipal waste that is landfilled by european member 
states  the directive also aims to reduce the polluting impact of landfills by 
substantially restricting other types of waste that may be landfilled 
 
landfill tax  a significant mechanism being used by many european states to drive 
waste out of landfill to more environmentally acceptable options such as recycling 
and energy recovery 
 
energy prices and surety of supply  these have increased the pressure to find 
alternative fuels waste is one of these 
 
carbon emissions quotas – these have further increased the cost of using fossil 
fuels  waste derived fuels can be exempt from carbon emissions calculations 
increasing interest in this source of fuel 
 
renewable electricity  many waste based electricity generation projects qualify for 
renewable electricity subsidies and credits available in various forms across europe 
this is because a major component of waste derived fuels comprises renewable 
short carbon cycle materials eg wood paper and other vegetable matter 
 
european waste framework directive – the revised european waste framework 
directive published in november 2008 provides further legislative support for 
recovering more resources and energy from waste by setting minimum energy 
recovery criteria and introducing statutory recycling targets for member states to 
achieve by 2020 both for municipal waste 50 and construction and demolition 
waste 70 
 
the effects of these drivers vary by territory and are explained in the business 
reviews by country  
  shanks  annual report 2009      11  
corporate strategy 
 
 
group vision 
 
“to be europe’s leading provider of sustainable waste management solutions” 
 
this will be achieved by firmly positioning the group in the recycling and energy 
recovery area of the waste hierarchy see figure 1 
 
prevention 
reuse 
recycling 
energy recovery 
disposal
shanks
shanks
prevention 
reuse 
recycling 
energy recovery 
disposal
shanks
shanks
 
 
figure 1 – waste hierarchy 
 
 
the key elements of the group’s strategy are 
• invest to drive organic growth where returns are greatest 
• develop our infrastructure further to support sustainable waste management and 
conversion of waste to renewable energy 
• share our core capabilities and technologies within the group 
• maximise asset utilisation and minimise unit costs 
• continue to use acquisitions to improve asset utilisation and reorient the portfolio 
to high growth markets 
 
this provides a strong corporate framework for clear individual country strategies 
which are detailed in the country business reviews 
 
activities and structure 
the group is a major player in the netherlands belgium and the uk  there are also 
some operations in france close to the belgian border which are managed from 
belgium and combined with the belgian operations due to their small size  there is 
also a start up operation in canada specialising in the treatment of source 
segregated municipal organic waste streams using our orgaworld tunnel composting 
technology 
 
the group’s organisational structure reflects the national nature of the markets in 
which it operates with divisions in the netherlands belgium uk and canada  
management of the group is decentralised to ensure that the people making the 
decisions are close to and understand their markets  this structure is underpinned 
by strong central financial control  throughout the organisation we employ high 
calibre management who are properly trained and motivated  shanks  annual report 2009      12  
 
table 1 below summarises the group’s waste activities in each country and table 2 
shows how these activities are grouped in the segmental reporting 
 
table 1 group activities   
   
 
 
industrial  
commercial 
 
municipal 
nonhazardous solid waste   
collection nl be uk be 
transfer  recycling nl be uk nl be uk 
organic processing nl nl ca 
residual treatment be be uk 
landfill disposal  power nl be uk be uk 
hazardous waste   
industrial cleaning and transport nl be  
treatment and disposal nl be  
contaminated land remediation nl be uk  
 
 
table 2 waste activities in segmental reporting 
  
solid waste nonhazardous solid waste collections 
transfer recycling and treatment 
landfill and power landfill disposal including contaminated 
soils and power generation from landfill 
gas 
hazardous waste industrial cleaning hazardous waste 
transport treatment including 
contaminated soils and disposal and 
contaminated land remediation 
organic treatment anaerobic digestion and tunnel 
composting of source segregated organic 
waste streams 
pfi contracts long term uk municipal waste treatment 
contracts 
 
in addition to the waste activities detailed above we also operate a sand quarry 
adjacent to our landfill site in wallonia and have small infrastructure and 
groundworks operations in ghent in belgium and amersfoort in the netherlands  
due to their small size the infrastructure and groundworks activities are reported as 
part of the solid waste activities 
 
key performance indicators kpis 
the group’s kpis can be divided into three categories health and safety 
environmental and operational   
 
health and safety 
reporting of injuries diseases and dangerous occurrences regulations riddor 
is uk law which requires companies to report specified more serious accidents and 
incidents to the health and safety executive  the group requires all of its 
operations no matter which country they are based in to report monthly in this 
common format  minor incidents are also reported  the minor and riddor kpis for  shanks  annual report 2009      13  
the current and prior years are given in the corporate responsibility section of this 
report 
 
environmental 
the group closely monitors compliance with environmental permits at locations  all 
issues are reviewed at monthly divisional meetings and at least quarterly at group 
board level  details of prosecutions during 20089 are given in the corporate 
responsibility section of this report 
 
operational 
the number of waste activities undertaken by the group is significant with each site 
involved in differing ranges of activities  the performance indicators used to monitor 
these activities are varied and range from lifts per day lifts per kilometre and tonnes 
per lift for collection activities to input and output tonnages and final elimination 
diversion rates for treatment and recycling activities  currently these kpis are only 
used at a local level with the kpis at a regional or country level being financial in 
nature these kpis are those common to most businesses namely revenue trading 
profit cash flows and return on capital employed  details are included in the 
business review by country section   
 
principal risks and their mitigation 
the performance of our industrial  commercial ic businesses approximately 
85 of revenue is linked to the economic activity in the sectors we serve  we are 
therefore exposed to fluctuations in these sectors across our national markets  we 
mitigate this risk by diversifying our customer base where possible 
 
the sale of recyclable materials provides a significant source of income across the 
group  as seen in the latter part of 2008 the level of global economic activity can 
have a dramatic effect on commodity prices and hence the value of these 
recyclables  where the group collects or processes segregated recyclables streams 
such as paper and cardboard it endeavours to reduce the exposure to fluctuations in 
commodity prices by linking input prices directly to corresponding quoted commodity 
prices  where the recyclables are recovered from residual waste streams their value 
is small compared to the costs of handling the stream so is not separately identified 
in the overall price to the customer  however the combined value of recyclables 
extracted from large volumes of residual waste can be significant and the impact of 
falling prices therefore becomes material the group seeks to limit exposure to 
fluctuations in commodity prices in the short to medium term by entering into 
agreements with off takers however in the longer term fluctuations in the value of 
these streams have to be covered in the collection or gate fee to the waste producer  
 
borrowings are drawn so far as possible in the same currencies as the underlying 
investment to reduce translation exposure on exchange rate movements however 
movements in exchange rates could have a negative impact on translations of the 
results of the group’s overseas subsidiaries into sterling 
 
in addition to the above economic risks there are a number of waste industry specific 
risks 
 
environmental legislation and its interpretation 
as already mentioned regulation is a key driver of the waste market  the ability of 
individual countries and indeed regions in the case of belgium to set their own 
legislation makes this a very complex field  this is further complicated by the rapid 
rate of change in legislation resulting from the increased profile of environmental 
issues  changes in the legislation or its interpretation can have a significant and far  shanks  annual report 2009      14  
reaching impact on markets  the group endeavours to mitigate this risk by 
employing high quality management in each of our divisions to influence the evolving 
legislative framework  we therefore actively lobby for our interests at european 
national and regional levels 
 
environmental compliance 
all operating sites and activities are regulated by environmental authorities in line 
with the requirements set out within licences and permits  these licences and 
permits are required to carry on the business therefore the negotiation of and 
compliance with their terms is of paramount importance  maintaining the highest 
environmental standards is also important to ensure continuing acceptance of 
operations by host communities and to satisfy customers  details of how the group 
monitors and controls environmental compliance are given in the corporate 
responsibility section of this report  
 
health and safety 
the waste management industry is recognised as one of the most hazardous sectors 
in which to work  shanks’ employees are the groups most important and valuable 
asset and their health and safety is paramount  as a result shanks devotes 
considerable management resource to ensure the highest health and safety practices 
are imposed and maintained  details can be found below in the corporate 
responsibility section of this report  
 
  shanks  annual report 2009      15  
 
business review by country 
 
chart 1 shows the geographical split of revenue and trading profit  the netherlands 
remains the main source of the group’s profits contributing 63 with belgium and 
the uk contributing 27 and 8 respectively  canada still being in start up mode 
currently contributes 2 
 
 
chart 1 revenue and trading profit by territory
revenue
26
1
22
51
trading profit
1
63
27
8
2
netherlands belgium united kingdom canada
 
1
 before group central services  
 
the netherlands 
market 
the netherlands has had some of the most advanced environmental legislation in 
europe in place for some time they also have high levels of landfill tax currently 
circa €90 per tonne  these together with the geological characteristics of the 
country have resulted in a low reliance on landfill incineration being the predominant 
final disposal route  the higher cost and limited capacity of final disposal outlets has 
made sorting and recycling in the netherlands more viable and it is not uncommon 
for recycling rates to be 70 or above 
 
the group’s business in the netherlands splits into three divisions solid waste 
hazardous waste and organic treatment  the solid waste business comprises a 
number of large recycling sites together with supporting collection vehicle fleets 
which typically recycle and divert from landfill or incineration 80 of the waste they 
process  the business derives approximately half its trading profit from construction 
and demolition cd waste the other half being from more general ic waste and 
other activities there is limited work from the municipal sector  the business is 
principally based in the populous randstad area to the west of the country where we 
have strong market positions number one in the collection of cd waste and 
number three in the collection of more general ic waste  our estimated national 
market shares are 7 and 11 respectively 
 
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 almost 
15 million tonnes of low contamination hazardous waste per annum there are three 
principal processes thermal treatment of contaminated soils pyrolysis of paint waste  shanks  annual report 2009      16  
and biological and physiochemical treatment of acqueous wastes  reym supplies 
industrial cleaning services to the oil and gas petrochemical and other industries  
again both these businesses have dominant market positions being market leaders 
in their respective activities  market shares vary by activity for industrial cleaning we 
have around 20 for treatment this is estimated at 25 for soil cleaning with 40
50 for highly contaminated water treatment and paint waste 
 
organic treatment comprises the orgaworld business which consists of a number of 
treatment facilities for organic wastes by wet or dry anaerobic digestion or tunnel 
composting these waste streams originate from industry mainly from food 
processing companies and supermarkets and source segregated organic municipal 
waste streams  orgaworld is the number three player in the netherlands with a 
market share of around 7 
 
strategy 
the strategic goal for the dutch operations is to maintain the strong operating 
margins we currently enjoy and over the long term grow both the solid and 
hazardous waste businesses ahead of gross domestic product  this will be 
achieved by  
• maintaining the current decentralised structure and culture but seeking out 
greater benefits from collaboration between the business units 
• upgrading existing recycling facilities to improve their efficiency and thereby 
maintain our market leadership in processing costs 
• focusing on new niche monostream markets such as the depleted growth 
media from the dutch greenhouse industry we already process 
• continuing the successful track record of tuckin acquisitions and 
• maintaining the current strong cash generation from the business 
 
in addition the recent orgaworld acquisition provides significant opportunities for 
higher rates of growth in the organic waste treatment sector not only in the 
netherlands but also in the uk belgium and canada 
 
operational review 
 
table 3 netherlands revenue and trading profit by activity
2009 2008 variance 2009 2008 variance
€m €m €m  €m €m €m 
solid waste 274 269 5 2 384 426 42 10
hazardous waste 151 143 8 6 188 134 54 40
organic treatment 12 10 2 20 21 23 02 9
country central services 5 4 1 25 47 49 02 4
total €m 432 418 14 3 546 534 12 2
total
£m at average fx rate 356 295 61 21 449 377 72 19
revenue trading profit
 
  shanks  annual report 2009      17  
table 4 netherlands trading margins and return on capital employed by activity
after allocation of country central services
2009 2008 variance 2009 2008 variance
   
solid waste 13 15 2 9 10 1
hazardous waste 11 83 19 13 6
organic treatment 15 21 6 5 72
total 13 13  11 10 1
trading margin roce
 
 
trading profit in the netherlands improved 19 to £449m 2008 £377m  
eliminating the impact of exchange profits were up 2 year on year  a difficult 
second half in solid waste due to the economic downturn and harsh weather 
conditions was offset by a strong performance from hazardous waste 
 
in solid waste the full year effect of last year’s four tuckin acquisitions contributed 
some €11m 3 of additional trading profit  profits from the existing solid waste 
businesses have reduced by €53m 12 principally due to the sharp downturn in 
the economy at the end 2008  this manifested itself in a number of ways as 
mentioned previously solid waste derives around 50 of its business from the 
construction and demolition cd sector  in the first quarter of 2009 we have seen 
reducing volumes in this market which have been further depressed by the unusually 
harsh winter  these reducing volumes have increased competitive pressure 
restricting our ability to raise prices at the beginning of 2009   
 
whilst not growing the more general ic market has been more stable in terms of 
volumes however here too there is pricing pressure as competitors seek to replace 
falling cd volumes   
 
at the same time as these local economic issues the collapse in commodity prices 
caused by the global downturn has driven down the value of recyclable materials  
this has had a modest effect on the profitability of source segregated recyclable 
streams due to the pass through nature of the commercial arrangements however 
the impact on margins of general waste streams has been more material because it 
has not been possible to recover the falling contribution from recovered materials due 
to the pricing pressures mentioned above  recovered metals are the main source of 
value which across the business total some 40000 tonnes per annum  as 
demonstrated in chart 2 the average sales prices achieved for recovered metals has 
fallen by 70 from its high in 2008 
  shanks  annual report 2009      18  
chart 2 average price received for recovered metals
0
50
100
150
200
250
300
350
apr08
may08
jun08
jul08
aug08
sep08
oct08
nov08
dec08
jan09
feb09
mar09
€  tonne
 
 
these pressures on revenue have also been accompanied by adverse factors in the 
cost base  in january 2009 there was a 375 increase in labour costs for the 
majority of our employees as a result of national collective labour agreements  in 
addition the amsterdam municipal incinerator a major outlet for our sorting residues 
significantly increased their prices  finally early in 2009 a major customer of our 
smink groundworks business unexpectedly went into administration resulting in a 
€1m bad debt   
 
in order to address the difficult trading conditions in the solid waste business a cost 
reduction programme – fit for the future  has been initiated which is targeting 
delivery of  €7m of annual savings in addition to the €5m that will be removed from 
the cost base as a consequence of reducing volumes 
 
our hazardous waste activities performed extremely well during the year showing a 
40 year on year improvement  this was principally due to an extremely strong 
performance from our atm treatment plant despite the unexpected disruption to the 
waste water treatment in july which caused a temporary shutdown and loss of 
capacity as disclosed in our interim results the financial impact of the shutdown of 
€27m was substantially offset by a favourable decision relating to a long running 
dispute on excise duties which resulted in a rebate of historic charges  prices and 
volumes at atm were up year on year by 2 and 4 respectively  reym our 
industrial cleaning business also had a good year extending a significant oil industry 
contract to 2014  both these businesses have and continue to show strong 
resilience to the economic downturn 
 
our organic treatment activity orgaworld continues to trade satisfactorily in its 
home market of the netherlands  work has started on the greenmills project a new 
100000 tonne per annum anaerobic digestion and 350000 tonne wastewater 
treatment facility in amsterdam  construction of this facility is expected to complete 
in 2010 
 
belgium 
market 
in belgium environmental responsibility is devolved to the three regions flanders 
wallonia and brussels  flemish environmental legislation and landfill tax levels are 
very similar to those in the netherlands resulting in similar market characteristics 
high levels of recycling a reliance on incineration for final disposal and very little 
landfill 
  shanks  annual report 2009      19  
in the walloon region landfill tax on ic waste at an effective rate of €53 per tonne 
is sufficient to drive reasonably high levels of recycling  this rate will rise to €90 per 
tonne in 2010 which combined with a lack of incineration capacity will promote 
increased recycling and other forms of energy recovery  the effective cost of landfill 
tax is 52 higher than the actual tax because it is nondeductible for corporation tax 
purposes 
 
in january 2008 new legislation was introduced which has had a major impact on the 
municipal waste treatment sector  prior to january 2008 a reasonable proportion of 
municipal waste was still landfilled as unlike ic waste it attracted very little landfill 
tax  in january 2008 the walloon region adopted a strict interpretation of the 
landfill directive requirement for pretreatment of nonhazardous waste which 
stopped residual waste collected from households from being landfilled without pre
treatment  at the same time landfill tax was introduced on other municipal waste 
streams at €20 per tonne  this is scheduled to rise to €60 per tonne from january 
2010 
 
the brussels region has little landfill capacity  it has its own incinerator but beyond 
that it is reliant on the other regions for final disposal 
 
the activities in belgium are broken down into solid waste landfill  power 
hazardous waste and a sand quarry  the solid waste business is similar to that in 
the netherlands however the division is less reliant on the cd sector and also 
includes the operation of municipal waste collection contracts the largest being for 
the city of liege under a ten year contract which was renewed in 2005 
  
the landfill and power operations are situated in mont st guibert in wallonia where 
we have one of the largest landfills in the walloon region  a major source of income 
for this operation is from the generation of renewable electricity from the methane 
produced as the biodegradable waste decays  this landfill is unique within the 
walloon region in that its licence allows it to accept municipal waste from across the 
region  this gives it a strong market position in the landfilling of municipal waste a 
market which will almost disappear due to the legislative changes mentioned above 
 
the hazardous waste division is also similar to that in the netherlands comprising 
industrial cleaning activities and a main treatment centre at roeselare in west 
flanders the industrial cleaning businesses service the steel cement chemical 
and other large industries not only across belgium but also in northern france the 
treatment facility specialises in the preparation of waste derived fuels and minerals 
for the cement industry which has major installations in both the east and west of 
wallonia  like atm in the netherlands the treatment facility also treats highly 
contaminated waste water streams using physiochemical and biological processes 
 
the sand quarry is adjacent to the landfill in wallonia and is a profitable but non
core activity 
 
in terms of overall revenue shanks belgium is the number two player in the belgian 
market  we estimate our market share in the solid and hazardous ic markets to be 
7 and 9 respectively  in terms of the municipal market our share is lower at 
around 3 however a significant proportion of this market remains within the public 
sector   
 
strategy 
in belgium the strategy is to grow the ic solid waste business to replace the 
declining contribution from landfill  by focusing on solid recovered fuel srf  shanks  annual report 2009      20  
production from ic waste we will be able to create sustainable competitive 
advantage by securing long term energy from waste outlets at lower costs than 
landfill or mass burn incineration approximately €120€130tonne in flanders 
 
the acquisition of foronex in april 2008 builds on this strategy by moving us into the 
european waste wood processing market which creates further opportunities in the 
biomass and cogeneration areas with the potential for shanks to both supply and 
invest in energy from waste projects   
 
further opportunities exist to invest in additional green energy production at our 
landfill and hazardous waste plants  these have already been partly realised 
through the development of a biodigester to create green energy on the roeselare 
site which began commissioning during the last quarter   
 
operational review 
 
table 5 belgium revenue and trading profit by activity
2009 2008 variance 2009 2008 variance
€m €m €m  €m €m €m 
solid waste 154 109 45 41 97 104 07 7
landfill  power 27 26 1 4 121 119 02 2
hazardous waste 60 58 2 3 57 47 10 21
sand quarry 4 3 1 33 14 10 04 40
country central services 26 19 7 37 53 50 03 6
total €m 219 177 42 24 236 230 06 3
total
£m at average fx rates 180 125 55 44 195 162 33 20
revenue trading profit
 
 
table 6 belgium trading margins and return on capital employed by activity
after allocation of country central services
2009 2008 variance 2009 2008 variance
   
solid waste 4 73 10 18 8
landfill  power 44 44  na
1
na
1
na
hazardous waste 7 52 23 20 3
sand quarry 34 30 4 na
1
na
1
na
total 11 13 2 40 60 20
trading margin roce
1 due to provisions for environmental liabilities these activities have net liabilities so roce is not a valid measure 
 
overall trading profit in belgium improved 20 to £195m 2008 £162m   
removing the benefit of exchange gains this represents 3 growth over last year  
reductions in the contribution in solid waste and the landfill element of landfill and 
power were more than offset by improved performance from power hazardous 
waste and the sand quarry 
  shanks  annual report 2009      21  
solid waste incorporates the foronex group which was acquired in april 2008 for a 
gross consideration of €25m plus a €6m post acquisition injection of working capital 
this combined with the full year effect of last year’s acquisitions contributed €09m 
9 of additional trading profit 
 
foronex collects and trades up to 1 million tonnes per annum of wood waste and by
products making it the largest company in this field across france and belgium   
during the year considerable effort has been spent to transition the business from a 
family run organisation to part of an international group  we have made significant 
improvements to the operating procedures and management information used within 
the business which has resulted in the renegotiation of a number of major input and 
output agreements  we expect the contribution from the business to increase going 
forward and for it to play an important role in growing the future development of the 
belgian business 
 
one of the key attractions of the foronex business is its ability to produce fuel for the 
biomass industry from the wood waste and byproducts it handles  as a strategic 
supplier to new project funded energy plants we also have the opportunity to 
participate directly in the special purpose vehicles spvs created to build and 
operate these plants allowing us to share in the attractive returns that they generate  
in october 2008 we took a 50 stake in the vare project a combined heat and 
power plant producing 5mw of green electricity and 12mw of steam with specialist 
renewable energy investor intrinergy energy the plant will be located near liege in 
belgium and will be fired by wood based biomass supplied by foronex  it will use the 
heat produced to turn sawdust also supplied by foronex into wood pellets for sale 
as a renewable fuel  construction of the facility is now underway and it is expected 
to be operational in late 2010   
 
profits from the existing solid waste business have declined €16m 15 due to the 
non repeat of a substantial industrial disposal job in the prior year which contributed 
€09m  the economic downturn in the second half has also impacted the business 
however considerably less than experienced in the netherlands due to the reduced 
exposure to the cd sector and the higher involvement in municipal waste  also 
recent investment in the business such as our solid recovered fuel production facility 
in ghent completed during the period have made maiden contributions  this facility 
accepts mainly ic waste and following extraction of recyclable materials produces 
a fuel which we dispose of via long term contracts with cement and other companies  
the plant is operating as planned having started up in june 2008 and is proving 
successful in attracting waste at competitive prices in the market 
 
in landfill and power there was an 8 decline in contribution from the landfill 
element which was a better than expected performance  following the ban in 
wallonia on untreated municipal solid waste msw going to landfill from january 
2008 inputs from these sources ceased  however we have been successful in 
attracting new sources of waste from both municipal treatment residues and 
commercial sources  our current expectation based on these new streams is for 
there to be a more modest decline in volumes through calendar year 2009 with a 
significant step down from january 2010 as landfill tax is increased and further bans 
on municipal solid waste come into effect  the contribution from landfill power is 
unaffected by these developments indeed it has increased during the period due to 
higher electricity prices and a favourable clarification of the qualification criteria for 
green electricity subsidies 
 
the strong growth in hazardous waste trading profit was due to increases in both 
volumes and prices at our treatment facility at roeselare in flanders there has  shanks  annual report 2009      22  
however been a reduction in lower margin labour intensive industrial cleaning work 
which has become more acute in the second half with the deterioration in the 
economic conditions  
 
the construction of our new anaerobic digestion facility in roeselare completed on 
schedule in early 2009  the treatment process is now being started up but it will take 
several months to reach full capacity due to its biological nature 
 
at the sand quarry activity levels have been stable with profits boosted by reduced 
restoration costs 
 
united kingdom 
market 
the uk’s historical heavy reliance on landfill means that the imposition of the 
european landfill directive is having a major impact particularly on the municipal 
sector  implementation of the directive implies that some 14 million tonnes per 
annum of biodegradable municipal waste needs to be diverted from landfill between 
2006 and 2020  in november 2006 defra estimated that the investment in new 
infrastructure required to achieve this is between £9bn and £11bn  in an endeavour 
to secure least cost compliance the government has introduced the landfill 
allowance trading scheme lats a tradeable permit scheme between local 
authorities  here authorities who overachieve against their landfill diversion 
requirements may sell their overachievement to an underachieving authority  failure 
by an authority either to meet its diversion requirements or to secure the necessary 
lats results in a £150 per tonne penalty for the excess 
 
as part of the 2009 budget the government has announced that it will strengthen 
the existing drivers for diverting ic waste from landfill and provide further financial 
support for alternative ways to deal with waste including reuse recycling energy 
from waste and anaerobic digestion the key budgetary announcements include 
• the standard rate of landfill tax will continue to increase by £8 per tonne on 1 
april each year from 2011 to 2013 the current rate of landfill tax since 1 
april 2009 of £40 per tonne will therefore increase to £72 per tonne by 1 april 
2013 the 2009 budget also highlighted that government is currently 
consulting on redefining  what constitutes a taxable disposal of waste so that 
a greater proportion of waste that ends up in landfill including materials used 
for cover and in construction of a landfill site is taxable these measures will 
further encourage the use of and investment in more sustainable alternative 
to reduce reliance on landfill 
• the government will make £10 million of new grants available in 20092010 
for uk businesses to deliver anaerobic digestion and invessel composting 
infrastructure 
• the government plans to commit more than £2billion of pfi credits to allow 
investment in waste handling projects through the treasury infrastructure 
finance unit which was launched by the treasury in march 2009 and 
• the government highlighted that uk renewable and energy projects will stand 
to benefit from up to £4 billion of new capital from the european investment 
bank 
 
these initiatives will further support the group’s strategy to become the leading 
provider of waste management solutions in europe 
 
another driver for the ic waste market is restriction of the type of waste that can be 
landfilled  a significant milestone of the european landfill directive is the restriction  shanks  annual report 2009      23  
on landfilling of untreated nonhazardous waste  the government has introduced 
new legislation which required pretreatment of nonhazardous waste prior to 
landfilling from october 2007  whilst the authorities have taken a fairly soft handed 
approach to the enforcement of this legislation initially it is expected it will be applied 
more rigorously in the future  
 
strategy  
in the uk the aim is to make shanks the preferred alternative to landfill  in the ic 
waste area we will build a resource management and reprocessing business with 
improved margins by importing more than ten years of dutch knowhow in this area  
initially we will focus on building density in the three regions where we already have 
critical mass scotland the east midlands and the northern home counties  having 
established an enabling platform of a strong regional business with a differentiated 
and profitable business model we may then consider more aggressive consolidation 
options 
 
we will continue to bid for pfi residual waste contracts using those that we win as a 
base from which to expand our ic business  at the same time we intend to secure 
a share of the significant uk demand for anaerobic digestion and composting both in 
the municipal and ic sectors using orgaworld and other technologies as 
appropriate 
 
in recent years we have established ourselves as a leading player in the pfi market 
with the first mechanical biological treatment mbt plant in the uk operational since 
2006 with a substantial number of opportunities coming to market that require 
alternative solutions we have improved our technical offering by entering into a 
strategic partnership with wheelabrator technologies inc wti this has enabled us 
to offer energy from waste solutions in addition to our mbt technology provided by 
ecodeco we have now been selected with others to tender for pfi contracts in 
staffordshire suffolk merseyside and belfast with wti as our equity and operating 
partner 
 
in addition the government has signalled its support for the treatment of separately 
collected kitchen wastes utilising anaerobic digestion to treat the waste and in so 
doing produce gas for energy generation and high quality compost for soil 
improvement as with solid wastes our dutch business orgaworld has a track 
record in this aspect of waste treatment which enables us to deliver a proven solution 
to the market 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  shanks  annual report 2009      24  
operational review 
 
table 7 united kingdom revenue and trading profit by activity
2009 2008 2009 2008
£m £m £m  £m £m £m 
solid waste 73 75 2 3 63 64 01 2
landfill  power 16 16  0 56 50 06 12
hazardous waste 20 11 9 82 17 17  0
pfi contracts 49 43 6 14 04 04 08 200
country central services    54 57 03 5
uk operations 158 145 13 9 78 78 00 0
pfi bid team   21 09 12 133
total 158 145 13 9 57 69 12 17
revenue trading profit
variance variance
 
 
table 8 united kingdom trading margins and return on capital employed by activity
after allocation of country central services
2009 2008 variance 2009 2008 variance
   
solid waste 4 31 9 54
landfill  power 34 33 1 48 48 
hazardous waste 7 11 4 42 47 5
pfi contracts 4 2 2 2 1 1
uk operations 5 5  10 11 1
trading margin roce
 
trading profit from operations was flat at £78m as difficult economic conditions in the 
second half impacted profitability and offset very good progress in the first 
 
in solid waste the full year effect of last year’s acquisition of wastecom contributed 
£01m 2 of additional trading profit  profits from the existing solid waste 
businesses have reduced by £02m 3  trading since november 2008 has been 
challenging due to the sharp fall in the value of recyclable materials and a slowdown 
in volumes  we took swift action to reduce the cost base which gave rise to a £15m 
exceptional restructuring charge  this is delivering approximately £2m of annualised 
cost savings going forward to help mitigate the challenging trading conditions  
 
our strategy for the solid waste business in the uk is to focus on our core regions of 
scotland east midlands and northern home counties and take advantage of rising 
landfill taxes to develop a recycling business using expertise from our dutch 
operations  during the year as part of focusing on these core regions we sold our 
liverpool and swansea operations for consideration of £3m and £2m respectively  
these transactions gave rise to exceptional disposal profits totalling £33m 
 
the downturn in the uk construction market has adversely impacted our hazardous 
waste activities which comprise our contaminated land services business  the 
number of site decontamination jobs from general construction activities is down 
substantially and we have reduced our headcount to reduce costs  on a more  shanks  annual report 2009      25  
positive note we handled 243k tonnes of soil from the 2012 olympic site clean up 
offsetting the decline in profit from the underlying business 
 
the economic slowdown in construction activities has also impacted contaminated 
soil inputs into our joint venture landfills  despite this slowdown increased power 
generation and lower void costs at our avondale joint venture sold subsequent to 
year end have delivered solid overall growth in trading profit for the landfill and 
power activity 
 
profits from our existing pfi contracts were down as we incurred additional operating 
costs to ensure hitting certain performance targets which will release income 
supplements at elwa  going into next year we are on target to receive these 
supplements   the dramatic fall in the resale value of metal recovered from the 
waste stream has also reduced profits  production of srf is going well with record 
amounts being delivered to the cement kilns  there is also increasing interest from 
other offtakers 
 
country central services costs were down £03m at £54m despite 2008 being net of 
disposal profits totalling £06m  underlying costs were therefore down £09m 16 
year on year 
  
pfi bid costs were up £12m at £21m reflecting the increased bidding activity  many 
authorities have or are about to start their procurement processes and we are 
actively pursuing this limited window of opportunity as the next two years will see a 
large number of deals being closed  we believe that our extensive experience in 
bidding combined with the enhanced offering mentioned in the chief executive’s 
statement positions us well to win our share 
 
canada 
market 
as part of the orgaworld acquisition completed in april 2007 the group acquired an 
operation in canada  in canada there is strong public opinion against landfill which 
in some areas has led to a shortage of consented capacity  as in europe there is a 
drive to reduce waste going to landfill  orgaworld identified an opportunity in the 
canadian market to offer biological treatment of source segregated organic municipal 
waste a market which has significant potential in terms of volumes and to date has 
few competitors 
 
operational review 
trading profit in canada increased £11m to £12m 2008 £01m reflecting the 
increase in volumes at the first orgaworld plant in london ontario  in march 2009 
the district of york confirmed a 20000 tonne per annum increase in their annual 
contract volumes and extended the term of their contract from ten to fifteen years 
this plant is now operating at close to its capacity of 150000 tonnes per annum  
construction work on our second facility in ottawa is progressing on schedule with 
operations due to start in early 2010 
 
group central services 
group central services costs reduced by £01m to £49m 2008 £50m shanks  annual report 2009      26  
financial review 
 
operating profit which includes exceptional property disposals in the uk of £33m 
exceptional restructuring charge and amortisation of acquisition intangibles has 
increased 16 to £639m 2008 £553m 
 
table 9  summarised group income statement
2009 2008 variance
£m £m £m 
revenue 697 564 133 24
operating profit 639 553 86 16
exceptional profits on disposals 33 19 14
exceptional restructuring charge 20  20
amortisation of acquisition intangibles 38 25 13 52
trading profit 664 559 105 19
net financial income from pfi 11 07 04 57
core finance charges 190 118 72 61
underlying profit before tax 485 448 37 8
tax  underlying 29 2008 32 141 144 03 2
underlying profit after tax 344 304 40 13
exceptional profits on disposals 33 19 14
amortisation of acquisition intangibles net of tax 28 19 09
exceptional restructuring net of tax 14  14
ias 39 adjustment net of tax 87 21 66
ibas exceptional tax charge 184  184
profit for the year 64 283 219
 
table 10 revenue and trading profit by geographical region
2009 2008 2009 2008
£m £m £m  £m £m £m 
netherlands 356 295 61 21 449 377 72 19
belgium 180 125 55 44 195 162 33 20
united kingdom 158 145 13 9 57 69 12 17
canada 5 1 4 100 12 01 11 100
central services 2 2  0 49 50 01 2
total 697 564 133 24 664 559 105 19
revenue trading profit
variance variance
 
 
 
the major factors impacting revenue trading and underlying profit are summarised in 
table 11 
  shanks  annual report 2009      27  
table 11 revenue trading profit and underlying profit bridge
revenue trading profit underlying pbt
£m £m £m
2008 564 100 559 100 448 100
organic growth excluding belgium landfill 14 3 01 0 24 5
current year acquisitions divestments 30 5 04 1 07 2
full year of prior year acquisitions 11 2 11 2 03 1
belgium landfill decline 0 0 04 1 04 1
exchange 78 14 93 17 75 17
2009 697 124 664 119 485 108
 
details of the group’s trading performance and acquisitions are given in the country 
business reviews 
 
table 12 shows the average and year end exchange rates used to translate our 
foreign currency denominated results  the euro has strengthened significantly 
verses sterling causing a 17 enhancement to euro denominated profits  the 
impact on the euro denominated year end balances is slightly less at 16 
 
table 12 exchange rates
2009 2008 change
euro
average 1215 1419 17
closing 1080 1254 16
canadian dollar
average 1826 2044 12
closing 1803 2039 13
 
 
  
net financial income from pfi increased to £11m 2008 £07m  as shown in table 
13 this comprises interest income on financial assets arising on the uk pfi contracts 
net of the interest charge on the pfi net debt before taking into account the 
international accounting standard ias 39 change in market value of financial 
instruments see below 
 
table 13 net financial income from pfi
2009 2008 variance
£m £m £m 
interest income from financial assets 89 88 01 1
interest charge on pfi net debt
1
78 81 03 4
net financial income from pfi 11 07 04 100
 
 
1
 pfi net debt is the external net debt in the special purpose vehicles set up to project finance the uk pfi 
contracts 
  shanks  annual report 2009      28  
the £03m decrease in interest charge on pfi net debt reflects the lower average 
level of debt during 2009 than during 2008 despite the balance being higher at the 
year end than at the start of the year 
 
core finance charges increased £72m to £190m 2008 £118m the main 
components of which are given in table 14 
 
table 14 core finance charges
2009 2008 change
£m £m £m
finance charge on core borrowings 170 107 63
discount unwind on deferred consideration 13 09 04
loan fee amortisation 05 09 04
discount unwind on other long term provisions 11 07 04
finance income from defined benefit pension schemes 09 14 05
core finance charges 190 118 72
 
 
the major factors behind the increase in the finance charge on core borrowings are 
detailed in table 15 
 
table 15 finance charge on core borrowings major factor analysis
2009 2008 change
£m £m £m
finance charge on core borrowings 170 107 63
major factors 
increase in core borrowing levels 45
exchange 18
total 63
 
 
the factors behind the increase in the level of core borrowings are covered in the 
cash flow section below  for reasons explained in the treasury section below a 
significant proportion of the group’s borrowings is in euros and therefore attracts 
euro denominated interest  the sterling value of this has therefore increased due to 
the strengthening of the euro   
 
under ifrs all long term liabilities and provisions except for deferred tax have to be 
stated at current value  this involves discounting the nominal value of a future 
liability which then unwinds as time progresses  the group uses a 5 discount rate 
this being an estimate of long term interest rates  the acquisition of orgaworld in 
april 2007 included a €25m deferred element €20m of which is dependent on 
achieving future profitability targets  the conditional element has been recognised in 
full at the acquisition date so is generating a significant finance charge even though 
the trading profits on which it depends will only arise in the future 
 
the average tax rate on underlying profit fell to 29 2008 32  this was 
attributable to the flow through of recent tax reductions in both the netherlands and 
the uk  the underlying rates of tax in the netherlands belgium and the uk were 
255 34 and 28 respectively  in belgium the effective rate on landfill derived  shanks  annual report 2009      29  
profits is higher as landfill tax is nondeductible for corporation tax  this is mitigated 
via a deduction for notional interest on belgian equity  
 
the exceptional disposal profits of £33m relate to the disposal of two surplus 
operations in the uk  these have been excluded from underlying profit due to their 
exceptional size  there was no tax payable on these disposals as the capital gains 
arising were sheltered by significant brought forward capital tax losses within the 
group 
 
the ias39 change in market value of financial instruments relates to interest rate 
swaps which fix the interest rate on pfi contract borrowing  at the financial close of 
a pfi contract the price of the service is determined by inter alia the long term 
interest rate available in the market  the group therefore protects itself against 
future fluctuations in interest rates by entering into interest rate swaps to match its 
future cash inflows and outflows  under ias39 these swaps must be valued at 
current market value irrespective of the commercial reasons for entering into them  
revaluation of these swaps can lead to large accounting gains or losses but does not 
affect the long term profitability of the contract as the group has matched its long 
term revenue and costs  whilst ias39 does allow these gains and losses to be taken 
directly to reserves it is on the proviso that the actual cash flows remain in close 
correlation to those originally forecast  at the time of introduction of ias39 there was 
a significant divergence of actual and originally forecast cash flows due to one years 
planning delays on elwa the group’s largest pfi project  whilst commercially 
neither the funders nor the group required the cash flows to be rehedged this 
rendered the interest rate swaps ineligible to be matched to the underlying loans 
under ias39  the resulting changes in fair value are excluded from our underlying 
profit  there was a £121m adverse 2008 £29m change in the market value of 
these swaps during the year 
 
cash flow 
details of the group’s cash flow performance are summarised in table 16 below 
  shanks  annual report 2009      30  
table 16 summarised group cash flow
2009 2008
core
non core
1
total total difference
£m £m £m £m £m
trading profit 68 2 66 56 10
depreciation  landfill provisions 47  47 37 10
ebitda 115 2 113 93 20
working capital movement and other
2
1 1 3 2
net replacement capital expenditure 46  46 31 15
interest  tax 31  31 20 11
underlying free cash flow 38 1 37 45 8
dividends  issue of shares 14  14 12 2
pfi cross funding 7 7   
net growth capital expenditure 30 13 43 19 24
acquisitions incl wkg cap injection 25  25 48 23
discontinued  restructuring 2  2  2
net cashflow 40 7 47 34 13
exchange 38  38 32 6
opening net debt
3
212 111 323 257 66
closing net debt
3
290 118 408 323 85
1
 non core includes pfi and other project finance 
2
 other comprises nonlandfill provision movements and add back of share based payments 
3
 excluding fair value of interest rate swaps 
 
the underlying free cash flow generated by the core business was £38m after net 
replacement capital expenditure of £46m  the £7m cross funding represents the net 
cash flow between the core and pfi and other project finance activities including the 
pfi bid team  the £25m outflow on acquisitions relates principally to the foronex 
acquisition in april 2008 and comprises the £10m paid £10m of net debt in the 
acquired entities and a £5m post acquisition injection of working capital  this was 
due to the unsustainably low level of working capital at acquisition which had been 
identified in the due diligence process  there was a £38m adverse movement on 
the translation of group’s euro denominated debt into sterling giving an overall 
increase in core net debt of £78m 
 
the nonrecourse aggregated net debt in the pfi companies excluding fair value of 
interest rate swaps increased by £2m to £113m 2008 £111m increases due to 
funding of ongoing capital investment principally at elwa  the other project finance 
debt of £5m relates to the investment together with intrinergy energy in a combined 
heat and power plant in belgium   
 
capital expenditure 
the group spent £89m net on capital expenditure 2008 £50m of which £76m was 
in the core business and £13m on pfi and other project finance contracts  the core 
business maintenance capital expenditure was £46m net of disposal proceeds of 
£3m from assets being replaced  gross expenditure on growth projects was £35m 
and proceeds from sale of surplus assets was £5m  major projects in the core  shanks  annual report 2009      31  
business included the installation of srf production and anaerobic digestion facilities 
in belgium construction of tunnel composting facilities in canada and the 
netherlands and the expansion of a recycling centre in the netherlands and 
additional engines for landfill power 
 
the capital expenditure on pfi contracts comprised £16m 2008 £17m of financial 
asset advances net of £10m 2008 £9m of financial asset repayments  the 
financial asset advances related to the completion of recyclables sorting facilities and 
final payments for the ecodeco mbt facilities at our elwa contract   
 
a further £7m has been spent on the combined heat  power plant in belgium being 
built in conjunction with intrinergy   
 
treasury 
the group’s treasury policy is to use financial instruments with a spread of maturity 
dates and sources in order to reduce funding risk borrowings are drawn in the same 
currencies as the underlying investment to reduce cash and net translation exposure 
on exchange rate movements no other currency hedging mechanisms are used 
the group maintains a significant proportion of its debt on fixed rates of interest in 
order to protect interest cover 
 
at 31 march 2009 the group’s principal financing was a £250m multicurrency 
revolving credit facility with five major banks expiring in april 2010 this was replaced 
on 7 april 2009 by a €360m multicurrency term loan and revolving credit facility 
expiring in april 2012  at first drawing on 9 april 2009 this facility was approximately 
79 utilised  the term loan of €270m equivalent was fully drawn in euro sterling 
and canadian dollars on three month interest periods some €13m equivalent was 
drawn on the revolving credit facility in sterling and canadian dollars on a one month 
interest period interest is based on libor or euribor for the relevant period the 
facility contains a requirement for interest rates to be hedged and this was met by the 
group entering on 15 may 2009 into a two year fixed interest swap with a principal of 
€180m from the three month libor commencing 9 july 2009 underwritten at an 
effective interest rate of 187  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 is fixed for the first six months 
and then varies on a ratchet fixed by the debtebitda ratio for the prior quarter on a 
rolling twelve 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 
 
the 2001 notes issued under the group’s pricoa private placement of €52m carry 
fixed interest at 69 and have repayments due july 2009 €16m april 2011 €18m 
and september 2013 €18m the financial covenants of this facility are principally 
the ratio of debtebitda of less than 2751 interest cover of not less than 3001 
and a minimum net worth  the definitions of these covenants are fixed in uk gaap 
as at 2001 and exclude the results of pfi and other project companies and the 
results of joint ventures except where received in cash under the terms of the notes 
the group’s other principal lenders have moved to a level of debtebitda of 3001 
the group can require pricoa to also move to a debtebitda level of 3001 whilst 
pricoa has the option to adopt the financial covenants definition of the new facilities 
 
the group also has £29m of working capital facilities with various banks cashflows 
are pooled at a country level and each operation is tasked with operating within the 
limits of the locally available working capital facilities 
  shanks  annual report 2009      32  
each of the group’s pfi projects has senior debt facilities which contribute 
approximately 85 of the capital funding required these facilities are secured on the 
future cash flows of the pfi companies with no recourse to the group as a whole 
repayment of these facilities and any equity bridge facility in respect of the 
remaining capital funding commences when construction is complete and concludes 
one to two years prior to the expiry of the pfi contract period as the group currently 
holds 100 of the equity in its pfi companies the net debt of £113m and the fair 
value of the interest rate swaps used to fixed interest rates of £16m are fully 
consolidated in the group balance sheet the maximum which could be drawn down 
under these facilities at 31 march 2009 is £3m the interest rates on these loans vary 
with one month libor during the construction period and three month or six month 
libor in the postconstruction period in order to provide a fixed price to the client 
local authority varying only with inflation interest rates are fixed at between 625 
and 699 with a weighted average of 657 by means of interest rate swaps at the 
time of contract inception 
 
insurance 
the group places all its insurance with leading insurance companies with sound 
financial credentials  for obligatory insurances the policy is to obtain the necessary 
cover at competitive rates  for other areas regular risk assessments are undertaken 
to identify and assess risks where appropriate insurance is then used to mitigate 
these risks  the level of cover put in place will depend on the nature of the risks and 
the cost and extent of cover available in the market  the majority of our insurances 
are renewed annually 
 
the group uses international brokers to advise on risk management appropriate 
insurers cover levels and benchmarking 
 
insurance requirements for our uk pfi contracts are set out in the funding and 
project agreements 
 
 
retirement benefits 
the group uses ias19 – employee benefits to account for pensions  the pension 
charge for the year has increased to £91m 2008 £77m  using assumptions laid 
down in ias19 there was a net retirement benefit deficit of £10m 2008 £94m 
surplus  this relates solely to the defined benefit section of our uk schemes  the 
defined benefit section of the uk scheme was closed to new members in september 
2002 and new employees are now offered a defined contribution arrangement  
 
the 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 
 
the pension arrangements within our belgian operations are considered to be 
defined contribution in nature  shanks  annual report 2009      33  
corporate responsibility 
 
 
responsible and corporate 
all companies are responsible to their stakeholders and the environment they 
operate in  at shanks we have identified three main areas as the focus of corporate 
responsibility  they are the environment including carbon and climate change the 
wellbeing of employees and the group’s relationship with its stakeholders and the 
wider communities its operations are located within   
 
waste and resources companies operate under strict environmental law and 
regulation each of the group’s sites has a series of permits and permissions which 
dictate how they operate  from which wastes they can accept and the processes for 
receiving such to discharge conditions and the nature of the treatment recovery and 
other activities allowed failure to comply with these permits and permissions can 
result in enforcement action prosecution and restrictions on operations  in addition 
entities which repeatedly breach their permissions may face increased difficulty 
gaining new permits or varying those they already hold to take advantage of 
changing market conditions new technologies and emerging business opportunities   
 
no one can have failed to notice that the issue of carbon and climate change has 
increased in importance over the past few years for many companies the focus has 
been to reduce the ‘carbon footprint’ of their products and services by reducing the 
carbon impact of production or service delivery andor by offsetting this impact  
waste and resources companies are in the almost unique position that their 
products such as recyclable materials and products and secondary fuels which can 
displace fossil fuels may have their own intrinsic carbon benefits this is discussed 
in more depth below but in essence for a waste and resources company producing 
more products can mean less carbon for the wider economy   
 
waste and resources management is acknowledged as a sector with a high health 
and safety risk  in most countries for example the accident rates displayed by those 
in the sector are often multiples of the averages for that country in addition to the 
moral imperative of not harming employees or others who may be affected by the 
group’s operations the risks of prosecution and civil costs are significant drivers 
 
the group is not a large single site operation rather it is a diverse and widespread 
group with more than 4000 employees located at over 120 sites many of which 
have multiple operations based on them the quality competence and motivation of 
local management and employees are critical to the group’s continued success 
 
beyond its employees the operations sit in a wider community waste and resources 
sites and operations can no matter what their overall benefit to the environment be 
seen at best as an unpopular necessity everyone accepts the need for recycling and 
recovery operations but not always on their own doorstep  virtually all 
environmental permission systems have a statutory duty to consider local issues and 
companies which do not foster good relations will find the gaining of new or revision 
and maintenance of current permissions at best difficult 
 
coordinating responsibility 
corporate responsibility is an important and continuously evolving issue for the 
group 
  shanks  annual report 2009      34  
the whole of the waste and resources management industry is changing rapidly  
new technologies are constantly being introduced to improve recycling and recovery 
rates  older activities such as landfill are in decline and the diversity of the sector is 
expanding at an increasing rate in addition environmental and health and safety 
regulation and expectations have risen rapidly over recent years and will continue to 
do so and community tolerance of industrial type activities is decreasing 
 
similarly the shanks group is continuing to expand in size geographical spread 
complexity and the diversity of its operations and activities ten years ago shanks 
had operations in the uk only and was largely dependent on landfill  today the 
group is active in five countries has four times as many employees and a range of 
waste and resource management activities which would have seemed unimaginable 
a decade ago in this rapidly changing environment no approach to corporate 
responsibility can remain static 
 
during 20089 the group formed its group corporate responsibility committee 
formed out of preexisting environmental health and safety and human resources 
structures and comprising of senior representatives from the group’s main countries 
of operation this group corporate responsibility committee reports directly into the 
group’s executive committee which includes the group chief executive the group 
finance director and managing directors of the group’s three operating companies   
 
reporting of corporate responsibility issues and performance has been improved 
both internally and externally  shanks’ first groupwide corporate responsibility 
report which will be published this year is a very clear example of improved 
reporting and includes the group’s first assessment of its carbon footprint  this 2009 
group corporate responsibility report will be available on the group website and in 
hard copy and provides information on a wide variety of corporate responsibility 
performance indicators  in addition to reporting on performance the report includes 
qualitative and quantitative targets and case study examples from around the group   
 
the environment 
shanks is an environmental management group  it takes society’s byproducts and 
manages them in an environmentally sound manner and where practical produces 
resources from recycling and recovery the benefits of which are fed back into 
society the technologies and facilities it employs to perform this function are bound 
by a complex and strict network of environmental regulation and policy 
 
all the group operations have environmental management systems aimed at 
compliance with environmental regulation and permitting and maximising the benefits 
of resource recovery within these set boundaries the group aims to foster 
constructive relationships with its environmental regulators the group’s success in 
achieving the above aims may be measured at a headline level by the low level of 
enforcement action taken against its operating companies   
 
table 17 environmental convictions 
 
  fine £k  details 
netherlands  99  breach of oil spill reporting deadlines 
netherlands  25  breach of safety procedures for cleaning processes 
belgium  none   
united kingdom  none   
canada  none   
 
  shanks  annual report 2009      35  
the framework for waste and resource management in europe is set by reference to 
the waste hierarchy with the 2008 waste directive introducing targets for recycling 
and recovery which eu member states must enforce the group’s policy is to align 
itself with the waste hierarchy and to increase its recycling and recovery rates 
 
such recycling rate and recovery performance are not equal across all countries of 
operation some having higher recycling and recovery rates than others  one of our 
strengths as a multinational concern is the ability to transfer technologies and 
experience across the group as a tool for improvement for example the anaerobic 
digestion technologies acquired in the netherlands are of potential use in the group’s 
other countries of operation 
 
table 18 overall recycling and recovery rate 
 
  recyclingrecovery rate 
netherlands  87 
belgium  61 
united kingdom  32 
canada  75 
group  70 
 
carbon and climate change 
most organisations deliver products or services which have a carbon impact  a 
waste and resources group is different in that its ‘products’ are environmental 
management and recycled or recovered resources for example the group may 
produce from waste a secondary fuel which displaces fossil fuels in a production 
process or a recyclate which displaces virgin raw material in a process so producing 
a carbon avoidance benefit 
 
as the technologies employed by the group develop and become more widespread 
in use it is expected that carbon emissions from its own direct energy use may rise 
for some operations however it is also expected that the potential carbon avoidance 
benefit for the wider society of these activities will also increase to more than balance 
out any energy use issues it is the balance between energy use and potential 
carbon avoidance benefit which is the important performance indicator rather than a 
simple calculation involving only one end of the process   
 
of course the potential carbon avoidance benefits accrued from recycling and 
recovery activities are not the sole property of the group  it is also spread across the 
group’s customers consigning wastes to its sites and the downstream recipients of 
recycled and recovered resources  it is certain that the issues surrounding waste 
and resource management and carbon will continue to develop rapidly over the next 
few years however the group’s carbon footprint demonstrates the critical and 
growing role the group can play in the carbon debate 
 
people employee wellbeing and health and safety 
with its geographical spread and diverse operational structure the group relies 
heavily on the competence motivation and abilities of its employees whether to 
ensure compliance with its environmental permissions or to maintain the effective 
and safe running of its operations employee wellbeing is perhaps more important for 
the group than for many other businesses 
 
at its most basic level employee wellbeing means not harming employees and is a 
health and safety issue  the group has always been aware that it operates in a 
potentially high risk sector and has reported publicly on its accident performance for  shanks  annual report 2009      36  
more than 18 years at a more complex level issues such as employee 
communication dignity diversity business ethics and company culture are all part of 
employee wellbeing 
 
 
table 19 shanks group riddor accident rate per 100000 employees 20012002–
20082009 
 
 
table 19 displays the group’s riddor reporting of injuries diseases and 
dangerous occurrence regulations employee accident rate from 20012 when 
shanks acquired its dutch interests to the year 20089  as can be seen the trend is 
one of continuous improvement 
 
all of the group’s employment and training policies are compliant with relevant 
national employment legislation and regulatory obligations 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 two way communications is actively promoted and trade unions works 
councils and other employee groups are involved wherever appropriate   
 
at a group level the approach taken is clearly outlined in the statement of business 
principles and corporate ethics this is publicly available alongside other corporate 
publications on the group’s website for 2009 the group has committed to the 
review of this policy to include wider corporate responsibility issues and via the 
activities of the group corporate responsibility committee to seek ways to embed 
this better into company operations and culture   
 
a further target the group has set itself is to improve employee communications and 
a first step in this will be to implement new and review previous employee attitude 
surveys this target is one of the objectives to be set into the 2009 corporate 
responsibility report 
 
wider community 
waste and resource management operations are often not the most popular of 
neighbours even if they are accepted by society as a whole as being a necessity 
and so far as recycling and recovery facilities are concerned even as a benefit 
 
the group understands that it is essential to keep good communication lines open 
with its neighbours and other stakeholders more than this the group has a positive 
role to play in promoting recycling and other more environmentally sustainable waste 
management practices to the public and its closer stakeholders such as customers 
 
0
1000
2000
3000
4000
5000
20012002 20022003 20032004 20042005 20052006 20062007 20072008 20082009
riddor rate shanks  annual report 2009      37  
the group has an open door policy and encourages visits from local communities 
customers and other interested persons and parties open days are held at some 
sites while at others education centres have been established for the use of local 
schools and other bodies formal liaison groups are encouraged at highprofile sites 
and engagement with local political systems is a direct duty of operational 
management 
 
the group cannot rely on its regulators and internal monitoring systems completely 
when assessing the potential impacts of its operations and it is essential that local 
populace opinion and concerns are accounted for as a result the group has 
complaint and comment tracking and response systems at all of its sites trends in 
complaints are tracked centrally with the aim of addressing any issues before they 
either come to the regulator’s attention or start to impact significantly on company 
image and reputation  the group is more than aware that local perception is a 
critical factor which can have a direct effect on site development and success this is 
reflected in one of the objectives to be set out in the 2009 group corporate 
responsibility report which requires its operating companies to review their existing 
environmental complaints procedures to ensure that they remain relevant and 
effective in tracking local opinion and views 
 
2009 corporate responsibility report 
since the late 1980s the group has produced publicly available reports on corporate 
responsibility issues such as on health and safety and the environment in later 
years these separate reports were combined into one safety health and 
environment report and for 2008 the group produced a corporate responsibility data
set publication which included wider corporate responsibility performance 
information 
 
for 2009 shanks will produce its first groupwide corporate responsibility report 
including details of the group carbon footprint and giving examples of company 
initiatives as case studies this report will primarily be an electronic publication and 
will be produced in english dutch and french and will be available for download on 
the group’s website    shanks  annual report 2009      38  
board of directors  
 
adrian auer ba mba act  chairman 
adrian joined the board in 2005 and was appointed chairman in july 2006 he chairs 
the nomination committee and is also a member of the remuneration committee 
adrian is also chairman of readymix plc and a nonexecutive director of filtrona plc 
previously he has held the position of finance director in a number of major 
companies notably in the building materials and construction sectors as well as 
senior finance positions with bp and ici he is also chairman of addaction britain’s 
largest specialist drug and alcohol treatment charity adrian will be standing for re
election at the forthcoming agm and is considered by the board to be independent 
 
stephen riley b eng phd  nonexecutive director 
stephen was appointed to the board in march 2007 and is a member of the audit 
remuneration and nomination committees he is currently an executive director 
with international power plc having joined that business in 1985 stephen has 
extensive operational experience in the power industry having held senior positions in 
the uk and australia stephen will be standing for reelection at the forthcoming agm 
and is considered by the board to be independent 
 
peter johnson ba aca  nonexecutive director 
peter joined the board in may 2005 and is the chairman of the audit committee and 
also sits on the remuneration and nomination committees peter is a chartered 
accountant and a nonexecutive director of oriel securities limited he 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 peter will be standing for reelection at the 
forthcoming agm and is considered by the board to be independent 
 
eric van amerongen  senior independent director 
eric was appointed to the board in february 2007 and sits on the audit 
remuneration and nomination committees in july 2007 he was appointed chairman 
of the remuneration committee and senior independent director he was until 
january 2008 a nonexecutive director of corus group plc a position he held for 
seven years eric has wide ranging european business experience and holds a 
number of nonexecutive and advisory positions eric will be standing for reelection 
at the forthcoming agm and is considered by the board to be independent 
 
tom drury ma  group chief executive 
tom joined the company as group chief executive designate in september 2007 
and was appointed group chief executive in october of that year following an early 
career with unilever and pricewaterhousecoopers he went on to a distinguished 
career with united utilities plc being appointed a main board director in 2005 in 
1996 he was appointed managing director of a new commercial enterprise vertex 
which grew to become the second largest firm in the uk’s business process 
outsourcing sector until the sale of that business in march 2007 to us private equity 
 
chris surch bcom acc aca  group finance director 
chris joined the board in may 2009 as group finance director following an early 
career with pricewaterhousecoopers he joined ti group plc in 1995 where he held 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 chris will be 
standing for election at the forthcoming agm  shanks  annual report 2009      39  
directors’ report 
the directors present their annual report together with the audited financial 
statements for the year ended 31 march 2009 
directors 
the composition of the board of directors at the date of this report is shown on the 
previous page together with their biographical details mr a auer mr t drury mr e 
van amerongen mr p johnson and dr s riley all served on the board throughout 
the financial year under review on 27 april 2009 mr f welham who served as a 
director throughout the year left the board and was succeeded as group finance 
director on 1 may 2009 by mr c surch mr c surch will be standing for election at the 
forthcoming agm and mr a auer mr e van amerongen mr p johnson and dr s 
riley will be offering themselves for reelection voluntarily mr c surch has a service 
contract terminable on six months notice up to 1 november 2009 and on twelve 
months notice thereafter the board commends to shareholders the election and re
elections of these directors all of whom they regard as possessing the requisite 
skills and attributes to continue making significant contributions in their respective 
roles  
details of the directors’ interests are shown in the remuneration report 
principal activities and business review 
the principal activities of the group continue to be waste processing and waste 
management in the netherlands belgium uk and canada 
the chairman’s statement chief executive’s statement market overview 
corporate strategy business review by country financial review and corporate 
responsibility sections of this annual report refer to the objectives and strategy 
competition and the markets in which the group operates the principal risks and 
uncertainties facing the group a review of the development and performance of the 
business for the year ended 31 march 2009 the financial position of the group as at 
the financial year end key performance indicators and likely future developments of 
the business together with corporate governance the remuneration report and 
statement of directors’ responsibilities the information referred to above fulfills the 
requirements of the business review provisions in section 417 of the companies act 
2006 and is incorporated by reference into and shall be deemed to form part of this 
report together with the other information referred to in this directors’ report 
acquisitions and disposals 
during the year acquisitions have been made at a total cost of £104m 2008 
£475m details of which are described in note 13 to the financial statements there 
were no disposals in the year 2008 £nil subsequent to the year end on 14 may 
2009 the group disposed of its joint venture interest in the avondale landfill business 
in the uk for a consideration of up to £275m as described in note 30 to the financial 
statements 
 
research and development 
the group spent £nil 2008 £nil on research and development during the year 
ended 31 march 2009  shanks  annual report 2009      40  
results and dividends 
the group’s consolidated income statement appears on page 63 and note 2 to the 
financial statements shows the contribution to revenue and profits made by the 
different segments of the group’s business the group’s profit for the year amounted 
to £64m 2008 £283m 
the directors do not recommend a final dividend for the year 2008 42pthe 
interim dividend of 21p 2008 20p per share already paid on 9 january 2009 
therefore represents the total dividend for the year 2008 62p 
statement of going concern 
after making enquiries the directors have formed the view at the time of approving 
the financial statements that the company and group have adequate resources to 
continue in operational existence for the foreseeable future for this reason the 
directors continue to adopt the going concern basis in preparing the financial 
statements 
notifiable interests 
as at 20 may 2009 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 
  
share capital 
during the year ended 31 march 2009 no ordinary shares were issued other than 
those issued in respect of exercises of options under the company’s share option 
schemes and in satisfaction of awards granted under the long term incentive plans 
details of which are given in note 5 to the financial statements as at 31 march 2009 
and as at the date of this report the authorised ordinary share capital was and is 
£35000000 consisting of 350000000 ordinary shares of 10 pence each as at 31 
march 2009 and as at the date of this report there were 238019801 ordinary shares 
in issue 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 unless the terms of issue of any share otherwise provide dividends 
may be declared or paid in any currency and all dividends shall be declared and 
paid according to the amounts paid up on the share in respect of which the 
dividend is paid and dividends shall be apportioned and paid pro rata according 
to the amounts paid up on a share during any portion of the period in respect of 
which the dividend is paid  payment or satisfaction of a dividend may be made 
wholly or partly by distribution of specific assets including fully paid shares or 
debentures of any other company such action must be directed by the general 
 
number of 
shares percentage
legal  general group plc 43296585 1819
schroder investment management limited 31294239 1314
norges bank 7266636 305 shanks  annual report 2009      41  
meeting which declared the dividend by ordinary resolution and upon the 
recommendation of the directors  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 ordinary shares of the company 
• voting rights – voting at any general meeting is by a show of hands unless a poll 
is duly demanded on a show of hands every shareholder who is present in 
person at a general meeting and every proxy appointed by a shareholder and 
present at a general meeting has one vote regardless of the number of shares 
held by the shareholder or represented by the proxy on a poll every 
shareholder who is present in person or by proxy has one vote for every share 
held by that shareholder the deadline for exercising voting rights by proxy is set 
out in the form of proxy a poll may be demanded by any of the following a the 
chairman of the meeting b at least five shareholders entitled to vote and 
present in person or by proxy at the meeting c any shareholder or shareholders 
present in person or by proxy and representing in the aggregate not less than 
onetenth of the total voting rights of all shareholders entitled to attend and vote 
at the meeting or d any shareholder or shareholders present in person or by 
proxy and holding shares conferring a right to attend and vote at the meeting on 
which there have been paid up sums in the aggregate equal to not less than one
tenth of the total sum paid up on all the shares conferring that right in the case of 
an equality of votes whether on a show of hands or on a poll the chairman of the 
meeting is entitled to cast the deciding vote in addition to any other votes he or 
she may have  in the case of joint holders of an ordinary share the vote of the 
senior who tenders a vote whether in person or by proxy 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 companys 
register of members 
• 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 the companies acts divide among the shareholders in kind the 
whole or any part of the company’s assets alternatively a liquidator may upon 
the adoption of a special resolution of the shareholders vest the assets in whole 
or in part in trustees upon such trusts for the benefit of shareholders but no 
shareholder is compelled to accept any assets upon which there is any liability 
 subsequent to the year end on 21 may 2009 being the date of this report the 
company announced proposals to raise approximately £667m net of expenses by 
way of a 2 for 3 rights issue of 158679867 rights issue shares at a price of 45p 
per rights issue share a prospectus detailing these proposals and convening an 
extraordinary general meeting will be published and posted to shareholders 
 
restrictions on the holding or transfer of shares 
there are no restrictions under the companys memorandum or articles of 
association that restrict the rights of members to hold or transfer the companys 
shares 
 
control rights under employee share schemes 
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   shanks  annual report 2009      42  
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 
 
appointment and replacement of directors 
the company shall appoint disregarding alternate directors not less than two 
directors the appointment and replacement of directors may be made as follows 
 
• the 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 director shall retire from office 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 
 
• the company may by special resolution remove any director before the expiration 
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 and  
 
• there are a number of other grounds on which a directors office may cease 
namely voluntary resignation where all the other directors being at least three in 
number request his or her resignation where he or she suffers mental 
incapacity compounds with his or her creditors is declared bankrupt or is 
prohibited by law from being a director   
 
powers of directors 
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 memorandum and articles of association of 
the company 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 power 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 employee share 
scheme is restricted under the companies acts the directors of a company 
are with certain exceptions unable to allot any equity securities without 
express authorisation which may be contained in a company’s articles of 
association or given by its shareholders in general meeting but which in either 
event cannot last for more than five years under the companies acts the 
company may also not allot shares for cash otherwise than pursuant to an 
employee share scheme without first making an offer to existing shareholders 
to allot such shares to them on the same or more favourable terms in proportion 
to their respective shareholdings unless this requirement is waived by a special  shanks  annual report 2009      43  
resolution of the companys 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 £1184000  this authority lasts until the earlier of 
the annual general meeting of the company in 2009 or 24 october 2009 
• 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 acts any shares which have been bought back may be held as 
treasury shares subject to statutory limitations 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 23690000 ordinary shares  this 
authority lasts until the earlier of the agm of the company in 2009 or 23 
january 2010 
• 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 companys assets subject to the
 
limitation that the aggregate amount of all 
net external borrowings of the group outstanding at any time shall not exceed 
an amount equal to three times the aggregate of the group’s adjusted capital 
and reserves calculated in the manner prescribed in the articles of association 
unless sanctioned by an ordinary resolution of the company’s shareholders 
amendment to company’s articles 
the company may alter its articles of association by special resolution passed at a 
general meeting 
corporate governance 
the board is fully committed to high standards of corporate governance details 
relating to the company’s compliance with the combined code on corporate 
governance for the financial year are given in the corporate governance and 
remuneration reports on pages 46 to 59 these sections contain details of 
directors’ service contracts and further information on the appointment of directors 
and the responsibilities of the board subject to the provisions of the companies 
acts the memorandum and articles of association and directions given by special 
resolution the business of the company is managed by the board which may 
exercise all the powers of the company 
corporate responsibility 
information on corporate responsibility matters including the environment 
employment policies health and safety and community relations are set out on pages 
33 to 37  shanks group plc is a constituent member of the ftse4good index 
series designed to measure the performance of companies that meet globally 
recognised corporate responsibility standards 
 
charitable and political donations 
during the period donations made by the group for charitable purposes amounted to 
£550 2008 £2430  in the uk through the landfill communities fund the group 
has also supported local environmental and social projects in areas around its 
remaining landfill sites this fund aims to offset some of the negative impacts of 
residing very near to such sites by enabling operators to channel a proportion of their 
landfill tax liability to notforprofit organisations to undertake projects such as 
disused land restoration public park maintenance and habitat conservation in the 
netherlands a charitable project was established in the year to recycle and  shanks  annual report 2009      44  
recondition hand tools for shipment to start up businesses in africa in addition staff 
at individual group businesses have organised various fund raising events to support 
local and national charities no donations were made for political purposes during the 
year 2008 £nil  
 
payment of suppliers 
the company does not currently subscribe to any code or standard on payment 
practice it is the companys policy however to settle terms of payment with those 
suppliers when agreeing the terms of each transaction to ensure that those 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 68 days 2008 65 
days for the group and was 34 days 2008 25 days for the company 
change of control  significant agreements 
the group’s principal financing instrument at 31 march 2009 the multicurrency 
£250m revolving credit facility with five major banks contains an option for those 
banks to declare that all sums outstanding under that agreement are repayable 
immediately in the event of a change of control this notice takes effect no earlier 
than thirty days from change of control and if exercised at 31 march 2009 would 
have required the repayment of £2432m in principal and interest 
 
the multicurrency €360m term loan and revolving credit facility with six major banks 
which was signed on 7 april 2009 and replaced the facility in place at 31 march 2009 
contained identical terms regarding change of control 
the 2001 notes issued under the group’s private placement contain an option for the 
noteholders to enforce prepayment between thirty days and sixty days from change 
of control of outstanding principal and interest which would have amounted in total at 
31 march 2009 to £487m in addition an amount of makewhole amounting to £55m 
which is not provided for in these accounts would be payable to private placement 
noteholders based on treasury yields at 31 march 2009 
in addition the rules of the company’s share plans provide that awards and options 
may vest and become exercisable on a change of control of the company 
persons with whom the company has essential contractual and other 
arrangements 
the company’s largest customers for its products and services include local 
authorities and municipalities in the uk these include notably twenty five year 
integrated waste management contracts with the east london waste authority 
dumfries  galloway and argyll and bute councils under these contracts the group 
is responsible for dealing with all the municipal wastes and recyclables collected by 
the borough or district councils or their subcontractors in the netherlands the 
group’s hazardous waste business has long term contracts with the oil and gas 
industry and is a major supplier of cleaning services to the petrochemical industry 
the netherlands also has a number of long term 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 under a 
ten year contract which was renewed in 2005 in addition the foronex business in 
belgium has a small number of longterm wood supply agreements with biomass 
burning renewable energy producing plants  shanks  annual report 2009      45  
disclosure of information to the company’s auditors 
each of the company’s directors in office as at the date of this report confirms that 
so far as he is aware there is no relevant audit information in connection with 
preparing their report of which the company’s auditors are unaware each director 
has taken all steps which he ought to have taken as a director in order to make 
himself aware of any relevant audit information and to establish that the auditors are 
aware of that information 
annual general meeting 
notice of the annual general meeting of the company to be held at the offices of the 
royal bank of scotland 250 bishopsgate london ec2m 4aa on thursday 23 july 
2009 at 1100am will be set out in a circular which will be dispatched to shareholders 
together with a form of proxy  
 
resolutions will be proposed to receive the 2009 report and accounts approve the 
2009 remuneration report elect mr chris surch as a director reelect the non
executive directors reappoint pricewaterhousecoopers llp as auditors of the 
company and authorise the directors to determine the auditors’ remuneration 
shareholders will also be asked to renew the general authority of the directors to 
issue shares together with the authority to disapply preemption rights and authorise 
the company to make purchase of its own shares a resolution will also be proposed 
to authorise the company to call a general meeting on not less than fourteen clear 
days notice in addition a resolution will be proposed to amend the company’s 
articles such that nonexecutive directors will be required to stand for annual re
election 
the directors consider that all the resolutions proposed at the agm to be held on 23 
july 2009 are in the best interests of the company and its shareholders as a whole 
and they unanimously recommend that all shareholders vote in favour of the 
resolutions as they intend to do in respect of their own shareholdings 
by order of the board 
 
 
philip griffinsmith 
company secretary  
21 may 2009 
  shanks  annual report 2009      46  
corporate governance 
combined code 
the group is committed to achieving high standards of corporate governance and 
integrity and exemplary ethical standards in all its business dealings this statement 
together with the remuneration report on pages 52 to 59 explains how the group 
has applied the provisions of the combined code on corporate governance 
published in 2003 by the financial reporting council and updated subsequently in 
2006 the board considers that it has complied with section 1 of the combined code 
in all material respects throughout the year the group has also complied with the 
financial reporting council guidance on audit committees issued in october 2008 
in all material respects 
the board of directors 
the board currently comprises the chairman a further three independent non
executive directors the group chief executive and group finance director the 
chairman has primary responsibility for running the board and the group chief 
executive is responsible for the operations of the group and for the development of 
strategic plans and initiatives for consideration by the board the division of 
responsibilities between the chairman and the group chief executive has been 
clearly established set out in writing and agreed by the board 
the nonexecutive directors bring a wide range of experience to the group and are 
considered by the board to be independent of management and free from any 
business or other relationship which could materially interfere with the exercise of 
their independent judgement 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 as necessary with the other nonexecutive directors without 
the executive directors present 
the combined code also recommends that the board appoints one of its 
independent nonexecutive directors to be the senior independent director this 
director is available to shareholders should they have concerns which contact 
through the normal channels of chairman group chief executive or group finance 
director has failed to resolve or for which such contact is inappropriate during the 
year this role was fulfilled by mr e van amerongen 
the board meets regularly having met thirteen times during the year in addition 
separate strategic discussions take place several meetings are held at subsidiary 
company locations in the netherlands belgium and the uk where local operations 
are reviewed and site inspections made in line with the requirement of sound 
corporate governance there is a formal schedule of matters reserved specifically for 
the board’s decision these include approval of financial statements strategic policy 
acquisitions and disposals capital projects over defined limits annual plans and new 
borrowing facilities 
the board operates under agreed terms of reference which together with those of its 
committees are documented formally and updated as necessary the board is 
provided with appropriate information in a timely manner to enable it to effectively  shanks  annual report 2009      47  
discharge its duties all directors have access to the company secretary whose role 
includes ensuring that board procedures and regulations are followed in addition 
directors are entitled if necessary to seek independent professional advice in the 
furtherance of their duties at the company’s expense 
performance evaluation of the board its committees and individual directors during 
the year was again undertaken through the mechanism of formalised self 
assessment questionnaires the performance evaluation of the chairman was 
undertaken by the nonexecutive directors led by the senior independent director 
an additional number of board meetings necessitated by the refinancing of the 
group’s core bank facility during the year called particularly upon the experience and 
contribution of the nonexecutive directors and reflected the effective working of the 
whole board under the direction of the chairman the board will also set itself 
specific governance objectives for the coming year against which progress can be 
monitored the board will also determine whether to engage the services of external 
consultants for the next formal evaluation 
all directors submit themselves for reelection by shareholders in accordance with 
the company’s articles of association and all nonexecutive directors are appointed 
initially for a three year term any new director appointed to the board will be subject 
to election by shareholders at the first opportunity after their appointment the board 
has determined that with effect from the forthcoming agm nonexecutive directors 
will stand for reelection on an annual basis and a resolution will be put to the agm to 
amend the company’s articles accordingly   
on appointment directors are given an introduction to the group’s operations 
including visits to principal sites and meetings with operational management specific 
training requirements of directors are met either directly or by the company through 
legalregulatory updates board succession planning is kept under review by the 
nomination committee 
as at the date of this report indemnities are in force between the company and 
each of its directors under which the company has agreed to indemnify each 
director to the extent permitted by law in respect of certain liabilities incurred as a 
result of carrying out his role as a director of the company the directors are also 
indemnified against the costs of defending any criminal or civil proceedings or any 
claim by the company or a regulator as they are incurred provided that where the 
defence is unsuccessful the director must repay those defence costs to 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 the financial year and has renewed that policy 
with effect from 1 october 2008 the companies act 2006 introduced a statutory duty 
on directors to avoid conflicts of interest shareholders approved a resolution at the 
2008 agm giving directors authority to approve situations involving any such 
conflicts and to allow conflicts of interest to be dealt with by the board all directors 
are required to notify the company on an ongoing basis of their other commitments 
and through the company secretary has established procedures for ensuring that 
the board’s powers for authorising directors’ conflicts of interest are operated 
effectively 
the table below details the number of formal board and committee meetings held in 
the year and the attendance of each director in addition the board held a one day  shanks  annual report 2009      48  
strategy meeting with senior management in attendance there was also regular 
communication between the nonexecutive directors without the presence of the 
executive directors 
  
   audit remuneration nomination 
director  group board committee committee committee 
a auer  13 13 na 3 3 1 1 
t drury  13 13 na na na 
p johnson  13 13 3 3 3 3 1 1 
s riley  13 13 3 3 3 3 1 1 
e van amerongen  9 13 3 3 3 3 1 1 
f welham  13 13 na na na 
 inclusive of four meetings held by telephone conference 
figures in brackets indicate maximum number of meetings during the period in which 
each individual was a boardcommittee member 
audit committee 
the audit committee which met three times in the year is formally constituted with 
written terms of reference which are available on the group’s website the 
committee is comprised solely of nonexecutive directors mr p johnson dr s riley 
and mr e van amerongen mr p johnson who continues to have current and 
relevant financial experience under combined code requirements chaired the 
committee throughout the year the external auditors the chairman and the 
executive directors are regularly invited to attend meetings and the committee has 
access to the external auditors’ advice without the presence of the executive 
directors the audit committee has the authority to examine any matters relating to 
the financial affairs of the group this includes the appointment terms of 
engagement objectivity and independence of the external auditors the nature and 
scope of the audit reviews of the interim and annual financial statements internal 
control procedures accounting policies adherence with accounting standards and 
such other related functions as the board may require the committee also 
considers and reviews other risk management and control documentation including 
the group’s policy on ‘whistleblowing’ and security reporting procedures 
the policy on engagement of the external auditors for nonaudit services was 
reviewed during the year specified non–audit 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 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 
during the year the performance of the external auditors was formally reviewed a 
resolution proposing the reappointment of pricewaterhousecoopers llp as group 
auditors will be put to shareholders at the forthcoming agm  shanks  annual report 2009      49  
remuneration committee 
the remuneration committee which met three times in the year is formally 
constituted with written terms of reference which are available on the group’s 
website the committee is comprised solely of nonexecutive directors mr e van 
amerongen mr a auer mr p johnson and dr s riley the committee has been 
chaired since july 2007 by mr e 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 ltip 
and the save as you earn saye share options are awarded to employees the 
committee also determines the remuneration of the group’s senior management and 
that of the chairman it recommends the remuneration of the 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 52 to 59 contains particulars of directors’ remuneration and interests in the 
company’s shares 
nomination committee 
the nomination committee is chaired by mr a auer and is comprised solely of non
executive directors mr e van amerongen mr p johnson and dr s riley the 
committee is formally constituted with written terms of reference which are available 
on the group’s website it met once during the year and is responsible for making 
recommendations to the board on the appointment of directors and succession 
planning during the year the committee reviewed succession planning in respect of 
the senior management teams in the netherlands belgium the uk it has also 
reviewed the structure composition and balance of skills of the board to ensure that 
all members of the board had devoted sufficient time and contributed adequately to 
the work of the board using the services of an external executive search consultant 
the recommendation of the nomination committee of the appointment of mr c surch 
as group finance director was accepted by the board leading to his appointment on 
1 may 2009 
pensions 
the assets of both the final salary and money purchase schemes in the uk are held 
separately from those of the group these are invested by independent professional 
investment managers and cannot be invested directly in the company there are 
three trustees appointed by the company and a selection process is underway 
currently to fill two vacancies for member nominated trustee positions senior 
employees in belgium are provided with defined contribution pension benefits in the 
netherlands employees participate in compulsory collective transport industry wide 
pension schemes or equivalent schemes which provide benefits up to a certain level 
of pay senior employees in the netherlands earning in excess of the maximum level 
of pay allowed for within the compulsory pension schemes also participate in a 
defined contribution arrangement for the excess amount 
investor relations 
the company has an active investor relations programme with designated members 
of the board regularly meeting institutional investors analysts press and other 
parties the board obtains feedback from its broker rbs hoare govett on the views 
of institutional shareholders and the chairman attends meetings with major 
shareholders whose views are communicated to the board as a whole detailed 
shareholder and market comment in particular is reported to the full board after 
results announcements the group also communicates with private and institutional  shanks  annual report 2009      50  
investors through its agm the group’s website wwwshanksplccouk provides 
additional information for shareholders and the general public 
risk management 
the board confirms that processes for identifying evaluating and managing the 
material risks faced by the group and their regular review by the board have been in 
place for the financial year 2009 and to the date of approval of the annual report and 
accounts during the year the group has strengthened its risk management 
processes through the formal adoption of a risk management framework the key 
elements of which are as follows 
• a biannual review by each business unit to identify and evaluate the significant 
strategic operational financial and compliance risks affecting the business and 
to record the key mitigating controls in place to reduce risks to a level acceptable 
to the board 
• review by both country management and the board of the risk summaries 
developed out of the above process to ensure the appropriateness of both the 
risks identified and the controls reported 
• annual selfassessment by each business unit of the scope and quality of its risk 
management process and system of internal control with subsequent review by 
both country management and the board and 
• consideration of both the risk summaries and selfassessment reviews by the 
risk management and internal audit function in setting the group’s riskbased 
internal audit plan 
risk management also forms part of major decisionmaking processes such as those 
concerning acquisitions major contract tenders and investment projects it is also 
embedded in the day to day management of operations including health safety and 
environmental compliance 
internal control 
the directors are responsible for and have reviewed the effectiveness of the group’s 
system of internal control during the period covered by the annual report and 
accounts the system is designed to provide reasonable but not absolute assurance 
against material avoidable loss or misstatement of financial information the key 
features of the control system are as follows 
• monthly visits by executive directors to key operating locations to attend local 
board or management meetings 
• regular executive committee meetings of the group’s most senior managers and 
executive directors 
• formal written financial policies and procedures applicable to all business units 
• comprehensive annual budgets requiring board and business unit approval 
reviewed on a regular basis with performance measured against budgets and 
explanations sought for significant variances  shanks  annual report 2009      51  
• a formal clearly defined framework for control and approval of capital expenditure 
and investment programmes with cash authorisation limits and post investment 
appraisals along with contract authorisation levels 
• identification and evaluation of key risks applicable to each area of business 
assessed on a continuing basis at both divisional board and group board level 
• appointment of experienced and professional staff of the necessary calibre to 
meet their responsibilities 
• annual reviews by the risk management and internal audit function of the 
adequacy of procedures and controls in each country’s operations following self
assessment by each business unit summaries of findings from these reviews 
and the status of followup actions are discussed at both divisional board and 
group board level 
• an annual riskbased audit plan approved by the audit committee the audits 
are performed under the guidance of the risk management and internal audit 
function findings from these audits are discussed at the monthly business unit 
board meetings summaries of audit findings the status of followup actions to 
remedy significant failings and the progress of audits against plan are discussed 
at the group board and audit committee meetings on a regular basis 
• a range of quality assurance and environmental management systems are used 
at the group’s sites where appropriate these are independently certified to 
internationally recognised standards including iso 9001 and iso 14001 and as 
such are subject to regular external audits and 
• an audit committee comprising nonexecutive directors the responsibilities of 
which are set out on page 48 
to strengthen existing controls the board accepted the recommendation of the audit 
committee in february 2008 that an independent internal audit function be 
established the role of group risk management  internal audit manager with a 
direct reporting line to the chairman of the audit committee was created to head up 
this function and in june 2008 an appropriately qualified candidate was recruited  shanks  annual report 2009      52  
remuneration report 
remuneration policy 
the principal objectives of the remuneration committee which is chaired by mr e 
van amerongen and comprises the nonexecutive directors are to attract retain and 
motivate high quality senior management with a competitive package of incentives 
and awards linked to performance and the interests of shareholders the committee 
seeks to ensure that the executive directors are fairly rewarded taking into account 
all elements of their remuneration package in the light of the group’s performance 
the committee has appointed deloitte llp to provide independent market 
information and advice relating to executive remuneration and benefits deloitte llp 
are considered to be independent as they provide only very limited other services to 
the group   
as described below a significant proportion of potential total remuneration is 
performance related and is built around annual and longer term incentives for 
directors achieving median performance performance related pay would represent 
approximately 35 of total remuneration if performance were such that the 
maximum award available under each incentive scheme was paid performance 
related pay would represent approximately 70 of total remuneration 
basic salary 
the basic salary element is determined primarily by reference to external data which 
takes into account the executive director’s duties and responsibilities basic salary is 
generally reviewed on an annual basis or following a significant change in 
responsibilities during the year and as at the date of this report no increases have 
been applied to executive directors’ salaries as such the base salary of the group 
chief executive remains at £390000 the new group finance director appointed on 
1 may 2009 joined on a base salary of £250000 
 
annual cash bonuses 
annual cash bonuses for executive directors are paid at the discretion of the 
remuneration committee as a percentage of base salary dependent upon corporate 
financial performance compared to target and achievement of personal objectives 
 
for the year to 31 march 2009 the corporate financial component of mr t drury’s 
bonus ranged from 30 for achieving target performance to a maximum bonus of 
100 for achieving performance of approximately 10 above target performance 
for mr f welham the respective ranges were 225 and 75 in addition the 
maximum bonus component for achievement of personal objectives was 25 
resulting in a maximum total bonus potential of 125 and 100 for mr t drury and 
mr f welham respectively 
target performance of the corporate financial component was achieved for 20089  
together with achievement of personal objectives relating to 15 and 17 of salary 
the remuneration committee determined that total bonuses of 45 and 395 be 
awarded to mr t drury and mr f welham respectively in addition the remuneration 
committee awarded mr t drury a special one off bonus of £25000 at the beginning 
of the 20089 financial year in recognition of his strong performance in his first six 
months as group chief executive  shanks  annual report 2009      53  
given the difficulty in predicting financial performance and forecasting earnings in the 
current economic climate the remuneration committee reviewed the structure of the 
annual bonus plan for 200910 recognising both the need to incentivise executives 
whilst also aligning with investor interests and the wider debate on levels of executive 
remuneration in general having considered the advice of remuneration consultants 
and recognising the greater degree of uncertainty a lower threshold has been set for 
bonus payout against budgeted financial performance for the year ending 31 march 
2010 as such 10 of salary will be payable for “threshold” performance 
representing 90 of budget a total of 25 and 20 of salary will be payable to the 
group chief executive and group finance director respectively for achievement of 
200910 budget whilst a maximum 75 and 50 respectively would be payable for 
outperformance of budget together with the retained 25 component for 
achievement of personal objectives the maximum aggregate bonus potential for the 
group chief executive and group finance director is 100 and 75 respectively 
having been reduced from 125 and 100 for the year ended 31 march 2009the 
remuneration committee will review these arrangements for future years 
long term incentive plan 
under the long term incentive plan ltip executive directors and senior 
employees may be granted an award annually the vesting of which is subject to the 
attainment of performance conditions measured over a three year period awards are 
in the form of shanks group plc shares the maximum value in any financial year is 
limited to 100 of basic salary as at the date of grant and is calculated on the 
company’s share price at that time 
for awards up to and including those made in 2008 two performance conditions 
have been applied the first performance condition is based on total shareholder 
return tsr where the company’s tsr achieved during the three year 
performance period is measured against the tsr achieved by those companies that 
constituted the ftse support services sector immediately before the date of grant 
of an award an award will only vest in full if the company’s tsr results in it being 
ranked in the upper quartile of the companies in the comparator group where the 
company with the highest tsr is ranked first if the tsr of the company results in a 
median position in the comparator group then 25 of the award will vest vesting 
above the median position is on a sliding scale with 3 of the award vesting for 
each percentile increase in the company’s rank above the median position up to the 
maximum award if the company’s tsr for the performance period results in a 
position below the median then the award will lapse 
the second performance condition is based on earnings per share eps and for an 
award to vest the average growth in the company’s adjusted eps calculated on a 
consistent basis must exceed the growth in the retail price index over the same 
period by at least nine percentage points having reviewed this performance 
condition and in light of market conditions at the time the remuneration committee 
increased this to twelve percentage points for those grants awarded during the 
financial year 20089  
the remuneration committee have decided to amend the performance conditions 
for ltip awards to be made in 2009 in the current circumstances the committee 
believe that a single tsr condition will provide the best measure of performance  as 
such the company’s 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  shanks  annual report 2009      54  
further reflecting the fall in the share price of the company and investor views on 
this topic the committee has decided to reduce the award level for the coming year  
as such and for awards in 2009 only the quantum of awards for executive directors 
and managing directors will be limited to 50 of basic salary compared to 100 of 
salary for the prior year none of the awards will vest if the company’s tsr is 
ranked below median  subject to the underlying performance of the company 
awards with an initial value at grant of 25 of salary will vest at median performance 
with the balance vesting in full for upper quartile performance  awards will vest on a 
straight line basis between median and upper quartile 
the remuneration committee intends to review and consult more widely with regard 
to performance conditions applying to awards made in 2010 
a number of minor administrative amendments to the ltip were made during the 
year by the remuneration committee including the introduction of the option for the 
committee to recommend to the plan trustees that awards can be cash settled in 
respect of the tax liability crystalising on exercise no amendment may be made to 
the performance conditions which would be to the material advantage of participants 
without the prior approval of shareholders in general meeting 
during the year the committee confirmed that the performance conditions for the 
ltips granted in 2005 had been achieved and that those awards vest in full with 
regard to the ltips granted in 2006 the committee have determined that as only one 
of the relevant two performance conditions for the financial year ended 31 march 
2009 were met none of those awards would vest 
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 2009 the employee share trust did not 
hold any of the company’s shares 
figure 1 shanks group plc total shareholder return versus ftse support 
services sector index for the period 1 april 2004 to 31 march 2009  
0
25
50
75
100
125
150
175
200
225
250
shanks group plc
ftse support
services sector
200405 200506 200607 200708 200809
source datastream
 
the graph shows the total shareholder return of the company and that of the ftse 
support services sector index over the five year period to 31 march 2009 this index  shanks  annual report 2009      55  
has been selected as it is a broad equity index of which shanks group plc is a 
constituent member 
share option schemes 
the remuneration committee believes that share ownership by employees 
encourages the matching of long term interests between employees and 
shareholders all uk employees including executive directors may participate in a 
hm revenue  customs approved savings related share option scheme 
srsos former executive directors and senior executives were also able to 
participate in an executive share option scheme esos at the discretion of the 
remuneration committee grants of options under the esos were discontinued in 
august 2005 when this scheme was replaced by the ltip 
under the terms of the srsos options may be granted during the ten year period to 
july 2015 to acquire up to 10 of the issued equity share capital of the company 
including options granted under the esos and ltip options are granted at the 
higher of the nominal value of an ordinary 10 pence share and an amount 
determined by the remuneration committee being not less than 80 of the market 
value employees held options over nearly 06m shares under the srsos as at 
31 march 2009  
under the terms of the discontinued esos options could be granted during the ten 
year period to august 2005 to acquire up to 5 of the issued equity share capital of 
the company the exercise of options granted under the esos was subject to a 
performance condition achievement of which was a prerequisite for exercise of 
options the condition was tested once only after a period of three years and if it was 
not achieved the relevant options lapsed options were only exercisable if the 
group’s eps calculated on a consistent basis exceeded the growth in retail price 
index over the same period by at least nine percentage points at a meeting of the 
remuneration committee on 27 may 2008 the performance conditions for the 
financial year ended 31 march 2008 were determined to have been achieved 
resulting in the vesting of the final tranche of executive options granted in 2005 at an 
option price of £144 
directors’ service contracts and notice periods 
the remuneration committee has agreed that the policy with regard to the notice 
period for executive directors is one year accordingly mr t drury has a rolling 
service contract dated 3 september 2007 which requires one year’s notice from the 
company   
 
the service contract of mr c surch dated 27 april 2009 has the same provisions 
save that until 1 november 2009 a mutual six month notice period applies in the 
event of early termination the remuneration committee will consider carefully what 
compensation should be paid taking into account the circumstances of the particular 
case as at the date of this report the compensation payment relating to 
mr f welham’s leaving the company was yet to be finalised but will be disclosed fully 
in next year’s remuneration report 
the nonexecutive directors do not have service contracts as their terms of 
engagement are governed by letters of appointment during the year letters of 
appointment for both mr a auer and mr p johnson were renewed for a further three 
year term  shanks  annual report 2009      56  
 
 date of date of 
 appointment as director initial letter of appointment term of appointment
a auer 16 may 2005 10 may 2005 renewable three year term
p johnson 16 may 2005 10 may 2005 renewable three year term
e van amerongen 9 february 2007 12 january 2007 renewable three year term
s riley 29 march 2007 12 january 2007 renewable three year term
external appointments 
the remuneration committee acknowledges that executive directors may be invited 
to become nonexecutive directors of other quoted companies which have no 
business relationship with the group and that these duties can broaden their 
experience and knowledge to the benefit of the company executive directors are 
limited to 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 executive directors during the year 
directors’ interests in ordinary shares 
the directors’ interests in the ordinary shares of the company both during the year 
and at 20 may 2009 were as follows 
  
  
as at 1 april 2008
as at 31 march 2009
and 20 may 2009 or date
 of leaving if earlier
a auer  10000 20000
t drury  15000 35000
p johnson  1585 1585
s riley  – –
c surch appointed 1 may 2009  – –
e van amerongen  – –
f welham left 27 april 2009  – 63119
 
  shanks  annual report 2009      57  
the auditors are required to report on the information contained in the remaining 
section of the remuneration report 
directors’ remuneration 
 
   performance other 2009 2008
 
 
basic
salaryfees 
related
bonus 
emoluments
 
total
 
total
  £000 £000 £000 £000 £000
      
chairman      
a auer  108 – – 108 100
      
executive directors      
m averill retired 30 september 2007  – – – – 201
t drury appointed 1 october 2007  390 200 125 715 409
f welham left 27 april 2009  257 102 46 405 418
      
nonexecutive directors      
p delaunois retired 26 july 2007  – – – – 26
p johnson  40 – – 40 40
b pointon retired 26 july 2007  – – – – 13
s riley   35 – – 35 35
e van amerongen   40 – – 40 38
total  870 302 171 1343 1280
notes 
i other emoluments for mr t drury and mr f welham include such items as car 
allowance and medical insurance which are not pensionable in the case of mr 
f welham this also includes company contributions of £24483 to the defined 
contribution section of the shanks group pension scheme other emoluments 
for mr t drury include a cash element paid in lieu of pension scheme 
contributions equating to 25 of salary all of these items are non pensionable 
ii the nonexecutive directors do not participate in the annual bonus plan and do 
not receive any pension contributions from the group 
iii with effect from 1 april 2009 the board determined to denominate the fees of 
the netherlands resident senior independent director mr eric van amerongen 
in euros and to increase these to €60000 £49375 per annum 
directors’ pension benefits 
mr f welham is a member of the final salary defined benefit section of the shanks 
group pension scheme which is a funded scheme approved by hm revenue  
customs pension benefits are capped at the notional hm revenue  customs 
earnings cap which is reviewed annually for the year to 31 march 2009 the notional 
cap was £117600 under the terms of this scheme participating executive directors 
have 
• at retirement and subject to length of service a pension of up to two thirds of 
basic salary 
• an employee contribution of 7 of basic salary 
• a lump sum death in service benefit of four times basic salary and 
• a spouse’s pension on death 
 
  shanks  annual report 2009      58  
the following table shows the movement in director’s pension benefits during the 
year 
director’s final salary pension – benefits 
 
  
age at
310309 
increase in
accrued
pension
during the 
year 
increase in
accrued
pension
during the
year
net of 
inflation
accrued
pension 
at
310309
transfer 
value
at 
310309
of pension
benefits
accrued at
310309
transfer 
value
at 310308
of pension
benefits
accrued at
310308
increase in
transfer value
less director’s
contributions
transfer
value of
increase in
accrued 
pension
during the 
year
net of inflation
less director’s
contributions
director’s 
contributions
   ii ii iii iv v vi vi
   £000 pa £000 pa £000 £000 £000 £000 £000 £000
f welham  44 4 4 34 414 355 51 37 8
 
notes 
i this schedule sets out the disclosures in respect of benefits accrued in the 
shanks group pension scheme only under both the stock exchange listing 
requirements and the large and mediumsized companies and groups 
accounts and reports regulations 2008 requirements it does not include 
benefits accrued in the senior executive scheme or any other company 
sponsored arrangement  
ii the increase in accrued pension during the year represents the difference 
between the total accrued pension at the end of the year and the equivalent 
amount at the beginning of the year 
iii the pension entitlement shown is that which would be paid annually on 
retirement based on service at the end of the year 
iv following the change in transfer value regulations with effect from 1 october 
2008 the transfer value as at 31 march 2009 has been calculated in accordance 
with regulations 7 to 7e of the occupational pension schemes transfer value 
regulations 1996 it has been calculated taking account of market conditions 
and the age at 31 march 2009 
v the transfer value as at 31 march 2008 has been calculated on the basis of 
actuarial advice in accordance with actuarial guidance note gn11 the 
calculation is based on the assumption that pensions will be paid from the 
earliest retirement age possible without the application of actuarial reduction 
factors at age 62 for mr f welham 
vi the increase in transfer value has been calculated taking into account market 
conditions and the director’s age at 31 march 2008 and 31 march 2009 
directors’ interests in share options 
the following director held options to subscribe for ordinary shares of the company 
 
       option number    number
  date of normal exercise dates price at 1 granted lapsed exercised at 31
share options  grant from to pence april 2008 in year in year in year march 2009 
f welham e 020804 030807 020814 1150 25000 – – – 25000
 s 250903 011108 300409 840 18869 – – 18869 –
 s 260908 011111 300412 1770 – 5423 – – 5423
 e executive share option scheme and s savings related share option scheme  shanks  annual report 2009      59  
notes 
i  the option price is the price at which the option was granted the price is set by 
the remuneration committee but is not less than 80 srsos and 100 
esos of the average market price of the shares over the last three dealing 
days immediately preceding the date of the invitation to subscribe srsos or 
the date of grant esos the performance conditions relating to the exercise of 
executive share options are shown on page 55   
ii  the market price of the shares on 6 november 2008 when mr f welham 
exercised his savings related share options was 14325 pence 
directors’ interests in long term incentive plan 
the following directors have been made notional allocations of shares under the 
company’s long term incentive plan 
 
   
outstanding 
awards at 
31 march 
2008   
awards made 
during 
the year   
awards lapsed
during
the year 
awards
exercised
during
the year  
outstanding
 awards at
31 march
2009 
date of
award 
share price on 
date of award 
pence   
performance 
period end   
restricted
period end
t drury   150000   –   – – 150000 280907 2330   310310   280910
   –    155000    –  – 155000 100608 23675    310311   100611
              
f welham   75000   –   – 75000 – 060605 14475   310308   060608
   94000   –   94000 – – 050606 1700   310309   050609
   75000   –   – – 75000 040607 2735   310310   040610
  –  100000  – – 100000 100608 23675  310311  100611
notes 
i the market price of the shares on 9 june 2008 on the vesting of mr f 
welham’s 2005 long term incentive plan was 24117 pence 
ii the performance conditions relating to awards granted in 2006 under the 
long term incentive plan were not met at the end of the three year 
performance period and these awards lapsed on 31 march 2009 
 
iii the performance conditions relating to the vesting of the awards are shown 
on page 53   
 
the highest closing midmarket price of the ordinary shares of the company during 
the year was 263 pence and the lowest closing midmarket price during the year was 
465 pence the midmarket price at the close of business on 31 march 2009 was 
5575 pence 
other interests 
none of the directors had an interest in the shares of any subsidiary undertaking of 
the company or in any significant contracts of the group 
by order of the board 
 
 
eric van amerongen 
chairman of the remuneration committee  
21 may 2009  shanks  annual report 2009      60  
statement of directors’ responsibilities 
in respect of the annual report the directors’ remuneration report and the 
financial statements 
 
the directors are responsible for preparing the annual report the directors’ 
remuneration report and the financial statements in accordance with applicable law 
and regulations 
company law requires the directors to prepare financial statements for each financial 
year under that law the directors have prepared the group and parent company 
financial statements in accordance with international financial reporting standards 
ifrss as adopted by the european union the financial statements are required by 
law to give a true and fair view of the state of affairs of the company and the group 
and of the profit or loss of the company and group for that period 
in preparing those financial statements the directors are required to 
• select suitable accounting policies and then apply them consistently 
• make judgements and estimates that are reasonable and prudent 
• state that the financial statements comply with ifrss as adopted by the eu  
• prepare the financial statements on the going concern basis and 
• include a fair review of the development performance and position of the 
business together with a description of the principal risks and uncertainties   
the directors are responsible for keeping proper accounting records that disclose 
with reasonable accuracy at any time the financial position of the company and the 
group and to enable them to ensure that the financial statements and the directors’ 
remuneration report comply with the companies act 1985 and as regards the 
group financial statements article 4 of the ias regulation they are also 
responsible for safeguarding the assets of the company and the group and hence 
for taking reasonable steps for the prevention and detection of fraud and other 
irregularities 
the directors are responsible for the maintenance and integrity of the 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 page 38 of the 
annual report confirm that to the best of their knowledge 
• the company and 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 and 
• the directors’ report includes a fair review of the development and performance 
of the business and the position of the company and the group together with a 
description of the principal risks and uncertainties that it faces and 
• there is no relevant audit information of which the company and the group’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 and the group’s auditors are aware of that information 
by order of the board 
 
philip griffinsmith 
company secretary  
21 may 2009  shanks  annual report 2009      61  
independent auditors’ report to the members of 
shanks group plc 
 
we have audited the group and parent company financial statements the ‘‘financial 
statements’’ of shanks group plc for the year ended 31 march 2009 which comprise 
the consolidated group and parent company income statements the consolidated 
group and parent company balance sheets the consolidated group and parent 
company cash flow statements the consolidated group and parent company 
statements of recognised income and expense and the related notes  these 
financial statements have been prepared under the accounting policies set out 
therein we have also audited the information in the directors’ remuneration report 
that is described as having been audited 
 
respective responsibilities of directors and auditors 
the directors’ responsibilities for preparing the annual report the directors’ 
remuneration report and the financial statements in accordance with applicable law 
and international financial reporting standards ifrss as adopted by the european 
union are set out in the statement of directors’ responsibilities 
 
our responsibility is to audit the financial statements and the part of the directors’ 
remuneration report to be audited in accordance with relevant legal and regulatory 
requirements and international standards on auditing uk and ireland this report 
including the opinion has been prepared for and only for the company’s members as 
a body in accordance with section 235 of the companies act 1985 and for no other 
purpose  we do not in giving this opinion accept or assume responsibility for any 
other purpose or to any other person to whom this report is shown or into whose 
hands it may come save where expressly agreed by our prior consent in writing 
 
we report to you our opinion as to whether the financial statements give a true and 
fair view and whether the financial statements and the part of the directors’ 
remuneration report to be audited have been properly prepared in accordance with 
the companies act 1985 and as regards the group financial statements article 4 of 
the ias regulation we also report to you whether in our opinion the information 
given in the directors report is consistent with the financial statements the 
information given in the directors’ report includes that specific information presented 
in the chairman’s statement chief executive’s statement market overview 
corporate strategy business review by country financial review and corporate 
responsibility that is cross referred from the business review section of the 
directors’ report 
 
in addition we report to you if in our opinion the company has not kept proper 
accounting records if we have not received all the information and explanations we 
require for our audit or if information specified by law regarding directors’ 
remuneration and other transactions is not disclosed 
 
we review whether the corporate governance statement reflects the company’s 
compliance with the nine provisions of the combined code 2006 specified for our 
review by the listing rules of the financial services authority and we report if it 
does not we are not required to consider whether the board’s statements on internal 
control cover all risks and controls or form an opinion on the effectiveness of the 
group’s corporate governance procedures or its risk and control procedures 
 
we read other information contained in the annual report and consider whether it is 
consistent with the audited financial statements the other information comprises  shanks  annual report 2009      62  
only the directors’ report the unaudited part of the directors’ remuneration report 
the financial highlights chairman’s statement chief executive’s statement the 
market overview business review by country financial review corporate 
responsibility corporate governance statement consolidated five year summary 
and all other information as referenced by the contents page of the annual report 
we consider the implications for our report if we become aware of any apparent 
misstatements or material inconsistencies with the financial statements our 
responsibilities do not extend to any other information 
 
basis of audit opinion 
we conducted our audit in accordance with international standards on auditing uk 
and ireland issued by the auditing practices board an audit includes examination 
on a test basis of evidence relevant to the amounts and disclosures in the financial 
statements and the part of the directors’ remuneration report to be audited it also 
includes an assessment of the significant estimates and judgments made by the 
directors in the preparation of the financial statements and of whether the accounting 
policies are appropriate to the group’s and company’s circumstances consistently 
applied and adequately disclosed 
 
we planned and performed our audit so as to obtain all the information and 
explanations which we considered necessary in order to provide us with sufficient 
evidence to give reasonable assurance that the financial statements and the part of 
the directors’ remuneration report to be audited are free from material 
misstatement whether caused by fraud or other irregularity or error in forming our 
opinion we also evaluated the overall adequacy of the presentation of information in 
the financial statements and the part of the directors’ remuneration report to be 
audited 
 
opinion 
in our opinion 
 
• the financial statements give a true and fair view in accordance with ifrss as 
adopted by the european union of the state of the group’s and the parent 
company’s affairs as at 31 march 2009 and of the group’s and the parent 
company’s profit and cash flows for the year then ended 
 
• the financial statements and the part of the directors’ remuneration report to be 
audited have been properly prepared in accordance with the companies act 
1985 and as regards the group financial statements article 4 of the ias 
regulation and 
 
• the information given in the directors report is consistent with the financial 
statements 
 
 
pricewaterhousecoopers llp 
chartered accountants and registered auditors 
london 
21 may 2009  shanks  annual report 2009      63  
consolidated income statement 
year ended 31 march 2009 
 
 2009 2008 
 note £m £m 
continuing operations    
revenue 2 6965 5637 
cost of sales before amortisation of acquisition intangibles  5673 4560 
amortisation of acquisition intangibles 10 38 25 
total cost of sales  5711 4585 
gross profit  1254 1052 
administrative expenses before exceptional items  628 518 
exceptional profit on disposal of properties 3 33 19 
exceptional restructuring charge 3 20 – 
total administrative expenses  615 499 
operating profit 23 639 553 
finance charges    
interest payable  286 238 
interest receivable  107 127 
change in fair value of interest rate swaps  121 29 
total finance charges 6 300 140 
profit before tax 2 339 413 
tax before exceptional items  91 130 
exceptional tax  184 – 
total tax 7 275 130 
profit for the year  64 283 
    
dividend per share 8 21p 62p 
    
earnings per share    
– basic 9 27p 120p 
– diluted 9 27p 120p 
consolidated statement of recognised income and expense 
year ended 31 march 2009 
 
 2009 2008
note £m £m
exchange gain on translation of foreign operations 24 350 281 
actuarial loss gain on defined benefit pension schemes 22 121 160 
  229 441 
deferred tax in respect of defined benefit pension schemes  34 47 
net income recognised directly in equity  263 394 
profit for the year  64 283 
total recognised income and expense for the year 24 327 677 
the notes on pages 69 to 107 are an integral part of these consolidated financial statements  shanks  annual report 2009      64  
consolidated balance sheet 
at 31 march 2009 
  
   at at 
   31 march 31 march 
    2009 2008 
  note £m £m 
noncurrent assets     
intangible assets  10 3147 2737 
property plant and equipment  11 3882 2875 
other investments and loans to joint ventures  12 25 16 
trade and other receivables  17 1564 1507 
retirement benefit assets  22 – 94 
deferred tax assets  14 126 37 
   8744 7266 
current assets     
inventories  15 104 77 
trade and other receivables  17 1627 1528 
current tax receivable   15 14 
cash and cash equivalents  18 270 532 
   2016 2151 
total assets   10760 9417 
current liabilities     
borrowings  19 307 81 
trade and other payables  20 1917 1755 
current tax payable   122 162 
provisions  21 30 41 
   2376 2039 
noncurrent liabilities     
borrowings  19 4206 3718 
other noncurrent liabilities  20 180 185 
deferred tax liabilities  14 669 391 
provisions  21 323 283 
retirement benefit obligations  22 10 – 
   5388 4577 
total liabilities   7764 6616 
net assets   2996 2801 
     
equity     
share capital  23 238 237 
share premium  24 992 974 
exchange reserve  24 642 292 
retained earnings  24 1124 1298 
total equity  24 2996 2801 
the notes on pages 69 to 107 are an integral part of these consolidated financial statements 
the financial statements on pages 63 to 110 were approved by the board of 
directors and authorised for issue on 21 may 2009 
they were signed on its behalf by 
  
 
 
 
a auer 
chairman  
c surch 
group finance director 
  shanks  annual report 2009      65  
consolidated cash flow statement 
year ended 31 march 2009 
  
   2009 2008 
  note £m £m 
net cash from operating activities  25 912 871 
investing activities     
purchases of intangible assets   05 05 
purchases of property plant and equipment   925 477 
disposals of property plant and equipment   85 53 
financial asset capital advances   161 171 
financial asset capital repayments   102 88 
acquisitions of subsidiary and other businesses   205 475 
income received from other investments   03 04 
net cash used in investing activities   1096 983 
financing activities     
interest paid   258 211 
interest received   110 106 
proceeds from issue of shares   07 23 
dividends paid   150 143 
increase in net borrowings   185 385 
increase in obligations under finance leases   25 38 
repayments of obligations under finance leases   27 27 
net cash flow from financing activities   108 171 
net decrease increase in cash and cash equivalents   292 59 
effect of foreign exchange rate changes   30 46 
cash and cash equivalents at beginning of year   532 427 
cash and cash equivalents at end of year   270 532 
the notes on pages 69 to 107 are an integral part of these consolidated financial statements 
  shanks  annual report 2009      66  
company income statement 
year ended 31 march 2009 
  
   2009 2008 
  note £m £m 
continuing operations     
administrative expenses before exceptional items   32 34 
administrative expenses – exceptional  3 – 1370 
total administrative expenses   32 1404 
other operating expense – exchange   188 177 
operating loss  23 220 1581 
income from shares in subsidiary undertakings   453 1875 
finance charges     
interest payable   281 198 
interest receivable   110 61 
total finance charges  6 171 137 
profit before tax   62 157 
tax  7 64 69 
profit for the year   126 226 
company statement of recognised income and expense 
year ended 31 march 2009 
  
   2009 2008 
  note £m £m 
actuarial loss gain on defined benefit pension schemes  22 121 160 
deferred tax in respect of the above   34 47 
net expense income recognised directly in equity   87 113 
profit for the year   126 226 
total recognised income and expense for the year  24 39 339 
the notes on pages 69 to 107 are an integral part of these financial statements  shanks  annual report 2009      67  
company balance sheet 
at 31 march 2009 
  
   at at 
   31 march 31 march 
   2009 2008 
  note £m £m 
noncurrent assets     
property plant and equipment  11 02 02 
investments in subsidiary undertakings  12 4696 4696 
retirement benefit assets  22 – 94 
deferred tax assets  14 05 – 
   4703 4792 
current assets     
trade and other receivables  17 2749 1840 
current tax receivable   60 81 
cash and cash equivalents  18 56 376 
   2865 2297 
total assets   7568 7089 
current liabilities     
borrowings  19 146 – 
trade and other payables  20 31 35 
provisions  21 24 31 
   201 66 
noncurrent liabilities     
borrowings  19 1234 1285 
other noncurrent liabilities  20 4257 3763 
deferred tax liabilities  14 – 16 
retirement benefit obligations  22 10 – 
   5501 5064 
total liabilities   5702 5130 
net assets   1866 1959 
     
equity     
share capital  23 238 237 
share premium  24 1232 1214 
retained earnings  24 396 508 
total equity  24 1866 1959 
the notes on pages 69 to 107 are an integral part of these financial statements 
the financial statements on pages 63 to 110 were approved by the board of 
directors and authorised for issue on 21 may 2009 
they were signed on its behalf by 
 
 
a auer c surch 
chairman group finance director 
  shanks  annual report 2009      68  
company cash flow statement 
year ended 31 march 2009 
 
  2009 2008 
  £m £m 
net cash from operating activities    
operating loss  220 1581 
net decrease increase in provisions  24 1308 
exchange loss  188 177 
sharebased payments  08 08 
operating cash flows before movements in working capital  48 88 
increase in receivables  881 1592 
increase in payables  490 1005 
cash generated by operations  439 675 
income taxes received  74 48 
net cash from operating activities  365 627 
investing activities    
dividends received  453 578 
net cash from investing activities  453 578 
financing activities    
interest paid  281 189 
interest received  110 61 
proceeds from issue of shares  07 23 
dividends paid  150 143 
repayment increase of net borrowings  94 287 
net cash flow from financing activities  408 39 
net decrease in cash and cash equivalents  320 10 
cash and cash equivalents at beginning of year  376 386 
cash and cash equivalents at end of year  56 376 
the notes on pages 69 to 107 are an integral part of these financial statements  shanks  annual report 2009      69  
notes to the financial statements 
1 accounting policies – group and company 
general information 
shanks group plc is a public limited company incorporated and domiciled in the 
united kingdom under the companies act 1985 
basis of preparation 
the financial statements are prepared in accordance with international financial 
reporting standards ifrs as required by article 4 of the european union ias 
regulation and with those parts of the companies act 1985 applicable to 
companies reporting under ifrs the financial statements are prepared on the 
historical cost basis except for derivative financial instruments which are stated 
at fair value the policies set out below have been consistently applied the 
group has applied all accounting standards and interpretations issued relevant to 
its operations and effective for accounting periods beginning on 1 april 2008 
 
the group early adopted ifrs 8 operating segments for the year ended 31 
march 2008 in order to facilitate a greater understanding and improve the 
transparency of the group’s reported results  ifrs 8 requires that disclosure of 
financial information be made which is consistent with that used by the chief 
operating decision maker to decisions about allocating resources and assessing 
performancethere has been no impact on reported profits or net assets 
at the date of authorisation of these financial statements the following standards 
amendments to existing standards and interpretations which have not been 
applied in these financial statements were in issue but not yet effective  
ias 23 amendment borrowing costs effective from 1 january 2009 the 
amendment requires an entity to capitalise borrowing costs directly attributable to 
the acquisition construction or production of a qualifying asset one that takes a 
substantial period of time to get ready for use or sale as part of the cost of that 
asset the option of immediately expensing such borrowing costs will be 
removed this is in line with the group’s existing accounting policy and will have 
no impact on reported profits or net assets 
‘improvements to ifrss’ contains amendments to various existing standards 
the amendments are effective in most cases from 1 january 2009 or otherwise 
for annual periods beginning on or after 1 july 2009 there is not expected to be 
any material impact on the results 
ifrs 3 revised business combinations effective for annual periods beginning 
on or after 1 july 2009 subject to eu endorsement the revised standard 
continues to apply the acquisition method to business combinations with some 
significant changes for example all payments to purchase a business are to be 
recorded at fair value as at acquisition date with contingent payments classified 
as debt subsequently remeasured through the income statement all acquisition 
related costs should be expensed there is a choice on an acquisitionby
acquisition basis to measure the noncontrolling interest in the acquiree at either 
fair value or at the noncontrolling interest’s proportionate share of the acquiree’s 
net asset the group will adopt ifrs 3 revised prospectively to all business 
combinations from 1 april 2010 subject to eu endorsement 
  shanks  annual report 2009      70  
 
ias 27 revised consolidated and separate financial statements effective for 
annual periods beginning on or after 1 july 2009 subject to eu endorsement 
the revised standard requires the effects of all transactions with a noncontrolling 
interest to be recorded in equity if there is no change in control and these 
transactions no longer result in goodwill or gains and losses the revised 
standard also specifies the accounting when control is lost any remaining 
interest in the entity is remeasured to fair value and a gain or loss is recognised 
in profit or loss the group will apply ias 27 revised prospectively from 1 april 
2010 
the directors anticipate that the adoption of the following amendments to 
standards and interpretations in future periods which were also in issue but were 
not effective at the date of authorisation of these financial statements will have 
no material impact on the results of the group 
o ias 1 revised presentation of financial statements effective from 1 
january 2009 
o ias 32 amendment financial instruments presentation and ias 1 
amendment presentation of financial statements – puttable financial 
instruments and obligations arising on liquidation effective from 1 january 
2009 subject to eu endorsement  
o ias 39 amendment financial instruments recognition and measurement 
– eligible hedged items effective for annual periods beginning on or after 1 
july 2009 subject to eu endorsement 
o ifrs 1 amendment first time adoption of ifrs effective from 1 january 
2009 subject to eu endorsement 
o ifrs 2 amendment share based payments – vesting conditions and 
cancellations effective from 1 january 2009 
o ifric 13 customer loyalty programmes effective for annual periods 
beginning on or after 1 july 2008 
o ifric 15 agreements for the construction of real estate effective from 1 
january 2009 subject to eu endorsement 
o ifric 16 hedges of a net investment in a foreign operation effective for 
annual periods beginning on or after 1 october 2008 subject to eu 
endorsement  
o ifric 17 distributions of noncash assets to owners effective for annual 
periods beginning on or after 1 july 2009 and 
o ifric 18 transfer assets from customers issued in january 2009 subject 
to eu endorsement 
 
the preparation of financial statements in accordance with ifrs requires 
management to make judgements estimates and assumptions that affect the 
application of policies and reported amounts of assets and liabilities income 
and expenses although these estimates are based on management’s best 
knowledge of the amount event or actions actual results ultimately may differ 
from those estimates the most significant judgements made relate to 
assumptions concerning discount rates future returns on assets and future  shanks  annual report 2009      71  
contribution rates in connection with the group’s retirement benefit schemes 
see note 22 in making these assumptions the group takes advice from 
qualified actuaries other significant judgements made relate to tax see note 
7 provisions see note 21 and pfi contracts see below 
basis of consolidation 
the consolidated financial statements incorporate the financial statements of 
shanks group plc and all its subsidiary undertakings subsidiaries entities 
which are jointly controlled with another party or parties joint ventures are 
incorporated in the financial statements by proportional consolidation the 
results of subsidiaries and joint ventures acquired or sold during the year are 
included in the consolidated financial statements up to or from the date control 
passes wholly owned subsidiary companies set up under pfi contracts are 
fully consolidated by the group 
pfi contracts 
the group’s pfi contracts are all integrated waste management contracts in 
these contracts the existing local authority waste management services are 
operated by the group from inception of the contract the pfi contract requires 
the building of new infrastructure to add to that inherited from the previous 
service provider and all rights to the infrastructure pass to the local authority at 
the termination or expiry of the contract the payments made to contractors for 
the construction of the infrastructure are accounted for as financial assets the 
group accounts for the service element as revenue and the repayment element 
is deducted from the financial asset interest receivable is added to the financial 
asset based on the rate implied in the contract payments reviews are 
undertaken regularly to ensure that the financial asset will be recovered over 
the contract life 
borrowing costs relating to contract specific external borrowings are expensed 
in the income statement 
 
bid costs are expensed in the income statement until the group is appointed 
preferred bidder and there is a high probability that a contract will be awarded 
bid costs incurred after this point are capitalised within trade and other 
receivables when the contract is awarded the costs are included in the 
relevant financial asset 
revenue 
revenue represents the invoiced value of waste streams processed and other 
services provided including landfill tax but excluding sales taxes revenue is 
recognised when processing occurs or when the service is provided 
exceptional items 
items are classified as exceptional and disclosed separately due to their size or 
incidence to enable a better understanding of performance these include but 
are not limited to financing fair value remeasurements and the profit or loss on 
disposals of properties 
sharebased payments 
the fair value of options granted is expensed on a straightline basis over the 
vesting period based on the group’s estimate of shares that will eventually 
vest adjustments to the amounts expensed are only made in respect of non
market related factors  shanks  annual report 2009      72  
discontinued operations 
a discontinued operation is a component of the group’s business that 
represents a separate major line of business classification as a discontinued 
operation occurs upon disposal or when the operation meets the criteria to be 
classified as held for sale if earlier 
intangible assets 
i goodwill 
goodwill 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 for the purpose of 
impairment testing the allocation is made to those cash generating units 
or groups of cash generating units 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   
 
the profit or loss on disposal or closure of a business is calculated after 
taking into account any goodwill excluding amounts previously written off 
to reserves prior to 1998 
ii landfill void 
 when landfill operations are acquired landfill void is capitalised based on 
the fair value of the void acquired and is amortised over its estimated 
useful life on a void usage basis 
iii other intangibles 
other intangible assets are capitalised on the basis of the fair value of the 
assets acquired or on the basis of costs incurred to purchase and bring 
the assets into use these are amortised over the estimated useful life on 
a straight line basis as follows 
 
computer software 1 to 5 years 
waste permits 5 to 20 years 
other 5 to 10 years 
 
property plant and equipment 
property plant and equipment except for freehold land is stated at cost less 
depreciation and provision for any impairment freehold land is not depreciated 
i buildings plant and machinery 
depreciation is provided on these assets to write off their cost by equal 
annual installments over the expected useful economic lives the 
expected useful life of buildings is 25 to 50 years plant and machinery 
lives are  shanks  annual report 2009      73  
 
computer equipment 1 to 5 years 
mobile plant 5 years 
generation equipment 8 to 15 years 
heavy goods vehicles 5 to 10 years 
other items 3 to 20 years 
ii landfill sites 
site development costs including engineering works and the discounted 
cost of final site restoration are capitalised these costs are written off 
over the operational life of each site based on the amount of void space 
consumed 
impairment of assets 
assets other than goodwill are reviewed for impairment whenever events or 
circumstances indicate that the carrying amount may not be recoverable if any 
such indication exists the recoverable amount is estimated in order to 
determine the extent of any impairment loss the recoverable amount is the 
higher of fair value less costs to sell and value in use in assessing value in use 
the estimated future cash flows are discounted to their present value if the 
recoverable amount is estimated to be less than the carrying amount the asset 
is reduced to the recoverable amount an impairment loss is recognised 
immediately as an operating expense 
leased assets 
i finance leases 
where the group has substantially all the risks and rewards of ownership 
of a leased asset the lease is treated as a finance lease leased assets 
are included in property plant and equipment at the total of the capital 
elements of the payments during the lease term and the corresponding 
obligation is included in payables depreciation is provided to write down 
the assets over the expected useful life or the lease term which ever is 
the shorter 
ii operating leases 
all leases other than finance leases are treated as operating leases 
rentals paid under operating leases are charged to the income statement 
in the year to which they relate the obligation to pay future rentals on 
operating leases is shown in note 27 to the accounts   
 
inventories 
inventories are stated at the lower of cost and net realisable value and are 
measured on a first in first out basis 
government grants and subsidies 
capital related government grants are released to the income statement evenly 
over the expected useful lives of the assets to which they relate revenue 
grants and subsidies are credited in the same period as the items to which they 
relate 
unprocessed waste 
the accrual or deferred income relating to unprocessed waste is calculated at 
the higher of sales value or processing cost  shanks  annual report 2009      74  
deferred consideration 
deferred consideration is provided for at the net present value npv of the 
group’s expected cost at the date of acquisition the likelihood of payment for 
deferred consideration conditional on meeting certain performance targets is 
considered on acquisition any differences between consideration accrued and 
consideration paid are charged or released to the income statement 
site restoration provision 
full provision is made for the 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 
discounting 
all long term provisions for deferred consideration 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 ias19 employee 
benefits for defined benefit plans obligations are measured at discounted 
present value whilst plan assets are recorded at market value the operating 
and financing costs of the plans are recognised separately in the income 
statement and actuarial gains and losses are recognised in full through the 
statement of recognised income and expense surpluses on defined benefit 
plans are recognised only to the extent that they are recoverable movements in 
irrecoverable surpluses are recognised immediately in the statement of 
recognised income and expense 
payments to defined contribution schemes are charged to the income statement 
as they become due the group participates in several multiemployer schemes 
in the netherlands these are accounted for as defined contribution plans as it 
is not possible to split the assets and liabilities of the schemes between 
participating companies and the group has been informed by the schemes that 
it has no obligation to make additional contributions in the event that the 
schemes have an overall deficit 
tax 
i current tax 
current tax payable is based on taxable profit for the year taxable profit 
differs from profit before tax in the income statement because it excludes 
items of income or expense that are taxable or deductible in other years or 
that are never taxable or deductible the liability for current tax is  shanks  annual report 2009      75  
calculated using tax rates that have been enacted or substantially 
enacted by the balance sheet date 
ii deferred tax 
deferred tax is recognised in full where the carrying value of assets and 
liabilities in the financial statements is different to the corresponding tax 
bases used in the computation of taxable profits deferred tax liabilities are 
generally recognised for all taxable temporary differences and deferred tax 
assets are recognised to the extent that it is probable that the taxable 
profits will be available against which deductible temporary differences can 
be utilised deferred tax is calculated at the tax rates that are expected to 
apply in the period when the liability is settled or the asset is realised 
deferred tax is charged or credited in the income statement except where 
it relates to items charged or credited through the statement of recognised 
income and expense or directly to reserves when it is charged or credited 
there 
 
foreign currencies 
foreign currency denominated assets and liabilities are translated into sterling 
at the year end exchange rate transactions and the results of overseas 
subsidiary undertakings and joint ventures in foreign currencies are translated 
at the average rate of exchange for the year and the resulting exchange 
differences are recognised in the group’s exchange reserve cumulative 
exchange differences are recognised in the income statement in the year in 
which an overseas subsidiary undertaking is disposed of the group applies the 
hedge accounting principles of ias 39 financial instruments recognition and 
measurement relating to net investment hedging to offset the exchange 
differences arising on foreign currency denominated borrowings with the 
translation of foreign operations net investment hedges are accounted for by 
recognising exchange rate movements in the exchange reserve with any hedge 
ineffectiveness being charged to the income statement in the period the 
ineffectiveness arises 
 
financial instruments 
i trade receivables 
trade receivables do not carry interest and are stated at their nominal 
value reduced by appropriate allowances for estimated irrecoverable 
amounts 
ii financial assets relating to pfi contracts 
financial assets relating to pfi contracts are classified as loans and 
receivables and are initially recognised at the fair value of the 
consideration paid and subsequently amortised using the effective interest 
rate method 
iii cash and cash equivalents 
cash and cash equivalents comprise cash balances and call deposits with 
a maturity of three months or less 
iv external borrowings 
interest bearing bank loans are recorded at the proceeds received net of 
direct issue costs finance charges including premiums payable on 
settlement or redemption and direct issue costs are accounted for on an 
accruals basis to the income statement using the effective interest rate 
method and are added to the carrying amount of the borrowings to the 
extent that they are not settled in the period in which they arise  shanks  annual report 2009      76  
v trade payables 
trade payables on normal terms are not interest bearing and are stated at 
their nominal value 
vi derivative financial instruments 
as part of the group’s pfi contracts the group has a number of interest 
rate swaps these swaps are measured at fair value at each reporting 
date with the gains or losses between period ends being taken to finance 
charges in the income statement 
vii other receivables and other payables 
other receivables and other payables are measured at amortised cost 
using the effective interest rate method 
contingent liabilities 
the company and certain subsidiaries have in the normal course of business 
given guarantees and performance bonds relating to the group’s contracts 
dividends 
dividends are accounted for on a cash basis and are not accrued in the balance 
sheet 
segmental reporting 
the group’s organisational structure reflects the national nature of markets in 
which it operates with divisions in the netherlands belgium the united 
kingdom and canada 
use of adjusted measures 
shanks group plc believes that trading profit underlying profit before tax 
underlying profit after tax and underlying earnings per share provide useful 
information on underlying trends to shareholders these measures are used by 
shanks for internal performance analysis and incentive compensation 
arrangements for employees the terms ’trading profit’ ‘exceptional items’ and 
‘adjusted’ 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  shanks  annual report 2009      77  
 
2 segmental reporting 
the group operates in the netherlands belgium the united kingdom and 
canada as discussed in the business review by country on pages 15 to 25 the 
waste markets are different in each member state of the european union as a 
result the group is organised and managed mainly by geographical location 
each geographical location can be analysed according to the following types of 
activity 
 
solid waste nonhazardous solid waste collections transfer 
recycling and treatment 
landfill and power landfill disposal including contaminated soils and 
power generation from landfill gas 
hazardous waste industrial cleaning hazardous waste transport 
treatment including contaminated soils and disposal 
and contaminated land remediation 
organic treatment anaerobic digestion and tunnel composting of source 
segregated organic waste streams 
pfi contracts long term united kingdom municipal waste treatment 
contracts 
sand quarry mineral extraction 
in addition to the waste activities detailed above we have small infrastructure 
and groundworks operations in ghent in belgium and amersfoort in the 
netherlands  due to their small size the infrastructure and groundworks 
activities are reported as part of the solid waste activities 
the accounting policies of the reportable segments are the same as those 
described in note 1 except that pension expense for the united kingdom is 
recognised and measured on the basis of cash payments to the pension plan 
the profit measure the group uses to evaluate performance is trading profit 
trading profit is operating profit before the amortisation of acquisition 
intangibles excluding landfill void and computer software and exceptional 
items the group accounts for intersegment trading on an arm’s length basis   shanks  annual report 2009      78  
 
 2009 2008
revenue £m £m
netherlands solid waste 2256 1895
 hazardous waste 1243 1006
 organic treatment 102 72
  intrasegment revenue 43 26
   3558 2947
belgium  solid waste 1264 772
  landfill and power 222 180
  hazardous waste 490 409
  sand quarry 32 22
  intrasegment revenue 210 132
   1798 1251
united kingdom  solid waste 726 751
  landfill and power 163 152
  hazardous waste 201 109
  pfi contracts 488 432
   1578 1444
canada  organic treatment 47 14
intersegment revenue 16 19
total revenue  6965 5637
group  6742 5473
share of joint ventures 223 164
total revenue  6965 5637
  shanks  annual report 2009      79  
 
   2009 2008 
profit before tax   £m £m 
trading profit
1
     
netherlands  solid waste  316 300 
  hazardous waste  154 95 
  organic treatment  17 16 
  country central services  38 34 
    449 377 
belgium  solid waste  80 74 
  landfill and power  100 83 
  hazardous waste  47 33 
  sand quarry  12 07 
  country central services  44 35 
    195 162 
united kingdom  solid waste  63 64 
  landfill and power  56 50 
  hazardous waste  17 17 
  pfi contracts  04 04 
  pfi bid team  21 09 
  country central services  54 57 
    57 69 
canada  organic treatment  12 01 
group central services  49 50 
total trading profit    664 559 
amortisation of acquisition intangibles  38 25 
exceptional profit on disposal of properties  33 19 
exceptional restructuring charge  20 – 
   25 06 
total operating profit   639 553 
group   580 501 
share of joint ventures  59 52 
total operating profit   639 553 
finance charges  interest payable  286 238 
  interest receivable  107 127 
  change in fair value of interest rate swaps  121 29 
total finance charges  300 140 
profit before tax   339 413 
1 
 trading profit is operating profit before amortisation of acquisition intangibles excluding landfill void 
and computer software and exceptional items 
the company operates solely in the united kingdom providing central 
services 
  shanks  annual report 2009      80  
  
      2009 2008 
  net assets    £m £m 
  netherlands  gross noncurrent assets  5239 4513 
    gross current assets  841 788 
    gross liabilities  1207 1176 
      4873 4125 
  belgium  gross noncurrent assets  1131 550 
    gross current assets  534 375 
    gross liabilities  807 626 
      858 299 
  united kingdom  gross noncurrent assets  2056 1998 
    gross current assets  341 435 
    gross liabilities  374 370 
      2023 2063 
  canada  gross noncurrent assets  190 72 
    gross current assets  11 04 
    gross liabilities  11 05 
      190 71 
  
group central 
services  gross noncurrent assets  02 96 
    gross current assets  04 03 
    gross liabilities  61 87 
      55 12 
  total  gross noncurrent assets  8618 7229 
    gross current assets  1731 1605 
    gross liabilities  2460 2264 
  net operating assets  7889 6570 
  current tax    107 148 
  deferred tax    543 354 
  net debt    4243 3267 
  net assets    2996 2801 
 
 
  
      2009 2008 
  other disclosures    £m £m 
  netherlands   capital expenditure  339 318 
    depreciation  285 232 
    amortisation of intangibles  44 35 
  belgium  capital expenditure  348 118 
    depreciation  132 71 
    amortisation of intangibles  02 – 
  united kingdom  capital expenditure  78 56 
    depreciation  39 38 
    amortisation of intangibles  08 04 
  canada   capital expenditure  112 21 
    depreciation  03 02 
    amortisation of intangibles  01 01 
  total   capital expenditure  877 513 
    depreciation  459 343 
    amortisation of intangibles  55 40 
  shanks  annual report 2009      81  
3 profit for the year 
  
  profit for the year is stated after charging crediting 
    group company
    2009 2008 2009 2008
    £m £m £m £m
  staff costs see note 4  1671 1316 24 25
  depreciation of property plant and equipment     
  – owned assets  413 321 – –
  – held under finance leases  46 22 – –
  amortisation of intangible assets charged to cost of sales  55 40 – –
  
repairs and maintenance expenditure on property plant and 
equipment  418 316 – –
  net profit on disposal of property plant and equipment  20 12 – –
  exceptional disposal profits on the sale of property  33 19 – –
  exceptional restructuring costs in the uk and belgium  20 – – –
  
impairment of investment in subsidiary undertakings note 
12  – – – 1334
  
makewhole payment relating to amounts owed to subsidiary 
undertakings  – – – 36
  trade receivables impairment  19 08 – –
  government grants  01 01 – –
  operating lease costs     
  – minimum lease payments  203 153 01 01
  – less sublease rental income  01 02 – –
    202 151 01 01
  represented by     
  – operating lease rentals – land and buildings  60 49 01 01
  – operating lease rentals – plant and machinery  142 102 – –
    202 151 01 01
  auditors’ remuneration     
  – audit of parent company and consolidated accounts  01 01 01 01
  – audit of subsidiaries pursuant to legislation  05 04 01 01
  – tax services  05 05 05 05
  – other  04 – 02 –
  total payments to auditors  15 10 09 07
at 31 march 2009 the amount due to pricewaterhousecoopers llp for fees not 
yet invoiced was £03m 
  shanks  annual report 2009      82  
4 employees 
  
    2009 2008 
    number number 
  
the average number of persons employed by the group during the year was 
as follows    
  netherlands  2295 2161 
  belgium  1245 1031 
  united kingdom  977 914 
  canada  12 5 
  group central services  15 14 
    4544 4125 
      
    2009 2008 
    £m £m 
  the total remuneration of all employees comprised    
  wages and salaries costs  1338 1057 
  employer’s social security costs  242 182 
  employer’s pension costs see note 22  91 77 
    1671 1316 
 
the disclosure above relates to the group the average number of persons 
employed by the company was 15 2008 14 with the related wages and 
salaries costs employer’s social security costs and employer’s pension costs 
amounting to £20m 2008 £18m £02m 2008 £03m and £02m 2008 
£04m respectively 
  shanks  annual report 2009      83  
5 sharebased payments 
group and company 
as described in the remuneration report the group issues equitysettled 
sharebased payments under a savings related share option scheme 
srsos an executive share option scheme esos and a long term 
incentive plan ltip for key executives 
outstanding options  
 
   srsos  esos ltip 
   weighted  weighted  
   average  average  
   exercise  exercise  
  options price options price options 
  number pence number pence number 
outstanding at 31 march 2007  740842 107p 2015000 155p 1732500 
granted during the year  104630 186p – – 751400 
forfeited during the year  43995 131p – – – 
expired during the year  17493 130p 125000 141p 7725 
exercised during the year  100523 111p 1390000 161p 507275 
outstanding at 31 march 2008  683461 117p 500000 141p 1968900 
granted during the year  275063 177p – – 933750 
forfeited during the year  93200 166p – – – 
expired during the year  51633 110p 20000 144p 266750 
exercised during the year  238422 89p 313000 144p 540000 
outstanding at 31 march 2009  575269 149p 167000 135p 2095900
1 
exercisable at 31 march 2009  193356 102p 167000 135p  
exercisable at 31 march 2008  17557 116p 55000 115p  
 
      
       
at 31 march 2009       
range of price per share  84p to 186p 115p to 144p  
weighted average remaining contractual 
life   
2 years
  
2 years
 
 2 years
 
1
 with regard to the ltips granted in 2006 since the year end the remuneration committee have determined 
that as only one of the relevant two performance conditions for the year ended 31 march 2009 were met 
none of the 454000 awards would vest  
 
fair value of options granted during the year 
 
   srsos  ltip 
  2009 2008   
  black black 2009 2008 
valuation model  scholes scholes binomial binomial 
weighted average fair value  50p 66p 116p 147p 
weighted average share price  205p 233p 237p 265p 
weighted average exercise price  177p 186p – – 
expected volatility  27 31 26 33 
expected life  3 years 3 years 3 years 3 years 
riskfree interest rate  43 51 53 56 
dividend yield  28 40 – – 
expected dividends  – – 20p42p 20p40p 
correlation  – – 31 21 
expected volatility was determined by calculating the historical volatility of the 
company’s share price over three five and seven years prior to the date of 
grant the riskfree interest rate is based on the term structure of uk 
government zero coupon bonds the expected life used in the models has 
been adjusted based on management’s best estimate for the effects of non
transferability exercise restrictions and behavioural considerations  shanks  annual report 2009      84  
charge for the year 
the group and the company recognised total expenses of £08m 2008 
£08m relating to equitysettled sharebased payments 
6 finance charges 
 
   group  company 
2009 2008 2009 2008
£m £m £m £m
interest payable      
interest payable on borrowings wholly repayable within five 
years  
176
 
128
 
75
 
50
 
interest payable on other borrowings  78 81 201 139 
share of interest of joint ventures  03 03 – – 
unwinding of discount on long term landfill liabilities  11 08 – – 
unwinding of discount on deferred consideration  13 09 – – 
amortisation of bank fees  05 09 05 09 
total interest payable  286 238 281 198 
interest receivable      
interest receivable on financial assets relating to pfi 
contracts  
90 89 –
 
–
 
other interest receivable  17 38 110 61 
total interest receivable  107 127 110 61 
change in fair value of pfi interest rate swaps  121 29 – – 
net finance charges  300 140 171 137 
 
7 tax 
the tax charge credit based on the profit for the year is made up as follows 
 
    group   company 
   2009 2008 2009  2008 
   £m £m £m  £m 
current tax uk corporation tax at 28 2008 30       
 – current year  32 55 55  70 
 – prior year  15 16 26  14 
 double tax relief  29 29 –  – 
 overseas tax       
 – current year  128 108 –  – 
 – prior year  14 21 –  – 
total current tax  102 97 81  84 
deferred tax see note 14       
– current year  11 27 10  15 
– prior year   – 06 07  – 
– exceptional  184 – –  – 
total deferred tax  173 33 17  15 
total tax charge credit for the year  275 130 64  69 
  shanks  annual report 2009      85  
the tax assessed for the year is higher than the united kingdom standard rate 
of tax of 28 2008 30 the differences are explained below 
 
   group  company 
  2009 2008 2009 2008 
  £m £m £m £m 
total profit before tax  339 413 62 157 
tax charge credit based on uk tax rate  95 124 17 47 
effects of      
adjustment to tax charge in respect of prior periods  29 31 19 14 
profits taxed at overseas tax rates  10 01 – – 
nontaxablenondeductible items  05 15 78 121 
unrecognised tax losses  15 29 15 19 
withdrawal of industrial buildings allowances   184 – – – 
other  05 22 01 – 
total tax charge credit for the year  275 130 64 69 
for both the group and the company in addition to the amount charged to the 
income statement deferred tax relating to retirement benefit obligations and 
sharebased payments amounting to £38m has been credited 2008 £49m 
charged directly to equity 
as a result of changes enacted in the finance act 2008 there will be a phased 
withdrawal of industrial buildings allowances over a period of 4 years this has 
resulted in an £184 million exceptional tax charge in the period this principally 
relates to the nondiscounted value of tax relief that would have been available 
on the pfi infrastructure towards the end of the 25 year pfi contracts 
 
8 dividends 
 
  group and company 
  2009 2008 
  £m £m 
amounts recognised as distributions to equity holders in the year    
final dividend paid for the year ended 31 march 2008 of 42p per share 
2007 40p  100 95 
interim dividend paid for the year ended 31 march 2009 of 21p per share 
2008 20p  50 48 
  150 143 
proposed final dividend for the year ended 31 march 2009 of nil pence per 
share 2008 42p  – 99 
  shanks  annual report 2009      86  
9  earnings per share 
 
  group 
 2009 2008 
number of shares    
weighted average number of ordinary shares for basic earnings per share 2376 2362 
effect of share options in issue  01 05 
weighted average number of ordinary shares for diluted earnings per 
share  2377 2367 
    
calculation of basic and adjusted basic earnings per share    
earnings for basic earnings per share being profit for the year £m  64 283 
change in fair value of interest rate swaps net of tax £m  87 21 
amortisation of acquisition intangibles net of tax £m  28 19 
exceptional restructuring charge net of tax £m  14 – 
exceptional profit on disposal of properties net of tax £m  33 19 
exceptional iba tax charge  184 – 
earnings for adjusted basic earnings per share £m  344 304 
basic earnings per share pence  27p 120p 
adjusted basic earnings per share pence see note below  145p 129p 
    
calculation of diluted earnings per share    
earnings for basic earnings per share being profit for the year £m  64 283 
effect of dilutive potential ordinary shares £m  – – 
earnings for diluted earnings per share £m  64 283 
diluted earnings per share pence  27p 120p 
the directors believe that adjusting earnings per share for the effect of the 
amortisation of acquisition intangibles excluding landfill void and computer 
software and exceptional items enables comparison with historical data 
calculated on the same basis 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 changes in fair 
values of interest rate swaps that the group is required to enter into in relation 
to its pfi arrangements are considered to be exceptional items 
  shanks  annual report 2009      87  
10 intangible assets 
 
  goodwill landfill void other total 
group  £m £m £m £m 
cost      
at 31 march 2007  1701 203 132 2036 
on acquisition of businesses  249 – 174 423 
additions  – – 04 04 
exchange  308 36 35 379 
at 31 march 2008  2258 239 345 2842 
on acquisition of businesses  28 – 16 44 
additions  – – 05 05 
disposals  – – 05 05 
exchange  353 39 46 438 
at 31 march 2009  2639 278 407 3324 
accumulated impairmentamortisation      
at 31 march 2007  – 12 41 53 
amortisation charge for the year  – 11 29 40 
exchange  – 03 09 12 
at 31 march 2008  – 26 79 105 
amortisation charge for the year  – 14 41 55 
disposals  – – 05 05 
exchange  – 06 16 22 
at 31 march 2009  – 46 131 177 
net book value      
at 31 march 2009  2639 232 276 3147 
at 31 march 2008  2258 213 266 2737 
at 31 march 2007  1701 191 91 1983 
of the total £55m 2008 £40m amortisation charge for the year £38m 2008 
£25m related to intangible assets arising on acquisition  
goodwill impairment 
impairment testing is carried out at cash generating unit cgu level on an 
annual basis a segment level summary of the goodwill allocation is presented 
below   
 
    2009 2008 
    £m £m 
netherlands    2329 2005 
belgium    196 130 
united kingdom    114 123 
    2639 2258 
 
 
the group estimates the recoverable amount of a cgu using a value in use 
model by projecting cashflows for the next twenty years discounted at the 
group’s estimated average cost of capital the posttax discount rate used is 
based on the group’s weighted average cost of capital wacc of 8 as most 
cgus have integrated operations across large parts of the group this is 
considered appropriate for all parts of the business the group wacc is 
equivalent to a pretax discount rate of approximately 11 
 
where the impairment test indicates that the recoverable value of the unit is 
close to or below its carrying value it is reperformed using a pretax discount 
rate and pretax cash flows in order to determine if an impairment exists and to  shanks  annual report 2009      88  
establish its magnitudethe cash flows are based on projections prepared by 
management covering a fiveyear period and are extrapolated using estimated 
growth rates at the end of the five year plan the growth rate does not exceed 
the long term average growth management determined the five year plan 
based on past performance and its expectation of market development in each 
case the valuations indicate sufficient headroom such that a reasonably 
possible change to key assumptions is unlikely to result in an impairment of the 
related goodwill 
other intangible assets impairment 
other intangible assets includes site or waste permits customer lists and other 
acquired intangible assets as well as computer software during the year there 
has been no indication of any impairment  
 
11 property plant and equipment 
 
  land and landfill plant and  
  buildings sites machinery total 
group  £m £m £m £m 
cost      
at 31 march 2007  1187 484 3037 4708 
on acquisition of businesses  209 – 70 279 
additions  95 29 389 513 
disposals  14 01 96 111 
exchange  322 55 525 902 
at 31 march 2008  1799 567 3925 6291 
on acquisition of businesses  25 – 127 152 
additions  289 53 535 877 
disposals  25 01 204 230 
exchange  297 59 676 1032 
at 31 march 2009  2385 678 5059 8122 
accumulated depreciation      
at 31 march 2007  293 361 1964 2618 
depreciation charge for the year  59 15 269 343 
disposals  05 – 84 89 
exchange  148 49 347 544 
at 31 march 2008  495 425 2496 3416 
depreciation charge for the year  71 21 367 459 
disposals  14 01 184 199 
exchange  86 53 425 564 
at 31 march 2009  638 498 3104 4240 
net book value      
at 31 march 2009  1747 180 1955 3882 
at 31 march 2008  1304 142 1429 2875 
at 31 march 2007  894 123 1073 2090 
included in plant and machinery are assets held under finance leases with a net 
book value of £167m 2008 £120m 
depreciation expense of £445m 2008 £334m has been charged in cost of 
sales and £14m 2008 £09m in administrative expenses  shanks  annual report 2009      89  
 
  land and plant and  
  buildings machinery total 
company  £m £m £m 
cost     
at 31 march 2008 and 31 march 2007  01 05 06 
additions  – 01 01 
disposals  – 02 02 
at 31 march 2009  01 04 05 
accumulated depreciation     
at 31 march 2008 and 31 march 2007  – 04 04 
disposals  – 01 01 
at 31 march 2009  – 03 03 
net book value     
at 31 march 2009  01 01 02 
at 31 march 2008  01 01 02 
at 31 march 2007  01 01 02 
 
 
12 investments 
  
   group company 
  loans other   investments 
  to joint unlisted   in subsidiary 
  ventures investments total  undertakings 
  £m £m £m  £m 
at 31 march 2007  – 18 18  3798 
additions  – – –  2232 
repayments or disposals  – 04 04  – 
provision movement  – 02 02  1334 
at 31 march 2008  – 16 16  4696 
additions  09 02 11  – 
repayments or disposals  – 03 03  – 
provision movement  – 01 01  – 
exchange  – 02 02  – 
at 31 march 2009  09 16 25  4696 
details of subsidiary undertakings and joint ventures are shown on page 108 to 
109 and form part of these financial statements 
during the prior year the company acquired shanks investments from other 
group companies in exchange for intercompany loans following the acquisition 
and subsequent dividend distribution an impairment provision of £1346m was 
considered necessary  shanks  annual report 2009      90  
in relation to the group’s interest in joint ventures the assets liabilities income 
and expenses are shown below 
  
  2009 2008 
  £m £m 
noncurrent assets  238 137
current assets  63 48
current liabilities  81 51 
noncurrent liabilities  107 42 
net assets  113 92
income  223 164
expenses  166 115 
profit before tax  57 49
tax  16 14 
share of profit after tax for the year from joint ventures  41 35
the joint ventures have no significant contingent liabilities to which the group is 
exposed nor has the group any significant contingent liabilities in relation to its 
interest in joint ventures 
the share of capital commitments of the joint ventures is shown in note 26 
 
13 business combinations 
a on 1 april 2008 the group acquired 100 of the share capital of the foronex 
group in belgium for a consideration of £104m foronex is a leading player in 
the wood waste and byproducts market in benelux the goodwill recognised is 
attributable to foronex’s strong market position growth potential and synergistic 
benefits from acquisition to 31 march 2009 foronex contributed £380m to 
revenue and reduced profit after tax by £11m the aggregate book value of the 
assets and liabilities acquired and the fair value to the group were as follows 
  
   fair  
  book value fair 
  value adjustment value 
  £m £m £m 
intangible assets  – 16 16 
property plant and equipment  81 81 162 
investments  01 
–
 01 
inventories  18 
–
 18 
trade receivables   100 
–
 100 
other receivables  01 
–
 01 
trade payables  106 
–
 106 
other payables  23 
–
 23 
borrowings  65 39 104 
deferred tax asset  22 20 02 
provisions  01 
–
 01 
net assets acquired  28 38 66 
goodwill    38 
    104 
satisfied by     
cash consideration    104 
b for acquisitions completed in the year ended 31 march 2008 there have been 
no amendments to the provisional fair values except for wastecom limited in 
the uk acquired for a consideration of £64m on 7 november 2007 following 
the finalisation of the fair value of net assets on completion and a price  shanks  annual report 2009      91  
adjustment of £10m goodwill arising on the acquisition has been reduced by 
£10m 
 
14 deferred tax 
deferred tax is provided in full on temporary differences under the liability 
method using applicable local tax rates deferred tax assets and liabilities are 
only offset where there is a legally enforceable right of offset and there is an 
intention to settle the balances net 
  
group  
retirement
benefit
schemes
£m 
tax
losses
£m 
interest
rate swaps
£m 
capital
allowances
£m 
other 
timing
differences
£m 
total
£m 
at 31 march 2007  48 118 02 282 52 166 
acquisitions  – 01 – 61 04 64 
charge credit to income 
statement  17 21 08 16 19 33 
charge to equity  47 – – – 02 49 
exchange  – 05 – 31 16 42 
at 31 march 2008  16 103 10 358 93 354 
acquisitions  – 24 – – 22 02 
charge credit to income 
statement  15 34 34 201 25 173 
charge to equity  34 – – – 04 38 
exchange  – 05 – 40 21 56 
at 31 march 2009  03 166 44 599 157 543 
deferred tax assets  03 61 44 19 37 126 
deferred tax liabilities  – 105 – 580 194 669 
at 31 march 2009  03 166 44 599 157 543 
deferred tax assets  16 24 10 18 37 37 
deferred tax liabilities  – 79 – 340 130 391 
at 31 march 2008  16 103 10 358 93 354 
as at 31 march 2009 the group has unused trading losses tax effect of 
£229m 2008 £179m available for offset against future profits a deferred tax 
asset has been recognised in respect of £166m 2008 £103m of such losses 
no deferred tax asset has been recognised in respect of the remaining £63m 
2008 £76m due to the unpredictability of future profit streams tax losses 
may be carried forward indefinitely 
no liability has been recognised on the aggregate amount of temporary 
differences associated with undistributed earnings of subsidiaries because the 
group is in a position to control the timing and method of the reversal of these 
differences and it is probable that such differences will not give rise to a tax 
liability in the foreseeable future 
  
company  
retirement
benefit
schemes
£m 
other
timing
differences
£m 
total
£m 
at 31 march 2007  48 – 48 
charge credit to income statement  17 02 15 
charge to equity  47 02 49 
at 31 march 2008  16 – 16 
charge to income statement  15 02 17 
charge to equity  34 04 38 
at 31 march 2009  03 02 05  shanks  annual report 2009      92  
as at 31 march 2009 the company has unused tax trading losses tax effect of 
£58m 2008 £71m 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 
 
15 inventories 
  
   group 
  2009 2008 
  £m £m 
raw materials and consumables  94 66 
work in progress  05 05 
finished goods  05 06 
  104 77 
 
16 financial instruments 
carrying value and fair value of financial assets and financial liabilities 
  
    group company 
   carrying value carrying value 
   2009 2008 2009 2008 
financial assets  note £m £m £m £m 
loans and receivables       
financial assets relating to pfi contracts  17 1648 1587 – – 
trade and other receivables  17 1543 1448 2749 1840 
cash and cash equivalents  18 270 532 56 376 
   3461 3567 2805 2216 
the group considers that the fair value of financial assets is not materially 
different to their carrying value 
 
      group company 
   carrying value fair value  carrying value  fair value  
   2009 2008 2009 2008 2009 2008 2009 2008 
financial liabilities  note £m £m £m £m £m £m £m £m 
loans and payables           
bank overdrafts and           
short term loans  19 67 – 67 – – – – – 
bank loans  19 3658 3252 3658 3252 1234 1160 1234 1160 
senior notes  19 478 411 507 420 146 125 148 126 
finance lease obligations  19 154 101 154 101 – – – – 
trade and other payables  20 2097 1940 2097 1940 4288 3798 4288 3798 
derivative financial 
instruments           
interest rate swaps  19 156 35 156 35 – – – – 
   6610 5739 6639 5748 5668 5083 5670 5084 
the fair value of the senior notes is measured by discounting the future cash 
flows at the market interest rate set by swaps with an equivalent interest 
pattern the fair value of interest rate swaps is measured by reference to the 
cost of foreclosing the swap position at the year end none of the change in fair 
value of interest rate swaps is attributable to changes in the group’s credit risk 
risk management 
the group is exposed to market risk interest rate risk and foreign exchange 
risk liquidity risk and credit risk group treasury is charged with managing and 
controlling risk relating to the financing and liquidity of the group under policies 
approved by the board of directors group treasury does not enter into 
speculative transactions  shanks  annual report 2009      93  
 
interest rate risk 
a substantial part of the group’s borrowings are at floating rates which exposes 
the group to interest rate risk the group’s core borrowings are mainly at 
floating rates except for the senior notes which are at fixed rates the debt 
relating to pfi nonrecourse borrowings is at floating rates and the group has 
entered into interest rate swaps as a condition of the related debt the interest 
rate swaps represent a hedge of the interest cash flows and although hedge 
accounting under ias 39 would allow changes in the fair value of interest rate 
swaps to be recognised directly in reserves the group has not previously 
allocated the hedges the interest rate swaps are therefore classified as held 
for trading in accordance with ias 39 the swaps are presented in noncurrent 
liabilities together with the related long term borrowings since the group 
believes this best reflects the commercial reality of the instruments 
changes in interest rates could have a significant impact on banking covenants 
relating to interest cover and on the interest charge in the income statement 
the group manages this risk by fixing the interest rates on a proportion of its 
total borrowings the proportion of borrowings fixed at any one time is 
dependent on forecast interest rate cover in order to measure the risk 
borrowings and the expected interest cost for the year are forecast on a 
quarterly basis and scenarios run using management’s expectations of a 
reasonably possible change in interest rates 
interest expense volatility remained within acceptable limits throughout the year 
the group’s exposure to and the way it manages interest rate risk has not 
changed from the previous year 
the weighted average effective interest rates at the balance sheet dates were 
as follows 
 
    2009   2008 
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 pfi 
contracts  – 1648 56 – 1587 56 
cash and cash equivalents  150 – – 343 – – 
short term deposits  120 – 08 189 – 54 
        
financial liabilities        
bank overdrafts and short term loans 67 – 25 – – – 
senior notes  – 478 69 – 411 69 
bank loans  3658 – 23 3252 – 55 
interest rate swaps  1196 1196 66 1238 1238 66 
excluded from the analysis above is £154m 2008 £101m of amounts 
payable under finance leases as set out in note 19 which are subject to fixed 
rates of interest in addition trade and other receivables and payables have 
been excluded as they are not interest bearing 
the average term for shortterm deposits is no more than seven days  shanks  annual report 2009      94  
for the company there were no short term deposits in 2008 the effective 
interest was 54 with an average term of 1 day the effective interest rate on 
the company’s cash and cash equivalents was nil 2008 50 the weighted 
average effective interest rates relating to the company were nil 2008 nil for 
euro bank overdrafts 69 2008 69 for senior notes and 196 2008 
54 for bank loans interest on intercompany loan balances are charged at 
rates of between 0 and 12 2008 0 and 12 
 
derivative financial instruments – interest rate swaps 
the notional principal amount of the outstanding interest rate swap contracts at 
31 march 2009 was £1196m 2008 £1238m the expiry dates of the 
contracts range from 16 april 2023 earliest to 31 march 2025 latest 
interest rate sensitivity assuming all other variables remain constant 
 
  2009 2008 
  income equity income equity 
  sensitivity sensitivity sensitivity sensitivity 
  £m £m £m £m 
1 increase in interest rates       
derivatives  12 107  13 100 
non derivatives  33 33  25 25
  21 74  12 75 
1 decrease in interest rates       
derivatives  12 117  13 112
non derivatives  33 33  25 25 
  21 84  12 87
the interest rate sensitivity is taken to occur from 31 march 2008 and so the 
change in the fair value of the swaps is shown as an equity sensitivity which 
results in an increase of £95m 2008 £87m for a 1 increase in interest rate 
and a decrease of £105m 2008 £99m for a 1 decrease in rates 
foreign exchange risk 
the group operates in europe and canada and is exposed to foreign exchange 
risk for movements between the euro canadian dollar and sterling the 
majority of the group’s subsidiaries conduct their business in their respective 
functional currencies therefore there is limited transaction risk foreign 
exchange risk arises mainly from net investments in foreign operations this 
exposure is reduced by funding the investments as far as possible with 
borrowings in the same currency the group applies hedge accounting 
principles to net investments in foreign operations and the related borrowings  
the group has designated the carrying value of euro borrowings of £1317m 
2008 £1135m fair value of £1320m 2008 £1136m as a net investment 
hedge of the group’s investments denominated in euros the hedge was 100 
effective 2008 100 for the year ended 31 march 2009 and as a result the 
related exchange loss of £173m 2008 £171m on translation of the 
borrowings into sterling has been recognised in the exchange reserve 
foreign exchange rate sensitivity assuming all other variables remain 
constant 
the following table details how the group’s income and equity would increase if 
there were a 10 increase in the respective currency against sterling a 10 
decrease would have an equal and opposite effect  shanks  annual report 2009      95  
 
 2009 2008
 income equity income equity
 sensitivity sensitivity sensitivity sensitivity
 £m £m £m £m
10 increase in foreign exchange rates against sterling
euro 35 139 34 82
canadian dollar – 03 – –
 35 142 34 82
liquidity risk 
liquidity risk is the risk that the group does not have sufficient financial 
resources to meet its obligations as they fall due as well as term borrowing 
under a syndicated loan facility the group maintains uncommitted lending 
facilities with a range of banks for working capital purposes the group 
manages liquidity risk by monitoring forecast cash flows to ensure that facility 
drawdowns are arranged as necessary and an adequate level of headroom is 
maintained the group’s exposure to and the way it manages liquidity risk has 
not changed from the previous year 
 
undrawn committed borrowing facilities 
 
  core pfi companies total group 
  2009 2008 2009 2008 2009 2008 
group  £m £m £m £m £m £m 
expiring within one year  – – – – – – 
expiring between one and two 
years  69 – – – 69 – 
expiring in more than two 
years  – 395 30 184 30 579 
  69 395 30 184 99 579 
in addition the group had access to £255m 2008 £273m of undrawn 
uncommitted working capital facilities 
as at 31 march 2009 the company had undrawn committed borrowing facilities 
at floating rates of £69m expiring in between one and two years 2008 £395m 
in more than two years 
maturity profile of noncurrent borrowings 
 
   group company 
  2009 2008 2009 2008 
  £m £m £m £m 
between one and two years  2503 211 1234 125 
between two years and five years  552 2466 – 1160 
over five years  1151 1041 – – 
  4206 3718 1234 1285 
the group’s principal bank loan expiring in between one and two years has 
been refinanced since the year end see note 30 
security of borrowing facilities 
the group’s principal bank loans are unsecured but are subject to cross 
guarantees within the group excluding the pfi companies see note 28 each  shanks  annual report 2009      96  
pfi company has loan facilities which are secured by fixed and floating charges 
on the future cash flows of pfi contracts 
credit risk 
credit risk is the risk of financial loss where counterparties are not able to meet 
their obligations 
surplus cash when not used to repay borrowings is placed on deposit with 
banks and money market funds in accordance with a policy that specifies the 
minimum acceptable credit rating and the maximum exposure to each 
counterparty at 31 march 2009 the amount of credit risk totalled £270m 2008 
£532m 
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 
2009 the credit risk was £nil 2008 £nil 
trade and other receivables comprise mainly amounts due from customers for 
services performed management consider that the exposure to any single 
customer is not significant and that where credit quality is in doubt adequate 
provision has been made for probable losses at 31 march 2009 the credit risk 
amounted to £1543m 2008 £1448m the group does not hold any collateral 
as security 
the financial assets relating to pfi contracts are recoverable from the future 
revenues relating to the pfi contracts management consider that as the 
counterparties for the future revenues are uk local authorities or councils there 
is minimal credit risk at 31 march 2009 the credit risk was £1648m 2008 
£1587m 
capital risk management 
the group maintains a group funding strategy to ensure that the group 
maintains an appropriate debt to equity ratio as well as an appropriate debt 
maturity profile the strategy is based on the requirements of the company’s 
articles of association which state that debt should be limited to three times the 
level of capital and reserves 
the group’s funding strategy has not changed from the previous year   
 
the group has to comply with a number of banking covenants which are set out 
in the agreements for bank loans and senior notes there are financial 
covenants which are measured using the performance of the core group 
excluding pfi companies and relate to interest cover the ratio of debt to 
ebitda and the net worth of the group there are other restrictions in the loan 
documentation concerning acquisitions disposals security and other issues 
the group has complied with its banking covenants 
  shanks  annual report 2009      97  
17 trade and other receivables 
 
   group company 
  2009 2008 2009 2008 
  £m £m £m £m 
noncurrent assets      
financial assets relating to pfi contracts  1548 1488 – – 
other receivables  16 19 – – 
  1564 1507 – – 
current assets      
trade receivables  1373 1291 – – 
provision for impairment of receivables  53 44 – – 
trade receivables – net  1320 1247 – – 
amounts owed by subsidiary undertakings  – – 2692 1837 
financial assets relating to pfi contracts  100 99 – – 
other receivables  96 85 55 02 
prepayments and accrued income  111 97 02 01 
  1627 1528 2749 1840 
 
movement in the provision for impairment of receivables 
 
   group 
  2009 2008 
  £m £m 
at 1 april 2008  44 42 
charged to income statement  19 08 
on acquisition of business  06 – 
utilised  22 06 
exchange  06 – 
at 31 march 2009  53 44 
 
ageing of trade receivables that are past due but not impaired 
 
   group 
  2009 2008 
  £m £m 
neither impaired nor past due  655 574 
not impaired but overdue by less than 3 months  635 641 
not impaired but overdue by between 3 and 6 months  25 28 
not impaired but overdue by more than 6 months  05 04 
impaired  53 44 
impairment provision  53 44 
  1320 1247 
 
the carrying amounts of trade and other receivables are denominated in the following currencies 
  
   group company
  2009 2008 2009 2008
  £m £m £m £m
 sterling  1889 1917 1328 840
 euro  1291 1114 1415 995
 canadian dollar  11 04 06 05
   3191 3035 2749 1840
       shanks  annual report 2009      98  
 
18 cash and cash equivalents     
    group  company
   2009 2008 2009 2008
   £m £m £m £m
 cash at bank and in hand  150 343 56 320
 short term deposits  120 189 – 56
   270 532 56 376
      
 the carrying amounts of cash and of cash equivalents are denominated in the following currencies 
      
    group  company
   2009 2008 2009 2008
   £m £m £m £m
 sterling  52 124 56 179
 euro  206 396 – 197
 canadian dollar  12 10 – –
 us dollar  – 02 – –
   270 532 56 376
      
19 borrowings     
    group  company
   2009 2008 2009 2008
   £m £m £m £m
 current borrowings     
 bank overdrafts and short term loans  67 – – –
 senior notes  146 – 146 –
 bank loans  42 45 – –
 finance lease obligations  52 36 – –
   307 81 146 –
 noncurrent borrowings     
 senior notes  332 411 – 125
 bank loans  3616 3207 1234 1160
 interest rate swaps  156 35 – –
 finance lease obligations  102 65 – –
   4206 3718 1234 1285
  shanks  annual report 2009      99  
the carrying amounts of borrowings are denominated in the following currencies 
 
      group company
     2009 2008 2009 2008
     £m £m £m £m
 sterling    1517 1337 160 150
 euro    2819 2393 1220 1135
 canadian dollar    177 69 – –
     4513 3799 1380 1285
        
 the group’s finance lease liabilities are payable as follows 
        
     2009   2008
   minimum   minimum  
   lease   lease  
   payments interest principal payments interest principal
 group  £m £m £m £m £m £m
 less than one year  60 08 52 44 08 36
 between one and five years  100 12 88 58 07 51
 more than five years  17 03 14 17 03 14
   177 23 154 119 18 101
  
 
the group has an option to purchase leased assets at the end of the lease term there are no
restrictions imposed by lessors to take out other debt or leases 
  
20 trade and other payables and other noncurrent liabilities 
        
      group  company
     2009 2008 2009 2008
     £m £m £m £m
 current liabilities       
 trade payables    927 799 06 02
 other tax and social security payable    156 141 01 01
 other payables    90 104 02 07
 accruals and deferred income    538 570 22 25
 deferred consideration    57 – – –
 unprocessed waste    148 141 – –
 government grants    01 – – –
     1917 1755 31 35
 noncurrent liabilities       
 amounts owed to group undertakings   – – 4257 3763
 deferred consideration    178 182 – –
 government grants    02 03 – –
     180 185 4257 3763
        
 
the carrying amounts of trade and other payables and other noncurrent liabilities are denominated in 
the following currencies 
        
      group  company
     2009 2008 2009 2008
     £m £m £m £m
 sterling    1741 331 1399 828
 euro    345 1604 2889 2970
 canadian dollar    11 05 – –
     2097 1940 4288 3798
  shanks  annual report 2009      100  
 
21 provisions  
 
    group company 
  
site 
restoration    
  
and 
aftercare other total other 
  £m £m £m £m 
at 31 march 2008  256 68 324 31 
provided – cost of sales  04 08 12 – 
released – cost of sales  15 01 16 – 
released – administrative expenses  – 02 02 02 
finance charges – unwinding of discount  12 – 12 – 
utilised  07 08 15 05 
exchange  34 04 38 – 
at 31 march 2009  284 69 353 24 
current  04 26 30 24 
noncurrent  280 43 323 – 
at 31 march 2009  284 69 353 24 
current  05 36 41 31 
noncurrent  251 32 283 – 
at 31 march 2008  256 68 324 31 
site restoration 
site restoration provision as at 31 march 2009 relates to the cost of final 
capping and covering of the landfill sites the group’s minimum unavoidable 
costs have been reassessed at the year end and the net present value fully 
provided for 
an element of the closing provision relates to costs of £04m that are expected 
to be paid next year the remaining part of the provision relates to restoration 
costs that are expected to be paid over a period of up to twenty five years from 
today these costs may be impacted by a number of factors including changes 
in legislation and technology 
aftercare 
post closure costs of landfill sites including such items as monitoring gas and 
leachate management and licensing have been estimated by management 
based on current best practice and technology available these costs may be 
impacted by a number of factors including changes in legislation and 
technology the dates of payments of these aftercare costs are uncertain but 
are anticipated to be over a period of approximately thirty years from closure of 
the relevant landfill site 
other 
other provisions principally cover onerous leases warranties and indemnities 
the net present value of the rental on vacant leasehold properties has been 
provided in full these payments will be made over the next five years under 
the terms of the agreements for the disposal of the united kingdom landfill and 
power and other united kingdom operations the company has given a number 
of warranties and indemnities to the purchasers which may give rise to 
payments 
  shanks  annual report 2009      101  
 
22 retirement benefit schemes 
 
   group 
retirement benefit costs  2009 2008 
  £m £m 
uk defined contribution schemes  06 05 
uk funded defined benefit schemes  10 15 
overseas pension schemes  75 57 
total pension cost  91 77 
a united kingdom 
the group and company’s principal pension scheme is the shanks group 
pension scheme which covers eligible united kingdom employees and has 
both funded defined benefit and defined contribution sections the group also 
has two other small funded defined benefit schemes which are included in the 
defined benefit disclosures below pension costs for the defined benefit section 
are determined by an independent qualified actuary on the basis of triennial 
valuations using the projected unit method 
assumptions 
the most recent actuarial valuation of the principal funded defined benefit 
pension scheme operated by the group dated 5 april 2006 has been updated 
by independent qualified actuaries to take account of the requirements of ias 
19 employee benefits in order to assess the liabilities of these schemes at 31 
march 2009 the main assumptions were as follows 
 
  2009 2008 
   pa  pa 
discount rate  66 69 
future salary growth  40 52 
rate of increase in pensions payment fixed 3  30 30 
rate of increase in pensions payment cap 5  29 36 
rate of increase in pensions payment cap 25  21 24 
rate of price inflation  30 37 
the mortality assumptions are based on standard mortality tables which allow 
for future mortality improvements the assumptions are that a member currently 
aged 65 will live on average for a further 22 years if they are male and for a 
further 24 years if they are female the assumptions used by the independent 
qualified actuaries are the best estimates chosen from a range of possible 
actuarial assumptions 
income statement 
    2009 2008 
    £m £m 
operating profit  current service cost  10 15 
other finance items    
  interest charge on scheme liabilities  60 58 
  expected return on scheme assets  69 72 
    09 14 
net pension cost before tax  01 01 
  shanks  annual report 2009      102  
 
statement of recognised income and expense 
    
  2009 2008 
  £m £m 
loss on actual return less expected return on scheme assets  165 76 
experience losses arising on scheme liabilities  01 03 
gain arising on changes in assumptions underlying the present value of the 
scheme liabilities  43 233 
actuarial loss gain  121 160 
cumulative actuarial gains and losses recognised in the statement of 
recognised income and expense since 1 april 2004 are £39m 2008 £160m   
 
history of experience gains and losses 
  2009 2008 2007  2006 2005 
market value of scheme assets £m  863 974 984  941 716 
present value of scheme liabilities £m  873 880 1068  1044 885 
deficit surplus  in the schemes £m  10 94 84  103 169 
experience adjustments arising on scheme assets 
£m  165 76 08  117 18 
 of scheme assets  191 78 08  124 25
experience adjustments arising on scheme 
liabilities £m  01 03 15  – 08 
 of scheme liabilities  01 03 14  – 09
balance sheet 
the aggregate fair values of the assets in the group’s defined benefit schemes 
the aggregate net pension liabilities and their expected weighted average long 
term rates of return are set out below 
 
 
expected long term
rate of return 
net pension
fund 
plan assets as
 of total assets 
 2009 2008 2009 2008 2009  2008 
  pa  pa £m £m    
equities 85 86 501 619 581  636
government bonds 40 46 355 348 411  357
corporate bonds 50 53 04 04 05  04
cash 43 60 03 03 03  03
total market value of assets 863 974 1000  1000
present value of scheme liabilities 873 880  
net deficit surplus in the schemes 1094  
related deferred tax asset liability 03 26  
net pension liability asset  0768  
 
the overall expected rate of return on scheme assets is 66 2008 71 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 long term rate of return on 
each asset class is set out within this note the overall expected rate of return is 
then derived by aggregating the expected return for each asset class over the 
actual asset allocation for the schemes as at 31 march 2009  shanks  annual report 2009      103  
at 31 march 2009 the ias 19 net retirement deficit was £10m 2008 surplus 
£94m the change is due to a £165m decrease in assets as a result of the 
change in market value the amount of the surplus varies if the main financial 
assumptions change particularly the discount rate if the discount rate 
increased or decreased by 025 the ias19 asset would increase or decrease 
by circa £39m 
 
movement in scheme assets during the year 
  2009 2008 
  £m £m 
at 1 april   974 984 
expected return on plan assets  69 72 
actual return less expected return on plan assets  165 76 
employer contributions  18 19 
member contributions  04 04 
benefits paid  37 29 
at 31 march   863 974 
movement in scheme liabilities during the year 
  2009 2008 
  £m £m 
at 1 april   880 1068 
current service cost  10 15 
interest cost on plan liabilities  60 58 
experience gains  01 03 
changes in assumptions  43 233 
member contributions  04 04 
benefits paid  37 29 
at 31 march   873 880 
 
the estimated contributions expected to be paid to the schemes in the year 
ending 31 march 2010 are £11m 
b overseas 
in the netherlands employees are members of either a multiemployer pension 
scheme or other similar externally funded schemes these schemes are treated 
as defined contribution plans as it is not possible to separately identify the 
group’s share of the assets and liabilities of those schemes the group has 
been informed by the schemes that it has no obligation to make additional 
contributions in the event that the schemes have an overall deficit in belgium 
the group operates small defined contribution schemes the total cost in the 
year for overseas pensions was £75m 2008 £57m 
 
23 called up share capital 
  2009 2008 
group and company  £m £m 
authorised 350 million 2008 350 million ordinary shares of 10p each  350 350 
allotted called up and fully paid 238 million 2008 237 million ordinary 
shares of 10p each  238 237 
 
during the year 1091422 2008 1997798 ordinary shares were allotted 
following the exercise of options under the company’s long term incentive 
plan and executive and savings related share option schemes for an 
aggregate consideration of £662289 2008 £2346545 further disclosures 
relating to sharebased payments are set out in note 5 
  shanks  annual report 2009      104  
24 statement of changes in shareholders’ funds 
 
  share share exchange retained   
  
capital
 
premium
 
reserve
 
earnings 
 
total
 
group  
£m
 
£m
 
£m
 
£m 
 
£m
 
at 31 march 2007  235 940 11 1051  2237 
recognised income and expense for the year  – – 281 396  677 
dividends paid  – – – 143  143 
sharebased payments  – – – 08  08 
tax on sharebased payments  – – – 02  02 
other reserves movement  – – – 12  12 
issue of share capital  02 34 – –  36 
at 31 march 2008  237 974 292 1298  2801 
recognised income and expense for the year  – – 350 23  327 
dividends paid  – – – 150  150 
sharebased payments  – – – 08  08 
tax on sharebased payments  – – – 04  04 
other reserves movement  – – – 13  13 
issue of share capital  01 18 – –  19 
at 31 march 2009  238 992 642 1124  2996 
 
the exchange reserve comprises all foreign exchange differences arising since 
1 april 2005 from the translation of the financial statements of foreign 
operations as well as from the translation of liabilities that hedge the group’s 
net investment in foreign operations 
 
  share share retained  
  
capital
 
premium
 
earnings
 
total
 
company  
£m
 
£m
 
£m
 
£m
 
at 31 march 2007  235 1180 318 1733 
recognised income and expense for the year  – – 339 339 
dividends paid  – – 143 143 
sharebased payments  – – 08 08 
tax on sharebased payments  – – 02 02 
other reserves movement  – – 12 12 
issue of share capital  02 34 – 36 
at 31 march 2008  237 1214 508 1959 
recognised income and expense for the year  – – 39 39 
dividends paid  – – 150 150 
sharebased payments  – – 08 08 
tax on sharebased payments  – – 04 04 
other reserves movement  – – 13 13 
issue of share capital  01 18 – 19 
at 31 march 2009  238 1232 396 1866 
  shanks  annual report 2009      105  
25 notes to the cash flow statement 
 
  2009 2008 
group  £m £m 
net cash from operating activities    
operating profit  639 553 
amortisation of intangible assets  55 40 
depreciation of property plant and equipment  459 343 
charge for long term landfill provisions  11 10 
exceptional gain on disposal of property plant and equipment  33 19 
earnings before interest tax depreciation and amortisation “ebitda”  1131 927 
nonexceptional gain on disposal of property plant and equipment  20 12 
decrease in provisions  61 17 
sharebased payments  08 08 
operating cash flows before movements in working capital  1058 906 
increase in inventories  26 13 
decrease increase in receivables  189 140 
decrease increase in payables  151 202 
cash generated by operations  1070 955 
income taxes paid  158 84 
net cash from operating activities  912 871 
    
consolidated movement in net debt    
    
  2009 2008 
  £m £m 
net decrease increase in cash and cash equivalents  292 59 
increase in borrowings and finance leases  183 396 
amortisation of loan fees  05 09 
exchange loss  375 318 
change in fair value of interest rate swaps  121 29 
movement in net debt  976 693 
net debt at beginning of year  3267 2574 
net debt at end of year  4243 3267 
    
analysis of net debt    
    
  at at 
  31 march 31 march 
  2009 2008 
  £m £m 
cash and cash equivalents  270 532 
current borrowings  307 81 
noncurrent borrowings  4206 3718 
total group net debt  4243 3267 
    
  at at 
  31 march 31 march 
  2009 2008 
  £m £m 
core business net debt  2900 2117 
pfi companies and other project finance net debt  1187 1115 
total group net debt before fair value of interest rate swaps  4087 3232 
fair value of pfi interest rate swaps  156 35 
total group net debt  4243 3267 
  shanks  annual report 2009      106  
26 capital commitments 
 
  2009 2008 
group  
£m
 
£m
 
contracts placed for future capital expenditure on financial assets  18 110 
contracts placed for future capital expenditure on property plant and equipment  266 155 
share of joint venture future capital expenditure  74 06 
the company had no capital commitments at 31 march 2009 2008 £nil      
 
27 financial commitments 
 
  2009 2008 
group  
£m
 
£m
 
commitments under noncancellable operating leases expiring    
within one year  74 68 
later than one year and less than five years  325 330 
after five years  524 489 
  923 887 
future minimum lease payments expected to be received under noncancellable 
subleases  06 14 
  917 873 
 
the company has commitments under noncancellable leases of £05m 
expiring in between two and five years 2008 £05m  
 
28 contingent liabilities 
group and company 
under the terms of the sale agreement with terra firma for the disposal of the 
group’s landfill and power operations the group has given a number of 
indemnities and warranties relating to the disposed operations 
the company and certain subsidiaries have in the normal course of business 
given guarantees and performance bonds relating to the group’s contracts in 
addition the company has contingent liabilities in respect of both vat and hm 
revenue  customs group payment arrangements of £02m 2008 £03m 
the company has given guarantees in respect of the group’s and subsidiary 
undertakings’ bank borrowing facilities totalling £292m 2008 £286m 
joint ventures 
the group’s joint ventures have no significant contingent liabilities 
 
29 related party transactions 
 
a transactions between the company and its subsidiaries 
a list of the company’s principal subsidiaries is set out on page 108 
transactions with subsidiaries relate to interest on intercompany loans and 
management charges net interest expense was £109m 2008 £112m and 
management charges received were £21m 2008 £20m total outstanding 
balances are listed in notes 17 and 20 
b remuneration of key management personnel 
key management comprises the board of directors and the managing directors 
of the country operations the disclosures required by the companies act 1985 
and those specified by the financial services authority relating to directors’ 
remuneration including pension benefits and incentive plans interests in  shanks  annual report 2009      107  
shares share options and other interests are set out within the remuneration 
report on pages 52 to 59 and form part of these financial statements the 
aggregate emoluments paid to the country managing directors was £960000 
 
30 post balance sheet events 
on 7 april 2009 the group signed an agreement to refinance its £250 million 
core bank facility the new facility is a €360 million facility expiring in april 2012 
provided by a club comprising six banks the new facility is denominated in 
euros but can be drawn in sterling or canadian dollars the cost of the facility 
both in terms of the upfront arrangement fees and interest margin over libor 
although significantly higher than in the past is in line with current market 
norms the facility contains a requirement for interest rates to be hedged and 
this was met by the group entering on 15 may 2009 into a two year fixed 
interest swap with a principal of €180m from the three month libor 
commencing 9 july 2009 underwritten at an effective interest rate of 187 
 
on 14 may 2009 the group completed the sale of the 50 holding in avondale 
environmental limited for a consideration of up to £275m with £3m deferred 
for 12 months £6m payable over the next seven years and £3m contingent on 
planning approval for an increase in the landfill void  as a part of the 
transaction the group has entered into a five year supply agreement with 
avondale environmental limited which guarantees a certain minimum tonnage 
at a preagreed price which increases annually in line with the retail price 
index  during the year to 31 march 2009 avondale environmental limited 
made a pretax profit of £79m with net assets of £103m  in the year to 31 
march 2009 the group received total dividends of £15m 
 
on 21 may 2009 the company announced proposals to raise approximately 
£667m net of expenses by way of a 2 for 3 rights issue of 158679867 
rights issue shares at a price of 45p per rights issue share a prospectus 
detailing these proposals and convening an extraordinary general meeting will 
be published and posted to shareholders 
   shanks  annual report 2009      108  
subsidiary undertakings and joint ventures 
at 31 march 2009 
subsidiary undertakings 
the company held through wholly owned subsidiaries 100 of the issued share 
capital of the following principal trading subsidiaries unless otherwise stated all of 
which have been consolidated in the group’s financial statements 
 
  country of incorporation
principal group subsidiary undertakings  
shanks nederland bv  netherlands
icova bv  netherlands
bv van vliet groep milieudienstverleners  netherlands
vliko bv  netherlands
klok containers bv  netherlands
transportbedrijf van vliet bv “contrans”  netherlands
afvalstoffen terminal moerdijk bv “atm”  netherlands
reym bv  netherlands
smink beheer bv  netherlands
orgaworld bv 82  netherlands
shanks sa  belgium
shanks hainaut sa  belgium
shanks liègeluxembourg sa  belgium
shanks bruxelles sa  belgium
shanks vlaanderen nv  belgium
shanks transport nv  belgium
foronex nv  belgium
shanks waste management limited  uk
orgaworld canada ltd  canada
  
subsidiary undertakings holding pfi contracts  
shanks argyll  bute limited  uk
elwa limited  uk
shanks dumfries and galloway limited  uk
  shanks  annual report 2009      109  
joint ventures 
the company held through wholly owned subsidiaries the following interests in 
material joint venture companies all of which operate as waste management 
companies the group’s share of profits and gross assets and liabilities have been 
incorporated in the group’s financial statements 
 
  group most recent country of
 holdingyear endincorporation
avondale environmental limited 50 31 march 2009 uk
caird bardon limited 50 31 december 2008 uk
geohess uk limited 50 31 december 2008 uk
vare holdings sprl 50 31 december 2008 belgium
silvamo nv 50 31 december 2008 belgium
marpos nv 45 31 december 2008 belgium
  shanks  annual report 2009      110  
consolidated five year financial summary 
at 31 march 2009 
 
  2009 2008 2007 2006 2005 
  ifrs ifrs ifrs ifrs ifrs 
  £m £m £m £m £m 
consolidated income statement      
revenue  6965 5637 5085 4425 4204
trading profit from continuing operations
1
  664 559 473 389 360
finance charges – interest  150 85 58 42 47
finance charges – other  29 26 12 07 06
profit from continuing operations before exceptional      
items and tax underlying profit  485 448 403 340 307
amortisation of acquisition intangibles  38 25 11 – –
exceptional items  108 10 69 37 110
profit before tax from continuing operations  339 413 461 303 197
tax  91 130 148 105 71
exceptional tax  184 – – – –
profit after tax from continuing operations  64 283 313 198 126
profit after tax from discontinued operations  – – – 106 650
profit for the year  64 283 313 304 776
      
consolidated balance sheet      
noncurrent assets  8744 7266 5618 4660 4337
other assets less liabilities  1505 1198 807 686 660
net debt  4243 3267 2574 1888 1787
net assets  2996 2801 2237 2086 1890
share capital and share premium  1230 1211 1175 1172 1166
reserves  1766 1590 1062 914 724
total equity  2996 2801 2237 2086 1890
financial ratios      
adjusted basic earnings per share  145p 129p 117p 96p 87p
basic earnings per share  27p 120p 133p 130p 331p
dividends per share  21p 62p 59p 57p 57p
1
trading profit from continuing operations is stated before exceptional items and amortisation of acquisition 
intangibles  shanks  annual report 2009      111  
shareholder information  
at 31 march 2009 
analysis of shareholders as at 31 march 2009 
 
  holders  shares held  
private shareholders  2342 616 12027638  51 
corporate shareholders  1457 384 225992163  949 
  3799 1000 238019801  1000 
 
size of shareholding   holders  shares held  
1 –     5000  2876 757 5177688 22 
5001 –   25000  565 149 5967178 25 
25001 –   50000  90 24 3270966 14 
50001 – 100000  61 16 4699496 20 
100001 – 250000  70 18 11810712 49 
250001 – 500000  41 11 15241573 64 
over 500000  96 25 191852188 806 
   3799 1000 238019801 1000 
registrar services 
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 
if you receive more than one copy of our annual report it may be that your shares 
are registered under two or more names should you wish to combine such holdings 
into a single account please contact computershare 
electronic shareholder communication 
following the introduction of new legislation 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 register for this option by registering 
your email address at wwwetreeukcomshanksplc you will require your srn or 
shareholder reference number which can be found on either your share  shanks  annual report 2009      112  
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 are 
available on the shanks group plc website including the annual report  
 
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 
 
low cost share dealing service 
a low cost execution only sharedealing service for the purchase and sale of shanks 
group plc shares is available from natwest stockbrokers natwest stockbrokers is 
authorised and regulated by the financial services authority and is a member of the 
london stock exchange  natwest stockbrokers waterhouse square 138142 
holborn london ec1n 2th telephone 0870 600 3070   
shareholder warning – unsolicited mail 
in recent years many companies have become aware that their shareholders have 
received unsolicited telephone calls or correspondence concerning investment 
matters these are typically from overseas based ‘brokers’ who target uk 
shareholders offering to sell them what often turns out to be worthless or high risk 
shares in us or uk investments they can be very persistent and extremely 
persuasive it is not just the novice investor that has been duped in this way many of 
the victims had been successfully investing for several years shareholders are 
advised to be very wary of any unsolicited advice offers to buy shares at a discount 
or offers of free company reports 
if you receive any unsolicited investment advice 
 
• make sure you get the correct name of the person and organisation and make a 
record of any information they give you 
• check that they are properly authorised by the fsa before getting involved you 
can check at wwwfsagovukregister 
• the fsa also maintains on its website a list of unauthorised overseas firms who 
are targeting or have targeted uk investors any approach from such an 
organisation should be reported to the fsa so that this list can be kept up to date 
and any other appropriate action can be considered if you deal with an 
unauthorised firm you would not be eligible to receive payment under the 
financial services compensation scheme the fsa can be contacted by 
completing an online form at 
wwwfsagovukpagesdoingregulatedlawalertsformshtml or if you do not have 
internet access on 0845 606 1234 and 
• inform our registrars on 0870 707 1290 
 
details of any sharedealing facilities that the company endorses will be included in 
company mailings more detailed information on this or similar activity can be found 
on the fsa website wwwfsagovukconsumer   
share price information 
on 31 march 2009 the middle market price of shanks group plc ordinary 10 pence 
shares was 5575 pence per share having varied during the year between a low of 
465 pence and a high of 263 pence share price information on shanks group plc is 
widely available in the financial press and on financial websitesthe isin  shanks  annual report 2009      113  
“international securities identification number “ code for the company’s ordinary 
shares is gb0007995243 and the sedol “stock exchange official daily list” 
number is 0799524  
sharegift 
if shareholders have only a small number of shares whose value makes it 
uneconomic to sell they may wish to consider donating them to the charity sharegift 
registered charity no 1052686 further information may be obtained from their 
website at wwwsharegiftorg or by calling 020 7930 3737 
company websites 
the shanks group plc website containing company details financial information 
and current news can be found at wwwshanksplccouk the website for shanks 
companies within belgium can be found at wwwshanksbe that for the netherlands 
at wwwshanksnl and that for the united kingdom at wwwshankscouk   
financial calendar 
 
23 july 2009  annual general meeting 
november 2009  announcement of interim results and dividends 
january 2010  payment of interim dividend 
31 march 2010  2010 financial year ends 
june 2010  announcement of 2010 results and dividend recommendation 
 
  shanks  annual report 2009      114  
company information 
  
corporate head office  registered office  group company secretary
shanks group plc  shanks group plc  philip griffinsmith fcis 
dunedin house  16 charlotte square   
auckland park mount farm  edinburgh   
milton keynes  eh2 4df   
buckinghamshire mk1 1bu     
     
tel 00 44 0 1908 650580  registered in scotland no sc077438 
fax 00 44 0 1908 650651     
website wwwshanksplccouk     
email infoshanksplccouk     
 
principal offices 
  
the netherlands  belgium  united kingdom 
shanks nederland  shanks belgium  shanks waste management 
po box 171  rue edouard belin 31  dunedin house 
3000 ad rotterdam  be1435  auckland park mount farm 
the netherlands  mont saint guibert  milton keynes 
  belgium  buckinghamshire mk1 1bu 
     
tel 00 31 0 10 280 5300  tel 00 32 0 1023 3660  tel 00 44 0 1908 650650 
fax 00 31 0 10 280 5311  fax 00 32 0 1023 3661  fax 00 44 0 1908 650699 
website wwwshanksnl  website wwwshanksbe  website wwwshankscouk 
email infoshanksnl  email infoshanksbe  email infoshankscouk 
corporate advisers 
  
auditors  financial advisers  corporate brokers 
pricewaterhousecoopers llp  greenhill  co international llp  rbs hoare govett limited 
     
principal bankers  solicitors  financial public relations advisers 
barclays bank plc  ashurst llp  tulchan communications group 
fortis bank sa  dickson minto ws   
hsbc bank plc     
ing bank nv     
rabobank international     
the royal bank of scotland plc     
     
 


Summary:
 shanks  annual report 2009      3  
trading performance remains resilient despite the economic 
slowdown  the approach to delivering our strategy has been 
adapted to increase the focus on maximising the short to medium 
term cash position 
 
 
chairman’s statement 
 
the economic environment in which the group operates changed dramatically during 
the second half of 2008 with all countries in the eurozone now experiencing sharp 
declines in gdp  this has led to reductions in the amount of consumer and industrial 
waste produced and a fall in the value of materials recovered from waste the speed 
and severity of this slowdown in economic activity impacted on all companies in the 
waste sector   
 
against this background the financial results for the year demonstrate the robust 
makeup of our business portfolio  underlying profit before tax rose 8 to £485m  
this reflected growth of 13 in the first half year slowing to 4 in the second half as 
a result of the progressively deteriorating economic conditions   
 
people 
the change in economic outlook during the year has required our people to adapt 
very rapidly we have strong operational management across the group and they 
have responded quickly and decisively to the challenges facing them  on behalf of 
the board i would like to thank all of our employees for their commitment and 
creativity  we have achieved some major milestones during the year and they 
should all feel proud of these achievements   
 
in april 2009 we announced the appointment of chris surch as group finance 
director on the departure of fraser welham  prior to joining shanks chris held a 
number of senior positions for smiths group plc most recently as finance director of 
the specialty engineering division  chris brings years of industry and operational 
expertise to shanks from his time at smiths group and previously ti group plc  on 
behalf of the board i would like to record our appreciation to fraser for everything he 
has done over the last thirteen years with the group   
 
strategic progress 
the tougher external environment will require us to be even more focused and 
disciplined in the pursuit of our long term strategy for the group   
 
in response to the quite exceptional prevailing economic conditions the stewardship 
of the group’s cash position has become a key strategic priority  we are taking 
action to realise value from noncore assets and have initiated a range of cost 
saving measures across the group in addition efforts to improve the efficient use of 
capital in the business have resulted in a marked reduction in expenditure on 
maintenance and a sharply improved working capital performance   
 
these actions confirm our determination to position the group to participate in the 
market’s transition to more sustainable waste management solutions  despite the 
present economic climate the environmental challenges facing society have not 
changed and to meet these challenges the pace of legislative change has 
accelerated  in this context it was pleasing to see the uk government’s recent  shanks  annual report 2009      4  
budget commitment to provide significant funding to support the pfi process and the 
decision to further increase landfill tax   
 
with a portfolio offering proven landfill diversion and waste to energy technologies 
ranging from anaerobic digestion biological treatment and incineration shanks is 
well positioned to selectively realise very attractive opportunities in our core markets   
 
financial position 
in april 2009 we announced the successful refinancing of the group’s £250m 
medium term bank facility  this was a significant achievement which secured an 
increase in funding from an expanded group of financial institutions in a very difficult 
funding market   
 
in this recessionary environment capacity to continue to invest will be critical to the 
long term market positioning and profitability of the group   
 
strengthening our capital structure 
the group has historically maintained what was considered to be an appropriate 
level of borrowings given the prevailing economic environment  given the prospect 
of a difficult trading environment in 200910 we intend to continue our actions to 
preserve cash and reduce net debt  in order to further strengthen the position of the 
group the board believes it is both appropriate and in the best interests of its 
shareholders to raise net proceeds of approximately £667 million equity via a rights 
issue which we announced on 21 may 2009 
 
we intend to use the net proceeds of this rights issue to reduce the level of 
indebtedness which in the short term will increase headroom and ensure balance 
sheet strength in case of any further unforeseen deterioration in market conditions  
we have a clear growth strategy in place based around three key areas recycling 
organic processing including orgaworld and uk pfi and funding for these will be 
provided by the proceeds of targeted noncore disposals and also strong cash flow 
generation once economic conditions start to improve 
 
dividend 
the company will not be recommending a final 2009 dividend  following the rights 
issue the board expects to pay an interim and final dividend for the year to 31 march 
2010 and then to implement a progressive dividend policy within a cover range of 
20 to 25 
 
the board 
the board has also had to adapt very quickly to the changing economic 
circumstances and i would like to thank my board colleagues for their unreserved 
commitment and professionalism in addressing the challenges facing the group   
 
for investors these are also difficult times and it is critically important that they have 
confidence in the qualification and decisions of the board and also that the board 
can be held accountable for its decisions  in recognition of the need to strengthen 
this accountability the board will present to the agm in july a resolution proposing 
the annual reelection of all nonexecutive directors   
 
remuneration 
the board is mindful of the understandable public and investor focus on the 
remuneration of senior executives in the current climate particularly in those 
companies where earnings are under pressure the remuneration report sets out 
the steps we have taken to demonstrate responsiveness to these concerns whilst  shanks  annual report 2009      5  
also ensuring the continued motivation of our senior management team in what are 
quite exceptional operating conditions 
 
corporate responsibility 
shanks operates in a sector which is increasingly seen to have an important role in 
managing the impact of climate change and improving the reuse of the world’s finite 
resources this year the group will publish its first corporate responsibility report 
which sets out some clear commitments and reports progress on a number of 
important indicators  this will include a calculation of the group’s carbon footprint 
together with the impact our activities can have on wider carbon emissions we have 
also established a group corporate responsibility committee which reports directly 
into the executive committee to ensure a consistent and committed focus across the 
group 
 
outlook 
the outlook for the near term is undoubtedly more challenging than twelve months 
ago in the netherlands our exposure to the construction sector has seen the 
profitability of our dutch solid waste business reduce over recent months and other 
parts of the business have also been impacted however we have taken decisive 
action to reduce costs and conserve cash and the benefits of recent investments will 
come through during the current financial year   
 
we expect the current year to remain challenging but the group is well positioned 
with strong market positions and proven technologies to deliver attractive earnings 
growth once the wider economic outlook improves   
 
 
 
 
adrian auer 
chairman