1. WASTE AND ENVIRONMENT GROUP ANNUAL REViEW 2011
An ever changing landscape
Waste and environmental
services in the UK

2. Contents
03 introduction
04 Sector drivers
11 Current issues
16 M&A activity and trends
20 Grant Thornton in the waste and
environment sector
21 Case study: OSS Group
22 Case study: Tradebe
23 Case Study: DCC plc
24 Case study: Avondale
25 How we can help
27 Appendix
2 An ever changing landscape Waste and environmental services in the UK 2011

3. Introduction to our 2011
Annual Report
Welcome
Welcome to the fifth edition of our annual ‘Ever changing Landscape’ series. As in
previous years we have aimed to provide an overview of the key issues affecting the
sector in 2011 as well as reviewing M&A trends over the last year. The sub-sectors
covered by our annual report are detailed below.
Our latest edition also provides an update on key issues directly affecting your
business such as the taxation regime within the waste and environmental sector and
the impact of Government policy
As ever, we would be interested in your feedback on our report. If you have any
comments please let us know by contacting either ali.sharifi@uk.gt.com or
nigel.mattravers@uk.gt.com.
Waste Environmental Energy Pollution
support efficiency control
services
integrated waste Environmental Buildings Pollution control
consultancies technologies
Recycling Transport
Compliance and Environmental
Hazardous and technical advice Automation and sensing and testing
clinical control systems products
Carbon and other
Waste technology assets trading Smart metering Clean-up and
industrial and Smart grids remediation
Other general
commercial environmental
Energy from waste services
e.g. street scene,
Landfill arboriculture etc.
An ever changing landscape Waste and environmental services in the UK 2011 3

4. Section 1:
Sector drivers

5. Market dynamics
2011 Market Drivers These priorities are backed up by Evidencing the progress that’s been
national and European legislation which made, recycling rates continue to
The waste and recycling manifests itself in higher levels of waste increase with the Welsh government
market in England during treatment (rather than landfill), growth recently confirming they have reached a
in the use of recycled materials and 49% rate in the 4th quarter of 2011 and
2011 has continued to ever increasing use of technology and have the best rate in the UK (average
develop in line with automation to deliver these. across the country of c. 40% in 2011 –
DEFRA’s priorities which These trends are starting to become DEFRA); back in 2000/01 they were at
evident in corporate activity as, for 7% and targets are now 75% for 2025
are essentially driving example, landfill operators now need to and zero waste by 2050.
down waste volumes add value to waste streams in order to From an investment and borrowing
and increasing recycling generate returns and retain contracts. perspective the drivers remain
Within some subsectors (such as wood the same, proven technology and
efficiency. waste), as advancing technology is predictable or secure supply and
diversifying the customer base (for off-take arrangements. The impact
Government priorities
example into biomass plants), securing of the Green Investment Bank (GIB)
(source DEFRA, June 2011)
long term supplies of consistent quality has yet to be determined but the first
• greater focus on waste prevention
waste material is becoming a key priority sectors have been announced
and resource efficiency, within the
priority for businesses. with commercial and industrial waste
waste and resource management
processing and recycling and energy
sector and working with customers
from waste being two of the five sectors.
• achieving higher levels of recycling,
GIB will be a key component of the
by helping customers do the
progression towards a green economy,
right things
complementing other green policies to
• levels of quality for recyclable
help accelerate additional capital into
materials that enable the UK to meet
green infrastructure. The Government
its obligations under the revised
“Our business simply will capitalise the GIB at £3 billion and
Waste Framework Directive and
the waste shipment controls, and couldn’t grow as a pure expects to obtain state aid approval for
landfill business - we the GIB by early 2013. In advance of
ensure the UK recycling system
that, the Government will begin making
can withstand sudden changes in needed to invest to add
investments in green projects, including
market specifications value to waste streams waste, from April 2012.
• in keeping with localism, engaging and the MRF is just the Whilst rising finance has remained
further with local communities to
beginning” difficult, M&A volumes surpassed
improve or maintain a high level
expectations in 2011 with a record
of public confidence in the waste
and resource industry, and foster Derek Cooper, number of deals in the waste sector.
This was driven by an increasing level of
acceptance of new infrastructure. Chairman, Avondale
investment by overseas parties combined
Environmental Ltd with a particularly high number of
acquisitions of both Paper and WEEE
recycling companies.
An ever changing landscape Waste and environmental services in the UK 2011 5

6. One of the hottest topics recently has
been the proposals to amend the Waste
(England and Wales) Regulations 2011 “We continue to see the waste and environmental
which transpose the requirements of the space as a key growth sector, as the legislative
revised Waste Framework Directive into
agenda continues to push development and growth.
domestic law. These bland titles hide
the debate on ensuring the quality of
That said, investment is becoming harder for
recycled materials with on one side the businesses in the sector, as availability of capital
Campaign for Real Recycling saying that becomes more limited, and uncertainty over
the European law requires collection of funding remains”
separate waste streams and on the other
the lobby that considers properly run Nigel Mattravers, Principal Consultant, Grant Thornton
Material Recycling Facilities (MRFs)
processing comingled materials will
produce the same result. Government
has launched a consultation on a code
of practice for MRF operations but we
can expect that this debate will carry on Chart title
through 2012. Source:
During 2011, the waste and
£120
environmental services sector indices
have underperformed the benchmark
£110
FTSE 100 and All Share indices, the
first year this has occurred. This could £100
be indicative of the uncertainties within
the environmental space. The sharp £90
drop in the indices during the summer
of 2011 and fluctuations during the final £80
quarter of 2011 reflected the turmoil in
the financial markets due to the Greek £70
bailout and Eurozone crisis.
£60
11
0
1
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1
11
11
11
11
11
11
11
11
01
01
01
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20
20
20
20
20
20
20
20
20
/2
/2
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4/
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/1
/0
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/0
/1
/1
/1
31
04
04
01
29
27
24
29
26
30
28
25
30
FTSE Environmental Opportunities Waste and Pollution Technology – price index £
FTSE Environmental Opportunities Energy Efficiency – price index £
FTSE Environmental Opportunities All Share – price index £
FTSE All Share – price index £
FTSE 100 All Share – price index £
6 An ever changing landscape Waste and environmental services in the UK 2011

7. Materials pricing update
Prices on the whole have been relatively packaging recycling targets from 69% to equivalent, PERNS, by January 27th
flat in 2011 with nearly all material types 71% for 2011 and 2012. 2012. At the same time Government has
seeing flat or decreasing prices at the end With export demand dropping at come out for consultation on a proposal
of 2011 when compared with the end of the end of 2011 and fears of a possible to significantly increase the targets for
2010. Recycled plastic prices continued double dip recession, more pressure packaging recycling. For plastics the
to increase from the end of 2010 with is expected on PRN prices. However, target could rise from 32% now to 57%
clear and blue PET reaching a high the number of exporters and UK by 2017. This dramatic increase could, in
of £395 per tonne in September 2011, reprocessors accredited to issue PRNs the opinion of some observers, increase
before decreasing back down to £310 has fallen compared to this time last the value of PRNs to £35-£65 rather
per tonne, a gain of over 10 per cent year. The decline in accreditations than the £5 now. This increase in targets
compared to the year-end price in 2010. has prompted fears that UK recycling could provide good opportunities for
Plastic PRN prices increased during targets may be harder to meet in future if the plastic industry but the timescale to
April to June 2011 and then steadily less recycling is recorded because fewer deliver the necessary infrastructure will
dropped towards the end of the year. reprocessors issue PRNs. According be tight.
The DEFRA target for plastics recycling to Environment Agency data, just 49
increased from 29% in 2010 to 32% exporters and 120 reprocessors were
in 2011 which led to slight increases in approved to issue PRNs and their export
price during 2011.
Glass PRN price picked up during
the beginning of 2011 from its decline
at the end of 2010, reaching a high of
£`13.00 per tonne before gradually
dropping steadily for the rest of the year.
After large fluctuations in scrap steel
prices in 2010, prices remained strong
and stable during 2011, although PRN
prices for steel and aluminium continued
their downward trend during 2011. Steel
PRN prices ending the year in 2011 at
£2.00 per tonne, a historic low not seen
since 2007. The drop in prices could
be due to a number of factors. During
the recession in 2008, less overseas
buyers were purchasing materials so less
PRNs were being produced, hence the
value increased significantly to a high
of £85.00 per tonne during November
and December 2008. As demand has
increased during 2010, prices have
dropped. Prices may continue to stay
low during 2012 as DEFRA upped steel
7

8. Median recovered paper, 450
glass and plastic prices 400
Jan 2007 - Dec 2011 350
300 Clear glass container prices
Source: Letsrecycle.com – delivered to collector
£ per tonne
250
Clear and light blue PET
– merchant
200
News and magazines
150
– merchant
100
50
0
7
7
7
7
8
8
8
8
9
9
9
9
0
0
0
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1
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t-0
n-0
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Ju
Ju
Ju
Ju
Oc
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Ap
Ap
Ap
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Ja
Ja
Ja
Ja
Ja
Median PRN prices – £ per 70
PRN/one tonne of mate- 60
rial Jan 2007 - Dec 2011 Glass
Source: Letsrecycle.com 50
Paper
£ per tonne
40
Plastics
30 Mixed energy recovery
Wood
20
10
0
7
7
7
7
8
8
8
8
9
9
9
9
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Ap
Ap
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Ap
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Ja
Ja
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Ja
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Ferrous metal prices 300
Jan 2007 - Dec 2011 250
Source: Letsrecycle.com
200
£ per tonne
No 1 old steel scrap
150
No 2 new steel scrap
100 12A new production
heavy steel scrap
50
0
7
7
7
7
8
8
8
8
9
9
9
9
0
0
0
0
1
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8

9. Legislative landscape
in 2011
Waste policy in England 2011 by targeting appropriate measures and storage. Key elements of the reform
Defra released the long-awaited at those households likely to need package include:
waste policy review and action additional support. • a Carbon Price Floor to reduce
plan for England in June 2011. The On 24 November 2011, £200m investor uncertainty, putting a fair
review brought key objectives for the of new and additional Government price on carbon and providing a
Government in relation to the funding was announced to provide stronger incentive to invest in low-
waste industry a special time-limited ‘introductory’ carbon generation
The EU Waste Framework Directive offer to boost the early take up of the • the introduction of new long-term
calls for 50% of household waste to Government’s Green Deal energy contracts (Feed-in Tariff with
be recycled by 2020, to recover 70% efficiency scheme. Contracts for Difference) to provide
of construction and demolition waste stable financial incentives to invest
by 2020 and for a 35% reduction in Electricity Market Reform in all forms of low-carbon
biodegradable municipal waste landfill On 12 July 2011 the Government electricity generation.
by 2020. published ‘Planning our electric future:
The Waste (England and Wales) a White Paper for secure, affordable Publication of the White Paper marks
Regulations 2011 transpose the revised and low-carbon electricity’. The White the first stage of the reform process. The
EU Waste Framework Directive into Paper sets out key measures to attract Government intends to legislate for the
law and make some changes to the way investment, reduce the impact on key elements of this package during the
waste is managed in England and Wales. consumer bills, and create a secure mix latter half of 2012, and for legislation
They came into force on 29 March 2011. of electricity sources including gas, new to reach the statute book by the end
nuclear, renewables, and carbon capture of Spring 2013, so the first low-carbon
Energy Bill/Energy Act/Green Deal
/Energy Company Obligation
In October 2011, the Energy Bill
received Royal Assent and became
the Energy Act 2011. The Green Deal
creates a new financing framework
to enable the provision of fixed On 24 November 2011, £200m of new
improvements to the energy efficiency and additional Government funding was
of households and non-domestic
properties, funded by a charge on energy announced to provide a special time-limited
bills that avoids the need for consumers ‘introductory’ offer to boost the early take
to pay upfront costs. up of the Government’s Green Deal energy
The Energy Company Obligation
(ECO) take over from existing
efficiency scheme.
obligations to reduce carbon emissions
(the Carbon Emissions Reduction Target
(CERT) and Community Energy Saving
Programme (CESP)), which expire at
the end of 2012. The ECO will work
alongside the Green Deal finance offer
An ever changing landscape Waste and environmental services in the UK 2011 9

10. projects can be supported under its not commence until late 2013, though
provisions around 2014. there are capital grants (RGI Premium
Payments) available before then.
Feed in tariffs
On 7 February 2011, the Government CRC Energy Efficiency Scheme
announced the first comprehensive The CRC is a mandatory scheme aimed
review of the Feed-in tariffs at improving energy efficiency and
(FITs) scheme for small-scale low- cutting emissions in large public and
carbon electricity generation. The private sector organisations. The CRC
Comprehensive Review Phase 1 for began in April 2010. In June 2011 the
solar PV closed on 23 December Department of Energy and Climate
2011 (discussed further in “Funding Change (DECC) published proposals
Uncertainties”). In the first part of to simplify the Scheme in an effort to
2012, the new tariffs for solar PV were further reduce the administrative burden
confirmed, with FITs being reduced by on businesses. DECC will consult on
over 50% from 1st April, with a further draft legislation in February 2012 and
step down in July and 5-10% reductions the changes will come into force from
every six months thereafter. The tariff April 2013.
is to be pegged to cost reductions and
industry growth, in order to provide an Anaerobic Digestion Strategy and
element of certainty for investment. Action Plan for England
The Anaerobic Digestion Strategy and
Renewable Heat Incentive Action Plan for England was published
The Renewable Heat Incentive for in June 2011 by DEFRA. Key actions
non-domestic generators opened for in the Government’s Anaerobic
applications on 28 November 2011 with Digestion (AD) strategy and action
the first successful applicants announced plan include guidance on the cost and On 7 February
in January 2011. The Government has benefits of AD to developers and local 2011, the
provided £860 million in funding. The authorities, evidence on the value of
Government
start of the scheme follows a short delay digestates, developing skills and training
while DECC resolved the scheme’s for AD operators, and highlighting announced the first
compatibility with EU state aid rules ‘best practice’ projects that deliver comprehensive
and re-submitted the draft regulations community benefits. review of the Feed-in
to Parliament. Organisations will be
able to apply to Ofgem for support tariffs (FITs) scheme
under the scheme from Monday 28 for small-scale low-
November and will receive payments carbon electricity
on a quarterly basis for heat generated
over 20 years. During the first quarter
generation.
of 2012 the Government has announced
that support for domestic generators will
10 An ever changing landscape Waste and environmental services in the UK 2011

11. Section 2:
Current issues

12. Funding uncertainties
Investor Confidence is amongst the pigeons. In the case of As one funder commented “how do
large solar farms Government did act I know what number to put into my
Not Being Helped by retrospectively in withdrawing FITs financial model when the tariff could
Government support for such energy facilities change twice before the plant comes
and this caused many well developed on line!”
Nigel Mattravers, projects to collapse. The Government’s All of this debate about the FITs
principal consultant within next action to call for consultation regime has been at a time of other
on domestic solar PV tariffs with a changes with the RHI launch having
Grant Thornton’s Waste and
proposal to retrospectively change the been delayed, the proposed changes
Environment team, comments
value of the tariffs, led to a court case to the banding within the RO scheme
on Investor confidence in the which Government subsequently lost. and the uncertainty over the Electricity
waste sector. Although all of these actions concerned Market Reform. And at a time of
only support for solar PV, the whole global investment uncertainty investor
It was always generally understood renewable funding sector became confidence in the waste sector is waning.
that the British Government stuck increasingly nervous. The Government Government please stop tinkering and
to agreed policies and would not act has now brought out a further give the investors certainty; the size of
retrospectively but in the last year consultation on non-solar projects and the prize does not matter at much as
or so this belief has been upset by with it further uncertainty for investors. knowing what the prize will be.
Government’s actions and so has
unsettled the waste funding market.
Over recent years successive
governments have encouraged new
waste treatment technologies with
support schemes including, amongst
“How do I know what number to put
others, the Renewable Obligation
scheme (RO) and more latterly Feed in into my financial model when the tariff
Tariffs (FITs) and the Renewable Heat could change twice before the plant
Incentive (RHI). Increasingly, however, comes on line!”
government has sought to bring these
incentives under more regular review
and this has brought nervousness Anonymous
amongst potential investors. The first
ripple in the pond of support was
following a review of the RO regime
for new technologies and in particular
‘grandfathering’ rights. It took a few
months to resolve the jitters around
the issue.
But it was the changes to the FITs
for solar PV that really put the cat
12 An ever changing landscape Waste and environmental services in the UK 2011

13. Tax update
Landfill tax mattered was the intent of the Operators
customer or the landfill site operator. Landfill operators should review their
There is a degree of uncertainty in the • The case determined that it was the business model and day to day site
Waste sector as to whether landfill intent of the owner of the material operations to establish if they intend to
tax is due at all where the landfill site that mattered, and the owner of the use materials for purposes outside of
operator intends to use the materials material is the landfill site operator. the list.
that pass over their weighbridge. The • The landfill site operator intended to • Those uses may not be subject
law has developed radically since 2008 use the material in, for example, site to landfill tax if the landfill site
and a further challenge has been raised engineering, and as such there was operator can demonstrate its intent.
in the courts, the first hearing of which not a disposal for landfill For example, the majority of landfill
took place in March 2012. A significant tax purposes. sites are producers of renewable
amount of landfill tax is at stake. All • If the landfill site operator intends to electricity and therefore source
affected businesses should make relevant use the material then it is not subject materials to use as fuel.
claims to protect against time limits as it to landfill tax. • HMRC consider uses outside the list
is likely to be a number of years before a The principle established in the WRG as subject to landfill tax. There are a
final decision is reached by the courts. case has wide implications for the tax, as number of challenges ongoing due
a modern day landfill site is a recovery to the uncertainty regarding the
What is the opportunity for businesses? and reuse business rather than a legal basis.
• Landfill customers should consider disposal business. • The risk of doing nothing is
whether they can recover landfill tax substantial as the business exposes
paid to a landfill operator where it HMRC response itself to claims from customers
should not have been charged. The HMRC were aware of the wider without being able to recover landfill
customers should review the last implication of the WRG case and tax from HMRC.
six years. therefore introduced some new rules, • The operators should consider
• Landfill operators should review the from 1 September 2009, that made making a protective claim as
day to day use of materials received certain uses subject to landfill tax. a minimum.
and make a claim against HMRC,
limited to last four years, for recovery Uses subject to landfill tax Customers
of landfill tax, where they have not • Cover material for short periods Landfill customers should review their
done so already, in order that they are of time. contracts with landfill operators.
able to fund any customer claims. • Temporary hard standing. If HMRC is unsuccessful in their
• Cell bund. view of the legislation, then landfill
What has created the uncertainty? • Temporary screening bund. customers may be due a repayment
A landfill tax case heard in the Summer • Material placed against the liner / of tax from the landfill site operator
of 2008 ‘HM Revenue & Customs v drainage layer to protect the liner / through contract law (depending on
Waste Group Recycling,’ known in the drainage layer. the nature of their arrangement).
sector as the WRG case, radically altered • Temporary storage of ash. A protective claim should be
the landscape. Uses should be identified that may considered as a minimum.
• The case centred on whether the not be subject to landfill tax (i.e. uses
intent to dispose of material that outside the above list).
An ever changing landscape Waste and environmental services in the UK 2011 13

14. Tax update
Capital expenditure Development firstly with the phased withdrawal
The sector is undertaking a significant and abolition of industrial building
– tax relief amount of expenditure. It is devoting allowance in 2008 and secondly with
manpower and expertise to develop the reduction in the tax depreciation
Background
technologies that discover ever on plant from 25% to 20% and then a
The tax relief available on capital
more innovative products from wall further reduction to 18% for the 2012
expenditure is a ‘hot topic’ for any
insulation to new fuels, and abilities to financial year.
capital asset intensive business in these
sort and recycle materials to enhance The drawback of this approach is that
challenging economic times. This is
recoverability. clearly this has had a negative impact on
particularly relevant for the Waste
the long term view of investment
sector which is responsible for the
Changes to tax relief over recent years in the UK waste sector it effectively
development of the next generation
The Government has part funded the reduces the tax benefits of
of the UK’s waste infrastructure and
reduction in the corporation tax rates such investment.
contributing to the UK’s renewable
from 28% to 22% by reducing the tax
energy needs.
relief available on capital expenditure, Technologies
A further difficulty for capital
investment in the waste sector is that
many technologies have ‘significant
structures’ i.e. many will be housed in
large buildings, which are unlikely to get
tax relief for, for example:
• Energy from Waste;
• Composting Facilities;
• Mechanical Biological Treatment;
• Anaerobic Digestion;
• Materials Recovery Facility.
This further complicates the field, and
can make policies appear to be mis-
aligned - on the one hand the sector is
being asked to undertake innovation
and development, but at the same time
there is complexity around available tax
reliefs, and a decline in levels of relief
available for capital investment.
However despite the doom and gloom,
there are still a number of tax incentives
available to investors including:
14 An ever changing landscape Waste and environmental services in the UK 2011

15. Key points for investors to consider
Projects should be fully assessed to identify all items of plant. This can be wide for tax
purposes and will include bunds, push walls, odour systems, CCTV, etc that may be building
for accounting purposes.
Where assets are under construction and the business is trading it is sensible to identify the
plant and claim tax depreciation as the expenditure is incurred.
Where a significant amount of innovation and development is undertaken, some of the
expenditure should qualify for research and development tax relief.
If the projects under construction are receiving capital grants or subsidies then make sure the
agreements specify the funds are intended for certain capital expenditure that will not qualify
for tax depreciation.
A number of the projects under construction are constructed in accordance with the BREEAM
standards for sustainability. This will invariably mean that there are a number of assets that
qualify for enhanced capital allowances (100% tax write off in year 1).
The Government has made enhanced capital allowances available in the Anaerobic Digestion
i.e. biomass, and Combined Heat and Power plant sectors to specifically encourage
innovation, investment, and roll out across the UK.
Consider entering contracts with long term guaranteed tariffs i.e. RHI. These tariffs provide a
level of return that is intended to cover the innovation and development and compensate for
the capital expenditure that may not receive tax relief.
If the expected economic life of the asset is less than two years is the expenditure revenue in
nature and therefore tax deductible.
An ever changing landscape Waste and environmental services in the UK 2011 15

16. Section 3:
M&A activity
and trends

17. Historic deal volumes
– waste sector
Deal volumes
Despite on-going economic uncertain-
ties in the UK and European market, 48
M&A volumes surpassed expectations
in 2011 with a record number of deals in 39
the waste sector. 37
This was in part driven by an increas- 33
ing level of acquisitions made by over- 28
seas parties (11 deals in 2011 vs 8 deals in 24
2010). Most notably of all however was
the significant increase in acquisitions
of paper recycling companies (7 deals
in 2011 vs 1 deal in 2010) and WEEE
recycling companies (5 deals in 2011 vs 2
deals in 2010).
2006 2007 2008 2009 2010 2011
Based on figures this year we expect
2012 deal volumes to remain relatively
constant with 2011.
Note on data collection
Please note that for comparison pur-
poses the deal volume charts above are 14 14
for waste deals only. As we have only
started collecting data on energy effi-
ciency and environmental services M&A 11 11
recently we will only be able to provide
9 9 9
historical comparisons of these ‘new’
8
subsectors from our next annual review.
In the meantime please see the next
page for further details of the full sector
breakdown for 2011 which provides a
snapshot of the market over the last
12 months.
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2010 2010 2010 2010 2011 2011 2011 2011
An ever changing landscape Waste and environmental services in the UK 2011 17

18. Deals in 2011 by type
Deals by subsector waste and waste management sectors,
Number of deals by subsector Our sector review continues to being areas that tend to be made up of
Source: MergerStat highlight the growing importance of a large number of smaller-businesses,
the consultancy and energy efficiency providing opportunities for businesses
space– this sub-sector now represents to grow by consolidation.
over ¼ of total deals in 2011. We forecast that the leaning towards
The continued activity in the niche/specialist companies will continue
consultancy and energy efficiency sub- going forward with the subcategories
sectors perhaps indicates businesses of energy from waste and organic waste
are buying-in these capabilities as these recycling accounting for the greatest
markets remain buoyant. number of transactions, in addition to
The chart also illustrates the significant opportunities in
continuing concentration of deal energy efficiency.
volumes in the recycling, hazardous
Recycling 50%
Energy efficiency 17%
Consultancy 10%
Hazardous and industrial waste 7%
Waste management 4%
Waste equipment 4%
Recycling deals Sims Metal Management Limited of
Medical waste 2%
Once again we have broken down two UK based mobile phone
Energy from waste 2%
recycling by material type as this is recycling companies.
Other environmental services 2%
the most popular subsector in terms of The paper subsector continues to
Compliance and technical 2% M&A volumes. represent around a ¼ of deals in 2011
The growing trend towards WEEE, with Spain based SAICA making two
has been partially driven by the acquisitions to build on the deals in Q1
acquisitions made by Australia based involving PHS Datashred.
Number of recycling deals by type In line with trends seen in previous
Source: MergerStat years, organic waste also continues to
represent a substantial number of deals
with interest remaining in new waste
General 26% treatment technologies, and in particular
Paper 23% AD. Given this continuing interest in
Organic 16% waste to energy technologies we would
Metal 13% expect this trend to continue into 2012
WEEE 16% and beyond.
Plastic 3%
Glass 3%
18 An ever changing landscape Waste and environmental services in the UK 2011

19. Selected key deals in 2011
Sub-sector Deal Rationale / commentary
General Viridor Waste Management Mr Colin Drummond, Chief Executive of Viridor stated, “Recycling is a fast growing part of
Recycling Ltd’s acquisition of Viridor’s business and accounted for around 31% of the Company’s profit contribution in
Community Waste Holding the first half of financial year 2011/12. Community Waste’s operations iprovide additional
Ltd for £15.75m volumes for our international trading arm. The acquisition is expected to be earnings
enhancing in its first full year.”
Paper Viridor Waste Management As stated above, the purchase is in line with Viridor's plans to expand its waste
Recycling Ltd's acquisition of Martock management activities, especially in the recycling sector.
Waste paper Ltd for £7.4m
Organic Stobart Group Ltd's Mr Andrew Tinkler, Chief Executive Officer, commented: "Since listing in 2007 we have
Recycling increased its shareholding delivered consistently good performance with substantial growth in all areas of the
in Stobart Biomass Products business and also been able to invest in other areas of high growth potential such as
Ltd from 50 to 100% Biomass. We are now a diverse company with risk and returns spread across a number
for £20m of sectors. "
Hazardous DCC Environmental Britain Mr Tommy Breen, Chief Executive of DCC plc said, "The acquisition of Oakwood will
and Ltd's acquisition of Oakwood broaden DCC Environmental's service offering into additional complementary waste
industrial Fuels Ltd for £29.681m streams in Britain and capitalise on the trend towards more sustainable waste management
waste and in particular increased waste recovery and recycling. "
Paper Sociedad Anonima industrias SFG managing director Mr Forbes Connor stated: “Stirling Fibre has always been a huge
Recycling Celulosa Aragonesa SA's supporter of the UK paper making industry and we are delighted to be part of one of the
acquisition of Stirling Fibre largest recyclers of packaging in Europe. I firmly believe that the Stirling Fibre Group is
Ltd for an undisclosed sum joining the right organisation and we all look forward to developing and growing Saica
Natur in the UK.”
Organic 4R (Group) Ltd' acquisition Mr Mike Holt, Managing Director of 4R Group, stated “We are delighted to welcome
Recycling of ByProduct Recovery Ltd the ByProduct Recovery staff into 4R Group, and we see a bright future for ByProduct
for an undisclosed sum Recovery. Across the Group as a whole we strive to provide industry with cost effective,
environmentally beneficial options for managing wastes more sustainably, diverting
waste from landfill and manufacturing recycled products as part of the drive for a
greener economy.”
“We are continuing to advise a high number of corporates who see acquisition as a key means of
expanding in the waste and environmental sector. Many are seeking to secure access to waste, as
control of feedstocks continues to be vital across many sub-sectors.”
Ali Sharifi, Partner, Grant Thornton UK LLP
An ever changing landscape Waste and environmental services in the UK 2011 19

20. Section 4:
Grant Thornton
in the waste and
environment sector

21. Case study:
OSS Group
OSS Group, one of the largest waste management companies in the UK,
headquartered in Knowsley, has completed the acquisition of Hall and Campey OSS Group
Environmental Services for an undisclosed sum.
OSS employs some 170 people at sites across the UK. The company, which is
backed by UK mid market private equity house Dunedin, was advised by Grant OSS GROUP
Thornton’s Liverpool-based corporate finance team and Pinsent Masons Manchester
based corporate law team.
OSS specialises in collecting waste lubricating oils and recycling them into Acquisition of Hall and
Campey Environmental
environmentally-friendly alternative fuels. The company has just launched its latest
Services LimitedHazardous
processed fuel oil product, Gen3™, which has applications in industrial and process garage and workshop waste
heating, glass production, dairies, brewing and food processing.
Hall and Campey is an industrial waste management company primarily £undisclosed October 2011
operating in the Midlands and East Anglia, which also specialises in the disposal of
Grant Thornton provided corporate
similar waste streams. finance advisory services
“OSS is a long-
“Adding the regional strength of Hall and Campey to standing
our existing national service creates a much stronger Grant Thornton
organisation in terms of total UK coverage. it operates client and we are
delighted to be able
similar services to OSS and will continue very much to close this deal
as now but with the benefit of the OSS infrastructure, which will provide
additional customer services and market leading the firm with the
Gen3™ technology.” feedstock necessary
to continue to grow
and develop their
Iain Lees innovative patented
Acting Group Managing Director waste recovery
OSS Group process as well
broadening the OSS
product offering.”
Mark Steel
Grant Thornton
An ever changing landscape Waste and environmental services in the UK 2011 21

22. Case study:
Tradebe
Tradebe Environmental Services Limited (Tradebe) is a leading global specialist
Tradebe Environmental
waste management company.
Services Limited
In September 2011 Tradebe acquired Solvent Resource Management Limited
(SRM). The acquisition of SRM makes Tradebe the leader in the UK hazardous
waste management market. Tradebe now has 19 sites in the UK.
As the market leader in the UK, Tradebe can offer a full range of hazardous waste
disposal and recycling services to Tradebe’s and SRM’s customers.
Through continuing investment in acquisitions, introduction of new technologies Acquisition of Solvent
Resource Management
and improvements to production facilities, Tradebe’s global sales have grown from
Limited (SRM) Organic waste
40 million euros in 2000 to approaching 300 million euros today. With the SRM materials disposal
acquisition, Tradebe will now each year manage globally well over two million £undisclosed
tonnes of waste. September 2011
Grant Thornton provided both financial and tax due diligence to Tradebe.
Grant Thornton provided financial
due diligence services
“We are pleased to
“We selected Grant Thornton to assist us in the financial have worked with
and pensions due diligence work on the SRM deal due Tradebe on their
acquisition of SRM.
to the strength of their proposal and in particular their The acquisition
previous work within the sector. Their due diligence of SRM will bring
work was focussed and the final report was a valuable major benefits to
contribution to the deal process setting out a clear but both Tradebe’s and
SRM’s customers
detailed financial analysis of the target.” as the range of
services available
Robert Allen is enhanced. We
UK Corporate Director wish Tradebe every
Tradebe success with the
integration of SRM
and as it continues
to expand. ”
David Grundy
Grant Thornton
22 An ever changing landscape Waste and environmental services in the UK 2011

23. Case study:
DCC plc
Oakwood Fuels, based in Nottinghamshire, has been sold in a deal worth up to
£30m. The company, which collects waste lubricant oil and hazardous waste from DCC plc
businesses, was purchased by DCC Environmental Britain, based in Ireland. Steve
Tooley, managing director of Oakwood Fuels, said the move would support the
company’s rapid expansion plans.
DCC is a sales, marketing, distribution and business support services group.
The company completed the acquisition on behalf of its subsidiary, DCC
Environmental Britain.
Acquisition of Oakwood Fuels
Bilsthorpe-based Oakwood collects refuse from businesses in a variety of sectors
Limited
and converts the waste oil to processed fuel oil (PFO). Waste oil processing
The PFO is then sold to customers for use in a variety of applications including
road surfacing operations, aggregate drying, industrial and agricultural drying, £undisclosed June 2011
power stations, large boilers and furnaces.
Grant Thornton provided financial
Oakwood, which employs 105 people in Nottinghamshire, recoded adjusted due diligence services
operating profit if £2.2m for the year ending 30 September 2010, on revenue
of £9.3m.
Grant Thornton Corporate Finance advised on this transaction.
“The acquisition
of Oakwood will
broaden DCC
Environmental’s
service offering
“The evolution of Oakwood in becoming a fuel into additional
complementary
manufacturer has propelled the business into new
waste streams
markets. The decision to sell the business and become in Britain and
part of a larger group will support Oakwood’s rapid capitalise on the
expansion plans whilst DCC’s own environmental arm trend towards more
sustainable waste
will benefit from the technological expertise in the waste management and in
processing sector.” particular increased
waste recovery
Steve Tooley and recycling.
Managing Director
Oakwood Fuels Tommy Breen
Chief Executive
DCC plc
An ever changing landscape Waste and environmental services in the UK 2011 23

24. Case study:
Avondale Environmental
Holdings
Avondale Environmental is set to create one of Europe’s leading waste recycling
Avondale Environmental
centres following a £17m funding package put together in Manchester, led by HSBC
Limited
Corporate Banking. The landfill operator is developing its existing site at Falkirk,
near junction 4 of the M9 motorway, into a leading edge recycling facility. It will
process some 200,000 tonnes of household and commercial rubbish, vastly reducing
the amount going into landfill.
The Manchester office of HSBC provided the funding from their corporate and
asset finance teams and the Manchester office of Grant Thornton advised Avondale
Fund raising
throughout the funding process.
Development of a waste
Avondale has a range of public and private sector contracts in Central and recycling facility
Northern Scotland and it is intended that this new facility will facilitate improved
recycling rates for both domestic and commercial waste in the region. £17m May 2011
Grant Thornton provided corporate
finance advisory services
“This is an excellent result, “We are delighted to
we’re really pleased to see support our long standing
the project progress; it customer with a package
will keep the business at which will drive the next “We’ve nurtured
our plans over
the forefront of a dynamic phase of its growth. The
a number of
waste management industry move highlights our support
years, including
in the UK.” for the business’ investment taking the
in environmental innovation, scheme through
Andrew Stubbs and our confidence in the
Associate Director
planning, so
Grant Thornton management team’s ability we’re obviously
to deliver.” delighted to
have reached
Steve Sherratt this significant
Senior Corporate Banking Manager milestone.”
HSBC NorthWes
Derek Cooper
Director
Avondale
Environmental
24 An ever changing landscape Waste and environmental services in the UK 2011

25. Section 5:
How we can help

26. How we can help
About Grant Thornton Contact details
Grant Thornton UK LLP is one of the largest accountancy and advisory firms in the If you would like further information
UK. A leading financial and business adviser, we have over 200 partners and 4,000 regarding Grant Thornton, please
staff based in 28 locations nationwide. contact one of the following members of
Recognising the importance of a sector focus, we operate through sector teams, the waste and recycling group:
providing industry-specific, reliable and candid solutions to the challenges facing
North
today’s businesses. Each partner-led team is staffed by sector specialists who have
Ali Sharifi – Partner
immense experience and know-how in their chosen field. This approach gives our Manchester
clients a high quality service based on sound market understanding. T +44 (0)161 953 6350
E ali.sharifi@uk.gt.com
We offer a range of services to waste and environmental businesses, such as mergers
and acquisitions advice, as well as fund raising, and have been successful in raising Mark Burke – Partner
Leeds
funds despite the difficult banking environment. In addition, we can provide T +44 (0)113 200 1527
specialised advice in a variety of areas including; E mark.t.burke@uk.gt.com
South West
• Contract tendering Nigel Mattravers –Director
Bristol
• Project finance advice
T +44 (0)117 305 7699
• Project appraisal E nigel.mattravers@uk.gt.com
• Transactional tax advice
Mark Naughton – Director
• Money saving ideas in relation to environmental tax incentives Bristol
• Valuations T +44 (0)117 305 7712
E mark.c.naughton@uk.gt.com
• Feasibility studies
• Policy implementation Scotland
Nathan Goode – Partner
• Corporate structuring advice Edinburgh
• Internal audit reviews of environmental activities T +44 (0)131 659 8513
E nathan.goode@uk.gt.com
East
Tim Blois – Director
Milton Keynes
T +44 (0)1908 359 582
E tim.m.blois@uk.gt.com
South East
Peter Dawson – Partner
London
T +44 (0)20 7728 3197
E peter.dawson@uk.gt.com
Northern Ireland
Charlie Kerlin – Director
Belfast
T +44 (0)28 9031 6510
E charlie.kerlin@uk.gt.com
26 An ever changing landscape Waste and environmental services in the UK 2011

27. Appendix A:
Deals listing

28. Waste and recycling
Date Deal value
completed Target name Target business description Acquiror name £000’s GBP
11/01/2011 Britcare Ltd Waste disposal services Tradebe Ltd n.a.
14/01/2011 Swinnerton Environmental Ltd Waste management services Viridor Ltd n.a.
27/01/2011 Redeem Ltd Printer cartridge and mobile phone Mbi Team - United Kingdom n.a.
recovery services
31/01/2011 International Recycling Ltd Waste processing and trading services Ciparo Bv n.a.
03/02/2011 Northumberland Waste Waste management services The Durham Company Ltd n.a.
Services Ltd
07/02/2011 Martock Waste Paper Ltd Paper recovery and recycling services provider Viridor Waste Management Ltd 7,400
09/02/2011 Singh (UK) Ltd Waste processing services Valens Resources Group Plc n.a.
17/02/2011 CK Polymers Ltd Plastic recycling services Private Group led by management n.a.
of CK Polymers Ltd
21/02/2011 Oklm Recycling Waste processing services Sutco Recyclingtechnik n.a.
Technology Ltd GmbH & Co
04/03/2011 Shred Easy Ltd Confidential data destruction and recycling PHS Datashred n.a.
services
14/03/2011 Hewitt International Ltd Vehicle salvage disposal services Copart UK Ltd n.a.
16/03/2011 Wales Environmental Ltd Liquid waste management services MBO Team n.a.
25/03/2011 Shredsecure Ltd Confidential paper and document PHS Datashred n.a.
shredding services
04/04/2011 Premier Waste Management Waste management services HW Martin n.a.
Ltd’s Commercial And
Industrial Waste Business
21/04/2011 Stobart Biomass Products Ltd Biomass fuel distribution services Stobart Group Ltd 20,000.00
26/04/2011 Halstead Renewable Power Developer of AD power Countrystyle Recycling n.a.
05/05/2011 Reynolds Boughton Ltd Waste handling and military vehicles manufacturer Skan Group Holdings Ltd n.a.
09/05/2011 Dunn Brothers (1995) Ltd Metal recycling services Sims Group UK Ltd n.a.
11/05/2011 Recycle-Direct.Com Ltd Recycling waste services Green Recycling Ltd n.a.
17/05/2011 North East Recycling Ltd’s Recycling services Newport Paper Company Ltd n.a.
assets
01/06/2011 Smash And Grab Bottle crushing machinery SWR Waste Management n.a.
01/06/2011 Ml Oils Ltd Waste oil procurement and handling services Verta Energy Trading Ltd n.a.
07/06/2011 Storm Recycling Ltd Cardboard and plastics recycling services Viridor Waste Management Ltd 1,700
14/06/2011 Recycled Glass Products Ltd Household products from recycled glass Collingham Ventures Ltd n.a.
manufacturer
23/06/2011 Oakwood Fuels Ltd Waste oil and hazardous waste collection DCC Environmental Britain Ltd n.a.
services
28 An ever changing landscape Waste and environmental services in the UK 2011

29. Date Deal value
completed Target name Target business description Acquiror name £000’s GBP
04/07/2011 Environmental Mobile Business data removal services, Redeem Holdings Ltd n.a.
Control Ltd Business recycling services
06/07/2011 Cutts Recycling Ltd Paper collection, processing and Sociedad Anónima Industrias n.a.
recycling services Celulosa Aragonesa SA
07/07/2011 Countryside Skip Hire Skip hire services GD Environmental Ltd 5,000.00*
20/07/2011 Ruskinn Technology Ltd Anaerobic and modified-atmosphere The Baker Company Inc. n.a.
workstations manufacturer
05/08/2011 Waste Watch Recycling litter charity trust services Keep Britain Tidy n.a.
Valpak Ltd Environmental compliance, consultancy, recycling Valpak 2011 Ltd n.a.
08/08/2011 schemes services
05/09/2011 Solvent Resource Organic waste disposal services Tradebe SA n.a.
Management Ltd
06/09/2011 Stirling Fibre Ltd Recycling services Sociedad Anónima Industrias n.a.
Celulosa Aragonesa SA
14/09/2011 Prosper De Mulder Ltd Food chain by-product recycling services Saria Bio-Industries Ag & Co Kg n.a.
15/09/2011 Coleraine Skip Hire And Skip hire services Investors 5,000.00
Recycling Ltd
21/09/2011 Recycled Carbon Fibre Ltd Carbon fibre recycling services ELG Haniel GmbH n.a.
29/09/2011 Recycle Wales Ltd Waste management compliance The Wastepack Group Ltd n.a.
schemes operator
30/09/2011 S3 Interactive Ltd Mobile phone recycling services Sims Metal Management Ltd n.a.
30/09/2011 S3 Interactive Ltd Mobile phone recycling services Sims Metal Management Ltd n.a.
06/10/2011 Byproduct Recovery Ltd Recycling services 4R (Group) Ltd n.a.
10/10/2011 Thoroughshred Ltd Shredding and confidential waste Restore Shred Ltd 375.00
collection services
20/10/2011 Hall and Campey Garage waste handling and disposal services OSS Group Ltd n.a.
Environmental Services Ltd
18/11/2011 JWS Churngold Ltd Waste logistics and transport services Viridor Waste Management Ltd 14,250.00
27/11/2011 IT Asset Disposal Ltd Electrical and electronic equipment waste Footprintmatters2u Ltd n.a.
management services
30/11/2011 Chris Davey Car Parts Ltd Car parts wholesaler, Scrap car recycling South West Metals and Waste 500.00*
centre operator Recycling Ltd
30/11/2011 Community Waste Holding Ltd Recycling services Viridor Waste Management Ltd 15,750.00
08/12/2011 Acu-Pak Ltd Waste management compliance The Wastepack Group Ltd n.a.
schemes operator
08/12/2011 Nilwaste Ltd Waste management compliance The Wastepack Group Ltd n.a.
schemes operator
An ever changing landscape Waste and environmental services in the UK 2011 29