Information  X 
Enter a valid email address

Augean Plc (AUG)

  Print      Mail a friend

Wednesday 26 February, 2020

Augean Plc

Final results for the year ended 31 December 2019

RNS Number : 1160E
Augean Plc
26 February 2020
 

26 February 2020

 

Augean plc ("Augean" or "the Group")

 

Final results for the year ended 31 December 2019

 

Augean, one of the UK's leading specialist waste management businesses, announces its final results for the year ended 31 December 2019.

Financial highlights

Adjusted metrics are from continuing operations and exclude non underlying items 1  

· Adjusted revenue2 before landfill tax increased by 33% to £91.5m (2018: £68.8m)

· Adjusted profit2 before taxation increased 68% to £19.2m (2018: £11.4m)

· Statutory result before taxation worsened to a loss of £15.3m (2018: profit of £10.6m)

· Adjusted EBITDA3 increased by 52% to £28.8m (2018: £18.9m)

· Adjusted basic earnings per share increased by 80% to 15.33 pence (2018: 8.52p)

· Statutory Loss per share was 12.26p (2018: Earnings per share 9.61p)

· Net bank debt4 position of £13.2m (December 2018: net cash of £8.2m)

· Return on capital of 37.8% (2018: 21.6%)

 

Operational highlights

· Good sales growth in all sites with Treatment & Disposal up 24% and North Sea up 61%

· 12% growth from residues from Energy from Waste (EfW) and other incinerators despite delays in commissioning of new plants

· Improved margins contributed £3.1m additional profit before tax

· Strong further progress demonstrated in soils with overall volumes increasing 46% on 2018

· Continued diversification in North Sea with new customer wins in industrial services, decommissioning and waste management 

 

HMRC

· The Group has made payments against landfill tax assessments for its companies Augean North and Augean South for a total of £40.4m (£37.7m excluding interest)

· All assessments have been appealed and the First Tier Tax Tribunal is expected no earlier than late 2020

 

Outlook

· Significant further growth targeted in the Group's core markets

· Strong cash generation

· The Board is confident in the prospects of the Group for the full year.

 

Commenting on the results, Jim Meredith, Executive Chairman, said:

"2019 was a good year for the Group.  I look forward to making further progress in 2020 with growth in the Group's core niche markets."

There will be a meeting for analysts at 10am today at the offices of N+1 Singer, 1 Bartholomew Lane, London EC2N 2AX

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation.

For further information, please call:


Augean plc

01937 844 980

Jim Meredith Executive Chairman

Mark Fryer, Group Finance Director

 


N+1 Singer

020 7496 3000

Shaun Dobson

Peter Steel

Rachel Hayes

 


1   Non-underlying items are share based payments, the settlement of landfill tax liabilities and other non-underlying items

2   A reconciliation of these measures is included in note 8 of this announcement

3 EBITDA means adjusted earnings before interest, tax, depreciation and amortisation from continuing operations

4 Calculated as statutory net debt less lease liabilities

 

 

 



 

Executive Chairman's statement

 

The Group continued with its streamlined business model in 2019 with focus on increasing revenue in attractive niche growing segments of the hazardous waste market to drive increased underlying cash generation and adjusted profit. The strong underlying trading in all of the Group's businesses resulted in adjusted profit before tax increasing 68% to £19.2m.  This profit excludes the one off-items which do not impact underlying performance, notably accounting charges in relation to the payment of £40.4m of disputed Landfill Tax assessments and Long Term Incentive Plan (LTIP) payments which are reconciled in note 8.  Overall the Group made a loss after tax of £12.8m in 2019.

The amended banking facilities with HSBC agreed in December 2019 allowed the Group to pay all currently received assessments from HMRC which totalled £40.4m including interest.  Based on legal advice received, we maintain our position that we have correctly collected and paid the appropriate landfill tax, and we will continue to robustly challenge the assessments received through the tax tribunal system. Nonetheless, paying these assessments fully has enabled the Group to obtain an appropriate corporation tax deduction and to focus on implementing its strategy for further growth and creation of future value. 

The Group is currently trading in line with the Board's expectations for 2020 with a continued focus on business growth in niche segments and cash generation.  The Board will not pay a dividend for 2019 (2018 final: nil), maintaining its position of not resuming dividends until the debt, recently drawn down to fund the HMRC payment, is significantly reduced. 

The Group continues to secure further contracts with top-tier customers in Energy from Waste, Radioactive waste, construction waste and North Sea decommissioning. The Group achieved double digit growth in Energy from Waste (EfW) volumes in a year when no new municipal incinerators were commissioned.  The volumes of construction and demolition waste improved significantly as a result of investment in the sales team and investment in processing solutions to generate the most environmentally beneficial outcomes for our customers.

Health and safety remain the highest priority for the Board, management and employees across the Group. The management team has continually improved the safety environment by enhancing hazard recognition, risk evaluation and learning from incidents.  There was a small increase in the number of incidents and near misses recorded by the business during 2019. However, the number of accidents remains low and in line with the best performers in our industry.  The Board continues to recognise the risks faced by our people, who work in challenging environments involving the moving, treating and disposing of hazardous waste.

Protecting the environment is not only a matter of compliance with permits but encompasses our broader responsibilities to society and future generations. The Group diligently monitors its performance in this regard, the results of which are regularly reported to the Board. The majority of our sites in England are ranked by the Environment Agency as Category A or as "Excellent" by the Scottish Environmental Protection Agency.

The Board recognises that our business success is dependent on the quality, diligence and hard work of all Augean's employees and I would like to take this opportunity on behalf of the Board to thank everyone who has contributed to the Group's strong progress during the year. 

As in previous years, I am pleased to note the addition of new shareholders to our register during the year and again I am thankful for the continued support from all of our investors.

The Group set ambitious targets for the 2019 year which it comprehensively exceeded. Undoubtedly 2020 is economically uncertain for the UK economy as a whole whilst Brexit plays out but, with limited direct exposure to EU markets, coupled with a strong start to 2020 trading and a robust pipeline of activity, the Board remains confident in the Group's prospects for the new financial year. 

I look forward to updating shareholders on our continuing progress and refreshed strategy during 2020.

 

 

Jim Meredith

Executive Chairman

25 February 2020

 

 

 

 

Operating Review

Introduction

The Group operated through two business units during 2019 and 2018, being Treatment & Disposal and North Sea Services.  This reflects the operational management of the business.  Within these segments, the Group's core strategic markets are Energy from Waste, treatment, nuclear decommissioning and North Sea decommissioning.


Adjusted continuing revenues (£'m)


Adjusted operating profit before PLC costs (£'m)


2019

2018


2019

2018

Treatment and Disposal

56.6

47.1


18.1

10.9

North Sea Services

34.9

21.7


2.6

2.1

Revenues excluding LFT

91.5

68.8


-

-

Operating Profit pre-PLC costs

-

-


20.7

13.0

PLC costs




(0.8)

(0.8)

Operating profit post-PLC costs




19.9

12.2

 

Adjusted continuing revenues exclude intra segment trading, discontinued operations and landfill tax.  Adjusted operating profit excludes non-underlying items, share based payment charges and profit or loss from discontinued operations.  A reconciliation of these adjusted metrics is shown in note 8.

Business performance

Treatment and Disposal

The principal activity of this business unit is the treatment and disposal of waste from Energy from Waste (EfW) incinerators, construction and industrial sites. The largest waste stream by revenue and profit is the disposal of ash from EfW sites which comprises bottom ash and fly ash from the burning of biomass and municipal waste to generate energy. The largest waste stream by tonnage is contaminated waste materials and soils (including asbestos), mainly from the manufacturing and construction sectors. A key growth market in Treatment and Disposal is low level radioactive waste decommissioning. 

Adjusted revenues, excluding landfill tax, increased by 20% to £56.6m (2018: £47.1m), with growth across landfill and treatment inputs. Ash inputs increased almost 12% to 211,000 tonnes (2018: 189,000). This was despite no new municipal EfW plants coming online in the year and the high downtime experienced by some EfW customers due to operational challenges.  Radioactive waste volumes increased from 10,600 tonnes to 14,300 tonnes in 2019. 

The adjusted operating profit of Treatment and Disposal increased to £18.1m (2018: £10.9m) due to increased sales, improved margins and the maintenance of previously announced cost savings.

The Treatment and Disposal strategy is to continue to win new treatment contracts, optimise the use of our treatment plants, and maximise the market opportunity from growth in EfW ash waste volumes, nuclear decommissioning and construction sector wastes.

North Sea Services (NSS)

The NSS business unit operates in the North Sea Oil & Gas market. The primary revenue streams are from drilling waste management (DWM), including the rental of offshore engineers and equipment to customers, production waste management, onshore & marine industrial services, decommissioning and water treatment. Decommissioning is expected to grow to be the most significant revenue and profit generator in the coming years.

NSS revenue increased by 61% to £34.9m (2018: £21.7m) on new customer wins in Industrial Services and Decommissioning.  This segment saw an increase in adjusted operating profit to £2.6m (2018: £2.1m) due to revenue increase, cost savings, better mix and the impact of increased decommissioning activity in the North Sea. 

During 2019, NSS successfully carried out specialised industrial cleaning and waste management services to Shell for the Curlew Floating Production Storage and Offloading Vessel FPSO (Curlew FPSO).  The Curlew FPSO has been berthed in Forth Ports' Port of Dundee for the last 8 months where ANSS has a major decommissioning and decontamination facility working alongside Forth Ports and other tenants of the Port of Dundee.  Augean is now undertaking the finalisation works to allow the Curlew FSPO to be ready to sail later in 2020.

The NSS strategy continues to gain traction as the business moves up the supply chain, dealing directly with Oil & Gas operators and top-tier customers, so providing opportunities to widen its service scope more directly with those customers.  The opportunity remains for Augean to continue to service this growing North Sea decommissioning market, worth multi-billion pounds for many years to come.  NSS actively markets these facilities, through each of its sites although primarily through Dundee, which is rapidly becoming the major decommissioning facility for the North Sea.

Discontinued operations

East Kent Incinerator

A review of this asset was completed in 2018 and the Group decided that the facility would be mothballed early in 2019. The assets associated with the facility less committed costs to prepare for sale were therefore classified as an asset held for sale in 2018. 

On 25 January 2019 the Group sold the land, buildings and plant associated with East Kent High Temperature Incinerator for a total cash consideration of £3.35m.  There was no material gain or loss on disposal and no material trading result for this asset in 2019.

HMRC assessment

Since August 2017, the Group has received assessments (including accrued interest) for uncollected Landfill Tax where HMRC does not agree with the Group's interpretation of the rate of Landfill Tax that applies. The total value of assessments received, including interest accrued to the date of the assessments, is £40.4m.

Based on the legal and other advice received by the Group over several years, Augean is confident that the Group has met its obligations in respect of landfill tax, consistent with the law and official guidance at the time.   Accordingly, it has appealed both the Augean South Limited and Augean North Limited assessments.  The First Tier Tax Tribunal hearing is expected no earlier than late 2020.

In December 2019, subsequent to the refinance described elsewhere in this report, the Group paid these assessments in full.  This prevents any further accrual of interest and allows the Group to receive a corporation tax deduction.  This does not change the Group's legal position which is to robustly challenge the LFT Assessments.

The Group currently accounts for the legal costs of the dispute with HMRC, totalling £0.5m in 2019, as a non-underlying cost.  The payments made to HMRC in December 2019 have been accounted for in line with IAS 37, resulting in an asset held on the balance sheet (categorised as an "other receivable") of £14.2m and an expense to non-underlying costs of £26.2m.  £24.0m of the charge relates to the cash-settled payments and £2.2m of the charge relates to assessments which the Group has not received and may never receive.  The application of IAS37 involves the application of probabilistic modelling to tribunal outcomes, which are impacted by a number of different factors.  The Group considers that the accounting outcome of meeting the obligations of IAS37 is not representative of its expectation of any potential tribunal result as the application of probabilities to events with binary outcomes does not result in accurate real-life possible outcomes.

Planning and permitting

The current site planning permissions extend to 2026 in the case of East Northants Resource Management Facility (ENRMF), 2034 for the Thornhaugh site and for a period of more than 50 years in the case of Port Clarence.

In the year the Group acquired an option to purchase approximately 90 acres of land adjacent to its existing East Northants Resource Management Facility ("ENRMF") landfill site near Peterborough. This option is Augean's preferred choice following its investigation of a number of alternative solutions to provide long term key infrastructure, aligning with the national need for hazardous landfill and soil treatment in the South of England.  With appropriate planning and permitting consent, the extension that has been optioned would prolong the life of the ENRMF site until at least the mid-2040s.

Financial performance

Group overview

A summary of the Group's financial performance, is as follows:

 

£'m except where stated

2019

2018

Revenue

107.1

79.7

(Loss) / Profit after taxation

(12.8)

8.6

Net operating (cashflow) / inflow

(16.5)

17.4

Basic (loss) /earnings per share

(12.26)p

9.61p

 

The Group considers adjusted metrics, as reconciled to statutory metrics in note 8, as being appropriate to understand the underlying performance of the Group's businesses.  The adjusted metrics exclude large or one-off items.  The adjusted items in the current year are non-underlying items, detailed below but which represent a large payment to HMRC in respect of landfill tax and share based payments. 

A summary of the Group's financial performance, from continuing operations and excluding non-underlying items, is as follows:

£'m except where stated

2019

2018

Adjusted Revenue

91.5

68.8

Adjusted Operating profit

19.9

12.2

Adjusted Profit before taxation

19.2

11.4

Adjusted Profit after taxation

15.9

9.2

Adjusted Net operating cash flow

29.6

17.2

Basic adjusted earnings per share

15.33p

8.52p

Return on capital employed

37.8%

21.6%

 

A consideration of the operational factors affecting performance is included in the operating review.

Trading, adjusted operating profit and EBITDA

Adjusted revenue from continuing operations, excluding landfill tax, for the 12 months ended 31 December 2019 increased by 33% to £91.5m (2018: £68.8m).

Adjusted operating profit increased by 63% to £19.9m (2018: £12.2m) and adjusted profit before tax increased by 68% to £19.2m (2018: £11.4m), on the same basis.

Adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA), from continuing operations and before non-underlying items, is determined as follows:

 


2019

£'m

2018

£'m

Adjusted Operating profit

19.9

12.2

Depreciation and amortisation from continuing operations

8.9

6.7

Adjusted EBITDA

28.8

18.9

 

Non-underlying items

Non-underlying items in 2019 of £26.8m before taxation include £0.5m expense related to landfill tax legal costs, £26.2m related to the charge associated with the payment of landfill tax assessments and £0.1m of other costs. 

 

Share based payments

The cash-settled management LTIP vested after the achievement of criteria in relation to value creation, as measured by the increase in share price experienced in 2019.  The charge in relation to this LTIP had previously been expected to be expensed over five years and was £351,000 in 2018.  This previously accrued charge offsets the amount charged in 2019.  The total net charge for this scheme was £7.6m.  The charge disclosed on the consolidated statement of comprehensive income also includes £0.1 charge in relation to an equity settled LTIP scheme.

Finance costs

Total finance charges were £0.7m (2018: £0.7m) including the interest on bank debt, other financial liabilities, the amortisation of upfront fees associated with obtaining the facility and the non-cash unwinding of discounts on provisions.

Earnings per share

Adjusted basic earnings per share (EPS), from continuing operations and excluding non-underlying items, increased by 80% to 15.33 pence (2018: 8.52 pence) due to the increased volumes, higher pricing and lower costs.

The Group made an adjusted profit after taxation of £15.9m (2018: £9.2m), all of which was attributable to equity shareholders.

The total number of ordinary shares in issue increased during the period from 103,786,792 to 104,085,198 with the weighted average number of shares in issue increasing from 103,408,043 to 104,006,779 for the purposes of basic EPS due to the issue of shares to satisfy options granted in previous years.

Dividend

Due to the Group's net debt position, the Board has decided not to declare a dividend for 2019 (2018 interim and final: £nil).

Cash flow and net debt

Adjusted net operating cash flows were generated from continuing trading as follows:

 


2019

£'m

2018

£'m

EBITDA from continuing operations and before non-underlying items

28.8

18.9

Net working capital movements from continuing operations

(0.5)

(0.3)

Interest and taxation payments

(1.3)

(1.4)

Net operating cash flows from continuing operations and before non-underlying items

27.0

17.2

 

The cash flow of the Group is summarised as follows:


2019

£'m

2018

£'m

Net operating cash flows from continuing operations

27.0

17.2

Net operating cash flows from adjusted items

(44.5)

(0.3)

Net operating cash flows from discontinued operations

-

(0.9)

Total net operating cash (outflow) / inflow

(17.5)

16.0

Maintenance capital expenditure

(4.3)

(2.0)

Post-maintenance free (outflow) / inflow

(21.8)

14.0

Development capital expenditure

(1.5)

(1.4)

Free cashflow

(23.3)

12.6

Sale of Business and assets

3.3

6.2

Net cash (outflow) / inflow before dividends

(20.0)

18.8

 

Adjusted items include the working capital movement in relation to the recognition of an asset for a proportion of the Landfill Tax assessments paid.  Adjusted net operating cash flow as a percentage of EBITDA was 94% in 2019 (2018: 91%).

The operating cash flow of the Group before adjusted items and discontinued operations of £29.6m was used primarily to pay down debt and fund the HMRC Landfill Tax payment, with capital investment in property, plant & equipment and intangible assets made by the Group totalling £5.8m (2018: £3.4m), including spend offset against provisions, split between maintenance capital (to lengthen the productive life of existing assets) of £4.3m and expansion capital (for targeted future growth) of £1.5m.  Maintenance capital expenditure has increased from the prior year as a result of cell construction and works to improve the road at the Avonmouth site.  The development capex is substantially related to the decommissioning service of the North Sea business and is in line with the prior year.

Post-maintenance free cash flow, as set out in the table above, represents the underlying cash generation of the Group, before any investment in future growth or the payment of dividends to shareholders.

As a result of the above net cash movements, net bank debt, which excludes newly capitalised lease liabilities, was at £13.2m at 31 December 2019 compared with net cash of £8.2m at 31 December 2018. Gearing, defined as net bank debt divided by net assets, was therefore 27.9% (31 December 2018: nil). The ratio of net bank debt to EBITDA, from continuing operations and before non-underlying items, was 0.5 times (2018: negative 0.4 times).

Financing

During 2019, the activities of the Group were substantially funded by cash from operations with bank debt allowing the HMRC payments. The bank facility was renewed and extended in December 2019 with HSBC Bank plc at £40m comprising a term loan of £20m and a revolving credit facility of £20m.  £32m was drawn against this facility in the year.  The earliest maturity of the facility is December 2022.

Balance sheet and return on capital employed

Consolidated net assets were £47.6m on 31 December 2019 (2018: £60.3m) and net tangible assets, excluding goodwill and other intangible assets, were £27.8m (2018: £40.5m), of which all was attributable to equity shareholders of the Group in both years.  This reduction was principally due to the settlement of the Landfill Tax assessments.

Return on capital employed, defined as adjusted operating profit divided by average capital employed, where capital employed is net assets excluding net cash or net bank debt, increased to 37.8% in 2019 (2018: 21.6%).  

Impairment reviews

In accordance with IAS36 'Impairment of Assets', an annual impairment review was carried out for each cash-generating unit (CGU) to which significant goodwill is allocated and also any other CGU where management believed there may have been an indication of potential impairment to the carrying values of assets in those CGUs.

For the continuing operations of the Group, this exercise was completed for the CGUs within the Treatment & Disposal and North Sea Services reportable segments.

Based on these reviews, no impairments were noted and no reversal of prior year impairments was required.

The cash flows for all CGUs were discounted using a pre-tax discount rate of 8.0% (2018: 8.0%).

Employees

The Group employed an average of 392 staff (2018: 385) over the course of the year.  The number of employees in the Group has increased marginally during 2019 reflecting increased trading activity, with a substantial increase in sales.

Brexit

The Group is focused on trading in Britain and uses disposal infrastructure almost entirely based in the UK.  Where disposal routes in mainland Europe are used, the financial impact of different scenarios which could result from this external change have been modelled.  The impact of Brexit on these routes is difficult to predict but the position is being closely monitored with the Group board having access to expert advice. Coupled with UK Government advice that current waste movement structures will be rolled over in most EU States and the Group's work to establish alternatives, the risk of significant business disruption as a result is thought limited.

 

 

 

Key performance indicators

 

The Augean plc Board of Directors, Group Management Board and local management teams regularly review the performance of the Group as a whole, along with the performance of individual business units. This includes the use of a balanced scorecard for applicable key performance indicators (KPIs) to monitor progress towards delivery of the Group's principal targets. These KPIs are consistent with those reported in 2018.  The Group regard the performance in 2019 compared to their benchmark, which is the prior year performance, to be satisfactory.

 

The focus of the Group is in three priority areas:

 

1.  Health & safety: monitored through near miss incidents and the number of accidents incurred;

2.  Compliance with regulations, in particular Environment Agency and Scottish Environment Protection Agency audit results; and

3.  Financial performance.

 

 

KPI

2019

Outcome

2018

Outcome

Number of incidents (1)

 

29

16

Number of near misses reported (2)

 

3,437

2,320

Compliance scores (3)

 

English Sites : A-B

Scottish Sites Excellent

 

 

 

Landfill & Treatment: Excellent/A-B

ANSS: Excellent/E

Discontinued operation: E

Adjusted profit before taxation (4)

£19.2m

£11.4m

Post-maintenance free cash flow (5)

£(21.8)m

£14.0m

Return on capital employed (6)

37.8%

21.6%

Volumes of waste disposed to our landfill sites

630,000t

523,000t

 

Ash Volumes treated

211,000t

189,000t

 

Amount of North Sea Oil & Gas revenue generated directly from operators and Top-Tier customers

 

94% of ANSS revenue

 

87% of ANSS revenue

 

 

 

(1)  The number of total reported accidents, that resulted in injury, including those resulting in damage to plant or equipment. This is an absolute figure which has not been normalised for changes in employee numbers.

(2)  The total number of incidents reported which could have resulted in an accident or injury or damage to property.

(3)  The average of audit scores notified during the year by the Environment Agency (EA) in England or the Scottish Environment Protection Agency (SEPA) in Scotland. The EA notifies results on the scale A-F and SEPA notifies on the scale Excellent-Very Poor.

(4)  Group profit before taxation, from continuing operations and excluding non-underlying items and share based payments charges

(5)  Net operating cash flows, less maintenance capital expenditure.

(6)  Calculated as operating profit, from continuing operations and excluding non-underlying items, divided by average capital employed, where capital employed is the consolidated net assets of the Group excluding net bank debt.

 

Summary and Outlook

The Group continued to make significant progress against delivering its strategy during 2019, generating £29.3m of cash before non-underlying outflows and growing profit before tax 68%, paying all received (but disputed) HRMC assessments and therefore providing a stable platform for future growth.  A strong start to initial trading has been made in the first months of 2020 with results ahead of prior year.  The Board is confident in the prospects of the Group for the full year.

 

 

 



 

Consolidated statement of comprehensive income  

for the year ended 31 December 2019

 

 



2019

£'000

 

2018

£'000

 

Revenue


107,137

79,749

Operating expenses


(87,228)

(67,563)

Adjusted Operating profit


19,909

12,186

Share based payments


(7,693)

(523)

Settlement of Landfill tax assessments


(26,179)

-

Other non-underlying items


(664)

(322)

Operating (loss) / profit


(14,627)

11,341

Net finance charges


(697)

(748)

(Loss) / profit before tax


(15,324)

10,593

Taxation credit / (charge)


2,568

(2,043)

(Loss) / profit from continuing operations


(12,756)

8,550

Discontinued operations

Profit from discontinued operations

 


-

1,389

(Loss) / profit for the year and total comprehensive income attributable to equity shareholders of Augean plc


(12,756)

9,939

(Loss) / earnings per share




Diluted


(12.26)p

9.55p


Group Statement of financial position

As at 31 December 2019

 



Group

 



2019

£'000

2018

£'000

 

Non-current assets




 

Goodwill


19,757

19,757

 

Other intangible assets


45

66

 

Property, plant and equipment


38,309

40,373

 

Right of use assets


4,516

-

 

Deferred tax asset


4,350

1,781

 



66,977

61,977

 

Current assets




 

Inventories


302

277

 

Trade and other receivables


40,200

18,628

 

Asset held for sale


-

3,304

 

Cash and cash equivalents


21,588

11,162

 



62,090

33,371

 

Current liabilities




 

Trade and other payables


(32,205)

(21,222)

 

Current tax liabilities


(1,145)

(1,863)

 

Borrowings


(6,667)

-

 

Lease liabilities


(1,445)

-

 

Provisions


(500)

(500)

 



(41,962)

(23,585)

 

Net current assets / (liabilities)


20,128

9,786

 

Non-current liabilities




 

Borrowings


(28,123)

(2,922)

 

Lease liabilities


(3,104)

-

 

Employee benefit liability


-

(351)

 

Provisions


(8,242)

(8,190)

 



(39,469)

(11,463)

 

Net assets


47,636

60,300

 

Shareholders' equity




 

Share capital


10,409

10,379

 

Share premium account


816

757

 

Retained earnings


36,411

49,164

 

Total equity


47,636

60,300

 

 

 



 

Consolidated statement of cash flow

For the year ended 31 December 2019

 



Group



2019

£'000

2018

£'000

Operating activities




Cash (used in) / generated from operations


(16,215)

17,413

Finance charges paid


(597)

(360)

Corporation Tax paid


(820)

(1,063)

Net cash (used in) / generated from operating activities


(17,632)

15,990

Investing activities




Proceeds on disposal of assets held for sale


3,350

-

Proceeds on disposal of property, plant and equipment


-

36

Purchases of property, plant and equipment


(5,823)

(3,407)

Purchases of intangible assets


(18)

(6)

Sale of business


-

6,176

Net cash (used in) / generated from investing activities


(2,491)

2,799

Financing activities




Dividends paid


-

-

Issue of equity


89

84

(Repayment) / drawdown of loan facilities


32,000

(14,290)

Payment of principal on lease liabilities


(1,540)

-

Net cash generated from / (used in) financing activities


30,549

(14,206)

Net increase in cash and cash equivalents


10,426

4,583

Cash and cash equivalents at beginning of year


11,162

6,579

Cash and cash equivalents at end of year


21,588

11,162

 

 

 

 

 

 

 

 

 

Statement of changes in shareholders' equity

for the year ended 31 December 2019

 

 

 

Group

Share

capital

£'000

Share

premium

account

£'000

Retained

earnings

£'000

 

Total

equity

£'000

At 1 January 2018

10,295

757

39,053

50,105

Total comprehensive income for the year





Retained profit

-

9,939

9,939

Total comprehensive income for the year

9,939

9,939

Transactions with the owners of the company





Issue of equity

84

-

-

84

Share-based payments

-

-

172

172

Total transactions with the owners of the company

84

-

172

256

At 31 December 2018

10,379

757 

49,164

60,300

IFRS16 opening adjustment

-

-

(39)

(39)

At 1 January 2019 as restated

10,379

757 

49,125

60,261

Total comprehensive loss for the year





Retained loss

-

(12,756)

(12,756)

Total comprehensive loss for the year

(12,756)

(12,756)

Transactions with the owners of the company





Issue of equity

30

59

-

89

Share-based payments

-

-

42

42

Total transactions with the owners of the company

30

59

42

131

At 31 December 2019

10,409

816

36,411

47,636

 

 



 

1 B asi s of pr e parati on

The financial information set out in this preliminary announcement does not constitute statutory accounts as defined by section 435 of the Companies Act 2006. It has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS) adopted for use in the European Union, including IFRIC interpretations issued by the International Accounting Standards Board, and in accordance with the AIM rules and is not therefore in full compliance with IFRS. The principal accounting policies of the Group have remained unchanged from those set out in the Group's 2016 annual report. The financial statements have been prepared under the historical cost convention.

 

The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from these estimates.

The auditors' reports on the accounts for 31 December 2019 and 31 December 2018 were unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

The financial information for the year ended 31 December 2019 and the year ended 31 December 2018 does not constitute the company's statutory accounts for those years. Statutory accounts for the year ended 31 December 2018 have been delivered to the Registrar of Companies. The statutory accounts for the year ended 31 December 2019 were approved by the Board on 25 February 2020 and will be delivered to the Registrar of Companies in due course.  The statutory accounts for the period ended 31 December 2019 will be posted to shareholders at least 21 days before the Annual General Meeting and made available on our website www.augeanplc.com .

 

2 Operating segments

 

The Group has two reportable segments.  The two segments are the Group's strategic business units.

These business units are monitored and strategic decisions are made on the basis of each business unit's operating performance. The Group's business units provide different services to their customers and are managed separately as they are subject to different risks and returns. The Group's internal organisation and management structure and its system of internal financial reporting are based primarily on these operating business units. For each of the business units, the Group's Executive Chairman (the chief operating decision-maker) reviews internal management reports on at least a monthly basis. The following summary describes the operations of each of the Group's reportable segments:

· Treatment and disposal: Augean provides waste remediation, management, treatment and disposal services through its six sites across the UK. 

· Augean North Sea Services: Augean provides waste management and waste processing services to oil and gas operators.

 

Information regarding the results of each reportable segment is included below. Performance is measured based on the segment operating profit, as included in the internal management reports that are reviewed by the Group's Executive Chairman. This profit measure for each business unit is used to measure performance as management believes that such information is the most relevant in evaluating the results of each of the business units relative to other entities that operate within these sectors.

Total revenue for one customer amounts to more than 10% of the total revenue of Augean PLC.  One customer accounts for £14.1m of revenue which is all reported in the North Sea Services segment.

Materially all activities arise almost exclusively within the United Kingdom. Inter-segment trading is undertaken on normal commercial terms.



 

 


2019


Treatment & disposal

 

£'000

North Sea Services

 

£'000

Group

 

 

£'000

Revenue




Incinerator Ash and APCr management

17,196

-

17,196

Other landfill activities

16,967

-

16,967

Waste treatment activities

19,531

-

19,531

Radioactive waste management

3,704

-

3,704

Services to Oil production and exploration customers

-

34,896

34,896

Total revenue net of landfill tax

57,398

34,896

92,294

Landfill tax

15,611

-

15,611

Total revenue including inter-segment sales

73,009

34,896

107,905

Inter-segment sales

(748)

(20)

(768)

Revenue

72,261

34,876

107,137


Operating profit before non-underlying items

18,062

2,619

20,681

Non-underlying items

(26,843)

-

(26,843)

Operating (loss) / profit

(8,781)

2,619

(6,162)

Net finance charges



(697)

Share based payments



(7,693)

Central costs



(772)

Loss before tax



(15,324)

Taxation credit



2,568

Loss for the year attributable to equity shareholders of Augean plc



(12,756)

 

 



 

 


2018


Treatment & disposal

 

£'000

North Sea Services

 

£'000

Group

 

 

£'000

Revenue




Incinerator Ash and APCr management

12,461

12,461

Other landfill activities

14,301

14,301

Waste treatment activities

20,664

20,664

Radioactive waste management

3,517

-

3,517

Services to Oil production and exploration customers

-

21,669

21,669

Total revenue net of landfill tax

50,943

21,669

72,612

Landfill tax

10,991

-

10,991

Total revenue including inter-segment sales

61,934

21,669

83,603

Inter-segment sales

(3,853)

(1)

(3,854)

Revenue

58,081

21,668

79,749





Operating profit before non-underlying items

10,933

2,062

12,995

Non-underlying items

(322)

-

(322)

Operating profit from continuing operations

10,611

2,062

12,673

Net finance charges



(749)

Share based payments



(523)

Central costs



(808)

Profit before tax from continuing operations



10,593

Taxation charge



(2,043)

Profit after tax from continuing operations



8,550

Profit after tax from discontinued operations



1,389

Profit for the year attributable to equity shareholders of Augean plc



9,939

 

 



 

3 Non-underlying items

The following pre-tax items have been charged to operating profit:


2019

£'000

2018

£'000

Non-underlying items:



Landfill tax assessments settlement

26,179

-

Other non-underlying charges



  Restructuring and similar charges

165

166

Legal costs associated with Landfill tax dispute

499

156

Total

664

322




Charges in relation to share based payments, as disclosed on the consolidated statement of comprehensive income are considered non underlying by the Group. 

4 Taxation

 

Group

2019

2018


£'000

Continuing operations and Total

£'000

Continuing operations

£'000

Discontinued operations

£'000

Total

 

Current tax





 

UK corporation tax on profit /(loss) for the year

-

2,665

(554)

2,111

 

Adjustments in respect of prior years

68

(102)

439

337

 


68

2,563

(115)

2,448

 

Deferred tax





 

(Credit) / charge in respect of the current year

(2,458)

(493)

16

(477)

 

Adjustments in respect of prior years

(178)

(27)

(207)

(234)

 


(2,636)

(520)

(191)

(711)

 

Tax (credit) / charge on the result for the year

(2,568)

2,043

(306)

1,737

 

 

Tax reconciliation - continuing operations


2019

 

2018


£'000

%

£'000

%

(Loss) / profit before tax

(15,324

)

10,593


Tax at theoretical rate

(2,912)

19%

2,013

19%

Effects of:





- expenses not deductible for tax purposes

270

(2)%

158

1%

- change in tax rate

291

(2)%

51

0%

- effect of share options

(108)

0%

(50)

0%

- adjustments in respect of prior years

(110)

1%

(129)

(1)%

Tax (credit) / charge on the result for the year

(2,569)

17%

2,043

19%

The main rate of corporation tax in the UK was 19.00% (2018: 19.00%).

 

5 Earnings per share

The calculation of basic earnings per share (EPS) is as follows:

 


2019

£'000

2018

£'000

(Loss) / profit after tax for the purposes of basic and diluted earnings per share

(12,756)

9,939

Non-underlying items net of tax

22,467

(3,155)

Share based payments net of tax

6,231

-

Adjusted profit after tax for the purposes of basic and diluted earnings per share

15,942

6,784

Profit after tax from discontinued operations before non-underlying items

-

2,026

Adjusted earnings for the purposes of basic and diluted EPS for continuing operations only

15,942

8,810

Loss after tax from continuing non-underlying items

-

(260)

Earnings for the purposes of basic and diluted EPS for continuing operations only

15,942

8,550

 

Exceptional items and share based payments above are stated net of a tax credit of £5,837,000 (2018: charge of £120,000). 

No discontinued items are included for 2019.  For 2018, Loss after tax from discontinued operations is stated net of a tax credit of £487,000, Loss after tax from continuing exceptional.  Profit is stated net of a tax credit of £61,000 and pre-tax adjusting items are detailed in notes 3 and 8. 

The exceptional items have been adjusted, in the adjusted earnings per share, to better reflect the underlying performance of the business, when presenting the basic and diluted earnings per share.  Share based payments are considered to be adjusting item in the current year due the vesting of the scheme in full after 2 years compared to the expected life of five years.

 


2019

number

2018

number

Number of shares



Weighted average number of shares for basic earnings per share

104,006,779

103,408,043

Effect of dilutive potential ordinary shares from share options

802,208

709,119

Weighted average number of shares for diluted earnings per share

104,808,987

104,117,162

(Loss) / Earnings per share



Basic

(12.26)p

9.61p

Diluted

(12.26)p

9.55p

Adjusted earnings per share



Basic

15.33p

6.56p

Diluted

15.21p

6.52p

Adjusted earnings per share - continuing operations



Basic

15.33p

8.52p

Diluted

15.21p

8.46p



 

6 Reconciliation of operating profit / (loss) to net cash generated from / (used in) operating activities

 


Group

 

2019

£'000

 

2018

£'000

 

 

Operating (loss)/profit

(14,627)

11,341

 

Operating profit / from discontinued operations

-

1,083

 

Depreciation of right of use assets

1,417

-

 

Amortisation of intangible assets

39

58

 

Depreciation

7,471

7,032

 

Impairment (reversal)

-

(2,644)

 

(Loss) / earnings before interest, tax, depreciation and amortisation (EBITDA)

(5,700)

16,870

 

42

523

 

(Increase) / decrease in inventories

(28)

162

 

(Increase) in trade and other receivables

(21,737)

(2,473)

 

Increase in trade and other payables

10,885

4,372

 

(Profit) on disposal of property, plant and equipment

-

(1,969)

 

Increase / (decrease) in provisions

323

(72)

 

Cash (used in) / generated from operations

(16,215)

17,413

 

Finance charges paid

(597)

(360)

 

Tax paid

(820)

(1,063)

 

Net cash (outflow) / generated from operating activities

(17,632)

15,990

 

 

The above EBITDA and net cash generated from operating activities includes a total net cash outflow of £44,500,000 relating to non-underlying items which includes £40,400,000 in relation to the settlement of landfill tax assessments (2018: total outflow of £322,000).

 

7 Analysis of changes in net debt

The table below presents the net debt of the Group at the balance sheet date.


1

January

2018

£'000

Repayment and (drawdown) of loans

 

'£000

Cash-flows

 

'£000

Other movements

'£000

31

December

2018

£'000

Adoption of IFRS 16

 

'£000

Other movement

 

£'000

Drawdown of loans

 

 

£'000

Cash

flow

 

 

£'000

31

December

2019

 

£'000

Cash and cash equivalents

6,579

-

4,583

-

11,162

-

-

-

10,426

21,588

Lease Liabilities

-

-

-

-

-

(4,741)

192

-

-

(4,549)

Bank loans within one year

(17,378)

17,290

-

88

-

-

-

(6,667)

-

(6,667)

Bank loans after one year


(3,000)

-

78

(2,922)

-

132

(25,333)

-

(28,123)

Net (debt) / cash

(10,799)

14,290

4,583

166

8,240

(4,741)

324

(32,000)

10,426

(17,751)

 

The other movement relates to the amortisation of the fees incurred to set up the bank facility.

8 Reconciliation of performance metrics

The following metrics have been used in the Operating review.

Revenue

 


2019

2018


Revenue

£'000

Landfill

Tax

£'000

Adjusted Revenue

£'000

Revenue

£'000

Landfill

Tax

£'000

Adjusted Revenue

£'000

Treatment & disposal segment

72,261

(15,611)

56,650

58,081

(10,991)

47,090

North Sea Services segment

34,876

-

34,876

21,668

-

21,668

Continued operations

107,137

(15,611)

91,526

79,749

(10,991)

68,758

Discontinued Operations

-

-

-

7,062

-

7,062

Total Group

107,137

(15,611)

91,526

86,811

(10,991)

75,820

 


2019

 

 

Statutory

Share based payments

Non-underlying items

Adjusted


£'000

£'000

£'000

£'000

Treatment & disposal segment

(8,781)

-

26,843

18,062

North Sea Services segment

2,619

-

-

2,619

Central costs

(8,465)

7,693

-

(772)

Operating profit from continuing operations

(14,627)

7,693

26,843

19,909

Finance charges

(697)

-

-

(697)

Profit before tax from continuing operations

(15,324)

7,693

26,843

19,212

Taxation

2,568

(1,462)

(4,376)

(3,270)

Profit after tax from continuing operations

(12,756)

6,231

22,467

15,942

Discontinued Operations

-

-

-

-

Total Group Operating profit

(12,756)

6,231

22,467

15,942

 

 

 

 

 



 

 

EBIT

 

 

 

 

2018

 

 

Statutory

Share based payments

Non-underlying items

Adjusted


£'000

£'000

£'000

£'000

Treatment & disposal segment

10,611

-

322

10,933

North Sea Services segment

2,062

-

-

2,062

Central costs

(1,331)

523

-

(808)

Operating profit from continuing operations

11,342

523

322

12,187

Finance charges

(749)

-

-

(749)

Profit Before tax from continuing operations

10,593

523

322

11,438

Taxation

(2,043)

(99)

(120)

(2,262)

Profit after tax from continuing operations

8,550

424

202

9,176

Discontinued Operations

1,389

-

(3,595)

(2,206)

Total Group Operating profit

9,939

424

(3,393)

6,970

 

9 Annual Report & Accounts

The Annual Report will be sent to shareholders on or before 16 May 2020 and will be available on the Company's website www.augeanplc.com from that date.  The Annual General Meeting will be held at 12 noon on 15 June 2020 at 6 Stratton Street, Mayfair, London W1J 8LD.

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
END
 
 
FR EAPASAAAEEFA

a d v e r t i s e m e n t