Cost savings and disposals result in improved performance for waste management firm
Specialist waste management business, Augean, has seen an improvement in its first half of 2018 after disposing of two loss-making divisions.
The Wetherby-based firm this morning announced its interim results for the six months ended 30 June 2018. Its revenues for the period stood at £37.5m, up from £35.3m for the same period in the prior year. Pre-tax profits rose to £5.8m from £3.3m.
The listed firm sold its Augean Integrated Services division on 16 March 2018 to Regen Holdings for £4m. The fixed assets of the Colt business were sold to Future Industrial on 22 June 2018 for £1m. The total consideration of £5m has been used to reduce the firm’s net debt.
It operated through two remaining divisions during the first half – Treatment and Disposal and North Sea Services.
Augean said there had been good progress on its business optimisation programme including cost savings and coherent incentivisation of sales, operations and staff.
It reported double digit growth from Energy from Waste (EfW) plants despite customers having a disproportionate amount of “downtime” and the business reported a strong growth in framework radioactive waste, with revenues up around a third.
Augean also continued further diversification in North Sea into industrial services and waste management with reduced drilling volumes.
Earlier this year, the firm issued a profit warning and updated the markets of the impact of an HMRC investigation looking at whether the company had paid sufficient land fill tax in relation to its treatment and disposal of hazardous waste.
This morning, Augean said: “Having taken legal advice confirming its position, Augean continues to believe that the Landfill Tax (LFT) Assessments received to date are to protect HMRC’s four-year lookback. Protective assessments have continued to be issued although not on a consistent basis with currently 9 in total at a value of £14.8m. There has been no further update on the pre-assessment notifications previously announced in April. Augean is maintaining positive discussions with HMRC in an effort to resolve the matter. The Group will robustly challenge the LFT Assessments that it has or may receive from HMRC, through the tax tribunal system if appropriate. Augean continues to work with stakeholders in the waste and other affected industry sectors about the broader adverse implications for the continued and necessary proper treatment of hazardous waste.
“The Group intends to account for the legal costs of the dispute with HMRC as an exceptional item but not to make a provision for assessments received to date based on the strength of independent legal and professional advice received. ”
Jim Meredith, Executive Chairman, said: “We have made excellent progress in the first half of 2018 having grown sales in all our key strategic markets, reduced the cost base of the Group, driven cash generation and co-operatively engaged with HMRC. We expect to make progress with HMRC in the second half of 2018 and will update the market accordingly. The team at Augean have responded well to the changes in the business, for which I would like to thank them all. With growth in our key strategic markets we expect to deliver full year financial results that exceed current market expectation.”
