TIDMAUG
RNS Number : 2552K
Augean Plc
20 September 2016
20 September 2016
Augean plc ("Augean" or "the Group")
Interim results for the six months ended 30 June 2016
Augean, one of the UK's leading specialist waste management
businesses, announces its Interim Results for the six months ended
30 June 2016.
Group financial highlights (excluding exceptional items)
-- Profit before tax increased by 1% to GBP3.1m (2015: GBP3.1m)
-- EBITDA(1) increased by 15% to GBP6.7m (2015: GBP5.8m)
-- Net operating cash flows decreased by 19% to GBP5.3m (2015: GBP6.6m)
-- Return on capital employed(2) decreased to 11.4%, from 11.7% in 2015
-- Basic earnings per share increased by 5% to 2.42p (2015: 2.30p)
-- Net debt increased to GBP12.9m, from GBP4.3m at December 2015
(GBP3.0m at June 2015), with GBP8.9m increase due to the
acquisition of Colt Holdings in the period
Operational highlights and strategic developments
-- Acquisition of Colt Holdings, now part of the Industry & Infrastructure business unit, accelerating industrial services capability, adding further revenues from tier-1 customers under
framework agreements and delivering synergies for the Group
-- Total volume of waste disposed by the Energy &
Construction business increased by 45%, including strong growth in
APCR(3) volumes
-- Material slowdown in the rate of UK Government spending in relation to nuclear decommissioning led to a decline in volumes disposed of by Radioactive Waste Services
-- Significant improvement in profitability of the Industry & Infrastructure business
-- Increase in Total Waste Management (TWM) contracts and further long-term contract wins for Augean Integrated Services, offset by unplanned operational downtime at East Kent HTI(4)
-- Continued focus on diversification of revenue streams in Augean North Sea Services, with significant contract wins from strengthened relationships with tier-1 customers and investment in new site at Great Yarmouth
Outlook
-- Full year performance for 2016 anticipated to be in line with management expectations
-- Group remains well-placed to continue to take advantage of growth opportunities, in particular growth within the APCR market and through the integration of the Colt Holdings acquisition.
Commenting on the Results, Dr Stewart Davies, Chief Executive,
said:
"The Group has performed well in the first half of 2016, with
particularly strong performances from its Energy & Construction
and Industry & Infrastructure businesses.
The Group is well-placed to continue to take advantage of growth
opportunities and to deliver profit growth for 2016, in particular
due to additional APCR volumes secured in the first half and the
integration of the Colt Holdings acquisition. Accordingly, the
Board remains confident of delivering full year financial results
in line with market expectations."
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
There will be a meeting for analysts at 9.00am today at the
offices of FTI Consulting, 9(th) Floor, 200 Aldersgate, Aldersgate
Street, London, EC1A 4HD. For further information please call 020
3727 1203.
For further information, please call:
Augean plc
Dr Stewart Davies, Chief
Executive
Richard Laker, Group Finance
Director 01937 844 980
N+1 Singer
Shaun Dobson
Richard Lindley
Jen Boorer 020 7496 3000
FTI Consulting
Oliver Winters
Fiona Walker 020 3727 1000
(1) EBITDA means earnings before interest, taxation,
depreciation and amortisation
(2) Return on capital employed is defined as operating profit,
excluding exceptional items, divided by average capital employed,
where capital employed is net assets excluding net debt
(3) APCR means Air Pollution Control Residues
(4) HTI means High Temperature Incinerator
Strategic report
Operating review
Introduction
In the first six months of 2016 the results of the Group,
excluding exceptional items, show that, compared to the same period
in 2015:
-- Profit before taxation increased by 1% to GBP3.1m;
-- EBITDA(1) increased by 15% to GBP6.7m;
-- Net operating cash flows decreased by 19% to GBP5.3m;
-- Return on capital employed(2) decreased to 11.4%, from 11.7% in 2015
-- Basic earnings per share increased by 5% to 2.42p (2015: 2.30p)
The operating cash flow was used to fund the growth of the
Group, with total organic capital investment of GBP3.6m, of which
GBP1.4m was maintenance capital expenditure and GBP2.2m was
development capital expenditure, for future growth. In May 2016,
the Group acquired the entire issued share capital of Colt Holdings
Limited, including its trading subsidiary, Colt Industrial
Services, for an initial net cash payment of GBP8.9m, including
adjustments for normalised working capital and cash acquired. The
Group remains committed to growth through both organic and
acquisitive means. Aside from its operating cash flows, the Group
had total available banking facilities of GBP20m at 30 June 2016,
compared to net debt of GBP12.9m. The net debt was equivalent to
1.0 times historic rolling 12 month EBITDA, before exceptional
items, leaving the Group in a position to continue to take
advantage of medium term investment opportunities that would
accelerate the strategy and are value enhancing for
shareholders.
Business performance
The Group operated through five business units during the
period, with the performance of each set out below.
Energy & Construction (E&C)
Revenues, excluding landfill tax and intra-group trading,
increased by 20% to GBP12.7m (2015: GBP10.5m) with a 45% increase
in the total volume of waste disposed by the E&C business to
301,500 tonnes in 2016, from 208,100 tonnes in the first half of
2015. The operating profit of the E&C business unit grew by 42%
to GBP4.3m (2015: GBP3.0m) and EBITDA grew by 44% to GBP6.4m (2015:
GBP4.4m), with the improvement in operating margin primarily due to
the increase in APCR(3) volumes, which are generally higher
margin than the construction-derived waste streams also dealt
with by E&C.
APCR volumes increased by 14,500 tonnes to 51,800 tonnes (39%
increase compared to H1 2015), with average APCR gate fees
increasing by 2% to GBP88 per tonne with an overall increase in
APCR revenue of 41% compared to the first half of 2015. APCR
volumes have grown strongly and are expected to grow further in the
second half of 2016 as a result of contract wins, which were
announced in April 2016.
Volumes of other waste streams increased by 78,900 tonnes to
249,700 tonnes (46% increase compared to H1 2015). The average gate
fees on soils and other waste fell by 23% to GBP30 per tonne, with
an overall increase in revenue of 11%, due to the significant
increase in volume. The average gate fee was impacted by changes in
the mix of the specific waste streams. Volumes of those waste
streams which have the potential to be impacted by the update to
landfill tax guidance, issued by HMRC in December 2015, remained in
line with management expectations for the first half of 2016 with
no significant impact on volumes or gate fees.
As the strategic traction of APCR volume growth is now being
delivered, together with continued strong volumes of construction
and other waste streams, it is now considered that the E&C
business profit will exceed previous management expectations for
the 2016 financial year.
Radioactive Waste Services (RWS)
The total revenue from the disposal and treatment of low level
radioactive waste, excluding intra-group trading, fell by 53% to
GBP0.6m (2015: GBP1.2m) in the period, with a decrease in operating
profit to a loss GBP0.1m (2015: profit of GBP0.8m) and a decrease
in EBITDA to negative GBP0.1m (2015: positive GBP0.8m). This was
generated from a total volume of 867 tonnes; a decrease of 50%
compared to 1,747 tonnes in the first half of 2015.
As signalled at the time of the 2015 full year results, in March
2016, there has been a material slowdown in the rate of UK
Government spending in relation to nuclear decommissioning since
May 2015 which has continued in the first half of 2016.
An increase in volumes is anticipated in the second half of 2016
compared to the first half and Nuclear Decommissioning Authority
(NDA) forecasts indicate a recovery of 2017 volumes to similar
levels to those seen in 2015. Aside from the potential recovery of
NDA volumes, further medium-term opportunities exist for the RWS
business through growth in the market for treatment of naturally
occurring radioactive material and the incineration of low level
radioactive waste.
However, in the short-term there remains a risk that UK
Government spending on moving low level radioactive waste off
decommissioned sites continues to be deferred. Accordingly, it is
currently expected that the RWS business will fall materially short
of management expectations for the 2016 financial year.
Industry & Infrastructure (I&I)
The I&I business unit generated revenue, excluding
inter-segment sales, of GBP9.1m during the first six months of
2016, a 54% increase over the same period last year (H1 2015:
GBP5.9m). This contributed to a significant improvement in
profitability, with an operating profit of GBP0.2m compared to an
operating loss of GBP0.5m in the same period in the prior year. The
business generated a positive EBITDA of GBP0.5m, compared to a
negative EBITDA of GBP0.1m in the first half of 2015.
The improvement in profitability was due to good performances
across all of the main I&I sites, including the Avonmouth site
where a plan has been successfully executed to return the site to
profitability during 2016.
On 18 May 2016, the Group acquired Colt Industrial Services,
which now forms part of the I&I business unit. The results of
the business unit are not materially impacted by this acquisition
in the first half of the year. Post period end, the integration of
Colt is substantially complete and the Colt business is expected to
trade in line with expectations for 2016.
Given the performance of the I&I business unit in 2016 to
date, it is now anticipated that the 2016 full year trading
performance of the business unit will be ahead of previous
management expectations.
Augean Integrated Services (AIS)
Total revenue, excluding inter-segment sales, was GBP3.7m, an
increase of 38% compared to the same period last year (2015:
GBP2.7m). This included GBP2.4m from the total waste management
(TWM) business (2015: GBP1.8m), of which GBP1.6m was under
contracts (2015: GBP1.0m). The first half of 2016 saw further TWM
contract wins with terms of three years and above, which will
positively impact the second half of 2016, with further positive
impacts expected in 2017 and beyond.
The AIS business recorded an operating loss of GBP0.2m, an
improvement from the GBP0.4m loss in the same period in 2015, as
well as positive EBITDA of GBP0.1m (2015: negative GBP0.3m). The
East Kent high temperature incinerator experienced some additional
unplanned downtime during the first half of 2016; in particular
during a scheduled plant maintenance shutdown in May 2016 when
additional work was required to be completed. A performance
improvement programme is underway at the site, which is targeting
further improvement in profitability.
The further contract wins and the East Kent improvement
programme are positively impacting the second half of 2016 and
beyond. However, the unplanned operating shortfall at East Kent
leads management to believe that the full year performance of the
AIS business unit will now be behind existing expectations for the
2016 full financial year.
Augean North Sea Services (ANSS)
Revenue fell by 26% to GBP6.0m (H1 2015: GBP8.1m), with a
reduction in operating profit from GBP1.0m in the first half of
2015 to an operating loss of GBP0.2m in 2016. EBITDA fell by 89% to
GBP0.1m (H1 2015: GBP1.4m), reflecting the impact of challenging
conditions in the North Sea Oil & Gas market, as stated in
March 2016.
The ANSS business continues to execute its strategic imperative
of diversification away from exploration drilling waste services,
towards production-based waste streams which are less impacted by
reduced oil prices. The business generated 42% of its revenue from
this activity in the first half of 2016, compared to 64% in the
same period in 2015, and maintained incumbency on an average of 3.3
drilling rigs, compared to 5.0 in the same period in 2015.
As previously announced in February 2016, ANSS was successful in
being awarded contracts for production and onshore waste management
with a major oil company, which was accompanied by an investment of
GBP0.5m in a new site at Great Yarmouth, in order to service that
contract. This represents a further diversification of this
business, which has continued to maintain its direct commercial
relationships with oil & gas operators and tier-1 customers in
this market, and increases the potential for it to widen its
service scope directly with those customers as a result. 91% of
total ANSS revenues were directly generated from our commercial
relationships with those customers in the first half of 2016 (H1
2015: 89%).
In response to the sharp reduction in activity, the business has
undergone a cost reduction programme, with an annualised benefit of
GBP0.5m, of which GBP0.2m will be seen in 2016.
The on-going growth in revenue streams from term contracts
relating to activities other than exploration drilling waste
services, combined with the reputation of the business in the
market and its commercial pipeline, leads to an expectation of
increased profitability in the second half of 2016, compared to the
first half.
However, following the rate of activity reduction in the first
half, it is now considered that the ANSS business unit will fall
short of previous management expectations for the 2016 financial
year, but the Group is confident in the outlook for the business in
2017 and beyond.
Acquisition
On 18 May 2016, the Group purchased the entire issued share
capital of Colt Holdings Limited for a total initial cash
consideration of GBP9.2 million. After adjustments for a normalised
level of working capital, the net cash outflow in the period was
GBP8.9 million. A further GBP0.5 million of associated deal costs
have been charged to the income statement in the period, as an
exceptional item.
Legislative environment
In 2016, there have been further proposed changes to the
landfill tax regime, the on-going evolution in hazardous waste
classification, developments on the derogations for landfill
acceptance criteria and a review of national strategy for the
management of hazardous waste. No material impact on volumes or
prices has been seen, as explained above. The potential impact of
the outcome of the UK referendum on EU membership and the key
legislative instruments that affect our markets is also being
closely monitored. The current indications are that the mainstay of
environmental legislation will remain significantly unchanged for
the foreseeable future.
Planning and permitting
In 2016, the main focus has been on consolidating existing
consents and extending Environmental Permits. The Thornhaugh
planning and permitting approval enables Augean to re-engineer part
of the landfill site, create new void and prolong the life of the
site to 2034. Planning permission was also granted for the Group to
continue operating the Port Clarence site until it is full, which
is currently estimated to be in the latter part of the twenty-first
century.
Another key factor in 2016 is the consent for the storage and
management of Naturally Occurring Radioactive Material (NORM). To
add to the unique Augean position of being able to dispose of NORM
wastes at an elevated exemption level at Port Clarence, the Group
is at various stages of obtaining similar permits at several sites
in the UK.
In July 2013, the Secretary of State for Communities and Local
Government granted a Development Consent Order (DCO) for the
extension of the landfill site at East Northants Resource
Management Facility. To fully exploit the DCO, it was necessary to
vary the permits for low level radioactive waste (LLW) and
hazardous wastes. The last of the revised permits relating to the
disposal of LLW was issued in March 2016, securing increased
radioactive capacity to the end of the life of the site, estimated
to be 2026.
Financial performance
Group overview and EBITDA
A summary of the Group's financial performance, excluding
exceptional items, along with the change compared to the same
period in 2015 is as follows:
GBP'm except where 2016 2015 Change
stated
------------------------ ------ ------ --------
Revenue 36.8 31.3 17.6%
------------------------ ------ ------ --------
Operating profit 3.5 3.5 2.6%
------------------------ ------ ------ --------
Profit before taxation 3.1 3.1 0.6%
------------------------ ------ ------ --------
EBITDA (defined
below) 6.7 5.8 15.1%
------------------------ ------ ------ --------
Net operating cash
flow 5.3 6.6 (19.2)%
------------------------ ------ ------ --------
Basic earnings per
share 2.42p 2.30p 5.2%
------------------------ ------ ------ --------
Return on capital
employed 11.4% 11.7% (0.3)%
------------------------ ------ ------ --------
Trading, operating profit and EBITDA
Net revenue for the six months ended 30 June 2016 increased by
18% to GBP36.8m (H1 2015: GBP31.3m). Operating profit before
exceptional items increased by 3% to GBP3.5m (H1 2015: GBP3.5m) and
profit before tax increased by 1% to GBP3.1m (H1 2015: GBP3.1m), on
the same basis.
Earnings before interest, taxation, depreciation and
amortisation (EBITDA), before exceptional items, is calculated as
follows:
2016 2015
GBP'm GBP'm
------------------ ------- -------
Operating profit 3.5 3.5
------------------ ------- -------
Depreciation and
amortisation 3.2 2.3
------------------ ------- -------
EBITDA 6.7 5.8
------------------ ------- -------
Exceptional items
Exceptional charges of GBP1.7m in the period (H1 2015: GBP0.1m)
comprise GBP0.5m of costs associated with the acquisition of Colt
Holdings Limited, GBP1.1m of costs related to the settlement of a
commercial dispute with a customer and GBP0.1m of other
charges.
Earnings per share
Basic earnings per share (EPS), excluding exceptional items,
increased by 5% to 2.42 pence (H1 2015: 2.30 pence).
The Group made a profit after taxation, excluding exceptional
items, of GBP2.7m (H1 2015: GBP2.4m), of which GBP2.7m (H1 2015:
GBP2.3m) was attributable to equity shareholders.
The total number of ordinary shares in issue was unchanged
during the period at 102,249,083 with the weighted average number
of shares in issue increasing from 102,029,822 to 102,249,083, for
the purposes of basic EPS.
Dividend
The Board's current policy is to pay a single annual dividend
following the Annual General Meeting. A payment of GBP0.7m, based
on a dividend of 0.65 pence per share was made to shareholders in
June 2016 in respect of the year ended 31 December 2015 (2015:
GBP0.5m, 0.50 pence per share). Accordingly, no interim dividend
has been recommended.
Cash flow and net debt
The cash flow of the Group is summarised as follows:
2016 2015
GBP'm GBP'm
--------------------------------- ------- -------
Net operating cash flows
before exceptional items 5.3 6.6
--------------------------------- ------- -------
Net operating cash flows
from exceptional items (0.9) (0.1)
--------------------------------- ------- -------
Total net operating cash
flows 4.4 6.5
--------------------------------- ------- -------
Maintenance capital expenditure (1.4) (1.1)
--------------------------------- ------- -------
Post-maintenance free cash
flow 3.0 5.4
--------------------------------- ------- -------
Development capital expenditure (2.2) (1.2)
--------------------------------- ------- -------
Acquisition of Colt Holdings (8.9) -
--------------------------------- ------- -------
Purchase of remaining shares
in ANSS - (1.1)
--------------------------------- ------- -------
Free cash flow (8.1) 3.1
--------------------------------- ------- -------
Dividend payments (0.7) (0.5)
--------------------------------- ------- -------
Proceeds from issuance
of equity - 0.1
--------------------------------- ------- -------
Net cash (consumption)
/ generation (8.8) 2.7
--------------------------------- ------- -------
The post-maintenance free cash flow of the Group, as defined
above, excluding exceptional items, decreased by 29% to GBP3.9m (H1
2015: GBP5.5m), after excluding net operating cash outflows from
exceptional items of GBP0.9m (H1 2015: GBP0.1m).
Net operating underlying cash flows were generated from
continuing trading as follows:
2016 2015
GBP'm GBP'm
-------------------------------- ------- -------
EBITDA before exceptional
items 6.7 5.8
-------------------------------- ------- -------
Net working capital movements (0.4) 1.1
-------------------------------- ------- -------
Interest and taxation payments (1.0) (0.9)
-------------------------------- ------- -------
Other - 0.6
-------------------------------- ------- -------
Net operating cash flows
before exceptional items 5.3 6.6
-------------------------------- ------- -------
Net operating cash flow as a percentage of EBITDA represented
79% in 2016 (H1 2015: 113%).
Capital investment in property, plant and equipment made by the
Group totalled GBP3.6m (H1 2015: GBP2.3m) and is shown in the table
below, split between maintenance investment, focused on upgrading
existing facilities, and development investment on new
activities:
2016 2016 2016 2015
Maintenance Development TOTAL TOTAL
GBP'm GBP'm GBP'm GBP'm
--------------------------- ------------- ------------- ------- -------
Energy & Construction 0.2 0.7 0.9 1.0
--------------------------- ------------- ------------- ------- -------
Radioactive Waste - - - -
Services
--------------------------- ------------- ------------- ------- -------
Industry & Infrastructure 0.1 - 0.1 0.1
--------------------------- ------------- ------------- ------- -------
Augean Integrated
Services 0.7 0.3 1.0 0.5
--------------------------- ------------- ------------- ------- -------
Augean North Sea
Services 0.3 0.9 1.2 0.4
--------------------------- ------------- ------------- ------- -------
Other/corporate 0.1 0.3 0.4 0.3
--------------------------- ------------- ------------- ------- -------
Total 1.4 2.2 3.6 2.3
--------------------------- ------------- ------------- ------- -------
As a result of the above, net debt, defined as total borrowings
less cash and cash equivalents, increased to GBP12.9m at 30 June
2016, from GBP4.3m at 31 December 2015. This represented gearing,
defined as net debt divided by net assets, of 23.4% (31 December
2015: 7.8%, 30 June 2015: 5.5%). The ratio of net debt to EBITDA,
before exceptional items, was 1.0 times (31 December 2015: 0.4
times, 30 June 2015: 0.3 times).
Financing
The activities of the Group are substantially funded by a bank
facility, comprising a committed revolving credit facility (RCF)
and bank overdraft. The RCF was renewed on improved commercial
terms on 21 March 2016 with HSBC Bank plc at a level of GBP20m with
an uncommitted option of a further GBP10m exclusively to fund
acquisitions. The maturity of the facility is October 2020 and the
overdraft is reviewed annually. This facility, along with the
underlying cash generation of the Group, is expected to provide the
required funds to support further growth of the business over that
period. As at 30 June 2016, the undrawn committed funds available
to the group totalled GBP4.2m, excluding cash of GBP2.5m.
Balance sheet and return on capital employed
Consolidated net assets were GBP55.0m on 30 June 2016 (30 June
2015: GBP54.9m) and net tangible assets, excluding goodwill and
other intangible assets, were GBP30.0m (30 June 2015: GBP35.0m),
all of which was attributable to equity shareholders of the
Group.
Return on capital employed, from continuing operations and
excluding exceptional items, defined as operating profit divided by
average capital employed, where capital employed is net assets
excluding net debt, decreased to 11.4% in the twelve months ended
30 June 2016 (H1 2015: 11.7%).
Managing risk
The performance of the business is linked to economic activity
in the waste markets it serves, including the manufacturing,
construction, nuclear decommissioning, energy-from-waste and oil
& gas sectors. Fluctuations in the UK economy in general and
these sectors in particular affect Group performance, along with
Governmental regulatory, fiscal policies, inflation and other cost
pressures. Risks are mitigated by diversifying the customer base
and by linking gate fees and other customer charges, wherever
possible, to prevailing operating costs and commodity prices,
including the costs of waste disposal outside of the Group. There
are also a number of risks specific to the markets served by the
Group which may have a material impact on activities and results.
Those risks are set out on pages 40 to 43 of the Augean plc 2015
Annual Report and Accounts and remain materially unchanged. The
Group uses a range of resources to manage and mitigate its risks,
including the adoption of a broad range of internal controls, the
use of risk registers and regular reporting, monitoring and
feedback of risks through the business.
Outlook
The Group has performed well in the first half of 2016, with
particularly strong performances from its Energy & Construction
and Industry & Infrastructure businesses.
The Group is well-placed to continue to take advantage of growth
opportunities and to deliver profit growth for 2016, in particular
due to additional APCR volumes secured in the first half and the
integration of the Colt Holdings acquisition. Accordingly, the
Board remains confident of delivering full year financial results
in line with market expectations.
Dr Stewart Davies
Chief Executive
19 September 2016
Unaudited consolidated statement of comprehensive income
For the six months ended 30 June 2016
Unaudited Unaudited Audited
Six months Six months Year
Ended Ended ended
30 June 30 June 31 December
2016 2015 2015
Note GBP'000 GBP'000 GBP'000
-------------------------------------- ---- ---------- ---------- -----------
Continuing operations
Revenue 4 36,810 31,311 61,005
Operating expenses (33,265) (27,856) (54,185)
-------------------------------------- ---- ---------- ---------- -----------
Operating profit before exceptional
items 3,545 3,455 6,820
Exceptional items (1,722) (113) (3,508)
-------------------------------------- ---- ---------- ---------- -----------
Operating profit 1,823 3,342 3,312
Net finance charges (473) (402) (788)
Profit before tax 1,350 2,940 2,524
Taxation 5 (361) (632) (837)
-------------------------------------- ---- ---------- ---------- -----------
Profit from continuing operations
and total comprehensive income 989 2,308 1,687
-------------------------------------- ---- ---------- ---------- -----------
Profit attributable to:
Equity shareholders of Augean
plc 989 2,256 1,635
Non-controlling interest - 52 52
-------------------------------------- ---- ---------- ---------- -----------
Earnings per share
Basic 0.97p 2.21p 1.60p
Diluted 6 0.94p 2.15p 1.56p
Unaudited consolidated statement of financial position
At 30 June 2016
Unaudited Unaudited Audited
30 June 30 June 31 December
2016 2015 2015
GBP'000 GBP'000 GBP'000
------------------------------ --------- --------- -----------
Non-current assets
Goodwill 23,531 19,602 19,757
Other intangible assets 2,410 271 214
Property, plant and equipment 45,381 43,248 42,918
Deferred tax asset 1,642 1,688 2,316
72,964 64,809 65,205
------------------------------ --------- --------- -----------
Current assets
Inventories 388 347 306
Trade and other receivables 18,281 14,070 11,829
Cash and cash equivalents 2,498 1,271 3,553
------------------------------ --------- --------- -----------
21,167 15,688 15,688
------------------------------ --------- --------- -----------
Current liabilities
Trade and other payables (16,456) (13,468) (10,838)
Current tax liabilities (701) (768) (940)
Borrowings (36) (1,045) (1,054)
Provisions (25) - (25)
------------------------------ --------- --------- -----------
(17,218) (15,281) (12,857)
------------------------------ --------- --------- -----------
Net current assets 3,949 407 2,831
------------------------------ --------- --------- -----------
Non-current liabilities
Borrowings (15,315) (3,250) (6,764)
Provisions (6,629) (7,080) (6,874)
------------------------------ --------- --------- -----------
(21,944) (10,330) (13,638)
------------------------------ --------- --------- -----------
Net assets 54,969 54,886 54,398
------------------------------ --------- --------- -----------
Equity
Share capital 10,225 10,225 10,225
Share premium account 612 612 612
Retained earnings 44,132 44,049 43,561
------------------------------ --------- --------- -----------
Total equity 54,969 54,886 54,398
------------------------------ --------- --------- -----------
Unaudited consolidated statement of cash flows
For the six months ended 30 June 2016
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
Note GBP'000 GBP'000 GBP'000
-------------------------------------- ---- ----------- ----------- -----------
Operating activities
Cash generated from operations 7 5,385 7,352 12,348
Finance charges paid (438) (441) (715)
Tax paid (599) (443) (1,105)
Net cash generated from operating
activities 4,348 6,468 10,528
-------------------------------------- ---- ----------- ----------- -----------
Investing activities
Purchases of property, plant
and equipment (3,563) (2,303) (7,474)
Purchases of intangible assets - (12) (51)
Purchase of business (net of
cash acquired) (8,901) - (91)
Net cash used in investing activities (12,464) (2,315) (7,616)
-------------------------------------- ---- ----------- ----------- -----------
Financing activities
Issue of equity - 96 96
Drawdown / (repayment) of loan
facilities 7,750 (2,874) 626
Acquisition of non-controlling
interest - (1,050) (1,050)
Repayments of obligations under
finance leases (24) (45) (22)
Dividends paid (665) (511) (511)
-------------------------------------- ---- ----------- ----------- -----------
Net cash generated from / (used
in) financing activities 7,061 (4,384) (861)
-------------------------------------- ---- ----------- ----------- -----------
Net (decrease) / increase in
cash and cash equivalents (1,055) (231) 2,051
Cash and cash equivalents at
beginning of period 3,553 1,502 1,502
-------------------------------------- ---- ----------- ----------- -----------
Cash and cash equivalents at
end of period 2,498 1,271 3,553
-------------------------------------- ---- ----------- ----------- -----------
Unaudited consolidated statement of changes in equity
For the six months ended 30 June 2016
Share Share Retained Shareholders' Non-controlling Total
capital premium earnings equity interest equity
account
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2015 10,199 542 42,059 52,800 955 53,755
Total comprehensive
income for the period
Retained profit - - 2,256 2,256 52 2,308
------------------------------- -------- -------- --------- ------------- --------------- -------
Total comprehensive
income for the period - - 2,256 2,256 52 2,308
------------------------------- -------- -------- --------- ------------- --------------- -------
Transactions with
owners of the Company
Issue of equity 26 70 - 96 - 96
Acquisition of non-controlling
interest - - (43) (43) (1,007) (1,050)
Dividends paid - - (511) (511) - (511)
Share-based payments - - 288 288 - 288
------------------------------- -------- -------- --------- ------------- --------------- -------
Total transactions
with the owners of
the Company 26 70 (266) (170) (1,007) (1,177)
------------------------------- -------- -------- --------- ------------- --------------- -------
At 30 June 2015 10,225 612 44,049 54,886 - 54,886
------------------------------- -------- -------- --------- ------------- --------------- -------
Total comprehensive
income for the period
Retained profit - - (621) (621) - (621)
------------------------------- -------- -------- --------- ------------- --------------- -------
Total comprehensive
income for the period - - (621) (621) - (621)
------------------------------- -------- -------- --------- ------------- --------------- -------
Transactions with
owners of the Company
Share-based payments - - 133 133 - 133
------------------------------- -------- -------- --------- ------------- --------------- -------
Total transactions
with the owners of
the Company - - 133 133 - 133
------------------------------- -------- -------- --------- ------------- --------------- -------
At 31 December 2015 10,225 612 43,561 54,398 - 54,398
------------------------------- -------- -------- --------- ------------- --------------- -------
Total comprehensive
income for the period
Retained profit - - 989 989 - 989
------------------------------- -------- -------- --------- ------------- --------------- -------
Total comprehensive
income for the period - - 989 989 - 989
------------------------------- -------- -------- --------- ------------- --------------- -------
Transactions with
owners of the Company
Dividends paid - - (665) (665) - (665)
Share-based payments - - 247 247 - 247
------------------------------- -------- -------- --------- ------------- --------------- -------
Total transactions
with the owners of
the Company - - (418) (418) - (418)
------------------------------- -------- -------- --------- ------------- --------------- -------
At 30 June 2016 10,225 612 44,132 54,969 - 54,969
------------------------------- -------- -------- --------- ------------- --------------- -------
1 Statutory information
The financial information in the interim report does not
constitute statutory accounts as defined by Section 434 of the
Companies Act 2006 and has not been audited or reviewed.
The financial information relating to the year ended 31 December
2015 is an extract from the latest published financial statements
on which the auditor gave an unmodified report that did not contain
statements under Section 498 (2) or (3) of the Companies Act 2006
and which have been filed with the Registrar of Companies.
The interim financial statements for the six months ended 30
June 2016 are available from the Group's website at
www.augeanplc.com.
2 Accounting policies
The Interim financial statements have been prepared in
accordance with the AIM Rules for Companies and on a basis
consistent with the accounting policies and methods of computation
as published by the Group in its Annual Report for the year ended
31 December 2015, which is available on the Group's website.
3 Basis of preparation
The Group has chosen not to adopt IAS 34 'Interim Financial
Statements' in preparing these interim financial statements and
therefore the Interim financial information is not in full
compliance with International Financial Reporting Standards.
4 Operating segments
The Group has five reportable segments. The five 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 Chief Executive Officer (CEO) (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:
-- Energy and Construction: Augean operates three modern
hazardous and non-hazardous landfill operating sites based at East
Northants Resource Management Facility (ENRMF), Thornhaugh in
Northamptonshire and Port Clarence on Teesside, providing waste
remediation, treatment and disposal services to its customers. The
business unit includes a site at Cooks Hole in Northamptonshire
where minerals are extracted and also generates energy as
electricity from closed landfill cells.
-- Radioactive Waste Services: Augean provides waste disposal
services of low level radioactive wastes and naturally occurring
radioactive material produced in the UK.
-- Augean Integrated Services: Augean operates a High
Temperature Incinerator at Sandwich, East Kent and a site in
Cannock focused on Total Waste Management solutions.
-- Augean North Sea Services: Augean provides waste management
and waste processing services to offshore oil and gas operators in
the North Sea.
-- Industry and Infrastructure: Augean operates three waste
processing sites across the UK, with activities focused on the
management of oil-contaminated waste. The business unit also
provides specialist industrial cleaning services. The Colt
Industrial Services business, acquired in May 2016, is included
within this business unit.
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 CEO. 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.
All activities arise solely within the United Kingdom.
Inter-segment trading is undertaken on normal commercial terms.
The segmental results for the six months ended 30 June 2016 were
as follows:
Radioactive Augean Augean
Energy Waste Integrated Industry North
and Construction Services Services and Infrastructure Sea Services Group
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- ------------------ ------------ ------------ -------------------- -------------- --------
Revenue
Hazardous landfill
activities 6,886 - - - - 6,886
Non-hazardous
landfill activities 1,730 - - - - 1,730
Waste treatment
activities - - 1,566 7,595 - 9,161
Total Waste
Management
activities - - 2,416 - - 2,416
Energy generation 38 - - - - 38
APCR(*) management 4,573 - - - - 4,573
Radioactive waste
management - 571 - - - 571
Processing of
offshore waste - - - - 2,579 2,579
Rental of offshore
equipment and
personnel - - - - 1,840 1,840
Industrial Services
activities - - - 2,008 1,578 3,586
----------------------
Total revenue
net of landfill
tax 13,227 571 3,982 9,603 5,997 33,380
Landfill tax 4,826 - - - - 4,826
---------------------- ------------------ ------------ ------------ -------------------- -------------- --------
Total revenue
including
inter-segment
sales 18,053 571 3,982 9,603 5,997 38,206
Inter-segment
sales (569) - (287) (538) (2) (1,396)
---------------------- ------------------ ------------ ------------ -------------------- -------------- --------
Revenue 17,484 571 3,695 9,065 5,995 36,810
---------------------- ------------------ ------------ ------------ -------------------- -------------- --------
Result
Operating
profit/(loss)
before exceptional
items 4,262 (70) (211) 173 (242) 3,912
Exceptional items (11) (8) (8) (555) (1,140) (1,722)
---------------------- ------------------ ------------ ------------ -------------------- -------------- --------
Operating
profit/(loss) 4,251 (78) (219) (382) (1,382) 2,190
---------------------- ------------------ ------------ ------------ -------------------- -------------- --------
Finance charges (473)
Central costs (367)
---------------------- ------------------ ------------ ------------ -------------------- -------------- --------
Profit before
tax 1,350
Taxation (361)
---------------------- ------------------ ------------ ------------ -------------------- -------------- --------
Profit after
tax 989
---------------------- ------------------ ------------ ------------ -------------------- -------------- --------
Exceptional items comprise GBP1,111,000 relating to a commercial
dispute (Note 10), GBP547,000 relating to acquisition costs and
GBP64,000 of other costs.
* APCR means Air Pollution Control Residues
The segmental results for the six months ended 30 June 2015 were
as follows:
Radioactive Augean Industry Augean
Energy Waste Integrated and North
and Construction Services Services Infrastructure Sea Services Group
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ ------------------ ------------ ------------ ------------------ -------------------- --------
Revenue
Hazardous
landfill
activities 6,572 - - - - 6,572
Non-hazardous
landfill
activities 1,323 - - - - 1,323
Waste treatment
activities - - 1,163 7,367 - 8,530
Total Waste
Management
activities - - 1,773 - - 1,773
Energy generation 28 - - - - 28
APCR management 3,235 - - - - 3,235
Radioactive waste
management - 1,205 - - - 1,205
Processing of
offshore waste - - - - 5,001 5,001
Rental of
offshore
equipment and
personnel - - - - 2,403 2,403
Waste transfer
activities - - - - 703 703
------------------ ------------------ ------------ ------------ ------------------ -------------------- --------
Total revenue
net of landfill
tax 11,158 1,205 2,936 7,367 8,107 30,773
Landfill tax 2,948 - - - - 2,948
------------------ ------------------ ------------ ------------ ------------------ -------------------- --------
Total revenue
including
inter-segment
sales 14,106 1,205 2,936 7,367 8,107 33,721
Inter-segment
sales (619) - (260) (1,494) (37) (2,410)
------------------ ------------------ ------------ ------------ ------------------ -------------------- --------
Revenue 13,487 1,205 2,676 5,873 8,070 31,311
------------------ ------------------ ------------ ------------ ------------------ -------------------- --------
Result
Operating
profit/(loss)
before
exceptional
items 3,005 772 (447) (509) 1,045 3,866
Exceptional items (23) (23) (22) (23) (22) (113)
------------------ ------------------ ------------ ------------ ------------------ -------------------- --------
Operating
profit/(loss) 2,982 749 (469) (532) 1,023 3,753
------------------ ------------------ ------------ ------------ ------------------ -------------------- --------
Finance charges (402)
Central costs (411)
------------------ ------------------ ------------ ------------ ------------------ -------------------- --------
Profit before
tax 2,940
Taxation (632)
------------------ ------------------ ------------ ------------ ------------------ -------------------- --------
Profit after
tax 2,308
------------------ ------------------ ------------ ------------ ------------------ -------------------- --------
Exceptional items totalling GBP113,000 substantially relate to
restructuring.
5 Taxation
The taxation charge for the six month period ended 30 June 2016
has been based on the anticipated full year effective tax rate of
20.0% (six months ended 30 June 2015: 21.5%).
All deferred tax liabilities and assets have arisen on the
temporary timing differences between the tax base of relevant
assets and their carrying value in the statement of financial
position. With the exception of a deferred tax liability arising on
the recognition of an intangible asset associated with the
acquisition of the Colt Industrial Services business, no change in
deferred tax compared to the position at 31 December 2015 has been
reflected in these statements. The taxation charge for the six
month period to 30 June 2016 is all reflected within current tax,
consistent with the 30 June 2015 position.
6 Earnings per share
The calculation of basic earnings per share (EPS) is based on
the profit attributable to ordinary shareholders of GBP989,000 (six
months ended 30 June 2015: GBP2,256,000, year ended 31 December
2015: GBP1,635,000) and a weighted average number of ordinary
shares outstanding of 102,249,083 (six months ended 30 June 2015:
102,029,822, year ended 31 December 2015: 102,139,647), calculated
as follows:
Unaudited Unaudited Audited
Six months Six Year
months
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBP'000 GBP'000 GBP'000
--------------------------------------- ----------- ---------- ------------
Earnings for the purposes of basic
and diluted EPS 989 2,256 1,635
Exceptional items (net of associated
taxation) 1,486 90 3,118
--------------------------------------- ----------- ---------- ------------
Earnings for the purposes of adjusted
basic and diluted EPS 2,475 2,346 4,753
--------------------------------------- ----------- ---------- ------------
Number of shares Number Number Number
Weighted average number of shares
for basic earnings per share 102,249,083 102,029,822 102,139,647
Effect of dilutive potential ordinary
shares from share options 2,826,458 3,000,779 2,795,165
--------------------------------------- ------------ ------------ ------------
Weighted average number of shares
for diluted earnings per share 105,075,541 105,030,601 104,934,812
--------------------------------------- ------------ ------------ ------------
Earnings per share
Basic 0.97p 2.21p 1.60p
Diluted 0.94p 2.15p 1.56p
--------------------------------------- ------------ ------------ ------------
Adjusted earnings per share
Basic 2.42p 2.30p 4.65p
Diluted 2.36p 2.23p 4.53p
--------------------------------------- ------------ ------------ ------------
The exceptional items have been adjusted, in the adjusted EPS,
to better reflect the underlying performance of the business, when
presenting basic and diluted EPS.
7 Reconciliation of operating profit to cash generated from
operations
Unaudited Unaudited Audited
Six months Six Year
months
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBP'000 GBP'000 GBP'000
--------------------------------------------- ----------- ---------- ------------
Operating profit 1,823 3,342 3,312
Amortisation of intangible assets 85 36 133
Depreciation 3,067 2,326 5,103
Impairment charge - - 2,888
--------------------------------------------- ----------- ---------- ------------
Earnings before interest, tax, depreciation
and amortisation (EBITDA) 4,975 5,704 11,436
--------------------------------------------- ----------- ---------- ------------
Share-based payments 247 288 421
(Increase) / decrease in inventories (144) 62 105
(Increase) / decrease in trade and
other receivables (3,099) (1,034) 956
Increase / (decrease) in trade and
other payables 3,676 2,090 (312)
(Decrease) / increase in provisions (270) 242 (264)
Loss on disposal of property, plant
and equipment - - 6
--------------------------------------------- ----------- ---------- ------------
Cash generated from operations 5,385 7,352 12,348
--------------------------------------------- ----------- ---------- ------------
The above EBITDA and cash flow generated from operations both
include a net cash outflow of GBP970,000 relating to exceptional
items (H1 2015: outflow of GBP113,000).
8 Analysis of changes in net debt
Audited Unaudited
31 December Acquisitions Cash Other 30 June
2015 flow movement 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- ------------ ------------- --------- --------- ----------
Cash and cash
equivalents 3,553 4,888 (5,943) - 2,498
Bank loans (7,750) - (7,750) 193 (15,307)
Finance leases (68) - 24 - (44)
---------------- ------------ ------------- --------- --------- ----------
Net debt (4,265) 4,888 (13,669) 193 (12,853)
---------------- ------------ ------------- --------- --------- ----------
9 Acquisition of subsidiary
On 18 May 2016, the Group acquired 100 percent of the issued
share capital of Colt Holdings Limited, the holding company of Colt
Industrial Services Limited, an industrial services business.
The amounts recognised in respect of the identifiable assets
acquired and liabilities assumed are as set out in the table
below:
2016 2016 2016
Book Provisional Fair
Value Fair Value
Value
adjustments
GBP'000 GBP'000 GBP'000
--------------------------- -------- ------------- --------
Intangible assets - 2,262 2,262
Property, plant
and equipment 2,524 - 2,524
Inventories 82 (32) 50
Trade and other
receivables 2,665 (43) 2,622
Cash and cash equivalents 4,888 - 4,888
Deferred tax liabilities (198) (438) (636)
Trade and other
payables (1,674) (21) (1,695)
--------------------------- -------- ------------- --------
Total identifiable
assets 8,287 1,728 10,015
--------------------------- -------- -------------
Goodwill 3,774
Total consideration 13,789
--------------------------- -------- ------------- --------
Net cash outflow
arising on acquisition:
Cash consideration 13,789
Less: cash balances
acquired (4,888)
--------------------------- -------- ------------- --------
Total cash outflow 8,901
--------------------------- -------- ------------- --------
The intangible asset of GBP2,262,000 arising from the
acquisition relates to the customer frameworks and contracts held
by the acquired business.
In addition to the initial consideration, a deferred
consideration falls due dependent on the business obtaining certain
commercial contracts in a defined time period. The fair value of
the contingent consideration, which has a maximum potential value
of GBP4,750,000, is estimated as GBPnil and was estimated by
applying likelihood estimates against each element of the deferred
consideration.
10 Contingent liability
In the 2015 Annual Report & Accounts, approved in March
2016, the Group indicated that it was involved in a commercial
dispute with a customer, which had arisen in the normal course of
business and that the customer had indicated its intention to bring
a legal claim against the Group in relation to that matter.
In July 2016, the Group settled the dispute with the customer,
without a legal claim being made. The terms of the settlement are
confidential and the total non-recurring cost of the settlement,
including amounts paid to the customer, along with advisor fees and
other related costs, is approximately GBP1.1m, which has been
reflected as an exceptional item in the consolidated income
statement of the Group in the six months ended 30 June 2016 (Note
4).
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR DKLFFQKFEBBZ
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