Augean Share Discussion Threads

[brummy_git] 27/8/2017 19:57

An lbo is possible, but only once the tax issue has been resolved , or at least quantified in magnitude. I can't see anyone wanting to risk any significant capital until they know how much this going to cost them.

[buywell3] 27/8/2017 18:38

LBO

Your views please

[brummy_git] 26/8/2017 10:11

From the 2016 accounts, it appears Augean received 574,000 tonnes (incl 111,000 of Flyash from incinerators) into its landfill and paid £10.1 million of LFT. The standard rate was £84.40/Ton (say for normal commercial rubbish), and £2.65/Ton for either pre-treated, reprocessed, naturally occurring rocks/soils/ceramins/minerals, and generally less hazardous waste (including flyash), etc.



IMO, the key to the whole tax dispute, will centre around which waste streams should be charged at which applicable rate. And whether Augean, for the lower rated volumes, has correctly followed the guidelines (see above link) and possesses valid records to show it has tested the 3rd party waste as it has been deposited.

What is obviously a bit galling is that it seems to have taken 20 years (LFT introduced in 1996!) for this dispute to surface. Why on earth hasn't the issue been raised before by HMRC, and why hasn't Augean at least sought informal approval that it was following the rules correctly.

That said given the company is only a collector, and doesn't profit at all from charging the levy, then once everyone gets round the table, this dispute may be able to be resolved amicably. In the event mistakes have been made, then to me both parties look at least to be partly culpable.

Before the dispute gets to court, I guess there is now a 45 day appeal process with HMRC – so hopefully which we should hear the results of this sometime in October. Clearly this whole issue has much broader industry connotations, outside of just Augean's landfills. Which unfortunately may incentivise the Treasury to drag the process out and take the case to court - ie hoping to win a much bigger prize further down the road.

[morton2011] 26/8/2017 07:30

Cerrito.
Augean are probably taking in some waste for 'treatment' not landfill. The treatment is somehow allowing them to deposit the waste in their landfill without paying landfill tax which is £ 86.10 a tonne (£72 in 2013). They are not alone is these type of practices and as noted are a well run company. So internally they will have known what they were doing and would have taken advice on it.
They refer to another subsidiary and I suspect a lot of this relates to APCR resiudes (the waste out of incinerators for largely domestic waste). This was in last annual report:
"The Group has developed the capability to treat and
dispose of APCR at our sites at Port Clarence and East
Northants Resource Management Facility (ENRMF),
handling approximately 111,000 tonnes, representing an
approximate 40% market share (2015: approximate 35%
share)."

Note the 'treat and dispose' wording and these are both treatment plants on landfill sites despite the stupid naming convention of 'resource management facility'.

The size of this claim would be very large as the RNS suggests if it this waste stream. In the quarter they referred to in 2013 they were only doing around 35,000 tonnes annually of APCR (their interim report). So treble the volume and 20% higher landfill tax means it could be say 3 times larger in the current quarter so possibly £ 24 million per annum for 2017 alone..

There are treatment processes which do not involve with Landfill - sounds better environmentally to me. So a producer of the waste would be looking at possibly double or more his disposal cost for the type of wastes involved but Augean are just becoming large tax collectors if so even if the producer has no other option.

Listed companies seem to always release very minimal details in these type of situations so we will all be sticking our fingers in the air trying to figure this out I suspect.

I see few problems for the day to day trading and HSBC loan etc assuming it does not need short term refinance. There are a lot of assets and they will be secured by the lenders one would assume.

Overall looks very risky for a PI

[topvest] 25/8/2017 19:14

Think hazardous waste is a bit of an industry issue. Don't hold, but don't like the sound of this. Think I might indirectly hold through Utilico or Oryx.

[cerrito] 25/8/2017 19:03

I am still having difficulty reading this.
I have been through the AR to see if there was any hint of this and I could not see any; page 35 refers to HMRC future thinking on landfill tax but that is for the future; they do acknowledge the risk on Page 41 of a difference of opinion between them and HMRC as to whether landfill tax is applicable but I read this as being theoretical.
This must have come up quickly as otherwise the Auditor would have mentioned it in the March 20 letter.
Three aspects.
The first is the high level of legal costs they will need to expense.
The second is the result of the Appeal. My reading of AUG management and BOD is that they are thorough and professional and good that Bryce-although he seems to have no tax expertise- is back on the job. While intuitively I would back AUG difficult to read. One wonders why they did not get a definitive ruling with HMRC before-perhaps that is not the way these things are done.
The third is how this impacts on the business going forward-as Morton2011 highlighted.
It will be useful if the company could commission an Edison report which explains the issues.
I am not planning to buy any more and well done to those who sold first thing and do not anticipate the swift rebound we have seen this week with PFG shares.
PS One wonders what HSBC’s stance is with the Revolver and Overdraft
PPS Not sure how much more will be revealed on Sept 19 when we get the interims.

[clocktower] 25/8/2017 14:49

1 p, HMRC has to win first and that is not a forgone conclusion.This company is used to dealing with hazardous waste and even radioactive waste, so HMRC should be a pushover. :-)

[1he patriot] 25/8/2017 14:09

Hope they do not bankrupt it. I do not think they will destroy people livelihood.

Make shareholders pay for it with a Rights issue.

[clocktower] 25/8/2017 14:06

HMRC is unlikely to Bankrupt the company over this tax dispute. Yes it will cost in legal fees but a deal will be struck I expect.What price then is another matter.

[1he patriot] 25/8/2017 14:03

This is from the RNS

Should HMRC make further such assessments, for this and one other subsidiary, the total amount that could potentially be claimed could be very large. Augean intends to work with stakeholders in the sector about the broader adverse implications for the continued and necessary proper treatment of hazardous waste.




Could be very large. How large? Of course that's the worst case scenario, but it can't be discounted.

[1he patriot] 25/8/2017 13:58

It's could become a play when it's no longer hot. I am basing this on the fact, over-reaction / oversold can last for days, weeks.

What I am saying punters who bought in today, made mistakes so far, that's just my opinion. It's difficult to know who are dumping large amounts in the background.


Some people may run today and cut losses on their wrong calls.

[clocktower] 25/8/2017 13:58

For every seller there is a buyer at the level of support.

[1he patriot] 25/8/2017 13:54

Looks clearly biggie shareholder dumping, there could be more.

[robizm] 25/8/2017 13:12

I am not in this but how nice if the patriot to warn everyone off as he is so concerned

[robizm] 25/8/2017 13:12

I am not in this but how nice if the patriot to warn everyone off as he is so concerned

[pugugly] 25/8/2017 12:46

28th August - U will be lucky - Market Closed Bank Holiday - is it not ?

[king kong dong] 25/8/2017 12:45

This is a clear over-reaction. The RNS indicates that the company believe they have no grounds and that HMRC are buying time.....that wouldnt surprise me.

Augean are profit making and have free cashflow....

All to play for.

[1he patriot] 25/8/2017 12:35

Sorry guys

buying above 32p now selling at 28p is 14% loss.

I have a bad feeling at the end of the day 14% loss will become -30% or more and on Monday, could -60% down.

[1he patriot] 25/8/2017 11:35

People buying at this price could be down - 25% to -30% by the end of the day.


I suspect bad newspaper report too on this and could crash again on Monday to 10p.

[1he patriot] 25/8/2017 11:24

This will be closer to 20p-25p and we could see this in single digit next week.

[pugugly] 25/8/2017 10:47

bb - was on watch list So OK - Always looking for over sold opportunities.

[bionicblabbermouth] 25/8/2017 10:02

PUG

Seems you are always in every disaster almost every day.

You should be bankrupt by now.

[dozey3] 25/8/2017 09:07

Only for the brave now. Thank goodness I didn't park mine in the ISA - at least I can use the capital loss :-(

[pugugly] 25/8/2017 09:01

Definate leak (imo) price had been trending down for some time - rns was (imo) just acknowledging what was known to a few -