Augean Share Discussion Threads

[woozle1] 26/3/2018 17:31

Big insider buying can only be a good thing!

[woozle1] 23/3/2018 16:26

I think this looks like an interesting situation and I take great comfort from having Chris Mills on the board and as a shareholder. It's my understanding that issuing notices within a specific time period is v normal for HMRC to cover themselves.

He tends to get involved these situations and does very well. He bought into Telecom Plus when they had hedging issues and the shares were around 50p (now £12)).

I managed to pick 250,000 shares a few days back and hoping to get to 1,000,000 eventually. I think this is a multi bagger, once the litigation is out of the way. I think it will be softer next week as I suspect it's being tipped in the IC.

The decommissioning of the North Sea is going to cost multi billions and Aug are v well positioned. If you assume 10p of earnings in the next few year and 15x rating, 150p is easily achievable.

[cerrito] 23/3/2018 16:13

Well done to those who were more on the ball than me and bought at 26/27.
I see directors' buying was 5.5 m shares combined.

[rogash] 23/3/2018 16:00

Has anybody looked at aug today? Can't believe there has been no comment.

[cerrito] 22/3/2018 23:30

Noting the relative lack of share price movement following the announcement that HMRC had adjusted down one assessment I have been trying to get a handle on what is going on.
Not easy given as Morton2011 says we lack explanation on the tax issues.
They have never been very private shareholder friendly-interesting to see that they have no presentation of 2017 results on their website- and the few AGM’s I have been to have been perfunctory. Note that 67% odd of the shares are in hands of people who have 3pc+/
I read the very short Edison report with a DCF valuation excluding HMRC assessments equivalent to70 p per share not too far from the price pre COLT and HMRC issues. They also note the difference between the current marcap and their DCF valuation is £47m compared to HMRC assessments received to date of £12 m.. That made me do some digging.
On August 25 last year we were told that one sub had received an assessment of £2.1 m including interest for the quarter ended August 2013. We were told on October 27 that this related to South and told on the same date that North had received one for the quarter ended October 2017 of £0.8m including interest.
Since then South will have had two more- November 2013 and February 2014. North would have had the one for January 2014. This would make the five referred to in the Final results. We are not told if this £12 m figure included interest and I am assuming it is before the possible £1.5 m reduction. Given what we know ,75pc of assessment seem to be from South. As we have had to date 3 from South and 2 from North the amount of the remaining three would be about £5 m give or take making an annual rate of £17 m.
I then compared landfill tax paid for 2013-£6.9m- with that of last year £10.7m which would suggest that sums for last year will be higher than those so far disclosed relating to 2013 ; but no doubt it is more complicated than that.
We can take very limited comfort from the fact that HSBC have ignored the assessments in their covenant calculations and their Auditors are comfortable with a nil provision.
Btw Edison see 2018 as better with net cash flow which was neutral in 2017 being positive £9.8 m given less capex, no dividend and no AIS cash drain and indeed the AIS disposal receipt.
I could not find an outlook statement in Tuesday’s release and the lacklustre 2017 earnings will not have produced enthusiasm.
I am going through the rest of the figures carefully.; my intuition tells me that despite the modest share price increase in the last few days this is a good buy but my intuition is having difficulty convincing my head.
Ps
Interesting to see change of shareholder base between March 2016 and Jan 1 2018. We have said goodbye to Utilico with their 21pc, Henderson with their 10pc, JO Hambro with their 11pc and seen Schroder go down from 19 pc to 13oc and said hello to Harwood Capital with their 18 pc. Those with 3 pc+ have gone down in total from 74pc to 67pc of total shareholding.

[lbo] 22/3/2018 11:42

https://www.investing.com/analysis/augean-improving-underlying-cash-flow-200299607

[morton2011] 22/3/2018 08:17

Prelims were out this week. Profits down more than expected from the costs resulting from the tax case. They blame it largely on one contract from the Colt purchase and write down the value of that acquisition.

No explanation of what the tax issues are actually about. HMRC billing £ 8 - £ 10 million (some rebate in one quarter) for the tax bill 4 years ago so worst case they have to pay lets say £ 8 million a year since 2014. Sounds like they have not changed their practices very much so if they lose the tax case then the company is effectively bust and certainly share price will be wiped out.

The landfill tax rate as a % of input increased in 2017, volumes reduce by 20% but tax paid up by 6%, not sure what the tax increases were but feels like they are charging more tax across all the volumes. The tax paid at £ 10.6 million across 458,000 tonnes is around £ 23 per tonne when landfill tax is £ 86 per tonne for standard rate material, somehow they are making/ classifying haz waste as inert or lower rate.
Discussion in report provides some possible clues:
" APCR volumes have shown strong growth as a result of contract wins for the Group. An increase in the volume of APCR treated by the Group remains a
key strategic objective in the short and medium term, with the business well-positioned to utilise its additional investment in treatment capacity to service
the growth in Energy from Waste and biomass energy capacity in the areas of the UK served by our sites. The Group is committed to obtaining recycling
credit for its treatment of APCR which, after cost, is important for the operators of the EfW plants, the municipal authorities and ultimately the British public
in lower Council taxes. "

Still seems to me like insiders much better placed to value this as they can see all the legal opinion and discussions in detail.

Capex remains an issue as well, eating up all the 'free' cashflow. Landfill operators need to prepare cells etc for new volumes and its money that has top be spent to keep the business going which is why they cannot stop spending 'development' capex I expect.

The other point I noted is that they breached their banking covenant due to the 'tax' issues. HSBC allowing them to March 2019 to try and resolve

"Financing

During 2017, the activities of the Group were substantially funded by a bank facility, comprising a revolving credit facility and bank overdraft. That facility was renewed on 21 March 2016 with HSBC Bank plc at a level of £20m.The maturity of the facility is October 2020 and the overdraft is reviewed annually. HSBC
has, at 31 December 2017 and through to end of March 2019, waived breach of the taxation clause of the bank credit facility which requires potential
liabilities associated with tax disputes to be less than £0.1m. As at 31 December 2017, the net debt is £10.8m with headroom available to the Group of
£9.2m."

[molatovkid] 18/3/2018 23:04

I think if you are in at a higher level then its become a waiting game.....

[cerrito] 17/3/2018 20:16

The lack of activity on this board suggests that a lot of you are rather like me and for whatever reason have rather switched off Aug.
I see that they normally publish the prelims at this time of year so based on previous years we will get something in the next fortnight.
I see the AIS disposal had no effect on the sp; perhaps AUG is out if sight out of mind;perhaps it was a Friday afternoon;perhaps it was because while not a bad deal in any way, was it a good deal? Yes good to simplify the business and to be able to make a book profit on something that has never made money. That said in the interims they were very upbeat on the prospects for this.
Good to reduce debt and this could do so by 20% odd but I would not regard them as over borrowed. Have no firm view as to whether good or bad that they are keeping the East Kent facility.
I await the prelims…am not counting on getting a dividend and hope they have a good explanation of the mechanics of the tax payments in dispute with HMRC.

[lbo] 26/2/2018 17:59

https://www.thetimes.co.uk/edition/ireland/enva-wastes-no-time-in-eyeing-rilta-takeover-t7cnt60dq

[supervillain] 26/1/2018 13:22

Careful Mug punters, I expect a -60% mms cut coming.

[lbo] 22/11/2017 11:42

Following the announcement of a dispute with HMRC and a recent profit warning, the shares have fallen 47% to the point where significant value has now emerged. With the subsequent appointment of a new board (who own c25% of Augean), management will seek to improve shareholder value. Already, annualised cost savings of £3m have been identified and will lead to a reduction in the complexity of the business and a streamlining of reporting lines.

[lbo] 30/10/2017 11:19

Edison updated forecasts2017 PBT £6m EPS 5.56p DPS 1.2p2018 PBT £8.1m EPS 6.88p DPS 1.44p

[value hound] 25/10/2017 18:25

That's a sizeable buy.

[lbo] 19/10/2017 09:25

https://www.research-tree.com/companies/uk/waste-services/augean/research/n-1-singer/n-1-singer-augean-board-changes-and-reduction-in-expectations/CN74_7_1Augean has announced a number of Board changes. These include the resignation of CEO Stewart Davies and a move from Non-Executive Chairman to Executive Chairman for Jim Meredith. They also include the appointment of two new NEDs: Roger McDowell, who was a senior Board member of the group until 2015 and Christopher Mills, founder of Harwood Capital which is now the largest shareholder in Augean. The group has also announced further cost saving measures in response to continued weakness in trading. We have reduced our adjusted PBT forecasts by 12% for 2017, with more modest reductions of 8% for 2018 and 6% for 2019 as the cost savings take effect.

[cerrito] 17/10/2017 12:02

Fair question Morton2011 as to why Davies resigned as CEO.
I do not hold him responsible for the tax situation which for me at the end of the day is a board decision and as you say predates his mid 2013 appointment although he may have misread the smoke signals coming from HMRC.
The fact is that he was paid a lot of money to run a pretty small company which never seems to fulfil its potential and so he was vulnerable. We do not know if he fell out with his colleagues or if Meredith was/is feeling bored and wants to get his hands on the driving wheel.
Should he have spotted the bad contract COLT had entered into pre acquisition? On his salary the answer has to be yes. Was he responsible for the slow take up of LLW? Not in my book. Was he responsible for the issues at the East Kent incinerator? Have no idea.
I did get the impression (which may well have been erroneous) that he had a sharper focus than his predecessor. It will be interesting to see how successful Meredith is especially giving the uncertainty around the UK economy-reflecting the blame they laid on the General Election which I find hard to believe.

[morton2011] 17/10/2017 11:01

Why did Stewart Davies resign ? The tax issues predate his appointment

[cerrito] 16/10/2017 11:32

As a holder of AUG,IRV and PRES had a busy morning.
I think the initial price fall was overdone this morning but not sure if I see much scope for further improvement from levels as I write.
I can understand why they say that they do not see imminent resolution of HMRC issue.
Would have been good to have had more insight into where trading was weaker and the impact of HMRC issues. As flagged up there will be legal expenses but not sure how this uncertainty is impacting the underlying business.
I think we can wave goodbye for any dividend in the near future.
Regret not having made it to an AGM recently which would have given me a feel for Meredith. He has the experience but he has been the chair for 5 years so does have some input for the current situation. I see last year he got £60k which is a bit on the high side to chair a company of AUG’s size and the CEO got £362k in 2016 and £264k in 2015 which in the circumstances was very generous. I see the CEO’s name has been removed from the website.
I got the impression that Meredith will be around for a while; incidentally saw in the AR his signature. Be interested if there are any handwriting specialists among you and what you made of it.
I have no feel for Mills; McDowell comes across well and is a plus. Given my holding in AVG-post HAYT- I have quite a lot riding on him.
I should have smelt a rat when there was no Edison report on the interims.
I see at these share price more of a buy than a sell but I have enough thank you at the moment and do not have a strong enough conviction to buy more.

[topvest] 16/10/2017 07:56

Another profit warning today. I'm sure having Chris Mills on the board will help. Prefer to have an interest through his investment trusts, rather than directly. Too risky.

[lbo] 21/9/2017 13:37

Mr. Andrew John Bryce is the Owner of Andrew Bryce & Co. Mr. Bryce serves as Convenor of Waste Working Party of United Kingdom Environmental Law Association. He served as an Equity Partner and Head of Environmental Services of City law firm Cameron Markby Hewitt (now part of CMS Cameron McKenna). Mr. Bryce has a long and distinguished career in environmental law in the UK. He trained to be a lawyer at Newcastle University and College of Law Lancaster Gate. During his career, he has focused practical experience on: waste management; contaminated land; regulatory advice on pollution control; EU environmental law; legal aspects of environmental management systems; environmental insurance issues and environmental warranty negotiations. Mr. Bryce has a wide range of contacts, environmental law and regulatory experience. He serves as Vice Chairman of the Planning and Environmental Sub-Committee of the City of London Law Society. Mr. Bryce served as Chairman and Vice Chairman of the United Kingdom Environmental Law Association. He has been Non-Executive Director of Augean plc since September 4, 2017. Mr. Bryce served as a Non Executive Director of Augean plc since June 2005 until July 27, 2017.

[1he warrior] 20/9/2017 18:33

“Augean believes this assessment to be without merit and we will appeal.”



and yet the market thinks otherwise as the share price got battered by 60%. Market tends to be right.

[topvest] 19/9/2017 20:34

Well I'm happy to take the risk through North Atlantic Smaller Companies Investment Trust and Oryx both run by Christopher Mills. Lakehouse and Augean have both been added aggressively recently. Wouldn't buy either myself but don't deny the value angle if Christopher Mills is involved. That's the value of holding his investment vehicles if he is good at something you don't personally feel comfortable in investing in.