Augean Share Discussion Threads

[cerrito] 18/9/2018 23:21

I have yet to have a close look at today's results and will do so soonest.
Not quite sure why I did not think about this before but wondered what the experience of others in the field had been on landfill tax.
Reading the last BIFFA AR( and I have not had shares
in them for 10 years) page 168 of the AR describes a long running case with HMRC which BIFFA lost at First Tier Tax Tribunal and are appealing. My sense is that there are specific issues here which do not make it comparable to AUG.
I could find no reference in the latest Pennon/Viridor or Renewi/ Shanks AR's to issues with HMRC concerning land fill tax.
Not sure why HMRC picked on little old AUG.

[woozle1] 18/9/2018 11:10

Re valuation, it looks like they'll do 7.5p EPS. Applying a market p/e of 12 gets one to 90p this year. Once the HMRC case is out of the way, a bid for the company looks likely if it continues to languish on a single digit p/e.
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[woozle1] 18/9/2018 10:50

Morton, agreed but it also depends on how much of the business going forward will be subject to landfill tax e.g. the North Sea business
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[morton2011] 18/9/2018 08:06

better = HMRC withdrawn their multi £ million claim. As it is reads to me it is more like a settlement is being negotiated. Key question for me as before is would any settlement affect ongoing business as tax could be payable on existing waste streams and may make Augean uncompetitive.
Rest of results read well and they should be able to generate the cash to pay any settlement as they could raise more debt if needed.

[molatovkid] 18/9/2018 07:21

Yes....excellent news. All looking good - very good !

[woozle1] 18/9/2018 07:20

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".

Not sure we could have expected better.

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[matt123d] 04/9/2018 21:09

Should be able to see 60p from this move.

[revoman] 04/9/2018 14:05

Looking a little perky today.

[molatovkid] 24/7/2018 18:28

Company look like the actions they have taken are working and they are turning a corner....loss making divisions sold, debt coming down with the prospect of being debt free and trading itself very well.

Great update!

[value hound] 24/7/2018 13:28

Not too shabby an update.

[woozle1] 25/6/2018 15:26

Applying a market rating of 13 to earnings of £6.9m gets you to double the s/p.
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[cerrito] 25/6/2018 14:46

The following is what constitutes my prep for my going to the AGM which I could not make in the end..
For those of you who have a different take welcome your input.
I note no AGM statement today. The company is somewhat taciturn-reflecting as it does that 70% odd of the shares are held by people with more than 3%. none of whom have a retail base; I would imagine that they would say that nothing has changed since May 16 RNS that trading in line with 2018 expectations. I note Digital Look has 2018 revenues at £76m (adjusting for AIS and COLT broadly flat) and pretax at £8.35 which would be very good if achieved and comfortably a company record; problem is that we have no idea if this is what the Company regards as market expectations.
I asked myself some basic questions

Where is growth coming from?
Air Pollution Control Residues (APCR) anticipated to grow 9%pa for next few years but not clear how big it is in sales terms at the present time. The way I read the AR is that they are currently at their capacity of 122k tonnes pa-out of a total UK market demand of 300k for those who do not provide this service themselves. This would suggest that they would be incurring development capex but no mention of it in the AR. Note in last year’s presentation they talked about modest capex in the next couple of years. I am a bit confused,
This is their involvement in EFW which they treat at Port Clarence and East Northants.
North Sea sales should continue to expand- although not clear if it can repeat 2017 revenue increase of 41%. Given no acquisitions this was very good; note that 2017 development capex was 20% of group total at £900k with 2016 development capex higher at £1.9m. Given operational gearing would have expected increase in operating profit from £0.5m to £0.7m to have been greater. Not clear to me the relative importance of exploration, production or decommissioning as drivers of growth,.
Note comment that supply of LLW unpredictable; waste and industrial waste supply reduced as fewer energy intensive industries in UK and difficult to sell to Continent.

Will they close/sell more units?
Have sold Colt which was a major reason for I&I losses but note this division was making losses pre COLT acquisition so perhaps expect some smaller closures; that said, in the Presentation seemed bullish on this division ex COLT.
Note sale of other loss making unit AIS
Note keeping East Kent under review

Do they have financial flexibility?
For me , yes
Note net debt has fallen to £6.6 m as of May 14 from £8.9 m at March 19 and £10.8m at year end. One assumes that this will have gone down further with the COLT £1 m received in cash.
Note HSBC facility expires 2020
Note that require £4/£5mpa on maintenance capex and even in 2017 managed to generate £9.5m in operating cash flow.

Will the Share Price be impacted by shareholder selling.
Who knows? But they have in my view a stable shareholder base and coped with the exit of Utilico who had 21% in March 16.
Compared with other AIM stocks , in my view not a big risk

Will they be making acquisitions
Once again who knows? I do not see large scale ones until HMRC situation resolved and clarity on the share price and with an Executive Chairman sorting the business out not clear if management depth; presumably the COLT saga has made them wary. That said may well be small debt financed infill ones.

HMRC
I am assuming that they are receiving assessments from HMRC on a quarterly basis before the 4 year term is up.
We just need to wait.
Does not encourage people to invest in this industry of such importance for the country if you had to spend £1m+ in fees last year and no doubt a significant amount this year.

Other issues
Too bad that with all the headwinds last year had a bad debt provision of £700 k+.
The Board seems rather big for a £40m marcap company and indeed high powered. Do they really need 5 members of each committee? Given HMRC good to have Bryce around. Good to see McDowell has 3m shares. Note Director’s fees are £31k pa. Do not have a strong view either way on this.
See auditor's report concerning provisions that need to make ref after care services for land sites for 60 years,

Conclusion
I did a small topup last month at just under 35p and feel I have enough-well done to those who bought in the mid 20’s.
I appreciate that they are well positioned in a strategically important industry but the reality is they have not in the 11 ½ years I have been a shareholder been able to translate that into consistent profitability. On HMRC I am going on the basis that at the ned of the day will have to pay tax/interest of £2m but this is pure hunch,

[cerrito] 24/6/2018 21:23

I was all set to go to the AGM tomorrow and had finished my prep but something has come up so once again will be unable to make it.
Appreciate any feedback from anyone who can make it.

[woozle1] 22/6/2018 08:16

Slowly cleaning up previous management's mess!

[molatovkid] 22/6/2018 07:14

That's what you call turning a negative into a positive....good news!

[cerrito] 24/5/2018 23:41

I thought of AUG attending the AGM todsy of the private equity Investment Trust FPEO when they discussed their new investment in an Aberdeen company called TWMA who like AUG are in drilling waste management services. They do the separation between the water ,oil and powder on the rig and can discharge the water back onto the sea as long as it meets the quality standards which are far more rigorous than for The Gulf of Mexico.
Doing it on the rig is apparently far more cost effective than the normal skip and ship to an onshore processing plant; my impression is that AUG's ANSS uses the skip and ship model but of course ANSS has a much wider product line.
Anyway perhaps a question for the AGM which I plan to attend and it would be great if there was a good turnout as I have been the only person there on the ones I have been to in the past.
PS Interested to see AGM at Harwood's office and perhaps AUG saving a bob or two on room hire or wanting to send a message on Harwood support

[woozle1] 17/5/2018 07:16

ALS,
Not sure I agree with you; as do Mills and management.
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[arthur_lame_stocks] 16/5/2018 21:37

It looks like HMRC have already triped your investment Woozle!

[woozle1] 16/5/2018 20:08

so we are nearly half way through the year and the company are on track to meet market forecasts of 6.3 EPS. A p/e of 5 is hardly demanding. We should at least be doubling or triping our investments in the next 5 years.
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[woozle1] 16/5/2018 19:27

Cerrito, the big play is Augean NSS and a play on decommissioning

[cerrito] 16/5/2018 18:34

I was surprised that the share price fell initially this morning given that net debt had fallen to £6.6 m as of May 14 from £8.9 m at March 19 and £10.8m at year end. One assumes that the AIS monies have been received.
Also given that decisive action is being taken by Mr Meredith and let's hope that the people affected can get redeployed.
I am somewhat confused with COLT as the prelims suggest that there was just a problem with one contract which had been resolved and the implication I drew-which appears to have been wrong-is that the rest of the business is OK.
That said I see the COLT impairment charge last year of £6.3m
The loss in YTD for COLT of £600k does seem high and also note that in 2017 the operating loss pre exceptionals for I&I were £760k.
Somewhat surprised we have had neither the AR or AGM notice

[woozle1] 26/4/2018 11:26

Great spot LBO and the reason that the North Sea Services business is set to grow and become the engine of earnings growth for the company. That said, that may well have been one of the worst written pieces of journalism ever to have crossed my screen. I had to re-read it understand it.

[morton2011] 12/4/2018 10:24

"The one confusing smoke signal from this HMRC issue is that although the board believe the HMRC claim to be without merit, they've axed the dividend until the HMRC matter is settled. I'm wondering if they've been told to do this by the bank or they speak with forked tongue."

Its in one of the RNS that they breached their loan with HSBC given it was a tax issue but HSBC allowed them to continue with the bank loan until March next year from memory.