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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Augean Plc | LSE:AUG | London | Ordinary Share | GB00B02H2F76 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 371.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMAUG
RNS Number : 7483F
Augean Plc
17 July 2019
17 July 2019
Augean plc ("Augean" or "the Group")
Interim results for the six months ended 30 June 2019
Augean, one of the UK's leading specialist waste management businesses, announces its unaudited interim results for the six months ended 30 June 2019.
Financial highlights
Adjusted metrics are from continuing operations and excluding exceptional items and share based payments
-- Adjusted revenue(1) before landfill tax increased by 40% to GBP44.2m (2018: GBP31.6m) -- Adjusted profit(1) before taxation increased 100% to GBP9.6m (2018: GBP4.8m) -- Adjusted EBITDA(2) increased by 71% to GBP14.2m (2018: GBP8.3m) -- Adjusted basic earnings per share increased by 114% to 7.61 pence (2018: 3.56p) -- Proceeds of GBP3.35m for the sale of East Kent received -- Net cash position of GBP22.8m (December 2018: GBP8.2m)
Operational highlights
-- Business optimisation programme delivered with cost savings considerably exceeding target -- Good sales growth in all sites with Treatment & Disposal up 39% and North Sea 43%
-- Double digit growth from residues from Energy from Waste (EfW) and other incinerators plants despite delays in plants commissioning
-- Strong further progress demonstrated in the market position for soils with overall volumes doubling on H1 2018
-- Continued diversification in North Sea into industrial services, decommissioning and waste management where we have seen new customer wins
HMRC
-- The Group has received landfill tax assessments for its companies Augean North and Augean South for a total of GBP34.7m (GBP37.3m including interest), and expects to receive additional assessments for other time periods until the outcome of the Tax Tribunal is known
-- All assessments have been appealed, hardship awarded, no provision created, and the Lower Tier Tax Tribunal is expected in 2020
-- Augean remains confident the Group has met its landfill tax obligations
Outlook
-- Further growth targeted in the core markets of Energy from Waste and North Sea Decommissioning
-- The Board anticipates to exceed market expectations for the full year
Commenting on the results, Jim Meredith, Executive Chairman, said:
"The Group has delivered strong results in all areas of the business with cash generation especially pleasing. We remain confident in the Group's prospects for a full year result and anticipate results ahead of market expectations".
There will be a meeting for analysts at 10am today at the offices of N+1 Singer, 1 Bartholomew Lane, London EC2N 2AX
This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation.
For further information, please call: Augean plc 01937 844 980 Jim Meredith Executive Chairman Mark Fryer, Group Finance Director N+1 Singer 020 7496 3000 Shaun Dobson Jen Boorer Rachel Hayes
(1) A reconciliation of these measures is included in note 10 of this announcement
(2) EBITDA means adjusted earnings before interest, tax, depreciation and amortisation from continuing operations
Strategic report
The Group's core strategic markets are Energy from Waste, treatment, nuclear decommissioning and North Sea decommissioning:
Hot Features
Premium
Adjusted continuing Adjusted operating
revenues (GBP'm) profit before PLC
costs (GBP'm)
2019 2018 2019 2018
---------- ---------- ---------- ---------
Treatment and Disposal 30.5 22.0 9.6 5.1
---------- ---------- ---------- ---------
North Sea Services 13.7 9.6 0.9 0.8
---------- ---------- ---------- ---------
Revenues 44.2 31.6 - -
---------- ---------- ---------- ---------
Operating Profit pre-central
costs - - 10.5 5.9
---------- ---------- ---------- ---------
Central (PLC) costs (0.6) (0.6)
---------- ---------- ---------- ---------
Operating profit post
central costs 9.9 5.3
---------- ---------- ---------- ---------
Adjusted revenues exclude intra segment trading, discontinued operations and landfill tax. Adjusted operating profit excludes exceptional items, share based payment charges and loss from discontinued operations. A reconciliation of these adjusted metrics is shown in note 10. 2018 comparatives have been restated where appropriate to exclude the result of the East Kent HTI.
Business performance
The Group operated through two business units during 2019 and 2018.
Treatment and Disposal
The principal activity of this business unit is the treatment and disposal of waste from Energy from Waste (EfW) incinerators, construction and industrial sites. The largest waste stream by revenue and profit is the disposal of ash from EfW sites which comprises bottom ash and ash from the burning of biomass and municipal waste to generate energy. The largest waste stream by tonnage is asbestos and other contaminated waste materials and soils, mainly from construction sectors. A key growth market in Treatment and Disposal is low level radioactive waste decommissioning.
Adjusted revenues, excluding landfill tax, increased by 39% to GBP30.5m (2018: GBP22.0m), with an increase in disposal revenue (mainly from construction soils), new contract wins in treatment and strong Radioactive waste volumes.
The adjusted operating profit of Treatment and Disposal increased by 88% to GBP9.6m (2018: GBP5.1m) due to higher disposal volumes and delivered cost savings above target.
The Treatment and Disposal strategy is to continue to win new treatment contracts, optimise the use of our treatment plants and maximise the market opportunity from growth in EfW ash waste volumes, nuclear decommissioning and construction sector wastes.
North Sea Services (NSS)
The NSS business unit operates in the North Sea Oil & Gas market. The primary revenue streams are from drilling waste management (DWM), including the rental of offshore engineers and equipment to customers, production waste management, onshore & marine industrial services, decommissioning and water treatment.
NSS revenue increased by 4% to GBP13.7m (2018: GBP9.6m) on new customer wins in Industrial Services and Waste Management. This segment saw an increase in adjusted operating profit to GBP0.9m (2018: GBP0.8m) due to revenue increase, better mix and the impact of increased decommissioning in the North Sea.
The NSS strategy continues to gain traction as the business moves up the supply chain, dealing directly with Oil & Gas operators and top-tier customers, so providing opportunities to widen its service scope more directly with those customers. The opportunity remains for Augean to continue to service this growing North Sea decommissioning market, worth multi-billion pounds for many years to come. NSS actively markets these facilities alongside other operators at the port, which in turn cements its international position as a decommissioning facility for the North Sea.
Discontinued operations
East Kent Incinerator
A review of this asset was completed in 2018 and the Group decided that the facility would be mothballed. The assets associated with the facility less committed costs to prepare for sale were classified as an asset held for sale in the balance sheet as at 31 December 2018. On 25 January 2019 the Group sold the land, buildings and plant associated with East Kent High Temperature Incinerator for a total cash consideration of GBP3.35m.
HMRC assessment
The Group has received landfill tax assessments for its companies Augean North and Augean South for a total of GBP34.7m (GBP37.3m including interest).
Based on the legal and other advice received by the Group over several years, Augean is confident that the Group has met its obligations in respect of landfill tax, consistent with the law and official guidance at the time. Accordingly, it has appealed both the Augean South and Augean North assessments and the lower tier tax tribunal is expected in 2020. HMRC has agreed to the deferment of the payment of total tax assessed under Augean North and Augean South until the outcome of the tax tribunal has concluded. HMRC is considering whether penalties may be appropriate and the Group expects to receive other final assessments for other time periods for both Augean North and Augean South.
The Group currently accounts for the legal costs of the dispute with HMRC as an exceptional item but has not made a provision for this assessment based on the strength of independent legal and professional advice received.
Financial performance
Group overview
A summary of the Group's financial performance, from continuing operations and excluding exceptional items, is as follows with 2018 comparative restated where appropriate to exclude the result of the East Kent HTI:
GBP'm except where stated 2019 2018
Adjusted Revenue 44.2 31.6
------ ------
Adjusted Operating profit 9.9 5.3
------ ------
Adjusted Profit before
taxation 9.6 4.8
------ ------
Adjusted Profit after
taxation 7.9 3.7
------ ------
Net operating cash flow 14.6 7.2
------ ------
Basic adjusted earnings
per share 7.61 3.56
------ ------
Annualised return on
capital employed 44.2% 18.8%
------ ------
Adjusted metrics exclude intra segment trading, discontinued operations and landfill tax. Adjusted operating profit excludes share based payments, exceptional items and loss from discontinued operations. A reconciliation between the adjusted and statutory metrics is shown in note 10 to the accounts.
Exceptional items are detailed below.
Trading, adjusted operating profit and EBITDA
Adjusted revenue from continuing operations, excluding landfill tax, for the six months ended 30 June 2019 increased by 40% to GBP44.2m (2018: GBP31.6m).
Adjusted profit before tax increased by 100% to GBP9.6m (2018: GBP4.8m).
Adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA), from continuing operations and before exceptional items, is determined as follows:
2019 2018
GBP'm GBP'm
Operating profit 9.9 5.3
------- -------
Depreciation and amortisation 4.3 3.0
------- -------
EBITDA 14.2 8.3
------- -------
Exceptional items
Exceptional items in 2019 were GBP0.2m, being landfill tax legal appeal costs.
Finance costs
Total net finance charges were GBP0.3m (2018: GBP0.4m) largely being the non-cash unwinding of discounts on provisions.
Earnings per share
Adjusted basic earnings per share (EPS), from continuing operations and excluding exceptional items and share based payment charges, increased by 114% to 7.61 pence (2018: 3.56 pence) due to the increased sales and lower costs.
The Group made an adjusted profit after taxation, from continuing operations and excluding exceptional items, of GBP7.9m (2018: GBP3.7m), all of which was attributable to equity shareholders.
The total number of ordinary shares in issue increased during the period from 103,428,392 to 104,085,198 with the weighted average number of shares in issue increasing from 103,408,043 to 103,809,060 for the purposes of basic EPS.
Dividend
The Board has decided not to declare an interim dividend (2018 interim and final: Nil) while the Group appeals the HMRC assessments.
Cash flow and net debt
Underlying net operating cash flows were generated from continuing trading as follows:
2019 2018
GBP'm GBP'm
EBITDA from continuing operations
and before exceptional items 14.2 8.3
------- -------
Net working capital movements 0.7 -
------- -------
Interest and taxation payments (0.3) (1.1)
------- -------
Net operating cash flows from continuing
operations and before exceptional
items 14.6 7.2
------- -------
The cash flow of the Group is summarised as follows:
2019 2018
GBP'm GBP'm
Net operating cash flows from continuing
operations (before exceptional
items) 14.6 7.2
------- -------
Net operating cash flows from exceptional
items and discontinued operations (0.3) (2.3)
------- -------
Total net operating cash flows 14.3 4.9
------- -------
Maintenance capital expenditure (1.7) (1.4)
------- -------
Post-maintenance free cash flow 12.6 3.5
------- -------
Development capital expenditure (0.6) (0.4)
------- -------
Free cash flow 12.0 3.1
------- -------
Sale of Business and assets (discontinued
operation) 3.4 5.0
------- -------
Net cash generation (before financing
activities) 15.4 8.1
------- -------
Underlying net operating cash flow as a percentage of EBITDA was 102% in 2019 (2018: 87%).
The operating cash flow of GBP14.3m was used to pay down debt and fund the future growth of the Group, with capital investment in property, plant & equipment and intangible assets made by the Group totalling GBP2.8m (2018: GBP1.8m), split between maintenance capital (to lengthen the productive life of existing assets) of GBP2.0m and expansion capital (for targeted future growth) of GBP0.8m. The increase in maintenance capital expenditure is due to the construction of new cells at all three of the Group's landfill sites during 2019. The development capex is substantially related to the North Sea business unit.
Post-maintenance free cash flow, as set out in the table above, represents the underlying cash generation of the Group, before any investment in future growth or the payment of dividends to shareholders.
As a result of the above net cash inflow, net cash was at GBP22.8m at 30 June 2019 compared with GBP8.2m at 31 December 2018. Gearing is nil (31 December 2018: nil).
Financing
During 2019, the activities of the Group were substantially funded by internally generated cash. The Group also has 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 GBP20m.The maturity of the facility is October 2020 and the overdraft is reviewed annually. HSBC has waived breach of the taxation clause of the bank credit facility which requires potential liabilities associated with tax disputes to be less than GBP0.1m. As at 30 June 2019, further loan drawdowns were available to the Group of GBP17.0m.
Balance sheet and return on capital employed
Consolidated net assets were GBP67.8m on 30 June 2019 (2019: GBP53.7m) and net tangible assets, excluding goodwill and other intangible assets, were GBP48.0m (2018: GBP33.8m), of which all was attributable to equity shareholders of the Group in both years. Annualised return on capital employed based on the six months ending June 2019, from continuing operations and excluding exceptional items, defined as adjusted operating profit divided by closing capital employed, where capital employed is net assets excluding net cash and net debt, increased to 44.2% (annualised six months ending June 2018: 18.7%).
Outlook
Given continuing growth in our key strategic markets of Energy from Waste plants, Treatment, Nuclear and North Sea decommissioning combined with the full year benefit of cost savings, we anticipate exceeding current market expectations.
Jim Meredith
Executive Chairman
16 July 2019
Unaudited consolidated statement of comprehensive income
For the six months ended 30 June 2019
Restated
Unaudited Unaudited Audited
Six months Six months Year
Ended Ended ended
30 June 30 June 31 December
2019 2018 2018
Note GBP'000 GBP'000 GBP'000
---------------------------------------------- ---- ----------- ---------- -----------
Continuing operations
Revenue 4 52,362 36,238 79,749
Operating expenses (42,422) (30,984) (67,563)
---------------------------------------------- ---- ----------- ---------- -----------
Operating profit before exceptional items 9,940 5,254 12,186
Share based payments (370) (67) (523)
Exceptional items (238) 1,359 (322)
---------------------------------------------- ---- ----------- ---------- -----------
Operating profit 9,332 6,546 11,341
Net finance charges (326) (413) (748)
Profit before tax 9,006 6,133 10,593
Taxation 5 (1,713) (1,165) (2,043)
---------------------------------------------- ---- ----------- ---------- ----------- Profit from continuing operations 7,293 4,968 8,550 ---------------------------------------------- ---- ----------- ---------- ----------- Discontinued operations Loss from discontinuing operations - (1,510) 1,389 ---------------------------------------------- ---- ----------- ---------- ----------- Profit for the period and total comprehensive income attributable to equity shareholders 7,293 3,458 9,939 ---------------------------------------------- ---- ----------- ---------- ----------- Earnings / (loss) per share Basic 7.03p 3.35p 9.61p Diluted 6 6.98p 3.33p 9.55p
Unaudited consolidated statement of financial position
At 30 June 2019
Unaudited Unaudited Audited
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
------------------------------ --------- --------- -----------
Non-current assets
Goodwill 19,757 19,757 19,757
Other intangible assets 45 115 66
Property, plant and equipment 43,829 44,717 40,373
Deferred tax asset 1,780 1,243 1,781
65,411 65,832 61,977
------------------------------ --------- --------- -----------
Current assets
Inventories 284 326 277
Trade and other receivables 20,013 18,138 18,628
Asset held for sale - - 3,304
Cash and cash equivalents 25,767 5,235 11,162
------------------------------ --------- --------- -----------
46,064 23,699 33,371
------------------------------ --------- --------- -----------
Current liabilities
Trade and other payables (27,700) (17,615) (21,222)
Current tax liabilities (3,474) (887) (1,863)
Provisions (500) (200) (500)
------------------------------ --------- --------- -----------
(31,674) (18,702) (23,585)
------------------------------ --------- --------- -----------
Net current assets 14,390 4,997 9,786
------------------------------ --------- --------- -----------
Non-current liabilities
Borrowings (2,944) (7,900) (2,922)
Employee benefit liability (636) - (351)
Provisions (8,449) (9,251) (8,190)
------------------------------ --------- --------- -----------
(12,029) (17,151) (11,463)
------------------------------ --------- --------- -----------
Net assets 67,772 53,678 60,300
------------------------------ --------- --------- -----------
Equity -
Share capital 10,409 10,343 10,379
Share premium account 816 757 757
Retained earnings 56,547 42,578 49,164
------------------------------ --------- --------- -----------
Total equity 67,772 53,678 60,300
------------------------------ --------- --------- -----------
Unaudited consolidated statement of cash flows
For the six months ended 30 June 2019
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2019 2018 2018
Note GBP'000 GBP'000 GBP'000
--------------------------------------------- ---- ----------- ----------- -----------
Operating activities
Cash generated from operations 7 14,246 5,951 17,413
Finance charges paid (379) (298) (360)
Tax paid - (719) (1,063)
Net cash generated from operating activities 13,867 4,934 15,990
--------------------------------------------- ---- ----------- ----------- -----------
Investing activities
Proceeds on disposal of property, plant
and equipment - 1,000 36
Purchases of property, plant, equipment
and intangibles (2,337) (1,846) (3,413)
Sale of business (net of cash) 3,350 3,998 6,176
Net cash used in investing activities 1,013 3,152 2,799
--------------------------------------------- ---- ----------- ----------- -----------
Financing activities
Issue of equity 89 48 84
Payment of lease liabilities (364) - -
(Repayment) / Drawdown of loan facilities - (9,478) (14,290)
Net cash generated from financing activities (275) (9,430) (14,206)
--------------------------------------------- ---- ----------- ----------- -----------
Net (decrease) / increase in cash and cash
equivalents 14,605 (1,344) 4,583
Cash and cash equivalents at beginning
of period 11,162 6,579 6,579
--------------------------------------------- ---- ----------- ----------- -----------
Cash and cash equivalents at end of period 25,767 5,235 11,162
--------------------------------------------- ---- ----------- ----------- -----------
Unaudited consolidated statement of changes in equity
For the six months ended 30 June 2019
Share Share Retained Shareholders'
capital premium earnings equity
account
GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2018 10,295 757 39,053 50,105
Total comprehensive income
for the period
Retained profit - - 3,458 3,458
------------------------------- -------- -------- --------- -------------
Total comprehensive income
for the period - - 3,458 3,458
------------------------------- -------- -------- --------- -------------
Transactions with owners
of the Company
Issue of equity 48 - - 48
Share-based payments - - 67 67
------------------------------- -------- -------- --------- -------------
Total transactions with the
owners of the Company 48 757 67 115
------------------------------- -------- -------- --------- -------------
At 30 June 2018 10,343 757 42,578 53,678
------------------------------- -------- -------- --------- -------------
Total comprehensive income
for the period
Retained profit - - 6,481 6,481
------------------------------- -------- -------- --------- -------------
Total comprehensive income
for the period - - 6,481 6,481
------------------------------- -------- -------- --------- -------------
Transactions with owners
of the Company
Issue of equity 36 - - 36
Share-based payments - - 105 105
Total transactions with the
owners of the Company 36 - 105 141
-------- -------- ---------
At 31 December 2018 previously
reported 10,379 757 49,164 60,300
------------------------------- -------- -------- --------- -------------
Adjustment on implementation
of IFRS 16 5 5
At 31 December 2018 10,379 757 49,169 60,305
------------------------------- -------- -------- --------- -------------
Total comprehensive income
for the period
Retained profit - - 7,293 7,293
------------------------------- -------- -------- --------- -------------
Total comprehensive income
for the period - - 7,293 7,293
------------------------------- -------- -------- --------- -------------
Transactions with owners
of the Company
Issue of equity 30 59 - 89
Share-based payments - - 85 85
------------------------------- -------- -------- --------- -------------
Total transactions with the
owners of the Company 30 59 85 174
------------------------------- -------- -------- --------- ------------- At 30 June 2019 10,409 816 56,547 67,772 ------------------------------- -------- -------- --------- -------------
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 as is permissible under the rules of the AIM market.
The financial information relating to the year ended 31 December 2018 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 2019 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 2018, 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.
The Group have applied the modified retrospective approach to the implementation of IFRS16. The impact of this has been to create an opening asset of GBP4,850,000 and an opening liability of GBP4,845,000. A depreciation charge of GBP671,000 has been recognised in respect of these right of use assets in the six-month period ending June 2019.
The result for the six months ending June 2018 has been restated to exclude the result for the East Kent incinerator asset. This was classified as discontinued in the result for the year ending December 2018 and has now been disposed of.
Having considered the material uncertainty around the HMRC issue and after making further enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Financial forecasts and projections, taking account of reasonably possible changes and sensitivities in trading performance and the market value of the Group's assets, have been prepared and show that the Group is expected to be able to operate within the level of cash and the available headroom on the current banking facility.
The Directors are confident that the Company will be able to meet its liabilities as they fall due over the next 12 months. As a result, the financial statements have been prepared on a going concern basis.
4 Operating segments
The Group has two reportable segments. The two 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 Executive Chairman (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:
-- Treatment and disposal: Augean provide waste remediation, incineration, management, treatment and disposal services through its seven sites across the UK.
-- Augean North Sea Services: Augean provides waste management and waste processing services to oil and gas operators.
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 Executive Chairman. 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.
Materially all activities arise almost exclusively within the United Kingdom. Inter-segment trading is undertaken on normal commercial terms.
The segmental results for the six months ended 30 June 2019 were as follows:
Treatment North Sea
and disposal Services Group
GBP'000 GBP'000 GBP'000
--------------------------------------- -------------- ---------- --------
Revenue
Incinerator Ash 7,712 - 7,712
Other landfill activities 10,743 - 10,743
Waste treatment activities 10,415 10,415
Incineration of waste - - -
Radioactive waste management 2,234 - 2,234
Services to North Sea production
and exploration customers - 13,683 13,683
--------------------------------------- -------------- ---------- --------
Total revenue net of landfill
tax 31,104 13,683 44,787
Landfill tax 8,159 - 8,159
--------------------------------------- -------------- ---------- --------
Total revenue including inter-segment
sales 39,263 13,683 52,946
Inter-segment sales (578) (6) (584)
--------------------------------------- -------------- ---------- --------
Revenue 38,685 13,677 52,362
--------------------------------------- -------------- ---------- --------
Result
Operating profit before exceptional
items 9,298 855 10,153
Exceptional items (238) - (238)
--------------------------------------- -------------- ---------- --------
Operating profit 9,060 855 9,915
--------------------------------------- -------------- ---------- --------
Finance charges (326)
Central costs (583)
--------------------------------------- -------------- ---------- --------
Profit before taxation 9,006
Taxation (1,713)
--------------------------------------- -------------- ---------- --------
Profit after tax 7,293
--------------------------------------- -------------- ---------- --------
Exceptional items comprise GBP0.2m of professional fees relating to landfill tax.
The segmental results for the six months ended 30 June 2018, restated to separately classify operations now discontinued, were as follows:
Treatment North Sea
and disposal Services Group
GBP'000 GBP'000 GBP'000
--------------------------------------- -------------- ---------- --------
Revenue
Incinerator Ash 6,037 - 6,037
Other landfill activities 5,705 - 5,705
Waste treatment activities 9,392 - 9,392
Radioactive waste management 1,219 - 1,219
Services to North Sea production
and exploration customers - 9,604 9,604
--------------------------------------- -------------- ---------- --------
Total revenue net of landfill
tax 23,353 9,604 31,957
Landfill tax 4,619 - 4,619
--------------------------------------- -------------- ---------- --------
Total revenue including inter-segment
sales 26,972 9,604 36,576
Inter-segment sales (336) (2) (338)
--------------------------------------- -------------- ---------- --------
Revenue 26,636 9,602 36,238
--------------------------------------- -------------- ---------- --------
Result
Operating profit before exceptional
items 5,026 759 5,785
Exceptional items 1,359 - 1,359
--------------------------------------- -------------- ---------- --------
Operating profit 6,385 759 7,144
--------------------------------------- -------------- ---------- --------
Finance charges (413)
Central costs (598)
--------------------------------------- -------------- ---------- --------
Profit before taxation 6,133
Taxation (1,165)
--------------------------------------- -------------- ---------- --------
Profit before tax 4,968 --------------------------------------- -------------- ---------- -------- Profit from discontinued operations (1,510) --------------------------------------- -------------- ---------- -------- Profit after Tax 3,458 --------------------------------------- -------------- ---------- --------
Exceptional items comprise GBP1.2m profit on disposal relating to the AIS business and GBP0.2m relating to the sale of Colt assets offset by professional fees relating to landfill tax and other costs.
5 Taxation
The taxation charge for the six-month period ended 30 June 2019 has been based on the anticipated full year effective tax rate of 19.0% (six months ended 30 June 2018: 19%).
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. No change in deferred tax compared to the position at 31 December 2018 has been reflected in these statements. The taxation charge for the six-month period to 30 June 2019 is all reflected within current tax, consistent with the 30 June 2018 position.
6 Earnings per share
The calculation of basic earnings per share (EPS) is as follows:
Unaudited Restated Audited
Unaudited
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
------------------------------------------------ ----------- ----------- ------------
Earnings for the purposes of basic and diluted
EPS 7,293 3,458 9,939
Share based payments 370 67 523
Exceptional items (net of associated taxation) 238 (1,359) (3,155)
------------------------------------------------ ----------- ----------- ------------
Earnings for the purposes of adjusted basic
and diluted EPS 7,901 2,166 7,307
(Profit) / Loss for discontinued operations - 1,510 2,026
------------------------------------------------ ----------- ----------- ------------
Earnings for the purposes of adjusted basic
and diluted EPS - continuing operations 7,901 3,676 9,333
------------------------------------------------ ----------- ----------- ------------
Number of shares Number Number Number
Weighted average number of shares for basic
earnings per share 103,809,060 103,174,871 103,408,043
Effect of dilutive potential ordinary shares
from share options 744,310 806,321 709,119
----------------------------------------------- ------------ ----------------- ------------
Weighted average number of shares for diluted
earnings per share 104,553,370 103,981,192 104,117,162
----------------------------------------------- ------------ ----------------- ------------
Earnings per share
Basic 7.03p 3.35p 9.61p
Diluted 6.98p 3.33p 9.55p
----------------------------------------------- ------------ ----------------- ------------
Adjusted earnings per share
Basic 7.61p 2.10p 7.07p
Diluted 7.56p 2.08p 7.02p
----------------------------------------------- ------------ ----------------- ------------
Adjusted earnings per share - Continuing
Operations
Basic 7.61p 3.56p 9.03p
Diluted 7.56p 3.54p 8.96p
----------------------------------------------- ------------ ----------------- ------------
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 months Year
ended ended ended
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
---------------------------------------------------- ----------- ----------- ------------
Operating profit including discontinued operations 9,331 4,827 12,424
Amortisation of intangible assets 21 36 58
Depreciation 4,298 3,286 7,032
Impairment reversal - - (2,644)
---------------------------------------------------- ----------- ----------- ------------
Earnings before interest, tax, depreciation
and amortisation (EBITDA) 13,650 8,149 16,870
---------------------------------------------------- ----------- ----------- ------------
Share-based payments 85 67 523
Increase in inventories (7) 115 162
Decrease/(increase) in trade and other receivables (1,409) (1,837) (2,473)
(Decrease)/increase in trade and other payables 1,718 1,187 4,372
(Decrease) / increase in provisions 209 131 (72)
(Profit) / Loss on disposal of property, plant
and equipment - (1,861) (1,969)
---------------------------------------------------- ----------- ----------- ------------
Cash generated from operations 14,246 5,951 17,413
---------------------------------------------------- ----------- ----------- ------------
The above EBITDA and cash flow generated from operations both include a net cash outflow of GBP318,000 relating to exceptional items (H1 2018: outflow of GBP706,000). Operating loss from discontinued operations was GBPnil (H1 2018: GBP1,458,000 profit)
8 Analysis of changes in net cash
Audited Unaudited
31 December Cash Other 30 June
2018 flow movement 2019
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ------------ -------- --------- ----------
Cash and cash equivalents 11,162 14,605 - 25,767
Bank loans (2,922) - (22) (2,944)
Net cash 8,240 14,605 (22) 22,823
--------------------------- ------------ -------- --------- ----------
9 Contingent Liability
The Group has received landfill tax assessments for its companies Augean North and Augean South for a total of GBP34.7m (GBP37.3m including interest).
Based on the legal and other advice received by the Group over several years, Augean is confident that the Group has met its obligations in respect of landfill tax, consistent with the law and official guidance at the time. Accordingly, it has appealed both the Augean South and Augean North assessments and the tax tribunal is expected in 2020. HMRC has agreed to the deferment of the payment of total tax assessed against the relevant group entities until the outcome of the tax tribunal has concluded. HMRC is considering whether penalties may be appropriate and there may be other final assessments for other time periods for both Augean North and Augean South.
The Group currently accounts for the legal costs of the dispute with HMRC as an exceptional item but has not made a provision for this assessment based on the strength of independent legal and professional advice received.
10 Reconciliation of performance metrics
The following metrics have been used in the Operating Review.
Revenue
Unaudited 6 months ending
30 June Unaudited 6 months
2019 ending 30 June 2018
Landfill Adjusted Landfill Adjusted
Revenue Tax Revenue Revenue Tax Revenue
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ --------- --------- --------- --------- --------- ---------
Treatment & disposal segment 38,685 (8,159) 30,525 26,636 (4,619) 22,017
North Sea Services segment 13,677 - 13,677 9,602 - 9,602
------------------------------ --------- --------- --------- --------- --------- ---------
Continued operations 52,362 (8,159) 44,202 36,238 (4,619) 31,619
Discontinued Operations - - 4,884 - 4,884
------------------------------ --------- --------- --------- --------- --------- ---------
Total Group 52,362 (8,159) 44,202 41,122 (4,619) 36,503
------------------------------ --------- --------- --------- --------- --------- ---------
EBIT
Unaudited 6 months ending 30
June
2019
Statutory Share based Exceptional Adjusted
payments items
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------------- ---------- ------------ ------------ ---------
Treatment & disposal segment 9,059 370 238 9,668
North Sea Services segment 855 - - 855
Central costs (583) - - (583)
---------------------------------------------- ---------- ------------ ------------ ---------
Operating profit from continuing operations 9,331 370 238 9,940
Finance charges (326) - - (326)
---------------------------------------------- ---------- ------------ ------------ ---------
Profit before tax from continuing operations 9,006 370 238 9,614
Taxation (1,713) - - (1,713)
---------------------------------------------- ---------- ------------ ------------ ---------
Profit after tax from continuing operations 7,293 370 238 7,901
Discontinued Operations - - - -
---------------------------------------------- ---------- ------------ ------------ ---------
Total Group Operating profit 7,293 370 238 7,901
---------------------------------------------- ---------- ------------ ------------ ---------
Unaudited 6 months ending 30
June
2018
Statutory Share based Exceptional Adjusted
payments items
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------------- ---------- ------------ ------------ ---------
Treatment & disposal segment 6,385 67 (1,359) 5,093
North Sea Services segment 759 - - 759
Central costs (598) - - (598)
---------------------------------------------- ---------- ------------ ------------ ---------
Operating profit from continuing operations 6,546 67 (1,359) 5,254
Finance charges (413) - - (413)
---------------------------------------------- ---------- ------------ ------------ ---------
Profit Before tax from continuing operations 6,133 67 (1,359) 4,841
Taxation (1,165) - - (1,165)
---------------------------------------------- ---------- ------------ ------------ ---------
Profit after tax from continuing operations 4,968 67 (1,359) 3,676
Discontinued Operations (1,510) - - (1,510)
---------------------------------------------- ---------- ------------ ------------ ---------
Total Group Operating profit 3,458 67 (1,359) 2,166
---------------------------------------------- ---------- ------------ ------------ ---------
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR QQLFFKDFXBBX
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