20th Sep 2006 07:02
Augean Plc20 September 2006 20th September 2006 Augean Plc Interim results for the six month period ended 30th June 2006 Augean Plc ("Augean" or "the company"), the UK's market leader in the managementof hazardous waste today announces its interim results for the six months ended30th June 2006. Financial Highlights • Turnover of £13.9 million• Operating profit before amortisation of £1.9 million• Earnings per share before amortisation of 2.31p• Loss per share of 5.69p pence after charging £5.2million of amortisation costs• Strong operating cash flow of £1.7million Operational Highlights • Acquisition of the Credential Environmental hazardous waste facilities• Treatment site at Cannock fully integrated - introduction of 24 hour working• Augean Treatment division established• Terramundo Joint Venture formed at Port Clarence with Belgium based DEC NV• Port Clarence wharfage agreement in place enabling movement of waste by ship• Laboratory facilities at King's Cliffe opened improving customer service and reducing costs• Appointment of Peter Southby as Group Finance Director• Clearer visibility on inputs to our facilities in H2 2006 and beyond John Huntington, CEO of Augean Plc said: "The first half of 2006 has seen another period of expansion for the Group withthe acquisition of the Credential Environmental hazardous waste facilities inHinckley and Worcester, together with the announcement of the Terramundo JointVenture at Port Clarence. This has now established Augean as the UK's marketleader in the management of hazardous waste. "In my statement accompanying the 2005 Annual Report I listed a number ofdevelopments which were to take place during 2006. The majority of these are nowin place and will deliver growth in the second half of 2006 and beyond. This isunderpinned by a clearer visibility on inputs to our facilities during thisperiod." For further information, please contact: John Huntington, Chief Executive, Augean Plc - 01937 844 980 Jonathon Brill/BillyClegg/Edward Westropp, Financial Dynamics - 020 7831 3113 Chief Executive's review The first half of 2006 has seen another period of expansion for the Group withthe acquisition of the Credential Environmental hazardous waste facilities inHinckley and Worcester, together with the announcement of the Terramundo JointVenture at Port Clarence. This has now established Augean as the UK's marketleader in the management of hazardous waste Market and legislation Further legislation in July 2006 has meant more wastes have to be pre-treatedbefore final disposal. We believe that this presents a tremendous opportunityfor Augean's newly formed Treatment division and underpins our strategy ofmaking further acquisitions in the hazardous waste treatment sector. The Environment Agency ("EA") has strengthened its hazardous waste team andrecently appointed two senior managers, one who will be responsible forhazardous landfills and a second with responsibility for hazardous wastetreatment facilities, both on a national basis. This should reduce the amount ofwaste being misdirected to non hazardous facilities and increase the overallhazardous waste market. Augean continue to work closely with the EA to ensurethat legislation is enforced and the Group's position is protected. Landfill Division Our sales team at Augean has continued to grow the volumes of hazardous wasteinto our landfill sites, increasing the amount of both chemical and constructionrelated wastes, whilst prices have remained stable. Particular emphasis has been placed on increasing volumes of contaminated soilsinto Port Clarence and I am pleased to report that this has been verysuccessful. We expect further increases in volumes towards the latter part ofthe year on the back of the recent wharfeage agreement which enables material tobe transported directly to site by ship. Terramundo is a joint venture company with Belgium based DEC NV, set up todevelop and operate a soil treatment centre at Port Clarence. This facility isdue to come on stream in December 2006 and will be primarily for soils whichcannot be sent directly to landfill. The laboratory facilities at King's Cliffe opened in April and have enabled usto improve our service to customers whilst having the added benefit of reducingour overall costs. Further plans to reduce testing costs even further areexpected to come to fruition later this year. Treatment Division Following the acquisition of the Credential hazardous facilities all thetreatment and transfer centres now operate as Augean Treatment and in the futurewill be run as a separate division reporting to the newly created role ofManaging Director Treatment. As a result of this restructuring the role of GroupOperations Director has become redundant. The site at Cannock is now fully integrated and has continued to develop withthe creation of new office facilities, the introduction of 24 hour working andthe installation of the pilot plant. The Credential acquisition has both increased our geographical coverage andcustomer base and early signs are very encouraging. Financial performance Turnover for the period was £13.9 million, generating an operating profit beforeamortisation of intangible assets of £1.9 million, a loss on ordinary activitiesbefore taxation of £3.7 million and a loss per share of 5.69 pence. Net assetsat the period end were £101.7 million and there was a net cash inflow fromoperating activities of £1.7 million. The Board will not be recommending the payment of a dividend for the periodended 30th June 2006. Management team We have made a number of changes to the management team during 2006 tostrengthen our position within the UK hazardous waste market, and I would liketo personally thank the entire management team and workforce for their continuedefforts. We are pleased to confirm the appointment of Peter Southby to the Board as GroupFinance Director. Clive Gilham will continue as Interim Finance Director untilPeter joins the company later in the year. Outlook In my statement accompanying the 2005 Annual Report I listed a number ofdevelopments which were to take place during 2006. The majority of these are nowin place and will deliver growth in the second half of 2006 and early 2007. Thisis underpinned by a clearer visibility on inputs to our facilities during thisperiod. The management team continue to evaluate hazardous waste technologies throughoutthe world with the intention of developing these, at both our Port Clarence siteand our treatment facilities, as and when they become economically viable. Consolidated Profit and Loss Accountfor the six months to 30 June 2006 1 January 2006 6 August 2004 6 August 2004 to 30 June to 30 June to 31 December 2006 2005 2005 £'000 £'000 £'000 Turnover from continuing operations 13,357 12,898 26,113Turnover from acquisitions in the current period 511 - - ------- ------- -------Turnover 13,868 12,898 26,113Cost of sales (9,368) (8,726) (18,025) ------- ------- ------- Gross profit 4,500 4,172 8,088 Administrative expenses excluding amortisation of intangibles (2,561) (2,284) (4,400)Amortisation of goodwill (5,184) (3,367) (10,122)Amortisation of other intangible assets (60) - (28) ------- ------- -------Total administrative expenses (7,805) (5,651) (14,550) ------- ------- ------- +----------------------------------------------------------------------------------------------------------------+| || Operating profit before amortisation of intangible assets 1,939 1,888 3,688|| |+----------------------------------------------------------------------------------------------------------------+ Operating loss (3,305) (1,479) (6,462) Interest payable and similar charges (424) (186) (565)Interest receivable and similar income - 230 287 ------- ------- ------- Loss on ordinary activities before taxation (3,729) (1,435) (6,740) Tax on loss on ordinary activities - - (1,380) ------- ------- ------- Loss on ordinary activities after taxation (3,729) (1,435) (8,120) ------- ------- ------- Basic and diluted loss per share (pence) (5.69) (3.60) (16.55) Consolidated Balance Sheetat 30 June 2006 30 June 31 December 2006 2005 £'000 £'000 Fixed assetsIntangible fixed assets 89,467 86,488Tangible fixed assets 29,386 29,547 ------- ------- 118,853 116,035 ------- -------Current assetsStocks 1 1Debtors 7,158 6,870 ------- ------- 7,159 6,871 Creditors: Amounts falling due within one year (10,136) (9,838) ------- -------Net current liabilities (2,977) (2,967) ------- ------- Total assets less current liabilities 115,876 113,068 Creditors: Amounts falling due after more than one year (8,350) (335) Provisions for liabilities and charges (5,822) (7,336) ------- -------Net assets 101,704 105,397 ------- ------- Capital and reservesCalled up share capital 6,549 6,549Share premium 104,429 104,429FRS 20 Reserves 2,575 2,539Profit and loss account (11,849) (8,120) ------- -------Equity Shareholders' funds 101,704 105,397 ------- ------- Consolidated Cash Flow Statementfor the six months to 30 June 2006 1 January 2006 6 August 2004 6 August 2004 to 30 June to 30 June to 31 December 2006 2005 2005 £'000 £'000 £'000 Net cash inflow from operating activities 1,674 2,032 7,316 Returns on investments and servicing of finance (443) 44 (278) Taxation (131) - - Capital expenditure and financial investment (2,239) (2,813) (4,589) Acquisitions and disposals (8,515) (54,737) (64,674) ------- ------- -------Cash outflow before financing (9,654) (55,474) (62,225) Financing 10,000 62,865 61,496 ------- ------- -------Increase / (decrease) in cash in the period 346 7,391 (729) Movement in financing (10,000) - 703 ------- ------- -------Change in net debt arising from cash flows (9,654) 7,391 (26)New finance leases and hire purchase agreements - - (63)Debt acquired with subsidiary (117) (3,502) (3,502) ------- ------- -------Movement in net debt in the period (9,771) 3,889 (3,591) Net funds / (debt) brought forward (3,591) - - ------- ------- -------Net funds / (debt) carried forward (13,362) 3,889 (3,591) ------- ------- ------- Analysis of net funds / (debt)Cash - 6,775 -Term Loan (10,000) - -Bank overdraft (1,155) - (729)Debt factor advances (1,785) (2,476) (2,346)Other Loan - - (100)Hire purchase (422) (410) (416) ------- ------- ------- (13,362) 3,889 (3,591) ------- ------- ------- Notes 1. Fair Values of Acquisitions During the previous financial period to 31 December 2005 the Group acquiredthree companies, being Atlantic Waste Holdings Limited and Zero Waste HoldingsLimited ("the Landfill Division") and Proactive Waste Solutions Limited ("Proactive"). During the current period to 30 June 2006 the Group acquired thebusiness and assets ("Credential Hazardous") of the hazardous waste businessfrom Credential Waste Holdings Limited. All the assets and liabilities of thoseacquired companies and Credential Hazardous have been recorded at their fairvalues reflecting their condition at the relevant acquisition date. However theassessment of these fair values in relation to the Landfill Division is complexand resulted in significant revisions throughout the previous period and minorrevisions during the current period as the review, which is still ongoing, hasprogressed. As such, provisional fair values have been included within thereported results, which may result in further changes to the carrying value ofthese net assets during the remainder of the current financial year. The fairvalue adjustments in relation to Proactive were finalised in the previous periodand for Credential Hazardous will be finalised by 31 December 2006. 2. Financial Reporting Standard 20 ("FRS20") FRS20 has been implemented for the first time. The impact upon the six months to30 June 2006 was to charge profits in respect of those share options that havevesting conditions with an amount of £36,000 and to credit this to reserves. Separately those share options and warrants that were issued in connection withthe acquisition of the Landfill Division in December 2004 and related equityfundraising have been charged to those transactions as there were no vestingconditions. Consequently £746,000 has been charged as a cost of investment,capitalised as an intangible asset and amortised since the acquisition date and£1,793,000 has been charged to the share premium account. This has resulted inan increased amortisation of intangible assets in the six months to 30 June 2006of £34,000 with a corresponding amount charged to the comparative period. Thebalance sheet as at 31 December 2005 has been adjusted accordingly. The calculation of the fair values of the share options and warrants issued bythe Company have been based upon the Binomial lattice model together with anumber of subjective assumptions, the most significant of which is that theexpected volatility of the Company's shares will be 40%. All assumptions will berefined for the financial statements for the full year to 31 December 2006 whenmore relevant evidence will be available. 3. Segmental Analysis 1 January 2006 6 August 2004 6 August 2004 to 30 June to 30 June to 31 December 2006 2005 2005 £'000 £'000 £'000 Landfill division 10,817 12,898 24,184Treatment division 3,051 - 1,929 ------- ------- -------Turnover 13,898 12,898 26,113 ------- ------- ------- Landfill division 1,397 1,888 3,327Treatment division 542 - 361 ------- ------- -------Adjusted Operating Profit * 1,939 1,888 3,688 ------- ------- ------- * This is operating profit before the amortisation of goodwill and otherintangible assets. 4. Loss per share For the six months ended 30 June 2006 the calculation of the basic loss perordinary share was based on the weighted average of 65,488,892 ordinary sharesin issue and loss after taxation of £3,729,000. For the period ended 30 June 2005 the calculation of the basic loss per ordinaryshare was based on the weighted average of 39,879,637 ordinary shares in issueand loss after taxation of £1,435,000. For the period ended 31 December 2005 the calculation of the basic loss perordinary share was based on the weighted average of 49,065,022 ordinary sharesin issue and loss after taxation of £8,120,000. No diluted loss per share arises due to the loss in the year, resulting in nodilutive share options. 5. Reconciliation of Operating Loss to Net Cash Inflow from Operating Activities 1 January 2006 6 August 2004 6 August 2004 to 30 June to 30 June to 31 December 2006 2005 2005 £'000 £'000 £,000 Operating loss (3,305) (1,479) (6,462)Amortisation of intangible fixed assets 5,244 3,367 10,150Depreciation 2,927 2,824 4,986Aftercare provisions 226 281 235FRS20 expenses 36 - - ------- ------- ------- 5,128 4,993 8,909Movement in debtors (288) 5 2,244Movement in creditors (1,426) (2,966) (3,602) ------- ------- ------- 3,414 2,032 7,551 Provisions spent (1,740) - (235) ------- ------- -------Net cash inflow from operating activities 1,674 2,032 7,316 ------- ------- ------- 6. Statutory Information These interim financial statements do not constitute statutory financialstatements within the meaning of section 240 of the Companies Act 1985. Theresults for the six months to 30 June 2006 have not been audited. Comparativeinformation has been extracted from the two interim statements to 31 December2004 and to 30 June 2005 and from the audited financial statements for theperiod from 6 August 2004 to 31 December 2005. These latter statements, on whichthe auditors gave an unqualified opinion, have been filed with the Registrar ofCompanies. These interim financial statements will be posted to all shareholders and areavailable from the registered office of the company, 4 Rudgate Court, Walton,Wetherby, LS23 7BF or from our website at www.augeanplc.com. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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