9th Jul 2009 07:00
9 July 2009
Augean plc ("Augean" or "the Group")
Pre Close Period Trading Update
Augean, the UK's leading hazardous waste management business, is pleased to provide a pre close period update on trading.
Trading Performance
As a consequence of the challenging economic conditions, the Board reported in March 2009 that the first half of the current financial year would be difficult and below its previous expectations. The Group traded in line with these revised expectations, although economic conditions will remain challenging throughout the rest of this year.
During the first six months of the year, hazardous waste volumes into the Landfill Division were 108,000 tonnes (2008: 109,000 tonnes) with prices remaining firm. The Treatment Division has found trading conditions particularly difficult in the markets it serves, with many of our clients suffering the full effects of the economic downturn. The volatility in the UK market and the associated tighter controls that businesses have placed on cash preservation, have produced an overall reduction in industrial production and waste generation. We have taken action to reduce the division's cost base to reflect the trading volumes and have focused all our efforts on providing an efficient and competitive service which, along with our investment in upgraded facilities, will bring a stronger second half performance.
The outlook for the business remains positive and the Board believes that the Group, with its uniquely comprehensive portfolio of waste management assets, is well positioned to benefit from any economic recovery.
Operational Developments
Later this month we will submit an application to gain consent to manage waste streams with a low level of radioactivity ("Low Level Waste") at our hazardous waste landfill installation in East Northamptonshire. As part of the application, we have completed a thorough public consultation process with all stakeholders including local communities, regulators and the planning authority. The application is one of only a small number being submitted and is unique in its range and capability. The inventories for Low Level Waste held by the nuclear industries exceed 4 million tonnes with no long term capacity for safe disposal currently available. We are working with the Government on developing a disposal strategy and accelerating the decommissioning programme.
We have also made significant progress in completing the asset development projects set out in the 2008 preliminary results statement. We received the full environmental permit in May for the Port Clarence Waste Recovery Park and the commissioning of the Indirect Thermal Desorption process has now been completed. We are working with a broad range of clients from the oil and gas markets and the off-shore industry to secure volumes into the facility. Additionally the new facility includes a transfer station providing regional capacity to the North East markets.
The Paisley site will be opening a new transfer station in the second half of the year delivering capacity to the markets in Scotland and feeding new business into the Group's facilities. The Avonmouth facility completed an upgrade to its biological treatment plant in the second quarter of the year, materially improving both its performance and capacity and allowing the sales teams to target new waste streams.
At the Cannock facility, the upgrade has had a longer than planned commissioning phase which has caused difficulties in bringing on line the new capacity and treatment techniques. We have been working with the consultants and contractors to resolve the commissioning issues and have been able to operate at approximately 70 per cent of the design capacity since June. We are also taking steps to explore what remedies are open to us given the delays experienced, but in the meantime have reduced the site's cost base. We anticipate all issues being resolved in the second half of the year and a return to the full design operation going forward.
As the hazardous waste market continues to move towards more sustainable methods of managing waste, the Group continues to position itself at the forefront of this movement, such that it is best placed to benefit from this trend by developing new business from the renewable energy sector and evaluating investment opportunities to add new capabilities to Augean's existing offering.
Landfill Tax
Following the judgement in the WRG case on Landfill Tax and the subsequent HMRC guidance issued in late 2008, the Group has lodged a claim for overpaid tax in previous years. We expect to be able to update on progress with this claim at the time of the interim results announcement. The scope of Landfill Tax is currently in a state of transition, with new rules to be applied from 1 September 2009 and a consultation on the longer term framework underway. We continue to monitor this situation closely to ensure that our commercial and environmental interests are maximised.
Outlook
Whilst it has been a challenging period, both corporately and within the waste management industry, we have worked extremely hard at extending our services to new markets, reducing our cost base and conserving cash. We believe that as the economy recovers, Augean, with its broad portfolio of waste management assets, is uniquely positioned to benefit from the comprehensive range of waste management services we have developed in order to generate long term value for our shareholders. The Group will give a further update regarding its prospects when it announces its interim results in mid September 2009.
- Ends -
For further information, call:
|
Augean Plc Paul Blackler, Chief Executive Peter Southby, Finance Director |
01937 844 980 |
|
Singer Capital Markets Shaun Dobson |
020 3205 7500 |
|
Financial Dynamics Billy Clegg/Edward Westropp |
020 7269 7157 |
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