The Group has renewed and upgraded its Banking Facilities (“Facilities”) with HSBC UK Bank plc (“HSBC”).
Under the terms of the amended Facilities, the Group may draw down a Revolving Credit Facility of £20m and additional loans up to an aggregate value of £20m on materially similar covenants and pricing as the Group’s previous £20m Revolving Credit Facility.
The new Facilities are for a three year term with the flexibility to be extended for a further one or two year term as the parties agree.
The Facilities may continue to be used by the Group for working capital and general corporate purposes and have been extended to cover any payments to HMRC pursuant to the previously announced landfill tax assessments.
Landfill Tax Assessments
From August 2017, the Group has been in receipt of assessments (including accrued interest) and penalties for Landfill Tax. The total value of assessments received, including with interest accrued to the date of the assessments of £2.7m, is £40.4m. This figure is £4.6m lower than has been previously announced (over the last two years) as HMRC has withdrawn the penalties notice for Augean South whilst it reviews it (potentially to re-issue it).
Despite its strong growth since 2017, the Group has endured considerable uncertainty due in a large part to HMRC’s actions, which has imposed significant constraints on the Board’s management of the business and its further development. As a Group, we are now in a position to use our cash balances (c. £28m at the end of November 2019), together with the Facilities, to pay all HMRC assessments received in full. These have been paid to stop any further accrual of interest from today (should HMRC’s case succeed) and allow the Group to (i) receive an appropriate Corporation Tax deduction for the relevant expense which will be treated as an exceptional item in the results for the year ending 31 December 2019; and (ii) look forward unencumbered by this matter and use its cash generation and gearing to facilitate further growth and development.
The Group continues to robustly challenge the LFT Assessments through the tax tribunal system with the first hearing expected to be heard in 2020.
Jim Meredith, Executive Chairman of Augean, said:
“The Group is pleased to have agreed the amended Facilities with HSBC increasing their flexibility of use. Based on legal advice received, we maintain our position that we have correctly collected and paid the appropriate landfill tax, and we will continue to robustly challenge the assessments received through the tax tribunal system. Nonetheless paying these assessments fully will enable the Group to focus on implementing its strategy for creation of further value.”