Final results for the year ended 31 December 2020

We are pleased to announce our final results for the year ended 31 December 2020.

Financial charts
Financial highlights

From continuing operations and excluding exceptional items and share based payments1:

  • Adjusted metrics exclude non underlying items1
  • Adjusted revenue2 before landfill tax decreased by 16% to £76.9m with the majority of the shortfall in the North Sea Services segment (2019: £91.5m)
  • Adjusted profit2 before interest and tax increased to £20.5m (2019: £19.9m)
  • Adjusted profit2 before taxation increased to £19.3m (2019: £19.2m)
  • Statutory profit before taxation of £16.4m (2019: loss of £15.3m)
  • Adjusted EBITDA3 increased to £29.0m (2019: £28.8m)
  • Adjusted basic earnings per share decreased by 3% to 14.90 pence (2019: 15.33p)
  • Statutory earnings per share was 12.70p (2019: Loss per share 12.26p)
  • Strong operating cash generation of £28.0m resulting in a net cash4 position of £6.4m (December 2019: net bank debt4 of £13.2m)
  • Return on capital of 35% (2019: 35%)
  • Proposed resumption of dividend in 2021

Operational Highlights 

  • All sites have remained fully operational all year with safe working practices in place to mitigate the impact of Covid-19
  • Treatment & Disposal sales (excluding landfill tax) reduced by 4% principally due to Covid-19
  • 15% growth in sales from residues from Energy from Waste (EfW) and other incinerators despite biomass incinerators being shut in quarter two due to lockdown
  • New contracts signed with six EfW plants of which four are operational and two new. Annualised revenue from these plants is forecast to be approximately £6m
  • Revenue from customers under contract or framework agreements generate in excess of 50% of the Group revenue including 70% of the APCr revenue with an average contract duration of over 4 years.
  • Receipt of Recovery Code (R Code) for Augean North site infrastructure expands the available EfW market for the Group
  • Improved margins contributed to small adjusted profit growth despite impact of Covid-19 in sales reduction
  • Further progress demonstrated with soils being received by boat into Port Clarence demonstrating viability of new logistics channel
  • Progress with planning applications made to extend the Augean South site and receipt of increased low level radioactive waste into the Augean North landfill
  • Treatment business resilient in difficult conditions and important wins of new EfW business for expanding services beyond ash processing
  • North Sea restructured to achieve break-even with contribution of successfully integrated Haliburton Ecocentre acquired in August 2020

HMRC

  • The Group made payments in December 2019 against all landfill tax assessments for its companies Augean North and Augean South for a total of £40.4m (£37.7m excluding interest) and the first hearing, on one aspect of the claim, was heard by the First Tier Tax Tribunal in September 2020 and the outcome is awaited
  • In December 2020, the Group was repaid £1.4m of the total payment made as HMRC agreed that tax should not have been assessed. The Group is also seeking reimbursement of costs.

Outlook

  • Significant further growth targeted in the Group’s core niche markets
  • Strong cash generation – proposed return to dividend in 2021
  • The Board is confident in the prospects for the Group

Commenting on the Results, Jim Meredith, Executive Chairman, said:

I am incredibly proud of our employees hard work and dedication during a year where everyone had to go beyond their normal duties so that the Group could deliver critical national services through a period of crisis. This was achieved whilst maintaining Group profitability, clearly demonstrating the Group’s resilience during this period. Moreover services were delivered with improved safety across our sites. I look forward to working with our teams to further develop the Group and do this in an environmentally sensitive manner through 2021 and beyond on behalf of all our stakeholders.

1 Non-underlying items are share based payments, the accounting for landfill tax liabilities, Impairment of tangible assets and other non-underlying items
2 A reconciliation of these measures is included in note 8 of this announcement
3 EBITDA means adjusted earnings before interest, tax, depreciation and amortisation
4 Calculated as statutory net cash / net debt excluding lease liabilities

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