Interim results for the six months ended 30 June 2021

We are pleased to announce our unaudited interim results for the six months ended 30 June 2021.

Financial charts

The Group has continued to grow in its key market of Energy from Waste (EfW) treatment and seen recovery in both the construction, treatment and to a lesser extent radioactive waste sector which were impacted in 2020 as a result of the Covid-19 pandemic. The North Sea service business continues to be subdued however revenue remains in line with management expectation.

Financial summary

  • Adjusted metrics are excluding non-underlying items
  • Adjusted revenue1 before Landfill Tax decreased by 8% to £37.9m (2020: £41.4m)
  • Adjusted profit1 before taxation increased 19% to £10.1m (2020: £8.5m)
  • Adjusted EBITDA2 increased by 7% to £14.2m (2020: £13.3m)
  • Adjusted basic earnings per share increased by 16% to 7.79 pence (2020: 6.70p)
  • Net cash of £6.1m (December 2020: £6.4m) excluding lease liabilities
  • Return on capital of 46.2% compared with 44.9% at December 20203

Operational summary

  • All sites have remained fully operational year to date with safe working measures in place to mitigate impact of Covid-19
  • Sales growth1 of 20% in Treatment and disposal with strong growth in all waste streams
  • Strong growth of 20% in residues from Energy from Waste (EfW) and other incinerator plants as a result of annualised growth and new contracted plants coming online
  • Successful application for an onsite EfW r-code solutions at our Port Clarence landfill
  • North Sea service business revenue remains in line with management expectation

HMRC

  • As announced on 10 December 2019, the Group paid £40.4m to HMRC to clear all outstanding Landfill Tax assessments. In 2020 HMRC subsequently repaid £1.4m relating to one aspect of the Landfill Tax dispute
  • On 25 May 2021 HMRC issued a Landfill Tax assessment for £1.5m relating to time periods that had previously remained unassessed in relation to the Landfill Tax assessments. This has no impact on the income statement as modelling for the IAS37 and probabilistic losses already factored in the unassessed time periods
  • On 23 June 2021, the decision of the preliminary hearing of the First Tier Tax tribunal heard in September 2020 was received. The preliminary decision in relation was as to whether Augean had appropriately interpreted certain elements of Landfill Tax law as described in guidance note LFT1 (published by HMRC). The decision of the Tribunal found in favour of Augean. HMRC have subsequently applied to the Tribunal for a determination to extend or move the appeal period of  the initial decision

Outlook

  • Further growth targeted in the core markets of Energy from Waste and construction soils
  • Subdued market for North Sea Services with no new significant decommissioning project expected in 2021
  • The Board expects to meet management expectations for the full year

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

The Group has delivered pleasing growth in our core markets in the first half.  We anticipate this to continue in the second half with full year results therefore anticipated to be in line with our expectations.

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