Hazardous waste overview
The market for hazardous waste in the UK is based on a  legislative environment underpinned by the implementation of  the European Union’s Waste Framework Directive and the UK’s  own hazardous waste National Policy Statement (NPS), which  encourage sustainable methods of managing waste and the  development of treatment, recycling and recovery facilities as the  key focus of future waste management activities. NPS confirmed  the need for the portfolio of treatment and disposal facilities and  services developed by Augean. Importantly, the Group plays an  active part in five of the eight sectors identified as essential for  the management of hazardous wastes in the UK. The Waste  Hierarchy provides a framework for waste management and  implementation of infrastructure which will allow sustainable  waste management solutions. However, the Waste Hierarchy is  a simplification of Best Overall Environmental Outcome, which is  the goal of environmental strategy, policy and regulation, and for  hazardous wastes there is a particular need to consider the fate  of the persistent and toxic pollutants in the waste.

The hazardous waste market is highly segmented with a total  volume of approximately 5 million tonnes (Environment Agency)  of waste handled in the UK each year. Within this arena Augean  continues to focus on the treatment and disposal of waste from  the growth areas of construction and demolition activities, Oil &  Gas, energy from waste operators, specialist manufacturers and  other industrial producers.

Hazardous landfill
Approximately 0.9 million tonnes of Hazardous waste are  disposed per annum to hazardous landfill sites and the total  UK capacity for hazardous landfill is at most 14 million cubic  metres and declining as hazardous landfills are closing and new  hazardous landfills are not being permitted (source: Environment  Agency and management estimates). Augean’s Energy &  Construction business continues to be a leading provider within  this market, holding in excess of 40% of the UK’s remaining and  reducing scarce hazardous landfill capacity.

Energy-from-Waste and Biomass Energy waste market
Augean’s treatment and disposal to landfill includes the  management of certain by-products from energy-fromwaste  (EfW) plants, required to deliver the UK’s obligation to  significantly reduce the landfilling of municipal solid waste by  2020, and from biomass energy plants. These facilities produce  air pollution control residues (APCR) and intermediate bottom  ash (IBA), also known as fly ash. The Group has developed  the capability to treat and dispose of these ashes and residues  at our sites at Port Clarence and East Northants Resource  Management Facility (ENRMF), handling approximately a  40% market share (2017: approximate 40% share). This market  is expected to grow at 9% compound average growth rate  through to 2022. Disappointingly, due to operational issues, no  new incinerators came on line in 2018. Despite this, it is pleasing  that the Group was able to grow ash volumes by double digit  percentage in 2018. The Group actively monitors technological  developments in the treatment and recycling of this material  to ensure its long term competitive position in this market.   The Group’s overall volumes from this market increased 14%  in 2018.

Construction waste market
Construction soils are a key input to the Group’s landfill sites.  In 2018, the Group received volumes of this waste into its  sites at ENRMF and Port Clarence where contaminated soils  are treated and disposed to landfill. The volume of these soils  available to the Group is variable and linked to activity in the  construction sector, including the progress of large-scale  infrastructure projects. The market for these soils, by nature,  is not operated on a long term contracted basis. It is sensitive  to the prevailing market spot price, influenced by haulage costs  and thus proximity to the disposal site.

The Group has also invested in soil washing and treatment  equipment to promote recycling of a proportion of such  materials, as required by the market. During 2018, the Group  reassembled a construction sales team which resulted in  construction waste volumes being up over 140% in the second  half of the year. Overall construction volumes were increased by  24% over 2017.

Radioactive waste market
The Group’s key radioactive waste market is the nuclear  decommissioning market, relating to the closure and dismantling  of the UK’s redundant nuclear power and research facilities.  This is managed on behalf of the UK government by the Nuclear  Decommissioning Authority (NDA). The disposal of naturally  occurring radioactive material (NORM) generated principally  from the Oil and Gas industry is the second key radioactive  waste market for the Group. Augean has planning permission  and environmental permits in place to dispose of low activity  low level waste (LLW), very low level waste (VLLW) and NORM.  The NDA publishes regular forecasts on the volumes of  radioactive wastes requiring disposal and treatment.

During 2018 the volumes of radioactive waste processed by the  Group increased by 82%

Industrial waste market
The waste market has again remained stable as a result of  shutdown and maintenance work being carried out across  a broad range of sectors and overall growth in the UK  manufacturing sector. During 2018 the Group grew its share in  this market with sales increasing by 39%.

As large energy-intensive industries have moved production out  of the UK, the demand for organic waste derived fuels in the UK  market has reduced. The market has some reliance on facilities  in mainland Europe for the recovery of energy from these fuels.  The opportunity to send waste to energy recovery routes within  mainland Europe has remained stable and Augean benefits from  these disposal routes. The impact of Brexit on these routes is  difficult to predict but the position is being closely monitored  with the Group Board having access to expert advice. The  Group has established additional disposal routes outside of  Europe, which it believes will ensure business continuity in this  regard. Additionally, inventories will be managed down to reduce  risk as we progress towards the planned exit date.

North Sea Oil & Gas waste services market
The markets for waste produced in the exploration, appraisal,  development, production and decommissioning of North Sea  oil & gas are centred on Aberdeen, extend to the Shetland Isles  for the northern sector, and Great Yarmouth for the Southern  sector. Augean North Sea Services (ANSS) provide a full range  of services, equipment rental and manpower provision for the  containment, treatment and associated specialised industrial  cleaning of all Oil & Gas offshore and terminal wastes. These  include the cuttings and slop waters from drilling, contaminated  waters from the production process, production wastes, oil  sludges, including those contaminated with low level naturally  occurring radioactive material (NORM), swarf containment from abandonment activities, as well as a more general range of  industrial general and hazardous wastes. In addition, ANSS now  provide full NORM decontamination of wellbore and topside  production equipment in their new decommissioning Centre in  the Port of Dundee.

The dependence of the UK’s energy sector on oil and gas will  continue over several decades, leading to increased levels  of demand for specialised industrial service related waste  management for offshore production facilities and onshore  terminals, as the sector, depending on economics, extends the  life of, or begins decommissioning the assets in the North Sea.

The market has seen an upturn in Decommissioning related plug  and abandonment activities. NORM builds up over time on the  downhole production equipment, processing lines and topside  equipment, which requires decontamination with specialised  industrial jetting equipment resulting in the generation of  NORM scale. The volume of downhole and topside equipment  requiring decontamination is rising rapidly alongside plug and  abandonment decommissioning activities, requiring specialised  decontamination, treatment and disposal.

The Group’s sales in this market increased by 19% in 2018.

The above segments represent the Group’s targeted growth  markets. Each has shown growth during 2018, proving the  Group’s strategic choices.

OBJECTIVES

The business currently has two short term objectives against which progress has been made in 2018. After further progress has been achieved a revised long term strategy will be presented to Shareholders.

STRATEGIC FOCUS DESCRIPTION KPI’s
Resolve HMRC Position HMRC has issued the Group with assessments in relation to its treatment and  disposal of hazardous waste. Based on the legal and other advice received by  the Group over several years, Augean is very confident that the Group has met its  obligations in respect of landfill tax, consistent with the law and official guidance at  the time. Resolution of issue
Maximise profitability and cash generation of business The Board has implemented several rounds of cost reduction including a management reorganisation, which have resulted in a significant cost saving and increase in profitability. Year-on-year profit growth

Increase in cash balance