TIDMAUG
RNS Number : 5815Q
Augean Plc
01 March 2021
1 March 2021
Augean plc ("Augean" or "the Group")
Final results for the year ended 31 December 2020
Augean, one of the UK's leading specialist waste management
businesses, announces its final results for the year ended 31
December 2020.
Financial highlights
Adjusted metrics exclude non underlying items (1)
-- Adjusted revenue(2) before landfill tax decreased by 16% to
GBP76.9m with the majority of the shortfall in the North Sea
Services segment (2019: GBP91.5m)
-- Adjusted profit(2) before interest and tax increased to GBP20.5m (2019: GBP19.9m)
-- Adjusted profit(2) before taxation increased to GBP19.3m (2019: GBP19.2m)
-- Statutory profit before taxation of GBP16.4m (2019: loss of GBP15.3m)
-- Adjusted EBITDA(3) increased to GBP29.0m (2019: GBP28.8m)
-- 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 GBP28.0m resulting in a
net cash(4) position of GBP6.4m (December 2019: net bank debt(4) of
GBP13.2m)
-- 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 GBP6m
-- 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 GBP40.4m (GBP37.7m 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 GBP1.4m 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."
There will be a call for analysts at 10am today organised by N+1
Singer.
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation.
For further information, please
call:
Augean plc 01937 844 980
Jim Meredith Executive Chairman
Mark Fryer, Group Finance Director
N+1 Singer 020 7496 3000
Peter Steel
Rachel Hayes
Jen Boorer
(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
Executive Chairman's statement
The Group continued its focus in 2020 on increasing revenue in
attractive, growing segments of the hazardous waste market to drive
underlying cash generation and adjusted profit. The underlying
trading in the Group's businesses was positive and robust in spite
of the significant impact of Covid-19 in quarter two, particularly
on the construction and biomass sectors. Additionally, our North
Sea business was adversely impacted from Covid-19 and the reduced
oil price from quarter two and for the second half. As a result,
the Group delivered growth in adjusted profit before tax to
GBP19.3m (2019: GBP19.2m), a very credible achievement
demonstrating the underlying resilience of the business. This
profit excludes the one off-items which do not impact underlying
performance, notably accounting charges of GBP0.9m in relation to
the rationalisation for the North Sea business, impairment charges
of GBP2.9m for the North Sea business and legal costs of GBP0.5m in
pursuing our claim against HMRC offset by a profit of GBP1.8m due
to an improved probability of success in our claim for tax recovery
from HMRC. A reconciliation of adjusted to reported profits is set
out in note 27. The Group made a statutory profit after tax of
GBP13.3m in 2020 (2019: loss of GBP12.8m). The increase is
primarily as a result of one-off exceptional costs recorded in 2019
relating to HMRC Landfill Tax Assessments.
We are pleased to report the Group maintained its record of a
double-digit growth in Energy from Waste (EfW) revenue and
profitability. A large number of construction sites closed through
the second quarter due to the impact of Covid-19, which was more
marked in the South than the North, reducing construction waste
volumes which have traditionally represented more than a quarter of
overall Group landfill volumes. A further knock-on effect was that
construction site waste sent to biomass incinerators as fuel, was
also curtailed, forcing some to close and thereby reducing the
volume of ash we would otherwise have received. A total of six new
EfW sites have been secured; four operational and two new. We are
particularly excited about the recent receipt of the Recovery Code
at our site in Port Clarence. This allows Augean the opportunity to
grow its customer base by selling to a broader range of new and
existing EfW facilities that require an R code for some, or all of
their ash.
The impact of Covid-19 was most felt on Augean North Sea
Services (ANSS). Covid-19 saw unprecedented declines in the Brent
oil price with a consequent fall off in activity in the North Sea.
This is seen in declining rig count (impacting volume of drilling
waste and industrial service activity) but more importantly decline
in discretionary decommissioning expenditure. In response to this,
the Group has undertaken a rapid and significant rationalisation
programme which has seen the overall ANSS workforce reduce by more
than half, reduction in the senior management team expense, cost
saving and rationalisation of sites. The total cost of the
rationalisation of GBP0.9m has been treated as exceptional. In
addition, a review of the asset values for ANSS has concluded that
these are impaired and an appropriate impairment charge of GBP2.9m
has been provided which has also been treated as exceptional.
The Group continues to secure further contracts with top-tier
customers in Energy from Waste, Radioactive waste and construction
waste. This year saw the first deliveries of waste into the Port
Clarence site via boat thereby significantly expanding the
geographical reach of this site but more importantly generating
cost saving and significantly improved environmental outcomes for
our customers including carbon and emissions reduction when
compared to transport by truck.
The Group successfully argued and won one aspect of our Landfill
Tax (LFT) dispute with HMRC, with the repayment of GBP1.4m
(excluding costs of up to GBP0.2m still sought) which was received
in December 2020. We await the decision of the Lower Tier Tax
Tribunal on one other key aspect of the LFT dispute. 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.
The Group's strong cash generation of GBP28.0m has resulted in
net cash (excluding lease liabilities) at 31 December 2020 of
GBP6.4m (2019: net debt of GBP13.2m). The net cash has benefitted
from GBP3.2m of VAT deferred from March 2020 and which will fall
due on 31(st) March 2021 in line with the government VAT deferral
scheme. The Board will not pay a dividend for 2020 (2019 final:
nil) but is proposing a return to paying dividends in 2021 having
now fully repaid all debt associated with the disputed HMRC LFT
assessments.
There has been no impact of Brexit on the results and the Group
does not expect a material impact in 2021 as less than 1% of the
Group profit arises from activity outside of the United
Kingdom.
Health and safety remain the highest priority for the Board,
management and employees across the Group. The management team has
continually improved the safety environment by enhancing hazard
recognition, risk evaluation and learning from incidents. There was
an overall decrease in the number of incidents recorded by the
business during 2020. While we remain one of the best performers in
our industry we must not become complacent and we will continue to
strive to improve. The Board continues to recognise the risks faced
by our people, who work in challenging environments involving the
moving, treating and disposing of hazardous waste.
Protecting the environment is not only a matter of compliance
with permits but encompasses our broader responsibilities to
society and future generations. The Group diligently monitors its
performance in this regard, the results of which are regularly
reported to the Board. The majority of our sites in England are
ranked by the Environment Agency as Category A or as "Excellent" by
the Scottish Environmental Protection Agency. We had one site that
scored an E, which was highly unusual for our operations, but was
associated with the exceptional rain and flood events during early
2020 and matters have been addressed to prevent any recurrence.
The Board recognises that our business success is dependent on
the quality, diligence and hard work of all Augean's employees and
I would like to take this opportunity on behalf of the Board to
thank everyone who has contributed to the continuation of operation
of all of the Group sites which have not lost a single days
operational trading during this global pandemic.
As in previous years, I am pleased to note the addition of new
shareholders to our register during the year and again I am
thankful for the continued support from our investors.
The Group has set ambitious internal targets for the 2021 year
which will undoubtedly be an economically uncertain period for the
UK whilst Brexit plays out and the impact of Covid-19 continues;
however, with limited direct exposure to EU markets, coupled with a
strong start to 2021 trading and a robust pipeline of activity, the
Board remains confident in the Group's prospects for the new
financial year.
I look forward to updating shareholders on our continuing
progress during 2021.
Jim Meredith
Executive Chairman
26 February 2021
Operating Review
Introduction
The Group operated through two business units during 2020 and
2019, being Treatment & Disposal and North Sea Services. This
reflects the operational management of the business. Within these
segments, the Group's core strategic markets are Energy from Waste,
treatment, nuclear decommissioning and North Sea
decommissioning.
Adjusted revenues Adjusted operating
(GBP'm) profit before PLC
costs (GBP'm)
2020 2019 2020 2019
--------- --------- ---------- ---------
Treatment and Disposal 54.6 56.6 20.0 18.1
--------- --------- ---------- ---------
North Sea Services 22.4 34.9 1.4 2.6
--------- --------- ---------- ---------
Revenues excluding
LFT 77.0 91.5 - -
--------- --------- ---------- ---------
Operating Profit pre-PLC
costs - - 21.4 20.7
--------- --------- ---------- ---------
PLC costs (0.9) (0.8)
--------- --------- ---------- ---------
Operating profit post-PLC
costs 20.5 19.9
--------- --------- ---------- ---------
Adjusted revenues exclude intra segment trading and landfill
tax. Adjusted operating profit excludes non-underlying items. A
reconciliation of these adjusted metrics is shown in note 8.
Business performance
Treatment and Disposal
The principal activity of this business unit is the treatment
and disposal of waste from Energy from Waste (EfW) incinerators,
construction and industrial sites. The largest waste stream by
revenue and profit is the disposal of ash from EfW sites which
comprises bottom ash and fly ash from the burning of biomass and
municipal waste to generate energy. The second waste stream by
tonnage is contaminated waste materials and soils (including
asbestos), mainly from the manufacturing and construction sectors.
A key growth market in Treatment and Disposal is low level
radioactive waste decommissioning.
Adjusted revenues, excluding landfill tax, decreased by 4% to
GBP54.6m (2019: GBP56.6m), due to the input of construction sector
wastes being reduced as a result of Covid-19 lockdown. Ash inputs
increased 5% to 222,000 tonnes (2019: 211,000) with municipal ash
up 38% to 130,000 tonnes. The overall ash growth would have been
stronger still but for the biomass incinerators being largely
closed through the second quarter due to a lack of input materials
resulting from the closure of municipal waste sites and the impact
of lockdown on the construction sector. Overall ash revenue has
grown by 15% to GBP19.7m (2019: GBP17.2m). Radioactive waste
volumes decreased to 7,600 tonnes from 14,200 tonnes in 2019. The
effect of Covid-19 has been most marked on the radioactive and
North Sea waste streams.
The adjusted operating profit of Treatment and Disposal
increased to GBP20.0m (2019: GBP18.1m) due to increased ash sales,
improved margins and the continued cost control offset by the
impact of lower construction soils volumes and radioactive waste
volume.
The Treatment and Disposal strategy is to continue to win new
treatment contracts, win new and existing EfW sites particularly
now we have an R coded process for ash treatment, optimise the use
of our treatment plants, and maximise the market opportunity from
shipping waste by boat to Port Clarence. We expect nuclear
decommissioning and construction sector wastes to recover from the
impact of Covid-19 experienced in 2020.
North Sea Services (ANSS)
The ANSS business unit operates in the North Sea Oil & Gas
market. The primary revenue streams are from drilling waste
management (DWM), including the rental of offshore engineers and
equipment to customers, production waste management, onshore &
marine industrial services, decommissioning and water treatment.
Decommissioning is expected to grow to be the most significant
revenue and profit generator in the coming years.
ANSS revenue decreased by 36% to GBP22.4m (2019: GBP34.9m). This
segment saw a decrease in adjusted operating profit to GBP1.4m
(2019: GBP2.6m) due to the impact of Covid-19, the subsequent
reduction in the oil price resulting in unprecedented reductions in
drilling and decommissioning activity. Revenue in the first half of
the year benefitted from the decommissioning of the Shell Curlew
vessel in Dundee. This was completed and all performance and
contractual obligations satisfied by June 2020. Revenue in the
first half was some 50% higher than in the second half of the year
with the impact of Covid-19 felt more seriously. In response to
this the workforce in ANSS has been reduced by over half, the
senior management team cost reduced, sites rationalised and the
overhead cost base reduced substantially. The cost of this
rationalisation is GBP0.9m and has been shown as an exceptional
cost. In addition, The Group has reviewed the carrying value of the
assets in ANSS and has impaired the value of these assets by
GBP2.9m which has also been shown as an exceptional cost.
Despite the tough outlook for ANSS the Group used this as an
opportunity to purchase the Haliburton Ecocentre at Peterhead to
process drilling and other waste from the North Sea oil and gas
customer base. This was completed at a significant discount in
August and the initial consideration was GBP1.1m with a further
GBP0.3m due in August 2021. This asset has not been impaired as it
is trading broadly in line with expectation set at the time of the
acquisition.
The ANSS strategy continues to gain traction as the business
moves up the supply chain, dealing directly with Oil & Gas
operators and top-tier customers, so providing opportunities to
widen its service scope more directly with those customers. The
opportunity remains for Augean to continue to service this growing
North Sea decommissioning market, worth multi-billion pounds for
many years to come however the group does not expect this market to
pick up until late 2022 or early 2023. ANSS actively markets these
facilities, through each of its sites although primarily through
Dundee.
HMRC assessment
Since August 2017, the Group has received assessments (including
accrued interest) for uncollected Landfill Tax where HMRC does not
agree with the Group's interpretation of the rate of Landfill Tax
that applies. The total value of assessments received, including
interest accrued to the date of payment of the assessments, is
GBP40.4m.
In December 2019, the Group paid these assessments in full. This
prevents any further accrual of interest and allowed the Group to
receive a corporation tax deduction. Payment of the assessment does
not change the Group's legal position where we remain of the view
the Group has applied the appropriate treatment in respect of
levying LFT on waste received therefore the Group intends to
maintain our robust challenge of HMRC's LFT Assessments. A number
of separate legal challenges are being made of which the first was
heard by the Lower Tier Tax Tribunal in September 2020 and the
decision of the Tribunal is awaited.
The Group currently accounts for the legal costs of the dispute
with HMRC, totalling GBP0.5m in 2020, as a non-underlying cost. The
payments made to HMRC in December 2019 were accounted for in line
with International Accounting Standard (IAS) 37, resulting in an
expense in 2019 of GBP26.2m and a residual tax deposit asset of
GBP14.2m held on the balance sheet (categorised as an "other
receivable") as at the end of 2019. The application of IAS 37
involves the application of probabilistic modelling to tribunal
outcomes, which are impacted by a number of different factors. The
Group considers that the accounting outcome of meeting the
obligations of IAS 37 is not necessarily representative of its
expectation of any potential tribunal result. The assessments,
points of law, interpretations and interconnectivity of aspects of
the assessments means that the expected value approach taken does
not necessarily result in accurate real-life possible outcomes.
In December 2020, the Group received GBP1.4m of Landfill Tax
relating to overpayment for a particular customer which was a small
element of the GBP40.4m paid in December 2019. As a result of this,
and in conjunction with our external counsel, we have re-assessed
the IAS 37 probabilistic modelling of our legal challenges to the
HMRC Assessments resulting in a theoretical accounting profit of
GBP1.8m which has been treated as an exceptional item. The tax
deposit asset held as a non-current asset is GBP14.6m compared to
GBP14.2m in 2019. Given the length of time the tribunal process has
taken, and is expected to continue for before a settlement is
reached, this receivable has been shown as due in greater than one
year.
Additionally, the Group submitted a claim to HMRC for GBP11m
associated with material used for engineering purposes beneath but
forming a functional support layer for the landfill cap. The
Group's claim results from a successful challenge by other Landfill
operators against HMRC's interpretation of applicable LFT rates.
The matter has been heard at the Lower and Upper Tax Tribunals with
the courts having found against HMRC. HMRC are however continuing
the appeal process to the final stage which is going to be heard
during the first quarter of 2021. The Group's GBP11m claim includes
approximately GBP10m of material currently contained within the
GBP40.4m assessment value and approximately GBP1m of LFT paid but
not included within the current assessment values. Should Augean be
successful in our legal challenge of the HMRC Assessments the value
of this separate claim will reduce to GBP1m which is disclosed as a
contingent asset as at 31 December 2020, as any recovery is not yet
seen as virtually certain.
Planning and permitting
The current site planning permissions extend to 2026 in the case
of East Northants Resource Management Facility (ENRMF), 2034 for
the Thornhaugh site and for a period of more than 50 years in the
case of Port Clarence.
The Group has an option to purchase approximately 90 acres of
land adjacent to its existing East Northants Resource Management
Facility (ENRMF) landfill site near Peterborough which would
prolong the life of the ENRMF site until at least the
mid-2040s.
The Group is currently preparing an application for a
Development Consent Order (DCO) for an extension in the area and
life of the East Northants Resource Management Facility (ENRMF).
The proposal at ENRMF is classified as a Nationally Significant
Infrastructure Project (NSIP) under the Planning Act 2008 and
consent must be granted by the Secretary of State in the form of a
DCO. The Group will therefore submit the DCO application in Spring
2021 to the Planning Inspectorate (PINS) rather than to
Northamptonshire County Council or the emerging North
Northamptonshire Council. PINS is an impartial public body whose
role is to consider all important and relevant matters and advise
the Secretary of State whether consent should be granted for
nationally significant infrastructure projects.
The Group has also submitted planning applications to
Stockton-on-Tees Borough Council in the year for permissions
specifically to accept wastes contaminated with small amounts of
radioactivity - Low Level Waste - for treatment in the Waste
Recovery Park or disposal into the hazardous and non-hazardous
waste landfill sites.
An application for an Environmental Permit to accept LLW for
disposal into the landfill has already been submitted to the
Environment Agency. The permit application is supported by an
Environmental Safety Case which contains a wide range of risk
assessments in order to demonstrate to the Environment Agency that
the proposals will not result in harm to people in the local area
or to the environment. The Environment Agency is undertaking a
determination process and has consulted on the Permit application.
It is anticipated that the application will be determined in
2021.
Augean has submitted a planning application to Peterborough City
Council requesting a change in the currently approved sequence of
the excavation and engineering of landfill cells at Thornhaugh
Landfill Site. The application, if successful will simply
facilitate a now preferred site engineering and filling sequence
plus assist the logistics of access route.
Financial performance
Group overview
A summary of the Group's financial performance, is as
follows:
GBP'm except where stated 2020 2019
Revenue 91.7 107.1
------- ---------
Profit / (loss) after
taxation 13.3 (12.8)
------- ---------
Net operating cash inflow
/ (Outflow) 29.8 (16.2)
------- ---------
Basic earnings / (loss)
per share 12.70p (12.26)p
------- ---------
The Group considers adjusted metrics, as reconciled to statutory
metrics in note 8, as being appropriate to understand the
underlying performance of the Group's businesses. The adjusted
metrics exclude one-off items or items outside the normal course of
activities for the group. The adjusted items in the current year
are non-underlying items as detailed below, and include asset
impairment, restructure cost and adjustment to the accounting
assessment for the HMRC Landfill Tax Assessment.
A summary of the Group's financial performance, excluding
non-underlying items, is as follows:
GBP'm except where stated 2020 2019
Adjusted Revenue 76.9 91.5
------- -------
Adjusted Operating profit 20.5 19.9
------- -------
Adjusted Profit before
taxation 19.3 19.2
------- -------
Adjusted Profit after
taxation 15.6 15.9
------- -------
Adjusted Net operating
cash flow 28.0 27.0
------- -------
Basic adjusted earnings
per share 14.90p 15.33p
------- -------
Return on capital employed 35.4% 35.3%
------- -------
A consideration of the operational factors affecting performance
is included in the operating review.
Trading, adjusted operating profit and EBITDA
Adjusted revenue excluding landfill tax, for the 12 months ended
31 December 2020 decreased by 16% to GBP76.9m (2019: GBP91.5m).
Adjusted operating profit increased by 3% to GBP20.5m (2019:
GBP19.9m) and adjusted profit before tax increased by 1% to
GBP19.3m (2019: GBP19.2m), on the same basis.
Adjusted earnings before interest, taxation, depreciation and
amortisation (EBITDA), before non-underlying items, is determined
as follows:
2020 2019
GBP'm GBP'm
Adjusted Operating profit 20.5 19.9
------- -------
Depreciation and amortisation 8.5 8.9
------- -------
Adjusted EBITDA 29.0 28.8
------- -------
Non-underlying items
Non-underlying items in 2020 totalling GBP2.8m comprise: ANSS
impairment GBP2.9m, ANSS restructuring cost GBP0.9m, updated
assessment of IAS 37 potential LFT liability resulting in an
exceptional profit of GBP1.8m, Landfill Tax legal cost GBP0.5m and
other cost GBP0.3m. In 2019 non-underlying items include GBP0.5m
expense related to landfill tax legal costs, GBP26.2m related to
the charge associated with the payment of landfill tax assessments,
GBP7.7m share based payments and GBP0.1m of other costs.
Finance costs
Total finance charges were GBP1.2m (2019: GBP0.7m) including the
interest on bank debt, other financial liabilities, the
amortisation of upfront fees associated with obtaining the facility
and the non-cash unwinding of discounts on provisions. The interest
will return to historic 2019 levels following the repayment of debt
taken on in late 2019 to pay all outstanding Landfill Tax
assessments.
Earnings per share
Adjusted basic earnings per share (EPS) excluding non-underlying
items, decreased by 3% to 14.90 pence (2019: 15.33 pence) due to
the Covid-19, reduced oil sector activity and higher interest
costs.
Statutory basic earnings per share (EPS) increased to 12.70
pence (2019: loss 12.26 pence) due to the exceptional charge in
2019 related to HMRC Landfill Tax Assessments and other
non-underlying items noted above.
The Group made an adjusted profit after taxation of GBP15.6m
(2019: GBP15.9m), all of which was attributable to equity
shareholders.
The total number of ordinary shares in issue increased during
the period from 104,085,198 to 104,971,924 with the weighted
average number of shares in issue increasing from 104,006,779 to
104,371,664 for the purposes of basic EPS due to the issue of
shares to satisfy options granted in previous years.
Dividend
The Board has decided not to declare a dividend for 2020 (2019
interim and final: GBPnil) but, with the tax assessments paid in
full and the Group returning to cash positive, the Group is
proposing to pay dividends in 2021.
Cash flow and net debt
Adjusted net operating cash flows were generated from operations
as follows:
2020 2019
GBP'm GBP'm
EBITDA before non-underlying items 29.0 28.8
------- -------
Net working capital movements 0.7 (0.5)
------- -------
Interest and taxation payments (1.7) (1.3)
------- -------
Net operating cash flows before
non-underlying items 28.0 27.0
------- -------
The cash flow of the Group is summarised as follows:
2020 2019
GBP'm GBP'm
Net operating cash flows 28.0 27.0
------- -------
Net operating cash flows from adjusted
items (1.7) (44.5)
------- -------
Total net operating cash Inflow
/ (outflow) 26.3 (17.5)
------- -------
Maintenance capital expenditure (4.2) (4.3)
------- -------
Post-maintenance free Inflow /
(outflow) 22.1 (21.8)
------- -------
Development capital expenditure (2.9) (1.5)
------- -------
Free cashflow 19.2 (23.3)
------- -------
Sale of Business and assets - 3.3
------- -------
Net cash Inflow / (outflow) before
dividends 19.2 (20.0)
------- -------
Prior year adjusted items include the working capital movement
in relation to the recognition of an asset for a proportion of the
Landfill Tax assessments paid. Adjusted net operating cash flow as
a percentage of EBITDA was 97% in 2020 (2019: 94%).
The operating cash flow of the Group before adjusted items of
GBP28.0m was used primarily to pay down debt and capital investment
in property, plant & equipment and intangible assets made by
the Group totalling GBP7.1m (2019: GBP5.8m), including spend offset
against provisions, split between maintenance capital (to lengthen
the productive life of existing assets) of GBP4.2m and expansion
capital (for targeted future growth) of GBP2.9m. Maintenance
capital expenditure has increased from the prior year as a result
of cell construction and works. The development capex is
substantially related to the acquisition of the Haliburton assets
and the aforementioned planning consents.
Post-maintenance free cash flow, as set out in the table above,
represents the underlying cash generation of the Group, before any
investment in future growth or the payment of dividends to
shareholders.
As a result of the above net cash movements, net cash, which
excludes capitalised lease liabilities, was GBP6.4m at 31 December
2020 compared with net debt of GBP13.2m at 31 December 2019.
Financing
During 2020, the activities of the Group were substantially
funded by cash from operations with bank debt renewed in 2019. The
bank facility with HSBC Bank plc of GBP40m comprises a term loan of
GBP20m and a revolving credit facility of GBP20m. GBP13m was drawn
against this facility at 31 December 2020. The earliest maturity of
the HSBC bank facility is December 2022.
Balance sheet and return on capital employed
Consolidated net assets were GBP61.0m on 31 December 2020 (2019:
GBP47.6m) and net assets, excluding goodwill and other intangible
assets, were GBP41.1m (2019: GBP27.8m), of which all was
attributable to equity shareholders of the Group in both years.
Return on capital employed, defined as adjusted operating profit
divided by average capital employed, where capital employed is net
assets excluding net cash or net bank debt, increased marginally to
35.4% in 2020 (2019: 35.3%).
Impairment reviews
In accordance with IAS36 'Impairment of Assets', an annual
impairment review was carried out for each cash-generating unit
(CGU) to which significant goodwill is allocated and also any other
CGU where management believed there may have been an indication of
potential impairment to the carrying values of assets in those
CGUs.
For the Group, this exercise was completed for the CGUs within
the Treatment & Disposal and North Sea Services reportable
segments.
Based on these reviews, a GBP2.9m impairment was made against
North Sea services. The cash flows for all CGUs were discounted
using a pre-tax discount rate of 12.2% (2019: 8.0%).
Employees
The Group employed an average of 316 staff (2019: 392) over the
course of the year. The number of employees in the Group has
decreased significantly during 2020 reflecting the Groups view of
future trading in the North Sea Services sector.
Brexit
The Group is focused on trading in Britain and uses disposal
infrastructure almost entirely based in the UK. Where disposal
routes in mainland Europe are used, the financial impact of
different scenarios which could result from this external change
have been modelled. 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. Coupled with
UK Government advice that current waste movement structures will be
rolled over in most EU States and the Group's work to establish
alternatives, the risk of significant business disruption as a
result is thought limited.
Key performance indicators
The Augean plc Board of Directors, Group Management Board and
local management teams regularly review the performance of the
Group as a whole, along with the performance of individual business
units. This includes the use of a balanced scorecard for applicable
key performance indicators (KPIs) to monitor progress towards
delivery of the Group's principal targets. These KPIs are
consistent with those reported in 2019. The Group regard the
performance in 2020 compared to their benchmark, which is the prior
year performance, to be satisfactory.
The focus of the Group is in three priority areas:
1. Health & safety: monitored through near miss incidents and the number of accidents incurred;
2. Compliance with regulations, in particular Environment Agency
and Scottish Environment Protection Agency audit results; and
3. Financial performance.
KPI 2020 2019
Outcome Outcome
Number of incidents (1) 22 29
----------------- --------------
Number of near misses reported
(2) 2,035 3,437
----------------- --------------
Compliance scores (3) English English
Sites : Sites
A-B (one A-B
site E) Scottish
Scottish Sites
Sites Excellent Excellent
(one site
Good)
----------------- --------------
Adjusted profit before taxation GBP19.3m GBP19.2m
(4)
----------------- --------------
Post-maintenance free cash GBP21.0m GBP(21.8)m
inflow / (outflow) (5)
----------------- --------------
Return on capital employed
(6) 35.4% 35.3%
----------------- --------------
Volumes of waste disposed to
our landfill sites 570,000t 630,000t
----------------- ------------
Ash Volumes treated 222,000t 211,000t
----------------- ------------
Amount of North Sea Oil & Gas 91% of ANSS 94% of ANSS
revenue generated directly from revenue revenue
operators and Top-Tier customers
----------------- ------------
(1) The number of total reported accidents, that resulted in
injury, including those resulting in damage to plant or equipment.
This is an absolute figure which has not been normalised for
changes in employee numbers.
(2) The total number of incidents reported which could have
resulted in an accident or injury or damage to property.
(3) The average of audit scores notified during the year by the
Environment Agency (EA) in England or the Scottish Environment
Protection Agency (SEPA) in Scotland. The EA notifies results on
the scale A-F and SEPA notifies on the scale Excellent-Very
Poor.
(4) Group profit before taxation, excluding non-underlying items
and share based payments charges
(5) Net operating cash flows, less maintenance capital
expenditure.
(6) Calculated as operating profit, excluding non-underlying
items, divided by average capital employed, where capital employed
is the consolidated net assets of the Group excluding net bank
cash/debt.
Summary and Outlook
The Group performed well during 2020, generating GBP28.0m of
cash before non-underlying outflows and was able to marginally grow
adjusted profit before tax despite the impact of Covid-19 and the
impact on the North Sea business. A pleasing start to trading has
been made in the first few weeks of 2021 with results in line with
Group expectations. The Board is confident in the prospects of the
Group for the full year.
Consolidated statement of comprehensive income
for the year ended 31 December 2020
2020 2019
GBP'000 GBP'000
------------------------------------------------------ -------- --------
Revenue 91,660 107,137
Operating expenses (71,208) (87,228)
------------------------------------------------------- -------- --------
Adjusted Operating profit 20,452 19,909
Share based payments - (7,693)
Landfill tax assessments credit / (charge) 1,824 (26,179)
Non-current asset impairment (2,931) -
Other non-underlying items (1,721) (664)
Operating profit / (loss) 17,624 (14,627)
Net finance charges (1,195) (697)
Profit / (Loss) before tax 16,429 (15,324)
Taxation (charge) / credit (3,169) 2,568
------------------------------------------------------- -------- --------
Profit / (loss) for the year and total comprehensive
income attributable to equity shareholders of Augean
plc 13,260 (12,756)
------------------------------------------------------- -------- --------
Earnings / (loss) per share
Basic 12.70p (12.26)p
Diluted 12.70p (12.17)p
Group Statement of financial position
As at 31 December 2020
Group
----------------------
2020 2019
GBP'000 GBP'000
*Restated
Non-current assets
Goodwill 19,757 19,757
Other intangible assets 89 45
Property, plant and equipment 36,042 38,309
Right of use assets 2,546 4,516
Deferred tax asset 3,016 4,350
Landfill tax asset 14,638 -
------------------------------------ --------- -----------
76,088 66,977
------------------------------------ --------- -----------
Current assets
Inventories 548 302
Trade and other receivables 16,778 26,000
Landfill tax asset - 14,200
Cash and cash equivalents 19,721 21,588
------------------------------------- --------- -----------
37,047 62,090
------------------------------------ --------- -----------
Current liabilities
Trade and other payables (24,362) (32,205)
Current tax liabilities (2,342) (1,145)
Borrowings (6,667) (6,667)
Lease liabilities (1,237) (1,445)
Provisions (521) (500)
------------------------------------- --------- -----------
(35,129) (41,962)
------------------------------------ --------- -----------
Net current assets / (liabilities) 1,918 20,128
------------------------------------- --------- -----------
Non-current liabilities
Borrowings (6,666) (28,123)
Lease liabilities (2,078) (3,104)
Provisions (8,267) (8,242)
------------------------------------- --------- -----------
(17,011) (39,469)
------------------------------------ --------- -----------
Net assets 60,995 47,636
------------------------------------- --------- -----------
Shareholders' equity
Share capital 10,497 10,409
Share premium account 827 816
Retained earnings 49,671 36,411
------------------------------------- --------- -----------
Total equity 60,995 47,636
------------------------------------- --------- -----------
* The comparative information is restated on account of
correction of disclosures to separately disclose the Landfill tax
asset within the Statement of financial position due to its
material size and nature. This balance was classified within Trade
and other receivables in 2019. This adjustment has no impact on net
assets as at 31 December 2019 or the loss previously reported for
the year then ended.
Consolidated statement of cash flow
For the year ended 31 December 2020
Group
------------------
2020 2019
GBP'000 GBP'000
--------------------------------------------------------- -------- --------
Operating activities
Cash generated from / (used in) operations 29,797 (16,215)
Finance charges paid (1,078) (597)
Corporation Tax paid (638) (820)
---------------------------------------------------------- -------- --------
Net cash generated from / (used in) operating activities 28,081 (17,632)
---------------------------------------------------------- -------- --------
Investing activities
Proceeds on disposal of assets held for sale - 3,350
Proceeds on disposal of property, plant and equipment 49 -
Purchases of property, plant and equipment (7,067) (5,823)
Purchases of intangible assets (82) (18)
Net cash generated from / (used in) investing activities (7,100) (2,491)
---------------------------------------------------------- -------- --------
Financing activities
Dividends paid - -
Issue of equity 99 89
(Repayment) / drawdown of loan facilities (21,457) 32,000
Payment of principal on lease liabilities (1,490) (1,540)
---------------------------------------------------------- -------- --------
Net cash generated from / (used in) financing activities (22,848) 30,549
---------------------------------------------------------- -------- --------
Net (decrease) / increase in cash and cash equivalents (1,867) 10,426
Cash and cash equivalents at beginning of year 21,588 11,162
---------------------------------------------------------- -------- --------
Cash and cash equivalents at end of year 19,721 21,588
---------------------------------------------------------- -------- --------
Statement of changes in shareholders' equity
for the year ended 31 December 2020
Share Share Retained
capital premium earnings Total
Group GBP'000 account GBP'000 equity
GBP'000 GBP'000
At 1 January 2019 10,379 757 49,125 60,261
--------------------------------------------- --------- --------- ---------- ----------
Total comprehensive loss for the year
Retained loss - - (12,756) (12,756)
--------------------------------------------- --------- --------- ---------- ----------
Total comprehensive income for the year - - (12,756) (12,756)
Transactions with the owners of the company
Issue of equity 30 59 - 89
Share-based payments - - 42 42
Total transactions with the owners of the
company 30 59 42 131
--------------------------------------------- --------- --------- ---------- ----------
At 31 December 2019 10,409 816 36,411 47,636
--------------------------------------------- --------- --------- ---------- ----------
Total comprehensive income for the year
Retained profit - - 13,260 13,260
--------------------------------------------- --------- --------- ---------- ----------
Total comprehensive income for the year - - 13,260 13,260
Transactions with the owners of the company
Issue of equity 88 11 - 99
Total transactions with the owners of the
company 88 11 - 99
--------------------------------------------- --------- --------- ---------- ----------
At 31 December 2020 10,497 827 49,671 60,995
--------------------------------------------- --------- --------- ---------- ----------
1 B asi s of pr e parati on
The financial statements have been prepared in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006. The company has elected to
prepare its parent Company financial statements in accordance with
Financial Reporting Standard 101 (FRS101). The financial statements
have been prepared on the historical cost basis with the exception
of certain items which are measured at fair value as disclosed in
the principal accounting policies set out below. These policies
have been consistently applied to all years presented unless
otherwise stated.
The preparation of financial statements in conformity with IFRS
requires the use of estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting period. Although these estimates are
based on management's best knowledge of the amount, event or
actions, actual results ultimately may differ from these
estimates.
The directors have, at the time of approving the financial
statements, a reasonable expectation that the Company and the Group
have adequate resources to continue in operational existence for
the foreseeable future. Thus, they continue to adopt the going
concern basis of accounting in preparing the financial
statements.
The auditors' reports on the accounts for 31 December 2020 and
31 December 2019 were unqualified, did not draw attention to any
matters by way of emphasis, and did not contain a statement under
498(2) or 498(3) of the Companies Act 2006.
The financial information for the year ended 31 December 2020
and the year ended 31 December 2019 does not constitute the
company's statutory accounts for those years. Statutory accounts
for the year ended 31 December 2019 have been delivered to the
Registrar of Companies. The statutory accounts for the year ended
31 December 2020 were approved by the Board on 24 February 2021 and
will be delivered to the Registrar of Companies in due course. The
statutory accounts for the period ended 31 December 2020 will be
posted to shareholders at least 21 days before the Annual General
Meeting and made available on our website www.augeanplc.com .
Significant judgements and key sources of estimation
uncertainty
The preparation of the financial statements in conformity with
IFRS requires management to make estimates and assumptions that
affect the application of policies and reported amounts of assets,
liabilities, income, expenses and related disclosures. The
estimates and underlying assumptions are based on historical
experience, the best available information and various other
factors that are believed to be reasonable under the circumstances.
This forms the basis of making judgements about carrying values of
assets and liabilities that are not readily apparent from other
sources.
Actual results may however differ from these estimates. The
estimates and underlying assumptions are reviewed on an ongoing
basis. Changes in accounting estimates may be necessary if there
are changes in the circumstances on which the estimate was based,
or as a result of new information or further information. Such
changes are recognised in the period in which the estimate is
revised. Certain accounting policies are particularly important to
the preparation and explanation of the Group's financial
information. Key assumptions about the future and key sources of
estimation uncertainty that have a risk of causing a material
adjustment to the carrying value of assets and liabilities over the
next twelve months are set out below.
Landfill Tax assessments (estimate)
The Group have made payments to HMRC in 2019 of GBP40,393,000 in
relation to Landfill tax assessments received. The payments made to
HMRC and additional potential assessments have been accounted for
in line with IAS 37 and with reference to IFRIC guidance issued in
January 2019.
The assessments are divided into 5 distinct waste types
("baskets"). However, there are multiple points of law being
considered and challenged within each basket and some
interdependencies between assessments. In order to calculate the
"best estimate" of settlement under IAS 37 the likelihood of
success on each basket has been estimated by 3(rd) party legal
experts together with a further uncertainty factor applied. These
estimates have been applied to the baskets in creating a
probabilistic assessment of likely economic outflow. The expected
outflow has then been deducted from the total payment lodged with
HMRC, to arrive at a tax deposit of GBP14,638,000 (2019:
GBP14,200,000) recognised in the Statement of Financial Position.
Further information can be found in note 28.
The probabilistic modelling is reassessed based on input from
external lawyers at the end of each accounting period and
adjustments are recognised as appropriate. The tax asset had been
disclosed in 2019 as a current asset, as the tribunal for one of
the waste types was expected to take place in less than one year
and the Group had an expectation, at the time, that the assessments
could be settled during 2020. As the Group are still awaiting a
verdict on this tribunal, the asset has been classified as a
non-current at 31 December 2020 as recoverability within 12 months
is not certain.
Ultimately the economic outflow of this dispute will be
determined by tribunals for each individual point of law with
further appeals possible following which the outcome may be
different from the amount charged to the Statement of Comprehensive
Income. The range of possible outcomes from the assessments as at
31 December 2020 range from GBPnil to GBP42,750,000 should the
group lose all assessments and periods not yet assessed.
Provisions
The provision for restoration and after-care relates to closure
and post-closure costs for all landfill sites, charged over the
estimated active life of the sites. The expenditure is incurred
partially on completion of the landfill sites (restoration) and in
part after the closure of the landfill sites (after-care) over a
period up to 60 years from the site closure dates. After-care
expenditure relates to items such as monitoring, gas and leachate
management and may be influenced by changes in legislation and
technology. The provision is based on management's best estimate
and the use of external consultants of the annual costs associated
with these activities over the 60 year period, using current costs
and discounted using a discount rate of 3%. GBP50,000 of this
provision is expected to be utilised within 12 months of the
balance sheet date (2019: GBP50,000). In 2020 a balance of
GBP550,000 was transferred from accruals to provision to better
reflect the uncertainty of timing around spend related to transfer
of clay from site.
The capping provision reflects the expected costs of capping
established and active landfill cells. Capping is required
following the end of a cell's useful economic life and the build-up
of the provision is based on the rate of use of the available void
space within each cell. Costs of site development and cell
engineering/capping are estimated using either the work of external
consultants or internal experts. The Group has accelerated the
program of capping its landfills cells with a spend of GBP1,294k
(2019: GBP324k) during the year. This provision is not discounted
as the costs are expected to be incurred shortly after consumption
of the void. GBP180,000 (2019: GBP450,000) of this provision is
expected to be utilised within 12 months of the balance sheet
date.
2 Operating segments
The Group has two reportable segments. The two segments are the
Group's strategic business units.
These business units are monitored and strategic decisions are
made on the basis of each business unit's operating performance.
The Group's business units provide different services to their
customers and are managed separately as they are subject to
different risks and returns. The Group's internal organisation and
management structure and its system of internal financial reporting
are based primarily on these operating business units. For each of
the business units, the Group's Executive Chairman (the chief
operating decision-maker) reviews internal management reports on at
least a monthly basis. The following summary describes the
operations of each of the Group's reportable segments:
-- Treatment and disposal: Augean provides waste remediation,
management, treatment and disposal services through its six sites
across the UK.
-- Augean North Sea Services: Augean provides waste management, waste processing services and decommissioning work to oil and gas operators.
Information regarding the results of each reportable segment is
included below. Performance is measured based on the segment
operating profit, as included in the internal management reports
that are reviewed by the Group's Executive Chairman. This profit
measure for each business unit is used to measure performance as
management believes that such information is the most relevant in
evaluating the results of each of the business units relative to
other entities that operate within these sectors.
Total revenue for one customer amounts to more than 10% of the
total revenue of the Group. One customer accounts for GBP11.1m of
revenue (2019:GBP14.1m) which is all reported in the North Sea
Services segment.
Materially all activities arise almost exclusively within the
United Kingdom. Inter-segment trading is undertaken on normal
commercial terms.
2020
Treatment North Group
& disposal Sea Services
GBP'000 GBP'000 GBP'000
--------------------------------------------------------- ------------ -------------- ---------
Revenue
Incinerator Ash and APCr management 19,738 - 19,378
Other landfill activities 15,745 - 15,745
Waste treatment activities 17,208 - 17,208
Radioactive waste management 2,200 - 2,200
Services to Oil production and exploration customers - 22,365 22,365
Total revenue net of landfill tax 54,891 22,365 77,256
Landfill tax 14,730 - 14,730
--------------------------------------------------------- ------------ -------------- ---------
Total revenue including inter-segment sales 69,621 22,365 91,986
Inter-segment sales (326) - (326)
--------------------------------------------------------- ------------ -------------- ---------
Revenue 69,295 22,365 91,660
--------------------------------------------------------- ------------ -------------- ---------
Operating profit before non-underlying items 19,986 1,355 21,341
Landfill tax assessment credit 1,824 - 1,824
Impairment of tangible assets - (2,931) (2,931)
Other non-underlying items (811) (910) (1,721)
--------------------------------------------------------- ------------ -------------- ---------
Operating profit / (loss) 20,999 (2,486) 18,513
--------------------------------------------------------- ------------ -------------- ---------
Net finance charges (1,195)
Central costs (889)
--------------------------------------------------------- ------------ -------------- ---------
Profit before tax 16,429
Taxation charge (3,169)
--------------------------------------------------------- ------------ -------------- ---------
Profit for the year attributable to equity shareholders
of Augean plc 13,260
--------------------------------------------------------- ------------ -------------- ---------
2019
Treatment North Group
& disposal Sea Services
GBP'000
GBP'000 GBP'000
-------------------------------------------------------- ------------ -------------- ---------
Revenue
Incinerator Ash and APCr management 17,196 - 17,196
Other landfill activities 16,967 - 16,967
Waste treatment activities 19,531 - 19,531
Radioactive waste management 3,704 - 3,704
Services to Oil production and exploration customers - 34,896 34,896
Total revenue net of landfill tax 57,398 34,896 92,294
Landfill tax 15,611 - 15,611
-------------------------------------------------------- ------------ -------------- ---------
Total revenue including inter-segment sales 73,009 34,896 107,905
Inter-segment sales (748) (20) (768)
-------------------------------------------------------- ------------ -------------- ---------
Revenue 72,261 34,876 107,137
-------------------------------------------------------- ------------ -------------- ---------
Operating profit before non-underlying items 18,062 2,619 20,681
Non-underlying items (26,843) - (26,843)
-------------------------------------------------------- ------------ -------------- ---------
Operating (loss) / profit (8,781) 2,619 (6,162)
-------------------------------------------------------- ------------ -------------- ---------
Net finance charges (697)
Share based payments (7,693)
Central costs (772)
-------------------------------------------------------- ------------ -------------- ---------
Loss before tax (15,324)
Taxation credit 2,568
-------------------------------------------------------- ------------ -------------- ---------
Loss for the year attributable to equity shareholders
of Augean plc (12,756)
-------------------------------------------------------- ------------ -------------- ---------
3 Non-underlying items
The following pre-tax items have been charged / (credited) to
operating profit:
2020 2019
GBP'000 GBP'000
--------------------------------------------------- -------- --------
Non-underlying items:
Landfill tax assessments settlement (1,824) 26,179
Impairment of PPE and ROU assets 2,931 -
Other non-underlying charges 381 -
Restructuring and similar charges 890 165
Legal costs associated with Landfill tax dispute 450 499
Total 2,828 26,843
--------------------------------------------------- -------- --------
4 Taxation
Group 2020 2019
----------------- -------------------
GBP'000 GBP'000
-------------------------------------------- ----------------- -----------------
Current tax
UK corporation tax on profit /(loss) for
the year 3,534 -
Adjustments in respect of prior years (1,699) 68
---------------------------------------------- ----------------- -----------------
1,835 68
-------------------------------------------- ----------------- -----------------
Deferred tax
(Credit) in respect of the current year (675) (2,458)
Adjustments in respect of prior years 2,009 (178)
---------------------------------------------- ----------------- -----------------
1,334 (2,636)
-------------------------------------------- ----------------- -----------------
Tax charge / (credit) on the result for the
year 3,169 (2,568)
---------------------------------------------- ----------------- -----------------
Tax reconciliation
2020 2019
------------- --------------
GBP'000 % GBP'000 %
------------------------------------------- ------- ---- -------- ----
Profit / (loss) before tax 16,429 (15,324)
Tax at theoretical rate 3,121 19% (2,912) 19%
Effects of:
- expenses not deductible for tax purposes 268 (2)% 270 (2)%
- change in tax rate (275) 2% 291 (2)%
- effect of share options (162) 1% (108) 0%
- movement on unrecognised deferred
tax (62) 0% - 0%
- income not taxable (31) 0% - 0%
- adjustments in respect of prior years 310 (2)% (110) 1%
Tax charge / (credit) on the result
for the year 3,169 19% (2,569) 17%
------------------------------------------- ------- ---- -------- ----
The main rate of corporation tax in the UK was 19.00% (2019:
19.00%).
5 Earnings per share
The calculation of basic earnings per share (EPS) is as
follows:
2020 2019
GBP'000 GBP'000
-------------------------------------------------------- -------- --------
Profit / (loss) after tax for the purposes of basic
and diluted earnings per share 13,260 (12,756)
Non-underlying items net of tax 2,291 22,467
Share based payments net of tax - 6,231
-------------------------------------------------------- -------- --------
Adjusted profit after tax for the purposes of adjusted
basic and diluted earnings per share 15,551 15,942
-------------------------------------------------------- -------- --------
Exceptional items are stated net of a tax charge of GBP537,000
(2019: credit of GBP5,838,000).
The exceptional items have been adjusted, in the adjusted
earnings per share, to better reflect the underlying performance of
the business, when presenting the basic and diluted earnings per
share. Share based payments are considered to be adjusting item in
the prior year due the vesting of the scheme in full after 2 years
compared to the expected life of five years.
2020 2019
number Number
-------------------------------------------------------- ----------- -----------
Number of shares
Weighted average number of shares for basic earnings
per share 104,371,664 104,006,779
Effect of dilutive potential ordinary shares from share
options - 802,208
-------------------------------------------------------- ----------- -----------
Weighted average number of shares for diluted earnings
per share 104,374,664 104,808,987
-------------------------------------------------------- ----------- -----------
(Loss) / Earnings per share
Basic 12.70p (12.26)p
Diluted 12.70p (12.17)p
Adjusted earnings per share
Basic 14.90p 15.33p
Diluted 14.90p 15.21p
6 Reconciliation of operating profit / (loss) to net cash
generated from / (used in) operating activities
Group
------------------
2020 2019
GBP'000 GBP'000
Operating profit / (loss) 17,624 (14,627)
Impairment of non-current assets 2,931 -
Depreciation of right of use assets 1,525 1,417
Amortisation of intangible assets 38 39
Depreciation 6,934 7,471
Earnings / (Loss) before interest, tax, depreciation
and amortisation (EBITDA) 29,052 (5,700)
--------------------------------------------------------- -------- --------
Share based payments - 42
(Increase) in inventories (246) (28)
Decrease / (Increase) in trade and other receivables 8,784 (21,737)
(Decrease) / Increase in trade and other payables (7,797) 10,885
Loss on disposal of property, plant and equipment 58 -
(Decrease) / Increase in provisions (54) 323
Cash generated from / (used in) operations 29,797 (16,215)
Finance charges paid (1,078) (597)
Tax paid (638) (820)
--------------------------------------------------------- -------- --------
Net cash generated / (outflow) from operating activities 28,081 (17,632)
--------------------------------------------------------- -------- --------
The above EBITDA and net cash generated from operating
activities includes a total net cash inflow of GBP1,927,000
relating to non-underlying items which includes GBP1,824,000
reassessment of the IAS 37 liability in respect of landfill tax
assessments (2019: total net cash outflow of GBP44,500,000 relating
to non-underlying items which includes GBP40,400,000 in relation to
the settlement of landfill tax assessments).
7 Analysis of changes in net cash / (debt)
The table below presents the net debt of the Group at the
balance sheet date.
1 January New leases Cash flow 31 December
2020 GBP'000 GBP'000 2020
GBP'000 GBP'000
---------------------------- ---------- ----------- ---------- ------------
Cash and cash equivalents 21,588 (1,867) 19,721
Lease Liabilities (4,549) (334) 1,568 (3,315)
Bank loans within one year (6,667) - (6,667)
Bank loans after one year (28,123) 21,457 (6,666)
---------------------------- ---------- ----------- ---------- ------------
Net (debt) / cash (17,751) (334) 21,158 3,073
---------------------------- ---------- ----------- ---------- ------------
8 Reconciliation of performance metrics
The following metrics have been used in the Operating
review.
Revenue
2020 2019
Landfill Adjusted Landfill Adjusted
Revenue Tax Revenue Revenue Tax Revenue
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ --------- --------- --------- --------- --------- ---------
Treatment & disposal segment 69,295 (14,730) 54,565 72,261 (15,611) 56,650
North Sea Services segment 22,365 - 22,365 34,876 - 34,876
------------------------------ --------- --------- --------- --------- --------- ---------
Total Group 91,660 (14,730) 76,930 107,137 (15,611) 91,526
------------------------------ --------- --------- --------- --------- --------- ---------
EBIT
2020
Statutory Share Non-underlying Adjusted
based items
payments
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ ---------- ---------- --------------- ---------
Treatment & disposal segment 2 0,981 - (1,013) 1 9,968
North Sea Services segment ( 2,468) - 3,841 1 ,373
Central costs (889) - - (889)
------------------------------ ---------- ---------- --------------- ---------
Operating profit 17,624 - 2,828 20,452
Finance charges (1,195) - - (1,195)
------------------------------ ---------- ---------- --------------- ---------
Profit before tax 16,429 - 2,828 19,257
Taxation (3,169) - (537) (3,706)
------------------------------ ---------- ---------- --------------- ---------
Total Group Operating profit 13,260 - 2,291 15,551
------------------------------ ---------- ---------- --------------- ---------
EBIT
2019
Statutory Share Non-underlying Adjusted
based items
payments
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ ---------- ---------- --------------- ---------
Treatment & disposal segment ( 8,781) - 2 6,843 1 8,062
North Sea Services segment 2 ,619 - - 2 ,619
Central costs ( 8,465) 7 ,693 - ( 772)
------------------------------ ---------- ---------- --------------- ---------
Operating profit ( 14,627) 7 ,693 2 6,843 1 9,909
Finance charges (6 97) - - (6 97)
------------------------------ ---------- ---------- --------------- ---------
Profit Before tax ( 15,324) 7 ,693 2 6,843 1 9,212
Taxation 2 ,568 ( 1,462) ( 4,376) ( 3,270)
------------------------------ ---------- ---------- --------------- ---------
Total Group Operating profit ( 12,756) 6 ,231 22,467 15,942
------------------------------ ---------- ---------- --------------- ---------
9 Annual Report & Accounts
The Annual Report will be sent to shareholders on or before 1
May 2021 and will be available on the Company's website
www.augeanplc.com from that date. The Annual General Meeting will
be held at 12 noon on 16 June 2021 at 4 Rudgate Court, Wetherby,
LS23 7BF.
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