Augean's (AUG) first-half numbers weren't at all bad, with adjusted profit before tax up 18 per cent to £1m. But a warning that problems in the waste network division will hit the full-year performance sent the company's shares down 9 per cent. Indeed, the waste network division, which handles traditional waste, is operating in an increasingly commoditised marketplace and continues to make substantial losses. Mechanical failures at the East Kent incinerator added to the problems and the company says the division will not meet its original targets.
Broker N+1 Singer has downgraded its full-year earnings per share estimate by 27 per cent to 2.1p (1.8p in 2012) to reflect the weaker-than-expected performance at the waste network division, with the 2014 forecast cut by 8 per cent to 3.5p. Augean now plans to dispose of the struggling division and new chief executive Dr Stewart Davies says the company has received approaches - an exit looks possible in the second half.
That will leave Augean with its land resources, oil and gas services and North Sea services offshore waste management divisions. There are brighter prospects here such as the treatment of air pollution control residues generated by energy from waste operators and a growing market for the treatment of low activity radioactive waste, as well as the potential to increase the services offered to North Sea oil and gas operators.
AUGEAN (AUG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 40p | MARKET VALUE: | £39.9m | |
| TOUCH: | 39p-41p | 12-MONTH HIGH: | 45p | LOW: 29p |
| DIVIDEND YIELD: | 0.6% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 50p* | NET DEBT: | 12% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 20.0 | 0.54 | 0.33 | nil |
| 2013 | 23.4 | 0.90 | 0.55 | nil |
| % change | +17 | +67 | +67 | - |
Ex-div: - Payment: - *Includes intangible assets of £21.8m, or 22p a share | ||||
