HMRC’s assertion that Augean (AUG) had failed to pay the correct amount of landfill tax had been casting a shadow over the group since 2017. While the waste management specialist maintains it has paid the correct amount – it will be appealing at a tax tribunal later this year – it chose to pay HMRC’s assessment and accrued interest in full to the tune of £40.4m. In doing so, the group swung to a statutory pre-tax loss in 2019. Using its cash balances and banking facilities to fund the payment, it moved from an £8.2m net cash position in 2018 to £13.2m of net debt (including £4.5m in lease liabilities).
Looking beyond the statutory numbers, Augean’s underlying growth continued. Adjusted pre-tax profit surged more than two-thirds to £19.2m, coming in ahead of upgraded consensus analyst expectations of £18.4m.
Benefiting from the shift towards energy from waste facilities, revenue from managing incinerator ash and other residues surged by almost two-fifths to £17.2m. Meanwhile, increasing North Sea decommissioning activity saw sales from services to oil production and exploration customers jump 61 per cent to £34.9m. Targeting ‘top tier’ customers, Augean is moving up the supply chain to deal directly with oil and gas operators. Last year saw the successful completion of a contract to clean a floating production storage and offloading vessel for Royal Dutch Shell (RDSB).
Bloomberg consensus forecasts adjusted pre-tax profit of £22.6m and EPS of 17.7p in 2020, rising to £26.7m and 20.9p in 2021.
| AUGEAN (AUG) | ||||
| ORD PRICE: | 196p | MARKET VALUE: | £204m | |
| TOUCH: | 192-200p | 12-MONTH HIGH: | 232p | LOW: 80.5p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 45.7p* | NET DEBT: | 37%** | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 61.0 | 2.5 | 1.6 | 0.65 |
| 2016 | 76.0 | 1.3 | 0.4 | 1 |
| 2017 | 67.0 | 4.6 | -3.4 | nil |
| 2018 | 79.7 | 10.6 | 9.6 | nil |
| 2019 | 107 | -15.3 | -12.3 | nil |
| % change | +34 | - | - | - |
| Ex Div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £20m, or 19p a share | ||||
| **Includes lease liabilities of £4.5m | ||||
