Augean to sell off hazardous waste network

The company noted the divisions underperformance in its six-month interim financial results ending June 30 2013, published yesterday (September 24), and said it now intends to get of the business as soon as practically possible.

Augeans Waste Network division, which offers collection, storage, transfer, treatment, recovery and disposal of hazardous waste streams, initially delivered an increase in revenues at the start of the six month period, driven by an increase in volumes through its East Kent Waste Recovery Facility.

The facility, which burns waste to temperatures up to 1200 degrees C, is one of three hazardous waste high temperature incinerators (HTIs) in the UK, and contributed 0.7 million in revenue through new contracts secured with pharmaceutical and clinical waste specialists.

Loss

However, the facility suffered a series of mechanical failures over the course of the six months across its solids handling systems, which were 10-15 years old and required repairing. The resulting downtime slowed throughput at the plant, leading to a 0.4 million loss.

While Augean recorded an overall net revenue of 19.6 million, some 2 million more than 2012, the Waste Network division delivered an operating loss of 1.1 million – 10% worse than the previous year.

While the company believes the Kent HTI will provide long-term benefits to the Augean Group over the remaining nine years of its lease, a decision has been taken to carry out significant upgrades during the third quarter of 2013.

Augean also noted little growth in traditional waste transfer markets meant transfer and disposal revenues could only be achieved through focusing on new contracts with direct customers. With no improvements expected during 2013, the company has decided to exit from the commoditised hazardous waste markets from January 2014.

Strategy

Commenting on the results, Augean chief executive Dr Stewart Davies said: The results reflect the sustained progress made with our previously identified strategic opportunities, including Low Level Waste, Offshore, Minerals and Energy. Despite challenging conditions in a number of markets, the Group has delivered increases in revenue and cash flow and we expect these key sectors to continue delivering further growth in the second half of the year.

We have taken decisive action to address the underperformance in the Waste Network division which, while impacting the Groups full year results, will allow the management team to focus on the next phase of the Groups strategic development. While I have only been in the role a short time, I am excited about the potential growth opportunities available to the Group and look forward to providing shareholders with an update in due course.

The Group, which first invested in the UK hazardous waste sector in 2004, currently operates through three divisions, Land Resources, Waste Network and Oil & Gas Services, and a subsidiary company, Augean North Sea Services.

One of Augeans main operations in the sector has also been hazardous landfill including the Kings Cliffe landfill in Northamptonshire. A full plan for the disposal of the Waste Network division has yet to be confirmed, though details are likely to emerge before the end of the year.