Profits down as Augean voices regulatory concerns

The results show that West Yorkshire-based Augean had a revenue of £16.8 million (2007: £10.7 million) but profit before tax fell, this year it was £1.2 million (2007: £2 million), with the landfill division being hit hard following a number of construction delays.

In its interim results statement, Augean expressed disquiet that there was a lack of consistency in regulation throughout the country, despite claiming to have seen an improvement in regulatory enforcement for certain parts of the market .

Chief executive Paul Blackler said: “We still often see a regional decision having a national impact; for example a light touch approach to auditing and inspection may be taken in one region whilst a firm and often heavy-handed approach is taken in another, resulting in waste movement to the locations where less scrutiny occurs.”

Report

In the interim report Auegean, which was formed as an ‘acquisition vehicle' in 2004, stated that it had seen revenue increases in its recently expanded treatment division from £4.6 million in 2007 to £12.3 million for this year but its underlying profit before tax had fallen to £1.2 million, with losses seen across the business.

Most notably, its joint venture Terramundo had been operating with “very disappointing volumes” due to the state of the construction industry and a supposed lack of enforcement around its target waste stream of contaminated soils which do not comply with the landfill Waste Acceptance Criteria.

Despite the set-back, Augean remains confident that Terramundo will play a pivotal role in the company once the phased removal of landfill tax exemptions by 2012 puts permitted treatment operators at a “competitive advantage” against direct landfill and is one of many long-term projects of the firm.

Mr Blackler said: “We spent much energy in the first half laying important foundations for the future sustainable and visible growth of the group. We have a better balance between our landfill business and our treatment business and have secured major contracts which will deliver a strong second half performance. As such, the board is confident that current year market expectations will be achieved.”

Future

The report also highlights that has received a number of “preliminary approaches”, which could potentially lead to an offer for the group, with a further update to be made to stakeholders when appropriate. In the meantime, the company is developing infrastructure at its Cannock facility and has also undertaken construction of its Waste Recovery Park at Port Clarence in Middlesbrough.

Mr Blackler said: “Looking forward to the remainder of the year we are seeing a considerable, sustained upturn in activity based on certain large customers delivering strong volumes, into our landfill sites, as show by hazardous waste inputs of 75,000 tonnes in the first two months of the second half of the year. At the same time we are experiencing a strong performance, in line with expectations, in our enlarged treatment division.”

“As a result of the certainty of these revenue streams, the board is confident that current year market expectations will be achieved,” he added.