Waste pays as Augean unveils first dividend

The Wetherby-based company invested £3m in 2012 to buy a 70 per cent stake in the newly formed Augean North Sea Services.

The new operation provides a wide range of waste management solutions to customers in the North Sea oil and gas sector.

Augean’s finance director and interim chief executive Richard Allen said early results have been encouraging, with positive earnings and break even at the pre-tax profit level in the first six months of trading.

“The North Sea business will be profitable this year,” said Mr Allen.

“It’s going very well. The business is growing and we’re picking up new contracts. We’re growing revenue stream on all fronts.”

The group has formed a partnership with Scomi to provide waste management services to North Sea operators at Aberdeen.

Mr Allen said that a lot of hazardous waste comes onshore.

Drilling for new oil and gas produces waste rock contaminated with oils and oily liquid waste, which is brought onshore, treated onshore and disposed of.

“North Sea oil and gas exploration grew by 30 per cent in 2012. We’re aligning the business with growing areas,” he said.

He was speaking yesterday as the company announced a doubling in pre-tax profit to £2.8m in the year to December 31.

Revenue including landfill tax rose 13 per cent to £42.4m.

The group will pay out a maiden dividend of 0.25p per share following a robust performance in 2012.

“Over the last two years we’ve managed to significantly increase profits year on year,” said Mr Allen.

“The business is more stable and more diverse with a solid level of performance in the foreseeable future. We think we can hit increasing targets each year.”

Analysts at N+1 Singer said: “Augean reported another year of strong growth in sales and profits in 2012, with numbers in line with N+1 Singer forecasts, except for a bigger than expected maiden dividend.”

Sales at the Land Resources division rose three per cent to £21.4m. This growth was driven by a maiden contribution of £600,000 from low level waste (LLW) and an increase in air pollution control residue incinerator ash (APCR) to £4.0m.

Last year the group started taking low level waste from decommissioned nuclear power stations.

Augean has signed an agreement with Low Level Waste Repository Limited to take in rubble from old offices, laboratories and ancillary buildings from redundant nuclear facilities across the UK.

LLW landfill volumes grew from 124 tonnes in the first half to 1,983 tonnes in the second half, giving a total for the year of 2,107 tonnes, above management’s 2,000 tonne guidance.

The average price per tonne was lower than expected at £271.

“This was due to consignment mix – frustratingly slow arrival of higher priced LLW from one of the contracts with the UK nuclear estate, but good volumes of lower priced VLLW from another nuclear estate contract, industrial customers and naturally occurring radioactive material from North Sea drilling,” said analysts at N+1 Singer in a note.

Augean has submitted a number of bids for further contracts from the UK nuclear estate, which are expected to be awarded later this year.

Augean’s new chief executive Dr Stewart Davies will join the group in August.

Dr Davies, 52, who joins from Royal Mail subsidiary Romec where he is managing director, is replacing outgoing chief executive Paul Blackler, who leaves at the end of this month.

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