HAZARDOUS waste firm Augean is forecasting strong trading in the months ahead thanks to a ‘hat-trick’ of new projects that could double profits this year.
The Wetherby-based company told shareholders at its AGM yesterday that the progress reported at its preliminary results in March has continued and “trading remains ahead of our original expectations”.
The group’s chief executive Paul Blackler said: “We’ve delivered a hat-trick of new strategic initiatives. The business is in very good shape. We’re diversifying our services into new markets.”
The three new areas are radioactive waste disposal, the treatment of offshore oil waste and the incineration of drugs and chemicals.
The group has been awarded preferred bidder status by the Government for the disposal of 2,000 tonnes of low level waste through a framework agreement supported by the Nuclear Decommissioning Authority.
“This is a significant contract,” said Mr Blackler. “We’ve secured 2,000 tonnes through a Government framework agreement for this year. Next year it could go up to 5,000 tonnes annually.”
Augean started to take low level waste from decommissioned nuclear power stations earlier this year after winning a court battle allowing it to take in waste at its East Northants site in Northamptonshire, a former clay pit.
The group 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.
Any materials that were involved in the power generation process will continue to be sent to a high level waste plant in Cumbria. The rubble is brought in in containers and disposed of within the landfill site before being immediately covered over.
The level of radiation from the rubble is often lower than the level that occurs naturally.
Mr Blackler said the radiation levels are so low that the radioactivity diminishes during the life of the site. Once the site is closed it will be monitored for 60 years and then turned into arable land.
“We’ve been through a long process to show it’s sound and we’ve done that now,” said Mr Blackler.
The group estimates its low level waste business will add £1m to sales this year.
Along with a nine per cent increase in profits at the core business and a £200,000 benefit from mineral extraction, Augean believes it should make a pre-tax profit of £2.7m in 2012.
While low level waste will be the big earner in the short term, Augean believes it has long term potential in offshore waste management.
The company is to seize a slice of the North Sea oil renaissance with a new joint venture to provide waste management services to offshore operators.
Augean has signed a joint venture agreement with Scomi Oiltools to take a controlling stake in a new company formed from the existing operational assets of Scomi in the UK.
Augean is paying £2.05m for a 70 per cent shareholding in the new company, which is to be called Augean North Sea Services.
“We see this as a very exciting opportunity,” said Mr Blackler. “This deal will broaden our offer into the offshore market. We’ll be dealing with all waste coming off from the North Sea.
“The key point is that North Sea operations have seen a decline. This is an entry point at the bottom of the cycle. The market is growing again.”
Drilling for new oil and gas produces waste rock contaminated with oils and oily liquid waste. This is brought onshore by boats, treated onshore and then disposed of.
Another opportunity lies in decommissioning old drilling platforms. Augean said the joint venture will give it access to the emerging market for the decommissioning of redundant offshore structures.
The third new area is the incineration of pharmaceuticals and chemicals after the group took over a high temperature incinerator in Kent.
“We’re dealing with difficult to handle pharmaceutical waste,” said Mr Blackler.
The group is taking pharmaceutical and chemical waste from all over the country. The incinerator can burn and destroy old prescription drugs that are past their sell-by date or where there has been a manufacturing fault.
Pharmaceutical companies need a guarantee that the drugs have been certified destroyed and the incinerator operates at 1,200 degrees centigrade.
Augean then captures the heat and it is pumped back into the site’s power network, the only incinerator in the country that can recycle the power that it generates.