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Augean

LN: AUG

£209.1m market cap

200p last close

Augean is a UK-based specialist waste management business. The business operates via two divisions: Treatment & Disposal and North Sea Services.

Investment summary

Augean’s H120 results were robust in the face of the pandemic. Adjusted revenue fell by 6% to £41.4m, as did adjusted EBITDA to £13.3m. Balance sheet strength was improved with adjusted net debt falling to £3.3m (excluding £3.9m of leases). Augean filed a claim in May with HMRC for the repayment of £11.1m landfill tax (LFT) related to engineering materials (fluff layer). Some other waste operators have successfully argued with the Upper Tax Tribunal that they should be able to reclaim LFT associated with the fluff layer. Any rebate from HMRC could provide a meaningful reward for investors. Overall COVID-19 reduced sales by c £10m and PBT by c £4m. While markets remain challenging, especially for the North Sea business, growth continues in the energy for waste segment and activity is bouncing back elsewhere. Management expects to broadly meet revised market expectations for FY20.

Y/E Dec
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2018A 79.7 18.9 11.4 9.09 22.0 11.9
2019A 107.1 28.8 19.2 20.94 9.6 N/A
2020E 93.5 29.9 19.7 15.37 13.0 7.0
2021E 100.0 32.1 21.7 17.00 11.8 6.8
Industry outlook

A growing trend towards treatment, recovery and recycling in the waste hierarchy supports Augean’s specialist industry knowledge model.

Last updated on 26/11/2020
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Sector
Industrials
Share price graph
Balance sheet
Forecast net cash (£m) 3.5
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual 0.0 16.6 12.7
Relative* (8.9) 9.8 28.5
52-week high/low 225.0p/112.0p
*% relative to local index
Key management
Jim Meredith Chairman
Mark Fryer FD