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ANNUAL REPORT
& ACCOUNTS
Annual Report & Accounts
for the year ended 31 December 2019
Stock Code: AUG
27194
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CONTENTS
Executive Chairman’s Statement
Strategic Report
Marketplace
Business Model and Strategy
Operating Review
Financial Performance
Key Performance Indicators
Managing Risk
Corporate Social Responsibility (CSR)
Performance
S172
Directors’ Report
Governance
The Board of Directors
Chairman’s Corporate Governance
Statement
Risk Management and Control
Audit Committee Report
Nominations Committee Report
Remuneration Committee Report
Directors’ Remuneration Report
Financial Statements
Independent Auditor’s Report
Consolidated Statement of
Comprehensive Income
Statements of Financial Position
Statement of Cash Flow
Statements of Changes in
Shareholders’ Equity
Notes to the Financial Statements
Shareholder Information
Notice of Annual General Meeting
Advisers and Company Information
02
03
05
06
08
10
11
14
16
17
21
23
24
24
25
25
26
28
32
33
34
35
37
74
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019
Protecting the environment is not only a matter of compliance
with permits but encompasses our broader responsibilities to
society and future generations. The Group diligently monitors
its performance in this regard, the results of which are regularly
reported to the Board. The majority of our sites in England
are ranked by the Environment Agency as Category A or as
‘Excellent’ by the Scottish Environmental Protection Agency.
The Board recognises that our business success is dependent
on the quality, diligence and hard work of all Augean’s
employees and I would like to take this opportunity on behalf of
the Board to thank everyone who has contributed to the Group’s
strong progress during the year.
As in previous years, I am pleased to note the addition of new
Shareholders to our register during the year and again I am
thankful for the continued support from all of our investors.
The Group set ambitious targets for the 2019 year which it
comprehensively exceeded. Undoubtedly 2020 is economically
uncertain for the UK economy as a whole whilst Brexit plays out,
but with limited direct exposure to EU markets, coupled with a
strong start to 2020 trading and a robust pipeline of activity, the
Board remains confident in the Group’s prospects for the new
financial year.
I look forward to updating Shareholders on our continuing
progress and refreshed strategy during 2020.
Jim Meredith
Executive Chairman
25 February 2020
Executive Chairman’s Statement
The Group continued with its streamlined business model
in 2019 with focus on increasing revenue in attractive, niche
growing segments of the hazardous waste market to drive
increased underlying cash generation and adjusted profit.
The strong underlying trading in all of the Group’s businesses
resulted in adjusted profit before tax increasing 68% to £19.2m.
This profit excludes the one-off items which do not impact
underlying performance, notably accounting charges in relation
to the payment of £40.4m of disputed Landfill Tax assessments
and Long Term Incentive Plan (LTIP) payments which are
reconciled in note 27. Overall the Group made a loss after tax of
£12.8m in 2019.
The amended banking facilities with HSBC agreed in
December 2019 allowed the Group to pay all currently
received assessments from HMRC which totalled £40.4m
including interest. Based on legal advice received, we maintain
our position that we have correctly collected and paid the
appropriate Landfill Tax, and we will continue to robustly
challenge the assessments received through the tax tribunal
system. Nonetheless, paying these assessments fully has
enabled the Group to obtain an appropriate corporation tax
deduction and to focus on implementing its strategy for further
growth and creation of future value.
The Group is currently trading in line with the Board’s
expectations for 2020 with a continued focus on business
growth in niche segments and cash generation. The Board
will not pay a dividend for 2019 (2018 final: nil), maintaining its
position of not resuming dividends until debt, recently drawn
down to fund the HMRC payment, is significantly reduced.
The Group continues to secure further contracts with top-
tier customers in Energy from Waste, radioactive waste,
construction waste and North Sea decommissioning. The
Group achieved double digit growth in Energy from Waste (EfW)
volumes in a year when no new municipal incinerators were
commissioned. The volumes of construction and demolition
waste improved significantly as a result of investment in the
sales team and investment in processing solutions to generate
the most environmentally beneficial outcomes for our customers.
Health and safety remain the highest priority for the Board,
management and employees across the Group. The
management team has continually improved the safety
environment by enhancing hazard recognition, risk evaluation
and learning from incidents. There was a small increase in the
number of incidents and near misses recorded by the business
during 2019. However, the number of accidents remains low
and in line with the best performers in our industry. The Board
continues to recognise the risks faced by our people, who work
in challenging environments involving the moving, treating and
disposing of hazardous waste.
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Strategic Report
Marketplace
Treatment & Disposal and North Sea Services
The Group’s segments experienced several different market
conditions in the year:
Hazardous waste overview
The market for hazardous waste in the UK is based on a
legislative environment underpinned by the implementation of
the European Union’s Waste Framework Directive and the UK’s
own hazardous waste National Policy Statement (NPS), which
encourage sustainable methods of managing waste and the
development of treatment, recycling and recovery facilities as the
key focus of future waste management activities. NPS confirmed
the need for the portfolio of treatment and disposal facilities and
services developed by Augean. Importantly, the Group plays
an active part in five of the eight sectors identified as essential
for the management of hazardous wastes in the UK. The waste
hierarchy provides a framework for waste management and
implementation of infrastructure which will allow sustainable
waste management solutions. However, the waste hierarchy is
a simplification of Best Overall Environmental Outcome, which is
the goal of environmental strategy, policy and regulation, and for
hazardous wastes there is a particular need to consider the fate
of the persistent and toxic pollutants in the waste.
The hazardous waste market is highly segmented with a
total volume of approximately 5 million tonnes (Environment
Agency) of waste handled in the UK each year. Within this arena
Augean continues to focus on the treatment and disposal of
waste from the growth areas of construction and demolition
activities, Oil and Gas, Energy-from-Waste operators, specialist
manufacturers and other industrial producers.
Hazardous landfill
Approximately 0.9 million tonnes of hazardous waste are
disposed per annum to hazardous landfill sites and the total
UK capacity for hazardous landfill is at most 14 million cubic
metres and declining as hazardous landfills are closing and new
hazardous landfills are not being permitted (source: Environment
Agency (EA) and management estimates). Augean’s Treatment &
Disposal Business continues to be a leading provider within this
market, holding approximately 40% of the UK’s remaining and
reducing scarce hazardous landfill capacity (source: EA data /
management estimate).
Overall landfill volumes, including hazardous and non-hazardous,
increased by over 20% in 2019 to in excess of 600,000 tonnes.
The Group has focused on improving margins with an overall
increase of over 13% achieved in 2019, worth approximately
£3.1m.
Energy-from-Waste and Biomass Energy waste market
Augean’s treatment and disposal to landfill includes the
management of certain by-products from Energy-from-Waste
plants, required to deliver the UK’s obligation to significantly
reduce the landfilling of municipal solid waste by the end of
2020, and from biomass energy plants. These facilities produce
air pollution control residues (APCR) also known as fly ash and
intermediate bottom ash (IBA). The Group has developed the
capability to treat and dispose of these ashes and residues
at our sites at Port Clarence and East Northants Resource
Management Facility (ENRMF). This market is expected to grow
at 8% compound average growth rate through to 2024 (Source:
Tolvik). Disappointingly, due to funding cycles and operational
issues, no new incinerators came online in 2019. With this
background, it is particularly pleasing that the Group was able to
grow ash volumes in 2019 by 12%. The Group actively monitors
technological developments in the treatment and recycling of
this material to ensure its long-term competitive position in this
market.
The Group expects to continue winning market share in ash
volumes and therefore exceed the market growth rate. This will
be achieved as new municipal ash contracts, that have already
been won and announced, come online in 2020.
Construction waste market
Construction soils are a key volume input to the Group’s landfill
sites. The volume of these soils available to the Group is variable
and linked to activity in the construction sector, including the
progress of large-scale infrastructure projects. The market for
these soils, by nature, is not operated on a long-term contracted
basis. It is sensitive to the prevailing market spot price,
influenced by haulage costs and thus proximity to the disposal
site.
The Group has invested in soil washing and treatment
equipment to promote recycling of a higher proportion of such
materials, as required by the market. Capitalising on the strong
progress made in the second half of 2018, the Group has
continued to grow construction waste volumes during 2019
which are up 46% compared to 2018.
The Group expects the construction waste market to be slower
in the first half of 2020 due to the timing of the General Election
and the potential impact of Brexit before it increases in the
second half of the year. Any marked increase in Government
infrastructure would positively impact volumes albeit over the
medium term.
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019STRATEGIC REPORT
Marketplace continued
Radioactive waste market
The Group’s key radioactive waste market is the nuclear
decommissioning market, relating to the closure and dismantling
of the UK’s redundant nuclear power and research facilities.
This is managed on behalf of the UK government by the Nuclear
Decommissioning Authority (NDA). The disposal of naturally
occurring radioactive material (NORM) generated principally from
the Oil and Gas industry is the second key radioactive waste
market for the Group. Augean has planning permission and
environmental permits in place to dispose of low activity low
level waste (LLW), very low level waste (VLLW) and NORM. The
NDA publishes regular forecasts on the volumes of radioactive
wastes requiring disposal and treatment.
During 2019 the volumes of radioactive waste processed by the
Group increased by 35% as a result of significant volumes from
a small number of significant contracts. These contracts will
mainly expire in 2020 and therefore the Group will need to win
new contracts to maintain and grow volumes. The performance
may well therefore be ‘lumpy’ dependent on the timing of these
new contracts.
Industrial waste market
The waste market has again remained stable as a result of
shutdown and maintenance work being carried out across
a broad range of sectors and overall growth in the UK
manufacturing sector. In 2019 the Group maintained its very low
share in this market.
The market has some reliance on facilities in mainland Europe
for the recovery of energy from organic waste derived fuels.
The opportunity to send waste to energy recovery routes within
mainland Europe has remained stable and Augean benefits
from these disposal routes. The impact of Brexit on these
routes is difficult to predict but the position is being closely
monitored with the Group Board having access to expert
advice. The Group has established additional disposal routes,
which it believes will ensure business continuity in this regard.
Additionally, inventories have been managed down to reduce
risk as we progress towards the end of the transition period. The
level of sales impacted by this potential change is less than 3%
and the impact on profit is negligible.
North Sea Services
North Sea Oil and Gas waste services market
The markets for waste produced in the exploration, appraisal,
development, production and decommissioning of North Sea Oil
and Gas are centred on Aberdeen and extend to the Shetland
Isles for the Northern sector, and Great Yarmouth for the
Southern sector. North Sea Services (NSS) provide a full range
of services, equipment rental and manpower provision for the
containment, treatment and associated specialised industrial
cleaning of all Oil and Gas offshore and terminal wastes. These
include the cuttings and slop waters from drilling, contaminated
waters from the production process, production wastes, oil
sludges, including those contaminated with low level naturally
occurring radioactive material (NORM), swarf containment from
abandonment activities, as well as a more general range of
industrial general and hazardous wastes. In addition, NSS now
provide full NORM decontamination of wellbore and topside
production equipment from the decommissioning centre in the
Port of Dundee.
The dependence of the UK’s energy sector on Oil and Gas
will continue over several decades, leading to increased levels
of demand for specialised industrial service related waste
management for offshore production facilities and onshore
terminals, as the sector, depending on economics, extends the
life of, or begins decommissioning the assets in the North Sea.
The market has seen an upturn in decommissioning-related plug
and abandonment activities. NORM builds up over time on the
downhole production equipment, processing lines and topside
equipment, which requires decontamination with specialised
industrial jetting equipment resulting in the generation of
NORM scale. The volume of downhole and topside equipment
requiring decontamination is rising rapidly alongside plug and
abandonment decommissioning activities, requiring specialised
decontamination, treatment and disposal.
The Group has been very busy in 2019 on the specialised
cleaning and preparation of the Shell Curlew Floating
Platform, Storage and Offloading vessel. This is one of the
Group’s first major decommissioning projects which has
generated significantly more work than initially expected
when the project started in June 2019. The project has now
substantially completed, with finalisation work being concluded
by the half year. The Group has a strong pipeline of similar
decommissioning contracts as well as a strong and growing
supply of equipment, pipelines and tubulars requiring cleaning
and NORM disposal. The Group expects the decommissioning
market to exhibit long term sustained growth albeit with a certain
level of ‘lumpiness’ around the timing of the major projects.
The Group’s sales in the North Sea increased by 61% in 2019
with adjusted operating profit growing to £2.6m from £2.1m in
2018. Earnings before interest, tax and depreciation (EBITDA)
similarly grew to £4.2m from £3.1m in 2018.
The above five areas represent the Group’s targeted niche
growth markets. Each has shown good growth during 2019,
validating the Group’s strategy.
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Business Model and Strategy
The strategy of the Group previously set out has been to focus on growing shareholder value in niche higher growth hazardous
market segments.
The business currently has two short-term objectives against which good progress has been made in 2019.
Strategic focus
Description
Resolve HMRC
position
HMRC has issued the group with assessments in relation to its
treatment and disposal of hazardous waste. Based on the legal and
other advice received by the Group over several years, Augean is
confident that the group has met its obligations in respect of Landfill
Tax, consistent with the law and official guidance at the time.
Maximise profitability
and cash generation
of business
The Board has implemented several rounds of cost reduction including
a management re-organisation, which have resulted in a significant cost
saving and increase in profitability.
Progress / KPIs
Payment of £40.4m in
December 2019 with tribunal
appeal expected in 2020
earliest
Year on year profit growth
in underlying businesses
measured using adjusted profit
(note 27)
Increase in cash generation
from underlying businesses
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019STRATEGIC REPORT
Operating Review
Introduction
The Group operated through two business units during 2019 and 2018, being Treatment & Disposal and North Sea Services. This
reflects the operational management of the business. Within these segments, the Group’s core strategic markets are Energy from
Waste, treatment, nuclear decommissioning and North Sea decommissioning.
Adjusted continuing
revenues
(£’m)
Adjusted operating profit
before PLC costs
(£’m)
2019
56.6
34.9
91.5
-
2018
47.1
21.7
68.8
-
2019
18.1
2.6
-
20.7
(0.8)
19.9
2018
10.9
2.1
-
13.0
(0.8)
12.2
North Sea Services (NSS)
The NSS business unit operates in the North Sea Oil and Gas
market. The primary revenue streams are from drilling waste
management (DWM), including the rental of offshore engineers
and equipment to customers, production waste management,
onshore and marine industrial services, decommissioning
and water treatment. Decommissioning is expected to grow
to be the most significant revenue and profit generator in the
coming years.
NSS revenue increased by 61% to £34.9m (2018: £21.7m) on
new customer wins in Industrial Services and Decommissioning.
This segment saw an increase in adjusted operating profit to
£2.6m (2018: £2.1m) due to revenue increase, cost savings,
better mix and the impact of increased decommissioning activity
in the North Sea.
During 2019, NSS successfully carried out specialised industrial
cleaning and waste management services to Shell for the
Curlew Floating Production Storage and Offloading Vessel FPSO
(Curlew FPSO). The Curlew FPSO has been berthed in Forth
Ports’ Port of Dundee for the last eight months where ANSS has
a major decommissioning and decontamination facility working
alongside Forth Ports and other tenants of the Port of Dundee.
Augean is now undertaking the finalisation works to allow the
Curlew FPSO to be ready to sail later in 2020.
The NSS strategy continues to gain traction as the business
moves up the supply chain, dealing directly with Oil and Gas
operators and top-tier customers, so providing opportunities
to widen its service scope more directly with those customers.
The opportunity remains for Augean to continue to service this
growing North Sea decommissioning market, worth multi-billion
pounds for many years to come. NSS actively markets these
facilities, through each of its sites although primarily through
Dundee, which is rapidly becoming the major decommissioning
facility for the North Sea.
Treatment & Disposal
North Sea Services
Revenues excluding LFT
Operating profit pre-PLC costs
PLC costs
Operating profit post-PLC costs
Adjusted continuing revenues exclude intra-segment trading,
discontinued operations and Landfill Tax. Adjusted operating
profit excludes non-underlying items, share based payment
charges and profit or loss from discontinued operations. A
reconciliation of these adjusted metrics is shown in note 27.
Business performance
The Group operated through two business units during 2019 and
2018 being Treatment & Disposal and North Sea Services. This
reflects the operational management of the business.
Treatment & Disposal
The principal activity of this business unit is the treatment and
disposal of waste from Energy from Waste (EfW) incinerators,
construction and industrial sites. The largest waste stream
by revenue and profit is the disposal of ash from EfW sites
which comprises bottom ash and fly ash from the burning of
biomass and municipal waste to generate energy. The largest
waste stream by tonnage is contaminated waste materials
and soils (including asbestos), mainly from the manufacturing
and construction sectors. A key growth market in Treatment &
Disposal is low level radioactive waste decommissioning.
Adjusted revenues, excluding Landfill Tax, increased by 20%
to £56.6m (2018: £47.1m), with growth across landfill and
treatment inputs. Ash inputs increased almost 12% to 211,000
tonnes (2018: 189,000). This was despite no new municipal
EfW plants coming online in the year and the high downtime
experienced by some EfW customers due to operational
challenges. Radioactive waste volumes increased from 10,600
tonnes to 14,300 tonnes in 2019.
The adjusted operating profit of Treatment & Disposal increased
to £18.1m (2018: £10.9m) due to increased sales, improved
margins and the maintenance of previously announced cost
savings.
The Treatment & Disposal strategy is to continue to win new
treatment contracts, optimise the use of our treatment plants,
and maximise the market opportunity from growth in EfW ash
waste volumes, nuclear decommissioning and construction
sector wastes.
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Planning and permitting
The current site planning permissions extend to 2026 in the
case of East Northants Resource Management Facility (ENRMF),
2034 for the Thornhaugh site and for a period of more than 50
years in the case of Port Clarence.
In the year the Group acquired an option to purchase
approximately 90 acres of land adjacent to its existing East
Northants Resource Management Facility landfill site near
Peterborough. This option is Augean’s preferred choice following
its investigation of a number of alternative solutions to provide
long-term key infrastructure, aligning with the national need for
hazardous landfill and soil treatment in the South of England.
With appropriate planning and permitting consent, the extension
that has been optioned would prolong the life of the ENRMF site
until at least the mid 2040s.
Discontinued operations
East Kent Incinerator
A review of this asset was completed in 2018 and the Group
decided that the facility would be mothballed early in 2019.
The assets associated with the facility less committed costs to
prepare for sale were therefore classified as an asset held for
sale in 2018.
On 25 January 2019, the Group sold the land, buildings and
plant associated with East Kent High Temperature Incinerator
for a total cash consideration of £3.35m. There was no material
gain or loss on disposal and no material trading result for this
asset in 2019.
HMRC assessment
Since August 2017, the Group has received assessments
(including accrued interest) for uncollected Landfill Tax where
HMRC does not agree with the Group’s interpretation of the
rate of Landfill Tax that applies. The total value of assessments
received, including interest accrued to the date of the
assessments is £40.4m.
Based on the legal and other advice received by the Group over
several years, Augean is confident that the Group has met its
obligations in respect of Landfill Tax, consistent with the law and
official guidance at the time. Accordingly, it has appealed both
the Augean South Ltd and Augean North Ltd assessments. The
first tier tax tribunal hearing is expected no earlier than late 2020.
In December 2019, subsequent to the refinance described
elsewhere in this report, the Group paid these assessments in
full. This prevents any further accrual of interest and allows the
Group to receive a corporation tax deduction. This does not
change the Group’s legal position which is to robustly challenge
the LFT assessments.
The Group currently accounts for the legal costs of the dispute
with HMRC, totalling £0.5m in 2019, as a non-underlying cost.
The payments made to HMRC in December 2019 have been
accounted for in line with IAS 37, resulting in an asset held
on the balance sheet (categorised as an ‘other receivable’) of
£14.2m and an expense to non-underlying costs of £26.2m.
£24.0m of the charge relates to the cash-settled payments
and £2.2m of the charge relates to assessments which the
Group has not received and may never receive. The application
of IAS 37 involves the application of probabilistic modelling to
tribunal outcomes, which are impacted by a number of different
factors. The Group considers that the accounting outcome of
meeting the obligations of IAS 37 is not representative of its
expectation of any potential tribunal result as the application of
probabilities to events with binary outcomes does not result in
accurate real-life possible outcomes.
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019STRATEGIC REPORT
Financial Performance
Group overview
A summary of the Group’s financial performance, is as follows:
£’m except where stated
Revenue
(Loss) / Profit after taxation
Net operating (cashflow) / inflow
Basic (loss) /earnings per share
2019
107.1
(12.8)
(16.5)
(12.26)p
2018
79.7
8.6
17.4
9.61p
The Group considers adjusted metrics, as reconciled to
statutory metrics in note 27, as being appropriate to understand
the underlying performance of the Group’s businesses. The
adjusted metrics exclude large or one-off items. The adjusted
items in the current year are non-underlying items, detailed
below but which represent a large payment to HMRC in respect
of Landfill Tax and share based payments.
A summary of the Group’s financial performance, from
continuing operations and excluding non-underlying items, is as
follows:
£’m except where stated
Adjusted revenue
Adjusted operating profit
Adjusted profit before taxation
Adjusted profit after taxation
Adjusted net operating cash flow
Basic adjusted earnings per share
Return on capital employed
2019
91.5
19.9
19.2
15.9
29.6
15.33p
37.8%
2018
68.8
12.2
11.4
9.2
17.2
8.52p
21.6%
A consideration of the operational factors affecting performance
is included in the operating review.
Trading, adjusted operating profit and EBITDA
Adjusted revenue from continuing operations, excluding Landfill
Tax, for the 12 months ended 31 December 2019, increased by
33% to £91.5m (2018: £68.8m).
Adjusted operating profit increased by 63% to £19.9m (2018:
£12.2m) and adjusted profit before tax increased by 68% to
£19.2m (2018: £11.4m), on the same basis.
Adjusted earnings before interest, taxation, depreciation and
amortisation (EBITDA), from continuing operations and before
non-underlying items, is determined as follows:
Adjusted operating profit
Depreciation and amortisation from
continuing operations
Adjusted EBITDA
2019
£’m
19.9
8.9
28.8
2018
£’m
12.2
6.7
18.9
Non-underlying items
Non-underlying items in 2019 of £26.8m before taxation include
£0.5m expense related to Landfill Tax legal costs, £26.2m
related to the charge associated with the payment of Landfill Tax
assessments and £0.1m of other costs.
Share based payments
The cash-settled management LTIP vested after the
achievement of criteria in relation to value creation, as measured
by the increase in share price since the reintroduction of the
scheme. The charge in relation to this LTIP had previously been
expected to be expensed over five years and was £351,000
in 2018. This previously accrued charge offsets the amount
charged in 2019. The total net charge for this scheme was
£7.6m. The charge disclosed on the consolidated statement of
comprehensive income also includes £0.1m charge in relation to
an equity settled LTIP scheme.
Finance costs
Total finance charges were £0.7m (2018: £0.7m) including the
interest on bank debt, other financial liabilities, the amortisation
of upfront fees associated with obtaining the facility and the non-
cash unwinding of discounts on provisions.
Earnings per share
Adjusted basic earnings per share (EPS), from continuing
operations and excluding non-underlying items, increased by
80% to 15.33 pence (2018: 8.52 pence) due to the increased
volumes, higher pricing and lower costs.
The Group made an adjusted profit after taxation of £15.9m
(2018: £9.2m), all of which was attributable to equity
shareholders.
The total number of ordinary shares in issue increased during
the period from 103,786,792 to 104,085,198 with the weighted
average number of shares in issue increasing from 103,408,043
to 104,006,779 for the purposes of basic EPS due to the issue
of shares to satisfy options granted in previous years.
Dividend
Due to the Group’s net debt position, the Board has decided not
to declare a dividend for 2019 (2018 interim and final: £nil).
Cash flow and net debt
Adjusted net operating cash flows were generated from
continuing trading as follows:
EBITDA from continuing
operations and before non-
underlying items
Net working capital movements
from continuing operations
Interest and taxation payments
Net operating cash flows from
continuing operations and
before non-underlying items
2019
£’m
28.8
(0.5)
(1.3)
2018
£’m
18.9
(0.3)
(1.4)
27.0
17.2
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The cash flow of the Group is summarised as follows:
Net operating cash flows from
continuing operations
Net operating cash flows from
adjusted items
Net operating cash flows from
discontinued operations
Total net operating cash
(outflow) / inflow
Maintenance capital expenditure
Post-maintenance free
(outflow) / inflow
Development capital expenditure
Free cashflow
Sale of Business and assets
Net cash (outflow) / inflow
before dividends
2019
£’m
27.0
(44.5)
-
(17.5)
(4.3)
(21.8)
(1.5)
(23.3)
3.3
(20.0)
2018
£’m
17.2
(0.3)
(0.9)
16.0
(2.0)
14.0
(1.4)
12.6
6.2
18.8
Adjusted items include the working capital movement in relation
to the recognition of an asset for a proportion of the Landfill
Tax assessments paid. Adjusted net operating cash flow as a
percentage of EBITDA was 94% in 2019 (2018: 91%).
The operating cash flow of the Group before adjusted items
and discontinued operations of £29.6m was used primarily
to pay down debt and fund the HMRC Landfill Tax payment,
with capital investment in property, plant and equipment
and intangible assets made by the Group totalling £5.8m
(2018: £3.4m), including spend offset against provisions, split
between maintenance capital (to lengthen the productive
life of existing assets) of £4.3m and expansion capital (for
targeted future growth) of £1.5m. Maintenance capital
expenditure has increased from the prior year as a result of cell
construction and works to improve the road at the Avonmouth
site. The development capex is substantially related to the
decommissioning service of the North Sea business and is in
line with the prior year.
Post-maintenance free cash flow, as set out in the table above,
represents the underlying cash generation of the Group, before
any investment in future growth or the payment of dividends to
shareholders.
As a result of the above net cash movements, net bank debt,
which excludes newly capitalised lease liabilities, was at £13.2m
at 31 December 2019, compared with net cash of £8.2m at
31 December 2018. Gearing, defined as net bank debt divided
by net assets, was therefore 27.9% (31 December, 2018:
nil). The ratio of net bank debt to EBITDA, from continuing
operations and before non-underlying items, was 0.5 times
(2018: negative 0.4 times).
Financing
During 2019, the activities of the Group were substantially
funded by cash from operations with bank debt allowing the
HMRC payments. The bank facility was renewed and extended
in December 2019 with HSBC Bank PLC at £40m comprising a
term loan of £20m and a revolving credit facility of £20m. £32m
was drawn against this facility in the year. The earliest maturity of
the facility is December 2022.
Balance sheet and return on capital employed
Consolidated net assets were £47.6m on 31 December 2019
(2018: £60.3m) and net tangible assets, excluding goodwill and
other intangible assets, were £27.8m (2018: £40.5m), of which
all was attributable to equity shareholders of the Group in both
years. This reduction was principally due to the settlement of the
Landfill Tax assessments.
Return on capital employed, defined as adjusted operating profit
divided by average capital employed, where capital employed
is net assets excluding net cash or net bank debt, increased to
37.8% in 2019 (2018: 21.6%).
Impairment reviews
In accordance with IAS 36 ‘Impairment of Assets’, an annual
impairment review was carried out for each cash-generating
unit (CGU) to which significant goodwill is allocated and also any
other CGU where management believed there may have been
an indication of potential impairment to the carrying values of
assets in those CGUs.
For the continuing operations of the Group, this exercise was
completed for the CGUs within the Treatment & Disposal and
North Sea Services reportable segments.
Based on these reviews, no impairments were noted and no
reversal of prior year impairments was required.
The cash flows for all CGUs were discounted using a pre-tax
discount rate of 8.0% (2018: 8.0%).
Employees
The Group employed an average of 392 staff (2018: 385) over
the course of the year. The number of employees in the Group
has increased marginally during 2019 reflecting increased
trading activity with a substantial increase in sales.
Brexit
The Group is focused on trading in Britain and uses disposal
infrastructure almost entirely based in the UK. Where disposal
routes in mainland Europe are used, the financial impact of
different scenarios which could result from this external change
have been modelled. The impact of Brexit on these routes is
difficult to predict but the position is being closely monitored
with the Group Board having access to expert advice. Coupled
with UK Government advice that current waste movement
structures will be rolled over in most EU States and the Group’s
work to establish alternatives, the risk of significant business
disruption as a result is thought limited.
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019STRATEGIC REPORT
Key Performance Indicators
The Augean PLC Board of Directors, Group Management Board and local management teams regularly review the performance of
the Group as a whole, along with the performance of individual business units. This includes the use of a balanced scorecard for
applicable key performance indicators (KPIs) to monitor progress towards delivery of the Group’s principal targets. These KPIs are
consistent with those reported in 2018. The Group regard the performance in 2019 compared to their benchmark, which is the prior
year performance, to be satisfactory.
The focus of the Group is in three priority areas:
1. Health and safety: monitored through near miss incidents and the number of accidents incurred;
2. Compliance with regulations, in particular Environment Agency and Scottish Environment Protection Agency audit results; and
3. Financial performance.
KPI
Number of incidents (1)
Number of near misses reported (2)
Compliance scores (3)
Adjusted profit before taxation (4)
Post-maintenance free cash flow (5)
Return on capital employed (6)
Volumes of waste disposed to our landfill sites
Ash volumes treated
2019
Outcome
29
3,437
2018
Outcome
16
2,320
English Sites:
A-B
Scottish Sites
Excellent
Landfill & Treatment:
Excellent/A-B
ANSS: Excellent/E
Discontinued
operation: E
£19.2m
£(21.8)m
37.8%
630,000t
211,000t
£11.4m
£14.0m
21.6%
523,000t
189,000t
Amount of North Sea Oil & Gas revenue generated directly from operators
and top-tier customers
94% of ANSS
revenue
87% of ANSS
revenue
(1)
(2)
(3)
The number of total reported accidents, that resulted in injury, including those resulting in damage to plant or equipment. This is
an absolute figure which has not been normalised for changes in employee numbers.
The total number of incidents reported which could have resulted in an accident or injury or damage to property.
The average of audit scores notified during the year by the Environment Agency (EA) in England or the Scottish Environment
Protection Agency (SEPA) in Scotland. The EA notifies results on the scale A–F and SEPA notifies on the scale Excellent–Very
Poor.
(4) Group profit before taxation, from continuing operations and excluding non-underlying items and share based payments
charges.
(5) Net operating cash flows, less maintenance capital expenditure.
(6) Calculated as operating profit, from continuing operations and excluding non-underlying items, divided by average capital
employed, where capital employed is the consolidated net assets of the Group excluding net bank debt.
Summary and outlook
The Group continued to make significant progress against delivering its strategy during 2019, generating £29.3m of cash before
non-underlying outflows and growing profit before tax 68%, paying all received (but disputed) HRMC assessments and therefore
providing a stable platform for future growth. A strong start to initial trading has been made in the first months of 2020 with results
ahead of prior year. The Board is confident in the prospects of the Group for the full year.
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Managing Risk
Risk description
Mitigation
General economic risk
The performance of the business is linked to
economic activity in the waste markets it serves,
including the manufacturing, construction, nuclear
decommissioning, Energy from Waste and Oil and Gas
sectors. Fluctuations in the UK economy in general and
these sectors in particular affect Group performance,
as do inflationary and other cost pressures.
Health and safety
The activities of the Group involve a range of health
and safety risks, from offshore operations to the
handling of hazardous wastes.
Environmental legislation
Regulation is a key driver of the hazardous waste
market. Changes in legislation (including tax legislation
with environmental goals) or its interpretation can have
a significant and far reaching impact on waste markets.
The simplistic application of the waste hierarchy to the
markets in which the Group operates, with its focus
on reducing the volume of waste disposed to landfill,
could be perceived as a threat to the business in the
long term.
{ Diversification of customer base.
{ Linking gate fees and other customer charges, wherever possible, to
prevailing operating costs and commodity prices, including the costs
of waste disposal outside of the Group.
{ Health and safety is the first priority for all Directors, managers and
employees across the Group.
{ Investments in relevant assets and resources are made on an
on-going basis to ensure that the highest health and safety standards
are applied.
{ Health and safety performance is constantly monitored and reviewed,
including formal reviews at each Augean PLC Board meeting and in
depth quarterly reviews by the Group’s Management Board. These
mechanisms also include detailed reviews of any relevant incidents,
which allow the lessons learnt from such incidents to be fed back to
local teams, in order to reduce the likelihood of recurrence.
{ The Group employs suitably qualified professionals to advise,
monitor and assist all elements of the business to ensure risks to our
employees are appropriately assessed and mitigated.
{ Health and Safety training is carried out as a matter of normal
business, from policy workshops through to individual employees
including via online material to facilitate ease of access.
{ Employ high quality technical management to interpret the evolving
legislative framework and its potential and current impact on the
Group’s operations.
{ Maintain a presence on a number of industry groups to influence
the shaping of policy and liaise regularly with relevant regulators
and legislative bodies, including the Environment Agency (EA), the
Scottish Environment Protection Agency (SEPA), the Department for
Environment, Food and Rural Affairs (DEFRA) and the Department for
Business Energy and Industrial Strategy (BEIS).
{ Develop treatment solutions for customers who utilise landfill when
this is the most appropriate commercial and environmental solution,
but provide alternative approaches whenever they are suitable
{ Highlight the importance of Best Overall Environmental Outcome
(BOEO) in moderating the simplistic application of the waste hierarchy
by regulators.
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019STRATEGIC REPORT
Managing Risk
(continued)
Risk description
Mitigation
Tax legislation
The use of tax legislation to drive environmental
objectives, particularly the diversion of wastes away
from landfill disposal and towards greater treatment
and recycling, represents a risk in all time horizons.
Landfill Tax guidance (LFT1) was last updated in
November 2018. LFT is not totally prescriptive on the
tax treatment of the many alternate types of waste
received by the Group. This could lead to differences
in opinion on the treatment and the applicable tax
rate. The standard rate of Landfill Tax rose to £91.35
per tonne on 1 April, 2019 and will continue to rise in
line with the retail price index. Whilst European and
national legislation encourages ‘zero landfill’ solutions
for a range of waste streams, disposal in properly
engineered and permitted landfills continues to be
the most appropriate waste management solution
for many hazardous wastes. The group is in ongoing
discussions with HMRC with respect to whether it has
paid the correct amount of Landfill Tax.
Environmental compliance
All operating sites and activities are regulated by
environmental authorities in line with the requirements
set out within licences and permits. These licences
and permits are required to carry on the business of
the Group and compliance with their terms is essential
to its success. Withdrawal or temporary suspension
could have a significant impact on the Group’s ability
to operate.
Price risk
Price pressure remains a key feature of the hazardous
waste market, where customers often have a range
of options for the ultimate disposal of their waste and
access to several companies competing to service
their needs.
Economic growth
The Group relies on economic activity in the UK,
which in turn leads to production of the hazardous
wastes which form the basis of its sales revenues. Any
downturn in the UK economy may restrict the volume
of hazardous wastes produced and therefore constrain
the Group’s revenues.
{ Develop a range of waste treatment solutions for customers.
{ Broaden capabilities to ensure the Group’s sites are able to accept all
those wastes which do require landfill disposal.
{ Maintain specialist testing facilities and seek appropriate external
chemical, engineering, taxation and legal advice.
{ Modelling of the financial impact under different external legislative
positions.
{ Specialist legal and environmental advice.
{ Landfill Tax internal audits and external assurance on processes.
{ Adherence to the highest environmental standards.
{ Maintenance of good relations with local communities and to satisfy
customers that the techniques, practices and procedures adopted by
the Group are consistent with those of a responsible business.
{ Employment of technical experts who work to well-established
policies and procedures described in the Group’s Integrated
Management System.
{ Provision of training to develop the knowledge and competence of its
staff.
{ Regular monitoring and review of compliance performance.
{ Production of the Group’s corporate social responsibility (CSR) report.
{ Review pricing policies on an on-going basis to ensure that the Group
influences and stabilises the market.
{ Respond to emerging trends and customer needs.
{ Specialist in-house resource to assess and price waste consignments
in line with market rates and available disposal solutions.
{ Regular review of all services to ensure that price changes in the
market do not lead to uneconomic activities being undertaken by
the Group.
{ Develop positions in a range of markets requiring specialist waste
management capabilities and which have high barriers to entry.
{ Identify and invest in the techniques, assets and resources to provide
a broad range of services to customers, diversifying the revenue base
of the Group.
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Risk description
Mitigation
Technological factors
Technological risk factors may cause treatment
technology in use to become obsolete or too costly to
maintain.
{ Monitor the development and application of the waste hierarchy vs
Best Overall Environmental Outcome.
{ Invest selectively in development.
{ Employ strategic planning to make timely investments in existing and
new equipment.
{ Evaluation of operational costs and market environment is made
before investment.
North Sea Oil and Gas investment
With a well-established business focused on providing
waste management services to North Sea Oil and Gas
operators, the Group has some exposure to any fall
in investment for Oil and Gas exploration activity in
the North Sea. This may in turn reduce the volume of
waste available for management by Augean North Sea
Services.
{ Maintain a comparatively low level of operational gearing, with the
business therefore able to adjust its significant direct cost base in the
event of a significant and permanent reduction in revenues.
{ Diversify North Sea activities across a number of revenue-generating
streams, with services provided to production customers offshore and
onshore.
{ Pursue North Sea decommissioning as new market opportunities for
ANSS that would further mitigate against risk.
Transport disruption
The Group relies on the delivery of wastes to its sites to
secure revenues and any disruption to local or national
networks, for example in severe weather conditions,
can cause delays or lost revenue for the Group.
{ Outsourcing of the majority of the Group’s haulage requirement,
augmented with the use of the Group’s own fleet where appropriate.
{ Maintenance of ability to accept wastes into sites in different
geographical locations before onward transfer to their final treatment
or disposal destination.
Brexit risk
Although the group is focused on wastes arising in
Britain and uses disposal infrastructure almost entirely
based in the UK, the Group may fail to anticipate
and manage the potential impact of Britain leaving
the European Union, notably potential increases in
interest rate.
{ Establish new routes outside of Europe.
{ Minimise inventory.
{ Monitor market conditions to allow appropriate investment in
infrastructure and management of costs.
{ Maintenance of ability to accept wastes into sites in different
geographical locations before onward transfer to their final treatment
or disposal destinations outside of Europe.
{ Modelling of the financial impact of different scenarios which could
result from this external change.
The Group uses a range of resources to manage and mitigate its risks, including the adoption of a broad range of internal controls,
the use of risk registers and regular reporting, monitoring and feedback of risks through the business.
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019STRATEGIC REPORT
Corporate Social Responsibility
(CSR) Performance
The Board recognises the important role played by the Group
in the environment and communities within which it operates.
The health and safety of our employees and compliance with
regulations are two of the Group’s top three business priorities.
Augean is committed to conducting its business operations in
an open and responsible manner and we recognise the need to
continually improve our operations where practical to do so, in
order to reduce our impact on the environment, to continuously
improve assets and processes to ensure the safety and welfare
of our employees and to act as a good neighbour, minimising
the impact of our operations on the wider community.
The Group has a commitment to mitigating any adverse effects
of its operations and this is explained further in the detailed CSR
report, which will be published alongside the Annual Report
and Accounts.
The environment
All operating sites and activities are strictly regulated by
environmental authorities through a range of regulations set
out in the permits for each site. In the context of hazardous
waste, the principal instruments driving standards are the Waste
Framework Directive and the Industrial Emissions Directive,
which provide an integrated approach to pollution control to
prevent emissions into air, land or water. The standards expect
the techniques and procedures adopted by the Group to
represent the Best Available Technique (BAT). BAT requires a
review of each activity and the implementation of the highest
standards to minimise emissions, be energy efficient, reduce
waste and consumption of raw materials, manage noise,
vibration and heat loss and ensure accident prevention
is in place.
The Group continues to deliver the objectives of BAT through
its operations and works closely with the regulators to ensure
that Augean is a leader in compliance in the sector. Activities
are delivered subject to well-developed environmental
controls and compliance systems (as defined in the Integrated
Management System), involving suitably competent people in
the management of all aspects of its operations. Environmental
reports are prepared and monitored within the Group and
supplemented by information from regulators. This includes the
Environment Agency’s own review of companies operating in the
waste sector which are subject to their account management
regime, of which Augean is one. The information available for
2019 indicates that the Group’s operations do not result in
a significant impact on the local environment and in general
our environmental performance continues to be one of the
top three in the sector. The results of inspections and audits
received from the Environment Agency (EA) in England and the
Scottish Environmental Protection Agency (SEPA) in Scotland
demonstrate high standards and low environmental impact.
As part of our commitment to implement the elements of the
waste hierarchy relevant to the hazardous sector, the Group
continues to take a strong role in the development of regulation
and policy for hazardous waste. By engaging with Government
departments, local authorities and regulators, we promote the
profile of the industry and modernisation of the sector, seeking
to establish a positive regulatory and policy framework for the
business. In previous years, representatives from the Group
took a high profile role in the development of the National
Policy Statement for hazardous waste (NPS), directly engaging
with Government departments and giving evidence at the
Parliamentary Select Committee inquiry. We also have continued
to engage throughout 2019 on topics such as Best Overall
Environmental Option, substances of concern, radioactive
materials liability insurance, planning, the Government’s
Resource and Waste Strategy and the developing Chemical
Strategy and Brexit.
Employees
The Group’s employees are vital to its success and during
the year made a significant contribution to the performance
improvements outlined in this report. A 3% aggregate general
pay increase was awarded to staff and directors in 2019, in view
of general inflationary conditions in the UK.
The Group is committed to the principle of equal opportunity in
employment and to creating a harmonious working environment
which is free from harassment and bullying and in which every
employee is treated with respect and dignity. Accordingly, well
established policies are in place to ensure that recruitment,
selection, training, development and promotion procedures
result in no job applicant or employee receiving less favourable
treatment on the grounds of race, colour, nationality, ethnic
or national origin, religion or belief, disability, trade union
membership or non-membership, sex, sexual orientation,
gender, marital status, age or status as a part-time or fixed-term
employee. The Group’s objective is to ensure that individuals are
selected, promoted and otherwise treated solely on the basis of
their relevant aptitudes, skills and abilities.
These equal opportunity policies are set out in the Group’s
Employee Handbook, a copy of which is provided to each
employee on joining the Group and made available electronically.
The Handbook is updated periodically for changes in policy
and regulations. The Group also operates a clear whistle-
blowing policy, providing every employee the opportunity to
raise concerns directly with an impartial Director, without the
intervention of line management. Once an issue is reported the
Director is required to undertake a thorough investigation and
make recommendations.
In order to provide a formal, recorded, regular review of an
individual’s performance, and a plan for future development, all
staff undertake an annual or bi-annual Performance Appraisal
with their line manager. Appraisals assist in the development
of individuals and establish individual training needs, improve
organisational performance, and feed into business planning.
Where appropriate the appraisal process establishes specific
training plans for each individual.
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Training and development activity during the year built on the
progress made during 2018 and investment was made to
ensure that all employees had the knowledge, qualifications and
skills to operate safely and compliantly within their specific role
and in the broader waste management sector.
Safety
Health and safety and compliance are priorities for the business.
While there has been an increase in 2019 compared with the
previous couple of years the number of accidents remains
low. Most of them are minor and our recordable incidents is
comparable with our peers in the sector. The business continues
to analyse trends and the causes of incidents to identify
learnings and to ensure suitable preventative action is taken.
To support commitment to health and safety improvements,
reporting of near miss incidents continued to be a key part of
the health and safety programme during the year, supplemented
with safe act reporting designed to applaud and encourage safe
working practice. Key focus areas for 2020 have been identified
by understanding the underlying trends in 2019 – these are
incorporated in Group and site-level improvement plans.
The community
Augean recognises the important role that it has within local
communities and aims to maintain an open dialogue with its
neighbours about its activities and plans. This is achieved
through regular liaison committees, newsletters and open days.
The establishment of new businesses, changes in the waste
streams managed and active planning processes during the year
led to a high level of interaction with local communities in some
areas. As in previous years the Group maintained a programme
of consultation in these localities to ensure that its plans were
well known and understood.
The Group continued to contribute to the communities around
its landfill sites through the Landfill Tax Credit Scheme and the
Low Level Waste Fund. A total of £0.9m (2018: £0.6m) was
contributed through these schemes during the year, providing
funds for community projects including sports facilities and a
wildlife reserve.
Jim Meredith
Executive Chairman
25 February 2020
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019STRATEGIC REPORT
Our plan considered the impact of the Company’s operations
on the community, the environment and our wider societal
responsibilities. Contributions to the Landfill Community
Fund, local causes and the maintenance of facilities for open
and regular dialogue with communities in proximity to our
operations are included in the plan. The Group’s CSR report
provides information on the factors considered and stakeholder
engagement.
As the Board of Directors, our intention is to behave responsibly
to all stakeholders and to ensure that management operate
the business in a responsible manner, operating within the high
standards of business conduct and good governance expected
for a business such as ours. Acting in this way will contribute to
the delivery of our plan and we intend to maintain our reputation
within the industry for responsible, compliant behaviour and the
use of BAT.
As the Board of Directors, our intention is also to make
decisions which lead to the long-term success of the company
whilst behaving responsibly towards our shareholders, treating
them fairly and equally, so they benefit from the successful
delivery of our strategy and plan.
The strategic report on pages 3 to 20 of this report was
approved and signed on behalf of the Board.
Jim Meredith
Executive Chairman
25 February 2020
S172
Statement by the Directors in performance of
their statutory duties in accordance with s172(1)
Companies Act 2006
The Board of Directors of Augean PLC consider that, individually
and together, they have acted in the way which in good faith
would be most likely to promote the success of the Company
for the benefit of its members as a whole (having regard to the
stakeholders and matters set out in s172(1)(a-f) of the Act in the
decisions taken during the year ended 31 December, 2019.
The Board looked to promote the success of the Company,
having regard to the long term, whilst taking into account the
interests of all stakeholders. Although the current strategy only
concerns two objectives, it is designed to secure the long-term
financial viability of the Company to the benefit of its members
and all stakeholders. A main feature of this is to continue to
operate the business within tight budgetary controls and in line
with regulatory requirements. This was done in particular by
reference to:
{ the approval of the strategic objectives (‘our strategy’) for the
company;
{ the business plan for the next financial year (‘our plan’);
{ the refinancing of the Group’s debt;
{ the decision to pay the received Landfill Tax assessments;
{ the approval of terms to enter into significant contracts;
{ the decision not to pay a dividend; and
{ ongoing consideration of legal advice on the Group’s HMRC
tribunal.
The Board recognises that our employees are fundamental to
the delivery of our plan. We aim to be a responsible employer
in our approach to the pay and benefits our employees receive.
The health, safety and well-being of our employees is of
primary concern in the way we do business and is monitored
extensively by the Board and taken into account in all major
decision-making.
Our duty is to apply the Waste Frameworks Directive and the
Industrial Emissions Directive and to apply the Best Available
Technology (‘BAT’). We also strive to always comply with the
requirements of the Environment Agency and the Scottish
Environmental Protection Agency. The treatments we operate
apply strict input and process control procedures to ensure
that each waste received is handled in the safest manner. We
also aim to act responsibly and fairly in how we engage with
our customers, suppliers, co-operate with our regulators and
act on feedback received from these stakeholders. All of these
considerations are taken into account by the Board when
making strategic decisions for the Company.
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Directors’ Report
The Directors present their report and the audited financial
statements for the Group and Company for the year ended
31 December, 2019.
Principal activity and business review
The principal activity of the Group is the provision of specialist
services focused on hazardous waste. These services include
waste treatment, recovery, recycling and secure disposal.
The Group operates substantially within the United Kingdom.
The Strategic Report provides a review of the business of the
Group, key performance indicators and an indication of future
prospects.
Results and dividends
The loss after tax of the Group for the year was £12.8m
(2018: Profit after tax of the Group for the year from continuing
operations £8.6m) from revenue including Landfill Tax of
£107.1m (2018: £79.7m). The loss included non-underlying
items totalling a charge of £26.8m (2018: £0.3m). The Board
has recommended no dividend be paid for the year (2018: no
dividend).
Environmental policy
The quality of the environment is at the core of the Group’s
operations and the Board recognises its importance to
employees, customers, suppliers and the communities in which
the Group operates. Augean continues to adopt high standards
of environmental practice and aims to minimise its impact on the
environment wherever possible and to support this publishes
a clear Environmental Policy, which is updated every twelve
months. Further details of the Group’s actions in this area can be
found in the separately published corporate social responsibility
(CSR) report and on pages 14 and 15 of this report.
Our Vision and values
Our vision is to create value for our customers through
innovative services that protect future generations. We hope to
achieve this by:
{ Demonstrating Customer Focus – understanding what drives
value for our customers and offering resilient compliant
solutions.
{ Delivering Service Solutions – committed to developing
innovative and more sustainable approaches to all the critical
activities around the management of hazardous waste.
{ Developing Specialist Waste Expertise – nurturing the
capabilities and assets that ensure hazardous and low level
radioactive wastes entrusted to us are dealt with safely and
compliantly, so earning the support of all our stakeholders.
Our core values have been developed to help us to shape the
way we all work together:
{ Respect – We show we value our people and others we work
with
{ Integrity – We demonstrate we can be trusted
{ Teamwork – We work better together
{ Excellence – We strive to achieve our ambition
Management of risks
The Group has developed procedures for the management of
risks relating to Landfill Tax, price, credit, liquidity, cash flow and
the business generally.
The management of the Group’s financial risks and the related
objectives and policies are the responsibility of the Executive
Directors. The Directors regularly review the Group’s financial
risk management policies and procedures to ensure that they
appropriately reflect the changing nature of the market and
business. The Group, through its training and management
standards and procedures, aims to develop a disciplined
and constructive control environment in which all employees
understand their roles and obligations. A risk register is
maintained and regularly reviewed by the Board.
The Group has maintained its policy that no trading in financial
instruments shall be undertaken. The Group’s principal financial
instruments during the period comprised bank loans, cash
and cash equivalents and finance leases. The main purpose of
these financial instruments is to finance the Group’s operations.
The Group’s other financial instruments include short-term
receivables and payables which arise directly from its operations.
There was no material difference between the fair value of the
financial assets and financial liabilities and their book value.
Liquidity risk is the risk that the Group will encounter difficulty
in meeting the obligations associated with its financial liabilities
that are settled by delivering cash or another financial asset.
The Group seeks to maintain a balance between continuity
of funding and flexibility. The objective is to maintain sufficient
resources to meet the Group’s funding needs for the foreseeable
future.
Credit risk is the risk of financial loss to the Group if a customer
or counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Group’s
receivables from customers. The Group has a robust customer
credit policy in place and the exposure to credit risk is monitored
on a daily basis. The Group’s standard credit terms are 30
days from date of invoice, with longer terms granted to certain
customers. Invoices older than agreed terms are assessed for
impairment.
Further identified risks are presented within the Operating
Review on page 11 – 13.
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019STRATEGIC REPORT
Directors’ Report
(continued)
Employees
The Group’s policy is to ensure the adequate provision for the
health, safety and welfare of its employees and of other people
who may be affected by its activities. Health and safety is the
first priority of the Group and to support this all accidents are
reported and thoroughly investigated and all employees are
encouraged to contribute to reporting of ‘near miss’ incidents
and ‘safe acts’ to promote greater awareness and proactive
safety behaviours, and accident reduction.
The success of the Group depends on the skill and motivation
of its workforce and it is the Group’s policy to ensure close
consultation with employees on matters of concern to them.
Regular newsletters and briefings are provided to employees
and announcements and notices are provided on the Group’s
intranet website and also directly through regular team briefings.
The Group produces a monthly ‘Augean Update’ newsletter,
available to all employees, which sets out a summary of the
performance of the Group and the key activities taking place at
each site. The Group aims to recruit and retain people with the
appropriate skills and behaviours to fully contribute to the future
success of the business. All new employees are provided with
an appropriate induction, ensuring that they have the knowledge
required to perform their role, and on-going training is provided
to ensure that skills and experience are kept up to date. By
maintaining this communication the Group engages with
employees on key decision making.
Disabled employees, employee involvement and
engagement
The Group encourages the employment of disabled persons
wherever this is practicable. The Group has a clear policy on
employment of disabled persons and ensures that disabled
employees, and those who become disabled whilst in
the Group’s employment, benefit from training and career
development programmes in common with all employees
(please see the CSR section for more details). In the event
that changes are required to the operations or structure of the
Group, including closure or sale of businesses, the Group has
well established procedures for consultation with individuals and,
where required, groups of employees. Consultation involves
clear, on-going communication of factors affecting individuals
and teams, regular consultation meetings with line management
and internally published announcements of significant decisions
and updates.
Employees are included in bonus or incentive schemes
designed to align the Group’s priorities in safety, regulatory
compliance and profit generation to the rewards available to
individuals. Quarterly and annual bonuses are made available.
Certain senior employees are also eligible to join the Group’s
share options scheme and long-term incentive plans, aligning
personal performance with strategic plans and targets and
ensuring that management is incentivised to deliver improving
returns for Shareholders.
Charitable and political donations
During the year the Group contributed £807,000 (2018:
£561,000) of its Landfill Tax liability to registered environmental
bodies as permitted by Government regulations and contributed
£73,000 (2018: £55,000) to other community causes. No
political donations were made during the year (2018: £nil).
Engagement with stakeholders
The Group aims to engage positively, responsibly and fairly
with all of its stakeholders. Our key stakeholders apart from
employees, discussed above, are customers and suppliers. We
act on feedback received from these stakeholders.
To create value for our customers we specialise in managing
their more difficult to handle wastes, providing certainty and
security underpinned by technical expertise and a high standard
of service. We strive to always comply with all legislation,
including the requirements of the Environment Agency and the
Scottish Environmental Protection Agency.
The Group relies on suppliers to deliver some of our services.
The availability of services and waste routes our operations.
Maintaining good relationships with suppliers helps ensure
quality of service delivery to our customers, environmental
compliance, the safety of our workforce and ultimately
shareholder value. The Group aims to act with integrity to
our suppliers.
Directors
The composition of the Board of Directors is shown on page
22. Details of the Directors’ interests and remuneration are given
in the Directors’ Remuneration Report on pages 26 to 27. On
9 January, 2019 Rod Holdsworth retired and on 30 April, 2019
Andrew Bryce retired from the Board. All other Directors have
served throughout the year and since the Balance Sheet date.
Substantial shareholdings
The number of shares issued by the Company increased
during the year, from 103,785,972 as at 1 January, 2019 to
104,085,198 at 31 December, 2019. The Company had been
notified of the following interests of more than 3% in its shares
as at 15 February, 2020:
Harwood Capital Management
Group
Cannacord Genuity Group Inc
Gresham House PLC
Close Brothers Group
Schroders
Fidelity Worldwide Investment
Unicorn Asset Management
Number
of shares
27,100,000
10,650,000
7,255,166
7,015,149
5,611,419
3,723,138
3,173,731
% of total
26.04%
10.23%
6.97%
6.74%
5.39%
3.58%
3.05%
One of the Company’s Directors, Christopher Mills, is a
partner and Chief Investment Officer of Harwood Capital LLP.
Other Directors’ shareholdings are disclosed in the Directors’
Remuneration Report.
18
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Corporate governance
A separate corporate governance report is included within this
annual report.
Qualifying third party indemnity provisions (as defined in the
Companies Act 2006) have been entered into by the Company
for the benefit of all Directors, which indemnify the Directors
against third party claims brought against them in their capacity
as Directors of the Company to the extent permitted by law and
such provisions continue in force at the date of this report.
Contact with investors
All shareholders have access to the interim and annual reports
and are invited to attend the Annual General Meeting (AGM) at
which all Board Directors are present. The Group periodically
hosts presentations at its sites and capital markets events for
the investor community and provides detailed information for
shareholders and the general public on its website
www.augeanplc.com.
Going concern
The Group’s business activities, together with the factors likely
to affect its future development, performance and position are
set out in the Strategic Report. Details of the Group’s financial
position, cash flows, liquidity position and borrowing facilities are
included in the financial review section and further information
on the Group’s financial risks and their management is given in
note 22 to the financial statements.
As highlighted in note 22, the Group met its short-term working
capital requirements during 2019 through its cash balances and
an overdraft and revolving loan facility (the Facility), which was
renewed and increased with HSBC Bank PLC in December
2019, providing access to a term loan and revolving loan facility
to a total level of £40m until December 2022 with a potential
to extend the £20m revolving loan element for an additional
two years. This facility, along with the underlying cash generation
of the Group, is expected to provide the required funds to
support further growth of the business over that period and
service its debts. The provision of the Facility is subject to
certain covenants, focused on the cover of interest costs and
the ratio of net bank debt to EBITDA.
Cash flow forecasts for the twelve months from the date of
approval of the financial statements indicate the Group’s ability
to operate within these covenants.
During 2019, the Group continued to demonstrate its ability to
generate cash flow from operating activities at a higher level
than previous years. The Group retains some discretion over
the nature and timing of significant capital expenditure, allowing
future liquidity to be managed, with the only exception to this
being the need to engineer new landfill cells as available void
space nears exhaustion. Landfill cell engineering is aligned with
cash flows through a comprehensive capital planning process.
Other capital expenditure includes that needed to maintain the
existing asset base and that deployed in the development of
the Group’s businesses (the table in the financial review shows
expenditure during 2019 in each of these categories). Given the
discretion available, the Board remains confident that capital
expenditure can be controlled if necessary.
Impairment reviews have been performed for each of the
Group’s cash-generating units which include goodwill balances,
the details of which are disclosed in note 9 to the financial
statements. In addition, the tangible asset base of the Group
has been reviewed for impairment. No impairments were
recognised in 2019 and the disposal of underperforming assets
has improved the Group’s ability to continue operating in its
current structure and form for the foreseeable future.
Financial forecasts and projections, taking account of reasonably
possible changes in trading performance, the position with
respect to HMRC and the market value of the Group’s assets,
has been prepared and show that the Group is expected to be
able to operate within its cash balance and the level of available
Facility, both for on-going working capital funding and any
capital investment expenditure, during the life of the Facility.
The results have been prepared taking into account the
Group’s net cash, available headroom on bank facilities and the
continuing support of the Group bankers HSBC.
Having considered the items set out above and after making
further enquiries, the Directors have a reasonable expectation
that the Company and the Group have adequate resources to
continue in operational existence for the foreseeable future. The
Directors are confident that the Company will be able to meet
its liabilities as they fall due over the next twelve months. As a
result the financial statements have been prepared on a going
concern basis.
Each of the persons who is a Director at the date of approval of
this annual report confirms that:
{ so far as each Director is aware, there is no relevant audit
information of which the Company’s auditor is unaware; and
{ the Directors have taken all the steps that they ought to
have taken as a Director in order to make themselves aware
of any relevant audit information and to establish that the
Company’s auditor is aware of that information.
This confirmation is given and should be interpreted in
accordance with the provisions of s418 of the Companies
Act 2006.
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019STRATEGIC REPORT
Auditor
BDO LLP have expressed willingness to continue in office as
auditor. In accordance with Section 489(4) of the Companies
Act 2006, a resolution to appoint BDO LLP will be proposed at
the Annual General Meeting.
Annual General Meeting
The Annual General Meeting (AGM) will be held on 15 June,
2020. John Grant and Roger McDowell will offer themselves for
re-election as Directors at the AGM.
No Director has a contract with an unexpired notice period of
more than twelve months.
By order of the Board
Mark Fryer
Group Finance Director
25 February 2020
Directors’ Report
(continued)
Directors’ responsibilities statement
The Directors are responsible for preparing the Strategic Report,
the Directors’ Report, the Remuneration Report and the financial
statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have to prepare the Group’s financial statements in accordance
with International Financial Reporting Standards as adopted
by the European Union (IFRSs). The Directors have elected to
prepare the parent Company financial statements in accordance
with Financial Reporting Standard 101 – ’The Reduced
Disclosure Framework’ (FRS 101) (UK Accounting standards).
Under company law, the Directors must not approve the
financial statements unless they are satisfied that they give a
true and fair view of the state of affairs and profit or loss of the
Group and parent Company for that period. In preparing these
financial statements, the Directors are required to:
{ select suitable accounting policies and then apply them
consistently;
{ make judgements and accounting estimates that are
reasonable and prudent;
{ for the Group financial statements, state whether applicable
IFRSs have been followed, subject to any material departures
disclosed and explained in the financial statements;
{ for the parent Company financial statements, state whether
applicable UK Accounting Standards have been followed,
subject to any material departures disclosed and explained in
the financial statements; and
{ prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time
the financial position of the Company and enable them to ensure
that the financial statements comply with the Companies Act
2006. They are also responsible for safeguarding the assets
of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Website publication
The Directors are responsible for ensuring the annual report
and the financial statements are made available on a website.
Financial statements are published on the company’s website
in accordance with legislation in the United Kingdom governing
the preparation and dissemination of financial statements, which
may vary from legislation in other jurisdictions. The maintenance
and integrity of the company’s website is the responsibility of
the Directors. The Directors’ responsibility also extends to the
ongoing integrity of the financial statements contained therein.
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The Board of Directors
The Board of Directors is responsible for ensuring the Group is
appropriately governed and led. This includes ensuring that the
Executive has formulated and implemented a business strategy
whilst also holding the Executive to account in delivering such
strategy and results. This involves maintaining relevant internal
control mechanisms and sound risk management within the
business, whilst also establishing the values and behaviours the
Group needs to ensure its business performance is sustainable
within its sector.
At 31 December, 2019 the Board comprised six members:
An Executive Chairman, Group Finance Director and three
Non-executive Directors, including John Grant as the Senior
Independent Director. The Executive Chairman has responsibility
for the overall leadership, effectiveness and governance of
the Board and of the Executive Management, along with the
strategic and operational running of the Group. The Senior
Independent Director supports the Executive Chairman and
leads the Non-executive Directors in reviewing the performance
of the Executive Chairman. The Non-executive Directors
have been appointed to the Board for their specific areas of
knowledge and expertise and exercise their duties in good
faith based on judgements informed by their professional and
personal experience to provide rigour to Board decisions.
The skills and background for each Director set out in their
biographies on page 22 make for a well-balanced and
experienced Board in terms of skills, prior experience and
personal qualities. The Board does not currently have a female
Director, however, the current composition of the Board is based
on a broad variety of factors and as and when a new Director
is needed, it would not discriminate against the appointment
of a new female Director. The Board recognises the benefits of
diversity at all levels of its organisation.
In 2019 the Board was constituted of three Non-executive
Directors, two of whom were deemed by the Board to
be independent (John Grant and Roger McDowell). Rod
Holdsworth and Andrew Bryce were independent Non-executive
Directors until 9 January, 2019 and 30 April, 2019 respectively.
The composition and effectiveness of the Board and its
Committees are regularly reviewed to reflect the skills and
resources needed to assist the Group in delivering its strategic
plan. An internal review took place in 2019 following the
resignation of Rod Holdsworth and Andrew Bryce and the Board
resolved that the current remaining composition of the Board
was effective. The last external review took place in 2016, when
Linstock Ltd, a corporate advisory firm that provide objective
and independent counsel to leading companies, carried out a
full Board evaluation. An internal review is currently underway,
evaluating areas such as: Board composition, relationship
between the Board and management, the Board’s role in and
oversight of strategy, risk management and internal control and
succession. Each Committee is also being reviewed along with
the Executive Chairman.
Appropriate training, briefings and inductions are available to all
Directors on appointment and subsequently where necessary,
taking into account the existing qualifications and experience
of each individual Director. All Directors have access to the
Company Secretary, who is responsible for ensuring that Board
procedures are followed and that the Group complies with
all applicable rules, regulations and obligations governing its
operations. Since 2016 the Company Secretary role has been
held by the Group General Counsel. The Directors also have
access to the advice and services of the Group’s company
secretarial partner, Addleshaw Goddard LLP. In addition, any
Director may take independent professional advice, where
necessary, at the Company’s expense. This includes external
legal advice. The Board has taken extensive advice during 2019
in relation to the HMRC assessments received. The Board
meets formally at least nine times a year and additional meetings
are held where necessary to review and approve specific
matters where a decision is required more urgently.
The Non-executive Directors have undertaken to devote
sufficient time to their duties as a Non-executive Director in
order to discharge their responsibilities effectively. This amounts
to an average time commitment of two working days per month,
however, Non-executive Directors regularly give more time
commitment than this in the form of additional calls, emails and
contributions throughout the month.
Each Director is provided with sufficient timely information in the
form of Board papers, to enable full consideration of matters in
advance of meetings in order to properly discharge their duties.
There is a formal schedule of matters reserved for the Board
which includes strategy and management, structure and capital,
financial reporting and controls, internal controls, contracts,
communication, Board membership and other appointments,
remuneration, delegation of authority, corporate governance
matters, and policies and this is displayed on the Company’s
website Augeanplc.com. Under the Company’s articles of
association one third of all Directors are required to retire from
office at each Annual General Meeting and may stand for re-
election by Shareholders. In addition, each Director is required
to retire in the third calendar year following his last appointment
and may stand for re-election. Any Director appointed to the
Board during the year is subject to election by Shareholders at
the following Annual General Meeting. The Board is satisfied
that all the Directors standing for election or re-election (as
appropriate) perform effectively and have demonstrated
commitment to their roles.
In line with the Companies Act 2006 and the Company’s Articles
of Association, approved at the 2008 AGM, the Company
has strict procedures in place to capture the disclosure and
subsequent consideration and potential authorisation of any
Director’s interest which may conflict with those of the Company.
Augean PLC Annual Report and Accounts for the year ended 31 December 2019
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019GOVERNANCE
The Board of Directors
(continued)
Jim Meredith
Executive Chairman
Jim has considerable experience in the waste sector (since
circa 1997) and has also worked within manufacturing, having
held several senior roles within these sectors. He has been
Chairman of RiverRidge Recycling since September 2016 and
became Chairman of Uform Holdings Ltd in December 2018,
both investments supported by the Business Growth Fund, Jim
has also been a Non-executive Director of Mar City Homes,
since July 2016 and in October 2019 became Chairman of
Ditto AI Ltd. He was CEO of the UK business of FCC, a leading
Spanish construction business, following its acquisition of
Waste Recycling Group (WRG) in 2006 from TerraFirma Capital
Partners whom Jim worked with from 2003 during their initial
acquisition of WRG. Jim was an Executive Director of Shanks
PLC and also CEO of SCAID Capital, whose main business was
Willerby Holiday Homes a manufacturer of holiday homes for the
leisure sector.
Jim has been Executive Chairman of Augean PLC since October
2017, having previously been Non-executive Chairman from
June 2012 and a member of the Board from December 2010.
Jim had 100% attendance in 2019 for all Board meetings.
Mark Fryer
Executive Director and Group Finance Director
Mark joined Augean in December 2016 bringing a significant
breadth of financial expertise across a broad range of both listed
and private companies having been Group Finance Director of
Dialight PLC from 2010 to 2014, an innovative LED technology
company and previously of Manganese Bronze Holdings PLC
from 2002 to 2010, the company that built London taxis.
Prior to joining Augean, Mark had been Interim Chief
Finance Officer of two private equity owned businesses,
Bridon International Ltd, the global technology leader in the
manufacture of wire and fibre rope, and Nualight Ltd, a specialist
LED technology company. Before this, Mark held senior finance
positions at GKN PLC and Cable & Wireless PLC after qualifying
as a Chartered Accountant with Ernst & Young in 1991. Whilst
at GKN PLC, Mark gained specialist waste experience having
been Finance Director for GKN Industrial Services division which
included Cleanaway waste management.
He was appointed to the Board and became Group Finance
Director on 14 December, 2016. Mark had 100% attendance in
2019 for all Board meetings.
John Grant
Non-executive Director, Chairman of the Remuneration
Committee in 2018 and of the Audit Committee from
December 2018
John has significant experience across a number of sectors,
including working for Ford for 25 years, where he held a number
of senior positions including Director of corporate strategy in the
USA, and then Executive Deputy Chairman at Jaguar after it was
purchased by Ford in 1990. John later joined Lucas Industries
PLC from 1992–1996 as Group Finance Director and was Chief
Executive of Ascot PLC from 1997–2000. He was until May
2017, Senior Independent Director of Melrose Industries PLC,
a FTSE 350 acquisitive international engineering group and is
currently Senior Independent Director of MHP SE, a UK listed
Ukrainian agro-industrial group, and Chairman of the British
Racing Drivers Club Ltd.
He was appointed to the Board in August 2015 and became
Senior Independent Director in November 2015. John was
Chairman of the Remuneration Committee from June 2016 till
December 2018 and has been Chairman of the Audit Committee
since December 2018. John had 100% attendance in 2019 for
all Board and Committee meetings.
Roger McDowell
Non-executive Director, Chairman of the Nominations
Committee and Chairman of the Remuneration Committee
from December 2018
Roger returned to Augean in October 2017 having previously
been a Board member of the Group for 11 years between
November 2004 and June 2015. Roger brings valuable
experience as a successful businessman and entrepreneur, with
a strong record of driving shareholder value and serving on the
Boards of public companies across a range of sectors. During
his previous tenure on Augean’s Board, Roger held the position
of Interim CEO from 2006 to 2007 and Chairman from 2010
to 2012. Roger was Managing Director of Oliver Ashworth for
18 years before its sale to St. Gobain and he is currently serving
as Non-executive Chairman of Avingtrans PLC and Hargreaves
Services PLC. Roger is also Senior Independent Director at
Tribal Group PLC and a Non-executive Director of ThinkSmart
PLC, Proteome Sciences plc, British Smaller Companies VCT2
PLC and Brand Architekts Group PLC.
Roger tendered his apologies for one Board meeting in 2019
and had 100% attendance at all Committee meetings.
Christopher Mills
Non-executive Director
Christopher founded Harwood Capital Management Group
in 2011 and was the Chief Investment Officer of its former
parent Company J O Hambro Capital Management, which
he co-founded in 1993. He is Investment Manager of North
Atlantic Smaller Companies Investment Trust PLC and Non-
executive Chairman of EKF Diagnostics Holdings PLC. He
is also a Non-executive Director of several publicly quoted
companies, including SureServe Group PLC, Bigblu Broadband
plc, Renalytix AI PLC, Gabelli Value Plus + Trust PLC and Ten
Entertainment Group PLC. Christopher was a Director of Invesco
MIM, where he was head of North American investments and
venture capital, and of Samuel Montagu International.
Christopher joined the Board in October 2017. Christopher
tendered his apologies to one Committee meeting in 2019 and
had 100% attendance for all Board meetings.
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Chairman’s Corporate Governance Statement
The QCA Code is constructed around ten broad principles
which focus on the pursuit of medium to long-term value for
Shareholders without stifling the entrepreneurial spirit in which
the Company was created. These ten principles are:
To Deliver Growth:
1.
Establish a strategy and business model which promote
long-term value for shareholders.
2.
3.
4.
Seek to understand and meet shareholder needs and
expectations.
Take into account wider stakeholder and social
responsibilities and their implications for long-term success.
Embed effective risk management, considering both
opportunities and threats, throughout the organisation.
Maintain a Dynamic Framework:
5.
Maintain the Board as a well-functioning, balanced team led
by the Chair.
6.
7.
8.
9.
Ensure that between them the Directors have the necessary
up-to-date experience, skills and capabilities.
Evaluate Board performance based on clear and relevant
objectives, seeking continuous improvement.
Promote a corporate culture that is based on ethical values
and behaviours.
Maintain governance structures and processes that are
fit for purpose and support good decision-making by
the Board.
Build Trust:
10. Communicate how the Company is governed and is
performing by maintaining a dialogue with Shareholders and
other relevant stakeholders.
As a Company we strive to fulfil these ten broad principles, and
our website at www.augeanplc.com provides further details on
our compliance with each element of the code.
Jim Meredith
Executive Chairman
25 February 2020
I am pleased to introduce the corporate governance section of
our report.
Augean remains committed to high standards of corporate
governance in all of its activities and reports against the
Quoted Companies Alliance Corporate Governance Code,
a full version of which is available at the QCA website
http://qca.com. The Board recognises the value of the
Code and good governance and as far as is practicable
and appropriate for a public company of the size and nature
of Augean PLC, adheres to it. The Board regularly reviews
guidance from regulatory bodies, supported by its Nominated
Adviser, and responds as appropriate. As a business traded
on the Alternative Investment Market of the London Stock
Exchange and operating in markets based on regulatory
frameworks, the Group is familiar with the benefits and
challenges associated with maintaining strong and effective
governance. In this regard the Board remains focused on the
need for a system of corporate governance which delivers
compliance with regulation whilst enhancing the performance of
the Group. This includes recognising the need to manage and
mitigate the risks faced by the business across all of its activities.
The Board embodies and promotes the vision and values of
the Company set out on page 17. The Group operates on
the premise that best practice is normal practice striving to
ensure that regulatory standards are met and, where possible,
exceeded. The Company sets clear policy and objectives on
its expectations on corporate social responsibility from the
Board, to the top of the management team and throughout the
organisation. We are proud of our culture, where all staff feel
responsible for making a difference in delivering high standards
within the organisation and to our customers, stakeholders and
local communities. To ensure that the business achieves its
objectives we invest in people and the business. We recognise
the need for continual development and improvement in all our
standards and measure performance year-on-year.
Each of the Board’s standing Committees (Audit, Remuneration
and Nominations) continued to be active during the year.
A report from each Committee Chairman follows, and I am
grateful to each for their diligence and skill in ensuring that the
Board plays an effective role in the proper management of the
Company and the wider Group.
As Chairman, one of my principal concerns is to maintain
excellent relationships with our Shareholders. During the year I
continued to make myself available to Shareholders to discuss
strategy and governance matters and was pleased to again
have individual meetings with some of the Group’s major
Shareholders.
The Board has a pro-active investor relations programme
and believes in maintaining good communication with all
stakeholders including institutional and private Shareholders,
analysts and the press. This includes making the Executive
Directors available to meet with institutional Shareholders and
analysts following the announcement of interim and final results.
The Board receives feedback from these meetings and uses this
to refine its approach to investor relations.
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019GOVERNANCE
Risk Management and Control
The Board has overall responsibility for the Group’s systems
of risk management and internal control and for reviewing
their effectiveness, while the role of management, through
the Management Board, is to implement Board policies on
risk management and control. The day to day activities of the
Group are managed by the Executive Chairman through the
Management Board, whose membership includes:
{ Executive Chairman;
{ Group Finance Director;
{ Group Operating Officer;
{ Corporate Stewardship Director;
{ Commercial Director;
{ Technical Supply Chain Director;
{ Managing Director of NSS; and
{ Group General Counsel.
The Management Board meets to formally review performance
and risk once each month and maintains regular dialogue,
including weekly calls, between these meetings.
The Management Board regularly reviews the control
environment of the Group and is responsible for managing and
mitigating commercial, operational, safety, compliance and
financial risks. This system is designed to provide reasonable
but not absolute assurance against material misstatement or
loss.
The Group operates a series of controls to meet its needs. Key
features of the control system include the following:
{ maintenance of an operational risk register, covering the key
health and safety, regulatory and operating risks faced by the
Group;
{ maintenance of a register of the major financial risks faced by
the Group;
{ monthly reviews of business risks affecting the Group,
identifying procedures and action required to manage
and mitigate those risks;
{ reports provided to the Board at every meeting setting out
the key risks and their management;
{ a clearly defined organisational structure with terms of
reference for Board Committees and responsibilities
and authorisation limits for executive and senior
management;
{ regular visits by the Executive Directors and senior
management to operating locations to meet with local
management and staff and to review business performance;
{ regular visits by the Group’s technical team to all sites to
identify risks and propose improvements to be implemented
by senior management. This includes powers to stop
activities if they are deemed to represent a danger, or are
inappropriate in the context of proper compliance;
{ a range of compliance management systems at the Group’s
sites subject to external review, including certification to ISO
9001:2015; 14001:2015; 18001:2007 and the Publicly
Available Specification of common management system
requirements PAS 99:2012;
{ an annual strategic planning and budgeting process;
{ reviews by senior management, the Management Board and
the Board of monthly financial and operating information,
including comparisons with budgets and forecasts. The
Group uses balanced scorecard reports, containing
key performance indicator targets, as a mechanism for
monitoring and managing the monthly performance of key
operations;
{ maintenance of a comprehensive insurance programme,
agreed with insurers following a detailed annual review of the
risks faced by the Group’s businesses.
To provide an overview of the risks faced by the Group, the
Audit Committee undertakes a six-monthly review of the
corporate risk register, which considers a broad range of risk
items. This takes account of the control environment and may
lead to recommendations which are implemented through the
Management Board.
Audit Committee report
The Audit Committee comprises the Non-executive Directors
and is chaired by John Grant. The external auditors and the
Executive Directors are regularly invited to attend the meetings
and the Committee also has access to the external auditor’s
advice without the presence of the Executive Directors. The
Committee met on four separate occasions during the year.
During the year the Committee considered the adequacy and
effectiveness of the risk management and control systems of
the Group and requested updates to the Group’s corporate risk
register. It also reviewed the scope and results of the annual
external audit, its cost effectiveness and the objectivity and
independence of the external auditor.
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Remuneration Committee report
The Remuneration Committee comprises the Non-executive
Directors and is chaired by Roger McDowell. The principal
objective of the Committee is to attract, retain and motivate
talented people with a competitive package of incentives
and awards linked to Group performance and aligned with
Shareholders’ interests.
The Committee met on four occasions during 2019, with
business including reviews of the remuneration for Executive
Directors, decisions relating to bonus awards and attainment,
Long Term Incentive Plans awards and attainment and the
vesting of the cash Long Term Incentive Plan. The Directors’
Remuneration Report includes the outcome of these
considerations.
The Committee uses the services of independent external
advisers as required. During 2019 the Remuneration Committee
received advice on the vesting of the cash Long Term Incentive
Plan (referenced below) from Walker Morris LLP and its NOMAD.
It also received advice on the vesting of the 2017 LTIP scheme
from Deloitte LLP.
The Committee monitored the integrity of the financial
statements of the company, including its annual financial
statements for 2018 and other information included in the
2018 annual report, the interim financial statements for 2019,
all formal announcements relating to results and all significant
financial reporting issues and judgements contained therein.
The Committee have reviewed, in depth, the key assumptions
around goodwill and other non-current asset impairment
reviews, provisions, accounting for Landfill Tax assessments,
deferred tax asset recognition, key assumptions around
provisioning and adoption of the going concern assumption.
During the year the Audit Committee reviewed its own
performance, its constitution and its terms of reference to
ensure it was operating at maximum effectiveness. A full review
of the Anti-Tax Facilitation law and policy was also carried out.
Recommendations were made to the Board for any changes it
considered necessary.
Nominations Committee report
The Nominations Committee comprises the Non-executive
Directors and is chaired by Roger McDowell. It meets as
required in order to review the structure, size and composition
of the Board. It is responsible for the selection and
recommendation of suitable candidates for appointment to
the Board and for ensuring that there is a formal, rigorous and
transparent procedure for the appointment of all new Directors
to the Board. During the year the Nominations Committee
kept under review the leadership and governance needs of
the organisation, both executive and non-executive. This
was done with a view to ensuring the continued ability of the
organisation to compete effectively in the marketplace, giving
full consideration to succession planning for Directors and other
senior Executives in the course of its work, taking into account
the challenges and opportunities facing the Company, and
the skills, experience, independence, knowledge and diversity
needed on the Board in the future.
During 2019 the activities of the Committee focused on ensuring
the composition of the Board remained effective following the
resignation of Rod Holdsworth and Andrew Bryce.
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019GOVERNANCE
(v) 2017 LTIP Scheme
For the third performance period of the 2017 LTIP Scheme
(announced in the Annual Report and Accounts for 2017)
100% attainment was achieved. As previously announced 0%
attainment was achieved for the first performance period of this
Scheme and 100% for the second performance period.
(vi) Share options
Under the share options scheme the Remuneration Committee
may annually grant options of up to 100% of basic salary,
allowing participants to purchase shares in the Company at a
future date. These options may be subject to the attainment
of pre-determined performance conditions but this is not an
absolute requirement. No awards were made during 2019.
(vii) Service contracts
Executive Directors have rolling service contracts with notice
periods of not more than twelve months.
Directors’ interests
The beneficial, family and contingent interests of the Directors in
the share capital of the Company are shown in the table below.
At 31 December 2019
Christopher Mills*
Roger McDowell
Jim Meredith
Mark Fryer
John Grant
Beneficial
shares
Number
27,100,000
3,000,000
2,500,000
-
100,000
LTIP
Number
Total
shares
Number
- 27,100,000
3,000,000
-
2,500,000
-
203,908
203,908
100,000
-
* Christopher Mills is a partner and Chief Investment Officer of Harwood Capital
LLP and these shares are held in or managed by Harwood Capital LLP (shares
held through Harwood Capital LLP, Oryx International Growth Fund Ltd and North
Atlantic Smaller Companies Investment Trust).
Directors’ Remuneration Report
Non-executive Directors
Remuneration of the Non-executive Directors, including base
fees and fees for acting as Chair of a relevant committee, is
determined by the Board as a whole.
Executive Directors
The current remuneration package of the Executive Directors
comprises:
(i) Basic salaries
Basic salaries for Executive Directors take into account the
performance, experience and responsibilities of the individuals
concerned, as well as the salaries of those with similar positions
and responsibilities. External advice is taken as appropriate and
basic salaries are reviewed annually.
In 2019, a 3% salary increase was awarded to Mark Fryer and
Jim Meredith in line with the rest of the Company.
(ii) Performance related bonus
The Executive Directors participate in a bonus scheme based
on the achievement of annual profit targets approved by the
Remuneration Committee, as well as minimum targets in respect
of safety and regulatory compliance. For 2019, these targets
were achieved.
(iii) Other benefits
Benefits provided to Directors can include a car allowance,
life assurance, private medical insurance, permanent
disability insurance, personal accident insurance and pension
contributions.
(iv) Cash Long Term Incentive Plan
The Executive Directors, along with the Group’s senior
management team, were awarded a new cash settled LTIP
scheme (the ‘Plan’) in 2018. The Plan was designed to align
Shareholders and management to optimise the performance
of the Company for the benefit of all Shareholders, with the
management team sharing in the incremental value generated.
The performance target for the Plan was therefore based on
the Company’s share price as a measure of incremental value
generated, or on a sale of the Company should this occur
earlier.
Under the Plan, up to a maximum of 13% of this incremental
value would be capable of being paid out, with reference to
a base share of 35 pence (being the average share price for
April 2018).
The incremental value performance criterion for this plan were
met in December 2019, resulting in a cost of £7.0m before
national insurance costs, of which £3.2m was attributable to Jim
Meredith and £1.0m was attributable to Mark Fryer.
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Directors’ emoluments
The emoluments of the Directors during 2019 were as follows:
Jim Meredith
Mark Fryer
John Grant
Christopher Mills
Roger McDowell
Andrew Bryce
Rod Holdsworth
2019
Basic fee/
salary
£’000
158
206
37
31
37
9
-
478
2019
Bonus
£’000
230
287
-
-
-
-
-
517
2019
LTIP
£’000
3,164
1,031
-
-
-
-
-
4,195
2019
Other
emoluments
£’000
-
13
-
-
-
-
-
13
2019
Total
£’000
3,552
1,537
37
31
37
9
-
5,203
2018
Total
£’000
271
354
34
31
34
34
34
792
Fees for Andrew Bryce, John Grant, and Roger McDowell include £3,000 per annum for acting as Chairman of various Board
Committees.
Other emoluments for Mark Fryer include a car allowance and medical insurance.
Nil Directors (2018: nil) are members of a pension scheme and £nil (2018: £nil) contributions were paid by the company to a pension
scheme. Equivalent sums to the pension contribution that Mark Fryer was entitled to were paid as additional salary in 2019.
Directors’ share plans
2017 LTIP
Mark Fryer
Award date
Earliest
vesting date
Market
price at
award date
Number
of shares
2018
Granted
in year
Lapsed
in year
Number of
shares
2019
31/10/2016
24/03/2019
51.75p
203,908
-
-
203,908
Options outstanding under the share option scheme are exercisable, once the vesting date is reached and assuming the vesting
criteria are achieved. The option price is 10 pence per share.
There are no options held by Executive Directors of Augean PLC in the extant share option scheme. There are a further 55,172
options held by one participant in the share option scheme who is not a Director of Augean PLC.
Other than options held by Executive Directors of Augean PLC set out in the table above, there are a further 573,183 exercisable
options held by other participants in LTIP schemes, none of whom are Directors of Augean PLC. Further information is provided in
note 19.
The latest date for exercise of all share options is ten years after the award date.
The mid-market price of the Company’s shares at 31 December, 2019 was 222.0 pence. The range of the share price during the
year was 68.5 pence to 222.0 pence.
On behalf of the Remuneration Committee
Roger McDowell
Chairman of the Remuneration Committee
25 February 2020
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019GOVERNANCE
Independent Auditor’s Report
to the members of Augean PLC
Opinion
We have audited the financial statements of Augean plc (the
‘Parent Company’) and its subsidiaries (the ‘Group’) for the year
ended 31 December 2019 which comprise the Group Statement
of Comprehensive Income, Group and Company Statements
of Financial Position, Group Statement of Cashflow, Group
and Company Statements of Changes in Equity, and notes
to the financial statements, including a summary of significant
accounting policies.
The financial reporting framework that has been applied in the
preparation of the Group financial statements is applicable
law and International Financial Reporting Standards (IFRSs)
as adopted by the European Union. The financial reporting
framework that has been applied in the preparation of the Parent
Company financial statements is applicable law and United
Kingdom Accounting Standards, including Financial Reporting
Standard 101 Reduced Disclosure Framework (United Kingdom
Generally Accepted Accounting Practice).
In our opinion:
{ the financial statements give a true and fair view of the state
of the Group’s and of the Parent Company’s affairs as at 31
December 2019 and of the Group’s loss for the year then
ended;
{ the Group financial statements have been properly prepared
in accordance with IFRSs as adopted by the European Union;
{ the Parent Company financial statements have been properly
prepared in accordance with United Kingdom Generally
Accepted Accounting Practice; and
{ the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described
in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the
Group and the Parent Company in accordance with the ethical
requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as
applied to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in
relation to which the ISAs (UK) require us to report to you where:
{ the Directors’ use of the going concern basis of accounting
in the preparation of the financial statements is not
appropriate; or
{ the Directors have not disclosed in the financial statements
any identified material uncertainties that may cast significant
doubt about the Group’s or the Parent Company’s ability to
continue to adopt the going concern basis of accounting for
a period of at least twelve months from the date when the
financial statements are authorised for issue.
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Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. This matter was addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on this matter.
Key audit matter
Landfill Tax assessment
(see notes 1(u) and 17)
From August 2017, the Group has been in receipt of
assessments, from HMRC, for additional Landfill Tax liabilities.
The total value of assessments received up to 31 December
2019, inclusive of interest, is £40.4m as previously announced
by the Group.
At the prior year end the Group concluded that, on the basis of
legal advice received, an outflow of economic resources was
not probable and therefore a contingent liability disclosure was
included in the 2018 financial statements.
There remains a significant degree of judgement in the outcome
and the associated accounting treatment of this matter.
Legal advice has progressed during 2019 such that a
proportional expense of £26.2m and a residual asset of £14.2m
has been recognised in the financial statements.
This represents the best estimate of the expected economic
outflow from the Group under a probability weighted
methodology in accordance with accounting standards and
guidance.
The Group have deposited the full value of the assessments
with HMRC during the year to prevent further interest accrual.
Given the significance of this matter to the Group’s results
and the complexity of the accounting treatment, including the
measurement of the expense and residual tax deposit asset,
we identified this area as a key audit matter.
How our audit addressed the key audit matter
We had a number of discussions with management regarding
the appropriate accounting treatment in this area throughout the
audit process.
We challenged the thought processes and assumptions being
made by management and determined the ‘best estimate’
approach to be the appropriate mechanism through which to
value the liability and expense. Accounting standards require this
approach when there are multiple linked events, calculating the
best estimate through the use of a probability weighted model.
Having agreed the appropriate accounting treatment, we then
reviewed the professional advice obtained by management from
an independent legal advisor and specialist in Landfill Tax.
This expert advice included assessment of the probability of loss
arising in respect of each waste type and the value of Landfill
Tax being levied against each.
In assessing this evidence we re-performed the calculation of
the best estimate of future economic outflow from the weighted
average probabilities provided by the legal advisor.
We also verified the underlying assessment values to HMRC
correspondence and confirmed that full payment of these had
been made by the Group in the year.
We reviewed the disclosure of this area as a key accounting
estimate in note 1(u) and within the provisions note 17, along
with the supporting references in the narrative reporting section
of the annual report.
Key observations
We did not identify any issues with the assumptions or
mechanics underpinning management’s best estimate of the
Landfill Tax provision.
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019FINANCIAL STATEMENTS
Independent Auditor’s Report
to the members of Augean PLC
Our application of materiality
We apply the concept of materiality both in planning
and performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the magnitude
by which misstatements, including omissions, could influence
the economic decisions of reasonable users that are taken on
the basis of the financial statements. In order to reduce to an
appropriately low level the probability that any misstatements
exceed materiality, we use a lower materiality level, performance
materiality, to determine the extent of testing needed.
Importantly, misstatements below these levels will not
necessarily be evaluated as immaterial as we also take account
of the nature of identified misstatements, and the particular
circumstances of their occurrence, when evaluating their effect
on the financial statements as a whole.
We have set materiality for Augean plc based on profit before
tax. We have used 5% of Group profit before tax which is a
judgement determined by the audit risk within the Group and
considering the market and shareholder interest. We have
adjusted the statutory loss before tax for the expense items
relating to the Landfill Tax payment referred to in our key
audit matter, and a £7.7m accelerated share based payment
expense, both of which are considered non-underlying in the
year and not being representative of the trading performance of
the Group. The application of this materiality basis gives a Group
materiality of £930,000 (2018: £530,000). The Parent Company
materiality level for Augean plc is £300,000 (2018: £175,000)
which was based on 0.5% of gross assets.
The materiality levels applied to individual components in the
group ranged from £125,000 to £545,000.
In order to reduce to an appropriately low level the probability
that any misstatements exceed materiality, we use a lower
materiality level, performance materiality, to determine the extent
of testing needed. Performance materiality has been set at 65%
of the above materiality.
We agreed with the Audit Committee that we would report to
those charged with governance all individual audit differences in
excess of £28,000 (2018: £10,600). We also agreed to report
differences below this threshold that, in our view, warranted
reporting on qualitative grounds.
An overview of the scope of our audit
The scope of the Group audit was determined by obtaining an
understanding of the Group structure and the nature and size of
each component. We considered the Group’s system of internal
control, and assessed the risks of material misstatement in the
financial statements at the Group level.
Financial information relating to the Parent Company and its
four significant components within the Group were subject to a
full scope audit by the Group audit team, covering 100% of the
revenue and profit of the Group for the year.
Other information
The Directors are responsible for the other information. The
other information comprises the information included in the
annual report and accounts, other than the financial statements
and our auditor’s report thereon. Our opinion on the financial
statements does not cover the other information and, except
to the extent otherwise explicitly stated in our report, we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in
the audit or otherwise appears to be materially misstated. If
we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there
is a material misstatement in the financial statements or a
material misstatement of the other information. If, based on the
work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the
Companies Act 2006
In our opinion, based on the work undertaken in the course of
the audit:
{ the information given in the strategic report and the Directors’
report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
{ the strategic report and the Directors’ report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to report
by exception
In the light of the knowledge and understanding of the Group
and the Parent Company and its environment obtained
in the course of the audit, we have not identified material
misstatements in the strategic report or the Directors’ report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report
to you if, in our opinion:
{ adequate accounting records have not been kept by the
Parent Company, or returns adequate for our audit have not
been received from branches not visited by us; or
{ the Parent Company financial statements are not in
agreement with the accounting records and returns; or
{ certain disclosures of Directors’ remuneration specified by
law are not made; or
{ we have not received all the information and explanations we
require for our audit.
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Use of our report
This report is made solely to the Parent Company’s members,
as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so
that we might state to the Parent Company’s members those
matters we are required to state to them in an auditor’s report
and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than
the Parent Company and the Parent Company’s members as a
body, for our audit work, for this report, or for the opinions we
have formed.
Mark Langford
(Senior Statutory Auditor)
For and on behalf of BDO LLP,
Statutory Auditor
Leeds
25 February 2020
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities
statement, the Directors are responsible for the preparation of
the financial statements and for being satisfied that they give a
true and fair view, and for such internal control as the Directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Group’s and the Parent
Company’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the
going concern basis of accounting unless the Directors either
intend to liquidate the Group or the Parent company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs (UK) will
always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in aggregate, they could reasonably be
expected to influence the economic decisions of users taken on
the basis of these financial statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council’s website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019FINANCIAL STATEMENTS
Consolidated Statement
of Comprehensive Income
For the year ended 31 December 2019
Revenue
Operating expenses
Adjusted Operating profit
Share-based payments
Settlement of Landfill Tax assessments
Other non-underlying items
Operating (loss)/profit
Net finance charges
(Loss)/profit before tax
Taxation credit / (charge)
(Loss)/profit from continuing operations
Discontinued operations
Profit from discontinued operations
(Loss)/profit for the year and total comprehensive income attributable to equity
shareholders of Augean plc
(Loss)/earnings per share
Basic
Diluted
The notes on pages 37 to 73 form an integral part of these financial statements.
Note
27
19
3
3
3
4
6
26
3
8
8
2019
£’000
107,137
(87,228)
19,909
(7,693)
(26,179)
(664)
(14,627)
(697)
(15,324)
2,568
(12,756)
2018
£’000
79,749
(67,563)
12,186
(523)
-
(322)
11,341
(748)
10,593
(2,043)
8,550
-
1,389
(12,756)
9,939
(12.26)p
(12.26)p
9.61p
9.55p
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Statements of Financial Position
As at 31 December 2019
Non-current assets
Goodwill
Other intangible assets
Investments in subsidiaries
Property, plant and equipment
Right of use assets
Deferred tax asset
Current assets
Inventories
Trade and other receivables
Asset held for sale
Cash and cash equivalents
Current liabilities
Trade and other payables
Current tax liabilities
Borrowings
Lease liabilities
Provisions
Net current assets/(liabilities)
Non-current liabilities
Borrowings
Lease liabilities
Employee benefit liability
Provisions
Net assets
Shareholders’ equity
Share capital
Share premium account
Retained earnings
Total equity
Group
2019
£’000
Note
9
10
11
12
15
6
13
26
14
16
15
17
16
15
19
17
18
19,757
45
-
38,309
4,516
4,350
66,977
302
40,200
-
21,588
62,090
(32,205)
(1,145)
(6,667)
(1,445)
(500)
(41,962)
20,128
(28,123)
(3,104)
-
(8,242)
(39,469)
47,636
10,409
816
36,411
47,636
2018
£’000
19,757
66
-
40,373
-
1,781
61,977
277
18,628
3,304
11,162
33,371
(21,222)
(1,863)
-
-
(500)
(23,585)
9,786
(2,922)
-
(351)
(8,190)
(11,463)
60,300
10,379
757
49,164
60,300
Company
2019
£’000
-
45
50,768
1,034
494
-
52,341
-
7,694
-
11,752
19,446
(6,936)
-
(6,667)
-
-
(13,603)
5,843
(28,123)
(484)
-
-
(28,607)
29,577
10,409
816
18,352
29,577
2018
£’000
-
66
50,768
1,121
-
-
51,955
-
708
-
3,263
3,971
(23,999)
-
-
-
-
(23,999)
(20,028)
(2,922)
-
(351)
-
(3,273)
28,654
10,379
757
17,518
28,654
The company made a profit of £766,000 (2018: loss of £6,318,000).
The notes on pages 37 to 73 form an integral part of these financial statements.
The financial statements were approved by the Board on 25 February 2020 and authorised for issue on its behalf by:
M Fryer
Group Finance Director
Augean PLC Registered number: 05199719
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019FINANCIAL STATEMENTS
Statement of Cash Flow
For the year ended 31 December 2019
Operating activities
Cash (used in) / generated from operations
Finance charges paid
Corporation tax paid
Net cash (used in)/generated from operating activities
Investing activities
Proceeds on disposal of assets held for sale
Proceeds on disposal of property, plant and equipment
Purchases of property, plant and equipment
Purchases of intangible assets
Sale of business
Net cash (used in)/generated from investing activities
Financing activities
Dividends paid
Issue of equity
Drawdown / (repayment) of loan facilities
Payment of principal on lease liabilities
Net cash generated from/(used in) financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Note
20
7
18
15
Group
2019
£’000
(16,215)
(597)
(820)
(17,632)
3,350
-
(5,823)
(18)
-
(2,491)
-
89
32,000
(1,540)
30,549
10,426
11,162
21,588
2018
£’000
17,413
(360)
(1,063)
15,990
-
36
(3,407)
(6)
6,176
2,799
-
84
(14,290)
-
(14,206)
4,583
6,579
11,162
34
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Statements of Changes
in Shareholders’ Equity
For the year ended 31 December 2019
Group
At 1 January 2018
Total comprehensive income for the year
Retained profit
Total comprehensive income for the year
Transactions with the owners of the company
Issue of equity
Share-based payments
Total transactions with the owners of the company
At 31 December 2018
IFRS16 opening adjustment
At 1 January 2019 as restated
Total comprehensive loss for the year
Retained loss
Total comprehensive loss for the year
Transactions with the owners of the company
Issue of equity
Share-based payments
Total transactions with the owners of the company
At 31 December 2019
Share
capital
£’000
10,295
-
-
84
-
84
10,379
-
10,379
-
-
30
-
30
10,409
Share
premium
account
£’000
757
-
-
-
-
-
757
-
757
-
-
59
-
59
816
Retained
earnings
£’000
39,053
9,939
9,939
-
172
172
49,164
(39)
49,125
Total
equity
£’000
50,105
9,939
9,939
84
172
256
60,300
(39)
60,261
(12,756)
(12,756)
(12,756)
(12,756)
-
42
42
36,411
89
42
131
47,636
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019FINANCIAL STATEMENTS
Statements of Changes
in Shareholders’ Equity
For the year ended 31 December 2019
Company
At 1 January 2018
Total comprehensive income for the year
Retained loss
Total comprehensive income for the year
Transactions with the owners of the company
Issue of equity
Share-based payments
Total transactions with the owners of the company
At 31 December 2018
IFRS16 opening adjustment
At 1 January 2019 as restated
Total comprehensive income for the year
Retained profit
Total comprehensive income for the year
Transactions with the owners of the company
Issue of equity
Share-based payments
Total transactions with the owners of the company
At 31 December 2019
Share
capital
£’000
10,295
-
-
84
-
84
10,379
-
10,379
-
-
30
-
30
10,409
Share
premium
account
£’000
757
Retained
earnings
£’000
23,664
Shareholders’
equity
£’000
34,716
-
-
-
-
-
757
-
757
-
-
59
-
59
816
(6,318)
(6,318)
-
172
172
17,518
26
17,544
766
766
-
42
42
18,352
(6,318)
(6,318)
84
172
256
28,654
26
28,680
766
766
89
42
131
29,577
36
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Notes to the Financial Statements
For the year ended 31 December 2019
1 Accounting policies
(a) Basis of accounting
The financial statements have been prepared in accordance with International Financial Reporting Standards, (IFRS) as adopted by
the European Union, International Financial Reporting Interpretations Committee (IFRIC) interpretations endorsed by the European
Union and those parts of the Companies Act 2006 that remain applicable to companies reporting under IFRS. The Company has
elected to prepare its parent Company financial statements in accordance with Financial Reporting Standard 101 (FRS101). The
financial statements have been prepared on the historical cost basis with the exception of certain items which are measured at
fair value as disclosed in the principal accounting policies set out below. These policies have been consistently applied to all years
presented unless otherwise stated.
The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Although these estimates are based on management’s best knowledge of the amount, event
or actions, actual results ultimately may differ from these estimates.
The Company has taken advantage of Section 408 of the Companies Act 2006 and has not included its individual statement of
comprehensive income in these financial statements. The Company’s overall result for the year is given in the statement of changes
in shareholders’ equity. The Company has taken advantage of all available disclosure exemptions conferred by FRS 101. Therefore,
these financial statements do not include: a statement of cashflows and related disclosures, IAS 24 related party disclosures, capital
management disclosures and the effect of future standards not adopted.
(i) Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial
statements of subsidiaries are included in the consolidated financial statements from the date on which control commences to the
date on which control ceases. All intra-group transactions, balances, income and expenses are eliminated on consolidation.
(ii) Business combinations
The acquisition method is used to account for all acquisitions. The cost of an acquisition is measured at the fair values on the
acquisition date, which is the date on which control is transferred to the Group. The consideration is calculated as the sum of fair
value of assets transferred and liabilities incurred. In assessing control, the Group, takes into consideration potential voting rights
that currently are exercisable.
The Group measures goodwill at the acquisition date as:
{ the fair value of the consideration transferred; plus
{ the recognised amount of any non-controlling interests in the acquiree; less
{ the net recognised amount of the identifiable assets acquired, and liabilities assumed, measured at their fair value.
When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts
generally are recognised in profit or loss.
Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a
business combination are expensed as incurred.
(iii) Going concern
The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group
have adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going
concern basis of accounting in preparing the financial statements. Further detail is contained in the Directors’ Report.
(b) Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the provision of services in accordance with the
Group’s primary revenue streams as set out below. Revenue is shown net of Value Added Tax and inclusive of Landfill Tax where
appropriate.
Treatment & Disposal and North Sea Services
Waste revenue is recognised at the point of acceptance of that waste into one of the Group’s facilities, being consistent with the
point where the Group’s responsibility for this waste arises and therefore reflecting fulfilment of the sole performance obligation to the
customer.
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1 Accounting policies continued
Contracts with customers are typically fixed price based on agreed weights and specifications and invoiced upon acceptance of
waste into one of the Group’s facilities. Landfill Tax revenue is recognised as revenue at the point of acceptance and an appropriate
liability is recognised at the same time with other tax and social security liabilities.
Service revenue is recognised at point of delivery of each separate service or where the right to invoice a customer for that revenue
is met. Contract assets and liabilities may arise where there is a short-term timing difference between recognition and invoicing.
The Group’s standard payment terms are 30 days from the provision of the service. There are no long-term contract or financing
arrangements in place across the Group.
The Group is assessed operationally and financially under the two primary revenue streams outlined above. The Directors do not
therefore consider there to be a lower relevant level of revenue disaggregation than that disclosed in Note 2, Operating Segments.
There are no material concentrations of revenue by customer or from countries outside of the United Kingdom.
(c) Non-underlying items
Items that are significant and outside the normal course of business are presented as non-underlying items in the statement of
comprehensive income. The Directors believe the separate recording of the non-underlying items provides helpful information
about the Group’s underlying business performance. Examples of events which may give rise to the classification of items as non-
underlying include restructuring of the business, unexpected payments of bonuses, legal costs associated with the Landfill Tax
dispute, the payment of Landfill Tax back assessments and other non-recurring income or expenditure.
(d) Goodwill
Goodwill arising on the acquisition of subsidiary undertakings and businesses, representing the excess of the fair value of the
consideration given over the fair value of the identifiable assets and liabilities acquired, is capitalised as an intangible asset. On
capitalisation the goodwill is allocated to the specific Cash Generating Unit (CGU) to which it relates. It is tested for impairment at
least annually by reference to this CGU and is carried at cost less accumulated impairment losses. Any impairment is recognised
immediately in profit or loss and is not subsequently reversed.
Goodwill arising on acquisitions before the date of transition to IFRS has been retained at the previous UK GAAP amounts subject to
being tested for impairment at that date and on an annual basis going forward.
(e) Other intangible assets
Intangible assets purchased separately, such as software licences that do not form an integral part of related hardware, are
capitalised at cost and amortised on a straight-line basis. This is charged to operating expenses over the asset’s useful economic
life of three years.
Intangible assets acquired through a business combination such as customer contracts are initially measured at fair value and
amortised on a straight-line basis over their useful economic lives to the profit and loss account which are taken to be the
length of the contract. An intangible asset is considered identifiable only if it is separable or if it arises from contractual or other
legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations.
After initial recognition assets acquired as part of a business combination are carried at cost less accumulated amortisation and any
impairment losses.
Methods of amortisation, residual value and useful lives are reviewed, and if necessary adjusted, at each statement of financial
position date.
(f) Investments
Investments are in respect of subsidiaries. Investments held as non-current assets are stated at historic cost less any provision for
impairment.
(g) Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. The cost of an
item of property, plant and equipment comprises its purchase price and any costs directly attributable to bringing the asset into use.
Borrowing costs related to the purchase of property, plant and equipment are capitalised where the cost is directly attributable to
the property, plant or equipment being purchased. Freehold land and buildings are recognised at historical cost.
Subsequent costs are included in an asset’s carrying value or recognised as a separate asset, when it is probable that future
economic benefits associated with the additional expenditure will flow to the Group and the cost of the item can be measured
reliably. All other costs are charged to profit or loss when incurred.
The acquisition, commissioning and site infrastructure costs for each landfill site are capitalised when incurred. These costs are then
depreciated over the useful life of the site, which is assessed with reference to the usage of the void space available.
38
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1 Accounting policies continued
Cell engineering costs are capitalised when incurred. The depreciation charged to profit or loss is calculated with reference to actual
costs to date and expected future costs for each cell including the cost of the future cap, the total of which is spread over the useful
economic life of the cell. Useful life is assessed by reference to the usage of the void space available and the rate at which the void
space is filled.
Freehold land which is not part of a landfill site is not depreciated. Depreciation is provided evenly or on a reducing balance on all
other property, plant and equipment at rates calculated to write off the cost, less estimated residual value, of each asset over its
useful life as follows:
Freehold buildings
Leasehold land and buildings
Plant, machinery and motor vehicles – two to ten years
– 50 years
– 20 years or length of lease
Methods of depreciation, residual values and useful lives are reviewed and adjusted, if appropriate, at each statement of financial
position date.
Assets held under finance leases are depreciated over the shorter of their expected useful lives or, where there is no reasonable
certainty that title will be obtained at the end of the lease term, the term of the relevant lease.
The gain or loss arising from the disposal or retirement of an item of property, plant and equipment is determined as the difference
between the net disposal proceeds and the carrying amount of the item and is included in profit or loss.
Finance leases and hire purchase arrangements
Where the Group enters into a lease which entails taking on substantially all of the risks and rewards of ownership of an asset, the
lease is treated as a finance lease and the asset is capitalised. Future instalments under such leases, net of finance charges, are
recognised as a liability. Rentals payable are apportioned between the finance element, which is charged to profit or loss so as to
give an approximate constant rate of charge on the outstanding obligation and the capital element which reduces the outstanding
obligation for future instalments.
The asset and associated liability are recorded in the statement of financial position within property, plant and equipment and
financial liabilities respectively at their fair value or, if lower, at the present value of the minimum lease payments, both determined at
the inception of the lease.
Depreciation is calculated in accordance with the above depreciation policies.
Other leases are treated as operating leases, the rentals for which are charged to profit or loss on a straight-line basis over the
lease term.
Restoration, capping and after-care provisions
The anticipated total cost of restoration, capping, post-closure monitoring and after-care is capitalised and charged to profit or loss
over the expected useful life of the sites or cells to which the provision relates in proportion to the amount of void consumed at the
sites during the period. The costs of restoration and post-closure monitoring are charged against the provision when incurred. The
provision has been estimated using current costs and is discounted except for the capping element of the provision which is not
discounted due to the near-term nature of the expenditure. When the effect is material, the expected future cash flows required to
settle the obligation are discounted at the pre-tax rate that reflects the current market assessments of the time value of money and
the risks specific to the obligation.
(h) Impairment of non-current assets
At each statement of financial position date, the Group assesses whether there is any indication that its assets have been impaired.
If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if
any. If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the CGU to which the
asset belongs is determined.
The recoverable amount is defined as the higher of fair value less costs to sell and value in use at the date the impairment review is
undertaken. Value in use represents the present value of expected future cash flows discounted on a pre-tax basis, using a pre-
tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. If
the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable
amount. That reduction is recognised as an impairment loss.
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1 Accounting policies continued
(h) Impairment of non-current assets
An impairment loss relating to assets carried at cost less any accumulated depreciation or amortisation is recognised immediately in
profit or loss.
Goodwill is tested for impairment on an annual basis. An impairment loss is recognised for CGUs if the recoverable amount of the
unit is less than the carrying amount of the unit. The impairment loss is allocated to reduce the carrying amount of the assets of the
unit by first reducing the carrying amount of any goodwill allocated to the CGU and then reducing the other assets of the unit pro
rata on the basis of the carrying amount of each asset in the unit.
If an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable
amount but limited to the carrying amount that would have been determined had no impairment loss been recognised in prior years.
A reversal of an impairment loss is recognised in profit or loss. Any impairments of goodwill cannot be subsequently reversed.
(i) Leases
The Group leases plant and machinery, IT equipment, vehicles and property. With the exception of short-term leases and leases of
low-value underlying assets, each lease is reflected on the balance sheet as a right-of-use asset and a lease liability.
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the
discount rate determined by reference to the rate inherent in the lease unless this is not readily determinable, in which case 3% is
used, representing the Group’s incremental borrowing rate. The Group classifies its right-of-use assets in a consistent manner to its
property, plant and equipment.
The carrying value of the lease liability also includes amounts expected to be payable under any residual value guarantee, the
exercise price of any purchase option granted in favour of the group if it is reasonably certain to assess that option and any penalties
payable for terminating the lease, if the term of the lease has been estimated on the basis of termination option being exercised.
Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received and increased
for lease payments made at or before commencement of the lease, initial direct costs incurred and the amount of any provision
recognised where the group is contractually required to dismantle, remove or restore the leased asset.
Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance
outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the
remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease
term. When the group revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee
extension or termination option being exercised), it adjusts the carrying amount of the lease liability to reflect the payments to make
over the revised term, which are discounted at a new discount rate. The carrying value of lease liabilities is similarly revised when the
variable element of future lease payments dependent on a rate or index is revised. In both cases an equivalent adjustment is made
to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining (revised) lease
term.
When the group revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee
extension or termination option being exercised), it adjusts the carrying amount of the lease liability to reflect the payments to make
over the revised term, which are discounted using a revised discount rate. The carrying value of lease liabilities is similarly revised
when the variable element of future lease payments dependent on a rate or index is revised, except the discount rate remains
unchanged. In both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying
amount being amortised over the remaining (revised) lease term.
If the renegotiation results in a decrease in the scope of the lease, both the carrying amount of the lease liability and right-of-use
asset are reduced by the same proportion to reflect the partial of full termination of the lease with any difference recognised in profit
or loss.
The lease liability is then further adjusted to ensure its carrying amount reflects the amount of the renegotiated payments over the
renegotiated term, with the modified lease payments discounted at the rate applicable on the modification date. The right-of-use
asset is adjusted by the same amount.
(i) Leases (continued)
For contracts that both convey a right to the group to use an identified asset and require services to be provided to the group by
the lessor, the group has elected to account for the entire contract as a lease, i.e. it does not allocate any amount of the contractual
payments to, and account separately for, any services provided by the supplier as part of the contract.
40
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www.augeanplc.com Stock code: AUGNotes to the Financial StatementsFor the year ended 31 December 2019
1 Accounting policies continued
(j) Inventories
Inventories are stated at the lower of cost (measured on a first-in, first-out basis) and net realisable value and, where appropriate, are
stated net of provisions for impairment.
(k) Tax
Current tax
Current tax is provided at amounts expected to be paid (or recovered) using tax rates and laws that have been enacted or
substantively enacted at the statement of financial position date. The tax currently payable is based on taxable profit for the year.
Taxable profit differs from net profit as reported in the statement of comprehensive income because it excludes items of income that
are taxable or deductible in other years and it further excludes items that are never taxable or deductible.
Deferred tax
Deferred tax on temporary differences at the statement of financial position date between the tax bases of assets and liabilities and
their carrying amounts for financial reporting purposes is accounted for using the statement of financial position liability method.
Using the liability method, deferred tax liabilities are recognised in full for all taxable temporary differences and deferred tax assets
are recognised to the extent that it is probable that future taxable profits will be available against which deductible temporary
differences can be utilised. However, if the deferred tax asset or liability arises from the initial recognition of goodwill or the initial
recognition of an asset or liability in a transaction, other than a business combination, that at the time of the transaction affects
neither accounting nor taxable profit, it is not recognised.
Deferred tax on temporary differences associated with shares in subsidiaries is not provided if reversal of these temporary
differences can be controlled by the Group and it is probable that the reversal will not occur in the foreseeable future.
Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply when the asset is realised, or the
liability settled, based on tax rates and laws enacted or substantively enacted at the statement of financial position date.
Current and deferred tax are recognised in profit or loss except when they relate to items recognised in other comprehensive
income or equity, where they are similarly recognised in other comprehensive income or equity.
(l) Retirement benefits
Contributions made by the Group to individual money purchase pension schemes are charged to profit or loss during the period to
which they relate.
(m) Share-based payments
IFRS 2 ‘Share-based Payments’ requires that an expense for equity instruments granted is recognised in the financial statements
based on their fair values at the date of the grant. This expense, which is in relation to employee share options and executive LTIP
schemes, is recognised over the vesting period of the scheme based on the number of instruments expected to vest. The fair value
of employee services is determined by reference to the fair value of the awarded grant calculated using the Black Scholes model or
Monte Carlo model, excluding the impact of any non-market vesting conditions.
At the statement of financial position date, the Group revises its estimate of the number of share incentives that are expected to
vest. The impact of the revisions of original estimates on non-market based elements of these incentives, if any, is recognised in
profit or loss, with a corresponding adjustment to equity or the statement of financial position, over the remaining vesting period.
Management have elected to disclose the share-based payment charge separately on the Income Statement to allow users of the
accounts to better understand the underlying trading performance of the Group.
(n) Assets held for sale
Non-current assets, or disposal groups comprising assets and liabilities, that are expected to be recovered primarily through sale
rather than through continuing use, are classified as held for sale. Immediately before classification as held for sale, the assets, or
components of a disposal group, are re-measured in accordance with the Group’s accounting policies. Thereafter, generally the
assets, or disposal group, are measured at the lower of their carrying amount and fair value less costs to sell.
Impairment losses on initial classification as held for sale and subsequent gains and losses on revaluation are recognised in profit or
loss. Gains are not recognised in excess of any cumulative impairment loss.
Once classified as held for sale, intangible assets and property, plant and equipment are no longer amortised or depreciated.
(o) Cash and cash equivalents
Cash and cash equivalents comprise demand deposits and cash in hand together with short-term, highly-liquid deposits with a
maturity of three months or less, from the date of acquisition, which are subject to an insignificant risk of change in value.
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019FINANCIAL STATEMENTS
1 Accounting policies continued
(p) Tax deposits
Tax deposits are recognised to the extent they provide the Group a right to obtain future economic benefits, either by receiving a
cash refund or by using the payment to settle the tax liability. The measurement of the asset is achieved by applying probabilistic
modelling to the cash amounts paid to the relevant tax authorities.
(q) Financial instruments
(i) Financial assets
Financial assets that are held to collect are categorised as amortised cost under IFRS 9. This includes the Group’s trade and other
receivables, and cash and cash equivalents. Financial assets are assigned to this category on initial recognition, depending on the
characteristics of the instrument and the corresponding business model. A financial instrument’s category is relevant for the way it is
measured and whether any resulting income and expenses is recognised in profit or loss or other comprehensive income.
Augean recognises all financial assets when the Group becomes party to the contractual provisions of the instrument. Financial
assets are recognised initially at fair value plus transaction costs, and subsequently at amortised cost using the effective interest
method, less any allowance for impairment. Financial assets are reviewed for impairment under the simplified approach to the
expected credit loss model under IFRS 9. This is calculated through the use of a provision matrix by considering default rates by
receivable age. A historic two-year actual impairment loss on receivables, adjusted for management’s expectation of future market
conditions is utilised within this matrix. The movement in allowances for receivables is charged or credited through the income
statement. Discounting of long-term receivables is omitted where the effect is immaterial.
(ii) Financial liabilities
The Group’s financial liabilities include trade payables and debt and are all categorised under amortised cost in accordance with
IFRS 9. Trade payables are not interest bearing and are recognised initially at fair value and subsequently carried at amortised cost
using the effective interest method. Debt is initially recognised at fair value less transaction costs and carried at amortised cost. The
Group’s policy is that no trading in financial instruments or derivatives shall be undertaken, therefore the fair value through profit and
loss classification under IFRS 9 is not used for any financial liabilities.
Financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument. All interest-
related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss are included in the
statement of comprehensive income under ‘finance charges’.
(iii) Free cash flow
Free cash flow is a non-IFRS measure used by management defined as net operating cash flow less purchase of property, plant and
equipment. It is determined as part of the capital management assessment and is reconciled in note 22.
(iv) EBITDA
EBITDA is a non-IFRS measure used by management as a tool for approximating operating cash flows. It represents Earnings
before Interest, Tax, Depreciation, Amortisation and Impairment. It is determined as part of the cash flow reconciliation shown in
note 20.
(r) Equity
Equity comprises share capital, share premium and retained profit and losses. Share capital represents the nominal value of equity
shares. Share premium account represents the excess over nominal value of the fair value of consideration received for equity
shares, net of expenses of the share issue. Retained profit and losses represent retained profit and losses and equity-settled share-
based payment employee remuneration.
(s) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable
that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the
balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using
the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the
effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a
receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can
be measured reliably.
A contingent liability is disclosed if there is a possible obligation from a past event and the outflow is not probable or unable to be
measured.
42
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www.augeanplc.com Stock code: AUGNotes to the Financial StatementsFor the year ended 31 December 2019
1 Accounting policies continued
(t) Intercompany balances
The Company provides for impairment for amounts due from subsidiary undertakings using a forward looking lifetime expected
credit loss provision which is based on assessing whether there has been a significant increase in credit risk since initial recognition
of the financial asset.
(u) Significant judgements and key sources of estimation uncertainty
The preparation of the financial statements in conformity with IFRS requires management to make estimates and assumptions that
affect the application of policies and reported amounts of assets, liabilities, income, expenses and related disclosures. The estimates
and underlying assumptions are based on historical experience, the best available information and various other factors that are
believed to be reasonable under the circumstances. This forms the basis of making judgements about carrying values of assets and
liabilities that are not readily apparent from other sources.
Actual results may, however, differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing
basis. Changes in accounting estimates may be necessary if there are changes in the circumstances on which the estimate was
based, or as a result of new information or further information. Such changes are recognised in the period in which the estimate is
revised. Certain accounting policies are particularly important to the preparation and explanation of the Group’s financial information.
Key assumptions about the future and key sources of estimation uncertainty that have a risk of causing a material adjustment to the
carrying value of assets and liabilities over the next twelve months are set out below.
Landfill Tax assessments (estimate)
The Group have made payments to HMRC in the year of £40,393,000 in relation to Landfill Tax assessments received. The
payments made to HMRC and additional potential assessments have been accounted for in line with IAS 37, resulting in an asset
held on the balance sheet equal to £14,200,000 and an expense to non-underlying costs of £26,200,000. The application of IAS37
involves the application of probabilistic modelling to tribunal outcomes, which are impacted by a number of different factors.
Ultimately, the cost of this dispute will be determined by a tribunal at which the outcome may be different from the amount charged
to the Income Statement. A weighted average approach based on legal advice has been applied to derive the estimates in this
matter.
Impairment of goodwill, other intangible assets, investments and fixed assets (judgement and estimate)
The Group has property, plant and equipment with a carrying value of £38,309,000 (note 12) and goodwill with a carrying value of
£19,757,000 (note 9). These assets are reviewed annually for impairment as described in these financial statements to ensure that
goodwill and property, plant and equipment are not carried above their estimated recoverable amounts. To assess if any impairment
exists, estimates are made of the future cash flows expected to result from the use of the asset and its eventual disposal. Actual
outcomes could vary from such estimates of discounted future cash flows. Factors such as changes in expected use of property,
plant and equipment, closure of facilities, or lower than anticipated revenues could result in impairment.
Site development and cell engineering/capping (estimate)
Total anticipated site development and cell engineering/capping costs are charged to profit or loss as void usage progresses. Costs
of site development and cell engineering/capping are estimated using either the work of external consultants or internal experts.
Management uses its judgement and experience to provide for these estimated costs over the life of the site and cell.
See note 17 for further details of calculation methodology, assumptions used and potential sensitivities to these calculations.
After-care costs (estimate)
Provision is made for after-care costs as soon as the obligation arises and is charged to profit or loss as void usage progresses.
After-care costs are estimated using either the work of external consultants or internal experts. Management uses its judgement and
experience to provide for these estimated costs over the life of the site. See note 17 for further details of calculation methodology,
assumptions used and potential sensitivities to these calculations.
Other provisions (estimate)
Other provisions are made where management judges that a probable future outflow of resources will occur, which can be reliably
estimated, arising from a past event. Estimates are based on the work of internal experts and previous operational and commercial
experience. See note 17 for further details of calculation methodology, assumptions used and potential sensitivities to these
calculations.
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019FINANCIAL STATEMENTS
1 Accounting policies continued
Deferred tax taxes (estimate)
A deferred tax asset of £4,350,000 (2018: £1,781,000) has also been recognised. Estimates may be required in determining the
level of deferred income tax assets and liabilities, which the Directors believe are reasonable and adequately recognise any deferred
tax related uncertainties. Various factors may have favourable or adverse effects on the deferred tax assets or liabilities. These
include changes in tax legislation, tax rates and allowances, future levels of spending and the Group’s level of future earnings.
Lease accounting (judgement)
When the entity has the option to extend a lease, management uses its judgement to determine whether or not an option would be
reasonably certain to be exercised. Management considers all facts and circumstances including their past practice and any cost
that will be incurred to change the asset if an option to extend is not taken, to help them determine the lease term. The discount
rate use in assessing lease liabilities is based up on the equivalent external borrowing rate of the group.
(v) New IFRS standards and interpretations applied
The Group adopted IFRS 16 with a transition date of 1 January 2019. The Group has chosen not to restate comparatives on
adoption and therefore the revised requirements are not reflected in the prior year financial statements. These changes have been
processed at the date of initial application (i.e. 1 January 2019) and recognised in the opening equity balances. The Group has
the approach to measure the right-of-use asset at an amount equal to the lease liability, adjusted by the amount of any prepaid or
accrued lease payments recognised immediately before the date of initial application. At the date of the initial application of the new
lease standard, lessees are required to recognise the cumulative effect of the initial application as an adjustment to the opening
balance of retained earnings as of 1st January 2019.
IFRS 16 provides a single lessee accounting model, requiring the recognition of assets and liabilities for all leases, together with
options to exclude leases where the lease term is 12 months or less, or where the underlying asset is of low value. IFRS 16
substantially carries forward the lessor accounting in IAS 17, with the distinction between operating leases and finance leases being
retained. The Group does not have any leasing activities acting as a lessor.
The Group adopted IFRS 16 using the modified retrospective approach, with recognition of transitional adjustments on the date of
initial application (1 January 2019), without restatement of comparative figures. The Group elected to apply the practical expedient
to not reassess whether a contract is or contains a lease at the date of initial application. Contracts entered into before the transition
date that were not identified as leases under IAS 17 and IFRIC 4 were not reassessed. The definition of a lease under IFRS 16
was applied only to contracts entered into or changed on or after 1 January 2019. IFRS 16 provides for certain optional practical
expedients, including those related to the initial adoption of the standard.
The Group applied the following practical expedients when applying IFRS 16 to leases previously classified as operating leases
under IAS 17:
{ Apply a single discount rate to a portfolio of leases with reasonably similar characteristics;
{ Use hindsight when determining the lease term;
{ Exclude initial direct costs from the measurement of right-of-use assets at the date of initial application for leases where the right-
of-use asset was determined as if IFRS 16 had been applied since the commencement date; and
{ Reliance on previous assessments on whether leases are onerous as opposed to preparing an impairment review under IAS 36
as at the date of initial application; and Applied the exemption not to recognise right-of-use assets and liabilities for leases with
less than 12 months of lease term remaining as of the date of initial application.
As a lessee, the Group previously classified leases as operating or finance leases based on its assessment of whether the lease
transferred substantially all of the risks and rewards of ownership. Under IFRS 16, the Group recognises right-of-use assets and
lease liabilities for most leases. However, the Group has elected not to recognise right-of-use assets and lease liabilities for some
leases of low-value assets based on the value of the underlying asset when new or for short-term leases with a lease term of 12
months or less.
This resulted in the group recognising a right-of-use asset of £5,457,000, a right-of-use liability of £5,496,000 and a charge to
retained earnings of £39,000. Further detail is presented in note 15.
44
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www.augeanplc.com Stock code: AUGNotes to the Financial StatementsFor the year ended 31 December 2019
(w) New IFRS standards and interpretations not applied
The following new standards, amendments to standards and interpretations will be mandatory for the first time in future financial years:
New Standards
IFRS 17 Insurance contracts
Amendments to existing standards
Amendments to References to the Conceptual Framework in IFRS Standards
Amendments to IFRS 3 Business Combinations – Definition of a Business
29-Mar-18
22-Oct-18
Definition of Material - Amendments to IAS 1 and IAS 8
Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7)
31-Oct-18
26-Sep-19
Issued date
IASB
mandatory
effective date
EU
endorsement
status
18-May-2017
01-Jan-21*
TBC
01-Jan-20
01-Jan-20
01-Jan-20
01-Jan-20
Endorsed
Expected
Q1 2020
Endorsed
Endorsed
January 2020
The application of these standards and interpretations is not expected to have a material impact on the Group’s reported financial
performance or position.
2 Operating segments
The Group has two reportable segments. The two segments are the Group’s strategic business units.
These business units are monitored and strategic decisions are made on the basis of each business unit’s operating performance.
The Group’s business units provide different services to their customers and are managed separately as they are subject to different
risks and returns. The Group’s internal organisation and management structure and its system of internal financial reporting are
based primarily on these operating business units. For each of the business units, the Group’s Executive Chairman (the chief
operating decision-maker) reviews internal management reports on at least a monthly basis. The following summary describes the
operations of each of the Group’s reportable segments:
{ Treatment & Disposal: Augean provides waste remediation, management, treatment and disposal services through its six sites
across the UK.
{ Augean North Sea Services: Augean provides waste management and waste processing services to Oil and Gas operators.
Information regarding the results of each reportable segment is included below. Performance is measured based on the segment
operating profit, as included in the internal management reports that are reviewed by the Group’s Executive Chairman. This profit
measure for each business unit is used to measure performance as management believes that such information is the most relevant
in evaluating the results of each of the business units relative to other entities that operate within these sectors.
Total revenue for one customer amounts to more than 10% of the total revenue of Augean PLC. One customer accounts for £14.1m
of revenue which is all reported in the North Sea Services segment.
Materially all activities arise almost exclusively within the United Kingdom. Inter-segment trading is undertaken on normal commercial
terms.
This note includes information in relation to the disaggregation of revenue as described in note 1.
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019FINANCIAL STATEMENTS
2 Operating segments continued
Information about reportable segments
Assets
Segment assets
Unallocated segment assets
Deferred tax asset
Cash and cash equivalents
Group total assets
Liabilities
Segment liabilities
Unallocated segment liabilities
Bank overdraft and loans
Current tax liabilities
Group total liabilities
Assets
Segment assets
Unallocated segment assets
Deferred tax asset
Cash and cash equivalents
Group total assets
Liabilities
Segment liabilities
Unallocated segment liabilities
Bank overdraft and loans
Current tax liabilities
Group total liabilities
Treatment &
Disposal
£’000
2019
North Sea
Services
£’000
Group
£’000
82,710
20,419
103,129
4,350
21,588
129,067
(35,753)
(12,327)
(48,080)
(32,206)
(1,145)
(81,431)
2018
Treatment
and disposal
£’000
North Sea
Services
£’000
Discontinued
Operations
£’000
Group
£’000
66,633
12,366
3,406
82,405
1,781
11,162
95,348
(20,026)
(8,519)
(1,718)
(30,263)
(2,922)
(1,863)
(35,048)
46
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www.augeanplc.com Stock code: AUGNotes to the Financial StatementsFor the year ended 31 December 2019
2 Operating segments continued
Revenue
Incinerator Ash and APCr management
Other landfill activities
Waste treatment activities
Radioactive waste management
Services to Oil production and exploration customers
Total revenue net of Landfill Tax
Landfill Tax
Total revenue including inter-segment sales
Inter-segment sales
Revenue
Operating profit before non-underlying items
Non-underlying items (note 3)
Operating (loss)/profit
Net finance charges
Share-based payments
Central costs
Loss before tax
Taxation credit (note 6)
Loss for the year attributable to equity shareholders of Augean plc
Treatment &
Disposal
£’000
2019
North Sea
Services
£’000
17,196
16,967
19,531
3,704
-
57,398
15,611
73,009
(748)
72,261
18,062
(26,843)
(8,781)
-
-
-
-
34,896
34,896
-
34,896
(20)
34,876
2,619
-
2,619
Central costs relate to the costs of operating as a plc and are not allocated between the business units.
Treatment
and disposal
£’000
2018
North Sea
Services
£’000
12,461
14,301
20,664
3,517
-
50,943
10,991
61,934
(3,853)
58,081
10,933
(322)
10,611
-
-
-
-
21,669
21,669
-
21,669
(1)
21,668
2,062
-
2,062
Revenue
Incinerator Ash and APCr management
Other landfill activities
Waste treatment activities
Radioactive waste management
Services to Oil production and exploration customers
Total revenue net of Landfill Tax
Landfill Tax
Total revenue including inter-segment sales
Inter-segment sales
Revenue
Operating profit before non-underlying items
Non-underlying items (note 3)
Operating profit from continuing operations
Net finance charges
Share based payments
Central costs
Profit before tax from continuing operations
Taxation charge (note 6)
Profit after tax from continuing operations
Profit after tax from discontinued operations (note 27)
Profit for the year attributable to equity shareholders of Augean plc
Group
£’000
17,196
16,967
19,531
3,704
34,896
92,294
15,611
107,905
(768)
107,137
20,681
(26,843)
(6,162)
(697)
(7,693)
(772)
(15,324)
2,568
(12,756)
Group
£’000
12,461
14,301
20,664
3,517
21,669
72,612
10,991
83,603
(3,854)
79,749
12,995
(322)
12,673
(749)
(523)
(808)
10,593
(2,043)
8,550
1,389
9,939
Central costs relate to the costs of operating as a plc and are not allocated between the business units.
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019FINANCIAL STATEMENTS
3 Operating profit
Total operating profit for the year is arrived at after charging:
Fees payable to the Company’s auditor for the audit of the annual financial statements
Fees payable to the Company’s auditor for other services:
– audit of the financial statements of the Company’s subsidiaries pursuant to legislation
– other assurance services
Total Audit Fees
Total non-audit fees
Amortisation of intangible assets
Depreciation of property, plant and equipment:
– owned assets
– Right-of-use assets
Total
Non-underlying items:
Landfill Tax assessments settlement
Other non-underlying charges
Restructuring and similar charges
Legal costs associated with Landfill Tax dispute
Total
2019
£’000
68
25
-
93
-
93
39
7,471
1,454
8,925
26,179
165
499
664
2018
£’000
57
33
3
93
-
93
65
7,032
-
7,032
-
166
156
322
The Landfill Tax assessments settlement is in relation to Landfill Tax assessments received. Payments made in the year to HMRC
and additional potential assessments have been accounted for in line with IAS 37 which involves the application of probabilistic
modelling to tribunal outcomes, which are impacted by a number of different factors. A weighted average approach based on
legal advice has been applied to derive estimates. Ultimately the cost of this dispute will be determined by a tribunal at which the
outcome may be different from the amount charged to the Income Statement.
Charges in relation to share-based payments are considered non underlying by the Group. Further information is provided in
note 19.
4 Net finance charges
Net interest and charges payable on bank loans and overdrafts
Interest expense on lease liabilities
Unwinding of discount on provisions (note 17)
Interest receivable is not considered material for separate disclosure.
2019
£’000
451
146
100
697
2018
£’000
598
-
150
748
48
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www.augeanplc.com Stock code: AUGNotes to the Financial StatementsFor the year ended 31 December 2019
5 Group and Company employees
The average monthly number of employees analysed by function was:
Sales
Operations
Administration
Wages and salaries
Social security costs
LTIP
Other pension costs
2019
Number
21
283
88
392
2019
£’000
14,887
1,607
7,000
677
24,171
2018
Number
23
296
66
385
2018
£’000
14,342
1,222
-
483
16,047
Details of other statutory Directors’ remuneration disclosures, as required by the AIM rules, are given in the Directors’ Remuneration
Report under Directors’ emoluments and Directors’ share plans.
The company employed an average of 181 (2018: 244) people in the year. The total employee costs to the company were
£11,482,000 (2018: £8,946,000)
The total remuneration of the Directors of the company was £5,203,000 (2018: £792,000). The highest paid Director received total
emoluments of £3,552,000 (2018: total emoluments of £354,000).
No Directors exercised share options during the year (2018: none).
The Directors have identified 6 (2018:9) key management personnel. The total key management personnel compensation, including
the Non-executive Directors, presented below, was as follows:
Short-term employment benefits
Post-employment benefits
Share-based payments
6 Taxation
Current tax
UK corporation tax on profit/(loss) for the year
Adjustments in respect of prior years
Deferred tax
Charge/(credit) in respect of the current year
Adjustments in respect of prior years
Tax (credit)/charge on the result for the year
2019
£’000
1,437
12
5,258
6,707
2019
2018
£’000
Continuing
operations
and Total
£’000
Continuing
operations
£’000
Discontinued
operations
-
68
68
(2,458)
(178)
(2,636)
(2,568)
2,665
(102)
2,563
(493)
(27)
(520)
2,043
(554)
439
(115)
16
(207)
(191)
(306)
2018
£’000
1,523
18
454
1,995
£’000
Total
2,111
337
2,448
(477)
(234)
(711)
1,737
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019FINANCIAL STATEMENTS
6 Taxation continued
Tax reconciliation – continuing operations
(Loss)/profit before tax
Tax at theoretical rate
Effects of:
– expenses not deductible for tax purposes
– change in tax rate
– effect of share options
– adjustments in respect of prior years
Tax (credit)/charge on results
2019
£’000
(15,324)
(2,912)
270
291
(108)
(110)
(2,569)
%
19%
(2)%
(2)%
0%
1%
17%
2018
£’000
10,593
2,013
158
51
(50)
(129)
2,043
%
19%
1%
0%
0%
(1)%
19%
The main rate of corporation tax in the UK was 19.00% (2018: 19.00%).
Deferred tax
All deferred tax assets and liabilities have arisen on the temporary timing differences between the tax base of the assets and their
carrying value in the statement of financial position.
IAS 12 (Income Taxes) permits the offsetting of tax assets and liabilities within the same tax jurisdiction and which the Company has
the intention to realise and settle simultaneously. All of the deferred tax assets were available for offset against deferred tax liabilities
and as such have been presented net in the statement of financial position.
The movement in the net deferred tax asset during the year was as follows:
Group
At 1 January 2018
Credited/(Charged) to the income statement
Adjustment in respect of prior years
At 31 December 2018
Credited/(Charged) to the income statement
Adjustment in respect of prior years
At 31 December 2019
Deferred tax assets
At 31 December 2019
Goodwill
intangible
election
£’000
118
3
-
121
1
-
122
121
121
Capital
allowances
£’000
359
721
(183)
897
169
(4)
1,062
1,062
1,062
Share
options
£’000
49
(19)
-
30
77
-
107
107
107
Provisions
£’000
717
16
-
733
2,613
(287)
3,059
3,059
3,059
Total
£’000
1,243
721
(183)
1,781
2,860
(291)
4,350
4,350
4,350
The company has no deferred tax asset or liability (2018: £nil).
The reduction in the main rate of corporation tax to 17% from 1 April 2021 has been substantively enacted at the balance sheet
date. Accordingly, deferred tax balances have been valued at 17% in these accounts to the extent that timing differences are
expected to reverse after this date. £291,000 (2018: £51,000 charge) relates to changes in tax rates during the year.
No deferred tax has been recognised during the year in respect of certain temporary differences of £3,940,000 (2018: £5,383,000).
In the judgement of management, it is not probable that taxable income will be generated against which those deductions may be
recovered. The potential deferred tax assets in respect of those temporary differences arising on an election made in relation to a
goodwill balance and to certain long-dated general provisions are analysed as follows:
Unrecognised deferred tax asset
There are no unrecognised deferred tax assets in the company (2018: nil).
2019
£’000
670
2018
£’000
915
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www.augeanplc.com Stock code: AUGNotes to the Financial StatementsFor the year ended 31 December 2019
7 Dividends
Proposed final dividend for the year ended 31 December 2019 of nil pence per share
(2018: nil pence per share)
Total
8 Earnings per share
Earnings per share (EPS) is calculated as follows:
(Loss)/profit after tax for the purposes of basic and diluted earnings per share
Non-underlying items net of tax
Share-based payments net of tax
Adjusted profit after tax for the purposes of basic and diluted earnings per share
Profit after tax from discontinued operations before non-underlying items
Adjusted earnings for the purposes of basic and diluted EPS for continuing operations only
Loss after tax from continuing non-underlying items
Earnings for the purposes of basic and diluted EPS for continuing operations only
2019
£’000
-
-
2019
£’000
(12,756)
22,467
6,231
15,942
-
15,942
-
15,942
2018
£’000
-
-
2018
£’000
9,939
(3,155)
-
6,784
2,026
8,810
(260)
8,550
No discontinued items are included for 2019. A reconciliation of the split of taxation adjusted items, continuing and discontinued
operations in 2019 is shown in note 27.
The non-underlying items have been adjusted, in the adjusted earnings per share, to better reflect the underlying performance of the
business, when presenting the basic and diluted earnings per share. Share-based payments are considered to be adjusting item in
the current year due the vesting of the scheme in full after two years compared to the expected life of five years.
Non-underlying items in 2018 are stated net of a tax charge of £120,000, loss after tax from discontinued operations is stated net
of a tax credit of £487,000 and loss after tax from continuing non-underlying items is stated net of a tax credit of £61,000. Pre-tax
adjusting items are detailed in note 27.
Number of shares
Weighted average number of shares for basic earnings per share
Effect of dilutive potential ordinary shares from share options
Weighted average number of shares for diluted earnings per share
(Loss)/Earnings per share
Basic
Diluted
Adjusted earnings per share
Basic
Diluted
Adjusted earnings per share – continuing operations
Basic
Diluted
2019
number
2018
number
104,006,779 103,408,043
709,119
104,808,987 104,117,162
802,208
(12.26)p
(12.26)p
15.33p
15.21p
15.33p
15.21p
9.61p
9.55p
6.56p
6.52p
8.52p
8.46p
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019FINANCIAL STATEMENTS
9 Goodwill
Cost
At 1 January 2018, 1 January 2019 and 31 December 2019
Accumulated impairment
At 1 January 2018, 1 January 2019 and 31 December 2019
Net book value
At 1 January 2018, 1 January 2019 and 31 December 2019
£’000
108,163
(88,406)
19,757
The goodwill arose on the acquisition of subsidiary undertakings and businesses and represents the excess of the fair value of the
consideration given over the fair value of the identifiable assets and liabilities acquired. The goodwill which arose before the date of
transition to IFRS has been retained at the previous UK GAAP amounts.
Goodwill has been allocated to the Group’s Cash Generating Units (CGUs) which are defined as the Group’s reportable segments.
The Group has two CGUs as at 31 December 2019. The allocation of goodwill by CGU is as follows:
Treatment & Disposal
2019
£’000
19,757
2018
£’000
19,757
Goodwill is tested for impairment annually at the balance sheet date and as and when other events or changes in circumstance
indicate that the carrying amount may not be fully recoverable. The goodwill impairment test is performed by comparing the net
book value of the goodwill and other non-current assets for a particular CGU to its value in use estimated on a discounted cash flow
basis.
Discounted cash flows have been prepared separately for each CGU tested. The cash flows for all CGUs have been discounted
using a pre-tax discount rate representing the Group’s Weighted Average Cost of Capital (WACC) of 8.0% (2018: 8.0%), which
reflects management’s best estimate of the current market’s assessment of the time value of money and the business, operational
and financial risks specific to the CGUs. The same discount rate has been used for all CGUs as any risks, specific to those CGUs,
are reflected in the projected cash flows.
The discount rate has been determined using the Capital Asset Pricing Model.
The key assumptions for the Treatment & Disposal CGU’s cash flows are:
{ based on approved budgets and plans for 2020 and, beyond this period, have been forecast for a total period of 20 years, being
the shortest potential life associated with any of the CGU’s operations in their current form;
{ revenue growth over the time horizon is expected to achieve 1% per annum;
{ 1% increase in maintenance capital expenditure from 2020 onwards; and
{ cash operating costs and maintenance capital expenditure are expected to increase by 1% per annum, reflecting the impact of
cost inflation offset by effective underlying cost control.
Using the discount rate described above there is no indication of impairment with headroom of £226,261,000 against the CGU
Goodwill and asset balance. Sensitivity analysis has been performed over the key assumptions which indicate the following impact,
meaning reduction or increase in headroom:
Discount factor
EBITDA margin
Revenue growth rate
EBITDA means earnings before interest, tax, depreciation and amortisation.
Sensitivity
1%
1%
1%
Impact
in 2019
£20.2m
£8.6m
£7.1m
52
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www.augeanplc.com Stock code: AUGNotes to the Financial StatementsFor the year ended 31 December 2019
10 Other intangible assets
Cost
At 1 January 2018
Additions
Disposals relating to discontinued operations
At 31 December 2018
Additions
At 31 December 2019
Amortisation
At 1 January 2018
Charge for the year
Disposals relating to discontinued operations
At 31 December 2018
Charge for the year
At 31 December 2019
Net book value
At 31 December 2019
At 1 January 2019
At 1 January 2018
Group
Computer
software
£’000
Customer
relationships
£’000
1,278
10
(409)
879
18
897
955
65
(207)
813
39
852
45
66
323
2,262
-
(2,262)
-
-
-
2,262
-
(2,262)
-
-
-
-
-
-
Company
Computer
software and
total
£’000
874
5
-
879
18
897
778
35
-
813
39
852
45
66
96
Total
£’000
3,540
10
(2,671)
879
18
897
3,217
65
(2,469)
813
39
852
45
66
323
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019FINANCIAL STATEMENTS
11 Investments in subsidiaries
Company
Cost
At 1 January 2018
At 1 January 2019
At 31 December 2019
Provision for impairment
At 1 January 2018
Impairment
At 1 January 2019
Impairment
At 31 December 2019
Net book value
At 31 December 2019
At 1 January 2019
At 1 January 2018
The subsidiary companies of the Group are as follows:
Country of registration
or incorporation
Name of company
Augean Treatment
England and Wales
Limited
Augean North Limited England and Wales
Augean South Limited England and Wales
Augean North Sea
Services Limited
Augean Property
Limited
Colt Industrial Services
Limited
RNA Investments
Limited
Hitech Equipment
Limited
England and Wales
England and Wales
England and Wales
Scotland
Scotland
£’000
147,272
147,272
147,272
(89,926)
(6,578)
(96,504)
-
(96,504)
50,768
50,768
57,346
Nature of
business
Proportion held
at balance sheet
date
%
100 Waste treatment
100 Landfill operations
100 Landfill operations
100 Waste treatment
Registered address
4 Rudgate Court, Wetherby, LS23 7BF
4 Rudgate Court, Wetherby, LS23 7BF
4 Rudgate Court, Wetherby, LS23 7BF
2 Woodside Road Bridge Of Don Industrial
Estate, Aberdeen, AB23 8EF
4 Rudgate Court, Wetherby, LS23 7BF
100
Dormant
4 Rudgate Court, Wetherby, LS23 7BF
100 (indirect)
Dormant
4 Rudgate Court, Wetherby, LS23 7BF
36 Clark Street, Paisley, Renfrewshire, PA3 1RB
100
100
Dormant
Dormant
These companies are owned directly by Augean except where noted. The principal place of business for all companies is the United
Kingdom.
The impairment loss in 2018 related to the Company’s investment in Colt Holdings Limited. The assets and property relating to the
Colt business have been sold resulting in a full impairment of the remaining carrying value of the investment. The carrying value of
this investment remains £nil.
54
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www.augeanplc.com Stock code: AUGNotes to the Financial StatementsFor the year ended 31 December 2019
12 Property, plant and equipment
Group
At 1 January 2018
Additions
Reclassification as held for sale
Disposals
At 31 December 2018
Additions
At 31 December 2019
Accumulated depreciation
At 1 January 2018
Charge for year
Impairment loss
Disposals
At 1 January 2019
Charge for year
At 31 December 2019
Net book value
At 31 December 2019
At 1 January 2019
At 1 January 2018
Freehold
land and
buildings
£’000
47,719
351
-
(1,211)
46,859
798
47,657
13,435
1,877
408
(43)
15,677
2,545
18,222
29,435
31,182
34,284
Leasehold
improvements
£’000
1,456
50
-
-
1,506
130
1,636
Engineered
cells
£’000
14,593
1,688
-
-
16,281
2,931
19,212
431
112
-
-
543
128
671
965
963
1,025
13,690
2,174
-
-
15,864
2,061
17,925
1,287
417
903
Plant and
machinery
£’000
37,904
1,759
(714)
(7,011)
31,938
1,548
33,214
27,438
2,870
(619)
(5,562)
24,127
2,737
26,864
6,622
7,811
10,466
Total
£’000
101,672
3,848
(714)
(8,222)
96,584
5,407
101,991
54,994
7,033
(211)
(5,605)
56,211
7,471
63,682
38,309
40,373
46,678
There were outstanding contractual commitments for acquisitions of property, plant or equipment of £187,000 at 31 December
2019 (2018: £309,000). Materially all of the disposals in 2018 related to the trade and asset sales related to the Group’s
discontinued operation.
Certain assets are pledged as security for loans as disclosed in note 16.
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019FINANCIAL STATEMENTS
12 Property, plant and equipment continued
Company
Cost
At 1 January 2018
Additions
Disposals
At 31 December 2018
Additions
At 31 December 2019
Accumulated depreciation
At 1 January 2018
Charge for year
Disposals
At 31 December 2018
Charge for year
At 31 December 2019
Net book value
At 31 December 2019
At 1 January 2019
At 1 January 2018
13 Trade and other receivables
Current assets
Trade receivables
Prepayments and other debtors
Amounts due from subsidiary undertakings
Contract assets
Freehold
land and
buildings
£’000
Plant and
machinery
£’000
842
98
(12)
928
-
928
151
8
-
159
13
172
755
769
691
1,790
-
(62)
1,728
157
1,885
1,209
193
(26)
1,376
231
1,607
279
352
581
Group
2019
£’000
20,247
15,535
-
4,418
40,200
2018
£’000
14,515
1,661
-
2,452
18,628
Company
2019
£’000
-
383
7,311
-
7,694
Total
£’000
2,632
98
(74)
2,656
157
2,813
1,360
201
(26)
1,535
244
1,779
1,034
1,121
1,272
2018
£’000
-
708
-
-
708
All amounts are anticipated to be recoverable in the short term. The carrying amount of trade receivables is considered a reasonable
approximation of fair value.
All contract assets are invoiced within 12 months. The movement in the asset between years is due to the invoicing of prior year
assets and the accrual of amounts relating to the current year.
A Landfill Tax deposit asset of £14.2m (2018: £nil) is included in other debtors.
Amounts due from subsidiary undertakings are due on demand and no expected credit loss is attributed to them.
14 Trade and other payables
Current
Trade payables
Amounts due to subsidiary undertakings
Other taxes and social security
Accruals
Group
2019
£’000
7,050
-
10,588
14,567
32,205
2018
£’000
4,102
-
5,299
11,821
21,222
Company
2019
£’000
972
-
3,553
2,411
6,936
2018
£’000
333
22,373
-
1,293
23,999
All amounts are anticipated to be payable in the short term. The carrying values are considered to be a reasonable approximation of
fair value.
Amounts due to subsidiary undertakings are due on demand.
56
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www.augeanplc.com Stock code: AUGNotes to the Financial StatementsFor the year ended 31 December 2019
15 Leases
The Group lease a number of properties which are used to carry out trade. The Group also lease certain items of plant and
equipment, including vehicles. Leases of plant, equipment and vehicles comprise only fixed payments over the lease terms.
The percentages in the table below reflect the current proportions of lease payments that are either fixed or variable.
Group
Property leases
Leases of plant, equipment and vehicles
Total
All the Company’s 18 leases are plant, equipment and vehicles.
2019
Number
Lease
contracts
8
69
77
%
Fixed
payments
18
82
100
The nature of the Group’s leasing activities are recognised in the statement of financial position as right-of-use assets as follows:
At 1 January 2019
Additions
Disposal
Depreciation
At 31 December 2019
Lease liabilities are presented in the statement of financial position as follows:
At 1 January 2019
Additions
Interest expense
Disposal
Lease payments
At 31 December 2019
Group 2019
£’000
Company 2019
£’000
Plant,
machinery
and motor
vehicles
2,889
1,132
(22)
(1,157)
2,842
Land and
buildings
1,842
92
-
(260)
1,674
Plant,
machinery
and motor
vehicles and
total
463
302
-
(271)
494
Total
4,731
1,224
(22)
(1,417)
4,516
Group 2019
£’000
Company 2019
£’000
Plant,
machinery
and motor
vehicles
2,823
1,120
90
(11)
(1,268)
2,753
Land and
buildings
1,918
92
57
-
(272)
1,796
Plant,
machinery
and motor
vehicles and
total
437
255
15
-
(223)
484
Total
4,741
1,212
147
(11)
(1,540)
4,549
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019FINANCIAL STATEMENTS
15 Leases continued
The expense charged to the P&L in relation to low value assets is £3,000 for the Group and Company. The expense relating to
variable lease payments not included in the measurement of lease liabilities is £nil for the Group and Company.
No income is made by directly subleasing right-of-use assets. There are no residual value guarantees, sale and leaseback
arrangements, restrictions imposed by leases or uncommenced leases to which the Group or the Company is committed.
The maturity of the Group’s lease liabilities is as follows:
Up to 3 months
Between 3 and 12 months
Total due within 1 year
Between 1 and 2 years
Between 2 and 5 years
Over 5 Years
Total due after 1 year
Total
2019
Discounted
£’000
373
1,072
1,445
1,195
1,112
797
3,104
4,549
2019
Undiscounted
£’000
479
1,387
1,866
1,497
1,067
754
3,318
5,184
The undiscounted amounts above represent the undiscounted cashflows gross of interest. The weighted average incremental
borrowing rate applied to lease liabilities on 1 January 2019 was 3.0%.
The aggregate lease liability recognised in the statement of financial position at 1 January 2019 and the Group’s operating lease
commitment at 31 December 2018 can be reconciled as follows:
Operating lease commitment at 31 December 2018
Effect of discounting annual commitments at an annual rate of 3.0%
Effect of revenue-based variable lease payments not included within the IFRS16 lease liability
Effect of variation in lease term
Effect of electing to account for short-term and low-value leases off balance sheet
Total
£’000
6,609
(432)
(816)
(446)
(174)
4,741
For the purposes of previous operating lease commitment disclosures the Group had assumed that variable lease payments as a
result of revenue-based rents would be fully payable whereas for the purposes of applying IFRS16, these payments are expensed
as they are paid.
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www.augeanplc.com Stock code: AUGNotes to the Financial StatementsFor the year ended 31 December 2019
16 Borrowings
This note provides information about the Group’s and Company’s interest-bearing borrowings which are carried at amortised cost.
Current
Bank overdraft
Bank loans
Obligations under finance leases and hire purchase contracts
Non-current
Bank loans
Analysis of total borrowings
Bank overdraft
Bank loans
Total borrowings are repayable as follows:
– on demand or within one year
– in the second year
– in the third to fifth years inclusive
Group
2019
£’000
-
6,667
-
6,667
28,123
28,123
-
34,790
34,790
6,667
28,123
-
34,790
2018
£’000
-
-
-
-
2,922
2,922
-
2,922
2,922
-
2,922
-
2,922
Company
2019
£’000
2018
£’000
-
6,667
-
6,667
28,123
28,123
-
34,790
34,790
6,667
28,123
-
34,790
-
-
-
-
2,922
2,922
-
2,922
2,922
-
2,922
-
2,922
The bank overdraft, bank loan and guarantees are secured by way of a first legal charge over certain freehold land and properties,
debentures, cross guarantees and indemnities across the Group.
For more information about the Group’s exposure to interest rate, credit risk, liquidity risk and borrowing facilities see note 22.
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019FINANCIAL STATEMENTS
17 Provisions
Group
At 1 January 2018
Charged/(credited) to profit or loss during the year
– unwinding of discount
– provision in the year
Utilised during the year
At 31 December 2018
Charged to profit or loss during the year
– unwinding of discount
– provision in the year
– reclassification
Utilised during the year
At 31 December 2019
Restoration
and
after-care
costs of
landfill sites
£’000
3,714
150
50
(73)
3,841
100
276
502
(324)
4,395
Capping
provision
£’000
4,378
Other
provisions
£’000
76
Landfill Tax
assessments
£’000
-
-
395
-
4,773
-
-
(502)
-
4,271
-
-
-
76
-
-
-
-
76
-
-
-
-
-
26,179
-
(26,179)
-
Total
£’000
8,168
150
445
(73)
8,690
100
26,455
-
(26,503)
8,742
The provision for restoration and after-care relates to closure and post-closure costs for all landfill sites, charged over the estimated
active life of the sites. The expenditure is incurred partially on completion of the landfill sites (restoration) and in part after the closure
of the landfill sites (after-care) over a period up to 60 years from the site closure dates. After-care expenditure relates to items such
as monitoring, gas and leachate management and may be influenced by changes in legislation and technology. The provision is
based on management’s best estimate of the annual costs associated with these activities over the 60-year period, using current
costs and discounted using a discount rate of 3%. £50,000 of this provision is expected to be utilised within 12 months of the
balance sheet date (2018: £50,000).
The capping provision reflects the expected costs of capping established and active landfill cells. Capping is required following the
end of a cell’s useful economic life and the build-up of the provision is based on the rate of use of the available void space within
each cell. This provision is not discounted as the costs are expected to be incurred shortly after consumption of the void. £450,000
(2018: £450,000) of this provision is expected to be utilised within 12 months of the balance sheet date.
During the year, the group undertook an exercise to re-evaluate its long term provisions, utilising an external specialist adviser. As
part of this exercise it was concluded that the costs to cap completed landfill cells would be lower than originally expected and that
the costs of aftercare would be higher than previously expected. A reclassification between those two provisions has therefore been
reflected in the year.
The other provision relates to a tyre provision which is anticipated to be utilised during future landfill cell construction.
A change of 1% in the discount rate applied to the provision would result in a change in the amount provided of £690,000. A
reduction in the assumed costs of 1% would result in a change in the amount provided of £41,000.
The provision in relation to Landfill Tax relates to assessments received from HMRC in relation to Landfill Tax balances. IAS37 has
been applied to this liability and probabilistic modelling of tribunal outcomes, which are impacted by a number of different factors
including legal advice which resulted in the creation of this provision. Subsequent to the cash settlement of this liability the provision
has been discharged and an asset has been recognised, in line with IFRIC guidance, within debtors. The Group considers that the
accounting outcome of the meeting the obligations of financial reporting requirements is not representative of its expectation of any
real-life possible tribunal outcome.
18 Share capital
Allotted, called up and fully paid – 104,085,198 (2018: 103,786,792) shares of 10p
2019
£’000
10,409
2018
£’000
10,379
During the year, 299,000 shares (2018: 839,000) were issued as a result of the exercise of share options. The total proceeds were
£89,000 (2018: £84,000).
60
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www.augeanplc.com Stock code: AUGNotes to the Financial StatementsFor the year ended 31 December 2019
19 Share-based payments
At 31 December 2019, outstanding awards to subscribe for ordinary shares of 10p each in the Company, granted in accordance
with the rules of the Augean share option schemes and the Augean LTIP, were as follows:
Exercise date
Augean Share Option Schemes
December 2013 – December 2019
May 2011 – May 2021
Augean LTIP Scheme
April 2020 – September 2027
April 2019 – September 2026
April 2017 – September 2024
Weighted average exercise price
Of which exercisable
Weighted average exercise price
Exercise
price
39.5p
29p
10p
10p
10p
Outstanding awards at 31 December 2018 were as follows:
Exercise date
Augean Share Option Schemes
December 2013 – December 2019
May 2011 – May 2021
Augean LTIP Scheme
April 2020 – September 2027
April 2019 – September 2026
April 2017 – September 2024
Weighted average exercise price
Of which exercisable
Weighted average exercise price
Exercise
price
39.5p
29p
10p
10p
10p
At
1 January
2019
202,531
55,172
257,703
476,687
106,500
345,952
1,186,842
18.1p
948,497
20.1p
At
1 January
2018
202,531
55,172
257,703
678,929
298,082
1,183,708
2,418,422
12.9p
1,441,411
14.9p
Granted
Exercised
Lapsed
-
-
-
-
-
-
-
10p
(202,531)
-
(202,531)
-
-
(96,875)
(299,406)
10p
-
-
-
-
-
-
-
10p
Granted
Exercised
Lapsed
-
-
-
-
-
-
-
10p
-
-
-
-
-
-
-
-
(837,756)
(837,756)
10p
(202,242)
(191,582)
-
(393,824)
10p
At 31
December
2019
-
55,172
55,172
476,687
106,500
249,077
887,436
11.9p
887,436
11.9p
At 31
December
2018
202,531
55,172
257,703
476,687
106,500
345,952
1,186,842
18.1p
948,497
20.1p
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019FINANCIAL STATEMENTS
19 Share-based payments continued
Fair Value of equity settled options
The fair value of remaining share options has been calculated using the Black Scholes method for the prior year LTIP and the Monte
Carlo model for the cash settled LTIP. The assumptions used in the calculation of the fair value of the share options for which charge
has been accrued during the year were:
Grant or valuation date
Exercise period
Date of vesting
Share price at grant or valuation date
Exercise price
Expected share price volatility
Expected life or term (years)
Risk-free rate
Expected dividend yield
Fair value per option (pence)
Fair value of scheme (£m)
2017 LTIP
28 April 2017
April 2020 - September 2027
-
65.0p
10p
25.03%
2.7 years
0.1%
1.54%
52
-
Expected volatility was determined by reviewing the historical volatility of the Company’s share price over a period commensurate
with the expected life of the options.
The risk-free rate of return is the yield on zero coupon UK government bonds of a term equal to the expected term of the options.
For options outstanding at 31 December 2019, the weighted average remaining contractual life is 5.8 years (2018: 6.2 years).
The Group recognised a total expense of £42,000 (2018: £523,000) related to equity settled share-based payment transactions.
Cash settled LTIP Scheme
In 2018, the group established a cash settled LTIP which entitled executive directors and senior managers in the Company to
receive cash awards upon the fulfilment of certain performance criteria. The performance target for this plan was met in 2019 and
the full payment of £7,000,000 was made to the participants. This amount, plus associated national insurance and less previously
accrued charges has been charged to non-underlying items in the income statement in 2019.
This LTIP vested after the achievement of criteria in relation to value creation, as measured by the increase in share price
experienced in 2019. The charge in relation to this LTIP had previously been expected to be expensed over five years and was
£351,000 in 2018. This previously accrued charge offsets the amount included in non-underlying costs in 2019.
62
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www.augeanplc.com Stock code: AUGNotes to the Financial StatementsFor the year ended 31 December 2019
20 Reconciliation of operating (loss)/profit to net cash (outflow)/inflow from operating activities
Operating (loss)/profit
Operating profit/from discontinued operations
Depreciation of right-of-use assets
Amortisation of intangible assets
Depreciation
Impairment (reversal)
(Loss)/earnings before interest, tax, depreciation and amortisation (EBITDA)
Share-based payments
(Increase)/decrease in inventories
(Increase) in trade and other receivables
Increase in trade and other payables
(Profit) on disposal of property, plant and equipment
Increase/(decrease) in provisions
Cash (used in)/generated from operations
Finance charges paid
Tax paid
Net cash (outflow)/inflow from operating activities
Group
2019
£’000
(14,627)
-
1,417
39
7,471
-
(5,700)
42
(28)
(21,737)
10,885
-
323
(16,215)
(597)
(820)
(17,632)
2018
£’000
11,341
1,083
-
58
7,032
(2,644)
16,870
523
162
(2,473)
4,372
(1,969)
(72)
17,413
(360)
(1,063)
15,990
The above EBITDA and net cash generated from operating activities includes a total net cash outflow of £44,500,000 relating to
non-underlying items which includes £40,400,000 in relation to the settlement of Landfill Tax assessments (2018: total outflow of
£322,000).
21 Analysis of changes in net debt
The table below presents the net debt of the Group at the balance sheet date.
1
January
2018
£’000
6,579
-
Repayment
and
(drawdown)
of loans
‘£000
Cash-flows
‘£000
Other
movements
‘£000
31
December
2018
£’000
Adoption
of IFRS 16
‘£000
Other
movement
£’000
Drawdown
of loans
£’000
31
December
2019
£’000
Cash
flow
£’000
-
-
4,583
-
-
-
11,162
-
-
(4,741)
-
192
-
-
10,426
-
21,588
(4,549)
(17,378)
17,290
-
(10,799)
(3,000)
14,290
-
4,583
88
78
166
-
-
-
(6,667)
-
(6,667)
(2,922)
8,240
-
(4,741)
132
324
(25,333)
(32,000)
-
10,426
(28,123)
(17,751)
Cash and cash
equivalents
Lease Liabilities
Bank loans within
one year
Bank loans after
one year
Net (debt)/cash
The other movement in bank loans relates to the amortisation of fees incurred to set up the bank facility.
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019FINANCIAL STATEMENTS
22 Financial instruments
The financial assets of the Group and Company are categorised as follows:
As at 31 December 2019
Trade receivables
Contract assets
Cash and cash equivalents
As at 31 December 2018
Trade receivables
Contract assets
Cash and cash equivalents
The financial liabilities of the Group and Company are categorised as follows:
As at 31 December 2019
Trade payables – current
Accruals
Borrowings – current and non-current
Amounts owed to subsidiary undertakings
As at 31 December 2018
Trade payables – current
Accruals
Borrowings – non-current
Amounts owed to subsidiary undertakings
Group
and total
amortised
costs
£’000
20,247
4,418
21,588
46,253
Group
and total
loans
and
receivables
£’000
14,515
2,452
11,162
28,129
Group
and total
amortised
costs
£’000
7,050
14,566
34,790
-
56,406
Group and
total financial
liabilities at
amortised
cost
£’000
4,102
11,821
2,922
-
18,845
Company
and total
loans
and
receivables
£’000
-
-
11,752
11,752
Company
and total
loans
and
receivables
£’000
-
-
3,263
3,263
Company
and total
financial
liabilities at
amortised
cost
£’000
972
2,413
34,790
-
38,175
Company
and total
financial
liabilities at
amortised
cost
£’000
333
1,293
2,922
22,373
26,921
The Group and Company’s financial liabilities have contractual maturities (including interest payments where applicable) which are
summarised below. As these amounts are the contractual undiscounted amounts they do not agree to the amounts shown in the
balance sheet for financial liabilities.
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www.augeanplc.com Stock code: AUGNotes to the Financial StatementsFor the year ended 31 December 2019
22 Financial instruments continued
Group
As at 31 December 2019
Trade and other payables – current
Borrowings – current
Borrowings – non-current
Total
As at 31 December 2018
Trade and other payables – current
Borrowings – non-current
Total
Amounts
due in
less than
one year
£’000
21,616
6,667
-
28,283
Amounts
due in
less than
one year
£’000
15,923
-
15,923
Amounts
due in
second to
fifth year
£’000
-
-
28,123
28,123
Amounts
due in
second to
fifth year
£’000
-
2,922
2,922
Total
financial
liabilities
£’000
21,616
6,667
28,123
56,406
Total
financial
liabilities
£’000
15,923
2,922
18,845
The Group’s borrowings are under a revolving credit arrangement, therefore the amount of interest paid is dependent upon the level
of drawdown throughout the year. If the balance at 31 December 2019 remained consistent throughout the following 12-month
period, the amount of interest payable would be £683,000 (2018: £80,000).
Company
As at 31 December 2019
Trade and other payables – current
Borrowings – current and non-current
As at 31 December 2018
Trade and other payables – current
Borrowings – non-current
Amounts
due in
less than
one year
£’000
6,938
6,667
13,605
Amounts
due in
less than
one year
£’000
22,769
-
22,769
Amounts
due in
second to
fifth year
£’000
-
34,790
34,790
Amounts
due in
second to
fifth year
£’000
-
2,922
2,922
Total
financial
liabilities
£’000
6,938
41,457
48,395
Total
financial
liabilities
£’000
22,769
2,922
25,691
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019FINANCIAL STATEMENTS
22 Financial instruments continued
Financial risk management objectives and policies
Overview
The Group has exposure to the following risks arising from financial instruments:
{ liquidity risk;
{ credit risk; and
{ interest rate risk.
The majority of the Group’s transactions take place in Pounds Sterling, with levels of transactions in Euro and US Dollars not
considered significant.
The management of the Group’s financial risks and the related objectives and policies are the responsibility of the Executive
Directors. The Directors regularly review the Group’s financial risk management policies and procedures to ensure that
they appropriately reflect the changing nature of the market and business. The Group, through its training and management
standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand
their roles and obligations. The Group has maintained its policy that no trading in financial instruments shall be undertaken.
The Group’s principal financial instruments during the period comprised bank loans and cash and cash equivalents. The main
purpose of these financial instruments is to finance the Group’s operations. The Group’s other financial instruments include short-
term receivables and payables, including contract assets, which arise directly from its operations. There was no material difference
between the fair value of the financial assets and financial liabilities and their book value.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that
are settled by delivering cash or another financial asset. The Group seeks to maintain a balance between continuity of funding
and flexibility. The objective is to maintain sufficient resources to meet the Group’s funding needs for the foreseeable future. At 31
December 2019, the Group carried net bank debt of £13,202,000 (2018: £8,240,000 debt) and short-term flexibility is achieved
through bank facilities comprising of a £40m revolving credit and term loan facility.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations and arises principally from the Group’s receivables from customers.
The Group has a robust customer credit policy in place and the exposure to credit risk is monitored on a daily basis. The Group’s
standard credit terms are 30 days from date of invoice but non-standard terms may be agreed with certain customers. Invoices
greater than agreed terms are assessed as overdue. The maximum exposure to credit risk is the carrying value of each financial
asset included on the statement of financial position as summarised below:
Cash and cash equivalents
Contract assets
Trade receivables
Group
2019
£’000
21,588
4,418
20,247
46,253
2018
£’000
11,162
2,452
14,515
28,129
Company
2019
£’000
11,752
-
-
11,752
2018
£’000
3,263
-
-
3,263
At 31 December 2019, £2.8m (2018: £5.7m) of the Group’s trade receivables were past due. A credit loss provision of £0.2m (2018:
£0.2m) is held to mitigate the exposure to potential bad and doubtful debts.
66
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www.augeanplc.com Stock code: AUGNotes to the Financial StatementsFor the year ended 31 December 2019
22 Financial instruments continued
The ageing of the Group’s trade receivables is as follows:
Not more than four months past due
More than four months past due
Total past due trade receivables
Trade receivables not yet past due
Total gross trade receivables
Expected credit loss
Total net trade receivables (note 13)
2019
£’000
2,420
408
2,828
17,579
20,407
(160)
20,247
2018
£’000
5,658
84
5,742
8,932
14,674
(159)
14,515
The Group’s management considers that all the above financial assets for each of the reporting dates under review are of good
quality. The ageing profile above is the profile used by management in reviewing the ledger, however, it is the expected credit loss
model which is used to calculate the provision as 31 December 2019.
The Company has no trade receivables (2018: £nil).
The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss
provision for trade receivables and contract assets. To measure expected credit losses on a collective basis, trade receivables and
contract assets are grouped based on similar credit risk and aging. The contract assets have similar risk characteristics to the trade
receivables for similar types of contracts. The expected loss rates are based on the Group’s historical credit losses experienced over
the two-year period prior to the period end. The historical loss rates are then adjusted for current and forward-looking information on
macroeconomic factors affecting the Group’s customers.
A reconciliation of the movement in the impairment allowance for receivables under the expected credit loss model is shown below.
Expected credit loss provision as at 31 December 2017
Amounts released
Amounts provided
Expected credit loss provision as at 31 December 2018
Amounts released
Amounts provided
Expected credit loss provision as at 31 December 2019
There is no impairment allowance or expected credit loss in the company in relation to receivable amounts from other group
companies.
£’000
798
(699)
60
159
(52)
53
160
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019FINANCIAL STATEMENTS
22 Financial instruments continued
Interest rate risk
The Group finances its operations through a mixture of free cash flow, overdraft facilities and bank borrowings. Due to the relatively
low level of the Group’s borrowings no interest rate swaps or other forms of interest risk management has been undertaken. The
Group regularly reviews its exposure to fluctuations in underlying interest rates and will take appropriate action if required to minimise
any impact on the performance and financial position of the Group.
The interest rate profile of the Group and Company’s borrowings at 31 December 2019 was:
Group
Bank loans
Finance leases
At 31 December 2019
At 31 December 2018
Company
Bank loans
Finance leases
At 31 December 2019
At 31 December 2018
Floating
rate
£’000
34,790
-
34,790
2,922
Floating
rate
£’000
34,790
-
34,790
2,922
The Group met its short-term working capital requirements for the majority of 2019 through an overdraft and revolving loan facility
with HSBC Bank plc renewed in March 2016 consisting of an overdraft, revolving credit facility and accordion facility. In December
the Group refinanced with HSBC Bank plc at a level of £40m and secured a term loan of £20m and a revolving credit facility of
£20m. The earliest maturity of the facility is December 2022. The loans attract an interest charge varying between 2.0% and 2.5%
above LIBOR. The term loan is repayable in equal instalments from March 2020 to September 2022.
Although the Group is currently in credit, it maintains a level of drawn debt to ensure liquidity. A change in interest rate of 0.5%
affects the annual interest cost for both the Group and Company by approximately £175,000 (2018: £15,000).
The Group has no hire purchase agreements. The maturity profile of the Group’s financial liabilities is shown in note 16.
The Board has determined that the current risk management policies described above continue to be appropriate but that they will
be regularly assessed to ensure this remains the case.
Capital management policies and procedures
The Group defines the capital that it manages as the Group’s share capital, share premium account and financial liabilities, as shown
in the table below:
Share capital
Share premium
Borrowings
Note
18
16
2019
£’000
10,409
817
34,790
46,016
2018
£’000
10,379
757
2,922
14,058
68
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www.augeanplc.com Stock code: AUGNotes to the Financial StatementsFor the year ended 31 December 2019
22 Financial instruments continued
The Group’s capital management objectives which have remained unchanged during the year are:
{ to ensure the Group’s ability to continue as a going concern; and
{ to provide a strong financial base to deliver growth and adequate return to shareholders.
The Group’s primary sources of capital are equity (statement of changes in shareholders’ equity) and bank debt (note 16) secured
against certain assets. By pricing products and services commensurately with the level of risk and focusing on the effective
collection of cash from customers, the Group aims to maximise revenues and operating cash flows. Cash flow is further controlled
by ongoing justification, monitoring and reporting of capital investment expenditures and regular monitoring and reporting of
operating costs. Working capital fluctuations are managed through the bank facility.
The Group considers that the current capital structure will provide sufficient flexibility to ensure that appropriate investment can be
made, if required, to implement and achieve the longer term growth strategy of the Group. The primary source of funding would be
achieved through drawing on the loan facility, which has £26.8m of headroom at 31 December 2019 (2018: £25.2m).
Management sets targets against the following measures and monitors the Group’s performance against each throughout the year:
{ bank facility covenants, which include Net debt to EBITDA and EBIT to net debt costs;
{ net debt to equity ratio; and
{ free cash flow generated.
The performance against each of these capital measures is shown in the table below:
Net debt to EBITDA*
EBIT* to net bank debt cash costs
Net debt to equity (“gearing”) (%)
Free cash flow (£’000s)
* from continuing operations and excluding non-underlying items
The value of net debt and free cash flow is monitored on a daily basis.
2019
Actual
0.5
44.5
27.9%
(21,831)
2019
Target
<2.5
>3.5
prior year
prior year
2018
Actual
(0.4)
20.4
-
12,583
Free cash flow represents net operating cash flows adjusted for capital investment. This is reconciled to the statement of cash flows
as follows.
Net operating cash flow (note 20)
Purchase of property, plant and equipment
Free cash flow
2019
£’000
(17,484)
(4,721)
(22,205)
2018
£’000
15,990
(3,407)
12,583
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019FINANCIAL STATEMENTS
23 Retirement benefit obligations
The Group operates defined contribution retirement benefit schemes for all qualifying employees. The assets of the schemes
are held separately from those of the Group in funds under the control of trustees. Where there are employees who leave the
schemes prior to vesting fully in the contributions, the contributions payable by the Group are reduced by the amount of forfeited
contributions.
The total cost charged to income of £677,000 (2018: £483,000) represents contributions payable to these schemes by the Group
at rates specified in the rules of the schemes. As at 31 December 2019, contributions of £47,000 (2018: £nil) due in respect of the
current reporting period had not been paid over to the schemes.
24 Contingent liabilities
In accordance with Environmental permitting, the Group has to make such financial provision as is deemed adequate by the
Environment Agency to discharge its obligations under the relevant site permits for its landfill sites. Consequently, guarantees have
been provided, by certain subsidiaries of the company, in favour of the Environment Agency in respect of the Group’s landfill sites.
Total guarantees outstanding at the year end were £9.0m (2018: £9.3m). Future site restoration costs for each landfill site have been
provided as disclosed in note 17.
25 Related party disclosures
IAS 24 ‘Related Party Transactions’ requires the disclosure of the details of material transactions between reporting entities and
related parties. The Group has taken advantage of the exemption under IAS 24 not to disclose transactions between subsidiaries
which are eliminated on consolidation.
Related party transactions of the Group which are not eliminated on consolidation and related party transactions of the Company
are both as follows:
There are no related party transactions within the Group which are not eliminated on consolidation.
Transactions and balances with subsidiary undertakings - Company
Included within current trade and other receivables (note 13) are amounts receivable from 100% subsidiary undertakings of
£7,276,000 (2018: £22,400,000 payable). These amounts are repayable on demand.
The movement in the Company’s balances with its subsidiaries reflects the Group’s banking facilities and inter-company
arrangements operating during the year.
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www.augeanplc.com Stock code: AUGNotes to the Financial StatementsFor the year ended 31 December 2019
26 Discontinued operations
There are no discontinued operations disclosed in 2019.
On 16 March 2018 the Group sold its total waste management business, Augean Integrated Services, for a consideration of
£3,998,000.
On 22nd June 2018 the property, plant and equipment of the Colt business was disposed of for £928,000 and the freehold land
and buildings associated with the Colt business were subsequently sold for £1,250,000 on 21 December 2018. During the year
there was a total £6,176,000 cash inflow associated with investing activities.
The incinerator asset at East Kent was held for sale as at 31 December 2018 and subsequently disposed of on 25 January 2019.
The associated result is therefore disclosed as discontinuing for 2018. There was no material trading in 2019.
The AIS and East Kent businesses were previously included in the Group’s AIS business unit. The Colt business was part of
the Group’s Industry and Infrastructure business unit. Neither of these business units exist under the Group’s current operating
structure.
The analysis below shows the result from these operations:
Revenue
Operating expenses
Profit/(Loss) before tax and non-underlying items
Non-underlying items
Profit/(Loss) before tax
Taxation
Profit after Tax
AIS
£’000
2,053
(1,923)
130
728
858
2018
Colt
£’000
2,592
(4,339)
(1,747)
223
(1,524)
East Kent
£’000
2,893
(3,788)
(895)
2,644
1,749
Total
£’000
7,538
(10,050)
(2,512)
3,595
1,083
306
1,389
During 2018 these businesses contributed a net cash outflow of £665,000 to the Group’s net operating cash flow.
The non-underlying items in 2018 represented the gain for selling discontinued operations before tax. The gain on selling the AIS
business after tax was £550,000. The gain on selling the Colt assets and freehold property after tax is £180,000. A reversal of
impairment of £2,644,000 on the East Kent site assets has also been recognised in non-underlying costs. The balance of the
£3,304,000 asset held for sale related to amounts reclassified from property plant and equipment.
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019FINANCIAL STATEMENTS
26 Discontinued operations continued
The cash flows associated with these discontinued operations in 2018 and reconciliation to total non-underlying charge can be
determined as follows:
Proceeds
Net assets disposed of:
Property, plant and equipment
Intangible assets
Trade and other receivables
Trade and other payables
Other
Gain on disposal before tax
Reversal of impairment (non cash)
Total non-underlying Income
2018
Total
£’000
6,176
(2,648)
(337)
(3,096)
1,730
(874)
951
2,644
3,595
Other costs represent cash outflows in relation to the arrangement of the sales of discontinued operations.
The reversal of impairment related to the incinerator at East Kent which was originally impaired in 2016. Market conditions indicated
that the asset’s value on the open market is in excess of its current carrying value. Therefore income at a level equal to the
depreciated historical cost of the impaired assets was recognised in non-underlying items and an equivalent asset was recognised
and classified as an asset held for sale.
27 Reconciliation of performance metrics
The adjusted metrics referred to in the Operating review are derived as follows.
Revenue
Treatment & Disposal segment
North Sea Services segment
Continued operations
Discontinued Operations
Total Group
2019
Landfill
Tax
£’000
(15,611)
-
(15,611)
-
(15,611)
Adjusted
Revenue
£’000
56,650
34,876
91,526
-
91,526
2018
Landfill
Tax
£’000
(10,991)
-
(10,991)
-
(10,991)
Adjusted
Revenue
£’000
47,090
21,668
68,758
7,062
75,820
Revenue
£’000
58,081
21,668
79,749
7,062
86,811
Revenue
£’000
72,261
34,876
107,137
-
107,137
72
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www.augeanplc.com Stock code: AUGNotes to the Financial StatementsFor the year ended 31 December 2019
27 Reconciliation of performance metrics continued
EBIT
Treatment & Disposal segment
North Sea Services segment
Central costs
Operating profit from continuing operations
Finance charges
Profit before tax from continuing operations
Taxation
Profit after tax from continuing operations
Discontinued Operations
Total Group Operating profit
Treatment & Disposal segment
North Sea Services segment
Central costs
Operating profit from continuing operations
Finance charges
Profit Before tax from continuing operations
Taxation
Profit after tax from continuing operations
Discontinued Operations
Total Group Operating profit
2019
Statutory
£’000
(8,781)
2,619
(8,465)
(14,627)
(697)
(15,324)
2,568
(12,756)
-
(12,756)
Share-based
payments
£’000
-
-
7,693
7,693
-
7,693
(1,462)
6,231
-
6,231
2018
Statutory
£’000
10,611
2,062
(1,331)
11,342
(749)
10,593
(2,043)
8,550
1,389
9,939
Share-based
payments
£’000
-
-
523
523
-
523
(99)
424
-
424
Non-
underlying
items
£’000
26,843
-
-
26,843
-
26,843
(4,376)
22,467
-
22,467
Non-
underlying
items
£’000
322
-
-
322
-
322
(120)
202
(3,595)
(3,393)
Adjusted
£’000
18,062
2,619
(772)
19,909
(697)
19,212
(3,270)
15,942
-
15,942
Adjusted
£’000
10,933
2,062
(808)
12,187
(749)
11,438
(2,262)
9,176
(2,206)
6,970
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019FINANCIAL STATEMENTS
Notice of Annual General Meeting
We are pleased to write to you with details of our 2020 Annual
General Meeting (AGM) which will be held at 12 noon at Augean
PLC’s head office at 4 Rudgate Court, Wetherby, LS23 7BF on
Monday 15 June 2020. The formal notice of Annual General
Meeting is set out on page 76 to 77 of this document.
In addition to the routine business of the AGM, there are three
items of special business to be transacted, as summarised and
explained below:
Authority to allot shares (Resolution 6)
Article 4.6(a) of the Company’s Articles of Association contains a
general authority for the Directors to allot shares in the Company
for a period (not exceeding five years) (the Section 551
prescribed period) and up to a maximum aggregate nominal
amount (the Section 551 amount) approved by a special or
ordinary resolution of the Company.
The existing authority to allot shares granted at the Company’s
last annual general meeting is due to expire at the AGM.
Resolution 6, which will be proposed as an ordinary resolution,
seeks to renew the allotment authority so that the Section 551
amount shall be £3,469,506 (being an amount equal to one third
of the issued ordinary share capital of the Company at the date
of this document) and the Section 551 prescribed period shall
be the period from the date Resolution 6 is passed to 30 June
2021 or the conclusion of the Company’s next annual general
meeting, whichever is earlier.
Authority to purchase own shares (Resolution 7)
Article 4.4 of the Company’s Articles of Association provides that
the Company may, subject to statutory requirements and the
resolution of the Company’s shareholders in general meeting,
purchase its own shares.
Resolution 7, which will be proposed as a special resolution,
seeks to grant the Directors the authority, for the period from the
date Resolution 7 is passed to the conclusion of the Company’s
next annual general meeting (unless such authority is revoked
or renewed prior to such time), to make market purchases
of the Company’s own Ordinary shares, up to a maximum
amount of 15,602.371 Ordinary shares, being an amount equal
to approximately 14.99% of the issued share capital of the
Company (as at 25 March 2020, being the latest practicable
date prior to publication of this document). The maximum price
payable for the purchase by the Company of its Ordinary shares
will be limited to 5 per cent above the average of the middle
market quotations for an Ordinary share in the Company (as
derived from The London Stock Exchange’s Daily Official List)
for the five business days immediately preceding the day on
which such share is contracted to be purchased or, in the case
of a tender offer, the terms of the tender offer are announced.
The minimum price payable by the Company for the purchase
of its Ordinary shares will be 10 pence, being the nominal value
of an Ordinary share. The Directors consider that it is in the best
interests of the Company and its shareholders to have the ability
to make market purchases of the Company’s own shares in
appropriate circumstances, without the cost and delay of calling
a separate general meeting. The authority will be kept under
review and the Directors will only exercise the power of purchase
after careful consideration and when the Directors are satisfied
that the purchase would be in the best interests of the Company
and its shareholders. The Directors’ do not currently have the
intention of exercising the authority granted by this Resolution.
Disapplication of pre-emption rights
(Resolutions 8 and 9)
Article 4.6(b) of the Company’s Articles of Association
empowers the Directors for a period (not exceeding five years)
(the Section 561 prescribed period) to allot shares for cash
in connection with a rights issue and also to allot shares in
any other circumstances up to a maximum aggregate nominal
amount approved by a special resolution of the Company (the
Section 561 amount) without having to comply with statutory
pre-emption rights.
The existing authority to disapply pre-emption rights granted at
the Company’s last annual general meeting is due to expire at
the AGM.
Resolution 8, which will be proposed as a special resolution
and which will only be effective if Resolution 6 is passed,
seeks to renew the disapplication authority so that the Section
561 amount shall be £520,426 (representing approximately
5% of the Company’s issued share capital at the date of this
document) and the Section 561 prescribed period shall be the
period from the date Resolution 8 is passed to 30 June 2021 or
the conclusion of the Company’s next annual general meeting,
whichever is earlier.
Resolution 9 is also proposed as a special resolution, which
will only be effective if Resolution 6 is passed. In line with the
Pre-Emption Group’s Statement of Principles (as updated in
March 2015) (the Statement of Principles), the Company is
seeking authority to issue up to 5% of its issued ordinary share
capital for cash without pre-emption rights applying, in addition
to the authority sought in Resolution 8. In accordance with
the Statement of Principles, the Company will only allot shares
under this additional authority in connection with the financing
(or refinancing, if the authority is to be used within 6 months
after the original transaction) of a transaction which the Directors
determine to be an acquisition or specified capital investment
(within the meaning given in the Statement of Principles). The
Section 561 prescribed period for the purposes of Resolution
9 shall be the period from the date Resolution 9 is passed to
30 June 2021 or the conclusion of the Company’s next annual
general meeting, whichever is earlier.
Political donations (Resolution 10)
Although the policy of the Company is not to make political
donations or to incur political expenditure as those expressions
are normally understood, the definitions of political donations,
political organisations and political expenditure used in the
Companies Act 2006 are very wide. Shareholder approval is
74
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therefore being sought on a precautionary basis only, to allow
the Company (and any companies that are subsidiaries of the
Company at any time during the period for which Resolution 9
has effect) to continue to support the community and participate
in public debate on matters which affect its business without
running the risk of inadvertently breaching the legislation. The
authority sought will permit the Company and its subsidiaries
to make donations to political parties and independent election
candidates not exceeding £50,000 in aggregate, to make
donations to political organisations other than political parties
not exceeding £50,000 in aggregate, and to incur political
expenditure not exceeding £50,000 in aggregate.
Action to be taken by Shareholders
Whether or not you intend to be present at the AGM you are
requested to complete and submit a proxy appointment in
accordance with the notes to the Notice of AGM set out on
page 74. To be valid, the proxy appointment must be received
at the address for delivery specified in the notes by no later than
12.00pm on Thursday 11th June 2020. The completion and
return of a proxy appointment form will not preclude you from
attending and voting at the meeting, should you so wish. A hard
copy proxy appointment form is enclosed for your use.
Note: Due to the rapidly evolving COVID-19 situation, the
Board asks shareholders to monitor the Company’s website
for updates on the AGM. The Board encourages submission of
votes by proxy this year where restrictions on movement persist.
Recommendation
The Directors consider that the proposals set out above are
in the best interests of the Company and its shareholders
as a whole. They recommend that you vote in favour of the
resolutions set out in the notice of meeting as they intend to do
in respect of their own beneficial holdings other than in respect
of those resolutions in which they are interested.
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019SHAREHOLDER INFORMATION
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN that the 2020 Annual General
Meeting of Augean plc (the “Company”) will be held at
12 noon at 4 Rudgate Court, Walton, Near Wetherby, West
Yorkshire LS23 7BF on Monday 15 June 2020 for the purpose
of considering and, if thought fit, passing the resolutions set
out below. Resolutions 7, 8 and 9 will be proposed as special
resolutions. All other resolutions will be proposed as ordinary
resolutions.
1. THAT the reports of the Directors and the auditors and
the audited financial statements for the year ended 31
December 2019 be received.
2. THAT John Grant be re-elected as a Director of the
Company.
3. THAT Roger McDowell be re-elected as a Director of the
Company.
4. THAT BDO UK LLP be appointed auditors of the Company,
to hold office until the next meeting at which accounts are
laid before the Company.
5. THAT the Directors be authorised to determine the auditors’
remuneration.
6. THAT the authority to allot shares and grant rights to
subscribe for or to convert any security into shares,
conferred on the Directors by Article 4.6(a) of the
Company’s articles of association, be granted for the period
commencing on the date of the passing of this resolution
and expiring on 30 June 2021 or at the conclusion of the
Company’s next Annual General Meeting (whichever is
the earlier) and for that period the Section 551 amount is
£3,469,506.
7. THAT the Company be generally and unconditionally
c.
b.
authorised, pursuant to section 701 of the Companies Act
2006, to make market purchases (within the meaning of
s693 of that Act) of Ordinary shares of 10p each in the capital
of the Company on such terms and in such manner as the
Directors may from time to time determine, provided that:
the maximum number of Ordinary shares hereby
a.
authorised to be acquired is 15,602,371;
the minimum price (excluding expenses) which may be
paid for any such Ordinary share is its nominal value of
10p;
the maximum price (excluding expenses) which may be
paid for any such Ordinary share is an amount equal to
105% of the average of the middle market quotations
for an Ordinary share in the Company (as derived from
The London Stock Exchange’s Daily Official List) for the
five business days immediately preceding the day on
which such share is contracted to be purchased or, in
the case of a tender offer, the terms of the tender offer
are announced;
the authority hereby conferred shall expire at the end
of the next Annual General Meeting of the Company
after the passing of this resolution unless previously
renewed, varied or revoked by the Company in general
meeting; and
the Company may make a contract to purchase its
Ordinary shares under the authority hereby conferred
prior to the expiry of such authority, which contract will
or may be executed wholly or partly after the expiry of
such authority, and which contract will or may require
a purchase of its Ordinary shares in pursuance of any
such authority to be completed after such expiry.
d.
e.
8. THAT, subject to the passing of resolution 6, the power to
allot equity securities as if s561(1) of the Companies Act
2006 did not apply to any such allotment conferred on
the Directors by Article 4.6(b) of the Company’s articles
of association be granted for the period commencing on
the date of the passing of this resolution and expiring on
30 June 2021 or at the conclusion of the Company’s next
Annual General Meeting (whichever is the earlier) and for
that period the Section 561 amount is £520,426.
9. THAT, subject to the passing of resolution 6, the power, in
addition to that granted under resolution 8, to allot equity
securities as if s561(1) of the Companies Act 2006 did not
apply to any such allotment conferred on the Directors
by Article 4.6(b) of the Company’s articles of association
be granted for the period commencing on the date of the
passing of this resolution and expiring on 30 June 2021 or
at the conclusion of the Company’s next Annual General
Meeting (whichever is the earlier) and for that period the
Section 561 amount is £520,426, provided that such
authority shall only be used for the purpose of financing (or
refinancing, if the authority is to be used within 6 months
after the original transaction) a transaction which the
Directors determine to be an acquisition or other capital
investment of a kind contemplated by the Statement of
Principles on Disapplying Pre-Emption Rights most recently
published by the Pre-Emption Group prior to the date of this
notice.
10. That the Company and all companies that are its
subsidiaries at any time during the period for which this
resolution is effective are hereby authorised to:
a. make political donations to political parties and/or
to independent election candidates, not exceeding
£50,000 in aggregate;
b. make political donations to political organisations
c.
other than political parties, not exceeding £50,000 in
aggregate; and
incur political expenditure, not exceeding £50,000
in aggregate, in each case, during the period ending
on the date of the Company’s next Annual General
Meeting. The aggregate amount of political donations
and political expenditure made or incurred under this
authority shall not exceed £150,000.
For the purposes of this resolution, the terms ‘political
donations’ ‘political parties’, ‘independent election candidates’,
‘political organisation’ and ‘political expenditure’ have the
meanings set out in sections 363 to 365 of the Act.
By order of the Board
Angela McGhin
Company Secretary
25 February 2020
Registered Office
4 Rudgate Court
Walton
Near Wetherby
West Yorkshire
LS23 7BF
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NOTES:
(a) Only those shareholders entered on the relevant register of
members (the “Register”) for certificated or uncertificated
shares of the Company (as the case may be) at 12.00pm
on Saturday 13th June 2020 (the “Specified Time”) will
be entitled to attend and vote at the AGM in respect of
the number of shares registered in their name at the time.
Changes to entries on the Register after the Specified Time
will be disregarded in determining the rights of any person
to attend and vote at the AGM.
(b) Any member may appoint a proxy to attend, speak and
vote on his/her behalf. A member may appoint more than
one proxy in relation to the AGM provided that each proxy is
appointed to exercise the rights attached to a different share
or shares of the member, but must attend the meeting in
person. A proxy need not be a member. Completion of a
proxy appointment form does not prevent a member from
attending and voting in person if he/she is entitled to do so
and so wishes.
(c) Hard copy appointment of proxies: A hard copy proxy
appointment form is enclosed for use at the AGM. To
be valid, it must be completed in accordance with the
instructions that accompany it and delivered, together
with any authority under which it is executed or a copy of
the authority certified notarially, by post or (during normal
business hours only) by hand to Computershare Investor
Services plc, The Pavilions, Bridgwater Road, Bristol
BS99 6ZY so as to be received no later than 12.00pm on
Thursday 11th June 2020.
To appoint more than one proxy you may photocopy the
hard copy proxy form. Please indicate the proxy holder’s
name and the number of shares in relation to which they are
authorised to act as your proxy (which, in aggregate, should
not exceed the number of shares held by you). Please also
indicate if the proxy instruction is one of multiple instructions
being given. All forms must be signed and should be
returned together in the same envelope.
(d) Electronic appointment of proxies: As an alternative to
completing the hard-copy proxy form, you can appoint a
proxy electronically by going to www.investorcentre.co.uk/
eproxy. You will be asked to enter the Control Number, the
Shareholder Reference Number and PIN all found on the
front sheet of your hard copy proxy form. For an electronic
proxy appointment to be valid, your electronic message
confirming the details of the appointment in accordance
with the relevant instructions must be transmitted so as to
be received by Computershare Investor Services plc no
later than 12.00pm on Thursday 11th June 2020.
(e) Appointment of proxies through CREST: CREST members
who wish to appoint a proxy or proxies by utilising the
CREST electronic proxy appointment service may do so
for the AGM and any adjournment(s) of it by using the
procedures described in the CREST Manual (available
from https://www.euroclear.com/site/public/EUI). CREST
Personal Members or other CREST sponsored members,
and those CREST members who have appointed a voting
service provider(s), should refer to their CREST sponsor
or voting service provider(s), who will be able to take the
appropriate action on their behalf.
In order for a proxy appointment made by means of CREST
to be valid, the appropriate CREST message (a “CREST
Proxy Instruction”) must be properly authenticated in
accordance with Euroclear UK & Ireland Limited’s (“EUI”)
specifications and must contain the information required
for such instructions, as described in the CREST Manual.
The message must be transmitted so as to be received by
Computershare Investor Services plc as the issuer’s agent
(ID Reference: 3RA50) by 12.00pm on Thursday 11th June
2020. For this purpose, the time of receipt will be taken to
be the time (as determined by the timestamp applied to the
message by the CREST Applications Host) from which the
issuer’s agent is able to retrieve the message by enquiry to
CREST in the manner prescribed by CREST.
CREST members and, where applicable, their CREST
sponsors or voting service providers should note that EUI
does not make available special procedures in CREST
for any particular messages. Normal system timings and
limitations will therefore apply in relation to the input of
CREST Proxy Instructions. It is the responsibility of the
CREST member concerned to take (or, if the CREST
member is a CREST personal member or sponsored
member or has appointed a voting service provider(s),
to procure that his CREST sponsor or voting service
provider(s) take(s)) such action as shall be necessary to
ensure that a message is transmitted by means of the
CREST system by any particular time. In this connection,
CREST members and, where applicable, their CREST
sponsors or voting service providers are referred, in
particular, to those sections of the CREST Manual
concerning practical limitations of the CREST system and
timings.
The Company may treat as invalid a CREST Proxy
Instruction in the circumstances set out in Regulation 35(5)
(a) of the Uncertificated Securities Regulations 2001.
(f) Any corporation which is a member can appoint one or
more corporate representatives who may exercise on its
behalf all of its powers as a member provided that they
do not do so in relation to the same shares. Any such
representative should bring to the meeting written evidence
of his appointment, such as a certified copy of a Board
resolution of, or a letter from, the corporation concerned
confirming the appointment.
(g) A website giving information regarding the AGM is
available from www.augeanplc.com. A member may not
use any electronic address provided by the Company in
this document or with any Proxy Form or in any website
for communicating with the Company for any purpose in
relation to the AGM other than as expressly stated in it.
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Augean PLC Annual Report and Accounts for the year ended 31 December 2019SHAREHOLDER INFORMATION
78www.augeanplc.com Stock code: AUG27194 31 March 2020 5:13 pm PROOF 6Advisers and Company InformationSecretaryA McGhinRegistered office 4 Rudgate Court Walton Wetherby West Yorkshire LS23 7BFRegistered number5199719 (incorporated and registered in England and Wales)Websitewww.augeanplc.comBroker and nominated adviserN+1 Singer Capital Markets One Bartholomew Lane London EC2N 2AXAuditorBDO UK LLP Central Square 29 Wellington Street Leeds LS1 4DLBankersHSBC Bank PLC City Point 29 King Street Leeds LS1 2HLLegalWomble Bond Dickinson St Anns Wharf 112 Quayside Newcastle upon Tyne NE1 3DXRegistrarsComputershare Investor Services PLC The Pavilions Bridgwater Road Bristol BS13 8AAugean-AR2019.indd 7831/03/2020 17:13:38 Printed on Revive™ 100 Silk.
A recycled paper manufactured from paper fibres derived from
pre and post consumer waste and manufactured at a mill certified
with ISO 14001 environmental management standard.
Augean PLC Annual Report and Accounts for the year ended 31 December 2019
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Augean PLC
4 Rudgate Court
Walton
Wetherby
West Yorkshire
LS23 7BF
Tel: 01937 844980
www.augeanplc.com
contact@augeanplc.com
Contacting Augean
To find out about how Augean can help
your business call us on 01937 844980
or email us at contact@augeanplc.com
to arrange for a sales adviser to call you.
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