Post on 26-Jun-2020
Year ended 31 December 2019
Preliminary Results
February 2020
Presented by:
Jim Meredith, Executive Chairman
Mark Fryer, Group Finance Director
1
69%
31%
88%
12%
Augean at a glance
Business overview
Revenue and EBITDA contribution (2019A)
⚫ Augean is the UK’s leading hazardous waste management
business with a strong and diverse customer base across
a range of sectors and throughout the UK
⚫ Reliable and diverse revenue stream against which to
operate key assets which are strategically located in respect
of customers served
⚫ Augean offers a comprehensive range of hazardous waste
services, from disposal via hazardous landfills to treatment,
recovery or re-use of waste
⚫ Industry leading critical analysis of best waste treatment /
disposal routes for customers
⚫ With c. 40% of the UK hazardous waste landfill and three
associated dedicated treatment plants, the business is
underpinned by secure long term disposal facilities
⚫ Hazardous waste types treated originate from UK EfW plants,
waste from construction projects, industrial processes,
decommissioning of the UK nuclear estate and the Oil & Gas
industry
⚫ Strengthened and lean business built over the last two
years with a focus on growing in key markets which are
highly profitable with high EBITDA margin, cash generative
and high ROCE
⚫ Investment opportunities to extend the scope and
diversity of the business still remain and provide a platform
to sustain good growth into the future
Geographical footprint
£107m £29m
Revenue (£m) EBITDA (£m)
The UK’s leading provider of hazardous waste management solutions
Treatment and Disposal North Sea Services
Avonmouth
Paisley
Port Clarence
PC Waste
Recovery Park
East
Northants RMF
Thornhaugh
Great
Yarmouth
Dundee
Aberdeen
Lerwick
2
£1.5-2bn
Group divisional overviewD
ivis
ion
s
Mark
et
siz
e
Mark
et
po
sit
ion
Co
mp
eti
tive
ad
van
tag
es
Treatment & Disposal
EfW residueConstruction &
Industrial waste
Radioactive waste
services
Treatment &
Recovery
North Sea Services
Drilling and Well
AbandonmentIndustrial
ServicesWaste Services
Treatment and disposal
of by-products
generated from EfW and
biomass plants (e.g.
APCR ash)
Treatment and disposal
of contaminated waste
from construction /
demolition activities and
specialist manufacturers
Disposal of low level
activity radioactive
waste mainly generated
from decommissioning
of UK nuclear plants
Hazardous and difficult
waste management
service supported by
specialist treatment
plants, vehicles,
equipment and expert
personnel
Waste management
of waste generated
from the drilling and
abandonment of
wells
Cleaning and
decontamination
services, including
vessels, tanks and
tube bundles
cleaning
General waste
management
services to active
O&G rigs and
platforms
Market leader for North Sea P&A
projects
Preferred
provider for specialised
decommissioning
services
✓ Most competitive
pricing
✓ Unique know-how
✓ Multiple sites with
national coverage
✓ Industry leading
customer and
technical support
team
✓ Soil washing
capabilities
✓ Only disposal site
capable of accepting
radioactive
hazardous waste
✓ Preparation &
cleaning pre disposal
✓ On-site Technical
Resource capability
✓ Comprehensive
treatment for all
waste types
✓ Multiple sites with
national coverage
✓ Multi skilled
capabilities –
allowing for a
wide range of
in house
services
✓ Strategic
access to
decommission-
ning hub and
know-how
✓ One-stop-shop
waste
management
solutions for
the offshore
O&G industry
Established
presence as waste
management
provider of choice
Established player
within local geographies
Active across multiple niche and attractive hazardous waste markets, with leading positions and strong
barriers to entry
c. £1bn
c. 40%
of remaining UK haz
void
Only player with
radioactive
hazardous permit
Number one
player in APCR
Arr
ow
s =
gro
wth
3
Long-term drivers of growth
Main market drivers
8mt of EfW capacity expected to be added in
the next 5-6 years - resulting in c. 410ktpa of
additional EfW ash/residue needed to be
treated
Strategy
⚫ Win significant share of new EfW APCr
treatment/disposal contracts by maintaining most
competitive pricing
⚫ Continue with track record of 90% win rate
HMRC taxing of soil on site, resulting in
greater landfilling. Greater EA enforcement
Brownfield site redevelopment
⚫ Continue to capitalise on revamped sales and
commercial team
⚫ Increase market share in London by establishing a
river-sea-river route to transport London’s construction
soils to Port Clarence
⚫ Expand site capability
➔ Decommission of UK nuclear estate
expected to steadily continue over the next
40 years
⚫ Broaden service offering / technical capabilities to
become a provider of full lifecycle of radioactive waste
management
⚫ Port Clarence licence extension – NORM and sort and
segregation increased offering
➔ Regulatory drive to dispose of waste through
recycling and recovery vs. landfill
⚫ Increase capacity utilisation at current treatment facilities
⚫ Re-focus and increase HiPods operations
Waste value streams
Growth driven by favourable market trends and well-defined business strategy
EfW residue
Construction &
industrial waste
Radioactive waste
services
Treatment & recovery
North Sea Services
Growth
Rapidly increasing decommissioning market
– £15-20bn spend estimated over the next 10
years of which up to c. £1bn (5% of total) is
addressable by Augean
⚫ Establish Dundee as main port for decommissioning
projects
⚫ Win majority of Plug & Abandonment projects by
leveraging current market leading position in on-site
waste support services
4
Strategy
Overall Group strategic focus
➔ Maintain focus on margin and ROCE optimisation
➔ Eliminate debt
➔ Resolve HMRC
Drive further growth in specialist
defensible areas and support the
current asset base with targeted
forward investment
➔ North Sea, particularly decommissioning
➔ Support for Nuclear decommissioning
➔ Contaminated construction and demolition soils
➔ EfW residue growth — support
➔ Invest in waste stream specific treatments to develop and enhance existing key
assets
5
Operational highlights
Strong revenue growth
across all divisions
Established Market
leading positions and a
successful diversification
strategy in the North Sea
Continued
Business optimisation
✓ Sales growth overall of 33%, Landfill up 28%, Radioactive 5%, Treatment (5%) and North Sea 61%. All sites
showed profit growth year on year with some standout performances, notably Port Clarence WRP up 88%,
PC Landfill 65%, Paisley 65%, Kings Cliffe Landfill 62%, and North Sea 25%
✓ 12% growth from residues from Energy from Waste (plants despite no new municipal EfW opening in 2019)
✓ Significant increase for soils of 46% reflecting a successful investment in the team resulting in a more
effective and focused approach
✓ Continued diversification in North Sea into industrial services, decommissioning and waste management
more than offsetting reduced drilling volumes resulting in profit increase of 25%
✓ Excellent progress on business optimisation program with cost savings exceeding target and no cost creep
✓ Contracts won in 2019 representing one third of 2019 municipal ash volume with EfW plants expected to in
2020 with full impact by 2021
✓ Increasing margins contributing £3.1m in additional profit
6
Group financials
Strong track record of revenue growth Industry leading margins
Treatment and Disposal North Sea Services
Revenue (£m) FCF (£m)2
Margin (%)
4% 19%Growth (%)
Adjusted EBITDA (£m)
22% 24%20% 39% 82%34%
Significant improvement in cash
generation
Cash conversion (%)
1
Notes
1 Revenue for 2016A excludes revenue generated from AIS (£5.5m), Colt (£3.5m) and East Kent (£2.7m) which are excluded from the financials reported on the continuing basis for 2017A and 2018A
2 Free Cash Flow (FCF) defined as EBITDA less capex; cash conversion defined as FCF over EBITDA
34% 27% 80%
6467
80
107
2016A 2017A 2018A 2019A
13
15
19
29
2016A 2017A 2018A 2019A
23
4
6
15
2016A 2017A 2018A 2019A
68.8
91.5
FY 2018 FY 2019
7
FY 2019 Financial highlights1
Note
1 From continuing operations excluding landfill tax, other non-underlying items and share based payments
2 Denotes statutory results
Adjusted revenue
(excluding landfill tax)
Adjusted PBT
Adjusted EBITDA
Adjusted EPS
Net (debt)/cash position
of £(13.2)m – after LFT
cash payment of £40.4m and
LTIP payment of £4.0m
ROCE
1
2
3
4
5
6
+33% increase FY 2019
vs FY 2018
37.8%FY 2019
+68% increase FY 2019
vs FY 2018
+52% increase FY 2019
vs FY 2018
+80% increase FY 2019
vs FY 2018
+72% Adj. operating CF
increase –
£29.6m vs
£17.2m in FY18
18.9
28.8
FY 2018 FY 2019
8.2
(13.2)
FY 2018 FY 2019
21.6%FY 2018
FY 2018 FY 2019
FY 2018 FY 2019
11.4
10.6
19.2
(15.3)
8.5
9.6
15.3
(12.3)
8
Adjusted income statement
Note
1 From continuing operations excluding landfill tax, exceptional items and share based payments
⚫ Exceptional items in 2019 of £34.5m including:
– £0.7m exceptional expense related to continuing operations, being £0.5m of net landfill tax legal costs and £0.2m of other costs and
– LTIP expense of £7.6m
– LFT expense of £26.2m
£m, Dec y/e1 FY 2019 FY 2018 Change (%)
Excluding exceptional items
Revenue 91.5 68.8 33%
Operating expenses (71.6) (56.6) (27)%
Operating profit 19.9 12.2 63%
Finance charges (0.7) (0.7)
Profit before tax 19.2 11.5 68%
Discontinued / Exceptional Items (34.5) 1.1
PBT including exceptional items (15.3) 12.6
9
Balance sheet
£m, Dec y/e FY 2019 FY 2018 Change (£m)
Goodwill and intangible assets 19.8 19.8 -
PPE and other non-current assets 47.2 42.2 5.0
Total non-current assets 67.0 62.0 5.0
Net current assets (excluding cash and debt) 2.6 (1.2) 3.8
Restoration and capping provisions (8.7) (8.7) -
Capital employed 60.8 52.1 8.8
Net (debt) / cash (13.2) 8.2 (21.4)
Net assets 47.6 60.3 (12.7)
Gearing n/a n/a
ROCE % on average capital employed 37.8% 21.6% 16.2%
10
Total cash flows and net debt
£m, Dec y/e FY 2019 FY 2018 Change (£m)
EBITDA (continuing and before exceptional items) 28.8 18.9 9.9
Net working capital (0.5) (0.3) (0.2)
Interest, taxation and other (1.3) (1.4) 0.1
Net operating cash flows 27.0 17.2 9.8
Maintenance capital expenditure (4.3) (2.0) (2.3)
Post maintenance free cash flow 22.7 15.2 7.5
Development capital expenditure (1.5) (1.4) (0.1)
Free cash flow 21.2 13.8 7.4
Dividends paid - - -
Net cash flow from continuing operations 21.2 13.8 7.4
Sale of business and assets 3.3 6.2 (2.9)
Net cash generation 24.5 20.0 4.5
Exceptional items (44.5) (0.3) (44.2)
Net cashflow (20.0) 19.7 (39.7)
11
Bank facilities
Note
1 Excluding exceptional items
£m, Dec y/e1 FY 2019 FY 2018
Closing net cash / (debt) (13.2) 8.2
Closing headroom (not including £10m M&A accordion) 26.6 25.2
Gearing (net debt/equity) 27.9% n/a
Net debt/EBITDA (covenant < 2.5x) 0.5x n/a
12
Outlook
Eliminate bank debt1
Continue to challenge the HMRC LFT claims2
Maximise opportunity in the key growth markets of Energy from Waste, Treatment, and Decommissioning projects
both nuclear and North Sea3
The Board is confident in the Group’s prospects for the full year
13
Summary
Leader
UK wide network of
locations
Successful
turnaround strategy
Highly attractive
investment
opportunity
Strong
performance
Favourable
market trends
✓ In attractive niche and highly regulated hazardous waste markets
✓ Two hazardous landfill locations accounting for c. 40% of current void and optionally to increase void
✓ Strategy successfully executed resulting in strong financial performance
✓ Strong revenue momentum, which analysts are expecting to continue going forward
✓ Growth supported by strong market trends and a targeted business strategy
✓ Multiple levers for value creation
14
Key investment highlights
Attractive financial profile…
… with analysts expecting strong
revenue and profit growth to
continue over the forecast period
+19%Revenue CAGR
2016-19
27%EBITDA margin
2019
37%ROCE
FY 2019
80%Cash conversion
2019
Revenue (£m)EBITDA (£m)
64 6780
107
2016A 2017A 2018A 2019A
⚫ Comprehensive range of hazardous waste treatment and disposal solutions
⚫ Leading provider of EfW ash treatment and disposal with exceptional 86% win
rates
⚫ Leader in hazardous construction and demolition wastes
⚫ Leading provider of waste management solutions to the North Sea O&G sector
⚫ Only company to operate with a haz and non-haz low-level radioactive waste
permit and a second low level radioactive waste licence in planning for Port
Clarence, creating the only disposal facility combined with on site treatment
optionality
UK’s market leading provider of
hazardous waste management
solutions
UK-wide network of strategically
located treatment and disposal
facilities
⚫ 2 hazardous landfills representing c. 40% of remaining void in the UK, with life
through to 2050 and beyond
⚫ Share of void should further increase over the next 30 years – e.g. a further
1.9m m3 of void located in ENRMF
⚫ 100% success rate on planning permissions for new planning and development
⚫ 3 well-invested treatment and recovery facilities
⚫ 4 North Sea sites strategically located for the decommissioning market
1315
1929
2016A 2017A 2018A 2019A
Appendix
Appendix
Appendix
16
4.8
2.01.8
1.81.5
1.11.0
0.9
0.40.1
Hazardous landfills
UK hazardous landfill capacity by site Commentary
⚫ Unlike non-hazardous landfills, demand for
hazardous landfills is expected to stay constant
as it is the only possible disposal option for a
majority of hazardous waste types, post
treatment and recovery
⚫ Levels of recycling, re-use and treatment of
industrial wastes means that residual materials
currently received to hazardous landfills should
persist
⚫ The National Policy Statement for Hazardous
Waste establishes a need for further hazardous
waste landfill capacity with general planning
policy supporting the extension of existing above
new sites
⚫ Augean currently holds c. 40% of hazardous
landfill void in the UK, through its Port Clarence
and ENRMF facilities establishing it as a key
player in the hazardous waste disposal market
⚫ Furthermore, Port Clarence and ENRMF have
the potential to increase their void
Augean holds c. 40% of the remaining hazardous landfill void in the UK, with life through 2050 and
beyond
Operator
Planning
expiry
NamePort
Clarence
ICI No 3
Teesport
White
moss
Bradley
Park
Wins-
ford
Wing-
moor Farm
ENRMF Winterton
South
Parkgate Polmont
n/a 2035 2028 n/a 2030 2025+ 2026 2023 20222050
Comments
c. 4 / 5
years
expected
life
Salt mine
/ Veolia
lease
expires in
3 years
m m3 hazardous landfill void
Augean currently holds c. 40% of
hazardous landfill void in the UK
+1.9m m3 from
additional
adjacent land
optioned
Limited
waste
types
accepted
Source: Tolvik
A. Appendix
17
211 ktpa
60 ktpa
38 ktpa
103 ktpa
-
50kt
100kt
150kt
200kt
250kt
Planning Commissioning On Hold In Build
Large pipeline on potential new contracts… … supporting significant growth in volumes treated by Augean
410 ktpa of APCr, IBA and Fly Ash
from
37 EfW / biomass
plants in planning/commissioning
or construction
Large pipeline supporting topline growth >35 EfW / biomass plants in construction or planning, which are expected to add c. 410ktpa of EfW residue in
the market, of which Augean is expected to win a significant share, in line with historical win rates
⚫ Large pipeline of contracts for treatment and disposal of APCr and
bottom ash, as result of 37 EfW / biomass facilities either in
planning/commissioning or already under construction
EfW residue treated and disposed by Augean - historical and forecast (ktpa)
~150
~190
~210
-
100kt
200kt
300kt
2017 2018 2019
APCr Bottom ash
⚫ Volumes of APCr and bottom ash treated and disposed by Augean
Source: Tolvik
A. Appendix