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Morning Colt
Your reading of events is persuasive and perhaps I am jaded by seeing too much happen in sp manipulation on other shares especially on AIM. A favourable result with HMRC would prove interesting and there is still a chance as the company is certainly fighting it.
I hold and hope as a LTH
My view is that the share price rise is just following the improvement in the company trading performance which has been excellent to say the least. You have to take into consideration the serious position that the company found itself in after HMRC signalled their intent to issue landfill tax assessments. The share price tanked and the then CEO paid the price. Jim Meredith is a very experienced waste guy who stepped into the CEO to take on the challenge of saving the business from failure. Both he and Fryer were given very good incentives to turn the business around for the benefit of all shareholders. They have done a sterling job and in my opinion deserve the rewards.
Do I think the share price will see a significant retreat - no. I really like this business with its sticky customer base and quality management team. Colt45
If you were a cynic you could now see the reason for the rise after the LTIP RNS.Wonder if they will have to give it back if the sp now falls?
I am assuming this is just profit taking after the considerable rise as I can't see any other justification - just as I couldn't see an immediate reason for the rise.
Colt, many thanks. I was assuming interest in Augean as a takeover target was perhaps driving this but your analysis is a fascinating one. The HMRC prospective tax penalty must be, as you say, built in to some extent as it hardly a secret. Imagine the sp if Augean wins that. Hold for me at the moment I think based on all the above - my decision.
Hello Kernowlad - The share price is moving to where it should be based on a multiple of current earnings that would be relevant to the sector. The public announcement re settlement of the HMRC liability will knock the share price back but not as much as originally feared as the information is already out there.
I would not be surprised at all if current plans are turned full circle and Augean goes on an acquisition trail. This plan is supported by key investors.
I have been doing some research on possible targets and how they could fit in with Augean. One possible target is a £50m turnover waste company based in Northern Ireland called River Ridge Recycling. Jim Meredith is the Chairman of River Ridge so he will know the business well. River Ridge is the largest independent waste company in Northern Ireland and processes c500k tonnes of mainly council waste per annum. They also have exclusive connections to an EFW plant in Belfast which is useful in this climate. This would be a very good bolt on to Augean in the short term as they build turnover.
Watch this space - we may see acquisition activity in the not too distant future. Colt45
This is really going somewhere now. Something must be in the offing but I can't see anything anywhere.
Wondering whether to top slice or not?
Obviously DYOR but GLALTH
Your prognosis seems on the mark as something is afoot with the rise continuing. Long may it last. Not up enough yet to top slice but better than being way down.
GLALTH
Colt, having read the Edison research paper, obviously commissioned by Augean, it is clear management are actively considering what you suggest will happen. So the controlling shareholders it seems are positioning now for a takeover. I can't imagine they would accept the current price plus small premium less the 50 pence for the tax bill payment. It seems the share price might well continue rising towards the numbers suggested by Edison, and any party considering taking it over perhaps should do so sooner rather than later as if, and of course its always a big if, the business continues on its current trajectory the share price will be moving significantly upwards in the next 12 months, albeit with the 50 pence drop if they pay off the tax.
The HMRC case could take up to 2 years to be resolved. Aug will be taken-over long before that but only with a clean balance sheet with no contingent liabilities.
That is indeed correct Alan80 but the interest charged by a bank will be less than HMRC. This is there only option to clear the way for a realistic valuation based on current earnings. Any potential buyers will need this resolved before they takeover the business. I do not think we will have too long to wait for point 2 to happen.
Interest will only be paid if they lose and as they are supremely confident they won't why would they destroy their bank balance now?
Probably too simplistic a view but...
Colt, the problem with the second point is the company still don't have the cash to make a full payment so would have to do so using debt, and therefore the interest saving will evaporate
This is how I see this playing out over the coming months.
1) Good news today re the trading performance of Augean. Well received by the market and positive movement in the share price. That said, it takes very little volume to move the share price due to the share ownership structure.
2) Over the coming days / weeks I expect another RNS will be released re the HMRC assessments. I expect the company to clear the decks and agree to pay the assessments in full to avoid the accumulating interest. They will make it clear however that the legal battle will continue to prove that they have accounted for the tax correctly. The market will react by a decrease in the share price back down to c£1.00
3) Continuing positive trading and profit growth edging the share price back up to c£1.50 - £1.80.
4) Augean wins HMRC legal battle and tax refunded toi the company - major boost in share price.
5) Company will be taken over by a larger waste company eg Biffa or Panda at +£2.00. The takeover is coming but any buyer will want the worst case scenario re HMRC washed out hence point 2 above.
I plan to buy more share once the HMRC position has been clarified (hopefully on a significant dip on today's price) and wait for the takeover.
Colt45