AUG.L Regulatory News (AUG)

23rdJuly 2014

Augean plc

("Augean" or "the Group")

Pre-close trading update

Augean, one of the UK's leading specialist waste management businesses, provides the following update to the market prior to commencement of its close period ahead of issuing its half year results for the six months ended 30th June 2014.

Group revenues rose by 6% to £24.9m (H1 2013: £23.4m), with revenue growth in each of the five business divisions.

The Energy & Construction division (formerly Land Resources) continued to grow the volumes of air pollution control residues (APCR) from Energy from Waste customers, treated at the East Northants and Port Clarence sites, and the treatment and disposal of hazardous waste volumes. Total waste volumes into the landfill sites during the first six months were 151,125 tonnes. The pipeline of work for the remainder of the year suggests that expectations for 2014 could be exceeded.

The Radioactive Waste Services division delivered an increase to the volumes disposed. A total of 2,453 tonnes were received in the first six months, with the pipeline of work for the remainder of the year suggesting that expectations for 2014 could be exceeded.

The newly formed Augean Integrated Services (AIS) division grew revenues during the first half, with new contracts secured with high value manufacturing customers requiring a broad waste management service. The facility at East Kent, now managed as part of AIS, has experienced delays in securing new waste volumes which were expected to drive improvements in operating profit and as a consequence AIS is significantly behind its plan. However good progress is now being made on converting contractual opportunities for later in the second half of the year and the East Kent facility continues to hold significant medium term potential and remains a key part of Augean's comprehensive service strategy.

As reported at the time of the Annual General Meeting in June, Augean North Sea Services (ANSS) suffered a slow start to the year as drilling activity was curtailed in the North Sea by poor weather conditions. The business made a strong recovery from that early position during the second quarter, gaining incumbency on new drilling operations and further expanding onshore waste management activities, and is now in line with its plan for the year.

The Industry & Infrastructure division (formerly Oil & Gas Services) was impacted by the slow-down in drill cuttings volumes during the first quarter. However, performance across the three processing sites remained sufficient to deliver a year on year improvement to operating losses and results for the first six months were satisfactory.

During the first six months of the year the Group completed two transactions: the sale of its former Waste Network assets and the purchase of the East Kent site. The net cash outflow required to complete these transactions and support the capital investment programme was offset by positive cash inflows from operations. Net debt at the end of the period was approximately £8.9m (H2 2013: £8.5m), well within the headroom available from the Group's loan facilities.

We are pleased to announce that, from September, the Energy & Construction business will be led by a new divisional director, Andrew Woolcock. Andrew has more than 20 years' experience in the waste and Energy from Waste sectors working with companies including Martin Engineering Systems, FCC and Ramboll. As a business leader in Energy from Waste engineering and operations he has worked on much of the new waste infrastructure introduced in recent years and is well known in the waste management industry.

Commenting on the first half of the year Dr Stewart Davies, CEO, said:

"We are seeing clear signs of the opportunities that the new strategy is opening up for the Group with positive revenue growth across all five divisions. While the first quarter was impacted by a number of one-off issues, the overall performance in the second quarter and pipeline of work in the Energy & Construction and Radioactive Waste Services divisions give me confidence in delivering the strategy announced in March. The Group continues to trade in line with market expectations for the full year."

The Group's half year results to 30th June 2014 are expected to be announced on 23rd September 2014.

-Ends-

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