AUG.L Regulatory News (AUG)

23rd July 2013

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 2013.

While trading during the first half of the year has been challenging in a competitive market offering limited growth in certain traditional areas, the Group has delivered a year on year increase in revenue and positive cash flow from operations.

Group revenues rose by 17% to £23.4m (H1 2012: £20.0m), supported by contributions from the recently developed activities in disposal of radioactive wastes and North Sea waste management services.

In the Land Resources division the revenue generated from Low Level Waste (LLW) and Naturally Occurring Radioactive Material (NORM) disposal increased from the previous year, with combined revenue from radioactive disposals totalling £0.6m during the first half and a clear pipeline of projects available in the second half of the year. Total waste volumes into the Group's landfill sites during the first six months were 139,779 tonnes, an improvement from the previous six months (H2 2012: 128,305 tonnes). Overall, the division has met expectations during the period, although the second quarter saw a softening of the core soils remediation market and a downturn in total volumes treated and disposed.

Augean North Sea Services (ANSS) has built on its positive start during the second half of 2012 and continued to deliver growth in revenues and EBITDA, trading in line with expectations. The business is now well established as a provider of waste management solutions to North Sea operators and has continued to invest in new facilities and equipment to support its growing range of activities. The Board reiterated its confidence in the future potential of ANSS during the first half by authorising the purchase of a further 11% of the share capital of the business, by way of a debt to equity swap with our partners Scomi Oiltools (Europe) Ltd (Scomi). This has increased Augean's ownership to 81%, with Scomi retaining the remaining 19%.

The markets for traditional hazardous waste transfer have continued to be challenging and despite winning new contracts trading in the Waste Network division has been below expectations. With the Worcester site now closed, we have started reducing operations at the smaller site in Rochdale with a view towards full closure during the second half.

The Oil & Gas Services division delivered an improved performance over the same period during 2012 and provided a small positive contribution to cash flows.

Capital investment in assets to support future revenue generation, including a new tank farm, soils and ash treatment plants and landfill cells in Land Resources and a new site for ANSS, was offset by positive cash flows from operations, leading to stable net debt at the end of the period of approximately £6.1m (H2 2012: £6.1m).

As announced on 12th July the Secretary of State for Communities and Local Government has granted a Development Consent Order (DCO) for the extension of the East Northants Resource Management Facility (ENRMF). This planning permission* extends the life of the site to 31st December 2026 and allows an increase to the capacity of the existing soil treatment facility and construction of approximately one million m3 of new hazardous landfill void. In his concluding statement, the Secretary of State said that "there is a compelling case for authorising the ENRMF scheme, particularly given the significant continuing level of demand for hazardous waste landfill capacity and the requirement for low level radioactive waste landfill facilities"

The ENRMF site will continue to dispose of hazardous and low level radioactive wastes, making a major contribution to the national infrastructure for disposal of these specialist waste types. ENRMF is a significant profit and cash generator for the Group and its continued operation provides a strong platform for the future development of the business and delivery of strong returns from the capital employed.

As previously announced, the Board is also pleased to confirm that the new Chief Executive Officer, Dr Stewart Davies, will join the Group from 12th August 2013.

Commenting on the first half of the year Richard Allen, Interim CEO, said:

"Trading has been satisfactory during the first half of the year, with the Group continuing to operate in challenging market conditions. Whilst our visibility of volumes available during the second half is currently limited, we remain confident of delivering year on year improvements to performance and results."

The Group's half year results to 30th June 2013 are due to be announced on 24th September 2013.

* Please note that the ENRMF DCO may be challenged if a claim is made to the High Court for judicial review by 23rd August 2013.

-Ends-

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