AUG.L Regulatory News (AUG)

27th January 2012

Augean plc

("Augean" or "the Group")

Pre-close trading update

Augean, one of the UK's leading hazardous waste businesses, is pleased to provide a trading update prior to going into its close period ahead of the publication of its 2011 full year results on 27th March 2012.

The Board is pleased to report that trading in the second half of the year has met expectations despite strong competition across the hazardous waste markets and the Board expects the final results to be in line with market expectations.

Positive cashflows from operations allowed the Group to continue to invest in the infrastructure of the business during the second half of the year, with no associated increase in the level of net debt, at £3.9m. When adjusted for year end customer collections (which have since been received), net debt fell to an underlying value of £3.4m, representing a reduction year-on-year (2010: £3.9m).

Strategic opportunities

We have continued to focus on the development of strategic opportunities which can be integrated into the newly implemented Group structure and which we believe will enhance profitability, stability and return on capital employed.

Following a protracted planning and legal process, the Group implemented its planning permission to dispose of Low Level Waste ("LLW") at its East Northants Resource Management Facility ("ENRMF") and commenced the receipt of consignments during December.

A legal challenge to the planning permission was heard in the Court of Appeal earlier this month, resulting in rejection of the appeal and confirmation that the planning permission was legally granted by the Secretary of State for Communities and Local Government. Whilst the Court of Appeal refused permission and a further request to refer the case to the European Court of Justice, it remains possible for the claimant to apply directly to the Supreme Court for permission to appeal.

The Group will now focus on developing the commercial market for LLW disposal. Discussions are progressing regarding the potential for commercial consignments to be received during the first half of 2012, although exact timing is uncertain. These discussions indicate that volumes of up to 2,000 tonnes could be received in the year ahead.

The Group has also continued to increase its access to the markets for treatment of hazardous wastes. We have extended our relationship with Scomi Oiltools (Europe) Ltd to provide waste management services to North Sea operators and we are also developing new routes to market through thermal treatment technologies.

Following confirmation of planning permission to extract minerals from its site at Cook's Hole in Northamptonshire, the Group has undertaken a tender process during the year and intends to appoint a minerals extraction partner during Q1 2012.

Divisional update

The Landfill division has continued to grow the volume of waste treated and disposed at our sites, winning a number of large remediation contracts during the year. Total landfill volumes were 340,383 tonnes during 2011, a 12% increase from the previous year (2010: 303,261 tonnes). Competition remained strong across the sector, but by providing appropriate treatment solutions for our customers we have won volumes and delivered improvements to operating margins.

The Treatment division is expected to deliver a modest improvement in profitability following cost reduction initiatives and the redeployment of assets. This included the Port Clarence Waste Recovery Park making its first positive contribution to operating profit during the year and settlement of the outstanding insurance claim at our Cannock site, which was successfully closed out during Q3 2011.

The planned reorganisation of our divisions, announced in September, was completed during the second half of the year and implemented at the beginning of 2012. Going forward the Group will operate three divisions, each specialising in different sectors of the hazardous waste markets and targeting improvements to operating margins and divisional profitability.

Banking Facilities

The Board is pleased to announce that we have reached agreement with our corporate bankers, HSBC plc, to renew the Group's existing facility agreement for a further three year period on similar terms to those currently in place. The new facility will provide access to up to £10m of funding to support the capital needs of the business and the development of strategic opportunities. The renewal process is expected to be completed during Q1 2012.

Outlook

The Board approaches the year ahead with some optimism. Trading has started positively and a number of strategic opportunities are nearing operational status. The Board is aware of the potential risks to volumes and revenues which may materialise if general economic conditions worsen in the UK, but believes that the action taken over the past 12 months has left the Group better able to respond to such events. The Board's confidence in the core business remains unchanged, but with trading in LLW now activated it expects to see material improvements to revenue and profit later in the year.

-Ends-

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