Shares in waste management specialist Augean (AUG:AIM) gained 2% to 120p after the firm released strong first-half results and repeated that it expects to beat full year expectations.
Last month in its second quarter trading update the firm said that group profits would be ahead of market expectations, sending the shares up 8% in a day.
Revenues for the six months to 30 June were up 40% to £44.2m while earnings before interest, taxes, depreciation and amortisation (EBITDA) rose 71% to £14.2m and pre-tax profits doubled to £9.6m.
The company cited good sales growth across all its sites and cost savings which ‘considerably exceeded’ its initial targets.
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Augean has two major divisions: the treatment and disposal of waste from incinerators, energy-from-waste plants, construction and industrial sites; and North Sea services which handles drilling waste, onshore and offshore industrial services, decommissioning of old facilities and water treatment.
Revenues from waste treatment and disposal grew by 39% to £30.5m in the first half due mainly to an increase in construction soil volumes together with new contract wins and ‘strong’ radioactive waste volumes.
Adjusted operating profits for the division rose by 88% to £9.6m thanks to higher volumes and cost savings above earlier estimates.
In February the company warned that it had received landfill tax assessments from HMRC for a total of £37.3m including interest covering the period from February 2015 to May 2018 and had appealed against the assessments to the Tax Tribunal which is due to make a decision some time next year.
Augean remains confident that it has met its landfill tax obligations and hasn’t therefore provisioned for the amount claimed by HMRC or any additional assessment or any penalties that might be imposed, although it has taken the legal costs of its dispute on its profit and loss (P&L) account as exceptional costs.
The North Sea services division also had a strong first half with revenues up 43% to £13.7m on new customer wins among top-tier oil and gas operators for decommissioning work.
Augean believes that the decommissioning market is ‘worth multi-billion pounds for many years to come’ and is looking to broaden its services to clients.
