Augean PlC - operational update.
Augean plc ("Augean" or the "Company")
Consultation on Colt
Augean, one of the UK's leading specialist waste management businesses, provides an update in relation to its ongoing programme to optimise business units and turn around those that are underperforming. This programme has stringent requirements designed to ensure that all divisions of the Augean group are making a positive contribution and at the time of the preliminary results in March the Company announced that it could not continue to invest in assets that did not generate suitable returns.
In the year to date, the Colt business has not provided the positive improvement required under this programme having incurred a loss of £0.6m year to date. In the light of this, the Board does not believe that Colt has the potential to generate appropriate returns in the medium term.
It has therefore been decided to consult with staff to investigate options to strengthen and support other profitable areas of the Industrial Services business across the Group (turnover almost £15m with 75 staff operating out of seven sites) through the potential re-allocation of Colt assets. The Group is also seeking to reduce its costs through the potential closure of the Colt offices and disposal of unwanted assets. This consultation will take 30 days and could impact up to 60 staff in Colt. The Hull site could also be sold.
The income statement impact of closure of the Hull site and any associated redundancy costs could be approximately £1.6m with net cash receipt expected of £1.3m. The Colt operation is expected to be classified as a discontinued operation for both the half and full year accounts and will include the loss to date of £0.6m as well as the potential closure cost of £1.6m.
Elsewhere, the Board is encouraged by Group trading and is therefore confident that this remains in line with market expectations. The latest net debt at 14 May was £6.6m.
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.