investor presentation - augean plc · 2019-11-05 · investor presentation november 2019. 1...

The UK’s leading provider of hazardous waste management solutions

Investor Presentation

November 2019

1

Disclaimer

The information in this presentation (the "Presentation") has not been independently verified and must not be regarded as any kind of profit

forecast or profit estimate. In addition, the Presentation contains forward-looking statements, which are, by their nature, inherently predictive,

speculative and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. All

statements that address expectations or projections about the future, including statements about operating performance, market position, industry

trends, general economic conditions, expected expenditures and financial results, are forward-looking statements. Some of the forward-looking

statements may be identified by words like "expects", "anticipates", "plans", "intends", "projects", "indicates" and similar expressions. Any

statements contained herein that are not statements of historical fact are forward-looking statements. There are a number of factors including, but

not limited to, commercial, operational, economic and financial factors, that could cause actual results and developments to differ materially from

those expressed or implied by these forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond Augean

PLC's (the "Company") ability to control or estimate precisely, such as changes in taxation or fiscal policy, future market conditions, currency

fluctuations, the behaviour of other market participants, the actions of governmental regulators, or other risk factors, such as changes in the

political, social and regulatory framework in which the Company operates or in economic or technological trends or conditions on a global, regional

or national basis. These forward-looking statements speak only as of the date of the Presentation. The Company does not undertake any

obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this

presentation. Accordingly, undue reliance should not be placed on these forward-looking statements. In particular, but without prejudice to the

generality of the above, no representation or warranty is given, and no responsibility or liability is accepted, either as to the achievement or

reasonableness of any future projections, forecasts, estimates or statements as to any prospects or future returns contained or referred to in the

Presentation or in relation to the basis or assumptions underlying such projections or forecasts. The price of the Company’s shares and any

income from them may go down as well as up and investors may not get back the full amount invested on disposal of such shares.

2

88%

12%

73%

27%

Augean at a glance

Business overview

Revenue and EBITDA contribution (2018A)

⚫ Augean is the UK’s leading hazardous waste management

business with a strong and diverse customer base across

a range of sectors and throughout the UK

⚫ Reliable and diverse revenue stream against which to

operate key assets which are strategically located in respect

of customers served

⚫ Augean offers the full spectrum of hazardous waste

services, from disposal via hazardous landfills to treatment

for recovery or re-use of waste types

⚫ Specialist critical analysis of best waste treatment / disposal

routes for customers

⚫ With 40% of the UK hazardous waste landfill and three

associated dedicated treatment plants, the business is

underpinned by secure long term disposal facilities

⚫ Hazardous waste types treated originate from UK EfW plants,

waste from construction / demolition projects, industrial

processes, decommissioning of UK nuclear estate and the

O&G industry

⚫ Strengthened and lean business built over the last two

years with a focus on growing in key markets which are

highly profitable with high EBITDA margin, cash generative

and high ROCE

⚫ Investment opportunities to extend the scope and

diversity of the business still remain and provide a platform

to sustain good growth into the future

Geographical footprint

Avonmouth

Paisley

Port Clarence

PC Waste

Recovery Park

East

Northants RMFThornhaugh

Great Yarmouth

Dundee

Aberdeen

Lerwick

£80m £19m

Revenue (£m) EBITDA (£m)

The UK’s leading provider of hazardous waste management solutions

Treatment and Disposal North Sea Services

3

Group divisional overviewE

st.

Mkt.

siz

e

Mark

et

nic

he

gro

wth

Co

mp

eti

tive

ad

van

tag

es

Treatment & Disposal

EfW residueConstruction &

industrial waste

Radioactive waste

services

Treatment &

recovery

North Sea Services

Drilling and Well

AbandonmentIndustrial

ServicesWaste Services

Treatment and disposal

of by-products

generated from EfW and

biomass plants (e.g.

APCr ash)

Treatment and disposal

of contaminated waste

from construction /

demolition activities and

specialist manufacturers

Disposal of low level

activity radioactive

waste mainly generated

from decommissioning

of UK nuclear plants

Recovery and recycling

of oil and solvents and

the generation of

secondary liquid and

solid fuels from haz

packaged waste

Waste management

waste generated

from the drilling and

abandonment of

wells

Cleaning and

decontamination

services, including

vessel, tanks tube

bundles cleaning

General waste

management

services to active

O&G rigs and

platforms

c. £1.5bn – £2bn

✓ Most competitive

pricing

✓ Unique know-how

✓ Multiple sites with

national coverage

✓ Specialist

customer and

technical support

team

✓ Soil washing

capabilities

✓ Only disposal site

capable of accepting

radioactive

hazardous waste

✓ Preparation &

cleaning pre disposal

✓ On-site Technical

Resource capability

✓ Comprehensive

treatment for all

waste types

✓ Multiple sites with

national coverage

✓ Multi skilling

capabilities –

allowing for a

wide range of

in house

services

✓ Strategic

access to

decommission-

ning hub and

know-how

✓ One-stop-shop

waste

management

solutions for

the offshore

O&G industry

Active across multiple niche and attractive hazardous waste markets, with leading positions

Div

isio

ns

an

d w

aste

valu

e s

tream

s

c. £1bn

4

Strategy post August 2017

Overall Group strategic focus

➔ Focus on extending the reach and share of existing growth niche markets

➔ Waste streams / customers profitability

➔ Maintain focus on margin and ROCE optimisation

➔ Invest where returns exceed 25%

➔ Site optimisation to drive efficiencies and increase utilisation

➔ Cost savings

➔ Drive cash

➔ Resolve HMRC

Drive growth in specialist

defensible areas and support the

current asset base with targeted

forward investment

➔ North Sea, particularly decommissioning

➔ Support for Nuclear decommissioning

➔ Contaminated construction and demolition soils

➔ EfW residue growth — support

➔ Invest in waste stream specific treatments to develop and enhance existing key assets

5

H1 2019 Financial highlights1

Note

1 From continuing operations excluding landfill tax, exceptional items and share based payments

Adjusted revenue

(excluding landfill tax)

Adjusted PBT

Adjusted EBITDA

Adjusted EPS

Net cash position of

£22.8m – including

£3.35m proceeds received from the

sale of East Kent

ROCE

1

2

3

4

5

6

+40% increase H1 2019

vs H1 2018

31.6

44.2

H1 '18 H1 '19

44%Annualised ROCE

H1 2019


vs H1 2018

4.8

9.6

H1 '18 H1 '19


vs H1 2018

8.3

14.2

H1 '18 H1 '19


vs H1 2018

3.56

7.61

H1 '18 H1 '19


vs H1 2018

8.2

22.8

H1 '18 H1 '19

6

6467

80

2016A 2017A 2018A

Group financials

Strong track record of revenue growth Industry leading margins

Treatment and Disposal North Sea Services

Revenue (£m) FCF (£m)2

Margin (%)

5% 19%Growth (%)

EBITDA (£m)

22% 24%17% 39% 82%34%

Significant improvement in cash

generation

Cash conversion (%)

1

Notes

1 Revenue for 2016A excludes revenue generated from AIS (£5.5m), Colt (£3.5m) and East Kent (£2.7m) which are excluded from the financials reported on the continuing basis for 2017A and 2018A

2 Free Cash Flow (FCF) defined as EBITDA less capex; cash conversion defined as FCF over EBITDA

13

15

19

2016A 2017A 2018A

4

6

15

2016A 2017A 2018A

7

Long-term drivers of growth

Main market drivers

8mt of EfW capacity expected to be added in

the next 5-6 years - resulting in c. 410ktpa of

additional EfW ash/residue needed to be

treated

Strategy

⚫ Win significant share of new EfW APCr

treatment/disposal contracts by maintaining most

competitive pricing

⚫ Continue with track record of 90% win rate

HMRC taxing of soil on site, resulting in

greater landfilling. Greater EA enforcement

Brownfield site redevelopment

⚫ Continue to capitalise on revamped sales and

commercial team

⚫ Increase market share in London by establishing a

river-sea-river route to transport London’s construction

soils to Port Clarence

⚫ Expand site capability

➔ Decommission of UK nuclear estate

expected to steadily continue over the next

40 years

⚫ Broaden service offering / technical capabilities to

become a provider of full lifecycle of radioactive waste

management

⚫ Port Clarence licence extension – NORM and sort and

segregation increased offering

➔ Regulatory drive to dispose of waste through

recycling and recovery vs. landfill

⚫ Increase capacity utilisation at current treatment facilities

⚫ Re-focus and increase HiPods operations

Waste value streams

Growth driven by favourable market trends and well-defined business strategy

EfW residue

Construction &

industrial waste

Radioactive waste

services

Treatment & recovery

North Sea Services

Growth

Rapidly increasing decommissioning market

– £15-20bn spend estimated over the next 10

years of which up to c. £1bn (5% of total) is

addressable by Augean

⚫ Establish Dundee as main port for decommissioning

projects

⚫ Win majority of Plug & Abandonment projects by

leveraging current market leading position in on-site

waste support services

8

64 6780

2016A 2017A 2018A

Key investment highlights (1/2)

⚫ Full suite of hazardous waste treatment and disposal solutions

⚫ #1 provider of EfW ash treatment and disposal with exceptional win rates

⚫ Leader in hazardous construction and demolition wastes

⚫ Key provider of waste management solutions to the North Sea O&G sector

⚫ Only company to operate with a haz and non-haz low-level radioactive waste

permit and a second low level radioactive waste licence in planning for Port

Clarence

UK’s leading provider of

hazardous waste management

solutions

UK-wide network of strategically

located treatment and disposal

facilities

Attractive financial profile…

… with analysts expecting strong

revenue and profit growth to

continue over the forecast period

⚫ 2 hazardous landfills representing 40% of remaining void in the UK, with life

through to 2050 and beyond

⚫ Share of void should further increase over the next 30 years – e.g. a further

2.9m3 of void located in Kings Cliffe

⚫ 100% success rate on planning permissions for new planning and development

⚫ 3 well-invested treatment and recovery facilities

⚫ 4 North Sea sites strategically located for the decommissioning market

+11%Revenue CAGR

2016-18

24%EBITDA margin

2018

44%Annualised ROCE

H1 2019

>80%Cash conversion

2018

Revenue (£m)EBITDA (£m)

1315

19

'16A '17A '18A

9

Key investment highlights (2/2)

⚫ Capitalising on river-sea-river route from London to Port Clarence

⚫ Potential upward pricing movement as hazardous void capacity decreases

⚫ Possible add-on services in radioactive waste

⚫ Various large government funded developing projects

⚫ Some specific large contract opportunities

Significant additional business

and commercial opportunities

Limited cyclicality due to business

diversification across customers

and end-markets

⚫ Diverse sources of wastes allows the business to be resilient to UK economic

performance

– EfW ash driven by general consumption

– Construction and demolition strongly linked to government funded development

projects

– Radioactive waste consistently produced as part of long term plan for UK Nuclear

estate decommissioning

– North Sea decommissioning long term and a-cyclical trend

⚫ ... resulting in limited downcycle from Brexit potential economic disruption

… supported by favourable long

term markets trends and well

defined strategy

⚫ Substantial pipeline of EfW facilities in-construction or planning, expected to add

c. 410ktpa of ash contracts, of which Augean will continue to win a significant share

⚫ Rapidly increasing North Sea decommissioning market

⚫ Increasing share of London’s construction and demolitions wastes by establishing

a river-sea-river route to landfill facilities

⚫ Steady spending on UK Nuclear decommissioning

Good revenue visibility

underpinned by predicable and re-

occurring contracts

⚫ Revenue visibility supported by expected and foreseeable waste volumes (e.g.

EfW residue)

⚫ Further visibility linked to a multitude of reoccurring short and medium term

contracts underpinned by long term relationships with customers

10

Update on HRMC

⚫ As at July 2019, the Group has received landfill tax assessments for its companies Augean North and Augean South for a total of £34.7m (£37.3m

including interest)

⚫ In late July 2019, the Group received a final assessment of £3.1m (incl. interest) for Augean North

⚫ In early August 2019, the Group penalty notice of £4.6m for Augean South

⚫ The current total liability is c. £45m

⚫ All assessments have been appealed and no provision made

⚫ Hardship application granted for Augean North and South therefore no immediate requirement to deposit cash with HMRC

⚫ Lower Tier Tax Tribunal expected in 2020

⚫ If required, there is always a possibility to appeal

⚫ The business has taken specialist legal and tax advice over several years to ensure actions are consistent with the law and official guidance at the

time. Based on this advice, we remain confident in our position

⚫ £0.2m cash payment on legal fees in H1 2019

11

Summary

Leader

UK wide network of

locations

Successful

turnaround strategy

Highly attractive

investment

opportunity

Strong

performance

Favourable

market trends

✓ In attractive niche and highly regulated hazardous waste markets

✓ Two hazardous landfill locations accounting for 40% of current void and optionally to increase void

✓ Strategy successfully executed resulting in strong recent financial performance

✓ Strong revenue momentum, which analysts are expecting to continue going forward

✓ Growth supported by strong market trends and a targeted business strategy

✓ Multiple levers for value creation

Appendix

Treatment & Disposal (“T&D”) – Additional business description

A

13

T&D sub-divisional overview

Description Locations Customer typesDivision Sub-division

Treatment &

Disposal

EfW residue

Construction

& industrial

waste (“C&I”)

Radioactive

waste services

(“RWS”)

Treatment &

recovery

(“T&R”)

⚫ Treatment and disposal of the by-products from EfW and biomass plants, such

as Air Pollution Control Residue (“APCr”) and bottom ash

⚫ Main treatment stabilises dredgings with APCr and disposes of them in Port

Clarence and ENRMF – most cost effective treatment and preferred route for

cost conscious clients. Also offering disposal for hazardous bottom ash

⚫ Application for R-Code underway

⚫ Disposes and treats contaminated waste from construction / demolition

activities and the by products of industrial process

⚫ Waste types treated are mainly asbestos, contaminated waste materials and

contaminated soils

⚫ Offers a wider variety of treatment types vs. competitors including soil washing

TPH and PAH treatment and bioremediation

Port

Clarence

ENRMF,

Thornhaugh

Avonmouth,

Paisley, Port

Clarence

WaRP

⚫ Treats and disposes of low level radioactive waste and Naturally Occurring

Radioactive Material (“NORM”)

⚫ Waste typically originates from the decommissioning of the UK Nuclear estate

and the O&G industry

⚫ Main treatment centred on disposal to landfill and decontamination of materials

(including plant and equipment jet washing)

⚫ Focused on the recovery and recycling of oil and solvents and the generation

of secondary liquid and solid fuels

⚫ Typically treats packaged / chemical / bulk liquid waste

⚫ Treatment types includes solvent plants to split waste liquid waste, oil and

water treatment, chemical treatment and bio treatment to provide a road to

recovery or for efficient disposal

⚫ Also provides specialist industrial cleaning services

Wide range of hazardous waste management solutions – from disposal of hazardous radioactive waste

to recovery of solvents

⚫ EfW facilities

operators

⚫ Biomass facilities

operators

⚫ Construction,

Demolition and

enabling

contractors

⚫ Specialist

contaminated

land contractors

⚫ The LLWR

⚫ Irradiation

reactors, radio

and pharma

⚫ O&G, mineral

processing and

mining

⚫ Oil and chemical

refineries

⚫ Port operators

⚫ Industrial plants

⚫ Waste

management

providers

A. Treatment & Disposal (“T&D”) – Additional business description

14

Avonmouth

Paisley

Port Clarence

PC Waste

Recovery Park

Thornhaugh

East

Northants RMF

T&D map of locations

Hazardous and non-hazardous landfills

Paisley

⚫ One of the largest plants in Scotland

primarily serving the O&G industry

⚫ Treatment, recovery and transport

facilities for oils and solvents and

packaged and organic waste

⚫ Capacity of c.80kte p.a.

East Northants RMF (“ENRMF”)

⚫ Treatment and disposal facility for hazardous and

non hazardous waste

⚫ Majority of waste from EfW residue with asbestos,

construction soils and filter cake as main wastes

types also accepted

⚫ Permitted to treat using a variety of processes e.g.

stabilisation / de-hydration and bioremediation

including soil washing capabilities

Thornhaugh

⚫ Non-hazardous disposal facility

⚫ Planning permissions until 2034

⚫ Includes Cook Hole landfill void – in development

Port Clarence Waste Recovery Park (“PCWRP”)

⚫ Waste Treatment and Recovery plant

with a wide permit to accept varied waste

types

⚫ Sort and segregation capabilities to

process Nuclear waste

⚫ Planning permissions until 2024 with

potential expansion for four new buildings

⚫ Current capacity for 26kte p.a.

Avonmouth

⚫ Waste Treatment and

Recovery Operations

since 2005/06

⚫ Wide permit accepting

most waste types

(organic / oils / solvents)

and with discharge

capabilities

Port Clarence (“PC”)

⚫ Planning permissions extended to 2026

– 1m m3 of void space

– c. 150kt of waste accepted p.a.

⚫ Option extension to mid 2040+

UK-wide network of strategically located hazardous landfills and treatment facilities

Treatment and recovery facilities


⚫ Strategically located to accept construction waste from the North East and in

close proximity to estuaries to accept dredgings for APCr treatment

⚫ Opened ended planning permissions for both Landfill and WRP for a period in

excess of 50 years

– 5.6m m3 of hazardous void space → 33+ years remaining lifespan

– c. 90kt of waste p.a. with 100+ vehicles accepted daily

⚫ Treatment and disposal facility for hazardous and

non hazardous waste

⚫ Largest hazardous landfill in the UK with long term

and well established contracts

⚫ Waste types accepted include APCr, river

dredgings, filter cakes, asbestos contaminated

materials and drilling muds

⚫ Majority of input from contaminated soils

15

Hazardous landfills

UK hazardous landfill capacity by site Commentary

⚫ Unlike non-hazardous landfills, demand for

hazardous landfills is expected to stay constant as it

is the only possible disposal option for a majority of

hazardous waste types

⚫ The majority of hazardous waste going to landfill is

therefore expected to remain broadly stable given

lack of alternative disposal methods

⚫ The UK government will not grant permits for new

hazardous landfills - it will only grant timing and

capacity extension (to adjacent land) to currently

permitted sites

⚫ Capacity extensions are limited by the nature of the

land surrounding the landfill – i.e. unlikely to be

granted extensions in populous areas

⚫ Augean currently holds 40% of hazardous landfill

void in the UK, through its Port Clarence and

ENRMF facilities establishing it as a key player in

the haz waste disposal market

⚫ Unlike most other landfill operators, Augean has a

freehold on their landfill sites vs leasehold

⚫ Furthermore, Port Clarence and ENRMF have the

potential to increase their void

Augean holds 40% of the remaining hazardous landfill void in the UK, with life through 2050 and

beyond

Operator

Planning

expiry

NamePort

Clarence

ICI No 3

Teesport

White

moss

Bradley

Park

Wins-

ford

Wing-

moor Farm

ENRMF Winterton

South

Folly

Farm

Parkgate Pinden Polmont

Shotley

Holdings

n/a 2035 2028 n/a 2030 2025+ 2026 n/a 2023 2042 20222050

Comments Not

operatio

-nal

c. 4 / 5

years

expected

life

End of

life /

change of

use

Veolia

lease

expires in

3 years

Asbestos

only

Asbestos

only

+2.9m3 from

additional

adjacent land

optioned

mt hazardous landfill void

Augean currently holds 40% of

hazardous landfill void in the UK


Source: Tolvik

5.1

2.01.8

1.81.5

1.10.9

0.90.6

0.40.2

0.1

16

Growth in EfW capacity and resulting ash

UK capacity gap driving increase in UK EfW… … resulting in steep increase in EfW residue

-

100

200

300

400

500

600

700

800

900

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Residual Waste EfW Woody Biomass

Other Biomass Hazardous / Clinical Waste⚫ EfW capacity has consistently grown since 2008, when landfill tax made EfW

incineration a more economical disposal route compared to landfill

⚫ Today there is still a significant capacity gap in the UK, which is currently

landfilled for lack of better options

⚫ The significant capacity gap is driving the expected build up of EfW facilities

in the UK – capacity is excepted to grow from 11.6mt in 2018 to 19.2mt in

2024

⚫ Additionally, the tax in Europe on RDF imports is driving further demand for

EfW capacity in the UK

⚫ The forecasted increase of EfW capacity will result in

significant increase in EfW residue (APCr and bottom ash)

– Total APCr generated by both EfW, biomass and

hazardous/clinical incinerators facilities is expected to

grow by c. 85%, from c. 510kt in 2018 to c. 770kt in 2024

⚫ Average yearly APCr growth from 2014 to 2018 was 13.1%

⚫ On average, for each tonne of waste incinerated 3.5% of

APCr is generated

-

5mt

10mt

15mt

20mt

25mt

30mt

35mt

40mt

'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24

EfW

MBT Diversion / Co-Incineration

RDF Exports

Capacity cap

Residual Waste

+8 mtEfW

capacity

The UK capacity gap is driving the build up of EfW facilities (+8 mt capacity expected), resulting in a

significant increase in EfW residue needing to be treated

-

100

200

300

400

500

600

700

800

900

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Residual Waste EfW Woody Biomass

Other Biomass Hazardous / Clinical Waste

Source: Tolvik Source: Tolvik

-

5mt

10mt

15mt

20mt

25mt

30mt

35mt

40mt

'08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 '24 '25 '26


17

211 ktpa

60 ktpa

38 ktpa

103 ktpa

-

50kt

100kt

150kt

200kt

250kt

Planning Commissioning On Hold In Build

Large pipeline on potential new contracts… … supporting significant growth in volumes treated by Augean

410 ktpa of APCr, IBA and Fly Ash

from

37 EfW / biomass

plants in planning/commissioning

or construction

Large pipeline supporting topline growth >35 EfW / biomass plants in construction or planning, which are expected to add c. 410ktpa of EfW residue in

the market, of which Augean is expected to win a significant share, in line with historical win rates

⚫ Large pipeline of contracts for treatment and disposal of APCr and

bottom ash, as result of 37 EfW / biomass facilities either in

planning/commissioning or already under construction

EfW residue treated and disposed by Augean - historical and forecast (ktpa)


~150

~190

~210

-

100kt

200kt

300kt

2017 2018 2019

APCr Bottom ash

⚫ Volumes of APCr and bottom ash treated and disposed by Augean

Source: Tolvik

Appendix

North Sea Services (“NSS”) – Additional business description

B

19

13

1822

'16A '17A '18A

Exceptional track record of topline and

profit growth, expected by analysts to

continue in the forecast period

Key investment highlights for Augean NSS

⚫ Full spectrum of waste and industrial services solution to O&G

operators in North Sea – from drill cutting management to

decontamination for infrastructure decommissioning

⚫ Leading positions across all divisions and main services lines

⚫ Strategically located facilities covering the entire UK North Sea region

⚫ £15-20bn estimated total decommissioning spend in the North Sea

over the next 10 years…

⚫ … of which up to c. £1bn (5% of total) is addressable by Augean

⚫ Augean is uniquely positioned in the Port of Dundee…

✓ Only operator with NORM-permitted facilities in Dundee

✓ Founding member of the Forth and Tay Decommission alliance

⚫ … which is quickly establishing itself as main decommissioning hub

in the UK

⚫ With active presence in both Aberdeen and Lerwick

⚫ Experienced management team with a proven track record

Leading provider of waste and

industrial services solutions to the

North Sea O&G sector

Current and future growth

underpinned by large and rapidly

accelerating decommissioning

market…

… of which Augean is expected to win

a substantial share

Led by an experienced management

team, highly regarded in the industry

Revenue (£m)

B. North Sea Services (“NSS”) – Additional business description

20

Leading provider of waste and industrial services solutions to the North Sea O&G sector, with strong

track record of revenue and profit growth

Augean North Sea Services

Overview

⚫ Formed in 2012 as 70% / 30% JV between Augean and

Scomi Oiltools – now 100% owned by Augean

⚫ Specialised waste management solutions provider for

the containment, treatment and associated industrial

cleaning of waste generated by the North Sea O&G

industry

⚫ Services include: 1) full waste services solutions for both

well drilling and abandonment, 2) industrial cleaning and

decontamination for vessels and decommissioning

projects, 3) general waste management services for

operating rigs and platforms

⚫ Strong track record of revenue and profit growth –

£22m revenue, 9.5% EBIT margin for FY18

⚫ Analysts expect significant growth to continue on the

back of the North Sea decommissioning sector

⚫ Operates out of strategically located facilities in

Aberdeen, Lerwick, Great Yarmouth and the Port of

Dundee

⚫ Clear strategic benefits of being part of Augean Group

as it can leverage its disposal sites (e.g. Port Clarence)

⚫ Leading position in all key markets – key competitors

include ASCO, Taylor Industrial Services, Bilfinger,

Veolia and Scotoil Services

⚫ Led by industry veteran Simon Gibb employing c. 120

people

Overview of NSS locations

34 rigs

worked on

>570wells contained

>150 pit cleaning projects

200k ftcontaminated

tubulars processed

12+ years LTI free at rig

sites

>4m barrels of wellbore wastes re-

injected

Great Yarmouth

Lerwick

Aberdeen

Dundee


21

Three divisions offering the full spectrum of waste and industrial services to O&G operators in North

Sea – from drill cuttings management to decontamination for infrastructure decommissioning

Divisional overview

⚫ Specialised waste management solutions for

waste generated from the drilling and

abandonment of wells

⚫ Services include: provision of engineers and

equipment for the monitoring and handling of

waste, as well as solutions for the collection,

disposal and transport of well waste

⚫ Large fleet of custom built skips, conveyors,

cuttings pumps and vacuum collection

machines for rental

⚫ Plug & Abandonment service offering including

tubular extraction monitoring and NORM

contamination verification

⚫ Mainly operating out of Aberdeen facility with c.

40 employees

⚫ Industrial cleaning and decontamination

services for decommissioning projects or

active operating vessels and terminals

⚫ Services include 1) high-pressure jet cleaning

of vessels (incl. PSVs), infrastructures and

terminals, 2) processing and discharge of

vessel waste, 3) NORM decontamination and

4) full services for on/offshore Shutdowns &

TARs

⚫ Increasingly focused on decommissioning

projects by providing cleaning of topsides

vessels, tubulars (valves and well heads),

deep tank cleans and scrap material cleaning

⚫ Operating out of Dundee, Scotland’s main

decommissioning hub

⚫ Employs c. 150 people (incl. contractors)

⚫ General waste management services provided

to O&G rigs and platforms

⚫ Offering includes collection, transportation,

treatment and disposal of O&G waste

⚫ Waste collected from the rig / platform is

transported to a transfer & treatment facility

located in one of ANSS various locations for

treatment or disposal and recycling

⚫ Further services include treatment and

decontamination of waste for discharge

⚫ Transfer & treatment facilities in all of Augean’s

NSS locations, but Great Yarmouth and

Aberdeen are the main WS facilities

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✓ Engineers in 7 out of 23 operating drilling rigs

in the North Sea

✓ Refocusing division towards faster growing

Plug & Abandonment projects

✓ Only operator in Dundee providing full

decontamination and cleaning services for

decommissioning projects

✓ Leader in both decontamination and vessel

cleaning

✓ Provider of one-stop-shop waste management

solutions for rigs and platforms – including all

types of waste

✓ National and integrated offering across the UK

Drilling, Plug & Abandonment Waste

Management (“DWM and P&A”)Waste Services (“WS”)Industrial Services (“IS”)


22

From drilling to decommissioning

… by offering

⚫ Augean NSS was formed in 2012 to provide

waste management of drill cuttings

⚫ It was able to quickly win a leading market

share, by providing very competitive pricing for

the management of drill cuttings

⚫ Over the last 7 years, management has

successfully implemented its strategy of

expanding its service offering and enter new

niche markets

⚫ Examples on new services introduced:

– Marine Services in 2013

– Industrial Services in 2014

– NORM decontamination in 2015

– Decommissioning services in 2016

⚫ Augean NSS is now focusing its efforts and

resources on the growing and sizable

decommissioning market

Diversifying away waste from drilling … … and refocusing on decommissioning…

Market share of drill cutting management / disposal ⚫ Significant number of structures and wells to be

decommissioned in the North Sea

⚫ … amounting to a c. £15-20bn estimated total

spend over the next 10 years

⚫ Of which up to c. 5% is addressable by

Augean NSS

⚫ Full cleaning and decontamination

services for decommissioning

vessels, pipelines and subsea

infrastructure

– Tank and vessel cleaning

– High-jet cleaning

– Tubular cleaning and

decontamination

– Scrap metal for NORM

decontamination

– FSPO decommissioning

⚫ Specialised industrial cleaning and

NORM decontamination

⚫ Monitoring and NORM

decontamination services for P&A

⚫ Multi skilled personnel to reduce

down-time and increase P&A project

efficiencies

⚫ National coverage with network of

sites located in main

decommissioning hubs (Dundee) and

across the country (Great Yarmouth)

£15-20bn spend over next 10 years

Source O&G UK, OGA

-

£0.5bn

£1.0bn

£1.5bn

£2.0bn

20

17

201

8

201

9

202

0

202

1

202

2

202

3

202

4

202

5

202

6

20

27

Diversifying away from a potentially slowing drilling market to focus on the faster growing decommissioning

and well abandonment sector, expected to represent £15-20bn of spend in the next 10 years

Installations 79

5,618 kmPipelines

1,224Wells

9,495Mattresses

82.5 tSubsea infra.

16FPSOs


23

Dundee – The UK’s main decommission hub

⚫ The port of Dundee is strategically

located for decommissioning projects - key

advantages include

– Natural deep water berth allowing for

large vessels to dock and remain

stationary

⚫ Other main ports in Scotland are less likely

to play a major role given the scale of their

commercial activities (similar for Aberdeen)

⚫ Scottish government has ruled that all

publicly-funded decommissioning

operations will have to be done within

Scotland

Dundee is a key hub for decommissioning… … in which Augean NSS plays a key role… … allowing to win major projects

⚫ The alliance was created with the goal of

positioning Dundee as the UK hub for

North Sea decommissioning work

⚫ The members of the alliance intend to

jointly provide an integrated, end-to-end

O&G decommissioning service

⚫ Being a member allows Augean NSS to be

the preferred supplier of cleaning and

decontamination services for

decommissioning projects taking place in

Dundee

⚫ Augean NSS is also the only provider in

Dundee with PPC and RSA permitted

facilities for NORM-related services and

reception / cleaning of contaminated

equipment

⚫ Augean NSS is a founding member of the

Forth and Tay decommissioning alliance

in Dundee

Shell Curlew Contract

⚫ In 2019, Shell awarded Augean with the

cleaning and decontamination of the Curlew

Floating Production Storage and Offloading

Vessel (FPSO)

⚫ After the clean up the ship will be taken to

Turkey for final dismantling and recycling

⚫ Scope: cleaning of 30 meter deep oil and slops

tanks as well as cleaning of topsides vessels,

flare stack, turret and > 5,000m process

pipework – includes treatment and disposal of c.

400te NORM

⚫ All processes done in collaboration with others

in the alliance

– Forth Ports (quayside services)

– OilMac (lifting services)

– John Lawrie / Robertson’s Recycling

⚫ Contract originally under-scoped, resulting in

increased work required – e.g. 30t vs. 400t of

sludge waste to be cleaned

⚫ Contract extension with expanded scope of

work could generate additional revenues of up

£9m

Strongly positioned to win the significant share of the decommissioning projects, by leveraging unique

position in Dundee, which is quickly establishing itself as the UK’s main decommissioning hub


investor presentation - augean plc · 2019-11-05 · investor presentation november 2019. 1...

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