We are pleased to announce the purchase of assets and surrounding land at our East Kent Waste Recovery Facility.
The East Kent Waste Recovery Facility (the Facility), located at the Discovery Park, Sandwich, Kent, was created in April 2012, with the company signing multiple 10 year leases to operate a high temperature incinerator (HTI), solvent handling facility and associated plant and storage buildings at the site. Over the past two years the Facility has been operated under these lease agreements, but an opportunity has recently arisen to purchase the Facility from the landlord, Discovery Park Limited.
The purchase will expand our footprint at East Kent, granting freehold title over the areas covered by the original leases but also additional land to the south of the Facility. This will provide a self-contained, secure site, presenting opportunities for complementing the existing incineration activities with new waste management services. The Board is confident that the returns available from the Facility will grow over the next two years, as new contracts are secured and a wider service offering is developed.
The cash consideration for the purchase of the land and assets is £1.5m on completion and two further payments of £0.2m deferred until January 2015 and January 2016. This will be funded through the Group’s existing debt facilities with HSBC bank plc. The value of the assets at the Facility is expected to be £2.5m at completion.
The purchase of an expanded site at East Kent provides an excellent opportunity for Augean to enhance its position as a key partner to a range of customers requiring secure destruction of their hazardous wastes. We believe that through owning the assets and land at East Kent we can extend our existing waste management services through the capabilities of the incinerator and the use of new secure storage facilities, driving further revenue growth and enhancing returns for shareholders. Work on this transformation is already underway.
Since its inception the East Kent business has developed its commercial offering to customers across the UK, providing secure destruction for a range of chemical, pharmaceutical and clinical wastes. Turnover at the Facility was £1.5m during 2013, although this was restricted by the need to upgrade the solid feed mechanisms for the HTI, this work being completed successfully during the second half of the year. The Group’s forecasts for 2014 expect the upgraded assets to deliver turnover exceeding £2.5m and an EBITDA contribution to the Group of £0.3m.
