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Augean makes moves to shutter Colt division
Specialist waste management company Augean updated the marker on its ongoing programme to optimise business units and turn around those that were underperforming on Wednesday.
The AIM-traded firm said the programme had "stringent requirements" designed to ensure that all divisions of the Augean group were 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 had not provided the positive improvement required under the 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," the Augean board said in its statement.
"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 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."
That consultation would take 30 days, Augean said, and could impact up to 60 staff in Colt.
The Hull site could also be sold.
Augean said the income statement impact of closure of the Hull site and any associated redundancy costs could be around £1.6m, with a net cash receipt expected of £1.3m.
The Colt operation was expected to be classified as a discontinued operation for both the half and full year accounts, and would 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."