The TEG Group PLC : Half Yearly Report

The TEG GROUP PLC (AIM: TEG)

("TEG" or "the Group")

The TEG Group PLC, the AIM listed green technology company, which develops and operates organic composting and energy plants, announces its interim results for the half year ended 30 June 2013

Financial

·      Results build on strong progress seen during second half of 2012.  Half year revenue up substantially to £12,906,000 (2012: £5,617,000)

·      Gross profit of £1,940,000 (2012: £1,268,000)

·      Group trading loss significantly reduced to £777,000 (2012: £1,789,000) 

·      The Group cash balance at 30 June 2013 was £1,739,000 (2012: £1,101,000)

·      No dividend is recommended

Operations

·      Revenues of the Group's own plant operations continue to grow strongly with operational revenues up 7% and waste volumes increased by 7%

·      Several new contracts secured during period and with Group passing the one million tonne mark for organic waste recycling

·      Flagship Dagenham plant progressing well, on time and in budget with IVC plant already in operation and operation of AD plant expected shortly

·      Perth AD Facility operating very successfully and generating power continuously since commissioning in early 2012

·      Construction of the fourth and final facility (Bolton), as part of the Greater Manchester Waste PFI Contract,is now complete and commissioning of the facility is in progress. 

Strategic activities

·      Offer of loans totalling £2.6m received to give TEG both working capital and funds to facilitate some future strategic activities

·      Funding offers received for next project in Gaydon, Warwickshire

Commenting, Rory Maw, Non-Executive Chairman, TEG Group Plc, said:

"I am pleased to see that TEG has been able to continue the significant progress it saw during the second half of 2012 and the ongoing success of the Group's own plant operations demonstrates that market demand for more capacity remains strong".

"Whilst the Group currently does face challenges in completing the Manchester contract, obtaining the associated cash retentions and recognising associated one-off charges in the current year, the funding offer received for the forthcoming Gaydon project, as well as our strong pipeline of tender opportunities and increasing market profile, allows us to anticipate significant future growth in forthcoming years".  

- ENDS -

Editor's Notes

TEG

TEG provides state of the art technology for handling organic wastes.  Its in-vessel composting ("IVC") system is one of the few approved technologies capable of treating animal by-product ("ABP") waste and it is now providing an anaerobic digestion ("AD") technology to produce power from food waste.  Plant economics are predominantly driven by the gate fees charged, rather than the value of the end product (compost).  

The AD plants also benefit from power sales and Renewable Obligations Certificates ("ROCS") or Feed-in Tariffs ("FITs").  TEG owns its composting technology, the TEG Silo Cage System, and has an agreement with UTS Biogastechnik GmbH ("UTS") for the provision of AD technology into the UK waste markets.  The TEG processes are an economic and sustainable alternative to landfill.

The TEG Silo Cage System

The Silo Cage system, one of the few technologies capable of treating organic waste, is a natural process producing compost as an end product.  The compost is an excellent soil conditioner that fertilises, retains moisture, provides structure and reduces the incidence of plant disease.  TEG's Silo-Cages are housed in self-contained buildings, suitable for urban environments, are not unsightly and are environmentally friendly.

Collaboration with UTS

UTS is one of the world's leading biogas companies offering services in the planning, construction, delivery and installation of biogas plants and their key components.  UTS has its own production facilities and service shops, technical design and development departments as well as mobile mechanical and biological customer service technicians to support the international client base. 

UTS also develops and sells specialized mixers, pumps and a variety of solid/liquid separating devices related to the biogas and agro/food markets. It is headquartered near Munich, Germany with subsidiaries in Italy, Hungary, Spain, the Czech Republic and now a rapidly developing company UTS Biogas Limited, to service the United Kingdom & Ireland markets.

TEG Biogas (Perth) Limited

TEG Biogas (Perth) Limited ("TEG Biogas Perth") is a joint venture company established by TEG with Albion LLP.  TEG Biogas Perth has constructed a 15,000 tonnes per annum AD plant at TEG's Glenfarg site to produce nominally 0.7MW of electrical power and 0.2MW of heat that is to be used by Binn Eco Park.  The facility has been in operation, generating revenues from waste sales and power generation since Quarter 1 of 2012.  It has become one of the leading AD operations in Scotland.

TEG Biogas (London) Limited (TEGBL)

TEG Biogas (London) Limited ("TEG Biogas London") is a joint venture company established by TEG with funding partners led by Foresight Environmental Fund LP.   TEG Biogas London is constructing a combined In Vessel Composting (IVC) and AD plant in Dagenham that will process approximately 50,000 tonnes per annum of organic wastes and will generate approximately 1.4MW of power, sufficient to power approximately 2000 homes.   The IVC plant is already in operation and it is expected that the AD plant will commence operations in Quarter 3 of this year.  The facility, which is currently on time and in line with budget, is due to be handed over to the client, TEG Biogas (London) Limited, in Quarter 1 of 2014. 

TEG received a contract to construct the facility valued at approximately £16m and will operate the facility after handover as part of a 15-year operating contract.  The Group has a minority shareholding in TEGBL, which has been established as a joint venture with various funding partners.

General

Customers include local authorities, waste management companies, food processing companies, farmers and landowners.  The Company's expanding market is driven by increasingly stringent EU and UK legislation regulating the treatment and disposal of organic waste.  Statutory targets for the diversion of waste from landfill increase annually through to 2020, increasing TEG's market opportunity year on year. 

Chairman's statement

I am delighted to present the Group's interim report for the half year ended 30 June 2013, which was a positive trading period during which the Group has built on the progress seen in the second half of 2012. It is highly encouraging to note that the performance of the business in the 12-month period from June 2012 to June 2013 was the strongest in the Group's history.

Half year revenue for the period was up substantially to £12,906,000 (2012: £5,617,000) with the Group trading loss being significantly reduced to £777,000 (2012: £1,789,000 loss).  The Group recorded a gross profit of £1,940,000 (2012 interim £1,268,000 profit).

The Group cash balance as at 30 June 2013 was £1,739,000 (2012: £1,101,000).

Group Plant Operations

Revenues at the Group's own plant operations continued to grow in the first half of 2013 and we continue to be pleased with the performance of the BOO business.  Operational revenues grew by 7% in the first half of 2013 compared to the same period in 2012.  Waste volumes increased by 7% and overall gate fees have increased by 4%. 

The Group announced new contracts in the period with FCC Environment Limited ("FCC"), Perth and Kinross Council and Nottingham City Council.  A significant milestone was achieved when the Group passed the '1 million tonnes' mark for organic waste recycling, which has removed from the environment the equivalent of over 200,000 tonnes of CO