TEG GROUP PLC (AIM: TEG)

("TEG" or "the Company")

INTERIM RESULTS

The TEG Group Plc, the AIM-listed cutting edge green technology company, which develops and operates organic composting and energy plants, announces its interim results for the half year ended 30 June 2010.

Highlights
 

Financial

Trading for the period in line with Board expectations.
 

Half year revenues up substantially to £8,797,000 (2009: £4,484,000).
 

The underlying loss for the interim period reduced by 50.8% to £391,000 (2009: £796,000 loss) after adjusting for the negative goodwill credit of £15,000 (2009: £851,000) arising due to the acquisition in June 2009 of Banham Compost Limited.
 

Underlying EBITDA profit of £461,000 (2009: £273,000 loss).
 

The Group recorded its first positive trading cash-flow for the period and the Group retains a healthy cash position with a closing balance as at 30 June 2010 of £4,650,000.
 

Operational

Greater Manchester Waste PFI Contract

Construction of the Greater Manchester plant in Rochdale completed in June 2009 and the plant handed over in November 2009. 
Commissioning of second plant in Bredbury underway following construction completion.
Construction at the third plant at Trafford commenced in April 2010. 
Planning approval gained at the remaining site in Bolton.
 

Simpro Limited Acquisition & Fundraising

Acquisition of Simpro Limited, a well established Midlands-based composting business (announced 17/06/10) following a successful share placing to raise £6.8m before expenses.  Simpro has six operating sites, immediate revenue and cash flow and potential for future growth. 
 

Simpro is also part of a consortium that has secured preferred bidder status for the Milton Keynes Council contract that will be operated from a seventh site to be developed ? it is expected to be operational by the third quarter of 2011.

Group Plant Operations

Record plant performance in first half.
Perth - revenues increased by 13.7%.
Todmorden  - revenues increased by 64%.
Carleton Rode - integration of facility has proceeded to plan, and has exceeded expectations.
Sherdley Farm  - to be progressively closed during 2010.
 

Post Period End

First AD project (announced on 26/07/10) to be constructed by TEG Biogas (Perth) Limited, a JV company established with Albion Ventures LLP.  The facility is to be constructed on the existing TEG site in Perth, with technology supplied by UTS Biogastechnik GmbH ("UTS") and the gas to power element supplied by Alkane Energy PLC ("Alkane").  TEG was able to secure project finance through Albion for the capital funding of the facility and additional grant funding from Zero Waste Scotland. 
 

Market Update

Annual escalation of Landfill Tax ("LFT") continues to act as strong stimulus for the diversion of waste from landfill and for the development of new renewable energy and food waste recycling technologies. Statutory obligations to divert waste from landfill are increasing annually and are expected to increase continuously until 2020.  Central Government has also placed particular emphasis on AD and the Welsh assembly Government is considering a landfill ban for organic wastes.  All of which are contributing to very favourable market conditions.
 

Commenting, Nigel Moore, Non-Executive Chairman, TEG Group Plc, said:

"The Board is very pleased with the continued growth of the business and the performance in the first Half of the year."

"The acquisition of Carleton Rode has proved very successful and the recent acquisition and successful integration of Simpro further enhances the Group?s capabilities.  The Board believes the Group?s strategy to grow the business by a combination of plant sales and owned and operated facilities, and to diversify into AD, is proving very successful and the Group intends to continue to pursue this strategy."

"TEG?s ability to secure debt and project finance reinforce the Group?s ability to respond to changes in market procurement policy and to maintain strong future growth.  The Group is very well placed to continue to take full advantage of its expanding market with both its Silo Cage in-vessel composting technology and its collaborations in the AD sector with UTS and Alkane."

 "The Board is confident that the Group has an exciting future with a strong outlook for trading in the remainder of 2010 and beyond."

ENDS

Contact:

 
 
The TEG Group Plc
Tel: 01772 644980
Mick Fishwick, Chief Executive
www.theteggroup.plc.uk
Tanja Willis, Finance Director
  
 
Ambrian Partners Limited (Nomad)
Tel : 020 7634 4700
Andrew Craig / Ben Wright 
  
 

Peckwater PR
Tel: 07879 458 364
Tarquin Edwards
tarquin.edwards@peckwaterpr.co.uk
 

Editor s Notes:

TEG

TEG provides an in-vessel composting technology, which is one of the few approved technologies capable of treating animal by-product (ABP) waste, and 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 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 alternative to landfill.

The TEG Silo Cage System

The Silo Cage system, one of the few technologies in Europe capable of treating this 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, are not unsightly and are environmentally friendly.

Collaboration with UTS

Having supplied equipment to more than 1,500 equipped biogas plants, UTS Biogastechnik GmbH is one of the world?s leading biogas companies.  The UTS group of companies offers services in the planning, construction, delivery and installation of biogas plants and their key components.  The company 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. The company 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.

Anagest, Stormy Down, Bridgend

TEG announced on 12 October 2009 that it will be developing a facility at Stormy Down, near Bridgend in association with Anagest, itself a joint venture between the site owner, a cement manufacturer (Cenin) and a farming concern, to develop a co-located anaerobic digestion ("AD") and in-vessel composting ("IVC") plant.

The site at Stormy Down benefits from planning permission for an AD plant and an IVC plant. The site is ideal for AD development with demand for heat and power from the cement manufacturer and outlets for the digestate through the farming partner.  It is intended that construction at the facility will commence in 2010 and will ultimately provide up to 70,000 tonnes per annum of organic waste treatment capacity.

TEG Biogas (Perth) Limited

TEG announced on 26 July 2010 that it will be establishing its first anaerobic digestion ("AD") plant to operate alongside the Group?s well established in vessel composting plant at Glenfarg, Perthshire.  The Company has formed a 50:50 joint venture ("JV"), TEG Biogas (Perth) Limited ("TEG Biogas") with Albion Ventures LLP ("Albion"), the London based venture capital investor.  TEG Biogas is to construct and operate a 16,000 tonnes per annum food waste AD plant and TEG will operate the plant on behalf of TEG Biogas under a management agreement.  TEG will manage sales and will supply waste to the AD facility from its surplus currently under management.

TEG Biogas has been awarded a grant for approximately 20% of the plant and equipment capital funding (£700,000) by Zero Waste Scotland, the Scottish Government funded organisation that provides support to the waste and recycling sector.  The grant will help fund the purchase of the AD plant and equipment.  The TEG Biogas facility is expected to generate approximately 0.7 MW of electricity and 0.25 MW of heat. 

General

Customers include local authorities, waste management companies, food processors, 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. 

The Natural Organic Fertiliser Company Limited ("NOFCO"), a subsidiary of TEG, is a marketing company specialising in the development of end markets for compost products, an important aspect of all plant developments and key to local authority development.  The company has an expertise in the development of agricultural and horticultural markets and this capability is provided to customers to enhance TEG?s overall service offering.