TEG.L Regulatory News (TEG)

The TEG Group Plc

("TEG" or the "Company")

Half Year Update

The TEG Group Plc (AIM: TEG), the AIM-listed green technology company, which develops and operates organic composting and energy plants, is pleased to provide its half-year trading update.

Group Plant Operations

Trading in the first half of the year has been very satisfactory and the operational business has exceeded budget to date. The Board was delighted to complete the acquisition of the Hillbarton composting facility at the end of March 2014, to enhance the Company's scope of operations. The Company acquired a 34,000 tonnes per annum In Vessel Composting ("IVC") and Open Air Windrow ("OAW") composting facility, with potential to expand to 50,000 tonnes per annum and with future development potential for a renewable energy plant. At the same time, this has extended the Company's geographic presence into the South West of England. Integration of the business has gone well.

Anaerobic Digestion ("AD") Facilities

The £16m Dagenham IVC and AD facility was delivered to time and budget at the end of February this year and TEG has moved into a 15-year operating and maintenance contract, which will generate £1.3m per year in annual revenues. The plant is operating well.

The Perth AD plant continues to operate very well, with consistently high power output and electricity sales.

Greater Manchester Contract

The Company is pleased to report solid progress in relation to the Manchester contracts. Work is continuing to resolve the outstanding issues and it is anticipated that the release of some retentions will commence in due course.

Strategic Activities

Unfortunately the Company has not yet been able to reach financial close of the Gaydon project in Warwickshire. Whilst early construction activities have been undertaken, there remain certain site related issues to resolve before financial close can be achieved.

The Company is pursuing a number of other projects from its pipeline, including the development of other Company assets.

Market Update

The Company believes that market forces continue to develop in favour of TEG, with landfill tax, recycling targets and legislation forcing increased diversion of waste from landfill. The implementation of the landfill ban in Scotland has seen a marked increase in waste supply in 2014. The wider regulatory environment continues to benefit the Company with few IVC technologies now able to meet the stringent environmental standards required.

The Company will announce its interim results for the period to 30th June 2014 during September 2014.

Commenting for TEG, Chief Executive Mick Fishwick said "It has been a very strong start to the year by our operational businesses and we are delighted with the good performance of the two AD plants. It is of course frustrating that we have not yet been able to reach financial close of the Gaydon project but we continue to pursue this and other development opportunities. The Company still needs to establish a solid capital position, but we maintain a very promising pipeline and we are confident the Company has good prospects ahead".

Notes to Editors

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"). 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.

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 has constructed a combined In Vessel Composting (IVC) and Anaerobic Digestion (AD) plant in Dagenham that processes approximately 50,000 tonnes per annum of organic wastes and generates approximately 1.4MW of power, sufficient to power approximately 2000 homes. The plant went into full operation in Q1 2014. 

TEG received a contract to construct the facility, valued at approximately £16m, in September 2012. The Company is currently operating the facility, post handover, as part of a 15-year operating and maintenance contract. The Group has a 24.5% shareholding in TEGBL.

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.