TEG.L Regulatory News (TEG)

18 Aug 2005 07:00

TEG Environmental Plc18 August 2005 For release 7.00am 18 August 2005 TEG ENVIRONMENTAL PLC Interim Results for the half year ended 30 June 2005 TEG Environmental Plc ("TEG"), the leading edge green technology company whichconverts organic wastes into natural organic fertiliser, announces its InterimResults for the half year ended 30 June 2005. For further information pleasecontact: TEG Environmental PlcMick Fishwick, Chief Executive 01772 422 220 TEG Environmental PlcTanja Willis, Finance Director 01772 422 220 Binns & Co PR LtdPeter Binns / Tarquin Edwards 020 7786 9600 Editor's Notes: TEG provides an in-vessel composter, which is one of the few approvedtechnologies capable of treating animal by-product waste. Plant economics aredriven by the gate fees charged, rather than the value of the end product(compost). The TEG process is an economic alternative to landfill. The Silo Cage system, one of the few technologies in Europe capable of treatingthis waste, is a natural process producing compost as an end product, used as anexcellent soil conditioner that fertilizes, retains moisture, provides structureand restricts weed growth. TEG's Silo-Cages will be housed in a self-containedbuilding, are not unsightly and are environmentally friendly. Potential customers include local authorities, waste management companies, foodprocessors, farmers and landowners. The Company's expanding market is driven byincreasingly stringent EU and UK legislation regulating the treatment anddisposal of organic waste. TEG ENVIRONMENTAL PLC Interim Report for the six months ended 30 June 2005 Chairman's Statement I am pleased to present the company's interim results for the first half of2005. The first half of the year has seen tremendous progress in thedevelopment of the business with major commercial successes, the benefits ofwhich will be seen in the second half of the year. In addition, we haveachieved positive release status for Animal By Product (ABP) processing at ourplant at Sherdley Farm, Preston and we have strengthened our management teamwith the appointment of Michael Fishwick as Chief Executive and Tanja Willis asFinance Director. The first half of the financial year saw us secure a £925,000 contract with TheCity and County of Swansea Council. Although TEG received the first payment of£357,000 as deposit, this is bonded until works commence and equipment ordersare placed, scheduled for the fourth quarter of 2005. Consequently, this doesnot show against the first half results. We have recorded a post tax loss of£762,379 (2004 : £518,566), the results reflecting the cost of strengthening themanagement team in this period and resultant increase in administrativeexpenses. No dividend is proposed. On 12 July 2005, we were able to announce our second sale, a plant for Banham(Compost) Limited valued at close to £2 million. Revenues are expected tocommence in the third quarter of 2005. I am also delighted to be able to announce a third major project for TEG, thetakeover and development of a large composting business in Scotland, our firstmajor build, own and operate project. The contract is for 11 years and is worthsome £14 million, with substantial scope for growth. The business has established revenues with an excellent customer base. It isone of the largest ABP composting businesses in the UK and has waste managementlicence and planning permission in place. It represents TEG's largest contractgain since it listed on AIM in July 2004. TEG will assume responsibility for the business in September 2005 and willinstall its Silo-Cages progressively in early to mid 2006. Revenues willcommence on 29 August 2005. As noted above, TEG achieved positive release status for ABP approval at itsplant at Sherdley Farm, Preston. Full ABP approval is expected at the end ofAugust 2005. Once achieved, this will enable development of the plant and wehave generated significant local interest from food manufacturers to supplywaste to the facility. It is anticipated that revenues will be generated fromthe fourth quarter of 2005. In order to finance the new projects, TEG has announced it is intending to raisefunds by a share issue in August 2005. The contracts we have secured provide the base for an excellent business and Ilook forward to its continued success. Nigel MooreChairman SUMMARISED PROFIT AND LOSS ACCOUNTFor the six months ended 30 June 2005 Unaudited 6 Unaudited 6 Audited 12 months months months ended ended 30 ended 30 31 December June 2005 June 2004 2004 Note £ £ £ TURNOVER 9,286 14,326 21,572 Cost of Sales (8,292) (9,259) (12,017) _________ _________ _________GROSS PROFIT 994 5,067 9,555 Administrative expenses (773,981) (533,248) (1,227,550) _________ _________ _________OPERATING LOSS (772,987) (528,181) (1,217,995) Interest receivable 22,446 12,702 34,598Interest payable (1,375) (3,087) (4,121) _________ _________ _________LOSS ON ORDINARY ACTIVITIES BEFORE (751,916) (518,566) (1,187,518)TAXATION Taxation 2 (10,463) - 75,774 _________ _________ _________LOSS FOR THE PERIOD (762,379) (518,566) (1,111,744) --------- --------- --------- Loss per ordinary share 3 (4.65p) (4.15p) (7.9p)- basic & diluted SUMMARISED BALANCE SHEETAs at 30 June 2005 Unaudited Unaudited Audited at at 30 June at 30 June 31 December 2005 2004 2004 £ £ £FIXED ASSETSIntangible assets 1,990 5,988 3,990Tangible assets 179,071 140,384 206,549 _________ _________ _________ 181,061 146,372 210,539CURRENT ASSETSStocks 3,362 7,848 8,166Debtors 84,217 79,380 100,122Cash at bank and in hand 771,650 314,267 1,164,284 _________ _________ _________ 859,229 401,495 1,272,572 CREDITORS: due within one year (631,707) (309,160) (300,479) _________ _________ _________NET CURRENT ASSETS 227,522 92,335 972,093 _________ _________ _________TOTAL ASSETS LESS CURRENT 408,583 238,707 1,182,632LIABILITIES CREDITORS: due after more than one (24,517) - (36,187)year _________ _________ _________NET ASSETS 384,066 238,707 1,146,445 --------- --------- --------- CAPITAL AND RESERVESCalled up share capital 819,269 624,207 819,269Share premium account 9,352,543 8,046,688 9,352,543Profit and loss account (9,787,746) (8,432,188) (9,025,367) _________ _________ _________EQUITY SHAREHOLDERS' FUNDS 384,066 238,707 1,146,445 --------- --------- --------- SUMMARISED STATEMENT OF CASHFLOWSFor the six months ended 30 June 2005 Unaudited 6 Unaudited 6 Audited 12 months months months ended ended 30 ended 30 31 December June 2005 June 2004 2004 Note £ £ £ NET CASH OUTFLOW FROM OPERATING 4 (397,557) (550,862) (1,196,815)ACTIVITIES _________ _________ _________RETURNS ON INVESTMENT ANDSERVICING OF FINANCEInterest received 22,446 12,702 34,598Interest element of finance lease (1,375) (3,087) (4,121)and hire purchase payments _________ _________ _________ 21,071 9,615 30,477 _________ _________ _________TAXATIONUK Corporation tax received - 71,137 71,137 _________ _________ _________ CAPITAL EXPENDITURE AND FINANCIALINVESTMENTPayments to acquire tangible (6,708) (12,586) (27,972)fixed assetsReceipts from sales of tangible 2,230 - 2,859fixed assets _________ _________ _________ (4,478) (12,586) (25,113) _________ _________ _________NET CASH OUTFLOW BEFORE FINANCING (380,964) (482,696) (1,120,314) FINANCINGProceeds on issue of shares - - 1,500,916Repayment of capital lease and (11,670) (16,542) (29,823)hire purchase contracts _________ _________ _________ (11,670) (16,542) 1,471,093 _________ _________ _________(DECREASE) / INCREASE IN CASH (392,634) (499,238) 350,779 --------- --------- --------- NOTES TO THE UNAUDITED INTERIM RESULTS 1. BASIS OF PREPARATION OF INTERIM FINANCIAL INFORMATION The financial information contained in this statement does not constitutestatutory accounts as defined in section 240 of the Companies Act 1985. Thefigures for the 12 month period ended 31 December 2004 have been extracted fromthe Statutory Financial Statements which have been filed with the Registrar ofCompanies. The auditors' report on those financial statements was unqualifiedand did not contain a statement under Section 237(2) of the Companies Act 1985. The accounts have been prepared in accordance with applicable accountingstandards and under the historical cost convention. The principal accounting policies of the company have remained unchanged fromthose set out in the Company's 2004 Annual Report and Financial Statements. The directors have concluded that the continued development of the business willresult in a net cash outflow until operating revenues exceed expenditure.Consequently, the current funds available are believed to be insufficient tofinance the future development of the business. The directors intend to undergoa further fund raising exercise to raise working capital sufficient to enablethe company to continue its development and to fund investments in committedprojects. Therefore, the directors consider it appropriate to prepare the financialstatements on a going concern basis. The financial statements do not include anyadjustments that would result in the failure to raise the additional finance. The interim report has been reviewed by the Company's auditors. A copy of theauditors' review report is attached to this interim report. 2. TAXATION The tax charge represents a reduction in the claim for payable R&D tax credit2004. 3. LOSS PER SHARE The loss per share is calculated by reference to the loss attributable toordinary shareholders divided by the weighted average of 16,385,381 ordinaryshares for the 6 months to 30 June 2005, 12,484,140 ordinary shares for the 6months to 30 June 2004, and 14,060,383 for the 12 months to 31 December 2004. Unaudited 6 Unaudited 6 Audited 12 months ended months ended months ended 30 June 2005 30 June 2004 31 December 2004 Attributable loss (£) (762,379) (518,566) (1,111,744) _________ _________ _________Average number of ordinaryshares in issuefor basic and diluted loss per 16,385,381 12,484,140 14,060,383share _________ _________ _________Basic and diluted loss per (4.65p) (4.15p) (7.9p)share --------- --------- --------- The loss for each period and the weighted average number of ordinary shares forcalculating the diluted loss per share for each period are identical to thoseused for the basic loss per share. This is because the outstanding share optionswould not be dilutive under the terms of Financial Reporting Standard No. 14'Earnings per share' (FRS 14). 4. RECONCILIATION OF OPERATING LOSS TO NET CASH FLOW FROM OPERATING ACTIVITIES Unaudited Unaudited Audited 12 6 months 6 months months ended 30 ended 30 ended 31 June 2005 June 2004 December 2004Operating loss (772,987) (528,181) (1,217,995)Amortisation 2,000 1,998 3,996Depreciation of tangible fixed assets 31,687 30,323 32,666Loss/(profit) on sale of tangible fixed 270 - (2,859)assetsDecrease/(increase) in stocks and work 4,804 (967) (1,285)in progressDecrease/(increase) in debtors 5,442 (52,004) 3,028Increase/(decrease) in creditors 331,227 (2,031) (14,366) _________ _________ _________ (397,557) (550,862) (1,196,815) --------- --------- --------- 5. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS Unaudited Unaudited Audited 12 6 months 6 months months ended 30 ended 30 ended 31 June 2005 June 2004 December 2004(Decrease) / increase in cash during (392,634) (499,238) 350,779the period Cash outflow from hire purchase 11,670 16,542 29,823 _________ _________ _________Change in net funds resulting from (380,964) (482,696) 380,602cashflowsInception of finance lease - - (53,122) _________ _________ _________Movement in net funds during the period (380,964) (482,696) 327,480 Opening net funds 1,104,751 777,271 777,271 _________ _________ _________Closing net funds 723,787 294,575 1,104,751 --------- --------- --------- 6. ANALYSIS OF MOVEMENT IN NET FUNDS At 1 January Cash flow 30 June 2005 2005 £ £ £ Cash at bank and in hand 1,164,284 (392,634) 771,650 _________ _________ _________Finance leases (59,533) 11,670 (47,863) _________ _________ _________ 1,104,751 (380,964) 723,787 --------- --------- --------- An advance customer payment of £357,000 is held in a restricted account whichwill be released following the completion of contractual conditions. 7. RECONCILIATION OF EQUITY SHAREHOLDERS' FUNDS Unaudited Unaudited Audited At At 30 June At 30 June 31 December 2005 2004 2004 £ £ Loss for the financial period (762,379) (518,566) (1,111,744) Issue of share capital - - 1,500,916 _________ _________ _________(Decrease) / increase in equity (762,379) (518,566) 389,172shareholders' funds Opening equity shareholders' funds 1,146,445 757,273 757,273 _________ _________ _________Closing equity shareholders' funds 384,066 238,707 1,146,445 --------- --------- --------- 8. Copies will be available on request from the Company Secretary, TEGEnvironmental plc, Unit 6, Meadowcroft Business Park, Pope Lane, Whitestake,Preston, Lancs. PR4 4BA. 9. The interim report was approved by the board of directors on 17 August 2005. INDEPENDENT REVIEW REPORT TO TEG ENVIRONMENTAL PLC Introduction We have been instructed by the company to review the financial information forthe six months ended 30 June 2005 which comprises the Summarised Profit and LossAccount, Summarised Balance Sheet, Summarised Cash Flow Statement, and therelated notes 1 to 9. We have read the other information contained in theinterim report, which comprises only the Chairman's Statement, and consideredwhether it contains any apparent misstatements or material inconsistencies withthe financial information. Our responsibilities do not extend to any otherinformation. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report and ensuring that theaccounting policies and presentation applied to the interim figures areconsistent with those applied in preparing the preceding annual accounts exceptwhere any changes, and the reasons for them, are disclosed. Review work performed We conducted our review having regard to the guidance contained in Bulletin 1999/4 'Review of interim financial information' issued by the Auditing PracticesBoard for use in the United Kingdom. A review consists principally of makingenquiries of management and applying analytical procedures to the financialinformation and underlying financial data, and based thereon, assessing whetherthe accounting policies and presentation have been consistently applied, unlessotherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance with UnitedKingdom Auditing Standards and therefore provides a lower level of assurancethan an audit. Accordingly we do not express an audit opinion on the financialinformation. Going concern In arriving at our review conclusion, we have considered the adequacy of thedisclosures made in the interim statement concerning the future funding of thecompany. The interim statement has been prepared on a going concern basis, thevalidity of which depends on future funding being available. The interimstatement does not include any adjustments that would result from the failure toobtain funding. Details of the circumstances relating to this fundamentaluncertainty are described in note 1. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2005. Grant Thornton UK LLPManchester17 August 2005. This information is provided by RNS The company news service from the London Stock Exchange