TEG.L Regulatory News (TEG)

The TEG GROUP PLC (TEG/L)

("TEG" or "the Company")

Pre Close Trading Update for 2012

The TEG Group Plc, the AIM listed green technology company, which develops and operates organic composting and energy plants, is pleased to report on trading activity for the 12-month period to 31 December 2012. 

As announced on 3rd September 2012, financial close was completed on the Dagenham project, the combined in-vessel composting ("IVC") and anaerobic digestion ("AD") facility to be constructed at Dagenham Dock, London. TEG was awarded a construction contract worth approximately £16m in revenues together with a 15-year operating contract. Construction has proceeded well, is on budget and remains on programme for final completion in Quarter 1 2014.

Trading at TEG's own facilities in 2012 was strong and exceeded Board expectations. The Company has again processed a record volume of waste during the period and both revenues and profitability have increased markedly.

The Perth AD plant was successfully commissioned in the first half of the year and the plant has operated well throughout the period, generating power since April 2012.

Overall, the trading performance for the business improved substantially in the second half of the year with both the operational and projects elements of the business performing well. The Company finished the year with a strong cash position and a low level of borrowings.

The Board believes that the outlook for the Company in 2013 is positive. Local Authorities and private sector customers continue to divert organic waste from landfill to meet statutory targets and TEG's contract pipeline remains strong. The Company has planning permission in place for its next project and has received funding proposals. The overall funding position for new projects remains challenging, however, and the Company remains cautious about the availability of funding for new projects in the immediate future and the rate at which these projects can be executed. 

TEG anticipates that legislation will continue to support the expansion of the market for the foreseeable future. Landfill Tax is expected to rise again in April 2013, further increasing the attractiveness of TEG's plants and technologies, and interest in both AD and composting continues to grow strongly.

The Company expects to announce its preliminary results for the 12 months to 31 December 2012 in the week commencing 18 March 2013.

ENDS

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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 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, 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. 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.

TEG Biogas (Perth) Limited

TEG Biogas (Perth) Limited ("TEG Biogas") is a joint venture company established by TEG with Albion LLP. TEG Biogas is constructing 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.

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.