TEG.L Regulatory News (TEG)

The TEG GROUP PLC (TEG/L)

("TEG" or "the Company")

Project Update

Dagenham and North East Wales

The TEG Group Plc ("TEG"), the AIM listed cutting edge green technology company, which develops and operates organic composting and energy plants, is pleased to provide the following update with regards to the proposed Dagenham and North East Wales projects.

Dagenham

The Company can confirm that it has been granted planning approval to develop its proposed Anaerobic Digestion ("AD") and In Vessel Composting ("IVC") plant at the Sustainable Industries Park in Dagenham, London. Planning permission documentation is expected shortly.

Whilst securing funding has proved to be a lengthy process, the Company is pleased to have entered into Heads of Terms with the Foresight Environmental Fund ("FEF"), which will be the lead funder for the project. FEF is engaging with other funders to complete the funding required for the project and to form a new company, TEG Biogas (London) Limited ("Biogas London"). The funding includes a loan for £1.9m from the London Waste and Recycling Board ("LWaRB") as previously announced on 13th December 2010. FEF expects to reach conditional Financial Close at or around the end of 2011. However, the plant supply contract between Biogas London and TEG is unlikely to be completed before the end of 2011 and the Company will therefore not be able to book the anticipated revenues for the project in the current year to 31 December 2011, but will recognise this revenue in the year to 31 December 2012.

In the first phase, it is intended that the Dagenham facility will comprise a 30,000 tonnes per annum AD plant and a 20,000 tonnes per annum IVC plant. The facility will be the first AD plant in central London and will generate in excess of 1MW of electricity, sufficient to power approximately 2,000 homes. It will also produce over 40,000 tonnes per annum of compost and fertiliser. The planning approval allows for future expansion of the facility with a further 20,000 tonnes per annum of AD capacity.

The Company was delighted to announce on the 9th March 2011 that it had been awarded a contract by LondonWaste Limited for 12,000-15,000 tonnes per annum of co-mingled food and green waste, which provides a solid initial contract base for the facility. This contract commenced in April 2011 and the Company is processing the waste in its network of facilities until such time as the Dagenham plant is operational.

North East Wales

TEG announced on 31 August 2011 that in conjunction with it partner Alkane Energy PLC it had been awarded Preferred Bidder status for a long term food waste contract by three Local Authorities in North East Wales ("the Council Hub"). TEG is pleased to confirm that all parties are moving towards Financial Close, though the target date for completion has moved to Quarter 1 in 2012. As stated in August 2011, TEG expects this project to be bank funded and a funding offer is in place. The overall programme and project details remain unchanged.

TEG and Alkane will create a joint venture company, to be called NEAT Biogas Limited ("NEAT") in which TEG will be a 70% equity holder and Alkane 30%. Under the contract, NEAT is planning to construct and operate a new 20,000 tonnes per annum AD plant to process the food waste supplied by the Council Hub together with additional third party food waste. The initial contract with the Council Hub will be for fifteen years, with a potential five year extension.

The facility will be an AD plant processing food wastes to produce electricity and a digestate product, for use as a fertiliser in agricultural applications. Full year revenues for the operating project are expected to build to approximately £2m per annum and the facility is expected to generate approximately 1MW of renewable power, sufficient to satisfy the needs of approximately 2,000 homes. This type of operation is a recognised solution to the UK Government's stated objectives in complying with both EU landfill targets and de-carbonising the UK electricity market and the electricity generated will benefit from premium selling prices through the Feed-in Tariff scheme.

Commenting, Mick Fishwick, Chief Executive, said:

"In a very challenging financial market, we are delighted to have made such good progress in the execution of these two flagship projects. We look forward to both projects moving to completion and into construction in 2012".

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 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, suitable for urban environments, are not unsightly and are environmentally friendly.

Collaboration with UTS

UTS Biogastechnik GmbH 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 16,000 tonnes per annum AD plant at TEG's Glenfarg site to produce 0.7MW of electrical power and 0.2MW of heat that is to be used by Binn Eco Park. The facility is due to be completed in 2011.

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.

NOFCO

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.