Pre-Close Trading Update for 2013

Generation Essentials

31/01/2014 07:00

RNS Number : 9419Y

TEG Group (The) PLC

31 January 2014

 

 

31 January 2014

 

 

 

The TEG GROUP PLC

("TEG" or "the Company")

 

Pre-Close Trading Update for 2013

 

 

 

The TEG Group PLC (AIM: TEG), the AIM-listed green technology company, which develops and operates organic composting and energy plants, provides an update on trading activity for the 12 month period to 31 December 2013.

 

Overall, trading for 2013 was broadly in line with Board expectations following the update announced on the 30 September 2013. 

 

On a positive note, trading in the Operations division, TEG's owned and operated facilities, continued to be strong in the second half of the year, exceeding Board expectations.  In addition, the Perth Anaerobic Digestion ("AD") joint venture continues to perform well, generating in excess of 5 million KWh during 2013.

 

In TEG's Projects division, construction of the Dagenham combined In Vessel Composting ("IVC") and AD plant has continued to proceed smoothly and the plant is now undergoing its planned commissioning and testing process.  The Board expects this plant to be handed over on time and budget in the current quarter and final retentions of approximately £1.5m are expected to be released at that point.  TEG will then commence a 15-year operating and maintenance contract and will retain 24.5% ownership of the facility.

 

Progress has also continued on the development of the new IVC/AD project at the TEG Gaydon site in Warwickshire.  The Board had hoped to reach Financial Close with the project's funders before the end of 2013, which would have contributed to revenue in that year, but the delay into 2014 means that revenue should now be recognised during 2014 and 2015.

 

The final Greater Manchester contract facility at Bolton achieved Take Over in quarter 4 of 2013.  Although progress has been made on resolving outstanding issues on the wider contract and all parties are working together to implement practical solutions, no further retentions had been received by the year end.

 

As explained in September, provision was made for a number of one-off administrative charges, including some costs associated with the shareholder loan announced on 30 September 2013.  Together with the delay in closing the Gaydon project, and corresponding delay in revenues, this has resulted in a disappointing second half to the year.

 

The Board believes that the outlook for 2014 is positive.  TEG's own facilities continue to perform well and the performance of both of the Perth and Dagenham AD facilities is highly encouraging.  The Board expects tougher trading conditions for the Operations division in 2014 due to competitive pressures in some regions.  The pipeline for Projects, including Gaydon, remains strong but as the Board has noted before, there continues to be some degree of uncertainty over the precise timing of revenue recognition and cash receipts.

  

The Company expects to announce its preliminary results for the 12 months to 31 December 2013 in the week commencing 31st March 2014.

 

 

- ENDS -

Contact:
The TEG Group Plc
Tel: 01772 644980
Michael Fishwick, Chief Executive
www.theteggroup.plc.uk
Peckwater PR
Tel: 07879 458 364
Tarquin Edwards
tarquin.edwards@peckwaterpr.co.uk
N+1 Singer Advisory LLP
(Nomad & Broker)
Tel: 0207 496 3000
Andrew Craig/Ben Wright


 

 

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 is constructing a combined In Vessel Composting (IVC) and AD plant in Dagenham that will process approximately 50,000 tonnes per annum of organic wastes and will generate approximately 1.4MW of power, sufficient to power approximately 2000 homes.   The IVC plant is already in operation and the AD plant is undergoing commissioning tests.  The facility, which is currently on time and in line with budget, is due to be handed over to the client, TEG Biogas (London) Limited, in Quarter 1 of 2014. 

TEG received a contract to construct the facility valued at approximately £16m and will operate the facility after handover as part of a 15-year operating contract.  The Group has a minority shareholding in TEGBL, which has been established as a joint venture with various funding partners.

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. 

 

 

This information is provided by RNS

The company news service from the London Stock Exchange

 
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