RNS Number:4550D
TEG Environmental Plc
29 September 2004
TEG Environmental Plc
Interim Results for six months ended 30 June 2004
TEG Environmental Plc ("TEG"), the leading edge green technology company which
converts organic wastes into natural organic fertiliser, announces its Interim
Results for the six months ended 30 June 2004.
TEG floated on AIM on 27th July 2004 by way of a placing and open offer. It
raised net proceeds of #1.51 million to build the team to deliver orders and
roll out projects, finance the delivery of plant sales and build, own and
operate projects, for research and development for future products and services
and for general working capital purposes.
Highlights
* Loss of #518,566 before tax (2003: Loss #1.41m) in line with
expectations.
* Strong list of existing sales prospects being progressed.
* Canaccord Capital appointed NOMAD and brokers for AIM listing; Grant
Thornton now appointed as Company's auditors.
* Listing on AIM subscribed by new institutions and existing private
shareholders.
* Environmental pressures and legislative directives to limit
biodegradable waste going to landfill, creates strong driver for TEG's
market and in-vessel composting technology - one of the few approved
methods of treating biodegradable waste.
* May Local Authority elections created delays in decision-making.
* City and County of Swansea scheme re-tender due to financial and
grant constraints.
* Technical sales team expansion, recruitment process for CEO elect
recently commenced.
Prospects
* Optimism that stagnant period for progress on planning applications
nearing end.
* Favorable decision on applications expected; also on client's appeal
in next 12 months.
* Board encouraged by Government's positive attitude towards speeding
planning process for waste facilities.
For further information please contact:
TEG Environmental Binns & Co PR Ltd
Nigel Moore 07770 852760 Peter Binns 020 7786 9606
Dick Bilborough 01772 422 220 Paul McManus 020 7153 1485
Hannah Sloane 020 7153 1480
Editor's Notes
TEG sells and operates in-vessel composting Silo-Cages, which provide an
efficient and reliable method of composting a wide variety of organic materials,
while achieving a reliable level of pathogen kill.
In-vessel composting is competitive against traditional ('heap on the ground')
methods due to legislative changes that require: (i) more recycling, (ii)
prevention of untreated animal products getting into the environment (i.e. BSE
and Foot & Mouth) and, (iii) greater certainty of pathogen kills. Many existing
methods cannot assure pathogen kill rates or stop untreated material entering
the environment.
TEG's system consists of large insulated silo-cages that create the optimum
environment for rapid composting. Target waste streams are combined with
complementary amendment materials (such as wood chips, green garden waste,
poultry litter etc.) to create the correct balance of nutrients. This ensures
accelerated composting at temperatures greater than 70oC, effectively killing
pathogens and producing a composted product in circa 14 days.
TEG ENVIRONMENTAL PLC
Interim Report and Accounts for the six months ended 30 June 2004
Chairman's Statement
Trading Prospects
The Company continues to run in lean mode while vigorously pursuing the
satisfactory determination of planning applications which are a pre-requisite to
orders from clients becoming unconditional. The impact of important legislation
such as the Animal By-Products Regulation and the Landfill Directive which
require much higher treatment requirements by certain dates is slowly but surely
attaining a higher profile in the awareness of local authorities and organic
waste producers. The closure of some landfill operations, the increasing of
Landfill Tax and the restriction of the use of landfill for the disposal of some
organic wastes continues to bring new enquiries to the company while the strong
list of existing sales prospects is being progressed.
The May Local Authority elections, which changed the elected members of so many
councils, inevitably introduced further delay in many areas because of a
reluctance by outgoing and incoming members to make any decisions during the
period. The City and County of Swansea, where previously we were preferred
bidder on a significant project, has advised that, due to financial and grant
constraints, the Authority has decided to review this project and has asked the
company to re-tender for this scheme. This we have done.
The impetus brought to the market by new legislation continues to favour the
Company's technology and we are cautiously expanding our team to allow
increasing focus on sales activity. We have recently advertised for a Chief
Operating Officer - CEO Elect.
The Directors are optimistic that the stagnant period for the progress on
planning applications is coming to an end and we expect favorable decisions on
applications and on a client's appeal in the next 12 months. We are encouraged
by the positive attitude by the Government towards speeding the planning process
for waste facilities.
Listing on AIM market
The Company succeeded in its application for a listing on the AIM market on 27th
July and raised a net value of #1,512,175 from the issue of 3,901,248 Ordinary
shares of 5p each subscribed by three new institutional shareholders and in
equal part by the support of existing private shareholders. In accordance with
accounting requirements the total costs associated with this fundraising will be
set against the share premium account as shown in the Pro Forma balance sheet at
note 8. Canaccord Capital were appointed our Nominated Advisors and brokers to
effect our AIM market listing.
Appointment of new auditors
We have now appointed Grant Thornton as the Company's auditors in succession to
Moore and Smalley whom we thank for their valuable service and helpful
contributions over the past years.
SUMMARISED PROFIT AND LOSS ACCOUNT
For the six months ended 30 June 2004
Unaudited 6 Unaudited 6 Audited 14
months ended months ended months ended 31
30 June 2004 30 April 2003 December 2003
Note # # #
TURNOVER 14,326 15,313 33,147
Cost of Sales (9,259) (22,026) (58,299)
_________ _________ _________
GROSS PROFIT / (LOSS) 5,067 (6,713) (25,152)
Administrative expenses (533,248) (618,385) (1,522,206)
_________ _________ _________
OPERATING LOSS (528,181) (625,098) (1,547,358)
Exceptional loss (refer to note below) - (780,000) (450,000)
Interest receivable 12,702 1,561 6,887
Interest payable (3,087) (3,216) (5,740)
_________ _________ _________
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (518,566) (1,406,753) (1,996,211)
Taxation 2 - 54,508 125,645
_________ _________ _________
LOSS FOR THE PERIOD (518,566) (1,352,245) (1,870,566)
--------- --------- ---------
Loss per ordinary share 3 (4.15p) (12.2p) (16.2p)
- basic & diluted
On 6 November 2002 the Company subscribed for 1,000,000 shares of 5pence each
and 200,000 warrants in New Opportunity Investment Trust Plc (NOIT) by issuing
1,111,111 TEG ordinary shares of 5pence each. In the 6 month period to 30 April
2003 a provision of #780,000 was made to recognise the fall in the NOIT share
price to 22pence per share at that time. This was reduced to an actual loss of
#450,000 following the disposal of the shares on 30 December 2003 at 55pence per
share (total cash received #550,000) as reflected in the above results for the
14 month period to 31 December 2003.
SUMMARISED BALANCE SHEET
As at 30 June 2004
Unaudited at Unaudited at Audited at 31
30 June 2004 30 April 2003 December 2003
# # #
FIXED ASSETS
Intangible assets 5,988 10,650 7,986
Tangible assets 140,384 256,237 158,121
_________ _________ _________
146,372 266,887 166,107
CURRENT ASSETS
Stocks 7,848 271,183 6,881
Debtors 79,380 69,641 98,513
Investment in listed shares - 220,000 -
Cash at bank and in hand 314,267 238,978 813,505
_________ _________ _________
401,495 799,802 918,899
CREDITORS: due within one year (309,160) (469,205) (317,286)
_________ _________ _________
NET CURRENT ASSETS 92,335 330,597 601,613
_________ _________ _________
TOTAL ASSETS LESS CURRENT LIABILITIES 238,707 597,484 767,720
CREDITORS: due after more than one year - (11,514) (10,447)
_________ _________ _________
NET ASSETS 238,707 585,970 757,273
--------- --------- ---------
CAPITAL AND RESERVES
Called up share capital 624,207 556,727 624,207
Share premium account 8,046,688 7,424,545 8,046,689
Profit and loss account (8,432,188) (7,395,302) (7,913,623)
_________ _________ _________
EQUITY SHAREHOLDERS' FUNDS 238,707 585,970 757,273
--------- --------- ---------
SUMMARISED STATEMENT OF CASHFLOWS
For the six months ended 30 June 2004
Unaudited 6 Unaudited 6 Restated
months ended months ended Audited 14
30 June 2004 30 April 2003 months ended
31 December
2003
Note # # #
NET CASH OUTFLOW FROM OPERATING ACTIVITIES 4 (550,862) (1,261,737) (1,676,067)
_________ _________ _________
RETURNS ON INVESTMENT AND SERVICING OF FINANCE
Interest received 12,702 1,561 6,887
Interest element of finance lease and hire purchase (3,087) (3,216) (5,740)
payments
_________ _________ _________
9,615 (1,655) 1,147
_________ _________ _________
TAXATION
UK Corporation tax received 71,137 54,508 154,508
_________ _________ _________
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Payments to acquire tangible fixed assets (12,586) (13,500) (34,849)
Receipts from sales of tangible fixed assets - - 2,000
_________ _________ _________
(12,586) (13,500) (32,849)
_________ _________ _________
NET CASH OUTFLOW BEFORE FINANCING (482,696) (1,222,384) (1,553,261)
FINANCING
Receipt from sale of shares - - 550,000
Proceeds on issue of shares - 1,263,610 1,623,234
Repayment of bank loans - (4,943) (4,943)
Repayment of capital lease and hire purchase contracts (16,542) (27,415) (31,635)
_________ _________ _________
(16,542) 1,231,252 2,136,656
_________ _________ _________
(DECREASE) / INCREASE IN CASH (499,238) 8,868 583,395
--------- --------- ---------
NOTES TO THE UNAUDITED INTERIM RESULTS
1. BASIS OF PREPARATION OF INTERIM FINANCIAL INFORMATION
The financial information contained in this statement does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985. The
figures for the 14 month period ended 31 December 2003 have been extracted from
the Statutory Financial Statements (after the reanalysis of the cashflow
statement) which have been filed with the Registrar of Companies. The auditors'
report on those financial statements was unqualified and did not contain a
statement under Section 237(2) of the Companies Act 1985. The accounts have
been prepared in accordance with applicable accounting standards and under the
historical cost accounting rules.
The principal accounting policies of the company have remained unchanged from
those set out in the Company's 2003 Annual Report and Financial Statements. The
accounts are prepared on a going concern basis, which assumes that the Company
will continue in operational existence for the foreseeable future.
The interim financial statements have been reviewed by the Company's auditors. A
copy of the auditors' review report is attached to this interim report.
2. TAXATION
The tax credit represents a claim for payable R&D tax credit.
3. LOSS PER SHARE
The loss per share is calculated by reference to the earnings attributable to
ordinary shareholders divided by the weighted average of 12,484,140 ordinary
shares for the 6 months to 30 June 2004, 11,077,997 ordinary shares for the 6
months to 30 April 2003, and 11,531,870 for the 14 months to 31 December 2003.
Unaudited 6 Unaudited 6 Audited 14 months
months ended 30 months ended 30 ended 31 December
June 2004 April 2003 2003
Attributable loss (#) (518,566) (1,352,245) (1,870,566)
_________ _________ _________
Average number of ordinary shares in issue
for basic and diluted loss per share 12,484,140 11,077,997 11,531,870
_________ _________ _________
Basic and diluted loss per share (4.15p) (12.2p) (16.2p)
--------- --------- ---------
The loss for each period and the weighted average number of ordinary shares for
calculating the diluted loss per share for each period are identical to those
used for the basic loss per share. This is because the outstanding share
options would 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 6 Unaudited 6 Restated
months ended months ended Audited 14
30 June 2004 30 April 2003 months ended
31 December
2003
Operating loss (528,181) (625,098) (1,547,358)
Amortisation 1,998 1,998 4,662
Depreciation of tangible fixed assets 30,323 34,677 150,142
Exceptional Loss on listed shares - (780,000) (450,000)
Loss on sale of tangible fixed assets - - 2,000
(Increase)/decrease in stocks and work in progress (967) (1,563) 262,738
(Increase)/decrease in operating debtors and prepayments (52,004) 136,053 78,319
(Decrease) in operating creditors and accruals (2,031) (27,804) (176,570)
_________ _________ _________
(550,862) (1,261,737) (1,676,067)
--------- --------- ---------
5. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
Unaudited 6 Unaudited 6 Audited 14
months ended months ended months ended
30 June 2004 30 April 2003 31 December
2003
(Decrease) / Increase in cash during the period (499,238) 8,868 583,395
Cash outflow from bank loans - 4,943 4,943
Cash outflow from hire purchase 16,542 27,415 31,635
_________ _________ _________
Movement in net funds during the period (482,696) 41,226 619,973
_________ _________ _________
Opening net funds 777,271 157,298 157,298
_________ _________ _________
Closing net funds 294,575 198,524 777,271
--------- --------- ---------
6. ANALYSIS OF MOVEMENT IN NET FUNDS
At 1 January 2004 Cash flow 30 June 2004
# # #
Cash at bank and in hand 813,505 (499,238) 314,267
_________ _________ _________
Finance leases (36,234) 16,542 (19,692)
_________ _________ _________
777,271 (482,696) 294,575
--------- --------- ---------
7. RECONCILIATION OF EQUITY SHAREHOLDERS' FUNDS
Unaudited At Unaudited At Audited At
30 June 2004 30 April 2003 31 December 2003
# # #
Loss for the financial period (518,566) (1,352,245) (1,870,566)
Issue of share capital - 1,483,610 2,173,234
_________ _________ _________
(Decrease)/Increase in equity shareholders' funds (518,566) 131,365 302,668
Opening equity shareholders' funds 757,273 454,605 454,605
_________ _________ _________
Closing equity shareholders' funds 238,707 585,970 757,273
--------- --------- ---------
8. On 27 July 2004 the Company's shares were admitted onto AIM. The net
proceeds of the 3,901,248 Ordinary 5pence shares which have subsequently been
issued were #1,512,145. The Pro Forma Balance Sheet below indicates the impact
the share issue would have had on the balance sheet, had the shares been issued
on 30 June 2004.
PRO FORMA BALANCE SHEET
Unaudited at Net Proceeds Pro Forma
30 June 2004 from Balance Sheet
Share Issue
# # #
FIXED ASSETS 146,372 - 146,372
CURRENT ASSETS
Stocks & Debtors 87,228 (14,978) 72,250
Cash at bank and in hand 314,267 1,527,153 1,841,420
_________ _________ _________
401,495 1,512,175 1,913,670
CREDITORS: due within one year (309,160) - (309,160)
_________ _________ _________
NET CURRENT ASSETS 92,335 1,512,175 1,604,510
_________ _________ _________
NET ASSETS 238,707 1,512,175 1,750,882
--------- --------- ---------
CAPITAL AND RESERVES
Called up share capital 624,207 195,062 819,269
Share premium account 8,046,688 1,317,113 9,363,801
Profit and loss account (8,432,188) - (8,432,188)
_________ _________ _________
EQUITY SHAREHOLDERS' FUNDS 238,707 1,512,175 1,750,882
--------- --------- ---------
9. Copies will be available on request from the Company Secretary, TEG
Environmental plc, Unit 6, Meadowcroft Business Park, Pope Lane, Whitestake,
Preston, Lancs. PR4 4BA.
10. The interim report was approved by the board of directors on 29
September 2004.
INDEPENDENT REVIEW REPORT TO TEG ENVIRONMENTAL PLC
Introduction
We have been instructed by the company to review the financial information for
the six months ended 30 June 2004 which comprises the Summarised Profit and Loss
Account, Summarised Balance Sheet, Summarised Cash Flow Statement, and the
related notes 1 to 10. We have read the other information contained in the
interim report, which comprises only the Chairman's Statement, and considered
whether it contains any apparent misstatements or material inconsistencies with
the financial information. Our responsibilities do not extend to any other
information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report and ensuring that the
accounting policies and presentation applied to the interim figures are
consistent with those applied in preparing the preceding annual accounts except
where any changes, and the reasons for them, are disclosed as required by the
AIM Rules issued by the London Stock Exchange.
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 Practices
Board for use in the United Kingdom. A review consists principally of making
enquiries of group management and applying analytical procedures to the
financial information and underlying financial data, and based thereon,
assessing whether the accounting policies and presentation have been
consistently applied, unless otherwise disclosed. A review excludes audit
procedures such as tests of controls and verification of assets, liabilities and
transactions. It is substantially less in scope than an audit performed in
accordance with United Kingdom Auditing Standards and therefore provides a lower
level of assurance than an audit. Accordingly we do not express an audit
opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2004.
Grant Thornton UK LLP
Manchester
29 September 2004.
This information is provided by RNS
The company news service from the London Stock Exchange
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