30th Sep 2014 13:47
LONDON (Alliance News) - The TEG Group PLC Tuesday said its loss widened in the first half of the year, as revenue more than halved as its engineering, procurement and construction division finished one project and faced delays in completing financial close on another project, and the company re-iterated it needs new funding.
The company develops organic composting and energy plants, going on to run most itself.
It reported a pretax loss of GBP1.5 million for the six months to June 30, compared with a loss if GBP806,000 a year earlier, as revenue fell to GBP5.6 million, from GBP12.9 million.
TEG said gross profit at its own plant operations division rose 27% on the year, and the unit's gross margin rose to 28.7%, from 21.7%, helped by the acquisition of the Hillbarton composting facility. The unit is expected to get a boost in 2015 after it moved to an operating and maintenance contract on another composting facility in Dagenham.
However, its engineering, procurement and construction contract division is struggling, after it completed the Dagenham plant build, the close of another project in Gaydon was delayed, and as waste contracts in Manchester hit problems.
TEG said it is nearing the end of an operational review aimed at ending its reliance on higher-risk and unpredictable construction contracts, as well as resolving the issues with the Greater Manchester contracts. It said it will update the markets in the near future.
"The board recognises that the group remains significantly undercapitalised and that to secure the future of the group it is necessary to secure further funding, both for projects and working capital. The board also recognises that the group remains at risk unless secure additional finance is achieved, but on the basis that such funding can be secured, the board is confident that the group has a positive future as a larger and more profitable operating company," Non-Executive Chairman Leo McKenna said in a statement.
Its cash balance stood at GBP288,000 at the end of June, down from GBP1.7 million a year earlier.
McKenna added that the company believes its future lies with its operations division, and it is going to focus on developing anaerobic digestion facilities at its sites, bolstering the operations through acquisitions, and possibly refinancing "associated" assets.
"This strategy will reduce the reliance on the unpredictable and lumpy cash flows associated with contracts in the EPC division," he said.
Anaerobic digestion produces power from food waste.
The TEG Group shares were down 46.6% at 2.61 pence Tuesday afternoon.
By Steve McGrath; [email protected]; @stevemcgrath1
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