Half Yearly Report

For Immediate Release:

Environmental Recycling Technologies plc

Interim Results for the six months ended 30 June 2014

Environmental Recycling Technologies plc ("ERT", "the Company") (AIM: ENRT), the patent rights holder to the Powder Impression Moulding ("PIM") process which is capable of converting mixed waste plastics into commercially viable products, announces its unaudited interim results for the six months ended 30 June 2014.

Highlights

· US Licensee, Brown Water Plastics, received first significant million plus dollar order for barge covers

· Well advanced stage of negotiations for major PIM Licenses in China and USA

Lee Clayton, Managing Director, commented

"The collaborative arrangements with our industry recognised partners are really beginning to pay off. The high quality enquiries that we are receiving and progressing can now be dealt with in an efficient and effective manner using resources that have not been previously available to the company. We look forward to updating shareholders soon on the exciting progress that is currently being made at ERT."

For further information:

 Strategic Review

Results

Revenue for the six months ended 30 June 2014 was £31,000 (H1, 2013 £99,000). The loss on operations was £0.59 million (H1, 2013 loss £2.12 million). Losses attributable to equity shareholders were £1.60 million (H1, 2013 loss £2.41 million).

Turnover included revenue from royalties.

Administrative expenses were £0.62 million (H1, 2013 £2.22 million). Administrative expenses, excluding depreciation and amortisation, incurred in the day to day running of the business were £0.49 million (H1, 2013 £0.49 million).

Strategic Report

The Company continues to build on the significant progress made last year working closely with global engineering consultants, ARUP, to provide a global turnkey PIM manufacturing capability. Pursuant to our endeavours we continue to work on commercialising PIM globally (including Asia) with regard to existing enquiries and we are pleased to report that we have made significant progress with several new blue chip companies.

Further details will be announced to shareholders as soon as possible, bearing in mind the commercial constraints as to confidentiality.

Our existing licensees in the UK and USA continue to perform well with record level order books. As previously reported, we continue to receive significant new interest in the USA and indeed the Americas generally.

Additional equipment has been acquired with regard to the demonstration line and process. As previously announced we have increased our presence at trade shows and exhibitions in the UK and abroad.

Positioning ourselves commercially has come with some costs; this is reflected in our results. Your board is confident now is the time to incur these expenses enabling continued technology establishment on a global scale. This investment allows ERT to continue to meet the needs of its existing and new clients.

The various changes in personnel recently announced at the AGM are being implemented in accordance with our commercial and operational strategy.

Given the progress made to date and in prospect, we expect to widen our intellectual property bank and commercial activities this year.

Dividends and loss per share

As at 30 June 2014 as reported in the statement of financial position, the company does not have distributable reserves and is unable to declare a dividend.

The loss per share was 0.18 pence (H1, 2013 0.30 pence).

Short term funding

The Company meets its day to day cost base by managing its cash resources and securing appropriate levels of finance to settle its liabilities as they fall due. Additional cash loans during the period were £560,000, and after date loans totalling a further £200,000 were raised.

During the period the company received additional funding from Oxford Capital of £1.4million. The directors have received written assurance from Oxford Capital, the lenders of £4.54 million, that there is no intention to request immediate repayment of the liabilities and that subject to agreement, the lender would accept repayment by way of a debt for equity swap.

Short term funding facilities have been organised to cover the Company's normal overheads for the rest of the year. The directors do not expect there to be a requirement to repay the loans in cash during the next twelve months.

Ken Brooks

Chairman

Independent review report to Environmental Recycling Technologies plc.

Introduction

We have been engaged by the company to review the interim set of financial statements in the half-yearly financial report for the six months ended 30 June 2014 which comprises the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Shareholders' Equity, Statement of Cash Flows and explanatory notes.

We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim set of financial statements.

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 in accordance with the rules of the London Stock Exchange for companies trading securities on AIM which require that the half-yearly report be presented and prepared in a form consistent with that which will be adopted in the company's annual accounts having regard to the accounting standards applicable to such annual accounts.

Our responsibility

Our responsibility is to express to the company a conclusion on the interim set of financial statements in the half-yearly financial report based on our review.

Our report has been prepared in accordance with the terms of our engagement to assist the company in meeting the requirements of the rules of the London Stock Exchange for companies trading securities on AIM and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity'', issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the interim set of financial statements in the half-yearly financial report for the six months ended 30 June 2014 is not prepared, in all material respects, in accordance with the rules of the London Stock Exchange for companies trading securities on AIM.

Emphasis of matter - going concern

In forming our conclusion, which is not modified, we have considered the adequacy of the disclosures made in Note 1 of this half yearly financial report concerning the ability of the Company to continue as a going concern. The disclosures indicate that the Company is able to continue as a going concern for at least the twelve month period from the signing of these financial statements if the cash flow expected from licence fees is generated or, in the event that such sales are not generated, that additional funding is able to be obtained from a further share issue and further funding from an alternative lender at an appropriate time. Written assurance has been received from the lender covering £4.54 million that there is no intention to request immediate repayment and that subject to agreement the lender would accept repayment by the issue of shares in the company.

We consider that these conditions indicate the existence of material uncertainties which may cast significant doubt over the Company's ability to continue as a going concern.

The financial statements do not include the adjustments that would result if the company was unable to continue as a going concern.

BDO LLP

Chartered Accountants and Registered Auditors, Birmingham. 29 September 2014

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127)

Interim Accounts for the Six Months ended 30 June 2014 (unaudited)

The financial information contained within these accounts has been prepared by the Directors who accept responsibility for the financial information presented below and confirm that it has been properly presented in accordance with applicable law. The interim financial statements were approved by the Board of Directors on 28 September 2014 and have been prepared on the basis of the accounting policies set out in note 1. The financial information covers the six months ended 30 June 2014.

Statement of Comprehensive Income (unaudited)

Statement of Financial Position (unaudited)

Statement of Changes in Shareholders' Equity (unaudited)

Statement of Changes in Shareholders' Equity (audited)

Statement of Cash Flows (unaudited)

Six months ended 30 June 2014

Notes to the comprehensive financial statements

1. Accounting policies

Basis of accounting

The principal accounting policies adopted in the preparation of the interim financial statements are set out below.

In the preparation of this Interim Report there have been no changes to the accounting policies applied and disclosed in the annual financial statements for the year ended 31 December 2013. Furthermore the Company does not expect there to be any changes to the accounting policies applicable at 31 December 2014.

The interim report has been prepared in accordance with the recognition and measurement principles that are consistent with International Financial Reporting Standards (IFRSs) as endorsed by the European Union using accounting policies that are expected to be applied for the financial year ended 31 December 2014.

The financial information in this interim report does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006.

The financial information for the year ended 31 December 2013 does not constitute the full statutory accounts for that period, but is derived from those accounts.

The Annual Report and Financial Statements for 2013 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Financial Statements for 2013 was unqualified, included an emphasis of matter in respect of going concern, and did not contain a statement under Section 498(2) or 498(3) of the Companies Act 2006.

As at 30 June 2014, the company held 40% of the voting rights of Delta Waste Management Limited, which meets the definition of an associated undertaking. Delta Waste Management Limited has not been accounted for as an associated undertaking on the basis that its results are not material to the company.

Going concern

The company's business activities, together with the factors likely to affect its future development, performance and position are set out in the Reviews. The financial position of the company, its borrowings and borrowing facilities are described in the Strategic Review.

As described in the Financial Review the company has reported another operating loss for the year and has net liabilities of £3,101k. Whilst there are a number of uncertainties, the directors' consider that the outlook is now more promising. The directors have continued to manage cash resources and secure appropriate levels of finance.

The directors are in discussions with Oxford Capital ("the lender") to settle the outstanding loans by the issue of shares in the company rather than settling in cash.

In addition, written assurance has been received from the lender covering £4.54 million that there is no intention to request immediate repayment and that subject to agreement the lender would accept repayment by the issue of shares in the company. Similarly the expectations arising from the terms of the remaining loan arrangement are that the one lender would accept settlement in shares if the company was unable to repay the loans.

The directors have prepared forecasts that indicate that the company has adequate resources to meet commitments as they fall due. Furthermore, the directors have obtained written confirmation from Magna Group ("Magna") ("a further lender") confirming their willingness to make available to the company, if required, a Convertible Promissory Note amounting to the value of $1.2 million on acceptable terms to cover the company's normal overheads in the foreseeable future.

The directors acknowledge that due to the reliance on new licences and on the above lender for financial support, there is a degree of uncertainty. Based on their current expectations of the progress of licence fees and negotiations the directors have a reasonable expectation that revenue will be generated in line with the forecasts during this year and will be available to underpin the cash flows of the Company. The forecasts indicate that the Company is able to continue as a going concern for at least the twelve month period from the signing of these financial statements if the cash flow expected from licence fees is generated or, in the event that such sales are not generated, that additional funding is able to be obtained from a further share issue and further funding from the lender at an appropriate time. Although the directors consider it likely that additional funding can be raised from shareholders, main loan provider or a further share placing at the appropriate time, they consider that these conditions indicate the existence of material uncertainties which may cast significant doubt over the group's ability to continue as a going concern.

Accordingly the directors continue to adopt the going concern basis in preparing the annual report and accounts.

The financial statements do not include the adjustments that would result if the company was unable to continue as a going concern.

2. Impairments

The amounts which became due for payment from 2K Manufacturing at the beginning of July 2013 have not been paid. Due to non-payment a provision of £1,608,000 was made against the trade receivables loan at 30 June 2013.

3. Finance

4. Earnings per share

From continuing operations

At 30 June 2014, there were 5,750,000 (31 December 2013: 5,750,000) (H1, 2013: 38,491,000) of potentially issuable shares which are anti-dilutive.

5. Trade and other receivables

All receivable balances are in sterling. As at 30 June 2013, a provision of £1,608,000 was made against the trade receivable loan due to non-payment of the current outstanding balance due. A further provision of £75,000 was made at 31 December 2013 against current receivables.

6. Borrowings

The carrying value (which is a reasonable approximation to fair value) of borrowings analysed by lender is as follows:

Cash loans advanced during the period totalled £560,000 (31 December 2013: £500,000) (H1 2013: £200,000).

Long term borrowings of £1,841,369 are secured five year loan notes and carry an interest rate of 2% above the Bank of England base rate. The balance of loans outstanding carry interest at 7.5%.

The company has no other borrowing facilities.

7. Share capital

Authorised share capital

The Deferred Shares do not entitle holders to receive any dividend or other distribution or to attend or to vote at any general meeting of the company.

At the Annual General Meeting held on 21 August 2014, the ordinary resolution to increase the authorised ordinary share capital of the Company from a nominal value of £2,500,000 to a nominal value of £4,000,000 was approved.