Turnaround at TEG

17/03/2010 Robert Tyerman

A Silo Cage system from TEG, which enjoyed an encouraging turnaround last year

Organic composting specialist TEG Group is pursuing long-term contracts after turning £1.6 million annual losses into £155,000 pre-tax profits.

The Preston-based company, which increased turnover 21 per cent to £15.4 million in 2009, is also on the lookout for acquisition opportunities, says chief executive Michael Fishwick. AIM-quoted TEG moved into the black last year with the help of £956,000 of negative goodwill arising from its takeover of Norfolk-based Banham Composting, which it accompanied with a £1.9 million fundraising at 40p.

TEG, whose in-vessel composting technology can treat animal by-product waste and which is now providing anaerobic digestion technology to produce power from food waste, has recently been winning new deals, including a contract with Perth & Kinross Council to process mixed food and garden waste, worth between £470,000 and £1 million over four years. Fishwick says the company, which last year signed collaboration agreements with Munich-based anaerobic digestion specialist UTS and Nottinghamshire-based Alkane Energy, has several contract bids in the pipeline, including some long-term waste management deals.

With £3.8 million cash, TEG is devoting its resources to expansion and proposes no dividend. Floated at 50p six years ago, the shares now trade at 44p, valuing the company at £23.4 million, which should leave room for improvement.