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TEG plunges into losses after Gaydon AD plant delays

Organics recycling firm TEG Group reported widening losses in 2013 after a subdued second half of the year, which saw delays in the completion of an anaerobic digestion (AD) project in Warwickshire.

According to the company’s annual report, pre-tax losses dipped to £2.7m, doubling in comparison to the previous year.

Impacting the company’s performance were one-off administrative charges and delays in closing a project in Gaydon, which resulted in a “disappointing” second half of 2013, according to chairman Rory Maw.

In September the group had warned shareholders of the impact of such delay, which was due to a “timing issue”. TEG had been unable to conclude the detailed financial terms in the first half of 2013 and consequently would not be able to book significant revenues on this project in the second half of the year, as it had originally forecast.

However, TEG expressed confidence that financial close would be achieved in the second quarter of 2014, and construction would begin in 2015.

The project will be similar to the group’s Dagenham development (above), London’s first in-vessel composting and AD facility, which has commenced operations.

The £16m ‘flagship’ plant is expected to generate £1.3m per year in revenues. It is operated by subsidiary TEG Biogas (London) Limited, with TEG retaining 24.5% ownership.

Maw noted that despite widening losses, revenues and profit margins at the group plant operations had grown “impressively” in 2013.

Operational revenues grew by 3.5% year-on-year, with a 6.8% increase in gross margin. The volume of waste processed fell by approximately by 5% but this was offset by gate fees increasing by 10%.

Also singled out in the annual report was the completion of a fourth facility in Bolton part of a Private Financial Initiative contract with the Greater Manchester Waste Disposal Authority.

Maw said: “Our operations have had an excellent start to 2014 and I believe the group remains well placed to take advantage of its expanding market.

“The Board is excited by potential new opportunities in the pipeline and overall we expect a strong operational performance in 2014.”

Last year, the group had reported its “strongest ever trading period” between June 2012 and June 2013 and the milestone of recycling one million tonnes of organics waste.

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