Final Results

TEG Environmental Plc
15 March 2006



For Release                         7:00am                      15 March 2006

                                                          




                             TEG ENVIRONMENTAL PLC
                            ('TEG' or 'the Company')


                                 FINAL RESULTS
                      for the year ended 31 December 2005

    'Breakthrough Year as Expected; Significant Growth Anticipated in 2006'


TEG Environmental Plc, the leading green technology company, which converts
organic wastes into natural organic fertilizer announces its final results for
the year ended 31 December 2005.


Highlights

Financial

   • Turnover up hugely to £555k (2004: £21.5k) mainly generated in the
     second half
   • Post tax loss of £1.571 million (2004: £1.112 million) - largely
     reflecting exceptional charges and the delay in recognising the Swansea
     contract revenues, the Company's first sale to a local authority
   • No dividend is proposed

Operational

   • £3.7 million fund raising in August 2005, oversubscribed several times
   • Category III ABP Approval granted in June 2005 - positively impacts
     revenue generation and opens up new and larger markets
   • Management team substantially strengthened

Significant contracts

   • City & County of Swansea - planning permission granted; revenues now
     secured for 2006
   • Acquisition of Binns Skips, Perth, Scotland - one of the largest animal
     by-product composting businesses
   • Sherdley Farm, Lancashire - commercial development of plant final
     quarter 2005, waste contracts secured with Schwan and HJ Heinz
   • Banham Poultry, Norfolk - sale of plant, planning approval being sought
     at site with existing permission for in-vessel composting
   • Kildare, Ireland - planning approval granted for composting plant
   • Post financial year end, collaboration deal with quoted support services
     company jointly targeting local authority contract opportunities



Said Mick Fishwick, TEG's Chief Executive, commenting on the year under review
and future prospects:

' 2005 proved to be the breakthrough year we had expected. Based on the
contracts achieved and the number of enquiries the Company has received, the
Board expects to achieve further significant growth in 2006.'






ENDS


Contact:


TEG Environmental Group Plc

Michael Fishwick, Chief Executive 01772 314 100

Tanja Willis, Finance Director 01772 314 100


Binns & Co PR Ltd 020 7786 9600

Peter Binns 07768 392 582

Tarquin Edwards 07879 458 364



Editor's Notes:


TEG provides an in-vessel composting technology, which is one of the few
approved technologies capable of treating animal by-product waste. Plant
economics are driven by the gate fees charged, rather than the value of the end
product (compost). The TEG process is an economic alternative to landfill.


The Silo Cage system, one of the few technologies in Europe capable of treating
this waste, is a natural process producing compost as an end product, used as an
excellent soil conditioner that fertilizes, retains moisture, provides structure
and reduces the incidence of plant disease. TEG's Silo-Cages are housed in a
self-contained building, are not unsightly and are environmentally friendly.


Potential customers include local authorities, waste management companies, food
processors, farmers and landowners. The Company's expanding market is driven by
increasingly stringent EU and UK legislation regulating the treatment and
disposal of organic waste.





                              Chairman's Statement



I am delighted to present the Company's 2005 annual results. TEG has made
tremendous progress during the year and it is a pleasure to report our first
meaningful sales figures. The turnover of £555,250 is a very significant
increase on the previous year's figure (2004: £21,572) and, given it was almost
entirely generated in the second half of the year, the growth in annualised
turnover is even greater. It is a minor disappointment that planning permission
for our Swansea project was delayed to the end of the final quarter and revenues
did not impact on 2005, but it is reassuring that those revenues are now secured
for 2006.


2005 proved to be the breakthrough year we had expected.


The implementation of legislation, principally under the Landfill Directive and
Animal By-Products Regulations, clearly crystallised thinking in the market and
after years of speculative interest we finally saw the commitment from the
market we were seeking.

Contract Wins


During the year we secured our first sale to the public sector with a sale to
The City and County of Swansea, confirmed as a full contract after obtaining
planning permission in December 2005. We were also successful in securing the
acquisition of the Binns Skips composting business in Perth, Scotland, one of
the largest animal by-products composting businesses in the UK. Commercial
development of the plant at Sherdley Farm, Preston began in the final quarter
with a 3 year waste contract secured with Schwan Consumer Brands UK Ltd, part of
the pizza and global food processing business, and a further contract has been
secured in March 2006 with HJ Heinz . The contract with yet another global food
business, HJ Heinz, is great news for the Company and is a further endorsement
of the TEG product. In addition, we were delighted to reach a conclusion to the
planning process at Kildare in Ireland and we are looking forward to bringing
that plant back on line in 2006.


Finally, we are pleased to have secured the sale of a plant to Banham Poultry
Limited. Whilst this sale remains secure, a change in location for the plant has
been proposed and Banham have withdrawn their planning application for an
in-vessel composting facility at the original Lenwade site in order to pursue
other activities at that site. Banham has however, pleasingly opted to install
an in-vessel composting plant at another of its sites in Norfolk for which it
already has planning permission for in-vessel composting. TEG believes this new
arrangement is preferable, particularly because of the timing and planning
permission implications. Banham has already requested permission for change of
technology to the TEG system at that site.

Fundraising


Funding of the expansion was achieved through a successful fundraising in August
2005, one that was oversubscribed several times. TEG was able to raise £3.7m
before expenses.

Animal By-Product approval


Crucially, TEG achieved Animal By-Product approval from the State Veterinary
Service (SVS) during the year, following extensive trials and scrutiny by the
regulator. Not only did this enable us to secure certain contracts during the
year but it also opened up market opportunities for 2006 and beyond. Approval
from the SVS is fundamental if TEG is to process the higher value animal
by-products and full approval hugely reduces the burden of approval on future
plants.


Management


During the year we made a number of appointments to strengthen the team. Michael
Fishwick joined the Company in January 2005 and assumed the role of Chief
Executive in April 2005. Tanja Willis joined the Board on 7 March 2005 as
Finance Director - she also continues as Company Secretary. Together with other
key executives heading sales, project management, engineering, technical and
scientific, we have a strong, committed executive team to take the Company
forward.


Results


A number of exceptional costs were taken in 2005, notably the write down of
£78,000 of redundant assets following development at Sherdley Farm and the
£35,000 of legal fees for the Perth contract. In addition, the delay in
recognising the Swansea revenues reduced projected margins by £96,000. We have
recorded a post tax loss of £1.571 million (2004: £1.112 million). No dividend
is proposed.

Post Year-end events


In February 2006, TEG announced a collaboration with Glendale Managed Services
Ltd, a division of Parkwood Holdings PLC, a Support Services company fully
quoted on the London Stock Exchange, to jointly bid for local authority
contracts. Glendale is the leading parks maintenance business in the UK, with
over 100 Local Authority contracts. TEG believes this collaboration
significantly strengthens the Company's capability to bid for and win a large
number of the local authority contract opportunities we are seeing throughout
the UK.

Future Prospects


Based on the contracts achieved, the number of enquiries the Company has
received and the number of active projects, the Board expects to achieve further
significant growth in 2006.


Shareholders will be advised of the date for the Annual General Meeting in due
course.










Nigel Moore

Chairman

15 March 2006







PROFIT AND LOSS ACCOUNT

For the period ended 31 December 2005



                                                     2005        2004

                                               Note  £           £

Turnover - continuing activities                     555,250     21,572

Cost of sales                                        (256,793)   (12,017)

Gross profit                                         298,457     9,555

Other operating charges                              (1,952,498) (1,227,550)

Operating loss - continuing activities               (1,654,041) (1,217,995)

Interest receivable                                  69,971      34,598

Interest payable                                     (40,107)    (4,121)

Loss on ordinary activities before taxation          (1,624,177) (1,187,518)

Tax on loss on ordinary activities               2   53,110      75,774

Loss for the financial year transferred from         (1,571,067) (1,111,744)
reserves

Loss per share - basic and diluted               3   (7.91p)     (7.91p)






BALANCE SHEET

As at 31 December 2005



                                                    2005         2004
                                                    £            £
Fixed assets
Intangible assets                                   2,269,584    3,990
Tangible assets                                     1,093,289    206,549
Investments                                         2            -
                                                    3,362,875    210,539
Current assets
Stocks                                              123,070      8,166
Debtors                                             429,981      100,122
Cash at bank and in hand                            2,414,392    1,164,284
                                                    2,967,443    1,272,572

Creditors: amounts falling due within one year      (1,338,846)  (300,479)

Net current assets                                  1,628,597    972,093

Total assets less current liabilities               4,991,472    1,182,632

Creditors : amounts falling due after more          (1,958,644)  (36,187)
than one year

Net assets                                          3,032,828    1,146,445

Capital and reserves
Called up share capital                             1,319,269    819,269
Share premium account                               12,309,993   9,352,543
Profit and loss account                             (10,596,434) (9,025,367)
Shareholders' funds                                 3,032,828    1,146,445



CASH FLOW STATEMENT

For the period ended 31 December 2004

                                                     2005        2004
                                                Note £           £

Net cash outflow from operating activities       4   (1,126,123) (1,196,815)

Returns on investments and servicing of finance
Interest received                                    69,971      34,598
Finance lease interest paid                          (2,749)     (4,121)

Net cash inflow from returns on investments and      67,222      30,477
servicing of
finance

R & D tax credit received                            65,311      71,137

Capital expenditure and financial investment
Purchase of tangible fixed assets                    (841,771)   (27,972)
Sale of tangible fixed assets                        3,859       2,859

Net cash outflow from capital expenditure and        (1,040,412) (25,113)
financial
investment

Acquisitions and disposals
Acquisition of business                          7   (352,500)   -

Financing
Issue of shares                                      3,700,000   1,950,624
Expenses paid in connection with share issues        (242,550)   (449,708)
Capital element of finance lease rentals             (23,340)    (29,823)

Net cash inflow from financing                       3,434,110   1,471,093

Increase in cash                                 5   1,250,108   350,779



NOTES TO THE FINAL RESULTS


1.       BASIS OF PREPARATION OF FINANCIAL INFORMATION


The financial information contained in this preliminary announcement does not
constitute statutory accounts as defined in section 240 of the Companies Act
1985. The balance sheet at 31 December 2005 and the profit and loss account,
cash flow statement and associated notes for the year then ended have been
extracted from the Company's 2005 statutory financial statements upon which the
auditors opinion is unqualified and does not include any statement under Section
237(2) of the Companies Act 1985. Those financial statements have not yet been
delivered to the Registrar of Companies. The figures for the period ended 31
December 2004 have been extracted from the statutory financial which have been
filed with the Registrar of Companies. The auditors' report on those financial
statements was unqualified but contained an explanatory paragraph in respect of
future funding of the Company and did not contain a statement under Section 237
(2) of the Companies Act 1985.


The preliminary announcement has been prepared in accordance with applicable
accounting standards and under the historical cost accounting rules.


The principal accounting policies of the Company are set out in the Company's
2005 Annual Report and Financial Statements and have remained unchanged from the
previous year. However, FRS 21, Events after the balance sheet date, FRS 22,
Earnings per share and the disclosure under FRS 25, Financial instruments:
disclosure & presentation, have been adopted during the year although there has
been no impact on the Company.


2.       TAXATION


The tax credit represents a claim for R&D tax credit.


3.       LOSS PER SHARE


The loss per share is calculated by reference to the loss attributable to
ordinary shareholders divided by the weighted average of 19,859,354 ordinary
shares for the 12 months to 31 December 2005, and 14,060,383 for the 12 months
to 31 December 2004.

                                                        2005        2004

Attributable loss                                    (1,571,067) (1,111,744)

Average number of shares in issue for basic and       19,859,354  14,060,383
diluted loss per share

Loss per share                                           (7.91p)     (7.91p)



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. 22
'Earnings per share' (FRS 22).



4.       RECONCILIATION OF OPERATING LOSS TO NET CASH FLOW FROM OPERATING

ACTIVITIES
                                                     2005        2004
                                                     £           £

Operating loss                                       (1,654,041) (1,217,995)
Amortisation                                         74,914      3,996
Depreciation                                         75,640      32,666
Goodwill on acquisition of business                  (2,340,508) -
Loss/(profit) on sale of tangible fixed assets       78,032      (2,859)
Increase in stocks                                   (114,904)   (1,285)
(Increase)/decrease in debtors                       (342,060)   3,028
Increase/(decrease) in creditors                     756,296     (14,366)
Increase in deferred consideration                   2,340,508   -
Net cash outflow from operating activities           (1,126,123) (1,196,815)


5.       RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS

                                                      2005       2004
                                                      £          £

Increase in cash in the year                          1,250,108  350,779
Cash outflow from finance leases                      23,340     29,823
Change in net funds resulting from cashflows          1,273,448  380,602
Inception of finance leases                           -          (53,122)
Movement of net funds in the year                     1,273,448  327,480
Net funds at 1 January 2005                           1,104,751  777,271
Net funds at 31 December 2005                         2,378,199  1,104,751


6.       ANALYSIS OF MOVEMENT IN NET FUNDS

                               At 1 January                  At 31 December
                               2005
                                              Cashflow       2005
                               £
                                              £              £

Cash at bank and in hand       1,164,284      1,250,108      2,414,392
Finance leases                 (59,533)       23,340         (36,193)
                               1,104,751      1,273,448      2,378,199





7.       ACQUISITIONS


On 17 August 2005, the Company acquired the Binns Skips composting business in
Perthshire and agreed an 11 year lease and operating contract.


The fair value of the acquisition £2,543,008, represents fixed assets acquired
and paid for £202,500 and goodwill, £2,340,508. Management consider the fair
value of the fixed assets acquired is equal to their book value. The goodwill
has been calculated by discounting the deferred consideration of £3,000,000 to
present value at a rate of 6%. The consideration is payable in equal quarterly
instalments over a period of 10 years and the consideration for the fixed assets
was paid in full at completion. The difference between the fair value and the
deferred consideration will be deemed interest and will be recognised in the
financial statements over the 10 year period. This is in accordance with the
terms of Financial Reporting Standard No. 7 ('FRS7').


The contract will be reviewed after the initial 11 year contract period.



8.       RECONCILIATION OF EQUITY SHAREHOLDERS' FUNDS
                                                     2005        2004
                                                     £           £

Loss for the financial year                          (1,571,067) (1,111,744)
Issue of shares                                      3,457,450   1,500,916
Net addition to shareholders' funds                  1,886,383   389,172
Opening shareholders' funds                          1,146,445   757,273
Closing shareholders' funds                          3,032,828   1,146,445





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