Full-year results from composting technology group TEG were completely overshadowed by the ending of takeover talks and news of a £2m fundraising which sent the shares tumbling and prompts us to call time on our buy recommendation.
The company has been hit hard by delays to projects and subsequent delays to payments for completed projects, which ultimately resulted in a painful performance. This masked a significant improvement at TEG's composting facilities, which grew waste volumes by a third to 244,000 tonnes, and saw average gate fees rise by 16 per cent. However, delays to a major project at Dagenham and on the fourth facility for Manchester Waste hit revenues in the period. In fact, Manchester is still retaining £1m due to TEG and, although Dagenham is expected to achieve financial close and a first payment within three months, management is taking no further risks.
So TEG is raising £2m in an open offer at 3p a share, of which £1.2m is underwritten and a further £600,000 already committed by key investors. The company has admitted that a failure of the offer and further delays in receipt of income from projects would "place the company in a position of significant uncertainty".
TEG (TEG) | ||||
---|---|---|---|---|
ORD PRICE: | 3.75p | MARKET VALUE: | £5m | |
TOUCH: | 3.5-4p | 12-MONTH HIGH: | 22p | LOW: 3p |
DIVIDEND YIELD: | nil | PE RATIO: | na | |
NET ASSET VALUE: | 17p* | NET DEBT: | 1% |
Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2007 | 2.2 | -3.10 | -6.7 | nil |
2008 | 12.7 | -1.62 | -3.1 | nil |
2009 | 15.4 | 0.16 | 0.5 | nil |
2010 | 20.7 | -0.63 | -0.7 | nil |
2011 | 17.9 | -8.00 | -7.9 | nil |
% change | - | - | - | - |
*Includes £5.1m of intangible assets, or 4p a share |