Shares digital

Manchester Council has given its first tangible commitment to starting a £3 billion PFI waste management project involving TEG (TEG:AIM). The company, which converts organic waste into fertiliser, has received the go-ahead to start detailed designs in earnest for silo cage systems, which will treat waste from the Manchester region.

The project suffered a small delay in November, which meant TEG could not book the full anticipated revenue into its 2007 earnings. It could only do basic design work until its construction manager Costain (COST) finalised its contracts with the Viridor-Laing consortium overseeing the project.

Chief executive Michael Fishwick said he was ‘disappointed’ not to see the Manchester update revive TEG’s share price, which has nearly halved since mid-2007. ‘I don’t think the market realises the importance of the work order from Costain. It means the PFI project is now moving,’ he said after the shares stayed flat at 79p.

TEG’s contribution is worth around £35 million for three years’ work. The first and final years are only valued at ‘a few million pounds’ each, but the middle year is worth up to £25 million, according to Fishwick.

The company has offered to operate and maintain the plants once operational. Contract discussions have been postponed until financial close on the PFI scheme, which is set for 31 March.

Overseas expansion could happen in 2009, said Fishwick. It has agents in Eastern Europe, France and Portugal seeking waste management work. Last year, TEG was beaten in the final round of a tender in Poland.

Shares says: Needs to secure higher-value, longer-term work to revive the share price.