UPDATE 2-TEG Group swings to FY profit, sees strong 2010

* Sees 2010 pretax profit of over 0.5 mln stg - CEO

* Says dividend unlikely in near term

* Expects plants in Scotland, South Wales opening in 2010

* Sees EU, UK govt policies supporting expansion of market (Recasts; adds comments from CEO and analyst)

By Aditi Samajpati

BANGALORE, March 17 (Reuters) - Green technology firm TEG Group Plc (TGE.L) swung to a full-year profit, helped by new contract wins, and said it expected to post a higher pretax profit for 2010.

The company, which provides technology to treat organic waste, said it expected European Union and UK government policies on diversion of organic waste from landfills to support expansion of its market for the foreseeable future.

"The key drivers that help our market at the moment are in legislation and will continue through 2020," Chief Executive Michael Fishwick told Reuters on Wednesday.

He expects a pretax profit of more than 0.5 million pounds ($762,300) for 2010.

TEG, which provides in-vessel composting technology for treating animal by-product waste and producing power from food waste, expects to benefit irrespective of which political party wins the forthcoming UK general election.

"Both the parties are talking about very good green policies ... At the end of the day, they both are going to step up the green agenda," Fishwick said.

The company would focus on expansion in the English Midlands, where it sees a lot of opportunities, and also expects to open new plants in Wales and Scotland this year, the CEO said.

"The UK market is still growing so rapidly that that's where our main focus is. But we would not rule out future overseas development," Fishwick said.

He said the company already had a partnership agreement in Eastern Europe and it also saw the Indian waste-management market as an upcoming growth area.

TEG Group, which ended 2009 with 3.8 million pounds in cash, did not recommend a dividend for the period.

"We hope to spend our cash very wisely. We are looking at quite a few projects and hence no dividend because we are looking to reinvest back into the business," Fishwick said.

TEG acquired Banham Compost Ltd in June 2009, which it sees performing strongly for the remainder of 2010.

"We expect TEG to increase investment to take advantage of growing market opportunities," Bob Liao at Canaccord Adams said. He kept his "buy" rating and price target of 80 pence on the stock.

In the year to end-December, the company earned a pretax profit of 155,000 pounds ($236,300), compared with a loss of 1.6 million pounds a year ago.

Revenue rose 21 percent to 15.4 million pounds.

TEG Group shares were unchanged at 44 pence at 1111 GMT on the London Stock Exchange. ($1=.6559 Pound) (Reporting by Aditi Samajpati; Editing by Anne Pallivathuckal and Gopakumar Warrier)