Journeo Regulatory News (JNEO)

30 Oct 2007 07:01

TG21 Plc30 October 2007 Embargoed Release: 0700 hrs 30 October 2007 TG21 plc ("TG21" or "the Group") TG21 EXITS LOW MARGIN DISTRIBUTION BUSINESS AS PART OF ITS CONTINUED STRATEGIC REPOSITIONING TG21, the vehicle installation service provider supplying public transport CCTVand other monitoring systems, today announces that its subsidiary company, Toad(UK) Limited ("Toad" or "the Company"), has agreed to dispose of its "Sextons"division which distributes in-car entertainment and satellite navigationsystems. The Sextons name and its inventory are to be sold to Car ElectronicsLimited ("CEL"), a private company based in Leicester. The proposed disposal isdue for completion on 31 October 2007. Sextons generated sales of around £4.5m in the six months to 30 June 2007 butthe sector has suffered declining margins in recent years and the division madea loss in the period of £0.1m. CEL is to pay a cash consideration linked to the stock holding of the divisionon 31 October and expected to be around £0.6m. Toad will incur reorganisationcosts of £0.2m and will make an exceptional provision for remaining obsoletestock of £0.2m. In addition the Company will make a provision for onerous leaseson vacant premises of £0.1m. The net cash proceeds will be applied to reduce theGroup's bank borrowing. Peter Ward, Chairman of TG21, said: "We have clearly stated our strategy to exit at the earliest opportunity fromour low margin legacy businesses to allow us to focus on those areas where weanticipate the higher levels of growth, namely becoming a vehicle installationservice provider with our 75% subsidiary, 21st Century, supplying publictransport CCTV and other monitoring systems. "As a private family company with a successful distribution business alreadyoperating in this sector, CEL are well placed to leverage Sextons as a bolt-onbusiness to their existing operation and we wish them every success. For ourpart, the disposal will allow us to liquidate stock and, while there areinevitably exceptional costs which will arise out of exiting this business, manyof these are not cash impacting and consequently we anticipate a furtherreduction in our net debt at the year end. "We look forward to concentrating our management and financial resources onfurther developing our vehicle installation and public transport offering." -Ends- For Further Information: TG21 plc Nick Grimond, CEO 020 8710 4000Hogarth Partnership Limited Barnaby Fry/Sarah Richardson 020 7357 9477Daniel Stewart & Co plc (Nomad) Graham Webster 020 7776 6550 Notes to editors Launched in 1993, the Company began as Toad plc and was focused on thedistribution of in-car entertainment systems and vehicle security products.Under the stewardship of Chairman Peter Ward, former Chairman and CEO of RollsRoyce Motors and Cunard Line, who joined the board at the end of 2001, TG21'sstrategy has been to reposition itself away from its legacy businesses intomarkets with better growth potential while leveraging its core strengths -nationwide field force of vehicle electrical engineers, call centre anddistribution facilities. In line with this strategy, in 2005 the Company took a controlling stake in 21stCentury Crime Prevention Services Ltd ("21st Century"), the preferred supplierof on-board CCTV systems for Arriva UK Bus. 21st Century has pioneered the useof WiFi with on board CCTV systems and was the first company to successfullylaunch automatic video downloads and a bus CCTV monitoring system (HeartbeatTM).In addition to Arriva UK Bus, clients of 21st Century include ArrivaScandinavia, Go-Ahead Group, Metroline, Kinch Bus and ACIS. In 2006 the Companybolstered this division, with a strategic investment in another bus CCTVbusiness, Cyberlyne Communications Limited ("CCL"). This investment was made byway of a loan of £430,000 to CCL and in parallel with this loan agreement CCLhas granted an option to TG21 to acquire the whole of its share capital.Recently the Company has completed a number of installations for a pilot 'pay asyou go' motor insurance scheme with a major insurance company and has severalother similar trials in progress. The Company was awarded these opportunities onthe back of the long and valued relationships which it has developed in thismarket through its insurance replacement services. Headquartered in Mitcham, the Group also has leased offices in Blackburn,Runcorn and Tamworth and employs around 170 staff. This information is provided by RNS The company news service from the London Stock Exchange