Journeo Regulatory News (JNEO)

21 Aug 2006 07:00

TG21 Plc21 August 2006 Embargoed Release: 7.00 hrs 21 August 2006 TG21 plc Interim Results for the six month period ended 30 June 2006 TG21, the niche provider of business solutions to the automotive, publictransport, cellular and insurance markets, today announces unaudited interimfigures for the six months to 30 June 2006. Operational Highlights €21st Century new products to be trialed with Arriva UK Bus •In July the Company acquired an interest in a second public transport CCTV business •Legacy distribution business achieved increased sales but at low margins •Services business hit by delays in Pay As You Drive projects Financial Highlights •Group turnover up 7% to £17.4m (H1 2005: £16.2m) •Group profit before tax* of £320,000 •Basic earnings per share* of 0.37p •Cash flow from operations remains strong despite disappointing trading results *pre-amortisation of intangibles Commenting on the results, Peter Ward, Chairman of TG21, said: "After a robust set of results for 2005, the performance of the Group in thefirst half of the current year has been disappointing. Our aim is to harvest thecash generated by our legacy businesses to allow us to move into growth areasleveraging our core competencies. Our investment in the public transport monitoring systems market via 21stCentury and CCL underlines our commitment to this strategy. The Board remainsconvinced that the future growth of the Company lies in these markets. We willcontinue to work hard to attract new customers and develop new products whichallow public transport companies to monitor and maintain their fleets. " For Further Information: TG21 plc Wilson Jennings 020 8710 4000 Finance Director Hogarth Partnership Barnaby Fry/ 020 7357 9477 Sarah Richardson TG21 plcChairman's statement - Interims 2006 TG21, the niche provider of business solutions to the automotive, publictransport, cellular and insurance markets, today announces unaudited interimfigures for the six months to 30 June 2006. For the 12 months to 31 December 2005, our public transport CCTV businesscontributed £1.1m to Group operating profit before amortisation. For the firstsix months of this year its contribution has been satisfactory and hascompensated to some extent for the decline in our maturing legacy businesses. Weare, however, hoping for more from this investment in the medium and long termand have significant levels of pipeline business awaiting approval. We believethis division to be a key part of the future growth of TG21 plc. We have achieved increased sales in our Distribution division compared to thesame period last year and within our Services Division turnover from hands-freeinstallations has been maintained at around last year's levels. However, themajority of Distribution sales came from very low margin satellite navigationsystems. We have also seen a continued decline in insurance replacement combinedwith delays experienced in the revenue stream from Pay As You Driveinstallations impacting significantly on our bottom line. Consequently we aretaking steps to achieve overhead savings and examining further exit strategiesfrom some sectors of the legacy business. Cash flow remains strong. Net debt stands at £3.3m which is down by £0.6m whencompared to 30 June last year despite the fact that in the intervening period wehave spent £2.7m to increase our holding in 21st Century to 75% at a net cashcost of £2.0m and £0.7m on capital expenditure including the refurbishment ofour call centre. Public transport on-board monitoring systems Principal activities in this division are the supply of CCTV, black box andother monitoring systems for use on public transport vehicles. In August 2005 we increased our stake in 21st Century to 75% and haveconsolidated its results as a subsidiary from that date. 21st Century is thepreferred supplier of on-board CCTV to Arriva UK Bus. Sales in the first half of 2006 at £1.5m compare to £2.1m for the same periodlast year. However we have significant pipeline business on hold awaiting finalapproval. To build upon its on-board CCTV business, 21st Century is developing newproducts aimed at enhancing revenue and reducing running costs for bus operatorsand Arriva UK Bus is shortly to commence trials of these products on 56 of itsbuses. In July this year we announced that we have made a loan of £0.4m to CyberlyneCommunications Limited ("CCL"). At the same time we were granted options toacquire the whole of the share capital of CCL. Like 21st Century, CCL supplieson-board CCTV for use on public transport vehicles and has 6,000 installedsystems to date. CCL however has a wider customer base which includes FirstGroup, Go-Ahead and Translink and has developed its own digital recorder whichlies at the heart of the CCTV system. We believe that this investment has thepotential to leverage our existing position in the market. Services The principal activities within Services are the replacement of stolen in-carentertainment and navigation systems for insurance company customers and thesupply and installation of mobile 'phone hands-free kits for corporate fleets.Following the acquisition of 21st Century, the division now also undertakesinstallations of public transport monitoring systems. Turnover in this division was £0.8m (13%) down on the same period last year at£5.3m. In the second half of last year we exited a number of peripheralactivities - telematics (Actra), camera and computer insurance replacement andvehicle inspection services - which contributed to the reduced sales. However,most of the decline in the first half of this year is attributable to thematuring audio replacement business. Installations of mobile 'phone hands-free kits have held up reasonably wellcompared to the first half of last year. We recognise that this market does nothave an indefinite shelf life and so our focus has been to find newopportunities to leverage our strengths in engineering, distribution and callcentre services. Our investment in public transport on-board monitoring servicesvia 21st Century and now CCL is a significant step forward in this regard and weanticipate that installations of public transport monitoring systems will makean increasing contribution to Group profitability as income from our legacybusinesses falls away. From the start of the year we also geared up our engineering capability andinvested in technology in anticipation of new income streams from our insurancecustomers offering Pay As You Drive ("PAYD") schemes. However delays in theseprojects which are beyond our control mean that we are unlikely to see a returnon our investment in the current year. Distribution Principal activities within Distribution consist of the distribution of in-carentertainment systems, satnav/communications equipment, speed camera alerts,audio leads and own brand automotive and motorcycle alarms to the retail trade. Overall the sales in this division increased by £0.5m (5%) from £10.1m to £10.6mat the half year. Datatool our motorcycle alarm and accessory brand accountedfor 70% of this increase in turnover which is encouraging. However the remainingincrease and almost half of total Distribution sales were attributable to salesof very low margin portable satellite navigation systems which have far outsoldin-car entertainment systems and speed camera alerts. While the growth inportable satellite navigation is flattering to our top line it has not been ableto mask the underlying decline in higher margin aftermarket in-car entertainmentsystems. We have also suffered from the impact of a 9 month delay in delivery bythe manufacturer of the upgraded Inforad speed camera alert, for which we haveUK distribution rights. Current trading and outlook After a robust set of results for 2005, the performance of the Group in thefirst half of the current year has been disappointing. We have flagged for sometime, however, that our in-car entertainment and security businesses areoperating in very mature and declining markets. Our aim is to harvest the cashgenerated by these legacy businesses or divest of them altogether to allow us tomove into growth areas which leverage our core competencies. Our investment inthe public transport monitoring systems market via 21st Century and CCLunderlines our commitment to this strategy but it is clear that we still have alot of hard work ahead of us to achieve the vision we have for the Group. Peter WardChairman Consolidated profit and loss account Unaudited six months Unaudited six ended 30 June 2006 Months ended Year ended 30 June 2005 31 Dec 2005 Restated Restated (see note 1) (see note 1) Before After amortisation Amortisation amortisation of of of intangibles intangibles intangibles £'000 £'000 £'000 £'000 £'000 Turnover 17,403 - 17,403 16,214 36,316 Cost of sales (11,105) - (11,105) (9,250) (21,409) ========= ========= ========= ========== =========== Gross profit 6,298 - 6,298 6,964 14,907 Other operatingexpenses (5,744) (288) (6,032) (5,993) (12,664) ========= ========= ========= ========== =========== Group operatingprofit 554 (288) 266 971 2,243 Share of operatingprofit/(loss)of associate - - - 144 (137) ========= ========= ========= ========== ===========Total operatingprofit 554 (288) 266 1,115 2,106 Interest payable andsimilarcharges (234) - (234) (253) (500) ========= ========= ========= ========== ===========Profit on ordinaryactivitiesbefore taxation 320 (288) 32 862 1,606Taxation - - - (66) (289) ========= ========= ========= ========== ===========Profit on ordinaryactivitiesafter taxation 320 (288) 32 796 1,317Minority interests (15) - (15) (36) (132) ========= ========= ========= ========== =========== Profit attributable tomembers of the parentcompany (note 2) 305 (288) 17 760 1,185 ========= ========= ========= ========== =========== Earnings per share -basic 0.37p (0.35)P 0.02p 0.93p 1.45pEarnings per share -diluted 0.37p (0.35)P 0.02p 0.93p 1.45p ========= ========= ========= Consolidated balance sheet Unaudited Unaudited 30 June 2006 30 June 2005 31 Dec 2005 Restated Restated (see note 1) (see note 1) £'000 £'000 £'000Fixed Assets Intangible assets 4,562 592 4,850Tangible assets 4,679 4,424 4,645Investments - 2,658 - =========== ========= ========== 9,241 7,674 9,495 Current AssetsStocks 3,451 3,709 3,799Debtors 4,667 5,558 6,771Cash at bank and in hand 1,397 2,370 1,525 =========== ========= ========== 9,515 11,637 12,095 Creditors: amounts fallingdue within one year (6,408) (8,784) (8,865) =========== ========= ========== Net current assets 3,107 2,853 3,230 =========== ========= ==========Total assets less currentliabilities 12,348 10,527 12,725Creditors: amounts fallingdue after more than oneyear (2,979) (1,981) (3,468) =========== ========= ========== Net Assets 9,369 8,546 9,257 Capital and reservesCalled-up share capital 8,169 8,169 8,169Share premium account 3,387 12,110 12,110Share capital to be issued 43 43 43Revaluation reserve 1,378 1,392 1,378Profit and loss account (3,845) (13,204) (12,665) =========== ========= ==========Total equity shareholders'funds (note 2) 9,132 8,510 9,035 Minority interests 237 36 222 9,369 8,546 9,257 =========== ========= ========== Consolidated cash flow statement Unaudited Unaudited six six months ended months ended Year ended 30 June 2006 30 June 2005 31 Decr 2005 £'000 £'000 £'000 Net cash inflow from operatingactivities (note 3) 959 1,112 4,092 ========= ========= ========== Returns on investments andservicing of financeInterest payable and similarcharges (223) (210) (503) TaxationUK Corporation tax paid - - (151) Capital expenditure andfinancialinvestment Purchase of tangible fixed (275) (259) (699)assets ========= ========= ========== (275) (259) (699)AcquisitionsPurchase of investment inassociate (805) - Purchase of investment insubsidiary - - (3,133)Cash acquired - - 319 - (805) (2,814) ========= ========= ========== Cash inflow/(outflow) beforefinancing 461 (162) (75) Financing Net movement in long termborrowings (500) 1,000 2,500Repayment of principal underfinance leases - (2) (2) ========= ========= ========== (500) 998 2,498 ========= ========= ==========(Decrease)/increase in cash inperiod (note 4) (39) 836 2,423 ========= ========= ========== Notes 1. Basis of preparation. The interim statement has been prepared on the basis ofthe accounting policies set out in the Group's statutory accounts to 31 December2005 with the exception of share based payments which are now accounted forunder FRS 20. Applying the Black-Scholes valuation model gives a fair valuecharge for these share options which in accordance with FRS 20 has been added toother operating expenses in each period as follows: Unaudited six Unaudited six months ended months ended Year ended 30 June 2006 30 June 2005 31 Dec 2005 £'000 £'000 £'000 Share based remuneration charge(FRS 20) 80 50 150 ============ =========== ========== The financial information contained in the interim report does not constitutestatutory accounts as defined in Section 240 of the Companies Act 1985. Theinterim report has neither been audited nor reviewed by the Group's auditors. Acopy of the Group's 2005 statutory accounts has been filed with the Registrar ofCompanies: the Auditors' opinion on those accounts was unqualified and did notcontain any statement under section 237 of the Companies Act 1985. The interimstatement for the six months ended 30 June 2006 was approved by the directors on21 August 2006. 2. Reconciliation of movements in shareholders funds Unaudited six Unaudited six months ended Months ended Year ended 30 June 2006 30 June 2005 31 Dec 2005 (Restated) (Restated) £'000 £'000 £'000 Net profit for the period 17 760 1,185FRS20 current year adjustment(note 1) 80 - -Share premium decrease* (8,723) - -Retained profit and loss reserveincrease* 8,723 - - ========== ========= =========Net movement in shareholders'funds 97 760 1,185 ========== ========= =========Opening shareholders' funds aspreviously reported 9,035 7,700 7,700Prior year adjustments (note 1) - 50 150 ========== ========= =========Opening shareholders' funds asrestated 9,035 7,750 7,850 ========== ========= =========Closing shareholders' funds 9,132 8,510 9,035 ========== ========= ========= *At the Annual General Meeting held on 23 May 2006 a special resolution waspassed to transfer £8,723,000 standing on the credit of the company's sharepremium account to distributable reserves. Following the AGM an application tothe High Court was made and this completed on 28 June 2006. 3. Reconciliation of operating profit to net cash flow from operating activities Unaudited six Unaudited six months ended Months ended Year ended 30 June 2006 30 June 2005 31 Dec 2005 £'000 £'000 £'000 Operating profit 266 971 2,243Depreciation of tangible fixedassets 241 223 482FRS20 adjustment (note 1) 80 50 150Amortisation of intangible fixedassets 288 60 312Decrease/(increase) in workingcapital balances 84 (192) 905 ========== ========== =========Net cash inflow from operatingactivities 959 1,112 4,092 ========== ========== ========= 4. Reconciliation of net cash flow to movement in net debt Unaudited six Unaudited six months ended Months ended Year ended 30 June 2006 30 June 2005 31 Dec 2005 £'000 £'000 £'000(Decrease)/increase in cash in theperiod (39) 836 2,423 Cash outflow/(inflow) fromdecrease/(increase) in net debt 500 (998) (2,498) ========== ========== =========Changes in net debt resulting fromcash flows 461 (162) (75)Other (11) (43) 7 ========== ========== =========Movement in net debt in the period 450 (205) (68)Net debt at start of period (3,793) (3,725) (3,725) ========== ========== =========Net debt at end of period (3,343) (3,930) (3,793) ========== ========== ========= Notes to editors About TG21 TG21 plc is a niche provider of business solutions to the automotive, publictransport, cellular and insurance markets. It operates via 3 core divisions:Public Transport On-board Monitoring Systems, Services and Distribution. TG21 holds a 75% stake in 21st Century, a leading provider of CCTV and black boxrecording systems to the UK public transport sector. This black box technology,pioneered by the aviation industry, offers features above and beyond standardCCTV. 21st Century is the preferred supplier to Arriva UK Bus. In the Services division, TG21 provides Insurance Services such as claimshandling and fulfillment, related to theft of in-car entertainment systems. TG21provides a professional call centre and engineer response. Major customersinclude Royal Bank of Scotland and Norwich Union. TG21 also provides TechnicalServices, which include mobile vehicle installation of hands-free mobile phonekits for UTL who manage the installation logistics for Vodafone. TG21's Distribution division focuses on the distribution of automotive andmotorcycle products to the UK specialist aftermarket, to include security,speed-camera warning, audio, navigation and multi-media systems. TG21 employs around 250 staff with offices in Mitcham, Tamworth, Blackburn andRuncorn. This information is provided by RNS The company news service from the London Stock Exchange