Journeo Regulatory News (JNEO)

6 Aug 2008 07:00



6 August 2008

TG21 plc ("TG21", "the Company" or "the Group")

Interim Results for the six months ended 30 June 2008

TG21, the vehicle installation service provider supplying public transport CCTV and other monitoring systems, today announces its unaudited interim figures for the six months to 30 June 2008.  Over the last few years the Group has moved successfully to reposition itself away from being a distributor of in-car entertainment and security systems to become a vehicle installation service provider with its subsidiary, 21st Century, supplying public transport CCTV and other monitoring systems.

Group Highlights

Group revenue from continuing operations of £6m (2007: £8.2m);

21st Century Highlights

Pipeline orders for 1,000 EcoManager systems and potential to roll out across Arriva's UK bus fleet;

EcoManager also to be trialed in mainland Europe by Arriva;

New CCTV business win with Go-Ahead.

Commenting on the results, Peter Ward, Chairman of TG21, said:

"The first half of the year has undoubtedly been challenging, however our strategy of exiting mature and declining markets and reducing net debt means that we are well placed to deal with the challenges we face and exploit opportunities going forward. 

"We are particularly excited by the prospects for EcoManager which is aimed at reducing fuel costs for bus operators and other fleet managers. EcoManager has received excellent results from recently completed trials.  In the current economic climate with the spiraling cost of crude oil the launch of this product, which is the culmination of two years' development and testing, is very timely.

"Current trading is in line with expectations."

A copy of this interim results announcement is available on the Company's website: www.tg21plc.com

For Further Information:

Notes to editors

Launched in 1993, the Company began as Toad plc and was focused on the distribution of in-car entertainment systems and vehicle security products. Under the stewardship of Chairman Peter Ward, former Chairman and CEO of Rolls Royce Motors and Cunard Line, who joined the board at the end of 2001, TG21's strategy has been to reposition itself away from its legacy businesses into markets with better growth potential while leveraging its core strengths - nationwide field force of vehicle electrical engineers, call centre and distribution facilities. 

In line with this strategy, in 2005 the Company took a controlling stake in 21st Century Crime Prevention Services Ltd ("21st Century"), the preferred supplier of on-board CCTV systems for Arriva UK Bus. 21st Century has pioneered the use of WiFi with on-board CCTV systems and was the first company to successfully launch automatic video downloads and a bus CCTV monitoring system (HeartbeatTM).  In addition to Arriva UK Bus, clients of 21st Century include Arriva Scandinavia, Go-Ahead Group, Metroline, Kinch Bus and ACIS. 

The Group also provides vehicle installation services to the insurance market for the replacement of stolen in-car entertainment and navigation systems. On the back of this business the Group now supplies installation services for an embryonic black-box motor insurance scheme aimed at the corporate fleet market. 

Headquartered in Mitcham, the Group also has leased offices in Blackburn and Runcorn and employs around 100 staff.

  TG21 plc

Chairman's statement

The financial information contained within this interim report is based upon the Group's unaudited results for the six months to 30 June 2008.

The Company's strategy has been to reposition itself away from its legacy in-car entertainment and security distribution businesses and move into markets with higher growth and profit potential. At the end of last year I was pleased to announce the disposal of our in-car entertainment and car security businesses and we are now in a transitional period as we invest to develop the growth opportunities within public transport monitoring systems and vehicle installations.

Turnover from continuing operations was £6m in the period (2007: £8.2m) and the Group made a small loss of £26,000 (2007 profit: £0.5m). Net debt has been reduced considerably standing at just £0.4m at 30 June 2008 (2007: £3.0m).

Public transport on-board monitoring systems

Principal activities in this division are the supply of CCTV, black box and other monitoring systems for use on public transport vehicles, including products such as EcoManager and our passenger counting system, PAS.

Sales in the first half of 2007 increased 27% to just under £3.4m (H1 2007: £2.7m) and we are on track to complete 1,000 CCTV installations for Arriva UK Bus in the current year.

21st Century has completed the development of its EcoManager system aimed at reducing fuel costs for bus operators.  EcoManager works by monitoring individual driving styles and giving computer generated feedback, so that driver training can be focused to reduce harsh acceleration and braking, excessive idling and other factors which increase fuel consumption. Trials of the EcoManager system resulted in considerable fuel savings and changes to driving style which lead to increased safety. Arriva PLC have embraced the project within their UK Regional Bus division, with a depot awareness campaign and driver briefings. I am very pleased to report that June's results were boosted by our first sales of EcoManager to Arriva as part of an initial pipeline order for 1,000 systems and thereafter Arriva will be reviewing the rollout of EcoManager throughout its UK bus fleet. We are also very encouraged by the fact that Arriva are to trial the product in mainland Europe where they operate over 8,000 buses. 

While Arriva remains our main customer in the CCTV market, I am also delighted to report that in the first half of the year 21st Century has won new CCTV business from Go-Ahead and has significant pipeline orders from non-Arriva customers to be fulfilled through the second half of the year and into next year. 

In 2006 we acquired an option to purchase Cyberlyne Communications Limited ("CCL") which, like 21st Century, specialises in the supply and installation of on-board CCTV for public transport vehicles. While CCL was loss making and in need of management direction we felt that the company's synergies and customer base presented a good opportunity for us to expand our presence in the CCTV market.  We account for CCL as an associate company under the equity method of accounting and our share of its result for the period is included in the consolidated profit and loss account.  Further investment will be needed in CCL to move the business onto the next generation of products; however, in our view the more immediate opportunity for growth lies with 21st Century and so our strategy for growth is currently focused on EcoManager and other innovations in the 21st Century pipeline. 

Vehicle installation services 

The principal activities within this division are:

replacement and installation of stolen in-car entertainment and navigation systems for insurance company customers; 

installation of public transport monitoring systems for 21st Century;

installation services for the embryonic black-box motor insurance market.

Turnover in this division excluding intercompany installation charges to 21st Century fell by £2.9m (64%) to £1.6m.  This decline is attributable to the maturing audio insurance replacement business and our exit from the mobile 'phone installation contract with Unipart at the end of last year. Moreover, and as I flagged in the pre-close trading update of 19 June, the growth in black box installations for the motor insurance market has been disappointing.

Whilst continuing to work with our insurance clients in this market we are also making strategic investment in the pursuit of other vehicle installation opportunities. 

Distribution 

Following the disposals referred to above, our only remaining business in this division is Datatool which distributes motor cycle security and accessory products to the retail trade. Datatool continues to make a positive contribution to our central overheads.

Current trading and outlook

Having disposed of a significant part of our declining legacy business and successfully reduced the Group's bank indebtedness, we have been able to ride out the disappointments within our vehicle installation services business. We are excited by the initial market response to EcoManager, which in light of the recent increases in fuel costs, could generate significant new business for the Group.

We continue to work with new technology in the public transport industry and we look forward to strengthening existing and new relationships in the coming year.

Current trading is in line with market expectations.

Consolidated income statement

Consolidated balance sheet

Consolidated cash flow statement

   Notes

1. Basis of preparation and approval of interim statement 

The interim financial statement for the six months to 30 June 2008 has been prepared in accordance with IFRSs as adopted by the European Union and specifically in accordance with IAS 34 'Interim Financial Reporting'.  They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements for the year ended 31 December 2007.

The accounting policies adopted in the preparation of the interim financial statements are the same as those set out in the Group's Annual Report and Financial Statements 2007.

The financial information herein does not amount to full statutory accounts within the meaning of Section 240 of the Companies Act 1985. The Annual Report and Financial Statements 2007 have been filed with the Registrar of Companies. The auditors' report on these financial statements was unqualified and did not include a statement under Section 237(2) or s237(3) of the Companies Act 1985.

The interim financial statement is unaudited and was approved by the Board of Directors on 5 August 2008.

2. Segmental reporting

3. Cash generated from operations

4. Statement of changes in equity