Tekmar Group Regulatory News (TGP)

15 Mar 2006 07:45

Immediate Release: Wednesday 15th March 2006The following announcement replaces the announcement published today at 07:01hrs under reference PRNUK-1403061501-5D7F.Profit before amortisation of intangibles should have read up to ‚£2.7m and EPSshould have read up to 1.63p. The rest of the announcement remains unchangedand the full and correct text can be found below: TG21 plc (`The group') Preliminary Results for the 12 Months Ended 31st December 2005 Highlights¢â‚¬¢Profit before amortisation of intangibles up from ‚£2m to ‚£2.7m¢â‚¬¢Net profit up 74%¢â‚¬¢EPS (basic) up 68% to 1.63p¢â‚¬¢Net debt increase of only ‚£0.1m after payment of ‚£3.1m to acquire controllingstake in 21st Century¢â‚¬¢Investment in 21st Century increased to 75% which contributed over ‚£1m tooperating profit¢â‚¬¢Hands free installations continue to grow¢â‚¬¢Datatool wins new distribution rightsFor enquiries please contact:Peter Ward TG21 plc Tel: 020 8710 4000ChairmanWilson Jennings TG21 plc Tel: 020 8710 4000Finance DirectorAndrew Tan Hansard Communications Tel: 020 7245 1100Account DirectorChairman's StatementPrincipal activitiesThe Group's principal activities are the supply and installation of products inthe following market sectors:¢â‚¬¢ Public transport CCTV¢â‚¬¢ Mobile `phone hands-free installations¢â‚¬¢ Insurance replacement of stolen in-car entertainment systems¢â‚¬¢ Car and motorcycle security and accessory productsTrading ResultsGroup sales for the year increased by ‚£1.7m to ‚£36.3m (2004: ‚£34.6m) andinclude ‚£1.9m turnover from 21st Century which was consolidated for the fivemonths from 1st August 2005 being the date that we took a controlling interest.Group 2005 2004 ‚£m ‚£m Turnover 36.3 34.6 Gross profit 14.9 14.2 Gross profit percentage 41.0% 41.0% Total operating expenses excluding amortisation and (12.2) (12.2)impairment of intangibles Total operating profit before amortisation and impairment 2.7 2.0of intangibles Amortisation and impairment of intangibles (0.4) (0.7) Total operating profit 2.3 1.3 Net profit attributable to members of the parent company 1.3 0.8 EPS (basic) 1.63p 0.97p Net debt 3.8 3.7I am very pleased to report that Group operating profit before amortisation andimpairment of intangibles has increased to ‚£2.7m (2004: ‚£2.0m). This includes ‚£0.6m of operating profit (before amortisation) arising on the consolidation forthe last 5 months of the year of our newly acquired subsidiary, 21st CenturyCrime Prevention Services Limited ("21st Century"). 21st Century supplies andinstalls CCTV equipment for use on public transport vehicles. In addition inthe period after we made our initial investment but before we took acontrolling stake we provided a range of services to 21st Century to supportexpansion of its activities for which we charged 21st Century ‚£500,000. Thisbrought the total contribution from 21st Century to group pre-amortisationoperating profit for the year to ‚£1.1m. In the prior year, the sale of certaindistribution rights to 21st Century contributed ‚£0.8m to group profit.Group net profit (attributable to the members of the parent company) is up 63%at ‚£1.3m (2004: ‚£0.8m) and basic Earnings Per Share is up 68% at 1.63p (2004:0.97p). The closing share price at 31 December 2005 was 13p (2004: 13.75p)giving a p/e ratio for TG21 plc of just 8.0 (2004: 14.2) at that date.Public transport CCTVDuring the year we increased our investment in 21st Century to 75% havingacquired an initial 25% in 2004. The total cost of this investment to date is ‚£4.9m including professional fees and we have an option to acquire the remaining25% for ‚£2.1m.From the start of the year we geared up our engineering resource within thegroup to service the installation needs of 21st Century. As described above werecovered these costs by way of a ‚£0.5m charge to 21st Century in respect ofservices provided. Given the contribution to group profit from 21st Century wewaived our preference share dividend entitlement of ‚£0.5m due from 21st Centuryfor 2005 although a dividend entitlement remains for future years.In my last interim statement I also announced that 21st Century had wonbusiness worth ‚£1.5m for the installation of CCTV and related systems at aregional bus depot. Much of the work in this region was delayed by the customeruntil the Spring of 2006 and so we can look forward to the contribution fromthis project in the current year.Our key targets for 21st Century are to build upon their existing customerrelationships, develop value added products to compliment the security CCTVsolutions they offer and to win new customers in the public transport market.Our prospects in this regard are significantly improved following the recentappointment of a Director of Sales for 21st Century who has been recruited fromthe UK's leading supplier of public transport ticketing machines.Mobile `phone hands-free installationsTurnover from the installation of mobile `phone hands-free kits was up to ‚£4.9m(2004 excluding sale of distribution rights: ‚£4.4m) for the year. We are nowundertaking around 3,000 of these installations a month for Unipart who managethe installation logistics on behalf of Vodafone.Insurance replacement of stolen in-car entertainment systemsCar audio insurance replacement turnover was down ‚£1.6m in line withexpectations at ‚£7.1m (2004: ‚£8.7m) but our relationships with a number ofinsurance companies has the potential to yield another installation incomestream through a new initiative known as Pay As You Drive (PAYD) . Under thePAYD scheme the motor insurance policy holders benefit from a reduced premiumin return for having a black-box device fitted to their vehicles which iscapable of recording journey information. Our involvement is as an installationcontractor acting for the insurance companies. This new initiative, if adoptedwidely in the car insurance market, could make a significant and increasingcontribution to our 2006 and future year results.Car and motorcycle security and accessory productsWithin our Distribution Division, sales of portable satellite navigationsystems have compensated for the anticipated decline in the car securitymarket. However the margins in this high volume business are much tighter andthis has had an impact on the gross profit in this sector.Datatool, our motorcycle security and accessory business, has recently beenawarded distribution rights for a number of exciting products and we anticipategrowth from these in the current year.FinanceCash flow remains strong. We increased our long term loans by ‚£2.5m to helpfinance the acquisition of 21st Century. However, through efficient workingcapital management net debt at the year end was up by only ‚£0.1m to stand at ‚£3.8m (2004: ‚£3.7m).Dividend policyTo date the company has not been in a position to pay dividends because of thelevel of bank debt in the business and the losses of the company accumulated inits formative years. In the last four years the group has generated a retainedprofit of ‚£3.5m and ‚£13.4m in cash from operating activities. The group hasalso reduced net debt from ‚£8.5m to ‚£3.8m in that period. If we are able tomaintain our cash generation and can successfully exploit our growthopportunities, it is the Board's intention to review the company's dividendpolicy during 2006. To this end a Resolution will be put forward forconsideration by shareholders at our next AGM to enable the company to offsetits share premium against its prior year accumulated losses so that futureprofit is available for distribution by way of dividend.Move to AIMThe company's ordinary shares were moved across from the Official List of theUnited Kingdom Listing Authority (the "Official List") to the AIM market of theLondon Stock Exchange ("AIM") on 15 April 2005.As an AIM company, the company continues to be subject to the regulatory anddisciplinarycontrols of the London Stock Exchange. The board believes that AIM, with itslower cost of complying with continuing obligations, is a more appropriatemarket for the company given its size and shareholder base.Strategy and current tradingDuring 2005 we positioned the business to focus more efficiently andeffectively on the high growth sectors in the group. Our investment in 21stCentury has yielded an excellent return and has made a significant contributionto group results in 2005. We are looking to consolidate our position in thecurrent year which to date is in line with expectations and develop theopportunities for growth into 2007.StaffFinally, I would like to take this opportunity to thank all the staff for theirhard work over the last year. Without their contribution the good performancethis year could not have been achieved.Peter WardChairman14 March 2006Operating ReviewThe TG21 plc group of companies now operates in three divisions:¢â‚¬¢Public transport CCTV¢â‚¬¢Services - Technical- Insurance¢â‚¬¢DistributionPublic transport CCTVPrincipal activities: The supply and installation of CCTV systems for publictransport vehicles. Major customers include Arriva UK Bus, Alexander Dennis,Volvo and Scania Buses.Full year sales in our newly acquired subsidiary, 21st Century, were ‚£4.3m ofwhich ‚£1.9m (2004: nil) has been included in our consolidated turnover from thedate of the acquisition of our majority stake.The company has now undertaken 3,000 installations of CCTV systems in the UKand is expecting to undertake at least another 1,000 installations in thecurrent year. The company also has several pipeline products which will runthrough the same gateway as the CCTV system and which could potentially savemillions of pounds for major bus operators. We are using these value addedproducts in our marketing drive for new customers to build on the solidplatform that this company has established with its existing customers.ServicesPrincipal activities: 1) Technical Services - The supply and installation ofhands-free mobile `phone kits to corporate fleets. The major customer isVodafone whose installation logistics are managed by Unipart Logistics Limited("Unipart"). 2) Insurance Services - Insurance replacement and installation ofstolen in-car entertainment and satellite navigation systems. Most of theleading insurance companies are among this division's customers and theyinclude Norwich Union and the Royal Bank of Scotland Group.Technical Services turnover excluding the sale of distribution rights last yearwas up by 11% at ‚£4.9m (2004 sales excluding sale of distribution rights: ‚£4.4m). Most of this income comes from our contract with Unipart to undertakehands-free `phone kit installations into corporate fleet customers of Vodafone.During the year we were consistently ranked highly against our KPIs and as aconsequence were awarded the installation business for several new customers.Monthly sales of hands-free installations have increased steadily fromapproximately ‚£0.2m in January 2004 to ‚£0.4m in December 2005.The car audio insurance replacement market continues to mature and as aconsequence Insurance Services turnover at ‚£7.1m was 18% down on the previousyear (2004 sales: ‚£8.7m). We have maintained excellent working relationshipswith our insurance company clients to increase penetration in this market.Moreover, we believe that these relationships can generate other sources ofincome for vehicle installation work. A number of insurance companies have beenlooking at launching Pay As You Drive (PAYD) type motor insurance schemes. PAYDis a relatively new concept in the motor insurance industry and we are lookingto be a "black-box" installation contractor for the insurance companiesoffering these schemes. We are currently running trials with several insurancecompanies who are planning to implement PAYD schemes in 2006. This represents agreat opportunity for us to build on our excellent reputation with the insurersfor quality installation and call centre services.The Services division incorporates our engineering workforce which has providedsupporting services to 21st Century. On 31 July 2005 the Services divisioncharged ‚£0.5m to 21st Century for the provision of its services up to thatdate. There was no such charge in 2004 but in that year Services sales included‚£0.8m in respect of the sale of certain distribution rights to 21st Century.DistributionPrincipal activities: The distribution of in-car entertainment systems, satnav/communication equipment, speed camera alerts, audio leads and own brandautomotive and motorcycle alarms to the retail trade and original equipmentmanufacturers. Major customers include Argos, Subaru, Triumph Motorcycles andWoolworths.Distribution turnover increased to ‚£21.9m (2004: sales ‚£20.7m). Sales ofportable satellite navigation systems have made a major contribution to thisgrowth and have compensated at the turnover line for the continued decline inthe car security market.We have extended the product range within Datatool and have recently beenawarded distribution rights within the UK motorcycle market for Tracker, TomTomnavigation, the Inforad speed camera location device and the Text Alertsecurity product.Operating expensesGroup operating expenses excluding amortisation and impairment of intangiblesat ‚£12.2m are in line with the previous year despite the fact that the 2005operating expenses include ‚£0.3m of overheads from the results of 21st Century.Amortisation and impairment of intangibles for 2005 is ‚£0.4m, down from ‚£0.7min 2004. The 2004 charge included a one-off ‚£0.4m provision for impairment(2005: Nil).Working capital and net debtNet cash inflow from operations was ‚£4.1m (2004: ‚£3.0m) up ‚£1.1m on the prioryear. We spent ‚£3.1m including professional fees to acquire a further 50% of21st Century (2004: initial 25% stake cost of ‚£1.8m) bringing our holding to75%. At the date of the acquisition of our controlling stake, 21st Century had‚£0.3m of cash at bank. Net long term borrowing was increased by ‚£2.5m to partfinance the acquisition (2004: repayment of ‚£1.0m), we paid ‚£0.5m (2004: ‚£0.5m)in interest and finance costs and invested ‚£0.7m (2004: ‚£0.5m) in fixed assetsduring the year.The resultant year end net debt has increased slightly on last year to stand at‚£3.8m (2004: ‚£3.7m).Nick GrimondChief Executive Officer14 March 2006Consolidated profit and loss accountFor the year ended 31 December 2005 Notes Before Amortisation 2005 2004 amortisation of intangibles ‚£'000 ‚£'000 ‚£'000 ‚£'000 Turnover 34,381 - 34,381 34,574 Continuing operations Acquisitions 1,935 - 1,935 - __________ __________ _________ ________ 1 36,316 - 36,316 34,574 Cost of sales 2 (21,409) - (21,409) (20,380) ---------- ---------- --------- -------- Gross profit 14,907 - 14,907 14,194 Other operating expenses 2 (12,202) (312) (12,514) (12,874) Group operating profit 2,080 (118) 1,962 1,320 Continuing operations 625 (194) 431 - Acquisitions _________ ________ _______ ________ 2,705 (312) 2,393 1,320 Share of operating loss (21) (116) (137) (6)in associate - acquisition --------- --------- --------- --------- Total operating profit 2,684 (428) 2,256 1,314 Interest payable and (500) - (500) (547)similar charges --------- --------- --------- --------- Profit on ordinary 2,184 (428) 1,756 767activities before taxation Taxation (289) - (289) - --------- --------- --------- --------- Profit on ordinary 1,895 (428) 1,467 767activities after taxation Minority interest - (132) - (132) (1)equity --------- --------- --------- --------- Profit for the year 1,763 (428) 1,335 766attributable to members of the parent company --------- --------- --------- --------- Earnings per share - 1.63p 0.97pbasic - diluted 1.63p 0.94p Consolidated note of group historical cost 2005 2004profits and losses ‚£'000 ‚£'000 Reported profit on ordinary activities 1,756 767before taxation Difference between historical cost 28 -depreciation charge and actual depreciation charge for the year calculated on the revalued amount -------- ------- Historical cost profit on ordinary 1,784 767activities before tax -------- -------- Historical cost profit on ordinary 1,363 766activities after tax and minority interest -------- -------- Consolidated statement of total recognised 2005 2004gains and losses ‚£'000 ‚£'000 Profit/(loss) for the financial year - Group 1,472 772 - Associate company (137) (6) -------- ------- 1,335 766 Unrealised surplus on revaluation of - 1,406 freehold property -------- ------- Total recognised gains for the year 1,335 2,172 -------- -------- - Group 1,472 2,178 - Associate company (137) (6) -------- ------- Total recognised gains for the year 1,335 2,172 -------- --------Balance Sheetsas at 31 December 2005 Group Company Notes 2005 2004 2005 2004 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Fixed assets Intangible assets 4 4,850 634 - - Tangible assets 5 4,645 4,406 - - Investments - 1,774 13,721 10,562 ------- ------- ------- ------- 9,495 6,814 13,721 10,562 ------- ------- ------- ------- Current assets Stocks 3,799 3,678 - - Debtors 6,771 5,000 3,395 4,184 Cash at bank and in hand 1,525 809 40 - ------- ------- ------- ------- 12,095 9,487 3,435 4,184 ------- ------- ------- ------- Creditors: amounts falling (8,865) (7,626) (1,088) (1,099)due within one year ------- ------- ------- ------- Net current assets 3,230 1,861 2,347 3,085 ------- ------- ------- ------- Total assets less current 12,725 8,675 16,068 13,647liabilities Creditors: amounts falling (3,468) (975) (3,468) (975)due after more than one year ------- ------- ------- ------- Net assets 9,257 7,700 12,600 12,672 ------- ------- ------- ------- Capital and reserves Called up share capital 8,169 8,169 8,169 8,169 Share premium account 12,110 12,110 12,110 12,110 Other reserve 43 43 43 43 Merger reserve - - 1,001 1,001 Revaluation reserve 1,378 1,406 - - Profit and loss account (12,665) (14,028) (8,723) (8,651) ------- ------- ------- ------- Total equity shareholders' 6 9,035 7,700 12,600 12,672funds Minority interests 222 - - - ------- ------- ------- ------- Capital employed 9,257 7,700 12,600 12,672 ------- ------- ------- -------Consolidated statement of cash flowsFor the year ended 31 December 2005 Notes 2005 2004 ‚£'000 ‚£'000 Net cash inflow from operating activities 7 4,092 3,002 ---------- ---------- Returns on investments and servicing of finance Interest paid (463) (461) Interest paid on finance leases - (2) Issue costs of new loans (40) - ---------- ---------- (503) (463) ---------- ---------- Taxation UK corporation on tax paid (151) - ---------- ---------- Capital expenditure Purchase of tangible fixed assets (699) (513) Sale of tangible fixed assets - 5 ---------- ---------- (699) (508) ---------- ---------- Acquisitions Purchase of investment in associate* - (1,780) Purchase of investment in subsidiary* (3,133) - Cash acquired 319 - ---------- ---------- (2,814) (1,780) ---------- ---------- Cash (outflow)/inflow before financing (75) 251 Financing Issue of shares - 25 Increase/(decrease) in long term borrowings 2,500 (1,000) Repayment of principal under finance leases (2) (13) ---------- ---------- 2,498 (988) ---------- ---------- Increase/(decrease) in cash in the year 8,9 2,423 (737) ---------- ---------- * The purchase of investment in associate in 2004 represents the payment made to acquire a minority stake in 21st Century which became a subsidiary on 1 August 2005 when a controlling interest was taken. Notes to the preliminary announcementFor the year ended 31 December 20051. Segmental reportingTurnover consists primarily of sales made in the United Kingdom. Export salesare not material. The analysis by business area is based upon the group'sreporting structure. Sales between segments are not material. Turnover Profit before tax Business analysis 2005 2004 Before After After amortisation amortisation amortisation ‚£'000 ‚£'000 of of and intangibles intangibles impairment of intangibles 2005 2005 2004 ‚£'000 ‚£'000 ‚£'000 Continuing 12,454 13,897 720 720 575operations Services Distribution 21,927 20,677 860 742 192 ------- ------- ----------- ----------- ----------- 34,381 34,574 1,580 1,462 767 Acquisitions 1,935 - 604 294 - Public transport CCTV ------- ------- ----------- ----------- ----------- 36,316 34,574 2,184 1,756 767 ------- ------- ----------- ----------- ----------- Net assets/(liabilities) Business analysis Excluding Including Including intangible intangible intangible assets assets assets 2005 2005 2004 ‚£'000 ‚£'000 ‚£'000 Services 2,651 2,651 3,479 Distribution 5,790 6,322 4,021 Public transport CCTV (4,134) 184 - ----------- ----------- ----------- 4,307 9,157 7,500 Central (deferred tax asset) 100 100 200 ----------- ----------- ----------- 4,407 9,257 7,700 ----------- ----------- -----------Services net assets in 2004 include ‚£1,774,000 in respect of the investment in21st Century. In 2005 a new segment has been created for this business; PublicTransport CCTV.Central net assets comprise assets, partially offset by liabilities, thatcannot practicably be divided between the segments and comprise the deferredcorporation tax asset.2. Cost of sales and other operating expenses 2005 2004 ‚£'000 ‚£'000 Cost of sales Continuing operations 20,426 20,380 Acquisitions 983 - --------- --------- 21,409 20,380 --------- --------- Before Amortisation 2005 2004 amortisation of intangibles Total Total of intangibles ‚£'000 ‚£'000 ‚£'000 ‚£'000 Other operating expenses Administrative expenses Continuing operations 3,875 118 3,993 4,653 Acquisitions 108 194 302 - ---------- ---------- ---------- ---------- 3,983 312 4,295 4,653 Distribution expenses Continuing operations 8,000 - 8,000 8,221 Acquisitions 219 - 219 - ---------- ---------- ---------- ---------- 8,219 - 8,219 8,221 ---------- ---------- ---------- ---------- 12,202 312 12,514 12,874 ---------- ---------- ---------- ----------3. Amortisation of and impairment of intangibles 2005 2004 ‚£'000 ‚£'000 Amortisation of goodwill and other intangibles* 428 268 Impairment of intangibles - 422 --------- --------- 428 690 --------- ---------*Includes amortisation on investment in associate of ‚£116,000 (2004: ‚£3,000)4. Intangible fixed assetsGroup 21st Datatool Metvale Total Spacetrac Patents Actra Total Century goodwill goodwill goodwill distribution goodwill & goodwill agreement ‚£'000 ‚£'000 intangible ‚£'000 ‚£'000 ‚£'000 assets ‚£'000 ‚£'000 ‚£'000 Cost: At 1 January 2005 - 980 802 1,782 230 110 333 2,455 Additions 4,628 16 - 4,644 - - - 4,644 ------ ------ ------ ------ ------ ------ ------ ------ At 31 December 4,628 996 802 6,426 230 110 333 7,0992005 ------ ------ ------ ------ ------ ------ ------ ------ Amortisation: At 1 January 2005 - 368 802 1,170 230 88 333 1,821 Charge for the 310 96 - 406 - 22 - 428year ------ ------ ------ ------ ------ ------ ------ ------ At 31 December 310 464 802 1,576 230 110 333 2,2492005 ------ ------ ------ ------ ------ ------ ------ ------ Net book value: At 31 December 4,318 532 - 4,850 - - - 4,8502005 ------ ------ ------ ------ ------ ------ ------ ------ At 31 December - 612 - 612 - 22 - 6342004 ------ ------ ------ ------ ------ ------ ------ ------21stCentury goodwillThe company has acquired a 75% interest in 21st Century Crime PreventionServices Limited ("21st Century") in three tranches:PercentageAcquired Date Nature of Consideration Investment 25% 18 December 2004 Preference Shares* ‚£1.8m 24% 9 May 2005 Preference Shares* ‚£0.8m 26% 1 August 2005 Ordinary Shares ‚£2.3m*21st Century has two classes of shares, being ordinary and preference shares.The preference shares and ordinary shares rank pari-passu in all in allrespects except in terms of entitlement to dividends.The preference shares yield an annual dividend entitlement of at least ‚£500,000. The 2005 dividend entitlement was waived by the preference shareholders. A charge of ‚£500,000 for provision of services was made from thecompany to 21st Century for the 7 months to 31 July 2005.The company has an option to acquire the remaining 25% of 21st Century for ‚£2.1m in cash. Should the company not exercise this option by 18 December 2006,the minority shareholder in 21st Century has the option to buy back the 75%interest currently held by the company.From the date of the initial acquisition on 18 December to 31 July 2005 theacquisition contributed a net loss of ‚£23,500 to the group's results. In itslast published accounts for the 7 months ended 31 December 2004, 21st CenturyCrime Prevention Services Limited made a loss after exceptional costs of ‚£850,000 of ‚£574,000. For the period since that date to the date that thecontrolling stake was acquired on 31 July 2005, 21st Century Crime PreventionServices management accounts show: ‚£'000 Turnover 2,365 Operating profit before charges from 463TG21 plc for provision of services Operating loss after charges from (37)TG21 plc for provision of services Loss before taxation (37) Taxation 11 --------- Net loss after tax (26) ---------In summary, the analysis of net assets acquired and the fair value to the Group(at the date of taking the controlling interest at 1 August) is as follows: Book and fair TG21 plc Fair value to value of net Group Share Group assets (75%) ‚£'000 ‚£'000 ‚£'000 Tangible fixed assets 24 18 18 Stocks 394 296 296 Debtors 1,507 1,130 1,130 Cash 319 239 239 Creditors: falling due within one (1,849) (1,387) (1,387)year --------- --------- --------- Net assets 395 296 296 Consideration: Cash 4,647 Acquisition costs 277 --------- Total consideration 4,924 --------- Goodwill 4,628 --------- The fair value of the net assets acquired are provisional. 5. Fixed asset investmentsDetails of the Group's investments are: Interest in associate ‚£'000 Cost: At 1 January 2005 1,777 Addition 102 * Net assets 727 * Goodwill (21) Share of loss in period Reclassification on change from associate to subsidiary company (2,585) ----------- At 31 December 2005 - ----------- Accumulated amortisation of goodwill: At 1 January 2005 3 Charge for the year 116 Reclassification on change from associate to subsidiary company (119) ----------- At 31 December 2005 - ----------- Net book amount: At 31 December 2005 - ----------- At 31 December 2004 1,774 -----------The investment above represents the group's interest in 21st Century accountedfor on an equity basis of accounting up to the point that the company took acontrolling interest in 21st Century on 1 August 2005. On this date theinvestment became a 75% subsidiary and therefore the cost and accumulatedamortisation have been reclassified appropriately.Details of the company's investments are: Interests in group undertakings ‚£'000 Cost: At 1 January 2005 20,711 Additions 3,159 --------- At 31 December 2005 23,870 --------- Amounts provided: At 1 January 2005 (10,149) Provided in the year - --------- At 31 December 2005 (10,149) --------- Net book amounts: 13,721 At 31 December 2005 --------- At 31 December 2004 10,562 ---------6. Reconciliation of movements in equity shareholders' fundsGroup 2005 2004 ‚£'000 ‚£'000 Opening shareholders' funds 7,700 5,503 Exercise of share options - 25 Revaluation surplus - 1,406 Profit for the year 1,335 766 --------- --------- Closing equity shareholders' funds 9,035 7,700 --------- ---------Company 2005 2004 ‚£'000 ‚£'000 Opening shareholders' funds 12,672 20,155 Exercise of share options - 25 Loss for the year (72) (7,508) --------- --------- Closing equity shareholders' funds 12,600 12,672 --------- ---------7. Reconciliation of operating profit to net cash inflow from operatingactivities 2005 2004 ‚£'000 ‚£'000 Operating profit 2,393 1,320 Depreciation on tangible fixed assets 482 414 Amortisation and impairment of intangible fixed assets 312 690 Decrease in stocks 273 77 (Increase)/decrease in debtors (364) 153 Increase in creditors 996 348 --------- --------- Net cash inflow from continuing operating activities 4,092 3,002 --------- ---------8. Reconciliation of net cash flow to movement in net debt 2005 2004 ‚£'000 ‚£'000 Increase/(decrease) in cash in the year 2,423 (737) Cash outflow from movement in debt (2,498) 1,013 --------- --------- Change in net debt arising from cash flows (75) 276 Capitalisation of loan issue costs 40 - Amortisation of loan issue costs (33) (85) --------- --------- Movement in net debt in the year (68) 191 Net debt at 1 January (see note 9) (3,725) (3,916) --------- --------- Net debt at 31 December (see note 9) (3,793) (3,725) --------- ---------9. Analysis of net debt At 31 Cash flow Non cash At 31 December movement December 2004 ‚£'000 2005 ‚£'000 ‚£'000 ‚£'000 Cash at bank and in hand 809 716 - 1,525 Bank overdrafts (2,557) 1,707 - (850) -------- -------- -------- -------- (1,748) 2,423 - 675 -------- -------- -------- -------- Finance leases (2) 2 - - Short term bank loans (1,000) 1,000 (1,000) (1,000) Other loans (975) (3,500) 1,007 (3,468) -------- -------- -------- -------- (3,725) (75) 7 (3,793) -------- -------- -------- --------The net non cash movement relates to the movement in amortised loan issue costsduring the year.10. Related party transactions21st Century Crime Prevention Services Limited ("21st Century"), Mr PaulFrodsham and Mr Wilson JenningsMr Paul Frodsham, Managing Director and 25% shareholder in 21st Century, is thebrother-in-law of Mr Wilson Jennings a main board director and CompanySecretary of TG21 plc.During the year TG21 plc increased its stake in 21st Century to a 75% holdinghaving acquired this stake from Mr Paul Frodsham. The company also has optionsto acquire the remaining share capital in 21st Century. The total considerationpaid to date in respect of the current holding, excluding costs, is ‚£4.6m andthe option price for the remaining 25% is ‚£2.1m.On 31 July 2005 the group made a charge of ‚£500,000 to 21st Century forservices provided up to that date. (2004: nil charge but the group sold certaindistribution rights to 21st Century for ‚£850,000 in that year).Included in creditors of 21st Century at 31 December 2005 is an amount of ‚£593,649 (2004: ‚£606,556) payable to Mr Frodsham. During the year Mr Frodshammade a personal loan to Mr Jennings of ‚£32,000. This amount was paid by 21stCentury to Mr Jennings and was accounted for in the books of that company as areduction in the amount payable by 21st Century to Mr Frodsham.OtherThe group has taken advantage pf the FRS 8 exemption not to disclose anytransactions or balances between entities of the TG21 plc Group which have beenestimated on consolidation.11. Publication of non-statutory accounts and basis of preparationThe financial information contained in this preliminary announcement does notconstitute statutory accounts for the year ended 31 December 2005. Thefinancial information for the year ended 31 December 2004 is derived from thestatutory accounts for that period which have been delivered to the Registrarand included an audit report which was unqualified and did not contain astatement under either Section 237(2) or Sections 237(3) of the Companies Act1985. The statutory accounts for the year ended 31 December 2005 will befinalised on the basis of the financial information presented by the directorsin the preliminary announcement and will be delivered to the Registrar ofCompanies following the Company's Annual General Meeting.ENDTG21 PLC