23rd May 2006 07:01
TG21 Plc23 May 2006 TG21 plc ("the Group") AGM trading update, business developments and outlook Trading Update At this morning's AGM, the Group intend to make the following statement. Group sales for the first quarter of 2006 were ahead of expectation. Much ofthis increased turnover, however, came from the distribution of low marginportable satellite navigation systems. If the current sales trend continues tothe year end, total budgeted gross profit will be under pressure. Consequently,we have instigated an overhead reduction program in certain targeted areas inthe second quarter. This experience reflects the level of dependence of the legacy elements of ourbusiness on the distribution and installation of in-car entertainment andsecurity products. Our strategy is to move into new growth markets, such aspublic transport CCTV and other areas, where we can add value through theprovision of call centre and engineering logistics services. A number of opportunities in these higher value areas, along with our healthycash flow, have led the Board to conclude that the Group needs to implement acontrolled investment program totalling around £0.5m to exploit these growthopportunities in a timely and effective manner. This will involve therecruitment and training of more engineers to service the new Pay As You Driveinitiative from motor insurers, investment in PDA technology for our engineeringworkforce to streamline our systems and the manufacture, trial and marketing ofour new Revenue-Manager and Eco-Manager products, along with the recruitment ofsales and senior personnel to drive the growth opportunities forward. Business Developments We have announced today that our 75% subsidiary, 21st Century CPS Ltd, hassigned a contract with Biodata Limited for the exclusive rights to their peoplecounting system, when interfaced with public transport vehicle systems.Passenger counting forms a key element of the 21st Century's Revenue-Manageron-board CCTV product. Biodata are also developing an interface to ourEco-Manager product which is aimed at reducing fuel and maintenance costs forbus operators. A major public transport company has already agreed to run trialsof both Revenue-Manager and Eco-Manager on 54 of its buses. In my last Chairman's Statement I highlighted the opportunity for us to provideinstallation services under the new Pay As You Drive ("PAYD") initiatives whicha number of insurance companies are introducing. We have been appointed as aninstallation contractor under Norwich Union's PAYD scheme and contractnegotiations for this project are in their final stages. Outlook By continued tight working capital management, cash flow remains strong withcurrent headroom of over £2.5m on our bank facilities, consequently theexpenditure plans outlined above will be accommodated comfortably within ourexisting financing arrangements. We believe that making the investment this yearwill underpin enduring value for the Group in future years. Peter Ward Chairman Ends For enquiries please contact: Peter Ward Chairman or Wilson Jennings Finance Director 020 8710 4000 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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