25th Sep 2007 07:01
TG21 Plc25 September 2007 25 September 2007 TG21 plc ("TG21", "the Company" or "the Group") Interim Results for the six months ended 30 June 2007 TG21 today announces its unaudited interim figures for the six months to 30 June2007. Over the last few years the Company has moved successfully to repositionitself from being a distributor of in-car entertainment and security systems tobecome a vehicle installation service provider with its 75% subsidiary, 21stCentury, supplying public transport CCTV and other monitoring systems. Financial Highlights The results are reported under International Financial Reporting Standards("IFRS") for the first time, with prior year comparatives restated. • Turnover reduced to £14.2m (H1 2006: £17.4m), in line with the focus on higher margin business; • Sales of 21st Century public transport monitoring systems demonstrated record growth increasing 70% to £2.7m (H1 2006: £1.5m); • EBITDA increased to £0.9m (2006: £0.6m), an increase of 44% despite lower distribution and insurance services sales; • Basic earnings per share up 119% to 0.35p (H1 2006: 0.16p); • Net debt reduced to £3.0m (2006: £3.3m). Operational Highlights • New business wins for 21st Century division with Arriva Scandinavia, Go-Ahead Group, Metroline during H1 and Kinch Bus and ACIS post-period end; • Innovative new product trials for the public transport market nearing completion; • As anticipated, the end of in-car hands-free installation business is in sight, but the new 'pay as you go' insurance black-box installation business is now coming on stream; • Exit strategies for legacy businesses being pursued. Commenting on the results, Peter Ward, Chairman of TG21, said: "We are pleased with the renewed progress of the business in the first half ofthe year. Our best in class public transport CCTV system, sold through 21stCentury, has delivered record profit growth during the period and the Group as awhole has achieved increased profitability on lower turnover as a result of ourshift in focus toward better quality, higher margin business. We haverepositioned the Group into areas where we see strong opportunities for growth,namely, public transport on-board monitoring systems and the emerging insurance'pay as you go' installation market. We have also reduced our net debt in theperiod through tight management of costs and we hope to reduce our borrowingsfurther through exit strategies within our legacy businesses. Current tradinggives us confidence that we are on track to meet analyst expectations for theyear." A copy of this interim results announcement is available on the Company'swebsite: www.tg21plc.com For Further Information: TG21 plc Wilson Jennings, 020 8710 4000 Finance Director Hogarth Partnership Limited Barnaby Fry/ 020 7357 9477 Sarah Richardson Daniel 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. TG21 plc Chairman's statement The financial information contained within this interim report is based upon theGroup's unaudited results for the six months to 30 June 2007. Over the last few years, the Company has moved to successfully reposition itselffrom being a distributor of in-car entertainment and security systems to becomea vehicle installation service provider with its 75% subsidiary, 21st Century,supplying public transport CCTV and other monitoring systems. The Group currently operates in three divisions: (i) Public transport on-board monitoring systems (ii) Vehicle installation services (iii) Distribution 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. Sales in the first half of 2007 increased 70% to just under £2.7m (H1 2006:£1.5m). This first half performance is particularly pleasing when viewed againstsales of £2.9m for the whole of last year. Our 75% subsidiary, 21st Century, is the preferred supplier of on-board CCTVsystems to Arriva UK Bus. Arriva UK Regions are aiming for a roll out of 1,000systems in the current year and have given 21st Century an advance order for 835of these units. In addition to this 21st Century has won new business fromArriva Scandinavia, Go-Ahead Group and Metroline in the first six months of thecurrent year and has received orders from Kinch Bus and ACIS since the half yearend. Trials of our new on-board monitoring products aimed at enhancing revenue andreducing running costs for bus operators are nearing completion and we lookforward to being in a position to begin marketing these products during 2008. In July of last year we acquired an option to purchase Cyberlyne CommunicationsLimited ("CCL") which, like 21st Century, specialises in the supply andinstallation of on-board CCTV for public transport vehicles and has around 6,000installed systems. This Company was loss making at the time we acquired ouroption but, following the appointment of a TG21 executive as Managing Director,the business has achieved break-even in the first half of the current year.While this is encouraging and the synergies are obvious, we are looking for morefrom this investment before we take up the option to acquire the business. Vehicle installation services The principal activities within this division are: (i) the replacement and installation of stolen in-car entertainment and navigation systems for insurance company customers; (ii) the supply and installation of mobile 'phone hands-free kits for corporate fleets; (iii)the installation of public transport monitoring systems for 21st Century. The division now also provides black-box installation services for the embryonic'pay as you go' motor insurance schemes operated by several insurance companies.We believe that the potential growth from this business is significant. Turnover in this division fell by £0.7m (14%) to £4.5m with the decline whollyattributable to the maturing audio insurance replacement business. Our strategywithin this business unit is to phase out of the low margin installation ofmobile 'phone hands-free kits, in line with our previous guidance, as this is amarket in decline. We are therefore currently in negotiations regarding exitterms from our contract with Unipart who manage the installation logistics forVodafone. As a consequence we only have visibility on the income from hands-freeinstallations to the end of the current year by which stage we aim to havecompleted our exit strategy. Our focus within this division will now be on the installation of publictransport CCTV and 'pay as you go' systems which we anticipate will compensatein the short term and yield stronger growth in the medium and long term. 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 fell by £3.6m (34%) from £10.6m to £7.0m atthe half year. Fortunately, however, the negative impact on our operating profitwas less than £0.1m as the reduction in turnover was largely attributable to afall in portable satellite navigation sales which attract only very low margins;whereas, sales of our more profitable own brand security systems held up well.In addition, the division benefited from an overhead reduction programimplemented in the second half of last year. Current trading and outlook The performance within our Public Transport CCTV division and the prospects forgrowth from 21st Century's new products and 'pay as you go' are encouraging. Weare executing our strategy of streamlining the business to focus on those areaswhere we anticipate higher levels of growth and increasing our focus on highermargin work. We have reduced net debt to £3.0m at 30 June 2007 from £3.3m at theend of 2006 and we hope to reduce Group borrowings further as we pursue exitstrategies from some of our legacy businesses. We are pleased to report thatcurrent trading is in line with market expectations. Peter Ward Chairman Consolidated income statement Unaudited six Unaudited Year ended months ended six months 31 30 30 ended December June 2007 June 2006 2006 Restated* Restated* £'000 £'000 £'000------------------------ ---------- ---------- ----------Turnover 14,175 17,403 31,228 Cost of sales (8,283) (11,105) (19,310)------------------------ ---------- ---------- ----------Gross profit 5,892 6,298 11,918 Administrative expenses (5,257) (5,917) (11,000)------------------------ ---------- ---------- ----------Group operating profit 635 381 918 Share of operating profit/(loss) of - - (60)associate ------------------------ ---------- ---------- ----------Profit from operations 635 381 858 Finance costs (136) (237) (432)------------------------ ---------- ---------- ----------Profit before tax 499 144 426 Taxation (150) - 1------------------------ ---------- ---------- ----------Profit for the period 349 144 427 Minority interests (60) (15) (27)------------------------ ---------- ---------- ----------Profit attributable to members ofthe parent company 289 129 400======================== ========== ========== ==========Earnings per share - basic 0.35p 0.16p 0.49pEarnings per share - diluted 0.35p 0.16p 0.49p * As restated for the adoption of International Financial Reporting Standards - see note 1 Consolidated balance sheet Unaudited 31 December 30 June 2007 2006 Restated* £'000 £'000------------------------ ---------- ----------Non-current assetsGoodwill 4,850 4,850Other intangible assets 369 397Property, plant and equipment 4,046 4,203Deferred tax asset 256 256------------------------ ---------- ---------- 9,521 9,706Current assetsInventories 3,191 3,114Trade and other receivables 6,239 4,562Cash and cash equivalents 2,420 745------------------------ ---------- ---------- 11,850 8,421Total assets 21,371 18,127 Current liabilitiesTrade and other payables (5,628) (4,302)Tax liabilities (150) -Bank overdrafts and loans (3,953) (2,032)Derivative financial instruments - (29)------------------------ ---------- ---------- (9,731) (6,363)------------------------ ---------- ----------Net current assets 2,119 2,058------------------------ ---------- ----------Non-current liabilitiesBank loans (1,489) (1,989)Deferred tax liabilities (626) (626)------------------------ ---------- ---------- (2,115) (2,615) Total liabilities (11,846) (8,978)------------------------ ---------- ----------Net assets 9,525 9,149======================== ========== ==========EquityShare capital 8,169 8,169Share premium account 3,387 3,387Special reserve 1,206 1,206Other reserve 43 43Revaluation reserve 1,350 1,350Profit and loss account (4,708) (5,050)------------------------ ---------- ----------Total equity shareholders' funds 9,447 9,105Minority interests 78 44------------------------ ---------- ----------Total equity 9,525 9,149======================== ========== ========== * As restated for the adoption of International Financial Reporting Standards - see note 1 Consolidated cash flow statement Unaudited six Unaudited Year ended months ended six months 31 30 30 ended December June 2007 June 2006 2006 Restated* Restated* £'000 £'000 £'000------------------------- --------- --------- ---------Net cash inflow from operatingactivities (note 3) 528 959 1,621------------------------- --------- --------- ---------Investing activitiesCosts of acquisition of associate - - (25)Purchases of property, plant and equipment (74) (275) (446)------------------------- --------- --------- ---------Net cash used in investing activities (74) (275) (471) Financing activities Repayment of borrowings (500) (500) (1,500) Interest paid (174) (223) (407) Dividend paid to minority interest (26) - (205)------------------------- --------- --------- ---------Net cash used in financing activities (700) (723) (2,112)------------------------- --------- --------- ---------Net decrease in cash and cash equivalents (246) (39) (962)Cash and cash equivalentsat beginning of period** (287) 675 675------------------------- --------- --------- ---------Cash and cash equivalents at end of period** (533) 636 (287)========================= ========= ========= ========= * As restated for the adoption of International Financial Reporting Standards - see note 1 ** Net of bank overdrafts Notes 1. Basis of preparation As required by the AIM Rules for Companies and European Union Law, the Companywas required to adopt International Financial Reporting Standards ("IFRS") witheffect from 1 January 2007. Consequently, the results for the six months ended30 June 2007 represent the Group's first interim financial statements preparedin accordance with its accounting policies under IFRS. The Group's first IFRSReport and Accounts will be for the year ending 31 December 2007. Previously theGroup reported using UK generally accepted accounting principles ("UK GAAP").Detailed UK GAAP to IFRS reconciliations of equity for the date of transition (1January 2006) and 31 December 2006, and reconciliations of profit and recognisedincome and expense for the six months ended 30 June 2006 and the year ended 31December 2006 along with a commentary and the Group's accounting policies underIFRS were issued on 21 September 2007 and are available on the Group's websitewww.tg21plc.com. The analysis below shows a summary reconciliation of the opening transition datebalance sheet net equity attributable to ordinary shareholders as at 1 January2006 under UK GAAP to the revised net equity under IFRS: Reconciliation of net equity attributable to ordinary shareholders as £'000at 1 January 2006Net equity under UK GAAP 9,035Full recognition of deferred tax asset on decelerated capital 155allowancesDeferred tax provision on property revaluation (626)Inclusion of financial instruments at their fair value (24) --------Net equity under IFRS 8,540 ======== The analysis below shows summary reconciliations of the profit attributable toequity shareholders under UK GAAP for the year ended 31 December 2006 and forthe six months ended 30 June 2006 to the revised profit under IFRS as reportedin these financial statements: Reconciliation of profit attributable to equity shareholders for the £'000year ended 31 December 2006Profit under UK GAAP 1Reverse goodwill amortisation 576Reverse hindsight adjustment (173)Other IFRS adjustments (4) --------Profit under IFRS 400 ======== Reconciliation of profit attributable to equity shareholders for the £'000six months ended 30 June 2006Profit under UK GAAP 17Reverse goodwill amortisation 288Reverse hindsight adjustment (173)Other IFRS adjustments (3) --------Profit under IFRS 129 ======== These interim financial statements have been prepared by the Group in accordancewith the disclosure requirements of the AIM Rules and using those reportingstandards it expects to be applicable when the accounts are prepared for theyear ending 31 December 2007. IFRS is currently being applied to AIM companiesfor the first time and practice is continuing to evolve. Therefore, at thispreliminary stage, the full financial effect of reporting under IFRS as it willbe applied and reported on in the Group's first full IFRS financial statementsfor the year ending 31 December 2007 may be subject to change. The financial information herein does not amount to full statutory accountswithin the meaning of Section 240 of the Companies Act 1985. The figures for theyear to 31 December 2006 have been extracted from the IFRS restatements issuedon 21 September 2007 and were themselves based on the Annual Report and Accounts2006 which have been filed with the Registrar of Companies and on which theauditors gave an unqualified report and did not include a statement undersection 237 of the Companies Act 1985. 2. Segmental reporting By business sector with revenue Public Vehicle Distribution Totalreflecting sales to external transport Install-customers CCTV ation Services £'000 £'000 £'000 £'000--------------------- -------- --------- -------- --------Unaudited six months ended 30 June 2007 Revenue 2,652 4,529 6,994 14,175 Operating result 343 368 (76) 635 Unaudited six months ended 30 June 2006Restated* Revenue 1,530 5,266 10,607 17,403 Operating result 184 264 (67) 381 Year ended 31 December 2006 Restated* Revenue 2,895 9,890 18,443 31,228 Operating result 310 582 (34) 858 3. Cash generated from operations Unaudited six Unaudited Year ended months ended six months 31 30 30 ended December June 2007 June 2006 2006 Restated* Restated* £'000 £'000 £'000------------------------ ---------- --------- ---------Continuing operationsOperating profit 635 381 918 Hindsight adjustment - 173 173 Depreciation/amortisation 259 241 491 Share based payments 53 80 165 (Increase)/decrease in working capital (419) 84 66balances ------------------------ ---------- --------- ---------Cash generated from operations 528 959 1,813 Tax paid - - (192)------------------------ ---------- --------- ---------Net cash inflow from operating activities 528 959 1,621========================= ========== ========= ========= * As restated for the adoption of International Financial Reporting Standards -see note 1 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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