23 May 2006
TG21 plc ('the Group')
AGM trading update, business developments and outlook
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 of
this increased turnover, however, came from the distribution of low margin
portable satellite navigation systems. If the current sales trend continues to
the year end, total budgeted gross profit will be under pressure. Consequently,
we have instigated an overhead reduction program in certain targeted areas in
the second quarter.
This experience reflects the level of dependence of the legacy elements of our
business on the distribution and installation of in-car entertainment and
security products. Our strategy is to move into new growth markets, such as
public transport CCTV and other areas, where we can add value through the
provision of call centre and engineering logistics services.
A number of opportunities in these higher value areas, along with our healthy
cash flow, have led the Board to conclude that the Group needs to implement a
controlled investment program totalling around £0.5m to exploit these growth
opportunities in a timely and effective manner. This will involve the
recruitment and training of more engineers to service the new Pay As You Drive
initiative from motor insurers, investment in PDA technology for our engineering
workforce to streamline our systems and the manufacture, trial and marketing of
our new Revenue-Manager and Eco-Manager products, along with the recruitment of
sales and senior personnel to drive the growth opportunities forward.
We have announced today that our 75% subsidiary, 21st Century CPS Ltd, has
signed a contract with Biodata Limited for the exclusive rights to their people
counting system, when interfaced with public transport vehicle systems.
Passenger counting forms a key element of the 21st Century's Revenue-Manager
on-board CCTV product. Biodata are also developing an interface to our
Eco-Manager product which is aimed at reducing fuel and maintenance costs for
bus operators. A major public transport company has already agreed to run trials
of both Revenue-Manager and Eco-Manager on 54 of its buses.
In my last Chairman's Statement I highlighted the opportunity for us to provide
installation services under the new Pay As You Drive ('PAYD') initiatives which
a number of insurance companies are introducing. We have been appointed as an
installation contractor under Norwich Union's PAYD scheme and contract
negotiations for this project are in their final stages.
By continued tight working capital management, cash flow remains strong with
current headroom of over £2.5m on our bank facilities, consequently the
expenditure plans outlined above will be accommodated comfortably within our
existing financing arrangements. We believe that making the investment this year
will underpin enduring value for the Group in future years.
For enquiries please contact:
020 8710 4000
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