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TG21 Plc (TGP)

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Wednesday 26 March, 2008

TG21 Plc

Final Results

TG21 Plc
26 March 2008




26 March 2007


                TG21 plc ('TG21', 'the company' or 'the group')

            Preliminary results for the year ended 31 December 2007


TG21 today announces its preliminary results for the year ended 31 December
2007. Over the last few years the company has moved successfully to reposition
itself from being a distributor of in-car entertainment and security systems to
become a vehicle installation service provider with its 75% subsidiary, 21st
Century, supplying public transport CCTV and other monitoring systems.


Financial Highlights

 • Operating profit from continuing operations up 75% to £1.4m (2006: £0.8m)
 • Profit after tax from continuing operations up 100% to £1.0m (2006: £0.5m)
 • Earnings per share for continuing operations up 88% to 1.05p (2006: 0.56p)
 • Turnover for public transport monitoring division up 85% to £5m (2006: £2.7m)


Operational Highlights

  • Successful disposal of two of the group's mature distribution divisions
  • 100% increase in sales volumes for public transport CCTV systems
  • Business now focused on core public transport CCTV and monitoring
    systems and vehicle installation
  • Trials of 21st Century's EcoManager and passenger counting system
    nearing completion


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


'2007 has been a transformational year for the company and we are now well
placed to take advantage of markets with high growth potential. The group has
continued to reduce net debt with the disposal of our legacy divisions, allowing
us to leverage core strengths in vehicle monitoring systems. We are excited
about new product developments such as EcoManager, aimed at reducing fuel costs,
where our initial field trails have been very encouraging.'


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


For Further Information:

TG21 plc                Wilson Jennings, Finance Director       020 8710 4000

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 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. In 2006 the company
bolstered this division, with a strategic investment in another bus CCTV
business, Cyberlyne Communications Limited ('CCL'). This investment was made by
way of a loan of £430,000 to CCL and in parallel with this loan agreement CCL
has granted an option to TG21 to acquire the whole of its share capital.

In 2007 the company completed a number of installations for a pilot black-box
based motor insurance scheme with two major insurance companies. The company was
awarded these opportunities on the back of the long and valued relationships
which it has developed in this market through its insurance replacement
services.

Headquartered in Mitcham, the group also has an office in Blackburn and employs
around 170 staff.



TG21 plc

Chairman's statement

Trading Results


I am pleased to report that the group results for the year are ahead of market
expectations and our borrowings have been reduced significantly.

Towards the end of the year the company took a significant step to reposition
itself away from its legacy distribution businesses. On 30 October 2007 we sold
Sextons, our in-car entertainment distribution business and on 14 December 2007
we sold our Sigma and Toad security businesses along with ITI, our interface
lead distribution business. The total proceeds from these sales was £2.2m in
cash of which £1.5m was received prior to the year end. This, combined with cash
generated from operations, has reduced net debt from £3.3m at the start of the
year to just £0.6m at the year end. These disposals will allow us to focus on
our core higher growth market sectors - public transport on-board monitoring
systems and vehicle installation services.


Financial Review

Our consolidated income statement for the year and the 2006 comparatives show
sales from continuing operations only. The overall net result from the sold
businesses (the 'discontinued operations') is disclosed separately. The overall
net loss from the discontinued operations for the year was £0.4m compared to a
net loss of £0.1m in the prior year. Operating profit from continuing operations
increased by 75% on last year at £1.4m (2006: £0.8m) and profit after tax of
£1.0m from continuing operations was double that achieved in 2006 (£0.5m).


Group - continuing operations                                    2007       2006
                                                                   £m         £m

Turnover                                                         15.5       15.2
Gross profit                                                      8.4        8.5
Gross profit percentage                                           55%        56%

Net operating expenses                                          (7.0)      (7.7)
Total operating profit from continuing operations                 1.4        0.8
Finance costs                                                   (0.3)      (0.3)
Profit before tax from continuing operations                      1.1        0.5
Taxation                                                        (0.1)          -
Loss for the period from discontinued operations                (0.4)      (0.1)
Profit from continuing and discontinued operations                0.6        0.4
Minority interest                                               (0.1)          -
Net profit attributable to members of the parent company          0.5        0.4
                                                            =========  =========
-------------------------------------                       ---------  ---------
Earnings per share                                              Pence      Pence
- Continuing operations                                         1.05p      0.56p
- Continuing and discontinued operations                        0.62p      0.49p
-------------------------------------                       ---------  ---------

                                                                   £m         £m
Net debt                                                          0.6        3.3
                                                            =========  =========

Analysis of turnover from continuing operations                  2007       2006
                                                                   £m         £m

Public transport monitoring systems                               5.0        2.7
Vehicle installation services                                     8.6       10.1
Distribution                                                      1.9        2.4
                                                            ---------  ---------
Total                                                            15.5       15.2
                                                            ---------  ---------




Operational Review

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.

During the year our 75% subsidiary, 21st Century CPS Limited ('21st Century')
supplied over 1,000 on bus CCTV systems, double the number of systems supplied
in 2006.

While Arriva UK Bus remains the principal customer, the group also won repeat
business from Go-Ahead and Arriva in Europe. In the current year we already have
visibility on orders for in excess of 1,000 systems. Cumulative on bus CCTV
systems supplied by 21st Century are now 5,500 units representing less than 10%
of the total UK market.

In addition, 21st Century is close to completing trials of its EcoManager and
passenger counting systems aimed at reducing fuel costs and enhancing revenues
for bus operators and we are confident that we will win orders in the current
year for these new products.

To strengthen our presence in the bus CCTV market we acquired an option to
purchase Cyberlyne Communications Limited ('CCL') in July 2006. For the year to
31 December 2006 CCL made a loss of £0.8m after hindsight adjustments. Since our
involvement, CCL has reorganised its business to reduce overheads and for 2007
the company has achieved breakeven after hindsight adjustments and we believe
that CCL is now well placed to make a positive contribution in the current year.


Vehicle installation services

The principal activities within this division are:


(i)   the supply and installation of replacements for 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 installation services for the embryonic black-box
motor insurance schemes operated by several insurance companies.

The reduced turnover in this division is attributable to the maturing audio
insurance replacement business and, as flagged in my interim statement, at the
year end we exited from our mobile 'phone hands-free installation contract with
Unipart.

We anticipate that in the medium to longer term this division could benefit
significantly from growth in the black-box motor insurance market and we are
encouraged that so far in the current year we have undertaken over 1,000
black-box installations on behalf of insurers.


Distribution

Up until the disposal of the majority of this division, the principal activities
within Distribution consisted of the distribution of in-car entertainment
systems, satnav/communications equipment, speed camera alerts, audio leads and
own brand automotive and motorcycle alarms to the retail trade.

The only continuing business in this division is the distribution of motorcycle
alarms and accessories through our Datatool business. Datatool continues to make
a positive contribution to our results.


Outlook

Thanks to the invaluable contribution of management and staff, we have
successfully repositioned the group away from the mature legacy businesses to
allow us to focus on areas with higher growth potential. At the same time we
have generated cash to reduce our net debt position significantly. We have a
number of exciting new initiatives in growth markets and we are well placed to
build sustainable returns in the coming years.


Peter Ward
Chairman
26 March 2008




Consolidated income statement for the year ended 31 December 2007

                                                   Notes        2007       2006
                                                               £'000      £'000

Continuing operations
Revenue                                              2        15,455     15,246

Cost of sales                                                (7,020)    (6,735)
                                                            --------   --------

Gross profit                                                   8,435      8,511
Other operating income                                           108        104
Administrative expenses                                      (7,183)    (7,718)
Share of results of associate                                      -       (60)
                                                            --------   --------

Operating profit                                     2         1,360        837

Finance costs                                                  (271)      (356)
                                                            --------   --------

Profit before taxation                                         1,089        481
Taxation                                                       (100)          1
                                                            --------   --------

Profit for the period from continuing operations                 989        482

Discontinued operations
Loss for the period from discontinued operations     3         (353)       (55)
                                                            --------   --------

Profit for the period                                            636        427
                                                            ========   ========

Attributable to:
Equity holders of the parent                                     503        400
Minority interest                                                133         27
                                                            --------   --------

                                                                 636        427
                                                            ========   ========

Earnings per share
From continuing operations
Basic and diluted                                              1.05p      0.56p
                                                            ========   ========

From continuing and discontinued operations
Basic and diluted                                              0.62p      0.49p
                                                            ========   ========



Consolidated statement of total recognised income and expense
for the year ended 31 December 2007

                                                               2007        2006
                                                              £'000       £'000

Profit for the year and total recognised income
and expense for the year                                        636         427
Prior period adjustment - share based payment reserve             -       (150)
                                                          ---------   ---------

                                                                636         277
                                                          =========   =========

                                                                ---         ---
Group                                                           503         250
Minority interest                                               133          27
                                                          ---------   ---------

                                                                636         277
                                                          =========   =========




Consolidated balance sheet as at 31 December 2007

                                                    Notes        2007       2006
                                                                £'000      £'000
Assets
Non-current assets
Goodwill                                                        4,850      4,850
Other intangible assets                                           511        524
Property, plant and equipment                                   3,837      4,076
Deferred tax asset                                                226        256
                                                            ---------  ---------

                                                                9,424      9,706
                                                            ---------  ---------

Current assets
Inventories                                                     1,291      3,114
Trade and other receivables                                     4,566      4,562
Cash and cash equivalents                                       2,965        745
                                                            ---------  ---------

                                                                8,822      8,421
                                                            ---------  ---------

Total assets                                                   18,246     18,127

Liabilities
Current liabilities
Trade and other payables                                      (3,682)    (4,302)
Current tax liabilities                                          (70)          -
Bank loans and overdrafts                                     (2,444)    (2,032)
Provisions                                            4          (72)          -
Derivative financial instruments                                    -       (29)
                                                            ---------  ---------

                                                              (6,268)    (6,363)
                                                            ---------  ---------

Net current assets                                              2,554      2,058

Non-current liabilities
Bank loans                                                    (1,150)    (1,989)
Provisions                                            4         (337)          -
Deferred tax liabilities                                        (626)      (626)
                                                            ---------  ---------

                                                              (2,113)    (2,615)
                                                            ---------  ---------

Total liabilities                                             (8,381)    (8,978)
                                                            ---------  ---------
Net assets                                                      9,865      9,149
                                                            =========  =========

Shareholders' equity
Share capital                                                   8,169      8,169
Share premium account                                           3,387      3,387
Special reserve                                                 1,206      1,206
Other reserve                                                      43         43
Retained earnings                                             (3,091)    (3,700)
                                                            ---------  ---------

Equity attributable to equity holders of the parent             9,714      9,105
Minority interests                                                151         44
                                                            ---------  ---------

Total equity                                                    9,865      9,149
                                                            =========  =========




Consolidated statement of cash flows for the year ended 31 December 2007

                                                  Notes         2007        2006
                                                               £'000       £'000

Net cash generated from operating activities          5        1,373       1,213
                                                           ---------   ---------
Cash flow from investing activities

Disposal of discontinued operations                            1,547           -
Costs of acquisition of associate                                  -        (25)
Purchases of property, plant and equipment                      (78)       (256)
Purchases of intangible fixed assets                           (158)       (189)

                                                           ---------   ---------
Net cash generated from/(used in) investing 
activities                                                     1,311       (470)
                                                           ---------   ---------
Cash flow from financing activities
Repayment of borrowings                                      (1,350)     (1,500)
Increase in bank overdrafts                                      912         182
Dividend paid to minority interest                              (26)       (205)

                                                           ---------   ---------
Net cash used in financing activities                          (464)     (1,523)
                                                           ---------   ---------

Net increase/(decrease) in cash and
cash equivalents                                               2,220       (780)
                                                           ---------   ---------

Cash and cash equivalents at beginning of year                   745       1,525
                                                           ---------   ---------
Cash and cash equivalents at end of year                       2,965         745
                                                           =========   =========



Other than the disposal proceeds disclosed above there was no cash flow from
investing activities relating to the discontinued operations. Cash flows from
operating and financing activities attributable to the discontinued operations
cannot be meaningfully distinguished from those relating to continuing
operations.


Notes to the preliminary results announcement for the year ended 31 December
2007


1. Basis of preparation

As required by the AIM Rules for Companies and European Union Law, the company
was required to adopt International Financial Reporting Standards ('IFRS') with
effect from 1 January 2007 for its consolidated financial statements.
Consequently, the group's first IFRS Report and Accounts are for the year ended
31 December 2007. Previously the group reported using UK generally accepted
accounting principles ('UK GAAP'). Detailed UK GAAP to IFRS reconciliations of
equity for the date of transition (1 January 2006) and 31 December 2006, and
reconciliations of profit and recognised income and expense for the six months
ended 30 June 2006 and the year ended 31 December 2006 along with a commentary
and the group's accounting policies under IFRS were issued on 21 September 2007
and are available on the group's website www.tg21plc.com.


2. Segmental reporting

The analysis by business area is based upon the group's reporting structure.

                                    Public  
2007 - Continuing operations     transport       Vehicle  
                                monitoring  installation
                                   systems      services  Distribution     Total
                                   
                                     £'000        £'000         £'000      £'000

Total revenue                        4,961       11,409         1,873     18,243
Inter-segment
sales                                  (4)      (2,784)             -    (2,788)
                               -----------    ---------      --------  ---------
External
revenue                              4,957        8,625         1,873     15,455
                               ===========    =========      ========  =========

Operating profit before
                                       ---          ---           ---        ---
reorganisation and
                                       ---          ---           ---        ---
Redundancy
costs                                  545          782            79      1,406

Reorganisation and
redundancy
costs                                    -         (46)             -       (46)
                               -----------    ---------      --------  ---------
Operating
profit                                 545          736            79      1,360
                               ===========    =========      ========  =========



2007 - Discontinued operations                                      Distribution

                                                                           £'000

Revenue                                                                   11,096
                                                                      ==========

Operating loss before disposal costs and proceeds                          (364)
                                                                      ==========

Reorganisation and redundancy costs                                        (262)

Write down of inventories following disposals of businesses                (200)

Onerous lease provision                                                    (409)
                                                                      ----------

Operating loss before proceeds from disposals of businesses              (1,235)
Profit on sale of business                                                   957
                                                                      ----------

Operating loss after proceeds from disposals of businesses                 (278)
                                                                      ==========






2006 - Continuing operations       Public        
                                transport      Vehicle
                               monitoring installation    
                                  systems     services  Distribution       Total
                                    £'000        £'000         £'000       £'000

Total revenue                       2,895       10,819         2,444      16,158
Inter-segment
sales                               (212)        (700)             -       (912)
                               ----------   ----------    ----------  ----------
External
revenue                             2,683       10,119         2,444      15,246
                               ==========   ==========    ==========  ==========

Operating profit/(loss)
before share
of associate                          370          615          (88)         897

Share of result
of associate                         (60)            -             -        (60)

                               ----------   ----------    ----------  ----------
Operating
profit/(loss)                         310          615          (88)         837
                               ==========   ==========    ==========  ==========


2006 - Discontinued operations                                      Distribution

                                                                           £'000

Revenue                                                                   15,727
                                                                       =========

Operating profit                                                              20
                                                                       =========




3. Discontinued operations

On 30 October 2007, the group entered into a sale agreement to dispose of its
in-car entertainment distribution division ('Sextons') and on 14 December 2007,
the group entered into a sale agreement to dispose of its vehicle security
division. The disposals were completed on these dates and from these dates the
control of these divisions passed to the acquirers.


The results of the discontinued operations which have been included in the
consolidated income statement were as follows:

                                                                2007        2006
                                                               £'000       £'000

Revenue                                                       11,096      15,727
Expenses                                                    (12,406)    (15,782)
                                                            --------    --------

Loss before and after tax*                                   (1,310)        (55)

Profit on disposal of discontinued operations                    957           -
                                                            --------    --------

Net loss attributable to discontinued operations               (353)        (55)
                                                            ========    ========
*There was no tax payable on discontinued operations.

Book value of net assets sold
Current assets - inventories                                   1,250           -
Non-current assets - property, plant and equipment                30           -
                                                            --------    --------
Net assets disposed of                                         1,280
Gain on disposal                                                 957           -
                                                            --------    --------
                                                               2,237           -
                                                            ========    ========

Consideration paid in cash                                     1,547           -
Deferred sales proceeds                                          690           -
                                                            --------    --------
                                                               2,237           -
                                                            ========    ========



4. Provisions
                                                                            2007
                                                                           £'000

Balance at 1 January                                                           -
Provision made in the year                                                   409
                                                                        --------

Balance at 31 December                                                       409
                                                                        ========

Included in current liabilities                                               72
Included in non-current liabilities                                          337
                                                                        --------

                                                                             409
                                                                        ========


The provision represents the management's best estimate of the group's liability
under onerous leases in respect of property that is no longer utilised following
the disposal of its discontinued operations.


5. Reconciliation of operating profit to net cash inflow from operating
activities

                                                                2007       2006
                                                               £'000      £'000

Profit for the year                                              636        427

Adjustments for:
Share of result from associate                                     -         60
Finance costs                                                    346        432
Income tax expense                                               100        (1)
Gain on disposal of discontinued operations                    (957)          -
Depreciation of property, plant and equipment                    289        377
Amortisation of intangible fixed assets                          148        113
Share based payment expense                                      106        165
Increase in provisions                                           409          -
                                                            --------   --------

Operating cash flows before movement in working capital        1,077      1,573

Decrease in inventories                                          573        685
Decrease in receivables                                          686      2,142
Decrease in payables                                           (620)    (2,589)
                                                            --------   --------

Cash inflow from operations                                    1,716      1,811
Income taxes paid                                                  -      (192)
Interest paid                                                  (343)      (406)
                                                            --------   --------

Net cash inflow from operating activities                      1,373      1,213
                                                            ========   ========




6. Publication of non-statutory accounts

The preliminary results announcement for the year ended 31 December 2007 is
unaudited. The financial information contained in this preliminary announcement
does not constitute statutory accounts for the year ended 31 December 2007.  The
financial information for the year ended 31 December 2006 is derived from the
statutory accounts for that period (after the restatement described at note 1
above) which have been delivered to the Registrar and included an audit report
which was unqualified and did not contain a statement under either Section 237
(2) or Section 237(3) of the Companies Act 1985. The financial information for
the year ended 31 December 2007 is derived from the statutory accounts for the
period which include an audit report which is unqualified and did not contain a
statement under either Section 237(2) or Section 237(3) of the Companies Act
1985 and will be delivered to the Registrar of Companies following the company's
Annual General Meeting.



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