RNS Number : 3445K
18 December 2008
18 December 2008
('TG21', 'the Company' or 'the Group')
Pre-close Trading Update
TG21, the vehicle installation service provider supplying public transport CCTV and other monitoring systems, today issues the following pre-close trading update relating to the year ending 31 December 2008.
Operating profit from continuing activities
The Public Transport Solutions ('PTS') business, 21st Century, performed well with record sales of over £1m in November. Almost half of these sales were from the recently launched EcoManager product aimed at reducing fuel and maintenance costs and improving safety by monitoring bus driver behaviour.
The PTS business also has a good pipeline of orders for public transport CCTV systems from Europe and, if these are delivered before the year end, the Group is likely to exceed its operating profit expectations for the year before exceptional items.
Carrying value of our freehold property
The Group announced on 20 October this year that we have signed an option agreement to dispose of the Group's freehold premises in Mitcham, Surrey for £2.7m. The carrying value of these premises in our audited balance sheet as at 31 December 2007, which was based upon a revaluation carried out in December 2004, was £3.5m.
Subsequent to the disposal of a number of our distribution businesses at the end of 2007 our operations in Mitcham have contracted significantly, so that the Mitcham property is currently under-utilised and the directors now consider that the value in use of this property has therefore reduced. Consequently, the consolidated income statement of the Group for 2008 will include a provision of £0.8m for the write down in the carrying value of the freehold property to its recoverable amount of £2.7m. There will also be a credit of £0.2m in respect of a reversal of the deferred tax provision on the revaluation surplus.
Our investment in Cyberlyne Communications Limited ('CCL')
In July 2006, the Company made a loan of £430,000 to CCL and took an option to acquire 50% of the share capital of this company for £100 and a second option to acquire the remaining 50% for the higher of £1m and a multiple of CCL's profit. While our involvement with CCL has yielded some benefits to the Group's PTS operations, we believe that our resources would yield a better return if focused on the successful 21st Century business and the Board are therefore not minded to take up these options in CCL.
The loan from TG21 is repayable by CCL on 31 December 2008, however, we are advised that CCL is not in a position to make this repayment on the due date. Consequently, we are currently negotiating a possible deferred repayment schedule with the management of CCL and expect to make an announcement in the first quarter of the New Year. In the meantime, the Board must acknowledge that all or part of the £430,000 loan, made to CCL, may not be recoverable.
Thanks to tight working capital management, and proceeds received from the timely disposal last year of some of our businesses which were more exposed to recessionary conditions, our cash flow remains strong. Group borrowings have been at their lowest level throughout 2008 than at any time in the last 10 years and we anticipate that net debt will remain under £1m at the year end.
For enquiries please contact:
TG21 plc Tel: 020 8710 4016
Peter Ward, Chairman
Nick Grimond, Chief Executive
Wilson Jennings, Finance Director
Daniel Stewart & Company plc Tel: 020 7776 6550
Hogarth Partnership Tel: 020 7357 9477
Barnaby Fry/Vicky Watkins
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