:05:06 TG21 Plc - Interim Results RNS Number:4010E TG21 Plc 25 September September 2007

Transcription

1 :05:06 TG21 Plc - Interim Results RNS Number:4010E TG21 Plc 25 September 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 June 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 The results are reported under International Financial Reporting Standards ("IFRS") for the first time, with prior year comparatives restated. * Turnover reduced to ï ½14.2m (H1 2006: ï ½17.4m), in line with the focus on higher margin business; * Sales of 21st Century public transport monitoring systems demonstrated record growth increasing 70% to ï ½2.7m (H1 2006: ï ½1.5m); * EBITDA increased to ï ½0.9m (2006: ï ½0.6m), 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 ï ½3.0m (2006: ï ½3.3m). 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 of the year. Our best in class public transport CCTV system, sold through 21st

2 Century, has delivered record profit growth during the period and the Group as a whole has achieved increased profitability on lower turnover as a result of our shift in focus toward better quality, higher margin business. We have repositioned 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 the period through tight management of costs and we hope to reduce our borrowings further through exit strategies within our legacy businesses. Current trading gives us confidence that we are on track to meet analyst expectations for the year." A copy of this interim results announcement is available on the Company's website: For Further Information: TG21 plc Wilson Jennings, Finance Director Hogarth Partnership Limited Barnaby Fry/ Sarah Richardson Daniel Stewart & Co plc (Nomad) Graham Webster 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 ï ½430,000 to CCL and in parallel with this loan agreement CCL has granted an option to TG21 to acquire the whole of its share capital. Recently the Company has completed a number of installations for a pilot 'pay as you go' motor insurance scheme with a major insurance company and has several other similar trials in progress. 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 leased offices in Blackburn, Runcorn and Tamworth and employs around 170 staff. TG21 plc

3 Chairman's statement The financial information contained within this interim report is based upon the Group's unaudited results for the six months to 30 June Over the last few years, the Company has moved to successfully 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. 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 and other monitoring systems for use on public transport vehicles. Sales in the first half of 2007 increased 70% to just under ï ½2.7m (H1 2006: ï ½1.5m). This first half performance is particularly pleasing when viewed against sales of ï ½2.9m for the whole of last year. Our 75% subsidiary, 21st Century, is the preferred supplier of on-board CCTV systems to Arriva UK Bus. Arriva UK Regions are aiming for a roll out of 1,000 systems in the current year and have given 21st Century an advance order for 835 of these units. In addition to this 21st Century has won new business from Arriva Scandinavia, Go-Ahead Group and Metroline in the first six months of the current year and has received orders from Kinch Bus and ACIS since the half year end. Trials of our new on-board monitoring products aimed at enhancing revenue and reducing running costs for bus operators are nearing completion and we look forward to being in a position to begin marketing these products during In July of last year we acquired an option to purchase Cyberlyne Communications Limited ("CCL") which, like 21st Century, specialises in the supply and installation of on-board CCTV for public transport vehicles and has around 6,000 installed systems. This Company was loss making at the time we acquired our option 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 more from 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;

4 (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 ï ½0.7m (14%) to ï ½4.5m with the decline wholly attributable to the maturing audio insurance replacement business. Our strategy within this business unit is to phase out of the low margin installation of mobile 'phone hands-free kits, in line with our previous guidance, as this is a market in decline. We are therefore currently in negotiations regarding exit terms from our contract with Unipart who manage the installation logistics for Vodafone. As a consequence we only have visibility on the income from hands-free installations to the end of the current year by which stage we aim to have completed our exit strategy. Our focus within this division will now be on the installation of public transport CCTV and 'pay as you go' systems which we anticipate will compensate in the short term and yield stronger growth in the medium and long term. Distribution Principal activities within Distribution consist 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. Overall the sales in this division fell by ï ½3.6m (34%) from ï ½10.6m to ï ½7.0m at the half year. Fortunately, however, the negative impact on our operating profit was less than ï ½0.1m as the reduction in turnover was largely attributable to a fall 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 program implemented in the second half of last year. Current trading and outlook The performance within our Public Transport CCTV division and the prospects for growth from 21st Century's new products and 'pay as you go' are encouraging. We are executing our strategy of streamlining the business to focus on those areas where we anticipate higher levels of growth and increasing our focus on higher margin work. We have reduced net debt to ï ½3.0m at 30 June 2007 from ï ½3.3m at the end of 2006 and we hope to reduce Group borrowings further as we pursue exit strategies from some of our legacy businesses. We are pleased to report that current trading is in line with market expectations. Peter Ward Chairman Consolidated income statement

5 Unaudited six Unaudited Year ended months ended six months ended December June 2007 June Restated* Restated* ï ½'000 ï ½'000 ï ½' 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 Share of operating profit/(loss) of - - (60) associate Profit from operations Finance costs (136) (237) (432) Profit before tax Taxation (150) Profit for the period Minority interests (60) (15) (27) Profit attributable to members of the parent company ======================== ========== ========== ========== Earnings per share - basic 0.35p 0.16p 0.49p Earnings 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 Restated* ï ½'000 ï ½'000 Non-current assets Goodwill 4,850 4,850 Other intangible assets Property, plant and equipment 4,046 4,203 Deferred tax asset ,521 9,706 Current assets Inventories 3,191 3,114 Trade and other receivables 6,239 4,562 Cash and cash equivalents 2,

6 11,850 8,421 Total assets 21,371 18,127 Current liabilities Trade 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 liabilities Bank 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 ======================== ========== ========== Equity Share capital 8,169 8,169 Share premium account 3,387 3,387 Special reserve 1,206 1,206 Other reserve Revaluation reserve 1,350 1,350 Profit and loss account (4,708) (5,050) Total equity shareholders' funds 9,447 9,105 Minority interests 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 ended December June 2007 June Restated* Restated* ï ½'000 ï ½'000 ï ½'000 Net cash inflow from operating activities (note 3) ,621 Investing activities Costs 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)

7 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 equivalents at beginning of period** (287) 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 Company was required to adopt International Financial Reporting Standards ("IFRS") with effect from 1 January Consequently, the results for the six months ended 30 June 2007 represent the Group's first interim financial statements prepared in accordance with its accounting policies under IFRS. The Group's first IFRS Report and Accounts will be for the year ending 31 December 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 The analysis below shows a summary reconciliation of the opening transition date balance sheet net equity attributable to ordinary shareholders as at 1 January 2006 under UK GAAP to the revised net equity under IFRS: Reconciliation of net equity attributable to ordinary shareholders as ï ½'000 at 1 January 2006 Net equity under UK GAAP 9,035 Full recognition of deferred tax asset on decelerated capital 155 allowances Deferred 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 to equity shareholders under UK GAAP for the year ended 31 December 2006 and for the six months ended 30 June 2006 to the revised profit under IFRS as reported in these financial statements: Reconciliation of profit attributable to equity shareholders for the ï ½'000

8 year ended 31 December 2006 Profit under UK GAAP 1 Reverse goodwill amortisation 576 Reverse hindsight adjustment (173) Other IFRS adjustments (4) Profit under IFRS 400 ======== Reconciliation of profit attributable to equity shareholders for the ï ½'000 six months ended 30 June 2006 Profit under UK GAAP 17 Reverse goodwill amortisation 288 Reverse hindsight adjustment (173) Other IFRS adjustments (3) Profit under IFRS 129 ======== These interim financial statements have been prepared by the Group in accordance with the disclosure requirements of the AIM Rules and using those reporting standards it expects to be applicable when the accounts are prepared for the year ending 31 December IFRS is currently being applied to AIM companies for the first time and practice is continuing to evolve. Therefore, at this preliminary stage, the full financial effect of reporting under IFRS as it will be applied and reported on in the Group's first full IFRS financial statements for the year ending 31 December 2007 may be subject to change. The financial information herein does not amount to full statutory accounts within the meaning of Section 240 of the Companies Act The figures for the year to 31 December 2006 have been extracted from the IFRS restatements issued on 21 September 2007 and were themselves based on the Annual Report and Accounts 2006 which have been filed with the Registrar of Companies and on which the auditors gave an unqualified report and did not include a statement under section 237 of the Companies Act Segmental reporting By business sector with revenue Public Vehicle Distribution Total reflecting sales to external transport Installcustomers CCTV ation Services ï ½'000 ï ½'000 ï ½'000 ï ½' Unaudited six months ended 30 June 2007 Revenue 2,652 4,529 6,994 14,175 Operating result (76) 635 Unaudited six months ended 30 June 2006 Restated* Revenue 1,530 5,266 10,607 17,403 Operating result (67) 381 Year ended 31 December 2006 Restated*

9 Revenue 2,895 9,890 18,443 31,228 Operating result (34) Cash generated from operations Unaudited six Unaudited Year ended months ended six months ended December June 2007 June Restated* Restated* ï ½'000 ï ½'000 ï ½' Continuing operations Operating profit Hindsight adjustment Depreciation/amortisation Share based payments (Increase)/decrease in working capital (419) balances Cash generated from operations ,813 Tax paid - - (192) Net cash inflow from operating activities ,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 Exchange END IR SEWFWLSWSEEU