Business
Trading Update and Investment
Trading Update and Investment.
About this update from Tekmar Group Plc
[{"type":"text","content":"\n TG21 Plc\n26 July 2006\n\n\nFor release: 26 July 2006\n\n TG21 plc ('the Group')\n\n Trading Update and Strategic Investment\n\nTG21, the niche provider of business solutions to the automotive, public\ntransport, cellular and insurance markets, today issues a further trading update\non its legacy Distribution and Services businesses. It also announces a\nstrategic investment in Cyberlyne Communications Limited, a specialist in the\nsupply and installation of on-board CCTV for public transport vehicles.\n\nTrading Update\n\nFurther to our AGM trading update in May sales in the second quarter for our\nDistribution businesses have continued the trend from the previous quarter, with\nthe majority of sales coming from low margin portable satellite navigation\nsystems. As previously indicated, this lower margin sales mix is impacting the\nprofitability of the business. Accordingly, we are taking steps to achieve\nfurther overhead savings and are examining exit strategies for some sectors of\nthis business.\n\nWe have also seen disappointing sales in our Services businesses in the second\nquarter. Despite our appointment as a black-box installation contractor to a\nnumber of insurance companies introducing Pay As You Drive ('PAYD') insurance\nschemes, delays in these projects which are beyond our control, are expected to\nhave a significant impact on the profitability of this business in the current\nyear.\n\nConsequently after taking into account reorganisation costs in our legacy\nDistribution business and the investment already made in infrastructure to\nsupport the PAYD services business, we are expecting our Distribution and\nServices businesses to make only a small operating profit contribution for the\nyear to December 2006.\n\nOn the positive side, our public transport vehicle CCTV business, 21st Century,\ncontinues to make good progress and is expected to continue to make a positive\ncontribution to operating profit in the second half, even after taking into\naccount the investment in new technologies.\n\nWe are pleased to announce today that we have entered into a strategic alliance\nwith one of the other major CCTV systems suppliers in this sector which will\nallow us broaden our customer and product base.\n\nStrategic Investment in Cyberlyne Communications Limited\n\nTG21 has entered into a loan and share option agreemen...