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[woodie3] 14/12/2007 07:07

TG21 plc ('TG21' or 'the Group')


TG21 ANNOUNCES FURTHER DISPOSALS IN LINE WITH ITS STRATEGY TO REPOSITION THE
GROUP



TG21, the vehicle installation service provider supplying public transport CCTV
and other monitoring systems, today announces that its subsidiary company, Toad
(UK) Limited ('Toad'), has disposed of its 'Sigma' and 'Toad Security'
businesses which distribute car alarms and immobilisers. In addition its
subsidiary, Integrated Technologies (International) Limited ('ITI') which
distributes in-vehicle interface leads and trades under the name 'Soundlinx' has
disposed of its business. The disposals have been made by way of asset sales.
The Sigma, Toad Security and Soundlinx names and inventory are to be sold to
Scorpion Electro Systems Limited ('Scorpion'), a private company based in
Chorley, Lancashire.


These Toad and ITI businesses together achieved breakeven in the six months to
30 June 2007 on sales of around £1.5m.


Scorpion is to pay a total cash consideration of £1.67m for the businesses which
includes £0.4m in respect of stock. £1m of the consideration was paid on
completion (13 December 2007) and the balance is to be paid in installments
during 2008. £0.4m will be payable within 120 days of completion; £0.07m is
payable in June 2008 and £0.2m in December 2008. Toad and ITI will incur
combined reorganisation costs of £0.2m and will make an exceptional provision
for remaining obsolete stock of £0.3m. In addition, the Group will make a
provision for onerous leases on vacant premises of £0.3m. The net cash proceeds
will be applied to reduce the Group's bank borrowing.


These disposals are a key step in the repositioning of the business. The Board
anticipates that certain non-recurring costs relating to this ongoing
repositioning will arise in the next financial year and the Board therefore
currently expects that this will have some impact on final year earnings for
2008.

[tanelorn] 05/12/2007 14:08

Lots of small sales gone through over the last week or so. These add up!
Expect we will see a purchase @ circa 5.5 as Gyllenhammer mops them up.
It would be rather nice to have more news from TG21 rather than waiting until March 08, the small holders are getting bored and selling slowly.

[nod] 04/12/2007 22:07

i'm tempted to say life's very quiet for TGP shareholders, but last time i said that the price dropped... so i won't

[tanelorn] 23/11/2007 01:35

Hello Nod>

The NU were keen to emphasise the 'none fiscal benefit' of PAYG in relation to the improved track record of young drivers and overall benefit to the nation. Clearly this is being utilised as a marketing ploy but one that's understandable given the governments' fixation with statistics.
Their refusal to be drawn over this aspect of discussion is natural. Such discussions are not always directional, rather taking a broad brush approach to garnishing future goodwill.

Nod, i agree especially with your final paragraph.... "Insurers would need to adopt a revolutionary business model to increase retention rates and lower admin costs".....

This i feel is ultimately why insurers will follow NU's lead and harks back to the point i made about Direct Line leading the way in the mid 80's.
Ultimately it's all about retention and dealing directly where possible. Brokers loyalty is to the customer not the insurer. Insurers would rather knock 12% commission off, deal direct ( especially online ) and hope they can improve retention.

... Final point, i asked whether the NU needed to invite renewal at all, bearing in mind they were simply sending monthly itemised statements to their customers. "Yes" he said, "its an industry ( he may have said legal ) requirement".

[nod] 22/11/2007 18:25

tanelorn - very interesting.

I would have thought PAYG just allows the insurers to segment a group more. It's generally believed that low-risk drivers have always subsidised high-risk drivers. By separating out low-risk you should be able to offer them much lower premiums. However, to compensate for this revenue loss the insurer would have to raise premiums on higher-risk drivers.

I don't drive many miles each year - I never have done in my 33 years of driving. However, my insurance premium has never reflected my driving pattern. In those 33 years I have only ever made one modest claim. My risk profile has been very low but this has never been reflected in my premiums. I therefore subsidise high risk or high mileage drivers.

I've had my current BMW 5 series estate from new - it's exactly 15 years old this month and done 75k miles. That's an average of 5k miles per year (with perhaps another 2k driving my wife's car but that is on her insurance). I have always paid the same insurance as someone who drives 100k miles per year.

The point here is there are many market segments that PAYG could target. However, the insurers know that lower risk users (like myself and my wife) subsidise the higher risk users. They can't lose revenue from the low risk without recovering that revenue from elsewhere. They can't do this because the market is highly competitive.

A point on the "churn". If the churn rate is 60% in two years you would have churned the equivalent of your entire policy book i.e. 120%. This illustrates how price competitive vehicle insurance is. The admin cost must be huge plus broker commissions. Insurers would need to adopt a revolutionary business model to increase retention rates and lower admin costs.

[tanelorn] 22/11/2007 13:28

Addendum to my previous post.

Everyone mistakenly believes that savings to the customer is the most important aspect of PAYG and will prove to be the driving force in offering the product, Wrong !

If an insurance company has 1000 policies and operates on a renewal retention of 40%, after 5 years offering renewal terms they are left with only 10.25 clients if the retention is 35% it's worse, only 1.84 clients.
Whereas @ 90% retention they still have 590 clients.

35% = 1.838 policies left
90% = 590 policies left.

I think this is the most remarkable aspect of the info offered by NU. This alone makes PAYG so important.

[tanelorn] 22/11/2007 12:32

Okay everyone, a little up date on PAYG.

As you are aware the NU are the industry leaders with PAYG and according to their press officer the major beneficiary of PAYG are the UK's young drivers. Some interesting facts:
1) Young drivers are 30% less likely to have an accident on their PAYG insurance policy than compared to a tradition none PAYG policy. This is an extremely important road safety issue as young drivers ( and persons over 70 yrs old ) are significantly more likely to be involved in serious accidents than any other group.
2) The average renewal retention on a private car policy for most insurers is only 30-40% ( 70 to 60% lapse each year - do not renew !) and reducing this lapse ratio significantly reduces administration costs. - the lapse ratio for PAYG is only 10%, that's a 90% retention !
3) PAYG with the NU is working and 'here to stay' - National TV coverage has not yet taken place and as yet there is no immediate plan to do so. Nonetheless business volumes are increasing and the NU are extremely pleased with progress and profitability.
4) Discussions with government and safety groups over the significant reduction in accidents due to the educational and awareness aspects of PAYG is ongoing, the implication being PAYG makes the young driver more aware of how his driving infracts upon other road users and especially his pocket. No further expansion on this point was forthcoming.


Other insurers ?
a) After digging around a bit, i can report that the only other major insurer currently running a PAYG pilot is 'Morethan' who i understand fit a black box, give a significant discount on initial premium and then charge extra depending upon driving times etc. This is slightly different to the NU's approach.
b) Other insurers have expressed interest but i cannot find any other insurer actually running trials. ( There maybe others under the NU or Morethan umbrella. )

Additional thought.

It would appear that the major beneficiaries of PAYG are those with higher premiums whereby the saving of 10-30% makes a large financial difference. Commercial Motor would seem to be an obvious market, ie Taxi Drivers, HGV, Haulage, Courier etc. A typical Taxi driver pays circa £1400 / year.
There are no Taxi insurers currently offering this, not even the NU. Something for the future.?

[nod] 20/11/2007 20:25

mo - i would guess that PG has a small army of analysts giving him advice and doing indepth "insider" research. he's been a shareholder for well over a year now and keeps buying. as you say, PG's interest looks to be more than a punt.

The other insiders have also been buying. In particular, Paul Frodsham, founder of 21st Century, now holds 3.9% of TGP

Ward, Grimond, Voss and Jennings now own 7%

Voss has been squirrelling his holding into his SIPP, indicating a long-term investment.

[supreme mo] 20/11/2007 18:46

nod totally agree - pg only needs to buy another 85% then he will own the whole company!!!

He has bought too many times for this to be 'just a punt' - must know more than other investors about the co imho.

It is more reassuring than anything else..

[nod] 20/11/2007 18:12

Peter Gyllenhammar mops up everything between 5p and 6p which has provided support for 5 months while the market has been volatile. I guess TGP could easily have stayed below 5p had PG not been around.

Public transport is doing well because of the high fuel costs and 21C should be growing. But we really need to win a PAYG contract or make another bolt on acquisition to compensate for the legacy business.

[tanelorn] 20/11/2007 15:58

Yes full year results should be interesting, circa March 2008? - This share is imo good value, picked up another £10k a few days ago.

Regards
Tan

[rivaldo] 20/11/2007 15:56

PG up to 15.2% now per today's RNS, buying another 600k shares. Given the asset backing and the profitability TGP must be quite a safe play in the current market!

I'd love TGP to announce a sale and leaseback of the property, or some such measure to utilise its obvious value. That would really get things going.

Still, with all the activity on the 21st Century CPS front, and the decent interim outlook, I'm pretty optimistic now, certainly much more so than before. And PG is obviously happy to continue accummulating a pretty large stake.

[tanelorn] 19/11/2007 22:55

If i tried to buy that volume , it would cost me a premium. Am i being churlish ?

[qut] 19/11/2007 22:44

Looks like big Pete was buying today!

[whatlp] 19/11/2007 19:37

i thought big Pete was buying, not selling?!

[supreme mo] 19/11/2007 17:34

some big trades at the 5.5p level - i wonder if mr gyllenhammar has anything to do with them ;-)

[qut] 16/11/2007 23:27

They must have heard you nod!

[nod] 14/11/2007 20:20

i think this is the longest period of flatlining that TGP has had for a long time. nearly one month now.

[nod] 14/11/2007 20:19

TGP mentioned PAYG trials for "several" insurers, so i would guess that other insurers are ready to go if the numbers stack up. TGP were fairly positive about the PAYG business.

"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."

"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."

"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."

"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."

[tanelorn] 09/11/2007 20:06

basketbob and whatlp

Yes of course, you're both right.

However, insurance is industry led, that is, if one successfully cherry-picks like Direct Line did in the 80's the others have to follow.

Also my point wasn't that RAC are installing for NU, but that if the gradient is towards these black boxes and pay-as-you-go, then there will be more than enough business for every company with a serious national coverage of engineers ready to install.

Back in the eighties i owned a brokerage with a turnover of circa 2M, i've seen it before. Personally i believe the insurance industry is slow to react, they're more reactive than proactive. All it takes is for the NU to launch a national advertising campaign, to open the flood-gates, and the others will react

We know from TG21 that they have received numerous enquiries from insurers with regard to capacity of engineers should the need arise, it all comes down to the success of the NU.

Plus TG21 are already running trials probably as sub-contractors for RAC?

Lets just see how it develops over the next two year.

[whatlp] 09/11/2007 19:03

BTW - Norwich Union have a deal with the RAC and not TG21

[basketbob] 09/11/2007 17:59

Or a high level of sickness at the moment?

Your hypothesis is very circumstantial.

No offence intended.

[tanelorn] 09/11/2007 17:00

I rang the Norwich Union asking about the availability of PAYD insurance in my area. "NO problems" they said, " its available in all of the UK excluding some Scottish Isles, the Isle of Man, and the Channel Islands". ( Therefore not in my area ! )
However the point was that it took three minutes on hold before i got through and whilst i was asking general questions, the male operator actually said that there "was a queue of people holding on the line " the inference being, 'please be as quick as possible as we are struggling to cope with the demand'.!!
Now i know this quick check hardly guarantees orders are flooding in, but nonetheless it seems that way.

[nod] 02/11/2007 20:11

Good find Rivaldo.

I wouldn't have thought many cars with Satnav/GPS/IVU were the low usage drivers the NU PAYD scheme was aimed at.

But the beauty of this data-centric approach is the huge variety of metrics that can be used to tailor insurance policies from the data collected. Each insurer could tailor policies that are aimed at a completely different segment than their competitors.

For example, one insurer may go for low mileage users while another goes for high mileage long-distance drivers. This is where the actuaries come in - mapping the data to accident and risk profiles.

[rivaldo] 02/11/2007 12:55

Note the comment about PAYD being expanded to "hundreds of thousands" in the next year:



"October 11, 2007

So Simple, Even a Comcast Sub Can Do It
By Jim Barthold
Speaking of gas - OK, so we were talking about GaAs, if you want to be picky; still sounds the same - an insurance company in the U.K. has come up way for drivers to save on their car insurance by using GPS technology. And while the notion so far is all satellite-based, you have to wonder if there isn't some kind of opportunity for the clever cable operator that deploys a wireless mesh architecture in its metro serving area.

Norwich Union's Pay as You Drive Insurance plan uses an in-vehicle unit (IVU) already installed in a lot of cars for GPS road mapping systems and satellite radio, then adds some specific software - the secret sauce, as conference presenters love to say - to track driver usage and driving patterns. The insurance company then develops rates for good drivers and penalties for bad drivers based on information the IVU's report.

"You're only really paying for usage," said Tony Lovick, a pricing actuary with Norwich Union speaking at Teradata Partners' User Conference and Expo in Las Vegas this week. "You're not paying a fixed annual fee."

The process, now being tested by about 5,000 drivers in the U.K. but expected to expand to hundreds of thousands in the next year or so, gathers the driver information and feeds it back to a Teradata enterprise data warehouse (EDW), from which it's retrieved and dissected by Norwich Union. The results are included in insurance bills."