Interim Results

RNS Number:6897O
TGI PLC
14 December 2001

14 December 2001

                                   TGI plc

                            ("TGI" or "the Group")

           Interim Results for the six months to 30 September 2001

                             Chairman's Statement

Results

Sales from continuing operations in the first half were level with the
previous period but below anticipated levels, reflecting more difficult
trading conditions, particularly in international markets. Despite a mixed
start to the year reported with the preliminary results in June, our
professional business continued to show good growth but this was offset by a
sales shortfall in our hi-fi business, particularly due to disruption caused
by a change of distribution partner in Europe. Our European hi-fi distribution
arrangements have now been changed radically and we expect this action to have
a favourable impact in the second half. The revised arrangements are discussed
in more detail below.

Total sales were #22.3 million (2000: #23.7 million). Operating profit from
continuing operations decreased to #1.2 million (#1.4 million) and profit
before tax fell to #0.9 million from #1.3 million in the previous year.
Earnings per share were 3.0 pence (4.6 pence) and headline earnings per share
were 3.2 pence (4.2 pence).

Net debt at 30 September 2001 was #4.4 million, reflecting an increase in
working capital since the year end. Our balance sheet remains strong with
gearing of 37 per cent. We intend to reduce working capital during the second
half and, in particular, plan for a reduction in stock and debtors.

Dividend

In light of the Offer, the Board of TGI does not intend to recommend an
interim dividend in respect of the 6 months to 30 September 2001. Should the
Offer lapse or be withdrawn and no competing offer be declared wholly
unconditional, the Board intends to declare an interim dividend of 1.2 pence
(2000: 1.2 pence) as soon as possible thereafter.

Professional

Overall, our professional business continued to grow well with Lab Gruppen, in
particular, reporting a further strong sales performance, benefiting from the
introduction of the new iP amplifier range. Tannoy also saw growth despite
softer market conditions in North America, exacerbated by the events of 11
September.

During the period Martin Audio successfully previewed its newly developed Line
Array system, which targets the live sound touring market. A number of unique
features enable this system to deliver extremely high performance and a
superior long distance sound capability. We have high hopes for this important
new launch.

Tannoy Professional appointed a specialist agent within the UK to address the
sizeable and growing market for audio-visual equipment in venues such as
hotels, board rooms and conference facilities.

Hi-Fi

Whilst our hi-fi business continued to show progress in a number of markets,
notably China, South Africa, Russia and the Netherlands, overall sales were
down as a result of the serious under-performance of our main European
distributor.

As we flagged in the preliminary results statement, the decision to change our
European distribution arrangements was made in July and became effective from
October. Tannoy, our global hi-fi brand, now has new distributors in Italy,
France, Spain and Germany and its own sales force in the United Kingdom. We
expect a strong turnaround in these markets in the second half as the new
arrangements take full effect.

The benefits from this major distribution change will be further reinforced by
the introduction of the new Eyris mid-market product range in October. This
stylish new product range, which incorporates the Tannoy WIDEBAND(TM) high
frequency unit, is aimed at all significant world markets.

Automotive

Automotive remained a difficult environment and sales were down on the first
half of the prior year, but they met our expectations. Action continued to
generate future sales from new contracts.

These efforts were rewarded recently with the award of significant new
business for a North American customer, which will compensate in large measure
in sales revenue terms for the expiry of substantial contracts. Deliveries
will commence in the coming weeks and it is anticipated that the project will
generate several million pounds of revenue per annum. Beyond March 2002, it is
anticipated that GLL will commence two further new automotive contracts in the
period from April to September 2002.

In order to support their growing level of business in North America, GLL is
planning to have a Mexican manufacturing capacity in place by the end of 2002.
This initiative is being undertaken in collaboration with a local specialist
agency and would be implemented on a similar basis to the successful
manufacturing arrangements already established in Hungary.



Prospects

Although the world market environment has undoubtedly become more challenging
in recent months, opportunities for further growth from the recently
introduced new products and new distribution arrangements continue to exist in
each of the Group's businesses. Therefore, we believe that a satisfactory
performance will be achieved for the year as a whole.

Michael Windsor

Chairman





Consolidated Profit and Loss Account (Unaudited)

                                         Six months      Six months  Year ended
                                              ended           ended    31 March
                                       30 September    30 September        
                                               2001            2000        2001
                                              #'000           #'000       #'000
Turnover
Continuing operations                        22,302          22,535      44,469
Discontinued operations                           -           1,206       2,545
Total turnover                               22,302          23,741      47,014

Operating profit/(loss)
Continuing operations                         1,157           1,410       2,069
Discontinued operations                           -           (98 )       (61 )
Total operating profit                        1,157           1,312       2,008

Exceptional items
Profit on the sale of fixed assets -
continuing operations                             -             127         128
Loss on the termination of
operations -
discontinued operations                           -               -    (1,686 )

Profit on ordinary activities before          1,157           1,439         450
interest

Net interest payable                         (214 )          (131 )      (346 )

Profit before tax                               943           1,308         104

Tax
On exceptional items                              -           (12 )       (12 )
Other                                        (267 )          (270 )      (485 )
Total tax                                    (267 )          (282 )      (497 )

Profit after tax                                676           1,026      (393 )

Minority interests                            (26 )           (30 )        (5 )

Profit for the period                           650             996      (398 )

Dividends                                         -          (260 )      (823 )

Retained profit                                 650             736    (1,221 )

Earnings per share                             3.0p            4.6p      (1.8)p
Diluted earnings per share                     3.0p            4.6p      (1.8)p
Headline earnings per share                    3.2p            4.2p        5.7p







Consolidated balance sheet (Unaudited)


                                     30 September    30 September     31 March
                                             2001            2000         2001
                                            #'000           #'000        #'000
Fixed assets
Intangible assets - goodwill                1,789           1,885        1,837
Tangible assets                             3,159           3,143        3,132
                                            4,948           5,028        4,969

Current assets
Stocks and work in progress                 9,577           7,989        9,311
Debtors                                     9,204           8,846        8,343
Cash                                            -              97            -
                                           18,781          16,932       17,654

Creditors
Amounts falling due within one year       (9,478)         (9,815)     (10,581)

Net current assets                          9,303           7,117        7,073

Total assets less current                  14,251          12,145       12,042
liabilities

Creditors
Amounts falling due after more than       (1,799)           (300)        (266)
one year
Provisions for liabilities and              (147)            (66)        (147)
charges
                                           12,305          11,779       11,629

Capital and reserves
Equity shareholders funds                  12,042          11,517       11,392
Minority interests                            263             262          237
                                           12,305          11,779       11,629







Consolidated cash flow statement
                                         Six months     Six months   Year Ended
                                              ended          ended     31 March
                                       30 September   30 September         
                                               2001           2000         2001
                                              #'000          #'000        #'000
Operating activities
Net cash (outflow)/inflow from                (262)            137          405
operating activities

Returns on investment and servicing of
finance
Interest paid                                 (231)          (122)        (331)
Interest element of finance lease              (12)           (10)         (20)
repayments
Interest received                                29              1            5
                                              (214)          (131)        (346)

Taxation                                      (200)           (64)        (629)

Capital expenditure
Purchase of fixed assets                      (505)          (622)      (1,263)
Sale proceeds from fixed assets                   1            197          197
                                              (504)          (425)      (1,066)

Acquisitions and disposals
Acquisition of subsidiary                         -        (2,560)      (2,560)
Disposal of subsidiary                            -              -          900
                                                  -        (2,560)      (1,660)

Equity dividends paid                         (563)          (563)        (823)

Net cash (outflow) before financing         (1,743)        (3,606)      (4,119)

Financing
Capital payments on finance leases             (80)           (52)        (104)
New medium term bank loans                    1,627              -            -
Capital payments on bank loans                 (64)           (30)         (11)
                                              1,483           (82)        (115)
(Decrease) in cash                            (260)        (3,688)      (4,234)


Reconciliation of net cash flow to movement in net debt

                                           Six months    Six months        Year
                                                ended         ended       ended
                                                   30            30    31 March
                                            September     September        2001
                                                 2001          2000
                                                #'000         #'000       #'000
(Decrease) in cash in the period                (260)       (3,688)     (4,234)
Cash (outflow)/inflow from change in debt     (1,483)            82         115
and lease financing
Change in net debt resulting from cash        (1,743)       (3,606)     (4,119)
flows
Net finance leases                               (54)             -           -
Translation differences                             -             6        (16)
Movement in the period                        (1,797)       (3,600)     (4,135)
Net (debt)/cash at start of period            (2,621)         1,514       1,514
Net (debt) at end of period                   (4,418)       (2,086)     (2,821)



Net cash (outflow)/inflow from operating activities

                                         Six months     Six months   Year ended
                                              ended          ended     31 March
                                       30 September   30 September         2001
                                               2001           2000
                                              #'000          #'000        #'000

Operating profit                              1,157          1,312        2,008
Depreciation and amortisation                   579            577        1,144
(Increase) in stocks                          (266)          (499)      (2,124)
(Increase) in debtors                         (963)          (308)        (225)
(Decrease) in creditors                       (769)          (944)        (478)
(Decrease)/increase in provisions                 -            (1)           80
Net cash (outflow)/inflow from                (262)            137          405
operating activities




Notes


 1. The figures for the six months ended 30 September are unaudited. The
    interim statements have been prepared on the basis of the accounting
    policies set out in the accounts for the financial year ended 31 March
    2001, with the exception of FRS19 Deferred Tax which will be applied in
    the TGI Group statutory accounts for the year ending 31 March 2002.

 2. The comparative figures for the financial year ended 31 March 2001 are not
    the TGI Group's statutory accounts for that financial year. These accounts
    have been reported on by the TGI's Group auditors and delivered to the
    Registrar of Companies. The report of the auditors was unqualified and did
    not contain a statement under section 237 (2) or (3) of the Companies Act
    1985.

 3. The taxation charge reflects the utilisation of ACT previously written off.

 4. Earnings per share is based upon profits of #650,000 and 21,657,497
    ordinary shares in issue during the six months ended 30 September 2001.
    Headline earnings per share exclude the impact of exceptional profits and
    losses and exclude the impact of exceptional profits and losses and
    exclude amortisation of goodwill.