Final Results

Quadnetics Group PLC 29 September 2003 Press Release 29 September 2003 Quadnetics Group plc Preliminary Results for the year ended 31 May 2003 Quadnetics Group plc, a leader in the design, integration and control of advanced CCTV and networked video systems, reports its Preliminary Results for the year ended 31 May 2003. Highlights - Sales up by over 50% to £20.3 million (2002: £13.4 million) - Operating profit of £1.4 million (2002: £0.1 million) - Profit before tax £1.4 million (2002: loss of £0.8 million) - Strengthened balance sheet - Dividend payments recommenced at 2p per share Commenting on the results, Russ Singleton, Chief Executive, said: 'I am delighted to report that the Group has met or exceeded all its primary objectives this year. Our leading position in the high-complexity end of the CCTV and security systems market, combined with a broad range of technical and commercial capability, has allowed us to capture a significant share of the market. As a result, our sales increased by over 50 per cent to £20.3 million and our operating profit rose from £0.1 million to £1.4 million, representing a return on sales of 7 per cent. 'Many of our products have become industry standards and we continue to develop new products which we believe will become the accepted systems of the future. This year Quadnetics was involved in one of the largest and most technically challenging CCTV systems seen so far in the UK, and has strengthened its successful relationships with large corporate customers such as NCP. Our objectives are to continue to build on the success to date and also to develop the international side of our business, which has already begun through partnerships with IBM and Barco. We look forward to another successful year.' For further information, please contact: Quadnetics Group plc Tel: +44 (0) 1527 850 080 Russ Singleton Email: r.singleton@quadnetics.com Brewin Dolphin Securities Neil Baldwin Tel: +44 (0) 113 241 0130 Media enquiries: Bankside Consultants Limited Tel: +44 (0) 20 7444 4140 Peter Curtain / Ariane Vacher Email: peter.curtain@bankside.com Chairman's Statement The Company has delivered a strong performance in the year to 31 May 2003. I am therefore pleased to announce, subject to shareholder approval, the recommencement of dividend payments. After several years of hard work and investment, the Company has established a pre-eminent position in the market for advanced and complex CCTV and security systems, and the financial rewards are now being realised. Sales improved by more than 50 per cent to £20.3 million from £13.4 million last year, and profit before tax increased to £1.4 million. No tax is payable for the year due to the benefit of brought forward losses. The Group balance sheet at 31 May 2003 is in a strong position with net assets of £5.5 million, and minority interests fully eliminated following the issue of 987,800 Ordinary shares to acquire the outstanding 21% interest in Quadrant Video Systems plc and Synectic Systems Limited. The Group finished the year with net funds of £3.3 million compared with net debt of £0.9m at 31 May 2002, although this was partly an overly flattering position because of unsustainably favourable cash collections on a number of contracts shortly before the year-end. Nevertheless the underlying position was, and remains, positive. Your Board is recommending the payment of a dividend of 2 pence per share, which will be paid on 10 December 2003 to shareholders on the register on 7 November 2003. Our industry is robust and growing rapidly as it is recast in the digital era. We are seeing rapid and sustained growth in demand as the benefits of advanced CCTV products and services gain recognition. Our position within that industry is assured by virtue of our dominance of the public space surveillance sector of the market and our evolving product line, which utilises advanced proprietary technology. We are moving rapidly to the position of being suppliers of products as well as projects. Our award winning products, including Synergy control system and TLL (Time Lapse Later) video data management software, have generated enthusiastic interest across the whole video imaging market. We are confident of significant further advances in the Group's financial performance, and we anticipate making further announcements in relation to ongoing business within the next few months. Peter Rae Chairman Consolidated Profit & Loss Account For the year ended 31 May 2003 Unaudited 2003 2002 Notes £'000 £'000 Turnover 1 Continuing operations 20,299 13,392 Discontinued operations - 4,659 20,299 18,051 Less share of joint venture's turnover - (308) Group turnover 20,299 17,743 Cost of sales (15,110) (14,125) Gross profit 5,189 3,618 Net operating expenses (3,773) (3,782) Operating profit/(loss) Continuing operations 1,416 102 Discontinued operations - (266) Group operating profit/(loss) 1,416 (164) Share of operating profit in discontinued joint venture - 67 Share of operating profit in discontinued associate - 13 Total operating profit/(loss) 1,416 (84) Exceptional item - discontinued operations 2 - (518) Profit/(loss) before interest 1,416 (602) Net interest payable 3 (9) (150) Profit/(loss) before taxation 1,407 (752) Tax charge on ordinary activities 4 - - Profit/(loss) on ordinary activities after taxation 1,407 (752) Minority interests (232) 8 Profit/(loss) on ordinary activities after taxation and minority 1,175 (744) interests Dividends 5 (150) - Retained profit/(loss) for the year 1,025 (744) Basic earnings/(loss) per ordinary share 6 17.4p (11.6)p Diluted earnings/(loss) per ordinary share 6 17.0p (11.6)p Consolidated Balance Sheet 31 May 2003 Notes Unaudited 2003 2002 £'000 £'000 Fixed assets Intangible assets 7 1,233 32 Tangible assets 501 555 1,734 587 Current assets Stocks 1,767 1,973 Debtors 4,375 6,489 Cash at bank and in hand 3,376 - 9,518 8,462 Creditors: amounts falling due within one year (5,722) (5,656) Net current assets 3,796 2,806 Total assets less current liabilities 5,530 3,393 Creditors: amounts falling due after more than one year (25) (59) Provisions for liabilities and charges (48) (8) Net assets 5,457 3,326 Capital and reserves Called up share capital 8 1,496 1,288 Share premium account 9 3,770 6,934 Other reserves 9 835 4,387 Profit and loss account 9 (644) (9,557) Equity shareholders' funds 5,457 3,052 Equity minority interest 8 - 274 5,457 3,326 Consolidated Cash Flow Statement For the year ended 31 May 2003 Unaudited 2003 2002 Notes £'000 £'000 Net cash inflow/(outflow) from operating activities 3,719 (1,228) Returns on investments and servicing of finance (14) (89) Net capital expenditure and financial investment (88) (301) Acquisitions and disposals 10 593 1,339 Cash inflow/(outflow) before financing 4,210 (279) Financing (14) (68) Increase/(decrease) in cash 4,196 (347) Statement of Total Recognised Gains and Losses For the year ended 31 May 2003 2003 2002 £'000 £'000 Total gains/(losses) recognised since the last annual report: Consolidated profit/(loss) after taxation and minority interests 1,175 (744) Reconciliation of Movements in Shareholders' Funds For the year ended 31 May 2003 Notes 2003 2002 £'000 £'000 Total recognised gains/(losses) in the year 1,175 (744) Issue of shares 8 1,380 - Proposed dividend (150) - Goodwill previously written off to reserves - 220 Net movement in shareholders' funds 2,405 (524) Opening shareholders' funds 3,052 3,576 Closing shareholders' funds 5,457 3,052 Notes 1. Continuing operations comprise the businesses of Quadrant Video Systems plc ('QVS') and Synectic Systems Limited ('Synectics'). Discontinued operations comprise Axiom Design & Print Limited, Quadrant Systems Limited, the Group's joint venture company, Quest Flight Training Limited, and the Group's associated company Quadrant Visual Solutions Limited all of which were sold in the year ended 31 May 2002. 2 The exceptional item in 2002 arose on the disposal of the Group's interests in commercial printing and flight simulation, and a 21% interest in QVS and Synectics. 3. Net interest payable in 2002 includes £68,000 in respect of net interest payable by joint ventures and associates. 4. No tax charge arises in 2003 owing to the availability of tax losses brought forward. At 31 May 2003 the Group has tax losses available to be carried forward against the future taxable profits of certain Group companies of approximately £1.6 million, the benefit of which will only be realised over a number of years. 5. Following the completion of the capital reduction, noted in 9 below, the Company is now able to recommence the payment of dividends, and the Directors recommend the payment of a final dividend of 2p per share, totalling £150,000 on 10 December 2003 to shareholders registered on 7 November 2003. 6. The calculation of basic earnings per ordinary share is based on the profit after taxation and minority interests for the year of £1,175,000 (2002: loss £(744,000)) and on 6,766,627 shares, being the weighted average number of shares in issue and ranking for dividend during the year (2002: actual number of shares - 6,439,956). The calculation of diluted earnings per share in the current year is based on the profit after taxation and minority interests for the year of £1,175,000 and on 6,904,185 shares, being the weighted average number of shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares. Diluted earnings per share for 2002 was the same as basic earnings per share because there was no dilution caused by share options outstanding at the end of that year. 7. Intangible assets represent goodwill arising on consolidation and include additions in the year of £1.2 million arising from the acquisition of SJC 120 Limited explained in note 8. 8. During the year the Company exercised a call option to acquire SJC 120 Limited, a company which held a 21% interest in both QVS and Synectics and which was owned by four managers of those two companies. As a result of the option exercise 987,800 ordinary shares of 20p each were issued to the four managers as consideration for this purchase under the terms of an agreement approved by shareholders on 27 February 2002. Following this acquisition there were no other minority interests in the Group. A further 50,000 ordinary shares of 20p each were issued during the year following the exercise of options over that number of shares. 9. Following approval by the Company's shareholders at an extraordinary general meeting on 12 February 2003 and the subsequent approval by the High Court on 5 March 2003, the Company cancelled £4,219,438 standing to the credit of the capital redemption reserve and reduced the balance on the share premium account by £4,336,000 to eliminate the deficit on the Company's profit and loss account. An amount of £119,000 was not required to eliminate the deficit at the date of the capital reduction and therefore, in accordance with the undertaking given to the High Court, this amount has been transferred to a Special reserve, included within Other reserves. 10. Net cash inflows from acquisitions and disposals include £600,000 of deferred consideration from the disposal of Quadrant Systems Limited and Quest Flight Training Limited. 11. The preliminary results for the year have not been audited by the Group's auditors and do not constitute statutory accounts. The comparative figures for 2002 have been abridged from the statutory accounts for the year ended 31 May 2002. The Auditors' opinion on these accounts was unqualified and did not contain any statements under section 237(2) or (3) of the Companies Act 1985. The statutory accounts for the year ended 31 May 2002 have been filed with the Registrar of Companies. 12. Copies of this preliminary statement are available from Quadnetics Group plc, North Court House, Morton Bagot, Studley, Warwickshire B80 7EL or on the Company website at www.quadnetics.com. - Ends - This information is provided by RNS The company news service from the London Stock Exchange

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