Interim Results

Quadrant Group PLC
15 February 2001

                                   Quadrant Group plc
                    Interim Results for the half year to 30 November 2000 
 
Half Year Statement 

In the half year to 30 November 2000 Quadrant Group produced an operating
profit of £159,000 (1999: loss £328,000) and a profit before tax (after
interest and exceptional items) of £291,000 (1999: £793,000). The improved
operating result reflects primarily the expected breakthrough to
profitability of Quadrant Systems, the disposal of the loss-making
audio-visual business and growth in Quadrant Video Systems' electronic
security activities. Because these improvements did not materialise in the
main until August, the overall picture was of an operating loss in the first
quarter, followed by reasonable profitability in the second quarter. 
 
Turnover from continuing operations for the six months grew by 50% compared
with the corresponding period last year, confirming the trend indicated in
the Group's last Annual Report. Net borrowings at 30 November 2000 were £0.9
million, increased from £0.5 million at 31 May 2000, following an investment
of £0.5 million in a 50% share of Quest Flight Training. 
 
The CCTV security activities of Quadrant Video Systems continued to make
progress. Turnover for the six months increased by 24% but against a
relatively poor comparative period. Operating margins suffered in the first
quarter from the impact of low new sales volumes, but recovered well in the
second quarter. The high level of the order book at 30 November gives
confidence for a strong second half. 
 
Synectic Systems' electronics control products serve the same underlying
market, and experienced a similar pattern of market delays in the first
quarter followed by a strong autumn period. Overall turnover was up by 49%
compared with the first half last year. Significant further investment was
made in research and development and in establishing a presence in major
export markets, leading to an operating result just below break-even. There
is good momentum into the second half with both existing and new products. 

As previously reported, Quadrant's flight simulation business was successful
in winning a £60 million, 30-year contract from the Ministry of Defence for
exclusive provision of flight crew simulator training for the RAF's E-3D
AWACS aircraft. The contract was awarded in late July to Quest Flight
Training, a 50/50 joint venture between Quadrant and Evans & Sutherland
Computer Corporation. As a result Quest has ordered a £3 million update for
the existing E-3D simulator from Quadrant Systems, to be completed by early
2002. 
 
The E-3D contract, together with other major contract wins, led to turnover
at Quadrant Systems increasing to £3.3 million in the first half, an increase
of more than 100% over last year. Although Quadrant Systems operated
profitably over the first half, margins were affected by a necessary build up
of costs prior to award of the E-3D contract, and by inefficiencies
associated with the high growth rate. Margin improvement is a key management
focus for the second half. 
 
Axiom Group's design and print activities produced another solid result, with
turnover up by 8.5% to £1.1 million and an operating margin of 9%. The second
half is seasonally weaker and will also be affected by anticipated lower
volumes from a major customer. 
 
Quadrant Group's stated goals for this year are to deliver strong organic
growth and sustainable operating and bottom line profits. Current order books
and levels of activity suggest that these objectives will be achieved. 
 
15 February 2001 
 
Consolidated Profit and Loss Account 
For the half year ended 30 November 2000 

                                                                          
                                Notes    Unaudited     Unaudited       Audited  
                                         Half year to  Half year to    Year to  
                                         30 Nov 2000   30 Nov 1999   31 May 2000

                                           £'000       £'000           £'000    
            
                                                    
                                                                              
  Turnover                                                                    
  Continuing operations              1       8,096      5,401       13,192     
  Discontinued operations            1       -          2,825        6,096      
                                             8,096      8,226       19,288     
  Less: share of joint venture's     2         (67)         -            -      
   
  turnover                                                                      
  Group turnover                             8,029      8,226       19,288     
  Cost of sales                             (5,659)    (5,301)     (12,493)   
  Gross profit                               2,370      2,925        6,795      
  Net operating expenses                    (2,253)    (3,253)      (7,180)    
  Operating profit/(loss)                                                     
  Continuing operations                        117       (250)        (159)     

  Discontinued operations                        -        (78)        (226)     

                                               117       (328)        (385)     

  Share of operating profit in       2, 3       42           -          -       
  joint venture and associate                                                 
  Total Group operating                        159        (328)       (385)     

  profit/(loss)                                                               
  Exceptional items                                                           
  - Continuing operations                                                     
  Profit on disposal of fixed                    -         1,235      1,235     

  assets                                                                      
  - Discontinued operations                                                   
  Additional consideration from      4         168            -          -      
  sale of business                                                            
  Provisions and asset impairment                -          -          (450)    
  on disposal of business                                                     
                                               168        1,235         785     
  
  Profit before interest                       327          907         400     
  Net interest payable               5         (36)        (114)       (146)    
  Profit before taxation                       291          793         254     
  Tax charge                         6          (6)           -           -     
    
  Profit on ordinary activities                285         793          254  
  after taxation                                                              
  Minority interests                             -           -           -  
  Profit for the period -                      285         793          254 
  transferred to reserves                                                     
  Basic earnings per ordinary        7         4.4p       12.6p        4.1p     
  share                                                                       
  Diluted earnings per ordinary      7         4.4p       12.6p        4.1p   
  share                                                                       
 
 
Consolidated Balance Sheet 
30 November 2000 
                                                                     
                                          Unaudited    Unaudited     Audited    
                                          30 Nov 2000  30 Nov 1999 31 May 2000  
                                              £'000        £'000       £'000    
    
                                       Notes                                    
  
  Fixed assets                                                                
  Intangible assets                               44         47         46      

  Tangible assets                              1,619      2,176      2,044    
  Investments:                                                                
  Investment in        - share of gross   2    1,702          -          -      
  joint venture        assets                                                 
                       - share of gross       (1,203)         -          -      
                       liabilities                                            
                                                  499         -          -
  Investment in associate                 3       241         -          -      
 
  Total investments                               740         -          -      
                                                2,403      2,223      2,090    
  Current assets                                                              
  Stocks                                        1,279      1,182        936     

  Debtors                                       4,485      4,090      4,837    
  Cash at bank and in hand                         -           7        109     
                                               5,764       5,279       5,882    
  Creditors: amounts falling due within one    (4,602)    (3,840)     (4,650)  
  year                                                                        
  Net current assets                           1,162       1,439       1,232    
  Total assets less current liabilities        3,565       3,662       3,322    
  Creditors: amounts falling due after more      (93)        (65)        (92)   
   than one year                                                                
  Provisions for liabilities and charges         (77)       (148)       (120)   

  Net assets                                   3,395       3,449       3,110    
  Capital and reserves                                                        
  Called up share capital                      1,288       1,254       1,288    
  Share premium account                        6,934       6,798       6,934    
  Other reserves                               4,387       4,387       4,387    
  Profit and loss account                     (9,214)     (8,990)     (9,499)  
  Equity shareholders' funds                   3,395       3,449       3,110    
 
 
Consolidated Cash Flow Statement 
For the half year ended 30 November 2000 

                                                                          
                                            Unaudited   Unaudited      Audited  
                                           Half year to   Half year to   Year to
                                            30 Nov 2000 30 Nov 1999  31 May 2000
 
                                       Notes    £'000        £'000    £'000     
            
                                                   
                                                                              
  Net cash inflow/(outflow) from operating       551         (271)      (51)    

  activities                                                                  
  Returns on investments and servicing of                                     
  finance                                                                     
  Interest received                                1           3          9     
  Interest paid                                  (40)        (153)      (192)   

                                                 (39)        (150)      (183)   

  Net capital expenditure and financial                                       
  investment                                                                  
  Purchase of fixed assets                       (373)       (467)      (863)   

  Sale of fixed assets                             45       4,336      4,430    
                                                 (328)      3,869      3,567    
  Acquisitions and disposals                                                  
  Investment in joint venture            2, 8    (475)          -          -    
  Net investment in associate            3, 8    (100)          -          -   
                                                 (575)          -          -    
  Cash inflow/(outflow) before financing         (391)       3,448      3,333   

  Financing                                                                   
  Shares issued                                    -              -       170   
  New loans                                        -          1,020     1,020   

  Repayment of loans                               -         (3,252)    (3,376) 
 Payment of principal under finance leases       (53)           (18)       (31) 
                                                (53)         (2,250)    (2,217) 

  Increase/(decrease) in cash                    (444)        1,198      1,116  
 
 
 
 
Reconciliation of net cash flow to movement in net debt 
For the half year ended 30 November 2000 

                                                                        
                                              Unaudited   Unaudited    Audited 
                                           Half year to  Half year to  Year to
                                          30 Nov 2000   30 Nov 1999  31 May 2000

                                            £'000          £'000          £'000 
              
                                                  
                                                                             
   (Increase)/decrease in cash in the period     444      (1,198)    (1,116)  
   Decrease in debt and lease financing          (53)     (2,250)    (2,387)  
   Change in net debt arising from cash flows    391      (3,448)    (3,503)  
   New finance leases                            62       -              49     
   Movement in net debt in the period            453      (3,448)    (3,454)  
   Opening net debt                              481      3,935       3,935    
   Closing net debt                              934        487         481     

 
Reconciliation of operating profit to operating cash flows 
For the half year ended 30 November 2000 

                                                                       
                                            Unaudited     Unaudited     Audited 

                                          Half year to  Half year to  Year to 
                                         30 Nov 2000   30 Nov 1999   31 May 2000
                                          £'000           £'000           £'000 
                                   
                                                                              
  Operating profit/(loss)                        117        (328)        (385)  
  Depreciation and amortisation                  191         375          712   

  (Profit)/loss on sale of fixed assets           (4)         25           (7)  
   Increase in stocks                           (679)       (201)          (5)  
  (Increase)/decrease in debtors                 445        (125)        (872)  
  Increase/(decrease) in creditors               481         (17)         506   

  Net cash inflow/(outflow) from operating       551        (271)         (51)  

  activities                                                                  
 
Reconciliation of movements in shareholders' funds 
For the half year ended 30 November 2000 

                                                                       
                                                 Unaudited  Unaudited Audited   
                                             Half year to  Half year to  Year to

                                              30 Nov 2000  30 Nov 1999   31 May 
                                                                           2000 

                                                  £'000     £'000     £'000     
              
                                                 
                                                                             
  Total recognised gains - profit for the period     285      793        254    
  Share issue proceeds                                 -        -        170    
  Goodwill previously written off to reserves          -        -         30    

  Net movement on shareholders' funds                285      793        454    
  Opening shareholders' funds                      3,110    2,656      2,656  
  Closing shareholders' funds                      3,395    3,449      3,110  

Notes 

1.  Continuing operations comprise the businesses of Quadrant Systems, Quadrant
Video Systems ('QVS'), Axiom Design & Print, Synectic Systems and C3 Design &
Print. Turnover from continuing operations also includes 50% of the turnover
of Quest Flight Training Limited ('Quest', see note 2). Discontinued
operations comprise the former audio-visual equipment, systems and services
business ('The AV Business') of QVS (see note 3).  

2.  On 20 July 2000 Quest was awarded a contract by the UK Ministry of Defence
for the provision of aircrew simulator training for the RAF's Boeing E-3D
AWACS aircraft. Quest was specifically set up for this programme as a 50%
owned joint venture company between Quadrant Group plc and Evans & Sutherland
Computer Corporation. The activities of Quest have been reported as a joint
venture under the gross equity method of accounting. 


3.  The AV Business was transferred into a previously dormant subsidiary of QVS,
Quadrant Visual Solutions Limited ('VSL'), with effect from 1 June 2000, and
QVS subsequently completed the sale of 80.65% of the share capital of VSL to
the management of VSL. The activities of VSL have been reported as an
associated company under the equity method of accounting from 1 June 2000.
The amount shown as investment in associate includes secured loan notes of
£200,000 issued by VSL to QVS and repayable in instalments by 2007. 


4.  The exceptional item for the half year ended 30 November 2000 of £168,000
represents additional consideration payable for Yewlands Engineering Co.
Limited which was sold in 1997, under a sale agreement which provided that
additional consideration would be payable upon utilisation of tax losses
within the company. 

5.  Net interest payable includes the appropriate share of interest payable and
receivable by joint ventures and associates. 

6.  The tax charge represents the Group's share of joint venture tax charges. No
tax charges arise in either Quadrant Group plc, its subsidiaries or associate
company.  


7.  The calculation of earnings per share is based on the profit after taxation
for the period of £285,000 (half year to 30 November 1999: £793,000; year to
31 May 2000: £254,000) and on 6,439,956 shares (half year to 30 November
1999: 6,269,956; year to 31 May 2000: 6,271,349), being the weighted average
number of shares in issue and ranking for dividend during the period. 


8.  There were no dilutive potential ordinary shares in either the half year
ended 30 November 2000 nor the year ended 31 May 2000. 
Net cash outflows from acquisitions and disposals in the half year ended 30
November 2000 arose from the investment of £475,000 in 50% of the issued
share capital of Quest; subscription for £200,000 of loan notes in VSL less
the proceeds of £100,000 arising from the disposal of 80.65% of the issued
share capital of VSL. 


9.  The half year figures have not been audited nor reviewed by the Group's
auditors and do not constitute statutory accounts. The comparative figures
for 31 May 2000 have been abridged from the statutory accounts for the year
ended 31 May 2000. 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 2000
have been filed with the Registrar of Companies. 

10.  Copies of this statement are being sent to shareholders and will be
available from the Company's registered office at North Court House, Morton
Bagot, Studley, Warwickshire B80 7EL.