Interim Results

Quadnetics Group PLC
06 February 2008


For Immediate Release                                            6 February 2008


                              Quadnetics Group plc
                                        
            Interim results for the six months ended 30 November 2007

Quadnetics Group plc, a leader in the development, design, integration and
control of advanced CCTV and networked video systems, is pleased to report
interim results for the six months ended 30 November 2007.


Financial Highlights

        •  Turnover £35.9m (2006: £30.9m)

        •  Underlying turnover up 7%

        •  Profit before tax £2.0m (2006: £1.4m)

        •  Underlying profit* before tax £1.3m (2006/7: £1.8m)

        •  Basic EPS 8.8p (2006: 6.6p)

        •  Underlying* EPS 6.0p (2006/7: 8.7p)

        •  Proposed interim dividend 2.5p (2006: 2.0p)

        •  Net Cash as at 30 November 2007 £7.8m (2006: £6.3m)


Quadrant Security Highlights

        •  Turnover £26.0m (2006: £22.9m)

        •  Timing issues with orders and delivery schedules have subsided
  
        •  Order book up 50% on corresponding period last year


Synectics Highlights

        •  Turnover £10.6m (2006: £8.7m)

        •  Strong sales to gaming industry in North America

        •  Initial orders for new digital product range have exceeded expectations


*Underlying profit represents profit before tax, goodwill reduction in respect
of tax losses, and share-based payments charges


Commenting on the results, Russ Singleton, Chief Executive, said:

'We are pleased with the progress that Quadnetics has made in the first half of
the financial year. These results are in line with our expectations and we hope
to continue our momentum into the second half of the year. The demand for our
Synectics' new products is positive and our bid pipelines and order books are
healthy and so we expect continued progress in what is an attractive and
exciting marketplace for electronic security systems.'


For further information, please contact:

Quadnetics Group plc                                Tel: [phone]
Russ Singleton, Chief Executive
Email: [e-mail]                      www.quadnetics.com
Brewin Dolphin Securities                          Tel: [phone]
Neil Baldwin

Media enquiries:

Buchanan Communications Limited                    Tel: [phone]
Isabel Podda
Email: [e-mail]


Chairman's Statement

Introduction


The first half of the current financial year was a period of continued good
progress in some areas and weaker performance in others. On the positive side,
Synectics' sales to the North American gaming security sector enjoyed further
strong growth compared to the same period last year. As previously reported,
though, progress within our UK systems integration activities was slower than
anticipated. Actions were taken quickly to protect margins by reducing the cost
base in that area, although the impact of one-time charges means that the
benefit of these reduced costs will not show through until the second half.

Financial Results

Quadnetics' results for the first half were in line with the expectations set
out in our trading statement on 28 November 2007.

This is the Company's first set of results reported under IFRS accounting
conventions, although the net impact of changes compared with the previously
applied UK GAAP has not had a material effect on underlying profits.

Consolidated turnover for the half year was £35.9 million (2006/7: £30.9
million). This increase of just over 16% was flattered by approximately £3
million of additional turnover from low margin capital works performed by
sub-contractors in accordance with agreements with our retail managed services
clients. Excluding this effect, like-for-like turnover increased by 7.3%.
Underlying profits (that is, profits before tax, goodwill reduction in respect
of tax losses and share-based payment charges) were £1.3 million (2006/7: £1.8
million). Profit Before Tax was £2.0 million (2006/7: £1.4 million) after
benefiting from a credit of £0.8 million in respect of share-based payment
charges that the Board believes should be reported separately to avoid obscuring
the true operating performance. Underlying earnings per share (after tax) were
6.0 pence (2006/7: 8.7 pence), and basic earnings per share 8.8 pence (2006/7:
6.6 pence).

These results also reflect the significant decline in the US dollar exchange
rate, with an impact across the Group estimated to be around £0.2 million for
the half year. Subsequent to 30 November, part of the dollar decline has been
reversed and, if this position is maintained until our year end, we would expect
an exchange gain in the second half.

Cash Position

Net cash as at 30 November improved to £7.8 million (30 November 2006: £6.3
million; 31 May 2007: £5.6 million), aided by proceeds of £2.1 million from the
sale and leaseback of Synectics' headquarters building in Sheffield purchased in
March 2007.

Dividend

An interim dividend of 2.5 pence per share (2006/7: 2.0 pence) will be paid on
14 March to shareholders on the register at 15 February 2008.

Operating Review

Quadrant Security

The Group's security services division, providing integrated security systems,
mobile surveillance and security management support services.


Turnover £26m
Operating Profit £1.3m

Quadrant reported turnover increased to £26.0 million for the period (2006/7:
£22.9 million) although, as noted above, almost all of this increase derived
from additional capital works for retail managed service clients. Gross profits
for the division were essentially flat compared with the first half last year.
Underlying operating profits were £1.3 million (2006/7: £1.7 million), including
the redundancy costs already mentioned.

The major operating factor contributing to this first half financial performance
was the previously reported slowdown in finalisation of orders and delivery
schedules from central government customers in the UK and Middle East. It is
encouraging to note that such timing issues have now noticeably abated, with
important new orders received in both these areas. In total, the division's firm
order book at 30 November was approximately 50% higher than at the corresponding
point last year, underpinning expectations for the remainder of the year.

Synectics

The Group's security technology division, providing security network products
and software, hazardous area systems and high security surveillance technology.

Turnover £10.6m

Operating Profit £0.7m

Synectics grew turnover by 22% to £10.6 million (2006/7: £8.7 million), on which
it made an underlying operating profit of £734,000 (2006/7: £649,000).
Performance was to a certain extent held back by delays in the launch of
Synectics' new digital product range, due primarily to component supply issues
that have now been satisfactorily resolved. Initial orders for the first product
in the range have exceeded expectations, and customer trials of Synectics'
important new mobile surveillance products are now well on track.

Progress in sales to the gaming industry in North America continued to be
strong, and the pipeline of orders anticipated in the second half is robust. We
invested further to support our strategy of increased proprietary software
content in Synectics' sales, and our flagship Synergy system management and
control software continues to gain recognition as the premier product available
in this growing area.

Outlook

Quadnetics enjoys the benefit of an attractive and dynamic underlying
marketplace for electronic security systems, despite occasional volatility from
the timing of major projects. We are confident that our strategy of focusing on
specialised, highly demanding applications within the overall market will
continue to deliver long term growth and value to shareholders. Overall order
books, bid pipelines and the initial market response to Synectics' new products
together support an unchanged positive outlook for the second half of this year
and beyond.

Nevertheless, the Group's expected results this financial year are weighted even
more than usual towards the year end. In light of the inevitable risk this
implies, and against an increasingly uncertain worldwide economic background, a
note of caution is in order. Quadnetics is profitable, with a strong, ungeared
balance sheet and a well-diversified, primarily blue-chip, customer base skewed
to sectors of the economy (government high security, gaming, oil and gas,
transport, food retailing) that have historically been less exposed to any
general downturn. The Board will continue to ensure that the Company's approach
gives weight to these strengths, as well as to the exciting opportunities we see
to build on the market and technology positions Quadnetics has successfully
established over the past few years.


David Coghlan
6 February 2008


Consolidated Income Statement

For the half year ended 30 November 2007

                                                Unaudited     Unaudited    Unaudited
                                                Half year     Half year      Year to
                                                       to            to       31 May
                                                   30 Nov        30 Nov
                                         Notes       2007          2006         2007
                                                    £'000         £'000        £'000
Continuing operations
Revenue                                      2     35,939        30,935       66,065
Cost of sales                                    (26,175)      (21,064)     (44,234)
Gross profit                                        9,764         9,871       21,831
Net operating expenses                            (7,865)       (8,620)     (17,651)
Profit from operations
Excluding goodwill reduction and             2      1,235         1,648        5,084
share-based payments
Goodwill reduction in respect of tax         7      (141)         (153)        (309)
losses
Share-based payments credit/(charge)         3        805         (244)        (595)
Total profit from operations                        1,899         1,251        4,180
Investment income                                      76           153          233
Finance costs                                         (5)          (12)          (3)
Profit before tax
Excluding goodwill reduction and                    1,306         1,789        5,314
share-based payments
Goodwill reduction in respect of tax         7      (141)         (153)        (309)
losses
Share-based payments credit/(charge)         3        805         (244)        (595)
Total profit before tax                             1,970         1,392        4,410
Income tax expense                           4      (610)         (368)      (1,137)
Profit for the period                               1,360         1,024        3,273
Basic and diluted earnings per Ordinary      6       8.8p          6.6p        21.1p
share
Underlying basic and diluted earnings        6       6.0p          8.7p        25.9p
per Ordinary share


Consolidated Statement of Recognised Income and Expense

For the half year ended 30 November 2007
                                               Unaudited     Unaudited     Unaudited
                                               Half year     Half year       Year to
                                                      to            to        31 May
                                                  30 Nov        30 Nov          2007                  
                                                    2007          2006
                                                   £'000         £'000         £'000

Profit for the period                              1,360         1,024         3,273
Exchange differences on translation of              (14)            18           (4)
foreign operations
Total recognised income and expense for the        1,346         1,042         3,269
period


Consolidated Balance Sheet

30 November 2007
                                               Unaudited     Unaudited     Unaudited
                                                  30 Nov        30 Nov        31 May
                                                    2007          2006          2007
                                                   £'000         £'000         £'000
Non-current assets
Property, plant and equipment                      2,002         1,799         1,570
Intangible assets                                 17,246        16,817        16,874
Deferred tax asset                                   641           813           869
                                                  19,889        19,429        19,313
Current assets
Property held for resale                               -             -         2,056
Inventories                                        4,718         5,442         5,074
Trade and other receivables                       22,765        19,083        20,479
Cash and cash equivalents                          7,863         6,309         5,596
                                                  35,346        30,834        33,205
Total assets                                      55,235        50,263        52,518
Current liabilities
Trade and other payables                        (21,368)      (19,393)      (19,646)
Tax liabilities                                    (968)         (784)       (1,071)
Current provisions                                 (329)         (565)         (216)
                                                (22,665)      (20,742)      (20,933)
Non-current liabilities
Non-current provisions                             (709)       (1,102)       (1,096)
                                                   (709)       (1,102)       (1,096)
Total liabilities                               (23,374)      (21,844)      (22,029)
Net assets                                        31,861        28,419        30,489

Equity attributable to equity holders of
parent company
Called up share capital                            3,382         3,366         3,382
Share premium account                             14,851        14,621        14,851
Merger reserve                                     9,565         9,565         9,565
Other reserves                                   (2,486)       (2,391)       (2,486)
Currency translation reserve                        (27)             9          (13)
Retained earnings                                  6,576         3,249         5,190
Total equity                                      31,861        28,419        30,489



Consolidated Cash Flow Statement

For the half year ended 30 November 2007

                                               Unaudited     Unaudited     Unaudited
                                               Half year     Half year       Year to
                                                      to            to
                                                  30 Nov        30 Nov        31 May
                                                                                2007
                                                    2007          2006
                                                   £'000         £'000         £'000

Cash flows from operating activities

Profit from operations                             1,899         1,251         4,180

Depreciation and amortisation charge                 391           302           571

Goodwill reduction in respect of tax losses          141           153           309

Loss/(profit) on disposal of non-current              10           (1)            20
assets

Share-based payments (credit)/charge               (805)           244           595

Operating cash flows before movement in            1,636         1,949         5,675
working capital

Decrease/(increase) in stocks                        356       (1,161)         (793)

(Increase)/decrease in debtors                   (2,243)           161       (1,357)

Increase/(decrease) in creditors and               2,278       (3,024)       (2,913)
provisions

Cash generated from operations                     2,027       (2,075)           612

Interest received                                     76           106           236

Tax paid                                           (481)         (175)         (712)

Net cash from/(used in) operating activities       1,622       (2,144)           136

Cash flows from investing activities

Purchase of property, plant and equipment          (763)         (332)         (628)

Sale of property, plant and equipment                  -            35           472

Capitalised development costs                      (484)         (110)         (420)

Purchased software                                 (163)          (54)         (157)

Sale/(purchase) of property held for resale        2,060             -       (2,056)

Net cash from/(used in) investing activities         650         (461)       (2,789)

Cash flows from financing activities

Issue of shares                                        -             6           157

Payment of finance lease liabilities                   -          (20)          (20)

Interest paid                                        (5)          (12)           (3)

Dividends paid                                         -             -         (825)

Net cash used in financing activities                (5)          (26)         (691)

Net increase/(decrease) in cash and cash           2,267       (2,631)       (3,344)
equivalents

Cash and cash equivalents at the beginning of      5,596         8,940         8,940
the period

Cash and cash equivalents at the end of the        7,863         6,309         5,596
period



Notes

1.          Basis of preparation

The AIM Rules require that the next annual consolidated financial statements,
for the year ending 31 May 2008, be prepared in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the EU ('adopted IFRSs').

AIM-listed companies are not required to comply with IAS 34 'Interim Financial
Reporting' and accordingly the Company has taken advantage of this exemption.

This interim financial information has been prepared on the basis of the
recognition and measurement requirements of adopted IFRSs as at 30 November 2007
that are effective (or available for early adoption) at 31 May 2008, the Group's
first annual reporting date at which it is required to use adopted IFRSs. Based
on these adopted IFRSs, the directors have applied the accounting policies, as
set out below, which they expect to apply when the first annual IFRS financial
statements are prepared for the year ending 31 May 2008.

However, the adopted IFRSs that will be effective (or available for early
adoption) in the annual financial statements for the year ending 31 May 2008 are
still subject to change and to additional interpretations and therefore cannot
be determined with certainty. Accordingly, the accounting policies for that
annual period will be determined finally only when the annual financial
statements are prepared for the year ending 31 May 2008.

The comparative figures for the financial year ended 31 May 2007 are not taken
from the Group's statutory accounts for that financial year. However, the 'UK
GAAP as previously reported' figures for that year included in the
'Reconciliations from UK GAAP to IFRS'
(Note 7) have been extracted from those accounts, which were prepared under UK
Generally Accepted Accounting Principles, have been reported on by the Group's
auditors and delivered to the Registrar of Companies. The report of the auditors
was unqualified, did not include a reference to any matters to which the
auditors drew attention by way of emphasis without qualifying their report and
did not contain statements under section 237 (2) or (3) of the Companies Act
1985.

These consolidated interim financial statements were approved by the Board of
Directors on 6 February 2008.

The accounting policies applied by the Group resulting from changes for IFRS are
set out below. In all other respects, they are the same as those applied by the
Group in its consolidated financial statements as at and for the year ended 31
May 2007.

Goodwill

Goodwill arises on the acquisitions of subsidiaries, associates and joint
ventures. As part of its transition to IFRS, the Group elected not to restate
those business combinations that occurred prior to 1 June 2006. In respect of
these acquisitions, goodwill represents the amount recognised under the Group's
previous accounting framework (UK GAAP). For acquisitions on or after 1 June
2006, goodwill represents the excess of the cost of the acquisition over the
Group's interest in the net fair value of the identifiable assets, liabilities
and contingent liabilities of the acquiree. When the excess is negative, it is
recognised immediately in profit or loss.

Goodwill is measured at cost less accumulated impairment losses. The carrying
amounts are reviewed at each reporting date to determine whether there is any
indication of impairment. Where there is, the recoverable amount is estimated
and an impairment loss is recognised if the carrying amount exceeds its
recoverable amount.

Employee benefits

As a result of specific guidance contained in IAS 19 'Employee Benefits', the
Group recognises an accrual for untaken holiday pay at the balance sheet date.

Deferred taxation

Deferred tax is recognised on all taxable temporary differences. Temporary
differences are differences between the tax base of an asset or liability and
its carrying amount in the balance sheet.


2.          Segmental analysis

Turnover and underlying operating profit (operating profit before goodwill
reduction and share-based payments credit or charge) derives from the Group's
two business segments as follows:
                                           Unaudited     Unaudited    Unaudited
                                           Half year     Half year      Year to
                                                  to            to       31 May                                         
                                              30 Nov        30 Nov
                                                2007          2006         2007
                                               £'000         £'000        £'000

Turnover

Services                                      26,016        22,946       46,579

Products and software                         10,601         8,687       20,765

Intra-group sales                              (678)         (698)      (1,279)

                                              35,939        30,935       66,065

Underlying profit

Services                                       1,328         1,682        4,200

Products and software                            734           649        2,456

Central costs                                  (827)         (683)      (1,572)

                                               1,235         1,648        5,084



3.          Share-based payments

The Group issues equity-settled share-based payments and cash-settled
share-based payments to certain employees in the form of share options under the
Group's share option schemes, and awards under the Quadnetics Group Employee
Share Scheme respectively.

Based on the Company's share price as at 30 November 2007, the liability in
respect of share-based payments has fallen by £805,000 and accordingly this
amount has been credited to the income statement.

4.          Tax charge

The tax charge for the period is based on the estimated rate of corporation tax
that is likely to be effective for the full year to 31 May 2008.

5.          Dividends

An interim dividend of 2.5p per share (2006/07: 2.0p), totalling approximately
£388,000 (2006/07: £300,000) will be paid on 14 March 2008 to shareholders on
the register as at 15 February 2008.


6.          Earnings per share

Earnings per Ordinary share are as follows:
                UnauditedHalf UnauditedHalf Unaudited UnauditedHalf UnauditedHalf Unaudited
                      year to       year to   Year to       year to       year to   Year to
                       30 Nov        30 Nov    31 May        30 Nov        30 Nov    31 May
                         2007          2006      2007          2007          2006      2007
                        £'000         £'000     £'000             p             p         p

Basic earnings          1,360         1,024     3,273           8.8           6.6      21.1
Goodwill                  141           153       309           0.9           1.0       2.0
reduction
Share based             (805)           244       595         (5.2)           1.6       3.8
payments
(credit)/charge
Impact of
share-based
payments                  242          (73)     (165)           1.5         (0.5)     (1.0)
(credit)/charge
on tax charge
for the period
Underlying                938         1,348     4,012           6.0           8.7      25.9
earnings
Basic earnings          1,360         1,024     3,273           8.8           6.6      21.1
- diluted
Underlying                938         1,348     4,012           6.0           8.7      25.9
earnings -
diluted
                                                               '000          '000      '000

Weighted average number of ordinary shares - basic          15,530      15,479       15,495
calculation
Dilutive potential ordinary shares arising from share           13           6            9
options
Weighted average number of ordinary shares - diluted        15,543      15,485       15,504
calculation




7.          Reconciliations from UK GAAP to IFRS
Restated income statement                               Measurement
                                                                and
For the six months ended  UK GAAP as                    recognition        Restated
                          previously                    adjustments              in
30 November 2006            reported   Presentation                      accordance
                                        adjustments                       with IFRS
                               £'000          £'000           £'000           £'000

Continuing operations

Revenue                       30,935              -               -          30,935

Cost of sales               (21,064)              -               -        (21,064)

Gross profit                   9,871              -               -           9,871

Net operating expenses       (8,949)              -             329         (8,620)

Profit from operations

Excluding goodwill
amortisation, goodwill
reduction and share-based      1,622              -              26 (7)       1,648
payments
Goodwill amortisation          (456)              -             456 (8)           -

Goodwill reduction in              -              -           (153) (9)       (153)
respect of tax losses

Share-based payments           (244)              -               -           (244)
charge

Total profit from                922              -             329           1,251
operations

Investment income                141             12 (1)           -             153

Finance costs                      -           (12) (1)           -            (12)

Profit before tax

Excluding goodwill
amortisation, goodwill
reduction and share-based      1,763              -              26 (7)       1,789
payments
Goodwill amortisation          (456)              -             456 (8)           -

Goodwill reduction in              -              -           (153) (9)       (153)
respect of tax losses

Share-based payments           (244)              -               -           (244)
charge

Total profit before tax        1,063              -             329           1,392

Income tax expense             (350)              -            (18) (10)      (368)

Profit for the period            713              -             311           1,024




IFRS transition adjustments

Presentation adjustments

(1)     separate disclosure of interest payable on the face of the income
        statement

(2)     reclassification of purchased software as an intangible asset

(3)     reclassification of deferred tax asset as a Non-current asset

(4)     separate disclosure of tax liabilities on the face of the balance sheet

(5)     split of provisions into Current and Non-current liabilities

(6)     reclassification of currency translation adjustment to a separate
        reserve

Measurement and recognition adjustments

(7)     accrual for untaken holiday pay

(8)     removal of UK GAAP goodwill amortisation

(9)     goodwill reduction in respect of tax losses acquired as part of a
        business combination that were not initially recognised.

(10)    deferred tax on holiday pay accrual, on the reversal of the amortisation
        of goodwill arising on a trade and asset purchase and on the depreciation of
        short leasehold improvements acquired as part of a business combination.


The cash flow statement has been re-presented to conform with IFRS presentation
requirements. There has been no impact on cash and the Group continues to
reconcile to the same cash and cash equivalents balance.



Restated income statement                               Measurement
                                                                and
For the year ended 31 May UK GAAP as                    recognition        Restated
2007                      previously                    adjustments              in
                            reported   Presentation                      accordance
                                        adjustments                       with IFRS
                               £'000          £'000           £'000           £'000

Continuing operations

Revenue                       66,065              -               -          66,065

Cost of sales               (44,234)              -               -        (44,234)

Gross profit                  21,831              -               -          21,831

Net operating expenses      (18,242)              -             591        (17,651)

Profit from operations

Excluding goodwill
amortisation, goodwill
reduction and share-based      5,095              -            (11) (7)       5,084
payments
Goodwill amortisation          (911)              -             911 (8)           -

Goodwill reduction in              -              -           (309) (9)       (309)
respect of tax losses

Share-based payments           (595)              -               -           (595)
charge

Total profit from              3,589              -             591           4,180
operations

Investment income                230              3 (1)           -             233

Finance costs                      -            (3) (1)           -             (3)

Profit before tax

Excluding goodwill
amortisation, goodwill
reduction and share-based      5,325              -            (11) (7)       5,314
payments
Goodwill amortisation          (911)              -             911 (8)           -

Goodwill reduction in              -              -           (309) (9)       (309)
respect of tax losses

Share-based payments           (595)              -               -           (595)
charge

Total profit before tax        3,819              -             591           4,410

Income tax expense           (1,117)              -            (20) (10)    (1,137)

Profit for the period          2,702              -             571           3,273




Restated balance sheet                                  Measurement
                                                                and
At the date of transition UK GAAP as                    recognition        Restated
                          previously                    adjustments              in
(being 1 June 2006)         reported   Presentation                      accordance
                                        adjustments                       with IFRS
                               £'000          £'000           £'000

Non-current assets

Property, plant and            2,049          (295) (2)           -           1,754
equipment

Intangible assets             16,925            295 (2)       (282) (9)      16,938

Deferred tax asset                 -            901 (3)       (140) (10)        761

                              18,974            901           (422)          19,453

Current assets

Property held for resale           -              -               -               -

Inventories                    4,281              -               -           4,281

Trade and other               19,990          (901) (3)           -          19,089
receivables

Cash and cash equivalents      8,940              -               -           8,940

                              33,211          (901)               -          32,310

Total assets                  52,185              -           (422)          51,763

Current liabilities

Trade and other payables    (22,046)            536 (4)       (119) (7)    (21,629)

Tax liabilities                    -          (536) (4)           -           (536)

Current provisions                 -          (509) (5)           -           (509)

                            (22,046)          (509)           (119)        (22,674)

Non-current liabilities

Non-current provisions       (1,763)            509 (5)           -         (1,254)

                             (1,763)            509               -         (1,254)

Total liabilities           (23,809)              -           (119)        (23,928)

Net assets                    28,376              -           (541)          27,835



Equity attributable to
equity holders of parent
company
Called up share capital        3,263              -               -           3,263

Share premium account         13,634              -               -          13,634

Merger reserve                 9,565              -               -           9,565

Other reserves               (1,307)              -               -         (1,307)

Currency translation               -            (9) (6)           -             (9)
reserve

Retained earnings              3,221              9 (6)       (541)           2,689

Total equity                  28,376              -           (541)          27,835




Restated balance sheet                                  Measurement
                                                                and
At 30 November 2006       UK GAAP as                    recognition        Restated
                          previously                    adjustments              in
                            reported   Presentation                      accordance
                                        adjustments                       with IFRS
                               £'000          £'000           £'000

Non-current assets

Property, plant and            2,098          (299) (2)           -           1,799
equipment

Intangible assets             16,497            299 (2)          21 (8),     16,817
                                                                    (9)

Deferred tax asset                 -            971 (3)       (158) (10)        813

                              18,595            971           (137)          19,429

Current assets

Property held for resale           -              -               -               -

Inventories                    5,442              -               -           5,442

Trade and other               20,054          (971) (3)           -          19,083
receivables

Cash and cash equivalents      6,309              -               -           6,309

                              31,805          (971)               -          30,834

Total assets                  50,400              -           (137)          50,263

Current liabilities

Trade and other payables    (20,084)            784 (4)        (93) (7)    (19,393)

Tax liabilities                    -          (784) (4)           -           (784)

Current provisions                 -          (468) (5)           -           (468)

                            (20,084)          (468)            (93)        (20,645)

Non-current liabilities

Non-current provisions       (1,667)            468 (5)           -         (1,199)

                             (1,667)            468               -         (1,199)

Total liabilities           (21,751)              -            (93)        (21,844)

Net assets                    28,649              -           (230)          28,419



Equity attributable to
equity holders of parent
company
Called up share capital        3,366              -               -           3,366

Share premium account         14,621              -               -          14,621

Merger reserve                 9,565              -               -           9,565

Other reserves               (2,391)              -               -         (2,391)

Currency translation               -              9 (6)           -               9
reserve

Retained earnings              3,488            (9) (6)       (230)           3,249

Total equity                  28,649              -           (230)          28,419




Restated balance sheet                                  Measurement
                                                                and
At 31 May 2007            UK GAAP as                    recognition        Restated
                          previously                    adjustments              in
                            reported   Presentation                      accordance
                                        adjustments                       with IFRS
                               £'000          £'000           £'000

Non-current assets

Property, plant and            1,780          (210) (2)           -           1,570
equipment

Intangible assets             16,344            210 (2)         320 (8),     16,874
                                                                    (9)

Deferred tax asset                 -          1,029 (3)       (160) (10)        869

                              18,124          1,029             160          19,313

Current assets

Property held for resale       2,056              -               -           2,056

Inventories                    5,074              -               -           5,074

Trade and other               21,508        (1,029) (3)           -          20,479
receivables

Cash and cash equivalents      5,596              -               -           5,596

                              34,234        (1,029)               -          33,205

Total assets                  52,358              -             160          52,518

Current liabilities

Trade and other payables    (20,587)          1,071 (4)       (130) (7)    (19,646)

Tax liabilities                    -        (1,071) (4)           -         (1,071)

Current provisions                 -          (456) (5)           -           (456)

                            (20,587)          (456)           (130)        (21,173)

Non-current liabilities

Non-current provisions       (1,312)            456 (5)           -           (856)

                             (1,312)            456               -           (856)

Total liabilities           (21,899)              -           (130)        (22,029)

Net assets                    30,459              -              30          30,489



Equity attributable to
equity holders of parent
company
Called up share capital        3,382              -               -           3,382

Share premium account         14,851              -               -          14,851

Merger reserve                 9,565              -               -           9,565

Other reserves               (2,486)              -               -         (2,486)

Currency translation               -           (13) (6)           -            (13)
reserve

Retained earnings              5,147             13 (6)          30           5,190

Total equity                  30,459              -              30          30,489



8.  Copies of this statement will be sent to shareholders and will be
    available on the Group's website (www.quadnetics.com) and from Quadnetics Group
    plc, Haydon House, 5 Alcester Road, Studley, Warwickshire B80 7AN.


                                    - Ends -





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