Final Results

Quadnetics Group PLC
09 October 2002


Press Release                                                    9 October 2002


                              Quadnetics Group plc

               Preliminary Results for the year ended 31 May 2002

Quadnetics Group plc, a leader in the development, design, integration and
control of advanced CCTV and networked video systems, reports its Preliminary
Results for the year ended 31 May 2002.


Highlights

-      Significant restructuring undertaken focusing on CCTV systems and products
-      Russ Singleton appointed Chief Executive as from 26 March 2002
-      Turnover for continuing operations increased by 42% to £13.4m (2001: £9.4m)
-      Exceptional costs result in loss before taxation of £752,000 (2001: profit £501,000)
-      Research and development expenditure of £481,000 written off in the period
-      Order book now standing at £8m compared with £3m at same time last year
-      Two proprietary technologies place Group at leading edge of digital CCTV
-      Company now quoted on AIM and renamed Quadnetics Group


Commenting on the results, Russ Singleton, Chief Executive, said:  'The last
year has been exciting and challenging for Quadnetics.  By focusing on the core
business of CCTV systems and products, the Group is already seeing returns with
a sales growth of 42% on continuing operations to £13.4 million, giving an
operating profit on continuing operations of £102,000.  Within this, the areas
of proprietary products and digital systems more than doubled their revenues to
just over £4 million.

'We are confident that these figures will continue to improve as the market
grows and the Group develops enhanced products and services, beyond pure
security and surveillance.  The order book is strong at £8 million and
Quadnetics is seeing increased orders from both the public and private sectors,
including a major contract for National Car Parks (NCP).

'Quadnetics intends to achieve strong organic growth, by exploiting its position
in the CCTV systems market in the UK, and by increasing its market share both in
the UK and abroad by way of licensing agreements and partnerships, including
those with IBM and Barco.  The Group has had a strong start to the current year
and the Board is confident that significant growth and profit will be delivered.'


For further information, please contact:

Quadnetics Group plc                                             [phone]
Russ Singleton
Email: [e-mail]

Brewin Dolphin Securities  
Neil Baldwin                                                     [phone]


Media enquiries:

Bankside Consultants Limited                           Tel: [phone]
Peter Curtain / Ariane Vacher
Email: [e-mail]



                           Chairman's Statement


The Company

Quadnetics Group is now a clearly defined company. We design, manufacture,
install and maintain advanced Closed Circuit Television (CCTV) systems and
related control and networking products. Our two operating subsidiaries are
Quadrant Video Systems plc and Synectics Systems Limited.

Quadnetics Group is now listed on the Alternative Investment Market (AIM) of the
London Stock Exchange, having completed an extensive restructuring last year.
All the other businesses in which we were previously engaged have been sold. I
wish the new owners and their staff well for the future.


Results for the year ended 31 May 2002

The costs of the restructuring were significant and dominate the results for the
financial year, which ended 31 May 2002. The results are as follows: Turnover
was £18.1 million (2001: £18.3 million), exceptional costs related to the
restructuring were £518,000 and the loss before taxation was £752,000 (2001:
profit £501,000) The loss per share was 11.6p (2001: earnings per share 7.2p)

In this period our continuing businesses generated sales of £13.4 million and an
operating profit of £537,000 before head office costs amounting to £435,000.
Research and development expenditure of £481,000 was charged to the profit and
loss account in the year.

Our continuing business is going from strength to strength with our order book
now standing at £8 million compared with £3 million at the same time last year.
Our operating margins are improving.


Dividend

No dividend is proposed. However based on current trading, the Board intends to
effect the appropriate restructuring of the Company's reserves to enable
dividend payments to be recommenced in the future.


Management

I welcome the appointment of Mr. Russ Singleton to the position of Group Chief
Executive effective from 26 March 2002. Russ has been with the Group for 18
years and has been Divisional Managing Director of our CCTV interests for 8
years. I wish to emphasise the continuity of both the management and the
enterprise.


Dilution

It was explained in a circular to shareholders dated 28 February 2002 that four
members of the executive management (Mr. Russ Singleton, Mr. Michael Boddy, Mr.
Glenn Robinson and Mr. Colin Wragg) had entered in to a put and call option
agreement whereby their 21% minority interest in the two operating companies
could be effectively exchanged for shares in Quadnetics Group plc, subject to
certain performance criteria being met.  If these criteria are met the
management will be issued with a total of 987,800 new ordinary shares in
Quadnetics Group plc. The impact of these options being exercised would be to
raise the total number of shares in issue to 7.4 million from 6.4 million.
Therefore it is my opinion that for the purpose of evaluating Quadnetics Group
in terms of earnings or assets per share it is now appropriate to consider the
number of shares issued in effect to be 7.4 million.


The future

Our businesses are long established, profitable and highly regarded within the
CCTV industry. The business of data collection, storage and transmission is
undergoing a revolution as the computer dominates the new era of image
processing. The television, the camera, the camcorder and the telephone are some
of the devices that touch everybody's daily life. The computer encodes what we
actually see and hear and converts that information into ever increasing numbers
of simple binary code files. These files are stored by a computer and sent to
wherever they are required by telephone wires, fibre-optics, radio and various
other current and planned transmission methods. At some point the information is
de-coded to reconstruct what we need to see and hear. The so-called 'digital
revolution' is transforming the CCTV industry as much and as rapidly as any
other.

Quadnetics Group is at the forefront of this development. I believe that the
research and development capability within Synectic Systems Limited is
unrivalled within the industry. For example our technology enables our customers
to encode images for storage and future replay whilst retaining forensic
integrity. This key and unique attribute of our systems is vital for evidential
image gathering by CCTV. We have the depth of technical capability to design and
build such equipment and we have the breadth of experience to know what our
customers can benefit from the most. This combination of customer awareness and
technical capability has borne fruit in the form of valued business partnerships
with companies such as IBM and Barco. I believe that we are uniquely positioned
to embrace new technology within our industry. We will stick to what we know and
concentrate on lifting our present approximate 10% share of our addressable home
market while improving our margin. Abroad we will explore partnerships to
license our technology.

I am absolutely confident that in the current year Quadnetics will deliver
significant growth and profit.




Peter Rae
Chairman

8 October 2002



Consolidated Profit & Loss Account
For the year ended 31 May 2002


                                                                                   Unaudited
                                                                                        2002          2001
                                                       Continuing   Discontinued       Total         Total
                                               Notes        £'000          £'000       £'000         £'000
Turnover                                           1
Continuing operations                                      13,392              -      13,392         9,438
Discontinued operations                                         -          4,659       4,659         8,815
                                                           13,392          4,659      18,051        18,253
Less share of joint venture's turnover                          -          (308)       (308)         (282)
Group turnover                                             13,392          4,351      17,743        17,971
Cost of sales                                            (10,190)        (3,935)    (14,125)      (13,057)
Gross profit                                                3,202            416       3,618         4,914
Net operating expenses                                    (3,100)          (682)     (3,782)       (4,757)
Operating profit/(loss)
Continuing operations                                         102              -         102            28
Discontinued operations                                         -          (266)       (266)           129
Group operating profit/(loss)                                 102          (266)       (164)           157
Share of operating profit in discontinued                                                 67            97
joint venture
Share of operating profit in discontinued                                                 13            20
associate
Total operating profit/(loss)                                                           (84)           274
Exceptional items -discontinued operations
     Net cost of restructuring                     2                                   (518)             -
     Additional consideration from sale of                                                 -           296
business
                                                                                       (518)           296
Profit/(loss) before interest                                                          (602)           570
Net interest payable                               3                                   (150)          (69)
Profit/(loss) before taxation                                                          (752)           501
Tax charge on ordinary activities                                                          -          (35)
Profit/(loss) on ordinary activities after                                             (752)           466
taxation
Minority interests                                                                         8             -
Profit/(loss) for the year - transferred to                                            (744)           466
reserves

Basic earnings/(loss) per ordinary share           4                                 (11.6)p          7.2p
Diluted earnings/(loss) per ordinary share         4                                 (11.6)p          7.2p




Consolidated Balance Sheet
31 May 2002
                                                                                  Unaudited          2001
                                                                         Notes         2002         £'000
                                                                                     £'000
Fixed assets
Intangible assets                                                                        32             43
Tangible assets                                                                         555          1,633
Investments                                                                               -            769
                                                                                        587          2,445
Current assets
Stocks                                                                                1,973          1,467
Debtors                                                                               6,489          5,734
Cash at bank and in hand                                                                  -              3
                                                                                      8,462          7,204

Creditors: amounts falling due within one year                                      (5,656)        (5,853)

Net current assets                                                                    2,806          1,351

Total assets less current liabilities                                                 3,393          3,796

Creditors: amounts falling due after more than one year                                (59)          (164)

Provisions for liabilities and charges                                                  (8)           (52)

Net assets                                                                            3,326          3,580

Capital and reserves

Called up share capital                                                               1,288          1,288

Share premium account                                                                 6,934          6,934

Other reserves                                                                        4,387          4,387

Profit and loss account                                                             (9,557)        (9,033)

Equity shareholders' funds                                                            3,052          3,576

Equity minority interest                                                                274              4

                                                                                      3,326          3,580





Consolidated Cash Flow Statement
For the year ended 31 May 2002


                                                                               Unaudited
                                                                    Notes          2002             2001
                                                                                  £'000            £'000

Net cash inflow/(outflow) from operating activities                              (1,228)              879

Returns on investments and servicing of finance                                     (89)             (80)

Net capital expenditure and financial investment                                   (301)            (436)

Acquisitions and disposals                                            2            1,339            (381)

Cash outflow before financing                                                      (279)             (18)

Financing                                                                           (68)            (109)

Decrease in cash                                                                   (347)            (127)




Statement of Total Recognised Gains and Losses
For the year ended 31 May 2002

                                                                                Unaudited
                                                                                    2002             2001
                                                                                   £'000            £'000
Total gains recognised since the last annual report:
Profit/(loss) retained in Group                                                     (744)             376
Profit retained in joint venture                                                        -              78
Profit retained in associate                                                            -              12
Consolidated profit/(loss) for the year                                             (744)             466



Reconciliation of Movements in Shareholders' Funds
For the year ended 31 May 2002
                                                                                Unaudited
                                                                                     2001            2000
                                                                                    £'000           £'000

Total recognised gains/(losses) in the year                                         (744)             466
Goodwill previously written off to reserves                                           220               -
Net movement in shareholders' funds                                                 (524)             466
Opening shareholders' funds                                                         3,576           3,110
Closing shareholders' funds                                                         3,052           3,576



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 (see note 2).

2    The following restructuring took place during the year:

       a)   On 19 October 2001 Axiom Design and Print Limited and its subsidiary C3 Design & Print
            Limited were sold to Trilogy Media Group Limited for £654,000.

       b)   On 19 December 2001 the majority shareholders of Quadrant Visual Solutions Limited ('VSL'),
            the Group's associated company, exercised their right to buy the Group's 19.35% interest in
            VSL for £45,000.

       c)   On 26 March 2002, the Company completed the following transactions:

              i)   The disposal of its interests in Quadrant Systems Limited and Quest Flight Training
                   Limited to Law 2364 Limited, a company associated with DJ Coghlan and J.Sandiford, for
                   £1.5 million.

              ii)  The restructuring of QVS and Synectics, whereby 21% of the Company's interests in
                   these two companies was sold to SJC 120 Limited, a company owned by four managers in
                   the two businesses, for £367,500.

       d)   The above transactions resulted in exceptional costs of £518,000 which included goodwill
            previously written off to reserves of £220,000.

3.   Net interest payable includes £68,000 in respect of net interest payable by joint ventures and
     associates (2001: £8,000 receivable).

4.   The calculation of basic earnings per ordinary share is based on the loss after taxation and
     minority interests for the year of £744,000 (2001: profit £466,000) and on 6,439,956 shares being
     the actual number of shares in issue and ranking for dividend during the year (2001: actual number
     of shares - 6,439,956).

     There were no dilutive potential ordinary shares in the two years ended 31 May 2002.

5.   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 2001 have been abridged from the
     statutory accounts for the year ended 31 May 2001. 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 2001 have been filed with the Registrar of
     Companies.


6.   Copies of this preliminary statement are available from Quadnetics Group plc, North Court House,
     Morton Bagot, Studley, Warwickshire B80 7EL.




                                    - Ends -




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