Final Results
Quadnetics Group PLC
27 September 2004
Press Release 27 September 2004
Quadnetics Group plc
Preliminary Results for the year ended 31 May 2004
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 2004.
Highlights
- Profit before tax, exceptionals and goodwill amortisation of £2.3 million
(2003: £1.4 million)
- Underlying earnings per share of 21.2p (17.7p)
- Net funds of £4.3 million (2003: £3.3 million)
- Proposed dividend of 3p per share (2003: 2p)
- Acquired Look CCTV and Coex, facilitated by a successful share placing
that raised £8 million
- Progress in proprietary digital control and recording technologies
- Focus on higher-value work in the installation businesses
Commenting on the results, Russ Singleton, Chief Executive, said: 'Although
they contributed only for a few months in the year to 31 May 2004, the Look CCTV
and Coex acquisitions have strengthened our overall service offering, and we
expect them to contribute significantly in the future. We have a strong balance
sheet and we continue to look out for suitable opportunities that would further
enhance our business. As the level of recognition of our advanced products
continues to grow, both in the UK and overseas, we remain confident about our
prospects.'
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:
Abchurch Tel: +44 (0) 20 7398 7700
Peter Curtain / Ariane Comstive
Email: ariane.comstive@abchurch-group.com
Chairman's Statement
During the year ended 31 May 2004 the Group has achieved sales of £18.1 million
(2003: £20.3 million) and profit before tax of £1.9m (2003: £1.4 million) after
providing for an exceptional loss of £240,000 resulting from the unexpected
receivership of the parent company of a major customer, and after charging
£174,000 for amortisation of goodwill arising mostly from the acquisition of
Look CCTV.
At the year end the Group had no net borrowings and held net funds of £4.3
million.
The Board is recommending the payment of a dividend of 3p per share (2003: 2p
per share) on 14 December 2004 to all shareholders on the share register on 19
November 2004.
Synectic Systems Limited, our subsidiary which develops systems software and
equipment, continued to make real progress in the development of its products.
In a separate statement today we are delighted to announce that Synectics has
won a contract worth more than US$2 million to supply a digital recording and
control system to one of the largest casinos in Canada. This is Synectics' first
major contract in North America and is a powerful endorsement of our leading
technology. It follows on from our announcement on 30 June 2004 that Synectics
has been selected to supply a similar advanced digital recording solution to a
major UK police force. Revenue from this new work will only be recognised in the
current year ending 31 May 2005 and is not reflected in the financial results
announced today.
Look CCTV was acquired on 20 February 2004 and has proved to be an excellent
investment. Its dominant position in supplying on-board CCTV to the bus market
is continuing and both sales and profits are well ahead of our initial
expectations. We are particularly pleased that Look is now working with
Synectics to enhance and develop Look's products, and we are confident that this
will further strengthen its market position.
Coex Limited was acquired on 6 February 2004 and has also exceeded our
expectations. Its position in the market for hazardous environment CCTV is
strong and, helped by the financial and technical resources of the Group, we see
very good prospects.
The lower sales value within Quadrant Video Systems (£11.1 million compared to
£16.8 million in the previous year) is the expected result of our having
deliberately pursued higher value-added sales. However, despite the sales value
having fallen, the profitability of this subsidiary was in fact slightly ahead
of the previous year. Quadrant Video Systems has maintained its leading position
in the public space surveillance market and is continuing to work on improving
customer service and margin enhancement.
The CCTV market continues to migrate to digital solutions involving networks and
extensive data management. This market is large and worldwide and we are
delighted to look forward with the knowledge that our key products have been
selected by the most discerning and sophisticated buyers in North America and
the UK.
I am pleased to report that Steve Coggins, who currently heads the Europe,
Middle East and Africa operations of Silicon Graphics, Inc. has agreed to join
the board as an independent non-executive director with effect from 1 January
2005. Prior to joining Silicon Graphics, he previously held senior positions
with Fujitsu and IBM. I look forward to Steve's contribution to the next stage
in the development of the Group.
Peter Rae
CREATEDATE /@ 'd MMMM yyyy' /* MERGEFORMAT 27 September 2004
Consolidated Profit & Loss Account
For the year ended 31 May 2004
Before
exceptional
items and Unaudited
goodwill Exceptional Goodwill 2004 2003
amortisation items amortisation Total Total
Notes £'000 £'000 £'000 £'000 £'000
Turnover
Continuing operations 1 14,128 - - 14,128 20,299
Acquisitions 1 3,951 - - 3,951 -
Total turnover 18,079 - - 18,079 20,299
Cost of sales (11,570) - - (11,570) (15,110)
Gross profit 6,509 - - 6,509 5,189
Net operating expenses 2 (4,223) (240) (174) (4,637) (3,773)
Operating profit
Continuing operations 1,447 - (63) 1,384 1,416
Acquisitions 839 (240) (111) 488 -
Total operating profit 2,286 (240) (174) 1,872 1,416
Net interest receivable/(payable) 42 - - 42 (9)
Profit before taxation 2,328 (240) (174) 1,914 1,407
Tax charge on ordinary activities 3 (494) -
Profit on ordinary activities after
taxation 1,420 1,407
Minority interests - (232)
Profit on ordinary activities after
taxation and minority interests 1,420 1,175
Dividends 4 (346) (150)
Retained profit for the year -
transferred to reserves 1,074 1,025
Basic earnings per ordinary share 5 16.4p 17.4p
Diluted earnings per ordinary share 5 16.3p 17.0p
Underlying earnings per ordinary
share 5 21.2p 17.7p
All activities are continuing.
In 2003 there were no exceptional items and amortisation of goodwill was
£23,000.
Consolidated Balance Sheet
31 May 2004
Notes Unaudited 2003
2004 £'000
£'000
Fixed assets
Intangible assets 6 7,721 1,233
Tangible assets 956 501
8,677 1,734
Current assets
Stocks 2,710 1,767
Debtors 7,945 4,375
Cash at bank and in hand 4,711 3,376
15,366 9,518
Creditors: amounts falling due within one year (7,767) (5,722)
Net current assets 7,599 3,796
Total assets less current liabilities 16,276 5,530
Creditors: amounts falling due after more than one year (375) (25)
Provisions for liabilities and charges (83) (48)
Net assets 15,818 5,457
Capital and reserves
Called up share capital 7 2,305 1,496
Share premium account 7 12,248 3,770
Other reserves 715 835
Profit and loss account 550 (644)
Equity shareholders' funds 15,818 5,457
Consolidated Cash Flow Statement
For the year ended 31 May 2004
Unaudited
2004 2003
Notes £'000 £'000
Net cash inflow from operating activities 4 3,719
Returns on investments and servicing of finance 42 (14)
Taxation (13) -
Net capital expenditure and financial investment (331) (88)
Acquisitions and disposals 8 (6,409) 593
Equity dividends paid (150) -
Cash (outflow)/inflow before use of liquid resources and
financing (6,857) 4,210
Management of liquid resources - amounts placed on bank deposit 9 (2,500) -
Financing 7 8,192 (14)
(Decrease)/increase in cash (1,165) 4,196
Reconciliation of Net Cash Flow to Movements in Net Funds
For the year ended 31 May 2004
Unaudited
2004 2003
Notes £'000 £'000
(Decrease)/increase in cash in the year (1,165) 4,196
Increase in bank deposits 9 2,500 -
Decrease in debt and lease financing 35 35
Change in net funds resulting from cash flows 1,370 4,231
Acquisitions (410) -
Movement in net funds in the year 960 4,231
Opening net funds/(debt) 3,326 (905)
Closing net funds 4,286 3,326
Reconciliation of Movements in Shareholders' Funds
For the year ended 31 May 2004
Unaudited
Notes 2004 2003
£'000 £'000
Total recognised gains in the year 1,420 1,175
Proposed dividend 4 (346) (150)
1,074 1,025
Issue of shares 7 9,287 1,380
Net movement in shareholders' funds 10,361 2,405
Opening shareholders' funds 5,457 3,052
Closing shareholders' funds 15,818 5,457
Notes
1. Continuing operations comprise Quadnetics Group plc, Quadrant Video
Systems plc, Synectic Systems Limited, Coex Limited ('Coex') and Look CCTV
Limited ('Look'), with Coex and Look representing acquisitions made during
the year, as follows:
(1) On 6 February 2004 the Company acquired the entire issued ordinary
share capital of Coex, a specialist manufacturer of CCTV equipment and
systems for extreme or hazardous environments, for an initial consideration
of £1.165 million in cash. A further £0.2 million of deferred cash
consideration is payable on 30 September 2004.
(2) On 20 February 2004 the Company acquired the entire issued ordinary
share capital of Look, which develops and supplies CCTV systems to bus
manufacturers and operators, for an initial consideration of £6.3 million
made up of cash (£4.9 million), loan notes (£0.3 million) and new Ordinary
Shares (£1.1 million). A further £0.2 million of deferred cash
consideration is payable in October 2004.
2. Exceptional operating expenses relate to the post-acquisition element of
bad debts incurred by Look with subsidiaries of the Mayflower Corporation
plc which went into receivership in March 2004.
3. The 2004 tax charge on ordinary activities comprises a corporation tax
charge of £573,000 offset by a deferred tax credit of £79,000.
4. The Directors recommend the payment of a final dividend of 3p per share
(2003: 2p per share), totalling £346,000 on 14 December 2004 to
shareholders registered on 19 November 2004.
5. The calculation of basic earnings per ordinary share is based on the profit
after taxation and minority interests for the year of £1,420,000 (2003:
£1,175,000)) and on 8,633,489 shares, being the weighted average number of
shares in issue and ranking for dividend during the year (2003:
6,766,627).
The calculation of diluted earnings per share is based on the profit after
taxation and minority interests for the year of £1,420,000 (2003:
£1,175,000) and on 8,694,400 shares, being the weighted average number
of shares that would be in issue after conversion of all the dilutive
potential ordinary shares into ordinary shares (2003: 6,904,185).
The calculation of underlying earnings per ordinary share is based on the
profit after taxation and minority interests for the year, but before
deducting exceptional items and amortisation of goodwill, of £1,834,000
(2003: £1,198,000) and on 8,633,489 shares, being the weighted average
number of shares in issue and ranking for dividend during the year
(2003: 6,766,627).
6. Intangible assets represent goodwill arising on consolidation and include
additions in the year of £6.7 million arising from the acquisitions of
Coex and Look.
7. Issued share capital and the share premium account have increased by
£9.3 million during the year as a result of the following events:
(1) On 13 February 2004, 617,567 new Ordinary Shares were issued as a
result of share options being exercised, raising £0.5 million in cash.
(2) Following approval by the Company's shareholders at an extraordinary
general meeting on 18 February 2004, the Company issued 3,031,368 new
Ordinary Shares at £2.65 each under a placing agreement dated 23 January
2004. The proceeds of £7.7m, net of expenses, were used to finance the
acquisition of Look and provide further working capital for the development
of the Group.
(3) 400,000 new Ordinary Shares were issued at a valuation of £1.1 million
as part consideration for Look on 20 February 2004.
8. Cash outflows on acquisitions during the year reflect the initial
consideration for Coex and Look of £6.1 million, and acquisition expenses
of £0.4 million offset by bank balances acquired within the two businesses
of £0.1 million.
9. Cash outflows of £2.5 million shown as management of liquid resources
represents a term investment in a bank deposit account which matured on
4 June 2004.
10. 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 2003 have been abridged from the statutory accounts for the year ended
31 May 2003. 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 2003 have been
filed with the Registrar of Companies.
11. 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 -
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