Interim Results

Quadnetics Group PLC
23 January 2003


Press Release                                                    23 January 2003

          
                             Quadnetics Group plc

         Interim Announcement for the half year ended 30 November 2002

Quadnetics Group plc, a leader in the design, integration and control of
advanced CCTV and networked video systems, reports its interim results for the
half year ended 30 November 2002.


Highlights

•    Turnover for continuing operations increased 70% to £9.6m (2001: £5.7m)

•    Profit before tax of £621,000 (2001: £17,000)

•    Order book remains strong at over £7m (30th November 2002)

•    Earnings per share increased to 7.1p (2001: 0.3p), or 8.4p on an adjusted 
     basis

•    Further to installation of Europe's most advanced CCTV surveillance 
     operation in partnership with NCP (National Car Parks) and Manchester City 
     Council, a similar system has been installed in the West End, London.

•    Further organic growth and increased margins expected

Commenting on the results, Russ Singleton, Chief Executive said:  'We are
delighted to announce these excellent interim results.  Quadnetics will continue
to exploit its position as a leading provider of advanced CCTV and networked
video systems in the UK and overseas.  Our order book is strong and we are
seeing further contract wins from both the public and private sectors.

'The Group is well positioned to achieve strong organic growth in the future.'


For further information, please contact:
Quadnetics Group plc                                      
Russ Singleton                                                  ([phone]
                                                                 [phone]
Email: [e-mail]
www.quadnetics.com

Brewin Dolphin Securities
Neil Baldwin                                                     [phone]

Media enquiries:

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


Photographs are available from Bankside on request

Chairman's Statement

Results

The Board of Quadnetics is pleased to announce that in the half year period to
30 November 2002, the Group produced a profit before tax of £621,000 (2001:
£17,000).  Turnover from continuing activities increased 70% to £9,590,000
(2001: £5,681,000).  It is anticipated that no corporation tax will be due for
the period.

The only debt the Group has is to fund work in progress for its predominantly
blue chip customers.  This figure amounted to £1.5 million as at 30 November
2002.

Earnings per share for the period were 7.1 pence (2001:0.3p) after taking the
minority interest into account. The Board would like to draw the attention of
shareholders to Note 3 of this statement, which summarises the position
regarding the executive managers' minority interest in the two operating
subsidiary companies. If this interest had been acquired by the Group for the
issue of the agreed maximum number of Quadnetics' shares (987,800), thereby
taking the total number of shares in issue to 7,427,756, the corresponding
earnings per share would have been 8.4 pence.

Dividend

The Board is committed to commence payment of a dividend as soon as possible and
a circular has been posted to shareholders requesting authorisation for the
necessary capital reconstruction.  Subject to shareholder and court approval,
the Group anticipates paying a dividend during our next financial year.

Operational Review

These excellent interim results reflect the vigorous hard work and commitment
from everyone involved.  The Group's forward order book remained above £7
million at 30 November 2002.

Net operating profit margin in the half year increased to 6.7% and Quadnetics is
confident that through determined cost control and economies of scale this will
continue to improve.  Most completed installations lead to a long term service
and maintenance contract commencing in the subsequent year and typically lasting
at least five years.  This aspect of our business is rapidly developing an
important and predictable income stream, which enhances overall margin.

The CCTV and surveillance industry is experiencing unprecedented growth for two
main reasons.  Firstly, security is becoming a higher priority for every town
centre, utility provider and transport system together with the majority of
large businesses both private and public.  Secondly, the dramatic advance of
technology has meant that the digital era has ushered in a giant leap in the
capability and usefulness, and hence value, of truly networked CCTV.

Quadrant Video Systems plc is the market leader in the 'top end' UK town centre
CCTV market.  The recently installed infrastructure has been facilitated largely
by government 'Challenge Funding' for town centre surveillance. This funding is
coming to the end of its current cycle but, instead of activity tailing off, the
Group is finding that the presence of the new networks is inducing further
business from both the public and private sectors.

Synectic Systems Ltd has achieved a dominant position in the UK market for its
proprietary control systems, encoders and software and is expanding its market
share in the UK and overseas. Synectics' advanced technical capabilities have
been demonstrated in a major contract with NCP (National Car Parks) in
Manchester and as a contractor to the high profile West End CCTV project in
London. The Group is beginning to formulate a low risk strategy with major
overseas partners such as IBM and Barco to capitalise on this leading
technology.

The Future

The Group has exceeded its targets at the interim stage and is well positioned
to achieve strong organic growth in the future, by exploiting its position in
the CCTV systems market in the UK and overseas.

Peter Rae
Chairman

23 January 2003


Consolidated Profit & Loss Account
For the half year ended 30 November 2002


                                                              Unaudited        Unaudited          Audited
                                                           Half year to     Half year to          Year to
                                                                 30 Nov           30 Nov           31 May
                                                                   2002             2001             2002
                                                    Notes         £'000            £'000            £'000
Turnover                                                1
Continuing operations                                             9,590            5,681           13,392
Discontinued operations                                               -            3,523            4,659
                                                                  9,590            9,204           18,051
Less share of discontinued joint venture's                            -            (154)            (308)
turnover
Group turnover                                                    9,590            9,050           17,743
Cost of sales                                                   (7,209)          (6,886)         (14,125)
Gross profit                                                      2,381            2,164            3,618
Net operating expenses                                          (1,742)          (2,133)          (3,782)
Operating profit/(loss)
Continuing operations                                               639               84              102
Discontinued operations                                               -             (53)            (266)
Group operating profit/(loss)                                       639               31            (164)
Share of operating profit in discontinued joint                       -               17               67
venture
Share of operating profit in discontinued                             -               13               13
associate
Total operating profit/(loss)                                       639               61             (84)
Exceptional items - discontinued operations             2             -               31            (518)
Profit/(loss) before interest                                       639               92           (602)
Net interest payable                                               (18)             (75)            (150)
Profit/(loss) before taxation                                       621               17            (752)
Tax charge on ordinary activities                                     -                -                -
Profit/(loss) on ordinary activities after                          621               17            (752)
taxation
Minority interests                                                (164)                -                8
Profit/(loss) for the period - transferred to                       457               17            (744)
reserves

Basic earnings/(loss) per ordinary share                3          7.1p             0.3p          (11.6)p
Diluted earnings/(loss) per ordinary share              3          7.1p             0.3p          (11.6)p


Consolidated Balance Sheet
30 November 2002
                                                    Unaudited                             Unaudited       Audited
                                                       30 Nov                                30 Nov        31 May
                                                         2002                                  2001          2002
                                                        £'000                                 £'000         £'000
Fixed assets
Intangible assets                                          31                                    42            32
Tangible assets                                           490                                 1,397           555
Investment in joint venture and associate                   -                                   758             -
                                                          521                                 2,197           587
Current assets
Stocks                                                  1,744                                 2,513         1,973
Debtors                                                 6,779                                 5,275         6,489
                                                        8,523                                 7,788         8,462

Creditors: amounts falling due within one             (5,055)                               (6,255)       (5,656)
year

Net current assets                                      3,468                                 1,533         2,806

Total assets less current liabilities                   3,989                                 3,730         3,393

Creditors: amounts falling due after more than           (32)                                  (98)          (59)
one year

Provisions for liabilities and charges                   (10)                                  (11)           (8)

Net assets                                              3,947                                 3,621         3,326

Capital and reserves

Called up share capital                                 1,288                                 1,288         1,288

Share premium account                                   6,934                                 6,934         6,934

Other reserves                                          4,387                                 4,387         4,387

Profit and loss account                               (9,100)                               (8,988)       (9,557)

Equity shareholders' funds                              3,509                                 3,621         3,052

Equity minority interest                                  438                                     -           274

                                                        3,947                                 3,621         3,326



Consolidated Cash Flow Statement
For the half year ended 30 November 2002
                                                              Unaudited        Unaudited          Audited
                                                           Half year to     Half year to          Year to
                                                                 30 Nov           30 Nov           31 May
                                                                   2002             2001             2002  
                                                   Notes          £'000            £'000            £'000

Net cash outflow from operating activities                      (1,133)          (1,492)          (1,228)

Returns on investments and servicing of finance                    (19)             (46)             (89)

Net capital expenditure and financial investment                    (6)            (219)            (301)

Acquisitions and disposals                           4              600              520            1,339

Cash outflow before financing                                     (558)          (1,237)            (279)

Financing                                                          (10)             (32)             (68)

Decrease in cash                                                  (568)          (1,269)            (347)



Notes


1.   Continuing operations comprise the businesses of Quadrant Video Systems plc 
     ('QVS') and Synectic Systems Limited ('Synectics').
     
     Discontinued operations comprise Axiom Design & Print Limited, Quadrant 
     Systems Limited, the Group's joint venture company, Quest Flight Training 
     Limited and the Group's associated company, Quadrant Visual Solutions 
     Limited, all of which were sold in the year ended 31 May 2002 to leave the 
     Group focussed on its CCTV security activities.

2.   Exceptional items in the year ended 31 May 2002 represent the net cost of 
     restructuring arising from the disposals referred to in note 1 and the 
     disposal of 21% of the Group's interest in QVS and Synectics to SJC 120 
     Limited, a company owned by four managers in those two businesses ('the 
     Managers').

3.   The calculation of basic earnings per ordinary share is based on the profit 
     after taxation and minority interests for the period of £457,000 (half year 
     to 30 November 2001: profit of £17,000; year to 31 May 2002: loss of 
     £744,000) and on 6,439,956 shares being the actual number of shares in 
     issue and ranking for dividend during the period from 1 June 2001 to 30 
     November 2002.

     There were no dilutive potential ordinary shares in the eighteen months 
     ended 30 November 2002.

     Under the terms of a put and call option agreement with the Managers, the 
     Group can reacquire the 21% minority interest in QVS and Synectics in 
     exchange for a number of shares in Quadnetics Group plc, dependent on the 
     market value of SJC 120 Limited, but capped at 987,800 shares. If this 
     option had been exercised at 1 June 2002 and the full 987,800 shares had 
     been issued the basic earnings per ordinary share for the half year ended 
     30 November 2002 would increase to 8.4p.

4.   £600,000 of deferred consideration from the disposal of Quadrant Systems 
     Limited and Quest Flight Training Limited was received in the half year 
     ended 30 November 2002.

5.   The half year results have not been audited by the Group's auditors and do 
     not constitute statutory accounts. The comparative figures for 31 May 2002 
     have been abridged from the statutory accounts for the year ended 31 May 
     2002. The Auditors' opinion on those accounts was unqualified and did not 
     contain any statements under section 237(2) or (3) of the Companies Act 
     1985. The statutory accounts for the year ended 31 May 2002 have been filed 
     with the Registrar of Companies.

6.   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, 
     North Court House, Morton Bagot, Studley, Warwickshire B80 7EL.


                                    - Ends -


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