Interim Results
Quadrant Group PLC
28 February 2002
QUADRANT GROUP PLC
Announcement of Interim Results for the Half Year ended 30 November 2001
Chairman's Statement
In the half year period to 30th November 2001 Quadrant Group made an un-audited
overall profit before tax of £17,000 (2000 : £291,000) including an exceptional
gain of £31,000 from the disposal of a subsidiary.
This result is of course disappointing. I was determined that I would not be
reporting yet another poor financial result with yet another up-beat assessment
of future potential. However that is exactly what I am going to do but with very
good reason this time!
My statement to you at this time is intended to provide a summary of the
performance of the group in the reported period and to provide a realistic
assessment of the current state of the business and its prospects. The most
important message I have to convey relates to the proposed re-structuring of the
Group involving the disposal of the flight simulation businesses and the
appointment of Russell Singleton as Chief Executive of what will be a highly
focussed business leading its field in advanced CCTV security systems and
related electronic control and data storage products.
The detail of these important proposals is set out in a separate announcement.
Those businesses, led by Mr. Singleton produced a 53% increase in turnover to
£5.68 million in the half year to 30th November and produced an operating profit
of £310,000. Head Office costs will be reduced as a result of the proposed
changes but were £226,000 for the period. The order books for these businesses
are now approximately 50 per cent. higher than at the same time last year.
Operating margins have been improved. The second half year period to 30th May
2002 is looking strong with a series of major projects all due for completion.
These projects embody major advances in video recording, storage and retrieval
for such customers as town councils and Police forces where image quality and
forensic integrity are paramount. I believe the prospects are very exciting
indeed in the short and longer terms.
The flight simulation businesses have in fact made great technical progress,
particularly on the E-3D military simulator update programme. The achievements
have come about through great dedication and effort by the whole team involved.
The turnover in these businesses declined by 14% compared to the same period
last year to £2.87 million, partly through increased resource having been
applied to the E-3D programme and partly due to the very tough trading
environment facing commercial airlines. The result was an operating loss of
£39,000 for the period. This is a disappointment when compared with our recent
expectations and has led to our decision to seek shareholder approval for the
disposal of this business to its management at a price very close to its net
book value. The amount of work done and the achievements made, albeit under very
difficult circumstances, are to be commended. I wish the whole team every
success in the future.
The sale of our printing business, Axiom Design & Print, was completed during
the period and gave rise to a small gain of £31,000 included in the interim
results. I am grateful to all the staff there for all their hard work under
tough trading conditions and I wish them a successful future.
The costs of the proposed restructuring will be significant and will lead to an
exceptional cost to be incurred in the second half of the year. However I am
confident that the prospects for the company have never looked brighter.
I will be issuing a further statement after the EGM to be held on 26 March 2002.
Peter Rae
Chairman
28th February 2002
Consolidated Profit and Loss Account
For the half year ended 30 November 2001
Unaudited Unaudited Audited
(note 6)
Half year to 30 November 2001 Half year to Year to
30 Nov 31 May
2000 2001
Notes Security Other
Systems Operations Total Total Total
£'000 £'000 £'000 £'000 £'000
Turnover
Continuing operations 1
- ongoing 5,681 - 5,681 3,701 9,438
- to be discontinued - 2,870 2,870 3,332 6,870
Discontinued operations 2 - 653 653 1,063 1,945
5,681 3,523 9,204 8,096 18,253
Less: share of joint - (154) (154) (67) (282)
venture's turnover
Group turnover 5,681 3,369 9,050 8,029 17,971
Operating profit/(loss)
Continuing operations 1
- ongoing 310 - 310 178 463
- central costs (226) - (226) (209) (435)
- to be discontinued - (56) (56) 47 29
Discontinued operations 2 - 3 3 101 100
Group operating profit/(loss) 84 (53) 31 117 157
Share of operating profit in
- joint venture - to be - 17 17 23 97
discontinued
- associate - discontinued - 13 13 19 20
Total operating profit/(loss) 84 (23) 61 159 274
Exceptional items
- discontinued operations
- disposal of subsidiary 3 31 - -
undertaking
- additional consideration - 168 296
from sale of business
Profit before interest 92 327 570
Net interest receivable/
(payable)
- Group (54) (41) (77)
- joint venture and associate (21) 5 8
Profit before taxation 17 291 501
Tax charge - joint venture - (6) (35)
Profit on ordinary activities 17 285 466
after taxation
Basic earnings per ordinary 4 0.3p 4.4p 7.2p
share
Diluted earnings per ordinary 4 0.3p 4.4p 7.2p
share
Consolidated Balance Sheet
30 November 2001
Unaudited Unaudited Audited
30 Nov 2001 30 Nov 2000 31 May 2001
£'000 £'000 £'000
Fixed assets
Intangible assets 42 44 43
Tangible assets 1,397 1,619 1,633
Investments:
Investment in joint - share of gross assets 3,302 1,702 2,672
venture
- share of gross (2,748) (1,203) (2119)
liabilities
554 499 553
Investment in associate 204 241 216
Total investments 758 740 769
2,197 2,403 2,445
Current assets
Stocks 2,513 1,279 1,467
Debtors 5,275 4,485 5,734
Cash at bank and in hand - - 3
7,788 5,764 7,204
Creditors: amounts falling due within one year (6,255) (4,602) (5,853)
Net current assets 1,533 1,162 1,351
Total assets less current liabilities 3,730 3,565 3,796
Creditors: amounts falling due after more than one (98) (93) (164)
year
Provisions for liabilities and charges (11) (77) (52)
Net assets 3,621 3,395 3,580
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 (8,988) (9,214) (9,033)
Equity shareholders' funds 3,621 3,395 3,576
Equity minority interest - - 4
3,621 3,395 3,580
Consolidated Cash Flow Statement
For the half year ended 30 November 2001
Unaudited unaudited audited
Half year to Half year to Year to
30 Nov 2001 30 Nov 2000 31 May 2001
Notes £'000 £'000 £'000
Net cash inflow/(outflow) from operating activities (1,492) 675 879
Returns on investments and servicing of finance (46) (39) (80)
Net capital expenditure and financial investment (219) (328) (436)
Acquisitions and disposals
Investment in joint venture and associate - (699) (699)
Loan repayment received from associate 20 - 20
Disposals 5 500 - 298
520 (699) (381)
Cash outflow before financing (1,237) (391) (18)
Financing (32) (53) (109)
Decrease in cash (1,269) (444) (127)
Notes
1 Continuing operations comprise two elements:
- the ongoing security systems businesses of Quadrant Video Systems
plc and Synectic Systems Ltd together with the Head Office function
of Quadrant Group plc, and
- Quadrant Systems Ltd and the Group's 50% joint venture interest in
Quest Flight Training Ltd for which a disposal has been agreed
subject to shareholder approval, and which will therefore be shown
as discontinued in the full year accounts.
2 Discontinued operations comprise the businesses of Axiom Design &
Print Ltd and its subsidiary C3 Design & Print Ltd, which were both sold in
October 2001; and the Group's 19.4% interest in its associate, Quadrant Visual
Solutions Ltd, which was sold to the management of that company in December
2001.
3 The exceptional gain in the half year ended 30 November 2001 arises
from the disposal of the entire issued share capital of Axiom Design & Print Ltd
in October 2001, and is stated after charging £28,000 in respect of goodwill
previously written off directly to reserves.
4 The calculation of earnings per share is based on the profit after
taxation for the period of £17,000 (half year to 30 November 2000: £285,000;
year to 31 May 2001: £466,000) and on 6,439,956 shares being the actual number
of shares in issue and ranking for dividend during the period from 1 June 2000
to 30 November 2001.
There were no dilutive potential ordinary shares in either the half year ended
30 November 2001, the half year ended 30 November 2000 nor the year ended 31 May
2001.
5 Disposals in the half year to 30 November 2001 relate to the sale of
Axiom Design & Print Ltd. Disposal proceeds in the year ended 31 May 2001 arise
from £296,000 of additional consideration received for Yewlands Engineering Co.
Ltd and £2,000 received on the sale of a 10% interest in C3 Design & Print Ltd.
6 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 2001 have been extracted 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.
7 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.
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