Interim Results

Quadnetics Group PLC 07 February 2007 Press Release 7 February 2007 Quadnetics Group plc Interim Results for the six months ended 30 November 2006 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 2006. Highlights • Turnover up 74% to £30.9 million (2005: £17.8 million) with full six months contribution from businesses acquired in the previous year • Overall gross margins increased from 29.0% to 31.9 • Underlying profit* before tax up 91% to £1.8 million (2005: £0.9 million) • Underlying earnings* per share up 21% to 8.7p • Interim dividend of 2p (2005: 1.5p) • $7.1m of orders or letters of intent received by Synectics for digital surveillance solutions in North American casinos with Synectics specified in upgrades valued at a further $3m *before goodwill amortisation, exceptional items and share based payments charges Commenting on the results, Russ Singleton, Chief Executive, said: 'Quadnetics has performed well over the last six months as we continue to develop innovative security solutions for specific customer sectors throughout the world. Our order books, pipelines and prospects support our growth plans and we are looking forward to strengthening our position in key market segments over the next few years.' For further information, please contact: Quadnetics Group plc (www.quadnetics.com) Tel: +44 (0) 1527 850080 Russ Singleton, Chief Executive Email: russ.singleton@ quadnetics.com Brewin Dolphin Securities Tel: +44 (0) 113 241 0130 Neil Baldwin Buchanan Communications Tel: +44 (0) 20 7466 5000 Tim Anderson/Isabel Podda/Simon Potter Email: isabelp@buchanan.uk.com Chairman's Statement Overview In the first half of our current financial year Quadnetics Group delivered a healthy performance in almost all areas. Quadrant Security Group maintained its leadership position in markets such as prisons and secure hospitals, while the Synectics digital technology offering is generating substantial sales in the rapidly expanding casino market segment. The businesses acquired last year have continued to contribute strongly within the restructured Quadnetics organisation. Good progress has been achieved in financial results, flowing from the Group's strategy of concentrating our efforts on specific sectors of the electronic security market where we have relevant scale and a strong competitive position. Results In the half year to 30 November 2006, Quadnetics Group recorded consolidated turnover of £30.9 million (2005: £17.8 million) and a profit before tax, exceptional costs, goodwill amortisation and share-based payments charges of £1.8 million (2005: £0.9 million). The half year benefited from inclusion of a full six month period of contribution from the acquired Protec businesses, compared with only one month in the first half last year. No exceptional costs were incurred in the period, but there was a charge of £0.24 million (2005 restated: £0.15 million) from application for the first time of the new share-based payment accounting standard. Previously, equivalent items of share-based compensation were noted in the financial statements but not charged to the profit and loss account. Profit before tax was £1.1 million (2005 restated: loss £0.1 million). Underlying earnings per share increased by 21% to 8.7p (2005: 7.2p). Net cash balances at 30 November 2006 were £6.3 million (30 November 2005: £7.9 million; 31 May 2006: £8.9 million). The cash outflow in the first half reflected an increase in working capital as business activity levels have risen in most areas, particularly towards the end of the period. Dividend An interim dividend of 2p per share (2005: 1.5p) will be paid on 16 March 2007 to shareholders on the register as at 16 February 2007. Operational Review The most pleasing element of the Group's operating performance in the first half was the increase in gross margins, particularly in the security services area. This in part reflects achievement of planned operational benefits in integrating the acquired Protec businesses with Quadnetics' existing activities. We are continuing to deliver customer and margin advantages from pushing these integration benefits further. Quadrant Security, our security services business, achieved turnover of just under £23 million (2005: £12.3 million) and an underlying operating profit (being operating profit before exceptional costs, goodwill amortisation and share based payments charges) of £1.7 million (2005: £0.9 million). This strong performance was underlined by Quadrant Security's continued leadership position in security systems for UK prisons and secure hospitals, where a number of large new orders were won and delivered. The division benefited from the expected resurgence of activity in the local government town centre CCTV sector, a traditional area of strength for Quadrant. Encouraging results are also being achieved in the specialist onshore petrochemical and major corporate sectors. The increased scale of our security services activities has enabled Quadrant to extend the scope and density of its national service network, and hence grow the higher margin recurring revenue portion of the business. This trend is expected to continue. Synectics, the Group's security technology business, grew turnover in the half year to £9.3 million (2005: £6.2 million), on which it made an underlying operating profit of £0.7 million (2005: £0.4 million). This result was achieved despite delays in receiving formal orders for two large casino contracts that were expected to contribute in the first half. These orders have now been received and will be produced and delivered in the second half. In fact since 1 December 2006 Synectic Systems, Inc. has received orders or letters of intent for casino surveillance products and software totalling $7.1 million, and in addition the Synectics digital surveillance solution has been specified for two casino upgrades expected to be worth a further $3.0 million. These orders confirm Synectics' strong position in this growing market segment, where we expect results for the year as a whole will be fully in line with our original plan. Notable achievements by Synectics during the first half included successful delivery of its software solution for the UK National Air Traffic Services emergency radio-based air traffic system, as well as the next phase of its specialist hazardous area video security system for AGIP's oil platforms on the Caspian Sea. Follow-on orders are expected for both these projects. Synectics also received and successfully supplied an urgent follow-on order from the Ministry of Defence for a classified surveillance system for use by the UK defence forces. One of Synectics' primary strategic objectives is to expand as rapidly as possible the range of worldwide video surveillance applications using its proprietary Synergy software control system. Good progress has been made in developing Synergy for mobile, marine and other transport infrastructure applications, and we are successfully increasing sales of this product through our systems integration businesses. At the beginning of the current financial year, Synectics established a dedicated research and development facility that will broaden the Company's digital surveillance product range within the market sectors we serve, and allow it to scale more easily. The first new products from this effort are expected to be released by early autumn this year. Related development costs of £0.1 million were capitalised in the first half. Outlook The market for electronic surveillance systems continues to grow. In addition, the shift in underlying video capture, transmission, storage and network technology from analogue to digital is creating opportunities for new products and services. Within this very positive environment, Quadnetics will maintain its focus on providing integrated, workable open platform solutions in a sub-set of specialised market sectors that we know well, and where we can deliver a competitive advantage. The Group's order books remain healthy and further large orders, in particular from the casino sector, are expected in the coming months. Overall, the activity level and momentum of our businesses are strong, and the Board continues to expect good results for the full year and further progress beyond. David Coghlan Chairman 7 February 2007 Consolidated Profit & Loss Account For the half year ended 30 November 2006 Restated Unaudited Unaudited Restated Half year to Half year to Year to 30 Nov 30 Nov 31 May 2006 2005 2006 Total Total Total Notes £'000 £'000 £'000 Turnover 2 30,935 17,790 49,642 Cost of sales (21,064) (12,623) (34,495) ------- ------- ------- Gross profit 9,871 5,167 15,147 Net operating expenses (8,949) (5,285) (13,687) ------- ------- ------- ------- ------- ------- Operating profit before goodwill amortisation, exceptional items and share based payments charges 1,622 871 3,467 Goodwill amortisation (456) (283) (740) Exceptional items - (555) (965) Share based payments charge (244) (151) (302) ------- ------- ------- Operating profit/(loss) 922 (118) 1,460 Exceptional item in respect of a subsidiary disposed of in a previous year - - (300) Net interest receivable 141 52 147 ------- ------- ------- ------- ------- ------- Profit before tax, goodwill amortisation, exceptional items and share based payments charges 1,763 923 3,614 Goodwill amortisation (456) (283) (740) Exceptional items - (555) (1,265) Share based payments charge (244) (151) (302) ------- ------- ------- Profit/(loss) on ordinary activities before taxation 1,063 (66) 1,307 Tax (charge)/credit on ordinary activities 3 (350) 8 (87) ------- ------- ------- Profit/(loss) for the financial period 713 (58) 1,220 ------- ------- ------- Earnings/(loss) per ordinary share: - Basic (and Diluted) 5 4.6p (0.5)p 8.9p ------- ------- ------- - Underlying (and Diluted Underlying) 5 8.7p 7.2p 24.2p ------- ------- ------- Consolidated Balance Sheet 30 November 2006 Unaudited Restated Restated 30 Nov Unaudited 31 May 2006 30 Nov 2006 2005 £'000 £'000 £'000 Fixed assets Intangible assets 16,497 17,788 16,925 Tangible assets 2,098 2,264 2,049 -------- --------- -------- 18,595 20,052 18,974 -------- --------- -------- Current assets Stocks 5,442 3,463 4,281 Debtors 20,054 17,556 19,995 Cash at bank and in hand 6,309 7,899 8,940 -------- --------- -------- 31,805 28,918 33,216 Creditors: amounts falling due within one year (20,084) (20,430) (22,015) -------- --------- -------- Net current assets 11,721 8,488 11,201 -------- --------- -------- Total assets less current liabilities 30,316 28,540 30,175 Creditors: amounts falling due after more than - - - one year Provisions for liabilities and charges (1,667) (1,414) (1,763) -------- --------- -------- Net assets 28,649 27,126 28,412 -------- --------- -------- Capital and reserves Called up share capital 3,366 3,244 3,263 Share premium account 14,621 13,366 13,634 Merger reserve 9,565 9,416 9,565 Other reserves (2,391) (1,164) (1,307) Profit and loss account 3,488 2,264 3,257 -------- --------- -------- Equity shareholders' funds 28,649 27,126 28,412 -------- --------- -------- Consolidated Cash Flow Statement For the half year ended 30 November 2006 Restated Unaudited Unaudited Restated Half year to Half year to Year to 30 Nov 30 Nov 31 May 2006 2005 2006 £'000 £'000 £'000 Net cash (outflow)/inflow from operating activities (2,075) 462 3,246 Returns on investments and servicing of finance 94 82 132 Taxation (175) 176 (299) Net capital expenditure and financial investment (461) (156) (238) Acquisitions and disposals - 3,782 3,220 Equity dividends paid - - (573) -------- -------- -------- Cash (outflow)/inflow before use of liquid resources and financing (2,617) 4,346 (5,488) Management of liquid resources - amounts (placed on)/withdrawn from bank deposit - (1,396) - Financing (14) (9) (110) -------- -------- -------- (Decrease)/increase in cash (2,631) 2,941 5,378 -------- -------- -------- Reconciliation of net cash flow to movements in net funds For the half year ended 30 November 2006 Restated Unaudited Unaudited Restated Half year to Half year to Year to 30 Nov 30 Nov 31 May 2006 2005 2006 £'000 £'000 £'000 (Decrease)/increase in cash in the period (2,631) 2,941 5,378 Increase in bank deposits - 1,396 - Decrease in debt and lease financing 20 359 395 -------- -------- -------- Change in net funds resulting from cash flows (2,611) 4,696 5,773 Acquisitions - (53) (53) -------- -------- -------- Movement in net funds in the period (2,611) 4,643 5,720 Opening net funds 8,920 3,200 3,200 -------- -------- -------- Closing net funds 6,309 7,843 8,920 -------- -------- -------- Statement of Total Recognised Gains and Losses For the half year ended 30 November 2006 Restated Unaudited Unaudited Restated Half year to Half year to Year to 30 Nov 30 Nov 31 May 2006 2005 2006 £'000 £'000 £'000 Total gains recognised since the last annual report: Profit/(loss) for the financial period 713 (58) 1,220 Other recognised gains and losses relating to the year - currency translation adjustment 17 1 (9) --------- -------- ------- 730 (57) 1,211 --------- -------- ------- Reconciliation of Movements in Shareholders' Funds For the half year ended 30 November 2006 Restated Unaudited Unaudited Restated Half year to Half year to Year to 30 Nov 30 Nov 31 May 2006 2005 2006 £'000 £'000 £'000 Profit/(loss) for the financial period 713 (58) 1,220 Dividends (524) (351) (573) --------- -------- ------- 189 (409) 647 Other recognised gains and losses relating to the year - currency translation adjustment 17 1 (9) Share based payment reserve 25 22 45 Issue of shares 6 9,183 9,477 Share buy-back - - (77) --------- -------- ------- Net movement in shareholders' funds 237 8,797 10,083 --------- -------- ------- Opening shareholders' funds as originally stated in year ended 31 May 2006 and 31 May 2005 accounts 28,578 17,978 17,978 Prior year adjustment in respect of FRS 20 (166) - - Prior year adjustment in respect of dividends - 351 351 --------- -------- ------- Restated opening shareholders' funds 28,412 18,329 18,329 --------- -------- ------- Closing shareholders' funds 28,649 27,126 28,412 --------- -------- ------- Notes 1. These interim accounts and the comparative figures are prepared on the basis of the accounting policies set out in the financial statements of the Group for the year ended 31 May 2006, with the exception of FRS20 (Share Based Payments) which has been applied for the first time. Prior year figures have been restated accordingly. The half year results have not been audited by the Group's auditors and do not constitute statutory accounts. The comparative figures for the year ended 31 May 2006 have been abridged from the statutory accounts for the year ended on that date, subject only to the adjustments noted above in respect of FRS20. 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 2006 have been filed with the Registrar of Companies. 2. Turnover and underlying operating profit (operating profit before goodwill amortisation, exceptional items and share based payments charges) derives from the Group's two business segments as follows: Restated Unaudited Unaudited Restated Half year to Half year to Year to 30 Nov 30 Nov 31 May 2006 2005 2006 Total Total Total £'000 £'000 £'000 Turnover Services 22,946 12,267 36,241 Products and software 9,301 6,161 14,595 Intra-group sales (1,312) (638) (1,194) ------- -------- ------- 30,935 17,790 49,642 ------- -------- ------- Underlying operating profit Services 1,655 943 3,198 Products and software 653 407 1,466 Central costs (686) (479) (1,197) ------- -------- ------- 1,622 871 3,467 ------- -------- ------- 3. 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 2007. 4. An interim dividend of 2p per share, totalling approximately £300,000 will be paid on 16 March 2007 to shareholders on the register at 16 February 2007. 5. Basic, diluted and underlying earnings per share have been calculated on the following earnings and numbers of shares: Earnings Earnings per share Restated Restated Restated Restated Half year Half year Year to Half year Half year Year to to 30 Nov to 30 Nov 31 May to 30 Nov to 30 Nov 31 May 2006 2005 2006 2006 2005 2006 £'000 £'000 £'000 p p p Basic Earnings 713 (58) 1,220 4.6 (0.5) 8.9 Share based payments charge 244 151 302 1.6 1.2 2.2 Exceptional items - 555 1,265 - 4.5 9.1 Impact of exceptional items and share based payments on tax charge for the period (73) (45) (189) (0.5) (0.3) (1.4) Goodwill amortisation 456 283 740 3.0 2.3 5.4 ------- ------- ------- ------- ------- ------ Underlying Earnings 1,340 886 3,338 8.7 7.2 24.2 ------- ------- ------- ------- ------- ------ Basic Earnings - diluted 713 (58) 1,220 4.6 (0.5) 8.9 ------- ------- ------- ------- ------- ------ Underlying Earnings - diluted 1,340 886 3,338 8.7 7.2 24.2 ------- ------- ------- ------- ------- ------ '000 '000 '000 Weighted average number of ordinary shares - basic calculation 15,479 12,318 13,782 Dilutive potential ordinary shares arising from share options 6 7 7 ------- ------- ------ Weighted average number of ordinary shares - diluted calculation 15,485 12,325 13,789 ------- ------- ------ 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, Haydon House, 5 Alcester Road, Studley, Warwickshire B80 7AN. - Ends - This information is provided by RNS The company news service from the London Stock Exchange

Companies

Synectics (SNX)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today