TIDMQDG
RNS Number : 5754G
Quadnetics Group PLC
03 February 2010
+---------------------------------+----------------------------------------+
| For Immediate Release | 3 February 2010 |
+---------------------------------+----------------------------------------+
Quadnetics Group plc
Interim results for the six months ended 30 November 2009
Quadnetics Group plc, a leader in advanced video surveillance technology and
security networks, reports its interim results for the six months ended 30
November 2009.
Highlights
+-----+--------------------------------------------------------------------+
| · | Revenue GBP29.8m (2008: GBP35.8m), Underlying profit* GBP161k |
| | (2008: GBP532k), Net cash: GBP3.4m (2008: GBP7.1m) |
+-----+--------------------------------------------------------------------+
| · | Significant new business won: Stagecoach (GBP3.7m), UK Prisons |
| | (GBP2.1m), Kashagan oilfield (GBP1.6m), Nexus Rail (GBP1.1m), |
| | London Underground (GBP0.7m), West Midlands Police (GBP0.8m) |
+-----+--------------------------------------------------------------------+
| · | Restructuring programme on plan, with total of GBP1.8m net |
| | annualised cost savings achieved to date |
+-----+--------------------------------------------------------------------+
| · | Total order book GBP22.1m (2008: GBP26.0m); Total pipeline |
| | GBP52.5m (2008: GBP30.6m) |
+-----+--------------------------------------------------------------------+
| · | Strong second half expected |
| | |
+-----+--------------------------------------------------------------------+
| · | Dividend maintained at 2.5p |
| | |
+-----+--------------------------------------------------------------------+
Commenting on the results, John Shepherd, Chief Executive, said:
"This result, viewed in the light of the worst global recession for half a
century, is a credit to the skills, ingenuity and hard work of all our
employees. The Group is settling down well after a period of significant
structural change and the new executive team is building momentum, which is
underpinning our expectations of a much stronger second half, in our chosen
market sectors and territories. As reflected in the significantly increased
order pipeline, the pace of new product and system introductions is accelerating
and finding strong customer acceptance at the expense of our competition."
*that is profit before tax, exceptional reorganisation costs and share-based
payments charge.
For further information, please contact:
+----------------------------------+-------------------------------+
| Quadnetics Group plc | Tel: +44 (0) 1527 850080 |
+----------------------------------+-------------------------------+
| John Shepherd, Chief Executive | |
+----------------------------------+-------------------------------+
| email: | |
| john.shepherd@quadnetics.com | |
+----------------------------------+-------------------------------+
| Brewin Dolphin Investment | Tel: +44 (0) 845 213 4726 |
| Banking | |
+----------------------------------+-------------------------------+
| Neil Baldwin | |
+----------------------------------+-------------------------------+
+----------------------------------+-------------------------------+
| Buchanan Communications Limited | Tel: +44 (0) 207 466 5000 |
+----------------------------------+-------------------------------+
| Isabel Podda / Tim Anderson | |
| /Jennie Spivey | |
+----------------------------------+-------------------------------+
| email: isabelp@buchanan.uk.com | |
+----------------------------------+-------------------------------+
Chairman's Statement
Results for the first half of Quadnetics' current financial year were in line
with the expectations set out in the Company's trading statement issued on 5
November 2009. The historically weaker trading pattern in the first half,
together with the impact of delayed orders in the North American gaming
surveillance market and in the Middle East, led to a weak underlying operating
performance. This was offset by market success for the new suite of Synectics
network and mobile surveillance products, strengthening of the senior management
and implementation of a new organisation structure allowing reduced overhead
costs and a more sharply focused strategy.
This is the first financial period following implementation of the strategy
review initiated by Quadnetics' new Chief Executive, and consequent
reorganisation of the Group into four operating divisions: Integration & Managed
Services, Synectics Network Systems, Synectics Mobile Systems and Synectics
Industrial Systems. Operating results will therefore be reported within the new
divisional structure which will increase visibility of underlying operational
performance.
The focus of business operations in the half was very much on bedding in the new
restructured organisation, to ensure the Group has both an efficient cost base,
and a stable and scalable platform for growth in its chosen markets. As a result
of cost reduction actions taken, annualised net savings in direct labour costs
and underlying overheads of GBP1.8 million were achieved in the first half of
this financial year, compared on a like-for-like basis with the same period last
year. Against the same base, the full annualised run-rate of cost savings is now
expected to be GBP2.2 million. Exceptional reorganisation costs in respect of
these actions have totalled GBP1.6 million, of which GBP0.3 million was charged
in the first half of this year.
The Board now believes that Quadnetics has the business structure and depth of
management in place to deliver on its growth potential.
Consolidated underlying profit (that is, profit before tax, exceptional
reorganisation costs and share-based payments) for the half year was GBP0.2
million (2008: GBP0.5 million). After charging exceptional reorganisation costs
of GBP0.3 million (2008: nil), and share-based payments of GBP80,000 (2008:
GBP5,000), the Group incurred a loss before tax of GBP(0.2) million (2008:
profit GBP0.5 million). Underlying earnings per share were 0.7 pence (2008: 2.4
pence).
The major factors giving rise to these results are set out in the Operating
Review below.
In spite of the difficult macroeconomic climate, the Group's total firm order
book as at 30 November 2009 held up well at GBP22.1 million (2008: GBP26.0
million). As an indication of the improving trend, the formally measured
pipeline of expected new business expanded to GBP52.5 million at the period end,
compared with GBP30.6 million on a like-for-like basis at the same point last
year.
At 30 November 2009, Quadnetics had consolidated net cash balances of GBP3.4
million (2008: GBP7.1 million) after paying restructuring costs and tax
liabilities of GBP1.3 million in the period. In addition, working capital
increased by GBP3.3 million, partly owing to the decline in activity in the
retail managed services business (GBP1.2 million).
In view of the anticipated substantial improvement in results for the remainder
of the year, the Board has decided to maintain an unchanged interim dividend of
2.5 pence per share, payable on 19 March 2010 to shareholders on the register as
at 19 February 2010.
The Group's security systems services division recorded revenue of GBP17.4
million for the half year, compared with GBP22.8 million for the corresponding
period last year. However, operating profits were maintained at GBP0.8 million
(2008: GBP0.8 million). The main reasons for this performance were a continued
reduction in low margin pass through capital equipment sales in the managed
services area, and margin increases achieved through reduced costs and
efficiency improvements.
Activity levels in the UK security systems integration area began to pick up
noticeably towards the end of the period, with major contract wins in the
prisons, transport and police sectors. Managed services for multiple retailers
continued to feel the effects of reduced client budgets, particularly for
capital projects. Innovative solutions, for example offering clients reduced
costs through IP (internet protocol) based alarm signalling, are starting to
generate sales after a considerable gestation period.
Overall, this division is expecting an improved profit performance in the second
half.
Synectics Network Systems provides video-based electronic surveillance systems
and technology globally to end customers with large scale high security
requirements. In the first half of 2009/10, the division had revenue of GBP4.9
million (2008: GBP5.8 million), on which it recorded an operating profit of
GBP0.3 million (2008: GBP0.8 million). One of Synectics Network Systems' largest
markets is surveillance for casinos in North America, where the impact of the
recession has been felt most strongly within the Group. A number of anticipated
orders where Synectics has either been notified of an impending award, or
specified as the sole-source provider, have been and continue to be delayed.
Customers for most of these projects have indicated that they expect to issue
contracts in the next few months.
As previously reported, Quadnetics' activities in the Middle East have been
consolidated under the control of the Synectics Network Systems division, with
the aim of focussing more on higher margin proprietary systems sales. The
additional sales resource and a short-term hiatus in new business as the
re-focused sales model is implemented, mean that there has been a negative
impact in the current financial year. The new management team has had early
success with the award of a substantial contract for surveillance in a fleet of
cash-in-transit vehicles, and substantial improvement is expected from this area
in the second half.
Synectics Network Systems' results in the first half in its core UK market were,
as anticipated, slightly weaker than last year; however, with growing sales of
its recently introduced H.264 products and virtual matrix systems, this division
is expected to deliver stronger sales and profits in the second half.
Synectics Mobile Systems provides specialist ruggedised surveillance systems and
products for the bus, rail and defence industries. Revenue in the first half of
this financial year was GBP5.2 million (2008: GBP5.4 million) on which it earned
an operating profit of GBP0.1 million (2008: loss GBP(0.1) million). Both the
lower sales and increased profit are principally due to the restructuring of the
defence business, which is expected to be profitable in the second half after
two loss-making years.
Sales of bus and rail systems were strong, with some significant contract wins
giving us confidence for an improved second half. We won our first order for a
rail based Synectics' T1000 mobile digital video recorder on the London
Underground, secured the first orders for our new "Genius" advanced driver
training and telematics system and recently secured a GBP3.7m three year
contract with Stagecoach to fit digital CCTV systems to all their new buses.
Sales of the T1000 accelerated, and have now passed 1,000 units shipped, with
evidence of increasing demand by both bus and rail customers.
Restructuring of the defence activities is now complete, with all manufacturing
consolidated in the Synectics Industrial Systems plant in Brigg. An initial
GBP0.4 million order has been shipped for our T1000-based Insight 360 video
recorders for military armoured vehicles, an area of significant promise for
future growth.
Synectics Industrial Systems designs, manufactures and supplies surveillance
systems for extreme or hazardous environments. Applications mainly include
offshore and onshore oil & gas facilities, ships and industrial process control.
Revenue for the half year grew by 7% to GBP3.4 million (2008: GBP3.1 million),
and operating profits nearly trebled to GBP0.5 million (2008: GBP0.2 million).
Significant contract wins included GBP1.6m of new business for the Kashagan oil
field in the Caspian Sea.
The major reasons for this margin improvement are continuing manufacturing
efficiency gains and an increasing proportion of Synectics' proprietary
technology in systems sales. During the second half, the division will be
launching a new range of hazardous area products, designed to open up the North
American Market. We expect further positive momentum despite the likely
continued lull in new orders from shipbuilders.
Quadnetics' businesses have historically reflected a seasonal pattern of
significantly stronger performance in the second half of its financial year,
particularly in the final quarter. This has made forecasting annual results
early in the year particularly difficult. As announced on 5 November 2009,
Quadnetics has accordingly changed its year end for 2010 from 31 May to 30
November. This will not affect the comparability or transparency of the
Company's financial performance, since we will be reporting second interim
results for the 12 months to 31 May 2010 in early August, followed by
preliminary results for the 18 months to 30 November 2010 in February 2011.
Quadnetics is anticipating a stronger than usual second half weighting to its
profits this year, supported by an increase in the firm order book to GBP26.8m
at the end of December (December 2008: GBP24.5m). A full period of benefit from
cost reduction measures taken during last year and the year so far, as well as
expected significantly increased contributions from the Middle East, mobile
systems and North American gaming, should accentuate the normal seasonal upturn.
Overall, the Company continues to anticipate that results for the 12 months to
31 May 2010 will be in line with market expectations.
David Coghlan
3 February 2010
Condensed Consolidated Income Statement
For the six months ended 30 November 2009
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| | | Unaudited | | Unaudited | | |
| | | Half | | Half | | Year |
| | | year to | | year to | | to |
| | | 30 Nov | | 30 Nov | | 31 May |
| | Notes | 2009 | | 2008 | | |
| | | GBP'000 | | GBP'000 | | 2009 |
| | | | | | | GBP'000 |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Continuing operations | | | | | | |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Revenue | 3 | 29,844 | | 35,847 | | 70,655 |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Cost of sales | | (20,731) | | (26,668) | | (50,881) |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Gross profit | | 9,113 | | 9,179 | | 19,774 |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Operating expenses | | (9,301) | | (8,777) | | (19,578) |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| (Loss)/profit from operations | | | | | | |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Excluding exceptional | 3 | 162 | | 407 | | 1,553 |
| reorganisation costs and | | | | | | |
| share-based payments | | | | | | |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Exceptional reorganisation costs | 4 | (270) | | - | | (1,350) |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Share-based payments charge | 5 | (80) | | (5) | | (7) |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Total (loss)/profit from | | (188) | | 402 | | 196 |
| operations | | | | | | |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Finance income | | 146 | | 366 | | 552 |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Finance costs | | (143) | | (241) | | (287) |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Share of results of joint venture | | (4) | | - | | 10 |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| (Loss)/profit before tax | | | | | | |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Excluding exceptional | | 161 | | 532 | | 1,828 |
| reorganisation costs and | | | | | | |
| share-based payments | | | | | | |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Exceptional reorganisation costs | 4 | (270) | | - | | (1,350) |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Share-based payments charge | 5 | (80) | | (5) | | (7) |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Total (loss)/profit before tax | | (189) | | 527 | | 471 |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Income tax credit/(expense) | 6 | 55 | | (159) | | (212) |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| (Loss)/profit for the period | | (134) | | 368 | | 259 |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Basic and diluted earnings per | 8 | (0.9)p | | 2.4p | | 1.7p |
| Ordinary share | | | | | | |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Underlying basic and diluted | 8 | 0.7p | | 2.4p | | 8.2p |
| earning per Ordinary share | | | | | | |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
Condensed Consolidated Statement of Recognised Income and Expense
For the six months ended 30 November 2009
+----------------------------------------+-----------+----------+-----------+----------+---------+
| | Unaudited | | Unaudited | | |
| | Half | | Half | | Year |
| | year to | | year to | | to |
| | 30 Nov | | 30 Nov | | 31 May |
| | 2009 | | 2008 | | |
| | GBP'000 | | GBP'000 | | 2009 |
| | | | | | GBP'000 |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| (Loss)/profit for the period | (134) | | 368 | | 259 |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| Exchange differences on translation of | (10) | | 157 | | 117 |
| foreign operations | | | | | |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| Total recognised income and expense | (144) | | 525 | | 376 |
| for the period | | | | | |
+----------------------------------------+-----------+----------+-----------+----------+---------+
Condensed Consolidated Balance Sheet
30 November 2009
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| | | Unaudited | | Unaudited | | |
| | | 30 Nov | | 30 Nov | | 31 May |
| | | 2009 | | 2008 | | |
| | Notes | GBP'000 | | GBP'000 | | 2009 |
| | | | | | | GBP'000 |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Non-current assets | | | | | | |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Property, plant and equipment | | 1,772 | | 1,993 | | 1,809 |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Intangible assets | 9 | 17,190 | | 18,333 | | 17,903 |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Deferred tax asset | | 412 | | 391 | | 414 |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Interest in joint venture | | 51 | | 38 | | 55 |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| | | 19,425 | | 20,755 | | 20,181 |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Current assets | | | | | | |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Inventories | | 5,396 | | 5,281 | | 5,343 |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Trade and other receivables | | 20,886 | | 23,590 | | 22,503 |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Cash and cash equivalents | | 3,408 | | 7,089 | | 8,111 |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| | | 29,690 | | 35,960 | | 35,957 |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Total assets | | 49,115 | | 56,715 | | 56,138 |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Current liabilities | | | | | | |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Trade and other payables | | (17,208) | | (22,780) | | (21,767) |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Tax liabilities | | - | | (296) | | (553) |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Current provisions | 9 | (529) | | (871) | | (1,585) |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| | | (17,737) | | (23,947) | | (23,905) |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Non-current liabilities | | | | | | |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Non-current provisions | 9 | (75) | | (75) | | (75) |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| | | (75) | | (75) | | (75) |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Total liabilities | | (17,812) | | (24,022) | | (23,980) |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Net assets | | 31,303 | | 32,693 | | 32,158 |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| | | | | | | |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Equity attributable to equity | | | | | | |
| holders of parent company | | | | | | |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Called up share capital | 10 | 3,514 | | 3,382 | | 3,382 |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Share premium account | 10 | 15,719 | | 14,851 | | 14,851 |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Merger reserve | 10 | 9,565 | | 9,565 | | 9,565 |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Other reserves | 10 | (3,486) | | (2,486) | | (2,486) |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Currency translation reserve | 10 | 94 | | 144 | | 104 |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Retained earnings | 10 | 5,897 | | 7,237 | | 6,742 |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
| Total equity | | 31,303 | | 32,693 | | 32,158 |
+-----------------------------------+-------+-----------+----------+-----------+----------+----------+
For the six months ended 30 November 2009
+----------------------------------------+-----------+----------+-----------+----------+---------+
| | Unaudited | | Unaudited | | |
| | Half | | Half | | Year |
| | year to | | year to | | to |
| | 30 Nov | | 30 Nov | | 31 May |
| | 2009 | | 2008 | | |
| | GBP'000 | | GBP'000 | | 2009 |
| | | | | | GBP'000 |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| Cash flows from operating activities | | | | | |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| (Loss)/profit for the period | (134) | | 368 | | 259 |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| Income tax (credit)/expense | (55) | | 159 | | 212 |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| Finance income | (146) | | (366) | | (552) |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| Finance costs | 143 | | 241 | | 287 |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| Depreciation and amortisation charge | 631 | | 504 | | 1,140 |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| (Profit)/loss on disposal of | (3) | | (13) | | 51 |
| non-current assets | | | | | |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| Share-based payments charge | 80 | | 5 | | 7 |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| Operating cash flows before movement | 516 | | 898 | | 1,404 |
| in working capital | | | | | |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| Increase in inventories | (62) | | (998) | | (1,067) |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| Decrease in receivables | 1,846 | | 6,753 | | 7,617 |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| Decrease in payables and provisions | (5,592) | | (6,625) | | (5,974) |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| Cash generated from operations | (3,292) | | 28 | | 1,980 |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| Interest received | 19 | | 111 | | 281 |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| Tax paid | (760) | | (144) | | 56 |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| Net cash (used in)/from operating | (4,033) | | (5) | | 2,317 |
| activities | | | | | |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| Cash flows from investing activities | | | | | |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| Purchase of property, plant and | (249) | | (267) | | (460) |
| equipment | | | | | |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| Sale of property, plant and equipment | 3 | | 13 | | 46 |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| Capitalised development costs | (192) | | (167) | | (174) |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| Purchased software | (135) | | (49) | | (68) |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| Deferred consideration on acquisition | (79) | | (383) | | (382) |
| made in 2005 | | | | | |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| Interest in joint venture | - | | (38) | | (45) |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| Net cash used in investing activities | (652) | | (891) | | (1,083) |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| Cash flows from financing activities | | | | | |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| Interest paid | (11) | | - | | (11) |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| Dividends paid | - | | - | | (1,087) |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| Net cash used in financing activities | (11) | | - | | (1,098) |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| Effects of exchange rate changes on | (7) | | 45 | | 35 |
| cash and cash equivalents | | | | | |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| Net (decrease)/increase in cash and | (4,703) | | (851) | | 171 |
| cash equivalents | | | | | |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| Cash and cash equivalents at the | 8,111 | | 7,940 | | 7,940 |
| beginning of the period | | | | | |
+----------------------------------------+-----------+----------+-----------+----------+---------+
| Cash and cash equivalents at the end | 3,408 | | 7,089 | | 8,111 |
| of the period | | | | | |
+----------------------------------------+-----------+----------+-----------+----------+---------+
Notes
1. General information
These consolidated interim financial statements were approved by the Board of
Directors on 3 February 2010.
The Board has announced a change in the Company's year end to 30 November, by
extending its current financial year to 30 November 2010. Following this interim
report the Company will be providing a second interim report for the period to
31 May 2010, ensuring transparency and comparability with prior financial years.
A full annual report and audited accounts will be provided for the 18 months to
30 November 2010.
2. Basis of preparation
These consolidated interim financial statements of the Group are for the six
months ended 30 November 2009.
The comparative figures for the financial year ended 31 May 2009 are not the
Group's statutory accounts for that financial year. Those statutory accounts
have been reported on by the Group's auditors and delivered to the Registrar of
Companies. The report of the auditors was (i) unqualified, (ii) did not include
a reference to any matters to which the auditors drew attention by way of
emphasis without qualifying their report and (iii) did not contain a statement
under Section 237 (2) or (3) of the Companies Act 1985.
The condensed consolidated interim financial statements do not include all the
information and disclosures required in the annual financial statements and
should be read in conjunction with the Group's annual financial statements as at
31 May 2009.
The condensed consolidated interim financial statements for the six months to 30
November 2009 have not been audited or reviewed by auditors pursuant to the
Auditing Practices Board guidance on Review of Interim Financial
Information.
The condensed consolidated interim financial statements for
the six months to 30 November 2009 have been prepared on the basis of the
accounting policies expected to be adopted for the period ended 30 November
2010. These are anticipated to be consistent with those set out in the Group's
latest annual financial statements for the year ended 31 May 2009. These
accounting policies are drawn up in accordance with adopted International
Accounting Standards (IAS) and International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board.
Significant accounting policies
AIM-listed companies are not required to comply with IAS 34 'Interim Financial
Reporting' and accordingly the Company has taken advantage of this exemption.
3. Segmental analysis
The analysis below sets out the Group's revenue and underlying operating profit
(operating profit before exceptional reorganisation costs and share-based
payments charge) derived from the Group's four business segments which were
identified in the Group's 2009 Annual Report following a restructuring of the
Group's activities at the start of this period. Comparative figures have been
restated accordingly.
+------------------------------------+-----------+----------+-----------+----------+---------+
| | Unaudited | | Unaudited | | |
| | Half | | Half | | Year |
| | year to | | year to | | to |
| | 30 Nov | | 30 Nov | | 31 May |
| | 2009 | | 2008 | | |
| | GBP'000 | | GBP'000 | | 2009 |
| | | | | | GBP'000 |
+------------------------------------+-----------+----------+-----------+----------+---------+
| Revenue | | | | | |
+------------------------------------+-----------+----------+-----------+----------+---------+
| Integration & Managed Services | 17,400 | | 22,775 | | 43,325 |
+------------------------------------+-----------+----------+-----------+----------+---------+
| Network Systems | 4,906 | | 5,818 | | 11,655 |
+------------------------------------+-----------+----------+-----------+----------+---------+
| Mobile Systems | 5,190 | | 5,355 | | 12,241 |
+------------------------------------+-----------+----------+-----------+----------+---------+
| Industrial Systems | 3,353 | | 3,139 | | 6,305 |
+------------------------------------+-----------+----------+-----------+----------+---------+
| Intra-group sales | (1,005) | | (1,240)) | | (2,871) |
+------------------------------------+-----------+----------+-----------+----------+---------+
| | 29,844 | | 35,847 | | 70,655 |
+------------------------------------+-----------+----------+-----------+----------+---------+
| Underlying operating profit | | | | | |
+------------------------------------+-----------+----------+-----------+----------+---------+
| Integration & Managed Services | 792 | | 788 | | 2,251 |
+------------------------------------+-----------+----------+-----------+----------+---------+
| Network Systems | 271 | | 795 | | 2,067 |
+------------------------------------+-----------+----------+-----------+----------+---------+
| Mobile Systems | 121 | | (95) | | (81) |
+------------------------------------+-----------+----------+-----------+----------+---------+
| Industrial Systems | 505 | | 186 | | 473 |
+------------------------------------+-----------+----------+-----------+----------+---------+
| Research & Development costs | (685) | | (595) | | (1,340) |
+------------------------------------+-----------+----------+-----------+----------+---------+
| Central costs | (842) | | (672) | | (1,817) |
+------------------------------------+-----------+----------+-----------+----------+---------+
| | 162 | | 407 | | 1,553 |
+------------------------------------+-----------+----------+-----------+----------+---------+
4. Exceptional reorganisation costs
Following the strategic review announced in February 2009, further
reorganisation costs of GBP270,000 have been expensed in the period, and
primarily relate to redundancy and related costs.
5. Share-based payments charge
A new Group Executive Share Ownership Plan (the 'ExSOP') was introduced in July
2009 and awards were made under this scheme in July and September 2009 and the
previous Long Term Incentive Plan has been discontinued. Accordingly a
share-based payment charge of GBP80,000 arises in respect of the ExSOP during
the period.
6. Tax charge
The tax charge for the period is based on the estimated rate of corporation tax
that is likely to be effective for the twelve months to 31 May 2010. This is
estimated to be 29% (2008: 30%).
7. Dividends
An interim dividend of 2.5p per share (2008: 2.5p), totalling approximately
GBP439,000 (2008: GBP388,000) will be paid on 19 March 2010 to shareholders on
the register as at 19 February 2010.
A final dividend of 4.5p per share totalling GBP791,000 for the year ended 31
May 2009 was approved at the Company's Annual General Meeting on 11 November
2009 and accordingly has been included as a liability as at 30 November 2009.
8. Earnings per share
Earnings per Ordinary share are as follows:
+---------------------+-----------+-----------+---------+-----------+-----------+--------+
| | Unaudited | Unaudited | | Unaudited | Unaudited | |
| | Half year | Half year | Year | | Half year | Year |
| | to | to | to | Half year | to | to |
| | 30 Nov | 30 Nov | 31 | to | 30 Nov | 31 |
| | 2009 | 2008 | May | 30 Nov | 2008 | May |
| | GBP'000 | GBP'000 | 2008 | 2009 | p | 2009 |
| | | | GBP'000 | GBP'000 | | p |
| | | | | p | | |
+---------------------+-----------+-----------+---------+-----------+-----------+--------+
| Basic earnings | (134) | 368 | 259 | (0.9) | 2.4 | 1.7 |
+---------------------+-----------+-----------+---------+-----------+-----------+--------+
| Exceptional | 270 | - | 1,350 | 1.7 | - | 8.7 |
| reorganisation | | | | | | |
| costs | | | | | | |
+---------------------+-----------+-----------+---------+-----------+-----------+--------+
| Impact of | (78) | | (342) | (0.5) | - | (2.2) |
| exceptional | | | | | | |
| reorganisation | | | | | | |
| costs on tax charge | | | | | | |
| for the year | | | | | | |
+---------------------+-----------+-----------+---------+-----------+-----------+--------+
| Share-based | 80 | 5 | 7 | 0.5 | - | - |
| payments charge | | | | | | |
+---------------------+-----------+-----------+---------+-----------+-----------+--------+
| Impact of | (23) | | | (0.1) | - | |
| share-based | | (2) | (2) | | | - |
| payments | | | | | | |
| (credit)/charge on | | | | | | |
| tax charge for the | | | | | | |
| period | | | | | | |
+---------------------+-----------+-----------+---------+-----------+-----------+--------+
| Underlying earnings | 115 | 371 | 1,272 | 0.7 | 2.4 | 8.2 |
| | | | | | | |
+---------------------+-----------+-----------+---------+-----------+-----------+--------+
| Basic earnings - | (134) | 368 | 259 | (0.9) | 2.4 | 1.7 |
| diluted | | | | | | |
+---------------------+-----------+-----------+---------+-----------+-----------+--------+
| Underlying earnings | 115 | 371 | 1,272 | 0.7 | 2.4 | 8.2 |
| - diluted | | | | | | |
+---------------------+-----------+-----------+---------+-----------+-----------+--------+
| | | | | '000 | '000 | '000 |
+---------------------+-----------+-----------+---------+-----------+-----------+--------+
| Weighted average number of Ordinary | 15,529 | 15,529 | 15,529 |
| shares - basic calculation | | | |
+-------------------------------------------------------+-----------+-----------+--------+
| Dilutive potential Ordinary shares | - | - | - |
| arising from share options | | | |
+-------------------------------------------------------+-----------+-----------+--------+
| Weighted average number of Ordinary | 15,529 | 15,529 | 15,529 |
| shares - diluted calculation | | | |
+---------------------+-----------+-----------+---------+-----------+-----------+--------+
9. Provisions
+----------------------------+---------------+-+---------------+-+----------+-+---------+
| | Deferred | | | | Property | | |
| | consideration | | Restructuring | | GBP'000 | | Total |
| | GBP'000 | | GBP'000 | | | | GBP'000 |
+----------------------------+---------------+-+---------------+-+----------+-+---------+
| | | | | | | | |
+----------------------------+---------------+-+---------------+-+----------+-+---------+
| At 1 June 2009 | 755 | | 776 | | 129 | | 1,660 |
+----------------------------+---------------+-+---------------+-+----------+-+---------+
| Charge to income statement | - | | 270 | | - | | 270 |
+----------------------------+---------------+-+---------------+-+----------+-+---------+
| Utilised in year | (79) | | (517) | | (54) | | (650) |
+----------------------------+---------------+-+---------------+-+----------+-+---------+
| Deferred consideration | (663) | | - | | - | | (663) |
| adjustment * | | | | | | | |
+----------------------------+---------------+-+---------------+-+----------+-+---------+
| Currency translation | (13) | | - | | - | | (13) |
| adjustment | | | | | | | |
+----------------------------+---------------+-+---------------+-+----------+-+---------+
| At 30 November 2009 | - | | 529 | | 75 | | 604 |
+----------------------------+---------------+-+---------------+-+----------+-+---------+
Provisions have been analysed between current and non-current as follows:
+----------------------+--------+-------+---------+-+---------+-+---------+
| | | | | | 30 Nov | | 31 May |
| | | | | | 2009 | | 2009 |
| | | | | | GBP'000 | | GBP'000 |
+----------------------+--------+-------+---------+-+---------+-+---------+
| | | | | | | | |
+----------------------+--------+-------+---------+-+---------+-+---------+
| Current | | | | | 529 | | 1,585 |
+----------------------+--------+-------+---------+-+---------+-+---------+
| Non-current | | | | | 75 | | 75 |
+----------------------+--------+-------+---------+-+---------+-+---------+
| | | | | | 604 | | 1,660 |
+----------------------+--------+-------+---------+-+---------+-+---------+
* In May 2005, the Group acquired the trade and net assets of AlphaPoint LLC, a
specialist provider of digital surveillance technology in North America, for a
total consideration of up to $3.3 million, made up of $1.3 million in cash and
Ordinary shares of the Company, plus a further amount in cash, capped at $2
million, which was dependent on the future profits of the business. Following
the conclusion of the earn-out period surplus provisions for deferred
consideration of GBP0.7m have been credited back to goodwill.
The restructuring provision primarily relates to redundancy and related costs
and costs of rationalising certain properties.
10. Reconciliation of movements in Total Equity
+--------------------------+---------+---------+---------+----------+-------------+----------+---------+
| | Called | Share | Merger | | Currency | | Total |
| | up | premium | reserve | Other | translation | Retained | GBP'000 |
| | share | account | GBP'000 | reserves | reserve | earnings | |
| | capital | GBP'000 | | GBP'000 | GBP'000 | GBP'000 | |
| | GBP'000 | | | | | | |
+--------------------------+---------+---------+---------+----------+-------------+----------+---------+
| | | | | | | | |
+--------------------------+---------+---------+---------+----------+-------------+----------+---------+
| At 1 June 2009 | 3,382 | 14,851 | 9,565 | (2,486) | 104 | 6,742 | 32,158 |
+--------------------------+---------+---------+---------+----------+-------------+----------+---------+
| Issue of shares to ExSOP | 132 | 868 | - | (1,000) | - | - | - |
+--------------------------+---------+---------+---------+----------+-------------+----------+---------+
| Loss after tax for the | - | - | - | - | - | (134) | (134) |
| period | | | | | | | |
+--------------------------+---------+---------+---------+----------+-------------+----------+---------+
| Dividends (approved but | - | - | - | - | - | (791) | (791) |
| not paid) | | | | | | | |
+--------------------------+---------+---------+---------+----------+-------------+----------+---------+
| Credit in relation to | - | - | - | - | - | 80 | 80 |
| share-based payments | | | | | | | |
+--------------------------+---------+---------+---------+----------+-------------+----------+---------+
| Currency translation | - | - | - | - | (10) | - | (10) |
| adjustment | | | | | | | |
+--------------------------+---------+---------+---------+----------+-------------+----------+---------+
| At 30 November 2009 | 3,514 | 15,719 | 9,565 | (3,486) | 94 | 5,897 | 31,303 |
+--------------------------+---------+---------+---------+----------+-------------+----------+---------+
11. 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
END
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