Preliminary Results
September 09 2009 - 2:00AM
UK Regulatory
TIDMQDG
RNS Number : 7324Y
Quadnetics Group PLC
09 September 2009
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| For immediate release | 9 September 2009 |
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Quadnetics Group plc
Preliminary Results for the year ended 31 May 2009
Quadnetics Group plc, a leader in the development, design, integration and
management of advanced surveillance technology and security networks, reports
its preliminary results for the year ended 31 May 2009.
Highlights
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| · | Revenue GBP70.7 million (2008: GBP79.2 million) | |
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| · | Underlying profit* before tax GBP1.8 million (2008: GBP3.7 | |
| | million), after charging GBP1.6 million of costs related to new | |
| | products (2008: GBP0.1 million) | |
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| · | Profit before tax GBP0.5 million (2008: GBP4.4 million) | |
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| · | Underlying EPS** 8.2p (2008: 18.9p) | |
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| · | Basic EPS 1.7p (2008: 21.6p) | |
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| · | Recurring revenue GBP16.3 million (2008: GBP14.1 million) | |
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| · | Proposed final dividend 4.5p per share making 7.0p for the full | |
| | year (2008: 7.0p) | |
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| · | Significant initial sales of new Synectics products | |
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| · | Net cash at 31 May 2009 GBP8.1 million (2008: GBP7.9 million) | |
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| · | Group restructuring well under way | |
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* Underlying profit represents profit before tax, exceptional items, goodwill
reduction and share-based payments charge/(credit). **Underlying earnings per
Ordinary share is based on profit after tax but before exceptional items,
goodwill reduction and share-based payments charge/(credit).
Commenting on the results, John Shepherd, Chief Executive, said:
"Trading for the year as a whole was difficult in comparison to the previous
year especially in the first half. It is especially pleasing to have delivered
the stronger second half performance as predicted in February without cutting
back on our investment in new product development - the lifeblood of future
growth.
"Since joining the Group in November I have begun a programme of transition
which is aimed at responding to and capitalising on the current global economic
turmoil through focusing the business on defendable higher margin market niches.
The first phase of the transition process, which includes significant investment
in senior management talent, structural reorganisation, site consolidation and
regional expansion, is now well underway. It will take a further six to twelve
months before we begin to see the fruits of this investment. The global security
and surveillance market is still growing and the supply base is fragmented - a
situation which presents many exciting opportunities for the Group."
For further information, please contact:
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| Quadnetics Group plc | Tel: +44 (0) 1527 850080 |
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| John Shepherd, Chief Executive | |
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| Email: john.shepherd@quadnetics.com | www.quadnetics.com |
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| Brewin Dolphin Investment Banking | Tel: +44 (0) 845 213 4726 |
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| Neil Baldwin | |
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Media enquiries:
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| Buchanan Communications Limited | Tel: +44 (0) 20 7466 5000 |
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| Tim Anderson, Isabel Podda, Ben Romney, | Email: |
| Katharine Sutton | isabelp@buchanan.uk.com |
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Chairman's Statement
Introduction
I am pleased to report that, after a weak first half, Quadnetics produced a
significantly stronger underlying operating performance in the second half of
2008/9 as anticipated in the Company's interim statement. Nevertheless, results
continued to be patchy across the various security and surveillance markets
Quadnetics serves, with some areas seemingly more affected than others by the
downturn of the past year or so. In particular, the gaming market in North
America was subject to a sharp decline as projects for systems upgrades suffered
lengthy delays, whereas Synectics Networks' products and systems in all other
regions produced good revenue and profits growth.
2008/9 was also a year of investment for Quadnetics, both in a new Group
technology platform, and in establishing a more integrated operating structure.
Firstly, we brought to market our suite of new H.264 digital surveillance
products. The net cost of development of these products charged to the income
statement in 2008/9 was GBP1.6 million (2008: GBP88,000). Secondly, we began
during the year a substantial reorganisation of the Group's operating and
management structure to consolidate and further integrate our activities and so
enable greater focus on specific core customer groups, and greater efficiencies
of operating scale. We expect the benefits of these actions to become apparent
in the second half of the 2009/10 financial year.
Results
In the year to 31 May 2009, Quadnetics recorded underlying profit (that is,
profit before tax, exceptional costs, goodwill reduction and share-based payment
costs) of GBP1.8 million (2008: GBP3.7 million) on revenue of GBP70.7 million
(2008: GBP79.2 million). The primary reasons for the decreases in both revenue
and operating margin are set out in the business review below. Profit before tax
was GBP0.5 million (2008: GBP4.4 million), after charging GBP1.35 million of
exceptional costs related to the restructuring referred to above.
Sales in the nature of recurring revenue, primarily maintenance and managed
services, are a key measure targeted by the Group. These grew by just over 15%
to GBP16.3 million.
Underlying earnings per share were 8.2p (2008: 18.9p).
The Group's balance sheet remained ungeared, with net cash at 31 May 2009 of
GBP8.1 million (2008: GBP7.9 million). Free cash flow, that is cash inflow from
operations (excluding exceptional payments) less capital expenditure, was GBP1.9
million (2008: GBP2.5 million).
Dividend
The Board is proposing a final dividend of 4.5p (2008: 4.5p) payable on 4
December 2009 to shareholders on the register on 6 November 2009. If approved by
shareholders, this would bring the total dividend for the full year to 7.0p
(2008: 7.0p). The proposal of an unchanged dividend reflects both our strong
balance sheet and, more importantly, the Board's confidence in the prospects of
the Group.
Business Review
Quadrant Security
The Group's security services division, providing integrated security systems,
security management support and mobile surveillance services
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| Revenue | GBP52 million | |
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| Operating Profit | GBP3.6 million | |
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Quadrant Security Group ("QSG") achieved a small overall increase in operating
profit to GBP3.6 million (2008: GBP3.5 million), on revenue that declined by 10%
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