Quadrant Group Plc - Final Results
September 10 1998 - 8:52AM
UK Regulatory
RNS No 7810h
QUADRANT GROUP PLC
10th September 1998
PRELIMINARY ANNOUNCEMENT OF UNAUDITED RESULTS
FOR THE YEAR ENDED 31 MAY 1998
CHAIRMAN'S STATEMENT
The 1997/8 financial year saw the successful completion of
Quadrant Group's restructuring, with the disposal of our
precision engineering subsidiaries, Yewlands Engineering in the
UK and Quadrant Precision Manufacturing in the US. The Group is
now focused on its growing electronics systems businesses,
particularly flight simulation and training and closed circuit
television security.
The result for the year to 31 May 1998 was a loss before tax of
#0.6 million (loss for the 15 months ended 31 May 1997: #9.8
million), confirming the substantial recovery reported at the
half year point. No dividend is proposed.
The trend of improved operating results continued across the
Group, with all businesses operating profitably in the second
half year. This is particularly encouraging in the case of
Quadrant Systems, our flight simulation and training subsidiary,
in which major investment has been made over the past four years
to create a strong base in a specialised and rapidly evolving
global market.
Investment in organic growth and cost reductions also resulted in
improved performance at Quadrant Video Systems and Quick Imaging
Centre, both of which moved from losses in the previous year into
profit.
Total borrowings at the year end stood at #3.0 million, down from
#5.9 million last time, reflecting mainly the disposals of
Yewlands Engineering and Quadrant Precision Manufacturing.
Further amounts of #0.8 million have been received in the current
year for QPM.
More than ever, the Board is grateful for the continuing
commitment and enthusiasm of the Group's employees through this
period. Some, of course, have left the Group, as their
businesses have gone to new owners, and we wish them all well for
the future.
Trading in the current year has begun relatively satisfactorily,
with successful completion of a large digital video installation
and good progress in the CCTV market. The second half should
also benefit as Quadrant Systems' recently acquired Airbus A300B4
flight simulator comes into service.
Much has been achieved over the past year and the robust steps
taken have provided a focused platform for further improvement in
results in coming periods.
Lord Rees, Chairman
10 September 1998
Chief Executive's Report
Overview
Quadrant Group's operating result for the year recovered to a
small loss of #94,000, against a #2.95 million loss in the 15
months of 1996/7. Within continuing operations the operating
result improved from #(1.1) million to #(0.4) million. Turnover
on continuing operations grew on an annualised basis by 24%,
without the benefit of any acquisitions.
Improved results were achieved in each of the business areas,
despite the inevitable uncertainties generated by major
restructuring within the Group.
Quadrant Systems
The two existing full flight simulators at Quadrant Systems
("QSL") maintained high utilisation during the year and attracted
significant new customers. These included Lufthansa and Air
France, who have chosen QSL as back-up to support their own
training operations.
During the year QSL also acquired an Airbus A300B4 full flight
simulator, which is being extensively updated and will enter
service later this year. This aircraft type is enjoying a
renaissance in its new freighter configuration, generating a
substantial unfilled aircrew training need in the UK. We have
received strong support from the UK and Irish airlines operating
the aircraft and are confident that QSL's simulator will quickly
achieve good utilisation.
Important contracts were also won last year for simulator
equipment services, including the upgrade and relocation of a
B737 simulator from Lufthansa to LanChile worth in excess of #0.5
million.
Crucially, QSL continued its growth and market penetration during
the year and moved into positive operating profitability in the
second half.
Quadrant Video Systems
Overall, Quadrant Video Systems ("QVS") produced annualised
turnover growth of 27%, primarily from continued expansion within
the CCTV security systems sector, and a recovery to modest
profitability.
The rationalisation of the professional video branch network
proceeded successfully, with higher than anticipated retention of
regional business following the closure of the Glasgow and
Sheffield branches. The professional video activities, however,
still have some way further to go to produce satisfactory
results.
In the CCTV sector, QVS is one of the few UK companies offering
national coverage for design, installation and maintenance of
large or high-complexity systems, and is believed to have further
increased its market share during the year. As this business
matures, a greater portion of its revenues derive from
maintenance and upgrades of existing installations, leading to
higher average margins and quality of earnings. The business has
a strong technical base and should benefit from the growth of
more complex digital CCTV equipment.
Synectic Systems
Synectics designs and supplies proprietary electronic control
system products for large CCTV installations. Developed as a
start-up business over the past three years out of Quadrant Video
Systems' in-house research and development activity, Synectics
has already achieved significant penetration in the UK market for
high-end systems and is growing rapidly. Its modular product
range is believed to have a technical edge in large applications
over other systems currently available and to have good potential
in markets beyond the UK.
Synectics' innovative technical abilities were recognised when
one of its products won a prestigious annual award from The
British Securities Industry Association.
The business moved through the breakeven point during last year
and we expect further progress in the current period.
Quick Imaging Centre
Quick Imaging completed a profitable year as the combined
benefits of an innovative approach to electronic imaging design,
solid customer service and tight financial control have borne
fruit.
Outlook
The sale of Quadrant's precision engineering companies has now
enabled us to focus single-mindedly on developing the potential
that has been created within our electronics systems businesses.
The objectives set for the Group last year concentrated on
organic growth and new systems to support that growth with
tighter operational and financial control. Across a narrower
range of activities, organic profit growth remains the primary
goal for the current year.
Progress in the first three months of this year has been good and
in each business there is now a clear sense of confidence and
renewed purpose.
David Coghlan, Chief Executive
10 September 1998
Consolidated Profit and Loss Account
For the year ended 31 May 1998
15
Unaudited months
Notes year to to
31 May 31 May
1998 1997
#'000 #'000
Turnover
Continuing operations 1 18,431 18,533
Discontinued operations 1 8,591 29,147
27,022 47,680
Cost of sales 19,817 38,282
Gross profit 7,205 9,398
Net operating expenses 7,299 12,352
Operating profit/(loss)
Continuing operations (382) (1,055)
Discontinued operations 17 (1,899)
Provision for losses on 271 -
discontinued activities utilised
(94) (2,954)
Exceptional items
- discontinued operations
Loss on disposal of subsidiaries (2,120) (1,481)
provision utilised (2,276) 1,315
provision for loss on disposal of - (2,547)
subsidiary
other exceptional items (193) (2,534)
- continuing operations
provision for loss on disposal of fixed - (450)
assets
provision for restructuring costs - (300)
(37) (5,997)
Loss before interest (131) (8,951)
Net interest payable (517) (842)
Loss before taxation (648) (9,793)
Tax charge on ordinary activities (20) (26)
activities
Loss on ordinary activities after taxation (668) (9,819)
Minority interests (21) (13)
Loss for the financial period - transferred to (689) (9,832)
Reserves
Loss per ordinary share 2 (11.1)p (470.1)p
IIMR loss per ordinary share 2 (10.5)p (197.7)p
Consolidated Balance Sheet
31 May 1998
Unaudited 1997
1998 #'000
#'000
Fixed assets
Intangible assets - 136
Tangible assets 4,465 8,166
4,465 8,302
Current assets
Stocks 995 3,515
Debtors 4,133 5,127
Freehold property held for resale - 1,200
Cash at bank and in hand 308 176
5,436 10,018
Creditors: amounts falling due within
one year (including convertible debt) 5,519 9,411
Net current assets/(liabilities) (83) 607
Total assets less current liabilities 4,382 8,909
Creditors:amounts falling due after more
than one year (including convertible debt) 1,260 2,056
convertible debt)
Provisions for liabilities and charges 424 3543
Net assets 2,698 3,310
Capital and reserves
Called-up share capital 1,243 4,613
Share premium account 6,791 6,789
Other reserves 4,387 1,038
Goodwill write-off account (842) (1,030)
Profit and loss account (8,881) (8,192)
Equity shareholders' funds 2,698 3,218
Equity minority interests - 92
2,698 3,310
Consolidated Cash Flow Statement
For the year ended 31 May 1998
Unaudited 15 months
year to to
31 May 31 May
1998 1997
#'000 #'000
Net cash inflow/(outflow) from operating 1,049 (2,096)
activities
Returns on investments and servicing of finance (538) (840)
Taxation - tax received/(paid) 18 (32)
Net capital expenditure and financial investment(670) (51)
Acquisitions and disposals 1,575 3,519
Cash inflow before financing 1,434 500
Financing (131) 1,238
Increase in cash 1,303 1,738
Statement of Total Recognised Gains and Losses
For the year ended 31 May 1998
Unaudited 15
year to months
31 May to 31
1998 May
#'000 1997
#'000
Total gains and losses recognised
since last annual report:
Loss for the financial period (689) (9,832)
Translation loss on assets held in foreign (24) (50)
currency
Total recognised losses (713) (9,882)
Notes
1.Continuing operations comprise the businesses of Quadrant
Systems, Quadrant Video Systems, Synectic Systems and Quick
Imaging Centre. Discontinued operations comprise the
photographics businesses of Sangers, Leeds Photovisual, Premier
Distribution and Prisma (Europe) which were sold on 28 August
1996, Yewlands Engineering Co. Ltd, which was sold on 6 August
1997 (see note 3) and Quadrant Precision Manufacturing, Inc
which was sold on 29 May 1998. (see note 4).
2.The calculation of earnings per ordinary share is based on
the loss after taxation and minority interests for the year of
#689,000 (1997: loss #9,832,000) and on 6,202,558 shares (1997:
2,091,638) being the weighted average number of shares in issue
and ranking for dividend during the year. The earnings per
share measure recommended by the Institute of Investment
Management and Research (the "IIMR earnings per share") has
been calculated on the loss attributable to shareholders
excluding exceptional capital items.
3.On 6 August 1997 the Company sold the entire issued share
capital of Yewlands Engineering Co. Limited ("Yewlands") for a
nominal consideration. The purchaser also assumed Yewlands'
debt of approximately #0.6 million. In addition deferred
consideration of up to approximately #0.6 million may be
payable by the purchaser dependent on the utilisation of tax
losses in Yewlands.
4.Following shareholder approval at an Extraordinary General
Meeting on 29 May 1998 the Company disposed of its 80%
beneficial shareholding in Quadrant Precision Manufacturing,
Inc. ("QPM") for a total consideration of $2.2 million in cash,
of which $1.0 million was deferred until September 1998. In
addition the Company received $0.4 million in loan notes of
QPM, repayable over two years, to satisfy outstanding inter-
company debt. Early repayment of the loan notes, together with
the balance of the consideration, was received in full on
2 September 1998.
5.Exceptional items incurred in the year ended 31 May 1998
relate to the net loss on disposal of Yewlands and QPM plus
related goodwill of #193,000, offset by the utilisation of
provisions created in 1996/7.
6.The figures for the year ended 31 May 1998 are unaudited
and do not constitute statutory accounts.
7.The figures for the 15 months to 31 May 1997 have been
abridged from the statutory accounts for that period. The
Auditors' opinion on these accounts was unqualified and the
statutory accounts have been filed with the Registrar of
Companies.
CONTACT:
David Coghlan, Chief Executive 01527 850080
Quadrant Group plc
Nigel Poultney, Finance Director 01527 850080
Quadrant Group plc
END
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