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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Quadnetics Grp | LSE:QDG | London | Ordinary Share | GB0007156838 | ORD 20P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 290.50 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
RNS Number:4147L Quadnetics Group PLC 22 April 2005 Quadnetics Group plc 22 April 2005 Acquisition, Major Contract Win and Trading Update Acquisition Quadnetics Group plc, a leader in the design, integration and control of advanced CCTV and networked video surveillance systems, announces that it has agreed to acquire the trade and assets of Alphapoint LLC, a specialist provider of digital surveillance technology in the North American market, for a maximum total consideration of approximately $US3.3 million. Initial consideration, payable on completion in mid May, will be approximately $US900,000, of which $US700,000 will be payable in cash and $US200,000 in approximately 33,000 ordinary shares of the Company. The management team of Alphapoint will be remaining with the business, and further consideration of up to $US2.0 million in cash and $US0.4 million in approximately 66,000 Quadnetics shares will be payable, depending on profits over the next four years. Alphapoint, based in Santa Barbara, California is one of a small number of US based specialist security IT organisations working in the IP (Internet Protocol) CCTV field, with particular focus on casinos. In the year to 31 December 2004, Alphapoint had unaudited turnover of $US4.3 million and profit before tax of $US0.35 million. At 31 December 2004, Alphapoint's unaudited net assets were approximately $US0.4 million. Quadnetics believes that the resources and capabilities of Alphapoint's business, trading as Synectic Systems, Inc. in North America, will further accelerate the penetration of Synectics technology into the casino, homeland defence and transportation security surveillance sectors of the North American digital CCTV market. Major contract award The Company is also pleased to announce that it has secured a further order of approximately $US3 million to supply Synectics digital CCTV technology for four additional casinos in Canada. A significant proportion of this order will be completed within the Company's current financial year. The order follows successful commissioning for the same customer of what is believed to be the largest real time digital CCTV system in the world so far. Trading Update On the basis of currently anticipated deliveries over the final two months, the Board of Quadnetics expects that profit before tax and goodwill amortisation for the year to 31 May 2005 will fall within the range of #2.6 million to #3.0 million, which is below current market expectations of around #3.5 million. Turnover for the year will be approximately #27 million which would represent an increase of around 50% on the previous year. Slightly more than half of this turnover increase is organic growth and the remainder the result of the acquisition of Look CCTV and Coex in February 2004. The potential variation in profit depends primarily on what proportion of the high volume of sales expected to be made by Synectics in the next three months, following recent and immediately anticipated order wins, will arise before the year-end. After goodwill amortisation of #(0.4) million, and the positive impact of recognising a deferred tax asset of #0.4 million, reported net profit after tax is likely to be in the range of #1.8 million to #2.1 million. The performance of Synectics during the year continues to be outstanding, and fully in line with expectations. Turnover is expected to grow by over 100% to in excess of #8 million, with operating profit margins increasing to around 18%. The market for large-scale digital surveillance systems remains buoyant, particularly in North America, and all indications are that Synectics' technology and systems solutions are becoming increasingly recognised as among the best available. Export sales to North America will have increased from a very low base in 2003/4 to over $US5 million in the current year. The establishment of a permanent US base, through the acquisition of Alphapoint, should support significant further growth. Elsewhere, Look CCTV has had lower than planned installation completions this year, due primarily to the financial collapse of the parent company of Transbus, its largest customer. Look's strong ties with the bus operating companies have enabled it to maintain market share through this transition period and to develop closer working relationships with Transbus' new owners, Alexander Dennis. Look has now been appointed as preferred supplier by Alexander Dennis for a three year period. Planned increases in infrastructure and sales and marketing expenditure have been made to enable penetration into new geographical and product areas, and to increase the proprietary elements of the systems Look supplies. These expenditures have reduced net operating margins to a still very creditable 18% for the current year, and are expected to provide a solid platform for future growth. Overall, Look's profit contribution will be satisfactory for the current year, although somewhat below original expectations. As announced in the Company's interim statement in January 2005, contract awards and completions at Quadrant Video Systems in the first half of the year were lower than anticipated. The situation has reversed in the second half, with turnover increasing by around 25% compared with the first half, and the run-rate of activity returning to planned levels. Although it now appears that not all of the first half shortfall in operating profits against budget will be made up in the second half, the business continues to produce strong operating margins and will have very positive momentum going into next year. Coex, the Marine and Explosion-rated specialist acquired last year, has been developing the next generation solutions for advanced CCTV monitoring and control in hazardous environments, particularly within the oil and gas industry. Proprietary Synectics technology will be incorporated in future versions of these solutions. As new management, financial systems and sales resources have been brought in, the business was not anticipated to make a significant contribution to Group results in the current year. The actual result is likely to be a small operating loss. The changes in structure and capability have enabled Coex to address larger and more complex sales, with the objective of securing for the Group a large share of this specialist global surveillance market. The Board is pleased with progress to date and, in particular, with recent orders from Far East shipyards worth initially around #0.8 million, with substantial follow-on orders likely. The Board believes Quadnetics is making significant progress in all of its target areas and achieving real success in extending its reach into new vertical and geographic market sectors. Underlying operating profits in the second half will be substantially higher than in the first half, and the current run-rate is satisfactorily in line with the Company's operating plan in absolute terms. The Company intends to strengthen the senior management team in line with the increased growth and geographical spread of its activities, and expects to make important new Group-level appointments shortly. Quadnetics' primary objective remains to seek out or develop opportunities to establish Synectics technology and systems with significant market share in a number of specialist sectors in the global digital CCTV surveillance market, particularly public space surveillance, casinos, government security services, transportation and oil & gas. Progress in the current year has been particularly pleasing in respect of the high rate of profit and revenue growth Synectics is now achieving. The Company's overall pipeline of business, in particular for Synectics in both the UK and North America, gives considerable confidence for next year. Russ Singleton, Chief Executive, commented: "We expect the acquisition of Alphapoint, bringing with it a team of respected industry professionals in the US digital CCTV surveillance market, to significantly enhance our capability to achieve our ambitious growth objectives in North America. With existing contract wins, Synectics has already established that its technology is highly competitive in this market, and we look forward to increasing our share of the major growth opportunities now emerging." Enquiries: Peter Curtain / Ariane Vacher Tel: +44 020 7398 7700 Abchurch Communications ariane.vacher@abchurch-group.com Neil Baldwin Tel: +44 0113 241 0130 Brewin Dolphin Securities neil.baldwin@brewin.co.uk --------------------------- This information is provided by RNS The company news service from the London Stock Exchange END ACQUUVURVORSUAR
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