Final Results

RNS Number:8214K
Quadrant Group PLC
28 September 2001



                              Quadrant Group plc

                Preliminary Announcement of Unaudited Results

                        for the year ended 31 May 2001


Chairman's Statement

Last year, Quadrant Group made an overall profit before tax of #501,000 (1999/
2000: #254,000), including an exceptional gain of #296,000 from re-negotiation
of deferred consideration for a past disposal. The operating profit was 
#274,000, compared to a loss in the prior year of #385,000. Turnover on
continuing operations increased to #18.3 million, representing growth of 38%
over last year. No dividend is proposed.

Although somewhat below our original expectations, these results confirm the
positive impact of the predicted substantial organic growth from our core
electronic systems businesses and of the restructuring undertaken over the
past two years.

The company's largest area of activity is in the CCTV security market, where
Quadrant Video Systems and Synectic Systems have established UK leadership
positions in installation and maintenance, and in core electronic control
products, for large scale networked CCTV security systems, such as town
centres. With the support of local and central governments, this market has
continued to grow.

Exports of Synectics' products made further progress. Also, towards the end of
the year, Quadrant Video successfully installed in Jersey City, phase one of
the first modern town-centre CCTV system to be commissioned in the United
States. Additional opportunities are expected in this area.

Operating margins in the installation business were below normal levels,
particularly in the second half, as a result both of an unusual proportion of
lower margin government work and increased overhead expenditure to gear up for
accelerated growth anticipated in the current year. These margins are expected
to be back towards historical levels in the first half of this year.

As previously reported, our flight simulation business (through the Quest
Flight Training joint venture) won an important contract to provide pilot
training for the RAF's E-3D AWACS crews for the next 30 years. Preparatory
work on upgrading the simulator absorbed a great deal of effort and resource
during the year, and full training on the updated device is expected to begin
on schedule at the end of October.

Overall turnover in flight simulation grew by over 100% to #6.9 million. As
predicted, the business achieved profitability, generating an operating profit
of #126,000 compared to a loss of #415,000 last year. Although it was a year
of real successes, the rapid growth rate and resource constraints imposed by
the E-3D programme resulted in cost inefficiencies and therefore margins that
were considerably below potential. In the current year we expect a more stable
sales level and improved profitability.

Axiom Design & Print again produced a creditable performance, despite an
unavoidable loss of volume from a large customer that reduced its result to
breakeven in the second half.

After investing #475,000 for our 50% share of Quest Flight Training, net
borrowings at the year end were #698,000.

The recent period has been an especially challenging one for the Group's
employees at all levels, with extraordinary commitment needed to grasp the
opportunities that have been developed and to ensure promises are delivered.
Much has been achieved, and the Board is grateful to all those who have
contributed to this spirit of achievement.

The current year has started positively, particularly in the CCTV businesses
which have won important contracts incorporating new networking and digital
video recording technology. CCTV order books have grown substantially and
underpin an expectation of continuing strong organic growth. Overall, although
there are obvious uncertainties, we expect the Group's businesses to deliver
further solid improvement in financial results.

Peter Rae

Chairman

28 September 2001





Consolidated Profit and Loss Account

For the year ended 31 May 2001
                                                           Unaudited       2000
                                                   Notes        2001      #'000
                                                               #'000
Turnover
Continuing operations                                1        18,253     13,192
Discontinued operations                              1             -      6,096
                                                              18,253     19,288
Less share of acquired joint venture's turnover                (282)          -
Group turnover                                                17,971     19,288
Cost of sales                                               (13,057)   (12,493)
Gross profit                                                   4,914      6,795
Net operating expenses                                       (4,757)    (7,180)
Operating profit/(loss)
Continuing operations                                            157      (159)
Discontinued operations                                            -      (226)
Group operating profit/(loss)                                    157      (385)
Share of operating profit in acquired and            2            97          -
continuing joint venture
Share of operating profit in continuing associate    3            20          -
Total operating profit/(loss)                                    274      (385)
Exceptional items
- continuing operations                                           
    Profit on disposal of fixed assets                            -      1,235
- discontinued operations                            
    Additional consideration from sale of business   4           296          -
    Provisions and asset impairment on disposal of                 -      (450)
    business
                                                                 296        785

Profit before interest                                           570        400
Net interest payable                                 5          (69)      (146)
Profit before taxation                                           501        254
Tax charge on ordinary activities                    6          (35)          -
Profit on ordinary activities after taxation                     466        254
Minority interests                                                 -          -
Profit for the year - transferred to reserves                    466        254

Basic earnings per ordinary share                    7          7.2p       4.1p
Diluted earnings per ordinary share                  7          7.2p       4.1p





Consolidated Balance Sheet

31 May 2001
                                                      Notes Unaudited      2000
                                                                 2001     #'000
                                                                #'000
Fixed assets
Intangible assets                                                  43        46
Tangible assets                                                 1,633     2,044
Investments
Investment in joint venture                             2
- share of gross assets                                         2,672         -
- share of gross liabilities                                  (2,119)         -
                                                                  553         -
Investment in associate                                 3         216         -
Total investments                                                 769         -
                                                                2,445     2,090
Current assets
Stocks                                                          1,467       936
Debtors                                                         5,734     4,837
Cash at bank and in hand                                            3       109
                                                                7,204     5,882
Creditors: amounts falling due within one year                (5,853)   (4,650)

Net current assets                                              1,351     1,232

Total assets less current liabilities                           3,796     3,322

Creditors: amounts falling due after more than one year         (164)      (92)

Provisions for liabilities and charges                           (52)     (120)

Net assets                                                      3,580     3,110

Capital and reserves
Called up share capital                                         1,288     1,288
Share premium account                                           6,934     6,934
Other reserves                                                  4,387     4,387
Profit and loss account                                       (9,033)   (9,499)

Equity shareholders' funds                                      3,576     3,110
Equity minority interest                                            4         -
                                                                3,580     3,110



Consolidated Cash Flow Statement

For the year ended 31 May 2001
                                                          Unaudited        2000
                                                               2001       #'000
                                                              #'000

Net cash inflow/(outflow) from operating activities             879        (51)

Returns on investments and servicing of finance                (80)       (183)

Net capital expenditure and financial investment              (436)       3,567

Acquisitions and disposals                                    (381)           -

Cash inflow/(outflow) before financing                         (18)       3,333

Financing                                                     (109)     (2,217)

Increase/(decrease) in cash                                   (127)       1,116




Notes


 1. Continuing operations comprise the businesses of Quadrant Systems, Quadrant
    Video Systems ("QVS"), Synectic Systems, Axiom Design & Print and C3
    Design & Print. Turnover from continuing operations also includes 50% of
    the turnover of Quest Flight Training Limited ("Quest", see note 2).
    Discontinued operations comprise the former audio-visual equipment,
    systems and services business ("The AV Business") of QVS (see note 3).

 2. On 20 July 2000 Quest was awarded a contract by the UK Ministry of Defence
    for the provision of aircrew simulator training for the RAF's Boeing E-3D
    AWACS aircraft. Quest was specifically set up for this programme as a 50%
    owned joint venture company between Quadrant Group plc and Evans &
    Sutherland Computer Corporation, to which both parties have subscribed 
    #475,000 for ordinary share capital. The activities of Quest have been
    reported as a joint venture under the gross equity method of accounting.

 3. With effect from 1 June 2000 the AV Business was transferred into a
    previously dormant subsidiary of QVS, Quadrant Visual Solutions Limited
    ("VSL") and QVS then sold 80.65% of the share capital of VSL to the
    management of VSL. In addition, VSL issued to QVS #200,000 of 7% secured
    loan notes (repayable over 5 to 7 years), of which #180,000 remained
    outstanding at 31 May 2001 and is included in the amount shown as
    investment in associate on the balance sheet. The activities of VSL have
    been reported as an associated company under the equity method of
    accounting from 1 June 2000.

 4. The terms of the sale agreement for Yewlands Engineering Co. Limited, a
    former subsidiary undertaking which was sold in 1997, provided that
    Quadrant would receive additional consideration payable upon utilisation
    of tax losses in that company. During the year the Company received #
    296,000 in full and final settlement of this provision. This amount has
    been shown as an exceptional item in the profit and loss account and
    included under acquisitions and disposals in the cash flow statement.

 5. Net interest payable includes the appropriate share of interest payable and
    receivable by joint ventures and associates.

 6. The tax charge represents the Group's share of the joint venture tax
    charge. No tax charges arise in either Quadrant Group plc, its
    subsidiaries or associate company.

 7. The calculation of basic earnings per ordinary share is based on the profit
    after taxation and minority interests for the year of #466,000 (2000: 
    #254,000) and on 6,439,956 shares being the actual number of shares in
    issue and ranking for dividend during the year (2000: weighted average
    number of shares - 6,271,349).

    There were no dilutive potential ordinary shares in the two years ended 31
    May 2001.

 8. The preliminary results for the year have not been audited by the Group's
    auditors and do not constitute statutory accounts. The comparative figures
    for 2000 have been abridged from the statutory accounts for the year ended
    31 May 2000. The Auditors' opinion on these 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 2000
    have been filed with the Registrar of Companies.