Quadrant Group Plc - Fifteen Months Results

RNS No 8378a
QUADRANT GROUP PLC
24th November 1997
                     Quadrant Group plc ("Quadrant")
         (The Precision Engineering and Electronic Systems Group)

                                     
       Preliminary Results for the fifteen months ended 31 May 1997


CHAIRMAN'S STATEMENT

Due  to  a change in Quadrant's year end from February to May, we are  this
year  reporting  on results for the fifteen month period ended  on  31  May
1997.

During  this period, the Group's continuing operations produced a  slightly
reduced  operating  loss of #0.7 million (12 months to  29  February  1996:
#0.9  million).  The overall result however, was a loss before tax of  #9.8
million (1996:  #15.7 million) deriving in large part from #7.4 million  of
pre-interest  losses and exceptional charges (including goodwill)  relating
to  Yewlands  Engineering, which was sold shortly after the year  end.   No
dividend is proposed.

In  the  period,  the Group also disposed of its Photographics  activities,
producing  a  loss on disposal of #1.5 million, the majority of  which  was
provided for in last year's accounts.

The  reasons behind these poor results have been set out at length  in  the
two Interim Statements issued during the period and in the circular sent to
shareholders  in  May in connection with the Placing  &  Open  Offer.   The
dominant  factor  has been the decision not to persevere further  with  the
turnaround  of  Yewlands  necessitated  by  problems  revealed  soon  after
acquisition.  Although much positive progress had been made and indications
received from customers of significant future volume increases, the  timing
of  Yewlands'  recovery remained uncertain and it became likely  that  cash
limits  imposed by the Board would be exceeded.  The company was  therefore
sold  in  August 1997, for a price in line with expectations but inevitably
at a substantial loss.

Within  the  same  sector  of  aerospace  component  manufacture,  Quadrant
Precision  Manufacturing enjoyed considerable success over  the  period  in
strengthening  its  volumes  with its major  customer,  Boeing.   This  has
culminated in the recent award of long term contracts estimated to be worth
in excess of $35 million in revenues over the next five years.

Rapid sales growth was also achieved in Quadrant Systems' flight simulation
activities  and  in  Quadrant  Video  Systems'  closed  circuit  television
security business.  This is covered in some detail in the Chief Executive's
Report.

Aggregate Group borrowings were reduced in the period from #10.8 million to
#5.9 million.  Borrowings have been further reduced in the current year  by
receipt  of  the  proceeds  of disposal of Yewlands  and  the  building  it
occupies, totalling approximately #1.5 million net of costs.

1996/7  was  clearly  a period of considerable turbulence  and  uncertainty
throughout  the Group.  I would like to pass on the Board's thanks  to  all
our employees for their continuing dedication and goodwill.

Four  Board  changes occurred in August of this year.  Michael Dunlop  left
the  Group  Board to concentrate further on the successful  development  of
Quadrant  Precision Manufacturing, where he remains President.   Peter  Rae
joined  us  as  an Executive Director bringing considerable  experience  of
manufacturing businesses and has made positive contributions to the  Group.
Stephen Eldred, who was Group Finance Director since 1994 and recently also
acted as Managing Director of Yewlands, left Quadrant to take up a post  in
the  United States.  We will miss his talents and enthusiasm and  wish  him
well  for  the  future.  We were fortunate to have an able  replacement  in
Nigel  Poultney, who has been the Group's Company Secretary since 1994  and
has now additionally joined the Board as Finance Director.

Trading in recent months, though still unsatisfactory, has improved in most
areas,  particularly  in Quadrant Video's CCTV activities  and  in  the  US
manufacturing business. With the benefit of favourable markets, this  trend
is expected to continue.  We have taken significant and robust steps to put
the  set-backs  of the past two years behind us and, although uncertainties
remain, we look forward to a positive future for the Group.



Lord Rees
Chairman

24 November 1997



For further information contact:

David Coghlan (Chief Executive)                          01527 850080
Brian Coleman-Smith (Binns & Co Public Relations)        0171 786 9600


CHIEF EXECUTIVE'S REPORT

Overview

1996/7  was,  in plain language, an awful period for Quadrant overall.   It
was  dominated  by the final cost of what turned out to be  the  disastrous
acquisition of Yewlands Engineering.

The  period  was also marked by progress in the four continuing businesses,
although  this is as yet more evident in revenues and order  book  than  in
profits.   Turnover  on  continuing operations  grew  by  over  40%  on  an
annualised basis.

Results  improved in most areas, though more slowly than  expected  and  to
levels that are still unsatisfactory overall.

Quadrant Precision Manufacturing, Inc.

Quadrant's aerospace component manufacturing activities comprised  Yewlands
Engineering  in  the  UK,  now sold, and Quadrant  Precision  Manufacturing
("QPM") in the USA.

At  QPM,  annualised sales grew by 98% last year primarily due to increased
volume  at  its  existing facilities and a new factory coming  on  line  in
Seattle.  Anticipated profit growth did not materialise because of one-time
costs  associated with a major shift in the business away from  short  term
off-load work into more consistently profitable long term contracts.   This
has  since resulted in the award to QPM of several five year contracts, the
most  notable of which involve manufacture of Main Landing Gear  Beam  kits
for  Boeing's  newest aircraft types, the 777 and new series  737.   Actual
revenues  from  these  contracts will depend  on  the  number  of  aircraft
produced over the period, but are estimated at $7-8 million per year.

Quadrant Video Systems

1996/7  was a mixed period for Quadrant Video Systems ("QVS").  The branch-
based  professional video sales and hire operations produced unsatisfactory
returns,  with  planned growth not materialising.  On the other  hand,  the
CCTV security activities saw increasing demand and market penetration, both
for    installation   and   maintenance   and   for   proprietary   control
systems.Further  restructuring of QVS is planned for the  current  year  to
enable  increased  focus  on  developing the full  potential  of  the  CCTV
operations.

Further growth and improved results have been achieved in the current  year
so far.
Quadrant Systems

The  Quadrant  Systems B727 and B747 full flight simulators now  have  high
training loads and are producing contributions in line with plan.  The B747
in  particular  is  benefiting  from long term  contracts  and  partnership
arrangements with its major airline customers.


A  number  of contracts were won during the period for simulator  equipment
services,  the  largest  allowing  for  the  prototype  application  of   a
proprietary  computer emulation product.  The contracts  completed  so  far
have  achieved budgeted profits and schedules.  Nevertheless this  side  of
the  business  continued  to  experience a  frustrating  level  of  delays,
cancellations  and  postponements of contract  awards.   For  this  reason,
losses still continued although at a reduced level.

Acceptable  profitability  will  depend on  having  either  two  additional
simulators in the available bays or a greater volume of equipment  business
than  has  so  far been achieved.  Options are been pursued to ensure  that
rapid progress is made on both of these issues.

Quick Imaging Centre

Quick  Imaging Centre grew annualised revenues by 21% over the  period  and
continues to make progress in the commercial design and print market.

Outlook

It is hard to overstate the degree of dissatisfaction felt by all concerned
over  Yewlands  and the impact it has had over the past three  years  on  a
company  of  Quadrant's  size and stage of development.   A  difficult  and
bitter pill has now been swallowed.

The objectives for the immediate future involve:

   - focus on organic growth
   - tighter  operational and financial control as new  systems  introduced
     over the past year come on stream
   - cost reductions in all areas
   
A  number  of  steps  have  already been taken or agreed  in  these  areas,
including big cuts in central costs.

Results  in  the current year are improving in each business, but  for  the
moment caution is still in order.

As  Chief  Executive, and as a shareholder, I am deeply  conscious  of  the
value  that has been lost in this Company over the past two years.   Having
in   May  significantly  increased  my  personal  financial  commitment  to
Quadrant,  I  am determined that the Company will develop successfully  and
produce acceptable returns for all shareholders as soon as possible.



David Coghlan
Chief Executive




CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the 15 months ended 31 May 1997

                                               Unaudited             
                                               15 months to   Year to
                                                  31 May  29 February
                                     Notes          1997         1996
                                                   #'000        #'000
                                              
                                                                     
Turnover                                                             
Continuing operations                  1          26,807       14,827
Discontinued operations                1          20,873       37,494
                                                --------     --------
                                                    4680       52,321
Cost of sales                                     38,282       42,866
                                                --------     --------
Gross profit                                       9,398        9,455
Net operating expenses                            12,352       11,026
                                                --------     --------
Operating loss                                                       
Continuing operations                              (735)        (872)
Discontinued operations                          (2,219)        (699)
                                                 (2,954)      (1,571)
Exceptional items                      2                             
 - discontinued operations                                           
loss on disposal of subsidiaries                 (1,481)            -
provision utilised                                1,315             -
provision for loss on                                                
 disposal of subsidiary                          (2,547)      (1,315)
other exceptional items                          (2,534)     (12,131)
- continuing operations                                              
    provision for loss                                               
    on disposal of fixed assets                    (450)            -
    provision for restructuring                    (300)            -
costs
                                                 (5,997)     (13,446)
                                                --------     --------
Loss before interest                             (8,951)     (15,017)
Net interest payable                               (842)        (726)
                                                --------     --------
Loss before taxation                             (9,793)     (15,743)
Tax credit/(charge) on                                               
ordinary activities                                 (26)           70
                                                --------     --------
Loss on ordinary activities                                          
after taxation                                   (9,819)     (15,673)
Minority interests                                  (13)          137
                                                --------     --------
Loss for the financial period                    (9,832)     (15,536)
Dividends                                              -            -
                                                --------     --------
Retained loss for the                                                
financial period                                 (9,832)     (15,536)
                                                  ======       ======
Loss per ordinary share                3          (470)p       (838)p
                                                  ======       ======
IIMR loss per ordinary share           3          (198)p       (113)p
                                                  ======       ======

BALANCE SHEET
31 May 1997


                                       Unaudited            
                                          31 May 29 February
                                            1997        1996
                                           #'000       #'000
                                                            
Fixed assets                                                
Intangible assets                            136         158
Tangible assets                            8,166      11,767
                                        --------    --------
                                           8,302      11,925
                                        --------    --------
Current assets                                              
Stocks                                     3,515       6,122
Debtors                                    5,127       9,057
Freehold property held for resale          1,200       1,884
Cash at bank and in hand                     176          88
                                        --------    --------
                                          10,018      17,151
Creditors: amounts falling due                              
within one year (including convertible     9,411      16,243
debt)                                   --------    --------
Net current assets                           607         908
                                        --------    --------
                                                            
Total assets less current                  8,909      12,833
liabilities
                                                            
Creditors: amounts falling due                              
after morethan one year (including         2,056       4,178
convertible debt)
Provisions for liabilities and charges     3,543       1,612
                                        --------    --------
Net assets                                 3,310       7,043
                                          ======      ======
                                                            
Capital and reserves                                        
Called-up share capital                    4,613       3,748
Share premium account                      6,789       3,519
Other reserves                             1,038       1,088
Goodwill write-off account               (1,030)      (2,952)
Profit and loss account                  (8,192)       1,640
                                         -------      -------
Equity shareholders' funds                 3,218       7,043
Equity minority interests                     92           -
                                          --------  --------
                                           3,310       7,043
                                          ======      ======

Notes

1)Continuing  operations  comprise  the  businesses  of  Quadrant  Systems,
  Quadrant Video Systems, Quadrant Precision Manufacturing, Inc. 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,  and  Yewlands
  Engineering Co. Ltd, which was sold on 6 August 1997 (see note 4).

2)Exceptional items comprise the following charges:

                                     15 months to       Year to
                                           31 May   29 February
                                             1997          1996
                                            #'000         #'000
Loss on disposal of Photographics           1,481             -
Group
Provision utilised                         (1,315)            -
Provision for loss on disposal                                 
of subsidiaries                             2,547         1,315
Goodwill on disposals                       1,931         3,864
Other goodwill previously                                      
written off to reserves                         -         7,393
Provisions in respect of properties           603           874
Provision for loss on                                          
disposal of fixed assets                      450             -
Provision for restructuring costs             300             -
                                        ---------     ---------
                                            5,997        13,446
                                          =======       =======

3)The  calculation  of earnings per ordinary share is  based  on  the  loss
  after  taxation  and  minority interests for  the  period  of  #9,832,000
  (1996: loss #15,536,000) and on 2,091,638 shares (1996: 1,854,253)  being
  the  weighted average number of shares in issue and ranking for  dividend
  during  the period.  The average number of shares in issue prior  to  the
  splitting and consolidation of ordinary shares of 10p each into  ordinary
  shares  of  20p each has been calculated as though an equivalent   number
  of  ordinary shares of 20p each had been in issue throughout the  period.
  The   earnings  per  share  measure  recommended  by  the  Institute   of
  Investment  Management and Research (the "IIMR earning  per  share")  has
  been  calculated  on  the  loss attributable  to  shareholders  excluding
  exceptional capital costs.

4)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.

5)The  figures for the 15 months to 31 May 1997 are unaudited  and  do  not
  constitute statutory accounts.

6)The  figures for the year ended 29 February 1996 have been abridged  from
  the  statutory  accounts for that year.  The Auditors' opinion  on  these
  accounts was unqualified and the statutory accounts have been filed  with
  the Registrar of Companies.



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