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Delayed orders hurt Quadnetics
QUADNETICS, the CCTV company that helped to identify the July 7 bombers, yesterday warned that its underlying full year profits were likely to fall short of market expectations.
Although Quadnetics has secured major contracts, the company revealed that its Sheffield-based hi-tech Synectics security technology business had suffered from delayed orders.
Trading in the firm's network surveillance sector had also been held back by delays in completing Synectics new specialist digital video recorder. However, Quadnetics remained bullish about its long term prospects.
Quadnetics specialises in advanced CCTV networks which can be found in city centres, transport networks, oil rigs, air traffic control and the Ministry of Defence. The company is probably best known for supplying the City of London police with state-of-the-art cameras which identified the suicide bombers who killed 52 people on July 7 2005. Quadnetics also sells CCTV surveillance systems that help casinos to clamp down on cheating.
In a trading update, issued yesterday, Quadnetics said it had received a number of major orders, including a three-year security management contract for a major new retail customer worth more than 1m.
It has also secured orders for surveillance systems for casinos in Europe and North America with a total value of around 2m. The statement added: "Order intake overall in the second half so far has been strong, with the total firm order book at March 31 standing at 31m, an increase of 14 per cent since the beginning of the current financial year.
"However, while some segments of our business have continued to perform well, in particular UK integrated systems and North American gaming, other parts have performed below our expectations...Despite the orders noted above, a number of other large expected orders for Synectics products have been or may be delayed by customers, and are now anticipated early next year."
Quadnetics said trading within the Synectics surveillance technology division had been adversely affected by two factors.
Firstly, in the defence and offshore oil and gas applications sectors, Synectics had experienced cost overruns leading to significantly reduced margins on two large contracts.
The statement added: "The issues leading to these cost overruns have been firmly addressed. Management changes have been made and process improvements implemented in both areas. The relevant contracts are still profitable, and no further negative impacts are anticipated.
"Secondly, as reported at the time of the interim results, trading in our core network surveillance products sector has been held back by delays in completing development of Synectics' new specialist digital video recorder, which will mean lower than expected customer deliveries of these products in the second half, and consequently reduced margins in this area."
Quadnetics said that these issues had been resolved and it was pleased to report that trials of the new products were underway and the reception from customers had been very positive.
The company expects to achieve solid organic growth in turnover for the year of around 20 per cent, to around 80m. Underlying profits, while still healthy, were now likely to be below market expectations, Quadnetics added. Net cash at year end is expected to be around 7m.
The statement added: "Trading for the final quarter of the current financial year looks set to be strong. With the order book continuing to grow well, and with Synectics' new product suite now coming on line, the company expects to have excellent momentum into 2008/9, and a considerably improved bottom line performance for next year as a whole."
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