Quadnetics just waiting for call from casinos

The group, which has its Synectics security technology business in Sheffield, felt the effects of North American casinos deferring spending on new CCTV systems.

Coupled with the cost of redundancies and restructuring in the Middle East, Quadnetics fell to a 189,000 loss in the six months to the end of November, compared with a 527,000 profit a year earlier.

Revenue was down 17 per cent to 29.8m, but Quadnetics said the result was creditable in the midst of a deep recession.

The group said its strong order pipeline, which stands at 52.5m compared to 30.6m a year earlier, shows customers are increa-singly attracted to its products.

"Quadnetics is anticipating a stronger than usual second half weighting to its profits this year, supported by an increase in the firm order book," it said.

The group believes stalled casino contracts will soon be freed up, as operators are obliged to maintain high security levels to help prevent cheating.

"We are through the worst of things in just about every other part of the business," said chief executive John Shepherd. "The area of most uncertainty is the US casino business. If that picks up significantly in the second half there's upside potential."

Mr Shepherd said other areas of its business are making up for the uncertainty.

After consolidating work in the Middle East to focus on system sales rather than maintenance and installation, it recently won a "substantial" contract for surveillance in a fleet of cash-in-transit vehicles. While the restructuring meant a hiatus in new business in the first half, it expects the second half to be stronger, fuelled by the need to protect critical national infrastructure.

"The whole critical national infrastructure is pretty recession-proof," said Mr Shepherd. "The world is worried about terrorism with major things like oil storage depots and government buildings."

The group's rugged surveillance systems are increasingly winning admirers among bus, defence and rail customers. Revenues in its mobile systems division were down slightly at 5.2m after restructuring its defence business but it earned a small operating profit.

Synectics won an order for an entire line of the London Underground, where it fitted its rugged T1000 mobile digital recorder to Tube carriages in a deal worth about 0.7m. Mr Shepherd said after completing the contract early, this will "definitely" lead to more orders on the London Underground, as well as opening up international opportunities.

The group also won a recent 3.7m contract to fit the T1000 system to all of Stagecoach's new buses. The group has now shipped more than 1,000 units of the recorder.

Synectics is also targeting significant growth for this product in the defence industry, where it won an initial 0.4m deal to fit armoured vehicles.

Within the oil and gas markets, where it designs and makes surveillance systems for hazardous environments, revenue grew seven per cent to 3.4m and operating profits nearly trebled to 0.5m. It won a 1.6m contract to fit a surveillance system in Kazakhstan at the Kashagan oil field.

During the second half Synectics will be launching a new range of rugged hazardous area products, designed to open up the North American market.

"We expect further positive momentum despite the likely continued lull in new orders from shipbuilders," said the company.

Analysts at house broker Brewin Dolphin said: "Quadnetics traditionally has a strong second half but that effect will be amplified this year now that some restructuring is complete."

A touch of genius

Quadnetics' new bus driver training system is gaining increasing popularity among bus operators.

The new Genius advanced driver training and telematics system monitors the performance of drivers and tries to improve their driving style.

The system records a driver's performance, which can then be downloaded and monitored by the depot.

Genius allows bus drivers to make fuel savings, reduce accidents and improve passenger safety. The system can be fitted to old and new vehicles.

Quadnetics recently secured its first order for Genius with a London bus operator and is on the verge of signing a second contract for 800 systems with another London operator.