Quadnetics optimistic despite tough first half

The group, which has its Synectics security technology business based in Sheffield, reported revenue of 29.8m in the six months to November 30, down from 35.8m a year earlier. Underlying profit was 161,000 compared to 532,000 in 2008.

Net cash fell by more than half to 3.4m compared to 7.1m.

US and Canadian casinos, which use Synectics' CCTV system to help prevent cheating, are delaying spending on new systems but the firm said they expect the situation to improve in the coming months.

Quadnetics' activities in the Middle East have been consolidated under the control of the Synectics Network Systems division, with the aim of focusing more on higher margin proprietary systems sales. The additional sales resource and a short-term hiatus in new business as the re-focused sales model is implemented, mean that there has been a negative impact in the current financial year, the firm said.

But it added that the new management team has had early success with the award of a substantial contract for surveillance in a fleet of cash-in-transit vehicles, and substantial improvement is expected from this area in the second half.

The company won a number of new contracts with Stagecoach, UK Prisons, Kashagan oilfield, Nexus Rail, London Underground, and West Midlands Police.

Under chief executive John Shepherd, who took the helm a year ago, the group is undergoing a deep restructuring and said it was going according to plan.

The group is optimistic about the second half of the year. The total order book currently stands at 22.1m, compared to 26m in 2008 and the total pipeline is 52.5m, up from 30.6m.

Mr Shepherd said: "This result, viewed in the light of the worst global recession for half a century, is a credit to the skills, ingenuity and hard work of all our employees.

"The group is settling down well after a period of significant structural change and the new executive team is building momentum, which is underpinning our expectations of a much stronger second half, in our chosen market sectors and territories.

"As reflected in the significantly increased order pipeline, the pace of new product and system introductions is accelerating and finding strong customer acceptance at the expense of our competition."

The company is maintaining its dividend of 2.5p