Companies: QDG   

The CCTV and network video systems supplier's year-end results to May reflected the benefits of its strategic decision to move away from 'low-margin subcontract work' and pursue higher value-added sales instead. Turnover fell from £20.3m to £18.1m, but pre-tax profits rose 36% to £1.9m. Quadrant, which supplies surveillance services to more than 50% of the UK's civic space market (town centres, squares etc), is increasingly building recurring revenues through fixed five-year maintenance contracts. Quadnetics' other subsidiary, Synetic Systems, develops related software and equipment and has just won a contract from a Canadian casino to supply a digital recording and control system worth an initial $2m (£1.1m). This follows a £1m major police force contract announced in June. The company intends to push sales in North America in 2005 by opening an office in Canada. In February it acquired two niche businesses, Look CCTV, which has 70% of the UK market in supplying on-board CCTV to the bus market, and Coex, the hazardous environment CCTV supplier. An £8m placing paid for the acquisitions. Broker Brewin Dolphin forecasts 2005 sales will jump to £27.9m and pre-tax profits will come in at £3.8m. The prospective p/e of 12.2 is far below the sector average of 32 and with consolidation rife in CCTV world (Siemens has made a bid for Photoscan and Honeywell acquired Silent Witness) you would do well to hold onto the shares.