Synectics Regulatory News (SNX)

("Quadnetics", "the Group" or "the Company")

Post Year End Trading Update

Quadnetics Group plc, a leader in advanced surveillance technology and security networks, provides the following update on trading following the end of its financial year. As previously announced, the Company has changed its year end from 31 May to 30 November, and the latest financial year therefore covers the 18-month period ending 30 November 2010.

After a strong performance in the six months to 31 May 2010, trading in the final months of the financial year was somewhat below the Board's expectations. A large factor in the shortfall was last minute slippage of deliveries by one of Synectics' key component suppliers for several large orders in the US casino market. This has meant that customer deliveries due for November will not now take place until a few weeks after the Company's year end, resulting in margin moving into the next reporting period. In addition, a large anticipated Synectics order for November delivery to a UK local authority customer was delayed until next year, and the Group's new UK banking customer adjusted its schedule for November rollout of branch upgrades.

While these delivery delays in the final month of the period will affect reported results, the overall improvement in most of Quadnetics' business areas has continued. On a like-for-like basis, expected results for the 12 months to 30 November 2010 are very significantly ahead of those for the same period in the previous year, and the Group remains on track towards its objective of doubling operating margins over the next few years, as set out in its last interim statement. The continuing momentum of business improvement in the year just finished is reflected in a substantial increase in the Group's firm order book, which is estimated to be approximately £28 million as at 30 November 2010, up from £22 million at the end of November 2009.

Important large orders, with extensive follow-on potential, have recently been received for:

- Phase 1 of the £25bn Gorgon natural gas project in Australia, incorporating Synectics' new Coex3000 explosion-rated camera system, and our first order from this region;

- A major UK bank, with Synectics' new Simplicity hybrid digital video recorder; and

- UK prisons and Young Offenders Institutions under the Home Office framework agreement won by Quadrant Security Group last year.

Synectics will announce a further significant new product launch in the defence force protection market early in this new financial year.

Consolidated net cash balances as at 30 November 2010 were approximately £3 million, compared with £3.4 million at the same date last year.

The 18-month period just ended has been dominated by implementation of a major restructuring of the Group's organisation and senior management, following the appointment of our new Chief Executive. The key objectives of this restructuring are to improve the efficiency of the Group's operating fixed cost base, and to increase dramatically our capability for cross-selling our technology, systems integration and managed services skills across our three specialist customer sectors: high security infrastructure protection, mobile surveillance and oil & gas.

Quadnetics continues to operate in a more than usually uncertain market environment, but is doing so with increased internal effectiveness. In most areas there are clear signs of renewed growth; however, the timing of specific orders in the UK local government sector, a relatively small part of our business, remains difficult to predict. We are frustrated that supply chain and customer delays have held back the finish of what has otherwise been a very solid year. However, the Group's rising order book, successful new product launches and energised organisation give the Board increasing confidence of further good progress in 2011.

Quadnetics will issue preliminary results for the 18 months to 30 November 2010 on or around 23 February 2011.

For further information, please contact: