Acquisition of Indanet AG (5152K)
18 July 2011 - 4:00PM
UK Regulatory
TIDMQDG
RNS Number : 5152K
Quadnetics Group PLC
18 July 2011
For Immediate Release 18 July 2011
Quadnetics Group plc
Acquisition of Indanet AG
Quadnetics Group plc ("Quadnetics" or the "Company") (AIM: QDG)
a leader in advanced surveillance technology and security networks,
announces that it has agreed to acquire 100% of the issued share
capital of Indanet AG ("Indanet"), a leading German provider of
integrated surveillance and security management systems to the
transport industry, for a maximum total consideration of EUR10
million. Consideration of EUR2 million in cash was paid on
completion for an initial tranche of shares equivalent to 51% of
Indanet's issued share capital. Further consideration of between
EUR1 million and EUR8 million for the remaining 49% of Indanet will
be payable in three tranches between 2013 and 2015, dependent on
Indanet's profits for the period from completion to 31 May 2015. A
maximum of EUR3.5 million of this further consideration may be
paid, at Quadnetics' option, in new Quadnetics ordinary shares with
the remainder in cash. The cash element of the consideration will
be funded from existing resources and from an extension of
Quadnetics' existing bank facilities.
The major customers of Indanet, which is based in Munich,
include Deutsche Bahn and the organisations responsible for public
transport in Berlin, Munich and Frankfurt. In the year to 31
December 2010 Indanet had turnover of EUR5.7 million, on which it
reported profit before tax of EUR0.2 million and net assets of
EUR1.0 million. In its three most recent financial years, Indanet's
turnover has grown at a compound rate of 30% per year.
Indanet's technology and market positions are highly
complementary to those of Quadnetics' Synectics Mobile Systems and
Network Systems divisions, and the acquisition is expected to
accelerate significantly the Company's expansion into specialist
transport surveillance markets in northern, central and eastern
Europe in particular. It should also provide enhanced opportunities
for the sales of Synectics high security surveillance systems into
those regions.
Together with the management of Indanet, who have agreed to
continue with the business, Quadnetics believes that Indanet has
substantial near-term growth opportunities from expanded
development of its software and systems product range and from
geographical expansion, which will be enhanced by being part of the
Quadnetics Group. The Company anticipates providing around EUR1.5
million of post-acquisition financing to enable Indanet to pursue
these opportunities, and to exploit the growth synergies available
from integrating the capabilities of Indanet and Synectics. Since
the majority of this investment will be expensed to the profit and
loss account, Quadnetics expects that Indanet will make a net
negative contribution to Group profits in the first 12 months from
completion of up to around GBP1 million, prior to making a
substantial earnings enhancing contribution in the 2012/13
financial year and beyond.
John Shepherd, Chief Executive of Quadnetics, commented:
"Indanet is a high quality organisation which has been built on
the back of a long term relationship with the Berliner Verkehrs
Gesellschaft (BVG), the Berlin integrated transport agency. It has
expanded that core position into similar organisations which are
responsible for the Frankfurt and Munich transport systems, and
into Deutsche Bahn, the German national long distance and regional
railway operator.
"The company has a young and technically knowledgeable team of
software and systems engineers who are capable of forming the
nucleus of a bigger and more diverse organisation. Indanet has
substantial growth ambitions both within Germany and through
expanding to adjacent international markets and they will benefit
significantly from Quadnetics' wider product and market expertise,
and
greater financial and technical resources. The strategic,
marketing and financial disciplines we bring will help shape and
deliver their growth plan.
"Indanet brings to Quadnetics a strong base in Germany, which we
have identified as the ideal European base for expanding all of
Synectics' product offerings into central, eastern and northern
Europe, something which is difficult to do from the UK.
"Culturally, Indanet is an excellent fit with our Synectics
Divisions, as the deep engineering and technical backgrounds are
very similar.
"Strategically, Indanet has positioned itself in the driving
seat with the most valuable customers in one of the biggest markets
in the world for integrated transport surveillance systems. I look
forward to working closely with the dynamic management team at
Indanet to deliver the significant growth of which our joint
strategies are capable."
For further information, please contact:
Quadnetics Group plc Tel: +44 (0) 1527 850080
John Shepherd, Chief Executive
email: john.shepherd@quadnetics.com www.quadnetics.com
Arbuthnot Securities Tel: +44 (0) 20 7012 2000
Tom Griffiths
Media enquiries:
Buchanan Tel: +44 (0) 207 466 5000
Isabel Podda / Tim Anderson
email: isabelp@buchanan.uk.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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