Appendix 4D 31 December 2010 For personal use only2011/02/28 · Appendix 4D Half yearly report 31 December 2010 Q Technology Group Limited (formerly QRSciences Holdings Limited)

Appendix 4D

Half yearly report

31 December 2010

Q Technology Group Limited (formerly QRSciences Holdings Limited) ABN 27 009 259 876

Results for announcement to the market Extracts from this report for announcement to the market. $A'000

Revenues from ordinary activities

Up 71% to 17,371

Net Profit/(loss) from ordinary activities after tax attributable to members

Down 116% to (608)

Net Profit/ (Loss) for the period attributable to members

Down 116% to (608)

Dividends Amount per security

Franked amount per security

Interim dividend Nil Nil

Previous corresponding period Nil Nil

+Record date for determining entitlements to the dividend

No dividend has been declared or paid.

Brief explanation of any of the figures reported above and short details of any other item(s) of importance not previously released to the market: Refer attached Half Year financial report

Net Tangible Assets Backing

Current period

Previous corresponding

Period

Net tangible asset backing per +ordinary security 2.07¢ 7.81¢

Entities over which control has been gained during the period:

Name of Entity: API Services and Solutions Pty Ltd Date: September 2010

Entities over which control has been lost during the period:

Name of Entity: QRSciences Pty Ltd Date: August 2010

These accounts are not subject to audit dispute or qualification. The review report is attached as part of the Interim Report.

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HALF YEAR FINANCIAL REPORT 31 DECEMBER 2010 ABN 27 009 259 876

Holdings Limited

and Controlled Entities

Q Technology Group Limited (formerly QRSciences Holdings Limited) is incorporated in Western Australia

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Q Technology Group Limited (formerly QRSciences Holdings Limited) and Controlled Entities

ABN 27 009 259 876

Interim Financial Report

Page 2

This Interim Financial Report covers Q Technology Group Limited (formerly QRSciences Holdings Limited) and its controlled entities as a consolidated group. The Group's functional presentation currency is Australian Dollars.

CORPORATE DIRECTORY

DIRECTORS

Mr Bruce Higgins (Chairman, Non-Executive)

Mr Rick Stokes

Mr Douglas Potter

Mr Robert Halverson (Non-Executive)

Mr Michael O’Leary (Non-Executive)

AUDITORS

Moore Stephens

Chartered Accountants

Level 10, 530 Collins Street

Melbourne Victoria 3000

Telephone: +61 3 8635 1800

Facsimile: +61 3 8102 3400

CHIEF FINANCIAL OFFICER & COMPANY SECRETARY

Mr Jamie Taylor

BANKERS

National Australia Bank Limited

49 Malop Street

Geelong Victoria 3220 and;

GE Capital

572 Swan Street

Richmond Victoria 3121

REGISTERED OFFICE

5/435 Williamstown Road

Port Melbourne Victoria 3207

Telephone +61 3 9646 9016

Fax +61 3 9646 2049

SOLICITORS

Norton Rose

RACV Tower, 485 Bourke Street

Melbourne Victoria 3000

Telephone: +61 3 8686 6000

Facsimile: +61 3 8686 65005

SHARE REGISTRY

Computershare Investor Services Pty Ltd

Level 2, 45 St George's Terrace

Perth Western Australia 6000

Telephone: +61 8 9323 2000

Facsimile: +61 8 93232033

STOCK EXCHANGE

Australian Stock Exchange

Exchange Plaza

2 The Esplanade

Perth Western Australia 6000

WEBSITE

www.qtechnologygroup.com.au

www.qvideosystems.com.au

ASX CODE

QTG - Ordinary Shares

QRSNY.PK - U.S. ADR’s For

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http://www.qtechnologygroup.com.au/

http://www.qvideosystems.com.au/


ABN 27 009 259 876


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DIRECTORS’ REPORT

Your directors submit the financial report of the consolidated group for the half-year ended 31 December

2010.

Directors

The names of directors who held office during or since the end of the half-year:

Rick Stokes Bruce Higgins (appointed 21/12/10)

Douglas Potter Bob Halverson

Michael O’Leary (appointed 4/01/11)

The directors are pleased to report the company’s financial results for the first half of the financial year

ending 30 June 2011.

The Company’s revenue for the half was $17.467m and the consolidated group result after tax was a loss

of $608K.

The directors wish to provide details to the shareholders of the underlying business performance and the

consolidated items arising from the acquisition of API Services and Solutions, and have provided the table

below as a means to clarify business performance and reconcile continuing net profit after tax by adjusting

for API acquisition expenses and discontinued operations.

(Half-Year)

$’000

31-Dec-10 31-Dec-09 % Change

Revenue

17,467

10,179 71.6%

Gross Profit

6,950

3,032 129.2%

GP Margin 39.8% 29.8% 33.6%

EBITDA 768 743 3.3%

EBITDA Margin 4.4% 7.3% (2.9%)

EBIT 540 651 (17.1)%

EBIT Margin 4.9% 6.4% (23.9%)

Interest Expense

(479)

(86) (454.4%)

Continuing NPAT

422

569 (25.8%)

API Acquisition Expenses

(522)

-

API Onerous property lease contract

(372)

-

Gain on disposal of Spectrum

-

3,818

Discontinued Operations

(136)

(532) 74.4%

Consolidated NPAT

(608)

3,855 (115.8%)

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DIRECTORS’ REPORT

Consolidated revenue was $17.371m, up 71.24% with a loss for the period of $608k which was down 116% from the same corresponding period last year. The Group results were adversely affected by the one off costs of integrating the API Locksmith business and totaled $192K during the period. In addition to these integration costs there were transaction costs of $522K for legal and due diligence services along with a 322% increase in the finance costs for the Group from $135K to $570K for the period.

The Q Video Systems business continued to grow revenue and maintained its profitability during the period.

The Group completed the acquisition of the API Services and Solutions (API) business on 30 September 2010 and substantial progress has been made in the integration of the business operations into the Group as to the date of this report.

The net asset position of the Group is $11.578m which equates to 7.63 cents per share.

QRSciences Security Pty Ltd, which comprises Q Video Systems and Q Alarm Supplies, continues to grow with the business delivering sales in the first six months of $11.440m up 12.5% from the same period last year and posted a before tax profit of $1.173m which was an improvement of 30.3% over the corresponding period last year.

The API business had sales for the quarter of $6.064m and recorded a before tax loss for the period of $17K. The result was adversely affected by one off integration costs of $192K for the period which will not be present in the ongoing operations.

The Company appointed a Non-executive Chairman Bruce Higgins to the Board on 21 December 2010, and also appointed Mr. Michael O’Leary on the 4

th of January 2011 after the balance date for the period.

Mr. Higgins and Mr. O’Leary appointment further diversifies the Board to support the growth plans of the Company.

The Board is now confident that the majority of the integration of the API business is behind the Group and look forward to an improved consolidated result for the second half of the year.

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DIRECTORS’ REPORT

Update on QRSciences Security Pty Ltd

QRSciences Security Pty Ltd, which comprises Q Video Systems and Q Alarm Supplies, with offices located in Melbourne, Sydney, Brisbane and Perth, achieved a Net Profit before tax of $1.304m a very strong trading result for the business.

Highlights for the period were;

Revenue up 12.5% to $11.440m when compared to the previous corresponding period.

Profit before tax for the period up 30.3% to $1.173m compared to the previous corresponding period.

The business entered into an exclusive distribution agreement with Tyco Safety products for the DSC security product range.

The distribution arrangements with Samsung continue to strengthen with sales of Samsung products growing significantly.

The Q Alarm Supplies sales growth continues to grow and further diversifies the revenue base for the business.

The Company remains pleased with the continued growth of the Q Video Systems and the Q Alarm Supplies businesses.

Both revenue and profit before tax grew strongly for the period in an environment where a strong Australian dollar has had a price deflationary effect on the industry in general, with this in mind the results for the period are outstanding.

Update on QRSciences Pty Ltd

QRSciences Pty Ltd, the Group’s Perth based R&D business, was closed down in the period and the Company was placed in Voluntary Administration and all debts were written off in the process.

The net result was that a one off loss of $136K was accounted for in this period under review.

Update on API Services and Solutions

The API Services and Solutions business, which trades as API, was acquired on 30 September 2010; hence revenue was only recognized for the last 3 months of the period.

API is Australia’s leading commercial locksmith and has 19 branch locations throughout Australia.

Highlights for the period were: (All financial numbers exclude integration expenses)

Revenue for the last quarter was $6.064m.

EBIT for the period was $14K

Integration of the API business into the Group is complete and most one off costs now accounted for in this period.

With the business now integrated into the Group we are expecting revenue and earnings growth for the remainder of the financial year.

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DIRECTORS’ REPORT

Events Occurring After The Reporting Period

The following events occurred after the end of the reporting period, being;

On 4 January 2011 the Company appointed Michael O’Leary as a Non-executive Director to the QTG Board.

In January 2011 the Queensland floods affected the Company’s sales locations in Brisbane. The API Milton branch was closed by this event and the Company had losses of inventory and property plant & equipment totaling approximately $540k. These assets were insured and the Company expects to recover most of these costs. A progress payment from the Company’s insurers of $250K was received in February 2011.

In addition to this cover the business has Business Interruption Insurance in place, and the Company is in the process of quantifying this claim.

Rounding of Amounts

The consolidated group has applied the relief available to it in ASIC Class Order 98/100 and accordingly

certain amounts in the financial report and the directors’ report have been rounded off to the nearest

$1,000.

Auditor’s Declaration

The lead auditor’s independence declaration under s 307C of the Corporations Act 2001 is set out on page

7 for the half-year ended 31 December 2010.

This report is signed in accordance with a resolution of the Board of Directors.

Mr Rick Stokes

Managing Director and Chief Executive

Date: 28 February 2011

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Moore Stephens ABN 39 533 589 331. Liability limited by a scheme approved under Professional Standards Legislation. An independent member of Moore Stephens International Limited – members in principal cities throughout the world. The Melbourne Moore Stephens firm is not a partner or agent of any other Moore Stephens firm. And is a separate partnership in Victoria.

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Melbourne VIC 3000

T +61 (0)3 8635 1800

F +61 (0)3 8102 3400

www.moorestephens.com.au

Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001

to the directors of Q Technology Group Limited (formerly QRSciences Holdings Limited)

I declare that, to the best of my knowledge and belief, during the half-year ended 31 December 2010

there has been:

(i) No contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review, and

(ii) No contraventions of any applicable code of professional conduct in relation to the review.

MOORE STEPHENS Chartered Accountants

Grant Sincock Partner

Melbourne, 28 February 2011

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CONSOLIDATED INCOME STATEMENT

FOR THE HALF-YEAR ENDED 31 DECEMBER 2010

Note Consolidated Group

31.12.2010 31.12.2009

$’000 $’000

Revenue 17,371 10,144

Costs of goods sold (10,421) (7,112)

Gross profit 6,950 3,032

Interest income 96 35

Other Income 851 4,718

Employee benefits expense (4,680) (1,884)

Depreciation and amortisation expense (228) (91)

Finance costs (570) (135)

Other expenses (2,942) (1,303)

Profit/(Loss) before income tax (523) 4,372

Income tax (expense)/benefit 51 (11)

Profit/(Loss) from continuing operations (472) 4,361

(Loss) from discontinued operations 5 (136) (532)

Profit/(Loss) for the period 2 (608) 3,829

Profit/(Loss) attributable to:

Members of the parent entity (608) 3,829

Non-controlling interest - -

(608) 3,829

Earnings per share

From continuing and discontinued operations:

Basic earnings per share (cents) (0.43) 2.52

Diluted earnings per share (cents) (0.43) 2.52

From continuing operations:

Basic earnings per share (cents) (0.34) 2.87

Diluted earnings per share (cents) (0.34) 2.87

The accompanying notes form part of these financial statements.

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME



31.12.2010 31.12.2009

$’000 $’000

Profit/(Loss) for the period (608) 3,829

Other comprehensive income

Exchange differences on translating foreign controlled entities - 26

Other comprehensive income for the period, net of tax - 26

Total comprehensive income for the period (608) 3,855

Total comprehensive income attributable to:

Members of the parent entity (608) 3,855


(608) 3,855


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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2010

Consolidated Group

31.12.2010 30.06.2010

$’000 $’000

ASSETS

CURRENT ASSETS

Cash and cash equivalents 2,559 6,920

Trade and other receivables 8,374 4,785

Inventories 10,121 5,839

Other assets 537 124

21,591 17,668

Non-current assets classified as held for sale - 136

TOTAL CURRENT ASSETS 21,591 17,804

NON-CURRENT ASSETS

Property, plant and equipment 2,510 358

Intangibles 6 8,432 -

Deferred tax assets 946 265

Other assets 349 120

TOTAL NON-CURRENT ASSSETS 12,237 743

TOTAL ASSETS 33,828 18,547

CURRENT LIABILITIES

Trade and other payables 7,004 3,188

Borrowings 3 6,982 1,437

Current tax liabilities 907 277

Short-term provisions 875 14

TOTAL CURRENT LIABILITIES 15,768 4,916

NON-CURRENT LIABILITIES

Borrowings 3 6,148 1,445

Long-term provisions 334 -

TOTAL NON-CURRENT LIABILITIES 6,482 1,445

TOTAL LIABILITIES 22,250 6,361

NET ASSETS 11,578 12,186

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2010

Consolidated Group

31.12.2010 30.06.2010

$’000 $’000

EQUITY

Issued capital 70,741 70,741

Reserves 52 52

Retained earnings (59,215) (58,607)

Parent entity interest 11,578 12,186


TOTAL EQUITY 11,578 12,186


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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


Note

Issued

Capital

Ordinary

Retained

(Losses)

Foreign

Currency

Translation

Reserve

Options

Reserve Total

$’000 $’000 $’000 $’000 $’000

Balance at 1 July 2009 70,741 (63,222) 369 52 7,940

Profit attributable to

members of the parent

entity

- 3,829 - - 3,829

Total other

comprehensive income

for the period

- - 26 - 26

Subtotal 70,741 (59,393) 395 52 11,795

Dividends paid or

provided for

- - - - -

Balance at 31

December 2009

70,741 (59,393) 395 52 11,795

Balance at 1 July 2010 70,741 (58,607) - 52 12,186

Profit attributable to

members of the parent

entity

- (608) - - (608)

Total other

comprehensive income

for the period

- - - - -

Subtotal 70,741 (59,215) - 52 11,578

Dividends paid or

provided for

- - - - -

Balance at 31

December 2010

70,741 (59,215) - 52 11,578


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CONSOLIDATED STATEMENT OF CASH FLOWS


Consolidated Group

31.12.2010 31.12.2009

$’000 $’000

CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from customers 17,179 10,530

Payments to suppliers and employees (18,086) (10,711)

Grants received - 145

Interest received 96 35

Finance costs (375) (97)

Income tax paid - (95)

Net cash (used in)/provided by operating activities (1,186) (193)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment (300) (68)

Payment for subsidiary, net of cash acquired (12,550) -

Net cash (used in)/provided by investing activities (12,850) (68)

CASH FLOWS FROM FINANCING ACTIVITIES

Repayment of borrowings (306) (153)

Proceeds from Borrowings 5,296 -

Net cash used in financing activities 4,990 (153)

Net decrease in cash and cash equivalents held (9,046) (414)

Cash and cash equivalents at beginning of period 6,404 853

Cash and cash equivalents at end of period (2,642) 439

Reconciliation of cash and cash equivalents

Cash at bank 2,559 747

Bank overdraft (5,201) (308)

(2,642) 439

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NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2010

NOTE 1: BASIS OF PREPARATION

These general purpose financial statements for the interim half-year reporting period ended 31 December

2010 have been prepared in accordance with requirements of the Corporations Act 2001 and Australian

Accounting Standards including AASB 134: Interim Financial Reporting.

This interim financial report is intended to provide users with an update on the latest annual financial

statements of Q Technology Group Ltd (formerly QRSciences Holdings Ltd) and its controlled entities (the

Group). As such, it does not contain information that represents relatively insignificant changes occurring

during the half-year within the Group. It is therefore recommended that this financial report be read in

conjunction with the annual financial statements of the Group for the year ended 30 June 2010, together

with any public announcements made during the half-year.

The same accounting policies and methods of computation have been followed in this interim financial

report as were applied in the most recent annual financial statements.

NOTE 2: PROFIT/(LOSS) FOR THE PERIOD


31.12.2010 31.12.2009

$’000 $’000

The following revenue and expense items are relevant in

explaining the financial performance for the interim period:

Net gain on the disposal of investments (2) 3,818

Realised gains/(losses) on foreign currency 354 416

Unrealised gains on foreign currency 96 102

NOTE 3: BORROWINGS

As part of the API acquisition, and effective from 30 September 2010 QRSciences Security Pty Ltd moved

its financing banking facilities from National Australia Bank to GE Capital.

Details of the facility

Aggregate facility limit of $12m made up of;

Receivables purchase facility up to $10m with a prepayment percentage of up to 85% expiring 30

September 2013.

Term loan facility of $2m interest at base rate plus 4.0% per annum. This is to be repaid in 24

monthly instalments, maturing on the 30 September 2012

Establishment fee of $240k

Unused line fee of 0.75%

Financial undertakings:

o CapEx <$1m pa

o Net tangible worth of the reporting group is at least $4m

o The fixed charge coverage ratio of the reporting group is not less than 1.35

The Group confirms that is has met all its financial undertakings and does not anticipate that its facilities

will be withdrawn.

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NOTE 3: BORROWINGS (CONTINUED)

The new loan from Helmsman Capital Fund Trust IIB, effective 30 September 2010, is for 3.0m of loan

notes at a face value of $3.0m

Each loan note will bear Payment In Kind (“PIK”) interest from the issue date until and including

the date of redemption at the rate of 5% per annum

PIK interest will be calculated daily, capitalised monthly and payable on the principal

PIK interest will accrue and be payable by the Company to the note holders only on;

o Redemption or partial repayment,

o The occurrence of an event of default

Additional interest

o Each loan note will bear additional interest at the rate of 15% per annum from the issue

date until the date of redemption

o The interest will be calculated daily and capitalised

Termination fee

o On the Maturity Date, the Company must pay a non-refundable termination fee to each

Noteholder equal to the number of Loan Notes held by the Noteholder multiplied by

$0.1333.

The existing loan from Helmsman Capital Fund Trust IIB for $1.2m attracts interest at the rate of 15%pa.

Interest is calculated daily and capitalised monthly. The loan term expires on 31 March 2012 and a

termination fee of $200k is payable at this time. If early repayment occurs, all interest which would

otherwise would have accrued from the early repayment event to maturity would be payable.

Helmsman are the first ranking senior creditor secured over the assets and undertakings of the business

including fixed floating charges over all group entities and second only to the senior secured lender to

QRSciences Security Pty Ltd.

NOTE 4: OPERATING SEGMENTS

Segment Information

Identification of reportable segments

The Group has identified its operating segments based on the internal reports that are reviewed and used

by the Board of Directors (chief operating decision makers) in assessing performance and determining the

allocation of resources.

The Group is managed primarily on the basis of product category and service offerings since the

diversifications of the Group’s operations inherently have notably different risk profiles and performance

assessment criteria. Operating segments are therefore determined on the same basis.

Reportable segments disclosed are based on aggregating operating segments where the segments are

considered to have similar economic characteristics and are also similar with respect to the following:

• the products sold and/or services provided by the segment;

• the type or class of customer for the products or service;

• the distribution method; and

• the geographic target of the segment operations

Types of products and services by segment

(i) Investment

Q Technology Group Ltd is an investment company that continues to explore and evaluate

investment opportunities.

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NOTE 4: OPERATING SEGMENTS (CONTINUED)

(ii) Closed Circuit Television (CCTV) Distribution

The distribution segment imports and distributes CCTV equipment primarily via its wholly owned

subsidiary QRSciences Security Pty Ltd (QRSS). QRSS comprises three business units, which are

Q Video Systems, Q Alarm Supplies and Q Detection Systems. These business units are

aggregated as one reportable segment as the products are similar in nature and distributed to

similar types of customers.

(iii) Services and Solutions

The services and solutions segment is made up of the supply of safes, locks and alarms, and

delivers a range of products and services through its wholly owned subsidiary API Services and

Security Pty Ltd (API). These business units are aggregated as one reportable segment as the

products are similar in nature and distributed to similar types of customers.

Basis of accounting for purposes of reporting by operating segments

Unless stated otherwise, all amounts reported to the Board of Directors as the chief decision maker with

respect to operating segments are determined in accordance with accounting policies that are consistent

to those adopted in the annual financial statements of the Group.

Inter-segment transactions

Q Technology Group Ltd provides staff services to its wholly owned subsidiary QRSciences Security Pty

Ltd. Service Fees are charged across accordingly on a fortnightly basis. All such transactions are

eliminated on consolidation for the Group’s Financial Statements.

Inter-segment loans payable and receivable exist between the following entities:

QRSciences Security Pty Ltd to Q Technology Group Ltd

QRSciences Security Pty Ltd to API Services and Solutions Pty Ltd

These transactions are entered into on normal commercial terms.

Segment assets

Where an asset is used across multiple segments, the asset is allocated to the segment that receives the

majority of economic value from the asset. In the reporting period, segment assets are clearly identifiable

to a specific segment on the basis of their nature and physical location.

Segment liabilities

Liabilities are allocated to segments where there is direct nexus between the incurrence of the liability and

the operations of the segment. Borrowings and tax liabilities are generally considered to relate to the

Group as a whole and are not allocated. Segment liabilities include trade and other payables and certain

direct borrowings.

Unallocated items

The following items of revenue, expense, assets and liabilities are not allocated to operating segments as

they are not considered part of the core operations of any segment:

• net gains on disposal of available-for-sale investments;

• impairment of assets and other non-recurring items of revenue or expense;

• income tax expense;

• deferred tax assets and liabilities;

• current tax liabilities;

• other financial liabilities;

• discontinuing operations;

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(i) Segment performance

Investment CCTV

Distribution

Services and

Solutions

Total

$’000 $’000 $’000 $’000

Six months ended

31.12.2010

Revenue

External sales - 11,307 6,064 17,371

Inter-segment sales 191 129 - 320

Interest revenue 92 4 - 96

Total segment revenue 283 11,440 6,064 17,787

Reconciliation of segment revenue

to group revenue

Inter-segment elimination (320)

Total group revenue 17,467

Segment net profit/(loss) before

tax

(1,138) 1,254 84 200

Reconciliation of segment result to

group net profit/(loss) before tax

Amounts not included in segment

result but reviewed by the Board:

• Depreciation and

amortisation

(45) (82) (101) (228)

Unallocated items:

• Corporate charges (19)

• Finance costs (570)

• Unrealised gain on

investments

96

• Net Loss on Disposal (2)

Net loss before tax from continuing operations (523)

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(i) Segment performance

Investment CCTV

Distribution

Services and

Solutions

Total

$’000 $’000 $’000 $’000

Six months ended

31.12.2009

Revenue

External sales - 10,144 - 10,144

Inter-segment sales 249 - - 249

Interest revenue 14 21 - 35

Total segment revenue 263 10,165 - 10,428

Reconciliation of segment revenue

to group revenue

Inter-segment elimination (249)

Total group revenue 10,179

Segment net profit/(loss) before

tax

(294) 1,001 - 707

Reconciliation of segment result to

group net profit/(loss) before tax

Amounts not included in segment

result but reviewed by the Board:

• Depreciation and

amortisation

(34) (57) - (91)

Unallocated items:

• Corporate charges (16)

• Finance costs (135)

• Unrealised gain on

investment

89

• Net gain on disposal 3,818

Net profit before tax from continuing operations 4,372

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(ii) Segment assets

Investment CCTV

Distribution

Services and

Solutions

Total

$’000 $’000 $’000 $’000

As at 31.12.2010

Segment assets 19,551 17,486 18,790 55,827

Segment asset increases for the

period:

• Capital expenditure - - - -

• Acquisitions 12,550 - 18,790 31,340

12,550 - 18,790 31,340

Reconciliation of segment assets to

group assets

Inter-segment eliminations (22,945)

Unallocated assets:

• Deferred tax assets 946

Total group assets from continuing operations 33,828

As at 30.6.2010

Segment assets 13,453 10,767 - 24,220

Segment asset increases for the

period:

• Capital expenditure - 67 - 67

- 67 - 67

Reconciliation of segment assets to

group assets

Inter-segment eliminations (6,140)

Unallocated assets:

• Deferred tax assets 264

Total group assets from continuing operations 18,411

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(iii) Revenue by geographical region

Revenue attributable to external customers is disclosed below, based on the location of the

external customer:

For the six

months ended

31.12.2010

For the six months

ended 31.12.2009

$’000 $’000

Australia 17,371 10,179

Total revenue 17,371 10,179

(iv) Assets by geographical region

The location of segment assets is disclosed below by geographical location of the assets:

Balance as at

31.12.2010

Balance as at

30.6.2010

$’000 $’000

Australia 33,828 18,411

Total assets 33,828 18,411

(v) Major customers

QRSciences Security Pty Ltd has a diversified customer base that contributes to the sales of the

business and the top 20 customers account for 48% of the sales revenue for the business. The

business continues to diversify its customer base to ensure that no major customer will become a

critical source of revenue for the business.

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NOTE 5: DISCONTINUED OPERATIONS

Consolidated Group

31.12.2010

$000

31.12.2009

$000

Diversified Opportunities (DVOP-OB)

The group disposed of Diversified Opportunities (DVOP-OB)

on 17 March 21010, thereby discontinuing its operations in

this USA Operations.

The financial performance of the discontinued operation to

the date of this interim financial report which is included in

profit/(loss) from discontinued operations per the statement

of comprehensive income is as follows:

Revenue - -

Expenses - (17)

Loss before income tax - (17)

Income tax expense - -

Loss attributable to members of the parent entity - (17)

QRSciences Pty Ltd

In October 2009 the group announced to the market its

intention to dispose of QRSciences Pty Ltd. The company

has now exited this business with the sale of the assets and

associated IP to Rapiscan Systems Inc. In the USA.

The financial performance of the discontinued operation to

the date of this interim financial report which is included in

profit/(loss) from discontinued operations per the statement

of comprehensive income is as follows:

Revenue - 146

Expenses (136) (661)

Loss before income tax (136) (515)

Income tax expense - -

Loss attributable to members of the parent entity (136) (515)

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NOTE 6: ACQUISITION OF BUSINESS

Consolidated Group

31.12.2010

$000

31.12.2009

$000

API Services and Solutions

On 30 September 2010 the group completed its acquisition

of the API Services and Solutions business. The API

business is Australia’s leading commercial locksmith

business and is part of the group’s overall strategy to

expand the security business. Details of the acquisition are

as follows:

Purchase consideration 12,550 -

Consisting of :

- Cash Consideration 12,550 -

Total Consideration 12,550 -

Cash Consideration

12,550 -

Amount due under contract of sale (12,550) -

Cash Outlay - -

Identifiable assets and liabilities assumed at acquisition

date:

Trade receivables (i) 2,730 -

Inventories 3,331 -

Property, Plant & Equipment 1,913 -

Payables (3,337) -

Provisions – Long Service Leave (819) -

Goodwill (ii) 8,432 -

12,550 -

i. The Directors believe the trade receivables are fully recoverable and no provision for impairment

is required;

ii. The goodwill is attributable to the following:

- Brand name and associated positive reputation of the business;

- The synergies gained and savings on overheads from combining the head office with Q

Technology Group and controlled entities;

- The ability to cross sell with the QRSciences Security business;

- The large share of the locksmithing market that the business has;

- National coverage in every state and territory and being represented in many geographical

areas which assists in the ability to service large nationwide companies.

No amount of Goodwill is deductible for tax purposes

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NOTE 6: ACQUISITION OF BUSINESS (CONTINUED):

- Revenue & losses resulting from the acquisition of the API Service & Solutions business since

acquisition amount to $6,064m and $11K respectively and are included in the consolidated

income statement.

- Included in other expenses in the consolidated income statement are acquisition related costs of

$774k and include advisory, legal, professional fees and integration costs.

- Had the result of the API Service & Solutions business been consolidated from 1 July 2010,

consolidated revenue of the consolidated group would have been between $23 – 24m and

consolidated loss of the combined group would have been approximately $108K - $208K for the

half year ended 31 December 2010.

NOTE 7: CONTINGENT LIABILITIES

There has been no change in contingent liabilities since the end of the last annual reporting period.

NOTE 8: EVENTS AFTER THE REPORTING DATE

The following events occurred after the reporting date of the accounts, being;

On 4 January 2011 the Company appointed Michael O’Leary as a Non-executive Director to the QTG Board.

In January 2011 the Queensland floods affected the Company’s sales locations in Brisbane. The API Milton branch was closed by this event and the Company had losses of inventory and property plant & equipment totaling approximately $540k. These assets were insured and the Company does not expect to be out of pocket by this event. A progress payment from the Company’s insurers of $250K was received in February 2011.

In addition to this cover the business has Business Interruption Insurance in place, and is in the process of quantifying this claim.

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DIRECTORS’ DECLARATION

The directors of the company declare that:

1. The financial statements and notes, as set out on pages 7 to 23 are in accordance with the

Corporations Act 2001, including:

a. complying with Accounting Standard AASB 134: Interim Financial Reporting; and

b. giving a true and fair view of the consolidated entity’s financial position as at 31 December

2010 and of its performance for the half-year ended on that date.

2. In the directors’ opinion there are reasonable grounds to believe that the company will be able to

pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors.

Mr Rick Stokes

Director

Date: 28 February 2011

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Moore Stephens ABN 39 533 589 331. Liability limited by a scheme approved under Professional Standards Legislation. An independent member of Moore Stephens International Limited – members in principal cities throughout the world. The Melbourne Moore Stephens firm is not a partner or agent of any other Moore Stephens firm. And is a separate partnership in Victoria.

Page 25


Melbourne VIC 3000

T +61 (0)3 8635 1800

F +61 (0)3 8102 3400

www.moorestephens.com.au

INDEPENDENT AUDITOR’S REVIEW REPORT

TO THE MEMBERS OF Q TECHNOLOGY GROUP LIMITED

(FORMERLY QRSCIENCES HOLDINGS LIMITED)

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Q Technology Group Limited and controlled entities (“the consolidated entity”), which comprises the consolidated condensed statement of financial position as at 31 December 2010, and the consolidated condensed statement of comprehensive income, the consolidated condensed statement of changes in equity, the consolidated condensed statement of cash flows for the half-year ended on that date, the accounting policies and other selected explanatory notes and the directors’ declaration.

Directors’ Responsibility for the Half-Year Financial Report

The directors of Q Technology Group Limited (“the company”) are responsible for the preparation and fair presentation of the half-year financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001, and for such control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Australian Auditing Standards on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, anything has come to our attention that causes us to believe that the financial report is not presented fairly, in all material respects, in accordance with the Corporations Act 2001. As the auditor of Q Technology Group Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and account matters, and applying analytical and review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001.

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Conclusion

Based on our review, which is not an audit, nothing has come to our attention that causes us to believe that the half-year financial report of Q Technology Group Limited and controlled entities is not in accordance with the Corporations Act 2001 including:

(i) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2010 and of its performance for the half-year ended on that date; and

(ii) complying with AASB 134: Interim Financial Reporting and the Corporations Regulations 2001.

Matters Relating to the Electronic Presentation of the Audited Financial Report

This auditor’s review report relates to the financial report of Q Technology Group Limited and controlled entities for the period ended 31 December 2010 included on Q Technology Group Limited’s website. The company’s directors are responsible for the integrity of Q Technology Group Limited’s website. We have not been engaged to report on the integrity of the Q Technology Group Limited’s website. The auditor’s review report refers only to the subject matter described above. It does not conclude on any other information which may have been hyperlinked to/from these statements. If users of the financial report are concerned with the inherent risks arising from publication on a website, they are advised to refer to the hard copy of the audited financial report to confirm the information contained in this website version of the financial report.

MOORE STEPHENS Chartered Accountants

Grant Sincock Partner

Melbourne, 28 February 2011

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Documents

Appendix 4D 31 December 2010 For personal use only2011/02/28 · Appendix 4D Half yearly report 31 December 2010 Q Technology Group Limited (formerly QRSciences Holdings Limited)