CCTV firm in sights of Cannington company

Cannington-based security technology group QRSciences Holdings Ltd has announced a proposed acquisition of Baxall Australia Ltd, the Australian arm, of closed circuit TV camera development and manufacturing firm Baxall UK.

In a statement issued to the stock exchange, QRS chief executive Kevin Russeth said the company was looking to augment its research and product development capabilities. He indicated the acquisition would give the QRS an established sales team and access to the CCTV market both in Australia and overseas.

The company expects that Baxall Australia, established in March 2005, will earn in excess of $10 million in revenue in the coming financial year.

QRS will acquire the business at the adjusted value of the nominated assets and a subsequent goodwill payment. A deposit of $200,000 will be paid to Baxall, comprising $50,000 cash and the balance in fully paid QRS shares.

QRS had recently secured a $33 million agreement with US security company Rapiscan Systems.

The full QRS statement is pasted below

29 June, 2006 Perth, Western Australia: QRSciences (QRS:ASX) (QRSHY:PK) announced today that
it has executed a Letter of Intent (LOI) to acquire the business and key assets of Baxall Australia Pty Ltd
(Baxall) from Baxall UK.
Baxall was established in Port Melbourne in March 2005 as a direct seller and distributor of surveillance
and monitoring equipment including closed circuit television security cameras, digital video recorders
and related components. The company employs 15 people across Australia with warehouse and sales
facilities in Melbourne, Sydney and Brisbane. The business is expected to be profitable and to earn in
excess of $10M in revenue in the coming financial year.
The acquisition provides QRS with an established sales team and access to the vibrant and growing
$150M per year Australian CCTV distribution market, one of the fastest growing markets in the
Homeland Security space. Baxall is underpinned by key supply contracts with some of the world's
leading CCTV manufacturers and a long term partnering and distribution agreement with Baxall UK.
In Australia, Baxall's business extends across the government facility, banking, retail shopping,
commercial office building, hospitality and retail service station market segments and includes a number
of major Australian companies as clients.
Rick Stokes, CEO Baxall Australia, has 15 years experience in the CCTV industry and has been an
integral part of the development of that market in Australia through past positions at Hills Industries and
heading Vicam CCTV Systems and Pacific Communications. Mr. Stokes will continue with the business
in a full time capacity.
"Acquisition of Baxall Australia provides QRS with a ready-made sales and distribution capability
spanning the country plus an overseas network of representatives, security consultants, local
distributors and connections particularly across the ASEAN region. These channels constitute a
profitable and growing revenue based security distribution business with further growth driven by sales
of QRSciences proprietary products" said QRSciences CEO Mr. Kevin Russeth.
"QRS strategy is to continue look for opportunities that create a short to medium term return to
shareholders and to augment our R&D and product development capabilities" Russeth concluded.
QRS will acquire the business at the adjusted value of the nominated assets (taking into account
obsolete stock) plus a subsequent goodwill payment equally in scrip and cash based on a 4 times
multiple of audited EBIT for the 12 months to 30 June 2007. A deposit of $ 200,000 will be paid to
Baxall, comprising $ 50,000 cash and the balance in fully paid shares in QRS.
The transaction is expected to be completed in the first quarter of FY07.
About QRSciences:
QRSciences Holdings Limited is based in Perth, Western Australia with offices in San Diego, California.
The company designs, develops and sells advanced technology systems, sub-systems, components
and software for security related applications. Applications for its technologies include the detection of
explosives and narcotics, metal detection and imaging, pharmaceutical quality control and assurance,
mineral and material assay, and lab instrumentation.
For more information visit QRSciences on the web at http:/www.qrsciences.com or phone
+61 8 9358 5011.
About Baxall UK:
Established in 1976, Baxall UK is headquartered in Stockport, UK and is a pioneer and world leader in
CCTV camera development and manufacturing. Baxall employs around 250 people including 40
development engineers and a technical support centre in the United States.
For more information on Baxall visit: http://www.baxall.com