PipeHawk Share News (PIP)

(Sharecast News) - PipeHawk reported a sharp deterioration in first-half performance on Monday, as revenues fell and the group swung to a loss amid weak order conversion and rising costs, with management describing trading conditions as "very difficult and frustrating".

For the six months ended 31 December, revenue declined by around 45% to £1.14m from £2.09m a year earlier, while the group posted a pre-tax loss of £573,000 compared with a profit of £30,000 in the prior period.

Post-tax losses totalled £495,000 versus a profit of £59,000 a year earlier.

Chairman Gordon Watt said the period had been challenging, with "abundant evidence of latent demand and companies wanting to place orders with the group," but added that "the economic and political environment is such that confidence and/or funds are lacking to actually place those orders".

Within its Thomson Engineering Design (TED) division, trading remained relatively stable, with the AIM-traded group highlighting progress in embedding its solutions into global infrastructure projects through its partnership with Unipart.

While the UK rail market remained subdued, with Network Rail "appearing to spend very little of its allocated £44bn budget," the company said it had converted £185,000 of £500,000 of requests for quotes generated at the Rail Live event, with further orders dependent on greater commitment from Network Rail.

New products including the RT23 Rail Threader and SL21 Sleeper Laying Machine have completed development and are entering Network Rail's approval process.

At Utsi Electronics, the group reported a solid start to the year in terms of orders and enquiries, but said supply chain disruption and component obsolescence had delayed deliveries and pressured margins.

PipeHawk confirmed it was awaiting regulatory clearance from the National Security and Investment Authority for the proposed sale of Utsi, which it said would provide forward funding and support future growth.

The Adien division faced significant financial strain during the period, with turnover falling to £712,000 from £855,000 a year earlier.

Following weather-related disruption and a bad debt, the subsidiary was deemed insolvent, and steps are under way to appoint liquidators.

"The demise of Adien, whilst very sad, in accounting terms means the write back of net liabilities of approximately £250,000," Watt said.

Despite the difficult trading backdrop, the board pointed to potential upside from anticipated global orders via Unipart and the expected proceeds from the Utsi disposal.

"Accordingly, I think there is cause for optimism," Watt added, noting that the transaction, if approved, would provide sufficient funding to develop TED's offering further.

The group said it continued to rely on financial support from its chairman, with a support letter extended to December.

Directors had also deferred fees and interest payments, with £127,000 accrued during the period, bringing the total deferred balance to £2.42m.

Reporting by Josh White for Sharecast.com.

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