PipeHawk Regulatory News (PIP)

14 Nov 2005 11:25

14 November 2005 PipeHawk Plc ("the Group" or "the Company") Preliminary Results for the year ending 30 June 2005 CHAIRMAN'S STATEMENTAs a provider of services to the utilities, particularly the water sector, theCompany was badly affected by the delay in Ofwat's pricing recommendations forthe sector. This was finally resolved at the end of 2004 and the way is nowclear for the water utilities to begin a major capital expenditure programmeover the next five years.In last year's Annual Report and my Interim Statement I referred to ourstrategy of investing for the future, coupled with a firm handle on costs andcash control. I am pleased to tell you that, as a result of the implementationof these actions, the Group is able to report a record turnover of ‚£1,477,000(2004: ‚£1,010,000) for the year ended 30 June 2005 and almost a breakevenresult after taxation in the second half of the year (loss after taxation: ‚£27,000 (2004: loss ‚£426,000)). Hence our loss for the year has reduced to ‚£297,000 (2004: ‚£717,000). We have reinforced our position as the UK leader inunderground mapping; a market, which has enormous potential, with PipeHawk as aworld leader in the technology of Ground Probing Radar. My fellow directors andI believe we will be moving into profitability at the operating level in thecurrent year and I am looking forward to reporting meaningful earnings.The Group has four major business areas1. AdienAdien - our high definition underground mapping and planning service. Ourstrategy of broadening our sales efforts beyond the water industry is yieldinggood levels of enquiries, conversions and sales. Adien continues to be theleader in its field of reliable and accurate identification when producingtopographical surveys of the underground environment. It now also operates onan international basis having worked in Kuwait and mainland Europe during ayear when sales increased by 51 per cent. to ‚£1,148,000. In the current year afurther increase in sales is expected and currently Adien's order book is some40 per cent. ahead of the same period last year. Adien has strengthened itssales team during the year and has also recently signed an important agreementwith Leica Geosystems Limited to upgrade surveying equipment which will improveon-site efficiencies leading to greater market penetration. Our technologydivision has spent much time during the year refining and improving PipeHawk'sinformation gathering capacity to assist Adien in maintaining its leadingposition and providing a compelling selling proposition to Adien's clients.2. SUMO - a 40 per cent. owned joint venture, which provides an instant markout service.SUMO added two new franchisees to its UK coverage during the year, andincreased by 50 per cent. its company owned capability. During the year theSumo franchisee turnover increased by 149 per cent. to ‚£548,274 (2004: ‚£219,875) and cut losses to ‚£54,000. Like Adien, SUMO's sales and operationsactivities have continued to grow and, since the year-end Sumo has reachedbreak even.The recent high profile court cases regarding health and safety issuesdemonstrates that it is increasingly important in the minds of companydirectors involved in ground breaking activities, to procure the services ofAdien and SUMO.3. Handheld Pipe DetectorDuring the year our technology division completed the development and prototypestage of our handheld pipe detector in association with the North East GasAssociation ("NEGAS") of America. We produced a lightweight monostatic GroundProbing Radar capable of complying with the stringent American FCC regulations.NEGAS is currently assessing the prototype and deciding which manufacturer theywish to allow to participate in the licensing and distribution of the finalproduct.4. Mine DetectionAn outline design and specification for an operational landmine detectionvehicle has been produced and lodged with the Company's lawyers. We haveretained the services of an acknowledged expert in the field of European grantsand have submitted a detailed proposal to the European Union to develop thedetection vehicle to the point of production. We await a decision on theapplication to the European Union and are advised that it is being viewedpositively. This is an extremely exciting project, as the grant will see thefruition of over 20 years work by PipeHawk and its predecessor companies toproduce such a vehicle.Strategy and OutlookOur strategy is to remain at the forefront of applied GPR and non-invasivetesting technologies, delivering high quality, value adding services andproducts which play a vital role in the safety and protection of peopleworldwide.The current year has started well and I am confident that it will continue theprogress achieved over the last two years.Gordon WattChairman14 November 2005Consolidated Profit and Loss AccountFor the year ended 30th June 2005 2005 2004 ‚£'000 ‚£'000 Turnover Group and share of joint venture 1,477 1,010 Less: share of joint venture turnover (102) (67) Group Turnover - total 1,375 943 Group operating costs (1,689) (1,715) Group operating loss (314) (772) Share of operating loss in joint venture (25) (69) Loss on ordinary activities before interest and (339) (841)taxation Group interest receivable and similar income - 1 Group interest payable and similar charges (55) (52) Loss on ordinary activities before taxation (394) (892) Tax on profit on ordinary activities 97 175 Transfer from reserves (297) (717) 2005 2004 p p Loss per share Basic and diluted (1.3) (3.3) There are no recognised gains or losses other than those reported above.Consolidated Balance SheetAs at 30th June 2005 2005 2004 ‚£'000 ‚£'000 Fixed assets Intangible assets 241 255 Tangible assets 239 365 Investment in joint venture: Share of gross assets 39 45 Share of gross liabilities (43) (211) (4) (166) Goodwill - 39 Loan to Joint Venture - 148 (4) 21 476 641 Current assets Stocks 263 281 Debtors 469 285 732 566 Creditors: amounts falling due within one year (1,260) (720) Net Current liabilities (543) (154) Total assets less current liabilities (52) 487 Creditors: amounts falling due after more than one (111) (353)year Provisions for liabilities and charges - - Net (liabilities)/assets (163) 134 Capital and reserves Called up equity share capital 232 232 Share premium account 4,081 4,081 Profit and loss account (4,476) (4,179) Equity shareholders' (deficit)/funds (163) 134Consolidated Cash Flow StatementFor the year ended 30th June 2005 2005 2004 ‚£'000 ‚£'000 Net cash flow from operating activities (126) (586) Returns on investments and servicing of finance Interest received - 1 Interest element of finance lease rentals (3) (16)and hire purchase payments Interest paid (52) (36) (55) (51) Corporation tax received 96 105 Capital expenditure and financial investment Payments for tangible fixed assets (43) (153) Loan to joint venture - (68) Receipts from sale of current asset - 95investment Receipts from sale of tangible fixed - 4assets (43) (122) Cash outflow before use of liquid (128) (654)resources and financing Financing New loans 216 - Repayment of loans (15) (51) Capital element of finance lease and hire (26) (28)purchase payments Issue of ordinary shares - 682 175 603 Increase/(Decrease) in cash 47 (51)Notes to the Cash Flow StatementA. Reconciliation of Operating Loss to Net Cash Outflow from OperatingActivities 2005 2004 ‚£'000 ‚£'000 Operating loss (314) (772) Amortisation of intangible assets 14 17 Depreciation of tangible fixed assets 169 146 Loss on sale of investments - 4 Working capital movements Stock and work in progress 17 59 Debtors (182) 65 Creditors 170 (105) Net cash outflow from operating activities (126) (586)B. Reconciliation of Net Cash Flow to Movement of Net Debt 2005 2004 ‚£'000 ‚£'000 Increase/(Decrease) in cash 47 (51) Cash (outflow)/inflow from increase in debt and hire (175) 79purchase finance Decrease/(Increase) in net debt from cash flows (128) 28 (Increase)/Reduction in net debt (128) 28 Opening net debt (598) (626) Closing net debt (726) (598) C. Analysis of changes in net debt 1 July 2004 Cash flows 30 June 2005 ‚£'000 ‚£'000 ‚£'000 Cash at bank and in hand - - - Bank Overdraft (197) 47 (150) Cash (197) 47 (150) Loans (375) (201) (576) Hire purchase agreements (26) 26 - Borrowings (401) (175) (576) Net debt (598) (128) (726) Notes to the preliminary statements 1. Publication of non-statutory accountsThe financial information set out in this preliminary announcement does notconstitute statutory accounts as defined in Section 240 of the Companies Act1985.The consolidated balance sheet at 30th June, 2005, and the consolidated profitand loss account, consolidated cash flow statement and associated notes for theperiod then ended have been extracted from the Group's financial statements.Those financial statements have not yet been delivered to the Registrar ofCompanies.2. Loss per shareThe calculation of the basic loss per share is based on the loss on ordinaryactivities after taxation of ‚£297,000 (2004: loss ‚£717,000) divided by23,203,808 (2004: 21,798,121) ordinary shares, being the weighted averagenumber of shares in issue during the period.3. DividendThe Directors are not proposing the payment of a dividend in respect of theperiod ended 30th June, 2005.4. Taxation 2005 2004 ‚£'000 ‚£'000 United Kingdom Corporation Tax Current taxation (80) (90) Adjustments in respect of prior years (17) (95) (97) (185) Deferred taxation - - Tax on loss on ordinary activities (97) (185) 2005 2004 ‚£'000 ‚£'000 Loss on ordinary activities before taxation (391) (892) Theoretical tax at UK corporation tax rate (117) (268)30% Effects of: - losses brought forward (26) - - joint ventures' losses unrelieved 8 21 - R&D tax credit adjustments 27 20 - other expenditure that is not tax 4 8deductible - adjustments in respect of prior years (17) (95) - accelerated capital allowances 24 5 - losses carried forward - 134 Actual current taxation charge (97) (175) 5. Report and AccountsCopies of the Report and Accounts will be sent to shareholders in due courseand will be available from the Company's registered office.Further Enquiries:PipeHawk Plc Gordon Watt, Chairman Tel: 01420 590990 John East & Partners Limited Johnny Townsend/Simon Clements Tel: 020 7628 2200 J M Finn Sam Smith Tel: 020 7628 9688ENDPIPEHAWK PLC