Last checked at 20 Mar 2009 07:00
PipeHawk Plc ("PipeHawk" or "the Company") Interim unaudited results for the six months ended 31 December 2008
Chairman's Statement
The Company's turnover in the six months ended 31 December 2008 was £1,326,000 (2007 £1,200,000) resulting in a loss before taxation of £500,000 (2007: £321,000).
PipeHawk continued to develop GPR products during this six month period and has expensed all of such costs to the profit and loss account, which has resulted in the loss for the six months being higher than the comparable period last year despite the increase in turnover. The result is that PipeHawk now has a varied range of GPR products that are being well received in the market place. I can report that sales enquiries in the first two and a half months of 2009 are at their highest level for several years.
Adien has enjoyed its busiest six months trading during the first half of this financial year. Adien's strength in understanding the needs of its core clients and providing relevant solutions has paid off in providing a steadily increasing flow of work during the period. Two of its clients are now entering national health and safety design awards based upon the benefits that Adien's approach brought to their respective projects. Adien's consultative approach to its clients puts it in a strong position to weather the recession.
At QM Systems ("QMS"), following the difficult period experienced during the previous financial year, the business goes from strength to strength. A far more diverse sales strategy has been implemented and the business has experienced rapid growth over the last six months, which is all the more impressive considering the current difficult economic climate. This strategy has secured QMS a number of major test and automation projects in both the automotive and aerospace industries. The order book currently stands at its largest level for over two years. A number of opportunities across a variety of industries are now materialising and QMS looks set to continue its growth in order book and sales terms over the coming period.
QMS's commitment to the development of the Lightning Strike Protection Test System is proving to be a sound investment. A number of units have now been sold and QMS is experiencing increasing levels of interest from a number of potential future clients. Increase in demand for this test equipment is further fuelled by the move in the aerospace industry to composite airframes as composite material is lighter and stronger.
I am extremely pleased with the progress made by QMS since the beginning of the current financial year and am excited by the prospects that lie ahead for this business. QMS is now focused on growth and with a diverse product offering is a more stable business.
QMS's legal action against GE Aviation for breach of contract and IPR continues on a contingent fee basis.
SUMO has suffered somewhat in the period under review and since the period end. This is in line with other construction-based industries in the current economic climate. The integration of a topographical survey business acquired in 2008 has proved challenging. Accordingly, SUMO has taken steps to maintain profitability.
During times of recession companies look at different ways of cutting costs, from the time honoured method of reducing head count to wider use of new technologies.
The PipeHawk Group cut its head count over two years ago in anticipation of more difficult economic conditions whilst at the same time has:
* enhanced its professionalism in the use of GPR surveys; * adapted its technology into new products; and * focused on offering new labour saving technological innovations to two of the hardest hit, but critical, global markets; the automotive and aerospace industries.
Whilst the results are not evident in these latest six month figures, orders and enquiries received since December 2008 give me confidence. Consequently, I remain cautiously optimistic for the future.
Related party transactions
During the period under review both I and Robert Tallentire, Finance Director, have continued to provide financial support to the Company through director loans. During the six month period ended 31 December 2008 I advanced loans of £ 290,000. In addition, since 31 December 2008, I have advanced further loans of £80,000. These loans have been made in accordance with a letter of support dated 17 November 2008. The loans are unsecured and accrue interest at an annual rate of base rate plus 2.15 per cent.
Chairman's Statement - continued
The directors, other than myself, consider, having consulted with the Company's nominated adviser, that the terms of the loans are fair and reasonable insofar as the Company's shareholders are concerned.
In addition to the loans I have provided to the Company during the period and in previous years, my fellow directors and I have deferred a certain proportion of our fees until the Company is in a suitably strong position to make the full payments. These deferred fees amount to approximately £74,000 in the six month period ended 31 December 2008 and approximately £351,000 in total, all of which have been accrued in the Company's accounts.
The Company will be providing a presentation to shareholders at 3.00pm on Thursday 26 March at the offices of FinnCap, 4 Coleman Street, London, EC1 and the presentation will be made available on the Company's website ( www.pipehawk.com) at that time.
Gordon WattChairman20 March 2009Consolidated Income StatementFor the six months ended 31 December 2008 6 months ended 6 months ended Year ended 31 December 31 December 30 June 2008 2007 2008 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Revenue - continuing operations 1,326 1,200 2,411 Staff costs (1,084) (908) (1,436) General administrative expenses (692) (603) (1,391) Operating loss (450) (311) (416) Share of operating profit in joint 5 32 66venture Loss on ordinary activities before (445) (279) (350)interest and taxation Finance costs (55) (42) (88) Loss before taxation (500) (321) (438) Taxation 35 30 111 Loss for the period (465) (291) (327) Loss per share (pence) - basic (1.73) (1.08) (1.21) Loss per share (pence) - diluted (1.10) (0.84) (1.00)Consolidated Balance sheetAs at 31 December 2008Assets As at As at As at 31 December 31 December 30 June 2008 2007 2008 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Non-current assets Property, plant and equipment 176 258 231 Goodwill 1,061 1,061 1,061 Intangible assets 1,006 579 1,025 Investment in joint venture 157 118 152 2,400 2,016 2,469 Current assets Inventories 451 338 268 Current tax assets 106 110 106 Trade and other receivables 965 729 742 1,522 1,177 1,116 Total Assets 3,922 3,193 3,585 Equity and liabilities Equity Share capital 269 269 269 Share premium 4,842 4,842 4,842 Other reserves (5,018) (4,517) (4,553) 93 594 558 Non-current liabilities Borrowings 524 551 705 524 551 705 Current liabilities Trade and other payables 2,785 1,705 1,959 Bank overdrafts and loans 520 343 363 3,305 2,048 2,322 Total equity and liabilities 3,922 3,193 3,585Consolidated Cash Flow StatementFor the six months ended 31 December 2008 6 months ended 6 monthsended Year ended 31 December 31 December 30 June 2008 2007 2008 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Cash inflow from operating activities Loss from operations (450) (311) (416) Adjustments for: Profit on sale of fixed assets (23) - - Depreciation 84 102 134 (389) (209) (282) (Increase)/decrease in inventories (183) (60) 11 Increase in receivables (223) (98) (107) Decrease in liabilities 582 152 265 Cash used in operations (213) (215) (113) Interest paid (55) (42) (88) Corporation tax received 35 30 111 Net cash used in operating (233) (227) (90)activities Cash flows from investing activities Development costs paid - (171) (587) Purchase of plant and equipment (52) (42) (78) Sale of plant and equipment 65 - - Net cash generated from / (used in) 13 (213) (665)investing activities Cash flows from financing activities New loans and finance leases 291 200 540 Repayment of bank loan (194) (37) (40) Repayment of finance leases (34) (33) (75) Net cash generated from financing 63 130 425activities Decrease in cash and cash (157) (310) (330)equivalents Cash and cash equivalents at (363) (33) (33)beginning of period
Cash and cash equivalents at end of (520) (343) (363) period
Consolidated Statement of changes in equityFor the six months ended 31 December 2008 Share Share Retained Total capital premium earnings account £'000 £'000 £'000 £'000 6 months ended 31 December 2007 As at 1 July 2007 269 4,842 (4,226) 885 Loss for the period - - (291) (291) As at 31 December 2007 269 4,842 (4,517) 594 12 months ended 30 June 2008 As at 1 July 2007 269 4,842 (4,226) 885 Loss for the period - - (327) (327) As at 30 June 2008 269 4,842 (4,553) 558 6 months ended 31 December 2008 As at 1 July 2008 269 4,842 (4,553) 558 Loss for the period - - (465) (465) As at 31 December 2008 269 4,842 (5,018) 93 Notes to the Interim Results1. Basis of preparation
The Interim Results for the six months ended 31 December 2008 are unaudited and do not constitute statutory accounts in accordance with section 240 of the Companies Act 1985.
Full accounts for the year ended 30 June 2008, on which the auditors gave an unqualified report and contained no statement under Section 237 (2) or (3) of the Companies Act 1985, have been delivered to the Registrar of Companies.
The interim financial information has been prepared on a basis which is consistent with the accounting policies adopted by the Group for the last financial statements and in compliance with IAS 34.
2. Segmental information
The group operates in one geographical location being the UK. Accordingly the primary segmental disclosure is based on activity.
Utility Development, Test system Total detection assembly and solutions and mapping sale of GPR services equipment £'000 £'000 £'000 £'000 6 months ended 31 December 2008 Total segmental revenue 945 33 348 1,326 Segmental result 47 (397) (155) (505) Share of operating profit in 5joint venture Loss before taxation (500) Segment assets 1,485 1,462 975 3,922 Segment liabilities (1,041) (1,578) (1,210) (3,829) Depreciation 52 1 32 85 Additions to non-current 42 - 10 52assets 6 months ended 31 December 2007 Total segmental revenue 826 55 319 1,200 Segmental result 18 (208) (163) (353) Share of operating profit in 32joint venture Loss before taxation 321 Segment assets 1,119 1,639 435 3193 Segment liabilities (776) (1,347) (476) (2,599) Depreciation 61 31 10 102 Additions to non-current 42 172 - 214assets 12 months ended 30 June 2008 Total segmental revenue 1,687 150 574 2,411 Segmental result 71 (341) (234) (504) Share of operating profit in 66joint venture Loss before taxation (438) Segment assets 920 2,004 661 3,585 Segment liabilities (523) (1,763) (741) (3,027) Depreciation 119 1 15 135 Additions to non-current 77 362 225 664assets 3. Loss per share
This has been calculated on losses of £465,000 (2007: £291,000) and the number of shares used was 26,937,181 (2007: 26,917,330) being the weighted average number of share in issue during the year. For the fully diluted calculations the number of shares used for the calculation was 42,178,849 (2007: 34,667,952)
4. Dividends
No dividend is proposed for the six months ended 31 December 2008.
5. Copies of Interim Results
The Interim Results will be posted on the company's web site www.pipehawk.com and copies are available from the Company's registered office at Systems House, Mill Lane, Alton, Hampshire GU34 2QG..
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