PipeHawk Regulatory News (PIP)

12 Mar 2007 14:41

12 March 2007 PipeHawk Plc ("the Group" or "the Company") Interim Results for the six months ended 31 December 2006

I am delighted to report that the Group's progress continues.

The turnover for the six months ended 31 December of ‚£2,547,000 is an increase of more than two and a half times that for the corresponding period in 2005 (‚£ 970,000) and the retained profit for the six months is ‚£13,000, compared with a loss of ‚£100,000 in the same period last year.

These figures include a full six months' contribution from QM Systems Limited ("QM Systems"), it has integrated well and has been assisting PipeHawk with its planned introduction of the next generation of PipeHawk development, now that the GPR industry is regulated. QM Systems is however being affected by unexpected management and policy changes at Smiths Aerospace, which has caused a reduction in workflow from that customer. New order intake from a more targeted marketing effort is already yielding a much more diverse and better spread of customers.

Continuing on the technology front, PipeHawk, with nine European partners, has been awarded ¢â€š¬2.15 million by the EU to develop a Ground Probing and Imaging Radar system, specifically to detect damage to water pipes throughout the EU. The consortium members have estimated that there are over half a million water pipe breakages / new leaks annually throughout the EU. PipeHawk's primary responsibility is to oversee the effective exploitation of this new technology.

Adien and SUMO both continue to grow and expand in their respective market places, following the issue to them of the first Ofcom licences in September last year. The issue of these licences has assisted in differentiating our services as all companies which use GPR must now be registered and regulated to operate legally.

During the period SUMO sold four further franchises and is now operating effectively throughout mainland Great Britain.

Adien is steadily getting larger contracts and is being involved earlier in the decision making process in the planning of highway construction projects. To cope with this success we have invested in extending Adien's premises and adding further equipment and teams to its resources.

The MineHawk EU grant is progressing slowly but steadily through the offices of the European Commission; we are confident that funding for this landmine detection vehicle will be announced during the course of this financial year.

In summary, again, trading continues to improve and we continue to look forward to the future with confidence.

Gordon WattChairman12 March 2007

SUMMARISED CONSOLIDATED PROFIT AND LOSS ACCOUNT

for the six months ended 31 December 2006

Note Six months to Six months to 31 December 31 December 2006 2005 (Unaudited) (Unaudited) ‚£000 ‚£000 Turnover Group and share of joint venture 2,547 970 Less: share of joint venture (529) (244)turnover Turnover - continuing operations 2,017 726 Operating costs 2,060 (841) Operating loss (43) (115) Share of operating profit / (loss) 39 5in joint venture Loss on ordinary activities before (4) (110)interest and taxation Group interest payable and similar (29) (20)charges Loss on ordinary activities before (33) (130)taxation Tax on profit on ordinary 2 46 30activities Retained profit/(loss) for the 13 (100)period p p Profit/(Loss) per share Basic and diluted 3 0.05 (0.3)

SUMMARISED CONSOLIDATED BALANCE SHEET

at 31 December 2006 Note 31 December 31 December 2005 2006 (Unaudited) (Unaudited) ‚£000 ‚£000 Fixed assets Intangible assets 1,091 234 Tangible assets 325 256 Investment in joint venture 54 1 1,470 491 Current assets Stocks 516 284 Debtors 541 438 1,057 722 Creditors: amounts falling due within (1,172) (846)one year Net current liabilities (115) (124) Total assets less current liabilities 1,355 367 Creditors: amounts falling due after (569) (630)one year Net assets /(liabilities) 786 (263) Capital and reserves Called up share capital 269 232 Share premium account 4,839 4,081 Profit and loss account (4,322) (4,576) Equity shareholders' funds/(deficit) 6 786 (263)

SUMMARISED CONSOLIDATED CASH FLOW STATEMENT

for the six months ended 31 December 2006

Note Six months to Six months to 31 December 31 December 2006 2005 (Unaudited) (Unaudited) ‚£000 ‚£000 Net cash outflow from operating 4, 5 (50) (22)activities Returns on investment and servicing of (29) (20)finance Corporation tax received 46 80 Capital expenditure and financial investment Payments for fixed assets (13) (25) Cash (outflow) /inflow before use of (46) 13liquid resources and financing Financing New loans 11 50 Repayment of loans (39) (37) Capital elements of finance payments (25) - Issue of ordinary shares less expenses 25 - (Decrease)/ increase in cash (74) 26

NOTES TO THE FINANCIAL STATEMENTS

for the 6 months ended 31 December 2006

1. Basis of accounting

The consolidated interim financial statements have been prepared on the basis of the accounting policies set out in the Group's 2006 financial statements. The interim financial statements are unaudited and do not constitute full financial information as defined in section 240 of the companies Act 1985 (as amended). The comparative figures for the six months ended 31 December 2005 do not comprise full financial statements. No account has been taken of the trading results or any other transactions entered into by the Group since 31 December 2006.

2. Taxation

No corporation tax was payable as a result of losses arising and the Company benefits from the Government's "Research and Development Tax Credit Scheme".

3. Profit/(Loss) per share Six months to Six months to 31 December 31 December 2006 2005 (Unaudited) (Unaudited) These have been calculated on losses ‚£13,041 ‚£100,130of: The weighted average number of 26,897,803 23,203,808shares was: Basic and diluted 0.05p (0.3p)

4. Reconciliation of operating loss to net cash outflow from operating

activities Six months to Six months to 31 December 31 December 2006 2005 (Unaudited) (Unaudited) ‚£000 ‚£000 Operating loss (43) (115) Depreciation and amortisation 85 70 Movement in stocks 241 (21) Movement in debtors 428 (19) Movement in creditors (792) 63 Net cash outflow from operations (50) (22)

5. Reconciliation of net cash flow to movement of net debt

Six months to Six months to 31 December 31 December 2006 2005 (Unaudited) (Unaudited) ‚£000 ‚£000 Change in cash (74) 26 Cash inflow/ (outflow) from increase/ 53 37(decrease) in debt and lease finance Net (increase)/decrease in debt resulting from (21) 13cashflows New finance leases (43) (56) Movement in net debt for the period (64) (43) Opening net debt (794) (677) Closing net debt (858) (720)

6. Reconciliation of movement in shareholders' funds

Six months to Six months to 31 December 31 December 2005 2005 (Unaudited) (Unaudited) ‚£000 ‚£000 Profit/(Loss) for the period 13 (100) Net proceeds of shares issued 25 Increase/(Decrease) in shareholders' 38 (100)funds Opening shareholders' funds 748 (163) Closing shareholders' funds 786 (263) 7. Dividends

The directors are not proposing the payment of a dividend in respect of the six months ended 31 December 2006.

8. Copies of interim results will be sent to shareholders shortly and will

also be available at the Company's registered office, Systems House, Mill

Lane, Alton, Hampshire GU34 2QG.