23 March 2018
PipeHawk plc
(“PipeHawk” or the
“Company”)
Unaudited results
for the six months ended 31 December
2017
Chairman’s Statement
I am pleased to report that the Company’s turnover in the six
months ended 31 December 2017 was
£2,310,000 (2016: £2,999,000), resulting in a loss before taxation
of £118,000 (2016: loss of £180,000) and a profit after taxation of
£18,000 (2016: £43,000). The results reflect a profit on sale
of the 28.4 per cent. interest in SUMO Limited of £143,000.
This has been a most peculiar six months for all divisions of
the Group; the level of enquiries and indications that we would be
awarded orders has never been higher, however the orders, whilst
not going away, simply did not happen during the period with
consequent effect on underutilisation of staff – and hence
profitability. Nevertheless, as described below, since the period
end the orders have flowed in and we are now extremely busy.
The effect of lower turnover in the first six months of the
financial year was largely offset by careful control of costs and
overheads in general administrative expenses which at £1,140,000
was £495,000 lower than in the comparative period last year.
At QM Systems the first part of the year saw slower than
expected order intake and this, combined with some restructuring
activity within our operational departments is reflected in the
loss in the interim results. I am however pleased to say that from
December to date order intake has been very buoyant and our
orderbook has now returned to a level that we would expect for year
to date. We have experienced a particularly strong start to 2018
and we expect our position to recover fully by the end of the
current financial year.
We continue to maintain quotation activity at a very high level.
It is also worthy of note that a significant proportion of the work
that we have quoted during the last 18 months is still yet to be
awarded, predominantly due to delays in contract placement by our
clients. A number of these projects are now overdue for placement
and must be placed in the next 4-6 weeks if they are to meet client
self-imposed deadlines. Taking this into account our immediate
potential order book appears very strong. In terms of client
industry focus we continue to diversify from our historical core,
Automotive and Aerospace business. The Marine and Building Services
sectors now form a significant part of our business plan, with
opportunities in the Food and Pharmaceutical sectors also
continuing to grow. This diversification, using our core key
skills, enables us to secure a far more stable business model as we
accelerate growth.
We are currently recruiting in a number of areas across the
business to enable us to continue our planned growth in terms of
adding to our existing key skillsets or adding complimentary
skillsets and this is proving quite successful as we continue to
build on the success of the previous financial year. We have
further expanded our project management capability as we focus on
client satisfaction and client retention. We continue to deliver
best service in class.
Our approach to offer a 'one stop shop' for production and test
requirements continues to draw great interest, particularly where
a client does not already possess a number of other disjointed
packages. Where a client has the freedom of choice to consider all
aspects of a production or test system then QM Systems product and
service offering is a very compelling one.
For PipeHawk Technology challenging trading conditions in the UK
construction & utilities sectors contributed to GPR sales
performing below expectation through the second half of 2017,
however the lack of growth in the UK was not echoed in other
markets and our international sales continue to show growth
particularly on the back of our pre-Brexit push into Middle East & Asian markets. With new
opportunities also beginning to show promise in South America, we look forward to our
international growth continuing through 2018. We continue to
receive encouraging feedback on our H2020 grant applications so we
are continuing to submit applications albeit that none have been
successful to date.
For Adien the six month period saw a notable progression in a
number of key market areas, this is set against a backdrop of an
increasingly competitive marketplace. Concentrating on the
specialist sectors of Power, Airports, Water and Transport
Infrastructure has been a successful strategy and has resulted in a
full order book and a programme of work stretching forward to June
2018. Contracts won include a significant amount of sub
-contract working which is optimised to provide additional and
increased profitability. The Scottish division
has made real progress in establishing Adien as a framework
provider to a number of key client within the sectors noted
above.
On 30 November 2017, the Group
acquired Thomson Equipment Design Limited. Sales and results in the
period to 31 December were negligible, however since the period end
the level of enquiries has picked up and its integration with other
parts of the Group is on track.
Related party transactions
At the Annual General Meeting shareholders approved the sale to
me of PipeHawk’s minority interest in Sumo and this realised a
profit for the Group over net book value of £143,000.
In the period under review, on 13 October
2017 I paid the £197,000 cash consideration payable on my
purchase of the minority interest in SUMO and therefore provided
working capital support to the Company until completion occurred
following shareholder approval at the Annual General Meeting on
14 December 2017.
My letter of financial support was renewed on 30 October 2017 for a further year. Loans, other
than those covered by the CULS agreement, are unsecured and accrue
interest at an annual rate of Bank of England base rate plus 2.15 per cent.
In addition to the loans I have provided to the Company in
previous years, my fellow directors and I have deferred a certain
proportion of our fees and interest payments until the Company is
in a suitably strong position to make the full payments.
During the six months ended 31 December
2017, these deferred fees and interest payments amounted to
approximately £ 101,000 in total, all of which have been accrued in
the Company’s accounts, and at 31 December
2017 amounted in total to £1,667,000.
Gordon Watt
Chairman
Enquiries:
PipeHawk Plc
Gordon Watt (Chairman) |
Tel. No.
01252 338 959 |
Allenby Capital (Nomad and Broker)
David Worlidge/Asha Chotai |
Tel. No. 020 3328
5656 |
Statement of Comprehensive Income
For the six months ended
31 December 2017
|
6 months
ended
31 December 2017
(unaudited)
£’000 |
6 months
ended
31 December 2016
(unaudited)
£’000 |
Year ended
30 June
2017
(audited)
£’000 |
|
|
|
|
Revenue |
2,310 |
2,999 |
5,702 |
|
|
|
|
|
|
|
|
Staff costs |
(1,353) |
(1,455) |
(2,876) |
General administrative expenses |
(1,140) |
(1,635) |
(2,842) |
Operating loss |
(183) |
(91) |
(16) |
|
|
|
|
Profit on sale of joint venture
investment |
143 |
- |
1 |
Loss on ordinary activities before interest and
taxation |
(40) |
(91) |
(15) |
Finance costs |
(78) |
(89) |
(178) |
|
|
|
|
Loss before taxation |
(118) |
(180) |
(193) |
|
|
|
|
Taxation |
136 |
223 |
372 |
Profit for the
period attributable to equity holders of the Company |
18 |
43 |
179 |
Other comprehensive income |
- |
- |
- |
Total comprehensive income for
the period net of tax |
18 |
43 |
179 |
|
|
|
|
Earnings per share (pence)
– basic |
0.05 |
0.13 |
0.54 |
Earnings per share (pence)
– diluted |
0.03 |
0.13 |
0.47 |
Consolidated Statement of Financial Position
As at 31
December 2017
Assets |
As at
31 December 2017
(unaudited) |
As at
31 December 2016
(unaudited) |
As at
30 June
2017
(audited) |
|
£’000 |
£’000 |
£’000 |
|
|
|
|
Non-current assets |
|
|
|
Property, plant and equipment |
446 |
190 |
145 |
Goodwill |
1,169 |
1,061 |
1,061 |
Investment in joint venture |
- |
53 |
54 |
|
1,615 |
1,304 |
1,260 |
|
|
|
|
Current assets |
|
|
|
Inventories |
177 |
93 |
156 |
Current tax assets |
158 |
225 |
253 |
Trade and other receivables |
1,147 |
1,770 |
745 |
Cash |
95 |
26 |
72 |
|
1,577 |
2,114 |
1,226 |
Total Assets |
3,192 |
3,418 |
2,486 |
|
|
|
|
Equity and liabilities |
|
|
|
|
|
|
|
Equity |
|
|
|
Share capital |
340 |
330 |
330 |
Share premium |
5,191 |
5,151 |
5,151 |
Other reserves |
(9,039) |
(9,193) |
(9,057) |
|
(3,508) |
(3,712) |
(3,576) |
|
|
|
|
Non-current liabilities |
|
|
|
Borrowings |
2,659 |
2,308 |
2,266 |
Trade and other payable |
251 |
- |
- |
|
2,910 |
2,308 |
2,266 |
Current liabilities |
|
|
|
Trade and other payables |
1,632 |
4,461 |
1,609 |
Bank overdrafts and loans |
2,158 |
361 |
2,187 |
|
|
|
|
|
3,790 |
4,822 |
3,796 |
Total equity and liabilities |
3,192 |
3,418 |
2,486 |
|
|
|
|
Consolidated Statement of Cash Flow
For the six months ended
31 December 2017
|
6
months ended
31 December 2017
(unaudited)
£’000 |
6
months ended
31 December 2016
(unaudited)
£’000 |
Year ended
30 June 2017
(audited)
£’000 |
|
|
|
|
Cash inflow from
operating activities |
|
|
|
Loss from operations |
(183) |
(91) |
(16) |
|
|
|
|
Adjustments for: |
|
|
|
Depreciation |
47 |
52 |
100 |
|
(136) |
(39) |
84 |
|
|
|
|
Decrease/(Increase) in
inventories |
11 |
11 |
(51) |
(Increase)/ Decrease in
receivables |
(321) |
(554) |
478 |
(Decrease)/Increase in
liabilities |
(311) |
501 |
(577) |
|
|
|
|
Cash used in operations |
(757) |
(81) |
(66) |
|
|
|
|
Interest paid |
(3) |
(15) |
(2) |
Corporation tax received |
278 |
188 |
299 |
|
|
|
|
Net cash (used in)/generated from
operating activities |
(482) |
92 |
231 |
|
|
|
|
Cash flows from investing
activities |
|
|
|
|
|
|
|
Purchase of plant and equipment |
(1) |
(15) |
(18) |
Sale of Joint Venture
investment |
197 |
- |
- |
|
|
|
|
Net cash (used in)/generated from
investing activities |
196 |
(15) |
(18) |
|
|
|
|
Cash flows from financing
activities |
|
|
|
|
|
|
|
New loans and finance leases |
308 |
68 |
97 |
Repayment of bank and other
loans |
(2) |
(121) |
(210) |
Repayment of finance leases |
(8) |
(22) |
(52) |
Net cash generated from/(utilised
in) financing activities |
298 |
(75) |
(165) |
|
|
|
|
Increase in cash and
cash equivalents |
12 |
2 |
48 |
|
|
|
|
Cash and cash equivalents at
beginning of period |
72 |
24 |
24 |
Acquisition of Subsidiary |
11 |
- |
- |
|
|
|
|
Cash and cash equivalents at end of
period |
95 |
26 |
72 |
Consolidated Statement of changes in equity
For the six months ended
31 December 2017
|
Share capital |
Share premium
account |
Retained earnings |
Total |
|
£’000 |
£’000 |
£’000 |
£’000 |
|
|
|
|
|
6 months ended 31 December
2016 |
|
|
|
|
|
330 |
5,151 |
(9,236) |
(3,755) |
As at 1 July 2016 |
- |
- |
43 |
43 |
Profit for the period |
|
|
|
|
|
|
|
|
|
As at 31 December 2016 |
330 |
5,151 |
(9,193) |
(3,712) |
|
|
|
|
|
12 months ended 30 June
2016 |
|
|
|
|
|
|
|
|
|
As at 1 July 2016 |
330 |
5,151 |
(9,236) |
(3,755) |
Profit for the period |
- |
- |
179 |
179 |
|
|
|
|
|
As at 30 June 2017 |
330 |
5,151 |
(9,057) |
(3,576) |
|
|
|
|
|
6 months ended 31 December
2017 |
|
|
|
|
|
|
|
|
|
As at 1 July 2017 |
330 |
5,151 |
(9,057) |
(3,576) |
Profit for the period |
10 |
40 |
18 |
68 |
|
|
|
|
|
As at 31 December 2017 |
340 |
5,191 |
(9,039) |
(3,508) |
|
|
|
|
|
Notes to the Interim Results
1. Basis of preparation
The Interim Results for the six months ended 31 December 2017 are unaudited and do not
constitute statutory accounts in accordance with section 240 of the
Companies Act 2006.
Full accounts for the year ended 30 June
2017, on which the auditors gave an unqualified report and
contained no statement under Section 237 (2) or (3) of the
Companies Act 2006, 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
basic principles of IFRS.
2. Segmental information
The Group operates in one geographical location being the UK.
Accordingly, the primary segmental disclosure is based on
activity.
|
Utility detection
and mapping services |
Development,
assembly and sale of GPR equipment |
Test system solutions |
Total |
|
£’000 |
£’000 |
£’000 |
£’000 |
6 months ended 31 December
2017 |
|
|
|
|
Total segmental revenue |
747 |
106 |
1,457 |
2,310 |
Segmental result |
(12) |
38 |
(209) |
(183) |
Finance costs |
(3) |
(66) |
(9) |
(78) |
Profit on sale of joint venture
investment |
|
|
|
143 |
Loss before taxation |
|
|
|
(118) |
|
|
|
|
|
Segment assets |
625 |
1,357 |
1,210 |
3,192 |
Segment liabilities |
637 |
4,302 |
1,761 |
6,700 |
Depreciation and amortization |
31 |
- |
16 |
47 |
|
|
|
|
|
|
|
|
|
|
6 months ended 31 December
2016 |
|
|
|
|
Total segmental revenue |
591 |
156 |
2,252 |
2,999 |
Segmental result |
(76) |
24 |
(39) |
(91) |
Finance costs |
(4) |
(66) |
(19) |
(89) |
Share of operating loss in joint
venture |
|
|
|
- |
Loss before taxation |
|
|
|
(180) |
|
|
|
|
|
Segment assets |
507 |
1,449 |
1,462 |
3,418 |
Segment liabilities |
523 |
5,485 |
1,122 |
7,130 |
Depreciation and amortization |
34 |
- |
18 |
52 |
|
|
|
|
|
|
|
|
|
|
12 months ended 30 June
2017 |
1,363 |
288 |
4,051 |
5,702 |
Total segmental revenue |
|
|
|
|
Segmental result |
25 |
(83) |
42 |
(16) |
Finance costs |
(9) |
(132) |
(37) |
(178) |
Share of operating profit in joint
venture |
|
|
|
1 |
Loss before taxation |
|
|
|
(193) |
|
|
|
|
|
Segment assets |
498 |
1,381 |
607 |
2,486 |
Segment liabilities |
418 |
5,404 |
240 |
6,062 |
Non-current asset additions |
12 |
- |
6 |
18 |
Depreciation and amortisation |
66 |
- |
34 |
100 |
|
|
|
|
|
3. Earnings per share
This has been calculated on the profit for the period of £18,000
(2016: £43,000) and the number of shares used was 33,105,447 (2016:
33,020,515), being the weighted average number of share in issue
during the period.
4. Dividends
No dividend is proposed for the six months ended 31 December 2017.
5. Copies of Interim Results
The Interim Results will be posted on the Company’s website
www.pipehawk.com and copies are available from the Company's
registered office at 4, Manor Park Industrial Estate, Wyndham Street, Aldershot, GU12 4NZ.