REG-PipeHawk Plc: Half-year Report
23/03/2018 07:05
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 Year ended
ended 31 December 2016 (unaudited) £’000 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.
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