REG-PipeHawk Plc: Half-year Report
18/03/2019 07:05
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulation
(EU) No. 596/2014 ("MAR").
18 March 2019
PipeHawk plc
(“PipeHawk” or the “Company”)
Unaudited results for the six months ended 31 December 2018
Chairman’s Statement
I am pleased to report that the Company’s turnover in the six months ended
31 December 2018 was £2,901,000 (2017: £2,310,000), an increase of 25 per
cent. over the comparable period last year, resulting in a loss before
taxation of £164,000 (2017: loss of £118,000) and a profit after taxation of
£12,000 (2017: £18,000). The increase in turnover has been effectively
offset in the period by increased recruitment and staff costs at QM Systems to
service the Cox Powertrain Limited and Penso (UK) Ltd orders, as previously
announced by the Company, coupled with increased R&D spend and marketing
activity at Thomson Engineering Design. However, we are now very well placed
for the second half of the financial year with full order books in all parts
of the business and are fully staffed to deliver thereon.
Since the period end the Company has agreed a reduction of the amount of debt
due to the vendors of Thomson Engineering Design (“TED”), acquired in
November 2017, to £71,000. The Company acquired TED with a debt due to the
vendors of TED amounting to £200,000, and so this reduction will add
£129,000 to the Company’s profits for the year ending 30 June 2019.
QM Systems
At QM Systems the current year is proving to be a marked improvement on the
previous financial year with a stark turnaround in orders that is beginning to
filter through to a much-improved bottom line, though held back in the six
months under review by closing out problematic projects.
In the period under review QM Systems has achieved an order intake in excess
of £2.3 million, with a further £2.7 million orders taken in the current
calendar year (i.e. in the second half of this financial year), most of which
are due for delivery by the end of this current financial year. This is very
pleasing as QM Systems entered the current financial year with a buoyant order
book. QM Systems continues to maintain a high level of quotation activity
which is hoped will lead to good order intake during the second half of the
financial year. It is also encouraging to see that QM Systems’s client
demographic continues to be diverse with no reliance on any single industry.
Given the uncertainty that inevitably will exist as we pass through Brexit,
this puts QM Systems in a strong position to weather any fallout from Brexit
over the coming months.
On the operations we have been ramping up our resource as well as carefully
selecting partners that we will work with to deliver on our commitments.
During the period under review, we added a number of new engineers to our
mechanical, electrical and software design teams and we continue to recruit in
these areas. We are also recruiting new engineers to our electrical and
mechanical build teams.
Thomson Engineering Design
At TED the focus has been to develop sales of new products nationally and
internationally. Despite a slow start to the period in terms of order intake
we have subsequently seen a marked improvement in enquiries received,
quotations submitted and more recently orders received. The factory is
currently fully loaded with orders for these new products making for a great
start to the 2019 calendar year. We have several more new products that will
be released to market during the next 6-12 months.
During the period we have re-established our distributor agreements with
France and the Far East. It is particularly pleasing to see that a much
greater number of orders are now arriving from international clients.
Aside from the traditional Rail markets, we are continuing to explore the
potential for TED to develop its business within similar markets such as
highways and off road. This is starting to gain some traction with requests
for quotations now feeding into the business for new, though similar, products
to TED’s existing product catalogue.
Technology Division
For PipeHawk Technology the first half of the current year has seen some
increase in unit sales as we continue to re-establish UK sales channels
following the failure of one of our key UK distributors.
Our recently established distributor for the Asian market; based in Japan, is
starting to generate more substantial sales leads and this is beginning to
translate into unit orders from around the region.
We are continuing to see a marked increase in recurring revenue from the sale
of service, support and spares contracts, especially now that the e-Safe
family of products has penetrated a number of markets and we develop more
experienced users and distribution channels.
In R&D we have focused on the development of the large antenna version of
e-Safe PRO which is centred on the requirement for identifying deep services.
We have built prototypes and have been able to demonstrate these prototypes to
key potential clients and users; feedback on the product’s capability has
been very positive. We aim to release the large antenna deep utilities product
variant to market later in the year. Unit margins are also expected to improve
as we see the benefits of recent R&D work on common components used across our
product range, including the new antenna, appear in production units.
Finally, I am proud to report that in February 2019 e-Safe has won a further
award for Technical Innovation at the International Water and Irrigation
Exhibition in Spain which further reinforces the product’s international
standing.
Adien
At Adien trading in the period under review has resulted in a positive and
promising start to the year with the renewal of a number of long
term framework agreements leading to a stream of consistent work producing
good margins in our key markets. A number of major contracts have been secured
which contain significant sub contract elements; these provide additional
profitability to the core survey elements of the contract through the
provision of Traffic Management, CCTV, Jetting, Laser scanning and clearing of
vegetation services. The activity levels in Scotland remain consistently
high and we are currently recruiting additional staff experienced in the
relevant industries.
The order book is looking strong with the current upturn in Defence contracts
coupled with infrastructure renewal. Accordingly, the outlook for the
remainder of the financial year is encouraging.
Related party transactions
My letter of financial support dated 30 October 2017 was renewed on 24 October
2018 for a further year.
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 2018, these
deferred fees and interest payments amounted to approximately £ 73,000 in
total, all of which have been accrued in the Company’s accounts, and at 31
December 2018 amounted in total to £1,601,000.
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 2018
6 months ended 31 December 2018 (unaudited) £’000 6 months ended 31 December 2017 (unaudited) £’000 Year ended 30 June 2018 (audited) £’000
Revenue 2,901 2,310 4,789
Staff costs (1,533) (1,353) (2,703)
General administrative expenses (1,462) (1,140) (2,494)
Operating loss (94) (183) (408)
Profit on sale of joint venture investment - 143 142
Loss on ordinary activities before interest and taxation (94) (40) (266)
Finance costs (70) (78) (236)
Loss before taxation (164) (118) (502)
Taxation 176 136 351
Profit/(loss) for the period attributable to equity holders of the Company 12 18 (151)
Other comprehensive income - - -
Total comprehensive income for the period net of tax 12 18 (151)
Earnings per share (pence) – basic 0.04 0.05 0.45
Earnings per share (pence) – diluted 0.04 0.03 0.45
Consolidated Statement of Financial Position
As at 31 December 2018
Assets As at 31 December 2018 (unaudited) As at 31 December 2017 (unaudited) As at 30 June 2018 (audited)
£’000 £’000 £’000
Non-current assets
Property, plant and equipment 490 446 481
Goodwill 1,190 1,169 1,190
1,680 1,615 1,671
Current assets
Inventories 169 177 178
Current tax assets 274 158 372
Trade and other receivables 1,453 1,147 1,175
Cash 72 95 19
1,968 1,577 1,744
Total Assets 3,648 3,192 3,415
Equity and liabilities
Equity
Share capital 340 340 340
Share premium 5,191 5,191 5,191
Other reserves (9,196) (9,039) (9,208)
(3,665) (3,508) (3,677)
Non-current liabilities
Borrowings 2,928 2,659 2,966
Trade and other payable 4 251 8
2,932 2,910 2,974
Current liabilities
Trade and other payables 2,246 1,632 1,972
Bank overdrafts and loans 2,135 2,158 2,146
4,381 3,790 4,118
Total equity and liabilities 3,648 3,192 3,415
Consolidated Statement of Cash Flow
For the six months ended 31 December 2018
6 months ended 31 December 2018 (unaudited) £’000 6 months ended 31 December 2017 (unaudited) £’000 Year ended 30 June 2018 (audited) £’000
Cash inflow from operating activities
Loss from operations (94) (183) (408)
Adjustments for:
Profit on disposal of fixed asset (13) - -
Depreciation 41 47 106
(66) (136) (302)
Decrease in inventories 10 11 10
Increase in receivables (278) (321) (196)
Increase/(decrease) in liabilities 104 (311) 143
Cash used in operations (230) (757) (345)
Interest paid (32) (3) (87)
Corporation tax received 274 278 232
Net cash generated/(used in) from operating activities 12 (482) (200)
Cash flows from investing activities
Purchase of plant and equipment (55) (1) (17)
Proceeds from disposal of fixed asset 17 - -
Sale of Joint Venture investment - 197 197
Other income 17 - -
Net cash (used in)/generated from investing activities (21) 196 180
Cash flows from financing activities
New loans and finance leases 83 308 -
Repayment of bank and other loans (8) (2) (10)
Repayment of finance leases (13) (8) (34)
Net cash generated from/(utilised in) financing activities 62 298 (44)
Increase in cash and cash equivalents 53 12 (64)
Cash and cash equivalents at beginning of period 19 72 72
Acquisition of subsidiary - 11 11
Cash and cash equivalents at end of period 72 95 19
Consolidated Statement of changes in equity
For the six months ended 31 December 2018
Share capital Share premium account Retained earnings Total
£’000 £’000 £’000 £’000
6 months ended 31 December 2018
As at 1 July 2017 330 5,151 (9,057) (3,576)
Profit for the period - - 18 18
Total comprehensive income - - 18 18
Issue of Shares 10 40 - 50
As at 31 December 2018 340 5,191 (9,039) (3,508)
12 months ended 30 June 2018
As at 1 July 2017 330 5,151 (9,057) (3,576)
Loss for the period - - (151) (151)
Total comprehensive income - - (151) (151)
Issue of Shares 10 40 - 50
As at 30 June 2018 340 5,191 (9,208) (3,677)
6 months ended 31 December 2018
As at 1 July 2017 340 5,191 (9,208) (3,677)
Profit for the period - - 12 12
Total comprehensive income - - 12 12
As at 31 December 2018 340 5,191 (9,196) (3,665)
Notes to the Interim Results
1. Basis of preparation
The Interim Results for the six months ended 31 December 2018 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 2018, on which the auditors gave an
unqualified report and contained no statement under Section 498 (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 Company for the last
financial statements and in compliance with basic principles of IFRS except as
disclosed below:
IFRS 15 – Revenue from contracts with customers – Accounting Policies and
Transition
The directors have reviewed the way that the group accounts for revenues from
contracts with customers across each division of the group and have adopted
the new reporting standard on revenue recognition, IFRS 15. Following that
review, the directors consider that fixed price contracts should be recognised
on the basis of percentage completion as the group is creating an asset with
no alternative use to it and the contracts include the right to payment for
work completed to date. This is consistent with the previously adopted
revenue recognition accounting policy. For contracts for the sale of GPR
equipment, revenue continues to be recognised on delivery of the equipment. On
this basis there was no financial impact of adoption of IFRS 15.
2. Segmental information
The Company 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 Automation and Test system solutions Total
£’000 £’000 £’000 £’000
6 months ended 31 December 2018
Total segmental revenue 709 107 2,085 2,901
Segmental result (15) 4 (83) (94)
Finance costs (5) (51) (14) (70)
Loss before taxation (164)
Segment assets 479 1,444 1,725 3,648
Segment liabilities 528 4,394 2,391 7,309
Non-current asset additions (20) - 32 12
Depreciation and amortisation 26 - 15 41
6 months ended 31 December 2018
Total segmental revenue 747 106 1,457 2,310
Segmental result (12) 38 (209) (183)
Finance costs (3) (66) (9) (78)
Share of operating loss in joint venture 143
Loss before taxation (118)
Segment assets 625 1,357 1,210 3,192
Segment liabilities 637 4,302 1,761 6,700
Non-current asset additions - - 448 448
Depreciation and amortisation 31 - 16 47
12 months ended 30 June 2018
Total segmental revenue 1,534 173 3,082 4,789
Segmental result 52 (102) (358) (408)
Finance costs (28) (149) (59) (236)
Loss before taxation (502)
Segment assets 596 1,375 1,444 3,415
Segment liabilities 615 4,308 2,169 7,092
Non-current asset additions 91 - 457 548
Depreciation and amortisation 63 - 43 106
3. Earnings per share
This has been calculated on the profit for the period of £12,000 (2017:
£18,000) and the number of shares used was 33,543,808 (2017: 33,543,808),
being the weighted average number of shares in issue during the period.
4. Dividends
No dividend is proposed for the six months ended 31 December 2018.
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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