TIDMPIP
RNS Number : 6303S
PipeHawk PLC
18 March 2021
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse (Amendment) (EU EXIT) Regulations 2019/310.
18 March 2021
PipeHawk plc
("PipeHawk" or the "Company")
Unaudited results for the six months ended 31 December 2020
Chairman's Statement
I am pleased to report that the Company's turnover in the six
months ended 31 December 2020 was GBP2,641,000 (H1 2019:
GBP4,518,000), a decrease of 42 per cent over the comparable period
last year, resulting in a loss before taxation of GBP336,000 (H1
2019: profit of GBP111,000) and a loss after taxation of GBP161,000
(H1 2019: profit GBP283,000). I believe that this is a very
creditable result given the exceptionally challenging six months of
uncertainty surrounding both Brexit and COVID lockdowns, with
orders being postponed and deferred, but few actually being
cancelled or being placed elsewhere. So, with the assistance of the
UK Government's COVID financial aid in the form of furlough grants
and CBILS loans, the operational side of our businesses, with the
notable exception of Adien, concentrated on completing the orders
in hand, whilst our salespeople have worked tirelessly on new
concepts and developments which clients have indicated they will
require once sufficient confidence returns. We believe that there
is a significant overhang of orders waiting to be placed when the
time is right.
In the meantime, we have taken the opportunity to implement some
strategic decisions: the post-period end acquisition of Utsi
Electronics to integrate with PipeHawk Technology; full absorption
of Wessex slip testing into QM Systems; and development of a
manufacturing offering also within QM Systems.
QM Systems
At QM Systems, trading has been hampered by the effect of the
initial lockdown and again by the effect of the third lockdown.
Despite entering the first lockdown with a very full orderbook, low
order intake for the period from March through to July 2020
impacted the ability to pull sales through the business in the
latter part of 2020 which has effectively resulted in the loss for
the period under review. However, once the first lockdown eased,
order intake returned to more normal levels and we were fortunate
in that short period to be able to secure orders that have enabled
the Company to return to trading at a near normal level.
We have now again returned to a period of uncertainty through
the third lockdown, where a number of expected orders have been
delayed. We have, however, secured a number of follow-on contracts
that will carry us through this period with the aim that we are in
an excellent position to capitalise on what is anticipated to be a
very buoyant market for our solutions later this year. At the time
of writing, we continue to remain relatively busy in all areas of
the business.
It is fair to say that we have weathered a difficult period
better than many of our competitors. Not content though with
standing still we have been exploring ways in which we can add
further value and revenue to our business. I am pleased to announce
that following a recent contract win we will be establishing a new
business enterprise to provide contract manufacturing capability to
our clients where this may be beneficial. This will move the
Company into a new and exciting direction and is designed to
complement the products and services that we offer today,
effectively enabling QM Systems to work with its clients, where
required, from conceptualisation through to product manufacture,
service and support.
Operationally we have taken the opportunity to make some changes
to our structure which has resulted in more efficient design and
manufacturing teams. All current projects are progressing well and
to plan, with a number due to be delivered by the end of this
financial year or early into the next financial year.
Following the acquisition of Wessex Precision Instruments Ltd in
October 2019, we have undertaken a major exercise to reduce costs
whilst dramatically improving the service that we offer. We have
relocated the manufacturing facilities to our Aldershot office and
have reviewed our stock and supplier structure to ensure that we
now maintain a stock of key products, spares and consumables 'on
the shelf' to ensure our clients can have orders fulfilled in the
shortest timeframe possible.
Thomson Engineering Design ("TED")
TED suffered similarly to QM with a significant slowdown in
orders over the summer months. However, during November 2020 TED
received a large order for 2 new products totalling over GBP200k
with a challenging delivery timescale of mid-February 2021. I am
pleased to report that the team at TED were able to demonstrate
their ability as a true 'can do' business and achieved the delivery
of this incredibly aggressive lead-time, on time.
I am pleased to report that, even ignoring the above, order
intake for TED since November 2020 has remained buoyant. Following
a very solid performance for 2019/20 FY, where TED achieved good
growth with a return to profit, TED is now set to continue its
growth trajectory with an increase in sales year-on-year. It has
been pleasing to see of late that the domestic market appears more
buoyant than last year whilst the international market also appears
strong. This we believe is down to increases in marketing, linked
to the solid reputation that TED has achieved for delivering
quality product and support internationally. At the time of writing
TED is quoting on further major contracts within the Asia Pacific
territory.
During the period, TED has delivered a mixture of domestic and
international sales across a broad spectrum of products including
Sleeper Spreaders, Panel Handlers, Rail Grabs, Gantries, Cable
Yokes, De-Clippers, Fast Clip Machines, Threader Draggers,
Manipulators and others. It is gratifying to see that the
investment provided by the Group to TED during the last three years
since acquisition to support the development of new products is
really starting to bear fruit.
I am fully expecting that TED's trading in the second part of
the 2020/21 FY will significantly outperform the initial six months
(a repeat of last year) and I anticipate TED will achieve growth on
last financial year's results. Given the current climate that TED
operates within, particularly within manufacturing, this would be a
great achievement.
Adien
Adien has had an excellent six months increasing turnover by
15%, working, as the team does, largely in the open air, and having
both adjusted quickly to the needs, and additional costs, of the
pandemic they continued to supply their service (whilst others
didn't), and were able to fulfil the long term framework contracts
which had been successfully re-secured in the previous year.
Increasingly within the framework contracts Adien is able to
supply a one-stop shop for the subcontract elements of Traffic
Management, CCTV, Jetting, Laser scanning and Drone 3D surveys with
inspections, which provides increased profitability over and above
the core survey elements of the contract.
The activity levels in both England and Scotland currently
remain very strong and we have recruited additional staff
experienced in the relevant sectors to assist Adien's growth.
The order book is positive as a result of the current upturn in
Defense, Telecoms, 5G and Power Distribution, plus infrastructure
renewal. Accordingly, the outlook for the remainder of the
financial year and beyond for Adien is most encouraging.
PipeHawk Technology
PipeHawk Technology has been in tickover/furlough mode for most
of the six months under review. However during the period,
discussions and negotiations were held with the owners of a
complementary company, Utsi Electronics Limited, and this business
was successfully acquired on 27 January 2021 for essentially net
asset value plus a profit related payout over the next two
years.
The Utsi products are technically well designed and recognised
internationally as being very capable ground penetrating radar
(GPR) systems with most models being available with a selection of
antenna types/frequencies making them suitable for use across a
wide range of markets from the common and highly competitive
Utility Survey market to the very specialist fields of Structural
Fault analysis, Environmental/Pollution research and Railway
standards compliance. Some models are also available in versions
designed specifically for operation in harsh climates
(deserts/polar regions) and/or over rough terrain.
The majority of these products and markets are complementary to
those of our own PipeHawk brand systems. The acquisition of Utsi
will provide an increased portfolio of GPR system offerings into a
significantly wider range of markets as well as offering excellent
opportunity to extend R&D activities into the highly desirable
Environmental/Water/Structural Faults markets and increase unit
profitability across the dual product ranges achieved through
enhanced marketing, rationalised designs and parts sourcing.
By combining the PipeHawk & Utsi systems there is the
opportunity for improvements and growth for both product lines
(thereby maintaining servicing of both ends of the market) while at
the same time rationalising boards and components used, to improve
sales, productivity and profit margins.
Related party transactions
As announced on 21 October 2020, my letter of financial support
dated 7 October 2019 was renewed on 28 September 2020 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 2020, these deferred fees and interest
payments amounted to approximately GBP107,000 in total, all of
which have been accrued in the Company's accounts, and at 31
December 2020 amounted in total to GBP1,574,000.
Gordon Watt
Chairman
Enquiries:
PipeHawk Plc Tel no. 01252 338 959
Gordon Watt (Chairman)
Allenby Capital (Nomad and Broker) Tel no. 020 3328 5656
David Worlidge/Asha Chotai
Statement of Comprehensive Income
For the six months ended 31 December 2020
6 months ended 6 months ended Year ended
31 December 31 December 30 June
2020 2019 2020 (audited)
(unaudited) (unaudited) GBP'000
GBP'000 GBP'000
------------------ ------------------ -------------------
Revenue 2,641 4,518 8,325
Staff costs (1,697) (1,190) (3,776)
General administrative expenses (1,178) (2,404) (4,144)
------------------ ------------------ -------------------
(Loss)/profit on ordinary activities
before interest and taxation (234) 204 405
Finance costs (102) (118) (211)
------------------ ------------------ -------------------
(Loss)/profit before taxation (336) 111 194
Taxation 175 172 396
------------------ ------------------ -------------------
(Loss)/profit for the period
attributable to equity holders
of the Company (161) 283 590
Other comprehensive income - - -
------------------ ------------------ -------------------
Total comprehensive (expense)/income
for the period net of tax (161) 283 590
================== ================== ===================
(Loss)/ earnings per share
(pence) - basic (0.46) 0.82 1.69
(Loss)/earnings per share (pence)
- diluted (0.99) 0.58 0.93
================== ================== ===================
Consolidated Statement of Financial Position
As at 31 December 2020
As at As at As at
31 December 31 December 30 June
2020 2019
(unaudited) (unaudited) 2020 (audited)
GBP'000 GBP'000 GBP'000
Assets
----------------- ---------------- -------------------
Non-current assets
Property, plant and equipment 793 761 811
Goodwill 1,345 1,279 1,345
----------------- ---------------- -------------------
2,138 2,040 2,156
----------------- ---------------- -------------------
Current assets
Inventories 146 295 151
Current tax assets 255 167 394
Trade and other receivables 1,538 1,120 1,654
Cash 1,019 99 250
----------------- ---------------- -------------------
2,958 1,681 2,449
----------------- ---------------- -------------------
Total assets 5,096 3,721 4,605
================= ================ ===================
Equity and liabilities
Equity
Share capital 349 344 349
Share premium 5,215 5,205 5,215
Other reserves (8,467) (8,613) (8,306)
----------------- ---------------- -------------------
(2,903) (3,064) (2,742)
----------------- ---------------- -------------------
Non-current liabilities
Borrowings 3,321 2,846 3,255
Trade and other payable - 19 6
----------------- ---------------- -------------------
3,321 2,865 3,261
----------------- ---------------- -------------------
Current liabilities
Trade and other payables 2,771 1,677 1,949
Bank overdrafts and loans 1,907 2,224 2,137
----------------- ---------------- -------------------
4,678 3,920 4,086
----------------- ---------------- -------------------
Total equity and liabilities 5,096 3,721 4,605
================= ================ ===================
Consolidated Statement of Cash Flow
For the six months ended 31 December 2020
6 months ended 6 months ended Year ended
31 December 31 December 30 June
2020 2019 2020 (audited)
(unaudited) (unaudited) GBP'000
GBP'000 GBP'000
------------------ ------------------ -------------------
Cash inflow from operating
activities
(Loss)/profit from operations (234) 204 405
Adjustment for:
Depreciation 97 87 191
------------------ ------------------ -------------------
(137) 291 596
Decrease/(increase) in inventories 5 (112) (18)
Decrease/(increase) in receivables 115 480 (52)
Increase/(decrease) in liabilities 616 (1,706) (1,037)
------------------ ------------------ -------------------
Cash generated from/(used in)
operations 599 (1,047) (511)
Interest paid (31) (23) (69)
Corporation tax received 314 320 318
------------------ ------------------ -------------------
Net cash generated from/(utilised
in) operating activities 882 (750) (262)
------------------ ------------------ -------------------
Cash flows from investing activities
Purchase of plant and equipment (79) (319) (474)
Proceeds from disposal of fixed - (1) -
assets
Net cash utilised in investing
activities (79) (320) (474)
------------------ ------------------ -------------------
Cash flows from financing activities
New loans and finance leases 23 557 -
Proceeds from borrowings 35 - 523
Repayment of bank and other
loans (3) (105) (165)
Repayment of finance leases (89) (81) (170)
------------------ ------------------ -------------------
Net cash (utilised in)/generated
from financing activities (34) 371 188
------------------ ------------------ -------------------
Increase/(decrease) in cash
and cash equivalents 769 (699) (548)
Cash and cash equivalents at
beginning of period 250 774 774
Acquisition of subsidiary - 24 24
------------------ ------------------ -------------------
Cash and cash equivalents at
end of period 1,019 99 250
================== ================== ===================
Consolidated Statement of Changes in Equity
For the six months ended 31 December 2020
Share premium
Share capital account Retained
earnings Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------- -------------- ----------- --------
6 months ended 31 December 2019
As at 1 July 2019 344 5,205 (8,896) (3,347)
Profit for the period - - 283 283
Total comprehensive income - - 283 283
---------------- -------------- ----------- --------
As at 31 December 2019 344 5,205 (8,613) (3,064)
================ ============== =========== ========
12 months ended 30 June 2020
As at 1 July 2019 344 5,205 (8,896) (3,347)
Loss for the period - - 590 590
Total comprehensive income - - 590 590
---------------- -------------- ----------- --------
Issue of shares 5 10 - 15
As at 30 June 2020 349 5,215 (8,306) (2,742)
================ ============== =========== ========
6 months ended 31 December 2020
As at 1 July 2020 349 5,215 (8,306) (2,742)
Profit for the period - - (161) (161)
Total comprehensive income - - (161) (161)
---------------- -------------- ----------- --------
As at 31 December 2020 349 5,215 (8,467) (2,903)
================ ============== =========== ========
Notes to the Interim Results
1. Basis of preparation
The Interim Results for the six months ended 31 December 2020
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 2020, 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.
2. Segmental information
The Company operates in one geographical location being the UK.
Accordingly, the primary segmental disclosure is based on
activity.
Utility Development,
detection assembly Automation
and mapping and sale and test
services of GPR equipment system solutions
Total
GBP'000 GBP'000 GBP'000 GBP'000
------------- ------------------ ------------------- --------
6 months ended 31 December
2020
Total segmental revenue 814 25 1,802 2,641
============= ================== =================== ========
Segment result 148 (1) (381) (234)
Finance costs (16) (71) (15) (102)
Profit/(loss) before taxation 132 (72) (396) (336)
------------- ------------------ ------------------- --------
Segment assets 767 1,983 2,346 5,096
Segment liabilities 619 4,557 2,823 7,999
Non-current asset additions 45 - 34 79
Depreciation and amortisation 51 - 46 97
============= ================== =================== ========
6 months ended 31 December
2019
Total segmental revenue 638 49 3,831 4,518
============= ================== =================== ========
Segmental result (110) 51 263 204
Finance costs (7) (72) (14) (93)
(Loss)/profit before taxation (118) 23 206 111
------------- ------------------ ------------------- --------
Segment assets 691 1,604 1,426 3,721
Segment liabilities 610 4,329 1,846 6,785
Non-current asset addition 118 18 155 291
Depreciation and amortisation 43 6 38 87
============= ================== =================== ========
12 months ended 30 June 2020
Total segmental revenue 1,344 81 6,900 8,325
============= ================== =================== ========
Segmental result 75 (15) 345 405
Finance costs (33) (141) (37) (211)
Profit/(loss) before taxation 42 (156) 308 194
------------- ------------------ ------------------- --------
Segment assets 771 1,527 2,307 4,605
Segment liabilities 664 4,379 2,304 7,347
Non-current asset additions 225 1 258 484
Depreciation and amortisation 95 1 95 191
============= ================== =================== ========
3. (Loss)/earnings per share
This has been calculated on the loss for the period of
GBP161,000 (H1 2019: profit GBP283,000) and the number of shares
used was 34,860,515 (H1 2019: 34,360,515), 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
2020.
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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