TIDMPIP
RNS Number : 8203F
PipeHawk PLC
24 March 2022
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.
24 March 2022
PipeHawk plc
("PipeHawk" or the "Company")
Unaudited results for the six months ended 31 December 2021
Chairman's Statement
I am pleased to report that the Company's turnover in the six
months ended 31 December 2021 was GBP3,247,000 (2020:
GBP2,641,000), an increase of 23 per cent over the comparable
period last year, resulting in a loss before taxation of GBP457,000
(2020: loss of GBP336,000) and a loss after taxation of GBP284,000
(2020: GBP161,000)
This has been an extremely challenging six months following the
removal of the UK government furlough support coupled with employee
absences as a result of ongoing variants of COVID-19, delays caused
by material shortages, much longer supply lead times and increased
costs, all of which have caused operational inefficiencies and
uncertainty with existing and potential clients such that expected
orders have been delayed or deferred. Nevertheless, the underlying
direction of travel of our business is clear. We have accelerated
progress at both QM Systems Limited ("QM Systems") and Thomson
Engineering Design Limited ("TED") and have now moved both
operations to a state of the art premises five times and three
times respectively greater than their previous footprint. This, and
the level of interest evidenced by our current sales discussions,
positions the Company very well for the future.
QM Systems
Order intake for the initial six months ended 31 December 2021
was below management expectations. This is predominantly the result
of anticipated projects being delayed rather than projects being
cancelled or lost. In addition, the operational team continues to
be kept busy on project work as the dramatic effects of the earlier
COVID-19 pandemic lockdowns has continued to affect the business
into the later stages of project lifecycle for longer than
anticipated. This has meant that balancing the various team
workloads has become increasingly difficult compared to previous
periods.
Since the beginning of 2022, QM Systems orderbook and order
prospects have improved, and it is anticipated that during the
later stages of the current financial year the QM Systems orderbook
will result in production being at full capacity. During the last
few weeks our quotation levels and degree of engagement have
increased significantly with a number of projects expected to start
within the next one or two months.
Over the first six months ended 31 December 2021, we secured two
contract manufacturing contracts for completely different products.
The first contract will see QM Systems produce a product for the
marine market and the second contract concerns a partnership with
Ventive Limited ("Ventive") to design and subsequently manufacture
an innovative, new technology home heating and hot water system
that is expected to replace conventional Gas and Oil fired heating
and hot water systems with a far more sustainable solution.
In order to enable QM Systems to reach the targeted start of
production dates for the above two manufacturing contracts of
mid-2022 and late-2022, respectively, QM Systems has relocated to a
far larger premises a few minutes away from its previous location.
QM Systems has made significant investment into the new facility to
provide a 'state of the art' manufacturing facility that our
partners and QM Systems can be proud of. Despite the challenging
timescales QM Systems managed to complete the move within two
months from signing of the contracts and QM Systems is now up and
running in the new facility. Inevitably the disruption created
through moving an entire operation to a new location will impact
our third quarter. However, we have kept disruption to a minimum
through careful planning and ensuring that our manufacturing
operations suffered minimal down time.
In the second half of the current financial year QM Systems
expects to continue to deliver its bespoke projects for assembly
and test systems to its existing and new clients as well as
continued preparations for the start of manufacturing the 'Ventive
Home' system at the end of June 2022.
Thomson Engineering Design ("TED")
Business has continued to be relatively buoyant at TED as it
continues to remain largely immune to the impact of the COVID-19
pandemic. Historically a pattern had emerged where the orderbook at
TED had been light during the first quarter of each new financial
year and subsequently growing in the mid to later stages of the
second quarter of the financial year. The effort that has been put
into marketing, promoting and developing TED's business into
further international markets and with new clients this year has
enabled TED to continue the momentum and traction gained in the
second part of the previous 2020/21 financial year into the first
half of the new 2021/22 financial year. This year TED entered the
new financial year with a very healthy orderbook and has since
continued to win a number of orders with existing and new clients.
In particular, we have seen the size of orders increase
significantly over the last 12 months and TED has been very
successful in winning and successfully delivering bespoke track and
rail-based gantry handling systems to a number of clients. TED
began the second half of the financial year with a very healthy
orderbook with a number of significant key contracts secured in the
first two months alone.
Operationally, TED has also relocated into a far more modern and
much larger facility. This has enabled the business to
significantly improve productivity and efficiency and provides a
far more pleasant facility for our employees to work within as well
as to showcase to our clients. The move was completed over a
three-month period. The move involved firstly moving the assembly
operations and subsequently the machining and fabrication
operations - which due to careful planning resulted in minimal
downtime for the manufacturing operations. In order to cope with
the increased workload at TED, a number of new staff have been
recruited across all levels of the business. TED anticipates that
the positive start to its financial year will continue to gain
momentum as it becomes established and embedded in the new
facility.
Adien
Following the COVID-19 pandemic last year and the removal of
furlough payments, Adien continues to maintain an effective and
profitable start to the year's trading. The continuance of long
term framework contracts has ensured a consistent supply of work
producing good margins, despite the increased costs inflicted by
the energy companies in addition to the ongoing costs of COVID-19
compliant working arrangements. Any increased operating costs are
passed on to the client in the first instance.
Adien was awarded key framework contracts with more than ten
distributors of 5G telecom mast sites and several major
distilleries, together with ongoing framework contracts with
several major players in the civil and construction industries.
Adien has extended its offering to include Traffic Management,
CCTV, Jetting, Laser scanning and Drone 3D survey inspections. The
activity levels in both England and Scotland currently remain
strong and we have since recruited additional staff experienced in
the relevant sectors in both England and Scotland.
Adien is also adding additional services (STATS requisitioning -
records of the utility providers - and EV charging points) to
Adien's core work services and these continue to evolve in response
to the demands of our clients and the marketplace.
The order book is positive with a current continued upturn in
Water, Power, Defence, Telecom 5G plus highway and rail renewal
projects. Accordingly, the outlook for the remainder of the
financial year is positive for Aiden.
PipeHawk Technology/Utsi
While we have worked hard towards achieving tighter integration
between the two complimentary businesses of PipeHawk Technology and
Utsi Electronics Ltd, the shortage of essential electronic
components, lengthening lead times and quickly escalating prices;
some by a factor of 4 to 10, have continued to create extremely
challenging trading conditions.
Our UK/EU enquiry numbers have continued to rise, as businesses
here and in Europe have begun returning to work. A number of
markets further afield have yet to do the same and therefore remain
very sluggish, with overall enquiries still well down when compared
to pre-pandemic levels.
The notable exception to this is academic and environmental
related enquiries, where our ability to engage with online
collaborators and remote working units, has enabled us to derive
benefit from funded research & development projects, as well as
maintaining communications for a number of future potential
opportunities for the pipeline, which are, for now, still in
abeyance.
Achieving a steady supply of components at stable prices is
identified as a key enabler for optimising price sensitive market
access to our extended product range and relevant to generating
additional sales from existing product resellers, as well as
creating an attractive opportunity for the recruitment of new
resellers. Maintenance of good communications with our supply chain
throughout the pandemic and strong negotiation with key suppliers
post lockdowns, has enabled us to secure on favourable terms, the
future supply in quantity of the most essential components required
in the manufacture of our product line. While the increased costs
of carrying higher inventory quantities than normal will impact
profits in the short-term, the beneficial effects on margins of
shielding future component requirements from the more rampant
price/availability fluctuations anticipated to impact component
supply over the coming months, are expected to more than compensate
over the medium term.
Related party transactions
As announced on 3 November 2021, my letter of financial support
dated 28 September 2020 was renewed on 6 September 2021 to provide
the group with financial support until 31 December 2024.
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 2021, these deferred fees and interest
payments amounted to approximately GBP103,000 in total, all of
which have been accrued in the Company's interim results, and at 31
December 2021 amounted in total to GBP1,600,000.
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/Vivek Bhardwaj
Consolidated Statement of Comprehensive Income
As at 31 December 2021
6 months ended 6 months ended Year ended
31 December 31 December 30 June
2021 2020 2021 (audited)
(unaudited) (unaudited) GBP'000
GBP'000 GBP'000
------------------ ------------------ -------------------
Revenue 3,247 2,641 6,665
Staff costs (1,903) (1,697) (3,478)
General administrative expenses (1,698) (1,178) (2,930)
------------------ ------------------ -------------------
(Loss)/profit on ordinary activities
before interest and taxation (354) (234) 257
Finance costs (103) (102) (178)
------------------ ------------------ -------------------
(Loss)/profit before taxation (457) (336) 79
Taxation 173 175 443
------------------ ------------------ -------------------
(Loss)/profit for the period
attributable to equity holders
of the Company (284) (161) 522
Other comprehensive income - - -
------------------ ------------------ -------------------
Total comprehensive (expense)/income
for the period net of tax (284) (161) 522
================== ================== ===================
(Loss)/ earnings per share
(pence) - basic (0.79) (0.46) 1.50
(Loss)/earnings per share (pence)
- diluted (0.79) (0.46) 0.83
================== ================== ===================
Consolidated Statement of Financial Position
As at 31 December 2021
As at As at As at
31 December 31 December 30 June
2021 2020
(unaudited) (unaudited) 2021 (audited)
GBP'000 GBP'000 GBP'000
Assets
------------------ ------------------ -------------------
Non-current assets
Property, plant and equipment 585 302 528
Right of use 590 491 363
Goodwill 1,357 1,345 1,357
------------------ ------------------ -------------------
2,532 2,138 2,248
------------------ ------------------ -------------------
Current assets
Inventories 308 146 373
Current tax assets 182 255 442
Trade and other receivables 1,723 1,538 1,809
Cash 644 1,019 920
------------------ ------------------ -------------------
2,857 2,958 3,544
------------------ ------------------ -------------------
Total assets 5,389 5,096 5,792
================== ================== ===================
Equity and liabilities
Equity
Share capital 358 349 349
Share premium 5,302 5,215 5,215
Other reserves (8,068) (8,467) (7,784)
------------------ ------------------ -------------------
(2,408) (2,903) (2,220)
------------------ ------------------ -------------------
Non-current liabilities
Borrowings 3,624 3,321 3,205
3,624 3,321 3,205
------------------ ------------------ -------------------
Current liabilities
Trade and other payables 2,012 2,771 2,651
Bank overdrafts and loans 2,161 1,907 2,156
------------------ ------------------ -------------------
4,173 4,678 4,807
------------------ ------------------ -------------------
Total equity and liabilities 5,389 5,096 5,792
================== ================== ===================
Consolidated Statement of Cash
Flow
For the six months ended 31
December 2021
6 months ended 6 months ended Year ended
31 December 31 December 30 June
2021 2020 2021 (audited)
(unaudited) (unaudited) GBP'000
GBP'000 GBP'000
------------------ ------------------ -------------------
Cash inflow from operating
activities
(Loss)/profit from operations (354) (234) 257
Adjustment for:
Depreciation 162 97 192
------------------ ------------------ -------------------
(192) (137) 449
Decrease/(increase) in inventories 65 5 (171)
Decrease/(increase) in receivables 87 115 (136)
(Decrease)/increase in liabilities (88) 616 581
------------------ ------------------ -------------------
Cash generated (used in)/from
operations (128) 599 723
Interest paid (36) (31) (50)
Corporation tax received 433 314 394
------------------ ------------------ -------------------
Net cash generated from operating
activities 269 882 1,067
------------------ ------------------ -------------------
Cash flows from investing activities
Purchase of plant and equipment (446) (79) (130)
Acquisition of subsidiary net
of cash acquired - - 42
Net cash utilised in investing
activities (446) (79) (88)
------------------ ------------------ -------------------
Cash flows from financing activities
New loans and leases - 23 -
Proceeds from borrowings 250 35 339
Repayment of bank and other
loans (221) (3) (483)
Repayment of leases (128) (89) (165)
------------------ ------------------ -------------------
Net cash utilised in financing
activities (99) (34) (309)
------------------ ------------------ -------------------
(Decrease)/increase in cash
and cash equivalents (276) 769 670
Cash and cash equivalents at
beginning of period 920 250 250
Cash and cash equivalents at
end of period 644 1,019 920
================== ================== ===================
Consolidated Statement of Changes in Equity
For the six months ended 31 December 2021
Share premium
Share capital account Retained
earnings Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------- -------------- ----------- --------
6 months ended 31 December 2020
As at 1 July 2020 349 5,215 (8,306) (2,742)
Loss for the period - - (161) (161)
Total comprehensive income - - (161) (161)
---------------- -------------- ----------- --------
As at 31 December 2020 349 5,215 (8,467) (2,903)
================ ============== =========== ========
12 months ended 30 June 2021
As at 1 July 2020 349 5,215 (8,306) (2,742)
Profit for the period - - 522 522
Total comprehensive income - - 522 522
---------------- -------------- ----------- --------
Issue of shares - - - -
As at 30 June 2021 349 5,215 (7,784) (2,220)
================ ============== =========== ========
6 months ended 31 December 2021
As at 1 July 2021 349 5,215 (7,784) (2,220)
Loss for the period - - (284) (284)
Total comprehensive income - - (284) (284)
---------------- -------------- ----------- --------
Issue of shares 9 87 - 96
As at 31 December 2021 358 5,302 (8,068) (2,408)
================ ============== =========== ========
Notes to the Interim Results
1. Basis of preparation
The Interim Results for the six months ended 31 December 2021
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 2021, 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
2021
Total segmental revenue 765 134 2,348 3,247
============= ================== =================== ========
Segment result 104 (45) (413) (354)
Finance costs (16) (77) (10) (103)
Profit/(loss) before taxation 88 (122) (423) (457)
------------- ------------------ ------------------- --------
Segment assets 654 2,301 2,434 5,389
Segment liabilities 515 4,895 2,387 7,797
Non-current asset additions 3 55 388 446
Depreciation and amortisation 47 9 106 162
============= ================== =================== ========
6 months ended 31 December
2020
Total segmental revenue 814 25 1,802 2,641
============= ================== =================== ========
Segmental result 148 (1) (381) (234)
Finance costs (16) (71) (15) (102)
(Loss)/profit before taxation 132 (72) (396) (336)
------------- ------------------ ------------------- --------
Segment assets
Segment liabilities 767 1,983 2,346 5,096
Non-current asset addition 619 4,557 2,823 7,999
Depreciation and amortisation 45 - 34 79
============= ================== =================== ========
12 months ended 30 June 2021
Total segmental revenue 1,395 150 5,120 6,665
------------- ------------------ ------------------- --------
Segmental result 130 (218) 345 257
Finance costs (29) (130) (19) (178)
Profit/(loss) before taxation 101 (348) 326 79
------------- ------------------ ------------------- --------
Segment assets 696 2,196 2,754 5,646
Segment liabilities 624 4,841 2,521 7,986
Non-current asset additions 50 4 77 131
Depreciation and amortisation 100 1 91 192
============= ================== =================== ========
3. Loss per share
This has been calculated on the loss for the period of
GBP284,000 (H1 2020: loss GBP161,000) and the number of shares used
was 35,812,823 (H1 2020: 34,860,515), 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
2021.
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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