TIDMPIP
RNS Number : 7004U
PipeHawk PLC
30 March 2023
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.
30 March 2023
PipeHawk plc
("PipeHawk" or the "Company")
Unaudited results for the six months ended 31 December 2022
Chairman's Statement
The Company's turnover in the six months ended 31 December 2022
was GBP2,239,000 (December 2021: GBP3,247,000), a reduction of 28
per cent over the comparable period last year, resulting in a loss
before taxation of GBP1,797,000 (2021: loss of GBP457,000) and a
loss after taxation of GBP1,440,000 (2021: loss GBP284,000).
As indicated in my November Chairman's Statement accompanying
the annual accounts for the year ended 30 June 2022, the challenges
faced within the first half of 2022 calendar year continued further
into the second half of 2022 than originally expected resulting in
a significant drop in turnover compared with the six months to 31
December 2021 and an accompanying significant pre-tax loss for the
six months ended 31 December 2022. War in Ukraine, fuel cost
spikes, interest rate rises, three UK Prime Ministers - all are
contributing factors for delays that a number of the group
businesses have faced in receiving contract awards from clients. It
has been very challenging to manage resource levels across the
group where we have protected staffing levels to be able to switch
on quickly where contract award appeared imminent. Nevertheless,
also as previously reported, Rishi Sunak introduced a degree of
confidence into the marketplace which appears to have provided a
level of confidence for our clients to again start to award
contracts and work started to flow in the later part of 2022. This
appears to be accelerating into the start of 2023 with several
contacts being awarded, with the result that we have recruited
significant additional staff in order to be able to cope with the
current and anticipated workload. It now appears that the move by
QM Systems to premises five times the size of its previous premises
and TED to premises three times the size of its previous premises
was well judged and both premises are nearing a far more
satisfactory level of occupation. Orderbooks are healthy, time
charged and revenue recognised from existing projects is greatly
improved and order pipeline appears healthy.
The Directors of PipeHawk therefore believe that the outlook
does look very positive for the remainder of this year and
beyond.
QM Systems ("QM")
As reported in the accounts for the year ended 30 June 2022 (the
"2021/22 FY"), QM witnessed an order intake that was significantly
below management expectations. Whilst quotations and the expected
orderbook through the latter part of 2021/22 FY increased
dramatically, the gestation period from quotation to order
placement remained protracted as our clients continued to grapple
with the material uncertainties within their markets created
initially by Covid-19 and then aggravated further by the invasion
of Ukraine by Russia. In 2021/22 FY, we reported that order intake
had increased significantly in the first four months of this
current financial year. In this regard, I am pleased to say that
this trend has continued with a number of projects moving forward
from a protracted quotation phase to order placement. New orders
received this financial year up to 29 March 2023 stood at over
GBP5.8M. Quotation activity remains buoyant and we have a
significant expected orderbook that we are confident in converting
to orders during this [financial year], providing fuel for further
growth at QM.
Timescales for projects over the last 18 months have increased
significantly, predominantly due to extended timescales surrounding
material and component availability. This hampers our ability to
generate revenue at a quicker rate as we experience longer periods
of waiting time for materials to be delivered following the release
from the design phase. Consequently, the effects of increases in
order intake to positively ripple through all areas of our business
is longer than that ordinarily anticipated. In addition, given the
reduced orderbook in 2021/22 FY we had reduced staffing levels to
accommodate the workload at that time. This workforce reduction has
further impacted our ability to realise revenue quickly,
particularly in being able to respond to sudden and significant
increases in order placement. The result of the aforementioned
conditions has contributed to the reduction in revenue in the first
part of the 2022/23 FY and this is reflected in the figures
published.
We are however pleased to report that material and component
delivery times are improving and we have recruited a number of
additional mechanical, electrical and software engineers for both
our engineering and manufacturing teams. Since 30 June 2022, the QM
workforce has increased from 44 to 55 despite recruitment of high
calibre engineers being and continuing to remain difficult. We
continue to recruit as we anticipate our workload to further
increase. These factors are anticipated to enable us to
significantly accelerate revenue recognition during the final six
months of this current FY and the current orderbook and forecasts
indicate that we anticipate to be able to generate profit within
the final 6 months of this FY with a large uptick in revenue
anticipated to be recognised within this next period.
Our preparations for the start of our contract manufacturing
business continues to gain momentum as we move towards production
start dates later this year. One of our contract manufacturing
opportunities which will involve the filling and assembly of vials
for PCR testing of respiratory diseases in humans and animals has
led to us invest in the installation of a Clean Room at QM's
Hartlebury facility. This will be the first of our contract
manufacturing business to start production towards the end of the
2022/23 FY. Our other contract manufacturing business (including
Ventive) are now due to enter production in the second half of
2023.
Thomson Engineering Design ("TED")
Following a very buoyant end to the 2021/22 FY at TED, order
intake for the first part of the 2022/23 FY has been below
management expectations. Despite healthy quotation activity, a
number of the orders that were anticipated have been slow to
materialise. TED's projects tend to have relatively short
timescales (e.g. 1-4 months) and, hence unlike QM Systems, a
downturn in order intake at TED can have a relatively quick
consequences on revenue recognition and profitability for TED.
However, order intake for TED post 2021/22 FY has seen a
significant increase and this is anticipated to enable us to
accelerate revenue recognition through the second part of the
financial year. Combined with this change in momentum, the
relationship with Unipart Rail is gaining traction and a number of
quotations totalling over GBP1.6M have now been provided for the
export product that is far in excess of export quotations delivered
previously. We remain hopeful that a number of these quotations
will convert to orders in this second half of the current FY.
Furthermore, Unipart Rail is currently conducting a major marketing
campaign to push our products worldwide. Accordingly, with this
increase in exposure, we are confident that this will contribute to
further significant sales in the next financial year's figures.
Previously we stated that TED had entered a partnership to
design and manufacture Rail conversions for Kawasaki Mule vehicles.
We are pleased to report that TED has since been awarded the first
order for 10 units with a further 10 [expected] to follow shortly.
In addition to the Mule conversions, TED has also been developing
with our partner a rail conversion for a trailer assembly to be
towed by the Mule. This combination provides an easy to deploy, low
cost solution that can be driven on road direct to the rail work
site and can be quickly and easily mounted to a rail track for
maintenance purposes.
In anticipation of the growth expected above, we have recently
expanded our design capacity by the addition of two extra people
and two new SolidWorks seats. Furthermore, we have expanded our
machining capacity with two additional CNC machines and operators
to match.
Adien
As previously reported, the reduced work volumes as a result of
continual delays in contract start dates in the first half of
calendar year 2022 continued into the second half and then volumes
picked up significantly in the fourth quarter. The pickup has
continued into the first months of 2023 and is anticipated to
continue.
Confidence in the demand for our services is such that we have
invested in new vehicles, new survey equipment, new CAD hardware
and software and renewed sales training. We have also recruited
additional surveyors to enable an additional team to be deployed
thereby increasing our total turnover capacity.
We therefore believe that the outlook for Adien for the rest of
this year and next year is positive.
Utsi/PipeHawk Technology
Our work to move Utsi & PipeHawk products toward utilising a
common architecture while progressing greatly, but our ability to
complete has been greatly impacted by the continuing long lead
times of some component lines and the advanced redundancy of
others.
While good management of resources has achieved some control
over our own rising energy costs, the effect on supply chain prices
have been far more significant, placing increased pressure on
margins and our ability to remain competitive.
A mid year switch of focus from our general use products to
bespoke products for more specialist markets, has succeeded in
drawing new opportunities from industrial clients however,
continuing market uncertainty has stretched client timelines for
delivery beyond those initially required, into the new year.
While traditional R&D opportunities routed in academia
continue to be on hold or awaiting grant funding, we continue to
seek opportunities within new fields of endeavour, where our
experience of developing innovative sensor technology may provide
an alternative income stream.
Related party transactions
As announced on 29 November 2022, my letter of financial support
dated 6 September 2021 was renewed on 11 October 2022 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 2022, these deferred fees and interest
payments amounted to approximately GBP3,000 in total, all of which
have been accrued in the Company's interim results, and at 31
December 2022 amounted in total to GBP1,640,000.
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 2022
6 months 6 months Year ended
ended 31 December ended 31 December 30 June
2022 2021 2022 (audited)
(unaudited) (unaudited) GBP'000
GBP'000 GBP'000
------------------- ------------------- ----------------
Revenue 2,239 3,247 6,191
Staff costs (1,962) (1,903) (3,861)
General administrative expenses (1,902) (1,698) (3,642)
------------------- ------------------- ----------------
Loss on ordinary activities
before interest and taxation (1,625) (354) (1,312)
Finance costs (172) (103) (264)
------------------- ------------------- ----------------
Loss before taxation (1,797) (457) (1,576)
Taxation 357 173 708
------------------- ------------------- ----------------
Loss for the period attributable
to equity holders of the Company (1,440) (284) (868)
Other comprehensive income - - -
------------------- ------------------- ----------------
Total comprehensive expense
for the period net of tax (1,440) (284) (868)
=================== =================== ================
Loss per share (pence) - basic (3.97) (0.79) (2.42)
Loss per share (pence) - diluted (3.97) (0.79) (2.42)
=================== =================== ================
Consolidated Statement of Financial Position
As at 31 December 2022
As at As at As at
31 December 31 December 30 June
2022 2021
(unaudited) (unaudited) 2022 (audited)
GBP'000 GBP'000 GBP'000
Assets
-------------- -------------- -----------------
Non-current assets
Property, plant and equipment 814 585 828
Right of use 2,381 590 2,549
Goodwill 1,357 1,357 1,357
-------------- -------------- -----------------
4,552 2,532 4,734
-------------- -------------- -----------------
Current assets
Inventories 308 308 340
Current tax assets 1,067 182 710
Trade and other receivables 1,949 1,723 2,389
Cash 149 644 4
-------------- -------------- -----------------
3,473 2,857 3,443
-------------- -------------- -----------------
Total assets 8,025 5,389 8,177
============== ============== =================
Equity and liabilities
Equity
Share capital 363 358 363
Share premium 5,316 5,302 5,316
Other reserves (10,087) (8,068) (8,647)
-------------- -------------- -----------------
(4,408) (2,408) (2,968)
-------------- -------------- -----------------
Non-current liabilities
Borrowings 5,317 3,624 5,612
5,317 3,624 5,612
-------------- -------------- -----------------
Current liabilities
Bank overdrafts and loans 2,633 2,161 2,674
Trade and other payables 4,483 2,012 2,859
-------------- -------------- -----------------
7,116 4,173 5,533
-------------- -------------- -----------------
Total equity and liabilities 8,025 5,389 8,177
============== ============== =================
Consolidated Statement of Cash Flow
For the six months ended 31 December 2022
6 months 6 months Year ended
ended 31 December ended 30 June
2022 31 December 2022 (audited)
(unaudited) 2021 GBP'000
GBP'000 (unaudited)
GBP'000
------------------- ------------- ----------------
Cash inflow from operating
activities
Loss from operations (1,625) (354) (1,312)
Adjustment for:
Depreciation 271 162 424
------------------- ------------- ----------------
(1,354) (192) (888)
Decrease in inventories 32 65 33
Decrease/(Increase) in receivables 439 87 (580)
Increase/(Decrease) in liabilities 1,735 (88) 286
------------------- ------------- ----------------
Cash generated from/(used in)
operations 852 (128) (1,149)
Interest paid (91) (36) (124)
Corporation tax received - 433 440
------------------- ------------- ----------------
Net cash generated from/(utilised
in) operating activities 761 269 (833)
------------------- ------------- ----------------
Cash flows from investing
activities
Purchase of plant and equipment (47) (446) (325)
Net cash utilised in investing
activities (47) (446) (325)
------------------- ------------- ----------------
Cash flows from financing
activities
(Repayments)/Proceeds from
borrowings (218) 250 286
(Repayments)/Proceeds of bank
and other loans (158) (221) 119
Repayment of leases (193) (128) (163)
------------------- ------------- ----------------
Net cash (utilised in)/generated
from financing activities (569) (99) 242
------------------- ------------- ----------------
Increase/(Decrease) in cash
and cash equivalents 145 (276) (916)
Cash and cash equivalents at
beginning of period 4 920 920
Cash and cash equivalents
at end of period 149 644 4
=================== ============= ================
Consolidated Statement of Changes in Equity
For the six months ended 31 December 2022
Share
Share premium Retained
capital account earnings Total
GBP'000 GBP'000 GBP'000 GBP'000
---------- --------- ----------- --------
6 months ended 31 December
2021
As at 1 July 2021 349 5,215 (7,779) (2,215)
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 (8,063) (2,403)
========== ========= =========== ========
12 months ended 30 June 2022
As at 1 July 2021 349 5,215 (7,779) (2,215)
Profit for the period - - (868) (868)
Total comprehensive income - - (868) (868)
---------- --------- ----------- --------
Issue of shares 14 101 - 115
As at 30 June 2022 363 5,316 (8,647) (2,968)
========== ========= =========== ========
6 months ended 31 December
2022
As at 1 July 2022 363 5,316 (8,647) (2,968)
Loss for the period - - (1,440) (1,440)
Total comprehensive income - - (1,440) (1,440)
---------- --------- ----------- --------
Issue of shares - - -
As at 31 December 2022 363 5,316 (10,087) (4,408)
========== ========= =========== ========
Notes to the Interim Results
1. Basis of preparation
The Interim Results for the six months ended 31 December 2022
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 2022, 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
2022
Total segmental revenue 449 79 1,711 2,239
============= ================== =================== ========
Segment result (164) (26) (1,435) (1,625)
Finance costs (16) (104) (52) (172)
Loss before taxation (180) (130) (1,487) (1,797)
------------- ------------------ ------------------- --------
Segment assets 441 1,872 5,712 8,025
Segment liabilities 544 5,079 7,027 12,650
Non-current asset additions - - 102 102
Depreciation and amortisation 30 9 232 271
============= ================== =================== ========
6 months ended 31 December
2021
Total segmental revenue 765 134 2,348 3,247
============= ================== =================== ========
Segmental 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 addition 3 55 388 446
Depreciation and amortisation 47 9 106 162
============= ================== =================== ========
12 months ended 30 June 2022
Total segmental revenue 1,453 246 4,492 6,191
------------- ------------------ ------------------- --------
Segmental result 21 (323) (1,010) (1,312)
Finance costs (36) (171) (57) (264)
Loss before taxation (15) (494) (1,067) (1,576)
------------- ------------------ ------------------- --------
Segment assets 655 1,924 5,598 8,177
Segment liabilities 628 5,226 5,442 11,296
Non-current asset additions 17 55 2,941 3,013
Depreciation and amortisation 106 3 316 425
============= ================== =================== ========
3. Loss per share
This has been calculated on the loss for the period of
GBP1,440,000 (2021: loss GBP868,000) and the number of shares used
was 36,312,823 (2021: 35,812,823), 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
2022.
5. Copies of Interim Results
The Interim Results will be posted on the Company's website
www.pipehawk.com and copies will be available from the Company's
registered office at 4, Manor Park Industrial Estate, Wyndham
Street, Aldershot, GU12 4NZ.
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END
IR PPUAWWUPWPWB
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