Half-yearly report
8 March 2011
Pipehawk plc
("Pipehawk" or the "Company")
Half-yearly results for the six months ended 31 December 2010
Chairman's Statement
I am pleased to report that the Company's turnover in the six months ended 31
December 2010 was £1,711,000, an increase on the corresponding period last year
of 8.1 per cent. (2009: £1,582,000), resulting in a profit before taxation of
£225,000 (2009: loss £334,000).  This includes the sum of £625,000, received in
respect of the settlement of claims brought against a third party.
In the period under review, PipeHawk continued to develop new GPR products and
as a consequence has, in the six months ended 31 December 2010, capitalised
approximately £128,000 of research and development expenditure. I can report
that sales and hires of our e-Spott product continue to develop as the e-Spott
becomes part of 'best practice techniques'. We have continued with the
development of a mini "customer friendly" e-Spade - a pipe and cable avoidance
product.
Adien operates in the large infrastructure project part of the construction
industry. Â During the period, Adien recovered some of the ground lost in the
period 2008 to 2010 when the construction industry was badly effected by the
recession. The severe weather in early December resulted in some loss of
production, which is reflected in these figures, but I am pleased to report that
orders received in January and February have been good in comparison to previous
years.
During the period QM Systems has seen a significant upturn in workload and order
intake and I am pleased to report that at the end of December QM was sitting on
a far healthier order book. Prospects look very buoyant as the business seeks to
capitalise on its strategy of offering complete turnkey solution to its clients.
QM has developed its sales strategy to offer engineering solutions consisting of
consultancy, special projects and products in the fields of assembly, automation
and test systems. The consultancy business has grown fourfold and now attracts
some very prestigious clients.
QM's commitment to research and development of products has continued with the
development of a system to test LED / Filament light clusters, which we are
hoping to sell across Europe. In addition, development of the Lightning Strike
Protection System has continued with a high power variant soon to be released.
Opportunities with several other niche products are also being explored.
In the period, QM completed a restructure of its operational activities which we
anticipate will lead to the leveraging of greater profit from the activities
that it undertakes.
SUMO has also made progress in the period under review and is now at a breakeven
point.
Related party transactions
During the period I have continued to provide financial support to the Company
through director loans, amounting to £625,000.  Consequently, the loans advanced
by me to date aggregate to £2,116,000 in addition to £1 million of Convertible
Unsecured Loan Stock 2014 ("CULS"). Â The loans have been made in accordance with
a letter of support dated 12 November 2010. Â The loans are unsecured and accrue
interest at an annual rate of base rate plus 2.15 per cent.
The Directors (other than myself), consider, having consulted with the Company's
nominated adviser, that the terms of the loans are fair and reasonable insofar
as the Company's shareholders are concerned.
In addition, my fellow directors and I have deferred a certain proportion of our
salaries and fees until the Company is in a suitably strong position to make the
full payments.  These deferred fees amount to approximately £119,000 in the six
month period ended 31 December 2010 and approximately £1,058,000 in total, all
of which have been accrued in the Company's accounts.
Gordon Watt
Chairman
Enquiries:
PipeHawk Plc Tel. No. 01420 590 990
Gordon Watt (Chairman)
Merchant Securities Limited (Nomad) Tel. No. 020 7628 2200
David Worlidge/Simon Clements
FinnCap (Broker) Tel. No. 020 7600 1658
Charles Cunningham
Statement of Comprehensive Income
For the six months ended 31 December 2010
 6 months ended 6 months ended Year ended
31 December 2010 31 December 2009 30 June 2010
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Revenue 1,711 1,582 2,636
Staff costs (673) (828) (1,626)
General administrative expenses (729) (1,031) (1,876)
-----------------------------------------------
Operating profit/(loss) 309 (277) (866)
Share of operating (loss) in
joint venture - (66) (70)
-----------------------------------------------
Profit /Loss) on ordinary
activities before interest and 309 (343) (936)
taxation
Finance costs (84) (32) (79)
-----------------------------------------------
Profit /(Loss) before taxation 225 (375) (1,015)
Taxation 87 80 171
-----------------------------------------------
Profit/(Loss) for the period
attributable to equity holders of 312 (295) (844)
the Company
Other comprehensive income - - -
-----------------------------------------------
Total comprehensive income for
the period net of tax 312 (295) (844)
Profit /(Loss) per share (pence)
- Â basic 0.94 (1.05) (2.85)
Profit /(Loss) per share (pence)
- Â diluted 0.66 (0.70) (2.85)
Consolidated Statement of Financial Position
As at 31 December 2010
 As at As at As at
 31 December 2010 31 December 2009  30 June 2010
 (unaudited) (unaudited) (audited)
Assets
 £'000 £'000 £'000
Non-current assets
Property, plant and 88 111 107
equipment
Goodwill 1,061 1,061 1,061
Intangible assets 1,931 1,625 1,803
Investment in joint 65 69 65
venture
--------------------------------------------------------
 3,145 2,866 3,036
--------------------------------------------------------
Current assets
Inventories 191 216 179
Current tax assets 150 240 156
Trade and other 718 801 493
receivables
Cash 704 - 90
--------------------------------------------------------
 1,763 1,257 918
--------------------------------------------------------
Total Assets 4,908 4,123 3,954
Equity and liabilities
Equity
Share capital 330 297 330
Share premium 5,151 5,034 5,151
Other reserves (5,483) (5,246) (5,795)
--------------------------------------------------------
 (2) 85 (314)
--------------------------------------------------------
Non-current liabilities
Borrowings 1,510 503 512
--------------------------------------------------------
 1,510 503 512
--------------------------------------------------------
Current liabilities
Trade and other payables 1,782 1,066 1,743
Directors' support 1,616 1,860 2,013
Bank overdrafts and 2 609 -
loans
--------------------------------------------------------
 3,400 3,535 3,756
--------------------------------------------------------
Total equity and 4,908 4,123 3,954
liabilities
Consolidated Statement of Cash Flow
For the six months ended 31 December 2010
Year ended
6 months ended 6 months ended 30 June
31 December 2010 31 December 2009 Â 2010
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Cash inflow from operating
activities
Profit /(Loss) from operations 309 (277) (866)
Adjustments for:
Impairment of intangible assets - - 5
Depreciation 32 35 74
---------------------------------------------
 341 (242) (787)
(Increase)/Decrease in inventories (12) 83 120
(Increase)/Decrease in receivables (225) (211) 175
Increase/(Decrease) in liabilities 33 11 (93)
---------------------------------------------
Cash generated/(used) in operations 137 (359) (585)
Interest paid (84) (32) (79)
Corporation tax received 93 80 177
---------------------------------------------
Net cash (used in)/generated from
operating activities 146 (311) (487)
---------------------------------------------
Cash flows from investing
activities
Development costs paid (128) (199) (382)
Purchase of plant and equipment (13) (3) (41)
Sale of plant and equipment - - 3
---------------------------------------------
Net cash (used in)/generated from
investing activities 5 (202) (420)
---------------------------------------------
Cash flows from financing
activities
Issue of share capital - 220 370
New loans and finance leases 625 180 1,139
Repayment of bank loan (5) (5) (10)
Repayment of finance leases (11) (18) (29)
---------------------------------------------
Net cash generated from financing 1,470
activities 609 377
---------------------------------------------
Increase/(Decrease) in cash and
cash equivalents 614 (136) 563
Cash and cash equivalents at (473)
beginning of period 90 (473)
---------------------------------------------
Cash and cash equivalents at end of 90
period 704 (609)
Consolidated Statement of changes in equity
For the six months ended 31 December 2010
  Share premium
Share capital account Retained earnings
Total
 £'000 £'000 £'000 £'000
6 months ended 31
December 2009
As at 1 July 2009 269 4,842 (4,951) 160
Loss for the period - - (295) (295)
Issue of shares 28 192 - 220
-----------------------------------------------------------
As at 31 December 297 5,034 (5,246) 85
2009
-----------------------------------------------------------
12 months ended 30
June  2010
As at 1 July 2009 269 4,842 (4,951) 160
Loss for the period - - (844) (844)
Issue of shares 61 309 - 370
-----------------------------------------------------------
As at 30 June 2010 330 5,151 (5,795) (314)
-----------------------------------------------------------
6 months ended 31
December 2010
As at 1 July 2010 330 5,151 (5,795) (314)
Profit for the period - - 312 312
-----------------------------------------------------------
As at 31 December 330 5,151 (5,483) (2)
2010
-----------------------------------------------------------
Notes to the Interim Results
1. Basis of preparation
The Interim Results for the six months ended 31 December 2010 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 2010, 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.
Revenue includes an amount of £625,000 received in respect of the settlement of
claims brought against a third party.
2. Segmental information
The Group operates in one geographical location being the UK. Accordingly the
primary segmental disclosure is based on activity.
 Utility Development, Test system Total
detection and assembly and sale solutions
mapping services of GPR equipment
 £'000 £'000 £'000 £'000
6 months ended 31
December 2010
Total segmental 553 44 1,114 1,711
revenue
------------------------------------------------------------
Segmental result (95) (183) 503 225
Share of operating    -
profit/(loss) in
joint venture
--------
Profit before    225
taxation
Segment assets 717 3,230 961 4,908
Segment liabilities (708) (3,153) (1,049) (4,910)
Depreciation 28 1 3 32
Additions to non- 13 128 - 141
current assets
6 months ended 31
December 2009
Total segmental 460 176 946 1,582
revenue
Segmental result (221) (21) (67) (309)
Share of operating    (66)
loss in joint
venture
--------
Loss before taxation    (375)
Segment assets 1,106 1,955 1,062 4,123
Segment liabilities (904) (1,715) (1,419) (4,038)
Depreciation 32 1 2 35
Additions to non- 2 199 1 202
current assets
12 months ended 30
June 2010
Total segmental 1,073 283 1,280 2,636
revenue
Segmental result (318) (221) (406) (945)
Share of operating    (70)
profit in joint
venture
--------
Loss before taxation    (1,015)
Segment assets 921 2,210 823 3,954
Segment liabilities (816) (1,982) (1,470) (4,268)
Depreciation 66 1 7 74
Additions to non- 38 - 3 41
current assets
3. Profit / (Loss) per share
This has been calculated on the profit for the period of £312,000 (2009: loss
£295,000) and the number of shares used was 33,020,515 (2009: 28,096,522), being
the weighted average number of share in issue during the period. Â For the fully
diluted calculations, the number of shares used for the calculation was
47,292,212 (2009: 42,368,219).
4. Dividends
No dividend is proposed for the six months ended 31 December 2010.
5. Copies of Interim Results
The Interim Results will be posted on the Company's web site www.pipehawk.com
and copies are available from the Company's registered office at 4, Manor Park
Industrial Estate, Wyndham Street, Aldershot GU12 4NZ .
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Pipehawk PLC via Thomson Reuters ONE
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