Interim Results

PipeHawk PLC
28 March 2003

PIPEHAWK PLC


INTERIM REPORT
SIX MONTHS ENDED 31 DECEMBER 2002


CHAIRMAN'S STATEMENT

The first half of the current financial year to December 2002 ended with losses
of £536,000 as anticipated in our Annual Report last year. A number of factors
contributed to a difficult trading period.

Whilst the closure costs of our R&D premises at Church Crookham were below
budget, sales of our PipeHawk product worldwide were significantly lower than
forecast. Adverse economic conditions affecting our European Distributors,
combined with the fact that since July 2002 PipeHawk sales to the USA were not
permitted due to the FCC's (the US regulator's) new radio licencing
requirements, contributed to a £300,000 revenue shortfall.

The PipeHawk's FCC compliance testing was delayed due to changes to the FCC
specification document which was not finalised until October 2002. Testing has
now been successfully completed with no major design changes being required to
the PipeHawk product. Final FCC approval is expected to be granted during April
2003, after which we anticipate orders from the USA will recommence.

During the same period the drafting of a harmonised European Radio Licensing
standard also progressed. Compliance with the FCC's requirements generally
implies that the PipeHawk product will meet the European standard as presently
drafted. Absence of such a regulatory emissions standard has prevented sales to
several European countries notably Switzerland, Sweden and Hungary.

The EU/Lotus landmine project successfully completed the final field trials in
Bosnia and we believe is the only vehicle mounted humanitarian land mine
detection system which meets the UN requirement of 99.6% detection accuracy. It
is disappointing that despite this success and proactive marketing of a
Commercial Exploitation proposal to the EU and others, continuation funding to
enable a production model to be built is yet to be provided by the EU. The pace
of worldwide humanitarian land mine clearance would be greatly increased by use
of the technology we have developed and proved.

The NYGAS project to develop a Handheld/Portable Radar device is now in the
second phase and is on target to produce a concept demonstrator by June 2003.
Exciting technological advancements have been achieved during this programme
which will, we believe, enable the production of the first low cost GPR product
with significant volume sales potential.

The move towards the establishment of nationwide surveying services utilising
our GPR technology is now substantially underway. Sales volumes at Adien Ltd.
have increased and it is now benefiting from strong demand and has a substantial
forward order book.

The Company's partnership arrangement with SUMO Ltd, its franchise underground
surveying programme, has been strengthened with the buyout of one of the
original three partners and the company has been relocated to PipeHawk's Alton
premises. Planned sales of SUMO franchises during the year to December 2003 are
expected to provide significant orders for the PipeHawk GPR product, with an
increasing number of sales forecast during 2004 as the franchise programme
accelerates.

Because of the close operational interface between SUMO and PipeHawk, Mike
Bushell our Group Managing Director, has also been appointed Managing Director
of SUMO.

Our earlier decision to diversify towards the provision of technology based
services is now proving justified. Despite the present overall economic
uncertainty our principal market sectors in the UK of construction and utilities
are performing strongly and, we believe, will continue to provide excellent
opportunities for our growth in the future.

Gordon Watt
Chairman

28 March 2003


SUMMARISED CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the six months ended 31 December 2002

                                             Note           6 months to       6 months to     12 months to
                                                            31 December       31 December          30 June 
                                                                   2002              2001             2002
                                                              Unaudited         Unaudited          Audited
                                                                   £000              £000             £000

Turnover - continuing operations                                    507               497            1,128

Operating costs                                                   (988)           (1,144)          (2,063)

Operating loss                                                    (481)             (647)            (935)

Share of operating loss in joint venture                           (26)                 0             (41)

Total operating loss                                              (507)             (647)            (976)

Group interest receivable and similar
income                                                                0                 3                7

Group interest payable and similar
charges                                                            (29)              (18)             (44)

Loss on ordinary activities before
taxation                                                          (536)             (662)          (1,013)

Tax on profit on ordinary activities          2                       0                 0                0

Retained loss for the period                                      (536)             (662)          (1,013)

No interim dividend will be paid


                                                                     p                p                p
Loss per share
Basic and diluted                             3                  (3.3)            (4.6)            (7.0)




SUMMARISED CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 31 December 2002


                                                 Note      6 months to 31  6 months to 31  12 months to 30
                                                            December 2002   December 2001        June 2002
                                                                Unaudited       Unaudited          Audited
                                                                     £000            £000             £000

Net cash outflow from operating activities        4, 5               (283)           (618)            (785)

Returns on investment and servicing of finance                        (14)            (15)             (37)

Capital expenditure and financial investment
Receipts from sales of tangible fixed assets                           27               0                0
Payments for fixed assets                                               0            (66)            (108)
Investment in joint venture                                          (17)               0             (53)
Investment in subsidiary                                             (78)               0                0
Net liabilities of acquired subsidiary                               (23)               0                0


Cash outflow before use of liquid resources
and financing                                                       (388)           (699)            (983)

Management of liquid resources                                          0             650              750


                                                                    (388)            (49)            (233)

Cash outflow before Financing


Financing
New loans                                                              53               0               39
Repayment of loans                                                   (69)               0             (17)
Capital elements of finance payments                                 (56)               0              (6)
Issue of ordinary shares less expenses                                408               0                5

Increase/(decrease) in cash                                          (52)            (49)            (212)





SUMMARISED CONSOLIDATED BALANCE SHEET
at 31 December 2002


                                           Note        31 December 2002  31 December 2001     30 June 2002
                                                              Unaudited         Unaudited          Audited
                                                                   £000              £000             £000
Fixed assets
Intangible assets                                                   429               235              194
Tangible assets                                                     399               257              251
Investment in joint venture                                          23                 0               12

                                                                    851               492              457


Current assets
Stocks                                                              440               421              406
Debtors                                                             466               464              553
Cash at bank and in hand                                             56               216                2


                                                                    962             1,101              961
Creditors: Amounts falling due within
one year                                                        (1,225)             (912)          (1,121)

Net current assets/(liabilities)                                  (263)               189            (160)

Total assets less current liabilities                               588               681              297
Creditors: Amounts falling due within
one year                                                          (110)              (82)             (45)

Net assets                                                          478               599              252


Capital and reserves
Called up share capital                                             179               145              145
Share premium account                                             3,122             2,390            2,395
Capital reserves                                                    921               921              921
Profit and loss account                                         (3,744)           (2,857)          (3,209)

Equity shareholders' funds                   6                      478               599              252



NOTES TO THE FINANCIAL STATEMENTS
for the 6 months ended 31 December 2002

1.      Basis of accounting

The consolidated interim financial statements have been prepared on the basis of
the accounting policies set out in the Group's 2002 financial statements.  The
interim financial statements are unaudited and do not constitute full financial
information as defined in section 240 of the companies Act 1985 (as amended).
The comparative figures for the year ended 30 June 2002 and the six months ended
31 December 2001 do not comprise full financial statements.

2.      Taxation

No corporation tax was payable in either period as a result of losses arising.

3.      Loss per share


                                                     6 months to 31   6 months to 31    12 months to 30
                                                      December 2002    December 2001          June 2002
                                                          Unaudited        Unaudited            Audited
These have been calculated on losses of:                   £536,000         £662,000         £1,013,000
The weighted average number of shares was:               16,076,395       14,465,220         14,471,470
Basic and diluted                                            (3.3p)           (4.6p)             (7.0p)


4.      Reconciliation of operating loss to net cash outflow from operating
activities

                                                     6 months to 31   6 months to 31    12 months to 30
                                                      December 2002    December 2001          June 2002
                                                          Unaudited        Unaudited            Audited
                                                               £000             £000               £000

Operating loss                                                (481)            (647)              (935)
Depreciation and amortisation                                   111               85                173
Movement in stocks                                             (34)            (156)              (140)
Movement in debtors                                              68               94                  5
Movement in creditors                                            53                6                112

Net cash outflow from operations                              (283)            (618)              (785)


5.      Reconciliation of net cash flow to movement of net debt

                                                     6 months to 31   6 months to 31    12 months to 30
                                                      December 2002    December 2001          June 2002
                                                          Unaudited        Unaudited            Audited
                                                               £000             £000               £000

Decrease in cash                                               (52)             (49)              (212)
Cash inflow from increase in debt and lease
finance                                                          72                8               (15)
Debt taken over on acquisition                                (227)                0                  0
Shares issued in repayment of debt                              146                0                  0
Movement in liquid resources                                      0            (650)              (750)

Net increase in debt                                           (61)            (691)              (977)

Opening net debt                                              (620)              357                357


Closing net debt                                              (681)            (334)              (620)



6.      Reconciliation of movement in shareholders' funds


                                                     6 months to 31   6 months to 31    12 months to 30
                                                      December 2002    December 2001          June 2002

                                                          Unaudited        Unaudited            Audited
                                                               £000             £000               £000

Loss for  the period                                          (536)            (661)            (1,013)
Shares issued in repayment of debt                              146                0                  0
Shares issued in repayment of interest on debt                   14                0                  0
Shares issued on acquisition of subsidiary                      194                0                  0
Net proceeds of option exercised                                  0                0                  5
Net proceeds of placing                                         408                0                  0


Increase / (decrease) in shareholders' funds                    226            (661)            (1,008)

Opening shareholders' funds                                     252            1,260              1,260


Closing shareholders' funds                                     478              599                252





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