Interim Results

PipeHawk PLC 10 February 2005 PipeHawk Plc ('the Group' or 'the Company') Interim Results for the six months ending 31 December 2004 Chairman's Statement The half-year results for the six months ended 31 December 2004 conclude an extremely difficult calendar year for the Company. However, the Board is confident that the actions taken during the first half of 2004 have begun to produce results in the latter half of 2004 and put us in a strong position entering 2005. The turnover for the six months has increased by 49 per cent. to £555,000 compared with the first half of the calendar year 2004: £372,000 (2003 - £571,000). The retained loss for the six months has almost halved to £270,000 from a loss of £526,000 in the first half of the 2004 calendar year (2003: loss £291,000). The steps taken by the board, in particular, the maintenance of tight cost controls, following the delay in OfWat's decision regarding consumer price increases have minimised the impact of the difficult trading environment on the Group's cash flows. I referred in my statement, which accompanied last year's Annual Report, that I believed 2004 would be a difficult trading year largely as a result of the lack of investment by the water companies awaiting OfWat's deliberations. OfWat announced its recommendations on 2 December, which subsequently permitted the water companies to raise their prices by, on average, 18 per cent. more than the rate of inflation spread over the next five years. The large water companies are now beginning to put in place their investment plans for meeting the improvements required of them by OfWat and utility detection is a strong requirement of them. Notwithstanding this, we have seen a noticeable increase in business in both SUMO (our franchise mark out business) and especially Adien (our high level mapping and planning service) since the autumn of 2004. We expect this increase to continue once the AMP4 investment programmes of the utility companies are finalised for the period 2005-10. As a consequence of the delay in OfWat's deliberations, your Board took action to source other non-water related business during 2004. A result of which has seen Adien successfully complete a prestigious mapping contract in Kuwait, work with Transport for London on the improvement of the capitals traffic congestion and with mobile telecommunications companies in the roll-out of the next generation of mobile telephone masts. As I write this Adien are enjoying a record level of high quality orders for the first half of 2005. During the six months under review the Company also entered into the next phase of the handheld pipe locator project with NEGAS, under which they provide a contribution amounting to $156,000 (50 per cent.) and the directors are pleased to report that the development work remains in line with expectations. With regard to the further development of our anti-landmine vehicle, your board continues to vigorously pursue potential sources of funding. In summary, your Board continue to remain very confident about the company's future. Gordon Watt Chairman 10 February 2005 Summarised Consolidated Profit and Loss Account For the six months ended 31 December 2004 Note 6 months to 6 months to 12 months to 31 December 31 December 30 June 2004 2003 2004 Unaudited Unaudited Audited £'000 £000 £000 Turnover - continuing operations 555 571 943 Operating costs (799) (822) (1,715) ----------- ---------- ---------- Operating loss (244) (251) (772) Share of operating loss in joint venture (15) (23) (69) ----------- ---------- ---------- Loss on ordinary activities before interest and taxation (259) (274) (841) Group interest receivable and similar income - - 1 Group interest payable and similar charges (28) (17) (52) ----------- ---------- ---------- Loss on ordinary activities before taxation (287) (291) (892) Tax on profit on ordinary activities 2 17 - 175 ----------- ---------- ---------- Retained loss for the period (270) (291) (717) =========== ========== ========== No interim dividend will be paid p p p Loss per share Basic and diluted 3 (1.2) (1.4) (3.3) =========== ========== ========== Summarised Consolidated Balance Sheet As at 31 December 2004 Note 31 December 31 December 30 June 2004 2003 2004 Unaudited Unaudited Audited £'000 £000 £000 Fixed assets Intangible assets 248 262 255 Tangible assets 302 345 365 Investment in joint venture: 6 35 21 ----------- ------------- --------- 556 642 641 ----------- ------------- --------- Current assets Stocks 312 282 281 Debtors 368 421 285 ----------- ------------- --------- 680 703 566 Creditors: amounts falling due within one year (896) (956) (720) ----------- ------------- --------- Net current assets/(liabilities) (216) (253) (154) ----------- ------------- --------- Total assets less current liabilities 340 389 487 Creditors: amounts falling due after more than one year (476) (361) (353) ----------- ------------- --------- Net assets (136) 28 134 =========== ============= ========= Capital and reserves Called up equity share capital 232 210 232 Share premium account 4,081 3,571 4,081 Profit and loss account (4,449) (3,753) (4,179) ----------- ------------- --------- Equity shareholders' funds 6 (136) 28 134 =========== ============= ========= Summarised Consolidated Cash Flow Statement For the six months ended 31st December 2004 Note 6 months to 6 months to 12 months to 31 December 31 December 30 June 2004 2003 2004 Unaudited Unaudited Audited £'000 £000 £000 Net cash flow from operating activities 4,5 (17) (42) (586) Returns on investments and servicing of finance (28) (18) (51) Corporation tax received - - 105 Capital expenditure and financial investment Receipts from sales of tangible fixed assets - - (153) Payments for fixed assets (20) (56) (68) Investments in joint venture - (33) 95 Investment in subsidiary - - 4 ----------- ---------- ---------- Cash outflow before use of liquid resources and financing (65) (149) (654) ----------- ---------- ---------- Financing New loans 202 - - Repayment of loans (13) (29) (51) Capital element of finance payments (26) (23) (28) Issue of ordinary shares - 150 682 ----------- ---------- ---------- Increase/(decrease) in cash 98 (51) (51) =========== ========== ========== Notes to the Financial Statements For the 6 months ended 31 December 2004 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 2004 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 2004 and the six months ended 31 December 2003 do not comprise full financial statements. No account has been taken of the trading results or any other transactions entered into by the Group since 31 December 2004. 2. Taxation No corporation tax was payable as a result of losses arising and the Company benefits from the Government's 'Research and Development Tax Credit Scheme'. 3. Loss per share 6 months 6 months 12 months to 31 December to 31 December to 2003 2004 Unaudited 30 June Unaudited 2004 Audited These have been calculated on losses of: 269,755 290,908 717,000 The weighted average number of shares was: 23,203,808 20,415,354 21,798,121 Basic and diluted (1.2p) (1.4p) (3.3p) 4. Reconciliation of operating loss to net cash outflow from operating activities 6 months to 31 6 months 12 months to 30 December 2004 June Unaudited to 31 December 2004 2003 £'000 Unaudited Audited £000 £000 Operating loss (244) (251) (772) Depreciation and amortisation 90 80 163 Loss on sale of investments - - 4 Realisations from investments - 99 - Movements in stocks (31) 58 59 Movement in debtors (66) (141) 65 Movement in creditors 234 113 (105) -------- ---------- ---------- Net cash outflow from operations (17) (42) (586) ======== ========== ========== 5. Reconciliation of net cash flow to movement of net debt 6 months to 31 6 months 12 months to 30 December 2004 June Unaudited to 31 December 2004 2003 £'000 Unaudited Audited £000 £000 Change in cash 98 (51) (51) Cash inflow/(outflow) from increase / (decrease) in debt and lease finance (163) 52 79 -------- ---------- ---------- Net increase in debt (65) 1 28 Opening net debt (598) (622) (626) -------- ---------- ---------- Closing net debt (663) (621) (598) ======== ========== ========== 6. Reconciliation of movement in shareholders' funds 6 months to 31 6 months 12 months December 2004 to 31 December to 30 June 2004 Unaudited 2003 Unaudited Audited £000 £000 £000 Loss for the period (270) (291) (717) Net proceeds of shares issued - 150 682 -------- ---------- ---------- Increase / (decrease) in shareholders' funds (270) (141) (35) Opening shareholders' funds 134 169 169 -------- ---------- ---------- Closing shareholders' funds (136) 28 134 ======== ========== ========== Further Enquiries: PipeHawk Plc Gordon Watt, Chairman Tel: 01420 590990 John East & Partners Limited Johnny Townsend/Simon Clements Tel: 020 7628 2200 This information is provided by RNS The company news service from the London Stock Exchange

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