Half-yearly report
9 March 2010
PipeHawk Plc
(the "Company")
Interim results for the six months ended 31 December 2009
Chairman's Statement
I am pleased to report that the Company's turnover in the six months ended 31
December 2009 was £1,582,000, an increase on the corresponding period last year
of 19.3 per cent. (2008: £1,326,000), resulting in a loss before taxation of
£334,000 (2008: £500,000).
In the period under review PipeHawk continued to develop new GPR products and as
a consequence has, in the six months ended 31 December 2009, capitalised
approximately £200,000 of research and development expenditure. I can report a
good level of interest in our e-Spott product, which allows spot testing to be
conducted on road and layered surfaces, and the e-Safe product, a mini "customer
friendly" e-Spade - cable location product. The e-Safe product has attracted
interest from international distributors, which gives us confidence that sales
volumes in the short to medium term could be higher than that achieved for any
other PipeHawk product.
Notwithstanding this, the results belie the progress made during the period by
the various segments of the business.
Adien operates in the large infrastructure project part of the construction
industry. Â During this six month period Adien has suffered from the withdrawal
of funding for projects that it had been awarded. Â In the period two projects
were postponed indefinitely which if completed would have generated turnover in
excess of £200,000.  In addition, as was the case five years ago, the water
companies have delayed the appointment of their framework partners for the next
phase of Asset Management Plans ("AMP") and this also delayed Adien's
participation in the detailed design and planning process that precedes these
capital projects. Â Adien has aligned its overhead base to better match the sales
activity being experienced in the market and is encouraged by the upturn in the
level of enquiries and orders that the first two months of 2010 has brought as
the construction sector slowly starts to recover.
At QM Systems ("QMS"), following the difficult period experienced during the
previous financial year, I can report that the business was profitable at an
operating level in the second quarter of this financial year. Â The business
continues to diversify into a provider of automated engineering services and
test systems. Â I have already reported on a number of large contracts that QMS
won in 2009 in the rail and automotive industries and I hope to be able to
report further encouraging news soon. Â QMS's commitment to research and
development of products to support the Lightning Strike Protection Test System
has been maintained throughout the period.
Like Adien, SUMO has suffered somewhat in the period under review. Â This is in
line with other construction-based industries in the current economic climate.
SUMO's management have taken the necessary steps to restore its profitability in
2010.
Related party transactions
During the period under review I have continued to provide financial support to
the Company through director loans. During the six month period ended 31
December 2009, I advanced loans of £180,000.  Accordingly, the loans advanced by
me to date aggregate to £1,546,000.  These loans have been made in accordance
with a letter of support dated 12 November 2009. Â The loans are unsecured and
accrue interest at an annual rate of base rate plus 2.15 per cent.
TheDirectors, 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 to the loans I have provided to the Company during the period and in
previous years, 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 £73,000 in the
six month period ended 31 December 2009 and approximately £814,000 in total, all
of which have been accrued in the Company's accounts.
The Company will be providing a presentation to shareholders at 11.30am on
Wednesday 14 April 2010 at the offices of its brokers, FinnCap, 4 Coleman
Street, London, EC1 and the presentation will be made available on the Company's
website (www.pipehawk.com <
http://www.pipehawk.com/>) at that time.
Gordon Watt
Chairman
8 March 2010
Consolidated Income Statement
For the six months ended 31 December 2009
 6 months ended 6 months ended Year ended
31 December 2009 31 December 2008 30 June 2009
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Revenue - continuing operations 1,582 1,326 3,241
Staff costs (828) (1,084) (1,841)
General administrative expenses (1,031) (692) (1,900)
------------------------------------------------
Operating loss (277) (450) (500)
Share of operating(loss) /
profit in joint venture (66) 5 (17)
------------------------------------------------
Loss on ordinary activities
before interest and taxation (343) (445) (517)
Finance costs (32) (55) (87)
------------------------------------------------
Loss before taxation (375) (500) (604)
Taxation 80 35 206
------------------------------------------------
Loss for the period (295) (465) (398)
Loss per share (pence) - Â basic (1.00) (1.73) (1.48)
Loss per share (pence) -
 diluted (0.67) (1.10) (0.97)
Consolidated Balance sheet
As at 31 December 2009
 As at As at As at
 31 December 2009 31 December 2008  30 June 2009
Assets (unaudited) (unaudited) (audited)
 £'000 £'000 £'000
Non-current assets
Property, plant and
equipment 111 176 143
Goodwill 1,061 1,061 1,061
Intangible assets 1,625 1,006 1,426
Investment in joint 69 157 135
venture
--------------------------------------------------------
 2,866 2,400 2,765
--------------------------------------------------------
Current assets
Inventories 216 451 299
Current tax assets 240 106 156
Trade and other
receivables 801 965 674
--------------------------------------------------------
 1,257 1,522 1,129
--------------------------------------------------------
Total Assets 4,123 3,922 3,894
Equity and liabilities
Equity
Share capital 297 269 269
Share premium 5,034 4,842 4,842
Other reserves (5,246) (5,018) (4,951)
--------------------------------------------------------
 85 93 160
--------------------------------------------------------
Non-current liabilities
Borrowings 3 24 17
Director's support 500 500 500
--------------------------------------------------------
 503 524 517
--------------------------------------------------------
Current liabilities
Trade and other 1,066 1,178 1,418
payables
Directors' support 1,860 1,607 1,326
Bank overdrafts and 609 520 473
loans
--------------------------------------------------------
 3,535 3,305 3,217
--------------------------------------------------------
Total equity and 4,123 3,922 3,894
liabilities
ConsolidatedCash Flow Statement
For the six months ended 31 December 2009
Year ended
6 months ended 6 months ended 30 June
31 December 2009 31 December 2008 Â 2009
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Cash inflow from operating
activities
Loss from operations (277) (450) (500)
Adjustments for:
Profit on sale of fixed assets - (23) (23)
Depreciation 35 84 138
----------------------------------------------
 (242) (389) (385)
Decrease/(Increase) in (31)
inventories 83 (183)
(Increase)/Decrease in 18
receivables (211) (223)
Decrease in liabilities 11 582 332
----------------------------------------------
Cash used in operations (359) (213) (66)
Interest paid (32) (55) (87)
Corporation tax received 80 35 206
----------------------------------------------
Net cash(used in)/generated from
operating activities (311) (233) 53
----------------------------------------------
Cash flows from investing
activities
Development costs paid (199) - (435)
Purchase of plant and equipment (3) (52) (58)
Sale of plant and equipment - 65 65
----------------------------------------------
Net cash(used in)/generated from
investing activities (202) 13 (428)
----------------------------------------------
Cash flows from financing
activities
Issue of share capital 220 - -
New loans and finance leases 180 291 521
Repayment of bank loan (5) (194) (209)
Repayment of finance leases (18) (34) (47)
----------------------------------------------
Net cash generated from financing 265
activities 377 63
----------------------------------------------
Decrease in cash and cash
equivalents (136) (157) (110)
Cash and cash equivalents at (363)
beginning of period (473) (363)
----------------------------------------------
Cash and cash equivalents at end (473)
of period (609) (520)
Consolidated Statement of changes in equity
For the six months ended 31 December 2009
  Share premium
Share capital account Retained earnings
Total
 £'000 £'000 £'000 £'000
6 months ended 31
December 2008
As at 1 July 2008 269 4,842 (4,553) 558
Loss for the period - - (465) (465)
-----------------------------------------------------------
As at 31 December 269 4,842 (5,018) 93
2008
-----------------------------------------------------------
12 months ended 30
June  2009
As at 1 July 2008 269 4,842 (4,553) 558
Loss for the period - - (398) (398)
-----------------------------------------------------------
As at 30 June 2009 269 4,842 (4,951) 160
-----------------------------------------------------------
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
-----------------------------------------------------------
Notes to the Interim Results
1. Basis of preparation
The Interim Results for the six months ended 31 December 2009 are unaudited and
do not constitute statutory accounts in accordance with section 240 of the
Companies Act 1985.
Full accounts for the year ended 30 June 2009, on which the auditors gave an
unqualified report and contained no statement under Section 237 (2) or (3) of
the Companies Act 1985, 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 IAS 34.
2. Segmental information
The Group operates in one geographical location being the UK. Accordingly the
primary segmental disclosure is based on activity.
 Utility
detection and Development,
mapping assembly and sale
services of GPR equipment Test system
solutions Total
 £'000 £'000 £'000 £'000
6 months ended 31
December 2009
Total segmental 460 176 946 1,582
revenue
------------------------------------------------------------
Segmental result (221) (21) (67) (309)
Share of    (66)
operatingloss in
joint venture
---------
Loss before    (375)
taxation
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 2 199 1 202
non-current assets
6 months ended 31
December 2008
Total segmental 945 33 348 1,326
revenue
Segmental result 47 (397) (155) (505)
Share of operating    5
profit in joint
venture
---------
Loss before    (500)
taxation
Segment assets 1,485 1,462 975 3,922
Segment liabilities (1,041) (1,578) (1,210) (3,829)
Depreciation 52 1 32 85
Additions to 42 - 10 52
non-current assets
12 months ended 30
June 2009
Total segmental 1,732 161 1,348 3,241
revenue
Segmental result 27 (374) (240) (587)
Share of operating    17
profit in joint
venture
---------
Loss before    570
taxation
Segment assets 1,271 1,876 747 3,894
Segment liabilities (848) (1,819) (1,067) (3,734)
Depreciation 86 2 16 104
Additions to 48 435 10 493
non-current assets
3. Loss per share
This has been calculated on the loss for the period of £295,000 (2008: £465,000)
and the number of shares used was 28,096,522 (2008: 26,937,181), being the
weighted average number of share in issue during the year. Â For the fully
diluted calculations, the number of shares used for the calculation was
42,368,219 (2008: 42,178,849) .
4. Dividends
No dividend is proposed for the six months ended 31 December 2009.
5. Copies of Interim Results
The Interim Results will be posted on the Company's web sitewww.pipehawk.com
<
http://www.pipehawk.com/> and copies are available from the Company's
registered office at Systems House, Mill Lane, Alton, Hampshire GU34 2QG.
1. 1. i. Enquiries:
PipeHawk Plc Tel. No.01420 590 990
Gordon Watt (Chairman)
Merchant John East Securities Limited (Nomad) Tel. No. 020 7628 2200
David Worlidge/Simon Clements
FinnCap (Broker) Tel. No. 020 7600 1658
Charles Cunningham
[HUG#1391910]
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