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PIP Pipehawk Plc

-0.25 (-2.22%)
03 Oct 2023 - Closed
Delayed by 15 minutes

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Share Name Share Symbol Market Type Share ISIN Share Description
Pipehawk Plc LSE:PIP London Ordinary Share GB0003010609 ORD 1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -0.25 -2.22% 11.00 10.50 11.50 11.25 11.00 11.25 10,000 16:12:05
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
General Indl Mach & Eq, Nec 6.2 -0.9 -2.4 - 3.99

PipeHawk PLC Final Results for the year ended 30 June 2022 (8454H)

29/11/2022 7:00am

UK Regulatory (RNS & others)

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RNS Number : 8454H

PipeHawk PLC

29 November 2022

This announcement contains inside information as stipulated under the Market Abuse Regulations (EU) no. 596/2014 (which forms part of domestic UK law pursuant to the European Union (Withdrawal) Act 2018) ("MAR"). With the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

29 November 2022

PipeHawk plc

("PipeHawk", "Company" or the "Group")

Final Results for the year ended 30 June 2022


   -     Turnover of GBP6.2 million, a decrease of 7.5% (2021: GBP6.7 million) 
   -     Loss before taxation for the financial year of GBP1,576,000 (2021: profit GBP79,000) 

- QM Systems completed a move into a modern and far larger facility on the Hartlebury Trading Estate, providing approx. 200% more office space and 600% more manufacturing capacity

- TED has moved into a significantly larger premises and since the financial year end has signed a global distribution memorandum of understanding with Unipart Rail Limited

The Group reported an operating loss in the year ended 30 June 2022 (the "financial year" and the "2021/22 FY") of GBP1,312,000 (2021: GBP257,000), a loss before taxation for the financial year of GBP1,576,000 (2021: profit GBP79,000) and a loss after taxation of GBP868,000 (2021: profit GBP 522,000 ). T urnover for the financial year reduced to GBP6.2million (2021: GBP6.7 million) . The loss per share for the financial year was 2.42p (2021: profit 1.50p).

In line with the outlook expressed in my Chairman's Statement last year, like others in the industry, we have been faced with difficult market conditions this financial year. As outlined on 24 March 2022 in the Group's unaudited results for the six months ended 31 December 2021 this has been an extremely challenging year. Just when we thought we were getting over the vicissitudes of the Coronavirus ("COVID-19") pandemic with its consequent delays caused by material shortages, extended lead times and increased costs, all suffered without the furlough buffer - then Russia invades the Ukraine, fuel costs soar and suddenly the world realises that energy is the key to our standard of living and economic livelihood at all levels.

As a consequence, the Group continued to see decisions across all levels of the chain be deferred and/or delayed throughout the financial year. The impact of the delay in receiving contract decisions continued to impact the Group right up to late September 2022. However, following September 2022, the Group has seen a number of larger orders that have previously been in abeyance for several months placed. In addition, the Group notes a shift in market sentiment, namely, that there appears to be a general willingness to actively re-engage and commit to forward-looking business decisions (as opposed to remaining in tick-over mode).

Despite the disappointing results for the financial year, the directors believe, for the reasons outlined above, that this merely represents a temporary blip in our growth trajectory. Notwithstanding this result, this financial year has been critical for the Group as seen by our underlying positive direction of travel. In addition, we have invested significantly to be able to take advantage of the opportunities evident from our groundwork. Not only have we expanded Thomson Engineering Design's ("TED") footprint fourfold (we have decided to retain, and rebuild its original premises whilst retaining its new premises, as we foresee the need for further growth), QM Systems Limited ("QM") footprint has increased fivefold, and a new line to QM business, contract manufacturing, has been established. Lastly, Adien is now fully engaged in 5G work and the integration of Utsi and PipeHawk's technology bodes well for the future.

I am confident therefore that the future looks very promising.

QM Systems

QM Systems has completed a challenging financial year where for a large part of that time the orderbook has been significantly below management expectation. This trend continued longer than expected into the 2021/22 FY resulting in the inability of QM Systems to pull through the expected level of revenue and profit. It does seem as though the effect of the pandemic eventually rippled through QM Systems later than initially anticipated. In addition, following Russia's invasion of the Ukraine, decision makers decided to defer making capital commitments, which manifested into expected orders being delayed by several months.

During the second half of the financial year, QM Systems completed a move into a modern and far larger facility on the Hartlebury Trading Estate. The move expands the available facilities from approximately 8,000 sq ft to approximately 45,000 sq ft; providing approx. 200% more office space and 600% more manufacturing capacity. The move was required to facilitate not only the anticipated growth in the company's project business but also the housing of the newly established contract manufacturing business unit. In addition, QM Systems has secured two manufacturing contracts with both expected to begin operation with manufactured product towards the end of the current 2022/23 FY. Both contract manufacturing projects bring the capacity for rapid growth in a new and exciting direction for QM Systems. Inevitably a move to a new facility of this size and scale brings commercial challenges and has required significant investment. In this regard, QM have invested over GBP750k in securing and fitting out the new facility to a very high standard.

Looking ahead, I am pleased to report that as we approached the end of the previous 2021/22 FY and entered the current FY order enquiries have increased dramatically. A number of projects that have been slow to gestate have now arrived resulting in an order intake for the first four months of the current FY alone at QM Systems being in excess of GBP3 million. Historically, this is an unprecedented order intake in such a short period of time and should enable QM Systems to rapidly recover the ground lost during the 2021/22 FY. In addition to orders received the order pipeline has again returned to a very healthy level with further significant order intake expected through the second quarter of the current FY and anticipated for the following quarter. It is also important to recognise that the projects won are sizeable projects that are expected to run across several months. This brings a further level of stability to QM Systems project business. To support the significant growth in the QM Systems projects business a number of new roles have been advertised for and subsequently filled across the engineering, projects and sales departments during the first third of the current FY. In addition to recruitment to support the project business the start and growth of the contract manufacturing business will see approximately 30 new employees join the QM Systems team over the next few months to support the production and administration activities required across the three contract manufacturing projects.

As a result of the above I fully expect to see QM Systems recover to a position of significant growth in both sales and profit during this current FY whilst securing a stable platform from which healthy growth can continue for the foreseeable future.

Thomson Engineering Design ("TED")

Revenue at Thomson Engineering Design ("TED") continued to grow into this financial year, with the best quarter on record achieved during the final quarter of the financial year. Revenue for FY2021/22 compared with the previous financial increased from approx. GBP1.2 million to GBP1.4 million (representing a circa16% increase). This did not however translate through into profit with a loss before taxation of GBP57k.

There are three key drivers within the year resulting in the reduction in profit versus expectation. The first is the significant upwards inflationary pressure regarding raw material cost which skewed the material content to be considerably higher than previous years. The second key factor was rising facility costs and investment into the new premises required during the 2021/22 FY. The third factor is that whilst we received a rent-free period in order to settle into and upgrade the new premises there is an accounting standard which requires us to amortise that rent free period over the life of the lease. The first two issues have been addressed through re-balancing margin on material and labour to accommodate higher material content and to provide for increased overhead recovery. The third is a non-cash cost in the short term.

Order intake at TED during the current 2022/23 FY continues to be strong, predominantly focused on the UK market with some export. Post the financial year, on 20 September 2022, TED entered into a memorandum of understanding with Unipart Rail Limited ("Unipart Rail"), a global retailer of Rail equipment for Unipart Rail to be the exclusive partner for sales and distribution of TED rail equipment into territories in Europe, Asia, New Zealand, Australia and the Americas. This enables TED to facilitate its strategy for global growth by utilising an established and well-respected distribution partner. Unipart and TED jointly attended the InnoTrans Expo in Berlin to launch the new partnership, where a number of key TED products have been on display to premium rail clients. Since the year end, TED has also entered into a partnership with a key client to provide rail conversions for Kawasaki Utility vehicles. This innovative approach allows capital outlay and emissions to be significantly reduced and eliminates the need to use high-cost excavators when carrying smaller loads and tools. We expect this partnership to add substantial additional revenue potential to TED's current portfolio over the next few years.

Overall, having taken measures to address profitability the future for TED both in the UK and the wider global market appears significantly positive.


After a very promising start last year's results ended with a disappointing loss of GBP15k due to work volumes dropping in the last few months of the year. This was, mainly due to continually delayed starts from the 5G telecom sector. The order lethargy continued into July and August this year, but has picked up dramatically since the start of September.

Adien now supplies the majority of the key contractors to the telecom providers.

Adien's Ministry of Defence projects are also starting to come on stream after a slow start following the renewal of the framework contracts in April this year. Similarly, Scottish & Southern Electricity Networks has recently put significant funding in place which will allow us to progress with their larger sites.

Positively, clients in the construction and infrastructure sectors are showing increased activity both in volume of the orders placed and enquiries for new projects.

Hybrid working for staff in the Doncaster office and the rationalisation of the Scottish operation has resulted in efficiencies, cost reductions and reduced travel times as well as a reduction in the carbon footprint of the business.

Recent investment in new vehicles that are more efficient, cost effective, greener and continued investment in new hardware and software for the computer-aided design as well as field teams ensure Adien is able to survey and process data effectively to all our clients' various requirements.

The outlook for the current year remains positive.


As enquiry levels have steadily risen through the 2022 calendar year, so too have material costs, component shortages and delivery timescales with the resulting lengthening transition times between enquiry, order and payment making the business of doing business, severely challenging. Sales of our flagship products; those manufactured and ordered in the largest quantities, have been most disrupted by the continuing supply delays, whereas those for more specialist, made to order products and those requiring bespoke alteration, have been less affected. Moving from just in time supply to just in case, namely, the increased stockholding of major "at risk" and "long lead time" components will reduce exposure to the worst supply chain excesses over the medium term. However, this change in approach has had a notable immediate effect on UTSI's cashflow and profits in the short term. While external R&D opportunities remain in recovery, bringing forward internal R&D timescales has offered a way towards achieving near term cost savings as tighter integration of existing PipeHawk & UTSI's product lines, becomes possible, whilst also offering the promise of attractive hybrid hardware/software solutions on the near horizon. While UTSI continues to seek out new opportunities, new partners and new markets, the restrictions imposed by global supply chain issues are expected to remain a significant limiting factor into the second half of 2022 and beyond.

Financial position

The Group continues to be in a net liability position and is still reliant on my continuing financial support.

My letter of support dated 6 September 2021 was renewed on 11 October 2022 to provide the group with financial support until 31 December 2024. Loans due to me, other than those covered by the CULS agreement, are unsecured and accrue interest at an annual rate of Bank of England base rate plus 2.15%.

The CULS agreement for GBP1 million, provided by myself, was renewed on 30 June 2022 and extended on identical terms, such that the CULS are now repayable on 13 August 2026.

In addition to the loans I have provided to the Company in previous years, I have deferred a certain proportion of fees and the interest due until the Company is in a suitably strong position to make the full payments.

Historically, my fees and interest payable have been deferred. During the year under review, the deferred element amounted to GBP160,000. At 30 June 2022, these deferred fees and interest amounted to approximately GBP1.8 million in total, all of which have been recognised as a liability in the Company's accounts.

Strategy & Outlook

The Group remains committed to creating sustainable earnings-based growth and focusing on the expansion of its business with forward-looking products and services. PipeHawk acts responsibly towards its shareholders, business partners, employees, society and the environment in each of its business areas.

PipeHawk is committed to technologies and products that unite the goals of customer value and sustainable development. In light of market conditions, all divisions of the Group are currently performing well and I remain optimistic in my outlook for the Group.

Gordon Watt


Date: 28 November 2022

Consolidated Statement of Comprehensive Income

For the year ended 30 June 2022

                                                        30 June    30 June 
                                                Note       2022       2021 
                                                        GBP'000    GBP'000 
                                                      ---------  --------- 
 Revenue                                      2           6,191      6,665 
 Staff costs                                  5         (3,861)    (3,478) 
 Operating costs                                        (3,642)    (2,930) 
                                                      ---------  --------- 
 Operating (loss) / profit                    4         (1,312)        257 
 Profit / (loss) before interest and 
  taxation                                              (1,312)        257 
                                                      ---------  --------- 
 Finance costs                                3           (264)      (178) 
                                                      ---------  --------- 
 (Loss) / profit before taxation                        (1,576)         79 
 Taxation                                     7             708        443 
 (Loss) / profit for the year attributable 
  to equity holders of 
  the parent                                              (868)        522 
                                                      =========  ========= 
 Other comprehensive income                                   -          - 
 Total comprehensive (Loss) / profit for 
  the year attributable to 
  equity holder of the parent                             (868)        522 
                                                      =========  ========= 
 (Loss) / profit per share (pence) - 
  basic                                       8          (2.42)       1.50 
 (Loss) / profit per share (pence) - 
  diluted                                     8          (2.42)       0.80 

The notes form an integral part of these financial statements.

Consolidated Statement of Financial Position

at 30 June 2022

                                            30 June         30 June 
                                    Note       2022            2021 
                                            GBP'000         GBP'000 
                                          ---------       --------- 
 Non-current assets 
 Property, plant and equipment    9             828             528 
 Right of use                     10          2,549             363 
 Goodwill                         11          1,357           1,357 
                                          ---------       --------- 
                                              4,734           2,248 
                                          ---------       --------- 
 Current assets 
 Inventories                      13            340             373 
 Current tax assets                             710             442 
 Trade and other receivables      14          2,389           1,809 
 Cash and cash equivalents                        4             920 
                                          ---------       --------- 
                                              3,443           3,544 
 Total assets                                 8,177           5,792 
                                          =========       ========= 
 Equity and liabilities 
 Share capital                    18            363             349 
 Share premium                                5,316           5,215 
 Retained earnings                          (8,647)         (7,784) 
                                          ---------       --------- 
                                            (2,968)         (2,220) 
                                          ---------       --------- 
 Non-current liabilities 
 Borrowings                       16          5,612           3,205 
                                              5,612           3,205 
                                          ---------       --------- 
 Current liabilities 
 Borrowings                       16          2,674           2,156 
  Trade and other payables         15         2,859           2,651 
                                              5,533           4,807 
 Total equity and liabilities                 8,177           5,792 
                                          =========       ========= 

The notes form an integral part of these financial statements.

Consolidated Statement of Cash Flow

For the year ended 30 June 2022

                                                Note    30 June    30 June 
                                                           2022       2021 
                                                        GBP'000    GBP'000 
                                                      ---------  --------- 
 Cash flows from operating activities 
 (Loss) / profit from operations                        (1,312)        257 
 Adjustments for: 
 Depreciation                                   4           424        192 
                                                          (888)        449 
 Decrease / (increase) in inventories                        33      (171) 
 Decrease / (increase) in receivables                     (580)      (136) 
 Increase/(decrease) in liabilities                         286        581 
                                                      ---------  --------- 
 Cash generated/(used) by operations                    (1,149)        723 
 Interest paid                                            (124)       (50) 
 Corporation tax received                                   440        394 
                                                      ---------  --------- 
   Net cash generated from / (used in) 
   operating activities                                   (833)      1,067 
                                                      ---------  --------- 
 Cash flows from investing activities 
 Acquisition of subsidiary net of cash 
  acquired                                                    -         42 
 Purchase of plant and equipment                          (325)      (130) 
 Net cash used in investing activities                    (325)       (88) 
                                                      ---------  --------- 
 Cash flows from financing activities 
 Proceeds / (repayments) from borrowings                    286        339 
 Proceeds / (repayments) of loan                            119      (483) 
 Repayment of leases                                      (163)      (165) 
                                                      ---------  --------- 
 Net cash (used in)/generated from financing 
  activities                                                242      (309) 
                                                      ---------  --------- 
 Net (decrease)/increase in cash and 
  cash equivalents                                        (916)        670 
 Cash and cash equivalents at the beginning 
  of year                                                   920        250 
 Cash and cash equivalents at end of 
  year                                                        4        920 
                                                      =========  ========= 

The notes form an integral part of these financial statements.

Statement of Changes in Equity

For the year ended 30 June 2022

                                                 Share premium    Retained 
                                 Share capital         account    earnings         Total 
                                       GBP'000         GBP'000     GBP'000       GBP'000 
                              ----------------  --------------  ----------      -------- 
 As at 1 July 2020                         349           5,215     (8,301)       (2,737) 
 Profit / (loss) for the 
  year                                       -               -         522           522 
 Total comprehensive income                  -               -         522           522 
 Issue of shares                             -               -           -             - 
                              ----------------  --------------  ----------      -------- 
 As at 30 June 2021                        349           5,215     (7,779)       (2,215) 
                              ================  ==============  ==========      ======== 
 Profit / (loss) for the 
  year                                       -               -       (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) 
                              ================  ==============  ==========      ======== 

The share premium account reserve arises on the issuing of shares. Where shares are issued at a value that exceeds their nominal value, a sum equal to the difference between the issue value and the nominal value is transferred to the share premium account reserve.

The notes form an integral part of these financial statements.

   1              Summary of significant accounting policies 
   1.1.   General information 

PipeHawk plc (the Company) is a limited company incorporated in the United Kingdom under the Companies Act 2006. The addresses of its registered office and principal place of business are disclosed in the company information on page 3 of the Report and Accounts. The principal activities of the Company and its subsidiaries (the Group) are described on page 9 of the Report and Accounts.

The financial statements are presented in pounds sterling, the functional currency of all companies in the Group. In accordance with section 408 of the Companies Act 2006 a separate statement of comprehensive income for the parent Company has not been presented. For the year to 30 June 2022 the Company recorded a net loss after taxation of GBP282,000 (2021: GBP236,000).

   1.2.   Basis of preparation 

The financial statements have been prepared in accordance with UK-adopted international accounting standards (IAS) The principal accounting policies are set out below.

   1.3.   Basis of preparation - Going concern 

The directors have reviewed the Parent Company and Group's funding requirements for the next twelve months which show positive anticipated cash flow generation, prior to any repayment of loans advanced by the Executive Chairman. The directors have furthermore obtained a renewed pledge from G G Watt to provide ongoing financial support for a period of at least twelve months from the approval date of the Group and Parent Company statement of financial positions. The directors therefore have a reasonable expectation that the entity has adequate resources to continue in its operational exercises for the foreseeable future. It is on this basis that the directors consider it appropriate to adopt the going concern basis of preparation within these financial statements. However a material uncertainty exists regarding the ability of the Group and Parent Company to

remain a going concern without the   continuing financial support of the Executive Chairman. 
   1.4.   Basis of consolidation 

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group. All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

   1.5.   Business combinations 

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The cost of the business combination is measured as the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 Business Combinations (revised) are recognised at their fair values at the acquisition date, except for non-current assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, which are recognised and measured at fair value less costs to sell.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised.

   1.6.   Goodwill 

Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses.

For the purpose of impairment testing, goodwill is allocated to each of the Group's cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.

On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

   1.7.   Revenue recognition 

For the year ended 30 June 2022 the Group used the five-step model as prescribed under IFRS 15 on the Group's revenue transactions. This included the identification of the contract, identification of the performance obligations under the same, determination of the transaction price, allocation of the transaction price to performance obligations and recognition of revenue.

The point of recognition arises when the Group satisfies a performance obligation by transferring control of a promised good or service to the customer, which could occur over time or at a point in time.

   1.8.   Sale of goods 

Revenue generated from the sale of goods is recognised on delivery of the goods to the customer. On this basis revenue is recognised at a point in time.

   1.9.   Sale of services 

In relation to the design and manufacture of complete software and hardware test solutions and the provision of specialist surveying, revenue is recognised through a review of the man-hours completed on the project at the year-end compared to the total man-hours required to complete the projects. Provision is made for all foreseeable losses if a contract is assessed as unprofitable.

Revenue represents the amount of consideration to which the Group expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.

Revenue from goods and services provided to customers not invoiced as at the reporting date is recognised as a contract asset and disclosed as accrued income within trade and other receivables.

Although payment terms vary from contract to contract invoices are in general raised in advance of services performed. Where billing has exceeded the revenue recognised in a period a contract liability is recognised and this is disclosed as payments received on account in trade and other payables.

1.10. Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Depreciation is charged so as to write off the cost of assets over their estimated useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis. Assets held under leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the relevant lease. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within the Statement of Comprehensive Income.

The principal annual rates used to depreciate property, plant and equipment are:

   Equipment, fixtures and fittings        25% 
   Motor vehicles                                      25% 

1.11. Inventories and work in progress

Inventories are stated at the lower of cost and net realisable value. Costs, including an appropriate portion of fixed and variable overhead expenses, are assigned to inventories by the method most appropriate to the particular class of inventory, with the majority being valued on a first-in-first-out basis. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.

Work in progress is valued at cost, which includes expenses incurred on behalf of clients and an appropriate proportion of directly attributable costs on incomplete assignments. Provision is made for irrecoverable costs where appropriate .

1.12. Financial assets

The Group's financial assets consist of cash and cash equivalents and trade and other receivables. The Group's accounting policy for each category of financial asset is as follows:

Financial assets held at amortised cost

Trade receivables and other receivables are classified as financial assets held at amortised cost. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.

Impairment provisions are recognised based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment, the amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable. For receivables, which are reported net, such provisions are recorded in a separate allowance account with the loss being recognised within administrative expenses in the statement of comprehensive income. On confirmation that the receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

The Group's financial assets held at amortised cost comprise other receivables and cash and cash equivalents in the statement of financial position.

Derecognition of financial assets

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire; or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.

Financial liabilities

Financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.

Derecognition of financial liabilities

The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or they expire.

1.13. Leased/Right of Use assets

The leases liability is initially measured at the present value of the remaining lease payments, discounted using the individual entities incremental borrowing rate. The lease term comprises the non-cancellable period of the contract, together with periods covered by an option to extend the lease where the Group is reasonably certain to exercise that option based on operational needs and contractual terms. Subsequently, the lease liability is measured at amortised cost by increasing the carrying amount to reflect interest on the lease liability, and reducing it by the lease payments made. The lease liability is remeasured when the Group changes its assessment of whether it will exercise an extension or termination option.

Right-of-use assets are initially measured at cost, comprising the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date, lease incentives received and initial direct costs. Subsequently, right-of-use assets are measured at cost, less any accumulated depreciation and any accumulated impairment losses, and are adjusted for certain remeasurement of the lease liability.

Depreciation is calculated on a straight-line basis over the length of the lease. The Group has elected to apply exemptions for short-term leases and leases for which the underlying asset is of low value. For these leases, payments are charged to the income statement on a straight-line basis over the term of the relevant lease. Right-of-use assets are presented within non-current assets on the face of the statement of financial position, and lease liabilities are shown separately on the statement of financial position in current liabilities and non-current liabilities depending on the maturity of the lease payments.

Under IFRS16, right-of-use assets will be tested for impairment in accordance with IAS36 Impairment of Assets.

Payments associated with short-term leases are recognised on a straight-line basis as an expense in the profit or loss. Short term leases are leases with a lease term of 12 months or less.

1.14. Pension scheme contributions

Pension contributions are charged to the statement of comprehensive income in the period in which they fall due. All pension costs are in relation to defined contribution schemes.

1.15. Share based payments

Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in note 18.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of equity instruments that will eventually vest. At each statement of financial position date, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss over the remaining vesting period, with a corresponding adjustment to reserves.

1.16. Foreign currencies

Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange ruling at 30 June. Transactions in foreign currencies are recorded at the rates ruling at the date of the transactions.

1.17. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the consolidated statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the year end date.

Deferred tax

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the statement of financial position liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the year end date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax for the year

Current and deferred tax are recognised as an expense or income in the statement of comprehensive income, except when they relate to items credited or debited directly to equity, in which case the tax is also recognised directly in equity.

1.18. Impairment of property, plant and equipment

At each year end date, the Group reviews the carrying amounts of its property, plant and equipment to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the statement of comprehensive income.

1.19. Research and development

The Group undertakes research and development to expand its activity in technology and innovation to develop new products that will begin directly generating revenue in the future. Expenditure on research is expensed as incurred, development expenditure is capitalised only if the criteria for capitalisation are recognised in IAS 38. The Company claims tax credits on its research and development activity and recognises the income in current tax.

1.20. Government grants

During the period, the Group received benefits from Government grants. Revenue based Government grants are recognised through the consolidated statement of comprehensive income by netting off against the costs to which they relate. Where the grant is not directly associated with costs incurred during the period, it is recognised as 'other income'.

1.21. Critical judgement in applying accounting policies and key sources of estimation uncertainty

The following are the critical judgements and key sources of estimation uncertainty that the directors have made in the process of applying the entity's accounting policies and that have the most significant effect on the amounts recognised in these financial statements.

Impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. A similar exercise is performed in respect of investment and long term loans in subsidiary.

The value in use calculation requires the directors to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value, see note 11 for further details.

The carrying amount of goodwill at the year-end date was GBP1,357,000 (2021: GBP1,357,000). The investment in subsidiaries at the year-end was GBP1,903,000 (2021: GBP1,903,000).

The methodology adopted in assessing impairment of Goodwill is set out in note 11 as is the sensitivity analysis applied in relation to the outcomes of the assessment.

Impairment investment in subsidiaries and inter-company receivables

As set out in note 12, an impairment assessment of the carrying value of investments in subsidiaries and inter-company receivables is in line with the methodologies adopted in the assessment of impairment of goodwill.

   2              Segmental analysis 
                                         2022       2021 
                                      GBP'000    GBP'000 
                                    ---------  --------- 
  Turnover by geographical market 
  United Kingdom                        5,627      6,103 
  Europe                                  243        172 
  Other                                   321        390 
                                    ---------  --------- 
                                        6,191      6,665 
                                    =========  ========= 
            The Group operates out of one geographical location being the 
             UK. Accordingly the primary segmental disclosure is based on 
             activity. Per IFRS 8 operating segments are based on internal 
             reports about components of the Group, which are regularly reviewed 
             and used by Chief Operating Decision Maker ("CODM") for strategic 
             decision making and resource allocation, in order to allocate 
             resources to the segment and to assess its performance. The Group's 
             reportable operating segments are as follows : 
              *    Adien Limited - Utility detection and mapping 
                   services - Sale of services 
              *    PipeHawk Limited and Utsi Electronics Limited - 
                   Development, assembly and sale of GPR equipment - 
                   Sale of goods 
              *    QM Systems - Test system solutions - Sale of services 
              *    TED Limited - Rail trackside solutions (included in 
                   the test system solutions segment) - Sale of services 
              *    Wessex Precision Instruments Limited - Non trading 
             The CODM monitors the operating results of each segment for the 
             purpose of performance assessments and making decisions on resource 
             allocation. Performance is based on revenue generations and profit 
             before tax, which the CODM believes are the most relevant in 
             evaluating the results relative to other entities in the industry. 
             Information regarding each of the operations of each reportable 
             segment is included below, all non-current assets owned by the 
             Group are held in the UK. 
                                              Utility        Development,   Automation 
                                            detection            assembly     and test 
                                          and mapping            and sale       system 
                                             services    of GPR equipment    solutions      Total 
                                              GBP'000             GBP'000      GBP'000    GBP'000 
                                        -------------  ------------------  -----------   -------- 
        Year ended 30 June 2022 
        Total segmental revenue                 1,453                 246        4,492      6,191 
                                        -------------  ------------------  -----------   -------- 
        Operating profit/(loss)                    21               (323)      (1,010)    (1,312) 
        Finance costs                            (36)               (171)         (57)      (264) 
        (Loss) / profit 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 
                                        =============  ==================  ===========   ======== 
                                        Utility        Development,   Automation 
                                      detection            assembly     and test 
                                    and mapping            and sale       system 
                                       services    of GPR equipment    solutions     Total 
                                        GBP'000             GBP'000      GBP'000   GBP'000 
                                  -------------  ------------------  -----------  -------- 
  Year ended 30 June 2021 
  Total segmental revenue                 1,395                 150        5,120     6,665 
                                  -------------  ------------------  -----------  -------- 
  Operating profit/(loss)                   130               (218)          345       257 
  Finance costs                            (29)               (130)         (19)     (178) 
  Profit /(loss) before 
   taxation                                 101               (348)          326        79 
                                  -------------  ------------------  -----------  -------- 
  Segment assets                            696               2,196        2,754     5,646 
  Segment liabilities                       624               4,841        2,521     7,986 
  Non-current asset additions                50                   4           77       131 
  Depreciation and amortisation             100                   1           91       192 
                                  =============  ==================  ===========  ======== 
   3              Finance costs 
                                                 2022       2021 
                                              GBP'000    GBP'000 
                                            ---------  --------- 
  Interest payable                                264        178 
                                            ---------  --------- 
                                                  264        178 
                                            =========  ========= 
  Interest payable comprises interest on: 
  Leases                                           69         25 
  Directors' loans                                140        129 
  Other                                            55         24 
                                            ---------  --------- 
                                                  264        178 
                                            =========  ========= 
   4              Operating profit for the year 
   This is arrived at after charging for the Group: 
                                                         2022       2021 
                                                      GBP'000    GBP'000 
                                                    ---------  --------- 
  Research and development costs not capitalised        2,333      2,285 
  Depreciation                                            424        192 
  Auditor's remuneration 
  Fees payable to the Company's auditor for the 
   audit of the Group's financial statements               45         45 
  Fees payable to the Company's auditor and its 
   subsidiaries for the provision of tax services           7          7 
  Lease rentals 
  Other including land and buildings                      352        156 
                                                    =========  ========= 
   The Company audit fee is GBP9,000 (2021: GBP9,000). 
   5              Staff costs 
                                            2022   2021 
                                             No.    No. 
                                           -----  ----- 
  Average monthly number of employees, 
   including directors: 
  Production and research                     79     78 
  Selling and research                         9     10 
  Administration                               7      5 
                                              95     93 
                                           =====  ===== 
                                            2022      2021 
                                         GBP'000   GBP'000 
                                        --------  -------- 
  Staff costs, including directors: 
  Wages and salaries                       3,387     3,032 
  Social security costs                      361       350 
  Other pension costs                        113        96 
                                           3,861     3,478 
                                        ========  ======== 
   6              Directors' remuneration 
                             Salary   Benefits      2022      2021 
                           and fees    in kind     Total     Total 
                            GBP'000    GBP'000   GBP'000   GBP'000 
                         ----------  ---------  --------  -------- 
  G G Watt                       71          -        71        71 
  S P Padmanathan                58          8        66        72 
  R MacDonnell                    2          -         2         2 
                         ----------  ---------  --------  -------- 
  Aggregate emoluments          131          8       139       145 
                         ==========  =========  ========  ======== 
  Directors' pensions                           2022   2021 
                                                 No.    No. 
                                               -----  ----- 
  The number of directors who are accruing 
   retirement benefits under: 
  Defined contributions policies                   1      1 
                                               =====  ===== 
   The directors represent key management personnel. 
    Refer to note 18 for details of directors share options. 
   7              Taxation 
                                                       2022            2021 
                                                    GBP'000         GBP'000 
                                            ---------------  -------------- 
  United Kingdom Corporation Tax 
  Current taxation                                    (708)           (435) 
  Adjustments in respect of prior years                   -             (8) 
                                            ---------------  -------------- 
                                                      (708)           (443) 
  Deferred taxation                                       -               - 
                                            ---------------  -------------- 
  Tax on profit / (loss)                              (708)           (443) 
                                            ---------------  -------------- 
  Current tax reconciliation 
  Taxable profit / (loss) for the year              (1,576)              79 
                                            ---------------  -------------- 
  Theoretical tax at UK corporation 
   tax rate 19% (2021: 19%)                           (289)              15 
  Effects of: 
      R&D tax credit adjustments                      (350)           (428) 
      Fixed asset timing differences                  (101)               - 
      Not deductible for tax purposes                     2            (12) 
      Deferred tax not recognised                        45              28 
      Adjustments in respect of prior 
       years                                              1            (18) 
      Utilisation of losses                               -            (27) 
      Short term timing differences                    (16)             (1) 
                                            ---------------  -------------- 
  Total income tax credit                             (708)           (443) 
                                            ===============  ============== 
   The Group has tax losses amounting to approximately GBP3,033,706 
    (2021: GBP3,008,408), available for carry forward to set off 
    against future trading profits . No deferred tax assets have 
    been recognised in these financial statements due to the uncertainty 
    regarding future taxable profits. 
    Potential deferred tax assets not recognised are approximately 
    GBP576,404 (2021: GBP541,065). 
   8              Loss / profit per share 
   Basic (pence per share) 2022 - Loss 2.42 profit per share; 2021 
    - 1.50 profit per share 
    This has been calculated on a loss of GBP868,000 (2021: Profit 
    GBP522,000) and the number of shares used was 35,812,823 (2021: 
    34,860,515) being the weighted average number of shares in issue 
    during the year. 
    Diluted (pence per share) 2022 - 2.42 loss per share; 2021 - 
    0.80 profit per share 
    In the current year the potential ordinary shares included in 
    the weighted average of shares are anti-dilutive and therefore 
    diluted earnings per share is equal to basic earnings per share. 
    The prior year calculation used earnings of GBP442,000 being 
    the profit for the year plus the interest paid on the convertible 
    loan note (net of 20% tax) of GBP80,000 and the number of shares 
    used was 55,344,987 being the weighted average number of shares 
    outstanding during the year of 34,860,515 adjusted for shares 
    deemed to be issued for no consideration relating to options 
    and warrants and the impact of the convertible instrument. 
   9              Property, plant and equipment 
                                       fixtures        Leasehold        Motor 
                       Freehold    and fittings     improvements     vehicles     Total 
                        GBP'000         GBP'000          GBP'000      GBP'000   GBP'000 
                    -----------  --------------  ---------------  -----------  -------- 
  At 1 July 2021            426           1,233              143          268     2,070 
  Additions                   -              97              331            -       428 
  Disposals                   -               -                -         (31)      (31) 
  Write off                   -            (10)                -            -      (10) 
  At 30 June 2022           426           1,320              474          237     2,457 
                    -----------  --------------  ---------------  -----------  -------- 
  At 1 July 2021             40           1,091              143          268     1,542 
  Charged in year             5              94               25            -       124 
  Disposals                   -               -                -         (31)      (31) 
  Write off                   -             (6)                -            -       (6) 
  At 30 June 2022            45           1,179              168          237     1,629 
                    -----------  --------------  ---------------  -----------  -------- 
  Net book value 
  At 30 June 2022           381             141              306            -       828 
                    ===========  ==============  ===============  ===========  ======== 
  At 30 June 2021           386             142                -            -       528 
                    ===========  ==============  ===============  ===========  ======== 
   The net book value of the property, plant and equipment includes 
    GBP2,549,000 (2021: GBP363,000) in respect of assets held under 
    lease agreements. These assets have been offered as security 
    in respect of these lease agreements. Depreciation charged in 
    the period on those assets amounted to GBP314,000 (2021: GBP138,000) 
    - see note 10. 
   10           Right of use 
                                       fixtures        Leasehold        Motor 
                       Freehold    and fittings     improvements     vehicles     Total 
                        GBP'000         GBP'000          GBP'000      GBP'000   GBP'000 
                    -----------  --------------  ---------------  -----------  -------- 
  At 1 July 2021            248             250                -          147       645 
  Additions               2,416               -              168            -     2,584 
  Disposal                 (84)            (14)                                    (98) 
  At 30 June 2022         2,580             236              168          147     3,131 
                    -----------  --------------  ---------------  -----------  -------- 
  At 1 July 2021            101             109                -           73       283 
  Charged in year           198              47               12           42       299 
  Disposal                    -               -                -            -         - 
  At 30 June 2022           299             156               12          115       582 
                    -----------  --------------  ---------------  -----------  -------- 
  Net book value 
  At 30 June 2022         2,281              80              156           32     2,549 
                    ===========  ==============  ===============  ===========  ======== 
  At 30 June 2021           147             142                -           74       363 
                    ===========  ==============  ===============  ===========  ======== 
   11           Goodwill 
                                      Goodwill      Total 
                                       GBP'000    GBP'000 
                                     ---------  --------- 
     At 1 July 2021                      1,357      1,357 
     Additions                               -          - 
                                     ---------  --------- 
     At 30 June 2022                     1,357      1,357 
                                     =========  ========= 
     As at 30 June 2021 and 30               -          - 
      June 2022 
                                     =========  ========= 
  Net book value 
     At 30 June 2022                     1,357      1,357 
                                     =========  ========= 
     At 30 June 2021                     1,357      1,357 
                                     =========  ========= 
        The goodwill carried in the statement of financial position of 
         GBP1,357,000 arose on the acquisitions of Adien Limited in 2002 
         (GBP212,000), QM Systems Limited in 2006 (GBP849,000), TED Limited 
         in 2017 (GBP129,000), Wessex Precision Equipment Limited in 2019 
         (GBP155,000) and Utsi Electronics Limited in 2021 (GBP12,000) 
         - see note 21. 
         Adien Limited represents the segment utility detection and mapping 
         services and QM Systems Limited represents the segment test system 
         QM Systems Limited, TED, Wessex and Utsi are involved in projects 
          *    The creation of innovative automated assembly systems 
               for the manufacturing, food and pharmaceutical 
          *    The provision of inspection systems for the 
               automotive, aerospace, rail and pharmaceutical 
          *    Slippage testing 
          *    Assembly and sale of GPR equipment 
          *    Automated test systems 
         The Group tests goodwill annually for impairment or more frequently 
         if there are indicators that it might be impaired. 
         The recoverable amounts are determined from value in use calculations 
         which use cash flow projections based on financial budgets approved 
         by the directors covering a five year period. The key assumptions 
         are those regarding the discount rates, growth rates and expected 
         changes to sales and direct costs during the period. Management 
         estimates discount rates using pre-tax rates that reflect current 
         market assessments of the time value of money and the risks specific 
         to the business. This has been estimated at 10% per annum reflecting 
         the prevailing pre-tax cost of capital in the Company. 
         The growth rate assumptions are based on forecasts and historic 
          *    Adien these have been assessed as 22% growth for 
               revenue in years 1 and 5% for years 2 and 3, 2.5% 
          *    UTSI and PipeHawk combined these have been assessed 
               as 15% for growth for revenue in year 1 and 55.2% for 
               year 2, 65.9% for year 3, 35% for year 4, 8% year 5. 
          *    QM have been assessed largely based on the current 
               orderbook, in addition to the expected orderbook. The 
               business has seen significant growth in order intake 
               and has received confirmed orders in the first four 
               months exceeding GBP3million. Management is expecting 
               to convert a strong pipeline into orders which would 
               see a 300% increase in year 1, a 183% increase in 
               year 2. This is followed by an expected 10 % in year 
               3 and 4 and 5% for years 5. 
          *    TED these have been assessed as 26% growth for 
               revenue in year 1, 10% growth in years 2 and 3 and 5% 
               thereafter. The reason for the significant Year 1 
               revenue growth in Adien, QM and TED is an expectation 
               based on current trading and the expected order 
   12           Non-current investments 
                                    Parent and 
                                   Group interest 
                                    in ordinary        Country of 
     Subsidiary                      shares and       incorporation     Principal activity 
                                   voting rights 
  -----------------------------  ----------------  ----------------  ---------------------- 
   Adien Ltd                           100%         England & Wales   Specialist surveying 
   QM Systems Ltd                      100%         England & Wales   Test solutions 
   Thomson Engineering                 100%         England & Wales   Specialist in railway 
    Design Ltd                                                         equipment 
   Wessex Precision Instruments        100%         England & Wales   Slip test solutions 
   Utsi Electronics Ltd                100%         England & Wales   GPR equipment 
   Wessex Test Equipment               100%         England & Wales   Dormant 
    Ltd (formerly Tech Sales 
    Services Ltd) 
   Minehawk Ltd                        100%         England & Wales   Dormant 
   An impairment assessment was performed in line with the assessment 
    of goodwill, see note 11 for further details. On the basis of 
    this assessment no impairment of the investment was required 
    at 30 June 2022. 
    The registered office of all of the above named subsidiaries, 
    except Thomson Engineering Design Ltd and Utsi Electronics Ltd 
    is Manor Park Industrial Estate, Wyndham Street, Aldershot, Hampshire, 
    GU12 4NZ. 
    The registered office of Thomson Engineering Design Ltd is Units 
    2a & 3 Crabtree Road, Forest Vale Industrial Estate 
    Cinderford, Gloucestershire, United Kingdom, GL14 2YQ 
    The registered office of Utsi Electronics Ltd is Unit 26, Glenmore 
    Business Park, Ely Road, Waterbeach, Cambridge, Cambridgeshire, 
    CB25 9PG. 
   13           Inventories 
                        2022       2021 
                     GBP'000    GBP'000 
                   ---------  --------- 
  Raw materials          150        287 
  Finished goods         190         86 
                         340        373 
                   =========  ========= 
   The replacement cost of the above inventories would not be significantly 
    different from the values stated. 
    The cost of inventories recognised as an expense during the year 
    amounted to GBP1,886,000 (2021: GBP2,078,000). For the Parent 
    company this was GBP41,612 (2021: GBP16,024). 
   14           Trade and other receivables 
                                            2022       2021 
                                         GBP'000    GBP'000 
                                       ---------  --------- 
  Trade receivables                        1,261      1,066 
  Amounts owed by Group undertakings           -          - 
  Other Debtors                              522       4 64 
  Accrued income                             332          3 
  Prepayments                                274       2 76 
                                           2,389      1,809 
                                       =========  ========= 
   15           Trade and other payables 
                                            2022       2021 
                                         GBP'000    GBP'000 
                                       ---------  --------- 
  Trade payables                             972        581 
  Other taxation and social security         447       5 01 
  Payments received on account               839        786 
  Accruals and other creditors               601        783 
                                          2 ,859     2 ,651 
                                       =========  ========= 
                                            2022       2021 
                                         GBP'000    GBP'000 
                                       ---------  --------- 
   Amounts owed to Group undertakings          -          - 
   Other creditors                             -          - 
                                               -          - 
                                       =========  ========= 
   The performance obligations of the IFRS 15 contract liabilities 
    (payments received on account) are expected to be met 
    within the next financial year. 
   16           Borrowing analysis 
                                            2022       2021 
                                         GBP'000    GBP'000 
                                       ---------  --------- 
  Due within one year 
  Bank and other loans                       708        269 
  Directors' loan                          1,644      1,748 
  Obligations under lease agreements         322        139 
                                       ---------  --------- 
                                           2,674      2,156 
                                       =========  ========= 
  Due after more than one year 
  Bank and other loans                    491     628 
  Directors' loan                       2,751   2,392 
  Obligations under lease agreements    2,370     185 
                                       ------  ------ 
                                        5,612   3,205 
                                       ======  ====== 
  Due within 1 year                              2,729     2,156 
  Over 1 year but less than 2 years              3,249     2,576 
  Over 2 years but less than 5 
   years                                         2,361       629 
                                             ---------  -------- 
                                                 8,339     5,361 
                                             =========  ======== 

Directors' loans

Included with Directors' loans and borrowings due within one year are accrued fees and interest owing to G G Watt of GBP1,644,000 (2021: GBP1,643,000). The accrued fees and interest is repayable on demand and no interest accrues on the balance.

The director's loan due in more than one year is a loan of GBP2,750,000 from G G Watt. Directors' loans comprise of two elements. A loan attracting interest at 2.15% over Bank of England base rate. At the year end GBP1,750,000 (2021: GBP1,339,000) was outstanding in relation to this loan. During the year to 30 June 2022 GBP200,000 (2021: GBP130,000) was repaid. The Company has the right to defer payment for a period of 366 days.

On 13 August 2010 the Company issued GBP1 million of Convertible Unsecured Loan Stock ("CULS") to G G Watt, the Chairman of the Company. The CULS were issued to replace loans made by G G Watt to the Company amounting to GBP1million and has been recognised in non-current liabilities of GBP2,750,000.

Pursuant to amendments made on 13 November 2014 and 9 November 2018, and 30 June 2022 the principal terms of the CULS are as follows:

- The CULS may be converted at the option of Gordon Watt at a price of 3p per share at any time prior to 13 August 2026;

- Interest is payable at a rate of 10 per cent per annum on the principal amount outstanding until converted, prepaid or repaid, calculated and compounded on each anniversary of the issue of the CULS. On conversion of any CULS, any unpaid interest shall be paid within 20 days of such conversion;

- The CULS are repayable, together with accrued interest on 13 August 2026 ("the Repayment Date").

No equity element of the convertible loan stock was recognised on issue of the instrument as it was not considered to be material.


The future minimum lease payments under lease agreements at the year end date was GBP206,033 (2021: GBP123,382). The difference between the minimum lease payments and the present value is wholly attributable to future finance charges.

  2022                                                                    Non-cash: 
                             Bought                     Non-cash:           Accrued     Carried 
                            forward     Cash flows     New leases    fees/interests     forward 
                            GBP'000        GBP'000        GBP'000           GBP'000     GBP'000 
                         ----------  -------------  -------------  ----------------  ---------- 
  Director loan               4,140            119              -               187       4,446 
  Leases                        324          (163)          2,584              (53)       2,692 
  Other                         897            286              -                18       1,201 
                         ----------  -------------  -------------  ----------------  ---------- 
  Loans and borrowings        5,361            242          2,584               152       8,339 
                         ==========  =============  =============  ================  ========== 
  2021                                                                    Non-cash: 
                             Bought                     Non-cash:           Accrued     Carried 
                            forward     Cash flows     New leases    fees/interests     forward 
                            GBP'000        GBP'000        GBP'000           GBP'000     GBP'000 
                         ----------  -------------  -------------  ----------------  ---------- 
  Director loan               4,121          (180)              -               199       4,140 
  Leases                        420          (165)             63                 6         324 
  Other                         851             36              -                10         897 
                         ----------  -------------  -------------  ----------------  ---------- 
  Loans and borrowings        5,392          (309)             63               215       5,361 
                         ==========  =============  =============  ================  ========== 
   17           Financial instruments 
     The Group uses financial instruments, which comprise cash and 
     various items, such as trade receivables and trade payables 
     that arise from its operations. The main purpose of these financial 
     instruments is to finance the Group's operations. 
     The main risks arising from the Group's financial instruments 
     are credit risk, liquidity risk and interest rate risk. A number 
     of procedures are in place to enable these risks to be controlled. 
     For liquidity risk these include profit/cash forecasts by business 
     segment, quarterly management accounts and comparison against 
     forecast. The board reviews and agrees policies for managing 
     this risk on a regular basis. 
     Credit risk 
     The credit risk exposure is the carrying amount of the financial 
     assets as shown in note 14 (with the exception of prepayments 
     which are not financial assets) and the exposure to the cash 
     balances. Of the amounts owed to the Group at 30 June 2022, 
     the top 3 customers comprised 34% (2021: 43.00%) of total trade 
     The Group has adopted a policy of only dealing with creditworthy 
     counterparties and the Group uses its own trading records to 
     rate its major customers, also the Group invoices in advance 
     where possible. The Group's exposure and the credit ratings 
     of its counterparties are continuously monitored and the aggregate 
     value of transactions concluded is spread amongst approved counterparties. 
     Having regard to the credit worthiness of the Groups significant 
     customers the directors believe that the Group does not have 
     any significant credit risk exposure to any single counterparty. 
   An analysis of trade and other receivables: 
  2022                 Weighted   Gross carrying        Impairment 
                   average loss            value    loss allowance 
                        GBP'000          GBP'000           GBP'000 
                 --------------  ---------------  ---------------- 
  Performing              0.00%            1,809                 - 
        2021                                     Weighted   Gross carrying        Impairment 
                                             average loss            value    loss allowance 
                                                                   GBP'000           GBP'000 
                                          ---------------  ---------------  ---------------- 
        Performing                                  0.00%            1,861                 - 
    Interest rate risk 
    The Group finances its operations through a mixture of shareholders' 
    funds and borrowings. The Group borrows exclusively in Sterling 
    and principally at fixed and floating rates of interest and 
    are disclosed at note 16. 
    As disclosed in note 16 the Group is exposed to changes in interest 
    rates on its borrowings with a variable element of interest. 
    If interest rates were to increase by one percentage point the 
    interest charge would be GBP15,000 higher. An equivalent decrease 
    would be incurred if interest rates were reduced by one percentage 
    Liquidity risk 
    As stated in note 1 the Executive Chairman, G G Watt, has pledged 
    to provide ongoing financial support for a period of at least 
    twelve months from the approval date of the Group statement 
    of financial position. It is on this basis that the directors 
    consider that neither the Group nor the Company is exposed to 
    a significant liquidity risk. 
   Contractual maturity analysis for financial liabilities: 
       2022                Less than   Due between     Due between 
                              1 year     1-2 years    2 - 5+ years         Total 
                             GBP'000       GBP'000         GBP'000       GBP'000 
                          ----------  ------------  --------------      -------- 
  Trade and other 
   payables                    1,876             -               -         1,576 
       Borrowings              2,405         2,887             355         5,647 
   Lease liability               322           363           2,007         2,692 
                          ----------  ------------  --------------      -------- 
                               4,603         3,250           2,362        10,215 
                          ==========  ============  ==============      ======== 
  2021                   Due or   Due between   Due between   Due between 
                         due in    1-3 months    3 months-1    1-5 years+ 
                      less than                        year                   Total 
                        1 month 
                        GBP'000       GBP'000       GBP'000       GBP'000   GBP'000 
                    -----------  ------------  ------------  ------------  -------- 
  Trade and other 
   payables                 997           197           170             -     1,364 
  Borrowings                164            95         1,897         3,205     5,361 
                    -----------  ------------  ------------  ------------  -------- 
                          1,161           292         2,067         3,205     6,725 
                    ===========  ============  ============  ============  ======== 
   Financial liabilities of the Company are all due within less than 
    three month with the exception of the intercompany balances that 
    are due between 1 and 5 years. 
   Fair value of financial instruments 
    Loans and receivables are measured at amortised cost. Financial 
    liabilities are measured at amortised cost using the effective 
    interest method. The directors consider that the fair value of 
    financial instruments are not materially different to their carrying 
    Capital risk management 
    The Group's objectives when managing capital are to safeguard 
    the Group's ability to continue as a going concern in order to 
    be able to move to a position of providing returns for shareholders 
    and benefits for other stakeholders and to maintain an optimal 
    capital structure to reduce the cost of capital. 
    The Group manages trade debtors, trade creditors and borrowings 
    and cash as capital. The entity is meeting its objective for managing 
    capital through continued support from G G Watt as described per 
    note 1. 
   18           Share capital 
                                      2022      2022         2021      2021 
                                       No.   GBP'000          No.   GBP'000 
                               -----------  --------  -----------  -------- 
  Ordinary shares of 1p each    40,000,000       400   40,000,000       400 
                               ===========  ========  ===========  ======== 
  Allotted and fully paid 
  Brought forward               34,860,515       349   34,360,515       344 
  Issued during the year         1,452,308        14      500,000         5 
  Carried forward               36,312,823       363   34,860,515       349 
                               ===========  ========  ===========  ======== 
   Fully paid ordinary shares carry one vote per share and carry 
    a right to dividends. 
    11,773,703 (2021: 12,773,703) share options were outstanding 
    at the year end, comprising the 1.12m employee options and the 
    10,653,703 share options and warrants held by directors disclosed 
    Share based payments have been included in the financial statements 
    where they are material. No share based payment expense has been 
    No deferred tax asset has been recognised in relation to share 
    options due to the uncertainty of future available profits. 
    The director and employee share options were issued as part of 
    the Group's strategy on key employee remuneration, they lapse 
    if the employee ceases to be an employee of the Group during 
    the vesting period. 
   Employee options 
       Date options exercisable                  Number of       Exercise price 
  Between July 2016 and July 
   2023                                             80,000                3.00p 
       Between November 2019 and                   400,000               3.875p 
        November 2026 
        Between November 2020 and                  300,000                3.75p 
         November 2027 
  Between March 2024 and March 
   2031                                          1,290,000                8.00p 
    Directors' share options 
                                              Number of options 
                           ---------  --------------------------------   ---------  ------------ 
            Directors'                 Granted      Lapsed                             Date from 
            share options        At     during      during      At end    Exercise         which 
                              start   the year    the year     of year       price   exercisable 
                            of year 
                           --------  ---------  ----------  ----------   ---------  ------------ 
                                                                                          18 Mar 
       G G Watt             750,000                      -     750,000        8.0p          2024 
       S P Padmanathan      200,000              (200,000)           -        3.9p 
       S P Padmanathan      300,000              (300,000)           -        8.0p 
                                                                                          18 Mar 
       R MacDonnell         200,000                      -     200,000        8.0p          2024 
         The Company's share price at 30 June 2022 was 16.5p. The high 
          and low during the period under review were 37p and 5.6p respectively. 
          In addition to the above, in consideration of loans made to the 
          Company, G G Watt has warrants over 3,703,703 ordinary shares 
          at an exercise price of 13.5p and a further 6,000,000 ordinary 
          shares at an exercise price of 3.0p. 
          The weighted average contractual life of share options outstanding 
          at the year end is 7.09 years (2021: 6.87 years). 
   19           Related party transactions 
   Directors' loan disclosures are given in note 16. The interest 
    payable to directors in respect of their loans during the year 
    G G Watt - GBP140,005 
    The directors are considered the key management personnel of 
    the Company. Remuneration to directors is disclosed in note 6. 
   There is no ultimate controlling party of PipeHawk plc. 
   20           Government grants 
   In addition to the Government assistance disclosed in note 16, 
    the following Government grants were received and has been recognised 
    during the period: 
                                          2022       2021 
                                       GBP'000    GBP'000 
                                     ---------  --------- 
  Coronavirus Job Retention Scheme 
   grants                                   48        340 
                                            48        340 
                                     =========  ========= 
   21         Copies of Report and Accounts 

Copies of the Report and Accounts will be posted to shareholders later today and will be available from the Company's registered office, Manor Park Industrial Estate, Wyndham Street, Aldershot, Hampshire GU12 4NZ and from the Company's website www.pipehawk.com .

   22          Notice of Annual General Meeting 

The Report and Accounts will include a notice that the annual general meeting will be held at the offices of Allenby Capital Limited, 5 St Helen's Place, London, EC3A 6AB at 11:30 am. on 22 December 2022.


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(END) Dow Jones Newswires

November 29, 2022 02:00 ET (07:00 GMT)

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