PipeHawk Plc ('the Group' or 'the Company') Interim Results for the six months ended 31 December 2006 

Chairman's Statement

I am delighted to report that the Group's progress continues. 

The turnover for the six months ended 31 December of £2,547,000 is an increase of more than two and a half times that for the corresponding period in 2005 (£ 970,000) and the retained profit for the six months is £13,000, compared with a loss of £100,000 in the same period last year. 

These figures include a full six months' contribution from QM Systems Limited ('QM Systems'), it has integrated well and has been assisting PipeHawk with its planned introduction of the next generation of PipeHawk development, now that the GPR industry is regulated. QM Systems is however being affected by unexpected management and policy changes at Smiths Aerospace, which has caused a reduction in workflow from that customer. New order intake from a more targeted marketing effort is already yielding a much more diverse and better spread of customers. 

Continuing on the technology front, PipeHawk, with nine European partners, has been awarded Euro2.15 million by the EU to develop a Ground Probing and Imaging Radar system, specifically to detect damage to water pipes throughout the EU. The consortium members have estimated that there are over half a million water pipe breakages / new leaks annually throughout the EU. PipeHawk's primary responsibility is to oversee the effective exploitation of this new technology.

 Adien and SUMO both continue to grow and expand in their respective market places, following the issue to them of the first Ofcom licences in September last year. The issue of these licences has assisted in differentiating our services as all companies which use GPR must now be registered and regulated to operate legally.

 During the period SUMO sold four further franchises and is now operating effectively throughout mainland Great Britain.

 Adien is steadily getting larger contracts and is being involved earlier in the decision making process in the planning of highway construction projects. To cope with this success we have invested in extending Adien's premises and adding further equipment and teams to its resources. The MineHawk EU grant is progressing slowly but steadily through the offices of the European Commission; we are confident that funding for this landmine detection vehicle will be announced during the course of this financial year. In summary, again, trading continues to improve and we continue to look forward to the future with confidence. 

Gordon Watt Chairman 

12 March 2007