Chairman's Statement

The half-year results for the six months ended 31 December 2004 conclude an extremely difficult calendar year for the Company. However, the Board is confident that the actions taken during the first half of 2004 have begun to produce results in the latter half of 2004 and put us in a strong position entering 2005.

The turnover for the six months has increased by 49 per cent. to £555,000 compared with the first half of the calendar year 2004: £372,000 (2003 - £571,000). The retained loss for the six months has almost halved to £270,000 from a loss of £526,000 in the first half of the 2004 calendar year (2003: loss £291,000).

The steps taken by the board, in particular, the maintenance of tight cost controls, following the delay in OfWat's decision regarding consumer price increases have minimised the impact of the difficult trading environment on the Group's cash flows.

I referred in my statement, which accompanied last year's Annual Report, that I believed 2004 would be a difficult trading year largely as a result of the lack of investment by the water companies awaiting OfWat's deliberations. OfWat announced its recommendations on 2 December, which subsequently permitted the water companies to raise their prices by, on average, 18 per cent. more than the rate of inflation spread over the next five years. The large water companies are now beginning to put in place their investment plans for meeting the improvements required of them by OfWat and utility detection is a strong requirement of them. Notwithstanding this, we have seen a noticeable increase in business in both SUMO (our franchise mark out business) and especially Adien (our high level mapping and planning service) since the autumn of 2004. We expect this increase to continue once the AMP4 investment programmes of the utility companies are finalised for the period 2005-10. As a consequence of the delay in OfWat's deliberations, your Board took action to source other non-water related business during 2004.

A result of which has seen Adien successfully complete a prestigious mapping contract in Kuwait, work with Transport for London on the improvement of the capitals traffic congestion and with mobile telecommunications companies in the roll-out of the next generation of mobile telephone masts. As I write this Adien are enjoying a record level of high quality orders for the first half of 2005.

During the six months under review the Company also entered into the next phase of the handheld pipe locator project with NEGAS, under which they provide a contribution amounting to $156,000 (50 per cent.) and the directors are pleased to report that the development work remains in line with expectations.

With regard to the further development of our anti-landmine vehicle, your board continues to vigorously pursue potential sources of funding.

In summary, your Board continue to remain very confident about the company's future.

Gordon Watt
Chairman