PipeHawk considers placing QM subsidiary into administration

5th Jul 2024 12:29

(Sharecast News) - PipeHawk shares were sliding on Friday, after it issued an update on its subsidiary QM Systems, detailing significant financial challenges.

The AIM-traded firm said that despite expectations of receiving two substantial orders to bolster QM's financial standing, the orders would now not materialise, exacerbating the subsidiary's financial difficulties.

On 27 March, PipeHawk announced various hurdles faced by QM, including a decrease in both the number and value of orders.

The absence of the anticipated orders had placed QM under severe financial strain, and as a result, the board said it was now considering placing QM into administration or a similar insolvency process to protect its creditors' interests.

Despite the setbacks, the directors said they were confident that PipeHawk's other subsidiaries - Thomson Engineering Design, Adien, and Utsi Electronics - would continue to trade as going concerns, with their performance currently aligning with management's expectations.

QM Systems specialises in providing turnkey solutions for automation, testing, and manufacturing systems across various industries, and also offers contract manufacturing services.

For the financial year ended 30 June 2023, QM generated £4.2m in revenue, accounting for about 65% of PipeHawk's total revenue for the year, but reported a post-tax loss of around £0.97m.

QM's total assets were valued at £4.7m on the same date.

At 1120 BST, shares in PipeHawk were down 73.05% at 2.29p.

Reporting by Josh White for Sharecast.com.