RNS Number:5453V
Hardide PLC
13 December 2005
Press Release 13 December 2005
Hardide plc
("Hardide" or "the Company")
Preliminary Results for the Period to 30 September 2005
Hardide plc, the provider of unique surface engineering technology, announces
its maiden set of preliminary results which cover the trading of Hardide plc
from its formation on 27 January 2005 to the Company's year end on 30 September
2005. The pro forma results cover the trading of the operating subsidiary
Hardide Coatings Limited, which was acquired by Hardide plc on 7 March 2005, for
the twelve months to 30 September 2005.
Highlights
* Proforma turnover of #1,088,615 (2004: #330,878)
* Proforma operating loss reduced to #705,884 (2004: #1,005,202)
* Proforma loss before tax reduced to #701,490 (2004: #1,016,937)
* Strong order book
Commenting on the results, Jim Murray-Smith, Chief Executive of Hardide plc,
said: "This is an encouraging set of results with Company turnover increasing
three-fold on a proforma basis, and losses substantially reduced as expected.
"Demand for Hardide's product is strong and our order book places the Company on
a solid footing for 2006. The coming year will be another important period for
Hardide as we continue our impressive history of new customer acquisition. I
look to forward to updating shareholders in the near future."
For further information:
Hardide plc
Jim Murray Smith, Chief Executive Tel: +44 (0) 1869 353 830
jmurray-smith@hardide.com www.hardide.com
Seymour Pierce
Sarah Wharry / Jeremy Porter, Corporate Finance Tel: +44 (0) 20 7107 8000
Media enquiries:
Abchurch
Henry Harrison-Topham / Chris Lane Tel: +44 (0) 20 7398 7700
chris.lane@abchurch-group.com www.abchurch-group.com
Chairman's Statement
Hardide has made sound progress in the last year, which incorporated our listing
on the AIM market and has resulted in this solid set of Preliminary Results.
Notable was the success achieved in establishing relationships with leading
companies in the forefront of the drive for technologies that improve the life
of components and optimise performance. Market conditions in our target sectors
and a healthy order book augurs well for 2006.
The coming year will also see a significant uplift in the scale and complexity
of our operations. The challenge will be to build on the opportunities
presented by the strength of the oil & gas and aerospace markets and to
capitalise on our international potential. We are well placed to exploit these
prospects and have embarked on a strategic plan geared to the realisation of our
ambitions.
We remain firmly focused on growing our core business through a combination of
building new and existing customers, new technology, international expansion and
excellent customer service. Hardide has an exciting future and I am confident
that 2006 will see the Company achieve ever more significant growth.
The Board would like to thank the management team and staff for their hard work
and commitment during this time, in particular Chief Executive Officer, Jim
Murray-Smith, for his vision and dedication in steering the Company through a
challenging and exciting year. His leadership of the Company and employees
resulted in a smooth and successful flotation in a year that encompassed strong
growth in all of Hardide's core markets.
David Chestnutt
Chairman
Chief Executive's Report
I am delighted to report Hardide's maiden set of Preliminary Results since the
Company's flotation on AIM in April 2005, when we raised #1.4 million to enable
Hardide to move on to the next stage of its development.
This set of preliminary results covers the period of trading from Hardide plc's
formation on 27 January 2005 to the Company's year end on 30 September 2005.
For direct comparison, we have included 12 month pro forma accounts for
Hardide's sole operating subsidiary, Hardide Coatings Limited, for the period to
30 September 2005. This proforma set of accounts clearly demonstrates Hardide's
progress throughout the period.
Turnover for Hardide Coatings' has increased three-fold in the year ended 30
September 2005 to #1.09 million, with total income increasing to #1.2 million.
This solid performance is attributable to the generation of additional business
from existing customers, new customer gains as well as international expansion.
For the quarter ending 30 September 2005, Hardide's UK coatings business
achieved an EBITDA positive position and the UK manufacturing base and
headquarters at Bicester, Oxfordshire is now complete and fully operational.
I am pleased to report that such progress is being achieved with existing
customers in the UK and Europe. Its scale of advance is demonstrated by sales
more than trebling in the oil & gas, valve and pump sectors over the year. The
Company's developing US business has also made a significant contribution with
sales more than doubling. This growth in the US has been achieved in spite of
the extended supply line to the territory.
Post flotation, the Company invested #100,000 in a new pre-treatment plant at
Bicester. This has enabled the Company to expand the range of materials that
can be coated with Hardide, thereby opening up new markets and customers. The
in-house pre-treatment plant further improves reliability and speeds up customer
component turnaround time, resulting in enhanced productivity and greater
customer satisfaction.
Hardide's patented technology is used in three main areas:
* Oil & Gas
* Valves and Pumps
* Aerospace
Oil & Gas
In the UK, the offshore oil & gas industry continues to be one of the most
important industrial sectors of the economy, both in contribution to economic
activity and capital expenditure. In 2005, oil prices surged to more than $70 a
barrel and the International Energy Agency also revised its 2010 oil price
forecast from last year's US $33 a barrel to US $45 a barrel, an increase of
more than a third.
In an environment where hydrocarbons are valued highly, the operating and
service companies (Hardide's customers) are driven to optimise the management
and productivity of existing oilfields to maximise the value that can be
extracted from these assets.
In this battle to exploit maximum value from both mature assets and from new
found oil and gas fields, the industry is seeing increasing problems developing
due to wear and corrosion of parts. The consequential costs are significant.
Components that benefit from Hardide's unique patented coating are now in use in
a large number of exploration and production (E&P) fields around the world. By
coating components with Hardide, their longevity is increased which in turn
helps to reduce downtime. This further reduces the challenges from high cost E&
P that operators face, thereby offering enormous operational and financial
benefits to oil companies, service companies and license holders.
Hardide exhibited at two of the world's largest energy events in 2005, namely
Offshore Technology Conference (Houston, USA) and Offshore Europe (Aberdeen,
Scotland). Our presence greatly raised international awareness of Hardide and
interest has been encouraging. Introductions made at the exhibitions have
resulted in customer trials which, I am happy to report, are progressing well.
These trials are the first step and a pre-requisite for sales.
Valves and Pumps
The Hardide coating is gaining acceptance as a proven technology in the UK and
European valve markets. The Company's business in this sector increased nearly
four-fold in 2005 and continues to grow with new customers being secured on a
monthly basis. The new pre-treatment plant has underpinned this growth as we
are now able to offer our customers fast turnaround times at premium prices.
Among the top four Houston-based valve manufacturers, annual sales are estimated
to be in excess of US $1 billion. Whilst the Company is currently in
development work with US-based customers, it will be extremely difficult to
achieve volume and highly profitable sales without a fully operational coating
facility in Houston that will enable us to match European turnaround times.
With most of the refining capacity around the world needing to be refurbished to
cope with increasing volumes of highly corrosive sour crude oil, the demand for
Hardide's tungsten carbide coating, which provides essential corrosion and wear
resistance to valves, is likely to increase dramatically. I am happy to report
that trials with suppliers to the refining industry are progressing well and
that we recently gained approved supplier status from a leading international
energy company from which we are already receiving revenue.
The pump market is an important part of the worldwide engineering business and
revenues from this sector have also increased more than three-fold in 2005. I
anticipate business from European customers in this sector to grow
substantially. The Company is working with, and receiving monthly orders from,
one of the world's leading pump manufacturers that is based in the US. However,
I firmly believe the potential of the US market can only be fully exploited with
the development of a domestic coating facility.
Aerospace
Since expanding into the aerospace sector in April 2005, Hardide has made
significant progress and has won approved supplier status from BAE Systems. We
also successfully completed our first orders to coat components for their
Eurofighter Typhoon. Other parts are under trial for BAE Systems and we are now
in discussions with other leading aircraft manufacturers, including a FTSE 100
aerospace and engineering firm.
Hardide can offer an unrivalled solution to improving performance and longevity
of components for both commercial and military aircraft, where the prevention of
corrosion and seizure is essential. I have been extremely encouraged by our
early exploration of this sector and look forward to it playing a major role in
our growth.
New Facility
In line with our strategy to invest for further growth, the Company's intention
to establish a sales and manufacturing facility in Houston, Texas was announced
in April 2005 and a sales office was established in July 2005. The production
facility will service the US oil & gas market as well as Hardide's existing
customers in the pump and valve sectors. Equipment supply lead times and
commissioning times are fairly extended at eight months; consequently your Board
is currently considering the timing and methodology of this next significant
step in the Company's growth. In the meantime, three key administration,
technical and sales positions have been filled to ensure seamless
knowledge-transfer from the UK and to handle the current level of enquiries that
are being received.
Health and Safety/Environment
Hardide is committed to maintaining the highest standards of health and safety
and protection of the environment. The Company's health and safety record is
exemplary.
Environmental protection is fundamental to the Company's operations and we are
continually looking for ways to eliminate the potential for any environmental
impact. The Company will aim to achieve ISO 14001, the internationally
recognised standard for Environmental Management Systems (EMS), accreditation in
the next year. I believe this to be a market-leading move for a smaller
organisation and one which will further enable us to work with the leading
international companies in our target sectors.
Furthermore, the pre-treatment plant investment included the installation of a '
best practice' solvent-based component cleaning process allowing us to maximise
surface preparation efficiency while exceeding environmental and safety
regulations.
Research and Development (R&D)
R&D will play a vital role by ensuring that the Company remains at the forefront
of advances in surface engineering technology. As the Company focused attention
on getting the UK and European facility fully operational, R&D has taken a back
seat over the last year. It is now our intention to further develop our R&D
activity over the next twelve months primarily to investigate additional Hardide
coating variants.
People
At the heart of Hardide lies a technically superb and dedicated team of
individuals who have channelled their talent to moving Hardide so far forward
this year. In 2005, the team was strengthened by three key management
appointments in the UK and two in the US. In the UK, Peter Davenport joined as
Chief Financial Controller bringing ten years financial management experience;
latterly with the UK subsidiary of NYSE-listed global coatings company Valspar
Corporation. Additionally, two UK-based sales and management positions were
created to spearhead our move into the international oil & gas, and aerospace
industries. Barry Vineall has been appointed Technical Sales Manager to focus
on the aerospace market and brings with him six years engineering and business
development experience from AF Aerospace. Jeff Rutland has also joined as
Projects Manager from worldwide oilfield services provider Schlumberger, where
he held engineering and management positions over a five year period. Each
brings extensive market understanding and contacts in the Company's key growth
sectors.
In Houston, Brian White and Larry Reed have been appointed as Technical Manager
and Sales Manager respectively. Brian has nearly 20 years coatings research and
development, and production experience. He joins from international product and
service supply company, Smith International, Inc. in Houston where he spent
eight years in their R&D materials and coatings operations. Larry has over 30
years sales management experience, the last ten with Cooper Cameron Valves where
he sold valves to the oil & gas, petrochemical and other industries.
I believe these appointments will enable us to develop and manage the interest
generated within each of the Company's target sectors.
Outlook
It is clear that significant progress has been made during the last year with
more than three-fold growth, an ever-increasing customer base and demand for new
applications from existing customers.
I view the future with optimism as the Company sits poised on the edge of major
breakthroughs in two immense global markets, oil & gas and aerospace, while at
the same time buoyant conditions prevail in our niche position within the valve
and pump sectors.
I believe that these encouraging conditions in the surface technology market
across the Company's chosen sectors are set to continue and will fuel demand for
Hardide's technology on the back of which I am confidant of delivering growing
returns for our shareholders.
Jim Murray-Smith
Chief Executive Officer
HARDIDE PLC
PROFORMA PROFIT & LOSS ACCOUNT
HARDIDE COATINGS LTD
Year ended Year ended
30 September 30 September
2005 2004
# #
Turnover 1,088,615 330,878
Cost of sales (458,518) (106,784)
Gross profit 630,097 224,094
Other operating income 90,869 52,587
Administrative expenses
Administration 1,190,897 1,113,686
Amortisation 4,956 4,954
Depreciation 230,997 163,243
(1,426,850) (1,281,883)
Operating loss (705,884) (1,005,202)
Interest receivable and similar income 13,026 7,631
Interest payable and similar charges (8,632) (19,366)
Loss on ordinary activities before taxation (701,490) (1,016,937)
Taxation on loss on ordinary activities - 44,246
Loss on ordinary activities after taxation (701,490) (972,691)
GROUP PROFIT AND LOSS ACCOUNT
FOR THE PERIOD ENDED 30 SEPTEMBER 2005
From 27 January
2005 to
30 September 2005
#'000
Turnover 692
Cost of sales (283)
Gross profit 409
Administrative expenses
Administration 864
Amortisation (40)
Depreciation 146
(970)
Operating loss (561)
Other income 68
Loss on ordinary activities before interest and taxation (493)
Other interest receivable 19
Interest payable and similar charges (7)
Loss on ordinary activities before taxation (481)
Taxation on loss on ordinary activities -
Loss on ordinary activities after taxation (481)
Loss per share: basic and diluted (pence per share) 0.4
There are no recognised gains or losses other than the loss for the period ended
30 September 2005 of #481,000. All results relate to acquisitions made during
the year.
GROUP BALANCE SHEET
AS AT 30 SEPTEMBER 2005
30 September
2005
#'000
Fixed assets
Tangible assets 1,100
Intangibles (46)
1,054
Current assets
Stock 63
Debtors 459
Cash at bank and in hand 1,107
1,629
Creditors: amounts falling due within one year (313)
Net current assets 1,316
Creditors: amounts falling due after one year (314)
Net assets 2,056
Capital and reserves
Called up share capital 1,275
Share premium reserve 1,262
Profit and loss account (481)
Shareholders' funds 2,056
The financial statements were approved by the board on 12th December 2005 and
signed on behalf of the board of directors.
J Murray-Smith
Director
COMPANY BALANCE SHEET
AT 30 SEPTEMBER 2005
30 September
2005
#'000
Fixed assets
Investment in subsidiaries 1,100
1,100
Current assets
Debtors 713
Cash at bank and in hand 646
1,359
Creditors: amounts falling due within one year (12)
Net current assets 1,347
Net assets 2,447
Capital and reserves
Called up share capital 1,275
Share premium reserve 1,262
Profit and loss account (90)
Shareholders' funds 2,447
The financial statements were approved by the board on 12th December 2005 and
signed on behalf of the board of directors.
J Murray-Smith
Director
GROUP CASH FLOW STATEMENT
FOR PERIOD ENDED 30 SEPTEMBER 2005
30 September
2005
#'000
Cash outflow from operating activities (851)
Returns on investment and servicing of finance
Interest element of finance lease rental payments (7)
Interest received 19
12
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (245)
Acquisitions and disposals
Net cash transferred with subsidiary undertakings 456
Net cash outflow before financing (628)
Financing
Issue of shares 1,437
Repayment of finance lease (20)
New finance lease agreements 318
1,735
Increase in cash 1,107
Notes
1. The financial information contained in this announcement does not represent
the full statutory accounts of the group.
2. Statutory accounts for the period ended 30 September 2005 have not yet been
delivered to the Registrar of Companies. They will carry an unqualified
audit report and no statement under section 237 (2) or (3) of the Companies
Act 1985.
This information is provided by RNS
The company news service from the London Stock Exchange
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