RNS Number : 8395W
Hardide PLC
17 June 2008
Press Release 17 June 2008
Hardide plc
("Hardide" or "the Group")
Interim Results for the six months to 31 March 2008
Hardide plc (AIM:HDD), the provider of unique surface engineering technology, announces its interim results for the six months ended 31
March 2008.
Highlights
* Group turnover increased 14% to �1.26 million (H1 2007: �1.11 million)
* Group gross profit increased 28% to �670,000 (H1 2007: �525,000)
* Group operating loss reduced 16% to �777,000 (H1 2007: loss �921,000)
* Group loss before tax reduced to �891,000 (H1 2007: loss �909,000)
* UK operating company, Hardide Coatings Limited, achieves maiden pre tax
profit of �112,000 (H1 2007: loss �52,000)
* UK gross margins increased by 6%
* Global gas supply agreement signed in December 2007
* Ken Siddall appointed as US Managing Director in November 2007
* Hardide Coatings, Inc. achieved ISO 9001 in November 2007
Post-Period Highlights
* Hardide Coatings Limited enters into a three year coatings approval test
programme with Airbus, one of the world's leading aircraft manufacturers
* Dr. Graham Hine appointed Chief Executive Officer on 2 June 2008
Commenting on the interim results, Robert Goddard, Chairman of Hardide plc, said: "I am pleased to report an increase in Group turnover
and gross profit together with a 16% reduction in operating loss for the first six months. Our progress is evidenced by the maiden profit
achieved by Hardide Coatings Limited during the period. The number and calibre of customers with whom Hardide is now in commercial use or
test, as demonstrated by the test programme with Airbus, is testament to the growing reputation and value that customers are placing on our
technology
"The Board believes that the leadership of Graham Hine and subsequent implementation of the new strategic plan will unlock the potential
of Hardide, and create growth in shareholder value."
For further information:
Hardide plc
Robert Goddard / Peter Davenport / Jackie Robinson Tel: +44 (0) 1869 353 830
www.hardide.com
Seymour Pierce Limited
Nicola Marrin / Richard Feigen Tel: +44 (0) 20 7107 8000
nicolamarrin@seymourpierce.com / www.seymourpierce.com
richardfeigen@seymourpierce.com
Media enquiries:
Abchurch
Chris Lane / George Parker Tel: +44 (0) 20 7398 7719
george.parker@abchurch-group.com www.abchurch-group.com
Chairman's Statement
These interim results reflect the commercial and operational progress that the Group has made in the six months to 31 March 2008. I can
report a 14% increase in turnover to �1.26 million compared to H1 2007 despite the slow growth in the US business and short-term reduction
in demand from a major UK customer that occurred towards the end of the half year, Group gross profit increased by 28% to �670,000 and Group
operating loss narrowed to �777,000 from �921,000 in H1 2007. I am pleased to report that Hardide Coatings Limited, the UK business, made a
pre tax profit of �112,000 compared with a loss of �52,000 in the same period last year.
Our focus on driving down overheads and costs as well as increasing margins has started to take effect. Despite the 14% increase in
sales, cost of sales increased by only 2% to �593,000 reflecting the global gas supply agreement which was made in December 2007, and more
efficient purchasing. In the UK, gross margins continued to rise, with a 6% increase to the end of March 2008. Group overheads were also
stable with administration expenses lower than in the same period last year.
I believe that these results, together with the number and calibre of global customers with whom the technology is currently in
commercial use or test, demonstrate the fundamentally sound proposition of the Group and its technology. Since this reporting period, the
Group experienced two difficult months culminating in June 2008 with a fundraising for �1.5 million, the appointment of Dr. Graham Hine as
Chief Executive Officer and a revision of its strategic plan. The new capital will cover operating losses and the development of
applications designed to lead to near and mid-term sales revenue.
The revised strategic plan is focused on increasing cash generation in the UK operation over the next twelve months and commercialising
the significant customer interest in the US. At the same time, discretionary capital and revenue expenditure is being minimised until a firm
trend of upward sales growth is established. In addition, a group-wide Applications Development Committee, led by Dr. Yuri Zhuk, Technical
Director, has been formed to select, review and prioritise new applications to ensure that resources are concentrated on those opportunities
with the greatest potential to realise strategically or financially significant immediate to medium-term sales.
UK: Hardide Coatings Limited
Hardide Coatings Limited, the UK operating company, achieved profitability in the first half of the financial year despite the sudden
customer de-stocking issue affecting the last month of the period. Orders are now resuming from the customer, with whom the company is in
advanced discussions on two new high-potential applications. Enquiries are continually being received from existing customers to coat new
parts, which demonstrates the level of customer satisfaction in the technology.
The move into the aerospace sector is also having encouraging results. I am pleased to announce today that Hardide Coatings Limited has
entered into a three-year coatings approval test programme with Airbus, one of the world's leading aircraft manufacturers. Furthermore, the
company has confidence tests being performed at seven key aerospace industry manufacturers, a necessary precursor to gaining customer
approvals and specification. Earlier stage discussions are ongoing with several other aerospace and defence organisations. Whilst the
approvals process in the aerospace sector is lengthy, the market potential for Hardide in this sector is strong.
The production teams in the UK and US have made excellent progress in increasing the part density in the furnaces. This has increased
gross margins and capacity, deferring the requirement for immediate capital expenditure. In select cases, the higher part density has
enabled the operating companies to secure business at lower price points. In addition, development work has begun on shortening the furnace
cycle time, which will increase capacity with no additional capital outlay.
US: Hardide Coatings, Inc.
The sales cycle for the technology in the US is taking longer than expected. Record oil prices and demand for oil services have meant
that our customers in this sector have been focusing attention on production, and testing programmes have not been given priority. This has
delayed the progress of our customer trials, which can already take 18 months to complete. On the other hand, cross-selling between the UK
and US is showing good potential in the valve market that should be realised sooner. Hardide-coated valves have been successfully run
through severe duty tests and the company is in various stages of dialogue to progress to production with several US valve manufacturers.
Ken Siddall joined Hardide Coatings, Inc. in November 2007 as US Managing Director, bringing twenty years of engineering, general
management and coatings technology experience. The US business is now implementing the new strategy which will focus sales resources on
applications that build on proven successes, shorten customer design approval and testing time, and increase the customer conversion rate.
The Houston facility achieved ISO 9001 in November 2007.
Outlook
The shortfall in sales that began at the end of the H1 2008 carried on, as expected, into the second half but there are strong
indications that a recovery in orders will occur in the coming few months. As such, the Group is likely to see sales in the second half less
in total than reported for the first. By the end of the second half, the monthly rate of sales is expected to surpass that experienced
during the first half.
The Board of Hardide is focused on generating shareholder value and is confident that the Group has the strategic plan, structure,
resources, skills and talent to turn cash-positive overall within the medium term. The strategic plan has been considered and analysed and
the Board believes it to be realistic and deliverable. We will also continue to discuss opportunities with potential partners in new
international markets.
The Board expects that the leadership of Graham Hine as Chief Executive Officer will provide the direction and framework for substantial
growth in shareholder value. The Group is building on proven success by application and by customer, and developing new applications and
markets with demonstrable commercial potential. This will further strengthen the already strong foundation for future success.
Robert Goddard
Chairman
17 June 2008
Consolidated income statement for the period ended 31 March
2008
6 months to 6 months to Year to
31 March 2008 31 March 2007 30 September 2007 (unaudited)
(unaudited) (unaudited)
� '000 � '000 � '000
Revenue 1,263 1,105 2,470
Cost of Sales (593) (581) (1,180)
Gross Profit 670 525 1,290
Administrative expenses (1,217) (1,229) (2,676)
Depreciation (230) (217) (475)
Operating profit (777) (921) (1,861)
Interest income 21 24 31
Finance costs (135) (12) (26)
Profit on ordinary activities (891) (909) (1,855)
before tax
Tax 24
Profit for the period (891) (909) (1,831)
Consolidated statement of recognised income and expense for the period ended 31
March 2008
6 months to 6 months to Year to
31 March 2008 31 March 2007 30 September 2007
(unaudited) (unaudited) (unaudited)
� '000 � '000 � '000
Profit for the period (891) (909) (1,831)
Exchange differences on (47) (6) 21
translation of foreign
operations
Total recognised income and (938) (915) (1,811)
expense for the year
Consolidated balance sheet at 31 March 2008
31 March 2008 31 March 2007 30 September 2007
(unaudited) (unaudited) (unaudited)
� '000 � '000 � '000
Assets
Non-current assets
Investments
Goodwill 69 69 69
Intangible assets 6 8 7
Property, plant & equipment 1,533 1,900 1,661
Total non-current assets 1,608 1,977 1,737
Current assets
Inventories 53 125 99
Trade and other receivables 351 426 648
Other current financial assets 156 164 147
Cash and cash equivalents 544 700 1,135
Total current assets 1,104 1,416 2,029
Total assets 2,712 3,393 3,767
Liabilities
Current liabilities
Trade and other payables 377 449 512
Financial liabilities 120 114 145
Provisions - - -
Total current liabilities 497 563 657
Net current assets 607 853 1,372
Non-current liabilities
Financial liabilities 920 164 893
Total non-current liabilities 920 164 893
Total liabilities 1,417 727 1,550
Net assets 1,295 2,666 2,217
Equity
Share capital 1,467 1,467 1,467
Share premium 3,345 3,345 3,345
Retained earnings (3,967) (2,172) (3,077)
Share-based payments reserve 465 22 450
Translation reserve (16) 4 31
Total equity 1,295 2,666 2,217
Consolidated condensed cash flow statement for the period ended 31 March 2008
6 months to 6 months to Year to
31 March 2008 31 March 2007 30 September 2007
(unaudited) (unaudited) (unaudited)
� '000 � '000 � '000
Cash flows from operating activities
Operating profit (777) (921) (1,825)
Impairment of 1 1 2
intangibles
Depreciation 230 216 437
Share option charge 15 22 59
(increase) / 46 (23) 23
decrease in
inventories
(increase) / 287 11 (224)
decrease in
receivables
Increase / (135) (34) 72
(decrease) in
payables
Finance income 21 24 31
Finance costs (53) (12) (25)
Tax received / - 50 107
(paid)
Net cash generated from operating activities (366) (666) (1,343)
Cash flows from investing activities
Purchase of (98) (402) (439)
property, plant and
equipment
Net cash used in investing activities (98) (402) (439)
Cash flows from financing activities
Net proceeds from - - -
issue of ordinary
share capital
Finance lease - 22 209
inception
Finance lease (74) (57) (95)
repayment
New loans raised - - 1,000
Net cash used in financing activities (74) (35) 1,114
Net increase / (decrease) in cash and cash (537) (1,103) (668)
equivalents
Cash and cash equivalents at the beginning of the 1,135 1,803 1,803
period
Effects of foreign exchange rate changes (56) - -
Cash and cash equivalents at the end of the period 544 700 1,135
This information is provided by RNS
The company news service from the London Stock Exchange
END
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