TIDMHDD
RNS Number : 2337H
Hardide PLC
18 June 2013
Press Release 18 June 2013
Hardide plc
("Hardide" or "the Company" or "the Group")
Interim Results
Hardide plc (AIM: HDD), the provider of advanced surface coating
technology, announces its interim results for the six months ended
31 March 2013.
Overview
-- Turnover decreased by 18% to GBP1.26m (H1 2012 GBP1.54m),
primarily as a result of a major inventory adjustment by a dominant
customer
-- Gross profit decreased by 23% to GBP855,000 (H1 2012: GBP1.12m)
-- Group interim loss of GBP102,000 (H1 2012: GBP201,000 profit)
-- Group EBITDA of GBP11,000 (H1 2012: GBP308,000)
-- Revenue from aerospace and advanced engineering sectors increased by 37%
-- The number of active accounts rose by 34% to 39 from 29 in H1
2012, reflecting the focus on strengthening the pipeline
-- A Technology Strategy Board grant worth up to GBP250,000 was
awarded in January 2013 to part--fund a two year project to further
develop, manufacture and test a new coating for superabrasive
materials used in 'hardfacing' tools for downhole and other
high-wear applications. Rapid technical and commercial progress was
made on the project
-- All aerospace and advanced engineering strategic development
projects progressed steadily and successfully with customer
partners
-- An independent and comprehensive testing programme was
launched to investigate further the properties and benefits of
Hardide coatings for a variety of new potential applications.
-- In January 2013, a loan note holder converted its convertible
loan note of GBP225,000 into 50,000,000 new ordinary shares of the
Company at a price of 0.45p per share ("New Ordinary Shares")
-- Cash at bank at 31 March 2013 of GBP1.39 million
Post Period Events
-- First sales of the new coating for superabrasive materials,
developed as a result of the TSB grant-funding, have been achieved
ahead of expectations
-- Patent applications have been filed in the US and UK for the
new coating for superabrasive materials
-- The business development team has been strengthened by the
appointment of two additional managers, one each in the UK and US
where they will promote applications and sales in existing and new
markets
-- An agent has been appointed for the German market in order to
widen the Company's geographic customer base and to capitalise upon
interest already expressed by potential customers in the region,
particularly in the valve and pump sectors and for cutting
blades
-- The Company is negotiating commercial agreements with two
world-leading blue chip companies which operate across a range of
advanced engineering technologies
Commenting on the interim results, Robert Goddard, chairman of
Hardide plc, said:
"Our 2013 half year results have been weakened primarily by a
rapid inventory reduction exercise by one major customer. This has
resulted in what is expected to be a short--term dip in demand and
projected to be resolved by the end of 2013. The Company is
achieving positive developments technically and with other
customers. So, while this set--back is disappointing, the
confidence of the Board remains high.
Ten new customers placing production orders were signed up
during the first six months of this year, increasing the number of
active accounts by 34% compared with the start of the year. Except
for the single large oil & gas customer, sales to other
customers remain steady. Meanwhile, the technical and commercial
aspects of the business are operating effectively and we are
investing heavily in sales and marketing activities to drive
customer penetration and diversification."
- Ends -
For further information:
Hardide plc
Robert Goddard, Chairman Tel: +44 (0) 1869 353 830
Philip Kirkham, CEO jrobinson@hardide.com
Jackie Robinson, Communications www.hardide.com
Manager
Andrew Craig/Ben Wright Tel: +44 (0) 207 496 3000
www.n1singer.com
Notes to editors:
Hardide develops, manufactures and applies nanotechnology
tungsten carbide-based coatings to a wide range of engineering
components. The Group's patented technology is unique in combining
a mix of abrasion, erosion and corrosion resistant properties in
one coating. When applied to metal components in aggressive
environments, the technology is proven to offer dramatic
improvements in component life resulting in cost savings through
reduced downtime and increased operational efficiency. Customers
include leading companies operating in oil and gas exploration and
production, valve and pump manufacturing, nuclear, advanced
engineering and aerospace industries.
CHAIRMAN'S STATEMENT
The interim results for the six months to 31 March 2013 reflect
the impact of a major inventory reduction by one dominant customer,
the effect of which was increased by unexpected delays in
well-advanced new product introductions by other customers. The
Hardide coating is performing well and is not related to these
customer delays. We expect the inventory reduction exercise to be
short-term and resolved by the end of 2013.
The Group is reporting H1 2013 revenue of GBP1.26m, a decrease
of 18% compared with the same period last year (H1 2012: GBP1.54m).
Group gross profit was GBP855,000, a fall of 23% from GBP1.12m in
H1 2012. Cost of sales decreased by 3% to GBP409,000 reflecting the
fixed nature of production staff salaries. The Group made an
operating loss of GBP102,000 (H1 2012: profit of GBP201,000), which
included the effects of the planned investment in business
development, marketing and further independent testing designed to
open new markets and accelerate customers' test cycles. Group
EBITDA was positive at GBP11,000 (H1 2012: GBP308,000).
While the half year results reflect the drop in demand from one
customer, other sales across our main sectors of oil & gas,
flow control and advanced engineering remain solid. In particular,
revenue from the aerospace and advanced engineering sectors grew by
37%. The strong rise during 2012 of the number of parts in customer
test bore fruit in the first half of 2013 as the number of active
accounts rose by 34% from 29 to 39. These include applications for
customers from sectors including motorsport, oil & gas and flow
control.
Broadening the customer base remains a key strategic objective
and significant investment is being made in 2013 to achieve this
more quickly. To this end, two further business development
managers have been appointed; one each in the UK and US, to develop
sales in existing and new markets. Also post-period, an agent has
been appointed to represent the Company in Germany, where we
believe there is high potential for us.
In January 2013, 50,000,000 New Ordinary Shares were admitted to
AIM after a loan note holder converted its GBP225,000 convertible
loan note that was issued in June 2008. Following this transaction,
the Company has one outstanding convertible loan note of
GBP633,000, which is convertible before August 2014 at a price of
0.45p per share.
In January 2013, the Company was awarded a Technology Strategy
Board grant worth up to GBP250,000 to part-fund a two-year project
to further develop, manufacture and test a new coating for
superabrasive materials used for 'hardfacing' tools in downhole and
other high--wear applications. Rapid technical and commercial
progress was made to the point that first commercial sales were
achieved shortly after the half-year. In April 2013, the Company
signed a mutually exclusive five-year supply agreement for use of
the new material in oil & gas applications with hardfacing
specialists Cutting & Wear Resistant Developments Limited of
Sheffield.
The Company is in the final stages of negotiating commercial
agreements with two world--leading blue chip engineering companies
that operate across a wide range of advanced engineering
technologies. These agreements will provide frameworks for working
in partnership to develop several new applications for the oil and
gas and industrial manufacturing sectors.
Our other strategic development programmes with aerospace and
advanced engineering customer partners continue to advance steadily
and successfully. As a result, we have ever--increasing confidence
that the extended period of product testing by our aerospace OEM
(original equipment manufacturer) customers will result in specific
approvals.
Overall, the Company is experiencing many positive customer and
technical developments so, while it is disappointing to report this
weaker set of interim financial results, the confidence of the
Board remains high.
Robert Goddard
Chairman
18 June 2013
Consolidated income statement
for the period ended 31 March 2013
6 Months 6 Months
to to Year to
31 March 31 March
2013 2012 30 Sept 2012
(unaudited) (unaudited) (audited)
GBP '000 GBP '000 GBP '000
Revenue 1,264 1,539 2,915
Cost of Sales (409) (422) (820)
Gross Profit 855 1,117 2,095
-------------------------------- ------------ ------------ -------------
Administrative expenses (844) (809) (1,573)
Depreciation (57) (51) (108)
Exceptional item: Impairment
of fixed assets - - (36)
Operating profit / (loss) (46) 257 378
-------------------------------- ------------ ------------ -------------
Finance income 1 1 2
Finance costs (57) (57) (115)
Loss on disposal of fixed
assets - -
Profit / (loss) on ordinary
activities before tax (102) 201 265
-------------------------------- ------------ ------------ -------------
Tax - - 42
Profit / (loss) for the period (102) 201 307
-------------------------------- ------------ ------------ -------------
Consolidated statement of changes
in equity for the period ended 31
March 2013
6 months 6 months
to to Year to
31 March 31 March 30 Sept 2012
2013 (unaudited) 2012 (unaudited) (audited)
GBP '000 GBP '000 GBP '000
Total equity at start of period 1,123 106 106
Profit / (loss) for the period (102) 201 307
Issue of new shares 304 714 714
Exchange differences on translation
of foreign operations 10 (9) (6)
Share options 20 - 2
Total Equity at end of period 1,355 1,012 1,123
----------------------------------------- -------------------- ---------------------- ----------------
Consolidated balance sheet at 31 March
2013
31 March 2013 31 March 30 Sept 2012
(unaudited) 2012 (unaudited) (audited)
GBP '000 GBP '000 GBP '000
Assets
Non-current assets
Investments - - -
Goodwill 69 69 69
Intangible assets 2 - -
Property, plant & equipment 374 459 379
Total non-current assets 445 528 448
-------------------------------- -------------- ------------------ -------------
Current assets
Inventories 35 25 33
Trade and other receivables 363 606 549
Other current financial assets 89 80 98
Cash and cash equivalents 1,389 1,072 1,405
Total current assets 1,876 1,783 2,085
-------------------------------- -------------- ------------------ -------------
Total assets 2,321 2,311 2,533
-------------------------------- -------------- ------------------ -------------
Liabilities
Current liabilities
Trade and other payables 276 387 480
Financial liabilities - - 257
Provisions - - -
Total current liabilities 276 387 737
-------------------------------- -------------- ------------------ -------------
Net current assets 1,600 1,396 1,348
-------------------------------- -------------- ------------------ -------------
Non-current liabilities
Financial liabilities 690 912 673
Total non-current liabilities 690 912 673
-------------------------------- -------------- ------------------ -------------
Total liabilities 966 1,299 1,410
-------------------------------- -------------- ------------------ -------------
Net assets 1,355 1,012 1,123
-------------------------------- -------------- ------------------ -------------
Equity
Share capital 2,733 2,666 2,666
Share premium 6,085 5,848 5,848
Retained earnings (7,095) (7,109) (6,993)
Share-based payments reserve 260 248 240
Translation reserve (628) (641) (638)
Total equity 1,355 1,012 1,123
-------------------------------- -------------- ------------------ -------------
Consolidated condensed cash flow statement
for the period ended 31 March 2013
6 months 6 months
to to Year to
31 March 31 March 30 Sept 2012
2013 (unaudited) 2012 (unaudited) (audited)
GBP '000 GBP '000 GBP '000
Cash flows from operating
activities
Operating profit / (loss) (46) 258 378
Impairment of intangibles 0 - -
Depreciation 57 51 108
Impairment of fixed assets - - 36
Share option charge 20 0 1
(increase) / decrease in
inventories (2) (1) (9)
(increase) / decrease in
receivables 195 (178) (139)
Increase / (decrease) in
payables (204) 16 110
Cash generated from operations 20 146 485
-------------------------------------- ------------------ ------------------ -------------
Finance income 1 1 2
Finance costs (31) (43) (83)
Tax received / (paid) - - 45
Net cash generated from operating
activities (10) 104 449
-------------------------------------- ------------------ ------------------ -------------
Cash flows from investing
activities
Purchase of property, plant
and equipment (48) (38) (50)
Net cash used in investing
activities (48) (38) (50)
-------------------------------------- ------------------ ------------------ -------------
Cash flows from financing
activities
Net proceeds from issue of
ordinary share capital 304 714 714
Loans repaid (262) - -
Net cash used in financing
activities 42 714 714
-------------------------------------- ------------------ ------------------ -------------
Net increase / (decrease)
in cash and cash equivalents (16) 780 1,113
-------------------------------------- ------------------ ------------------ -------------
Cash and cash equivalents
at the beginning of the period 1,405 292 292
Cash and cash equivalents
at the end of the period 1,389 1,072 1,405
This information is provided by RNS
The company news service from the London Stock Exchange
END
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