TIDMHDD
RNS Number : 8754X
Hardide PLC
25 November 2014
Press Release 25 November 2014
Hardide plc
("Hardide" or "the Group" or "the Company")
Preliminary results for the year ended 30 September 2014
Hardide plc (AIM: HDD), the provider of advanced surface coating
technology, announces its preliminary results for the year ended 30
September 2014.
Financial Highlights
-- Group revenue increased by 28% to a record GBP3.03m (2013: GBP2.36m)
-- Gross profit increased by 36% to GBP2.09m (2013: GBP1.54m)
and gross margin increased to 69% (2013: 65%)
-- Group operating profit of GBP0.18m (2013: loss of GBP0.80m)
-- Cash at bank at 30 September 2014 of GBP3.47m (2013 year end: GBP1.04m)
-- GBP2.7m (GBP2.5m net of expenses) raised in a private
placement of 167,875,000 new ordinary shares at 1.6 pence with new
and existing investors
-- The last remaining loan notes of GBP633,000 were converted
into 140,666,666 new ordinary shares of the Company.
Business and Operational Highlights
-- Major supply contract with the General Electric Company
guaranteeing minimum revenue of c. $1.30 million (c. GBP0.80m) over
two years to February 2016
-- Aerospace test and approval programmes with Airbus and
AgustaWestland continue to progress positively. Airbus' is now
progressing in the final phases before qualification
-- Advanced engineering and aerospace sales rose by 45%
-- Oil and Gas sales rose by 44%
Post Period Events
-- Installed UK capacity increased by nearly 50%
-- Planning for a new production facility in North America is now at an advanced stage
Commenting on the results, Robert Goddard, Chairman of Hardide
plc, said:
"I am pleased to report record Group revenue for the year to 30
September 2014. This validates the Group's strategy to increase
investment in technical development, sales and marketing to fuel
business growth. Further investment in these areas has been
budgeted for FY2015 as the Group continues to pursue
diversification.
"Of significant strategic importance is the increase in
installed UK capacity of nearly 50%. This will enable the Group to
increase production while maintaining its programme to develop new
Hardide coating technologies and applications.
"The Board is confident that the Group is in a strong financial
and operational position to continue the growth that has been
achieved this year. That same strong financial position and growing
demand merits the plan to reinstate production in North
America."
For further information:
Hardide plc
Philip Kirkham, CEO Tel: +44 (0) 1869 353 830
Jackie Robinson, Communications www.hardide.com
Manager
finnCap
Stuart Andrews / Grant Bergman Tel: +44 (0)20 7220 0500
www.finncap.com
Newgate Threadneedle Tel: +44 207 653 9850
Adam Lloyd / Heather Armstrong www.newgatethreadneedle.com
Notes to editors:
Hardide develops, manufactures and applies advanced technology
tungsten-carbide coatings to a wide range of engineering
components. Its patented technology is unique in combining in one
material a mix of toughness and resistance to abrasion, erosion and
corrosion; together with the ability to coat accurately interior
surfaces and complex geometries. The material is proven to offer
dramatic improvements in component life, particularly when applied
to components that operate in very aggressive environments. This
results 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 and ceo's report
PERFORMANCE OVERVIEW
Financial
Introduction
The Company is pleased to report record revenue of GBP3.03m for
the year ended 30 September 2014. This reflects a return to
more-normal order levels from the Group's major customer,
increasing demand from other existing customers and new accounts. A
36% increase in gross profit compared with the growth in sales of
28% reflects the Company's high operational gearing. The result has
been a modest operating profit of GBP0.18m, despite additional
spend on marketing.
The main feature of the balance sheet is the increase in cash to
GBP3.47m - up from GBP1.04m in the previous year, mainly due to the
net proceeds of GBP2.5m from the successful private placing in
August 2014.
Profit and loss
With sales of GBP1.31m (2013: GBP1.26m) for the first six months
of the year, the second half of the financial year progressed
strongly, with sales of GBP1.72m (2013: GBP1.10m). Second half
sales were helped by the supply contract with the General Electric
Company (GE) coming 'on stream'; together with a return to higher
order levels from our major oil & gas customer. There was also
a rise in demand from accounts established in the first half.
For the full year, sales increased by GBP0.67m to GBP3.03m
(2013: GBP2.36m) but the cost of sales increased by just 16%
against the 28% increase in revenue; reflecting fixed production
salaries and the mix of components that were processed so that a
gross margin of 69% was achieved, compared with 65% in the previous
year. The net effect was an increase of 36% in gross profit to
GBP2.09m compared with GBP1.54m the year before.
Operating profit improved to GBP0.18m from a loss of GBP0.80m in
FY2013. This was after accounting for a revaluation of fixed assets
of GBP0.07m and the release of a provision of GBP0.11m in respect
of the lease on the Houston facility.
Profit before tax was GBP0.11m (2013: GBP0.90m loss) and EBITDA
was GBP0.12m (2013: GBP0.23m loss).
Balance sheet and cash flow
Despite improved trading, net working capital utilised for
stock, debtors and creditors fell only slightly to GBP0.16m from
GBP0.19m, largely due to timing differences and improved debtor
management.
The net book value of fixed assets increased by GBP0.14m to
GBP0.38m. It includes new laboratory equipment, the transfer and
revaluation of some plant from Houston, and other investment to
increase UK production capacity.
In August 2014, the Company raised GBP2.7m gross (GBP2.5m net of
expenses) from a placing of 167,875,000 new ordinary shares at 1.6
pence with new and existing investors.
A provision of GBP0.38m was made in the FY2013 accounts for the
remaining lease costs on the Group's Houston facility under IAS37.
At the FY2014 year end the liability had reduced to GBP0.27m.
During the year, Amati Global Investors converted in two
tranches all its remaining convertible loan notes of GBP633,000
into 140,666,666 new ordinary shares of the Company. The Company
now has no further outstanding convertible loan notes and its
non-trade liabilities at the year-end amounted to just GBP0.33m
(2013: GBP1.08m).
The combined effect of these changes is a much stronger balance
sheet with net assets of GBP3.96m (2013: GBP0.62m) of which
GBP3.47m is cash.
Customers and Markets
In February 2014, the Group entered into an important supply
contract with GE. This contract has guaranteed minimum sales of c.
$1.3m (c.GBP0.8m) over the two years to February 2016. The nature
of the product and its end-user market means that we are optimistic
there will be sales well beyond the initial two--year term. Sales
from this customer grew steadily, contributing to the improved
performance in the second half of the year.
Sales to oil and gas customers rose by 44% from FY2013. The main
reason was the return to a more--normal demand pattern from our
major customer; as well as additional business from accounts gained
in the earlier part of the year. A notable new application is for
part of a specialist downhole tool that is providing significant
cost savings to operating companies. We worked very closely with
the customer on engineering and testing and as a result the Hardide
coating is now 'designed-in' to the tool. This meant good growth in
turnover with that customer during the second half and we are
confident of further growth as the tool becomes more widely
adopted. Other applications are now in test with this customer.
In the second half of the year we secured our first production
order for a fracking tool component from a major oilfield services
company. We look forward to further business in this area.
Revenue from coating flow control components was adversely
affected by the phasing of sales to our largest customer in this
sector and sales slipped by 11%. However, the value of orders
received from this customer in the financial year increased by
almost 20% compared with FY2013, but sales revenue from the later
orders will be booked in the next financial year and highlights the
effects of this customer's 'lumpy' demand pattern.
Advanced engineering and aerospace revenue grew by 45%; albeit
from a low base. After many years of development, volume orders are
now being received and are forecast for components for a new type
of high-speed, X--ray machine for three-dimensional scanning of
baggage at airports. We are encouraged by the customer's estimates
of future volumes for this machine, for which a worldwide roll-out
is planned. We also saw an almost 200% rise in sales to a long-term
customer who is a world leader in construction equipment.
Sales of Hardide-D have been strong. This product is the new
coating for TSP (thermally stable polycrystalline) diamonds that
the Group developed last year to extend the life and improve the
performance of drilling tools operating in extremely abrasive
environments. The minimum volumes in the supply agreement with
Cutting & Wear Resistant Developments Limited were exceeded and
their exclusivity remains in place.
During the course of the year, we invested further in raising
the profile of the Company and its coating technology. Greater
awareness among design engineers of a new, advanced coating whose
future applications are not yet all known is particularly important
to achieve but also very challenging. Activity included editorial
in influential trade publications, e--marketing, the development of
German and Italian language websites and representation at trade
exhibitions and conferences.
Germany and Italy are new territories for the Group and we
believe they have considerable potential, but until recently we
have not had the resources to address the markets there as well as
we would like. Our new agent in Germany is performing well and many
customer trials are underway. Initial business development activity
has resulted in orders from both of these countries and we will
invest further in sales and marketing in each in FY2015.
Our excellent safety and environmental record remains in place.
No lost-time incidents have been recorded for six years and the
Company surpassed all its environmental objectives and maintains
its ISO14001 accreditation.
North America
Sales to North America fell back slightly to GBP0.55m (2013:
GBP0.69m), although order intake from this market increased by 28%
compared with FY2013. The main reason for this apparent
contradiction is the phasing of orders relative to our year end
from a major flow control customer, together with volume orders
under the new GE contract starting during the second half. Orders
received from the flow control customer were actually 19% higher
than in FY2013 and sales to GE are already scheduled well into
FY2015. The Board is confident about the underlying strength of the
North American market and its potential for the Hardide technology.
Looking forward, the Company intends to undertake several strategic
development projects with high projected values. These and other
large volume customers have put it to the Company that it should
manufacture in North America in order for its products to become
more widely accepted there. This due to concerns about security of
supply, order lead time and other logistical costs. In line with
the announcement in August 2014 of our successful equity placement,
plans for a new production facility in North America are now at an
advanced stage.
Technology, Research & Development
The Group has increased its technical strength and capability
during the year. Two additional scientists are now in place and a
Scanning Electron Microscope (SEM) has been acquired. The Group's
programme of strategic technical development projects has continued
successfully, although the high demand in the second half of the
year from customers meant that capacity was restricted for trials
and development work.
The Group's own test programme to explore for additional
beneficial features of the coating and how it performs in
so-far-untried conditions continues and will do so throughout 2015.
A range of new characteristics of the coating have already been
established as a result of this work.
Intellectual Property
Following the successful commercialisation of the Hardide-D
variant developed last year for coating TSP diamonds, a PCT
application for international patent protection was filed in March
2014.
Our research and development laboratory is continuing to work on
the fundamental R&D of Hardide coating variants which will
potentially add to the patent portfolio in the future.
Standards and qualifications
The Company's qualification test programmes with Airbus and
AgustaWestland are progressing well and now with greater urgency
than before. The REACH 'sunset date' of 2017 for hexavalent
chromium salts used in the process of hard chrome plating is fast
approaching and this is focusing the industry's attention on
securing alternatives. Both programmes have taken longer than
originally expected; mainly because of complex procedures within
these two large organisations.
Since January 2014, we have been developing further our internal
systems to achieve compliance with Nadcap, the aerospace industry's
global accreditation standard. This is progressing well and to
plan.
Staff
We undertake annual personal performance planning with all of
our staff and identify their training and development needs; as
well as agreeing personal objectives for the year ahead. We are
pleased that our first technical apprentice has recently completed
his training and achieved NVQ level 3. We also motivate staff to
achieve results by means of a bonus incentive system based on
company performance.
The Board thanks the management team and employees for
delivering a record sales year and our shareholders for their
continued support. The loyalty and dedication of both have been key
factors in our successes and make for a Company with excellent
morale.
STRATEGY
Hardide is an innovator in an industry where innovation is not
routine and the Company's advanced coatings fill a gap in the
ranges that much larger players currently offer to their numerous
customers. As such, it is reasonable to expect the Hardide range
would be a very attractive addition, offering scope for growth, new
applications and higher profitability in their portfolios. The
Hardide Board therefore takes the view that shareholder value will
be maximised by concentrating its resources on growing the
Company's gross profit line, but not to the exclusion of achieving
a level of profitability. Accordingly, the board will continue to
invest in marketing, product development and manufacturing so as to
steadily increase gross profit and the capacity to sustain such
growth. This will involve making revenue and capital investments
well ahead of the realisation of the sales that will arise from
such investment. Our recent increase in UK capacity, advanced
planning for North American production and continued investment in
sales and marketing are all consistent with this approach.
Diversification of our customer base, by geography and by sector
remains an important strategic objective. Breaking into the civil
aerospace market is expected to open up an extensive, long-term
global market.
At all times, the Group will aim to achieve success in a safe,
environmentally-conscious and socially-responsible manner.
OUTLOOK
The Group delivered a record revenue performance in FY2014, with
a particularly strong second half. The improved trading performance
is currently being maintained and the Board expects the Group to
make good progress in the year ahead. We are conscious of
uncertainties in the global economic outlook, the impact of that on
oil prices and the possible knock-on effect on exploration and
production investment and thus on demand for our oil and gas
industry coatings. Whilst we maintain close contact with customers
in this regard and so far we have had no indications of any
softening of demand for our services, we are not complacent. In any
event, our balance sheet is solid and so our plans for strategic
investment and growth remain in place and on track.
Robert Goddard Philip Kirkham
Chairman CEO
25 November 2014 25 November 2014
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 September 2014
2014 2013
GBP000 GBP000
Revenue 3,030 2,359
Cost of sales (944) (815)
Gross profit 2,086 1,544
------------------------------------------ -------- --------
Administrative expenses (1,964) (1,769)
Depreciation and amortisation (121) (110)
Impairment of fixed assets 72 (90)
Provision for onerous lease obligations 103 (376)
Operating profit / (loss) 176 (801)
------------------------------------------ -------- --------
Finance income 9 2
Finance costs (75) (103)
Profit / (loss) on ordinary activities
before taxation 110 (902)
------------------------------------------ -------- --------
Taxation 51 54
Profit / (loss) on ordinary activities
after taxation 161 (848)
------------------------------------------ -------- --------
Profit / (loss) per share: Basic 0.01p (0.08)p
Profit / (loss) per share: Diluted 0.01p (0.07)p
All operations are continuing.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 30 September 2014
2014 2013
GBP000 GBP000
Assets
Non-current assets
Goodwill 69 69
Intangible assets 5 2
Property, plant & equipment 383 245
---------------------------------------- -------- --------
Total non-current assets 457 316
---------------------------------------- -------- --------
Current assets
Inventories 50 41
Trade and other receivables 571 434
Other current financial assets 199 154
Cash and cash equivalents 3,467 1,037
---------------------------------------- -------- --------
Total current assets 4,287 1,666
---------------------------------------- -------- --------
Total assets 4,744 1,982
---------------------------------------- -------- --------
Liabilities
Current liabilities
Trade and other payables 463 282
Financial liabilities 16 702
Provision for lease obligation 132 86
Total current liabilities 611 1,070
---------------------------------------- -------- --------
Net current assets 3,676 596
---------------------------------------- -------- --------
Non-current liabilities
Financial liabilities 37 5
Provision for lease obligation 140 290
---------------------------------------- -------- --------
Total non-current liabilities 177 295
---------------------------------------- -------- --------
Total liabilities 788 1,365
---------------------------------------- -------- --------
Net assets 3,956 617
---------------------------------------- -------- --------
Equity attributable to equity holders
of the parent
Share capital 3,041 2,733
Share premium 8,934 6,085
Retained earnings (7,507) (7,841)
Share-based payments reserve 127 275
Translation reserve (639) (635)
---------------------------------------- -------- --------
Total equity 3,956 617
---------------------------------------- -------- --------
The financial statements were approved and authorised for issue
by the Board on 25 November 2014.
Robert Goddard
Chairman
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 September 2014
2014 2013
GBP000 GBP000
Cash flows from operating activities
Operating profit / (loss) 176 (801)
Depreciation 121 110
Impairment of fixed assets (72) 90
Share option charge 25 35
Increase in inventories (9) (8)
(Increase) / Decrease in receivables (175) 114
Increase / (Decrease) in payables 180 (198)
Increase / (Decrease) in provisions (104) 376
Cash generated from operations 142 (282)
---------------------------------------------- -------- --------
Finance income 9 2
Finance costs (51) (61)
Tax received / (paid) 42 -
Net cash generated from operating activities 142 (341)
---------------------------------------------- -------- --------
Cash flows from investing activities
Purchase of property, plant and equipment (189) (69)
Net cash used in investing activities (189) (69)
---------------------------------------------- -------- --------
Cash flows from financing activities
Net proceeds from issue of ordinary share
capital 3,158 304
Loan repayment (734) (262)
Finance lease inception 65 -
Finance lease repayment (12) -
Net cash used in financing activities 2,477 42
---------------------------------------------- -------- --------
Net increase / (decrease) in cash and
cash equivalents 2,430 (368)
---------------------------------------------- -------- --------
Cash and cash equivalents at the beginning
of the year 1,037 1,405
---------------------------------------------- -------- --------
Cash and cash equivalents at the end
of the year 3,467 1,037
---------------------------------------------- -------- --------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 September 2014
Share Share Share-based Foreign Retained Total
Capital Premium Payments Translation Earnings Equity
---------------------- --------- --------- ------------ ------------- ---------- --------
At 1 October 2012 2,666 5,848 240 (638) (6,993) 1,123
---------------------- --------- --------- ------------ ------------- ---------- --------
Issue of new shares 67 237 - - - 304
Share options - - 35 - - 35
Combined instruments - - - - - -
Exchange translation - - - 3 - 3
Loss for the year - - - - (848) (848)
---------------------- --------- --------- ------------ ------------- ---------- --------
At 30 September
2013 2,733 6,085 275 (635) (7,841) 617
---------------------- --------- --------- ------------ ------------- ---------- --------
At 1 October 2013 2,733 6,085 275 (635) (7,841) 617
---------------------- --------- --------- ------------ ------------- ---------- --------
Issue of new shares 308 2,849 - - - 3,157
Share options - - 25 - - 25
Combined instruments - - (173) - 173 -
Exchange translation - - - (4) - (4)
Profit for the
year - - - - 161 161
---------------------- --------- --------- ------------ ------------- ---------- --------
At 30 September
2014 3,041 8,934 127 (639) (7,507) 3,956
---------------------- --------- --------- ------------ ------------- ---------- --------
The financial information set out in this preliminary
announcement does not constitute statutory accounts as defined in
Section 435 of the Companies Act 2006.
The consolidated statement of financial position at 30 September
2014, and the consolidated statement of comprehensive income and
consolidated statement of cash flows for the year then ended have
been extracted from the Group's 2014 statutory financial statements
upon which the auditors have not yet reported. The auditor's report
is expected to be unqualified and is not expected to include any
statement under Sections 498 (2) (accounting records or returns
inadequate or accounts not agreeing with records) or 498 (3)
(failure to obtain necessary information and explanations) of the
Companies Act 2006. Those financial statements have not yet been
delivered to the Registrar of Companies.
Accounting Policies
The preliminary announcement for the year ended 30 September
2014 has been prepared in accordance with International Financial
Reporting Standards as adopted by the European Union. The
accounting policies applied in this preliminary announcement are
consistent with those reported in the Group's annual financial
statement for the year ended 30 September 2014 with new standards
and interpretations which became mandatory for the financial
year.
Copies of the Annual Report and Financial Statements will be
posted to shareholders shortly and will be available from the
Company's registered office at 11 Wedgwood Road, Bicester OX26
4UL.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BIBJTMBITTTI
Grafico Azioni Hardide (LSE:HDD)
Storico
Da Giu 2024 a Lug 2024
Grafico Azioni Hardide (LSE:HDD)
Storico
Da Lug 2023 a Lug 2024