TIDMHDD
RNS Number : 7751N
Hardide PLC
21 May 2015
21 May 2015
Hardide plc
("Hardide" or "the Group" or "the Company")
Interim Results
for the six months ended 31 March 2015
Key Points
Financial
-- Encouraging progress - supported by increased demand in H1
-- Revenue increased by 36% to GBP1.78m (H1 2014: GBP1.31m) - record six month high
-- Gross profit increased by 38% to GBP1.21m (H1 2014: GBP0.88m)
-- Operating loss reduced to GBP0.08m (H1 2014: loss of GBP0.19m)
-- EBITDA of GBP3,000 (H1 2014: EBITDA loss of GBP0.13m)
-- Strong balance sheet - cash at bank at 31 March 2015 of GBP3.25m
Operational
-- Programme to significantly expand capacity commenced:
- additional coating reactor in UK has increased capacity by almost 50%
- new manufacturing facility in North America under construction
-- Extension of major supply contract with General Electric Company Inc. ("GE")
- now three year contract to 2017 and extendable up to five years
-- Diversification of the customer base continues
-- Board expects continuing progress
Commenting on the interim results, Robert Goddard, Chairman of
Hardide plc, said:
"We are pleased to report encouraging first half results, with
revenues up 36% to GBP1.78m, a new record high for a six month
period. This reflects a rise in demand from existing customers as
well as new customer wins.
"Plans for the expansion of our coatings capacity are on track.
A third large reactor is now operational in our UK plant,
increasing capacity by almost 50%, and the opening of our new US
production facility is scheduled for late 2015. We are also pleased
to see the extension of our relationship with GE and continuing
good progress with test programmes for new customers, including
Airbus.
"We made a strong start to the second half. Looking ahead, and
as previously reported, we are cautious in the short term about the
potential impact of the fall in the oil price on demand from some
customers. Nonetheless, Hardide is moving forward positively on
many fronts and the Board remains confident about the longer-term
prospects for the business."
- Ends -
For further information:
Hardide plc
Philip Kirkham, CEO Tel: +44 (0) 1869 353
Jackie Robinson, Communications 830
Manager www.hardide.com
finnCap
Stuart Andrews / Grant Tel: +44 (0)20 7220
Bergman 0500
www.finncap.com
KTZ Communications
Katie Tzouliadis Tel: +44 (0)20 3178
6378
www.ktz.co.uk
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 hardness and toughness together with resistance
to abrasion, erosion and corrosion; and 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 STATEMENT
Introduction
First half results for the six months to 31 March 2015 were very
encouraging, with sales up 36% to GBP1.78m, a new record high for a
six month period. These results reflect increased demand from
existing customers as well as new customer gains, assisted by the
continuing expansion of our product offering into new
applications.
Financial Results
Revenue for the six months increased by 36% to GBP1.78m (2014:
GBP1.31m). Gross profit rose by 38% to GBP1.21m (H1 2014:
GBP0.88m). As expected, after the refurbishment of the
pre-treatment line and the investment in business development and
marketing resource, the Group generated an operating loss of
GBP0.08m, which nonetheless represented a substantial improvement
on the same period last year (2014: loss of GBP0.19m). Earnings
before interest, tax, depreciation and amortisation ("EBITDA") was
GBP3,000, which included GBP0.08m of costs relating to the new US
production facility. This compared with an EBITDA loss of GBP0.13m
in the same period last year.
The balance sheet remains strong, with a cash balance of
GBP3.25m (FY 2014: GBP3.47m) despite much increased capital
expenditure of GBP0.37m (H1 2014: GBP0.10m).
Operational Overview
The Group made encouraging progress over several fronts in the
period. A particularly important development has been the expansion
of our coating capacity to support further sales growth in both the
UK and North America. In October 2014, we commissioned a third
large reactor at our UK manufacturing facility, increasing capacity
by almost 50%. As well as enabling us to increase production
volumes, this extra capacity is now available for our research and
development programme, which underpins our planned expansion into
new applications, as well as continuing innovation with existing
technologies. In January 2015, we began construction of a new
production facility in Martinsville, Virginia and this is on track
for production to commence towards the end of 2015. Two senior
employees have now been recruited to manage the plant and will
undergo training in the UK for several months in advance of its
opening.
Alongside the expansion of capacity, we continue to diversify
our customer base, both in terms of end user markets and geography.
Sales increased across the UK, Europe and North America. In North
America sales rose by 139% against the same period last year, with
volumes benefitting from our major supply agreement with GE. This
agreement, signed in February 2014, was extended by a further year
to three years in March 2015. As previously reported, under the
current terms, minimum total sales of c.$2.0million are guaranteed
over its three year term to February 2017 and the contract may be
extended up to five years. We continue to develop our newer
territories of Germany and Italy and have invested further in sales
and marketing. Customer trials there are progressing well.
Our research and development programme is supporting our
expansion into new markets, including civil aerospace, plastics
processing and injection moulding. As we have previously reported,
an important objective is to build our currently-modest position in
the aerospace sector and to this end we have recruited a
specialised Business Development Manager. Our progress towards the
global aerospace Nadcap accreditation continues and we expect to
apply for final certification under this scheme before the end of
2015.
Our coating qualification programme with Airbus is also
advancing well. Document preparation, approval and signature by
numerous individuals is a necessary although very time--consuming
part of this process. However, with an Airbus Industries Process
Specification (AIPS) now issued for a 'CVD-deposited tungsten
carbide coating', the programme is moving at a faster pace.
Development with AgustaWestland continues, although progress has
slipped due to delays in receiving test parts.
We continue to invest in raising market awareness of our
coatings technology and are implementing a comprehensive programme
including industry editorial, direct e-marketing, technical
presentations and selective exhibiting.
Board Appointment
At the beginning of March we were pleased to appoint Jan Ward to
the Board as a non-executive director. She is the founder and chief
executive of Corrotherm International, a supplier of specialist
metals for critical applications in the energy and aerospace
sectors and brings extensive relevant experience. Her understanding
of the high-technology engineering sector and connections in our
key markets further strengthens the Board. We thank William
Zakroff, whom Jan replaces, for his valuable contribution to
Hardide as non-executive director over many years.
Summary and Outlook
Hardide made very encouraging progress in the first half and has
had a good start to the second half of the year. While the dramatic
fall in the oil price had no marked impact on demand from our major
oil and gas service company customers in the first seven months of
the year, the Board takes a cautious view on likely demand in the
remaining months given reduced global oil and gas exploration and
drilling spending and the limited forward visibility from these
customers. In all other markets and areas of the oil and gas
industry, demand remains encouraging.
The Company's balance sheet is strong with a cash balance of
GBP3.25m. Despite the likely adverse effects on trading in H2 from
the low oil price, the Board expects further good progress to be
made on technical, customer and market developments during the
second half of the year.
Robert Goddard
Chairman
21 May 2015
Consolidated Statement of Comprehensive Income
For the period ended 31 March 2015
GBP 000 6 months 6 months Year to
to to
31 March 31 March 30 September
2015 2014 2014
(unaudited) (unaudited) (audited)
Revenue 1,777 1,311 3,030
Cost of Sales (564) (433) (944)
Gross profit 1,213 878 2,086
----------------------------- ------------- ------------- --------------
Administrative expenses (1,210) (1,011) (1,964)
Depreciation (78) (59) (121)
Exceptional items:
Impairment of fixed
assets - - 72
Provision for onerous
lease - - 103
Operating (loss)/
profit (75) (192) 176
----------------------------- ------------- ------------- --------------
Finance income 8 4 9
Finance costs (1) (48) (75)
Loss on ordinary activities
before tax (68) (236) 110
----------------------------- ------------- ------------- --------------
Tax (1) - 51
Loss on ordinary activities
after tax (69) (236) 161
----------------------------- ------------- ------------- --------------
Consolidated Statement of Changes in Equity
For the period ended 31 March 2015
GBP 000 6 months 6 months Year to
to to
31 March 31 March 30 September
2015 2014 (unaudited) 2014
(unaudited) (audited)
Total equity at start
of period 3,956 617 617
----------------------- ------------- ------------------- --------------
Profit / (loss) for
the period (69) (236) 161
Issue of new shares - 199 3,157
Exchange differences
on translation of
foreign operation (16) 8 (4)
Share options 15 13 25
Total equity at end
of period 3,886 601 3,956
----------------------- ------------- ------------------- --------------
Consolidated Statement of Financial Position
As at 31 March 2015
GBP 000 31 March 31 March 30 September
2015 2014 2014
(unaudited) (unaudited) (audited)
Assets
Non-current assets
Investments - - -
Goodwill 69 69 69
Intangible assets 4 2 5
Property, plant &
equipment 684 290 383
----------------------------- ------------- ------------- -------------
Total non-current
assets 757 361 457
----------------------------- ------------- ------------- -------------
Current assets
Inventories 67 32 50
Trade and other receivables 588 474 571
Other current financial
assets 98 96 199
Cash and cash equivalents 3,254 944 3,467
----------------------------- ------------- ------------- -------------
Total current assets 4,007 1,546 4,287
----------------------------- ------------- ------------- -------------
Total assets 4,764 1,907 4,744
----------------------------- ------------- ------------- -------------
Liabilities
Current liabilities
Trade and other payables 536 386 463
Financial liabilities 16 504 16
Provision for lease
obligation 144 84 132
----------------------------- ------------- ------------- -------------
Total current liabilities 696 974 611
----------------------------- ------------- ------------- -------------
Net current assets 3,311 572 3,676
----------------------------- ------------- ------------- -------------
Non-current liabilities
Financial liabilities 29 50 37
Provision for lease
obligation 153 282 140
----------------------------- ------------- ------------- -------------
Total non-current
liabilities 182 332 177
----------------------------- ------------- ------------- -------------
Total liabilities 878 1,306 788
----------------------------- ------------- ------------- -------------
Net assets 3,886 601 3,956
----------------------------- ------------- ------------- -------------
Equity attributable
to equity holders
of the parent
Share capital 3,041 2,777 3,041
Share premium 8,935 6,240 8,934
Retained earnings (7,576) (8,077) (7,507)
Share-based payment
reserve 142 288 127
Translation reserve (656) (627) (639)
----------------------------- ------------- ------------- -------------
Total equity 3,886 601 3,956
----------------------------- ------------- ------------- -------------
Consolidated Statement of Cash Flows
For the period ended 31 March 2015
GBP 000 6 months 6 months Year to
to to
31 March 31 March 30 September
2015 2014 2014
(unaudited) (unaudited) (audited)
Cash flows from operating
activities
Operating profit /
(loss) (75) (192) 176
Impairment of intangibles 1 0 1
Depreciation 77 59 120
Impairment of fixed
assets - - (72)
Share option charge 14 13 25
(Increase) / decrease
in inventories (17) 9 (9)
(Increase) / decrease
in receivables 28 (28) (175)
Increase / (decrease)
in payables 73 104 180
Increase / (decrease)
in provisions - - (104)
Cash generated from
operations 101 (35) 142
------------------------------- ------------- ------------- --------------
Finance income 8 4 9
Finance costs (1) (27) (51)
Tax received / (paid) 53 42 42
Net cash generated
from operating activities 161 (16) 142
------------------------------- ------------- ------------- --------------
Cash flows from investing
activities
Purchase of property,
plant, equipment (366) (104) (189)
Net cash used in investing
activities (366) (104) (189)
------------------------------- ------------- ------------- --------------
Cash flows from financing
activities
Net proceeds from
issue of ordinary
share capital - 200 3,158
Loans repaid - (232) (734)
Finance lease inception - 65 65
Finance lease repayment (8) (6) (12)
Net cash used in financing
activities (8) 27 2,477
------------------------------- ------------- ------------- --------------
Net increase / (decrease)
in cash and cash equivalents (213) (93) 2,430
------------------------------- ------------- ------------- --------------
Cash and cash equivalents
at the beginning of
the period 3,467 1,037 1,037
------------------------------- ------------- ------------- --------------
Cash and cash equivalents
at the end of the
period 3,254 944 3,467
------------------------------- ------------- ------------- --------------
This information is provided by RNS
The company news service from the London Stock Exchange
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