TIDMHDD
RNS Number : 2386A
Hardide PLC
06 June 2016
6 June 2016
Hardide plc
("Hardide" or "the Group" or "the Company")
Interim Results
for the six months ended 31 March 2016
Key Points
Financial
-- Revenue of GBP0.95m (H1 2015: GBP1.78m) affected by downturn
in oil & gas exploration as expected
-- Gross profit of GBP0.25m (H1 2015: GBP1.21m)
-- Group operating loss of GBP0.63m, after accounting for
revaluation and provision and including US start-up costs (H1 2015:
loss of GBP0.08m)
-- EBITDA loss of GBP0.72m (H1 2015: profit GBP3,000)
-- Cash at bank at 31 March 2016 of GBP1.00m
Business/Operational
-- North America investment project completed on budget and on time
- new facility in Virginia operational - customer site-approval trials ongoing
-- Growing sales in advanced engineering and aerospace
- revenue rose by 122% from H1 2015
- GBP300,000 order to coat components for new airport high-speed
X-ray baggage screening machine announced in December 2015
- encouraging progress with coating for diamond trials for major OEMs
-- Aerospace test programmes advancing, new opportunities being developed
- Airbus formal technical approval received and first coated
aircraft components awaiting life testing by Airbus
- promising new applications in development from customers in USA, UK & Europe
-- Cost reduction plan in place to mitigate impact of oil and gas downturn
-- Given uncertainty about timing of recovery of oil and gas
activity, the Board remains cautious about near term outlook, but
believes H2 revenues will be higher than those in H1. Encouraging
progress continues with our diversification strategy and
longer-term prospects remain good
Commenting on the interim results, Robert Goddard, Chairman of
Hardide plc, said:
"Advanced engineering and aerospace sector revenues more than
doubled during the half year and Group order intake showed a 44%
rise from the prior six months. However, we are in the midst of the
longest and most severe global downturn in our core market of oil
and gas and this has led to Group revenues falling 46% from the
same period last year. In response, the Company has acted quickly
and decisively to reduce its cost and expense base while retaining
its ability to react quickly when demand from the oil and gas
market recovers. However, for the foreseeable future the Company
has to operate in these challenging market conditions and continues
to grow its business outside oil and gas. With this in mind the
Board is considering potential funding options for the business as
a precautionary measure. Nonetheless the Board is encouraged by the
progress being made in the potentially high-value advanced
engineering and aerospace sectors and is confident about the
longer-term outlook 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
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
The continuing low oil price is a significant headwind for our
major oil and gas customers and our interim results for the six
months to 31 March 2016 reflect the impact that this has had on the
Company's business. Good progress continues in other sectors and
sales to advanced engineering and aerospace customers rose 122%
from H1 2015. Order intake in the half was 44% higher than H2 2015,
though down 32% from H1 2015. In response to the challenging market
conditions, the Company has acted swiftly to reduce its cost and
expense base while retaining the ability to respond quickly when
oil and gas activity returns.
Financial Results
The Group is reporting H1 2016 revenue of GBP0.95m, a decrease
of GBP0.83m compared with the same period last year (H1 2015
GBP1.78m). Group gross profit was GBP0.25m, compared with GBP1.21m
in H1 2015. As expected, the combination of opening of the US
facility, the fixed nature of production salaries and the mix of
product through the UK facility, led to a 23% or GBP0.13m increase
in the cost of sales, despite the fall back in revenue. The value
of plant and machinery remaining at our Houston facility, dormant
since March 2009, had been written down to zero in the accounts of
previous financial years; upon its installation in Virginia, it was
revalued back to its net book value at March 2009. This resulted in
a revaluation in the profit and loss account of GBP0.23m. With
effect from 4 December 2015, the lease on the Houston facility was
terminated and allowed the release of the remaining onerous lease
provision of GBP0.02m. Together with the planned Virginia spend,
investment in sales and marketing and UK facility improvements,
this resulted in a Group operating loss of GBP0.63m (H1 2015: loss
of GBP0.08m). The Group made a loss before interest, tax,
depreciation and amortisation ("EBITDA") of GBP0.72m (H1 2015:
profit GBP3,000). The cash balance at 31 March 2016 was GBP1.00m
(31 March 2015: GBP2.33m). Capex spend in the 12 month period to 31
March 2016 was GBP1.23m in addition to US revenue costs of GBP0.27m
(net of grants).
Operational Overview
The Group has made good progress in several areas in H1 2015.
The first high volume aircraft components have been coated for life
testing by Airbus and development work is underway on several other
volume Airbus A320 parts. Opportunities are also being developed
with other US, UK and European aerospace manufacturers with
part-specific technical developments on-going. Coated components
are with AgustaWestland for testing, which awaits the allocation of
time on a highly specialised test rig. Testing of critical
components in the aerospace industry is, by necessity, very
stringent and time consuming and requires specialist facilities.
Our work on Nadcap is substantially complete and the application
for this aerospace accreditation is planned for this summer.
The new production facility in Virginia is operational and
supporting a small production team that is processing parts to
secure site-approval from certain US customers. Production for
those customers will be transferred from the UK in phases following
the completion of site-approvals. US capital expenditure and
revenue costs relating to the start-up of the new site are now
substantially complete, with no further significant spend planned.
Also in the US, the patent for coating industrial diamonds has now
been granted.
We continue to diversify our customer base and orders from
advanced engineering and aerospace customers rose by 122% from H1
2015. In December 2015, the Company announced an order worth more
than GBP300,000 to cover an initial eight month period to supply
crucial coated components for a new type of airport high-speed
X-ray baggage screening machine. We expect demand to increase
further as production of the new machine ramps up.
Success in securing sales of coating for new components normally
results from extensive joint development work with customers and
their applications and so there tends to be a lengthy period before
full commercialisation of new applications. However, several
important opportunities are now close to completion and we are
continuing to work with existing and potential customers on many
new and exciting developments that should be the source of further
growth in the medium- to long-term.
Even within the currently depressed oil and gas market, new
opportunities continue to emerge in this sector for the Hardide
technology. Following successful testing, the Company secured its
first large production order to coat components for fracking tools
during the period, with a further large order received post-period.
In addition we have recently been certified by a major global
player on critical subsea flow control components, and are now
receiving orders. The coating has also entered development and test
in a range of new applications for several oil and gas service and
operating companies internationally.
Summary and Outlook
We are in the midst of the longest and most severe global
downturn ever experienced in our core market of oil and gas. Timing
of the recovery is uncertain and will be determined by
macro-economic and political factors. However, from forward orders
we already have on-hand we believe that H2 revenues will be higher
than those in H1. The Board takes a cautious view of when demand is
likely to return from this sector and accepts that the Company has
to operate in these challenging market conditions for the immediate
future. With this in mind the Board is considering potential
funding options for the business as a precautionary measure.
Nonetheless the Board is encouraged by the progress being made in
the potentially high value advanced engineering and aerospace
sectors and is confident about the longer-term outlook for the
business.
Robert Goddard
Chairman
6 June 2016
Consolidated Statement of Comprehensive Income
For the period ended 31 March 2016
GBP 000 6 months 6 months Year to
to to
31 March 31 March 30 September
2016 2015 2015
(unaudited) (unaudited) (audited)
Revenue 949 1,777 3,003
Cost of Sales (695) (564) (1,198)
Gross profit 254 1,213 1,805
----------------------------- ------------- ------------- --------------
Administrative expenses (971) (1,210) (2,130)
Depreciation (165) (78) (161)
Exceptional items:
Revaluation of fixed 232 - -
assets
Release of onerous
lease provision 23 - 269
Operating (loss)/
profit (627) (75) (217)
----------------------------- ------------- ------------- --------------
Finance income 4 8 12
Finance costs (1) (1) (2)
Loss on ordinary activities
before tax (624) (68) (207)
----------------------------- ------------- ------------- --------------
Tax - (1) 91
Loss on ordinary activities
after tax (624) (69) (116)
----------------------------- ------------- ------------- --------------
Consolidated Statement of Changes in Equity
For the period ended 31 March 2016
GBP 000 6 months 6 months Year to
to to
31 March 31 March 30 September
2016 2015 (unaudited) 2015
(unaudited) (audited)
Total equity at start
of period 3,859 3,956 3,956
----------------------- ------------- ------------------- --------------
Profit / (loss) for
the period (624) (69) (116)
Issue of new shares - - 1
Exchange differences
on translation of
foreign operation 88 (16) (9)
Share options 8 15 27
Total equity at end
of period 3,331 3,886 3,859
----------------------- ------------- ------------------- --------------
Consolidated Statement of Financial Position
As at 31 March 2016
GBP 000 31 March 31 March 30 September
2016 2015 2015
(unaudited) (unaudited) (audited)
Assets
Non-current assets
Investments - - -
Goodwill 69 69 69
Intangible assets 2 4 3
Property, plant &
equipment 1,939 684 1,262
----------------------------- ------------- ------------- -------------
Total non-current
assets 2,010 757 1,334
----------------------------- ------------- ------------- -------------
Current assets
Inventories 104 67 59
Trade and other receivables 422 588 469
Other current financial
assets 146 98 271
Cash and cash equivalents 1,006 3,254 2,327
----------------------------- ------------- ------------- -------------
Total current assets 1,678 4,007 3,126
----------------------------- ------------- ------------- -------------
Total assets 3,688 4,764 4,460
----------------------------- ------------- ------------- -------------
Liabilities
Current liabilities
Trade and other payables 328 536 544
Financial liabilities 17 16 16
Provision for lease
obligation - 144 21
----------------------------- ------------- ------------- -------------
Total current liabilities 345 696 581
----------------------------- ------------- ------------- -------------
Net current assets 1,333 3,311 2,545
----------------------------- ------------- ------------- -------------
Non-current liabilities
Financial liabilities 12 29 20
Provision for lease - 153 -
obligation
----------------------------- ------------- ------------- -------------
Total non-current
liabilities 12 182 20
----------------------------- ------------- ------------- -------------
Total liabilities 357 878 601
----------------------------- ------------- ------------- -------------
Net assets 3,331 3,886 3,859
----------------------------- ------------- ------------- -------------
Equity attributable
to equity holders
of the parent
Share capital 3,041 3,041 3,041
Share premium 8,935 8,935 8,935
Retained earnings (8,247) (7,576) (7,623)
Share-based payment
reserve 162 142 154
Translation reserve (560) (656) (648)
----------------------------- ------------- ------------- -------------
Total equity 3,331 3,886 3,859
----------------------------- ------------- ------------- -------------
Consolidated Statement of Cash Flows
For the period ended 31 March 2016
GBP 000 6 months 6 months Year to
to to
31 March 31 March 30 September
2016 2015 2015
(unaudited) (unaudited) (audited)
Cash flows from operating
activities
Operating profit /
(loss) (627) (75) (217)
Impairment of intangibles 1 1 1
Depreciation 164 77 160
Revaluation of fixed (232) - -
assets
Share option charge 8 14 27
(Increase) / decrease
in inventories (45) (17) (9)
(Increase) / decrease
in receivables 96 28 67
Increase / (decrease)
in payables (216) 73 81
Increase / (decrease)
in provisions (23) - (269)
Cash generated from
operations (874) 101 (159)
------------------------------- ------------- ------------- --------------
Finance income 4 8 12
Finance costs (1) (1) (2)
Tax received / (paid) 64 53 53
Net cash generated
from operating activities (807) 161 (96)
------------------------------- ------------- ------------- --------------
Cash flows from investing
activities
Purchase of property,
plant, equipment (506) (366) (1,029)
Net cash used in investing
activities (506) (366) (1,029)
------------------------------- ------------- ------------- --------------
Cash flows from financing
activities
Net proceeds from
issue of ordinary
share capital - - 1
Loans repaid - - -
Finance lease inception - - -
Finance lease repayment (8) (8) (16)
Net cash used in financing
activities (8) (8) (15)
------------------------------- ------------- ------------- --------------
Net increase / (decrease)
in cash and cash equivalents (1,321) (213) (1,140)
------------------------------- ------------- ------------- --------------
Cash and cash equivalents
at the beginning of
the period 2,327 3,467 3,467
------------------------------- ------------- ------------- --------------
Cash and cash equivalents
at the end of the
period 1,006 3,254 2,327
------------------------------- ------------- ------------- --------------
IMPORTANT NOTICES
No statement in this announcement is intended to be a profit
forecast or estimate and no statement in this announcement should
be interpreted to mean that earnings per share of the Company for
the current or future financial years would necessarily match or
exceed the historical published earnings per share of the
Company.
This announcement may include statements that are, or may be
deemed to be, "forward-looking statements". These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms "believes", "estimates", "plans",
"projects", "anticipates", "expects", "intends", "may", "will", or
"should" or, in each case, their negative or other variations or
comparable terminology. These forward-looking statements include
matters that are not historical facts. They appear in a number of
places throughout this announcement and include statements
regarding the Directors' current intentions, beliefs or
expectations concerning, among other things, the Company's results
of operations, financial condition, liquidity, prospects, growth,
strategies and the Company's markets. By their nature,
forward-looking statements involve risk and uncertainty because
they relate to future events and circumstances. Actual results and
developments could differ materially from those expressed or
implied by the forward-looking statements. Forward-looking
statements may and often do differ materially from actual results.
Any forward-looking statements in this announcement are based on
certain factors and assumptions, including the Directors' current
view with respect to future events and are subject to risks
relating to future events and other risks, uncertainties and
assumptions relating to the Company's operations, results of
operations, growth strategy and liquidity. Whilst the Directors
consider these assumptions to be reasonable based upon information
currently available, they may prove to be incorrect. Save as
required by law or by the AIM Rules for Companies, the Company
undertakes no obligation to release publicly the results of any
revisions to any forward-looking statements in this announcement
that may occur due to any change in the Directors' expectations or
to reflect events or circumstances after the date of this
announcement.
finnCap Ltd ("finnCap") which is authorised and regulated in the
United Kingdom by the Financial Conduct Authority, is acting for
the Company and no one else in connection with the Placing and will
not regard any other person (whether or not a recipient of this
announcement) as a client in relation to the Placing and will not
be responsible to anyone other than the Company for providing the
protections afforded to its clients or for providing advice in
relation to the Placing or any matters referred to in this
announcement.
Apart from the responsibilities and liabilities, if any, which
may be imposed on finnCap by the Financial Services and Markets Act
2000 or the regulatory regime established thereunder, finnCap does
not accept any responsibility whatsoever for the contents of this
announcement, and makes no representation or warranty, express or
implied, for the contents of this announcement, including its
accuracy, completeness or verification, or for any other statement
made or purported to be made by it, or on its behalf, in connection
with the Company or the Placing Shares or the Placing, and nothing
in this announcement is or shall be relied upon as, a promise or
representation in this respect whether as to the past or future.
finnCap accordingly disclaims to the fullest extent permitted by
law all and any liability whether arising in tort, contract or
otherwise (save as referred to above) which it might otherwise have
in respect of this announcement or any such statement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BLGDLBSGBGLX
(END) Dow Jones Newswires
June 06, 2016 02:00 ET (06:00 GMT)
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