Interim Results

RNS Number : 1952I

Hardide PLC

28 May 2014

 



28 May 2014

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 2014.

As stated by the Company in its Trading Update on 30 April 2014, H1 2013 benefitted from strong sales to a major oil and gas customer but subsequently as a result of a significant inventory reduction exercise by this customer, results in the second half of 2013 were adversely affected. Therefore, comparison of H1 2014 results with those of H1 2013 is a less helpful indicator of progress than comparison with H2 2013 and we have therefore compared these latest results with both H1 and H2 2013 periods.

Overview

·   Turnover increased by 20% to £1.31m from H2 2013: £1.10m (H1 2013: £1.26m)

·   Gross profit increased by 27% to £0.88m from H2 2013: £0.69m (H1 2013: £0.86m)

·   Group operating loss of £0.19m against loss before exceptional items of £0.29m in H2 2013 (H1 2013: loss of £0.05m)  

·   Major supply contract with the General Electric Company guaranteeing a minimum turnover of c. $1.3million (£0.77m) over the two years to February 2016 

·   The number of customer accounts has increased by 32% from 38 to 50 since September 2013 

·   Further diversification of the customer base

·   First orders were received from Italy and Germany, and from the UK subsea ROV (remotely operated vehicle) sector 

·   Aerospace test programmes with Airbus and AgustaWestland continue to progress well.

·   Cash at bank at 31 March 2014 of £0.94m

Commenting on the interim results, Robert Goddard, Chairman of Hardide plc, said:

"The first half of the year progressed well with several notable 'firsts' resulting from the investment in business development and marketing. Further diversification of the customer base is pleasing, with the number of accounts rising by 32% and the first orders secured from Italy and Germany, and in the UK subsea ROV market. 

"The inventory reduction by one major customer that particularly affected the second half of last year has been completed and demand is returning to more typical levels. We are greatly encouraged by the progress of strategic developments, including the supply agreement with GE and the continued technical testing by Airbus and AgustaWestland.  Our trading continues to improve and we are confident about a healthy outlook for the year."

- Ends -

For further information:

Hardide plc
Philip Kirkham, CEO Jackie Robinson, Communications Manager	Tel: [phone] www.hardide.com
finnCap Stuart Andrews / Grant Bergman	Tel: [phone]      www.finncap.com
Newgate Threadneedle Graham Herring / Heather Armstrong	Tel: [phone] www.newgatethreadneedle.com

Notes to editors:

Hardide develops, manufactures and applies nano-structured 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 STATEMENT

The Board is pleased to report that the Company has made good progress on many fronts. There has been a return to normal order levels from the customer that undertook a substantial stock reduction exercise during H2 2013, together with stable revenues from other existing customers and some notable new business.

The Group is reporting H1 2014 revenue of £1.31m, an increase of 20% compared with H2 2013 (£1.10m) and up 4% against the same period last year (H1 2013: £1.26m).  Group gross profit was £0.88m, an increase of 27% from £0.69m in H2 2013 and 3% from H1 2013 (£0.86m).  After the deliberate increase in expenditure on business development and technical staffing, the Group made an operating loss of £0.19m.  This compares with an underlying loss (excluding impairments and provisions) of £0.29m in H2 2013 (H1 2013: operating loss of £0.05m).

Sales across our sectors of oil & gas, aerospace and advanced engineering rose significantly from H2 2013 and also relative to H1 2013.  The number of active accounts continued its upward trend, rising from 38 to 50 over the period.  These include orders from customers in Italy and Germany which are new geographies for the Group, as well as the first order from the subsea ROV (remotely operated vehicle) sector for the coating of a critical part of the thruster system for ROVs. The customer for this application reported "greatly improved performance" and a "vast improvement" in wear resistance. After many years of development, the first volume orders were received for parts for a new type of airport 3D X-ray baggage scanning machine, and that has now gone into production with a global manufacturer in this sector.

Broadening the customer base remains a key strategic goal and with the increase in business development resources in 2013, the Company is now engaged with new companies on laboratory testing and field trials for a wide range of pre-qualified applications.  For example, trials are underway in Germany at a major flow control company and for plastic extrusion tooling applications.  In North America our increased resource and efforts are also having good results.  Field trials are in progress in the Middle East and the USA on a critical component for a down-hole telemetry tool.  Sales of the coating for TSP diamonds for oil and gas industry tools continued to rise and development work is underway on variances of this product.  An international patent was filed for the coating of TSP diamonds.

The aerospace testing programmes with Airbus and AgustaWestland continue to progress well. In January 2014, the Company started developing its systems to standards that will comply with the aerospace industry's Nadcap accreditation.

In March 2014, we entered into a major supply contract with the General Electric Company that has a guaranteed minimum turnover of c. $1.3million over the two years to February 2016.  This has not contributed to the H1 2014 results but will do so in H2 2014.  Trials are progressing with GE on other applications.

The Company is very pleased with an order that has been secured post-period for a fracking tool application from a major global oilfield services company.  This is significant due to the stature of the customer and the potential with it for this and other applications.  Also it is the first production order for a fracking tool component.  More than 500 Hardide-coated components are now being deployed in a down-hole tool in one field in the USA and which may lead to further sales for the Company in the future.

Looking forward, an increase in UK plant capacity is being planned and detailed discussions and planning are underway regarding a resumption of production in the USA.

Overall, Company performance is good, our trading continues to improve and the Board is positive about the outlook for the full year.

Robert Goddard

Chairman

28 May 2014

Consolidated Statement of Comprehensive Income

For the period ended 31 March 2014

£ 000	6 months to 31 March 2014 (unaudited)	Year to 30 September 2013 (audited)	6 months to 30 September 2013 (unaudited)	6 months to 31 March 2013 (unaudited)
Revenue	1,311	2,359	1,095	1,264
Cost of Sales	(433)	(815)	(406)	(409)
Gross Profit	878	1,544	689	855
Administrative Expenses	(1,011)	(1,769)	(925)	(844)
Depreciation	(59)	(110)	(53)	(57)
Exceptional Items:
Impairment of fixed assets	-	(90)	(90)	-
Provision for onerous lease	-	(376)	(376)	-
Operating (Loss)	(192)	(801)	(755)	(46)
Finance Income	4	2	1	1
Finance Costs	(48)	(103)	(46)	(57)
Loss on ordinary activities before tax	(236)	(902)	(800)	(102)
Tax	-	54	54	-
Loss on ordinary activities after tax	(236)	(848)	(746)	(102)

Consolidated Statement of Changes in Equity

For the period ended 31 March 2014

£ 000	6 months to 31 March 2014 (unaudited)	Year to 30 September 2013 (audited)	6 months to 30 September 2013 (unaudited)	6 months to 31 March 2013 (unaudited)
Total Equity at start of period	617	1,123	1,355	1,123
Loss for the period	(236)	(848)	(746)	(102)
Issue of new shares	199	304	-	304
Exchange differences on translation of foreign operation	8	3	(7)	10
Share options	13	35	15	20
Total Equity at end of period	601	617	617	1,355

Consolidated Statement of Financial Position

As at 31 March 2014

£ 000		31 March 2014  (unaudited)	30 September 2013 (audited)	31 March 2013 (unaudited)
Assets
Non-current assets
Investments		-	-	-
Goodwill		69	69	69
Intangible assets		2	2	2
Property, plant & equipment		290	245	374
Total non-current assets		361	316	445
Current assets
Inventories		32	41	35
Trade and other receivables		474	434	363
Other current financial assets		96	154	89
Cash and cash equivalents		944	1,037	1,389
Total current assets		1,546	1,666	1,876
Total assets		1,907	1,982	2,321
Liabilities
Current liabilities
Trade and other payables		386	282	276
Financial liabilities		504	702	-
Provision for lease obligation		84	86	-
Total current liabilities		974	1,070	276
Net current assets		572	596	1,600
Non-current liabilities
Financial liabilities		50	5	690
Provision for lease obligation		282	290	-
Total non-current liabilities		332	295	690
Total liabilities		1,306	1,365	966
Net assets		601	617	1,355
Equity attributable to equity holders of the parent
Share capital		2,777	2,733	2,733
Share premium		6,240	6,085	6,085
Retained earnings		(8,077)	(7,841)	(7,095)
Share-based payment reserve		288	275	260
Translation reserve		(627)	(635)	(628)
Total equity		601	617	1,355

Consolidated Statement of Cash Flows

For the period ended 31 March 2014 

£ 000	6 months to 31 March 2014 (unaudited)	Year to 30 September 2013 (audited)	6 months to 30 September 2013 (unaudited)	6 months to 31 March 2013 (unaudited)
Cash flows from operating activities
Operating loss	(192)	(801)	(755)	(46)
Impairment of intangibles	0	0	0	0
Depreciation	59	110	53	57
Impairment of fixed assets	-	90	90	-
Share option charge	13	35	15	20
(Increase) / decrease in inventories	9	(8)	(6)	(2)
(Increase) / decrease in receivables	(28)	114	(81)	195
Increase / (decrease) in payables	104	(198)	6	(204)
Increase in provisions	-	376	376	-
Cash generated from operations	(35)	(282)	(302)	20
Finance income	4	2	1	1
Finance costs	(27)	(61)	(30)	(31)
Tax received / (paid)	42	-	-	-
Net cash generated from operating activities	(16)	(341)	(331)	(10)
Cash flows from investing activities
Purchase of property, plant, equipment	(104)	(69)	(21)	(48)
Net cash used in investing activities	(104)	(69)	(21)	(48)
Cash flows from financing activities
Net proceeds from issue of ordinary share capital	200	304	-	304
Loans repaid	(232)	(262)	-	(262)
Finance lease inception	65	-	-	-
Finance lease repayment	(6)	-	-	-
Net cash used in financing activities	27	42	-	42
Net increase / (decrease) in cash and cash equivalents	(93)	(368)	(352)	(16)
Cash and cash equivalents at the beginning of the period	1,037	1,405	1,389	1,405
Cash and cash equivalents at the end of the period	944	1,037	1,037	1,389

 

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