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Hardide PLC (HDD)

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Tuesday 21 June, 2011

Hardide PLC

Half Yearly Report

RNS Number : 7704I
Hardide PLC
21 June 2011
 

 

 

Press Release

21 June 2011

 

Hardide plc

 

("Hardide" or "the Group")

 

Interim Results

 

Hardide plc (AIM: HDD), the provider of unique surface engineering technology, announces its interim results for the six months ended 31 March 2011.

 

Overview

·  

Turnover increased by 13% to £793,000 (H1 2010: £702,000)

·  

Gross profit increased by 10% to £449,000 (H1 2010: £410,000)

·  

Cash outflow reduced by 33% to £221,000 (H1 2010: £328,000)

·  

Group EBITDA loss increased by 16% to £235,000 (H1 2010: £203,000) mainly because of investment in business development to accelerate growth

·  

Revenue from non-oil and gas sectors increased by 96% from H1 2010

·  

Bruce Robinson appointed as non-executive director.  Bruce brings extensive experience of the oil and gas industry and young technology businesses

·  

UK projects manager and US business development manager recruited to accelerate diversification and growth

 

Post-Period Events

·  

$3.65 million seven-year exclusivity deal announced with US blue chip manufacturer of high-pressure fluid handling equipment

·  

Group EBITDA profitable in May 2011

 

Commenting on the interim results, Graham Hine, chief executive of Hardide plc, said: "The Group has delivered improved revenue and gross profit on H1 2010.  Over the last six months we have had success in diversifying our customer base and as a result our dependency on one major customer has reduced by almost a quarter and sales to non-oil and gas sectors have nearly doubled. 

 

"Through our investment in business development, we have increased penetration in our core sectors of oil and gas, and flow control and are building a stronger short term sales pipeline.  Our outlook for the remainder of the year is positive as we see upward trends across our key markets and growing sales to current and new customers.  The Group is now accelerating growth towards profitability," added Dr Hine.

 

- Ends -

 

For further information:

Hardide plc


Graham Hine, Chief Executive

Tel: +44 (0) 1869 353 830

Jackie Robinson, Corporate Communications

www.hardide.com

 

Seymour Pierce Limited


Guy Peters

Tel: +44 (0) 20 7107 8000


www.seymourpierce.com

 

 

Notes to editors:

Hardide manufactures and applies tungsten carbide-based coatings to a wide range of engineering components.  The Group's patented technology provides a unique combination of ultra-hardness, toughness, low friction and chemical resistance in one coating.  When applied to components, the technology is proven to offer dramatic cost savings through reduced downtime and extended part life.  Customers include leading companies operating in oil and gas exploration and production, flow control, general engineering and aerospace.

 



CHAIRMAN'S STATEMENT

 

Revenue for the six months to 31 March 2011 was £793,000, 13% higher than in the same period last year (H1 2010 £702,000).  Group gross profit was £449,000, a rise of 10% from £410,000 in H1 2010. Cost of sales increased by 18% to £344,000 reflecting a one-off increase in gas costs as the company entered a new long-term supply agreement. In spite of this, production margins remained robust.  Our investment in much needed business development staff was the main reason for a 12% rise in administrative expenses to £684,000 from £613,000 in H1 2010.  Similarly, Group EBITDA loss increased by 13% to £235,000 from £203,000 in H1 2010. 

 

A non-cash movement of the value of the intercompany loan between Hardide plc and Hardide Coatings Inc caused by exchange rate movements meant that the operating loss increased from £14,000 to £380,000. Similarly the loss before tax increased from £67,000 to £432,000.  Without this impact, operating loss would have been £296,000 (H1 2010 loss of £273,000) and loss before tax would have been £348,000 (H1 2010 loss of £326,000).  

 

A drop in demand from a major customer caused a fall back from the revenue level that was reported in H2 2010.  However, the board is confident that aggregate sales to this customer are secure for the foreseeable future, and they have already shown recovery in H2 2011.  Customer diversification remains a key strategic goal and we achieved an almost four-fold increase in sales to other oil and gas customers in H1 2011.  On the matter of revenue volatility overall, I am pleased to report that we have made significant progress in another of our strategic goals and have increased revenue from non-oil and gas sectors by 96% in the first half of the year.  This has been achieved through new customer gains and increased sales to other existing customers. 

 

Work continues apace with customer partners in major longer term projects including aerospace, coating for diamonds and industrial turbine blades and these projects remain an important part of building shareholder value.  Significant progress was made in our development programmes, especially in aerospace where excellent results were recorded from some particularly demanding tests, and we expect major aerospace approvals in 2012.

 

In February 2011, the board welcomed Bruce Robinson as a new non-executive director.  The Group has already benefited from his understanding of the oil and gas industry, where he has helped us to identify more and more accurately the areas where the Hardide coating will add the greatest value.

 

As we progress through the year, we are seeing some steadiness return to our main markets and opportunities within new sectors are looking favourable.  The diversification strategy is ongoing and the board is optimistic that the second half of the year will see significantly increased demand and good prospects for further improvement.  Indeed, total sales for the three months ending 31 May 2011 were nearly 60% higher than for the previous three months.

 

Robert Goddard

Chairman

21 June 2011

 



 

CHIEF EXECUTIVE OFFICER'S REVIEW

 

The Group has delivered improved revenue and gross profit on the same period last year.  Following two years of successful cost reduction, we have created a streamlined and efficient business and are now carefully investing in business development to accelerate growth towards profitability.

 

The investment in business development and project management personnel is opening doors for us in sectors and geographies that previously we have not had the resources to address.  It is also enabling us to hasten short term development projects from within our existing market specialisms such as oil and gas exploration and severe-service flow control.

 

We are successfully diversifying our customer base and over the last two years have built a strong sales pipeline intended to create significantly improved performance.  Controlled diversification into new applications for existing customers and into new markets has been a key focus for the management team.  One of our successes in H1 2011 has been the swift progress that has been made with a development for an extrusion device for abrasive polymer mixes, where sales have already been made for coating the prototype parts.  We are optimistic about future revenue from this and similar applications.

 

Revenue from the flow control sector has increased.  This is due to a combination of new business and increased demand from existing customers.  A renewed focus on this sector has converted an encouraging level of new valve and pump business, with several trials underway with new valve customers.

 

The engagement of a well-connected business development representative in the US has enabled us to build relationships with prospective blue chip customers in Houston.  As a result, we expect to see increased revenues from the US during the year. 

 

We reviewed, valued and re-oriented our pipeline in the first half of the year and now believe that we have a healthy mix of short and long term development projects that are aligned to the resources that we have available now and can make available as revenues grow.  All of our long term test programmes including aerospace and coating for diamonds have continued to progress and we are focusing on those projects with greater potential to generate revenue in the shorter term. 

 

Our outlook for the remainder of the year is positive as we see upward trends across our key markets and growing sales to current and new customers.  The Group is now accelerating growth towards profitability.

 

Graham Hine

Chief Executive Officer

21 June 2011

 



 

Consolidated income statement

for the period ended 31 March 2011













6 Months to


6 Months to


Year to



31 March 2011


31 March 2010


30 Sept 2010



(unaudited)


(unaudited)


(audited)



£ '000


£ '000


£ '000








Revenue


793


702


1,735

Cost of Sales


(344)


(292)


(649)








Gross Profit


449


410


1,086








Administrative expenses


(684)


(613)


(1,293)

Depreciation


(61)


(70)


(136)

Exchange difference on intercompany loan


(84)


259


66

Exceptional item: Impairment of fixed assets


-


-


(126)








Operating profit / (loss)


(380)


(14)


(403)








Finance income


-


2


2

Finance costs


(52)


(55)


(106)

Loss on disposal of fixed assets


-


-


-








Profit on ordinary activities before tax


(432)


(67)


(507)








Tax


-


-


33








Profit for the period


(432)


(67)


(474)








 

Consolidated statement of recognised income and expense for the period ended 31 March 2011




 










6 months to


6 months to


Year to



31 March 2011 (unaudited)


31 March 2010 (unaudited)


30 Sept 2010 (audited)



£ '000


£ '000


£ '000








Profit for the period


(432)


(67)


(474)








Exchange differences on translation of foreign operations


318


(832)


(45)








Total recognised income and expense for the year


(114)


(899)


(519)

 



 

Consolidated balance sheet at 31 March 2011














31 March 2011 (unaudited)


31 March 2010 (unaudited)


30 Sept 2010 (audited)



£ '000


£ '000


£ '000

Assets














Non-current assets







Investments







Goodwill


69


69


69

Intangible assets


-


1


-

Property, plant & equipment


520


747


569

Total non-current assets


589


817


638








Current assets







Inventories


24


24


26

Trade and other receivables


305


285


337

Other current financial assets


47


77


62

Cash and cash equivalents


315


604


536

Total current assets


691


990


961








Total assets


1,280


1,807


1,599








Liabilities














Current liabilities







Trade and other payables


264


292


258

Financial liabilities


26


90


55

Provisions


-


-


-

Total current liabilities


290


382


313








Net current assets


401


608


648








Non-current liabilities







Financial liabilities


851


732


801

Total non-current liabilities


851


732


801








Total liabilities


1,141


1,114


1,114








Net assets


139


693


485








Equity







Share capital


2,541


2,541


2,541

Share premium


5,259


5,259


5,259

Retained earnings


(7,069)


(6,549)


(6,955)

Share-based payments reserve


272


275


269

Translation reserve


(864)


(833)


(629)

Total equity


139


693


485

 



 

Consolidated condensed cash flow statement for the period ended 31 March 2011








6 months to


6 months to


Year to




31 March 2011 (unaudited)


31 March 2010 (unaudited)


30 Sept 2010 (audited)




£ '000


£ '000


£ '000

Cash flows from operating activities








Operating loss


(380)


(14)


(403)


Impairment of intangibles


-


1


2


Depreciation


61


68


134


Impairment of fixed assets


-


-


126


Share option charge


4


1


2


(increase) / decrease in inventories


2


2


-


(increase) / decrease in receivables


47


(87)


(89)


Increase / (decrease) in payables


6


31


(1)


Exchange rate variance


84


(259)


(66)

Cash generated from operations


(176)


(257)


(295)










Finance income


-


2


2


Finance costs


(3)


(8)


(10)


Tax received / (paid)


-


-


39









Net cash generated from operating activities


(179)


(263)


(264)









Cash flows from investing activities








Purchase of property, plant and equipment


(13)


(7)


(25)









Net cash used in investing activities


(13)


(7)


(25)









Cash flows from financing activities








Net proceeds from issue of ordinary share capital


-


-


-


Finance lease inception


-


-


-


Finance lease repayment


(29)


(58)


(107)


New loans raised


-


-


-









Net cash used in financing activities


(29)


(58)


(107)









Net increase / (decrease) in cash and cash equivalents


(221)


(328)


(396)









Cash and cash equivalents at the beginning of the period


536


932


932









Cash and cash equivalents at the end of the period


315


604


536

 


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