TIDMHDD
RNS Number : 2600N
Hardide PLC
19 May 2020
The information communicated in this announcement is inside
information for the purposes of Article 7 of Regulation
596/2014.
19 May 2020
Hardide plc
("Hardide", the "Group" or the "Company")
Interim Results
for the six months ended 31 March 2020
Hardide (AIM: HDD), the developer and provider of advanced
surface coating technology, today announces its results for the
six-month period ended 31 March 2020 ("H1 2020").
Highlights
Financial
-- Record revenue for a half-year - up by 29% to GBP3.02m (H1 2019: GBP2.35m)
-- Gross profit of GBP1.66m - up by 58% (H1 2019: GBP1.05m)
-- Increased gross margin of 55% (H1 2019: 45%) as a result of a stronger product mix
-- EBITDA of GBP0.03m* (after IFRS 16 and relocation costs the
like-for-like H1 2019 would have been a loss of GBP0.37m)
-- Over-subscribed fundraising of GBP2.50m (before expenses) to
fund additional equipment, enhance new UK site and strengthen the
balance sheet
-- Cash at bank at 31 March 2020 of GBP4.88m (GBP5.35m at 31 March 2019)
-- Sole material borrowing is the maiden asset finance agreement
with Hitachi Capital over GBP0.40m against a new coating
reactor
* Application of IFRS 16 has led to operating lease charges
previously recognised within operating profit to now be partially
recognised in interest costs, leading to an increase in EBITDA of
approximately GBP0.14m. For reference, before IFRS 16 adjustments,
EBITDA would have been a loss of GBP0.11m in H1 2020, compared with
a loss of GBP0.44m in H1 2019.
Operational
-- Relocation to the new UK site is on track for completion by
end-September 2020; aerospace work will continue to be processed at
the Wedgwood Road site until the new facility is fully approved by
Airbus
-- Encouraging progress continues to be made with Airbus and a
supply agreement has been reached with one of their major Tier 1
suppliers
-- Two projects grant-funded by the National Aerospace
Technology Exploitation Programme (NATEP) were completed
successfully
-- International filing of UK patent for turbine blades has commenced
Post-period
-- First production order received for Airbus A380 wing compression pads
-- Honoured with a Queen's Award for Enterprise in recognition
of the outstanding growth in international sales
-- No significant reduction in demand seen so far as a result of
COVID-19. Encouraging dialogue is being maintained with customers
regarding projected demand
-- Both UK and US sites continue to coat product as normal and
are following government safety directives
-- Discretionary spending is under regular review and actions
are being taken to maximise future cash balances
-- New Finance Director, Simon Hallam, appointed on 20 April 2020
Commenting on the interim results, Robert Goddard, Chairman of
Hardide plc, said:
"The Group is pleased to report another record for sales revenue
for a half year. The phased relocation of our UK business to a
larger, modern and high-spec facility is on time and budget.
Meanwhile, our UK and US sites are operating effectively and
continue to coat product during the COVID-19 pandemic.
"So far, trading in H2 2020 has started well and has not, to
date, been significantly disrupted by the effects of COVID-19.
There are grounds for cautious optimism, but in the current
context, the Board must be mindful of the potential for order book
disruption in the second half. The Group has a robust cash position
and measures are being put in place to preserve cash, which
positions us well in these uncertain times.
"The safety and well-being of our staff remain the Group's main
priority. The Board continues to observe and implement government
safety directives that apply to its businesses in the UK and the
US. These are unprecedented times and the Board wishes to thank our
employees for their commitment, flexibility and resolve during this
challenging period."
Enquiries:
Hardide plc Tel: +44 (0) 1869 353
Robert Goddard, Non-Executive Chairman 830
Philip Kirkham, CEO
Jackie Robinson, Communications Manager
IFC Advisory Tel: +44 (0) 20 3934
Graham Herring / Tim Metcalfe / Florence 6630
Chandler
finnCap - Nominated Adviser and Joint Broker Tel: +44 (0) 2072 200
Henrik Persson / Matthew Radley 500
Allenby Capital - Joint Broker Tel: +44 (0) 20 3328
Jeremy Porter/Tony Quirke 5656
Notes to editors:
www.hardide.com
Hardide develops, manufactures and applies advanced technology
tungsten carbide/tungsten metal matrix 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, precision engineering and
aerospace industries.
CHAIRMAN'S STATEMENT
Introduction
In H1 2020, the Group reported another record sales revenue for
a half year. Compared with H1 2019, sales to flow control customers
increased by 49%, and to oil and gas by 30%. Demand from most of
our oil and gas customers is currently not significantly affected
by the COVID-19 situation. Discussions between the Company, Airbus
and its Tier 1 suppliers on converting components from hard chrome
plating to our Hardide-A coating continue, and after the period
end, the Company was very pleased to receive its first production
order for Airbus A380 wing compression pads.
Relocation of the UK facility to the new larger site nearby is
on track, with internal fit-out work having been completed in March
2020. The plan to complete the move by the end of September 2020
remains achievable. Some staff have already relocated to the new
site which has helped social distancing measures.
During H1 2020, the Group raised GBP2.50m (before expenses) in
an over-subscribed share placing. The proceeds are being used to
fund additional equipment, enhance the new site, improve
environmental performance and strengthen the balance sheet. In
addition, GBP0.40m in asset-backed finance was secured for a new
coating reactor in the UK.
Financial Results
The Group is reporting H1 2020 revenue of GBP3.02m, an increase
of 29% compared with the same period last year (H1 2019: GBP2.35m).
An increase in sales, together with a stronger product mix,
resulted in a 58% rise in Group gross profit to GBP1.66m (H1 2019:
GBP1.05m), together with the gross margin increasing to 55%,
compared with 45% in H1 2019.
EBITDA profit for the period was GBP0.03m. For comparison,
before the IFRS16 adjustment, EBITDA was a loss of GBP0.11m which
included GBP0.14m of costs relating to the new site (H1 2019:
GBP0.44m EBITDA loss). EBITDA, excluding costs associated with the
new site, has now been positive for the nine-month period from 1
July 2019 to 31 March 2020. In H1 2020, capital expenditure on the
site relocation amounted to GBP2.90m.
Overheads increased to GBP1.63m (H1 2019: GBP1.48m), primarily
due to recruitment and increased staff costs, building and
equipment expenses and an adverse exchange rate on the revaluation
and translation of cash balances.
During the period, we repaid the Virginia Tobacco Commission
grant of $116k and released the provision of $170k, resulting in an
exceptional credit of GBP42k to operating profit. The
Martinsville-Henry County Economic Development Corporation in
Virginia has converted the outstanding value of their loan, $182k,
to a grant, with the Company released from all obligations under
the loan agreement, with no further repayments due. This will be
written-off to the income statement in line with the remaining life
of the reactor installed at Martinsville in December 2018, for
which the loan was originally made.
Operational Overview
Revenue increased from flow control (valves and pumps) by 49%
and from oil and gas customers by 30%. Sales to a major global oil
and gas customer returned to previous levels after they resolved a
supply chain issue that caused delays to their supply of components
and adversely affected our revenues in H1 2019. The growth in oil
and gas revenues included a 210% increase in the sales of coated
industrial diamonds used primarily in drilling tools. Demand has
remained subdued from another major oil and gas customer that has
been affected by the restriction on pipeline capacity in Canada.
Sales to our major North American industrial pump manufacturer
customer increased substantially as we coated parts for their new
product ranges.
In March 2020, the first new coating reactor was delivered to
the new Longlands Road site in Bicester and has now been installed
and commissioned. The second and larger new coating reactor was
delivered in April 2020 and transfer of the existing reactors from
Wedgwood Road, Bicester will commence in May 2020. A programme of
work has been agreed with Airbus for their approval of reactors and
qualification of the new site by the end of calendar year 2020.
Aerospace work will continue to be processed at Wedgwood Road until
the new facility is fully approved. Additionally, another new
coating reactor has been delivered to the Martinsville facility in
the US, bringing the total there to four. This site continues to
operate well with sales increased by 133% in H1 2020 compared with
H1 2019.
Negotiations on a supply agreement with a major Airbus Tier 1
supplier have been completed and requests for pricing are now being
received from a number of their other UK and European Tier 1
suppliers for various other components. Airbus is currently
planning second-stage testing on further Hardide--coated components
for the A320 aircraft. The first, low volume production order for
Airbus A380 compression pads was received post-period. These are to
replace hard chrome parts on aircraft currently undergoing routine
maintenance.
Final approval by Leonardo Helicopters of Hardide-coated parts
of a transmission system has been delayed due to the unavailability
of the customer's test rig. Testing is expected to resume shortly.
Regular production parts are now being received for Lockheed
Martin's F-35 Joint Strike Fighter and further components are in
trials with other aerospace companies.
In the next stage of our long-term project for the development
of a coating to extend the life of steam turbine blades, EDF Energy
has supplied blades that will be coated at the new UK site once the
large processing line has been installed and commissioned. This is
expected to be during summer 2020.
The two NATEP projects carried out in collaboration with Airbus,
Leonardo Helicopters and other industry partners were completed
successfully. The first project demonstrated that our new ultra-low
temperature coating can be applied on certain temperature-sensitive
materials used in aircraft components without affecting their
properties. The second project defined the machining parameters for
the complex surface finish characteristics for these applications.
Importantly, the success of this programme has widened the range of
aerospace applications for Hardide's coating.
Following the success of a technically-challenging application
for a global oil and gas operator that has led to a high-volume
supply agreement, the Company has been investigating users of
similar components in areas other than oil and gas. We have
received samples from two new customers for coating and testing.
Since Hardide has the unique ability to coat components that are
critical to the performance of particular types of filtration
equipment, this application has exciting potential.
Summary and Outlook
The Group has announced record sales in the first half of the
financial year and our underlying business is strong. Our order
book going into the second half was strong and trading has started
well and has not been significantly affected so far by the
disruptive effects of COVID-19. That is pleasing in the current
context, but we are mindful of the risks and challenges faced in
the markets we serve, and are monitoring the situation closely.
The Group has a strong cash position following the recent
fundraise and asset finance agreement. The Board continues to plan
for a range of scenarios, including a likely worst-case assumption,
and this gives confidence that the Group will be able to withstand
the uncertain period ahead. Measures to protect the current cash
position are being put in place, including very limited use of the
UK employment furlough scheme and of the US Paycheck Protection
Program (which the Company does not expect will lead to a material
repayment). Discretionary spending cuts and cost savings are being
continually reviewed and implemented where appropriate.
In January 2020, Peter Davenport advised the Board that he
wanted to step down as Finance Director and pursue a new career in
education. The Board is very grateful to Peter for his dedication
and the role that he has played in the development of the Group
over the last 15 years. We are sad to see Peter leave, but we
welcome his successor Simon Hallam, who was appointed as Finance
Director on 20 April 2020. Peter has kindly consented to a suitable
handover period until 22 May 2020.
The safety and well-being of our staff remain the Group's key
priority. The Group is observing government guidelines and ensuring
compliance with those that apply to its businesses in the UK and
the US. The Board thanks our employees for their commitment,
flexibility, hard work and resolve during these unprecedented
times.
Robert Goddard
Chairman
19 May 2020
Consolidated Statement of Comprehensive Income
For the period ended 31 March 2020
GBP 000 6 months to 6 months to Year to
31 March 2020 31 March 2019 30 September
2019
(unaudited) (unaudited) (audited)
Revenue 3,022 2,346 5,052
Cost of Sales (1,366) (1,300) (2,635)
Gross profit 1,656 1,046 2,417
----------------------------- --------------- --------------- --------------
Administrative expenses (1,627) (1,482) (3,037)
Depreciation (377) (226) (481)
Provisions 42 - (101)
Operating (loss)/ profit (306) (662) (1,202)
----------------------------- --------------- --------------- --------------
Finance income 7 6 15
Finance costs (48) (1) (3)
Loss on ordinary activities
before tax (347) (657) (1,190)
----------------------------- --------------- --------------- --------------
Tax - - 54
Loss on ordinary activities
after tax (347) (657) (1,136)
----------------------------- --------------- --------------- --------------
Consolidated Statement of Changes in Equity
For the period ended 31 March 2020
GBP 000 6 months to 6 months to Year to
31 March 2020 31 March 2019 30 September
2019
(unaudited) (unaudited) (audited)
Total equity at start of
period 7,698 5,079 5,079
------------------------------------- --------------- --------------- --------------
Profit / (loss) for the period (347) (657) (1,136)
Issue of new shares 2,347 3,451 3,579
Exchange differences on translation
of foreign operation 17 6 113
Share options 25 40 63
Total equity at end of period 9,740 7,919 7,698
------------------------------------- --------------- --------------- --------------
Consolidated Statement of Financial Position
As at 31 March 2020
GBP 000 31 March 2020 31 March 2019 30 September
2019
(unaudited) (unaudited) (audited)
Assets
Non-current assets
Investments - - -
Goodwill 69 69 69
Intangible assets 31 24 30
Property, plant & equipment 5,857 2,122 2,745
Right of Use Assets 2,275 - -
Total non-current assets 8,232 2,215 2,844
------------------------------------ -------------- -------------- -------------
Current assets
Inventories 568 357 691
Trade and other receivables 874 773 1,003
Other current financial assets 419 198 277
Cash and cash equivalents 4,881 5,348 4,809
Total current assets 6,742 6,676 6,780
------------------------------------ -------------- -------------- -------------
Total assets 14,974 8,891 9,624
------------------------------------ -------------- -------------- -------------
Liabilities
Current liabilities
Trade and other payables 2,037 539 1,351
Financial liabilities - borrowings 102 37 50
Financial liabilities - leases 226 - -
Provision for grant repayment 121 246 260
Total current liabilities 2,486 822 1,661
------------------------------------ -------------- -------------- -------------
Net current assets 4,256 5,854 5,119
------------------------------------ -------------- -------------- -------------
Non-current liabilities
Financial liabilities - borrowings 494 150 164
Financial liabilities - leases 2,152 - -
Provision for onerous lease 102 - 101
Total non-current liabilities 2,748 150 265
------------------------------------ -------------- -------------- -------------
Total liabilities 5,234 972 1,926
------------------------------------ -------------- -------------- -------------
Net assets 9,740 7,919 7,698
------------------------------------ -------------- -------------- -------------
Equity attributable to equity
holders of the parent
Share capital 3,831 3,645 3,673
Share premium 18,176 15,887 15,987
Retained earnings (12,311) (11,583) (11,964)
Share-based payment reserve 299 348 274
Translation reserve (255) (378) (272)
------------------------------------ -------------- -------------- -------------
Total equity 9,740 7,919 7,698
------------------------------------ -------------- -------------- -------------
Consolidated Statement of Cash Flows
For the period ended 31 March 2020
GBP 000 6 months to 6 months to Year to
31 March 2020 31 March 2019 30 September
2019
(unaudited) (unaudited) (audited)
Cash flows from operating
activities
Operating profit / (loss) (306) (662) (1,202)
Impairment of intangibles 5 3 7
Depreciation 372 223 474
Share option charge 25 40 62
(Increase) / decrease in
inventories 123 (71) (392)
(Increase) / decrease in
receivables (89) 56 (266)
Increase / (decrease) in
payables 685 (797) 73
Increase / (decrease) in
provisions (42) - 116
Cash generated from operations 773 (1,208) (1,128)
-------------------------------------- --------------- --------------- --------------
Finance income 7 6 16
Finance costs (11) (1) (3)
Tax received / (paid) 76 -
Net cash generated from operating
activities 845 (1,203) (1,115)
-------------------------------------- --------------- --------------- --------------
Cash flows from investing
activities
Purchase of property, plant,
equipment (3,336) (321) (1,106)
Net cash used in investing
activities (3,336) (321) (1,106)
-------------------------------------- --------------- --------------- --------------
Cash flows from financing
activities
Net proceeds from issue of
ordinary share capital 2,347 3,451 3,578
Loans raised - 128 139
Loans repaid (19) (9) (27)
Grant repaid (94) - -
Finance lease inception 402 - -
Lease principal repayments (73) - -
Net cash used in financing
activities 2,563 3,570 3,690
-------------------------------------- --------------- --------------- --------------
Effect of exchange rate fluctuations - - 38
-------------------------------------- --------------- --------------- --------------
Net increase / (decrease)
in cash and cash equivalents 72 2,046 1,507
-------------------------------------- --------------- --------------- --------------
Cash and cash equivalents
at the beginning of the period 4,809 3,302 3,302
-------------------------------------- --------------- --------------- --------------
Cash and cash equivalents
at the end of the period 4,881 5,348 4,809
-------------------------------------- --------------- --------------- --------------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR BLGDULGBDGGI
(END) Dow Jones Newswires
May 19, 2020 02:00 ET (06:00 GMT)
Hardide (LSE:HDD)
Historical Stock Chart
Von Jun 2024 bis Jul 2024
Hardide (LSE:HDD)
Historical Stock Chart
Von Jul 2023 bis Jul 2024
