TIDMHDD
RNS Number : 1854F
Hardide PLC
16 May 2017
16 May 2017
Hardide plc
("Hardide" or "the Group" or "the Company")
Interim Results
for the six months ended 31 March 2017
Hardide (AIM: HDD), the developer and provider of advanced
surface coating technology, today announces its results for the
six-month period ended 31 March 2017.
Financial Highlights
-- Revenue of GBP1.51m (H1 2016: GBP0.95m), increase of 59% from H1 2016 and 27% from H2 2016
-- Gross profit of GBP0.69m (H1 2016: GBP0.25m)
-- Group operating loss of GBP0.69m (H1 2016: GBP0.63m loss,
which included a GBP0.23m reversal of impairment and grant income
of GBP0.14m). On a like-for-like basis, Group operating loss of
GBP0.72m (H1 2016: GBP1.02m loss excluding reversal of impairment,
release of provision and effect of grants)
-- EBITDA loss (gross profit less administrative expenses) of
GBP0.43m (H1 2016: loss of GBP0.72m)
-- Cash at bank at 31 March 2017 of GBP1.56m
Operational Highlights
-- Demand returning from oil and gas sector
- sales from this sector rose 115% compared with H1 2016 and 38% compared with H2 2016
- testing completed successfully and commercial discussions
underway with major oil service company in North America for
onshore drilling components
-- Approved Supplier status with the Airbus Group gained
- detailed commercial and technical discussions progressing with
Airbus and other equipment manufacturers about coating specific
aircraft parts
-- Increase in sales to aerospace and precision engineering
- additional new parts approved for the BAE Systems Typhoon aircraft
- test plan for new transmission components with Leonardo
Helicopters is progressing well. The original testing programme for
other safety-critical main rotor components awaits the availability
of the customer's highly-specialised test rig
-- US facility in Virginia fully operational and producing
regular production parts for blue-chip North American customers
Post Period
-- Further order of $100k received from the General Electric
Company Inc ("GE") for the same components as were supplied under
the three-year Strategic Supply Agreement which expired at end of
February 2017
-- First production order from new, major oilfield service
company for coating of a family of subsea flow-control
components
-- Royal Mail approval for coating of a component for letter sorting machines
Commenting on the interim results, Robert Goddard, Chairman of
Hardide plc, said:
"We are pleased to see that there is significant evidence of
improvement in demand for the Hardide product in a still
challenging and volatile oil and gas market. At the same time, the
Group has made good progress in its diversification and growth
strategy with the award of Approved Supplier status from Airbus and
encouraging developments with customers in the aerospace and
precision engineering sectors. Overall, with the early signs of
recovery in the oil and gas market, particularly in North American
onshore drilling, and the expectation of new aerospace business in
the near future, the Board's outlook is positive. The Board expects
the trading performance for the full financial year to be in line
with market expectations."
- Ends -
For further information:
Hardide plc Tel: +44 (0) 1869
Philip Kirkham, CEO 353 830
Jackie Robinson, Communications Manager
finnCap
Stuart Andrews /Henrik Persson/James Tel: +44 (0)20
Thompson 7220 0500
IFC Advisory
Graham Herring/Heather Armstrong Tel: +44 (0)20
3053 8761
Notes to editors:
www.hardide.com
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 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, power generation, precision engineering and
aerospace industries.
CHAIRMAN'S STATEMENT
Chairman's Statement
Introduction
The six-months to 31 March 2017 has been a period of steady
progress for Hardide as we continue to operate in a market that has
seen significant difficulties over the last few years. This has
translated into total revenues for the period 59% ahead of the
first half of 2016 and 27% ahead of the second half.
Sales to our oil and gas customers in H1 increased by 115%
compared with the first half of 2016 and this supports the
generally-accepted belief that the bottom of the oil and gas
industry downturn has been reached. We are very pleased to have
seen this reflected in increasing levels of activity among our
customers and demand for Hardide-coated downhole components. Whilst
we have limited visibility as to whether this trend will continue,
we are optimistic about our growth potential in this area.
The period saw the achievement of 'Approved Supplier' status to
the Airbus Group and this is a significant stage in Hardide's
diversification strategy. As a result, the Company is now involved
in commercial and technical discussions with Airbus about coating
components, predominantly used in the wing structure and landing
gear for A320, A330, A380 and A400M aircraft; as well as with a
number of Tier 1 equipment manufacturers and Maintenance, Repair
and Overhaul (MRO) organisations.
We are seeing the use of our technology predominantly on parts
critical to flight safety. This means that comprehensive proving
tests are undertaken by Airbus on each component family before the
coating of production parts commences. A number of such tests are
well underway and the pace of progress to the production order
stage may be slow in some cases but, once the part is in
production, orders for it can continue for the life of the
aircraft. Since securing our approved supplier status with Airbus,
we have seen significant interest from several other international
aerospace component manufacturers and for a diverse range of
components.
Financial Results
The Group is reporting H1 2017 revenue of GBP1.51m, an increase
of 59% compared with the same period last year (H1 2016 GBP0.95m)
with Group gross profit of GBP0.69m, compared with GBP0.25m in H1
2016. Overheads of GBP1.11m (H1 2016 GBP0.97m) are being well
controlled and include a significantly reduced credit from grant
income of GBP36k compared with GBP141k in H1 2016.
There was a Group operating loss of GBP0.69m (H1 2016: loss of
GBP0.63m, which included GBP0.26m of exceptional credits in the US
and GBP0.14m of grant income). On a like-for-like basis, excluding
grants and exceptional items, the Group operating loss of GBP0.72m
compares with a loss of GBP1.02m in the same period last year.
The Group made a loss before interest, tax, depreciation and
amortisation ("EBITDA") of GBP0.43m (H1 2016: loss GBP0.72m).
Operational Overview
The Group delivered increased revenue in H1 2017, with sales to
oil and gas, precision engineering and aerospace customers
increasing compared with both H1 2016 and H2 2016. Sales to
customers in the flow control sector that are related to the oil
and gas market tend to lag increases in drilling activity, and so
sector sales overall were broadly in line with H1 2016. We are
pleased to report an improvement in market sentiment among oil and
gas customers and demand is returning for Hardide coated product
both from existing customers and for development and testing of new
applications. This is illustrated by the successful use in the
field by a North American customer of key, high-volume components
in their onshore drilling and completion tools. Commercial
discussions are currently underway with this customer regarding
further production orders. As this market recovers, the Company is
optimistic about future volumes from this customer. Post period,
and after comprehensive trials, a major global oilfield service
company has certified the coating for a family of subsea flow
control components and production orders for these are now being
received.
Strong progress has been made in the precision engineering
sector, with sales increasing by 21% from H1 2016. Post period and
following successful trials, we received approval of the coating
from the Royal Mail for a new application on a letter sorting
machine which will be used across sorting offices. We are also in
trials with this customer for further applications.
Aerospace remains a key growth market for Hardide and tests are
progressing well with several aerospace component manufacturers in
the UK and Europe. BAE Systems, a long-term customer of Hardide,
continues to adopt our technology and has certified additional
parts that are currently being coated for the Typhoon aircraft. The
Nadcap audit is planned and we hope to gain this global aerospace
accreditation during H2 2017. Our relationship with Leonardo
Helicopters continues to strengthen. Coated safety-critical
components for a rotor mechanism are still awaiting availability of
Leonardo's highly--specialised test rig, while production trials
and life-testing of new, less-critical transmission system parts
are progressing well.
The US coatings facility in Virginia is regularly producing
product for customers in North America and is operating smoothly
and efficiently. A number of new product applications for North
American customers currently in development in our UK facility are
planned to be transferred to Virginia when they are
production-ready.
Summary and Outlook
While the Group continues to operate in a challenging and
volatile oil and gas sector, there is strong evidence of gradual
improvement in market conditions and demand for Hardide coating. At
the same time, the Group has made significant progress in its
diversification and growth strategy with the award of Approved
Supplier status from the Airbus Group and encouraging developments
with other customers in the aerospace and precision engineering
sectors. With promising signs of recovery in the oil and gas
market, particularly in the North American onshore sector where the
rig count is now 116% greater than a year ago, the Board's outlook
remains positive and we expect the trading performance for the full
financial year to be in line with market expectations.
Robert Goddard
Chairman
16 May 2017
Consolidated Statement of Comprehensive Income
For the period ended 31 March 2017
GBP 000 6 months 6 months Year to
to to
31 March 31 March 30 September
2017 2016 2016
(unaudited) (unaudited) (audited)
Revenue 1,511 949 2,142
Cost of Sales (826) (695) (1,457)
Gross profit 685 254 685
----------------------------- ------------- ------------- --------------
Administrative expenses (1,110) (971) (1,989)
Depreciation (262) (165) (418)
Exceptional items:
Reversal of fixed
asset impairment - 232 232
Release of onerous
lease provision - 23 23
Operating (loss)/
profit (687) (627) (1,467)
----------------------------- ------------- ------------- --------------
Finance income 3 4 6
Finance costs (0) (1) (1)
Loss on ordinary activities
before tax (684) (624) (1,462)
----------------------------- ------------- ------------- --------------
Tax - - 121
Loss on ordinary activities
after tax (684) (624) (1,341)
----------------------------- ------------- ------------- --------------
Consolidated Statement of Changes in Equity
For the period ended 31 March 2017
GBP 000 6 months 6 months Year to
to to
31 March 31 March 30 September
2017 2016 (unaudited) 2016
(unaudited) (audited)
Total equity at start
of period 4,377 3,859 3,859
----------------------- ------------- ------------------- --------------
Profit / (loss) for
the period (684) (624) (1,341)
Issue of new shares - - 1,571
Exchange differences
on translation of
foreign operation 65 88 260
Share options 27 8 28
Total equity at end
of period 3,785 3,331 4,377
----------------------- ------------- ------------------- --------------
Consolidated Statement of Financial Position
As at 31 March 2017
GBP 000 31 March 31 March 30 September
2017 2016 2016
(unaudited) (unaudited) (audited)
Assets
Non-current assets
Investments - - -
Goodwill 69 69 69
Intangible assets 1 2 1
Property, plant &
equipment 1,775 1,939 1,872
Total non-current
assets 1,845 2,010 1,942
----------------------------- ------------- ------------- -------------
Current assets
Inventories 154 104 60
Trade and other receivables 517 422 566
Other current financial
assets 162 146 270
Cash and cash equivalents 1,563 1,006 1,967
Total current assets 2,396 1,678 2,863
----------------------------- ------------- ------------- -------------
Total assets 4,241 3,688 4,805
----------------------------- ------------- ------------- -------------
Liabilities
Current liabilities
Trade and other payables 444 328 408
Financial liabilities 12 17 17
Total current liabilities 456 345 425
----------------------------- ------------- ------------- -------------
Net current assets 1,940 1,333 2,438
----------------------------- ------------- ------------- -------------
Non-current liabilities
Financial liabilities - 12 3
Total non-current
liabilities - 12 3
----------------------------- ------------- ------------- -------------
Total liabilities 456 357 428
----------------------------- ------------- ------------- -------------
Net assets 3,785 3,331 4,377
----------------------------- ------------- ------------- -------------
Equity attributable
to equity holders
of the parent
Share capital 3,242 3,041 3,242
Share premium 10,305 8,935 10,305
Retained earnings (9,648) (8,247) (8,964)
Share-based payment
reserve 211 162 184
Translation reserve (325) (560) (390)
----------------------------- ------------- ------------- -------------
Total equity 3,785 3,331 4,377
----------------------------- ------------- ------------- -------------
Consolidated Statement of Cash Flows
For the period ended 31 March 2017
GBP 000 6 months 6 months Year to
to to
31 March 31 March 30 September
2017 2016 2016
(unaudited) (unaudited) (audited)
Cash flows from operating
activities
Operating profit /
(loss) (687) (627) (1,467)
Impairment of intangibles 1 1 2
Depreciation 261 164 416
Revaluation of fixed
assets - (232) (232)
Share option charge 27 8 28
(Increase) / decrease
in inventories (94) (45) 1
(Increase) / decrease
in receivables 76 96 (18)
Increase / (decrease)
in payables 36 (216) (160)
Increase / (decrease)
in provisions - (23) (23)
Exchange rate variance - 31
Cash generated from
operations (380) (874) (1,422)
------------------------------- ------------- ------------- --------------
Finance income 3 4 6
Finance costs (0) (1) (1)
Tax received / (paid) 82 64 64
Net cash generated
from operating activities (295) (807) (1,353)
------------------------------- ------------- ------------- --------------
Cash flows from investing
activities
Purchase of property,
plant, equipment (100) (506) (561)
Net cash used in investing
activities (100) (506) (561)
------------------------------- ------------- ------------- --------------
Cash flows from financing
activities
Net proceeds from
issue of ordinary
share capital - - 1,571
Loans repaid - - -
Finance lease inception - - -
Finance lease repayment (9) (8) (17)
Net cash used in financing
activities (9) (8) 1,554
------------------------------- ------------- ------------- --------------
Net increase / (decrease)
in cash and cash equivalents (404) (1,321) (360)
------------------------------- ------------- ------------- --------------
Cash and cash equivalents
at the beginning of
the period 1,967 2,327 2,327
------------------------------- ------------- ------------- --------------
Cash and cash equivalents
at the end of the
period 1,563 1,006 1,967
------------------------------- ------------- ------------- --------------
This information is provided by RNS
The company news service from the London Stock Exchange
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