Trading Update

RNS Number : 1377T

Hardide PLC

16 July 2020

 

16 July 2020

Hardide plc

("Hardide" or "the Group" or "the Company")

Trading Update

Hardide plc (AIM: HDD), the developer and provider of advanced surface coating technology, provides the following update on trading for the year ending 30 September 2020.

Previously, the Company announced record revenues for its first half to 31 March 2020 and minimal disruption to the Company's sales pipeline and order book in the first few months of the COVID-19 lockdown. More recently, the Company has started to see the risk, as indicated, of a slowing in the previously-robust customer demand, and order book delays come through. This lower level of demand is expected to remain throughout the rest of this financial year, and it is reasonable to expect this trend to continue into the beginning of the next financial year. The Company expects to report revenue for the current financial year of not less than £4.7 million. The Company has, as previously indicated, taken prudent measures to manage its cost base so that adjusted EBITDA loss is expected to be in the region of £0.5 million (on an IFRS 16 basis).

The Company's order book has been particularly impacted by the delay to a large order from a major oil well operator who, due to international travel restrictions, has rescheduled the development of a major project to 2021 and therefore their planned order from Hardide. This has been compounded by a marked slowing in orders from the Company's customers elsewhere in the oil and gas sector together with other similar, albeit smaller, order delays.

Despite the recent delay in customer demand, it has been very encouraging to see the high number of new oil and gas applications that are in current evaluation and test programmes. This is indicative of new business potential in the coming months.

The work with Airbus and their Tier 1 supply chain continues to progress well, with further orders received for A380 components. Meanwhile, additional components for Airbus have been approved for production and further parts are currently in their testing phase. Work on components for the higher volume A330 and A320 aircraft is rapidly nearing a conclusion, with Airbus finalising drawings specifying Hardide's coating on these parts before their issue to the supply chain. Regular orders are also being received for the Lockheed Martin F35 Joint Strike Fighter components.

The Group's facilities in Bicester and Martinsville have continued to operate as normal throughout the pandemic. The move to the new premises in Bicester is on schedule and on budget, with three reactors and all other processing equipment now fully operational. The aerospace-approved reactor is now the only one left in operation at Wedgwood Road. Commissioning of the new large reactor will take place once the manufacturer's engineers are able to travel from Europe, which we hope will be in the coming months. Airbus' approval of the new reactors and the new site's processes is expected to be complete by early 2021, as planned.

Management has taken actions to preserve cash and core capability in the business, without undermining strategic and operational progress. Because of the Board's strategy to maintain a substantial cash buffer to cover an unexpected downturn in market conditions, the Company has sufficient cash reserves for the medium to long term based on the current sales projections. As at 30 June 2020, the Company had £3.4m of cash and cash equivalents out of which there are future capital commitments of approximately £0.7m associated with the relocation and capital investment projects.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

Enquiries:
Hardide plc Robert Goddard, Non-Executive Chairman Philip Kirkham, CEO Jackie Robinson, Communications Manager	Tel: [phone]
IFC Advisory Graham Herring / Tim Metcalfe / Florence Chandler	Tel: [phone]
finnCap - Nominated Adviser and Joint Broker Henrik Persson / Matthew Radley (corporate finance) Richard Chambers (ECM) Allenby Capital- Joint Broker Jeremy Porter / Tony Quirke	Tel: [phone]  Tel: [phone]

Notes to editors:

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.

www.hardide.com

 

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