Half Yearly Report

RNS Number : 9808E

Hardide PLC

11 June 2012

 



Press Release

11 June 2012

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 2012.

Overview

·	Turnover increased by 94% to £1.54m (H1 2011: £793,000)
·	Gross profit increased by 149% to £1.12m (H1 2011: £449,000)
·	Group records maiden interim profit of £201,000 (H1 2011: £432,000 loss)
·	Group EBITDA of £308,000 (H1 2011: £235,000 loss)
·	Positive operating cash flow
·	Revenue from flow control sector, excluding one dominant customer, increased by 77% compared to H1 2011; revenue including dominant customer increased by 100% compared to H1 2011
·	Revenue from aerospace and advanced engineering sectors increased by 66%
·	Strong pipeline growth: an increase in the number of parts in customer test compared to H1 2011 and steady progress on all strategic development projects with customer partners
·	Fundraising of £750,000 gross in November 2011 from a placing with new and existing shareholders
·	Cash at bank at 31 March 2012 of £1.07 million

 

Commenting on the interim results, Robert Goddard, executive chairman of Hardide plc, said: "I am very pleased to report an excellent start to the year as evidenced by record first half revenue of £1.54m and a maiden profit for the Group of £201,000.  This has been driven by increased demand, underpinned by strong technical and operational effectiveness.

"While we have achieved excellent growth in the first half of the year, we are aware that there has been an element of stock building by certain key customers.  We therefore need to be cautious in basing our full year expectations on a repetition of the first six months.  Nonetheless, we do expect the full year results to show good growth over last year."

- Ends -

For further information:

Hardide plc
Robert Goddard, Executive Chairman	Tel: [phone]
Jackie Robinson, Communications Manager	[e-mail] www.hardide.com

	N+1 Brewin (Nomad & Broker)
	Andrew Craig/Ben Wright		Tel: [phone] www.nplus1brewin.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

I am pleased to report that in the six months to 31 March 2012, the Group recorded revenue of £1.54m, a 94% increase from the same period last year (H1 2011: £793,000).  Furthermore, the Group achieved a maiden profit of £201,000 (H1 2011 loss of £432,000).

Group gross profit was £1.12m, a rise of 149% from £449,000 in H1 2011. Cost of sales increased by only 23% to £422,000 reflecting that more than 50% of the cost of sales are relatively fixed production staff salaries with only the balance being truly variable.  Operating profit was £257,000 compared to a loss of £380,000 in H1 2011; last year's result included an adverse exchange rate variance of £84,000 which is now treated as a movement in reserves.  Despite a significant increase in working capital, the Group generated cash from operating activities in the first half. The Group achieved an EBITDA positive position of £308,000 compared to a loss of £235,000 in H1 2011.

Sales were strong in the oil and gas sector, but still weighted too much towards a small number of major customers.  The Group continues to focus on diversifying the customer base and some progress has been made; flow control revenue increased by 77% and aerospace and advanced engineering by 66% on the same period last year.  However, a relatively small number of customers continue to dominate and so, broadening the customer base remains a key strategic goal.

In November 2011, the Group raised £750,000 gross from the issue of 125,000,000 new ordinary shares of 0.1p each at 0.6p per share in a placing from existing and new investors.  Now, with sufficient cash on the balance sheet from the placing, together with profitable trading, we are able to increase our marketing efforts.  This will include market investigation and awareness raising, as well as widening the range of specialised test results often looked for by customers.

Since early 2011, we have regularly calculated the risk and time-adjusted value of our pipeline of applications.  Since then we have seen a considerable increase in this measure; although customers continue to take longer in testing than they initially indicate.  We have also seen a strong rise in the number of application projects in the pipeline, with specific parts in customer test, in comparison to H1 2011. 

Strategic projects with customer partners in industrial tooling, aerospace, coating for diamonds and industrial turbine blades continue to make steady progress and represent good long term prospects.  In addition, we have begun the coating and testing of parts for a Tier One supplier to an aircraft manufacturer as well as for several other turbine blade and aircraft engine applications.

Since August 2011, the Group has been managed on an interim basis through two part-time roles; myself as executive chairman and Bruce Robinson as chief operating officer.  A search firm has been appointed to recruit a group managing director and we expect to make an appointment in the near future.  This process has taken longer than anticipated but is not out of the ordinary and the board is united in its view that it is vital to secure the right candidate to lead Hardide.

The board is pleased and encouraged with performance in the first half of 2012 and expect that the full year results will show good growth over FY 2011.

Robert Goddard

Chairman

11 June 2012

Consolidated income statement for the period ended 31 March 2012
		6 Months to		6 Months to		Year to
		31 March 2012		31 March 2011		30 Sept 2011
		(unaudited)		(unaudited)		(audited)
		£ '000		£ '000		£ '000
Revenue		1,539		793		1,947
Cost of Sales		(422)		(344)		(733)
Gross Profit		1,117		449		1,214
Administrative expenses		(809)		(684)		(1,439)
Depreciation		(51)		(61)		(115)
Exchange difference on intercompany loan				(84)		-
Exceptional item: Impairment of fixed assets				-		-
Operating profit / (loss)		257		(380)		(340)
Finance income		1		-		-
Finance costs		(57)		(52)		(106)
Loss on disposal of fixed assets		-		-
Profit / (loss) on ordinary activities before tax		201		(432)		(446)
Tax		-		-		65
Profit / (loss) for the period		201		(432)		(381)

Consolidated statement of recognised income and expense for the period ended 31 March 2012
		6 months to			6 months to				Year to
		31 March 2012 (unaudited)			31 March 2011 (unaudited)				30 Sept 2011 (audited)
		£ '000			£ '000				£ '000
Profit / (loss) for the period		201			(432)				(381)
Exchange differences on translation of foreign operations		(9)			318				(3)
Cancellation of share options previously charged to profit		-			-				26
Total recognised income and expense for the year		192			(114)				(358)

Consolidated balance sheet at 31 March 2012
		31 March 2012 (unaudited)		31 March 2011 (unaudited)		30 Sept 2011 (audited)
		£ '000		£ '000		£ '000
Assets
Non-current assets
Investments		-		-		-
Goodwill		69		69		69
Intangible assets		-		-		-
Property, plant & equipment		459		520		478
Total non-current assets		528		589		547
Current assets
Inventories		25		24		24
Trade and other receivables		606		305		406
Other current financial assets		80		47		102
Cash and cash equivalents		1,072		315		292
Total current assets		1,783		691		824
Total assets		2,311		1,280		1,371
Liabilities
Current liabilities
Trade and other payables		387		264		370
Financial liabilities		-		26		-
Provisions		-		-		-
Total current liabilities		387		290		370
Net current assets		1,396		401		454
Non-current liabilities
Financial liabilities		912		851		895
Total non-current liabilities		912		851		895
Total liabilities		1,299		1,141		1,265
Net assets		1,012		139		106
Equity
Share capital		2,666		2,541		2,541
Share premium		5,848		5,259		5,259
Retained earnings		(7,109)		(7,069)		(7,310)
Share-based payments reserve		248		272		248
Translation reserve		(641)		(864)		(632)
Total equity		1,012		139		106

Consolidated condensed cash flow statement for the period ended 31 March 2012
			6 months to		6 months to			Year to
			31 March 2012 (unaudited)		31 March 2011 (unaudited)			30 Sept 2011 (audited)
			£ '000		£ '000			£ '000
Cash flows from operating activities
	Operating profit / (loss)		258		(380)			(340)
	Impairment of intangibles		-		-			-
	Depreciation		51		61			115
	Impairment of fixed assets		-		-			-
	Share option charge		0		4			5
	(increase) / decrease in inventories		(1)		2			2
	(increase) / decrease in receivables		(178)		47			(109)
	Increase / (decrease) in payables		16		6			112
	Exchange rate variance		-		84			-
Cash generated from operations			146		(176)			(215)
	Finance income		1		-			-
	Finance costs		(43)		(3)			(10)
	Tax received / (paid)		-		-			48
Net cash generated from operating activities			104		(179)			(177)
Cash flows from investing activities
	Purchase of property, plant and equipment		(38)		(13)			(21)
Net cash used in investing activities			(38)		(13)			(21)
Cash flows from financing activities
	Net proceeds from issue of ordinary share capital		714		-			-
	Finance lease inception		-		-			-
	Finance lease repayment		-		(29)			(46)
	New loans raised		-		-			-
Net cash used in financing activities			714		(29)			(46)
Net increase / (decrease) in cash and cash equivalents			780		(221)			(244)
Cash and cash equivalents at the beginning of the period			292		536			292
Cash and cash equivalents at the end of the period			1,072		315			536

 

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