REG-Hardide PLC Interim Results
Released: 14/05/2007
RNS Number:4924W
Hardide PLC
14 May 2007
Press Release 14 May 2007
Hardide plc
("Hardide" or "the Company" 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 2007.
Operational Highlights
- Record turnover for Oil & Gas division in Q2 2007 with customer destocking
issue now resolved
- UK manufacturing plant strengthened with the introduction of a fourth
furnace and x-ray fluorescence equipment
- Operational management team strengthened with the appointment of Neill
Ricketts as MD for UK and European Operations
- AFILEX appointed as an agent for Hardide in France, Germany and the Benelux
countries
- Manufacturing facility in Houston, Texas is fully operational with four
significant new customers converted in the period
- UK subsidiary delivering positive operating cash flow totalling £210,000 in
H1 2007
Financial Highlights
- Turnover £1,105,000 (H1 2006: £1,063,000)
- Gross profit £525,000 (H1 2006: £653,000)
- Loss before tax £887,000 (H1 2006: loss £293,000) reflecting budgeted investment into
Houston manufacturing facility
Commenting on the results, Jim Murray-Smith, Chief Executive of Hardide plc,
said: "These interim results demonstrate the Group's continued progress. We
have addressed the customer destocking issues and are very encouraged by the
record turnover in our oil and gas division in Q2 2007.
"Hardide's facility in Houston, Texas is now fully operational. The four new
significant customers won in the period for our US facility reinforce my
confidence in our ability to deliver much increased turnover for Houston in the
second half of the year."
For further information:
Hardide plc
Jim Murray Smith, Chief Executive Tel: +44 (0) 1869 353 830
jmurray-smith@hardide.com www.hardide.com
Seymour Pierce
Sarah Wharry Tel: +44 (0) 20 7107 8000
Media enquiries:
Abchurch
Chris Lane / Hugo Jenkins Tel: +44 (0) 20 7398 7700
chris.lane@abchurch-group.com www.abchurch-group.com
Chief Executive's Report
These interim results reflect strong commercial growth and significant
investment in international expansion with associated capital expenditure in the
six months to 31 March 2007. The Group has continued to pursue a vigorous
strategy to maximise key technical and early mover strengths while successfully
capitalising on new opportunities and markets. Importantly, the Group has
maintained historic pricing levels.
Progress is back on track following the customer de-stocking issue which has
affected the Company's financial performance in the previous full calendar year
and has also impacted on Q1 2007. Sales with this customer have now surpassed
previous levels. Over the last six months, growth was achieved in each of the
Group's key sectors of oil and gas, valves, pumps and aerospace. Meanwhile, we
have continued to invest in set-up costs for the Houston facility and in capital
expenditure on technical equipment in the UK. These factors underline the
Company's commitment to building long term shareholder value through global
markets where we can solve the most challenging of customer problems.
The Company has achieved its strategic objectives set at the time of the
flotation and surpassed many. From the outset, the Company has sought blue chip
and market leading customers. This goal has been firmly met as customers now
include eight of the largest global oil and gas service companies.
Unfortunately, non-disclosure agreements prevent us naming the majority of
customers, although we were able to announce the Expro Group as our first new US
customer in February 2007. This was an application that took 18 months to
engineer and test; not an untypical time-frame to convert a new application in
such a buoyant, time-poor sector.
UK
I am pleased to report that Hardide Coatings Limited has been cash positive in
H1 2007. The fourth furnace in Bicester became operational in the last six
months and we invested in x-ray fluorescence equipment to ensure that we remain
at the forefront of technical expertise and customer service.
The operational management team was strengthened in March with the appointment
of Neill Ricketts as MD for UK and European Operations. Neill brings 18 years
of operations, production and surface engineering experience, and has already
initiated a process optimisation programme to maximise plant efficiency. In
March, we also appointed AFILEX France as our agent in France, Germany and the
Benelux countries.
To ensure a continual pool of technical expertise, we established skills
pipelines with two recognised centres of excellence in our field, Salford
University and the University of Besacon in France. We have recruited graduates
directly from both universities and are active in the tailoring of course
content relevant to our business.
US
The Houston plant became fully operational and the first new commercial orders
were booked during the period. To date, four significant new customers have been
gained with more anticipated from over 30 ongoing trials. Intense interest has
been generated from the US valve market with ten trials ongoing. The facility
is on schedule to meet budget forecast in the second half of the year.
Our largest US pump customer validated the plant for transfer of production from
the UK, and the reassignment of remaining US production across all sectors is
well underway.
Skills transfers have been taking place between the US and UK with secondments
in each direction proving successful in sharing knowledge throughout the Company
as well as motivating staff. These will continue as we ensure the best fit of
people as our business grows.
Oil & Gas
Oil and gas sector sales recovered and achieved record half year levels after
the resolution of the primary customer inventory situation. Hardide is now a
Tier 1 supplier to this customer. In addition, the Hardide coating is now
specified on five new downhole tools with more new specifications under
discussion. The Company is now ideally positioned to grow its business in the
buoyant oil and gas exploration and production sector.
Valves and Pumps
The level of enquiries from the valve sector has increased significantly in the
last six months with regular customer conversions leading to five new customers.
Our first US valve order has been received and trials are underway with 10
Texas-based valve manufacturers.
Aerospace and Other
Repeat orders are being regularly processed from BAE Systems with new
Eurofighter Typhoon components on trial. We are also undergoing the
qualification process with another major aerospace manufacturer and have an
active development programme underway with a third. Prospects are promising for
this sector as Hardide offers a better performing, environmentally safe
alternative to hard chrome plating, a traditional aerospace coating which is
being phased out for environmental reasons.
Outlook
Our business strategy remains robust and I am confident that the second half
will deliver significantly increased revenues from our Houston facility. The
Group's continued growth will be ensured through new and existing customers,
internationalisation, and a quality product and service. We are generating
increasing demand for our products in all our core markets. Coupled with
localised production in the US, I believe that the Company is well placed to
accelerate business in the second half of the year thus building long term
shareholder value.
Jim Murray-Smith
Chief Executive Officer
11 May 2007
Financial Review
Group turnover for the six months was £1,105,000, an increase over the same
period last year of 4%. Strong turnover growth was seen during the second
quarter which was 15% higher than the same quarter last year, and 62% ahead of
the first quarter of this year.
Start up costs of our Houston plant of £112,000, including customer trials and
initial testing, affected Group gross profit, which fell to £525,000 from
£653,000. Gross profit margins at our UK subsidiary slipped slightly from 61%
in the first half of last year to 58% this year, reflecting some increases in
raw material costs. We are confident that process optimisation and raw material
cost savings will begin to have an impact on margins in the second half.
Administrative expenses rose to £1,229,000 from £789,000 last year. £236,000 of
the increase arose from our Houston operation, the remainder reflects investment
in key resources and activities to boost turnover and bolster productivity in
the UK.
Overall Group loss before tax was £887,000, of which £512,000 was attributable
to our US operation, compared with a group loss of £293,000 last year.
Cashflow was impacted by the purchase of our new furnace and x-ray fluorescence
machine in Bicester, completion of the fit out of the Houston plant, and start
up losses there. No further capital expenditure is envisaged at the moment for
either facility.
The forward order book is currently at record levels and the outlook is for a
continuation of robust revenue growth in the second half.
Peter Davenport
Finance Director
11 May 2007
Hardide Plc Group Profit & Loss Account
For the six months ended 31st March 2007
Six months ended Six months ended Year ended
31st March 2007 31st March 2006 30th September 2006
(unaudited) (unaudited)
£'000 £'000 £'000
Turnover 1,105 1,063 1,891
Cost of Sales (580) (410) (817)
Gross Profit 525 653 1,074
Administrative Expenses (1,229) (789) (1,871)
Earnings before interest, tax, (704) (136) (797)
depreciation & amortisation
Depreciation & Amortisation (195) (165) (289)
Operating Profit / (Loss) (899) (301) (1,086)
Other Income 2 2
Profit / (Loss) on ordinary activities (899) (299) (1,084)
Interest Receivable 24 19 60
Interest Payable (12) (13) (24)
Profit / (Loss) on ordinary activities (887) (293) (1,048)
before taxation
Hardide Plc Group Consolidated Balance Sheet
31st March 2007 31st March 2006 30th September 2006
(unaudited) (unaudited)
£'000 £'000 £'000
Fixed Assets
Tangible 1,908 1,050 1,753
Intangible (31) (50) (10)
1,877 1,000 1,743
Current Assets
Stock 125 51 102
Trade Debtors 360 399 287
Other Debtors 132 183 170
Prepayments 99 145 131
Cash at bank & in hand 700 1,371 1,803
1,416 2,149 2,493
Creditors: Amounts falling due within one (563) (285) (584)
year
Net Current Assets 2,730 1,863 1,909
Creditors: Amounts falling due after one (164) (266) (216)
year
Net Assets 2,566 2,598 3,436
Capital & Reserves
Called up Share Capital 1,467 1,341 1,467
Share Premium Reserve 3,367 1,975 3,345
Profit & Loss Account (2,268) (718) (1,376)
Shareholders Funds 2,566 2,598 3,436
Hardide Plc Group Cash Flow Statement
Six months ended Six months ended Year ended
31st March 2007 31st March 2006 30th September
2006
(unaudited) (unaudited)
£'000 £'000 £'000
Cash outflow from Operating Activities (728) (364) (581)
Returns on investment and servicing of finance
Interest element of finance lease rental payments (12) (13) (24)
Interest Received 24 19 60
Taxation 50 - 35
Capital Expenditure and Financial Investment
Payments to acquire tangible fixed assets (402) (113) (978)
Acquisitions & Disposals
Net Cash Inflow / (Outflow) before financing (1,068) (471) (1,488)
Financing
Issue of Shares 780 2,375
Capital element of finance lease rental payments (57) (44) (91)
New finance lease agreements 22
Expenses paid in connection with share issues (100)
Increase / (Decrease) in cash (1,103) 265 696
Reconciliation of Movement in Shareholders Funds
31st March 2007
(unaudited)
£'000
Profit / (Loss) for the period (887)
Other recognised gains and losses 17
Increase / (Decrease) in Shareholders Funds (870)
Opening Shareholders Funds 3,436
Closing Shareholders Funds 2,566
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BLGDUSUBGGRB