REG-Hardide PLC Interim Results
Released: 17/06/2008
com:20080617:RnsQ8395W
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RNS Number : 8395W
Hardide PLC
17 June 2008
Press Release 17 June 2008
Hardide plc
("Hardide" or "the Group")
Interim Results for the six months to 31 March 2008
Hardide plc (AIM:HDD), the provider of unique surface engineering technology,
announces its interim results for the six months ended 31 March 2008.
Highlights
* Group turnover increased 14% to £1.26million (H1 2007:
£1.11 million)
* Group gross profit increased 28% to £670,000 (H1 2007:
£525,000)
* Group operating loss reduced 16% to £777,000 (H1 2007:
loss £921,000)
* Group loss before tax reduced to £891,000 (H1 2007: loss
£909,000)
* UK operating company, Hardide Coatings Limited, achieves
maiden pre tax profit of £112,000 (H1 2007: loss £52,000)
* UK gross margins increased by 6%
* Global gas supply agreement signed in December 2007
* Ken Siddall appointed as US Managing Director in November
2007
* Hardide Coatings, Inc. achieved ISO 9001 in November 2007
Post-Period Highlights
* Hardide Coatings Limited enters into a three year coatings
approval test programme with Airbus, one of the world's
leading aircraft manufacturers
* Dr. Graham Hine appointed Chief Executive Officer on 2 June
2008
Commenting on the interim results, Robert Goddard, Chairman of Hardide plc,
said: "I am pleased to report an increase in Group turnover and gross profit
together with a 16% reduction in operating loss for the first six months. Our
progress is evidenced by the maiden profit achieved by Hardide Coatings Limited
during the period. The number and calibre of customers with whom Hardide is now
in commercial use or test, as demonstrated by the test programme with Airbus, is
testament to the growing reputation and value that customers are placing on our
technology
"The Board believes that the leadership of Graham Hine and subsequent
implementation of the new strategic plan will unlock the potential of Hardide,
and create growth in shareholder value."
For further information:
Hardide plc
Robert Goddard / Peter Davenport / Jackie Robinson Tel: +44 (0) 1869 353830
www.hardide.com
Seymour Pierce Limited
Nicola Marrin / Richard Feigen Tel: +44 (0) 20 7107 8000
nicolamarrin@seymourpierce.com / www.seymourpierce.com
richardfeigen@seymourpierce.com
Media enquiries:
Abchurch
Chris Lane / George Parker Tel: +44 (0) 20 7398 7719
george.parker@abchurch-group.com www.abchurch-group.com
Chairman's Statement
These interim results reflect the commercial and operational progress that the
Group has made in the six months to 31 March 2008. I can report a 14% increase
in turnover to £1.26 million compared to H1 2007 despite the slow growth in the
US business and short-term reduction in demand from a major UK customer that
occurred towards the end of the half year, Group gross profit increased by 28%
to £670,000 and Group operating loss narrowed to £777,000 from £921,000 in H1
2007. I am pleased to report that Hardide Coatings Limited, the UK business,
made a pre tax profit of £112,000 compared with a loss of £52,000 in the same
period last year.
Our focus on driving down overheads and costs as well as increasing margins has
started to take effect. Despite the 14% increase in sales, cost of sales
increased by only 2% to £593,000 reflecting the global gas supply agreement
which was made in December 2007, and more efficient purchasing. In the UK, gross
margins continued to rise, with a 6% increase to the end of March 2008. Group
overheads were also stable with administration expenses lower than in the same
period last year.
I believe that these results, together with the number and calibre of global
customers with whom the technology is currently in commercial use or test,
demonstrate the fundamentally sound proposition of the Group and its technology.
Since this reporting period, the Group experienced two difficult months
culminating in June 2008 with a fundraising for £1.5 million, the appointment of
Dr. Graham Hine as Chief Executive Officer and a revision of its strategic plan.
The new capital will cover operating losses and the development of applications
designed to lead to near and mid-term sales revenue.
The revised strategic plan is focused on increasing cash generation in the UK
operation over the next twelve months and commercialising the significant
customer interest in the US. At the same time, discretionary capital and revenue
expenditure is being minimised until a firm trend of upward sales growth is
established. In addition, a group-wide Applications Development Committee, led
by Dr. Yuri Zhuk, Technical Director, has been formed to select, review and
prioritise new applications to ensure that resources are concentrated on those
opportunities with the greatest potential to realise strategically or
financially significant immediate to medium-term sales.
UK: Hardide Coatings Limited
Hardide Coatings Limited, the UK operating company, achieved profitability in
the first half of the financial year despite the sudden customer de-stocking
issue affecting the last month of the period. Orders are now resuming from the
customer, with whom the company is in advanced discussions on two new
high-potential applications. Enquiries are continually being received from
existing customers to coat new parts, which demonstrates the level of customer
satisfaction in the technology.
The move into the aerospace sector is also having encouraging results. I am
pleased to announce today that Hardide Coatings Limited has entered into a
three-year coatings approval test programme with Airbus, one of the world's
leading aircraft manufacturers. Furthermore, the company has confidence tests
being performed at seven key aerospace industry manufacturers, a necessary
precursor to gaining customer approvals and specification. Earlier stage
discussions are ongoing with several other aerospace and defence organisations.
Whilst the approvals process in the aerospace sector is lengthy, the market
potential for Hardide in this sector is strong.
The production teams in the UK and US have made excellent progress in increasing
the part density in the furnaces. This has increased gross margins and capacity,
deferring the requirement for immediate capital expenditure. In select cases,
the higher part density has enabled the operating companies to secure business
at lower price points. In addition, development work has begun on shortening the
furnace cycle time, which will increase capacity with no additional capital
outlay.
US: Hardide Coatings, Inc.
The sales cycle for the technology in the US is taking longer than expected.
Record oil prices and demand for oil services have meant that our customers in
this sector have been focusing attention on production, and testing programmes
have not been given priority. This has delayed the progress of our customer
trials, which can already take 18 months to complete. On the other hand,
cross-selling between the UK and US is showing good potential in the valve
market that should be realised sooner. Hardide-coated valves have been
successfully run through severe duty tests and the company is in various stages
of dialogue to progress to production with several US valve manufacturers.
Ken Siddall joined Hardide Coatings, Inc. in November 2007 as US Managing
Director, bringing twenty years of engineering, general management and coatings
technology experience. The US business is now implementing the new strategy
which will focus sales resources on applications that build on proven successes,
shorten customer design approval and testing time, and increase the customer
conversion rate. The Houston facility achieved ISO 9001 in November 2007.
Outlook
The shortfall in sales that began at the end of the H1 2008 carried on, as
expected, into the second half but there are strong indications that a recovery
in orders will occur in the coming few months. As such, the Group is likely to
see sales in the second half less in total than reported for the first. By the
end of the second half, the monthly rate of sales is expected to surpass that
experienced during the first half.
The Board of Hardide is focused on generating shareholder value and is confident
that the Group has the strategic plan, structure, resources, skills and talent
to turn cash-positive overall within the medium term. The strategic plan has
been considered and analysed and the Board believes it to be realistic and
deliverable. We will also continue to discuss opportunities with potential
partners in new international markets.
The Board expects that the leadership of Graham Hine as Chief Executive Officer
will provide the direction and framework for substantial growth in shareholder
value. The Group is building on proven success by application and by customer,
and developing new applications and markets with demonstrable commercial
potential. This will further strengthen the already strong foundation for future
success.
Robert Goddard
Chairman
17 June 2008
Consolidated income statement for the period ended 31 March 2008
6 months to 6 months to Year to
31 March 2008 (unaudited) 31 March 2007 (unaudited) 30 September 2007 (unaudited)
£ '000 £ '000 £ '000
Revenue 1,263 1,105 2,470
Cost of Sales (593) (581) (1,180)
Gross Profit 670 525 1,290
Administrative expenses (1,217) (1,229) (2,676)
Depreciation (230) (217) (475)
Operating profit (777) (921) (1,861)
Interest income 21 24 31
Finance costs (135) (12) (26)
Profit on ordinary activities before tax (891) (909) (1,855)
Tax 24
Profit for the period (891) (909) (1,831)
Consolidated statement of recognised income and expense for the period ended 31 March 2008
6 months to 6 months to Year to
31 March 2008 (unaudited) 31 March2007 (unaudited) 30 September 2007 (unaudited)
£ '000 £ '000 £ '000
Profit for the period (891) (909) (1,831)
Exchange differences on translation of foreign operations (47) (6) 21
Total recognised income and expense for the year (938) (915) (1,811)
Consolidated balance sheet at 31 March 2008
31 March 2008 (unaudited) 31 March 2007 (unaudited) 30 September 2007 (unaudited)
£ '000 £ '000 £ '000
Assets
Non-current assets
Investments
Goodwill 69 69 69
Intangible assets 6 8 7
Property, plant & equipment 1,533 1,900 1,661
Total non-current assets 1,608 1,977 1,737
Current assets
Inventories 53 125 99
Trade and other receivables 351 426 648
Other current financial assets 156 164 147
Cash and cash equivalents 544 700 1,135
Total current assets 1,104 1,416 2,029
Total assets 2,712 3,393 3,767
Liabilities
Current liabilities
Trade and other payables 377 449 512
Financial liabilities 120 114 145
Provisions - - -
Total current liabilities 497 563 657
Net current assets 607 853 1,372
Non-current liabilities
Financial liabilities 920 164 893
Total non-current liabilities 920 164 893
Total liabilities 1,417 727 1,550
Net assets 1,295 2,666 2,217
Equity
Share capital 1,467 1,467 1,467
Share premium 3,345 3,345 3,345
Retained earnings (3,967) (2,172) (3,077)
Share-based payments reserve 465 22 450
Translation reserve (16) 4 31
Total equity 1,295 2,666 2,217
Consolidated condensed cash flow statement for the period ended 31 March 2008
6 months to 6 months to Year to
31 March 2008 (unaudited) 31 March 2007 (unaudited) 30 September 2007 (unaudited)
£ '000 £ '000 £ '000
Cash flows from operating activities
Operating profit (777) (921) (1,825)
Impairment of intangibles 1 1 2
Depreciation 230 216 437
Share option charge 15 22 59
(increase) / decrease in inventories 46 (23) 23
(increase) / decrease in receivables 287 11 (224)
Increase / (decrease) in payables (135) (34) 72
Finance income 21 24 31
Finance costs (53) (12) (25)
Tax received / (paid) - 50 107
Net cash generated from operating activities (366) (666) (1,343)
Cash flows from investing activities
Purchase of property, plant and equipment (98) (402) (439)
Net cash used in investing activities (98) (402) (439)
Cash flows from financing activities
Net proceeds from issue of ordinary share capital - - -
Finance lease inception - 22 209
Finance lease repayment (74) (57) (95)
New loans raised - - 1,000
Net cash used in financing activities (74) (35) 1,114
Net increase / (decrease) in cash and cash equivalents (537) (1,103) (668)
Cash and cash equivalents at the beginning of the period 1,135 1,803 1,803
Effects of foreign exchange rate changes (56) - -
Cash and cash equivalents at the end of the period 544 700 1,135
This information is provided by RNS
The company news service from the London Stock Exchange
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