Hardide plc (LON:HDD), the developer and provider of advanced surface coating technology, has provided an update on trading for the financial year ended 30 September 2022 (subject to audit and year-end adjustments).
Revenues for the year to 30 September 2022 are expected to be in line with the Board’s expectations of approximately £5.0m, up almost 40% on the previous year. As reported in the Trading Update issued on 14 July 2022, the volatility in the Company’s key markets has influenced revenue for FY22. This was driven by lengthened raw material lead times for customers and delays in certain project orders originally scheduled for the final quarter of FY22. None of these delayed orders have been lost and will now be recognised in the new financial year starting 1 October 2022. The Group is not experiencing any negative effect because of current exchange rates.
The Board is grateful for the support of new and existing investors in the Group’s recent fundraising. The Group had approximately £0.7m of cash at 30 September 2022 and continues to maintain strict cost and investment discipline as well as continuing to explore options for raising new working capital support. Approximately half of the delayed cash receipt from a significant customer was received prior to year-end, with the balance expected soon. The Group is also pleased to be in final contract negotiations relating to a sale and leaseback arrangement for its property in Martinsville, USA which will, when completed, make a substantial contribution to the Group’s financial position.
Despite well-documented headwinds, we start the current financial year with a strong order book and, with revenues from certain contracts arriving in this financial year 2023, the Board maintains a positive outlook for the business beyond the near term as supply chains stabilise and markets continue their recovery. The Company sees clear potential for the current financial year to show considerable improvement on recent years and the Board is optimistic about the future.
A summary of our progress in each of our key customer sectors is set out below.
The major oil service companies are seeing rising demand, however, the supply of components to be coated by Hardide is being restricted by raw material availability and machining capacity. We have good visibility on orders and this demand is expected to reach us in the next few months. Components for a major project order for coating mesh sand‑control screens, originally scheduled for the last financial quarter, were received just prior to the year end. As a result, revenue will now be recognised early in the new financial year. Another large project order received from a North American oil and gas customer and currently being processed will also be completed early in the new financial year. Several new and potentially significant, high-volume applications are in development in this sector.
Two large orders for coating gas turbine compressor blades were completed in FY22, with further similar orders expected during the current financial year. Trials are ongoing with several other turbine producers.
Testing is underway to obtain data to show the beneficial effects of the coating in hydrogen applications, as well as separate testing in a hydrogen production application.
Regular orders are now being received for components for the Airbus A320, A330, A380 and A400M series aircraft. Further applications for Airbus are in development and testing. Orders continue to be received for the BAE Eurofighter Typhoon. Technical discussions and trials are also underway with several other OEM and MRO companies.
Demand from our major industrial pump customer in North America has remained buoyant throughout the past year and is expected to remain so. As the airline industry recovers, we are seeing signs of increasing demand for the airport X-ray screening machine application. Hardide expect much higher revenues from this customer in the current financial year as they increase their production output. Trials are still taking place with the large EV manufacturer on components used in the battery production process.