Hardide plc (LON:HDD), the developer and provider of advanced surface coating technology, has announced its preliminary results for the year ended 30 September 2020.
Highlights
Financial
· Revenue of £4.8m (FY2019: £5.1m)
· Gross profit of £2.3m (FY2019: £2.4m)
· Gross margin of 49% (FY2019: 48%)
· Reduced EBITDA loss of £0.5m before exceptional items, including £0.2m of costs relating to site relocation (FY2019: loss before exceptional items £0.6m). The beneficial impact on EBITDA this year of applying IFRS 16 is £0.4m (after IFRS 16, like for like FY2019 EBITDA loss of £0.4m)
· Over-subscribed fundraising of £2.5m (before expenses) to fund additional equipment, enhance new UK site at Longlands Road, Bicester and strengthen the balance sheet
· Cash at bank at 30 September 2020 of £2.7m (FY2019: £4.8m)
Trading
· Revenue was only 6% below FY2019 with increased revenue across all sectors other than oil & gas, which was adversely affected in H2 due to the slowdown of the global economy resulting from the COVID-19 pandemic
· Sales to the energy sector down 14%. Parts for the delayed major oil and gas project order were received post period in October 2020
· 9% increase in sales to the flow control sector
· 19% increase in sales to the aerospace sector
· 4% increase in sales to the precision engineering sector
· 56% increase in sales of coated industrial diamonds
· Revenue from UK and North American customers were each 49% of total Group sales (FY2019: UK 35%, North America 65%)
· Revenue from Martinsville facility up 10% compared to FY2019, totaling 33% of Group sales
· Honoured with Queen’s Award for Enterprise: International Trade 2020 in recognition of the outstanding growth of international sales
Strategic
· Relocation of UK operations to new site completed on time and within projected cost
· Two new coating reactors installed in UK including one large reactor, and one new reactor in the US. The Group now has nine operational reactors compared to six at the end of 2019
· Airbus production orders being received for the A380 wing compression flap pads. Coating of components for the Lockheed Martin F-35 Lightning II Joint Strike Fighter continues
· Long-term test programmes with our new coating for steam and gas turbine blades progressing well
· Major environmental improvements due to the new site and production processes
· Good progress in targeting new opportunities in low or carbon-neutral energy technology with production orders received.
Technology
· Successfully completed two National Aerospace Technology Exploitation Programme (NATEP) grant funded projects on a new ultra-low temperature coating for aerospace metals, which is now in late stages of development before being commercially available
· UK Intellectual Property Office granted a patent on the further-enhanced Hardide coating and its new applications, including turbine blades. National phase patenting has started in 10 leading industrial countries
· Validation began in nine countries of a European patent application for alloyed tungsten produced by chemical vapour deposition
Commenting on the results, Robert Goddard, Chairman of Hardide, said: “Given the economic backdrop and impact of COVID-19 on the second half of the financial year, we are pleased to announce a solid set of numbers, which are just 6% below our record revenues in FY2019 and in-line with market expectations. Sales to all market sectors increased in the year, other than to oil & gas, which fell by 14% due to the COVID-19 related downturn.
“Looking forward, the Board retains a cautious outlook in the short-term as the uncertainty of COVID-19 continues to impact on our customers’ visibility for their own businesses. This is set against a confidence that as the global economy recovers, volume demand will return and continue on the previous upward trajectory. The latest market forecasts show a good recovery in oil demand and production in the course of 2021, with good grounds for optimism across our other targets as we move towards the second half of our financial year.
“We continue to implement our strategy of seeking new resilient, emerging and high-volume markets. To that end, the Board is excited by the progressive shift to forms of energy that are not derived from fossil fuels and the moves towards a carbon-neutral future being taken by the major oil & gas companies and our customers. The Hardide coating is already incorporated in a solar energy application in Europe and we are making excellent progress on a fast-track test programme with a leading, blue chip, clean energy company in the USA. Looking forward, we see applications in low-carbon and renewable energy technologies forming an increasing part of our overall revenue.”
