The information contained within this announcement is deemed by Hardide to constitute inside information pursuant to Article 7 of EU Regulation 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 as amended.
8 February 2024
Hardide plc
("Hardide", the "Group" or the "Company")
Unaudited preliminary FY23 annual results and FY24 trading update
Hardide plc (AIM: HDD), the developer and provider of advanced surface coating technology, announces its preliminary annual results for the year ended 30 September 2023, which remain subject to audit sign off.
FY23 Financial Highlights
| FY23 | FY22 | Change |
|
Revenue (£m) | 5.5 | 5.0 | +10% |
|
Gross margin % | 47.5% | 37.5% | +10 ppts |
|
EBITDA (£m) | (0.1) | (0.9) | +£0.8m |
|
Loss before tax (£m) | (1.2) | (2.3) | +£1.1m |
|
| | | |
|
Business cash flow before financing (£m) | 0.1 | (1.2) | +£1.3m |
|
Cash balance at 30 September (£m) | 0.7 | 0.7 | - |
|
· Revenue increased by 10% to a record £5.5m due to strong oil & gas sector demand, new aerospace work increasing in Q4 and successful recovery of cost inflation in selling prices | ||||
· Gross margins increased by 10 percentage points year on year to 47.5% benefiting from better capacity utilisation and operational gearing | ||||
· Close to EBITDA break-even performance delivered (FY22: £0.9m loss) reflecting higher revenues at better margins together with good overhead control | ||||
· Business cash flow positive performance due to improved EBITDA, strong working capital control and low capital expenditure requirements as the business is well invested |
FY23 Business and Commercial Highlights
· Significant ongoing growth in aerospace business |
· Developing new industrial / engineering customers following recent trials |
· Strong core oil & gas business with ongoing development potential |
· Early success and promising future for coating turbine blades in the power generation sector |
· Strategic potential in green energy, hydrogen production and hydrogen storage applications |
· Patentable technical developments ongoing to enhance Hardide coatings and broaden their end use applications, supported by grant funding |
· Strong cost, cash flow and inflation management disciplines demonstrated, with an EBITDA and cash flow benefit of c.£0.7m realised during FY23 |
· Commercial relationships developing with global coatings companies to broaden market reach FY24 developments
|
· A slower than expected start to the year with a number of OEM customers de-stocking. This has more than offset ongoing growth in aerospace demand. The cost base has been re-aligned in mitigation · The Board now anticipates FY24 revenue to be broadly in line with FY23 and, given cost mitigations, to be EBITDA positive with trading expected to gather momentum as the year progresses · A new interim CEO, Steve Paul, formerly of Praxair Surface Technologies, joins Hardide on 12 February |
· Cash headroom has been depleted by slower trading year to date, and additional equity and debt funding is being sought from existing shareholders and other investors to satisfy short term cash constraints by early March and to support Hardide's growth strategy
|
Andrew Magson, Non-Executive Chair of Hardide plc, commented:
"We are pleased with the progress made in FY23, particularly the significant improvements to the EBITDA and cash flow performance of the business. This was driven by further growth, effective management of input cost inflation, and strong management of costs and working capital.
Trading conditions so far in the current financial year have been unexpectedly challenging and we have taken all reasonable internal measures to mitigate the impact without damaging the core of our business. Having managed the business to cash break-even in FY23, we regret now being in the position of asking investors for their support. The funding we are seeking will enable us to execute our strategy of accelerating revenue growth, bolstered and underpinned by the appointment of Steve Paul as Interim CEO today, and to unlock the significant value potential provided by our unique coatings technology."
Further announcements will be made as appropriate.
Enquiries: | |
Hardide plc Andrew Magson, Non-Executive Chair Jackie Heddle, Communications Manager | Tel: +44 (0) 1869 353 830 |
IFC Advisory Graham Herring Tim Metcalfe Florence Chandler | Tel: +44 (0) 20 3934 6630 |
Cavendish Capital Markets Ltd - Nominated Adviser and Joint Broker Henrik Persson/ Abigail Kelly
| Tel: +44 (0) 2072 200 500 |
Allenby Capital - Joint Broker Tony Quirke / Joscelin Pinnington - Sales and Corporate Broking Jeremy Porter/ Dan Dearden-Williams - Corporate Finance |
Tel: +44 (0) 20 3328 5656 |
Notes to editors:
Hardide develops, manufactures and applies advanced technology tungsten carbide/tungsten metal matrix coatings to a wide range of engineering components. Its patented technology is unique in combining in one material, a mix of toughness and resistance to abrasion, erosion and corrosion; together with the ability to coat accurately interior surfaces and complex geometries. The material is proven to offer dramatic improvements in component life, particularly when applied to components that operate in very aggressive environments. This results in cost savings through reduced downtime and increased operational efficiency. Customers include leading companies operating in the energy sectors, valve and pump manufacturing, industrial gas turbine, precision engineering and aerospace industries.
CHAIR'S STATEMENT
Overview
I am pleased to report another year of good progress for Hardide, with revenues moving ahead by 10% to £5.5m and the delivery of a close to EBITDA break-even profit performance.
The Board is focused on driving an acceleration in revenue growth, as adoption of Hardide's unique coating technology gains further traction across a diverse range of end use market applications.
Current Trading and Financing
Hardide has experienced a slower than expected start to the current financial year with a number of major OEM customers de-stocking. This de-stocking effect has more than offset the positive ongoing growth in aerospace demand. The cost base has been re-aligned in mitigation, and selling prices were increased in January 2024. Group revenues in the four months to 31 January 2024 were £1.3m compared with £1.9m in the equivalent prior year period.
The Board expects that this will have the effect that revenues for the full year to September 2024 will be broadly in line with those of the year to September 2023, with the benefits of a disciplined approach to costs coming through such that we anticipate being EBITDA positive for the year.
In recent weeks the Group's cash balances have fluctuated in a range between £0.2m and £0.5m, with the impact of a particularly weak January sales month still to flow through to the cash position, which is expected to erode our remaining cash headroom. This, together with a review of our short-term revenue expectations and associated sensitivities, has led us to conclude that £1m of additional funding is required before early March. We are therefore in discussions with existing shareholders and other investors to raise new equity. We are also actively seeking further debt finance. We have taken external specialist advice and will continue to do so with a view to ensuring that all measures are taken to raise the requisite capital and/or preserve shareholder value.
These preliminary financial statements have been prepared on the basis that the Group remains a going concern, however there is material uncertainty relating to the level of new funds raised, and the timing and extent of the expected recovery in sales as OEM ordering patterns normalise and Hardide wins anticipated new work.
Strategy
The Board is executing a two-stage strategy:
1. Focus on becoming profitable and cash generative as soon as possible. This will be driven mainly by increased sales to existing and new customers, utilising proven coating technology and existing production capacity, thereby benefiting from Hardide's strong operational gearing.
We made good progress in FY23 in growing revenues and recovering input cost inflation, whilst keeping tight control of costs to deliver a close to EBITDA break-even profit performance.
2. Identifying and taking opportunities to drive significant value for shareholders and other stakeholders over the medium to longer term through further development and commercialisation of the Group's unique, high performance coatings technology, including co-operation with other coatings companies.
We entered into commercial agreements with two global coatings companies during the last year enabling all parties involved to benefit from the ability to offer Hardide's coatings to a broader international customer base.
Business Development
The Board is focused on the realisation of numerous business development opportunities available in the short to medium term across various end market sectors. In addition, our research and development activities (much of which are supported by grant funding) are intended to significantly enhance Hardide's coatings technology and its applications, and much of our focus here is on green energy and in assisting hydrogen generation and storage. Further details of these opportunities are given in the Chief Executive's Report.
People and Board
On behalf of the Board I'd like to put on record our thanks to all our loyal and committed employees for their hard work and achievements, not least driving the continued growth of the business to record levels in FY23 in line with our strategic objectives against a challenging market backdrop.
We are pleased to welcome Steve Paul as Interim Chief Executive Officer, effective from 12 February. He will succeed Phil Kirkham who announced his intention to step down last November. Steve, formerly of Praxair Surface Technologies, will bring a wealth of experience in general management, commercial development and performance improvement. We look forward to working with Steve and to his contribution both to the business and the Board.
The Board would like to thank Phil once again for the immense contribution he has made to the development of Hardide over the last decade, including significantly broadening the customer base and leading the establishment of our two modern and well invested production facilities, all of which provide us with an excellent platform for future growth.
We also welcomed Matt Hamblin to the Board in November. Matt is the ex-CEO of Keronite, a coatings company with many similarities to Hardide, where he led its growth into profitability and then its successful sale to a large global organisation last year. Matt's insights have already been highly valuable as we evolve and refine our growth strategy. These Board changes provide the opportunity to evolve the leadership and culture of the business to become more sales focused and commercially driven, and better aligned with the Board's determination to drive an acceleration in revenue growth.
Outlook
Whilst the global economic situation remains uncertain and this has impacted trading and our financial position in the first part of the new financial year, Hardide is still a relatively early life cycle business benefiting from unique and potentially disruptive technology. This technology is steadily gaining market acceptance and market share, enabling the underlying business to continue to grow.
There are numerous business development opportunities being pursued, detailed in the Chief Executive Officer's Report. We are focused on bringing these to fruition, with sales to the aerospace sector in particular growing significantly in the current financial year.
The Board is taking all steps necessary and possible to raise the requisite financing required such that the Company can deliver on its potential to generate significant value for shareholders and all stakeholders over the medium to longer term.
Andrew Magson
Non-Executive Chair
7 February 2024
CHIEF EXECUTIVE OFFICER'S REPORT
Overview
Hardide generated record revenues for the year of £5.5m, an increase of 10% from FY22. Revenue growth was led by a 21% increase from the energy sector, particularly from oil and gas customers. However, this increase was tempered by the absence during the year of any repeat orders for the coating of gas turbine blades and vanes. Volume aerospace orders for Airbus components commenced in the final quarter of the year with a 100% increase in sales from this sector for the year to become 7% of total revenues. Price increases were implemented across the customer base during the year to recover cost inflation, particularly raw materials, energy and people costs.
The combination of price increases, revenue growth and cost reductions led to a significant improvement in gross margins, which rose by ten percentage points to 47.5% from 37.5% in the prior year. This enabled us to deliver a close to break-even EBITDA performance, compared with the prior year equivalent of a £0.9m EBITDA loss.
Operational Overview
Customers and Markets
The mix of revenue from our main market segments during the year was:
· Energy: 63% (including oil & gas and power generation)
· Industrial: 30%
· Aerospace: 7%
Energy
Sales to energy customers increased by 21% to £3.4m during FY23, including a 48% increase in sales to oil & gas customers assisted by sales of coated mesh sand screens. This was offset by a reduction of £0.5m in power generation sales compared to FY22, as previously expected orders for the coating of gas turbine blades were delayed due to engineering modifications of the turbine.
Further progress has been made in diversifying the oil & gas customer base with sales spread across a broadening number of customers and with not one dominating this segment's revenue. Towards the end of FY23, the Group started to experience some softening in demand from oil and gas customers, and this has impacted more significantly in the first few months of FY24. We believe this reflects reassessment of inventory levels by customers as global supply chains normalise post the COVID pandemic; a reduction in the number of active US land drilling rigs, primarily due to removal of local tax reliefs; and the full cessation of supplies to Russia to comply with US and international sanctions.
The large oil service companies continue to talk about the industry being at the start of a long-term 'up cycle' for oil and gas exploration and production. With the oil price climbing recently on the back of OPEC+ production cuts and international events, the medium-term future looks positive for supplying to this sector.
Alternative Energy
It is a strategic objective for the Group to increase the proportion of revenue generated from the alternative energy sector. Promising progress with development projects is being made, particularly in hydrogen applications.
Following the initial testing of several Hardide coating variants at Cranfield University for a process for the manufacture of 'green' hydrogen, the Group was successful in being awarded an Innovate UK grant to progress further this work. This project commenced in November 2023 and is to be completed within 17 months. The initial test results and further details are confidential to maintain potential patentability of the application.
In another hydrogen application, an independent laboratory is currently testing the permeability of the Hardide coating to provide quantitative data on how good a barrier the coating is in preventing hydrogen from diffusing into metal components and causing cracks. Subject to positive results, this would open up a large range of opportunities for Hardide coatings in hydrogen storage and distribution applications.
Power Generation
The expected production orders for the coating of gas turbine compressor blades from Ansaldo Energia in Italy were not received in the financial year as engineering modifications are in progress on the turbine itself. In parallel, the first two turbines containing Hardide coated blades are in the final stages of commissioning and the performance data of these blades is being gathered. This data will undoubtedly be a factor in proving the benefit of the Hardide coating and in gaining future business. Testing is also underway with this customer on new applications/materials for a different turbine.
The work with EDF Energy on use of the coating on steam turbine blades to prevent water droplet erosion has not progressed during the year due to other priorities within the EDF engineering team. It is hoped that this work will be restarted during the coming 12 months. Extensive technical work and testing has been done by another global steam and gas turbine manufacturer with positive results. Discussions are now underway regarding potential applications.
Currently, the Group is working on developments and trials with other global steam and gas power generation turbine manufacturers, both in the UK and overseas.
Industrial
Revenues decreased in this sector by 15% from FY22. This was due to 22% lower sales to our major industrial pump customer in North America where inventory levels are continuing to be re-aligned, following high demand during and immediately after the COVID pandemic period. However, there was an increase in revenue from the airport X-ray scanner manufacturer as their production increased. In addition, developments and trials are still underway with the large US-based EV manufacturer on components used in the vehicle battery production process. Trials and testing are also ongoing on new battery technology and fuel cell applications with a major organisation in the Far East.
Aerospace
Aerospace sales doubled during FY23 to 7% of total Group revenue, with regular volume demand commencing in the last quarter of the year from Gardner Aerospace to coat components for the Airbus A320/A321 aircraft. This level of demand is based on Airbus' current production rate of c.50 A320/A321 being produced per month. Airbus' plan is to gradually increase this rate to 65 aircraft per month by end 2024 and to 75 by 2026 indicating that demand on the Group will also increase. Additionally, orders were received from other Tier 1 companies for the lower volume A330, A380 and A400M applications. Airbus and their Tier 1 suppliers continue to gain confidence in the Group to provide a quality coating together with excellent levels of service, and as a result there are further parts currently in development and testing.
Orders continue to be received for the coating of BAE Eurofighter Typhoon components. In addition, an increase in demand for parts for Lockheed Martin's F35 Lightning II fighter was seen in FY23. Technical trials are now underway with a major civil and military helicopter manufacturer in the US. We continue to work with several other OEMs and maintenance, repair and overhaul ("MRO") companies for applications including landing gear, door mechanisms and peripheral engine components.
During the year the Group received full supplier approval from Leonardo Helicopters ("Leonardo") to coat flying parts. Production orders are for components used in helicopter gearbox transmission systems and are part of an existing engine upgrade. The Hardide coating will reduce 'in-service' costs and extend component life. Leonardo is one of the UK's leading aerospace companies and one of the biggest suppliers of defence and security equipment to the UK Ministry of Defence. This approval is expected to open other opportunities within the wider Leonardo Group and the broader helicopter market.
Technical discussions on replacing chrome plating on components are also underway with another major aircraft manufacturer based in the US.
Hardide coatings are being used increasingly as a substitute for hard chrome plating ("HCP") and thermal spray coatings. The EU and UK Reach regulations currently have an end date of April 2024 for the use of the toxic hexavalent chromium chemicals used in the production of HCP. As this date rapidly approaches many companies are turning to Hardide coatings as a replacement. Thermal spray coatings are less corrosion resistant and more prone to cracking under deformation than are Hardide coatings.
Health & Safety
I am pleased to report that there were zero lost time incidents across the Group during the year. Regular audits and inspections are performed by external bodies at both sites and continuous improvements are being made following these.
Accreditations and Research & Development
Hardide's UK site is accredited to Nadcap Gold Merit status, the highest accreditation available for commitment to continual improvement in aerospace quality. Both the UK and the US sites are accredited to aerospace quality standard AS9100 RevD and to ISO9001. The UK site is certified to environmental standard ISO14001, while the US site complies with all local, state and federal environmental standards.
Fundamental experimental work on the development of a new coating variant with additional properties that would open new markets for Hardide has been completed. Preliminary assessment has shown this coating could be patentable. Further development work will be necessary to scale-up and characterise the coating and the Group is continuing to look to secure grant funding for this.
Intellectual Property
Our most recent patent covers the enhanced Hardide coating with improved mechanical properties and its new applications, including turbine blades and vanes. This had been previously granted in the UK and this year we received new grants of the patent in the USA, China, India and South Korea. Registration of the equivalent patent is progressing in other leading industrial countries.
Business Development
We are focused on realising a number of shorter-term business development opportunities to grow revenues to a level where the business becomes cash positive and fully profitable for the first time.
Hardide is a well invested business with operational capacity for sales of around £10-11 million a year, approximately double FY23's revenues. With this spare capacity available and high operational gearing such that a high proportion of incremental revenues convert into profit and cash, we estimate that Hardide will become fully cash generative at revenues of c.£6.2m and fully profitable / earnings per share positive at revenues of c.£7.5m.
The principal shorter-term business development opportunities being progressed are:
· Additional Airbus parts
· High volume consumable components for thermal spray equipment
· Steam and gas turbine blades and vanes
· Couplers for land-based oil production pumps
Technical and commercial collaboration is well underway with various international coating companies who have complementary ranges of coatings with the aim enhancing the range of materials and components to which our coating be applied, as well as approaching the market with joint solutions for difficult industrial applications.
Current Financial Year Trading
Having managed the business to a broadly EBITDA and stable cash flow position in FY23, trading in the first four months of the current financial year has been impacted by some of our major customers de-stocking. So far, this has more than offset the continuing strong growth in our aerospace business that began in the final quarter of FY23. Group revenues in the four months to 31 January 2024 were £1.3m compared with £1.9m in the equivalent prior year period. We have taken action to reduce costs and improve cash flows accordingly. In addition, selling prices were increased by an average of 5% in January 2024.
After discussing anticipated forward order schedules with major customers and updating our forecasts, including building in the impact of the recent cost reductions and selling price increases, and assuming the requisite capital is raised in time, the Board now believes that revenues for the year to September 2024 will be broadly in line with the previous financial year. In view of the reduced cost base this should enable the Group to deliver a positive EBITDA performance for the year.
Philip Kirkham
CEO
7 February 2024
FINANCIAL REVIEW
Income Statement
Hardide grew during FY23 to report record revenues of £5.5m (FY22 £5.0m), an increase of 10% year on year.
We were successful in recovering significant input cost inflation (in particular process gas, energy and people costs) into selling prices during the year. This, combined with strong cost controls and increased capacity utilisation which allowed better recovery of factory fixed costs, led to a 10 percentage point uplift in gross profit margins to 47.5% (FY22: 37.5%).
Overheads of £2.9m were well controlled and were held to similar levels as in the prior year, despite the growth in the business and cost inflationary pressures.
Overall, this enabled Hardide to significantly reduce its EBITDA loss from £0.9m in the prior year to just £0.1m in FY24.
Total depreciation charges of £0.9m were some £0.3m lower than in the prior financial year, mainly because Hardide is a well invested business with spare capacity with depreciation comfortably exceeding capital investment during the year. This position is expected to continue for the foreseeable future. In addition, we reviewed the useful lives of some of our reactors. In view of these reactors' prior utilisation levels and their current condition we concluded that a 15 year expected life was now more appropriate than the previously assessed 10 years.
As a result of all the above, Hardide more than halved its operating loss from £2.1m in FY22 to £1.0m in FY23.
EBITDA is a key financial performance indicator used by management to assess the operational performance of the Group. This may be reconciled to the Income Statement as follows:
| 2023 £m
| 2022 £m |
Operating loss | (1.0) | (2.1) |
Depreciation, amortisation and impairment of owned assets | 0.7 | 0.9 |
Depreciation and amortisation of right of use assets | 0.2 | 0.3 |
EBITDA | (0.1) | (0.9) |
Net finance costs of £0.2m were slightly higher than in the prior year, mainly reflecting the new extended lease on the Martinsville facility in the USA.
Therefore, the loss before tax for the year of £1.2m also broadly halved compared with prior year levels of £2.3m, as did the loss per share of 1.9p (FY22: 3.9p).
Cash Flow
Hardide's cash flow for the year can be summarised as follows:
£m | Year to 30 Sept 2023 | Year to 30 Sept 2022 |
| | |
EBITDA | (0.1) | (0.9) |
Reduction in working capital | 0.4 | - |
Other operating cash items | (0.1) | - |
Operating cash flow | 0.2 | (0.9) |
| | |
Capital expenditure | (0.1) | (0.3) |
| | |
Business cash flow before financing | 0.1 | (1.2) |
| | |
Proceeds from sale and leaseback | 0.5 | - |
Net loan and lease repayments | (0.6) | (0.2) |
Equity finance | | 0.5 |
| | |
Net cash flow for the year | - | (0.9) |
Hardide's overall cash performance for the year was break-even, representing a significant improvement from the £0.9m cash outflow in the prior financial year. This reflected the close to EBITDA break-even trading performance, together with strong control of both working capital and capital spend.
Therefore, we began and ended the financial year with net cash resources of £0.7m.
Much work was done during the year to improve working capital efficiency, including consignment stocking arrangements and strong credit control.
The one-off cash benefit arising from the Martinsville lease transaction of £0.5m was largely used to repay existing financing and lease obligations.
Balance Sheet, Capital Structure and Net Debt
The main changes in the Group balance sheet over the year were:
· a reduction in the net book value of property, plant and equipment by £0.8m to £4.6m, as depreciation exceeded capital expenditure; and
· a reduction in current assets by £0.5m to £2.1m due to improved working capital efficiency as described above.
Therefore, total assets decreased by £1.3m to £8.4m.
Total equity / shareholders' funds decreased over the year from £5.5m to £4.3m, largely reflecting the loss after tax for the year.
Hardide's net debt (including lease liabilities) was largely unchanged year on year at £2.3m. This comprised cash of £0.7m (2022: £0.7m), loans of £0.7m (2022: £1.0m) and lease liabilities of £2.3m (2022: £2.0m). As described above, the new lease on the Martinsville facility helped refinance some existing financial obligations that were repaid when due.
Recent trading and financial position
The challenging trading conditions in the first four months of the financial year referred to in the Chair's and Chief Executive's statements have led to a significant reduction in the level of cash available to the company compared with the £0.7m reported at the last financial year end. Costs have been reduced accordingly.
Funding and going concern
As described in the Chair's statement, we are actively seeking to raise an additional £1m in the short term from a combination of equity and debt finance to provide necessary working capital and to support investment to grow the business. Whilst we are actively in discussions with shareholders, other investors and potential lenders, at this time there can be no certainty that adequate funds will be received, on which terms, or their timing.
Simon Hallam
Finance Director
7 February 2024
CONSOLIDATED INCOME STATEMENT
for the year ended 30 September 2023
| | Unaudited 12 months to 30 September 2023 £000 | Audited 12 months to 30 September 2022 £000 |
| |
| |
Revenue | | 5,499 | 5,015 |
Cost of sales | | (2,886) | (3,135) |
| |
| |
Gross profit | | 2,613 | 1,880 |
| |
| |
Administrative expenses | | (2,871) | (2,821) |
Other operating income | | 159 | - |
Other operating costs | | (932) | (1,208) |
| | (1,031) | (2,149) |
| |
| |
Finance income | | 3 | 4 |
Finance costs Finance costs on right of use assets | | (59) (106) | (49) (80) |
| |
| |
(Loss) on ordinary activities before taxation | | (1,193) | (2,274) |
| |
| |
Taxation | | 75 | 86 |
| |
| |
(Loss) on ordinary activities after taxation | | (1,118) | (2,188) |
| |
| |
(Loss) per share: Basic | | (1.9)p | (3.9)p |
(Loss) per share: Diluted | | (1.9)p | (3.9)p |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 30 September 2023
| | Unaudited As at 30 September 2023 £000 | Audited As at 30 September 2022 £000 |
| |
| |
Assets | |
| |
| |
| |
Non-current assets | |
| |
Goodwill | | - | 69 |
Intangible assets | | 9 | 19 |
Property, plant & equipment Right of use assets | | 4,640 1,697 | 5,402 1,660 |
Total non-current assets | | 6,346 | 7,150 |
| |
| |
Current assets | |
| |
Inventories | | 236 | 487 |
Trade and other receivables | | 742 | 955 |
Other current financial assets | | 335 | 450 |
Cash and cash equivalents | | 740 | 693 |
Total current assets | | 2,053 | 2,585 |
| |
| |
Total assets | | 8,399 | 9,735 |
| |
| |
Liabilities | |
| |
| |
| |
Current liabilities | |
| |
Trade and other payables | | 919 | 1,077 |
Loans | | 253 | 238 |
Right of use lease liability | | 182 | 201 |
Total current liabilities | | 1,371 | 1,535 |
| |
| |
Net current assets | | 682 | 1,050 |
| |
| |
Non-current liabilities | |
| |
Loans Deferred income | | 505 72 | 780 98 |
Right of use lease liability | | 2,106 | 1,742 |
Provision for dilapidations | | 50 | 50 |
Total non-current liabilities | | 2,736 | 2,670 |
| |
| |
Total liabilities | | 4,107 | 4,205 |
| |
| |
Net assets | | 4,292 | 5,530 |
| |
| |
Equity attributable to equity holders of the parent | |
| |
Share capital | | 4,063 | 4,063 |
Share premium | | 19,242 | 19,242 |
Retained earnings | | (19,318) | (18,200) |
Share-based payments reserve | | 577 | 553 |
Translation reserve | | (272) | (128) |
Total equity | | 4,292 | 5,530 |
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 September 2023
| Unaudited 12 months to 30 September 2023 £000 | Audited 12 months to 30 September 2022 £000 |
Cash flows from operating activities |
| |
Operating (loss) | (1,031) | (2,149) |
Gain on sale and leaseback | (159) | - |
Impairment of goodwill | 69 | - |
Depreciation and amortisation on owned assets Depreciation on right of use assets | 677 186 | 890 318 |
Share option charge / (credit) | 24 | (9) |
Decrease in inventories | 251 | 17 |
Decrease / (increase) in receivables | 243 | (372) |
(Decrease) / increase in payables | (93) | 372 |
(Decrease) in provisions | - | (34) |
Cash generated from / (used in) operations | 167 | (967) |
|
| |
Finance income | 3 | 4 |
Finance costs | (59) | (49) |
Right of use asset interest Tax received | (106) 161 | (80) 78 |
Net cash generated from / (used in) operating activities | 166 | (1,014) |
|
| |
Cash flows from investing activities |
| |
Proceeds from sales of property, plant and equipment | - | 7 |
Purchase of intangibles | (2) | (1) |
Purchase of property, plant and equipment | (108) | (298) |
Net cash used in investing activities | (110) | (292) |
|
| |
Cash flows from financing activities |
| |
Net proceeds from issue of ordinary share capital | - | 509 |
Proceeds from sale and leaseback | 477 | - |
New loans raised | - | 325 |
Loans repaid Repayment of leases | (286) (289) | (261) (251) |
Net cash (used in) / generated from financing activities | (98) | 322 |
|
| |
Effect of exchange rate fluctuations | 89 | 134 |
|
| |
Net increase / (decrease) in cash and cash equivalents | 47 | (850) |
|
| |
Cash and cash equivalents at the beginning of the year | 693 | 1,543 |
|
| |
Cash and cash equivalents at the end of the year | 740 | 693 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 September 2023
| Share Capital £000 | Share Premium £000 | Share-based Payments £000 | Translation Reserve £000 | Retained Earnings £000 | Total Equity £000 |
|
|
|
|
|
|
|
At 1 October 2021 | 3,942 | 18,854 | 562 | (432) | (16,012) | 6,914 |
Issue of new shares | 121 | 388 | - | - | - | 509 |
Share options | - | - | (9) | - | - | (9) |
Exchange translation | - | - | - | 304 | - | 304 |
Loss for the year | - | - | - | - | (2,188) | (2,188) |
At 30 September 2022 | 4,063 | 19,242 | 553 | (128) | (18,200) | 5,530 |
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At 1 October 2022 | 3,942 | 19,242 | 553 | (128) | (18,200) | 5,530 |
Issue of new shares | - | - | - | - | - | - |
Share options | - | - | 24 | - | - | 24 |
Exchange translation | - | - | - | (144) | - | (144) |
Loss for the year | - | - | - | - | (1,118) | (1,118) |
At 30 September 2023 | 4,063
| 19,242 | 577
| (272)
| (19,318)
| 4,292
|
(unaudited) |
|
Notes
1. Basis of preparation of financial information
While the financial information included in this preliminary unaudited annual financial results announcement has been prepared in accordance with the recognition and measurement principles of international accounting standards in conformity with the requirements of Companies Act 2006, this announcement does not contain sufficient information to comply with IFRSs.
The financial information set out herein does not constitute the Company's statutory accounts and is unaudited. Statutory accounts for Hardide plc for the year ended 30 September 2022 have been delivered to the Registrar of Companies and those for the year ended 30 September 2023 will be delivered following the Company's annual general meeting. The auditors' report in respect of the year ended 30 September 2022 was unqualified and did not contain statements under s498 (2) or (3) of the Companies Act 2006. The auditors have not yet reported on the financial statements for the year ended 30 September 2023 and therefore the financial information included in this announcement is unaudited.
Funding and going concern
As described in the Chair's Statement, we are actively seeking to raise an additional £1m in the short term from a combination of equity and secured debt finance to provide necessary working capital and to support investment to grow the business. Whilst we are actively in discussions with shareholders, other investors and potential lenders, at this time there can be no certainty that adequate funds will be received, on which terms, or their timing.
2. Segmental information
Under IFRS8, operating segments are defined as a component of the entity (a) that engages in business activities from which it may earn revenues and incur expenses (b) whose operating results are regularly reviewed and (c) for which discrete financial information is available. The Group management is organised into UK and USA operation and Corporate central functions, and this factor identifies the Group's reportable segments.
Year ended 30 September 2023 | UK operation £000 | US operation £000 | Corporate £000 | Total £000 | ||||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
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| |
| |
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External revenue | 3,154 | 3,076 | 2,345 | 1,939 | - | - | 5,499 | 5,015 |
Operating profit / (loss) | (776) | (1,545) | 759 | 201 | (1,014) | (805) | (1,031) | (2,149) |
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| |
| |
| |
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| |
| |
| |
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Segment assets | 6,196 | 6,855 | 2,054 | 2,323 | 149 | 557 | 8,399 | 9,735 |
Expenditure for non-current assets | 22 | 221 | 23 | 81 | - | - | 45 | 302 |
Segment liabilities | 2,594 | 2,962 | 1,225 | 893 | 288 | 350 | 4,107 | 4,205 |
The Group currently has a single business product, so no secondary analysis is presented. Revenue from external customers is attributed according to their country of domicile. Turnover by geographical destination is as follows:
External sales | UK £000 | Europe £000 | N America £000 | Rest of World £000 | Total £000 |
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2023 | 1,938 | 95 | 3,396 | 70 | 5,499 |
2022 | 1,314 | 666 | 3,007 | 28 | 5,015 |
3. Earnings Before Interest, Taxation, Depreciation and Amortisation ("EBITDA")
EBITDA is a key financial performance indicator used by management to assess the operational performance of the Group. This may be reconciled to the Income Statement as follows:
| 2023 £000
| 2022 £000 |
Operating loss | (1,031) | (2,149) |
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| |
Add back non-cash other operating costs: |
| |
Impairment of goodwill | 69 | - |
Depreciation and amortisation of owned assets | 677 | 890 |
Depreciation and amortisation of right of use assets | 186 | 318 |
EBITDA | (99) | (941) |
4. Earnings per share
| 2023 £000
| 2022 £000 |
(Loss) on ordinary activities after tax | (1,118) | (2,188) |
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Basic earnings per ordinary share: |
| |
|
| |
Weighted average number of ordinary shares in issue | 58,901,959 | 56,058,053 |
Earnings per share | (1.9)p | (3.9)p |
As net losses were recorded in 2023 and 2022, the potentially dilutive share options are anti-dilutive for the purposes of the loss per share calculation and their effect is therefore not considered.
5. Post balance sheet events
As described in the Chair's Statement and Chief Executive's reports, the first four months trading of the current financial year ending 30 September 2024 have been challenging. Revenues were £1.3m compared with £1.9m in the equivalent prior year period.
Hardide is seeking to raise an additional £1m in the short term from a combination of equity and secured debt finance both to provide additional working capital and to support investment to grow the business. Further details are in the Chair's Statement and the Financial Review.
6. Annual report and accounts and notice of AGM
The full audited annual report and accounts for the year ended 30 September 2023, including the basis for preparation and other explanatory notes, will be posted to shareholders in February 2024 upon completion of audit finalisation procedures. These will be available as soon as possible thereafter on the Company's website (www.hardide.com). The announcement of the publication of the full report and accounts will be notified. Notice of the Company's annual general meeting will be sent to shareholders at the same time.
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