REG - Hardide PLC - Annual results for year ended 30 September 2024
29/01/2025 07:00
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RNS Number : 0260V Hardide PLC 29 January 2025
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under Article 17 of
MAR.
29 January 2025
Hardide plc
("Hardide", the "Group" or the "Company")
Annual results for the year ended 30 September 2024
Hardide plc (AIM: HDD), the provider of advanced surface coating technology,
announces its audited annual results for the year ended 30 September 2024
("FY24" or the "Period").
"Well placed to deliver profitable growth, cash generation and value creation"
FY24 Financial Highlights:
£m H2 24 FY24 FY23 FY24 vs FY23 Change
Revenue 2.6 4.7 5.5 -£0.8m
Gross margin % 54% 48% 48% -
Adjusted EBITDA* 0.5 - (0.1) +£0.1m
Adjusted EBITDA* % 19% - - -
Cash at 30 Sept. 0.7 0.7 0.7 -
* Adjusted EBITDA is calculated before one-off restructuring costs.
· An encouraging recovery in the second half year, with H2 revenues of
£2.6m compared with H1 revenues of £2.1m.
· Strong H2 gross margin of 54% (H1: 41%), enabling full year
margins of 48% to recover to be in line with the prior year.
· Improved H2 profitability, with a positive adjusted EBITDA of
£0.5m (H2 FY23: -£0.1m) at a margin of 19% which reflects the gains achieved
from internal efficiency, pricing and cost-reduction actions.
· The business became cash flow positive towards the end of the
financial year, benefiting from a reduction of 30% in the cash break-even
level of sales since FY22 to just over £5m of revenue per year.
· Management expects strong revenue growth in FY25. Q1 FY25
revenues of £1.3m were ahead of the prior Q1 of £1.1m, in line with
expectations, with Q2 expected to benefit from the new aerospace work won
recently.
· The year-end cash balance was £0.7m (30 September 2023: £0.7m).
This subsequently increased to £1.0m at 31 December 2024 reflecting EBITDA
positive trading and working capital benefits. The Board is not currently
seeking further funding.
Business and Commercial Highlights
· Aerospace revenues more than doubled in FY24 and are expected
continue growing with the Group having secured a 10-year supply agreement with
a major customer in Q1 FY25. This win is expected to yield at least £0.5m
revenue in FY25 and future revenues of £6-8m over the 10-year timeframe.
· Double digit percentage growth in revenues from industrial
engineering
· Energy revenues recovering, following a weak H1 which was impacted
by customer de-stocking and some legacy oil and gas work ending
· Enhanced pre-coated product range launched in March 2024 is now
building traction
· Fresh approach to the commercialisation and development of the
group, with focus on accelerating sales growth and utilising spare capacity
over the short to medium term spearheaded by new CEO, Matt Hamblin.
Matt Hamblin, Chief Executive Officer of Hardide plc, commented:
"This is an exciting time to have joined Hardide as CEO, which has seen:
· action taken to right-size the cost base of the business and
improve margins in FY24;
· a return to revenue growth in the current financial year, including
from the recently announced aerospace sector work; and
· a refreshed, more focused approach to accelerating revenue growth
over the short to medium term to utilise spare production capacity.
We expect Hardide to deliver profitable growth in the current financial year
and beyond."
For further information:
Hardide plc Tel: +44 (0) 1869 353 830
Matt Hamblin (CEO)
Simon Hallam (Finance Director)
Andrew Magson (Non-Executive Chair)
Cavendish Capital Markets Ltd - Nominated Adviser and Broker Tel: +44 (0) 2072 200 500
Henrik Persson / Elysia Bough (Corporate Finance)
Jasper Berry / Dale Bellis (Sales)
Notes to editors:
www.hardide.com (http://www.hardide.com/)
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 as well as a reduced carbon footprint.
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
Whilst FY24 was a challenging financial year for Hardide, I am pleased to
report that the Board believes that we have now built a much stronger and more
resilient business.
The new leadership team established during the year is growth focussed and
commercially led.
The Group now has a far more appropriate cost base and break-even point, and
recent positive trading momentum has taken us into EBITDA positive territory
and into a net cash generative trading position.
The Board therefore believes Hardide is now well positioned to deliver
profitable growth both in the current financial year and beyond.
Strategy
Our strategy remains unchanged. However, with the leadership and personnel
changes made during the year and our more broad-based approach to business
development set out in the Chief Executive's review, we are now much better
positioned to deliver the acceleration in revenue growth we have been seeking.
Since early 2023 we have been progressing a 2-stage strategy.
1. Focus on becoming profitable and cash generative as soon as possible,
driven by increased sales to existing and new customers, utilising proven
coating technology and existing production capacity.
We made good progress on this objective during the year. The focus now is very
much to leverage profit and cash generation through an acceleration in revenue
growth, thereby better utilising substantial spare capacity and driving return
on investment.
2. Generate 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 surface treatment technology, including
co-operation with other coatings companies.
Under new leadership, we are taking a more holistic approach to business
development and how we further develop and commercialise the Group, as set out
in more detail in the Chief Executive's Review. The development of sales of
our Enhanced Products range launched during the year has led to increased
co-operation with a number of global coatings companies.
Performance
First half performance was impacted by customer de-stocking and the cessation
of several legacy oil and gas contracts, but the Group's second half results
were much improved as some of these challenges lessened. This, combined with
the benefits of our strategy to improve selling prices, drive internal
efficiencies and reduce cost, enabled the Group to deliver an EBITDA positive
result in the second half year ("H2").
The Group achieved an adjusted EBITDA in H2 of £0.5m from revenues of £2.6m,
resulting in an EBITDA margin of 19%. This compared with a small EBITDA loss
from similar revenues in the equivalent prior year period. In addition, the
business traded at a cash flow neutral level in the H2, becoming cash flow
positive towards the end of the year as previously targeted.
Since the financial year-end, trading has been in line with the Board's
expectations. Revenues in first quarter of FY25 were £1.3m, compared with
£1.1m in prior year first quarter, and the Group traded at EBITDA positive
levels on an unadjusted basis. The Group's cash balance has grown to £1.0m,
up from £0.7m held at the FY24 year-end, reflecting the benefits of EBITDA
positive trading and reduced working capital.
People
Hardide's employees are our most important asset and, on behalf of the Board,
I'd like to thank our colleagues for their hard work, resilience, constructive
feedback and support during what was a challenging year. It was pleasing to
see their endeavours reflected in the improving performance of the business as
the year progressed. All employees now participate in a group bonus scheme
that rewards profitable growth.
Board
There have been a number of Board changes over the last year.
The Nomination Committee has taken opportunities to refresh the Board and in
doing so evolve its mix of skills and experience to more closely align with
our strategy of accelerating revenue growth.
After an important period during which Steve Paul became Interim CEO last
Spring, we were delighted that Matt Hamblin then decided to step up from his
non-executive role to become our permanent CEO in June. Both Matt and Steve
contributed positively to the development of our growth strategy in the year,
introducing our Bespoke Solutions and Enhanced Products business streams as
described further in the CEO's report.
In December, Tim Rice stepped down from the Board after six years' service as
Senior Independent Director and Chair of our Remuneration and Nomination
Committee. On behalf of the Board, I would like to thank Tim for his wise
counsel during his tenure and, in particular, his contribution to the
development of Hardide's business in the Aerospace sector. We wish Tim well
for the future.
Tim has been succeeded by Dr Bryan Allcock, who has a background in materials
science and has spent his career developing and commercialising innovative
niche coating systems, including with businesses he has personally owned and
run. Bryan's expertise and entrepreneurial experience is therefore highly
aligned with Hardide's growth strategy.
Funding
The Board was very grateful to shareholders for supporting the business during
the equity fund raise last February and is pleased to report that there has
been no subsequent erosion of the £0.7m of cash realised at that time.
The Group has now become cash generative, with Hardide's cash balance
increasing to £1.0m at 31 December 2024. Hardide is already a well invested
business with significant spare capacity. Therefore, the Board is not planning
to raise further funds at the present time and has prepared the financial
statements on a going concern basis.
Outlook
Hardide continues to benefit from unique, patented, advanced coatings
technology. The business is trading at EBITDA positive levels and generating
cash from a well invested operational platform with significant spare
capacity. The execution of Hardide's growth strategy is now being driven by
our new commercially focused leadership team. Therefore, the Board believes
the business is increasingly well positioned for success and value creation.
Andrew Magson
Non-Executive Chair
28 January 2025
Chief Executive's Review
Results for the year
The Group's results for the year can be summarised as follows:
£m
Year ended: 30 September 2023 30 September 2024
H1 H2 FY23 H1 H2 FY24
Revenue 2.9 2.6 5.5 2.1 2.6 4.7
Gross margin % 47% 48% 48% 41% 54% 48%
Adjusted EBITDA * - (0.1) (0.1) (0.5) 0.5 -
Adjusted EBITDA * margin % - n/a n/a n/a 19% -
Non-recurring costs* - - - - (0.4) (0.4)
EBITDA * - (0.1) (0.1) (0.5) 0.1 (0.4)
*EBITDA is Earnings Before Interest, Tax, and Depreciation and Amortisation
charges. Non-recurring costs principally relate to restructuring costs.
Revenues in FY24 of £4.7m decreased from last year's record of £5.5m. This
was driven by several customers reducing their inventory holdings as global
supply chains began to normalise following COVID, along with a number of oil
and gas projects coming to an end.
After a weaker H1, revenues in the second half recovered to £2.6m, a similar
level to the equivalent prior period. This reflected demand from our
industrial customers normalising and new business in the aerospace sector
beginning to replace legacy oil and gas work.
Despite a weaker H1 impacting the full-year results, the table above
illustrates the positive impact of management's actions to improve gross
margins and EBITDA profitability over the last two years. These actions
facilitated an adjusted EBITDA break-even performance for the full year, a
modest improvement on the prior year's result.
However, two particular metrics in the table above illustrate the significant
progress made to improve the profitability of the Group:
· Strong gross margin growth to 54% in the second half of FY24, (H2
FY23: 48%, H2 FY22: 38%); and
· Adjusted EBITDA was £0.5m at a 19% margin in H2 of FY24,
compared to a broadly EBITDA neutral result FY23, generated from similar
revenues of £2.6m.
Management estimates that revenue required to achieve cash break even has
reduced by circa 30% over the last two years from in excess of £7m in FY22 to
just over £5m at the end of FY24. This has been achieved through a
combination of significant cost savings, internal efficiencies, better pass
through of input cost inflation to customers and improved selling prices.
Commercial review
The Group's revenues by end use market were:
£m FY23 FY24 % change FY23 % total FY24 % total
Energy 3.4 1.9 -45% 63% 40%
Industrial 1.7 1.9 +12% 30% 40%
Aerospace 0.4 0.9 +100%+ 7% 20%
Total 5.5 4.7 -14% 100% 100%
The above illustrates the significant change in revenue mix seen during the
year, with a reduced dependence on oil and gas work and encouraging progress
being made in the development of aerospace applications.
Energy
During the year, Energy revenues fell significantly to £1.9m, a decrease of
approximately 45% on the FY23 results. This reflected the impact of several
significant oil and gas customers de-stocking during H1, as global supply
chains continued to normalise post COVID together with the impact of sanctions
on Russia and new regulations impacting land drilling in the USA.
Following efforts re-energise relationships with our existing oil customer
base, the new commercial team has received encouraging feedback, with a number
of new projects now under discussion. This is reflected in promising Q1 FY25
demand levels. New customers proactively engaged during FY24 resulted in
several new applications being identified and the successful completion of
customer funded development projects.
To illustrate this, a specification is being finalised to support a Tier 1
supplier of energy systems and projects with production revenue set to begin
in FY25. Additionally, customer funded testing is also underway to support a
global OEM of Oil & Gas infrastructure with their global applications.
Early indications suggest positive test results with specific applications
being explored will lead to increased customer funded development projects
during FY25, and a move towards volume production starting in FY26.
There has been no repeat demand since FY22 for the coating of industrial gas
turbine blades, where the Hardide coating is used to mitigate water droplet
erosion. We re-assessed the likely commercial appetite for this application
during the year and, whilst we believe there remain opportunities for
development over time, we have concluded it is a niche application for certain
end use customers of the major OEMs operating in the power generation market.
Therefore, this is no longer a focus of current business development activity.
In the green and renewable energy sector, demand was again modest during the
year. The European solar panels market, where we have had some initial
success, has recently been flooded by lower cost product from China that does
not use our coatings.
Applications of Hardide coatings for battery technology, hydrogen production
and storage remain promising for the medium / longer term and remain a key
focus of our research and development activities. Our Innovate UK grant
project, which focuses on researching a new CVD coating variant supportive of
green hydrogen, is expected to complete in April 2025. Successes in initial
testing has confirmed our products as a promising coating solution for use and
adoption in this area. As the project is expected to complete mid-way though
FY25, we will be seeking customer engagement to help industrialise the
solution for these applications.
Industrial engineering
Demand in the industrial engineering sector was also subdued in the first half
of FY24 when one of our major customers de-stocked. Activity levels in H2
recovered, albeit we are mindful that this customer is managing its inventory
holdings tightly as product ranges are refreshed.
Another major industrial customer, who uses Hardide products in the
manufacture of airport scanning devices, increased demand in line with the
aviation industry recovery post-COVID.
Overall, industrial engineering revenues recovered to deliver double digit
percentage growth for the year as a whole.
Aerospace
Following significant investment into developing our presence within the
aerospace market, including achieving all relevant quality accreditations, the
Group secured its first major production volumes with a large European
aircraft manufacturer towards the end of the prior financial year to supply
coating of parts used in commercial passenger aircraft. This work has
progressed well enabling overall revenues into the aerospace sector to
increase by 147%, having benefited from the first full year of sales with this
customer and good forward visibility of continuing work. It is pleasing to see
that first quarter demand levels in FY25 have shown further growth.
In December 2024 we announced we had won additional work with this customer to
coat parts for freight aircraft. This is expected to add at least £0.5m to
revenues in FY25, and based on the customer's anticipated build rates, further
production revenues in the range £6-8m over the expected 10 year time frame
of the contract.
We continue to seek new production work within the aerospace sector, and so
far, have had encouraging successes in technical trials and achieved
accreditations to work with a number of blue chip customers.
Business development
The Board conducted a thorough review of our business development activities
in the first part of the FY24 and concluded that the portfolio had
insufficient projects with a high enough probability of material commercial
success in the short to medium term. We therefore focused on shorter term
aerospace market opportunities and developing the supply of copper nozzle
component spares, both of which began to bear fruit later in the year.
Since then, our approach to developing the business has changed significantly.
Digital marketing activities have been initiated with a specialist partner and
are targeted to increase market awareness of the unique features and benefits
Hardide coatings, particularly in challenging operating environments and where
non-line of sight coating application is required. The objective is to use
sophisticated digital and web site technology to attract and open up a
dialogue with design engineers who have technical needs that Hardide could
provide solutions for.
We are also taking a broader and more holistic approach to end use market
development that places focus on applications where Hardide coatings are
uniquely differentiated. Therefore, our approach has become less restricted by
the Group's traditional targeting of energy, aerospace and certain industrial
engineering applications.
Our focus is also on achieving significantly better utilisation, as soon as
practicable, of:
(i) our existing invested asset base where we believe we have
spare operational capacity to at least double current revenues; and
(ii) the skill sets of our people.
This has led us to target, for example, end user and spares markets where
decision making and conversion of opportunities into revenue is typically much
faster.
Taking the above together, we have reorganised our sales, business development
and marketing functions as follows, to expand Hardide's business far beyond
our previous coatings as a service model.
We now have three business development streams:
1. Service
This is Hardide's traditional business and currently represents over 90% of
sales revenues. Typically, work is driven by larger OEMs, although orders are
placed on Hardide by their tier 1 or tier 2 suppliers. Becoming accredited by
OEMs can take many years, and there is typically no order book as such.
We are now working much more closely with OEM customers to generate "pull
through" demand, and are taking a more open and flexible approach to better
understanding customer needs, likely volume levels and working together with
customers to develop a way of reducing costs per unit to achieve mutually
beneficial price points at attractive margins.
We are also developing ancillary service offerings to better utilise Hardide's
existing capabilities beyond our core CVD coatings business. Examples include
providing pre-coating services using our nickel strike facilities, and
offering specialist laboratory inspection services.
2. Enhanced products
This business stream was launched in April 2024. The objective is to
accelerate revenue growth and generate more predictable repeat business by
coating high volume consumable spares to end users where the payback offered
by the durability of the Hardide coating provides a compelling value
proposition. The initial focus has been to provide coatings for copper nozzles
and associated components used in thermal spraying equipment where the
existing life of the component is only a few hours and the downtime costs of
replacement are high. Hardide's coatings are proven to increase the life of
these components between 3 and 20 times. To date we have provided nozzles to
22 customers, these are both our own products as well as providing a service
to customers of a coating on their existing stock to extend life. Initial
revenue generated in the second half of FY24 was encouraging and we
established credibility with this new customer base in terms of product
performance. We are targeting significant growth in the current financial year
and beyond.
3. Bespoke Solutions
This business stream is currently under development and is focused on solving
unique customer problems with a bespoke Hardide specification in both our
traditional markets as well as new markets. In our traditional markets of
Energy and Aerospace development lead times and customer approvals are long,
and therefore having a balanced opportunity pipeline in terms of timeframes to
revenue realisation is therefore critical to our success and work has begun to
achieve this. As part of this initiative, we will seek to become more market
agnostic and also target customers and applications with shorter approval
cycles. In doing this we will work with customers to provide a solution that
has a bespoke Hardide specification and therefore creates a high barrier to
entry for other surface treatment providers. As an example of new markets, our
first customer funded development project was recently completed for a
customer operating in the semi-conductor sector. If successful, this will lead
to a wider portfolio of applications that could benefit from Hardide's coating
capabilities. This offering will be underpinned by our new use of digital
marketing, together with our own networks, to identify and attract design
engineers to Hardide where our coatings technology offers a unique solution
leading to repeatable and predictable production orders.
By now developing the business using the structure and approach set out above,
we believe that we will be able to accelerate Hardide's growth, consistent
with our strategy, with meaningful results expected over the short to
short/medium term.
Operations
Health & safety
Once again, there were zero lost time health and safety incidents across the
Group during the FY24 financial year. Regular external audits and inspections
are performed at both sites and recommendations for continuous improvement
followed up. Greater focus on being placed on potential hazard and near miss
identification, reporting and continuous improvement activities in order to
reduce the risk of accidents occurring.
Accreditations
Hardide's site at Bicester in the UK 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 site at Martinsville
are accredited to aerospace quality standard AS9100 Rev. D and to ISO9001. The
Bicester facility is certified to environmental standard ISO14001, while
Martinsville complies with applicable local, state and federal environmental
standards.
Continuous improvement
A number of continuous improvement projects were initiated during the year and
are beginning to bear fruit. Initial focus has been on improving the
efficiency of usage of our two key variable input costs, process gas and
energy. In addition, we are putting increased focus on increasing the
efficiency and flexibility of production workflows to improve productivity.
Fundamentally, the cost per part of components coated is heavily dependent on
the quality of up front application engineering, together with the volume,
predictability and repeatability of demand, which together help enable
efficient batch sizes and reactor utilisation. We have recently been more far
more proactive in working with customers to optimise these areas for our
mutual benefit.
Development of the Martinsville site in the USA
We believe that revenue growth opportunities for Hardide in the USA and North
America are significant.
Traditionally, our Martinsville site in Virginia has been a satellite
production centre and has operated under the close supervision of operational
management in the UK. We are evolving the organisational structure with the
objective of empowering and developing the team in Martinsville to carry out
some business development activities directly; and also to enable them to more
fully mirror operational capabilities with those in the UK.
We believe that the additional sales potential, including from increased
competitiveness by providing more coatings for the North American market
locally will offer fast returns on what at this stage are anticipated to be
relatively modest incremental costs of investment.
Intellectual property
Hardide continues to renew patents in territories that it believes are
important to its commercial development and to protect latest developments and
applications in its coatings technology.
In effect, our most recent patents serve to increase the life span of our
original patents by covering an increased range of applications.
Management also believes that Hardide's know-how and experience in applying
the coatings technology has now become as valuable, if not more so, than the
patents themselves.
Research and development
The focus of our research and development activities during the year was as
follows:
1. Working on a grant funded project to evaluate the benefits of Hardide
coatings in the areas of hydrogen production and storage. The project will be
concluded in the current financial year.
2. Fundamental research work on developing a variant of the coating that
reduces friction.
We are taking a more commercial approach to our development work, with focus
on projects that are judged more likely to convert into revenue, profit and
cash in the short to medium term and working with customers who will assist us
in funding the development of solutions for specific commercial applications.
Environmental, Social and Governance ("ESG")
We believe Hardide has strong ESG credentials as explained in the ESG report
later in the full Annual Report.
Hardide's coatings prolong the life of, and improve the resilience and
efficiency of, the components and parts used by our customers, thereby
reducing life cycle costs, reducing waste and avoiding the harmful chemicals
used in some competing coating technologies.
Our facilities in the UK and USA are well invested and operate to high
environmental standards, with continuous improvement initiatives targeting a
relative reduction in carbon emissions over time.
As a small team of around 30 people, we work closely with and communicate
regularly with employees, who are involved in discussions as to how we grow,
develop and continually improve the business. In the new financial year we
have introduced a profit bonus scheme that all employees participate in.
We believe that Hardide as a small, listed business on London's Alternative
Investment ("AIM") market, is well governed and we comply with the QCA
corporate governance code for AIM listed businesses.
Strong, responsible corporate governance and ethical behaviour is fundamental
to the Board's oversight of the Group and to Hardide's broader culture and
values.
Current financial year to date trading
Year to date trading in the first quarter of FY25 has been in line with
management's expectations, with a continuation of the broad trends observed in
the second half of FY24. The second quarter of the current financial year is
expected to benefit from the additional aerospace sector work recently won and
demand is building for copper nozzles within our Enhanced Products range.
Unaudited sales in the first quarter of FY25 were £1.3m (Q1 FY24: £1.1m) and
the Group continues to trade at EBITDA positive levels. The Group's cash
balance at 31 December 2024 was £1.0m, a £0.3m increase on the position at
30 September 2024.
Outlook
In light of:
· action taken to right-size the cost base of the business and
improve margins in FY24;
· a return to revenue growth in the current financial year,
including from the recently announced aerospace sector work; and
· a refreshed, more focused approach to accelerating revenue growth
over the short to medium term to utilise spare production capacity
we expect Hardide now to deliver profitable growth in the current financial
year and beyond.
Matt Hamblin
Chief Executive Officer
28 January 2025
Group Finance Director's Review
Income statement
The revenue and EBITDA performance of the Group for the year is described in
the Chief Executive's review.
A reconciliation of adjusted EBITDA and earnings to statutory profit measures
is set out below:
Year ended: 30 September 2023 30 September 2024
Non-recurring costs
£m Statutory Adjusted Statutory
EBITDA (0.1) - (0.4) (0.4)
Depreciation and amortisation
(0.9) (0.8) - (0.8)
Financing costs (0.2) (0.2) - (0.2)
Loss before tax (1.2) (1.0) (0.4) (1.4)
Tax 0.1 - - -
Net earnings after tax (1.1) (1.0) (0.4) (1.4)
Basic earnings per share (pence) (1.9)
(1.9) (1.3) (0.6)
The non-recurring costs during FY24 relate to the one-off costs of
restructuring the business to reduce the ongoing cost base; costs associated
with the equity fund raise in February 2024; and the costs of the restricted
share option awards made to the CEO on commencement of his role that are
described further in the Remuneration and Nomination Committee Report.
Depreciation and amortisation costs of £0.8m in the year were a little lower
than in the prior year and financing costs of £0.2m were similar.
The Group had no corporation tax charge in FY24 or FY23 due to the losses
before tax incurred in both years. The Group benefited from modest research
and development tax credits in both years.
The negative basic earnings per share of 1.9 pence was the same as FY23,
despite the higher loss after tax, due to the greater average number of shares
in issue in FY24 following the equity fund raise in February 2024.
The group's cash flow statement for the year can be summarised as follows:
Year ended: 30 September 2023 30 September 2024
Adjusted EBITDA (0.1) -
Change in working capital 0.4 0.1
Net interest and tax (0.1) (0.1)
Operating cash flow 0.2 -
Restructuring cash costs - (0.4)
Capital expenditure (0.1) (0.1)
Business cash flow before financing
0.1 (0.5)
Net financing cash flows (0.1) 0.5
Net cash flow for the year - -
Cash balance at 30 September
0.7 0.7
Prior to the £0.8m equity fundraise in February 2024 and the benefit of net
new debt finance raised in the year of £0.2m, the group had a cash outflow
before financing costs of £0.5m in the year. This compared with a £0.1m net
positive cash flow in the prior year.
The weaker overall cash flow performance in the year to 30 September 2024
(prior to financing transactions) when compared with the prior year is
explained by the poor trading performance of the business in H1 of FY24
described in the CEO's report, the one-off cash restructuring costs incurred
in the second half of FY24 of £0.4m and fluctuations in working capital.
Prior to the net new asset finance raised and the one-off cash costs of the
restructuring during the second half of the FY24 financial year, which largely
offset each other, second half trading cash flows recovered to a broadly
neutral position.
The group began to generate net cash towards the end of the financial year and
this has continued into the first quarter of the current financial year. The
net cash balance at 30 September 2024 was £0.7m (30 September 2023: £0.7m)
and this had risen to £1.0m by 31 December 2024.
Balance Sheet, Capital Structure and Net Debt
The main changes in the Group's balance sheet over the year were:
· a reduction in the net value of property, plant and equipment by
£0.6m to £4.0m, as depreciation exceeded capital expenditure, reflecting the
significant invested capacity in the business;
· a reduction in net current assets, from £0.7m to £0.6m,
reflecting a small reduction in inventory.
Therefore, total assets decreased from £8.4m to £ 7.7m over FY24.
Total equity / shareholders' funds decreased from £4.3m to £3.7m, reflecting
the loss after tax for the year, partly offset by the proceeds raised from the
equity fundraising in February 2024 of £0.8m.
An analysis of Hardide's net debt is set out in the table below:
At 30 September: 2023 2024
Cash (0.7) (0.7)
Loans 0.8 0.7
Lease liabilities 2.2 2.1
Net debt 2.3 2.1
In total, the value of loans and lease finance due to be repaid in FY25 is
£0.45m (FY24: £0.44m).
Funding and going concern
The Group became cash generative for the first time towards the end of FY24,
with £0.7m of cash balances held at the financial year-end which increased to
£1.0m at 31 December 2024. Given Hardide is already a well invested business
with significant spare capacity, the Board is not planning to raise further
funds at the present time. The financial statements have been prepared on a
going concern basis.
Reverse stress testing suggests that, absent specific actions to reduce costs,
working capital and capital expenditure, the Group may need to seek further
funding only if revenues fell by more than 20% compared to forecast. Given to
date the business is trading in line with management expectations, the Board
considers this scenario to be unlikely.
Simon Hallam
Group Finance Director
28 January 2025
CONSOLIDATED INCOME STATEMENT
for the year ended 30 September 2024
12 months to 30 September 2024 12 months to 30 September 2023
£000 £000
Revenue 4,730 5,499
Cost of sales (2,454) (2,886)
Gross profit 2,276 2,613
Administrative expenses (2,244) (2,871)
Other operating income - 159
Adjusted EBITDA before restructuring costs 32 (99)
Restructuring costs (399) -
EBITDA (367) (99)
Depreciation and amortisation (823) (863)
Impairment of goodwill - (69)
Operating (loss) (1,190) (1,031)
Finance income 4 3
Finance costs (157) (165)
(Loss) on ordinary activities before taxation (1,343) (1,193)
Taxation 23 75
(Loss) on ordinary activities after taxation (1,320) (1,118)
(Loss) per share: Basic (1.9)p (1.9)p
(Loss) per share: Diluted (1.9)p (1.9)p
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 30 September 2024
As at 30 September 2024 As at 30 September 2023
£000 £000
Assets
Non-current assets
Intangible assets 9 9
Property, plant & equipment 3,979 4,640
Right of use assets 1,526 1,697
Total non-current assets 5,514 6,346
Current assets
Inventories 167 236
Trade and other receivables 980 742
Other current financial assets 391 335
Cash and cash equivalents 700 740
Total current assets 2,238 2,053
Total assets 7,752 8,399
Liabilities
Current liabilities
Trade and other payables 795 919
Loans 235 253
Deferred income
393
17
Right of use lease liability 216 182
Total current liabilities 1,639 1,371
Net current assets 599 682
Non-current liabilities
Loans 479 508
Deferred income 50 72
Right of use lease liability 1,875 2,106
Provision for dilapidations 50 50
Total non-current liabilities 2,454 2,736
Total liabilities 4,093 4,107
Net assets 3,659 4,292
Equity attributable to equity holders of the parent
Share capital 4,845 4,063
Share premium 19,188 19,242
Retained earnings (20,638) (19,318)
Share-based payments reserve 607 577
Translation reserve (343) (272)
Total equity 3,659 4,292
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 September 2024
Share Share Share-based Payments Translation Reserve Retained Total
Capital Premium Earnings Equity
£'000 £'000 £'000 £'000 £'000 £'000
At 1 October 2022 4,063 19,242 553 (128) (18,200) 5,530
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
At 1 October 2023 4,063 19,242 577 (272) (19,318) 4,292
Issue of new shares 782 98 - - - 880
Share issue costs - (152) - - - (152)
Share options - - 30 - - 30
Exchange translation - - - (71) - (71)
Loss for the year - - - - (1,320) (1,320)
At 30 September 2024 4,845 19,188 607 (343) (20,638) 3,659
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 September 2024
12 months to 30 September 2024 12 months to 30 September 2023
£000 £000
Cash flows from operating activities
Operating (loss) (1,190) (1,031)
Gain on sale and leaseback - (159)
Impairment of goodwill - 69
Depreciation and amortisation on owned assets 605 677
Depreciation on right of use assets 218 186
Share option charge 30 24
Decrease in inventories 69 251
(Increase) / decrease in receivables (270) 243
Increase / (decrease) in payables 269 (93)
Cash (used in) / generated from operations (269) 167
Finance income 4 3
Finance costs (157) (165)
Tax received - 161
Net cash (used in) / generated from operating activities (422) 166
Cash flows from investing activities
Purchase of intangibles, property, plant and equipment (64) (110)
Net (cash used) in investing activities (64) (110)
Cash flows from financing activities
Net proceeds from issue of ordinary share capital 728 -
Proceeds from sale and leaseback - 477
New loans raised 235 -
Loans repaid (260) (286)
Repayment of leases (269) (289)
Net cash generated from / (used in) financing activities 434 (98)
Effect of exchange rate fluctuations 12 89
Net (decrease) / increase in cash and cash equivalents (40) 47
Cash and cash equivalents at the beginning of the year 740 693
Cash and cash equivalents at the end of the year 700 740
Notes
1. Basis of preparation of financial information
The financial information presented is extracted from the audited financial
statements. Full statutory accounts for Hardide plc for the year ended 30
September 2023 have been delivered to the Registrar of Companies and those for
the year ended 30 September 2024 will be delivered following the Company's
annual general meeting.
Funding and going concern
The directors have adopted the going concern basis in preparing the financial
statements after assessing the principal risks and considering the impact of
various downside scenarios to the Group's base case financial plans, including
latest sales expectations and profit margins for the period to March 2026.
The Board expects the Group to have sufficient financial and other resources
to continue to operate as a going concern for the foreseeable future, but in
reaching that conclusion the Board has undertaken a series of sensitivity
analyses based on the Group not achieving its base case sales forecast. In
order for the Group to have a material uncertainty as to its ability to
continue as a going concern, absent further actions that could be taken to
reduce costs, working capital and capital expenditure, there would need to be
a reduction of c.20% against its base case sales forecast.
The Board believe that this scenario is unlikely and has therefore concluded
that it remains appropriate to prepare the financial statements on a going
concern basis.
2. Segmental information
Year ended UK operation US operation Corporate Total
30 September £000 £000 £000 £000
2024 2023 2024 2023 2024 2023 2024 2023
External revenue 3,129 3,154 1,601 2,345 - - 4,730 5,499
Operating profit / (loss) (442) (776) 296 759 (1,044) (1,014) (1,190) (1,031)
Segment assets 5,779 6,196 1,754 2,054 219 149 7,752 8,399
Expenditure for non-current assets 25 22 23 23 - - 48 45
Segment liabilities 2,686 2,594 1,188 1,225 219 288 4,093 4,107
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 Europe N America Rest of World Total
£000 £000 £000 £000 £000
2024 2,096 159 2,033 442 4,730
2023 1,938 95 3,396 70 5,499
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:
2024 2023
£000 £000
Operating loss (1,190) (1,031)
Restructuring costs 399 -
Add back non-cash other operating costs:
Impairment of goodwill - 69
Depreciation and amortisation of owned assets 605 677
Depreciation and amortisation of right of use assets 218 186
Adjusted EBITDA 32 (99)
4. Earnings per share
2024 2023
£000 £000
(Loss) on ordinary activities after tax (1,320) (1,118)
Basic earnings per ordinary share:
Weighted average number of ordinary shares in issue 70,849,596 58,901,959
Earnings per share (1.9)p (1.9)p
As net losses were recorded in 2024 and 2023, 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. Loans
2024 2023
£000 £000
Total loans 714 761
Maturity analysis:
Within 1 year 235 253
1 to 2 years 169 212
2 to 3 years 103 144
3 to 4 years 86 76
4 to 5 years 54 57
5+ years 67 19
6. Right of use lease liabilities
2024 2023
£000 £000
Total lease liabilities 2,091 2,288
Maturity analysis:
Within 1 year 216 182
1 to 2 years 193 192
2 to 3 years 195 196
3 to 4 years 205 199
4 to 5 years 218 208
5+ years 1,064 1,311
7. Post balance sheet events
On 18th December 2024, the Group announced that it had signed a 10 year supply
agreement with a major customer in the Aerospace sector for the coating of
cargo door components. Customer funded equipment modifications are largely due
to be completed in the first half of the new financial year. These, together
with subsequent tooling and initial production volumes, are expected to
benefit the current financial year revenues by approximately £0.5m and future
revenues by c.£6-£8m over the life of the agreement.
On 27 December 2024, the Group awarded the following Options:
Name Position Number of Options Type of option Conditions
Matt Hamblin CEO 1,000,000 Restricted shares Minimum 3-year tenure in role
2,300,000 Performance shares Financial performance
Simon Hallam Finance Director 655,200 Performance shares Financial performance
Yuri Zhuk Technical Director 776,412 Performance shares Financial performance
The Options set out above are issued pursuant to the Hardide plc 2016 EMI
option scheme and have an exercise price of 5.71p per share, being the 5-VWAP
for the 5 business days preceding the date of the award.
Also on 27 December 2024, the Group issued 355,240 shares to satisfy a
previously contracted bonus award to Sketchley GmBH, a company owned by Steve
Paul, who served as the Company's interim CEO for the period February to May
2024.
8. Annual report and accounts and notice of AGM
The full audited annual report and accounts for the year ended 30 September
2024, including the basis for preparation and other explanatory notes, will be
made available to shareholders in February 2025. These will be available as
soon as possible thereafter on the Company's website (www.hardide.com
(http://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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