REG - Hardide PLC - Interim Statement
20/05/2025 07:00
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RNS Number : 2961J Hardide PLC 20 May 2025
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
Hardide plc
("Hardide", "the Group" or "the Company")
Interim Statement for the six months ended 31 March 2025
Financial Highlights
Six months ended 31 March:
£m H1 2025 H1 2024 Change
Revenue 2.8 2.1 +0.7 (+32%)
Gross margin % 54% 41% +13 ppts
EBITDA 0.4 (0.5) +0.9
Operating profit / (loss) - (0.9) +0.9
Free cash flow 0.3 (0.7) ¹ +1.0
Cash balance at 31 March 1.0 0.7 +0.3
Business Highlights
· A significant positive turnaround in performance, with strong H1
revenues up 32% versus H1 2024.
· Hardide has now become EBITDA profitable and cash generative,
remaining on track to deliver on full year performance expectations.
· Our strategy of accelerating revenue growth, utilising significant
available production capacity, is building traction under new management.
· The project to fully harmonise operational capabilities between our
plants in the USA and UK will complete this month, providing greater customer
service flexibility and positioning the Company well to changes in US tariff
policies.
· H2 will see a roll out of additional pre-treatment service offerings
which will be made available to existing and new customers. This new service
offering will include; low phosphorus electroless nickel plating, passivation,
electropolishing as well as laboratory services including corrosion salt spray
testing and material testing and analysis.
· H2 revenues will continue to benefit from the significant new
aerospace contract announced in December, together with numerous other
engineering development projects from both new and existing customers.
· Hardide is well positioned to drive significant further profitable
growth from the ongoing commercialisation of its unique surface treatment
technology, leveraging its well invested operational platform and significant
available capacity.
Andrew Magson, Non-Executive Chair commented:
"I am very pleased to report another period of encouraging commercial and
financial progress. Whilst mindful of the uncertain global trading environment
and Hardide's usual limited order book visibility, we are on track to deliver
against our expectations of performance for the full year.
More broadly the Board remains focused on its strategy of building value by
accelerating the growth in the business to utilise significant spare capacity
over the next few years."
¹ Free cash flow in H1 2024 excludes the net proceeds from the February
equity fundraise
Enquiries:
Hardide plc
Matt Hamblin, CEO Tel: +44 (0) 1869 353 830
Simon Hallam, CFO
Cavendish Capital Markets Ltd - Broker and Nominated Adviser Tel: +44 (0) 2072 200 500
Henrik Persson / Elysia Brough (Corporate Finance)
Dale Bellis / Jasper Berry (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.
Performance Overview
We are pleased to report that Hardide has delivered a significant positive
turnaround in performance over the last twelve months.
This has been achieved through revenue growth with both new and existing
customers, improved gross margins, delivery of operational efficiencies and
overhead reduction.
In the six months ended 31 March 2025 revenues grew by over 30% relative to
the prior first half year to £2.8m (H1 2024: £2.1m). Gross margins improved
from 41% to 54%. Together with a lower fixed cost base these factors enabled
the Group to record an EBITDA positive performance for the period of £0.4m at
an EBITDA margin of 14% (H1 2024: EBITDA loss of £0.5m).
The positive EBITDA performance enabled the Group to generate £0.3m of cash
in the period, compared with a £0.7m cash outflow (excluding proceeds from
fundraising) in the prior first half year.
Commercial review
The Group's revenues analysed by end use market were as follows:
H1 25 H1 24 % change H1 25 H1 24
(£m)
(£m)
% total
% total
Energy 1.2 0.8 +41% 44% 42%
Industrial 0.6 0.8 -27% 20% 36%
Aerospace 1.0 0.5 +113% 36% 22%
Total 2.8 2.1 +32% 100% 100%
The principal driver of revenue growth was demand from the aerospace sector,
including initial development revenues from the new contract won in December
2024 to coat cargo door components for freight aircraft. Additional production
readiness revenues and initial production revenues from this contract are
expected in the second half year.
Industrial revenues were a little subdued, in part relating to short term
inventory management by some customers around their financial year ends. These
customers are now showing improved demand schedules for our second half year.
Our enhanced product range launched a year ago, principally to coat consumable
spares for thermal spray guns, continues to build steady traction and is
contributing positively to overall sales.
Demand from the energy sector improved markedly on a year ago, in part a
recovery from a weak H1 2024 when some customers were de-stocking, but also,
encouragingly, from a variety of new application development projects with
existing customers as well as new customers in new geographies.
Innovation, research and development
The four principal areas of innovation, research and development activity in
the period were:
1. The commencement of a project in conjunction with a team of post
graduate engineering students from Cranfield University to evaluate the
potential for Hardide Coatings in carbon capture applications.
2. Continuing to work with a key customer in the power generation industry
to further improve the performance of Hardide coatings when used to mitigate
the effects of water droplet erosion on turbine blades. This follows the
outcome of field trials of the components initially supplied in 2022 which, if
successful, could lead to further sales in 2026.
3. Finalising the work, supported by grant funding, to assess the
potential for use of Hardide Coatings in the production of green Hydrogen.
Initial results have been encouraging and we are now seeking and engaging with
commercial partners to take development to the next stage.
4. CVD process optimisation focused on masking material usage to enable
the wider adoption of CVD in aerospace applications. Success would enable more
cost effective CVD coatings solutions to be applied to the critical component
area requiring protection. Grant funding is also being sought with an
application submitted.
Financial review
Income statement
The Group's income statement for the period can be summarised as follows:
£m H1 2025 H1 2024 Change
Revenue 2.8 2.1 +0.7 (+32%)
Gross margin 1.5 0.9 +0.6
Gross margin % 54% 41% +13 ppts
Overheads (1.1) (1.4) +0.3
EBITDA 0.4 (0.5) +0.9
Depreciation (0.4) (0.4) -
Operating profit / (loss) - (0.9) +0.9
Financing costs (0.1) (0.1) -
Loss before tax (0.1) (1.0) +0.9
Commentary on the Group's positive revenue and gross margin performance can be
found in the Performance Overview and the Commercial review sections above.
Overheads reduced from £1.4m in H1 2024 to £1.1m in H1 2025 due to
management action taken to focus the cost base of the business in the second
half of the last financial year. These actions are described further in our
last Annual Report.
Better revenues and gross margins, combined with lower overheads enabled
EBITDA to improve significantly to £0.4m compared with a £0.5m EBITDA loss
in the prior first half year.
Non-cash depreciation and amortisation changes were similar to the prior first
half at £0.4m, enabling the Group to report a small operating profit for the
period, another stepping stone on the way to Hardide become fully profitable
and earnings per share positive in the near term.
Cash flow
The Group's cash flow statement for the period is summarised below:
£m 6m to 31.3.25 6m to 31.3.24 Change
EBITDA 0.4 (0.5) 0.9
Working capital movement 0.2 0.2 -
Capital expenditure - (0.1) 0.1
Interest (0.1) (0.1) -
Debt repayment (0.2) (0.2) -
Equity fund raise - 0.7 (0.7)
Net cash flow 0.3 - 0.3
Net cash generated in the period was £0.3m enabling the group's cash balance
to increase from £0.7m at 30 September 2024 to £1.0m at 31 March 2025. This
compared with a cash outflow in the first half of the prior financial year of
£0.7m, prior to the £0.7m net proceeds from the February 2024 equity fund
raise.
Temporary working capital benefits in H1 2025 regarding initial engineering
work associated with the new aerospace sector work won last December, is
expected to reverse in H2 2025.
Balance sheet
The evolution of the Group's balance sheet since the last financial year end
is summarised in the table below:
£m 31 March 2025 30 September 2024 Change
Property, plant & equipment 3.7 4.0 (0.3)
Right of use assets 1.4 1.5 (0.1)
Working capital 0.1 0.3 (0.2)
Capital invested 5.2 5.8 (0.6)
Cash 1.0 0.7 0.3
Loans (0.6) (0.7) 0.1
Lease liabilities (2.0) (2.1) 0.1
Shareholders' funds 3.6 3.7 (0.1)
Shareholders' funds were largely maintained in the period at £3.6m,
reflecting the substantially reduced loss after tax.
The Group's net indebtedness (including IFRS16 lease liabilities) at 31 March
2025 was £1.6m (30 September 2024: £2.1m). Of this, £0.1m of the loans and
£0.1m of the lease liabilities are repayable in the six-month period to 30
September 2025 and a further £0.3m in the twelve-month period to 31 March
2026.
Global trading environment and tariffs
Hardide's business model is to coat component parts owned by its customers.
Hardide's selling prices are set on an ex-works basis and the business does
not therefore bear the financial risks of transporting parts to and from our
facilities, across international borders, or funding any applicable tariffs.
Hardide further benefits from having factories in both the UK and the USA, and
later this month will complete a strategic project to fully harmonise the
operational capabilities of its US plant with that in the UK. Therefore,
whilst around 5% of group revenues destined for the US market has in the past
been processed in the UK, customers will be able to choose the most beneficial
geographic option to them in the future.
Work sourced from and/or destined for Europe and the Rest of the World does
not need to be processed by Hardide in the USA.
Therefore, whilst the Board believes that the direct impact on Hardide of the
changes to US tariff policies announced in recent months will be
insignificant, the greater risk to the business is the persisting volatile and
uncertain geopolitical and economic environment, and the potential impact of
this on global demand for trade.
Financing
The interim financial statements have been prepared on a going concern basis,
with no material uncertainties to this assessment identified from the Board's
review of the Group's latest financial plans and sensitivity analyses. Prior
to mitigating actions on costs, capital expenditure and working capital that
could be taken, if necessary, our scenario modelling indicates that the Group
would begin to erode cash should revenues fall by more than circa 10% from
current levels. Should revenues reduce by more than circa 20% from current
levels over a sustained period of time, then further external funding might be
needed.
Accelerating revenue growth
The priority of the Board and management team continues to be to accelerate
revenue growth and to capitalise on Hardide's substantial available capacity
as soon as possible over the coming years.
For the first time a quantified roadmap now exists, updated monthly, that
shows on a line by line basis how we might broadly double current revenues and
move towards fully utilising our operational capacity, estimated to be in the
range £10-12m, over the next few years. The "hopper" of potential
opportunities still needs to be filled out, so risks of work not being secured
or being delayed is reduced and overall chances of success are increased, but
nonetheless this marks a significant step forward.
As we grow the business, we intend to maintain the margin and cost disciplines
we have demonstrated over the last year.
We expect to be able to fund revenue growth using internally generated cash,
as the Group's ratio of profit and cash generation from incremental sales is
significantly higher than its ratio of working capital to sales. We also
believe capital expenditure needs will continue to be modest.
We have two broad strategies to drive acceleration in revenue growth:
1. Expansion of Hardide's existing business of supplying coatings as a
service. Traditionally, this has been Hardide's business model. This
includes:
- Selling developed and approved CVD coatings to our customers on
existing and new applications within our traditional markets. Over the last
year, key account management has become far more proactive and effective,
resulting in several new application trials underway with customers we have
worked with for many years. Business development activity has also been more
focused for coating as a service opportunity. In the period under review a new
oil and gas OEM located in the Middle East, a new geographical region for us,
is extensively testing our existing CVD coatings on specific applications
operating in similar operating environments where we have existing success;
- Further development of our enhanced products range launched a year
ago which involves coating consumable spare parts sold direct to end use
customers;
- Developing ancillary sales, such as offering a wider variety of
pre and post treatment services, an example being low phosphorus electroless
nickel plating (due to come on stream in May), and laboratory analysis
services to external customers in order to better utilise Hardide's asset base
and skills that exist in the business;
- Modest investment in our Martinsville, USA facility, to harmonise
its operational capabilities with our facility in the UK. This will give
customers choice on sourcing, help mitigate tariffs and potentially lower
their delivered costs, thereby enhancing the value proposition. This facility
is expected to come on stream by the end of May.
2. Development of a Bespoke Solutions business. This business stream has
been formed this year and is focused on solving unique customer problems with
a bespoke specification sales approach, collaborating closely together with
customers and thereby creating differentiated solutions with high barriers to
entry. This includes:
- A sophisticated sales-led digital marketing programme designed to
expand our network of key specifying engineers in search of solutions, with
focus on areas where Hardide coatings are truly differentiated from the
competition, i.e. challenging operating environments, complex shapes and
non-line of sight coating applications;
- An increase in engineering, testing and tooling sales as these
solutions are developed, building another income stream to support production
sales;
- A sector agnostic approach, enabling us to both grow and diversify
our revenue streams. As an example, we achieved our first sales to the
semiconductor sector in the period.
Outlook
Whilst mindful of both the uncertain global trading environment and Hardide's
limited order book visibility, based on year to date performance, the ongoing
development of the business and latest customer demand schedules, the Board
continues to expect Hardide to achieve its expectations for full year
financial performance.
More broadly, the Board believes that Hardide is increasingly well positioned
to drive significant further profitable growth from the ongoing
commercialisation of its unique surface treatment technology, leveraging its
well invested operational platform and significant available capacity.
Andrew
Magson
Matt Hamblin
Non-Executive Chair
CEO
20 May 2025
Income Statement
£ 000 Year to
6 months to 6 months to 30 September 2024
31 March 2025 31 March 2024 (audited)
(unaudited) (unaudited)
Revenue 2,801 2,116 4,730
Cost of Sales (1,302) (1,248) (2,454)
Gross profit 1,499 868 2,276
Administrative expenses (1,109) (1,350) (2,244)
Adjusted EBITDA before restructuring costs 390 (482) 32
Restructuring costs - - (399)
EBITDA 390 (482) (367)
Depreciation and amortisation (385) (400) (823)
Operating profit / (loss) 5 (882) (1,190)
Finance income 3 2 4
Finance costs (73) (77) (157)
Loss on ordinary activities before tax (65) (957) (1,343)
Tax - - 23
Loss on ordinary activities after tax (65) (957) (1,320)
Consolidated Statement of Changes in Equity
£ 000 Year to
6 months to 6 months to 30 September 2024
31 March 2025 31 March 2024 (audited)
(unaudited) (unaudited)
Total equity at start of period 3,659 4,292 4,292
Loss for the period (65) (957) (1,320)
Issue of new shares 20 880 880
Share issue costs - (125) (152)
Exchange differences on translation of foreign operation 19 (29) (71)
Share options 17 - 30
Total equity at end of period 3,650 4,061 3,659
Consolidated Statement of Financial Position
£ 000 30 September 2024
31 March 2025 31 March 2024 (audited)
(unaudited) (unaudited)
Assets
Non-current assets
Intangible assets 8 6 9
Property, plant & equipment 3,754 4,318 3,979
Right of Use Assets 1,422 1,595 1,526
Total non-current assets 5,184 5,919 5,514
Current assets
Inventories 186 215 167
Trade and other receivables 627 668 980
Other current financial assets 312 345 391
Cash and cash equivalents 992 732 700
Total current assets 2,117 1,960 2,238
Total assets 7,301 7,879 7,752
Liabilities
Current liabilities
Trade and other payables 959 882 795
Financial liabilities - loans 198 257 235
Financial liabilities - deferred income 17 17 393
Financial liabilities - leases 199 185 216
Total current liabilities 1,373 1,341 1,639
Net current assets 744 619 599
Non-current liabilities
Financial liabilities - loans 391 374 479
Financial liabilities - deferred income 43 61 50
Financial liabilities - leases 1,794 1,992 1,875
Provision for dilapidations 50 50 50
Total non-current liabilities 2,278 2,477 2,454
Total liabilities 3,651 3,818 4,093
Net assets 3,650 4,061 3,659
Equity attributable to equity holders of the parent
Share capital 3,152 4,845 4,845
Share premium 19,194 19,215 19,188
Capital redemption reserve 1,707 - -
Retained earnings (20,703) (20,275) (20,638)
Share-based payment reserve 624 577 607
Translation reserve (324) (301) (343)
Total equity 3,650 4,061 3,659
Following the authority given at the AGM on 18 March, 189,642,236 deferred
shares, valued in the statement of financial position at £1,706,780, were
repurchased and cancelled for aggregate consideration of 1p, with the balance
transferred to the capital redemption reserve.
Consolidated Statement of Cash Flows
£ 000 Year to
6 months to 6 months to 30 September 2024
31 March 2025 31 March 2024 (audited)
(unaudited) (unaudited)
Cash flows from operating activities
Operating profit / (loss) 5 (882) (1,190)
Depreciation - owned assets 273 310 605
Depreciation - right of use assets 112 90 218
Share option charge 17 - 30
(Increase) / decrease in inventories (19) 21 69
Decrease / (increase) in receivables 383 64 (270)
(Decrease) / increase in payables (213) 36 269
Cash generated from / (used in) operations 558 (361) (269)
Finance income 3 2 4
Finance costs (73) (77) (157)
Tax received 49 - -
Net cash generated from / (used in) operating activities 537 (436) (422)
Cash flows from investing activities
Purchase of intangibles, property, plant, equipment (8) (102) (64)
Net cash used in investing activities (8) (102) (64)
Cash flows from financing activities
Net proceeds from issue of ordinary share capital - 755 728
New loans raised - - 235
Loans repaid (141) (120) (260)
Repayment of leases (117) (111) (269)
Net cash (used in) / generated from financing activities (258) 524 434
Effect of exchange rate fluctuations 21 6 12
Net increase / (decrease) in cash and cash equivalents 292 (8) (40)
Cash and cash equivalents at the beginning of the period 700 740 740
Cash and cash equivalents at the end of the period 992 732 700
Notes
1. Basis of preparation of financial information
While the financial information included in these interim financial results
for the half year ended 31 March 2025 have 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 IFRS's.
These condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements for the year ended 30
September 2024, which have been prepared in accordance with UK adopted
international accounting standards and with the requirements of the Companies
Act 2006 as applicable to companies reporting under these standards.
The financial information set out above does not constitute the Company's
statutory accounts as defined by section 434 of the UK Companies Act 2006. A
copy of the statutory accounts for Hardide plc for the year ended 30 September
2024 has been delivered to the Registrar of Companies. The auditors have
reported on those accounts; their reports were unqualified. Their reports for
the year ended 30 September 2024 did not contain statements under section 498
(2) or (3) of the Companies Act 2006.
The consolidated financial statements present the results of the Company and
its subsidiaries ("the Group") as if they formed a single entity. Intercompany
transactions and balances between Group companies are therefore eliminated in
full. Subsidiaries are fully consolidated from the date on which control is
transferred to the Group and cease to be consolidated from the date on which
control is transferred out of the Group.
2. EBITDA
Earnings Before Interest, Taxation, Depreciation and Amortisation ("EBITDA")
is a key financial performance indicator used by management to assess the
operational performance of the Group. This may be reconciled to the Operating
Loss as reported in the Income Statement as follows:
£ 000 Year to
6 months to 6 months to 30 September 2024
31 March 2025 31 March 2024 (audited)
(unaudited) (unaudited)
Operating profit / (loss) 5 (882) (1,190)
Add back non-cash operating costs:
Depreciation and amortisation of owned assets 273 310 605
Depreciation and amortisation of right of use assets 112 90 218
EBITDA 390 (482) (367)
Restructuring costs - - 399
Adjusted EBITDA 390 (482) 32
3. 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.
6 months ended UK operation £000 US operation Corporate Total
31 March 2025 £000 £000 £000
2,801
2,313 488 -
External revenue
Reportable segment operating profit / (loss) 519 (40) (474) 5
Segment assets 5,588 1,549 164 7,301
Segment liabilities 2,292 1,165 194 3,651
6 months ended UK operation £000 US operation Corporate Total
31 March 2024 £000 £000 £000
1,394 722 - 2,116
External revenue
Reportable segment operating profit / (loss) (249) 7 (640) (882)
Segment assets 5,366 1,955 558 7,879
Segment liabilities 2,378 1,088 352 3,818
12 months ended UK operation £000 US operation Corporate Total
30 September 2024 £000 £000 £000
3,129 1,601 - 4,730
External revenue
Reportable segment operating profit / (loss) (442) 296 (1,044) (1,190)
Segment assets 5,779 1,754 219 7,752
Segment liabilities 2,686 1,188 219 4,093
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
6 months to 31 March 2025 1,019 712 455 615 2,801
6 months to 31 March 2024 1,004 97 987 28 2,116
12 months to 30 September 2024 2,096 159 2,033 442 4,730
3. Earnings per share
31 March 2025 31 March 2024 30 September 2024
£000
£000 £000
(Loss) on ordinary activities after tax (65) (957) (1,320)
Basic earnings per ordinary share:
Weighted average number of ordinary shares in issue 78,642,936 61,045,033 70,849,596
Earnings per share (0.1)p (1.6)p (1.9)p
As net losses were recorded in each of the respective periods, the potentially
dilutive share options are anti-dilutive for the purposes of the loss per
share calculation and their effect is therefore not considered.
4. Going concern
The interim financial statements have been prepared on a going concern basis,
with no material uncertainties to this assessment identified from the Board's
review of the Group's latest financial plans and sensitivity analyses. Prior
to mitigating actions on costs, capital expenditure and working capital that
could be taken, if necessary, our scenario modelling indicates that the Group
would begin to erode cash should revenues fall by more than circa 10% from
current levels. Should revenues reduce by more than circa 20% from current
levels over a sustained period of time, then further external funding might be
needed.
5. Debt maturity
Loans
31 March 31 March 30 September 2024
2025
2024
£000
£000
£000
Total loans 589 631 714
Maturity analysis:
Within 1 year 198 257 235
1 to 2 years 134 169 169
2 to 3 years 87 104 103
3 to 4 years 82 54 86
4 to 5 years 39 47 54
5+ years 49 - 67
Lease liabilities
31 March 31 March 30 September 2024
2025
2024
£000
£000
£000
Total lease liabilities 1,993 2,177 2,091
Maturity analysis:
Within 1 year 199 185 216
1 to 2 years 196 193 193
2 to 3 years 201 195 195
3 to 4 years 213 200 205
4 to 5 years 226 213 218
5+ years 958 1,191 1,064
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