REG - Hardide PLC - Preliminary FY23 results & FY24 trading update
08/02/2024 07:15
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RNS Number : 4029C Hardide PLC 08 February 2024
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 Tel: +44 (0) 1869 353 830
Andrew Magson, Non-Executive Chair
Jackie Heddle, Communications Manager
IFC Advisory Tel: +44 (0) 20 3934 6630
Graham Herring
Tim Metcalfe
Florence Chandler
Cavendish Capital Markets Ltd - Nominated Adviser and Joint Broker Tel: +44 (0) 2072 200 500
Henrik Persson/ Abigail Kelly
Allenby Capital - Joint Broker
Tony Quirke / Joscelin Pinnington - Sales and Corporate Broking Tel: +44 (0) 20 3328 5656
Jeremy Porter/ Dan Dearden-Williams - Corporate Finance
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. 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 2022
£m £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 Audited
12 months to 30 September 2023 12 months to 30 September 2022
£000 £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 (59) (49)
Finance costs on right of use assets (106) (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 Audited
As at 30 September 2023 As at 30 September 2022
£000 £000
Assets
Non-current assets
Goodwill - 69
Intangible assets 9 19
Property, plant & equipment 4,640 5,402
Right of use assets 1,697 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
Deferred income
17
19
Right of use lease liability 182 201
Total current liabilities 1,371 1,535
Net current assets 682 1,050
Non-current liabilities
Loans 505 780
Deferred income 72 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 Audited
12 months to 30 September 2023 12 months to 30 September 2022
£000 £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 677 890
Depreciation on right of use assets 186 318
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 (106) (80)
Tax received 161 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 (286) (261)
Repayment of leases (289) (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 Share Share-based Payments Translation Reserve Retained Total
Capital Premium £000 £000 Earnings Equity
£000 £000 £000 £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
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 UK operation US operation Corporate Total
30 September 2023 £000 £000 £000 £000
2023 2022 2023 2022 2023 2022 2023 2022
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)
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 Europe N America Rest of World Total
£000 £000 £000 £000 £000
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 2022
£000 £000
Operating loss (1,031) (2,149)
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 2022
£000 £000
(Loss) on ordinary activities after tax (1,118) (2,188)
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 (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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