Research note8 Dec 2015 07:05
The developer and provider of advanced surface coating technology reported results for the year ended 30 September 2015 that evidently disappointed. With the small Group’s core oil and gas market in the doldrums and plenty of investment in the period it was always going to be a tricky year. Looking ahead it’s all about aerospace!
Hardide’s range of nanostructured tungsten carbide-based coatings combine exceptional wear and corrosion resistance with toughness and ductility. Applied by low temperature chemical vapour deposition (CVD), they offer a unique combination of protective and life-extending properties in one coating.
The coatings can be applied to a wide range of metallic substrates including stainless steels, superalloys, tool and carbon steels as well as nickel, copper and cobalt-based alloys, and are a recognised replacement for hard chrome plating, chemically formed ceramics and HVOF tungsten carbides.
The Group web site at http://www.hardide.com/ is worth a visit
After a record first half, Hardide’s performance in the second half of the year was adversely affected by the weak oil & gas sector; in particular, reduced expenditure in exploration and drilling. As a result, revenues are largely flat year-on-year at £3.00m. Gross profit for the year decreased by 13% to £1.81m and gross margin reduced to 60% (2014: 69%).
The reported operating loss was £217k (2014: Profit £176k), which factored in costs associated with the Virginia facility, investment in the UK facilities, additional resource in business development and technical areas, as well as increased sales and marketing activity. It did also include a one-off benefit (£269k) from the release of an onerous lease provision. Management should be commended for resisting the urge to provide an ‘adjusted’ number as others seem to prefer, although the adjusted operating loss in this instance would probably have been worse!
The operating loss of £217k resulted in a net operating cash outflow of £159k with a further £1m incurred in capital expenditure.
The Balance Sheet looks able to withstand the current malaise with net cash of £2.3m and a current ratio 5.3x.
The year also saw significant investment in both the UK and US with a new production facility in Virginia expected to become fully operational by the end of December 2015 to support increasing sales to North America, including sales to the GE and other large volume customers.
Although oil and gas remains core they have expanded their presence in flow control, plastics processing and advanced engineering, as well as the aerospace sector. Sales to core markets of oil & gas and flow control increased respectively by 3% (2014: 44%) and 10% (2014: decrease of 11%).
Sales to North America rose 117% to £1.20m with volumes benefitting from the strategic supply agreement with GE, as well as the flow control orders received
Sign In
Follow the stocks
