Page 14 - Hardide-Annual-Report-2021
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 14 Strategic Report
As described in the Chairman’s & CEO’s Report, Hardide is a ‘technology development’ company in which increasing numbers of customers and types of application prove the worth and robustness of the technology; thereby giving rise to increasing sales, customer industries and customers, and ultimately to high, growing and consistent profits.
The Board retains its settled view that a strong upward trajectory in gross profit is the primary indicator of growth in the Group’s value. Accordingly, there is a focus on investing to grow revenues steadily and significantly so that, because of the Group’s high operational gearing, gross profit is maximised.
The Group has made further progress in its strategic goal of broadening its customer and sector base, and is now less dependent on a small number of customers and markets, and so is far less vulnerable to fluctuations in demand from any one customer.
Despite the COVID-19 pandemic, the move to new premises in Bicester was completed successfully. There are now five reactors installed there, including one that will accommodate components 50% larger than the others.
The successful establishment some five years ago of our coating facility in the US continues to serve the large North American market. Additionally, having a geographically separate production facility provides greater security of supply for customers. An additional benefit of establishing a geographically remote facility is our development of in-house expertise and experience in the transfer of Hardide technology. This will be of great benefit when there is to be further geographic expansion.
Customer contact
Although the Group’s coatings have wide applicability in very many industry sectors, it is a specialised
and relatively new, problem-solving product. However, it is not nearly as well-known as other high-performance coatings. Therefore, Hardide will continue vigorously with its programme of high-level technical presentations and attendance at trade fairs and conferences (pandemic restrictions permitting). Greater use will be made of email campaigns and
a range of channels such as trade press and social media will continue to be used to the full extent that resources permit.
Customer and industry diversification
As well as increasing sales, the customer and industry diversification element of the Group’s strategy is a major consideration.
Our development of the complex coating process
of filter screens used in well completion has led to increased sales of the product and represents an important diversification away from directional drilling. In the coming calendar year, sales to the aerospace industry are expected to grow, largely on the back of
demand from Airbus, Leonardo and others. Normally, this sector tends to be slightly counter-cyclical to the oil & gas sector and helps balance our portfolio of industry sectors.
Power generation is a large non-cyclical industry. Within power stations, the turbines that drive the generator to produce electricity are large and expensive components. Building on our initial success in developing a protective coating for turbine blades, and supported in this by EDF Energy, we will continue to develop this application. An initial order from a large European manufacturer of industrial gas turbines has been received and is currently being processed at
the UK site. This has great potential for future business. Sales of the newly-patented coating for turbine blades will diversify considerably our customer base.
The Group classifies its applications into five sectors: Energy (conventional and alternative), Aerospace, Flow Control, Power Generation and Precision Engineering.
Energy production
Historically, oil & gas has been the dominant sector for Hardide and may remain so; at least for the medium term. However, as demonstrated over recent times, overall demand from the sector can be highly cyclical and previously our customers within it have been somewhat concentrated. Determined development work by the Group in this sector has resulted in new and significant customers.
Customers in the oil & gas industry are particularly secretive and our agreements with them usually prevent Hardide from revealing their name, and especially not referencing the coating’s particular use, which often conveys competitive advantage to the end user.
Recognising the shift towards alternative forms for production of energy, Hardide has secured sales to a producer of materials used in the production of solar cells. Also, in joint development with a very large manufacturer of environmentally friendly

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