Page 8 - Hardide-Annual-Report-2021
P. 8

 8 Chairman's and CEO's Report
We are pleased to report on our annual results for the 2021 financial year. Market recovery is demonstrated by the value of orders received during the second half of the year, which are a healthy 52% higher than in the first half. This improvement in order intake has been continuing from all sectors in the first months of FY22.
During the period, the Group raised net new financing of approximately £1.25m to increase cash reserves by way of an equity fundraising and CBILS loans.
The move to the new UK production site at Longlands Road in Bicester was concluded during the year and the final coating reactor was relocated following Airbus’ approval of the new facility. The new site provides the opportunity to benchmark our environmental performance and identify areas for further improvement.
The Group has continued to operate throughout the pandemic. It has taken precautions to protect our employees, contractors and visitors at our UK and US sites. In the UK, where it was operationally appropriate to do so, the Group utilised the Government’s Coronavirus Job Retention Schemes to match our workforce to demand and protect employment. In the US, we received funds from the US Small Business Association’s ‘Paycheck Protection Programs’.
The Group generated sales of £3.6m in the year ended 30 September 2021 (FY20: £4.8m).
The value of orders received during H2 FY21 was 52% higher than in H1 FY21, with the upward trend continuing into FY22.
Direct costs decreased by 6%, primarily due to the reduction in the amount of process gases used, as a consequence of the lower sales volume.
Group gross profit was £1.3m (FY20: £2.3m). Gross margin was 36% (FY20: 49%), the reduction being due to the fixed cost of sales (which mainly comprise production salaries) not decreasing in line with sales revenue.
Overhead costs, which are mainly staffing costs, increased by 1% in FY21 on the previous year. Both
years have benefitted to varying degrees from US government and UK COVID-19 government support programmes. Excluding the impact of these, overheads were in line with the previous year.
Before exceptional items, the Group’s EBITDA loss was £1.5m (FY20: £0.5m loss). This reflected the reduced revenue.
Borrowings increased from £0.5m in FY20 to £0.8m in FY21. Mainly this was due to the receipt of two CBILS loans in February and April 2021, each for £0.25m. The cash balance at the end of the financial year was £1.5m (FY20: £2.7m).
Net assets at 30 September 2021 were £6.9m (FY20: £8.8m).
Customers and Markets
Aerospace sales increased by 46%. Largely, this was due to demand from BAE Systems for the coating of parts for the Eurofighter Typhoon, together with small production orders from Airbus. The coating has been approved by Airbus for use on parts for the A320, A330, A380 and A400M aircraft and we expect to see orders for coating components for these aircraft during FY22.
The Group is now experiencing further and increased demand. Development projects are underway with
a wide range of aerospace customers, including manufacturers of landing gear and from MRO (Maintenance, Repair and Overhaul) companies. During FY21, the Group experienced a marked slowdown of
test programmes and commercial discussions, and in some cases their cessation. Now, many of these have restarted and are gathering pace.
We are still waiting for Airbus and their Tier 1 supplier to agree final arrangements that will allow a supply agreement to be signed between Hardide and the Tier 1. The timing of this is outside of our control,
but indications are that it should be soon. Other components for Airbus from other Tier 1 suppliers are not affected.
Leonardo Helicopters completed successfully the extended test programme of the transmission assembly incorporating Hardide-coated parts. This is the culmination of a long-standing project to develop a number of coating techniques for parts used in the transmission and rotor head systems to reduce ‘in- service’ costs and extend component life. Production orders are expected to begin in FY22.
The Group attended many virtual and some face-to- face aerospace-related conferences and exhibitions throughout FY21, thereby making new connections and identifying new applications with OEMs and Tier 1 suppliers. The Group plans to exhibit at the Singapore Airshow in February 2022 and at the Farnborough Airshow in July 2022.

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