Page 9 - Hardide-Annual-Report-2021
P. 9

Demand is returning in the energy sector as market fundamentals improve. Energy consumption is increasing and our major oilfield services customers are reporting growth in their own businesses. As the global economy recovers, the Board is confident that demand for Hardide-coated products in this sector will return to previous levels, if not beyond.
Recent remarks from the CEO of Schlumberger (October 2021) were very positive about the outlook for the oil & gas sector:
‘...the strengthening industry fundamentals, combined with the actions of OPEC+ and continued capital discipline in North America, have firmly established the prospects of an exceptional multiyear growth cycle ahead’ and ‘...our confidence in the onset of an exceptional growth cycle is reinforced.’
Also, in October 2021 the CEO of Halliburton stated:
‘...I see a multi-year upcycle unfolding.’
Alternative Energy
The Group is committed to increasing the proportion
of revenue generated from the alternative energy market. Sales to a manufacturer of product for the
solar cell industry are expected to increase as this company expands considerably its production facilities in response to increasing demand. Sales and marketing resources have been allocated to identify technologies and components that would benefit from Hardide coatings. Sectors of interest include solar, hydrogen, geothermal, nuclear, gas and wind turbines.
Power Generation and Precision Engineering
Currently, the Group is working on projects with five power generation companies in the UK and EU. These will be based on our recently-patented coating for blades and vanes used in turbines.
In the first months of FY22, blades are already being coated for a major European manufacturer of steam and gas turbines. These are for installation in early
2022 into a high efficiency, low emission gas turbine. Coating these blades and other applications currently in development, can only be undertaken because of the recent installation of Hardide’s new, larger-capacity coating reactor and the larger pre treatment line in the UK.
Field trials of coated steam turbine blades were scheduled by EDF Energy for 2022, but have been delayed by the pandemic. Meanwhile, the customer is conducting further performance tests.
Demand for our coated components for high speed X-ray baggage scanners remained stable throughout the year.
Production, Technology, Research & Development and Accreditations
In August 2021, the last remaining coating reactor in our former site was relocated to the new facility, and this has enabled the Group to reduce its emissions and environmental footprint. New equipment and methods of waste treatment were established in the new facility, thereby reducing significantly the environmental impact of our manufacturing processes. The use of natural gas has been eliminated at the new site and
all electricity there is supplied from a REGO-certified (Renewable Energy Guarantees Origin) source. Four electric vehicle (EV) charging points were installed for staff use.
The new UK site and the US facility are both accredited to the aerospace quality management system AS9100D/ISO9001. The new Bicester facility is also accredited to Nadcap’s ‘Merit Status’, and to the environmental standard ISO14001.
Fundamental research continues into the development of new coating variants with potentially revolutionary properties that would open up new markets for Hardide.
Intellectual Property
Registration of our most recent patent is underway in ten leading industrial countries. This new patent covers the further-enhancement of the Hardide coating and new applications, including turbine blades and vanes.
Hardide is a ‘technology development’ Group that designs and deploys a range of very high performance coatings for use on metal components that operate
in harsh, extreme or safety-critical conditions. New customers, applications and industries are being developed that are proving the worth and robustness of the technology.
The Group’s P&L demonstrates clearly a high operational gearing. This means that the rate of change in EBITDA is markedly greater than that for sales. Before the COVID-19 pandemic badly affected demand, sales revenue was on a strong upward trajectory. However, there has been a sharp increase in order intake during the latter months of FY21. This will lead to considerable improvement in performance during the first quarter of FY22. As a result, we are seeing now the positive aspects of operational gearing. In addition, the increased number of customers and diversity of market sectors will lead to much better capacity utilisation and lower volatility of demand.
Operational gearing established clearly over time in the P&L, a more diverse customer base; together with a higher volume and lower volatility of sales, will lead to a much-enhanced financial performance. Therefore, the Group’s main objective is to increase volume by continued and strong business development activities at the same time as maintaining high margins.
Chairman's and CEO's Report 9
 1 A more-detailed and forward-looking description of the Group’s business strategy is set out in a separate section in this Annual Report

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