HDD Hardide Plc

RNS Number:5310K
Hardide PLC
04 April 2005




Press Release                                        4 April 2005



                                  Hardide plc



                    First day of dealings on the AIM market



Hardide plc ("Hardide" or "the Company"), the provider of unique surface
engineering technology, today announces the commencement of dealings of its
Ordinary Shares on the AIM market of the London Stock Exchange.  Seymour Pierce
is acting as Nominated Adviser and Seymour Pierce Ellis as Broker to the
Company.  The stock market EPIC is HDD.L.



Admission and Placing statistics
Placing Price                                                                                          10p
Number of Placing Shares                                                                        17,500,000
Number of Vendor Placing Shares being placed                                                    11,201,040
Number of Ordinary Shares in issue immediately following Admission                             127,493,242
Placing Shares as a percentage of the Enlarged Issued Share Capital                                  13.7%
Market capitalisation at the Placing Price                                                     #12,749,324
Gross proceeds of the Placing                                                                   #1,750,000
Estimated net proceeds of the Placing receivable by the Company                                 #1,416,000





Reasons for the Placing and Admission and use of proceeds



The net proceeds of the Placing received by the Company will be used to fund
development of the Company's business and to provide the Company with working
capital to execute its business plan.  The Board intends to use the net proceeds
of the Placing to fund expenditure on capital equipment and to expand its sales
and marketing resources. These activities should enhance the Company's
operations and enable it to develop new business in the USA and elsewhere.



Jim Murray-Smith, Chief Executive of Hardide plc, said: "We are most encouraged
to have seen such a strong demand for shares in Hardide during the placing.  Our
listing will provide both the additional funds and market presence to enable us
to fulfil Hardide's strategy."



For further information:
Hardide plc
Jim Murray Smith, Chief Executive                                               Tel: +44 (0) 1869 353 830
jmurray-smith@hardide.com                                                                 www.hardide.com


Seymour Pierce
Sarah Wharry / Jeremy Porter, Corporate Finance                                 Tel: +44 (0) 20 7107 8000



Media enquiries:
Abchurch
Peter Curtain / Hannah Woodley                                                  Tel: +44 (0) 20 7398 7700
hannah.woodley@abchurch-group.com                                                  www.abchurch-group.com





History



Hardide is the name given to a patented surface engineering technology which
combines ultra-hardness, low friction and chemical resistance for use with
steel, hard alloys and other materials. When applied to customer supplied
components, the Hardide tungsten carbide coating technology typically extends
useful life.



After a number of years of research, the Company was incorporated in August 2000
to develop further and commercialise the Hardide technology. Since September
2003 Hardide Ltd has operated its 12,500 sq ft commercial coating facility in
Bicester, Oxfordshire.



Product and Technology



The coating process is performed in a CVD (Chemical Vapour Deposition) furnace
and is applied to customer supplied components which are heated to a specific
temperature between 500 and 650 degrees Centigrade, dependent on the
application.  Once at the desired temperature, a controlled mixture of gases is
pumped into the furnace. In the furnace chamber a chemical reaction between the
gases takes place which then crystallises on the surface of the components
producing a smooth layer of binder-free tungsten carbide with abrasion and
chemical resistant characteristics.



The first prototype machine (Hardide 1) was commissioned in August 2001
specifically to develop further and to prove the Hardide process. On successful
completion of this task, a further machine was commissioned based on the
existing prototype designed to offer a greater capacity than that of the pilot
machine. Hardide 2 was duly installed in Bicester and after a prolonged
commissioning period, the first commercial revenues were generated in early
2004.



To meet customer expectations of continuity of supply, a third machine (Hardide
3) was installed in December 2004 and successfully commissioned during January
2005. This machine has benefited from design modifications arising from
experiences gained from Hardide 2.



The Company holds patents and patent applications over the intellectual property
rights protecting the technology.



Key Markets



Prior to the commissioning of Hardide 2, the Company followed a strategy of
marketing to a broad range of possible customers, with the aim of identifying
those sectors which offered the best margin and growth opportunities.



Arising from this initial programme the Company identified a number of sectors
as initial markets for development, namely, oil and gas, valves and pumps. These
sectors, together with a small number of niche opportunities in the general
engineering sector, have been the primary focus of the business and sales
efforts and production capabilities have been channelled towards such sectors so
as to improve revenues from existing customers and potential new customers which
operate in those sectors.



Whilst demand for fossil fuels is increasing, established oil and gas field
deposits are being depleted. The International Energy Agency (IEA) forecasts
world energy demand will increase by 1.7% per year for the next 25 years, with
90% of this increase having to be met by hydrocarbons. This forecast translates
to increasing current production by 11 million barrels of oil per day which
coupled with an average field depletion rate of 5% (which is considered
conservative), means that the oil industry will have to produce some 44 million
new barrels of oil per day by 2010. To achieve these goals producers must not
only seek new deposits but also maximise production from the extremities of
established fields.



Both of these activities require operators to control directional drilling
equipment and to place extraction machinery with accuracy. Extended component
life offers users of Hardide coated components the opportunity to make
significant downtime cost reductions by prolonging operational time down-hole,
particularly where drilling through highly aggressive media has historically
called for frequent and expensive component replacement.



Valves are used in most industry sectors and manufacturing processes. The UK
valve market is well established and is estimated to be worth #603 million in
2004. Modern manufacturing processes demand continual improvement in equipment
performance and reliability. Hardide's coating is gaining acceptance across a
growing number of Industry sectors as a material that offers significant
improvement to productivity with enhanced component life and consequent savings
to plant downtime.



Pumps are also used in a variety of manufacturing processes and despite the
recent sector decline the Directors believe the UK market to be worth
approximately #582 million annually.  Hardide offers manufacturers extended
component life in areas where parts failure has historically caused loss of
production and costly downtime whilst replacement components are fitted.



The Directors believe that the unique properties offered by the technology,
combined with the proven ability to apply and supply the technology to
customers, positions the Company firmly ahead of competitive technologies. The
Directors' opinions are supported by:



1.        An article published by and on the website of the Paint & Coatings
Industry Magazine in which the Hardide Coating is said to be "poised to have a
major impact on the surface engineering sector worldwide ... able to challenge
all existing coating methods such as PVD, thermal or plasma spraying".



2.        The ASTM (American Society for Testing Materials) G65 Industry
standard test procedure, for measuring abrasion resistance.





Strategy



The Company has successfully developed supply relationships with key customers
in each of the initial chosen industries. In Oil and Gas Drilling, orders are
being placed with increasing frequency and value. The pump sector business
development is benefiting from regular repeat orders from several leading
companies and in valves, regular and repeat orders of increasing value are being
won from a growing number of customers. Development of future additional markets
will arise from the Company's current activities in the general engineering
sector. The pace of these developments will depend on the resources made
available to the Company.



The Directors believe that the Company has been successful in meeting industry's
requirement for a high-performance and cost-effective coating and that the
Company has demonstrated its ability to provide such a coating. To grow sales
and to maximise the opportunities facing the business, the Company intends to
expand on its current strategies, namely:



  * Extending the use of Hardide with customers who have already adopted the
    technology;
  * Mapping out the use of the technology in Hardide-proven areas of
    application;
  * Utilising and positioning the website to attract potential customers with
    real and immediate erosion/corrosion issues; and
  * Supporting the above with increased sales and marketing resource.



In the long term, the Company intends to:



  * Continue to employ the strategies outlined above;
  * Expand the use of Hardide into additional market sectors; and
  * Expand sales and marketing effort into larger geographical areas,
    initially in the USA.



Additionally, the Directors believe that the provision of a first-class service
to customers is fundamental to the Company's progress.  To support all of the
above the Company must continue to provide such a service to its customers and
where and when possible find ways of improving performance levels. Accordingly
additional manufacturing resource both in terms of people and equipment will be
required as the Company progresses.



On the decision to float on AIM, Jim Murray-Smith, Chief Executive of Hardide,
commented:  "Hardide's admission to AIM will enable the Company to continue
growing organically and provide us with the necessary funds to service the
increasing demand for our product, while extending sales efforts into larger
geographical markets such as the USA."



Directors



David Moore Alexander Chestnutt, Non-Executive Chairman (aged 55)

A chartered accountant, David was a senior audit and client management partner
with Pannell Kerr Forster in Liverpool until May 1997. The following two and a
half years were spent as finance director at Liverpool Football Club, a position
he resigned from in September 1999. David is Chief Executive of Flintstone,
which he joined in early 2000. He is a fellow of the Institute of Chartered
Accountants in England and Wales.



James ("Jim") Stewart Murray-Smith, Chief Executive Officer (aged 55)

Jim was appointed as an executive director of Hardide Coatings Limited (HCL) in
March 2003 with an accomplished background of commercial and developmental
management. His experience includes the running of high-tech materials
processing companies and developing new product divisions of several
multi-national companies, including Borg-Warner, Enichem and Chemie Linz. Jim
was formerly Group Operations Director of Flintstone.



Dr Yuri Nikolaevich Zhuk, Technical Director (aged 44)

Yuri is a founder director of HCL and is responsible for the Company's
patenting, technology and applications development programmes. Yuri gained a PhD
in Plasma Physics and Chemistry at Moscow State University. Prior to joining HCL
he gained ten years' experience of international technology transfer with Tetra
Consult, a Moscow-based technology consultancy company.



Hugh Carlisle Smith, Non Executive Director (aged 58)

Hugh joined the Board of HCL in May 2003, bringing the benefit of his wide
experience of the automotive industry. Hugh was formerly a senior export manager
of British Leyland before helping to found Allmakes Limited, one of the UK's
largest independent suppliers of Land Rover spare parts. Hugh remains Chairman
of Allmakes as well as holding a number of Non-Executive Directorships.



David Edward Christian Mott, Non-Executive Director (aged 31)

David joined the Board of HCL in April 2004. He is a fund manager with Oxford
Capital Partners, a firm which specialises in managing investments in technology
companies. He has previously worked with Result, PricewaterhouseCoopers and
Deloittes and is a director of several technology companies.



Terms defined in the Prospectus have the same meaning in this press release.



Availability of Prospectus

Copies of the Prospectus are available free of charge from the Company's
registered office and at the offices of Seymour Pierce Limited, Bucklersbury
House, 3 Queen Victoria Street, London EC4N 8EL during normal business hours on
any weekday (Saturdays and public holidays excepted) and shall remain available
until one month after Admission.




                      This information is provided by RNS
            The company news service from the London Stock Exchange
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