Haydale Regulatory News (HAYD)

Haydale Graphene Industries plc ("Haydale" or the "Company") Acquisition of EPL Composite Solutions Limited ("EPL") Haydale Graphene Industries plc (AIM:HAYD), the Company focused on enablingtechnology for the commercialisation of graphene, is pleased to announce thatit has entered into an agreement to acquire the entire issued share capital ofEPL, specialists in the design, development and commercialisation of advancedcomposite polymer materials both in the UK and overseas (the "Acquisition"). Highlights: * EPL is a recognised composite R&D and testing house, based in Loughborough with 17 scientists and technicians. EPL's customers include significant corporations such as National Grid, SSE, Eirgrid, Chevron, Anglian Water, Severn Trent Water, Yorkshire Water and 3M; * Total maximum consideration payable is £1.381 million comprising £400,000 in cash and £187,691 in directors loans with up to £792,500, payable in either cash and/or shares in the Company based on earnings targets to 30 June 2016; * EPL is already revenue generating with sales of £815,000 and profit before taxation of £26,000 in the year ended 31 March 2014; * Haydale has agreed commercial terms with Silicon Valley Bank for a new £ 500,000 facility to part fund the Acquisition. The loan has a three year term with repayments expected to be funded from cash generated by EPL. The facility thereby preserves the Group's existing cash resources to fund its other development and growth programmes; and * Recent tests conducted by EPL, in collaboration with Haydale, using a standard epoxy resin mixed with Haydale functionalised Graphene Nano Platelets ("GNPs"), have shown over a 200% improvement in ultimate tensile strength (a measure of material toughness) using just 2% loading of Haydale's GNPs. Further information: The Acquisition by Haydale of EPL is for an aggregate consideration of up to £1.381 million payable in cash and new ordinary shares in Haydale. TheAcquisition is in line with Haydale's strategy of forming partnerships withcompanies who already have market presence in its target sectors. EPL's accessto the composites market is intended to enhance Haydale's sales potential inthis area. Haydale and EPL are already collaborating on a number of projects. The Acquisition is a major step in capitalising on Haydale's proprietarytechnology which enables it to incorporate graphene and other nano enhancingfillers into composites; a global and growing industry where market researchfirm IDTechEx forecast the Graphene element alone to be worth approximately$80m by 2018. EPL has developed a reputation for delivering innovative solutions in thecommercial applications of advanced polymer composite materials working withglobal companies over more than 20 years. EPL is focused on a range of marketsectors including pipe lining for the oil, gas and water industries,infrastructure for electricity and energy sectors plus the marine andtransportation markets. EPL's competence spans the entire development cycle from applied research,product design, process development, product testing and certification, tosetting up manufacturing plants. EPL also works with OEMs and end-users todevelop and provide composite solutions with demonstrable clear technical,economic and environmental benefits over existing structures currentlymanufactured in traditional materials such as steel, aluminium, wood orconcrete. Ray Gibbs, CEO at Haydale, commented: "This acquisition is a major step forward for us because the rapidly growingcomposites industry is known for the early adoption of new technologies and isone of the major markets for embracing disruptive technology and introducinginnovative new materials. The ground breaking work independently undertaken byAerospace Corporation in the USA using our standard plasma treated GNPs hasalready proven that our patented applied for process can enable the developmentof lighter, stronger composite materials and we now have direct access tocompanies looking for exactly that. In addition, the credibility of our plasmaprocess was boosted when the UK National Physical Laboratory ("NPL") reportedpositively on the confirmation of our capability to add compatible chemicalgroups on the surface of the GNPs: known as functionalisation. " About EPL: EPL is a well-respected and recognised composite R&D and testing house, basedin Loughborough with 17 scientists and technicians. EPL's customers includesignificant corporations such as National Grid, SSE, Eirgrid, Chevron, AnglianWater, Severn Trent Water, Yorkshire Water and 3M. In recent tests conducted by Haydale, in collaboration with EPL, using astandard epoxy resin mixed with Haydale functionalised GNPs, Haydale achievedover a 200% improvement in ultimate tensile strength (a measure of materialtoughness) using just 2% loading of Haydale's GNPs. These excellent results cannow be demonstrated to the composite industry and specifically, to theextensive client list of EPL. In the year ended 31 March 2014, EPL's audited sales were £815,000 and profitbefore taxation was £26,000. Audited net assets were £274,000 as at 31 March2014. EPL's management will continue to manage EPL's business and Gerry Boyce,the majority owner and Managing Director of EPL, will join the board of HaydaleLimited, the Company's main operating subsidiary. Acquisition Details: EPL is being acquired for a mix of cash and new ordinary shares in Haydale.Initial Consideration comprises £400,000 in cash ("Initial Consideration") andHaydale will procure the repayment by EPL of £187,691 of shareholder loans dueto the EPL shareholders of which £123,643 will be immediately applied by GerryBoyce in subscribing for 198,623 new ordinary shares in Haydale at a price of62.25p per share (being the closing price of Haydale shares on 31 October 2014)("New Shares"). The New Shares are subject to a 12 month lock-in provision,followed by a 12 month orderly market arrangement. In addition, the EPL vendorsmay receive up to a further £792,500 payable in cash (or, at the election ofthe vendors, new ordinary shares in Haydale at the closing price of Haydale onthe date immediately prior to the date of such election), dependent on EPLachieving certain agreed profit targets for the period to 30 June 2016. The EPLvendors are providing Haydale with usual warranties and indemnities in respectof EPL and their ownership of it. To satisfy the Initial Consideration, Haydale is pleased to announce that ithas agreed commercial terms with Silicon Valley Bank ("SVB") to provide Haydalewith a three year, £500,000 loan facility ("Facility"). The rationale forentering the Facility is to allow Haydale to preserve its existing cash balancefor organic growth and to match EPL's expected cash generation against theFacility's repayment profile. Silicon Valley Bank is a commercial bank that isdedicated to serving technology, life science, venture capital and privateequity businesses. Application for the admission of the New Shares to trading on AIM has been madeand trading in the New Shares is expected to commence on 6 November 2014. TheNew Shares will rank pari passu with the existing ordinary shares of theCompany. Following the issue of the New Shares, the Company's enlarged issuedordinary share capital will comprise 11,446,446 ordinary shares of 2p each.This number may be used by shareholders in the Company as the denominator forthe calculations by which they will determine if they are required to notifytheir interest in, or a change in their interest in, the share capital of theCompany under the FCA's Disclosure and Transparency Rules. Ray Gibbs continued: "The acquisition of EPL provides us with an immediate route into the fastmoving and dynamic composites market together with a substantial R&D resourceand dedicated composite and polymer expertise to boost our current in-housecapability. Our strategy is to provide solutions in enabling thecommercialisation of graphene in key targeted strategic markets. Our recentcollaboration with the speciality inks and coatings solutions provider, theWelsh Centre for Printing and Coating (WCPC), addresses one of our keystrategic markets. The acquisition of EPL, together with our WCPC association,provides us direct access into two substantial industries known for the earlyadoption of new technologies and offers us exciting future opportunities." Gerry Boyce, the majority owner of EPL added: "We have been working with Haydale since the beginning of this year testingtheir materials and have been very impressed with their technology. Thecomposite industry is always looking for innovative technology and has longrecognised the benefits of using nanomaterials in composites. Haydale'sproprietary technology, as verified by Aerospace Corp and NPL, opens up a rangeof opportunities in the composites world not previously available to EPL. " For further information please contact: Haydale Graphene Industries plc 01269 842 946 John Knowles, Chairman Ray Gibbs, Chief Executive Officer Cairn Financial Advisers LLP (Nomad) 0207 148 7900 Tony Rawlinson Paul Trendell Cantor Fitzgerald Europe (Broker) 020 7894 7000 David Foreman Paul Jewell Hermes Financial PR Trevor Phillips 07889 153 628 Chris Steele 07979 604 687 About Haydale Haydale has developed a patent-pending proprietary scalable plasma process tofunctionalise graphene and other nanomaterials. This enabling technology canprovide Haydale with a rapid and highly cost-efficient method of supplyingtailored solutions to enhance applications for both raw material suppliers andproduct manufacturers. Functionalisation is carried out through a low-pressure plasma process thattreats both mined, organic fine powder and other synthetically producednanomaterial powders, producing high-quality few layered graphenes and graphenenanoplatelets. The process can functionalise with a range of chemical groups,with the level of functionalisation tailored to the customer's needs. Gooddispersion improves the properties and performance of the host material andensures the final product performs as specified. The Haydale plasma process does not use wet chemistry, nor does it damage thematerial being processed; rather, it can clean up any impurities inherent inthe raw material. The technology is a low energy user and most importantlyenvironmentally friendly. The Haydale method is an enabling technology,allowing the Company to work with a raw material producer who seeks to addvalue to the base product and tailor the outputs to meet the targetapplications of the end user. Haydale, based in South Wales and housed in a purpose-built facility forprocessing and handling nanomaterials, is facilitating the application ofgraphenes and other nanomaterials in fields such as inks, sensors, energystorage, photovoltaics, composites, paints and coatings. www.haydale.com About EPL EPL is an independent company specialising in the design, development andcommercialisation of advanced polymer composite materials on a global basis. EPL spans the entire development cycle from applied research, product design,process development, product testing and certification, to setting upmanufacturing plants. EPL also works with OEMs and end-users to develop anddemonstrate composite solutions which provide clear technical, economic andenvironmental benefits over existing structures currently manufactured intraditional materials such as steel, aluminium, wood or concrete. Having demonstrated these benefits and generated a demand, EPL then looks toidentify commercial partners - either under licence or as a joint venture - toscale up and manufacture the composite solution on either a regional or globalvolume basis.

www.eplcompositesolutions.co.uk