Hardide Regulatory News (HDD)

4 Apr 2005 08:00

Hardide PLC04 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 surfaceengineering technology, today announces the commencement of dealings of itsOrdinary Shares on the AIM market of the London Stock Exchange. Seymour Pierceis acting as Nominated Adviser and Seymour Pierce Ellis as Broker to theCompany. The stock market EPIC is HDD.L. Admission and Placing statisticsPlacing Price 10pNumber of Placing Shares 17,500,000Number of Vendor Placing Shares being placed 11,201,040Number of Ordinary Shares in issue immediately following Admission 127,493,242Placing Shares as a percentage of the Enlarged Issued Share Capital 13.7%Market capitalisation at the Placing Price £12,749,324Gross proceeds of the Placing £1,750,000Estimated 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 funddevelopment of the Company's business and to provide the Company with workingcapital to execute its business plan. The Board intends to use the net proceedsof the Placing to fund expenditure on capital equipment and to expand its salesand marketing resources. These activities should enhance the Company'soperations and enable it to develop new business in the USA and elsewhere. Jim Murray-Smith, Chief Executive of Hardide plc, said: "We are most encouragedto have seen such a strong demand for shares in Hardide during the placing. Ourlisting will provide both the additional funds and market presence to enable usto fulfil Hardide's strategy." For further information:Hardide plcJim Murray Smith, Chief Executive Tel: +44 (0) 1869 353 830jmurray-smith@hardide.com www.hardide.com Seymour PierceSarah Wharry / Jeremy Porter, Corporate Finance Tel: +44 (0) 20 7107 8000 Media enquiries:AbchurchPeter Curtain / Hannah Woodley Tel: +44 (0) 20 7398 7700hannah.woodley@abchurch-group.com www.abchurch-group.com History Hardide is the name given to a patented surface engineering technology whichcombines ultra-hardness, low friction and chemical resistance for use withsteel, hard alloys and other materials. When applied to customer suppliedcomponents, the Hardide tungsten carbide coating technology typically extendsuseful life. After a number of years of research, the Company was incorporated in August 2000to develop further and commercialise the Hardide technology. Since September2003 Hardide Ltd has operated its 12,500 sq ft commercial coating facility inBicester, Oxfordshire. Product and Technology The coating process is performed in a CVD (Chemical Vapour Deposition) furnaceand is applied to customer supplied components which are heated to a specifictemperature between 500 and 650 degrees Centigrade, dependent on theapplication. Once at the desired temperature, a controlled mixture of gases ispumped into the furnace. In the furnace chamber a chemical reaction between thegases takes place which then crystallises on the surface of the componentsproducing a smooth layer of binder-free tungsten carbide with abrasion andchemical resistant characteristics. The first prototype machine (Hardide 1) was commissioned in August 2001specifically to develop further and to prove the Hardide process. On successfulcompletion of this task, a further machine was commissioned based on theexisting prototype designed to offer a greater capacity than that of the pilotmachine. Hardide 2 was duly installed in Bicester and after a prolongedcommissioning period, the first commercial revenues were generated in early2004. To meet customer expectations of continuity of supply, a third machine (Hardide3) was installed in December 2004 and successfully commissioned during January2005. This machine has benefited from design modifications arising fromexperiences gained from Hardide 2. The Company holds patents and patent applications over the intellectual propertyrights protecting the technology. Key Markets Prior to the commissioning of Hardide 2, the Company followed a strategy ofmarketing to a broad range of possible customers, with the aim of identifyingthose sectors which offered the best margin and growth opportunities. Arising from this initial programme the Company identified a number of sectorsas initial markets for development, namely, oil and gas, valves and pumps. Thesesectors, together with a small number of niche opportunities in the generalengineering sector, have been the primary focus of the business and salesefforts and production capabilities have been channelled towards such sectors soas to improve revenues from existing customers and potential new customers whichoperate in those sectors. Whilst demand for fossil fuels is increasing, established oil and gas fielddeposits are being depleted. The International Energy Agency (IEA) forecastsworld energy demand will increase by 1.7% per year for the next 25 years, with90% of this increase having to be met by hydrocarbons. This forecast translatesto increasing current production by 11 million barrels of oil per day whichcoupled with an average field depletion rate of 5% (which is consideredconservative), means that the oil industry will have to produce some 44 millionnew barrels of oil per day by 2010. To achieve these goals producers must notonly seek new deposits but also maximise production from the extremities ofestablished fields. Both of these activities require operators to control directional drillingequipment and to place extraction machinery with accuracy. Extended componentlife offers users of Hardide coated components the opportunity to makesignificant downtime cost reductions by prolonging operational time down-hole,particularly where drilling through highly aggressive media has historicallycalled for frequent and expensive component replacement. Valves are used in most industry sectors and manufacturing processes. The UKvalve market is well established and is estimated to be worth £603 million in2004. Modern manufacturing processes demand continual improvement in equipmentperformance and reliability. Hardide's coating is gaining acceptance across agrowing number of Industry sectors as a material that offers significantimprovement to productivity with enhanced component life and consequent savingsto plant downtime. Pumps are also used in a variety of manufacturing processes and despite therecent sector decline the Directors believe the UK market to be worthapproximately £582 million annually. Hardide offers manufacturers extendedcomponent life in areas where parts failure has historically caused loss ofproduction 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 tocustomers, positions the Company firmly ahead of competitive technologies. TheDirectors' opinions are supported by: 1. An article published by and on the website of the Paint & CoatingsIndustry Magazine in which the Hardide Coating is said to be "poised to have amajor impact on the surface engineering sector worldwide ... able to challengeall existing coating methods such as PVD, thermal or plasma spraying". 2. The ASTM (American Society for Testing Materials) G65 Industrystandard test procedure, for measuring abrasion resistance. Strategy The Company has successfully developed supply relationships with key customersin each of the initial chosen industries. In Oil and Gas Drilling, orders arebeing placed with increasing frequency and value. The pump sector businessdevelopment is benefiting from regular repeat orders from several leadingcompanies and in valves, regular and repeat orders of increasing value are beingwon from a growing number of customers. Development of future additional marketswill arise from the Company's current activities in the general engineeringsector. The pace of these developments will depend on the resources madeavailable to the Company. The Directors believe that the Company has been successful in meeting industry'srequirement for a high-performance and cost-effective coating and that theCompany has demonstrated its ability to provide such a coating. To grow salesand to maximise the opportunities facing the business, the Company intends toexpand 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 serviceto customers is fundamental to the Company's progress. To support all of theabove the Company must continue to provide such a service to its customers andwhere and when possible find ways of improving performance levels. Accordinglyadditional manufacturing resource both in terms of people and equipment will berequired 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 continuegrowing organically and provide us with the necessary funds to service theincreasing demand for our product, while extending sales efforts into largergeographical 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 partnerwith Pannell Kerr Forster in Liverpool until May 1997. The following two and ahalf years were spent as finance director at Liverpool Football Club, a positionhe 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 CharteredAccountants 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) inMarch 2003 with an accomplished background of commercial and developmentalmanagement. His experience includes the running of high-tech materialsprocessing companies and developing new product divisions of severalmulti-national companies, including Borg-Warner, Enichem and Chemie Linz. Jimwas 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'spatenting, technology and applications development programmes. Yuri gained a PhDin Plasma Physics and Chemistry at Moscow State University. Prior to joining HCLhe gained ten years' experience of international technology transfer with TetraConsult, 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 wideexperience of the automotive industry. Hugh was formerly a senior export managerof British Leyland before helping to found Allmakes Limited, one of the UK'slargest independent suppliers of Land Rover spare parts. Hugh remains Chairmanof 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 OxfordCapital Partners, a firm which specialises in managing investments in technologycompanies. He has previously worked with Result, PricewaterhouseCoopers andDeloittes 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'sregistered office and at the offices of Seymour Pierce Limited, BucklersburyHouse, 3 Queen Victoria Street, London EC4N 8EL during normal business hours onany weekday (Saturdays and public holidays excepted) and shall remain availableuntil one month after Admission. This information is provided by RNS The company news service from the London Stock Exchange