Hardide Regulatory News (HDD)

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA, THE REPUBLIC OF IRELAND OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

FURTHER, THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND SHALL NOT CONSTITUTE AN OFFER TO SELL OR ISSUE OR THE SOLICITATION OF AN OFFER TO BUY, SUBSCRIBE FOR OR OTHERWISE ACQUIRE ANY NEW ORDINARY SHARES OF HARDIDE PLC IN ANY JURISDICTION IN WHICH ANY SUCH OFFER, ISSUE OR SOLICITATION WOULD BE UNLAWFUL.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

21 January 2020

Hardide plc

("Hardide", the "Group" or the "Company")

Placing to raise £2.5 million

Board Change

Hardide plc (AIM: HDD), the developer and provider of advanced surface coating technology, is pleased to announce that it has conditionally raised £2.5 million before expenses by way of a placing (the "Placing"). The Placing will be satisfied through the issue of 3,968,254 new ordinary shares of 4.0 pence each in the Company ("Ordinary Shares") (the "Placing Shares") at a price of 63.0 pence per share (the "Placing Price").

The Placing follows significant demand from new and existing investors and is an opportunity to welcome new investors to the register. The Board is pleased to announce that the Placing has been significantly oversubscribed and the Placing Price of 63.0 pence represents a premium of 1.6 per cent. to the closing mid-market price on 20 January 2020.

With these new funds the Company will acquire replacement and additional modern equipment to a value of approximately £1.5 million in connection with the move to new premises in Bicester during 2020. This will enable the Company to achieve greater operational efficiency and environmental performance. Plans include upgrading the existing three coating reactors to the latest technical specifications along with new pre-treatment and component cleaning equipment and a new development reactor. In addition to the capital investment, the new funds will allow the Company to meet the additional fit-out costs of approximately £350,000 that are associated with the new site. A further £500,000 of additional capex requirement has been identified by the Company in order to enhance the technical, quality control and analytical facilities, as well as for equipment to improve health and safety and additional future proofing of the Martinsville and Bicester sites.

As set out in the Company's annual results that were announced on 9 December 2019, the move to the new facility in Bicester remains on track, and will result in improvements to capacity, capability and environmental performance.

A major factor in the decision to buy new equipment is the need to keep the processing capability for Airbus components at the present UK site during the move to the new Longlands Road site. This is because Airbus approval is specific to equipment and its location. Accordingly, the new site will require its own audit and approval, which is now unlikely to be finalised by Airbus until early 2021. There will be minimal operating costs for the residual operations at the current Wedgwood Road site until then.

The Placing will also enable the Company to strengthen its balance sheet, thereby providing additional reassurance to large customers intending to enter into long-term supply agreements with Hardide.

The Company will continue to explore the potential for asset finance.

The Placing is taking place pursuant to existing authorities established at the Company's last Annual General Meeting on 4 March 2019.

Further information on the Placing, including its conditionality, is set out below.

Board change

The Company also announces that Hardide's Finance Director, Peter Davenport, has notified his intention to step down to pursue a career in education. The Board has identified a talented successor and is in the process of finalising contract terms. Peter will remain with the Company as Finance Director until his successor is appointed and for a short period thereafter to ensure a smooth handover. A more detailed announcement outlining the change will be made in due course.

Director Dealing

Yuri Zhuk, Technical Director, intends to sell 208,775 Ordinary Shares as soon as possible following this announcement, at no less than the Placing Price. Dr. Zhuk is selling these shares to fund a property purchase. A further announcement will be made in due course once the sale has occurred.

Details of the Placing

The Placing Shares, when issued, will represent approximately 7.47 per cent. of the Company's then issued share capital. The Placing Price of 63.0 pence per Placing Share represents a premium of approximately 1.6 per cent. to the closing mid-market price of 62.0 pence per Ordinary Share on 20 January 2020.

The Placing Shares, when issued, will be fully paid and rank pari passu in all respects with the existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid in respect of such Ordinary Shares after the date of issue.

The Placing Shares will be issued under the Company's existing authorities established at the Company's last Annual General Meeting on 4 March 2019, subject to customary conditions, including admission to trading on AIM ("Admission") of the relevant Placing Shares becoming effective. Settlement for the Placing Shares and Admission is expected to take place at 8.00 a.m. on 24 January 2020. The Company has received advance assurance from HM Revenue & Customs that the Placing Shares will rank as 'eligible shares' for the purposes of EIS and will be capable of being a 'qualifying holding' for the purposes of investment by VCTs.

The Placing is conditional, inter alia, upon:

a. the Placing Agreement, described below, becoming unconditional in all respects (save for Admission) and not having been terminated;

b. the Company having allotted, subject only to Admission, the Placing Shares in accordance with the Placing Agreement; and

c. Admission of the Placing Shares becoming effective at or before 8.00 a.m. on 24 January 2020 or such later time as finnCap and Allenby Capital may agree with the Company (being not later than 8.00 a.m. on 7 February 2020).

The Placing Agreement

i. Pursuant to the terms of a placing agreement between the Company and its joint brokers, finnCap and Allenby Capital ("Placing Agreement"), finnCap and Allenby Capital have agreed to use their respective reasonable endeavours to procure placees for the Placing Shares at the Placing Price.

ii. The Placing Agreement contains customary warranties from the Company in favour of finnCap and Allenby Capital in relation to, inter alia, certain matters relating to the Company and its business. In addition, the Company has agreed to indemnify finnCap and Allenby Capital in customary terms in relation to certain liabilities that may be incurred in respect of the Placing.

iii. Each of finnCap and Allenby Capital has the right to terminate the Placing Agreement in certain circumstances prior to Admission, in particular, in the event of a material breach of the warranties given to finnCap and Allenby Capital by the Company in the Placing Agreement, the failure of the Company to comply with any of its obligations under the Placing Agreement or the occurrence of an adverse change in (amongst other things) national or international financial or political conditions (which in the opinion of finnCap and Allenby Capital will or is likely to be prejudicial to the Company or to the Placing or Admission).

Application for Admission and Total Voting Rights

Application has been made to the London Stock Exchange for the 3,968,254 Placing Shares to be admitted to trading on AIM and it is anticipated that trading in the Placing Shares will commence on AIM at 8.00 a.m. on 24 January 2020.

On Admission, the Company's issued share capital will comprise 53,113,946 Ordinary Shares with one voting right each, with no Ordinary Shares held in treasury. Therefore, the total number of Ordinary Shares and voting rights in the Company on Admission will be 53,113,946. From Admission this figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the FCA's Disclosure Guidance and Transparency Rules.

Related Party Transactions

Canaccord Genuity Ltd, Marlborough Nano-Cap Growth Fund and Canaccord Genuity Wealth Ltd ("Canaccord") have agreed to subscribe for, in aggregate, 1,017,615 Placing Shares pursuant to the Placing. Canaccord is a related party of the Company for the purposes of the AIM Rules for Companies by virtue of its status as a shareholder holding 10% or more of the existing Ordinary Shares.

The directors of the Company (the "Directors") consider, having consulted with the Company's nominated adviser, finnCap, that the terms upon which Canaccord has participated in the Placing are fair and reasonable insofar as the Company's shareholders are concerned.

Robert Goddard, Chairman of Hardide, commented: "I am delighted that we have been supported by new and existing shareholders to provide the Company with additional capital to support our growth strategy. The new money raised will enable the Company to promote the continuing growth of Hardide and strengthen its balance sheet. The funds will mainly be employed at the new UK site which will see improvements to production capacity, capability and environmental performance to deal with the increased demand for our products.

"I would also like to take this opportunity to thank Peter Davenport for all his help and support over the years and we wish him well in his new teaching profession.

"As previously reported, the year has started well and we look forward to the year ahead with confidence."

Notes to editors:

Hardide develops, manufactures and applies advanced technology tungsten carbide/tungsten metal matrix coatings to a wide range of engineering components. Its patented technology is unique in combining, in one material, a mix of toughness and resistance to abrasion, erosion and corrosion; together with the ability to coat accurately interior surfaces and complex geometries. The material is proven to offer dramatic improvements in component life, particularly when applied to components that operate in very aggressive environments. This results in cost savings through reduced downtime and increased operational efficiency. Customers include leading companies operating in oil and gas exploration and production, valve and pump manufacturing, precision engineering and aerospace industries.

www.hardide.com

IMPORTANT NOTICES

The information communicated in this Announcement is inside information for the purposes of Article 7 of Regulation 596/2014.

This Announcement should be read in its entirety. In particular, you should read and understand the information provided in this "Important Notices" section of this Announcement.

This Announcement does not constitute a prospectus for the purposes of the Prospectus Rules of the FCA, nor does it comprise an admission document prepared in accordance with the AIM Rules. Accordingly, this Announcement has not been approved by or filed with the FCA.

finnCap, which is authorised and regulated in the United Kingdom by the FCA, is acting as nominated adviser and joint broker to the Company for the purposes of the AIM Rules for Companies exclusively for the Company and no one else and will not be responsible to any other person for providing protections afforded to their customers nor for providing advice in relation to the contents of this Announcement. No representation, warranty, express or implied, is made by finnCap for the accuracy of any information or opinions contained in this Announcement or the omission of any material information, nor has finnCap authorised the contents of this Announcement for any purpose and no liability whatsoever is accepted by finnCap. finnCap expressly disclaims all and any responsibility or liability whether arising in tort, contract or otherwise which they might otherwise have in respect of this Announcement.

Allenby Capital, which is authorised and regulated by the FCA in the United Kingdom, is acting as joint broker to the Company for the purposes of the AIM Rules for Companies in connection with the Placing and Admission. Allenby Capital will not be responsible to any person other than the Company for providing the protections afforded to clients of Allenby Capital or for providing advice to any other person in connection with the Placing or any acquisition of shares in the Company. Allenby Capital is not making any representation or warranty, express or implied, as to the contents of this Announcement and has not authorised the contents of, or any part of, this Announcement, and no liability whatsoever is accepted by Allenby Capital for the accuracy of any information or opinions contained in this Announcement or for the omission of any material information.

Forward-Looking Statements

This Announcement contains forward-looking statements. These statements relate to the Group's future prospects, developments and business strategies. Forward-looking statements are identified by their use of terms and phrases such as "potential", "estimate", "expect", "may", "will" or the negative of such terms and phrases, variations or comparable expressions, including references to assumptions. The forward-looking statements in this Announcement are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements. These forward-looking statements speak only as at the date of this Announcement. No statement in this Announcement is intended to constitute a profit forecast or profit estimate for any period. Neither the Directors nor the Company undertake any obligation to update forward-looking statements other than as required by the AIM Rules or by the rules of any other securities regulatory authority, whether as a result of new information, future events or otherwise.

Information to Distributors

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended ("MiFID II"); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the "Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the Product Governance Requirements) may otherwise have with respect thereto, the Placing Shares have been subject to a product approval process, which has determined that the Placing Shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the "Target Market Assessment"). Notwithstanding the Target Market Assessment, investors should note that: the price of the Placing Shares may decline and investors could lose all or part of their investment; Placing Shares offer no guaranteed income and no capital protection; and an investment in Placing Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Placing. Furthermore, it is noted that, notwithstanding the Target Market Assessment, only investors who have met the criteria of professional clients and eligible counterparties have been procured. For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to Placing Shares.