2010
Annual Report
Hardide-AR-2010-cover-v2.indd   3 3/12/10   16:40:41 Hardide Coatings is the leading global innovator and 
provider of advanced tungsten carbide-based metal 
coatings for internal and external surfaces.  
Hardide
TM
 is a family of low temperature CVD (chemical vapour deposition) coatings that 
significantly increase the life of critical metal parts operating in abrasive, erosive, corrosive and 
chemically aggressive environments.
The patented coatings have a unique combination of abrasion, erosion and chemical resistant 
properties while also being tough, ductile and impact resistant.  The technology has many 
comparable advantages over other hard facing coatings including the ability to coat internal 
surfaces and complex shapes.
Hardide surface engineering technology is revolutionising the way that parts perform under the 
harshest of conditions.  Previously levels of friction, abrasion and aggressive chemical attack 
have led to part failure, downtime and extreme cost.  Hardide coatings are enabling customers 
in high wear/high value industries such as oil and gas drilling, aerospace and flow control to 
optimise part life, improve product performance and make significant cost savings.  
Hardide-AR-2010-cover-v2.indd   4 3/12/10   16:40:42 20 Consolidated Statement of Comprehensive Income 
21 Consolidated Statement of Financial Position
22 Consolidated Statement of Cash Flows
23 Consolidated Statement of Recognised Income and Expense
24 Notes to the Group Financial Statements
38 Parent Company Balance Sheet
39 Notes to the Parent Company Accounts
43 Directors and Advisers
Contents
01 Highlights
02 Chairman’s Statement
04 Chief Executive Officer’s Review
09 Financial Review
10 Board of Directors
12 Report of the Directors
14 Corporate Governance
18 Report of the Independent Auditor
Financial Highlights
n Group turnover increased 44% to £1.74 million (2009: £1.21 million) 
n Loss before tax and exceptional items decreased 74% to £381k (2009: loss £1.46 million)  
n Group EBITDA loss decreased 87% to £141k (2009: loss £1.12 million). Group EBITDA positive in H2 2010
n UK operation, Hardide Coatings Limited, posts maiden full year pre-tax profit of £378k (2009: loss £324k)
n Loss per share 0.06p (2009: loss 0.6p)
n Cost of sales reduced by 24% on a 44% increase in turnover 
n Overheads reduced by 30% compared to 2009
Operational Highlights
n AS9100 aerospace standard certification achieved. 
This certifies Hardide as a registered aerospace manufacturing supplier
n Major US and European valve manufacturers launched new Hardide coated applications 
These applications are set to expand and further applications are in development
n Testing of new applications underway in several pre-qualified sectors including plastics extrusion equipment, 
new pump applications, Formula One parts and mud motors for oil and gas drilling services
n IP and Risk Management board sub-committees formed 
n New website launched 
Post Period Events
n Houston-based business development representative appointed to accelerate US revenue growth
n Hugh Smith to resign as non-executive director at AGM in February 2011
n Bruce Robinson appointed as non-executive director with effect from AGM in February 2011
01
Hardide-AR-2010-v4.indd   1 3/12/10   16:41:48 2010
Annual Report
 
Chairman’s Statement
I am pleased to report an improved performance 
by Hardide plc in a year that continued to present 
considerable challenges.  The resumption in demand 
from key customers together with new business, 
reduced costs and minimal capital expenditure has 
enabled the Group to exceed management forecasts 
across all of our financial metrics.
Full year sales to 30 September 2010 rose 44% 
to £1.74 million from £1.21 million in 2009.  Group 
EBITDA loss decreased 87% to £141k (2009: loss 
£1.12 million) with the Group EBITDA positive in 
the second half of the year.  Group PBT for the year 
narrowed to a loss before tax and exceptional items 
of £381k, a 74% reduction from a loss of £1.46 
million in 2009. 
 
There has been a general recovery in demand from 
those of our customers who service the oil and gas 
drilling tool and flow control markets, with H2 2010 
being markedly stronger than H1 2010.  Customer 
restocking that was in evidence during H1 2010 has 
stabilised and been replaced with broadly consistent 
demand.  To assist the forecasting of potential 
future destocking situations, the board is continually 
monitoring various indicators to help predict sudden 
fluctuations in demand.
The improvement in demand in key sectors 
has been supported by a stabilised cost base, 
ongoing operational efficiencies and negligible 
capital expenditure. The full year effect of last 
year’s restructuring and cost reduction programme 
together with further savings has led to a 30% 
reduction in overheads compared with 2009. Strong 
revenue growth coupled with tight control on costs 
and capex has led to a reduction in our cash outflow 
compared with 2009. The Group’s ability to grow 
within its current markets was not restricted by these 
controls.  
 
 
 
 
 
 
It is pleasing to report that Hardide Coatings Limited 
achieved its first full year of profitability with a pre-tax 
profit of £378k compared with a loss last year of 
£324k.  The UK business has demonstrated that 
it can be profitable at the current, stabilised cost 
base.  We are beginning to build a more diversified 
customer base, with new customers won across all 
key sectors and new products coming to market, 
such as Hardide-A for hard chrome replacement and 
a coating for titanium. Our strategic development 
projects of coatings for aerospace and industrial 
diamonds are also progressing steadily.
The Houston facility remains hibernated with all 
plant and equipment in-situ. This will remain so until 
demand is such that it is economically viable to 
resume manufacturing in the US.  The building has 
been sub-let on terms that will enable a managed re-
entry; although further expenditure would be required 
for the facility to operate profitably as an independent 
business.
The US hibernation contributed significantly to a 24% 
reduction in the cost of sales on the 44% increased 
turnover fulfilled wholly from the UK.  Volume through 
Houston was such that it had always operated 
sub-optimally, and greater economies of scale are 
now being achieved by servicing all US business 
from the UK. The US is a very important market for 
the growth of the Group and business development 
continues apace with notable account gains and 
test programmes with US based customers across 
all of our key sectors.  The Group is committed to 
re-opening the US operation when it is commercially 
and economically prudent to do so.  
In line with the new edition of the UK Corporate 
Governance Code, the board has tightened and 
streamlined several aspects of its operation, 
without any increase in bureaucracy or impediment 
to decision making. The board also established 
intellectual property and risk management sub-
committees to manage these key aspects of the 
Group’s business.
02
New business, reduced costs 
and minimal capital expenditure 
has enabled the Group to exceed 
management forecasts
“
”
Hardide-AR-2010-v4.indd   2 3/12/10   16:41:55 2010
Annual Report
On the whole, the board is pleased with the results 
for the year.  Whilst the economic climate overall 
has not yet materially improved in all the sectors 
in which the Group operates, there are indications 
that demand will continue to return and then grow 
in these areas.  Meanwhile, the business has clear 
strategic goals, is operationally and financially fitter, 
and sharply focused on profitable revenue growth.  
The board is optimistic in its outlook for the coming 
year. 
Over the past year, the company has had loyal 
support from its staff and constructive interest from 
a number of key shareholders.  The board owes its 
sincere thanks to both.
Finally, Hugh Smith, our longest serving non-
executive director has decided to step down from 
the board at the next AGM.  We are all enormously 
grateful to Hugh for his unstinting and constructive 
work on behalf of the company, particularly on the 
two main board sub-committees.  Hugh remains an 
avid supporter of Hardide and intends to retain his 
shareholding for the foreseeable future.  We shall 
miss Hugh’s wise counsel but wish him and his 
family well and hope to see him at future AGMs.
Replacing Hugh as a non-executive director and 
member of both the audit committee and the 
combined remuneration and nomination committee 
will be Bruce Robinson (50).  Bruce brings extensive 
experience of growing technology-based businesses 
and of the international oil and gas industry.  He 
spent his early career as an engineer in oilfield 
services before becoming a founder shareholder and 
General Manager of Phoenix Petroleum Services, an 
engineering product and service company that was 
sold to Schlumberger.  He has since started, run 
and assisted a wide range of innovative companies 
developing and exploiting technologies in various 
industry sectors.
Robert Goddard 
Chairman
03 December 2010
03
Hardide-AR-2010-v4.indd   3 3/12/10   16:42:07 2010
Annual Report
 
Chief Executive Officer’s Review
As we entered the 2010 financial year there was still 
a high level of uncertainty about the economy and 
the effect it would continue to have on our business. 
We had begun to see signs of stability returning to 
key customers’ markets but there was little visibility 
of the timing and level of recovery. Towards the 
end of the half year we began to see a consistently 
upward trend in demand, particularly from oil and 
gas, and then valve and other general industrial 
customers. At that point it was difficult to distinguish 
sustainable demand from the effects of restocking. 
However, the second half of the year saw a 
meaningful return of demand together with new 
customer gains.  I am pleased to report that this, 
together with cost and capex controls, has resulted 
in the first full year of profitability for the UK operating 
company and the first half year of positive EBITDA 
for the Group.
In spite of the turbulence over the last 18 months, 
we have retained experienced people across all 
parts of the business and this has enabled us 
to increase activity seamlessly as demand has 
resumed.  The engineering, operations and technical 
teams have worked on process improvements, 
loading capacities and coating methodologies, which 
all supported the move to profitability for the UK 
business.
UK: Hardide Coatings Limited
The UK operating company, Hardide Coatings 
Limited, has achieved full year profitability for the 
first time with PBT of £378k (2009: loss £324k) 
on revenue of £1.74 million (2009: £1.09 million).  
Sales to oil and gas, valve and general industrial 
customers were all higher than in 2009.  Gas costs 
rose significantly during the year but were absorbed 
without affecting gross margin.
The UK facility is processing all sales from the US 
with no detrimental effect on lead time.  We have 
gained new customers in the US during the year and 
since year-end have contracted an experienced and 
well-connected representative in the US to pursue 
new business.
We were proud to achieve AS9100 quality system 
approval in February 2010.  AS9100 demonstrates 
the presence of a robust and consistent aerospace 
quality system and augments the ISO9001 standard 
by focusing on the more rigorous requirements of 
the aerospace industry.  Many original equipment 
manufacturers will only work with AS9100-registered 
suppliers and this accreditation demonstrates our 
commitment to quality and to the aerospace industry.
In July 2010, Robin Gillham joined the management 
team as Business Development Manager focusing 
on flow control. Robin returned to Hardide having 
previously worked for the company for four years to 
2008 as Sales Manager. He is a valuable addition 
to the management team having almost 20 years of 
engineering and technical sales experience and a 
thorough understanding of the Hardide technology.
Throughout the year, the engineering team has 
steadily improved production efficiency.  One 
innovation is the design of small chambers that work 
within the main coating bell but use less consumable 
material, thereby enabling more efficient coating 
of smaller batches or smaller parts.  The team 
has also been looking at ways of coating longer, 
internal surfaces. Success here will open up further 
opportunities in new and existing markets.
Across the company, a greater emphasis is being 
placed on enhancing personal performance and 
KPIs are being drawn up for all functions.
All health, safety and environmental matters are 
important to the Group and we recorded no lost time 
incidents during the year.
04
Hardide-AR-2010-v4.indd   4 3/12/10   16:42:09 2010
Annual Report
05
Following extensive testing, Hardide has been applied to Weatherford 
International Ltd’s Expandable Sand Screen (ESS
®
) / Expandable 
Zonal Isolation (EZI™) expansion tool roller bearing. Initial deployments 
proved that the coating would provide excellent wear characteristics 
and improved friction benefits over the existing system. Following 
modifications to the bearing pins, Weatherford’s sand control group has 
experienced trouble free coating applications to the pins and outstanding 
performance.  The coating has provided a significant contribution in tool 
reliability to allow completions to be run in deep wells and also over long 
production zones of over 2000ft of continuous ESS
®
.    
Hardide Enhances Weatherford Expandable Sand Screen Tooling
Hardide-AR-2010-v4.indd   5 3/12/10   16:42:13 2010
Annual Report
06
 
Chief Executive Officer’s Review continued
Markets
The management team, supported by the board, 
completed an in-depth strategic review of markets 
and applications for the Hardide technology in H1 
2010.  The process resulted in a comprehensive 
plan to create a profitable and diversified business.  
Throughout the year, progress has been made with 
diversifying our customer base.  We are pleased to 
have secured business with several significant flow 
control, and oil and gas industry customers.  We 
are particularly excited about the launch of a new 
Hardide-coated application by a major US valve 
manufacturer. The customer’s product line has 
proven successful and is set to expand in 2011 
with a second line under development.  In Europe, 
another Hardide-coated application has been 
developed for a major valve manufacturer requiring 
a hard-wearing, low-friction coating for subsea 
deployment.  One of the issues that we continue to 
face is the reluctance of our customers to allow us to 
disclose their names or their use of the coating.  We 
understand that this is due to the high value that they 
place on the competitive advantage that the coating 
provides.
Technology, Research & Development 
Headed by Dr Yuri Zhuk, Technical Director, the 
technical team has made a strong contribution to 
our diversification strategy over the year providing 
valuable analysis of the viability of potential 
applications and leading test programmes for 
several significant new applications.  These have 
included new types of pumps, equipment for plastics 
extrusion, Formula 1 automotive parts and mud 
motors for the oil and gas industry.  
Tests were also carried out to provide additional 
information on the bond strength, porosity and 
fatigue performance of the coatings.  Independent 
comparative tests were made of Hardide A and two 
other coatings as replacement materials for hard 
chrome plating; a material widely used in aerospace 
manufacturing and which is being phased out for 
environmental reasons.  The results of all the tests 
have been positive, with the Hardide coatings 
demonstrating that they are unique in the level and 
combination of valuable properties that they provide.
An IP sub-committee was formed to optimise 
the Hardide IP protection within reasonable cost 
parameters.  Several national patents, which are 
not expected to be used, were abandoned, which 
also resulted in cost savings.  In addition to cost 
rationalisation, this committee also considers how 
the IPR portfolio should be protected and makes 
recommendations to the board accordingly.
Both the aerospace and diamond coating projects 
continue to make steady progress with our customer 
partners.
Hardide-AR-2010-v4.indd   6 3/12/10   16:42:17 2010
Annual Report
07
Chief Executive Offi cer’s Review continued
Staff
Our staff have been extremely supportive and hard 
working over the past two diffi cult years.  Most of 
them have not received a salary increase but, as a 
result of better than expected results, I am delighted 
that we have been able to award a modest bonus 
to all employees who have been with us over the 
course of the last year.
Outlook
At this early stage of the 2010/11 year, we are 
encouraged by the improving conditions in our 
customers’ core markets.  However economic 
uncertainties remain and our target is to improve 
on 2009/10 performance and show strong revenue 
growth and positive cash generation.  We have 
a good development pipeline and our strategic 
projects are progressing to plan.  All projects under 
development have been benchmarked against our 
strategic goals and pre-qualifi ed.  This helps provide 
confi dence that a good proportion will be converted 
to sales.  Furthermore, our more diverse customer 
base means that we are becoming less vulnerable to 
a downturn in demand from one customer or in one 
sector.  These factors support the view that we can 
meet our expectations for a further improvement in 
trading over the coming year.  
Our employees, customers and shareholders 
continue to demonstrate their confi dence in the 
technology and the business and I thank them for 
their commitment.
Dr Graham Hine
Chief Executive Offi cer
03 December 2010
The UK operating company, 
Hardide Coatings Limited, 
has achieved full year 
proﬁ tability for the ﬁ rst time
“
”
Hardide-AR-2010-v4.indd   7 3/12/10   16:42:19 2010
Annual Report
08
Hardide coated hybrid hydrodynamic/hydrostatic radial 
and thrust bearings have been used by the major US pump 
and steam turbine design and repair specialist in 8-stage 
and 6-stage high-performance centrifugal pumps that are 
designed for high temperature refinery service.  At the 
product temperature of 450˚F (230˚C) both the octane and 
diesel have poor lubricity.  Alfred Conhagen’s concern in 
both applications was entrained solids and thermal growth 
of the close clearance components.  The Hardide coated 
bearings have now been in service for three years during 
which time they have experienced some moderate-to-
severe solid ingestion, yet the coated bearing surfaces 
remain in excellent working condition with a number of 
parts showing no signs of wear at all.
Hardide Pump Success For Alfred Conhagen, Inc.
Hardide-AR-2010-v4.indd   8 3/12/10   16:42:21 2010
Annual Report
09
The first quarter of the year started quietly as Hardide 
continued to feel the effects of reduced demand and 
inventory cuts by our customers which hit the Group 
so savagely in 2008/09.  
However there were early signs of growth as small 
orders started being placed, and revenue has 
improved quarter on quarter through to the end of 
the year.
While much of the revenue growth came from 
UK and European customers, there was also 
growth from US customers whose processing 
was successfully absorbed into the UK operation 
upon the hibernation of our Houston facility.  The 
44% increase in revenue was achieved within the 
structure implemented in 2009.  However, we did 
take the opportunity in the second half of the year 
to strengthen specific areas of the company, notably 
technical and sales.  The UK operation was hit by 
some increases in raw material costs during the 
second half, however gross margins were maintained 
as these were offset by economies of scale.  The 
cost increases should be partially mitigated going 
forward as new supply contracts kick in.
The effect of increased revenues and a stable cost 
structure meant that the Group’s loss after tax fell 
from £1,789k in 2009 to £474k in 2010, and EBITDA 
loss fell from £1,122k in 2009 to £141k in 2010.
The UK operation, Hardide Coatings Limited, 
recorded a pre-tax profit of £378k against a loss 
of £324k last year.  Costs of our US subsidiary 
Hardide Coatings Inc amounted to £191k (2009: 
£834k) before including a further impairment 
charge of £126k against the fixed assets there.  
The decision was taken in May 2010 to sublease 
the facility in Houston, however all our equipment 
remains securely stored there and will be able to be 
reinstated quickly.  Further cost reductions should be 
realised in the current year.  Hardide plc recorded a 
loss of £535k on a consolidated basis (2009: £267k 
loss) before accounting for a provision against the 
intercompany loan with Hardide Coatings Inc of 
£300k.  The increased loss is due to reduced credits 
for exchange differences of £66k (2009: £377k), 
if these are stripped out the costs of plc fell from 
£643k in 2009 to £601k.
As a result of rising revenues and the actions taken 
on costs last year, cash outflow from operating 
activities fell to £264k from £1,358k in 2009. Cash 
balance at the year end was £536k (2009: £932k).
These results demonstrate that the Group, by taking 
the actions that it did in 2009, has successfully 
reduced its cost base without impairing its ability to 
deal with significant increases in revenue.
Peter Davenport 
Finance Director 
03 December 2010
 
Financial Review
Hardide-AR-2010-v4.indd   9 3/12/10   16:42:22 2010
Annual Report
Robert John Goddard (59) 
Non-Executive Chairman 
Robert Goddard was appointed as Non-Executive Chairman in January 2008.  A 
Chartered Engineer, he was on the executive board of Burmah Castrol plc and 
previously managed its worldwide fuels business and a substantial portion of its 
chemicals business.  He subsequently joined Amberley Group PLC where he was 
Chief Executive, responsible for turning round and selling on its four speciality chemical 
subsidiaries.  Recently he has undertaken a variety of advisory and turnaround 
assignments.  He is also involved with a group developing a waste-to-energy business.
Dr (Richard) Graham Hine (56) 
Chief Executive Officer
Graham Hine was appointed as Chief Executive Officer in June 2008. After an 
international career with Philips BV and Hitachi, he has spent the last fifteen years 
growing the value of several advanced technology companies. He was CEO and 
Chairman of P2i, and CEO of Capteur Sensors.  He has a PhD in Physics from 
Cambridge University.  
Peter Neil Davenport (44) 
Finance Director
Peter Davenport was appointed Finance Director of Hardide plc in March 2006.  He 
joined Hardide in June 2005 as Financial Controller bringing ten years of financial 
management experience.  Mr Davenport was previously Financial Controller at the 
UK subsidiary of NYSE-listed global coatings company Valspar Corporation.  He is an 
associate of the Chartered Institute of Management Accountants.
10
 
Board of Directors
Hardide-AR-2010-v4.indd   10 3/12/10   16:42:26 2010
Annual Report
Dr Yuri Nikolaevich Zhuk (49) 
Technical Director
Yuri Zhuk is a co-founder of Hardide Coatings Limited and is responsible for 
the company’s technology, research & development, patenting and applications 
development programmes.  Previously, he co-founded Tetra Consult Ltd, a Moscow-
based technology consultancy company where he specialised in international 
technology commercialisation and transfer delivering projects for companies including 
ICI, GM, Johnson & Johnson and Samsung.  Dr Zhuk holds a PhD degree in Plasma 
Physics and Chemistry from the Moscow State University and an MBA from the Open 
University.  
 
 
 
Hugh Carlisle Smith (64) 
Non-Executive Director
Hugh Smith joined the board of Hardide plc in March 2005 having been on the board of 
Hardide Coatings Limited since May 2003.  He was formerly a senior export manager 
at British Leyland before helping to found Allmakes Limited, one of the UK’s largest 
independent suppliers of Land Rover spare parts and where he was Chairman until 
October 2006.  He holds a number of non-executive directorships. 
William Yale Zakroff (60) 
Non-Executive Director
William Zakroff joined the board of Hardide plc in June 2007.  Based in Houston, Texas, 
he is a founder and Executive Director in several ventures including Marinus Power 
LLC, Smart OES LLC, and DeepDriver LLC.  Mr Zakroff also continues to provide 
international business development and general management consulting services under 
Zakroff Group LP and is on the advisory board of Ingenero Inc.  Prior to founding Zakroff 
Group in 1984, he held various management positions within the advanced materials 
group of the General Electric Company (US).
11
Hardide-AR-2010-v4.indd   11 3/12/10   16:42:28 2010
Annual Report
Results
The group loss for the period, after taxation, amounted to £474,000 (2009: £1,789,000 loss).   
Directors
The present membership of the Board is set out on page 9.  All directors served throughout the year, the 
beneficial interests of the directors and their families in the shares of the company are shown below.
   30 September 201 30 September 2009  
 Appointed  Number of shares Number of shares
Robert Goddard 28 January 2008  3,468,333 3,468,333
Hugh Smith 14 March 2005  30,679,567 30,679,567
William Zakroff 26 June 2007  1,691,667 1,691,667
Graham Hine 2 June 2008  10,000,000 10,000,000
Yuri Zhuk 14 March 2005  6,031,132 6,031,132
Peter Davenport 21 March 2006  2,226,667 2,226,667
No director had, during or at the end of the year, a material interest in any contract which was significant in 
relation to the company’s business except as disclosed in Note 19 to the financial statements.
Directors’ interests in share options
The company has share option schemes under the terms of which directors are able to subscribe for ordinary shares 
in the company.  Details of the directors’ interests in share options are shown in note 18 to the group accounts.  
Directors’ responsibilities for the financial statements
The directors are responsible for preparing the annual report and the financial statements in accordance with 
applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year.  Under that law the 
directors have elected to prepare the financial statements in accordance with International Financial Reporting 
Standards (IFRS).  Under company law the directors must not approve the financial statements unless they are 
satisfied that they give a true and fair view of the state of affairs of the group and of the company and of the profit 
or loss of the group for that period.  In preparing these financial statements, the directors are required to:-
n select suitable accounting policies and then apply them consistently;
n make judgments and accounting estimates that are reasonable and prudent;
n prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group 
will continue in business; and
n state whether applicable International Financial Reporting Standards have been followed, subject to any 
material departures disclosed and explained in the financial statements.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain 
the group’s and company’s transactions and disclose with reasonable accuracy at any time the financial position 
of the group and company and enable them to ensure that the financial statements comply with the Companies 
Act 2006.  They are also responsible for safeguarding the assets of the group and company and hence for taking 
reasonable steps for the prevention and detection of fraud and other irregularities.
 
Report of the Directors 
12
Hardide-AR-2010-v4.indd   12 3/12/10   16:42:28 2010
Annual Report
13
In so far as the directors are aware:
n there is no relevant audit information of which the company’s auditor is unaware, and
n the directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit 
information and to establish that the auditors are aware of that information.
The directors are responsible for the maintenance and integrity of corporate and financial information included 
on the Company’s website.  Legislation in the United Kingdom governing the preparation and dissemination of 
financial statements may differ from legislation in other jurisdictions.
Financial risk management objectives and policies
The Group uses various financial instruments including finance leases, equity and loans, and cash and various 
items, such as trade debtors and trade creditors that arise directly from its operations.  The main purpose of these 
financial instruments is to raise finance for the Group’s operations. The existence of these financial instruments 
exposes the Group to a number of financial risks. The main risks are currency risk and interest rate risk. The 
directors review and agree policies for managing each of these risks. Further disclosure is provided in Note 20.
Substantial shareholders
At 18 November 2010 the following shareholders had a disclosable interest in 3% or more of the nominal value of 
the company’s shares:
Name Shareholding %
R Boyce & Associates 246,312,225 29.5
A Badenoch & Associates 240,066,667 28.8
J M Finn Nominees Ltd 79,174,275 9.5
Hargreave Hale Nominees Ltd 55,236,000 6.6
William Samuel Clive Richards Esq 26,320,000 3.2
 
Payment policy and practice
It is the company’s policy that payments to suppliers are made in accordance with those terms and conditions 
agreed between the company and its suppliers, provided that all trading terms and conditions have been complied 
with.  At 30 September 2010 the group had an average of 40 days outstanding in trade creditors (2009: 37 days).
G Hine 
Director
03 December 2010
Hardide-AR-2010-v4.indd   13 3/12/10   16:42:28 2010
Annual Report
The board has studied the new UK Corporate Governance Code published by the Financial Reporting Council on 
28 May 2010 and as a result has made certain changes to the way the board works.  Detailed disclosure against 
the criteria outlined in the Code is as follows: 
The Role of the Board
During the year, board meetings were held each month and each director attended every board meeting.  In the 
case of Mr Zakroff, this was in person every quarter and the remainder via video conference.
From time to time, consideration of a single matter is delegated to a board sub-committee set up for the specific 
purpose; for example on risk management or intellectual property.  In the normal course, such sub-committees 
make recommendations to the board or the board ratifies the sub-committee’s decision where that has to be 
made before a full board is convened.  The work of these ad hoc committees has been found to be valuable 
and the board has now resolved to establish standing sub-committees for risk management and for intellectual 
property.
At regular monthly board meetings, the CEO reports on overall performance for the previous month supported 
on financial detail by the Finance Director.  The Technical Director reports on progress with development projects 
and technical aspects of customer and product issues.  From time to time, a senior member of staff who is not a 
director is invited to present to the board on a specific topic.
There is a formal schedule of matters reserved for the board.  This includes the setting of high level targets, 
approval of budgets, capital expenditure, license agreements and the like.  Authority levels for expenditure are 
delegated to individual executives or management committees according to a schedule agreed by the board.
Non-executive Directors
It is not thought that the company is large enough to warrant a formal senior non-executive position.  Instead 
both other non-executive directors are actively consulted by the chairman and encouraged to provide feedback.  
In addition, the Chairman has regular contact with most major shareholders and they are free to contact him at 
times outside those meetings, and do so.
Because of the frequent involvement of the chairman with executive directors on various projects, coupled with 
rapidly changing demands made upon executive directors over the last two years, matters of their personal 
performance have been dealt with on an ongoing basis.  However, the board believes that a more formal 
performance review against an agreed list of objectives is now appropriate.  The objectives-setting process is now 
underway and performance against the objectives will be reviewed at least once a year.
Open exchange among board members has become part of the culture of the company and by this means the 
chairman is made aware of matters of substance and style that merit attention.  No formal mechanism exists for 
appraising the effectiveness of the board as a whole or of the chairman alone.  However, in the coming year, the 
Remuneration and Nomination Committee will consider if a formal mechanism is appropriate and if it does such a 
process will be implemented.
The Composition and Effectiveness of the Board
Modest amounts are paid to Mr Zakroff’s Houston-based company for the costs in dealing with administrative 
matters for the currently-dormant Houston subsidiary of Hardide.  Mr Zakroff also receives a travel allowance for 
when he visits Hardide in the UK.  Mr Goddard previously had an indirect interest in BCB Ltd, which during the 
year had a small waste collection contract with Hardide Coatings Ltd.  Each of the non-executive directors also 
own ordinary shares in Hardide plc and Mr Goddard has been granted options on ordinary shares in Hardide plc, 
all as declared elsewhere in this report.  The board has considered all these connections with the company and 
concluded that each of the three non-executive members of the board is “independent”.  
14
 
Corporate Governance
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Annual Report
The board has reviewed Mr Goddard’s activities outside of Hardide and is satisfied that none of these conflict with 
his role as Chairman of Hardide.
The terms and conditions for non-executive directors are agreed by the board.  They are available for inspection 
at the company’s registered office and at the location of the AGM for a period before the meeting begins.
All directors have access to independent professional advice at company expense if this is felt by them in their 
own judgement that is needed to enable them to discharge their duties and that the cost of such advice is 
reasonable in the circumstances.
Collectively and individually, the directors monitor the performance of the board and its members on a range 
of measures.  These include attendance, familiarity with the board packs, the quality of those board packs, an 
understanding of the matters under discussion, the ability to contribute to board discussion and the quality of the 
challenge made to executive proposals & performance and the thoroughness of reporting and recommendations 
made by the sub-committees.  Given its size and currently-limited financial resources, a formal evaluation of board 
performance by an outside agency is not believed to be appropriate.
Board Sub-committees
The company has had two standing sub-committees of the board, one being the Audit Committee and the other 
is the combined Remuneration and Nomination Committee.  Hugh Smith and William Zakroff are members of 
both.  The group chairman is co-opted from time to time to sit on the Remuneration and Nomination Committee 
and is also kept appraised of the work of both committees.  The Remuneration and Nomination Committee 
convenes at least once per year and as the need arises.  The Audit Committee convenes at least twice a year.  
Both Committees have terms of reference approved by the whole board and these are updated as needed from 
time to time. 
As stated earlier, two additional standing board sub-committees have been set up.  These are the Risk 
Management Committee and the Intellectual Property Committee.  Their main purposes and terms of reference 
are also set out below.
Remuneration and Nomination Committee
The Remuneration Committee comprises Hugh Smith (Chairman) and William Zakroff.  During the year the 
Committee met on a number of occasions. The main terms of reference of the committee are:
1. To determine and agree with the board the framework or broad policy for the remuneration of the Company’s 
chief executive, chairman, the executive directors, the Company secretary and such other members of the 
executive management as it is designated to consider. 
2. To approve the design of, and determine targets for, any performance related pay schemes operated by  
the Company and approve the total annual payments made under such schemes 
3. To review the design of all share incentive plans for approval by the board and shareholders. For any  
such plans, determine each year whether awards will be made, and if so, the overall amount of such  
awards, the individual awards to executive directors and other senior executives and the  performance targets 
to be used. 
4. To ensure that contractual terms on termination, and any payments made, are fair to the individual,  
and the Company, that failure is not rewarded and that the duty to mitigate loss is fully recognised 
5. Within the terms of the agreed policy and in consultation with the chairman and/or chief executive as 
appropriate, determine the total individual remuneration package of each executive director and other senior 
executives who report to the chief executive, including bonuses, incentive payments and  share options, other 
share awards or other benefits.
6. To oversee any major changes in employee benefits structures throughout the Company or group. 
15
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Annual Report
In the past year there has been a bonus scheme in operation for both executive Directors and for members of 
staff employed by the Company from October 1st 2009 and still employed by the Company.  That bonus scheme 
was based on the achievement of a certain minimum level of gross profit together with ensuring that the level of 
cash within the Company was above a certain minimum.  The Remuneration committee is pleased to report that 
the minimum targets were achieved and that as a result all members of staff and executive Directors received a 
bonus amounting to about 2.3% of their earnings. As most staff had not received any salary increase for over 
two years, the Board was delighted that the targets were achieved and that all staff and executive directors could 
benefit as a result.  
A similar scheme has been approved for the next financial year, but with higher targets.
With regard to executive and staff share options, everyone employed before October 1st 2009 participates in a 
share option scheme.  10% of their options vested on October 1st 2010.  A further 10% will vest after another 12 
months and 10% after 24 months.  50% of shares will vest if the average market capitalisation of the Company 
reaches £15 million for a period of 20 consecutive days. A further 50% of shares will vest if the average market 
capitalisation of the Company reaches £30 million for a period of 20 consecutive days.  If either of these last two 
conditions occur before October 2012 then shares will vest and override the date conditions.
In recognition of the extraordinary amount of additional work put in by the Chairman he enjoys slightly different 
terms compared with the Executive Directors and staff.  30% of his options have vested by October 2010.  A 
further 20% will vest if the average market capitalisation of the Company reaches £15 million for a period of 20 
consecutive days. A further 50% of shares will vest if the average market capitalisation of the Company reaches 
£30 million for a period of 20 consecutive days.
All options vest at an option price of 0.45 pence per share.  
William Zakroff and Hugh Smith do not participate in any bonus scheme or share option scheme.
Audit Committee
The Audit Committee meets formally twice each year with the Company’s auditor at appropriate times during the 
reporting and audit cycle, and otherwise as required.  The duties of the Audit Committee are to:
1. Monitor the integrity of the financial statements, including the annual and interim reports; review the 
consistency of accounting policies; review whether the Company has followed appropriate accounting 
standards and made appropriate estimates and judgments; review the methods used to account for 
significant or unusual transactions; review the clarity of disclosure in the Company’s financial reports; and 
review all material information presented with the financial statements.
2. Review the effectiveness of the Company’s internal controls and risk management systems, and to review and 
approve the statements included in the annual report concerning these.
3. Review the Company’s arrangements for its employees to raise concerns about possible wrongdoing, and 
ensure these arrangements allow proportionate and independent investigation; and to review the Company’s 
procedures for detecting and preventing bribery and fraud.
4. Consider and make recommendations in relation to the appointment, re-appointment and removal of the 
Company’s external auditor; oversee the relationship with the external auditor; meet regularly with the external 
auditor, including at least once a year without management being present; review and approve the annual 
audit plan; review the findings of the audit with the external auditor; and review the effectiveness of the audit.
16
 
Corporate Governance continued
Hardide-AR-2010-v4.indd   16 3/12/10   16:42:28 2010
Annual Report
Other Committees
Given the importance to the company of its intellectual property and the cost of developing and protecting it, a 
sub-committee of the board has been constituted and is charged with reviewing all matters of intellectual property 
and making recommendations to the board where the sub-committee does not have delegated powers.  The 
sub-committee will sit at least twice each year.
In addition, a Risk Management Sub-committee has been formed to identify risks that the company may be 
exposed to and recommend to the board how these may be avoided, mitigated or insured against, or some 
combination of these.  This sub-committee has met twice in the year, and will sit at least every four months.  
The standing members of both these sub-committees will be the chairman, the chief executive, the technical 
director and the finance director.
Business Model and Strategy
Your board holds strongly to the view that improvement in shareholder value in the company over the medium 
to long term will be realised by creation of applications that are of exceptionally high value to customers and 
provide performance benefits over any competing products.  To this end, the company continues with a number 
of long-duration development programmes.  One example is the replacement of chromium-plated components 
for the aerospace industry and another is the use of Hardide in high-performance cutting and abrasive tools.  In 
the shorter term the priority is to boost revenue in the near term by increasing sales to existing customers and the 
provision of existing products to new customers. 
Whilst overheads have been reduced to a base level, they are at a level at which the company is capable of 
delivering profitability.  Only once a strong upward trend in future sales is confirmed, additional revenue and capital 
expenditure will be made in order to satisfy the expected increased demand.  In the past, the company has 
suffered badly from the sudden reduction in demand from a dominant customer.  The marketing strategy adopted 
is designed partly to reduce this exposure and is proving effective.
Business Review
The board regularly reviews both the financial position of the Group and non-financial performance information.  
Financial information includes monthly balance sheets and profit and loss accounts for the group, company and 
subsidiaries, together with analysis of movements in cash, trade debtors and creditors, and fixed assets.  Non-
financial information reviewed by the board includes reports and key performance indicators including furnace 
performance, delivery performance, research and development activity, sales activity and health and safety. During 
the year, the Company has developed and implemented a number of non-financial KPIs which are enabling us to 
monitor, benchmark and improve our performance across a range of environmental, production, operations, sales 
and human resource measures.
On behalf of the board, 
R J Goddard 
Chairman
03 December 2010
17
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Annual Report
Independent Auditor’s Report to the 
Members Of Hardide Plc
We have audited the financial statements of Hardide Plc for the year ended 30 September 2010 which comprise 
the Consolidated Income Statement, the Consolidated and Company Balance Sheets, the Consolidated Cash 
Flow Statement, the Consolidated Statement of Recognised Income and Expense and the related notes.  The 
financial reporting framework that has been applied in the preparation of the group financial statements is 
applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.  The 
financial reporting framework that has been applied in the preparation of the parent company financial statements 
is applicable law and United Kingdom Accounting Standards(United Kingdom Generally Accepted Accounting 
Practice).
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the 
Companies Act 2006.  Our audit work has been undertaken so that we might state to the company’s members 
those matters we are required to state to them in an auditors’ report and for no other purpose.  To the fullest 
extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the 
company’s members as a body, for our audit work, for this report, or for the opinions we have formed.  
Respective responsibilities of directors and auditors
As explained more fully in the Directors’ Responsibilities Statement (set out on page 10) the directors are 
responsible for the preparation of the financial statements and for being satisfied that they give a true and fair 
view.  Our responsibility is to audit the financial statements in accordance with applicable law and International 
Standards on Auditing (UK and Ireland).  Those standards require us to comply with the Auditing Practices 
Board’s (APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to 
give reasonable assurance that the financial statements are free from material misstatement, whether caused by 
fraud or error.  This includes an assessment of: whether the accounting policies are appropriate to the group’s 
and the parent company’s circumstances and have been consistently applied and adequately disclosed; the 
reasonableness of significant accounting estimates made by the directors; and the overall presentation of the 
financial statements.
Opinion on financial statements
In our opinion:
n the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs 
as at 30 September 2010 and of the group’s loss for the year then ended;
n the group financial statements have been properly prepared in accordance with IFRSs as adopted by the 
European Union;
n the parent company financial statements have been properly prepared in accordance with United Kingdom 
Generally Accepted Accounting Practice;
n the financial statements have been prepared in accordance with the requirements of the Companies Act 2006; 
and, as regards the group financial statements, Article 4 of the IAS Regulation.
18
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Annual Report
Independent Auditor’s Report to the 
Members Of Hardide Plc
Emphasis of matter-going concern
In forming our opinion on the financial statements, which is not qualified, we have considered the adequacy of 
the disclosures made in note 1 concerning the group’s ability to continue as a going concern should the group 
not fulfil its current plan for revenue, costs and cash flow.  These matters indicate the existence of a material 
uncertainty which may cast significant doubt over the company’s ability to continue as a going concern.  The 
financial statements do not include the adjustments that would result if the group was unable to continue as a 
going concern.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion:
n the information given in the Directors’ Report for the financial year for which the financial statements are 
prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report 
to you if, in our opinion:
n adequate accounting records have not been kept by the parent company, or returns adequate for our audit 
have not been received from branches not visited by us; or
n the parent company financial statements are not in agreement with the accounting records or returns; or
n certain disclosures of directors’ remuneration specified by law are not made; or
n we have not received all the information and explanations we require for our audit.
Kevin Byrne (Senior Statutory Auditor) 
for and on behalf of 
Critchleys LLP 
Statutory Auditor 
Abingdon
03 December 2010
19
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Annual Report
20
Consolidated Statement of 
Comprehensive Income 
for the year ended 30 September 2010
 Note 2010 2009
  £ ’000 £ ’000
Revenue 2 1,735 1,209
Cost of sales  (649) (854)
   
Gross profit  1,086 355
Administrative expenses  (1,293) (1,854)
Exchange difference on intercompany loan  66 377 
Impairment of intangibles  (2) (2)
Depreciation and amortisation  (134) (330)
Exceptional item: Impairment of fixed assets  (126) (364)
   
Operating loss 3 (403) (1,818)
Finance income 4 2 14
Finance costs 5 (106) (13)
Disposal of fixed asset  - (7)
   
Loss on ordinary activities before taxation  (507) (1,824)
Taxation 7 33 35
   
Loss on ordinary activities after taxation  (474) (1,789)
Loss per share: Basic 8 (0.06)p (0.6)p
Loss per share: Diluted 8 (0.04)p (0.2)p
 
All operations are continuing.
The accompanying accounting policies and notes form an integral part of these financial statements.
Hardide-AR-2010-v4.indd   20 3/12/10   16:42:28 2010
Annual Report
21
  Note 2010 2009
   £ ‘000 £ ‘000
Assets   
   
Non-current assets   
 Goodwill 9 69 69
 Intangible assets 10 - 2
 Property, plant & equipment 11 569 796
Total non-current assets  638 867
   
Current assets   
 Inventories 12 26 26
 Trade and other receivables 12 337 208
 Other current financial assets 12 62 101
 Cash and cash equivalents 12 536 932
Total current assets  961 1,267
   
Total assets  1,599 2,134
   
Liabilities   
   
Current liabilities   
 Trade and other payables 13 258 259
 Financial liabilities 13 55 118
 Total current liabilities  313 377
   
Net current assets  648 890
   
Non-current liabilities   
 Financial liabilities 14 801 748
Total non-current liabilities  801 748
   
Total liabilities  1,114 1,125
   
Net assets  485 1,009
   
Equity attributable to equity holders of the parent   
 Share capital 16 2,541 2,541
 Share premium 17 5,259 5,259
 Retained earnings 17 (6,955) (6,481)
 Share-based payments reserve 17 269 274
 Translation reserve 17 (629) (584)
Total equity  485 1,009
The financial statements were approved and authorised for issue by the Board on 03 December 2010.
Graham Hine 
Director
 
Consolidated Statement of Financial Position 
at 30 September 2010
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Annual Report
22
 
Consolidated Statement of Cash Flows
for the year ended 30 September 2010
  2010 2009
  £ ‘000 £ ‘000
Cash flows from operating activities   
 Operating loss  (403) (1,818)
 Impairment of intangibles  2 2
 Depreciation  134 330
 Impairment of fixed assets  126 364
 Share option charge  2 64
 Decrease in inventories  - 18
 Decrease in receivables  (89) 181
 Decrease in payables  (1) (97)
 Exchange rate variance  (66) (377)
Cash generated from operations  (295) (1,333)
   
 Finance income  2 14
 Finance costs  (10) (75)
 Tax received / (paid)  39 36
   
Net cash generated from operating activities  (264) (1,358)
   
Cash flows from investing activities   
 Purchase of property, plant and equipment  (25) (30)
   
Net cash used in investing activities  (25) (30)
   
Cash flows from financing activities   
 Net proceeds from issue of ordinary share capital  - 802
 Finance lease inception  - -
 Finance lease repayment  (107) (110)
 New loans raised  - 633
   
Net cash used in financing activities  (107) 1,325
   
Net increase / (decrease) in cash and cash equivalents  (396) (63)
   
Cash and cash equivalents at the beginning of the year  932 995
   
Cash and cash equivalents at the end of the year  536 932
Hardide-AR-2010-v4.indd   22 3/12/10   16:42:28 2010
Annual Report
23
Consolidated Statement of 
Recognised Income and Expense 
for the year ended 30 September 2010
   2010 2009
   £ ‘000 £ ‘000
Exchange differences on translation of foreign operations  (45) (279)
   
Net income recognised directly in equity  (45) (279)
   
Loss for the year  (474) (1,789)
   
Total recognised income and expense for the year  (519) (2,068)
Hardide-AR-2010-v4.indd   23 3/12/10   16:42:28 2010
Annual Report
24
1. Accounting policies
Accounting convention 
The group previously reported its financial statements under UK Generally Accepted Accounting Practice (GAAP).  
From 1 October 2007 the group is required to prepare its financial statements in accordance with International 
Financial Reporting Standards (IFRS), International Accounting Standards (IAS) and Interpretations (IFRIC).      
Transition to IFRS 
The group’s transition date to IFRS was 1 October 2006, which is the beginning of the comparative period for the 
year ended 30 September 2007.  The group has applied IFRS1 for the first time adoption of IFRS and has elected 
to use the following exemptions:
n Business combinations – business combinations that took place prior to 1 October 2006 have not been 
restated;
n Share-based payment – the group has applied the requirements of IFRS2 Share-based payments to all grants 
of equity instruments after 7 November 2002 that were unvested as of 1 October 2006.
Standards, interpretations and amendments to published standards not yet effective 
Certain new standards, amendments and interpretations to existing standards have been published that are 
mandatory for the group’s accounting periods beginning on or after 1 October 2010 or later periods and which 
the group has decided not to adopt early.  
In November 2009, the IASB issued IFRS 9 Financial Instruments Classification and Measurement which 
altered the classification and measurement of financial instruments. Under the new standard only two possible 
classifications arise, rather than the four existing classifications currently available under IAS 39, and will result in 
all financial assets being valued at amortised cost or fair value through the income statement. Financial liabilities 
are excluded from the scope of the standard. The standard is not mandatory before 1 January 2013 and Hardide 
Plc currently has no plans to apply the standard early. The adoption of this standard is not expected to materially 
impact upon the Group’s financial statements.
The following principal accounting policies have been applied:
Basis of preparation 
The financial statements have been prepared on the going concern basis, under the historical cost convention.  
These financial statements are presented in pounds sterling because that is the currency of the primary economic 
environment in which the group operates.
Going Concern 
The directors believe that the Company and the Group have adequate resources to continue in operational 
existence for the foreseeable future.  This belief is based on the Group’s current business plan and in particular 
its plan for revenues, costs and cash flows.  In particular, the group’s previous cost reductions have resulted in a 
lower break-even point.  The plan for the current year is based on a view of recovery in the group’s markets and 
customers and this plan does not show a need for further funding. 
Basis of consolidation 
The consolidated financial statements incorporate the financial statements of the Company and entities controlled 
by the Company (its subsidiaries) made up to 30 September each year.  
Control is achieved where Hardide plc has the power to govern the financial and operating policies of an investee 
entity so as to obtain benefits from its activities.
The financial statements of subsidiaries are included in the consolidated financial statements from the date that 
control commences until the date that control ceases.
 
Notes to the Group Financial Statements
Hardide-AR-2010-v4.indd   24 3/12/10   16:42:28 2010
Annual Report
25
Transactions between and balances with group companies are eliminated together with unrealised gains on inter-
company transactions.  Where necessary, adjustments are made to the financial statements of subsidiaries to 
bring the accounting policies used into line with those used by the group.
Acquisitions are accounted for by the purchase method.  The cost of an acquisition is measured as the fair value 
at the date of exchange of the consideration provided plus any costs directly attributable to the acquisition.  On 
acquisition, the assets and liabilities and contingent liabilities of the acquired business that meet the conditions 
for recognition under IFRS 3 are measured at their fair values at the date of acquisition.  Any excess of the cost of 
acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill.  Any deficiency of 
the cost of acquisition below the fair values of the identifiable net assets acquired is credited to profit or loss in the 
period of acquisition.
Revenue recognition 
Revenue represents the invoiced amount of goods sold and services provided during the period, excluding 
value added tax and other sales taxes, trade discounts, and intra-group sales.  Revenue is recognised when 
performance has occurred and a right to consideration has been obtained.  This is normally when goods have 
been despatched or services provided to the customer, title and risk of loss have been transferred and collection 
of related receivables is probable.
Research and development 
Expenditure on research and development costs is charged to the income statement in the period in which it is 
incurred unless such costs should be capitalised under the requirements of the applicable standard, which is only 
when the future economic benefits expected to arise are deemed probable and the costs can be reliably measured. 
Intangible assets: Goodwill 
Goodwill represents the excess of the cost of acquisition over the Company’s interest in the fair value of the 
identifiable assets and liabilities of a subsidiary at the date of acquisition.  Goodwill is recognised as an asset and 
reviewed for impairment at least annually.  
Goodwill arising on acquisitions before the date of transition to IFRS (1 October 2006) has been retained at the 
previous UK GAAP amounts subject to being tested for impairment at that date and at least annually thereafter.
On disposal of a subsidiary the attributable amount of goodwill is included in the determination of the profit or loss 
on disposal.
Intangible assets: Development costs 
Capitalised development costs are amortised on a straight line basis over their useful economic lives once the 
product is available for use.
Intangible assets: Other  
Separable intangible assets are recognised separately from goodwill on all acquisitions after the date of transition, 
are initially measured at fair value and amortised over their useful economic lives.  Purchased intangible assets are 
capitalised at cost and amortised over their useful economic lives.
Impairment of intangible assets 
Goodwill is allocated to cash-generating units for the purposes of impairment testing.  The recoverable amount 
of the cash-generating unit to which the goodwill relates is tested annually for impairment or when events or 
changes in circumstances indicate that it might be impaired.  Any impairment is recognised immediately in the 
income statement and is not subsequently reversed.
Intangible assets other than goodwill are tested for impairment when a trigger event occurs.  Useful lives are also 
examined on an annual basis and adjustments, where applicable, are made on a prospective basis.
Hardide-AR-2010-v4.indd   25 3/12/10   16:42:29 2010
Annual Report
26
1. Accounting policies continued 
Recoverable amount is the higher of fair value less costs to sell, and value in use.  In assessing value in use, 
the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects 
current market assessments of the time value of money and the risks specific to the asset for which the estimates 
of future cash flows have not been adjusted.  An impairment loss is recognised to the extent that the carrying 
value exceeds the recoverable amount.  
An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued 
amount, in which case the impairment loss is treated as a revaluation decrease.  A reversal of an impairment loss 
is recognised as income immediately, unless the asset is carried at a revalued amount, in which case the reversal 
of the impairment loss is treated as a revaluation increase.
Property, plant and equipment 
Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment 
loss.
Depreciation is provided on the cost of assets less any residual value over their estimated useful lives, using the 
straight line method, as follows:
 Plant & machinery  2 to 10 years 
 Leasehold improvements Over remaining term of lease 
 Fixtures & fittings  4 years 
 Computer equipment 4 years
Depreciation is not charged on assets under construction. 
Borrowing costs related to the purchase of fixed assets are not capitalised.
The carrying values of property, plant and equipment and investments measured using a cost basis, are reviewed 
for impairment only when events indicate the carrying value may be impaired.
Investments 
Investments held as fixed assets are stated at cost less any provision for impairment.
Inventories 
Inventories are valued at the lower of cost and net realisable value. The costs incurred in bringing each product to 
its present location and condition are accounted for as follows:
 Raw materials Cost of purchase on a first in, first out basis
 Work in Progress and Cost of raw materials and direct labour and a proportion of manufacturing   
 Finished goods overheads based on the normal level of activity
Net realisable value is based on the estimated selling price less estimated costs to completion and estimated 
costs necessary to make the sale.
Leases 
Finance leases, which transfer to the group substantially all the risks and benefits incidental to ownership of the 
leased item, are included in the balance sheet at fair value or, if lower, at the present value of the minimum lease 
payments.  Depreciation is charged over the useful economic life of the assets.  Lease payments are apportioned 
between the finance charges and the reduction of the lease liability so as to achieve a constant rate of interest on 
the remaining balance of the liability.
Leases where the lessor retains substantially all the risks and rewards of ownership are classified as operating 
leases.  Rentals payable under operating leases are charged to the income statement on a straight line basis over 
the term of the lease.
Notes to the Group Financial Statements 
continued
Hardide-AR-2010-v4.indd   26 3/12/10   16:42:29 2010
Annual Report
27
Financial Instruments 
The group does not enter into hedging or speculative derivative contracts.
Financial assets and liabilities are recognised on the group’s balance sheet when the group becomes a party to 
the contractual provisions of the instrument.
Income and expenditure arising on financial instruments is recognised on the accruals basis, and credited or 
charged to the profit and loss account in the financial period to which it relates.
Financial liabilities and equity 
Financial liabilities and equity instruments are classified according to the substance of the contractual 
arrangements entered into.  
A financial liability exists where there is a contractual obligation to deliver cash or another financial asset to 
another entity, or to exchange financial assets or financial liabilities under potentially unfavourable conditions.  In 
addition, contracts which result in the entity delivering a variable number of its own equity instruments are financial 
liabilities.  Shares containing such obligations are classified as financial liabilities.
Finance costs and gains or losses relating to financial liabilities are included in the income statement.  The carrying 
amount of the liability is increased by the finance cost and reduced by payments made in respect of that liability.  
An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting 
all of its liabilities.  Dividends and distributions relating to equity instruments are debited directly to reserves.
Equity instruments issued are recorded at the proceeds received, net of direct issue costs.
Compound instruments 
Compound instruments comprise both a liability and an equity component.  The elements of a compound 
instrument are classified in accordance with their contractual provisions.  At the date of issue, the liability 
component is recorded at fair value, which is estimated using the prevailing market interest rate for a similar debt 
instrument without the equity feature.  Thereafter, the liability component is accounted for as a financial liability in 
accordance with the accounting policy set out above.  The residual is the equity component, which is accounted 
for as an equity instrument.
Cash and cash equivalents 
Cash and cash equivalents include cash at bank and in hand, and short-term deposits with an original maturity 
period of three months or less.
Trade and other receivables and payables 
Trade and other receivables are stated at amounts receivable less any provision for recoverability.  Trade payables 
are stated at their nominal value.
Foreign currencies 
The company’s functional and presentation currency is Sterling.  Transactions denominated in foreign currencies 
are translated into sterling at the rates ruling at the date of the transactions.  
Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at 
the rates of exchange ruling at that date.  Gains and losses arising on translation are recognised in the income 
statement.
On consolidation, the assets and liabilities of the group’s overseas operations are translated into Sterling at 
the exchange rate at the date of the balance sheet.  Income and expense items are translated at the average 
exchange rates for the period.  Exchange differences arising are classified as equity and are transferred to the 
translation reserve. 
Exchange gains and losses arising on the translation of the group’s net investment in foreign entities are also 
classified as equity.
Hardide-AR-2010-v4.indd   27 3/12/10   16:42:29 2010
Annual Report
28
1. Accounting policies continued 
Share-based payments 
The fair value of equity-settled share payments is determined at the date of grant and is recognised on a straight 
line basis over the vesting period based on the group’s estimate of options that will eventually vest.
Fair value is measured by use of a Black-Scholes pricing model.
Retirement benefits 
The group operates a stakeholder scheme for its employees, but does not make any contributions to it.
Short-term employee benefit costs 
The undiscounted amount of short-term benefits attributable to services that have been rendered in the period 
are recognised as an expense.  Any difference between the amount of cost recognised and the cash payments 
made is treated as a liability or prepayment as appropriate.
Taxation 
The charge for current tax is based on the results for the period as adjusted for items that are non-assessable 
or disallowed, and is calculated using tax rates that have been enacted or substantively enacted by the balance 
sheet date
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the balance 
sheet differs from its tax base.  Recognition of deferred tax assets is restricted to those instances where it is 
probable that taxable profit will be available against which the difference can be utilised.  Deferred tax liabilities 
are recognised for taxable temporary differences.  Such assets and liabilities are not recognised if the temporary 
difference arises from the amortisation of goodwill or the initial recognition of other assets and liabilities in a 
transaction that is not a business combination and affects neither the tax profit nor the accounting profit.  
The amount of the asset or liability is determined using tax rates that have been enacted or substantially enacted 
at the balance sheet date, and are expected to apply when the deferred tax assets or liabilities are settled or 
recovered.  Deferred tax balances are not discounted.
Deferred tax is charged or credited in the income statement except where it relates to items charged or credited 
to equity, in which case the deferred tax is dealt with there.
Borrowings 
Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of 
the liability for at least twelve months after the balance sheet date.  All borrowing costs are recognised in the 
income statement in the period in which they are incurred.
Provisions 
Provisions are made when the group has a present obligation as a result of past events, it is more likely than 
not that an outflow of economic benefits will be required to settle the obligation, and the amount can be reliably 
estimated.  Provisions are discounted to present value where the impact is significant, using a discount rate that 
reflects current market assessments of the time value of money and the risks specific to the obligation.
Notes to the Group Financial Statements 
continued
Hardide-AR-2010-v4.indd   28 3/12/10   16:42:29 2010
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29
2. Segmental analysis 
Under IFRS8, operating segments are defined as a component of equity (a) that engages in business activities 
from which it may earn revenues and incur expenses (b) whose operating results are regularly reviewed and (c) for 
which discrete financial information is available.  The group management is organised in to UK and USA operation 
and Corporate central functions, and this factor identifies the group’s reportable segments.
Year ended 30 September 2010
 UK operation US operation Corporate Eliminations Consolidated
  £ ‘000  £ ‘000  £ ‘000  £ ‘000  £ ‘000 
 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009
External revenue 1,735 1,086 - 123 - - - - 1,735 1,209
Inter-segment revenue - - - - - - - - - -
Interest revenue - 3 -  2 11 - - 2 14
Interest expense 9 19 1 1 96 (7) - - 106 13
Depreciation 134 215 - 115 - - - - 134 330
Impairment - - 126 364 - - - - 126 364
Income tax income - - - - 33 35 - - 33 35
Reportable segment 378 (324) (317) (1,198) (535) (267) - - (474) (1,789) 
profit / (loss)
   
Segment assets 1,196 858 179 288 1,660 2,409 (1,436) (1,421) 1,599 2,134
Expenditure for 25 8 - 22 - - - - 25 30 
non-current assets
Segment liabilities 577 614 5,026 4,767 865 779 (5,354) (5,035) 1,114 1,125
The group currently has a single business product, so no secondary analysis is presented.  Revenue from external 
customers is attributed according to their country of domicile.  Turnover by geographical destination is as follows:
 UK Europe N America Rest of World  Total
 £ ‘000 £ ‘000 £ ‘000 £ ‘000 £ ‘000
External sales    
2010  1,381  67  284  3  1,735
2009  935  28  245  1  1,209
 
One external customer (2009 - one) contributed more than 10% of the Group’s continuing external sales for 
the year ended 30 September 2010.  The external sales for this customer are £1.173 million which has been 
recorded within the UK Operation reportable segment, excluding central costs.
Hardide-AR-2010-v4.indd   29 3/12/10   16:42:29 2010
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30
3. Operating loss
This is stated after charging:
   2010 2009
   £ ‘000 £ ‘000
Auditor’s remuneration  
 fees payable to the company’s current auditor for 
 the audit of the company’s accounts 14 10
 other services - 1
Cost of inventory recognised as an expense 169 188
Research and development 125 145
Operating lease rentals
 - plant and machinery 18 19
 - property 214 212
Share option expense 2 64
4. Finance income
   2010 2009
   £ ‘000 £ ‘000
Interest on bank deposits 2 14
5. Finance costs
   2010 2009
   £ ‘000 £ ‘000
Interest on loans 69 54
Interest on finance leases 9 18
Finance charges on combined instruments 27 (62)
Other interest payable 1 3
 106 13
 
Notes to the Group Financial Statements 
continued
Hardide-AR-2010-v4.indd   30 3/12/10   16:42:29 2010
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31
6. Employees
The average number of employees, including executive directors but not including non-executive directors, during 
the year comprised:
 2010 2009
 Number Number
Technical 9 11
Production 9 10
Sales and marketing 3 3
Management and admin 2 8
 23 32
Staff costs, including executive and non-executive directors, during the year amounted to:
 2010 2009
 £ ‘000 £ ‘000
Wages and salaries 855 1,172
Social security costs 96 115
Share option expense 2 64
 953 1,351
The amounts received by each director during the year were as follows:
  2010
  £ ‘000
Dr Graham Hine (Chief Executive ) Salary 120 
 Bonus 3 
 Car allowance 10
Dr Yuri Zhuk (Technical Director) Salary 68 
 Bonus 2 
 Car allowance 9
Peter Davenport (Finance Director) Salary 51 
 Bonus 1 
Robert Goddard (Non-Executive Chairman) Salary 30
Hugh Smith (Non-Executive Director) Salary 16
William Zakroff (Non-Executive Director) Fees 16
Total directors’ remuneration  326
Hardide-AR-2010-v4.indd   31 3/12/10   16:42:29 2010
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32
7. Taxation
 2010 2009
 £ ‘000 £ ‘000
UK corporation tax on the loss for the year - -
R&D tax credit 30 35
Adjustment in respect of prior year R&D tax credits 3 -
Adjustment in respect of prior year UK corporation tax - -
 33 35
The group has unutilised tax losses in the UK of approximately £8.2m (2009: £7.8m). The deferred tax asset has 
not been recognised due to uncertainty about its recoverability.  
8. Earnings per ordinary share
 2010 2009
 £ ‘000 £ ‘000
Loss on ordinary activities after tax (474) (1,789)
Basic earnings per ordinary share
Weighted average number of ordinary shares in issue  834,042,238 318,522,236
Earnings per share   (0.06)p (0.6)p
Fully diluted earnings per ordinary share
Number of ordinary shares in issue   834,042,238 834,042,238
Outstanding share options   90,611,334 88,703,334
Convertible loans   190,666,666 190,666,666
Total    1,115,320,238 1,113,412,238
Earnings per share   (0.04)p (0.2)p
9. Goodwill
 £ ‘000
Cost at 1 October 2009 and 30 September 2010 69
Net book value at 1 October 2009 and 30 September 2010 69
Goodwill relates to the acquisition of Isle Hardide Limited by Hardide Coatings Limited.
10. Intangible assets
 £ ‘000
Cost at 1 October 2009 and 30 September 2010 9
Net book value at 1 October 2009 2
Impairment charge 2
Net book value at 30 September 2010 0
Notes to the Group Financial Statements 
continued
Hardide-AR-2010-v4.indd   32 3/12/10   16:42:29 2010
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33
11. Property, plant and equipment
 Leasehold buildings Plant, vehicles and fixtures Computer equipment Total 
 £ ‘000 £ ‘000 £ ‘000 £ ‘000
Cost at 1 October 2009 223 2,914 174 3,311
Additions 2 23 - 25
Disposals - (42) (10) (52)
Exchange differences - 12 3 15
Cost at 30 September 2010 225 2907 167 3,299
    
Depreciation at 1 October 2009 138 2,215 162 2,515
Provided in the year 17 110 7 134
Disposals  (42) (10) (52)
Impairment 5 118 3 126
Exchange differences 3 4 - 7
Depreciation at 30 September 2010 163 2405 162 2730
    
Net book value at 1 October 2009 85 699 12 796
Net book value at 30 September 2010 62 502 5 569
 
The net book value of plant & machinery includes £183,000 (2009: £387,000) in respect of assets held under 
finance leases. Depreciation on these assets amounted to £59,000 (2009: £59,000). 
Following the sublease of Hardide Coatings Inc’s facility in Houston, an exceptional impairment charge of 
£126,000 was incurred to reflect the current status of the assets there as non-revenue earning.
12. Current assets
  2010 2009
  £ ‘000 £ ‘000
Inventories 
 Raw materials and consumables 26 26
 Work in progress - -
  26 26
Trade and other receivables 
 Trade receivables 278 148
 Other receivables 59 60
  337 208
Other current financial assets 
 Prepayments 32 50
 Accrued income 30 35
 Recoverable VAT - 16
  62 101
Cash and cash equivalents 
Sterling 499 917
Euro - -
US Dollar 37 15
  536 932
Hardide-AR-2010-v4.indd   33 3/12/10   16:42:29 2010
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34
13. Current liabilities
 2010 2009
 £ ‘000 £ ‘000
Trade and other payables
 Trade payables 100 139
 Taxation and social security costs 81 35
 Accruals 77 85
  258 259
 2010 2009
 £ ‘000 £ ‘000
Current financial liabilities
 Finance lease 55 118
  55 118
14. Non-current other financial liabilities
 2010 2009
 £ ‘000 £ ‘000
Finance leases - 55
Loans 801 693
 801 748
All non-current financial liabilities are denominated in sterling.  The amount shown above is the book value of the 
debt.  The loans have been classified as combined instruments under IAS 32.  The loans are discounted using an 
appropriate internal rate of return, as shown below. The table below shows the total amounts repayable and their 
profile.  
Maturity profile:  Loans   Finance leases
 2010 2009 2010 2009 
 £ ‘000 £ ‘000 £ ‘000 £ ‘000
In one year or less -  - 57  128
In more than one but not more than two years -  - -  57
In more than two but not more than five years 939  858 -  -
 939  858 57  185
Interest on the finance lease is fixed at an interest rate of 8.9%.  
Repayment and interest rate information on the loans is as follows:  
£225,000 Repayable June 2013 Fixed rate 8% payable annually  IRR 11%
£633,000 Repayable August 2014 Fixed rate 8% payable annually  IRR 15%
The terms of the £225,000 loan notes due June 2013 were varied under a deed of variation dated 5th August 
2009, under which interest due on the principal between July 2009 and August 2011 is not paid on its due date 
but is rolled up and interest is payable on both the principal and the rolled up interest from August 2011.  
The terms of the £633,000 loan notes due August 2014 are such that interest due on the principal up to August 
2011 is not paid on its due date but is rolled up and interest is payable on both the principal and the rolled up 
interest from August 2011.
The rolled up interest referred to above is treated as a long-term liability and added to the loan amount.
Notes to the Group Financial Statements 
continued
Hardide-AR-2010-v4.indd   34 3/12/10   16:42:29 2010
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35
15. Total commitments under operating leases
 Land and buildings Plant
 2010 2009 2010 2009 
 £ ‘000 £ ‘000 £ ‘000 £ ‘000
In one year or less -  - 1  1
In two to five years 118  163 20  41
In more than five years 956  1,101 -  -
 1,074  1,264 21  42
16. Share capital
   2010  2009
 Number Value Number Value 
 000 £ ‘000 000 £ ‘000
Authorised ordinary shares of 1p each - - - -
Allotted ordinary shares of 1p each - - - -
Authorised ordinary shares of 0.1p each 1,750,000 1,750 1,750,000 1,750
Authorised deferred shares of 0.9p each 250,000 2,250 250,000 2,250
Allotted ordinary shares of 0.1p each 834,042 834 834,042 834
Allotted deferred shares of 0.9p each 189,642 1,707 189,642 1,707
17. Analysis of changes in equity
 Share Share Share-based Foreign Retained Total
 Capital Premium  Payments Translation Earnings Equity
At 1 October 2009 2,541 5,259 274 (584) (6,481) 1,009
Issue of new shares - - - - - -
Employee share options - - (5) - - (5)
Combined instruments - - - - - -
Exchange translation - - - (45) - (45)
Loss for the year - - - - (474) (474)
At 30 September 2010 2,541 5,259 269 (629) (6,955) 485
Hardide-AR-2010-v4.indd   35 3/12/10   16:42:29 2010
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36
18. Share-based payment
  Number Weighted average
   exercise price
Outstanding at 1 October 2009 88,703,334 0.45p
Exercisable at 1 October 2009 8,333,334 0.45p
Granted during year 7,631,000 0.60p
Forfeited during year (5,671,000) 0.45p
Outstanding at 30 September 2010 90,663,334 0.46p
Exercisable at 30 September 2010 8,333,334 0.45p
The current directors’ interests in share options, all of which are priced at 0.45p, are as follows:
 Number
Robert Goddard (Chairman) 6,681,000
Graham Hine (Chief Executive) 31,081,000
Yuri Zhuk (Technical Director) 8,351,000
Peter Davenport (Finance Director) 8,351,000
The fair values of employee options granted were measured at date of grant by the use of a Black-Scholes pricing 
model.  The assumptions used in the model are as follows:  Volatility of 85%; dividend yield of nil; risk-free interest 
rate of 3%; and an average weighted expected life of options of 3.5 years.
19. Related party transactions
Hardide Coatings Ltd spent £2,024 (2009: £5,234) with BCB Environmental Management Ltd for waste disposal, 
of which £Nil (2009: £1,448) remained outstanding at the year end.  Robert Goddard is chairman of both Hardide 
plc, the parent company of Hardide Coatings Ltd, and AWP Environmental Ltd, the parent company of BCB 
Environmental Management Ltd.
Hardide Coatings Inc spent $2,606 (2009: $600) with Zakroff Group LP for the provision of administrative services 
following the hibernation of the Houston operation.  William Zakroff is a non-executive director of Hardide plc, and 
is the owner of Zakroff Group LP .  
  
Notes to the Group Financial Statements 
continued
Hardide-AR-2010-v4.indd   36 3/12/10   16:42:29 2010
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37
20. Financial Instruments - Risk Management
In common with other businesses, the group is exposed to risks that arise from its use of financial instruments.  
The group uses financial instruments comprising borrowings, cash, liquid resources and various items such 
as trade debtors and creditors that arise directly from its operations.  Exposure to credit, liquidity and market 
risks arises in the normal course of the Group’s business.  The Group does not enter into derivative financial 
instruments.
Credit risk 
The Group’s credit risk is primarily attributable to its credit sales.  The Group has significant concentration of sales 
to a few key customers, however, since the ultimate customers for the Group’s products are predominantly blue-
chip multinational companies, the board believes that this is not a significant risk.  Credit risk also arises from cash 
and deposits with banks.  These risks are reviewed regularly by the board. 
Liquidity risk 
The Group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs 
and to invest cash assets safely and profitably.  The interest rate exposure of the Group as at 30 September 2009 
and the maturity profile of the carrying value of the Group’s financial liabilities are shown in note 14.  The group’s 
policy is to ensure that it has sufficient cash to allow it to meet its liabilities.  The board receives forecast cash 
flows on a monthly basis and uses these as the basis for forward planning.
Market risk 
The Group is exposed to translation and transaction foreign exchange risk arising because the group has 
operations in more than one country.  As such, the group’s net assets arising from such overseas operations 
are exposed to currency risk resulting in gains or losses on retranslation into sterling.  Foreign exchange risk 
also arises when group companies enter into transactions denominated in a currency other than their functional 
currency.  
Fair value 
The directors consider that the fair values of the financial instruments of the Group are not significantly different 
from their book value.
Hardide-AR-2010-v4.indd   37 3/12/10   16:42:29 2010
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38
 Note 2010 2009
  £ ‘000  £ ‘000
   
Assets   
Non-current assets   
 Investments 3 1,100 1,100
 Amounts owed by group undertakings 4 4,999 4,698
 Provision 4 (4,999) (4,698)
Total non-current assets  1,100 1,100
Current assets   
 Trade and other receivables 5 394 404
 Cash and cash equivalents  166 905
Total current assets  560 1,309
   
Total assets  1,660 2,409
   
Liabilities   
Current liabilities   
 Trade and other payables 6 63 86
Total current liabilities  63 86
   
Net current assets  497 1,223
   
Non-current liabilities   
 Financial liabilities 7 801 693
Total non-current liabilities  801 693
   
Total liabilities  864 779
   
Net assets  796 1,630
   
Equity   
 Share capital 8 2,541 2,541
 Share premium 9 5,259 5,259
 Retained earnings 9 (7,266) (6,431)
 Share-based payments reserve 9 262 261
Total equity  796 1,630
Under section 408 of the Companies Act 2006 the company has not included its own profit and loss account in 
these financial statements.  The parent company’s loss for the year was £835,000 (2009: loss of £4,964,000).   
The accompanying notes form an integral part of these financial statements.
The financial statements were approved and authorised for issue by the Board on 03 December 2010.
Graham Hine 
Director
Parent Company Balance Sheet
at 30 September 2010 
Prepared in accordance with UK Generally Accepted Accounting Policies
Hardide-AR-2010-v4.indd   38 3/12/10   16:42:29 2010
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39
Basis of preparation 
The accounts have been prepared under the historical cost convention and in accordance with applicable United 
Kingdom Generally Accepted Accounting Practice and the Companies Act 2006.
1. Summary of significant accounting policies
Foreign currency translation 
Monetary assets and liabilities denominated in foreign currencies are translated at the rates of exchange ruling at 
the balance sheet date.  Transactions in foreign currencies are translated at the rate of exchange ruling at the date 
of transaction.  Any differences are dealt with through the profit and loss account.
Research and development 
Research and development expenditure is charged to the profit and loss account in the period in which it is 
incurred.
Investments 
Investments are stated at cost.
Financial instruments 
The company does not enter into hedging or speculative derivative contracts.  The company uses financial 
instruments primarily to manage exposures in fluctuations in foreign currency exchange rates and interest rates.  
Income and expenditure arising on financial instruments is recognised on the accruals basis, and credited or 
charged to the profit and loss account in the financial period to which it relates.  Financial assets are recognised 
in the balance sheet at the lower of cost and net realisable value.  Provision is made for diminution in value where 
appropriate.
Classification as equity or financial liability 
Financial liabilities and equity instruments are classified according to the substance of the contractual 
arrangements entered into.  A financial liability exists where there is a contractual obligation to deliver cash or 
another financial asset to another entity, or to exchange financial assets or financial liabilities under potentially 
unfavourable conditions.  In addition, contracts which result in the entity delivering a variable number of its own 
equity instruments are financial liabilities.  Shares containing such obligations are classified as financial liabilities.  
Finance costs and gains or losses relating to financial liabilities are included in the profit and loss account.  The 
carrying amount of the liability is increased by the finance cost and reduced by payments made in respect of that 
liability.  Finance costs are calculated so as to produce a constant rate of charge on the outstanding liability.  An 
equity instrument is any contract that evidences a residual interest in the assets of the group / company after 
deducting all of its liabilities.  Dividends and distributions relating to equity instruments are debited directly to 
reserves.
Compound instruments 
Compound instruments comprise both a liability and an equity component.  The elements of a compound 
instrument are classified in accordance with their contractual provisions.  At the date of issue, the liability 
component is recorded at fair value, which is estimated using the prevailing market interest rate for a similar debt 
instrument without the equity feature.  Thereafter, the liability component is accounted for as a financial liability in 
accordance with the accounting policy set out above.  The residual is the equity component, which is accounted 
for as an equity instrument.
Pensions 
The company operates a stakeholder pension scheme for its employees, but does not make any contributions to it.
Share-based Payments 
In accordance with FRS 20, the fair value of equity-settled share payments is determined at the date of grant and 
is recognised on a straight line basis over the vesting period based on the company’s estimate of options that will 
eventually vest.  The fair value of share options is measured by the Black-Scholes pricing model.
 
Notes to the Parent Company Accounts
Hardide-AR-2010-v4.indd   39 3/12/10   16:42:29 2010
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40
2. Employees
The average number of employees, including executive directors but excluding non-executive directors, during 
the year comprised:
 2010 2009
 Number Number
Management and admin 2 4
Sales and marketing 1 1
Technical 5 5
Staff costs, including executive and non-executive directors, during the year amounted to:
 2010 2009
 £ ‘000 £ ‘000
Wages and salaries 366 382
Social security costs 44 41
Share option expense - 61
 410 484
Details of individual directors’ remuneration are included in note 6 to the group financial statements.
3. Investments
 £ ‘000
Investments in subsidiaries at 1 October 2009 and 30 September 2010 1,100
At 30 September 2010 the company held 100% of the share capital of the following subsidiaries: 
 Class of share Amount Country  Nature of business
Hardide Coatings Limited Ordinary 100% UK Surface engineering
Hardide Coatings Incorporated Ordinary 100% USA Surface engineering
4. Amounts owed by group undertakings
The amounts owed by Hardide Coatings Inc amounting to £4,999,000 (2009 £4,698,000) has been classified as 
a non-current asset. Due to the hibernation of the Houston facility in March 2009, a provision has been made for 
the full amount owed because of doubts about its recoverability. The additional debt incurred during the year of 
£301,000 has been charged to the profit and loss account in the year.   
5. Trade and other receivables
 2010 2009
 £ ‘000  £ ‘000
Amounts owed by group undertakings 355 337
Prepayments and accrued income 9 16
Taxation recoverable 30 51
Other debtors - -
 394 404
The amount shown in receivables as owed by group undertakings in 2009 and 2010 relates only to debt owed by 
Hardide Coatings Limited.  It is the directors’ belief that this will be fully recoverable in the short term.
Notes to the Parent Company Accounts 
continued
Hardide-AR-2010-v4.indd   40 3/12/10   16:42:29 2010
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41
6. Trade and other payables
 2010 2009 
 £ ‘000  £ ‘000
Trade creditors 18 31
Social security and other taxes 9 12
Accruals and deferred income 36 43
 63 86
7. Financial liabilities
 2010 2009
 £ ‘000  £ ‘000
Loans 801 693
Loans are repayable as follows:  
In one year or less - -
In more than one but not more than two years - -
In more than two but not more than five years 801 693
The above loans have been classified as combined instruments under FRS25.  The amounts shown have been 
discounted by an appropriate internal rate of return.  The actual amounts repayable are as follows:
 2010 2009
 £ ‘000  £ ‘000
In more than one but not more than two years - -
In more than two but not more than five years 939 858
 
Details of the changes in financial liabilities can be found in note 14 to the group financial statements.
8. Share Capital
   2010  2009
 Number Value Number Value 
 000 £ ‘000 000 £ ‘000
Authorised ordinary shares of 0.1p each 1,750,000 1,750 1,750,000 1,750
Authorised deferred shares of 0.9p each 250,000 2,250 250,000 2,250
Allotted ordinary shares of 0.1p each 834,042 834 834,042 834
Allotted deferred shares of 0.9p each 189,642 1,707 189,642 1,707
Details of the movement in share capital can be found in note 16 to the group financial statements. 
9. Reserves
 Share Share Other Retained Total
 Capital Premium Reserve Earnings Equity
At 1 October 2009 2,541 5,259 261 (6,431) 1,630
Issue of new shares - - - - -
Employee share options - - 1 - 1
Combined instruments - - - - -
Retained loss for the year - - - (835) (835)
At 30 September 2010 2,541 5,259 262 (7,266) 796
Details of the movement in reserves can be found in note 17 to the group financial statements.
Hardide-AR-2010-v4.indd   41 3/12/10   16:42:29 2010
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42
Notes to the Parent Company Accounts 
continued
10. Capital commitments
The company has no capital commitments at 30 September 2010 or 30 September 2009.
11. Contingent liabilities
There were no contingent liabilities at 30 September 2010 or 30 September 2009.  
12. Related party transactions
Hardide Coatings Ltd spent £2,024 (2009: £5,234) with BCB Environmental Management Ltd for waste disposal, 
of which £Nil (2009: £1,448) remained outstanding at the year end. Robert Goddard is chairman of both Hardide 
plc, the parent company of Hardide Coatings Ltd, and AWP Environmental Ltd, the parent company of BCB 
Environmental Management Ltd.
Hardide Coatings Inc spent $2,606 (2009: $600) with Zakroff Group LP for the provision of administrative services 
following the hibernation of the Houston operation.  William Zakroff is a non-executive director of Hardide plc, and 
is the owner of Zakroff Group LP .
13. Post balance sheet events
There are no post balance sheet events to report. 
14. Cash flow statement
The company is exempt from the requirement to publish a cash flow statement because a cash flow statement 
for the group is included in the group financial statements.
15. Share-based payment
 Number Weighted average  
  exercise price
Outstanding at 1 October 2009 72,593,334 0.45p
Exercisable at 1 October 2009 8,333,334 0.45p
Forfeited during year - -
Granted during year 208,000 0.48p
Outstanding at 30 September 2010 72,801,334 0.45p
Exercisable at 30 September 2010 8,333,334 0.45p
The current directors’ interests in share options, all of which are priced at 0.45p, are as follows:
 Number
Robert Goddard (Chairman) 6,681,000
Graham Hine (Chief Executive) 31,081,000
Yuri Zhuk (Technical Director) 8,351,000
Peter Davenport (Finance Director) 8,351,000
The fair values of the employee options granted were measured at the date of grant by the use of a Black-
Scholes pricing model.  The assumptions used in the model are as follows:  Volatility of 85%; dividend yield of nil; 
risk-free interest rate of 3%; and an average weighted expected life of options of 3.5 years.
Hardide-AR-2010-v4.indd   42 3/12/10   16:42:29 2010
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43
 
Directors and Advisers
Directors
R Goddard 
H Smith 
W Zakroff 
G Hine 
P Davenport 
Y Zhuk
Secretary
P Davenport  
Auditors
Critchleys LLP 
Avalon House 
Marcham Road 
Abingdon 
Oxon 
OX14 1UD
Bankers
The Royal Bank of Scotland 
1 Town Hall Buildings 
Banbury 
Oxfordshire 
OX16 5YH
Nominated Advisers and Broker
Seymour Pierce Limited 
20 Old Bailey 
London 
EC4M 7EN
Registrars
Share Registrars Limited 
First Floor, Suite E 
9 Lion and Lamb Yard 
Farnham 
Surrey 
GU9 7LL
Patent Agent
Harrison Goddard Foote 
Belgrave Hall 
Belgrave Street 
Leeds 
LS2 8DD
Registered Office and Head Office
Unit 11 
Wedgwood Road 
Bicester 
Oxfordshire 
OX26 4UL
Hardide-AR-2010-v4.indd   43 3/12/10   16:42:30 2010
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