(Alliance News) - Shares in HydroDec Group PLC plunged on Friday after it said its "extremely disappointing" performance in 2019 was due to working capital constraints.
The stock was trading 36% lower at 6.55 pence each on Friday morning in London.
The industrial oil re-refining company said it expects annual revenue at USD11.6 million, reflecting a 22% fall from USD14.9 million reported for 2018. The group expects to report an adjusted EBITDA loss of around USD3.2 million, widened from a loss of USD1.2 million the year prior.
For 2018, Hydrodec posted a pretax loss of USD6.6 million.
HydroDec attributed the recent performance to ongoing working capital constraints, adding that its Canton plant utilisation stood at an annual average of 45% compared to 55% in 2018.
Separately, the company said that it has recently signed a three-year contract with US utility Duke Energy to process its used transformer oil, with an option to extend for a further two years.
Although the contract will have a positive impact, Hydrodec said it anticipates its 2020 performance will be materially lower than market expectations but will be an improvement on its 2019 results.
HydroDec said it is reliant on support from Non-Executive Director Andrew Black, and confirmed that it has agreed terms with Black to extend his financial support. Black - who is HydroDec's largest shareholder - has provided cash of around USD1.8 million since June 30, the company said.
"Working capital constraints have a material impact on our ability to source feedstock, which in turn drives volume, margin and overall financial performance. Whilst the 2019 performance is extremely disappointing, there are some encouraging signs of early successes with our sustainability strategy, and this together with traction with major US utility companies, gives me cause for greater optimism going into 2020," said HydroDec Chief Executive & Interim Executive Chair Chris Ellis.
By Ife Taiwo; ifetaiwo@alliancenews.com
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