HYR.L Regulatory News (HYR)

27 June 2017

Hydrodec Group plc

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

AGM Statement

At the Company's AGM to be held later today, Chris Ellis (CEO) will make the following statement:

"When the 2016 full year results were announced in May my review referred to the progress made by the Company towards profitability, reflecting the positive impact of the operational improvements and cost reduction measures put in place during 2016 as we focused on the core transformer oil business.

By way of an update I am pleased to provide the following in terms of expectations for the first half of 2017 and beyond:

· Revenues for H1 (to end June) expected to be approximately US$9.1 million, representing growth of approximately 12% compared to H1 2016 (US$8.1 million), driven by improved pricing and sales mix

· Sales volumes of SUPERFINE transformer oil and base oil expected to total approximately 15.2 million litres (H1 2016: 16.75 million litres), reflecting a less active feedstock market so far this year - demand for the Group's products remains strong

· Transformer oil sales are expected to grow to 58% of all oil sales for the six months (H1 2016: 42%) leading to a significant increase in margin of approximately 11c per litre on the prior year

· The Company expects to achieve positive EBITDA in the first half (H1 2016: US$1.1 million loss), despite the volatility of feedstock collection and availability particularly in the US

· First sale of carbon credits achieved in Q2 and the Company expects to conclude a commercial agreement in respect of all credits from 2015 onwards in the near term

· Revenues and EBITDA are capable of growing further throughout the year - performance at EBITDA level will be determined by the continuing improvement in margin which in turn is influenced by the direction of oil prices and by overall feedstock availability

· The Board continues to monitor its working capital position for its current requirements whilst also looking to ensure that the Company is well positioned to take advantage of improvements in market outlook

When I look at the first half of 2017, it is clear that we have taken significant steps forward in successfully reshaping the Company against a challenging and volatile market backdrop. However, from a personal perspective I am still to be satisfied with the speed of our progress and remain hugely ambitious for the Company and the opportunity to deliver fully on its technological potential, with the award and sale of carbon credits only reinforcing in my mind the unique offering Hydrodec possesses.

Accordingly, it is clear to me that to meet the aspirations of the Board and all shareholders through the successful delivery of the strategy we embarked upon in 2016, we need to realise a step change in the products and services currently offered by the Group, in addition to ensuring that the Group's capital structure enables the business to realise such a change.

We therefore continue to work with both Canaccord Genuity and Simmons & Co, specialists in international investment banking services for the energy industry, in exploring options which will deliver accretive value for shareholders and provide significant strategic growth whilst fully leveraging the significant progress made over the last eighteen months. With the full support of the Board, Colin and I will continue to assess all opportunities for internal and organic business growth as well as strategic acquisition opportunities and partnerships if, and only if, they are seen by the Board to add shareholder value. We will update shareholders on the progress of these initiatives as appropriate. In the meantime, my focus remains on continuing to build upon the positive EBITDA expected to be delivered for H1, through the continued improvement in volumes and margins in both of our existing operations."

For further information please contact:

Notes to Editors:

Hydrodec's technology is a proven, highly efficient, oil re-refining and chemical process initially targeted at the multi-billion US$ market for transformer oil used by the world's electricity industry. MarketsandMarkets forecasts that the global transformer oil market is expected to grow from US$1.98 billion in 2015 to US$2.79 billion by 2020 at a CAGR of 7.14% from 2015 to 2020. Spent oil is currently processed at two commercial plants with distinct competitive advantage delivered through very high recoveries (near 100%), producing 'as new' high quality oils at competitive cost and without environmentally harmful emissions. The process also completely eliminates PCBs, a toxic additive banned under international regulations.

In 2016 Hydrodec received carbon credit approval from the American Carbon Registry ("ACR"), enabling its product to be sold with a carbon offset and creating an incremental revenue stream. The Group is now generating carbon offsets through the re-refining of used transformer oil, which would otherwise ordinarily be incinerated or disposed of in an unsustainable manner. This is a highly distinctive feature for the Group, confirming (as far as the Board is aware) Hydrodec as the only oil re-refining business in the world to receive carbon credits for its output. This is a significant endorsement of the Company's proprietary technology and standing as a leader in its field.

Hydrodec's plants are located at Canton, Ohio, US and Bomen, New South Wales, Australia. 

Hydrodec's shares are listed on the AIM Market of the London Stock Exchange. For further information, please visit www.hydrodec.com.

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.