7 Jun 2016 07:00
7 June 2016
Hydrodec Group plc
("Hydrodec" or the "Company")
AGM Statement
Hydrodec Group plc (AIM: HYR), the clean-tech industrial oil re-refining group, will be holding its Annual General Meeting at 8.30am today at the offices of Canaccord Genuity Limited, 88 Wood Street, London EC2V 7QR. At the meeting, Chris Ellis, Chief Executive of the Company, will make the following statement:
I have referred to previously my strategy to implement a fundamental turnaround for the Company and refocus on the core transformer oil re-refining technology. The first step of that strategy was the disposal of Hydrodec's UK operations announced in early March. I also stated that the next stage of that plan would be focused on delivering increased operational performance, reduced costs and ultimately the achievement of a profitable 2016. I would like to provide an update in respect of the progress which we have made in implementing this plan.
I am pleased to report significant progress against all of our key objectives since the beginning of the year. I will talk you through them now.
Our core objective this year has been to optimise the performance of our Canton facility and to increase production levels through a combination of leveraging the experience gained by operating the plant since the end of last year along with specific targeted operating improvements. These improvements have been validated by the significantly lower number of production hours lost due to unscheduled stoppages and the record monthly production performances of the plant in March of 2.56 million litres superseded in May with 2.82 million litres produced.
Another key objective relates to improving the sales mix between higher margin transformer oil and lower margin base oil produced from our Canton plant. At the beginning of the year our January transformer oil sales represented 19% of US volumes sold. We have made significant improvements in this area and in May transformer oil represented 54% of sales and June's confirmed orders would indicate approximately 80% transformer oil for the month.
We have also been concentrating on our operations in Australia and more specifically, feedstock availability. Since the move to the Southern Oil Refinery we have had to work extremely hard to re-establish our commercial position in the market. I am pleased to report that in May, the Australian business enjoyed one of its highest feedstock acquisition months since 2012 and the underlying pipeline is growing steadily.
We have also worked hard this year to materially reduce corporate costs. We have made good progress in this area, however it is one in which we will continue to seek to make improvements. Significant reductions have already been realised and we expect the benefits from more recently implemented initiatives to filter through in H2 with corporate costs and overheads forecast to reduce by US$767k or 40% from H2-15 to H2-16.
In summary, whilst the above is not an exclusive list of the initiatives that have been my focus since the beginning of the year I believe that the information provided today confirms significant progress in the turnaround of the Company over this time period. Our key objective during the rest of the year is to strengthen margins as we grow market share whilst continuing the program of cost reduction.
The slides accompanying this statement are also available on the Company's website at http://www.hydrodec.com/investors/results-and-presentations/2016
For further information please contact:
Hydrodec Group plc | 020 3300 1643 | |
Chris Ellis, Chief Executive Officer James Hodges, General Counsel and Company Secretary | ||
Canaccord Genuity (Nominated Adviser and Broker) | 020 7523 8000 | |
Guy Marks Henry Fitzgerald-O'Connor | ||
Vigo Communications (PR adviser to Hydrodec) | 020 7830 9700 | |
Patrick d'Ancona Chris McMahon |
Notes to Editors:
Hydrodec's technology is a proven, highly efficient, oil re-refining and chemical process initially targeted at the multi-billion US$ 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. 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.