HYR.L Regulatory News (HYR)

12 July 2017

Hydrodec Group plc

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

Carbon Credit Service Agreement

Hydrodec Group plc (AIM: HYR), the clean-tech industrial oil re-refining group, is pleased to confirm that it has entered into a management services agreement in respect of all carbon credits generated by Hydrodec of North America ("HoNA") recognised and recognisable under its registration by the American Carbon Registry ("ACR") for HoNA's production for the period commencing 1 January 2015 and up to and including the period ending December 2022 (the "Agreement").

In 2016 Hydrodec received carbon credit approval from the 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.

Under the terms of the Agreement with 3Degrees Inc. ("3Degrees"), a provider of renewable energy and carbon mitigation strategies, products, and services, 3Degrees will prepare the plans and reports required under ACR to support the accreditation of carbon credits for the periods outlined above, and will work with ACR and other relevant organisations to effect issuance of such credits for sale. 3Degrees will manage all aspects of the monetisation and sale of such credits, including marketing them to eligible buyers, negotiating offers with such buyers, drafting and negotiating sale agreements, and delivering credits to buyers. Under the terms of the Agreement any such sale by 3Degrees will be at a minimum price, unless otherwise approved in writing by Hydrodec. If, at any time during the term of the Agreement, Hydrodec identifies directly prospective third-party purchasers of the credits, Hydrodec will be entitled to pursue such sales, if such prospective sales are at a price that is at least 20% greater than the current minimum guaranteed under this arrangement.

The Company anticipates that going forward it will generate 50,000 to 60,000 tons of carbon offset

annually and expects it could earn up to $5 per ton from the ongoing generation of such credits based on recent industry publications.*

Commenting on the Agreement, Chris Ellis, Chief Executive Officer of Hydrodec, said: "This is another significant step forward in leveraging the accreditation gained from the ACR for the Hydrodec process in 2016. Concluding an agreement with such a market leading organisation as 3Degrees provides further validation that there is an active market for our carbon credits and more importantly ensures that we have the support and expertise to realise an important incremental revenue stream over a long term period. Using 3Degrees will also ensure the process of monetising our carbon credits will be as efficient as possible without calling on management time."

*Source: Carbonomics

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%. 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.