HYR.L Regulatory News (HYR)

3 August 2018

Hydrodec Group plc

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

Trading Update

Hydrodec Group plc (AIM: HYR), the cleantech industrial oil re-refining group, is pleased to provide a trading update.

· In the US, July recorded the highest level of monthly production this year. Performance in late Q2/early Q3 has been good, due in large part to securing greater feedstock supplies from existing and new sources - providing the Board with confidence around production and sales for the rest of the year

· This contrasted with sales volumes and revenues in H1 which are expected to be lower than H1 2017 as previously indicated - however, pricing and margins have improved through H1

· The review of growth options being undertaken by the Executive Chairman and CFO announced in the Annual Report and addressed at the AGM is well advanced and will be presented to the Board with the intention of an announcement expected on schedule by the end of September

· Conditions in Australia - a much smaller part of the Group's operations (representing one train in comparison to six in Canton, Ohio) - remain challenging with production this year being focused on base oil. Action is being taken to resolve these issues as part of the review referred to above

Lord Moynihan, Executive Chairman and Interim Chief Executive Officer, commented:

"Since taking on executive responsibility in April, David Dinwoodie, your Interim CFO, and I have been to the US on a number of occasions to work on the Board's review of growth options. In addition to working with our partners and the President of our American business, we have directly discussed with US utilities and transformer manufacturers the opportunity for Hydrodec to enter a "closed loop" business model.

The recent independent laboratory verification of the quality of our SUPERFINE transformer oil has supported our belief that we can produce a utility grade oil which meets the international standards and specifications achieved by crude refiners. The price this product could command represents a premium price to our current customers.

It is our intention to become a significant player in this market. We can collect used transformer oil from utilities as part of extending our feedstock supply base and re-refine it in a closed loop removing the uncertainty faced by utilities as to what happens to their used oil once disposed of; providing them with a sustainable "green oil" story; avoiding the need for utilities to buy 'new oil' from crude refiners; opening the Company to new sources of feedstock supply and meeting the sustainability objectives of both international utilities and transformer manufacturers at a competitive price. Given its benefits, this is not just a closed loop, it is a virtuous circle for Hydrodec and its counterparties.

We continue to develop our strategic plans for the Company, the results of which we intend to provide by the end of September. The focus of our considerations has been how best to both strengthen the balance sheet and address the growth options we see ahead of us.

We are making significant progress and look forward to updating shareholders further in September."

For further information, please contact:

Hydrodec Group plc hydrodec@vigocomms.com

Lord Moynihan, Executive Chairman and Interim Chief Executive Officer

Arden Partners plc (Nominated Adviser and Broker) 0207 614 5900

Chris Hardie

Ciaran Walsh

Alex Penney

Vigo Communications (PR adviser to Hydrodec) 020 7390 0240

Patrick d'Ancona

Chris McMahon

Notes to Editors:

Hydrodec's technology is a proven, highly efficient, oil re-refining and chemical process principally 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. Used transformer 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.