Sales and Agreements Update

8 Aug 2006 07:01

HydroDec Group plc08 August 2006 HYDRODEC GROUP PLC TRANSFORMER OIL SALES AND FEEDSTOCK AGREEMENTS - AUSTRALIA Hydrodec Group plc ("Hydrodec") is pleased to announce it has secured writtenacceptance from a leading Australian transformer manufacturer, and conditionalacceptance from at least one additional transformer manufacturer, along withmajor transformer purchasers, for bulk use of its SuperfineTM transformer oil innew transformers. Bulk supply of Superfine transformer oil to manufacturerswill commence in the immediate future. New bulk supply arrangements have beenunderpinned by additional feedstock supply commitments from major utilitycompanies. Following commissioning of the new 20,000 litre per day refining facility in NSWAustralia, progressively increasing orders are now expected to ensure marketuptake of at least 50% of the productive capacity of the new refining plantlater in Q3 2006. Achieving 50% sold capacity on the new plant is expected togenerate annualised revenues of up to or greater than £1,800,000 ($AU4,400,000). Commencement of bulk shipment of product to transformer manufacturers isscheduled for late August 2006. Increased feedstock supply arrangementscommenced in July 2006. The above transformer manufacturer commitments evidence the broad acceptancethat Superfine oil has achieved for use in new transformer equipment. Industryacceptance has followed extensive testing and quality evaluation of Superfine byutility users of transformer oils, transformer manufacturers and independenttesting laboratories. The completion of quality evaluations by all parties hasresulted in written endorsement of Superfine as compliant with all technicalstandards for new mineral transformer oils, by utilities and manufacturersalike. New sales supplement ongoing sales to power companies who are using Superfine inboth power transformer and general infrastructure maintenance activities.Increasing oil sales to utilities is underpinning gradually increasing demandfrom some utilities for Hydrodec's field services including voltage transformerretrofill and on site oil management. Hydrodec Chairman John Gunn said: "These major new sales ensure the Australianoperations will move into profitability during Q3 2006. We further expect thatdemand for Superfine transformer oil production from the Australian plant willescalate through late 2006 and into 2007 to achieve sold capacity in excess of80% of design capacity. We are now well positioned to utilise the emerging financial strength of thecompany along with the internal experience, skills, technical knowledge andproduct performance data developed during the past 18 months to acceleratetargeted growth into other international markets". For further information please contact:- Contacts: John Gunn, Chairman, HydroDec Group plc Tel: 020 7236 6236 Nick Fox, M:Communications Tel: 020 7153 1530 This information is provided by RNS The company news service from the London Stock Exchange