First transformer oil sales from Canton

21 October 2015

Hydrodec Group plc

("Hydrodec" or the "Company")

First transformer oil sales from Canton and additional short term working capital facility

Hydrodec Group plc (AIM: HYR) is pleased to announce a successful return to the US transformer oil market, with strong sales of SUPERFINE transformer oil to customers in the US and Mexico. The rebuilt and expanded plant at Canton, Ohio has produced transformer oil since 24 September and we expect to increase production from the first four trains to operating design capacity of c. 70,000 litres per day. The plant itself is on track to deliver the 10 million litres of processed oil this year, as previously advised, with the plant anticipated to be cash generative from an operating perspective by the end of 2015.

In order to reinforce the Company's short term working capital position during the ramp up of production at Canton, the Company has entered into a £1.35 million short term working capital facility agreement (the "Facility") with Andrew Black, a Non-Executive Director of the Company. The Facility is for up to £1.35 million with interest payable at 7 per cent per annum on drawn-down funds, is on normal commercial terms and is repayable at any time by the Company. The Facility is secured over the Company's licence of and rights to develop the CEP lubricant oil re-refining technology in the UK. 

Ian Smale, Chief Executive Officer of Hydrodec commented: "We are confident that the rebuilt and expanded plant has a unique market proposition and will be well placed in 2016 to leverage the production of the highest quality transformer oil produced in the US, meeting all US and international standards. The additional working capital facility reinforces the Company's short term working capital position and ensures that Hydrodec's North American business remains adequately funded during the important ramp up of production from Canton."

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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. 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 Young, New South Wales, Australia. In 2013, Hydrodec acquired the business and assets of OSS Group, the UK's largest collector, consolidator and processor of used lubricant oil and seller of processed fuel oil, with a national network of oil storage and transfer stations. Used oil is converted into processed fuel oil at OSS's plant at Stourport and principally sold on to the UK quarry and power industry. In April 2015, Hydrodec further acquired the business and assets of Eco Oil, a leading UK waste oil collector and supplier of recycled industrial fuel oil into the power and road stone industries. It is also one of four significant providers of waste management services to the marine industry in the UK, specifically oily-water slops or marine pollutant (MARPOL). In line with our stated intention to develop a base oil re-refinery in the UK, we have an exclusive licence agreement with California-based Chemical Engineering Partners (CEP) to develop the CEP wiped-film evaporation and hydrogenation technology in the UK as well as the basic engineering for a 75 million litre per annum capacity base oil re-refinery.

The new transformer oil produced from the Canton plan meets the US ASTM specification as verified by independent testing and, subject to further tests, we expect this to meet all international specifications and match the best oil available in the United States.

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