Hydrodec Group plc 2015 Long Term Incentive Plan

14 July 2015

Hydrodec Group plc

("Hydrodec" or the "Company")

Awards made under the Hydrodec Group plc 2015 Long Term Incentive Plan

At the Annual General Meeting of the Company held on 9 June 2015 shareholders approved the adoption of the Hydrodec Group plc 2015 Long Term Incentive Plan (the "LTIP") for the purposes of attracting, retaining and motivating key executives and securing greater alignment of management with the interests of shareholders and the Company's business strategy. 

On 13 July 2015, the awards set out in the table below were made under the LTIP to the two Executive Directors of the Company (the "Participants"). The awards were structured in the form of the issue to the Participants of new D Shares in Hydrodec Holdco Limited, a subsidiary of the Company ("Holdco"). The articles of association of Holdco entitle the Participants to exchange the D Shares in Holdco for ordinary shares in the Company ("Ordinary Shares"), determined by reference to the Participant's proportionate interest in a pool of Ordinary Shares (the "Parent Share Pool"), if certain share price hurdles are met during the three year vesting period of the LTIP ending on 9 June 2018 (the "Determination Date").

In consideration for the issue of the D Shares, the Participants have agreed to become employee shareholders of the Company and Holdco and otherwise have provided no consideration for the awards. At present, 25% of the Parent Share Pool remains unallocated.  

The number of ordinary shares of the Company comprising the Parent Share Pool is dependent on the extent to which the Company's share price exceeds various share price hurdles (each, a "Hurdle") (linked to the average mid-market closing share price for Ordinary Shares over a 20 dealing day period) as follows:

o The initial Hurdle is 14 pence. If this is achieved, Participants are collectively entitled to a Parent Share Pool comprising such number of Ordinary Shares equivalent to a 10 per cent share of the incremental value in the Company's share price generated between 11.25 pence and 14 pence;

o If the next Hurdle of 16 pence is achieved, Participants are collectively entitled to an additional Parent Share Pool comprising such number of Ordinary Shares equivalent to a 10 per cent share of the incremental value in the Company's share price generated between 14 pence and 16 pence;

o If the next Hurdle of 18 pence is achieved, Participants are collectively entitled to an additional Parent Share Pool comprising such number of Ordinary Shares equivalent to a 10 per cent share of the incremental value in the Company's share price generated between 16 pence and 18 pence;

o If the 20 pence Hurdle is achieved, Participants are collectively entitled to an additional Parent Share Pool comprising such number of Ordinary Shares equivalent to a 12.5 per cent share of the incremental value in the Company's share price generated between 18 pence and 20 pence, with such Hurdles continuing to operate in two pence increments up to and including a maximum Hurdle of 25 pence.

If no Hurdle is achieved, or a relevant Participant ceases to be employed by the Group prior to the Determination Date (subject to the provisions if that employee is a 'good leaver'), the D Shares of the relevant Participant(s) will be transferred to the Company for nil consideration.

Subject to the relevant Hurdle being reached by the Determination Date, the Participants may exchange their D Shares for Ordinary Shares at any time prior to the tenth anniversary of the Determination Date. Unvested awards are subject to 'malus' provisions, allowing the Company to withhold any unvested awards in the event of the gross misconduct or dishonesty of a Participant or the material misstatement of the financial accounts. Once vested, 50% of the Ordinary Shares (net of tax) will be subject to a twelve month hold restriction and the remaining 50% (net of tax) will be subject to a twenty-four month hold restriction.

The aggregate nominal amount of new Ordinary Shares in respect of which options may be granted under the LTIP may not, when added to the nominal amount of any new Ordinary Shares allocated in the previous 10 years under all employee share schemes of the Group, exceed 10% of the equity share capital of the Company.

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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.