Trading Update

22 January 2014

Hydrodec Group plc

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

Year-end 2013 trading update

The Board of Hydrodec Group plc (AIM: HYR), the clean-tech industrial oil re-refining group, is pleased to provide a trading update for the year ended 31 December 2013.

Highlights

· Revenues expected to increase by approximately 52% to US$39.7 million (2012: US$26.1 million), the ninth consecutive year of growth, driven by a 9% increase from the core re-refining business (US$28.5 million) and the acquisition of the OSS business in September.

· Increased sales volumes of premium quality Hydrodec SUPERFINE transformer oil and base oil, up 12% at 25.2 million litres (2012: 22.5 million litres); total oil sales, including OSS, of 37.0 million litres, an increase of 65%.

· Gross unit margins in the re-refining business are expected to be significantly higher than the previous year, despite lower product sales prices, driven by better feedstock acquisition, volume impacts and tight cost control.

· Achieved our target of positive Group EBITDA run-rate in September, October and November, prior to the positive contribution from OSS. Underlying operating EBITDA performance for the year is likely to be significantly improved on previous year.

· Higher utilisation of productive capacity in the re-refining business for the 11 months prior to the business interruption at Canton at 78% (2012: 70%), predominantly due to improved access to feedstock following the strategic partnership with G&S since April.

· Assessment of the damage and business interruption insurance position is ongoing following the incident at Canton in December. The Hydrodec Board and partners G&S have reconfirmed the commitment to expand Canton, adding 50% to pre-incident capacity by end 2014 through a combination of repair, replacement and expansion.

· The strategic partnership with G&S continues to work very constructively in the US; integration of OSS in UK is on track; the collaboration with Essar Oil in UK and the plant co-location and tolling arrangement with Southern Oil in Australia are both progressing as expected.

Update

2013 saw the Company deliver clear progress on its strategy set out in September 2012. Continued operating improvement, growth through partnership and acquisition and the restructuring of the balance sheet were key milestones in building a stronger, more flexible Company for the future.

The immediate objectives for 2014 include resolving the rebuilding and expansion of the US business in Canton as well as leveraging further integration of OSS within the Group. Co-location with Southern Oil in Australia, development of a lubricant re-refinery pilot project in the UK and developing a UK re-refining business in collaboration with Essar are all key milestones for 2014.

Importantly, Hydrodec's strengthened balance sheet provides the Group with the flexibility to take advantage of opportunities to add value, both organically and, where appropriate, through partnership or acquisition.

The Group expects to release its audited results for the year ended 31 December 2013 on 28 March 2014 and accordingly will enter into a pre-results close period on 28 January 2014.

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. 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. Hydrodec recently 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, currently serviced by a fleet of more than 90 trucks which collect used oil and other garage workshop waste from over 30,000 customers. 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.

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