TIDMHYR
RNS Number : 8239C
HydroDec Group plc
20 June 2019
20 June 2019
Hydrodec Group plc
("Hydrodec", the "Company" or the "Group")
AGM Statement
Hydrodec Group plc (AIM: HYR), the clean-tech industrial oil
re-refining group, announces that at today's Annual General
Meeting, Executive Chairman Lord Moynihan will make the following
comments as he updates shareholders on progress across the business
as the Board continues to execute its turnaround strategy.
'As we enter the second year of the two-year turnaround of your
Company, I am pleased to report that our principal goals for 2018
were delivered. These included:
-- Completed a placing and open offer, raising gross proceeds of
approximately $14.3m and introducing a strong institutional
investor base;
-- Strengthened the balance sheet through the combined repayment
and conversion into equity of $11.1m of debt;
-- Renegotiated the ownership structure of Hydrodec of North
America (HoNA) by acquiring an 85% ownership interest with
managerial and operational control, and appointed new HoNA Board of
Directors with David Dinwoodie as President, Ron Kubala as Plant
Director and myself as Chair;
-- Restructured the management team in Canton with Ed Superior
as Sales & Procurement Director; and
-- I can today announce that the sale of the Australian plant
has been agreed in principle for A$2m (excluding decommission and
other associated costs) with an expected closing date of 30 June.
The conditions include a licensing agreement and the payment of
royalties to Hydrodec for a minimum period of seven years. Full
details will be announced at the time of closing.
As we move into the second year of the turnaround our objectives
remain as set out by the Board in 2018:
-- Increase feedstock levels through the plant at Canton;
maximise utilisation of the plant and expand sources of new
feedstock in the Canton plant;
-- Build strong relationships with US utilities providing carbon
credits as part of the commercial proposition for receiving their
used transformer oil;
-- Work with the team in Canton on the turnaround with David and
I present in the States for some ten days a month to meet
customers, utilities, opinion formers in Government as well as
management and operators at Canton;
-- Support the US Department of Energy who are implementing
President Trump's request for a full Department of Energy study on
re-refining used oil to be completed by the end of 2019; and
-- Highlight the risks of blending used transformer oil as a
possible substitute for fuel oil when the lower sulphur cap is
introduced into the shipping industry by the International Maritime
Organisation in 2020.
Addressing these in turn, I am pleased to report the following
progress.
Feedstock from new sources of supply at the Canton plant are at
record levels. When combined with our feedstock from G&S, our
total re-refining volumes to date are currently above levels
achieved in the comparative period in 2018. The Board and
Management remain confident in the outlook for 2019 and beyond.
Whilst remaining focused on naphthenic feedstock for our
Superfine product, we have identified a new paraffinic product line
for which there is an existing market and readily available
feedstock at good volume. Negotiations are underway to make
purchases that will enable us to raise plant utilisation and should
be accretive to the overall performance of the business whilst we
continue to move from spot purchases of naphthenic feedstock to
contracted purchases. Over time, Hydrodec can manage the mix of
products appropriately in line with market conditions to maximise
value for shareholders.
The generation of our carbon credits resonates well with the US
utilities who are looking to meet higher environmental standards
applicable when managing their waste streams and any liabilities
arising. We are now in contact with a wide range of US utilities,
all of whom see the merit in ensuring their waste transformer oil
comes to Hydrodec and is recycled against 'Certificates of
Origination'; receiving carbon credits for the way they treat their
own waste streams, thus strengthening their commitment to
sustainability which is demanded by their shareholders and
institutional investors alike.
As we deepen our US focus, we have made further changes to
reduce the central overhead costs in the UK. The business is run
efficiently in Canton with a strong management team. David and I
now work out of Canton every month. We have recently appointed Dia
Ray as Finance Director.
On 21 December 2018, President Trump signed HR 1733 into law.
This bipartisan Bill directs "the Secretary of State for Energy to
review and update a report on the energy and environmental benefits
of the re-refining of used lubricating oil". We are actively
involved with the US Department of Energy on the report to seek the
inclusion of used transformer oil and the importance of
Certificates of Origination to denote the destination of all used
oil and maximise the opportunities for re-refining used oil in the
US. In July I will hold meetings with further utilities across the
States; leading collectors of used transformer oil; marketing
companies and senior members of the Federal Government.
The two-year turnaround programme is on target. We believe by
the completion of the second year of the turnaround strategy we
will report to next year's Annual General Meeting that the business
will have achieved the objectives necessary to establish long-term
relationships with US utilities both as the re-refiner of choice
for their used transformer oil and as buyers of our Superfine
product; thus delivering a market leading 'closed loop' strategy.
At that point we will have built a sustained and sustainable
platform for further expansion in the States; particularly in
California where the value of carbon credits is at its
highest.'
For further information please contact:
Hydrodec Group plc hydrodec@vigocomms.com
Lord Moynihan, Executive Chairman
David Dinwoodie, Chief Executive Officer
Arden Partners plc (Nominated Adviser and Broker) 0207 614 5900
Corporate Finance: Ciaran Walsh, Maria Gomez De Olea
Sales: Aimee Kerslake
Vigo Communications (PR adviser to Hydrodec) 020 7390 0230
Patrick d'Ancona
Chris McMahon
Notes to Editors:
Hydrodec Group plc is a clean-tech industrial oil re-refining
group with operations in the USA.
Hydrodec's technology is a proven, highly efficient, oil
re-refining and chemical process principally targeted at the
multi-billion US dollar market for transformer oil used by the
world's electricity industry. MarketsandMarkets forecasts that the
global transformer oil market is expected to grow from USD 1.98
billion in 2015 to USD 2.79 billion by 2020 at a CAGR of 7.14%.
Used transformer oil is processed 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 (polychlorinated biphenyls), 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 shares are listed on the AIM Market of the London
Stock Exchange. For further information, please visit
www.hydrodec.com.
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
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END
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