Hydrodec Group plc Re- emerging stronger Strategy update Ian Smale - - PowerPoint PPT Presentation

hydrodec group plc
SMART_READER_LITE
LIVE PREVIEW

Hydrodec Group plc Re- emerging stronger Strategy update Ian Smale - - PowerPoint PPT Presentation

Hydrodec Group plc Re- emerging stronger Strategy update Ian Smale , Chief Executive Chris Ellis , Chief Financial Officer 20 January 2015 www.hydrodec.com Precautionary Statement This presentation has been issued by Hydrodec Group plc


slide-1
SLIDE 1

www.hydrodec.com

Hydrodec Group plc

“Re-emerging stronger”

Strategy update

Ian Smale, Chief Executive Chris Ellis, Chief Financial Officer 20 January 2015

slide-2
SLIDE 2

Hydrodec Group plc

This presentation has been issued by Hydrodec Group plc (“Hydrodec”) and is personal to the recipient. This presentation and these slides may not be reproduced or published in whole or in part for any purpose. This presentation and associated discussion includes forward-looking statements. Certain information contained in this presentation relating to Hydrodec has been compiled from public sources. All statements other than statements of historical fact included in this presentation, including without limitation those regarding the plans, objectives and expected performance of Hydrodec, are forward- looking statements. Hydrodec has based these forward-looking statements on its current expectations and projections about future events, including numerous assumptions regarding its present and future business strategies, operations, and the environment in which it will operate in the future. All information in this presentation is only accurate as at the date of this presentation. Forward-looking statements generally can be identified by the use of forward-looking terminology such as 'ambition', 'may', 'will', 'could', 'would', 'expect', 'intend', 'estimate', 'anticipate', 'believe', 'plan', 'seek' or 'continue', or negative forms or variations of similar terminology. Such forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors related to Hydrodec. By their nature, forward-looking statements involve risks, uncertainties and assumptions and many relate to factors which are beyond the control of Hydrodec, such as future market and economic conditions, external factors affecting operations and the behaviour of other market participants. Actual results may differ materially from those expressed in forward-looking statements. Given these risks, uncertainties, and assumptions, you are cautioned not to put undue reliance on any forward-looking statements. In addition, the inclusion of such forward-looking statements should under no circumstances be regarded as a representation by Hydrodec that Hydrodec will achieve any results set out in such statements or that the underlying assumptions used will in fact be the case. Other than as required by applicable law or the applicable rules of any exchange on which securities of Hydrodec may be listed, Hydrodec has no intention or obligation to update or revise any forward-looking statements included in this presentation. This presentation is for information only and does not constitute or form part of any offer or invitation to sell, or any solicitation of any

  • ffer to purchase, any shares in Hydrodec or any other securities, nor shall it or any part of it nor the fact of its distribution form the basis
  • f, or be relied upon in connection with, any contract or investment decision related thereto.

Precautionary Statement

1

slide-3
SLIDE 3

Hydrodec Group plc

A relevant, technology based, disruptive business model, reset to expand from a proven base Re-emerging stronger - set to grow

2

slide-4
SLIDE 4

Hydrodec Group plc

Transformer Oil

  • Patented, unique technology
  • Cash generating businesses in US

and Australia re-engineered

  • Fundamentally short global market

($1.6bn, growing 9% to 2017)

  • Oil that tests “better than new” with

extraordinary recoveries (>99%)

  • Quality gross margins of 25%

Lubricant Oil

  • Feedstock secure: UK re-refinery by

end 2016

  • $30bn. global base oil market – local

supply exclusivity

  • Exclusive licence and technical

collaboration; patented opportunities for improvement

  • Priced against base oil imports –
  • ffers 30% plus gross margin
  • pportunity

Global markets; ubiquitous feedstock - access critical. Re-refining used oil to re-use for original purpose; focus on product quality

3

slide-5
SLIDE 5

Hydrodec Group plc

Adapting to changing market conditions, where base oil (and especially high quality base oil / transformer oil) remains resilient

4

Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Group III Base Oil Group I/II Base Oil Fuel Oil (3.5%) OSS ASP (PFO) OSS APP Margin

UK pricing linked to fuel oil High quality base oils resilient Adapting to changing markets

slide-6
SLIDE 6

Hydrodec Group plc

Drive returns and organic growth through cash generating US and Australian transformer oil businesses Develop a unique general lubricant oil re-refining opportunity in UK Focus on reducing business, technology and financial risk through new and successful established partnership models Secure and robust patent, IP protection Support an appropriate UK regulatory framework to support investment Drive business growth through identifying and delivering value-chain consolidation across the business models Drive performance, efficiency and growth; responsible balance sheet development and relentless focus on EBITDA.

Strategy – growth and returns

5

slide-7
SLIDE 7

Hydrodec Group plc

USA: Canton, Ohio

  • Re-engineered;

expanded T-oil plant – commissioning 1Q15

  • 45ml capacity: 6 “trains”

3 integrated modules

  • Strategic partnership

with G&S Technologies integrates supply chain

  • G&S 25% at $3.4m,

plus 24.9% with further expansion

  • Highest quality product

in US; access to voluntary carbon offset

UK

  • Acquired OSS 3Q13 –

leading collector/ processor of used oil

  • 40+ml core feedstock

supply for unique UK re- refinery by end 2016

  • Leading PFO/RFO

producer; low value/low margin

  • Integrated, compliant

service offer based on convenience

  • Consolidation
  • pportunity

Year on year organic growth through proprietary, integrated oil re- refining solutions – highly competitive but feedstock critical

6

Australia: NSW

  • Relocated 1Q15
  • 6.5ml capacity:1 “train”
  • Turnkey operating

agreement with Southern Oil Company, Wagga Wagga offers significant efficiencies

  • Full commercial

stewardship/brand retained

slide-8
SLIDE 8

Hydrodec Group plc

Protected technology, better engineered; safer, more efficient, higher quality – with carbon accreditation

Single processing train – Australia, 6.5m litre p.a. capacity Composite re-refining module for Canton; two 3-phase processing “trains,” 15m litres p.a. capacity

7

slide-9
SLIDE 9

Hydrodec Group plc

Hydrodec (UK): the platform for investment, re-rating technology; creating a market virtue from price volatility

Fleet re-financed; logistics efficiencies being delivered Aligning to the customer: “competitive, compliant, convenient” Market opportunity significant

25.5 19.5 139.5 129.5

20 40 60 80 100 120 140 160 180 Automotive Industrial Litres (millions) OSS Remaining Oil

UK Used Oil

8

slide-10
SLIDE 10

Hydrodec Group plc

Creating the UK re-refining hub for used oil

End 2016 Phase 1 – re-refinery 2017 Phase 1a – T-oil re-refinery End 2018 Phase 2 – re-refinery

Advantaged UK location Petrochemical heartland; adjacent to existing infrastructure

slide-11
SLIDE 11

Hydrodec Group plc

Strong revenue growth drives progress towards positive EBITDA

Hydrodec trading performance

5,000 10,000 15,000 20,000 25,000 30,000 2011 H1 2011 H2 2012 H1 2012 H2 2013 H1 2013 H2 2014 H1

USD '000 Year

Total Revenue

  • 2,500
  • 2,000
  • 1,500
  • 1,000
  • 500

500 1,000 1,500 H1 2011 H2 2011 H1 2012 H2 2012 H1 2013 H2 2013 H1 2014

USD '000 Year

Underlying Operating EBITDA

1 including estimated receipts for business interruption coverage under Group insurance policy 2 EBITDA adjusted for growth expenditure of US$1.1 million (H1 2013: US$1.7 million) 1 2

10

slide-12
SLIDE 12

Hydrodec Group plc

Trading Performance Revenues up 36% to $54m - full year impact of OSS acquisition outweighing reduced income from US; US revenues: business interruption income and oil trading Total sales volumes up 26% to 48.6ml - trading sales only in US Group EBITDA - expected to improve over 2013 Milestones Insurance settlement delivered $18.75m net; created a “profit on disposal” of $1.4m US$10m, 7 year asset financing facility for Hydrodec of North America Submission of patent applications - Protecting patents, IP Exclusive UK licence and collaboration agreement for used oil re-refining in the UK with CEP – Basic engineering delivered, FEED commissioned

Re-emerging, positioned for growth

Trading Update (January 2015)

11

slide-13
SLIDE 13

Hydrodec Group plc

Delivering “the circular economy;” supported by the EU waste directive hierarchy Proven, successful businesses; clear, materially de-risked paths to growth; experienced board and management Proprietary, world leading technology; multi-feedstock applications; high value products Integrated business models; secure feedstock; offer options for consolidation Re-refined oils, returning oils for original purpose, “better than new” not reliant on subsidy; qualifying for carbon offset credits Expansion into base oil re-refining offers substantial organic growth with scope for market consolidation using proven technology

.

Hydrodec: Proven, profitable disruptive business model underpinned by proprietary technologies now set for substantial growth

12

slide-14
SLIDE 14

Hydrodec Group plc

Contact

Hydrodec Group plc. 50 Curzon Street London W1J 7UW United Kingdom +44 (0)20 79079220 www.hydrodec.com