HYDRODEC GROUP PLC 2011 Results Presentation April 2012 - PowerPoint PPT Presentation

HYDRODEC GROUP PLC 2011 Results Presentation April 2012

PRECAUTIONARY STATEMENT 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. 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 offer 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 of, or be relied upon in connection with, any contract or investment decision related thereto.

“A fresh start to growth…” What to expect in this presentation: Reflections – Introduction Business Environment 2011 Results 1Q 2012 Update and Strategic Themes 3

Section 1: Reflections “2011 has been a year of improved financial performance and growing operational momentum which has continued into 2012… ” “The technology is unique and proven; and there is real potential to apply it to new products and markets… ” “The sustainability of the process has the potential to be an “absolute good” – the aspiration remains to have an oil product with an associated carbon credit..!” “Three distinct business models offer a fresh st st art t o grow ow t h, beginning to deliver on the longer-term potential of the Company and its technology… ”

Section 1: Reflections - Introduction Adding capability A proven, commercial technology The sustainable “closed-loop” business model Three platforms for growth 5

Building a strong, experienced management capability… Ian Smale Chief Executive Mark McNamara David Robertson Lee Taylor Takuichi Murachi Paul Manchester Head of Technology Chief Operating Head of Corporate President, Finance Director and International Officer Development Hydrodec Japan Projects

…the new team has more than 150 years of oil, technology and business-based experience. Ian Smale, Mark McNamara, Chief Executive Head of Technology and International 30 year career with BP plc. Projects Leadership positions including Group Head of 10 years with Clough Engineering responsible for the Strategy & Policy, Global Head of Mergers and environmental technology and engineering division Acquisitions, and as President and Chief Executive Joined Hydrodec in 2004 originally as Chief Operating of BP Exploration North Africa Officer, assumed the role of CEO in 2005 Joined Hydrodec as CEO in January 2012 Became Head of Technology and International Projects in January 2012 Paul Manchester, Lee Taylor, Finance Director Head of Corporate Development Significant senior management experience, with a Corporate partner at Linklaters for 15 years including particular focus on cost management and control as Global Head of the Energy and Utilities sector 10 years in construction and facilities Structured several ground-breaking BP transactions, management including the Amoco merger, the Burmah Castrol Joined Hydrodec as Financial Controller in takeover and the BP / TNK joint venture September 2009, assumed the role of Finance Joined Hydrodec as Head of Corporate Development in Director in 2010 January 2012 David Robertson, Takuichi Murachi, Chief Operating Officer President, Hydrodec Japan 30 year career at Mitsui & Co, concluding as Senior VP 30 years at BP plc., with executive level roles in BP Chemicals and Technology and COO of Plant and Project Division Subsequent senior positions at Toyo Engineering Recently COO at a US based technology start-up business in the energy / waste sectors. Has worked Corporation and Veolia Water Japan Joined Hydrodec as President and Representative in the US for the past 13 years Director of Hydrodec Japan in January 2012 Joined Hydrodec as Chief Operating Officer in January 2012 7

Hydrodec’s unique hydrogenation technology is now proven and operating commercially… Eradicating PCB contamination – SUPER FINE TM meets or exceeds all current standards for transformer oil

…beyond patent protection, six years of operating experience have simplified and consolidated the technical IP . The technology, originally designed to treat PCB (polychlorinated biphenyl) contamination, was developed in Australia; We estimate that our trade secrets and know-how provide at least 5 years of competitive IP protection; The process is extremely efficient, rendering PCB contamination into an inert residue and recovering 99.9% of the original oil; The SUPER FINE TM branded product is equivalent if not better than new mineral transformer oil, and ultimately sustainable. 9

The sustainable “closed-loop” clean-tech lubricant solution… UTILITIES Replaces new Used Transformer Oil mineral oil (with/without PCB supply contamination) Competes with incineration as most likely alternative to manage liability risk Cost competitive PCB eradication Low Carbon Emissions High Quality & Near 100% Performance – recovery factor meets or exceeds Potential Carbon standards Credit

…has the potential to be an “absolute good” – potentially the first oil product that could be delivered with an associated carbon credit! The virtual “ closed-loop ” business model remains an aspiration; The used oil market is fragmented and increasingly competitive – especially in the US; The closed-loop offers “liability management” for used, contaminated oil. Incineration is the key disposal alternative, and industry conservatism the major challenge; The offer does not rely on regulatory support; but regulation does influence the business model most likely to be effective; A methodology is being prepared to test against the United Nations Framework Convention on Climate Change and Verified Carbon Standard for full carbon qualification. 11

There are three platforms for growth…

…2011 has been a turning point, a year of improving financial performance and operational momentum. Young, NSW, Australia pilot plant 2004 commercial plant commissioned April 2006 productive capacity 6.5m litres pa Canton, Ohio, USA plant commissioned Oct 2008 productive capacity 27m litres pa EPA licence to treat PCB material – expected 2012 Japan Strategic Alliance with Kobelco Eco-Solutions March 2010 first operating JV agreement signed July 2011 first plant commissioning, expected in 2013 13

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Section 2: Business Environment Global demand for Transformer oil is growing at ca. 2% per annum… Like all oil products, price benchmarks can be a useful guide to price and margin expectations… Regulation varies; it can help define the market structure…

Global demand for transformer oil is growing at ca. 2% per annum… Global Transformer Oil demand by Region Transformer Oil Demand by Region Kt 1,600 1,400 1,200 1,000 800 600 400 200 0 FSU Middle East Africa Asia Eastern Europe Western Europe Latin America North America Source: PFC Energy, April 2012