Hydrodec Group plc
Annual Report and Accounts 2014
Hydrodec Group plc Annual Report and Accounts 2014
Re-emerging
stronger In the USA and Australia, our focus is on producing high quality transformer oil from used and contaminated waste oil. In the UK, 
we focus on used lubricant oils. Building on our current collections and processing business, we intend to develop the UK’s first 
purpose-built used lubricant oil re-refinery producing Group II/II+ base oils by the end of 2017.
Key to delivering our strategy is securing access to the value chain, the application of ‘best in class’ technology, the reduction of 
risk through partnership or acquisition and a rigorous focus on controlling business costs and increasing efficiency. During 2014 
we delivered a number of significant milestones to prepare Hydrodec for future growth and profitability, including settlement 
of the Canton insurance claim, signing an exclusive licence agreement with CEP to develop their technology in the UK and 
further protecting our proprietary technology.
Hydrodec Group plc is a clean-tech oil re-refining group with operations in 
the USA, Australia and UK. We handle, treat and re-refine used oil to produce 
sustainable, high quality oils for re-use as new.
Overview & 2014 Highlights
Strategic highlights
• Resolved the Canton insurance claim 
Settled insurance claim arising from the incident in Canton in December 
2013 for a gross value of US$20 million (US$18.75 million net of deductibles) 
and resulted in a profit on disposal of US$1.4 million on the written off assets.
• De-risked proposed UK expansion 
Signed 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 design for an initial 75 million litre base oil re-refinery.
• Secured proprietary technology 
Submitted provisional patent applications to protect operating and 
design innovations in our unique transformer oil re-refining technology 
and upgrade technology innovations which will enhance the re-refining 
of lubricant oils.
• US business financing  
Entered into a US$10 million, seven year term, asset financing facility and 
increased working capital line for Hydrodec of North America LLC, to 
fund appropriately the North American business following the rebuild 
and expansion of the Canton re-refinery.
Contents
Strategic Report
IFC Overview & Highlights
2 At a Glance
3 Chairman’s Statement
4 Objective
5 Our Strategy
6 How Our Business Works
8 Market Opportunity
10 Chief Executive Review
14 Financial Review
18 Key Performance Indicators
20 Principal Risks and Uncertainties
Governance
22 Board of Directors
24 Report of the Directors
28 Corporate Governance Report
32 Remuneration Committee Report
35 Audit Committee Report
Financial Statements
37 Independent Auditor’s Report to the  
Members of Hydrodec Group plc
38 Consolidated Income Statement
39 Consolidated other Comprehensive Income 
Statement
40 Consolidated Statement of Financial Position
41 Consolidated Cash Flow Statement
42 Consolidated Statement of Changes in Equity
43 Notes to the Financial Statements
63 Independent Auditor’s Report to the  
Members of 
63 Hydrodec Group plc
64 Company Balance Sheet
65 Notes to the Financial Statements
Other Information
68 Directors and Advisers 1 Hydrodec Annual Report & Accounts 2014
Governance Financial Statements Strategic Report
EBITDA year revenue growth
2011 2012 2013 2014
US$(2.2m) US$(2.8m) US$0.2m US$1.6m
Despite volatile market conditions in general and the more 
specific challenges posed by the rebuild of our Canton facility, Hydrodec 
has developed its technical and operational platform, and improved its 
financial base. As a result of the actions taken during the year, Hydrodec 
will emerge stronger with a more robust balance sheet and a clear sense 
of direction centred on our two core business streams.
Ian Smale
Chief Executive Officer
Total oil sales
+31%
Total oil sales for 2014 increased 
by 31% to 48.6 million litres (2013: 
37.0 million litres); 2014 includes a 
full year of trading by OSS and oil 
sales in the US
Group Operating EBITDA
us$1.6m
Group Operating EBITDA
1
 of 
US$1.6 million
2
 in 2014 improved 
over the prior year (2013: US$0.2 
million)
Performance highlights
Revenue growth Hydrodec’s annual results for 2014 reflect the accounting treatment of the 
insurance proceeds received in respect of the incident at Canton. A portion 
of the insurance proceeds has been attributed to the capital replacement 
cost of the damaged equipment, the rest has been attributed to business 
interruption covering the period from 1 December 2013 to 31 March 2015. 
These insurance proceeds have been apportioned between 2013, 2014 and 
2015 financial years, and are collectively shown as ‘other income’. Any 
comparison of the 2014 financial outcome to 2013 needs to consider the 
unusual impact of the business interruption settlement. The business 
delivered the following in 2014: 
Total income
+36%
Total income for 2014 increased 
by 36% to US$54.7 million (2013: 
US$40.1 million), the tenth 
consecutive year of growth; 
revenues included a full year 
of OSS and in the US represent 
business interruption income  
and oil trading
1 EBITDA adjusted for non-operating growth expenditure of US$2.3 million (2013: US$3.3 million), share based payment costs of US$0.3 million (2013: US$0.5 million) and  
foreign exchange loss of US$0.2 million (2013: US$0.7 million) (“Operating EBITDA”) 
2 Including US$1.5 million (less associated lease rentals) from the gain on disposal of assets in Hydrodec (UK) Limited
2011 2012 2013 2014
US$22.4m US$26.1m US$40.1m US$54.7m 2 Hydrodec Annual Report & Accounts 2014
At a Glance
Hydrodec produces new, high quality transformer oil from used and 
contaminated waste oil in the USA and Australia. In the UK, we collect 
and process used motor oils producing fuel oil products and we are 
developing our existing re-refining technology to produce high quality 
base oils from used motor oils and other industrial oils.
UK USA Australia
Plant Location
Stourport and Newport (and national network of 
oil storage and transfer stations)
 
Plant Location
Canton, Ohio
Plant Location
Young, NSW (until February 2015). Plant now 
co-located at the Southern Oil Refinery (SOR), 
Bomen, NSW (April 2015)
Process/Products(s)
Recycling used motor oil to produce processed 
fuel oil (PFO) and recycled fuel oil (RFO)
Process/Products(s)
Re-refining used transformer oil to produce 
SUPERFINE™ transformer oil and base oil
Process/Products(s)
Re-refining used transformer oil to produce 
SUPERFINE™ transformer oil and base oil
Capacity
Existing
65m litres PFO and 10m litres RFO per annum
Capacity
Existing
No operations in 2014. Rebuild and expansion of 
the plant has been on-going during 2014
Capacity
Existing
6.5m litres SUPERFINE™ per annum
Hydrodec’s first commercial processing facility 
– a single “train” processing unit
Planned
Currently in pre-planning phase to construct and 
operate UK’s first purpose-built used lubricant oil 
re-refinery producing Group II/II+ base oils. First 
phase capacity of 75m litres per annum
Planned
Once in production, operating capacity of 40m 
litres SUPERFINE™ per annum. At least 10% 
greater efficiency than name plate capacity of 
original equipment
Planned
6.5m litres SUPERFINE™ per annum
Partners / value chain
OSS, acquired in 2013, is UK’s largest collector, 
consolidator and processor of used lubricant oil 
and seller of PFO. It also provides complementary 
waste management services
Eco-oil business acquired in April 2015 to further 
secure supply chain for used oil in the UK
Partners / value chain
G&S is a leading New Jersey-based electricity 
transformer recovery services group
25% partner in Hydrodec of North America 
since 2013
Partners / value chain
SOR and its partner JJ Richards are leading 
collectors and re-refiners of used lubricant oils 
in Australia
65
million litres
PFO
10
million litres 
RFO
40
million litres 
SUPERFINE™
6.5
million litres 
SUPERFINE™ 3 Hydrodec Annual Report & Accounts 2014
Governance Financial Statements Strategic Report
Chairman’s Statement
In 2014, a key focus for the Board has been to support management to 
deliver a clear strategy to profitability for Hydrodec whilst ensuring that 
an effective management team and governance framework is in place to 
implement that strategy. 
Our objective is to deliver, within an 
integrated feedstock and value-chain 
business model, outstanding growth in 
revenue and returns. We apply ‘best in class’ 
disruptive technologies to handle, treat and 
re-refine used oil. Our goal is to produce 
sustainable, high quality oils. 
Whilst 2014 will be remembered for the impact and successful resolution of 
the Canton insurance claim, significant progress has been made during the 
year in preparing Hydrodec for future growth and profitability. Indeed, I 
believe the fundamentals of the Group are stronger than they have been at 
any point during my time with Hydrodec. The Group today and the Group 
of three years ago are materially different. I believe Hydrodec, led by Ian 
Smale, is on the threshold of growth and success, through the combination 
of a first rate management team, market leading technology and a focused 
strategy for growth in the USA, Australia and the UK. 
The re-commissioning of Canton marks a substantial achievement, not 
only will it return us to being operational in the USA, but it will do so with 
in excess of a 50% increase in capacity compared to December 2013. Our 
technology platform has also broadened with provisional patent 
applications submitted in 2014 to protect operating and design 
innovations in our unique transformer oil re-refining technology and 
upgrade innovations that will enhance the re-refining of lubricant oils. The 
co-location of our Australian operations to the Southern Oil Refinery at 
Bomen, and the on-going work to restructure the OSS business and 
‘realign’ it to the customer further reposition the business for growth. 
Underpinned by an exclusive licence agreement with CEP to develop their 
technology in the UK, we also continue to make progress towards the 
independent development of a base oil re-refinery in the UK. 
I believe that good governance is integral to delivering growth in 
shareholder value. Whilst listed on AIM, our governance should strive to 
meet FTSE 350 standards. The Board continues to strengthen the 
governance of the Group and this year the Board has established a new 
Safety and Technology Committee, chaired by Dame Mary Archer, to 
reinforce its oversight of the key areas of health, safety and technology. 
Dame Mary brings considerable scientific and governance experience to 
the Board. Under her leadership, the Committee will provide rigorous 
oversight and a robust challenge for the Group’s technology programme. 
Long term success also requires transparency, accountability and 
engagement to maintain a consistent, high quality dialogue with both 
institutional and retail investors. In this regard, I was pleased to meet 
with a wide cross-section of shareholders at the Group’s first retail 
investor meeting in January. 
In conclusion, I want to return to the Canton insurance claim. It was a long 
process and made 2014 a challenging and frustrating year. However, the 
insurance settlement obtained was, in the end, comprehensive and a good 
outcome for the Company. Whilst special mention should be made to 
recognise the efforts of Chris Ellis; Michael Pitcher (the CEO of Hydrodec of 
North America) and their respective teams, I would like to thank Ian, his 
management team and all the staff at Hydrodec for their efforts in 2014 as 
everyone played their part in maintaining professionalism and morale in a 
challenging year.
Lord Moynihan
Chairman
20 March 2015 4 Hydrodec Annual Report & Accounts 2014
Objective
Our objective is to deliver 20 per cent per annum organic growth on 
average over the next five years through proprietary integrated oil  
re-refining solutions.
What is Hydrodec’s Business Model?
The diagram below represents our business model. It is a proven, technology-based, 
disruptive re-refining business model with integrated value chains, set for organic growth 
with the potential for substantial disruptive growth.
Value Creation
Increasing 
importance of 
re-refining in waste 
management
High quality 
transformer oil and 
lubricant margins 
among best available 
in oil industry
Feedstock 
available to 
service a global 
short market for 
transformer oil
Market Drivers
Lubricant oil 
re-refining offers 
real opportunities for 
disruptive growth
Proprietary ‘best 
in class’ technology 
with multi-feedstock 
applications
High recoveries, 
create sustainable 
solutions and access 
carbon offset 
credits
High quality 
products, for 
original purpose, as 
good or better than 
original
Key Differentiators
Integrated 
feedstock and 
value chain business 
model drives 
efficiencies
Lubricant 
oil re-refining 
in UK based on 
complementary 
value accretive 
CEP/Hydrodec 
technology
Exploit commercial 
opportunities which 
underpin strategic  
plan
Scope for 
step-out inorganic 
growth (US/Europe) 
and value-chain 
consolidation
Growth Accelerators
New business/
product applications 
including fuels, 
base oils, soil 
contamination
10 successive years 
of growth, targeting 
operational EBITDA
Focus on core 
growth through 
profitable US 
transformer oil 
business
Consolidation 
of supply-chain 
de-risks investment 
and creates 
opportunities for 
efficiencies
Delivering Profitability
Rigorous focus on 
controlling cost and 
increasing efficiency 5 Hydrodec Annual Report & Accounts 2014
Governance Financial Statements Strategic Report
UK
• To leverage and consolidate UK feedstock 
collection and commence project to 
translate CEP technology licence into UK 
base oil re-refining plant.
• To relocate technology programme to  
the UK.
• To identify and deliver value-chain 
consolidation in the UK.
United States
• To deliver the rebuild and expansion of 
our US market position through our 
re-refinery at Canton, Ohio.
• Plant to deliver at least 10% greater 
efficiency than name plate capacity of 
original equipment – in excess of 40 
million litres of effective operating 
capacity.
Australia
• To deliver the re-location of our Australian 
operations to the Southern Oil  
Re-Refinery, Bomen, New South Wales.
• Adoption of outsourced tolling 
arrangement.
• Hydrodec to continue to own transformer 
oil re-refining plant and proprietary 
technology and to control commercial 
sales activity.
Our Strategic Priorities
We believe clear actions will drive project delivery and performance and 
deliver profitable growth. Our strategic priorities for 2015 are:
Our Strategy
The key elements of our strategy are set out below:
1
Organic growth
To drive returns and organic growth through profitable US and 
Australian transformer oil businesses
2
Lubricant oil re-refining 
To develop a market-leading lubricant oil re-refining opportunity 
in the UK, strongly underpinned by quality feedstock supplies
3
Reduction in business, technology and financial risk
To focus on reducing business, technology and financial risk 
through new and successful partnership models
4
IP Protection
To secure our intellectual property, through patent protection
5
Value-chain consolidation
To drive business growth through identifying and delivering 
value-chain consolidation across the business models
6
Performance and efficiency
Drive performance, efficiency and growth with responsible 
balance sheet management and a relentless focus on EBITDA Hydrogen Scavenger
system
To oxidiser
Water wash
Scavenger
system
Hydrogen recycle
Reactor 
mixture
Reactor
Heater
Feedstock
Processing (Hydrodec)
Sales
Once used oil can be returned as feedstock
6 Hydrodec Annual Report & Accounts 2014
How Our Business Works
Our technology platform was originally 
developed in Australia in response to a challenge 
by the nation’s power industry to eliminate 
potentially carcinogenic polychlorinated 
biphenyls (“PCBs”) from used transformer oil. 
PCBs were routinely added to enhance the flame 
retardant performance of transformer oil globally 
until banned in the 1970s.
The technology now deployed commercially by 
Hydrodec in Australia and the United States is 
unique, proven, proprietary and industry-leading. 
Not only does it deconstruct PCBs from 
transformer oil, the process also recovers more 
than 99 per cent of the used oil as new oil with 
de minimis air emissions and none of the 
hazardous waste materials normally associated 
with traditional re-refining processes.
As oil is used, it oxidises. Oxidation negatively 
impacts the performance of that oil. Our 
proprietary re-refining process, applies 
hydrogenation technology, to remove the 
oxidation products and, in addition, reinforces 
the hydrocarbon molecule thereby reducing 
susceptibility to future oxidation. The result is 
regenerated oil fit for its original purpose, with 
the same lifetime and characteristics as the 
original oil. Indeed, since the Hydrodec output is 
of a more consistent quality (when compared to 
virgin oil), such regenerated oil is potentially 
preferable for blenders.
Transformer oil re-refining process 7 Hydrodec Annual Report & Accounts 2014
Governance Financial Statements Strategic Report
Feedstock
Transformer oil
Used transformer oil sourced directly from utilities, or indirectly 
from hardware salvage, repair and service companies and used 
oil collectors/traders.
Cost influenced by prevailing diesel price (given potential 
alternative uses of used oil) and PCB contamination levels 
(higher PCB material available at nil/negative cost). 
Industrial oil
Used motor oils collected by own fleet of trucks from garages 
and service stations, aggregated at collection points and then 
transferred to recycling plant.
Cost have been influenced by recent low oil prices and 
competing demand for feedstock from re-refiners (especially 
in Europe) but the compliant, convenient and competitive 
service offer of OSS and Eco-oil will ensure that we are capable 
of delivering a genuinely differentiated, integrated oil and 
waste management service. 
Re-refining/recycling process
Transformer oil
Hydrodec’s unique, proprietary and industry-leading 
hydrogenation re-refining technology. The process 
deconstructs PCBs and recovers more than 99 per cent of the 
used oil as new oil with de minimis air emissions and no 
hazardous waste by-products.
Industrial oil
Current – OSS process produces two grades of fuel oil for 
industry: PFO (Gen3™), an environmentally friendly alternative 
to virgin fuel oils and RFO, an economical alternative to virgin 
fuel oil.
Future – Engineering CEP exclusive technology licence into UK 
re-refining plant and developing Hydrodec’s transformer oil 
re-refining technology for application to industrial oils.
Sales
Transformer oil
Premium SUPERFINE™ transformer oil sold directly to original 
equipment manufacturers (OEMs) (ie manufacturers of 
transformer hardware for “first fill”) and utilities (new oil 
replacing oil), or indirectly via distributors.
Premium SUPERFINE™ base oil sold directly or indirectly to 
other industrial users.
Price influenced by ICIS benchmark index for Pale 60 base oil. 
Industrial oil
Current – PFO and RFO are sold into UK power and other 
industries and also for use as bunker fuel.
Future – high grade premium base oil output (Group II/II+) 
would be produced and sold to blenders (where various 
additive packs applied to establish characteristics for various 
lubricant oil end uses) for marketing and on-sale. Lubricant oils
Transformer oil
us$30bn
global market
us$1.8bn
global market
8 Hydrodec Annual Report & Accounts 2014
Transformer oil
Characteristics
• Predominantly refined from naphthenic crudes
• Specialised base oil having properties meeting long established  
power industry technical standards
• Integral part of world’s critical power infrastructure
Environment
• Global market 1.35 billion litres, growing at estimated 5% cagr to 2017
1
• Valued at US$1.8 billion, growing c. 9 per cent cagr to 2018
2
• Naphthenic baseoil supply of 3.7 billion litres will not meet projected 
demand of up 5.0 billion litres
3
• Hydrodec re-refining technology approved in US, Australia & Japan  
for treating PCB contaminated oil
Sources of Used Oil
• OECD: “75% rule” – new oil displacing old oil
4
• Direct from utilities: c. 25 per cent
• Indirect channels in highly fragmented market
• Alternatives: incineration, fuel additives, regeneration, recycling
Uses
• Re-used as new transformer oil into growing market
• Sustainable “closed-loop” proposition with utilities
• Original equipment manufacturers: c. 40 per cent demand
• Other naphthenic applications: base oil markets in inks, agriculture, 
mining & explosives, oil based drilling muds
Competitive Advantage
• > 99 per cent as new oil, no waste
• Tests as better than new oil
• Single-step re-refining process
• Negligible emissions, ‘carbon neutral oil’
Lubricant oils
Characteristics
• Predominantly refined from paraffinic crudes
• Additives to base oil produce different industrial oils for different uses, 
including motor oil, hydraulic oil and other industrial oils
Environment
• Global market in excess of US$30 billion
• UK is most attractive market in Europe 
• UK low grade recycling market vs Europe, creates ideal technology 
opportunity
• UK lubricant base oil demand estimated at 700m litres per annum 
(predominantly imported)
• UK used oil protocol regulates production & use of processed fuel oil 
(PFO) as produced by OSS and Eco-oil
Sources of Used Oil
• Total waste lubricant oil in UK c. 350 million litres per annum
• Collection based activity drives access to used oil
• Active secondary market in bulk used oil in UK
Uses
• 170 million litres per annum of PFO produced in UK
5
• Demand: industrial c. 80 million litres; UK power c. 350 million litres;  
> 100 million litres bunker fuel (shipping)
• Europe is a competitive feedstock market for oil recycling
Competitive Advantage
• UK lags European & US recycling technology platform supported  
by regulation
• Hydrodec lubricant re-refining technology potential to leapfrog 
existing Europe & US recycling technology
• Potential for carbon credits from Hydrodec methodology
1 Source: Markets and Markets: Transformer oil market, Global Industry Trends & Forecast to 2017
2 Source: Markets and Markets: Transformer oil market, Global Industry Trends & Forecast to 2018
3 Nynas European ICIS meeting, London 2014
4 Source: Hydrodec estimates
5 Source: Oil Recycling Association estimate
Market Opportunity us$30bn
global market
9
Governance Financial Statements Strategic Report
Hydrodec Annual Report & Accounts 2014
All six ‘trains’ are now on site and in situ. Pre-commissioning of 
expansion ‘trains’ 1 & 2 started on 5 April with first production 
expected to commence on 10 May. Replacement ‘trains’ 3 to 6 
will follow sequentially such that all six ‘trains’ should be in 
production from 20 May this year. Despite the later start date, 
the US business is expecting to sell 5 million gallons of 
finished products in the US in 2015 (2013: 5.4 million gallons / 
2012: 4.9 million gallons) having built a significant supply of 
feedstock since 4Q 2014.
The new Canton plant will create several important 
advantages for the business. In particular, the new plant will 
deliver at least 10% greater efficiency than the name plate 
capacity of the original equipment that is, in excess of 40 
million litres of effective operating capacity. It will be safer, 
easier to maintain and we consider will produce the best 
quality transformer oil available in the US. It will also qualify  
for an offset carbon credit.
 
Canton Rebuild and Expansion
There has been significant progress on the Canton project during the period 
and into 2015. 10 Hydrodec Annual Report & Accounts 2014
Chief Executive Review
However, we were still able to deliver 
a number of significant milestones during 
the year that will prepare the Group for 
growth in 201 5 and beyond. These 
milestones and our other achievements in 
my view confirm the resilience but also the 
potential of the Hydrodec business.
Technology
We continue to invest in growth, a significant portion of which is in the 
development, delivery and innovation of our technology. 
We submitted provisional patent applications to protect operating and 
design innovations in our unique transformer oil re-refining technology 
and upgrade technology innovations that will enhance the re-refining of 
lubricant oils. I believe this strengthens our position for the longer term in 
lubricant re-refining where the aspiration is to reproduce very high quality 
oil, fit for its original purpose with world leading yields and efficiencies 
(just as we do for transformer oil). 
Lubricant re-refining
We signed 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 
design for an initial 75 million litre base oil re-refinery. The CEP relationship 
also offers the opportunity to collaborate on the development of our own 
technology going forward. CEP is the most commercially distributed of the 
re-refining technologies; current projects and installed capacity add to 
approaching a billion litres per annum of capacity globally. The relationship 
is very important and will significantly de-risk our major business move into 
used lubricant oil re-refining. Moreover, we believe our technology 
innovation is value accretive and can upgrade the CEP process increasing 
yield and improving product quality. 
Zeton relationship
Hydrodec has had a close relationship through 2014 with Zeton from 
Canada, firstly on the engineering design for the new transformer oil plants 
planned for the Canton expansion and also on their fabrication. The design 
is a major step forward. The new plant is modular in construction and 
provides access at all levels for easier monitoring and maintenance. 
Importantly, the design incorporates end-to-end processing through two 
reactor trains with each module having a capacity of 15 million litres per 
annum, at least 10% more efficient than their predecessors. We are also 
confident that this improved configuration will become our best available 
technology capable of producing the best quality transformer oil available 
today in the US.
Canton insurance settlement
We settled the Canton insurance claim for a total gross value of US$20 
million, which net of deductibles, resulted in total cash payments of 
US$18.75 million being made to the Group. This was a good and 
comprehensive result, after a frustratingly long and arduous process. 
Importantly, it allows us to rebuild at Canton funded and confident that we 
can re-capture the growth and momentum in the business interrupted by 
the incident. Our relationship with, and the full co-operation of, our 
partners, G&S Technologies, has been critical to achieving our ambitious 
re-build plans and I extend my thanks to them.
2014 has been a year of rebuilding and setting the platform for the 
future profitability of Hydrodec; a future where we re-emerge stronger. 
Responding to and resolving the aftermath of the Canton incident 
certainly created a frustrating ‘overhang’ which impacted the business, 
particularly as we worked to resolve the insurance claim. 11
Governance Financial Statements Strategic Report
Hydrodec Annual Report & Accounts 2014
CEP is the most commercially distributed of the re-refining 
technologies, with ten plants operating globally and two 
more in design, approaching a billion litres per annum of 
re-refining capacity globally. It is also assessed by Hydrodec  
to be the most compatible technology platform with our  
own technology development programme. 
CEP’s leading technology can produce API Group II/II+ quality 
base oil from collected used lubricant oil feedstock with base 
oil recoveries in excess of 70%. Moreover, we believe our 
technology innovation can upgrade the CEP process 
increasing yield recoveries and improving product quality. 
Engineering and licence agreement and technical collaboration agreement with CEP
This year we signed an exclusive licence agreement with California-based 
Chemical Engineering Partners (CEP) to develop its wiped-film evaporation and 
hydrogenation technology in the UK as well as the basic engineering design 
for an initial 75 million litre base oil re-refinery. This substantially de-risks our 
proposed UK base oil re-refining project. 12 Hydrodec Annual Report & Accounts 2014
Chief Executive Review
continued
Safety and Technology Committee
The Board has introduced a new Board Committee specifically focused  
on our HSEQ agenda, but also with oversight of Hydrodec’s technology 
programme and development. Dame Mary Archer, DBE a renowned 
chemist, but also widely associated with science, renewable technologies 
and governance in the NHS, agreed to join the Board and assume 
responsibility for this Committee in November 2014. As our Chairman said 
at the time, “Mary’s access to academia and knowledge of the renewable 
energy sector will greatly strengthen the Board’s ability to support the 
development of the Hydrodec business and technology.”
Strategic developments
USA
There has been significant progress in the Canton project during the 
period and into 2015. All six ‘trains’ are now on site and in situ. Expansion 
‘trains’ 1 & 2 are currently progressing through mechanical and electrical 
completion and are now available for operator training. The replacement 
‘trains’ 3 to 6 will follow sequentially. The new Canton will create several 
important advantages for the business. The new plant will deliver at least 
10% greater efficiency than the name plate capacity of the original 
equipment; that is, in excess of 40 million litres of effective operating 
capacity. It will be safer, easier to maintain and will produce the best  
quality transformer oil available in the US. It will also qualify for an offset 
carbon credit. 
Australia
The co-location of Hydrodec’s Australian operations from Young to 
Southern Oil’s Bomen lubricant oil re-refinery in Wagga Wagga will be 
complete at the end of March 2015. The project, which was subject to an 
extended planning process and submission, creates a significant re-refining 
hub in New South Wales, which will not only benefit from operating 
efficiencies under a single operating structure, but also offer better 
logistics and location advantages. Hydrodec continues to own the 
transformer oil re-refining plant and the proprietary technology, and will 
control all the commercial activity of Hydrodec branded SUPERFINE™ 
transformer oil.
OSS Group
OSS has a good, experienced team and remains the leading service 
provider in the UK by size and benefits from that scale. Emerging from 
administration created a number of challenges, and we realised that its 
business strategy and structure needed to change even before the decline 
in oil prices had any impact and that decline has and will drive further 
significant change into the used oil market. We believe realigning the 
business back towards the major transport and industrial clients and by 
focusing on its compliant, convenient and competitive service offer to 
major car groups, workshop networks as well as industrial and transport 
companies, is the right strategy. Furthermore, we have taken action to 
reduce headcount and costs by more than £0.5 million.
UK re-refining project
We continue to progress the independent development of a base oil 
re-refinery. Indeed, it is worth noting that base oil prices have held up well 
relative to the prevailing oil price. The UK is a very attractive option for 
profitable growth and development in the used-oil and transformer oil 
markets – a unique opportunity to create a fully integrated operation from  
a standing start covering all oil, as well as leapfrogging the majority of the 
European competition in efficiency and product quality. OSS is critical to this, 
securing feedstock to underpin and support further investment, as well as 
offering the brand, business and customer base to be successful in its own 
right. After detailed consideration in which 12 potential sites were evaluated, 
a location adjacent to the QE2 Dock on the Wirral in the North West of 
England has been identified. This is a pre-zoned industrial site close to both 
excellent sea and road transport logistics and a significant storage facility. 
The project itself qualifies as a nationally significant infrastructure project and 
requires a statutory development consent order. 
Financial and operating performance 
The benefit of a full year of trading from OSS has enabled the Group to 
continue its commendable year on year growth in income, up 36% to 
US$54.7 million, as well as a significant increase in total oil sales, up 31% to 
48.6 million litres. This was without production revenue from the US offset in 
part by business interruption income and a step up in oil trading as we 
maintained our channels of trade in preparation for 2015. Gross margins this 
year are more complex to understand given the impact and accounting 
treatment of business interruption given the income reimbursing lost margin 
due to the incident, but margins have otherwise stood up despite lower 
product sales prices and challenging market conditions. 
Balance sheet
In December, we entered into a US$10 million, seven year term, asset 
financing facility and increased working capital line for Hydrodec of North 
America LLC, to fund appropriately the North American business following 
the rebuild and expansion of the Canton re-refinery. This creates a more 
efficient capital structure, introduces competitively priced debt onto the 
balance sheet of the operating company, and gives us the capability to 
fund additional working capital for the expanded business as well as 
creating flexibility for Hydrodec as a group to invest further in 
strengthening the value chain or in other opportunities.
Outlook
The Board expects 2015 will be a year of regaining momentum, much as 
we were doing in 2013. Clearly Canton is very important and we will be 
looking to rebuild the business and ramp up production from the second 
and third quarters. It will be very interesting to see how far we can take this 
new design and equipment through the rest of the year and this is a very 
exciting proposition for us. In the UK, the key is resolving the market 
structure of the collections business in the short term whilst making 
progress on the UK re-refinery project including building the business case 
and resolving how best to fund and develop this project. Moreover, 
because of our actions I am confident that growth can be delivered at 
lower risk and from a stronger financial base than we envisaged in our 
original strategy from September 2012. Delivering an expanded Canton, 
re-locating in Australia and progressing our plans for a re-refinery in the UK 
as we envisage today will put us back, or at least very close, to our original 
trajectory from before the incident.
Ian Smale
Chief Executive Officer
20 March 2015 13
Governance Financial Statements Strategic Report
Hydrodec Annual Report & Accounts 2014
UK re-refinery project
Our proposal to develop a 75 million litre base oil re-refining facility in the 
UK is clearly supported by the Department of Environment, Food and Rural 
Affair’s infrastructure plan for the UK, its national policy for hazardous waste 
and relevant planning legislation.
The development constitutes a nationally significant infrastructure 
project (NSIP) requiring a statutory development consent order 
from the Secretary of State. This positions the Hydrodec project 
within a national framework for development consent (rather 
than local planning), offering greater clarity of process, with a 
defined framework for consultation, consideration of the 
application and determination within a guaranteed time line.
A lubricant oil re-refinery will provide the core development 
proposition. It is intended that this will be followed in due 
course by a Hydrodec proprietary transformer oil re-refining 
capability and the potential for a second phase lubricant oil 
re-refinery, thereby creating a fully-integrated world scale 
used oil treatment and processing facility supplied by 
Hydrodec UK’s integrated collection and logistics operations.  14 Hydrodec Annual Report & Accounts 2014
Financial Review
Group income increased by 36% over 2013 to US$54.7 million (2013: 
US$40.1 million), the tenth consecutive year of growth. This growth was 
achieved in spite of the replacement of revenues in Canton with margin 
based insurance income and significant pricing pressure in the UK as a 
result of the global slump in oil prices.
In their reports both the Chairman and Chief Executive summarised key 
areas of the strategic development of the Group and covered in some 
detail the successful resolution of the insurance claim in our US business.
The conclusion of this claim brings some complexity to understanding  
the Group’s financial statements this year and as part of this review I have 
sought to clarify the key elements arising from the claim and their impact 
where appropriate.
Revenue and operational performance
Group income increased by 36% over 2013 to US$54.7 million (2013: US$40.1 
million), the tenth consecutive year of growth. This growth was achieved in 
spite of the replacement of revenues in Canton with margin based 
insurance income and significant pricing pressure in the UK as a result of 
the global slump in oil prices. The Group benefited from supplementary oil 
trading of 7.8 million litres generating US$4.5 million of revenue in the US, 
undertaken to maintain customer relationships during the shutdown 
period as well as a full year of trading at OSS Group. Overall, total oil sales 
grew by 31% to 48.6 million litres (2013: 37.0 million litres).
The comparison of gross margin with 2013 is complicated due to the 
nature and basis of business interruption insurance proceeds. However, on 
a pro forma basis using the actual data upon which the claim was paid, 
gross margin in the re-refining business would have increased to 30% 
(2013: 23%). In addition, challenging feedstock supply in the Australian 
market and the necessity to carry out a safety related shutdown following 
the incident in Canton impacted utilisation in Australia. 
Sales volumes in the recycling business totalled 36.2 million litres at a gross 
margin of 14.4% and contributed US$4.9 million gross profit. Given the 
accelerated decline in the global oil market at the end of 2014, the Group 
implemented strategies to improve margins and accommodate lower 
global oil prices including the renegotiation of feedstock pricing 
mechanisms with suppliers.
Total employee costs and other operating overheads increased to US$21.9 
million (2013: US$16.4 million) driven principally by a full year of trading at 
OSS in the UK. This increase was in part offset by reduced growth costs, 
reflecting reduced transaction related fees and costs in 2014 compared  
to 2013, and rationalisation of fleet costs through a sale and leaseback 
arrangement with one of the primary fleet service providers, TIP Europe, 
generating a surplus of US$1.5 million. Costs as a percentage of total 
income fell to 40% from 41% and including Canton on a pro forma revenue 
basis would have decreased to 32% of total income. 
The underlying operating loss (before growth costs, amortisation of 
intangible assets, profit on disposal of assets, restructuring costs and 
bargain purchase gain) improved to US$2.9 million (2013: US$3.2 million). 
The overall operating loss improved to US$7.9 million (2013: US$9.0 million, 
after restatement for the bargain purchase price adjustment).
Internally the business continues to be managed and performance 
measured by reference to Operating EBITDA (pre growth costs and other 
non-operating items), which for 2014 was US$1.6 million (including US$1.5 
million (less associated lease rentals) from the gain on disposal of assets  
in Hydrodec (UK) Limited) (2013: US$0.2 million). As this is not a statutory 
accounting measure, the table below reconciles this figure to the statutory 
operating loss: 15 Hydrodec Annual Report & Accounts 2014
Governance Financial Statements Strategic Report
USD’000
Operating EBITDA
1
1,610
Growth costs (2,278)
Depreciation (3,123)
Amortisation (3,513)
Share based payment costs (324)
Foreign exchange loss (227)
Statutory operating loss (7,855)
Canton incident and insurance claim
On 1 December 2013 a fire at the US plant in Canton, resulted in a 
shutdown of production and caused significant damage to the main 
reactors and ancillary equipment. From the date of the incident, the 
Company along with its insurers and their loss adjusters went through  
a process of establishing the extent of the damage caused, the costs  
to rebuild it and the estimated time it would take to re-establish full 
operational capability. The Company submitted a claim for its total loss 
including business interruption. As at 31 December 2013, the Company  
had estimated a total impairment and write off of assets of US$7.2 million 
for which it created a corresponding receivable due from the insurers. 
Based on actual orders and sales pipelines, and taking account of stock in 
trade, it also assumed US$0.4 million of income receivable for the period 
from 1 December 2013 to 31 December 2013 post the incident under the 
terms of its business interruption coverage and pending settlement and 
final agreement of the claim. Final resolution of the insurance claim in 
November 2014 resulted in payments totalling US$18.75 million  
(gross agreed claim US$20 million net of US$1.25 million property damage 
and business interruption excess). Total income of US$9.7 million was 
recognised in 2014 (2013: US$7.6 million), based on the capital replacement 
payment and business interruption income under the claim and after asset 
disposal and insurance claim related expenses totalled US$8.6 million. In 
accordance with the finalised claim, a further US$1.5 million of business 
interruption income will be recognised in 2015.
Strategic Developments
Partnership with G & S Technologies Group 
The Group disposed of 25% of its interest in Hydrodec of North America 
LLC to G&S Recycling Group LLC (G&S) on 16 April 2013. Under the terms of 
the agreement, G&S made an initial payment of US$1.73 million based on a 
multiple of earnings for the year ended 31 December 2012 (5 times EBITDA) 
with an additional amount payable on the excess of the 2013 EBITDA over 
2012 EBITDA paid at a multiple of 6.5 times. The total consideration was 
estimated at US$3.3 million resulting in a small loss on disposal of US$0.3 
million in 2013. The final calculation of the 2013 EBITDA resulted in an 
additional payment of US$1.7 million reducing this loss to US$0.2 million. 
Under the terms of the agreement, G&S were obliged to contribute 
additional capital for the two expansion trains ordered in December 2013 
and during the year provided US$2.5 million in relation to this obligation 
with a further payment expected of US$0.7 million in 2015.
Agreement with Southern Oil
The Group entered into an agreement in November 2013 to co-locate  
its Australian transformer oil business at the Southern Oil Refining (SOR) 
lubricant oil refinery in Bomen, New South Wales (NSW), to create a single 
re-refining site of scale and improving Hydrodec’s cost and operational 
efficiency as well as enhancing operational resilience. SOR will operate the 
combined facility under a tolling agreement. As highlighted last year, the 
implementation of this arrangement was linked to obtaining appropriate 
planning and operating permits to facilitate the move, the timing of which 
was outside the Group’s control. All such requirements were fulfilled in the 
latter part of 2014 with the physical relocation of the operating equipment 
taking place in Q1 2015. Accordingly, the Group has provided restructuring 
costs of US$0.3 million related to employee termination costs. It is expected 
that the employment termination costs will be incurred in Q1 2015. At the 
same time, the Group reviewed the carrying value and value in use of the 
remaining production assets at the Young site following the relocation to 
Bomen and carried out a professional valuation assessment using a market 
comparison approach as the primary method to arrive at the realisable 
value. This exercise resulted in an impairment charge of US$0.8 million on 
the production assets and a revaluation surplus (principally on tanks and 
laboratory equipment) totalling US$0.5 million.
Development of UK lubricant oil re-refinery
During 2014, the Group signed an exclusive engineering and licence 
agreement with Chemical Engineering Partners (CEP), covering the 
engineering, planning and development for a UK lubricant oil re-refinery.  
In line with the agreement, 50% of the one-off licence fee together with 
100% of the Basic Engineering Design (BED) fee, totalling US$1.25 million 
were paid to CEP on delivery of the BED package during 2014. The 
remaining 50% of the licence fee, totalling US$1.0 million is payable on 
commissioning of the UK re-refinery and as such is held as a non-current 
liability of the Group.
A site for the UK re-refinery has been identified with preparation for the 
planning application currently underway. Costs incurred but not expensed 
pending approval associated with the planning application together with 
the establishment of the UK plant amounted to US$0.4 million.
Amortisation and impairment of intangible assets
Amortisation of US$3.5 million (2013: US$2.5 million) principally relates to 
the annual charge relating to the Hydrodec technology and prepaid 
royalty, both of which are being amortised over anticipated useful lives of 
15 years from their acquisition date in 2004. The increase in the charge from 
the prior year relates to the charge for the intangible assets acquired with 
the OSS Group in 2013, comprising the brand name and customer 
contracts, both of which are being amortised over three years, reflecting 
the anticipated change in the nature of the business to the UK base oil 
re-refinery over that period. In accordance with accounting standards, the 
Board has reviewed the carrying value of goodwill and other intangible 
assets across the Group in the light of current trading and prospects and 
progress towards achieving the Group’s strategic plans. The Board 
concluded that the carrying value of goodwill and other intangible assets 
remained appropriate and that no impairment had occurred.
1  Including US$1.5 million (less associated lease rentals) from the gain on disposal of 
assets in Hydrodec (UK) Limited 16 Hydrodec Annual Report & Accounts 2014
Financial Review
continued
Foreign exchange rates
The Group has historically reported its results in US dollars, though a 
significant proportion of trading now takes place in sterling following  
the OSS Group acquisition. The main currency exposure arises on the 
translation of sterling earnings and costs into US dollars at the average rate 
as well as the translation of reserves at the closing rate. The Group does not 
hedge this exposure as these hedges only have a temporary effect and 
each operating unit is not subject to currency exchange risk as their 
commercial activities are for the most part executed within their own local 
currency. The exchange rates used for the consolidated income statement 
and balance sheet are set out below:
2014 2013
Average rates:
Sterling 0.61 0.64
Australian Dollar 0.87 0.97
Japanese Yen 105.8 97.5
Closing rates:
Sterling 0.64 0.61
Australian Dollar 0.82 0.89
Japanese Yen 119.5 105.0
Operating cash flow and working capital
In 2014, the Group generated net cash from operating activities of US$6.0 
million, compared to a US$4.9 million net cash outflow in 2013. This was as a 
result of the improved Operating EBITDA and reduced transaction fees, 
together with significant positive working capital movements arising from the 
payment of insurance proceeds included in receivables at the end of 2013.
The amount of working capital required by the Group’s operations 
continues to be closely monitored and controlled, and forms a key part of 
the management information. Credit management remains robust with  
no bad debts written off during the year.
Capital expenditure
Capital expenditure in 2014 totalled US$19.0 million (2013: US$1.0 million), 
primarily incurred in the US in relation to both the re-build and the expansion 
of the plant at Canton. Re-build capital expenditure in Canton has been 
funded entirely through the insurance proceeds received during 2014, while 
the expansion has been funded equally by the Group and its partner G&S,  
as previously highlighted. Outside of the US, the Group has started to incur 
capital costs in relation to the establishment of the UK re-refinery, primarily in 
relation to site preparation and the acquisition of the BED from CEP which 
has been funded out of current Group cash reserves.
Liquidity
The Group’s sources of funding currently comprise operating cash flow and 
access to committed bank and asset financing facilities from a range of 
banks and asset leasing institutions. During 2014 the Group’s US subsidiary, 
Hydrodec of North America LLC (HoNA) entered into a seven year term 
asset financing facility, while increasing its working capital line of credit to 
US$1.5 million to provide an efficient capital structure for the US business 
and provide further working capital for investment in feedstock and other 
opportunities. The facilities are secured by a charge over all of the assets of 
HoNA. The Group has sufficient cash balances and undrawn financing 
facilities to finance all investment and capital expenditure included in its 
plant for the current year with an additional margin for contingencies. The 
Group is committed to renewing its facilities on a regular basis.
Shares in issue
The basic and fully diluted weighted average number of shares in issue for 
2014 was 744.1 million (2013: 467.8 million) following the placing and open 
offer in November 2013 and the issue of a further 125,000 shares in March 
2014 pursuant to the receipt of an exercise notice in respect of warrants. As at 
31 December 2014, 56.6 million shares were owned by a member of the 
Group and therefore treated as if they were treasury shares on consolidation 
(2013: 56.6 million). These shares were cancelled on 16 April 2015. The 
Hydrodec Employee Benefit Trust held 2.6 million shares as at 31 December 
2014 (2013: 2.6 million).
Financial reporting
The financial information has been prepared under IFRS and in accordance 
with the Group’s accounting policies. There have been no changes to the 
Group’s accounting policies during the year ended 31 December 2014.
Going concern
The Directors are confident, on the basis of current financial projections 
and facilities available, and after considering possible changes in trading 
performance, that the Group has sufficient resources for its operational 
needs for the next 12 months. Accordingly, the Directors continue to adopt 
the going concern basis.
Chris Ellis
Chief Financial Officer
20 March 2015 17 Hydrodec Annual Report & Accounts 2014
Governance Financial Statements Strategic Report 18 Hydrodec Annual Report & Accounts 2014
Key Performance Indicators
The Group monitors and measures performance against its KPIs, a number 
of which are highlighted below. These KPIs are in line with strategic 
priorities of the Group and provide a means of evaluating how well the 
Group is working together to deliver the long-term strategy.
Purpose
To identify directional trend in sales revenue and 
evaluate the ability of the Group to grow its 
customer base.
Target
To grow revenue year-on-year.
Performance
Total revenue and other income has grown 36% 
in 2014, in spite of the replacement of revenues 
in Canton with margin based insurance income 
and significant pricing pressure in the UK as a 
result of the global slump in oil prices. The Group 
benefited from supplementary oil trading of 7.8 
million litres generating US$4.5m of revenue in 
the US, undertaken to maintain customer 
relationships during the shut down period as 
well as a full year of trading at OSS Group.
Financial performance
Total revenue
+36%
2012 2013 2014
48.6
2011
37 22.5 20.3
2012 2013 2014 2011
54.7 40.1 26.1 22.4
2012 2013 2014
30
2011
14
23
16
21
0
22
0
2012 2013 2014
1.6
2011
0.2 -2.8 -2.2
Million Litres
US$ Million
Margin %
US$ Million
Re-reﬁning Recycling
Re-reﬁning Recycling
Re-reﬁning Recycling
Purpose
To identify directional trend in sales volumes 
and evaluate the ability of the Group to grow 
its customer base.
Target
To grow sales volumes year-on-year.
Performance
Volumes grew 26% in 2014, despite the closure of 
Canton production for the year, driven by a full 
year of trading at OSS.
2012 2013 2014
48.6
2011
37 22.5 20.3
2012 2013 2014 2011
54.7 40.1 26.1 22.4
2012 2013 2014
30
2011
14
23
16
21
0
22
0
2012 2013 2014
1.6
2011
0.2 -2.8 -2.2
Million Litres
US$ Million
Margin %
US$ Million
Re-reﬁning Recycling
Re-reﬁning Recycling
Re-reﬁning Recycling
Strategic Performance
Total volume
+26% 19 Hydrodec Annual Report & Accounts 2014
Governance Financial Statements Strategic Report
Purpose
To evaluate the profitability and financial health 
of the Group. A relative measure of each US$ of 
revenue remaining after all direct costs have 
been incurred. Due to the replacement of 
revenue with business interruption income for 
Canton a pro forma measure has been provided 
to give a like for like comparison for the 
re-refining business.
Target
To maintain and improve gross margin.
Performance
Pro-forma re-refining gross margin improved by 
600 basis points to 30% reflecting the basis on 
which business interruption was paid. Recycling 
gross margin declined 2% due to reduced global 
oil prices affecting selling prices.
Re-refining gross margin
30%
2012 2013 2014
48.6
2011
37 22.5 20.3
2012 2013 2014 2011
54.7 40.1 26.1 22.4
2012 2013 2014
30
2011
14
23
16
21
0
22
0
2012 2013 2014
1.6
2011
0.2 -2.8 -2.2
Million Litres
US$ Million
Margin %
US$ Million
Re-reﬁning Recycling
Re-reﬁning Recycling
Re-reﬁning Recycling
2012 2013 2014
48.6
2011
37 22.5 20.3
2012 2013 2014 2011
54.7 40.1 26.1 22.4
2012 2013 2014
30
2011
14
23
16
21
0
22
0
2012 2013 2014
1.6
2011
0.2 -2.8 -2.2
Million Litres
US$ Million
Margin %
US$ Million
Re-reﬁning Recycling
Re-reﬁning Recycling
Re-reﬁning Recycling
Purpose
To evaluate the operational performance and 
profitability of the Group.
Target
To outperform year-on-year. 
Performance
Significant improvement year on year, building 
further on last year’s first positive result in 
Group’s history.
Operating EBITDA
us$1.6m 20 Hydrodec Annual Report & Accounts 2014
Principal Risks and Uncertainties
How we manage risk
The effective management of risk is a core function of the Board and executive management, 
who regularly review and monitor the key risks involved in operating the business. The table 
below sets out identified material risks which are believed by the Board to be the most 
significant to the achievement of the Group’s strategic business objectives. They do not 
comprise all of the risks that the Group may face and are not listed in any order of priority. 
There may be other risks which are currently unknown to the Group or which may become 
material in the future. We have also identified relevant mitigating factors which are designed 
to provide a reasonable (but not absolute) level of protection against the impact of the events 
in question.
Risk Description Mitigation
Strategic and Commercial Risks
Feedstock availability 
In the US and Australia, the Group is dependent on 
sourcing used oil feedstock from which to manufacture 
its SUPERFINE™ products. Historically, this has provided 
the main operational challenge due to competing uses 
for used transformer oil and/or long-established 
practices around waste incineration. Similar risks apply  
as the Group expands its operations into lubricant oils.
We closely monitor feedstock availability in the markets 
in which we operate. The strategic partnership with G&S 
has significantly de-risked security of feedstock supply in 
the US and underpins expansion in the key US market. In 
the UK, the OSS and Eco-oil businesses provide value 
chain consolidation to support our proposed 
development of a lubricant oil re-refinery in the UK.
Permitting / legal and regulatory 
compliance
The waste oil market is subject to detailed regulation and 
we must comply with a broad range of legal and 
regulatory requirements in the jurisdictions in which we 
operate. In particular, the rebuild and expansion 
programme at Canton, the co-location project in Australia, 
the proposed UK re-refining project and any other new 
plants and locations will require appropriate permitting 
and licences, over which the Group may have only limited 
control as to timing and conditions attached.
The Group has developed good relations and has a 
strong environmental and safety record with the relevant 
EPA and other national and local bodies in each of the 
jurisdictions in which we operate. In relation to the UK 
lubricant oil re-refining project, appropriate resources are 
being dedicated to addressing permitting and regulatory 
compliance risks.
Key executives and personnel
The Group’s future success is substantially dependent on 
the continued services and performance of its senior 
management team and its ability to attract and retain 
highly skilled and qualified personnel – particularly 
during the current stage of business and technology 
development.
The Remuneration Committee maintains a policy that 
aims to attract, motivate and retain key personnel for the 
Group. This incorporates a significant element of 
performance related remuneration to align interests with 
those of shareholders. A new long term incentive plan for 
executive management will be proposed at the 2015 AGM.
Realising the opportunities for growth
During our current stage of business and technology 
development, the business is subject to project 
execution risk. A failure to identify, execute or properly 
integrate acquisitions or other growth opportunities 
could impact on profit targets and impede the strategic 
development of the Group.
Management have significant expertise in, and 
experience of, integrating acquisitions. All potential 
acquisitions are subject to a stringent internal evaluation 
process and external due diligence prior to completing 
any such transaction.
Health, Safety and Environmental Risks
Health, safety and environmental 
compliance
The activities of the Group involve a range of health, 
safety and environmental risks. Managing such risks is a 
priority for all directors, managers and employees across 
the Group and we invests in relevant assets and 
resources on an ongoing basis to ensure the highest 
standards are maintained. This is also important for our 
relationship with local communities and to satisfy 
customers that the Group’s operating procedures are 
consistent with those of a responsible business.
All Group subsidiaries operate health, safety and 
environmental management systems appropriate to the 
nature and scale of their risks. The establishment of the 
Safety and Technology Committee in 2014 further 
reinforces the Board’s oversight of health, safety and 
environmental matters and provides a robust challenge 
for the Group’s technology programme.
Insurance cover is maintained at Group level for 
significant insurable risk. 21 Hydrodec Annual Report & Accounts 2014
Governance Financial Statements Strategic Report
Risk Description Mitigation
Technology Risks
New technology development
A key element of the Group’s expansion into the lubricant 
oil market relates to the ultimate successful commercial 
deployment of our proprietary technology to the 
re-refining of lubricant oils, either standalone or as an 
add-on to existing technology. 
Such proprietary IP must also be appropriately protected, 
in particular, if future third party collaborations or 
licensing.
Signed exclusive licence agreement with CEP to develop 
their technology in the UK, significantly de-risking 
proposed development of a lubricant oil re-refinery in 
the UK. Also intention to relocate Hydrodec technology 
platform to the UK during 2015.
Submitted provisional patent applications in 2014 to 
protect operating and design innovations in our 
transformer oil technology and upgrade innovations that 
will enhance the re-refining of lubricant oils. 
Operational Risk
Operational reliability, product quality 
and relationship with partners
The Group is dependent on the re-establishment of 
business operations at Canton during 2015, and going 
forward, the continuing reliability of, and product quality 
from, Canton, under the tolling arrangement with 
Southern Oil Refinery in Australia and from its operating 
plants in the UK, with associated risks of loss of revenue 
and reputation for non-performance.
The Group continues to invest in operational and capital 
expenditure, including human resource, to maintain and 
improve reliability and quality. Procedures are in place to 
maintain close on-going relationships with G&S and 
Southern Oil respectively.
Concentration / loss of major customers
Sales in the US are relatively highly concentrated in a 
small number of key customers which, if lost, might have 
a material financial impact on the Group.
The Group aims to build long-term relationships with our 
customers based on value, quality and service. 
Furthermore, we continue to build our customer base 
and would expect to decrease the reliance on key 
customers over time.
Market conditions
The overall growth and demand for the Group’s products 
is subject, to a certain degree, to the usual drivers of 
commercial activity. This demand can be unpredictable 
and the Group has relatively low visibility of future orders 
from its customers. Price pressure remains a key features 
of the waste oil market. The used oil market in the UK has 
been significantly impacted by lower oil prices and 
volumes have declined as a consequence of changing 
industry practices.
Management prepares regular forecasts and reviews that 
can focus on remedial action plans required to deliver 
the desired performance. Management have undertaken 
a material intervention to restructure the OSS business 
during 2014.
The Group’s technology is its key differentiating factor, as 
well as commercial first mover advantage provided by 
know-how and trade secrets.
Financial Risks
Availability of capital
The continued growth and expansion of the Group’s 
operations increases demand for capital at a time when 
the availability of capital has become more restricted.
Management monitors the Group’s financial 
performance closely and reviews appropriate funding 
options for each project. During 2014, Hydrodec of North 
America LLC entered into US$10 million asset financing 
facility and increased its working capital line to fund the 
North American business following the rebuild and 
expansion of the Canton re-refinery.
Foreign exchange risk
The Group is exposed to translation and transaction foreign 
exchange risk. The currencies where the Group is most 
exposed to volatility are UK Sterling and Australian Dollars.
The Group’s policy is to match, as far as possible, its 
principal projected cash flows by currency. Currently, no 
hedging instruments are used. The Group keeps under 
review the extent of its exposure to currency fluctuations.
The Strategic Report was approved by the Board of Directors on 20 March 2015 and was signed on its behalf by:
Ian Smale
Chief Executive Officer
Chris Ellis 
Chief Financial Officer  22 Hydrodec Annual Report & Accounts 2014
Board of Directors
Lord Moynihan
Chairman
Ian Smale
Chief Executive Officer
Chris Ellis
Chief Financial Officer
Mark McNamara
Senior Executive Director
Background and experience
Lord Moynihan was previously Executive 
Chairman and Chief Executive of Consort 
Resources Limited and Executive 
Chairman of Clipper Windpower Europe 
Limited. Colin was a Member of 
Parliament in the UK for 10 years, serving 
as Minister for Energy from 1990 to 1992. 
Colin stood down as Chairman of the 
British Olympic Association in 2012 after 
seven years, during which time he 
oversaw Team GB’s successful 
performance in the Beijing and London 
Olympic Games. He was a Rowing Silver 
Medallist in the 1980 Olympic Games.
Background and experience
Prior to joining the Board as CEO in 
January 2012, Ian had spent his entire 
career with BP plc and held various senior 
roles in a career spanning 30 years. He 
held a variety of leadership positions 
across BP , including Group Head of 
Strategy & Policy, Business Unit Leader for 
Commercial Marketing and Distribution in 
South Africa, Global Head of Mergers and 
Acquisitions, and President and Chief 
Executive of BP North Africa.
Background and experience
Chris is a qualified chartered accountant 
and has more than 20 years of board level 
finance and management experience, 
running a range of large, complex 
international businesses as well as small 
and medium-sized ventures, including a 
significant period within GE Capital. From 
2009 to 2012, he served as Global Chief 
Financial Officer of PPC Worldwide, a 
global healthcare business within 
UnitedHealth Group Inc.
Background and experience
Mark’s experience and background are 
primarily in chemical engineering, 
technology and environmental services. 
He managed the construction and 
commissioning of the first Hydrodec plant 
in Australia in 2004. Mark joined the Board 
originally as Chief Operating Officer and 
assumed the role of CEO in August 2005. 
He became Senior Executive Director on 
Ian Smale’s commencement of duties as 
CEO in January 2012 and is the Group’s 
Head of Technology.
Date of appointment
Colin joined the Board and became 
Chairman in October 2012. 
Date of appointment
Ian joined the Board as CEO in  
January 2012.
Date of appointment
Chris joined the Board in July 2012 as CFO. 
Date of appointment
Mark joined the Board in December 2004. 
External appointments
Colin is a Director of Rowan Companies 
plc (offshore drilling), Chairman of 
Buckthorn Capital LLP and a Director of a 
number of renewable energy companies.
External appointments
Ian is a Non-Executive Director of Nexen 
Petroleum UK Ltd.
External appointments
None.
External appointments
None.
Committee memberships
Colin chairs the Board’s remuneration and 
nomination committees and also serves 
on the Board’s audit and safety & 
technology committees.
Committee memberships
Ian serves on the Board’s nomination and 
safety & technology committees.
Committee memberships
Chris serves on the Board’s safety and 
technology committee.
Committee memberships
None.
Independence
The Board considers Colin to be an 
Independent Director and considers that 
the historic one-off option grant does not 
impact upon his independence given its 
quantum, the size of his shareholding and 
the fact that the award was supported by 
shareholders at the time.
Independence
Executive – Non-Independent.
Independence
Executive – Non-Independent.
Independence
Executive – Non-Independent. 23 Hydrodec Annual Report & Accounts 2014
Financial Statements Strategic Report Governance
Andrew Black
Non-Executive Director
Alan Carruthers
Non-Executive Director
Gillian Leates
Non-Executive Director
Dame Mary Archer
Non-Executive Director
Background and experience
Andrew is the co-founder of Betfair, the 
world’s leading online betting exchange 
and FTSE 250 constituent, having devised 
its unique betting exchange model. He 
was a director of the Betfair Group from 
1999 to 2010.
Background and experience
Alan has 27 years’ experience in the 
financial services sector and from 2003 
to 2010 was Global Head of Equities at 
Cazenove. During this time he was 
appointed a main Board Director and 
was a member of both the executive and 
operations committees. He helped 
spearhead the joint venture with 
J.P.Morgan in 2005 and spent a year as 
Head of EMEA Cash Equities at 
J.P.Morgan Cazenove, following the 
buyout of Cazenove in January 2011.
Background and experience
Gill brings with her a wealth of public 
market experience, having spent eight 
years at Schroder Investment 
Management as an analyst and fund 
manager and later serving as Investment 
Director on the main board of Majedie 
Investments PLC. She also served as a 
Non-Executive Director of Majedie Asset 
Management Limited where she played a 
key role in setting up the UK pension fund 
management business in 2002.
Background and experience
Dame Mary studied chemistry at St Anne’s 
College, Oxford, and physical chemistry at 
Imperial College, London, before 
becoming a lecturer at Cambridge 
University. She was awarded the Energy 
Institute’s Melchett Medal in 2002 and the 
Eva Philbin Award of the Institute of 
Chemistry of Ireland in 2007. Dame Mary 
has held prominent leadership roles in the 
NHS. She was appointed DBE in 2012 for 
services to the NHS.
Date of appointment
Andrew joined the Board in July 201 1.
Date of appointment
Alan joined the Board in August 2012. 
Date of appointment
Gill joined the Board in June 2009.
Date of appointment
Dame Mary joined the Board in 
November 2014.
External appointments
Andrew holds board seats at a number of 
companies unrelated to the activities of 
the Group.
External appointments
None.
External appointments
Gill serves as Non-Executive Chairman  
of Verdes Management plc and is a 
Non-Executive Director of Innovenn,  
a subsidiary of Venn Life Science  
Holdings plc.
External appointments
Dame Mary holds multiple external 
appointments including as Chairman of 
the Science Museum Group, Cambridge 
Healthcare Limited and Imperial College 
Health Partners Expert Advisory Board. 
Dame Mary is also President of the 
National Energy Foundation and the UK 
Solar Energy Society.
Committee memberships
Andrew serves on the Board’s 
remuneration and nomination 
committees.
Committee memberships
Alan serves on the Board’s audit, 
nomination and remuneration 
committees.
Committee memberships
Gill chairs the Board’s audit committee 
and also serves on the Board’s 
remuneration and nomination 
committees.
Committee memberships
Dame Mary chairs the safety & technology 
committee.
Independence
Non-Independent due to significant 
shareholding.
Independence
The Board considers Alan to be an 
Independent Director.
Independence
The Board considers Gill to be an 
independent Director and consider that 
the historic one-off option grant does not 
impact upon her independence given its 
quantum and the fact that the award was 
supported by shareholders at the time.
Independence
The Board considers Dame Mary to be an 
Independent Director.
All Directors shall retire at the AGM. All Directors shall put themselves forward for re-election other 
than Mark McNamara who will retire as a Director of the Company at this year’s AGM. 24 Hydrodec Annual Report & Accounts 2014
Report of the Directors
The Directors present their annual report on the affairs of the Group, together with the financial statements and auditor’s report for the year ended 
31 December 2014. The Corporate Governance Report set out on pages 28 to 31 forms part of this report.
Details of significant events since the balance sheet date are contained in notes 26 and 37 to the financial statements on pages 62 and 67 respectively. 
The Group has no branches outside the United Kingdom.
Strategic Report
Details of the Group’s strategy and business model during the year and the information that fulfils the requirements of the Strategic Report can be found 
on pages 2 to 21. An indication of likely future developments in the business of the Group, and details of research and development activities are 
included in the Strategic Report, which are deemed to form part of this report by reference. 
Results and dividends
The consolidated income statement for the year is set out on page 38. No dividend has been declared or is proposed by the Company for the year. 
Capital structure
Details of the issued share capital, together with details of the movements in the Company’s issued share capital during the year are shown in note 16 to 
the financial statements on page 57. The Company has one class of ordinary shares which carry no right to fixed income. Each ordinary share carries the 
right to one vote at general meetings of the Company. There are no specific restrictions on the size of a holding nor on the transfer of shares, which are 
both governed by the general provisions of the Articles of Association and prevailing legislation. No person has any special rights of control over the 
Company’s share capital and all issued shares are fully paid. Details of employee share schemes are set out in note 18 to the financial statements on  
page 58. Shares held by the Hydrodec Group Employee Benefit Trust abstain from voting. 
With regard to the appointment and replacement of Directors, the Company is governed by its Articles of Association, the AIM Rules of the London 
Stock Exchange, the Companies Act 2006 and related legislation. The powers of Directors are described in the Corporate Governance Report set out on 
pages 28 to 31.
Directors and their interests
The Directors who served during the year are set out below, together with their beneficial interests in the ordinary shares of the Company. Biographical 
details are included on pages 22 and 23.
31 December 2014 31 December 2013
Ordinary shares 
of of 0.5p each
Share
options
Ordinary shares 
of 0.5p each
Share
options
Dame Mary Archer (appointed 1 Nov. 2014) – – – –
Andrew Black 181,824,857 – 176,144,798 –
Alan Carruthers 1,733,433 – 1,278,888 –
Chris Ellis 1,346,838 – 892,293 –
Gillian Leates 226,929 500,000 136,020 500,000
Mark McNamara 271,464 6,500,000 180,555 6,500,000
Lord Moynihan 9,897,749 1,000,000 8,788,659 1,000,000
Ian Smale 928,014 – 473,469 –
The number, exercise price and earliest and latest dates of exercise of options over ordinary shares in the Company held by Directors at the end of the 
year were as follows:
Share 
options
Exercise
price
(pence)
Earliest
exercise
date
Latest
exercise
date
Gillian Leates* 500,000 15.00p n/a 16 Jul 2019
Mark McNamara** 5,000,000 11.50p 15 Jul 2005 29 Apr 2015
Mark McNamara 1,500,000 33.25p 24 Jan 2010 24 Jan 2018
Lord Moynihan* 1,000,000 8.50p n/a 24 Oct 2022
* Options issued to Gillian Leates and Lord Moynihan are only exercisable on the attainment of predetermined share price targets
** These options lapsed on 29 April 2015 
Further details regarding the share options and the executive Directors’ interests in the Company’s Long Term Incentive Plan are provided in the 
Remuneration Committee Report on pages 32 to 34. 25 Hydrodec Annual Report & Accounts 2014
Financial Statements Strategic Report Governance
The following Directors have a beneficial interest in warrants to subscribe for ordinary shares: 
31 December 2014 31 December 2013
16p exercise
price
8p exercise
price
16p exercise
price
8p exercise
price
Andrew Black 13,000,000 7,000,000 13,000,000 7,000,000
Lord Moynihan 1,500,000 – 1,500,000 –
These warrants were granted in connection with subscriptions for the Company’s fixed rate secured loan note instruments, all of which have now been 
repaid. The warrants exercisable at 8p per ordinary share may be exercised at any time prior to 14 June 2016. The warrants exercisable at 16p per ordinary 
share may be exercised at any time prior to 19 December 2017. The grants of these warrants are unconnected with the relevant Directors’ appointment to 
the Board.
Directors’ indemnity and insurance
The Company has made qualifying third party indemnity provisions, as defined by section 236 of the Companies Act 2006, for the benefit of its Directors 
which remain in force at the date of this report. The Company has also arranged directors’ and officers’ liability insurance.
Substantial shareholdings
As at 31 December 2014 the Company has been notified of the following beneficial interest in 3% or more of its issued voting share capital:
Shareholder % holding
Andrew Black 24.35%
Aviva plc (and subsidiaries) 15.58%
Thesis Asset Management plc 12.20%
Royal London Asset Management Limited 5.11%
During the period between 31 December 2014 and as at the date of this report the Company has not received any further notifications of beneficial 
interest in 3% or more of its issued voting share capital. On 7 April 2015, the Company received notification that Andrew Black had increased his beneficial 
interest in the issued voting share capital of the Company to 183,574,857 ordinary shares (24.6% of the issued voting share capital).
Related party transactions
Related party transactions are disclosed in note 25 to the financial statements on page 62.
Employee involvement
The Group’s policy is to encourage employee involvement at all levels, as it believes this is essential for the success of the business. Employees are 
encouraged to present their views and suggestions in respect of the Group’s performance and policies. An employee share investment plan is to be put 
to shareholders at this year’s Annual General Meeting to allow employees a tax efficient means of investing in the Company.
Occupational health and safety, and environment (OHSE)
The Group operates complex industrial plants involving hazardous conditions, substances and materials. As a consequence, we place great emphasis on 
our environmental performance and the safety of our employees and our broader communities and strive continuously to further improve in these areas. 
We have dedicated OHSE personnel providing advice and support to staff, customers, suppliers and other visitors, as well as coordinating the fulfilment of 
the Group’s regulatory obligations.
During the year, the Board has established a new Safety and Technology Committee, chaired by Dame Mary Archer, to strengthen the Board’s oversight 
of health, safety and technology matters. Further details on the composition, scope and activities of the Safety and Technology Committee are set out on 
page 31. 
Disabled employees
Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of 
members of staff becoming disabled every effort is made to ensure that their employment with the Group continues and that appropriate training is 
arranged. It is the policy of the Group that the training, career development and promotion of disabled persons should, as far as possible, be identical to 
that of other employees.
Change of control
There are a number of contracts which enable the counterparties to alter or terminate those arrangements in the event of a change of control of the 
Company. These arrangements are commercially sensitive and confidential and their disclosure could be seriously prejudicial to the Group. 
The Group does not have any agreement with a Director or officer that would provide compensation for loss of office or employment resulting from a 
takeover, except that provisions of the Group’s share plans may cause options and awards granted under such plans to vest on a takeover. 26 Hydrodec Annual Report & Accounts 2014
Report of the Directors continued
Political donations
The Group’s policy is not to make political donations. Neither the Company nor its subsidiaries, during the financial year, made any political donation to a 
political party, other political organisation or independent election candidate, or incurred any political expenditure or made any contribution to a non-EU 
political party.
Articles of Association
The Articles of Association of the Company may be amended by special resolution of shareholders.
Financial risk management objectives and policies
The main risks arising from the Group’s financial instruments are currency risk, interest rate risk, credit risk and liquidity risk. The Directors review the 
policies for managing each of these risks on an on-going basis and they are summarised in note 19 to the financial statements on pages 59 to 60. These 
policies have remained unchanged from previous years.
Going concern
The financial statements have been prepared on the going concern basis, which assumes that the Group will have sufficient funds to continue in 
operational existence for the foreseeable future. The Group’s forecasts and projections, taking account of reasonably possible changes in trading 
performance, show that the Group should be able to operate within the level of its current available working capital and working capital facilities for the 
next 12 months. Therefore the Directors consider the going concern basis appropriate.
Statement of disclosure of information to auditors
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare financial 
statements in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs) and elected to prepare parent 
company financial statements in accordance with United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). The 
financial statements are required by law to give a true and fair view of the state of affairs of the Group and parent company and of the profit or loss of the 
Group for that period. In preparing these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial 
statements; and 
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
In so far as the Directors are aware:
• there is no relevant audit information of which the Company's auditors are unaware; and
• the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the 
auditors are aware of that information.
The Directors are responsible for keeping adequate accounting records that disclose with reasonable accuracy at any time the financial position of the 
Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the 
assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. 
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Auditor
Grant Thornton UK LLP have acted as the Company’s auditors since 2004. Following a competitive tender process conducted by the Audit Committee, 
details of which are set out on page 36, KPMG LLP were invited and have offered themselves for appointment as auditors of the Company and the Group 
in accordance with section 489 of the Companies Act 2006.
Forward looking statements
These reports and financial statements contain certain forward looking statements which are subject to assumptions, risks and uncertainties; actual 
future results may differ materially from those expressed in or implied in such statements. Many of these assumptions, risks and uncertainties relate to 
factors that are beyond the Group’s ability to control or estimate precisely. The forward looking statements reflect the knowledge and information 
available at the date of preparation of this report, and will not be updated during the year. These forward-looking statements include all matters that are 
not historical facts. They appear in a number of places throughout these reports and financial statements and include statements regarding the current 
intentions, beliefs or expectations of the Directors or the Group concerning, among other things, the results of operations, financial condition, prospects, 
growth, strategies, and dividend policy of the Group and the industry in which it operates. In particular, the statements regarding the Group’s strategy 
and other future events or prospects are forward-looking statements. Nothing in this annual report should be construed as a profit forecast. 27 Hydrodec Annual Report & Accounts 2014
Financial Statements Strategic Report Governance
Annual General Meeting
All holders of ordinary shares are entitled to attend the annual general meeting of the Company (AGM). All holders of ordinary shares on the register at 
the relevant record date are entitled to receive Notice of the AGM which is posted at least 20 working days before the AGM. They are also entitled to 
speak at general meetings of the Company, to appoint one or more proxies or, if they are corporations, corporate representatives, and to exercise voting 
rights. Shareholders may vote and appoint proxies electronically. The notice of meeting specifies deadlines for exercising voting rights and appointing a 
proxy or proxies to vote in relation to resolutions to be put to the AGM. 
This year’s AGM will be held on 9 June 2015. The results of the voting on resolutions will be made available to shareholders on the Group’s website after 
the meeting. At the meeting, the Chairman, the Chief Executive and the Chairmen of the Board Committees will be present to answer questions on any 
matters relating to the Group’s business. Shareholders will also have an opportunity to meet the Directors informally after the meeting.
Approved by the Board and signed on its behalf by:
Ian Smale
Chief Executive Officer
20 March 2015 28 Hydrodec Annual Report & Accounts 2014
Corporate Governance Report
Dear Shareholder,
Good governance, transparency and accountability are integral to delivering growth in shareholder value. Last year, I reported that additional measures 
were being planned to improve the Company’s corporate governance, and I am pleased to report on their implementation. 
On the following pages, we have set out the key features of the corporate governance structures which the Company currently has in place. Further 
details are also set out on the activities of the Audit Committee on pages 35 and 36, the Remuneration Committee on pages 32 to 34 and the Nomination 
Committee on page 30.
Board composition and the new Safety and Technology Committee
Effective governance requires sound decision-making processes backed by the right balance of skills, experience, independence and knowledge on the 
Board. The steps taken this year to initiate a refreshment process for the membership of the Board and to establish a separate Safety and Technology 
Committee are important elements of this. 
In November 2014, we welcomed Dame Mary Archer to the Board as an independent Non-Executive Director and as Chair of the Safety and Technology 
Committee. Under her leadership, the Safety and Technology Committee will provide rigorous oversight of health, safety and environmental matters and 
a robust challenge for the Group’s technology programme.
Audit tender
Effective governance also requires that appropriate structures are in place to establish and articulate the Board’s chosen strategy. Given the Group’s stage 
of development, it is important we do so within an entrepreneurial environment. At the same time, the Board must ensure that sound risk management 
procedures are in place to identify and manage risk in line with the Company’s appetite for risk. In that regard, I would highlight the exercise undertaken 
by the Audit Committee this year to tender the Group’s external auditors, as well as the recent work of the Remuneration Committee, supported by 
external remuneration consultants, to develop new long term arrangements to incentivise and retain a strong management team. 
Dialogue with shareholders
I also believe in the importance of being clear where responsibility lies within the Company for the delivery of key outputs. The performance of the 
Company’s management should be undertaken in a culture of openness and constructive challenge. Part of that culture is to maintain a broad and 
consistent dialogue with shareholders, both institutional and retail. In addition to the Company’s regulatory disclosure obligations and regular investor 
roadshows, management continues to make use of the website for the publication of news and updates, whilst Ian’s video updates and audio interviews 
have become a regular feature at the time of results announcements and other material news. I welcomed the Company’s first retail investor presentation 
in January, which was well attended and received constructive feedback. We intend to hold more interactive meetings along these lines.
The Board’s aspiration to move towards full compliance with the UK Corporate Governance Code over the coming years remains important work in 
progress. We will continue to review and develop the best corporate governance practices for the Company taking account of its size, structure and 
stage of development. We took important steps in this direction during 2014 and will continue to do so.
Lord Moynihan
Chairman
20 March 2015 29 Hydrodec Annual Report & Accounts 2014
Financial Statements Strategic Report Governance
Corporate Governance
Responsibility for good governance lies with the Board. This Corporate Governance Report details the corporate governance arrangements which the 
Company currently has in place and the steps being taken to develop good governance within the Company and the Group.
Compliance statement
As the Group is listed on the Alternative Investment Market it is not required to comply with the provisions of the UK Corporate Governance Code (the 
Code) issued in September 2014. It should be emphasised, however, that it is the Board’s intention to move towards compliance with the Code over the 
coming years as the Company grows. We believe this approach to the Code and to the QCA Code (set out below) is proportionate and in the best 
interests of shareholders. 
The Company is a member of the Quoted Companies Alliance (QCA), an independent membership organisation that champions the interests of small to 
mid-sized quoted companies. The Board considers that the QCA’s Corporate Governance Code for Small and Mid-Size Quoted Companies 2013 (QCA 
Code) provides the most appropriate guidance in respect of best corporate governance practice and disclosure for a company such as the Company. The 
Board currently draws upon, and benchmark’s itself against, this best practice. 
Leadership
How we govern the Company
Our governance structure comprises the Board and various committees detailed below, supported by the Group’s standards, polices and controls, which 
are described in more detail in this report.
Data to come
Chairman
Board
Audit Committee Remuneration Committee Nomination Committee Safety and Technology Committee
The Board
As at 31 December 2014, and as at the date of this report, the Board of Directors was made up of eight members, comprising the Chairman, three 
Executive Directors and four Non-Executive Directors. The full Board holds meetings quarterly and at any other times as may be necessary to address 
specific significant matters that may arise.
The Board’s primary role is the protection and enhancement of long-term shareholder value. To fulfil this role, the Board is responsible for the overall 
management and corporate governance of the Company including its strategic direction, establishing goals for management and monitoring the 
achievement of these goals.
From time to time the Board may delegate or entrust to any Executive Director (including the CEO) such of its powers, authorities and discretions for such 
time and on such terms as it thinks fit. The Board has adopted a Delegation of Board Authority which establishes those matters which it considered 
appropriate to remain within the overall control of the Board (or its committees) and those which are delegated to the CEO (or onwards as appropriate). 
In addition to overall strategy, the Board approves the annual budget and retains control over corporate activity (mergers, acquisitions, joint ventures, 
material disposals and investments) and material contract and financing decisions (over and above set value/credit-risk limits). Management’s role is to 
implement the strategic plan established by the Board and to work within the corporate governance and internal control parameters established by 
the Board.
Division of responsibilities
The roles of Chairman and Chief Executive are separate and there is a clear division of responsibilities. The Chairman is responsible for leadership of the 
Board, ensuring its effectiveness and setting the agenda for Board meetings. Once strategic objectives have been agreed by the Board, it is the Chief 
Executive Officer’s responsibility to ensure they are delivered and to be accountable to the Board. The Chief Executive Officer meets regularly with the 
executive management team which comprises the Executive Directors and other senior members of the management team. The day to day operations 
of the Company are managed by the executive management team.  30 Hydrodec Annual Report & Accounts 2014
Corporate Governance Report continued
Conflicts of interest
In line with the requirements of the Companies Act 2006, each Director has notified the Company of any situation in which he or she has, or could have, a 
direct or indirect interest that conflicts, or possibly may conflict, with the interests of the Company (a situational conflict). These were considered and 
approved by the Board in accordance with Company’s Articles of Association on 11 December 2014 and each Director was informed of the authorisation 
and any terms on which it was given. A register of those situational conflicts is maintained and will be reviewed by the Board going forward. Where the 
Board believes that a significant conflict exists, the Director concerned is either not present or does not take part in discussions and voting at the meeting 
whilst the item is considered.
Committees of the Board
The Board has established a number of committees to assist in the discharge of its duties and the formal Terms of Reference for the principal committees, 
approved by the Board, can be found on the Company’s website at www.hydrodec.com. The Terms of Reference are reviewed annually and updated 
where necessary. Membership of the principal committees is shown on pages 22 and 23. The Company Secretary acts as Secretary to all Board 
committees. Meetings between the Non-Executive Directors, both with and without the presence of the Chief Executive Officer, are also scheduled in 
the Board’s annual programme.
Effectiveness
The Composition of the Board
The composition of the Board is determined using the following principles:
• a majority of the Board should be Non-Executive Directors;
• the role of Chairman is to be filled by a Non-Executive Director;
• the Board should have enough Directors to serve on various committees of the Board without overburdening the Directors or making it difficult for 
them to fully discharge their responsibilities;
• the Company Secretary should not be a member of the Board but should attend meetings and should report directly to and advise the Chairman on 
corporate governance matters; and
• Directors appointed by the Board are subject to election by shareholders at the following annual general meeting and thereafter Directors are subject 
to re-election every year. 
The Board has considered whether the appointment of a Senior Independent Director (SID) is necessary or appropriate given the current composition of 
the Board. At present the Board does not believe that such an appointment is required.
Meeting attendance
The following table shows the attendance of Directors at meetings of the Board, Audit, Nomination and Remuneration Committees during 2014:
Board
Remuneration 
Committee
Nomination 
Committee
Audit  
Committee
Number of 
meetings
Number 
attended
Number of 
meetings
Number 
attended
Number of 
meetings
Number 
attended
Number of 
meetings
Number 
attended
Dame Mary Archer 1 1 – – – – – –
Andrew Black 5 5 3 3 1 1 – –
Alan Carruthers 5 5 3 3 1 1 4 4
Chris Ellis 5 5 – – – – – –
Gillian Leates 5 5 3 3 1 1 4 4
Mark McNamara 5 4 – – – – – –
Lord Moynihan 5 5 3 3 1 1 4 4
Ian Smale 5 5 – – 1 1 – –
Information, support and development
The agenda for Board meetings is prepared in conjunction with the Chairman. Submissions are circulated in advance. For the regular quarterly 
Board meetings the agenda will include operational and financial updates together with papers relating to specific agenda items. Senior executives 
are regularly involved in Board discussions and Directors have other opportunities, including visits to operations, for contact with a wider group 
of employees.
Each Director has the right of access to all relevant Company information and to the Company’s executives and, subject to prior consultation with the 
Chairman, may seek independent professional advice at the Company’s expense. A copy of any advice received by the Director is to be made available to 
all other members of the Board. In accordance with best practice, the Chairman monitors the developmental needs of the Board as a whole, with a view 
to further developing its effectiveness as a team.
Nomination Committee
The key objective of the Nomination Committee is to ensure that the Board comprises individuals with the necessary skills, knowledge and experience to 
ensure that it is effective in discharging its responsibilities. The members of the Nomination Committee for 2014 were Lord Moynihan (Chairman), Andrew 
Black, Alan Carruthers, Gillian Leates and Ian Smale. The Company Secretary acts as secretary to the Committee. In the year ahead, the Nomination 
Committee will continue to assess the Board’s composition and how it may be enhanced.  31 Hydrodec Annual Report & Accounts 2014
Financial Statements Strategic Report Governance
Accountability
Financial and business reporting
Management prepare monthly finance reports which allow the Board to assess the Company’s activities and review its performance. 
Risk management and internal control
The Board is ultimately responsible for the Company’s system of internal control and for reviewing its effectiveness. The Board has reviewed and updated 
the process for identifying and evaluating the significant risks affecting the Company and the policies by which these risks are managed. Internal control 
systems are designed to meet the Company’s particular needs and the risks to which it is exposed. Accordingly, the internal control systems are designed 
to manage rather than eliminate the risk of failure to achieve business objectives and by their nature can only provide reasonable and not absolute 
assurance against misstatement and loss.
Audit Committee 
The Audit Committee is responsible for assisting the Board with the discharge of its responsibilities in relation to financial reporting, including reviewing 
the Company’s annual and interim financial statements and accounting policies, reviewing and monitoring the scope of the annual audit and the extent 
of the non-audit work undertaken by external auditors, advising on the appointment of external auditors and reviewing the effectiveness of the internal 
controls systems in place within the Group. The report of the Audit Committee is set out on pages 35 and 36. The Chairman of the Audit Committee will 
attend the AGM to respond to any shareholder questions that might be raised on the Audit Committee’s activities. The Company’s auditors are also 
invited to attend the Annual General Meeting and are available for discussion in relation to the Company’s financial statements.
Safety and Technology Committee
In December 2014, the Board formally established a separate Safety and Technology Committee. The Safety and Technology Committee is responsible for 
assisting the Board with the discharge of its oversight responsibilities in relation to the Group’s strategy with respect to health, safety, environmental, 
quality and technology (‘HSEQT’) matters. The members of the Safety and Technology Committee for 2014 were Dame Mary Archer (Chairman), Lord 
Moynihan, Ian Smale and Chris Ellis. The Group Chief Operating Officer reports to the Committee. Marsh Risk Consulting has been appointed to provide 
advisory services to the Committee. 
Remuneration
Remuneration Committee 
The Remuneration Committee is responsible for making recommendations to the Board on remuneration policy, and determining the specific 
remuneration packages for the Chairman, Executive Directors and senior management. The Remuneration Committee comprises Lord Moynihan 
(Chairman), Andrew Black, Alan Carruthers and Gillian Leates. The report of the Remuneration Committee is set out on pages 32 to 34. The Chairman  
of the Remuneration Committee will attend the AGM to respond to any shareholder questions that might be raised on the Remuneration 
Committee’s activities.
Communicating with shareholders
Dialogue with shareholders
The Board aims to ensure that shareholders are informed of all major developments affecting the Company. The Board encourages full participation of 
shareholders at the Annual General Meeting to ensure a high level of accountability and identification with the Company’s strategy and goals. As part of 
the Company’s objective of engaging with shareholders, the Company held a comprehensive briefing for retail investors in January 2015 and it intends to 
continue to hold such meetings.  32 Hydrodec Annual Report & Accounts 2014
Remuneration Committee Report
Overview
The Remuneration Committee is formally constituted with written terms of reference which can be found on the Company’s website at 
www.hydrodec.com.
Objectives
The key objectives of the Remuneration Committee are:
• to ensure that the Company's Directors and senior executives are fairly rewarded for their individual contributions to the Company's overall 
performance by determining their pay and other remuneration; and
• to demonstrate to all shareholders that the general policy relating to, and actual remuneration of, individual senior executives of the Company is set 
by a Committee of the Board who have no personal interest in the outcome of the decisions and who will give due regard to the interests of 
shareholders and to the financial and commercial health of the Company.
Composition
The Remuneration Committee is solely comprised of Non-Executive Directors: Lord Moynihan (Chairman), Andrew Black, Alan Carruthers and Gillian 
Leates. The Company Secretary acts as secretary to the Remuneration Committee. The Chief Executive Officer may be invited to attend meetings of the 
Remuneration Committee at the discretion of the Remuneration Committee. 
Advisers to the Remuneration Committee
New Bridge Street provided periodic independent advice to the Remuneration Committee on various aspects of the Directors’ remuneration packages 
during the year. ‘New Bridge Street’ is a trading name of Aon Hewitt Limited, part of Aon plc. They are members of the Remuneration Consultants Group 
and their work is governed by the Code of Conduct in relation to executive remuneration consulting in the UK. 
Remuneration Committee meetings
The Remuneration Committee met three times during the year. The attendance of its members at those meetings is set out in the table on page 30. The 
agenda for Remuneration Committee meetings is prepared in conjunction with the Chairman. Submissions are circulated in advance and may include 
remuneration benchmark surveys and guidance on best practice together with papers relating to specific agenda items. 
Remuneration policy
The Remuneration Committee intends that its policy and practice should align with, and support the implementation of, the Group’s strategy, be in line 
with the Group’s approach to risk management and promote the long-term success of the Group. The policy is intended to motivate the right behaviours 
and to ensure that any risk created by the remuneration structure is acceptable to the Remuneration Committee and within the strategy and risk appetite 
of the Board.
Remuneration packages for the Executive Directors currently comprise a combination of annual salary, annual performance bonus (part cash and part 
deferred into ordinary shares through a Joint Share Ownership Plan (JSOP)) and interests in a Long Term Incentive Plan (LTIP). Previously, Directors were 
granted share options pursuant to a share option scheme but this is now only used for those below Board level. 
Implementation of the policy
Salary
The Remuneration Committee continues to review the salaries of Executive Directors against appropriate benchmarks for executive directors of AIM and 
FTSE SmallCap companies of a similar scale. The Remuneration Committee notes that the salaries fall towards the higher end of the benchmark range. 
The Remuneration Committee, however, considers that such salaries are appropriate to help attract, retain and motivate high calibre Executive Directors 
and reflect the experience of the individuals concerned and the current growth phase of the Group. The base salaries of the Executive Directors and 
other members of the senior executive management team were increased by 2% in 2014.
Annual bonus
Executive Directors and other members of the senior executive management team are entitled to participate in an annual bonus scheme pursuant to 
which they can earn up to 100 per cent of their base annual salary. The performance parameters for the 2014 bonus were structured with:
• a 40% weighting towards ‘delivering the plan safely’ with reference to EBITDA, production/utilisation and safe operations; 
• a 20% weighting towards ‘key milestones’, including delivering an acceptable settlement of the Canton insurance claim as well as various other 
operational milestones; and 
• a 40% weighting towards ‘strategic milestones’ to position the Group for growth.
The Remuneration Committee approved a total annual bonus pot for 2014 for the senior executive management team representing approximately 
32 per cent of the maximum potential aggregate bonus award. Individual bonuses were then agreed between the Committee and the Chief 
Executive Officer by reference to individual contributions towards the targets. The bonus payments made to the Chief Executive Officer and the  
Chief Financial Officer reflect their particular efforts in the successful resolution of the Canton insurance claim. In relation to the UK resident members 
of the senior management team, half of their respective 2014 annual bonus was paid in cash and half will be settled through the issue of interests 
under a JSOP.  33 Hydrodec Annual Report & Accounts 2014
Financial Statements Strategic Report Governance
Long Term Incentive Plan
In November 2011, shareholders approved the Hydrodec Group plc 2012 Long Term Incentive Plan (the LTIP) for the purposes of attracting, retaining and 
motivating key executives of the Group and securing greater alignment of the interests of shareholders and management.
Awards were granted to selected members of the senior executive team effective 15 January 2012 and, in the case of Chris Ellis, on his appointment on 7 
July 2012. An award entitles the executive to receive a fixed proportion of a share pool conditional on achieving certain share price targets and subject to 
that executive’s continued employment within the Group. The Executive Directors who have been granted awards, and their proportion of the share 
pool, are as follows:
Ian Smale   33.33%
Chris Ellis   20.00%
Mark McNamara  13.33%
The aggregate number of ordinary shares in the share pool is determined by reference to growth in the market capitalisation of the Company and was 
conditional on the achievement of the following share price targets for 90 consecutive business days prior to 15 January 2015: 16 pence, 20 pence and 25 
pence per ordinary share (each a Share Price Threshold). Since the Share Price Threshold was not met the awards will not vest.
The Remuneration Committee has been working with remuneration consultants, New Bridge Street, to structure and implement a new long term 
incentive plan for the purpose of attracting, retaining and motivating key executives of the Company and securing greater alignment of the interests 
of shareholders and management. The terms of this new long term incentive plan are to be put before shareholders for approval at the Company’s 
Annual General Meeting on 9 June 2015. Further details on the terms of the new long term incentive plan are to be included in the Notice of Annual 
General Meeting.
Directors’ remuneration
The following table shows emoluments paid to Directors during the financial year, applying the average exchange rates (AUD to USD and GBP to USD) 
used in the financial statements.
Salary/fees
USD’000
Bonus
USD’000
Total emoluments
2014
USD’000
Total emoluments
2013
USD’000
Current Directors:
Dame Mary Archer (Non-Executive) 12 – 12* –
Andrew Black (Non-Executive) 58 – 58 55
Alan Carruthers (Non-Executive) 58 – 58 55
Chris Ellis 418 126 544 508
Gillian Leates (Non-Executive) 58 – 58 55
Mark McNamara 346 9 355 395
Lord Moynihan (Non-Executive Chairman) 115 – 115 110
Ian Smale 502 113 615 615
1,567 248 1,815 1,793
* From appointment
Note: The apparent increase in the remuneration of the Non-Executive Directors is the result of exchange rate fluctuations.
Share options
In 2005 the Company established an unapproved share option scheme pursuant to which certain Directors and other senior members of staff were 
granted share options. Options granted under this scheme typically have a vesting schedule of between two to three years and exercise prices 
corresponding to the market price of a share at the date of grant.
With the exception of historic awards to Mark McNamara, none of the Executive Directors have been granted options pursuant to this scheme. Indeed, 
with the introduction of the new long term incentive plan, the Committee would not expect to grant any further awards under the unapproved share 
option scheme to Executive Directors except in exceptional circumstances (such as where the tax residence of individuals determines that they cannot 
participate efficiently in other schemes). On the appointment of certain Non-Executive Directors one-off awards of options have historically been made 
following consultation with shareholders. 34 Hydrodec Annual Report & Accounts 2014
The number, exercise price and earliest and latest dates of exercise of options over ordinary shares in the Company held by Directors at the end of the 
year were as follows:
Share
options
Exercise price
(pence)
Earliest exercise
date
Latest exercise
date
Gillian Leates* 500,000 15.00p n/a 16 Jul 2019
Mark McNamara** 5,000,000 11.50p 15 Jul 2005 29 Apr 2015
Mark McNamara 1,500,000 33.25p 24 Jan 2010 24 Jan 2018
Lord Moynihan* 1,000,000 8.50p n/a 24 Oct 2022
* Options issued to Gillian Leates and Lord Moynihan are only exercisable on the attainment of predetermined share price targets
** These options lapsed on 29 April 2015 
No options were granted to Directors during the year and no options held by Directors were exercised, lapsed or forfeited during the year. 
Service contracts
The Executive Directors have entered into service contracts with the Group that are terminable by either party on not less than 12 months prior notice 
and which have reduced to 6 months prior notice with effect from 15 January 2015. 
Pensions and private healthcare
There are no pension or private healthcare arrangements in place for Directors, except for any mandatory contributions for superannuation required by 
regulations in Australia. 
Directors’ share interests
The Directors’ shareholdings in the Company are set out in the Report of the Directors on page 22 to 23. 
Lord Moynihan
Chairman of the Remuneration Committee
20 March 2015
Remuneration Committee Report continued 35 Hydrodec Annual Report & Accounts 2014
Financial Statements Strategic Report Governance
Audit Committee Report
Overview
The Audit Committee is formally constituted with written terms of reference which can be found on the Company’s website at www.hydrodec.com. 
Objectives
The key objective of the Audit Committee is to assist the Board with the effective discharge of its responsibilities for financial reporting, internal 
accounting and financial controls and to review the performance of the Company’s external auditors. 
Composition
The Audit Committee is solely comprised of Non-Executive Directors: Gillian Leates (Chairman), Alan Carruthers and Lord Moynihan. The Company 
Secretary acts as secretary to the Audit Committee.
Audit Committee meetings
The Audit Committee met four times during the year. The attendance of its members at those meetings is set out in the table on page 24. 
Representatives from the external auditors, Grant Thornton UK LLP (Grant Thornton), the Chief Executive Officer, the Chief Financial Officer and other 
members of senior management are regularly invited to attend meetings, although the Audit Committee also reserves time for discussion without 
invitees present. 
Role of the Audit Committee
The role of the Audit Committee is one of oversight. The Audit Committee has no executive powers with regard to its recommendations and does not 
relieve the Executive Directors of their responsibilities for these matters. The agenda for Audit Committee meetings is prepared in conjunction with the 
Chairman. Submissions are circulated in advance and may include drafts of interim and annual financial statements, related papers from management, 
audit planning and key issues memoranda prepared by the external auditors and other papers relating to specific agenda items.
Activities of the Audit Committee
Key financial reporting activities during 2014
During the year, the Audit Committee considered specifically those matters with the potential likelihood to have the greatest significant impact on the 
financial statements. These included: 
• The accounting treatment for the insurance proceeds received in relation to the Canton incident. In particular, this involved considering the split of 
the insurance proceeds between capital replacement and business interruption; and
• The accounting treatment for the opening balance sheet of Hydrodec (UK) Limited. Hydrodec (UK) Limited acquired the assets of OSS Group Limited 
(in administration) on 6 September 2013. Due to the proximity to year-end and the nature of the acquisition (purchased out of administration), the 
acquisition was accounted for using provisional balances. Since acquisition, within the measurement period, new information has been obtained 
about the facts and circumstances that existed at the acquisition date. As a result, the Group has recognised some adjustments to the provisional 
opening balance sheet amounts in accordance with IFRS 3.
Other activities during 2014
In addition, during the year, the Audit Committee also undertook the following key activities:
• review and approval of the 2013 audited financial statements;
• review and approval of the 2014 unaudited interim financial statements; 
• the retender of the Group’s external audit function; and
• review and approval of the 2014 audit plan.
External auditors
Grant Thornton were re-appointed as auditor to the Company and to the Group at the Company’s Annual General Meeting on 30 June 2014.  36 Hydrodec Annual Report & Accounts 2014
Audit Committee Report continued
Auditor independence and provision of non-audit services
The Audit Committee reviews with management the engagement of the external auditor for non-audit services and the level of associated non-audit 
fees. Details of the engagement of the external auditor for non-audit services are set out in note 2.3 to the Financial Statements on page 50. The Audit 
Committee is aware of, and is sensitive to, investor body guidelines on non-audit fees. Given the nature of work required in relation to taxation and the 
implementation of various employee share schemes, it was, however, assessed that Grant Thornton were best placed to perform these additional 
services in view of their knowledge of the business and the likely cost.
Tender of external audit services
Grant Thornton have been the Company’s and the Group’s auditors since 2004. Based on good corporate governance practice, the Board instructed the 
Audit Committee to review the provision of external audit services to the Group and a tender process was run during October and November 2014. The 
process consisted of a request for proposal (RFP) covering certain key criteria followed by a presentation to the selection panel. Each participating firm 
was then rated by the panel using a weighted scorecard. Face-to-face interviews with key members of the management team and the Chairman of the 
Audit Committee were also conducted. Based on the outcome of the tender process and the recommendation of the Audit Committee, the Board 
resolved that KPMG LLP should succeed Grant Thornton as the Group’s external auditors for the financial year ending 31 December 2015.
Risk management and internal control
The Group’s approach to risk management, material identified risks and the steps taken to manage those risks are outlined on pages 20 and 21.
Gillian Leates
Chairman of the Audit Committee
20 March 2015 37 Hydrodec Annual Report & Accounts 2014
Governance Strategic Report Financial Statements
We have audited the group financial statements of Hydrodec Group plc for the year ended 31 December 2014 which comprise the consolidated income 
statement, the consolidated other comprehensive income statement, the cash flow statement, the consolidated statement of changes in equity and the 
related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting 
Standards (IFRSs) as adopted by the European Union.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has 
been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no 
other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s 
members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of the Directors and Auditor
As explained more fully in the Statement of Directors’ Responsibilities set out in the Report of the Directors, the directors are responsible for the 
preparation of the group financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an 
opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require 
us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s website at 
www.frc.org.uk/audit scope/private.cfm.
Opinion on financial statements
In our opinion the group financial statements:
• give a true and fair view of the state of the group's affairs as at 31 December 2014 and of its loss for the year then ended;
• have been properly prepared in accordance with IFRS as adopted by the European Union; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and the Report of the Directors for the financial year for which the group financial statements 
are prepared is consistent with the group financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
• certain disclosures of directors' remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Other matter
We have reported separately on the parent company financial statements of Hydrodec Group plc for the year ended 31 December 2014.
David Miller
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor
Chartered Accountants
London
20 March 2015
Independent Auditor’s Report to the Members of 
Hydrodec Group plc 38 Hydrodec Annual Report & Accounts 2014
Consolidated Income Statement
For the year ended 31 December 2014
Note
2014
USD’000
2013
Restated
USD’000
Revenue 2 46,185 39,665
Other income 2 8,552 436
Total income 54,737 40,101
Cost of goods sold (40,445) (30,664)
Gross profit 14,292 9,437
Operating costs:
Employee benefit expense (12,201) (8,595)
Other operating costs (9,177) (8,314)
Depreciation (542) (868)
Foreign exchange loss (227) (664)
Total operating costs (22,147) (18,441)
Operating loss (7,855) (9,004)
Analysed as:   
Underlying operating loss (2,870) (3,150)
Growth costs 2 (2,278) (3,256)
Amortisation of intangible assets 8 (3,513) (2,499)
Share based payments costs 3 (324) (530)
Acquisition related gain – 428
Profit on disposal of assets 1,473 3
Restructuring costs (343) –
Operating loss (7,855) (9,004)
Finance costs 4 (236) (9,100)
Finance income 45 7
Impairment of property plant and equipment 2 (809) (7,160)
Other income 2 – 7,160
Loss on ordinary activities before taxation (8,855) (18,097)
Income tax 5 403 202
Loss for the year (8,452) (17,895)
Loss for the year attributable to:
Non-controlling interests 986 259
Owners of the parent (9,438) (18,154)
Total loss for the year (8,452) (17,895)
Loss per share – basic/diluted 6 (1.14) cents (3.48) cents 39 Hydrodec Annual Report & Accounts 2014
Governance Strategic Report Financial Statements
Consolidated other Comprehensive 
Income Statement
For the year ended 31 December 2014
2014
USD’000
2013
Restated
USD’000
Total loss for the year (8,452) (17,895)
Other comprehensive income
Items that may be reclassified to profit and loss:
Exchange differences on translation of foreign operations (2,670) (1,890)
Partner capital contribution 1,234 –
Revaluation of fixed assets 548 – 
Total comprehensive loss for the year (9,340) (19,785)
Other comprehensive income for the period attributable to:
Non-controlling interests 986 259
Owners of the parent (10,326) (20,044)
Total comprehensive loss for the year (9,340) (19,785) 40 Hydrodec Annual Report & Accounts 2014
Consolidated Statement of Financial Position
As at 31 December 2014
Note
2014
USD’000
2013
Restated
USD’000
Non-current assets
Property, plant and equipment 7 36,790 22,663
Intangible assets 8 20,387 23,189
Investments 9 – 114
57,177 45,966
Current assets
Trade and other receivables 10 8,310 17,032
Inventories 11 1,721 1,572
Cash and cash equivalents 14,946 21,902
24,977 40,506
Current liabilities
Trade and other payables 12 (16,636) (12,897)
Provisions 13 (319) (34)
(16,955) (12,931)
Net current assets 8,022 27,575
Non-current liabilities
Employee obligations (143) (105)
Provisions 13 (507) (952)
Borrowings 14 (367) (1,276)
Deferred taxation 15 (1,453) (2,025)
Other non-current liabilities (1,000) –
(3,470) (4,358)
Net assets 61,729 69,183
Equity attributable to equity holders of the parent
Called up share capital 16 6,250 6,619
Share premium account 123,243 130,524
Merger reserve 46,204 48,940
Treasury reserve (41,716) (44,186)
Employee benefit trust (1,239) (1,312)
Foreign exchange reserve 5,017 2,850
Share option reserve 7,556 7,330
Revaluation reserve 548 –
Profit and loss account (90,234) (85,454)
55,629 65,311
Non-controlling interests 6,100 3,872
Total equity 61,729 69,183
The financial statements were approved by the Board of Directors on 20 March 2015 and were signed on its behalf by:
   
Ian Smale     Chris Ellis
Chief Executive Officer   Chief Financial Officer
The accompanying accounting policies and notes form an integral part of these financial statements. 41 Hydrodec Annual Report & Accounts 2014
Governance Strategic Report Financial Statements
Consolidated Cash Flow Statement
As at 31 December 2014
2014
USD’000
2013
Restated
USD’000
Cash flows from operating activities
Loss before tax (8,855) (18,097)
Net finance costs 191 9,093
Amortisation, depreciation and impairment 7,445 5,172
Bargain purchase recognised in statement of comprehensive income – (428)
(gain) on disposal of property, plant and equipment (1,473) (3)
Share based payment expense 324 530
Foreign exchange movement (47) 381
Operating cash flows before working capital movements (2,415) (3,352)
(Increase)/decrease in inventories (149) 533
Decrease/(increase) in receivables 6,986 (1,517)
Increase in trade and other payables 2,143 250
Increase in provisions (480) (709)
Taxes paid (40) (108)
Net cash inflow/(outflow) from operating activities 6,045 (4,903)
Cash flows from investing activities
Acquisition of OSS Group – (7,664)
Purchase of property, plant and equipment (19,023) (1,046)
Purchase of other intangible assets (1,000) –
Proceeds from disposal of property, plant and equipment 1,851 16
Proceeds from sale of investment in Hydrodec of North America LLC 1,695 1,733 
Interest received 45 7
Net cash outflow from investing activities (16,432) (6,954)
Cash flows from financing activities
Issue of new shares 17 39,491
Costs of share issue – (814)
Proceeds from loans 3,000 17,446
Repayment of loans – (21,085)
Expansion capital partner contribution 2,468 –
Interest paid (236) (1,924)
Repayment of lease liabilities (1,667) (470)
Net cash inflow from financing 3,582 32,644
(Decrease)/Increase in cash and cash equivalents (6,805) 20,787
Movement in net cash
Cash 21,902 1,635
Bank overdraft – (542)
Exchange differences on cash and cash equivalents (151) 22
Opening cash and cash equivalents 21,751 1,115
(Decrease)/Increase in cash and cash equivalents (6,805) 20,787
Closing cash and cash equivalents 14,946 21,902
Reported in the Consolidated Statement of Financial Position as:
Cash and cash equivalents 14,946 21,902 42 Hydrodec Annual Report & Accounts 2014
Consolidated Statement of Changes in Equity
For the year ended 31 December 2014
Share
 capital
USD’000
Share
premium
USD’000
Equity
 reserve
USD’000
Revaluation
reserve
USD’000
Merger
 reserve
USD’000
Treasury
 reserve
USD’000
Employee
 benefit
 trust
USD’000
Foreign
 exchange
 reserve
USD’000
Share
 option
 reserve
USD’000
Profit 
 and loss
 account
USD’000
Total
USD’000
Non
Controlling
Interest
USD’000
Equity
USD’000
At 1 January 2013 3,870 72,446 6,929 – 47,967 (43,308) (1,286) 4,906 6,640 (72,683) 25,481 – 25,481
Exchange differences 78 1,469 140 – 973 (878) (26) (1,774) 24 – 6 (6) –
Share-based payment – – – – – – – – 891 – 891 – 891
Issue of shares 2,671 57,423 – – – – – – – – 60,094 – 60,094
Issue costs – (814) – – – – – – – – (814) – (814)
Transfer – – (7,069) – – – – – (361) 7,430 – – –
Investment in subsidiary
1
– – – – – – – – – (303) (303) 3,619 3,316
Transactions with 
owners
1
2,749 58,078 (6,929) – 973 (878) (26) (1,774) 554 7,127 59,874 3,613 63,487
Exchange differences – – – – – – – (282) 136 (1,744) (1,890) – (1,890)
Loss for the period
1
– – – – – – – – – (18,154) (18,154) 259 (17,895)
Total Comprehensive 
Income –  –  –  –  –  –  – (282) 136 (19,898) (20,044) 259 (19,785)
At 31 December 2013
1
6,619 130,524 – – 48,940 (44,186) (1,312) 2,850 7,330 (85,454) 65,311 3,872 69,183
Exchange differences (370) (7,296) – – (2,736) 2,470 73 7,851 – – (8) 8 –
Share-based payment – – – – – – – – 635 – 635 – 635
Issue of shares 1 15 – – – – – – – – 16 – 16
Issue costs – – – – – – – – – – – –
Investment from partner – – – – – – – – – – – 1,234 1,234
Transfer – – – – – – – – – – – – –
Transactions with 
owners (369) (7,281) – – (2,736) 2,470 73 7,851 635 – 643 1,242 1,885
Exchange differences – – – – – – – (5,684) (409) 3,423 (2,670) – (2,670)
PPE revaluation – – – 548 – – – – – – 548 – 548
Investment from partner – – – – – – – – – 1,234 1,234 – 1,234
Loss for the year – – – – – – – – – (9,438) (9,438) 986 (8,452)
Total Comprehensive 
Income – – – 548 – – – (5,684) (409) (4,781) (10,326) 986 (9,340)
At 31 December 2014 6,250 123,243 – 548 46,204 (41,716) (1,239) 5,017 7,556 (90,234) 55,629 6,100 61,729
1
 Restated, refer to Note 20.
Exchange differences on transactions with owners arise on the presentation of Sterling denominated reserves balances in US dollars.
A description of each reserve is set out in note 17. 43 Hydrodec Annual Report & Accounts 2014
Governance Strategic Report Financial Statements
Notes to the Financial Statements
For the year ended 31 December 2014
1. Accounting policies
The Group’s principal activities are grouped into the following principal service lines:
• re-refining of used transformer oil into, and sale of, new SUPERFINE
TM
 oil; and
• collection and treatment of waste lubricant oil and the sale of recycled oil products.
Hydrodec Group plc is incorporated and domiciled in England and Wales and situated at 6 Hay’s Lane, London, SE1 2HB. The Group’s shares are admitted 
to trading on the Alternative Investment Market of the London Stock Exchange.
Basis of preparation
The Group’s consolidated financial statements are prepared in accordance with the principal accounting policies adopted by the Group as set out below 
and International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations (IFRC) as adopted for use in the European 
Union (EU), and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The following standards have been amended or became effective during the year. The Group’s consolidated financial statements have been prepared in 
accordance with these changes where relevant:
• IFRS 10 Consolidated Financial Statements (effective 1 January 2014)
• IFRS 11: Joint arrangements (effective 1 January 2014)
• IFRS 12: Disclosures of interest in other entities (effective 1 January 2014)
• IAS 27 (Revised), Separate Financial Statements (effective 1 January 2014)
Application of these standards did not result in any impact on the financial statements for 2014.
Standards issued but not yet effective
In addition, the following is a list of standards that are in issue but are not effective in 2014, and have not yet been endorsed for use in the EU, together 
with the effective date of application to the Group:
• IFRS 9: Financial instruments (IASB effective date 1 January 2018)
The Directors do not anticipate that the adoption of these standards will have a material impact on the Group’s reported results.
The preparation of financial statements in accordance with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets 
and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and 
expenses during the reporting period. Although these estimates are based on management's best knowledge of current events and actions, actual 
results may ultimately differ from those estimates.
Presentational currency
The Group presents its financial statements in US dollars translated at the closing rate each year, as the Group’s business is influenced by pricing in 
international commodity markets which are primarily dollar based.
Basis of consolidation
The Group financial statements consolidate those of the Company and its subsidiary undertakings drawn up to 31 December 2014. Subsidiaries which are 
prepared for the same financial reporting period as the company, are entities controlled by the company. All intra-group transactions, balances and 
unrealised gains on transactions between group companies are eliminated on consolidation.
The group attributes total comprehensive income or loss of subsidiaries between the owners of the parent and the non-controlling interests based on 
their respective ownership interests.
Business combinations
Business combinations are dealt with by the acquisition method. This involves the recognition at fair value of all identifiable assets and liabilities, including 
contingent liabilities of the subsidiary at the acquisition date whether or not they were recognised in the statements of the subsidiary prior to acquisition. 
On initial recognition the assets and liabilities of the subsidiary are included in the consolidated statement of financial position at their fair values which 
are also used as the bases for subsequent measurement in accordance with the Group accounting policies. The results of any subsidiary undertakings 
acquired during the period, where applicable, are included from the date of acquisition. Acquisition costs are recognised as an expense in the period in 
which they are incurred.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports 
provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period, or 
additional assets or liabilities are recognised to reflect the information obtained about the facts and circumstances that existed at the acquisition date that, 
if known, would have affected the amounts recognised at that date. The measurement period is the period from the date of acquisition to the date the 
Group obtains complete information about the facts and circumstances that existed as of the acquisition date, and is subject to a maximum of one year. 
Measurement period adjustments for transactions effected in 2013 are presented in Note 20. 44 Hydrodec Annual Report & Accounts 2014
Notes to the Financial Statements continued
For the year ended 31 December 2014
1. Accounting policies continued
Disposal of non-controlling interest
Disposal of an investment where there is no loss of control is recognised in equity, no gain or loss on disposal is recorded in the profit and loss.
The value of non-controlling interest is adjusted and the difference between fair value of the consideration received and the non-controlling interest is 
recorded in the income statement and is attributable to the parent.
Goodwill
Goodwill, representing the excess of the fair value of the consideration paid over the fair value of the identifiable net assets of subsidiary undertakings at 
the date of acquisition, is initially recognised as an asset at its fair value and is subsequently measured at cost less any accumulated impairment losses. If 
the fair values of identifiable net assets exceed fair value of consideration paid, the excess amount (i.e. gain on a bargain purchase) is recognised in profit 
or loss immediately.
Investments in associates
Investments in associates are initially recognised at cost and subsequently accounted for using the equity method. Any goodwill or fair value adjustment 
attributable to the Group’s share in the associate is not recognised separately and is included in the amount recognised as investment in associates. The 
carrying amount of the investment in associates is increased or decreased to recognise the Group’s share of the profit or loss and other comprehensive 
income of the associate, adjusted where necessary to ensure consistency with the accounting policies of the Group. Unrealised gains and losses on 
transactions between the Group and its associates are eliminated to the extent of the Group’s interest in those entities. Where unrealised losses are 
eliminated, the underlying asset is also tested for impairment.
Foreign currency translation
The individual financial statements of each Group entity are presented in the currency of the primary economic environment in which the entity operates 
(its functional currency). For the consolidated financial statements, the results and financial position of each entity are firstly expressed in Sterling, which is 
the functional currency of the parent company. The presentational currency for the consolidated financial statements is US dollars at the rate of exchange 
ruling at the consolidated statement of financial position date, and at the average rate for the statement of comprehensive income where this 
approximates to the actual rate. Any differences arising from this procedure have been included in other comprehensive income.
Foreign currency transactions
Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign 
currencies are retranslated at the rate of exchange ruling at the statement of financial position date. All differences are taken to profit or loss with the 
exception of differences on translation of the net investment in a foreign Group entity. These are taken directly to other comprehensive income until the 
disposal of the net investment, at which time they are re-classified from equity to profit or loss.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign operations and 
translated at the closing rate.
Revenue recognition
Revenues are recognised at fair value of the consideration receivable net of the amount of value added taxes.
Sale of goods
Sales revenue comprises revenue earned (net of returns, discounts and allowances) from the provision of products to entities outside the consolidated 
entity. Sales revenue is recognised when the risks and rewards of ownership of the goods passes to the customer, which is normally upon delivery, and 
when the amount of revenue can be measured reliably. 
Government grants
The Australian Government provides an incentive for product stewardship of used oil which is recognised at the point of delivery of the associated 
revenue stream.
Other income
The Group has business interruption insurance which provides coverage if business operations are suspended because of the loss of use of property and 
equipment resulting from a covered loss. Accordingly insurance income is recognised under the terms of such coverage. Refer to Note 2.5.
Interest income
Interest income is brought to account as it accrues, using the effective interest method.
Property, plant and equipment
Property, plant and equipment are generally measured at cost less accumulated depreciation and impairment charges.
Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials 
and direct labour, and any other costs directly attributable to bringing the asset to a working condition for its intended use. 45 Hydrodec Annual Report & Accounts 2014
Governance Strategic Report Financial Statements
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of 
property, plant and equipment.
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future 
economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The cost of the day-to-day servicing of 
property, plant and equipment are recognised as an expense as incurred.
Depreciation is provided at rates calculated to write off the cost of property, plant and equipment, less their estimated residual value, over the expected 
useful lives on a diminishing value basis. The rates used vary between 5% and 33% per annum and residual values and useful economic lives are 
re-assessed annually.
During 2014 in preparation for the transfer of assets to Southern Oil refinery an independent one-off valuation of the assets held at Young was 
undertaken. Details of the valuation and its results are provided in note 7.
Patents
All costs incurred in maintaining patents are expensed in the period in which they are incurred, unless they meet the recognition criteria under IAS 38, in 
which case they are capitalised.
Growth costs
The group identifies certain costs as Growth Costs as the business continues to invest in long term strategic growth initiatives focused on geographic 
expansion and research and development.
Expenditure on growth costs is classified into two key categories:
Market expansion costs
Expenditure on extending existing products or operations into new markets is recognised as an expense in the period in which it is incurred.
New product development costs
Expenditure on new product development is recognised as an expense in the period in which it is incurred.
Development costs incurred on specific projects are capitalised when all the following conditions are satisfied:
• completion of the intangible asset is technically feasible so that it will be available for use or sale;
• the Group intends to complete the intangible asset and use or sell it;
• the Group has the ability to use or sell the intangible asset;
• the intangible asset will generate probable future economic benefits. Among other things this requires that there is a market for the output from the 
intangible asset or for the intangible asset itself, or, if it is to be used internally, the asset will be used in generating such benefits;
• there are adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and
• the expenditure attributable to the intangible asset during its development can be measured reliably.
Costs incurred which do not meet the above criteria are expensed as incurred.
Intangible assets
Intangible assets acquired separately from a business are capitalised at cost and amortised over their useful lives. Intangible assets acquired as part of an 
acquisition of a business are capitalised separately from goodwill if the fair value can be measured reliably on initial recognition. Intangible assets, 
excluding development costs, created within the business are not capitalised and expenditure is charged against profits in the year in which it is incurred.
The carrying values of intangible assets are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not 
be recoverable.
Intangible assets, other than goodwill, are amortised over their estimated useful economic life of 3-15 years.
Impairment of tangible and intangible assets 
At each balance sheet date, the Group reviews the carrying amounts of its property, plant and equipment and intangible assets (excluding goodwill) to 
determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the 
asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an 
individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted 
to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. 46 Hydrodec Annual Report & Accounts 2014
1. Accounting policies continued
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or 
cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is 
carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating) unit is increased to the revised estimate of its 
recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no 
impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or 
loss, unless the relevant assets are carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
Goodwill is not amortised but is subject to an impairment review on an annual basis or more frequently when events or changes in circumstances 
indicate it might be impaired. Any impairment is charged to the consolidated income statement in the period in which it arises and is not subject to 
subsequent reversal.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and demand deposits that are readily convertible into known amounts of cash and which are subject 
to an insignificant risk of changes in value. 
Financial liabilities and equity
Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into 
and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of 
the Group after deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out below.
Derecognition of financial liabilities
A financial liability is removed from the balance sheet when the obligation is discharged, or cancelled, or expires. On the redemption or settlement of 
debt securities issued by the Group, the Group derecognises the debt instrument and records a gain or loss being the difference between the debt’s 
carrying amount and the cost of redemption or settlement. The same treatment applies where the debt is settled via the issue of new ordinary shares 
calculated by reference to the prevailing market price of those shares.
Interest-bearing loans and borrowings
All loans and borrowings are initially recognised at fair value of the consideration received net of issue costs associated with the borrowing.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. 
Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement.
All interest costs are charged to the income statement.
Share-based payments
The Group issues equity-settled share-based payments to certain employees and directors. Equity-settled share-based payments are measured at fair 
value of the instruments granted (excluding the effect of non-market-based vesting conditions) at the date of grant. The fair value determined at the 
grant date of the equity-settled share based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of the 
shares that will eventually vest and adjusted for the effect of non-market-based vesting conditions. 
Warrants
The Group issued equity-settled warrants in connection with fixed rate loan notes. Equity-settled warrants are measured at fair value of the instruments 
granted (excluding the effect of non-market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-
settled share based payments is expensed on a straight-line basis over the vesting period (or until fixed rate loan notes are repaid), based on the Group’s 
estimate of the shares that will eventually vest and adjusted for the effect of non-market-based vesting conditions. 
Inventories
Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less 
the estimated costs of selling expenses.
The cost of inventories is based on the first-in first-out principle and includes expenditure incurred in acquiring the inventories and bringing them to their 
existing locations and condition.
Provisions
Provisions are recognised when:
• the Group has a present legal or constructive obligation as a result of a past event;
• it is probable that an outflow of resources will be required to settle the obligation; and
• a reliable estimate can be made of the amount of the obligation.
Notes to the Financial Statements continued
For the year ended 31 December 2014 47 Hydrodec Annual Report & Accounts 2014
Governance Strategic Report Financial Statements
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking 
into account the risks and uncertainties surrounding the obligation.
Trade and other receivables
Trade receivables, which generally have 30 day terms, are recognised initially at fair value and subsequently measured at amortised cost using the 
effective interest rate method less provisions for impairment. Provision against trade receivables is made when there is objective evidence that the Group 
will not be able to collect all amounts due to it in accordance with the original terms of those receivables. The amount of the write-down is determined 
as the difference between the asset’s carrying amount and the present value of estimated future cash flows.
Leasing
Leased assets
Leases under which the consolidated entity assumes substantially all the risks and benefits of ownership are classified as finance leases. Other leases are 
classified as operating leases.
Finance leases
A lease asset and a lease liability equal to the lower of the present value of the minimum lease payments and fair value are recorded at the inception of 
the lease.
The interest element of leasing payments represents a constant proportion of the capital balance outstanding and is charged to the income statement 
over the period of the lease.
Operating leases
Payments made under operating leases are expensed on a straight line basis over the period of the lease.
Taxation
Current tax is the tax currently payable based on taxable profit for the year.
Deferred income taxes are calculated using the liability method on temporary differences. Deferred tax is generally provided on the difference between 
the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill, nor on the 
initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred tax on 
temporary differences associated with shares in subsidiaries and joint ventures is not provided if reversal of these temporary differences can be controlled 
by the Group and it is probable that reversal will not occur in the foreseeable future. In addition, tax losses available to be carried forward as well as other 
income tax credits to the Group are assessed for recognition as deferred tax assets.
Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that it is probable that the underlying 
deductible temporary differences will be able to be offset against future taxable income. Current and deferred tax assets and liabilities are calculated at 
tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted at the balance sheet date.
Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the consolidated income statement, except where they 
relate to items that are charged or credited directly to other comprehensive income or equity in which case the related deferred tax is also charged or 
credited directly to other comprehensive income or equity.
Employee Benefit Trust
The assets and liabilities of the Employee Benefit Trust (EBT) have been included in the Group accounts. Any assets held by the EBT cease to be 
recognised on the Group balance sheet when the assets vest unconditionally in identified beneficiaries.
The costs of purchasing own shares held by the EBT are shown as a deduction against equity. The proceeds from the sale of own shares held increase 
equity. Neither the purchase nor sale of own shares leads to a gain or loss being recognised in the consolidated statement of comprehensive income.
Going concern
The financial statements have been prepared on the going concern basis, which assumes that the Group will have sufficient funds to continue in 
operational existence for the foreseeable future. The Group’s forecasts and projections, taking account of reasonably possible changes in trading 
performance, show that the Group should be able to operate within the level of its current available working capital and working capital facilities for at 
least 12 months from the date of approval of the financial statements. 48 Hydrodec Annual Report & Accounts 2014
1. Accounting policies continued
Key judgements in applying the Group’s accounting policies
In the process of applying the Group’s accounting policies, which are described in this note, management was required to make a judgement considered 
to have a significant effect on the amounts recognised in the financial statements as detailed below:
Accounting for business interruption income
The allocation of proceeds received in respect of the settlement of the insurance claim in Canton has been derived from the loss adjustment 
documentation used as the basis for the settlement agreement. Given the anticipated timing of the re-commissioning of the Canton plant for the start of 
Q2 2015, this resulted in a deferral of US$1.5 million of income to 2015. 
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant effect on 
the amounts of assets and liabilities within the next financial year, are discussed below.
Valuation and amortisation of intangible assets and goodwill
The intangible assets carried forward relate to the intellectual property and goodwill acquired by the Group in 2004, and through the acquisition of 
Virotec International plc and reclassification of a royalty prepaid in 2008. The original cost of £19.5 million is amortised over the estimated useful life of the 
asset. The intellectual property consists of know-how and trade secrets relating to the technology, some of which is covered in a patent. It is 
management’s view that the useful life of the intellectual property will extend far beyond the life of the patent and for the purposes of calculating the 
period over which the costs are amortised it has been estimated that the cost will be amortised over 15 years (note 8).
The intangible assets recognised in the recycling business relate to customer contracts and brand name acquired by the Group through the acquisition 
of the principal business and assets of OSS Group Limited (in administration) (note 20). The original cost of £2.8 million is amortised over the estimated 
useful life of the assets which management estimate will be 3 years for these purposes (note 9).
Impairment of goodwill and other intangibles
There are a number of assumptions management have considered in performing impairment reviews of goodwill and intangible assets. In determining 
whether goodwill and intangible assets are impaired, an estimation of value in use of cash generating units to which goodwill and other intangible assets 
are allocated is made. The value in use calculation requires the Directors to estimate the future cash flows expected to arise from the cash generating unit 
and a suitable discount rate in order to calculate present value (note 8).
Useful lives and impairment of property, plant and equipment
Property, plant and equipment is depreciated over its useful life. The useful life is based on the management’s estimates of the period that the assets will 
generate revenue, which are periodically reviewed for continued appropriateness. Changes to estimates can result in significant variations in the carrying 
value and amounts charged to the income statement in specific periods (note 7).
In determining whether property, plant and equipment assets are impaired, if the recoverable amount of an asset is less than its carrying amount, the 
carrying amount of the asset is reduced to its recoverable amount. That reduction is an impairment loss with amounts charged to comprehensive 
income statement in the relevant periods (note 7).
Provisions
Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the 
reporting date. In making this assessment management have referenced third party costs and the likelihood of the full cost being incurred (note 13).
Notes to the Financial Statements continued
For the year ended 31 December 2014 49 Hydrodec Annual Report & Accounts 2014
Governance Strategic Report Financial Statements
2. Revenue and operating loss
2.1. Segment analysis
The Group operates two operating segments:
• Re-refining: principally the treatment of used transformer oil and the sale of SUPERFINE
TM
 oil
• Recycling: principally the collection and treatment of waste lubricant oil and the sale of recycled oil products
The financial information detailed below is frequently reviewed by the Board (the Chief Operating Decision Maker) and decisions made on the basis of 
adjusted segment operating results. 
Year ended 31 December 2014
Re-refining
USD’000
Recycling
USD’000
Unallocated
 USD’000
Total
USD’000
Revenue 11,505 34,680 – 46,185
Other income 8,552 – – 8,552
Operating EBITDA* 4,944 764 (4,098) 1,610
Growth Costs (1,772) – (506) (2,278)
Depreciation (1,769) (2,092) 738 (3,123)
Amortisation (2,246) (1,268) – (3,513)
Share-based payment costs – – (324) (324)
Foreign exchange loss (67) (88) (72) (227)
Operating loss (910) (2,684) (4,262) (7,855)
Year ended 31 December 2013
Re–refining
USD’000
Recycling
USD’000
Unallocated
USD’000
Total
USD’000
Revenue 28,421 11,244 – 39,665
Other income 436 – – 436
Operating EBITDA 3,983 10 (3,803) 190
Growth Costs (2,453) (266) (537) (3,256)
Bargain Purchase (restated) – 428 – 428
Depreciation (2,498) (138) (37) (2,673)
Amortisation (2,133) (366) – (2,499)
Share-based payment costs – – (530) (530)
Foreign exchange loss (664) – – (664)
Operating loss (3,768) (332) (4,907) (9,004)
* Including US$1.5 million (less associated lease rentals) from the gain on disposal of assets in Hydrodec (UK) Limited
The 2013 bargain purchase restatement reflects changes in the opening balance sheet in relation to the acquisition of the business and assets of OSS 
Group Ltd (in administration). Refer to note 20.
2.2. Geographic analysis
The Group’s revenues and other income from external customers and its non-current assets are divided into the following geographical areas:
2014 2013
Revenue and
other income
USD’000
Non-current
assets
USD’000
Revenue and
other income
USD’000
Non-current
assets
USD’000
UK 34,680 11,580 11,244 13,264
USA 13,910 23,733 20,603 6,289
Australia 6,147 13,078 8,254 14,675
Unallocated – 8,786 – 11,738
54,737 57,177 40,101 45,966
Revenue and other income have been identified on the basis of the customers’ geographical location. Net assets are based on their physical location. 50 Hydrodec Annual Report & Accounts 2014
2. Revenue and operating loss continued
2.3. Loss on ordinary activities
The loss on ordinary activities before taxation is stated after charging/(crediting) the following amounts:
2014
USD’000
2013
USD’000
Grant Income (1,641) (2,327)
Profit on disposal of assets (1,473) (3)
Cost of goods sold
 – inventory expensed 11,058 16,480
 – other direct costs 20,313 8,514
 – employee benefit expense 6,493 3,865
 – depreciation 2,581 1,805
Amortisation 3,513 2,499
Share based payments 324 530
Depreciation 542 868
Impairment of property, plant and equipment 809 7,160
Operating lease rentals – land & buildings 804 621
Exchange loss 227 664
Fees payable to the Group’s auditor for the audit of the annual accounts 70 69
Fees payable to the Group’s auditor and its associates for other services:
 – the audit of the Group’s subsidiaries 101 70
 – tax & other services 144 116
Profit on disposal of assets in 2014 relate to the surplus generated from a sale and leaseback arrangement with TIP Europe.
Fees paid to the Group auditors and its associates for non-audit services to the Group itself are not disclosed in the individual accounts of Hydrodec 
Group plc because the Group’s consolidated financial statements are required to disclose such fees on a consolidated basis.
2014
USD’000
2013
USD’000
Capital expenditure
 – property, plant and equipment 19,023 1,047
2.4. Growth costs
The business continues to invest in long term strategic growth initiatives focused on geographic expansion and research and development. These costs 
are analysed as follows:
2014
USD’000
2013
USD’000
Market expansion development costs 1,270 1,747
New product development 1,008 675
Transaction fees and onetime costs – 834
2,278 3,256
2014
USD’000
2013
USD’000
Employee benefit expense 1,342 1,588
Other costs 936 1,668
2,278 3,256
Notes to the Financial Statements continued
For the year ended 31 December 2014 51 Hydrodec Annual Report & Accounts 2014
Governance Strategic Report Financial Statements
2.5. Insurance proceeds
On 11 November 2014 the Group and its insurers settled the Group’s insurance claim arising from the incident at Canton in December 2013. The total 
gross value of the claim was agreed at USD 20,000,000, which after deduction of property damage and business interruption insurance excesses of USD 
1,250,000 in aggregate, resulted in cash payments of USD 18,750,000 to the Group.
USD’000
Proceeds recognised in 2013 7,596
Proceeds recognised in 2014 9,658
Proceeds to be recognised in 2015 1,496
18,750
2014
USD’000
Recognised in 2014 9,658
Less asset disposal costs (409)
Less insurance claim related costs (697)
Net Income recognised in 2014 8,552
3. Directors and employees
Staff costs, excluding key management personnel (shown below), during the year were as follows:
2014
USD’000
2013
USD’000
Wages and salaries 15,493 9,673
Payroll taxes 1,265 820
Share-based payments 145 218
16,903 10,711
The average number of employees of the Group during the year was:
2014
Number
2013
Number
Operations 237 129
Corporate Office 13 12
250 141
The remuneration of the Group’s key management personnel (including executive Directors), are set out below. Additional information on remuneration, 
share options and pension contributions can be found in the Remuneration Committee Report.
2014
USD’000
2013
USD’000
Wages and salaries 1,815 1,793
Payroll taxes 207 174
Share-based payments 179 312
2,201 2,279
The highest paid Director received emoluments of USD 615,000 (2013: USD 615,000). Pension contributions for Directors totalled USD 13,000 2013: USD nil).
4. Finance costs
2014
USD’000
2013
USD’000
Bank overdrafts and leases 236 70
Loan stock – 8,221
Fixed rate notes – 641
Revolving credit line – 168
236 9,100 52 Hydrodec Annual Report & Accounts 2014
5. Income tax
2014
USD’000
2013
USD’000
Current tax (79) (108)
Deferred tax
Reversal of temporary timing differences 389 259
Adjustment for change in UK tax rate 93 51
Total tax 403 202
Loss on ordinary activities before taxation – 2013 restated (8,855) (18,097)
Rate of corporation tax in the United Kingdom of 21.5% (2013: 23.25%) (1,904) (4,207)
Effects of:
Current Tax (79) (108)
Expenses not deductible for tax purposes 804 735
Release of deferred tax 482 310
Tax losses not recognised 1,100 3,472
403 202
A deferred tax asset of approximately USD 18,954,000 (2013: USD 17,854,000) in respect of unused losses against future taxable profits is not recognised 
due to the uncertainty of future taxable profits. 
6. Loss per share
The calculation of the basic loss per share is based on the loss attributable to ordinary shareholders divided by the weighted average number of shares in 
issue during the year.
The weighted average number of shares used in the calculations are set out below:
2014
Number of Shares
2013
Number of Shares
744,074,814 467,828,531
In 2013 and 2014, the share options and warrants were anti-dilutive and diluted earnings per share is the same as basic. The calculation of the weighted 
average number of shares excludes shares which are now held by a member of the Group and in respect of which votes may not be cast at a general 
meeting (which are treated as if they were treasury shares) and also shares held by the Hydrodec Group Employee Benefit Trust.
Notes to the Financial Statements continued
For the year ended 31 December 2014 53 Hydrodec Annual Report & Accounts 2014
Governance Strategic Report Financial Statements
7 . Property, plant and equipment
Land and 
buildings
USD’000
Plant and 
equipment
USD’000
Assets in 
course of 
construction
USD’000
Total
USD’000
Cost
At 31 December 2012 6,287 24,384 – 30,671
Change in exchange rates (242) (1,655) – (1,897)
Acquisition-Restated 1,953 7,760 – 9,713
Additions 43 1,003 – 1,046
Impairment (3,064) (6,206) – (9,270)
Disposals – (186) – (186)
At 31 December 2013-Restated 4,977 25,100 – 30,077
Change in exchange rates (146) (3,692) – (3,838)
Additions 7 918 18,098 19,023
Revaluation – 548 – 548
Disposals (1,424) – (1,424)
At 31 December 2014 4,838 21,450 18,098 44,386
Accumulated depreciation
At 31 December 2012 625 7,087 – 7,712
Change in exchange rates (25) (827) – (852)
Depreciation charge for the year 118 2,555 – 2,673
Impairment (388) (1,722) – (2,110)
Disposals – (9) – (9)
At 31 December 2013 330 7,084 – 7,414
Change in exchange rates (28) (2,298) – (2,326)
Depreciation charge for the year 201 2,922 – 3,123
Impairment – 809 – 809
Disposals – (1,424) – (1,424)
At 31 December 2014 503 7,093 – 7,596
Carrying amount
At 31 December 2014 4,335 14,357 18,098 36,790
At 31 December 2013-Restated 4,647 18,016 – 22,663
Buildings are depreciated at various rates depending on the estimated life of the item. The rates of depreciation vary between 2.5% and 10% per annum. 
Plant and equipment is depreciated at various rates depending on the estimated life of the item. The rates of depreciation vary between 5% and 33% per 
annum. The carrying amount of the Group’s plant and equipment includes USD 925,000 (2013: USD 3,127,000) in respect of assets held under finance 
leases. The 2013 balance sheet restatement reflects changes in the opening balance sheet in relation to the acquisition of the business and assets of OSS 
Group Ltd (in administration). Refer to note 20.
In preparation for the relocation to Southern Oil’s Bomen Re-refinery a one-off independent valuation of the plant and equipment held at Young, New 
South Wales was undertaken by DMS Davlan Pty Ltd, an AVAA Certified Practising Valuer, on 8 October 2014. The valuation was carried out using a market 
comparison approach as the primary method to arrive at the realisable value. In the event direct market comparisons were not available a value was 
determined using a combination of depreciated replacement cost along with the likely market based value based on historical assessments of similar 
assets. A revaluation surplus was identified on tanks and laboratory equipment totalling USD 548,000 and an impairment on production plant of USD 
809,000 was recognised in 2014. Under the cost model the carrying value of plant and equipment would total USD 20,902,000 prior to any impairment. 54 Hydrodec Annual Report & Accounts 2014
8. Intangible assets
Re-Refining Recycling
Total
USD’000
Royalty
USD’000
Hydrodec 
Technology
USD’000
Goodwill
USD’000
CEP License
USD’000
Contracts
USD’000
Brand Name
USD’000
Cost
At 31 December 2012 5,815 25,345 6,591 – – – 37,751
Exchange translation (805) 514 134 – – – (157)
Additions – – – 2,354 2,201 4,555
At 31 December 2013 5,010 25,859 6,725 – 2,354 2,201 42,149
Exchange translation (417) (1,445) (376) (52) (131) (122) (2,543)
Additions 2,000 2,000
At 31 December 2014 4,593 24,414 6,349 1,948 2,223 2,079 41,606
Accumulated amortisation and impairment  
At 31 December 2012 2,440 10,454 3,235 – – – 16,129
Exchange translation (38) 297 65 – 4 4 332
Provided in the year 523 1,610 – – 175 191 2,499
At 31 December 2013 2,925 12,361 3,300 – 179 195 18,960
Exchange translation (211) (785) (182) – (36) (39) (1,253)
Provided in the year 551 1,694 – – 607 660 3,512
At 31 December 2014 3,265 13,270 3,118 – 750 816 21,219
Carrying amount  
At 31 December 2014 1,328 11,144 3,231 1,948 1,473 1,263 20,387
At 31 December 2013 2,085 13,498 3,425 – 2,175 2,006 23,189
At 31 December 2012 3,375 14,891 3,356 – – – 21,622
The Group tests intangible assets annually for impairment or more frequently if there are indications that the carrying value might be impaired. The 
Group considers it has two cash generating units (CGUs) - re-refining and recycling. Re-refining relates to the global exploitation of the Hydrodec 
re-refining technology (currently operating in respect of the treatment of used transformer oil and the production and sale of SUPERFINETM oils) and 
recycling relates to the OSS business (principally focussed on the collection and treatment of other waste oils and the sale of recycled oil products). The 
recoverable amounts of the CGU is determined from the value in use calculations.
Re-refining
The royalty was recorded at cost in 2008 and represented the right to receive income based on the quantity of SUPERFINE
TM
 oil produced for a period of 
15 years and commenced in 2004. It is being amortised on a straight line basis and, at 31 December 2014, the remaining unamortised life of the asset was 
six years. 
The Hydrodec technology is being amortised over its anticipated useful life of 15 years. The intangible asset carried forward relates to intellectual 
property acquired by the Group in 2004. The intellectual property consists of know-how and trade secrets relating to the technology, some of which is 
covered by a patent. The patent expired in 2013 in respect of certain countries but continues in respect of the US. It is management’s view that the useful 
life of the intellectual property will extend far beyond the life of the patent and for the purposes of calculating the period over which the costs will be 
amortised it has been estimated that the minimum useful life of the technology is 15 years. At 31 December 2014, the remaining unamortised life of the 
asset was six years.
Goodwill of USD 2,904,000 arose on the acquisition of Oil Treatment Services Pty Ltd in 2005, which has been fully provided for, and the balance relates to 
the acquisition of Virotec International plc in 2008.
Value in use is the present value of the projected cash flows of this CGU. The key assumptions regarding the value in use calculations were budgeted 
growth in revenues, budgeted gross profit margins and the discount rate applied. Budgeted revenue growth and budgeted gross profit margins were 
estimated based on actual performance over the past two financial years and expected market changes. 
The discount rate used (13.4%) is a pre-tax rate and reflects the risks specific to the relevant CGU. The Group prepares cash flow forecasts, based on the 
most recent financial budgets approved by management, which cover a five year period. After the five year forecast period a static growth rate of 0% is 
applied thereafter.
The cash flow projections anticipate significant investment and expansion in existing and new markets. This is considered consistent with the stage of 
the development of the Group and the identified market opportunities that have been assessed. Included within this are various sensitivities, one of 
which is no further expansion. Even against this key sensitivity, although the headroom is small, there is no impairment.
Notes to the Financial Statements continued
For the year ended 31 December 2014 55 Hydrodec Annual Report & Accounts 2014
Governance Strategic Report Financial Statements
Recycling
The customer contracts (USD 2,354,000) and brand name (USD 2,201,000) were recognised on acquisition of the principal assets and business of OSS 
Group Limited (in administration) as part of the fair value assessment of the assets acquired (see note 21) and are being amortised over their anticipated 
useful life. Both items are being amortised on a straight line basis and, at 31 December 2014, the remaining unamortised life of the assets was two years.
Value in use is the present value of the projected cash flows of this CGU. The key assumptions regarding the value in use calculations were budgeted 
revenues, budgeted gross profit margins and the discount rate applied. Budgeted revenue and budgeted gross profit margins were estimated based on 
actual performance over the past financial year and expected market changes.
The discount rate used (13.4%) is a pre-tax rate and reflects the risks specific to the relevant CGU. The Group prepares cash flow forecasts, based on the 
most recent financial budgets approved by management, which cover a five year period. After the five year forecast period a static growth rate of 0% is 
applied thereafter.
The cash flow projections anticipate significant investment and expansion in existing and new markets as sanctioned by the Board. This is considered 
consistent with the stage of the development of the Group and the identified market opportunities that have been assessed. Included within this are 
various sensitivities, one of which is no further expansion. Even against this key sensitivity there is no impairment.
CEP Licence
The CEP licence (USD 1,948,000) has been recognised in full as the Group has entered into an agreement with Chemical Engineering Partners to license 
their technology for use in the proposed UK Re-refinery. 50% consideration has been paid, with the remaining 50% payable upon commissioning of the 
plant. As such, no amortisation of the license has been provided in 2014.
9. Investments
Through its Japanese subsidiary, the Group purchased the balancing 50% interest in Hydrotek Eco Japan Co Limited and sold their 47.5% interest in Pacific 
Eco Refining Co Limited and a 5% interest in Central Eco Cycle Co Limited. Hydrotek Eco Japan is accordingly incorporated into the consolidated 
financial statements.
10. Trade and other receivables
2014
USD’000
2013
Restated
USD’000
Trade receivables 4,270 6,165
Prepayments and accrued income 3,790 1,189
Other receivables 198 9,604
Other taxation and social security 52 74
8,310 17,032
All trade receivable amounts are short term. The carrying value is considered a fair approximation of their fair value. All of the Group’s trade and other 
receivables have been reviewed for indicators of impairment. The 2013 balance sheet restatement reflects changes in the opening balance sheet in 
relation to the acquisition of the business and assets of OSS Group Limited (in administration) and the final agreed earn out from G&S Technologies. Refer 
to note 20.1.
At 31 December 2014, some of the unimpaired trade receivables are past their due date but all are considered recoverable. The analysis of financial assets 
is as follows:
2014
USD’000
2013
Restated
USD’000
Less than one month 3,375 5,347
Past due but not impaired 895 818
4,270 6,165
Credit sales are only made after credit approval procedures are completed, and the carrying value represents the Group’s maximum exposure to 
credit risk. 56 Hydrodec Annual Report & Accounts 2014
10. Trade and other receivables continued
The carrying amounts of the Group’s trade and other receivables are denominated in the following currencies:
2014
USD’000
2013
Restated
USD’000
Sterling 4,964 5,522
Australian dollars 1,151 1,004
United States dollars 2,195 10,506
8,310 17,032
1 1. Inventories
2014
USD’000
2013
USD’000
Raw materials 1,365 1309
Finished goods at cost 333 263
Work-in-progress 23 –
1,721 1,572
All inventory is carried at lower of cost and net realisable value.
12. Trade and other payables
2014
USD’000
2013
Restated
USD’000
Trade payables 6,624 3,568
Accruals 5,207 7,818
Other loan obligations due within 1 year 3,000 –
Deferred income 1,496 439
Finance lease obligations due within 1 year 309 1,072
16,636 12,897
The carrying value of trade and other payables are considered to be a reasonable approximation of fair value. The 2013 balance sheet restatement reflects 
changes in the opening balance sheet in relation to the acquisition of the business and assets of OSS Group Limited (in administration). Refer to note 20.1.
Deferred income as at 31 December 2014 relates to insurance proceeds received in relation to the fire at Canton on 1 December 2013 which is being 
recognised over the period to March 2015, the anticipated completion date for re-instalment of the plant. The Other loan obligation of USD 3,000,000 
relates to the initial draw down of the finance lease facility in the US which will convert to a seven year finance lease arrangement once the Canton plant 
is commissioned.
13. Provisions
2014
USD’000
2013
USD’000
Remediation of contaminated stock
Current 319 34
Non-current – 302
Remediation of contaminated land
Current – –
Non-current 507 650
826 986
The movement in the provision is represented by:
Provision
USD’000
At 31 December 2013 986
Change in exchange rates 29
Released to income statement (79)
Utilised in the year (110)
At 31 December 2014 826
Notes to the Financial Statements continued
For the year ended 31 December 2014 57 Hydrodec Annual Report & Accounts 2014
Governance Strategic Report Financial Statements
The remediation of contaminated stock provision of USD 319,000 relates to stocks of materials at the Young facility dating from the plant’s original 
function, ownership and business strategy. During the period the Group was able to process certain materials for which it incurred costs for remediation 
services charged to the provision. The cost for treatment and disposal has been reassessed by management and the current remaining provision is 
deemed to be adequate.
The remediation of contaminated land provision of USD 507,000 relates to the costs of remediation of land occupied by the Group’s operations on 
acquisition of the business and assets of OSS Group Ltd (in administration). During the year the Group undertook some remediation, the costs of which 
were utilised against the provision.
14. Non-current liabilities – borrowings
2014
USD’000
2013
USD’000
Finance lease liabilities due in 1-5 years 367 1,276
367 1,276
Finance leases
Finance leases are secured over the assets to which they relate.
15. Deferred taxation
2014
USD’000
At 31 December 2012 1,669
Recognised on acquisition 646
Transfer to Statement of Comprehensive Income (310)
Change in exchange rates 20
At 31 December 2013 2,025
Transfer to Statement of Comprehensive Income (482)
Change in exchange rates (90)
At 31 December 2014 1,453
16. Share capital
Issued and fully paid - ordinary shares of 0.5 pence each
2014
Number of shares
2013
Number of shares
At the beginning of the year 803,231,138 479,137,027
Issued for cash 125,000 212,983,000
Issued in settlement of loan – 111,111,111
803,356,138 803,231,138
2014
USD’000
2014
USD’000
At the beginning of the year 6,619 3,870
Exchange translation (370) 78
Issued for cash 1 1,755
Issued in settlement of loan – 916
At the end of the year 6,250 6,619
Hydrodec Group plc holds 54,500,000 of its own ordinary shares which were held by VIN (Australia) Pty Ltd pursuant to the acquisition of Virotec 
International plc in 2008 and were transferred to Hydrodec Group plc as part of a dividend in specie to Hydrodec Group plc on the liquidation of VIN 
(Australia) Pty Ltd in 2014. The intention is for these shares to be cancelled in due course. Votes in respect of these shares, and a further 2,173,333 shares 
issued pursuant to that acquisition, may not be cast in a general meeting of Hydrodec Group plc and as such they are treated as if they were treasury 
shares on consolidation.
Warrants
In 2011, the Group issued 10,750,000 warrants in connection with the issue of £2,000,000 of fixed rate loan notes - 2014. The warrants have an exercise 
price of 8p per share with an exercise window from 14 June 2013 to 14 June 2016.
Between 24 December 2012 and 27 June 2013, the Group issued an additional 25,000,000 warrants in connection with the issue of £5,000,000 of fixed rate 
loan notes - 2015. The warrants have an exercise price of 16p per share with an exercise window from 19 June 2013 to 19 December 2017.  58 Hydrodec Annual Report & Accounts 2014
17 . Reserves
The capital reserve represents the nominal value of shares that have been issued.
The share premium account represents the excess over the nominal value of shares allotted.
The merger reserve arose on the acquisition of Virotec International plc.
The treasury reserves are shares held by a subsidiary undertaking in the parent company that were acquired as part of the acquisition of Virotec 
International plc.
The Employee Benefit Trust represents the value of shares held on trust for the benefit of employees.
The foreign exchange reserve records differences arising from the translation of the net investment in subsidiaries.
The share option reserve represents accumulated charges made under IFRS 2 in respect of share based payments.
The revaluation reserve comprises gains from the revaluation of certain plant and equipment.
The profit and loss reserve includes all current and prior period retained losses.
18. Share based payments
Long Term Incentive Plan
In November 2011 shareholders approved the Hydrodec Group plc 2012 Long Term Incentive Plan (the LTIP) for the purposes of attracting, retaining and 
motivating key executives of the Group and securing greater alignment of the interests of shareholders and management.
Awards were granted to selected members of the senior executive team effective 15 January 2012 (or on later appointment) and were conditional on the 
achievement of the following share price targets for 90 consecutive business days to 15 January 2015: 16 pence, 20 pence and 25 pence per ordinary 
share (each a Share Price Threshold). As these Share Price Thresholds were not met the awards will not vest.
Equity-settled share option scheme
The Group has a share option scheme for selected employees and Directors of the Group. Options are generally exercisable at a price equal to the quoted 
market price of the Group’s shares on the date of grant. The vesting period for each grant is variable and typically between two and five years. No options 
were granted during the year and a total of 5,700,000 options granted to previous directors and employees of the Group lapsed or were forfeited during 
the year. No options were exercised in the year. The total number of options in issue is shown below:
Number
2014
Weighted average 
exercise price Number
2013
Weighted average 
exercise price
At the beginning of the year 19,950,000 16.9p 20,450,000 17.9p
Issued in the year – 1,000,000 11.5p
Lapsed during the year (5,700,000) 6.7p (1,500,000) 21.6p
At the end of the year 14,250,000 17.6p 19,950,000 17.3p
Fair value is determined by reference to the fair value of the instrument granted to the employee. The expected life used in the Black-Scholes option 
pricing model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural 
considerations. 
These fair values were calculated using a Black-Scholes option pricing model as follows:
2013
Weighted average share price 19.47p
Weighted average exercise price 17.34p
Expected volatility 92%
Expected life 6.24yrs
Risk free rate 4.30%
Expected dividend yield 0.0%
Expected volatility was assessed based on the volatility of the Group’s shares since incorporation. The share options outstanding at the end of the year 
have exercise prices of between 6.90p and 33.25p per share. In the directors’ experience, the expected life of an employee share option is 10 years from 
the date of grant.
Notes to the Financial Statements continued
For the year ended 31 December 2014 59 Hydrodec Annual Report & Accounts 2014
Governance Strategic Report Financial Statements
19. Financial instruments
Capital management risk
The Group manages its capital structure to ensure it will be able to continue as a going concern. The Group’s financial instruments comprise cash, and 
various items, such as trade and other receivables (see note 10) and trade payables and hire purchase and finance leases (see note 12) that arise directly 
from or in support of its operations which is monitored by the Board. No trading in derivative financial instruments is undertaken.
The main risks arising from the Group’s financial instruments are interest rate, credit, currency and liquidity. The Board reviews and agrees policies for 
managing each of these risks and they are summarised below. These policies have remained unchanged during the year.
Liquidity risk
The Group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and 
profitably. The Group manages liquidity risk by the pooling of cash resources and depositing funds available for investment in approved financial 
instruments with financial institutions. Counterparty risk with respect to cash and cash equivalents is managed by only investing in banks and financial 
instruments with good credit ratings. Management does not expect any losses from the non-performance of these counterparties.
Interest rate risk
The Group finances its operations through equity Group funds which are invested in deposit accounts with the objective of maintaining a balance 
between accessibility of funds and competitive rates of return. The weighted average interest rate received on deposited funds was 0.54% (2013: 2.76%) 
during the year.
Interest costs of items acquired under lease arrangements are fixed at the time the lease is entered into for the term of the lease, which carry a weighted 
average interest cost of 9.4 % (2013: 7.9%) per annum.
The Directors consider the only element of risk from changes in interest rates arises on bank deposits which are not expected to give rise to a material 
adjustment to the reported results for either 2014 or 2013.
The table below analyses the Group’s financial liabilities into relevant groupings based on the remaining period at the balance sheet date to the 
contractual maturity date.
Balance Sheet
Contractual 
cash flows
Less than 1 
year
Between 1 year 
and 5 years
Trade and other payables including finance leases
31 December 2014 18,003 18,003 16,636 1,367
31 December 2013-Restated 14,173 14,173 12,897 1,276
Credit risk
The Group’s credit risk is primarily attributable to its trade receivables. The amounts presented in the balance sheet are net of allowances for doubtful 
receivables, estimated by the Group’s management based on prior experience and their assessment of the current economic environment. The 
maximum exposure to credit risk for the Group is USD 4,270,000 (2013: USD 6,165,000), and there are no material concentrations of credit risk, other than as 
set out in note 2.
The credit risk on liquid funds is limited because the counterparties are reputable banks.
 
Currency risk
The Group is exposed to translation and transaction foreign exchange risk. The currencies where the Group is most exposed to volatility are UK Sterling 
and Australian Dollars. The Group’s policy is to match, as far as possible, its principal projected cash flows by currency.
Currently, no hedging instruments are used. The Group keeps under review the extent of its exposure to currency fluctuations.
The following table illustrates the sensitivity of the net result for the year and equity in regards to the Group’s financial assets and financial liabilities and 
the US dollar to British pound and Australian dollar exchange rates. There is insignificant currency risk arising within the Group, but the presentation of 
the Group results can be affected by presentation in US dollars. It assumes a percentage change in the exchange rate based on the foreign currency 
financial instruments held at each balance sheet date. Both of these percentages have been determined based on the average market volatility in 
exchange rates in the previous 12 months. 60 Hydrodec Annual Report & Accounts 2014
19. Financial instruments continued
UK sterling Australian dollars
2014 2013 2014 2013
Currency fluctuation 5% 4% 7% 6%
If the US dollar had strengthened against each currency by the percentage above retrospectively, then this would have had the following impact:
2014 
USD’000
2013 
USD’000
GBP AUD GBP AUD
Net result for the year 517 59 680 95
Equity (323) (7) (514) 49
If the US dollar had weakened against each currency by the percentage above retrospectively, then this would have had the following impact:
2014 
USD’000
2013 
USD’000
GBP AUD GBP AUD
Net result for the year (517) (59) (680) (95)
Equity 323 7 514 (49)
Exposure to foreign exchange rates varies during the year depending on the volume of overseas transactions. Nonetheless, the analysis above is 
considered to be representative of the Group’s exposure to currency risk.
Fair values
The Directors consider there to be no material difference between the book value and fair value of the Group’s financial instruments in either 
financial year.
20. Measurement period adjustments
On 6 September 2013, the Group acquired the principal business and assets of OSS Group Limited (in administration) (OSS) from the administrators of 
OSS. In line with Group accounting policies (see Note 1), provisional amounts were reported as at 31 December 2013. These provisional amounts were 
adjusted during the measurement period.
The details of the measurement period adjustments are as follows:
31 December 2013
As stated 
originally
USD’000
Revised
USD’000
Movement
USD’000
Property, plant and equipment 9,915 9,712 (203)
Trade and other receivables 4,076 4,143 67
Trade and other payables (7,832) (8,142) (310)
Profit and loss account (874) (428) 446
21. Capital commitments
At 31 December 2014, the Group had contractual capital commitments of USD 6,611,472 (2013: USD 385,000) in relation to the US rebuild and expansion 
program and UK re-refining licence. There were no other material contractual commitments.
22. Contingent liabilities
There were no contingent liabilities at 31 December 2014 or 31 December 2013.
Notes to the Financial Statements continued
For the year ended 31 December 2014 61 Hydrodec Annual Report & Accounts 2014
Governance Strategic Report Financial Statements
23. Financial commitments
The Group has entered into commercial leases on certain properties. There are no restrictions placed upon the lessee by entering into these leases.
The future minimum rentals payable under non-cancellable operating leases is as follows:
2014
USD’000
2013
USD’000
Within one year 778 1,368
Between one and five years 1,528 1,378
2,306 2,746
24. Interests in subsidiaries
24.1. Composition of the Group
Set out below are details of the subsidiaries held directly by the Group:
The subsidiary undertakings at 31 December 2014 are listed below:
Country of incorporation and
principal operations Ordinary share capital held Activity
Hydrodec Holdco Limited UK 100% Holding company
Hydrodec Development Corporation (UK) Limited* UK 100% Technology company
Hydrodec Development Corporation Pty Limited* Australia 100% Technology and holding company
Hydrodec (UK) Limited* UK 100% Oil treatment services
Hydrodec Re-refining (UK) Limited* UK 100% Oil treatment services
Hydrodec Inc USA 100% Holding company
Hydrodec of North America LLC** USA 75% Oil treatment services
Hydrodec Australia Pty Limited*** Australia 100% Oil treatment services
Virotec International plc (in liquidation) UK 100% Holding company
Hydrodec Japan Co Limited Japan 100% Holding company
Hydrotek Eco Japan Co Limited**** Japan 100% Patent holding company
* Held through Hydrodec Holdco Limited
** Held through Hydrodec Inc
*** Held through Hydrodec Development Corporation Pty Limited
**** Held through Hydrodec Japan Co Limited
24.2. Subsidiary with material non-controlling interests
The Group includes one subsidiary, Hydrodec of North America LLC, which has material non-controlling interests (NCI):
Proportion of ownership 
interests and voting rights 
held by NCI
Total comprehensive 
income allocated to NCI Accumulated NCI
Year ended 31 December 2014 2014 2013
2014
USD’000
2013
USD’000
2014
USD’000
2013
USD’000
Hydrodec of North America LLC 25% 25% 986 259 1,245 259
No dividends were paid to the NCI during the years 2014 and 2013. 
Summarised financial information for Hydrodec of North America LLC, before intragroup eliminations, is set out below:
2014
USD’000
2013
USD’000
Non-current assets 23,733 6,289
Current assets 7,499 10,744
Total assets 31,232 17,033
Non-current liabilities  
Current liabilities (6,866) (1,546)
Total Liabilities (6,866) (1,546)
Equity attributable to owners of the parent 18,266 11,615
Non-controlling interests 6,100 3,872 62 Hydrodec Annual Report & Accounts 2014
24. Interests in subsidiaries continued
2014
USD’000
2013
USD’000
Revenue 4,599 13,962
Other Income 8,552 436
Profit for the year attributable to the owners of the parent 2,958 750
Profit for the year attributable to NCI 986 259
Profit for the year 3,944 1,009
Total comprehensive income for the year attributable to the owners of the parent 2,958 750
Total comprehensive income for the year attributable to NCI 986 259
2014
USD’000
2013
USD’000
Net cash from operating activities 13,822 723
Net cash used in investing activities (17,875) (461)
Net cash from (used in) financing activities 7,670 350
Net cash flow 3,617 612
During the year, as part of the agreement signed in 2013, total capital contributions of USD4.9 million were made by the Group and G&S in relation to the 
expansion of the Canton plant. 25% of this contribution (USD1.2 million) was recognised in non-controlling interests reflecting the percentage of 
ownership held by G&S, with the remainder recognised in the Group reserves.
25. Related party transactions
AirTerAq Pty Ltd, a company in which a Director, Mark McNamara has an interest, supplied services to the value of USD 127,000 during 2014 (2013: USD 
395,000). These services were for the provision of Mr McNamara as a Director of the Company.
G&S Technologies, a company in which G&S Oil Recycling Group LLC (G&S) the holder of a 25% interest in Hydrodec of North America LLC (HoNA)) has an 
interest, supplied feedstock to the value of USD 2,617,000 in 2014 (2013: USD 4,200,000 subsequent to taking an interest in HoNA). HoNA also sold traded 
oil to G&S with a value of USD 684,014 (2013: USD nil), balance outstanding of USD 134,000. 
26. Post balance sheet events
No adjusting or significant non-adjusting events have occurred between 31 December 2014 and the date of authorisation.
Notes to the Financial Statements continued
For the year ended 31 December 2014 63 Hydrodec Annual Report & Accounts 2014
Governance Strategic Report Financial Statements
Independent Auditor’s Report to the Members of 
Hydrodec Group plc
We have audited the parent company financial statements of Hydrodec Group plc for the year ended 31 December 2013 which comprise the company 
balance sheet and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom 
Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of part 16 of the Companies Act 2006. Our audit work has 
been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no 
other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s 
members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of Directors and Auditors
As explained more fully in the Statement of Directors’ Responsibilities set out on pages 29 and 30, the directors are responsible for the preparation of the 
parent company financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on 
the parent company financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards 
require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s website at  
www.frc.org.uk/audit scope/private.cfm
Opinion on financial statements
In our opinion the parent company financial statements:
• give a true and fair view of the state of the company’s affairs as at 31 December 2014;
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on the matter prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are 
prepared is consistent with the parent company financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches 
not visited by us; or
• the parent company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Other matter
We have reported separately on the group financial statements of Hydrodec Group plc for the year ended 31 December 2014. 
David Miller
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
London
20 March 2015 64 Hydrodec Annual Report & Accounts 2014
Company Balance Sheet
As at 31 December 2014
Note
2014
£’000
2013
£’000
Fixed Assets
Tangible assets 30 30 73
Investments 31 40,926 38,133
40,956 38,206
Current assets
Debtors 32 940 953
Amounts due from subsidiary undertakings 32 12,164 8,272
Cash at bank 5,918 11,014
19,022 20,239
Current liabilities
Amounts due to subsidiary undertakings (2,079) (164)
Trade and other creditors 33 (1,979) (539)
(4,058) (703)
Net current assets 14,964 19,536
Total assets less current liabilities 55,920 57,742
Equity attributable to equity holders of the parent
Called up share capital 34 4,016 4,016
Share premium account 108,895 108,885
Treasury reserve (649) (649)
Share option reserve 1,425 1,017
Profit and loss account (57,767) (55,527)
Total equity 55,920 57,742
The financial statements were approved by the Board of Directors on 20 March 2015 and were signed on its behalf by:
   
Ian Smale     Chris Ellis
Chief Executive Officer   Chief Financial Officer
The accompanying accounting policies and notes form an integral part of these financial statements. 65 Hydrodec Annual Report & Accounts 2014
Governance Strategic Report Financial Statements
Notes to the Company Financial Statements
For the year ended 31 December 2014
27 . Significant accounting policies
The separate financial statements of the Company are presented as required by the Companies Act 2006. As permitted by that Act, the separate financial 
statements have been prepared in accordance with all applicable United Kingdom accounting standards. The principal accounting policies of the 
Company are set out below.
The financial statements have been prepared on the historical cost basis.
Investments
Investments in subsidiaries are recorded at cost, less amount written off.
Financial liabilities and equity
Financial liabilities and equity instruments issued by the Company are classified according to the substance of the contractual arrangements entered into 
and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of 
the Company after deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out below.
The fair value of the liability portion of the unsecured loan stock (which was previously convertible into shares) was determined using a market interest 
rate for an equivalent non-convertible instrument. The amount was recorded as a liability on an amortised cost basis until extinguished on repayment of 
the loan stock. The remainder of the proceeds was allocated to the conversion option, which was recognised and included in shareholders’ equity.
Tangible fixed assets and depreciation
Depreciation is calculated to write down the cost less estimated residual value of all tangible fixed assets other than freehold land by equal annual 
instalments over their expected useful lives. The rates generally applicable are:
Fixtures, fittings and equipment 30% diminishing value
Employee Benefit Trust
The assets and liabilities of the Employee Benefit Trust (EBT) have been included in the Company accounts. Any assets held by the EBT cease to be 
recognised on the Group balance sheet when the assets vest unconditionally in identified beneficiaries.
Share based payments
The Company issues equity-settled share-based payments to certain employees and directors. Equity-settled share-based payments are measured at fair 
value (excluding the effect of non-market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled 
share-based payments is expensed on a straight-line basis over the vesting period, based on the Company’s estimate of the shares that will eventually 
vest and adjustment for the effect of non-market-based vesting conditions.
Warrants
The Group issued equity-settled warrants in connection with fixed rate loan notes. Equity-settled warrants are measured at fair value of the instruments 
granted (excluding the effect of non-market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-
settled share based payments is expensed on a straight-line basis over the vesting period (or until fixed rate loan notes are repaid), based on the Group’s 
estimate of the shares that will eventually vest and adjusted for the effect of non-market-based vesting conditions. 
Interest-bearing loans and borrowings
All loans and borrowings are initially recognised at cost of the consideration received net of issue costs associated with the borrowing.
All interest costs are charged to the income statement.
Going concern
As set out in note 1 of the Group financial statements, the financial statements have been prepared on the going concern basis, which assumes that the 
Group will have sufficient funds to continue in operational existence for the foreseeable future. 
28. Directors 
Directors’ emoluments paid during the year were:
2014
£’000
2013
£’000
Emoluments 1,135 1,145
The highest paid Director received emoluments totalling £373,000 (2013: £393,000). Pension contributions for Directors were 2014: nil (2013: nil). 66 Hydrodec Annual Report & Accounts 2014
29. Loss attributable to the shareholders of the Company
The Company is an investment holding company. As permitted by section 408 of the Companies Act 2006, the Company’s profit and loss account has 
not been included in these accounts. The loss on ordinary activities attributable to shareholders of the Company dealt with in these accounts was 
£2,882,000 (2013: £9,439,000).
30. Tangible fixed assets
Fixtures and 
equipment
£’000
Cost
At 1 January 2014 139
Additions in the year 1
At 31 December 2014 140
Depreciation
At 1 January 2014 66
Provided in the year 44
At 31 December 2014 110
Carrying amount
Net book amount at 31 December 2014 30
Net book amount at 31 December 2013 73
31. Investments
Shares in 
subsidiary 
undertakings
£’000
Loans in 
subsidiary 
undertakings
£’000
Total
£’000
Cost
At 31 December 2013 57,752 611 58,363
Transfers 4,226 – 4,226
At 31 December 2014 61,978 611 62,589
Accumulated impairment  
At 31 December 2013 20,230 – 20,230
Increase in provision 1,433 – 1,433
At 31 December 2014 21,663 – 21,663
Carrying amount
At 31 December 2014 40,315 611 40,926
At 31 December 2013 37,522 611 38,133
Transfers in 2014 relate to the distribution of Hydrodec Group shares from VIN Australia Pty Limited on liquidation. 
Notes to the Company Financial Statements continued
For the year ended 31 December 2014 67 Hydrodec Annual Report & Accounts 2014
Governance Strategic Report Financial Statements
32. Debtors and amounts due from subsidiaries
2014
£’000
2013
£’000
Other debtors 940 953
Amounts due from subsidiary undertakings 12,164 8,272
13,104 9,225
The amount due from subsidiaries relates to the ongoing funding provided to the principal trading subsidiaries during their development phase. All 
intercompany amounts are repayable on demand. The timing of the repayment of this debt is uncertain and unlikely to be within one year. 
33. Trade and other creditors
2014
£’000
2013
£’000
Trade creditors 1,492 59
Other creditors 59 98
Accruals 428 382
1,979 539
34. Share capital
2014
£’000
2013
£’000
Issued and fully paid 803,356,138 ordinary shares of 0.5p each 4,016 4,016
On 26 March 2014 the Company issued 125,000 new ordinary shares pursuant to the receipt of an exercise notice in respect of warrants to subscribe for 
ordinary shares at an exercise price of 8p per share and exercise proceeds of £10,000.
35. Reconciliation of movements in shareholders’ funds
Share capital
£’000
Share premium
£’000
Equity reserve
£’000
Treasury 
reserve
£’000
Share option 
reserve
£’000
Foreign 
exchange 
reserve
£’000
Profit and loss 
account
£’000
Total
£’000
At 1 January 2013 2,396 74,539 4,289 (649) 680 (50,595) 30,660
Share issues 1,620 34,840 – – – – – 36,460
Issue costs – (494) – – – – – (494)
Share-based payment – – – – 555 – – 555
Transfers – – (4,289) – (218) – 4,507 –
Loss for the year – – – – – – (9,439) (9,439)
At 1 January 2014 4,016 108,885 – (649) 1,017 – (55,527) 57,742
Share issues 1 10 – – – – – 11
Issue costs – – – – – – – –
Share-based payment – – – – 190 – – 190
Transfers (1) – – – 218 – 642 859
Loss for the year – – – – – – (2,882) (2,882)
At 31 December 2014 4,016 108,895 – (649) 1,425 – (57,767) 55,920
36. Related party transactions
The Company has taken advantage of the exemption in Financial Reporting Standard No 8 “Related party disclosures” and has not disclosed transactions 
with Group undertakings, with a greater than 90% interest. No transactions were undertaken between the company and any entities where the group 
interest is less than 90%.
37 . Post balance sheet events 
No adjusting or significant non-adjusting events have occurred between 31 December 2014 and the date of authorisation. 68 Hydrodec Annual Report & Accounts 2014
Directors and Advisers
Company registration number: 5188355
Registered office: 6 Hays Lane, London SE1 2HB
Directors: Lord Moynihan (Non-Executive Chairman)
Dame Mary Archer (Non-Executive Director)
Andrew Black (Non-Executive Director)
Alan Carruthers (Non-Executive Director)
Gillian Leates (Non-Executive Director)
Ian Smale (Chief Executive Officer)
Chris Ellis (Chief Financial Officer)
Mark McNamara (Senior Executive Director)
Company secretary: James Hodges
Nominated adviser and broker: Peel Hunt LLP
Moor House
120 London Wall
London EC2Y 5ET
Solicitors: Norton Rose Fulbright LLP
3 More London Riverside
London SE1 2AQ
Registrars: Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Auditor: Grant Thornton UK LLP
Registered Auditor
Chartered Accountants
Grant Thornton House
Melton Street
Euston Square
London NW1 2EP Hydrodec Group plc Annual Report and Accounts 2014
Hydrodec Group plc 
6 Hays Lane 
London, SE1 2HB  
United Kingdom
www.hydrodec.com