Corporate Presentation
Company Profile Membrane technology based water and wastewater solution provider Asia s pioneer and leader in Membrane Bioreactor (MBR) wastewater treatment technology for industrial and municipal sectors Established track record with prominent clients such as Sinopec, CNOOC, CNPC, municipalities and major industrial parks etc. Owns more than 30 water treatment assets with daily design capacity over 1.5 million m3/day(municipal wastewater equivalent) Listed on the Mainboard of Singapore in 2004 and Taiwan Stock Exchange in 2010 Strength in technology and EPC capability positions the company to capture the industrial wastewater upgrading market --- the future Well positioned to ride on the growing trend of using membrane based technology for drinking water treatment
Leading the Pack First Asian water player to focus on developing MBR technology First mover advantage allowed company to establish market leadership position within 10 years First water treatment company that KKR, a global leading investment firm, have chosen to take a substantial stake in First company to design and build several largest industrial and municipal wastewater treatment plants in Asia using MBR technology: o World s largest underground municipal MBR plant: Guangzhou Jing Xi MBR Waste Water Treatment Plant o Largest industrial MBR wastewater treatment plant: Taixing Industrial Park o CNOOC s first oil refinery wastewater treatment plant and first MBR plant: CNOOC Refinery Wastewater MBR at Huizhou
Core Business Business segments: EPC Provision of turnkey services for the design, construction, installation and commissioning using membrane technology such as membrane bioreactor (MBR) and continuous membrane filtration (CMF) processes in microfiltration, ultrafiltration and reverse osmosis Water Investment projects (TOT/BOT/BOO) Investment, design, construction, installation and operation of water or wastewater treatment facilities that are typically backed by offtake agreements from the Chinese Government Operation and Maintenance services Operation and maintenance of existing water or wastewater treatment facilities for an agreed period and monthly fee, which provides a stable recurring cash flow. Engineering, Procurement and Construction (EPC) Water Investment Projects (TOT/BOT/BOO) Operation and Maintenance services (O&M)
Milestones Won EPC contract to upgrade a 30,000 + 40,000 m3/day industrial wastewater treatment plant into MBR in Taixing, Jiangsu 2006 UEL formed JV company to acquire the industrial park wastewater treatment plant in Dafeng, Jiangsu 2007 Won EPC Contract to build Guangzhou Jingxi wastewater treatment plant. The 100,000 m 3 /day underground MBR is the largest MBR of this kind in the world. 2009 2008 UEL s Taiwan Depository Receipt (TDR) listed on the Mainboard of Taiwan Stock Exchange 2010 Subscription by KKR of US$ 113.8 million convertible bonds where proceeds were used for investment in water plants. 2011 2012 Won EPC project to construct 100,000 m3/day drinking water project using double membrane technology Invested in 7 wastewater treatment plants 2013 KKR announced additional investment of US$40 million into UEL in Jan 2013 UEL acquired 13.18% of issued and paid-up share capital of Memstar 2005 Won Group s first BOO investment project in industrial wastewater treatment plant in Guangzhou Nansha Set up Malaysia operation, the Group s fully owned subsidiary outside of China 2003 2004 Acquired a 200,000 m3/day wastewater treatment plant in Liaoyang, a milestone TOT investment project in municipal wastewater treatment plant Listed on Singapore Exchange Awarded MBR project at Huizhou Daya Bay Petrochemical Hub, one of the largest industrial MBR in Asia Incorporation of United Envirotech Ltd Completed Wastewater Reclamation Project for Sinopec first double membrane industrial Newater project, first of its kind in Sinopec Group Awarded MBR project from Sinopec, first MBR for petrochemical industry and the largest petrochemical wastewater MBR plant in China upon completion
Growing Chinese Market for Water Technology China s Looming Water Crisis: Significant growth in China s water market: o Identified as 1 of the 13 countries with extreme water shortages by United Nations 1 o Home to 20% of the world population but holds only 6% of the world s water resources 1 o 2/3 of the Chinese cities suffer from insufficient water supply Per Capita Water Resources (Ton) 30,352 28,498 23,348 9,344 6,511 3,365 2,134 o Water pollution is also worsening, with all seven major river basins in China classified as having top grade pollution by the government, and more than 300 million population inaccessible to safe drinking water o The government is planning a total of $300 billion invested into water treatment over the next 10 years, with favorable policies to attract private sector investors, creating significant market opportunities Market Size of China Waste Water Treatment Sector (US$ billion) 3.3 4.0 CAGR: +20% 5.0 6.1 7.0 Russia Brazil Australia US World Average Japan Source: World Bank China 2007 2008 2009 2010 2011E Source: E&Y
Growing Chinese Market for Water Technology Strong Policy Support for Wastewater Treatment o Earmarked wastewater treatment as the No. 1 priority for environmental protection development in the 12th Five-Year Plan (FYP) from 2011-2015 2 o Plans to spend RMB1 trillion on water and wastewater infrastructure during the 12th FYP 3 o 12th Five-Year Plan requires all counties and cities to achieve wastewater treatment ratio of 80% and 85% respectively, from the current 50% and 75% 4 o Strict discharge guidelines established in recent policies 5 o Based on the target to increase urban wastewater treatment rate from 78% in 2010 to 85% in 2015, 23-37 mntons/day, valued at CNY 66 bnworth of new WWTP is to be added. o 8% reduction target in COD, 10% reduction target in Nitrate and ammonia nitrogen emission over 2010 level by 2015, points to upgrading opportunity to meet more stringent discharge limits. o Urban recycled water rate of 20% by 2015 implying a 28% CARGR on water recycle capacity during 2011 to 2015. Estimated CNY 28 bnto be spent on recycledwater development. o Non-traditional water source such as desalinated seawater, recycled wastewater will favor the use of membrane technology
The MBR Potential MBR has been identified by the Chinese Government as a key solution for the water shortage/pollution 1 MBR is becoming the preferred water treatment of choice 2 o Account for around 3% of the total water treatment market in China, vs>20% in Korea and Singapore. o With cost gradually declining, market share of MBR vsconventional technologies particularly in industrial and municipal waste water treatment and recycling projects, is expected to increase MBR Market Size in China (US$ million) o MBR market size in China have grown at a CAGR of +113% from 2004-2010 and is expected to grow at a CAGR of >50% over the next 5 years from 2011-2015. 6 42 69 136 246 369 554 4,203 2004 2005 2006 2007 2008 2009E 2010E 2015E (1) Report by Emerging Markets Private Equity Association released on October 2012 (2) China Water Net Consulting
MBR- The Water Treatment Technology of Tomorrow Water Treatment Processes Used by United Envirotech: Best Available Technology by China Membrane Technology Technology Key Functions Applications Membrane Bioreactor (MBR) Continuous Membrane Filtration (CMF) Reverse Osmosis (RO) Continuous Membrane Filtration & Reverse Osmosis (CMF + RO) Combines membrane separation with biological wastewater treatment for direct recycling Utilises microfiltration or ultrafiltrationmembrane to achieve removal of submicron contaminants in water Reverses the flow of water in the natural process of osmosis Integration of CMF and RO technologies into one system Biological wastewater treatment Wastewater recycling Wastewater treatment plant upgrade Drinking water production Pretreatment to reverse osmosis Wastewater reclamation Water purification & deionization Desalination of seawater Wastewater reclamation Seawater desalination Wastewater reclamation (NEWater application) Deionizedwater production
MBR- The Water Treatment Technology of Tomorrow Process Land Requirement Investment MBR technology Biochemical treatment + Membrane separation Compact facilities Occupies only 20% -50% land area of traditional plants Slightly higher equipment investment offset by significantly less land and construction costs. Highly advantageous when land resources are scarce Traditional Biological Technology Biochemical treatment + clarfication Complex and bulky facilities Occupies large area Slightly lower equipment investment but significantly higher land and construction costs Operating Cost Low operating cost High operating cost Water Quality High output quality suitable for highly polluted water and recycling Low output quality in comparison
Demand for Membrane Based Drinking water Treatment Technology Increasing Water Tariffs: o China s wholesale water price has risen by 10% CAGR over the past 10 years to reach an average of Rmb3.68/ton as of Jul 2011 1 o Water tariff increase is expected to continue to outpace inflation in the next few years at an average rate of 5-10% p.a. 1 as water tariffs as a % of household disposal income compared to other global peers is still low 2 Demand for better quality drinking water o Tightening of drinking water standard coupled with deterioration in raw water quality favours better treatment technology. o Increase in adoption of membrane based drinking water plants.
Move towards Vertical Integration Acquired 13.2% stake for S$35 million on 9 Jan 2013 Stable supply of membrane products is critical for the Group s membrane based water and wastewater treatment system Rationale of acquisition: o Strengthen strategic relationship between UEL and MTL o Leverage on MTL s membrane technology o Benefit from the growth of the MTL in view of its strong membrane technologies and research and development capabilities Leading manufacturer and supplier of polyvinylidene fluoride ( PVDF ) hollow fibre membrane and membrane products One of the few manufacturers of high performance PVDF hollow fibre membranes in the world today
Competitive Strengths Established Track Record: Recognized as a market leader in industrial MBR in Asia Stellar reputation with prominent clients such as Sinopec, CNOOC, CNPC, municipalities and major industrial parks etc. Pioneer of MBR technology in Asia -the Preferred Water Treatment method of Tomorrow: MBR received the Chinese government s stamp of approval Strong Support from KKR, Strategic Partner: 2 major investments from KKR totally US$154 million (includes US$40 million pending approval from EGM) Experienced Management with Proven Execution Capabilities: Strong leadership and dedicated team Twin Engine of Growth: EPC and Investment Technology and EPC capability allow UEL to venture into high margin upgrading industrial projects
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