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9M 2006 Results Review14th November 2006

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AgendaAgenda

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2

Financial Review

Building Sustainable & Profitable Growth

3 Outlook

2

Financial ReviewFinancial Review

Presented by Grace GohGroup CFO

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Financial HighlightsFinancial Highlights

(82%)(S$25.6m)(S$4.7m)Less : One time and fair

value gains

(13%)S$11.1mS$9.7mOperating Profit *

0.050.36Net Debt-to-Equity Ratio

(including PF loan)

(62%)7.35cents2.80centsEPS

(61%)S$36.6mS$14.5mPATMI

(70%)S$44.7mS$13.4mPAT

8%S$93.6mS$100.6mSales

+ / (-) %9M 20059M 2006

* Excludes one time and fair value gains

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5

59.5 29.329.329.329.3 66.966.966.966.9 4.44.44.44.40.4

33.600001010101020202020303030304040404050505050606060607070707080808080Revenue by SectorRevenue by Sector

S$’m

Municipal Sales 51% yty

− Lower revenue from Middle East and Singapore

− SinoSpring - EPC revenue are fully eliminated upon consolidation

− 29% of 2006 Group revenue

9m 2005 9m 2006 9m 2005 9m 2006 9m 2005 9m 2006

MunicipalMunicipal IndustrialIndustrial ConsumerConsumer

Consumer Sales 936% yty

─Turnaround in 3Q06

─Sales expected to improve

─4% of Group’s revenue

Industrial Sales 99% yty

─Strong order book and demand in the pharmaceutical and bio-technology sectors

─67% of 2006 Group revenue

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20.8 21.5 23.5

34.5

52.356.6

66.9

2000 2001 2002 2003 2004 2005 9M2006

Strong Industrial GrowthStrong Industrial GrowthRevenue in S$’m

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7

Revenue by SectorRevenue by Sector

9M 20069M 20069M 20069M 2006

Municipal

29%

Industrial

67%

Consumer

4%

9M 20059M 20059M 20059M 2005

Industrial

36%

Consumer

0%

Municipal

64%

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China China –– Key Revenue DriverKey Revenue Driver

9M 20069M 20069M 20069M 2006

China

71%

SG

19%

ME/OTH

10%

9M 20059M 20059M 20059M 2005

SG

35%

ME/OTH

23%

China

42%

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Building up Recurring Income StreamBuilding up Recurring Income Stream

0%0%0%0%10%10%10%10%20%20%20%20%30%30%30%30%40%40%40%40%50%50%50%50%2005200520052005 9M069M069M069M06 MediumMediumMediumMediumTermTermTermTerm Long TermLong TermLong TermLong Term

% of Recurring Income to Total % of Recurring Income to Total % of Recurring Income to Total % of Recurring Income to Total RevenueRevenueRevenueRevenue16%16%16%16% > 30%> 30%> 30%> 30%

2%2%2%2% 3333---- 5 yrs5 yrs5 yrs5 yrs > 5 yrs> 5 yrs> 5 yrs> 5 yrs20% 20% 20% 20% ---- 30%30%30%30%

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Higher Personnel & Development CostsHigher Personnel & Development Costs

� To develop and expand into new markets and used oil recovery business

10.5

17.617.617.617.6 10.410.410.410.4 2.42.42.42.40.3

8.700002222444466668888101010101212121214141414161616161818181820202020

9m 2005 9m 2006 9m 2005 9m 2006

Personnel Expense + Cost of Share based

Personnel Expense + Cost of Share based

Other Operating Expense

Other Operating Expense

Net Financial Expense

Net Financial Expense

9m 2005 9m 2006

► Necessary to generate new revenue streams

6

11

37 3043

71

44 59

88 29

2003 2004 2005 9M 2006 2007 2008

1H 2H

Strong Revenue GrowthStrong Revenue Growth

CAGR 27%

S$’m Target CAGR 30%

81m89m

132m

101m

12

9 9

23

13

11111111 19191919 232323232222

2003 2004 2005 9M 2006 2007 2008

1H 2H

Strong Profit GrowthStrong Profit GrowthS$’m

CAGR 52%

Target CAGR 30%

20m

27m

46m

14m

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Cash Flow AnalysisCash Flow Analysis

NM64.9(3.6)Net cash (used in) / generated

from financing activities

60%(33.5)(53.4)Net cash used in investing

activities

(97%)13.20.4Net cash generated from

operations

NM(0.1)(1.2)Payment of tax

(87%)13.31.7Cash generated from operations

(22%)29.322.8

Profit before working capital changes adjusted for non cash item

Change9M 20059M 2006In S$’m

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Healthy Cash FlowHealthy Cash Flow

� Net cash generated from operations of S$0.4m

– 97% lower than 9M 2005 mainly due to :

– Higher working capital requirements of S$21.2m

– Higher tax payments of S$1.2m

Net cash generated from operations

Net cash used in investing activities

Net cash used in financing activities

� Net cash used in investing activities of S$53.4m– Acquisitions of subsidiaries, property, plant and

equipment, technologies and investments in subsidiaries for DBOO/DBOT projects in China

– In same period last year, proceeds of sale of 50% equity stake in SingSpring was received

� Net cash used in financing activities of S$3.6m– Interest payments of S$3.8m– Dividends distribution to shareholders of S$7.0m– Offset by proceeds from short term loans

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0.36 0.05Net debt to equity ratio (including PF* Loan)

Healthy Debt to Equity RatioHealthy Debt to Equity RatioSep 06Sep 06 Dec 05Dec 05

78.6

ChangeChange

PF Loan

Long Term

Short Term

Total Borrowings

75.8 +2.8

Net Borrowings 76.8 10.7 +66.1

2.4 30.9 -28.5

31.8 0.4 +31.4

112.8 107.1 +5.7

Less : Cash & cash equivalents

(36.0) (96.4) -60.4

Net Cash Net CashNet debt to equity ratio (excluding PF* Loan)

Amts in S$’million

* PF – Non-recourse project financing

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Low Debt Equity

Ratio of 0.36

Raise Equity (when

needed) to Increase

Capacity to Fund Large

Projects

Business trust or

infrastructure fund

Funding through

Mezzanine Entity

Optimize Capital

Structure

�US$138m syndicated loan

� IFC – TianjinUS$25m

�Project financing

� IFC –SinoSpringUS$20m

� Asset light strategy

� unlock asset value

�Redeploy capital

Funding GrowthFunding Growth

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Presented by Sam OngGroup EVP & Chief Investment Officer

Building Sustainable & Profitable GrowthBuilding Sustainable & Profitable Growth

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Sustainability From the Ground UpSustainability From the Ground Up

30% CAGR (2003-2008)

Water Utilities

Industrial

Oil / R

ecycling

Financial CapabilityOperational Capability

TechnologyHum

an

Capital

Singapore / SE AsiaChina

India, MENA

FOUNDATION

MARKETS

PILLARS OFGROWTH

SUSTAINABLEGROWTH

Consumer

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Opportunities in Key Growth MarketsOpportunities in Key Growth Markets

CHINA

INDIA

MENA

SEA

Physical Water Scarcity

Economic Water Scarcity

Little or No Water Scarcity

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Core : Technology & CompetencyCore : Technology & Competency

■ Largest membrane and materials research center in Asia outside Japan

■ More than 115 R&D staff, 35% increase in researchers and engineers

■ Speed to Commercialization

■ Comprehensive range of membranes

■ Polymeric, stainless steel & ceramic membranes

■ Know-how

Process/ProductImprovements

■ Oil recycling,

■ Food, Pharmaceuticals, biotechnology,

■ Chemicals and petrochemicals

■ Design

■ Membranes

■ Integration

New Applications

New Products

Invest in R&D

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It’s So Clear

China

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China Utilities (China Utilities (SinospringSinospring))

100,0001542008Tianjin Desal

40,000142008Jiangsu, Wujin

480,000~ 400Total

50,00080HoldLiaoning, Huludao Desal

80,000292007Hebei, LangfangWWTP/WWRP

20,000112007Jiangsu, Dafeng WCP

20,000142007Jiangsu, Yangzhou WWTP

30,000132007Henan, Lushan WTP

30,000102007Liaoning, Liaoyang WTP/WWRP

20,00092006Zhejiang, Tiantai WWTP

20,000102006Jiangsu, Taizhou WWTP

30,000172005Jiangsu, ChangshuWWTP

20,000102006Jiangsu, Wuxi WWTP

20,000122006Jiangsu, Yangkou WCP

Capacity(m3/day)

Project Cost

(S$Mil)Year of

CompletionProject

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Huludao Llatic Acid

Ningxia Llactic Acid

Used Oil

China Industrial & Non Water ProjectsChina Industrial & Non Water Projects

It’s So Clear

IndiaIndiaIndiaIndia

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India : Karnataka, India : Karnataka, W.BengalW.Bengal & Gujarat& Gujarat

Bangalore Office

Chennai Office

Desalination

Waste Water

Used Oil

Industrial

It’s So Clear

Consumer

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New Biz Model / Products / PartnersNew Biz Model / Products / Partners

� A Great Turnaround Story

� Extended Product Breadth To Cater To Various Market Segments

� New Commercial, Distribution and R&D Partnerships

� To be continued …

It’s So Clear

MENA

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Algeria Algeria –– TlemcenTlemcen @ @ SoukSouk TlataTlata

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AlgeriaAlgeria

� The Country

– Population 33 million

– GDP per capita US$5,400

– Water Usage : Farm 52% Homes 34% Industry 14%

� Water : Algeria’s Ministry of Water Resources / GWI

– Annual water availability per capita projected at less than 1,000 cubic meters in 2020 which is below water-stressed level of 1,700 cubic meters per person.

– Availability and projected future demand points to water deficit of 2.4 billion cubic meters p.a. by 2020

– Algerian government to act and improve hydro-infrastructures, including used-water treatments and desalinization projects urgently via AEC.

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AlgeriaAlgeria

� The largest project for Hyflux

� Consortium: Hyflux 20% & Malakoff 80%� Project : AEC 49% Consortium (51%)� Hyflux’s Effective Shareholding 10.2%

� WPA 25 years concession� Capacity: 200,000 m3 / year� Financing by Algerian banks� Off-taker: L’Algerienne Des Eaux (ADE)� Project:10 year Pioneer Tax Status� Corporate & VA Taxes waived� Custom Duties at Preferential Rate

� EPC: Exclusive to Hyflux @ US$205m� Completion: 24 mths from financial close

Project Co.

20%80%

Malakoff MenaSpring

Consortium AEC

49%51%

Hyflux Ltd

100%

ADESonatrach Guarantee

WPAHyflux Algeria

EPC

Hyflux Ltd

100%

The Project

It’s So Clear

Used Oil Recycling

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$-

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

Nov-02 Nov-03 Nov-04 Nov-05 Nov-06

US

$/T

on

Source: www.oilnergy.com

Oil Price Trend (2001 to 2006)Oil Price Trend (2001 to 2006)

Base Oil Price

Used Oil

Treatment Product

1. Re-refining

2. Hyflux Technology

3. Low Tech Process (e.gfiltration/sedimentation)

1. Re-refined Base Oil

2. Recovered Lube Oil

3. Fuel Oil

Selling Price of Fuel Oil Produced Using Low Technology Process

Re-refining Base Oil Selling @ 95% of Virgin Base Oil Price (high Capex & operating cost; low profit margin))

Hyflux Recovered Lube Oil Selling @ 80% of Virgin Base Oil Price

US$ 300/T to 500/T

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Sources of Used OilSources of Used Oil

XXX

Cylinder/ Crankshaft/ SterntubeOil

XXX

X

Quench Oil XXMarine IndustryXXXXXXPower Plant XXXIndustrial Plant(Repair/Maintenance ) XXXXXAutomobile Mfg Plant/ vehicle service plant X

X

X

X

X

Gear Oil

Machine Tool Plant XXXAircraft component machine shop XXXXXMills (eg steel mills) XXXXPetrochemical Industry XXXPlastic Injection moulding Metal Working Fluid Engine Oil Turbine/Transformer/ Heat Transfer/Circulating Oil Hydraulic/ SlidewayOil20% MENA + Asia20% MENA + Asia20% MENA + Asia20% MENA + Asia

���� 1.1.1.1.2 Mil ton p.a.2 Mil ton p.a.2 Mil ton p.a.2 Mil ton p.a.���� US$1bn p.a. SalesUS$1bn p.a. SalesUS$1bn p.a. SalesUS$1bn p.a. Sales

� Focus to capture 20% of Market Share or US$1bn.

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Current Used Oil ProjectsCurrent Used Oil Projects

Completed – ESK Singapore

In Progress

In Prelim Discussion

Presented by Sam OngGroup EVP & Chief Investment Officer

OutlookOutlook

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Growth in Order BookGrowth in Order Book

152152152152 4544544544541H 20061H 20061H 20061H 2006 9M 20069M 20069M 20069M 2006

� Order Book - S$454m

• Industrial / Consumer projects – S$130m

• Municipal projects - $324m

� Recurring income when completed

� SinoSpring group : S$160m to S$170m

� Singapore : S$23m to S$34m

���� Growth in order book mainlycontributed by :

� Our pioneer projects in Algeria and India

� Strong pipelines in Consumer business

� Industrial sector in China with strong demand in the pharmaceutical and bio-technology sectors

S$S$S$S$’’’’mmmmSin

oSpring

Sin

oSpring382382382382

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Outlook : Outlook : On Track PerformanceOn Track Performance

Strong Portfolio to deliver CAGR growth of 30%

over 5 year period from 2003 - 2008

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SummarySummary

� Q306 Performance : A Short Term Impact

� Investing For Future : People & Order Book

� Geographical Expansion : India & Algeria

� New pillar of Growth : Used Oil Recycling

� New Application : Strong Industrial Sales

� New Products / Biz Models : Consumers

� Core Strength : Integrated & Technology

� Strong Balance Sheet

30% CAGR (2003-2008)Water Utilities

Industrial

Oil / R

ecycling

Financial CapabilityOperational Capability

TechnologyHum

an

Capital

Singapore / SE AsiaChina

India, MENA

Consumer

40

ThankThank YouYou

Strong Portfolio to deliver CAGR growth of 30%

over 5 year period from 2003 - 2008

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Thank YouThank You