Appendix 4C - Quarterly and Commentary
1 Strategic alliance with RWL Water is yielding early results
The formation of a strategic alliance with RWL Water LLC announced on March 30 2017 is already accelerating the execution of the Company's China strategy.
The first jointly developed project between Emefcy and RWL announced earlier this month, is a multiphase agreement to utilize Emefcy's MABR wastewater treatment technology at one of five treatment plants in Tianjin - China's fourth largest city. The five plants are owned and operated by Tianjin Caring Company and have a total installed capacity of 1.5 million cubic meters per day.
This project was developed in partnership with one of Emefcy's China distributors, Interflow Control Technologies. The first phase of the project is based on a proprietary "packaged plant design solution" developed jointly by Emefcy and RWL Water, with an installed capacity of 20,000 litres per day and scheduled for installation in Q3, 2017. This paid Phase I MABR "packaged plant" combines Emefcy's proprietary technology and RWL Water's engineering and packaging solutions.
A subsequent phase opportunity is to deploy the Company's larger scale SUBRE technology in Tianjin Caring Company's municipal treatment sites and establish a reference site for municipal treatment in China. SUBRE is a submerged version of the MABR technology, and is suitable for larger, centralized traditional treatment plants.
The second key benefit of the alliance with RWL Water is the extension of the Emefcy MABR wastewater treatment solution into a larger packaged plant wastewater treatment solution, which offers a "plug and play" capability and reduces the need for site-based works. Through years of implementation experience, RWL Water is an expert in high quality packaged plant solutions.
As a consequence of being able to offer packaged plant solutions, Emefcy anticipates accessing a larger share of revenue from each wastewater deployment opportunity. Two demonstration packaged plant units have been produced by RWL Water for Emefcy and are being shipped to two of the company's Chinese strategic partners, China Gezhouba Group Corporation (SHA:600068) (CGGC) and Beijing Sinorichen Environmental Protection Corp. Ltd. ("Sinorichen").
Emefcy will enlist RWL Water's engineering expertise in designing and producing a range of packaged plant solutions for the China market. This expertise was developed over the years by designing, producing and deploying scalable water treatment solutions incorporating specially adapted shipping containers. This capability will enable Emefcy to offer its strategic distribution partners a spectrum of solutions including easy-to-ship and install modular solutions, packaged or kitted plants, or fully containerised plug-and-play plants.
These scalable solutions will provide the flexibility to meet varying requirements for waste water treatment in remote villages in China, thereby increasing the Company's ability to capture meaningful share of the enormous China market opportunity.
2 Roll out of the China strategy continues
Progress continues with existing and new distribution channels in China. The first demonstration plant deployed at the Wuxi Design Institute is operating within the required specifications. Data continues to be collected to support the application for certification.
A second demonstration unit was shipped to Jiangsu Jinzi Environmental Technology Company, Ltd. ("Jinzi"), a leading environmental protection company focusing on the design, building and operation of wastewater treatment systems for rural communities in the Central and Southern Provinces of China. The third and fourth demonstration units as described above are currently being shipped to CGGC and Sinorichen. These latter three demonstration units incorporate design upgrades resulting from operating experience at the first deployment at Wuxi. All four demonstration units will also be important reference sites for potential Chinese customers.
The Company's Wholly Foreign Owned Entity in China is now incorporated and operational.
3 Other news since 1 January 2017
In early February 2017, the Company announced the planned deployment of the first Emefcy MABR system in California. This is the result of a memorandum of understanding with Stanford University's Codiga Resource Recovery Center (CR2C), to test and evaluate Emefcy's MABR product. CR2C is a first-of-its-kind pilot-scale testing facility, using a novel core infrastructure and test beds for flexible analysis of mobile treatment systems fed multiple grades of water.
On February 13, 2017, the Company announced the signing of its second contract in Ethiopia. In collaboration with its local partner TodayTomorrow Ventures Inc. ("TTV"), the company will supply its proprietary technology for a new wastewater treatment plant for a large residential compound in Addis Ababa. When complete later this year, the plant will replace the existing septic systems with an energy-efficient, reliable, and neighbourhood-friendly treatment and reuse system. The contract will generate revenue of approximately US$400,000 to Emefcy. Construction is well underway.
On March 10, 2017, S&P Dow Jones Indices announced the admission of Emefcy to the prestigious ASX All Ordinaries Index, representing the Top 500 companies listed on ASX by market capitalisation.
On April 26, Emefcy was recognized as a 2016 Breakthrough Water Technology Company of the Year by Global Water Intelligence ("GWI"), one of the industry's pre-eminent water industry research organizations. The award category recognizes development-stage companies that made the most impressive commercial breakthroughs into the global water market in the past year. Emefcy was recognized "with distinction" at the awards ceremony at GWI's Global Water Summit in Madrid, Spain.
Key points to note in relation to the Appendix 4C (see the link below) include:
- Cash and cash equivalents at 31 March 2017 were USD 19.8M (31 Dec USD 23.0M).
- In addition to revenue reported for the quarter, on April 12 the Company received US$200,000, representing a 50% progress payment for the wastewater treatment plant under construction in Ethiopia.
- Net cash used in operating activities in the March quarter of USD 3.3M (December quarter USD 2.3M) increased as a consequence of increased purchases of manufacturing materials, year-end statutory expenses and building the China workforce.
- The ASX Appendix 4C Statement of Cash Flows is attached (see the link below), with all numbers in USD unless otherwise indicated.
About RWL Water
Founded by Ronald S. Lauder in 2010, New York-based RWL Water was established with a vision to become the leading global water, wastewater and reuse solutions provider in the middle market. With operations in Latin America, the United States, Europe and the Middle East and over 90 years of combined operational experience, RWL Water provides leading edge, global solutions for desalination, water, wastewater, waste-to-energy, recovery & reuse as well as food & beverage processing.
Visit our website: http://www.rwlwater.com/
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About Fluence Corporation Ltd
Fluence Corporation (ASX:FLC) (OTCMKTS:EMFGF) has experience operating in over 70 countries worldwide and employs more than 300 highly trained water professionals around the globe. The Company provides local, sustainable treatment and reuse solutions, while empowering businesses and communities worldwide to make the most of their water resources.
Fluence offers an integrated range of services across the complete water cycle, from early stage evaluation, through design and delivery to ongoing support and optimization of water related assets. With established operations in North America, South America, the Middle East and Europe, Fluence is also expanding into China's rural wastewater treatment market.
Global consultancy Frost and Sullivan recently awarded Fluence Corporation "2018 Global Decentralized Water and Wastewater Treatment Company of the Year", noting in their award dissertation:
"While typical decentralized water treatment systems are relatively expensive, complicated, and inefficient, Fluence Corporation leverages innovative and smart technology solutions backed by decades of industrial know-how to excel in water and wastewater treatment solutions. Fluence's excellence becomes apparent through its success, as the company continues to expand its existing offerings as well as partnerships with other prominent companies in the industry. With its easy to use, sustainable, smart and cost-effective solutions as well as a remarkable year of growth, innovation, and leadership, Fluence Corporation earns Frost & Sullivan's 2018 Global Company of the Year Award in the decentralized water and wastewater treatment industry."
Further information can be found at http://www.fluencecorp.com/
Fluence Corporation Ltd
China Gezhouba Group Company Limited