Chairman's Statement
Extracted from the Annual Report 2007
Dear Shareholders,
On behalf of the Board of Directors, I am honoured to thank you for the continued trust and support you have given to my team at Epure International Ltd. The Company was able to achieve great performance and significant development because of this support and confidence you have shown the team.
2007 - The Year In Review
In 2007, environmental issues pertaining to water and wastewater treatment and management became the main focus in China. It was clear that the issue needed immediate attention.
China's rapid economic development and the uneven distribution of water resources across the country have not only caused serious water pollution but also aggravated the problem of scarce water resources. As a result of these pressures on the environment, the water issue has become a nationwide environmental concern, and investment in waste and sewage treatment has increased dramatically.
Along with the announcement of the increased budget for China's 11th Five Year Plan have come intensified requests to increase water and sewage treatment charges. Spurred by the new policies in this direction, a large number of players have sharpened their operating strategies in China's municipal water industry.
In this increasingly competitive market, Epure was able to recognise the direction of future development. As a result, the Company has successfully launched many new projects in 2007. The total value of projects secured grew by 45% as compared to the previous year, while profits grew by comparable margins from a year ago: total revenue grew from approximately RMB505.6 million in 2006 to approximately RMB697.3 million in 2007. This translates to a growth rate of about 38%. Profits after tax, attributable to shareholders of the Company, grew from approximately RMB110.5 million in 2006 to approximately RMB164.4 million in 2007, a growth rate of about 49%.
Outlook
There are several significant events and developments to look forward to in China's municipal water industry in 2008.
1. An increased awareness among the general public for the protection of the
environment
The concept of conserving, protecting and controlling water and various environmental
resources to promote a "green" Beijing Olympic Games will reinforce the importance of
treasuring the environment. This greater awareness will be conducive for the government
to improve its regulatory framework and to translate demands for environmental protection
into actual markets for the industry.
2. A strengthening of the government's environment-protection department
At the impending 11th National People's Congress, proposals for the establishment of the
Ministry of Environment and the Energy Department, as well as the newly amended Act
proposed by the Water Pollution Control Department, should place environmental issues
high up on national agendas to tackle related issues.
3. A step-up in environmental monitoring efforts
A comprehensive step-up in environmental monitoring efforts could hasten the maturity of
the industrial wastewater treatment market, as well as trigger the rapid development of the
environmental-monitoring industry.
4. The introduction of policies to control capital for water supply
These policies will have direct impact on the price mechanism of water and water treatment
and subsequently will change the economics of water-related investments.
5. The reformation of the capital system in the water industry
These changes, which will improve economic returns in the water industry,
coupled with increased government spending and investment in the water
sector, will alter the investment framework in the municipal water industry. At
the same time, the development of industrial investment funds will result in the
separation of management rights from ownership rights. This signals the dawn
of the "New Capital" era where it will be conducive for the franchise system.
6. The introduction of a series of environmental economic policies
With these policies, the municipal water industry, particularly the wastewatertreatment
sector, will be given more incentives.
7. The emergence of a watershed management market
A pilot programme for a managed system of watershed resources and
environmental liability could be introduced in 2008. This would change the
current municipal water-treatment industry, where the city is the centre of
operation, and strengthen the water industry.
8. The introduction of Design-Build-Operate ("DBO") model
A comprehensive step-up in environmental monitoring efforts could hasten the maturity of
the industrial wastewater treatment market, as well as trigger the rapid development of the
environmental-monitoring industry.
Data from the National Environmental Protection Administration shows that China's environmental protection industry might, over the next five years, grow in size to approximately RMB800-1,000 billion a year. With more streamlined and pro-business policies and regulations from the government, environmental protection companies will enjoy unprecedented opportunities for growth and development.
The Epure team will rely on our years of experience in investment and operation and our tremendous financial strength, to seize this opportunity to excel further so as to better reward our shareholders for their confidence in us and the support they have shown.
In 2008, the urban water industry in China will ride on the comprehensive system being set in place to improve the environment as well as the fundamental overhaul of municipal facilities to register new peaks in growth and development.
In this dynamic operating environment, Epure's medium-to-long term strategy will be to focus on growing in terms of "Enterprise Scale, Core Competencies and Earnings Sustainability". As China's leading turnkey water and wastewater treatment solutions provider, Epure will continue to focus on enhancing the profitability of the Company while expanding working capital so we can meet the growing needs of the international market. We will also extend our reach in the industry value chain to enhance our position as an integrated player, offering a full range of services to our customers while improving our overall operational efficiency.
To achieve these targets, Epure recognises the importance of constantly attracting, cultivating and nurturing a team of highly-competent talents equipped with comprehensive and industry-leading technical skills as well as the agility to react swiftly to the ever-changing market. Epure will make every effort to maximise returns for shareholders and improve shareholder value.
Words of Gratitude
At this juncture, on behalf of Epure's management and staff, I would like to express my most sincere gratitude to all the shareholders who have supported and trusted us; and my most heart-felt wishes to all the people who has supported and cared for Epure. At the same time, I wish all shareholders a blissful family and a fulfilling career. I believe that with this mode of trust and cooperation, Epure will soar to greater heights in the coming year.
