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spk00: Good morning to those of you joining us from the United States. Good evening to those of you joining us from Asia. We'd like to welcome all of you to the Environmental Solutions Group Virtual Investor Day. My name is Crocker Colson with AUM Media, and we're very pleased to be able to hold this call to introduce both our new shareholders and industry analysts to ESGL's unique investment story. Before we get started, I'd like to refer our listeners to the disclaimers about today's presentation. In the course of their remarks today and in response to your questions, management may make certain forward-looking statements about the company's plans, strategies, and expectations. While such statements are based on assumptions that management believes are reasonable, such forward-looking statements are inherently uncertain. the company would like to refer investors to a more complete discussion of these risks and uncertainties in its filings with the SEC. In addition, in this presentation, we do reference certain third-party information statistics that management believes to be reliable, but these are subject to change and should not be assumed to be complete. Turning to today's agenda, we're going to open up with an overview of ESGL's history, mission, and business model from the company's founder and CEO, Mr. Leng Chuan-Kwek. Then, Lawrence Law, who's the company's Chief Sustainability and Strategy Officer, will walk us through ESGL's business overview, market opportunity in Southeast Asia, its growth strategy, and its commitment to innovation. As an illustration of that commitment, we're then going to be joined by Dr. Andre Vecchia, who's the founder and director of Nanomatics. He will speak in more detail about the exciting joint venture between ESGL and Nanomatics to produce carbon nanotubes and hydrogen from plastic waste. Mr. Quek will then make some brief closing remarks, and we will then open up the call to investor questions. You can find brief biographies for each of our speakers on the registration page for this event. During the Q&A section, we will also be joined by the company's chief financial officer, Mr. Xianqing Hou. It's now my great pleasure to turn the call over to the company's founder and CEO, Mr. Langchuan Quek. Over to you.
spk03: A very good morning to everyone on the call. My name is Leng Chuang, and I'm the CEO and Chairman of ESGL. This morning, I'm really excited and delighted to share more about ESGL from our green laboratory in our Singapore plant. What we are all about, how we are different, how we intend to grow the business, and how we will maximise your shareholder value. Let me start by telling you how it all began. My team and I, having had decades of experience in industrial waste management, we could always identify waste that could be recovered as a secondary resource, but was not. Lack of skill, lack of operational capability, no off-take connections resulted in poor economic viability, which made it then unviable to recover these materials as a business. But this turned some years ago when large waste generators started seeking sustainable and circular solutions for the waste that they generated to meet their own sustainability goals. A new demand expressed by these waste generators created a void in the market. A void in any marketplace means opportunity. An opportunity to be taken, which we at ESGL rose to the occasion to do just that. In a heretofore industry of no product differentiation where tons of waste generated was matched against tons of disposal capacity in a commoditized manner, it was just number against number, little brand differentiation and certainly no product differentiation. This was the backdrop against which ESGL arose, with a new value proposition to the modern waste generator of international repute that manufacture semiconductor chips, biopharmaceutical drugs and medicines, petrochemical products and other specialty chemicals. Huge quantities of spent acids, sludges, solid residues with metals and minerals, waste plastics, waste wood, begged to be rescued. And so we responded with our value proposition. Our value proposition is essentially our mission. which is to provide our customers environmental value and our shareholders economic value through the conversion of industrial waste into circular products. How is ESGL differentiated? Here's how. Waste comes to ESGL to be recast, repurposed, revived, reincarnated, indeed to be reborn into circular products. Our facilities are cradles of creation. where the competition operates places of destruction, of demise, of death, where waste eventually gets buried and disposed of in a landfill. Where the competition speaks of tonnage, capacity, size of fleet, locked in an archaic, commoditized mindset and stuck in reverse, we at ESGL, we sink circularity, environmental value, decarbonisation and sustainability goals. Where the competition merely transects, we at ESGL, we collaborate, connecting with our customer through common threats like the UN SDGs, carbon footprint, renewable energy certificates, plastic credits, landfill avoidance. We seek long-term relationships, the desired outcome of which are sticky contracts of 24 months or more. Attributes that used to be product differentiators such as safe operations and work practice, fair employee practice, quick operational turnaround, good customer service have all been relegated as basic hygiene factors. We at ESGL were built upon these basic hygiene factors and layered on our value proposition providing environmental value of helping our customers green and decarbonize the tail end of their supply chain. We back this up with green engineering, green chemistry, with technology that is designed to operate with minimal energy or indeed with renewable energy. With operational methodologies optimized first in our in-house laboratory, then implemented in the field. and the entirety all tightly hemmed together and managed by a team with decades of relevant experience. This is not wishful thinking nor hypothetical theory. Two years ago, a major semiconductor chip manufacturer awarded us a $1 million contract. Last year, this same company awarded us a contract of $5 million, a clear mandate of trust and approval of our value proposition. and endorsement for us to stay the course. We intend to stay the course and grow the business and increase shareholder value. We intend to do this through four pillars. The first, to acquire more waste through increased and stronger engagement and collaboration with the modern waste generator, particularly with waste that we are already familiar with. Two, to increase the scope and type of waste to be acquired and converted into a circular product through R&D and collaboration with third-party innovators like Nanometics that synthesizes carbon nanotubes from mixed waste plastics. Three is to secure offtake by strengthening and forging new partnerships and collaboration with offtakers for current and and future circular products, including environmental attributes such as carbon credits, renewable energy certificates, and plastic credits. Fourthly, circular integration or vertical integration by M&As or joint ventures to acquire more waste, to secure off-take for more circular products, or even support services within the growth centers of Southeast Asia. Let me explain now how we can increase shareholder value. ESGL first levies a treatment charge for every ton of waste that it receives from the waste generator. Secondly, ESGL sells the circular product it converts from this waste to generate a second income stream. Thirdly, For some of these circular products, ESGL consumes as raw material or generates renewable energy for captive consumption, realizing massive cost avoidance that impacts directly the bottom line, keeping our operational expenses well controlled and energy costs hedged and free from the fluctuations of oil prices. This is akin to having an inbuilt vertical integrated system with all the benefits that come with it. This business model generates compelling gross margins, exceeding 55%, translating directly into shareholder value for you. This supercharged business model is scalable, repeatable in any concentration of industrial manufacturing, in any growth economy. Characteristics that map just about every modern city in Southeast Asia, and that's the potential of where we can take this business. By 2023, we would have completed a major upgrade of our thermal treatment capabilities and our acid recovery capabilities to support the growth that we have projected for 2024. I'm also excited to share that we have also identified and commenced discussion with several M&A targets and JV partners in Singapore, Malaysia, Indonesia, with some in the finalisation stages of due diligence, where we are working towards a positive outcome and possibly make some nice announcements in the near future. I'll now hand over to my colleague Lawrence, our Chief Sustainability and Strategy Officer, to provide more information with further resolution and colour. I thank you for your attention.
spk02: Thank you, Leng Chuan.
spk01: Thank you everyone for being here with us this morning. Let me first share with you my story as an early investor in ESGL. I saw my children growing into a world where industrial exploitation is going to further deteriorate the environment we live in, with no real solutions. I felt the need to do something for the environment we live in, and our future generations will live in as well. And ESGL shared the same purpose I had. The next was really the hardest question for any entrepreneur. Can we deliver positive environmental impact and at the same time be an economically viable business? And so we came up with a long-term strategy to ensure we do what we set out to do for the environment and at the same time seek long-term profitable growth. And this is our formula. Core of that formula is everything we do must be sustainability-centric. our technologies, our solutions, our internal operations, and the language we all speak. This sustainability growth mindset will enable us to create differentiated offerings to create new markets. At the same time, effectively win against our competition. And as we scale, and grow our capacity, we must continue to optimise our operations through automation, artificial intelligence, enabling us to deliver more margins and in return, shareholder value. Coupling with all that, ESGL must lead Singapore and the region with circular economy-based industrial waste management solutions. We are executing our long-term strategy with these four pillars as previously presented by Ling Chuang. Over the next 15-20 minutes, I'll be sharing how we're bringing these growth drivers to life. Now, let's start with our first pillar, market opportunities. Our market opportunities lie in two key areas. Firstly, the magnitude of sustainability challenges that Singapore and ASEAN faces is our first opportunity. The volumes, categories and types of waste which are currently pain points for our environment is our second opportunity. To put more context, ESGL's broader growth opportunity lies beyond Singapore. It is in the sustainability gaps in ASEAN. ASEAN, made up of 10 member states including Singapore, is the world's sixth largest and fastest growing economy. And it will continue to face rapid urbanisation and industrialisation. Her GDP is set to exceed some $4 trillion by 2025. These trends creates the opportunity for ESGL to play a pivotal role in the circular economy supply chain. A Bain study recently shows that ASEAN is still behind sustainability rankings and is a critical need for us to adopt circular practices to meet wider ESGL goals. The two identified critical waste categories to resolve are plastic waste and wastewater, two waste types which are core strengths of the ESGL technologies. And as the region continues to attract investments from multinational manufacturers, ASEAN's hazardous waste volumes will continue to grow at double digits year on year. With limited hazardous waste recovery, this represents a significant opportunity for ESGL with our integrated hazardous waste and wastewater treatment system. There is much economic opportunity as recent studies released by the RIA predicts that an almost 10% economic growth opportunity exists as ASEAN transits into a circular economy. Now bringing this all back home, there are immediate opportunities to our home base in Singapore. As a developed economy, we are not spared of our own environmental challenges. Two of the few pain points for Singapore as shown is plastics waste, ash and sludge. Both of these waste types have single-digit recycling rates as of 2021, resulting in a high proportion of these waste going into landfills or being incinerated. These challenges are currently addressed by ESGL's technologies, in particular our FR3 and our G2 technologies. In fact, because of us scaling our G2 capacity over the last 18 months, we have helped Singapore raise its recycling rate of sludges from 9% to 11% in 2022. A clear demonstration of economic returns for shareholders and environmental return for all other stakeholders. And as Singapore grew rapidly over the last two decades, hazardous waste treatment capacity has not caught up with hazardous waste volumes. These are generated by the largest sectors of the economy, namely semiconductor, petrochemical and pharmaceutical industries. This again presents an opportunity for ESGL to invest behind our integrated hazardous waste and water treatment system over the next two years to meet that demand and circularise this waste category. With our deep understanding of market pricing and its dynamics and cross-referencing that to waste category opportunities and volumes, our conservative estimate shows that our technologies have a total market accessibility of over 360 million. And we have the technological and environmental competitive advantage to win. As Ling Chuan mentioned earlier, the competition is still archaic in their approach to waste. by tons collected versus tons disposed or destroyed as their business model, with little or no environmental returns. ESGL technologies are sustainability-centric, ensuring that our targeted waste categories have maximum reusability and recyclability. Ingredients which gives us the competitive advantage to win. And we're seeing these green shoots over the past two years. We've gained more contracts from leading global customers based out of Singapore across strategic verticals which drives Singapore's economy. An example which I'm extremely passionate about would be the pharmaceutical industry, where we started our relationship with AppD in 2021, recycling their plastics waste. And in 2022, we gained Elcon as a customer, recycling their plastics waste, which traditionally would have been sent to incinerators. We are winning because we are doing what others cannot do. And we do this with App-V and Elcon. We were able to help them generate their waste into sustainable circular feedstock for further use. To give you an overview of how we're winning on a period to period basis from 2022 to 2023, our waste volumes collected from these customers have grown in double digits. This clearly indicates a positive shift in their ESG ambitions to pivot away from traditional waste management companies to ESGL for sustainable solutions. Now, moving on to the next pillar, which is one I'm passionate about and it brings to my heart. We pride ourselves in not just our individual technologies, but also how we design the plant footprint and our renewable energy sources. We put a lot of thought into how we would design the plant to fully utilize the land footprint and to maximize economic yield. We liken it to a human body where our systems are our organs, how they interact and work together as a biomimetic ecosystem. The results of that thinking is the agility to scale our systems from 35,000 kilotons per annum to 195,000 kilotons per annum over the next few years, with each system's output synergistic with the other. When our systems and capacity builds are complete over the next few years, we will have the ability to broaden our waste categories collected, and in turn, regenerate them into circular products. You will realize by now what Leng Chuang meant when he said that ESGL technology ecosystem is designed to be scalable and repeatable. allowing us to deploy our technologies anywhere. The agility to follow the waste opportunities. Almost like an aircraft carrier ready to be deployed with all the assets on board, ready for battle. To be authentically sustainable, we subscribe ourselves to globally recognized certificates. We're the first in Singapore and one of the very few IACC certified pyrolysis facilities in Asia. Most recently, we have also filed a new patent application for our future HRWT and we will continue to protect our trade secrets, know-hows and technologies while they become more mature. While we have not allocated a tour of our facilities today, I thought I'd share a 2-minute video of ESGL to give you an idea of what we do.
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