Water Resources Group Limited Chairman and CEO's Address - Annual General Meeting 31 May 2011
PERTH, Australia, June 2, 2011 /PRNewswire/ --
Chairman – Peter Carre:
As I said in the 2010 Annual Report, the 2010 financial year has been a challenging one for the Water Resources Group Limited (WRG). Since the release of the Annual Report, trading conditions have arguably become considerably worse, due principally to the delays in decisions by the customers to award contracts to WRG to proceed with water treatment plants. As you will have seen from the Annual Report, the result was not what any us of hoped it would be in terms of achieving contract revenues. Mr. Harcourt will discuss progress on contract matters shortly.
What I can say is that your directors are working very hard to improve WRG's performance. One of the first things that the Board, with management, instigated after last year end's listing on the ASX was a thorough review of all of WRG's business opportunities and technologies. We did this out of concern that our business development was performing poorly and was impeding not only the share price, but also the advance of other aspects of WRG. The entire Board spent a significant amount of time together in strategy sessions reviewing the strategic input from management.
As a result of our review of WRG's business, and the strategic options available to us in view of the lack of timely progress on concluding contracts, we made tough decisions to restructure the group's business. This is an ongoing process that will take considerably more time to complete, as we eventually move the business more fully to the US. However, the restructure is essential in order to properly position WRG and reduce our burn rate so we can take advantage of opportunities which we have reason to believe are likely to arise in the near term as a result of the hard work that WRG has put into getting our technology and our business development to this stage.
With the resignation in May 2011 of Murray Vitlich as CEO and Phil Mirams as CFO, Brian Harcourt agreed to take over as interim CEO and has found a replacement CFO for that interim period. Mr. Harcourt has done this with his usual combination of focus, determination and energy and has the complete confidence and support of the Board. The Board believes that the initiatives currently being undertaken will deliver a stronger company, able to prosper even if these uncertain times continue for longer that we would want. The fact is that along with Bob Campbell, our chief technology officer, the company is in the hands of the founders, which we consider a good place for it to be. Mr. Harcourt will address what we are doing in the markets, what we are doing to achieve contract awards and what prospects exist for future technology. We share a common believe based on sound principles that we are on the cusp of major advances. Next year at this time I plan to be taking you through those achievements.
CEO – Brian Harcourt:
Welcome to the meeting and I am pleased to report the progress in each of our three Joint Venture areas.
1. Mexico – Our Joint Venture Partner, ATL Interamericana, S. de R.L. de C.V. (ATL), has advised us that this project is still on track although delayed. ATL continues to work with CAPAMA (the water commission operated by the municipality of Acapulco) to quantify and develop an opportunity to supply CAPAMA up to 40,000m3 per day of water from ASWRO systems over the next 3 to 4 years. This is expected to generate over US$100 million in revenue for the WRG group. We have been advised that Fonadin, the Mexican National Infrastructure Fund, is making a grant to the project for US$45-50 million, in order to subsidize the cost of the water to the poorer community. This is delaying matters, but we are confident of securing this contract this year.
2. Morocco – as disclosed in WRG's prospectus dated 16 November 2010, a memorandum of understanding for 8,000 cu m per day was signed on 29 October 2010 with Office Cherifien des Phosphates (OCP). Following on from my recent trip to Morocco, the directors expect to conclude the Water Offtake Agreement concerning the 8,000cu m per day from which we are confident that significant additional business will follow in Morocco. OCP is the world's leading exporter of phosphate rock and derivative products. Its products are an important component in global food security as they provide essential nutrients to food crops and help rebuild healthy soils.
As the largest enterprise in Morocco, OCP is a key driver of the country's economy. Phosphate and its derivatives represented in 2010, in value, approximately one quarter of Morocco's exports and the Company directly employs more than 18,000 employees.
3 Saudi Arabia – We have had our marketing and senior technical executives in Saudi Arabia during May and that area is developing well. Upon WRG securing the Water Offtake Agreement with OCP we anticipate that this will open up significant business opportunities in Saudi Arabia for WRG.
SOURCE Water Resources Group Limited
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