ENVIRONMENTAL CLEAN TECHNOLOGIES LIMITED. — Investor Presentation 2003

Oct 15, 2003

Attention ASX Company Announcements Platform Lodgement of Open Briefing

Environmental Solutions International 21 Teddington Road Burswood WA 6100

Date of lodgement: 16-Oct-2003

Title: Open Briefing, ESI, CEO on Profit Outlook

Record of interview:

corporatefile.com.au

Environmental Solutions International Limited recently announced a further lift in the order book to \$74 million following several new contracts in the water and wastewater market. What are your expectations for revenue in the current year ending June 2004?

CEO Denis Glennon

We expect record revenues, with the most significant contribution coming in the second half-year. Our order book has grown from about \$20 million 12 months ago to \$74 million currently and the rise will underpin a revenue lift in the current year and provide a good base for the commencement of 2005. The extent of the revenue rise this year will depend on the commencement date for some of the major contracts.

corporatefile.com.au

To what extent will the revenue increase convert to improved profitability?

CEO Denis Glennon

We are anticipating a return to profitability in 2004. Like our revenue, the profit contribution will be weighted heavily to the second half. Our water and wastewater business is performing strongly and the profit outlook at this stage is positive. Our ongoing investment in commercialising the ENERSLUDGE

technology, which last year cost the $P \& L$ about \$1.6 million, will be reduced somewhat, but will continue to impact our reported profit.

corporatefile.com.au

International demand for the ENERSLUDGE technology has been slower than anticipated. Does it remain a competitive sludge disposal option?

CEO Denis Glennon

Definitely. ESI owns the exclusive world rights to the ENERSLUDGE technology and there is no doubt it remains a competitive option for sludge disposal. In terms of the cost of sludge disposal, the ENERSLUDGE technology delivers whole-oflife costs at US\$195 to US\$265 per dry tonne. That compares very favourably with the most recently published costs of landfill and incineration at US\$299 to US\$402 per dry tonne in many parts of Europe.

Our focus remains on sewerage sludges, oily sludges, and tannery sludges and the demand outlook has improved through 2003. In the current market, we perceive there are good opportunities for commercialising ENERSLUDGE in Europe and specific regions in North America.

corporatefile.com.au

When will the technology fund its own growth?

CEO Denis Glennon

In each of the last five years we've expensed about \$1.5 million to \$2.0 million on commercialising the ENERSLUDGE technology and although positive returns aren't imminent, we remain confident it will achieve widespread acceptance and add to shareholder value in the longer term.

With regard to funding, our balance sheet remains strong with cash of about \$6 million. Also, directors have agreed to pursue options involving either a strategic partner or investor in ENERSLUDGE. It's early days in this process but our clear objective is to accelerate commercialisation of the technology and structure an independent funding capability.

We'd like to retain leverage to ENERSLUDGE's potential while reporting profit that accurately reflects the performance of our operating water and wastewater business.

corporatefile.com.au

The rise in your order book in the water and wastewater business to the current level of \$74 million has been quite rapid. Can you sustain an order book near this level? What is the outlook for new contracts?

CEO Denis Glennon

We have reached "preferred tenderer" status on an additional \$16 million of new contracts. We've submitted tenders and expressions of interest on another \$80 million of business and we're tracking a further \$155 million of work. Our forward order potential is very satisfactory and the outlook for the order book is obviously very good.

Our management plan is to achieve annual revenue of around \$40 million within a couple of years. We are aiming to achieve these levels via organic growth and we will also seek to supplement our growth, possibly through a suitable acquisition.

corporatefile.com.au

What is driving demand for your services in the water and wastewater segments and is the current high level of activity sustainable?

CEO Denis Glennon

The Australian water market today is very different from that of five years ago.

Drought is being experienced in many states. Many dams across the country are only partially filled. Water restrictions apply in most capital cities and are likely to remain in force for the foreseeable future. Traditional water rights are being reviewed and instruments and mechanisms are being developed that will alter long-standing water access arrangements. More stringent standards and community expectations are driving upgrades to existing water and wastewater treatment facilities and the establishment of new facilities.

Some state governments have set ambitious targets for reuse or recycling of water and a number of studies are underway to determine the most feasible approaches to achieve those targets. Current water allocations will inevitably change, that is, be reduced, and I'd expect the price of water to increase.

The macro environment for our water and wastewater business is very positive. The investigatory work and feasibility studies underway on a broad front, are a positive lead indicator for our order book.

corporatefile.com.au

Thank you Denis.

For previous ESI Open Briefings visit www.corporatefile.com.au

For further information on ESI visit www.environ.com.au