Highlights:
Significant milestones achieved towards commercialization of technologies;
Oman proving plant contract signed; start-up expected in mid-2009;
Gibraltar proving plant producing fresh water;
Net cash balance of GBP26.8 million at December 31, 2008;
Additional products and potential revenue streams identified from platform desalination technology.
Commenting on the results, Modern Water executive chairman Neil McDougall said:
“Modern Water has enjoyed another successful year, with significant milestones achieved in the commercialization of our desalination technologies. Our Gibraltar plant is producing fresh water and a second plant will be installed in Oman. Both operations will demonstrate the cost and energy-saving benefits of our desalination technology in two of our main target markets, the Mediterranean and the Middle East.”
“Modern Water has a strong balance sheet, with a robust cash position and we continue to maintain our prudent approach to growth in order to protect and increase shareholder value.”
“Looking forward, our focus remains on creating value through the deployment of our technologies, realizing the potential of our existing portfolio and developing additional revenue generating applications. Demand for cost savings in our key markets and an appetite for a reduced environmental footprint remain the key drivers for Modern Water as the business gains momentum.”
Chairman’s statement:
2008 has been a year of progress for Modern Water. Despite the extraordinary turmoil in global financial markets, we continue to take significant steps towards the commercialization of our technologies and our balance sheet remains strong with net cash of GBP26.8 million.
The majority of our technologies and businesses focus on reducing costs and environmental impact, both primary concerns for our target markets. Therefore interest in our product pipeline remains strong. We expect that demand for improved efficiency will continue to grow and become increasingly critical in the coming years. We are currently focusing on realizing the potential of our existing portfolio and developing additional revenue generating applications for our technologies.
The Modern Water business achieved several important milestones in 2008. Our proving plant in Gibraltar, the first of its kind in the world to apply our manipulated osmosis desalination technology, produced its first fresh water in September 2008. The plant operates alongside an existing traditional desalination plant, allowing our technical team to closely monitor the cost and energy savings that our technology offers.
Also in September, we signed a contract with the Oman Ministry of Water and Power to install a proving plant in the coastal town of Al Khaluf in Oman. Utilizing our patented manipulated osmosis technology, the Oman plant will enable Modern Water to demonstrate its enhanced cost-saving technology in challenging conditions. Construction of this second proving plant has begun, and we expect to have the Oman plant shipped to the Middle East and operational in mid-2009.
In December 2008, we acquired a 45% share in AguaCure Limited (AguaCure). AguaCure fits well with our existing portfolio and further cements our position as a leading edge company dedicated to the environmentally sustainable provision of fresh water and treatment of wastewater.
Over the past 12 months, the team at Modern Water has increased in size to ensure that we are well positioned to take advantage of the numerous opportunities available to the company. Along with expansion at our Guildford headquarters, we opened an office in Oman over the summer. I would like to thank the team for their hard work, dedication and commitment over the past 12 months and look forward to continued growth during the coming year.
I have been delighted at the high level of interest our technologies have attracted and the achievements the company has made to date in the roll-out and commercialization of our desalination technology. With a robust product pipeline offering both near and longer term revenue streams, the board looks forward to the coming year with a firm belief that Modern Water is on track to deliver on our vision and goals, continuing to build on our current success.
Business review:
Introduction:
In 2008, the group experienced successful progress in all areas of the business. The group’s first plant was installed and is producing fresh water, with confirmation of a further installation in the Middle East agreed. The team is now established and continues to expand and develop. During the past year the group has advanced its operations and taken technologies from development to commercialization in anticipation of continued growth over the coming year.
Market:
The current financial marketplace has proven to be challenging for many AIM listed companies. However, Modern Water remains well capitalized despite this recent turmoil, with GBP26.8m net cash in the bank as of December 31, 2008. The world’s fresh water resources are finite and the lack of available fresh water is increasing. Therefore demand for lower costs and more energy efficient water-related products is growing, which puts the group in a perfect position to exploit investment and revenue generating opportunities.
Gibraltar:
The agreement to install the group’s first plant in Gibraltar was announced in February 2008. Following building, shipping and installation over the summer, the plant produced its first fresh water in September 2008. The Gibraltar plant is the first in the world to use Modern Water’s manipulated osmosis desalination technology. It operates alongside an existing traditional desalination plant allowing for a direct comparison of the benefits of the technology, which include savings in operational costs and improved energy efficiency.
Oman:
In September 2008, the group announced a contract with the Oman Ministry of Water and Power to install a proving plant in the coastal town of Al Khaluf in Oman. Utilizing the group’s patented manipulated osmosis technology, the Oman plant will enable Modern Water to demonstrate its enhanced cost-saving technology in challenging conditions. Construction of the plant is underway and it is expected to be operational by mid-2009. The Middle East represents a key market for Modern Water, with expectations that the region will account for a significant proportion of the anticipated $56.4 billion capital expenditure on desalination worldwide by 2015.
AguaCure Limited:
In December 2008, Modern Water acquired a 45% share in AguaCure. AguaCure’s tried and tested system offers major environmental and financial benefits over competitor technologies through removing dissolved and suspended contaminants from water whilst eliminating bacteria and viruses. Its versatility allows the process to be used in a variety of applications including membrane pre-treatment, mine wastewater treatment, metal finishing, and treating phosphate-contaminated water. A large scale system is currently operating successfully in the car manufacturing industry.
Technologies:
Modern Water’s suite of complementary manipulated osmotic platform technologies offer mid and long-term revenue streams for the group.
Cymtox Limited:
The group owns pioneering technology which monitors acute water toxicity on a continuous, real-time basis. Acting like a modern day canary, its monitoring device constantly checks the presence of water-borne toxins and warns of suspicious changes.
Wastewater:
The group’s new technology which treats seawater for toilet flushing, reduces the domestic requirement for fresh water by up to 30%. The wastewater treatment systems are based on seawater substitution. Combining biological treatment and wastewater expertise, the principal benefit is the reduced requirement for fresh water.
