Water, Water Everywhere…

Have you heard talk of the world’s next dominant international cartel? That would be OWEC, not the OPEC that influences global markets with every utterance, but OWEC, the Organization of Water Exporting Countries. Canada is set to become a charter member, and it won’t be long before Canadians, like the petroleum-rich Saudis, are awash in cash

One opportunistic Canadian entrepreneur has promoted the idea of towing 5 million gallon bags of fresh water from glaciers outside Sitka, Alaska, and across the oceans to regions of the world where water supplies are desperately lacking. His Vancouver company proposes moving 4.8 billion gallons of water over the next 30 years.

So while the latter is fact, but the former still fiction, it wouldn’t be hard to argue that the most critical and precious commodity on earth is water. As Canadians grumble about metered water use and lawn sprinkling restrictions, the lives of millions of people around the globe are threatened by inadequate or unhealthy water supplies.

According to the first global, comprehensive United Nations evaluation of world water resources published in March 2003, at least 7 million people a year die of waterborne diseases. By the year 2050, 7 billion people in at least 60 countries may be facing water scarcity, UN experts warn.

The chorus of issues surrounding water has become louder and more urgent with each passing year. As far as water quality is concerned, water experts have come to question the sustainability of transferring Western sanitary concepts, with their traditional emphasis on centralized, large-scale solutions used in big cities, to the rest of the world. They have recognized the importance of decentralized, cost-effective, small-scale wastewater treatment and reuse of water.

One of the acknowledged global leaders in applying these practices is Oakville, Ontario based Zenon Environmental Inc. (stock symbols ZEN and ZEN.NV.A on the TSX), an environmental technology company that provides advanced membrane products and services for water purification, wastewater treatment and water reuse to municipalities and industries around the world. At the core of Zenon’s products is an ultrafiltration membrane, a patented, self-contained system that makes water biologically safe for consumption, without chemicals, by physically removing suspended solids, viruses, parasites and bacteria from the water.

In the aftermath of the Asian tsunami earlier this year, Zenon provided 54 of their Homespring filtration units through World Vision, together capable of supplying safe drinking water to over 350,000 tsunami survivors in India and Sri Lanka. Zenon also supplies filtration units to Canada’s Disaster Assistance Relief Team (DART).

In 2004, Corporate Knights, a business publication addressing issues involving corporate responsibility, ranked Zenon as Canada’s top corporate citizen for the second time. Zenon has also been selected as one of Canada’s Top 100 Employers for five consecutive years.

Zenon closed trading on Easter weekend at $20.60, near the low end of it’s recent 52-week range of $19.01 – $24.65. This company is no speculative play on the Venture Exchange, but a consistently profitable company with over 1100 employees in 12 countries.

In the year ended December 31, 2004, Zenon reported revenues of $236,022,000, profit of $16,990,000, and earnings per share of $0.55, respectively up 28%, 36% and 22% from the previous year. Their financial results have been impressive by any measure, and in CEO Andrew Benedek’s discussion of the 2004 numbers, he also gave indication of Zenon’s future prospects.

“We are seeing more demand for our technology all over the world as we focus on strengthening our presence in newly emerging markets,” stated Mr. Benedek. “In the fourth quarter, Zenon booked $101 million in new orders, a sizeable improvement over the same period a year ago of $58 million.”

“North America is still a large part of our business,” continued Benedek, “and we see no slowdown in the growth of orders there. But a potentially larger area of growth for us exists in the international realm.” While Zenon currently derives about 10% of their revenues from the Asia Pacific region, they are just beginning to scratch the surface of the Chinese market.

In China, water reuse is a critical component of growth as the country currently faces significant water shortages, particularly in the industrial areas in the north of the country. In 2004, Zenon secured $15 million in industrial orders from China, a tiny fraction of the potential market there.

In recognizing Zenon Environmental as Canada’s top corporate citizen, Toby Heaps, editor of Corporate Knights magazine stated, “It’s not enough to just have a nice environmentally friendly product, you have to be good across the board. We’re proud to have Zenon in the top spot because they go beyond the standard we expect of a Corporate Knight to being part of the restorative economy, a company that instead of leaving footprints is filling them.”

More information about Zenon Environmental, including annual reports, historical reviews, and Zenon’s Code of Business Conduct and Ethics, is available on the company’s website at www.zenon.ca.