Modern Water

Aiming to capitalise on growing global shortages of drinking water, Modern Water’s efforts to commercialise its relevant technologies are starting to bear fruit.

The Surrey-based venture, which joined AIM with a £30m fundraising in 2007 and still had £25m net cash this summer, has just sealed the first sale of its water toxicity monitor, Cymtox, through a distributor in China. Only a week before that, and possibly much more significantly given the expected global demand, the company commissioned its first desalination plant in the Middle East.

With the UN estimating that 2025 will see around half the world’s population living in water-deficient countries, executive chairman Neil McDougall is excited by the 'huge potential' and cites the Middle East as a prime market. 'The Middle East is one of the largest users of desalination – but lots of other technologies cannot cope due to the high salt levels and high temperature, so it’s been very important that we got our process to work.’

While traditional desalination processes use lots of energy and chemicals to filter out salt from water, Modern Water’s technology uses a naturally occurring ‘osmotic agent’ to pull water through a membrane before that agent is then removed. This can reduce energy costs, according to McDougall, by up to 30%, as has been proved in its first plant in Gibraltar, which has been running for over a year.

It is still early days at the wholly-owned Oman plant, but clean water is now being produced and tested, and should generate first revenues in 2010. Even more significantly, the level of commercial interest in the plant has been ‘huge’, says McDougall, and there are ‘a number of other projects coming on stream’.

Recent news has provided a strong boost to Modern Water's shares, which had dripped from their 119p float price to a low of 28.5p early this year. With revenues now flowing, buckets of cash in the bank and further technology acquisitions possible, Modern Water looks a decent speculative bet.

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