Service Systems December Newsletter
Service Systems International Ltd. (SVSY) Newsletter
Volume 2, Issue 2 December 2000
(also available online at servicesystems.com and rinvestor.net )
Service Systems International, Ltd. (OTCBB: SVSY) is a high technology company engaged in the development and commercialization of energy efficient water and wastewater treatment systems. Through its wholly owned subsidiary, UV Systems Technology, Inc., engineers, manufactures, and markets the Ultra Guard® ultraviolet (UV) disinfection system.
Ultra Guard® Technology represents a significant advancement in UV disinfection resulting in substantially reduced O & M (operations and maintenance) costs when compared to competing alternatives. The Technology is applicable in treatment of municipal water & wastewater or industrial effluent. The System uses low-pressure, high-intensity, high efficiency ultraviolet lamps, related high-tech controls, and patented components/design elements in custom configurations to suit the specific needs of a given client.
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USFilter and Service Systems Announce Alliance
On October 4/2000, USFilter and Service Systems International (OTCBB: SVSY) announced plans to form a strategic alliance to market Service Systems' ultraviolet disinfection technology for water and wastewater applications.
USFilter's Wallace and Tiernan Products group signed a letter of intent to form an exclusive alliance, in which Wallace and Tiernan Products will sell Service System's Ultra Guard® advanced ultraviolet disinfection technology.
Joe Millen, Executive Vice President of USFilter, said the alliance will ensure that USFilter remains a leader in this segment of the water and wastewater treatment industry.
"The Wallace & Tiernan Products group has 85 years of continued service to its customers for the supply of disinfection equipment applying various technologies. With UV disinfection systems, we will be even better positioned to serve an evolving market need."
According to Ken Fielding, Service Systems President and CEO, "The alliance represents a major milestone in a string of contract awards and independent third party validations of the advantages, energy savings and superior performance of Ultra Guard® treatment systems. The agreement gives Service Systems access to an extensive sales and distribution network associated with the world's premier water and wastewater company. With these resources, we will be poised to rapidly expand our business."
Steve Wirtel, Vice President of Municipal Sales for USFilter, added, "USFilter has been aware of the benefits of ultraviolet disinfection and has been actively searching for a UV disinfection technology to enhance our product and service offering to our clients. We wanted to be sure that our choice not only met short-term market demand, but also gave us sustainable value for all of our corporate objectives, including existing and future treatment plant operating contracts. ."
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Service Systems Announces Contract with Walker, Louisiana
On August 14/2000, Service Systems announced a contract to provide the municipality of Walker, Louisiana with their patented ultraviolet (UV) wastewater disinfection system.
"The significance of this project goes beyond increasing revenues," said VP-Sales and Marketing, Peter Z. Colak. "The coupling of this award with the world-scale project in Peterborough, Ontario clearly demonstrates the range of plant sizes in which our Ultra Guard® technology can be effective. We continue to win bids across the spectrum of wastewater disinfection needs whether pitted against chemical or other UV disinfection options."
Walker Mayor Mike Grimmer praised the Ultra Guard® system saying, "Our new wastewater facility will be using a proven technology that will provide a much safer environment for our citizens. We are excited about this plant and we're looking forward to a successful future working with Service Systems."
SVSY will install a six-lamp system for the municipality in a project that will see the flow treated expand from 0.5 million gallons per day (MGD) to 3.75 MGD. It will be placed within existing plant structures formerly used for chemical disinfection. It will use a fraction of the lamps and produce an 88% energy savings over industry alternatives. SVSY's Ultra Guard® technology is acknowledged as the most advanced in the UV industry.
Walker's switch to UV wastewater disinfection is just the most recent example of the trend to move from chemical treatment of wastewater and potable water to an environmentally friendly, safe and efficient UV alternative. It is expected that chlorination will be phased out and that UV will replace or supplement a majority of the existing chlorination systems.
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Contracts - Status Report
Sussex, Virginia: 12 Lamp System (NEW)
Service Systems was recently awarded a UV contract for a 12-lamp system in Sussex, Virginia. The project was already engineered and a prominent UV Manufacturer had been specified with a system requiring more than 400 UV lamps. After careful review, the client saw the benefits and energy savings of the Ultra Guard® UV system and awarded the UV contract to SVSY. Installation of this project is scheduled for May of 2001.
Deep River, Ontario: 3 Lamp System
Our UV system has been installed for a number of months and has gone through preliminary testing. The UV equipment is ready and operational. The WWT plant is still not flowing effluent but will be coming on-line sometime soon.
Rosemere-Lorraine, Quebec: 18 Lamp System
The system has been in operation for 15 months. Although effluent transmissions delivered to the UV System are lower than the specified level of 38%, there have been no adverse effects on the UV system. The system continues to operate efficiently and cost effectively with energy savings meeting expectations.
A number of engineering groups and plant operators including USFilter management have toured the UV facility and have favorably commented on the installation.
Hamilton, Alabama: 6 Lamp System
In operation for 24 months, it is Ultra Guard®'s first system in operation in the United States. Many engineering groups, plant operators and USFilter management have visited it. The system continues to operate efficiently and cost effectively, energy savings have met expectations.
Peterborough, Toronto-Western Beaches, Walker and Mohawk Nations projects: are currently in manufacturing. Deliveries are scheduled on expected dates ranging from the end of the first quarter to the end of the second quarter.
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Industry News
Dec 7/00: USFilter Operating Services was awarded a $48 million contract to design and build a system to mitigate combined sewer overflows (CSO) in Lynn, MA. The nine-year capital improvement plan is believed to be the nation's first CSO design/build project and, according to city estimates, is expected to save approximately $400 million.
Dec 1/00: London-based Thames Water Plc, the third largest global water service provider, has completed the acquisition of E'town Corporation. Thames will now have established water supply operations in the U.S.
Nov 22/00: Frost & Sullivan released their Autumn 2000 water industry update focusing on the European water industry. They cited, "...outsourcing is only just beginning and the future potential market could be massive".
Sept. 18/00: The EPA proposed additional measures to restrict the use of chlorine gas. This proposal would allow only certified and trained applicators to use chlorine gas in residential pool treatment and water and sewage treatment applications. EPA is taking this action because of serious accidents and fatalities among applicators from using this acutely toxic pesticide.
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Management Profiles:
Peter Z. Colak - Vice-President Sales and Marketing
Mr. Colak brings over 20 years of experience in the environmental field to the company. He joined the firm in 1997. Mr. Colak is experienced in bringing environmental technologies and companies to market. He is familiar in dealing with both the domestic and international marketplace. He has held senior management positions in sales, corporate development and operations management in large, multi-national organizations as well as fledgling companies. Mr. Colak has managed the process of corporate growth, developing and implementing systems while taking organizations from fledgling to world-class status. He holds a Bachelor of Science degree and a post-graduate education diploma from McGill University, as well as a formation in business administration. He has served as a board member of the Environmental Services Association of Alberta and currently serves as a member of the Disinfection Committee of the Water Environment Federation(USA).
Since the establishment of the alliance with USFilter in October, Peter has been heavily involved in introducing the Ultra Guard® Technology and training seminars to various USFilter operating groups. Peter delivered the initial presentation to USFilter representatives at the October 2000 WEFTEC Conference and has since presented to the Western Region of USFilter Plant Operations Group as well as the Wallace & Tiernan subsidiary.
The response to date has been overwhelming, resulting in a backlog of requests for quotations from the USFilter sales network.
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Vivendi Company Quick Facts:
Vivendi Total Annual sales $62.0 Billion
Split
Vivendi Universal $ 45.0 Billion
Vivendi Environmental $ 17.0 Billion
Included in Vivendi Environmental
Vivendi Water Division $ 12.0 Billion
Included in Vivendi Water
US Filter Division $ 7.0 Billion
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Ongoing Ultra Guard® Testing
USFilter is forging ahead with Product Demonstration Unit (PDU) trials with at least one and perhaps two Ultra Guard® units specifically ordered by them at their cost. This is in addition to the two units presently being used for WWTP testing.
Service Systems has also seen an increase in requests for quotations in the Potable Water Sector.
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EPA Proposes Reduction in Arsenic Levels -
Ultra Violet Applications
The U.S. Environmental Protection Agency has taken steps to significantly reduce public health risks from arsenic in the nation's drinking water. The agency is proposing to reduce the current arsenic standard from 50 parts per billion (ppb) to 5 ppb in drinking water. The proposal would provide additional protection to at least 22.5 million Americans from cancer and other health problems.
UV photo-catalyzed chemical removal of arsenic is one of the recognized treatment options that can meet the new reduced Arsenic levels. This represents a large potential market for UV equipment in the USA and other regions of the world where water supplies are contaminated by naturally occurring arsenic.
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Ultra Guard® Entering ETV Program
Service Systems will soon be submitting their Ultra Guard® technology to undergo the U.S. Environmental Protection Agency's (EPA) Environmental Technology Verification (ETV) Program. The program verifies the performance of innovative technical solutions to problems that threaten human health or the environment. The specific area of testing will focus on technologies to be applied in wet weather flow conditions. These conditions typically have resulted in wastewater treatment plants (WWTPs) exceeding contaminant discharge levels. Recent court rulings in the USA obligate WWTPs to treat storm flows rather than tolerate untreated by-pass. The high flows and untreated waste characteristics including poor UV transmissivity have made this a difficult application for other UV Equipment.
The company expects to demonstrate its superior ability to disinfect wastewater from this demanding application. Given Ultra Guard®'s patented reactor chamber surrounding each lamp, it can treat wastewaters of lower transmissivity with fewer lamps than competing UV systems.
ETV was created to substantially accelerate the entrance of new environmental technologies into the domestic and international marketplace. ETV verifies commercial-ready, private sector technologies through pilot testing. Further information on the ETV Program is available from the EPA at: epa.gov.
Testing and verification of the Ultra Guard® UV disinfection system is one further step the Company is taking to keep ahead of its competitors.
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WWW: Water/Wastewater Websites And Online Investor Resources
Investors and shareholder have continued conducting research and due diligence into the water/wastewater industry. As such, we would like to provide a few further websites as a launch point for them.
Australian Ultra-Violet - www.australianultraviolet.com.au
Environmental Protection Agency - www.epa.gov
Free Edgar (public company filings) - www.freeedgar.com
Raging Bull Discussion Forum - www.ragingbull.com
Service Systems Website - www.servicesystems.com
Ultra Guard Website - www.ultraguard.com
USFilter - www.usfilter.com
Water Environment Federation - www.wef.org
Water Investments - www.waterinvestments.com
Water Online - www.wateronline.com
Yahoo.com Quote Service - quote.yahoo.com
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Questions and Answers
Q: Who Is USFilter?
A: USFilter is now part of Vivendi, an international conglomerate involved in two core businesses: Environmental Management Services; and Communications.
Vivendi acquired USFilter in early 1999 through a public tender offer totaling approximately US$6.2 billion.
Vivendi Environment (Water) is the leading integrating water and wastewater company in the world. 1999 net sales were 22.4 billion euros with 171,000 employees.
Q: What is the current $$$ quoted projects?
Waste Water projects quoted by Service Systems from Sept 1/99 -Aug. 31/00 (Fiscal Year 2000)
The total value for the period quoted is: $US 148,000,000.00
In addition, 2 months into our first quarter we have quoted an additional: $US 18,000,000.00
Approximately 20 projects are in backlog and therefore not included.
Projects contributed from USFilter
since our Alliance announcement: $US 9,000,000.00
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An Alliance Perspective for Shareholders
A message from Ken Fielding, President
The recent announcement regarding the formation of an alliance with USFilter is a major step forward in the evolution of the Company's marketing strategy. It is a clear and tangible endorsement of the Ultra Guard® Technology.
While many of our shareholders are aware of Ultra Guard®'s competitive advantages and significant growth projections for UV in the water industry, they are frustrated with the pace of adoption of the Ultra Guard® Technology. Unfortunately, technological merits are not the only criteria weighed by municipalities, engineers and contractors. Neither is price. Other factors such as the suppliers' size, bonding capability, perceived financial strength, service capability and installed base are also evaluated when awarding contracts.
Management believes that the alliance with USFilter addresses these additional factors and strongly positions our technology ahead of any competitor within the industry. The alliance with USF/WT-Vivendi Companies:
Gives the Company world scale project financing and bonding capability.
Allows Ultra Guard® the opportunity to be placed into captive projects thereby quickly expanding its installations base.
Gives the Company the largest sales and marketing network compared to any UV manufacturer.
Provides customer field support for the Company's installations with the largest service and maintenance group in the industry.
This enhanced marketing stance increases the Company's visibility and market capture potential significantly.
Given the technical and financial merits of the Ultra Guard® Technology, and the alliance with USFilter, Service Systems has established a solid foundation for growth and leadership in the UV industry.
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Service Systems International Ltd.
This Newsletter is published to keep our shareholders informed of corporate issues and developments.
We invite you to email your questions to us, and we welcome your suggestions for articles that may be of interest to our shareholders. You may contact the Company at:
Service Systems International Ltd. (SVSY)
Investor Relations Department
PH5-1060 Alberni Street
Vancouver, BC, CANADA V6E 4K2
Telephone: (604) 257-4256 Toll free: 1-888-516-7766
Fax: (604) 608-2949
Online: www.servicesystems.com and/or www.ultraguard.com and/or www.australianultraviolet.com.au
E-mail: rrc@rrcomm.com |
