SVSY July 1999 Newsletter
Service Systems International Ltd. (SVSY) Newsletter
Volume 1, Issue 2
July 1999
Services Systems International, Ltd. (OTCBB: SVSY) is a high technology company engaged in the development and commercialization of energy efficient water treatment systems. Through our subsidiary, UV Systems Technologies, Inc., we engineer, manufacture, and market the Ultra Guard™ ultraviolet (UV) disinfection system.
Ultra Guard™ is the world's most advanced UV disinfection technology for municipal wastewater, sewage, or effluent treatment. The system uses low-pressure, high-intensity, high efficiency ultraviolet lamps, related high-tech controls, and equipment in custom configurations to suit the specific needs of a given wastewater treatment plant.
Ultra Guard™ Activity
Hamilton, Alabama diverts flow and begins to utilize UltraGuard™ unit
The City of Hamilton, Alabama has diverted the flow through their municipal wastewater treatment plant to utilize their Ultra Guard™ unit that was installed earlier this year. The unit installed at Hamilton includes the patented system reactor and flow balanced weir, as part of a six (6) lamp, self-cleaning, High Intensity System. The installation is part of the City of Hamilton's wastewater treatment expansion in order to process roughly 3.5 million gallons of standard effluent per day.
The Ultra Guard™ system offers significant advantages for effluent treatment at the City of Hamilton. As an automated, modular and self-contained system, the Ultra Guard™ system eliminates the manual labor costs associated with regular maintenance on conventional Low Intensity, Low Pressure UV Systems. A comparable Low Intensity system would have required 240 lamps (and significant manual cleaning) to match the UV output of SVSY's six lamp High Intensity System. Officials cited operating costs, ease of installation, and the small footprint (space savings) of the plant as key factors in their decision to purchase the Ultra Guard™ system.
Ultra Guard™ Shipped to Rosemere-Lorraine
The Ultra Guard™ destined for Rosemere-Lorraine, Quebec is being shipped with installation scheduled to start August 2, 1999.
The purchase by the municipality of Rosemere-Lorraine includes the patented Ultra Guard™ system reactor, flow balanced weirs, and eighteen (18) High Intensity lamps with automated cleaning attachments. Engineers have incorporated future provisions for adding 12 lamps into the design to expand the flow capacity from 7.5 MGD (million gallon per day) to a 12.6 MGD facility.
California Title 22 Certification Status
Service Systems recently underwent approximately 5 months of testing of their Ultra Guard™ UV wastewater treatment system at Los Angeles County Sanitation District. The purpose of this testing was for California Title 22 Certification.
The testing has gone extremely well. The data is being analyzed and processed and the Company is expecting the State of California to announce the results of the test in August.
California's Title 22 guidelines define performance criteria for systems treating wastewater that is reintroduced into the environment. Technology employed must deliver wastewater with less than 2.2 cfu/100 mL (total coliform). This operational guideline is recognized as the most stringent in the USA and is a prerequisite to any sales in that state. Successful completion of Title 22 accreditation will facilitate worldwide sales through increased credibility via third party performance verification.
Service Systems Receives Valuation
Service Systems International, Ltd. has received a $42,303,558 valuation from Stern Valuations of Flushing, NY, for the Company and its state-of-the-art patented technologies. The valuation was premised on the Discounted Cash Flow methodology and based upon forecasts and information provided by management. The valuation was also based upon certain assumptions, including, among others, weighted average cost of capital, terminal growth rate, corporate tax rate, present value of terminal value, and revenue growth until August of 2003, as well as the obtaining of necessary financing.
“We were pleased with this valuation information, which reflects the potential of our company in the competitive, rapidly growing wastewater treatment industry,” said Ken Fielding, Service Systems' president. “We believe we have the most advanced UV wastewater treatment technology available today”.
Strategic Alliance
Service Systems has instituted a plan to identify an industry partner who has worldwide water treatment industry recognition. The intent is to form a strategic alliance which could, through the partner's financial strength and recognition in the wastewater industry, provide us with the necessary funding and status and permit us to move into the forefront of the UV marketplace. At this time, we have no partnerships pending however interest level has been high and discussions continue on a number of possibilities.
Industry News
July 2/99: Vivendi-RWE-Allianz consortium wins contract for partial privatization of Berlin water company in transaction involving approximately $1.7 billion.
June 29/99: Trojan Technologies Inc. lowers earnings expectations.
June 28/99: Suez Lyonnaise des Eaux acquires Nalco for $4.1 billion in cash to become world's largest water treatment company.
June 15/99: Suez Lyonnaise des Eaux through Degrémont, acquires Calgon for $425 million to become Number 3 worldwide in water conditioning.
April 20/99: Vivendi S.A. acquired Sani-Gestion Inc. for over $33 million.
March 22/99: Vivendi S.A. to acquire US Filter through a $6.2 billion tender offer.
Water/Wastewater Industry Size
Recent publications have projected that by the year 2000, worldwide expenditures on water and wastewater treatment will exceed US$500 billion per year.
Service Systems bid inquiry book currently lists well over US$150 million in projects with additional inquiries increasing dramatically. This increase is due partly to the recognized savings in hydro energy and other O&M (operation and maintenance) costs and as well, water and wastewater facility operators overall acceptance of ultraviolet as the disinfection medium of choice.
Current trend in the U.S. projects UV Wastewater Treatment Plant installations will rise to 35% by 2008 from a level of approximately 10% as of 1998.
WWW: Water/Wastewater Websites
A number of investors and shareholder have been conducting research and due diligence into the water/wastewater industry. As such, we would like to provide a few websites as a launch point for them.
EPRI (Electric Power Research Institute) - epri.com
Service Systems Website - servicesystems.com
U.S. Environmental Protection Agency - epa.gov
Ultra Guard Website - ultraguard.com
Water Environment Federation - wef.org
Water Online - wateronline.com
Questions and Answers
Q: Why did one of your competitors (Trojan Technologies) recently report a lowered earning expectation if this is a growing industry?
A: According to Trojans press release: “Increased costs for next-generation product development and patent litigation, as well as gross margin pressure are being experienced…”
"Increasing competitive pressures are negatively affecting gross margins and have led to the decision to make a series of strategic investments. The increased expenses to implement these investments are directed at accelerating the development of next-generation technologies, market expansion, and new ventures such as air treatment, and are expected to begin to have a positive impact in the next fiscal year. “
Q: Can Ultraviolet treatment systems be used against Cryptosporidium?
A: Yes, the application of UV systems in the treatment of potable (drinking) water is presently undergoing testing by a number of organizations. EPRI (Electric Power Research Institute) is presently evaluating the effectiveness of different UV lamp systems in removing Cryptosporidium oocysts from wastewater.
Peter Colak Presents at EPRI Conference
Peter Colak, Vice President Sales and Marketing for UV Systems Technology Inc. recently conducted a presentation at an EPRI conference in Vancouver, BC.
Peter's presentation outlined a baseline for economic comparison of UV wastewater treatment systems. With this established, he went on to show the comparative O&M (operations and maintenance) savings of the Ultra Guard™ system versus competitive medium pressure systems over a 20 year period.
These potential savings were exemplified in a sample comparison of a 250-lamp system at the Humber WWTP in the City of Toronto. Versus a typical medium pressure high intensity system, the Ultra Guard™ system would deliver approximate annual savings of over $1 million (primarily in power savings). In another example on a 150 MGD (million gallons/day) system (atypical of a major metropolitan centre) the economic advantage of the Ultra Guard™ system resulted in compounded savings of +$100 million over a 20 year period.
These dramatic cost savings make the Ultra Guard™ system a compelling and obvious choice.
Service Systems International Ltd.
This Newsletter
...will be published quarterly. Initially, however, we expect to produce the Newsletter bimonthly in order to bring our shareholders up to date.
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)
PH5-1060 Alberni Street
Vancouver, BC, CANADA V6E 4K2
Telephone: (604) 257-4256
Toll free: 1-888-516-7766 or 1-800-542-8091
Fax: (604) 608-2949
Online at: www.servicesystems.com or
www.ultraguard.com
E-mail: rrc@rrcomm.com
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