Providing world-leading water technologies
Investment Case
The Water Crisis
By 2025, it is forecast that two-thirds of the world’s population will live in countries classified as water-stressed. Climate change is likely to further exacerbate this situation and in many areas of the world the limited availability of fresh water is a problem right now.
Company
Modern Water is an AIM listed Water Technology Group that was established in 2006 by IP Group Plc to develop and commercialise IP and technologies related to the treatment of water. It has spent £20m over last 12 years developing a portfolio of over 100 patents and cutting-edge technology focussed on making the treatment and recycling of water more efficient.
It employs 40 people across two divisions in the UK, US, Japan & China. The Membrane division is focussed on the treatment of water and the Monitoring division sells equipment to analyse the quality of water.
New Strategy
Following a Board reorganisation in 2015, Modern Water adopted a new strategy for its Membrane division that focuses on selling technology licences and engineering services to industrial partners that are experts in their local markets. This model has significantly reduced the project risk for Modern Water as the majority of revenue is now received upfront and there is no capital outlay.
At the same time, new management was appointed to run the Group’s Monitoring division and all of its activities were consolidated onto one Management system at its headquarters in the USA. The group’s cost base was also reduced by over £1.5m p.a.
Monitoring Division
- Sale of high-end water testing equipment and related ongoing consumables
- Tests performed by its key product are written into environmental legislation in 6 markets
- Almost 50% of sales are recurring; the high margin consumables used in the test process
- Revenue grew 29% in the 1st half of 2018, whilst maintaining its 50% Gross Margin
Membrane Division
- Technology has now been commercially deployed in India, China and Oman
- Chinese partner’s recent investment provided further validation of the technologies’ potential
- Sales Momentum is now building but, in these early stages of commercialisation, will be lumpy
- The design & build of Gibraltar’s Sewerage Treatment plant is worth £22m to MW over 2 years
CEO's Outlook
Modern Water made significant commercial progress in 2018 and is in a strong position to build on these successes.
In China, our Membrane Division is well-placed to capitalise on the world's largest market for brine concentration, together with our Strategic Partner Sunup. In India, the successful completion of our first project with our partner Advent Envirocare has increased interest and opportunities for deployment of our technology. In Gibraltar we are working hard to fulfil HM Government of Gibraltar's target of breaking ground this year.
The hard work of our Monitoring Division in building sales whilst continuing to upgrade and re-position our products leaves us well-placed for continued revenue growth in 2019 and beyond.