Ottawa Business Journal : Seprotech & DND contract value increased

By Krystle Chow, Ottawa Business Journal Staff
Thu, Sep 24, 2009 11:00 AM EST

The Department of National Defence has increased the value of its contract with local wastewater systems firm Seprotech Systems Inc. (TSX-V:SET).

Seprotech said the Canadian military has expanded its standing offer agreement for repair and overhaul services for water purification systems by $1.5 million in the current fiscal year.

“Seprotech began work on the DND contract in June of this year and the increase in the standing offer agreement underscores both the urgent need for these services and the confidence DND places in the quality of Seprotech’s work in executing this contract to meet tight military deadlines,” said Seprotech CEO Martin Hauschild in a statement.

The contract amendment adds on to the original deal that was valued at up to $6 million over five years when it was first announced in January. Seprotech said the initial two-year deal is estimated at $2.5 million, with the other $3.5 million to be added if the department exercises its option to extend the contract for an additional three one-year periods.

Mr. Hauschild noted that the contract would play a key part in the company’s new strategy to get half of its revenues from operations and maintenance work within two years, a shift in focus that Seprotech had mentioned when it won the initial DND deal.

“The utility and services side of our business will provide a stable and consistent revenue base while water and wastewater treatment equipment sales will provide a platform for growth,” said Mr. Hauschild.

Seprotech in the past was primarily focused on providing water and wastewater treatment systems such as its Crystal Blue membrane-based water recycling and ROTORDISK wastewater treatment solutions, but decided to switch gears after posting a $1.46-million loss and a 3.2-per-cent drop in revenues in its fiscal 2008 year.

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