Stock Profile: Zenon Environmental Symbol: ZEN (TSE)

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Stats as of 5/11/01

• H/L Ratio: 2.29 • RS: 95.9 • Shares: 19,440,463 • P/E: 72.22 • Price: $13.00

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A year ago, in May 2000, six people died and many more were made seriously ill by e. coli infecting the water supply of the Ontario town of Walkerton. The scandal led to a major inquiry and the Ontario government's launch of Operation Clean Water - a concerted effort to introduce universal water quality standards in that province.

An isolated incident? In May 2001 three people were reported killed by bacteria in the water supply of North Battleford, Saskatchewan. These are just the tip of the iceberg in an escalating water crisis as infrastructure decays. A recent poll showed that 46% of Canadians do not trust their tap water.

So it is not surprising that a company like Zenon Environmental is starting to catch the investing public's attention. Founded in 1980, Zenon is a leader in the manufacture and sales of membrane technologies for drinking water purification. It is also active in wastewater treatment.

Not only do Zenon's membrane products purify drinking water, they do so without chemicals. Its Zee-Weed^® product is an immersed hollow-fiber membrane that draws water to the inside of the fiber under slight suction. It can handle almost any kind of water including high turbidity without plugging.

And they are selling. Collingwood, Ontario built a plant using Zenon technology in 1998 after a Crytosporidium outbreak. The largest ultra-filtration water treatment plant in North America was completed in January 2001 in the Olivenhain Municipal Water District in Southern California using Zenon technology. Other plants include one in Thunder Bay, Ontario.

The company is international in scope with operations in Europe, the Middle East, Latin America and Asia. It is the supplier of shipboard filtration systems for the Holland America cruise ship line as well as industrial clients. The company operates from nine locations in North America.

Zenon has been profitable for most of the last ten years. It currently has a substantial backlog of orders. A renewed interest in water purification has pushed the stock up close to its all time high. Its price to earnings ratio is a hefty 72.2, but probably justified in the circumstances as more and more communities look to upgrade their systems.

The quarter to March 31st showed an operating profit but a net loss after taxes due the geographical distribution of tax liabilities.

Quarterly Earnings per Share

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