Water Intelligence reacquires Brisbane subsidiary

Leak detection and remediation technology company Water Intelligence announced on Wednesday that it has agreed to reacquire its franchise operation in Brisbane, Australia, within its American Leak Detection (ALD) subsidiary.

The AIM-traded firm said the transaction was pending certain regulatory requirements that should be satisfied during October.

It said the reacquisition in Australia’s third largest city followed July's reacquisition of the ALD franchise in Melbourne, and the previous reacquisition of the ALD franchise in Sydney.

As a result, the group said it would now have corporate operations in the three most populous cities in Australia.

Such critical mass would enable the group to better support the growth of current and new ALD franchises and corporate operations throughout the eastern half of Australia.

Due to strong demand for water conservation from residential, commercial and municipal customers, and an existing base of corporate and franchise operations to fulfil such demand, Water Intelligence said Australia was an “important geography” for its strategic growth plan.

The reacquisition would be accretive to shareholder value, the board said, with Brisbane operations generating around AUD 0.5m in revenue and AUD 0.1m in pre-tax profits for the trailing 12 months, which includes a period of slowdown due to the Covid-19 pandemic.

The purchase price would be AUD 0.55m.

Management would be staying with the group's corporate operations, the board said, with the purchase agreement including incentives for a price adjustment upward if management accelerated revenue and profits over the next 12 months as the marketplace adjusts.

Despite Covid-19's impact on the country, the group said it was continuing to operate in Australia as an ‘essential service’ provider, to support water and wastewater infrastructure.

“With our growth-focused execution, we continue to distinguish ourselves among companies operating in the Covid-19 marketplace,” said executive chairman Dr Patrick DeSouza.

“Brisbane reinforces our effort to drive growth across all our current geographies - US, UK, Canada and Australia.”

Dr DeSouza said that in particular, given the demand for solutions to water loss and wastewater issues, Australia would be a source of “strong growth” for the group.

“With Sydney, Melbourne and now Brisbane, we have a critical mass of profitable corporate operations with which to execute and accelerate our plan across Australia.”

At 1630 BST, shares in Water Intelligence were up 1.25% at 405p.