South Staffordshire acquires loss-making water treatment business in £1.8m deal

A SUBSIDIARY of utility company South Staffordshire has acquired the loss-making water hygiene and treatment division of APC Technology in a deal worth £1.8m.

Walsall-based South Staffordshire will pay £0.8m in cash to APC, with the remaining £1m used to settle the amount outstanding under an invoice finance facility provided to APC by ABN Commercial Finance.

The transaction has also allowed APC to dispose of £0.65m of future liabilities under operating leases, halve the company’s headcount and significantly reduce fixed costs.

The operation will be absorbed into South Staffordshire’s Integrated Water Services subsidiary.
 
The disposal follows a review by the APC board to focus efforts on the growth of its electronic components operation, Smartwave Internet of Things products, and energy efficient lighting distribution businesses.
 
“The (APC) board believes that these businesses align much more closely, both operationally and in terms of future strategy, and that they provide a sustainable base for the future development of the group,” said the company in a statement announcing the sale.
 
The proceeds of the disposal will be used to strengthen the group’s balance sheet and support working capital.
 
In the 17 months to August 31, 2015 the business being sold had audited revenues of £11.3m, made a pre-tax loss of £2.1m and had net assets at period-end of £0.4m.

BDO in Birmingham advised AIM-listed APC on the sale.

Satvir Bungar, Head of Facilities Management and M&A Director at BDO, said: “We have worked with the APC management team for many years and are delighted to be announcing this transaction, which will see the board of APC focus efforts its efforts on the significant growth opportunities its other businesses present.

“APC’s water hygiene business has a great reputation in providing essential compliance services in the areas of legionella testing and in promoting new technologies in the facilities management sector, with data analytics a key focus. There is a strong strategic fit for future development with South Staffordshire.”

South Staffordshire plc, which comprises of South Staffs Water and Cambridge Water, serves the West Midlands, South Staffordshire, South Derbyshire, North Warwickshire and North Worcestershire areas.