ZipTel to raise $334,000 before costs via a share placement

ZIP

ZipTel Limited (ASX: ZIP) is a telecommunications company and also offers IT infrastructure services and real-time networks. It aims to provide cost-effective communication network to its diverse client base including banks, small scale industries, home users, multinational corporations (MNCs) etc. The company provides a wide range to services including CCTV, IT solution and web solution, data centre services, IP surveillance etc.

On 16th April 2019, the company announced that it had received commitments to raise capital up to $334k before costs via a share placement of 33.4 million fully paid ordinary shares to sophisticated and professional investors. The new shares under the placement will be issued to only those investors who qualify under Section 708 of the Corporations Act, and no investor would be a related party to the company. The company has used its existing issue capacity under Listing Rules 7.1 and 7.1A to complete the issue.

Of the total issue of 33.4 million fully paid ordinary shares, 14,973,390 shares will be issued under Listing Rule 7.1A, and the remaining 18,426,610 shares will be issued under the Company’s 15% placement capacity under Listing Rule 7.1. The settlement date is expected to occur on 24th April 2019.

Use of funds

The proceeds from the placement will be used to increase the company’s software development capabilities to provide better support to Space Digital Media Limited to launch their white-label of the Zipt product. Apart from this, the company also wants to leverage its app, software development and telephony experience and expand its software development to provide better offerings to its customers. Another portion of the funds will be directed towards the review of complementary opportunities for its current platforms. The board will assess each of these opportunities efficiently and cost-effectively.

Financial performance

The company has also delivered a decent performance for the half year ended 31st December 2018. It has reduced its total expenses from $479,930 in 1HFY18 to $227,746 in 1HFY19. Consequently, the loss for the period has also gone down from $443,530 to $198964 in the same period. Total assets have been slightly reduced from $1.66 million as at 30th June 2018 to $1.40 million as at 31st December 2018, but the liabilities have been reduced to a higher degree relative to assets in percentage terms and the company posted a reduction of more than 42% from 145,392 to 83,402 in the same period.

Outlook for 2019 was also on a positive side. The company said it would continue to support and advise SDM on software development and focusing on establishing a positive cash flow business. It will seek to materialise the opportunities for its current platforms and will also continue to review other opportunities.

Technical outlook

The company has a market capitalisation of mere A$2.25 million. On the technical front, the stock price traded flat at A$0.015 and is close to its 52 week high of A$0.20 as of 16th April 2019 (AEST: 02:10 PM). In the last six months, the stock has delivered a negative return of 11.7% while YTD return stands at 15.3%.


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