The Share Price Of 5GN Zooms By 7.143% After The Recent Update On Strong Cash Reserves

On 19 October 2018, 5G Networks Limited (ASX: 5GN) made an announcement that an agreement is signed with the Commonwealth Bank (CBA) to provide a debt facility of A$5.5 million. The company has already planned to where to use the debt facility. The breakdown of A$5.5 million will be as follows: A$3 million out of A$3.5 million will be used for the acquisition of Asia Pacific Telecommunications (APTel). A$1 million will be used for consolidation of current lease obligations and another A$1 million to cover lease guarantee.

As per the plans of the company, they have acquired APTel and were also able to maintain a strong cash balance. Now, the company has plans to use this cash reserves for the organic growth of the company. As a result of the acquisition, over 800 customers of APTel were added to the customer database of 5GN along with the annualized revenue of A$6.4 million. Â

The managing director of the company highlighted that there were two acquisitions, one was Inabox and other was APTel. Both the companies together have generated a revenue of A$55 million approximately which has made the position of the company very strong.

Since the inception, the performance of the company is 61.54%. Since last year, the performance of the company is 7.69%. However, in the past 6 months, the performance of the company is negative.

For the year ended 30 June 2018, the company incurred net loss of $324,828. The company holds net assets of $8,480,890 which implies that the company is in a position to meet its long-term obligations. The total current asset of the company is $5,331,958 and the total current liabilities of the company is $4,889,634 which implies that the company maintains a position where it can meet its short-term obligations as well as net working capital. The total shareholder’s equity is worth $8,480,890.

From the operating activities of the company, there was a net cash outflow of $671,803. Here, the major source of cash outflow was due to the payments made to the suppliers and the employees as well as income tax.

From the investing activities of the company, there was a net cash outflow of $3,342,455. Here, the major source of cash outflow was the purchase of Enspire Australia Pty Ltd and APTel Pty Ltd. The company also purchased property, plant, and equipment.

From the financing activities of the company, there was a net cash inflow of $7,132,156. Here, the main source of cash inflow was through the proceeds from the issue of shares. Simultaneously, there were cash outflows as well in the form of borrowings and capital raising cost.

By the end of the year, the net cash available with the company was $3,356,702.

By the end of trading on 04 December 2018, the market price of the share increased by 7.143% and the last traded price of the share was A$0.450 with the stock reported a market capitalization of A$21.46 million.


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