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Velpic completes rights issue and builds cash to $3.2 million as NowForce gains traction

Completion of the rights issue will assist the company in growing revenues in 2018.
Picture of cash
Increased revenues and higher margins are expected to result in earnings growth in 2018

Velpic Ltd’s (ASX:VPC) completion of its rights issue shortfall is a positive development for the company as it builds its cash position to $3.2 million after costs.

This also includes the group’s US$1 million investment in NowForce which complements Velpic’s Learning Management Systems (LMS) technology.

The group’s more robust cash position will enable it to pursue new opportunities that went available prior to its investment in NowForce.

READ: Velpic teams up with NowForce to enter US$220 billion security services sector

Growth in revenues and cash flow forecasts for 2018

Completion of the rights issue leaves the company well-placed to grow both revenues and cash flow over the next 12 months.

Russell Francis, chief executive officer, said: “To have such a strong take-up of the placement in December and the rights issue in January demonstrates the confidence that our shareholders have in Velpic and our growth strategy going forward.

“We are very pleased with the accelerated roll out of Velpic Security and the partnership with NowForce is already providing us with opportunities for revenue growth in 2018.”

Margins improve as revenues grow

Demand is increasing for Velpic Security products and a pipeline of opportunities has already been established.

The entry level pricing for the security product starts at AU$25,000 per annum.

This is significantly higher than the current average pricing of circa $7200 per annum for Velpic LMS.

The increased revenue per customer combined with the higher margin per customer is projected to accelerate earnings growth.

Cross selling opportunities also have the potential to drive growth in 2018.

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