LONDON (ShareCast) - (Sharecast News) - International payment, currency risk and electronic account specialist Cornerstone FS has entered into a share purchase agreement for the sale of its non-core subsidiary Avila House, it announced on Friday.
The AIM-traded firm said it was selling Avila House - a registered small electronic money institution - to Aspire Commerce, trading as MulootMoney.com, for £0.3m in cash on completion.

It said the parties also entered a software licensing agreement for Aspire to licence the Cornerstone platform for 12 months, which would generate at least £0.29m for the company.

Cornerstone acquired Avila in October 2020, to gain a small electronic money institution.

In August 2021, its primary operating subsidiary Cornerstone Payment Solutions was approved by the Financial Conduct Authority (FCA) as an authorised electronic money institution, supplanting the more limited licence held through Avila.

As a result, the board said it believed it was in the best interests of the firm to realise the value of the non-core asset through its disposal to Aspire, a non-competing entity, while also further monetising the underlying Cornerstone platform as part of the transaction.

In addition, Aspire intended to use Cornerstone's services for any foreign exchange payments made on behalf of its clients.

The proceeds from the sale of Avila would be used to strengthen the company's existing cash resources.

For the financial year ended 31 December 2021, Avila generated revenue of £0.2m and a profit of £2,418.

All of the revenue and the majority of the costs incurred by Avila were intra-group related.

In addition to the consideration and licensing fees, the disposal of Avila would be "minimally beneficial" to the results of the consolidated Cornerstone group due to a small amount of standalone entity costs that would be saved after the disposal.

The completion of the share purchase agreement remained conditional on regulatory approval from the FCA, which was expected in the first quarter of 2023.

Cornerstone said the proceeds would be received on completion.

Under the terms of the licensing agreement, the firm would receive revenue in stages over the 12-month period, with the majority expected in the second half.

"This is an excellent deal for Cornerstone and reflects the value of an e-money registration as well as our platform," said chief executive officer James Hickman.

"As we have said previously, we have experienced strong trading momentum throughout the year, and it is great to now be ending 2022 having secured an additional £0.6m for next year.

"We look forward to reporting on our further progress."

At 1224 GMT, shares in Cornerstone FS were up 2.17% at 5.88p.

Reporting by Josh White for Sharecast.com.

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE