CloudBuy offloads company formations operation

Cloud-based e-commerce marketplace provider CloudBuy has signed a definitive agreement for the sale of its company formations business, it announced on Thursday, for cash proceeds of £0.28m.

The AIM-traded firm said the transaction represented the sale of the assets and liabilities of its company formations operations to the Stanley Davis Group, with the deal expected to complete on 29 March and the cash proceeds received on this date.

It said the proceeds, which were subject to an adjustment for receivables on the date of completion, would be applied to fund working capital.

The business being sold was a UK company formations agent, with ancillary revenue including registered office services.

CloudBuy said the operation had revenue of £0.32m in 2018 - a reduction of £59,165 from 2017.

It made an estimated operating profit, before allocation of general overheads, of £68,000 in 2018, with the net book value of the assets being sold standing at around £2,090.

As a result of this sale, CloudBuy said it would not require any additional funding to the £0.5m provided by Roberto Sella, announced on 20 March.

The company confirmed it would use the proceeds for general working capital purposes, with the board saying the transaction would allow the firm to concentrate on its strategy of focusing on existing e-commerce customers, and growing the ‘PHBChoices’ business.

“We founded this business in 2002 and were a pioneer in the sale of online company formations,” said executive chairman Ronald Duncan.

“However, the market has become more challenging since Companies House entered the market selling directly as evidenced by the decline in revenues.

“We are delighted that we have found a strong buyer for our business which will enable customers to continue to receive an outstanding service as part of a larger organisation.”