TIDMTUNG
RNS Number : 3026Z
Tungsten Corporation PLC
14 December 2017
TUNGSTEN CORPORATION PLC
("TUNGSTEN", the "Company" or "Group")
INTERIM FINANCIAL REPORT
FOR THE SIX MONTHSED 31 OCTOBER 2017
14 December 2017
Tungsten Corporation plc (LSE: TUNG), the global e-invoicing,
purchase order services, analytics and financing company, today
announces its results for the six months ended 31 October 2017
("H1-FY18").
Financial Highlights
-- Revenue increased 10% to GBP17.1 million (H1-FY17: GBP15.5
million(1) ); third consecutive half-year period of growth to give
18 month revenue increase of 32%, following three prior half-year
periods of flat revenue
-- Gross profit up 11% to GBP15.5 million (H1-FY17: GBP14.0
million), resulting in a gross margin of 91%
-- EBITDA(2) loss decreased to GBP5.0 million, a GBP1.3 million
YoY improvement (H1-FY17: GBP6.3 million loss(1) ); monthly EBITDA
declined from a peak period loss of over GBP1.5 million to a loss
of GBP0.6 million in October 2017
-- Statutory loss of GBP8.5 million (H1-FY17: loss of GBP4.5
million); prior year comparative included positive GBP4.8 million
revaluation of intercompany loans to overseas subsidiaries
-- Net cash and on balance-sheet invoice receivables were
GBP12.2 million as at 31 October 2017 (30 April 2017: GBP21.8
million)
Key Performance Metrics
-- 0.5 million invoices added in H1-FY18; total annualised
invoice volumes now 17.8 million (FY17: 17.1 million)
-- Average revenue per invoice increased to GBP1.86 (FY17: GBP1.82)
-- Adjusted operating expenses(3) steady at GBP20.5 million (H1-FY17: GBP20.3 million)
-- Tungsten Network Finance average invoice outstandings of
GBP22.4 million in October 2017 (GBP14.0 million in April 2017 and
GBP12.0 million in October 2016)
Operational Highlights
-- New Buyer sign-ups, including five signed in H1-FY18 and one
further new Buyer signed in November 2017. H1-FY18 new buyers
represent signed contract value of GBP1.1 million
-- 16 existing Buyers renewed contracts with weighted average
price increases of 30%; expected to add nearly GBP0.5 million to
revenue in FY18
-- A further seven existing Buyers contracts renewed
automatically at current pricing. In total 98% of renewing invoice
volume and 96% of renewing invoice revenue secured under new
contracts
-- 13,000 net new Suppliers added to bring total Suppliers to 264,000
-- Further progress by Tungsten Network Finance; new peak
outstandings achieved in September 2017 of GBP28.8 million and
three new funding partnerships, including one with BNP Paribas
-- Launched new Supplier Analytics product suite with initial
take-up. Enhanced outbound e-Billing capabilities
-- Significant progress on technology infrastructure projects,
including transition to new US core transaction processing network.
Additional major projects will be completed over the next six
months
(1) Prior year excludes Tungsten Bank as a discontinued
operations.
(2) EBITDA loss is defined as operating loss from continuing
operations before other income, depreciation, amortisation,
share-based payments charge, and exceptional items.
(3) Adjusted operating expenses defined as operating expenses
from continuing operations excluding cost of sales and before
depreciation, amortisation, share-based payments charge and
exceptional items.
Outlook
On track to deliver in FY18:
-- Constant currency growth in revenue of at least 15% (FY17: 12%);
-- Gross margin of at least 90% (FY17: 92.8%); and
-- Adjusted operating expenses of less than GBP40 million (FY17:
GBP40.8 million). This excludes one-off costs of approximately GBP3
million. One-off costs are now expected to be GBP1 million higher,
primarily due to the cost of reducing our property footprint in the
USA.
Trading in H1-FY18 was in line with our budget. We expect
monthly EBITDA to continue at the H1-FY18 average run rate until
the end of calendar 2017. Over the first four months of the 2018
calendar year we expect to achieve overall EBITDA breakeven in each
month, with slight variances dependent on the timing of new
customer sales.
The improved performance over H1-FY18 is expected to result
from:
-- the cumulative benefit of the new sales achieved in H1-FY18
and additional forecasted sales, including the Buyer sale concluded
in November 2017;
-- the phased completion of technology projects resulting in
implementation cost reduction and productivity enhancements that
are a consequence of these projects;
-- additional new product sales; and
-- growth in our trade finance solutions.
Richard Hurwitz, Chief Executive Officer, commented:
"Over the first half of FY18 we demonstrated further progress in
Tungsten's turnaround. Our results evidence the success we are
having in delivering against our plans to drive strategic
value.
"Revenue growth of 10% in the period was achieved with marginal
increase in our adjusted operating expenses and we have now
achieved 32% total revenue growth over the past three half-year
reporting periods, a CAGR of 20%. This revenue growth rate was in
line with our projections and our operating expenses demonstrate
continued robust financial control.
"In particular, five new buyer customer wins demonstrate that
our product offerings remain strong. The advancements made in our
Tungsten Network Finance business encourage us that we are
developing sustainable, scalable financing activities.
"We are progressing well with our essential remediation
activities to put in place an infrastructure that will support
emerging demand and the new opportunities we have opened. This
includes achieving important milestones such as transitioning to a
new core transaction processing capability in the USA and the
implementation of a new cloud-based disaster recovery platform.
"We are close to achieving our near-term aim of run-rate EBITDA
profitability. To be in this position reflects the strength of
Tungsten's customer proposition and the hard work undertaken by our
people to transform all areas of the business. More importantly,
however, we are well positioned to accelerate profitable growth and
do great things with our customers."
Nick Parker, Non-Executive Chairman, added:
"Our Board is focussed on the creation of long term value for
our shareholders and we are happy with the continued improvement
across the business, which is reflected in these results. We are
making good progress with our transformation, but while focus may
be on the imminent achievement of EBITDA breakeven, we will not
take short-term actions that may impact long-term growth
prospects'
"The changes made to Tungsten over the last two years were vital
to position ourselves for profitable growth. As we continue to
improve our capabilities, we also look outside Tungsten to
determine how best to take advantage of the opportunities presented
by a vibrant market, in which Tungsten intends to protect and grow
its strong position."
Analyst Presentation
Richard Hurwitz, Chief Executive Officer, and David Williams,
Chief Financial Officer, will today host a conference call and
webcast at 9.00am UK time. To access the webcast please click here.
For participants unable to join the webcast, the dial-in number for
the conference call will be +44 (0) 20 3003 2666 / +1 212 999 6659
with the password 'Tungsten' and a presentation will be available
on the Tungsten Network website.
A replay facility will be available until 28 December 2017. The
dial-in number for the replay facility is +44 (0) 20 8196 1998 with
PIN number 9843374#.
Enquiries
Tungsten Corporation plc
Richard Hurwitz, Chief
Executive Officer
David Williams, Chief Financial
Officer +44 20 7280 7713
Panmure Gordon UK Limited
(Nominated Advisor)
Dominic Morley/Peter Steel +44 20 7886 2500
Canaccord Genuity Limited
(Broker)
Simon Bridges/Andrew Buchanan/Emma
Gabriel +44 20 7523 8000
Neustria Partners (Investors,
Analysts and Media)
Robert Bailhache/Nick Henderson/Charles
Gorman +44 20 3021 2580
About Tungsten Corporation plc
Tungsten Corporation (LSE: TUNG) aims to be the world's most
trusted business transaction network by using data intelligently to
strengthen the global supply chain.
Tungsten Network is a secure e-invoicing, purchase order
services and workflow platform that brings businesses and their
suppliers closer together with unique technology that
revolutionises invoice processing, maximises efficiency and
improves cash flow. Delivering trusted connections and streamlined
transactions, the network also provides users with real-time spend
analysis and offers suppliers access to invoice financing through
Tungsten Network Finance, a form of alternative finance for
businesses.
Tungsten Network processes invoices for 70 percent of the FTSE
100 and 72 percent of the Fortune 500. It enables suppliers to
submit tax compliant e-invoices in 48 countries, and last year
processed transactions worth over GBP133bn for organisations such
as Alliance Data, Cargill, Deutsche Lufthansa, General Motors,
GlaxoSmithKline, Mondelēz International, Henkel, IBM, Kellogg's and
the US Federal Government.
Trusted, passionate and proven, Tungsten is making the
digitisation of global commerce between buyers and suppliers
faster, easier and smarter.
Forward looking statements
This document contains forward-looking statements that may or
may not prove accurate. For example, statements regarding expected
revenue growth and trading margins, market trends and our product
pipeline are forward-looking statements. Phrases such as "aim",
"plan", "intend", "anticipate", "well-placed", "believe",
"estimate", "expect", "target", "consider" and similar expressions
are generally intended to identify forward-looking statements.
Forward-looking statements involve known and unknown risks,
uncertainties and other important factors that could cause actual
results to differ materially from what is expressed or implied by
the statements. Any forward-looking statement is based on
information available to Tungsten as of the date of this statement.
All written or oral forward-looking statements attributable to
Tungsten are qualified by this caution. Tungsten does not undertake
any obligation to update or revise any forward-looking statement to
reflect any change in circumstances or in Tungsten's
expectations.
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
Business and Strategic Update
We are close to achieving our aim of EBITDA breakeven on a run
rate basis, and we expect to pass this milestone in the near
future. A focus on the point in time that this is reached loses
sight of the progress Tungsten is making on its corporate
transformation. We have chosen not to accelerate breakeven through
an arbitrary reduction of expenditure on any of our sales,
marketing, product development, customer services or the projects
that will bring further automation to our service delivery, as this
would restrict our future growth potential. Our ultimate
aspirations and those of our shareholders extend far further than
breakeven.
Revenue growth of 10% with marginal increase in our adjusted
operating expenses reflects the decoupling of cost increase from
revenue growth that we have achieved. Indeed, we have now delivered
five consecutive half-year periods where we have maintained our
expenses at a constant level, whilst increasing our revenue by 32%
at a 20% compound annual growth rate (CAGR) of our revenue over the
past three half-year periods. We expect revenue growth to
accelerate over the second half of FY18. While we remain subject to
the vagaries around the timing of new customer contracts, we retain
guidance of at least 15% revenue growth.
We continue to see proof of the strength in our business with
strong new customer signups and retention rates as well as
completion of some of the ongoing technology projects that will
transform our business infrastructure. As we look to the next stage
of Tungsten's evolution, we can adjust our focus to taking
advantage of growth opportunities in a market that is constantly
seeking ways to remove friction from the back office. We will
continue to do this in the framework of our four strategic
priorities, against which we have previously reported.
Focus on our core
Tungsten Network connects 264,000 global organisations around
the world, processing transactions for them and delivering data
between them. Transactions volumes grew 5% in H1-FY18 from the same
period in the prior year, an increase from 8.4 million to 8.9
million. On an annualised basis, we processed 17.8 million
transactions. We see transaction volumes as a lagging indicator,
following Buyer sign-up and implementation and Supplier sign-up and
implementation. Therefore, new customers signed in the H1-FY18 will
impact transaction volume growth rates in future periods.
Five new Buyer organisations contracted to join Tungsten Network
in H1-FY18, with another joining subsequent to the period end.
Encouragingly, these were from across our sales channels (direct,
PNC Bank, and BPO relationships), and subscribed to a wide range of
our services (Work Flow, Invoice Data Capture, E-Invoicing and PO
services). The combined signed contract value of the new Buyers
totalled GBP1.1 million, of which GBP0.7 million of revenue is
expected to be recognised in FY18.
We completed renewal discussions with 30 current Buyer customers
in H1-FY18, representing 5.0 million of annual transactions and
GBP2.0 million of recurring revenue (both based on FY17; recurring
revenue excludes one-off fees). We continue to enjoy strong
retention rates, with over 98% of renewing invoice volume and 96%
of renewing invoice revenue re-contracted, the majority on
multi-year agreements of services. Of the 23 Buyers that renewed,
16 agreed average price increases of 30% and a further six had
contracts that allowed for automatic renewals on the same terms as
previously agreed. One Buyer had its contract merged with another,
and the five Buyers that we did not renew represent just 80,000
transactions per year and GBP112,000 of revenue. These reflect our
focus on higher volume or growth accounts. We ended the period with
185 Buyers.
We increased the number of net connections by 13,000 during the
period and at the end of H1-FY18 had 264,000 Suppliers using
Tungsten Network for a combination of delivering invoices to their
customers, tracking the status of their invoices and having their
invoices digitised using our Invoice Data Capture product.
Suppliers leave Tungsten Network primarily where the Buyer
chooses to change the source of supply for goods or services. As a
result, Supplier attrition is higher than Buyer attrition. The net
increase of Suppliers of 13,000 reflects
the loss of 18,000 (7%) Suppliers, replaced by 32,000 new
members. We are focussed on minimising the loss of Suppliers,
primarily by connecting them to more Buyers.
Improve operational performance
Our core transaction processing network is nearing end of life,
being based on legacy technology. It had been hosted in managed
data centres that were costly to operate and inflexible. We are
transitioning legacy databases to a cloud-based provider and at the
same time rebuilding the technology that processes invoices for our
customers.
As a result, we will upgrade service levels and the scalability
of our technology platform, reduce running costs by just over GBP1
million per year, and avoid an estimated GBP3.0 million imminent
capital cost in replacing obsolete equipment.
We have now completed the initial phases of this exercise,
having commenced processing at our new hosting provider and
completed a full switch over to our new US core technology
platform. By the end of FY18 we expect to have moved substantially
all other processing and completed the transition to our new EU /
rest of world core technology platform. As at 31 October 2017 we
have recognised provisions of GBP1.1 million in respect of
termination costs of legacy technology providers.
Two further projects are expected to be completed in early FY19;
the replacement of Tungsten's legacy bespoke customer relationship
management software, enabling a fuller rollout of Salesforce
capabilities across the business, and the upgrade of our customer
facing web technologies and experience, including rebuilding our
customer sign-up process and portals.
Tungsten's technology transformation will result in a more
efficient, stable and secure infrastructure, enabling us to more
effectively implement and serve our customers, and do so at lower
cost. Each of these projects have been carefully planned, budgeted
and managed and all are on schedule. In H1-FY18 the majority of our
GBP2.0 million intangible asset additions were incurred on these
projects, and we expect a similar amount to be spent over the
second half of the year.
Our target is to maintain our annual adjusted operating expenses
at approximately GBP40.0 million. The H1-FY18 cost of GBP20.5
million is expect to decrease in the second half, in part as a
result of the completion of some of our technology projects.
Distinctive invoice financing
We restarted Tungsten Network Finance one year ago. Over this
time, we have developed additional funding partner relationships
and each now represent a new business development channel as well
as an alternate source of capital.
We are delighted to have launched a collaboration with BNP
Paribas to offer e-invoicing linked receivables purchase and
e-invoicing linked supply chain finance to large corporates in the
USA and Canada. As a result, we now offer four distinct trade
finance products, some with multiple financing partners, which
address different areas of the market: Tungsten Early Payment;
receivables purchase; supply chain finance; and flexible lines of
credit.
We have made funded sales of the first three are in the midst of
implementing a supply chain finance program with a global
corporation. In September 2017 we achieved a new peak outstandings
of GBP28.8 million, reflecting a combination of Tungsten Early
Payment and receivables purchase balances.
Tungsten Early Payment
Average outstandings over the period were GBP16.3 million and in
October 2017 this was GBP22.4 million, reflecting the continued
growth in Tungsten Early Payment. Customers paid an average of
5.38% (the gross yield) and our return was 1.9% (the net
yield).
Receivables purchase
As previously announced, we secured three structured receivables
financing mandates in Q1-FY18 totalling approximately $75.0 million
(GBP56 million). One of these was funded and drawn in H1-FY18, to a
total of GBP5.9 million. Our return on this was 0.13%. One of the
other receivables purchase deal was funded after the period
end.
We expect our receivables purchase arrangement to be regularly
redrawn over time, giving us an opportunity to continue to earn
revenue.
Supply chain finance
We hope to shortly conclude our first supply chain finance deal
with a global corporation.
Flexible lines of credit
Tungsten Network's U.S.-based customers have access to
additional financing options through BlueVine's business line of
credit solution, called Flex Credit. This offering was launched in
H1-FY18, with initial sales made.
Expand adjacent services
Our product innovation in H1-FY18 focussed on the launch of our
new Supplier analytics product and the expansion of our e-billing
capabilities.
Supplier analytics has been designed to be relevant to all
Suppliers, large or small, on Tungsten Network. Our beta launch has
focussed on larger Suppliers and we are delighted that a number
have purchased the product. Built in modules it gives Suppliers
real-time analysis of trading with their Buyers. We are currently
preparing for the full launch of the product to all Suppliers on
Tungsten Network.
We also launched an enhancement to our e-billing capabilities in
H1. Distinct from e-invoicing which provides automation for
accounts payable (AP), e-billing is a product for accounts
receivable (AR) departments that electronically delivers Supplier
outbound invoices, irrespective of whether its Buyer is on Tungsten
Network. Our enhancements have supported incremental sales of this
product in H1, and we expect to further develop our capabilities in
this area as we seek to expand Tungsten Network.
Tungsten remains at the forefront of providing tax compliant
e-invoicing, and our service enhancements in this regard in H1-FY18
included adapting our unique compliant, paperless invoicing in
India to accommodate the country's new GST regime, and the
development of payment receipts in response to a new legal
requirement in Mexico for a Complemento de Pagos.
Outlook
On track to deliver in FY18:
-- Constant currency growth in revenue of at least 15% (FY17: 12%);
-- Gross margin of at least 90% (FY17: 92.8%); and
-- Adjusted operating expenses of less than GBP40 million (FY17:
GBP40.8 million). This excludes one-off costs of approximately GBP3
million. One-off costs are now expected to be GBP1 million higher,
primarily due to the cost of reducing our property footprint in the
USA.
Trading in H1-FY18 was in line with our budget. We expect
monthly EBITDA to continue at the H1-FY18 average run rate until
the end of calendar 2017. Over the first four months of the 2018
calendar year we expect to achieve overall EBITDA breakeven in each
month, with slight variances dependent on the timing of new
customer sales.
The improved performance over H1-FY18 is expected to result
from:
-- the cumulative benefit of the new sales achieved in H1-FY18
and additional forecasted sales, including the Buyer sale concluded
in November 2017;
-- the phased completion of technology projects resulting in
implementation cost reduction and productivity enhancements that
are a consequence of these projects;
-- additional new product sales; and
-- growth in our trade finance solutions.
Principal Risks and Uncertainties
The Group's principal risks and uncertainties remain the same as
those set out in the Tungsten Corporation plc Annual report and
accounts for the year ended 30 April 2017.
Financial Results
The impact of foreign exchange movements on the results was
immaterial. We therefore present the results at actual exchange
rates only.
Revenues:
On a continuing Buyers Suppliers Tungsten Group
operations basis(1) Network
Finance
---------------------- -------- ---------- ---------
Revenue H1-FY18 GBP7.7m GBP9.2m GBP0.2m GBP17.1m
---------------------- -------- ---------- --------- ---------
Revenue H1-FY17 GBP6.7m GBP8.8m GBP0.0m GBP15.5m
---------------------- -------- ---------- --------- ---------
Change at actual
exchange rate 14% 4% 1536% 10%
---------------------- -------- ---------- --------- ---------
(1) Excludes the results of Tungsten Bank from prior period
comparative
Group revenue was GBP17.1 million (H1-FY17: GBP15.5 million),
representing an increase of 10%. The growth in revenues reflected
the benefits of new customer sales, additional product sales to
current customers and existing customer price increases.
Revenue from 185 Buyer customers grew 14% to GBP7.7 million.
This includes five new Buyers, which contributed GBP0.3 million in
the period.
We have continued the successful programme of Buyer contract
renewals. We achieved further price lift averaging 30% with 16 of
our Buyer customers in H1-FY18. Buyer revenues represented 45% of
total Tungsten Network revenues in the H1-FY18, compared to 43% in
H1-FY17.
Revenue from our Supplier customers grew 4% to GBP9.2 million.
This was split GBP7.9 million from Integrated Solution Suppliers
(H1-FY17: GBP7.2 million) and GBP1.3 million from Web Form
Suppliers (H1-FY17: GBP1.6 million). We increased the net number of
Suppliers connected to our Network in H1-FY18 by 13,000.
Tungsten purchases invoices from approved Suppliers on Tungsten
Network, which are then sold to a funding partner. In the reporting
period these funding partners were Tungsten Network Finance
(self-funded), Insight Investment and BNP Paribas. In the
comparative period, Tungsten Bank was also a funding partner.
The total gross Tungsten Network Early Payment fees in H1-FY18
were GBP401,000 (H1-FY17: GBPnil), of which GBP165,000 (H1-FY17:
GBPnil) was attributable as revenue for Tungsten Network
Finance.
EBITDA:
On a continuing Tungsten Tungsten Corporate Group
operations basis(1) Network Network
Finance
----------------------- ----------- ---------- ----------
Revenue H1-FY18 GBP16.9m GBP0.2m - GBP17.1m
----------------------- ----------- ---------- ---------- -----------
Revenue H1-FY17 GBP15.5m - - GBP15.5m
----------------------- ----------- ---------- ---------- -----------
Change at actual
exchange rate 10% 1536% n/a 10%
----------------------- ----------- ---------- ---------- -----------
Cost of sales H1-FY18 GBP(1.5)m Neg - GBP(1.5)m
----------------------- ----------- ---------- ---------- -----------
Cost of sales H1-FY17 GBP(1.5)m Neg - GBP(1.5)m
----------------------- ----------- ---------- ---------- -----------
Change at actual - - n/a -
exchange rate
----------------------- ----------- ---------- ---------- -----------
Adjusted operating GBP(16.3)m GBP(1.1)m GBP(3.1)m GBP(20.5)m
expenses(2) H1-FY18
----------------------- ----------- ---------- ---------- -----------
Adjusted operating GBP(16.3)m GBP(0.8)m GBP(3.2)m GBP(20.3)m
expenses H1-FY17
----------------------- ----------- ---------- ---------- -----------
Change at actual
exchange rate (0)% (38)% 3% (1)%
----------------------- ----------- ---------- ---------- -----------
EBITDA(2) H1-FY18 GBP(0.9)m GBP(0.9)m GBP(3.1)m GBP(5.0)m
----------------------- ----------- ---------- ---------- -----------
EBITDA H1-FY17 GBP(2.2)m GBP(0.8)m GBP(3.3)m GBP(6.3)m
----------------------- ----------- ---------- ---------- -----------
Change at constant
exchange rate (60)% 25% (6)% (21)%
----------------------- ----------- ---------- ---------- -----------
(1) Excludes the results of Tungsten Bank from both reported
periods.
(2) Adjusted operating expenses and EBITDA exclude discontinued
operations, other income, depreciation, amortisation, share-based
payments charge, and exceptional items.
Group EBITDA loss was GBP5.0 million (H1-FY17: GBP6.3 million),
a reduction of 21%. The improvement of GBP1.3 million reflects a
GBP1.6 million increase in revenue, offset by a GBP0.3 million
increase in adjusted operating expenses.
Exceptional items:
We had previously indicated that we would incur a number of
exceptional items in FY18 as a result of the restructuring of the
Group.
H1-FY18 restructuring costs of GBP2.3 million include:
-- Technology contract termination costs of GBP1.1 million;
-- Onerous lease provision of GBP0.7 million, reflecting future
amounts owed on a property now vacated in the USA. This property is
being marketed for sub-lease. Should we be successful in obtaining
a sub-tenant, we will reduce the provision accordingly;
-- Termination contract due to service performance of GBP0.2 million;
-- Redundancy costs of GBP0.3 million
Loss before tax:
The Group loss before tax was GBP9.1 million (H1-FY17: loss of
GBP3.1 million). This includes:
-- Depreciation and amortisation of GBP1.2 million (H1-FY17: GBP1.4 million)
-- Share based payment expense of GBP0.4 million (H1-FY17: GBP0.2 million)
-- Net finance loss of GBP0.3 million (H1-FY17: net finance gain of GBP4.8 million).
The comparative period net finance gain includes a one-off gain
on the revaluation of intercompany balances.
Loss for the period:
The Group loss for the period was GBP8.5 million (H1-FY17:
GBP4.5 million). A tax credit of GBP0.6 million (H1-FY17: GBP0.1
million) includes VAT refund of GBP0.3 million and a release of
GBP0.3 million in the deferred tax liability which related to the
technology acquired on the acquisition of OB10.
The comparative period net loss includes a loss from the
discontinued operations of GBP1.5million.
Cash flow:
Cash and cash equivalents at the end of H1-FY18 were GBP8.0
million; GBP12.2 million including self-funded invoice receivables
of GBP4.2 million. The comparative at the end of FY17 was GBP17.5
million, or GBP21.8 million including self-funded invoice
receivables of GBP4.3 million.
The cash outflow from operating activities was GBP7.3 million in
the six-month period to 31 October 2017 (H1-FY17: GBP5.4 million).
This included:
-- An outflow generated from operations of GBP4.5 million (H1-FY17: GBP6.3 million);
-- An outflow from trade and other receivables of GBP1.8 million (H1-FY17: GBP2.0 million);
-- An outflow from trade and other payables of GBP0.9 million (H1-FY17: GBP2.5 million inflow);
-- Net interest paid of GBP0.2 million (H1-FY17: GBP0.4 million); and
-- No flows from discontinued operations (H1-FY17: inflow of GBP0.8 million).
There was a GBP1.8 million outflow from trade and other
receivables (H1-FY17: GBP2.0 million). This was primarily due to an
increase in invoicing over the later part of the period. Overdue
amounts as at 31 October 2017 are at a similar level to the end of
FY17.
An increase in trade and other payables of GBP0.9 million
primarily reflects the provisions made for exceptional items.
The cash outflow from investing activities was GBP2.2 million
(H1-FY17: GBP0.8 million). This includes an outflow of GBP2.0
million from the capitalisation of software development costs,
reflecting the ongoing technology infrastructure enhancements. A
further GBP0.2 million outflow reflects the purchase and
capitalisation of fixed assets.
The cash inflow from financing activities was GBP24,000
(H1-FY17: GBP1.2 million). The comparative reflects discontinued
operations.
Loss per share
The basic and diluted loss per share was 6.73p and 6.62p
respectively (H1-FY17: 3.53p; 3.42p). On an adjusted basis
excluding share-based payments, other income, impairments and
acquisition-related amortisation, basic and diluted loss per share
was 5.29p (H1-FY17: 6.09p).
Net assets
Net assets decreased by GBP8.0 million to GBP123.3 million
during the period (FY17: GBP131.3 million) due to the Group's
statutory loss of GBP8.5 million offset by a movement in the share
based payment reserve of GBP0.4 million.
Condensed consolidated income statement
Six months Six months
ended ended
31 October 2017 31 October 2016
Note (unaudited) (unaudited)
GBP'000 GBP'000
Continuing operations:
Revenue 5 17,055 15,538
Operating expenses (25,885) (23,400)
---------------------------------------- ----- ------------------------------------ -------------------------------
Operating loss (8,830) (7,862)
EBITDA (4,952) (6,295)
Depreciation and amortisation (1,151) (1,396)
Share based payment expense 5 (383) (171)
Exceptional items 6 (2,344) -
-------------------------------
Operating loss (8,830) (7,862)
---------------------------------------- ----- ------------------------------------ -------------------------------
Finance income 13 1,331 6,907
Finance costs 13 (1,608) (2,125)
Net finance (costs) / income (277) 4,782
---------------------------------------- ----- ------------------------------------ -------------------------------
Loss before taxation (9,107) (3,080)
Taxation 626 127
Loss for the period from continuing
operations (8,481) (2,953)
---------------------------------------- ----- ------------------------------------ -------------------------------
Discontinued operations
Loss for the period from discontinued
operations - (1,504)
Loss for the period (8,481) (4,457)
---------------------------------------- ----- ------------------------------------ -------------------------------
Loss per share from
continuing and discontinued
operations attributable to
the equity holders
of the parent during the
period (expressed in pence
per share):
Basic
From continuing operations 14 (6.73) (2.34)
From discontinued operations 14 - (1.19)
---------------------------------------- ----- ------------------------------------ -------------------------------
(6.73) (3.53)
-------------------------------------- ----- ------------------------------------ -------------------------------
Diluted
From continuing operations 14 (6.62) (2.27)
From discontinued operations 14 - (1.15)
------------------------------- --- ---- ---------------------- -------
(6.62) (3.42)
------------------------------- --- ---- ---------------------- -------
The notes on pages 16 to 23 are an integral part of these
condensed consolidated interim financial statements.
Condensed consolidated statement of comprehensive income
Six months ended Six months ended
31 October 2017 31 October 2016
(unaudited) (unaudited)
GBP'000 GBP'000
Loss for the period (8,481) (4,457)
Other comprehensive income/(loss):
Items that may be reclassified subsequently to
profit or loss
Currency translation differences 106 (4,032)
Total comprehensive loss for the period (8,375) (8,489)
------------------------------------------------------ ------------------------ ------------------------------
Items in the statement above are disclosed net of tax.
The notes on pages 16 to 23 are an integral part of these
condensed consolidated interim financial statements.
Condensed consolidated statement of financial position
As at
As at 30 April
31 October 2017 2017
Note (Unaudited) (Audited)
GBP'000 GBP'000
-------------------------------------------------------------- ----- ---------- ----------------- ------------
Assets
Non-current assets
Intangible assets 7 119,411 118,452
Property, plant and equipment 8 1,852 1,856
Trade and other receivables 439 469
--------------------------------------------------------------------- ---------- ----------------- ------------
Total non-current assets 121,702 120,777
--------------------------------------------------------------------- ---------- ----------------- ------------
Current assets
Trade and other receivables 10,058 8,790
Invoice receivables 9 4,280 4,304
Cash and cash equivalents 7,965 17,498
--------------------------------------------------------------------- ---------- ----------------- ------------
Total current assets 22,303 30,592
--------------------------------------------------------------------- ---------- ----------------- ------------
Total assets 144,005 151,369
--------------------------------------------------------------------- ---------- ----------------- ------------
Capital and reserves attributable to the equity shareholders of the parent
Share capital 10 553 553
Share premium 10 188,794 188,794
Shares to be issued 3,760 3,760
Merger reserve 28,035 28,035
Share based payment reserve 6,184 5,815
Other reserve (8,858) (8,964)
Accumulated losses (95,144) (86,663)
--------------------------------------------------------------------- ----------------- ------------
Total equity 123,324 131,330
--------------------------------------------------------------------- ---------- ----------------- ------------
Non-current liabilities
Deferred taxation 2,315 2,630
Total non-current liabilities 2,315 2,630
--------------------------------------------------------------------- ---------- ----------------- ------------
Current liabilities
Trade and other payables 8,528 9,529
Provisions 11 2,193 -
Deferred income 7,645 7,880
--------------------------------------------------------------------- ---------- ----------------- ------------
Total current liabilities 18,366 17,409
--------------------------------------------------------------------- ---------- ----------------- ------------
Total liabilities 20,681 20,039
Total equity and liabilities 144,005 151,369
--------------------------------------------------------------------- ---------- ----------------- ------------
The notes on pages 16 to 23 are an integral part of these
condensed consolidated interim financial statements.
Condensed consolidated statement of changes in equity
Shares Share
to based
Share Share Merger be payment Other Accumulated Total
(Unaudited) capital premium reserve issued reserve reserve losses equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as
at
1 May 2017 553 188,794 28,035 3,760 5,815 (8,964) (86,663) 131,330
--------------- ----------- ---------------- -------------- ------------ ---------------- ----------------- ----------------------- ---------------
Currency
translation
differences - - - - - 106 - 106
Loss for the
period - - - - - - (8,481) (8,481)
--------------- ----------- ---------------- -------------- ------------ ---------------- ----------------- ----------------------- ---------------
Total
comprehensive
loss - - - - - 106 (8,481) (8,375)
--------------- ----------- ---------------- -------------- ------------ ---------------- ----------------- ----------------------- ---------------
Transaction
with
owners
Share based
payment
expense - - - - 369 - - 369
--------------- ----------- ---------------- -------------- ------------ ---------------- ----------------- ----------------------- ---------------
Transactions
with
owners - - - - 369 - - 369
Balance as at
31 October
2017 553 188,794 28,035 3,760 6,184 (8,858) (95,144) 123,324
--------------- ----------- ---------------- -------------- ------------ ---------------- ----------------- ----------------------- ---------------
Shares Share
to based
Share Share Merger be payment Other Accumulated Total
(Unaudited) capital premium reserve issued reserve reserve losses equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as
at
1 May 2016 553 188,794 28,035 3,760 5,419 (5,221) (75,206) 146,134
--------------- ----------- ---------------- -------------- ------------ ---------------- ----------------- ----------------------- --------
Currency
translation
differences - - - - - (4,032) - (4,032)
Loss for the
period - - - - - - (4,457) (4,457)
--------------- ----------- ---------------- -------------- ------------ ---------------- ----------------- ----------------------- --------
Total
comprehensive
loss - - - - - (4,032) (4,457) (8,489)
--------------- ----------- ---------------- -------------- ------------ ---------------- ----------------- ----------------------- --------
Transaction
with
owners
Share based
payment
expense - - - - 171 - - 171
--------------- ----------- ---------------- -------------- ------------ ---------------- ----------------- ----------------------- --------
Transaction
with
owners - - - - 171 - - 171
Balance as at
31 October
2016 553 188,794 28,035 3,760 5,590 (9,253) (79,663) 137,816
--------------- ----------- ---------------- -------------- ------------ ---------------- ----------------- ----------------------- --------
The notes on pages 16 to 23 are an integral part of these
condensed consolidated interim financial statements.
Condensed consolidated statement of cash flows
Six months ended
Six months ended 31 October
31 October 2017 2016
(unaudited) (unaudited)
GBP'000 GBP'000
Cash flows from operating activities
Loss before taxation from continuing operations (9,107) (3,080)
Adjustments for:
Depreciation and amortisation 1,150 1,396
Impairment loss provision of trade receivables 496 -
Finance costs 1,608 2,125
Finance income (1,331) (6,907)
Share based payment expense 383 171
Exceptional items 2,344 -
------------------------------------------------------- --- ----------------------------- -------------------------
Cash used in operations (4,457) (6,295)
Changes in working capital:
Increase in trade and other receivables (1,763) (2,021)
Decrease in trade and other payables (899) 2,505
Net interest paid (193) (394)
Discontinued operations - 800
Net cash outflows from operating activities (7,312) (5,405)
------------------------------------------------------------ ----------------------------- -------------------------
Cash flows from investing activities
Capitalisation of software development costs (1,969) (238)
Purchases of other intangibles (35) (31)
Purchases of property, plant and equipment (168) (63)
Discontinued operations - (429)
Net cash outflows from investing activities (2,172) (761)
------------------------------------------------------------ ----------------------------- -------------------------
Cash flows from financing activities
Decrease in invoice receivables 24 -
Discontinued operations - 1,150
Net cash inflow from financing activities 24 1,150
------------------------------------------------------------ ----------------------------- -------------------------
Net decrease in cash and cash equivalents (9,460) (5,016)
Cash and cash equivalents at start of the period 17,498 27,023
Exchange adjustments (73) (183)
Cash and cash equivalents including cash held in disposal
group at the end of the period 7,965 21,824
Cash held in the disposal group - (19,247)
Cash and cash equivalents at the end of the period 7,965 2,577
------------------------------------------------------------ ----------------------------- -------------------------
The notes on pages 16 to 23 are an integral part of these
condensed consolidated interim financial statements.
Notes to the condensed consolidated financial statements
1. General information
Tungsten Corporation plc (the Company) and its subsidiaries
(together, the Group) is a global e-invoicing network that offers
supply chain financing and spend analytics.
The Company is a public limited company, which is incorporated
and domiciled in the UK. The address of its registered office is
Pountney Hill House, 6 Laurence Pountney Hill, London EC4R 0BL,
UK.
2. Basis of preparation
These condensed consolidation interim financial statements of
Tungsten Corporation plc for the six months ended 31 October 2017
("the interim financial statements") comprise the company and its
subsidiaries (together referred to as the "Group").
The condensed consolidated interim financial statements for the
six months ended 31 October 2017 were approved by the Board for
issue on 14 December 2017.
The condensed consolidated financial statements for the six
months ended 31 October 2017 do not constitute the Group's
statutory accounts for the year ended 30 April 2017, which were
approved by the Board of Directors on 24 July 2017 and delivered to
the Registrar of Companies. The report of the auditors on those
accounts was unqualified, did not contain an emphasis of matter
paragraph and did not contain any statement under section 498 of
the Companies Act 2016.
The condensed consolidated interim financial statements for the
six months ended 31 October 2017 have been prepared in accordance
with International Accounting Standard ('IAS') 34 'Interim
Financial Reporting' as adopted by the European Union ('EU'). These
interim financial statements should be read in conjunction with the
Group's Annual Report and Accounts for the year ended 30 April
2017, which have been prepared in accordance with International
Financial Reporting Standards as adopted by the European Union, the
Companies Act 2006 that applies to companies reporting under IFRS,
and IFRS Interpretations Committee (IFRS IC).
The condensed consolidated financial statements have been
prepared applying the accounting policies, methods of computation
and presentation consistent with those described in the Annual
Report and accounts for the year ended 30 April 2017.
Adjusted Measure of Performance
The Group considers adjusted EBITDA, which is defined as
operating profit or loss before depreciation, amortisation,
impairments and share based payment charge as the most appropriate
measure of the Group's underlying performance.
Exceptional items
Items which are both material and considered by the Directors to
be unusual in nature and size are separately disclosed on the face
of the condensed consolidated income statement.
New standards, amendments and interpretations issued but not yet
effective in 2017 and not early adopted
The interim financial statements have been prepared with the
same accounting policies and methods of computation followed in the
most recent annual financial statements. This includes
consideration of the new accounting standards issued but not yet
effective. The impact on the group's financial statements of the
future adoption of these and other new standards and interpretation
is still under review.
The impact of the following standard is being assessed by the
Group.
IFRS 15, 'Revenue from contracts with customers' is effective
from 1 January 2018. This standard establishes principles for
reporting the nature, amount and timing of revenue arising from an
entity's contracts with customers. The Group has conducted an
initial review to assess the full impact of IFRS 15 and the current
view is that it will have potentially effect in the way revenues
are reported.
IFRS 9, 'Financial instruments', addresses the classification,
measurement and recognition of financial assets and financial
liabilities. It replaces the guidance in IAS 39 that relates to the
classification and measurement of financial instruments.
The standard is effective for accounting periods beginning on or
after 1 January 2018. The Group does not apply hedge accounting and
has limited financial assets therefore this standard is not
expected to be a significant impact on the Group.
There were no other new IFRSs or IFRS IC interpretations that
are not yet effective that would be expected to have a material
impact on the Group.
3. Critical accounting estimates and judgements
The preparation of interim financial statements requires
management to make judgements, estimates, and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates.
In preparing these condensed interim financial statements, the
significant judgements made by management in applying the group's
accounting policies and the key sources of estimation uncertainty
were the same as those that applied to the consolidated financial
statements for the year ended 30 April 2017.
Going Concern
The Group's going concern assessment is based on forecasts and
projections of anticipated trading performance. The assumptions
applied are subjective and management applies judgement in
estimating the profitability, timing and value of underlying cash
flows.
4. Financial Risk Management
The Group's activities expose it to a variety of financial
risks, predominantly credit, liquidity and foreign currency
risk.
Risk management is carried out by the Board of Directors. The
interim financial statements do not include all financial risk
management information and disclosures required in the annual
financial statements; they should be read in conjunction with the
group's annual financial statements as at 30 April 2017. There have
been no changes in the risk management department or in any risk
management policies since the year end.
5. Segment information
Management has determined the operating segments based on the
operating reports reviewed by the Board of Directors that are used
to assess both performance and strategic decisions. Management have
identified that the Board of Directors are the Chief Operating
Decision Maker (CODM).
The Board of Directors review the financial information for
three segments: Tungsten Network (which includes the e-invoicing
and spend analytics business of Tungsten Network), Tungsten Network
Finance (which includes the supply chain finance business), and
Tungsten Corporate (which includes overheads and general corporate
costs). Intersegment revenue from management fees and other
intersegment charges are eliminated.
5. Segment information (continued)
Six months ended 31 October 2017
Tungsten Tungsten Network
Network Finance Corporate Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- -------------- ------------------ -------------------- -----------------
Revenue 16,888 167 - 17,055
--------------------------------------- -------------- ------------------ -------------------- -----------------
Segment revenue 16,888 167 - 17,055
EBITDA - excluding non-cash share
based payment (901) (937) (3,114) (4,952)
EBITDA - including non-cash share
based payment (901) (937) (3,497) (5,335)
Depreciation and amortisation (1,151)
Share based payment (383)
Exceptional items (2,344)
Finance income 1,331
Finance costs (1,608)
--------------------------------------- -------------- ------------------ -------------------- -----------------
Loss before taxation (9,107)
Income tax credit 626
--------------------------------------- -------------- ------------------ -------------------- -----------------
Loss for the period (8,481)
--------------------------------------- -------------- ------------------ -------------------- -----------------
Capital expenditure 1,940 - 232 2,172
Total assets 135,487 4,325 4,193 144,005
Total liabilities 16,035 385 4,261 20,681
--------------------------------------- -------------- ------------------ -------------------- -----------------
Six months ended 31 October 2016
Tungsten
(Including discontinued Tungsten Network Bank
operations) Network Finance Corporate (discontinued) Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------------- ---------------- ------------------- ---------------------- -----------------
Revenue 15,528 10 - 241 15,779
-------------------------- --------------- ---------------- ------------------- ---------------------- -----------------
Segment revenue 15,528 10 - 241 15,779
EBITDA - excluding
non-cash share based
payment (2,246) (791) (3,258) (1,338) (7,633)
EBITDA - including
non-cash share based
payment (2,246) (791) (3,429) (1,338) (7,804)
Depreciation,
amortisation and
impairment (1,466)
Share based payment (171)
Finance income 6,907
Finance costs (2,221)
-------------------------- --------------- ---------------- ------------------- ---------------------- -----------------
Loss before taxation (4,584)
Income tax credit 127
-------------------------- --------------- ---------------- ------------------- ---------------------- -----------------
Loss for the period (4,457)
-------------------------- --------------- ---------------- ------------------- ---------------------- -----------------
Capital expenditure 62 - 1 - 63
Total assets 129,557 226 1,946 28,535 160,264
Total liabilities 58,014 18,874 (55,655) 1,215 22,448
-------------------------- --------------- ---------------- ------------------- ---------------------- -----------------
6. Exceptional items
Six months ended Six months ended
31 October 2017 31 October 2016
(unaudited) (unaudited)
GBP'000 GBP'000
Provision for onerous contracts 1,974 -
Restructuring costs 370 -
Total exceptional items 2,344 -
-------------------------------- ------------------- ------------------
The Group incurred a number of exceptional items during this
period as a result of the restructuring of the Group. They are
mainly technology contract termination costs of GBP1.1m, onerous
lease provision of GBP0.7m which reflecting future amounts owed to
a property now vacated in the US, restructuring costs due to
contract termination and other redundancy costs.
7. Intangible assets
Software
Customer development under
Goodwill relationships IT platform Software construction Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ ---------------- ------------------------ ---------------- ---------------- ---------------------- ------------------
Cost
Balance at 1 May
2017 102,049 11,116 7,188 660 3,570 124,583
Additions - - - 35 1,969 2,004
Reclassification - - - 46 (46) -
Exchange
differences (47) (2) (41) - 1 (89)
Balance at 31
October 2017 102,002 11,114 7,147 741 5,494 126,498
-------------------- ---------------- ------------------------ ---------------- ---------------- ---------------------- ------------------
Accumulated
amortisation
Balance at 1 May
2017 - 2,007 3,694 430 - 6,131
Charge for the
period - 289 597 93 - 979
Exchange
differences - (1) (21) (1) - (23)
Balance at 31
October 2017 - 2,295 4,270 522 - 7,087
-------------------- ---------------- ------------------------ ---------------- ---------------- ---------------------- ------------------
Net book value as
at 31 October 2017 102,002 8,819 2,877 219 5,494 119,411
Net book value as
at 30 April 2017 102,049 9,109 3,494 230 3,570 118,452
The Group has estimated the recoverable amount of the Tungsten
Network CGU using a value-in-use model by projecting cash flows for
the next five years together with a terminal value using a growth
rate. The five-year plan used in the impairment models are based on
Board approved budgets and management's past experience and future
expectations of performance. The cash flow projections are based on
the following key assumptions:
-- Revenue growth from buyers and suppliers using the Tungsten
Network, including Tungsten Workflow and Tungsten Analytics at a
compound annual growth rate of 15%
-- Pre-tax discount rate of 11.75% (FY2017: 11.75%), being based
on the Group's weighted average cost of capital (WACC)
-- Growth rate used in the annuity of 2.0% (FY2017: 2.0%).
Based on the above assumptions, Tungsten Network exceeded the
carrying value of the CGU by GBP68.3 million (FY2017: GBP69.7
million). The recoverable amount of the Tungsten Network CGU was
particularly sensitive to changes in the compound annual revenue
growth rate. Assuming that there is a reduction in the compound
annual growth rate to 9.1% the recoverable amount would equal the
carrying value of the CGU.
8. Property, plant and equipment
Leasehold Fixtures Computer
improvements and fittings equipment Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------- --------------------------------- --------------- ---------------------- ------------------
Cost
Balance at 1 May
2017 1,823 220 324 2,367
Additions 116 2 50 168
Exchange
differences 4 11 154 169
Balance at 31
October 2017 1,943 233 528 2,704
------------------ --------------------------------- --------------- ---------------------- ------------------
Accumulated
depreciation
Balance at 1 May
2017 373 70 68 511
Charge for the
period 70 23 78 171
Exchange
differences 4 12 154 170
Balance at 31
October 2017 447 105 300 852
------------------ --------------------------------- --------------- ---------------------- ------------------
Net Book
Value
At 31 October
2017 1,496 128 228 1,852
At 30 April 2017 1,450 150 256 1,856
9. Invoice receivables
The invoice receivables represent outstanding Early Payment
invoices that were financed by the Group on a transitional basis
prior to the implementation of additional funding arrangements with
our partners. Tungsten purchases invoices from approved Suppliers
on Tungsten Network, which are then sold to a funding partner. In
the reporting period these funding partners were Tungsten Network
Finance (self-funded), Insight Investment and Tungsten Bank.
10. Share capital and share premium
Ordinary Share Share
shares capital Premium
------------------
Nominal
Issued and fully paid Number value GBP'000 GBP'000
------------------------ --------------------------- ------------------ -------------------- ------------------
Balance as at 1 May 2016 126,069,397 GBP0.004386 553 188,794
Shares issued during
the year - - - -
------------------
Balance as at 30 April
2017 126,069,397 - 553 188,794
Shares issued during
the period - - - -
Balance as at 31 October
2017 126,069,397 - 553 188,794
------------------------- --------------------------- ------------------ -------------------- ------------------
11. Provisions
Six months ended Six months ended
31 October 2017 31 October 2016
(unaudited) (unaudited)
GBP'000 GBP'000
Onerous contracts 1,848 -
Legal fee 345 -
Total provisions 2,193 -
------------------ ------------------- ------------------
The provisions for onerous contracts include a settlement
provision for an early termination system support contract of
GBP1.1m and a vacant leased property of GBP0.7m.
12. Share based payments
Share based payment expenses of GBP383,000 have been recognised
in the consolidated income statement for the six months ended 31
October 2017 (31 October 2016: GBP171,000). The table below sets
out the movement in shares granted under the Company share
schemes:
Employee Save as
Founder Matched you earn UK US
Number Securities Shares shares Scheme Plan SARs Total
As at 1
May
2017 3,760,000 189,440 31,600 2,241,974 3,007,650 128,169 9,358,833
Granted
during
the
period - - - 1,047,250 1,426,750 99,000 2,573,000
Lapsed
during
the
period - (8,928) (3,200) (150,750) - (14,500) (177,378)
As at 31
October
2017 3,760,000 180,512 28,400 3,138,474 4,434,400 212,669 11,754,455
--------- ----------------------- ------------------ --------------- ------------------ ------------------ ---------------- --------------------
13. Finance Income and Costs
Six months ended Six months ended
31 October 2017 31 October 2016
(unaudited) (unaudited)
GBP'000 GBP'000
Finance income
Continuing operations
Interest income on short-term deposits 110 3
Foreign exchange gains 1,221 6,904
Total finance income 1,331 6,907
---------------------------------------------------- ----------------------- ---------------------
Finance costs
Continuing operations
Interest expense and bank charges (303) (404)
Foreign exchange losses (1,305) (1,721)
Total finance costs (1,608) (2,125)
---------------------------------------------------- ----------------------- ---------------------
Net finance (costs) / income from continuing
operations (277) 4,782
---------------------------------------------------- ----------------------- ---------------------
Discontinued operations:
Interest expense and bank charges - (96)
Net finance (costs) / income (277) 4,686
---------------------------------------------------- ----------------------- ---------------------
14. Loss per share
Basic loss per share is calculated by dividing the loss
attributable to the ordinary shareholders by the weighted average
number of ordinary shares in issue during the period.
Diluted loss per share amounts are calculated by dividing the
loss attributable to ordinary equity shareholders by the weighted
average number of ordinary shares outstanding during the period,
plus the weighted average number of shares that would be issued on
the conversion of dilutive potential ordinary shares into ordinary
shares.
Loss per share from continuing and discontinued operations
attributable to the equity holders of the parent during the
period:
Six months ended Six months ended
31 October 2017 31 October 2016
Loss Shares EPS Loss Shares EPS
GBP'000 '000 P GBP'000 '000 P
Basic
------------------------- --------------------- ------------------ --------------- -------- -------- -------
Continuing operations (8,481) 126,069 (6.73) (2,953) 126,069 (2.34)
------------------------- --------------------- ------------------ --------------- -------- -------- -------
Discontinued operations - - - (1,504) 126,069 (1.19)
------------------------- --------------------- ------------------ --------------- -------- -------- -------
Loss per share (6.73) (3.53)
------------------------- --------------------- ------------------ --------------- -------- -------- -------
Diluted
------------------------- --------------------- ------------------ --------------- -------- -------- -------
Continuing operations (8,481) 128,125 (6.62) (2,953) 130,290 (2.27)
------------------------- --------------------- ------------------ --------------- -------- -------- -------
Discontinued operations - - - (1,504) 130,290 (1.15)
------------------------- --------------------- ------------------ --------------- -------- -------- -------
Loss per share (6.62) (3.42)
------------------------- --------------------- ------------------ --------------- -------- -------- -------
15. Related-party transactions
The Group entered into the following transactions with related
parties in the ordinary course of business:
Six months ended Six months ended
31 October 2017 31 October 2016
GBP'000 GBP'000
--------------------- --------------------------- --------------------
Purchase of services 14 -
--------------------- --------------------------- --------------------
Richard Hurwitz held the position of Director of The Witz
Company (US). During the period ended 31 October 2017, this
includes the services received from The Witz Company (US) totalling
GBP13,000 (2016: nil).
Transactions between Group entities principally relate to
intercompany financing arrangements, which are eliminated on
consolidation.
16. Responsibility Statement
We confirm that to the best of our knowledge
(a) The interim financial statements have been prepared in
accordance with IAS 34 'Interim Financial Reporting';
(b) The interim financial statements include a fair review of
the information required by DTR 4.2.7R (identification of important
events during the first six months and their impact on the
condensed set of financial statements and description of principal
risks and uncertainties for the remaining six months of the year);
and
(c) The interim financial statements include a fair review of
the information required by DTR 4.2.8R (disclosure of related
parties' transactions and charges therein).
By order of the Board
Richard Hurwitz, Chief Executive Officer
David Williams, Chief Finance Officer
Independent review report to Tungsten Corporation plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Tungsten Corporation plc's condensed
consolidated interim financial statements (the "interim financial
statements") in the interim financial report of Tungsten
Corporation plc for the 6 month period ended 31 October 2017. Based
on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in
all material respects, in accordance with International Accounting
Standard 34, 'Interim Financial Reporting', as adopted by the
European Union and the AIM Rules for Companies.
What we have reviewed
The interim financial statements comprise:
-- the condensed consolidated statement of financial position as at 31 October 2017;
-- the condensed consolidated income statement and condensed
consolidated statement of comprehensive income for the period then
ended;
-- the condensed consolidated statement of cash flows for the period then ended;
-- the condensed consolidated statement of changes in equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the interim
financial report have been prepared in accordance with
International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union and the AIM Rules for
Companies.
As disclosed in note 2 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The interim financial report, including the interim financial
statements, is the responsibility of, and has been approved by, the
directors. The directors are responsible for preparing the interim
financial report in accordance with the AIM Rules for Companies
which require that the financial information must be presented and
prepared in a form consistent with that which will be adopted in
the company's annual financial statements.
Our responsibility is to express a conclusion on the interim
financial statements in the interim financial report based on our
review. This report, including the conclusion, has been prepared
for and only for the company for the purpose of complying with the
AIM Rules for Companies and for no other purpose. We do not, in
giving this conclusion, accept or assume responsibility for any
other purpose or to any other person to whom this report is shown
or into whose hands it may come save where expressly agreed by our
prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the interim
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
14 December 2017
a) The maintenance and integrity of the Tungsten Corporation plc
website is the responsibility of the directors; the work carried
out by the auditors does not involve consideration of these matters
and, accordingly, the auditors accept no responsibility for any
changes that may have occurred to the interim financial statements
since they were initially presented on the website.
b) Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GGBDDRXBBGRS
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