28 November 2014

Tungsten reports full year post-tax loss

08 July 2014  |  886 views  |  0 Source: Tungsten Corporation plc

Tungsten Corporation plc (Tungsten) (LSE: TUNG), the global electronic trading network focused on monetising the world's supply chain, has announced its results for the financial year ended 30th April 2014 ("FY2014").

Operational highlights

  • 55% of Fortune 500 and 67% of FTSE 100 now being served by Tungsten Network
  • 20% growth in e-Invoicing: $152bn of e-Invoices processed in FY2014, compared to $126bn in the prior year
  • Focus on long-term Tungsten Network growth:
    • Signed a net eight new buyers to Tungsten Network since acquisition, including recent additions of GE and Caterpillar
    • Moving buyers to pure digital invoicing: Fall in 'paper' invoice data capture (IDC) transactions to $35bn in FY2014 from over $48bn in prior year
    • Increase to 46 countries where Tungsten Network offers legal and tax compliant e-Invoicing
  • Over 168,000 suppliers now registered to use Tungsten Network
  • Tungsten Network Analytics invoice data repository now totals over $700bn
  • Key hires made across jurisdictions and business units including COO Lincoln Jopp; CEO of Americas Rick Hurwitz; and full Board and management team for Tungsten Bank

Business highlights

  • Completed acquisition of OB10 Limited e-Invoicing platform, now renamed Tungsten Network Limited, for £73m in cash and £28m in equity in October 2013
  • In June 2014 post the period end, completed acquisition of fully authorised UK bank, FIBI Bank (UK) plc, now renamed Tungsten Bank plc, for total cash consideration of £29.3m
  • Creation of Tungsten Network Finance:
    • Built an automated supply chain financing platform, integrated with Tungsten Network and financed the first invoices to selected suppliers
    • Agreement with PNC to resell Tungsten to its customers
    • Agreement with Alliance Data Systems to operate buyer-financed invoice discounting
    • Co-operation with Blackstone Tactical Opportunities to finance international invoice discound invoice discounting
    • Co-operation with Blackstone Tactical Opportunities to finance international invoice discound invoice discounting
    • Co-operation with Blackstone Tactical Opportunities to finance international invoice discounting
  • Trialling Tungsten Network Analytics, our real-time spend analysis technology, with selected buyers

Financial highlights

  • Admitted to AIM raising £160m of gross new money
  • Tungsten Network pro-forma full-year revenue of £19.5m (prior year £17.6m), an increase of 11%
  • Group net cash of £62.6m at 30th April 2014, prior to finalisation of acquisition and recapitalisation of Tungsten Bank in June 2014 (£30.1m cash outflow (consideration plus £5m capital injection), of which £25m is now restricted funds in the Bank)
  • Initial bank capital injection of £5m lower than previously anticipated
  • Group EBITDA loss of £10.2m (prior period: £9.9m), which includes the results of Tungsten Network for the period since acquisition
  • Post-tax loss for year of £11.0m (prior period: £9.9m) and loss per share of 18.6p (prior period: loss per share of 87.02p).

 

Basis of the presentation of results

Tungsten completed its acquisition of OB10 Limited (now renamed Tungsten Network Limited "Tungsten Network") on 16 October 2013.

In accordance with International Financial Reporting Standards, the consolidated financial results of the Tungsten Group include the results of Tungsten Corporation plc and Tungsten Corporation Guernsey Limited for the whole of the 12-month period, but only include the results of Tungsten Network Limited and its subsidiaries for the period since acquisition. On this basis, our loss before tax for the period was £11.1m (period ended 30 April 2013: £9.9m).

 

Tungsten Network e-Invoicing platform

 

We have invested heavily in the development of Tungsten Network since the acquisition to improve the technical capabilities; further enhance resilience and security; further increase the number of countries where we are compliant with tax and e-Invoicing regulations, and attract new buyer and supplier customers. On a pro-forma basis, revenue for Tungsten Network in FY2014 was £19.5m (FY2013: £17.6m), an increase of 11%.

The value of e-Invoices processed in FY2014 totalled $152bn, compared with $126bn in FY2013.

We are working with our customers to transition IDC 'paper' transactions to our e-Invoicing network. As a result, IDC invoices have reduced from $48bn in the previous financial year to $35bn in FY2014.

The volume of e-Invoices processed increased to 12.5m in FY2014, up over 16% from 10.8m in FY2013.

We have reviewed our buyer groupings to reflect recent corporate activities and have appropriately structured our customer relationship managers (CRMs) with the buyers that they will serve. On this basis we now have 124 corporate and governmental buyers, including 116 currently transacting and eight new companies in implementation. This is a net increase of five buyers since 31 December 2013, as reported in our interim report on 8th January 2014.

The number of countries in which Tungsten Network now offers compliant e-Invoicing has grown to 46, including the recent additions of Saudi Arabia and UAE. Supporting our customers by increasing our portfolio of compliant countries and driving global e-Invoicing policy remains a key strategic priority.

Due to our continued investment in the stability and integrity of Tungsten Network, we have received a clean report under the International Standards for Assurance Engagements (ISAE) 3402 Assurance Reports on Controls at a Service Organisation. Tungsten Network has also been awarded ISO 27001 certification, the international standard describing best practice for an information security management system.  We have curtailed a number of other networks with whom we offered inter-operability to maintain the integrity of our Network.

 

Tungsten Network Analytics

We agreed a five-year licence for spend analytics algorithms. We have integrated these algorithms with the data on Tungsten Network. To bring Tungsten Network Analytics to market, we have developed a powerful reporting interface and can now provide real-time, line-level analysis to identify instances of price variance.

The spend analytics product is now in live pilots. We have shared the beta version with a number of buyer customers and the initial feedback has been very encouraging. We are currently in discussions with a number of these customers to agree commercial terms.

 

Tungsten Network Finance (incorporating Tungsten Bank)

Post the period-end, Tungsten completed the regulatory approval process and acquired FIBI Bank (UK) plc, now renamed Tungsten Bank plc, in June 2014. Final completion payments of £25.1m resulted in total consideration of £29.3m. Provisional net assets acquired were £20m, resulting in goodwill of £9.3m. As we completed the acquisition after the year-end these amounts are currently unaudited, although they represent a considerably lower initial capital requirement than anticipated at the time of the IPO.

We are delighted to have appointed the Tungsten Bank board, including Non-Executive Directors Robert Eddowes, Richard Olliver and Tim Hall. Their experience and oversight complements additional new hires to the Tungsten Network Finance business, including Gordon Payne; COO Holger Beyer; Head of Financing Operations Andrew Wilson; Head of Credit Analytics Andreas Rands; and Head of Compliance Georgina Behrens. We will continue to build the team over the coming year.

We have made significant investment in the Tungsten Network Finance infrastructure, to create a stable and secure financing platform fully integrated with Tungsten Network. Combined with the development of our risk management framework, we have built a technical infrastructure designed to exceed the UK's strict Banking regulation regime.

While developing Tungsten Network Finance, we selected suppliers that are already members of Tungsten Network to trial our supply chain financing service; and plan to introduce more suppliers in July 2014.

In addition to Tungsten Bank, Tungsten Network Finance has progressed discussions with a range of third parties to explore additional sources of capital across the geographies and jurisdictions that Tungsten operates in. In particular, we have advanced the negotiations and operational capability to work with Blackstone Tactical Opportunities to provide invoice and trade finance on an international basis.  We expect to be able to update the market further within the next couple of months.

 

Edmund Truell, CEO of Tungsten Corporation plc, said:

"Tungsten is now unrecognisable from where we were 12 months ago. It has been a remarkable year of growth and hard work in securing our admission to AIM, completing two significant acquisitions and developing the delivery capabilities across each of our businesses.

The acquisition of Tungsten Bank, completed in June 2014, is an important milestone. By aiming to exceed the strict requirements of the PRA and FCA for change of control, we have demonstrated our commitment to risk management, compliance and oversight.

We are excited about the year ahead as we disrupt global markets with the launch of our Tungsten Network Finance and Analytics products. In addition, with the rise of mandatory e-Invoicing and the successful trials of Tungsten Network Analytics, corporations and government departments no longer have an excuse for continued poor procurement.

The new financial year has started very encouragingly with high-calibre new buyers selecting Tungsten Network, including GE and Caterpillar. We have also added new countries to our list of e-Invoicing compliant countries, such as Saudi Arabia and UAE, and developed our supply chain financing platform. Our focus for this year is to invest in growth across all of our businesses, which will support our long-term strategic plans".

 

Arnold Hoevenaars, Chairman of Tungsten Corporation plc, added:

"We have made great strides over the past year towards delivering our vision to monetise the global supply chain.

Progress has been made in the key strategic areas as we build our business to integrate our e-Invoicing network with a financing platform and our spend analytics offering. Once complete, we believe that we will have an unrivalled customer proposition. It is especially encouraging that major government departments in the US and Germany are using Tungsten to good effect.

The Tungsten Group now has the building blocks in place to start the next phase in the growth of Tungsten and we all look forward to what FY2015 will bring".

Financial review

 

Highlights

  • £160m equity funding raised on admission to AIM
  • Completed acquisition of OB10 (now Tungsten Network) for £73m in cash and £28m in equity
  • Tungsten Network pro-forma revenue increased by 11% to £19.5m (FY2013: £17.6m)
  • Tungsten Group EBITDA loss of £10.2m (FY2013: loss of £9.9m)
  • Post-tax loss of £11.0m (prior period: £9.9m)

 

Overview and Group trading performance

On 19 March 2013, we reached an agreement for the acquisition of FIBI Bank (UK) plc, subject to the necessary regulatory clearances. A deposit of £1.2m was paid at that time. Over the period 1 May 2013 to 30 April 2014, further deposit payments of £2.8m were made. The acquisition was completed after the end of the FY2014 reporting period, on 10 June 2014. All deposit payments made were deductible against the final consideration of £29.3m.

On 16 October 2013, we were admitted to AIM, raising £160m (£149m net of costs), and completed the acquisition of OB10 Limited for a total of £73m in cash and £28m in equity. Our reported results include the results of OB10 Limited (now Tungsten Network Limited) only for the period since the acquisition.

On 22 October 2013, we announced our agreement with @UK plc (now Cloudbuy plc) for the licensing of spend analytics algorithms. To date we have made payments totalling £0.5m to Cloudbuy pursuant to our five-year licencing agreement. The spend analytics software forms part of Tungsten Network Analytics, which sits in our Tungsten Network business.

Since our admission to AIM we have made significant investment in the people, infrastructure and working capital of Tungsten Network Finance, Tungsten Network and Tungsten Network Analytics, and the integration between them. We spent £9m in FY2014 on customer acquisition, systems development and the Group's global expansion and expect to make additional investments in these areas in FY2015.

At 30 April 2014, the Group had cash balances of £62.6m. In June 2014, we invested £25.1m on the acquisition of Tungsten Bank into which we have injected a further £5m of capital.

Group EBITDA

Tungsten Group EBITDA loss for the year end 30 April 2014 was £10.2m (prior period: £9.9m). Tungsten Network EBITDA loss of £1.3m (prior period: nil) reflects the results of Tungsten Network Limited for the period from 16 October 2013 to 30 April 2014. Tungsten Network Finance EBITDA loss of £1.9m (prior period: nil) reflects costs incurred by Tungsten Corporation plc in the acquisition of Tungsten Bank and the development of our supply chain finance business. Corporate EBITDA loss of £7.0m (prior period: £9.9m) reflects the costs incurred in making our acquisitions, the Board, Group management and head office running costs.

Tungsten Network

Tungsten Group's reported EBITDA loss for the period includes an EBITDA loss in respect of Tungsten Network of £1.3m (prior period: nil).

On a pro-forma annualised basis, the Tungsten Network EBITDA loss for FY2014 was £2.7m (prior period: £2.6m loss). This is before a share-based payment charge of £4.1m, which was incurred in October 2013 prior to the acquisition by Tungsten (2013: £0.5m)

Pro-forma annualised revenue for Tungsten Network for FY2014 was £19.5m (prior period: £17.6m), an increase of 11%.

Tungsten Network Finance

Tungsten Group incurred costs associated with the Tungsten Network Finance business totalling £1.9m in the year (prior period: nil). This includes regulatory costs, costs of the development of policies and procedures, software development and staffing costs.

Tungsten Network Finance did not earn any revenue in the period.

Corporate

The corporate EBITDA loss totalled £7.0m (prior period: £9.9m).

This excludes £10.8m of costs incurred in connection with the admission onto AIM, which have been taken directly to the share premium account.

Balance sheet

Non-current assets have increased by £115.7m to £115.9m driven by the acquisition of OB10 Limited, which as at 30 April 2014 comprised £114.2m.

The Group capitalised software costs associated with the building of the Tungsten Network Finance infrastructure totalling £0.3m.

The Group capitalised £1.3m of costs associated with the redevelopment of our new head office, Pountney Hill House, to house Tungsten Corporation, Tungsten Bank and the operation of Tungsten Network London.

Cash flow

Cash outflow from operating activities increased to £8.1m (prior period: £5.0m), reflecting investment in systems, products and working capital.

Liquidity and going concern

At 30 April 2014, the Group had cash on hand and short-term deposits of £62.6m. The Group has no borrowings.

We expect to have sufficient cash resources to fund the committed activities of the Group for at least 12 months from the date of these financial statements. Additional funding to support the lending capacity of Tungsten Network Finance will be sought from external sources with a range of funding sources being considered.

The Group's forecasts and projections, taking account of reasonably possible changes in trading performance and the timing of the growth in Tungsten Network Finance, show that the Group has sufficient liquidity to fund its committed expenditure. Accordingly, the Group continues to adopt the going concern basis.

Post balance sheet events

On 10 June 2014 the Company completed the acquisition of the entire share capital of FIBI Bank (UK) plc (subsequently renamed Tungsten Bank plc). The total consideration paid on or prior to completion was £29.3m and is subject to a net asset adjustment within 30 days of completion. £1.0m of the consideration is held in escrow for 18 months in lieu of any warranty claims. In addition, we have also injected a further £5m of capital into Tungsten Bank.

Jeffrey Belkin

Chief Financial Officer

 

Consolidated income statement

 

Year ended

30 April 2014

Period 2 February 2012 to 30 April 2013

 

Note

£'000

£'000

Revenue

3

10,769

-

 

 

 

 

Administrative expenses

 

(21,708)

(4,905)

Share based compensation

 

-

(5,040)

Operating loss

 

(10,939)

(9,945)

 

 

 

 

Finance costs

 

(323)

-

Finance income

 

122

20

Net finance (costs)/income

 

(201)

20

Loss before taxation

 

(11,140)

(9,925)

Taxation

 

125

-

Loss for the period

 

(11,015)

(9,925)

 

 

 

 

Loss per share (expressed in pence per share):

 

 

 

Basic and diluted loss per share

6

(18.60)

(87.02)

 

Consolidated statement of comprehensive income

 

Year ended 30 April 2014

Period 2 February 2012 to 30 April 2013

 

 

£'000

£'000

Loss for the period

 

(11,015)

(9,925)

Other comprehensive income:

 

 

 

Items that may be reclassified subsequently to profit or loss:

 

 

 

Exchange differences arising on retranslation of the net assets of foreign subsidiaries

 

78

-

Total comprehensive loss for the period

 

(10,937)

(9,925)

 

Items in the statement above are disclosed net of tax.

 

Consolidated statement of financial position

 

Notes

As at 30 April 2014

As at 30 April 2013

 

 

£'000

£'000

Assets

 

 

 

Non-current assets

 

 

 

Intangible assets

5

                         114,199

                            -  

Property, plant and equipment

 

                              1,734

                            -  

Trade and other receivables

 

                                    -  

                         220

Total non-current assets

 

                         115,933

                         220

 

 

 

 

Current assets

 

 

 

Trade and other receivables

 

                              6,025

                           85

Deposit paid for acquisition

 

                              3,990

                      1,200

Cash and cash equivalents

 

                            62,646

                      3,397

Total current assets

 

                            72,661

                      4,682

Total assets

 

                         188,594

                      4,902

 

 

 

 

Capital and reserves attributable to the equity shareholders of the parent

 

 

 

Share capital

 

                                 438

                      9,610

Share premium

 

                         160,127

                            -  

Shares to be issued

 

                              3,760

                            -  

Merger reserve

 

                            28,035

                            -  

Share based payment reserves

 

                              5,040

                      5,040

Other reserves

 

(5,372)

                            -  

Accumulated losses

 

(20,940)

(9,925)

Total equity

 

                         171,088

                      4,725

 

 

 

 

Non-current liabilities

 

 

 

Deferred taxation

 

                              2,935

                            -  

Total non-current liabilities

 

                              2,935

                            -  

 

 

 

 

Current liabilities

 

 

 

Trade and other payables

 

                              6,774

                         177

Deferred income

 

                              7,797

                            -  

Total current liabilities

 

                            14,571

                         177

Total liabilities

 

                            17,506

                         177

Total equity and liabilities

 

                         188,594

                      4,902

 


Consolidated statement of changes in equity

 

Share capital

Share premium

Merger reserve

Shares to be issued

Share-based payment reserve

Other reserves

Accumulated losses

Total equity

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 2 February 2012

-

-

-

-

-

-

-

-

Loss for the period

-

-

-

-

-

-

(9,925)

(9,925)

Total comprehensive loss

-

-

-

-

-

-

(9,925)

(9,925)

Transactions with owners

 

 

 

 

 

 

 

 

Issue of share capital

9,610

-

-

-

-

-

-

9,610

Fair value of Founder shares and founder securities

-

-

-

-

5,040

-

-

5,040

Transactions with owners

9,610

-

-

-

5,040

-

-

14,650

Balance as at 30 April 2013

9,610

-

-

-

5,040

-

(9,925)

4,725

Currency translation differences

-

-

-

-

-

78

-

78

Loss for the period

-

-

-

-

-

-

(11,015)

(11,015)

Total comprehensive loss

-

-

-

-

-

78

(11,015)

(10,937)

Transactions with owners

 

 

 

 

 

 

 

 

Reclassification

(9,560)

-

-

9,560

-

-

-

-

Proceeds from shares issues

312

159,688

-

-

-

-

-

160,000

TCGL ordinary B shares exchanged into Tungsten ordinary shares

22

11,228

-

(5,800)

-

(5,450)

-

-

Shares issues on acquisition of subsidiary

54

-

28,035

-

-

-

-

28,089

Issue cost

-

(10,789)

-

-

-

-

-

(10,789)

Transactions with owners

(9,172)

160,127

28,035

3,760

-

(5,450)

-

177,300

Balance as at 30 April 2014

438

160,127

28,035

3,760

5,040

(5,372)

(20,940)

171,088

 

Consolidated statement of cash flows

 

 

Year ended 30 April 2014

Period 2 February 2012 to  30 April 2013

 

 

£'000

£'000

 

 

 

 

Cash flows used in operating activities

 

 

 

Loss before taxation

 

(11,140)

(9,925)

Adjustments for:

 

 

 

Depreciation and amortisation

 

                          765

                              -  

Share based payment expense

 

                              -  

                      5,040

Finance costs

 

                          323

                              -  

Finance income

 

(122)

(20)

 

 

(10,174)

(4,905)

Changes in working capital:

 

 

 

Increase in trade and other receivables

 

(1,329)

(305)

Increase in trade and other payables

 

                      3,287

                          177

Interest received

 

                          122

20

Net cash flows used in operating activities

 

(8,094)

(5,013)

 

 

 

 

Cash flows used in investing activities

 

 

 

Purchases of property, plant and equipment

 

(1,492)

                              -  

Purchases of intangibles

 

(805)

-

Deposit paid for acquisition

 

(2,790)

(1,200)

Acquisition of subsidiary, net of cash acquired

 

(71,943)

                              -  

Net cash outflow used in investing activities

 

(77,030)

(1,200)

 

 

 

 

Cash flows from financing activities

 

 

 

Proceeds of share issue

 

                  149,211

                      9,610

Repayment of debt acquired

 

(4,838)

                              -  

Net cash inflow generated from financing activities

 

                  144,373

                      9,610

 

 

 

 

Net increase in cash and cash equivalents

 

                    59,249

                      3,397

Cash and cash equivalents at start of period

 

                      3,397

                              -  

Cash and cash equivalents at end of period

 

                    62,646

                      3,397

 

Basis of preparation

This financial information does not constitute the Group's statutory accounts for the period ended 30 April 2013 and year ended 2014. The financial information in respect of 2014 has been extracted from the audited financial statements for the year ended 30 April 2014 which have not yet been delivered to the Registrar of Companies. The auditors have reported on these financial statements; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

The information has been prepared in accordance with the EU-adopted International Financial Reporting Standards (IFRS) and IFRIC interpretations and with those parts of the Companies Act 2006 which are applicable to companies reporting under IFRS.

 

  1. 1.      Accounting policies

These results have been prepared applying the accounting policies and presentation of the financial statements for the period ended 30 April 2013 together with those additional accounting policies presented in our interim financial report for the six months ended 31 October 2013 dated 8 January 2014.

  1. 2.      Forward-looking statements

Certain statements in this preliminary announcement are forward-looking. Although the Group believe that the expectations reflected in the forward-looking statements are reasonable, we can give no assurance that these expectations will prove to have been correct. Because these statements involve risk and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements.

  1. 3.      Segment information

Management have 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 has identified that the Board of Directors is the chief operating decision maker (CODM).

The Board of Directors reviews financial information for three segments: Tungsten Network (which includes the e-Invoicing and spend analytics business of Tungsten Network (formerly OB10 Limited), Tungsten Network Finance (which includes the supply chain finance business Tungsten Network Finance) and Corporate (which includes overheads and general corporate costs). Intersegment revenue from management fees is eliminated below. For the period ended 30 April 2013, the Group had one reportable segment due to the sole business activity being the identification and acquisition of companies.


3             Segment information (continued)

Year ended 30 April 2014

 

 

Tungsten Network

Tungsten Network Finance

Corporate

Intra Group eliminations

Total

 

 

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

Revenue

 

    10,767

           -  

            2

                -  

10,769

Inter-segment revenue

 

-

-

        750

(750)

           -  

Segment revenue

 

    10,767

           -  

        752

(750)

10,769

 

 

 

 

 

 

 

EBITDA - excluding non-cash share-based payments

(1,288)

(1,851)

(7,035)

-

(10,174)

EBITDA - including non-cash share-based payments

(1,288)

(1,851)

(7,035)

-

(10,174)

Depreciation and amortisation

 

 

 

 

 

(765)

Finance income

 

 

 

 

 

        122

Finance cost

 

 

 

 

 

(323)

Loss before taxation

 

 

 

 

 

(11,140)

Income tax credit

 

 

 

 

 

        125

Loss for the year

 

 

 

 

 

(11,015)

 

 

 

 

 

 

 

Capital expenditure

 

117,194

-

1,721

-

118,915

Total assets

 

  120,087

           -  

    68,507

                -  

188,594

Total liabilities

 

    14,613

           -  

2,893

                -  

17,506

 

Period ended 30 April 2013

 

 

Tungsten Network

Tungsten Network Finance

Corporate

Intra Group eliminations

Total

 

 

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

Revenue

 

           -  

           -  

           -  

                -  

           -  

Inter-segment revenue

 

           -  

           -  

           -  

                -  

           -  

Segment revenue

 

           -  

           -  

           -  

                -  

           -  

 

 

 

 

 

 

 

EBITDA - excluding non-cash share-based payments

-

-

(4,905)

-

(4,905)

EBITDA - including non-cash share-based payments

-

-

(9,945)

-

(9,945)

Depreciation and amortisation

 

 

 

 

 

           -  

Finance income

 

 

 

 

 

          20

Finance cost

 

 

 

 

 

           -  

Loss before taxation

 

 

 

 

 

(9,925)

Income tax expense

 

 

 

 

 

           -  

Loss for the year

 

 

 

 

 

(9,925)

 

 

 

 

 

 

 

Capital expenditure

 

-

-

-

-

-

Total assets

 

           -  

           -  

     4,902

                -  

     4,902

Total liabilities

 

           -  

           -  

        177

                -  

        177

 

3             Segment information (continued)

 

Geographical information

The Group's revenue from external customers and non-current assets by geographical location are detailed below.

Revenue by geographical location is allocated based on the location in which the sale originated.

 

 

 

Revenue from external customers 

 

 

Year ended 30 April 2014

Period 2 February 2012 to 30 April 2013 

 

 

£'000

£'000 

United Kingdom

 

6,383

-

United States of America

 

3,448

-

Rest of Europe

 

706

-

Malaysia

 

232

-

 

 

10,769

-

 

Non-current assets are allocated based on the geographical location of those assets and excludes other financial assets, loans receivable and deferred tax.

 

 

 

Non-current assets 

 

 

As at 30 April 2014

As at 30 April 2013 

 

 

£'000

£'000 

United Kingdom

 

115,821

-

United States of America

 

71

-

Malaysia

 

41

-

 

 

115,933

-

 

 

  1. 4.      Business combinations

On 16 October 2013 the Group completed its acquisition of 100% of the issued ordinary share capital of Tungsten Network Limited (formerly OB10 Limited) in consideration of the payment of £73.0m in cash and the issue to the vendors of 12,484,143 ordinary shares of the Company. The primary reason for the acquisition was to support the growth of a global integrated supply chain platform.

In the period from 16 October 2013 to 30 April 2014, Tungsten Network has contributed £10.77m of revenues and a £1.2m EBITDA loss.

If the acquisition had occurred on the first day of this reporting period, being 1 May 2013, the contributions would have been £19,45m of revenues and a £6.56m EBITDA loss.

The table below sets out the final fair values at the acquisition date. The goodwill of £98.7 million arising on acquisition principally relates to skills and know how present within the assembled workforce, customer service capability and the future opportunities available once the Group completes its acquisition of a Bank to provide a financing platform.

The fair value adjustments consist of the harmonisation with the Group's IFRS compliant accounting policies and the recognition of intangible assets (customer relationships and IT platform).

Transaction costs of £2.1m have been expensed and are included in administrative expenses.

 

4        Business combinations (continued)

 

 

Final fair value at acquisition

 

£'000

Non-current assets

 

Goodwill arising on acquisition

98,695

Customer relationships

11,000

IT platform

4,300

Capitalised software

36

Property, plant and equipment

377

Total non-current assets

114,408

 

 

Current assets

 

Trade and other receivables

3,648

Other current asset

754

Cash and cash equivalents

1,098

Total current assets

5,500

 

 

Total assets

119,908

 

 

Current liabilities

 

Trade and other payables

(7,645)

Deferred revenue

(7,700)

Current taxation payable

(373)

Total current liabilities

(15,718)

 

 

Non-current liabilities

 

Deferred tax liabilities

(3,060)

Total non-current liabilities

(3,060)

 

 

Total liabilities

(18,778)

Net attributable assets including goodwill

101,130

 

 

Consideration satisfied by 

 

Cash paid

73,041

Fair value of shares issued

28,089

Total consideration

101,130

 

  1. 5.      Intangible assets

 

Goodwill

Customer relationships

IT platform

Software licences

Software development

Total

 

£'000

£'000

£'000

£'000

£'000

£'000

Cost

 

 

 

 

 

 

Balance at 1 May 2013

-

-

-

-

-

-

On acquisition of subsidiaries

98,695

11,000

4,300

248

-

114,243

Additions

-

-

-

474

331

805

Exchange differences

-

-

-

(5)

-

(5)

Balance at 30 April 2014

98,695

11,000

4,300

717

331

115,043

 

 

 

 

 

 

 

Accumulated depreciation

 

 

 

 

 

 

Balance at 1 May 2013

-

-

-

-

-

-

On acquisition of subsidiaries

-

-

-

212

-

212

Additions

-

297

330

9

-

636

Exchange differences

-

-

-

(4)

-

(4)

Balance at 30 April 2014

-

297

330

217

-

844

 

 

 

 

 

 

 

Net asset value as at 30 April 2013

-

-

-

-

-

-

Net asset value as at 30 April 2014

98,695

10,703

3,970

500

331

114,199

 

  1. 6.      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.

 

 

30 April 2014

30 April 2013

 

Loss

£'000

Shares thousand

EPS

pence

Loss

£'000

Shares thousand

EPS

pence

Basic and diluted

(11,015)

59,222

(18.60)

(9,925)

11,405

(87.02)

 

  1. 7.      Post balance sheet events

Bank purchase

On 10 June 2014, the Group completed the acquisition of the entire share capital of FIBI Bank (UK) plc (subsequently renamed Tungsten Bank plc). The total consideration paid on or prior to completion was £29.3m and is subject to a net asset adjustment within 30 days of completion. £1.0m of the consideration is held in escrow for 18 months in lieu of any warranty claims.

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