16th Dec 2015 09:24
LONDON (Alliance News) - Tungsten Corp PLC, an electronic invoicing, analytics and financing company, on Wednesday said it has agreed to sell its banking unit for about GBP30.0 million in cash, pinning the group's future on its electronic invoicing platform.
The decision follows a review carried out by Chief Executive Rick Hurwitz which found that operating a deposit-taking bank is "incompatible with pursuit of profitable growth from foreseeable invoice financing opportunity", Tungsten said.
Tungsten's bank attracted a sale price at a premium to net assets of GBP25.4 million, the company said. The buyer of the bank was not named by Tungsten.
The sale is subject to regulatory approval by the UK's Prudential Regulation Authority and the Financial Conduct Authority, with completion expected within six to 12 months.
Tungsten said invoice financing remains an "important component" of the services it offers to customers.
News of the disposal came as Tungsten reported earnings for the first half of its financial year.
Pretax losses widened to GBP17.8 million in the six months ended October 31, from GBP14.8 million in the corresponding half the prior year, as revenue grew to GBP13.1 million from GBP10.2 million. That growth was more than offset by costs, as operating expenses swelled to GBP30.8 million from GBP24.7 million, while a GBP6.8 million goodwill impairment charge was booked in connection to the sale of its banking unit.
Tungsten made a first-half loss of GBP9.5 million before interest, tax, depreciation and amorisation, narrowing from GBP13.2 million the corresponding period the prior year.
The group expects to generate revenue of at least GBP27.5 million in the full year, and an EBITDA loss of no more than GBP19.0 million.
"We have undertaken a thorough self-assessment of all aspects of our business, which has given us great clarity on the strategic outcomes we desire and the paths we will take to achieve them. These outcomes will improve our financial and operating performance, sharpen our focus on profitable business and increase our confidence in forecasting the timing of break even and organic cash generation," Hurwitz said in a statement.
"The management team can now concentrate on Tungsten's core businesses as we look to create the world's most trusted business transaction network," Hurwitz added.
Shares in Tungsten Corp were down 2.4% at 40.00 pence on Wednesday morning.
By Samuel Agini; [email protected]; @samuelagini
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