Tungsten Corporation PLC Interim Results for six months to 31 October 2017 (3026Z)

Share Name	Share Symbol	Market	Type	Share ISIN	Share Description
Tungsten Corporation Plc	LSE:TUNG	London	Ordinary Share	GB00B7Z0Q502	ORD 0.438P

	Price Change	% Change	Share Price	Bid Price	Offer Price	High Price	Low Price	Open Price	Shares Traded	Last Trade
	0.00	0.00%	54.60	54.00	55.20				0.00	01:00:00

Industry Sector	Turnover	Profit	EPS - Basic	PE Ratio	Market Cap
	0	0		N/A	0

Tungsten (LSE:TUNG)
Historical Stock Chart

From Apr 2019 to Apr 2024

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

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) 
-------------------------------   ---  ----  ----------------------  -------