Tungsten Corp PLC’s Losses Grow As The Company Struggles

Tungsten Corp PLC (LON: TUNG) is struggling to turn a profit.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Shares in struggling financial services company Tungsten (LSE: TUNG) slumped by as much as 10% in early trade this morning, after the company reported a wider than expected loss for the six months ended 31 October 2015. 

However, at time of writing Tungsten’s shares had recovered some of their early losses after the group announced that it had reached an agreement to sell Tungsten Bank for approximately £30m in cash, following a previously announced strategic review. The consideration represents net assets of £25.4m plus a premium.

Commenting on the disposal, Richard M. Hurwitz, Chief Executive Officer said: 

“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… The management team can now concentrate on Tungsten’s core businesses as we look to create the world’s most trusted business transaction network.”

But while the sale of Tungsten’s controversial banking division is relatively good news, Tungsten’s figures for the six months to the end of October are hardly anything to get excited about. 

Losses growing 

For the reported period, Tungsten’s revenue rose 28% to £13.1m and the group’s earnings before interest, tax, depreciation and amortisation improved by £3.7m to £9.5m. However, the group’s loss after tax rose to £17.6m, compared to £14.7m reported a year ago. 

Group net cash and cash equivalents were £39.7m at the end of October, although it’s unclear how much of this cash belonged to Tungsten Bank. Still, when the sale of the bank closes, Tungsten will receive a much needed cash infusion of £30m.

Nonetheless, it’s clear from Tungsten’s half-year report that the company is making progress. The company boasts that during the period it signed nearly 500 new integrated supplier customers, worth £0.5m in first-year revenues, and a further 13,000 web form suppliers. 

Also, during the six months to the end of October, the group saw a 10% increase in e-Invoice volumes to 7.5m with a 14% increase in e-Invoice value to £55.9bn. Total invoice volume growth was 8%. What’s more, during the period the company was able to negotiate, “renewals with 14 buyer customers to deliver future price increases averaging 70% as customers recognise the increasing value they derive from Tungsten.

Time will tell 

So, Tungsten’s key performance indicators seem to be heading in the right direction, but City analysts don’t expect Tungsten to report a profit anytime soon.

Analysts expect Tungsten to report a pre-tax loss of £18.3m for the year ending 30/04/2016 and a further loss of £5.3m for the financial period ending 30/04/2017. If all goes to plan, Tungsten is on track to report a profit for the year ending 30/04/2018. It should be noted however, that these forecasts are likely to change now that Tungsten has announced the sale of its bank. The sale will reduce group costs by £2m per annum, and free up funds for reinvestment, which could help accelerate sales growth. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

A pastel colored growing graph with rising rocket.
Investing Articles

How much passive income could I make for every £1,000 invested in Aviva shares?

Even a relatively small investment in Aviva shares could generate much greater passive income, particularly if the dividends are reinvested…

Read more »

Close-up of British bank notes
Investing Articles

I’m considering 100 shares in this FTSE 250 gem to aim for £300 a month in dividends

Mark Hartley outlines why a lesser-known banking stock from the FTSE 250's worth considering for an income portfolio in 2024.

Read more »

Investing Articles

History suggests these UK shares might soar if interest rates are cut in August

Some UK shares could rocket if interest rates fall from its 5.25% high next month. And there's one our writer…

Read more »

Female Doctor In White Coat Having Meeting With Woman Patient In Office
Investing Articles

Here’s why H1 results could boost the AstraZeneca share price

The AstraZeneca share price has been a success story in the past five years. With H1 results due, can it…

Read more »

Investing Articles

£17,365 in savings? Here’s how I’d use it to target a £6,700-a-month passive income

Here's how a lump sum investment could pave the way for me to make a four-figure monthly passive income in…

Read more »

Investing Articles

Down more than 10% in 6 months, Fools are backing these 5 UK stocks to reverse that – and then some! – by 2025

Some of our UK free-site writers have put forward their candidates for turnaround stocks!

Read more »

Investing Articles

Down 23%! Should I buy more CrowdStrike shares for my Stocks and Shares ISA?

Sometimes bad news can be good news for long-term investors. But is that the case for CrowdStrike in relation to…

Read more »

Investing Articles

2 UK shares near 52-week lows I’m considering snapping up

These UK shares are loitering near, or at, 52-week lows. Are these prime opportunities for our writer to boost her…

Read more »