TIDMTUNG
RNS Number : 2173J
Tungsten Corporation PLC
16 December 2015
TUNGSTEN CORPORATION PLC
("Tungsten", the "Company" or "Group")
INTERIM FINANCIAL REPORT
FOR THE SIX MONTHS ENDED 31 OCTOBER 2015
16 December 2015
Tungsten Corporation plc (LSE: TUNG), the global electronic
invoicing, analytics and financing company, today announces its
results for the six months ended 31 October 2015 ("H1-FY16").
Group Financial and Operational Summary
-- Revenue up 28% at GBP13.1m (H1-FY15: GBP10.2m); revenue
growth of 21% excluding revenue from new services of Tungsten Early
Payment and Workflow
-- EBITDA(1) loss improved by GBP3.7m to GBP9.5m (H1-FY15: GBP13.2m loss)
-- Loss after tax of GBP17.6m (H1-FY15: GBP14.7m loss),
including impairment in the carrying value of the investment in
Tungsten Bank of GBP6.8m following exclusivity for proposed sale of
the Bank
-- Loss per share of 14.59p basic and diluted (H1-FY15: 14.52p
basic and diluted loss per share)
-- Group net cash and cash equivalents of GBP39.7m at 31 October
2015 (including cash in Tungsten Bank which is held for sale)
-- Secured six new buyer customers with guaranteed revenues of over GBP0.5m in the first year
-- Negotiated renewals with 14 buyer customers to deliver future
price increases averaging 70% as customers recognise the increasing
value they derive from Tungsten; a further five buyer customer
contracts were automatically extended on existing terms
-- Signed nearly 500 new integrated supplier customers worth
c.GBP0.5m in first year revenues and a further 13,000 web form
suppliers
-- 10% increase in e-Invoice volumes to 7.5m (H1-FY15: 6.8m)
with 14% increase in e-Invoice value to GBP55.9bn (H1-FY15:
GBP48.9bn)
-- 8% growth in total invoice volumes (including non-electronic) to 7.9m (H1-FY15: 7.3m)
(1) EBITDA is defined as operating loss before depreciation,
amortisation, impairment and share-based payments charges
Business and Operational Update
-- Incoming CEO Rick Hurwitz completed review; strategy
realigned to pursue profitable growth in Tungsten Network and
targeted development of Tungsten Network Finance
-- Tungsten's vision evolved to aim to be the world's most
trusted business transaction network using data intelligently to
strengthen the global supply chain
-- Operational initiatives to grow value as well as volume of
business organised under four pillars:
o Driving network benefits for our customers
o Ensuring our people and processes deliver effectively
o Delivering distinctive financing products
o Providing adjacent products and services
-- Strategic review concluded that operating a regulated bank is
incompatible with pursuit of profitable growth from foreseeable
invoice financing opportunity and Tungsten Bank is therefore
non-core to strategy delivery
-- Exclusivity agreement for the sale of Tungsten Bank, subject to regulatory approval
-- Reshaped and strengthened Board and management team
-- Strategic plan to be presented at capital markets day on 9 February 2016
Proposed Sale of Tungsten Bank
A key component of Tungsten's strategy remains the development
of its invoice financing offering. Following an extensive business
and operational review, the Board has concluded that operating a
regulated deposit-taking bank is incompatible with the pursuit of
profitable growth from the foreseeable invoice financing
opportunity. The Board therefore resolved that Tungsten Bank was
non-core to the Group's strategy delivery.
As a result, the Board has taken the decision to divest Tungsten
Bank and today announces that it has entered into an exclusivity
agreement for its sale, subject to regulatory approval.
Following the divestment of Tungsten Bank, Tungsten Early
Payment will continue to be funded through Tungsten's existing
arrangement with Insight Securities S.A. (Luxembourg securitisation
vehicle known as IIFIG Securities S.A. since 17 July 2015
("Insight")) that enables it to selectively acquire individual
invoice contract and the Group plans to develop further options
with a range of other third parties.
Richard M. Hurwitz, Chief Executive Officer, commented:
"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. The management team can now concentrate on
Tungsten's core businesses as we look to create the world's most
trusted business transaction network."
Nick Parker, Non-Executive Chairman, added:
"Tungsten is making progress, achieving strong revenue growth
and concluding encouraging customer renewal agreements, even as it
resets expectations about the trajectory of its opportunity. This
is an exciting time for the Group with a strengthened management
team. There is much to be done, but with a strong pipeline of new
customers and prioritisation of activities that accelerate the
realisation of profitable business, I believe Tungsten is well
placed to deliver sustainable growth."
Analyst Presentation and Capital Markets Day
Rick Hurwitz, Chief Executive Officer, and David Williams, Chief
Financial Officer, will host a conference call for analysts and
investors at 9.00am GMT today. A live webcast will be available
at
https://engage.vevent.com/rt/tungsten20151216.
For participants unable to join the webcast, the dial-in number
for the conference call is 0800 376 6220/ +1 866 904 9624 with the
passcode 1741810 and a presentation will be available on the
Tungsten Corporation website at
https://www.tungsten-network.com/uk/about-tungsten/investor-relations/financial-reports/financial-documents/.
A replay facility will be available until 8 January 2016. The
dial-in number for the replay facility is 0800 953 1533/ +1 (866)
247 4222 with the passcode 92690926.
Tungsten will host a capital markets day in London on 9 February
2016 for analysts and institutional investors. Live webcasts and
replay facilities of this event will also be made available with
details posted to the website closer to the time.
Enquiries
Tungsten Corporation plc
Richard Hurwitz, Chief Executive +44 20 7280
Officer 7713
Juliana Wheeler, Head of Global +44 20 7280
Communications (Media) 7973
Panmure Gordon (Nominated
Advisor) +44 20 7886
Fred Walsh/Dugald J. Carlean 2500
Canaccord Genuity Limited
(Broker)
Simon Bridges/Emma Gabriel/Cameron +44 20 7523
Duncan 8000
Neustria Partners (Investors
and Analysts)
Robert Bailhache/Nick Henderson/Charles +44 20 3021
Gorman 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 platform that brings
businesses and their suppliers closer together with unique
technology that revolutionises invoice processing, maximises
efficiency and improves cash flow management. The network also
provides users with real-time spend analysis through Tungsten
Analytics, and offers access to Tungsten Early Payment, a form of
alternative finance for businesses.
Tungsten serves 56% of the Fortune 500 and 67% of the FTSE 100.
It enables suppliers to submit tax compliant e-invoices in 47
countries, and last year processed transactions worth over $187bn
for organisations such as Alliance Data, Aviva, Cargill, Deutsche
Lufthansa, General Motors, GlaxoSmithKline, Henkel, IBM, Kellogg's
and the US Federal Government.
Chief Executive Officer's Review
What I found during my evaluation of Tungsten's business
landscape was a company with a great deal of embedded value in our
Network, which connects the global supply chain.
Some of this value has been tangibly demonstrated in the
reporting period through a 28% increase in revenue, including a 21%
increase in the core e-Invoicing business, and the growth in the
number of buyers and suppliers joining our expanding network.
Further value from the actions taken in this period will
materialise over time as we renew buyer contracts at enhanced
pricing levels, which is a reflection of the value we deliver to
our multinational customers.
My primary focus in the period was to lead the management team,
and through them the wider business, to determine what was required
in order to deliver value for our shareholders, customers,
employees and other stakeholders.
The result is a realignment of our strategy to pursue profitable
growth from the expansion of Tungsten Network and a broader
approach to Tungsten Network Finance. We have evolved our vision
such that Tungsten aims to be the world's most trusted business
transaction network using data intelligently to strengthen the
global supply chain. Our four strategic objectives that support
this goal are:
-- Elevate our customer engagement by driving network benefits for them
-- Use end-to-end digital processes to ensure that our people and processes deliver effectively
-- Leverage our network and its data to deliver distinctive financing products
-- Increase the value we offer our customers by providing adjacent products and services
Underpinning each of these strategic objectives are plans and
timelines, and we look forward to the opportunity to provide
further information on these at our capital markets day on 9
February 2016. We intend to report against these objectives in the
future, including the key performance indicators that will
demonstrate our progress.
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