TIDMTUNG
RNS Number : 0676Z
Tungsten Corporation PLC
24 May 2016
TUNGSTEN CORPORATION PLC
("Tungsten", the "Company" or the "Group")
For Immediate Release
24 May 2016
Pre-Close Trading Update
Tungsten Corporation plc (LSE:TUNG), the global e-invoicing,
purchase order services, analytics and financing company, today
announces the following trading update for the financial year ended
30 April 2016 (FY16).
Unaudited preliminary results
Revenues for the period are expected to be in excess of GBP26
million, broadly in line with guidance at the time of the Company's
Capital Markets Day on 9 February 2016 and representing an increase
of at least 12.5% on the prior year. The timing of the completion
of new buyer contracts impacted FY16 revenues, the most significant
of which closed at the end of April, four months later than
previously envisaged. Tungsten's focus on pricing discipline is
expected to benefit revenues in the current financial year
(FY17).
As expected in previous guidance, Tungsten's EBITDA loss for
FY16 is anticipated to be less than GBP15 million, excluding
one-off items, or less than GBP19 million if one-off items are
included.
Unaudited cash balances at 30 April 2016 were GBP9.1 million,
excluding cash in Tungsten Bank. The cash balance is GBP1.1 million
in excess of the Board's expectations and represents an average
monthly net cash outflow of GBP1.1 million during the six months to
30 April 2016.
Tungsten has started FY17 with clear strategic goals developed
following the Company's leadership transition in July 2015. The
newly enhanced management team is focused on implementing the steps
required for the Company to become cash flow positive by the end of
FY17 and will provide updated revenue and profit guidance at the
time of its final FY16 results announcement on 25 July 2016.
Rick Hurwitz, Chief Executive Officer, commented:
"Tungsten's performance during FY16 demonstrates the Group's
encouraging momentum. I am confident we are on track to execute the
operational goals we expect to accelerate our achievement of
profitable growth. We have improved existing contract pricing,
engaged new buyers, reduced our cost base and recruited talented
executives. We start the new financial year with a clear strategic
plan and a focus on developing deep customer relationships and
improved operational performance."
Tungsten Network
Tungsten Network added 11 new buyers during FY16. The new
buyers, including Sanofi, Duracell and Ventura Foods, purchased a
range of Tungsten Network's accounts payable automation products,
including work flow, e-invoicing and associated services. Total
buyers as at 30 April 2016 amounted to 175, reflecting a reduction
of six buyers arising from the merging of contracts (principally as
a result of customer mergers) and three buyers with minimal invoice
flow leaving the network. The reductions are not expected to have a
material impact on revenue in FY17.
Tungsten completed contract renegotiations with 34 buyers in
FY16, agreeing weighted average price increases of 64% on a
like-for-like basis. The Company has also secured buyer commitments
to acquire additional products and widen the scope of our
relationships, and we expect to see the financial benefit of these
initiatives in FY17. A further eight buyer contracts were due for
renegotiation in FY16 of which we have agreed commercial terms on
five at similar price increases. We remain in discussions on the
remaining three.
Due to legacy contractual restrictions we were unable to
renegotiate pricing with an additional 10 buyers who had their
current contracts extended. We are in discussions with each of
these to agree new terms when the extended contracts expire.
We ended FY16 with 203,000 suppliers on Tungsten Network, an
increase of 22,000, or 12%, from FY15. We continue to connect
growing numbers of suppliers to each other, enhancing the
interconnectedness of our customer network.
Tungsten processed 16.1 million invoices in FY16, an increase of
9% from the prior year. E-invoicing volumes grew by 11% to 15.4
million as we continued to reduce the number of paper invoices
processed, which declined by 29% to 0.7 million. The value of
invoicing over the Network grew by 20% to GBP123 billion.
Tungsten Network Finance
Over FY16 Tungsten financed invoices for 79 suppliers totalling
over GBP100 million for an average duration of 36 days at an
average gross yield of 6.1%. This compared with GBP32 million for
38 suppliers in FY15. Unaudited Tungsten Network Finance revenues
for FY16 were GBP0.2 million (FY15: GBP0.1 million).
The Board's belief in the opportunity of creating an attractive
supply chain finance offering is unwavering and Prabhat Vira was
appointed President of Tungsten Network Finance in April 2016.
Prabhat has substantial experience in building financial operations
across the world and is leading a transformation of the Group's
financing offering, operations and funding.
Funding
Tungsten's cash position at 30 April 2016 was GBP26.9 million,
comprising GBP17.8 million of cash or cash equivalents held in
Tungsten Bank and GBP9.1 million freely available to the rest of
the Group. Tungsten Bank's cash balances are reduced to the extent
that it has purchased invoice receivables from Tungsten's
suppliers, which at 30 April 2016 totalled GBP7.3 million. As
envisaged when we announced the sale of Tungsten Bank last
December, we expect the process to be completed by the end of the
first half of FY17. The Group expects to finalise the terms of a
credit facility prior to the announcement of its final results in
order to provide stand-by facilities to bridge any unexpected delay
in the sale of Tungsten Bank.
In the unlikely event that the sale is not completed as
scheduled, the Board continues to intend to deregulate Tungsten
Bank in order to access the GBP25 million of capital on its balance
sheet.
Final results
Tungsten will announce its final results for the year ended 30
April 2016 on Monday 25 July 2016 when management will host a
conference call for investors and analysts at 9:00am UK time.
To access the webcast please click here. The dial-in number for
the conference call is +44 (0) 20 3003 2666 / +1 212 999 6659 with
the access code 5929655# and a presentation will be available on
the Tungsten website.
A replay facility will be available until Friday 5 August 2016.
The dial-in number for the replay facility is +44 (0) 20 8196 1480
/ +1 866 583 1035 with the above access code.
Enquiries
Tungsten Corporation plc
Richard Hurwitz, Chief Executive
Officer
David Williams, Chief Financial +44 20 7280
Officer 7713
Panmure Gordon (Nominated
Advisor) +44 20 7886
Fred Walsh/Peter Steel 2500
Canaccord Genuity Limited
(Broker)
Simon Bridges/Cameron Duncan/Emma +44 20 7523
Gabriel 8000
Neustria Partners
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 and purchase order
services 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 the Analytics product and offers access to Early Payment
through Tungsten Network Finance, 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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