TIDMTUNG
RNS Number : 1520N
Tungsten Corporation PLC
14 May 2015
TUNGSTEN CORPORATION PLC
("Tungsten" or the "Company")
For Immediate Release
Pre-close trading update
London, 14 May 2015 - Tungsten Corporation plc (LSE:TUNG), the
global electronic invoicing, analytics and financing company, today
announces the following trading update for the financial year ended
30 April 2015, ahead of its final results announcement due on 22
July 2015.
Unaudited preliminary results
Tungsten expects the unaudited financial results for the
financial year to be above the Board's expectations at the time of
the announcement of the Company's interim results, as the Company
continues the global roll-out of its products and services.
Revenues for the second half of the year are expected to be higher
than budget and show good progress compared with the first half of
the year, driven by accelerating the addition of new buyers and
suppliers on the Tungsten Network. As a result, full year revenues
are anticipated to be ahead of the market's expectation of GBP22.5
million. The higher revenues, combined with lower than forecast
costs in the second half of the year, are expected to result in a
smaller loss for the full year than the market's expectation of
GBP31.2 million.
Tungsten Network
The Network has continued to add new buyers and suppliers, with
a total of 173 buyer groups at 30 April 2015, up from 124 a year
earlier, of which 43 are buyers using Tungsten Workflow, a service
added during the year through the DocuSphere acquisition. Three
buyers left the Network during the year, one of which was due to a
corporate action and two which lacked scale.
During the year, 28,000 suppliers were added to the Network,
while 18,000 mostly paper invoice suppliers ceased transacting over
the Network as management focused on transitioning the Network away
from non e-invoicing suppliers. As a result, at the end of the
financial year the Network had 181,000 suppliers. Momentum of
supplier releases picked up in the second half of the year when
buyers sent Tungsten 25% more suppliers to bring onto the Network
than in the first half.
An important focus for the Company has been to improve the
effectiveness of its approach to leveraging the existing buyers and
suppliers on the Network, and the rate at which suppliers connect
to multiple buyers already on the Network has been encouraging.
This has helped increase the total e-invoicing volume on the
Network by 10% over the prior year to 13.8 million invoices out of
a total of 14.8 million invoices transacted over the Network.
E-invoicing value conducted over the Network grew by 8% to GBP103
billion, out of a total of GBP121 billion.
The pipeline of new customers for the Network, both buyers and
suppliers, is stronger than ever. Growth is coming from buyers
sending the Company additional supplier releases and from adding
new buyers to the Network. During the year, the Company invested
heavily in the on-boarding process and pricing for suppliers, which
is improving the conversion rate of new connection opportunities.
The new Customer Connect service, which enables suppliers to find
additional customers already transacting on the Network, has
already added over 3,700 new connections since its launch at the
beginning of April.
Tungsten Bank and Tungsten Early Payment
Tungsten Bank has made a promising start and the roll-out of
Tungsten Early Payment is now on track. The Tungsten Bank Board
decided last week not to take deposits for now. It will not impact
the Company's invoice financing capacity, since the Insight
Investment arrangements and the Bank's balance sheet are sufficient
to fund Tungsten Early Payment demand.
By 30 April 2015, 188 suppliers had signed a contract to use
Tungsten Early Payment, and 38 suppliers had completed the
registration process to become a customer of Tungsten Early
Payment. Total invoices financed was GBP32 million.
Tungsten's experience has shown the two distinct markets, large
corporates and SMEs, have different average yields, with large
corporate invoice financing having an average yield of 4.5% p.a.
and SMEs having an average yield of 12.4% p.a. The penetration rate
was 6.6% of SME suppliers targeted, while the penetration rate for
large corporates may be higher but has a smaller population.
Customers using Tungsten Early Payment finance repeatedly use the
service, financing an average of 79% of the value of their
available invoices.
Since launching Tungsten Early Payment at the end of last year,
we have determined that the sales and enrolment processes take
longer than desireable; require more sales people and marketing
resources; and need a simpler supplier financing approval process
to gain traction. We have hired Early Payment sales people, plan to
increase the marketing budget in the current financial year, and
are simplifying and shortening the process for suppliers to be
approved for Tungsten Early Payment, which currently takes several
months before a supplier is allowed to finance their invoices.
At year-end, 42 buyers were signed up for the standard Tungsten
Invoice Status Service, up from 37 at the mid-year. A key product
enhancement now being offered to buyers is the full Invoice Status,
which enables any and all of the invoices received by a buyer to be
presented on the Tungsten Portal. This means suppliers, even if
they have not yet connected to the Tungsten Network, can see the
status of their invoices sent to their Tungsten Network buyers. It
will also enable Tungsten to provide Tungsten Early Payment to
suppliers who are not yet connected to the Tungsten Network. Seven
buyers have already signed up for the full Invoice Status, which
when fully deployed would increase the addressable market for
Tungsten Early Payment fivefold.
We expect these changes to impact financing volumes positively
and anticipate the benefit of this will be seen in the current
financial year.
Tungsten Analytics
Tungsten Analytics, with real-time line level spend analysis,
continues to receive positive feedback from potential buyer
customers. The average savings identified in current trials are
1.6% of the spend analysed. At the end of April 2015, the first
buyer to trial analytics had contracted for the service and a
further 40 were taking part in pilot programmes. The Company is in
negotiations with these pilot buyers and with new buyers about
bundling Tungsten's e-invoicing, Workflow and Analytics products
into one combined package for our buyers, which would support a
considerably higher price point. These discussions will continue
over the next three years as each buyer approaches renewal. We
expect that this combined package will be well received by buyers,
and should improve future revenues.
In addition, Tungsten continues to develop Tungsten Analytics,
following the previously announced formation of the Tungsten Centre
for Intelligent Data Analysis in partnership with Goldsmiths
College.
Strategy for international network expansion and banking
growth
The Company intends to continue to invest in its businesses, in
terms of improved products and services as well as geographical
expansion. Recent discussions between Tungsten and the Indian
government resulted in a change to legislation to open up the
Indian market to e-invoicing. In addition, Tungsten can now provide
compliant e-invoicing services in Japan. To capitalise on these
markets now being open to Tungsten providing electronic invoicing,
the Company intends to grow with locally staffed offices, with
local sales and support functions.
As Tungsten sees increased opportunities in markets such as
Japan, Asia, Latin America and Eastern Europe, the supply chain
finance offering in these markets is better served by Tungsten
operating in partnership with local banks, which are being actively
explored.
Funding
Tungsten's cash position at 30 April 2015 was GBP31.4 million,
including GBP18.6 million of cash or cash equivalents held in
Tungsten Bank. The Tungsten Board is reviewing various proposals to
fund the the Company's growth strategy and will update the market
as these materialise.
Board and executive appointments
As Tungsten moves beyond its start up phase and executes on its
strategy, the Company is making the following senior executive
management changes.
Edmund Truell, currently Group CEO, moves to the newly created
role of Vice Chairman and Richard M. Hurwitz, currently Executive
Director, CEO (Americas) and Head of Global Client Development, is
appointed Group CEO reporting to the Board of Tungsten Corporation,
effective 13 July 2015.
These changes allow Edi to develop the wide range of strategic
opportunities available to Tungsten, including enhancing the
Group's relationships with major clients, providers of capital and
other strategic partners, and driving the global roll-out, which
will involve considerable international presence. In order to allow
Edi to concentrate on these important strategic matters, Nick
Parker, who is currently an Independent Non-Executive Director of
Tungsten Bank plc, has replaced Edi as Non-Executive Chairman of
Tungsten Bank and Edi has become Deputy Chairman of Tungsten
Bank.
Rob Eddowes, currently a Non-Executive Director of Tungsten
Bank, has been appointed interim Chief Executive Officer of
Tungsten Bank.
Tungsten also announces today the appointment of Nick Parker as
Non-Executive Director to Tungsten Corporation plc. Nick brings a
wealth of expertise to the Company's board from his 30 years'
corporate finance advisory experience at PwC, where he led the
Project Finance and Privatisation group. In addition to his role
with Tungsten Bank, Nick is currently a Non-Executive Director of
Pension Insurance Corporation plc and Chairman of The Wastepack
Group.
Current outlook
The Company is targeting significant growth and profitability by
extending the Tungsten Analytics and Workflow services to buyers
who currently use only e-invoicing; by enrolling new suppliers to
Tungsten Early Payment including into additional markets; by
introducing the full Invoice Status Service to expand the
addressable market of invoices that can be financed; by increasing
the number of new connections by enrolling more suppliers and by
connecting more existing suppliers to additional buyers on the
Network; and by opening new offices. The Board will continue to
assess potential acquisition opportunities.
Tungsten will continue to reduce the level of non-electronic
invoices it processes and to migrate away from interoperating with
networks that have less robust standards of compliance than the
Tungsten Network.
Edmund Truell commented:
"We have taken the exceptional customer base and international
compliance capability that we inherited from OB10 and, following
significant investment and procedural improvements, are now
executing on the Tungsten vision for continued and significant
future growth. The Tungsten Network continues to expand as we
attract new suppliers, enable more existing suppliers to transact
with additional buyers, and connect more large buyers to the
Network on a global basis to increasing its value through a true
network effect. We are now about to invite suppliers en masse to
enroll for finance and are negotiating with numerous buyers to
contract for Analytics.
"We look forward to 2016 as the year when Tungsten Corporation
begins to transform the world's supply chain and I believe Rick is
the right person to lead the company as CEO as we execute and
deliver on our strategy. As the leading provider of e-invoicing
services, we aim to trade on a compliant basis globally, harnessing
analytic tools to improve procurement for buyers and providing
peace of mind and offering financing for all their suppliers
through the Tungsten Portal."
Rick Hurwitz commented:
"I am truly excited at taking on the role of Group CEO and
working with the strong team we now have in place to continue
developing new solutions to enhance our service delivery and
executing on Tungsten's vision of supporting the global supply
chain."
Tungsten expects to announce its final results for the year
ended 30 April 2015 on Wednesday 22 July 2015.
Investor and Analyst Conference Call
Management will host a conference call for investors and
analysts at 9:00am UK time today. The dial-in number for the
conference call is +44 20 3427 1912 / +1 646 254 3364 and the
passcode is 5579696.
A replay facility will be available until 25 June 2015. The
dial-in number for the replay facility is +44 20 3427 0598/ +1 347
366 9565 and the passcode is 5579696.
Enquiries:
Tungsten Corporation plc +44 20 7280
Edmund Truell, Vice Chairman 7901
Juliana Wheeler, Head of +44 20 7280
Global Communications 7973
Charles Stanley Securities
(Nominated Adviser and Joint
Broker) +44 20 7149
Marc Milmo/Dugald Carlean 6000
Canaccord Genuity Limited
(Joint Broker)
Simon Bridges/Peter Stewart/Andrew +44 20 7523
Beswick 8000
Neustria Partners (Investors
and Analysts)
Robert Bailhache/Nick Henderson/Charles +44 20 3021
Gorman 2580
Equus Group (Media)
Piers Hooper/Sam Barton/James +44 20 7223
Culverhouse 1100
About Tungsten Corporation plc
Tungsten Corporation (LSE: TUNG) accelerates global trade by
enabling customers to streamline invoice processing, improve
cash-flow management and make better buying decisions from their
detailed spend data.
Buyer organisations that join Tungsten Network, the world's
largest compliant electronic invoice network, can reduce their
invoice-processing costs by 60%. Suppliers benefit from
efficiencies, greater visibility of their invoice status and peace
of mind. Tungsten offers supply chain financing through Tungsten
Bank*; and helps buying organisations profit by applying real-time
spend analytics to its vast repository of line-level invoice
data.
Tungsten serves 56% of the Fortune 500 and 67% of the FTSE 100
by connecting the world's largest companies and government agencies
to their thousands of suppliers around the globe. 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.
Tungsten Corporation joined forces with OB10 in 2013 to create
the world's largest electronic trading network; and acquired
DocuSphere in September 2014, a provider of accounts payable
automation solutions.
Contact: Juliana Wheeler, Head of Global Communications, +44 20
7280 7973.
juliana.wheeler@tungsten-network.com
* Tungsten Bank is authorised by the Prudential Regulation
Authority and regulated by the Financial Conduct Authority and the
Prudential Regulation Authority. Tungsten Bank is registered on the
financial services register with firm reference number 139209.
Cautionary statement
This announcement has been prepared for the shareholders of
Tungsten Corporatoin as a whole and its sole purpose and use is to
assist shareholders to exercise their governance rights. In
particular, this announcement has not been audited or otherwise
independently verified and no warranty is given as to its accuracy
or completeness (other than any such warranty which is mandatorily
implied by statute). Tungsten Corporation and its directors and
employees are not responsible for any other purpose or use or to
any other person in relation to this announcement and their
responsibility to shareholders shall be limited to that which is
imposed by statute.
This announcement contains indications of likely future
developments and other forward looking statements that are subject
to risk factors associated with, among other things, the economic
and business circumstances occurring from time to time in the
countries, sectors and business segments in which the Group
operates. These and other factors could adversely affect the
Group's results, strategy and prospects. Forward looking statements
involve risks, uncertainties and assumptions. They relate to events
and/or depend on circumstances in the future, which could cause
actual results and outcomes to differ materially from those
currently expected. No obligation is assumed to update any forward
looking statements, whether as a result of new information, future
events or otherwise.
Information relating to Nick Parker
Details of directorships that Nicholas Sherren Parker currently
holds or has held in the previous five years are given below:
Current
Cuvva Limited
Tungsten Bank Plc
Farmstar Polska (UK)
Pension Insurance Corporation plc
The Wastepack Group Limited
Former (in the past 5 years)
FP Lothian Limited
European Academy of Optometry and Optics
Scottish Resources Group Limited
Castle European Estates Limited
Continental Farmers Group plc
The Universum Group
As noted above, Mr Parker was a director and sole owner of FP
Lothian Limited, a business that owned a farm in Poland. In
February 2014, the company was wound up voluntarily by way of a
members' voluntary liquidation and there were no unpaid
creditors.
Save as disclosed above, there is no further information
required to be disclosed in accordance with Schedule 2, paragraph
(g) of the AIM Rules.
Information relating to Richard M. Hurwitz
Rick Hurwitz has a proven track-record spanning 30 years of
building high growth companies including extensive experience in
talent development, general management and capital raising with
financial services and technology companies in the US and
internationally. As Chief Executive of Pictometry International, Mr
Hurwitz led the strategic transformation of this category-defining
company in the changing geospatial industry. Earlier, he was as a
Partner at Aegis Investment Partners, a private investment firm
which focuses on buying and turning distressed assets, a Managing
Partner with Bancorp Services, where he led the firm's subsidiary
broker-dealer, and Chief Executive of Bridge Information Systems'
European operations where he also ran all non-US institutional
equity and derivatives trading.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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