TIDMTUNG
RNS Number : 7045G
Tungsten Corporation PLC
27 November 2020
Embargoed Release: 07:00hrs Friday 27 November 2020
TUNGSTEN CORPORATION PLC
("Tungsten" or the "Company")
TRADING UPDATE
Tungsten Corporation plc (AIM: TUNG), a leading provider of
digital financial management products and software solutions,
provides an update on current trading ahead of its interim results
release on 14 December 2020.
As stated on 7 September 2020 in the Company's Full Year
Results, Tungsten experienced challenging market conditions due to
COVID-19 in Q1 FY21, resulting in a transaction volume decline of
8%. The announcement also stated that if transaction volumes
remained at a similar percentage decline to that of Q1 levels for
the remainder of FY21, revenues and adjusted EBITDA would be
impacted. This trend has continued into Q2 FY21 resulting in a
transaction volume decline of approximately 7% in H1 FY21. The
current expectation is that transaction volumes will remain at
lower levels for the remainder of FY21.
In H1 FY21 new business momentum has been positive with Tungsten
securing 4 new customer wins however the Company is experiencing a
longer sales conversion cycle which is conservatively expected to
continue for the remainder of the current financial year. As a
consequence of the transaction volumes in H1 FY21 and the continued
expectation of lower transaction volumes in H2 FY21, together with
a longer sales conversion cycle, the Company expects FY21 revenues
to be similar to FY20. We expect to announce in the forthcoming
interim results revenues of GBP18.0m excluding TNF.
Underlying adjusted EBITDA is now expected to be not less than
GBP3.2m, materially lower than previous guidance. Adjusted EBITDA
has been impacted by the lower transaction volumes, product mix of
new sales, our new Total AR contracts requiring increased set-up
costs, as well as additional costs related to our investment in the
sales team. Planned actions were brought forward during H1 FY21 to
reduce the Group's cost base, which will help improve the Group's
underlying profitability going forward. The actions taken have had
a short-term negative impact on cash in H1 FY21 but are expected to
deliver annualised savings from FY22 of circa GBP4m.
As a result of the reduced revenue and adjusted EBITDA the
Company's net cash balance at the end of FY21 is anticipated to be
similar to the balance as at 31 October 2020 of GBP1m. This
represents cash of GBP3m less GBP2m drawn on the RCF. As of today,
GBP2m remains undrawn on the facility which expires in December
2024. This balance includes the impact of current year exceptional
costs as well as the cash costs of prior year restructuring
activities.
As part of the interim results preparation the Company shall
also be reassessing the carrying value of goodwill for any
impairment as a result of its revised guidance.
The Company expects the macro economic environment to remain
challenging over the coming months but it does anticipate that,
with the gradual easing of COVID-19 restrictions, transaction
volumes will begin to return to pre-COVID levels during FY22.
Andrew Lemonofides, Tungsten's Chief Executive, commented:
"Tungsten has faced a difficult and unpredictable market in
2020. In spite of these challenges and the decline in transaction
volumes, we have won new customer relationships and we expect to
deliver broadly similar revenues to FY20. This performance is
underpinned by the investments that we have continued to make in
our sales and product capabilities, coupled with our operational
gearing following our cost base reductions in H1.
It is disappointing that our profitability is going to be
materially lower that we expected this year, however the Company
remains focused on improving efficiency and converting its pipeline
of opportunities to drive growth in sales."
Enquiries
Tungsten Corporation plc
Andrew Lemonofides, Chief Executive Officer
Ian Kelly, Interim Chief Financial Officer +44 20 7280 6980
Canaccord Genuity Ltd (Nominated Advisor
& Broker)
Simon Bridges
Andrew Potts +44 20 7523 8000
Tavistock Communications Financial PR
& IR
Heather Armstrong
Jos Simson
Katie Hopkins +44 20 7920 3150
About Tungsten Corporation plc
Tungsten Corporation (AIM: TUNG) is the world's largest,
compliant business transaction network. A leading global electronic
invoicing and purchase order transactions network, Tungsten's
mission is centred on enabling a touchless invoice process allowing
businesses around the globe to gain maximum value from their
invoice process.
Tungsten processes invoices for 74% of the FTSE 100 and 71% of
the Fortune 500. It enables suppliers to submit tax compliant
e-invoices in 50 countries, and last year processed transactions
worth GBP195bn for organisations such as Caesars Entertainment,
Computacenter, GlaxoSmithKline, Kraft Foods, Mohawk Industries,
Mondelēz International, Procter & Gamble, Shaw Industries,
Unilever and the US Federal Government.
Founded in 2000 and headquartered in London, Tungsten has
offices in the US, Bulgaria and Malaysia, employing over 300
people.
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.
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END
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