Tungsten Corporation PLC – TUNG – Trading Update

Tungsten Corporation PLC – TUNG – Trading Update

Tungsten Corporation plc (AIM: TUNG), a leading provider of digital financial management products and software solutions, today issues a trading update ahead of the announcement of its full-year results for the year ended 30 April 2021.

 

Trading continues to recover following the initial impact of COVID-19 on transaction volumes.  Towards the end of FY21, we have seen strong momentum in new sales and recovering transaction volumes.

 

Operational performance:

·   

New customer wins increased in FY21 to 8 (FY20: 6 wins) from large international corporations delivering total contract value (TCV)1 of £2 million with £0.7 million expected to be recognised in FY21. This represents TCV growth of 137% versus FY20.

 

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Largest ever customer win with Nippon Telegraph and Telephone (NTT Europe) taking the combined offering of Total AP, Total AR and Workflow, with the potential to become a global deal for all of NTT.

 

·   

Signed a significant new partnership with FIS Worldpay which will deliver integrated payment offerings to our customers as part of our expansion into the invoice-to-pay space.

 

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Orbian Tungsten Network (OTN) supply chain financing partnership financed flows of over £500m in the last 11 months.

 

·   

Executive team further strengthened with the additions of a new Chief Technology Officer; Chief Product & Business Development Officer and Chief Marketing Officer.

 

 

Financial performance:

·   

On a constant currency basis revenue (excluding revenue from our wound down Tungsten Network Finance ("TNF")2 segment) grew 1.4% year on year - on a reported basis (excluding TNF) it reduced from £36.3 million to £36.0 million, in part reflecting the strengthening of the pound against the dollar.

 

·   

FY21 total group revenue (including TNF) decreased from £36.8 million to £36.0 million.

·   

93% of revenue was repeatable and recurring. This provides us with continued visibility of future revenues. New sales billings (NSB)3 grew by 7% from £3.3 million to £3.6 million.

 

·   

FY21 Adjusted EBITDA4 is expected to be in line with guidance, this was achieved via our restructuring activities from H1.

 

·   

Net cash5 of £2.1 million compared to £3.2 million at 30 April 2020; cash generation for the full year was £(1.1) million primarily impacted by the cost of restructuring activities from FY20 and FY21. However in H2 net cash has increased by £1.1 million due to higher billings and strong working capital management.

 

 

Update on COVID-19 and current trading

 

In FY21, due to the impact of the COVID-19 pandemic, transaction volumes decreased by 4% to 18.3 million from 19.0 million in FY20 and we maintained our RFC drawdown at £2 million, in line with the prior year.  For March and April FY21 the combined transaction volumes increased by 9% versus the same period in FY20. This trajectory has continued into FY22.

 

Andrew Lemonofides, Chief Executive Officer of Tungsten Corporation plc, said:

 

"We have delivered a robust performance in response to a challenging business environment, centred on our strategic investment in our sales team and the building out of our partnership network.  I remain immensely grateful to and proud of our colleagues for their continued commitment to supporting our customers through this difficult time.

 

"Our current sales conversion rate and increasing year-on-year transaction volumes across the business, particularly in Europe and North America, gives us cautious optimism for FY22 delivery.  The solid sales pipeline and an additional £1.0 million of investment in tech development and compliance functions in FY22 will provide us with a strong platform for future growth."

 

Notes

 

1 Total contract value is defined as annual recurring revenue and one off implementation revenue contracted with a customer

2 The TNF segment was fully wound down in Q1 FY21

3 New sales billings  represents implementation, subscription, license , and professional services fees to be billed in the period from new sales made in that period. Implementation and subscription fees are recognised to revenue over the 6 months and 12 months respectively from billing month. Subscription and  licence fees are recognised in the month sold. Professional services fees are recognised on work completion milestone. H1 NSB grew by 38% from £1.5 million to £2.1 million; on the new basis of NSB calculation which excludes transaction revenues.

4 Adjusted EBITDA is defined as operating profit before other income, depreciation, amortisation, gain or loss on sale, foreign exchange gain or loss,  share-based payments charge and exceptional items

5  Net cash is calculated as cash and cash equivalents on the balance sheet less drawings under the HSBC Revolving Credit Facility

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