viewTungsten Corp PLC

Initial Results of the Operating Review

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RNS Number : 4767X
Tungsten Corporation PLC
30 April 2019



("Tungsten", the "Company" or "Group")


30 April 2019




Tungsten Corporation today announces the results of its Operating Review. Details of the progress, key steps and decisions taken over the last six months by the new Board's Operating Review Committee, working in close collaboration with the management team, are set out below.


Tungsten is undergoing a period of fundamental change in regard to strategy, operations, governance and culture. As our plans bear fruit, we will publish an update on the further progress of the Operating Review in October 2019.


Strategic direction


We have now commissioned extensive market research and employed a number of specialist consultants to better understand the marketplace and our customers.


Demand for our pure high quality e-Invoicing services remains strong, as our competition focuses on all purpose commoditised procure-to-pay solutions that are weak on e-Invoice process and full legal/tax compliance. We believe that our existing strategy to become the de-facto e-Invoicing standard is within our grasp.


Nonetheless, the present appraisal of our strengths and weaknesses has led to a number of major new initiatives in the way we position ourselves in the P2P market and the manner in which we capture the global flow of invoices. These will have the effect of enlarging our footprint and maximising our product flexibility - without diminishing our core mission.


New Initiatives:


Procure-to-pay ("P2P")

Over the last five years, Tungsten's market has evolved. Invoicing is now often sold as part of a wider procure-to-pay solution, led by procurement commissioners. Tungsten therefore intends to offer our compliant invoicing service by partnering with a leading e-procurement technology provider. The best of breed combination of this provider's e-procurement capabilities, and Tungsten Network's market leading cross border compliant e-Invoicing platform will provide a compelling integrated cloud-based offering.


This approach will allow Tungsten to participate in the significant numbers of opportunities that call for the full suite of integrated P2P services.


Tungsten has signed a Memorandum of Understanding with the above e-procurement company and expects to proceed to a full partnership in a matter of months.


Supplier AR e-Invoicing


Tungsten's traditional and successful model has been to focus on the automation of invoices with the accounts payable ("AP") department of the Buyer. The onboarded Buyer has in turn mandated the enrolment on to our network of what has often been thousands of its own chosen Suppliers.


Our new and unique Supplier AR e-Invoicing product will now target the reverse flow opportunity; for the first time, we are approaching the biggest Suppliers on our network, and some who are not yet on it, to process 100% of the invoices they send out to their Buyers on and off our network.


By partnering with Data Interconnect Limited, an e-billing provider with an Order-to-Cash solution, with whom we have now signed a Memorandum of Understanding, we can deliver every kind of invoice to Buyers wherever they may be.


Offering to be a Supplier's digital post box for 100% of outgoing invoices is a highly attractive proposition to a customer struggling to deliver invoices and collect payment across multiple jurisdictions and myriad invoicing networks or delivery systems.


To enhance the service we intend to expand our ability to interoperate with other invoicing networks. We anticipate that this new approach to AR e-Invoicing will help grow transaction volumes more quickly than our existing model. We have set up a new sales team solely to focus on this service and identified our top Suppliers who will be initially targeted with this product.


Board and management


During the last six months, we have completely reconstituted our Board, which now has a new focus, momentum, diversity and relevant technology industry experience. The Board Committees adhere to best practices pursuant to the QCA's Corporate Governance Code.


Three members of the management team have moved on to other challenges: the Chief Executive, Chief Marketing Officer and the Head of Corporate Development. We have identified a field of first class external candidates for the CEO role, the marketing function is being restructured, and future M&A work will be resourced on a case-by-case basis.

We hope to make an announcement in relation to the appointment of a new CEO in the coming months. In the meantime, as previously announced, Tony Bromovsky has moved from Non-Executive to Executive Chairman and David Williams, the CFO, is overseeing day to day operations through the Executive Committee.

Global country compliance expansion

Tungsten's ability to provide our customers with a global tax and legally compliant invoicing network of 48 countries remains one of our key differentiators and an important part of our value proposition to our customers.


As of 1 May 2019, with the addition of Bahrain and all the French Overseas Territories, this network will increase from 48 to 50 countries. We are currently progressing plans in Latin America, Vietnam, Japan and China, certain of which include commercial partnerships. By the end of FY20 (April 2020), we plan to have more than 54 countries on our network.


This further expansion of our global country compliance capabilities will support existing Buyers on our network who already source in these new countries; it will bestow our full proprietary tax and legal validation on invoices emanating from these geographical additions to our global network. We anticipate significant transaction growth across our network from these important global trade locations.


We also anticipate that tax driven government mandated digital platforms will now occur with increasing frequency. This global trend mandates companies trading in a particular jurisdiction to have all their invoices approved on a government portal prior to payment, and it plays to our core strengths.


In January 2019, Italy was the first European country to do this and we became one of a very small group of officially approved intermediaries, enabling Tungsten to benefit from a wave of new Buyers and Suppliers transacting across both Tungsten's and the Italian Government platforms to comply with the new law.


We look forward to deploying the technology integration lessons learnt in Italy over the past year as other countries follow suit.


Sales: New routes to market


The Operating Review Committee considers that previous underperformance has been due to failures in leadership and a lack of clear targets and purpose.


-      The Company is addressing shortcomings in customer facing leadership, and in structural and organisational deficiencies, to improve the quality and quantity of our pitches, to access more senior levels at prospects and customers, and to propose new invoice release campaigns to Buyers from their Suppliers and therefore drive higher numbers of transactions.


-      For our sales teams to be fit for purpose they must have the tools to differentiate our offer, build our sales pipelines and manage the sales cycles more effectively. In May 2019 we will host our first global sales conference, bringing together all Tungsten sales and client relationship managers, to ensure they are fully equipped and trained to deliver success in all our new strategies.


-      We are also taking steps to increase the size of our New Buyer Salesforce and generally recruit in this area.


The success of this will be demonstrated in the growth of e-Invoice transactions across our network. There is, as usual, no silver bullet, rather a host of inter-connected measures that are being taken as fast as possible.


Product development

In addition to the expansion of services through the P2P and AR Supplier e-Invoicing partners referenced above, we have launched significant upgrades to our Purchase Order and Workflow products.

From May 2019, we will now offer monetised Purchase Order services as a standalone adjacent service to e-Invoice transactions. Suppliers will now for the first time be able to acknowledge, decline or even convert purchase orders into invoices with a few clicks. We are confident of good uptake of this service.

We have also released a major new version of our Workflow product, version 5.0, which manages the document flow in a company. This will now be based on modern intuitive user experience. This is already seeing good uptake from the current customer base.

Our previously announced collaboration with Mastercard for their MastercardTrack product is benefiting from further integration work and a number of major Buyers are showing interest.



Tungsten already boasts a reliable core technology infrastructure that has now migrated to the AWS Amazon cloud. There are a plethora of further significant technology projects scheduled for completion in the coming year, representing an ongoing annual investment of c. 30% of group turnover. These include general platform improvements, data archiving, API, connectivity and Invoice Status Service enhancements. Ultimately it is about delivering a better experience to our customers.


Customer portal

We have listened to our customers and are now delivering incremental user experience improvements as part of a complete redesign of our customer portal.  This includes faster, easier customer registration, sign-in, assisted first invoice despatch and better reporting.

Supplier onboarding

We are improving the speed and ease of onboarding new Suppliers onto the Tungsten Network. While Tungsten's ability to onboard Suppliers helps to differentiate us from competitors, our current onboarding process can sometimes too slow and complicated. Over the next year, our development teams will deliver solutions to speed up Supplier enrolment, activate Suppliers who are registered but not using the network, identify to Buyers those Suppliers still sending paper or pdf invoices, and continuously register new Suppliers as old ones fall away; this last measure to effectively reduce attrition rates.

We will also launch a self-service onboarding route for Suppliers, including machine learning technology to introduce new ways for Suppliers to integrate with the Tungsten Network. A key conclusion of the Operating Review is that a step change in Tech functionality will be a key driver of customer satisfaction, as well the speed and numbers of Suppliers onboarding at the behest of Buyers.

Cost base


The Operating Review also examined the cost base of the business, identifying superfluous services, waste, duplication, and best practice in order to reduce expenditure, while acknowledging the bottom line gains from further automation. These include:


·     A reduction in the footprint of our London office, through the sublet of two floors. The work to achieve this is expected to commence in May 2019, and once the vacant space is subsequently let, we anticipate an annual benefit of c. £0.5 million.

·     A new and more effective marketing plan, based less on internet targeting and campaigning and more on leveraging global client goodwill. We will support this by increasing our critical online presence and media profile. The net effect of these changes, as we reduce ineffectual expenditure, is expected to reduce marketing spend by up to £0.5 million.

·     The remuneration package for our next CEO will no longer include generous expatriate benefits and will be based on AIM best practice guidelines for this position.

·     A new remuneration plan is changing the focus from predominately cash payments to now include deferred shares, thereby aligning senior executives more with shareholders. This also has the associated benefit of reducing cash outflows.

·     Our FY20 technology programme will result in a higher level of automation, including customer onboarding which in turn will reduce the current high number of expensive support tickets.

·     Taken together these savings are significant; funds thus saved will be redeployed to critical front end impact areas such as sales and marketing.

Remuneration plan

The Remuneration Committee of the Board has met at least monthly since October 2018 to identify the shortcomings of prior remuneration arrangements and propose solutions. A new plan, based on advice from Aon and following consultations with shareholders, is founded on defining clear targets and KPIs for every employee. We will replace the granting of share options, whose benefits can be counter-productive, with deferred shares.

The Company will also offer current option holders the opportunity to convert to deferred shares, based on a detailed formula.

We have also set up a three year LTIP plan for management, with stretching targets.

Tungsten Network Finance

The Board has concluded that, whilst Trade Finance is an important service to be able to offer to our clients, its provision is non-core. Accordingly, Tungsten has appointed an M&A corporate finance firm to advise and handle this divestment. An information Memorandum will be finalised shortly and a list of interested parties has been prepared.

We intend to continue to provide our customers with a suite of different types of trade finance through a divested TNF via a controlled access agreement. With this in place, we hope to provide an even better service based on the most competitive pricing and range of products.

Tungsten intends to release an unaudited pre-close trading update for FY19 on 23 May 2019. Tungsten's final results for FY19 are scheduled for release on 22 July 2019.


For further information please contact:

Tungsten Corporation plc

Tony Bromovsky, Executive Chairman

David Williams, Chief Financial Officer




+44 20 7280 7713


Panmure Gordon (Nominated Adviser)

Dominic Morley


+44 20 7886 2500



Canaccord Genuity Limited (Financial Adviser and Broker)

Simon Bridges / Emma Gabriel


+44 20 7523 8000



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 business transaction network that brings businesses and their Suppliers closer together with unique technology that revolutionises invoice processing, maximises efficiency and improves cash flow. Delivering trusted connections and streamlined transactions, the network also provides users with real-time spend analysis and offers access to trade finance through Tungsten Network Finance.


Tungsten Network processes invoices for 74 percent of the FTSE 100 and 71 percent of the Fortune 500. It enables Suppliers to submit tax compliant e-Invoices in 48 countries, and last year processed transactions worth over £164bn for organisations such as Alliance Data, Cargill, Deutsche Lufthansa, General Motors, GlaxoSmithKline, Mondelēz International, Henkel, IBM, Kellogg's and the US Federal Government.


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.


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.

Quick facts: Tungsten Corp PLC

Price: 42

Market: AIM
Market Cap: £52.96 m

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