TUNG.L Regulatory News (TUNG)

TUNGSTEN CORPORATION PLC

("Tungsten" or the "Company")

10 March 2020

TRADING UPDATE FOR THE NINE MONTHS ENDED 31 JANUARY 2020

May 2019 to January 2020 ("YTD Q3-FY20") Unaudited Financial Highlights (excluding TNF):

· YTD Q3-FY20 revenue grew 3% to £27.1 million from £26.4 million in YTD Q3-FY19.

· YTD Q3-FY20 adjusted EBITDA grew 56% to £2.8 million from £1.8 million in YTD Q3-FY19.

· Adjusted EBITDA margin grew from 7% to 10%.

· Improved adjusted EBITDA performance resulted from:

o Increased sales revenue in the period of £0.7 million;

o Improved collection of overdue receivables added a further £0.5 million;

o Embedded structural cost reductions across a number of departments of £0.5 million. These three significant improvements were partially offset by one-off changes to the bonus policy provisions YTD Q3-FY19.

· YTD Q3-FY20 recurring and repeatable revenue(7) grew 6% to £25.4 million (YTD Q3-FY19: £23.9 million), representing 94% of total revenues (91% of total revenues YTD Q3-FY19).

· YTD Q3-FY20 one-off revenue declined by £0.7 million to £1.7 million (YTD Q3-FY19: £2.5 million) due to one-off set up fees in YTD Q3-FY19 connecting customer invoices to the Italian tax authority (due to regulation changes) and a reduction in workflow license sales.

· Net cash of £1.0 million remains flat against the half year reported level and is expected to increase further by the year-end.

· YTD Q3-FY20 new sales billings (NSB)(8) of £2.9 million compared to £3.4 million in YTD Q3-FY19

· Q3-FY20 revenue grew 1% to £9.3 million from £9.2 million in Q3-FY19.

May 2019 to January 2020 operational highlights:

· Transaction volumes grew 7% to 14.4 million from 13.5 million in YTD Q3-FY19.

· We have signed three new Total AP deals with three global multinationals.

· Our transformation to a sustainably profitable e-invoicing enterprise remains firmly on track.

We are well positioned to meet out four major new strategic goals:

o Driving the network effect: Introducing Total AR. We have signed one further Total AR deal bringing the total to 3 global vendors invoicing 61 countries.

o Strategic partnerships with e-procurement providers: This provides an additional channel to market. We remain on track to sign two major partnerships with leading P2P providers which will allow Tungsten Network to provide e-invoicing as part of a joint overall procure-to-pay offer.

o Interconnecting with other leading e-invoice platforms:  This will improve scale and reach for our customers and in turn boost our turnover, volume and income. We have completed the required technical integration with a major P2P provider and aim to achieve full connection with their network and agreeing commercial terms by the end of calendar Q2 2020.

o Trade Finance: Our new exclusive partnership with Orbian has been successfully launched this week, with market proven supply chain finance products ready to rollout across our new proprietary technology platform.

Our winddown of TNF remains on track, with the successful collection of the majority of outstanding funding contracts completed.

Other

· As previously announced, David Williams and Duncan Goldie-Morrison have stepped down from the board effective 28 February 2020. We expect to announce the replacements for both roles imminently.

Andrew Lemonofides, Chief Executive Officer

"In this year of transformation, we are demonstrating our ability to reduce costs and accelerate revenue. I am pleased to highlight that all of our strategic initiatives are being delivered as mentioned above and forecast last summer. In addition, I am continuing to restructure the company, drive down costs, re-boot our technology, replace key staff, introduce new products and augment new partnerships - and so build a redefined Tungsten in pole position to deliver accelerating growth.

Revenues remain in line with our YTD Q3-FY20 expectations. Whilst we still expect to show year on year growth in new sales billings, the growth will be below the level that we had previously expected and as a result we are a little more cautious about the outturn for the full year. However, as a result of prudent cost controls, we currently expect to meet EBITDA expectations."

(1) Tungsten's year-end is 30 April

(2) Tungsten is winding down the business and operations of Tungsten Network Finance ("TNF"). Results presented exclude TNF and present the continuing business to aid future comparability. Group results including and excluding TNF are presented exclusive of management fees charged by the Group to TNF

(3) Adjusted EBITDA is calculated as earnings before net finance cost, tax, depreciation and amortisation, impairment of intangible assets, foreign exchange gain or loss, share based payment expense and exceptional items, and is adjusted to include cash rental expenses and rental income

(4) Adjusted EBITDA margin is calculated as adjusted EBITDA as a percentage of revenue

(5) Net cash is calculated as cash and cash equivalents less drawings under the HSBC RCF

(6) Transaction volumes are measured as the total number of invoices and purchase orders delivered between a Supplier and Buyer

(7) Recurring revenue represents annual subscription and maintenance fees on contracts typically ranging from 1 to 3 years and billed annually in advance. Repeatable revenue represents transaction-based fees from contracted customers, typically billed at the point of usage or at the end of the month of usage

(8) New sales billings represents implementation, subscription, licence, transaction 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 licence and transaction fees are recognised in the month sold. Professional services fees are recognised on work completion milestones

Enquiries

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

About Tungsten Corporation plc

Tungsten Corporation (LSE: TUNG) aims to be the leading global electronic invoicing and purchase order transactions network.

Digital invoicing processes enable large businesses to reduce costs and effectively manage their businesses. They can improve business agility by creating scalable and repeatable growth processes, managing their cash effectively and making better decisions based on a comprehensive analysis of their data.

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 50 countries, and last year processed transactions worth over £173bn for organisations such as Caesars Entertainment, Computacenter, GlaxoSmithKline, Kraft Foods, Mohawk Industries, Mondelēz International, Procter & Gamble, Shaw Industries, Unilever 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