Electronic invoicing specialist Tungsten (TUNG:AIM) is on track to hit break-even by April 2017 and has enough cash to get there, the company’s management team claim.

Cash burn was £1.1 million per month in the six months to 31 October 2015, down from £1.5 million in the prior six month period, says chief financial officer David Williams.

Tungsten has £39.7 million of cash on its balance sheet, including funds in its fully owned banking unit.


'We do not believe we will require any additional funding outside operating cash and cash generation in the business,’ Williams said on a conference call.

‘We have identified margin enhancing and cost reducing activities and we have actioned steps and executed plans which sit behind that as part of the strategy work we are doing.

‘As part of the contingency, we have a bank with up to £25 million of cash and we are comfortable we will be able to access the cash within the bank prior to sale.’

As well as cutting costs, Tungsten’s top line grew 28% to £13.1 million in the six months to 31 October 2015. But the growth rate is slower when compared to the second half of Tungsten’s last financial year.

‘There are a number of factors in that which have impacted our full year guidance,’ says Williams.

‘We are anticipating sales of at least £14.5 million in the second half. Where is the confidence for that? There is an element of seasonality in the business and also, a lot of our revenue is booked business.

‘We have signed up six buyers in the last six months and we recognise the revenue from that over the next six month period.

‘Suppliers we have signed up are also booked revenue over the next six months.

‘And we will see the impact of the price increases we have agreed with our buyers. So we are confident we will continue to show significant double digit growth rates for the full year.'

German engineering giant Siemens (SIE:FRA) went live on the platform in the last six months and General Electric (GE:NYSE) goes live in the next month, chief executive Richard Hurwitz says.

Negotiations on contract renewals with existing customers yielded price increases of up to 70%, management claims.

Alongside the announcement, an agreement to sell Tungsten Bank for £30 million to an unnamed buyer was announced. Completion is expected in six to nine months.

Tungsten Early Payment, a key part of the business's growth strategy, averaged £12.8 million in loans outstanding in the period, up from £6.5 million six months earlier.

Shares in Tungsten trade 5% lower at 39p.

Issue Date: 16 Dec 2015