TIDMTPOP
RNS Number : 4738A
The People's Operator PLC
29 September 2015
29 September 2015
The People's Operator plc
("TPO" or the "Company")
Half Year Results
The People's Operator (AIM: TPOP), the cause-based commercial
mobile virtual network operator ("MVNO"), is pleased to announce
its half year results for the six month period ended 30 June
2015.
Financial Highlights
-- Revenue of GBP603,000 (H1 2014: GBP132,000), representing growth of 358%
-- Loss of GBP4.4m (H1 2014: GBP0.6m)
-- Cash and cash equivalents as at 30 June 2015 of GBP12.9m
-- UK subscriber numbers as at 29 September: 50,360, up 6% in
the two weeks since our last statement (and up 43% from 30 June
2015)
-- Average revenue per subscriber in the UK for 1 April 2015 to
30 June 2015 of GBP13.63 for PAYM customers and GBP10.89 for PAYG
customers
-- Average customer acquisition costs remain considerably below
industry standards at approximately GBP8.00
-- Low monthly subscriber churn rate of less than 4%
Post Balance Sheet Events
-- Successful launch in the US on 21 July 2015
o More than 30 partnership agreements signed, including UNHCR,
Save the Children and other charities with broad reach
-- TPO.com social network (TPO Community) successful launch with
over 17,400 users as at 28 September
o 84 causes, including World Wildlife Fund and WaterAid UK
signed up with more anticipated to join in the coming months
Jimmy Wales, Executive Chairman, commented:
"During the first half of the year our focus was on growing our
UK operation and preparing for our launch into the US. I am
delighted with the growth we are achieving in the UK which is in
line with our expectations. Our launch in the US attracted
considerable interest and early indications are very encouraging.
The successful launch of the TPO Community continues to build on
our strategy to drive word of mouth and engage both consumers and
causes on the platform.
"We look forward to building on the momentum we have achieved
and I am very confident about our prospects."
The calculation of the number of PAYM and PAYG customers, ARPU,
churn rate and the definition of subscriber are as set out in the
company's AIM admission document dated 28 November 2014.
For further information
The People's Operator plc via Alma PR
Jimmy Wales, Executive Chairman
Mark Epstein, Chief Executive
Officer
Nick Dashwood Brown, Head
of Investor Relations
finnCap Ltd
Stuart Andrews / Christopher
Raggett / Simon Hicks 020 7220 0500
Alma PR
Josh Royston +44 (0)7780 901979
John Coles +44 (0)7836 273660
Hilary Buchanan +44 (0)7515 805218
About The People's Operator
The Company was founded in 2012 and currently offers customers
pay monthly ("PAYM") and pay-as-you-go ("PAYG") mobile contracts.
These contracts are competitively priced and allow users to direct
10% of their monthly bill to a cause of their choosing at no
additional cost to themselves. In addition, The TPO Foundation, a
UK registered charity, will receive 25% of the UK trading profits
generated by The People's Operator LLP. A similar structure is
proposed to be adopted in other countries.
The strategy of the Group is to maintain a low fixed-cost base,
small staff numbers and lower levels of advertising and marketing
expenditure than its competitors. In addition, as TPO operates as
an MVNO, the Group is not expected to be exposed to the high
infrastructure costs and large capital investment charges that
traditional mobile operators can incur. This strategy is expected
to enable the Group to offer customers a highly competitive pricing
model with a high quality of service, whilst generating an
attractive return to shareholders after donations to causes.
TPO has developed partnerships with community organisations and
causes who promote TPO's products to their supporters. Under the
direction of Jimmy Wales, the founder of the online encyclopaedia
Wikipedia, the Company is also developing an online viral community
to expand the global network of mobile phone customers who share in
the common belief of supporting causes.
The Directors believe that this strategy is scalable into new
markets around the world which offer competitive wholesale mobile
network bandwidth prices and where subscriber acquisition and
revenue growth can be driven quickly at a low incremental cost once
network agreements have been concluded with local network
operators.
Initially, TPO launched in the United States in July 2015 having
signed a long term operating agreement with Sprint, the third
largest wireless network operator in the USA, in September 2014.
Following expansion into the USA, the Directors have identified a
number of jurisdictions for future expansion of the TPO offering
(Mexico, Brazil, Asia and Europe) and over the next 18 months the
Group intends to negotiate a series of operating agreements with
established network operators in these regions with a view to
replicating the model in an increasing number of countries
worldwide.
TPO was admitted to AIM on 4 December having successfully raised
approximately GBP20 million, before expenses, through a placing at
130p per Ordinary Share which will primarily be used to invest in
the development of its viral, on-line global community platform and
to provide working capital for expansion.
For more information, visit:
https://www.thepeoplesoperator.com.
Business Review
We are pleased to report a successful six months for the Company
following its admission to AIM in December 2014.
UK Operations
The majority of 2014 had been spent testing our operations,
logistics and customer service operations and this had resulted in
the acquisition of 14,000 customers by 31 December 2014. Following
the successful IPO in December we continued to roll out our UK
product and expand our domestic operations.
Subscriber numbers as at 30 June stood at 35,122 and, as
disclosed in our statement of 15(th) September, that number had
grown to 47,500. We are delighted to report that as of 29 September
we have reached the significant milestone of 50,360 UK subscribers.
We remain confident of exceeding our target of 69,000 subscribers
by year end.
Average Revenue per User (ARPU) remains in line with the market.
Average monthly revenue per Pay Monthly ("PAYM") subscriber from 1
April 2015 to 30 June 2015 was GBP13.63. The average revenue per
Pay-as-you-Go ("PAYG") customer from 1 April 2015 to 30 June 2015
was GBP10.89.
Our churn rate remains low, at less than 4%, and customer
acquisition costs remain significantly below industry standards at
GBP8, reflecting the low cost of our viral marketing strategy.
Revenue, at GBP603,000, was more than four times the turnover
for the equivalent period of 2014 and we have seen this progress
month by month since 30 June, such that billings for July usage
were GBP232,000 and billings for August usage are estimated to be
circa GBP270,000. This represents attractive revenue growth and we
remain confident that this trend will continue.
The Board remains focused on reducing the cost of sales
proportionate to revenue. As our customer base grows, our average
cost of sales will commensurately reduce. Moreover, we are
confident that we will be able to secure better wholesale terms in
the future and are increasingly focused on individual customer
profitability.
The combination of increasing revenues in the UK and the
generation of our first revenues in the US, the ability to
negotiate lowered wholesale costs to increase gross margin and the
reduction in operating expenses now that the US launch has been
completed combined with our substantial cash balance at 30 June
means that we are well positioned to aggressively grow the
business.
US Operations
The US operation went fully live on 21(st) July 2015 following
two months of soft marketing.
The media coverage of the launch within the US was outstanding.
As of 20 August, the company had achieved 550 million impressions
across 200 pieces of coverage. In addition, Jimmy Wales and Mark
Epstein were interviewed, together or separately, by a number of
leading media outlets including CNBC, Fox News, CNN, USA Today,
Forbes and Business Insider.
Given the very early stage of the US operation, it is too early
to be able to implement in-depth analysis. However, early
indications are very encouraging and we have already received 5,000
subscriber commitments which are being processed. We continue to
receive significant levels of enquiries from both individuals and
corporate entities.
TPO Community
The TPO Community was successfully launched in tandem with the
US product offering on 21 July. As of 28 September, we have 17,400
users across 150 countries and 84 registered charitable causes.
The growth of the TPO Community platform supports TPO's strategy
of driving word of mouth growth among audiences that are supportive
of cause-based initiatives. The programme to develop and launch the
TPO Community has been shortlisted for a Telecoms.com Award, with
the winning entries being announced in November 2015.
Key performance indicators
Our key performance indicators are revenue and subscribers added
to our network.
Revenue grew from GBP132,000 in H1 2014 to GBP603,000 in the six
months to 30 June 2015, an increase of 358% on the equivalent
period of 2014. The revenue increase was driven by the large growth
in the number of TPO subscribers in the UK. We offer two types of
service plans to our subscribers, a Pay Monthly plan and a Pay As
You Go plan.
TPO ended the period to 30 June with over 35,000 subscribers,
ahead of expectations. Since then subscriber numbers have continued
to grow strongly and as at 29 September reached the 50,000
milestone.
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Cash and cash equivalents at 30 June 2015 were GBP12.9m. At the
beginning of the year, the Company had post-IPO cash reserves of
GBP18.4m. Total expenses (including cost of sales) during the first
half totalled GBP5.5m. Of this expenditure, GBP1.1m reflected
non-recurring start-up costs, including GBP250,000 for the
establishment of the US operation's technical base. Monthly cash
burn during the first half averaged GBP730,000 and cash burn is now
approximately GBP550,000 per month, reflecting subscriber and
consequent revenue growth. The Company is confident that tight cost
control and increasing subscriber numbers will see the cash burn
rate to decline throughout 2016.
We maintain confidence in our forecast subscriber numbers over
the coming years, where we are aiming for up to 2 per cent
penetration of the UK and US markets by 2021. We remain assured
that the business model and platform are capable of international
transposition and, in line with our stated strategy, we continue to
investigate markets outside the UK and US for future commercial
prospects.
Outlook
The mobile market is large and commoditised. We have a different
proposition to our industry rivals which is proving very popular.
Our unique giving proposition, linked to very competitive products
and quality service point to the continuation of our record of
strong growth.
We are greatly encouraged by the growth in our subscriber
numbers in the UK and by the successful and seamless launch in the
US. Over the next few months we will establish more data points in
the US and look to reduce our wholesale costs in the UK as we grow
subscriber numbers.
Approved by the board and signed on its behalf
M Epstein
Consolidated statement of comprehensive income for the six
months ended 30 June 2015
6 months 6 months
ended ended
30 June 30 June
2015 2014
Note (Unaudited) (Unaudited)
GBP GBP
Revenue 2 602,964 131,538
Cost of sales (1,619,634) (297,468)
Gross Profit/Loss (1,016,670) (165,930)
Distribution costs (704,296) -
Administrative expenses (2,386,144) (403,666)
Exceptional item 6 (248,972) -
------------------------ ---------------------
Operating loss 3 (4,356,082) (569,596)
Finance income 13,772 -
Finance expense (10,944) (41,805)
Loss before taxation (4,353,254) (611,401)
Taxation - -
Loss and total comprehensive
income for the period (4,353,254) (611,401)
Loss and total comprehensive
income attributable
to:
Owners of the parent (3,705,598) (462,356)
Non-controlling interest (647,656) (149,045)
Loss and total comprehensive
income for the period (4,353,254) (611,401)
Basic and diluted loss
per share attributable
to shareholders of the
parent
Basic 4 (0.05) (0.01)
======================== =====================
Consolidated statement of financial position for the six months
ended 30 June 2015
At 30 At 31
June December
2015 2014
(Unaudited) (Audited)
GBP GBP
Assets
Non-current assets
Property, plant and equipment 33,585 9,983
Intangible assets 801,101 135,399
Total non-current assets 834,686 145,382
Current assets
Trade and other receivables 1,016,024 407,315
Cash and cash equivalents 12,881,279 18,415,236
Total current assets 13,897,303 18,822,551
Total assets 14,731,989 18,967,933
Equity and liabilities
Current liabilities
Trade and other payables 1,597,979 1,480,669
Total current liabilities 1,597,979 1,480,669
Non-current liabilities
Equity
Share Capital 38,550 38,550
Share Premium 21,821,784 21,821,784
Retained earnings (7,126,958) (3,421,360)
Total equity attributable
to the parent 14,733,376 18,438,974
Non-controlling interest (1,599,366) (951,710)
Total equity 13,134,010 17,487,264
TOTAL EQUITY AND LIABILITIES 14,731,989 18,967,933
Consolidated statement of cash flows for the six months ended 30
June 2015
6 months 6 months 6 months 6 months
to to to to
30 June 30 June 30 June 30 June
2015 2015 2014 2014
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
GBP GBP GBP GBP
Cash flow
from
operating
activities
Operating loss
for the period (4,353,254) (569,596)
Adjustments
for:
Depreciation
of property,
plant and
equipment 3,563 941
Amortisation
of intangible
fixed assets 90,085 27,870
(4,259,606) (540,785)
Increase in
trade
and other
receivables (608,709) 42,772
Increase in
trade
and other
payables 117,310 6,516
Cash used in
operations (4,751,005) (491,497)
Net cash flows
from operating
activities (4,751,005) (491,497)
Investing
activities
Purchase of
property,
plant and
equipment (27,164) (3,321)
Purchase of
intangibles (755,787) -
Net cash from
investing
activities (782,951) (3,321)
Financing
activities
Issue of
ordinary
shares - 22
Issue cost - 526,350
Loan from
related
party - (41,805)
Net cash from
financing
activities - 484,567
Net decrease
in cash and
cash
equivalents (5,533,957) (10,251)
Cash and cash
equivalents at
beginning of
year 18,415,236 48,009
Cash and cash
equivalents at
the end of the
period 12,881,279 37,758
Notes forming part of the financial statements for the six
months ended 30 June 2015
1 Basis of preparation
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